Go Back Email this Link to a friend

HARMONY REPORT TO SHAREHOLDERS FOR THE QUARTER ENDED 30 SEPT 1999

Release Date: 15/10/1999 12:02:09      Code(s): HAR HARO
HARMONY GOLD MINING COMPANY LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 05/38232/06)
NASDAQ TRADING SYMBOL HGMCY
REPORT TO SHAREHOLDERS FOR THE QUARTER ENDED 30 SEPTEMBER 1999
HIGHLIGHTS
* FULL GOLD PRICE EXPOSURE
* KALGOLD MERGER COMPLETED
* GOLD PRODUCTION INCREASED BY 12%
* WORKING COSTS REDUCED TO R46 945/KG
* BISSETT AND MASIMONG EXCEED EXPECTATIONS
FINANCIAL
                                         SEPT 1999           JUNE 1999
CASH OPERATING PROFIT
- SA RAND                                R51 MILLION         R75 MILLION
- US$                                    $8 MILLION          $12 MILLION
EARNINGS
- SA RAND                                R45 MILLION         R57 MILLION
- US$                                    $7 MILLION          $9 MILLION
EARNINGS PER SHARE
- SA CENTS PER SHARE                     56 CENTS            82 CENTS
- US CENTS PER SHARE                     9 CENTS             13 CENTS
KEY INDICATORS
                                         SEPT 1999           JUNE 1999
GOLD PRODUCED
-  KG                                    10 817              9 652
-  OZ                                    347 774             310 318
CASH COSTS
-  R/KG                                  46 945              47 166
-  $/OZ                                  240                 240
DURING THE QUARTER UNDER REVIEW THE COMPANY REALISED AN AVERAGE GOLD PRICE OF
$264/OZ (R51 687/KG). FOLLOWING THE ANNOUNCEMENT OF A MORATORIUM ON GOLD SALES
AND LENDING BY CENTRAL BANKS, THE GOLD PRICE HAS INCREASED TO THE CURRENT LEVEL
OF $320/OZ (R62 700/KG). AS YOUR COMPANY IS UNHEDGED, THIS WOULD INCREASE
REVENUE BY R120 MILLION PER QUARTER AT CURRENT PRODUCTION LEVELS.
MESSAGE FROM THE CHIEF EXECUTIVE
OVERVIEW
THE COMPANY HAS UNDOUBTEDLY EXPERIENCED THE MOST DEMANDING QUARTER IN ITS
HISTORY, WHEN THE GOLD PRICE DROPPED BELOW $260/OZ AND TESTED THE $250 LEVEL.
HOWEVER, THE DRAMATIC INCREASE IN THE GOLD PRICE AFTER THE ANNOUNCEMENT BY 11
CENTRAL BANKS ON 26 SEPTEMBER 1999 OF A MORATORIUM ON GOLD SALES AND LENDING
WILL SIGNIFICANTLY ENHANCE THE COMPANY'S PROSPECTS.  THE UNCERTAINTY IN THE
GOLD MARKET, WHICH ENABLED SPECULATORS TO INFLUENCE THE PRICE WAS REMOVED BY
THE DECISION OF THE CENTRAL BANKS TO LIMIT OFFICIAL GOLD SALES TO 2000 TONS
OVER FIVE YEARS.
THE BEARISH MOOD IN THE MARKET OVER THE LAST TWO YEARS HAS NOT INFLUENCED YOUR
COMPANY'S STRATEGY TO REMAIN UNHEDGED. WE DID NOT FOLLOW THE RUSH BY MANY
PRODUCERS TO HEDGE AT VERY LOW LEVELS, WHICH CONTRIBUTED TOWARDS CAPPING GOLD
AT APPROXIMATELY $260/OZ FOR MOST OF THE QUARTER.
OVER THE LAST FEW DAYS, NEWS OF COMPANIES INCURRING SIGNIFICANT LIQUIDITY
PROBLEMS SURFACED IN THE MARKET. THE FULL EXTENT TO WHICH PRODUCERS ARE BEING
FACED BY HEDGE BOOKS BECOMING A LIABILITY INSTEAD OF AN ASSET, IS NOT YET
APPARENT. WE WILL MOST LIKELY SEE FURTHER RESTRUCTURING OF COMPANIES AND HEDGE
BOOKS IN THE NEXT FEW MONTHS AND THIS MAY CREATE FURTHER OPPORTUNITIES FOR A
GROWTH COMPANY LIKE HARMONY.
AS EXPECTED WITH THE LATEST MOVE IN THE GOLD PRICE, THE COMPANY'S SHARE PRICE
INCREASED SIGNIFICANTLY IN COMPARISON TO HEDGED PRODUCERS AND THE JSE GOLD
INDEX. FOLLOWING THE BANK OF ENGLAND ANNOUNCEMENT OF ITS INTENDED GOLD SALES,
THE COMPANY'S SHARE PRICE UNDER-PERFORMED AGAINST THE JSE GOLD INDEX, BUT WITH
THE IMPROVED GOLD PRICE THIS HAS CHANGED. THE LONG-TERM OUTPERFORMANCE SHOULD
CONTINUE IN LINE WITH THE RECOVERY IN THE GOLD PRICE AND EXPECTED OPERATIONAL
PERFORMANCE.
OUR STRATEGY TO PURSUE GROWTH AND REMAIN UNHEDGED HAS BEEN SUCCESSFUL AND WITH
GOLD RE-ESTABLISHED ABOVE $300/OZ, SHAREHOLDERS WILL BE REWARDED WITH INCREASED
PROFITS. THE COMPANY IS IDEALLY POSITIONED TO CONTINUE TO GROW THROUGH
ACQUISITIONS AND TO INCREASE PRODUCTION FROM EXISTING OPERATIONS.  THE
INDUSTRY'S CHALLENGE IS TO SEE THAT THE FULL BENEFIT OF THE GOLD PRICE REACHES
THE BOTTOM LINE THROUGH INCREASED FOCUS ON COST CONTROL.
OPERATIONALLY, THE RESULTS FOR THE QUARTER CONFIRMED THE COMPANY'S ABILITY TO
OPERATE PROFITABLY IN A LOW GOLD PRICE ENVIRONMENT BY RETURNING NET EARNINGS
PER SHARE OF 56 CENTS (CALCULATED ON 80.5 MILLION SHARES), COMPARED TO 82 CENTS
(CALCULATED ON 69.5 MILLION SHARES)  DURING THE PREVIOUS QUARTER. THIS WAS
DESPITE A 6 PER CENT LOWER GOLD PRICE OF R51 687 PER KILOGRAM. TONNAGE FROM
UNDERGROUND OPERATIONS INCREASED SLIGHTLY TO 1.9 MILLION TONS. TOTAL GOLD
PRODUCTION INCREASED BY 12 PER CENT TO 10 817 KG, MAINLY DUE TO HIGHER RECOVERY
GRADES FROM THE FREE STATE OPERATIONS AND THE INCLUSION OF 630 KG FROM KALGOLD.
TOTAL WORKING COSTS PER KILOGRAM DECREASED TO R46 945. DURING THE QUARTER THE
FULL EFFECT OF THE 8 TO 9 PER CENT SALARY INCREASES WAS ABSORBED. WE EXPECT TO
SEE INCREASED PRODUCTIVITY LEVELS POSITIVELY IMPACTING ON UNIT WORKING COSTS
DURING THE REMAINDER OF THE FINANCIAL YEAR.
IN LINE WITH OUR STRATEGY TO DISPOSE OF NON-GOLD ASSETS, OUR STAKE IN THE RED
RIVER ILMENITE PROJECT WAS SOLD FOR A NET CONSIDERATION OF APPROXIMATELY R15.8
MILLION.
THE COMPANY INCURRED EXPLORATION AND NEW BUSINESS EXPENDITURE OF R2.2 MILLION.
EXPLORATION WAS MAINLY FOCUSED ON THE PROJECT AREAS IN THE KRAAIPAN  AND
MURCHISON GREENSTONE BELTS IN SOUTH AFRICA. WITH THE ACQUISITION OF THE
EXPLORATION ASSETS OF THE WRCM GROUP, HARMONY NOW HAS A NEW DIMENSION TO ADD TO
ITS GROWTH STRATEGY.
KALGOLD/HARMONY MERGER
THE MERGER BETWEEN THE COMPANIES HAS BEEN APPROVED BY THE VARIOUS SHAREHOLDERS
AND WAS COMPLETED WITH THE DELISTING OF KALGOLD AND WRCM SHARES ON 8 OCTOBER
1999. FOR OPERATIONAL REPORTING PURPOSES, THE TRANSACTION WAS EFFECTIVE AS OF 1
JULY 1999 AND THE RESULTS HAVE BEEN STATED ACCORDINGLY.
NASDAQ ADR LISTING
THE COMPANY'S FOCUS ON INCREASING ITS SHAREHOLDER BASE IN NORTH AMERICA IS
STARTING TO SHOW RETURNS. MONTHLY ADR VOLUMES PEAKED IN MAY AT ABOVE 5 MILLION
AND SUBSEQUENTLY DECREASED IN LINE WITH THE GOLD PRICE. MORE THAN 50 PER CENT
OF THE MONTHLY VOLUME OF OVER 4 MILLION WAS TRADED ON THE LAST FOUR DAYS OF
SEPTEMBER ON THE BACK OF THE HIGHER GOLD PRICE.
STRATE
AS REPORTED IN THE PRESS, THE DEMATERIALISATION OF HARMONY SHARES AS THE PILOT
PHASE FOR THE INTRODUCTION OF STRATE (SHARE TRANSACTIONS TOTALLY ELECTRONIC),
STARTED ON 27 SEPTEMBER 1999. THE PROCESS HAS GONE WELL WITH APPROXIMATELY
30.67 PER CENT OF THE COMPANY'S SHARES HAVING BEEN DEMATERIALISED BY 6 OCTOBER
1999. ELECTRONIC SETTLEMENTS ARE PLANNED TO START ON 1 NOVEMBER 1999.
MANAGEMENT'S DISCUSSION AND OPERATIONAL ANALYSIS FOR THE SEPTEMBER 1999 QUARTER
INTRODUCTION
THE FIRST INCLUSION OF THE OPERATIONAL RESULTS OF THE KALGOLD AND BISSETT GOLD
MINES AND THE INCREASED RECOVERY GRADE FROM THE FREE STATE OPERATIONS, LED TO A
12 PER CENT INCREASE IN GOLD PRODUCTION. THE OPERATIONAL RESULTS, WITH A CASH
OPERATING PROFIT OF R51.3 MILLION COMPARED WITH R74.8 MILLION IN THE PREVIOUS
QUARTER, CONFIRMED THE COMPANY'S ABILITY TO OPERATE PROFITABLY DESPITE A RAND
GOLD PRICE OF LESS THAN R51 700/KG ($264/OZ). THE COMPANY'S ALL INCLUSIVE COSTS
WERE REDUCED TO $242/OZ. THIS BODES WELL FOR THE FORTHCOMING QUARTER SHOULD THE
GOLD PRICE SUSTAIN LEVELS EXCEEDING $300/OZ. DUE TO THE NATURE OF THE OREBODY,
AS WELL AS THE COMPANY'S UNHEDGED POSITION, WE ARE IDEALLY PLACED TO TAKE
ADVANTAGE OF THE INCREASED GOLD PRICE.
FREE STATE
THE FREE STATE OPERATIONS RETURNED A CASH OPERATING PROFIT OF R21.7 MILLION
COMPARED TO R31.4 MILLION THE PREVIOUS QUARTER MAINLY AS A RESULT OF THE LOWER
GOLD PRICE. THIS WAS, HOWEVER, OFFSET BY THE 8 PER CENT INCREASE IN THE
RECOVERED GRADE. GOLD OUTPUT INCREASED BY 6 PER CENT FROM 6 370 KG TO 6 732 KG.
AS PREVIOUSLY REPORTED UNDERGROUND TONNAGES WERE AFFECTED FOR THE FIRST FIVE
WEEKS OF THE QUARTER BY THE ACCIDENT AT MERRIESPRUIT  1 SHAFT. THE SHAFT WAS
RE-COMMISSIONED AND SHOULD CONTRIBUTE AN ADDITIONAL 70 000 TONS DURING THE NEXT
QUARTER.
MASIMONG
MASIMONG WAS DRAMATICALLY AND SUCCESSFULLY TRANSFORMED DURING THE LAST YEAR,
EXCEEDING ALL TARGETS SET AT THE TIME OF ACQUISITION. TODAY, THE COMPLEX
PRODUCES GOLD AT R45 000/KG ($230/OZ) AND, WITH UNIT COSTS BELOW R250/T, IT IS
NOW READY TO INCREASE PRODUCTION.
EVANDER
THE ACCIDENT AT 7A SHAFT IMPACTED ON THE UNDERGROUND PRODUCTION OF THE EVANDER
OPERATIONS, WITH TONS MILLED BEING 2 PER CENT LOWER THAN THE PREVIOUS QUARTER.
THE RECOVERED GRADE ALSO REDUCED TO 6.26 G/T FROM THE 6.45 G/T ACHIEVED DURING
THE PREVIOUS QUARTER RESULTING IN UNDERGROUND GOLD OUTPUT REDUCING BY 5 PER
CENT TO 3 036 KG. THIS, TOGETHER WITH A 6 PER CENT REDUCTION IN THE GOLD PRICE
RESULTED IN UNDERGROUND REVENUE BEING R19.2 MILLION LOWER THAN THE PREVIOUS
QUARTER.
ALTHOUGH UNDERGROUND WORKING COSTS WERE LOWER THAN THE PREVIOUS QUARTER, UNIT
COSTS INCREASED FROM R269 TO R273 PER TON. THIS MARGINAL INCREASE WAS DESPITE
THE FACT THAT SALARY AND WAGE INCREASES OF BETWEEN 8 AND 9 PER CENT WERE
INCLUDED FROM JULY 1999. INCLUDED IN WORKING COSTS IS INCREASED DEVELOPMENT
FROM 5 006 METRES THE PREVIOUS QUARTER TO 6 060 METRES.
THE RE-COMMISSIONING OF 7A SHAFT DURING AUGUST ENABLES EVANDER TO INCREASE
PRODUCTION AND REDUCE UNIT COSTS.
SURFACE SOURCES GENERATED A PROFIT OF ONLY R115 000 FOR THE QUARTER COMPARED TO
THE R1.2 MILLION THE PREVIOUS QUARTER. THIS WAS MAINLY AS A RESULT OF A LOWER
GOLD PRICE AND ADDITIONAL REFURBISHMENT COSTS INCURRED AT THE LESLIE
METALLURGICAL PLANT IN ANTICIPATION OF INCREASED UNDERGROUND TONNAGES.
KALGOLD
THE TAKEOVER OF KALGOLD BY HARMONY, EFFECTIVE 1 JULY 1999, WAS FORMALLY
COMPLETED WITH THE DELISTING OF KALGOLD ON 8 OCTOBER 1999.
KALGOLD OPERATIONS PRODUCED A 7 PER CENT INCREASE IN TONNAGE THROUGHPUT OF 409
000 TONS, BENEFITING FROM THE NEW PRE-PRIMARY CRUSHER. TOTAL COSTS REMAINED
STEADY RESULTING IN A DECREASE IN TOTAL UNITS COSTS, TO R71 PER TON. AVERAGE
RECOVERED GRADES DROPPED FROM 1.73 G/T TO 1.54 G/T AS A RESULT OF A HIGHER
PROPORTION OF HEAP LEACH ORE PROCESSED AND SOME SHORT LIVED RECOVERY PROBLEMS
IN THE CIL PLANT. CASH PROFITS FELL BY R3.8 MILLION TO R3.2 MILLION, CAUSED BY
THE DOUBLE EFFECT OF LOWER GOLD RECOVERIES AND THE LOWER GOLD PRICE RECEIVED
FOR THE QUARTER.
BISSETT
THE QUARTER'S RESULTS SHOW A CONTINUED IMPROVEMENT WITH A CASH OPERATING PROFIT
OF R2.4 MILLION AGAINST A NET PRE-PRODUCTION EXPENDITURE OF R5.3 MILLION
CAPITALISED LAST QUARTER. THE EXPANSION PLAN (TO 27 000 TONS/MONTH) ANNOUNCED
IN JUNE IS PROGRESSING WELL WITH 63 000 TONS MILLED FOR THE QUARTER. AGGRESSIVE
DEVELOPMENT AT A RATE IN EXCESS OF 1 500 METRES, AS WELL AS DIAMOND DRILLING,
CONTINUED UNABATED DURING THE PERIOD SO AS TO IMPROVE FLEXIBILITY WITH THE AIM
OF MAINTAINING PRODUCTION AT THE HIGHER TONNAGE LEVELS. THE MINE IS NOW FULLY
STAFFED AT 195 EMPLOYEES.
WE FORECAST THAT IN EXCESS OF 70 000 TONS, AN 88 PER CENT LEVEL OF FULL
PRODUCTION AT IMPROVED GRADES WILL BE ACHIEVED BY DECEMBER QUARTER END.
NEW BUSINESS AND EXPLORATION
IN SOUTH AFRICA, THE MAIN EMPHASIS IS CURRENTLY ON WORK WITHIN THE KRAAIPAN AND
MURCHISON GREENSTONE BELTS WHERE A NUMBER OF PROMISING TARGETS HAVE BEEN
IDENTIFIED FOR FOLLOW-UP DRILLING. ON THE KRAAIPAN, THE KHUNWANA JOINT VENTURE
WITH GOLD FIELDS LIMITED IS PROGRESSING WELL AND DRILLING IS PLANNED TO
COMMENCE DURING THE DECEMBER QUARTER.
THE SEARCH FOR EXPLORATION PROPERTIES OUTSIDE SOUTH AFRICA IS CONFINED TO THE
IDENTIFICATION OF ADVANCED PROJECTS WITH DEMONSTRATED POTENTIAL.
CHANGES TO THE BOARD
ADAM FLEMING JOINS THE BOARD AS NON-EXECUTIVE CHAIRMAN WHILST LIONEL HEWITT,
FORMER CHAIRMAN, CONTINUES AS A NON-EXECUTIVE DIRECTOR. TED GROBICKI AND DR.
VAUGHAN ARMSTRONG JOIN THE BOARD AS EXECUTIVE DIRECTORS. LORD RENWICK OF
CLIFTON KCMG ALSO JOINS THE BOARD AS NON-EXECUTIVE DIRECTOR.
CAPITAL EXPENDITURE
CAPITAL EXPENDITURE DURING THE QUARTER AMOUNTED TO R28 MILLION.
                                         SEPT 1999         DEC 1999
OPERATION                                R MILLION         R MILLION
                                                           (FORECAST)
FREE STATE                               8                 7
EVANDER                                  11                11
BISSETT                                  7                 7
KALGOLD                                  2                 5
TOTAL                                    28                30
OPERATING AND FINANCIAL RESULTS (RAND/METRIC)
                     FREE STATE  EVANDER  EVANDER  BISSETT  KALGOLD
                     TOTAL       U/G      SURFACE           OPENCAST   TOTAL
ORE MILLED
- T'000   SEPT 1999  1 347       485      94       63       409        2 398
          JUNE 1999  1 379       495      107      -        -          1 981
GOLD
PRODUCED
- KG      SEPT 1999  6 732       3 036    71       348      630       10 817
          JUNE 1999  6 370       3 195    87       -        -          9 652
YIELD
- G/T     SEPT 1999  5.00        6.26     0.76     5.52     1.54       4.51
          JUNE 1999  4.62        6.45     0.81     -        -          4.87
CASH
OPERATING
COSTS
- R/KG    SEPT 1999  48 138      43 633   49 775   53 207   46 383    46 945
          JUNE 1999  49 987      41 738   39 920   -        -         47 166
CASH
OPERATING
COSTS
- R/T     SEPT 1999  241         273      38       294      71         212
          JUNE 1999  231         269      32       -        -          230
WORKING
REVENUE
(R'000)   SEPT 1999  345 770     156 293  3 649    20 951   32 430   559 093
          JUNE 1999  349 818     175 507  4 700    -        -        530 025
CASH
OPERATING
COSTS
(R'000)   SEPT 1999  324 066     132 470  3 534    18 516   29 221   507 807
          JUNE 1999  318 416     133 353  3 473    -        -        455 242
CASH
OPERATING
PROFIT
(R'000)   SEPT 1999  21 704      23 823   115      2 435    3 209     51 286
          JUNE 1999  31 402      42 154   1 227    -        -         74 783
FINANCIAL RESULTS - TOTAL OPERATIONS
(RAND/METRIC)
                                QUARTER                   QUARTER
                                ENDED                     ENDED
                                30 SEPT                   30 JUNE
                                1999                      1999
ORE MILLED - T'000              2 398                     1 981
GOLD PRODUCED - KG              10 817                    9 652
GOLD PRICE RECEIVED - R/KG      51 687                    54 913
CASH OPERATING COSTS - R/KG     46 945                    47 166
                                R'000                     R'000
GOLD SALES                      559 093                   530 025
CASH OPERATING COSTS            507 807                   455 242
CASH OPERATING PROFIT           51 286                    74 783
AMORTISATION                    (23 601)                  (24 586)
REHABILITATION PROVISION        (1 428)                   2 574
OTHER INCOME - NET              28 878                    15 660
CORPORATE EXPENDITURE           (1 943)                   (1 788)
EXPLORATION AND NEW BUSINESS    (2 230)                   (510)
PROFIT BEFORE TAXATION          50 962                    66 133
SOUTH AFRICAN NORMAL TAXATION
- CURRENT TAX                   (8 114)                   (4 609)
- DEFERRED TAX                  2 583                     (4 670)
NET EARNINGS AFTER TAX          45 431                    56 854
EARNINGS PER SHARE - CENTS
- CASH OPERATING EARNINGS       64                        108
- NET EARNINGS                  56                        82
DIVIDENDS PER SHARE - (CENTS)   -                         60
ABRIDGED BALANCE SHEET
(RAND)
                                            AT             AT
                                            30 SEPT        30 JUNE
                                            1999           1999
                                            R'000          R'000
EMPLOYMENT OF CAPITAL
MINING ASSETS AFTER AMORTISATION            2 344 217      2 057 200
INVESTMENTS                                 69 494         55 800
LOANS TO SHARE TRUSTS                       20 935         -
NET CURRENT LIABILITIES (EXCLUDING CASH)    (88 993)       (141 195)
CASH AND SHORT-TERM INVESTMENTS             296 472        310 062
                                            2 642 125      2 281 867
CAPITAL EMPLOYED
SHAREHOLDERS' EQUITY                        2 084 717      1 723 400
LOANS                                       135 651        147 686
LONG-TERM PROVISIONS                        247 999        239 081
DEFERRED TAX                                173 758        171 700
                                            2 642 125      2 281 867
ISSUED SHARE CAPITAL: 80.5 MILLION ORDINARY SHARES OF 50 CENTS EACH (JUNE 1999:
69.5 MILLION SHARES).
THE MAJOR MOVEMENTS ON THE BALANCE SHEET ARE MAINLY AS A RESULT OF THE
INCORPORATION OF WRCM/KALGOLD.
DEVELOPMENT RESULTS (METRIC)
                                 CHANNEL      CHANNEL     AU
                      SAMPLED    WIDTH        VALUE       CONTENT
                      METRES     (CM)         (G/T)       (CM.G/T)
FREE STATE
BASAL REEF            1 156      100          8.42        842
LEADER REEF           1 604      151          5.07        766
"A" REEF              278        128          6.92        886
EVANDER
KIMBERLEY REEF        1 668      54           37.76       2 039
TOTAL NET PROFIT MARGIN (US$/OUNCE)
                                    $ OZ                $ OZ
                                    QUARTER             QUARTER
                                    SEPT 1999           JUNE 1999
CASH OPERATING COSTS                240                 240
NET OTHER COST/SUNDRY INCOME        2                   9
   NET OTHER INCOME                 (12)                (8)
   AMORTISATION                     11                  13
   REHABILITATION                   1                   (1)
   TAXATION                         2                   5
ALL INCLUSIVE COSTS                 242                 249
TOTAL REVENUE                       264                 279
PROFIT MARGIN                       22                  30
ESTIMATED PROFIT MARGIN AT $300/OZ  58
THIS REPORT WAS APPROVED BY THE BOARD OF DIRECTORS AND IS SIGNED ON ITS BEHALF
BY:
ZB SWANEPOEL                    F ABBOTT                    VIRGINIA
CHIEF EXECUTIVE                 FINANCIAL DIRECTOR          15 OCTOBER 1999
INVESTOR INFORMATION
BUSINESS ADDRESS
HARMONY GOLD MINING COMPANY LIMITED
SECOND FLOOR, BUILDING 23 THE WOODLANDS WESTERN SERVICE ROAD, WOODMEAD
POSTNET SUITE 27, PRIVATE BAG X23 GALLO MANOR, 2052
TELEPHONE: +27 (11) 802-1822
TELEFAX:   +27 (11) 802-2363
E-MAIL: CORPORATE@HARMONY.CO.ZA
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 (212) 815-5800/ +1 (888)-BNY-ADRS
SHARE TRANSFER SECRETARIES
COMPUTERSHARE SERVICES LIMITED
EDURA HOUSE, 41 FOX STREET, JOHANNESBURG, 2001
PO BOX 62391, MARSHALLTOWN, 2107, SOUTH AFRICA
TELEPHONE: +27 (11) 370-7700
TELEFAX:   +27 (11) 834-4875
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
DIRECTORS
AR FLEMING*(CHAIRMAN), ZB SWANEPOEL (CHIEF EXECUTIVE), F ABBOTT, RA ANDREW*
(BRITISH), DR. NV ARMSTRONG, RAL ATKINSON, F DIPPENAAR, NJ FRONEMAN, TSA
GROBICKI, L HEWITT*, MF PLEMING*, LORD RENWICK OF CLIFTON KCMG*, FR SULLIVAN
* NON EXECUTIVE DIRECTORS
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
FACSIMILE: +27(11) 802-2363
E-MAIL: CLEONARDI@HARMONY.CO.ZA
VISIT OUR WEBSITE: HTTP://WWW.HARMONY.CO.ZA
FOR FURTHER DETAILS CONTACT BERNARD SWANEPOEL ON +27(0)83-303-9922
UNHEDGED HARMONY RETURNS STEADY PERFORMANCE IN DEMANDING QUARTER FOR GOLD
JOHANNESBURG, 15 OCTOBER 1999 - UNHEDGED HARMONY HAS UNDOUBTEDLY EXPERIENCED
THE MOST DEMANDING QUARTER IN ITS HISTORY, WHEN THE GOLD PRICE DROPPED BELOW
$260 AND OUNCE AND TESTED THE $250 LEVEL.
CHIEF EXECUTIVE BERNARD SWANEPOEL SAID THE DRAMATIC INCREASE IN THE GOLD PRICE,
AFTER 11 CENTRAL BANKS ANNOUNCED A MORATORIUM ON GOLD SALES AND LENDING, WILL
SIGNIFICANTLY ENHANCE THE COMPANY'S PROSPECTS. "THE UNCERTAINTY IN THE GOLD
MARKET, WHICH ENABLED SPECULATORS TO INFLUENCE THE GOLD PRICE, WAS REMOVED BY
THE CENTRAL BANKS' DECISION TO LIMIT OFFICIAL GOLD SALES TO 2000 TONS OVER FIVE
YEARS".
ACCORDING TO SWANEPOEL THE BEARISH MOOD IN THE MARKET OVER THE LAST TWO YEARS
HAD NOT INFLUENCED THEIR STRATEGY OF REMAINING UNHEDGED.  HE STATED THAT A
CONTRIBUTING FACTOR TO A GOLD PRICE OF APPROXIMATELY $260 AN OUNCE FOR MOST OF
THE QUARTER WAS A RUSH BY MANY PRODUCERS TO HEDGE AT VERY LOW GOLD PRICE
LEVELS. "IT HAS BECOME KNOWN THAT SOME COMPANIES ARE NOW EXPERIENCING
SIGNIFICANT LIQUIDITY PROBLEMS.  THE FULL EXTENT TO WHICH HEDGE BOOKS WILL
BECOME AN ASSET OR A LIABILITY IS NOT YET CLEAR AND WE WILL MOST LIKELY SEE
FURTHER RESTRUCTURING OF COMPANIES AND HEDGE BOOKS.  THIS MAY CREATE FURTHER
OPPORTUNITIES FOR A GROWTH COMPANY LIKE HARMONY".
"OUR STRATEGY TO PURSUE GROWTH AND REMAIN UNHEDGED HAS BEEN SUCCESSFUL AND WITH
GOLD RE-ESTABLISHED ABOVE $300 AN OUNCE, WE EXPECT THE COMPANY'S REVENUE TO
INCREASE BY R120 MILLION PER QUARTER AT CURRENT PRODUCTION LEVELS.  HARMONY IS
IDEALLY POSITIONED TO CONTINUE TO GROW THROUGH ACQUISITIONS AND TO INCREASE
PRODUCTION FROM EXISTING OPERATIONS.  THE INDUSTRY'S CHALLENGE IS TO SEE THE
FULL BENEFIT OF THE GOLD PRICE REACH THE BOTTOM LINE THOUGH AN INCREASED FOCUS
ON COST CONTROL," SAID SWANEPOEL.
THE OPERATIONAL RESULTS FOR THE QUARTER CONFIRMED HARMONY'S ABILITY TO OPERATE
PROFITABLY IN A LOW GOLD PRICE ENVIRONMENT.  DESPITE A 6% LOWER GOLD PRICE OF
LESS THAN $264 AN OUNCE, THE COMPANY RETURNED A CASH OPERATING PROFIT OF R51.3
MILLION, COMPARED WITH R74.8 MILLION FOR THE JUNE QUARTER, AND NET EARNINGS OF
56 CENTS A SHARE, COMPARED WITH 82 CENTS A SHARE THE PREVIOUS QUARTER.  TOTAL
GOLD PRODUCTION INCREASED BY 12% TO 10 817 KG, MAINLY DUE TO HIGHER RECOVERY
GRADES FROM THE FREE STATE OPERATIONS AND THE FIRST TIME INCLUSION OF BISSETT
AND KALGOLD.
HARMONY'S ALL INCLUSIVE COSTS WERE REDUCED TO $242 AN OUNCE.  ACCORDING TO
SWANEPOEL THIS BODES WELL FOR THE DECEMBER QUARTER, SHOULD THE GOLD PRICE
SUSTAIN LEVELS EXCEEDING $300 AN OUNCE. DUE TO THE NATURE OF THE OREBODY AND
THE COMPANY'S UNHEDGED POSITION, HARMONY IS IDEALLY PLACED TO TAKE ADVANTAGE OF
THE INCREASED GOLD PRICE.
DURING THE QUARTER, THE FULL EFFECT OF THE 8 TO 9% SALARY INCREASES WAS
ABSORBED.  IT IS EXPECTED THAT INCREASED PRODUCTIVITY LEVELS WILL IMPACT
POSITIVELY ON UNIT WORKING COSTS DURING THE REMAINDER OF THE FINANCIAL YEAR.
HARMONY'S MERGER WITH KALGOLD, EFFECTIVE 1 JULY 1999, HAS BEEN COMPLETED WITH
THE DELISTING OF KALGOLD AND WRCM ON 8 OCTOBER 1999. "WITH THE ACQUISITION OF
THE EXPLORATION ASSETS OF THE WRCM GROUP, THE COMPANY HAS ADDED A NEW DIMENSION
TO ITS GROWTH STRATEGY.  HARMONY INCURRED EXPLORATION AND NEW BUSINESS
EXPENDITURE OF R2.2 MILLION FOR THE QUARTER.  EXPLORATION WAS MAINLY FOCUSSED
ON THE PROJECT AREAS IN THE KRAAIPAN AND MURCHISON GREENSTONE BELTS IN SOUTH
AFRICA.
THE FREE STATE OPERATIONS MADE A CASH OPERATING PROFIT OF R21.7 MILLION,
COMPARED WITH R31.4 MILLION THE PREVIOUS QUARTER, MAINLY AS A RESULT OF THE
LOWER GOLD PRICE.  THIS WAS, HOWEVER, OFFSET BY AN 8% INCREASE IN RECOVERED
GRADE.  GOLD OUTPUT INCREASED BY 6% TO 6 732KG.  AS REPORTED EARLIER,
UNDERGROUND TONNAGES FROM THE FREE STATE OPERATIONS WERE AFFECTED FOR THE FIRST
5 WEEKS OF THE QUARTER BY AN ACCIDENT AT MERRIESPRUIT 1 SHAFT.  THE SHAFT WAS
RE-COMMISSIONED AND SHOULD CONTRIBUTE AN ADDITIONAL 70 000 TONS DURING THE NEXT
QUARTER.
ACCORDING TO SWANEPOEL, MASIMONG HAS BEEN DRAMATICALLY AND SUCCESSFULLY
TRANSFORMED DURING THE LAST YEAR. "WE HAVE EXCEEDED ALL TARGETS SET AT THE TIME
OF ACQUISITION.  TODAY, THE COMPLEX PRODUCES GOLD AT $230 AN OUNCE AND IS NOW
READY TO INCREASE PRODUCTION".
UNDERGROUND GOLD OUTPUT AT EVANDER REDUCED BY 5% TO 3 036 KG AS A RESULT OF A
REDUCED RECOVERED GRADE OF 6.26G/T, COMPARED WITH 6.45 ACHIEVED DURING THE
PREVIOUS QUARTER. THIS, TOGETHER WITH A 6% REDUCTION IN THE GOLD PRICE,
RESULTED IN UNDERGROUND REVENUE BEING DOWN BY R19.2 MILLION FORM THE PREVIOUS
QUARTER.  AN ACCIDENT AT 7A SHAFT IMPACTED ON THE UNDERGROUND PRODUCTION OF THE
EVANDER OPERATIONS, WITH TONS MILLED 2% DOWN.  THE SHAFT WAS RE-COMMISSIONED IN
AUGUST.  SURFACE SOURCES AT EVANDER GENERATED A PROFIT OF R115 000 FOR THE
QUARTER, COMPARED WITH R1.2 MILLION THE PRECEDING QUARTER.  THIS CAN MAINLY BE
ATTRIBUTED TO A LOWER GOLD PRICE AND ADDITIONAL REFURBISHMENT COSTS INCURRED AT
LESLIE METALLURGICAL PLANT, IN ANTICIPATION OF INCREASED UNDERGROUND TONNAGES.
THE KALGOLD OPERATIONS, BENEFITING FROM THE NEW PRE-PRIMARY CRUSHER, INCREASED
ITS TONNAGE THROUGHPUT BY 7% TO 409 000 TONS.  TOTAL COSTS REMAINED STEADY AND
RESULTED IN A DECREASE IN TOTAL UNIT COSTS TO R71 PER TON.  AS A RESULT OF A
HIGHER PROPORTION OF HEAP LEACH ORE PROCESSED AND SOME SHORT LIVED RECOVERY
PROBLEMS AT THE CIL PLANT, AVERAGE RECOVERY GRADES DROPPED FROM 1.73G/T TO
1.54G/T.  THE DOUBLE EFFECT OF LOWER GOLD RECOVERIES AND THE LOWER GOLD PRICE
RECEIVED FOR THE QUARTER, CAUSED CASH PROFITS TO DECREASE BY R3.8 MILLION TO
R3.2 MILLION.
THE QUARTER'S RESULTS SHOW A CONTINUED IMPROVEMENT AT BISSETT, WITH THE
OPERATION RETURNING A CASH OPERATING PROFIT OF R2.4 MILLION, AGAINST A NET
PRE-PRODUCTION EXPENDITURE OF R5.3 MILLION, CAPITALISED LAST QUARTER.  THE
EXPANSION PLAN, TO MILL 27 000 TONS PER MONTH, IS PROGRESSING WELL WITH 63 000
TONS MILLED FOR THE QUARTER.  AGGRESSIVE DEVELOPMENT, AT A RATE IN EXCESS OF 1
500 METERS, AS WELL AS DIAMOND DRILLING CONTINUED UNABATED DURING THE PERIOD.
THIS WILL IMPROVE FLEXIBILITY WITH THE AIM OF MAINTAINING PRODUCTION AT HIGHER
TONNAGE LEVELS.  THE MINE NOW HAS A FULL STAFF COMPLEMENT OF 195 EMPLOYEES.  IT
IS ANTICIPATED THAT IN EXCESS OF 70 000 TONS AT IMPROVED GRADES WILL BE
ACHIEVED BY DECEMBER QUARTER END.
"OUR SHAREHOLDERS HAVE BEEN PATIENT.  OUR STRATEGY WAS CORRECT AND NOW IT IS
PAYBACK TIME," SWANEPOEL SAID.
ENDS
ISSUED BY HARMONY GOLD MINING COMPANY LIMITED.
CONTACT: CHRISTINE LEONARDI; TEL: +2711 802-1822; FAX: +2711 802-2363;
E-MAIL: CLEONARDI@HARMONY.CO.ZA; WEB SITE: HTTP://WWW.HARMONY.CO.ZA



                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2019 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.