Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — FY2021 Earnings Presentation
61 slides from Harmony Gold Mining's earnings presentation, Aug 31, 2021
Slide 1: Results for the financial year ended 30 June 2021
AUGUST 2021 RESULTS © Harmony JSE Ticker Code: HAR for the financial year ended 30 June 2021 NYSE Ticker Code: HMY Peter Steenkamp, Chief Executive Officer Boipelo Lekubo, Financial Director
Slide 2: Safe Harbour Statement and Disclaimer
2 PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOUR STATEMENT AND DISCLAIMER FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of the safe harbour provided by Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amend
Slide 3: FY21 vs FY20 Key Highlights
3 FY21 VS FY20 KEY HIGHLIGHTS DELIVERY RESPONSIBLE STEWARDSHIP OPERATIONAL EXCELLENCE CASH CERTAINTY EFFECTIVE CAPITAL © Harmony Results for the financial year ended 30 June 2021 ALLOCATION A G A I N S T S T R AT E G Y > ESG > O P E R AT I O N A L > FINANCIAL > C A P I TA L Included in Production Re
Slide 4: FY21 vs FY20 Operational Update
4 FY21 VS FY20 OPERATIONAL UPDATE KEY FEATURES © Harmony Results for the financial year ended 30 June 2021 Successful integration SA operations Lost Time Operating free cash flow of Mponeng and Injury Frequency Rate related assets 83% 9 months of production resulting in 3% increase to R6.5bn a signi
Slide 5: ESG Highlights
5 ESG FY21 ESG HIGHLIGHTS © Harmony Results for the financial year ended 30 June 2021 ENVIRONMENT SOCIAL GOVERNANCE Banked over R1bn in energy saving initiatives Achieved record 3.38 million fatal free Corporate governance compliance with since 2016 shifts in the 4th quarter of FY21 over our regulat
Slide 6: Exploration and Projects: Creating Future Value
6 EXPLORATION AND PROJECTS CREATING FUTURE VALUE © Harmony Results for the financial year ended 30 June 2021 • Kalgold exploration drilling EXPLORATION • Target North • Tau Tona and Savuka shafts pillar extraction project studies FEASIBILITY • Kalgold expansion project • Savuka Plant Tailings Reclam
Slide 7: Capital Projects: Investing to Create Value
7 CAPITAL PROJECTS INVESTING TO CREATE VALUE ~4,10g/t ~1.44 g/t © Harmony Results for the financial year ended 30 June 2021 >55koz pa 160-200koz pa ~3,4g/t ~4,6g/t Enhanced 2.5 year LOM ~60koz pa production ~0,27g/t >230 koz pa 16 year LOM >98koz pa 20 year LOM ~9g/t 16 year LOM >220koz pa 24 year L
Slide 8: Strong Cash Flows
8 CREATING A SUSTAINABLE COMPANY STRONG CASH FLOWS Total Harmony - Cumulative operational free cash Gold price @ R800 000/kg © Harmony Results for the financial year ended 30 June 2021 140 000 9 000 120 000 FY22 8 000 including 100 000 7 000 projects 6 000 80 000 US$'000 R'000 5 000 60 000 FY22 4 00
Slide 9: Ounce Profile with Projects
9 OUNCE PROFILE WITH PROJECTS CREATING LONG TERM VALUE FY22 © Harmony Results for the financial year ended 30 June 2021 1 800 Hidden Valley 1 600 FY22 1 400 New SA projects 1 200 Wafi-Golpu* FY22 1 000 South Africa 000oz 800 600 400 200 - Increasing our profitability over time FY20 FY21 FY22 FY23 FY
Slide 10: Margin Expansion Catalysts
10 INVESTING IN QUALITY ASSETS MARGIN EXPANSION CATALYSTS © Harmony Results for the financial year ended 30 June 2021 Masimong end of life MARGINS Bambanani, Kusasulethu end of life Franco-Nevada streaming contract ends Tshepong Doornkop major capex complete Zaaiplaats and MWS major capital complete
Slide 11: Responsible Stewardship
RESPONSIBLE STEWARDSHIP © Harmony CREATING VALUE THROUGH SUSTAINABLE MINING
Slide 12: Safety Imperative
12 SAFETY IMPERATIVE © Harmony Results for the financial year ended 30 June 2021 ROAD TO ZERO LOSS OF LIFE AND PREVENT INJURIES Development of safety Embedded Improved employee Positively impacting leadership capability practices – routines engagement and employee's and credibility and habits develo
Slide 13: Safety Achieved
13 SAFETY ACHIEVED Fatality Injury Frequency Rate - Group 0,18 0,16 Record 3.38 million 0,16 © Harmony Results for the financial year ended 30 June 2021 0,14 0,12 fatality-free shifts 0,12 0,10 0,08 0,11 0,08 in 4th quarter of FY21 0,06 0,04 Masimong, Joel, Mponeng, 0,02 Fatality-free in Hidden Vall
Slide 14: Covid-19 Vaccination Roll-out
14 COVID-19 VACCINATION ROLL-OUT 80% TARGET BY OCTOBER Actual number and % vaccinated © Harmony Results for the financial year ended 30 June 2021 Vaccinated 2nd jab 12% 5 645 44% Not vaccinated 20 274 Vaccinated 44% 1st jab 20 517 Total employees: 46 436 Vaccination numbers of 25 August 2021
Slide 15: KPIs Linked to ESG
15 EMBEDDED ESG = INTEGRATED DECISION-MAKING KPIs LINKED TO ESG BALANCED SCORECARD © Harmony Results for the financial year ended 30 June 2021 Shareholder ESG value 25% 20% Organic growth and project execution 10% *Financial and 45% Operational *including environmental and social factors that impact
Slide 16: Road to Decarbonising: Energy Initiatives
16 ROAD TO DECARBONISING ENERGY INITIATIVES Renewable energy rollout plan © Harmony Results for the financial year ended 30 June 2021 OUR 350 300 301 OBJECTIVE: 250 to diversify our energy 200 183 mix, with solar a big 150 121 consideration in SA to 100 75 73 compliment existing 50 30 hydro power in
Slide 17: Operational Excellence
OPERATIONAL EXCELLENCE © Harmony EXTRACTING THE BEST FROM OUR ASSETS
Slide 18: Key Operational Focus Areas: Big Five
18 KEY OPERATIONAL FOCUS AREAS BIG FIVE © Harmony Results for the financial year ended 30 June 2021 Safety and Health Active cost management Capital allocation prioritised to drive margin growth (synergies, exploration, projects) Production excellence Ensuring infrastructure aimed at enhancing produ
Slide 19: AISC Margins to Expand (Rand/kg)
19 DRIVING COST DOWN THROUGH IMPROVED GRADE AND PRODUCTIVITY AISC MARGINS TO EXPAND AISC margin Rand/kg – FY21 © Harmony Results for the financial year ended 30 June 2021 500 000 400 000 CPR 300 000 Bambanani Phoenix Moab Mponeng Dumps 200 000 MWS Khotsong Hidden Valley AISC margin (R/kg) 100 000 Ts
Slide 20: AISC Margins to Expand (US$/oz)
20 DRIVING COST DOWN THROUGH IMPROVED GRADE AND PRODUCTIVITY AISC MARGINS TO EXPAND AISC margin US$/oz - FY21 © Harmony Results for the financial year ended 30 June 2021 1 000 800 CPR 600 Bambanani Phoenix Moab Mponeng Dumps 400 MWS Khotsong Hidden Valley AISC margin (US$/oz) 200 Tshepong Doornkop 0
Slide 21: Optimising Higher Cost Mines
21 OPERATIONAL EXCELLENCE OPTIMISING HIGHER COST MINES © Harmony Results for the financial year ended 30 June 2021 KALGOLD TARGET 1 TSHEPONG JOEL • A-zone and Watertank pit • Trackless and conventional • Face length and • Completion of Joel decline development development optimisation project • Brid
Slide 22: Costs Controlled: All-In Sustaining Costs FY21
22 ALL IN SUSTAINING COSTS FOR FY21 COSTS CONTROLLED © Harmony Results for the financial year ended 30 June 2021 Total Harmony excl Royalties and Covid-related cost R 13 446 /kg; R 697 405 /kg; US$1 US$27/oz 409/oz 96% 2% Total Harmony R723 054/kg Royalties (US$1 460/oz) Covid-related costs R 12 202
Slide 23: Cash Cost Variance FY20 vs FY21
23 CASH COSTS FOR FY20 vs FY21 CASH COST VARIANCE © Harmony Results for the financial year ended 30 June 2021 Hidden Valley Mponeng R 25m and Related Assets Royalties R5 072m Water R 266m R 14m Other Covid-19 Unisel R178m R 189m R389m Electricity Labour Contractors R 416m R1 316m Consumables, R 413m
Slide 24: Planned Production Guidance FY22 (kg)
24 PLANNED PRODUCTION GUIDANCE FOR FY22 ~50,000KG PER YEAR 52 000 © Harmony Results for the financial year ended 30 June 2021 51 000 29 37 81 79 247 125 194 166 349 170 50 000 1 345 372 649 49 000 1 226 Kgs 48 000 47 000 49 408 46 000 47 755 45 000 44 000 FY21 Mponeng MWS Target 1 Joel Hidden Tshepo
Slide 25: Planned Production Guidance FY22 (koz)
25 PLANNED PRODUCTION GUIDANCE FOR FY22 ~1 589KOZ PER YEAR 1 660 © Harmony Results for the financial year ended 30 June 2021 1 640 4 1 1 5 3 3 8 5 1 620 6 11 43 1 600 12 21 1 580 000oz 1 560 39 1 540 1 589 1 520 1 535 1 500 1 480 FY21 Mponeng MWS Target 1 Joel Hidden Tshepong Kalgold Doornkop Moab K
Slide 26: SA Underground Recovered Grade
26 SA UNDERGROUND RECOVERED GRADE (G/T) IMPROVED GRADE © Harmony Results for the financial year ended 30 June 2021 6,00 5,59 ~5.57 5,48 5,51 5,50 5,45 5,07 5,02 g/t 5,00 4,77 4,75 4,50 4,00 FY14 FY15 FY16 FY17 FY18 FY19 FY20 FY21 FY22e
Slide 27: Effective Capital Allocation
EFFECTIVE CAPITAL ALLOCATION © Harmony AIMED AT GROWTH AND SHAREHOLDER RETURN
Slide 28: Investing in Our Future
28 INVESTING IN OUR FUTURE Capital allocation Value realisation Projects © Harmony Results for the financial year ended 30 June 2021 • Prioritise safety Hidden Valley Debt repayment • Rank surface projects higher Target: Lower risk profile • Assess financial risk vs safety risk extension <1x net deb
Slide 29: Mineral Resources: Growth in Resources
29 MINERAL RESOURCES GROWTH IN RESOURCES Mineral Resources Reconciliation © Harmony Results for the financial year ended 30 June 2021 June 20 vs June 21 (Million ounces) 28.4 3.5 141.2 140 Gold equivalents 118.6 2.3 23.3 120 Gold equivalents 100 26,9 80 Gold 60 Gold 117,9 40 20 91,8 19% 0 June June
Slide 30: Mineral Reserves: Adding Quality Ounces
30 MINERAL RESERVES ADDING QUALITY OUNCES © Harmony Results for the financial year ended 30 June 2021 Mineral Reserves Reconciliation June 20 vs June 21 (Million ounces) 9.3 1.7 42.5 40 Gold equivalents 36.5 1.7 11.1 Gold equivalents 12.8 20 Gold Gold 31.4 23,7 16% 0 June2020- June – gold 2020 gold
Slide 31: FY22 Capital Guidance per Operation (Rand)
31 FY22 CAPITAL GUIDANCE PER OPERATION (RAND) 1 600 © Harmony Results for the financial year ended 30 June 2021 1 400 186 FY21 FY22 FC 1 200 12% Zaaiplaats 29% 367 537 1 000 905 Great Noligwa pillar 71% 88% Rm 800 209 63 600 289 271 97 708 233 898 400 174 71 247 134 200 360 408 137 125 275 211 193 1
Slide 32: FY22 Capital Guidance per Operation (US$)
32 FY22 CAPITAL GUIDANCE PER OPERATION (US$) 120 © Harmony Results for the financial year ended 30 June 2021 100 13 Zaaiplaats 80 25 37 Great Noligwa pillar 62 US$m 60 14 4 40 20 19 7 49 16 62 New acquisitions 12 5 17 20 9 25 28 9 9 19 15 13 13 11 9 8 3 2 1 3 5 4 4 - - - - - - - - Hidden Tshepong Mo
Slide 33: De-risked Portfolio: Operational Free Cash Flow
33 OPERATIONAL FREE CASH FLOW AS A % OF TOTAL FY21 DE-RISKED PORTFOLIO © Harmony Results for the financial year ended 30 June 2021 Existing underground 12% SA surface operations 26% 62% Acquired and reinvested assets* *Mponeng, Moab Khotsong and Hidden Valley Note: Total operational free cash flow R
Slide 34: Rapid Paybacks
34 CAPITAL RAPID PAYBACKS © Harmony Results for the financial year ended 30 June 2021 Moab R3.47bn investment paid back in full H1FY2021 Khotsong Hidden Valley $175m payback achieved in FY2021 Mponeng and R3.36bn investment due to be repaid FY22 MWS Moab Khotsong payback done over ~3 years Hidden Va
Slide 35: Key Projects FY22: Zaaiplaats
35 KEY PROJECTS FY22: ZAAIPLAATS (MOAB KHOTSONG) HIGH-GRADE, LONG-LIFE ASSET Key numbers © Harmony Results for the financial year ended 30 June 2021 225 000oz per annum Major Capex FY22: ~R537 million Moab Khotsong 2020/2021 LOM Plan Grade: 9g/t Moab Khotsong 2020/2021 LOM Plan truncated tail includ
Slide 36: Zaaiplaats Orebody
36 ZAAIPLAATS OREBODY © Harmony Results for the financial year ended 30 June 2021 Great Noligwa # Pillar Middle Mine Moab Khotsong Main # A Block Below cut-off (1985 cmg/t) Zaaiplaats
Slide 37: Key Projects FY22: Mine Waste Solutions
37 KEY PROJECTS FY22: MINE WASTE SOLUTIONS LOW RISK, HIGH MARGIN ASSET Key numbers © Harmony Results for the financial year ended 30 June 2021 Pre-tax real IRR: Project benefits: 98 000oz • High margins per annum 43% • High volume • Low risk surface operation R708m 16 year • Long life asset • Franco
Slide 38: Mine Waste Solutions and Kareerand TSF Overview
38 MINE WASTE SOLUTIONS AND KAREERAND TSF OVERVIEW 1 MWS Plants MWS Complex Sulphur Paydam & © Harmony Results for the financial year ended 30 June 2021 2 1 South East extension 3 East TSF Kareerand 4 Harties TSF Complex 5 Kareerand TSF P 4 3 2 6 West Complex P 5 1 7 MWS Complex 3 P 8 8 Buffels Comp
Slide 39: Key Projects FY22: Hidden Valley Extension
39 KEY PROJECTS FY22: HIDDEN VALLEY EXTENSION STRATEGIC FOR PNG Key numbers © Harmony Results for the financial year ended 30 June 2021 2.5 year 160-200koz 1.38g/t extension on R457 630/kg per annum yield LOM AISC (LOM) Project Benefits • Stage 8 cutback provides the additional ore for 2.5-year mine
Slide 40: Hidden Valley Extension
40 KEY PROJECTS FY22 HIDDEN VALLEY EXTENSION Tailings Storage Facility (TSF) © Harmony Results for the financial year ended 30 June 2021 Ridgeline Processing Plant Hamata Pit & TSF2 HV Crusher Stage 7 Kaveroi Pit Stage 8 Stage 6 HV Stage 5 Pit
Slide 41: Creation of Second TSF
41 KEY PROJECTS FY22: HIDDEN VALLEY EXTENSION CREATION OF SECOND TSF © Harmony Results for the financial year ended 30 June 2021 • 80m wide cutback on Hidden Valley Kaveroi pit • Same underlying mine planning assumptions • Construction of second tailings storage facility • Utilising existing Hamata
Slide 42: Cash Certainty
CASH CERTAINTY © Harmony CREATING BALANCE SHEET FLEXIBILITY
Slide 43: FY21 vs FY20 Earnings (Rand)
43 FY21 VS FY20 EARNINGS (RAND) GROWTH © Harmony Results for the financial year ended 30 June 2021 HEPS EBITDA NET PROFIT GOLD PRICE increased by 699% increased by 64% increased RECEIVED to 923 SA cents to R9.8bn from R6 bn in to R5.6bn increased by 16% from a loss of 154 SA FY20 from a loss of R850
Slide 44: FY21 vs FY20 Earnings (US$)
44 FY21 VS FY20 EARNINGS (US$) GROWTH © Harmony Results for the financial year ended 30 June 2021 HEPS EBITDA NET PROFIT GOLD PRICE increased by 700% increased by 66% increased RECEIVED to 60 US cents to US$636m from to US$352m increased by 18% from a loss of 10 US US$383m in FY20 from a loss of US$
Slide 45: Balance Sheet Strength: Net Debt to EBITDA (Rand)
45 NET DEBT TO EBITDA (RAND) BALANCE SHEET STRENGTH 12 000 1,8 © Harmony Results for the financial year ended 30 June 2021 10 000 1,5 8 000 1,2 NET DEBT TO EBITDA Rand m illion 6 000 0,9 4 000 0,6 2 000 0,3 - 0,0 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun
Slide 46: Balance Sheet Strength: Net Debt to EBITDA (US$)
46 NET DEBT TO EBITDA (US$) BALANCE SHEET STRENGTH 750 1,5 © Harmony Results for the financial year ended 30 June 2021 600 1,2 NET DEBT TO EBITDA USD Million 450 0,9 300 0,6 150 0,3 - 0,0 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Jun-20 Dec-20 Jun-21 Net Debt EBITDA Ratio
Slide 47: Flexible Balance Sheet (Rand)
47 FLEXIBILE BALANCE SHEET (RAND) R7BN HEADROOM © Harmony Results for the financial year ended 30 June 2021 Jun-21 Q4 Dec-20 Q2 R4 254 R3 162 million million Undrawn Undrawn credit facilities credit facilities Cash equivalent Cash equivalent R4 217 million R2 819 million
Slide 48: Flexible Balance Sheet (US$)
48 FLEXIBILE BALANCE SHEET (US$) US$500M HEADROOM © Harmony Results for the financial year ended 30 June 2021 Jun-21 Q4 Dec-20 Q2 US$ 298 US$ 215 million million Undrawn Undrawn credit facilities credit facilities Cash equivalent Cash equivalent US$ 287 million US$ 198 million
Slide 49: Clear Dividend Policy
49 CLEAR DIVIDEND POLICY ** 20% NET CASH RETURNED TO INVESTORS FY 21 revenue breakdown by item © Harmony Results for the financial year ended 30 June 2021 2% 9% Operational Expense 4% 2% 70% Capital Expenditure 13% Royalties and Tax Corporate, Rehab and Other Net Cash Retained Dividends -20% of Net
Slide 50: Conclusion
CONCLUSION © Harmony SPECIALIST EMERGING MARKET GOLD MINER WITH COPPER FOOTPRINT
Slide 51: Sustainable Mining Throughout the Cycle
51 THROUGHOUT THE CYCLE SUSTAINABLE MINING © Harmony Results for the financial year ended 30 June 2021 Optimisation of existing operations and asset mix Integrated ESG practices Robust yet flexible balance sheet POSITIVE SHAREHOLDER RETURNS THROUGH Astute acquisitions and SUSTAINABLE MINING A war ch
Slide 52: Investment Case
52 BALANCE SHEET SET FOR OPTIONALITY INVESTMENT CASE © Harmony Results for the financial year ended 30 June 2021 01 02 03 04 Embedded ESG Geared to Margin Re-engineered the Rand expansion portfolio gold price through growth Creating lasting legacies Rand costs; 1.6Moz gold producer plus Deleveraged
Slide 53: Questions?
QUESTIONS? © Harmony
Slide 54: ESG Leadership Recognition
54 ESG LEADERSHIP RECOGNITION © Harmony Results for the financial year ended 30 June 2021 O F E F F O R T S T O D AT E Precious metals GEI score of Upgraded to a FTSE4Good ranking of Prioritising 64.17% index constituent gender Top 50 Disclosure score of ‘B’ rating 2021 empowerment within our busine
Slide 55: Extract from Income Statement – Rand
55 EXTRACT FROM INCOME STATEMENT – RAND JUN21 JUN20 % Extracts from income statement and operating results (Rm) (Rm) change Revenue 41 733 29 245 43 © Harmony Results for the financial year ended 30 June 2021 Production costs (29 774) (22 048) 35 Cash operating costs (29 717) (21 897) 36 Inventory m
Slide 56: Extract from Income Statement – US$
56 EXTRACT FROM INCOME STATEMENT – US$ JUN21 JUN20 % Extracts from income statement and operating results (US$m) (US$m) change Revenue 2 710 1 867 45 © Harmony Results for the financial year ended 30 June 2021 Production costs (1 933) (1 409) 37 Cash operating costs (1 930) (1 399) 38 Inventory move
Slide 57: Hedging Table as at June 2021
57 HEDGING TABLE AS AT 30 JUNE 2021 FY2022 FY2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total Rand Gold Forward Contracts koz 79 72 63 52 38 5 - - 309 © Harmony Results for the financial year ended 30 June 2021 R'000/kg 863 933 1 022 1 070 1 084 1 025 - - 976 Dollar Gold Forward Contracts koz 12 12 11 11 9 9 7 2
Slide 58: FY22 Cost and Grade Guidance
58 FY22 COST AND GRADE GUIDANCE Plan to produce ~1.54 Moz to 1.63 Moz in FY22, at • an average underground recovered grade of ~5.40g/t to 5.57g/t, and • an all-in sustaining cost of R765 000/kg to R800 000/kg © Harmony Results for the financial year ended 30 June 2021 Adjusted reserve grade Reserve
Slide 59: FY21 Production Guidance (per Operation)
59 FY21 PRODUCTION GUIDANCE (PER OPERATION) FY21 production Life of mine FY22 guidance (oz) (years) Operation (oz) Tshepong operations 238 526 238 000 – 250 000 20 Results for the year ended 30 June 2021 Moab Khotsong 230 391 227 000 – 239 000 7 Mponeng 175 092 209 000 – 220 000 8 Bambanani 64 044 6
Slide 60: Capital Guidance (Rand)
60 CAPITAL GUIDANCE* (RAND) Capital guidance (Rand) 9 000 © Harmony Results for the financial year ended 30 June 2021 8 000 905 294 7 000 555 805 6 000 913 2 253 1 032 5 000 2 413 463 454 Rm 1 047 4 000 846 390 1 690 613 3 000 2 000 4 316 3 626 3 866 3 054 2 828 1 000 - FY21 FC FY21 Act FY22 FC FY23
Slide 61: Capital Guidance (US$)
61 CAPITAL GUIDANCE* (US$) Capital guidance (US$) 600 © Harmony Results for the financial year ended 30 June 2021 62 500 20 38 55 400 155 71 59 166 31 US$m 300 30 68 54 25 116 40 200 297 266 233 100 198 195 - FY21 FC FY21 Act FY22 FC FY23 FC FY24 FC Sustaining capital (SA) Growth capital (SA) Hidden
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