Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — Q2 FY2015 Earnings Presentation
29 slides from Harmony Gold Mining's earnings presentation, Feb 9, 2015
Slide 1: Graham Briggs, Frank Abbott 9 February 2015
Graham Briggs Frank Abbott 9 February 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 Value focused 2 Growing the value of Golpu 3 Financial results 4 Conclusion 3 www.harmony.co.za FY15 Q1 Q2 Q3 Q4
Slide 4: Value focused
Slide 5: Strategic scorecard
Strategic scorecard Our strategy Our performance to date Safely delivering on plans • Safety record improved • Production improved a Increase free cash flow through higher grades • Grades higher and cost control • Costs contained • Restructuring for profitability a Retain flexible balance sheet • Ke
Slide 6: Improved safety
Improved safety • During December 2014 quarter, the SA operations had zero fatalities 45 42 Fatalities (total Harmony including PNG) 40 35 31 30 29 27 25 22 22 21 21 20 16 15 15 10 10 5 3 0 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY11 FY12 FY13 FY14 End of Dec-14 6 www.harmony.co.za FY15 Q1 Q2 Q3 Q4
Slide 7: Positioned to deliver long term value
Positioned to deliver long term value • Golpu is spectacular and will drive down our costs • Restructuring our asset portfolio to enhance margins – Target 3 placed on care and maintenance – Kusasalethu – restructuring in progress – Increase in underground grade year on year 5.0 Underground grade (g/
Slide 8: Operational results (q-on-q)
Operational results (q-on-q) Dec 2014 Sep 2014 % quarter quarter change kg 8 459 9 435 (10) Gold produced oz 271 963 303 341 (10) R/kg 432 963 443 690 (2) Gold price US$/oz 1 200 1 282 (6) R/kg 357 111 355 693 - Cash operating costs US$/oz 990 1 028 4 Underground recovery grade g/t 4.78 4.84 (1) Rm
Slide 9: Delivering in line with our plans
Delivering in line with our plans Annual production guidance Operation Q2FY15 gold production (oz) Plan achieved – average per quarter (oz) Kusasalethu # 47 500 - 50 000 24 917 Doornkop 23 750 - 26 250 23 374 Phakisa 23 750 - 26 250 24 852 Tshepong 33 750 - 36 250 38 902 Masimong 20 000 - 21
Slide 10: Growing the value of Golpu
es GROWING THE VALUE OF GOLPU
Slide 11: Resource growth from 2009 to today
Resource growth from 2009 to today • Golpu is a globally significant resource • Next phase for the Golpu project - commencement of Feasibility Study SECTION VIEW SECTION VIEW 2009 Today Surface Surface 5250mRL 5250mRL 5000mRL 5000mRL 800m +1,700m 4750mRL 4750mRL 2009 GOLPU 2014 GOLPU RESOURCE(1) RES
Slide 12: Golpu – a spectacular ore body
Golpu – a spectacular ore body Stage 1 (BC1 and BC2) • Advanced exploration to start June 2015 Stage 1 BC 1 Total • Feasibility study to be completed end 2015 (Blue) resource • First production in 2020 shell • End of life estimated 2047 (Green) Stage 1 4285 BC 2 RL (Red) Stage 2 BC3 (Purple ) Stage
Slide 13: Stage 1 – maximising free cash flow (100%)
Stage 1 – maximising free cash flow (100%) 1 500 6 000 Cumulative Undiscounted Free Cash Flow (USD M) 1 250 5 000 1 000 4 000 750 3 000 Cash Flow (USD M) 500 2 000 250 1 000 0 0 (250) -1 000 (500) -2 000 US$1.6bn (750) -3 000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029
Slide 14: Golpu's gross revenue (50%)
Golpu’s gross revenue (50%) US$m Copper and gold revenue from Stage 1* (US$m) 800 700 600 500 400 300 200 100 0 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038 2039 2040 2041 2042 2043 2044 2045 2046 Copper revenue Revenue Gold revenue Total operating O
Slide 15: Gold and copper recovered production profile
70 year production profile t’000 Productions schedule – Portfolio 1 12000 360 000 10000 300 000 Gold (oz) and Copper (t) recovered 8000 240 000 6000 180 000 4000 120 000 2000 60 000 0 0 2019 2021 2023 2025 2027 2029 2031 2033 2035 2037 2039 2041 2043 2045 2047 2049 2051 2053 2055 2057 2059 2061 2063
Slide 16: Funding Golpu
Funding Golpu Harmony equity Harmony equity (35%) Funding options (50%) PNG Government buy-in for Harmony Project capital Project capital Year US$m US$m 2H FY15 (15) (15) FY16 (55) (55) • Internal cash flows FY17 (105) 45* FY18 (205) (140) • Internal cash flows FY19 (250) (175) • Debt finance • Copp
Slide 17: Golpu - a capital project that will drive down costs
Golpu - a capital project that will drive down costs 6Mtpa Block Description (Stage 1 100%) Unit cave Capital Project capital US$bn 2.3 Sustaining capital US$bn 0.8 Total life of Stage 1 capital US$bn 3.1 Maximum negative cash flow US$bn 1.6 Operating Total operating cost (real) US$/t 34.6 Cash cost
Slide 18: Golpu – a potential game changer for Harmony
Golpu – a potential game changer for Harmony Relative share price performance of peers (rebased to 100 on December 15, 2014) Source: FactSet as of 28 January 2015 18 www.harmony.co.za FY15 Q1 Q2 Q3 Q4
Slide 19: Financial results
FINANIGIAL RESULTS —
Slide 20: Restructuring for profitability
Restructuring for profitability • Optimised life of mine process – removed lower grade and unprofitable areas, which resulted in scrapping of the carrying values – Masimong: R216 million – Kusasalethu: R214 million • Termination and restructuring costs/provisions: R182 million – Ernest Oppenheimer H
Slide 21: Kusasalethu – reduced carrying value
Kusasalethu – reduced carrying value MM RV Levels 78 to 95 - scrapped all raise lines at a SHAFT SHAFT SUB carrying value of R214m 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 21 www.harmony
Slide 22: Efficient electricity consumption….but costs increasing
Efficient electricity consumption….but costs increasing GWh Electricity consumption 3 100 3 000 3 000 2 900 2 800 2 800 2 700 2 700 2 600 2 600 2 500 2 400 FY12 FY13 FY14 FY15 Electricity costs Rm 2 000 1 750 1 830 1 600 1 460 1 500 1 000 9.5% 9.4% 4.6% 500 0 FY 12 FY 13 FY 14 FY 15 22 www.harmony.c
Slide 23: Extract from income statement (q-on-q) – Rand
Extract from income statement (q-on-q) – Rand Dec 2014 Sep 2014 quarter quarter % (Rm) (Rm) change Revenue 3 715 4 431 (16) Production costs (3 096) (3 518) 12 Cash operating costs (3 021) (3 356) 10 Inventory movements (75) (162) 54 Production profit as per operating results 619 913 (32) Amortisati
Slide 24: Extract from income statement (q-on-q) – US$
Extract from income statement (q-on-q) – US$ Dec 2014 Sep 2014 quarter quarter % Extracts from income statement and operating results (US$m) (US$m) change Revenue 327 412 (21) Production costs (276) (327) 16 Cash operating costs (269) (312) 14 Inventory movements (7) (15) 53 Production profit as per
Slide 25: Cash flow statement analysis (q-on-q) – Rand
Cash flow statement analysis (q-on-q) – Rand Dec 2014 Qtr Sept 2014 Qtr Cash flow analysis (Rm) (Rm) Other SA ops (excl. Kusasalethu) Operating cash flow 722 758 Capex (548) (451) 174 307 Kusasalethu (incl. capex) (236) (71) Hidden Valley (incl. capex¹) (67) 46 Restructuring (106) (47) Other (170) (
Slide 26: Cash flow statement analysis (q-on-q) – US$
Cash flow statement analysis (q-on-q) – US$ Dec 2014 Qtr Sept 2014 Qtr Cash flow analysis (US$m) (US$m) Other SA ops (excl. Kusasalethu) Operating cash flow 64 70 Capex (49) (42) 15 28 Kusasalethu (incl. capex) (21) (7) Hidden Valley (incl. capex¹) (6) 4 Restructuring (9) (4) Other (16) (12) Working
Slide 27: Conclusion
Slide 28: Value focused
Value focused • Only safe, profitable ounces will be mined • Restructuring operations will create a profitable and cash generative Harmony – aim to produce approximately 1.1 to 1.2Moz at a total cost including capital of approximately US$1 150 – 1 250/oz (R420 000 - R440 000/kg) in FY15 • We plan to
Slide 29: Contact and key takeaways
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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