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Harmony Gold Mining: What To Think About These New Highs by Fun Trading

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Summary

  • Harmony announced on November 17 its operational update for the three months that ended in September 2019.

  • Strong results with higher gold production sequentially and strong revenue due to a massive increase of the price of gold in 3Q.

  • The Wafi-Golpu project in Papua New Guinea is a significant asset with good potential but presents an uncertain future.

  • HMY, like many other gold miners, seems overbought at the moment and it is perhaps time to take some profit off the table and wait for a retracement.

Source: ItnewsAfrica

Investment Thesis

The South African Harmony Gold Mining (HMY) is a prolific gold miner that operates mainly in South Africa. Further, Harmony is active in Papua New Guinea, where it owns the Hidden Valley mine - an open-pit gold and silver mine - and owns 50% interest in the Morobe Mining Joint Venture, which includes the Wafi-Golpu project and extensive exploration areas. Please look at the map below.

The company has a total of nine underground mining operations, one open-pit mine, and several surface operations in South Africa. The gold production for the third quarter of 2019 was a total of 361,085 Au Oz, including three segments:

South Africa underground mining: 280,868 Au Oz or 77.8% South Africa surface mining: 32,087 Au Oz or 8.9% Papua New Guinea: 48,130 Au Oz or 13.3%

Source: HMY Website

The investment thesis is quite straightforward here and has not changed much from my preceding article. I consider the company as a long-term candidate for investors who want to own an active miner involved primarily in South Africa gold play. It is quite similar to Sibanye Gold (SBGL) that I also cover on Seeking Alpha. The only significant difference between Harmony Gold and Sibanye Gold is that the latter is more diversified and produces platinum and palladium at a substantial level since the company acquired Stillwater a couple of years back.

While I believe Harmony Gold is a robust long-term contender, I think Barrick Gold (GOLD) seems a slightly better choice after increasing its presence significantly in Africa with the merger with Randgold Resources in September 2018.

Harmony Gold Mining has a large asset base and good growth potential. Production of gold for the last quarter ending September 2019 was 361,085 Au oz from fourteen different areas indicated below.

...Read the Full Post On Seeking Alpha

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