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HAR - Harmony Gold Mining Company Limited - Results for the first quarter ended

Release Date: 31/10/2008 08:00:10      Code(s): HAR
HAR - Harmony Gold Mining Company Limited - Results for the first quarter ended 
30 September 2008                                                               
HARMONY GOLD MINING COMPANY LIMITED                                             
Incorporated in the Republic of South Africa                                    
Registration Number 1950/038232/06                                              
("Harmony" or "Company")                                                        
JSE Share code: HAR                                                             
NYSE Share code: HMY                                                            
ISIN Code: ZAE000015228                                                         
Results for the first quarter ended 30 September 2008                           
The quarter at a glance:                                                        
- Total gold production up by 6% and grade increased by 4%                      
- Good signs of operational improvement                                         
- Management restructuring and refocusing                                       
- Good progress with projects, particularly at Morobe JV                        
- Rand/gold price marginally down, but likely to remain robust in medium to     
 long term                                                                      
- Debt levels reduced, despite significant capex                                
- Seven fatalities during quarter                                               
- Cash operating costs (R/kg) up by 9%, as input costs (electricity and labour) 
 increase                                                                       
- Cash operating profit down by 19%                                             
Financial summary                                                               
for the first quarter ended 30 September 2008                                   
(All results exclude Discontinued Operations, unless otherwise stated)          
                                        Quarter       Quarter                   
                                      September          June                   
2008          2008                   
Gold produced            - kg            12 342        11 694                   
                        - oz           396 803       375 970                    
Cash costs               - R/kg         151 827       138 940                   
- $/oz             607           556                    
Cash operating profit    - Rm               808           995                   
                        - US$m             104           128                    
Basic profit/(loss)      - SAc/s            118           (60)                  
- USc/s             15            (8)                   
Headline profit/(loss)   - SAc/s              8            38                   
                        - USc/s              1             5                    
                                                     Quarter                    
Q-on-Q     September                    
                                      variance          2007                    
Gold produced            - kg                6%        13 699                   
                        - oz                6%       440 432                    
Cash costs               - R/kg            (9%)       134 549                   
                        - $/oz            (9%)           590                    
Cash operating profit    - Rm             (19%)           297                   
                        - US$m           (19%)            41                    
Basic profit/(loss)      - SAc/s           297%         (133)                   
                        - USc/s           288%          (19)                    
Headline profit/(loss)   - SAc/s          (79%)          (35)                   
                        - USc/s          (80%)           (5)                    
Harmony`s Annual Report, Notice of Meeting, Sustainable Development Report and  
its Annual Report filed on a Form 20F with the United States` Securities and    
Exchange Commission for the year ended 30 June 2008 are available on our        
website at www.harmony.co.za.                                                   
Chief executive officer`s review                                                
Overview                                                                        
We made pleasing progress during the quarter under review towards fulfilment of 
our vision to create a sustainable company that generates earnings to fund      
dividends and growth.                                                           
Increased volumes, improved average grade and consequent higher gold production 
demonstrate clearly that the measures we have applied in implementing our       
`back-to-basics` philosophy during our stabilisation phase of our strategy,     
have delivered the stability we need to implement the next phase of our         
strategy, being organic growth.                                                 
There is a very notable turn for the better in the morale of the greater        
Harmony team. Our people are getting excited about the business again and their 
particular roles in it, which is evidenced by our productivity figures.         
Safety improvement remains a critical priority requiring immediate and decisive 
action. Despite our best efforts to ensure a safer workplace, seven             
work-related fatalities occurred during the quarter, compared with four in the  
previous quarter.                                                               
Safety                                                                          
We are deeply saddened by the deaths of seven of our colleagues and I extend my 
heartfelt condolences to their families, friends and workmates.                 
Those who died were: Elandsrand employees Diago Vasco Bila, a winch driver, and 
Mpeo Moeti and Magatsela Mangaliso, both rock drill operators; Tshepong         
employees Nokanyo Gcasamba, a locomotive operator, and Zinikele Yam, a utility  
vehicle driver; Target employee Mokutu Amos Qondile, a load-haul-dumper         
operator and Unisel employee Kali Makase, a rock drill operator.                
Although our Lost Time Injury Frequency Rate (LTIFR) for the quarter improved   
against that for the 2008 financial year, our Reportable Injury Frequency Rate  
(RIFR) and Fatality Injury Frequency Rate (FIFR) for the quarter both           
deteriorated.                                                                   
Gold market                                                                     
There was only a 3% drop in our average gold price received of R217 295/kg      
($869/oz), compared with R224 036/kg ($897/oz) in June 2008, despite the        
turmoil in global financial markets during the quarter. Notwithstanding         
evidence to suggest that gold still fulfils its historic role as the investment 
of last resort for many nervous investors in these circumstances, it seems      
reasonable to assume that gold price volatility will continue until the         
financial storm starts to abate.                                                
We remain bullish about the fundamentals for the metal in the medium and longer 
term. However, with economic deposits in mining locations harder to come by and 
exploration and development budgets under extreme pressure, supplies of new     
gold into the market are likely to continue to shrink.                          
Operating performance                                                           
Overall we have seen some good improvements. Total gold production for the      
quarter from continuing operations increased by 6% to 12 342 kg, reflecting a   
1% increase in volumes to 4.6 million tonnes and a 4% improvement in the        
average recovered grade to 2.68 g/t.                                            
Total underground gold production was 8% higher at 11 191 kg due to a 2%        
increase in tonnes milled from underground to 2.3 million tonnes and a 5%       
improvement in the average underground recovered grade to 4.79 g/t.             
Tonnes milled for our surface operations remained fairly constant at            
2.2 million tonnes for the quarter. The average grade was 12% lower from 0.58   
g/t in June 2008 to 0.51 g/t, resulting in an 11% decline in surface gold       
production to 1 151 kg. The decrease in grade was mainly due to a reduction in  
the kilograms recovered from plant clean-ups.                                   
Productivity has improved, but we need to remain focused on attaining ore       
reserve management excellence and quality mining throughout our operations to   
ensure that we meet our productivity targets.                                   
It is no coincidence that operation-by-operation comparisons show that our best 
safety performers, notably Masimong, Bambanani and the Virginia operations, are 
emerging also as our best producers and that our worst safety performers, being 
Elandsrand and Target are under-performing in terms of production.              
The lesson is obvious and we have not been slow to act. Elandsrand is now in    
`intensive care`. Chief Operating Officer, Alwyn Pretorius, has been            
re-assigned to lead Elandsrand`s management in a safety and production          
turnaround strategy and until this assignment is completed, Bob Atkinson,       
Executive: Projects, will act as Chief Operating Officer of the remaining       
operations in the North Region. At Target, new management has been appointed    
from within and outside the Company to ensure that we turn the value of the     
orebody to account.                                                             
Financial performance                                                           
An increase in operating costs as well as a decrease in the gold price received 
for the quarter under review, resulted in a decrease in cash operating profit   
of R187.1 million when compared with the June 2008 quarter. Operating costs     
increased by R249.2 million, 15% higher when compared with the June 2008        
quarter, mainly due to higher power costs (specifically Eskom`s 20% general     
tariff increase effective from the beginning of July and higher winter          
tariffs), annual wage increases effective from July 2008 and stores price hikes 
of 16%. Quarter on quarter our power bill rose by 43% and our labour bill by    
13% (which is inclusive of the holiday leave allowance). Power as a percentage  
of our total costs increased from 10% to 13%.                                   
Capital expenditure for the quarter decreased by 25% from R1.3 billion in the   
June 2008 quarter to R993 million in the September 2008 quarter. The decrease   
was as a result of Newcrest Mining Limited funding the remaining capex          
requirements of the Hidden Valley project as prescribed by Stage 2 of the joint 
venture, as from August 2008 when the joint venture came into effect.           
Cash costs and capital expenditure were both influenced by our decision to lift 
the ceiling on abnormal expenditure items from R50 000 to R250 000 and to       
allocate these to operating costs going forward, rather than to capital         
expenditure as in the past. This is another step, amongst many, we have taken   
in our drive to decentralise decision-making downward to general manager level. 
Power                                                                           
During the quarter, we engaged very constructively with Eskom and have secured  
the baseline power allocations for all of our current operations and            
undertakings to supply the additional power required for our Elandsrand,        
Phakisa and Doornkop projects. This will accommodate the build-up requirements  
on these operations as the projects come on line and are commissioned. We       
remain committed to partaking in as much power-saving efforts that are          
required.                                                                       
Transactions                                                                    
Cooke Assets                                                                    
We announced on 19 December 2007 that our wholly-owned subsidiary, Randfontein  
Estates Limited (Randfontein), had entered into agreements with Pamodzi         
Resources Fund 1, LL.P (PRF), in terms of which certain uranium and gold assets 
of Randfontein (Cooke Assets) would be sold into Rand Uranium (Proprietary)     
Limited (Rand Uranium), for a purchase consideration of US$420 million.         
The delay in meeting the conditions precedent, Harmony benefiting from the cash 
flow during this period, the turmoil in the global financial markets and other  
market-related adjustments resulted in a renegotiation of the purchase          
consideration. A revised purchase consideration of US$348 million for the Cooke 
Assets has been agreed. Harmony will receive a total purchase consideration of  
US$209 million for 60% of the issued share capital of Rand Uranium.             
The majority of the conditions precedent, including the approvals from the      
Minister of Minerals and Energy and the issuance of a certificate of            
registration by the National Nuclear Regulator, have been fulfilled. It is      
anticipated that the remaining conditions precedent will be fulfilled on or     
before 20 November 2008 and the transaction will become effective on 21         
November 2008.                                                                  
In exchange for 60% of the issued share capital of Rand Uranium, Harmony will   
receive US$40 million on the effective date of the transaction, a further       
US$157 million, plus interest thereon at 5% per annum, on 22 April 2009 and the 
balance of the purchase consideration of approximately US$12 million as soon as 
the second stage of the transaction (which relates to its Old Randfontein       
assets), is finalised. This is anticipated to be on or shortly after 22 April   
2009. PRF`s investors, affiliates of First Reserve and AMCI Capital, have       
provided Harmony with a guarantee in respect of the payment of the above        
amounts. In addition, PRF will pledge its shares in Rand Uranium to Harmony as  
security for PRF`s obligation to pay the purchase consideration to Harmony.     
Since entering into the agreements with PRF, Rand Uranium has been formed as a  
stand-alone company, information on the building of a potential uranium plant   
has been compiled and consultants have been involved with feasibility,          
metallurgical and environmental studies in respect of the extraction of         
uranium. Management capacity under the leadership of John Munro has been built  
up. Harmony will supply certain corporate services for a limited period and an  
agreement has been entered into for milling of the underground ore.             
We believe that the dual commodity (gold and uranium) mix should combine to     
make the Cooke Assets a viable, low-cost operation and look forward to a        
mutually beneficial partnership with PRF in developing the significant uranium  
resource base as a platform for future growth opportunities within the West     
Rand.                                                                           
Mt Magnet                                                                       
We have resumed our efforts to sell our Mount Magnet operation in Australia,    
following our termination of the sales agreement with Monarch Gold in August    
2008. The operation is on care and maintenance, which we estimate will cost us  
some A$5 million per year.                                                      
Exploration                                                                     
Exploration in Papua New Guinea, under the auspices of our Morobe Joint Venture 
with Newcrest Mining Limited, focused primarily on the Wafi-Golpu Nambonga      
North brownfields prospect and the Morobe Consolidated Tenements Upper Bulolo   
brownfields prospect during the quarter. In respect of the former, work is on   
schedule to achieve a mineral resource estimate by the end of calendar 2008. At 
the latter, a significant and exciting new development, trenching is in         
progress and diamond drilling is scheduled to begin in December 2008.           
Social and Labour Plans                                                         
We continue to make substantive progress in the implementation of our Social    
and Labour Plans. While this is essential to ensure retention of our licence to 
operate, it is also an enormously satisfying fulfilment of our commitment to be 
relevant to communities in which we do business.                                
During the quarter, we have contributed, with various other interested and      
affected parties, towards three major land development projects. These are:     
the Secunda West project, which will comprise 12 313 residential units          
covering all income levels, schools, community facilities, shops, sports        
amenities and green spaces; the Middelvlei/Droogeheuwel (Mohlakeng Ext 11)      
project, which will include all housing options, schools, social amenities and  
provisions for business development and the Phakisa Estate near Welkom, which   
envisages the establishment of a township comprising 6 500 residential units.   
Looking ahead                                                                   
While we remain mindful of the need to continue to apply the core principles of 
our `back to basics` philosophy initiated in August 2007 - most diligently in   
those of our operations that have been slower to turn around than we would have 
hoped - I believe we are well embarked on the `organic growth` phase of our     
three-phase growth plan to June 2012.                                           
We now have sufficient latitude to focus more closely on delivery of our        
various organic growth projects in South Africa and of the Hidden Valley        
project in Papua New Guinea, also to clear our debt burden and strengthen our   
balance sheet, positioning to look towards the third `organic-acquisition`      
phase of our strategy from June 2009.                                           
Note of thanks                                                                  
I wish to thank each Harmony employee for her/his contribution in building a    
sustainable company.                                                            
Chief Executive Officer                                                         
Graham Briggs                                                                   
FINANCIAL REVIEW FOR THE FIRST QUARTER ENDED 30 SEPTEMBER 2008 (RAND)           
CONDENSED CONSOLIDATED INCOME STATEMENT (Unaudited) (Rand)                      
                                                         Quarter ended(1)       
September      
                                                       Notes          2008      
                                                                 R million      
Continuing operations                                                           
Revenue                                                               2 682     
Cost of sales                                               2       (2 225)     
Production cost                                                     (1 874)     
Amortisation and depreciation                                         (308)     
Impairment of assets                                                      -     
Employment termination and restructuring costs                         (12)     
Other items                                                            (31)     
Gross profit                                                            457     
Corporate, administration and other expenditure                        (97)     
Exploration expenditure                                                (39)     
Other income/(expenses) - net                               3           505     
Operating profit/(loss)                                                 826     
Profit/(loss) from associates                                             1     
Profit on sale of investment in associate                                 1     
Impairment of investment in associate                       6         (112)     
Loss on sale of investment in joint venture                               -     
Mark-to-market of listed investments                                      -     
Loss on sale of listed investments                                        -     
Impairment of investments                                                 -     
Investment income                                                        77     
Finance cost                                                           (85)     
Profit/(loss) before taxation                                           708     
Taxation                                                              (234)     
Net profit/(loss) from continuing operations                            474     
Discontinued operations                                     4                   
(Loss)/profit from discontinued operations                             (72)     
Net profit/(loss)                                                       402     
Earnings/(loss) per ordinary share (cents)                  5                   
- Earnings/(loss) from continuing operations                            118     
- (Loss)/earnings from discontinued operations                         (18)     
Total earnings/(loss) per ordinary share (cents)                        100     
Diluted earnings/(loss) per ordinary share (cents)          5                   
- Earnings/(loss) from continuing operations                            117     
- (Loss)/earnings from discontinued operations                         (18)     
Total diluted earnings/(loss) per ordinary share (cents)                 99     
                                                         Quarter ended(1)       
June     September      
                                                        2008          2007      
                                                   R million     R million      
Continuing operations                                                           
Revenue                                                 2 620         2 140     
Cost of sales                                         (2 284)       (2 063)     
Production cost                                       (1 625)       (1 843)     
Amortisation and depreciation                           (222)         (201)     
Impairment of assets                                    (316)             -     
Employment termination and restructuring costs           (50)             -     
Other items                                              (71)          (19)     
Gross profit                                              336            77     
Corporate, administration and other                                             
expenditure                                              (49)          (72)     
Exploration expenditure                                  (62)          (44)     
Other income/(expenses) - net                             (9)          (15)     
Operating profit/(loss)                                   216          (54)     
Profit/(loss) from associates                            (68)             -     
Profit on sale of investment in associate                   -             -     
Impairment of investment in associate                    (95)             -     
Loss on sale of investment in joint venture               (2)             -     
Mark-to-market of listed investments                        -            33     
Loss on sale of listed investments                          -         (459)     
Impairment of investments                                 (1)             -     
Investment income                                          86            67     
Finance cost                                            (131)         (121)     
Profit/(loss) before taxation                               5         (534)     
Taxation                                                (246)             2     
Net profit/(loss) from continuing operations            (241)         (532)     
Discontinued operations                                                         
(Loss)/profit from discontinued operations                170          (34)     
Net profit/(loss)                                        (71)         (566)     
Earnings/(loss) per ordinary share (cents)                                      
- Earnings/(loss) from continuing operations             (60)         (133)     
- (Loss)/earnings from discontinued                                             
operations                                                 42           (9)     
Total earnings/(loss) per ordinary share (cents)         (18)         (142)     
Diluted earnings/(loss) per ordinary share (cents)                              
- Earnings/(loss) from continuing operations             (60)         (133)     
- (Loss)/earnings from discontinued operations             42           (9)     
Total diluted earnings/(loss) per ordinary share (cents)  (18)         (142)    
(1) There are no year ended figures, this being the first quarter of the        
financial year.                                                                 
The accompanying notes are an integral part of these condensed consolidated     
financials statements.                                                          
CONDENSED CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME (Unaudited)      
(Rand)                                                                          
                                               Quarter ended                    
September              June     September      
                                      2008              2008          2007      
                                 R million         R million     R million      
Net profit/(loss) for the period        402              (71)         (566)     
Attributable to:                                                                
Owners of the parent                    402              (71)         (566)     
Non-controlling interest                  -                 -             -     
Other comprehensive income/(loss)                                               
for the period, net of income tax        88              (73)           360     
Foreign exchange translation                                                    
profit and loss                         119              (86)            27     
Mark-to-market of                                                               
available-for-sale investments         (31)                13           333     
Total comprehensive income/(loss)                                               
for the period                          490             (144)         (206)     
Attributable to:                                                                
Owners of the parent                    490             (144)         (206)     
Non-controlling interest                  -                 -             -     
CONDENSED CONSOLIDATED BALANCE SHEET (Rand)                                     
                                                        At              At      
September            June      
                                                      2008            2008      
                                     Notes     (Unaudited)       (Audited)      
                                                 R million       R million      
ASSETS                                                                          
Non-current assets                                                              
Property, plant and equipment                        27 020          27 556     
Intangible assets                                     2 213           2 209     
Restricted cash                                         181              78     
Restricted investments                                1 512           1 465     
Investments in financial assets                          48              67     
Investment in associate                   6              34             145     
Trade and other receivables                             127             137     
                                                    31 135          31 657      
Current assets                                                                  
Inventories                                             752             693     
Trade and other receivables                             875             875     
Income and mining taxes                                  54              82     
Cash and cash equivalents                 8           1 186             413     
                                                     2 867           2 063      
Non-current assets classified as held                                           
for sale                                  4           1 408           1 537     
                                                     4 275           3 600      
Total assets                                         35 410          35 257     
EQUITY AND LIABILITIES                                                          
Share capital and reserves                                                      
Share capital                                        25 904          25 895     
Other reserves                                          777             676     
Accumulated loss                                    (1 430)         (1 832)     
                                                    25 251          24 739      
Non-current liabilities                                                         
Borrowings                                7             176             242     
Deferred income tax                                   3 008           2 990     
Provisions for other liabilities and                                            
charges                                               1 297           1 273     
                                                     4 481           4 505      
Current liabilities                                                             
Trade and other payables                              1 528           1 372     
Provisions and accrued liabilities                      295             287     
Borrowings                                7           3 363           3 857     
5 186           5 516      
Liabilities directly associated with                                            
non-current assets classified as held                                           
for sale                                  4             492             497     
5 678           6 013      
Total equity and liabilities                         35 410          35 257     
Number of ordinary shares in issue              403 424 148     403 253 756     
Net asset value per share (cents)                     6 259           6 135     
The accompanying notes are an integral part of these condensed consolidated     
financial statements.                                                           
CONDENSED CONSOLIDATED STATEMENT OF CHANGE IN EQUITY (Unaudited) (Rand)         
                                                Issued share         Other      
capital      reserves      
                                                   R million     R million      
Balance - 30 June 2008                                 25 895           676     
Issue of share capital                                      9             -     
Deferred share-based payments                               -            13     
Comprehensive income for the period                         -            88     
Balance at 30 September 2008                           25 904           777     
Balance - 30 June 2007                                 25 636         (349)     
Issue of share capital                                     16             -     
Deferred share-based payments                               -             9     
Comprehensive income/(loss) for the period                  -           360     
Balance at 30 September 2007                           25 652            20     
Accumulated                    
                                                        loss         Total      
                                                   R million     R million      
Balance - 30 June 2008                                (1 832)        24 739     
Issue of share capital                                      -             9     
Deferred share-based payments                               -            13     
Comprehensive income for the period                       402           490     
Balance at 30 September 2008                          (1 430)        25 251     
Balance - 30 June 2007                                (1 581)        23 706     
Issue of share capital                                      -            16     
Deferred share-based payments                               -             9     
Comprehensive income/(loss) for the period              (566)         (206)     
Balance at 30 September 2007                          (2 147)        23 525     
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (Unaudited) (Rand)                   
                                                           Quarter ended        
                                                                 September      
Note          2008      
                                                                 R million      
Cash flow from operating activities                                             
Cash generated by operations                                            670     
Interest and dividends received                                          82     
Interest paid                                                         (112)     
Income and mining taxes paid                                            (1)     
Cash generated by operating activities                                  639     
Cash flow from investing activities                                             
(Increase)/decrease in restricted cash                                (103)     
Net proceeds on disposal of listed investments                            -     
Net additions to property, plant and equipment                          798     
Other investing activities                                               10     
Cash generated/(utilised) by investing activities                       705     
Cash flow from financing activities                                             
Long-term loans raised                                                    -     
Long-term loans repaid                                                (588)     
Ordinary shares issued - net of expenses                                  8     
Dividends paid                                                            -     
Cash (utilised)/generated by financing activities                     (580)     
Foreign currency translation adjustments                                  7     
Net increase in cash and equivalents                                    770     
Cash and equivalents - beginning of period                              415     
Cash and equivalents - end of period                        8         1 186     
Quarter ended         
                                                        June     September      
                                                        2008          2007      
                                                   R million     R million      
Cash flow from operating activities                                             
Cash generated by operations                            1 506            54     
Interest and dividends received                            97            69     
Interest paid                                           (117)          (59)     
Income and mining taxes paid                             (67)          (12)     
Cash generated by operating activities                  1 419            52     
Cash flow from investing activities                                             
(Increase)/decrease in restricted cash                      2           274     
Net proceeds on disposal of listed investments              -         1 310     
Net additions to property, plant and equipment        (1 267)         (833)     
Other investing activities                              (190)          (51)     
Cash generated/(utilised) by investing                                          
activities                                            (1 455)           700     
Cash flow from financing activities                                             
Long-term loans raised                                    136         2 088     
Long-term loans repaid                                   (12)       (1 802)     
Ordinary shares issued - net of expenses                   23            19     
Dividends paid                                            (6)             -     
Cash (utilised)/generated by financing                                          
activities                                                141           305     
Foreign currency translation adjustments                 (38)            20     
Net increase in cash and equivalents                       67         1 077     
Cash and equivalents - beginning of period                348           494     
Cash and equivalents - end of period                      415         1 571     
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS                        
FOR THE PERIOD ENDED 30 SEPTEMBER 2008                                          
1.   Accounting policies                                                        
(a)   Basis of accounting                                                       
The condensed consolidated interim financial statements for the period ended 30 
September 2008 have been prepared using accounting policies that comply with    
International Financial Reporting Standards ("IFRS"), which are consistent with 
the accounting policies used in the audited annual financial statements for the 
year ended 30 June 2008. These condensed consolidated interim financial         
statements are prepared in accordance with IAS 34, Interim Financial Reporting, 
and should be read in conjunction with the financial statements for the year    
ended 30 June 2008.                                                             
2.   Cost of sales                                                              
                                             Quarter ended                      
                               September              June       September      
                                    2008              2008            2007      
(Unaudited)       (Unaudited)     (Unaudited)      
                               R million         R million       R million      
Production costs                    1 874             1 625           1 843     
Amortisation and depreciation         308               222             201     
Impairment of assets                    -               316               -     
Provision for rehabilitation                                                    
costs                                   6                12               -     
Care and maintenance cost of                                                    
restructured shafts                    12                29               9     
Employment termination and                                                      
restructuring costs                    12                50               -     
Share-based compensation               13                19              10     
Provision for post-retirement                                                   
benefits                                -                11               -     
Total cost of sales                 2 225             2 284           2 063     
3.   Other income/(expenses) - net                                              
Included in other income is R523 million profit on sale of 30.01% of Harmony`s  
Papau New Guinea gold and copper assets to Newcrest Mining Limited, as          
previously announced.                                                           
4.   Non-current assets held for sale and Discontinued operations               
The assets and liabilities related to Mount Magnet (operations in Australia)    
have been presented as held for sale following approval of the Group`s          
management and Board of Directors on 20 April 2007. During fiscal 2008, we      
entered into an agreement with Monarch Gold Mining Company ("Monarch") for the  
sale of these operations. However, during July 2008 we were advised that        
Monarch had placed itself in volantary administration and on 1 August 2008 the  
Administrator indicated that Monarch would not proceed with the proposed        
purchase and consequently the purchase agreement has been terminated.           
Management is still intent on the disposal of Mount Magnet despite the asset    
being classified as held for sale for more than 12 months.                      
The assets and liabilities relating to the Cooke 1, Cooke 2, Cooke 3, Cooke     
plant and relating surface operations (operations in the Gauteng area) have     
been presented as held for sale following the approval of the Group`s           
management on 16 October 2007. These operations were also deemed to be          
discontinued operations.                                                        
Included in (loss)/profit from discontnued operations is an impairment charge   
for the Mount Magnet assets for R152 million, relating to the decrease in the   
fair value less costs to sell at 30 September 2008.                             
5.   Earnings/(loss) per ordinary share                                         
Earnings/(loss) per ordinary share is calculated on the weighted average number 
of ordinary shares in issue for the quarter ended 30 September 2008: 403.1      
million (30 June 2008: 402.8 million, 30 September 2007: 399.5 million).        
The fully diluted earnings/(loss) per ordinary share is calculated on weighted  
average number of diluted ordinary shares in issue for the quarter ended 30     
September 2008: 404.6 million (30 June 2008: 405.2 million, 30 September 2007:  
402.8 million).                                                                 
                                 September            June       September      
                                      2008            2008            2007      
(Unaudited)     (Unaudited)     (Unaudited)      
                                 R million       R million       R million      
Total earnings/(loss) per                                                       
ordinary share (cents):                                                         
Basic earnings/(loss)                   100            (18)           (142)     
Fully diluted earnings/(loss)            99            (18)           (142)     
Headline earnings/(loss)                 24              65            (41)     
Reconciliation of headline                                                      
earnings/(loss):                                                                
Continuing operations                                                           
Net profit/(loss)                       474           (241)           (532)     
Adjusted for (net of tax):                                                      
(Profit)/loss on sale of                                                        
property, plant and equipment         (553)              32             (2)     
Loss on sale of listed                                                          
investment                                -               -             392     
Impairment of investments                 -               1               -     
Loss on sale of joint venture             -               2               -     
Profit on sale of associate             (1)               -               -     
Impairment of investment in                                                     
associates                              112              95               -     
Impairment of property, plant                                                   
and equipment                             -             159               -     
Impairment of intangible assets           -             105               -     
Headline profit/(loss)                   32             153           (142)     
Discontinued operations                                                         
Net (loss)/profit                      (72)             170            (34)     
Adjusted for (net of tax):                                                      
Profit on sale of property,                                                     
plant and equipment                    (14)            (90)               -     
Impairment of property, plant                                                   
and equipment                           152              30               7     
Headline profit/(loss)                   66             110            (27)     
Total headline profit/(loss)             98             263           (169)     
6.   Investment in associate                                                    
On 27 February 2008, Pamodzi Gold Limited bought the Orkney operations from the 
Harmony Group for a consideration of 30 million Pamodzi Gold Limited shares.    
This resulted in Harmony Gold Mining Company owning 32.4% of Pamodzi Gold       
Limited. At 30 September 2008, management tested for impairment of the          
investment in associate. An additional amount of R112 million (June 2008: R91   
million) was impaired and accounted for in the income statement. The book value 
at 30 September 2008, after taking impairment and loss from associate into      
account, was R34 million (June 2008: R145 million).                             
7.   Borrowings                                                                 
September          June      
                                                        2008          2008      
                                                 (Unaudited)     (Audited)      
                                                   R million     R million      
Unsecured borrowings                                                            
Convertible unsecured fixed rate bonds                  1 649         1 626     
Africa Vanguard Resources (Proprietary) Limited            32            32     
                                                       1 681         1 658      
Less: Short-term portion                              (1 649)       (1 626)     
Total unsecured long-term borrowings                       32            32     
Secured borrowings                                                              
Westpac Bank Limited*                                     183           258     
Africa Vanguard Resources (Doornkop) (Pty)                                      
Limited (Nedbank Limited)                                 201           194     
Nedbank Limited                                         1 482         2 000     
Less: Unamortised transaction costs                       (8)          (11)     
1 858         2 441      
Less: Short-term portion                              (1 714)       (2 231)     
Total secured long-term borrowings                        144           210     
Total long-term borrowings                                176           242     
Total current portion of borrowings                     3 363         3 857     
Total long-term borrowings                              3 539         4 099     
* The future minimum lease payments to Westpac Bank Limited are as follows:     
                                                   September          June      
2008          2008      
                                                 (Unaudited)     (Audited)      
                                                   R million     R million      
Due within one year                                        46            57     
Due between one and five years                            156           228     
                                                         202           285      
Future finance charges                                   (19)          (27)     
Total future minimum lease payments                       183           258     
8.   Cash and cash equivalents                                                  
    Comprises:                                                                  
                                                   September          June      
                                                        2008          2008      
(Unaudited)     (Audited)      
                                                   R million     R million      
Continuing operations                                   1 186           413     
Discontinued operations                                     -             2     
Total cash and cash equivalents                         1 186           415     
9.   Commitments and contingencies                                              
                                                   September          June      
                                                        2008          2008      
(Unaudited)     (Audited)      
                                                   R million     R million      
Capital expenditure commitments                                                 
Contracts for capital expenditure                         512         1 164     
Authorised by the directors but not contracted for      2 467         1 720     
                                                       2 979         2 884      
This expenditure will be financed from existing                                 
resources and where appropriate, borrowings.                                    
Contingent liabilities                                                          
Guarantees and suretyships                                 18            18     
Environmental guarantees                                  303           171     
                                                         321           189      
Contingent liability                                                            
On 18 April 2008, Harmony Gold Mining Company Limited was made aware that it    
has been named or may be named as a defendant in a lawsuit filed in the U.S.    
District Court in the Southern District of New York on behalf of certain        
purchasers and sellers of Harmony`s American Depositary Receipts ("ADRs").      
Harmony has retained legal counsel, who will advise Harmony on further          
developments in the U.S.                                                        
10. Subsequent events                                                           
Sale of Randfontein`s Cooke Assets                                              
The majority of the conditions percent, have been fulfilled. It is anticipated  
that the remaining conditions precedent will be fulfilled on or before 20       
November 2008 and the transaction will become effective on 21 November 2008.    
A revised purchase consideration of US$348 million for the Cooke Assets has     
been agreed. Harmony will receive a total purchase consideration of US$209      
million for 60% of the issued share capital of Rand Uranium.                    
In exchange for 60% of the issued share capital of Rand Uranium, Harmony will   
receive US$40 million on the effective date of the transaction, a further       
US$157 million, plus interest thereon at 5% per annum, by 22 April 2009 and the 
balance of the purchase consideration of approximately US$12 million as soon as 
the second stage of the transaction, which relates to its Old Randfontein       
assets, is finalised , which is anticipated to be on or shortly after 22 April  
2009. Pamodzi Resources Fund 1, LLP`s ("PRF") investors, affiliates of First    
Reserve and AMCI Capital, have provided Harmony with a guarantee in respect of  
the payment of the above amounts. In addition, PRF will pledge its shares in    
Rand Uranium to Harmony as security for RPF`s obligation to pay the purchase    
consideration to Harmony.                                                       
11. Segment report                                                              
The Group early adopted IFRS 8 - Operating Segments, in the 2008 financial      
year. The standard requires a "management approach", under which segment        
information is presented on the same basis as that used for internal reporting  
to the chief operating decision-maker ("CODM").                                 
The Group has only one product, being gold. In order to determine operating and 
reportable segments, management reviewed various factors, including             
geographical location as well as managerial structure. It was determined that   
an operating segment consists of a shaft or a group of shafts managed by a      
single general manager and management team.                                     
After applying the quantitative thresholds from the standard, the reportable    
segments were determined as:                                                    
Tshepong, Phakisa, Bambanani, Masimong, Target, Doornkop, Elandskraal, Evander  
operations, Virginia operations, Cooke operations (held for sale and            
discontinued) and Papua New Guinea. All other operating segments have been      
grouped together under Other - underground or Other - surface, under their      
classification as either continuing or discontinued.                            
The comparative segment reports have been restated for these changes.           
When assessing profitability, the CODM considers the revenue and production     
costs of each segment. The net of these amounts is the cash operating or loss.  
Therefore, cash operating profit has been disclosed in the segment report as    
the measure of profit or loss.                                                  
The CODM does not consider depreciation or impairment and therefore these       
amounts have not been disclosed in the segment report.                          
SEGMENT REPORT FOR QUARTER ENDED 30 SEPTEMBER 2008  (Rand/Metric)               
                                                                      Cash      
Production         operating      
Continuing operations              Revenue           cost     profit/(loss)     
South Africa                     R million      R million         R million     
Underground                                                                     
Tshepong                               410            250               160     
Phakisa                                 23             18                 5     
Bambanani                              256            171                85     
Doornkop                                55             59               (4)     
Elandsrand                             332            245                87     
Target                                 127            118                 9     
Masimong                               282            169               113     
Evander operations                     346            238               108     
Virginia operations                    485            377               108     
Other operations                       114             92                22     
Surface                                                                         
Other operations                       252            137               115     
Total South Africa                   2 682          1 874               808     
International                                                                   
Papua New Guinea                         -              -                 -     
Total international                      -              -                 -     
Total continuing operations          2 682          1 874               808     
Discontinued operations                                                         
Cooke operations                       338            248                90     
Other operations                         -              -                 -     
Total discontinued operations          338            248                90     
Total operations                     3 020          2 122               898     
                                          Capital                   Tonnes      
Continuing operations                  expenditure                   milled     
South Africa                             R million     Kilograms      t`000     
Underground                                                                     
Tshepong                                        51         1 904        354     
Phakisa                                        105           109         30     
Bambanani                                       11         1 188        142     
Doornkop                                        83           255        110     
Elandsrand                                      95         1 530        288     
Target                                          61           588        167     
Masimong                                        33         1 272        235     
Evander operations                              50         1 609        306     
Virginia operations                             39         2 198        568     
Other operations                                11           538        137     
Surface                                                                         
Other operations                                54         1 151      2 262     
Total South Africa                             593        12 342      4 599     
International                                                                   
Papua New Guinea                               400             -          -     
Total international                            400             -          -     
Total continuing operations                    993        12 342      4 599     
Discontinued operations                                                         
Cooke operations                                53         1 564        801     
Other operations                                 -             -          -     
Total discontinued operations                   53         1 564        801     
Total operations                             1 046        13 906      5 400     
SEGMENT REPORT FOR QUARTER ENDED 30 SEPTEMBER 2007 (Rand/Metric)                
                                                                      Cash      
                                              Production         operating      
Continuing operations              Revenue           cost     profit/(loss)     
South Africa                     R million      R million         R million     
Underground                                                                     
Tshepong                               366            245               121     
Phakisa                                  -              -                 -     
Bambanani                              203            202                 1     
Doornkop                                71             63                 8     
Elandsrand                             273            241                32     
Target                                 106             91                15     
Masimong                               171            191              (20)     
Evander operations                     351            249               102     
Virginia operations                    341            342               (1)     
Other operations                        93            114              (21)     
Surface                                                                         
Other operations                       165            105                60     
Total South Africa                   2 140          1 843               297     
International                                                                   
Papua New Guinea                         -              -                 -     
Total international                      -              -                 -     
Total continuing operations          2 140          1 843               297     
Discontinued operations                                                         
Cooke operations                       350            236               114     
Other operations                       305            330              (25)     
Total discontinued operations          655            566                89     
Total operations                     2 795          2 409               386     
Capital                   Tonnes      
Continuing operations                  expenditure                   milled     
South Africa                             R million     Kilograms      t`000     
Underground                                                                     
Tshepong                                        52         2 345        386     
Phakisa                                         62             -          -     
Bambanani                                       25         1 275        238     
Doornkop                                        71           454        126     
Elandsrand                                      84         1 753        289     
Target                                          34           688        150     
Masimong                                        30         1 096        241     
Evander operations                              70         2 244        372     
Virginia operations                             42         2 188        574     
Other operations                                16           595        134     
Surface                                                                         
Other operations                                31         1 061      2 047     
Total South Africa                             517        13 699      4 557     
International                                                                   
Papua New Guinea                               161             -          -     
Total international                            161             -          -     
Total continuing operations                    678        13 699      4 557     
Discontinued operations                                                         
Cooke operations                                43         2 240        834     
Other operations                               116         1 996        870     
Total discontinued operations                  159         4 236      1 704     
Total operations                               837        17 935      6 261     
The full set of the results for the first quarter ended 30 September 2008       
is available on our website at www.harmony.co.za                                
Forward-looking statements                                                      
This quarterly report contains forward-looking statements within the meaning of 
the United States Private Securities Litigation Reform Act of 1995 with respect 
to Harmony`s financial condition, results of operations, business strategies,   
operating efficiencies, competitive positions, growth opportunities for         
existing services, plans and objectives of management, markets for stock and    
other matters. Statements in this quarter that are not historical facts are     
"forward-looking statements" for the purpose of the safe harbor provided by     
Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and        
Section 27A of the U.S. Securities Act of 1933, as amended. Forward-looking     
statements are statements that are not historical facts. These statements       
include financial projections and estimates and their underlying assumptions,   
statements regarding plans, objectives and expectations with respect to future  
operations, products and services, and statements regarding future performance. 
Forward-looking statements are generally identified by the words "expect",      
"anticipates", "believes", "intends", "estimates" and similar expressions.      
These statements are only predictions. All forward-looking statements involve a 
number of risks, uncertainties and other factors and we cannot assure you that  
such statements will prove to be correct. Risks, uncertainties and other        
factors could cause actual events or results to differ from those expressed or  
implied by the forward-looking statements.                                      
These forward-looking statements, including, among others, those relating to    
the future business prospects, revenues and income of Harmony, wherever they    
may occur in this quarterly report and the exhibits to this quarterly report,   
are necessarily estimates reflecting the best judgment of the senior management 
of Harmony and involve a number of risks and uncertainties that could cause     
actual results to differ materially from those suggested by the forward-looking 
statements. As a consequence, these forward-looking statements should be        
considered in light of various important factors, including those set forth in  
this quarterly report. Important factors that could cause actual results to     
differ materially from estimates or projections contained in the forward        
looking statements include, without limitation:                                 
- overall economic and business conditions in South Africa and elsewhere;       
- the ability to achieve anticipated efficiencies and other cost savings;       
- increases or decreases in the market price of gold;                           
- the occurrence of hazards associated with underground and surface gold        
mining; the occurrence of labour disruptions;                                  
- availability, terms and deployment of capital;                                
- changes in Government regulation, particularly mining rights and              
 environmental regulations;                                                     
- fluctuations in exchange rates;                                               
- currency devaluations and other macro-economic monetary policies; and         
- socio-economic instability in South Africa and regionally.                    
This report was approved by the Board of Directors and is signed on their behalf
by:                                                                             
G Briggs                    B Abbott                              Virginia      
Chief Executive Officer     Intern Financial Director      31 October 2008      
CONTACT DETAILS                                                                 
HARMONY GOLD MINING COMPANY LIMITED                                             
Corporate Office                                                                
Randfontein Office Park                                                         
PO Box 2                                                                        
Randfontein, 1760                                                               
South Africa                                                                    
Corner Main Reef Road                                                           
and Ward Avenue                                                                 
Randfontein, 1759                                                               
Johannesburg                                                                    
South Africa                                                                    
Telephone: +27 11 411 2000                                                      
Website: http://www.harmony.co.za                                               
Directors                                                                       
P T Motsepe (Chairman)*                                                         
G Briggs (Chief Executive Officer)                                              
F Abbott (Interim Financial Director)                                           
J A Chissano*1                                                                  
F F T De Buck*, Dr C Diarra*+,                                                  
K V Dicks*, Dr D S Lushaba*, C Markus*,                                         
M Motloba*, C M L Savage*, A J Wilkens*                                         
(* non-executive)                                                               
(1 Mocambican)                                                                  
(+ US/Mali Citizen)                                                             
Investor Relations Team                                                         
Esha Brijmohan                                                                  
Investor Relations Officer                                                      
Telephone: +27 11 411 2314                                                      
Fax: +27 11 692 3879                                                            
Mobile: +27 82 922 4584                                                         
E-mail: esha@harmony.co.za                                                      
Marian van der Walt                                                             
Executive: Corporate and Investor Relations                                     
Telephone: +27 11 411 2037                                                      
Fax: +27 86 614 0999                                                            
Mobile: +27 82 888 1242                                                         
E-mail: marian@harmony.co.za                                                    
Company Secretary                                                               
Khanya Maluleke                                                                 
Telephone: +27 11 411 2019                                                      
Fax: +27 11 411 2070                                                            
E-mail: Khanya.maluleke@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                                                              
South Africa                                                                    
Telephone: +27 86 154 6572                                                      
Fax: +27 11 834 4389                                                            
United Kingdom Registrars                                                       
Capita Registrars                                                               
The Registry                                                                    
34 Beckenham Road                                                               
Bechenham                                                                       
Kent BR3 4TU                                                                    
United Kingdom                                                                  
Telephone: +44 870 162 3100                                                     
Fax: +44 208 636 2342                                                           
ADR Depositary                                                                  
The Bank of New York Mellon Inc                                                 
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                                  
Registration Number 1950/038232/06                                              
Incorporated in the Republic of South Africa                                    
ISIN: ZAE000015228                                                              
Date: 31/10/2008 08:00:08 Supplied by www.sharenet.co.za                     
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