HAR - Harmony Gold Mining Company Ltd - Harmony stronger year on year Release Date: 15/08/2011 08:01:01 Code(s): HAR
HAR - Harmony Gold Mining Company Ltd - Harmony stronger year on year
Harmony Gold Mining Company Ltd
Incorporated in the Republic of South Africa
Registration number: 1950/038232/06
JSE Share code: HAR
NYSE Share code: HMY
NASDAQ Share code: HMY
HARMONY STRONGER YEAR ON YEAR
Johannesburg: 15 August 2011: Harmony Gold Mining Company Limited (`Harmony` or
the `Company`) today released its financial results for the quarter and the year
ended 30 June 2011.
Graham Briggs, Harmony`s Chief Executive Officer commented, "The 2011 financial
year was filled with some notable achievements for Harmony. We improved our
safety rates, secured excellent exploration results, continued to build up our
operations and future production potential, with certain operations already
generating free operational cash flow. Hidden Valley in Papua New Guinea (PNG)
is now an operating mine and is Harmony`s first greenfields offshore
development, which was formally opened in September 2010. Within our South
Africa portfolio, Kusasalethu, Doornkop and Phakisa, all of which are in build-
up, along with Tshepong and Masimong have been steady contributors to
production. We have also dealt positively with the challenges encountered at
mines such as Evander, Target and Joel to ensure they are positioned to deliver
on their production targets".
Year on year
The operations in the build-up phase showed an increase in gold production of
22%. Hidden Valley increased its production by 64% to 3 118kg, from 1 903kg
produced in the previous financial year. Doornkop`s production increased by
562kg (29%), Phakisa`s by 391kg (29%) and Kusasalethu`s by 165kg (3%) on a year
on year basis. Underground grade also increased to 4.60g/t.
Headline earnings improved to R957 million, in comparison to R4 million in the
previous year. Harmony recorded a net profit of R617 million (R192m in FY 2010)
for financial year 2011.
Gold production for the year under review decreased by 9% - mainly as a result
of the shaft closures during the 2011 financial year. Year on year cash
operating costs in Rand terms increased by R686 million or 8%, mainly due to
restructuring costs, the inclusion of Target 3 (which started commercial
production in the past quarter), higher electricity costs and higher labour
costs. This resulted in the cash operating cost in R/kg terms increasing by 16%
from R195 162/kg in FY10 to R226 667/kg FY11. Rand per tonne unit costs remained
stable at R469/tonne.
Capital expenditure was spent responsibly and decreased by R317million (10%)
compared to the previous financial year. This is mainly attributed to a
reduction in capital spent on Hidden Valley by 47% or R252 million. In addition,
the capital spent at the South African operations decreased by R65 million (2%),
due to reduced expenditure at Phakisa (R117 million), Doornkop (R50 million) and
Kusasalethu (R50 million).
Harmony has invested a great deal in the expansion of its production base in
South Africa and PNG over the last couple of years. The resource base in PNG now
represents 10% of Harmony`s total gold resources (or 21% of the resource on a
gold equivalent basis #), which is in line with the Company`s long term strategy
of geographic diversification.
Quarter on quarter
Gold production for the June 2011 quarter is 3% higher than the previous
quarter, despite days lost to public holidays. The past quarter saw excellent
improvements in development metres, mainly at the build-up operations. Quarter
on quarter, cash operating costs in R/kg terms were 12% higher, mainly due to
higher electricity and stores costs, as well as the inclusion of Target 3 in our
operating results. Higher stores costs are due to additional maintenance
performed during public holidays. Electricity costs are higher due to a 25%
increase in tariffs as from April 2011 and the inclusion of one month`s winter
Operating profit at R901 million was 5% higher, primarily attributable to the
increase in the average Rand gold price received.
Harmony secures US$300m debt facility
Harmony has strengthened its financial flexibility through obtaining a 4 year
US$300 million revolving credit facility with Nedbank Limited and FirstRand Bank
Limited. This facility is specifically ear-marked for its activities in PNG.
Graham Briggs concluded, "Harmony is positioned to deliver long term value. We
have made good progress in getting the Company where we want it to be -
producing safe and quality ounces. Paying a dividend demonstrates our belief
that Harmony is in a healthy state, and as such are pleased to pay a dividend of
60 cents. This also serves as a sign of gratitude towards our shareholders for
their continued support". He also added, "We remain focused on delivering in
line with market expectations through the course of 2012."
# - Gold equivalent based on US$1150/oz Au, US$2.50/lb Cu, US$13.50/oz Ag at
100% recovery for metals.
For more details contact:
Investor Relations Officer
+27 (0) 82 759 1775 (mobile)
Marian van der Walt
Executive: Corporate and Investor Relations
+27 82 888 1242(mobile)
Randfontein Office Park
P O Box 2
South Africa 1760
T +27 (0)11 411 2000
J.P. Morgan Equities Limited
Date: 15/08/2011 08:01:01 Supplied by www.sharenet.co.za
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