Harmony Gold has become the latest gold miner to write-down its Papua New Guinea assets, as a sharp drop in bullion prices force mining companies globally to reassess the profitability of their mines.

An aerial view of the Hidden Valley gold mine. Credit: Morobe Mining Joint Venture/PNG Chamber of Mines and Petroleum

As we foreshadowed in May, South Africa’s third-largest gold producer said it was writing down up to US$280 million, mostly on the carrying value of its 50% holding in its Hidden Valley mine in Papua New Guinea.

‘The reason for the impairment is the reduction in the US dollar gold and silver prices and Hidden Valley’s poor production performance,’ according to Harmony’s Chief Executive Officer Graham Briggs.

Gold has fallen from almost US$1,700 per troy ounce to below US$1,300 within the past six months.

Bloomberg estimates miners worldwide have written down US$17 billion in assets in the past 16 months.

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Meanwhile, Melbourne law firm Slater and Gordon has confirmed the US group Comprehensive Legal Funding will fund a potential class action against Newcrest following allegations Newcrest engaged in misleading and deceptive conduct leading up to a corrective disclosure on 7 June.

The company then announced a US$6 billion reduction in the value of its assets with around half of the write down coming from Newcrest’s PNG operations.

In June, the board of Newcrest appointed former Australian Securities Exchange Chairman, Dr Maurice Newman AC, to conduct an independent review of the company’s disclosure and investor relations practices, following criticism of the write down announcement.

At the time, Chairman, Don Mercer, said: ‘We don’t think we’ve done anything wrong. Let’s be quite clear about that.’