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In the last trading session, the stock price of Harmony Gold Mining Co. (ADR)(NYSE:HMY) declined 0.45% to close the day at $2.22. The decline came at a share volume of 250 compared to share volume of 5.06 million. HMY stock was downgraded to ‘Sell’ post 3Q2016 results.

The performance

Harmony Gold plunged despite posting a production profit of 1.4 billion rand on its best ever quarterly sales of 5.25B rand, up 9% QoQ and 16% YoY. The company reported that its 3Q2016 production surged 10% YoY to over 277K oz., and it is on track to record its full-year output projection of 1.05M oz. Cash operating expenses surged by 12% QoQ in rand terms, primarily due to higher costs in electricity and labor.

Harmony stock is downgraded to ‘Sell’ from ‘Neutral’ at Citigroup, which stated increasing expenses, a roll-off in gold and currency price hedges will sharply reduce earnings post FY2017. The company lifts 1Q2017 output, after highest ever quarterly revenue. It posted its highest ever quarterly sales of R5.25-billion in the quarter to September 30.

Revenue for the reported period was 9% higher QoQ, on the back of a 10% jump in production to 277 461 oz, against the 253 349 oz generated in the quarter closed June 30. Underground recovered grade surged by 5.5% QoQ to 5.01 g/t. Development grades at all businesses except for Target 1 are also in line with projections and support the projected grade in the life-of-mine program.

At Kusasalethu, superior grades were intersected in the reported period. At Target 1, uneven ground situations troubled further mining in the premium areas. Action programs comprised an increased focus on advancement to ensure that mining flexibility enhances, with higher grades only projected by the 3Q2017 fiscal. Cash operating expenses for the September quarter surged by 12%, owing to a surge in higher electricity costs and labor expenses.

Harmony’s all-in sustaining costs declined 1% to R516 116/kg, regardless of the seasonal impact of winter electricity tariffs. The businesses recorded free cash flow of R850-million, enabling the miner to minimize net debt by 51% to R528-million from R1.08-billion, after compensating a dividend of R218-million.

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Steve Kanaval: Portfolio Manager/Writer/ Market Analyst Steve began his career in the Trading Pits in Chicago making markets at the Chicago Mercantile Exchange (NYSE:CME) the Chicago Board of Trade and the CBOE in the early 80’s. He ran the Morgan Stanley Derivative Prop Trading for the firm specializing in Index Arbitrage. He continued his career as a Trader/Portfolio Manager for multiple Hedge Funds during the Internet Boom of the 90’s managing large portfolios. Steve is known as an expert in MicroCap Technology Stocks and the emerging Digital Currency markets as a Portfolio Manager for his Family Office. Steve has managed portfolio’s in volatile asset classes for 3 decades as a commodity trader, hedge fund manager and digital currency trader and miner. Steve publishes his views on the asset classes in a public forum and has published more than 10,000 articles simplifying these complex and volatile assets for readers. His work is published on multiple sites including Bloomberg, Equities.com, Hacked.com, CryptoCurrencyNews as a paid contributor. His work includes research, journalism and archived video on important market volatility related to stocks, digital currency and other volatile misunderstood asset classes. He offers a humorous, unique insight and the related back stories and drivers for readers interested in volatility and emerging market assets. Full disclosure Steve is long 25 digital currencies and sits on the board of multiple public companies involved in digital currencies, and owns shares in these companies from time to time.

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