Wrap Text
Operational update - Q1FY18
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
OPERATIONAL UPDATE
Q1FY18
HARMONY - HIGHER PRODUCTION, INCREASED MARGINS
Johannesburg. Tuesday, 7 November 2017. Harmony Gold Mining Company Limited ("Harmony" or "the company") is pleased to announce its
operating results for the first quarter ended 30 September 2017.
"Operational excellence has strengthened our margins at our South African operations significantly. The recently announced Moab Khotsong acquisition
will further enhance free cash flows and enforces Harmony's belief that it offers an attractive investment case" said chief executive officer, Peter Steenkamp.
Quarter on quarter, gold production from the South African underground operations increased by 14% due to a 10% increase in ore milled and a 4%
increase in recovered grade to 5.35g/t. Increased production resulted in an 8% decrease in all-in sustaining unit costs to R487 581/kg (US$1 151/oz) for
the South African underground operations.
At Hidden Valley, the investment plan continued in line with budget and schedule, with waste stripping progressing in line with plan and processing of ore
will re-commence by the end of November 2017 following the expected completion of the processing infrastructure upgrade and maintenance activities.
Commercial levels of production at Hidden Valley is expected to be achieved during the June 2018 quarter.
All-in sustaining cost for the group decreased by 6% to R488 176/kg (5% to US$1 152/oz) due to increased production. Increased cash flow generated
from the South African operations supported the funding of the investment capital at Hidden Valley. Net debt for the company remained low at R906 million
(US$67 million) compared to R887 million (US$68 million) at 30 June 2017. Harmony's undrawn existing debt facilities include US$175 million on
the US$ dollar facility and a R1 billion revolving credit facility.
Acquisition of Moab Khotsong operations
Harmony announced the acquisition of the Moab Khotsong operations for US$300 million on 19 October 2017. As an experienced pillar mining specialist
with the proven ability to mine high grade pillars Harmony sees the potential to optimise Moab Khotsong and Great Noligwa mines. The circular to
shareholders regarding the transaction will be posted at the beginning of December 2017.
Wafi-Golpu, Papua New Guinea
The Wafi-Golpu Joint Venture parties continued to progress activity in line with the forward work plan previously communicated, including engagement
with the PNG Government on the application for a Special Mining Lease (SML) for the Wafi-Golpu project. The current study work is focused on assessing
internally-generated power options, developing deep-sea tailings placement options to compare with terrestrial tailings storage options, and reassessing
block cave levels and increased mining rates due to increased knowledge obtained from further drilling undertaken during the year.
The Joint Venture parties are targeting a complete update of the Feasibility Study by the end of the March 2018 quarter. The focus of this work is to further
optimise the business case and confirm any amendments necessary to the supporting documents for the SML application. Timing of first production is
dependent on the updated study outcomes and the granting of the SML.
Below is a table setting out Harmony's total operating results quarter on quarter:
Comparative
Quarter Quarter Q-on-Q Quarter Q-on-Q*
September June Variance September Variance
2017 2017 % 2016 %
Gold produced kg 9 040 8 574 5 8 630 5
oz 290 644 275 660 5 277 461 5
Underground grade g/t 5.35 5.16 4 5.01 7
Gold price received R/kg 571 664 561 558 2 605 224 (6)
US$/oz 1 350 1 324 2 1 339 1
Cash operating costs R/kg 413 082 428 779 4 448 117 8
US$/oz 975 1 011 4 991 2
All-in sustaining costs R/kg 488 176 516 845 6 516 116 5
US$/oz 1 152 1 219 5 1 142 (1)
Production profit R million 1 397 1 176 19 1 369 2
US$ million 106 89 19 97 9
Exchange rate R/US$ 13.18 13.19 - 14.06 (6)
*September 2017 quarter and September 2016 quarter comparison.
Quarter-on-quarter operating results table is included below.
The operational update report has not been reviewed or audited by the company's external auditors. Detailed financial and operational results are
provided on a six-monthly basis at the end of December and June.
OPERATING RESULTS - QUARTER ON QUARTER (RAND/METRIC)
South Africa
Underground production Surface production
Three Central Total
months Tshepong Total plant Total South Hidden Total
ended operations Bambanani Joel Doornkop Target 1 Kusasalethu Masimong Unisel Underground Phoenix reclamation Dumps Kalgold Surface Africa Valley(1) Harmony
Ore milled - t'000 Sep-17 485 62 135 182 196 156 169 104 1 489 1 534 939 458 386 3 317 4 806 268 5 074
Jun-17 426 56 122 168 188 139 162 94 1 355 1 675 - 735 379 2 789 4 144 788 4 932
Yield - g/tonne Sep-17 5.80 10.45 3.61 4.82 4.46 6.77 5.01 3.41 5.35 0.133 0.121 0.365 0.80 0.24 1.82 1.12 1.79
Jun-17 5.23 12.04 3.58 4.05 4.32 8.37 4.12 3.56 5.16 0.134 - 0.418 0.82 0.30 1.89 0.97 1.77
Gold produced - kg Sep-17 2 815 648 488 877 874 1 056 847 355 7 960 204 114 167 310 795 8 755 285 9 040
Jun-17 2 228 674 437 680 812 1 163 668 335 6 997 225 - 307 311 843 7 840 734 8 574
Gold sold - kg Sep-17 2 769 637 502 851 852 1 026 833 349 7 819 207 123 168 297 795 8 614 323 8 937
Jun-17 2 225 673 474 697 797 1 248 668 335 7 117 253 - 312 352 917 8 034 954 8 988
Gold price - R/kg Sep-17 573 748 574 392 573 002 574 951 571 019 572 912 572 887 573 037 573 353 544 522 571 057 571 292 575 003 565 672 572 644 543 805 571 664
received
Jun-17 566 638 567 551 563 814 563 537 567 316 562 838 566 157 566 301 565 581 533 676 - 566 109 562 105 555 624 564 445 533 915 561 558
Revenue (R'000) Sep-17 1 588 708 365 888 287 647 489 283 486 508 587 808 477 215 199 990 4 483 047 112 716 70 240 95 977 170 776 449 709 4 932 756 164 773 5 097 529
Jun-17 1 260 770 381 962 267 248 392 785 452 151 702 422 378 193 189 711 4 025 242 135 020 - 176 626 197 861 509 507 4 534 749 447 955 4 982 704
Cash operating (R'000) Sep-17 1 030 658 233 559 240 524 346 929 349 458 544 800 303 694 217 233 3 266 855 82 179 49 793 79 277 143 715 354 964 3 621 819 104 184 3 726 003
cost
Jun-17 920 811 213 821 224 390 311 758 353 342 498 741 280 482 207 869 3 011 214 88 057 - 128 491 114 772 331 320 3 342 534 284 507 3 627 041
Inventory (R'000) Sep-17 (19 312) (2 347) 6 240 (6 547) (13 390) (17 619) (5 827) (1 734) (60 536) 1 328 4 889 122 (8 192) (1 853) (62 389) 37 694 (24 695)
movement
Jun-17 233 24 14 819 9 879 (7 099) 45 946 720 248 64 770 11 662 - 2 900 19 296 33 858 98 628 80 931 179 559
Operating costs (R'000) Sep-17 1 011 346 231 212 246 764 340 382 336 068 527 181 297 867 215 499 3 206 319 83 507 54 682 79 399 135 523 353 111 3 559 430 141 878 3 701 308
Jun-17 921 044 213 845 239 209 321 637 346 243 544 687 281 202 208 117 3 075 984 99 719 - 131 391 134 068 365 178 3 441 162 365 438 3 806 600
Production profit (R'000) Sep-17 577 362 134 676 40 883 148 901 150 440 60 627 179 348 (15 509) 1 276 728 29 209 15 558 16 578 35 253 96 598 1 373 326 22 895 1 396 221
Jun-17 339 726 168 117 28 039 71 148 105 908 157 735 96 991 (18 406) 949 258 35 301 - 45 235 63 793 144 329 1 093 587 82 517 1 176 104
Capital (R'000) Sep-17 203 717 15 054 64 751 64 395 79 024 66 939 29 191 29 873 552 944 - 3 814 - 26 014 29 828 582 772 713 397 1 296 169
expenditure
Jun-17 200 217 16 176 62 586 66 914 112 656 87 221 38 255 23 452 607 477 440 41 879 1 642 52 043 96 004 703 481 677 825 1 381 306
Cash operating - R/kg Sep-17 366 131 360 431 492 877 395 586 399 838 515 909 358 553 611 924 410 409 402 838 436 781 474 713 463 597 446 496 413 686 393 147 413 082
costs
Jun-17 413 290 317 242 513 478 458 468 435 150 428 840 419 883 620 504 430 358 391 364 - 418 537 369 042 393 025 426 344 459 624 428 779
Cash operating - R/tonne Sep-17 2 125 3 767 1 782 1 906 1 783 3 492 1 797 2 089 2 194 54 53 173 372 107 754 440 739
costs
Jun-17 2 162 3 818 1 839 1 856 1 879 3 588 1 731 2 211 2 222 53 - 175 303 119 807 446 758
Cash operating - R/kg Sep-17 438 499 383 662 625 564 469 013 490 254 579 298 393 017 696 073 479 874 402 838 470 237 474 713 547 513 484 015 480 250 423 804 478 592
cost and Capital(2)
Jun-17 503 154 341 242 656 696 556 871 573 889 503 837 477 151 690 510 517 178 393 320 - 423 886 536 383 506 909 516 073 521 433 516 466
All-in sustaining - R/kg Sep-17 446 114 404 284 564 967 489 464 491 432 597 932 408 147 708 500 487 581 403 415 444 569 472 613 559 206 482 606 487 077 519 338 488 176
cost
Jun-17 514 118 360 645 590 511 575 032 594 376 520 408 495 438 709 593 528 197 395 885 - 357 016 543 032 439 144 517 414 511 392 516 845
Operating free % Sep-17 22 32 (6) 16 12 (4) 30 (24) 15 27 24 17 - 14 15 (390) 2
cash flow margin(3)
Jun-17 11 40 (7) 4 (3) 17 16 (22) 10 34 - 26 16 16 11 (105) -
(1) Ore milled for Hidden Valley includes 31 000 tonnes (Jun-17: 150 000t) that has been capitalised as part of pre-stripping of stages 5 & 6. Gold produced and sold
for Hidden Valley includes 20 kilograms (Jun-17: 115kg) that has been capitalised.
(2) Excludes investment capital for Hidden Valley.
(3) Excludes run of mine costs for Kalgold (Sep-17:R-1.114m, Jun-17:R0.249m) and Hidden Valley (Sep-17:R10.016m, Jun-17:R42.311m).
CONTACT DETAILS
CORPORATE OFFICE
Randfontein Office Park
PO Box 2, Randfontein, 1760, South Africa
Corner Main Reef Road and Ward Avenue
Randfontein, 1759, South Africa
Telephone: +27 11 411 2000
Website: www.harmony.co.za
DIRECTORS
PT Motsepe* (chairman)
FFT De Buck*^ (lead independent director)
JM Motloba*^ (deputy chairman)
PW Steenkamp (chief executive officer)
F Abbott (financial director)
JA Chissano*1^, KV Dicks*^, Dr DSS Lushaba*^
HE Mashego**, M Msimang*^, KT Nondumo*^
VP Pillay*^, JL Wetton*^, AJ Wilkens*
* Non-executive
** Executive
^ Independent
1 Mozambican
INVESTOR RELATIONS
E-mail: HarmonyIR@harmony.co.za
Telephone: +27 11 411 2314
Website: www.harmony.co.za
COMPANY SECRETARY
Telephone: +27 11 411 2094
E-mail: companysecretariat@harmony.co.za
TRANSFER SECRETARIES
Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
13th Floor, Rennie House, Ameshoff Street, Braamfontein
PO Box 4844, Johannesburg, 2000, South Africa
Telephone: +27 11 713 0800
E-mail: info@linkmarketservices.co.za
Fax: +27 86 674 2450
ADR* DEPOSITARY
Deutsche Bank Trust Company Americas
c/o American Stock Transfer and Trust Company
Peck Slip Station
PO Box 2050, New York, NY 10272-2050
E-mail queries: db@amstock.com
Toll free: +1-800-937-5449
Int: +1-718-921-8137
Fax: +1-718-765-8782
*ADR: American Depositary Receipts
SPONSOR
JP Morgan Equities South Africa (Pty) Ltd
1 Fricker Road, corner Hurlingham Road
Illovo, Johannesburg, 2196
Private Bag X9936, Sandton, 2146
Telephone: +27 11 507 0300
Fax: +27 11 507 0503
TRADING SYMBOLS
JSE Limited: HAR
New York Stock Exchange, Inc.: HMY
REGISTRATION NUMBER:
1950/038232/06
Incorporated in the Republic of South Africa
ISIN:
ZAE 000015228
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 2017
is available on our website (www.harmony.co.za/investors)
FORWARD-LOOKING STATEMENTS
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 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 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.
www.harmony.co.za
Date: 07/11/2017 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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