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Harmony Gold aiming for 1.7 million ounces

South Africa-based Harmony Gold is planning to boost its gold production from 1.17 million ounces in its current 2012 financial year to 1.7 million ounces by 2016.

Posted: Wednesday , 29 Aug 2012

JOHANNESBURG (Reuters)  - 

Harmony Gold Mining, the world's fifth-largest gold producer, said on Tuesday it aims to boost production by 45 percent in the next four years.

The South Africa miner is aiming to lift its production from 1.17 million ounces in its 2012 financial year to 1.7 million ounces by 2016.

Its target for 2013 is 1.3 million ounces. Most of this growth will come from its South African operations, with a contribution from the Wafi-Golpu project in Papua New Guinea only expected from 2019.

Chief Executive Graham Briggs told analysts on a conference call that growth would be funded primarily by cash flows and it may only need to raise additional funds in 2017.

Results of its Wafi-Golpu prefeasibility study pegs the cost of establishing a copper-gold development at $4.8 billion. This will be shared by Harmony and its partner in Papua New Guinea, Newcrest Mining.

"Golpu has the potential to change the company materially," Briggs said. Already its inclusion in the company's resource and reserves base shows a strong diversification away from its almost exclusive South African production.

Harmony increased its gold equivalent reserves by 31 percent year-on-year to 52.9 million ounces and said reserves in South Africa now represent 58 percent of it overall total.

Chief Financial Officer Frank Abbot said it would consider debt or bonds to top up its capital expenditure needs as the production of its Papua New Guinea operations gets nearer.

"We don't see the need for additional funding until 2017 and then it will depend on the gold price," Abbot said.

He indicated that if the gold price remained in the $1,600 an ounce range, the company would need to raise 4 billion rand but if it dipped to $1,400 an ounce it would require almost double at 7 billion rand.

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