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HARMONY GOLD MINING COMPANY LIMITED - Trading statement for the year ended 30 June 2019

Release Date: 15/08/2019 15:17
Code(s): HAR     PDF:  
 
Wrap Text
Trading statement for the year ended 30 June 2019

Harmony Gold Mining Company Limited
Registration number 1950/038232/06
Incorporated in the Republic of South Africa
ISIN: ZAE000015228
JSE share code: HAR
(“Harmony” and/or “the Company”)

Trading statement for the year ended 30 June 2019

Johannesburg, Thursday, 15 August 2019.

In terms of paragraph 3.4(b) of the Listings Requirements of the JSE
Limited (JSE), a company listed on the JSE is required to publish a
trading statement as soon as they are satisfied that a reasonable degree
of certainty exists that the financial results for the period to be
reported upon next will differ by at least 20% from the financial results
for the previous corresponding period.

Expected headline and basic earnings for the financial year ended June
2019 (“FY19”)

Shareholders of Harmony are advised that a reasonable degree of certainty
exists that earnings for FY19 will be higher than for the year ended
30 June 2018 (“the previous comparable period” or “FY18”) primarily due
to:

    - increased production and profit recorded following a full year’s
      production from Moab Khotsong and Hidden Valley,
    - lower impairments (non-cash) recorded year on year. The recorded
      impairments reduce the net profit of the Company but have no
      impact on reported cash balances and free cash flow,
    - a lower reported translation loss on the US$ denominated debt at
      30 June 2019, and
    - higher derivative gains recorded in FY19.

The positive impact on earnings is partially offset by increased
amortisation and depreciation at Hidden Valley.

Headline earnings per share (“HEPS”) and earnings per share (“EPS”) for
the period are further affected by the share placement during both the
current and prior year, affecting the weighted average number of shares
used in the calculations.

HEPS are expected to be between 191 and 226 South African cents – a
year-on-year increase of approximately 12% to 32% compared to the
previous financial year (which was 171 South African cents). In US dollar
terms, HEPS are expected to be between 14 and 16 US cents per share,
which is between 8% and 23% higher than the headline earnings of 13 US
cents per share reported for the previous financial year. Headline
earnings excludes impairments recorded.

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EPS are expected to improve to a loss of between 447 and 547 South
African cents per share – which is an improvement of approximately
between 45% and 55% on the loss of 1 003 South African cents per share
reported for the previous comparable period. In US dollar terms, the
loss per share is expected to be between 32 and 39 US cents per share,
which is approximately between 46% and 56% higher than the loss of 72
US cents per share reported for the previous comparable period.
Further details on the factors impacting earnings are:

-   Increased production from Moab Khotsong and Hidden Valley

    Harmony’s FY19 operating performance was boosted by the inclusion
    of a full financial year of production from both Moab Khotsong and
    Hidden Valley. Year on year, Harmony delivered a 17% increase in
    gold production of 1.44 million ounces, in line with its FY19
    guidance of 1.45 million ounces. Underground recovered grade was 2%
    higher at 5.59g/t in FY19 (FY18: 5.48g/t), the seventh consecutive
    year of achieving an increase in underground recovered grade.

-   Lower impairments (non-cash) year on year

    The life-of-mine plans form the basis for assessing whether any
    impairment against the carrying value of an asset is required. These
    values are informed by a number of factors, including estimates of
    future gold prices and exchange rates and operating and capital cost
    estimates.

    An impairment of R3.9 billion (US$276 million) was recorded in FY19
    compared to R5.3 billion (US$386 million) recorded in FY18. The
    assets impaired in FY19 include Tshepong Operations, Kusasalethu,
    Target 1, Target 3, Joel and Bambanani. The impairment was mainly
    driven by increased costs (which includes the estimated impact of
    carbon tax) and capital expenditure on exploiting the resource base.

-   Lower translation loss year on year

    A translation loss of approximately R99 million (US$7 million) was
    recognised on the US$ denominated debt as at 30 June 2019, compared
    to a translation loss of R669 million (US$52 million) recorded in
    the previous comparable period.

-   Higher derivative gains year on year

    Included in FY18 were derivative gains of R99 million (US$8 million)
    compared to R484 million (US$34 million) in FY19.




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-    Increase in amortisation and depreciation (non-cash) year on year

     A depreciation charge of R1.7 billion (US$123 million) was recorded
     for Hidden Valley in FY19 (compared to R138 million (US$11 million)
     for FY18), as a result of the recapitalisation of the mine. The
     operation reached commercial levels of production at the end of FY18
     following its net investment of US$175 million to mine the stage 5
     and 6 cutbacks.

The financial information on which this trading statement has been based
has not been reviewed or reported on by Harmony’s external auditors.

Harmony will publish its financial results for the year ended 30 June
2019 on Tuesday, 20 August 2019.

For more details contact:

Lauren Fourie
Investor Relations Manager
+27(0)71 607 1498 (mobile)

Marian van der Walt
Executive: Investor Relations
+27(0)82 888 1242 (mobile)

Johannesburg, South Africa
15 August 2019


Sponsor:
J.P. Morgan Equities South Africa Proprietary Limited
FORWARD-LOOKING STATEMENTS

This market release 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

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costs; estimates of future cash flows, and the sensitivity of cash flows to 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, exploration and 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 related to industrial action or health
and safety incidents; 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; our ability to hire and
retain senior management, sufficiently technically-skilled employees, as well as our
ability to achieve sufficient representation of historically disadvantaged HDSAs in
management positions; our ability to comply with requirements that we operate in a
sustainable manner and provide benefits to affected communities; potential liabilities
related to occupational health diseases; changes in government regulation and the
political environment, particularly tax and royalties, mining rights, health and safety,
environmental regulation and business ownership including any interpretation thereof;
court decisions affecting the South African mining industry, including, without
limitation, regarding the interpretation of mining rights; our ability to protect our
information technology and communication systems and the personal data we retain; risks
related to the failure of internal controls; the outcome of pending or future litigation
or regulatory proceedings; fluctuations in exchange rates any further downgrade of South
Africa's credit rating; 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.




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Date: 15/08/2019 03:17:00
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