Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — Q2 FY16 Earnings Presentation
28 slides from Harmony Gold Mining's earnings presentation, Feb 4, 2016
Slide 1: Quarter 2 FY16 ended 31 December 2015
Quarter 2 FY16 ended 31 December 2015 Peter Steenkamp Frank Abbott 4 February 2016 1 www.harmony.co.za Q2 FY16
Slide 2: Agenda
Agenda 1 Growing our margins 2 Solid financial results 3 Creating future value through exploration 4 Conclusion 2 www.harmony.co.za Q2 FY16
Slide 3: Growing Margins
GROWING MARGINS 3 www.harmony.co.za Q2 FY16
Slide 4: Ticking all the boxes…
Ticking all the boxes… UP 7% PRODUCTION HEADLINE Quarter on quarter GRADE EARNINGS PROFIT UP 84% R74m Quarter on quarter 2% Quarter on quarter PRODUCTION DOWN NET AISC 7% DEBT MARGIN ALL-IN SUSTAINING COSTS Quarter on quarter REDUCED 17% 4 www.harmony.co.za Q2 FY16
Slide 5: …delivering results q-on-q
…delivering results q-on-q • Safety parameters improving; working towards zero harm • 7% increase in underground recovered grade • 2% increase in production • AISC down by 7% at R434 834/kg (down 15% to US$950/oz) • 84% increase in production profit to R1.29 billion (up 68% to US$91 million) • Headl
Slide 6: Production increased q-on-q
Production increased q-on-q • Three consecutive quarters of increased production • Exceeding annual guidance year to date Production versus FY16 guidance (ounces) 300 000 287 074 281 385 275 000 256 456 250 000 245 697 225 000 Q3FY15 Q4FY15 Q1FY16 Q2FY16 6 www.harmony.co.za Q2 FY16
Slide 7: Exceeding guided grade
Exceeding guided grade SA underground recovered grade (g/t) 5.50 5.33 5.25 4.99 5.00 5.00 4.75 4.75 4.50 4.25 FY15 Q1FY16 Q2FY16 FY16 grade guidance (g/t) 7 www.harmony.co.za Q2 FY16
Slide 8: Leveraged to benefit from higher R/kg gold price
Leveraged to benefit from higher R/kg gold price R/kg Operational cash flow margin 600 000 580 000 550 000 507 490 500 000 463 910 473 567 460 569 450 000 432 963 435 000 400 000 350 000 300 000 250 000 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 FY16 Guidance with higher R/kg gold price Total capital R/kg C
Slide 9: Created a margin at current US$/oz gold price
Created a margin at current US$/oz gold price US$/oz Operational cash flow margin 1300 1220 1200 1195 1200 1133 1109 1100 1100 1000 902 900 800 700 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 FY16 Guidance (adjusted with R/US$ 15 exchange rate) Total capital US$/oz Cash operating cost US$/oz Gold price recei
Slide 10: Increase in all-in sustaining cost margin (R/kg)
Increase in all-in sustaining cost margin (R/kg) All-in sustaining cost (R/kg) 600 000 580 000 550 000 507 490 500 000 473 567 450 000 460 569 463 910 434 834 432 963 400 000 350 000 300 000 250 000 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Current spot gold price AISC (R/kg) Gold price (R/kg) 10 www.harmo
Slide 11: Increase in all-in sustaining cost margin (US$/oz)
Increase in all-in sustaining cost margin (US$/oz) All-in sustaining cost (US$/oz) 1 300 1 220 1 200 1 195 1 200 1 133 1 109 1 100 1 100 1 000 950 900 800 700 Dec 14 Mar 15 Jun 15 Sep 15 Dec 15 Current spot gold price AISC (US$/oz) Gold price (US$/oz) 11 www.harmony.co.za Q2 FY16
Slide 12: Net free cash flow – Q1FY16
Net free cash flow – Q1FY16 Rm SA operations 300 250 200 201 150 100 88 50 66 3 44 30 21 26 18 - -2 -28 -50 -72 -100 -150 Sep-15 12 www.harmony.co.za Q2 FY16
Slide 13: Net free cash flow – Q2FY16
Net free cash flow – Q2FY16 Rm SA operations 300 250 200 18 150 112 100 28 108 50 (9) 80 63 13 4 19 - 24 -50 40 -100 -150 Dec-15 13 www.harmony.co.za Q2 FY16
Slide 14: Net free cash flow at current gold prices
Net free cash flow at current gold prices December 2015 at R580 000/kg gold price Rm SA operations 300 250 62 83 200 76 150 88 100 48 52 50 34 20 44 14 19 72 - -50 -100 -150 Dec-15 @ R580 000/kg 14 www.harmony.co.za Q2 FY16
Slide 15: Harmony share price outperforming indices
Harmony share price outperforming indices Harmony share price performance since 10 December 2015 (rebased to 100) Harmony Gold Mining Co. Ltd. FTSE JSE All Share FTSE JSE Gold Mining S&P 500 FTSE 100 USD/oz Gold price ZAR/Kg Gold price 250 129.2% 230 210 190 170 150 37.0% 130 10.8% 110 4.0% (0.6)% (
Slide 16: Solid Financial Results
SOLID FINANCIAL RESULTS 16 www.harmony.co.za Q2 FY16
Slide 17: Extract from income statement (q-on-q) – Rand
Extract from income statement (q-on-q) – Rand Dec 2015 Sep 2015 quarter quarter % Extracts from income statement and operating results (Rm) (Rm) change Revenue 4 567 4 140 10 Production costs (3 275) (3 439) 5 Cash operating costs (3 216) (3 368) 5 Inventory movements (59) (71) 17 Production profit
Slide 18: Extract from income statement (q-on-q) – US$
Extract from income statement (q-on-q) – US$ Dec 2015 Sep 2015 quarter quarter % Extracts from income statement and operating results (US$m) (US$m) Change Revenue 321 319 - Production costs (230) (265) 13 Cash operating costs (226) (259) 13 Inventory movements (4) (6) 33 Production profit as per ope
Slide 19: Reduction in net debt (q-on-q) – Rand
Reduction in net debt (q-on-q) – Rand Debt Cash Net debt Extracts from cash flow statement and balance sheet (Rm) (Rm) (Rm) Opening balance 30 Sep 2015 (4 129) 1 487 (2 642) Net cash generated (5) 506 501 Cash generated by operating activities - 1 043 1 043 Cash utilised by investing activities - (5
Slide 20: Reduction in net debt (q-on-q) – US$
Reduction in net debt (q-on-q) – US$ Debt Cash Net debt Extracts from cash flow statement and balance sheet (US$m) (US$m) (US$m) Opening balance 30 Sep 2015 (298) 107 (191) Net cash generated - 33 33 Cash generated by operating activities - 73 73 Cash utilised by investing activities - (40) (40) Tra
Slide 21: Creating Future Value Through Exploration
CREATING FUTURE VALUE THROUGH EXPLORATION 21 www.harmony.co.za Q2 FY16
Slide 22: Kili Teke - right address and geological setting
Kili Teke - right address and geological setting South North • Maiden 4 Moz Au equivalent1 Resource declared - 128 Mt @ 0.4% Cu, 0.3 g/t Au, Limit of Inferred Resource610m Limestone 170 ppm Mo - 506 Kt Cu, 1.2 Moz Au Diorite porphyry and skarn • Excellent upside: Open - Only a portion of the overall
Slide 23: Golpu studies currently under final review
Golpu studies currently under final review • Feasibility study for Golpu stage 1 and the prefeasibility study for stage 2 completed in December 2015, as planned − subject to approval from the Harmony and Newcrest boards − planned release mid-February 2016 • Discussions continue on finalising the pre
Slide 24: Conclusion
CONCLUSION 24 www.harmony.co.za Q2 FY16
Slide 25: Early observations
Early observations • Competent teams • Excellent ore bodies • In support of strategy to create value and increase margins • Majority of operations produce safe, profitable ounces − teams to focus on basics of mining − effect of March quarter already taken into account in annual guidance • Investment
Slide 26: Profit drivers intact
Profit drivers intact Harmony, a company worth investing in Replacing ounces Golpu and Kili Teke potential game changers FY16 guidance realistic and safe profitable ounces Financial results cash is king (no compromises) Our operations positioned for profitability Our strategy creating value, increas
Slide 27: Private Securities Litigation Reform Act Safe Harbour Statement
Private Securities Litigation Reform Act Safe Harbour Statement This presentation contains forward-looking statements within the meaning of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended, with resp
Slide 28: Our key value drivers
OUR KEY VALUE DRIVERS We are efficient miners We are positioned for future growth and profitability We are experienced explorers, mine developers and operators in emerging economies CONTACT US Email: Golpu will develop into a world-class HarmonyIR@harmony.co.za copper-gold mine www.harmony.c