The world's fifth largest gold miner Harmony said on Thursday that it had absorbed Eskom's 10 percent reduction in electricity supply because it was able to incorporate the "challenge" into its restructuring efforts.

"Our restructuring has had sweeping implications for Harmony in that some of our high electricity consumption work-areas and high-cost operations have had to be closed and Conops (continuous operations) terminated where it proved to be ineffective and inefficient."

The gold miner has, however, submitted a request to Eskom for additional power that would be required by the company's projects as they begin to ramp-up to full capacity.

Harmony was presenting its financial review for the third quarter ending 31 March 2008.

Restructuring complete

In its review, it said that its total cash operating costs were down by 8.9 percent, its cash operating profit rose to R828-million while headline earnings per share were 42 cents compared to a loss per share in the second quarter.

It further said that its restructuring had been completed and that the "benefits" would now flow.

"Harmony has been through another demanding and active quarter of streamlining our operations in line with our strategic objectives. Much has been accomplished in the last two quarters and I am pleased with our progress to date," said CEO Graham Briggs.

However, the company's restructuring phase has had some negative impacts and consequences on productivity.

The termination of Conops at three operations during the March 2008 quarter caused underground tonnages and, to some extent, the grade to drop due to the reduction of the labour force and, in some instances, transferring labour to other operations, Harmony said. However, external factors were also to blame.

"Harmony's operations experienced a loss of production due to this year's lengthy Christmas holiday period.

"The effects of a five-day power cut were felt and similarly when power was restored at 80 percent of our previous consumption and thereafter the resultant build-up phase from 80 percent to 90 percent power supply," the company said.

This resulted in an estimated total loss of more than 800 kilograms from Harmony's operations.

Sapa