Assessing Horseman Capital’s 4Q14 key positions (Part 11 of 12)
(Continued from Part 10)
Horseman Capital and Harmony Gold Mining
Horseman sold its position in Harmony Gold Mining Company (HMY) in 4Q14. The position accounted for 2.30% of the fund’s 3Q14 portfolio.
Overview of Harmony Gold
Harmony Gold Mining has operations in South Africa and in Papua New Guinea. The company also has a 50% interest in the Morobe Mining Joint Ventures. In FY14, South Africa operations contributed 91% to total production of 1.17 million ounces (or Moz) of gold. As of June 30, 2014, attributable gold equivalent mineral reserves were 49.5 Moz, a year-over-year (or YoY) decrease of 3.9%. Attributable gold mineral resources were 133.8 Moz, a YoY decrease of 9.4%.
Harmony signed a joint venture (or JV) agreement with White Rivers Exploration. Harmony has 35% interest in the JV. The objective of the JV is to explore and develop potential gold resources.
Harmony’s net loss decreased in 1Q15
In the first quarter ending September 30, 2014, gold production was up 6% sequentially to 303,341 ounces. Revenue was up 18% sequentially to $412 million. Revenue was driven by a 16% increase in gold sales volume and a 2% increase in the Rand gold price.
Production profit was up by 8% sequentially, but the company recorded net loss of $25 million, driven by foreign exchange translation loss of $18 million and an increase in depreciation of $10 million. This was a reduction in net loss by 78% on a sequential basis. Net debt reduced from $98 million to $68 million.
Management said, “Harmony owns 50% of the spectacular Golpu ore body in Papua New Guinea, which has the potential to develop into a world-class copper gold mine and will allow us to sustain our business well into the future. Harmony remains undervalued and its successes are not currently factored into the share price.”
Horseman’s key positions in 4Q14
Horseman Capital added a new position in Alibaba (BABA). The fund increased its stake in TJX Companies (TJX), Vipshop Holdings (VIPS), BNY Mellon (BK), Wells Fargo (WFC), and Goldman Sachs (GS). The fund sold its positions in Comerica (CMA), Barrick Gold (ABX), IAMGOLD (IAG), and Harmony Gold (HMY). The fund reduced its stake in Newmont Mining (NEM).
In the next part of the series, we’ll discuss Horseman’s position change in Newmont Mining.
Continue to Part 12
Browse this series on Market Realist: