Harmony - Higher Gold Price More Than Doubles Cash Operating Profit Release Date: 07/08/2006 08:02:01 Code(s): HAR Harmony - Higher Gold Price More Than Doubles Cash Operating Profit
Harmony Gold Mining Company Ltd
Incorporated in the Republic of South Africa
Registration number: 1950/038232/06
Share code: HAR
ISIN: ZAE000015228
HIGHER GOLD PRICE MORE THAN DOUBLES CASH OPERATING PROFIT
Johannesburg, 4 August 2006 - Harmony Gold Mining Company Limited (NASDAQ/NYSE:
HMY JSE: HAR) today announced its results for the June 2006 quarter. Cash
operating profit increased from R305.6 million in the March 2006 quarter to
R645.2 million (111.1%) in the June 2006 quarter. The main reason for this
improvement was as a result of the revenue received, which went up by 19% and
tighter cost control that did not go up commensurately with the increased
volumes that were mined. Cash earnings showed a 109% improvement, from 78 cents
to 163 cents per share for the June quarter.
On the revenue side the gold price received for the June quarter improved from
R110 399/kg to R131 358/kg. This resulted in the cash operating margin improving
from 15,9% to 28,5%. Gold production decreased with 1.3% to 17 243kg quarter on
quarter.
"Harmony once again demonstrated that we offer to our shareholders significant
upside potential when the gold price rises. We have stepped up our development
rates to give us more mining flexibility, which in turn will allow us to take
advantage of the higher gold price. This is a process that will continue for
the next 18 months, but we expect to start reaping the benefits by the end of
the fiscal year." Commented Bernard Swanepoel, Chief Executive.
The performance of the company is best highlighted in the following table:-
June 2006 March 2006 %
Variance
Production - kg 17 243 17 464 (1)
Production - oz 554 373 561 477 (1)
Revenue - R/kg 131 358 110 399 19
Revenue - US$/oz 631 559 13
Cash cost - R/kg 93 968 92 914 (1)
Cash cost - US$/oz 452 470 4
Exchange rate - USDZAR 6.47 6.15 5
Improvement operating profit margins
JUN 2006 MAR 2006
Cash operating profit (Rm) 645,2 305,6
Cash operating profit margin 28,5% 15.9%
Cash operating profit -Mar 2006 R 305,6 million
- volume change R 148,6 million
- working cost change R 2,4 million
- recovery grade change (R 172,3) million
- gold price change R 360,9 million
- net variance R 339,6 million
Cash operating profit - Jun 2006 R 645,2 million
South African operations
Quality assets - underground tonnes increased by 6.3% to 1 618 million tonnes
during the quarter, whilst recovery grades decreased by 7.6% to 5.26 g/t. The
quality operations received an average gold price of R132 140, which led to a
profit margin of 39.1%. Operating profit increased by 79.0% to R439.9 million
compared to a profit of R245.7 million in the March quarter.
Leveraged assets - Volumes increased by 6.1% to 1 119 million tonnes and the
recovery grade decreased by 10.1% to 4.26 g/t. The leveraged operations received
an average gold price of R131 833 for the quarter, giving them a profit margin
of 14,23%. The Leverage operations had an operating profit of R89.4 million
compared to R36.3 million in the March quarter, an improvement of 146.3%.
Surface operations - Volume from surface sources increased by 34.6% to 1 054
million tones during the quarter, whilst recovery grades decreased by 32.7% to
0.66g/t. Gold production commensurately dropped by 8.6%. Costs were well
contained and operating profit climbed up to R36.1 million, an improvement of
177.7%.
Growth projects - The Company remained focused on rebuilding its growth strategy
on their projects. A total of R134 million was spent on capital projects and
the forecast for the September quarter amounts to R209 million.
The numbers reported includes a total of 39 000t of waste which was hoisted
through the reef orepass system at Elandsrand compared to 43 000t in the March
quarter. If this waste is excluded, the recovery grade goes up to 3.98g/t
compared to 4.93g/t in the March quarter.
Australasia operations
Australia - The Australian operations generated an operating profit of A$ 12.5
million in the current quarter compared to A$ 7 million in the previous quarter.
This is primarily the result of increased gold production from 49,608 oz in the
March quarter to 59,286 oz this quarter in a continued high gold price
environment.
PNG - The access road to Hidden Valley reached mining lease boundary during the
quarter. The road will now be upgraded to final specifications, which will
allow on mine earthworks to start.
The resource model for Wafi/Golpu has been upgraded with an increase in copper
of 266 000t (20%) and an increase in contained gold of 700 000oz (35%). The new
Golpu model has been reviewed and endorsed by mining consultancies RSG Global
and SRK. The additional resource inventory has significant potential to
positively impact the economical robustness of the Golpu project.
Issued by Harmony Gold Mining Company Limited
4 August 2006
For more details contact:
Bernard Swanepoel
Chief Executive
on +27(0)83 303 9922
or
Philip Kotze
Executive, Investor Relations
on +27(0)83 453 0544
Investor Relations Officer
Lizelle du Toit
Office: +27 11 684 0149
Mobile: +27(0)82 465 1244
lizelle.dutoit@harmony.co.za
For the comprehensive set of results please visit www.harmony.co.za
End
The directors of Harmony accept responsibility for the information contained in
this announcement. To the best of the knowledge and belief of the directors of
Harmony (who have taken all reasonable care to ensure that such is the case),
the information contained in this announcement is in accordance with the facts
and does not omit anything likely to affect the import of such information.
Date: 07/08/2006 08:02:06 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
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