Company announcements Home » Investors » News » Company announcements » Operational update for the three months ended 30 September 2023 2023 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 Operational update for the three months ended 30 September 2023November 13, 2023 Johannesburg, South Africa. Monday, 13 November 2023. Harmony Gold Mining Company Limited (Harmony or the Company) is pleased to report our operational update for the three months ended 30 September 2023 (Q1FY24). KEY HIGHLIGHTS (Q1FY24 vs Q1FY23*) Group LTIFR# at 4.84 with safety performance trending in the right direction 18% increase in underground recovered grades to 6.29g/t from 5.35g/t 17% increase in total gold production to 13 223kg (425 130oz) from 11 301kg (363 336oz) 7% improvement in group all-in sustaining costs (AISC) to R841 436/kg (US$1 404/oz) from R907 573/kg (US$1 657/oz) 33% increase in gold revenue to R14 781 million (US$793 million) from R11 137 million (US$654 million) 18% increase in average gold price received to R1 127 208/kg (US$1 881/oz) from R955 010/kg (US$1 743/oz) 278% increase in group operating free cash flow to R3 236 million (US$174 million) from R857 million (US$50 million) driven by higher recovered grades at Mponeng, Moab Khotsong and Hidden Valley High-grade underground operations contributed 53% towards group operating free cash flow Hidden Valley mine contributed 22% towards group operating free cash flow Net debt to EBITDA at zero from 0.2 times at the end of the previous financial year We remain on track to meet our FY24 production, cost and grade guidance * Q1FY23 – three-month period ended 30 September 2022 # LTIFR – lost-time injury frequency rate Please note that financial information has not been reviewed or audited by the Company’s external auditors Harmony delivers stellar first quarter. Higher free cash flows, higher recovered grades, higher production, higher gold price received … with lower costs The first quarter saw a continuation of the strong operating performance across all our operations, resulting in higher gold production and outstanding operating free cash flows. This was mainly due to higher average underground recovered grades from our South African underground operations alongside a very strong quarter from the Hidden Valley mine in Papua New Guinea. Average recovered grades at the South African underground operations increased by 18% to 6.29g/t for the Q1FY24 reporting period from 5.35g/t in Q1FY23. The higher underground recovered grades were underpinned by our high-grade Mponeng and Moab Khotsong operations. Recovered grades at the Hidden Valley mine have remained high since we intercepted the high-grade ‘Big Red’ part of the ore body in the fourth quarter of the previous financial year (Q4FY23). Recovered grades at Hidden Valley therefore increased by 74% year-on-year to 1.76g/t from 1.01g/t in Q1FY23. Group gold production in Q1FY24 increased by 17% to 13 223kg (425 130oz) from 11 301kg (363 336oz) in Q1FY23 with almost all our operations delivering higher production year-on-year. We are confident this good momentum will continue on the back of improved flexibility. Silver production from Hidden Valley increased by 55% to 30 914kg (993 914oz) from 19 955kg (641 579oz) in Q1FY23. The average silver price received also increased by 35% to R14 157/kg (US$23.59/oz) from R10 514/kg (US$19.21/oz) in Q1FY23. As a result, we generated R433 million (US$23 million) in silver revenue at Hidden Valley. Uranium is a by-product from the gold extraction process at Moab Khotsong. This quarter, uranium production increased by 50% to 70 044kg (154 420lb) from 46 710kg (102 978lb) in Q1FY23. Uranium sold increased 116% to 92 987kg (205 000lb) from 43 091kg (95 000lb). Year-on-year, the average uranium price received increased by 24% to US$58.21/lb from US$47.01/lb, resulting in uranium revenue of R223 million (US$12 million) for the quarter. The rand gold price remained favourable, increasing by 18% to R1 127 208/kg (US$1 881/oz) from R955 010/kg (US$1 743/oz) year-on-year. The strong rand/kg gold price continues to provide Harmony with a significant tailwind. Gold revenue increased by 33% to R14 781 million (US$793 million) this quarter from R11 137 million (US$654 million) in Q1FY23. We continue to manage costs carefully and are pleased that all our cost metrics per unit are lower year-on-year – in both rand and US dollar terms – as a result of the higher recovered grades, low-cost surface retreatment production and higher by-product credits from silver and uranium. Cash operating costs in Q1FY24 decreased by 6% to R711 999/kg (US$1 188/oz) from R756 166/kg (US$1 380/oz) in Q1FY23 All-in sustaining costs (AISC) decreased by 7% to R841 436/kg (US$1 404/oz) from R907 573/kg (US$1 657/oz) in Q1FY23 All-in costs (AIC) decreased by 5% to R900 505/kg (US$1 503/oz) from R946 228/kg (US$1 727/oz) Group operating free cash flows increased by 278% in Q1FY24 to R3 236 million (US$174 million) from R857 million (US$50 million) in Q1FY23. Group operating free cash flow margins increased to 22% in this reporting period from 8% in Q1FY23. The Company’s balance sheet has continued to strengthen this quarter as we reduced our net debt to R117 million (US$6 million) from R2 726 million (US$145 million) at the end of the 2023 financial year. Net debt to EBITDA ratio is 0.0 times from 0.2 times in the previous quarter. We have an extensive project pipeline to help us achieve our goal to improve the quality of our ounces and expand our margins as we transform into a global gold-copper producer. We are on track with the key projects in execution. These include the tailings storage facility expansion at Mine Waste Solutions and the Zaaiplaats project which is the life of mine extension at Moab Khotsong. Newmont Corporation has joined Harmony as partner in the Wafi-Golpu Joint Venture effective 7 November 2023, following the conclusion of the Newcrest Mining Limited acquisition. We look forward to working with them as we continue with the permitting of Wafi-Golpu after the signing of the non-binding framework Memorandum of Understanding (MoU) on 6 April 2023. Sustainability is embedded throughout Harmony, As such, we are incorporating a risk-based approach to informing and updating the feasibility study for the Eva Copper Mine Project in Australia. A key project consideration is to include the supply of renewable power in the project plan, which amongst other proposed changes, will require an environmental permit amendment. Harmony continues to receive good support from the state and local level stakeholders as we progress the Eva Copper Mine Project for the benefit of all our stakeholders. We will continue providing updates on the progress of the study and the permitting process. In the interim, we are continuing with enhancing the resource and project footprint database required to inform the feasibility study outcomes through on-site drilling, laboratory test-work and modelling activities, with over 41 000 metres drilled in the period since acquiring the project. This will inform resource definition, geotechnical, metallurgical and geohydrological data sets in addition to study optimisation work streams. The sequencing of our capital expenditure is expected to remain largely unchanged, with comfortable levels of capital intensity alongside our robust balance sheet. As we head towards the end of the calendar year, it is imperative we remain focused on safety, effective cost management and delivering operational excellence across all our operations. Our people remain our number one asset. The remarkable improvement in our group safety performance is evidence that a proactive safety culture and operational excellence work hand-in-hand. This is a true example of mining with purpose as we continue creating value for all our shareholders and stakeholders. HEALTH AND SAFETY Harmony’s safety performance continues to improve. The group LTIFR for this quarter improved to 4.84 from 5.68 in Q1FY23, the lowest in ten years. This is a remarkable achievement and reflects the immense effort by each employee to embed a culture of safety and to live the Harmony values at work and at home. Despite these efforts, more still needs to be done to achieve our goal of zero-loss of life. We are deeply saddened that three of our colleagues lost their lives in two separate fall-of-ground events. The first event occurred at Kusasalethu on 5 September 2023 (Q1FY24), while the second event occurred at Tshepong North on 6 October 2023 (Q2FY24). We express our sincerest condolences to the families of: Amahle Nodangala, rock drill operator, Kusasalethu Luvuyo Sangeni, development team member, Kusasalethu Mlandelwa Zide, scrapper winch operator, Tshepong North One life lost is one too many. Harmony takes the learnings from every incident as we continue our relentless pursuit of achieving zero loss of life. COMPARATIVE OPERATIONAL METRICS FOR Q1FY24 VS Q4FY23 AND Q1FY23 Q1FY24Q4FY23Q-on-q (%)Q1FY23Y-on-y(%) Average gold price received R/kg 1 127 208 1 143 114 (1) 955 010 18 $/oz 1 881 1 904 (1) 1 743 8 Underground yield g/t 6.29 6.09 3 5.35 18 Gold produced total kg 13 223 12 302 7 11 301 17 oz 425 130 395 520 7 363 336 17 SA optimised underground1 kg 5 448 4 802 13 5 345 2 oz 175 158 154 389 13 171 845 2 SA high grade underground2 kg 4 234 4 105 3 3 122 36 oz 136 126 131 979 3 100 374 36 SA surface3 kg 2 185 1 959 12 1 822 20 oz 70 250 62 984 12 58 580 20 International (Hidden Valley) kg 1 356 1 436 (6) 1 012 34 oz 43 596 46 168 (6) 32 537 34 Total cash costs R/kg 711 999 717 982 1 756 166 6 $/oz 1 188 1 196 1 1 380 14 Group AISC R/kg 841 436 878 138 4 907 573 7 US$/oz 1 404 1 462 4 1 657 15 Group AIC R/kg 900 505 937 480 4 946 228 5 US$/oz 1 503 1 561 4 1 727 13 Average exchange rate R/US$ 18.64 18.68 — 17.04 9 Tshepong South, Tshepong North, Target 1, Joel, Masimong, Doornkop and Kusasalethu Mponeng and Moab Khotsong Mine Waste Solutions, Phoenix, Central Plant, Savuka Tailings, Dumps and Kalgold For further information, download the Q1F23 results booklet FORWARD-LOOKING STATEMENTS This booklet 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 booklet, are necessarily estimates reflecting the best judgement 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; 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 Russian invasion of Ukraine and subsequent sanctions; 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. The forward-looking financial information has not been reviewed and reported on by the company’s auditors.
