Harmony Gold Mining Company Limited – An ADR on the NYSE as HMY – Also on JSE as HAR
Let’s start by looking at the one year chart. I am not suggesting it is immediately going to go all the way back up to it’s 52 week high. Here’s the chart
What I am suggesting is this is a stock heavily beaten up, and it is unjustifiably low. They have proven their production. Even if gold lost another 20% in value from today’s recent prices, Harmony is fine.
Notice that the stock has basically reached a base level. The downward momentum is simply not an issue any more.
NOW – THIS FILING CAME OUT IN JUNE:
Impairment of Hidden Valley asset Johannesburg. Tuesday, 18 June 2013 . Harmony Gold Mining Company Limited (“Harmony” or the “Company”) is currently compiling its financial year 2014 business plans, which will be completed by the end of its 2013 financial year, being 30 June 2013. Once approved, Harmony will use these plans to assess the carrying value of its assets to determine if any impairments are required (“impairment testing”). This will be informed by a number of factors, including estimates of the future gold price and exchange rates, life of mine plans, and operating and capital cost estimates.
At this early stage it appears likely that there will be a write-down of a portion of the carrying value of Hidden Valley in Papua New Guinea, due to its recent poor performance and the reduction in the US dollar gold and silver prices.
Harmony will advise the market of the outcome of the impairment testing, which the Company anticipates to be towards the end of July 2013. It should be noted that the write- down of the carrying value of Hidden Valley will reduce the net profit of the company, but will not have an impact on reported cash balances and free cash flow.
While negative, of course, don’t we already know this? Gold is down. The dollar versus gold is particularly down. Read that last part of the last sentence: “It should be noted that the write- down of the carrying value of Hidden Valley will reduce the net profit of the company, but will not have an impact on reported cash balances and free cash flow.“
I still like Harmony. Let’s take a look at this one in 90 days and I think we will see a different story here.