Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — FY2018 Earnings Presentation
43 slides from Harmony Gold Mining's earnings presentation, Aug 21, 2018
Slide 1: Results for the year ended 30 June 2018
RESULTS FOR THE YEAR ENDED 30 JUNE 2018 21 August 2018
Slide 2: Safe Harbour Statement: Forward Looking Statements
2 PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOUR STATEMENT FORWARD LOOKING STATEMENTS 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 o
Slide 3: Delivering on strategic objectives in FY18
Results for the year ended 30 June 2018 3 DELIVERING ON STRATEGIC OBJECTIVES IN FY18 Hidden Valley Moab Khotsong delivered safely, on schedule and within successfully acquired and integrated budget 8% Improving AISC increase in underground recovered grade unit costs © Harmony 13% from R517 000/kg in
Slide 4: Harmony's Strategy
4 HARMONY’S STRATEGY Strategy Strategic pillars Results for the year ended 30 June 2018 Operational excellence Safe, profitable ounces and Cash certainty Increasing margins © Harmony Effective capital allocation
Slide 5: Delivery journey
Results for the year ended 30 June 2018 5 DELIVERY JOURNEY FY18 • Acquired and integrated Moab Khotsong FY18 • Delivered Hidden Valley re-investment on schedule and budget • Momentum maintained at SA operations FY17 • Acquired 100% of Hidden Valley and re-invested US$180 million FY17 • Delivered saf
Slide 6: Safety a top priority
SAFETY A TOP PRIORITY PETER STEENKAMP
Slide 7: Focus on safety remains a priority
7 FOCUS ON SAFETY REMAINS A PRIORITY Group lost time injury frequency rate (LTIFR) 10.00 9.24 8.00 7.54 7.21 Results for the year ended 30 June 2018 Per million hours 6.23 6.23 6.00 worked 4.00 2.00 0.00 FY14 FY15 FY16 FY17 FY18 Group fatality injury frequency rate (FIFR) 0.30 0.26 Per million hours
Slide 8: Key aspects of our safety approach
8 KEY ASPECTS OF OUR SAFETY APPROACH Stop significant − Focus on critical control management Results for the year ended 30 June 2018 unwanted events − Four layered risk management process Active leadership and − Asset management and move towards engineered controls proactive culture − Engaged workfo
Slide 9: Harmony delivers operational excellence
HARMONY DELIVERS OPERATIONAL EXCELLENCE PETER STEENKAMP
Slide 10: Sixth consecutive year of increasing grade
10 SIXTH CONSECUTIVE YEAR OF INCREASING GRADE Underground recovered grade 5.75 Results for the year ended 30 June 2018 5.48 5.50 Moab Khotsong enhances the quality of our portfolio 5.25 5.20 5.00 5.07 5.02 4.75 g/t 4.77 4.75 4.50 4.54 4.25 4.26 © Harmony 4.00 3.75 3.50 FY12 FY13 FY14 FY15 FY16 FY17
Slide 11: Track record of delivering on guidance
11 TRACK RECORD OF DELIVERING ON GUIDANCE % Production guidance met Results for the year ended 30 June 2018 110 Operational excellence philosophy Achieved production guidance 100 for third consecutive year Operational excellence 90 philosophy % 80 − Safe, predictable production − Asset managemen
Slide 12: Quality ounces reduce all-in sustaining unit costs (R/kg)
12 QUALITY OUNCES REDUCE ALL-IN SUSTAINING UNIT COSTS (R/KG) R/kg 700,000 Unisel Joel Results for the year ended 30 June 2018 650,000 600,000 Gold price received (incl. gold hedge) Target 1 550,000 Kalgold Masimong Kusasalethu Hidden 500,000 Valley Total Harmony Doornkop Tshepong FY18 operations R50
Slide 13: Quality ounces reduce all-in sustaining unit costs (US$/oz)
13 QUALITY OUNCES REDUCE ALL-IN SUSTAINING UNIT COSTS (US$/OZ) US$/oz All-in Sustaining Costs US$/oz - FY18 1,700 Unisel 1,600 Joel Results for the year ended 30 June 2018 1,500 Gold price received (incl. gold hedge) Target 1 1,400 Kalgold 1,300 Kusasalethu Doornkop Total Harmony FY18 1,200 Masimong
Slide 14: Hidden Valley – excellent project delivery
14 Results for the year ended 30 June 2018 HIDDEN VALLEY – EXCELLENT PROJECT DELIVERY Safe Fatality free, no lost time injuries in FY18 Budget: net investment of US$180 million Below budget Actual: net investment of US$175 million Commercial levels of production achieved in On schedule the June 2018
Slide 15: Moab Khotsong's impact in four months
15 MOAB KHOTSONG’S IMPACT IN FOUR MONTHS Underground recovered grade (g/t) Gold produced (000oz) 5.50 1,400 5.48 Results for the year ended 30 June 2018 1,200 1,228 5.25 1,118 5.20 1,000 5.00 800 FY18 excl. MK Harmony FY18 FY18 excl. MK Harmony FY18 AISC (R/kg) Operational free cash flow (Rm) 520,00
Slide 16: Moab Khotsong boosts production
16 MOAB KHOTSONG BOOSTS PRODUCTION Quarter on quarter production (kilograms) 12,000 11,993 Results for the year ended 30 June 2018 9,000 9,040 8,782 8,574 8,378 6,000 3,000 © Harmony - Jun-17 Sep-17 Dec-17 Mar-18 Jun-18
Slide 17: Moab Khotsong enhances underground grade
17 MOAB KHOTSONG ENHANCES UNDERGROUND GRADE Quarter on quarter underground recovered grade (g/t) 6.00 5.98 Results for the year ended 30 June 2018 5.80 5.60 5.40 5.35 5.33 5.20 5.16 5.17 5.00 4.80 4.60 4.40 © Harmony 4.20 4.00 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18
Slide 18: Moab Khotsong drives down all-in sustaining unit costs
18 MOAB KHOTSONG DRIVES DOWN ALL-IN SUSTAINING UNIT COSTS Quarter on quarter all-in sustaining cost (R/kg) 560,000 Results for the year ended 30 June 2018 559,458 540,000 520,000 516,845 513,652 500,000 488,176 486,641 480,000 © Harmony 460,000 440,000 Jun-17 Sep-17 Dec-17 Mar-18 Jun-18
Slide 19: Cash certainty and effective capital allocation
CASH CERTAINTY AND EFFECTIVE CAPITAL ALLOCATION FRANK ABBOTT
Slide 20: Key financial features (Rand)
20 KEY FINANCIAL FEATURES (RAND) Year ended Year ended % June 2018 June 2017 change Results for the year ended 30 June 2018 Gold produced kg 38 193 33 836 13 Production profit Rm 5 356 4 452 20 Impairment Rm (5 336) (1 718) >(100) Gains on derivatives Rm 99 1 025 90 Translation gain/(loss) on US$ bo
Slide 21: Key financial features (US$)
21 KEY FINANCIAL FEATURES (US$) Year ended Year ended % June 2018 June 2017 change Results for the year ended 30 June 2018 Gold produced oz 1 227 934 1 087 852 13 Production profit US$m 416 327 27 Impairment US$m (386) (131) >(100) Gains on derivatives US$m 8 75 (89) Translation gain/(loss) on US$ b
Slide 22: FY18 impairment recognised
22 FY18 IMPAIRMENT RECOGNISED Impairments mainly driven by cost inflation, a subdued gold price of R535 000/kg ($1 250 at R/$13.30) applied in the life-of-mine plans and the resulting impact on margins; and Results for the year ended 30 June 2018 Lower resource multiples applied to estimate the
Slide 23: Margins enhanced through successful hedging strategy
23 MARGINS ENHANCED THROUGH SUCCESSFUL HEDGING STRATEGY R/kg 600,000 Results for the year ended 30 June 2018 575,000 550,000 525,000 500,000 © Harmony 475,000 450,000 FY16 FY17 FY18 Spot gold price Gold hedge Currency hedge
Slide 24: FY17 and FY18 capital allocation
24 FY17 AND FY18 CAPITAL ALLOCATION 5,000 R4.8bn 4,500 Results for the year ended 30 June 2018 4,000 R3.5bn 3,500 3,000 R2.7bn ~1.5Moz 2,500 R’million 2,000 1,500 1Moz 1,000 R0.5bn R0.6bn 500 R0.17bn - © Harmony Growing ounces
Slide 25: FY17 and FY18 funding sources
25 FY17 AND FY18 FUNDING SOURCES 8,000 R7.7bn Results for the year ended 30 June 2018 7,000 6,000 5,000 R’million 4,000 R3.5bn 3,000 2,000 © Harmony R1bn 1,000 - Cash generated by operating Net proceeds from share issue Net debt raised activities
Slide 26: Targeting net debt/EBITDA ratio below 1.0x
26 TARGETING NET DEBT/EBITDA RATIO BELOW 1.0X Net debt/EBITDA ratio 2.5x 2.3x Results for the year ended 30 June 2018 2.0x 2.0x 1.6x 1.5x 1.4x 1.2x 1.1x 1.0x 1.0x 0.9x 0.7x 0.5x 0.5x 0.4x 0.3x © Harmony – Harmony FY18 ■ International gold mining peers ■ SA gold mining peers Source: Company filings
Slide 27: Looking forward
LOOKING FORWARD PETER STEENKAMP
Slide 28: Key focus areas for FY19
28 KEY FOCUS AREAS FOR FY19 Strategy Strategic pillars Focus areas Results for the year ended 30 June 2018 Improve safety performance Operational Realise synergies of Moab Khotsong operations excellence Deliver on Hidden Valley plan Safe, profitable ounces Exceeding operational plans (genera
Slide 29: Quality growth opportunities
29 QUALITY GROWTH OPPORTUNITIES Ounces'000 Short to medium term organic opportunities: 1,500 − Tailings retreatment Results for the year ended 30 June 2018 expansion − Great Noligwa pillar extraction − Kalgold exploration − Hidden Valley extension − Zaaiplaats 1,000 Other: − Value accretive M&A acti
Slide 30: Wafi-Golpu remains a game changer
30 WAFI-GOLPU REMAINS A GAME CHANGER − 18.6Moz gold, 8.6Mt copper − Steady state production: 161 000t of copper, 266 000oz of gold (in Results for the year ended 30 June 2018 Large resource excess of 1.4 million gold equivalents ounces per annum) − Over 28 years Long mine life − High average recover
Slide 31: Wafi-Golpu next steps
31 WAFI-GOLPU NEXT STEPS 1 2 3 4 Submitted supporting Submitted Final investment documents to the Environmental Impact Granting of SML by decision by Harmony Results for the year ended 30 June 2018 Special Mining Lease Statement (EIS) - PNG government and Newcrest (SML) - March 2018 June 2018 Boards
Slide 32: Outlook
32 Results for the year ended 30 June 2018 OUTLOOK On track Driving to deliver a sustainable unit costs down by production performance producing quality ounces Delivering Cash flow © Harmony on our strategy of to be effectively increasing margins allocated to growth opportunities
Slide 33: Appendices
APPENDICES
Slide 34: Operational results year-on-year
34 OPERATIONAL RESULTS YEAR-ON-YEAR Year ended Year ended % June 2018 June 2017 change Results for the year ended 30 June 2018 kg 38 193 33 836 13 Gold produced oz 1 227 934 1 087 852 13 R/kg 570 709 570 164 - Gold price received US$/oz 1 380 1 304 6 R/kg 421 260 436 917 4 Cash operating costs US$/o
Slide 35: Quality ounces reduce all-in sustaining unit costs (Rand)
35 QUALITY OUNCES REDUCE ALL-IN SUSTAINING UNIT COSTS (RAND) R/kg 700,000 Unisel Joel Results for the year ended 30 June 2018 650,000 600,000 Gold price received (incl. gold hedge) Target 1 550,000 Kalgold Masimong Kusasalethu 500,000 Hidden Tshepong Total Harmony Valley Doornkop FY18 operations R50
Slide 36: FY18 all-in sustaining cost performance (US$)
36 FY18 ALL-IN SUSTAINING COST PERFORMANCE (US$) US$/oz All-in Sustaining Costs US$/oz - FY18 1,700 Unisel 1,600 Joel Results for the year ended 30 June 2018 1,500 Gold price received (incl. gold hedge) Target 1 1,400 Kalgold 1,300 Kusasalethu Doornkop Total Harmony Masimong FY18 1,200 US$1 231/oz T
Slide 37: FY19 production guidance (per operation)
37 FY19 PRODUCTION GUIDANCE (per operation) Life FY18 production FY19 guidance of mine Operation (oz) (oz) (years) Tshepong operations 302 026 287 000 17 Results for the year ended 30 June 2018 Moab Khotsong 105 969 248 000 7 Bambanani 90 698 82 000 5 Target 1 91 758 86 500 7 Doornkop 110 245 106 50
Slide 38: FY19 cost and grade guidance
38 FY19 COST AND GRADE GUIDANCE Plan to produce ~1.45 Moz in FY19, at – an average underground recovered grade of ~5.85g/t, and – an all-in sustaining cost of R515 000/kg Results for the year ended 30 June 2018 Adjusted Reserve grade reserve grade FY18 grade FY19 grade Operation (g/t) (-5%) (g/t) gu
Slide 39: Capital guidance (Rand)
39 CAPITAL GUIDANCE (RAND) 5,000 4,500 Results for the year ended 30 June 2018 167 819 4,000 835 3,500 1,494 672 491 3,000 898 R million 562 700 2,500 307 207 304 2,000 1,500 2,312 2,502 2,347 1,000 2,060 © Harmony 500 - FY18 FY19 FC* FY20 FC* FY21 FC* Sustaining capital (SA) Growth capital (SA) Hid
Slide 40: Capital guidance (US$)
40 CAPITAL GUIDANCE (US$) 400 350 Results for the year ended 30 June 2018 13 62 300 63 116 51 250 37 US$ million 67 42 53 200 24 16 23 150 100 188 180 176 155 50 © Harmony - FY18 FY19 FC* FY20 FC* FY21 FC* Sustaining capital (SA) Growth capital (SA) Hidden Valley capital Deferred stripping * Excludi
Slide 41: Organic growth opportunities
41 ORGANIC GROWTH OPPORTUNITIES Opportunity Nature Current status Next phase Kalgold Open-pit 15 829m drilling completed, Mineral resource update and encouraging drill results pre-feasibility study to optimise Results for the year ended 30 June 2018 Kalgold operation Central Plant tailings Tailings
Slide 42: Hedging programme at June 2018
42 HEDGING PROGRAMME AT 30 JUNE 2018 FY 2019 FY2020 TOTAL H1 H2 H1 H2 Rand Gold Forward Contracts koz 105 94 77 24 300 R'000/kg 660 623 631 640 639 Results for the year ended 30 June 2018 Dollar Gold Forward Contracts koz 48 38 10 - 96 US$/oz 1,290 1,336 1,382 - 1,318 Total Gold Contracts koz 153 13
Slide 43: Contact us
CONTACT US HarmonyIR@harmony.co.za +27 (11) 411 2314/+27 (82) 759 1775
Harmony Gold Mining Company — FY2018 Earnings Presentation on 6ix