Harmony Gold Mining Co. Ltd. · JSE:HAR

Harmony Gold Mining — Q1 FY2007 Earnings Presentation

50 slides from Harmony Gold Mining's earnings presentation, Oct 31, 2006

  1. Slide 1: Results Presentation Quarter ended September 2006

    Se p te m be rq ua rte r Results Presentation Quarter ended – September 2006 31 October 2006 1

  2. Slide 2: Private Securities Litigation Reform Act Safe Harbor Statement

    PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR 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

  3. Slide 3: Quarterly highlights

    Quarterly highlights - Development up by 7% - Underground tonnes milled up by 7% - Gold production increased by 13% - Cash operating profit R 891 million up by 38% - Cash operating profit margin improved from 29% to 32% 3

  4. Slide 4: Quarterly highlights

    Quarterly highlights - Net Profit R277 million - Headline earnings 66 cents per share - Australian hedge book reduced by 35 000 oz - Cost/kg increased 4% - Harmony Improvement Process (HIP) roll-out started 4

  5. Slide 5: Investing in the future

    Investing in the future - Unlocking value at Harmony by focusing on - vigilant cost containment - increasing production to 3.5Moz over next four years - Further inward investments - Harmony Improvement Process (HIP) - aimed at addressing current value drivers - should improve efficiencies at all ope

  6. Slide 6: Safety performance

    Safety performance HARMONY FATALITY RATE oo4 0.35 0.30 0.25 0.20 0.15 & a.10 4 ; 0.05 j i i i i

  7. Slide 7: Mining Charter Highlights

    Mining Charter Highlights - Harmony has attained a 7.9% representation of Women in Mining - Progress towards Employment Equity targets: - Executives 29% - Senior Management 35% - Professionals 87% 7

  8. Slide 8: Mining Charter Highlights

    Mining Charter Highlights - 8% employees in part-time ABET classes - 3% employees in full-time ABET classes - Harmony is committed to attainment of a literate workforce by 2015 - Hostel occupancy <60% of workforce - Procurement +40% BEE compliant 8

  9. Slide 9: Review of the quarter

    Review of the quarter 9

  10. Slide 10: Quarter on quarter analysis

    Quarter on quarter analysis SEPT JUN % 2006 2006 VAR Gold produced - kg 19 472 17 243 13% Revenue - R/Kg 143 283 131 358 9% Exchange Rate - R/US$ 7.14 6.47 10% Cash costs - R/kg 97 538 93 968 (4%) Cash operating profit - R (m) 891.0 645.2 38% Operating margin - (%) 31.9 28.5 12% Cash earnings - cent

  11. Slide 11: Quarter on quarter analysis

    Quarter on quarter analysis SEPT JUN % 2006 2006 VAR Gold produced - oz 626 036 554 373 13% Revenue - US$/oz 625 631 (1%) Exchange Rate - R/US$ 7.14 6.47 10% Cash costs - $/oz 425 452 6% Cash operating profit - US$ (m) 124 100 24% Operating margin - (%) 31.9 28.5 12% Cash earnings - cents per share

  12. Slide 12: Quarter on quarter Performance comparison

    Quarter on quarter Performance comparison WORKING PROFIT OPERATION Sept 2006 Jun 2006 % Var Rm Rm South African operations Quality assets 580.8 439.9 32% Growth projects 37.3 19.9 87% Leverage assets 141.0 89.4 58% Surface operations 38.8 36.1 8% Total SA Operations 797.9 585.3 36% Australian operat

  13. Slide 13: Quarter on quarter cash operating profit variance analysis

    Quarter on quarter cash operating profit variance analysis Cash operating profit – Jun 2006 R645.2 million Variance attributed to change in: - Volume change R125.5 million - working cost change (R279.0) million - recovery grade change R168.5 million - gold price change R230.8 million net variance R2

  14. Slide 14: Analysis of earnings per share

    Analysis of earnings per share Earnings per share Quarter ended Quarter ended (SA cents) September 2006 June 2006 Cash earnings 225 163 Basic earnings/(loss) 70 (11) Headline earnings/(loss) 66 (52) 14

  15. Slide 15: Quarter on quarter Development comparison

    Quarter on quarter Development comparison SEPT JUN % Total Metres ‘000 2006 2006 VAR Quality 22.1 21.8 1.4% Growth 6.5 4.6 41.3% Leverage 10.3 9.9 4.0% Total 38.9 36.3 7.2% Development Results Q1/07 16000 1600 14000 1400 12000 1200 10000 1000 Metres cmg/t 8000 800 6000 600 4000 400 2000 200 0 0 Jul

  16. Slide 16: Operational review

    S 7 > <b) _ © Cc a a) © i o . 1@)

  17. Slide 17: Quality assets Operational results

    Quality assets Operational results SEPT JUN % 2006 2006 VAR U/g tonnes milled (‘000) 1 665 1 618 3% U/g recovery grade (g/t) 5.64 5.26 7% U/g kilograms produced (kg) 9 392 8 510 10% U/g working costs (R/kg) 81 992 80 454 (2%) U/g working costs (R/t) 463 423 (10%) 17

  18. Slide 18: Quality assets Highlights

    Quality assets Highlights - Target increased development metres by 14% - Conops delivering above breakeven point - Masimong reef tonnes up by 17% - Another 3% improvement in tonnes at Tshepong Outlook - New drill rig at Target planned for December quarter should increase volumes 18

  19. Slide 19: Growth projects Operational results

    Growth projects Operational results SEPT JUN % 2006 2006 VAR U/g tonnes milled (‘000) 398 391 2% U/g recovery grade (g/t) 4.63 3.63 28% U/g kilograms produced (kg) 1 842 1 421 30% U/g working costs (R/kg) 123 439 120 626 (2%) U/g working costs (R/t) 571 438 (30%) 19

  20. Slide 20: Growth projects Highlights

    Growth projects Highlights - Elandsrand improved development by 73% - Doornkop main shaft holed with dual-sink - Tshepong Sub 66 Decline 90% completed - Phakisa rail-veyor 80% complete - Wafi/Golpu approved by Investment Committee for pre-feasibility work 20

  21. Slide 21: Growth project Elandsrand New Mine

    Growth project Elandsrand New Mine 21

  22. Slide 22: Growth project Doornkop shaft sinking

    Growth project Doornkop shaft sinking 22

  23. Slide 23: PNG Project Locations

    PNG Project Locations Grasberg Frieda New Ireland Porgera Bismarck Sea Lihir Rabaul MA Harmony Projects RK HA M FA Madang UL T New Britain Panguna FLY PLATFORM Aure Lae Trough Bougainville OW EN Yandera ST Solomon Sea AN LE Ok Tedi Port Moresby Y FA UL T Coral Sea Misima 23

  24. Slide 24: Wafi/Golpu Local Geology

    Wafi/Golpu Local Geology Mineralisation centred around an intrusive complex, intruding into meta-sediments Two styles of mineralisation present 1. Porphyry copper mineralisation overprinted by later high sulphidation Golpu epithermal event Porphyry 2. High to low sulphidation disseminated gold miner

  25. Slide 25: Wafi/Golpu Exploration Targets

    Wafi/Golpu Exploration Targets Golpu: 1.6 Mt Cu, 2.7 Moz Au -80#Stream -80# Stream sediment sediment response: response: 3.17 g/tAu, 0.4 g/t Au, 226 226 ppm ppm Cu KesiagoWafi Prospect Transfer Wafi Transfer -80# -80#Stream Streamsediment sediment response: response: 2 g/t Au, 2 g/t 380Structure Au,

  26. Slide 26: Wafi/Golpu Project focus areas

    Wafi/Golpu Project focus areas Wafi/ Golpu Project •Oblique Section looking NW 600N BOCO NRG Zone Gold Cap TOFR 400N Supergene Diatreme A Zone Advanced B Zone Argillic 200N Link Zone 0N Phyllic Zone -200N PFS Study Focus Potassic Zone At this time, study will not include other deposits unless Golpu

  27. Slide 27: Wafi/Golpu Mining concept

    Wafi/ Golpu Mining concept Goldcap Open Pit Link Zone Sub-level Cave Golpu Porphyry Block Cave Approx Scale 500m 27

  28. Slide 28: Wafi/Golpu Mining concept

    Wafi/Golpu Mining concept •Plan View Open Pit Link Zone Golpu Porphyry Approx Scale 500m 28

  29. Slide 29: Leveraged assets Operational results

    Leveraged assets Operational results SEPT JUN % 2006 2006 Var U/g tonnes milled (‘000) 1 288 1 119 15% U/g recovery grade (g/t) 4,27 4,26 - U/g kilograms produced (kg) 5 497 4 768 15% U/g working costs (R/kg) 117 741 113 074 (4%) U/g working costs (R/t) 503 482 (4%) 29

  30. Slide 30: Leveraged assets Highlights

    Leveraged assets Highlights - Joel improved tonnes by 32%; recovery grade up by 14% - Unisel volumes up 42% after shaft-bottom infrastructure completed - Leverage assets geared to current gold price Outlook - Harmony 2 resumes production after underground fire 30

  31. Slide 31: Surface Operations (includes Kalgold) Operational results

    Surface Operations (includes Kalgold) Operational results SEPT JUN % 2006 2006 VAR Surface tonnes milled (‘000) 905 1 054 (14%) Surface recovery grade (g/t) 0.76 0.66 15% Kilograms produced (kg) 692 700 (1%) Working costs (R/kg) 95 750 77 184 (24%) Working costs (R/t) 73 51 (43%) 31

  32. Slide 32: Surface operations Highlights

    Surface operations Highlights - Grades up 15% at surface operations - Kalgold grade increased by 10% from higher yields extracted from A-Zone - Project Phoenix increases profitability Outlook - Completion of infrastructural installation at Phoenix and reclamation to grow to 50 000t/m - Fourth cutbac

  33. Slide 33: Inward investment

    Inward investment -Target Plant – mill extension -Install Virginia SAG mill - increase capacity (115 000 t/month) - reduce cost R33/t – R28/t - Cooke plant - 88 kg/month - pilot for Randump 33

  34. Slide 34: Inward investment Randump pilot

    Inward investment Randump pilot - Sand re-treatment - Cooke plant available beginning February 2007 - Tonnes to be treated at full production 150 000 giving 88 kgs of gold per month Financial analysis Feasibility Capital Required R6.09 million Recovered grade 0.589 g/t Recovery % 80% Treatment Cost

  35. Slide 35: Inward investment Cooke plant sand re-treatment

    Inward investment Cooke plant sand re-treatment 35

  36. Slide 36: Inward investment

    Inward investment - R5.5 million capex for Mega Dumps - water balances - permitting of new disposal sites - Evander (Libra) - 3 dams (205 Mt) @ 1.5 Mt/month - Randfontein (Randumps) - 4 dams (201 Mt) @ 3 Mt/month - Welkom (Phoenix) - 5 dams (129 Mt) @ 2 Mt/month 36

  37. Slide 37: Inward investment Evander exploration

    Inward investment Evander exploration - Drilling programme - 48 surface bore holes - start of drilling - March 07 - drilling (6 machines) – 6 months - geological modeling, resource estimation – 5 months - capital cost – R42.3 million - Purpose - exploration of shallower < 500m western portion - expl

  38. Slide 38: Australian assets Operational results

    Australian assets Operational results SEPT JUN % 2006 2006 VAR Tonnes milled (‘000) 799 775 3% Recovery grade (g/t) 2.56 2.38 8% Kilograms produced (kg) 2 049 1 844 11% Working costs (R/kg) 91 914 92 760 1% Working costs (R/t) 236 221 (7%) 38

  39. Slide 39: Australasian assets Highlights

    Australasian assets Highlights - Production increased by 11% - Working profit up by 55% - Shirl and HBJ open pit mines commenced production at South Kal Mines - Encouraging drill results from Shirl underground resource - Hedge book reduced by 35 000 ounces - Hidden Valley project construction commen

  40. Slide 40: Hidden Valley Permanent camp site

    Hidden Valley Permanent camp site 40

  41. Slide 41: Hidden Valley Generators at port

    Hidden Valley Generators at port 41

  42. Slide 42: Financial review

    Financial review 42

  43. Slide 43: Royalty estimations

    Royalty estimations Total Rm Turnover (2006 Actual) 7 259 493 Royalty @ 1.5% (assume gold purity >99.5% and ignoring silver – not material) 108 892 Less: Marginal relief (37 028) Net Royalty payable 71 864 Tax saving @ 29% (20 841) Net effect 51 023 43

  44. Slide 44: Group Abridged Income Statement September 2006

    Group Abridged Income Statement 30 September 2006 Sep 2006 Jun 2006 Sep 2005 Rm Rm Rm Revenue 2 790 2 265 1 766 Cash operating costs 1 899 1 620 1 647 Cash operating profit 891 645 119 Amortisation and amortisation of mining properties (308) (267) (244) Corporate administration and other expenditure

  45. Slide 45: Group Abridged Balance Sheet September 2006

    Group Abridged Balance Sheet 30 September 2006 SEPT 2006 JUN 2006 SEPT 2005 (Unaudited) (Audited) (Unaudited) Rm Rm Rm ASSETS NON-CURRENT ASSETS 30 366 29 859 29 610 CURRENT ASSETS 2 494 2 320 2 147 TOTAL ASSETS 32 861 32 179 31 757 EQUITY AND LIABILITIES SHARE CAPITAL AND RESERVES 23 695 23 203 23

  46. Slide 46: Cash reconciliation Quarter on quarter

    Cash reconciliation Quarter on quarter Harmony Group cash reconciliation for Sep 2006 (Rm) Cash and equivalents on 30 June 2006 906.1 Operational (112.9) Operating profit 891.0 Capex (net) (340.9) Development cost capitalised (236.4) Corporate / exploration expenditure (99.7) Care and maintenance co

  47. Slide 47: Capital expenditure

    Capital expenditure Actual Forecast Operational Capex Sept 2006 Dec 2006 Rm Rm South African Operations 307 314 Australasian Operations 40 68 Total Operational Capex 347 382 Capital invested Project Capex to date Rm Doornkop South Reef 53 58 425 Elandsrand New Mine 35 44 499 Tshepong North Decline 1

  48. Slide 48: Project pipeline

    Project pipeline CAPITAL CASH LOM OUNCES oz/ PROJECT COST COST g/t (‘000oz) ANNUM (US$M) $/oz Phakisa (SA) 5 270 115 237 8.1 282 000 Elandsrand (SA) 6 990 124 281 7.8 444 000 Doornkop South Reef (SA) 2 960 170 263 6.6 340 000 Tshepong (Sub 66) (SA) 1 470 43 258 7.2 135 000 Hidden Valley (PNG) 2 620

  49. Slide 49: Quality future

    Quality future HARMONY” Oz ait 4,900,000 7.00 3,500 000 3000000 4 2500 000 2,200 000 1500 000 1000 000 LD 500,000 4.00 6 "2 a Ltd cos 1) 010 4 O14 01 oe 015 ~ Ot =] ao * - + > - a Oralty ome Growth mee SA Surte Rokpn tad Pophr mam Hkkke Valky fame Mega dumps Lee ng meee Atstaia SA Unck gntndGiak 2 2

  50. Slide 50: Questions

    QUESTIONS Website www.harmony.co.za 50

Harmony Gold Mining — Q1 FY2007 Earnings Presentation on 6ix