Wrap Text
Results for the six months and year ended 30 June 2016
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
H2 FY16 RESULTS
FOR THE SIX MONTHS AND YEAR ENDED
30 JUNE 2016
KEY FEATURES
Year on year
- 6% increase in underground recovered grade - Net profit of R949 million (US$64 million) - Headline earnings per share (HEPS)
- 54% reduction in net debt to R1.08 billion - Dividend of 50 SA cents (4 US cents) of 221 SA cents (15 US cents)
(61% to US$74 million) - Enhancing our portfolio of copper-gold
assets
6 months 6 months
ended ended
June December Year Year
2016 2015 % ended ended %
(H2FY16) (H1FY16) Variance June 2016 June 2015 Variance
Gold produced – kg 15 974 17 681 (10) 33 655 33 513 –
– oz 513 576 568 459 (10) 1 082 035 1 077 466 –
Cash operating costs – R/kg 413 796 372 358 (11) 392 026 369 203 (6)
– US$/oz 836 851 2 841 1 003 16
Gold sold – kg 15 900 17 742 (10) 33 642 34 332 (2)
– oz 511 198 570 417 (10) 1 081 615 1 103 793 (2)
Underground grade – g/t 4.88 5.16 (5) 5.02 4.75 6
Total costs and capital – R/kg 484 167 430 417 (12) 455 929 442 895 (3)
– US$/oz 978 983 1 978 1 203 19
All-in sustaining costs* – R/kg 492 792 444 884 (11) 467 526 453 044 (3)
– US$/oz 996 1 016 2 1 003 1 231 19
Gold price received – R/kg 605 476 490 773 23 544 984 449 570 21
– US$/oz 1 223 1 121 9 1 169 1 222 (4)
Production profit – R million 3 092 1 992 55 5 084 2 802 81
– US$ million 201 146 38 350 245 43
Basic earnings/(loss) per share – SAc/s 320 (102) >100 218 (1 044) >100
– USc/s 21 (7) >100 15 (86) >100
Headline earnings/(loss) – Rm 1 412 (449) >100 964 (821) >100
– US$m 92 (33) >100 66 (68) >100
Headline earnings/(loss) per share – SAc/s 324 (103) >100 221 (189) >100
– USc/s 21 (8) >100 15 (16) >100
Exchange rate – R/US$ 15.39 13.62 13 14.50 11.45 27
*Excludes share-based payment charge
HARMONY'S ANNUAL REPORTS
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 2016 will be available on
our website (www.harmony.co.za/investors) on 26 October 2016. Mineral resource and reserve information as at 30 June 2016 is included in this report.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the safe harbor 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 judgment 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 labor 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.
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.
The mineral resources and mineral reserves in this report are based
on information compiled by the following competent persons:
Resources and reserves of South Africa:
Jaco Boshoff, BSc (Hons), MSc, MBA, Pr. Sci. Nat, MSAIMM, MGSSA,
who has 21 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).
Mr Boshoff is Harmony's Lead Competent Person.
Jaco Boshoff
Physical address: Postal address:
Randfontein Office park P.O. Box 2
Corner of Main Reef Road and Ward Avenue Randfontein
Randfontein 1760
South Africa South Africa
Resources and reserves of Papua New Guinea:
Gregory Job, BSc, MSc, who has 28 years' relevant experience and
is a member of the Australian Institute of Mining and Metallurgy (AusIMM).
Greg Job
Physical address: Postal address:
Level 2 PO Box 1562
189 Coronation Drive Milton, Queensland
Milton, Queensland 4064 4064
Australia Australia
Both these competent persons, who are full-time employees of
Harmony Gold Mining Company Limited, consent to the inclusion in
the report of the matters based on the information in the form and
context in which it appears.
SHAREHOLDER INFORMATION
Issued ordinary share capital at 30 June 2016 437 299 479
Issued ordinary share capital at 31 December 2015 436 789 929
Issued ordinary share capital at 30 June 2015 436 187 133
MARKET CAPITALISATION
At 30 June 2016 (ZARm) 22 945
At 30 June 2016 (US$m) 1 567
At 31 December 2015 (ZARm) 6 813
At 31 December 2015 (US$m) 440
At 30 June 2015 (ZARm) 6 800
At 30 June 2015 (US$m) 560
HARMONY ORDINARY SHARES AND ADR PRICES
12-month high (1 July 2015– 30 June 2016) for ordinary shares 62.89
12-month low (1 July 2015– 30 June 2016) for ordinary shares 7.92
12-month high (1 July 2015– 30 June 2016) for ADRs 4.17
12-month low (1 July 2015 – 30 June 2016) for ADRs 0.53
FREE FLOAT 100%
ADR RATIO 1:1
JSE LIMITED HAR
Range for six months (1 January – 30 June 2016 closing prices) R15.60 – R62.89
Average daily volume for the six months (1 January – 30 June 2016) 2 934 226 shares
Range for previous six months (1 July – 31 December 2015
closing prices) R7.92 – R19.89
Average daily volume for the previous six months
(1 July – 31 December 2015) 1 968 724 shares
Range for year (1 July 2015 – 30 June 2016 closing prices) R7.92 – R62.89
Average daily volume for the year (1 July 2015 – 30 June 2016) 2 441 859 shares
Range for the previous year
(1 July 2014 – 30 June 2015 closing prices) R15.32 – R38.50
Average daily volume for the previous year
(1 July 2014 – 30 June 2015) 1 700 854 shares
NEW YORK STOCK EXCHANGE
including other US trading platforms HMY
Range for six months (1 January – 30 June 2016 closing prices) US$1.06 – US$4.17
Average daily volume for the six months (1 January – 30 June 2016) 5 306 179
Range for previous six months US$0.53 – US$1.34
(1 July – 31 December 2015 closing prices)
Average daily volume for the previous six months 2 778 343
(1 July – 31 December 2015)
Range for year (1 July 2015 – 30 June 2016 closing prices) US$0.53 – US$4.17
Average daily volume for the year (1 July 2015 – 30 June 2016) 4 027 274
Range for the previous year (1 July 2014 – 30 June 2015 closing prices) US$1.31 – US$3.29
Average daily volume for the previous year (1 July 2014 – 30 June 2015) 2 989 247
INVESTORS' CALENDAR
Release of Harmony's Integrated Annual Report of FY16 26 October 2016
Annual General Meeting 25 November 2016
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
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
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
MESSAGE FROM THE CHIEF EXECUTIVE OFFICER
Harmony is driven by excellence. We have a proactive approach
to safety and health, with excellent operational and management
teams, a world-class exploration team, we lead environmental
rehabilitation in South Africa and we continued to differentiate
ourselves through quality grade management, increasing
underground grade for the fourth consecutive year – this year by
6% to 5.02g/t.
Our revenue increased by 19% on the back of a 21% increase
in the R/kg gold price, combined with achieving our production
guidance of approximately 1.1 million ounces. Net debt was reduced
by 54% to R1.08 billion (61% to US$74 million).
Having turned around the previous year's headline
loss to headline earnings of 221 SA cents (15 US$ cents), we felt
it prudent to declare a dividend of 50 SA cents (refer to dividend
notice). Harmony remains well positioned to benefit
from a strong R/kg gold price.
We continue to have a positive view on the strength of the gold
price, with cash certainty being key in times of extreme market
volatility. The gold hedge was a necessary short-term step to secure
margins at some of our higher-cost operations and creates certainty
for a portion of our future cash flows. It enables us to further reduce
our debt and strengthen our balance sheet.
SAFETY
Sadly, in spite of recording an overall improvement in our safety
performance for the year, we had ten fatalities – nine in South Africa (SA)
and one in Papua NewGuinea (PNG), compared with nine fatalities in the previous year
(eight in SA and one in PNG).
Year on year, our lost time and reportable injury frequency rates
improved and are in line with the industry's milestone requirements.
During the year – to further assist management in ensuring that
safety standards are followed and regulations are adhered to, and
to increase awareness regarding safe behaviour – we established a
second-level safety assurance team, reporting to our central safety
structure. Training and safety awareness campaigns continue at all
of our operations.
YEAR-ON-YEAR OPERATIONAL RESULTS
Our total gold production for FY16 increased by 142kg (0.4%) to
33 655kg, compared to 33 513kg in FY15. Gold production in South
Africa increased by 4% year on year, if the Target 3 operation
(place on care and maintenance)in FY15 is excluded.
The following operations increased their gold production year on
year:
- Phakisa, by 870kg (28%), as a result of milling 75 000t (12%)
more and increasing recovered grade by 14% to 5.81g/t
(FY15: 5.10g/t);
- Tshepong, by 753kg (18%), as a result of a 10% (96 000t) rise
in milled tonnes and a 7% improvement in recovered grade to
4.62g/t (FY15: 4.31g/t);
- Bambanani, by 105kg (4%), as a result of a 2% increase in
recovered grade to 12.99g/t (FY15: 12.70g/t);
- Doornkop, by 67kg (3%), due to a 4% (27 000t) increase in
tonnes milled and in spite of a 2% decrease in recovered grade
to 4.33g/t;
- Joel, by 20kg, through an increase in recovered grade of 2% to
4.20g/t, while volume remained stable year on year;
- Unisel, by 9kg, a consequence of a 2% (7 000t) increase in tonnes
milled, with volume and grade remaining stable;
- the dumps, by 203kg (24%), through improved tonnes milled
(13%) and recovered grade (9%).
The following operations reported lower gold production for the
year:
- Hidden Valley was down 686kg (23%), due to a 19% decrease in
recovered grade to 1.31g/t (FY15: 1.61g/t) and a 5% decrease in
tonnes. Some 33 production days were lost during the September
2015 quarter when operations were suspended due to a fatality
in July 2015. The December 2015 quarter was affected by poor
grade and road closures, which restricted mining activity.
- Target 1 was 437kg (11%) lower due to a 10% decrease in
recovered grade to 4.58g/t (FY15: 5.11g/t). The operation was
adversely affected by safety stoppages during the March 2016 quarter.
- Kalgold was down 95kg (8%), a result of recovered grade
decreasing by 7% to 0.75g/t (FY15: 0.81g/t) and in spite of tonnes
milled increasing by 1% (7 000t).
- Kusasalethu, 90kg (2%) lower, was negatively affected by a
planned stoppage to upgrade its infrastructure. A 26% (240 000t)
decrease in tonnes milled however was partially offset by a 33%
increase in the recovered grade to 5.78g/t (FY15: 4.35g/t).
- Phoenix was down 63kg (7%) due to a 14% decrease in recovered
grade to 0.12g/t (FY15: 0.14g/t), which was partially offset by a
4% (220 000t) increase in tonnes milled.
- Masimong was 31kg down due to having milled 20 000t (3%) less
than in FY15.
Target 3 was placed on care and maintenance during FY15 and
produced no gold in FY16.
YEAR-ON-YEAR FINANCIAL RESULTS
Higher gold production, together with a higher average Rand gold
price received, delivered a 19% increase in revenue of R18.3 billion (decrease by 6% to US$1.27 billion).
The average Rand gold price increased by 21% to R544 984/kg
(R449 570/kg in FY15), due to a 27% weakening of the Rand
against the US dollar to US$/R14.50 (offsetting the 4 % decrease in the average gold price received to US1 169/oz).
Production profit increased to R5.084 billion, up 81% from
R2.802 billion in FY15 (increased by 43% to US$350 million), after accounting for a 7% increase in cash
operating costs (R821 million) (decrease of US$171 million or 16%). Operating costs were higher due
to increases in labour costs, electricity and contractor costs at our
South African operations.
Overall, cost increases were lower than inflation, with all-in sustaining cost
(AISC) for all operations increasing by only 3% to R467 526/kg,
compared to R453 044/kg in FY15 (decreased by 19% to US$1 003/oz compared to US$1 231/oz in FY15).
Annual adjustments recorded include the net reversal of an
impairment of R43 million (US$3 million) (which consists of a reversal of impairment
of R738 million (US$50 million) on Doornkop, offset by an impairment of R466 million (US$32 million)
on Hidden Valley and R229 million (US$16 million) on Masimong) and a rehabilitation
provision change in estimate credit of R110 million (US$7 million).
In FY16 a net profit of R949 million (US$64 million) was recorded compared to a
net loss of R4.5 billion (US$374 million) in FY15 and consequently, headline earnings
amounted to 221 SA cents per share (15 US cents per share) compared to a headline loss of
189 SA cents per share (16 US cents per share) for FY15.
HEDGING ACTIVITY
Currency hedging
Since February 2016, Harmony initiated and maintained a foreign exchange hedging programme. Hedging is in the form of zero cost collars,
which establish a minimum (floor) and maximum (cap) Rand/US dollar exchange rate at which to convert US dollars to Rands. The nominal
value of the hedging contracts as at 30 June 2016 was US$500 million. The hedging contracts are spread over a 12 month period, and are
summarised as follows:
H1 FY17 H2 FY17
Sold call options
Nominal US$250 million US$250 million
Average strike price R18.57 R17.97
Lowest strike price R17.93 R16.92
Highest strike price R19.08 R19.08
Purchased put option
Nominal US$250 million US$250 million
Average strike price R15.56 R15.53
Lowest strike price R15.40 R15.10
Highest strike price R15.80 R16.10
Gold hedging
To create cash certainty, we entered into short-term gold forward sale contracts during July 2016 for 432 000oz over a period of 24 months,
representing approximately 20% of our total production. The sharp increase in the R/kg gold price provided us with an
opportunity to lock in 20% of our gold sales at a very attractive average rate of approximately R682 000/kg. The breakdown of gold forward
sale contracts entered into post year end are as follows:
H1 H2
FY17 Kgs 3 049 3 360
Average R/kg R645 121 R666 888
FY18 Kgs 3 360 3 360
Average R/kg R692 836 R720 374
FY19 Kgs 311
Average R/kg R725 499
The limited size and duration of the hedge means shareholders retain full upside exposure on 80% of Harmony's gold production for
the next two years, after which they will have 100% exposure to the gold price.
MINERAL RESOURCES AND RESERVES
Harmony owns significant gold ore deposits. Attributable gold
equivalent mineral resources as declared at 30 June 2016, were
105.2Moz, a 4.6% decrease year on year. The total gold contained
in the mineral resources at the South African operations represents
55.2% of the company's total, with the Papua New Guinea (PNG)
operations representing 44.8% of Harmony's total gold and gold
equivalent mineral resources.
Our attributable gold and gold equivalent mineral reserves
amounted to 36.9Moz of gold, a 13.3% decrease year on year.
The gold reserve ounces in South Africa represent 45.4% while the
PNG gold and gold equivalent ounces represent 54.6% of our total
mineral reserves. See below for our resources and reserves
statement.
GOLPU
The joint venture is pursuing a conventional process of applying
for a special mining lease under the PNG Mining Act, targeted
to be lodged in the first quarter of FY17.
EXPLORATION
Kili Teke
Worldwide, new greenfield copper-gold discoveries are scarce. Our
exploration strategy in PNG remains to create long term value for
shareholders by enhancing and developing our world-class portfolio
of copper-gold assets, at industry leading discovery costs – less than
$US10 per equivalent gold ounce.
Kili Teke is a prolific complex with multiple mineralised intrusive
events. The revised mineral resource estimate for Kili Teke comprises
222Mt at 0.35% copper, 0.25 g/t gold and 170 ppm molybdenum
containing 782 000t copper, 1.75Moz of gold and 38 000t
molybdenum. The updated resource has grown 50% to 6Moz on
a gold equivalent basis(1) compared to the November 2015 model.
Refer to the website (www.harmony.co.za) for a detailed annexure
related to the Kili Teke resource update.
(1)Gold equivalent based on US$1 150 per ounce gold, and US$3 per pound
of copper and assumes 100% recovery of all metals.
South Africa
Exploration drilling is planned at Tshepong, Phakisa, Doornkop,
Target 1 and Kalgold.
NEW DRAFT MINING CHARTER
A new draft of the broad-based socio-economic empowerment charter
for the South African mining industry (Mining Charter) was published
by the Minister of Mineral Resources on 15 April 2016. We are actively
participating in the discussions on the provisions of the new charter to
ensure that the interests of all our stakeholders are protected.
STAKEHOLDER RELATIONS
Stronger margins helped us to continue to meet our social and
environmental commitments, substantiating our holistic approach to
mining in the interests of all of our stakeholders and our status as a
responsible miner. Harmony has – and continues to – make a difference:
- to shareholders – creating value by operating profitably and
growing our margins
- to our employees – ensuring that they are safe and healthy
- to communities – participating in local economic development,
limiting and mitigating our impact on the environment
- to government – contributing to the national fiscus
By conducting our business efficiently, profitably and sustainably,
Harmony creates shared value for all stakeholders, enabling it to
contribute to improved education, build infrastructure, provide
healthcare, stimulate local economies and rehabilitate the environment.
OBJECTIVE FOR THE NEXT THREE YEARS
Maintaining and growing our margins efficiently are essential to
sustaining our business and meeting our strategic objectives.
Harmony has shown that it can successfully operate as a gold
miner and explorer in both South Africa and PNG. The board has
supported a three-year strategy in which we plan to grow Harmony's
production to approximately 1.5Moz, producing gold at an all-in sustaining cost of
$950/oz, through:
- growing, nurturing and developing our core assets
- harvesting operations that are high cost and have a short life
- developing Golpu Stage 1
- expanding in South Africa, into Africa and PNG
- assessing organic growth opportunities
In the next year, we plan to produce approximately 1 050 000
ounces at about $1 100/oz (~R495 000/kg at an exchange rate of
R14.00). Through operational excellence, adhering to our company
values, applying mining discipline, further increasing our productivity,
creating an enabling environment and grade cut-off, we believe that
the guidance is realistic and achievable. We will not mine areas that
are unsafe or at grades lower than planned.
Our management teams are geared to deliver. On executive level,
I am well supported by an experienced, competent team and on
operational level, my two chief operating officers will ensure safe,
profitable production. I have no doubt that Harmony's current
momentum will be upheld.
Harmony has a strong investment case, being one of the few gold
mining companies increasing its underground grade, with one of the
lowest debt:ebitda ratios in the gold mining industry making a real
and lasting difference in the communities adjacent to our mines and
growing our gold–copper ounces at industry leading discovery costs.
Peter Steenkamp
Chief Executive Officer
NOTICE OF CASH DIVIDEND
Declaration of ordinary dividend no.86
The board has approved and declared a final dividend of 50 SA
cents per ordinary share in respect of the year ended
30 June 2016.
In accordance with paragraphs 11.17(a)(i) to (x) and 11.17(c)
of the JSE Listings Requirements the following additional
information is disclosed:
- The dividend has been declared out of income reserves;
- The local Dividends Tax rate is 15% (fifteen per centum);
- The gross local dividend amount is 50 SA cents per ordinary
share for shareholders exempt from the Dividends Tax;
- The net local dividend amount is 42.5 SA cents per ordinary
share for shareholders liable to pay the Dividends Tax;
- Harmony currently has 437 299 479 ordinary shares in issue
(which includes 572 296 treasury shares); and
- Harmony Gold Mining Company Limited's income tax
reference number is 9240/012/60/0.
A dividend No. 86 of 50 SA cents per ordinary share, being the
dividend for the year ended 30 June 2016, has been declared
payable on Monday, 19 September 2016 to those shareholders
recorded in the books of the company at the close of business
on Friday, 16 September 2016. The dividend is declared in the
currency of the Republic of South Africa. Any change in address or
dividend instruction to apply to this dividend must be received by
the company's transfer secretaries or registrar not later than Friday,
16 September 2016.
Last date to trade ordinary shares cum dividend is Tuesday,
13 September 2016
Ordinary shares trade ex-dividend Wednesday, 14 September 2016
Record date Friday, 16 September 2016
Payment date Monday, 19 September 2016
No dematerialisation or rematerialisation of share certificates
may occur between Wednesday, 14 September 2016 and Friday,
16 September 2016, both dates inclusive, nor may any transfers
between registers take place during this period.
SUMMARY UPDATE OF HARMONY'S MINERAL RESOURCES AND MINERAL RESERVES
AS AT 30 JUNE 2016
Harmony's statement of mineral resources and mineral reserves as
at 30 June 2016 is produced in accordance with the South African
Code for the Reporting of Mineral Resources and Mineral Reserves
(SAMREC) and the Australasian Code for Reporting of Exploration
Results, Mineral Resources and Ore Reserves (JORC). It should
be noted that the mineral resources are reported inclusive of the
mineral reserves.
This report 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 26 October 2016, which will
be available at www.harmony.co.za/investors. Refer to the website
(www.harmony.co.za) for the updated reserves and resources tables
as at 30 June 2016.
Harmony uses certain terms in the summary such as 'measured',
'indicated' and 'inferred' resources, which the United States'
Securities and Exchange Commission guidelines strictly prohibit
companies registered in the United States from including in their
filings with the commission. United States investors are urged to
consider the disclosure in this regard in our Form 20-F which will
be available on our website at www.harmony.co.za/investors/
reporting/20f on 26 October 2016.
Introduction
Gold mining and gold production are central to Harmony's existence.
Maintaining and growing our margins efficiently are essential to
sustaining our business and meeting our strategic objectives. This
includes delivering safely on our operational plans, reducing costs,
improving productivity and maximising revenue.
We are devoted to improving the company's operational
performance. Our values are entrenched in everything we do –
safety, accountability, achievement, being connected and honest –
and they inform our decisions and our actions. Realistic planning
supports our strategy to optimise assets – our ore bodies, our
infrastructure and our people. This will ensure safer, more profitable
production. Our life of mine plans for financial year 2017 were done
in line with this approach.
Harmony – Total
The company's attributable gold and gold equivalent mineral
resources are declared as 105.2Moz as at 30 June 2016, a 4.6%
decrease year on year from the 110.3Moz declared as at 30 June
2015. The total gold contained in the mineral resources at the South
African operations represents 55.2% of the company total, with
the Papua New Guinea (PNG) operations representing 44.8% of
Harmony's total gold and gold equivalent mineral resources as at 30
June 2016.
Harmony's attributable gold and gold equivalent mineral reserves
amounts to 36.9Moz, a 13.3% decrease from the 42.6Moz declared
at 30 June 2015. The gold reserve ounces in South Africa represent
45.4% while the PNG gold and gold equivalent ounces represent
54.6% of Harmony's total mineral reserves as at 30 June 2016.
SOUTH AFRICA
South African underground operations
The company's mineral resources at the South African underground
operations as at 30 June 2016 are 48.6Moz (162.1Mt at 9.32g/t), a
decrease of 19.9% year on year from the 60.6Moz (217.2Mt at 8.68g/t)
declared as at 30 June 2015. This decrease is mainly due to depletion
and reduced resources at Unisel and Masimong. There was also a
reduction at Doornkop due to the low grade South Reef to the east of the
mine that has been removed from the declaration.
The company's mineral reserves at the South African underground
operations as at 30 June 2016 are 9.7Moz (54.1Mt at 5.55g/t),
a decrease of 35.7% year on year from the 15.0Moz (80.3Mt at
5.82g/t) declared as at 30 June 2015. The decrease is due to normal depletion
and the revised Kusasalethu life of mine plan. The shorter life of
mine plan at Kusasalethu optimises the mine's cash flow at a higher
grade and creates a much stronger margin, providing us with
the option to consider the feasibility to
access the high grade VCR payshoot below infrastructure in the future.
South African surface operations, including Kalgold
The company's mineral resources at the South African surface
operations as at 30 June 2016 are 9.5Moz (1 085.2Mt at 0.27g/t) which
is materially the same as at the 30 June 2015 (1 082.3Mt at 0.27g/t).
The company's mineral reserves at the South African surface operations
as at 30 June 2016 are 7.1Moz (840.3Mt at 0.26g/t), in line with the
7.1Moz (835.9Mt at 0.26g/t) declared at 30 June 2015.
PAPUA NEW GUINEA (PNG)
Papua New Guinea operations
The company's attributable gold and gold equivalent mineral
resources at the PNG operations as at 30 June 2016 are 47.1Moz,
an increase of 17.1% year on year from the 40.2Moz declared as at
30 June 2015. This increase is due to resources declared at Kili Teke
and increases due to gold equivalent ratios that changed due to new
long term commodity prices used.
The company's gold and gold equivalent mineral reserves at the PNG
operations as at 30 June 2016 are 20.2Moz, a decrease of 1.8%
year on year from the 20.5Moz declared as at 30 June 2015.
ASSUMPTIONS
- In converting the mineral resources to mineral reserves, the
following commodity prices and exchange rates were applied:
- A gold price of US$1 150/oz
- An exchange rate of R/US$12.85
- The above parameters resulted in a rand gold price of R475 000/kg
for the South African assets.
- The Hidden Valley mine and Golpu project in the Morobe Mining
Joint Venture used commodity prices of US$ 1 150/oz Au,
US$15.00/oz Ag, US$5.00/lb Mo and US$3.00/lb Cu at an
exchange rate of US$0.80 per A$.
- Gold equivalent ounces are calculated assuming US$1 150/oz Au,
US$3.00/lb Cu and US$15.00/oz Ag, and assuming a 100%
recovery for all metals.
Harmony's South African mineral resources and reserves at
Tshepong, Phakisa, Kalgold and the group statement were
independently reviewed by The Mineral Corporation for compliance
to SAMREC. The mineral resources of the Hidden Valley operation
were independently reviewed by SRK Consulting Engineers
and Scientists and Golpu was independently reviewed by AMC
Consultants Pty Ltd for compliance with the standards set out
in JORC.
Note: Au= gold; Cu = copper; Ag = Silver, Mo = Molybdenum,
Moz= million ounces
Measured Indicated Inferred Total
Mineral Resources: Tonnes Gold Tonnes Gold Tonnes Gold Tonnes Gold
gold and gold equivalents (Mt) g/t '000oz (Mt) g/t '000oz (Mt) g/t '000oz (Mt) g/t '000oz
SA underground 55.3 9.83 17 475 61.1 9.08 17 846 45.7 9.03 13 248 162.1 9.32 48 569
SA surface incl Kalgold 346.2 0.28 3 146 664.0 0.25 5 266 75.0 0.44 1 051 1 085.2 0.27 9 463
Total South Africa 401.5 20 621 725.2 23 111 120.6 14 299 1 247.3 58 031
Hidden Valley* 1.3 1.09 47 36.4 1.62 1 898 1.1 1.28 47 38.9 1.59 1 991
Wafi-Golpu system* – – – 400.7 0.86 11 051 99.1 0.74 2 358 499.9 0.83 13 409
Kili Teke – – – – – – 221.5 0.25 1 751 221.5 0.25 1 751
Total Papua New Guinea 1.3 47 437.2 12 949 321.8 4 155 760.3 17 151
Total gold Resources 402.8 20 668 1 162.4 36 060 442.4 18 454 2 007.6 75 182
Hidden Valley – gold equivalent ounces* 1.3 11 35.0 450 1.0 14 37.3 475
Wafi-Golpu – gold equivalent ounces* – – 344.0 21 469 87.8 3 559 431.8 25 028
Kili Teke – – – – 221.5 4 494 221.5 4 494
Total gold equivalent Resources* 1.3 11 379.0 21 919 310.3 8 067 690.6 29 997
Total Harmony gold and gold
equivalent Resource** 402.8 20 679 1162.4 57 979 442.4 26 521 2 007.6 105 179
Mineral Resources: Measured Indicated Inferred Total
silver and copper Tonnes Silver Tonnes Silver Tonnes Silver Tonnes Silver
(used in equivalent calculations) (Mt) g/t '000oz (Mt) g/t '000oz (Mt) g/t '000oz (Mt) g/t '000oz
Hidden Valley 1.3 21.52 882 35.0 30.72 34 526 1.0 31.69 1 057 37.3 30.43 36 466
Measured Indicated Inferred Total
Tonnes Copper Tonnes Copper Tonnes Copper Tonnes Copper
(Mt) % 'Mlb (Mt) % 'Mlb (Mt) % 'Mlb (Mt) % 'Mlb
Golpu – – – 344.0 1.09 8 232 67.9 0.85 1 273 411.9 1.05 9 505
Nambonga – – – – – – 19.9 0.21 92 19.9 0.21 92
Kili Teke – – – – – – 221.5 0.35 1 723 221.5 0.35 1 723
Total – – – 344.0 1.09 8 232 309.3 0.45 3 088 653.3 0.79 11 320
Proved Probable Total
Tonnes Gold Tonnes Gold Tonnes Gold
Mineral Reserves: gold and gold equivalents (Mt) g/t '000oz (Mt) g/t '000oz (Mt) g/t '000oz
SA Underground 37.6 5.81 7 008 16.6 4.96 2 645 54.1 5.55 9 654
SA Surface including Kalgold 261.0 0.28 2 384 579.4 0.25 4 720 840.4 0.26 7 104
Total South africa 298.5 9 393 596.0 7 365 894.5 16 758
Hidden Valley* 1.3 1.09 47 12.5 1.67 671 13.8 1.62 718
Golpu system* – – – 189.6 0.91 5 522 189.6 0.91 5 522
Total Papua New Guinea 1.3 47 202.0 6 193 203.4 6 239
Total gold Reserves 299.9 9 440 798.0 13 558 1 097.9 22 997
Hidden Valley – gold equivalent ounces* 1.3 12 11.5 167 12.7 178
Golpu – gold equivalent ounces* – – 189.6 13 741 189.6 13 741
Total gold equivalent Reserves* 1.3 12 201.0 13 908 202.3 13 919
Total Harmony gold and gold equivalent Reserves** 299.9 9 451 798.0 27 465 1 097.9 36 916
Proved Probable Total
Mineral Reserves: silver and copper Tonnes Silver Tonnes Silver Tonnes Silver
(used in equivalent calculations) (Mt) g/t '000oz (Mt) g/t '000oz (Mt) g/t '000oz
Hidden Valley 1.3 21.52 882 11.5 34.69 12 789 12.7 33.37 13 671
Proved Probable Total
Tonnes Copper Tonnes Copper Tonnes Copper
(Mt) % 'Mlb (Mt) % 'Mlb (Mt) % 'Mlb
Golpu – – – 189.6 1.26 5 269 189.6 1.26 5 269
* Represents Harmony's equity portion of 50%.
** In instances where individual deposits may contain multiple valuable commodities with a reasonable expectation of being recovered (for example gold and
copper in a single deposit) Harmony computes a gold equivalent to more easily assess the value of the deposit against gold-only mines. Harmony does this
by calculating the value of each of the deposits commodities, then dividing the product by the price of gold. For example, the gold equivalent ounces for the
copper portion of a deposit would be calculated as follows: (copper pounds x copper price per pound)/gold price per ounce. All gold equivalent calculations
are done using metal prices and parameters as stipulated above.
ADMINISTRATIVE INFORMATION FOR PROFESSIONAL ORGANISATIONS
SACNASP – The legislated regulatory body for
natural science practitioners in South Africa
Private Bag X540, Silverton, 0127, Gauteng Province, South Africa
Telephone: +27 (12) 841-1075; Facsimile: +27 (86) 206 0427
http://www.sacnasp.org.za/
SAIMM – The Southern African Institute of Mining
and Metallurgy
P.O. Box 61127, Marshalltown, 2107
Gauteng Province, South Africa
Telephone: +27 (011) 834-1273/7;
Facsimile: +27 (011) 838-5923/8156
http://www.saimm.co.za/
AusIMM – The Australasian Institute of Mining
and Metallurgy
PO Box 660, Carlton South, Vic 3053, Australia
Telephone: +61 3 9658 6100; Facsimile: +61 3 9662 3662
http://www.ausimm.com.au/
Legal entitlement to the minerals being reported upon
Harmony's South African operations operate under new order
mining rights in terms of the Minerals and Petroleum Resources
Development of Act of 2002 (Act No. 28, of 2002) (MPRDA). In
PNG Harmony operates under the Independent State of Papua
New Guinea Mining Act 1992. All required operating permits have
been obtained, and are in good standing. The legal tenure of each
operation and project has been verified to the satisfaction of the
accountable Competent Person.
OPERATING RESULTS – six monthly (RAND/METRIC) (US$/IMPERIAL)
South Africa
Underground production Surface production
Six Total
months Total Total South Hidden Total
ending Kusasalethu Doornkop Phakisa Tshepong Masimong Target 1 Bambanani Joel Unisel Underground Phoenix Dumps Kalgold Surface Africa Valley Harmony
Ore Jun-16 286 316 330 535 301 359 106 264 202 2 699 3 161 1 612 745 5 518 8 217 994 9 211
milled - t'000 Dec-15 382 314 356 553 349 380 126 278 222 2 960 3 304 1 429 734 5 467 8 427 735 9 162
Jun-16 1 874 1 356 1 962 2 506 1 098 1 299 1 217 1 086 765 13 163 385 518 532 1 435 14 598 1 376 15 974
Gold produced - kg Dec-15 1 989 1 374 2 026 2 525 1 334 2 088 1 796 1 192 939 15 263 419 547 571 1 537 16 800 881 17 681
Jun-16 60 250 43 597 63 080 80 570 35 301 41 764 39 127 34 916 24 595 423 200 12 378 16 654 17 104 46 136 469 336 44 240 513 576
- oz Dec-15 63 948 44 175 65 137 81 181 42 889 67 131 57 743 38 323 30 190 490 717 13 471 17 587 18 359 49 417 540 134 28 325 568 459
Jun-16 6.55 4.29 5.95 4.68 3.65 3.62 11.48 4.11 3.79 4.88 0.12 0.32 0.71 0.26 1.78 1.38 1.73
Yield - g/tonne Dec-15 5.21 4.38 5.69 4.57 3.82 5.49 14.25 4.29 4.23 5.16 0.13 0.38 0.78 0.28 1.99 1.20 1.93
Jun-16 493 474 393 324 359 707 378 718 472 507 474 139 330 966 391 795 499 125 414 629 414 577 434 317 518 949 460 397 419 128 357 227 413 796
Cash - R/kg Dec-15 463 958 381 921 331 657 354 907 389 369 300 044 225 845 352 208 396 112 351 108 383 002 369 514 476 532 412 949 356 765 669 695 372 358
operating
costs Jun-16 997 795 727 765 955 958 669 792 1 008 838 838 878 1 048 930 847 722 836
- $/oz Dec-15 1 060 872 758 811 889 685 516 804 905 802 875 844 1 088 943 815 1 530 851
Cash operating Jun-16 3 233 1 688 2 139 1 774 1 724 1 716 3 800 1 612 1 890 2 022 50 140 371 120 745 495 718
costs - R/tonne Dec-15 2 416 1 671 1 887 1 621 1 488 1 649 3 219 1 510 1 675 1 810 49 141 371 116 711 803 719
Jun-16 1 806 1 314 1 955 2 496 1 095 1 323 1 212 1 008 761 12 970 379 507 550 1 436 14 406 1 494 15 900
Gold sold - Kg Dec-15 2 016 1 398 2 036 2 533 1 337 2 096 1 803 1 237 944 15 400 409 551 536 1 496 16 896 846 17 742
Jun-16 58 064 42 247 62 855 80 248 35 205 42 535 38 967 32 408 24 467 416 996 12 185 16 300 17 683 46 168 463 164 48 034 511 198
- oz Dec-15 64 816 44 946 65 459 81 437 42 986 67 388 57 967 39 771 30 350 495 120 13 150 17 715 17 233 48 098 543 218 27 199 570 417
Jun-16 1 094 106 793 872 1 184 626 1 513 124 662 784 800 723 733 943 610 307 461 552 7 855 037 228 671 305 487 331 996 866 154 8 721 191 905 875 9 627 066
Revenue (R'000) Dec-15 983 659 686 256 1 001 761 1 242 604 654 888 1 032 532 883 332 609 720 463 388 7 558 140 200 308 271 119 263 210 734 637 8 292 777 414 521 8 707 298
Jun-16 924 771 533 348 705 746 949 067 518 813 615 907 402 786 425 489 381 831 5 457 758 159 612 224 976 276 081 660 669 6 118 427 491 544 6 609 971
Cash operating costs (R'000) Dec-15 922 812 524 760 671 938 896 140 519 418 626 491 405 617 419 832 371 949 5 358 957 160 478 202 124 272 100 634 702 5 993 659 590 001 6 583 660
Inventory Jun-16 (43 481) (25 720) (4 988) (7 011) (2 906) 632 (977) (33 734) (1 383) (119 568) (4 371) (10 171) 7 888 (6 654) (126 222) 51 051 (75 171)
Movement (R'000) Dec-15 12 174 14 318 2 469 5 886 2 614 6 938 3 877 19 605 1 493 69 374 (3 466) 1 575 (16 025) (17 916) 51 458 79 522 130 980
operating costs Jun-16 881 290 507 628 700 758 942 056 515 907 616 539 401 809 391 755 380 448 5 338 190 155 241 214 805 283 969 654 015 5 992 205 542 595 6 534 800
(R'000) Dec-15 934 986 539 078 674 407 902 026 522 032 633 429 409 494 439 437 373 442 5 428 331 157 012 203 699 256 075 616 786 6 045 117 669 523 6 714 640
Production Jun-16 212 816 286 244 483 868 571 068 146 877 184 184 332 134 218 552 81 104 2 516 847 73 430 90 682 48 027 212 139 2 728 986 363 280 3 092 266
profit (R'000) Dec-15 48 673 147 178 327 354 340 578 132 856 399 103 473 838 170 283 89 946 2 129 809 43 296 67 420 7 135 117 851 2 247 660 (255 002) 1 992 658
Production Jun-16 13 824 18 594 31 432 37 095 9 541 11 964 21 574 14 197 5 268 163 489 4 770 5 891 3 121 13 782 177 271 23 598 200 869
profit ($'000) Dec-15 3 575 10 808 24 040 25 011 9 756 29 309 34 796 12 505 6 604 156 404 3 180 4 951 524 8 655 165 059 (18 726) 146 333
Jun-16 196 209 115 874 162 445 167 480 57 328 160 994 52 850 103 098 32 263 1 048 541 4 736 14 402 17 966 37 104 1 085 645 38 465 1 124 110
Capital (R'000) Dec-15 163 303 91 753 160 618 139 378 52 961 161 344 53 306 111 909 29 802 964 374 576 3 197 18 028 21 801 986 175 40 369 1 026 544
expenditure Jun-16 12 745 7 527 10 552 10 879 3 724 10 458 3 433 6 697 2 096 68 111 308 936 1 167 2 411 70 522 2 499 73 021
($'000) Dec-15 11 992 6 738 11 795 10 235 3 889 11 848 3 915 8 218 2 189 70 819 42 235 1 324 1 601 72 420 2 965 75 385
Jun-16 598 175 478 777 442 503 445 549 524 719 598 076 374 393 486 728 541 299 494 287 426 878 462 120 552 720 486 253 493 497 385 181 484 167
Cash Operating - R/kg Dec-15 546 061 448 699 410 936 410 106 429 070 377 316 255 525 446 091 427 850 414 291 384 377 375 358 508 105 427 133 415 466 715 516 430 417
Cost and Capital Jun-16 1 209 967 894 900 1 060 1 208 756 983 1 094 999 862 934 1 117 982 997 778 978
- $/oz Dec-15 1 247 1 025 939 937 980 862 584 1 019 977 946 878 857 1 161 976 949 1 634 983
Jun-16 614 069 486 741 453 534 456 159 546 615 604 176 375 987 445 332 561 454 501 430 422 997 461 111 565 351 490 977 499 393 429 121 492 792
All-in sustaining* - R/kg Dec-15 558 006 461 175 420 099 420 902 450 047 388 367 256 670 407 736 443 413 421 597 386 218 386 406 528 067 437 110 422 371 894 524 444 884
costs Jun-16 1 241 983 916 922 1 104 1 221 760 900 1 134 1 013 855 932 1 142 992 1 009 867 996
- $/oz Dec-15 1 275 1 053 960 961 1 028 887 586 931 1 013 963 882 883 1 206 998 965 2 043 1 016
*Excludes share-based payment charge
OPERATING RESULTS – YEAR ON YEAR (RAND/METRIC) (US$/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 Underground Phoenix Dumps Kalgold Surface Africa Valley Harmony
Ore milled Jun-16 668 630 686 1 088 650 739 232 542 424 - 5 659 6 465 3 041 1 479 10 985 16 644 1 729 18 373
- t'000 Jun-15 908 603 611 992 670 749 229 551 417 90 5 820 6 245 2 701 1 472 10 418 16 238 1 825 18 063
Jun-16 3 863 2 730 3 988 5 031 2 432 3 387 3 013 2 278 1 704 - 28 426 804 1 065 1 103 2 972 31 398 2 257 33 655
Gold - kg Jun-15 3 953 2 663 3 118 4 278 2 463 3 824 2 908 2 258 1 695 483 27 643 867 862 1 198 2 927 30 570 2 943 33 513
produced Jun-16 124 198 87 772 128 217 161 751 78 190 108 895 96 870 73 239 54 785 - 913 917 25 849 34 241 35 463 95 553 1 009 470 72 565 1 082 035
- oz Jun-15 127 092 85 618 100 246 137 540 79 187 122 944 93 495 72 596 54 495 15 529 888 742 27 875 27 713 38 517 94 105 982 847 94 619 1 077 466
Jun-16 5.78 4.33 5.81 4.62 3.74 4.58 12.99 4.20 4.02 - 5.02 0.12 0.35 0.75 0.27 1.89 1.31 1.83
Yield - g/tonne Jun-15 4.35 4.42 5.10 4.31 3.68 5.11 12.70 4.10 4.06 5.37 4.75 0.14 0.32 0.81 0.28 1.88 1.61 1.86
Jun-16 478 277 387 585 345 457 366 767 426 904 366 814 268 305 371 080 442 359 - 380 522 398 122 401 033 496 991 435 858 385 760 479 196 392 026
Cash - R/kg Jun-15 472 112 402 065 373 876 371 149 397 380 308 156 239 552 334 168 397 615 352 497 366 928 339 896 382 959 377 547 367 988 367 030 391 774 369 203
operating Jun-16 1 026 831 741 787 916 787 576 796 949 - 816 854 860 1 066 935 828 1 028 841
- $/oz Jun-15 1 283 1 092 1 016 1 008 1 080 837 651 908 1 080 958 997 924 1 041 1 026 1 000 997 1 065 1 003
Jun-16 2 766 1 680 2 008 1 696 1 597 1 681 3 484 1 560 1 778 - 1 911 50 140 371 118 728 626 718
Cash operating costs - R/tonne Jun-15 2 055 1 776 1 908 1 601 1 461 1 573 3 042 1 369 1 616 1 892 1 743 47 122 307 103 691 632 685
Jun-16 3 822 2 712 3 991 5 029 2 432 3 419 3 015 2 245 1 705 - 28 370 788 1 058 1 086 2 932 31 302 2 340 33 642
- Kg Jun-15 4 297 2 711 3 156 4 337 2 491 3 868 2 947 2 330 1 715 502 28 354 881 864 1 230 2 975 31 329 3 003 34 332
Gold sold Jun-16 122 880 87 193 128 314 161 685 78 191 109 923 96 934 72 179 54 817 - 912 116 25 335 34 015 34 916 94 266 1 006 382 75 233 1 081 615
- oz Jun-15 138 151 87 160 101 468 139 437 80 087 124 358 94 748 74 911 55 138 16 140 911 598 28 324 27 778 39 545 95 647 1 007 245 96 548 1 103 793
Jun-16 2 077 765 1 480 128 2 186 387 2 755 728 1 317 672 1 833 255 1 617 275 1 220 027 924 940 - 15 413 177 428 979 576 606 595 206 1 600 791 17 013 968 1 320 396 18 334 364
Revenue (R'000) Jun-15 1 938 854 1 219 563 1 420 103 1 948 230 1 118 128 1 737 965 1 329 685 1 046 231 770 175 222 494 12 751 428 396 398 389 163 551 323 1 336 884 14 088 312 1 346 310 15 434 622
Jun-16 1 847 583 1 058 108 1 377 684 1 845 207 1 038 231 1 242 398 808 403 845 321 753 780 - 10 816 715 320 090 427 100 548 181 1 295 371 12 112 086 1 081 545 13 193 631
Cash operating costs (R'000) Jun-15 1 866 258 1 070 700 1 165 744 1 587 777 978 747 1 178 389 696 616 754 551 673 957 170 256 10 142 995 294 690 330 111 452 301 1 077 102 11 220 097 1 152 992 12 373 089
Inventory Jun-16 (31 307) (11 402) (2 519) (1 125) (292) 7 570 2 900 (14 129) 110 - (50 194) (7 837) (8 596) (8 137) (24 570) (74 764) 130 573 55 809
movement (R'000) Jun-15 129 449 21 487 15 055 23 589 12 776 12 463 8 156 14 955 7 904 6 917 252 751 4 947 871 10 839 16 657 269 408 (9 898) 259 510
Jun-16 1 816 276 1 046 706 1 375 165 1 844 082 1 037 939 1 249 968 811 303 831 192 753 890 - 10 766 521 312 253 418 504 540 044 1 270 801 12 037 322 1 212 118 13 249 440
Operating costs (R'000) Jun-15 1 995 707 1 092 187 1 180 799 1 611 366 991 523 1 190 852 704 772 769 506 681 861 177 173 10 395 746 299 637 330 982 463 140 1 093 759 11 489 505 1 143 094 12 632 599
Jun-16 261 489 433 422 811 222 911 646 279 733 583 287 805 972 388 835 171 050 - 4 646 656 116 726 158 102 55 162 329 990 4 976 646 108 278 5 084 924
Production (R'000) Jun-15 (56 853) 127 376 239 304 336 864 126 605 547 113 624 913 276 725 88 314 45 321 2 355 682 96 761 58 181 88 183 243 125 2 598 807 203 216 2 802 023
profit Jun-16 18 035 29 893 55 950 62 876 19 293 40 229 55 588 26 817 11 797 - 320 478 8 051 10 904 3 804 22 759 343 237 7 467 350 704
($'000) Jun-15 (4 966) 11 127 20 905 29 427 11 060 47 794 54 591 24 174 7 715 3 959 205 786 8 453 5 083 7 703 21 239 227 025 17 752 244 777
Jun-16 359 512 207 627 323 063 306 858 110 289 322 338 106 156 215 007 62 065 - 2 012 915 5 312 17 599 35 994 58 905 2 071 820 78 834 2 150 654
Capital (R'000) Jun-15 462 863 245 144 403 495 313 317 165 670 295 504 109 910 182 239 99 428 20 437 2 298 007 3 641 5 979 40 898 50 518 2 348 525 121 121 2 469 646
expenditure Jun-16 24 795 14 320 22 282 21 164 7 607 22 232 7 322 14 829 4 281 - 138 832 366 1 214 2 482 4 062 142 894 5 437 148 331
($'000) Jun-15 40 434 21 415 35 248 27 370 14 472 25 814 9 601 15 920 8 686 1 785 200 745 318 522 3 573 4 413 205 158 10 581 215 739
Jun-16 571 342 463 639 426 466 427 761 472 253 461 983 303 538 465 464 478 782 - 451 334 404 729 417 558 529 624 455 678 451 746 514 125 455 929
Cash Operating - R/kg Jun-15 589 203 494 121 503 284 444 388 464 644 385 432 277 347 414 876 456 274 394 810 450 060 344 096 389 896 411 685 385 248 443 854 432 930 442 895
Cost and Capital Jun-16 1 226 995 915 918 1 013 991 651 999 1 027 - 968 868 896 1 136 978 969 1 103 978
- $/oz Jun-15 1 601 1 343 1 367 1 207 1 262 1 047 754 1 127 1 240 1 073 1 223 935 1 059 1 119 1 047 1 206 1 176 1 203
Jun-16 584 498 473 562 436 477 438 401 493 527 471 876 304 634 424 617 496 099 - 458 094 403 907 422 205 546 949 463 492 457 819 597 398 467 526
All-in sustaining* - R/kg Jun-15 587 406 501 151 495 644 454 512 479 096 395 669 270 623 384 022 469 246 403 249 452 900 344 319 403 906 422 323 393 875 447 135 514 690 453 044
costs Jun-16 1 254 1 016 936 940 1 059 1 012 654 911 1 064 - 983 866 906 1 173 994 982 1 282 1 003
- $/oz Jun-15 1 596 1 362 1 347 1 235 1 302 1 075 735 1 043 1 275 1 096 1 231 936 1 097 1 148 1 070 1 215 1 395 1 231
* Excludes share-based payment charge
DEVELOPMENT RESULTS
6 month average
January 2016 – June 2016
METRIC IMPERIAL
Channel Channel
Reef Sampled Width Value Gold Reef Sampled Width Value Gold
Meters Meters (Cm's) (g/t) (Cmg/t) Feet Feet (Inch) (oz/t) (In.oz/t)
Tshepong Tshepong
Basal 472 344 9.41 149.00 1 402 Basal 1 548 1 129 4.00 4.03 16
B Reef 529 544 155.12 13.21 2049 B Reef 1 736 1 785 61.00 0.39 24
All Reefs 1 001 888 98.67 18.23 1 799 All Reefs 3 284 2 913 39.00 0.53 21
Phakisa Phakisa
Basal 822 844 58.92 21.30 1 255 Basal 2 696 2 769 23.00 0.63 14
All Reefs 822 844 58.92 21.30 1 255 All Reefs 2 696 2 769 23.00 0.63 14
Bambabani Bambabani
Basal 62 56 197.50 10.09 1 993 Basal 203 184 78.00 0.29 23
All Reefs 62 56 197.50 10.09 1 993 All Reefs 203 184 78.00 0.29 23
Doornkop Doornkop
Main Reef 39 46.00 4.93 227 Main Reef 128 18.00 0.15 3
South Reef 625 585 62.98 15.32 965 South Reef 2 049 1 919 25.00 0.44 11
All Reefs 625 624 61.92 14.83 918 All Reefs 2 049 2 047 24.00 0.44 11
Kusasalethu Kusasalethu
VCR Reef 575 448 109.13 9.30 1 015 VCR Reef 1 887 1 470 43.00 0.27 12
All Reefs 575 448 109.13 9.30 1 015 All Reefs 1 887 1 470 43.00 0.27 12
Target 1 Target 1
Elsburg 83 90 260.90 1.73 451 Elsburg 271 295 103.00 0.05 5
All Reefs 83 90 260.90 1.73 451 All Reefs 271 295 103.00 0.05 5
Masimong 5 Masimong 5
Basal 447 317 75.97 16.37 1 243 Basal 1 465 1 040 30.00 0.48 14
B Reef 320 374 74.62 22.68 1 692 B Reef 1 049 1 227 29.00 0.67 19
All Reefs 766 691 75.24 19.76 1 486 All Reefs 2 514 2 267 30.00 0.57 17
Unisel Unisel
Basal 251 190 136.35 13.95 1 903 Basal 823 623 54.00 0.40 22
Leader 709 588 217.64 4.82 1 050 Leader 2 325 1 929 86.00 0.14 12
All Reefs 960 778 197.79 6.36 1 258 All Reefs 3 149 2 552 78.00 0.19 14
Joel Joel
Beatrix 1 194 1 107 122.16 7.69 940 Beatrix 3 918 3 632 48.00 0.22 11
All Reefs 1 194 1 107 122.16 7.69 940 All Reefs 3 918 3 632 48.00 0.22 11
Total Harmony Total Harmony
Basal 2 053 1 751 65.12 21.13 1 376 Basal 6 736 5 745 26.00 0.61 16
Beatrix 1 194 1 107 122.16 7.69 940 Beatrix 3 918 3 632 48.00 0.22 11
Leader 709 588 217.64 4.82 1 050 Leader 2 325 1 929 86.00 0.14 12
B Reef 849 918 122.32 15.56 1 904 B Reef 2 785 3 012 48.00 0.46 22
Elsburg 83 90 260.90 1.73 451 Elsburg 271 295 103.00 0.05 5
South Reef 625 585 62.98 15.32 965 South Reef 2 049 1 919 25.00 0.44 11
VCR 575 448 109.13 9.30 1 015 VCR 1 887 1 470 43.00 0.27 12
Main Reef 39 46.00 4.93 227 Main Reef 128 18.00 0.15 3
All Reefs 6 087 5 526 108.67 11.46 1 246 All Reefs 19 970 18 130 43.00 0.33 14
CONDENSED CONSOLIDATED INCOME STATEMENTS (RAND)
Six months ended Year ended
30 June 31 December 30 June 30 June 30 June
2016 2015 2015 2016 2015
Figures in million Note (Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Revenue 9 627 8 707 7 288 18 334 15 435
Cost of sales 2 (7 780) (8 006) (10 760) (15 786) (19 053)
Production costs (6 535) (6 715) (6 018) (13 250) (12 632)
Amortisation and depreciation (1 084) (1 086) (1 220) (2 170) (2 472)
Reversal of impairment/(impairment) of assets 43 - (3 471) 43 (3 471)
Other items (204) (205) (51) (409) (478)
Gross profit/(loss) 1 847 701 (3 472) 2 548 (3 618)
Corporate, administration and other expenditure (227) (182) (185) (409) (378)
Social investment expenditure (33) (25) (32) (58) (71)
Exploration expenditure (88) (103) (83) (191) (263)
Loss on scrapping of property, plant and
equipment 6 (64) - (61) (64) (491)
Foreign exchange translation gain/(loss) 3 606 (798) (125) (192) (367)
Other expenses (net) (31) (11) (9) (42) (5)
Operating profit/(loss) 2 010 (418) (3 967) 1 592 (5 193)
Profit/(loss) from associates 7 (28) 35 (25) 7 (25)
Profit on disposal of investments - - 4 - 4
Net gain/(loss) on financial instruments 28 (13) (8) 15 9
Investment income 127 114 118 241 229
Finance cost (133) (141) (132) (274) (264)
Profit/(loss) before taxation 2 004 (423) (4 010) 1 581 (5 240)
Taxation 4 (610) (22) 595 (632) 704
Normal taxation (122) (1) 7 (123) 5
Deferred taxation (488) (21) 588 (509) 699
Net profit/(loss) for the period 1 394 (445) (3 415) 949 (4 536)
Attributable to:
Owners of the parent 1 394 (445) (3 415) 949 (4 536)
Earnings/(loss) per ordinary share (cents) 5
Basic earnings/(loss) 320 (102) (786) 218 (1 044)
Diluted earnings/(loss) 306 (102) (786) 213 (1 044)
The accompanying notes are an integral part of these condensed consolidated financial statements.
The condensed consolidated provisional financial statements (condensed consolidated financial statements) for the year ended 30 June 2016
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 on 15 August 2016.
These condensed consolidated financials have been reviewed by the group's external auditors, PricewaterhouseCoopers Incorporated (see
note 16).
CONDENSED CONSOLIDATED STATEMENTS OF
COMPREHENSIVE INCOME (RAND)
Six months ended Year ended
30 June 31 December 30 June 30 June 30 June
2016 2015 2015 2016 2015
Figures in million (Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Net profit/(loss) for the period 1 394 (445) (3 415) 949 (4 536)
Other comprehensive income/(loss) for the period, net
of income tax (329) 472 (6) 143 59
Items that may be reclassified subsequently to profit or
loss: (333) 472 (11) 139 54
Foreign exchange translation gain/(loss) (333) 472 (11) 139 54
Items that will not be reclassified to profit or loss: 4 - 5 4 5
Remeasurement of retirement benefit obligation
Actuarial gain recognised during the year 3 - 8 3 8
Deferred taxation thereon 1 - (3) 1 (3)
Total comprehensive income/(loss) for the period 1 065 27 (3 421) 1 092 (4 477)
Attributable to:
Owners of the parent 1 065 27 (3 421) 1 092 (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 year ended 30 June 2016
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 - 322 - 322
Reversal of provision for odd lot repurchases 12 - - 12
Net profit for the period - - 949 949
Other comprehensive income for the period - 143 - 143
Balance - 30 June 2016 (Reviewed) 28 336 4 252 (4 409) 28 179
Balance - 30 June 2014 28 325 3 539 (822) 31 042
Share-based payments (1) 189 - 188
Net loss for the period - - (4 536) (4 536)
Other comprehensive income for the period - 59 - 59
Balance - 30 June 2015 (Audited) 28 324 3 787 (5 358) 26 753
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED BALANCE SHEETS (RAND)
At At At
30 June 31 December 30 June
2016 2015 2015
Figures in million Note (Reviewed) (Unaudited) (Audited)
ASSETS
Non-current assets
Property, plant and equipment 6 29 919 30 101 29 548
Intangible assets 870 878 885
Restricted cash 62 55 48
Restricted investments 2 496 2 434 2 384
Investments in associates 7 - 10 -
Investments in financial assets 5 5 5
Inventories 37 36 36
Other non-current receivables 12 172 74 80
Total non-current assets 33 561 33 593 32 986
Current assets
Inventories 1 167 1 260 1 292
Trade and other receivables 7 654 658 746
Income and mining taxes 4 6 11 30
Derivative financial assets 3 369 - -
Restricted cash 17 16 16
Cash and cash equivalents 1 256 876 1 067
Total current assets 3 469 2 821 3 151
Total assets 37 030 36 414 36 137
EQUITY AND LIABILITIES
Share capital and reserves
Share capital 28 336 28 324 28 324
Other reserves 4 252 4 358 3 787
Accumulated loss (4 409) (5 803) (5 358)
Total equity 28 179 26 879 26 753
Non-current liabilities
Deferred tax liabilities 2 413 1 926 1 906
Provision for environmental rehabilitation 2 183 2 364 2 218
Retirement benefit obligation 169 170 163
Other non-current liabilities 16 41 37
Borrowings 8 2 039 3 092 3 399
Total non-current liabilities 6 820 7 593 7 723
Current liabilities
Borrowings 8 300 299 -
Income and mining taxes 4 40 1 1
Trade and other payables 1 691 1 642 1 660
Total current liabilities 2 031 1 942 1 661
Total equity and liabilities 37 030 36 414 36 137
The accompanying notes are an integral part of these condensed consolidated financial statements.
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS (RAND)
Six months ended Year ended
30 June 31 December 30 June 30 June 30 June
2016 2015 2015 2016 2015
Figures in million Note (Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Cash flow from operating activities
Cash generated by operations 2 923 1 736 921 4 659 1 928
Interest and dividends received 27 47 46 74 101
Interest paid (116) (39) (62) (155) (108)
Income and mining taxes (paid)/refunded (83) 18 21 (65) 85
Cash generated by operating activities 2 751 1 762 926 4 513 2 006
Cash flow from investing activities
(Increase)/decrease in restricted cash (5) (7) 8 (12) 8
Decrease in restricted investments 36 3 30 39 31
(Increase)/decrease in loan to associate - 7 - 7 (120)
Loan to ARM BBEE Trust 12 (200) - - (200) -
Net additions to property, plant and equipment 10 (1 265) (1 168) (1 428) (2 433) (2 827)
Cash utilised by investing activities (1 434) (1 165) (1 390) (2 599) (2 908)
Cash flow from financing activities
Borrowings raised 8 - 300 941 300 941
Borrowings repaid 8 (928) (1 117) (793) (2 045) (793)
Cash generated/(utilised) by financing activities (928) (817) 148 (1 745) 148
Foreign currency translation adjustments (9) 29 9 20 (8)
Net increase/(decrease) in cash and cash equivalents 380 (191) (307) 189 (762)
Cash and cash equivalents - beginning of period 876 1 067 1 374 1067 1 829
Cash and cash equivalents - end of period 1 256 876 1 067 1 256 1 067
The accompanying notes are an integral part of these condensed consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
for the year ended 30 June 2016 (Rand)
1 Accounting policies
Basis of accounting
The condensed consolidated financial statements for the year ended 30 June 2016 are prepared in accordance with the requirements of
the JSE Limited Listings Requirements for provisional reports and the requirements of the Companies Act of South Africa. The Listings
Requirements require provisional reports to be prepared in accordance with the framework concepts and the measurement and
recognition requirements of International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards
Board (IASB) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial
Pronouncements as issued by the Financial Reporting Standards Council and to also, as a minimum, contain the information required by
IAS 34 Interim Financial Reporting . The accounting policies applied in the preparation of the condensed consolidated financial
statements are in terms of IFRS and are consistent with those applied in the previous consolidated annual financial statements.
2 Cost of sales
Six months ended Year ended
30 June 31 December 30 June 30 June 30 June
2016 2015 2015 2016 2015
Figures in million (Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Production costs - excluding royalty 6 427 6 652 5 976 13 079 12 537
Royalty expense 108 63 42 171 95
Amortisation and depreciation 1 084 1 086 1 220 2 170 2 472
(Reversal of impairment)/impairment of assets(1) (43) - 3 471 (43) 3 471
Rehabilitation expenditure/(credit)(2) (69) 28 (26) (41) (6)
Care and maintenance cost of restructured shafts 56 58 69 114 106
Employment termination and restructuring costs 1 15 21 16 251
Share-based payments(3) 224 105 68 329 208
Other (8) (1) (81) (9) (81)
Total cost of sales 7 780 8 006 10 760 15 786 19 053
(1) The net reversal of impairment of long-lived assets in the June 2016 period consists of a reversal of impairment of R738 million on Doornkop, offset by
an impairment of R466 million on Hidden Valley and R229 million on Masimong. The June 2015 impairment consists of an impairment of R2.11 billion
on Hidden Valley, R1.04 billion on Doornkop, R278 million on Phakisa and R43 million on Freddies 9. Refer to note 6 for further details.
(2) Included in the total for the June 2016 period is a credit of R110 million relating to the change in estimate following the annual reassessment.
(3) Due to the low share price at the time of the awarding of performance shares (PS) for 2015, a large number of PS were allocated to employees. The
increase in the share price between the award date and the approval date resulted in an increase in the IFRS 2 Share-based payment fair value per
award measurement.
3 Foreign exchange translation gain/(loss)
Six months ended Year ended
30 June 31 December 30 June 30 June 30 June
2016 2015 2015 2016 2015
Figures in million (Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Translation gain/(loss) on US$ revolving credit
facility (a) 135 (800) (122) (665) (382)
Unrealised derivative gain (b) 369 - - 369 -
Realised derivative gain (b) 77 - - 77 -
Other 25 2 (3) 27 15
Total foreign exchange translation gain/(loss) 606 (798) (125) (192) (367)
Rand/US$ exchange rate:
Closing/spot at 14.72 15.62 12.16 14.72 12.16
Average 15.39 13.62 11.91 14.50 11.45
a) Refer to note 8 for details on the US$ revolving credit facility.
b) During February 2016, Harmony entered into foreign exchange hedging contracts (forex hedging contracts) in the form of zero cost
collars, which establish a minimum (floor) and maximum (cap) Rand/US Dollar exchange rate at which to convert US dollars to
Rands. The nominal value of open forex hedging contracts at 30 June 2016 is US$500 million. The hedging contracts are spread
over a 12 month period with a weighted average cap price of US$1=R18.27 and weighted average floor price of US$1=R15.55. The
mark-to-market of the derivative asset is R369 million as at 30 June 2016 due to the strengthening of the Rand exchange rate against
the US dollar since the conclusion of the forex hedging contracts. As we do not apply hedge accounting, the gains have been
recorded in the income statement.
4 Taxation
Normal taxation expense increased during the year ended 30 June 2016 due to the increased profitability at most of the South African
operations and the inclusion of the unrealised derivative gain of R369 million in determining taxable income.
The deferred tax expense increased during 2016 due to the net increase in the deferred tax rates year on year and utilisation of assessed
losses and unredeemed capital by the South African companies. The weighted average deferred tax rates for most South African
companies increased as a result of increased forecast profitability of these operations.
5 Earnings/(loss) per share
Six months ended Year ended
30 June 31 December 30 June 30 June 30 June
2016 2015 2015 2016 2015
(Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Weighted average number of shares (million) 436.3 435.2 434.7 435.7 434.4
Weighted average number of diluted shares (million) 455.9 436.9 438.6 446.4 438.1
Total earnings/(loss) per share (cents):
Basic earnings/(loss) 320 (102) (786) 218 (1 044)
Diluted earnings/(loss) 306 (102) (786) 213 (1 044)
Headline earnings/(loss) 324 (103) (16) 221 (189)
Diluted headline earnings/(loss) 310 (103) (16) 216 (189)
Figures in million
Reconciliation of headline earnings/(loss):
Net profit/(loss) 1 394 (445) (3 415) 949 (4 536)
Adjusted for:
Profit on disposal of investments(1) - - (4) - (4)
Reversal of impairment/(impairment) of assets (43) - 3 471 (43) 3 471
Taxation effect on reversal of
impairment/(impairment) of assets 12 - (169) 12 (169)
Profit on sale of property, plant and equipment (3) (4) (5) (7) (6)
Taxation effect on profit on sale of property, plant
and equipment - - (1) 1 (1)
Loss on scrapping of property, plant and equipment 64 - 61 64 491
Taxation effect on loss on scrapping of property,
plant and equipment (12) - (9) (12) (67)
Headline earnings/(loss) 1 412 (449) (71) 964 (821)
(1) There is no taxation effect on this item.
6 Property, plant and equipment
(a) Impairment/reversal of impairment
One of the most significant assumptions that influence the Group's operations' life-of-mine plans and therefore impairment is the
expected gold price. During this year's planning and testing, commodity price and exchange rate assumptions as per the table below
were used. Post-tax real discount rates ranging between 8.43% and 11.77% (2015: 7.99% and 12.03%), depending on the asset,
were used to determine the recoverable amounts (generally fair value less costs to sell).
2017 onwards
US$ gold price ($/ounce) 1 189
US$ silver price ($/ounce) 17.80
Exchange rate (R/US$) 13.86
Exchange rate (PGK/US$) 3.10
Rand gold price (R/Kg) 530 000
For South African operations, values of US$40.86, US$23.35 and US$5.84 per ounce were used for measured, indicated and inferred
resources, respectively. For Hidden Valley, US$5.84 per ounce was used for indicated and inferred resources.
The annual impairment assessment performed resulted in a net reversal of impairment of R43 million for the 2016 financial year.
- A reversal of R738 million was recorded for Doornkop mainly due to the increased Rand gold price assumption, improvements in
operational efficiencies following the restructuring in 2015 and new areas included in the life-of-mine plan based on additional
exploration performed during 2016. The recoverable amount is R2.8 billion.
- An impairment of R466 million was recorded for Hidden Valley. The updated life-of-mine plan for Hidden Valley results in lower
production in 2017 as the mine undergoes processing of ore stockpiles and a period of care and maintenance, with stripping activities
for stage 5 planned to recommence in the 2018 financial year. The recoverable amount is R319 million (US$21.7 million).
- An impairment of R229 million was recorded for Masimong which has a remaining life of mine of three years. The exploration
programme to find additional areas of the higher grade B Reef proved unsuccessful and was stopped during 2016. In addition, the
grade estimation of the Basal Reef decreased and as a result a portion of the resource was abandoned at 30 June 2016. The
recoverable amount is R472 million.
The recoverable amounts for these assets were determined on a fair value less costs to sell basis using the assumptions above in
discounted cash flow models and attributable resource values. These are fair value measurements classified as level 3.
The sensitivity scenario of a 10% decrease in the commodity price used in the discounted cash flow models and the resource values
used (with all other variables held constant) would have resulted in an additional impairment at Hidden Valley of R319 million and
Masimong of R281 million. The decreases noted would have resulted in impairments at Unisel of R162 million, Free State surface
assets of R141 million, Other Harmony assets of R46 million and Doornkop of R15 million (as opposed to the reversal recorded of
R738 million).
(b) Loss on scrapping of property, plant and equipment
At 30 June 2016, following the annual life-of-mine planning, an amount of R64 million (2015: R491 million) was recorded for various
operations as a result of the abandonment of uneconomical areas in the life-of-mine plans of those operations. The abandonment of
unprofitable areas in the plans resulted in the derecognition of property, plant and equipment as no future economic benefits are
expected from their use or disposal. For June 2015, the scrapping loss recorded mainly related to the life-of-mine optimisation
process finalised in December 2014 which resulted in the abandoning of shaft levels and raise lines at Kusasalethu and Masimong.
7 Investment in associate
Harmony's gross 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 2016, Harmony set off its
share of profits from associate of R7 million against its share of losses of R25 million recorded against the loan in 2015, as well as an
additional provision for impairment of R25 million (2015: R15 million). The recoverable amount of the loan at 30 June 2016 is R62 million
(2015: R80 million). The fair value measurement of the net investment is classified as level 3 and is non-recurring. The loan is due in
December 2016 and has been included in Other receivables - current.
8 Borrowings
During the 2016 financial year R300 million and R400 million was raised and repaid respectively on the R1.3 billion Nedbank revolving
credit facility. US$110 million (R1 645 million) was repaid on the US$ revolving credit facility. Refer to note 3 for details on the foreign
exchange translation movement.
US$ facility Rand facility
Figures in million US dollar SA rand
Borrowings summary at 30 June 2016
Facility 250 1 300
Drawn down 140 300
Undrawn committed borrowing facilities 110 1 000
Maturity February December
2018 2016
Interest rate LIBOR + 3% JIBAR + 3.5%
At 30 June 2016, the drawn amount of R300 million on the Nedbank facility is repayable within 12 months and has been reclassified as
current. Refer to note 13 for events after reporting date.
9 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 at reporting date:
Fair value At 31
hierarchy At 30 June December At 30 June
level 2016 2015 2015
Available-for-sale financial assets
Investment in financial assets(1) Level 3 5 5 5
Fair value through profit or loss
Restricted investments(2) Level 2 640 614 538
Derivative assets(3) Level 2 369 - -
(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.
(3) The mark-to-market remeasurement of the forex hedging contracts (zero cost collars) is derived from a Black-Scholes valuation technique, derived
from spot Rand/US$ exchange rate inputs and discounted at market interest rate.
For all other financial instruments, fair value approximates carrying value.
10 Net additions to property, plant and equipment
Six months ended Year ended
30 June 31 December 30 June 30 June 30 June
2016 2015 2015 2016 2015
Figures in million (Unaudited) (Unaudited) (Unaudited) (Reviewed) (Audited)
Capital expenditure - operations 1 125 1 027 1 191 2 152 2 470
Capital and capitalised exploration and evaluation
expenditure for Golpu 126 114 105 240 119
Additions resulting from stripping activities at Hidden
Valley 14 28 138 42 236
Other - (1) (6) (1) 2
Net additions 1 265 1 168 1 428 2 433 2 827
11 Commitments and contingencies
At At At
30 June 31 December 30 June
2016 2015 2015
Figures in million (Reviewed) (Unaudited) (Audited)
Capital expenditure commitments:
Contracts for capital expenditure 264 166 158
Authorised by the directors but not contracted for 516 1 607 257
780 1 773 415
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. Other than discussed below, there were no significant changes in contingencies since 30 June 2015.
(a) Silicosis
On 13 May 2016, the Johannesburg High Court ordered the certification of a silicosis class and a tuberculosis (TB) class, which are
to proceed as a single class against the mining companies acted in the application. The companies requested leave to appeal to the
Supreme Court of Appeal (SCA), which was granted on 24 June 2016. Harmony submitted its notice of appeal in respect of the
transmissibility of the general damages order on 22 July 2016.
Due to the limited information available on the above claim and potential other claims, and the uncertainty of the outcome of the
matter, no costs estimation can as yet be made for the possible obligation.
12 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.
(a) Movement in shares owned by directors/prescribed officers for the year ended 30 June 2016:
Shares Performance
purchased in Shares sold in shares vested
Name of director/prescribed officer open market open market and retained
Frank Abbott (Financial director) (1) 300 000 - 18 547
Graham Briggs (Chief executive officer) (2) - - 46 874
Harry "Mashego" Mashego (Executive director) (3) - 10 000 7 760
Ken Dicks (Independent non-executive director) (4) 15 000 - n/a
Johannes van Heerden (5) - 41 337 13 153
(1) Purchased on 15 December 2015.
(2) Graham Briggs retired on 31 December 2015.
(3) Sold on 23 March 2016.
(4) Purchased on 8 December 2015.
(5) Sold in several tranches during 2016.
(b) During July 2015, Harmony signed a R150 million guarantee for the ARM Broad Based Economic Empowerment (BBEE) Trust (the Trust),
shareholder of the African Rainbow Minerals Limited. The guarantee was for additional security for the Trust's loan due to
Nedbank Limited. The guarantee was subsequently cancelled in April 2016 after Harmony advanced R200 million to the Trust as part
of the restructuring and refinancing of the Trust's bank debt. The loan is subordinated and unsecured. The interest rate is market
related (3 month JIBAR plus 4.25%) and is receivable on the maturity of the loan on 31 December 2022. At 30 June 2016, the loan to
the Trust was tested for impairment and a provision for impairment of R33 million was required. This impairment is included in "Other
expenses (net)" in the income statement. The recoverable amount on the Trust loan at 30 June 2016 is R172 million and is recorded
in Other non-current receivable in the balance sheet. The fair value measurement is classified as level 3 and is non-recurring.
13 Subsequent events
a) On 7 July 2016, Harmony repaid the remaining R300 million outstanding on the R1.3 billion Nedbank ZAR facility.
b) During July 2016, Harmony entered into short term gold forward sale contracts for a total of 432 000 ounces over a period of
24 months. These contracts create cash certainty for approximately 20% of the Group's total production at an average gold price of
R682 000/kg. We will be applying cash flow hedge accounting to these contracts.
c) On 15 August 2016, the board declared a dividend of 50 SA cents for the year ended 30 June 2016, payable on 19 September 2016.
14 Segment report
The segment report follows below.
15 Reconciliation of segment information to condensed consolidated income statements and balance sheets
Year ended
30 June 30 June
2016 2015
Figures in million (Reviewed) (Audited)
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 18 334 15 435
Total segment production costs (13 250) (12 632)
Production profit per segment report 5 084 2 803
Depreciation (2 170) (2 472)
Reversal of impairment/(impairment) of assets 43 (3 471)
Other cost of sales items (409) (478)
Gross profit/(loss) as per income statements(1) 2 548 (3 618)
(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
2016 2015
Figures in million (Reviewed) (Audited)
Reconciliation of total segment mining assets to consolidated property, plant and equipment
Property, plant and equipment not allocated to a segment
Mining assets 657 762
Undeveloped property 5 139 5 139
Other non-mining assets 168 199
Wafi-Golpu assets 1 785 1 188
7 749 7 288
16 Review report
These condensed consolidated financial statements for the year ended 30 June 2016 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 2016
Revenue Production cost Production profit/(loss) Mining assets Capital expenditure# Kilograms produced@ Tonnes milled@
30 June 30 June 30 June 30 June 30 June 30 June 30 June
2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015 2016 2015
R million R million R million R million R million kg t'000
South Africa
Underground
Kusasalethu 2 078 1 939 1 816 1 996 262 (57) 3 766 3 619 360 463 3 863 3 953 668 908
Doornkop 1 480 1 220 1 047 1 092 433 128 2 984 2 239 208 245 2 730 2 663 630 603
Phakisa 2 186 1 420 1 375 1 181 811 239 4 246 4 307 323 403 3 988 3 118 686 611
Tshepong 2 756 1 948 1 844 1 611 912 337 4 161 4 025 307 313 5 031 4 278 1 088 992
Masimong 1 318 1 118 1 038 992 280 126 485 893 110 166 2 432 2 463 650 670
Target 1 1 833 1 738 1 250 1 191 583 547 2 826 2 782 322 296 3 387 3 824 739 749
Bambanani 1 617 1 330 811 705 806 625 807 821 106 110 3 013 2 908 232 229
Joel 1 220 1 046 831 770 389 276 728 578 215 182 2 278 2 258 542 551
Unisel 925 770 754 682 171 88 543 594 62 99 1 704 1 695 424 417
Target 3(a) - 222 - 177 - 45 526 535 - 20 - 483 - 90
Surface
All other surface operations 1 601 1 338 1 272 1 092 329 246 448 483 59 51 2 972 2 927 10 985 10 418
Total South Africa 17 014 14 089 12 038 11 489 4 976 2 600 21 520 20 876 2 072 2 348 31 398 30 570 16 644 16 238
International
Hidden Valley 1 320 1 346 1 212 1 143 108 203 650 1 384 79 121 2 257 2 943 1 729 1 825
Total international 1 320 1 346 1 212 1 143 108 203 650 1 384 79 121 2 257 2 943 1 729 1 825
Total operations 18 334 15 435 13 250 12 632 5 084 2 803 22 170 22 260 2 151 2 469 33 655 33 513 18 373 18 063
Reconciliation of the segment
information to the condensed
consolidated financial statements (refer
to note 15) - - - - 7 749 7 288
18 334 15 435 13 250 12 632 29 919 29 548
# Capital expenditure for international operations excludes expenditure spend on Wafi-Golpu of R240 million (2015: R119 million).
(a) Target 3 was placed on care and maintenance in October 2014.
@ Production statistics are unaudited and not reviewed.
The segment report for the year ended 30 June 2015 has been audited. The segment report for the year ended 30 June 2016 has been reviewed.
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