June quarter and 2005 year-end results – operational and balance sheet re-structuring largely completed
Harmony Gold Mining Company Limited (NYSE: HMY JSE: HAR) today released its June quarter and FY05 results.
“Following a number of delays our re-structuring process is approaching completion. This has seen the transformation of our balance sheet through the sale of non-strategic assets and the completion of the re-structuring should see us restore operating health to our South African mines.” Reported Chief Executive Bernard Swanepoel.
In the year ending June 2005 Harmony produced 2,97 million ounces (-11%) at an average operating cost of US$412 per ounce. The decrease in production is the result of the restructuring of the South African operations to deal with the low rand gold price. This was achieved against a backdrop that saw South African gold production fall (in calendar 2004) by 9% to 343 tonnes, the lowest level seen since 1931.
In the June quarter a higher gold price and a steady operating result saw Harmony’s cash operating profit increase by R101 million from an operating loss of R55 million in March 2005 to an operating profit of R45 million (US$7,08 million) in the June period. Production in the June quarter declined by 5,9% to 639 325 oz (q-o-q) and cash operating costs increased by 1,9% to R87 461/kg but dropped by 4,7% in dollars to US$424/oz helped by 7% depreciation in the USDZAR exchange rate to R6,41/US$ for the June Quarter.
“The year ahead is an exciting period for Harmony and is the most capital intensive phase of the group’s recent history. We take comfort in the quality of the projects, which will not only enable us to grow our production profile, but also add significant value. In FY06 the Harmony board has approved R1,55 billion in capex of which R1,08 billion is project capex, R311 million is ongoing operational capex and R160m is a combination of surface infrastructure upgrades and systems replacement. This capital is earmarked for a range of existing and new Harmony projects that will re-build our production profile to around 4,0 million ounces over the next four years and all at lower cash costs.” Bernard added.
Harmony continues at full steam with the development of its project portfolio that will add more than 1,5 millions of gold production at cash operating costs of less than US$280 per ounce over the next five years.
| Year ended June 2005 | Year ended June 2004 | % Variance | ||
|---|---|---|---|---|
| Production | – kg | 92 230 | 103 127 | (11) |
| – | 2 965 250 | 3 315 595 | (11) | |
| Revenue | – R/kg | 84 799 | 85 219 | (0,5) |
| – US$/oz | 427 | 385 | 11 | |
| Working cost | – R/kg | 81 838 | 79 599 | (3) |
| – US$/oz | 412 | 360 | (15) | |
| U/g working costs | – R/tonne | 474 | 413 | (15) |
| Cash operating profit | – (R’m) | 273 | 580 | (53) |
| Cash earnings per share | – cents | 75 | 229 | (67) |
| EPS | – cents | (955) | (206) | Nm |
| June 2005 | March 2005 | % Variance | ||
|---|---|---|---|---|
| Production | – kg | 19 886 | 21 126 | (6) |
| Production | – oz | 639 346 | 679 251 | (6) |
| Revenue | – R/kg | 89 711 | 83 273 | 8 |
| Revenue | – US$/oz | 435 | 432 | 1 |
| Cash cost | – R/kg | 87 461 | 85 863 | 2 |
| Cash cost | – US$/oz | 424 | 445 | (5) |
| Exchange rate | – USDZAR | 6.41 | 6.00 | 7 |
| June 2005 | March 2005 | |
|---|---|---|
| Cash operating profit (Rm) | 45 | (55) |
| Cash operating profit margin | 2,5% | (3,1%) |
| Cash earnings (loss) per share | 12 | (14) |
| Headline EPS (cents) | (102) | (107) |
Unless the context otherwise requires, the definitions contained in the offer document or the registration statement sent to Gold Fields shareholders have the same meaning in this announcement.
The directors of Harmony accept responsibility for the information contained in this announcement. To the best of the knowledge and belief of the directors of Harmony (who have taken all reasonable care to ensure that such is the case), the information contained in this announcement is in accordance with the facts and does not omit anything likely to affect the import of such information.
For more details contact:
Bernard Swanepoel
Chief Executive
on +27(0)83 303 9922
or
Ferdi Dippenaar
Marketing Director
on +27(0)82 807 3684
or
Brenton Saunders
Executive, Investor Relations
on +27(0)83 607 4060
or
Investor Relations Officer
Vusi Magadana
Office: +27 11 684 0149
Mobile: +27(0)72 157 5986
Forward-looking Statements
Statements in this announcement include “forward-looking statements” that express or imply expectations of future events or results. Forward-looking statements are statements that are not historical facts. These statements include financial projections and estimates and their underlying assumptions, statements regarding plans, objectives and expectations with respect to future operations, products and services, and statements regarding future performance. Forward-looking statements are generally identified by the words “expect,” “anticipates,” “believes,” “intends,” “estimates” and similar expressions. All forward-looking statements involve a number of risks, uncertainties and other factors, and Harmony cannot give assurances that such statements will prove to be correct. Although Harmony’s management believes that the expectations reflected in such forward-looking statements are reasonable, investors are cautioned that forward-looking information and statements are subject to various risks and uncertainties, many of which are difficult to predict and generally beyond the control of Harmony, that could cause actual results and developments to differ materially from those expressed in, or implied or projected by, the forward-looking information and statements. These risks and uncertainties include those discussed or identified in the public filings with the SEC made by Harmony. Harmony does not undertake any obligation to update any forwardlooking information or statements.