S.Africa's Harmony Gold Q2 earnings weather strike

CAPE TOWN/JOHANNESBURG (Reuters) - South Africa's third-largest gold producer, Harmony Gold, said striking workers may return to its Kusasalethu mine as early as next week, as the company reported second-quarter results on Monday that beat expectations.

The results and optimism that the closed Kusasalethu mine could re-open sent Harmony's shares up more than 9 percent. They were up 7.8 percent at 61.86 rand by 1052 GMT.

Kusasalethu has been hit by strikes by workers demanding better wages since late last year. A bout of violence just before the end-of-year holidays prompted Harmony to close the site.

The company is now urging the unions to sign an agreement on operating rules that include commitments to avoid violence. It says up to 6,000 jobs could be lost if the unions fail to sign and the site stays closed.

In a Reuters interview on Monday, Chief Executive Graham Briggs said he was optimistic the unions would agree.

"We got to the point now where the agreements are being circulated amongst unions, which is very positive and we are waiting for feedback," he said. "Workers returning would be signaling the re-opening of the mine."

Kusasalethu has contributed about 14 percent of the company's annual output of roughly 1.3 million ounces.

Since platinum workers secured higher pay following violent strikes, a new labour union, the Association of Mineworkers and Construction Union (AMCU), has gained a growing following in South Africa's gold sector and disruption has spread.

Employees at Kusasalethu walked out in October. Harmony issued an ultimatum which brought most of them back but suspended 578 others for staying away.

Furious evening shift workers then staging a sit-in underground, prompting Harmony to suspend operations.

"If there is no agreement reached in Kusasalethu then people will have to be retrenched, but that mine deserves to operate and therefore we need to find employees who are prepared to sign up to those terms," said Briggs.

RESULTS BEAT EXPECTATIONS

Harmony beat market expectations with its second-quarter earnings despite a 9 percent fall in output due to the closure of Kusasalethu.

Headline earnings, which strip out some one-time items, were 158 cents per share for the three months from October to December, up 28 percent from the previous quarter and beating a Reuters consensus analyst estimate of 102 cents.

The company declared an interim dividend of 50 cents a share.

Briggs did not rule out the possibility of linking future dividends with the gold price, on which the company was bullish, but added that this was not being contemplated now.

Briggs said a 16 percent rise in operating profit to 1.6 billion rand was mainly a result of higher grades and gold prices, coupled with lower electricity costs.

Harmony's shares have lost 38 percent of their value in the last year, compared with a 27 percent drop in JSE Gold Mining Index.

Source: http://news.yahoo.com/africas-harmony-gold-earnings-weather-strike-storm-055737588--finance.html

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