Operational update for the nine months ended 31 March 2021
SIGNIFICANT JUMP IN EBITDA MARGIN TRANSLATES INTO STRONG CASH GENERATION
Johannesburg, South Africa. Tuesday, 11 May 2021. Harmony Gold Mining Company Limited (“Harmony” or “the Company”) is pleased to report its operational performance for the nine months ended 31 March 2021.
Harmony has delivered another strong set of operational results year-on-year on the back of the successful integration of Mponeng and related assets into its portfolio, and a stronger Rand per kilogram gold price. The combination of a higher gold price received and improved EBITDA margin has resulted in strong cash generation and further strengthening of the Company’s balance sheet. Growing the Company’s ounces and margins in a safe and capital-responsible manner will guide each of its decisions as it continues to invest in both its people and its assets.
With a sturdy balance sheet and astute capital decisions, Harmony is well positioned for the next phase of its growth strategy. The Company has a pipeline of cash-enhancing projects which will boost its cash flow margins and sustain its production for many years to come. In addition, the tier 1 Wafi-Golpu project offers both commodity and geographic diversification, further transforming Harmony’s portfolio as it focuses on becoming a lower risk and higher margin business.
Harmony has a proven track record in sustaining communities, creating jobs and unlocking significant value from assets well beyond their initial life of mine. Environmental, Social and Governance (“ESG”) practices are embedded in how the Company operates and makes decisions to ensure sustainable mining. Through its successful track record, Harmony has become not only the South African gold mining champion, but also an established player in Papua New Guinea.
Harmony has an exciting story to tell and a wealth of emerging market experience. The combination of its existing asset portfolio, Wafi-Golpu and other brownfield projects will allow the Company to build on its copper-gold story while it continues to create value for all shareholders and stakeholders.
| Unit | Y-on-Y move | Y-on-Y % | Nine months FY21 | Nine months FY20 | Comments | |
|---|---|---|---|---|---|---|
| Gold price | R/kg | ↑ | 23.3 | 868 964 | 704 965 | Higher US$ gold price and weaker Rand contributed to a higher Rand gold price received |
| Underground yield | g/t | ↑ | 2.6 | 5.54 | 5.40 | Improved grade at Kusasalethu, as well as the introduction of higher grades from Mponeng |
| Adjusted EBITDA# | Rm | ↑ | 360 | 9 439 | 2 050 | Increased due to an improved Rand gold price received and higher average grade and production post acquisition of Mponeng and related assets |
| Adjusted EBITDA margin | % | ↑ | 241 | 31 | 9 | Increased on the back of improved Rand gold price received and higher margins received at Mponeng and surface source operations |
| Gold produced total | kg | ↑ | 13.5 | 34 969 | 30 814 | Successful integration of Mponeng and related assets and improved production year-on-year |
| oz | ↑ | 13.5 | 1 124 274 | 990 691 | ||
| Production – South Africa | kg | ↑ | 15.9 | 31 470 | 27 154 | Successful integration of Mponeng and related assets |
| Production – Hidden Valley | kg | ↓ | (4.4) | 3 499 | 3 660 | As a result of lower labour productivity due to COVID-19 working roster and travel restrictions |
| All-in sustaining cost (“AISC”) | R/kg | ↓ | (15.8) | 720 572 | 622 458 | Higher royalties, unplanned COVID-19 related expenses and increased labour costs due to overtime. Other expenses which contributed to higher costs were consumables and contractors while Target 1 also contributed to an overall higher AISC |
| US$/oz | ↓ | (9.1) | 1 416 | 1 298 |
- * The financial information has not been reviewed by the Company’s Auditors
- # The Company reports adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) and non-recurring events. For the reporting period, the non-recurring events include the gain on bargain purchase and acquisition-related costs. Adjusted EBITDA may not be comparable to similarly titled measures of other companies. Adjusted EBITDA is not a measure of performance under IFRS and should be considered in addition to and not as a substitute for other measures of financial performance and liquidity
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 Manager
+27 (0) 82 759 1775
Jared Coetzer
Head: Investor Relations
+27 (0) 82 746 4120
JSE Sponsor:
JP Morgan Equities South Africa Propriety Limited
FORWARD-LOOKING STATEMENTS
This presentation 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 presentation and the exhibits to this presentation, 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. 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; impact of COVID-19 on our operational and financial estimates and results; estimates of future earnings, and the sensitivity of earnings to the prices of gold and other metals; estimates of future production and sales for gold and other metals; estimates of future cash costs; estimates of future cash flows, and the sensitivity of cash flows to the prices of gold and other metals; estimates of provision for silicosis settlement; estimates of future tax liabilities under the Carbon Tax Act; 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 labour 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 persons 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, 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; the outcome of pending or future litigation or regulatory proceedings; fluctuations in exchange rates and currency devaluations and other macroeconomic monetary policies; the adequacy of the Company’s insurance coverage; any further downgrade of South Africa’s credit rating and socio-economic or political instability in South Africa, Papua New Guinea and other countries in which we operate.
The foregoing factors and others described under “Risk Factors” in our Integrated Annual Report (www.harmony.co.za) and our Form 20F 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.