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HARMONY GOLD MINING COMPANY LIMITED - Operational update for the first quarter of FY2019

Release Date: 06/11/2018 07:05:00      Code(s): HAR       PDF(s):  
Operational update for the first quarter of FY2019

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


OPERATIONAL UPDATE
FOR THE FIRST QUARTER OF FY2019

Johannesburg. Tuesday, 6 November 2018. Harmony Gold Mining Company Limited ("Harmony" or "the company") is pleased to provide a quarterly
operational update for the first quarter ended 30 September 2018.

"Hidden Valley and Moab Khotsong have boosted the group's production and free cash flow generation compared to the September 2017 quarter. We 
are confident that we will achieve our annual production and cost guidance as we continue to focus on safety, production and cost management," said 
chief executive officer, Peter Steenkamp.

OPERATIONAL UPDATE

Total gold production in the September 2018 quarter increased by 30% compared to the September 2017 quarter and decreased by 2% when compared 
to the June 2018 quarter.

All-in sustaining unit costs for the group increased quarter on quarter by 8% to R526 747/kg (US$1 166/oz) in the September 2018 quarter.

Hidden Valley

In the September 2018 quarter, Hidden Valley delivered an excellent safety performance – recording no lost time injuries. The mine generated free cash flow
in the first quarter since achieving commercial levels of production in June 2018, compared to a net cash outflow in the previous quarter. The operation
recorded an all-in sustaining unit cost of R506 911/kg (US$1 119/oz). Recovered grade and gold production is expected to improve during the remainder
of the 2019 financial year (FY19) as mining into the deeper and higher grade areas of the ore-body progresses. During the September 2017 comparative
quarter, Hidden Valley recorded lower gold production due to the planned three and a half month plant stoppage and infrastructure upgrade and
maintenance programme which commenced in August 2017 (and successfully completed in November 2017).

South African operations

The South African operations recorded a 19% increase in gold production to 10 388kg (333 981oz) in the September 2018 quarter when compared to the
September 2017 quarter, mainly due to the addition of gold produced by Moab Khotsong (which was acquired in March 2018).

Quarter on quarter, production decreased by 2%. The underground recovered grade at Moab Khotsong is expected to improve during the remainder of
FY19 as mining in the middle mine section progresses. Operating costs during the September 2018 quarter increased due to the seasonal higher winter
electricity tariffs (in July and August) and higher labour costs, including once off leave liability adjustments following the settlement of the wage agreement
on 3 October 2018.

Below is a table setting out Harmony's total operating results quarter on quarter:

                                                                                                                                               Comparative
                                                                       Quarter             Quarter             Q-on-Q           Quarter            Q-on-Q*
                                                                     September                June           Variance         September           Variance
                                                                          2018                2018                  %              2017                  %
Gold produced                          kg                               11 773              11 993                 (2)            9 040                 30
                                       oz                              378 510             385 583                 (2)          290 644                 30
Underground grade                      g/t                                5.68                5.98                 (5)             5.35                  6
Gold price received                    R/kg                            570 545             566 636                  1           571 664                  –
                                       US$/oz                            1 263               1 391                 (9)            1 350                  6
Cash operating costs                   R/kg                            429 774             399 234                 (8)          413 082                 (4)
                                       US$/oz                              951                 981                  3               975                  2
All-in sustaining costs                R/kg                            526 747             486 641                 (8)          488 176                 (8)
                                       US$/oz                            1 166               1 195                  2             1 152                 (1)
Production profit                      R million                         1 678               1 883                (11)            1 397                 20
                                       S$ million                          119                 148                (20)              106                 12
Exchange rate                          R/US$                             14.05               12.64                 11             13.18                  7

*September 2018 quarter and September 2017 quarter comparison

Quarter-on-quarter operating results tables have been included below (R/metric).

The operational update has not been reviewed or audited by the company's external auditors. Detailed financial and operational results are provided on
a six-monthly basis at the end of December and June.

HEDGING UPDATE

The volatility and weakening of the Rand exchange rate against the US dollar during the September 2018 quarter presented an opportunity to
top-up Harmony's hedging programme.

The average Rand/US dollar exchange rate for the September 2018 quarter weakened by 11% to R14.05/US$ compared to the average June 2018
quarter exchange rate of R12.64/US$ (7% weaker compared to the September 2017 quarter exchange rate of R13.18/US$).

The table below shows the open position at 30 September 2018:

                                                   FY 2019                                    FY 2020                           FY2021
                                            Q2          Q3           Q4          Q1           Q2          Q3          Q4            Q1       TOTAL
Rand Gold
Forward Contracts       koz                 61          62           64          62           64          65          64            52         494
                        R'000/kg           616         626          610         621          638         642         657           670         634
Dollar Gold
Forward Contracts       koz                  –          20           18           6            4           –           –             –          48
                        US$/oz               –       1 335        1 338       1 370        1 400           –           –             –       1 392
Total Gold              koz                 61          82           82          68           68          65          64            52         542
Currency Hedges
Rand Dollar
Zero Cost Collars       $m                  93          88           89          50           36           34         30            21         441
                        Floor R/$        14.15       13.78        13.52       14.45        14.59        14.84      15.06         15.31       14.19
                        Cap R/$          14.94       14.41        14.17       15.05        15.19        15.45      15.68         15.94       14.85
Forward Contracts       $m                  75          75           72          57           48           48         48            20         443
                        FEC R/$          13.68       13.70        13.81       14.73        14.99        15.35      15.51         16.11       14.47
Total Rand Dollar       $m                 168         163          161         107           84           82         78            41         884
Dollar Silver
Zero Cost Collars       koz                   –         90           90          90            –            –          –             –         270
                        Floor $/oz            –      17.30        17.30       17.40            –            –          –             –       17.33
                        Cap $/oz              –      18.30        18.30       18.40            –            –          –             –       18.33

Board approved hedging limits:

25% currency (R/US$) over a 24 month period; 20% gold over a 24 month period; 50% silver over a 24 month period.

WAFI-GOLPU UPDATE

Engagement by the Wafi-Golpu Joint Venture (WGJV) with the PNG government on the application for a special mining lease (SML) for the
Wafi-Golpu project continued during the September quarter.

KALGOLD EXPLORATION UPDATE

Harmony is pleased to announce an updated mineral resource estimate for Kalgold incorporating the exploration drill results up to 
30 September 2018.

On 4 June 2018, Harmony announced encouraging drilling results at its Kalgold, open-pit operation in the North-West Province in the release
titled "Robust exploration drill results from Harmony's Kalgold open pit operation to underpin resource growth and expansion studies".

The Kalgold brownfields drill campaign resulted in drilling of 20 872m. Intercepts returned over the course of the programme outlined an
expanded, robust mineralized system with over 2.1 kilometres of strike, extending to in excess of 300m below surface (a full list of drill intercepts
is included with the SAMREC Table 1 report at https//www.harmony.co.za/what-we-do/exploration/kalgold-brownfields).

An updated mineral resource estimate incorporating exploration drill results up to 30 September 2018 was compiled post June 2018. The
final SAMREC compliant, independently audited, mineral resource declaration contains 76.5Mt @ 0.95 g/t Au for 2.34Moz Au, an increase of
1.05Moz (180%) from the 2017 estimate. Infill and scoping drilling continues.

Kalgold mineral resource statement as at 30 September 2018(1):
  
Resource category                                                                                             Mt           Au (g/t)         Au (koz)
Measured                                                                                                    11.3              0.85              310
Indicated                                                                                                   36.4              0.96            1 125
Inferred                                                                                                    28.7              0.98              903
Total                                                                                                       76.5              0.95            2 339

(1) Reported at 0.44 g/t cut-off within an optimised pit shell generated from Whittle 3D.

Mining studies have commenced to test a range of concepts to achieve a step change in the production profile of the operation through higher
mining and throughput rates.

Competent persons declaration

Jaco Boshoff, BSc (Hons), MSc, MBA, Pr. Sci. Nat, MSAIMM, MGSSA, who has 23 years' relevant experience and is registered with the South
African Council for Natural Scientific Professions (SACNASP) and a member of the South African Institute of Mining and Metallurgy (SAIMM).
Mr Boshoff, a full-time employee of Harmony, is the Lead Competent Person and consents to the inclusion in the report of the matters based on
the information in the form and context in which it appears.

Operating results – Quarter on Quarter (Rand/metric)
                                                                                                                                                      South Africa
                                                                                                        Underground production                                                                            Surface production
                                          Three                                                                                                                                                      Central                                                  Total
                                          months       Tshepong        Moab                                                                                                  Total                     plant                                    Total         South      Hidden        Total
                                          ended      operations    Khotsong  Bambanani       Joel    Doornkop    Target 1    Kusasalethu     Masimong       Unisel     Underground    Phoenix    reclamation         Dumps        Kalgold     Surface        Africa    Valley(1)     Harmony
Ore milled                   – t'000      Sep-18            423         276         61        118         197         161            180          166           66           1 648      1 561            981         1 071            418       4 031         5 679         988        6 667
                                          Jun-18            428         257         54        107         180         169            187          164           67           1 613      1 436            971         1 027            400       3 834         5 447       1 008        6 455
Yield                        – g/tonne    Sep-18           5.23        8.44      11.26       3.34        4.45        5.09           6.11         3.82         4.67            5.68      0.127          0.130         0.356           0.76        0.25          1.83        1.40         1.77
                                          Jun-18           5.28        9.85      12.39       3.49        5.19        4.68           6.60         3.59         3.99            5.98      0.132          0.139         0.336           0.83        0.26          1.96        1.52         1.93
Gold produced                – kg         Sep-18          2 214       2 330        687        394         876         819          1 099          634          308           9 361        199            128           381            319       1 027        10 388       1 385       11 773
                                          Jun-18          2 261       2 532        669        373         934         791          1 234          589          267           9 650        189            135           345            331       1 000        10 650       1 343       11 993
Gold sold                    – kg         Sep-18          2 168       2 269        673        393         863         825          1 144          620          302           9 257        193            124           378            333       1 028        10 285       1 388       11 673
                                          Jun-18          2 272       2 494        672        356         922         761          1 168          592          268           9 505        195            139           342            331       1 007        10 512       1 278       11 790
Gold price                   – R/kg       Sep-18        582 719     547 560    582 866    583 364     583 346     581 578        577 753      583 050      583 414         573 527    552 083        580 589       573 000        580 084     572 283       573 403     549 372      570 545
received                                  Jun-18        579 883     534 212    578 737    581 256     577 757     575 995        580 432      579 608      580 127         567 410    533 508        576 281       563 985        576 864     564 014       567 084     555 891      566 636
Gold Revenue                 (R'000)      Sep-18      1 263 335   1 242 414    392 269    229 262     503 428     479 802        660 949      361 491      176 191       5 309 141    106 552         71 993       216 594        193 168     588 307     5 897 448     762 528    6 659 976
                                          Jun-18      1 317 495   1 332 324    388 911    206 927     532 692     438 332        677 945      343 128      155 474       5 393 228    104 034         80 103       192 883        190 942     567 962     5 961 190     244 036    6 205 226
Cash operating               (R'000)      Sep-18      1 022 755     828 112    247 982    247 315     409 993     379 489        620 178      322 107      149 704       4 227 635     89 939         55 369       178 741        173 691     497 740     4 725 375     334 354    5 059 729
cost (net of by-                          Jun-18        960 052     768 919    234 963    234 619     378 687     342 405        531 707      294 964      148 712       3 895 028     83 670         49 918       151 026        159 675     444 289     4 339 317     123 716    4 463 033
product credits)
Inventory                    (R'000)      Sep-18        (21 206)    (32 696)    (7 430)       392     (15 208)      3 336         20 083       (7 589)      (4 206)        (64 524)    (3 217)        (2 199)       (2 219)         5 931      (1 704)      (66 228)    (11 775)     (78 003)
movement                                  Jun-18          2 550     (51 430)     4 940    (10 306)     (6 268)    (18 090)       (34 551)         637        2 012        (110 506)     3 920          1 416          (968)        (2 847)      1 521      (108 985)    (31 687)    (140 672)
Operating costs              (R'000)      Sep-18      1 001 549     795 416    240 552    247 707     394 785     382 825        640 261      314 518      145 498       4 163 111     86 722         53 170       176 522        179 622     496 036     4 659 147     322 579    4 981 726
                                          Jun-18        962 602     717 489    239 903    224 313     372 419     324 315        497 156      295 601      150 724       3 784 522     87 590         51 334       150 058        156 828     445 810     4 230 332      92 029    4 322 361
Production profit            (R'000)      Sep-18        261 786     446 998    151 717    (18 445)    108 643      96 977         20 688       46 973       30 693       1 146 030     19 830         18 823        40 072         13 546      92 271     1 238 301     439 949    1 678 250
                                          Jun-18        354 893     614 835    149 008    (17 386)    160 273     114 017        180 789       47 527        4 750       1 608 706     16 444         28 769        42 825         34 114     122 152     1 730 858     152 007    1 882 865
Capital                      (R'000)      Sep-18        280 731     137 538     14 048     51 701      65 153      81 863         69 726       28 709       11 454         740 923         22          1 416         2 250          7 630      11 318       752 241     342 336    1 094 577
expenditure                               Jun-18        275 667     133 104     16 105     64 592      78 715      78 496         72 627       35 884       11 110         766 300        485          5 888         2 229         14 660      23 262       789 562     257 105    1 046 667
Cash operating               – R/kg       Sep-18        461 949     355 413    360 964    627 703     468 029     463 357        564 311      508 055      486 052         451 622    451 955        432 570       469 136        544 486     484 654       454 888     241 411      429 774
costs                                     Jun-18        424 614     303 680    351 215    629 005     405 446     432 876        430 881      500 788      556 974         403 630    442 698        369 763       437 757        482 402     444 289       407 448     233 868      399 234
Cash operating               – R/tonne    Sep-18          2 418       3 000      4 065      2 096       2 081       2 357          3 445        1 940        2 268           2 565         58             56           167            416         123           832         338          759
costs                                     Jun-18          2 243       2 992      4 351      2 193       2 104       2 026          2 843        1 799        2 220           2 415         58             51           147            399         116           797         356          770
Cash operating               – R/kg       Sep-18        588 747     414 442    381 412    758 924     542 404     563 311        627 756      553 338      523 240         530 772    452 065        443 633       475 042        568 404     495 675       527 302     488 585      522 747
cost and capital(2)                       Jun-18        546 536     356 249    375 288    802 174     489 724     532 113        489 736      561 711      598 584         483 039    445 265        413 378       444 217        526 692     467 551       481 585     393 699      477 426
All-in sustaining            – R/kg       Sep-18        580 236     413 411    396 073    745 913     542 925     555 341        640 421      573 206      539 440         532 929    449 451        432 121       472 942        579 483     498 120       529 424     506 911      526 747
cost                                      Jun-18        525 012     418 590    383 340    776 149     490 703     521 646        488 998      581 252      616 728         494 544    451 667        411 669       445 284        521 339     466 879       489 026     429 519      486 641
Operating free               %            Sep-18             (3)         22         33        (30)          6           4             (4)           3            9               6         16             21            16              4          13             7           9            7
cash flow margin(3)                       Jun-18              6          32         35        (45)         14           4             11            4           (3)             14         19             30            21             10          18            14          (5)          13
   
(1)No production for Hidden Valley was capitalised during the September 2018 quarter. Ore milled for the June 2018 quarter includes
   660 000 tonnes that was capitalised as part of pre-stripping of stages 5 & 6. Gold produced for the June 2018 quarter includes 814 kilograms
   and gold sold 839 kilograms that was capitalised.
(2)Excludes investment capital for Hidden Valley included in the June 2018 quarter of R173 million.
(3)Excludes run of mine costs for Kalgold (Sep-18:R-3.188m, Jun-18:R2.472m) and Hidden Valley (Sep-18:R-16.349m, Jun-18:R-1.733m) as well as
   Hidden Valley's investment capital as per note 2.

CONTACT DETAILS

CORPORATE OFFICE

Randfontein Office Park
PO Box 2, Randfontein, 1760 South Africa
Corner Main Reef Road and Ward Avenue
Randfontein, 1759, South Africa
Telephone: +27 11 411 2000
Website: www.harmony.co.za

DIRECTORS

Dr PT Motsepe* (chairman)
M Msimang*^ (lead independent director)
JM Motloba*^ (deputy chairman)
PW Steenkamp (chief executive officer)
F Abbott (financial director)
JA Chissano*1^ FFT De Buck*^ KV Dicks*^
Dr DSS Lushaba*^ HE Mashego** KT Nondumo*^
VP Pillay*^ MV Sisulu*^ JL Wetton*^ AJ Wilkens*

* Non-executive
** Executive
^ Independent
1 Mozambican

INVESTOR RELATIONS

E-mail: HarmonyIR@harmony.co.za
Telephone: +27 11 411 2314
Website: www.harmony.co.za

COMPANY SECRETARY

Telephone: +27 11 411 2094
E-mail: companysecretariat@harmony.co.za

TRANSFER SECRETARIES

Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
13th Floor, Rennie House, Ameshoff Street, Braamfontein
PO Box 4844, Johannesburg, 2000, South Africa
Telephone: +27 11 713 0800
E-mail: info@linkmarketservices.co.za
Fax: +27 86 674 2450

ADR* DEPOSITARY

Deutsche Bank Trust Company Americas
c/o American Stock Transfer and Trust Company
Peck Slip Station
PO Box 2050, New York, NY 10272-2050
E-mail queries: db@astfinancial.com
Toll free: +1-800-937-5449
Int: +1-718-921-8124
Fax: +1-718-765-8782
*ADR: American Depositary Receipt

SPONSOR

JP Morgan Equities South Africa (Pty) Ltd
1 Fricker Road, corner Hurlingham Road
Illovo, Johannesburg, 2196
Private Bag X9936, Sandton, 2146
Telephone: +27 11 507 0300
Fax: +27 11 507 0503

TRADING SYMBOLS

JSE Limited: HAR
New York Stock Exchange, Inc.: HMY

REGISTRATION NUMBER:

1950/038232/06
Incorporated in the Republic of South Africa

ISIN:

ZAE 000015228


HARMONY'S ANNUAL REPORTS

Harmony's Integrated Annual Report, and its annual
report filed on a Form 20F with the United States' Securities
and Exchange Commission for the financial year ended
30 June 2018 is available on our website
(www.harmony.co.za/invest)

FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements within the meaning of the safe harbor provided
by Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amended
(the "Securities Act"), with respect to our 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.

These forward-looking statements, including, among others, those relating to our future business
prospects, revenues, and the potential benefit of acquisitions (including statements regarding
growth and cost savings) wherever they may occur in this report and the exhibits, are necessarily
estimates reflecting the best judgment of our senior management 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 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, Papua New Guinea, Australia and elsewhere; estimates of
future earnings, and the sensitivity of earnings to gold and other metals prices; estimates of
future gold and other metals production and sales; estimates of future cash costs; estimates
of future cash flows, and the sensitivity of cash flows to the gold and other metals prices;
estimates of provision for silicosis settlement; statements regarding future debt repayments;
estimates of future capital expenditures; the success of our business strategy, development
activities and other initiatives; future financial position, plans, strategies, objectives, capital
expenditures, projected costs and anticipated cost savings and financing plans; estimates of
reserves statements regarding future exploration results and the replacement of reserves; the
ability to achieve anticipated efficiencies and other cost savings in connection with past and
future acquisitions, as well as at existing operations; fluctuations in the market price of gold; the
occurrence of hazards associated with underground and surface gold mining; the occurrence
of labor disruptions; power cost increases as well as power stoppages, fluctuations and usage
constraints; supply chain shortages and increases in the prices of production imports and the
availability, terms and deployment of capital; changes in government regulation and the political
environment, particularly tax, mining rights, environmental regulation and business ownership
including any interpretation thereof; fluctuations in exchange rates and currency devaluations
and other macroeconomic monetary policies; the adequacy of the Group's insurance coverage;
and socio-economic or political instability in South Africa, Papua New Guinea, Australia and
other countries in which we operate.

The foregoing factors and others described under "Risk Factors" should not be construed as
exhaustive.

For a more detailed discussion of such risks and other factors (such as availability of credit
or other sources of financing), see the company's latest Form 20-F which is on file with the
Securities and Exchange Commission, as well as the company's other Securities and Exchange
Commission filings. The company undertakes no obligation to update publicly or release any
revisions to these forward-looking statements to reflect events or circumstances after the date
of this report or to reflect the occurrence of unanticipated events, except as required by law. All
subsequent written or oral forward-looking statements attributable to Harmony or any person
acting on its behalf are qualified by the cautionary statements herein.


www.harmony.co.za

Johannesburg
6 November 2018

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