Harmony faces critical six months

Harmony Gold Mining has sold its remaining 2% interest in Gold Fields, at a loss of R450 million.

The transaction raised R1.35 billion for the company and the money has been used to repay its entire R1.3 billion long-term debt to Rand Merchant Bank.

In recent weeks both Harmony’s chief executive officer and finance director have resigned, as results for the June quarter were delayed.

Harmony’s basic earnings reduced from R83 million in the March quarter, to losses of R652 million in the June quarter.

The result has been attributed in part to the installation of a new accounting system and several audits of the company’s systems and accounts are now taking place.

The company’s costs increased sharply in the June quarter, apparently as a result of some of the March quarter’s costs being captured in the June 2007 quarter.

Sector analysts are agreed that the next six months will be critical to Harmony’s survival.

The company will need to seek external funding to sustain its growth plans, or it could review its operations and opt for closures and retrenchments.

According to Graham Briggs, Harmony’s acting chief executive officer, the company has now adopted a “back to basics approach” to management.