Harmony Gold Mining Co. Ltd. · JSE:HAR

Harmony Gold Mining — Investor Presentation (May 2017)

46 slides from Harmony Gold Mining's investor presentation, May 2017

  1. Slide 1: Investor Brief May 2017

    © Harmony Investor Brief May 2017 1 MAY 2017 INVESTOR BRIEF

  2. Slide 2: Solid Investment Case

    2 SOLID INVESTMENT CASE  Safer and more predictable production  Maintain increase in grade (mining closer to reserve grade)  Strong balance sheet, which allows for growth and dividends (paid from profits only)  On track to produce in line with guidance (for a second consecutive year) © Harmony I

  3. Slide 3: Global Gold Miner

    3 GLOBAL GOLD MINER © Harmony Investor Brief May 2017 JSE (HAR); NYSE (HMY) Market cap of US$1bn

  4. Slide 4: Where We Operate

    4 WHERE WE OPERATE South Africa Papua New Guinea Limpopo Mpumalanga Gauteng North West Free State KwaZulu- Natal Northern Cape Eastern Cape Western Cape 2017 Brief May 2017 1 open pit mine 9 underground operations © Harmony |Investor Golpu project (50:50 JV) 1 open pit mine Multiple exploration area

  5. Slide 5: Quality Reserves (Gold Equivalent) Split

    5 QUALITY RESERVES (GOLD EQUIVALENT) SPLIT SA gold, 44%  Total reserves of 37.8 Moz1 16.8 Moz  Total resources of 107.6 Moz1 PNG copper as gold equivalents, 37% 14.1 Moz © Harmony Investor Brief May 2017 PNG gold, 19% 6.9 Moz 1. Refer www.harmony.co.za for detail, Gold equivalent based on US$1150

  6. Slide 6: Our Strategy

    © Harmony Investor Brief May 2017 6 OUR STRATEGY

  7. Slide 7: Our Strategy

    7 OUR STRATEGY Our Our strategic strategy pillars Delivering on our strategy…  Fatality and safety rates improved Operational  Grade management – no mining below cut off excellence  On track to meet production guidance in FY17 Mining safe, profitable ounces  Operations generating free cash flow

  8. Slide 8: Operational Excellence

    © Harmony Investor Brief May 2017 8 EXCELLENCE OPERATIONAL

  9. Slide 9: Safety First - Working Towards Zero Harm

    9 SAFETY FIRST - WORKING TOWARDS ZERO HARM Fatality Injury Frequency Rate 0.30 0.25 0.26 Per million hours worked 0.20 0.21 0.17 0.15 0.15 0.13 0.10 0.11 0.10 0.09 © Harmony Investor Brief May 2017 0.05 0.00 FY10 FY11 FY12 FY13 FY14 FY15 FY16 9 months YTD FY17

  10. Slide 10: Grade Discipline – No Mining Below Cut-off

    10 GRADE DISCIPLINE – NO MINING BELOW CUT-OFF  Planned average mining grades are being achieved  Medium to long term development strategies paying off SA underground recovered grade (g/t) 5.5 5.13 5 5.03 5.02 4.77 4.75 © Harmony Investor Brief May 2017 4.5 4 FY14 FY15 FY16 9H1FY17 Months FY17 guid

  11. Slide 11: Grade Is King

    11 GRADE IS KING Harmony’s grade code  No mining below cut-off  Mining to average reserve grade  Only quality grade Growth projects delivering good results  Phakisa, Tshepong decline on track with grades  Accessed higher grade areas through Doornkop and Kusasalethu deepening  Mining the Bamban

  12. Slide 12: More Predictable Mining

    12 MORE PREDICTABLE MINING  Guidance delivery FY17 Performance YTD Outlook Guidance (9 months March 2017) Production 1 050 000oz 812 192oz 77% of guidance  Well in reach All-in R495 000/kg R516 630/kg -4% variance  Increased Sustaining US$1 100/oz1 US$1 170/oz2 -6% variance production in Q4 Costs

  13. Slide 13: Cash Certainty

    © Harmony Investor Brief May 2017 13 CASH CERTAINTY

  14. Slide 14: Gold Hedge Secures Cash

    14 GOLD HEDGE SECURES CASH 650 000 625 000 Average gold price (R/kg) 600 000 575 000 550 000 525 000 500 000 475 000 450 000 425 000 400 000 375 000 350 000 © Harmony Investor Brief May 2017 Jun 15 Sep 15 Dec 15 Mar 16 Jun 16 Sep 16 Dec 16 Mar 17 Average gold price received R/kg (incl hedge) Spot go

  15. Slide 15: Further Cash Certainty - Currency Hedge

    15 FURTHER CASH CERTAINTY - CURRENCY HEDGE (SPOT vs FLOOR and CAP) 19 18 R394m (US$28m) cash received 17 H1FY17 16 R/US$ exchange rate 15 14 © Harmony Investor Brief May 2017 13 12 USDZAR spot close Floor Cap

  16. Slide 16: Solid Balance Sheet

    16 SOLID BALANCE SHEET 300 2.00 1.80 250 1.60 1.40 200 1.20 US$m 150 1.00 0.80 100 0.60 0.40 © Harmony Investor Brief May 2017 50 0.20 - - FY15 FY16 H1FY17 H1 EBITDA H2 EBITDA Net debt/EBITDA EBITDA: excludes impairment and loss on scrapping of property, plant and equipment

  17. Slide 17: Effective Capital Allocation

    © Harmony Investor Brief May 2017 17 ALLOCATION EFFECTIVE CAPITAL

  18. Slide 18: Repaid Debt and Paid Dividends (US$)

    18 REPAID DEBT AND PAID DIVIDENDS (US$) 250 225 64 200 175 15 170 150 US$ million 125 100 162 75 © Harmony Investor Brief May 2017 50 50 25 21 - Dec 15 Dividends paid Overheads, Cash generated by Hedging gains Dec 16 exploration, operations after realised translation gain capital and other

  19. Slide 19: Investing in Our Ore Bodies (US$)

    19 INVESTING IN OUR ORE BODIES (US$) Capital expenditure (US$m) 350 300 21 250 15 117 70 116 200 110 US$ million 11 17 41 150 8 23 99 100 93 97 71 94 © Harmony Investor Brief May 2017 50 36 48 51 39 35 14 14 9 5 11 0 FY16 FY17 FY18 FY19 FY20 Growth capital - SA Maintenance capital - SA Ongoing capit

  20. Slide 20: Our Aspiration Is to Grow from 1.1 Moz to 1.5 Moz by June 2019

    13 21 OUR ASPIRATION IS TO GROW FROM 1.1 MOZ TO 1.5 MOZ BY JUNE 2019 Through acquisition  Added 180 000oz by mining 100% of Hidden Valley  Assessing opportunities in PNG, SA and rest of Africa  Will not acquire at all cost Ounces Through organic growth  Tshepong/Phakisa integration  Tailings re

  21. Slide 21: Organic Growth Opportunities Through Exploration

    21 ORGANIC GROWTH OPPORTUNITIES THROUGH EXPLORATION PNG Golpu (50:50 JV) Stage 1 FS and Stage 2 PFS Kili Teke (100%) 6.0 million equivalent gold ounce resource¹ (785 Kt Cu & 1.8 Moz Au) Hidden Valley (100%) Stage 7 PFS FY18 targeting South Africa Kalgold Drill program – potential for larger opencast

  22. Slide 22: Golpu (50% Held) – A Quality High Grade Reserve

    22 GOLPU (50% HELD) – A QUALITY HIGH GRADE RESERVE (SE ASIA) Ore Gold Copper 1.8% Tonnes Grade Metal Grade Metal Golpu - Stage 1 MT g/t Moz % Mt 1.6% Total probable ore reserves* 379 0.91 11.0 1.26% 4.78 Golpu (total) 1.4% 1.2% Cu wt (%) Grasberg 1.0% 0.8% Northparkes OkTedi 0.6% Namosi Batu Hijau O

  23. Slide 23: Golpu (50% Held) - A Potential Game Changer

    23 GOLPU (50% HELD) - A POTENTIAL GAME CHANGER East West • Financial metrics of Stage 1*: − net present value (NPV): US$1.1bn − internal rate of return (IRR): ~16% − mine life: 28 years Golpu 2005 resource area (yellow): 95Mt @ BC1 access 0.65 g/t Au, 1.4% Cu1 development − maximum negative free cas

  24. Slide 24: Golpu: Current Status

    24 GOLPU: CURRENT STATUS 2017/2018: August 2016: Permitting and further Access declines First production Feb 2016: Submitted Special study optimisation To commence once SML Dependent on Feasibility study Mining Lease (SML) work results announced and board approvals finalisation of study application

  25. Slide 25: Golpu Stage Funding Requirements

    25 GOLPU STAGE 1 FUNDING REQUIREMENTS Golpu funding Golpu funding No PNG Government buy-in PNG Government buy-in (Harmony 50%) (Harmony 35%) Project cashflow Project cashflow Year (incl. capex) Year (incl capex) US$m US$m FY17 and FY17 and * * FY18 FY18 Grant of SML and PNG FY19 (115) FY19 37 Govern

  26. Slide 26: Growing Our Ounces Through Acquisition

    26 GROWING OUR OUNCES THROUGH ACQUISITION Acquisition criteria  Gold mines  1 - 2 Moz reserves  More than 100 000 oz per annum  Life of mine of 10 years or more  Producing or late stage development near producing  Low cost, cash generative asset (all-in sustaining cost of less than US$950/oz)

  27. Slide 27: First Step to Growth – Hidden Valley

    27 FIRST STEP TO GROWTH – 180 000 OZ TO BE MINED (ACQUIRED 100% OF HIDDEN VALLEY) Enhance and Stages 5&6 Strong fundamentals de-bottleneck investment  Project economics –  Safety performance • Invest remaining net $150m support FCF • Waste stripping - IRR well exceeding 20%  Additional flexibilit

  28. Slide 28: Hidden Valley Re-investment Update

    28 HIDDEN VALLEY RE-INVESTMENT UPDATE  Ahead of schedule and operational performance in line with budget Milestones achieved Excellent safety performance 12 month moving average Lost time injury frequency rate (LTIFR) at end of March 2017 of 0.3 Mining fleet availability Mining fleet recommissioned

  29. Slide 29: Potential to Extend Life of Mine Through Successive Cutbacks

    29 POTENTIAL TO EXTEND LIFE OF MINE THROUGH SUCCESSIVE CUTBACKS Hidden Valley Stages 5&6 (7 Years) Reserve: 27Mt @ 1.8 g/t Au, 32 g/t Ag © Harmony Investor Brief May 2017 1.4Moz Au, 27Moz Ag Stage 7 Prefeasibility study FY18 targeting 25Mt for 1.3Moz Au and 25Moz Ag

  30. Slide 30: Hidden Valley Net Re-investment Expenditure and Capital

    30 HIDDEN VALLEY NET RE-INVESTMENT EXPENDITURE AND CAPITAL 120 Net re-investment cash flow of Commercial levels of US$180m (FY17:US$70m and production 100 FY18: US$110m) 44 80 27 60 US$m 40 59 66 20 41 23 0 FY17 FY18 FY19 FY20 © Harmony Investor Brief May 2017 -20 -40 Capital Stage 5 and 6 pre-strip

  31. Slide 31: FY17 Performance to Date

    © Harmony Investor Brief May 2017 31 TO DATE FY17 PERFORMANCE

  32. Slide 32: FY17 – Performance for the Nine Months Ended March

    32 FY17 – PERFORMANCE FOR THE NINE MONTHS ENDED 31 MARCH 2017 March 2017 Nine months ended kg 25 262 Gold produced oz 812 192 R/kg 573 229 Gold price US$/oz 1 299 R/kg 439 669 Cash operating costs US$/oz 996 Underground recovered grade g/t 5.03 Rm 3 276 Production profit © Harmony Investor Brief May

  33. Slide 33: Quarter on Quarter Operational Results

    33 QUARTER ON QUARTER OPERATIONAL RESULTS March 2017 December 2016 % Quarter Quarter change kg 8 035 8 597 (7) Gold produced oz 258 330 276 401 (7) R/kg 546 772 565 360 (3) Gold price US$/oz 1 287 1 265 2) R/kg 443 317 427 739 (4) Cash operating costs US$/oz 1 043 957 (9) Underground recovered grade

  34. Slide 34: Six Months on Six Months Operational Results

    34 6 MONTHS ON 6 MONTHS OPERATIONAL RESULTS December 2016 June 2016 % Six months Six months change kg 17 227 15 974 8 Gold produced oz 553 862 513 576 8 R/kg 585 908 605 476 (3) Gold price US$/oz 1 303 1 223 7 R/kg 437 996 413 796 (6) Cash operating costs US$/oz 974 836 (17) Underground recovered gr

  35. Slide 35: Extract from Income Statement H1FY17 vs H2FY16 – US$

    35 EXTRACT FROM INCOME STATEMENT H1FY17 vs H2FY16 – US$ Extracts from income statement and operating results December 2016 June 2016 Six months Six months % (US$m) (US$m) change Revenue 706 625 13 Production costs (529) (424) (25) Excl. additional 50% of Hidden Valley (517) (424) (22) Additional 50%

  36. Slide 36: Making a Lasting Impact

    © Harmony Investor Brief May 2017 36 IMPACT MAKING A LASTING

  37. Slide 37: De-risking the Company Through Healthy Relationships

    37 DE-RISKING THE COMPANY THROUGH HEALTHY RELATIONSHIPS Shareholders General Employees, public and unions communities NGOs and Government and industry regulators Partners, Media and customers and © Harmony Investor Brief May 2017 analysts suppliers Neighbours

  38. Slide 38: Uplifting Our Communities in SA and PNG

    38 UPLIFTING OUR COMMUNITIES IN SA AND PNG  Improving living conditions in communities  Structured community engagement process – Local employment – Community self-sustaining projects (i.e.Doornkop area) • Cultivation of vegetables • Manufacture of protective clothing, uniforms and curtains • Thre

  39. Slide 39: Holistic Approach to Health

    39 HOLISTIC APPROACH TO HEALTH  Promotion and awareness of risks Proactive  Prevention and assessment of risks  Intervention (awareness programs) Holistic approach  Health hub at each operation to wellness Proximity  Doctors on-site improves productivity  Doctors part of management team © Harm

  40. Slide 40: Guidance

    © Harmony Investor Brief May 2017 40 GUIDANCE

  41. Slide 41: FY17 Production Guidance

    41 FY17 PRODUCTION GUIDANCE Plan to produce ~1.05 Moz in FY17, at – an average recovered grade of ~5.13g/t, and – an all-in sustaining cost of ~$1 100/oz (~R495 000/kg at an exchange rate of R14.00/US$) FY17 GRADE GUIDANCE Actual grade Adjusted Actual grade (g/t) achieved Reserve grade reserve grade

  42. Slide 42: FY17 Production Guidance (per operation)

    42 FY17 PRODUCTION GUIDANCE (per operation) FY17 production FY16 actual Life of mine Operation (oz ) (oz) (years) Tshepong 155 000 161 751 19 Phakisa 135 000 128 217 10 Bambanani 90 000 96 870 5 Target 1 110 000 108 895 10 Doornkop 85 000 87 772 17 Joel 67 500 73 239 11 Kusasalethu 140 000 124 198 5

  43. Slide 43: FY17 AISC Guidance (US$/oz) (per operation)

    43 FY17 AISC¹ GUIDANCE (US$/OZ) (per operation) FY17 FY16 Avg guidance Actual Operation (US$/oz )* (US$/oz ) Tshepong US$1 100/oz US$940/oz Phakisa US$1 080/oz US$936/oz Bambanani US$780/oz US$654/oz Target 1 US$1 040/oz US$1 012/oz Doornkop US$1 210/oz US$1 016/oz Joel US$1 040/oz US$911/oz Kusasal

  44. Slide 44: Classification of Cash Operating Costs Excluding Capital

    44 CLASSIFICATION OF CASH OPERATING COSTS EXCLUDING CAPITAL SA H1 FY17 Hidden Valley H1 FY17 Water, 1% Royalties, 2% Electricity Royalties, 2% and water, 5% Total labour, Electricity, 20% 16% Total Labour, 48% Consumables , 22% Contractors, Consumables 22% © Harmony Investor Brief May 2017 , 50% Con

  45. Slide 45: Safe Harbour Statement

    45 PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOUR STATEMENT This presentation contains forward-looking statements within the meaning of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, with r

  46. Slide 46: Contact Us

    46 CONTACT US © Harmony Investor Brief May 2017 www.harmony.co.za HarmonyIR@harmony.co.za Tel: +27 11 411 2314

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