Harmony Gold Mining Co. Ltd. · JSE:HAR

Harmony Gold Mining — FY2020 Earnings Presentation

52 slides from Harmony Gold Mining's earnings presentation, Sep 15, 2020

  1. Slide 1: Results for the year ended 30 June 2020

    RESULTS FOR THE YEAR ENDED 30 JUNE 2020 FY20 © Harmony 15 September 2020 Peter Steenkamp, Chief Executive Officer Boipelo Lekubo, Financial Director Harmony Gold Mining Company Limited JSE ticker code HAR; NYSE ticker code: HMY

  2. Slide 2: Safe Harbour Statement and Disclaimer

    2 PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOUR STATEMENT AND DISCLAIMER FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements within the meaning of the safe harbour provided by Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amend

  3. Slide 3: Our Strategy: FY20 Focus Areas

    3 FY20 FOCUS AREAS STRATEGIC PILLARS OUR STRATEGY RESPONSIBLE OPERATIONAL Results for the year ended 30 June 2020 STEWARDSHIP EXCELLENCE To produce safe, profitable ounces and 1 2 improve margins through operational excellence and value-accretive • Embed proactive safety culture • Continue operating

  4. Slide 4: Responsible Stewardship

    RESPONSIBLE STEWARDSHIP © Harmony SUSTAINABLE GOLD

  5. Slide 5: Improvement Evident

    5 IMPROVEMENT EVIDENT Fatality Injury Free Rate (per million hours worked) 0,26 0,17 0,16 Results for the year ended 30 June 2020 0,15 0,13 0,12 0,10 0,11 0,07 0,08 33.3% decline in FIFR* FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 COVID-19 Operations that achieved fatality-free shifts in FY20

  6. Slide 6: More To Be Done

    6 MORE TO BE DONE Safety strategy: key elements • leadership 6 fatalities Results for the year ended 30 June 2020 • risk management • attain a pro-active safety culture • adopt measures to prevent repeat incidents 2.7% increase • reward safe behavior; zero tolerance for non-compliance in LTIFR* Per

  7. Slide 7: Pro-active Safety Culture: The Journey Continues

    7 PRO-ACTIVE SAFETY CULTURE: THE JOURNEY CONTINUES PHASE 1 PHASE 2 PHASE 3 PHASE 4 FOUNDATION CAPACITATION INTERVENTION RE-INFORCEMENT Results for the year ended 30 June 2020 Learning Top-down Positive behaviour from incidents Operation-specific (leadership circle) recognition Psychology Bottom-up o

  8. Slide 8: COVID-19 Measures and Status

    8 COVID-19 MEASURES AND STATUS Key interventions 01 02 03 04 Status* • Results for the year ended 30 June 2020 Community We mourn the loss Ensuring a safe Introduction of Allocation of of 29 of our outreach projects and employee app for company facilities employees who aimed at most risk-free monito

  9. Slide 9: COVID-19 Response Embeds Our Commitment to the S in ESG

    9 COVID-19 RESPONSE AND MEASURES EMBED OUR COMMITMENT TO THE “S” IN ESG* HARMONY OUTPERFORMS GOLD AND BASIC MATERIALS SECTORS OUR FIVE SUSTAINABILITY Results for the year ended 30 June 2020 4,5 DRIVERS** 3,8 3,6 3,5 3,3 1 Safety and health 3,1 2,6 2,2 2,3 2 Environmental management and 1,8 1,8 2 ste

  10. Slide 10: Operational Excellence

    OPERATIONAL EXCELLENCE © Harmony EXPERTISE AND RESILIENCE RE-AFFIRMED

  11. Slide 11: FY2020 Key Features (Year-on-Year)

    11 FY2020 KEY FEATURES (YEAR-ON-YEAR) OPERATIONAL Results for the year ended 30 June 2020 106% increase in operating free cash flow Better than expected final quarter production despite COVID-19 pandemic 15% decline in gold production Annual production of 1.2Moz © Harmony 18% increase in all-in sust

  12. Slide 12: Profitable Ounces at Current Spot Gold Price

    12 PROFITABLE OUNCES AT CURRENT SPOT GOLD PRICE AISC* OPERATIONAL WEIGHTINGS AISC (FY20) 1 100 000 Current spot gold price – R1 050 00/kg Results for the year ended 30 June 2020 Kusasalethu 1 000 000 900 000 Target 1 800 000 Planned gold price FY21 - R750 000/kg Joel AISC (R/kg) 700 000 Unisel Kalgo

  13. Slide 13: Turning Resources into Reserves

    13 TURNING RESOURCES INTO RESERVES Total Group Mineral Resources Total Group Mineral Reserves PNG PNG Results for the year ended 30 June 2020 38% 52% 118.6 36.5 Moz* SA 48% Moz** SA 62% Y-on-Y increase due to: • © Harmony Y-on-Y increase due to: Tshepong Operations • Tshepong Operations • Moab Khots

  14. Slide 14: Future Growth

    14 FUTURE GROWTH ENHANCING PROJECT RETURNS Permitting Phase Pipeline of organic projects • Wafi-Golpu Feasibility Results for the year ended 30 June 2020 • Hidden Valley extension • Mispah tailings re-treatment • Zaaiplaats deepening • Kalgold expansion project • Doornkop 207/212 levels • CPR expans

  15. Slide 15: Immediate Growth in Production and Cash Flows

    15 IMMEDIATE GROWTH IN PRODUCTION AND CASH FLOWS CONCLUDED ACQUISITION OF MPONENG, MWS* Results for the year ended 30 June 2020 350 000+ ounces more per year • Mponeng 250 000oz • MWS +100 000oz INTEGRATION US$300 million purchase price secured • US$200 million raised through equity offer From 1 Oct

  16. Slide 16: Cash Certainty

    CASH CERTAINTY © Harmony HEADROOM INCREASED

  17. Slide 17: Balance Sheet Flexibility Created

    17 BALANCE SHEET FLEXIBILITY CREATED Cash preserved 1. • Higher quarter 4 production and sales than initially estimated (7 050kg vs 6 374kg) 5. Net debt reduced significantly • Much stronger gold price than planned • Net debt to EBITDA at 0.2x as at 30 June Results for the year ended 30 June 2020 •

  18. Slide 18: Hedging - Swings and Roundabouts

    18 HEDGING - SWINGS AND ROUNDABOUTS ONLY 20% OF GOLD HEDGED; 25% OF FOREX Gains in Rand gold price offset by foreign 2 000 1 796 exchange losses 1 700 Results for the year ended 30 June 2020 1 500 1 000 500 373 78 0 -500 Gains in both foreign Losses due to foreign Gains in both foreign -1 000 exchan

  19. Slide 19: Operating Free Cash Sensitivity to Gold Price

    19 OPERATING FREE CASH* SENSITIVITY TO GOLD PRICE 10 Results for the year ended 30 June 2020 8 6 Rbn 4 2 © Harmony 0 FY20 Gold price @ Gold price @ Gold price @ R800k/kg R900k/kg R1m /kg In calculating operating free cash, the following were assumed: an exchange rate of R15.66/US$, a base gold price

  20. Slide 20: Effective Capital Allocation

    EFFECTIVE CAPITAL ALLOCATION © Harmony AIMED AT RETURNS

  21. Slide 21: Clear Targets Inform Our Decisions

    21 CLEAR TARGETS INFORM OUR DECISIONS Capital allocation Value realisation Opportunities Results for the year ended 30 June 2020 • Prioritise safety Hidden Valley Debt repayment • Rank surface projects higher Target: Lower risk profile • Assess financial risk vs safety risk extension <1x net debt/EB

  22. Slide 22: Returns Realised to Date

    22 RETURNS REALISED TO DATE 248% INCREASE IN SHARE PRICE (JULY 2019 TO END OF AUGUST 2020) Performance since 28 June 2019 (rebased to 100) Included* in FTSE Top 40 Index Results for the year ended 30 June 2020 © Harmony Source: Factset …more than a 300% increase over the past 4 years * Effective fro

  23. Slide 23: Gold Remains a Safe Haven

    23 GOLD REMAINS A SAFE HAVEN WE KEEP OUR EYES ON WHAT WE ARE ABLE TO CONTROL PRICE-TAKER…gold price not in our control WITHIN OUR CONTROL: Results for the year ended 30 June 2020 1 Safety Gold serves as a hedge against multiple risks: • currency debasement 2 Production • inflation • economic recover

  24. Slide 24: In Conclusion

    IN CONCLUSION © Harmony SOLID INVESTMENT CASE

  25. Slide 25: Doing What We Know Best

    25 DOING WHAT WE KNOW BEST SA GOLD MINING CHAMPION PROVEN EXPERTISE IN ELEVATED MARGINS DELIVERING SAFELY DRIVING AND OPERATING FREE VALUE-ENHANCING CONSOLIDATION EFFICIENCIES CASH FLOW Results for the year ended 30 June 2020 • Emerging market specialist • Safety a core value • Positioned to benefit

  26. Slide 26: In Short – Our Investment Case

    26 IN SHORT – OUR INVESTMENT CASE 01 02 03 04 Results for the year ended 30 June 2020 Focus on >1.6*Moz Leveraged Quality producer in FY21 to the R/kg gold price maintaining growth strong balance sheet © Harmony prospects * Including Mponeng and Mine Waste Solutions

  27. Slide 27: Contact Us

    CONTACT US © Harmony HarmonyIR@harmony.co.za +27 (11) 411 2314 or +27 (82) 759 1775

  28. Slide 28: Annexures

    © Harmony ANNEXURES

  29. Slide 29: Annexures: Operational and Financial Information

    ANNEXURES © Harmony OPERATIONAL AND FINANCIAL INFORMATION

  30. Slide 30: Operational Results Summary (FY20 vs FY19)

    30 OPERATIONAL RESULTS SUMMARY (FY20 VS FY19) Measure Unit Move % FY20 FY19 Comments Operating free cash % 85.7 13 7 Higher gold price flow margin Results for the year ended 30 June 2020 Production profit Rm 9.2 7 197 6 588 Higher gold price Gold price received R/kg 25.4 735 569 586 653 $ and Rand g

  31. Slide 31: Extract from Income Statement – Rand

    31 EXTRACT FROM INCOME STATEMENT– RAND FY20 FY19 % Extracts from income statement and operating results (Rm) (Rm) change Results for the year ended 30 June 2020 Revenue 29 245 26 912 9 Production costs (22 048) (20 324) (8) Cash operating costs (21 897) (20 436) (7) Inventory movements (151) 112 (23

  32. Slide 32: Extract from Income Statement – US$

    32 EXTRACT FROM INCOME STATEMENT – US$ FY20 FY19 % Extracts from income statement and operating results (US$m) (US$m) Change Revenue 1 867 1 898 (2) Results for the year ended 30 June 2020 Production costs (1 409) (1 433) 2 Cash operating costs (1 399) (1 441) 3 Inventory movements (10) 8 (225) Prod

  33. Slide 33: Hedging Table as at June 2020

    33 HEDGING TABLE AS AT 30 JUNE 2020 Results for the year ended 30 June 2020 - 15 September 2020 FY2021 FY2022 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Total Rand gold Forward Contracts koz 88 86 85 71 61 44 25 10 470 R'000/kg 673 679 691 737 806 851 950 1 037 743 Dollar gold Forward Contracts koz 12 12 12 12 12 12 1

  34. Slide 34: Hedging Table as at 31 August 2020

    34 HEDGING TABLE AS AT 31 AUGUST 2020 FY2021 FY2022 FY2023 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Total Rand gold Forward Contracts koz 29 86 85 71 64 53 41 30 9 468 Results for the year ended 30 June 2020 R'000/kg 674 679 691 737 818 890 1 007 1 074 1 151 796 Dollar gold Forward Contracts koz 4 12 12 12 12 12

  35. Slide 35: Annexures: Summary of Operations

    ANNEXURES © Harmony SUMMARY OF OPERATIONS

  36. Slide 36: FY21 Cost and Grade Guidance

    36 FY21 COST AND GRADE GUIDANCE* Plan to produce ~1.260 Moz to 1.300 Moz in FY21, at • an average underground recovered grade of ~5.47g/t to 5.53g/t, and • an all-in sustaining cost of R690 000/kg to R710 000/kg Results for the year ended 30 June 2020 Adjusted reserve grade Reserve grade June 2020 F

  37. Slide 37: FY21 Production Guidance (Per Operation)

    37 FY21 PRODUCTION GUIDANCE* (PER OPERATION) FY20 production Life of mine FY21 guidance (oz) (years) Operation (oz) Tshepong operations 234 475 248 600 – 256 400 20 Results for the year ended 30 June 2020 Moab Khotsong 211 938 220 500 – 227 500 8 Bambanani 68 545 67 900 – 70 100 3 Target 1 72 146 80

  38. Slide 38: Bambanani

    38 SOUTH AFRICA BAMBANANI LOCATION Free State goldfield about 260km from Johannesburg Results for the year ended 30 June 2020 METHOD Underground, limited to the extraction of the high-grade shaft pillar DEPTH 2 219m STATUS Mature operation with focus on mining of the shaft pillar for the next few ye

  39. Slide 39: Doornkop

    39 SOUTH AFRICA DOORNKOP LOCATION West Rand goldfield, about 30km west of Johannesburg Results for the year ended 30 June 2020 METHOD Underground, narrow reef conventional mining DEPTH 2 219m STATUS Mining takes place on the South Reef at this single-shaft operation PROCESSING Doornkop plant FY20 IN

  40. Slide 40: Joel

    40 SOUTH AFRICA JOEL LOCATION Free State, about 290km from Johannesburg Results for the year ended 30 June 2020 METHOD Underground, conventional grid development DEPTH 1 379m STATUS Twin-shaft operation – technically challenging, decline project nearing completion PROCESSING Harmony 1 FY20 IN REVIEW

  41. Slide 41: Kalgold

    41 SOUTH AFRICA KALGOLD LOCATION North West province, 55km southwest of Mahikeng Results for the year ended 30 June 2020 METHOD Open pit STATUS Steady-state production from the A-zone pit; ramp-up of mining at pillar between A-Zone and Watertank pits; expansion project under consideration PROCESSING

  42. Slide 42: Kusasalethu

    42 SOUTH AFRICA KUSASALETHU LOCATION West Rand goldfields, about 90km from Johannesburg Results for the year ended 30 June 2020 METHOD Underground, conventional mining methods in a sequential grid layout DEPTH 3 388m STATUS Mature, steady state operation positioned for profitability PROCESSING Kusas

  43. Slide 43: Masimong

    43 SOUTH AFRICA MASIMONG LOCATION Free State goldfield, about 260km from Johannesburg Results for the year ended 30 June 2020 METHOD Underground, conventional tabular narrow reef stoping DEPTH Between 1 650m and 2 010m STATUS Mature, single shaft operation nearing the end of its life of mine PROCESS

  44. Slide 44: Moab Khotsong

    44 SOUTH AFRICA MOAB KHOTSONG LOCATION Klerksdorp goldfield, about 180km south-west of Johannesburg Results for the year ended 30 June 2020 METHOD Underground, scattered mining method with integrated backfill support system incorporating bracket pillars DEPTH Between 1 791m and 3 052m below surface

  45. Slide 45: Target 1

    45 SOUTH AFRICA TARGET 1 LOCATION Free State goldfield, about 270km south-west of Johannesburg Results for the year ended 30 June 2020 METHOD Underground, mechanised mining (massive mining techniques), conventional stoping DEPTH 2 300m below surface STATUS Crusher and related infrastructure project

  46. Slide 46: Tshepong Operations

    SOUTH AFRICA TSHEPONG 46 OPERATIONS LOCATION Free State, about 250km from Johannesburg Results for the year ended 30 June 2020 METHOD Underground, conventional undercut mining DEPTH Between 1 500m and 2 300m below surface STATUS Steady state operation: development continues PROCESSING Harmony One pl

  47. Slide 47: Unisel

    47 SOUTH AFRICA UNISEL LOCATION Free State goldfields, about 270km from Johannesburg Results for the year ended 30 June 2020 METHOD Underground, conventional scattered mining and pillar reclamation DEPTH Between 1 100m and 2 200m STATUS Mature operation reaching the end of its life of mine. Mining f

  48. Slide 48: SA Surface

    SOUTH AFRICA CENTRAL PLANT RECLAMATION (FY20) 48 4.0Mt 0.155g/t 20 094oz SA SURFACE Ore milled Yield Production US$14.9m US$774/oz 48% Central Plant Waste Rock Production profit All-in sustaining cost Operating free Reclamation Dumps Phoenix cash flow margin Results for the year ended 30 June 2020 L

  49. Slide 49: Hidden Valley

    49 PAPUA NEW GUINEA HIDDEN VALLEY LOCATION Papua New Guinea, approximately 90km from Lae in Morobe Province Results for the year ended 30 June 2020 METHOD Open-pit DEPTH Steady state operation; development continues to move from Stage 5 to Stage 6 PROCESSING Hidden Valley plant LIFE OF MINE 4 years

  50. Slide 50: Annexures: Wafi-Golpu

    ANNEXURES © Harmony WAFI-GOLPU

  51. Slide 51: Wafi-Golpu: Potential Game Changer

    51 WAFI-GOLPU*: POTENTIAL GAME CHANGER Steady state production: >1.4 million gold equivalent ounces Large production profile per annum (block cave underground mine) Results for the year ended 30 June 2020 High average recovery grades: Au = 0.90g/t, Cu = 1.27% High grade = low unit cost production Lo

  52. Slide 52: Wafi-Golpu: Significant Free Cash Flow Generation Potential

    52 WAFI-GOLPU: SIGNIFICANT FREE CASHF LOW GENERATION POTENTIAL • Initial capital expenditure approx. US$2.8bn • US$9 billion free cashflow generated in first 10 years* • Permitting process underway Results for the year ended 30 June 2020 2 500 17 500 Cumulative undiscounted cash flow 2 000 14 000 1

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