Harmony Gold Mining Company Limited - Press Announcement Release Date: 27/01/2003 12:02:35 Code(s): HAR
Harmony Gold Mining Company Limited - Press Announcement
HARMONY GOLD MINING COMPANY LIMITED
JSE Share code: HAR
ISIN No.: ZAE000015228
JSE Options code: HARW
ISIN No: ZAE000031209
HARMONY REPORTS SOLID OPERATIONAL PERFORMANCE UNDERLINED
BY 6% GROWTH IN E.P.S.
Johannesburg - 27 January 2003 - Harmony Gold Mining Company Limited (NYSE: HMY:
JSE: HAR) today reported a 6% increase in earnings per share, up from 247 cents
to 262 cents quarter on quarter, despite receiving 6% or R6 292/kg less in gold
price. The Harmony Board has approved an interim dividend of 125 cents up 67%
on last year`s interim dividend of 75 cents. Earnings per share for the first
six months of the 2003 financial year totals 509 cents, an increase of 89% over
the 270 cents reported for the corresponding period in the previous financial
In terms of growth in production and earnings per share the company is well on
track to improve on the previous year`s performance and is confident that
planned year on year production growth of 16%, which will see the company
produce in excess of 3,1 million ounces per annum, is achievable.
Cash operating profits quarter on quarter decreased by 20% from R950 million to
R763 million with the stronger Rand alone contributing R150 million to the
R187 million decrease. The company however still achieved a US$102/oz or 31%
cash operating profit margin at cash costs of US$222/oz.
In cost terms, the operations performed well, despite South African inflation
reaching a recent high of 12%. Cash operating costs decreased by 2% or R38
million to R1 649 million. Rand/tonne costs decreased by 4%. Despite the 3%
decrease in overall production of 24 078 kg, R/kg costs remained flat at R68
500.The effects of the appreciation of the South African Rand is clear with
Dollar cash costs increasing from US$204/oz using a R10,39 exchange rate to
US$222/oz at R9,61 to the Dollar.
On 19 September 2002, Harmony, the National Union of Mineworkers (NUM) and the
United Association of South Africa (UASA) entered into a historical agreement
whereby the stakeholders will develop and maintain programmes to reverse the
impact of HIV/AIDS.
The company views the current rising Dollar gold price trend as great news as it
reflects interest from investors and speculators in gold as an alternative
investment, hedging themselves against the current uncertainty in world markets.
"It is pleasing to see gold trading above US$350/oz as this shows there is solid
support for gold at these levels and in the continued absence of significant
hedging activities. Concerns that a gold price of above US$350/oz would see
producers returning to their bad habits of hedging has been shown to be
unfounded. The low interest rate environment resulted in a low gold contango
and not even the most prolific hedgers are prepared to continue to ignore the
clearly expressed wishes of investors when the potential benefits of hedging is
negligible. Exotic financial instruments are out of favour with investors and
simple ("vanilla") hedging is not worth the risk of further alienating investors
who want exposure to a rising gold price. The record long positions held by
speculators show that they expect the two year rising trend to continue,"
commented Bernard Swanepoel, chief executive.
With the 23 acquisitions Harmony has completed to date came a portfolio of
probably the most prospective shallow to medium depth mining project areas
remaining in South Africa, at no cost. The returns from these acquisitions have
been spectacular. The rising gold price may mean that now is not the smartest
time to be buying growth opportunities. At these prices excellent returns are
available from internal or organic growth projects which Harmony today owns. The
Doornkop South Reef Project which was launched on 22 January 2003 is an
excellent example. The Project, with an NPV of R876 million and IRR of 48%, will
add an additional 330 000 ounces to the company`s production profile. In
addition, 2 798 employment opportunities will be created. More projects are
being evaluated and further announcements are expected in the next quarter.
The company recently announced its acquisition of stakes in companies who have
operations and prospective exploration areas in Russia, and other mining regions
in the world. Harmony`s stake in Highland Gold which was acquired at a total
cost of US$26,4 million is currently valued at US$134 million.
On 21 November 2002 Harmony acquired a 21% stake in High River Gold at a cost of
US$14,5 million. The stake in this Toronto based company with gold interests in
Russia, Canada and West Africa has subsequently increased to US$24 million.
"In line with our growth strategy it has in the past, and definitely will in the
future, become necessary for the company to make strategic investments in
corporate entities. To date these activities have seen Harmony establish a
sizeable international production base," concluded Bernard.
Issued by Harmony Gold Mining Company Limited
27 January 2003
For more details contact:
on +27(0)83 303 9922
on +27(0)82 807 3684
Tel +27 11 684 0146
Fax +27 11 684 0188 Mobile +27(0)83 380 6614
ISIN No.: ZAE000015228
Date: 27/01/2003 12:02:06 PM Supplied by www.sharenet.co.za
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