Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — FY2017 Earnings Presentation
72 slides from Harmony Gold Mining's earnings presentation, August 2017
Slide 1: Analyst Book: Results for the year ended 30 June 2017
1 ANALYST BOOK Results for the year ended 30 June 2017 © Harmony | Analyst book and Outlook for 2018 financial year
Slide 2: Safe Harbour Statement
2 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 re
Slide 3: Contents
3 CONTENTS 1 Harmony at a glance 2 FY17 performance 3 South African operations 4 Papua New Guinea in focus 5 Exploration and projects 6 Making a lasting impact © Harmony | Analyst book 7 Appendices 8 Contact us and Investor calendar
Slide 4: Harmony at a Glance
© Harmony | Analyst book 4 GLANCE HARMONY AT A
Slide 5: Diversified Producer – Gold and Copper Portfolio
5 DIVERSIFIED PRODUCER – GOLD AND COPPER PORTFOLIO Geographic locations Gold and copper reserves South Africa PNG copper and silver SA gold as gold (16.3 Moz) Gauteng 9 underground operations equivalents 37% 44% North West (13.5 Moz) Free State 1 open pit mine Total reserves of 36.7 Moz1 Multiple su
Slide 6: Our Strategy
6 OUR STRATEGY Our Our strategic strategy pillars Enabling environment Maintaining disciplined cost management Positioned high cost operations for profitability Disciplined mining Operational Living our values Mining safe, excellence Increasing productivity profitable Grade management
Slide 7: Progress Made Towards Aspiration of 1.5Moz by FY19
7 PROGRESS MADE TOWARDS ASPIRATION OF 1.5MOZ BY FY19 Balance: Organic growth, exploration, identifying and evaluating acquisitions FY17 Hidden Valley acquisition 180 000oz FY17 Central plant tailings project 15 000oz © Harmony | Analyst book FY17 SA production 1Moz
Slide 8: FY17 Achievements
8 FY17 ACHIEVEMENTS Improved safety performance Production guidance met (2nd consecutive year) Fatality injury frequency rate Gold produced 0.15 1,100,000 1,087,852 Per million hours 1,082,035 1,080,000 0.1 worked 1,060,000 Oz 0.13 0.05 0.07 1,040,000 0 1,020,000 FY16 FY17 FY16 FY17 Underground grad
Slide 9: Solid Investment Case
9 SOLID INVESTMENT CASE Safer and more predictable production Operational excellence Maintain increase in grade Strong balance sheet, which allows for growth Cash certainty Achieving production guidance (1.1Moz @ about an AISC of US$1180/oz) Growth © Harmony | Analyst book Effective capita
Slide 10: FY17 Performance
© Harmony | Analyst book 10 FY17 PERFORMANCE
Slide 11: Key Features for FY17
11 KEY FEATURES FOR FY17 9 Milestone fatality free quarter 9 Met production guidance - second consecutive year 9 Secure cash margins through hedging strategy 9 35% increase in headline earnings per share 9 Flexible balance sheet that allows for growth 9 Progress made in growing to 1.5Moz 9 70% y-on-
Slide 12: Delivered on Strategic Objectives in FY17
12 DELIVERED ON STRATEGIC OBJECTIVES IN FY17 Our Our strategic Delivered strategy pillars Fatality rates improved Met FY17 production guidance - 2nd Operational consecutive year Mining safe, excellence Increase in underground recovery grade profitable ounces Hedging strategy – secured cash f
Slide 13: Safety Remains Our Top Priority
13 SAFETY REMAINS OUR TOP PRIORITY Fatality injury frequency rate 0.30 0.28 Achieved milestone 0.27 fatality free quarter 0.25 (June 2017 qtr) 0.22 0.22 0.21 0.21 Per million hours worked 0.20 0.18 0.17 0.16 0.15 0.13 0.11 0.11 0.10 0.07 © Harmony | Analyst book 0.05 0.00 FY05 FY06 FY07 FY08 FY09 FY
Slide 14: Delivering on Guidance
14 DELIVERING ON GUIDANCE % of production guidance met 110 100 90 80 70 © Harmony | Analyst book 60 50 FY14 FY15 FY16 FY17
Slide 15: Consistently Improving Underground Grade Y-on-Y
15 CONSISTENTLY IMPROVING UNDERGROUND GRADE Y-ON-Y 5.3 5.1 5.18 5.07 5.02 4.9 4.7 4.74 4.73 4.5 4.47 g/t 4.3 4.27 4.1 3.9 © Harmony | Analyst book 3.7 3.5 FY12 FY13 FY14 FY15 FY16 FY17 FY18 Actual Plan
Slide 16: Quality Grade Management
16 QUALITY GRADE MANAGEMENT Grade code: Grade discipline is key No mining below cut-off Mining to average reserve grade (no high grading) No grade dilution despite higher gold price Projects deliver increased grade: Phakisa/Tshepong declines on track with grades Kusasalethu’s plan focuse
Slide 17: Secured Our Cash Margins Through Hedging
17 SECURED OUR CASH MARGINS THROUGH HEDGING* Cash flow: R77 million R1.70 billion R1.51 billion R284 million 600,000 575,000 550,000 525,000 R/kg 500,000 475,000 450,000 FY16 FY17 FY18E FY19E Cash flow: US$5 million US$125 million US$115 million US$22 million 1,400 1,350 1,300 1,250 US$/oz © Harmony
Slide 18: Solid Balance Sheet Leads to Flexibility
18 SOLID BALANCE SHEET LEADS TO FLEXIBILITY 4000 3500 3000 2500 R'million 1.88x 2000 1500 1000 0.29x 0.26x 500 © Harmony | Analyst book 0 FY15 FY16 FY17 EBITDA Net debt Net debt/EBITDA ratio EBITDA: excludes impairment and loss on scrapping of property, plant and equipment
Slide 19: Low Net Debt Compared to Peers
19 LOW NET DEBT COMPARED TO PEERS Net debt/EBITDA 3.0 2.5 2.4 2.0 1.9 1.8 1.5 1.4 1.4 1.2 1.0 1.0 0.8 0.7 0.7 0.5 0.3 © Harmony | Analyst book 0.0 Yamana Pro-forma Goldcorp AngloGold Barrick Newcrest Gold Kinross Newmont Agnico Harmony Sibanye Fields Eagle Jun-17 Source: company financial statements
Slide 20: South African Operations
20 SOUTH AFRICAN OPERATIONS © Harmony | Analyst book
Slide 21: Operational Excellence – Strategy and Approach
21 OPERATIONAL EXCELLENCE – STRATEGY AND APPROACH Create an enabling environment Realistic Safety and Infrastructure Grade Capital production health management management allocation plans Safety Focused Consistent, Asset campaigns capital predictable management No mining and road to allocation produ
Slide 22: South African Asset Portfolio
22 SOUTH AFRICAN ASSET PORTFOLIO South Africa Nature Operation FY17 Asset priority production split Tshepong operations Growth 36% Growth capital allocated Joel Bambanani Short life - improve productivity High margin 9% (AISC <US$850) to maximise cash flow Underground Doornkop, Growth opportunities
Slide 23: SA Forecast (FY18)
23 SA FORECAST (FY18) FY17 FY18* 5.07 5.18 Underground recovered grade (g/t) 31,275 Produced 30,871 (kg) Operational excellence will extend life of mines Opportunities 514,333 520,000 Tshepong/Phakisa integration © Harmony | Analyst book Joel decline – increase grade AISC (R/kg) Cost containment Key
Slide 24: Tshepong/Phakisa
24 TSHEPONG/PHAKISA FY16 FY17 FY18* 5.21 5.38 g/t 5.08 4.61 7 396 Kg 9 019 8 828 9 427 238 Koz 290 284 303 Produced Life of mine 17 years Mt g/t kg 000oz Gold reserves 25.6 5.82 148 895 4 787 Location Free State Province (near Welkom) Mt g/t kg 000oz Gold resources Mine setup Single-shaft operation
Slide 25: Tshepong/Phakisa Continued
25 TSHEPONG/PHAKISA CONTINUED © Harmony | Analyst book
Slide 26: Joel
26 JOEL FY16 FY17 FY18* 4.37 4.32 4.20 4.10 g/t Kg 2 278 2 246 2 069 Koz 73 72 67 Produced Life of mine 9 years Mt g/t kg 000oz Gold reserves 4.5 5.19 23 493 755 Location Free State Province (near Theunissen) Mt g/t kg 000oz Gold resources Mine setup Two shafts (North and South 8.0 8.46 67 731 2 178
Slide 27: Joel Continued
© Harmony | Analyst book 27 JOEL CONTINUED
Slide 28: Bambanani
28 BAMBANANI FY16 FY17 FY18* 12.70 12.99 11.90 g/t 10.88 Kg 3 013 2 750 2 582 Koz 97 88 83 Produced Life of mine 5 years Mt g/t kg 000oz Gold reserves 1.1 11.54 12 468 401 Location Free State Province (near Mt g/t kg 000oz Welkom) Gold resources Mine setup Two surface shafts (East and 0.9 15.15 14 1
Slide 29: Bambanani Continued
© Harmony | Analyst book 29 BAMBANANI CONTINUED
Slide 30: Doornkop
30 DOORNKOP FY16 FY17 FY18* 4.64 4.42 4.33 g/t 4.17 Kg 2 730 2 673 2 940 Koz 88 86 95 Produced Life of mine 18 years Mt g/t kg 000oz Gold reserves 4.6 4.96 22 862 735 Location Gauteng Province (near Johannesburg) Mt g/t kg 000oz Gold resources Mine setup Single-shaft operation 17.1 7.86 134 337 4 31
Slide 31: Doornkop Continued
© Harmony | Analyst book 31 DOORNKOP CONTINUED
Slide 32: Target
32 TARGET 1 FY16 FY17 FY18* 5.11 4.58 4.17 3.58 g/t Kg 3 387 2 669 2 862 Koz 109 86 92 Produced Life of mine 7 years Mt g/t kg 000oz Gold reserves 5.2 4.22 21 916 705 Location Free State Province (near Allanridge) Mt g/t kg 000oz Gold resources Mine setup One primary underground mine 19.1 7.55 143 8
Slide 33: Target Continued
© Harmony | Analyst book 33 TARGET 1 CONTINUED
Slide 34: Kusasalethu
34 KUSASALETHU FY16 FY17 FY18* 7.24 6.85 5.78 g/t4.35 Kg 3 863 4 394 4 449 Koz 124 141 143 Produced Life of mine 5 years Mt g/t kg 000oz Gold reserves 4.9 6.85 33 835 1 088 Location Gauteng Province (near Mt g/t kg 000oz Caletonville) Gold resources 25.1 9.13 229 123 7 366 Mine setup Twin vertical a
Slide 35: Kusasalethu Continued
© Harmony | Analyst book 35 KUSASALETHU CONTINUED
Slide 36: Unisel
36 UNISEL FY16 FY17 FY18* 4.06 4.02 4.05 g/t 3.89 Kg 1 704 1 595 1 711 Koz 55 51 55 Produced Life of mine 5 years Mt g/t kg 000oz Gold reserves 2.0 4.58 9 381 302 Location Free State Province (near Mt g/t kg 000oz Virginia) Gold resources 2.6 6.97 18 241 586 Mine setup Single-shaft operation Mining
Slide 37: Unisel Continued
© Harmony | Analyst book 37 UNISEL CONTINUED
Slide 38: Masimong
38 MASIMONG FY16 FY17 FY18* 3.97 3.83 3.68 3.74 g/t Kg 2 432 2 538 2 240 Koz 78 82 72 Produced Life of mine 4 years Mt g/t kg 000oz Gold reserves 2.4 4.07 9 699 312 Location Free State Province (near Mt g/t kg 000oz Welkom) Gold resources Mine setup Two shaft operation 4.8 6.28 30 037 966 4 shaft us
Slide 39: Masimong Continued
© Harmony | Analyst book 39 MASIMONG CONTINUED
Slide 40: Kalgold
40 KALGOLD FY16 FY17 FY18* 0.81 0.800 0.876 0.746 g/t Kg 1 103 1 205 1 233 Koz 35 39 40 Produced Life of mine 21 years Mt g/t kg 000oz Gold reserves 26.6 1.09 29 035 934 Mt g/t kg 000oz Gold resources 41.6 0.95 39 580 1 273 Permanent 241 © Harmony | Analyst book Employees 395 Contractors Greenstone
Slide 41: Phoenix
41 PHOENIX FY16 FY17 FY18* 0.14 0.136 0.126 0.124 g/t Kg 804 918 758 Koz 26 30 24 Produced Life of mine 12 years Mt g/t kg 000oz Gold reserves 73.0 0.28 20 108 646 Mt g/t kg 000oz Gold resources 73.0 0.28 20 108 646 Permanent 82 © Harmony | Analyst book Employees 261 Contractors Improved recoveries
Slide 42: Central Plant
42 CENTRAL PLANT Central Plant reclamation project, plant upgrade commissioned at the end of FY17 Plant upgrade project – on schedule and on budget – nameplate processing of 10 000 tonnes per day achieved Expected to produce approx. 15 000oz per annum from FY18 Life of mine 19 years Mt g/t kg 000oz
Slide 43: Focused Capital Allocation and Prioritisation
43 FOCUSED CAPITAL ALLOCATION AND PRIORITISATION FY18 SA capital allocation 1,200 1,000 194 800 160 600 Rm 400 709 57 200 99 108 66 100 205 14 165 154 168 13 185 © Harmony | Analyst book 93 55 75 36 - 1 On-going development Shaft capital & AE's Major capital
Slide 44: Papua New Guinea in Focus
44 PAPUA NEW GUINEA IN FOCUS © Harmony | Analyst book
Slide 45: Papua New Guinea Asset Portfolio
45 PAPUA NEW GUINEA ASSET PORTFOLIO PNG Nature Operation Asset priority Operation Open-pit Hidden Valley Stage 5 and 6 investment Definitive Golpu – Stage 1 Optimise study outcomes feasibility Golpu - Stage 2 Study work to optimise Golpu value Prefeasibility/ Hidden Valley – feasibility Exploration
Slide 46: Operational Excellence – Strategy and Approach
46 OPERATIONAL EXCELLENCE – STRATEGY AND APPROACH Success at Hidden Valley Realistic Safety and Infrastructure Hidden Valley production health Reduce costs management delivery plans Upgrade projects during Critical control major FY17 verification shutdown performance in Contract Continuous © Harmony
Slide 47: Hidden Valley Forecast (FY18 and FY19)
47 HIDDEN VALLEY FORECAST (FY18 AND FY19) FY17 FY18* FY19* Recovered 1.59 grade (g/t) 1.16 1.07 5,910 Produced (kg) 2,965 2,940 543,186 535,000 Exploration – satellite deposits AISC 480,009 (R/kg) Opportunities Stage 7 cutback to extend © Harmony | Analyst book life-of-mine Key risks Safety
Slide 48: Investment Plan on Budget and Schedule
48 INVESTMENT PLAN ON BUDGET AND SCHEDULE 9 Ahead of schedule and operational performance in line with budget Milestones FY17 achievements FY18 targets Safety No safety related work stoppages Work towards zero harm Industry benchmark LTIFR achieved Production Operational ounces exceeded plan
Slide 49: Potential to Extend Life of Mine Through Successive Cutbacks
49 POTENTIAL TO EXTEND LIFE OF MINE THROUGH SUCCESSIVE CUTBACKS Hidden Valley Stages 5&6 (7 Years) Reserve: 27Mt @ 1.8 g/t Au, 32 g/t Ag 1.4Moz Au, 27Moz Ag © Harmony | Analyst book Stage 7 Prefeasibility study FY18 targeting 25Mt for 1.3Moz Au and 25Moz Ag
Slide 50: Projects and Exploration
50 PROJECTS AND EXPLORATION © Harmony | Analyst book
Slide 51: Golpu – A Quality Copper Gold Reserve
51 GOLPU – A QUALITY COPPER GOLD RESERVE Quality ore body1 Joint venture Copper market Copper-gold reserve 50:50* joint venture with Bullish on the copper Newcrest Mining Limited price Golpu copper reserves* Tonnes Grade Cu (Mt) % ‘Mlb 189.6 1.26 5 269 *PNG government has option to exercise buy-in o
Slide 52: Wafi-Golpu Study Ongoing
52 WAFI-GOLPU STUDY ONGOING Progressing work plan eotechnWork Geotechnical G nic cal a Deep sea tailings placement (DSTP) study to be completed end of nterrpre eta tati tion ti interpretationon program Q2FY18 Hydrogeological drilling to inform updated model Hydrology Current study work focused
Slide 53: Exploration
53 EXPLORATION Our exploration strategy is to target highly prospective underexplored terrains, pursue brownfields exploration targets close to existing infrastructure and thereby create value for shareholders by discovering large long-life bulk minable gold and copper-gold deposits and enhancing th
Slide 54: Exploration Continued
54 EXPLORATION CONTINUED South Africa B-Reef Doornkop Kalgold There is significant potential on the A 2D seismic survey has been The area beneath and surrounding B Reef which is currently being completed at Doornkop in the existing Kalgold operations mined as a high grade secondary conjunction with
Slide 55: Making a Lasting Impact
55 MAKING A LASTING IMPACT © Harmony | Analyst book
Slide 56: Holistic Approach to Health
56 HOLISTIC APPROACH TO HEALTH Prevent illness Proactive Early identification, early detection and treatment Focus on preventive care Harmony health initiatives Health hub at each operation Proximity improve productivity Doctors on-site and part of management team Medication provided © H
Slide 57: Harmony Gives Back
© Harmony | Analyst book 57 HARMONY GIVES BACK
Slide 58: Leader in Environmental Responsibility
58 LEADER IN ENVIRONMENTAL RESPONSIBILITY Rehabilitation Going beyond restoration programme - leaving a positive legacy 38 shafts closed to date commercial agricultural projects implemented created >200 jobs and local procurement through commercial vegetable mine rehabilitation production
Slide 59: Appendices
© Harmony | Analyst book 59 APPENDICES
Slide 60: Year on Year Results
60 YEAR ON YEAR RESULTS Year ended Year ended % June 2017 June 2016 change kg 33 836 33 655 1 Gold produced oz 1 087 852 1 082 035 1 R/kg 570 164 544 984 5 Gold price US$/oz 1 304 1 169 12 R/kg 436 917 392 026 (11) Cash operating costs US$/oz 1 000 841 (19) Underground recovered grade g/t 5.07 5.02
Slide 61: Extract from Income Statement Y-on-Y (Rand)
61 EXTRACT FROM INCOME STATEMENT Y-ON-Y (RAND) Extracts from income statement and operating results June 2017 June 2016 % (Rm) (Rm) change Revenue 19 264 18 334 5 Production costs (14 812) (13 250) (12) Cash operating costs (14 625) (13 194) (11) Inventory movements (187) (56) (>100) Production prof
Slide 62: Extract from Income Statement Y-on-Y (US$)
62 EXTRACT FROM INCOME STATEMENT Y-ON-Y (US$) Extracts from income statement and operating results June 2017 June 2016 % (US$m) (US$m) change Revenue 1 417 1 264 12 Production costs (1 090) (914) (19) Cash operating costs (1 076) (910) (18) Inventory movements (14) (4) (>100) Production profit as pe
Slide 63: Hedging Programme Summary at June 2017
63 HEDGING PROGRAMME SUMMARY AT 30 JUNE 2017 FY18 FY19 TOTAL Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 US$m 111 132 120 59 422 Currency US$/ Floor 15.00 14.40 14.00 14.00 ZAR Cap 16.30 15.50 15.00 15.00 ZAR/ ‘000 oz 54 54 54 54 54 27 27 324 gold R’000/kg 686 700 713 728 697 630 643 US$/ ‘000 oz 4 3 12 15 15 15 64 Com
Slide 64: FY18 Production Guidance
64 FY18 PRODUCTION GUIDANCE Plan to produce ~1.1 Moz in FY18, at – an average underground recovered grade of ~5.18g/t, and – an all-in sustaining cost of ~$1 180/oz (~R520 000/kg at an exchange rate of R13.74/US$) FY18 GRADE GUIDANCE Reserve grade Adjusted reserve Actual grade (g/t) FY18 grade Opera
Slide 65: FY18 Production Guidance (per operation)
65 FY18 PRODUCTION GUIDANCE (per operation) FY17 production FY18 guidance Life of mine Operation (oz ) (oz) (years) Tshepong operations 283 827 303 000 17 Bambanani 88 415 83 000 5 Target 1 85 809 92 000 7 Doornkop 85 939 94 500 18 Joel 72 211 66 500 9 Kusasalethu 141 270 143 000 5 Masimong 81 599 7
Slide 66: Investing in Our Growth (Capex)
66 INVESTING IN OUR GROWTH (CAPEX)* 5,000 165 4,000 411 1,511 Rm 3,000 924 482 390 2,000 2,351 2,713 2,662 2,363 1,000 - FY17 ¹ FY18 ¹ FY19 FY20 SA operations (Rm) Hidden Valley net-investment capital (Rm) Hidden Valley capital (Rm) 350 12 300 30 110 US$'m 250 200 68 35 28 150 © Harmony | Analyst bo
Slide 67: Hidden Valley Planning Assumptions
67 HIDDEN VALLEY PLANNING ASSUMPTIONS Mining method Open pit; owner operated and maintained conventional trucks and diggers Mining rate 38 trucks for 26Mt average Total Material Mined over 5 years (peak 30Mt per annum for 2 years) Ore transportation 5.5km overland conveyor from Hidden Valley Kaveroi
Slide 68: Hidden Valley Summary of Reinvestment Plan
68 HIDDEN VALLEY SUMMARY OF REINVESTMENT PLAN Planning parameters and costs Total material mined t'000 135 000 Strip ratio waste/ore 4.5 Tonnes milled t'000 22 800 Gold price USD/oz 1 200 Silver price USD/oz 17 Average mining costs* USD/t 3.25 Average processing costs* USD/t 3.00 Average G&A costs*
Slide 69: Contact Us and Investor Calendar
69 CONTACT US AND © Harmony | Analyst book INVESTOR CALENDAR
Slide 70: Investor Relations
70 INVESTOR RELATIONS HarmonyIR@harmony.co.za www.harmony.co.za +27 11 411 2314 © Harmony | Analyst book
Slide 71: Investor Calendar
71 INVESTOR CALENDAR Tshepong/Phakisa analyst day 24 – 25 August 2017 Denver Gold Forum Conference 24 – 27 September 2017 2017 Joburg Indaba 4 – 5 October 2017 Q1FY18 operating results October/November 2017 Harmony 2017 Annual Report Suite published 26 October 2017 Deutsche Bank Virtual Investor Con
Slide 72: Solid Investment Case
72 SOLID INVESTMENT CASE Safer and more predictable production Operational excellence Maintain increase in grade Strong balance sheet, which allows for growth Cash certainty Achieving production guidance (1.1Moz @ about an AISC of US$1180/oz) Growth © Harmony | Analyst book Effective capit
Harmony Gold Mining Company — FY2017 Earnings Presentation on 6ix