 
HARMONY - RESULTSRelease Date: 19/04/1999 12:41:21 Code(s): HAR HARO HARMONY GOLD MINING COMPANY LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 05/38232/06)
JSE CODE:HAR
NASDAQ TRADING SYMBOL HGMCY
REPORT TO SHAREHOLDERS FOR THE QUARTER ENDED 31 MARCH 1999
HIGHLIGHTS
- CASH OPERATING PROFIT OF R104 MILLION
- EPS INCREASED BY 123% TO 125 CPS
- EVANDER CASH COSTS BELOW US$200/OZ
- ONE MILLION OUNCES PRODUCED BY 9 APRIL 1999
FINANCIAL
- CASH OPERATING PROFIT R104 MILLION $17 MILLION
- EARNINGS R87 MILLION $14 MILLION
- EARNINGS PER SHARE 125 CENTS 20 US CENTS
KEY INDICATORS
- GOLD PRODUCED 9 943 KG 319 675 OZ
- CASH COSTS R46 432/KG $237/OZ
SOUTH AFRICAN RAND VALUES ARE USED IN THIS REPORT OTHER THAN WHERE SPECIFIED.
FOR CONVENIENCE, THE CONVERSION RATE CAN BE TRANSLATED AT US$1.00 = R6.10
(DECEMBER 1998: US$1.00 = R5.80)
ENQUIRIES CONCERNING THIS REPORT CAN BE DIRECTED TO:
CHRISTINE LEONARDI, PUBLIC RELATIONS MANAGER
POSTNET SUITE 27, PRIVATE BAG X23, GALLO MANOR, 2052, SOUTH AFRICA
TELEPHONE: +27 (11) 802-1822. TELEFAX: +27 (11) 802-2363
E-MAIL: CLEONARDI@HARMONY.CO.ZA
THIS REPORT IS ALSO AVAILABLE AT WEBSITE: HTTP://WWW.HARMONY.CO.ZA
MESSAGE FROM THE CHIEF EXECUTIVE
OVERVIEW
THE COMPANY IMPROVED ON ITS STRONG PERFORMANCE IN THE MARCH QUARTER. NET
EARNINGS WERE R86,6 MILLION, COMPARED WITH R38,8 MILLION FOR THE DECEMBER
QUARTER. ACCORDINGLY, EARNINGS PER SHARE MORE THAN DOUBLED TO 125 CENTS FROM
THE 56 CENTS REALISED IN DECEMBER, WHILST CASH OPERATING PROFIT INCREASED TO
R104,3 MILLION, COMPARED WITH R100,4 MILLION IN THE PREVIOUS QUARTER (R100,4
MILLION INCLUDED R8,7 MILLION FROM THE EAST RAND OPERATIONS WHICH HAVE
SUBSEQUENTLY BEEN SOLD).
FOLLOWING THE ACQUISITION OF EVANDER IN JUNE 1998, OUR TARGET OF PRODUCING MORE
THAN 1 MILLION OUNCES FOR THE FINANCIAL YEAR WAS ACHIEVED BY 9 APRIL 1999.
WE BELIEVE THAT FURTHER GROWTH OPPORTUNITIES EXIST WITHIN THE MINING INDUSTRY.
THE MOST PLEASING ASPECT OF THE QUARTER WAS THE EXCELLENT OPERATIONAL RESULTS
ACHIEVED AT EVANDER, WHERE PROFITS INCREASED FROM R42,7 MILLION TO R66,2
MILLION AND THE CASH COST PER OUNCE WAS REDUCED TO BELOW US$200 PER OUNCE.
EVANDER'S TURNAROUND IS SPECTACULAR SEEN AGAINST THE FACT THAT WITHIN A MERE
NINE MONTHS SINCE THE ACQUISITION, HARMONY'S MANAGEMENT TEAM HAS CONVERTED A
LOSS MAKING OPERATION INTO ONE OF THE LOWEST COST PRODUCERS IN THE COUNTRY.
THIS WAS ONLY POSSIBLE WITH THE CO-OPERATION AND SUPPORT FROM ALL EVANDER'S
EMPLOYEES.
THE FREE STATE OPERATIONS EXPERIENCED A DECREASE IN PROFITS FROM R49,0 MILLION
TO R38,1 MILLION DUE TO PRODUCTION RELATED PROBLEMS AT THE BEGINNING OF THE
QUARTER.
GOLD PRODUCTION FROM BISSETT WAS LOWER THAN EXPECTED AND THE OPERATIONS DID NOT
BREAK EVEN BY THE END OF THE QUARTER. THIS IS ATTRIBUTED TO A LACK OF
FLEXIBILITY AND A DISRUPTION IN PRODUCTION DUE TO A SERIOUS ACCIDENT IN A KEY
WORKING AREA. ADDITIONAL DRILLING AND DEVELOPMENT RECONFIRMED THE VOLUMES AND
GRADE OF THE ORE BODY.
OUR STRATEGY OF CONVERTING NON-CORE ASSETS INTO CASH HAS REALISED A PROFIT OF
R28 MILLION DURING THE QUARTER. THIS WAS OFFSET BY A FINAL WRITE DOWN OF R14
MILLION ON THE DISPOSAL OF THE EAST RAND OPERATIONS. WE RECEIVED 12 MILLION
MOLOPE "N" SHARES AS PART PAYMENT FOR THE EAST RAND OPERATIONS, OF WHICH 6
MILLION SHARES WERE SOLD FOR A CONSIDERATION OF R28,2 MILLION.
AFTER THE DIVIDEND PAYMENT OF R35 MILLION, OUR CASH BALANCE STILL INCREASED BY
R71,8 MILLION QUARTER-ON-QUARTER TO R268 MILLION.
SINCE 1993 THE COMPANY HAS BEEN ENSURING THAT ALL COMPUTER SYSTEMS ARE YEAR
2000 COMPLIANT AND HAS ALREADY INCURRED OVER R11 MILLION EXPENDITURE WITH A
FURTHER R1 MILLION ANTICIPATED. PUBLIC AND PRIVATE SECTOR ASSOCIATES ARE
CURRENTLY BEING EVALUATED FOR COMPLIANCE.
PROSPECTS
I EXPECT THE JUNE QUARTER TO BE CHALLENGING, ESPECIALLY IN VIEW OF THE SIX
PUBLIC HOLIDAYS DURING THIS PERIOD.
EVANDER IS ON TRACK TO REDUCE ITS COST TO R260 PER TONNE BY THE END OF JUNE.
THIS WILL BE ACHIEVED BY AN INCREASE IN TONNAGES AND A FURTHER REDUCTION IN
COSTS. THE INCREASE IN VOLUME WILL RESULT IN THE GRADE DECREASING TO A MORE
SUSTAINABLE LEVEL OF APPROXIMATELY 7,0 GRAMS PER TONNE.
AN INVESTIGATION INTO RE-TREATING SLIMES DAMS AT EVANDER IS UNDERWAY WITH A
DRILLING PROGRAMME TO CONFIRM GRADES.
PRODUCTION IMPROVEMENTS AT HARMONY AND INCREASED FLEXIBILITY AT MASIMONG SHOULD
RESULT IN AN IMPROVED PERFORMANCE FROM THE FREE STATE OPERATIONS, WHILST
BISSETT SHOULD BREAK EVEN.
MANAGEMENT'S DISCUSSION AND OPERATIONAL ANALYSIS
BISSETT
PRE-PRODUCTION COSTS OF R8,3 MILLION (DECEMBER QUARTER: R12,3 MILLION) WERE
CAPITALISED FOR THE QUARTER. EXTENSIVE DRILLING AND DEVELOPMENT IN THE LAST
THREE QUARTERS CONTINUE TO IMPROVE STOPING FLEXIBILITY AND CONFIRM PREVIOUS
RESERVE ESTIMATES.
HOLE TRUE WIDTH GRADE (G/TONNE) ZONE
METRES CUT* UNCUT
32 - 33 3.1 32.8 96.20 A-N EXTENSION
32 - 14 6.1 14.04 30.14 A-N EXTENSION
32 - 38 16.2 10.62 11.64 33A
32 - 42 13.4 7.50 15.00 33A
32 - 10 5.5 13.01 17.81 A-WEST EXTENSION
32 - 44 1.5 24.66 32.22 A-NORTH
* CUT TO 34G/T SAMPLE.
SEPT. 98 DEC. 98 MARCH 99
DEVELOPMENT RATES 1 761M 1 935M 1 525M
DIAMOND DRILLING 1 957M 6 737M 4 251M
FREE STATE
THE FREE STATE MADE A CASH OPERATING PROFIT OF R38,1 MILLION AGAINST R49,0
MILLION FOR THE PREVIOUS QUARTER. A DECLINE IN PRODUCTION OCCURRED DURING THE
QUARTER DUE TO THE CHRISTMAS BREAK, PUBLIC HOLIDAYS AND LEAVE SCHEDULING
PROBLEMS ASSOCIATED WITH THE MASS HIRING OF NEW WORKERS IN JANUARY 1998. THIS
RESULTED IN A DECREASE OF 11 PER CENT IN TONNAGES AND A 12 PER CENT INCREASE IN
COST PER TONNE TO R248. THE RECOVERED GRADE INCREASED BY 6 PER CENT TO 4.87
GRAMS PER TONNE. A SIGNIFICANT IMPROVEMENT IN COST PER TONNE IS EXPECTED AS
PRODUCTION VOLUMES RETURN TO NORMAL.
THE MASIMONG SHAFTS RECORDED A LOSS OF R1 MILLION (R7 MILLION IN THE DECEMBER
QUARTER). INCREASED DEVELOPMENT HAS RESULTED IN IMPROVED STOPING FLEXIBILITY.
EVANDER
CASH OPERATING PROFIT INCREASED BY 55 PER CENT TO R66,2 MILLION COMPARED WITH
R42,7 MILLION DURING THE DECEMBER QUARTER. THE INCREASED PROFIT IS DUE TO A
FURTHER REDUCTION IN UNDERGROUND COST TO R296 PER TONNE AND AN INCREASE OF 5
PER CENT IN RECOVERED GRADE TO 7.73 GRAMS PER TONNE. THE COST PER KILOGRAM
REDUCED BY 10 PER CENT TO R38 352 PER KILOGRAM ($196 PER OUNCE).
THE TREATMENT OF WASTE ROCK AT THE LESLIE PLANT CONTINUED. 109 000 TONNES WERE
TREATED AT A RECOVERED GRADE OF 0.96 GRAMS PER TONNE, RESULTING IN A PROFIT OF
R2,8 MILLION FOR THE QUARTER.
CAPITAL EXPENDITURE
CAPITAL EXPENDITURE DURING THE QUARTER AMOUNTED TO R26 MILLION.
MARCH 1999 JUNE 1999
OPERATION R MILLION R MILLION
(FORECAST)
FREE STATE 12 10
EVANDER 4 7
BISSETT 10 5
TOTAL 26 22
FINANCIAL RESULTS
QUARTER QUARTER
ENDED ENDED
31 MARCH 31 DECEMBER
TOTAL OPERATIONS (RANDS/METRIC) 1999 1998
GOLD PRODUCED - KG 9 943 10 896
GOLD PRICE RECEIVED - R/KG 56 917 55 501
CASH OPERATING COSTS - R/KG 46 432 46 286
CASH OPERATING COSTS - R/T 247 236
R'000 R'000
GOLD SALES 565 924 604 741
CASH OPERATING COSTS 461 674 504 328
CASH OPERATING PROFIT 104 250 100 413
OTHER INCOME - NET 23 799 5 803
EMPLOYMENT TERMINATION - (30 209)
AMORTISATION (25 304) (26 628)
REHABILITATION PROVISION (2 477) (3 060)
PROFIT BEFORE TAXATION 100 268 46 319
SOUTH AFRICAN NORMAL TAXATION
- CURRENT TAX (6 608) (1 279)
- DEFERRED TAX (7 106) (6 257)
NET EARNINGS AFTER TAX 86 554 38 783
CASH OPERATING EARNINGS PER SHARE - CENTS 150 145
EARNINGS PER SHARE- CENTS 125 56
DIVIDENDS PER SHARE - CENTS 0 50
PREPARED IN ACCORDANCE WITH INTERNATIONAL ACCOUNTING STANDARDS.
OPERATING AND FINANCIAL RESULTS - SA OPERATIONS (RANDS/METRIC)
FREE STATE EVANDER EVANDER
TOTAL UNDERGROUND SURFACE EAST RAND TOTAL
ORE MILLED - T'000
MARCH 1999 1 326 437 109 - 1 872
DECEMBER 1998 1 483 427 53 174 2 137
GOLD PRODUCED - KG
MARCH 1999 6 461 3 377 105 - 9 943
DECEMBER 1998 6 808 3 134 56 898 10 896
YIELD - G/T
MARCH 1999 4.87 7.73 0.96 - 5.31
DECEMBER 1998 4.59 7.34 1.06 5.16 5.10
CASH
OPERATING
COSTS - R/KG
MARCH 1999 50 882 38 352 32 457 - 46 432
DECEMBER 1998 48 314 42 399 29 125 45 545 46 286
CASH
OPERATING
COSTS - R/T
MARCH 1999 248 296 31 - 247
DECEMBER 1998 222 311 31 235 236
WORKING
REVENUE (R'000)
MARCH 1999 366 832 192 838 6 254 - 565 924
DECEMBER 1998 377 913 174 119 3 119 49 590 604 741
CASH
OPERATING
COSTS (R'000)
MARCH 1999 328 750 129 516 3 408 - 461 674
DECEMBER 1998 328 919 132 879 1 631 40 899 504 328
CASH
OPERATING
PROFIT (R'000)
MARCH 1999 38 082 63 322 2 846 - 104 250
DECEMBER 1998 48 994 41 240 1 488 8 691 100 413
ABRIDGED BALANCE SHEET
AT AT
31 MARCH 31 DECEMBER
R'000 1999 1998
CAPITAL EMPLOYED
SHAREHOLDERS' EQUITY 1 784 356 1 731 660**
EMPLOYMENT OF CAPITAL
NET MINING ASSETS AFTER DEPRECIATION 2 134 307* 2 203 189**
INVESTMENTS 70 802 52 705
LONG-TERM PROVISIONS
- DEFERRED TAX (190 688) (183 582)**
- REHABILITATION (210 287) (224 310)
- POST-RETIREMENT BENEFITS (34 981) (40 660)
LOANS (160 417) (163 754)
NET CURRENT LIABILITIES (EXCLUDING CASH) (92 653) (108 417)**
CASH AND SHORT-TERM INVESTMENTS 268 273 196 489
1 784 356 1 731 660
ISSUED SHARE CAPITAL: 69.3 MILLION ORDINARY SHARES OF 50 CENTS EACH (DECEMBER
1998: 69.3 MILLION SHARES).
** THE DISPOSAL OF THE EAST RAND OPERATIONS AT THE BEGINNING OF THE CURRENT
QUARTER WAS RESPONSIBLE FOR THE REDUCTION IN MINING ASSETS.
* CERTAIN ADJUSTMENTS RELATING TO THE EVANDER OPERATION HAVE BEEN MADE IN ORDER
TO CONFORM TO INTERNATIONAL ACCOUNTING STANDARDS. CONSEQUENTLY SOME DECEMBER
BALANCE SHEET ITEMS HAVE BEEN RESTATED.
DEVELOPMENT RESULTS (METRIC)
CHANNEL CHANNEL AU
SAMPLED WIDTH VALUE CONTENT
METRES (CM) (G/T) (CM.G/T)
FREE STATE
BASAL REEF 1 390 84 8.70 731
LEADER REEF 1 170 140 4.44 621
"A" REEF 264 142 7.39 1 050
MIDDLE REEF 60 207 6.35 1 314
EVANDER
KIMBERLEY REEF 1 041 54 21.56 1 164
FINANCIAL RESULTS
QUARTER QUARTER
ENDED ENDED
31 MARCH 31 DECEMBER
TOTAL OPERATIONS (US$/IMPERIAL) 1999 1998
GOLD PRODUCED - OZ 319 675 350 314
GOLD PRICE RECEIVED - $/OZ 290 297
CASH OPERATING COSTS - $/OZ 237 248
CASH OPERATING COSTS - $/T 36.67 36.91
$'000 $'000
GOLD SALES 92 774 104 266
CASH OPERATING COSTS 75 684 86 953
CASH OPERATING PROFIT 17 090 17 313
OTHER INCOME - NET 3 901 1 000
EMPLOYMENT TERMINATION - (5 208)
AMORTISATION (4 148) (4 591)
REHABILITATION PROVISION (406) (528)
PROFIT BEFORE TAXATION 16 437 7 986
SOUTH AFRICAN NORMAL TAXATION
- CURRENT TAX (1 083) (220)
- DEFERRED TAX (1 165) (1 079)
NET EARNINGS AFTER TAX 14 189 6 687
CASH OPERATING EARNINGS PER SHARE - CENTS 25 25
EARNINGS PER SHARE- CENTS 20 10
DIVIDENDS PER SHARE - CENTS 0 9
PREPARED IN ACCORDANCE WITH INTERNATIONAL ACCOUNTING STANDARDS.
CURRENCY CONVERSION RATE: US$1 = R6.10 (DECEMBER 1998: R5.80)
OPERATING AND FINANCIAL RESULTS - (US$/IMPERIAL)
FREE STATE EVANDER EVANDER
TOTAL UNDERGROUND SURFACE EAST RAND TOTAL
ORE MILLED - T'000
MARCH 1999 1 462 482 120 - 2 064
DECEMBER 1998 1 635 471 58 192 2 356
GOLD PRODUCED - OZ
MARCH 1999 207 726 108 573 3 376 - 319 675
DECEMBER 1998 218 882 100 760 1 801 28 871 350 314
YIELD - OZ/T
MARCH 1999 0.142 0.225 0.028 - 0.155
DECEMBER 1998 0.134 0.214 0.031 0.150 0.149
CASH
OPERATING
COSTS - $/OZ
MARCH 1999 259 196 165 - 237
DECEMBER 1998 259 227 156 244 248
CASH
OPERATING
COSTS - $/T
MARCH 1999 36.87 44.05 4.66 - 36.67
DECEMBER 1998 34.69 48.64 4.84 36.73 36.91
WORKING
REVENUE ($'000)
MARCH 1999 60 136 31 613 1 025 - 92 774
DECEMBER 1998 65 157 30 021 538 8 550 104 266
CASH
OPERATING
COSTS ($'000)
MARCH 1999 53 893 21 232 559 - 75 684
DECEMBER 1998 56 710 22 910 281 7 052 86 953
CASH
OPERATING
PROFIT ($'000)
MARCH 1999 6 243 10 381 466 - 17 090
DECEMBER 1998 8 447 7 111 257 1 498 17 313
ABRIDGED BALANCE SHEET (US$/IMPERIAL)
AT AT
31 MARCH 31 DECEMBER
1999 1998
$'000 $'000
CAPITAL EMPLOYED
SHAREHOLDERS' EQUITY 292 517 298 562**
EMPLOYMENT OF CAPITAL
NET MINING ASSETS AFTER DEPRECIATION 349 886* 379 860**
INVESTMENTS 11 607 9 087
LONG-TERM PROVISIONS
- DEFERRED TAX (31 260) (31 652)**
- REHABILITATION (34 473) (38 674)
- POST-RETIREMENT BENEFITS (5 735) (7 010)
LOANS (26 298) (28 233)
NET CURRENT LIABILITIES (EXCLUDING CASH) (15 189) (18 693)**
CASH AND SHORT-TERM INVESTMENTS 43 979 33 877
292 517 298 562
ISSUED SHARE CAPITAL: 69.3 MILLION ORDINARY SHARES OF 50 CENTS EACH (DECEMBER
1998: 69.3 MILLION SHARES).
** THE DISPOSAL OF THE EAST RAND OPERATIONS AT THE BEGINNING OF THE CURRENT
QUARTER WAS RESPONSIBLE FOR THE REDUCTION IN MINING ASSETS.
* CERTAIN ADJUSTMENTS RELATING TO THE EVANDER OPERATION HAVE BEEN MADE IN ORDER
TO CONFORM TO INTERNATIONAL ACCOUNTING STANDARDS. CONSEQUENTLY SOME DECEMBER
BALANCE SHEET ITEMS HAVE BEEN RESTATED.
DEVELOPMENT RESULTS (IMPERIAL)
CHANNEL CHANNEL
SAMPLED WIDTH VALUE
FEET (INCHES) (OZ/T)
FREE STATE
BASAL REEF 4 560 33 0.254
LEADER REEF 3 839 55 0.130
"A" REEF 866 56 0.216
MIDDLE REEF 197 81 0.185
EVANDER
KIMBERLEY REEF 3 415 21 0.629
TOTAL NET PROFIT MARGIN (US$/OUNCE)
$ OZ $ OZ
QUARTER QUARTER
MARCH 1999 DECEMBER 1998
CASH OPERATING COSTS 237 248
NET OTHER COST/SUNDRY INCOME 8 31
NET OTHER INCOME (13) (3)
EMPLOYEE TERMINATION COSTS - 15
AMORTISATION 13 13
REHABILITATION 1 2
TAXATION 7 4
ALL INCLUSIVE COSTS 245 279
TOTAL REVENUE 290 297
PROFIT MARGIN 45 18
THIS REPORT WAS APPROVED BY THE BOARD OF DIRECTORS AND IS SIGNED ON ITS BEHALF
BY:
Z B SWANEPOEL F ABBOTT
CHIEF EXECUTIVE FINANCIAL DIRECTOR
VIRGINIA
19 APRIL 1999
INVESTOR INFORMATION
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
INVESTOR RELATIONS
FOR FURTHER INFORMATION CONTACT
FERDI DIPPENAAR AT
TELEPHONE: +27 (11) 802-1822
TELEFAX: +27 (11) 802-2363
E-MAIL: FDIPPENAAR@HARMONY.CO.ZA
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
VISIT OUR WEBSITE: HTTP://WWW.HARMONY.CO.ZA
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 IMPROVES STRONG PERFORMANCE DESPITE GOLD'S LOWS
JOHANNESBURG, 19 APRIL 1999 - IN A QUARTER WHERE THE GOLD PRICE HAS FALLEN
CLOSE TO ITS LOWEST LEVEL IN 21 YEARS, HARMONY INCREASED ITS EARNINGS BY R48
MILLION TO R87 MILLION. ACCORDINGLY, EARNINGS PER SHARE MORE THAN DOUBLED TO
125 CENTS FROM THE 56 CENTS REALISED IN DECEMBER.
CASH OPERATING PROFIT INCREASED TO R104 MILLION. BERNARD SWANEPOEL, CHIEF
EXECUTIVE, SAYS THIS IS QUITE AN ACHIEVEMENT, SINCE THE PREVIOUS QUARTER'S R100
MILLION CASH PROFIT INCLUDED R9 MILLION FROM THE RECENTLY SOLD EAST RAND
OPERATIONS.
"THE MOST PLEASING ASPECT OF THE QUARTER IS THAT THE CASH COST PER OUNCE AT
EVANDER HAS BEEN REDUCED TO US$196 PER OUNCE. THIS EFFECTIVELY MAKES THIS
OPERATION ONE OF THE LOWEST COST PRODUCERS IN THE COUNTRY. PROFITS AT EVANDER
ALSO INCREASED FROM R43 MILLION TO R66 MILLION. THE INCREASED PROFIT IS NOT
ONLY ATTRIBUTABLE TO THE REDUCTION IN TOTAL UNDERGROUND COST TO R296 PER TONNE,
BUT ALSO TO A 5 PER CENT INCREASE IN RECOVERED GRADE TO 7.73 GRAMS PER TONNE.
THIS WAS ONLY POSSIBLE WITH THE COOPERATION AND SUPPORT OF ALL EVANDER'S
EMPLOYEES," SAYS SWANEPOEL.
THEIR TARGET OF PRODUCING MORE THAN 1 MILLION OUNCES FOR THE FINANCIAL YEAR WAS
ACHIEVED BY 9 APRIL 1999. "REACHING THIS TARGET WAS NEVER THE FINAL
DESTINATION, BUT ONE OF OUR MILESTONES IN CONVERTING HARMONY INTO A WORLD-CLASS
COMPANY. THE COMPANY WILL CONTINUE TO EMPHASISE EARNINGS PER SHARE AS THE TRUE
MEASURE OF GROWTH, SAYS SWANEPOEL".
THE FREE STATE OPERATIONS EXPERIENCED A DECREASE IN PROFITS FROM R49 MILLION TO
R38 MILLION AS A RESULT OF PRODUCTION RELATED PROBLEMS AT THE BEGINNING OF THE
QUARTER INCLUDING NUMEROUS PUBLIC HOLIDAYS AND LEAVE SCHEDULING PROBLEMS
ASSOCIATED WITH THE MASS HIRING OF NEW WORKERS IN JANUARY 1998. THIS RESULTED
IN AN 11 PER CENT DECREASE IN TONNAGES, WHICH WAS PARTIALLY OFFSET BY A 6 PER
CENT INCREASE IN RECOVERED GRADE TO 4.87 GRAMS PER TONNE. SWANEPOEL SAYS A
SIGNIFICANT IMPROVEMENT IN UNIT COST IS EXPECTED WHEN PRODUCTION VOLUMES RETURN
TO NORMAL. THROUGH THE WEAKER RAND, THE FREE STATE OPERATIONS' CASH COST WAS
MAINTAINED AT US$259.
THE RECENTLY ACQUIRED MASIMONG SHAFTS RECORDED A LOSS OF R1 MILLION - A
SIGNIFICANT IMPROVEMENT FROM THE R7 MILLION LOSS IN THE PREVIOUS QUARTER.
INCREASED DEVELOPMENT HAS RESULTED IN IMPROVED STOPING FLEXIBILITY.
GOLD PRODUCTION FROM BISSETT WAS LOWER THAN EXPECTED. THIS CAN BE ATTRIBUTED
TO A LACK OF FLEXIBILITY AND A DISRUPTION IN PRODUCTION DUE TO AN ACCIDENT IN A
KEY WORKING AREA. PRE-PRODUCTION COSTS OF R8 MILLION COMPARED WITH R12 MILLION
FOR THE PREVIOUS QUARTER, WERE CAPITALISED. EXTENSIVE DRILLING AND DEVELOPMENT
IN THE LAST THREE QUARTERS CONTINUE TO IMPROVE STOPING FLEXIBILITY AND HAVE
RECONFIRMED PREVIOUS RESERVE ESTIMATES.
"OUR STRATEGY OF CONVERTING NON-CORE ASSETS INTO CASH HAS ALLOWED US TO MAKE A
PROFIT OF R28 MILLION DURING THE QUARTER. THIS WAS OFFSET BY THE FINAL WRITE
DOWN OF R14 MILLION ON THE DISPOSAL OF THE EAST RAND OPERATIONS," SAYS
SWANEPOEL.
AFTER THE DIVIDEND PAYMENT OF R35 MILLION TO THE COMPANY'S SHAREHOLDERS,
HARMONY'S CASH BALANCE NEVERTHELESS INCREASED BY R72 MILLION QUARTER-ON-QUARTER
TO R268 MILLION.
"I EXPECT THE JUNE QUARTER TO BE CHALLENGING, ESPECIALLY IN VIEW OF THE SIX
PUBLIC HOLIDAYS DURING THIS PERIOD. EVANDER IS ON TRACK TO REDUCE ITS COST TO
R260 PER TONNE BY THE END OF THE NEXT QUARTER BY INCREASING TONNAGES AND A
FURTHER REDUCTION IN COSTS. THE INCREASE IN VOLUME WILL ALSO RESULT IN THE
GRADE DECREASING TO A MORE SUSTAINABLE LEVEL OF APPROXIMATELY 7 GRAMS PER
TONNE. PRODUCTION IMPROVEMENTS AT HARMONY AND INCREASED FLEXIBILITY AT MASIMONG
SHOULD RESULT IN AN IMPROVED PERFORMANCE FROM THE FREE STATE OPERATIONS, WHILST
BISSETT SHOULD BREAK EVEN. WITH TOTAL COST AT US$245 PER OUNCE, WE ARE WELL
POSITIONED TO GENERATE STRONG EARNINGS DESPITE THE UNDER-PERFORMANCE OF THE
GOLD PRICE," SAYS SWANEPOEL.
ENDS
ISSUED BY HARMONY GOLD MINING COMPANY LIMITED.
CONTACT: CHRISTINE LEONARDI: PH: +27(11) 802-1822, FAX: +27(11) 802-2363
E-MAIL: CLEONARDI@HARMONY.CO.ZA.
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