Wrap Text
Results for the fourth quarter FY14 and year ended 30 June 2014
Harmony Gold Mining Company Limited
("Harmony" or "Company")
Incorporated in the Republic of South Africa
Registration number 1950/038232/06
JSE share code: HAR
NYSE share code: HMY
ISIN: ZAE000015228
Q4 FY14
Results for the fourth quarter FY14 and year ended 30 June 2014
KEY FEATURES
Year on year
- 3% increase in gold production to 36 453kg (1.17moz)
- 5% improvement in underground recovered grade at 4.77g/t
- 4% reduction in all-in sustaining costs for the year from R431 745/kg to
R413 433/kg; an 18% reduction in US$ terms from US$1 522/oz to US$1 242/oz
- 30% reduction in total capital expenditure from R3.6bn (US$412m) to
R2.5bn in FY14 (US$244m)
- Net loss of R1.27 billion was recorded in FY14 compared to a net loss of
R2.35 billion in FY13
- an impairment of R1.44 billion mainly in respect of the Phakisa decline shaft
- employment termination and restructuring cost of R274 million in FY14
- Headline earnings amounted to 26 SA cents per share (2.5 US cents)
- excluding Rand Refinery loss, headline earnings would be 55 SA cents
per share (5.3 US cents)
Quarter on quarter
- 7% increase in gold production to 8 935kg (287 266oz)
- All-in sustaining costs remained stable at R428 383/kg (US$ 1 267/oz)
- Headline earnings of 30 SA cents per share (2.9 US cents) for the June 2014
quarter
All figures represent continuing operations unless stated otherwise
RESULTS FOR THE Fourth QUARTER FY14 ENDED 30 June 2014
Year Year
Quarter Quarter Q – on– Q ended ended
June March variance June June %
2014 2014 % 2014 2013* Variance
– kg 8 935 8 368 7 36 453 35 374 3
Gold produced
– oz 287 266 269 035 7 1 171 987 1 137 297 3
– R/kg 341 864 343 527 1 328 931 324 979 (1)
Cash operating costs
– US$/oz 1 011 987 (2) 988 1 146 14
– kg 8 635 8 502 2 36 288 34 970 4
Gold sold
– oz 277 621 273 344 2 1 166 682 1 124 312 4
Underground grade – g/t 4.66 5.10 (9) 4.77 4.54 5
All–in sustaining – R/kg 428 383 426 221 (1) 413 433 431 745 4
costs – US$/oz 1 267 1 224 (4) 1 242 1 522 18
– R/kg 435 775 450 528 (3) 432 165 454 725 (5)
Gold price received
– US$/oz 1 289 1 294 – 1 299 1 603 (19)
– R million 847 924 (8) 3 794 4 581 (17)
Production profit*
–US$ million 81 85 (5) 367 519 (29)
Basic (loss)/earnings – SAc/s (282) 7 > (100) (293) (543) 46
per share*(1) – USc/s (27) 1 > (100) (28) (62) 55
– Rm 129 52 >100 114 224 (49)
Headline earnings
– US$m 12 5 >100 11 25 (56)
Headline earnings – SAc/s 30 12 >100 26 52 (50)
per share*(1) – USc/s 2.9 1.1 >100 2.5 5.9 (58)
* Comparative figures in these line items have been restated as a result of the adoption of IFRIC 20 – Stripping costs in the production
phase of a surface mine
(1) The year ended June 2013 include discontinued operations where indicated
Shareholder information
Issued ordinary share capital at 30 June 2014 435 825 447
Issued ordinary share capital at 31 March 2014 435 693 819
Issued ordinary share capital at 30 June 2013 435 289 890
Market capitalisation
At 30 June 2014 (ZARm) 13 576
At 30 June 2014 (US$m) 1 276
At 31 March 2014 (ZARm) 14 247
At 31 March 2014 (US$m) 1 355
At 30 June 2013 (ZARm) 15 562
At 30 June 2013 (US$m) 1 568
Harmony ordinary share and ADR* prices
12-month high (1 July 2013 – 30 June 2014)
for ordinary shares R42.47
12-month low (1 July 2013 – 30 June 2014)
for ordinary shares R24.48
12-month high (1 July 2013 – 30 June 2014)
for ADRs US$4.33
12-month low (1 July 2013 – 30 June 2014)
for ADRs US$2.36
Free float 100%
ADR* ratio 1:1
JSE Limited HAR
Range for quarter
R27.72 – R35.60
(1 April– 30 June 2014 closing prices)
Average daily volume for the quarter
946 701 shares
(1 April– 30 June 2014)
Range for quarter
R27.25 – R40.32
(1 January – 31 March 2014 closing prices)
Average daily volume for the quarter
1 031 429 shares
(1 January – 31 March 2014)
Range for year
R24.48 – R42.47
(1 July 2013 – 30 June 2014 closing prices)
Average daily volume for the year
1 216 789 shares
(1 July 2013 – 30 June 2014)
Range for year
R33.47 – R85.71
(1 July 2012 – 30 June 2013 closing prices)
Average daily volume for the year
1 753 866 shares
(1 July 2012 – 30 June 2013)
New York Stock Exchange including other
HMY
US trading platforms
Range for quarter
US$2.61 – US$3.34
(1 April– 30 June 2014 closing prices)
Average daily volume for the quarter
2 020 458
(1 April– 30 June 2014)
Range for quarter
US$2.52 – US$3.77
(1 January – 31 March 2014 closing prices)
Average daily volume for the quarter
3 102 376
(1 January – 31 March 2014)
Range for year
US$2.36 – US$4.33
(1 July 2013 – 30 June 2014 closing prices)
Average daily volume for the year
2 923 933
(1 July 2013 – 30 June 2014)
Range for year
US$2.30 – US$10.34
(1 July 2012 – 30 June 2013 closing prices)
Average daily volume for the year
2 484 062
(1 July 2012 – 30 June 2013)
Investors' calendar
Release of Harmony's Integrated Annual
23 October 2014
Report of FY14
Q1 FY15 presentation (webcast and
5 November 2014
conference calls only)
Annual General Meeting 21 November 2014
Q2 FY15 live presentation from Cape Town 9 February 2015
Q3 FY15 presentation (webcast and
8 May 2015
conference calls only)
Q4 FY15 live presentation from Johannesburg 18 August 2015
*ADR: American Depository Receipts
Harmony's Integrated Annual Report, the Sustainable Development
Information which serves as supplemental information to the
Integrated Annual Report and its annual report filed on a Form 20F
with the United States' Securities and Exchange Commission for
the financial year ended 30 June 2014 will be available on our
website (www.harmony.co.za/investors) on 23 October 2014.
CONTACT DETAILS
Corporate Office
Randfontein Office Park
PO Box 2, Randfontein, 1760, South Africa
Corner Main Reef Road/Ward Avenue
Randfontein, 1759, South Africa
Telephone: +27 (0)11 411 2000
Website: www.harmony.co.za
Directors
P T Motsepe* Chairman
J M Motloba*^ Deputy Chairman
G P Briggs Chief Executive Officer
F Abbott Financial Director
H E Mashego Executive Director
F F T De Buck*^ Lead independent director
J A Chissano*1^, K V Dicks*^, Dr D S S Lushaba*^,
C E Markus*^, M Msimang*^, K T Nondumo*^,
V P Pillay *^, J Wetton*^, A J Wilkens*
* Non-executive
^ Independent
1 Mozambican
Investor relations team
Email: HarmonyIR@harmony.co.za
Henrika Ninham
Investor Relations Manager
Tel: +27 (0)11 411 2314
Mobile: +27 (0)82 759 1775
Email: henrika@harmony.co.za
Marian van der Walt
Executive: Corporate and Investor Relations
Tel: +27 (0)11 411 2037
Mobile: +27 (0)82 888 1242
Email: marian@harmony.co.za
Company Secretary
Riana Bisschoff
Telephone: +27 (0)11 411 6020
Mobile: +27 (0)83 629 4706
E-mail: riana.bisschoff@harmony.co.za
South African Share Transfer Secretaries
Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
13th Floor, Rennie House
19 Ameshoff Street
Braamfontein, 2001
PO Box 4844, Johannesburg, 2000, South Africa
Telephone: +27 (0)86 154 6572
Fax: +27 (0)86 674 4381
ADR Depositary
Deutsche Bank Trust Company Americas
c/o American Stock Transfer and Trust Company
Peck Slip Station
PO Box 2050, New York, NY 10272-2050
Email queries: db@amstock.com
Toll free: +1-800-937-5449
Intl: +1-718-921-8137
Fax: +1-718-921-8334
Sponsor
J.P. Morgan Equities South Africa (Pty) Ltd
1 Fricker Road, corner Hurlingham Road
Illovo
Johannesburg, 2196
Private Bag X9936, Sandton, 2146, South Africa
Telephone: +27 (0)11 507 0300
Fax: +27 (0)11 507 0503
Trading Symbols
JSE Limited: HAR
New York Stock Exchange, Inc: HMY
Berlin Stock Exchange: HAM1
Registration number
1950/038232/06
Incorporated in the Republic of South Africa
ISIN
ZAE000015228
Competent person's declaration
Harmony reports in terms of the South African Code for Reporting of
Exploration Results, Mineral Resources and Mineral Reserves (SAMREC).
In South Africa Harmony appoints an ore reserve manager at each of its
operations who takes responsibility for the compilation and reporting
of mineral resources and mineral reserves at their operations. In PNG,
competent persons are appointed for the mineral resources and mineral
reserves for specific projects and operations.
The mineral resources and mineral reserves in this report are
based on information compiled by the following competent
persons:
Resources and Reserves South Africa: Jaco Boshoff, BSc (Hons),
MSc, MBA, Pr. Sci. Nat., who has 19 years' relevant experience and
is registered with the South African Council for Natural Scientific
Professions (SACNASP) and a member of the South African Institute of
Mining and Metallurgy (SAIMM).
Resources and Reserves Papua New Guinea: Gregory Job, BSc, MSc, who
has 26 years relevant experience and is a member of the Australasian
Institute of Mining and Metallurgy (AusIMM).
Mr Boshoff and Mr Job are full-time employees of Harmony Gold Mining
Company Limited. These competent persons consent to the inclusion
in the report of the matters based on the information in the form and
context in which it appears.
Mineral Resource and Reserve information as at 30 June 2014 is included
in this report.
FORWARD-LOOKING STATEMENTS
This quarterly report contains forward-looking statements within the
meaning of the United States Private Securities Litigation Reform Act of
1995 with respect to Harmony's financial condition, results of operations,
business strategies, operating efficiencies, competitive positions, growth
opportunities for existing services, plans and objectives of management,
markets for stock and other matters. Statements in this quarter that are
not historical facts are "forward-looking statements" for the purpose of
the safe harbour provided by Section 21E of the U.S. Securities Exchange
Act of 1934, as amended, and Section 27A of the U.S. Securities Act
of 1933, as amended. Forward-looking statements are statements that
are not historical facts. These statements include financial projections and
estimates and their underlying assumptions, statements regarding plans,
objectives and expectations with respect to future operations, products
and services, and statements regarding future performance. Forward-
looking statements are generally identified by the words "expect",
"anticipates", "believes", "intends", "estimates" and similar expressions.
These statements are only predictions. All forward-looking statements
involve a number of risks, uncertainties and other factors and we cannot
assure you that such statements will prove to be correct. Risks, uncertainties
and other factors could cause actual events or results to differ from those
expressed or implied by the forward-looking statements. These forward-
looking statements, including, among others, those relating to the future
business prospects, revenues and income of Harmony, wherever they may
occur in this quarterly report and the exhibits to this quarterly report,
are necessarily estimates reflecting the best judgement of the senior
management of Harmony and involve a number of risks and uncertainties
that could cause actual results to differ materially from those suggested
by the forward-looking statements. As a consequence, these forward-
looking statements should be considered in light of various important
factors, including those set forth in this quarterly report. Important factors
that could cause actual results to differ materially from estimates or
projections contained in the forward-looking statements include, without
limitation: overall economic and business conditions in the countries in
which we operate; the ability to achieve anticipated efficiencies and other
cost savings in connection with past and future acquisitions; increases
or decreases in the market price of gold; the occurrence of hazards
associated with underground and surface gold mining; the occurrence of
labour disruptions; availability, terms and deployment of capital; changes
in government regulations, particularly mining rights and environmental
regulations; fluctuations in exchange rates; currency devaluations and
other macro-economic monetary policies; and socio-economic instability
in the countries in which we operate.
Section 45 (5) (a) compliance announcement
ANNOUNCEMENT FOR COMPLIANCE REASONS ONLY: NOTICE, AS
REQUIRED IN TERMS OF SECTION 45 (5) (a) OF THE COMPANIES ACT,
71 OF 2008 (THE ACT) FOR THE GRANTING OF FINANCIAL ASSISTANCE
Notice is hereby given, as required in terms of section 45 (5) (a) of the
Act that the Board of directors (the Board) of the company at a meeting
held on 11 August 2014, authorised the company to provide financial
assistance to any 1 (one) or more related or inter-related companies
or corporations of the Company and/or to any 1 (one) or more juristic
persons who are members of, or are related to, any such related or
inter-related company or corporation in terms of section 45 of the Act,
pursuant to the authority granted to the Board by shareholders at the
annual general meeting of the company, held on 5 December 2013.
The aggregate financial exposure of the Company in respect of any
financial assistance in terms of this resolution shall not exceed R1 billion.
In terms of section 45 (3) (b) of the Companies Act, the Board is
satisfied that:
- immediately after providing financial assistance, the Company
would satisfy the solvency and liquidity test as set out in section 4
of the Act; and
- the terms under which the financial assistance is proposed to be
given under the resolution are fair and reasonable to the Company.
Message from the chief executive officer
1. Our strategy
We revisit our strategy throughout the year to ensure that it remains
relevant and appropriate, while being responsive and adaptive to both
internal and external changes. The Harmony board met early in July
2014 to revisit the company strategy.
We believe that Harmony has four key advantages:
- We continuously regenerate ourselves in order to be efficient
miners – we keep our costs down, ensure future growth and
profitability, and are willing to make difficult decisions that will serve
our company in the long run. All decisions are made based on our
values, with safety being our core value.
- We are experienced explorers, mine developers and operators
in emerging economies. We have a diversified portfolio as well as
a significant exploration land holding in one of the most prospective
geological areas in the world (PNG). In addition, we invest time and
money into building win-win relationships with our stakeholders
that allow us to confidently manage our socio-political environment
and earn our social license to operate.
- We fund our own capital to ensure future growth and
profitability and invest in our assets even during lower gold price
cycles, allowing us to have low debt, financial flexibility and be
highly geared against the gold price.
- Golpu is a large resource of high-grade, low cost copper and
gold. A concept study is progressing on a scalable mine,
which will require less capital to start up, but has the potential for a
long life that will be flexible and adaptable in multiple copper price
cycles. We are also de-risking its development thanks to our project
development experience, our operational base and support services
in PNG and the orebody's high grade zones.
We want Harmony to be safe, highly profitable and generate the cash
necessary to underpin the development of Golpu, be a sought-after
investment, be robust at any gold or copper price, have a diverse risk
portfolio (with exposure to South Africa, PNG, gold and copper) and to
continue growing our quality ounces. Our strategy for 2015 to 2020,
is to improve our margins through safely delivering on our plans and
increase free cash flow through higher grades and cost control; retain
a flexible balance sheet; grow our value per share of our PNG assets,
complete the Golpu studies and it is our intention to build the Golpu mine.
We also intend identify acquisition opportunities of open pit mines and
bulk projects outside South Africa.
2. Safety
Safety will continue to be Harmony's first priority. Safety workshops
are ongoing and we have increased our efforts to communicate safety
messages to all employees. Our messages stress the value of each life
and encourage employees to stick to safety standards, to think before
they act and to act on their right to withdraw from an unsafe area.
High level audits are ongoing; regular underground visits by members of
the executive team and management take place and there are full time
safety representatives at each mine.
Although we manage our capital expenditure in a conservative manner,
it is not done at the expense of safety. Safety comes before production.
Our executive team is involved in a number of industry initiatives in
which leading practices are applied, which have the potential to improve
health and safety performance significantly. Safety is taken seriously at
all levels and takes priority in everything we do.
The lost time- and fatality injury frequency rates have shown an
improvement quarter on quarter and a number of operations achieved
excellent safety results. It is with great sadness though that three
employees lost their lives in three separate accidents during the quarter.
My heartfelt condolences go to the family, friends and colleagues of:
Moji Augustinus Matela (team leader at Tshepong), Amos Twala (team
leader at Bambanani) and Soba Mboyana (winch operator at Masimong).
An independent review of the Harmony safety strategy was conducted
during the quarter and actions were implemented based on the
recommendations.
More information on how we approach safety can be found in our safety
fact sheet at http://www.harmony.co.za/investors/news-and-events/
fact-sheets. Details on our safety performance for the past year and
our targets for the coming financial year can be found in our integrated
report, which will be published towards the end of October 2014.
3. International Mining Industry Underwriters' (IMIU) risk assessment
Our mining assets are insured for both business interruption as well as
property risk. IMIU is a globally recognised market leader in insuring all
types of mining, including underground exposures and is one of the
lead insurers partaking in Harmony's asset insurance programme. All
our mining assets are subject to an annual risk assessment by specialist
engineers and IMIU's technical team assesses the merits of each and
every risk that IMIU underwrites.
Harmony commenced with the annual IMIU surveys during 2003. Of
significance is the continuous improvement in our operations' scores
in comparison with IMIU's global average score. IMIU's 2014 global
mining average is calculated based on 390 mining operations surveyed
worldwide. 93% of Harmony's operations scored higher than the
global average during 2014 in respect of the measures implemented
to manage property and machinery risks. Overall, based on IMIU's
insurability matrix, a steep improvement in our operations' overall
property risk management has been evident especially over the past
3 years. This is indicative of the continued capital investment in our
infrastructure to maintain safe operating conditions.
Our South African asset portfolio is subject to routine maintenance
which is facilitated through an electronic system, as well as systemised
continuous condition monitoring protocols. We continue to invest in
security upgrades, metallurgical plant upgrades as well as the upgrade
and continuous maintenance of our existing asset portfolio.
4. Gold market
Harmony remains bullish about gold in the long term. Following the
sharp price decline during 2013, capital expenditure in the gold industry
has been reduced and many projects have been stalled or delayed. This
is expected to lead to a reduction in world gold production, possibly
from as early as 2015. Demand from central banks, especially in the
East, is increasing and the long term demand trend for gold bars
and coins is rising with a notable increase in demand from the East.
In addition, total exchange traded funds' holdings have stabilised
and physical demand rebounds strongly when the price declines. This
confirms gold's long history as an investment tool and store of value. It
remains a secure investment and while the price may fluctuate, gold will
always be in demand.
The average rand gold price received decreased from R454 725/kg in
financial year 2013 (FY13) to R432 165/kg in financial year 2014 (FY14).
The decrease was the result of a 19% decrease in the US dollar gold price
received for FY14 – from US$1 603/oz to US$1 299/oz. The decrease
in the US dollar gold price was partially offset by the weakening of the
rand against the US dollar in FY14 to R10.35/US$ (R8.82/US$ in FY13).
5. Operational results
Year on year
Gold production for FY14 increased by 3% to 36 453kg, compared to
35 374kg for financial year 2013, with a 4% decrease in all-in sustaining
costs from R431 745/kg in FY13, to R413 433/kg in FY14.
The following operations showed marked improvements year on year:
- Kusasalethu (+1 954kg) increased its recovered grade by 7% from
3.85g/t to 4.11g/t. The previous year was severely affected by strikes
and the increase in gold production in FY14 indicates the beginning
of a return to normal production levels.
- Bambanani (+970kg) increased its recovered grade by 28% to
12.50g/t, while tonnes milled increased by 26% year on year, as the
shaft pillar mining begins to ramp up.
- Hidden Valley (+648kg) had a significant turn around in its
performance during FY14. A 15% improvement in the gold recovery
grade was achieved (from 1.43g/t for FY13 to 1.65g/t in the year
under review), while 9% more tonnes (at 2 001 000t) were milled
during the year.
- Phakisa (+542kg) continues to build up its production, with a 13%
increase in tonnes milled at 577 000t year on year. The recovered
grade also improved by 9%, from 4.75g/t to 5.16g/t.
- Target 1 (+526kg) had a very good year, with a 5% improvement in
recovered grade to 5.83g/t, well above its reserve grade combined
with an 8% increase in tonnes milled at 771 000t.
The following operations' year on year performance was less
encouraging:
- Doornkop (-1 028kg) – the accident in the March 2014 quarter and
the closure of the Kimberley reef section resulted in a 2% decrease in
recovered grade to 3.53g/t, while tonnes milled were also adversely
affected.
- Masimong (-898kg) underperformed during the year with a 3%
decrease in recovered grade and a 23% decrease in tonnes milled
(from 868 000t to 670 000t).
- Joel (-893kg) suffered losses due to the shaft bottom that was
flooded. Although this has been rectified, Joel's recovery grade was
19% lower year on year at 4.26g/t and in FY14, tonnes milled for
FY14 also decreased by 10%.
- Dumps (-376kg) milled 13% less tonnes in FY14 and recovery grade
was 18% lower at 0.31g/t (FY13:0.38g/t).
- Target 3's (-213kg) recovered grade decreased by 7% year on year
(from 5.03g/to to 4.69g/t) while tonnes milled decreased by 7% to
301 000t.
- Kalgold (-170kg) recorded a lower recovery grade for FY14 at 0.79g/t
and throughput increased by 5% to 1 472 000t.
Production profit for FY14 was R3.8 billion compared to R4.6 billion in
FY13, mainly due to a 5% decrease in the rand gold price received and
a 4% (R495 million) increase in cash operating costs for FY14.
Operational capital expenditure for FY14 decreased by 19%
to R2.5 billion as planned, compared to R3.1 billion in FY13, mainly
due to a decrease in capital expenditure at Hidden Valley in Papua New
Guinea (PNG).
Quarter on quarter
Gold production for the June 2014 quarter increased by 7% (567kg)
from 8 368kg in the March 2014 quarter to 8 935kg in the June quarter.
All-in sustaining costs remained steady at R428 383/kg.
Production profit for the quarter was R847 million compared to
R924 million in the March 2014 quarter, mainly due to a lower rand
gold price. The rand gold price received decreased by 3% from
R450 528/kg in the March 2014 quarter to R435 775/kg in the June
2014 quarter. The decrease was as a result of the rand dollar exchange
rate strengthening by 3% against the US dollar to R10.51/US$. The
US dollar gold price received for the June 2014 quarter of $1 289/oz,
was slightly lower than in the March quarter 2014.
Cash operating costs increased by 6% (R180 million) in the June 2014
quarter, mainly due to an increase in consumables as well as higher
winter electricity tariffs for the South African operations.
Capital expenditure for the June 2014 quarter increased by 17% to
R676 million, compared to R579 million in the March 2014 quarter,
mainly at the South African underground operations.
6. OUR FY15 BUSINESS PLANS
We completed our business plans for FY15 in August 2014. Particular focus
was placed on the following:
- improving operating margins
- robust and realistic operating planning
- increasing free cash flow through higher grades and cost control
- capital expenditure which ensures returns are made within a
reasonable period of time.
We believe that our FY15 business plans adhere to the factors set
out above. Every effort will be made to ensure that our performance
exceeds market expectations.
7. Financial results
Year on year
Revenue
The 4% increase in gold sold from 34 970kg in FY13 to 36 288kg in
FY14, was more than offset by a 5% decrease in average gold price
received, resulting in a decrease in revenue of R220 million year on year.
Production costs
The annual production cost increase was well contained from
R11.3 billion in FY13 to R11.9 billion in FY14, or 5%, despite high
electricity and labour cost increases.
Other items in cost of sales
Other items included in cost of sales for the year ended 30 June 2014
include employment termination and restructuring costs of R274 million
relating mainly to the voluntary retrenchment packages offered in South
Africa and the restructuring at the Hidden Valley operation.
Loss per share
The loss per share of 293 SA cents for the year ended 30 June 2014
reduced from the loss per share of 543 SA cents for the year ended
30 June 2013.
Borrowings
Total borrowings increased by R322 million to R2 860 million in the year
ended 30 June 2014. This is due to a total drawdown of US$60 million
(R612 million) and a foreign exchange translation loss of R155 million
recorded on the US$ syndicated facility during the year. This was partially
offset by the repayment of R467 million made during the year on the
Nedbank revolving credit facility.
Quarter on quarter
Impairment of assets
The impairment in the June 2014 quarter consists of an impairment of
R1.38 billion in respect to Phakisa (includes goodwill of R1.31 billion), R7 million
on Steyn 2 and R21 million on St Helena, following the annual life-of-
mine reassessment.
The impairment recorded in respect of Phakisa resulted from the combination of
a number of factors, including the removal of the decline project from
the business plan, new revenue and cost estimates in the business plan,
and using higher discount rates as determined by market parameters.
(Loss)/profit from associates
The June 2014 quarter includes the provision of the loss related to the
inventory discrepancy at Rand Refinery of R127 million.
Deferred taxation
A deferred tax credit of R337 million was recorded following the net
decrease in the deferred tax rates year on year for the South African
companies.
Net (loss)/profit
The net loss for the June 2014 quarter was R1.22 billion, compared to
a net profit of R31 million in the March 2014 quarter, mainly due to the
impairment of R1.41 billion recorded.
(Loss)/profit per share
The loss per share of 282 SA cents in the June 2014 quarter reduced
from the earnings per share of 7 SA cents in the March 2014 quarter.
Non-current assets and assets of disposal groups classified as
held for sale
The sale of the investment in Witwatersrand Consolidated Gold
Resources Limited (Wits Gold) was completed during the June 2014
quarter and the consideration for the sale of R51 million was received
in April 2014. The accumulated gains of R14 million were reclassified to
the income statement and resulted in a profit on disposal.
8. Golpu
The Golpu resource definition drilling program is now complete for FY14
and there are no new assay results to report this quarter. A conceptual
study report on four, high-grade, sub-level cave start-up mine options
was completed which has progressed into pre-feasibility study.
Mine options at 2.5 Mtpa and 5 Mtpa were selected for progression to
pre-feasibility study level which will be completed when the gated
process has been completed toward the end of the calendar year.
9. Employee relations
The labour relations climate in Harmony and in the gold sector has
remained relatively stable over the quarter under review.
10. Bio-energy project
Harmony is implementing a bio-energy project involving the procreation
of biocrops on mine-impacted land in the Free State to generate natural
gas as a substitute for fossil fuels in the company's Harmony 1 Gold
Plant elution and carbon regeneration circuits. Phase 1 of the project
aims to deliver 71,000GJ of energy within 18 months with production
being ramped up to generate 187,000GJ within 36 months. This project
aims to turn mine-impacted land to account by creating a value-adding
use for it and, in so doing, promote skills development and job creation
for communities and ensure a sustainable legacy in the Free State.
As part of this process, we will convert electrical and polyfuel heating of
elution water at our gold plants to biogas heating.
11. In conclusion
Our strategy is to focus on improving our margins, growing the value
per share of our PNG assets and we intend identifying acquisition
opportunities outside South Africa. We remain committed to positioning
Harmony as a competitive, value focused gold mining company.
Graham Briggs
Chief Executive Officer
Summary update of Harmony's Mineral Resources and Mineral Reserves as at 30 June 2014
Harmony's statement of Mineral Resources and Mineral Reserves as
at 30 June 2014 is produced in accordance with the South African
Code for Reporting of Exploration Results, Mineral Resources and
Mineral Reserves (SAMREC) and the Australasian Code for Reporting of
Exploration Results, Mineral Resources and Ore Reserves (JORC).
This report only provides a summary of the update, while the
detailed statement of the Mineral Resources and Mineral Reserves
will be published in the Integrated Report on 23 October 2014,
which will be available at www.harmony.co.za/investors. The Mineral
Resources are reported inclusive of the Mineral Reserves. We use
certain terms in this summary such as 'Measured', 'Indicated'
and 'Inferred' Resources, which the United States' (US) Securities
and Exchange Commission (SEC) guidelines strictly prohibit
US-registered companies from including in their filings with the SEC.
US investors are urged to closely consider the disclosure in our Form
20-F which will also be available after 23 October 2014.
The Company's attributable gold equivalent Mineral Resources are
declared as 133.8 million ounces (Moz) as at 30 June 2014, a 9.4%
decrease year-on-year from the 147.7Moz declared on 30 June 2013.
The 9.4% decrease collectively represents depletion during the year
and geology related changes. The gold Resource ounces in South
Africa represent 69%, while Papua New Guinea (PNG) gold and gold
equivalent ounces represent 31% of Harmony's total gold equivalent
Resources as at 30 June 2014.
As at 30 June 2014, Harmony's attributable gold equivalent Mineral
Reserves amounted to 49.5Moz of gold, a 3.9% decrease from the
51.5Moz declared on 30 June 2013. The 3.9% decrease collectively
represents depletion during the year, a change in Reserves from surface
sources together with some scope changes at some of the underground
operations. The gold Reserve ounces in South Africa represent 57%
while the PNG gold and gold equivalent ounces represent 43% of
Harmony's total Reserves as at 30 June 2014.
There are no changes in the Reserves of Wafi-Golpu (jointly held by
Harmony and Newcrest Mining Limited in a 50/50 joint venture) since the
pre-feasibility study was completed in 2012. Changes to the Resources
are as a result of additional drilling and a more robust geological model.
On a 100% basis, Golpu continues to host high grade, quality Reserves
of 450Mt, containing 12.4Moz of gold and 5.4 million tonnes (Mt) of
copper.
In converting the Mineral Resources to Mineral Reserves the following
parameters were applied:
- for the South African assets a gold price of R425 000/kg;
- the Hidden Valley operations and Wafi-Golpu project in the Morobe
Mining Joint Venture applied prices of US$1 250/oz Au, US$21/oz Ag,
US$15/lb Mo and US$3.10/lb Cu. For Wafi-Golpu, gold
equivalent ounces are calculated assuming a US$1400/oz Au and
US$3.10/lb Cu and for Hidden Valley US$23.00/oz Ag with 100%
recovery assumed for all metals.
Harmony's South African Mineral Resources were reviewed and
audited by SRK Consulting Engineers and Scientists for compliance
with SAMREC. The Golpu Mineral Resources were audited by AMC
Consultants Pty Ltd for compliance with the standards set out in JORC
Code. Other Harmony Papua New Guinea Mineral Resources and Ore
Reserves have been reviewed in previous years, but these reviews were
not updated for this declaration as there have been no material changes
to calculation methodologies.
Note: Au = gold; Cu = copper; Ag = Silver, Mo = Molybdenum
Summary of Mineral Resources and Mineral Reserves as at 30 June 2014
Measured Indicated Inferred Total
Tonnes Gold Tonnes Gold Tonnes Gold Tonnes Gold
Resources (Mt) g/t '000oz (Mt) g/t '000oz (Mt) g/t '000oz (Mt) g/t '000oz
SA underground 77.7 9.31 23 242 83.4 9.25 24 808 155.2 7.07 35 262 316.3 8.19 83 312
SA surface incl Kalgold 391.3 0.28 3 594 680.0 0.23 5 198 51.3 0.47 769 1 122.6 0.26 9 561
Total South Africa 469.0 26 836 763.4 30 006 206.5 36 031 1 438.9 92 873
Hidden Valley* 1.2 1.15 44 48.7 1.59 2 505 2.8 1.24 112 52.7 1.57 2 661
Wafi-Golpu system* – 484.9 0.74 11 580 140.0 0.59 2 649 624.9 0.71 14 229
Total Papua New Guinea 1.2 44 533.6 14 085 142.8 2 761 677.6 16 890
Total gold Resources 470.2 26 880 1 297.0 44 091 349.3 38 792 2 116.5 109 763
Hidden Valley – gold
equivalent ounces* 14 792 45 850
Wafi-Golpu – gold
equivalent ounces* 19 521 3 620 23 141
Total Gold Equivalen
Resources 470.2 26 894 1 297.0 64 404 349.3 42 457 2 116.5 133 754
Proved Probable Total
Tonnes Gold Tonnes Gold Tonnes Gold
Reserves (Mt) g/t '000oz (Mt) g/t '000oz (Mt) g/t '000oz
SA underground 54.4 5.71 9 978 54.4 5.67 9 924 108.8 5.69 19 902
SA surface incl Kalgold 361.0 0.28 3 303 608.7 0.24 4 739 969.7 0.26 8 042
Total South Africa 415.4 13 281 663.1 14 663 1 078.5 27 944
Hidden Valley* 1.1 1.13 41 27.0 1.78 1 547 28.1 1.76 1 588
Wafi-Golpu system* 225.0 0.86 6 194 225 0.86 6 194
Total Papua New Guinea 1.1 41 252.0 7 741 253.1 7 782
Total gold Reserves 416.5 13 322 915.1 22 404 1 331.6 35 726
Hidden Valley – gold equivalent ounces* 11 456 466
Wafi-Golpu – gold equivalent ounces* 13 265 13 265
Total Gold Equivalent Reserves 416.5 13 333 915.1 36 125 1 331.6 49 457
*Represents Harmony's 50% portion
OPERATIONAL RESULTS – Quarter on quarter (Rand/Metric) (US$/Imperial)
South Africa
Underground production Surface production
Three Total
months Bambanani Total Total South Hidden Total
ended Kusasalethu Doornkop Phakisa Tshepong Masimong Target 1 Steyn 2 Joel Unisel Target 3 Underground Phoenix Dumps Kalgold Surface Africa Valley Harmony
Jun-14 286 161 146 247 156 206 49 152 98 71 1 572 1 564 649 388 2 601 4 173 525 4 698
Ore milled – t'000
Mar-14 226 102 138 232 164 181 61 88 95 73 1 360 1 483 620 356 2 459 3 819 467 4 286
Jun-14 1 353 532 763 1 188 616 998 549 619 392 311 7 321 192 225 268 685 8 006 929 8 935
Gold produced – kg
Mar-14 929 434 752 1 024 660 1 173 806 345 458 360 6 941 201 155 255 611 7 552 816 8 368
Jun-14 43 500 17 104 24 531 38 195 19 805 32 086 17 651 19 901 12 603 9 999 235 375 6 173 7 234 8 616 22 023 257 398 29 868 287 266
Gold produced – oz
Mar-14 29 868 13 953 24 177 32 922 21 219 37 713 25 914 11 092 14 725 11 574 223 157 6 462 4 983 8 198 19 643 242 800 26 235 269 035
Jun-14 4.73 3.30 5.23 4.81 3.95 4.84 11.20 4.07 4.00 4.38 4.66 0.12 0.35 0.69 0.26 1.92 1.77 1.90
Yield – g/tonne
Mar-14 4.11 4.25 5.45 4.41 4.02 6.48 13.21 3.92 4.82 4.93 5.10 0.14 0.25 0.72 0.25 1.98 1.75 1.95
Cash operating Jun-14 349 534 521 910 367 172 296 997 396 333 283 327 301 040 283 733 379 821 447 550 346 871 352 250 340 707 372 201 356 264 347 675 291 793 341 864
– R/kg
costs Mar-14 463 848 582 786 335 239 325 056 356 248 219 864 209 318 450 803 322 395 382 311 341 644 279 746 441 426 404 459 372 810 344 166 337 621 343 527
Cash operating Jun-14 1 034 1 544 1 086 879 1 173 838 891 839 1 124 1 324 1 026 1 042 1 008 1 101 1 054 1 029 863 1 011
– US$/oz
costs Mar-14 1 332 1 674 963 934 1 023 632 601 1 295 926 1 098 981 804 1 268 1 162 1 071 989 970 987
Cash operating Jun-14 1 654 1 725 1 919 1 428 1 565 1 373 3 373 1 155 1 519 1 960 1 615 43 118 257 94 667 516 650
– R/tonne
costs Mar-14 1 907 2 480 1 827 1 435 1 434 1 425 2 766 1 767 1 554 1 885 1 744 38 110 290 93 681 590 671
Jun-14 1 131 458 759 1 181 612 1 103 545 544 390 344 7 067 204 225 273 702 7 769 866 8 635
Gold sold – Kg
Mar-14 1 118 491 722 983 634 1 035 774 390 440 317 6 904 220 158 321 699 7 603 899 8 502
Jun-14 36 362 14 725 24 402 37 970 19 676 35 462 17 522 17 490 12 539 11 060 227 208 6 559 7 234 8 777 22 570 249 778 27 843 277 621
Gold sold – oz
Mar-14 35 944 15 786 23 213 31 604 20 384 33 276 24 884 12 539 14 146 10 192 221 968 7 073 5 080 10 320 22 473 244 441 28 903 273 344
Jun-14 493 055 195 768 332 058 516 839 268 045 482 003 238 972 238 095 170 550 149 999 3 085 384 89 208 93 668 119 767 302 643 3 388 027 374 891 3 762 918
Revenue (R'000)
Mar-14 500 510 223 445 326 249 444 215 286 428 466 477 348 599 176 285 198 666 142 729 3 113 603 97 738 71 013 142 303 311 054 3 424 657 405 728 3 830 385
Cash operating Jun-14 472 920 277 656 280 152 352 833 244 141 282 760 165 271 175 631 148 890 139 188 2 539 442 67 632 76 659 99 750 244 041 2 783 483 271 076 3 054 559
(R'000)
costs Mar-14 430 915 252 929 252 100 332 857 235 124 257 900 168 710 155 527 147 657 137 632 2 371 351 56 229 68 421 103 137 227 787 2 599 138 275 499 2 874 637
Inventory Jun-14 (83 364) (33 881) (5 436) (11 891) (3 134) 21 428 2 285 (15 350) (1 117) 10 593 (119 867) 786 (203) 3 388 3 971 (115 896) (23 155) (139 051)
(R'000)
movement Mar-14 64 740 20 837 (11 605) (15 785) (9 651) (36 805) (11 689) 3 609 (6 375) (19 718) (22 442) 5 483 (415) 17 747 22 815 373 30 997 31 370
Jun-14 389 556 243 775 274 716 340 942 241 007 304 188 167 556 160 281 147 773 149 781 2 419 575 68 418 76 456 103 138 248 012 2 667 587 247 921 2 915 508
Operating costs (R'000)
Mar-14 495 655 273 766 240 495 317 072 225 473 221 095 157 021 159 136 141 282 117 914 2 348 909 61 712 68 006 120 884 250 602 2 599 511 306 496 2 906 007
Jun-14 103 499 (48 007) 57 342 175 897 27 038 177 815 71 416 77 814 22 777 218 665 809 20 790 17 212 16 629 54 631 720 440 126 970 847 410
Production profit (R'000)
Mar-14 4 855 (50 321) 85 754 127 143 60 955 245 382 191 578 17 149 57 384 24 815 764 694 36 026 3 007 21 419 60 452 825 146 99 232 924 378
Jun-14 9 844 (4 566) 5 454 16 730 2 571 16 913 6 793 7 401 2 167 20 63 327 1 977 1 636 1 582 5 195 68 522 12 076 80 598
Production profit (US$'000)
Mar-14 449 (4 647) 7 921 11 742 5 629 22 662 17 694 1 584 5 300 2 292 70 626 3 328 277 1 978 5 583 76 209 9 165 85 374
Capital Jun-14 142 781 59 675 96 274 82 806 46 330 75 609 39 240 36 572 23 209 28 923 631 419 683 3 100 7 026 10 809 642 228 33 561 675 789
(R'000)
expenditure Mar-14 115 731 54 634 74 573 71 374 43 154 88 100 25 121 28 339 20 524 27 095 548 645 696 2 877 5 478 9 051 557 696 21 225 578 921
Jun-14 13 581 5 676 9 157 7 876 4 407 7 192 3 732 3 479 2 208 2 751 60 059 65 295 668 1 028 61 087 3 192 64 279
Capital
(US$'000)
expenditure Mar-14 10 688 5 046 6 887 6 592 3 985 8 136 2 321 2 617 1 895 2 502 50 669 64 266 506 836 51 505 1 960 53 465
Adjusted Jun-14 348 804 548 431 368 133 294 107 395 334 279 358 312 620 299 867 385 498 444 310 347 984 335 444 339 804 396 904 360 742 349 039 288 118 342 933
– R/kg
operating costs Mar-14 447 045 556 494 340 244 329 294 357 868 218 341 229 506 414 909 328 059 378 538 345 144 280 602 430 417 381 105 360 620 346 691 335 115 345 467
Jun-14 1 032 1 622 1 089 870 1 170 826 925 887 1 140 1 314 1 029 992 1 005 1 174 1 067 1 033 847 1 015
Adjusted
– US$/oz
operating costs Mar-14 1 284 1 599 977 946 1 028 627 659 1 192 942 1 087 991 806 1 236 1 095 1 036 996 955 992
All-in sustaining Jun-14 489 102 688 392 491 231 375 224 485 991 358 028 362 042 344 922 459 398 538 569 442 360 338 792 363 737 434 223 383 899 437 028 350 783 428 383
– R/kg
costs Mar-14 566 448 677 873 454 007 415 208 443 606 315 767 255 333 468 583 391 820 476 358 434 202 283 766 465 069 411 143 383 242 429 210 400 943 426 221
Jun-14 1 447 2 037 1 453 1 110 1 438 1 059 1 071 1 020 1 359 1 593 1 309 1 002 1 076 1 285 1 136 1 293 1 032 1 267
All-in sustaining
– US$/oz
costs Mar-14 1 627 1 947 1 304 1 193 1 274 907 733 1 346 1 126 1 368 1 247 815 1 336 1 181 1 101 1 233 1 143 1 224
OPERATING RESULTS – Year on year (Rand/Metric) (US$/Imperial)
South Africa
Underground production Surface production
Total
Year Total Total South Hidden Total
ended Kusasalethu Doornkop Phakisa Tshepong Masimong Target 1 Bambanani Joel Unisel Target 3 Steyn 2 Underground Phoenix Dumps Kalgold Surface Other Africa Valley Harmony
Jun-14 1 143 737 577 947 670 771 206 548 408 301 33 6 341 6 073 2 897 1 472 10 442 – 16 783 2 001 18 784
Ore milled – t'000
Jun-13 711 1 008 512 1 040 868 717 164 611 446 323 47 6 447 5 358 3 326 1 398 10 082 – 16 529 1 844 18 373
Jun-14 4 694 2 603 2 976 4 223 2 718 4 493 2 576 2 335 1 838 1 413 392 30 261 835 903 1 162 2 900 – 33 161 3 292 36 453
Gold produced – kg
Jun-13 2 740 3 631 2 434 4 154 3 616 3 967 1 606 3 228 1 813 1 626 477 29 292 827 1 279 1 332 3 438 – 32 730 2 644 35 374
Jun-14 150 916 83 687 95 680 135 772 87 385 144 453 82 821 75 072 59 093 45 429 12 603 972 911 26 846 29 032 37 358 93 236 – 1 066 147 105 840 1 171 987
Gold produced – oz
Jun-13 88 093 116 738 78 255 133 554 116 256 127 542 51 635 103 782 58 289 52 277 15 335 941 756 26 588 41 121 42 825 110 534 – 1 052 290 85 007 1 137 297
Jun-14 4.11 3.53 5.16 4.46 4.06 5.83 12.50 4.26 4.50 4.69 11.88 4.77 0.14 0.31 0.79 0.28 – 1.98 1.65 1.94
Yield – g/tonne
Jun-13 3.85 3.60 4.75 3.99 4.17 5.53 9.79 5.28 4.07 5.03 10.15 4.54 0.15 0.38 0.95 0.34 – 1.98 1.43 1.93
Cash operating Jun-14 389 762 420 617 358 995 326 498 360 006 233 487 222 764 294 493 326 466 394 522 263 893 327 866 294 408 363 568 351 670 338 887 – 328 830 329 943 328 931
– R/kg
costs Jun-13 553 358 296 714 405 077 343 895 272 403 238 840 292 136 206 737 315 136 316 547 286 067 317 478 279 615 337 428 288 147 304 428 – 316 108 434 796 324 979
Cash operating Jun-14 1 171 1 264 1 079 981 1 082 702 669 885 981 1 185 793 985 885 1 092 1 057 1 018 – 988 991 988
– US$/oz
costs Jun-13 1 951 1 046 1 428 1 212 960 842 1 030 729 1 111 1 116 1 009 1 119 986 1 190 1 016 1 073 – 1 114 1 533 1 146
Cash operating Jun-14 1 601 1 486 1 852 1 456 1 460 1 361 2 786 1 255 1 471 1 852 3 135 1 565 40 113 278 94 – 650 543 638
– R/tonne
costs Jun-13 2 132 1 069 1 926 1 374 1 135 1 321 2 861 1 092 1 281 1 594 2 903 1 442 43 130 275 104 – 626 623 626
Jun-14 4 531 2 633 2 963 4 204 2 708 4 508 2 567 2 308 1 834 1 409 393 30 058 825 895 1 203 2 923 – 32 981 3 307 36 288
Gold sold – Kg
Jun-13 2 698 3 550 2 423 4 135 3 598 3 925 1 591 3 192 1 804 1 613 473 29 002 805 1 278 1 263 3 346 – 32 348 2 622 34 970
Jun-14 145 673 84 653 95 263 135 161 87 064 144 936 82 530 74 204 58 964 45 301 12 635 966 384 26 524 28 775 38 677 93 976 – 1 060 360 106 322 1 166 682
Gold sold – oz
Jun-13 86 742 114 135 77 902 132 944 115 679 126 191 51 152 102 625 58 000 51 859 15 207 932 436 25 882 41 088 40 607 107 577 – 1 040 013 84 299 1 124 312
Jun-14 1 959 013 1 126 208 1 283 570 1 822 120 1 170 982 1 947 595 1 110 756 994 583 792 420 608 508 167 938 12 983 693 357 467 385 899 521 812 1 265 178 – 14 248 871 1 433 545 15 682 416
Revenue (R'000)
Jun-13 1 212 834 1 615 027 1 102 618 1 886 777 1 639 903 1 794 310 717 434 1 451 977 824 716 737 285 215 105 13 197 986 365 212 578 805 570 694 1 514 711 – 14 712 697 1 189 031 15 901 728
Cash operating Jun-14 1 829 543 1 094 866 1 068 368 1 378 800 978 495 1 049 059 573 839 687 640 600 044 557 459 103 446 9 921 559 245 831 328 302 408 640 982 773 – 10 904 332 1 086 173 11 990 505
(R'000)
costs Jun-13 1 516 201 1 077 368 985 957 1 428 541 985 011 947 479 469 171 667 347 571 341 514 705 136 454 9 299 575 231 242 431 570 383 812 1 046 624 – 10 346 199 1 149 601 11 495 800
Inventory Jun-14 (76 931) 3 240 (7 240) (13 782) 4 109 1 709 59 (19 618) (280) (622) 3 268 (106 088) (5 116) (4 492) 10 019 411 – (105 677) 3 520 (102 157)
(R'000)
movement Jun-13 (32 663) (35 084) (3 626) (1 514) (10 316) (10 387) (13 307) (13 356) (4 018) (6 242) (1 552) (132 065) (6 306) (4 707) (27 909) (38 922) – (170 987) (4 079) (175 066)
Jun-14 1 752 612 1 098 106 1 061 128 1 365 018 982 604 1 050 768 573 898 668 022 599 764 556 837 106 714 9 815 471 240 715 323 810 418 659 983 184 – 10 798 655 1 089 693 11 888 348
Operating costs (R'000)
Jun-13 1 483 538 1 042 284 982 331 1 427 027 974 695 937 092 455 864 653 991 567 323 508 463 134 902 9 167 510 224 936 426 863 355 903 1 007 702 – 10 175 212 1 145 522 11 320 734
Jun-14 206 401 28 102 222 442 457 102 188 378 896 827 536 858 326 561 192 656 51 671 61 224 3 168 222 116 752 62 089 103 153 281 994 – 3 450 216 343 852 3 794 068
Production profit (R'000)
Jun-13 (270 704) 572 743 120 287 459 750 665 208 857 218 261 570 797 986 257 393 228 822 80 203 4 030 476 140 276 151 942 214 791 507 009 – 4 537 485 43 509 4 580 994
Jun-14 19 940 2 715 21 490 44 160 18 200 86 642 51 865 31 549 18 613 4 992 5 914 306 080 11 279 5 999 9 965 27 243 – 333 323 33 220 366 543
Production profit (US$'000)
Jun-13 (30 685) 64 922 13 635 52 113 75 402 97 167 29 649 90 453 29 176 25 938 9 092 456 862 15 900 17 224 24 347 57 471 – 514 333 4 932 519 265
Capital Jun-14 508 869 237 922 360 120 300 518 167 874 289 408 124 967 144 903 85 613 128 197 1 739 2 350 130 2 310 8 569 33 134 44 013 – 2 394 143 122 346 2 516 489
(R'000)
expenditure Jun-13 419 566 285 427 337 462 310 494 170 610 331 010 115 390 159 682 77 930 145 073 3 830 2 356 474 156 064 14 744 52 470 223 278 26 544 2 606 296 505 888 3 112 184
Jun-14 49 162 22 986 34 791 29 033 16 218 27 960 12 073 13 999 8 271 12 385 168 227 046 223 828 3 201 4 252 – 231 298 11 820 243 118
Capital
(US$'000)
expenditure Jun-13 47 559 32 354 38 252 35 195 19 339 37 521 13 080 18 100 8 833 16 444 434 267 111 17 690 1 671 5 948 25 309 3 009 295 429 57 343 352 772
Adjusted Jun-14 395 061 429 415 365 692 331 640 371 056 237 627 234 117 296 210 334 795 402 113 251 681 333 975 291 815 361 798 356 360 339 808 – 334 502 329 224 334 021
– R/kg
operating costs Jun-13 571 058 301 531 415 213 354 213 281 455 245 026 297 064 213 772 329 332 320 093 293 125 326 196 280 227 339 889 282 737 303 962 – 323 931 445 555 333 048
Jun-14 1 187 1 290 1 099 997 1 115 714 703 890 1 006 1 208 756 1 004 877 1 087 1 071 1 021 – 1 005 985 1 004
Adjusted
– US$/oz
operating costs Jun-13 2 013 1 063 1 464 1 249 992 864 1 047 754 1 161 1 129 1 033 1 150 988 1 198 997 1 072 – 1 142 1 560 1 174
All-in sustaining Jun-14 522 347 523 839 486 710 415 061 450 210 312 436 263 867 338 957 397 993 503 810 272 956 418 105 294 615 383 701 397 889 364 396 – 413 270 415 068 413 433
– R/kg
costs Jun-13 742 033 380 935 549 340 441 108 346 557 338 405 325 497 252 342 388 617 419 004 321 340 411 584 284 911 365 401 329 652 332 542 – 403 856 775 866 431 745
Jun-14 1 570 1 574 1 463 1 247 1 353 939 793 1 019 1 196 1 514 820 1 256 885 1 153 1 196 1 095 – 1 242 1 244 1 242
All-in sustaining
– US$/oz
costs Jun-13 2 616 1 343 1 937 1 555 1 222 1 193 1 148 890 1 370 1 477 1 133 1 451 1 005 1 288 1 162 1 172 – 1 424 2 711 1 522
CONDENSED CONSOLIDATED INCOME STATEMENTS (Rand)
Quarter ended Year ended
30 June 31 March 30 June 30 June 30 June
2014 2014 2013 2014 2013
(Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Figures in million Note (Restated)* (Restated)*
Continuing operations
Revenue 3 763 3 830 3 483 15 682 15 902
Cost of sales 3 (4 941) (3 595) (6 171) (16 088) (16 448)
Production costs (2 916) (2 906) (2 812) (11 888) (11 321)
Amortisation and depreciation (526) (475) (531) (2 143) (2 001)
Impairment of assets (1 410) (29) (2 733) (1 439) (2 733)
Other items (89) (185) (95) (618) (393)
Gross (loss)/profit (1 178) 235 (2 688) (406) (546)
Corporate, administration and other expenditure (112) (109) (127) (431) (465)
Social investment expenditure (21) (8) (57) (88) (127)
Exploration expenditure (114) (90) (219) (458) (673)
Profit on sale of property, plant and equipment 5 30 – – 30 139
Other expenses (net) 8 (47) (22) (169) (208) (350)
Operating (loss)/profit (1 442) 6 (3 260) (1 561) (2 022)
(Loss)/profit from associates 6 (125) 10 – (108) –
Profit on disposal/(impairment) of investments 7 14 – – 7 (88)
Net gain/(loss) on financial instruments 32 25 (8) 170 173
Investment income 61 64 67 220 185
Finance cost (101) (59) (57) (277) (256)
(Loss)/profit before taxation (1 561) 46 (3 258) (1 549) (2 008)
Taxation 338 (15) (239) 279 (655)
Normal taxation 1 24 78 (24) (271)
Deferred taxation 337 (39) (317) 303 (384)
Net (loss)/profit from continuing operations (1 223) 31 (3 497) (1 270) (2 663)
Discontinued operations
Profit from discontinued operations – – – – 314
Net (loss)/profit for the period (1 223) 31 (3 497) (1 270) (2 349)
Attributable to:
Owners of the parent (1 223) 31 (3 497) (1 270) (2 349)
(Loss)/earnings per ordinary share (cents) 4
(Loss)/earnings from continuing operations (282) 7 (808) (293) (616)
Earnings from discontinued operations – – – – 73
Total (loss)/earnings (282) 7 (808) (293) (543)
Diluted (loss)/earnings per ordinary share (cents) 4
(Loss)/earnings from continuing operations (282) 7 (808) (293) (616)
Earnings from discontinued operations – – – – 73
Total diluted (loss)/earnings (282) 7 (808) (293) (543)
* The audited June 2013 annual results and unaudited June 2013 quarter results have been restated due to a change in accounting policy. Refer to note 2 for details. The restatements to the
comparative information have not been audited.
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Rand)
Quarter ended Year ended
30 June 31 March 30 June 30 June 30 June
2014 2014 2013 2014 2013
(Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Figures in million (Restated)* (Restated)*
Net (loss)/profit for the period (1 223) 31 (3 497) (1 270) (2 349)
Other comprehensive income/(loss) for the period, net of
income tax 624 (416) 25 (140) 737
Items that may be reclassified subsequently to profit or loss: 655 (416) 25 (109) 737
Foreign exchange translation 668 (421) 26 (108) 742
Movements on investments (13) 5 (1) (1) (5)
Items that will not be reclassified to profit or loss: (31) – – (31) –
Actuarial loss recognised during the year (38) – – (38) –
Deferred taxation thereon 7 – – 7 –
Total comprehensive (loss)/income for the period (599) (385) (3 472) (1 410) (1 612)
Attributable to:
Owners of the parent (599) (385) (3 472) (1 410) (1 612)
* The audited June 2013 annual results and unaudited June 2013 quarter results have been restated due to a change in accounting policy. Refer to note 2 for details. The restatements to the
comparative information have not been audited.
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (Rand)
for the year ended 30 June 2014
(Accumulated
Share Other loss)/retained
Figures in million Note capital reserves earnings Total
Balance – 30 June 2013 as previously reported * 28 325 3 464 522 32 311
Restatement for IFRIC 20 2 – (22) (74) (96)
Restated balance – 30 June 2013 28 325 3 442 448 32 215
Share-based payments – 237 – 237
Net loss for the period – – (1 270) (1 270)
Other comprehensive loss for the period – (140) – (140)
Balance – 30 June 2014 (Reviewed) 28 325 3 539 (822) 31 042
Balance – 30 June 2012 as previously reported* 28 331 2 444 3 307 34 082
Restatement for IFRIC 20 2 – (15) (94) (109)
Restated balance – 30 June 2012 28 331 2 429 3 213 33 973
Issue of shares 1 – – 1
Share-based payments (7) 274 – 267
Net loss for the period – – (2 349) (2 349)
Other comprehensive income for the period – 737 – 737
Option premium on BEE transaction – 2 – 2
Share of retained earnings on acquisition of associate – – 19 19
Dividends paid(1) – – (435) (435)
Balance – 30 June 2013 28 325 3 442 448 32 215
* The audited June 2013 and 2012 annual results have been restated due to a change in accounting policy. Refer to note 2 for details. The restatements to the comparative information have not
been audited.
(1) Dividend of 50 SA cents declared on 13 August 2012 and 50 SA cents on 1 February 2013
The accompanying notes are an integral part of these condensed consolidated financial statements.
The condensed consolidated provisional financial statements (condensed consolidated financial statements) have been prepared
by Harmony Gold Mining Company Limited's corporate reporting team headed by Mr Herman Perry, supervised by the financial
director, Mr Frank Abbott. They have been approved by the board of Harmony Gold Mining Company Limited on 11 August 2014.
The condensed consolidated financial statements for the 12 months ended 30 June 2014 were reviewed by the group's external
auditors, PricewaterhouseCoopers Incorporated (see note 15).
CONDENSED CONSOLIDATED BALANCE SHEETS (Rand)
At At At
30 June 31 March 30 June
2014 2014 2013
(Reviewed) (Unaudited) (Audited)
Figures in million Note (Restated)*
ASSETS
Non-current assets
Property, plant and equipment 5 33 069 32 400 32 732
Intangible assets 5 886 2 194 2 191
Restricted cash 42 40 37
Restricted investments 2 299 2 225 2 054
Deferred tax assets 81 84 104
Investments in associates 6 – 125 109
Investments in financial assets 4 4 49
Inventories 50 57 57
Total non-current assets 36 431 37 129 37 333
Current assets
Inventories 1 534 1 306 1 417
Trade and other receivables 951 900 1 162
Income and mining taxes 110 141 132
Restricted cash 15 15 –
Cash and cash equivalents 1 829 2 008 2 089
4 439 4 370 4 800
Non-current assets and assets of disposal groups classified as held for sale 7 – 51 –
Total current assets 4 439 4 421 4 800
Total assets 40 870 41 550 42 133
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 28 325 28 325 28 325
Other reserves 3 539 2 907 3 442
(Accumulated loss)/retained earnings (822) 401 448
Total equity 31 042 31 633 32 215
Non-current liabilities
Deferred tax liabilities 2 680 3 029 3 021
Provision for environmental rehabilitation 2 098 2 020 1 997
Retirement benefit obligation 247 205 194
Other non-current liabilities 95 67 55
Borrowings 8 2 860 2 843 2 252
Total non-current liabilities 7 980 8 164 7 519
Current liabilities
Borrowings 8 – – 286
Income and mining taxes – 3 4
Trade and other payables 1 848 1 750 2 109
Total current liabilities 1 848 1 753 2 399
Total equity and liabilities 40 870 41 550 42 133
* The audited June 2013 annual results have been restated due to a change in accounting policy. Refer to note 2 for details. The restatements to the comparative information have not been audited.
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (Rand)
Quarter ended Year ended
30 June 31 March 30 June 30 June 30 June
2014 2014 2013 2014 2013
Figures in million (Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Cash flow from operating activities
Cash generated by operations 431 755 221 2 124 3 154
Interest and dividends received 40 34 48 132 138
Interest paid (32) (39) (40) (121) (125)
Income and mining taxes refunded/(paid) 31 – (129) 3 (312)
Cash generated by operating activities 470 750 100 2 138 2 855
Cash flow from investing activities
Increase in restricted cash (3) (3) – (6) –
Increase in restricted investments (17) – – (17) –
Proceeds on disposal of investments 51 – – 51 –
Proceeds on disposal of investment in subsidiary – – – – 1 264
Purchase of investments – – (14) – (86)
Other investing activities – – (1) (10) (4)
Net additions to property, plant and equipment(1) (687) (599) (938) (2 528) (3 652)
Cash utilised by investing activities (656) (602) (953) (2 510) (2 478)
Cash flow from financing activities
Borrowings raised – – – 612 678
Borrowings repaid – (462) (156) (468) (333)
Ordinary shares issued – net of expenses – – 1 – 1
Option premium on BEE transaction – – 2 – 2
Dividends paid – – – – (435)
Cash (utilised)/generated by financing activities – (462) (153) 144 (87)
Foreign currency translation adjustments 7 (1) (4) (32) 26
Net (decrease)/increase in cash and cash equivalents (179) (315) (1 010) (260) 316
Cash and cash equivalents – beginning of period 2 008 2 323 3 099 2 089 1 773
Cash and cash equivalents – end of period 1 829 2 008 2 089 1 829 2 089
(1) The 2013 year includes capital expenditure for Wafi-Golpu and other international projects of R537 million and the June 2013 quarter R133 million.
The accompanying notes are an integral part of these condensed consolidated financial statements.
1. Accounting policies
Basis of accounting
The condensed consolidated financial statements for the year ended 30 June 2014 have been prepared in accordance with IAS 34, Interim
Financial Reporting, JSE Listings Requirements, SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council, and in the manner required by the Companies Act of South Africa.
They should be read in conjunction with the annual financial statements for the year ended 30 June 2013, which have been prepared in
accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS). The accounting
policies are consistent with those described in the annual financial statements, except for the adoption of applicable revised and/or new
standards issued by the International Accounting Standards Board.
The following accounting standards, amendments to standards and new interpretations have been adopted with effect from 1 July 2013.
IFRS 7 Amendment – Disclosures – Offsetting Financial Assets and Financial Liabilities
IFRS 10 Consolidated Financial Statements
IFRS 11 Joint Arrangements
IFRS 12 Disclosure of Interests in Other Entities
IFRS 13 Fair Value Measurement
IFRSs Annual Improvements 2009 – 2011
IAS 19 Employee Benefits (Revised 2011)
IAS 27 Separate Financial Statements (Revised 2011)
IAS 28 Investments in Associates and Joint Ventures (Revised 2011)
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
New standards and amendments which have an impact on the condensed consolidated financial statements of the group are described below:
IAS 19 includes a number of amendments to the accounting for defined benefit plans, including actuarial gains and losses that are now
recognised in other comprehensive income (OCI). Actuarial gains and losses recognised in OCI will not be recycled to profit or loss. The impact
for the group was immaterial for the prior years.
IFRS 11 requires joint operations to be accounted at the group's interest in the assets, liabilities, revenue and expenses of the joint operation.
The group only has a joint arrangement in PNG, through its 50% interest in mining and exploration assets located in Morobe province. These
operations are classified as joint operations under IFRS 11. The joint operations were previously accounted for by proportional consolidation.
Going forward, the group will account for its interest in assets, liabilities, revenue and expenses of these unincorporated joint operations.
IFRIC 20 clarifies the requirements for accounting for costs of stripping activity in the production phase of surface mining. Stripping assets that
cannot be attributed to an identifiable component of the orebody will be written off to retained earnings on adoption of IFRIC 20. Refer to
note 2 for further details.
2. Change in accounting policies
IFRIC 20 Stripping Costs in the Production Phase of a Surface Mine
IFRIC 20 – Stripping Costs in the Production Phase of a Surface Mine (IFRIC 20) which became effective on 1 January 2013, clarifies the
requirements for accounting for the costs of stripping activity in the production phase of surface mining when two benefits accrue: (i) usable
ore that can be used to produce inventory; and (ii) improved access to further quantities of material that will be mined in future periods.
Harmony has applied IFRIC 20 on a prospective basis from 1 July 2011 in compliance with the transitional requirements of IFRIC 20.
Harmony previously accounted for stripping costs incurred during the production phase to remove waste material by deferring these costs,
which were then charged to production costs on the basis of the average life-of-mine stripping ratio.
A stripping activity asset shall be recognised if all of the following are met:
(i) it is probable that the future economic benefit (improved access to the orebody) associated with the stripping activity will flow to the entity;
(ii) the entity can identify the component of the orebody for which access has been improved; and
(iii) the cost relating to the stripping activity associated with that component can be measure reliably.
The stripping asset shall be depreciated over the expected useful life of the identified component of the orebody based on the units of
production method.
Where there were no identifiable components of the orebody to which the predecessor asset relates, the asset was written off to retained
earnings at the beginning of the earliest period presented. An amount of R54 million was written off to opening retained earnings on
1 July 2011.
The comparative periods presented have been restated. The restatement had no effect on the condensed consolidated cash flow statements.
The results for the years ended 30 June 2013 and 2012 and the financial position at these dates have been audited but the restatement of the
results and balances affected by IFRIC 20 have not been audited.
Reconciliation of the effect of the change in accounting standard:
Condensed consolidated income statements
Quarter ended Year ended
30 June 30 June
2013 2013
Figures in million (Unaudited) (Audited)
Cost of sales
Production costs
As previously reported (2 844) (11 400)
IFRIC 20 adjustment 32 79
Restated (2 812) (11 321)
Amortisation and depreciation
As previously reported (501) (1 942)
IFRIC 20 adjustment (30) (59)
Restated (531) (2 001)
Increase/decrease in net profit/loss for the period* 2 20
* There is no material taxation effect on these items.
Condensed consolidated statements of comprehensive income
Quarter ended Year ended
30 June 30 June
2013 2013
Figures in million (Unaudited) (Audited)
Increase/decrease in net profit/loss for the period* 2 20
Other comprehensive income for the period net of income tax
Foreign exchange translation
As previously reported 26 749
IFRIC 20 adjustment – (7)
Restated 26 742
Increase/decrease in total comprehensive income/loss for the period 2 13
* There is no material taxation effect on these items.
Condensed consolidated balance sheets
At At
30 June 30 June
2013 2012
Figures in million (Audited) (Audited)
Non-current assets
Property, plant and equipment
As previously reported 32 820 32 853
IFRIC 20 adjustment (88) (93)
Restated 32 732 32 760
Current assets
Inventories
As previously reported 1 425 996
IFRIC 20 adjustment (8) (16)
Restated 1 417 980
Share capital and reserves
Other reserves
As previously reported 3 464 2 444
IFRIC 20 adjustment(1) (22) (15)
Restated 3 442 2 429
Retained earnings
As previously reported 522 3 307
IFRIC 20 adjustment (74) (94)
Restated 448 3 213
Decrease in total equity (96) (109)
(1) Translation effect of the IFRIC 20 adjustments on foreign operations.
Loss and headline (loss)/earnings per share
Quarter ended Year ended
30 June 30 June
2013 2013
(Unaudited) (Audited)
Total basic and diluted loss per share (cents)
As previously reported (809) (548)
IFRIC 20 adjustment 1 5
Restated (808) (543)
Total headline (loss)/earnings
Figures in million
As previously reported (804) 204
IFRIC 20 adjustment 2 20
Restated (802) 224
Total headline and diluted headline (loss)/earnings per share (cents)
As previously reported (186) 47
IFRIC 20 adjustment 1 5
Restated (185) 52
3. Cost of sales
Quarter ended Year ended
30 June 31 March 30 June 30 June 30 June
2014 2014 2013 2014 2013
(Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Figures in million (Restated)* (Restated)*
Production costs – excluding royalty 2 891 2 881 2 767 11 761 11 104
Royalty expense 25 25 45 127 217
Amortisation and depreciation 526 475 531 2 143 2 001
Impairment of assets(1) 1 410 29 2 733 1 439 2 733
Rehabilitation (credit)/expenditure(2) (9) 17 (40) 8 (24)
Care and maintenance cost of restructured shafts 13 16 16 66 68
Employment termination and restructuring costs(3) 40 90 39 274 46
Share-based payments 44 62 45 270 266
Other 1 – 35 – 37
Total cost of sales 4 941 3 595 6 171 16 088 16 448
* The audited June 2013 annual results and unaudited June 2013 quarter results have been restated due to a change in accounting policy. Refer to note 2 for details. The restatements to
the comparative information have not been audited.
(1) The impairment in the June 2014 quarter consists of an impairment of R1.38 billion on Phakisa, R7 million on Steyn 2 (March 2014: R29 million) and R21 million on St Helena. The June
2013 impairment consists of an impairment of R2.7 billion on Hidden Valley, R31 million on St Helena and R27 million on Steyn 2. Refer to note 5 for further details.
(2) Included in the total for the June 2014 quarter is a credit of R21 million relating to the change in estimate following the annual reassessment.
(3) Included are amounts relating to the restructuring at Hidden Valley and the voluntary retrenchment packages offered in South Africa.
4. Earnings/(loss) per share
Quarter ended Year ended
30 June 31 March 30 June 30 June 30 June
2014 2014 2013 2014 2013
(Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
(Restated)* (Restated)*
Weighted average number of shares (million) 433.9 433.3 432.6 433.2 431.9
Weighted average number of diluted shares (million) 435.2 434.6 433.1 434.7 432.7
Total (loss)/earnings per share (cents):
Basic (loss)/earnings (282) 7 (808) (293) (543)
Diluted (loss)/earnings (282) 7 (808) (293) (543)
Headline earnings/(loss) 30 12 (185) 26 52
– from continuing operations 30 12 (185) 26 3
– from discontinued operations – – – – 49
Diluted headline earnings/(loss) 30 12 (185) 26 52
– from continuing operations 30 12 (185) 26 3
– from discontinued operations – – – – 49
Figures in million
Reconciliation of headline earnings/(loss):
Continuing operations
Net (loss)/profit (1 223) 31 (3 497) (1 270) (2 663)
Adjusted for:
(Profit on disposal)/impairment of investments(1) (14) – – (7) 88
Impairment of assets 1 410 29 2 733 1 439 2 733
Taxation effect on impairment of assets (20) (8) (38) (24) (38)
Profit on sale of property, plant and equipment (30) – – (30) (139)
Taxation effect of profit on sale of property, plant and
equipment 6 – – 6 31
Headline earnings/(loss) 129 52 (802) 114 12
Discontinued operations
Net profit – – – – 314
Adjusted for:
Profit on sale of investment in subsidiary(1) – – – – (102)
Headline earnings – – – – 212
Total headline earnings/(loss) 129 52 (802) 114 224
(1) There is no taxation effect on these items.
* The audited June 2013 annual results and unaudited June 2013 quarter results have been restated due to a change in accounting policy. Refer to note 2 for details. The restatements to the
comparative information have not been audited.
5. Property, plant and equipment and intangible assets
(a) Impairment
One of the most significant assumptions that influence the life-of-mine plans and therefore impairment is the expected gold price.
During this year's planning and testing, we used a long term gold price of US$1 300 per ounce and exchange rates of R10.17/US$,
A$0.92/US$ and PGK0.404/US$. Post-tax real discount rates ranging between 7.03% and 11.56% (2013: 6.21% and 10.20%), depending
on the asset, were used to determine the recoverable amounts (generally fair value less costs to sell).
During the 2014 year, an impairment of R1.38 billion was recognised on Phakisa, following a change in the life-of-mine plan during the
annual planning process, combined with the factors discussed above. The change resulted after the completion of a feasibility study on the
proposed decline shaft, which showed a large amount of capital required, leading to negative cash flows in the short and medium term.
Management therefore decided not to proceed with the sinking of the decline shaft. The impairment comprises of R1.31 billion goodwill
and R0.07 billion other assets. The recoverable amount of Phakisa is R4.26 billion.
Impairments on Steyn 2 (R36 million) and St Helena (R21 million) were recognised following the decision not to mine these operations in
future. The operations were impaired to the recoverable amount of Rnil.
A 10% decrease in the gold price used in the models as well as a 10% decrease in the silver price for Hidden Valley would have resulted
in an additional impairment at Kalgold of R23 million, Phakisa R1.0 billion, Target 1 of R 704 million and Hidden Valley of R1.5 billion.
(b) Profit on sale of property, plant and equipment
During May 2014, the ground swap between Joel mine and Sibanye's Beatrix mine was completed, resulting in a non-cash profit being
recognised for the difference between carrying value of the Joel portion and the fair value of the Beatrix portion.
6. Investment in associate
Harmony holds a 10.38% share in Rand Refinery Proprietary Limited (Rand Refinery) as at 30 June 2014 and has equity accounted for its share
of the profits based on Rand Refinery's most recent available unaudited management accounts.
Rand Refinery implemented a new Enterprise Resource Planning (ERP) system on 1 April 2013 to conduct its financial and management
accounting. Since the implementation of the ERP software, the customisation of the software has been problematic with the result that Rand
Refinery has not been able to reconcile certain accounts at 30 September 2013 and therefore has not been able to finalise its annual financial
statements for the year. Rand Refinery's management team is currently resolving the problems encountered with the ERP software and is in
the process of investigating the transactions processed from 1 April 2013 on the ERP system to determine if any adjustments to their current
financial records are required. Thus far a discrepancy has been noted between the actual inventory and the accounting records of approximately
87 000 ounces of gold. Due to the uncertainty surrounding the matter, Harmony has provided for its full share of the loss. Therefore, Harmony
has recognised a R127 million loss in the June 2014 quarter to account for its share of this discrepancy.
As a precautionary measure following the challenges experienced by the implementation of the software system, Rand Refinery's shareholders
have extended Rand Refinery an irrevocable, subordinated loan facility of up to R1.2 billion, which can only be drawn down when there is
confirmation that an actual loss has been incurred. The facility, if drawn down, is convertible to equity after a period of two years. Harmony's
maximum commitment in terms of this facility will be R140 million. Interest on the facility will be JIBAR plus a margin of 3.5%. The agreements
relating to the facility were signed on 23 July 2014.
7. Non-current assets and assets of disposal groups classified as held for sale
During the December 2013 quarter, a cash offer for Witwatersrand Consolidated Gold Resources Limited's (Wits Gold) entire share capital was
made to all Wits Gold shareholders by Sibanye Gold Limited. Harmony has accepted the offer. Following this, the balance which represented
Harmony's fair value stake in Wits Gold was classified as a non-current asset held for sale (formerly classified as Investment in financial assets)
under IFRS 5. On 14 April 2014, a total consideration of R51 million was received. The accumulated gains recognised in equity were reclassified
to the income statement, resulting in a profit on disposal.
8. Borrowings
Two draw downs of US$30 million each were made from the US$300 million syndicated revolving credit facility during the September 2013
quarter. There were no draw downs subsequently and the drawn level remains at US$270 million. The weakening of the Rand against the
US$ resulted in a foreign exchange translation loss of R155 million being recorded for the year, increasing the borrowings balance and Other
expenses (net). The facility is repayable by September 2015.
Harmony refinanced its Nedbank revolving credit facility and entered into a new agreement for R1.3 billion revolving credit facility during the
December 2013 quarter. At the same time management also agreed an amended set of covenants with the lender group, to give the group
more long-term financial flexibility. The interest rate is equivalent to JIBAR + 350 basis points. The outstanding amount at 28 March 2014 of
R467 million was repaid. The facility is available until December 2016.
9. Financial risk management activities
Fair value determination
The following table presents the group's assets and liabilities that are measured at fair value by level within the fair value hierarchy:
Level 1: Quoted prices (unadjusted) in active markets for identical assets;
Level 2: Inputs other than quoted prices included within level 1 that are observable for the asset, either directly or indirectly (that is, as prices)
or indirectly (that is derived from prices);
Level 3: Inputs for the asset that are not based on observable market data (that is unobservable inputs).
At At At
30 June 31 March 30 June
2014 2014 2013
Figures in million (Reviewed) (Unaudited) (Audited)
Available-for-sale financial assets(1)
Level 1 – 51 44
Level 2 – – –
Level 3 4 4 5
Fair value through profit or loss(2)
Level 1 – – –
Level 2 798 768 1 041
Level 3 – – –
(1) Level 1 fair values are directly derived from actively traded shares on the JSE.
Level 3 fair values have been valued by the directors by performing independent valuations on an annual basis to ensure that significant prolonged decline in the value of the investments
has not occurred. At the end of the 2013 financial year, the investment in Rand Refinery was reclassified as an investment in associate on obtaining significant influence.
(2) The majority of the level 2 fair values are directly derived from the Shareholders Weighted Top 40 index (SWIX 40) on the JSE, and are discounted at market interest rate.
* Includes non-current assets or disposal groups held for sale where applicable.
10. Commitments and contingencies
At At At
30 June 31 March 30 June
2014 2014 2013
Figures in million (Reviewed) (Unaudited) (Audited)
Capital expenditure commitments:
Contracts for capital expenditure 157 245 416
Authorised by the directors but not contracted for 519 491 1 545
676 736 1 961
This expenditure will be financed from existing resources and, where appropriate, borrowings.
Contingent liabilities
For a detailed disclosure on contingent liabilities refer to Harmony's integrated annual report for the financial year ended 30 June 2013,
available on the group's website (www.harmony.co.za). There were no significant changes in contingencies since 30 June 2013 except as
discussed below.
(a) US class action
Following the dismissal of the appeal by the plaintiff in the United States Supreme Court, the case has been concluded. The matter will be
settled once the administrative processes have been completed.
11. Related parties
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the
group, directly or indirectly, including any director (whether executive or otherwise) of the group. During the September 2013 quarter, Frank
Abbott, financial director, purchased 65 600 shares in the company.
12. Subsequent events
(a) During July 2014, Harmony extended an irrevocable, subordinated loan facility to Rand Refinery. The facility, if drawn down, is convertible
to equity after a period of two years. Harmony's maximum commitment in terms of this facility is R140 million. Refer to note 6 for
further details.
13. Segment report
The segment report follows.
14. Reconciliation of segment information to condensed consolidated income statements and balance sheets
Year ended
30 June 30 June
2014 2013
(Reviewed) (Audited)
Figures in million (Restated)*
The “Reconciliation of segment information to condensed consolidated financial
statements” line item in the segment report is broken down in the following elements,
to give a better understanding of the differences between the financial statements and
segment report:
Reconciliation of production profit to gross loss
Total segment revenue 15 682 16 776
Total segment production costs (11 888) (11 854)
Production profit per segment report 3 794 4 922
Discontinued operations – (341)
Production profit from continuing operations 3 794 4 581
Depreciation (2 143) (2 001)
Impairment (1 439) (2 733)
Other cost of sales items (618) (393)
Gross loss as per income statements(1) (406) (546)
(1) The reconciliation was done up to the first recognisable line item on the income statement. The reconciliation will follow the income statement after that.
At At
30 June 30 June
2014 2013
(Reviewed) (Audited)
Figures in million (Restated)*
Reconciliation of total segment mining assets to consolidated property,
plant and equipment
Property, plant and equipment not allocated to a segment
Mining assets 787 836
Undeveloped property 5 139 5 139
Other non-mining assets 117 286
Wafi-Golpu assets 1 092 1 148
7 135 7 409
* The year ended June 2013 results have been restated due to a change in accounting policy. Refer to note 2 for details. The restatements to the comparative information have not
been audited.
15. Review report
These condensed consolidated financial statements for the year ended 30 June 2014 have been reviewed by
PricewaterhouseCoopers Inc., who expressed an unmodified review conclusion thereon. A copy of the auditor's review report is available for
inspection at the company's registered office, together with the financial statements identified in the auditor's report.
Segment report (Rand/Metric)
for the year ended 30 June 2014
Production
Revenue Production cost* profit/(loss)* Mining assets* Capital expenditure# Kilograms produced@ Tonnes milled@
30 June 30 June 30 June 30 June 30 June 30 June 30 June
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
R million R million R million R million R million kg t'000
Continuing operations
South Africa
Underground
Kusasalethu 1 959 1 213 1 753 1 484 206 (271) 3 616 3 435 509 420 4 694 2 740 1 143 711
Doornkop 1 126 1 615 1 098 1 042 28 573 3 386 3 378 238 285 2 603 3 631 737 1 008
Phakisa 1 284 1 103 1 061 982 223 121 4 590 4 547 360 337 2 976 2 434 577 512
Tshepong 1 822 1 887 1 365 1 427 457 460 3 941 3 877 301 310 4 223 4 154 947 1 040
Masimong 1 171 1 640 983 975 188 665 1 060 989 168 171 2 718 3 616 670 868
Target 1 1 948 1 794 1 051 937 897 857 2 770 2 704 289 331 4 493 3 967 771 717
Bambanani (a) 1 279 932 681 591 598 341 841 882 127 119 2 968 2 083 239 211
Joel 995 1 452 668 654 327 798 450 290 145 160 2 335 3 228 548 611
Unisel 792 825 600 567 192 258 663 656 85 78 1 838 1 813 408 446
Target 3 609 737 557 508 52 229 542 457 128 145 1 413 1 626 301 323
Surface
All other surface operations 1 263 1 515 981 1 008 282 507 473 250 44 250 2 900 3 438 10 442 10 082
Total South Africa 14 248 14 713 10 798 10 175 3 450 4 538 22 332 21 465 2 394 2 606 33 161 32 730 16 783 16 529
International
Hidden Valley 1 434 1 189 1 090 1 146 344 43 3 602 3 858 122 506 3 292 2 644 2 001 1 844
Total international 1 434 1 189 1 090 1 146 344 43 3 602 3 858 122 506 3 292 2 644 2 001 1 844
Total continuing
operations 15 682 15 902 11 888 11 321 3 794 4 581 25 934 25 323 2 516 3 112 36 453 35 374 18 784 18 373
Discontinued operations
Evander – 874 – 533 – 341 – – – 140 – 1 955 – 390
Total discontinued
operations – 874 – 533 – 341 – – – 140 – 1 955 – 390
Total operations 15 682 16 776 11 888 11 854 3 794 4 922 25 934 25 323 2 516 3 252 36 453 37 329 18 784 18 763
Reconciliation of the
segment information to
the condensed consolidated
financial statements
(refer to note 14) – (874) – (533) 7 135 7 409
15 682 15 902 11 888 11 321 33 069 32 732
* The June 2013 results have been restated due to a change in accounting policy. Refer to note 2 for details. The restatements to the comparative information have not been audited.
# Capital expenditure for international operations excludes expenditure spend on Wafi-Golpu of R12 million (2013: R537 million).
(a) Includes Steyn 2.
@ Production statistics are unaudited.
The segment report for the year ended 30 June 2013 has been audited. The segment report for the year ended 30 June 2014 has been reviewed.
DEVELOPMENT RESULTS (Metric)
Quarter ending June 2014
Channel
Reef Sampled Width Value Gold
Meters Meters (Cm's) (g/t) (Cmg/t)
Tshepong
Basal 280 276 8.17 203.84 1 666
B Reef 37 38 54.23 23.11 1 253
All Reefs 316 314 13.74 117.55 1 616
Phakisa
Basal 448 468 80.74 14.09 1 137
All Reefs 448 468 80.74 14.09 1 137
Total Bambanani
(Incl. Bambanani, Steyn 2)
Basal – – – – –
All Reefs – – – – –
Doornkop
South Reef 517 510 45.00 15.79 711
All Reefs 517 510 45.00 15.79 711
Kusasalethu
VCR Reef 535 486 107.00 8.34 892
All Reefs 535 486 107.00 8.34 892
Total Target
(incl. Target 1 & Target 3)
Elsburg 63 68 116.00 6.47 750
Basal 96 64 9.00 16.80 151
A Reef 47 8 74.00 19.53 1 445
B Reef 217 192 140.00 8.03 1 124
All Reefs 423 332 108.24 8.02 868
Masimong 5
Basal 489 402 41.74 20.95 874
B Reef 260 306 58.23 9.45 550
All Reefs 749 708 48.86 15.02 734
Unisel
Basal 223 198 128.81 12.17 1 567
Leader 524 436 221.62 4.46 987
All Reefs 747 634 192.64 6.07 1 169
Joel
Beatrix 219 174 75.00 15.51 1 163
All Reefs 219 174 75.00 15.51 1 163
Total Harmony
Basal 1 535 1 408 58.88 20.07 1 181
Beatrix 219 174 75.00 15.51 1 163
Leader 524 436 221.62 4.46 987
B Reef 514 536 87.23 9.23 806
A Reef 47 8 74.00 19.53 1 445
Elsburg 63 68 116.00 6.47 750
South Reef 517 510 45.00 15.79 711
VCR 535 486 107.00 8.34 892
All Reefs 3 955 3 626 89.01 11.11 989
DEVELOPMENT RESULTS (Imperial)
Quarter ending June 2014
Channel
Reef Sampled Width Value Gold
Feet Feet (Inch's) (oz/t) (In.oz/t)
Tshepong
Basal 917 906 3.00 6.38 19
B Reef 121 125 21.00 0.69 14
All Reefs 1 038 1 030 5.00 3.71 19
Phakisa
Basal 1 471 1 535 32.00 0.41 13
All Reefs 1 471 1 535 32.00 0.41 13
Total Bambanani
(Incl. Bambanani, Steyn 2)
Basal – – – – –
All Reefs – – – – –
Doornkop
South Reef 1 696 1 673 18.00 0.45 8
All Reefs 1 696 1 673 18.00 0.45 8
Kusasalethu
VCR Reef 1 756 1 594 42.00 0.24 10
All Reefs 1 756 1 594 42.00 0.24 10
Total Target
(incl. Target 1 & Target 3)
Elsburg 207 223 46.00 0.19 9
Basal 314 210 4.00 0.44 2
A Reef 155 26 29.00 0.57 17
B Reef 713 630 55.00 0.23 13
All Reefs 1 388 1 089 43.00 0.23 10
Masimong 5
Basal 1 604 1 319 16.00 0.63 10
B Reef 853 1 004 23.00 0.27 6
All Reefs 2 458 2 323 19.00 0.44 8
Unisel
Basal 730 650 51.00 0.35 18
Leader 1 720 1 430 87.00 0.13 11
All Reefs 2 450 2 080 76.00 0.18 13
Joel
Beatrix 718 571 30.00 0.45 13
All Reefs 718 571 30.00 0.45 13
Total Harmony
Basal 5 036 4 619 23.00 0.59 14
Beatrix 718 571 30.00 0.45 13
Leader 1 720 1 430 87.00 0.13 11
B Reef 1 687 1 759 34.00 0.27 9
A Reef 155 26 29.00 0.57 17
Elsburg 207 223 46.00 0.19 9
South Reef 1 696 1 673 18.00 0.45 8
VCR 1 756 1 594 42.00 0.24 10
All Reefs 12 975 11 896 35.00 0.32 11
Date: 14/08/2014 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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