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Trading statement and operational update for the financial year ended 30 June 2024
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 AND OPERATIONAL UPDATE FOR THE FINANCIAL YEAR ENDED
30 JUNE 2024 ("FY24")
• Full year operational performance elevates Harmony to new heights
on the back of sustained operational excellence, high recovered
grades and record gold prices
• Release of FY24 condensed financial statements ("financial
results") delayed until 5 September 2024 pending new external
auditors' completion of work relating to an undeveloped property
Johannesburg, Monday, 26 August 2024. 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 comparable
period.
"Harmony delivered an exceptional combined performance across all our
operations in FY24. This achievement was a result of clear strategic
intent and successful execution, enabling us to deliver ahead of plan
and capitalise on higher gold prices. Our aim is to be consistent and
excel at what we do and I believe we achieved this goal.
We have exceeded our upward revised production guidance of 1550 000
ounces (48 210 kg) while all-in-sustaining costs will come in comfortably
below R920 000/kg. Underground recovered grades will also be higher than
the guided 6g/t for FY24.
Group production for this reporting period increased by 6% to 48 578kg
(1 561 815oz) from 45 651kg (1 467 715oz) in FY23. This was mainly due
to higher recovered grades at Mponeng, Hidden Valley and Mine
Waste Solutions.
Recovered grades at the South African underground operations increased
by 6% to 6.11g/t from 5.78g/t in the previous reporting period. This was
driven by our high-grade operations, Mponeng and Moab Khotsong. Recovered
grades at Hidden Valley increased by 33% to 1.52g/t from 1.14g/t in FY23
while Mine Waste Solutions delivered a 36% increase in recovered grade
of 0.166g/t in this financial year from 0.122g/t.
All-in sustaining costs (AISC) increased by 1% to R901 550/kg
(US$1 500/oz) from R889 766/kg (US$1 558/oz).
We continued to allocate most of our project capital to our higher-
grade, higher-quality, and lower-risk assets. This aligns with our
strategy of producing safe, profitable ounces and improving margins
through operational excellence and value-accretive acquisitions.
By growing our higher-grade gold mines, expanding our surface retreatment
business, and our international gold and copper assets, we will continue
to transform and de-risk Harmony as we go from strength to strength,"
said Peter Steenkamp, chief executive officer of Harmony.
Expected basic and headline earnings for FY24
Shareholders of Harmony are advised that a reasonable degree of certainty
exists that basic earnings for FY24 will be higher than for the financial
year ended 30 June 2023 ("the previous comparable period" or "FY23")
primarily due to an increased gross profit as a result of:
• higher recovered grades
• an increase in gold production
• a higher average gold price received
In addition, an increase in the production of silver and uranium at the
Hidden Valley and Moab Khotsong operations respectively, coupled with a
meaningful increase in the average prices received for both commodities
also contributed to a better performance.
The increase in earnings was partially offset by the following:
1. Impairment of the Target North asset
Post year-end, management received preliminary Mineral Resource
estimates relating to the recent exploration drilling programme
conducted at Target North. The new geological model is more robust
and differs from previous interpretations as a result of the new
information obtained from the drilling. The application of modern
industry best practice estimation techniques on the updated
geological model resulted in a preliminary Mineral Resource estimate
of 13.8 million ounces (58.8Mt at 7.29g/t) in the inferred category,
at the time of publishing this report. The latest Mineral Resource
estimations were done focusing on a portion of the orebody and
indicates reduced ounces at a higher grade than the previous
estimate. The new estimates are currently under review by our
external mining consultants.
We believe that based on current available information, the new
Mineral Resource estimate indicate a recoverable amount of
R888 million for Target North and a resulting impairment of
R2 793 million.
Brief history of Target North:
a) In May 2004, Harmony concluded the acquisition of Avgold, which
included the Target 1 mine in the Free State. The acquisition
also included an extensive exploration programme in an area
known as Target North. At the time it was estimated that Target
North had a resource base of 67 million ounces, which included
the Oribi exploration area. The property was classified as
undeveloped property in property, plant and equipment and valued
at R5.1 billion.
b) In 2007, Harmony became severely capital constrained and a
strategic review led to the suspension of all greenfields
exploration projects in South Africa - including Target North.
A review was also done on the Reasonable Prospects for Eventual
Economic Extraction ("RPEEE") of minor reefs at various
operations. The same assessment was also done on shafts that
were placed on care and maintenance or closed at the time. It
was the view of the competent persons at the time that these
mineral resources (including Target North), no longer met RPEEE
from a Harmony perspective. Since 2007, Target North has
therefore been excluded from the reported Mineral Resources.
The valuation using a resource multiple price supported the
carrying amount at the time.
c) At 30 June 2018, an impairment of R1 458 million was recognised
for Target North following a decrease in the resource multiple
price applied in the valuation. The multiple price is derived
from recent market transactions, which then included Harmony's
acquisition of the Moab Khotsong operations in March 2018.
d) In financial year 2019, Harmony restarted drilling at Target
North to confirm the geological model. As part of our ongoing
exploration activities at Target North, additional drilling was
conducted to improve the granularity of our data and get a
better geological understanding of the orebody.
2. an increase in production costs mainly due to inflationary pressures
on costs including labour, contractors and electricity. Increased
production-based bonuses also contributed to higher labour cost;
3. an increase in exploration expenditure, mainly due to costs incurred
for: the updated feasibility study of the Eva Copper project, a
significant drill program and the start of early work site
activities;
4. an increase in the taxation expense predominately due to current
taxation. Current taxation moved from R643 million (US$36 million)in
FY23 to R2 416 million (US$129 million) in FY24 mainly due to the
impact of higher gold production and an increased gold price received
on mining tax.
Consequently, earnings per share ("EPS") are expected to be at least
1 385 South African ("SA") cents per share, which is an increase of at
least 78% on the EPS of 780 SA cents per share for the previous comparable
period. In United States ("US") dollar terms, the earnings per share is
expected to be at least 72 US cents per share, which is an increase of
at least 64% on the 44 US cents earnings per share reported for the
previous comparable period.
Headline earnings per share ("HEPS") are expected to be at least
1 852 SA cents per share, which represents an increase of more than 100%
from the HEPS of 800 SA cents per share reported in the previous
comparable period. In US dollar terms, the headline earnings per share
is expected to be at least 98 US cents per share, which is an increase
of more than 100% on the HEPS of 45 US cents per share reported for the
previous comparable period.
The Company will provide an update regarding the range for the EPS and
HEPS as soon as reasonable certainty has been established.
Delay of publication of financial results until 5 September 2024
Following the transition of external auditors from
PricewaterhouseCoopers Inc ("PwC") to the current external auditors,
Ernst & Young Inc, ("EY"), EY is in the process of assessing the approach
followed by management in determining the ounces used in the calculation
of the valuation of Target North, an undeveloped property, dating back
to 2004. This is the only outstanding item under review and has resulted
in a delay in concluding our reviewed financial statements, necessitating
a postponement of the financial results for FY24.
We remain confident in the accuracy of our Mineral Resources and Mineral
Reserve Statements. Target North has not been included in our Mineral
Resources since 2007 and therefore does not impact our Mineral Resources
declared to date.
Harmony's chief executive officer and financial director will host the
following conference calls:
- Sell-side analysts at 13h00 (South African time. Please register at:
https://www.diamondpass.net/8901990
- Media at 14h00 (South African time. Please register at:
https://www.diamondpass.net/2619524
- Investors at 15h00 (South African time. Please register at:
https://www.diamondpass.net/9480926
Harmony will publish its financial results for the financial year ended
30 June 2024 on 5 September 2024. Please see Harmony's website for more
details: www.harmony.co.za.
The financial information on which this trading statement and operational
update, has been based has not been reviewed or reported on by Harmony's
external auditors.
For more details, contact:
Jared Coetzer
Head of Investor Relations
+27 (0) 82 746 4120
Johannesburg, South Africa
26 August 2024
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 harbour 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 market release, 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 our integrated annual report.
By their nature, forward-looking statements involve risk and uncertainty
because they relate to future events and circumstances and should be
considered in light of various important factors, including those set
forth in this disclaimer. Readers are cautioned not to place undue
reliance on such statements. 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; the impact from, and measures taken to address,
Covid-19 and other contagious diseases, such as HIV and tuberculosis;
high and rising inflation, supply chain issues, volatile commodity costs
and other inflationary pressures exacerbated by the geopolitical risks;
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 gold and other metals
prices; estimates of provision for silicosis settlement; increasing
regulation of environmental and sustainability matters such as
greenhouse gas emission and climate change, and the impact of climate
change on our operations; estimates of future tax liabilities under the
Carbon Tax Act (South Africa); 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 and other metals; the occurrence
of hazards associated with underground and surface gold mining; the
occurrence of labour disruptions related to industrial action or health
and safety incidents; power cost increases as well as power stoppages,
fluctuations and usage constraints; ageing infrastructure, unplanned
breakdowns and stoppages that may delay production, increase costs and
industrial accidents; 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 persons in
management positions or sufficient gender diversity in management
positions or at Board level; 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,
safety, environmental regulation and business ownership including any
interpretation thereof; court decisions affecting the 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; our ability to meet our environmental,
social and corporate governance targets; the outcome of pending or future
litigation or regulatory proceedings; fluctuations in exchange rates and
currency devaluations and other macroeconomic monetary policies, as well
as the impact of South African exchange control regulations; the adequacy
of the Group's insurance coverage; any further downgrade of South
Africa's credit rating and socio-economic or political instability in
South Africa, Papua New Guinea, Australia and other countries in which
we operate; changes in technical and economic assumptions underlying our
mineral reserves estimates; geotechnical challenges due to the ageing
of certain mines and a trend toward mining deeper pits and more complex,
often deeper underground, deposits; and actual or alleged breach or
breaches in governance processes, fraud, bribery or corruption at our
operations that leads to censure, penalties or negative reputational
impacts.
The foregoing factors and others described under "Risk Factors" in our
Integrated Annual Report (www.har.co.za) and our Form 20-F should not
be construed as exhaustive. We undertake no obligation to update
publicly or release any revisions to these forward-looking statements
to reflect events or circumstances after the date of this annual report
or to reflect the occurrence of unanticipated events, except as required
by law. All subsequent written or oral forward-looking statements
attributable to Harmony or any person acting on its behalf are qualified
by the cautionary statements herein. Any forward-looking statement
contained in this media release has not been reviewed or reported on by
Harmony's external auditors.
Competent Person's statement
The information in this trading statement relates to Mineral Resources
or Ore Reserves that has been extracted from our Reserves and Resources
statement published on 30 June 2024. Harmony confirms that it is not
aware of any new information or data that materially affects the
information included in the statement, in the case of Mineral Resources
or Mineral Reserves, that all material assumptions and technical
parameters underpinning the estimates in the original release continue
to apply and have not materially changed. Harmony confirms that the form
and context in which the competent person's findings are presented
have not been materially modified from the original release.
Date: 26-08-2024 12:21:00
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