Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — Q3 FY2014 Earnings Presentation
31 slides from Harmony Gold Mining's earnings presentation, May 6, 2014
Slide 1: Q3 FY14
Q3 FY14 GRAHAM BRIGGS FRANK ABBOTT 6 May 2014 1 w w w . h a r mw onwyw. c. hoa. zr m a ony.co.za FY14 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 Safety 2 Operational results 3 Solid financials 4 Wafi-Golpu 5 Conclusion 3 www.harmony.co.za FY14 Q1 Q2 Q3 Q4
Slide 4: Safety
Safety www.harmony.co.za
Slide 5: Safety underpins our strategy
Safety underpins our strategy A globally competitive gold mining company – growth in profits, paying dividends to shareholders Safely delivering on projects Optimise operational delivery and operational plans Growth in margin Growth (free cash flow) Sharing profits with Sharing rewards stakeholders
Slide 6: More had to be done
More had to be done • Some of the key aspects of our safety strategy are: – behavioural aspects – leading from the top – research and new technologies • February 2014 safety incidents an anomaly • Independent safety review of all Harmony‟s SA operations being conducted • Increase in safety messaging
Slide 7: Operational results
Operational results www.harmony.co.za
Slide 8: Beating our guidance on grade
Beating our guidance on grade g/t 5.2 5.10 5.0 4.85 FY14 planned grade 4.8 4.6 4.55 4.4 4.37 4.2 4.0 Jun-13 Sep-13 Dec-13 Mar-14 8 www.harmony.co.za FY14 Q1 Q2 Q3 Q4
Slide 9: Production improvement, despite challenges
Production improvement, despite challenges kg Kilograms produced 8 600 8 400 8 368 8 200 8 000 7 891 7 800 7 699 7 600 7 400 7 200 7 000 Mar 12 Mar 13 Mar 14 9 www.harmony.co.za FY14 Q1 Q2 Q3 Q4
Slide 10: Curbing all-in sustaining costs (AISC) (US$/oz)
Curbing all-in sustaining costs (AISC) (US$/oz) US$/oz AISC (US$/oz) 1 800 1 600 1 400 1 200 1 000 800 600 Sep -12 Dec -12 Mar -13 Jun-13 Sep -13 Dec -13 Mar-14 AISC (US$/oz) Linear (AISC (US$/oz)) 10 www.harmony.co.za FY14 Q1 Q2 Q3 Q4
Slide 11: Increase in productivity
Increase in productivity People Production Grams per man (average over (kg) (average monthly) period) 9 months ended March 2014 35 707 27 518 86 9 months ended March 2013 37 426 26 786 80 Variance % -5% 3% 8% • Average age of the workforce decreased from 48 to 43 years • Targeting 10% increase in pr
Slide 12: Group operating results (q-on-q)
Group operating results (q-on-q) % Mar 2014 Dec 2013 change kg 8 368 9 515 (12) Gold produced oz 269 035 305 913 (12) R/kg 450 528 415 532 8 Gold price US$/oz 1 294 1 277 1 R/kg 343 527 308 665 (11) Cash operating costs US$/oz 987 949 (4) Underground recovery grade g/t 5.10 4.85 5 Rm 924 986 (6) Pro
Slide 13: Group operating results (9 monthly)
Group operating results (9 monthly) Nine months Nine months % ended Mar 2014 ended Mar 2013 change kg 27 518 26 786 3 Gold produced oz 884 721 861 188 3 R/kg 431 038 462 982 (7) Gold price US$/oz 1 302 1 672 (22) R/kg 324 731 317 772 (2) Cash operating costs US$/oz 981 1 148 15 Underground recovery
Slide 14: Solid financials
Solid financials www.harmony.co.za
Slide 15: Income statement (q-on-q) (Rand)
Income statement (q-on-q) (Rand) Mar 2014 Dec 2013 % Extracts from income statement and operating results (Rm) (Rm) change Revenue 3 830 4 071 (6) Production costs (2 906) (3 086) 6 Cash operating costs (2 875) (2 937) 2 Inventory movements (31) (149) 79 Production profit as per operational results
Slide 16: Income statement (q-on-q) (US$)
Income statement (q-on-q) (US$) Mar 2014 Dec 2013 % Extracts from income statement and operating results (US$m) (US$m) change Revenue 354 402 (12) Production costs (268) (305) 12 Cash operating costs (265) (290) 9 Inventory movements (3) (15) 80 Production profit as per operational results 86 97 (11
Slide 17: Net debt improves (q-on-q) (Rand)
Net debt improves (q-on-q) (Rand) Mar 2014 Dec 2013 Extracts from the cash flow statement (Rm) (Rm) Cash flow from operations before exploration 845 812 Exploration expenditure (90) (112) Income and mining taxes paid - (28) Capital expenditure (599) (624) At 31 March 2014: Net debt (835) (957) Cash
Slide 18: Net debt improves (q-on-q) (US$)
Net debt improves (q-on-q) (US$) Mar 2014 Dec 2013 Extracts from the cash flow statement (US$m) (US$m) Cash flow from operations before exploration 78 80 Exploration expenditure (8) (11) Income and mining taxes paid - (3) Capital expenditure (55) (62) At 31 March 2014: Net debt (79) (91) Cash balanc
Slide 19: Capital discipline
Capital discipline Capital expenditure (Rm) Capital expenditure (US$m) 4 000 450 3 649 413 3 500 400 31% 3 000 350 41% 2 521 2 500 300 2 000 250 245* 1 500 1 000 200 FY13 FY14 forecast FY13 FY14 forecast *Converted at an exchange rate of R/US$10.30, equal to the year to date rate 19 www.harmony.co.z
Slide 20: Beating inflation – costs stayed flat (Rbn)
Beating inflation – costs stayed flat (Rbn) Rbn All-in sustaining costs (Rbn) 12 11.21 11.30 1% 10 8 6 4 2 0 9 months 9 months ended Mar-13 ended Mar-14 20 www.harmony.co.za FY14 Q1 Q2 Q3 Q4
Slide 21: Beating inflation – R/kg and US$/oz
Beating inflation – R/kg and US$/oz All-in sustaining costs (R/kg) All-in sustaining costs (US$/oz) 450 000 1 600 2% 1 509 417 813 1 500 408 768 18% 400 000 1 400 1 300 1 234 350 000 1 200 1 100 300 000 1 000 900 250 000 800 700 200 000 600 9 months 9 months 9 months 9 months ended Mar-13 ended Mar-
Slide 22: Notable cost reductions (Rm)
Notable cost reductions (Rm) Rm Exploration costs (Rm) Corporate costs (Rm) 500 360 454 338 6% 340 450 24% 319 320 400 300 350 344 280 260 300 240 250 220 200 200 9 months 9 months 9 months 9 months ended Mar-13 ended Mar-14 ended Mar-13 ended Mar-14 22 www.harmony.co.za FY14 Q1 Q2 Q3 Q4
Slide 23: Notable cost reductions (US$m)
Notable cost reductions (US$m) US$m Exploration costs (US$m) Corporate costs (US$m) 55 53 40 39 38 50 36 21% 37% 45 34 32 31 40 30 35 33 28 30 26 24 25 22 20 20 9 months 9 months 9 months 9 months ended Mar-13 ended Mar-14 ended Mar-13 ended Mar-14 23 www.harmony.co.za FY14 Q1 Q2 Q3 Q4
Slide 24: Wafi-Golpu
Wafi-Golpu www.harmony.co.za
Slide 25: Drill results from Golpu
Drill results from Golpu PROJECTION VIEW (Looking west) WAFI(1) WR504 North • WR5041 (west to east) 7.2 Moz Au WR499 South 1 369m @ 1.1g/t Au and 1.7% 5500mRL Cu from 399m, including 428m Wafi @ 2.2g/t Au and 2.9% Cu from Total Resource 1 191m – confirmed fault structure 5000mRL controlling higher g
Slide 26: Where we are progressing to
Where we are progressing to 2012 Pre-feasibility outcome New targeted outcome • „Big Bang‟ solution • Modular expandable solution • Capital intensive • Lower total capital cost • Sustainable long term operation • Lower life-cycle cost • Schedule driven • Achievable but competitive schedule • Technic
Slide 27: Conclusion
Conclusion www.harmony.co.za
Slide 28: What will be different?
What will be different? Safety improvements • External safety review of Harmony‟s Health and Safety strategy • Leading from the front Change in operational • New Chief Operating Officer management structure • Increased focus on mining and engineering risks − 3 Regional General Manager (RGM) sections
Slide 29: Outperforming gold price
Outperforming gold price 150 140 130 25% 120 6% 110 6% 100 90 2014/01/02 2014/01/16 2014/01/30 2014/02/13 2014/02/27 2014/03/13 2014/03/27 2014/04/10 2014/04/24 Harmony R/kg US$/oz Source: JSE market data, FactSet 29 www.harmony.co.za FY14 Q1 Q2 Q3 Q4
Slide 30: Further upside in share price
Further upside in share price Increasing grade Balance sheet strength – low debt Golpu – one of the top gold/copper resources in the world Increase in productivity Greater capital discipline Free cash flow Geared to SA currency Earnings growth No hedging 30 www.harmony.co.za FY14 Q
Slide 31: Contact us
Contact us: HarmonyIR@harmony.co.za Henrika Ninham Investor Relations Manager Mobile: +27 (0)82 759 1775 Email: henrika@harmony.co.za Marian van der Walt Executive: Corporate and Investor Relations Mobile: +27 (0)82 888 1242 Email: marian@harmony.co.za JSE (HAR) An exciting NYSE (HMY) investment pro
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