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South Africa's largest gold-mining company Harmony Gold is building a resilient portfolio by investing continuously in its orebodies while growing in copper to protect cash flows through the commodity cycle, Harmony Gold CEO Beyers Nel highlighted during the JSE-listed group's declaration of record interim dividend payout of R3.4-billion.

The dividend involves a total payout of 43% of net free cash and an increase of 23% over the previous dividend policy, which is now revised to allow for up to 50% of net free cash to be returned to shareholders, Harmony FD Boipelo Lekubo outlined at the presentation, which reported 9% lower half-year gold production of 724 000 oz and 21%-higher all-in sustaining costs of $2 115/oz. (Also watch attached Creamer Media video.)

"The cash we're generating today is enabling us to fund a future in both gold and copper," an upbeat Nel reported during the well-attended presentation covered by Mining Weekly.

The operating profit of Harmony, which is a geographically diversified producer with assets in South Africa, Papua New Guinea and Australia, was up 61% at R16-billion on 11% lower but in-line underground recovered grade of 5.72 g/t. Basic earnings per share were up 24% at 1 563c.

Harmony's portfolio is underpinned by 136-million ounces in mineral resources and about 37-million ounces of mineral reserves providing scale, longevity and optionality.

"Gold remains our core, while copper is our strategic growth lever," Nel explained.

Harmony plans to bring 100 000 t of copper online a year from Australia within the next few to five years.

"Guided by long life asset optimisation and disciplined capital allocation, we prioritise value over volume to build a more profitable and sustainable Harmony over the long term.

"We're not targeting a fixed copper-to-gold ratio. Our decisions are driven by fundamentals, economic value and reserve strength.

By financial year 2035, 40% of production may be copper from Eva and CSA, both in Australia, and from Wafi-Golpu in Papua New Guinea, "complementing our South African gold base and enhancing resilience and also margins. Operational fundamentals remain firmly intact, despite some short-term headwinds," Nel noted.

The lower 724 000 oz of gold reported for the reporting period was impacted by an industry-wide cyanide shortage and lower plant recoveries in South Africa.

Although underground recovered grades decreased by 11% to 5.7 g/t, face grades mined were in line with our plans, and plant recoveries have reportedly now also normalised.

Hidden Valley's production in Papua New Guinea was affected by a tectonic-related mill motor failure and gold shipping delays, which impacted the amount of gold sold during the period.

Group all-in sustaining cost rose to R1.18-million per kilogram, or $2 115/oz, owing to lower volumes and much higher royalties paid.

"I'm confident that we'll remain on track to meet full-year production cost and grade guidance. We're generating strong free cash flows. On the back of consistent strong operational and financial results, we've revised our dividend policy to reflect the higher base dividend and additional performance related payout. This means shareholders could receive up to 50% of net free cash as a dividend.

"Our interim dividend has more than doubled, rewarding our shareholders alongside our growth aspirations.

"Copper and gold are both intrinsically important to us, and Harmony is well positioned for growth," said Nel.

Harmony's lost time injury frequency rate reached an all-time low of 4.23 and has remained below five for three consecutive quarters now.

"We are deeply saddened by the loss of our colleague in the second quarter, because any loss of life is unacceptable and reinforces the need for cont...