(Adds CEO comment on 2009 production, updates share price)
By James Macharia
JOHANNESBURG, May 8 (Reuters) - Harmony Gold <HARJ.J>, the world's fifth-biggest gold producer, swung into profit in the third quarter boosted by a soaring gold price and lower costs, despite falling output owing to a power crunch in South Africa.
Harmony Gold Mining Co Ltd shone despite its operations being hit by power cuts, staff lay-offs due to a restructuring, and closure of continuous operations at some of its mines.
Gold output in the third quarter fell to 332,662 ounces from 398,764 ounces in the second quarter, with a loss of about 800 kg of gold, the company said in a statement.
On output for the fourth quarter, Chief Executive Graham Briggs said on a conference call: "I'm still cagey about providing the guidance, but the target during the quarter is in the order of 12.5 tonnes from continuing operations."
Harmony's output in the third quarter was 10.3 tonnes.
When asked about production for 2009, Briggs said later that the company was holding to the 12.5 tonnes per quarter figure, though he added that management was still working on its forecasts.
Harmony reported third-quarter headline earnings per share of 42 cents to end-March after posting a headline loss of 43 cents per share in the second quarter to end-December. Headline EPS strip out capital, non-trading and some extraordinary items, and is the key profit measure in South Africa.
Harmony's shares rose 2.27 percent to 90.92 rand on the Johannesburg Stock Exchange.
"The company's continuous operations performance was quite good despite the difficulties related to power, but there is still more to do in terms of high fixed costs base," said Shoaib Vayej, head of resources at Sanlam Investment Management.
Harmony's cash operating costs rose by 9.2 percent to 145,514 rand/kg from 133,234 rand/kg in the third quarter.
Briggs forecast a 125,000 rand/kg to 130,000 rand/kg in the fourth quarter to end-June.
Record metal prices have outweighed output declines by producers in South Africa, caught in the grip of power shortages. The gold miners benefit from a weaker rand currency because gold is sold in dollars.
A higher gold price of $944.40/ounce and a weaker, more favourable exchange rate of 7.43 rand per dollar saw Harmony's revenue climb to 2.3 billion rand ($305.6 million) from 2.1 billion rand in the second quarter.
Harmony's net profit rose to 164 million rand compared with a net loss of 195 million rand for the second quarter.
"They definitely benefited from a fantastic gold price, and are on the right track with new management, but are also coming off a stretch of losses, and the only way is up," Vayej said.
POWER CRUNCH
Harmony's output was hit as state-owned power utility Eskom [ESCJ.UL] struggled to provide sufficient power to the mines, after a near collapse in the electricity grid in January led to a five-day countrywide mine shutdown. Harmony said it was still receiving up to 90 percent of its normal power requirements.
But it hoped to push on with new projects, due to ramp-up to full capacity by 2010 and for which it had requested Eskom for 40 megawatts of additional power, the company said. Some analysts said the fact that the firm did not have enough power could hobble its desire to lift future output.
"We have been through some pain, but I am confident that we have turned the corner and can begin to build on the new foundation," Briggs said. "I'm looking forward to a good final quarter of 2008."
"Essentially we are up to 90 percent (of power supply). We have not pushed for the 95 percent like others, but we have requested for more power to ramp-up output at our new projects."
On staff cuts, the group shed 1,421 staff in the third quarter and has cut a total of 5,985 jobs over six months. The job cuts pushed total cash operating costs down by 8.9 percent to 1.5 billion rand ($199.3 million) in the second quarter. (Additional reporting by Paul Simao; editing by Elaine Hardcastle)
