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Why Harmony Gold Rose Strongly after Beating Estimates

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Dec. 4 2020, Updated 3:53 p.m. ET

Harmony Gold’s fiscal 2Q16 Results

Harmony Gold’s (HMY) revenues came in higher than analysts’ estimates while its all-in sustaining costs were lower than market expectations. The company’s production rose 2% quarter-over-quarter, marking the third consecutive quarter of production growth. Harmony Gold’s revenues have risen 10% year-over-year, and 7% of this improvement is due to better gold prices while 3% is due to higher volumes sold.

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Stock price reacted positively

Investors reacted positively to the earnings as well as management’s upbeat commentary and outlook. The stock was up 9% following the results. It’s worth noting that HMY shares are up 350% since November 2015. The strength here is mainly due to the plunging rand, which is down ~10% against the US dollar since December 2015, and rising gold prices. These drivers have led gold prices, in rand terms, to rally ~20%.

As the above graph shows, other precious metal miners leveraged to the South African rand include Sibanye Gold (SBGL), AngloGold Ashanti (AU), and Gold Fields (GFI). These stocks have also outperformed gold prices (GLD) (IAU) and the gold miners index (GDX) since the start of 2016. GFI forms 3.3% of the VanEck Vectors Gold Miners ETF (GDX).

Series overview

In this series, we’ll analyze Harmony Gold’s 2Q16 earnings report and conference call. We’ll look at the firm’s production and cost performance. We’ll also see how management is trying to position the company in this volatile gold price environment.

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