Shares of Harmony Gold fell 4% on Tuesday, after the South African company posted a 49% decline in profit and said it has paused a project to extend the mine life at its Tshepong operations, citing tough mining conditions and low grades.

Harmony’s headline earnings per share (HEPS) – the main profit measure for South African firms – came in at R4.99 for the year ended June 30, down from R9.87 last year.

Higher costs, lower production and impairment losses dented the miner’s annual profit.

An impairment of R4.433 billion was recorded during the reported period, mainly due to a reserve downgrade at its Tshepong operations that significantly affected their valuation.

The company had decided to pause its Tshepong Sub-75 project, which had proved to be technically and geologically complex, Harmony Chief Executive Officer Peter Steenkamp said.

“We had very difficult mining conditions. We had to prioritise our capital, and for that reason, we decided to put the Sub-75 project on hold,” Steenkamp said during an earnings call.

Harmony will re-direct capital towards better quality assets that would generate higher margins and grades, which could drive costs down, he said.

Higher costs of labour, electricity and consumables drove all-in sustaining costs (AISC) – an industry measure of production costs – 17% higher during the year.

Annual production came in 3% lower at 1.487 million ounces from 1.535 million ounces last year. Harmony expects to produce between 1.4 million ounces and 1.5 million ounces in the next financial year.

Harmony declared a dividend of 22 cents per share, bringing the total dividend for the year to 62 cents.