Wrap Text
Operational Update for the nine months ended 31 March 2019
Harmony Gold Mining Company Limited
("Harmony" or "Company")
Incorporated in the Republic of South Africa
Registration number 1950/038232/06
JSE share code: HAR NYSE share code: HMY
ISIN: ZAE000015228
OPERATIONAL UPDATE
FOR THE NINE MONTHS ENDED 31 MARCH 2019
HARMONY ON TRACK TO DELIVER ON PRODUCTION GUIDANCE
Johannesburg. Thursday, 2 May 2019. Harmony Gold Mining Company Limited ("Harmony" or "the company") is pleased to provide an operational update for the nine months
ended 31 March 2019.
OPERATIONAL UPDATE
NINE MONTHS ENDED MARCH 2019 COMPARED TO NINE MONTHS ENDED MARCH 2018
The South African operations recorded a 4% improvement in the lost time injury frequency rate (per million hours) to 6.16 in the nine months ended 31 March 2019 compared to
6.43 for the nine months ended 31 March 2018.
Total gold production increased by 29% to 33 673kg (1 082 611oz) with underground recovered grade 6% higher compared to the previous comparative period of the March 2018
nine months due to the acquisition of Moab Khotsong (effective 1 March 2018) and build up in production from Hidden Valley (reaching commercial levels of production in June 2018).
The gold price received remained flat in Rand/kg terms at R579 778 for the nine months ended 31 March 2019, compared to R572 513/kg in the previous comparative period. In US$
terms the gold price received decreased by 7 % to US$1 278/oz for the nine months ended 31 March 2019.
Cash operating unit costs increased by 2% to R438 452/kg (decreased by 7% to US$966/oz) and all-in sustaining units cost increased by 5% to R543 432/kg (decreased by 4% to
US$1 198/oz) for the nine months ended 31 March 2019 compared to the previous comparative period.
MARCH 2019 QUARTER
Seasonally, the March quarter performance by Harmony's South African operations is influenced by the slower production start-up after the December holiday period.
The Eskom Stage 4 load shedding at the end of the March 2019 quarter, mainly had an impact on production from surface operations. Ore milling and hoisting scheduling
arrangements implemented to reduce electricity consumption impacted the continuity of ore processing during the quarter.
The performance of Harmony's largest operations are highlighted below:
- Tshepong Operations: management's focus has seen an improvement in flexibility (face length development and availability) in the March 2019 quarter. Flexibility and
mining discipline continue to be key focus areas in delivering an improvement in the performance of the operation;
- Moab Khotsong: the lower recovered grade performance in the March 2019 quarter was due to an increase in higher grade tonnes locked up underground. Mining crews
and plans have been implemented to address the lock-up tonnes which will be processed in the June 2019 quarter;
- Hidden Valley: the planned material handling and processing facility maintenance shutdown was successfully conducted in the March 2019 quarter.
Harmony is on track to deliver on annual production guidance.
OPERATING RESULTS SUMMARY
Nine months Nine months Quarter Quarter
ended ended Variance ended ended Variance
March 2019 March 2018(1) % March 2019 March 2018(1) %
Gold produced kg 33 673 26 200 29 10 314 8 782 17
oz 1 082 611 842 351 29 331 603 282 348 17
Underground grade g/t 5.60 5.28 6 5.48 5.33 3
Gold price received R/kg 579 778 572 513 1 595 814 554 718 7
US$/oz 1 278 1 378 (7) 1 324 1 444 (8)
Cash operating costs R/kg 438 452 431 130 (2) 457 911 456 237 0
US$/oz 966 1 038 7 1 017 1 118 14
Production profit Rm 4 813 3 473 39 1 428 761 88
US$m 341 269 27 102 64 59
All-in sustaining cost R/kg 543 432 518 861 (5) 578 785 559 458 (3)
US$/oz 1 198 1 249 4 1 286 1 456 12
Total cash operating cost and capital(2) R/kg 539 182 508 708 (6) 569 775 539 505 (6)
US$/oz 1 188 1 227 3 1 266 1 404 10
Exchange rate R/US$ 14.11 12.92 9 14.00 11.95 17
1 The March 2018 comparative periods include Moab Khotsong for one month only. The operation recorded gold produced of 764kg (24 563oz) attributable to the
March 2018 month.
2 Excludes investment capital for Hidden Valley in the March 2018 comparative period.
The operational update report has not been reviewed or audited by the company's external auditors. Detailed financial and operational results are provided
on a six-monthly basis at the end of December and June.
WAFI-GOLPU UPDATE
Engagement by the Wafi-Golpu Joint Venture (WGJV) with the Papua New Guinea (PNG) government on the application for a special mining lease (SML) for the Wafi-Golpu
project progressed during the March 2019 quarter.
The independent technical reviews of the project Environmental Impact Statement was progressed by PNG's Conservation and Environmental Protection Authority, along
with discussions with the PNG government on the terms of the mine development contract. The development forum process is expected to commence in the coming
months, where local landowner and provincial government agreements will be progressed.
FY19 GUIDANCE UPDATE
Gold production of 1.45 million ounces remains unchanged. Cost guidance is updated to an all-in sustaining unit cost (AISC) of R540 000/kg taking into account
the performance for the nine months ended 31 March 2019 as reported and Eskom electricity increases implemented on 1 April 2019 (previously an AISC range of
R520 000/kg to R530 000/kg).
HEDGING UPDATE
The volatility and weakening of the Rand exchange rate against the US dollar and higher US$ gold prices during the March 2019 quarter presented an opportunity to
top-up Harmony's hedging programme.
The table below shows the open position at 31 March 2019:
FY2019 FY2020 FY2021
Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 TOTAL
Rand Gold
Forward Contracts koz 67 67 67 67 67 67 67 46 515
R'000/kg 610 621 637 642 657 668 674 693 649
Dollar Gold
Forward Contracts koz 18 12 11 9 9 6 3 1 69
US$/oz 1 338 1 351 1 364 1 355 1 363 1 371 1 367 1 387 1 355
Total Gold koz 85 79 78 76 76 73 70 47 584
Currency Hedges
Rand Dollar
Zero Cost Collars $m 89 71 69 64 56 35 24 17 425
Floor R/$ 13.52 14.48 14.59 14.80 14.97 15.33 15.18 15.24 14.55
Cap R/$ 14.17 15.19 15.35 15.57 15.75 16.07 16.18 16.24 15.30
Forward Contracts $m 72 57 54 54 54 52 17 12 372
R/$ 13.81 14.73 15.04 15.33 15.47 15.91 15.74 15.86 15.04
Total Rand Dollar $m 161 128 123 118 110 87 41 29 797
Dollar Silver
Zero Cost Collars koz 90 90 - - - - - - 180
Floor $/oz 17.33 17.40 - - - - - - 17.37
Cap $/oz 18.33 18.40 - - - - - - 18.37
Board approved hedging limits:
25% currency (R/US$) over a 24 month period; 20% gold over a 24 month period; 50% silver over a 24 month period.
Operating results - Nine months on Nine months (Rand/metric)
South Africa South Africa
Underground production Surface production
Nine Central Total
months Tshepong Moab Total plant Total South Hidden Total
ended operations Khotsong Bambanani Joel Doornkop Target 1 Kusasalethu Masimong Unisel Underground Phoenix reclamation Dumps Kalgold Surface Africa Valley(1) Harmony
Ore milled - t'000 Mar-19 1 211 763 176 319 578 446 546 458 189 4 686 4 612 2 884 3 249 1 220 11 965 16 651 2 848 19 499
Mar-18 1 288 70 179 347 516 511 483 483 309 4 186 4 526 2 839 1 794 1 150 10 309 14 495 1 491 15 986
Yield - g/tonne Mar-19 4.94 8.07 10.80 3.50 4.62 4.80 6.64 3.70 4.90 5.60 0.121 0.149 0.350 0.74 0.25 1.76 1.55 1.73
Mar-18 5.54 10.91 12.02 3.64 4.84 4.04 6.61 4.21 3.28 5.28 0.121 0.129 0.410 0.80 0.25 1.70 1.12 1.69
Gold produced - kg Mar-19 5 985 6 156 1 901 1 115 2 673 2 143 3 628 1 694 926 26 221 557 429 1 136 904 3 026 29 247 4 426 33 673
Mar-18 7 133 764 2 152 1 262 2 495 2 063 3 195 2 034 1 013 22 111 548 367 736 919 2 570 24 681 1 519 26 200
Gold sold - kg Mar-19 5 910 6 121 1 872 1 143 2 664 2 171 3 687 1 667 917 26 152 552 427 1 127 915 3 021 29 173 4 430 33 603
Mar-18 7 066 671 2 132 1 300 2 482 2 067 3 133 2 017 1 004 21 872 544 369 732 900 2 545 24 417 1 485 25 902
Gold price received - R/kg Mar-19 585 776 565 171 586 755 587 488 589 464 586 967 586 219 586 893 585 347 581 691 568 899 587 417 580 913 587 439 581 614 581 683 567 230 579 778
Mar-18 576 149 506 738 575 661 574 590 574 081 576 434 576 150 575 884 575 180 573 603 538 994 577 035 569 490 576 544 566 560 572 869 543 805 572 513
Gold revenue (R'000) Mar-19 3 461 935 3 459 409 1 098 405 671 499 1 570 331 1 274 305 2 161 391 978 351 536 763 15 212 389 314 032 250 827 654 689 537 507 1 757 055 16 969 444 2 512 827 19 482 271
Mar-18 4 071 072 340 021 1 227 310 746 967 1 424 870 1 191 489 1 805 079 1 161 559 577 481 12 545 848 293 213 212 926 416 867 518 890 1 441 896 13 987 744 164 773 14 152 517
Cash operating cost Mar-19 2 991 577 2 368 840 734 150 715 004 1 204 495 1 122 001 1 764 188 914 899 427 880 12 243 034 254 070 163 417 517 656 508 942 1 444 085 13 687 119 1 076 867 14 763 986
(net of by-product (R'000) Mar-18 2 868 705 267 758 669 798 675 206 1 039 499 991 186 1 559 565 865 939 624 806 9 562 462 242 472 141 410 298 662 405 781 1 088 325 10 650 787 104 184 10 754 971
credits)
Inventory (R'000) Mar-19 (48 186) (26 352) (20 503) 15 102 (10 269) 12 699 24 783 (17 570) (8 882) (79 178) (3 272) (219) (5 250) 2 544 (6 197) (85 375) (9 150) (94 525)
movement Mar-18 (32 747) (32 763) (13 680) 20 325 (908) 2 900 (30 683) (7 360) (4 646) (99 562) (3 345) 2 120 (2 595) (9 591) (13 411) (112 973) 37 694 (75 279)
Operating costs (R'000) Mar-19 2 943 391 2 342 488 713 647 730 106 1 194 226 1 134 700 1 788 971 897 329 418 998 12 163 856 250 798 163 198 512 406 511 486 1 437 888 13 601 744 1 067 717 14 669 461
Mar-18 2 835 958 234 995 656 118 695 531 1 038 591 994 086 1 528 882 858 579 620 160 9 462 900 239 127 143 530 296 067 396 190 1 074 914 10 537 814 141 878 10 679 692
Production profit (R'000) Mar-19 518 544 1 116 921 384 758 (58 607) 376 105 139 605 372 420 81 022 117 765 3 048 533 63 234 87 629 142 283 26 021 319 167 3 367 700 1 445 110 4 812 810
Mar-18 1 235 114 105 026 571 192 51 436 386 279 197 403 276 197 302 980 (42 679) 3 082 948 54 086 69 396 120 800 122 700 366 982 3 449 930 22 895 3 472 825
Capital expenditure (R'000) Mar-19 830 211 418 618 46 917 134 225 216 360 227 527 238 760 80 086 30 226 2 222 930 3 495 4 664 6 435 41 391 55 985 2 278 915 1 112 982 3 391 897
Mar-18 732 723 40 089 47 440 185 867 195 210 230 955 216 154 92 796 73 601 1 814 835 2 590 16 430 300 92 984 112 304 1 927 139 1 306 250 3 233 389
Cash operating - R/kg Mar-19 499 846 384 802 386 191 641 259 450 615 523 566 486 270 540 082 462 073 466 917 456 140 380 925 455 683 562 989 477 226 467 984 243 305 438 452
costs Mar-18 402 174 350 469 311 244 535 029 416 633 480 459 488 127 425 732 616 788 432 475 442 467 385 313 405 791 441 546 423 473 431 538 393 147 431 130
Cash operating - R/tonne Mar-19 2 470 3 105 4 171 2 241 2 084 2 516 3 231 1 998 2 264 2 613 55 57 159 417 121 822 378 757
costs Mar-18 2 227 3 825 3 742 1 946 2 015 1 940 3 229 1 793 2 022 2 284 54 50 166 353 106 735 440 730
Cash operating cost - R/kg Mar-19 638 561 452 803 410 872 761 640 531 558 629 738 552 080 587 358 494 715 551 694 462 415 391 797 461 348 608 775 495 727 545 903 494 769 539 182
and Capital(2) Mar-18 504 897 402 941 333 289 682 308 494 873 592 410 555 781 471 354 689 444 514 554 447 193 430 082 406 198 542 726 467 171 509 620 423 804 508 708
All-in sustaining - R/kg Mar-19 629 215 458 121 424 890 740 118 531 049 623 679 567 756 604 363 506 850 554 392 460 676 390 770 460 374 622 681 499 750 547 994 513 391 543 432
cost Mar-18 511 169 426 592 353 250 630 641 514 515 604 494 578 648 493 222 694 908 525 926 444 333 423 160 404 463 563 321 471 874 518 855 519 339 518 861
Operating free cash % Mar-19 (10%) 19% 29% (26%) 10% (6%) 7% (2%) 15% 5% 18% 33% 20% (3%) 15% 6% 10% 6%
flow margin(3) Mar-18 12% 9% 42% (15%) 13% (3%) 2% 17% (21%) 9% 16% 26% 28% 3% 16% 10% 38% 10%
(1) No production for Hidden Valley was capitalised during the nine months ending March 2019. Ore milled for the nine months ended March 2018 includes 1 254 000 tonnes
that was capitalised as part of the pre-stripping of stages 5 and 6. Gold produced for the nine months ended March 2018 includes 1 254 kilograms and gold sold 1 182 kilograms
that was capitalised.
(2) Excludes investment capital for Hidden Valley included in the nine months ended March 2018 of R1 298 million.
(3) Excludes run of mine costs for Kalgold (Mar-19: R-0.76 million, Mar-18: R-5.554 million) and Hidden Valley (Mar-19: R-70.59 million, Mar-18: R10.016 million) as well as
Hidden Valley's investment capital as per note 2.
CONTACT DETAILS
CORPORATE OFFICE
Randfontein Office Park
PO Box 2, Randfontein, 1760, South Africa
Corner Main Reef Road and Ward Avenue
Randfontein, 1759, South Africa
Telephone: +27 11 411 2000
Website: www.harmony.co.za
DIRECTORS
PT Motsepe* (chairman)
M Msimang*^ (lead independent director)
JM Motloba*^ (deputy chairman)
PW Steenkamp (chief executive officer)
F Abbott (financial director)
JA Chissano*1^, FFT De Buck*^, KV Dicks*^, Dr DSS Lushaba*^
HE Mashego**, KT Nondumo*^
VP Pillay*^, MV Sisulu*^, JL Wetton*^, AJ Wilkens*
* Non-executive
** Executive
^ Independent
1 Mozambican
INVESTOR RELATIONS
E-mail: HarmonyIR@harmony.co.za
Mobile: +27 82 759 1775
Telephone: +27 11 411 2314
Website: www.harmony.co.za
COMPANY SECRETARY
Telephone: +27 11 411 6020
E-mail: companysecretariat@harmony.co.za
TRANSFER SECRETARIES
Link Market Services South Africa (Proprietary) Limited
(Registration number 2000/007239/07)
13th Floor, Rennie House, Ameshoff Street, Braamfontein
PO Box 4844, Johannesburg, 2000, South Africa
Telephone: 0861 546 572
E-mail: info@linkmarketservices.co.za
Fax: +27 86 674 4381
ADR* DEPOSITARY
Deutsche Bank Trust Company Americas
c/o American Stock Transfer and Trust Company
Peck Slip Station
PO Box 2050, New York, NY 10272-2050
E-mail queries: db@amstock.com
Toll free (within US): +1-886-249-2593
Int: +1-718-921-8124
Fax: +1-718-921-8334
*ADR: American Depositary Receipts
SPONSOR
JP Morgan Equities South Africa (Pty) Ltd
1 Fricker Road, corner Hurlingham Road
Illovo, Johannesburg, 2196
Private Bag X9936, Sandton, 2146
Telephone: +27 11 507 0300
Fax: +27 11 507 0503
TRADING SYMBOLS
JSE Limited: HAR
New York Stock Exchange, Inc.: HMY
REGISTRATION NUMBER:
1950/038232/06
Incorporated in the Republic of South Africa
ISIN:
ZAE 000015228
HARMONY'S ANNUAL REPORTS
Harmony's Integrated Annual Report, and its annual
report filed on a Form 20F with the United States' Securities
and Exchange Commission for the financial year ended
30 June 2018 is available on our website
(www.harmony.co.za/invest)
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements within the meaning of the safe harbor
provided by Section 21E of the Exchange Act and Section 27A of the Securities Act of
1933, as amended (the "Securities Act"), with respect to our financial condition, results
of operations, business strategies, operating efficiencies, competitive positions, growth
opportunities for existing services, plans and objectives of management, markets for
stock and other matters.
These forward-looking statements, including, among others, those relating to our
future business prospects, revenues, and the potential benefit of acquisitions (including
statements regarding growth and cost savings) wherever they may occur in this report
and the exhibits, are necessarily estimates reflecting the best judgment of our senior
management and involve a number of risks and uncertainties that could cause actual
results to differ materially from those suggested by the forward-looking statements. As a
consequence, these forward looking statements should be considered in light of various
important factors, including those set forth in this report. Important factors that could
cause actual results to differ materially from estimates or projections contained in the
forward-looking statements include, without limitation: overall economic and business
conditions in South Africa, Papua New Guinea, Australia and elsewhere; estimates of
future earnings, and the sensitivity of earnings to gold and other metals prices; estimates
of future gold and other metals production and sales; estimates of future cash costs;
estimates of future cash flows, and the sensitivity of cash flows to the gold and other
metals prices; estimates of provision for silicosis settlement; statements regarding future
debt repayments; estimates of future capital expenditures; the success of our business
strategy, development activities and other initiatives; future financial position, plans,
strategies, objectives, capital expenditures, projected costs and anticipated cost savings
and financing plans; estimates of reserves statements regarding future exploration
results and the replacement of reserves; the ability to achieve anticipated efficiencies and
other cost savings in connection with past and future acquisitions, as well as at existing
operations; fluctuations in the market price of gold; the occurrence of hazards associated
with underground and surface gold mining; the occurrence of labor disruptions; power
cost increases as well as power stoppages, fluctuations and usage constraints; supply
chain shortages and increases in the prices of production imports and the availability,
terms and deployment of capital; changes in government regulation and the political
environment, particularly tax, mining rights, environmental regulation and business
ownership including any interpretation thereof; fluctuations in exchange rates and
currency devaluations and other macroeconomic monetary policies; the adequacy of the
Group's insurance coverage; and socio-economic or political instability in South Africa,
Papua New Guinea, Australia and other countries in which we operate.
For a more detailed discussion of such risks and other factors (such as availability of
credit or other sources of financing), see the Company's latest Integrated Annual Report
and Form 20-F which is on file with the Securities and Exchange Commission, as well
as the Company's other Securities and Exchange Commission filings. The Company
undertakes no obligation to update publicly or release any revisions to these forward-
looking statements to reflect events or circumstances after the date of this report or to
reflect the occurrence of unanticipated events, except as required by law. The foregoing
factors and others described under "Risk Factors" should not be construed as exhaustive.
www.harmony.co.za
Johannesburg
2 May 2019
Date: 02/05/2019 11:13:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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