Wrap Text
Results for the second quarter FY16 and six months ended 31 December 2015
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
RESULTS FOR THE SECOND QUARTER FY16 AND SIX MONTHS ENDED 31 DECEMBER 2015
Q2 FY16
KEY FEATURES
Quarter on quarter
- Safety parameters improving; working towards zero harm
- 7% increase in underground recovered grade
- 2% increase in production
- AISC down by 7% at R434 834/kg (down 15% to US$950/oz)
- 84% increase in production profit to R1.29 billion (up 68% to US$91 million)
- Headline earnings of R74 million (US$5 million)
- Net debt reduction of R127 million (US$29 million)
Q-on-Q
Quarter Quarter variance
Dec-15 Sep-15 %
Gold produced – kg 8 929 8 752 2
– oz 287 074 281 385 2
Cash operating costs – R/kg 360 153 384 810 6
– US$/oz 787 921 15
Gold sold – kg 8 999 8 743 3
– oz 289 323 281 094 3
Underground grade – g/t 5.33 4.99 7
Total costs and capital – R/kg 417 368 443 730 6
– US$/oz 912 1 062 14
All-in sustaining costs – R/kg 434 834 466 061 7
– US$/oz 950 1 115 15
Gold price received – R/kg 507 490 473 567 7
– US$/oz 1 109 1 133 (2)
Production profit – R million 1 292 701 84
– US$ million 91 54 68
Basic profit/(loss) per share – SAc/s 17 (120) >100
– USc/s 1 (9) >100
Headline earnings/(loss) – Rm 74 (523) >100
– US$m 5 (40) >100
Headline earnings/(loss) per share – SAc/s 17 (120) >100
– USc/s 1 (9) >100
Exchange rate – R/US$ 14.24 13.00 10
FORWARD-LOOKING STATEMENTS
PRIVATE SECURITIES LITIGATION REFORM ACT
Safe Harbour Statement
This report contains forward-looking statements within the meaning of the safe harbour provided by Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities
Act of 1933, as amended, with respect to our 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. These include all statements other than statements of historical fact, including, without limitation, any statements proceeded by,
followed by, or that include the words "targets", "believes", "expects", "aims" "intends" "will", "may", "anticipates", "would", "should", "could", "estimates", "forecast", "predict", "continue"
or similar expressions or the negative thereof.
These forward-looking statements, including, among others, those relating to our future business prospects, revenues and income, wherever they may occur in this report and the exhibits to this
report, are essentially estimates reflecting the best judgement of our senior management 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 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 South Africa, Papua New Guinea, Australia and elsewhere, estimates of future earnings, and the sensitivity of earnings to the gold and other metals prices, estimates of future gold and
other metals production and sales, estimates of future cash costs, estimates of future cash flows, and the sensitivity of cash flows to the gold and other metals prices, statements regarding future debt
repayments, estimates of future capital expenditures, the success of our business strategy, development activities and other initiatives, estimates of reserves statements regarding future exploration
results and the replacement of reserves, the ability to achieve anticipated efficiencies and other cost savings in connection with past and future acquisitions, fluctuations in the market price of gold, the
occurrence of hazards associated with underground and surface gold mining, the occurrence of labour disruptions, power cost increases as well as power stoppages, fluctuations and usage constraints,
supply chain shortages and increases in the prices of production imports, availability, terms and deployment of capital, changes in government regulation, particularly mining rights and environmental
regulation, fluctuations in exchange rates, the adequacy of the Group's insurance coverage and socio-economic or political instability in South Africa and Papua New Guinea and other countries in
which we operate.
For a more detailed discussion of such risks and other factors (such as availability of credit or other sources of financing), see the Company's latest Integrated Annual Report on Form 20-F which is on
file with the Securities and Exchange Commission, as well as the Company's other Securities and Exchange Commission filings. The Company undertakes no obligation to update publicly or release
any revisions to these forward-looking statements to reflect events or circumstances after the date of this annual report or to reflect the occurrence of unanticipated events, except as required by law.
HARMONY'S ANNUAL REPORTS
Harmony's Integrated Annual Report and the Form 20-F filed with the United States' Securities and Exchange Commission
for the financial year ended 30 June 2015 are available on our website at
http://www.harmony.co.za/investors/reporting/annual-reports.
CONTACT DETAILS
CORPORATE OFFICE
Randfontein Office Park
PO Box 2, Randfontein, 1760, South Africa
Corner Main Reef Road/Ward Avenue
Randfontein, 1759, South Africa
Tel: +27 11 411 2000
Website: www.harmony.co.za
DIRECTORS
P T Motsepe* Chairman
M Motloba*^ Deputy chairman
P W Steenkamp 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 Markus*^, M Msimang*^, K T Nondumo*^,
V P Pillay *^, J L Wetton*^, A J Wilkens*
* Non-executive
^ Independent
(1) Mozambican
INVESTOR RELATIONS TEAM
Email: HarmonyIR@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
Henrika Ninham
Investor Relations Manager
Tel: +27 (0)11 411 2314
Mobile: +27 (0)82 759 1775
Email: henrika@harmony.co.za
COMPANY SECRETARY
Riana Bisschoff
Tel: +27 (0)11 411 6020
Mobile: +27 (0)83 629 4706
Email: 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
Tel: +27 86 154 6572
Fax: +27 86 674 2450
Email: meetfax@linkmarketservices.co.za
ADR(2) 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
(2) ADR: American Depository Receipts
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
Tel: +27 11 507 0300
Fax: +27 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
In South Africa, Harmony employs 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 Papua New Guinea, competent persons are
appointed for the mineral resources and mineral reserves for
specific projects and operations.
These competent persons, who are full-time employees of Harmony,
consent to the inclusion in the report of the matters based on the
information in the form and context in which it appears.
- Resources and reserves of South Africa:
Jaco Boshoff, BSc (Hons), MSc, MBA, Pr. Sci. Nat, MSAIMM,
MGSSA, who has 20 years' relevant experience, is registered
with the South African Council for Natural Scientific Professions
(SACNASP) and is a member of the South African Institute of
Mining and Metallurgy (SAIMM).
Mr Boshoff is Harmony's Lead Competent Person.
- Resources and reserves of Papua New Guinea:
Gregory Job, BSc, MSc, who has 27 years' relevant experience and
is a member of the Australian Institute of Mining and Metallurgy
(AusIMM).
For more information on Harmony's reserves and resources as
at 30 June 2015, please refer to https://www.harmony.co.za/
investors/reporting/annual-reports.
Mineral resource and reserve information as at 30 June 2015
has not changed.
SHAREHOLDER INFORMATION
Issued ordinary share capital at 31 December 2015 436 789 929
Issued ordinary share capital at 30 September 2015 436 187 133
MARKET CAPITALISATION
At 31 December 2015 (ZARm) 6 814
At 31 December 2015 (US$m) 440
At 30 September 2015 (ZARm) 3 764
At 30 September 2015 (US$m) 272
HARMONY ORDINARY SHARES AND
ADR PRICES
12-month high (1 January 2015 – 31 December 2015)
for ordinary shares 16.25
12-month low (1 January 2015 – 31 December 2015)
for ordinary shares 8.13
12-month high (1 January 2015 – 31 December 2015)
for ADRs 1.34
12-month low (1 January 2015 – 31 December 2015)
for ADRs 0.53
FREE FLOAT 100%
ADR RATIO 1:1
JSE LIMITED HAR
Range for quarter (1 October – 31 December 2015
closing prices) R16.25 – R8.13
Average daily volume for the quarter (1 October –
31 December 2015) 1,740,583 shares
Range for quarter (1 July – 30 September 2015
closing prices) R15.99 – R8.40
Average daily volume for the quarter (1 July –
30 September 2015) 2,196,866 shares
NEW YORK STOCK EXCHANGE
including other US trading platforms HMY
Range for quarter (1 October – 31 December 2015
closing prices) US$1.03 – US$0.53
Average daily volume for the quarter (1 October –
31 December 2015) 1,991,128
Range for quarter (1 July – 30 September 2015
closing prices) US$1.34 – US$0.60
Average daily volume for the quarter (1 July –
30 September 2015) 3,565,559 shares
INVESTORS' CALENDAR
Q3 FY16 presentation (webcast and conference
calls only) 27 May 2016
Q4 FY16 live presentation from Johannesburg 17 August 2016
Release of FY16 Integrated Report and Form 20-F 26 October 2016
Q1 FY17 presentation (webcast and conference
calls only) 14 November 2016
Annual General Meeting 25 November 2016
MESSAGE FROM THE CHIEF EXECUTIVE OFFICER
During my first five weeks at Harmony, I have spent time
with senior management, visited the various operations and met
with the operational teams in both South Africa and Papua New
Guinea. I am very impressed with the quality of our management
and mining teams. The company owns excellent ore bodies.
I have no doubt that the teams can deliver on their plans during
financial year 2016.
Harmony recorded another solid set of results for the second
quarter of financial year 2016 – three consecutive quarters of
increased delivery. Underground grade was 7% higher, the majority of
our operations produced higher kilograms with most of the
operations generating net free operational cash flow except
for Kalgold, Kusasalethu and Hidden Valley. Combined with
a 7% increase in the average R/kg gold price received from
R473 567/kg in the September 2015 quarter to R507 490/kg
during the quarter under review, revenue increased by 10% to
R4.57 billion (to US$321 million).
Higher production, combined with an increase in the R/kg gold
price, means that Harmony's cash flow is strengthened, our
margins are growing, we are able to repay our debt and able to fund Golpu.
During December 2015 we repaid R1.12 billion (US$78 million) of our debt.
At quarter end our net debt was at R2.52 billion (US$162 million).
Despite the gold price trading around multi-year lows in US dollar
terms, Harmony, with 94% of its operating revenue generated
in South Africa, benefits from the weak rand which more than
offsets the impact of the low US dollar gold price.
SAFETY
Harmony's safety statistics are improving – both quarter on
quarter as well as year on year. Regrettably the South African
operations did report two fatalities during the quarter. The men
who lost their lives were Carlos Sitoe (stoper at Masimong) and
Moeketsi Mongoako (rock drill operator at Target). Our heartfelt
condolences go to the families, friends and colleagues of these
men. We will continue to work towards zero harm.
OPERATIONAL
After a good performance in gold production in Q1FY16, gold
production for the December 2015 quarter increased by a further
2% to 8 929 kilograms/287 074 ounces. The increase was mainly
due to our mines keeping their momentum most notably Hidden
Valley recovering after the previous quarter and the improved
results flowing through from Doornkop post its restructuring.
Overall, Harmony's production profit increased by 84% to
R1.29 billion (68% to US$91 million) quarter on quarter, mainly
due to a 7% increase in the gold price received and supported by
a 2% increase in gold production.
All-in sustaining costs for all operations decreased by 7%
to R434 834/kg in the December 2015 quarter, compared
to R466 061/kg in the September 2015 quarter (15% decrease to
US$950/oz). Cash operating costs for the December 2015 quarter
decreased by 6% to R360 153/kg (15% decrease to US$787/oz).
Gold production at the following operations increased during the
December 2015 quarter:
- Hidden Valley (+189kg)(+ 6 077oz). Tonnes milled increased
by 103 000t (33%) whilst recovered grade improved by
17% to 1.28g/t, resulting in a 55% improvement in gold
produced. Hidden Valley's performance during the December
2015 quarter is not in line with plan as yet, as it was adversely
affected by poor grade and road closures which restricted
mining activity. Although an improvement on the prior
quarter, which had significant production stoppages due to a
fatality, the continued high cost nature of this operation has
resulted in the suspension of pre-strip activities until metal
prices significantly improve. Currently accessible ore sources
remain available for the remainder of calendar year 2016,
with the site remaining focused on safely operating at a free
cash flow neutral or better position. The joint venture partners
are concurrently assessing all strategic options in relation to
the future of the asset.
- Joel (+112kg) (+3 601oz) improved gold production by 21%,
due to a 21% increase in recovered grade to 4.69g/t;
- Target 1 (+76kg) (+2 443oz) increased tonnes milled by 8%
resulting in an 8% increase in gold produced;
- Phakisa (+62kg) (+1 993oz) increased gold production by 6%,
due to a 6% improvement in the recovered grade to 5.87g/t;
- Dumps (+45kg) (+1 447oz) increased tonnes milled by 11%
and recovered grade improved by 5% to 0.39g/t, resulting in
an 18% increase in gold produced;
- Doornkop (+44kg) (+1 415oz) recorded a 7% increase in gold
produced post the restructuring of the mine, as a result of a
7% improvement in the recovered grade to 4.73g/t, partially
offset by a 9% decrease in tonnes milled resulting in a 7%
increase in gold produced;
- Kalgold (+33kg) (+1 061oz) increased gold production by
12% when compared to the September 2015 quarter. This
was mainly due to an 8% improvement in the recovery grade
to 0.81g/t and a 4% increase in tonnes milled.
The following operations recorded a decrease in production
quarter on quarter:
- Masimong (-122kg) (-3 923oz) was impacted by the fatal
accident and milled 29 000 tonnes (15%) less than in the
September 2015 quarter which was the main reason for the
17% decrease in gold production;
- Tshepong (-113kg) (-3 633oz) recorded a 6% decrease in the
recovery grade to 4.43g/t and a 3% decrease in tonnes milled.
Production results were however in line with the operation's
plan;
- Bambanani's (-82kg) (-2 637oz) recovered grade decreased
by 6% to 13.82g/t for the quarter under review, but still
higher than the 11.5g/t guided for the year and tonnes milled
decreased by 3%;
- Kusasalethu (-51kg) (-1 640oz) milled 72 000 (32%) tonnes
less than in the September 2015 quarter. This was mainly
due to the reduction of waste after the re-commissioning
of the waste pass system. The reduction of
the waste to reef ratio combined with a 7% increase in the
face grade for the December 2015 quarter, resulted in a 39%
increase in the recovered grade to 6.25g/t.
The infrastructure related problems at this mine are however
continuing and management is in the process of assessing the
best way in which to address these issues.
I anticipate that the third quarter will show lower production due
to late start-ups post the December 2015 quarter and the Easter
holidays which also fall within the March quarter. I believe our
annual guidance of approximately 1.1 million ounces will not be
affected.
FINANCIAL RESULTS
Revenue
Revenue increased by 10% as a result of the 3% increase in gold
sold to 8 999kg/289 323 oz and a 7% increase in the average gold
price received at R507 490/kg (decrease of 2% to US$1 109/oz) in
the December 2015 quarter.
Production costs
Production costs decreased by 5% to R3.28 billion (decreased
by 13% to US$230 million) in the December 2015 quarter. The
decrease is mainly a result of the decrease in electricity cost of
R189 million (US$13 million) due to the higher winter electricity
price tariffs included in the September 2015 quarter.
Exploration expenditure
The increase in exploration expenditure quarter on quarter can be
attributed to an additional drill rig commissioned at Kili Teke.
Other expenses – net
The total of R369 million (US$26 million) in the December 2015
quarter is mainly due to a foreign exchange translation loss of
R374 million (US$26 million) recorded on the US$ borrowings. The
rand weakened by 13% from US$/R13.87 at 30 September 2015
to US$/R15.62 at 31 December 2015.
Profit/(loss) per share
We are pleased to report a 17 SA cents (1 US cents) profit per
share for the December 2015 quarter, improved from the loss per
share of 120 SA cents (9 US cents) for September 2015 quarter.
Cash and cash equivalents
Cash and cash equivalents decreased by R611 million
(US$51 million) due to the debt repayment
of R1.12 billion (US$78 million), offset by net cash generated of
R501 million (US$33 million).
Borrowings
Harmony repaid R1.12 billion (US$78 million) of its debt during the
December 2015 quarter. Repayments consisted of US$50 million
on its US$250 million Revolving Credit Facility and R400 million on
its R1.3 billion facility. The repayments were partially offset by the
foreign translation loss recorded due to the weakening of the rand
exchange rate against the US dollar.
GOLPU
Harmony, together with our joint venture partner Newcrest Mining
Limited, continued discussions with the Papua New Guinean
government on the appropriate terms on which to progress the
pre-mining development agreement.
Golpu is a fantastic asset, which the feasibility study confirms.
The study was completed in December 2015 and is subject to
both joint venture partners' approval before we will be able to
share the results in mid-February 2016.
EXPLORATION
Harmony is one of the few gold mining companies that continue
to spend on exploration. Kili Teke – which is 100% held by
Harmony – is a gold-copper asset which we discovered. A maiden
gold equivalent resource of 4 million ounces was declared for
the Kili Teke copper-gold deposit in November 2015; containing
506 000 tonnes of copper, 1.2 million ounces of gold and 22 000
tonnes of molybdenum.
The Mineral Resource comprises 128 million tonnes at 0.4%
copper, 0.3 g/t Au, 170 ppm molybdenum and was completed in
accordance with the guidelines of the SAMREC and JORC (2012
edition) codes. The Mineral Resource is classified as Inferred, and
has been defined over a zone 600m long, 300m wide and 400m
deep. A second rig was mobilised to site to accelerate the resource
definition and conversion process.
CONCLUSION
Harmony's share price responded following a weaker rand at the
beginning of December 2015 and Harmony's announcement
that it started repaying its debt. It continued its upward trend
throughout January 2016. Each of our mines has been positioned
to deliver safe, profitable ounces and my focus will be to deal
with the ones that aren't, to ensure that Harmony benefits from
a higher gold price.
Peter Steenkamp
Chief Executive Officer
OPERATING RESULTS – QUARTER ON QUARTER (RAND/METRIC) (US$/IMPERIAL)
South Africa
Underground production Surface production
Three Total
months Total Total South Hidden Total
ended Kusasalethu Doornkop Phakisa Tshepong Masimong Target 1 Bambanani Joel Unisel Underground Phoenix Dumps Kalgold Surface Africa Valley Harmony
Ore milled - t'000 Dec-15 155 150 178 272 160 197 62 139 110 1 423 1 660 753 374 2 787 4 210 419 4 629
Sep-15 227 164 178 281 189 183 64 139 112 1 537 1 644 676 360 2 680 4 217 316 4 533
Gold produced - kg Dec-15 969 709 1 044 1 206 606 1 082 857 652 462 7 587 209 296 302 807 8 394 535 8 929
Sep-15 1 020 665 982 1 319 728 1 006 939 540 477 7 676 210 251 269 730 8 406 346 8 752
- oz Dec-15 31 154 22 795 33 565 38 774 19 483 34 787 27 553 20 962 14 854 243 927 6 719 9 517 9 710 25 946 269 873 17 201 287 074
Sep-15 32 794 21 380 31 572 42 407 23 406 32 344 30 190 17 361 15 336 246 790 6 752 8 070 8 649 23 471 270 261 11 124 281 385
Yield - g/tonne Dec-15 6.25 4.73 5.87 4.43 3.79 5.49 13.82 4.69 4.20 5.33 0.13 0.39 0.81 0.29 1.99 1.28 1.93
Sep-15 4.49 4.05 5.52 4.69 3.85 5.50 14.67 3.88 4.26 4.99 0.13 0.37 0.75 0.27 1.99 1.09 1.93
Cash - R/kg Dec-15 447 254 356 415 316 269 362 768 418 186 286 296 229 501 321 026 404 123 343 965 372 742 355 578 441 887 392 322 348 614 541 196 360 153
operating Sep-15 479 826 409 116 348 017 347 719 365 380 314 830 222 508 389 857 388 352 358 168 393 214 385 948 515 428 435 751 364 906 868 384 384 810
costs - $/oz Dec-15 977 779 691 793 914 626 501 701 883 752 814 777 965 857 762 1 182 787
Sep-15 1 148 979 833 832 874 753 532 933 929 857 941 923 1 233 1 043 873 2 078 921
- R/tonne Dec-15 2 796 1 685 1 855 1 608 1 584 1 572 3 172 1 506 1 697 1 834 47 140 357 114 695 691 695
Sep-15 2 156 1 659 1 920 1 632 1 407 1 731 3 265 1 515 1 654 1 789 50 143 385 119 727 951 743
Gold sold - kg Dec-15 944 718 1 070 1 236 621 1 126 879 682 474 7 750 197 288 270 755 8 505 494 8 999
Sep-15 1 072 680 966 1 297 716 970 924 555 470 7 650 212 263 266 741 8 391 352 8 743
- oz Dec-15 30 350 23 084 34 401 39 738 19 966 36 202 28 260 21 927 15 239 249 167 6 334 9 259 8 681 24 274 273 441 15 882 289 323
Sep-15 34 466 21 862 31 058 41 699 23 020 31 186 29 707 17 844 15 111 245 953 6 816 8 456 8 552 23 824 269 777 11 317 281 094
Revenue (R'000) Dec-15 475 337 364 032 544 357 628 933 315 875 570 371 447 580 347 220 241 147 3 934 852 99 887 146 543 137 278 383 708 4 318 560 248 345 4 566 905
Sep-15 508 322 322 224 457 404 613 671 339 013 462 161 435 752 262 500 222 241 3 623 288 100 421 124 576 125 932 350 929 3 974 217 166 176 4 140 393
Cash operating (R'000) Dec-15 433 389 252 698 330 185 437 498 253 421 309 772 196 682 209 309 186 705 2 609 659 77 903 105 251 133 450 316 604 2 926 263 289 540 3 215 803
costs Sep-15 489 423 272 062 341 753 458 642 265 997 316 719 208 935 210 523 185 244 2 749 298 82 575 96 873 138 650 318 098 3 067 396 300 461 3 367 857
Inventory (R'000) Dec-15 (13 278) 8 918 8 183 12 020 6 948 17 234 8 573 13 949 4 218 66 765 (4 055) (3 580) (13 824) (21 459) 45 306 13 755 59 061
movement Sep-15 25 452 5 400 (5 714) (6 134) (4 334) (10 296) (4 696) 5 656 (2 725) 2 609 589 5 155 (2 201) 3 543 6 152 65 767 71 919
Operating costs (R'000) Dec-15 420 111 261 616 338 368 449 518 260 369 327 006 205 255 223 258 190 923 2 676 424 73 848 101 671 119 626 295 145 2 971 569 303 295 3 274 864
Sep-15 514 875 277 462 336 039 452 508 261 663 306 423 204 239 216 179 182 519 2 751 907 83 164 102 028 136 449 321 641 3 073 548 366 228 3 439 776
Production (R'000) Dec-15 55 226 102 416 205 989 179 415 55 506 243 365 242 325 123 962 50 224 1 258 428 26 039 44 872 17 652 88 563 1 346 991 (54 950) 1 292 041
profit Sep-15 (6 553) 44 762 121 365 161 163 77 350 155 738 231 513 46 321 39 722 871 381 17 257 22 548 (10 517) 29 288 900 669 (200 052) 700 617
($'000) Dec-15 3 880 7 194 14 469 12 603 3 899 17 095 17 022 8 707 3 528 88 397 1 830 3 151 1 240 6 221 94 618 (3 860) 90 758
Sep-15 (504) 3 444 9 337 12 399 5 951 11 982 17 811 3 563 3 056 67 039 1 328 1 735 (810) 2 253 69 292 (15 392) 53 900
Capital (R'000) Dec-15 73 426 45 130 75 634 73 790 25 362 82 027 29 526 58 723 14 212 477 830 469 1 686 7 007 9 162 486 992 23 888 510 880
expenditure Sep-15 89 877 46 623 84 984 65 588 27 599 79 317 23 780 53 186 15 590 486 544 107 1 511 11 021 12 639 499 183 16 481 515 664
($'000) Dec-15 5 158 3 170 5 313 5 183 1 782 5 762 2 074 4 125 998 33 565 33 118 492 643 34 208 1 678 35 886
Sep-15 6 914 3 587 6 538 5 046 2 123 6 102 1 829 4 092 1 199 37 430 8 116 848 972 38 402 1 268 39 670
Cash Operating - R/kg Dec-15 523 029 420 068 388 716 423 954 460 038 362 106 263 953 411 092 434 885 406 945 374 986 361 274 465 089 403 675 406 630 585 847 417 368
Cost and Capital - $/oz Sep-15 567 941 479 226 434 559 397 445 403 291 393 674 247 833 488 350 421 036 421 553 393 724 391 968 556 398 453 064 424 290 916 017 443 730
Dec-15 1 143 918 849 926 1 005 791 577 898 950 889 819 789 1 016 882 888 1 280 912
Sep-15 1 359 1 147 1 040 951 965 942 593 1 169 1 007 1 009 942 938 1 331 1 084 1 015 2 192 1 062
All-in - R/kg Dec-15 543 262 439 592 403 492 439 798 491 644 378 399 274 976 382 904 459 895 420 131 378 183 369 575 496 491 417 208 419 322 702 167 434 834
sustaining Sep-15 581 984 490 361 450 652 413 998 428 847 412 106 250 346 451 236 443 126 434 829 393 684 404 837 574 506 462 553 436 751 1 163 868 466 061
costs - $/oz Dec-15 1 187 960 882 961 1 074 827 601 837 1 005 918 826 808 1 085 912 916 1 547 950
Sep-15 1 393 1 173 1 078 991 1 026 986 599 1 080 1 060 1 040 942 969 1 375 1 107 1 045 2 836 1 115
CONDENSED CONSOLIDATED INCOME STATEMENTS (RAND)
Quarter ended Six month ended Year ended
31 December 30 September 31 December 31 December 31 December 30 June
2015 2015 2014 2015 2014 2015
Figures in million Note (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Revenue 4 567 4 140 3 715 8 707 8 146 15 435
Cost of sales 2 (3 918) (4 088) (3 970) (8 006) (8 289) (19 053)
Production costs (3 275) (3 439) (3 096) (6 715) (6 614) (12 632)
Amortisation and depreciation (531) (555) (602) (1 086) (1 252) (2 472)
Impairment of assets - - - - - (3 471)
Other items ( 112) (94) (272) (205) (423) (478)
Gross profit/(loss) 649 52 ( 255) 701 (143) (3 618)
Corporate, administration and other expenditure (93) (89) (83) (182) (194) (378)
Social investment expenditure (14) (11) (15) (25) (39) (71)
Exploration expenditure (60) (43) (95) (103) (180) (263)
Profit on sale of property, plant and equipment 2 2 1 4 1 6
Loss on scrapping of property, plant and
equipment - - (430) - (430) (491)
Other expenses (net) 5 (369) (443) (52) (813) (239) (378)
Operating profit/(loss) 115 (532) (929) (418) (1 224) (5 193)
Profit/(loss) from associates 4 35 - - 35 - (25)
Profit on disposal of investments - - - - - 4
Net gain/(loss) on financial instruments (5) ( 8) 8 ( 13) 15 9
Investment income 57 57 59 114 110 229
Finance cost (70) (71) (67) (141) (132) (264)
Profit/(loss) before taxation 132 (554) (929) (423) (1 231) (5 240)
Taxation (56) 33 73 ( 22) 109 704
Normal taxation ( 1) (1) (4) ( 1) (3) 5
Deferred taxation (55) 34 77 ( 21) 112 699
Net profit/(loss) for the period 76 (521) (856) (445) (1 122) (4 536)
Attributable to:
Owners of the parent 76 (521) (856) (445) (1 122) (4 536)
Profit/(loss) per ordinary share (cents) 3
Basic profit/(loss) 17 (120) (197) (102) (258) (1 044)
Diluted profit/(loss) 17 (120) (197) (102) (258) (1 044)
Figures may not cross-cast as they are rounded independently.
The accompanying notes are an integral part of these condensed consolidated financial statements.
The condensed consolidated financial statements for the six months ended 31 December 2015 have been prepared by Harmony Gold Mining Company
Limited's corporate reporting team headed by Herman Perry. This process was supervised by the financial director, Frank Abbott and approved by the board of
Harmony Gold Mining Company Limited. These financials have not been audited or independently reviewed.
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (RAND)
Quarter ended Six months ended Year ended
31 December 30 September 31 December 31 December 31 December 30 June
2015 2015 2014 2015 2014 2015
Figures in million (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Net profit/(loss) for the period 76 (521) (856) (445) (1 122) (4 536)
Other comprehensive income/(loss) for the period, net
of income tax 256 216 (114) 472 65 59
Items that may be reclassified subsequently to profit or
loss: 256 216 (114) 472 65 54
Foreign exchange translation 256 216 (114) 472 65 54
Items that will not be reclassified to profit or loss: - - - - - 5
Remeasurement of retirement benefit obligation
Actuarial gain recognised during the year - - - - - 8
Deferred taxation thereon - - - - - (3)
Total comprehensive income/(loss) for the period 332 (305) (970) 27 (1 057) (4 477)
Attributable to:
Owners of the parent 332 (305) (970) 27 (1 057) (4 477)
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(RAND)
for the six months ended 31 December 2015 (Unaudited)
Other Accumulated
Figures in million Share capital reserves loss Total
Balance - 30 June 2015 28 324 3 787 (5 358) 26 753
Share-based payments - 99 - 99
Net loss for the period - - (445) (445)
Other comprehensive income for the period - 472 - 472
Balance - 31 December 2015 28 324 4 358 (5 803) 26 879
Balance - 30 June 2014 28 325 3 539 (822) 31 042
Share-based payments - 129 - 129
Net loss for the period - - (1 122) (1 122)
Other comprehensive income for the period - 65 - 65
Balance - 31 December 2014 28 325 3 733 (1 944) 30 114
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS (RAND)
At At At At
31 December 30 September 30 June 31 December
2015 2015 2015 2014
Figures in million Note (Unaudited) (Unaudited) (Audited) (Unaudited)
ASSETS
Non-current assets
Property, plant and equipment 30 101 29 808 29 548 32 843
Intangible assets 878 882 885 883
Restricted cash 55 52 48 42
Restricted investments 2 434 2 408 2 384 2 366
Investments in associates 4 10 - - -
Investments in financial assets 5 5 5 5
Inventories 36 36 36 50
Trade and other receivables 4 74 80 80 120
Total non-current assets 33 593 33 271 32 986 36 380
Current assets
Inventories 1 260 1 263 1 292 1 337
Trade and other receivables 658 754 746 822
Income and mining taxes 11 28 30 43
Restricted cash 16 16 16 15
Cash and cash equivalents 876 1 487 1 067 1 374
Total current assets 2 821 3 548 3 151 3 591
Total assets 36 414 36 819 36 137 39 971
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 28 324 28 324 28 324 28 325
Other reserves 4 358 4 045 3 787 3 733
Accumulated loss (5 803) (5 879) (5 358) (1 944)
Total equity 26 879 26 490 26 753 30 114
Non-current liabilities -
Deferred tax liabilities 1 926 1 871 1 906 2 562
Provision for environmental rehabilitation 2 364 2 292 2 218 2 170
Retirement benefit obligation 170 167 163 255
Other non-current liabilities 41 39 37 42
Borrowings 5 3 092 4 129 3 399 -
Total non-current liabilities 7 593 8 498 7 723 5 029
Current liabilities
Borrowings 5 299 - - 3 121
Income and mining taxes 1 1 1 -
Trade and other payables 1 642 1 830 1 660 1 707
1 942 1 831 1 661 4 828
Liabilities of disposal groups classified as held for sale - - - -
Total current liabilities 1 942 1 831 1 661 4 828
Total equity and liabilities 36 414 36 819 36 137 39 971
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (RAND)
Quarter ended Six months ended Year ended
31 December 30 September 31 December 31 December 31 December 30 June
2015 2015 2014 2015 2014 2015
Figures in million Note (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Cash flow from operating activities
Cash generated/(utilised) by operations 1 040 696 (64) 1 736 1 007 1 928
Interest and dividends received 24 23 30 47 55 101
Interest paid (39) - (23) (39) (46) (108)
Income and mining taxes refunded 18 - 39 18 64 85
Cash generated/(utilised) by operating activities 1 043 719 ( 18) 1 762 1 080 2 006
Cash flow from investing activities
(Increase)/decrease in restricted cash (4) (3) (4) (7) - 8
Decrease in restricted investments 2 1 - 3 1 31
Loan to associate 7 - (120) 7 (120) (120)
Net additions to property, plant and
equipment 7 (573) (595) (748) (1 168) (1 399) (2 827)
Cash utilised by investing activities (568) (597) (872) (1 165) (1 518) (2 908)
Cash flow from financing activities
Borrowings raised - 300 - 300 - 941
Borrowings repaid (1 117) - - (1 117) - (793)
Cash generated/(utilised) by financing activities (1 117) 300 - ( 817) - 148
Foreign currency translation adjustments 31 (2) (17) 29 (17) (8)
Net increase/(decrease) in cash and cash equivalents (611) 420 (907) ( 191) (455) (762)
Cash and cash equivalents - beginning of period 1 487 1 067 2 281 1 067 1 829 1 829
Cash and cash equivalents - end of period 876 1 487 1 374 876 1 374 1 067
Figures may not cross-cast as they are rounded independently.
The accompanying notes are an integral part of these condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
for the six months ended 31 December 2015 (Rand)
1 Accounting policies
Basis of accounting
The condensed consolidated financial statements for the six months ended 31 December 2015 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 2015, 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.
2 Cost of sales
Quarter ended Six months ended Year ended
31 December 30 September 31 December 31 December 31 December 30 June
2015 2015 2014 2015 2014 2015
Figures in million (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Production costs - excluding royalty 3 237 3 414 3 074 6 652 6 560 12 537
Royalty expense 38 25 22 63 54 95
Amortisation and depreciation 531 555 602 1 086 1 252 2 472
Impairment of assets - - - - - 3 471
Rehabilitation expenditure/(credit) 16 13 5 28 19 (6)
Care and maintenance cost of restructured shafts(1) 37 22 20 58 37 106
Employment termination and restructuring costs - 15 182 15 230 251
Share-based payments 60 45 66 105 139 208
Other (1) (1) (1) (1) (2) (81)
Total cost of sales 3 918 4 088 3 970 8 006 8 289 19 053
(1) Included in the September 2015 quarter is a credit of R15 million relating to an insurance claim approved on the Brand 1A vent shaft explosion.
3 Earnings/(loss) per share
Quarter ended Six months ended Year ended
31 December 30 September 31 December 31 December 31 December 30 June
2015 2015 2014 2015 2014 2015
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Weighted average number of shares (million) 435.3 435.1 434.2 435.2 434.1 434.4
Weighted average number of diluted shares (million) 436.9 435.7 435.2 436.9 436.1 438.1
Total earnings/(loss) per share (cents):
Basic loss 17 (120) (197) (102) (258) (1 044)
Diluted loss 17 (120) (197) (102) (258) (1 044)
Headline earnings/(loss) 17 (120) (114) (103) (175) (189)
Diluted headline earnings/(loss) 17 (120) (114) (103) (175) (189)
Figures in million
Reconciliation of headline earnings/(loss):
Net profit/(loss) 76 (521) (856) (445) (1 122) (4 536)
Adjusted for:
Profit on disposal of investments(1) - - - - - (4)
Impairment of assets - - - - - 3 471
Taxation effect on impairment of assets - - - - - (169)
Profit on sale of property, plant and equipment (2) (2) (1) (4) (1) (6)
Taxation effect of (loss)/profit on sale of property,
plant and equipment - - - - - (1)
Loss on scrapping of property, plant and equipment - - 430 - 430 491
Taxation effect on loss of scrapping of property, plant
and equipment - - (69) - (69) (67)
Headline earnings/(loss) 74 (523) (496) ( 449) (763) (821)
(1) There is no taxation effect on this item.
4 Investment in associate
Harmony's portion of the subordinated shareholders' loan extended to Rand Refinery Proprietary Limited (Rand Refinery) in December 2014 amounts to
R120 million. This loan forms part of the net investment in associate. At 30 June 2015, Harmony recorded R25 million against the loan for its share of
losses, as well as a provision for impairment of R15 million.
Harmony's share of profits for the six months to end of December 2015 totalled R35 million. This profit effectively reversed the loss of R25 million
recognised against the loan in June 2015 and an investment in associate of R10 million has been recognised on the balance sheet at 31 December 2015.
The net investment's recoverability was assessed and a provision for impairment of R25 million was recognised in "Other expenses (net)" against the loan.
The fair value measurement of the net investment is classified as level 3 and is non-recurring.
5 Borrowings
During the December 2015 quarter, R400 million was repaid on the R1.3 billion Nedbank revolving credit facility and US$50 million on the US$ revolving
credit facility. During the September 2015 quarter, R300 million was drawn down on the R1.3 billion Nedbank revolving credit facility. The weakening of the
Rand against the US$ resulted in a foreign exchange translation loss of R374 million being recorded in the December 2015 quarter (September 2015
quarter: R426 million), increasing the Borrowings balance and Other expenses (net) total.
US$ facility Rand facility
Figures in million US dollar SA rand
Borrowings summary at 31 December 2015
Facility 250 1 300
Drawn down 200 300
Undrawn committed borrowing facilities 50 1 000
Maturity February December
2018 2016
Interest rate LIBOR + 3% JIBAR + 3.5%
The drawn amount of R300 million on the Nedbank facility is repayable during December 2016 and has been reclassified as current.
6 Financial risk management activities
Fair value determination
The fair value levels of hierarchy are as follows:
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).
The following table presents the group's assets and liabilities that are measured at fair value by level:
At At At At
31 December 30 September 30 June 31 December
2015 2015 2015 2014
Figures in million (Unaudited) (Unaudited) (Audited) (Unaudited)
Available-for-sale financial assets(1)
Level 1 - - - -
Level 2 - - - -
Level 3 5 5 5 5
Fair value through profit or loss(2)
Level 1 - - - -
Level 2 614 532 538 375
Level 3 - - - -
(1) Level 3 fair values have been valued by the directors by performing independent valuations on an annual basis.
(2) The majority of the level 2 fair values are directly derived from the Top 40 index on the JSE, and are discounted at market interest rate. This relates to equity-linked deposits in
the group's environmental rehabilitation trust funds (included in restricted investments).
7 Net additions to property, plant and equipment
Quarter ended Six months ended Year ended
31 December 30 September 31 December 31 December 31 December 30 June
2015 2015 2014 2015 2014 2015
Figures in million (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited) (Audited)
Capital expenditure - operations 511 516 682 1 027 1 278 2 470
Capital and capitalised exploration and evaluation
expenditure for Golpu 53 61 1 114 16 119
Additions resulting from stripping activities at Hidden
Valley 9 19 66 28 105 236
Other - (1) (1) (1) - 2
Net additions 573 595 748 1 168 1 399 2 827
8 Commitments and contingencies
At At At At
31 December 30 September 30 June 31 December
2015 2015 2015 2014
Figures in million (Unaudited) (Unaudited) (Audited) (Unaudited)
Capital expenditure commitments:
Contracts for capital expenditure 166 126 158 172
Authorised by the directors but not contracted for 1 607 1 980 257 1 646
1 773 2 106 415 1 818
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 annual financial statements for the financial year ended 30 June 2015. There were no
significant changes in contingencies since 30 June 2015.
9 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.
Movement in shares owned by directors/prescribed officers for the six months ended 31 December 2015:
Shares Performance
purchased in shares vested
Name of director/prescribed officer open market and retained
Frank Abbott (Financial director)(1) 300 000 18 547
Graham Briggs (Chief executive officer) - 46 874
Harry "Mashego" Mashego (Executive director) - 7 760
Ken Dicks (Independent non-executive director)(2) 15 000 n/a
Johannes van Heerden - 13 153
(1) Purchased on 15 December 2015.
(2) Purchased on 8 December 2015.
Harmony has signed a R150 million guarantee for the ARM Broad Based Economic Empowerment (BBEE) Trust, a member of the African Rainbow
Minerals (ARM) group. The guarantee is for additional security for the ARM BEE Trust loan due to Nedbank Limited. The fair value of the guarantee was
R15 million at 31 December 2015, and has been recorded in Other expenses (net) and Trade and other payables.
10 Subsequent events
Peter Steenkamp was appointed as chief executive officer (CEO) on 1 January 2016, replacing Graham Briggs who resigned as the CEO on 31 December
2015.
11 Segment report
The segment report follows on below.
12 Reconciliation of segment information to condensed consolidated income statements and balance sheets
Six months ended
31 December 31 December
2015 2014
Figures in million (Unaudited) (Unaudited)
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 profit
Total segment revenue 8 707 8 146
Total segment production costs (6 715) (6 614)
Production profit per segment report 1 992 1 532
Depreciation (1 086) (1 252)
Other cost of sales items (205) (423)
Gross profit as per income statements(1) 701 (143)
(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
31 December 31 December
2015 2014
Figures in million (Unaudited) (Unaudited)
Reconciliation of total segment mining assets to consolidated property, plant and equipment
Property, plant and equipment not allocated to a segment
Mining assets 749 791
Undeveloped property 5 139 5 139
Other non-mining assets 183 162
Wafi-Golpu assets 1 814 1 105
7 885 7 197
SEGMENT REPORT (RAND/METRIC)
for the six months ended 31 December 2015 (Unaudited)
Revenue Production cost Production profit/(loss) Mining assets Capital expenditure# Kilograms produced Tonnes milled
31 December 31 December 31 December 31 December 31 December 31 December 31 December
2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014 2015 2014
R million R million R million R million R million kg t'000
South Africa
Underground
Kusasalethu 984 1 005 935 1 065 49 (60) 3 661 3 526 163 247 1 989 2 109 382 476
Doornkop 686 620 539 566 147 54 2 237 3 332 92 129 1 374 1 346 314 298
Phakisa 1 002 720 674 589 328 131 4 274 4 625 161 213 2 026 1 628 356 300
Tshepong 1 243 1 010 902 805 341 205 4 079 3 997 139 171 2 525 2 288 553 528
Masimong 655 620 522 508 133 112 797 879 53 89 1 334 1 403 349 373
Target 1 1 032 912 633 596 399 316 2 840 2 799 161 143 2 088 2 052 380 386
Bambanani 883 617 410 347 473 270 810 842 53 64 1 796 1 391 126 115
Joel 610 563 439 419 171 144 673 513 112 90 1 192 1 162 278 285
Unisel 463 420 374 342 89 78 567 625 30 61 939 948 222 225
Target 3(a) - 222 - 177 - 45 528 546 - 20 - 483 - 90
Surface
All other surface operations 734 709 617 582 117 127 474 475 22 19 1 537 1 565 5 467 5 225
Total South Africa 8 292 7 418 6 045 5 996 2 247 1 422 20 940 22 159 986 1 246 16 800 16 375 8 427 8 301
International
Hidden Valley 415 728 670 618 (255) 110 1 276 3 487 40 33 881 1 519 735 905
Total international 415 728 670 618 (255) 110 1 276 3 487 40 33 881 1 519 735 905
Total operations 8 707 8 146 6 715 6 614 1 992 1 532 22 216 25 646 1 026 1 279 17 681 17 894 9 162 9 206
Reconciliation of the segment
information to the condensed
consolidated financial statements
(refer to note 12) - - - - 7 885 7 197
8 707 8 146 6 715 6 614 30 101 32 843
# Capital expenditure for international operations excludes expenditure spend on Golpu of R114 million (2014: R16 million).
(a) Target 3 was placed on care and maintenance in October 2014.
Date of release: 4 February 2016
Date: 04/02/2016 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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