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HARMONY GOLD MINING COMPANY LIMITED - Trading statement for the year ended 30 June 2017

Release Date: 14/08/2017 16:28:00      Code(s): HAR       PDF(s):  
Trading statement for the year ended 30 June 2017

Harmony Gold Mining Company Limited
Registration number 1950/038232/06
Incorporated in the Republic of South Africa
ISIN: ZAE000015228
JSE share code: HAR
(“Harmony” or “the company”)


Trading statement for the year ended 30 June 2017


Johannesburg, Monday, 14 August 2017. In terms of paragraph 3.4(b)
of the Listings Requirements of the JSE Limited (JSE), a company
listed on the JSE is required to publish a trading statement as soon
as they are satisfied that a reasonable degree of certainty exists
that the financial results for the period to be reported upon next
will differ by at least 20% from the financial results for the
previous corresponding period.


Shareholders of Harmony are advised that a reasonable degree of
certainty exists that earnings for the year ended 30 June 2017 will
be lower than for the year ended 30 June 2016 (“the previous
comparable period”), primarily due to:


-   an impairment of approximately R1.7 billion (US$131 million)
    recorded following the annual life-of-mine planning process (added
    back to headline earnings), and
-   a   provision   raised   for   a  possible   silicosis  class action
    settlement of R917 million (US$70 million) pre–tax (post-tax: R762
    million (US$58 million)) (not added back to headline earnings);


which will reduce the net profit of the company, but will not have
an impact on reported cash balances and free cash flow.


Harmony’s  year-on-year  financial  performance  and  cash flow was
strengthened by gains recognised on the gold and currency hedges
(included in headline earnings).


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Headline earnings per share (“HEPS”) are expected to increase to
between 276 and 320 South African cents per share, which is between
25% and 45% higher than the headline earnings of 221 South African
cents per share reported for the previous comparable period.    In US
dollar terms, HEPS are expected to be between 20 and 23 US cents per
share, which is between 35% and 55% higher than the headline earnings
of 15 US cents per share reported for the previous comparable period.


Earnings per share (“EPS”) are expected to decrease to between 65
and 109 South African cents per share, which is between 70% and
50% lower than the 218 South African cents   per share reported for
the previous comparable period, due to the impairment and the
provision for silicosis. In US dollar terms, EPS are expected to
be between 5 and 8 US cents per share, which is between 70% and
50% lower than the earnings of 15 US cents per share reported for
the previous comparable period.


The financial information on which this trading statement has been
based has not been reviewed or reported on by Harmony’s external
auditors.


Harmony will publish its financial results for the year ended 30
June 2017 on Thursday,
17 August 2017.


Further details on the impairment and silicosis provision are as
follow:


Impairment


The life-of-mine plans form the basis for assessing whether any
impairment against the carrying value of an asset is required. These
values are informed by a number of factors, including estimates of
future gold prices and exchange rates and operating and capital cost
estimates.


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Impairments have been recorded on:
  -    Target 1, following the reduction in the life of mine from ten
       years to seven years;
  -    a  lower  recoverable  amount for Kusasalethu  following a
       reduction in declared resources as a result of the decision to
       not develop another decline during FY17, and
  -    additional  capital  expenditure  on improving environmental
       conditions at Tshepong(which now includes Phakisa) .


Silicosis class action provision


Harmony expects to record a provision of R917million (US$70 million)
at 30 June 2017, representing the company’s share of the estimated
cost   of    a    possible  settlement of the  silicosis class action
litigation and related costs. The ultimate outcome of the silicosis
class action litigation remains uncertain, with a possible failure
to reach settlement with the claimants or to obtain the requisite
court approval for a potential settlement. The provision to be
recorded in the financial statements is consequently subject to
adjustment or reversal in the future, depending on the progress of
the working group discussions and stakeholder consultations, and the
ongoing legal proceedings.


In November 2014, a gold mining industry working group was formed
to address issues relating to the compensation and medical care for
occupational lung diseases in the gold mining industry in South
Africa. The working group comprises  Harmony,   African Rainbow
Minerals Limited, Anglo American South Africa Limited, AngloGold
Ashanti  Limited, Gold  Fields   Limited  and Sibanye Gold Limited
(collectively “the working group”).


The working group engaged all stakeholders including government,
organised labour, other mining companies and legal representatives
of claimants who have filed legal suits against the companies. These
engagements have sought a comprehensive solution to address legacy
compensation issues and future legal frameworks that is fair to past
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and current employees and enables companies to continue to be
sustainable over the long term.


As a consequence of the progress of negotiations between the working
group and affected stakeholders, an estimate of the cost to the
companies of a potential settlement of the class action claims and
related costs can be determined. The companies in the working group
continue to defend the legal proceedings filed against them. Harmony
and the other respondents are appealing the ruling which has been
set down for hearing from 19 to 23 March 2018.     The negotiations
with the claimants’ lawyers are confidential and the working group
companies are accordingly not able to provide any details of the
negotiations.


For more details contact:


Lauren Fourie
Investor Relations Manager
+27 (0) 071 607 1498 (mobile)


Or


Marian van der Walt
Executive: Corporate and Investor Relations
+27 (0) 082 888 1242 (mobile)




14 August 2017




Sponsor:


J.P. Morgan Equities South Africa Proprietary Limited.




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