Harmony Gold's Rising Costs: Can Margins Withstand the Pressure?

Harmony Gold Mining Co. Ltd. HMY saw a roughly 20% surge in all-in-sustaining costs (AISC) to $1,806 per ounce (oz) in the fiscal 2025 (ended June 30, 2025). Total cash operating costs also climbed 19% year over year to $1,499 per oz in the fiscal year, hurt by lower production and higher labor and electricity costs. Increased cash operating costs and higher sustaining capital led to the uptick in AISC. 

Harmony remains exposed to higher costs, which are likely to weigh on its margins over the near term. Labor and electricity remain the largest components of its cost structure.  

HMY experienced a 16% increase in electricity and water costs in fiscal 2025 due to higher annual tariffs charged by Eskom. While the company is implementing various energy-saving initiatives and launching a renewable energy program, the burden of higher electricity costs is unlikely to abate over the near term due to higher tariffs. The company’s AISC guidance for fiscal 2026 indicates a year-over-year increase, reflecting inflationary pressures and higher sustaining capital expenditures.  

Among its peers, AngloGold Ashanti plc AU saw higher total operating costs in the second quarter, including increased royalty expenses and costs associated with the initial inclusion of Sukari, elevated costs related to legacy TSFs and higher costs resulting from mining contractor rate adjustments. AngloGold Ashanti’s total cash costs per ounce were up 8%, while AISC per ounce increased 7%. AngloGold expects consolidated AISC in the band of $1,580- $1,705 per ounce in 2025.

Gold Fields Limited GFI reported a roughly 0.7% year-over-year decline in AISC to $1,739 per ounce in the second quarter. Gold Fields’ all-in cost rose around 2% year over year. Gold Fields sees AISC of $1,500-$1,650 per ounce and all-in cost between $1,780-$1,930 per ounce for full-year 2025.

HMY’s Price Performance, Valuation & Estimates

Shares of Harmony Gold have shot up 61.8% year to date against the Zacks Mining – Gold industry’s rise of 85.4%, thanks to a surge in gold prices.

From a valuation standpoint, HMY is currently trading at a forward 12-month earnings multiple of 4.61, a roughly 67.9% discount to the industry average of 14.36X. It carries a Value Score of B.

The Zacks Consensus Estimate for HMY’s fiscal 2026 earnings implies a year-over-year rise of 127.6%. The EPS estimates for fiscal 2026 have been trending higher over the past 60 days.

HMY stock currently carries a Zacks Rank #2 (Buy). 

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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