Harmony Gold Mining Co. (ADR)(NYSE:HMY) had achieved a 10% QoQ jump in gold production for the quarter closed September 30. The company continued to benefit from its gold and currency hedge, which, in addition to increased production, helped strong fund flows. Underground grade at more than 5 g/t was sustained during the quarter.

Harmony, which achieved its production estimate of 1.1-million ounces in the fiscal closed June 30, stated that it intends to increase production to 1.5-million ounces yearly by 2020, on the support of rising production in Africa, and its businesses in Papua New Guinea. The management said that importantly, they intend to accomplish this on an ASIC target up to $950/oz. The firm had, over the past 5 years, accomplished a gradual surge in its subversive gold grade profile. The key goal is to grow margin reported by South Africa gold mining by more than 5 g/t from underground mines.

The highlights

Newcrest Mining has decided to sell 50% of the Hidden Valley mine to its South African (JV partner Harmony Gold. The later will buy the 50% stake in the Hidden Valley for cash consideration of $1. Having closed the strategic assessment of Hidden Valley, Newcrest decided that the best result was to exit the business and focus attention on safe, lucrative growth at other assets.

Harmony CEO Peter Steenkamp reported that the Hidden Valley mine acquisition was matched with the group’s overall goal to increase its yearly production profile to around 1.5-million ounces in coming 3 years. The management believe that Hidden Valley has the prospect to contribute nearly 180 000 oz/y of gold to company’s production profile at an ASIC of less than $950/oz in the next 3 years.

In June 2016, the Hidden Valley mine had projected gold mineral reserve of 1.4-million ounces at 1.6 g/t and for silver it was 31 /t for 27-million ounces. The projected mineral resource covers 4 million ounces of gold fixed at 1.6 g/t while it is 29 g/t for 73-million ounces of silver. Harmony reported that mining the stage 6 and 5 cutback would spread the existing mine life by 7 years and need an initial capital investment of around $180-million.