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Harmony - Review For The Quarter Ended 31 December 2005

Release Date: 13/02/2006 08:00:01      Code(s): HAR
Harmony - Review For The Quarter Ended 31 December 2005                         
Harmony Gold Mining Company Limited                                             
Registration number 1950/038232/06                                              
Incorporated in the Republic of South Africa                                    
ISIN: ZAE000015228                                                              
Trading Symbols                                                                 
JSE Limited                              HAR                                    
New York Stock Exchange, Inc.            HMY                                    
London Stock Exchange plc                HRM                                    
Euronext Paris                           HG                                     
Euronext Brussels                        HMY                                    
Berlin Stock Exchange                    HAM1                                   
NASDAQ                                   HMY                                    
REVIEW FOR THE QUARTER ENDED 31 DECEMBER 2005                                   
CHIEF EXECUTIVE"S REVIEW - DECEMBER 2005                                        
"Despite the low R/kg gold price environment that we had to contend with during 
the last two years and the major restructuring exercise we went through,        
Harmony has stuck to its strategy to invest in our growth projects. I believe   
the company is now well positioned to pass the benefits from the improved gold  
price and the increased profitability through to our shareholders"              
OPERATING AND FINANCIAL RESULTS (Rand/metric) (unaudited)                       
                                         Underground production - South Africa  
                                                       Quality       Growth     
Ounces     Projects     
Ore milled - t"000                          Dec-05       1 574          312     
                                            Sep-05       1 464          315     
Gold produced - kg                          Dec-05       9 604        1 756     
Sep-05       8 719        1 995     
Yield - g/tonne                             Dec-05        6.10         5.63     
                                            Sep-05        5.96         6.33     
Cash operating costs - R/kg                 Dec-05      74 725      104 188     
Sep-05      76 896       91 253     
Cash operating costs - R/tonne              Dec-05         456          586     
                                            Sep-05         458          578     
Working revenue (R"000)                     Dec-05     981 335      180 504     
Sep-05     798 188      183 850     
Cash operating costs (R"000)                Dec-05     717 658      182 954     
                                            Sep-05     670 457      182 050     
Cash operating profit (R"000)               Dec-05     263 677      (2 450)     
Sep-05     127 731        1 800     
Capital expenditure (R"000)                 Dec-05     148 711      135 214     
                                            Sep-05     108 833      140 184     
                                                        Leve-                   
raged                   
                                                       Ounces     Sub-total     
Ore milled - t"000                        Dec-05        1 252         3 138     
                                          Sep-05        1 218         2 997     
Gold produced - kg                        Dec-05        6 113        17 473     
                                          Sep-05        5 380        16 094     
Yield - g/tonne                           Dec-05         4.88          5.57     
                                          Sep-05         4.42          5.37     
Cash operating costs - R/kg               Dec-05       90 074        83 057     
                                          Sep-05      100 158        86 452     
Cash operating costs - R/tonne            Dec-05          440           462     
                                          Sep-05          442           464     
Working revenue (R"000)                   Dec-05      626 599     1 788 438     
                                          Sep-05      492 960     1 474 998     
Cash operating costs (R"000)              Dec-05      550 621     1 451 233     
                                          Sep-05      538 852     1 391 359     
Cash operating profit (R"000)             Dec-05       75 978       337 205     
                                          Sep-05     (45 892)        83 639     
Capital expenditure (R"000)               Dec-05       59 391       343 316     
                                          Sep-05       45 597       294 614     
Quality Ounces  - Evander Shafts, Randfontein Cooke Shafts, Target, Tshepong,   
Masimong                                                                        
Growth Projects - Doornkop shaft and South Reef Project, Elandsrand shaft and   
New Mine Project, Phakisa shaft, Tshepong Decline Project                       
Leveraged Ounces - Bambanani, Joel, West, St Helena 8, Harmony 2,               
Merriespruit 1 and 3, Unisel, Brand 3 and Orkney 2 and 4                        
OPERATING AND FINANCIAL RESULTS (Rand/metric) (unaudited)                       
                                              South Africa     South Africa     
Surface            Total     
Ore milled - t"000                 Dec-05              938            4 076     
                                   Sep-05              838            3 835     
Gold produced - kg                 Dec-05              926           18 399     
Sep-05            1 228           17 322     
Yield - g/tonne                    Dec-05             0.99             4.51     
                                   Sep-05             1.47             4.52     
Cash operating costs - R/kg        Dec-05           89 849           83 398     
Sep-05           87 029           86 493     
Cash operating costs - R/tonne     Dec-05               89              376     
                                   Sep-05              128              391     
Working revenue (R"000)            Dec-05           94 098        1 882 536     
Sep-05          112 361        1 587 359     
Cash operating costs (R"000)       Dec-05           83 200        1 534 433     
                                   Sep-05          106 872        1 498 231     
Cash operating profit (R"000)      Dec-05           10 898          348 103     
Sep-05            5 489           89 128     
Capital expenditure (R"000)        Dec-05              304          343 620     
                                   Sep-05                0          294 614     
                                                    Australia       Harmony     
Total         Total     
Ore milled - t"000                       Dec-05           781         4 857     
                                         Sep-05           765         4 600     
Gold produced - kg                       Dec-05         1 917        20 316     
Sep-05         1 897        19 219     
Yield - g/tonne                          Dec-05          2.45          4.18     
                                         Sep-05          2.48          4.18     
Cash operating costs - R/kg              Dec-05        80 820        83 154     
Sep-05        78 643        85 718     
Cash operating costs - R/tonne           Dec-05           198           348     
                                         Sep-05           195           358     
Working revenue (R"000)                  Dec-05       196 270     2 078 806     
Sep-05       178 821     1 766 180     
Cash operating costs (R"000)             Dec-05       154 931     1 689 364     
                                         Sep-05       149 186     1 647 417     
Cash operating profit (R"000)            Dec-05        41 339       389 442     
Sep-05        29 635       118 763     
Capital expenditure (R"000)              Dec-05       105 103       448 723     
                                         Sep-05        71 389       366 003     
TOTAL OPERATIONS - QUARTERLY FINANCIAL RESULTS (Rand/metric) (unaudited)        
Quarter ended       Quarter ended     
                                            31 December     30 September 31     
                                                   2005                2005     
Ore milled                t"000                   4 857               4 600     
Gold produced             kg                     20 316              19 219     
Gold price received       R/kg                  102 333              91 888     
Cash operating costs      R/kg                   83 154              85 718     
                                              R million           R million     
Revenue                                           2 079               1 766     
Cash operating costs              (1)             1 690               1 647     
Cash operating profit                               389                 119     
Amortisation and depreciation of                                                
mining properties,                                                              
mine development costs and mine                                                 
plant facilities                  (1)             (249)               (244)     
Corporate, administration and                                                   
other expenditure                                  (72)                (56)     
Provision for rehabilitation costs                  (2)                 (3)     
Operating profit/(loss)                              66               (184)     
Amortisation and depreciation                                                   
other than mining                                                               
properties, mine development                                                    
costs and mine                                                                  
plant facilities                                   (10)                (11)     
Employment termination and                                                      
restructuring costs                                (15)                 101     
Care and maintenance cost                          (27)                (88)     
Share-based compensation                           (30)                (33)     
Exploration expenditure                            (32)                (18)     
Profit on sale of investment in                                                 
Gold Fields                                         306                   -     
Mark-to-market of listed                                                        
investments                                          22                  21     
Interest paid                                      (98)                (96)     
Interest received                                    48                  52     
Other income/(expenses) - net                         6                (21)     
Loss on financial instruments                     (183)               (115)     
(Loss)/Gain on foreign exchange                    (21)                  20     
Loss on sale of listed                                                          
investments and subsidiaries                        (1)                   -     
Profit/(Loss) before tax                             31               (372)     
Current tax - (expense)/benefit                     (4)                   -     
Deferred tax - (expense)/benefit  (1)               (5)                  48     
Net profit/(loss)                                    22               (324)     
(1) The change in accounting                                                    
policy                                                                          
on capitalisation                                                               
of mine development costs had                                                   
the following effect:                                                           
- Cash operating costs - decrease                   161                 136     
- Amortisation and depreciation                                                 
of mining properties,                                                           
mine development costs and                                                      
mine plant facilities                              (75)                (71)     
- Deferred tax - expense                           (18)                (13)     
- Net effect of change in                                                       
accounting policy                                    68                  52     
                                                              Quarter ended     
                                                                   December     
                                                                       2004     
(restated)     
Ore milled                t"000                                       5 916     
Gold produced             kg                                         24 604     
Gold price received       R/kg                                       84 031     
Cash operating costs      R/kg                                       77 415     
                                                                  R million     
Revenue                                                               2 068     
Cash operating costs                                  (1)             1 749     
Cash operating profit                                                   319     
Amortisation and depreciation of mining properties,                             
mine development costs and mine plant facilities      (1)             (267)     
Corporate, administration and other expenditure                        (41)     
Provision for rehabilitation costs                                     (14)     
Operating profit/(loss)                                                 (3)     
Amortisation and depreciation other than mining                                 
properties, mine development costs and mine                                     
plant facilities                                                        (6)     
Employment termination and restructuring costs                         (74)     
Care and maintenance cost                                              (35)     
Share-based compensation                                               (19)     
Exploration expenditure                                                (20)     
Profit on sale of investment in Gold Fields                               -     
Mark-to-market of listed investments                                      -     
Interest paid                                                         (104)     
Interest received                                                        27     
Other income/(expenses) - net                                          (16)     
Loss on financial instruments                                          (29)     
(Loss)/Gain on foreign exchange                                          14     
Loss on sale of listed investments and subsidiaries                       -     
Profit/(Loss) before tax                                              (265)     
Current tax - (expense)/benefit                                          56     
Deferred tax - (expense)/benefit                      (1)               (7)     
Net profit/(loss)                                                     (216)     
(1) The change in accounting policy                                             
on capitalisation                                                               
of mine development costs had                                                   
the following effect:                                                           
- Cash operating costs - decrease                                       156     
- Amortisation and depreciation                                                 
of mining properties,                                                           
mine development costs and                                                      
mine plant facilities                                                  (57)     
- Deferred tax - expense                                               (19)     
- Net effect of change in accounting policy                              80     
The effects of the change in policy are in the process of being audited. The    
company does not expect any material change to arise from the audit.            
TOTAL OPERATIONS - QUARTERLY FINANCIAL RESULTS (Rand/metric) (unaudited)        
                          Quarter ended     Quarter ended     Quarter ended     
31 December      30 September      31  December     
                                   2005              2005              2004     
                                                                 (restated)     
Loss per share - cents*                                                         
- Basic earnings/(loss)               6              (82)              (63)     
- Headline loss                    (75)              (86)              (70)     
- Fully diluted                                                                 
earnings/(loss)** ***                 6              (82)              (63)     
Dividends per share -                                                           
(cents)                                                                         
- Interim                             -                 -                 -     
- Proposed final                      -                 -                 -     
* Calculated on weighted average number of shares in issue at quarter end     
  December 2005: 392.7 million (September 2005: 392.3 million) (December 2004:  
  345.0 million).                                                               
  ** Calculated on weighted average number of diluted shares in issue at        
quarter end December 2005:398.5 million (September 2005: 392.3 million)       
  (December 2004: 344.7 million).                                               
  *** The effect of the share options is anti-dilutive.                         
Reconciliation of headline loss:                                                
Net profit/(loss)                    22             (324)             (216)     
Adjustments:                                                                    
- Profit on sale of assets         (12)              (15)              (25)     
- Loss on disposal of                                                           
Sangold investment                    1                 -                 -     
- Profit on disposal of                                                         
investment in Gold Fields         (306)                 -                 -     
Headline loss                     (295)             (339)             (241)     
ABRIDGED BALANCE SHEET AT 31 DECEMBER 2005 (Rand)                               
                      At 31 December     At 30 September     At 31 December     
                                2005                2005               2004     
                           R million           R million          R million     
(Unaudited)         (Unaudited)        (Unaudited)     
                                                                 (restated)     
ASSETS                                                                          
Non-current assets                                                              
Property, plant and                                                             
equipment                     22 735              22 633             23 520     
Intangible assets              2 268               2 268              2 268     
Investments                    2 191               4 709              6 364     
27 194              29 610             32 152     
Current assets                                                                  
Inventories                      560                 552                550     
Receivables                      744                 597                383     
Income and mining                                                               
taxes                             24                  27                  -     
Cash and cash                                                                   
equivalents                    2 914                 971                296     
4 242               2 147              1 229     
Total assets                  31 436              31 757             33 381     
EQUITY AND LIABILITIES                                                          
Share capital and                                                               
reserves                                                                        
Issued capital                25 689              25 645             25 500     
Fair value and other                                                            
reserves                       (717)               (257)            (2 061)     
Deferred share-based                                                            
compensation                   (185)               (215)              (128)     
(Accumulated                                                                    
loss)/Retained                                                                  
earnings                     (1 708)             (1 729)              1 222     
                              23 079              23 444             24 533     
Non-current                                                                     
liabilities                                                                     
Long-term borrowings           2 506               2 464              2 861     
Net deferred taxation                                                           
liabilities                    2 122               2 128              2 762     
Net deferred                                                                    
financial liabilities            498                 436                529     
Long-term provisions             943                 938                825     
                               6 069               5 966              6 977     
Current liabilities                                                             
Accounts payable                 892                 995                870     
Accrued liabilities              309                 298                362     
Short-term portion of                                                           
long-term borrowings           1 079               1 046                602     
Income and mining                                                               
taxes                              -                   -                 27     
Shareholders for                                                                
dividends                          8                   8                 10     
2 288               2 347              1 871     
Total equity and                                                                
liabilities                   31 436              31 757             33 381     
Number of ordinary                                                              
shares in issue          394 161 367         393 341 194        392 993 004     
Net asset value per                                                             
share (cents)                  5 853               5 960              6 243     
The balance sheet at 30 June 2005 is in accordance with the audited balance     
sheet, except for the effects of the adoption of IFRS 2, Share-based Payments,  
and the change in the accounting policy relating to the capitalisation of       
development costs.                                                              
CONDENSED STATEMENT OF CHANGES IN EQUITY                                        
FOR THE SIX MONTHS ENDED 31 DECEMBER 2005 (unaudited)                           
                                     Issued     Fair value         Deferred     
                                      share      and other      share-based     
                                    capital       reserves     compensation     
R million      R million        R million     
Balance at 1 July 2005               25 645          (670)            (248)     
Issue of share capital                   44              -                -     
Currency translation                                                            
adjustment and other                      -           (47)                -     
Adoption of IFRS 2,                                                             
share-based payments                      -              -               63     
Net loss                                  -              -                -     
Balance at                                                                      
31 December 2005                     25 689          (717)            (185)     
(restated)                                                                      
Balance at 1 July 2004               20 945        (1 186)             (27)     
Issue of share capital                4 424              -                -     
Currency translation                                                            
adjustment and other                      -          (875)                -     
Adoption of IFRS 2,                                                             
share-based payments                    131              -            (101)     
Net loss                                  -              -                -     
Dividends paid                            -              -                -     
Balance at 31 December 2004          25 500        (2 061)            (128)     
Retained                   
                                                     earnings         Total     
                                                    R million     R million     
Balance at 1 July 2005                                (1 406)        23 321     
Issue of share capital                                      -            44     
Currency translation                                                            
adjustment and other                                        -          (47)     
Adoption of IFRS 2,                                                             
share-based payments                                        -            63     
Net loss                                                (302)         (302)     
Balance at                                                                      
31 December 2005                                      (1 708)        23 079     
(restated)                                                                      
Balance at 1 July 2004                                  1 801        21 533     
Issue of share capital                                      -         4 424     
Currency translation                                                            
adjustment and other                                        -         (875)     
Adoption of IFRS 2,                                                             
share-based payments                                        -            30     
Net loss                                                (483)         (483)     
Dividends paid                                           (96)          (96)     
Balance at 31 December 2004                             1 222        24 533     
                                    Issued      Fair value         Deferred     
                                     share       and other      share-based     
capital        reserves     compensation     
                               US$ million     US$ million      US$ million     
Balance at 1 July 2005               4 051           (106)             (39)     
Issue of share capital                   7               -                -     
Currency translation                                                            
adjustment and other                     -             (7)                -     
Adoption of IFRS 2,                                                             
share-based payments                     -               -               10     
Net loss                                 -               -                -     
Balance at                                                                      
31 December 2005                     4 058           (113)             (29)     
(restated)                                                                      
Balance at 1 July 2004               3 721           (211)              (5)     
Issue of share capital                 786               -                -     
Currency translation                                                            
adjustment and other                     -           (155)                -     
Adoption of IFRS 2,                                                             
share-based payments                    23               -             (18)     
Net loss                                 -               -                -     
Dividends paid                           -               -                -     
Balance at 31 December 2004          4 530           (366)             (23)     
                                                   Retained                     
                                                   earnings           Total     
                                                US$ million     US$ million     
Balance at 1 July 2005                                (222)           3 684     
Issue of share capital                                    -               7     
Currency translation                                                            
adjustment and other                                      -             (7)     
Adoption of IFRS 2,                                                             
share-based payments                                      -              10     
Net loss                                               (48)            (48)     
Balance at                                                                      
31 December 2005                                      (270)           3 646     
(restated)                                                                      
Balance at 1 July 2004                                  320           3 825     
Issue of share capital                                    -             786     
Currency translation                                                            
adjustment and other                                      -           (155)     
Adoption of IFRS 2,                                                             
share-based payments                                      -               5     
Net loss                                               (86)            (86)     
Dividends paid                                         (17)            (17)     
Balance at 31 December 2004                             217           4 358     
Balances translated at closing rates of: December 2005: US$1 = R6.33            
(December 2004: US$1 = R5.63).                                                  
SUMMARISED CASH FLOW STATEMENT                                                  
FOR THE SIX MONTHS ENDED 31 DECEMBER 2005 (unaudited)                           
                                                        Six             Six     
months          months     
                                                      ended           ended     
                                                31 December     31 December     
                                                       2004            2005     
US$ million     US$ million     
Cash flow from operating activities                                             
Cash utilised by operations                            (11)            (49)     
Interest and dividends received                          10              15     
Interest paid                                          (19)            (14)     
Income and mining taxes paid                              -               -     
Cash utilised by operating activities                  (20)            (48)     
Cash flow from investing activities                                             
Net proceeds on disposal/(additions)                                            
of listed investments                                   (9)             365     
Net additions to property, plant and                                            
equipment                                             (116)           (121)     
Other investing activities                                -               1     
Cash generated/(utilised) by                                                    
investing activities                                  (125)             245     
Cash flow from financing activities                                             
Long-term loans (repaid)/raised                           3            (45)     
Ordinary shares issued - net of expenses                (6)               7     
Dividends paid                                         (15)               -     
Cash utilised by financing activities                  (18)            (38)     
Foreign currency translation adjustments                (1)              26     
Net increase/(decrease) in cash                                                 
and equivalents                                       (164)             185     
Cash and equivalents - 1 July                           217             275     
Cash and equivalents - 31 December                       53             460     
                                                        Six             Six     
                                                     months          months     
                                                      ended           ended     
31 December     31 December     
                                                       2005            2004     
                                                  R million       R million     
Cash flow from operating activities                                             
Cash utilised by operations                           (320)            (67)     
Interest and dividends received                         100              63     
Interest paid                                          (94)           (120)     
Income and mining taxes paid                            (2)               -     
Cash utilised by operating activities                 (316)           (124)     
Cash flow from investing activities                                             
Net proceeds on disposal/(additions)                                            
of listed investments                                 2 461            (57)     
Net additions to property, plant and                                            
equipment                                             (786)           (722)     
Other investing activities                                4               1     
Cash generated/(utilised) by                                                    
investing activities                                  1 679           (778)     
Cash flow from financing activities                                             
Long-term loans (repaid)/raised                       (295)              18     
Ordinary shares issued - net of expenses                 45            (36)     
Dividends paid                                            -            (95)     
Cash utilised by financing activities                 (250)           (113)     
Foreign currency translation adjustments               (29)           (103)     
Net increase/(decrease) in cash                                                 
and equivalents                                       1 084         (1 118)     
Cash and equivalents - 1 July                         1 830           1 414     
Cash and equivalents - 31 December                    2 914             296     
Operating activities translated at average rates of: December 2005: US$1 =      
R6.51 (December 2004:US$1 = R6.21).                                             
Closing balance translated at closing rates of: December 2005: US$1 = R6.33     
(December 2004:US$1 = R5.63).                                                   
SUMMARISED CASH FLOW STATEMENT                                                  
FOR THE THREE MONTHS ENDED 31 DECEMBER 2005 (unaudited)                         
                                                      Three           Three     
                                                     months          months     
                                                      ended           ended     
30 Septem-     31 December     
                                                   ber 2005            2005     
                                                US$ million     US$ million     
Cash flow from operating activities                                             
Cash utilised by operations                            (28)            (21)     
Interest and dividends received                           8               7     
Interest paid                                           (7)             (7)     
Income and mining taxes paid                              -               -     
Cash utilised by operating activities                  (27)            (21)     
Cash flow from investing activities                                             
Net proceeds on disposal of listed investments            -             378     
Net additions to property, plant and equipment         (54)            (67)     
Other investing activities                                -               -     
Cash generated/(utilised) by investing                                          
activities                                             (54)             311     
Cash flow from financing activities                                             
Long-term loans repaid                                 (45)               -     
Ordinary shares issued - net of expenses                  -               7     
Cash generated/(utilised) by financing                                          
activities                                             (45)               7     
Foreign currency translation adjustments                  4              10     
Net increase/(decrease) in cash and equivalents       (122)             307     
Cash and equivalents - beginning of quarter             275             153     
Cash and equivalents - end of quarter                   153             460     
Three          Three     
                                                      months         months     
                                                       ended          ended     
                                                 31 December     30 Septem-     
2005       ber 2005     
                                                   R million      R million     
Cash flow from operating activities                                             
Cash utilised by operations                            (136)          (184)     
Interest and dividends received                           48             52     
Interest paid                                           (47)           (47)     
Income and mining taxes paid                             (2)              -     
Cash utilised by operating activities                  (137)          (179)     
Cash flow from investing activities                                             
Net proceeds on disposal of listed investments         2 461              -     
Net additions to property, plant and equipment         (436)          (350)     
Other investing activities                                 3              -     
Cash generated/(utilised) by investing activities      2 028          (350)     
Cash flow from financing activities                                             
Long-term loans repaid                                     -          (295)     
Ordinary shares issued - net of expenses                  45              -     
Cash generated/(utilised) by financing activities         45          (295)     
Foreign currency translation adjustments                   7           (35)     
Net increase/(decrease) in cash and equivalents        1 943          (859)     
Cash and equivalents - beginning of quarter              971          1 830     
Cash and equivalents - end of quarter                  2 914            971     
Operating activities translated at average rates of: December 2005 quarter:     
US$1 = R6.53 (September 2005 quarter: US$1 = R6.03).                            
Closing balance translated at closing rates of: December 2005: US$1 = R6.33     
(September 2005: US$1 = R6.35).                                                 
NOTES TO THE RESULTS FOR THE PERIOD ENDED 31 DECEMBER 2005                      
1. Basis of accounting                                                          
The unaudited results for the quarter have been prepared using accounting       
policies that comply with International Financial Reporting Standards (IFRS).   
These consolidated quarterly statements are prepared in accordance with IFRS    
34, Interim Financial Reporting. The accounting policies are consistent with    
those applied in the previous financial year, except for the adoption of the    
revised international accounting standards forthcoming from the IAS             
improvements project and the changes which are described in Notes 2 and 3.      
2. New accounting policies adopted                                              
(a) Share-based Payments (IFRS 2)                                               
On 1 July 2005, the Company adopted the requirements of IFRS 2, Share-based     
Payments. In accordance with the transitional provisions, IFRS 2 has been       
applied to all grants of equity-settled payments after 7 November 2002 that     
were unvested at 1 January 2005. The Company issues equity-settled instruments  
to certain qualifying employees under an Employee Share Option Scheme to        
purchase shares in the Company"s authorised but unissued ordinary shares.       
Equity share- based payments are measured at the fair value of the equity       
instruments at the date of the grant. The total fair value of the options       
granted is recorded as deferred share-based compensation as a separate          
component of shareholders" equity with a corresponding amount recorded as share 
premium. The deferred share-based compensation is expensed over the vesting     
period, based on the Company"s estimate of the shares that are expected to      
eventually vest. The Company used the binominal option pricing model in         
determining the fair value of the options granted.                              
The impact of this adjustment on the net profit/(loss) is an expense of         
R63 million for the December 2005 year to date (December 2004 year to date:     
R30 million) (December 2005 quarter: R30 million) (September 2005 quarter:      
R33 million) (December 2004 quarter: R19 million).                              
(b) Determining whether an arrangement contains a lease (IFRIC 4)               
On 1 July 2005, the Company applied the requirements of IFRIC 4, Determining    
whether an arrangement contains a lease. The objective of the interpretation is 
to determine whether an arrangement contains a lease that falls within the      
scope of IAS 17, Leases. The lease is then accounted in accordance with IAS 17. 
The application of the interpretation had no impact on the results of the       
quarter or any prior reporting period.                                          
3. Change in accounting policy                                                  
(a) Capitalisation of mine development costs                                    
Previously mine development costs were capitalised when the reef horizon was    
intersected.                                                                    
Expenditure for all development that will give access to proven and probable    
ore reserves will now be capitalised. Capitalised costs are amortised over the  
estimated life of the proven and probable reserves to which the costs give      
access.                                                                         
The impact of this adjustment on the net profit/(loss) is as follows:           
- A decrease in the cash operating costs of R297 million for the December 2005  
year to date (December 2004 year to date: R315 million) (December 2005 quarter: 
R161 million) (September 2005 quarter: R136 million) (December 2004 quarter:    
R156 million).                                                                  
- Additional amortisation charges of R146 million for the December 2005 year to 
date (December 2004 year to date: R112 million) (December 2005 quarter:         
R75 million) (September 2005 quarter: R71 million) (December 2004 quarter:      
R57 million).                                                                   
- Taxation effect of the capitalised development costs and additional           
amortisation charges of R31 million for December 2005 year to date (December    
2004 year to date: R38 million) (December 2005 quarter: R18 million) (September 
2005 quarter: R13 million) (December 2004 quarter: R19 million).                
4. Derivative financial instruments                                             
Commodity contracts                                                             
The Harmony Group"s outstanding commodity contracts against future production,  
by type at 31 December 2005 are indicated below. The total net delta of the     
hedge book at 31 December 2005 was 455,379 oz (14,164 kg).                      
Year                                        30 June     30 June     30 June     
2006        2007        2008     
AUSTRALIAN DOLLAR                  GOLD                                         
Forward contracts             Kilograms       3,110       4,572       3,110     
                                 Ounces     100,000     147,000     100,000     
AUD per oz         511         515         518     
Call options sold             Kilograms           -         311           -     
                                 Ounces           -      10,000           -     
                             AUD per oz           -         562           -     
Total commodity                                                                 
contracts                     Kilograms       3,110       4,883       3,110     
                                 Ounces     100,000     157,000     100,000     
Total net gold*              Delta (kg)       3,110       4,874       3,099     
Delta (oz)      99,991     156,707      99,642     
Year                                                    30 June                 
                                                           2009       Total     
AUSTRALIAN DOLLAR                              GOLD                             
Forward contracts                         Kilograms       3,110      13,903     
                                             Ounces     100,000     447,000     
                                         AUD per oz         518         515     
Call options sold                         Kilograms           -         311     
Ounces           -      10,000     
                                         AUD per oz           -         562     
Total commodity                                                                 
contracts                                 Kilograms       3,110      14,214     
Ounces     100,000     457,000     
Total net gold*                          Delta (kg)       3,080      14,164     
                                         Delta (oz)      99,039     455,379     
* The Delta of the hedge position indicated above, is the equivalent gold       
position that would have the same marked- to-market sensitivity for a small     
change in the gold price. This is calculated using the Black-Scholes option     
formula with the ruling market prices, interest rates and volatilities at 31    
December 2005.                                                                  
These contracts are classified as speculative and the marked-to-market movement 
is reflected in the income statement.                                           
The mark-to-market of these contracts was a negative R486 million (negative     
USD77 million) at 31 December 2005 (at 30 September 2005: negative R345 million 
or negative USD54 million). The values at 31 December 2005 were based on a gold 
price of USD514 (AUD704) per ounce, exchange rates of USD1/R6.33 and            
AUD1/USD0.73 and prevailing market interest rates and volatilities at that      
date. These valuations were provided by independent risk and treasury           
management experts.                                                             
At 27 January 2006, the marked-to-market value of the hedge book was a negative 
R557 million (negative USD91 million), based on a gold price of USD559 (AUD741) 
per ounce, exchange rates of USD1/R6.11 and AUD1/USD0.75 and prevailing market  
interest rates and volatilities at that time.                                   
These marked-to-market valuations are not predictive of the future value of the 
hedge position, nor of the future impact on the revenue of the company. The     
valuation represents the cost of buying all hedge contracts at the time of the  
valuation, at market prices and rates available at the time.                    
Harmony closed out 10,000 oz call option contracts during the quarter ended 31  
December 2005 at a cost of R3.3 million (USD500,000). During the quarter ended  
30 September 2005, Harmony closed out 20,000 oz call option contracts and 8,000 
oz forward contracts, at a cost of R4.3 million (USD680,000).                   
Interest rate swaps                                                             
The Group has interest rate swap agreements to convert R600 million of its R1,2 
billion fixed rate bond to variable rate debt. The interest rate swap runs over 
the term of the bond, interest is received at a fixed rate of 13% and the       
Company pays floating rate based on JIBAR plus a spread ranging from 1.8% to    
2.2%.                                                                           
These transactions which mature in June 2006 are designated as fair value       
hedges. The marked-to-market value of the transactions was a positive R11       
million (USD2 million) at 31 December 2005, based on the prevailing interest    
rates and volatilities at the time.                                             
Currency contracts                                                              
Harmony inherited currency contracts with the acquisition of Avgold. These      
currency contracts matured on 31 December 2005 and was closed out accordingly.  
The contracts were classified as speculative and the mark- to-market movement   
was reflected in the income statement.                                          
The mark-to-market of these contracts was R NIL (USD NIL) at 31 December 2005   
(30 September 2005: negative R64 million or negative USD10 million). These      
values were based upon an exchange rate of USD1/R6.35 at 30 September 2005 and  
prevailing market interest rates at the time. Independent risk and treasury     
management experts provided these valuations.                                   
Z B Swanepoel                                 N V Qangule                       
Chief Executive                               Financial Director                
Virginia                                                                        
13 February 2006                                                                
CONTACT DETAILS                                                                 
Harmony Gold Mining Company Limited                                             
Corporate Office                                                                
Suite No. 1                                                                     
Private Bag X1                                                                  
Melrose Arch, 2076                                                              
South Africa                                                                    
First Floor                                                                     
4 The High Street                                                               
Melrose Arch, 2196                                                              
Johannesburg                                                                    
South Africa                                                                    
Telephone: +27 11 684 0140                                                      
Fax:       +27 11 684 0188                                                      
Website: http://www.harmony.co.za                                               
Directors                                                                       
P T Motsepe (Chairman)*                                                         
Z B Swanepoel (Chief Executive)                                                 
F Abbott*, J A Chissano*# , V N Fakude*                                         
Dr D S Lushaba*, R P Menell* M Motloba*,                                        
N V Qangule, C M L Savage*                                                      
(*non-executive) (# Mozambique)                                                 
Investor Relations                                                              
Philip Kotze                                                                    
Executive: Investor Relations                                                   
Telephone:    +27 11 684 0147                                                   
Fax:          +27 11 684 0188                                                   
Cell:         +27 (0) 83 453 0544                                               
E-mail:       philip.kotze@harmony.co.za                                        
Vusi Magadana                                                                   
Investor Relations Officer                                                      
Telephone:    +27 11 684 0149                                                   
Fax:          +27 11 684 0188                                                   
Cell:         +27 (0) 72 157 5986                                               
E-mail:       vusi.magadana@harmony.co.za                                       
Marian van der Walt                                                             
Company Secretary                                                               
Telephone:    +27 11 411 2037                                                   
Fax:          +27 11 411 2398                                                   
Cell:         +27 (0) 82 888 1242                                               
E-mail:       mvanderwalt@harmony.co.za                                         
South African Share Transfer Secretaries                                        
Ultra Registrars (Pty) Ltd                                                      
PO Box 4844                                                                     
Johannesburg, 2000                                                              
Telephone:    +27 11 832 2652                                                   
Fax:          +27 11 834 4398                                                   
United Kingdom Registrars                                                       
Capita Registrars                                                               
The Registry                                                                    
34 Beckenham Road                                                               
Beckenham                                                                       
Kent BR3 4TU                                                                    
Telephone:    +44 870 162 3100                                                  
Fax:          +44 208 639 2342                                                  
ADR Depositary                                                                  
The Bank of New York                                                            
101 Barclay Street                                                              
New York, NY 10286                                                              
United States of America                                                        
Telephone: +1888-BNY ADRS                                                       
Fax:         +1 212 571 3050                                                    
Trading Symbols                                                                 
JSE Limited                              HAR                                    
New York Stock Exchange, Inc.            HMY                                    
London Stock Exchange plc                HRM                                    
Euronext Paris                           HG                                     
Euronext Brussels                        HMY                                    
Berlin Stock Exchange                    HAM1                                   
NASDAQ                                   HMY                                    
Registration number 1950/038232/06                                              
Incorporated in the Republic of South Africa                                    
ISIN: ZAE000015228                                                              
Date: 13/02/2006 08:00:19 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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