HAR - Harmony Results Improve Despite Difficult Sa Working Conditions Release Date: 08/05/2008 09:23:39 Code(s): HAR
HAR - Harmony Results Improve Despite Difficult Sa Working Conditions
Harmony Gold Mining Company Ltd
Incorporated in the Republic of South Africa
Registration number: 1950/038232/06
Share code: HAR
("Harmony" or the "Company")
HARMONY RESULTS IMPROVE DESPITE DIFFICULT SA WORKING CONDITIONS
- Headline earnings of 42 cents per share
- Cash operating profit increased to R828 million
- Total cash operating cost down by 8.9%
- Harmony announces Newcrest as PNG partner
- Restructuring complete, benefits to flow
Johannesburg. Thursday, 8 May 2008. Harmony Gold Mining Company Limited
(Harmony) announced its financial results for the third quarter ended 31 March
Graham Briggs, chief executive officer says, "I am pleased with Harmony`s
financial performance for the quarter when considering that these results were
achieved under some difficult South African working conditions and that all our
revenue is generated from our South African operations.
"We have been through some pain, but I am confident that we have turned the
corner and can begin to build on the new foundation. It is pleasing to note that
some of our restructuring efforts were evident in this quarter with the R147
million reduction in working costs. Total cash operating costs were down 8.9% to
R1 506 million from R1 652 million", adds Briggs.
The company`s restructuring phase has nonetheless had a negative impact on
productivity. The termination of Conops at three of the operations - Masimong
during the December 2007 quarter; Elandsrand and Tshepong during the March 2008
quarter - caused the SA underground tonnages and, to some extent, the grade to
drop due to the reduction of the labour force and, in some instances,
transferring labour to other operations. Over the past two quarters the
company`s staff complement has reduced by 5 985 employees.
External factors also played their part. Harmony`s operations experienced a loss
of production due to last year`s lengthy Christmas holiday period. The effects
of a five-day power cut were felt and similarly when it was restored at 80% of
our previous consumption and thereafter the resultant build-up phase from 80% to
90% power supply. This resulted in an estimated total loss of more than 800
kilograms from our operations.
Harmony`s operational performance from its continuing operations for the quarter
under review was weaker with 7.2% lower tonnages at 4 125 000 tonnes compared
with 4 445 000 tonnes in the December quarter, resulting in a 16.6% decrease in
kilograms produced of 10 347kg versus 12 403kg.
Total grade for the group was 10% lower at 2.51g/t, while the grade from our SA
underground operations was recorded at 4.81g/t a 1.2% drop on the previous
quarter. The company`s cash operating costs increased by 9.2% to R145 514/kg
from R133 234/kg.
Briggs says, "We continued to forge ahead with our activities to create value,
strengthen the company`s balance sheet and improve operational performance.
Accordingly, we are determined to get all our operations on a sound footing with
all operations profitable after taking capital expenditure into account. In our
short-life operations we are considering ways of extending the life of mines.
The operations have all of the required infrastructure and we are considering
options of increasing development.
A higher received gold price of US$944.40/oz and a weaker, thus more favourable,
R/US$ exchange rate of R7.43/$ (R6.77/$) resulted in higher revenues of R2.3
billion compared with R2.1 billion and a net profit of R164 million compared
with a net loss of R195 million for the previous quarter.
Headline earnings stood at 42 cents per share versus a loss of 43 cents per
share for the December 2007 quarter.
A number of transactions were signed during the quarter and conditions precedent
have either being met or are in the process of being met. The most recent
transaction which was executed in the fourth quarter of 2008 is the 50:50 joint
venture agreement with Newcrest Mining Limited of Australia for the development
of Harmony`s PNG assets.
Newcrest will earn its 50% interest in the new joint venture by contributing a
maximum of US$525 million which will be paid in two tranches. An initial US$180
million payment to acquire a 30.01% interest by 30 June 2008, together with a
reimbursement to Harmony of US$45 million in project expenditure, and a farm-in
commitment for the remaining 19.99% of US$300 million, to fund project
expenditure up to the commencement of mining operations at Hidden Valley.
The introduction of a quality partner such as Newcrest with significant
technical skills, particularly in copper mining and bulk underground mining
techniques including block caving techniques will provide additional expertise
to the existing Harmony team in PNG and will add to the development potential of
the PNG assets.
The creation of this joint venture facilitates significant capital investment in
the PNG assets and substantially removes Harmony`s obligation to continue
funding the development of these assets entirely from our own cash flows.
We have been made aware of a pending class action in the United States of
America against Harmony whereby some ADR holders are seeking damages pertaining
to the company`s business practices. We have retained legal professionals in
that country to advise Harmony.
Issued by Harmony Gold Mining Company Limited
8 May 2008
For more details contact:
Chief Executive Officer
on +27 (0)83 265 0274
General Manager, Investor Relations
on +27 11 411 2314 or
+27 (0)82 654 9241
Randfontein Gold Mine
P O Box 1
South Africa 1796
T +27 (11) 411 2000
For the comprehensive set of results please visit www.harmony.co.za
8 May 2008
Date: 08/05/2008 09:23:39 Supplied by www.sharenet.co.za
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