Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — Q1 FY2012 Earnings Presentation
48 slides from Harmony Gold Mining's earnings presentation, Oct 31, 2011
Slide 1: Results for the period ended 30 September 2011
RESULTS FOR THE PERIOD ENDED 30 SEPTEMBER 2011 Graham Briggs, CEO Hannes Meyer, FD 31 October 2011 1 w w w . h a r mw onwyw. c. hoa. zr m a ony.co.za
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: Highlights for the quarter
Highlights for the quarter • Record operating profits – 45% increase to R1.3 billion • Highest ever revenue • HEPS¹ increased by 217% to 95 SA cents • Production in line with forecast despite industrial action – turnaround at Joel; shaft-equipping completed – continued build-up at Phakisa, Kusasalet
Slide 4: Agenda
Agenda 1 Safety 2 Our strategy 3 Wafi-Golpu 4 Exploration 5 Operational results 6 Financial results 7 Conclusion 4 www.harmony.co.za
Slide 5: Safety
Documentation: Completed Route Form Required From Altences k in at Training Ce jock Care to Start Time: O6h00 (Piimetuai) | ‘
Slide 6: Safety
Safety • 2 Fatalities • Behaviour-based safety approach has resulted in safety improvements – LTIFR a single digit for 12th consecutive quarter • 6% improvement q-on-q (from 9.64 to 9.06) – RIFR improved by 18% q-on-q (from 5.39 to 4.44) – FIFR improved by 31% q-on-q (0.13 to 0.09) LTIFR: Lost Time
Slide 7: Our strategy
Our strategy www.harmony.co.za
Slide 8: Delivering long-term value
Delivering long-term value Creating a sustainable company – generating earnings that fund dividends and growth…a company with free cash flow Growth assets Growth in quality Geographic diversity Generate free cash flow Grow the company Grow through partnerships Exploration Optimise asset portfolio, I
Slide 9: Increasing project value
Increasing project value Exploration Target definition Resource definition Pre-feasibility study Feasibility Wafi-Golpu Project construction Increasing project value Commissioning Production gap and build-up Doornkop, Phakisa www.harmony.co.za Steady state production Hidden Valley, Kusasalethu Masim
Slide 10: Future upside – for gold and Harmony
Future upside – for gold and Harmony Gold cash cost Production ($/oz) (million oz) Gold cash cost * ^ Production from 1100 2.5 • SA – 1.4Moz • Wafi-Golpu¹ - 400 000oz • Hidden Valley¹ – 200 000oz 900 2.0 p 700 1.5 500 Further decrease Production from SA and Hidden Valley under current copper price s
Slide 11: SA gold price environment
SA gold price environment R/kg gold price received • Since September 2008 the gold price 450 000 received in 400 000 350 000 – US$/oz increased by 99% 300 000 – R/kg increased by 82% 250 000 200 000 • Q-on-q the gold price received Sep Dec Mar Jun Sep Dec Mar Jun Sep 09 09 10 10 10 10 11 11 11 – inc
Slide 12: Harmony's operating profit
Harmony’s operating profit Operating profit Rm Operating profit US$m 1 400 190 170 1 200 150 1 000 130 800 110 90 600 70 400 50 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Sep 09 Dec 09 Mar 10 Jun 10 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Rm US$m Increase in operating profit margins 3
Slide 13: Wafi-Golpu
Wafi-Golpu www.harmony.co.za
Slide 14: Wafi-Golpu update
Wafi-Golpu update • Drilling to support future reserve upgrade and pre-feasibility studies continues • Latest drilling extends the system at depth – WR406(2) 861m @ 1.51g/t Au, 1.48% Cu including 199m @ 2.87g/t Au and 2.57% Cu from 1286m • Two additional large capacity drill rigs to commence drillin
Slide 15: Wafi transfer zone – forward work program
Wafi transfer zone – forward work program • Systematic grid based soil sampling to continue at Zimake – geological and alteration mapping to define core of system for targeted drill phase testing • New drill rig to pursue drill targets on transfer structure – to be commissioned in December quarter –
Slide 16: Wafi transfer zone – 'Elephant' country
Wafi transfer zone – ‘Elephant’ country Zimake : +1 500m diameter; high-order Au-Cu geochemistry; coincident magnetic intrusive New large scale exploration target (1) Refer www.harmony.co.za for July 2011 resource statement. Resource figures quoted on 100% basis 16 www.harmony.co.za
Slide 17: Exploration (100% Harmony)
Exploration (100% Harmony) www.harmony.co.za
Slide 18: Exploration projects Harmony 100%
Exploration projects Harmony 100% AMANAB: (granted tenement; 466 km2) Target: Sediment hosted gold vein stock-work Activities: Drill target generation / recce mapping Results: Rock chip results to 39.6 g/t Au from vein outcrop at Yup East. MT HAGEN: (granted tenements; 666.6km2) Target: Porphyry Cu
Slide 19: Kurunga intrusive complex
Kurunga intrusive complex • Magnetic intrusive complex • Associated high order regional Cu-Au stream sediment geochemistry • Ridge and spur soils outlined several major Cu-Au-Mo anomalies • Follow-up drilling underway with widespread Cu and Mo anomalism intersected to date G Greyscalel magnetic ti i
Slide 20: Mount Hagen exploration
Mount Hagen exploration EL1611 & EL 1596 (Mt Hagen) • Target – Porphyry Cu-Au PNDD001 – Cu-Au skarn – Epithermal Au mineralisation • Confirmed mineralised system • PNDD001; 285m @ 0.1% Cu, 83 ppm Mo from 72m • 1200 meters drilled to date in 2 holes 0 10 Km • Assays pending for second hole PNDD002 20
Slide 21: Penamb prospect
Penamb prospect • Results suggest Cu-Mo dominated porphyry system • Host sequence of volcanics, intrusives and hydrothermal breccia • Two mineralisation styles seen to date in core – Disseminated chalcopyrite & pyrite – Veins with molybdenum, pyrite and chalcopyrite • Mineralisation associated with
Slide 22: Operational results
Operational results www.harmony.co.za
Slide 23: Operational cash flow (R/kg)
Operational cash flow (R/kg) R/Kg Total Harmony 400 000 350 000 300 000 250 000 200 000 150 000 100 000 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Cash cost R/kg Ongoing capital R/kg Growth capital R/kg Abnormal and shaft capital R/kg Revenue R/kg 23 www.harmony.co.za
Slide 24: Operational cash flow (US$/oz)
Operational cash flow (US$/oz) US$/oz Total Harmony 1 900 1 700 1 500 1 300 1 100 900 700 500 Sep 10 Dec 10 Mar 11 Jun 11 Sep 11 Cash cost US$/oz Ongoing capital US$/oz Growth capital US$/oz Abnormal and shaft capital US$/oz Revenue US$/oz 24 www.harmony.co.za
Slide 25: Group operating results (q-on-q)
Group operating results (q-on-q) % Sept 2011 Jun 2011 change kg 10 207 10 152 0.5 Gold produced* oz 328 162 326 394 0.5 kg 9 948 10 412 (4.5) Gold sold* oz 319 836 334 752 (4.5) R/kg 396 405 329 536 20.3 Gold price US$/oz 1 727 1 513 14.1 R/kg 265 288 242 851 (9.2) Cash operating costs US$/oz 1 156
Slide 26: Doornkop – increase in margin q-on-q
Doornkop – increase in margin q-on-q 2 000 Margin • Gold production increased by 14.4% Cash cost US$/oz Ongoing capital US$/oz 1 800 Growth capital US$/oz Abnormal & shaft capital US$/oz to 866kg (27 843oz) Revenue US$/oz 1 600 • Stockpile milling completed 1 400 1 200 • 7 additional crews transferr
Slide 27: Doornkop (productivity)
Doornkop (productivity) Square metres mined Productivity 19 000 120 40 17 000 100 35 15 000 80 30 13 000 60 25 11 000 9 000 40 20 7 000 20 15 5 000 0 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 m² g/TEC t/TEC Actual
Slide 28: Kusasalethu – stronger margin q-on-q
Kusasalethu – stronger margin q-on-q 2 400 Margin • Production decrease of 2.0% Cash cost US$/oz Ongoing capital US$/oz 2 000 Growth capital US$/oz Abnormal & shaft capital US$/oz at 1 554kg (49 962oz) Revenue US$/oz 1 600 – 9.8% decrease in grade 1 200 – 5 days of strike action 800 400 • Implementa
Slide 29: Kusasalethu (productivity)
Kusasalethu (productivity) Square metres mined Productivity 20 000 120 24 22 18 000 110 20 18 16 000 100 16 14 000 90 14 12 12 000 80 10 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 m² g/TEC t/TEC Actual m² Linear (Actu
Slide 30: Phakisa – building-up
Phakisa – building-up 3 500 Margin • Increase in both volumes and grade Cash cost US$/oz Ongoing capital US$/oz 3 000 Growth capital US$/oz Abnormal & shaft capital US$/oz Revenue US$/oz – Production increase of 11.4% 2 500 at 526kg (16 911oz) 2 000 1 500 – Tonnes milled increased by 6.6% 1 000 – Gr
Slide 31: Phakisa (productivity)
Phakisa (productivity) Square metres mined Productivity 12 000 70 16 65 14 10 000 60 55 12 8 000 50 45 10 6 000 40 8 35 4 000 30 6 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 m² g/TEC t/TEC Actual m² Linear (Actual m²)
Slide 32: Hidden Valley – solid margin
Hidden Valley* – solid margin Margin • Overland conveyor repairs and re-commissioning 2 000 Cash cost US$/oz Ongoing capital US$/oz completed in September month Growth capital US$/oz Abnormal & shaft capital US$/oz Revenue US$/oz – Build up in throughput rates expected in December 1 500 quarter • Si
Slide 33: Evander – transformed
Evander – transformed Margin • Evander demonstrated its turnaround 2 500 Cash cost US$/oz Ongoing capital US$/oz Growth capital US$/oz Abnormal & shaft capital US$/oz with yet another quarter of excellent 2 000 Revenue US$/oz results 1 500 • Production increased by 13.9% to 1 000 854kg (27 457oz) 50
Slide 34: Evander (productivity)
Evander (productivity) Square metres mined Productivity 7 500 150 26 7 000 130 21 110 6 500 90 16 6 000 70 11 5 500 50 5 000 30 6 Jan 11 Feb 11 Mar 11 Apr 11 May 11 Jun 11 Jul 11 Aug 11 Sep 11 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Aug-11 Sep-11 m² g/TEC t/TEC Actual m² Linear (Actual m²)
Slide 35: Financial results
Financial results
Slide 36: Key features
Key features • Net profit of R478m/US$67m • Basic earnings per share at R1.11/US$16c • Headline earnings per share of 95c/US$13c an increase of 217% • First draw down on US$ loan facility • Dividend paid of R258m • Decrease in net debt (R176m/US$42m) 36 www.harmony.co.za
Slide 37: Income statement (q-on-q) – Rand
Income statement (q-on-q) – Rand Sep 2011 Jun 2011 % Extracts from Income Statement and operating results (Rm) (Rm) change Revenue 3 929 3 422 15 Cash operating costs¹ (2 698) (2 459) (10) Operating profit as per operating results 1 306 901 45 Impairment of assets - (264) 100 Employment termination
Slide 38: Income statement (q-on-q) – US$
Income statement (q-on-q) – US$ Sep 2011 Jun 2011 % Extracts from Income Statement and operating results (US$m) (US$m) Change Revenue 550 505 9 Cash operating costs¹ (378) (363) (4) Operating profit as per operating results 183 133 38 Employment termination and restructuring costs (5) - (100) Explor
Slide 39: Balance sheet (q-on-q) – Rand
Balance sheet (q-on-q) – Rand Debt Cash Net Jun 2011 (Rm) (Rm) (Rm) At 30 June 2011: Net debt 1 559 693 (866) (1 167) Cash flow from operations and other items 1 297 743 Dividend (258) - Working capital changes 67 496 Prepayment for Evander 6 and - 100 Twistdraai transaction Capital expenditure (700
Slide 40: Balance sheet (q-on-q) – US$
Balance sheet (q-on-q) – US$ Debt Cash Net Jun 2011 (US$m) (US$m) (US$m) At 30 June 2011: Net debt (230) 102 (128) (172) Cash flow from operations and other items 196 93 Dividend (32) - Working capital changes 9 88 Prepayment for Evander 6 and - 15 Twistdraai transaction Capital expenditure (98) (12
Slide 41: Conclusion
Conclusion www.harmony.co.za
Slide 42: Conclusion
Conclusion • Stronger gold prices expected • Profits and cash flow will continue to grow • Continued build-up at Phakisa, Kusasalethu, Doornkop and Hidden Valley • More exciting exploration results to come from PNG • Wafi-Golpu progressing with prefeasibility study 42 www.harmony.co.za
Slide 43: An exciting investment proposition
Henrika Basterfield Investor Relations Officer Tel: +27 (0)11 411 2314 Mobile: +27 (0)82 759 1775 Email: henrika@harmony.co.za Marian van der Walt Executive: Corporate and Investor Relations Tel: +27 (0)11 411 2037 Mobile: +27 (0)82 888 1242 Email: marian@harmony.co.za An exciting investment proposi
Slide 44: Appendix
Appendix www.harmony.co.za
Slide 45: SA underground operating results (q-on-q)
SA underground operating results (q-on-q) % Sept 2011 Jun 2011 change ’000 (metric) 1 982 1 876 5.7 Tonnes milled ’000 (imperial) 2 185 2 070 5.7 Recovery grade g/t 4.26 4.49 (5.1) kg 8 488 8 459 0.3 Gold produced oz 272 895 271 963 0.3 kg 8 343 8 688 (4.0) Gold sold oz 268 233 279 325 (4.0) R/kg 27
Slide 46: SA surface operating results (q-on-q)
SA surface operating results (q-on-q) % Sept 2011 Jun 2011 change ’000 (metric) 2 473 2 565 (3.6) Tonnes milled ’000 (imperial) 2 726 2 828 (3.6) Recovery grade g/t 0.37 0.34 8.8 kg 927 867 6.9 Gold produced oz 29 804 27 875 6.9 kg 940 951 (1.2) Gold sold oz 30 223 30 575 (1.2) R/kg 263 671 268 657
Slide 47: Hidden Valley operating results (q-on-q)
Hidden Valley operating results* (q-on-q) % Sept 2011 Jun 2011 change ’000 (metric) 415 420 (1.2) Tonnes milled ’000 (imperial) 458 463 (1.2) Recovery grade g/t 1.91 1.97 (3.0) kg 792 826 (4.1) Gold produced oz 25 463 26 556 (4.1) kg 665 773 (14.0) Gold sold oz 21 380 24 852 (14.0) R/kg 206 563 238
Slide 48: An exciting investment proposition
Henrika Basterfield Investor Relations Officer Tel: +27 (0)11 411 2314 Mobile: +27 (0)82 759 1775 Email: henrika@harmony.co.za Marian van der Walt Executive: Corporate and Investor Relations Tel: +27 (0)11 411 2037 Mobile: +27 (0)82 888 1242 Email: marian@harmony.co.za An exciting investment proposi
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