HARMONY - HARMONY INCREASES CASH OPERATING PROFITS BY 23% TO R163 MILLION Release Date: 03/02/2005 11:31:02 Code(s): HAR HARMONY - HARMONY INCREASES CASH OPERATING PROFITS BY 23% TO R163 MILLION
HARMONY GOLD MINING COMPANY LIMITED
Registration number 1950/038232/06
Incorporated in the Republic of South Africa
ISIN: ZAE000015228
JSE Securities Exchange South Africa HAR
New York Stock Exchange, Inc. HMY
PRESS RELEASE
HARMONY INCREASES CASH OPERATING PROFITS BY 23% TO R163 MILLION
Johannesburg, Thursday 3 February 2005 - Harmony Gold Mining Company Limited
(NYSE: HMY JSE: HAR) today announced that its restructuring programme was
delivering solid results. Cash operating profit improved by 23%, from
R133 million in the September 2004 quarter to R163 million. In line with its
restructuring plan, production decreased by 5% to 24 604 kg (Sept 2004 -
25 822 kg). The company"s focus on mining according to optimum cut-offs
continued to deliver the anticipated returns, with the average grade of the
South African underground operations increasing by 4% to 5,74 g/t.
Quarter on quarter, working costs decreased by R106,3 million or 5%. In R/kg
terms, costs decreased by 1% to R77 415/kg.
"For the financial year ending June 2004, Harmony reported costs of R79 599/kg.
Even after the inclusion of the 7% annual wage increases, and industry costs
pressures, we have managed to decrease costs by 3% over the past six months, an
excellent cost performance." commented Chief Executive Bernard Swanepoel
Although the company reported cash earnings of 47 cents per share, extraordinary
expenses for mainly retrenchment and restructuring charges, resulted in a loss
of 80 cents per share.
The company"s balance sheet remains strong, with the inclusion of its 11,5%
shareholding in Gold Fields, which is valued at approximately R3,8 bn.
"This allows us to continue investing in our range of growth projects in South
Africa and Australasia. These projects will deliver real production growth to
the company in the near future, Elandsrand"s progress being a good example of
the future quality of our asset profile," continued Bernard.
Commenting on the progress of Harmony"s bid for Gold Fields, Bernard said:
"Harmony today consists of a combination of assets, a grouping consisting of
operating mines which, in terms of its low cash cost profile compares with the
best in the South African Industry and some ore bodies which continue to offer
optionality and leverage to a higher R/kg gold price scenario. The same applies
to Gold Fields if the shafts are evaluated on a stand alone profitability basis.
This supports our compelling logic for the merging of the two companies to
create the world"s largest gold producer with a low cash cost profile, but with
significant optionality that comes with its South African exposure. A true
value proposition to all stakeholders, i.e. shareholders, employees and
communities."
Both Harmony, on 5 November 2004, and Gold Fields, on 15 December 2004, filed
their notifications on the proposed merger to the Competition Authorities. In
terms of the process, the Competition Commission is to submit its written
recommendation to the Competition Tribunal by 11 February 2005.
ENDS
ADDITIONAL INFORMATION
December September %
2004 2004 Variance
Production - kg 24 604 25 822 (5)
Production - oz 791 033 830 192 (5)
Revenue - R/kg 84 031 83 023 1
Revenue - US$/oz 434 405 7
Cash cost - R/kg 77 415 77 881 1
Cash cost - US$/oz 400 380 (5)
Exchange rate 6,03 6,38 (5)
Dec Sept %
2004 2004 Variance
Cash operating profit (R"m) 163 133 23
Cash operating profit margin 8% 6% 33
Cash earnings per share 47 41 15
EPS (cents) (80) (106) 25
In connection with the proposed merger, Harmony will file with the United States
Securities and Exchange Commission ("SEC"), a registration statement on Form F-
4, which will include a preliminary prospectus and related exchange offer
materials, to register the Harmony ordinary shares (including Harmony ordinary
shares represented by Harmony American Depository Shares ("ADSs")) to be issued
in exchange for Gold Fields ordinary shares held by holders located in the
United States of America ("United States" or "US") and for Gold Fields ADSs held
by holders wherever located, as well as a Statement on Schedule TO. Investors
and holders of Gold Fields securities are strongly advised to read the
registration statement and the preliminary prospectus, the related exchange
offer materials and the final prospectus (when available), the Statement on
Schedule TO and any other relevant documents filed with the SEC, as well as any
amendments and supplements to those documents, because they will contain
important information. Investors and holders of Gold Fields securities may
obtain free copies of the registration statement, the preliminary and final
prospectus and related exchange offer materials and the Statement on Schedule
TO, as well as other relevant documents filed with the SEC, at the SEC"s web
site at www.sec.gov and will receive information at an appropriate time on how
to obtain transaction-related documents for free from Harmony or its duly
designated agent.
This communication is for information purposes only. It shall not constitute an
offer to purchase or exchange or the solicitation of an offer to sell or
exchange any securities of Gold Fields or an offer to sell or exchange or the
solicitation of an offer to buy or exchange any securities of Harmony in the US,
nor shall there be any sale or exchange of securities in any jurisdiction in
which such offer, solicitation or sale or exchange would be unlawful prior to
the registration or qualification under the laws of such jurisdiction. The
distribution of this communication may, in some countries, be restricted by law
or regulation. Accordingly, persons who come into possession of this
communication should inform themselves of and observe these restrictions. The
solicitation of offers to buy Gold Fields ordinary shares (including Gold Fields
ordinary shares represented by Gold Fields ADSs) in the US will only be made
pursuant to a prospectus and related offer materials that Harmony expects to
send to holders of Gold Fields securities. The Harmony ordinary shares
(including Harmony ordinary shares represented by Harmony ADSs) may not be sold,
nor may offers to buy be accepted, in the US prior to the time the registration
statement becomes effective. No offering of securities shall be made in the US
except by means of a prospectus meeting the requirements of Section 10 of the
United States Securities Act of 1933, as amended.
Forward-looking Statements
Statements in this announcement include "forward-looking statements" that
express or imply expectations of future events or results. Forward-looking
statements are statements that are not historical facts. These statements
include financial projections and estimates and their underlying assumptions,
statements regarding plans, objectives and expectations with respect to future
operations, products and services, and statements regarding future performance.
Forward-looking statements are generally identified by the words "expect,"
"anticipates," "believes," "intends," "estimates" and similar expressions. All
forward-looking statements involve a number of risks, uncertainties and other
factors, and Harmony cannot give assurances that such statements will prove to
be correct. Risks, uncertainties and other factors that could cause actual
events or results to differ from those expressed or implied by the forward-
looking statements include, without limitation, the satisfaction of closing
conditions, the acceptance or rejection of any agreement by regulators, delays
in the regulatory processes, changes in the economic or political situation in
South Africa, the European Union, the US and/or any other relevant jurisdiction,
changes in the gold industry within any such country or area or worldwide and
the performance of (and cost savings realised by) Harmony. Although Harmony"s
management believes that the expectations reflected in such forward-looking
statements are reasonable, investors and holders of Gold Fields securities are
cautioned that forward-looking information and statements are subject to various
risks and uncertainties, many of which are difficult to predict and generally
beyond the control of Harmony, that could cause actual results and developments
to differ materially from those expressed in, or implied or projected by, the
forward-looking information and statements. These risks and uncertainties
include those discussed or identified in the public filings with the SEC made by
Harmony and Gold Fields, including those listed under "Cautionary Statement
Concerning Forward-Looking Statements" and "Risk Factors" in the preliminary
prospectus included in the registration statement on Form F-4 that Harmony will
file with the SEC. Harmony does not undertake any obligation to update any
forward-looking information or statements. You may obtain a free copy of the
registration statement and preliminary and final prospectus (when available) and
other public documents filed with the SEC in the manner described above.
Date: 03/02/2005 11:31:09 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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