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Harmony Gold Sets Sights on Papua New Guinea: Denver Gold Forum

Stocks in this article: HMY EGO NEM HL

COLORADO SPRINGS ( TheStreet ) -- Graham Briggs, chief executive officer of Harmony Gold (HMY), is still trying to diversify his company out of South Africa and into Papua New Guinea.

Ninety two percent of gold production in 2011 came from South Africa and 8% from Papua New Guinea. But 2011 gold equivalent resources are 79% in South Africa and 21% in Papa New Guinea. "We are reducing all the eggs we have at our South African basket," says Briggs.

The Wafi-Golpu mine is the key to this success, with 870 million tons of resources, 8.9 million tons of copper and 19.3 million ounces of gold. Briggs says the company is also trying to focus on grade, which has been improving, now at 0.82 grams per ton for the entire Wafi-Golpu resource base. Wafi-Golpu has the "highest grades for this type of project," says a video Briggs played during his presentation at the Denver Gold Forum, but "this type of project," was undefined, especially considering Randgold's grade is just under 4 grams per ton and NovaGold's grade at Donlin is at 2.2 grams per ton.

The first planned production for Wafi-Golpu is 2017 and by 2023 cash costs should fall from $1,000 an ounce to just over $500, which is why this project is labeled a "game changer" for the company.

Briggs reiterated his commitment to a dividend now at 0.6% but there was no word as to any increase. The company has been paying back shareholders for three years.

Eldorado Gold (EGO) will increase its dividend over the next few quarters with a 2% yield targeted, according to the company at the Denver Gold Forum.

This is the second year the miner has paid a dividend after it instituted the policy at $1,200 gold prices. "I am sure our board will reconsider options" at these record high gold prices, according to Eduardo E. Moura, vice president of corporate development. Currently the company's dividend is 0.6%.

Eldorado is among the miners to cave to pressure from investors to increase their payout. Newmont Mining (NEM) is the leader, tying its dividend to gold price targets. Hecla Mining (HL) followed today, linking its dividend to the average silver price sale in the previous quarter. Hecla's dividend will move by 1 cent per share for every $5 per ounce movement in the silver price.

Eldorado has 6 operating mines, one mine under construction and two development projects, and has exposure to some risky regions like Turkey and China. The company is trying to produce 1.5 million ounces of gold a year starting in 2015. For 2011, Eldorado will grow production by 15% to 725,000 ounces at cash costs of $410 per ounce.

Shares of Eldorado were rising 2.8% to $20.70.

More on Gold
Gold Price News
How to Invest in Gold

-- Written by Alix Steel in New York.

>To contact the writer of this article, click here: Alix Steel.

>To follow the writer on Twitter, go to

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.

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