Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — FY2022 Earnings Presentation
45 slides from Harmony Gold Mining's earnings presentation, Aug 30, 2022
Slide 1: FY22 Results
FY22 RESULTS 30 August 2022 © Harmony
Slide 2: Safe Harbour Statement and Disclaimer
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOUR STATEMENT AND DISCLAIMER 2 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
Slide 3: Overview
© Harmony OVERVIEW
Slide 4: Delivery Against Strategy
4 DELIVERY AGAINST STRATEGY OUR STRATEGY © Harmony Results for the financial year ended 30 June 2022 To produce safe, profitable ounces and improve margins through operational excellence and value-accretive acquisitions STRATEGIC PILLARS RESPONSIBLE OPERATIONAL CASH EFFECTIVE CAPITAL STEWARDSHIP EXC
Slide 5: Key Features FY22
5 © Harmony Results for the financial year ended 30 June 2022 KEY FEATURES FY22 Underground Average gold price Gold produced AISC recovered grade received • 46 236kg • 5.37g/t • R894 218/kg • R835 891/kg • 1 486 517oz • Met guidance • US$1 829/oz • US$1 709/oz • Met guidance • Slightly above guidanc
Slide 6: Growth Journey to Increase Margins and Progress Copper
6 GROWTH JOURNEY TO INCREASE MARGINS AND PROGRESS COPPER • Ensuring safe working areas • Embedded sustainability drives integrated risk-based decision making • Improve the quality of our ounces © Harmony Results for the financial year ended 30 June 2022 • Integrated new assets: Moab Khotsong, Mponen
Slide 7: Four Focus Areas to Create Value
7 © Harmony Results for the financial year ended 30 June 2022 FOUR FOCUS AREAS TO CREATE VALUE % SAFETY RETURNS COSTS GROWTH • Continuously drive the • Capital redirected to • Higher grade assets will • Growth aimed at quality improvement of safety and higher-grade assets and drive down costs in the
Slide 8: Safety
© Harmony SAFETY
Slide 9: Embedded Sustainability: Safety
9 EMBEDDED SUSTAINABILITY: SAFETY ROAD TO ZERO LOSS OF LIFE AND PREVENT INJ URIES © Harmony Results for the financial year ended 30 June 2022 Development of safety Embedded practices – Improved employee Positively impacting leadership capability routines and habits engagement and employee’s relation
Slide 10: Embedded Sustainability: Creating Shared Value
10 EMBEDDED SUSTAINABILITY: CREATING SHARED VALUE ENVIRONMENTAL SOCIAL GOVERNANCE Decarbonising Harmony through Creating a safe working 64% independent energy efficiencies, renewable energy environment to prevent loss of life; non-executive directors © Harmony Results for the financial year ended 30
Slide 11: Meaningful Returns
MEANINGFUL RETURNS © Harmony
Slide 12: Optimal Mix of Investments to Create Value
12 OPTIMAL MIX OF INVESTMENTS TO CREATE VALUE Capital prioritisation Value realisation Major projects Exploration Lower risk profile Hidden Valley extension Target North Safety and production optimisation: © Harmony Results for the financial year ended 30 June 2022 All ESG factors considered especia
Slide 13: Organic Growth and Investment to Deliver Long Term Value
13 ORGANIC GROWTH AND INVESTMENT TO DELIVER LONG TERM VALUE * Future projects (estimated production and all-in sustaining costs based on FY23 Total Harmony – Life-of-mine ounce profile planning parameters and subject to Safe Harbour statement) 1 800 FY22 © Harmony Results for the financial year ende
Slide 14: Higher Quality Portfolio Continues to Evolve
14 HIGHER QUALITY PORTFOLIO CONTINUES TO EVOLVE WITH 70% OPERATIONAL FREE CASH FROM ACQUIRED AND REINVESTED ASSETS FY16 Operational Free Cash FY22 Operational Free Cash Hidden Valley © Harmony Results for the financial year ended 30 June 2022 6% Existing SA surface underground operations 10% 8% SA s
Slide 15: Steady Production Demonstrates Resilience (Rand)
15 STEADY PRODUCTION DEMONSTRATES RESILIENCE (RAND) FY22 vs FY21 t'000 Tonnes milled kgs Gold produced g/t Underground recovered grade 60 000 6,00 5,51 5,37 60 000 53 801 © Harmony Results for the financial year ended 30 June 2022 49 253 50 000 47 755 46 236 5,00 50 000 40 000 40 000 4,00 30 000 30
Slide 16: Steady Production Demonstrates Resilience (US$)
16 STEADY PRODUCTION DEMONSTRATES RESILIENCE (US$) FY22 vs FY21 t'000 Tonnes milled Moz Gold produced g/t Underground recovered grade 70 000 1 800 6,00 5,51 5,37 59 325 1 600 1 535 1 487 © Harmony Results for the financial year ended 30 June 2022 60 000 54 312 1 400 5,00 50 000 1 200 4,00 40 000 1 0
Slide 17: Capital Expenditure Today to Enhance Margins Tomorrow
17 CAPITAL EXPENDITURE TODAY TO ENHANCE MARGINS TOMORROW Capital guidance (Rand) 9 000 8 500 © Harmony Results for the financial year ended 30 June 2022 8 029 6 192 8 200 8 000 11% 8% 11% not utlised 10% 7% 7 000 7% 6 000 18% 33% 5 400 5 103 28% 32% 5 000 5% 20% Rm 21% 20% 5% 4 000 8% 12% 21% 3 0
Slide 18: Future Grades Trending Higher = Enhanced Return on Capital
18 FUTURE GRADES TRENDING HIGHER = ENHANCED RETURN ON CAPITAL 5 000 © Harmony Results for the financial year ended 30 June 2022 4 500 Underground development 4 000 grades trending higher 3 500 3 000 2 500 Cmg/t 2 000 1 500 1 000 500 0 Moab Joel Masimong Tshepong Phakisa Kusasalethu Doornkop Mponeng
Slide 19: Investing in High-Grade Assets
19 INVESTING IN HIGH-GRADE ASSETS Adjusted FY23 reserve grade grade (g/t) guidance Operation (5%) (g/t) © Harmony Results for the financial year ended 30 June 2022 *Mponeng 8.32 7.45 - 7.68 Underground recovered grade 6,00 *Moab Khotsong 8.11 7.24 - 7.46 5,00 Kusasalethu 6.62 6.38 - 6.58 Tshepong No
Slide 20: Tshepong Operations Restructuring: Why, How and What
20 TSHEPONG OPERATIONS RESTRUCTURING: WHY, HOW AND WHAT Why did we need to restructure? Geotechnical and geological complexities resulted in face length/flexibility challenges. © Harmony Results for the financial year ended 30 June 2022 This meant it was difficult to mine as planned. This in turn di
Slide 21: Tshepong North Restructuring Sub-75
21 © Harmony Results for the financial year ended 30 June 2022 TSHEPONG NORTH RESTRUCTURING SUB-75
Slide 22: Gold Production Split Across a More Profitable, De-risked Portfolio
22 GOLD PRODUCTION NOW SPLIT ACROSS A MORE PROFITABLE AND DE-RISKED PORTFOLIO Gold production FY16 Gold production FY22 © Harmony Results for the financial year ended 30 June 2022 International International assets assets 6% 8% High grade assets Surface 27% operations Surface 9% operations 18% Remai
Slide 23: Operating Free Cash Flow Margins Planned Over Life of Mine
23 OPERATING FREE CASH FLOW MARGINS PLANNED OVER LIFE OF MINE Free cash flow margin ‒ FY23 Life of mine plan* 50% © Harmony Results for the financial year ended 30 June 2022 45% 40% Hidden Valley 35% Mponeng Kalgold 30% FCF margin Savuka tailings Moab CPR 25% Phoenix Khotsong MWS Tshepong 20% Masimo
Slide 24: Cost Management
COST MANAGEMENT © Harmony
Slide 25: Cost Management Ensures We Plan at 8% Inflation
25 © Harmony Results for the financial year ended 30 June 2022 COST MANAGEMENT ENSURES WE PLAN AT 8% INFLATION Mponeng and COSTS: Fixed wages Electricity Consumables related assets Covid-19 INCREASE Y/Y 6% 13% 10% 33% WHAT Labour decreased from Eskom tariffs • General stores increase in costs from C
Slide 26: Good Margins from Higher Grade and Surface Source Assets
26 GOOD MARGINS GENERATED FROM HIGHER GRADE AND SURFACE SOURCE ASSETS All-in sustaining costs FY22 © Harmony Results for the financial year ended 30 June 2022 Due to conveyor belt 1 200 000 failure Gold spot price: R950 000/kg 1 000 000 Gold price received: R894 218/kg 800 000 International assets R
Slide 27: By FY24 All Mines Expected to Be Profitable
27 BY FY24 ALL MINES EXPECTED TO BE PROFITABLE All-in sustaining cost forecast FY24* © Harmony Results for the financial year ended 30 June 2022 Gold price: R950 000/kg R/kg Surface operations International assets High-grade assets Remaining underground assets - 5 000 10 000 15 000 20 000 25 000 30
Slide 28: Operational Excellence Aimed at Improving Safety, Productivity and Costs
28 OPERATIONAL EXCELLENCE AIMED AT IMPROVING SAFETY, PRODUCTIVITY AND COSTS © Harmony Results for the financial year ended 30 June 2022 Panel pairing Thibakotsi Facetime transformation optimisation journey 10-15% increase in total S300* productivity at an average of 300m2 per crew per month over the
Slide 29: Harmony: Mining with Purpose
HARMONY MINING WITH PURPOSE
Slide 30: Key Catalysts to Expand Margins
30 KEY CATALYSTS TO EXPAND MARGINS Wafi-Golpu* © Harmony Results for the financial year ended 30 June 2022 Zaaiplaats major capital complete Doornkop major capital complete Franco-Nevada streaming contract ends, MWS major capital complete Kusasalethu and Masimong end of life Reallocation of capital
Slide 31: Significant Resources to Convert to Reserves
31 SIGNIFICANT RESOURCES TO CONVERT TO RESERVES Mineral Resources reconciliation June 2021 vs June 2022 (Moz) © Harmony Results for the financial year ended 30 June 2022 141,2 140 132,6 Gold equivalents 2,3 23,3 4,3 2,1 Gold equivalents 2,1 120 21,3 100 80 Gold 60 117,9 Gold 111,3 40 20 0 June 2021-
Slide 32: Higher Grade Means Better Cash Conversions from Reserves
32 HIGHER GRADE MEANS BETTER CASH CONVERSIONS FROM RESERVES GOING FORWARD Mineral Reserves reconciliation June 2021 vs June 2022 (Moz) © Harmony Results for the financial year ended 30 June 2022 42,5 1,6 0,7 39,8 40 Gold equivalents 1,7 0,7 Gold equivalents 11.1 0,5 2,8 1,6 11,7 30 20 Gold Gold 31,4
Slide 33: Financials
FINANCIALS Boipelo Lekubo © Harmony
Slide 34: Key Features FY22
34 © Harmony Results for the financial year ended 30 June 2022 KEY FEATURES FY22 Positive operating Steady net debt to Higher revenue Realised hedge gain free cash flow margin EBITDA • R42 645m (US$2 804m) from • R497m (US$33m) from a loss of • 7% from 16% • 0.1 times R41 733m (US$2 710m) R2 296m (U
Slide 35: FY22 Impairment Loss Recognised
35 FY22 IMPAIRMENT LOSS RECOGNISED Impairment of R4 433 million was recognised for the year ended 30 June 2022 © Harmony Results for the financial year ended 30 June 2022 The impairments relate to the following operations: Tshepong South Tshepong North Moab Khotsong Kusasalethu Bambanani (Phakisa se
Slide 36: Returning Cash to Shareholders as We Invest in Our Future
36 RETURNING CASH TO SHAREHOLDERS AS WE INVEST IN OUR FUTURE Confidence in our plans Delivering Normalising cash flow © Harmony Results for the financial year ended 30 June 2022 and our ability to pay a dividend shareholder returns would allow for a dividend alongside our growth aspirations Our poli
Slide 37: Conclusion
CONCLUSION © Harmony
Slide 38: Specialist Gold Producer with Tier 1 Copper Asset
38 © Harmony Results for the financial year ended 30 June 2022 SPECIALIST GOLD PRODUCER WITH TIER 1 COPPER ASSET SA SA underground underground high-grade optimised International SA and other gold surface equivalents high-margin SA = South Africa
Slide 39: Thank You
Jhesmonr THANK YOU MINING WITH PURPOSE
Slide 40: Harmony: Mining with Purpose
S S HARMONY MINING WITH PURPOSE 7 oe
Slide 41: FY23 Cost and Grade Guidance
FY23 COST AND GRADE GUIDANCE • Plan to produce ~1.4Moz to 1.5Moz in FY23, at • an average underground recovered grade of ~5.45g/t to 5.60g/t © Harmony Results for the financial year ended 30 June 2022 • an all-in sustaining cost of less than R900 000/kg for South African operations and total Harmony
Slide 42: FY23 Production Guidance (Per Operation)
42 FY23 PRODUCTION GUIDANCE (PER OPERATION) FY22 production FY23 guidance Life-of-mine Operation (oz) (oz) (years) © Harmony Results for the financial year ended 30 June 2022 Moab Khotsong 209 237 204 000 – 215 000 22 Mponeng 195 669 198 300 – 215 500 7 Kusasalethu 146 833 123 000 – 129 000 2 Doornk
Slide 43: FY23 Capital Guidance
43 FY23 CAPITAL GUIDANCE FY23 Capital guidance per operation (Rm) 2 000 © Harmony Results for the financial year ended 30 June 2022 1 800 1 600 1 400 939 1 200 Kareerand Zaaiplaats 960 602 Rm 1 000 800 51 194 88 600 295 238 station, 443 West pump 287 59 42 400 425 191 159 117 179 31 151 465 200 360
Slide 44: Gold Hedge Position as at June 2022
44 GOLD HEDGE POSITION AS AT 30 JUNE 2022 FY2023 FY2024 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Total Rand gold Forward contracts koz 72 72 72 70 44 32 16 378 © Harmony Results for the financial year ended 30 June 2022 R'000/kg 1 033 999 1 019 1 039 1 061 1 082 1 107 1 035 Dollar gold Forward contracts koz 9 9 9 9 9 8
Slide 45: Renewable Energy Rollout
45 RENEWABLE ENERGY ROLLOUT PHASE 1 PHASE 2 PHASE 3 30MW 137MW 56MW © Harmony Results for the financial year ended 30 June 2022 FY24 FY25 FY26 Energy generated Energy generated Energy generated per annum: 75GWh* per annum: 343GWh per annum: 139GWh Operations – peak PV (MW): Tshepong 10 Eland 10 Nyal
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