Harmony Gold Mining Co. Ltd. · JSE:HAR
Harmony Gold Mining — Merger or Acquisition (November 2004)
34 slides from Harmony Gold Mining's merger presentation, Nov 9, 2004
Slide 1: Form 6-K - Harmony Gold Mining Company Limited
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form 6-K REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO RULE 13a-16 OR 15d-16 UNDER THE SECURITIES EXCHANGE ACT OF 1934 For the Month of November 2004 Commission File Number: 001-31545 Harmony Gold Mining Company Limited (Translat
Slide 2: While Gold Fields dithers, Harmony delivers
WHILE “THE IN (IAN 9 NOVEMBER SOUTH COCKERILL, HARMONY GOLD AFRICA…” FIELDS 2004 WAY GOLD DITHERS, IS FIELDS GOOD HARMONY CEO, 3 NOVEMBER DELIVERS 2004)
Slide 3: Notice and forward-looking statements disclaimer
NOTICE In register by Gold they Investors Statement documents (212) This to or (including of prior Forward-looking Statements facts. and expressions. uncertainties closing the Harmony. that actual discussed Factors” information described sell connection sale regulation. Gold Gold United services, fo
Slide 4: The Harmony Way
THE A Four – We Flattens Empowers Creating No Harmony set cornerstones HARMONY frills of believe management the value isindividuals in management a lean the isWAY about ability operation practices and the of structure management business alland ourphilosophies people of gold teams. mining that
Slide 5: Demonstrable track record of sustainable cost reductions
DEMONSTRABLE ACHIEVING Actual Operation Labour Stores Electricity Other Contractors Average Source: EvanderCosts2 4% savings cost Harmony achieved St.8% andand Helena 1% 20% St 7% SIGNIFICANT 13% Water achieved Helena 2% 18% (2)% company 33% Randfontein 2% 4% TRACK 2% 8% (3)% were 32% 2% (1)% in5% 8
Slide 6: R1 billion cost savings target is achievable
THE R1 Projected Head Labour Payroll Stores Electricity Other Contractors Partial Additional Total Capital Cost South 6,729 Savings office costs2 264 CONOPS cost Optimisation 1BILLION 2 Management 66 cost 2004 and 4% Development African 66 140 1% 297 from savings 395 Water 1% (R 98 198 4.5% To132 6%
Slide 7: Evander: most profitable operation case study
-Operating 0 5,000 10,000 15,000 20,000 (Rand/kg) EVANDER Beatrix Kloof Driefontein Evander 5,000 margin, WOULD – A SUCCESFUL SeptNOW 2005BECASE GOLDSTUDY FIELDS MOST PROFITABLE OPERATION
Slide 8: Evander profitable in 2.5 years
EVANDER Historic Closure Rand/tonne P 0 100 200 300 400 500 600 development 2004 2003 2002 2001 2000 1999 Acquired re-acquisition of cost from E3 real PROFITABLE reduction costs &Gold 1998 E9 shafts Fields analysis management IN 2,5 – Evander YEARSfor R450 million Cumulative profit since acquisition
Slide 9: We have a track record of delivery
WE “They why Nick We Harmony SoSay HAVE it we’ve Holland, Say hashas taken A had TRACK aCFO proven tosospend long of RECORD Gold track to a great bring Fields record deal significant OF(28 inof DELIVERY extracting October time cost really 2004) value savings understanding and to this shareholders)”
Slide 10: Track record reflected in our performance
THIS550 Average 600 Rand/tonne 18% 12% 546 Gold 413 Source: Harmony WE HAVE increase Fields TRACK Harmony 500 underground ACHIEVED 450 over RECORD 400 analysis FY03 350 total THIS IS 300 based cash REFLECTED ON cost onAGold in SUSTAINABLE South Fields INAfrica, OUR and PERFORMANCE Harmony year BASIS
Slide 11: Harmony believes merger will create shareholder value
HARMONY Harmony Gold BREAKEVEN The Consensus NPV Accretion Source: Enlarged value of per Fields Harmony 15% 20% cost Harmony Gold 2,358 toNPV analysis 3,322 savings Gold BELIEVES cost Group Fields AT 321 US$m per savings analysis 491 field’s 15% share 7.35 share R9bn excluding including share 6.76 S
Slide 12: Our approach to dealing with cost is fundamentally different
OUR IS “They Ian We Harmony higher IfFUNDAMENTALLY Cockerill, Say you Say APPROACH grade look is more ore atGold the bodies cost cost TO Fields efficient DEALING and performance DIFFERENT CEO its tendency at(19 managing WITH October at Gold toCOST high its 2004) Fields South grade over African rathe
Slide 13: Long-term trends speak for themselves
South 600 Rand/tonne Sept 21% Harmony Source: THE 500 2001 Working LONG UNDERLYING Africa Harmony 400 Gold Dec–300 underground cost TERM 2001 Fields 200 analysis development Mar PERFORMANCE TRENDS 2002 total based June cash cutbacks SPEAK on Harmony 2002 cost,FOR OF 13% Sept GOLD and THEMSELVES 2001
Slide 14: Even more so in terms of restructuring benefits
EVEN South 100,000 Sept Gold Harmony Source: BENEFITS 2001 Fields Africa MORE Harmony 80,000 increase Gold Dec OF increase underground SO 2001 Fields OUR 60,000 analysis since INMar since RESTRUCTURING R/kg 40,000 Sept 2002 total Sept based TERMS 2001 20,000 June cash 2001 on: Harmony 2002 24% cost,
Slide 15: An unsustainable situation? Surface tonnages propping up profits
AN Gold Rand 200 400 600 800 1,000 1,200 1,400 Dec Mar June Sept Surface S 0 10 20 30 40 Underground Source: OVER eptUNSUSTAINABLE urface 2001 2002 2003 2004 2001 2002 2003 2004 Fields’ (millions) THE operating contribution Harmony PAST South contribution profit analysis African 5 to QUARTERS, South
Slide 16: What has Gold Fields achieved with capex spend?
WHAT ITS They “Over potentially We As “… Ian for Cockerill, Say acknowledge certain CAPEX Say the HASlast future have projects SPEND? GOLD Gold year R10 South the Gold Fields ofFIELDS amount billion aAfrican non-essential Fields CEO CEO, worth of ACHIEVED has projects: money (19 at of Gold spent Oct
Slide 17: Development mismanagement
DEVELOPMENT Total (18%) 15% Development Metres Kloof Wrong Exploitation Square 25 Sept Gold Source: Harmony MISMANAGEMENT 202002 Fields Development, 15 Driefontein way metres 55,000 14,000 Gold Harmony 10 Gold Dec2002 Dec toRatio, Fields Metres cut mined/metres 50,000 13,000 2002 fields and costs Be
Slide 18: High level of capex has not increased production
ALL800 Gold ‘000 900 Sept 19% Source: GOLD 2001 ounces THE Fields’ FIELDS Gold 700 Dec TRENDS South 600 Fields’ 2001 HIGH 500 African Mar GOING annual 400 LEVEL 2002 underground and THE June OF quarterly WRONG CAPEX 2002production, Sept reports HAS WAY? 2002 NOT Dec Sept INCREASED 2002 2001 Mar - Se
Slide 19: Gold Fields at higher grade, lower reserve base
GOLD Gold Million 24% Harmony’s Ounces 148% 80 1999 Source: AT 70 A 2000 Fields’ HIGHER 60FIELD’S (million) ounces Gold Harmony 502001 reserve 40 South Fields 30 RECOVERY 2002 RESERVE annual 20 African base annual 10 2003 analysis 0reports, reserve reports 2004 BASE GRADE, asbase DECLINED at financi
Slide 20: Gold Fields has not developed adequate replacement reserves
Hormany (45%) Ounces(millions) 81,000 Source:Gold 70 73,60(11%) Gold Sources: 95% GOLD 60of Fields price(10%) price 5090,000 FIELDS harmaony Harmony 40 reserves (Rand/) (Rand/kg) South Gold 30 Fields 20 HAS SOUTH price(10%) reserves Africa 10 2004 2004 0NOT annual AFRICAN annual reserves represented
Slide 21: Breakeven project reserves
15% 11.1 Breakeven Project Reserves “potential” Driefontein Kloof 22.6 Source:Gold HARMONY COST KEA Eba below 86,198 Gold Reserves 89,056 9# 5# SAVINGS Fields WILL 97,382 85,057 infrastructure price 10.9 3.4 2004 REDUCE (m under 11.1 83 ANICIPATED oz) mineral Gold (m CAPEX oz) resources Fields’manag
Slide 22: Gold Fields experience cash shortfall in South Africa
WILL Gold -Rand 0 500 1,000 1,500 Dec -1,000 Cash Capex Source: R400 5002002 Fields’ flow (millions) M GOLD Gold PER Mar from cash Fields ANNUM FIELDS 2003 operating flow annual June from EXPERIENCE IS2003 activities REQUIRED and operating Sept quaterly less 2003 activities, ATO capex reports CASH D
Slide 23: Gold Fields cash flow carried offshore
Gold -Rand 0 200 400 600 Dec -400 Source: GOLD 2002002 Fields’ (millions) FIELDS Gold MarSouth International Fields 2003 CASH SHAREHOLDERS African annual June FLOW 2003 cash cash andoperating Sept HAS quarterly operating 2003 HAVE BEEN profit reports Dec profit CARRIED DIRECTED 2003 less lesscapex,
Slide 24: Gold Fields shareholders are well rewarded
GOLD “Based Board Harmony Average Shareholding Revenues EBITDA1 Market EV2 Consensus Production, Reserves, Resources 0 Gold 10 20 61% Fields ofFIELDS cap2 on 30 Gold Directors and Moz 57% 39% (M&I), (M&2I), the 59% 40 NPV1 ‘000 Cost 62% in Gold 50 Fields Board 55% 43% 29% the SHAREHOLDERS oz 60 savi
Slide 25: Is their international performance really impressive?
IS THEIR Kilograms WMC Gold Rand Acquisition Sept Mar International Source: 1999 2003 1997 Fields’ (millions) gold Gold June Dec PERFORMANCE 35,000 asset of South South Fields’ capital 1997 1999 2003 800 acquisition 30,000 African Africa 700 Mar Sept annual hungry 600 1998 25,000 1999 2003 and and 5
Slide 26: Their underperforming assets are being sold on the cheap
THEIR Rand Sept Dec 80 (16%) South Source: Gold Ounces 40 1999 708% Sources: International 702002 301997 Fields’ 2000 (millions) 60 20 Africa PERFORMING (millions) Gold Gold 50 10 Mar Dec 2001 0International South South Fields Fields 2003 1997 1,200 2002 Africa African Africa annual June Mar annual
Slide 27: Gold Fields contractually committed to IAMGOLD
ISthe They “Our future” “… Cockerill, We If Gold Potential GOLD Say I shareholders Fields think Say IAMGold Willie further FIELDS Gold that will Jacobsz, what Fields transaction only dilution largely CONTRACTUALLY people have CEO Gold asfeel ais the (3 don’t 70% Fields completed, that November enlar
Slide 28: Gold Fields re-rating claims are unjustified
Relative Rebased 18 170 10-Aug Harmony Source: GOLD October 160FIELDS Datastream 24Aug 150 share toUS$ 10 2004 140 August price IAMGold 7-Sept RE-RATING ONLY Harmony 130performance, 120 2004, 21-Sept OUTPERFORMED US$ 110 announces US$-denominated CLAIMS 100 Gold 5-Oct 10 90Fields August 18-Oct offer
Slide 29: Value leakage to Gold Fields shareholders increases
THE VALUE Actual 4,500 1,500 Gold Source: Fields’ 4,000 1,729 value Harmony 3,500 3,008 international destruction LEAKAGE analysis 3,000 3,936 2,678 2,500 inassets, TO based theGOLD 2,000 (43%) proposed on 10Auf publicly 1,500 FIELDS (32%) 041 IAMGold 1,000 “See available SHAREHOLDERS 500 through” t
Slide 30: Gold Fields campaign dithers; let shareholders decide
GOLD They Q: Bernard you Willie Job to advice, breach fiduciary Web We Divert Issues THEIR offers. The SRPlook “Criminal say as that purpose significant Competition rejects interview, say of Jacobsz: custodians attention of FIELDS at and CAMPAIGN Swanepoel much?”. sharteholders duty the this where t
Slide 31: Full and fair premium
WE “They premium -Harmony’s We are merger Fields’ weighted eliminate Gold to rumours INACCURATE Ian As announcement. totally say OFFER of Cockerill, Fields’ Fields say average represents Monday’s of was average the inaccurate. astated share Aarguments bid distorting inFULL 30 Gold RUMOURS fact by pr
Slide 32: Net changes in resources between January and June 2004
NET130.60 Inferred Harmony (Disclosure SRK The CHANGES Resources Resources Resources million of total Jan INIndicated ounces possible 2004 June RESOURCES (Report 2004 were economic Resources (cut deemed dated BETWEEN off(up 250cmg/t April Measured conservative to US$ 2004) JANUARY or 1000/oz) Resour
Slide 33: Net changes in reserves between January and June 2004
NET All SRK Jan 1 2 3 4 5 6 Harmony Acquisitons Added Various Vamping Depletion Conversion figures 2004 CHANGES Reserves reserves (SRK) Reserves mine in gold bymillions of (PNG) Jan mining planning (old probable –at IN June 2004 June Free RESERVES gold) 1.84 of -0.70 2004 (Report 2004 issues, State
Slide 34: Signatures
SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized. Dated: November 9, 2004 Harmony Gold Mining Company Limited By: /s/ Nomfundo Qangule Name: Nomfundo Qan
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