Harmony Gold (JSE: HAR) sees FY26 HEPS rise 73%-90% on stronger gold prices

Harmony Gold Mining Company Limited (JSE: HAR) expects FY26 headline earnings per share to surge between 73% and 90%, after a much higher realised gold price and the addition of copper revenue from the acquired CSA mine transformed the earnings profile of the South African producer. HEPS is expected between 4,050 and 4,450 South African cents compared with 2,337 cents in FY25, while basic earnings per share are forecast between 4,400 and 4,800 cents, representing growth of approximately 90% to 108%.

The midpoint of the HEPS range is 4,250 cents, about 82% above the prior-year result. Harmony will publish its full FY26 financial statements on August 27, so the trading statement does not yet provide the complete picture on cash flow, dividends, capital expenditure or balance-sheet movements, but the operating information already shows that higher commodity prices rather than production growth alone are doing much of the earnings work.

How much did higher gold prices contribute to Harmony Gold’s FY26 earnings?

Harmony’s average realised gold price increased 35.3% to R2,069,710 per kilogram, equivalent to US$3,811 an ounce, from R1,529,358 per kilogram or US$2,620 an ounce in FY25. Group gold production reached 44,464 kilograms, or approximately 1.43 million ounces, within company guidance, while underground recovered grade of 5.83 grams per tonne also landed within the guided range.

That combination is powerful because Harmony did not need a dramatic increase in ounces to achieve a major improvement in revenue per unit of production. Higher realised pricing flows through the income statement against a cost base that, while inflationary, did not increase at anything close to the 35% rise in the realised gold price.

All-in sustaining costs came in at R1,191,698 per kilogram, or US$2,195 an ounce, within guidance. The difference between the realised gold price of US$3,811 an ounce and reported AISC of US$2,195 illustrates the substantially wider commodity margin available during FY26 before corporate costs, taxation, financing and other items are considered.

What did the CSA copper mine add after the MAC Copper acquisition?

FY26 was also the first period in which Harmony’s earnings included a meaningful contribution from CSA following the acquisition of MAC Copper Limited. The Australian operation produced 18,207 tonnes of copper, near the top end of guidance, at an average recovered grade of 3.75%. Copper sales included in revenue amounted to 16,719 tonnes at an average realised price of US$5.62 per pound.

CSA therefore provides a genuine second commodity exposure rather than merely changing the company’s corporate description from gold miner to diversified producer. The strategic question is whether copper can become sufficiently large to reduce Harmony’s sensitivity to movements in the gold price over time.

That diversification carries a cost. Harmony recorded approximately R1.4 billion, or US$82 million, of MAC Copper acquisition-related expenses during FY26. Investors will therefore need the full-year accounts to distinguish the recurring operating contribution from CSA from transaction and integration costs associated with bringing the asset into the group.

Why are reported earnings also benefiting from impairment reversals?

Harmony expects to recognise approximately R2.8 billion, or US$165 million, of impairment reversals relating to Tshepong North, Tshepong South, Kusasalethu and Doornkop. The reversals reflect changes in valuation assumptions, including the stronger gold-price environment, and contribute to the particularly large increase in basic earnings.

That distinction is important when assessing earnings quality. HEPS removes specified non-recurring and capital items and is therefore generally more useful for comparing underlying performance, which is why the expected 73%-90% HEPS increase offers a cleaner signal than the possible doubling of basic EPS.

Harmony also flagged higher production costs, derivative losses and larger royalty and tax charges. Royalty expense is expected to rise by approximately R1.5 billion and taxation by around R2.3 billion, primarily because of the stronger profitability generated during the year.

Why did Harmony Gold shares jump 7.3% after the trading statement?

Harmony shares closed at R375.91 on August 21, up 7.32% for the session after reaching R382.59 intraday. The rise extended a strong run: the stock had closed at R325.58 on August 17, implying an increase of about 15.5% across the five trading sessions through August 21.

The market response reflects more than the headline earnings range. Harmony has demonstrated that it can keep gold production and costs inside guidance while capturing a much stronger gold price, and CSA gives investors additional exposure to elevated copper prices. That combination materially increases cash-generating potential if commodity prices remain supportive.

The August 27 results will determine how much of that stronger earnings performance has translated into cash, balance-sheet flexibility and shareholder distributions. They will also provide a clearer view of capital requirements at Harmony’s existing mines and growth projects.

The trading statement nevertheless establishes a strong starting point: FY26 appears set to deliver near-doubling headline earnings at the upper end of guidance without relying on a major increase in gold output. The sustainability of that earnings level will now depend heavily on gold and copper prices, cost control and the returns generated from Harmony’s expanding capital programme.