Harmony Gold expects profit surge despite $158 mln writedown

Aug 26 (Reuters) - Harmony Gold HARJ.J said on Monday it will report an increase in profit of at least 64%, driven by higher output, grades and metal prices but partially offset by a $158 million impairment of its Target North project. The Johannesburg-based precious metals miner said in what it described as a trading statement and operational update it expects its basic earnings per share for the year ended June 30 to come in at $0.72, compared to $0.44 US the previous year. On a headline basis, which strips out once-off items, Harmony expects to report a profit of at least $0.98 per share, more than double the $0.45 per share reported last year. Harmony said its production, which increased by 6% to 1.56 million ounces and exceeded a revised forecast of 1.55 million ounces, drove the surge in income. Increased grades at Harmony's South African mines as well as Hidden Valley mine in Peru also helped boost earnings at a time when gold prices rose to record levels. The miner said it had further written down the carrying value of its Target North asset in the Free State province after revising its mineral resource estimates following a recent exploration drilling programme conducted at the project. "The new geological model is more robust and differs from previous interpretations as a result of the new information obtained from the drilling," Harmony said. As a result, an impairment of 2.793 billion rand ($157.51 million) would be recognised for Target North. The company said it was delaying the release of its financial results by a week to Sept. 5 as auditors assess the impact of the asset revaluation. ($1 = 17.7326 rand) (Reporting by Nelson Banya; editing by David Evans) (([email protected];))