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HARMONY - QUARTERLY REPORT

Release Date: 25/01/1999 12:02:23      Code(s): HAR HARO
HARMONY GOLD MINING COMPANY LIMITED
WEBSITE: WWW.HARMONY.CO.ZA
DIVIDEND ANNOUNCEMENT AND REPORT FOR THE QUARTER ENDED 31 DECEMBER 1998
HIGHLIGHTS
- RESUMPTION OF DIVIDENDS AFTER THREE YEARS
- RECENT ACQUISITIONS BEDDED DOWN
- GOLD PRODUCTION INCREASED BY A FURTHER 18 PER CENT
- ON TARGET TO BECOME A +1 MILLION OUNCE PER ANNUM PRODUCER
- CLOSURE AND SALE OF EAST RAND OPERATIONS
KEY INDICATORS
- GOLD PRODUCED                        10 896 KG         350 300 OZ
- CASH COSTS                           R46 286/KG        $248/OZ
FINANCIAL RESULTS
TOTAL OPERATIONS
                                       QUARTER           QUARTER
                                       31 DECEMBER       30 SEPTEMBER
                                       1998              1998
GOLD PRODUCED - KG                     10 896            9 191
GOLD PRICE RECEIVED - R/KG             55 501            57 750
CASH OPERATING COSTS - R/KG            46 286            46 393
CASH OPERATING COSTS - R/T             236               244
                                       R'000             R'000
GOLD SALES                             604 741           530 784
CASH OPERATING COSTS                   504 328           426 400
CASH OPERATING PROFIT                  100 413           104 384
OTHER INCOME - NET                     5 803             7 289
RETRENCHMENT COSTS                     (30 209)          (290)
AMORTISATION                           (26 628)          (24 222)
REHABILITATION COSTS                   (3 060)           (3 076)
PROFIT BEFORE TAXATION                 46 319            84 085
SOUTH AFRICAN NORMAL TAXATION
- CURRENT TAX                          (1 279)           (1 345)
- DEFERRED TAX                         (6 257)           (4 561)
EARNINGS AFTER TAXATION                38 783            78 179
CASH OPERATING EARNINGS PER SHARE
- CENTS                                145               153
EARNINGS PER SHARE- CENTS              56                114
DIVIDENDS PER SHARE - CENTS            50                -
FINANCIAL
- CASH OPERATING PROFIT                R100 MILLION      $17 MILLION
- EARNINGS                             R39 MILLION       $7 MILLION
- EARNINGS PER SHARE                   56 CENTS          10 US CENTS
- DIVIDENDS PER SHARE                  50 CENTS          9 US CENTS
- TOTAL DIVIDEND                       R35 MILLION       $6 MILLION
OPERATING AND FINANCIAL RESULTS - SA OPERATIONS
                                         EVANDER   EVANDER
               HARMONY  BRAND  MASIMONG  U/GROUND  SURFACE  EAST RAND  TOTAL
ORE MILLED - T'000
DECEMBER 1998   999     259    225       427        53      174        2 137
SEPTEMBER 1998  962     131    -         453        -       199        1 745
GOLD PRODUCED - KG
DECEMBER 1998   4 433   1 460  915       3 134      56      898       10 896
SEPTEMBER 1998  4 538   794    -         3 107      -       752       9 191
YIELD - G/T
DECEMBER 1998   4.44    5.64   4.07      7.34       1.06    5.16      5.10
SEPTEMBER 1998  4.72    6.06   -         6.86       -       3.78      5.27
CASH OPERATING COSTS - R/KG
DECEMBER 1998   44 774  49 806 63 081    42 399     29 125  45 545    46 286
SEPTEMBER 1998  43 520  51 714 -         47 596     -       53 140    46 393
CASH OPERATING COSTS - R/T
DECEMBER 1998   199     281    257       311        31      235       236
SEPTEMBER 1998  205     313    -         326        -       201       244
WORKING REVENUE (R'000)
DECEMBER 1998   245 812 81 345 50 756    174 119    3 119   49 590   604 741
SEPTEMBER 1998  264 001 46 049 -         177 288    -       43 446   530 784
CASH OPERATING COSTS (R'000)
DECEMBER 1998   198 483 72 717 57 719    132 879    1 631   40 899   504 328
SEPTEMBER 1998  197 496 41 061 -         147 882    -       39 961   426 400
CASH OPERATING PROFIT (R'000)
DECEMBER 1998   47 329  8 628  (6 963)   41 240     1 488   8 691    100 413
SEPTEMBER 1998  66 505  4 988  -         29 406     -       3 485    104 384
ABRIDGED BALANCE SHEETS
                                         AT                 AT
                                         31 DECEMBER        30 SEPTEMBER
R'000                                    1998               1998
CAPITAL EMPLOYED
SHAREHOLDERS' EQUITY                     1 740 266          1 692 115
EMPLOYMENT OF CAPITAL
NET MINING ASSETS AFTER
DEPRECIATION                             2 230 432          2 104 545
INVESTMENTS                              52 705             52 806
LONG TERM PROVISIONS
- DEFERRED TAX                           (217 502)          (211 243)
- REHABILITATION                         (224 310)          (195 498)
- POST-RETIREMENT BENEFITS               (40 660)           (43 436)
LOAN - FREEGOLD                          (99 119)           (70 777)
LOAN - BISSETT                           (64 635)           (50 393)
NET CURRENT LIABILITIES                  (93 134)           (81 005)
CASH AND SHORT TERM INVESTMENTS          196 489            187 116
                                         1 740 266          1 692 115
ISSUED SHARE CAPITAL: 69.3 MILLION ORDINARY SHARES OF 50 CENTS EACH (SEPTEMBER
1998: 68.4 MILLION SHARES).
NOTE: MAJOR MOVEMENTS ON THE BALANCE SHEET ARE AS A RESULT OF THE ACQUISITION
OF MASIMONG
DEVELOPMENT RESULTS
                                     CHANNEL   CHANNEL    AU
                            SAMPLED  WIDTH     VALUE      CONTENT
                            METRES   CM        G/T        CM.G/T
FREE STATE
BASAL REEF                  1 078    73        13.01      956
LEADER REEF                 1 204    139       4.20       584
"A" REEF                    496      155       7.36       1 141
MIDDLE REEF                 60       100       39.20      3 913
EAST RAND
BLACK REEF                  20       120       3.88       466
KIMBERLEY REEF              444      113       5.71       645
"A" REEF                    37       95        2.37       225
"C" REEF                    138      20        19.25      385
EVANDER
KIMBERLEY REEF              1 156    42        30.79      1 293
PREPARED IN ACCORDANCE WITH INTERNATIONAL ACCOUNTING STANDARDS CURRENCY
CONVERSION RATE: US$1 = R5.80 (SEPTEMBER 1998 = R6.21)
OVERVIEW
THE FIRST INCLUSION OF THE RESULTS OF THE MASIMONG SHAFTS AND BRAND NO. 5 SHAFT
LED TO AN 18 PER CENT INCREASE IN GOLD PRODUCTION. REVENUE, HOWEVER, DID NOT
INCREASE PROPORTIONALLY DUE TO THE LOWER RAND GOLD PRICE RECEIVED. ANNUALISED
GOLD PRODUCTION NOW STANDS AT 1.3 MILLION OUNCES.
A CASH OPERATING PROFIT OF R100.4 MILLION WAS ACHIEVED COMPARED WITH R104.3
MILLION IN THE PREVIOUS QUARTER. NET AFTER TAX EARNINGS, HOWEVER, DECLINED FROM
R78.2 MILLION (EPS: 114 CENTS) IN THE SEPTEMBER QUARTER TO R38.8 MILLION (EPS:
56 CENTS), MAINLY AS A RESULT OF R30 MILLION IN RETRENCHMENT COSTS INCURRED AT
THE EVANDER AND EAST RAND OPERATIONS.
OPERATIONS
HARMONY
CASH OPERATING PROFIT REDUCED BY R19.1 MILLION TO R47.3 MILLION. THIS WAS
MAINLY THE RESULT OF THE LOWER GOLD PRICE AND A SLIGHT REDUCTION IN RECOVERED
GRADE.
BRAND
CASH OPERATING PROFIT INCREASED BY R3.6 MILLION TO R8.6 MILLION. THE RESULTS OF
BRAND NO. 5 SHAFT WERE INCLUDED FOR THE FIRST TIME THIS QUARTER. INCREASED
PRODUCTION LED TO A REDUCTION OF 10 PER CENT IN COST PER TON FROM R313/T TO
R281/T.
MASIMONG
AS ANTICIPATED, A LOSS OF R7 MILLION WAS INCURRED DURING THE QUARTER. A CASH
OPERATING PROFIT WAS RECORDED IN THE MONTH OF DECEMBER AND THIS PROFIT TREND IS
EXPECTED TO CONTINUE.
EVANDER
A DECREASE IN WORKING COSTS ACHIEVED BY THE OPERATION WAS MAINLY RESPONSIBLE
FOR THE IMPROVEMENT IN CASH OPERATING PROFIT OF R13.3 MILLION TO R42.7 MILLION
FOR THE CURRENT QUARTER. TOTAL UNDERGROUND WORKING COSTS FOR THE QUARTER WERE
REDUCED BY R15 MILLION OR R5 197 PER KILOGRAM OF GOLD PRODUCED. DURING THE
QUARTER, 1141 EMPLOYEES ACCEPTED VOLUNTARY RETRENCHMENT AT A COST OF R19
MILLION AS PART OF A RATIONALISATION PROGRAM.
THE FULL BENEFITS OF RESTRUCTURING ARE ONLY EXPECTED IN THE JUNE QUARTER AS THE
MARCH QUARTER'S PRODUCTION WILL STILL BE AFFECTED ADVERSELY BY THE
RESTRUCTURING.
THE TREATMENT OF SURFACE WASTE ROCK COMMENCED DURING THE QUARTER AND IS
EXPECTED TO CONTINUE AT 35 000 TONS PER MONTH.
BISSETT
CAPITAL EXPENDITURE AND PRE-PRODUCTION COSTS OF R16.5 MILLION WERE CAPITALISED
FOR THE QUARTER. COSTS AND TONNAGES WERE IN LINE WITH EXPECTATIONS. DESIGNED
PRODUCTION LEVELS SHOULD BE ACHIEVED BY MARCH 1999.
EAST RAND
OPERATIONS
THE OPERATIONS CONTRIBUTED R8.6 MILLION TO CASH PROFIT, COMPARED WITH R3.4
MILLION THE PREVIOUS QUARTER. THE INCREASE IN CASH PROFIT AND GOLD PRODUCTION
WAS DUE TO CLEANUP OPERATIONS, BOTH UNDERGROUND AND SURFACE, PRIOR TO THE
CLOSURE AND DISPOSAL OF THE OPERATIONS. THE ENTIRE WORKFORCE WAS RETRENCHED AT
A COST OF R11 MILLION PURSUANT TO THE CLOSURE.
DISPOSAL
AS ANNOUNCED ON 4 DECEMBER 1998, THE COMPANY DISPOSED OF ITS ENTIRE
SHAREHOLDING IN, AND CLAIMS AGAINST, CONSOLIDATED MODDERFONTEIN MINES LIMITED
AND THE GROOTVLEI PROPRIETARY MINES LIMITED, SUBJECT TO CERTAIN CONDITIONS
PRECEDENT, TO PETRA MINING LIMITED FOR A CONSIDERATION OF R90 MILLION. THE
CONSIDERATION IS TO BE SETTLED BY WAY OF THE TRANSFER OF 12 000 000 MOLOPE "N"
SHARES AT A DEEMED VALUE OF R5,00 EACH, WITH THE BALANCE PAYABLE IN 21 MONTHLY
INSTALLMENTS AT AN INTEREST RATE OF 10 PER CENT PER ANNUM, COMMENCING 31 MARCH
1999.
MEDIUM-TERM PROSPECTS
IT IS NOW THREE YEARS SINCE THE THEN NEW HARMONY BOARD AND MANAGEMENT TEAM
FORMULATED ITS GROWTH STRATEGY TO ACQUIRE ADDITIONAL AND HIGHER QUALITY
RESERVES. THE CURRENT RESULTS REFLECT THE SUCCESS OF THIS STRATEGY. OUR
EFFICIENT AND LOW-COST OPERATIONAL SKILLS ALSO CONTINUE TO ENABLE US TO ADD
VALUE TO THESE NEW OPERATIONS.
THE PREVAILING GOLD PRICE AND INTERNATIONAL GOLD MARKET CONDITIONS CONTINUE TO
CREATE GROWTH OPPORTUNITIES FOR HARMONY IN THE SHORT TO MEDIUM TERM, MAINLY IN
SOUTH AFRICA, BUT ALSO INTERNATIONALLY.
DESPITE THE DEPRESSED GOLD PRICE, HARMONY IS WELL ON TRACK TO BECOME A
WORLD-CLASS GOLD MINING COMPANY IN TERMS OF OUTPUT AND PROFITABILITY, WHICH
WILL ULTIMATELY RESULT IN SHAREHOLDERS BEING REWARDED THROUGH REAL GROWTH IN
EARNINGS PER SHARE. THE CONTINUED SUPPORT OF SHAREHOLDERS AND EMPLOYEES SHOULD
ENSURE THE SUSTAINABILITY OF THE COMPANY'S SUCCESSFUL EXPANSION.
PROSPECTS FOR THE NEXT QUARTER
IT IS EXPECTED THAT CURRENT PRODUCTION LEVELS WILL BE MAINTAINED DURING THE
MARCH QUARTER. UNIT COSTS SHOULD REDUCE AT EVANDER, BRAND AND MASIMONG, BOTH
PER TON AND PER KILOGRAM.
THE COMPANY REMAINS ON TRACK TO DELIVER IN EXCESS OF A MILLION OUNCES FOR THE
FINANCIAL YEAR, AND IT IS ESTIMATED THAT THIS TARGET WILL BE REACHED IN APRIL
1999.
DIVIDEND
IN VIEW OF THE IMPROVED FINANCIAL PERFORMANCE OF THE COMPANY, THE DIRECTORS
HAVE DECLARED AN INTERIM DIVIDEND OF 50 CENTS PER SHARE.
THIS REPORT WAS APPROVED BY THE BOARD AND IS SIGNED ON ITS BEHALF BY:
Z B SWANEPOEL                                       F ABBOTT
CHIEF EXECUTIVE                                     FINANCIAL DIRECTOR
VIRGINIA
25 JANUARY 1999
NOTICE OF INTERIM DIVIDEND
A DIVIDEND NO. 68 OF 50 CENTS PER ORDINARY SHARE, BEING THE INTERIM DIVIDEND
FOR THE FINANCIAL YEAR ENDING 30 JUNE 1999, HAS BEEN DECLARED PAYABLE ON 26
MARCH 1999 TO THOSE SHAREHOLDERS REGISTERED IN THE BOOKS OF THE COMPANY AT THE
CLOSE OF BUSINESS ON 19 FEBRUARY 1999.
THE DIVIDEND IS DECLARED IN THE CURRENCY OF THE REPUBLIC OF SOUTH AFRICA.
DIVIDEND CHEQUES WILL BE POSTED FROM THE OFFICE OF THE TRANSFER SECRETARIES IN
SOUTH AFRICA OR THE REGISTRARS IN THE UNITED KINGDOM ON OR ABOUT 25 MARCH 1999.
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 19
FEBRUARY 1999.
THIS ANNOUNCEMENT WILL BE MAILED TO ALL REGISTERED SHAREHOLDERS ON OR ABOUT 26
JANUARY 1999.
BY ORDER OF THE BOARD
F W BAKER
COMPANY SECRETARY
VIRGINIA
25 JANUARY 1999
DIRECTORS
L HEWITT*(CHAIRMAN), ZB SWANEPOEL (CHIEF EXECUTIVE), F ABBOTT, RA ANDREW*
(BRITISH), RAL ATKINSON, GP BRIGGS (ALTERNATE), F DIPPENAAR, NJ FRONEMAN, TSA
GROBICKI*, PC PIENAAR (ALTERNATE), MF PLEMING*, FR SULLIVAN  *NON EXECUTIVE
DIRECTORS
HARMONY GOLD MINING COMPANY LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 05/38232/06)
NASDAQ TRADING SYMBOL HGMCY
BUSINESS ADDRESS
HARMONY GOLD MINING COMPANY LIMITED
SECOND FLOOR, BUILDING 26, THE WOODLANDS
WESTERN SERVICE ROAD, WOODMEAD
POSTNET SUITE 27, PRIVATE BAG X23, GALLO MANOR, 2052
E-MAIL: CORPORATE@HARMONY.CO.ZA
TELEPHONE: +27 (11) 802-1822. TELEFAX: +27 (11) 802-2363
SHAREHOLDER ENQUIRIES
FOR FURTHER INFORMATION CONTACT CHRISTINE LEONARDI AT
TELEPHONE: +27 (11) 802-1822
TELEFAX: +27 (11) 802-2363
E-MAIL: CLEONARDI@HARMONY.CO.ZA
SHARE TRANSFER SECRETARIES
OPTIMUM REGISTRARS (PROPRIETARY) LIMITED
EDURA HOUSE, 41 FOX STREET
JOHANNESBURG, 2001
PO BOX 62391, MARSHALLTOWN, 2107
SOUTH AFRICA
TELEPHONE: +27 (11) 834-1050. TELEFAX: +27 (11) 834-2446
UNITED KINGDOM REGISTRARS
COMPUTERSHARE SERVICES PLC
PO BOX 82, CAXTON HOUSE
REDCLIFFE WAY, BRISTOL BS99 7NH
ENGLAND
TELEPHONE: +44 (117) 930-6600
TELEFAX: +44 (117) 930-6509
UNITED STATES DEPOSITORY
AMERICAN DEPOSITORY RECEIPTS
THE BANK OF NEW YORK
SHAREHOLDER RELATIONS DEPARTMENT
101 BARCLAY STREET
NEW YORK NY 10286, USA
TELEPHONE +1 (800) 524-4458



                                        
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