Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — Q3 FY2006 Earnings Presentation
30 slides from Harmony Gold Mining's earnings presentation, March 2006
Slide 1: A New Game Plan for a Rising Gold Price
“A NEW GAME PLAN FOR A RISING GOLD PRICE” Quarter ended March 2006
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
Slide 3: Quarterly Highlights
QUARTERLY HIGHLIGHTS • Harmony highly geared to Rand gold price • CONOPS implementation completed • Tshepong holed with Phakisa after 5360m of development. • EMP on Hidden Valley authorized • Australian hedge book reduced by 25 000 oz. • Operations generated R292M cash • TGIO
Slide 4: Operational Review Completed
OPERATIONAL REVIEW COMPLETED Findings • aftermath of restructuring – skills and compliment rebalancing – ore body flexibility Our action steps • improved production capacity – no of faces mined – staffing of crews • longer term flexibility through development and opening up
Slide 5: Our Safety Results
OUR SAFETY RESULTS Fatility Injury Rate (Per Million Hours Worked) 0.4 0.35 0.3 0.25 0.2 0.15 0.1 0.05 0 06 02 04 03 05 20 20 20 20 20 og Pr
Slide 6: Quarter on Quarter Analysis (Rand)
QUARTER ON QUARTER ANALYSIS MAR DEC % 2006 2005 VAR Gold produced - kg 17 464 20 316 (14.0) Revenue - R/Kg 110 399 102 333 8.0 Exchange Rate - R/US$ 6.14 6.53 (6.0) Cash costs - R/kg 92 914 83 154 (11.7) Cash operating profit - R (m) 306 389 (21.3) Cash earnings - cents per share (SA) 78 99 (21.2)
Slide 7: Quarter on Quarter Analysis (US$)
QUARTER ON QUARTER ANALYSIS MAR DEC % 2006 2005 VAR Gold produced - oz 561 477 653 171 (14.0) Revenue - US$/oz 559 487 14.8 Exchange Rate - R/US$ 6.14 6.53 (6.0) Cash costs - $/oz 470 396 (18.7) Cash operating profit - US$ (m) 50 60 (16.7) Cash earnings - cents per share (US) 13 15 (13.3)
Slide 8: Quarter on Quarter Profit Comparison
QUARTER ON QUARTER PROFIT COMPARISON WORKING PROFIT (Rm) OPERATION Mar-06 Dec-05 Variance South African operations Quality ounces 245.7 263.7 (18.0) Growth ounces (21.0) (2.5) (18.5) Leverage ounces 36.2 76.0 (39.8) Surface operations 13.0 10.9 2.1 Total SA Operations 273.9 348.1 (74.2) Australian o
Slide 9: Quarter on Quarter Cash Operating Profit Variance Analysis
QUARTER ON QUARTER CASH OPERATING PROFIT VARIANCE ANALYSIS Cash operating profit – Dec 2005 R389,4 million Value attributed to change in: - volume (R144.3) million - working cost R 66.7 million - recovery grade (R147.6) million - Rand gold price R 141.4 million Net variance (R 83.8) million Cash ope
Slide 10: Reconciliation of Headline Earnings
RECONCILIATION OF HEADLINE EARNINGS EARNINGS PER QUARTER ENDED QUARTER ENDED SHARE (SA Cents) MARCH 2006 DECEMBER 2005 Cash earnings 78 99 Basic (loss)/earnings (46) 6 Headline loss (50) (75) Fully diluted (loss)/earnings (46) 6
Slide 11: Capital Expenditure (Rm)
CAPITAL EXPENDITURE (Rm) OPERATIONAL ACTUAL FORECAST CAPEX MAR 2006 JUN 2006 South African Operations 225 195 Australian Operations 32 33 Total Operational Capex 257 228 PROJECT CAPEX Doornkop South Reef 33 36 Elandsrand New Mine 35 43 Tshepong North Decline 13 24 Phakisa Shaft 22 56 Target Shaft 12
Slide 12: Operational Results - Quality Ounces
OPERATIONAL RESULTS - QUALITY OUNCES MAR DEC % 2006 2005 VAR U/g tonnes milled (‘000) 1 522 1 574 (3.3) U/g recovery grade (g/t) 5,69 6,10 (6.7) U/g kilograms produced (kg) 8 661 9 604 (9.8) U/g working costs (R/kg) 81 886 74 725 (9.6) U/g working costs (R/tonne) 466 456 (2.2)
Slide 13: Quality Ounces Highlights and Concerns
QUALITY OUNCES HIGHLIGHTS AND CONCERNS • Tshepong holing with Phakisa (5 360m) • CONOPS implemented on Masimong • Target starts to improve production levels JUNE QUARTER OUTLOOK • Volume bounce back • Grade improvements towards end of the year
Slide 14: Operational Results - Growth Projects
OPERATIONAL RESULTS - GROWTH PROJECTS MAR DEC % 2006 2005 VAR U/g tonnes milled (‘000) 343 312 9.9 U/g recovery grade (g/t) 4,37 5,63 (22.4) U/g kilograms produced (kg) 1 498 1 756 (14.7) U/g working costs (R/kg) 124 774 104 188 (19.8) U/g working costs (R/tonne) 545 586 7.0
Slide 15: Growth Operations Highlights
GROWTH OPERATIONS HIGHLIGHTS • orepass changeover on Elandsrand • Elandsrand performance still problematic (Change over to new mine) JUNE QUARTER OUTLOOK • improved production volumes expected from Elandsrand
Slide 16: Project Phoenix
PROJECT PHOENIX • slimesdam re-treatment • Saaiplaas plant available • rehabilitation/clean-up • 400 000 tons treated for 70 kg gold per month Financial analysis Capital Required R34.7 mil Head grade 0.35 g/t Recovery 47% Treatment Cost R10.54/t NPV @ R100 000/kg R78.4 mil NPV @ R120 000/kg R122.5 m
Slide 17: Operational Results - Leveraged Operations
OPERATIONAL RESULTS – LEVERAGED OPERATIONS MAR DEC % 2006 2005 Var U/g tonnes milled (‘000) 1 055 1 252 (15.7) U/g recovery grade (g/t) 4,74 4,88 (2.9) U/g kilograms produced (kg) 4 996 6 113 (18.3) U/g working costs (R/kg) 102 857 90 074 (14.2) U/g working costs (R/tonne) 487 440 (10.7)
Slide 18: Leveraged Ounces Highlights and Concerns
LEVERAGED OUNCES HIGHLIGHTS AND CONCERNS • Joel North Shaft commissioned • development on Bambanani progressed well JUNE QUARTER OUTLOOK • high gearing to current gold price • flexibility starting to improve at Bambanani • production volumes to improve at Joel
Slide 19: Operational Results - Surface Operations (Includes Kalgold)
OPERATIONAL RESULTS - SURFACE OPERATIONS (INCLUDES KALGOLD) MAR DEC % 2006 2005 VAR Surface tonnes milled (‘000) 783 938 (16.5) Surface recovery grade (g/t) 0.98 0.99 (1.0) Kilograms produced (kg) 766 926 (17.3) Working costs (R/kg) 92 535 89 849 (3.0) Working costs (R/tonne) 91 89 (2.2)
Slide 20: Australian Operations
AUSTRALIAN OPERATIONS MAR DEC % 2006 2005 VAR Tonnes milled (‘000) 763 781 (2.3) Recovery grade (g/t) 2,02 2,45 (17.6) Kilograms produced (kg) 1 543 1 917 (19.5) Working costs (R/kg) 91 876 80 820 (13.7) Working costs (R/tonne) 186 198 6.1
Slide 21: Australian Operations Highlights
AUSTRALIAN OPERATIONS HIGHLIGHTS • Drilling results • 25 000oz closed out JUNE QUARTER OUTLOOK • Shirl pit becoming reality • hedge book restructuring reach a peak of 75 000oz
Slide 22: Cash Reconciliation for the Period
CASH RECONCILIATION FOR THE PERIOD OCTOBER 2005 TO DECEMBER 2005 Cash and equivalents on 31 December 2005 (R’million) 2 914.4 Operational (51.2) Operating profit 305.6 Capex (net) (231.1) Development cost capitalised (160.2) Corporate / exploration expenditure (26.7) Care and maintenance costs (29.4
Slide 23: World Class Growth Projects
WORLD CLASS GROWTH PROJECTS LOM CAPITAL CASH PROJECT OUNCES COST US$ COST g/t oz/ (‘000/OZ) (US$M) COST/OZ $/oz ANNUM Masimong (SA) 2 530 30 12 370 5,2 260 000 Phakisa (SA) 3 960 99 25 275 7,3 250 000 Elandsrand (SA) 6 220 123 20 241 8,9 509 000 Doornkop South Reef (SA) 2 960 148 50 336 6,5 325 000
Slide 24: Harmony Production Profile
HARMONY PRODUCTION PROFILE 4000 7 3500 6.5 3000 Rec Grade (g/t) 6 2500 Ounces 2000 5.5 1500 5 1000 4.5 500 0 4 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Harmony excluding projects Masimong 5 Elandsrand Doornkop (KR & SR) Tshepong Sub
Slide 25: Hidden Valley Parameters
HIDDEN VALLEY PARAMETERS Ore (40.5 Mt) (M tonne/yr) 4.2 Recovery Grade (Au g/t) 2.21 Recovery Grade (Ag g/t) 35.7 Gold production per annum (‘000 oz) 280 Silver production per annum (‘000 oz) 3 900 Equivalent gold production (‘000 oz) 350 LOM gold production (‘000 oz) 2 600 LOM silver production (‘0
Slide 26: Hidden Valley Parameters - Capex US$250M
HIDDEN VALLEY PARAMETERS At US$ 500/oz Au, At US$ 550/oz Au, US$ 7.50/oz Ag US$ 10.50/oz Ag Pre Tax Cash Flow US$ 456 M US$ 699 M Pre Tax NPV @ 7,5% US$ 208 M US$ 351 M Pre Tax IRR 28% 36% Cash Cost (US$/oz) 229 188 CAPEX of US$ 250 M
Slide 27: Golpu Geotechnical Drilling Program
GOLPU GEOTECHNICAL DRILLING PROGRAM Isometric view of copper gold porphyry and geotechnical drilling program Current resource outline Golpu plan view showing major 507m @ 1.5% Cu, structures and geotechnical 549m @ 1.6% Cu, 0.6 g/t Au 0.5 g/t Au drilling program planned holes • 4 holes drilled, 2 00
Slide 28: So How Geared Are We?
SO HOW GEARED ARE WE? Gold Price (R/kg) 110 000 130 000 Gold production (Kg) 20 000 20 000 Revenue (Rm) 2 200 2 600 Working Cost (R85 000/Kg) 1 700 1 700 Operating Profit (Rm) 500 900 Profit Margin (%) 23% 35%
Slide 29: Harmony Remains Highly Geared and Unhedged
A NEW GAME PLAN FOR A RISING GOLD PRICE Company de-tox Introspection The right strategy +25 acquisitions Regaining profitability Making the most of LOM and labour mix Mining flexibility our assets Major retrenchments Development focus Organic growth Retraining & redeployment Improved Acquisitions pr
Slide 30: Questions
Questions Website www.harmony.co.za “A NEW GAME PLAN FOR A RISING GOLD PRICE”
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