http://www.mineweb.com/mineweb/view/...

Harmony bullish on gold price

The gold miner expects Q2 gold output to fall.

Posted: Thursday , 22 Jan 2009

JOHANNESBURG (Reuters) -

Harmony Gold Mining Co Ltd. expects its output to decline in the second quarter versus the first and is bullish on the gold price in the medium to longer term, the South African company said on Thursday.

Harmony said it had milled less tonnes in its second quarter, which runs to December, after the gold grade decreased, while the rand per kilogram costs rose owing to the lower output. Electricity and labour costs fell, it said.

"The gold market volatility (is) likely to continue but the price is likely to be sustained," Harmony said in a presentation posted on its website at www.harmony.co.za

Harmony said the gold price would be buoyed by fewer gold discoveries and inability by junior miners and exploration companies to raise funds during the credit crisis.

Gold was trading steady at $855.15 an ounce, and was within sight of a two-week high of $865.80 hit on Tuesday.

The company reiterated that it was on track to produce 2.2 million ounces by 2012.

Harmony, which is developing the Hidden Valley project with Australia's Newcrest Mining Ltd, said the project was 74 percent complete and on target for commissioning in mid-2009.

The company is focusing on growing its output, and the Hidden Valley Project in Papua New Guinea is a key project, which may yield 250,000 ounces of gold and 3.6 million ounces of silver each year for 14 years.

Shares in Harmony traded 1.23 percent higher at 99.99 rand, in line with a firmer stock market.

Harmony is due to issue its results on February 6. (Reporting by James Macharia; editing by James Jukwey)