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Harmony Gold Reports Loss in 3Q

Harmony Gold Mining Co. Ltd. (HMY - Analyst Report) recorded a net loss of 5 cents per share in third-quarter fiscal 2013 (ended Mar 31, 2013), compared with earnings of 30 cents per share recorded in the year-ago quarter. The results missed the Zacks Consensus Estimate of earnings of 26 cents.

Revenues and Costs
Revenues were down 26% sequentially and 5.3% year over year to $395 million.

Gold production decreased 15% sequentially and 12% year over year to 247,529 ounces (oz). The sequential decrease in production was due to the temporary closure of the Kusasalethu mine because of safety and security reasons, the damage to the ventilation shaft at Phakisa and a slow start-up at the other operations.

Cost of sales fell 10% sequentially to $367 million but rose 4.6% year over year. Gross profit amounted to $28 million in the reported quarter, a decline of 77.6% sequentially and 57.6% year over year.

Financial Overview

Cash and cash equivalents amounted to $336 million as of Mar 31, 2013, versus $186 million as of Mar 31, 2012.

Cash flow generated from operating activities was $23 million as of Mar 31, 2013, compared with $88 million as of Mar 31, 2012.


Post the third quarter, gold prices fell sharply to about $1400/oz and Harmony Gold will take measures to reduce costs. The company expects to reduce services and corporate costs in South Africa by R400 million ($44.4 million) and overall capital expenditure in both South Africa and Papua New Guinea (PNG) by R1.4 billion ($155.3 million) for the financial year ending Jun 30, 2014.

Harmony Gold, which is among the most prominent gold miners along with Barrick Gold Corporation (ABX - Analyst Report), Newmont Mining Corporation (NEM - Analyst Report) and Goldcorp Inc. (GG - Analyst Report), has world-class mines in South Africa and PNG.

Harmony Gold currently carries a Zacks Rank #3 (Hold).

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