Energy & Mining

Harmony Gold Mining Co. (ADR) (NYSE:HMY) In A Downtrend

Harmony Gold Mining Co. (ADR) (NYSE:HMY)

Harmony Gold Mining Co. (ADR) (NYSE:HMY)

Harmony Gold Mining Co. (ADR) (NYSE:HMY) continues to hit lower-lows in the market. Lower gold prices and a mine explosion appear to have triggered the current downtrend. The stock is currently trading at the lower end of $1.68-$1.81 trading range, amidst growing concerns over the company’s long term prospects.

Gold Production Outlook

The South African based gold miner has underperformed as other stocks in the industry have appreciated. A tragic loss of 25 miners in one of the company’s mines in March appears to have spooked investors. Over the last three months, the stock has shed more than 6% in market value and is currently down by 44.93% for the year.

However, Chief Executive Officer, Peter Steenkamp, remains bullish about Harmony Gold Mining Co. (ADR) (NYSE:HMY)’s long term prospects even on the stock’s poor performance. According to the executive the company is on track to achieve full year production guidance.

“The fundamentals underpinning our mine plans enable us to achieve our annual production guidance,” Steenkamp said. “Safety, costs and grade continue to be a focus and higher production in the fourth quarter will drive unit costs,” said Mr. Steenkamp.

During the third quarter, Harmony Gold Mining Co. (ADR) (NYSE:HMY) produced 258,330 ounces of gold, a 6.5% drop from the second quarter. Revenue in the quarter was down by 1.5% coming in at $358.271 million. The company sold 290,224 ounces of gold at an average price of $1,287 an ounce.

Gold demand in the global market continues to pick up. Growth in demand in China and India should have a positive impact on gold prices which, in turn, are expected to have a positive impact on Harmony Gold.

Headwinds at Hand

However, with Gold prices dropping in the wake of the U.S. Federal Reserve hiking interest rates adecline in Gold prices is not the only problem that Harmony Gold faces in the short term.

Mining operations in South Africa come with their own share of challenges. Electrical issues as well as labor strife are some of the problems that could derail the company’s operations.

Harmony Gold Mining Co. (ADR) (NYSE:HMY) may appear cheap at current trading levels given the strong fundamentals supporting the stock. A rise in gold prices could push the stock higher. The stock boasts a dividend yield of 3.9% and price to earnings ratio of 4.25.

Harmony Gold Mining Co. (ADR) (NYSE:HMY) stock was down by 6.93% in Friday’s trading session ending the week at $1.68 a share. On Monday, HMY shares were trading slightly higher at mi-day at $1.72.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

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About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

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