Harmony Gold Mining Co. Ltd. · JSE:HAR

Harmony Gold Mining — Investor Presentation (February 2020)

50 slides from Harmony Gold Mining's investor presentation, February 2020

  1. Slide 1: Briefing Book February 2020

    TM BRIEFING BOOK FEBRUARY 2020 © Harmony Harmony Gold Mining Company Limited NYSE Ticker code: HMY JSE Ticker code: HAR

  2. Slide 2: Investment Case

    2 INVESTMENT CASE Briefing Book February 2020 ~1.8Moz producer Quality growth Leveraged to the in FY21 prospects gold price Responsible gold mining at attractive returns and Rand hedge stock company with experienced, © Harmony credible management team

  3. Slide 3: Who We Are

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  4. Slide 4: Harmony Today

    4 HARMONY TODAY JSE, NYSE listed (HAR; HMY) Experienced operator • 69+ years Market cap: US$1.8bn Mines in: Briefing Book February 2020 • South Africa • Papua New Guinea Total reserves (gold equivalent) • gold >23 Moz • copper >12 Moz Copper* 34% Gold* 65% 12.5Moz 23.8Moz SOUTH AFRICA PAPUA NEW GUIN

  5. Slide 5: Operating Free Cash Sensitivity to Gold Price

    5 OPERATING FREE CASH* SENSITIVITY TO GOLD PRICE 300 250 20202020 February 200 February +89% ounces, +59% US$m 150 +29% Briefing Growing Book quality 100 130 50 © Harmony - Operating 5% increase 10% increase 15% increase free cash in gold price in gold price in gold price H1FY20 • In calculating ope

  6. Slide 6: H1FY20 vs H1FY19

    6 H1FY20 VS H1FY19 Produce safe, profitable OUR STRATEGY ounces, increasing margins Briefing Book February 2020 46% 8% 63% in gold production rise in improvement Mainly due to a 32% decrease in gold operating free in FIFR* production at Kusasalethu cash flow margin LOWEST EVER to 13% © Harmony RECOR

  7. Slide 7: H2FY20 Focus Areas

    7 H2FY20 FOCUS AREAS OUR STRATEGY Safe, profitable ounces Increasing margins STRATEGIC PILLARS Briefing Book February 2020 01 02 03 04 OPERATIONAL CASH EFFECTIVE CAPITAL RESPONSIBLE EXCELLENCE CERTAINTY ALLOCATION STEWARDSHIP • key focus to improve • repay debt • secure Wafi-Golpu • maintain strong

  8. Slide 8: Increasing Our Margins

    INCREASING OUR MARGINS © Harmony

  9. Slide 9: Acquisition of Mponeng and MWS – A Natural Fit

    9 ACQUISITION OF MPONENG AND MWS* – A NATURAL FIT Briefing Book February 2020 Strategic Operational Financial Geographical 70 years’ experience Quality ounces Synergies and in operating SA increase margin economies of scale gold mines with existing operations Meets our strategic All-in sustaining co

  10. Slide 10: Transaction Details

    10 TRANSACTION DETAILS • Assets acquired: • Mponeng* Adding quality ounces: • Above infrastructure reserves: 3.1Moz @ • 250 000 oz (Mponeng) 10.76g/t • 100 000 oz (MWS) • Total resource: 46.18Moz Briefing Book February 2020 • Mine Waste Solutions* (MWS) • Tailings retreatment reserves: 4.8Moz @ 0.25

  11. Slide 11: Close Proximity to Existing Mining Areas

    11 CLOSE PROXIMITY TO EXISTING MINING AREAS Briefing Book February 2020 © Harmony

  12. Slide 12: Creating a Sustainable Production Profile

    12 CREATING A SUSTAINABLE PRODUCTION* PROFILE 2 000 1 800 1 600 Briefing Book February 2020 1 400 1 200 ~ 1Moz producer Oz'000 until FY30 1 000 800 600 400 © Harmony 200 - 7 year FY 16 FY 17 FY 18 FY 19 FY 20 FY 21 FY 22 FY 23 FY 24 FY 25 FY 26 FY 27 FY 28 FY 29 FY 30 FY 31 FY 32 FY 33 FY 34 Stable

  13. Slide 13: Increasing the Life of Mine of Our SA Portfolio

    13 INCREASING THE LIFE OF MINE OF OUR SA PORTFOLIO 9 000 8 000 7 000 Briefing Book February 2020 6 000 5 000 Oz’000 4 000 3 000 6 to 18 months LOM left 2 000 1 000 © Harmony - Mineral resources *Important to note that Mponeng’s reserves and resources are based on Anglogold Ashanti Limited’s 2018 Res

  14. Slide 14: Increase in Quality Ounces Produced

    14 INCREASE IN QUALITY OUNCES PRODUCED Production (‘000 oz) 2 000 Briefing Book February 2020 350 1 500 80% 260 increase 1 000 73 182 500 1 009 Stable SA 958 © Harmony production - FY16 FY20 FC Stable SA production Hidden Valley Moab operations Mponeng and Mine Waste Solutions

  15. Slide 15: Quality of Our Asset Base Improved

    15 QUALITY OF OUR ASSET BASE IMPROVED Underground average recovered grade (g/t) 6,20 6,00 Briefing Book February 2020 5,80 Increases Mponeng average grade 5,60 to 5.92g/t 5,40 Moab Increased average grade to 5,20 5.59g/t g/t 5,00 4,80 4,60 Stable SA 5,02 5,06 © Harmony production 4,40 4,20 4,00 FY16

  16. Slide 16: Increasing Our SA Surface Gold Production

    16 INCREASING OUR SA SURFACE GOLD PRODUCTION SA surface including MWS 250 000 200 000 Briefing Book February 2020 150 000 Ounces 100 000 50 000 © Harmony - 3 year 3 year 5 year 5 year 7 year7 year 10 year 10 year 353year 37 year 3 year 310year 3 years years years 5 5year 710 yearyears year 3 year ye

  17. Slide 17: Calculation of Average Deferred Compensation per Ounce

    17 CALCULATION OF AVERAGE DEFERRED COMPENSATION PER OUNCE 80,00 70,00 Average deferred compensation - $/oz 60,00 Briefing Book February 2020 50,00 40,00 30,00 20,00 © Harmony 10,00 - 250 000 260 000 270 000 280 000 290 000 300 000 310 000 320 000 330 000 340 000 350 000 Gold ounces produced Note: US

  18. Slide 18: Creating Long Term Value for Investors

    18 CREATING LONG TERM VALUE FOR INVESTORS • Scaling up our ounces • Strengthening our cash flow • Increase the quality of our asset portfolio Briefing Book February 2020 • Sustaining a profitable production profile • Increasing cash flows to build Golpu • Stronger cash flows should result in stronge

  19. Slide 19: Wafi-Golpu Is a Tier One Asset

    19 WAFI-GOLPU IS A TIER ONE ASSET Permitting update  Targeted permitting timelines have not been achieved Briefing Book February 2020  Committed to re-commencing constructive negotiations with the newly appointed PNG government and stakeholders  Updated timelines will be shared once available © H

  20. Slide 20: Wafi-Golpu – Significant Cash Flow Generation Potential

    20 WAFI-GOLPU – SIGNIFICANT CASH FLOW GENERATION POTENTIAL* 2 500 17 500 • 5.5 years to early stage cash flow • Initial capital expenditure approx. Cumulative undiscounted cash flow 2 000 14 000 US$2.8bn 1 • Steady state production: in excess Briefing Book February 2020 1 500 10 500 Cash flow (US$m

  21. Slide 21: Financial Results

    FINANCIAL RESULTS © Harmony

  22. Slide 22: Extract from Income Statement – US$

    22 EXTRACT FROM INCOME STATEMENT – US$ H1FY20 H1FY19 % Extracts from income statement and operating results (US$m) (US$m) change Revenue 1 022 951 7 Briefing Book February 2020 Production costs (742) (712) (4) Cash operating costs (728) (709) (3) Inventory movements (14) (3) (>100) Production profit

  23. Slide 23: Reduction in Net Debt – US$

    23 REDUCTION IN NET DEBT – US$ 30 JUNE 2019 TO 31 DECEMBER 2019 400 350 US$42m decrease in net debt Briefing Book February 2020 300 21 48 250 215 US$m 200 104 349 150 307 100 © Harmony 50 - Net debt Cash generated Capital Capital Other Net debt Jun-19 by operations expenditure expenditure Dec-19 (SA

  24. Slide 24: Capital Allocation Aimed at Increasing Returns

    24 CAPITAL ALLOCATION AIMED AT INCREASING RETURNS Opportunities Capital allocation Value realization • Prioritise safety Debt repayment Hidden Valley extension Lower risk profile • Rank surface projects higher Target: <0.8x net Briefing Book February 2020 • Scrutinise pillar mining debt/EBITDA Wafi-

  25. Slide 25: Summary Operations

    SUMMARY OPERATIONS © Harmony INCLUDING ESG INFORMATION

  26. Slide 26: Operational Results Summary (H1FY20 vs H1FY19)

    26 OPERATIONAL RESULTS SUMMARY (H1FY20 VS H1FY19) Measure Unit Move % H1FY20 H1FY19 Comments Kusasalethu produced lower grade; development at kg (8) 21 411 23 359 Target continuing in line with reinvestment plan. Production Production for H1FY20 compared to production for oz (8) 688 379 751 008 Brie

  27. Slide 27: H1FY20 Cost Split

    27 H1FY20 COST SPLIT SA H1FY20 Hidden Valley H1FY20 Water; 1% Royalties; 1% Royalties; 3% Electricity and water; 9% Briefing book February 2020 Electricity, Total labour; 17% 19% Total Labour, 49% Contractors; 17% Consumables, 21% © Harmony Consumables; 53% Contractors, 11%

  28. Slide 28: Bambanani

    28 SOUTH AFRICA BAMBANANI LOCATION Free State goldfield about 260km from Johannesburg METHOD Underground, limited to the extraction of Briefing Book February 2020 the high-grade shaft pillar DEPTH 2 219m STATUS Mature operation with focus on mining of the shaft pillar for the next few years FY2019 I

  29. Slide 29: Doornkop

    29 SOUTH AFRICA DOORNKOP LOCATION West Rand goldfield, about 30km west of Johannesburg METHOD Underground, narrow reef conventional mining Briefing Book February 2020 DEPTH 2 219m STATUS Mining takes place on the South Reef at this single-shaft operation PROCESSING Doornkop plant FY2019 IN REVIEW ©

  30. Slide 30: Joel

    30 SOUTH AFRICA JOEL LOCATION Free State, about 290km from Johannesburg METHOD Underground, conventional grid development Briefing Book February 2020 DEPTH 1 379m STATUS Twin-shaft operation – technically challenging, decline project nearing completion FY2019 IN REVIEW PROCESSING Harmony One Plant L

  31. Slide 31: Kalgold

    31 SOUTH AFRICA KALGOLD LOCATION North West province, 55km southwest of Mahikeng Briefing Book February 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 Dedicated

  32. Slide 32: Kusasalethu

    32 SOUTH AFRICA KUSASALETHU LOCATION West Rand goldfields, about 90km from Johannesburg METHOD Underground, conventional mining methods in a Briefing Book February 2020 sequential grid layout DEPTH 3 388m STATUS Mature, steady state operation positioned for profitability PROCESSING Kusasalethu plant

  33. Slide 33: Masimong

    33 SOUTH AFRICA MASIMONG LOCATION Free State goldfield, about 260km from Johannesburg METHOD Underground, conventional tabular narrow reef Briefing Book February 2020 stoping DEPTH Between 1 650m and 2 010m STATUS Mature, single shaft operation nearing the end of its life of mine PROCESSING Harmony

  34. Slide 34: Moab Khotsong

    34 SOUTH AFRICA MOAB KHOTSONG LOCATION Klerksdorp goldfield, about 180km south-west of Johannesburg METHOD Underground, scattered mining method with Briefing Book February 2020 integrated backfill support system incorporating bracket pillars DEPTH Between 1 791m and 3 052m below surface STATUS Stead

  35. Slide 35: Target 1

    35 SOUTH AFRICA TARGET 1 LOCATION Free State goldfield, about 270km south-west of Johannesburg METHOD Underground, mechanised mining (massive Briefing Book February 2020 mining techniques), conventional stoping DEPTH 2 300m below surface STATUS Crusher and related infrastructure project well underwa

  36. Slide 36: Tshepong

    36 SOUTH AFRICA TSHEPONG LOCATION Free State, about 250km from Johannesburg METHOD Underground, conventional undercut mining Briefing Book February 2020 DEPTH Between 1 500m and 2 300m below surface STATUS Steady state operation: development continues PROCESSING Harmony One plant. Gold recovered by

  37. Slide 37: Unisel

    37 SOUTH AFRICA UNISEL LOCATION Free State goldfields, about 270km from Johannesburg METHOD Underground, conventional scattered mining Briefing Book February 2020 and pillar reclamation DEPTH Between 1 100m and 2 200m STATUS Mature operation reaching the end of its life of mine. Mining focused on hi

  38. Slide 38: SA Surface

    SOUTH AFRICA CENTRAL PLANT RECLAMATION (FY19) 38 SA SURFACE Central Plant Waste Rock Phoenix Reclamation Dumps LOCATION Welkom, Free Free State and Virginia, Free State Gauteng State Briefing Book February 2020 METHOD Tailings Processing of Tailings retreatment surface rock retreatment dumps WASTE R

  39. Slide 39: Hidden Valley

    39 PAPUA NEW GUINEA HIDDEN VALLEY LOCATION Papua New Guinea, approximately 90km from Lae in Morobe Province METHOD Open-pit Briefing Book February 2020 DEPTH Steady state operation; development continues to move from Stage 5 to Stage 6 PROCESSING Hidden Valley plant FY2019 IN REVIEW LIFE OF MINE 4 y

  40. Slide 40: FY2020 Guidance

    FY2020 GUIDANCE © Harmony

  41. Slide 41: FY20 Cost and Grade Guidance (Revised)

    41 FY20 COST AND GRADE GUIDANCE (REVISED) • Plan to produce ~1.4 Moz in FY20, at • an average underground recovered grade of ~5.50g/t to 5.57g/t; and • an all-in sustaining cost of R600 000/kg to R610 000/kg Briefing Book February 2020 Reserve grade adjusted for recovery Revised Operation Reserve gr

  42. Slide 42: FY20 Production Guidance (per Operation) (Revised)

    42 FY20 PRODUCTION GUIDANCE (PER OPERATION) (REVISED) FY19 Revised production FY20 guidance FY20 guidance Life of mine Operation (oz) (oz) (oz) (years) Tshepong operations 256 146 290 000 280 000 19 Moab Khotsong 254 891 246 000 248 000 9 Briefing Book February 2020 Bambanani 80 860 77 000 81 000 4

  43. Slide 43: Capital Guidance (US$)

    43 CAPITAL GUIDANCE* (US$) 350 300 74 84 104 Briefing Book February 2020 250 32 31 23 56 US$ million 200 43 35 41 10 30 150 100 180 184 173 158 © Harmony 50 - FY19 FY20 FC FY21 FC FY22 FC Sustaining capital (SA) Growth capital (SA) Hidden Valley capital Deferred stripping * Excluding Golpu (subject

  44. Slide 44: FY20 Capital Guidance per Operation (US$)

    44 FY20 CAPITAL GUIDANCE PER OPERATION (US$) 120 100 80 Briefing Book February 2020 74 8 60 13 US$ million 13 40 10 55 12 20 8 20 6 5 9 2 28 14 15 3 2 12 11 2 1 1 1 1 1 6 3 - - - - © Harmony Ore reserve development Other sustaining capital Major/growth capital* Deferred stripping * Excluded from all

  45. Slide 45: Responsible Mining ESG

    RESPONSIBLE MINING ESG © Harmony

  46. Slide 46: Alignment to the UN's Sustainable Development Goals

    46 ALIGNMENT TO THE UN’s SUSTAINABLE DEVELOPMENT GOALS OUR FIVE SUSTAINABILITY DRIVERS 1 Stakeholder engagement 2 Environmental management and stewardship Briefing Book February 2020 3 Socio-economic development 4 Employee engagement 5 Safety and Health EXTERNAL RECOGNITION CDP 2019 © Harmony Climat

  47. Slide 47: Moving Towards a Safer Harmony

    47 MOVING TOWARDS A SAFER HARMONY Fatality Injury Frequency Rate Key contributors: 0,3 • Visible, felt safety leadership, behavioural 0,28 0,27 interventions 0,25 • Critical control management Briefing Book February 2020 0,22 0,21 0,21 • Proactive risk assessment as a way of life 0,2 0,18 0,17 0,16

  48. Slide 48: Moving Towards a Proactive Safety Culture

    48 MOVING TOWARDS A PROACTIVE SAFETY CULTURE PHASE 1 PHASE 2 PHASE 3 PHASE 4 FOUNDATION CAPACITATION INTERVENTIONS REINFORCEMENT Learning Top-down Positive behaviour from incidents Operation-specific (leadership circle) recognition Briefing Book February 2020 Psychology Bottom-up of safety (behaviou

  49. Slide 49: Safe Harbour Statement

    49 PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOUR STATEMENT 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 amended (the “Secur

  50. Slide 50: Contact Us

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

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