AngloGold Ashanti is one of the big gold poducers that has had a surprisingly good quarter.

Bruce Whitfield:
Well surprisingly, it would appear to have been a better quarter for the big gold producers. We heard this week from AngloGold Ashanti, tomorrow we will talk to Goldfields, tonight though, the turn of Graham Briggs, the chief executive officer of Harmony Gold. Better than expected financial performance in the first quarter but as the website miningmx.com put it; the March quarter flattered to deceive — which are hard words Graham Briggs I guess, referring to the benefit you received from the higher gold price, the weak rand, rather than spectacular operational performance.

Graham Briggs:
Hi Bruce, yes I mean I didn't like that headline particularly, but I mean this is a turnaround quarter for us. We have obviously done a huge amount of work and we didn't get all the production we wanted, it was a difficult January, a little bit of a difficult February, and you know by the time of the end of the quarter we were in a much better position.

Bruce Whitfield:
Now a difficult January made much more difficult by the fact that you had to cut back on your power consumption but you did utilise that to your advantage in terms of the restructuring that you have undertaken.

Graham Briggs:
Yes Bruce, we had already started our restructuring in the previous quarter and we continued it through this quarter so the power factor was just another issue that we had to address and we were in the process of you know making the business decision on all our operations and portions of operations where it didn't make sense.

Bruce Whitfield:
Now the power situation, I asked Mark Cutifani at AngloGold Ashanti the question this week and he was very cautious about the outlook, cautiously optimistic, but still cautious, saying that you know, he is not comfortable necessarily that we are out of the woods yet on the power front.

Graham Briggs:
Certainly not comfortable yet Bruce. You know, we don't get great executive decision-making from Eskom, I think operationally the guys on the ground are getting some good feedback and good information but you know, what of the future, where the future lies, it is very difficult to determine what we should do there.

Bruce Whitfield:
You did succeed in turning a profit, in the previous quarter you lost R195-million, this time round you made profits of R164-million and that is despite the fact that you actually, you know, had all things been equal, you actually would have produced 800 kg more gold in the quarter than you would have. The power situation certainly hurt you there and losing 800 kg of gold, what’s that, R200-million worth of gold?

Graham Briggs:
It is about 200-million depending on what your gold price but yes, it would be about 200-million at these gold prices.

Bruce Whitfield:
And that is obviously a significant blow. Are you going to make up do you think for that lost production in the quarter or is that production that has gone for some time?

Graham Briggs:
Unfortunately you know once you have lost that production you have lost it but you know we set ourselves up to get the wheels turning again and to get the production units really humming this quarter.

Bruce Whitfield:
What about grades? Investors disappointed with the grade quality, is that just also something that you have to sort of get bad grades sometimes to get the better quality ore out of the ground at another time? How does that actually work?

Graham Briggs:
Bruce our grades slightly down at 4.81 g per tonne from the previous quarter’s 4.87. If you look at the detail you would see that there is one or two operations that were badly affected but this sort of thing happens when you are restructuring, you know you do lose the ball on some of those areas. There is a focus on grade, a renewed focus, and we will certainly get that to where it should be.

Bruce Whitfield:
Continuous operations, conops, though hugely controversial. A lot of the investors didn't like conops. A nice theory and you have stopped them at Elandsrand at Sepeng as well; are conops actually in operation anywhere within Harmony now?

Graham Briggs:
Yes they are. Bruce they operate on target, on the decline areas of Evander and we have them at some areas on Cook but you know where it doesn't work we have canned it and we have reverted to the normal sort of operation of 11 day fortnight. It is not that we have got anything against conops but if it doesn't work then we can't continue operating like that.

Bruce Whitfield:
What was it though that didn't work about continuous operations because the theory to a layman is a good one where you are extracting maximum value, using your labour force to optimum levels and besides its dark down there all the time so you might as well utilise all the hours of the day you can?

Graham Briggs:
The theory obviously is that you should get the benefits of continuous operations but the reality is that people make continuous operations work and if you have got something very unpopular that doesn't seem to work, where you know people working on Saturdays and Sundays every now and again, they can you know, have their barbecue on Sunday and go and watch the rugby on Saturday, whatever the case may be, you know one needs to implement it correctly and get the people's hearts and minds in a place to get that thing working. Where people are against it they remain against it and they actually will make it fail if you don't implement it properly so it is people that is sort of behind these things and if you can get the benefits and reinvigorate the old way of working then that is exactly what we have done.

Bruce Whitfield:
The past six months you have seen 6000 jobs lost within Harmony as well - that is a pretty big chunk of your overall workforce isn't it?

Graham Briggs:
Yes it is a large number Bruce. You know we have done it so we have taken the pain. We have obviously had good cooperation from everybody in doing it, from now on we have got to the new foundation, we are now building up, some of our operations are actually going to increase in labour going forward. So I think we have taken the pain, a large number of people as you said, but we are ready to build the company again.

Bruce Whitfield:
How many people work at Harmony now?

Graham Briggs:
We have approximately 42 000 employees and probably another 5500 contractors.

Bruce Whitfield:
Okay so about 47 500, 48 000 people depend for their livelihoods on Harmony. You are looking to selectively I guess, employ people once again; is the restructuring of Harmony to the best of your knowledge because we can’t obviously forecast the future done?

Graham Briggs:
Yes, it is done. We have done all the hard work and taken all the pain and now we are in the process of getting productivity up and rebuilding the morale in the teams.

Bruce Whitfield:
Operating costs R145 000 a kilogram, the gold price at the moment R230 000 a kilogram or thereabouts; can you still make money if gold did in the unlikely scenario pull back to $650 or $700 an ounce?

Graham Briggs:
Our sort of way of working and planning at the moment is we are planning on a gold price of around R180 000 a kilogram, obviously, if it drops below that we will have to do some more restructuring but that is really what we have planned on our operations, they should make profits including the capital you know at R90 000 a kilogram.

Bruce Whitfield:
Graham Briggs, thanks very much indeed, the chief executive officer of Harmony Gold.