We have retained our Neutral recommendation on gold miner
). While we are encouraged by its continued focus on improving
gold grades, we take a cautious stance considering higher costs
and volatility in gold price.
Harmony Gold, on May 3, reported a loss of 5 cents per share for
third-quarter fiscal 2013 (ended Mar 31, 2013) versus earnings of
30 cents per share a year ago. It missed the Zacks Consensus
Estimate of earnings of 26 cents.
Revenues fell by double digits on lower gold production due to
the temporary closure of the Kusasalethu mine. Harmony Gold, at
the third quarter call, divulged its plans to cut capital
expenditure following a fall in gold price.
Harmony Gold, which is among the prominent gold miners in South
Africa along with
AngloGold Ashanti Ltd.
), is making good progress in producing better quality gold
ounces. It has several world-class mines in South Africa, which
together with Hidden Valley and Wafi-Golpu projects in Papua New
Guinea (PNG), will be significant contributors to its set
Harmony Gold is also showing significant progress both in the
growth of resources as well as diversity. The company is focused
on meeting its long-term targets and maximizing shareholder
value. It remains confident in achieving its stated gold
production goal of 1.7 million ounces by 2016.
However, Harmony Gold's operations are likely to be impacted by a
slower-than-expected ramp-up in production at mines,
higher-than-expected operating costs and gold price volatility.
Harmony Gold is seeing a rise in operating costs. Weak gold price
coupled with higher costs is significantly affecting the
company's profitability. Harmony Gold is also exposed to
geopolitical risks associated with mine shut downs and labor
Harmony Gold currently retains a Zacks Rank #3 (Hold).
Other Stocks to Consider
Other companies in the mining industry with favorable Zacks Rank
Sibanye Gold Limited
Lake Shore Gold Corp.
). While Sibanye Gold carries a Zacks Rank #1 (Strong Buy), Lake
Shore Gold retains a Zacks Rank #2 (Buy).
ANGLOGOLD LTD (AU): Free Stock Analysis
HARMONY GOLD (HMY): Free Stock Analysis
LAKE SHORE GOLD (LSG): Free Stock Analysis
SIBANYE GLD-ADR (SBGL): Get Free Report
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