Harmony Gold Mining Company Limited (Harmony) JSE (HAR) NYSE (HMY) June/July

Transcription

1 Harmony Gold Mining Company Limited (Harmony) JSE (HAR) NYSE (HMY) June/July 2013

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4 Who we are Operating in South Africa and Papua New Guinea (PNG) Building world class mines in South Africa and PNG 10 underground mines, one open pit operation and several surface sources in SA 50% joint venture in PNG with Newcrest Mining Ltd Hidden Valley open pit mine Wafi-Golpu Exploration 100% PNG exploration areas Company changing exploration projects Low debt with available facilities Generating robust margins and earnings Empowered compliant with 2014 Mining Charter requirements Employs (including contractors)¹ shares in issue¹ Market capitalisation of R25.7bn (US$2.8bn)¹ Rest of the World, 3% Rest of Europe, 7% South Africa, 37% Listed on JSE Limited (Ticker : HAR) New York Stock Exchange (Ticker: HMY) Shareholding as at 30 April 2013 United Kingdom, 17% United States, 36% ¹ Figures as at end of March Development and recovered grades cmg /t g/t 5

5 Executing our strategy unlocking value Increasing project value Exploration Target definition Resource definition Pre-feasibility study Feasibility Project construction Wafi-Golpu Commissioning Exploration in both SA and PNG Production gap and build-up Hidden Valley Bambanani/Steyn 2 Steady state production Masimong, Tshepong, Joel, Target 1,Unisel, Kalgold Kusasalethu, Doornkop, Phakisa, Target 3 6 Gold price US$/oz and R/kg Gold price received 9 months YTD¹ Mar months YTD¹ Mar 2012 % change R/kg US$/oz (2) Exchange rate R/US$ Post the March 2013 quarter the gold price has dropped dramatically US$1 400/oz Harmony has implemented actions to reduce costs (Project 400) Harmony will apply a conservative gold price assumption of R /kg for planning ¹ YTD: Year to date 7

6 Curbing costs in South Africa Capital expenditure to be reprioritised and reduced by approximately R400m for FY14 A further R400m saving to come from reducing services and corporate costs review/renegotiate all external consultants and supply contracts various labour initiatives Shaft or mine closures not envisaged at present 8 Improvement initiatives in PNG Hidden Valley 3 areas are being focused on to return the mine to profitability primary crusher being replaced full use of overland conveyor ore will no longer be hauled to the plant, resulting in cost saving enable ramp-up of mining and improved mining grades Plant and mobile equipment improvements restructuring the operations reducing costs by 20% Wafi-Golpu Capital expenditure to be reprioritised and/or reduced by approximately R1bn in FY14 9

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9 Reserves reconciliation y-on-y 60 Gold equivalent Mineral Reserves reconciliation - FY11 vs FY Equivalent 13.9 Moz Balance at June 2011 Evander held for sale Resultant 0.0 Mined during FY12 Geological & Scope changes SA PNG Gold & Gold Equivalents Balance at June PNG exploration (MMJV and Harmony 100%) Indonesia Amanab Ok Tedi Tari Amanab Mapping and surface sampling completed +1km surface Au geochem anomaly associated with outcropping mineralised quartz sulphide veins Frieda River Porgera Mt Hagen Wafi-Golpu Hidden Valley Tari Drilling commenced Several zones of skarn alteration and mineralisation intercepted Assays pending Mt Hagen Tollgate review completed with withdrawal recommended Morobe JV Lihir Bougainville Morobe JV Lift 1 drilling intercepts realising upside Significant new gold zones intersected at Wafi Garawaria drilling confirms major epithermal target with broad low grade Au intercepts Misima 15

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11 Planned production ounces (FY13) *Excluding Evander 18 Our progress in FY13 Operation Expected potential ounces in FY16 (annual) Average potential ounces in FY16 (per quarter) Actual Q1 FY13 production Actual Q2 FY13 production Actual Q3 FY13 production Kusasalethu oz oz oz oz 1 575oz Doornkop oz oz oz oz oz Phakisa oz oz oz oz oz Tshepong oz oz oz oz oz Masimong oz oz oz oz oz Hidden Valley oz¹ oz oz oz oz Target oz oz oz oz oz Bambanani oz oz oz oz 9 581oz Joel oz oz oz oz oz Unisel oz oz oz oz oz Target oz oz oz oz oz Various surface oz oz oz oz oz Kalgold oz oz oz oz 9 935oz Steyn oz oz 3 247oz 3 729oz 4 469oz Total ~ 1.7 million oz ~ oz oz oz oz ¹ Represents Harmony s 50% equity portion 19

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13 MMJV Wafi gold zone Eastern margin area Highly significant intercept located between Golpu and the A zone mineralisation WR457: 2.56 g/t Au (114m) Includes: 4 g/t Au from 150m Significant potential for repetition of Link zone style high grade Au mineralisation Highlights gold potential of the Wafi system Follow-up drilling in progress including at the Northern Zone 3 g/t Au) Note: Au= gold; Cu = copper 22 MMJV Golpu Advanced Argillic (High As zone) shallows to the north Expanded 1.5% grade shell 4620 RL 5140 RL Record drill production ( m) Lift 1 focus Better continuity of high grade in upper levels than currently modelled Overall positive impact on metal content and metallurgy Argillic overprint (which negatively impacts metallurgy) less extensive than previously modelled Results Copper grade shells in relation to PFS Lift 1 infrastructure Orange grade shell = 1.5% Cu from 2012 resource model Pink grade shell = 1.5% Cu leapfrog shell incorporating latest drill results Blue grade shell = 100ppm As zone (Proxy for advanced argillic alteration poorer metallurgy) Note: As= Arsenic; Au= gold; Cu = copper * partial result WR449: 0.43 g/t Au, 0.97% Cu from 333m. Includes: 0.97 g/t Au, 2.14% Cu from 798m WR459*: 0.32g/t Au, 1.24% Cu from 62m 23

14 MMJV Golpu drilling results lift 2 Drill results continue to firm up model with very encouraging intercepts Spiky gold grades up to 110 g/t Au were encountered in WR444 in the core of the orebody Grade spikes were evident in drill core, associated with late crosscutting veins containing blebs of visible gold This particular gold rich vein event has not been recorded previously Drill results received for lift 2 WR429W_3 Incl 0.85 g/t Au, 1.09% Cu from 1240m 1.68 g/t Au, 1.97% Cu from 1398m WR444W_1* 0.78 g/t Au, 0.93% Cu from 980m Incl 2.32 g/t Au, 2.41% Cu from 1238m Note: Au= gold; Cu = copper * partial result 24 World class Golpu resource Golpu project resource In production Project Sourced from Company Reports and Wood Mackenzie Database (accessed 28/06/2012). (1) Gold equivalent based on US$ 1250/oz Au, USD 3.10/lb Cu on an in-situ basis 25

15 Mine access layout preferred option Two block cave lifts: sequential mining of lifts Rock mass preconditioning by hydraulic fracturing and conditioning techniques Mine development plan further optimised in feasibility study Remains open at depth 26 Cash flow funding Golpu (US$m) Subject to current planning to be completed by July 2013 * R8.00/US$ exchange rate has been used to calculate net cash generated Note: Future costs are calculated in real terms 27

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17 Revised guidance on capex Exchange rate (R/US$): FY14 and FY15= Sharing the upside Interim dividend of 50 cents declared Interim and final dividends declared (SA cents) Earnings and dividend per share (SA cents) 31

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19 Latest quarterly results (Q3 FY13)

20 Key features of the quarter Quarter on quarter Lowest recorded quarterly LTIFR² Evander sale transaction completed 6% decrease in underground grade after increasing 3 consecutive quarters Gold production decreased by 15% to 7 699kg ( oz) Headline loss per share* of 47 SA cents (5 US cents) Operating profit¹ lower at R821m (US$92m) Watershed agreement signed with Kusasalethu labour All figures represent continuing operations unless stated otherwise * Includes discontinued operations ¹ Operating profit is comparable to the term production profit in the segment report in the financial statements and not to the operating profit line in the income statement ² LTIFR= Lost Time Injury Frequency Rate 35 March quarter s seasonality explained Slow start up after the festive season Metallurgical plants continue to run with surface tonnage until end of December 36

21 Total costs and free cash flow (US$/oz) ¹ Total cost margin ª Cash operating cost margin 37 Net cash/(net debt) position compared to peers US$m Net Cash/(Net Debt) US$m as at 31 March Harmony Goldcorp Sibanye* Gold Fields Australian South African North American AngloGold Ashanti Newcrest* Newmont Barrick Source: Bank of America Merrill Lynch (from public company reports) *Figures for Sibanye and Newcrest represent balances as at 31 December 2012 as the figures for 31 March 2013 were not available 38

22 Cash flow summary (q-on-q) US$ Extracts from the cash flow statement Mar 2013 (US$m) Dec 2012 (US$m) Cash flow from operations before exploration Exploration expenditure (18) (18) Income and mining taxes paid (8) (25) Proceeds from sale of Evander Capital expenditure (96) (121) Dividend (24) - At 31 March 2013: Surplus cash after debt Cash balance Debt Income statement (q-on-q) US$ Extracts from income statement and operating results Mar 2013 (US$m) Dec 2012 (US$m) % change Revenue (26) Production costs (303) (344) 12 Cash operating costs (312) (325) 4 Inventory movements 9 (18) >100 Operating profit as per operating results (51) Amortisation and depreciation (51) (58) 12 Exploration expenditure (18) (18) - Taxation (5) (25) 80 Profit from discontinued operations Net (loss)/profit (13) 84 >(100) HEPS* US cents (5) 18 >(100) Exchange rate (R/US$) Note: All figures exclude discontinued operations (except net profit and HEPS*) *Headline earnings per share 40

23 Income statement (9 months YTD¹) US$ Extracts from income statement and operating results 9 months YTD¹ 9 months YTD¹ Mar 2013 (US$m) Mar 2012 (US$m) % change Revenue (2) Production costs (993) (950) (5) Cash operating costs (993) (962) (3) Inventory movements - 12 (100) Operating profit as per operating results (13) Amortisation and depreciation (167) (179) 7 Exploration expenditure (53) (44) (20) Taxation (49) 42 >(100) Profit from discontinued operations (32) Net profit (60) HEPS* US cents (64) Exchange rate (R/US$) Note: All figures exclude discontinued operations (except net profit and HEPS*) *Headline earnings per share ¹ YTD: Year to date 41 Private Securities Litigation Reform Act Safe Harbour Statement This presentation contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the safe harbour created by such sections. These statements may be identified by words such as expects, looks forward to, anticipates, intends, believes, seeks, estimates, will, project or words of similar meaning. All statements other than those of historical facts included in this presentation are forward-looking statements, including, without limitation, (i) estimates of future earnings, and the sensitivity of earnings to the gold and other metals prices; (ii) estimates of future gold and other metals production and sales, (iii) estimates of future cash costs;( iv) estimates of future cash flows, and the sensitivity of cash flows to the gold and other metals prices; (v) statements regarding future debt repayments; (vi) estimates of future capital expenditures; and (vii) estimates of reserves, and statements regarding future exploration results and the replacement of reserves. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, project cost overruns, as well as political, economic and operational risks in the countries in which we operate and governmental regulation and judicial outcomes. 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 Annual Report on Form 20-F for the year ended June 30, 2012 which is on file with the Securities and Exchange Commission, as well as the Company's other SEC filings. The Company does not undertake any obligation to release publicly any revisions to any "forward-looking statement" to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. 42

24 Results for the third quarter FY13 and nine months ended 31 March 2013 Operating results (Rand/Metric) (US$/Imperial) Underground production Three months ended Kusasalethu Doornkop Phakisa Tshepong Masimong Target 1 Bambanani Joel Ore milled t 000 Mar Dec Gold produced Gold produced Yield Cash operating costs Cash operating costs Cash operating costs Gold sold Gold sold Revenue Cash operating costs Inventory movement Operating costs Operating profit kg oz g/tonne R/kg $/oz R/tonne Kg oz (R 000) (R 000) (R 000) (R 000) (R 000) Mar Dec Mar Dec Mar Dec Mar Dec Mar Dec Mar Dec Mar Dec Mar Dec Mar Dec Mar Dec Mar (21 389) (5 111) (12 557) (9 232) (16 606) (3 516) (17 535) Dec Mar Dec Mar-13 ( ) (18 147) Dec-12 ( ) Operating profit ($ 000) Mar-13 (32 021) (2 034) Dec-12 (13 087) Capital expenditure Capital expenditure (R 000) ($ 000) Mar Dec Mar Dec

25 South Africa Surface production Unisel Target 3 Steyn 2 Total Underground Phoenix Dumps Kalgold Total Surface Other Total South Africa Hidden Valley Total Continuing Operations (4 852) (9 241) (1 907) (76 835) (1 831) (3 624) (108) (5 563) (82 398) (1 661) (84 059) (95) (5 437) (3 538) (20 924) (2 346)

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28 Henrika Basterfield Investor Relations Manager Tel: +27 (0) Mobile: +27 (0) Marian van der Walt Executive: Corporate and Investor Relations Tel: +27 (0) Mobile: +27 (0) JSE (HAR) NYSE (HMY) An exciting investment proposition