Harmony Gold Mining Co. Ltd. · JSE:HAR

Harmony Gold Mining — H1 FY2021 Earnings Presentation

51 slides from Harmony Gold Mining's earnings presentation, Feb 23, 2021

  1. Slide 1: Interim results for the six-month period ended 31 December 2020

    JSE Ticker Code: HAR NYSE Ticker Code: HMY 23 FEBRUARY 2021 INTERIM RESULTS FOR THE SIX-MONTH PERIOD ENDED 31 DECEMBER 2020 © Harmony Peter Steenkamp, Chief Executive Officer Boipelo Lekubo, Financial Director

  2. Slide 2: Safe Harbour Statement and Disclaimer

    2 PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOUR STATEMENT AND DISCLAIMER Harmonyresults for the six month period ended in 31 December 2020 FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of the safe harbour provided by Section 21E of the Ex

  3. Slide 3: FY21 Focus Areas

    3 FY21 FOCUS AREAS OUR STRATEGY OUR VALUES results for the six month period ended in 31 December 2020 To produce safe, profitable ounces and improve margins through operational excellence and value-accretive acquisitions STRATEGIC PILLARS RESPONSIBLE OPERATIONAL CASH EFFECTIVE CAPITAL STEWARDSHIP EX

  4. Slide 4: H1FY21 vs H1FY20 - Key Highlights (Rand)

    4 H1FY21 VS H1FY20 - KEY HIGHLIGHTS (RAND) EFFECTIVE RESPONSIBLE OPERATIONAL CASH CAPITAL results for the six month period ended in 31 December 2020 3 1 STEWARDSHIP 2 EXCELLENCE CERTAINTY 4 ALLOCATION • • 69% increase in operating • Successful integration of • In Phase 2 of embedding a 65% increase

  5. Slide 5: H1FY21 vs H1FY20 - Key Highlights (US$)

    5 H1FY21 VS H1FY20 - KEY HIGHLIGHTS (US$) EFFECTIVE RESPONSIBLE OPERATIONAL CASH CAPITAL results for the six month period ended in 31 December 2020 3 1 STEWARDSHIP 2 EXCELLENCE CERTAINTY 4 ALLOCATION • 69% increase in operating • Successful integration of • In Phase 2 of embedding a • 49% increase i

  6. Slide 6: Responsible Stewardship

    RESPONSIBLE STEWARDSHIP © Harmony SUSTAINABLE GOLD

  7. Slide 7: Safety – A Moral Imperative

    7 SAFETY – A MORAL IMPERATIVE Harmonyresults for the six month period ended in 31 December 2020 Lost Time Injury Frequency Rate - Group OUR STRATEGY 10,00 9,00 8,00 7,54 9,24 7,21 7,00 6,23 6,26 6,16 6,33 6,27 6,00 5,00 4,00 Pursue continual improvement in 3,00 the health and safety performance 2,00

  8. Slide 8: Making Progress in Preventing Incidents

    8 MAKING PROGRESS IN PREVENTING INCIDENTS Group Total Injury Accident Frequency Rate Harmonyresults for the six month period ended in 31 December 2020 18,00 16,00 15,29 14,00 12,00 10,33 10,00 8,95 8,27 7,86 8,00 8,00 7,69 © Interim 6,00 4,00 2,00 0,00 FY15 FY16 FY17 FY18 FY19 FY20 FY21 (Dec)

  9. Slide 9: Safety: Our People Are Our Priority

    9 SAFETY: OUR PEOPLE ARE OUR PRIORITY Harmonyresults for the six month period ended in 31 December 2020 ZERO LOSS OF LIFE AND PREVENT INJURIES Development of safety leadership capability and credibility Embedded practices – routines and habits Improve employee engagement and development © Interim Po

  10. Slide 10: Agile Healthcare Practices Result in Effective COVID-19 Response

    10 AGILE HEALTHCARE PRACTICES RESULT IN EFFECTIVE COVID-19 RESPONSE Harmonyresults for the six month period ended in 31 December 2020 Multi-disciplinary response team established at start of pandemic Return-to-work process designed, implemented to ensure safe return of all employees (number of activ

  11. Slide 11: Unisel Mine Life Extension: ESG in Practice

    11 UNISEL MINE LIFE EXTENSION: ESG IN PRACTICE Life of mine extended; increased margin; multiple jobs created; communities sustained Harmonyresults for the six month period ended in 31 December 2020 SINCE 2005 UNISEL PRODUCED: Mine opened single • R1.8 billion operating profit 9m diameter shaft, sun

  12. Slide 12: ESG Commitment Recognised by External Parties

    12 ESG COMMITMENT RECOGNISED BY EXTERNAL PARTIES Harmonyresults for the six month period ended in 31 December 2020 © Interim 1st in ESG disclosures among South African mining companies Note: ESG = Environmental, Social and Governance

  13. Slide 13: Operational Excellence

    OPERATIONAL EXCELLENCE © Harmony DOING WHAT WE DO BEST

  14. Slide 14: Enhanced Our Portfolio with Quality Ounces

    ENHANCED OUR PORTFOLIO WITH QUALITY OUNCES (FY16 TO DATE) 14 Production 1 800 Interim results for the six month period ended 31 December 2020 1 600 174 1 400 200 283 1 200 26 271 157 73 84 110 1 000 261 Koz 226 800 600 1 009 993 1 026 967 400 835 882 200 - FY16 FY17 FY18 FY19 FY20 FY21FC SA producti

  15. Slide 15: 90% of Total Ounces Profitable at Current Spot

    15 90% OF TOTAL OUNCES PROFITABLE AT CURRENT SPOT AISC - December 2020 quarter Harmonyresults for the six month period ended in 31 December 2020 1 300 000 Target 1 1 200 000 1 100 000 1 000 000 Kalgold Joel 900 000 Current spot gold price - R850 000/kg AISC (R/kg) Kusasalethu 800 000 Planned gold pr

  16. Slide 16: Astute Acquisitions Result in Improved Cash Flow Margins

    16 ASTUTE ACQUISITIONS RESULT IN IMPROVED CASH FLOW MARGINS (H1FY21) Operating free cash flow margin Harmonyresults for the six month period ended in 31 December 2020 50 43 42 40 38 34 34 31 32 30 28 25 22 20 % 13 10 7 5 - © Interim (10) (7) (8) (20) Tshepong Moab Mponeng Bambanani Joel Doornkop Tar

  17. Slide 17: Operating Free Cash Flow Yield

    © Harmony 17 Interim results for the six month period ended in 31 December 2020 20% 25% 10% 15% 0% 5% FY16 FY17 FY18 OPERATING FREE CASH FLOW YIELD FY19 FY20 H1FY21

  18. Slide 18: Adding Quality Resources and Reserves

    18 ADDING QUALITY RESOURCES AND RESERVES JUNE 2020 TO DECEMBER 2020 Harmonyresults for the six month period ended in 31 December 2020 TOTAL GROUP MINERAL RESOURCES TOTAL GROUP MINERAL RESERVES June 2020 Dec 2020 June 2020 Dec 2020 30% 52% 43% 20% 17% 38% 118.6 169.8 27% 36.5 43.8 43% Moz* Moz Moz**

  19. Slide 19: Diversified Portfolio of Assets

    19 DIVERSIFIED PORTFOLIO OF ASSETS (Q2FY16 VS Q2FY21) Harmonyresults for the six month period ended in 31 December 2020 Production profile – Q2FY16 Production profile – Q2FY21 Hidden Hidden SA Valley Valley surface 6% 9% 9% SA surface 18% SA SA underground underground © Interim 85% 73% Updated guida

  20. Slide 20: Added Surface Sources De-risk Asset Portfolio

    20 ADDED SURFACE SOURCES DE-RISK ASSET PORTFOLIO (H1FY21) Harmonyresults for the six month period ended in 31 December 2020 H1FY21 - Operational cash flow (% of total) Surface operations offer: • Safety 66% • Lower risk Underground • Longer life SA surface • Increased margins 22% Hidden Valley • Low

  21. Slide 21: One of the Largest Processors of Tailings and Waste Rock Dumps

    21 ONE OF THE LARGEST PROCESSORS OF TAILINGS AND WASTE ROCK DUMPS GLOBALLY Total gold production Harmonyresults for the six month period ended in 31 December 2020 350 300 293 250 200 Koz 150 131 100 © Interim 50 24 5 0 Harmony* Peer 1 Peer 2 Peer 3 Source: Wood Mackenzie (WoodMac) *includes: Mine Wa

  22. Slide 22: Newly Acquired Assets Allow Service and Surface Synergies

    22 NEWLY ACQUIRED ASSETS ALLOW OPPORTUNITIES FOR SERVICE AND SURFACE SYNERGIES Harmonyresults for the six month period ended in 31 December 2020 Repurpose and Unlocking Reduce optimise MOD* Cross utilisation significant value, Water treatment operational and TSF** of workshops synergies and plants f

  23. Slide 23: Cash Certainty

    CASH CERTAINTY © Harmony HEADROOM INCREASED

  24. Slide 24: Earnings Growth (Rand)

    24 EARNINGS GROWTH (RAND) Harmonyresults for the six month period ended in 31 December 2020 HEPS increased by 211% to 775 SA cents from 249 SA cents Basic EPS increased by 288% to 966 SA cents from 249 SA cents • 336% increase in net profit to R5.8bn from R1.3bn • 31% increase in gold price received

  25. Slide 25: Earnings Growth (US$)

    25 EARNINGS GROWTH (US $) Harmonyresults for the six month period ended in 31 December 2020 HEPS increased by 182% to 48 US cents from 17 US cents Basic EPS increased by 247% to 59 US cents from 17 US cents • 69% increase in operating free cash flow margin to 22% from 13% • 291% increase in net prof

  26. Slide 26: Net Debt: EBITDA Ratio Well Below Target of 1x (Rand)

    26 NET DEBT: EBITDA RATIO WELL BELOW TARGET OF 1x (RAND) 9 000 1,8 EBITDA vs Net debt Harmonyresults for the six month period ended in 31 December 2020 8 000 1,6 7 000 1,4 6 000 1,2 Ratio 5 000 1,0 R Million 4 000 0,8 3 000 0,6 © Interim 2 000 0,4 1 000 0,2 0 0,0 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 J

  27. Slide 27: Net Debt: EBITDA Ratio Well Below Target of 1x (US$)

    27 NET DEBT: EBITDA RATIO WELL BELOW TARGET OF 1x (US$) Harmonyresults for the six month period ended in 31 December 2020 EBITDA vs Net Debt 1,8 600 1,6 500 1,4 Net Debt to EBITDA Ratio 1,2 400 US$ million 1,0 300 0,8 0,6 200 0,4 © Interim 100 0,2 0 0,0 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-

  28. Slide 28: Higher Quality Assets = Stronger Operational Free Cash Flows

    28 HIGHER QUALITY ASSETS = STRONGER OPERATIONAL FREE CASH FLOWS Operational free cash flow % of total H1FY21 Interim results for the six month period ended 31 December 2020 136% increase in gross production profit Kusasalethu; 10% Joel; -1% Bambanani; 7% Target 1; -2% Masimong; 2% Doornkop; 9% Kalgo

  29. Slide 29: Adapting Our Hedging Strategy to Secure Stronger Margins

    29 ADAPTING OUR HEDGING STRATEGY TO SECURE STRONGER MARGINS Harmonyresults for the six month period ended in 31 December 2020 Rand gold cost and market price 1 100 000 How and when we hedge 1 050 000 determined by: 1 000 000 950 000 − being more selective before entering into hedges 900 000 25% 850

  30. Slide 30: Net Headroom Provides Myriad of Options (ZAR)

    30 NET HEADROOM PROVIDES MYRIAD OF OPTIONS (ZAR) Net headroom (Rand) – as at 31 December 2020 Harmonyresults for the six month period ended in 31 December 2020 © Interim

  31. Slide 31: Net Headroom Provides Myriad of Options (US$)

    31 NET HEADROOM PROVIDES MYRIAD OF OPTIONS (US$) Net headroom (US$) – as at 31 December 2020 Harmonyresults for the six month period ended in 31 December 2020 © Interim

  32. Slide 32: Effective Capital Allocation

    EFFECTIVE CAPITAL ALLOCATION © Harmony AIMED AT GROWTH AND SHAREHOLDER RETURN

  33. Slide 33: Good Stewards of Financial Capital

    33 GOOD STEWARDS OF FINANCIAL CAPITAL Harmonyresults for the six month period ended in 31 December 2020 Capital allocation Deliverables achieved Debt repayment • 58% reduction in net debt to R580m (US$40m) in December 2020 Target: from R1.4bn*(US$79m) in June 2020 <1x net debt/EBITDA • Net debt to E

  34. Slide 34: Capital Allocation Aimed at Value Creation

    34 CAPITAL ALLOCATION AIMED AT VALUE CREATION: MEASURED AGAINST CLEAR CRITERIA Harmonyresults for the six month period ended in 31 December 2020 • Prioritise safety Lower risk profile • Rank surface projects higher • Assess overall risk impact Pipeline of projects • Replace marginal ounces, reduce •

  35. Slide 35: Driving Total Shareholder Returns

    35 DRIVING TOTAL SHAREHOLDER RETURNS 472% INCREASE IN MARKET CAP OVER 5 YEARS Harmonyresults for the six month period ended in 31 December 2020 Performance since January 2016 900 80 000 60 000 Harmony market cap. (ZARmm) Share price (rebased to 100) 600 40 000 472% 305% 267% 300 20 000 © Interim 91%

  36. Slide 36: Interim Dividend Declared

    36 INTERIM DIVIDEND DECLARED DEFINITIVE POLICY INTRODUCED Harmony’s dividend policy is to pay a return of 20% of net free cash* generated to shareholders, at the discretion of the board of directors** Harmonyresults for the six month period ended in 31 December 2020 Revenue item by use (%) FY21E @ U

  37. Slide 37: In Conclusion

    IN CONCLUSION © Harmony SOLID INVESTMENT CASE

  38. Slide 38: Harmony 2021: Value Creation Throughout the Cycle

    38 HARMONY 2021: VALUE CREATION THROUGHOUT THE CYCLE Interim results for the six month period ended in 31 December 2020 Optimisation of existing operations and asset mix Integrated ESG practices Robust yet flexible balance sheet POSITIVE SHAREHOLDER Astute acquisitions and RETURNS THROUGH A warchest

  39. Slide 39: Harmony's Equity Offering

    39 HARMONY’S EQUITY OFFERING Harmonyresults for the six month period ended in 31 December 2020 • Replacing marginal assets with quality ounces • Proven success in extending life of mine and adding value to all stakeholders • Emerging market specialist (South Africa and Papua New Guinea) Positives •

  40. Slide 40: Our Investment Case

    40 OUR INVESTMENT CASE Harmonyresults for the six month period ended in 31 December 2020 01 02 03 04 balance sheet ~1.6*Moz gold Leveraged Quality positioned for producer in FY21 to the R/kg gold price growth shareholder © Interim prospects returns * Including Mponeng and related assets

  41. Slide 41: Contact Us

    CONTACT US © Harmony EMAIL: HARMONYIR@HARMONY.CO.ZA MOBILE: 082 759 1775

  42. Slide 42: Annexures

    ANNEXURES © Harmony

  43. Slide 43: Extract from Income Statement – Rand

    43 EXTRACT FROM INCOME STATEMENT– RAND DEC20 DEC19 % Harmonyresults for the six month period ended in 31 December 2020 Extracts from income statement and operating results (Rm) (Rm) change Revenue 21 018 15 009 40 Production costs (14 238) (10 898) (31) Cash operating costs (13 819) (10 687) (29) In

  44. Slide 44: Extract from Income Statement – US$

    44 EXTRACT FROM INCOME STATEMENT – US$ DEC20 DEC19 % Harmony results for the six month period ended in 31 December 2020 Extracts from income statement and operating results (US$m) (US$m) change Revenue 1 294 1 022 27 Production costs (876) (742) (18) Cash operating costs (850) (728) (17) Inventory m

  45. Slide 45: Hedging Table as at December 2020

    45 HEDGING TABLE AS AT 31 DECEMBER 2020 FY2021 FY2022 FY2023 Harmonyresults for the six month period ended in 31 December 2020 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Total Rand gold Forward contracts koz 100 86 79 70 58 48 29 1 471 R'000/kg 742 790 863 932 1 025 1 076 1 109 1 081 892 Dollar gold Forward contracts

  46. Slide 46: FY21 Cost and Grade Guidance

    46 FY21 COST AND GRADE GUIDANCE Harmonyresults for the six month period ended in 31 December 2020 • Plan to produce ~1.56 Moz to 1.60 Moz in FY21, at • an average underground recovered grade of ~5.47g/t to 5.64g/t, and • an all-in sustaining cost of R700 000/kg to R720 000/kg Adjusted Reserve grade

  47. Slide 47: FY21 Production Guidance (per Operation)

    47 FY21 PRODUCTION GUIDANCE (PER OPERATION) Harmonyresults for the six month period ended in 31 December 2020 FY20 production Life of mine FY21 guidance (oz) (years) Operation (oz) Tshepong operations 234 475 232 700 - 238 700 20 *Mponeng - 162 800 - 167 000 9 Moab Khotsong 211 938 234 500 - 240 500

  48. Slide 48: Capital Guidance (Rand)

    48 CAPITAL GUIDANCE* (RAND) Harmonyresults for the six month period ended in 31 December 2020 7 000 6 000 913 5 000 463 4 000 846 Rm 675 825 3 000 368 408 2 000 © Interim 2 801 1 000 2 103 - FY20 FY21 FC Sustaining capital (SA) Growth capital (SA) Capital (Mponeng and MWS) Hidden Valley capital Defe

  49. Slide 49: FY21 Capital Guidance per Operation (Rand)

    49 FY21 CAPITAL GUIDANCE PER OPERATION (RAND) Harmonyresults for the six month period ended in 31 December 2020 1 600 1 400 1 200 176 1 000 913 215 Rm 800 Additional capital from new acquisitions 196 21 600 174 183 400 795 176 233 143 © Interim 83 94 130 5 200 383 393 156 229 222 77 38 207 149 111 9

  50. Slide 50: Capital Guidance (US$)

    50 CAPITAL GUIDANCE* (US$) Harmonyresults for the six month period ended in 31 December 2020 400 350 59 300 30 54 250 US$m 200 43 53 23 150 26 100 180 © Interim 134 50 - FY20 FY21 FC Sustaining capital (SA) Growth capital (SA) Capital (Mponeng and MWS) Hidden Valley capital Deferred stripping *Exclu

  51. Slide 51: FY21 Capital Guidance per Operation (US$)

    51 FY21 CAPITAL GUIDANCE PER OPERATION (US$) 100 Harmonyresults for the six month period ended in 31 December 2020 90 80 70 11 60 59 14 US$m 50 13 40 1 Additional capital from new acquisitions 30 11 12 51 11 9 15 20 5 6 © Interim 25 25 8 10 10 5 15 14 13 2 10 7 6 6 1 - - 2 4- 3- - - Hidden Tshepong

Harmony Gold Mining Company — H1 FY2021 Earnings Presentation on 6ix