Go Back Email this Link to a friend


Harmony - Review for the first quarter ended 30 September 2006

Release Date: 31/10/2006 08:00:13      Code(s): HAR
Harmony - Review for the first quarter ended 30 September 2006                  
Harmony Gold Mining Company Limited                                             
Registration number 1950/038232/06                                              
Incorporated in the Republic of South Africa                                    
ISIN: ZAE000015228                                                              
REVIEW FOR THE FIRST QUARTER ENDED 30 SEPTEMBER 2006                            
Trading Symbols                                                                 
JSE Limited                           HAR                                       
New York Stock Exchange, Inc.         HMY                                       
NASDAQ                                HMY                                       
London Stock Exchange plc             HRM                                       
Euronext Paris                        HG                                        
Euronext Brussels                     HMY                                       
Berlin Stock Exchange                 HAM1                                      
Issuer code                           HAPS                                      
CHIEF EXECUTIVE"S REVIEW                                                        
Harmony produced a more pleasing set of results from improved production,       
higher grades, a higher received rand gold price and a weaker Rand/Dollar       
exchange rate which more than offset annual increases.                          
"Unlocking value is what we at Harmony will be focusing on during the new       
financial year. I am confident that Harmony will unlock value not only through  
vigilant cost containment but also by increasing production to 3.5Moz over the  
next four years. Our growth performance, to be sustained by our quality assets  
and our major projects, should begin contributing meaningfully in the next      
financial year. The Harmony Improvement Process (HIP), aimed at addressing      
current value drivers, should also improve efficiencies at all our perations."  
The group reported a 38% increase in cash operating profit to R891 million      
(R645 million) and a R277 million profit compared with a loss of R41 million.   
Basic headline earnings of 66 cents per share for the quarter ended 30          
September 2006, compared favourably with the loss of 52 cents per share for     
the previous quarter.                                                           
Cash operating costs increased by 4% to R97 538/kg mainly due to the annual     
increases in SA labour costs as well as seasonal higher energy costs.           
Contributing factors to the improved performance of South African underground   
operations included an increase in tonnes milled of 7% to 3,351 million tonnes  
(3,128 million tonnes); 6% increase in grades per tonne; 9% increase in         
received gold price of R143 283/kg (R131 358/kg) and a weaker R/$ exchange      
rate of R7,14.                                                                  
Tonnes increased by 3% at our Australian operations and yields improved with    
8% from 2.4g/t in the June quarter to 2.6g/t in the September quarter. This     
resulted in an increase in gold production rising from 59 291oz to 65 883oz.    
Amortisation and depreciation of mining properties increased by 15% to R308     
million (R267 million), driven by increased tonnes and increased development    
quarter on quarter. On-going care and maintenance costs at shafts previously    
closed, were lower at R20 million (R36 million).                                
Harmony closed out 25 000 ounces forward contracts during the quarter at a      
cost of R41 million (US$5,8 million) and 10 000 ounces call options at a cost   
of R14 million (US$2 million).                                                  
QUARTERLY OPERATING AND FINANCIAL RESULTS (Rand/Metric) (unaudited)             
                                Underground production - South Africa           
                          Quality         Growth     Leveraged                  
Ounces       Projects        Ounces      Sub-total   
Ore milled                                                                      
- t"000        Sep-06       1 665            398         1 288          3 351   
               Jun-06       1 618            391         1 119          3 128   
Gold Produced                                                                   
- kg           Sep-06       9 392          1 842         5 497         16 731   
               Jun-06       8 510          1 421         4 768         14 699   
Yield                                                                           
- g/tonne      Sep-06        5.64           4.63          4.27           4.99   
               Jun-06        5.26           3.63          4.26           4.70   
Cash Operating Costs                                                            
- R/kg         Sep-06      81 992        123 439       117 741         98 301   
Jun-06      80 454        120 626       113 074         94 920   
Cash Operating Costs                                                            
- R/tonne      Sep-06         463            571           503            491   
               Jun-06         423            438           482            446   
Working Revenue                                                                 
(R"000)        Sep-06   1 350 838        264 626       788 244      2 403 708   
               Jun-06   1 124 511        191 270       628 580      1 944 361   
Cash Operating Costs                                                            
(R"000)        Sep-06     770 067        227 374       647 225      1 644 666   
               Jun-06     684 661        171 410       539 138      1 395 209   
Cash Operating Profit                                                           
(R"000)        Sep-06     580 771         37 252       141 019        759 042   
Jun-06     439 850         19 860        89 442        549 152   
Capital Expenditure                                                             
(R"000)        Sep-06     179 183        193 000        91 164        463 347   
               Jun-06     202 265        149 954        82 743        434 962   
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      
QUARTERLY OPERATING AND FINANCIAL RESULTS (Rand/Metric) (unaudited)             
South Africa    South Africa       Australia       Harmony  
                         Surface           Total           Total         Total  
Ore milled                                                                      
- t"000     Sep-06           905           4 256             799         5 055  
Jun-06         1 054           4 182             775         4 957  
Gold Produced                                                                   
- kg        Sep-06           692          17 423           2 049        19 472  
            Jun-06           700          15 399           1 844        17 243  
Yield                                                                           
- g/tonne   Sep-06          0.76            4.09            2.56          3.85  
            Jun-06          0.66            3.68            2.38          3.48  
Cash Operating Costs                                                            
- R/kg      Sep-06        95 750          98 199          91 914        97 538  
            Jun-06        77 184          94 112          92 760        93 968  
Cash Operating Costs                                                            
- R/tonne   Sep-06            73             402             236           376  
Jun-06            51             347             221           327  
Working Revenue                                                                 
(R"000)     Sep-06       105 010       2 508 718         281 490     2 790 208  
            Jun-06        90 119       2 034 480         230 966     2 265 446  
Cash Operating Costs                                                            
(R"000)     Sep-06        66 259       1 710 925         188 331     1 899 256  
            Jun-06        54 029       1 449 238         171 050     1 620 288  
Cash Operating Profit                                                           
(R"000)     Sep-06        38 751         797 793          93 159       890 952  
            Jun-06        36 090         585 242          59 916       645 158  
Capital Expenditure                                                             
(R"000)     Sep-06         1 159         464 506         112 770       577 276  
Jun-06         1 388         436 350          48 423       484 773  
TOTAL OPERATIONS - QUARTERLY FINANCIAL RESULTS (Rand/metric) (unaudited)        
                                  Quarter ended Quarter ended Quarter ended     
                                   30 September       30 June  30 September     
2006          2006          2005     
Ore milled - t"000                        5 055         4 957         4 600     
Gold produced -   kg                     19 472        17 243        19 219     
Gold price received - R/kg              143 283       131 358        91 888     
Cash operating costs - R/kg              97 538        93 968        85 718     
                                      R million     R million     R million     
Revenue                                   2 790         2 265         1 766     
Cash operating costs                      1 899         1 620         1 647     
Cash operating profit                       891           645           119     
Amortisation and depreciation of                                                
mining properties, mine development                                             
costs and mine plant facilities           (308)         (267)         (244)     
Corporate, administration and other                                             
expenditure                                (59)          (53)          (56)     
(Provision)/Reversal for                                                        
rehabilitation costs                        (2)            18           (3)     
Operating profit/(loss)                     522           343         (184)     
Amortisation and depreciation other                                             
than mining properties, mine development                                        
costs and mine plant facilities            (17)          (19)          (11)     
Employment termination and                                                      
restructuring costs                           -           (1)            13     
Care and maintenance costs                 (20)          (36)             -     
Share-based compensation                   (12)          (10)          (30)     
Exploration expenditure                    (41)          (35)          (18)     
Mark-to-market of listed investments         24            22            21     
Interest paid                               (95)         (180)          (96)    
Interest received                            39            48            52     
Other income - net                           29            10             -     
Gain/(Loss) on financial instruments         18            35         (115)     
Loss from associates                       (48)         (105)             -     
Provision for post-retirement benefits        -           (7)             -     
Reversal of impairment of fixed assets        -           216             -     
Profit/(Loss) before tax                    399           281         (368)     
Current tax - expense                         -           (5)             -     
Deferred tax - (expense)/benefit          (122)         (317)            48     
Net profit/(loss)                           277          (41)         (320)     
Loss per share - cents *                                                        
- Basic earnings/(loss)                      70          (11)          (82)     
- Headline earnings/(loss)                   66          (52)          (85)     
- Fully diluted earnings/(loss) ** ***       69          (11)          (82)     
Dividends per share - (cents)                                                   
- Interim                                     -             -             -     
- Proposed final                              -             -             -     
*   Calculated on weighted average number of shares in issue at quarter         
    end September 2006: 396.8 million (June 2006: 394.9 million)                
    (September 2005: 392.3 million).                                            
**   Calculated on weighted average number of diluted shares in issue at        
quarter end September 2006: 402.9 million (June 2006: 401.1 million)       
     (September 2005: 392.3 million).                                           
***  The effect of the share options is anti-dilutive.                          
Reconciliation of headline profit/(loss):                                       
Net profit/(loss)                           277          (41)         (320)     
Adjustments:                                                                    
- Profit on sale of assets                 (13)          (12)          (15)     
- Profit on sale of GBS Gold                                                    
International investment                  (1)             -             -     
- Impairment of fixed assets - net of                                           
tax                                           -         (151)             -     
Headline profit/(loss)                      263         (204)         (335)     
ABRIDGED BALANCE SHEET AS AT 30 SEPTEMBER 2006 (Rand)                           
                                          At             At               At    
                                30 September        30 June     30 September    
                                        2006           2006             2005    
R million      R million        R million    
                                 (Unaudited)      (Audited)      (Unaudited)    
ASSETS                                                                          
Non-current assets                                                              
Property, plant and equipment        23 849          23 318          22 633     
Intangible assets                     2 270           2 270           2 268     
Investment financial assets           2 306           2 255           4 709     
Investments in associates             1 860           1 909               -     
Trade and other receivables              82             107               -     
                                     30 367          29 859          29 610     
Current assets                                                                  
Inventories                             730             666             552     
Trade and other receivables             871             721             597     
Income and mining taxes                  25              27              27     
Cash and cash equivalents               868             906             971     
                                      2 494           2 320           2 147     
Total assets                         32 861          32 179          31 757     
EQUITY AND LIABILITIES                                                          
Share capital and reserves                                                      
Share capital                        25 521          25 489          25 289     
Other reserves                         (88)           (271)           (144)     
Accumulated loss                    (1 738)         (2 015)         (1 701)     
                                     23 695          23 203          23 444     
Non-current liabilities                                                         
Borrowings                            2 637           2 591           2 464     
Net deferred taxation liabilities     2 449           2 300           2 128     
Deferred financial instruments          609             631             436     
Provisions for other                                                            
liabilities and charges               1 009             983             938     
                                      6 704           6 505           5 966     
Current liabilities                                                             
Trade and other payables              1 184           1 199             995     
Accrued liabilities                     264             259             298     
Borrowings                            1 006           1 006           1 046     
Shareholders for dividends                8               7               8     
                                      2 462           2 471           2 347     
Total equity and liabilities         32 861          32 179          31 757     
Number of ordinary shares in                                                    
issue                           397 549 945     396 934 450     393 341 194     
Net asset value per share                                                       
(cents)                               5 960           5 846           5 960     
CONDENSED STATEMENT OF CHANGES IN EQUITY FOR THE THREE MONTHS ENDED             
30 SEPTEMBER 2006 (Rand) (unaudited)                                            
                              Issued share     Other   Retained                 
capital  reserves   earnings       Total     
                                 R million R million  R million   R million     
Balance as at 1 July 2006           25 489     (271)     (2 015)     23 203     
Issue of share capital                  32         -           -         32     
Currency translation adjustment                                                 
and other                                -       183           -        183     
Net earnings                             -         -         277        277     
Balance as at 30 September 2006     25 521      (88)     (1 738)     23 695     
Balance as at 1 July 2005           25 289     (587)     (1 381)     23 213     
Issue of share capital                   -         -           -          -     
Currency translation adjustment                                                 
and other                                -       443           -        443     
Net loss                                 -         -       (320)      (320)     
Balance as at 30 September 2005     25 289     (144)     (1 701)     23 444     
SUMMARISED CASH FLOW STATEMENT FOR THE THREE MONTHS ENDED                       
30 SEPTEMBER 2006 (Rand) (unaudited)                                            
3 months      3 months      3 months     
                                          ended         ended         ended     
                                   30 September  30 September       30 June     
                                           2006          2005          2006     
R million     R million     R million     
Cash flow from operating activities                                             
Cash generated/(utilised) by                                                    
operations                                  471         (184)           467     
Interest and dividends received              39            52            48     
Interest paid                              (45)          (47)          (59)     
Income and mining taxes paid                  -             -           (4)     
Cash generated/(utilised) by                                                    
operating activities                        465         (179)           452     
Cash flow from investing activities                                             
Net proceeds on disposal of listed                                              
investments                                  30             -             -     
Net additions to property, plant and                                            
equipment                                 (562)         (350)         (471)     
Other investing activities                    -             -          (26)     
Cash utilised by investing activities     (532)         (350)         (497)     
Cash flow from financing activities                                             
Long-term loans repaid                        -         (295)       (1 008)     
Ordinary shares issued - net of                                                 
expenses                                     32             -           128     
Dividends paid                                -             -           (7)     
Cash generated/(utilised) by                                                    
financing activities                         32         (295)         (887)     
Foreign currency translation                                                    
adjustments                                 (3)          (35)            57     
Net decrease in cash and equivalents       (38)         (859)         (875)     
Cash and equivalents - beginning of                                             
period                                      906         1 830         1 781     
Cash and equivalents - end of period        868           971           906     
NOTES TO THE RESULTS FOR THE QUARTER ENDED 30 SEPTEMBER 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.                                                
2.   Commodity contracts                                                        
The Harmony Group"s outstanding commodity contracts against future production,  
by type at 30 September 2006 are indicated below. The total net delta of the    
hedge book at 30 September 2006 was 291 991 oz (9 082 kg).                      
                                30 June     30 June     30 June                 
Year                               2007        2008        2009       Total     
Australian                                                                      
Dollar Gold:                                                                    
Forward contracts Kilograms        2 862       3 110       3 110       9 082    
Ounces          92 000     100 000     100 000     292 000    
                  AUD per oz         518         518         518         518    
Total commodity                                                                 
contracts         Kilograms        2 862       3 110       3 110       9 082    
Ounces          92 000     100 000     100 000     292 000    
Total net gold**  Delta (kg)       2 863       3 111       3 108       9 082    
                  Delta (oz)      92 034     100 028      99 929     291 991    
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 positive R73 million (positive      
USD10 million) at 30 September 2006 (at 30 June 2006: negative R631 million or  
negative USD88 million). The values at 30 September 2006 were based on a gold   
price of USD599 (AUD804) per ounce, exchange rates of USD1/R7.76 and            
AUD1/USD0.75 and prevailing market interest rates and volatilities at that      
date. These valuations were provided by independent risk and treasury           
management experts.                                                             
At 25 October 2006, the marked-to-market value of the hedge book was a          
positive R58 million (positive USD7.5 million), based on a gold price of        
USD584 (AUD767)per ounce, exchange rates of USD1/R7.72 and AUD1/USD0.76 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 30      
September 2006 at a cost of R41 million (USD5.8 million). During the quarter    
ended 30 June 2006, Harmony closed out 75 000oz forward contracts at a cost of  
R143 million (USD23 million).                                                   
Harmony closed out 10 000oz call options during the quarter ending 30           
September 2006 at a cost of R14 million (USD2 million).                         
** 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 30    
September 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*,                                                       
Dr D S Lushaba*, F T De Buck*, M Motloba*,                                      
N V Qangule, C M L Savage*                                                      
(*non-executive) (Mozambique)                                                   
Investor Relations                                                              
Amelia Soares                                                                   
Investor Relations Manager                                                      
Telephone:      +27 11 684 0146                                                 
Fax:            +27 11 684 0188                                                 
Cell:           +27 (0) 82 654 9241                                             
E-mail:         amelia.soares@harmony.co.za                                     
Lizelle du Toit                                                                 
Investor Relations Officer                                                      
Telephone:      +27 11 684 0149                                                 
Fax:            +27 11 684 0188                                                 
Cell:           +27 (0) 82 465 1244                                             
E-mail:         lizelle.dutoit@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:        marian.vanderwalt@harmony.co.za                                  
South African Share Transfer Secretaries                                        
Link Market Services South Africa (Proprietary) Limited                         
(Registration number 2000/007239/07)                                            
5th Floor, 11 Diagonal Street                                                   
Johannesburg, 2001                                                              
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                                       
NASDAQ                                HMY                                       
London Stock Exchange plc             HRM                                       
Euronext Paris                        HG                                        
Euronext Brussels                     HMY                                       
Berlin Stock Exchange                 HAM1                                      
Issuer code                           HAPS                                      
Registration number 1950/038232/06                                              
Incorporated in the Republic of South Africa                                    
ISIN: ZAE000015228                                                              
Date: 31/10/2006 08:00:37 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2019 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.