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Harmony (HMY) Reports Profits in 1H17, Sales Improve Y/Y

Harmony Gold Mining Company Limited HMY posted adjusted earnings of 11 cents per share for the first half of fiscal 2017 (ended Dec 31, 2016) as against a loss of 8 cents per share recorded in the first half of fiscal 2016. The improvement was primarily due to an increase in gold prices along with gains from Hidden Valley acquisition as well as gold and currency hedges.

Revenues and Costs

Revenues increased 10.5% year over year to $706 million in the first half of fiscal 2017 from $639 million registered in the first half of fiscal 2016.

Gold production increased 8% sequentially to 553,862 ounces (oz) in the first half of fiscal 2017. Gold ounces sold, rose 6% sequentially to 544,086 oz in the first half of fiscal 2017.

Cost of sales increased 10.2% year over year and 28.3% sequentially to $648 million in the first half of fiscal 2017. Cash operating costs rose 17% sequentially to $974 per oz. All-in-sustaining costs of $1,136 per oz rose 14% from the second half of fiscal 2016.

Financial Overview

Cash and cash equivalents increased 57.1% to $88 million as of Dec 31, 2016 from $56 million as of Dec 31, 2015. Cash flow generated from operating activities was $137 million for the six months ended Dec 31, 2016, compared with $128 million for the six months ended Dec 31, 2015.

Harmony declared an interim dividend of 4 cents per share for the first half of fiscal 2017.

Outlook

At the Hidden Valley mine, the company is currently processing at the Hamata pit and expects operations to be shut for five months due to maintenance. The mine is expected to commence commercial production from fiscal 2019.

The mine is expected to generate 180,000 ounces of gold at an all-in sustaining cost ranging $850–$950 per ounce on average. Harmony expects to reinvest $70 million and $110 million in fiscal year 2017 and 2018, respectively.

In the fiscal year, the company plans to produce about 1,050,000 ounces of gold at roughly $1,100 per oz.

Harmony has outperformed the Zacks categorized Mining-Gold industry year to date. The company’s shares have gained around 19.9% over this period, compared with roughly 16.1% gain recorded by the industry.

Zacks Rank & Other Stocks to Consider

Harmony holds a Zacks Rank #2 (Buy).

Other favorably placed companies in the mining space are IAMGOLD Corporation IAG, Pretium Resources Inc. PVG and Teck Resources Limited TECK.

IAMGOLD has an expected long-term growth rate of 3% and sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Pretium Resources holds a Zacks Rank #2 and has delivered an average positive surprise of 14.58% over the trailing four quarters.

Teck Resources, also sporting a Zacks Rank #1, has an expected long-term growth rate of 10.65%.

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Pretium Resources, Inc. (PVG): Free Stock Analysis Report
 
Iamgold Corporation (IAG): Free Stock Analysis Report
 
Harmony Gold Mining Company Limited (HMY): Free Stock Analysis Report
 
Teck Resources Ltd (TECK): Free Stock Analysis Report
 
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