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Gold/Mining/Energy : Mining News of Note -- Ignore unavailable to you. Want to Upgrade?

To: LoneClone who wrote (44709)	10/7/2009 10:30:30 PM
From: LoneClone	Read Replies (1) \| Respond to of 197060

Gold to stay above $1000 - Harmony CEO But a strong rand is making life tough for South African producers Author: James Macharia (Reuters) Posted: Wednesday , 07 Oct 2009 JOHANNESBURG (Reuters) - mineweb.co.za The chief executive of Harmony Gold Mining Co. said the dollar price of gold could stay above $1,000 this year after it hit a new record, but a stronger rand was eroding gains for South African producers. Gold hit a record high on the spot and futures markets on Wednesday, with dollar weakness continuing to support sentiment by attracting fresh investment in the precious metal. By 0948 GMT, spot gold rose to $1,046.20/ounce , after the dollar fell against a basket of major currencies. "Certainly it will go higher. It wouldn't surprise me if it stayed above $1,000 an ounce," Graham Briggs, Chief Executive Officer of Harmony told Reuters. "My preference is that it should not rocket fast, but that it should creep up steadily. It's a little bitter-sweet for us South African gold producers, because what affects us most is the rand gold price. This is what would make a big difference." Harmony is the world's fifth-biggest, and Africa's number three gold producer, with most of its mines in South Africa. "I guess the expectation has been that the gold price was likely to go up. The fundamentals have supported that view with lack of new supply, rising production costs and the fact that successful explorations have been few and far between," he said. Africa's top three gold firms -- AngloGold Ashanti, Gold Fields and Harmony respectively -- sell their gold in dollars and pay costs in rand. The stronger rand, which has gained on rising global demand for risk and expected capital inflows has eroded their profits. He said the strong rand had "chipped away" at some of Harmony's plans, but no drastic changes had been effected yet. "But if the rand continues to be strong, one will have to look at things, one cannot live in hope," he said. Briggs said some of the company's more marginal shafts could struggle under the strong rand. Briggs said with the eroded earnings, costs were a concern, especially after new increases in electricity prices and wages. SEEKING ACQUISITIONS In August, Harmony surprised the market with its first dividend in five years after reporting its highest ever full-year profit. The company said it had 2 billion rand in cash, which would enable it to pursue acquisitions and invest in organic growth as well as paying a dividend. Asked how Harmony's strategy to grow through acquisitions was progressing, Briggs said it was slower than expected. Apart from assets from the liquidated Pamodzi Gold, Harmony had not found bigger projects to buy he said. "It's not going very well, there's not much to be bought out there. It's probably an indication that there are not many successful explorations," he said. "We are relatively fussy, we want to add quality." Briggs said his company had done due diligence on projects in Indonesia, the Philipines, the United States and Africa, scouring for projects of up to $350 million to produce 150,000 ounces a year. He forecast the company's production would rise to 1.7 million in FY 2010, with additional output coming from the company's new joint venture operation in Papua New Guinea and from revitalised mines in South Africa. Harmony produced 1.5 million ounces in financial year 2009. Briggs said the group maintained its target of producing 2.2 million ounces a year by 2012, which would be met through various mine improvements, expansions and acquisitions.