Harmony Gold Reports Big Production Drop

(REUTERS) -- Harmony Gold, South Africa's third-largest gold producer, on Friday became the latest miner to report a sharp drop in output in the first 3 months of 2012 because of an increase in government-ordered safety stoppages.

Harmony's share price extended losses on the news to be almost 2 percent lower at 1140 GMT, underperforming gains of 0.12 percent on the Top 40 index of blue-chip stocks..

Harmony's announcement that output would be 18 percent lower compared to the previous quarter came a day after official data showed gold output in South Africa had fallen 11.5 percent in volume terms in February on an annual basis.

Platinum output in the same period fell almost 50 percent.

Pointedly, the tone taken by chief executive Graham Briggs on the government safety drive softened since February, when he said the campaign was punitive.

Safety stoppages indicate that we need to do even more to ensure a safer working environment for our employees at all times, Briggs said on Friday in a trading update.

In the previous quarter to the end of December, the second in Harmony's financial year, the group produced just shy of 345,000 ounces of gold, so an 18 percent fall would bring March output to 283,000 ounces, according to Reuters' calculations.

The company has already cut its full financial year target to 1.35 million ounces from 1.55 million ounces, partly because of the wave of safety stoppages, and the latest figures mean it will likely be reduced again.

The March quarter is not in line with our expectations, Briggs said.

Public holidays, a one-day national strike that Harmony's employees joined, and heavy rains in Papua New Guinea that impacted its Hidden Valley operations there also contributed to the fall in output.

Africa's top gold producer AngloGold Ashanti said on Tuesday that safety stoppages had cost it 76,000 ounces of lost production in the first quarter of 2012.

A government drive to reduce deaths in South Africa's deep and dangerous mines has led to more inspections that shut shafts and cut production.