South Africa: Harmony Reinstates Dividend As Gold Price Boosts Earnings

Harmony Gold reinstated its dividend on Tuesday after it unveiled robust interim results, underpinned by red-hot prices for the precious metal.

Harmony is the latest gold producer to report a big boost in profits after gold bulls ran rampant last year, taking the price at one point into record territory above $2,000 an ounce. The Covid-19 pandemic has roiled the global economy while lifting gold in the process.

Low interest rates enhance the yield appeal of gold, while general uncertainty burnishes its status as a safe haven for capital. For South African producers, rand weakness becomes a double bonus as gold is priced in dollars while most of their cost base is in the domestic currency. With wages talks in the gold sector set to take place later this year, none of this will be lost on unions.

Gold companies need to be in a position to take advantage of rising prices and so work on raising productivity, containing costs and mining ore bodies with high grades. This means that even small price bumps can flow hugely to the bottom line, and a fall in prices can be taken on the chin. Of course, a big fall can still...

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