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Harmony Gold Mining Limited - Review For The Quarter Ended 31 March 2006

Release Date: 05/05/2006 08:00:15      Code(s): HAR
Harmony Gold Mining Limited - Review For The Quarter Ended 31 March 2006        
HARMONY GOLD MINING LIMITED                                                     
Registration number 1950/038232/06                                              
Incorporated in the Republic of South Africa                                    
Share Code: HAR                                                                 
Issuer Code: HAPS                                                               
ISIN: ZAE000015228                                                              
REVIEW FOR THE QUARTER ENDED 31 MARCH 2006                                      
QUARTERLY HIGHLIGHTS                                                            
* Higher gold price partially offsets weak quarter.                             
* CONOPS implementation now completed.                                          
* Tshepong holes "spot on" with Phakisa mine on 66 level after 5 360m of        
  development.                                                                  
* Surface operations shows the optionallity that exists in a rising gold        
  environment.                                                                  
* Environmental Management Plan on Hidden Valley signed off by Government.      
* Australian hedge book reduced by 25 000 oz.                                   
QUARTERLY FINANCIAL HIGHLIGHTS                                                  
                                                   31 March     31 December     
2006            2005     
Gold produced                                                                   
- kg                                                 17 464          20 316     
- oz                                                561 477         653 171     
Cash costs                                                                      
- R/kg                                               92 914          83 154     
- $/oz                                                  470             396     
Cash operating profit                                                           
- Rand                                          306 million     389 million     
- US$                                            50 million      60 million     
Cash earnings                                                                   
- SA cents per share                                     78              99     
- US cents per share                                     13              15     
Basic (loss)/earnings                                                           
- SA cents per share                                   (46)               6     
- US cents per share                                    (8)               1     
Headline loss                                                                   
- SA cents per share                                   (50)            (75)     
- US cents per share                                    (8)            (12)     
Fully diluted (loss)/earnings                                                   
- SA cents per share                                   (46)               6     
- US cents per share                                    (8)               1     
CHIEF EXECUTIVE"S REVIEW - MARCH 2006                                           
"We have stuck to our growth strategy by continuing to invest in our growth     
projects which are progressing well. I believe that this puts our shareholders  
in a much better position to take advantage of the increase in the gold price,  
which has reached a 25-year high."                                              
SAFETY REPORT                                                                   
Although the overall safety performance is still not acceptable to us as a      
company, there were a number of pockets of excellence that are worth            
mentioning. Merriespruit 3 achieved 2 million fatality free shifts after going  
for 7 years without any fatal accidents. Brand 3 shaft has also been running    
for the last 4.5 years without any fatalities. Masimong remains an excellent    
safety performer with a Lost Time Injury Frequency Rate (LTIFR) of 8.86.        
Safety achievements during this quarter:                                        
Mine                    Fatality free shifts achieved               Date        
Merriespruit 3 Shaft                        2 000 000       3 March 2006        
Masimong 5 Shaft                            1 000 000      18 March 2006        
Tshepong                                      500 000      20 March 2006        
Evander 7 Shaft                               500 000    17 January 2006        
The LTIFR increased by 4.3% from 17.27 in December 2005 to 18.02 in March 2006. 
At the same time the SLFR increased to 424 compared with 404 in December 2005,  
a regression of 5%.                                                             
Five employees lost their lives in five separate incidents during the past      
quarter at our South African operations. This is an improvement of 11% on our   
fatality rate compared with the previous quarter. We are proud to report that   
Harmony Australia had no fatalities or serious incidents during the period      
under review.                                                                   
Our biggest problem still originates from unsafe behaviour by individuals and   
it is this segment that the company wants to give the correct attention. In     
order to re-energise the safety awareness in Harmony, the company has           
introduced the "Sindile Mosha" safety campaign, which is based on the           
"alertness" of the mongoose. Harmony still maintains that safety is a state of  
mind and believes that deep level mining operations can be executed safely,     
without loss of life or damage to equipment.                                    
PAST QUARTER UNDER REVIEW                                                       
We have once again struggled to have the December break make less of an impact  
on our operational performance, but have not been successful and gold produced  
fell by 14%. Recovered grades were also down in the quarter. As stated during   
the December quarterlies, our Evander 7 shaft has hit a sill and at our         
Elandsrand operations the reef and waste has had to be combined until the new   
orepass system has been equipped. Both these areas are temporary problems and   
it is expected that they will return to normal recovery grades during the       
September quarter. We do not have a cost problem. Our lack of flexibility       
(shortage of face length) manifests itself as a volume (tons) underperformance  
which reflects as high unit costs. Some of our grade underperformance also      
stems from our flexibility shortage.                                            
The performance of the company is best highlighted in the following table:      
March     December     Percentage                 
                               2006         2005       variance                 
Production     - kg          17 464       20 316           (14)                 
Production     - oz         561 477      653 171           (14)                 
Revenue        -R/kg        110 399      102 333             8                  
Revenue        -US$/oz          559          487            15                  
Cash cost      - R/kg        92 914       83 154           (12)                 
Cash cost      - US$/oz         470          396           (19)                 
Exchange rate  - USDZAR        6.15         6.53            (6)                 
Although total operating costs were lower, unit cost in rand per ton and rand   
per kilogram costs went up from R348/t to R363/t and R83,154/kg to R92,914/kg,  
respectively. On the revenue side the gold price received for the March quarter 
improved from R102,333 per kilogram during the December 2005 quarter to         
R110,399 per kilogram causing the drop in revenue in real terms to be only      
7.2%.                                                                           
Cash operating margins                                                          
March 2006     December 2005     
Cash operating profit (Rm)                          305,6             389,4     
Cash operating profit margin                        15,9%             18,7%     
The March 2006 quarter"s results reflected a reduction in the operating profit  
of R83.8 million compared with the December 2005 quarter. This was mainly due   
to a reduction in gold ounces produced as a result of lower production volumes  
and grades as explained above.                                                  
Quarter on quarter cash operating profit variance analysis                      
Cash operating profit - December 2005                        R389,4 million     
-   volume reduction                                       (R144,3) million     
-   working cost reduction                                    R66,7 million     
-   recovery grade reduction                               (R147,6) million     
-   gold price increase                                      R141,4 million     
-   net variance                                            (R83,8) million     
Cash operating profit - March 2006                           R305,6 million     
As can be seen from the above table our biggest problem existed as a result of  
the lower tonnage mined (Christmas break impact) and the lower yields           
(operational constraints). Both these problems are temporary in nature and it   
is expected that we will regain a substantial portion of this lost ground       
during the June quarter. We are now in the territory where Harmony"s gearing is 
clearly evident as can be seen in the profitability despite the lower gold      
produced.                                                                       
Analysis of earnings per share (SA cents)                                       
                                            Quarter ended     Quarter ended     
Earnings per share (SA cents)                  March 2006     December 2005     
Cash earnings                                          78                99     
Basic (loss)/earnings                                (46)                 6     
Headline loss                                        (50)              (75)     
Fully diluted (loss)/earnings                        (46)                 6     
The net loss for the current quarter was R182 million (loss per share of 46     
cents) compared with a net profit of R22 million (earnings per share of 6       
cents) for the previous quarter. It should however be noted that the December   
2005 quarter"s net profit included the profit on the disposal of the remaining  
investment in Gold Fields of R306 million. The current quarter"s results were   
mainly negatively affected in two areas, a lower operating profit associated    
with the lower gold ounces produced and secondly the negative mark-to-market of 
the Australian hedge book.                                                      
Reconciliation between basic and headline loss                                  
                                         Headline earnings in cents per share   
                                                     Quarter ended March 2006   
Basic loss                                                               (46)   
Profit on sale of mining assets                                           (4)   
Headline loss                                                            (50)   
Our cash earnings for the year to date total 207 cents per share.               
FOCUS ON OUR GROWTH PROJECTS REMAINS                                            
Despite the harsh financial and operating conditions encountered in the past    
year the company has remained focused on rebuilding its growth strategy.        
Accordingly expenditure on all of the local and international growth projects   
continued as planned. During the past quarter a total of R391 million was spent 
on capital. Of this, R134 million was spent on our growth projects.             
Capital expenditure (Rm)                               Actual      Forecast     
OPERATIONAL CAPEX                                  March 2006     June 2006     
South African Operations                                  225           195     
Australasian Operations                                    32            33     
Total Operational Capex                                   257           228     
PROJECT CAPEX                                                                   
Doornkop South Reef                                        33            36     
Elandsrand New Mine                                        35            43     
Tshepong North Decline                                     13            24     
Phakisa Shaft                                              22            56     
Target Shaft                                               12            14     
PNG                                                        19            26     
Total Project Capex                                       134           199     
TOTAL CAPEX                                               391           427     
Our focus to grow the company, with respect to ounces and quality, continues    
and has led to a unique pipeline of projects in South Africa and abroad. We     
continued as planned with all of our South African projects. At our Hidden      
Valley project in PNG, the construction of the road is now past the 60% mark    
and it is envisaged that the team will reach the base camp on the mine by the   
end of June 2006. The construction of our Hidden Valley Mine in PNG is well on  
track and we believe that it will demonstrate to our shareholders our ability   
to also build mines internationally.                                            
Cash position                                                                   
Harmony Group cash reconciliation for March 2006                                
Cash and equivalents on 31 December 2005 (R"million)                2 914.4     
Operational                                                          (51.2)     
Operating profit                                                      305.6     
Capex - net                                                         (231.1)     
Development cost capitalised                                        (160.2)     
Corporate/exploration expenditure                                    (26.7)     
Care and maintenance costs                                           (29.4)     
Interest paid                                                        (96.1)     
Movement in working capital excluding accrued liabilities              80.3     
Movement in accrued liabilities                                         7.4     
Other items                                                            98.9     
Non operational                                                   (1 082.0)     
Net sundry revenue                                                     76.5     
Foreign exchange losses                                               (1.1)     
Shares issued - net of expenses                                        12.2     
Australian hedge close outs                                          (62.6)     
SARS payments                                                         (5.2)     
Payment BOE loan (ARMgold)                                           (89.6)     
RMB loan raised                                                     1 000.0     
Investment in Western Areas                                       (2 012.2)     
Cash and equivalents on 31 March 2006                               1 781.2     
During the past quarter our cash balance decreased from R2 914 million to       
R1 781 million. The breakdown shows an operating contribution of R305.6 million 
being offset by R356.8 million spent on Capex, corporate overheads,             
exploration, financing charges and working capital movements. A R1 000 million  
loan raised by RMB partially financed the acquisition of our investment in      
Western Areas at a total cost of R2 012.2 million.                              
OPERATIONAL REVIEW                                                              
Operational highlights were as follows:                                         
- Tshepong holed correctly with Phakisa mine on 66 level after 5 360m of        
development.                                                                  
- CONOPS implementation at Masimong 5 was completed at the end of the quarter.  
- The North shaft at Joel Mine was commissioned in March 2006.                  
- On Kalgold a new contract has been awarded for the mining operation.          
Quarterly profit comparison for operations                                      
                                                   WORKING PROFIT (Rm)          
                                           December      March                  
OPERATION                                      2005       2006     Variance     
South African operations                                                        
Quality ounces                                263.7      245.7       (18.0)     
Growth ounces                                 (2.5)     (21.0)       (18.5)     
Leverage ounces                                76.0       36.2       (39.8)     
Surface operations                             10.9       13.0          2.1     
                                               41.3       31.7        (9.6)     
Australasian operations                                                         
Total Harmony                                 389.4      305.6       (83.8)     
VARIANCES (Rm)               
OPERATION                            Volume       Grade     Price     Costs     
South African operations                                                        
Quality ounces                       (32.4)      (63.9)      69.9       8.4     
Growth ounces                          17.9      (44.1)      11.7     (4.0)     
Leverage ounces                      (98.6)      (15.2)      38.2      35.8     
Surface operations                   (15.5)       (0.7)       6.0      12.3     
                                      (4.5)      (33.6)      15.8      12.7     
Australasian operations                                                         
Total Harmony                       (133.1)     (157.5)     141.6      65.2     
Quality operations                                                              
Includes the following shafts: Target, Tshepong , Masimong , Evander and        
Randfontein"s Cooke Shafts                                                      
                                               March 2006     December 2005     
U/g tons milled            ("000)                   1 522             1 574     
U/g recovery grade         (g/t)                     5,69              6,10     
U/g kilograms produced     (kg)                     8 661             9 604     
U/g working costs          (R/kg)                  81 886            74 725     
U/g working costs          (R/t)                      466               456     
Underground tons decreased by 3.3% to 1 522 million tons during the quarter     
whilst recovery grades decreased by 6.7% to 5.69 g/t. The combined effect of    
this was an 9.8% decrease in gold production to 8 661kg. Although real cost     
went down by 1.2% or R8.4 million, unit working costs in R/kg terms increased   
by 9.6% bringing the cost of production to R81 886/kg . This gave our Quality   
Operations a profit margin of 25.7% taking the average gold price received of   
R110 253. As a result of the decrease in volumes and grades, the operating      
profit dropped by 6.8% to R245.7 million compared with a profit of              
R263.7 million in the previous quarter.                                         
OPERATING AND FINANCIAL RESULTS (Rand/metric) (unaudited)                       
                                Underground production - South Africa           
                                                        Leve-                   
                             Quality       Growth       raged                   
Ounces     Projects      Ounces     Sub-total     
Ore milled - t"000  Mar-06     1 522          343       1 055         2 920     
                    Dec-05     1 574          312       1 252         3 138     
Gold produced - kg  Mar-06     8 661        1 498       4 996        15 155     
Dec-05     9 604        1 756       6 113        17 473     
Yield - g/t         Mar-06      5.69         4.37        4.74          5.19     
                    Dec-05      6.10         5.63        4.88          5.57     
Cash operating                                                                  
costs - R/kg        Mar-06    81 886      124 774     102 857        93 040     
                    Dec-05    74 725      104 188      90 074        83 057     
Cash operating                                                                  
costs - R/t         Mar-06       466          545         487           483     
Dec-05       456          586         440           462     
Working revenue                                                                 
(R"000)             Mar-06   954 903      165 919     550 139     1 670 961     
                    Dec-05   981 335      180 504     626 599     1 788 438     
Cash operating                                                                  
costs (R"000)       Mar-06   709 214      186 912     513 873     1 409 999     
                    Dec-05   717 658      182 954     550 621     1 451 233     
Cash operating profit                                                           
(R"000)             Mar-06   245 689     (20 993)      36 266       260 962     
                    Dec-05   263 677      (2 450)      75 978       337 205     
Capital                                                                         
expenditure                                                                     
(R"000)             Mar-06   145 579      127 022      67 254       339 855     
                    Dec-05   148 711      135 214      59 391       343 316     
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  Australia     Harmony  
                                  Surface         Total      Total       Total  
Ore milled - t"000      Mar-06        783         3 703        763       4 466  
Dec-05        938         4 076        781       4 857  
Gold produced - kg      Mar-06        766        15 921      1 543      17 464  
                        Dec-05        926        18 399      1 917      20 316  
Yield - g/t             Mar-06       0.98          4.30       2.02        3.91  
Dec-05       0.99          4.51       2.45        4.18  
Cash operating                                                                  
costs - R/kg            Mar-06     92 535        93 014     91 876      92 914  
                        Dec-05     89 849        83 398     80 820      83 154  
Cash operating                                                                  
costs - R/t             Mar-06         91           400        186         363  
                        Dec-05         89           376        198         348  
Working revenue                                                                 
(R"000)                 Mar-06     83 889     1 754 850    173 421   1 928 271  
                        Dec-05     94 098     1 882 536    196 270   2 078 806  
Cash operating costs                                                            
(R"000)                 Mar-06     70 882     1 480 881    141 764   1 622 645  
Dec-05     83 200     1 534 433    154 931   1 689 364  
Cash operating                                                                  
profit (R"000)          Mar-06     13 007       273 969     31 657     305 626  
                        Dec-05     10 898       348 103     41 339     389 442  
Capital expenditure                                                             
(R"000)                 Mar-06        785       360 640     50 586     391 226  
                        Dec-05        304       343 620    105 103     448 723  
TOTAL OPERATIONS - QUARTERLY FINANCIAL RESULTS (Rand/metric) (unaudited)        
Quarter ended     Quarter ended     Quarter ended     
                               31 March       31 December          31 March     
                                   2006              2005              2005     
                                                                 (restated)     
Ore milled             t"000      4 466             4 857             5 463     
Gold produced          kg        17 464            20 316            21 126     
Gold price received    R/kg     110 399           102 333            83 273     
Cash operating costs   R/kg      92 914            83 154            79 333     
R million         R million         R million     
Revenue                           1 928             2 079             1 759     
Cash operating costs       (1)    1 622             1 690             1 676     
Cash operating profit               306               389                83     
Amortisation and depreciation                                                   
of mining properties,                                                           
mine development costs and                                                      
mine plant facilities      (1)    (270)             (249)             (246)     
Corporate, administration and                                                   
other expenditure                   (6)              (72)              (46)     
Provision for rehabilitation                                                    
costs                               (1)               (2)              (14)     
Operating profit/(loss)              29                66             (223)     
Amortisation and depreciation                                                   
other than mining                                                               
properties, mine development                                                    
costs and mine plant                                                            
facilities                         (17)              (10)              (10)     
Employment termination and                                                      
restructuring costs                   -              (15)             (142)     
Care and maintenance costs         (30)              (27)              (29)     
Share based compensation           (30)              (30)              (19)     
Exploration expenditure            (21)              (32)              (13)     
Profit on sale of investment                                                    
in Gold Fields                        -               306                 -     
Mark-to-market of listed                                                        
investments                          22                22                 -     
Interest paid                      (96)              (98)              (96)     
Interest received                    71                48                24     
Other income/(expenses) - net         5                 6              (15)     
(Loss)/gain on financial                                                        
instruments                       (260)             (183)                51     
(Loss)/gain on foreign                                                          
exchange                            (1)              (21)                21     
Loss on sale of listed                                                          
investments and subsidiaries          -               (1)             (111)     
Impairment of fixed assets            -                 -           (1 513)     
(Loss)/profit before tax          (328)                31           (2 075)     
Current tax - (expense)             (1)               (4)               (5)     
Deferred tax -                                                                  
benefit/(expense)          (1)      147               (5)               428     
Net (loss)/profit                 (182)                22           (1 652)     
(1) The change in accounting                                                    
policy on capitalisation of                                                     
mine development costs had the                                                  
following effect:                                                               
- Cash operating costs -                                                        
decrease                            160               161               138     
- Amortisation and                                                              
depreciation of mining                                                          
properties,                                                                     
mine development costs and                                                      
mine plant facilities              (88)              (75)              (59)     
- Deferred tax - expense           (16)              (18)              (15)     
- Net effect of change in                                                       
accounting policy                    56                68                64     
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 March       31 December          31 March     
                                   2006              2005              2005     
                                                                 (restated)     
Loss per share - cents*                                                         
- Basic earnings/(loss)            (46)                 6             (420)     
- Headline loss                    (50)              (75)              (96)     
- Fully diluted                                                                 
earnings/(loss)** ***              (46)                 6             (420)     
Dividends per share -                                                           
(cents)                                                                         
- Interim                             -                 -                 -     
- Proposed final                      -                 -                 -     
* Calculated on weighted average number of shares in issue at quarter end March 
2006: 393.4 million (December 2005: 392.7 million) ( March 2005: 393.2          
million).                                                                       
** Calculated on weighted average number of diluted shares in issue at quarter  
end March 2006: 400.5 million (December 2005: 398.5 million) (March 2005: 392.9 
million).                                                                       
*** The effect of the share options is anti-dilutive.                           
Reconciliation of headline loss:                                                
Net (loss)/profit                 (182)                22           (1 652)     
Adjustments:                                                                    
- Profit on sale of assets         (13)              (12)              (18)     
- Loss on sale of ARM Ltd -                                                     
net of tax                            -                 -               111     
- Loss on disposal of Sangold                                                   
investment                            -                 1                 -     
- Profit on disposal of investment                                              
in Gold Fields                        -             (306)                 -     
- Impairment of fixed assets -                                                  
net of tax                            -                  -            1 182     
Headline loss                     (195)             (295)             (377)     
TOTAL OPERATIONS - YEAR TO DATE FINANCIAL RESULTS (Rand/metric) (unaudited)     
                                              Year to date     Year to date     
                                                  31 March         31 March     
                                                      2006             2005     
(restated)     
Ore milled                t"000                     13 923           17 943     
Gold produced             kg                        56 999           71 552     
Gold price received       R/kg                     101 282           83 450     
Cash operating costs      R/kg                      87 019           73 751     
                                                 R million        R million     
Revenue                                              5 773            5 971     
Cash operating costs                       (1)       4 960            5 277     
Cash operating profit                                  813              694     
Amortisation and depreciation of mining                                         
properties, mine                                                                
development costs and mine plant                                                
facilities                                 (1)       (763)            (799)     
Corporate, administration and other                                             
expenditure                                          (134)            (125)     
Provision for rehabilitation costs                     (6)             (42)     
Operating loss                                        (90)            (272)     
Amortisation and depreciation other than                                        
mining properties,                                                              
mine development costs and mine plant                                           
facilities                                            (38)             (25)     
Employment termination and restructuring costs          79            (322)     
Care and maintenance costs                           (138)            (112)     
Share based compensation                              (93)             (49)     
Exploration expenditure                               (71)             (57)     
Profit on sale of investment in Gold Fields            306                -     
Mark-to-market of listed investments                    65                -     
Interest paid                                        (290)            (300)     
Interest received                                      171               87     
Other expenses - net                                  (10)             (30)     
(Loss)/gain on financial instruments                 (558)               23     
(Loss)/gain on foreign exchange                        (1)               34     
Loss on sale of listed investments and                                          
subsidiaries                                           (1)                -     
Profit on Australian-listed investments                  -                4     
Loss on sale of listed investments and                                          
subsidiaries                                             -            (111)     
Impairment of fixed assets                               -          (1 513)     
                                                     (669)          (2 643)     
Loss before tax                                                                 
Current tax - (expense)/benefit                        (5)               34     
Deferred tax - benefit                     (1)         190              474     
Net loss                                             (484)          (2 135)     
(1) The change in accounting policy on                                          
capitalisation of mine                                                          
development costs had the following effect:                                     
- Cash operating costs - decrease                      455              453     
- Amortisation and depreciation of mining                                       
properties, mine                                                                
development costs and mine plant facilities          (234)            (172)     
- Deferred tax - expense                              (46)             (53)     
- Net effect of change in accounting policy            175              228     
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 - YEAR TO DATE FINANCIAL RESULTS (Rand/metric) (unaudited)     
                                              Year to date     Year to date     
31 March         31 March     
                                                      2006             2005     
                                                                 (restated)     
Loss per share - cents*                                                         
- Basic loss                                         (123)            (605)     
- Headline loss                                      (211)            (255)     
- Fully diluted loss** ***                           (123)            (605)     
Dividends per share - (cents)                                                   
- Interim                                                -                -     
- Proposed final                                         -                -     
* Calculated on weighted average number of shares in issue for 9 months to      
March 2006: 392.9 million (March 2005: 352.7 million).                          
** Calculated on weighted average number of diluted shares in issue for 9       
months to March 2006: 398.1 million (March 2005: 352.7 million).                
*** The effect of the share options is anti-dilutive.                           
Reconciliation of headline loss:                                                
Net loss                                             (484)          (2 135)     
Adjustments:                                                                    
- Profit on sale of assets                            (40)             (52)     
- Profit on Australian listed investments                -              (4)     
- Loss on sale of ARM ltd - net of tax                   -              111     
- Loss on disposal of Sangold investment                 1                -     
- Profit on disposal of investment in Gold                                      
Fields                                               (306)                -     
- Impairment of fixed assets - net of tax                -            1 182     
Headline loss                                        (829)            (898)     
ABRIDGED BALANCE SHEET AT 31 MARCH 2006 (Rand)                                  
                             At 31 March     At 31 December     At 31 March     
2006               2005            2005     
                               R million          R million       R million     
                             (Unaudited)        (Unaudited)     (Unaudited)     
                                                                 (restated)     
ASSETS                                                                          
Non-current assets                                                              
Property, plant and equipment     22 628             22 735          22 267     
Intangible assets                  2 268              2 268           2 268     
Investments                        2 259              2 191           6 531     
Investments in associates          2 012                  -               -     
                                  29 167             27 194          31 066     
Current assets                                                                  
Inventories                          593                560             571     
Receivables                          775                744             614     
Income and mining taxes               28                 24              18     
Cash and cash equivalents          1 781              2 914           (233)     
3 177              4 242             970     
Total assets                      32 344             31 436          32 036     
EQUITY AND LIABILITIES                                                          
Share capital and reserves                                                      
Issued capital                    25 702             25 689          25 512     
Fair value and other reserves      (791)              (717)         (1 501)     
Deferred share-based                                                            
compensation                       (156)              (185)           (110)     
Accumulated loss                 (1 895)            (1 708)           (430)     
                                  22 860             23 079          23 471     
Non-current liabilities                                                         
Long-term borrowings               2 549              2 506           2 944     
Net deferred taxation                                                           
liabilities                        1 963              2 122           2 369     
Net deferred financial                                                          
liabilities                          679                498             452     
Long-term provisions                 943                943             847     
                                   6 134              6 069           6 612     
Current liabilities                                                             
Accounts payables                  1 035                892             997     
Accrued liabilities                  316                309             340     
Short-term portion of                                                           
long-term borrowings               1 981              1 079             607     
Shareholders for dividends            18                  8               9     
3 350              2 288           1 953     
Total equity and liabilities      32 344             31 436          32 036     
Number of ordinary shares in                                                    
issue                        394 369 190        394 161 367     393 231 894     
Net asset value per share                                                       
(cents)                            5 797              5 853           5 969     
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 NINE MONTHS ENDED 31 MARCH 2006  (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                   57              -                -     
Currency translation                                                            
adjustment and other                      -          (121)                -     
Adoption of IFRS 2,                                                             
share-based payments                      -              -               92     
Net loss                                  -              -                -     
Dividends paid                            -              -                -     
Balance at 31 March 2006             25 702          (791)            (156)     
(restated)                                                                      
Balance as 1 July 2004               20 945        (1 186)             (27)     
Issue of share capital                4 436              -                -     
Currency translation                                                            
adjustment and other                      -          (315)                -     
Adoption of IFRS 2,                                                             
share-based payments                    131              -             (83)     
Net earnings                              -              -                -     
Dividends paid                            -              -                -     
Balance at 31 March 2005             25 512        (1 501)            (110)     
                                                     Retained                   
earnings         Total     
                                                    R million     R million     
Balance at 1 July 2005                                (1 406)        23 321     
Issue of share capital                                      -            57     
Currency translation                                                            
adjustment and other                                        -         (121)     
Adoption of IFRS 2,                                                             
share-based payments                                        -            92     
Net loss                                                (484)         (484)     
Dividends paid                                            (5)           (5)     
Balance at 31 March 2006                              (1 895)        22 860     
(restated)                                                                      
Balance as 1 July 2004                                  1 801        21 533     
Issue of share capital                                      -         4 436     
Currency translation                                                            
adjustment and other                                        -         (315)     
Adoption of IFRS 2,                                                             
share-based payments                                        -            48     
Net earnings                                          (2 135)       (2 135)     
Dividends paid                                           (96)          (96)     
Balance at 31 March 2005                                (430)        23 471     
SUMMARISED CASH FLOW STATEMENT                                                  
FOR THE NINE MONTHS ENDED 31 MARCH 2006 (unaudited)                             
                                                         Nine          Nine     
months        months     
                                                        ended         ended     
                                                     31 March      31 March     
                                                         2006          2005     
R million     R million     
Cash flow from operating activities                                             
Cash utilised by operations                              (88)         (461)     
Interest and dividends received                           176           104     
Interest paid                                           (143)         (192)     
Income and mining taxes paid                              (8)          (51)     
Cash utilised by operating activities                    (63)         (600)     
Cash flow from investing activities                                             
Net proceeds on disposal                                                        
of listed investments                                   2 461            92     
Acquisition of investment                                                       
in associate                                          (2 012)             -     
Net additions to property, plant                                                
and equipment                                         (1 164)         (989)     
Other investing activities                               (18)             1     
Cash utilised by investing activities                   (733)         (896)     
Cash flow from financing activities                                             
Long-term loans raised                                    615            81     
Ordinary shares issued - net of expenses                   55          (36)     
Dividends paid                                              -          (95)     
Cash generated/ (utilised) by financing                                         
activities                                                670          (50)     
Foreign currency translation adjustments                   77         (101)     
Net (decrease)/increase in cash and                                             
equivalents                                              (49)       (1 647)     
Cash and equivalents - 1 July                           1 830         1 414     
Cash and equivalents - 31 March                         1 781         (233)     
SUMMARISED CASH FLOW STATEMENT                                                  
FOR THE THREE MONTHS ENDED 31 MARCH 2006 (unaudited)                            
                                                        Three         Three     
                                                       months        months     
                                                        ended         ended     
31 March   31 December     
                                                         2006          2005     
                                                    R million     R million     
Cash flow from operating activities                                             
Cash generated/(utilised) by operations                   229         (136)     
Interest and dividends received                            76            48     
Interest paid                                            (48)          (47)     
Income and mining taxes paid                              (5)           (2)     
Cash generated/(utilised) by operating activities         252         (137)     
Cash flow from investing activities                                             
Net proceeds on disposal of listed investments              -         2 461     
Acquisition of investment in associate                (2 012)             -     
Net additions to property, plant and equipment          (378)         (436)     
Other investing activities                               (21)             3     
Cash (utilised)/generated by investing activities     (2 411)         2 028     
Cash flow from financing activities                                             
Long-term loans raised                                    910             -     
Ordinary shares issued - net of expenses                   10            45     
Cash generated by financing activities                    920            45     
Foreign currency translation adjustments                  106             7     
Net (decrease)/increase in cash and equivalents       (1 133)         1 943     
Cash and equivalents - beginning of quarter             2 914           971     
Cash and equivalents - end of quarter                   1 781         2 914     
NOTES TO THE RESULTS FOR THE PERIOD ENDED 31 MARCH 2006                         
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 Note 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 as 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 share capital.      
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 number of 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 R93 million for the March 2006 year to date (March 2005 year to           
   date: R48 million) (March 2006 quarter: R30 million) (December 2005          
   quarter: R33 million) (March 2005 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 R458 million for the March       
2006 year to date (March 2005 year to date: R454 million) (March 2006        
   quarter: R160 million) (December 2005 quarter: R161 million)                 
   (March 2005 quarter: R138 million).                                          
   - Additional amortisation charges of R234 million for the March 2006 year    
to date (March 2005 year to date: R172 million) (March 2006 quarter: R88     
   million) (December 2005 quarter: R75 million) (March 2005 quarter:           
   R59 million).                                                                
   - Taxation effect of the capitalised development costs and additional        
amortisation charges of R47 million for March 2006 year to date (March       
   2005 year to date: R53 million) (March 2006 quarter: R16 million)            
   (December 2005 quarter: R18 million) (March 2005 quarter: R15 million).      
4. Investment in associate                                                      
On 9 March 2006, the Company announced that it had acquired a 29.2%          
   investment in Western Areas Ltd. The investment will be treated as an        
   associate. The accounting policies of the associate is in line with the      
   investment in an associate is in line with the accounting policies of the    
Company, therefore no significant adjustments are foreseen. The most         
   practicable date of the transaction for accounting purposes is 1 April 2006. 
   The Company"s portion of the results of the associate from 9 March 2006 to   
   31 March 2006, will therefore be accounted for in the June 2006 quarter.     
5. Derivative financial instruments                                             
   Commodity contracts                                                          
   The Harmony Group"s outstanding commodity contracts against future           
   production, by type at 31 March 2006 are indicated below. The total net      
delta of the hedge book at 31 March 2006 was 431,285 oz (13 414 kg).         
   Year                   30 June     30 June     30 June     30 June           
                             2006        2007        2008        2009     Total 
   AUSTRALIAN DOLLAR GOLD                                                       
Forward contracts                                                            
              Kilograms     2,333       4,572       3,110       3,110    13,126 
              Ounces       75,000     147,000     100,000     100,000   422,000 
              AUD per oz      509         515         518         518       515 
Call options sold                                                            
              Kilograms         -         311           -           -       311 
              Ounces            -      10,000           -           -    10,000 
              AUD per oz        -         562           -           -       562 
Total commodity                                                              
   contracts                                                                    
              Kilograms     2,333       4,883       3,110       3,110    13,437 
              Ounces       75,000     157,000     100,000     100,000   432,000 
Delta (kg)    2,333       4,881       3,105       3,096    13,414 
   Total net gold*                                                              
              Delta (oz)   74,995     156,943      99,818      99,529   431,285 
* 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 March 2006.                                                                  
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 R654 million (negative     
USD106 million) at 31 March 2006 (at 31 December 2005: negative R486 million or 
negative USD77 million). The values at 31 March 2006 were based on a gold price 
of USD588 (AUD821) per ounce, exchange rates of USD1/R6.15 and AUD1/USD0.72 and 
prevailing market interest rates and volatilities at that date. These           
valuations were provided by independent risk and treasury management experts.   
At 20 April 2006, the marked-to-market value of the hedge book was a negative   
R745 million (negative USD91 251 million), based on a gold price of USD644      
(AUD865) per ounce, exchange rates of USD1/R5.96 and AUD1/USD0.74 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 25,000oz forward contracts during the quarter ending         
31 March 2006 at a cost of R62.6 million (USD 10.2 million). During the quarter 
ending 31 December 2005, Harmony closed out 10,000oz call option contracts at   
a cost of R3.3 million (USD 500,000).                                           
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 a 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           
R25 million (USD4 million) as at 31 March 2006 (at 31 December 2005 positive    
R11 million or USD 2 million), based on the prevailing interest rates and       
volatilities at the time.                                                       
Z B Swanepoel                                         N V Qangule               
Chief Executive                                       Financial Director        
Virginia                                                                        
3 May 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*, M Motloba*,                                                    
N V Qangule, C M L Savage*                                                      
F Mothobi                                                                       
(*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                                                   
Date: 05/05/2006 08:00:37 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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