Harmony Q2 earnings up on higher gold price

The gold miner says it is looking for growth opportunities but cautions that the rand price of gold is likely to be flat for the next 12 months

JOHANNESBURG (Reuters) - 

Harmony Gold Mining Co. (HARJ.J) second quarter earnings were lifted by a rise in the price of gold and declining costs despite a drop in production, the South Africa-based company said on Monday.

Harmony posted headline earnings per share of 49 South African cents in the quarter to December versus a loss of 12 cents in the preceding quarter, after the gold price averaged $1,100, up 14 percent on the September quarter.

Cash operating profit rose 44 percent to 800 million rand ($104.3 million), driven by the stronger rand gold price.

The rand gold price for gold was 10.6 percent higher quarter-on-quarter, the world's fifth largest gold producer said. South African gold producers sell their gold in dollars and receive their earnings in rand.

Gold production for the quarter was down 1.2 percent to 371,956 ounces, mainly due to the closure of marginal shafts.

Harmony's Chief Executive Officer Graham Briggs said in a statement the company would pursue growth opportunities - organically, by acquisition and through forging strategic partnerships, but gave no details of any immediate ventures.

Briggs warned that there could be "more pain before gain" on the production front as Harmony continues to assess and close those of its South African operations with depleted ore bodies in its pursuit of 2.2 million profitable ounces by 2012.

Briggs said despite the rand gold price improvement during the December quarter, Harmony believed that the rand/kg gold price would most likely remain flat for the next 12 months.

"We still hold the view that general rand strength is likely to continue for so long as any global economic uncertainties last. We therefore expect the gold price to remain fairly flat for the next 12 months in rand/kg terms," he said.

(Reporting by James Macharia)

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