Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — Q3 FY2011 Earnings Presentation
44 slides from Harmony Gold Mining's earnings presentation, May 5, 2011
Slide 1: Results for the quarter ending 31 March 2011
Results for the quarter ending 31 March 2011 Graham Briggs, CEO Hannes Meyer, FD 5 May 2011 An exciting investment proposition 1 www.harmony.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: Growth journey…
Growth journey… 1 Our strategy 2 Adding to our growth ounces 3 More PNG excitement 4 Operational efficiency 5 Quarterly developments 6 Financial overview 7 Conclusion 3 www.harmony.co.za
Slide 4: Our strategy
Our strategy 4 www.harmony.co.za
Slide 5: 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 Optimize asset portfolio, I
Slide 6: Broad-based expertise… a competitive advantage
Broad-based expertise… a competitive advantage find deposits develop projects commission mines 6 www.harmony.co.za
Slide 7: …more growth to come
Transforming the portfolio from marginal to world-class assets Associates/ SA underground Surface International Equity holding • Tshepong • Kalgold • Morobe JV • Wits Gold (12.9%) • Phakisa • Phoenix - Hidden Valley • Doornkop • Rock dumps - Wafi Golpu copper/ gold Exploration • Kusasalethu • Additi
Slide 8: Adding to our growth ounces
Adding to our growth ounces 8 www.harmony.co.za
Slide 9: Production steady
Production steady Total Harmony kilograms (quarterly) 14 000 12 000 10 000 8 000 6 000 4 000 2 000 0 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar 08 08 08 08 09 09 09 09 10 10 10 10 11 Current shafts kgs Closed shafts kgs 9 www.harmony.co.za
Slide 10: Better quality, lower costs (Kg)
Better quality, lower costs (Kg) Kg R/Kg 3 500 300 000 3 000 250 000 2 500 200 000 2 000 150 000 1 500 100 000 1 000 50 000 500 0 0 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar 08 08 08 08 09 09 09 09 10 10 10 10 11 Hidden Valley Doornkop Phakisa Kusasalethu Rand per kilogram * * Cash operati
Slide 11: Better quality, lower costs (oz)
Better quality, lower costs (oz) ’000 oz US$/oz 120 1 200 100 1 000 80 800 60 600 40 400 20 200 0 0 Mar Jun Sep Dec Mar Jun Sep Dec Mar Jun Sep Dec Mar 08 08 08 08 09 09 09 09 10 10 10 10 11 Hidden Valley Doornkop Phakisa Kusasalethu US$/oz * * Cash operating costs 11 www.harmony.co.za
Slide 12: Wafi-Golpu: Recent success
Wafi-Golpu Recent success Drill hole legend 12 www.harmony.co.za
Slide 13: Wafi Transfer Zone: An emerging mineral district
Wafi Transfer Zone: An emerging mineral district • Potential for deposit cluster or alignment Zimake of porphyry copper gold and related high sulphidation gold deposits is excellent • First class anomalies (tenor and grade) ne Bavaga at Bavaga, Zenapu, Zimake and Mt Tonn Zo fer • 17km trend e ns t e
Slide 14: Wafi-Golpu: Early access
Wafi-Golpu Early access Nabonga Creek Watut River Flats Vent Shaft Buvu Creek Access & Vent Ridge Watut Portal Bulk Wafi Caves Sample Level Golpu Lift 1 Pre-feasibility study will determine scale of operation, current resource indicates: • 600Mt – 800Mt mining inventory • 20 – 30Mtpa throughput Golp
Slide 15: Golpu will be a mine
Golpu will be a mine High grade gold and copper resource Close proximity to good infrastructure Experienced team Stable regulatory environment Significant upside potential Multiple funding options under consideration 15 www.harmony.co.za
Slide 16: More excitement to come from PNG
More excitement to come from PNG 16 www.harmony.co.za
Slide 17: Harmony tenement portfolio
Harmony tenement portfolio AMANAB – (EL1708: 932km2 granted) Desktop review 7 months field program Renewal documents submitted to MRA 50% reduction – April 2011 MT HAGEN – (EL1596/1611, ELA1864/5/66/7: 995km2 renewals & applications) Continuous field work including mapping, surface sampling and dril
Slide 18: Operational efficiency
Operational efficiency 18 www.harmony.co.za
Slide 19: Phakisa channel grades (g/t)
Phakisa Development grade 1 200 60 1 400 1 000 50 1 200 Channel grades (g/t) 1 000 800 40 800 Cmg/t Cmg/t 600 30 600 400 20 400 200 10 200 0 0 - Ore reserve Rolling 4 Current quarter Mar 11 Jun 09 Jun 10 Mar 09 Mar 10 Dec 08 Dec 09 Dec 10 Sep 08 Sep 09 Sep 10 block grade quarter average average deve
Slide 20: Doornkop channel grades (g/t)
Doornkop Development sampling grade 1 400 35 1 200 1 200 30 1 000 Channel grades (g/t) 1 000 25 800 800 20 Cmg/t Cmg/t 600 600 15 400 400 10 200 200 5 0 0 - Ore reserve Rolling 4 Current quarter Mar 11 Jun 09 Jun 10 Mar 09 Mar 10 Dec 08 Dec 09 Dec 10 Sep 08 Sep 09 Sep 10 block grade quarter average
Slide 21: Kusasalethu channel grades (g/t)
Kusasalethu Development sampling grade 2 500 40 1 400 35 1 200 2 000 30 Channel grades (g/t) 1 000 25 1 500 800 Cmg/t Cmg/t 20 600 1 000 15 400 10 500 5 200 0 0 - Ore reserve Rolling 4 Current quarter Mar 11 Jun 09 Jun 10 Mar 09 Mar 10 Dec 08 Dec 09 Dec 10 Sep 08 Sep 09 Sep 10 block grade quarter av
Slide 22: Quarterly developments
Quarterly developments 22 www.harmony.co.za
Slide 23: Safety
Safety • Two fatalities • Safety remains our number one priority • Significant safety achievements during the quarter • Fatality Injury Frequency Rate (FIFR) improved • High level task team established to formulate and implement a comprehensive fall of ground strategy 23 www.harmony.co.za
Slide 24: Production (q-on-q)
Production (q-on-q) • Gold production decreased by 2%, from 10 055kg to 9 857kg – mainly as a result of the December break – underground production only 1% down, despite volumes being 3% lower – surface tonnes 2% higher • Stable cash operating cost at R217 802/kg (US$970/oz) • Underground recovered
Slide 25: Tshepong (q-on-q)
Tshepong (q-on-q) 2 000 • Lowest cash cost producer in the company at R170 662/kg 1 800 • Production increased by 3.1% 1 600 to 1 679kg (53 981oz) 1 400 • Recovery grade increased by 1 200 6.8% to 5.04g/t 1 000 800 600 400 200 0 Kg Jun Sep Dec Mar Jun Sep Dec Mar 09 09 09 10 10 10 10 11 Kilograms pr
Slide 26: Doornkop (q-on-q)
Doornkop (q-on-q) 700 • 28% improvement in square metres mined 600 • March quarter kilograms down 11%, due to plant breakdown 500 • 94 kg in stock pile 400 – surface stock pile 27 866 tonnes – Average estimated recovered grade 300 3.38g/t 200 • Plant under ‘intensive care’ to improve efficiency and
Slide 27: Kusasalethu (q-on-q)
Kusasalethu (q-on-q) 1 800 • Excellent recovery • R/kg cash cost decreased by 27% 1 600 • Production increased by 40% 1 400 to 1 464kg (47 069oz) 1 200 • Recovery grade increased by 7.4% 1 000 to 4.93g/t 800 600 400 200 - Kg Jun Sep Dec Mar Jun Sep Dec Mar 09 09 09 10 10 10 10 11 Kilograms produced
Slide 28: Phakisa (q-on-q)
Phakisa (q-on-q) 600 • Production decreased by 19% to 408 kg (13 117oz) 500 • Nyala shaft production stopped • Grade decreased by 2% to 4.64g/t 400 • In build-up 300 200 100 - Kg Jun Sep Dec Mar Jun Sep Dec Mar 09 09 09 10 10 10 10 11 Kilograms produced 28 www.harmony.co.za
Slide 29: Hidden Valley (q-on-q)
Hidden Valley (q-on-q) 900 • Production decreased by 4% to 794kg (25 525oz)* 800 – due to unavailability of the overland 700 conveyor (OLC) 600 • Recovered grade steady at 1.95g/t 500 • Actions – assessment and repair of the structure 400 – trucking of ore 300 200 100 - Kg Mar 10 Jun 10 Sep 10 Dec 1
Slide 30: Group operating results (q-on-q)
Group operating results (q-on-q) Mar Dec % 2011 2010 change kg 9 857 10 055 (2.0) Gold produced* oz 316 909 323 275 (2.0) kg 9 716 10 046 (3.3) Gold sold* oz 312 378 322 986 (3.3) R/kg 312 029 303 354 2.9 Gold price US$/oz 1 389 1 371 1.3 R/kg 217 802 216 595 (0.6) Cash operating costs US$/oz 970 97
Slide 31: SA underground operating results (q-on-q)
SA underground operating results (q-on-q) Mar Dec % 2011 2010 change ’000 (metric) 1 701 1 759 (3.3) Tonnes milled ’000 (imperial) 1 876 1 939 (3.3) Recovery grade g/t 4.64 4.60 0.9 kg 8 164 8 273 (1.3) Gold produced* oz 262 478 265 982 (1.3) kg 8 003 8 239 (2.9) Gold sold* oz 257 303 264 890 (2.9)
Slide 32: SA surface operating results (q-on-q)
SA surface operating results (q-on-q) Mar Dec % 2011 2010 change ’000 (metric) 2 538 2 491 1.9 Tonnes milled ’000 (imperial) 2 799 2 746 1.9 Recovery grade g/t 0.35 0.38 (7.9) kg 899 955 (5.9) Gold produced oz 28 903 30 704 (5.9) kg 880 898 (2.0) Gold sold oz 28 293 28 871 (2.0) R/kg 227 335 215 422
Slide 33: Hidden Valley operating results (q-on-q)
Hidden Valley operating results* (q-on-q) Mar Dec % 2011 2010 change ’000 (metric) 407 425 (4.2) Tonnes milled ’000 (imperial) 449 469 (4.2) Recovery grade g/t 1.95 1.95 - kg 794 827 (4.0) Gold produced oz 25 528 26 589 (4.0) kg 833 909 (8.4) Gold sold oz 25 782 29 225 (8.4) R/kg 216 981 195 605 (10
Slide 34: Financial overview: March 2011 quarter
Financial overview: March 2011 quarter 34 www.harmony.co.za
Slide 35: Income statement
Income statement • Cash operating profit R855m (US$122m) • Impairment of investment of R160m (US$23m) iro of Rand Uranium • Deferred tax credit of R309m (US$44m) – includes effect of Freegold capital allowance • Net profit of R238m (US$34m) • Headline earnings of R390m (US$56m) • Headline earnings o
Slide 36: Balance sheet (q-on-q) (Rand)
Balance sheet (q-on-q) (Rand) Debt Cash Net Dec 2010 (Rm) (Rm) (Rm) At 31 December 2010: Net debt 1 587 837 (750) (405) Cash flow from operations and other items 793 1 103 Working capital changes (310) (339) Capital expenditure (667) (834) Exploration expenditure (87) (102) Corporate and social inve
Slide 37: Balance sheet (q-on-q) (US$)
Balance sheet (q-on-q) (US$) Debt Cash Net Dec 2010 (US$m) (US$m) (US$m) At 31 December 2010: Net debt (240) 127 (113) (58) Cash flow from operations and other items 113 156 Working capital changes (44) (50) Capital expenditure (95) (121) Exploration expenditure (12) (15) Corporate and social invest
Slide 38: Deferred tax credit
Deferred tax credit • Deferred tax credit of R333m recognised on Freegold capital allowance • SARS previously disallowed Freegold’s ‘post 1973 gold mine’ capital allowance • SARS conceded that Freegold is entitled to claim capital allowance 38 www.harmony.co.za
Slide 39: Conclusion
Conclusion 39 www.harmony.co.za
Slide 40: 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 Optimize asset portfolio, I
Slide 41: Investor relations contacts
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 42: Appendix
Appendix 42 www.harmony.co.za
Slide 43: Income statement (q-on-q) (Rand)
Income statement (q-on-q) (Rand) Extracts from Income Statement and operating results – Mar 2011 Dec2010 % excludes discontinued operations (Rm) (Rm) change Revenue 2 949 2 990 (1) Cash operating costs (2 059) (2 107) 2 Royalties (30) (30) - Operating profit as per Operating Results 855 867 (1) Empl
Slide 44: Income statement (q-on-q) (US$)
Income statement (q-on-q) (US$) Extracts from Income Statement and operating results – Mar 2011 Dec2010 % excludes discontinued operations (US$m) (US$m) change Revenue 422 434 (3) Cash operating costs (295) ( 306) 4 Royalties (4) ( 4) - Operating profit as per Operating Results 122 126 (3) Employmen
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