Harmony Gold Mining Co. Ltd. · JSE:HAR

Harmony Gold Mining — Q3 FY2005 Earnings Presentation

34 slides from Harmony Gold Mining's earnings presentation, 2005

  1. Slide 1: Taking the Bitter Medicine

    TAKING THE BITTER MEDICINE HARMONY’ Restructurex Tablets #@ First stage treatment of restructuring for long-term profitability and sustainability. Extra-Strength \ fe) ———EE_ aaeee |

  2. Slide 2: Directors' Responsibility

    DIRECTORS’ RESPONSIBILITY The directors of Harmony accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the directors of Harmony (who have taken all reasonable care to ensure that such is the case), the information contained in this ann

  3. Slide 3: Private Securities Litigation Reform Act Safe Harbor Statement

    PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT This presentation contains "forward­looking 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

  4. Slide 4: Our South African asset base is being restructured

    “OUR SOUTH AFRICAN ASSET BASE IS BEING RESTRUCTURED FOR IMPROVED OPERATIONAL PERFORMANCE AND A SOUND FINANCIAL POSITION” Quarter ended March 2005

  5. Slide 5: The Shrinking South African Gold Mining Industry

    THE SHRINKING SOUTH AFRICAN GOLD MINING INDUSTRY Global and South African Gold Production 3000 90.0 80.0 2500 70.0 2000 60.0 South Africa % of world Tons Produced 50.0 1500 40.0 1000 30.0 20.0 500 10.0 0 0.0 1887 1892 1897 1902 1907 1912 1917 1922 1927 1932 1937 1942 1947 1952 1957 1962 1967 1972 19

  6. Slide 6: Latest Chamber of Mines South African Gold Production Report

    LATEST CHAMBER OF MINES SOUTH AFRICAN GOLD PRODUCTION REPORT • production decrease of 8% to 343 tonnes, lowest since 1931 • combination of factors:­ § fall in R/kg gold price § cost pressures remain despite productivity and efficiency improvements § mature industry with generally associated higher c

  7. Slide 7: The Gold Fields Bid

    THE GOLD FIELDS BID • no conditions precedent except Competition Authorities, Tribunal hearing set for 3 to 6 May 2005 § extension to these hearing days is possible • Norilsk’s irrevocable undertaking remains intact Our offer of 1,275 Harmony shares for one Gold Fields share offers full and fair val

  8. Slide 8: Our Estimated To Date Costs Associated with the Gold Fields Bid

    OUR ESTIMATED TO DATE COSTS ASSOCIATED WITH THE GOLD FIELDS BID Costs to date Quarter ending R millions September 04 46,5 December 04 39,3 March 05 64,7 Total 150,5 Estimated total To date cost for 11,5% Cost Allocation R millions R millions Investment Banking Fees 17,1 17,2 Legal Fees 53,1 58,0 Cre

  9. Slide 9: Reconciliation of Our Ore Reserves

    RECONCILIATION OF OUR ORE RESERVES Jan­05 CPR Jan­05 Variance Ounces (000) Ounces (000) Ounces 1. Operations Proven and Probable 43,737 41,720 2017 2. Projects Below infrastructure Proven and Probable 10,116 9,91 ­ 206 3. Stockpiles Underground (Vamping) Proven and Probable 1,095 ­ 1095 4. Surface P

  10. Slide 10: Restructuring Our Balance Sheet

    RESTRUCTURING OUR BALANCE SHEET During March quarter: • sale of 3% of our ARM shares for R200 million Post quarter events: • sold 14% of our ARM shares for R830 million • disposal of our 11,5% stake in Bendigo for A$32 million

  11. Slide 11: Interpretation of Financial Position

    INTERPRETATION OF FINANCIAL POSITION Mar '05 Dec '04 R million R million Net debt 3,177 2,565 Near cash and cash equivalent 6,298 7,593 Net Asset Value 22,491 23,616 Solvency ratios Debt : Asset 0.27 0.27 Debt : Equity 0.37 0.37 A strong balance sheet

  12. Slide 12: Fatality Injury Rate (per million hours worked)

    FATALITY INJURY RATE (PER MILLION HOURS WORKED) 0.4 0.35 0.3 * 0.25 0.2 0.15 0.1 0.05 0 05 5 5 01 00 02 03 04 0 /0 4/ 4/ 20 20 20 20 20 04 00 00 20 2 2 tr tr tr Q Q Q t d d 1s * Note: Incorporation of Free Gold assets 3r 2n

  13. Slide 13: Quarterly Summary

    QUARTERLY SUMMARY • critical phase of restructuring underway • cash operating loss of R54,7 million (Dec ’04 ­ profit of R163 million) • working costs of R85 863/kg (Dec ’04 – R77 415/kg) • CONOPS roll out progresses well, with the exception of the Free State • Hidden Valley Mine in PNG gets final m

  14. Slide 14: Quarter on Quarter Analysis

    QUARTER ON QUARTER ANALYSIS March Dec % 2005 2004 Variance Production ­ kg 21 126 24 604 ­14 Production ­ oz 679 251 791 033 ­14 Revenue ­ R/kg 83 273 84 031 ­1 Revenue ­ US$/oz 431 434 ­1 Cash cost ­ R/kg 85 863 77 415 +11 Cash cost ­ US$/oz 445 400 +11 Exchange rate ­ USDZAR 6,00 6,03 ­1

  15. Slide 15: On Track with Our Delivery on Working Costs

    ON TRACK WITH OUR DELIVERY ON WORKING COSTS QUARTER TARGET ACHIEVED • June 2004 R83 173/kg • Sept 2004 R80 000/kg R77 881/kg • Dec 2004 R77 500/kg R77 415/kg • June 2005 R75 000/kg on target for 30 June 2005 Our cost for the financial year to date totals R80 077/kg Our gold price year to date totals

  16. Slide 16: Quarter on Quarter Cash Operating Profit Variance Analysis

    QUARTER ON QUARTER CASH OPERATING PROFIT VARIANCE ANALYSIS Cash operating profit – Dec 2004 R 162,8 million ­ volume change (tonnes) R(294,0)million ­ working cost change R 90,8 million ­ recovery grade change (g/t) R 1,9 million ­ Rand gold price change (R/kg) R (16,2)million ­ net variance R(217,4

  17. Slide 17: Reconciliation of Headline Earnings

    RECONCILIATION OF HEADLINE EARNINGS QUARTER QUARTER EARNINGS PER ENDED ENDED SHARE (SA Cents) MARCH 2005 DEC 2004 Cash earnings (14) 47 Basic loss (432) (80) Fully diluted loss (432) (80) Headline loss (107) (88) Headline loss in cents per share Quarter ended Mar 2005 Basic loss (432) Profit on sale

  18. Slide 18: Impairment Calculations

    IMPAIRMENT CALCULATIONS SA Operations Impairment % of Book Reserve Value Shafts R’ millions Impaired m/ozs Bambanani 149,0 24 ­ Unisel 119,8 85 ­ St Helena 118,7 100 0,6 E 2/3/5 138,7 100 0,8 Nyala 96,2 100 0,4 Free State other assets 180,0 54 ­ Kudu/Sable/Eland 77,3 100 ­ B2/B3 complex 33,4 100 ­ J

  19. Slide 19: Cost of Retaining Optionality

    COST OF RETAINING OPTIONALITY ANNUAL COST OF RETAINING OREBODY OPTIONALITY Estimated annual cost of care and maintenance (Rm) R 35 million Resource ounces contained in care and maintenance shafts (m) 113,8 million % of total Resource base 22% It is costing the company US$0,06 per ounce per annum to

  20. Slide 20: Impairment Calculation (Continued)

    IMPAIRMENT CALCULATION (CONTINUED) R’millions SA Operations 1 023,8 Undeveloped properties 72,0 (Kalgold) Australia Operations 200,1 Undeveloped properties 217,7 Total 1 513,6 Less deferred tax 331,5 Net impairment 1 182,2

  21. Slide 21: Estimated Annualised Production

    ESTIMATED ANNUALISED PRODUCTION Estimated Annualised Production @ R6,25 per US$ Cash Cash Cash Cash costs costs Ounces Costs Costs plus plus (R/kg) ($/oz) capex capex (R/kg) ($/oz) Leveraged shafts 865 000 84 394 420 85 387 425 Quality Shafts 1 383 000 66 881 333 70 497 351 Project Shafts 323 000 80

  22. Slide 22: Cash Reconciliation for the Period April 2004 to March 2005

    CASH RECONCILIATION FOR THE PERIOD APRIL 2004 TO MARCH 2005 R million Cash and equivalents on 31 March 2004 2 337 Operational (2 184) Operating profit 198 Capex (net) (607) Corporate / exploration expenditure (235) Retrenchment and restructuring (618) Interest paid (287) Other income ­ net 99 Other

  23. Slide 23: Quarter on Quarter Operational Performance

    QUARTER ON QUARTER OPERATIONAL PERFORMANCE OPERATIONS Mar 2005 Dec 2004 Variance (R’million) (R’million) (R’million) Quality ounces 66,7 218,1 (151,4) Growth projects (18,2) (19,1) 0,9 Leveraged ounces (131,5) (101,6) (29,9) Surface operations 8,9 6,2 2,7 Total South Africa (74,0) 103,6 (177,6) Aust

  24. Slide 24: Operational Results - Quality Ounces

    OPERATIONAL RESULTS ­ QUALITY OUNCES Mar Dec % 2005 2004 Variance U/g tonnes milled (‘000) 1 570 1 815 (13) U/g recovery grade (g/t) 6.25 6,43 (3) U/g kilograms produced (kg) 9 819 11 676 (16) U/g working costs (R/kg) 76 518 65 224 (17) U/g working costs (R/tonne) 479 420 (14)

  25. Slide 25: Operational Results - Leveraged Operations

    OPERATIONAL RESULTS – LEVERAGED OPERATIONS Mar Dec % 2005 2004 Variance U/g tonnes milled (‘000) 1 062 1 426 (25) U/g recovery grade (g/t) 5,16 4,88 6 U/g kilograms produced (kg) 5 481 6 956 (21) U/g working costs (R/kg) 107 805 98 600 (9) U/g working costs (R/tonne) 556 481 (16)

  26. Slide 26: Operational Results - Growth Projects

    OPERATIONAL RESULTS ­ GROWTH PROJECTS Mar Dec % 2005 2004 Variance U/g tonnes milled (‘000) 323 360 (10) U/g recovery grade (g/t) 6,56 5,62 17 U/g kilograms produced (kg) 2 119 2 022 5 U/g working costs (R/kg) 91 828 93 376 2 U/g working costs (R/tonne) 602 524 (15)

  27. Slide 27: Operational Results - Surface Operations (Includes Kalgold)

    OPERATIONAL RESULTS ­ SURFACE OPERATIONS (INCLUDES KALGOLD) Mar Dec % 2005 2004 Variance Opencast tonnes milled (‘000) 1 533 1 334 15 Opencast recovery grade (g/t) 1,02 1,09 (6) Kilograms produced (kg) 1 564 1 454 8 Working costs (R/kg) 76 187 80 183 5 Working costs (R/tonne) 78 87 10

  28. Slide 28: Australasian Operations

    AUSTRALASIAN OPERATIONS Mar Dec % 2005 2004 Variance Kilograms produced (kg) 2 143 2 496 (14) Working costs (R/kg) 73 729 60 859 (21) Working costs (R/tonne) 162 155 (5)

  29. Slide 29: Capital Expenditure - Investing in Our Future

    CAPITAL EXPENDITURE – “INVESTING IN OUR FUTURE” OPERATIONAL ACTUAL FORECAST CAPEX MAR 2005 JUNE 2005 South African Operations 29 34 Australasian Operations 34 47 Total Operational Capex 63 81 PROJECT CAPEX Doornkop South Reef 25 29 Elandsrand New Mine 15 26 Tshepong North Decline 8 11 Phakisa Shaft

  30. Slide 30: PNG - Progress at Hidden Valley Mine

    PNG – PROGRESS AT HIDDEN VALLEY MINE • received our mining licence and environmental permit • a total of 1 312 metres of diamond drilling was completed Hole ID From To Average Grade (m) (m) g/t HDVD 156 67 73 4,29 “ 156 55 63 8,60 “ 156 85 96 11,03 “ 156 39 43 11,76 “ 158 301 308 4,60 “ 158 220 229

  31. Slide 31: PNG - Progress at Wafi

    PNG – PROGRESS AT WAFI • a total of 1 540 metres of diamond drilling was completed Hole ID From To Average Grade (m) (m) g/t WR 194 32 67 4,10 “ 196 166 179 2,59 “ 196 134 159 2,71 “ 196 52 69 6,15 “ 198 71 101 6,00

  32. Slide 32: What May the Future Hold?

    WHAT MAY THE FUTURE HOLD ? Next quarter (June ‘05) • gold price – R83 000 – R85 000/kg • even more focus on our cost structure • finality on our Gold Fields bid ??? We remain on track to our targeted cash cost of R75 000/kg

  33. Slide 33: Positive Side Effects

    POSITIVE SIDE EFFECTS HARMONY’ Restructurex # restructuring tor long-term profitability and sustainabiity First stage treatment —— Composition Restructuring, sinkes, pubic uncertainty, oppositional mud stinging. Pharmacological Ciassitication ‘Schedule 8, Medicine acting on local and glebal economic

  34. Slide 34: Questions

    Questions Website www.harmony.co.za

Harmony Gold Mining — Q3 FY2005 Earnings Presentation on 6ix