Tue
June 18 2013
South Africa's Harmony Gold said on Tuesday it expected to
write down a portion of the carrying value of its Hidden Valley mine in Papua
New Guinea because of lower gold and silver prices and a poor operating
performance.
"It should be noted that the write-down of the carrying
value of Hidden Valley will reduce the net profit of the company, but will not
have an impact on reported cash balances and free cash flow," Harmony said
in a statement.
The company, which will report annual results in August, said
it would advise the market on the size of the impairment towards the end of
July. The company's share price fell over 5.5 percent on Tuesday, bringing its
decline in the year to date to around 50 percent. Investors could punish the
stock further as Harmony's plans to diversify out of South Africa are centered
on Papua New Guinea.
The company's share price has fallen faster than bigger
Johannesburg-listed rivals such as AngloGold Ashanti, the world No. 3 bullion
producer, which has lost about 39 percent since the start of the year. But
Harmony is much more exposed to South Africa, where costs and political risks
are high, labour strife is rife, and the mines are deep and dangerous.
Harmony gets over 90 percent of its output from South Africa and its plans to expand its production profile outside of the country depend on Hidden Valley and its huge Wafi-Golpu project in Papua New Guinea.
Source: Reuters