Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — Q3 FY2008 Earnings Presentation
27 slides from Harmony Gold Mining's earnings presentation, May 8, 2008
Slide 1: Financial Results for Third Quarter March 2008
FINANCIAL RESULTS FOR THIRD QUARTER March 2008 Graham Briggs Chief Executive Officer 8 May 2008
Slide 2: Private Securities Litigation Reform Act Safe Harbour Statement
Private Securities litigation reform act safe harbour statement This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the safe
Slide 3: Highlights for Q3 FY08
Highlights for Q3 FY08 – HEPS of 42 cents per share for continuing operations – Sound improvement in cash operating profit to R828 million – Total SA underground grade steady at 4.81g/t – Total cash operating cost down by 8.9% – Harmony selects Newcrest as PNG partner 3
Slide 4: Safety performance
Safety performance FATALITY RATE 0.40 0.37 0.35 0.33 0.30 0.3 0.29 0.28 0.25 0.22 0.22 0.20 0.19 0.15 0.10 0.05 0.00 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 2006-2007 2007-2008 – Two million Fatality Injury Free Shifts at Harmony SA operations – Harmony South and North shafts ach
Slide 5: Group operating results March Q
Group operating results March Q (Continuing operations) Rand/Metric Mar Dec 2008 2007 Gold produced - kg 10 347 12 403 Revenue - R/kg 225 541 169 502 Exchange rate - USD/ZAR 7.43 6.77 Cash costs - R/kg 145 514 133 234 Cash operating profit - R (m) 828 450 Operating margin - (%) 35.5 21.4 5
Slide 6: Segmental working profit quarter-on-quarter
Segmental working profit quarter-on-quarter (Continuing operations) Mar 2008 Dec 2007 Rm Rm Harmony Operations SA underground 695.9 345.4 Surface 132.1 104.4 International - - Total Harmony 828.0 449.8 6
Slide 7: Group operating results March Q (US$)
Group operating results March Q (Continuing operations) US$/Imperial Mar 2008 Dec 2007 Gold produced - oz 332 662 398 764 Revenue - US$/oz 944 779 Exchange rate - ZAR/US$ 7.43 6.77 Cash costs - $/oz 609 613 Cash operating profit - US$ (m) 111 66 Operating margin - (%) 35.5 21.4 7
Slide 8: Quarter-on-quarter cash operating profit variance analysis
Quarter-on-quarter cash operating profit variance analysis Cash operating profit – Dec 2007 R 449.8 million Variance attributed to change in: – Volume (R 269,2 million) – Working cost R 147,0 million – Recovery grade (R 78,6 million) – Gold price R 579,0 million – Net variance R 378,2 million Cash o
Slide 9: Operational review for quarter ending March 2008
Third Q March 2008 Operational review for quarter ending March 2008 9
Slide 10: SA Underground operational results
SA Underground operational results (Continued operations) Mar Dec % 2008 2007 VAR U/g tonnes milled (‘000) 1 934 2 297 (15.8) U/g recovery grade (g/t) 4.81 4.87 (1.2) U/g kilograms produced (kg) 9 302 11 175 (16.8) U/g working costs (R/kg) 150 795 138 531 (8.9) U/g working costs (R/t) 725 674 (7.6)
Slide 11: SA Surface operational results
SA Surface operational results (Continued operations) Mar Dec % 2008 2007 VAR Surface tonnes milled (‘000) 2 191 2 148 (2.0) Surface recovery grade (g/t) 0.48 0.57 (15.8) Surface kilograms produced (kg) 1 045 1 228 (14.9) Surface working costs (R/kg) 98 504 85 031 (15.8) Surface working costs (R/t)
Slide 12: Discontinued operations operational results
Discontinued operations operational results (Discontinuing operations - Total) Mar Dec 2008 2007 Tonnes milled (‘000) 1 064 1 807 Recovery grade (g/t) 1.87 2.59 Kilograms produced (kg) 1 985 4 689 Working costs (R/kg) 181 375 126 480 Working costs (R/t) 338 328 Cash operating profit R (m) 113 205 -
Slide 13: Financial results for quarter ending March 2008
Third Q March 2008 Financial results for quarter ending March 2008 13
Slide 14: Extracts from Income Statement March 2008Q vs December 2007Q
Extracts from Income Statement March 2008Q vs December 2007Q Mar 2008 Dec 2007 Rm Rm Revenue 2 334 2 102 Cash operating costs (1 506) (1 652) Cash operating profit 828 450 Exploration (55) (42) Interest paid (123) (138) Taxation (156) (54) Profit from discontinued operations 181 241 Net profit 345 4
Slide 15: Balance Sheet as at March 2008
Balance Sheet as at 31 March 2008 Mar 2008 Dec 2007 Rm Rm Assets Non-current assets 33 436 31 431 Current assets Cash and cash equivalents 346 425 Other current assets 3 421 3 602 Total assets 37 203 35 458 Equity and liabilities Share capital and reserves 24 818 23 637 Non-current liabilities Borro
Slide 16: Capital expenditure
Capital expenditure OPERATIONAL ACTUAL ACTUAL CAPEX Mar 2008 Dec 2007 Rm Rm South African Operations 346 348 Total Operational Capex 346 348 CAPITAL PROJECT CAPEX INVESTED TO DATE Doornkop South Reef 79 91 869 Elandsrand New Mine 28 22 778 Tshepong North Decline 6 17 284 Phakisa Shaft 62 55 782 Hidd
Slide 17: IT financial system
IT financial system – Good progress with re-implementation of ERP system – Commenced with re-training all employees related to the job – We have performed necessary checks and balances – Confident that we will have a clean “bill of health” at the end of FY08 17
Slide 18: USA class action
USA class action – Harmony was made aware of US class action on 17 April 2008 when it appeared on the Internet – Harmony has retained US lawyers for advice – Once preliminary matters are resolved, lawyers will prepare a motion to dismiss 18
Slide 19: Restructuring for profitability
Third Q March 2008 Restructuring for profitability 19
Slide 20: Newcrest becomes PNG partner
Newcrest becomes PNG partner – Harmony and Newcrest signed an agreement which will allow Newcrest to earn a 50% interest in Harmony’s PNG gold and copper assets – The total consideration payable by Newcrest is US$525 million allocated as follows US$ million Initial payment to Harmony acquire a 30.01
Slide 21: Harmony ounces after Newcrest partnership
Harmony ounces after Newcrest partnership Total Harmony Ounces Profile 2 500 2 000 1 500 (Koz) 1 000 500 - E YR7/8 E YR8/9 E YR9/10 E YR10/11 Tshepong Phakisa Doornkop Elandsrand Target Masimong Evander Randfontein Incl SS Joel Virginia Kalgold Project Phoenix Saint Surface Sources Bambanani Hidden
Slide 22: Development for Q3
Development for Q3 Total Metres & cmg/t : Quarters m2 / Metre Ratio : Quarters 50000 1400 60.0 1200 50.0 40000 m 2 / m r a t io 1000 40.0 M e tr e s 30000 c m g /t 800 30.0 20000 600 20.0 400 10000 10.0 200 0 0 0.0 Sep Q 06 Dec Q 06 Mar Q 07 Jun Q 07 Sep Q 07 Dec Q 07 Mar Q 08 Sep Q 06 Dec Q 06 Mar
Slide 23: Rand Uranium Company
Rand Uranium Company – Conditions precedent for the transaction with Pamodzi Resources Fund progressing smoothly – Harmony to receive foreign capital injection of R1,9 billion on fulfilment of conditions – We are confident conditions should be fulfilled by end June 2008 – John Munro appointed Chief
Slide 24: Restructuring update
Restructuring update – Complement reduction of 1 421 employees for March quarter - further reductions unlikely – Shedding or closing high-cost operational areas and assets now completed – Getting our operations on a sound footing with all operations profitable after their capital expenditure – Consi
Slide 25: New projects under consideration
New projects under consideration Gold – Evander South - drilling tenders are out – St Helena plant tailings re-treatment - feasibility complete – Phoenix project expansion to 1Mt per month being contemplated Uranium – Scoping study in progress on Tshepong, Phakisa and Masimong run-of-mine gold taili
Slide 26: Outlook
Outlook – Increase quarterly development to 35 000 metres – Strengthening balance sheet through – R1,7 billion partnership with Newcrest (Total PNG partnership worth US$525 million) – R1,9 billion partnership with Pamodzi Resources Fund – Productivity and cost control focus – The gold price at +R200
Slide 27: Questions
Questions www.harmony.co.za 27
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