Our opinion on the current state of HAR.

Harmony (HAR) is probably South Africa's most marginal gold mine with an all-in sustaining cost of production of $1660 against a gold price of $1907 per ounce. A marginal gold mine is one which has a cost of extraction which is relatively close to the current gold price. This means that small movements in the rand price of gold can have a radical impact on the mine, pushing it from profit to loss and back to profit very quickly. The result tends to be a volatile share price and a lot of uncertainty which investors generally do not like. Their margin is relatively thin and there is not much room for cost increases or a fall in the rand gold price. In the future, Harmony will be relying on the Wafi-Golpu mine in Papua New Guinea which it owns 50% of, together with Newcrest Mining. Harmony and Newcrest have signed a "memorandum of understanding" with the government of Papua New Guinea which gives the development of the mine a firm time frame. The development of this mine and its processing plant are expected to cost around US$2,8bn - and Harmony does not at this stage have its share of that cash (about R20bn). During 2021 the company purchased Mponeng gold mine for R4,2bn. Mponeng is the world’s deepest mine and has all the problems of ultra-deep level mining. The company is building a 30mw solar park in the Free State and has plans to build a further 80mw of green power. In its results for the six months to 31st December 2022 the company reported a 6% increase in gold revenue and a 5% decrease in total gold production. Recovered grades improved by 5% and the average gold price received was up 12%. Headline earnings per share (HEPS) increased 18%. The company said, "Group AISC increased by 11% to R890 735/kg (US$1 600/oz) in H1FY23 from R802 260/kg (US$1 660/oz) in H1FY22. This increase was mainly due to the higher AISC at Target 1, Kusasalethu and Hidden Valley". On 9th May 2022, the company announced that 4 of its employees had been killed at Kusasalethu mine. On 6th October 2022, the company announced that it had agreed to buy 100% of the Eva copper project in Australia for R4,1bn. In an operational update on the 9 months to 31st March 2023 the company reported an 11% increase in gold revenue with Mponeng contributing 39% to free cash flow. Underground recovered grades improved 5% and total gold production was up 2%. In a pre-close update on 22nd June 2023 the company said, "...underground recovered grades will be higher than the guided 5.6g/t for FY23. As anticipated, recovered grades at Hidden Valley also improved in the fourth quarter". In a trading statement for the year to 30th June 2023 the company estimated that HEPS would rise by between 50% and 70% due to higher grades and no impairments. Harmony remains a volatile, marginal gold producer and hence risky - although this latest acquisition could change its direction significantly taking it out of precious metals. Eva is only expected to commence production in 3 years and is expected to add 260 000 ounces of gold and 1,7 billion pounds of copper to Harmony's reserves.