Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — Q3 FY2015 Earnings Presentation
27 slides from Harmony Gold Mining's earnings presentation, May 8, 2015
Slide 1: Graham Briggs, Frank Abbott, 8 May 2015
Graham Briggs Frank Abbott 8 May 2015 www.harmony.co.za 1 w w w . h a r mw onwyw. c. hoa. zr m a ony.co.za FY15 Q1 Q2 Q3 Q4
Slide 2: 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: Agenda
Agenda 1 Taking action 2 Restructuring for profitability 3 Quarterly results 4 Crystallising value 3 www.harmony.co.za FY15 Q1 Q2 Q3 Q4
Slide 4: Taking Action
Slide 5: Gold economic environment
Gold economic environment • Falling gold prices – no increase predicted • Rapidly escalating input costs • Wage increases - labour more than 50% of costs • Power constraints - load shedding and higher than inflation increases • Policy and regulatory challenges SA operations - cash operating cost Wat
Slide 6: Reducing labour force, increasing costs
Reducing labour force, increasing costs Employees in service Decrease of 11% 38000 36 915 36 266 36 424 36000 34 721 34000 31 880 32000 30000 FY11 FY12 FY13 FY14 FC FY15 Total labour cost (Rbn) Increase 7.0 of 19% 6.7 6.4 6.5 6.3 6.0 5.9 5.5 5.4 5.0 FY11 FY12 FY13 FY14 FC FY15 6 www.harmony.co.za FY
Slide 7: Our values
Our values • We live our 5 values and keep communication lines open with our employees • We have a pro-active communication campaign – our employees remain informed – we embrace our social licences to mine and go beyond compliance – we acknowledge that people play a major role in the industry – we t
Slide 8: Gold wage demands
Gold wage demands • Harmony will not survive high wage increases • Massive retrenchments inevitable should high increases be granted • Harmony is not replacing employees that are leaving and there is a moratorium on new recruitments • Win-win to be agreed for all parties • Economic and Social Compac
Slide 9: Electricity consumption vs cost
Electricity consumption vs cost GWh R'm 3 100 2 200 Consumption 2 100 decrease of 13% 3 000 R2 000m 3 000 2 000 1 900 2 900 R1 750m 1 800 Cost increase 2 800 1 700 2 800 of 34% R1 600m 1 600 2 700 R1 490m 2 700 1 500 1 400 2 600 2 600 1 300 2 500 1 200 FY12 FY13 FY14 FY15 FC Electricity consumption
Slide 10: Controlling costs
Controlling costs (SA total operating costs, including capital) R’bn 16.0 14.0 R0.4bn, 3% R 0.3bn, 3% R1.4bn, 12% 12.0 R1.3bn, 12% 10.0 R13.7bn 8.0 R10.3bn 6.0 FY11 FY12 FY13 FY14 FC FY15 Total FC FY15 10 www.harmony.co.za FY15 Q1 Q2 Q3 Q4
Slide 11: Restructuring for Profitability
RESTRUCTU RING FOR PROFITABILITY m7 >. J
Slide 12: Steering each mine to profitability
Steering each mine to profitability (SA underground) Gold price R460 000/kg 14 13 Bambanani 12 11 10 Production grade (g/t) 9 8 7 Phakisa 6 Target 1 Tshepong Kusasalethu 5 Doornkop Unisel 4 Joel 3 Masimong High grade 2 1 0 250 000 300 000 350 000 400 000 450 000 500 000 550 000 600 000 650 000 Low c
Slide 13: Kusasalethu restructured
Kusasalethu restructured MM RV Levels 78 to 95 closed SHAFT SHAFT SUB SHAFT 73 L 77 Belt level 75 L 78 L 80 L 82 L 85 L Old mine 78 level 88 L to 95 level 92 L 95 L 98 L 102 L 105 L 109 L New mine 98 level to 113 level 113 L 13 www.harmony.co.za FY15 Q1 Q2 Q3 Q4
Slide 14: Kusasalethu restructured, cont'd
Kusasalethu restructured, cont’d • Section 189A process complete − 389 transferred − 224 voluntary separation packages − 223 retrenched − 227 contractors replaced • New plan FY16 − grade of 5g/t to 5.6g/t − gold production of 170 000oz to 180 000oz − total cost of +/- R400 000/kg (+/- US$1 050/oz) 1
Slide 15: Restructuring Masimong, Doornkop and Hidden Valley
Restructuring Masimong, Doornkop and Hidden Valley Masimong • Substantial reduction in development • Life of mine to be reduced to 2 years • Approximately 400 employees may be impacted • Continue to focus on the high grade areas Doornkop • Focus on development for improved higher grade mining • The
Slide 16: Quarterly Results
QUARTERLY RESULTS tn, ‘Uf iS Ss La “SSSR —s ~RBal~ es bi Ls 7 ae I aS
Slide 17: Operational results (q-on-q)
Operational results (q-on-q) Mar 2015 Dec 2014 % quarter quarter change kg 7 642 8 459 (10%) Gold produced oz 245 697 271 963 (10%) R/kg 460 569 432 963 6 Gold price US$/oz 1 220 1 200 2 R/kg 377 901 357 111 (6) Cash operating costs US$/oz 1 001 990 (1) Underground recovery grade g/t 4.75 4.78 (1) R
Slide 18: Extract from income statement (q-on-q) – Rand
Extract from income statement (q-on-q) – Rand Mar 2015 Dec 2014 quarter quarter % Extracts from income statement and operating results (Rm) (Rm) change Revenue 3 428 3 715 (8) Production costs (2 785) (3 096) 10 Cash operating costs (2 888) (3 021) 4 Inventory movements 103 (75) >100 Production prof
Slide 19: Extract from income statement (q-on-q) – US$
Extract from income statement (q-on-q) – US$ Mar 2015 Dec 2014 quarter quarter % Extracts from income statement and operating results (US$m) (US$m) change Revenue 292 331 (12) Production costs (237) (276) 14 Cash operating costs (246) (269) 9 Inventory movements 9 (7) >100 Production profit as per o
Slide 20: Cash flow summary (q-on-q) – Rand
Cash flow summary (q-on-q) – Rand Mar 2015 Dec 2014 Extracts from the cash flow statement (Rm) (Rm) Cash flow from operations before exploration 380 19 Exploration expenditure¹ (27) (83) Income and mining taxes refunded 26 39 Loan to associate - (120) Capital expenditure¹ (710) (748) At 31 March 201
Slide 21: Cash flow summary (q-on-q) – US$
Cash flow summary (q-on-q) – US$ Mar 2015 Dec 2014 Extracts from the cash flow statement (US$m) (US$m) Cash flow from operations before exploration 32 1 Exploration expenditure¹ (2) (7) Income and mining taxes refunded 2 3 Loan to associate - (11) Capital expenditure¹ (60) (67) At 31 March 2015: Net
Slide 22: Cash operating cost and capital (Rand)
Cash operating cost and capital (Rand) R/kg 700 000 600 000 Kusasalethu Hidden Valley 500 000 Phakisa Doornkop Gold price received Unisel Tshepong Masimong Dumps Total 400 000 Harmony Kalgold R436 000/kg Joel Phoenix Target 1 300 000 Bambanani 200 000 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Cumu
Slide 23: Cash operating cost and capital (US$/oz)
Cash operating cost and capital (US$/oz) US$/oz 2 100 1 900 1 700 Kusasalethu 1 500 Hidden Valley 1 300 Phakisa Doornkop Gold price received Unisel Tshepong Masimong Dumps Total 1 100 Harmony Kalgold US$1 200/oz Joel Target 1 Phoenix 900 700 Bambanani 500 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Slide 24: Crystallising Value
Slide 25: Golpu – a spectacular ore body
Golpu – a spectacular ore body Stage 1 (BC1 and BC2) • Earth works to start September 2015 Stage 1 BC 1 Total • Feasibility study to be completed end 2015 (Blue) resource • First production in 2020 shell (Green) Stage 1 4285 BC 2 RL (Red) Stage 2 BC3 (Purple ) Stage 2 (BC3) 4100 4300 • Updated prefe
Slide 26: Actions to unlock value
Actions to unlock value Actions Steps Action 1 Achieve business plans Operational performance Restructure for profitability Golpu to be on-time and on-budget Action 2 Realising shareholder value Evaluating strategic options and funding Golpu 26 www.harmony.co.za FY15 Q1 Q2 Q3 Q4
Slide 27: Contact and investment summary
Email: HarmonyIR@harmony.co.za www.harmony.co.za 1. We are efficient miners 2. We fund our capital to ensure future growth and profitability 3. We are experienced explorers, mine developers and operators in emerging economies 4. Golpu will develop into a world-class copper-gold mine JSE (HAR) NYSE (
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