We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Harmony Gold's Rising Costs: Can Margins Withstand the Pressure?
Read MoreHide Full Article
Key Takeaways
Harmony Gold's AISC rose 20% in fiscal 2025 to $1,806 per ounce, driven by higher labor and electricity costs.
Electricity and water expenses climbed 16% in fiscal 2025 as Eskom tariffs rose.
HMY trades at a steep discount to the industry, with 2026 EPS estimates trending higher in 60 days.
Harmony Gold Mining Co. Ltd. (HMY - Free Report) saw a roughly 20% surge in all-in-sustaining costs (AISC) to $1,806 per ounce (oz) in the fiscal 2025 (ended June 30, 2025). Total cash operating costs also climbed 19% year over year to $1,499 per oz in the fiscal year, hurt by lower production and higher labor and electricity costs. Increased cash operating costs and higher sustaining capital led to the uptick in AISC.
Harmony remains exposed to higher costs, which are likely to weigh on its margins over the near term. Labor and electricity remain the largest components of its cost structure.
HMY experienced a 16% increase in electricity and water costs in fiscal 2025 due to higher annual tariffs charged by Eskom. While the company is implementing various energy-saving initiatives and launching a renewable energy program, the burden of higher electricity costs is unlikely to abate over the near term due to higher tariffs. The company’s AISC guidance for fiscal 2026 indicates a year-over-year increase, reflecting inflationary pressures and higher sustaining capital expenditures.
Among its peers, AngloGold Ashanti plc (AU - Free Report) saw higher total operating costs in the second quarter, including increased royalty expenses and costs associated with the initial inclusion of Sukari, elevated costs related to legacy TSFs and higher costs resulting from mining contractor rate adjustments. AngloGold Ashanti’s total cash costs per ounce were up 8%, while AISC per ounce increased 7%. AngloGold expects consolidated AISC in the band of $1,580- $1,705 per ounce in 2025.
Gold Fields Limited (GFI - Free Report) reported a roughly 0.7% year-over-year decline in AISC to $1,739 per ounce in the second quarter. Gold Fields’ all-in cost rose around 2% year over year. Gold Fields sees AISC of $1,500-$1,650 per ounce and all-in cost between $1,780-$1,930 per ounce for full-year 2025.
HMY’s Price Performance, Valuation & Estimates
Shares of Harmony Gold have shot up 61.8% year to date against the Zacks Mining – Gold industry’s rise of 85.4%, thanks to a surge in gold prices.
Image Source: Zacks Investment Research
From a valuation standpoint, HMY is currently trading at a forward 12-month earnings multiple of 4.61, a roughly 67.9% discount to the industry average of 14.36X. It carries a Value Score of B.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for HMY’s fiscal 2026 earnings implies a year-over-year rise of 127.6%. The EPS estimates for fiscal 2026 have been trending higher over the past 60 days.
Image Source: Zacks Investment Research
HMY stock currently carries a Zacks Rank #2 (Buy).
Image: Bigstock
Harmony Gold's Rising Costs: Can Margins Withstand the Pressure?
Key Takeaways
Harmony Gold Mining Co. Ltd. (HMY - Free Report) saw a roughly 20% surge in all-in-sustaining costs (AISC) to $1,806 per ounce (oz) in the fiscal 2025 (ended June 30, 2025). Total cash operating costs also climbed 19% year over year to $1,499 per oz in the fiscal year, hurt by lower production and higher labor and electricity costs. Increased cash operating costs and higher sustaining capital led to the uptick in AISC.
Harmony remains exposed to higher costs, which are likely to weigh on its margins over the near term. Labor and electricity remain the largest components of its cost structure.
HMY experienced a 16% increase in electricity and water costs in fiscal 2025 due to higher annual tariffs charged by Eskom. While the company is implementing various energy-saving initiatives and launching a renewable energy program, the burden of higher electricity costs is unlikely to abate over the near term due to higher tariffs. The company’s AISC guidance for fiscal 2026 indicates a year-over-year increase, reflecting inflationary pressures and higher sustaining capital expenditures.
Among its peers, AngloGold Ashanti plc (AU - Free Report) saw higher total operating costs in the second quarter, including increased royalty expenses and costs associated with the initial inclusion of Sukari, elevated costs related to legacy TSFs and higher costs resulting from mining contractor rate adjustments. AngloGold Ashanti’s total cash costs per ounce were up 8%, while AISC per ounce increased 7%. AngloGold expects consolidated AISC in the band of $1,580- $1,705 per ounce in 2025.
Gold Fields Limited (GFI - Free Report) reported a roughly 0.7% year-over-year decline in AISC to $1,739 per ounce in the second quarter. Gold Fields’ all-in cost rose around 2% year over year. Gold Fields sees AISC of $1,500-$1,650 per ounce and all-in cost between $1,780-$1,930 per ounce for full-year 2025.
HMY’s Price Performance, Valuation & Estimates
Shares of Harmony Gold have shot up 61.8% year to date against the Zacks Mining – Gold industry’s rise of 85.4%, thanks to a surge in gold prices.
From a valuation standpoint, HMY is currently trading at a forward 12-month earnings multiple of 4.61, a roughly 67.9% discount to the industry average of 14.36X. It carries a Value Score of B.
The Zacks Consensus Estimate for HMY’s fiscal 2026 earnings implies a year-over-year rise of 127.6%. The EPS estimates for fiscal 2026 have been trending higher over the past 60 days.
HMY stock currently carries a Zacks Rank #2 (Buy).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.