Company announcements

Harmony reports strong operational cash flows and creates balance sheet flexibility to support growth

September 15, 2020

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Johannesburg, Tuesday, 15 September 2020. Harmony Gold Mining Company Limited (“Harmony” and/or “the Company”) is pleased to report a 106% increase in operating free cash flows. A 25% improvement in the Rand gold price to R735 569/kg in financial year 2020 resulted in a 9% increase in revenue to R29.25 billion. In US dollar terms revenue decreased by 2% to US$1 867 million. The average gold price received increased by 14% to US$1461/oz from US$1 287/oz in FY19.

Through an increase in operating cash flows and the capital raise in June 2020 to fund its latest acquisition, Harmony has created a robust balance sheet that enables it to fund further growth.

“Harmony continues to make good progress in executing its strategy of producing safe, profitable ounces and increasing margins. Our drive for safe ounces was never more applicable than in the last quarter of the financial year as we faced the challenge of managing and mitigating the risks presented by the COVID-19 pandemic. Despite the impact of the South African lockdown and phased re-start of mining in the country, we are pleased to report higher than anticipated production and substantial delivery against our strategy in the last quarter of the year”, Peter Steenkamp, chief executive officer of Harmony said.

Year on year, total annual gold production was 15% lower at 37 863kg, or 1.2Moz, mainly due to the impact of the COVID-19 national lockdown and the phased recovery in South Africa. The average underground recovered grade was almost 3% lower at 5.45g/t, with the decrease attributed to the impact of remedial actions to address geological challenges and seismicity at Kusasalethu.

The Company yesterday (14 September 2020) announced the conclusion of its acquisition of Mponeng and Mine Waste Solutions following the completion of the last condition precedent The transaction is consequently scheduled to close on 30 September 2020, with Harmony assuming full ownership and operation of the assets from 1 October 2020.

Aside from improving Harmony’s portfolio mix between surface and underground operations, the transaction has the potential to improve the group’s overall recovered grade and increase cash flow margins. Harmony will only be able to estimate the full benefit of the integration once its planning parameters have been applied and the Company has taken ownership of the assets.

The Company expects to produce between 1.26Moz and 1.3Moz at an all-in sustaining cost of R690 000/kg to R710 000/kg in FY21. Guidance will be updated towards the end of the year, to also reflect the inclusion of Mponeng and Mine Waste Solutions.

Harmony is pleased to learn that it will join the FTSE/JSE Africa Top 40 Index with effect from 18 September 2020. Inclusion in the index, which consists of the 40 most investable companies ranked by investable market capitalisation, points to investor interest in, and support for, both Harmony’s strategy to produce safe profitable ounces and increase margins through operational excellence and value-accretive acquisitions, and in our product, gold.

Peter Steenkamp concluded that “Harmony is well-positioned to benefit from anticipated continuing strength of the gold price. The newly acquired assets will help grow production and, as conditions improve, Harmony has other Tier 1 projects such as Wafi-Golpu and a pipeline of organic projects in South Africa to incorporate into its portfolio.”

For more details, contact:

Marian van der Walt
Senior Group Executive: Enterprise Risk and Investor Relations
+27 (0) 82 888 1242

Max Manoeli
Investor Relations
+27 (0) 82 759 1775