UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6K
REPORT OF FOREIGN PRIVATE ISSUER
PURSUANT TO RULE 13a16 OR 15d16 UNDER THE
SECURITIES EXCHANGE ACT OF 1934
For February 23, 2021
Harmony Gold Mining Company Limited
Randfontein Office Park
Corner Main Reef Road and Ward Avenue Randfontein,
1759
South Africa
(Address of principal executive offices)
*-
(Indicate by check mark whether the registrant files or will file
annual reports under cover of Form 20 F or Form 40F.)
Form 20F ☒ Form 40F ☐
(Indicate by check mark whether the registrant by furnishing the
information contained in this form is also thereby
furnishing
the information to the Commission pursuant to Rule 12g32(b) under
the Securities Exchange Act of 1934.)
Yes ☐ No ☒
Harmony Gold Mining Company Limited
Incorporated in the Republic of South Africa
Registration number: 1950/038232/06
JSE share code: HAR
NYSE share code: HMY
ISIN: ZAE000015228
(“Harmony” or “company”)
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INTERIM RESULTS FY21*
for the six-month period ended 31 December 2020
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HIGHLIGHTS for the six-month period ended 31 December 2020 (H1FY21)
vs
the six-month period ended 31 December 2019 (H1FY20)**
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RESPONSIBLE
STEWARDSHIP |
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• In Phase 2 of embedding a proactive safety
culture focused on leadership and behaviour
• Our health initiatives combined with the
COVID-19 standard operating plans embed our
commitment to the "S" in ESG#
• Ranked first in ESG disclosure among
South African mining companies
• FTSE4Good constituent
• Included in the Bloomberg Gender Equality
Index 2021
• Runner-up in the Sunday Times Top 100
Companies Awards 2020
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OPERATIONAL
EXCELLENCE |
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• 65% increase in production profit
to R6.8bn
(US$417m) from
R4.1bn
(US$280m)
• 5% increase in underground recovered grade
to 5.58g/t from 5.29g/t
• 8% increase in gold production
to 23 183kg
(745 314oz)
from
21 411kg
(688 379oz)
• 42% increase in total mineral resources†
• 20% increase in total mineral reserves†
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CASH
CERTAINTY |
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• 69% increase in operating free
cash flow margin to 22% from 13%
• 336% increase in net profit
to R5.8bn
(US$356m)
from R1.3bn
(US$91m)
• 58% reduction in net debt
to R580m
(US$40m)
from R1.4bn
(US$79m)
• 31% increase in Rand gold price received
to R896 587/kg
(US$1 716/oz)
from R683 158/kg
(US$1 447/oz)
• R902m (US$56m) net gain on derivatives
• HEPS increased by 211% to 775 SA cents
(48 US cents)
from 249 SA cents
(17 US cents)
• Net debt to EBITDA at 0.1x
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EFFECTIVE
CAPITAL ALLOCATION |
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• Successful integration of Mponeng
and Mine Waste Solutions – 3 months of
production resulting in a significant increase
in our overall grade, production and cash flow
• Strong pipeline of organic projects to drive
production profile and margin expansion
• Interim dividend^
of 110 SA cents (7.5 US) cents‡
per share declared
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* These interim results have been reviewed
by our external auditors, PricewaterhouseCoopers
Incorporated
** For the US$ comparative % increase
please see our results presentation
# ESG = Environmental, social and
governance
† The mineral reserves are included in the
business valuation of the operations acquired from AngloGold
Ashanti Limited, while the resources are per their mineral
resources statement as at December 2019
^ See dividend notice on page 7 for the
details
‡ Illustrative equivalent based on the
exchange rate of R14.64 as at 19 February 2021
OPERATING RESULTS
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Six months
ended
December 2020
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Six months
ended
December 2019
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%
Change |
Six months
ended
June 2020*
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% change relates to the six months ended June 2020 vs December
2020 |
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Gold produced |
kg |
23 183 |
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21 411 |
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8 |
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16 452 |
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41 |
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oz |
745 347 |
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688 379 |
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8 |
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528 944 |
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41 |
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Underground grade |
g/t |
5.58 |
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5.29 |
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5 |
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5.69 |
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(2) |
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Gold price received |
R/kg |
896 587 |
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683 158 |
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31 |
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805 300 |
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11 |
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US$/oz |
1 716 |
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1 447 |
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19 |
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1 504 |
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14 |
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Cash operating costs |
R/kg |
596 047 |
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499 139 |
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(19) |
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624 276 |
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5 |
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US$/oz |
1 141 |
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1 057 |
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(8) |
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1 166 |
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2 |
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Total costs and capital |
R/kg |
697 026 |
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603 302 |
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(16) |
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704 708 |
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1 |
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US$/oz |
1 334 |
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1 278 |
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(4) |
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1 316 |
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(1) |
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All-in sustaining costs |
R/kg |
715 837 |
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605 911 |
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(18) |
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711 818 |
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(1) |
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US$/oz |
1 370 |
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1 283 |
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(7) |
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1 329 |
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(3) |
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Production profit |
R million |
6 780 |
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4 110 |
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65 |
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3 086 |
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120 |
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US$ million |
417 |
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280 |
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49 |
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185 |
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125 |
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Exchange rate |
R:US$ |
16.25 |
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14.69 |
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11 |
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16.65 |
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(2) |
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* Six-month period ended June 2020 included to illustrate the
impact of COVID-19 on operations during the first half of the
calendar year
FINANCIAL RESULTS
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Six months
ended
December 2020
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Six months
ended
December 2019
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%
Change |
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Basic earnings per share |
SA cents |
966 |
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249 |
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288 |
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US cents |
59 |
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17 |
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247 |
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Headline earnings |
R million |
4 644 |
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1 331 |
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249 |
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US$ million |
286 |
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91 |
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214 |
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Headline earnings per share |
SA cents |
775 |
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249 |
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211 |
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US cents |
48 |
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17 |
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181 |
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Please refer to our website for the full results presentation:
https://www.harmony.co.za/invest/financials/fy21
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
prices; 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 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 and other countries
in which we operate.
The foregoing factors and others described under “Risk Factors” in
our Integrated Annual Report (www.har.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.
CONTENTS
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PAGE |
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2 |
Forward-looking statements |
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3 |
Shareholder information |
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4 |
Message from the chief executive officer |
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7 |
Notice of cash dividend |
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8 |
Operating results – year-on-year (Rand/metric) |
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10 |
Operating results – year-on-year (US$/imperial) |
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12 |
Review report from external auditor |
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13 |
Condensed consolidated income statement (Rand) |
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14 |
Condensed consolidated statement of comprehensive income
(Rand) |
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14 |
Condensed consolidated statement of changes in equity
(Rand) |
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15 |
Condensed consolidated balance sheet (Rand) |
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16 |
Condensed consolidated cash flow statement (Rand) |
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17 |
Notes to the condensed consolidated financial
statements |
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35 |
Segment report (Rand/metric) |
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36 |
Condensed consolidated income statement (US$) |
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37 |
Condensed consolidated statement of comprehensive income
(US$) |
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37 |
Condensed consolidated statement of changes in equity
(US$) |
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38 |
Condensed consolidated balance sheet (US$) |
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39 |
Condensed consolidated cash flow statement (US$) |
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40 |
Segment report (US$/imperial) |
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41 |
Development results – metric and imperial |
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42 |
Competent person's declaration |
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43 |
Directorate and administration |
SHAREHOLDER INFORMATION
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Issued ordinary share capital 31 December 2020 |
616 052 197 |
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Issued ordinary share capital 30 June 2020 |
603 142 706 |
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MARKET CAPITALISATION |
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As at 31 December 2020 (ZARm) |
44 109 |
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As at 31 December 2020 (US$m) |
3 003 |
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As at 30 June 2020 (ZARm) |
43 342 |
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As at 30 June 2020 (US$m) |
2 494 |
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HARMONY ORDINARY SHARES AND ADR PRICES
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12-month high (1 January 2020 – 31 December 2020) for ordinary
shares (ZAR) |
124.95 |
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12-month low (1 January 2020 – 31 December 2020) for ordinary
shares (ZAR) |
33.62 |
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12-month high (1 January 2020 – 31 December 2020) for ADRs
(US$) |
7.10 |
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12-month low (1 January 2020 – 31 December 2020) for ADRs
(US$) |
1.93 |
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FREE FLOAT |
100 |
% |
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American Depositary Receipt ("ADR") RATIO |
1:1 |
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JSE LIMITED |
HAR |
Average daily volume for the year
(1 January 2020 – 31 December 2020) |
4 320 919 |
Average daily volume for the previous year
(1 January 2019 – 31 December 2019) |
2 313 153 |
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NEW YORK STOCK EXCHANGE |
HMY |
Average daily volume for the year
(1 January 2020 – 31 December 2020) |
7 601 064 |
Average daily volume for the previous year
(1 January 2019 – 31 December 2019) |
6 152 535 |
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INVESTORS' CALENDAR |
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FY21 results presentation |
31 August 2021 |
MESSAGE FROM THE CHIEF EXECUTIVE OFFICER
Harmony delivered an outstanding set of numbers for the first half
of the financial year ("H1FY21"), in line with our strategy of
producing safe, profitable ounces and increasing margins. These
results are a true reflection of how Harmony has transformed and
de-risked its business since January 2016. While the majority of
our gold still comes from underground mining, we have increased the
contribution from higher margin and lower risk surface sources to
approximately 30% of our total production (from 15% in January
2016).
Our people and their safety have never been more important as we
continue to face and manage the challenges brought about by the
COVID-19 pandemic.
Net profit increased by 336% to R5 812 million (US$356
million) for H1FY21 compared to R1 332 million (US$91 million)
in the six months ended 31 December 2020 ("H1FY20") as a result of
an increase in the average recovered underground grade and higher
production from our underground operations, supported by a higher
average R/kg gold price received. We have successfully integrated
Mponeng and Mine Waste Solutions into our portfolio and have
already seen an increase in grade, production and cash flow since
we took ownership of these assets on 1 October
2020.
Operating free cash flow of R4 702 million
(US$289 million) for the period allowed us to repay a
significant portion of our debt, resulting in a robust balance
sheet.
As a result of our investment in growth assets, a stronger
operational performance from our mines in H1FY21 and a strategy
aimed at delivering positive shareholder returns, we are pleased to
announce an interim dividend of 110 SA cents (7.5 US
cents).
RESPONSIBLE STEWARDSHIP
Safety and health
Safety is a foundational value at Harmony and it is of utmost
importance that we ensure safe production at all our operations.
The development of safety leadership capability, embedded safety
practices, embracing a safety culture and improved employee
engagement will entrench safe behaviour across all our employees at
all times.
Risk management is an essential step in ensuring that our employees
and working areas are safe at all times. Harmony remains committed
to the elimination of work-related injuries and fatalities. We
continue to address specific causes of work-related events
resulting in injury and loss of life, focusing on improving our
safety in general and embedding a proactive safety culture. It
remains a continuous journey of engagement, training, creating
awareness, learning from each other and caring for each
other.
It is therefore with great sadness that we report six of our
colleagues lost their lives in mine-related incidents in the
six-month period ended 31 December 2020. It is simply not
acceptable and will never be acceptable. We pay our respects to
Zamokuhle Shabane (team leader, Bambanani), Zakhele Lubisi,
(artisan, Kusasalethu), Alexis Lesiamang Ntjantso (driller,
Doornkop), Tsoaela Botsane (supervisor, Tshepong), Tisetso Pati
(winch operator, Tshepong) and Rakitsi Seseli (driller,
Kusasalethu) and extend our deepest condolences to their families,
friends and colleagues.
A number of our mines have recorded some significant safety
milestones and we are seeing progress as we work on embedding a
proactive safety culture. Our total injury and accident frequency
rate has improved over the past decade and is now at 7.69 per
million hours worked as we strive towards our goal of zero loss of
life. Despite this progress, the group fatality injury frequency
rate regressed in H1FY21, increasing to 0.13 per million hours
(FY20: 0.08).
COVID-19 remains a major focus with continued co-ordination from
all stakeholders, management and employees towards fighting the
pandemic. The focus remains on limiting or eliminating the spread
of COVID-19 at all our operations and keeping our employees
safe.
A multi-disciplinary response team was established at the start of
the pandemic to ensure compliance and alignment of all COVID-19
related processes. Harmony also developed and implemented a
Standard Operating Procedure to assist in the prevention and
transmission of COVID-19 at its operations in South Africa and
Papua New Guinea (PNG).
Employees who were scheduled to go home for the festive season were
required to sign a registration form and full screening was
conducted. A return to work process was designed and implemented to
ensure a safe return of all employees to the workplace. About 7 000
of our employees travelled outside South Africa's borders over the
December 2020 period, all of whom were allowed to return through
the borders provided they were able to produce a negative COVID-19
test result.
As at 19 February 2021, Harmony had 94 active COVID-19 cases,
representing only 0.2% of our workforce. We mourn 40 employees lost
to the pandemic and continue to urge all our employees, their
families and communities to remain vigilant as we battle the second
wave of the pandemic.
Harmony is committed to playing an active role, with our social
partners, to help with the vaccine roll-out. While the South
African government is primarily responsible for funding the vaccine
roll-out and is the single buyer, Harmony will play an important
role by accelerating the vaccination programme on our mines and in
host communities. As guided by the Department of Health, our
healthcare workers and other frontline workers will receive
vaccines first, followed by our remaining employees as per our
internal COVID-19 vaccine roll-out plan.
We will continue to prioritise our other healthcare initiatives,
particularly those relating to occupational and lifestyle diseases
despite the current challenges presented by COVID-19.
The COVID-19 pandemic combined with our existing health and
wellness initiatives have given added impetus and reinforced our
commitment to environmental, social and governance (ESG) matters
and to sustainable development. Our response to the COVID-19
pandemic clearly demonstrated that the “S” in ESG is part of
Harmony’s DNA. Caring for those who contribute to, support and
benefit from our company has been key to our success.
ESG reporting
Harmony ranked first in ESG disclosures for mining companies in
South Africa based on a recent study conducted by Risk Insights and
Instinctif Partners. The research was based on ESG metrics using
Risk Insight’s own ESG rating tool which analyses publicly
available disclosures, integrated reports and media coverage.
Harmony was also runner-up in the Sunday Times Top 100 Companies in
2020. This award acknowledged Harmony as a JSE-listed company for
creating wealth and value for shareholders over a five-year
period.
It is evident from these external recognitions that a successful
ESG strategy delivers positive shareholder returns.
OPERATIONAL EXCELLENCE
Operational results for the six-month period ended 31 December
2020
Total gold production for H1FY21 was 8% higher at 23 183kg
(745 347oz) compared to 21 411kg (688 379oz) in
H1FY20. Higher gold production was due to the inclusion of Mponeng
and related assets into our portfolio and achieving our operational
plans at the majority of our mines.
The newly acquired assets added 3 220kg (103 525oz) for the
December 2020 quarter comprising; 1 874kg or 60 250oz from Mponeng
underground,
318kg or 10 224oz from Mponeng surface, 216kg or 6 944oz from
Kopanang surface and 812 kg or 26 106oz from Mine Waste
Solutions.
The average underground recovered grade increased by 5% to 5.58g/t
from 5.29g/t as a result of higher grades at Kusasalethu, Mponeng
and Joel operations. Moab Khotsong was our most profitable
operation for the reporting period followed by Mponeng, delivering
R1 143 million (US$70 million) and R547 million (US$34
million) in free cash respectively.
Production from our surface sources increased by 86% from
2 009kg in H1FY20 to 3 741kg in H1FY21 due to higher
throughput from Mine Waste Solutions and waste rock dumps. However,
average surface grade decreased by 12% to 0.23g/t (H1FY20:
0.26g/t). The acquisition of Mine Waste Solutions, a high-volume,
low-grade operation, was primarily responsible for this decline. We
are however, confident that we are able to lower the overall cost
base at Mine Waste Solutions and achieve synergies.
Hidden Valley’s recovered grade decreased by 5% to 1.20g/t at
H1FY21 from 1.26g/t in H1FY20 as planned, whilst the open pit was
transitioning between stages 5 and 6. Grade is expected to increase
in the second half of FY21 as more stage 6 ore becomes available.
Gold production was 17% lower for the period as a result of lower
mill throughput due to a major shutdown and additional maintenance
work being carried out in the first half of FY21 compared to the
comparable period.
Total production costs increased by 30% to R14 808 million
(US$911 million) compared to R11 366 million (US$774 million)
in H1FY20. The increase of R3 442 million (US$212
million) was driven mainly by the inclusion of the acquired
operations which contributed R1 751 million (US$108
million) in new costs. The other major contributors to the
production cost increase were labour which increased by R585
million (US$36 million), royalties which increased by
R267 million (US$16 million) as a result of higher
revenues, and COVID-19 related expenses which amounted to R215
million (US$13 million). Hidden Valley's production costs were R363
million (US$22 million) higher for the period due to
additional COVID-19 related expenses, run of mine stockpiles being
maintained and a decrease in the deferred stripping
credit.
Group all-in sustaining costs was therefore 18% higher for H1FY21
at R715 827/kg compared to H1FY20 at R605 911kg.
Group capital expenditure for H1FY21 increased by 5% to R2 341
million (US$144 million) from R2 230 million (US$151 million) in
H1FY20 due to the inclusion of Mponeng mine and related assets. The
impact of COVID-19 resulted in lower than planned capital
expenditure but this is expected to normalise.
The capitalisation project at Target 1 to bring infrastructure
closer to the mining areas is continuing but unfortunately pillar
failures and backfill dilution in two of our massive stopes
impacted grade and volume. We have adopted a revised plan which
will take into account the delay caused by these events. We expect
this to be resolved by Q4FY21.
For the June 2020 to December 2020 period, total gold production
increased by 41% to 23 183kg (745 347oz) from 16 452kg (528 944oz)
as production normalised post COVID-19 lockdowns in South Africa
and due to the inclusion of the newly acquired assets.
CASH CERTAINTY
Financial results for the six-month period ended 31 December
2020
Revenue
Revenue increased by 39% from R15 477 million (US$1 054
million) to R21 588 million (US$1 328 million),
mainly due to a stellar performance from our underground South
African operations, supported by a higher R/kg gold price received
and the inclusion of our newly acquired assets. The average R/kg
gold price received increased by 31% in H1FY21 to R896 587/kg
from R683 158/kg in H1FY20. In US dollar terms, revenue
increased by US$274 million or 26% to
US$1 328 million and the average gold price received
increased by 19% to US$1 716/oz from US$1 447/oz in
H1FY20.
Gains and expenses included in operating profit
Corporate, administrative and other expenditure includes a 58%
increase relating to higher management incentive payments and the
integration costs in respect of the acquisition of the Mponeng
operations and related assets.
The foreign exchange translation gain is predominantly due to the
impact of the strengthening of the Rand from R17.32/US$ at 30 June
2020 to R14.69/US$ at 31 December 2020 on the US dollar
borrowings, resulting in a translation gain of R652 million (US$40
million) compared to R36 million (US$2 million) in the
comparative period.
Gain on bargain purchase
Harmony reported a R1 153 million (US$69 million) gain on
bargain purchase from the acquisition of the Mponeng operations and
related assets in terms of IFRS 3. This gain was reported
after taking into account fair value adjustments and provisions
between the consideration paid and the net asset value of the
acquired assets and liabilities assumed. The fair value exercise
has been provisionally concluded and will be finalised in the
12 months permitted by IFRS. Refer to note 13 in the financial
statements for further detail.
Taxation
The taxation expense for the group increased to R772 million
(US$48 million) for H1FY21 from R157 million (US$11
million) for H1FY20. The current taxation expense for the
reporting period is higher mainly due to gains on derivatives and
foreign exchange gains on the US dollar loans. The deferred
taxation expense for H1FY21 is higher mainly as a result of the
utilisation of assessed losses and unredeemed capital expenditure
due to increased profitability.
Net profit
Harmony’s net profit increased to R5 812 million
(US$356 million) in H1FY21, compared to a profit of R1 332
million (US$91 million) in H1FY20. Headline earnings increased to
775 SA cents per share (48 US cents) compared with
headline earnings of 249 SA cents (17 US cents) per share
for H1FY20.
Net debt
As at the end of December 2020, Harmony's net debt decreased
by R781 million (US$40 million) to R580 million (US$39
million). The cash generated by operations was more than sufficient
to pay for the new assets and significantly reduce our
debt.
Derivatives and hedging
Harmony continues to enjoy favourable commodity and foreign
exchange pricing on the unhedged portion of its exposure, while
locking in higher prices as part of its derivative programme when
available. For the current period we recorded a net gain of R902
million (US$56 million) compared to a R157 million
(US$11 million) gain for the six months period to December
2019 mainly due to a stronger Rand:US$ exchange rate.
Since the inception of the derivative programmes in FY16, these
programmes have realised net gains of R159 million
(US$10 million). Going forward we will be more selective
before entering into hedges only hedging when a margin of 25% above
cost and inflation can be locked in.
EFFECTIVE CAPITAL ALLOCATION
Growing our ounces
The strong performance in H1FY21 provided Harmony with an
opportunity to accelerate some of our key strategic financial
objectives which include cash certainty, debt reduction and balance
sheet flexibility.
Harmony has successfully integrated Mponeng and related assets as
from 1 October 2020. The integration of these assets into our
portfolio is expected to increase group resources by 43% to 169.8
million ounces from 118.6 million ounces and group mineral reserves
by 20% to 43.8 million ounces from 36.5 million ounces
(as per AngloGold Ashanti Limited mineral resources declaration as
at December 2019). We also expect these assets potentially to
enhance our near-term production by approximately 275 000oz to 282
000oz for FY21 based on 9-month production figures as well as
potential other surface and service synergies (subject to further
feasibility studies).
Harmony is now one of the largest processors of tailings and waste
rock dumps globally after our acquisition of Mine Waste Solutions.
This is a compelling opportunity for Harmony due to surface source
assets being safe, low-risk, long-life assets, with increased
margins and ensuring diversification of our asset
portfolio.
There are a number of exploration projects underway which include
extending the life of some of our mines both in South Africa and
PNG. All projects are carefully assessed to establish if the
returns will meet our criteria for capital deployment.
Our strong balance sheet affords us flexibility to pursue our
strategic growth objectives through mergers and acquisitions,
alongside our pipeline of organic projects, while at the same
sharing returns with investors.
Wafi-Golpu Project
In December 2020, following a rigorous environmental impact
assessment, the Environmental Permit for the Wafi-Golpu Project was
approved by the Papua New Guinean Conservation and Environment
Protection Authority and issued by the Director of
Environment.
The Environmental Permit is required under the Papua New
Guinean Environment Act and is a prerequisite for the grant of a
Special Mining Lease under the Mining Act. Harmony, together with
its Wafi-Golpu Joint Venture partner, Newcrest Mining Limited, look
forward to re-engaging with the State of Papua New Guinea and
progressing discussions on the Special Mining Lease.
Interim dividend
Harmony has reviewed its existing dividend policy and is pleased to
confirm a more definitive policy aimed at paying a return of 20% of
net free cash generated to shareholders. The new dividend policy is
aimed at being more predictable, meaningful and sustainable. While
the dividend policy is reviewed every two years, the payment of a
dividend will be at the discretion of the board and will be decided
on every six months.
When declaring a dividend, the board of directors will take the
following into account: future major capital expenditure, net debt
to EBITDA not being greater than 1.0x, solvency and liquidity
requirements in line with the SA Companies Act and current banking
covenants.
As a result of a significant reduction in net debt, it was deemed
appropriate to return cash to shareholders. As such, we are pleased
to announce that Harmony has declared an interim dividend of 110 SA
cents (7.5 US cents) per share on the back of our strong free cash
flow. This translates to a dividend yield of approximately 2% based
on our recent share price. The decision to pay a dividend was made
on the basis that it will be sustainable and will not inhibit
future expansion opportunities. See page 7 for
details.
UPDATED FY21 GROUP PRODUCTION AND COST GUIDANCE
Following the integration of the newly acquired Mponeng mine and
related assets, and taking into account the amended plan at Target,
production guidance for FY21 is expected to be between 1.56Moz and
1.6Moz at an all-in sustaining cost of between R700 000/kg and
R720 000/kg (previously 1.26Moz to 1.3Moz at an all-in
sustaining cost of between R690 000/kg to R710 000/kg). Underground
recovered grade is expected to increase from between 5.47g/t and
5.64g/t (previously 5.47g/t to 5.5g/t).
IN CONCLUSION
Harmony remains committed to safely operating our mines and
expanding our reserves and margins while delivering on our ESG
objectives.
The optimisation of existing and new operations, combined with a
deployable war chest and a robust balance sheet ensures we remain
well-positioned to take advantage of a higher gold price while
delivering positive shareholder returns throughout the
cycle.
As we move into the next phase of our growth plans, we will
continue to service our communities, stakeholders and employees by
doing what we know best – mining gold.
Peter Steenkamp
Chief executive officer
NOTICE OF INTERIM GROSS CASH DIVIDEND
Our dividend declaration for the six months ended 31 December 2020
is as follows:
Declaration of interim gross cash ordinary dividend no.
89
The Board has approved, and notice is hereby given, that an interim
gross cash dividend of 110 SA cents (7.5 US cents*) per ordinary
share in respect of the six months ended 31 December 2020, has been
declared payable to the registered shareholders of Harmony on
Monday, 19 April 2021.
In accordance with paragraphs 11.17(a)(i) to (x) and 11.17(c) of
the JSE Listings Requirements the following additional information
is disclosed:
•The
dividend has been declared out of income reserves;
•The
local Dividend Withholding Tax rate is 20% (twenty
percent);
•The
gross local dividend amount is 110 SA cents (7.5 US cents*) per
ordinary share for shareholders exempt from the Dividend
Withholding Tax;
•The
net local dividend amount is 88 SA cents per ordinary share for
shareholders liable to pay the Dividend Withholding
Tax;
•Harmony
currently has 616 052 197 ordinary shares in issue (which includes
6 154 630 treasury shares); and
•Harmony’s
income tax reference number is 9240/012/60/0.
A dividend No. 89 of 110 SA cents (7.5 US cents*) per ordinary
share, being the dividend for the six months ended 31 December
2020, has been declared payable on Monday 19 April 2021 to those
shareholders recorded in the books of the company at the close of
business on Friday, 16 April 2021. The dividend is
declared in the currency of the Republic of South Africa. Any
change in address or dividend instruction to apply to this dividend
must be received by the company’s transfer secretaries or registrar
not later than Friday, 9 April 2021.
In compliance with the requirements of Strate Proprietary Limited
(Strate) and the JSE Listings
Requirements, the salient dates for payment of the dividend are as
follows:
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Last date to trade ordinary shares cum-dividend is |
Tuesday, 13 April 2021 |
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Ordinary shares trade ex-dividend |
Wednesday, 14 April 2021 |
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Record date |
Friday, 16 April 2021 |
|
Payment date |
Monday, 19 April 2021 |
No dematerialisation or rematerialisation of share certificates may
occur between Wednesday, 14 April 2021 and Friday, 16 April 2021,
both dates inclusive, nor may any transfers between registers take
place during this period.
On payment date, dividends due to holders of certificated
securities on the SA share register will either be electronically
transferred to such shareholders' bank accounts or, in the absence
of suitable mandates, dividends will be held in escrow by Harmony
until suitable mandates are received to electronically transfer
dividends to such shareholders.
Dividends in respect of dematerialised shareholdings will be
credited to such shareholders' accounts with the relevant Central
Securities Depository Participant (CSDP) or broker.
The holders of American Depositary Receipts (ADRs) should confirm
dividend details with the depository bank. Assuming an exchange
rate of R14.64/US$1* the dividend payable on an ADR is equivalent
to US7.5 cents for ADR holders before dividend tax. However, the
actual rate of payment will depend on the exchange rate on the date
for currency conversion.
*Based on an exchange rate of R14.64/US$1 at 19 February 2021.
However, the actual rate of payment will depend on the exchange
rate on the date for currency conversion.
OPERATING RESULTS – SIX MONTHLY (RAND/METRIC)
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Six months ended |
SOUTH AFRICA |
Hidden
Valley |
TOTAL
HARMONY |
|
UNDERGROUND PRODUCTION |
|
|
SURFACE PRODUCTION |
TOTAL
SOUTH
AFRICA |
Moab
Khotsong |
Tshepong
Operations |
Mponeng |
Kusasalethu |
Doornkop |
Bambanani |
Masimong |
Target 1 |
Joel |
Unisel³ |
TOTAL
UNDER-
GROUND |
Mine waste solution |
Dumps |
Phoenix |
Central
plant
reclamation |
Kalgold |
TOTAL
SURFACE |
|
Ore milled |
- t'000 |
Dec-20 |
440 |
733 |
228 |
375 |
445 |
117 |
258 |
280 |
169 |
57 |
3 102 |
5 904 |
4 249 |
3 091 |
1 970 |
758 |
15 972 |
19 074 |
1 789 |
20 863 |
|
Dec-19 |
456 |
889 |
— |
349 |
381 |
123 |
311 |
305 |
233 |
136 |
3 183 |
— |
1 831 |
3 208 |
2 010 |
813 |
7 862 |
11 045 |
2 039 |
13 084 |
|
Yield |
- g/tonne |
Dec-20 |
8.47 |
4.71 |
8.22 |
6.15 |
4.36 |
8.97 |
3.85 |
3.65 |
4.05 |
4.33 |
5.58 |
0.138 |
0.392 |
0.132 |
0.144 |
0.75 |
0.23 |
1.10 |
1.20 |
1.11 |
|
Dec-19 |
8.74 |
5.04 |
— |
4.72 |
4.28 |
10.54 |
3.88 |
3.72 |
3.67 |
4.31 |
5.29 |
— |
0.348 |
0.132 |
0.158 |
0.78 |
0.26 |
1.71 |
1.26 |
1.64 |
|
Gold produced |
- kg |
Dec-20 |
3 725 |
3 453 |
1 874 |
2 305 |
1 940 |
1 050 |
994 |
1 021 |
685 |
247 |
17 294 |
812 |
1 665 |
408 |
284 |
572 |
3 741 |
21 035 |
2 148 |
23 183 |
|
Dec-19 |
3 987 |
4 479 |
— |
1 648 |
1 632 |
1 297 |
1 208 |
1 136 |
855 |
586 |
16 828 |
— |
637 |
424 |
318 |
630 |
2 009 |
18 837 |
2 574 |
21 411 |
|
Gold sold |
- kg |
Dec-20 |
3 781 |
3 461 |
1 844 |
2 358 |
1 952 |
1 050 |
997 |
1 040 |
686 |
242 |
17 411 |
783 |
1 634 |
413 |
286 |
575 |
3 691 |
21 102 |
2 207 |
23 309 |
|
Dec-19 |
4 135 |
4 577 |
— |
1 738 |
1 693 |
1 325 |
1 235 |
1 135 |
874 |
598 |
17 310 |
— |
655 |
420 |
321 |
619 |
2 015 |
19 325 |
2 644 |
21 969 |
|
Gold price received |
- R/kg |
Dec-20 |
900 063 |
895 441 |
946 900 |
892 801 |
899 556 |
901 210 |
840 110 |
908 572 |
899 453 |
925 979 |
900 545 |
778 243 |
911 155 |
827 370 |
899 189 |
909 548 |
872 407 |
895 623 |
905 797 |
896 587 |
|
Dec-19 |
690 255 |
686 268 |
— |
684 306 |
688 947 |
686 535 |
662 309 |
653 573 |
685 330 |
664 405 |
682 650 |
— |
685 690 |
662 221 |
682 255 |
689 197 |
681 329 |
682 512 |
687 879 |
683 158 |
|
Gold revenue¹ |
(R'000) |
Dec-20 |
3 403 140 |
3 099 123 |
1 746 084 |
2 105 225 |
1 755 933 |
946 270 |
837 590 |
944 915 |
617 025 |
224 087 |
15 679 392 |
728 168 |
1 488 827 |
341 704 |
257 168 |
522 990 |
3 338 857 |
19 018 249 |
1 999 093 |
21 017 342 |
|
Dec-19 |
2 854 206 |
3 141 050 |
— |
1 189 323 |
1 166 388 |
909 659 |
817 951 |
741 805 |
598 978 |
397 314 |
11 816 674 |
— |
449 127 |
278 133 |
219 004 |
426 613 |
1 372 877 |
13 189 551 |
1 818 752 |
15 008 303 |
|
Cash operating cost (net of by-product credits) |
(R'000) |
Dec-20 |
1 966 107 |
2 494 857 |
981 069 |
1 553 978 |
1 093 137 |
593 921 |
717 265 |
840 041 |
572 059 |
178 154 |
10 990 588 |
379 369 |
894 883 |
198 590 |
140 120 |
394 666 |
2 007 628 |
12 998 216 |
819 943 |
13 818 159 |
|
Dec-19 |
1 740 731 |
2 260 572 |
— |
1 352 242 |
881 277 |
549 204 |
667 373 |
762 800 |
534 254 |
313 661 |
9 062 114 |
— |
337 437 |
185 567 |
115 329 |
363 288 |
1 001 621 |
10 063 735 |
623 324 |
10 687 059 |
|
Inventory movement |
(R'000) |
Dec-20 |
62 139 |
535 |
111 367 |
47 160 |
5 208 |
(197) |
(2 091) |
10 087 |
(178) |
3 679 |
237 709 |
95 812 |
33 269 |
1 855 |
(62) |
899 |
131 773 |
369 482 |
50 232 |
419 714 |
|
Dec-19 |
54 377 |
49 859 |
— |
40 645 |
41 924 |
15 434 |
16 607 |
(2 292) |
11 404 |
6 837 |
234 795 |
— |
5 097 |
(1 397) |
968 |
(7 529) |
(2 861) |
231 934 |
(21 131) |
210 803 |
|
Operating costs |
(R'000) |
Dec-20 |
2 028 246 |
2 495 392 |
1 092 436 |
1 601 138 |
1 098 345 |
593 724 |
715 174 |
850 128 |
571 881 |
181 833 |
11 228 297 |
475 181 |
928 152 |
200 445 |
140 058 |
395 565 |
2 139 401 |
13 367 698 |
870 175 |
14 237 873 |
|
Dec-19 |
1 795 108 |
2 310 431 |
— |
1 392 887 |
923 201 |
564 638 |
683 980 |
760 508 |
545 658 |
320 498 |
9 296 909 |
— |
342 534 |
184 170 |
116 297 |
355 759 |
998 760 |
10 295 669 |
602 193 |
10 897 862 |
|
Production profit |
(R'000) |
Dec-20 |
1 374 894 |
603 731 |
653 648 |
504 087 |
657 588 |
352 546 |
122 416 |
94 787 |
45 144 |
42 254 |
4 451 095 |
252 987 |
560 675 |
141 259 |
117 110 |
127 425 |
1 199 456 |
5 650 551 |
1 128 918 |
6 779 469 |
|
Dec-19 |
1 059 098 |
830 619 |
— |
(203 564) |
243 187 |
345 021 |
133 971 |
(18 703) |
53 320 |
76 816 |
2 519 765 |
— |
106 593 |
93 963 |
102 707 |
70 854 |
374 117 |
2 893 882 |
1 216 559 |
4 110 441 |
|
Capital expenditure |
(R'000) |
Dec-20 |
294 292 |
463 848 |
218 016 |
90 723 |
225 131 |
33 187 |
11 182 |
182 818 |
87 538 |
— |
1 606 735 |
33 791 |
24 205 |
1 163 |
6 380 |
83 976 |
149 515 |
1 756 250 |
584 751 |
2 341 001 |
|
Dec-19 |
297 502 |
571 512 |
— |
118 423 |
167 432 |
31 004 |
16 863 |
191 557 |
91 449 |
4 714 |
1 490 456 |
— |
— |
2 951 |
4 099 |
27 229 |
34 279 |
1 524 735 |
705 513 |
2 230 248 |
|
Cash operating costs |
- R/kg |
Dec-20 |
527 814 |
722 519 |
523 516 |
674 177 |
563 473 |
565 639 |
721 595 |
822 763 |
835 123 |
721 271 |
635 515 |
467 203 |
537 467 |
486 740 |
493 380 |
689 976 |
536 655 |
617 933 |
381 724 |
596 047 |
|
Dec-19 |
436 602 |
504 705 |
— |
820 535 |
539 998 |
423 442 |
552 461 |
671 479 |
624 858 |
535 258 |
538 514 |
— |
529 728 |
437 658 |
362 670 |
576 648 |
498 567 |
534 254 |
242 162 |
499 139 |
|
Cash operating costs |
- R/tonne |
Dec-20 |
4 468 |
3 404 |
4 303 |
4 144 |
2 456 |
5 076 |
2 780 |
3 000 |
3 385 |
3 126 |
3 543 |
64 |
211 |
64 |
71 |
521 |
126 |
681 |
458 |
662 |
|
Dec-19 |
3 817 |
2 543 |
— |
3 875 |
2 313 |
4 465 |
2 146 |
2 501 |
2 293 |
2 306 |
2 847 |
— |
184 |
58 |
57 |
447 |
127 |
911 |
306 |
817 |
Cash operating cost
and Capital |
- R/kg |
Dec-20 |
606 819 |
856 851 |
639 853 |
713 536 |
679 520 |
597 246 |
732 844 |
1 001 821 |
962 915 |
721 271 |
728 422 |
508 818 |
552 005 |
489 591 |
515 845 |
836 787 |
576 622 |
701 425 |
653 954 |
697 026 |
|
Dec-19 |
511 220 |
632 303 |
— |
892 394 |
642 591 |
447 346 |
566 421 |
840 103 |
731 816 |
543 302 |
627 084 |
— |
529 728 |
444 618 |
375 560 |
619 868 |
515 630 |
615 197 |
516 254 |
603 302 |
|
All-in sustaining cost |
- R/kg |
Dec-20 |
607 898 |
856 918 |
724 776 |
730 735 |
635 501 |
611 982 |
753 167 |
971 069 |
974 546 |
782 126 |
736 634 |
659 840 |
582 838 |
489 149 |
512 021 |
849 856 |
624 799 |
716 892 |
705 748 |
715 837 |
|
Dec-19 |
506 622 |
634 687 |
— |
893 959 |
637 401 |
466 079 |
586 439 |
818 370 |
725 952 |
561 704 |
628 175 |
— |
522 953 |
445 526 |
369 935 |
638 831 |
518 035 |
616 635 |
527 531 |
605 911 |
|
Operating free cash flow margin² |
% |
Dec-20 |
34 |
% |
5 |
% |
31 |
% |
22 |
% |
25 |
% |
34 |
% |
13 |
% |
(8) |
% |
(7) |
% |
20 |
% |
20 |
% |
32 |
% |
38 |
% |
42 |
% |
43 |
% |
7 |
% |
33 |
% |
22 |
% |
28 |
% |
22 |
% |
|
Dec-19 |
29 |
% |
10 |
% |
— |
% |
(24) |
% |
10 |
% |
36 |
% |
16 |
% |
(29) |
% |
(4) |
% |
20 |
% |
11 |
% |
— |
% |
25 |
% |
32 |
% |
45 |
% |
8 |
% |
24 |
% |
12 |
% |
17 |
% |
13 |
% |
|
|
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|
¹Includes a non-cash consideration related to the streaming
arrangement (refer to note 12) (Dec-20:R118.804m) under Mine Waste
Solutions, excluded from the gold price calculation. |
|
²Excludes run of mine costs for Kalgold (Dec-20:-R5.862m,
Dec-19:-R3.499m) and Hidden Valley (Dec-20:-R31.984m,
Dec-19:-R182.313m). |
|
³The Unisel operation closed in October 2020. |
OPERATING RESULTS – SIX MONTHLY (US$/IMPERIAL)
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Six
months
ended |
SOUTH AFRICA |
Hidden
Valley |
TOTAL
HARMONY |
|
UNDERGROUND PRODUCTION |
|
|
SURFACE PRODUCTION |
TOTAL
SOUTH
AFRICA |
Moab
Khotsong |
Tshepong
Operations |
Mponeng |
Kusasalethu |
Doornkop |
Bambanani |
Masimong |
Target 1 |
Joel |
Unisel³ |
TOTAL
UNDER-
GROUND |
Mine waste solutions |
Dumps |
Phoenix |
Central
plant
reclamation |
Kalgold |
TOTAL
SURFACE |
|
Ore milled |
- t'000 |
Dec-20 |
485 |
808 |
251 |
413 |
491 |
129 |
285 |
308 |
187 |
63 |
3 420 |
6 510 |
4 686 |
3 409 |
2 173 |
836 |
17 614 |
21 034 |
1 973 |
23 007 |
|
Dec-19 |
503 |
980 |
— |
385 |
420 |
136 |
343 |
336 |
257 |
150 |
3 510 |
— |
2 019 |
3 537 |
2 217 |
897 |
8 670 |
12 180 |
2 248 |
14 428 |
|
Yield |
- oz/ton |
Dec-20 |
0.247 |
0.137 |
0.240 |
0.179 |
0.127 |
0.262 |
0.112 |
0.107 |
0.118 |
0.126 |
0.163 |
0.004 |
0.011 |
0.004 |
0.004 |
0.022 |
0.007 |
0.032 |
0.035 |
0.032 |
|
Dec-19 |
0.255 |
0.147 |
— |
0.138 |
0.125 |
0.307 |
0.113 |
0.109 |
0.107 |
0.126 |
0.154 |
— |
0.010 |
0.004 |
0.005 |
0.023 |
0.007 |
0.050 |
0.037 |
0.048 |
|
Gold produced |
- oz |
Dec-20 |
119 761 |
111 016 |
60 250 |
74 107 |
62 372 |
33 758 |
31 958 |
32 825 |
22 023 |
7 941 |
556 011 |
26 106 |
53 531 |
13 118 |
9 131 |
18 390 |
120 276 |
676 287 |
69 060 |
745 347 |
|
Dec-19 |
128 185 |
144 003 |
— |
52 984 |
52 470 |
41 699 |
38 838 |
36 523 |
27 489 |
18 841 |
541 032 |
— |
20 480 |
13 632 |
10 224 |
20 255 |
64 591 |
605 623 |
82 756 |
688 379 |
|
Gold sold |
- oz |
Dec-20 |
121 562 |
111 274 |
59 286 |
75 811 |
62 758 |
33 758 |
32 054 |
33 437 |
22 055 |
7 780 |
559 775 |
25 174 |
52 534 |
13 279 |
9 195 |
18 487 |
118 669 |
678 444 |
70 956 |
749 400 |
|
Dec-19 |
132 943 |
147 153 |
— |
55 878 |
54 431 |
42 600 |
39 706 |
36 491 |
28 100 |
19 226 |
556 528 |
— |
21 059 |
13 503 |
10 320 |
19 902 |
64 784 |
621 312 |
85 006 |
706 318 |
|
Gold price received |
- $/oz |
Dec-20 |
1 723 |
1 714 |
1 813 |
1 709 |
1 722 |
1 725 |
1 608 |
1 739 |
1 722 |
1 773 |
1 724 |
1 490 |
1 744 |
1 584 |
1 721 |
1 741 |
1 670 |
1 715 |
1 734 |
1 716 |
|
Dec-19 |
1 462 |
1 453 |
— |
1 449 |
1 459 |
1 454 |
1 403 |
1 384 |
1 451 |
1 407 |
1 446 |
— |
1 452 |
1 402 |
1 445 |
1 459 |
1 443 |
1 445 |
1 457 |
1 447 |
|
Gold revenue¹ |
($'000) |
Dec-20 |
209 464 |
190 752 |
107 472 |
129 577 |
108 078 |
58 243 |
51 554 |
58 160 |
37 978 |
13 793 |
965 071 |
44 818 |
91 638 |
21 032 |
15 829 |
32 190 |
205 507 |
1 170 578 |
123 045 |
1 293 623 |
|
Dec-19 |
194 330 |
213 860 |
— |
80 976 |
79 414 |
61 935 |
55 691 |
50 506 |
40 782 |
27 051 |
804 545 |
— |
30 579 |
18 937 |
14 911 |
29 046 |
93 473 |
898 018 |
123 831 |
1 021 849 |
|
Cash operating cost (net of by-product credits) |
($'000) |
Dec-20 |
121 014 |
153 559 |
60 385 |
95 648 |
67 283 |
36 556 |
44 148 |
51 705 |
35 210 |
10 965 |
676 473 |
23 350 |
55 080 |
12 223 |
8 624 |
24 291 |
123 568 |
800 041 |
50 467 |
850 508 |
|
Dec-19 |
118 518 |
153 912 |
— |
92 068 |
60 002 |
37 393 |
45 438 |
51 935 |
36 375 |
21 355 |
616 996 |
— |
22 975 |
12 634 |
7 852 |
24 735 |
68 196 |
685 192 |
42 439 |
727 631 |
|
Inventory movement |
($'000) |
Dec-20 |
3 825 |
33 |
6 855 |
2 903 |
321 |
(12) |
(129) |
621 |
(11) |
226 |
14 632 |
5 897 |
2 048 |
114 |
(4) |
55 |
8 110 |
22 742 |
3 092 |
25 834 |
|
Dec-19 |
3 702 |
3 395 |
— |
2 767 |
2 854 |
1 051 |
1 131 |
(156) |
776 |
466 |
15 986 |
— |
347 |
(95) |
66 |
(513) |
(195) |
15 791 |
(1 439) |
14 352 |
|
Operating costs |
($'000) |
Dec-20 |
124 839 |
153 592 |
67 240 |
98 551 |
67 604 |
36 544 |
44 019 |
52 326 |
35 199 |
11 191 |
691 105 |
29 247 |
57 128 |
12 337 |
8 620 |
24 346 |
131 678 |
822 783 |
53 559 |
876 342 |
|
Dec-19 |
122 220 |
157 307 |
— |
94 835 |
62 856 |
38 444 |
46 569 |
51 779 |
37 151 |
21 821 |
632 982 |
— |
23 322 |
12 539 |
7 918 |
24 222 |
68 001 |
700 983 |
41 000 |
741 983 |
|
Production profit |
($'000) |
Dec-20 |
84 625 |
37 160 |
40 232 |
31 026 |
40 474 |
21 699 |
7 535 |
5 834 |
2 779 |
2 602 |
273 966 |
15 571 |
34 510 |
8 695 |
7 209 |
7 844 |
73 829 |
347 795 |
69 486 |
417 281 |
|
Dec-19 |
72 110 |
56 553 |
— |
(13 859) |
16 558 |
23 491 |
9 122 |
(1 273) |
3 631 |
5 230 |
171 563 |
— |
7 257 |
6 398 |
6 993 |
4 824 |
25 472 |
197 035 |
82 831 |
279 866 |
|
Capital expenditure |
($'000) |
Dec-20 |
18 114 |
28 551 |
13 418 |
5 584 |
13 856 |
2 043 |
688 |
11 252 |
5 388 |
— |
98 894 |
2 080 |
1 490 |
72 |
393 |
5 169 |
9 204 |
108 098 |
35 991 |
144 089 |
|
Dec-19 |
20 255 |
38 911 |
— |
8 062 |
11 399 |
2 110 |
1 148 |
13 042 |
6 226 |
321 |
101 474 |
— |
— |
201 |
279 |
1 853 |
2 333 |
103 807 |
48 035 |
151 842 |
|
Cash operating cost |
- $/oz |
Dec-20 |
1 010 |
1 383 |
1 002 |
1 291 |
1 079 |
1 083 |
1 381 |
1 575 |
1 599 |
1 381 |
1 217 |
894 |
1 029 |
932 |
944 |
1 321 |
1 027 |
1 183 |
731 |
1 141 |
|
Dec-19 |
925 |
1 069 |
— |
1 738 |
1 144 |
897 |
1 170 |
1 422 |
1 323 |
1 133 |
1 140 |
— |
1 122 |
927 |
768 |
1 221 |
1 056 |
1 131 |
513 |
1 057 |
|
Cash operating costs |
- $/t |
Dec-20 |
250 |
190 |
241 |
232 |
137 |
283 |
155 |
168 |
188 |
174 |
198 |
4 |
12 |
4 |
4 |
29 |
7 |
38 |
26 |
37 |
|
Dec-19 |
236 |
157 |
— |
239 |
143 |
275 |
132 |
155 |
142 |
142 |
176 |
— |
11 |
4 |
4 |
28 |
8 |
56 |
19 |
50 |
Cash operating cost
and Capital |
- $/oz |
Dec-20 |
1 162 |
1 640 |
1 225 |
1 366 |
1 301 |
1 143 |
1 403 |
1 918 |
1 843 |
1 381 |
1 395 |
974 |
1 057 |
937 |
988 |
1 602 |
1 104 |
1 343 |
1 252 |
1 334 |
|
Dec-19 |
1 083 |
1 339 |
— |
1 890 |
1 361 |
947 |
1 199 |
1 779 |
1 550 |
1 150 |
1 328 |
— |
1 122 |
942 |
795 |
1 313 |
1 092 |
1 303 |
1 093 |
1 278 |
|
All-in sustaining cost |
- $/oz |
Dec-20 |
1 164 |
1 641 |
1 388 |
1 399 |
1 217 |
1 172 |
1 442 |
1 859 |
1 866 |
1 497 |
1 410 |
1 263 |
1 116 |
936 |
980 |
1 627 |
1 196 |
1 372 |
1 361 |
1 370 |
|
Dec-19 |
1 073 |
1 344 |
— |
1 893 |
1 350 |
987 |
1 242 |
1 733 |
1 537 |
1 190 |
1 330 |
— |
1 107 |
943 |
783 |
1 353 |
1 097 |
1 306 |
1 113 |
1 283 |
|
Operating free cash flow margin² |
% |
Dec-20 |
34 |
% |
5 |
% |
31 |
% |
22 |
% |
25 |
% |
34 |
% |
13 |
% |
(8) |
% |
(7) |
% |
20 |
% |
20 |
% |
32 |
% |
38 |
% |
42 |
% |
43 |
% |
7 |
% |
33 |
% |
22 |
% |
28 |
% |
22 |
% |
|
Dec-19 |
29 |
% |
10 |
% |
— |
% |
(24) |
% |
10 |
% |
36 |
% |
16 |
% |
(29) |
% |
(4) |
% |
20 |
% |
11 |
% |
— |
% |
25 |
% |
32 |
% |
45 |
% |
8 |
% |
24 |
% |
12 |
% |
17 |
% |
13 |
% |
|
|
|
|
¹Includes a non-cash consideration related to the streaming
arrangement (refer to note 12) (Dec-20:US$7.312m) under Mine Waste
Solutions, excluded from the gold price calculation. |
|
²Excludes run of mine costs for Kalgold (Dec-20:-US$0.361m,
Dec-19:-US$0.238m) and Hidden Valley (Dec-20:-US$1.969m,
Dec-19:-US$12.413m). |
|
³The Unisel operation closed in October 2020. |
CONDENSED CONSOLIDATED INCOME STATEMENT (RAND)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
Year ended |
|
Figures in million |
Notes |
31 December
2020
(Reviewed) |
31 December
2019
(Reviewed) |
30 June
2020
(Audited) |
|
Revenue |
4 |
21 588 |
|
15 477 |
|
29 245 |
|
|
Cost of sales |
5 |
(16 922) |
|
(13 498) |
|
(25 908) |
|
|
Production costs |
|
(14 808) |
|
(11 366) |
|
(22 048) |
|
|
Amortisation and depreciation |
|
(1 816) |
|
(1 926) |
|
(3 508) |
|
|
|
|
|
|
|
Other items |
|
(298) |
|
(206) |
|
(352) |
|
|
|
|
|
|
|
Gross profit |
|
4 666 |
|
1 979 |
|
3 337 |
|
|
Corporate, administration and other expenditure |
6 |
(535) |
|
(339) |
|
(611) |
|
|
Exploration expenditure |
|
(76) |
|
(127) |
|
(205) |
|
|
Gains/(losses) on derivatives |
10 |
902 |
|
157 |
|
(1 678) |
|
|
Foreign exchange translation gain/(loss) |
1,11
|
652 |
|
36 |
|
(892) |
|
|
Other operating expenses |
1 |
(45) |
|
(72) |
|
(309) |
|
|
Operating profit/(loss) |
|
5 564 |
|
1 634 |
|
(358) |
|
|
Gain on bargain purchase |
13 |
1 153 |
|
— |
|
— |
|
|
Acquisition costs |
13 |
(111) |
|
— |
|
(45) |
|
|
Share of profits from associates |
|
65 |
|
51 |
|
94 |
|
|
Investment income |
|
240 |
|
144 |
|
375 |
|
|
Finance costs |
|
(327) |
|
(340) |
|
(661) |
|
|
Profit/(loss) before taxation |
|
6 584 |
|
1 489 |
|
(595) |
|
|
Taxation |
7 |
(772) |
|
(157) |
|
(255) |
|
|
Current taxation |
|
(325) |
|
(60) |
|
(58) |
|
|
Deferred taxation |
|
(447) |
|
(97) |
|
(197) |
|
|
|
|
|
|
|
Net profit/(loss) for the period |
|
5 812 |
|
1 332 |
|
(850) |
|
|
Attributable to: |
|
|
|
|
|
Non-controlling interest |
|
27 |
|
— |
|
28 |
|
|
Owners of the parent |
|
5 785 |
|
1 332 |
|
(878) |
|
|
Earnings/(loss) per ordinary share (cents) |
8 |
|
|
|
|
Basic earnings/(loss) |
|
966 |
|
249 |
|
(164) |
|
|
Diluted earnings/(loss) |
|
943 |
|
240 |
|
(166) |
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
|
|
|
|
The condensed consolidated financial statements for the six months
ended 31 December 2020 have been prepared by Harmony Gold
Mining Company Limited’s corporate reporting team headed by
Michelle Kriel CA(SA). This process was supervised by the financial
director, Boipelo Lekubo CA(SA) and approved by the board of
Harmony Gold Mining Company Limited on 23 February 2021. These
condensed consolidated financial statements have been reviewed by
the group's external auditors, PricewaterhouseCoopers
Incorporated.
|
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(RAND)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
Year ended |
|
Figures in million |
Notes |
31 December
2020
(Reviewed) |
31 December
2019
(Reviewed)
Restated* |
30 June
2020
(Audited) |
|
Net profit/(loss) for the period |
|
5 812 |
|
1 332 |
|
(850) |
|
|
Other comprehensive income for the period, net of income
tax |
|
1 740 |
|
(244) |
|
(1 958) |
|
|
Items that may be reclassified subsequently to profit or
loss: |
|
1 729 |
|
(263) |
|
(1 998) |
|
|
Foreign exchange translation gain/(loss) |
|
(1 123) |
|
(85) |
|
1 199 |
|
|
Remeasurement of gold hedging contracts |
10 |
2 852 |
|
(178) |
|
(3 197) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Items that will not be reclassified to profit or loss: |
|
11 |
|
19 |
|
40 |
|
|
Gain on assets measured at fair value through other comprehensive
income |
|
11 |
|
19 |
|
25 |
|
|
Remeasurement of retirement benefit obligation |
|
|
|
|
|
Actuarial gain/(loss) recognised during the period |
|
— |
|
— |
|
17 |
|
|
Deferred taxation thereon |
|
— |
|
— |
|
(2) |
|
|
|
|
|
|
|
Total comprehensive income for the period |
|
7 552 |
|
1 088 |
|
(2 808) |
|
|
Attributable to: |
|
|
|
|
|
Non-controlling interest |
|
42 |
|
— |
|
12 |
|
|
Owners of the parent |
|
7 510 |
|
1 088 |
|
(2 820) |
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
*Refer to note 2 for detail. The restated amounts are
unaudited.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(RAND)
FOR THE SIX MONTHS ENDED 31 DECEMBER 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figures in million |
|
Share capital |
Accumulated loss |
Other
reserves |
Non-controlling interest |
Total |
|
Balance – 1 July 2020 |
|
32 937 |
|
(12 583) |
|
3 017 |
|
4 |
|
23 375 |
|
|
Share issue costs |
|
(2) |
|
— |
|
— |
|
— |
|
(2) |
|
|
Share-based payments |
|
— |
|
— |
|
90 |
|
— |
|
90 |
|
|
Partial purchase of non-controlling interest |
|
— |
|
— |
|
(4) |
|
(1) |
|
(5) |
|
|
Net profit for the period |
|
— |
|
5 785 |
|
— |
|
27 |
|
5 812 |
|
|
Other comprehensive income for the period |
|
— |
|
— |
|
1 725 |
|
15 |
|
1 740 |
|
|
Dividends paid |
|
— |
|
— |
|
— |
|
(1) |
|
(1) |
|
|
Balance – 31 December 2020 |
|
32 935 |
|
(6 798) |
|
4 828 |
|
44 |
|
31 009 |
|
|
Balance – 1 July 2019 |
|
29 551 |
|
(11 710) |
|
4 773 |
|
— |
|
22 614 |
|
|
Share-based payments |
|
— |
|
— |
|
90 |
|
— |
|
90 |
|
|
Recognition of non-controlling interest |
|
— |
|
5 |
|
— |
|
(5) |
|
— |
|
|
Net profit for the period |
|
— |
|
1 332 |
|
— |
|
— |
|
1 332 |
|
|
Other comprehensive income for the period |
|
— |
|
— |
|
(244) |
|
— |
|
(244) |
|
|
Balance – 31 December 2019 |
|
29 551 |
|
(10 373) |
|
4 619 |
|
(5) |
|
23 792 |
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
CONDENSED CONSOLIDATED BALANCE SHEET (RAND)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
At |
At |
At |
|
Figures in million |
Notes |
31 December
2020
(Reviewed) |
30 June
2020
(Audited) |
31 December
2019
(Reviewed) |
|
ASSETS |
|
|
|
|
|
Non-current assets |
|
|
|
|
|
Property, plant and equipment |
9 |
35 180 |
|
29 186 |
|
28 209 |
|
|
Intangible assets |
9 |
542 |
|
536 |
|
534 |
|
|
Restricted cash |
|
137 |
|
107 |
|
100 |
|
|
Restricted investments |
13 |
4 933 |
|
3 535 |
|
3 386 |
|
|
Investments in associates |
|
149 |
|
146 |
|
102 |
|
|
Inventories |
|
47 |
|
47 |
|
43 |
|
|
Deferred tax assets |
7 |
312 |
|
531 |
|
— |
|
|
Other non-current assets |
|
382 |
|
388 |
|
372 |
|
|
Derivative financial assets |
10 |
613 |
|
50 |
|
203 |
|
|
Total non-current assets |
|
42 295 |
|
34 526 |
|
32 949 |
|
|
Current assets |
|
|
|
|
|
Inventories |
|
2 199 |
|
2 421 |
|
1 953 |
|
|
Restricted cash |
|
72 |
|
62 |
|
55 |
|
|
Trade and other receivables |
|
1 485 |
|
1 308 |
|
1 311 |
|
|
Derivative financial assets |
10 |
718 |
|
18 |
|
536 |
|
|
Cash and cash equivalents |
|
4 217 |
|
6 357 |
|
1 250 |
|
|
Total current assets |
|
8 691 |
|
10 166 |
|
5 105 |
|
|
Total assets |
|
50 986 |
|
44 692 |
|
38 054 |
|
|
EQUITY AND LIABILITIES |
|
|
|
|
|
Share capital and reserves |
|
|
|
|
|
Attributable to equity holders of the parent company |
|
30 965 |
|
23 371 |
|
23 797 |
|
|
Share capital |
|
32 935 |
|
32 937 |
|
29 551 |
|
|
Other reserves |
|
4 828 |
|
3 017 |
|
4 619 |
|
|
Accumulated loss |
|
(6 798) |
|
(12 583) |
|
(10 373) |
|
|
Non-controlling interest |
|
44 |
|
4 |
|
(5) |
|
|
Total equity |
|
31 009 |
|
23 375 |
|
23 792 |
|
|
Non-current liabilities |
|
|
|
|
|
Deferred tax liabilities |
7 |
1 810 |
|
996 |
|
750 |
|
|
Provision for environmental rehabilitation |
13 |
4 752 |
|
3 408 |
|
3 151 |
|
|
Provision for silicosis settlement |
|
663 |
|
717 |
|
737 |
|
|
Retirement benefit obligation |
|
226 |
|
193 |
|
205 |
|
|
Borrowings |
11 |
4 407 |
|
7 463 |
|
5 454 |
|
|
Contingent consideration liability |
13 |
237 |
|
— |
|
— |
|
|
Other non-current liabilities |
|
127 |
|
101 |
|
86 |
|
|
Derivative financial liabilities |
10 |
115 |
|
879 |
|
162 |
|
|
Streaming contract liability |
12 |
933 |
|
— |
|
— |
|
|
Total non-current liabilities |
|
13 270 |
|
13 757 |
|
10 545 |
|
|
Current liabilities |
|
|
|
|
|
|
|
|
|
|
Provision for silicosis settlement |
|
175 |
|
175 |
|
175 |
|
|
Borrowings |
11 |
390 |
|
255 |
|
86 |
|
|
|
|
|
|
|
Trade and other payables |
13 |
4 125 |
|
3 006 |
|
2 925 |
|
|
Derivative financial liabilities |
10 |
1 627 |
|
4 124 |
|
531 |
|
|
Streaming contract liability |
12 |
390 |
|
— |
|
— |
|
|
Total current liabilities |
|
6 707 |
|
7 560 |
|
3 717 |
|
|
Total equity and liabilities |
|
50 986 |
|
44 692 |
|
38 054 |
|
The accompanying notes are an integral part of these condensed
financial statements
CONDENSED CONSOLIDATED CASH FLOW STATEMENT (RAND)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
Year ended |
|
Figures in million |
Notes |
31 December
2020
(Reviewed) |
31 December
2019
(Reviewed) |
30 June
2020
(Audited) |
|
CASH FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
Cash generated by operations |
|
6 070 |
|
2 928 |
|
5 031 |
|
|
Dividends received |
|
45 |
|
— |
|
— |
|
|
Interest received |
|
33 |
|
37 |
|
86 |
|
|
Interest paid |
|
(171) |
|
(164) |
|
(370) |
|
|
Income and mining taxes paid |
7 |
(198) |
|
(68) |
|
(24) |
|
|
Cash generated from operating activities |
|
5 779 |
|
2 733 |
|
4 723 |
|
|
CASH FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
Increase in restricted cash |
|
(23) |
|
(15) |
|
(21) |
|
|
Amounts refunded from restricted investments |
|
34 |
|
2 |
|
5 |
|
|
Redemption of preference shares from associates |
|
36 |
|
59 |
|
59 |
|
|
Acquisition of the Mponeng operations and related
assets |
13 |
(3 363) |
|
— |
|
— |
|
|
Capital distributions from investments |
|
8 |
|
— |
|
7 |
|
|
Proceeds from disposal of property, plant and equipment |
|
4 |
|
1 |
|
2 |
|
|
Additions to property, plant and equipment |
15 |
(2 366) |
|
(2 270) |
|
(3 610) |
|
|
Cash utilised by investing activities |
|
(5 670) |
|
(2 223) |
|
(3 558) |
|
|
CASH FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
Borrowings raised |
11 |
— |
|
4 741 |
|
6 541 |
|
|
Borrowings repaid |
11 |
(2 126) |
|
(5 009) |
|
(5 661) |
|
|
Proceeds from the issue of shares |
|
— |
|
— |
|
3 466 |
|
|
Share issue costs |
|
(2) |
|
— |
|
— |
|
|
Lease payments |
|
(30) |
|
(17) |
|
(38) |
|
|
Partial repurchase of non-controlling interest |
|
(5) |
|
— |
|
— |
|
|
Dividends paid to non-controlling interests |
|
(1) |
|
— |
|
(3) |
|
|
Cash generated from/(utilised by) financing activities |
|
(2 164) |
|
(285) |
|
4 305 |
|
|
Foreign currency translation adjustments |
|
(85) |
|
32 |
|
(106) |
|
|
Net increase/(decrease) in cash and cash equivalents |
|
(2 140) |
|
257 |
|
5 364 |
|
|
Cash and cash equivalents – beginning of period |
|
6 357 |
|
993 |
|
993 |
|
|
Cash and cash equivalents – end of period |
|
4 217 |
|
1 250 |
|
6 357 |
|
The accompanying notes are an integral part of these condensed
consolidated financial statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL
STATEMENTS
FOR THE SIX MONTHS ENDED 31 DECEMBER 2020 (RAND)
1. ACCOUNTING POLICIES
Basis of accounting
The condensed consolidated financial statements for the interim
reporting period ended 31 December 2020 has been prepared in
accordance with International Accounting Standard IAS 34
Interim Financial Reporting,
the recognition and measurement requirements of International
Financial Reporting Standards (IFRS) as issued by the International
Accounting Standards Board, the SAICA Financial Reporting Guides as
issued by the Accounting practices Committee, Financial Reporting
Pronouncements as issued by the Financial Reporting Standards
Council, JSE Listings Requirements and in the manner required by
the Companies Act no. 71 of 2008 of South Africa. The interim
report does not include all the notes of the type normally included
in an annual financial report. Accordingly, this report is to be
read in conjunction with the annual report for the year ended 30
June 2020 and any public announcements made by Harmony during the
interim reporting period. The accounting policies adopted are
consistent with those of the previous financial year and
corresponding interim reporting period. There were no new
standards, amendments to standards or interpretations that became
effective that had a material impact on the group's results or
financial position.
Foreign exchange translation gain/(loss) has been presented
separately in the income statement. The amounts were previously
included as part of other operating income/(expenses). Other
operating income/(expenses) has been represented in all periods
presented.
The condensed consolidated financial statements have been prepared
on a going concern basis.
2. RESTATEMENT OF DECEMBER 2019 FINANCIAL
RESULTS
Subsequent to the release of the financial results for the six
months ended 31 December 2019 management identified a
classification error on the 'Foreign exchange translation
gain/(loss)', the 'Unrealised gain/(loss) on gold contracts' and
the 'Gain on asset measured at fair value through other
comprehensive income' line items in the statement of other
comprehensive income. The impact of the correction of the error on
the December 2019 statement of comprehensive income is disclosed
below:
Statement of comprehensive income
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the six months ended 31 December 2019 |
|
Figures in million |
Previously
reported |
Correction |
Restated |
|
Other comprehensive income for the period, net of income
tax |
(244) |
|
— |
|
(244) |
|
|
Items that may be reclassified subsequently to profit or
loss: |
(244) |
|
(19) |
|
(263) |
|
|
Foreign exchange translation gain/(loss) |
(402) |
|
317 |
|
(85) |
|
|
Gain on assets measured at fair value through other comprehensive
income |
19 |
|
(19) |
|
— |
|
|
Remeasurement of gold hedging contracts |
|
|
|
|
Unrealised gain/(loss) on gold
contracts |
(227) |
|
(317) |
|
(544) |
|
|
Released to revenue |
317 |
|
— |
|
317 |
|
|
Deferred taxation thereon |
49 |
|
— |
|
49 |
|
|
|
|
|
|
Items that will not be reclassified to profit or loss: |
— |
|
19 |
|
19 |
|
|
Gain on assets measured at fair value through other comprehensive
income |
— |
|
19 |
|
19 |
|
|
|
|
|
|
The error, and subsequent correction, net each other off within
other comprehensive income and are limited to the line items
mentioned. The net profit, other comprehensive income and total
comprehensive income line items for the period were not impacted,
nor were any earnings amounts, the cash flow statement or any other
statement or other disclosure within the financial
statements.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
continued
FOR THE SIX MONTHS ENDED 31 DECEMBER 2020 (RAND)
3. COVID-19 IMPACT
South Africa
The national lockdown that began on 27 March 2020 to curb the
spread of the Coronavirus (COVID-19) and allow the country time in
which to prepare for the demands the pandemic would have on its
health care system is still in place. Harmony continues with the
risk assessment-based COVID-19 prevention strategy which was rolled
out across all of its operations before the lockdown was announced.
This approach has allowed management to identify, evaluate and rank
the hazards associated with any exposures to COVID-19 and potential
infections. It has allowed the company to reduce or eliminate the
probability of an employee contracting COVID-19 and to limit the
severity should an employee be infected.
Harmony’s COVID-19 Standard Operating Procedure (SOP) has been
adopted and rolled out, ensuring a safe return to work and work
environment for each of its employees. The SOP was informed by
guidelines provided by the Department of Mineral Resources and
Energy, the National Council for Infectious Diseases and the World
Health Organisation.
All requisite staffing, facilities and equipment are in place to
ensure continuous rigorous screening of employees at work, as well
as isolate or quarantine employees infected by or exposed to
COVID-19, with subsequent testing and treatment. Management adapt
the approach continuously as more information becomes available and
new best practices evolve.
Papua New Guinea
Harmony’s Hidden Valley mine in Papua New Guinea has continued to
operate during the COVID-19 State of Emergency declared in that
country, however restrictions on international travel and the
implementation of strict COVID-19 control protocols, required
longer employee rosters, which includes rostered days off on site
to manage fatigue, which has negatively impacted productivity. Work
is being done to mitigate this impact. The delivery of essential
supplies to the mine has continued, with strict isolation control
measures in place. All non-essential staff have been removed from
site and certain activities and expenditures have been curtailed to
focus on safe, profitable operations during the pandemic. Protocols
were adopted to allow the safe movement of personnel to and from
site during this period.
Vaccines
During November and December 2020, several pharmaceutical companies
announced the successful development of vaccines against the
SARS-COV-2 virus. At the time, this was considered a crucial
tipping point in protecting people and preventing infections in
future. However, the subsequent discovery of several mutations, or
variants, worldwide is very concerning, given how quickly these
occurred and whether the vaccines would still be effective against
these variants.
Governments around the world are rolling out vaccine programmes,
including South Africa. The initial draft of the roll-out approach
includes essential workers in the second tier. South African miners
have been classified as essential workers and would therefore be
eligible for vaccination, along with other people in this category,
following the vaccination of healthcare workers. Harmony is working
together with its peers in the mining industry to consider options
for the roll-out and if there are opportunities to extend this to
the communities that they operate in.
Due to the high level of uncertainty and lack of official
information, management is unable to reliably estimate when the
roll-out would occur. Possible estimations of timelines for a
government-led roll-out would be for the second tier to be
vaccinated by December 2021, at best, with a possible worst-case by
June 2022. This is without considering any potential negation of
the effectiveness by the current and future variants.
Financial risk management
The effects of COVID-19 and other macro developments have increased
financial risks such as exchange rate, interest rate and commodity
price volatility, while also impacting on liquidity and credit
risk. Management has put various measures in place to mitigate
and/or manage the risks and continues monitoring the situation
closely. Refer to note 14 for additional detail.
Market impact
Exchange rates
Due to the impact of the COVID-19 pandemic, the Rand has weakened
significantly from the beginning of the 2020 calendar year. The
Rand has since recovered from its weakest level at the beginning of
April 2020 of R19.05/US$ to close at R14.69 on
31 December 2020. The Rand strengthened against the
Australian dollar from R11.96/A$1 at 30 June 2020 to R11.31/A$1 at
31 December 2020. In addition, the Papua New Guinea Kina weakened
against the Australian dollar from PGK2.38/A$1 at 30 June 2020 to
PGK2.74/A$1 at 31 December 2020. These movements in the currencies
expose the group's operations to foreign currency gains and losses
on foreign-denominated receivables and liabilities, including
derivatives, and also impact the group’s translation of its
international operating results and net assets into its Rand
presentation currency, which resulted in a foreign exchange
translation loss of R1.1 billion in other comprehensive income. In
addition, a net foreign exchange translation gain of
R652 million was recognised in profit or loss for the six
months ended 31 December 2020, primarily on the US$ borrowings.
With the announcements made during November and December 2020 on
the successful development of vaccines against the SARS-COV-2
virus, a marked strengthening of the Rand against the US$ has
occurred. The R/US$ exchange rate at 30 June 2020 and 31 October
2020 was R17.32 and R16.24, respectively and subsequently the
average R/US$ exchange rates for November and December 2020 were
R15.51 and R14.85, respectively.
Commodity prices
Gold prices have rallied to an all-time high following the global
economic fallout of COVID-19 and ongoing geopolitical uncertainty
supporting its safe haven status with investors. The US dollar gold
price received increased by 19% from $1 447 per ounce in
December 2019 to $1 716 per ounce for the December 2020
period. The Rand gold price received increased by 31% from
R683 158 per kilogram in December 2019 to R896 587 per
kilogram for the December 2020 period. Following the announcements
on the successful development of vaccines against the SARS-COV-2
virus in November and December 2020, spot gold prices experienced a
pull-back, falling at one stage to $1 777 per ounce towards the end
of November 2020. This drop in spot gold prices was subsequently
reversed during December 2020 with prices rising as high as $1 894
per ounce as a result of the second wave of COVID-19 infections
being experienced across the world.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
continued
FOR THE SIX MONTHS ENDED 31 DECEMBER 2020 (RAND)
3. COVID-19 IMPACT
continued
Market impact
continued
Interest rates
The United States of America (US) as well as South African market
interest rates remain stable at the recent low levels and are
expected to remain low for some time to come, as economies all over
the world are still impacted by the economic impact of the COVID-19
pandemic.
Since the US Federal Reserve dropped the Fed Funds rate to a
maximum of 0.25% in March 2020, there have been no changes to the
rate. Similarly in South Africa, the South African Reserve Bank
(SARB) has kept the repo rate at a low of 3.50% since reducing it
to that level on 23 July 2020. In the first half of 2020 the SARB
lowered the repo rate by 2.75% from 6.50% to 3.75%. The expectation
is for interest rates to remain low as inflation is well within the
target band.
Impact on production
During the initial phase of the South African national lockdown,
the underground operations were placed on care and maintenance and
employees returned to their homes across the country and in other
SADC countries. On 1 May 2020, the underground operations were
granted concessions to start producing at a maximum capacity of 50%
and as of 1 June 2020, operational restrictions were lifted further
to allow the mining industry to operate at 100% of its labour
capacity. By 1 September 2020, Harmony had completed the recall of
all operational employees.
Management continuously monitors the crew availability and adapts
the production models accordingly. The December break was shortened
to allow for a catch-up on development which had been delayed
during Level 4 & 5 of the national lockdown. It also allowed
for extra production days.
Due to the protocols put in place to deal with an employee who has
potentially been exposed to the virus, the disruption to production
has been minimal. The reduction of the quarantine time from 14 to
10 days has also seen a quicker return after a potential exposure.
The use of the rapid antigen test during the January 2021
return-to-work process significantly improved the process as
employees could be cleared for work within an hour of testing.
Those with a positive test were immediately isolated for further
case management.
Critical estimates and judgements
There have been no significant changes to the critical estimates
and judgements for the impact of COVID-19 as at 30 June 2020. With
the fair value exercise that is required for the acquisition of
AngloGold Ashanti's remaining South African assets, management made
certain assumptions and estimates required in the process as at 1
October 2020. These assumptions were affected by the market
volatility at the time. Refer to note 13 for further
detail.
4. REVENUE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
Year ended |
|
Figures in million |
|
31 December
2020
(Reviewed) |
31 December
2019
(Reviewed) |
30 June
2020
(Audited) |
|
Revenue from contracts with customers |
|
23 240 |
|
15 794 |
|
30 642 |
|
|
Gold1
|
|
22 670 |
|
15 326 |
|
29 704 |
|
|
Silver2
|
|
510 |
|
409 |
|
839 |
|
|
Uranium2
|
|
60 |
|
59 |
|
99 |
|
|
Consideration from streaming contract3
|
|
119 |
|
— |
|
— |
|
|
Hedging loss4
|
|
(1 771) |
|
(317) |
|
(1 397) |
|
|
Total revenue5
|
|
21 588 |
|
15 477 |
|
29 245 |
|
1 The
increase is mainly due to the acquisition of the Mponeng operations
and related assets and a higher gold price. The acquired operations
contributed R2.8 billion in revenue during the period. In addition,
the average gold price received increased by 31% to R896 587/kg
from R683 158/kg in the December 2019 six months.
2 Silver
is derived from the Hidden Valley mine in Papua New Guinea. Uranium
is derived from the Moab Khotsong operation.
3 Relates
to the recognition of non-cash consideration recognised as part of
revenue for the streaming arrangement. Refer to note 12 for further
information.
4 Relates
to the realised effective portion of the hedge-accounted gold
derivatives. Refer to note 10 for further information.
5 A
geographical analysis of revenue is provided in the segment
report.
The points of transfer of control are as follows:
|
|
|
|
|
|
|
•Gold:
South Africa (excluding streaming contract)
|
Gold is delivered and certificate of sale is issued. |
|
•Gold
and silver: Hidden Valley
|
Metal is collected from Hidden Valley and a confirmation of
collection is sent to and accepted by the customer. |
|
•Uranium
|
Confirmation of transfer is issued. |
|
•Streaming
contract
|
Gold is delivered and credited into the Franco-Nevada designated
gold account. |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
continued
FOR THE SIX MONTHS ENDED 31 DECEMBER 2020 (RAND)
5. COST OF SALES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
Year ended |
|
Figures in million |
31 December
2020
(Reviewed) |
31 December
2019
(Reviewed) |
30 June
2020
(Audited) |
|
Production costs – excluding royalty1
|
14 399 |
|
11 233 |
|
21 721 |
|
|
Royalty expense2
|
409 |
|
133 |
|
327 |
|
|
Amortisation and depreciation3
|
1 816 |
|
1 926 |
|
3 508 |
|
|
Rehabilitation expenditure |
3 |
|
47 |
|
47 |
|
|
Care and maintenance cost of restructured shafts |
72 |
|
73 |
|
146 |
|
|
Employment termination and restructuring costs4
|
151 |
|
26 |
|
40 |
|
|
Share-based payments |
64 |
|
64 |
|
130 |
|
|
Other |
8 |
|
(4) |
|
(11) |
|
|
Total cost of sales |
16 922 |
|
13 498 |
|
25 908 |
|
1 Production
costs increased during the December 2020 period mainly due to the
Mponeng operations and related assets acquisition which amounted to
R2.0 billion. The remaining increase is mainly attributable to
annual and inflationary increases related to labour costs,
consumables and services.
2 The
royalty expense increased during the December 2020 period due to
increased profitability as a result of the higher gold
price.
3 The
completion of Stage 5 at Hidden Valley during the December 2019
quarter is the primary contributor for the period on period
decrease.
4
The increase is due to a new programme for voluntary and medical
severance packages offered to employees.
6. CORPORATE, ADMINISTRATION AND OTHER
EXPENDITURE
The amount for the six months ended 31 December 2020 increased from
31 December 2019 mainly due to higher management incentive payments
and R96 million for the integration cost related to the
acquisition of the Mponeng operations and related
assets.
7. TAXATION
(a) Current taxation
The increase in gains on foreign exchange derivative contracts and
foreign exchange gains as well as the increase in revenue increased
taxable profits and consequently the current tax expense during the
December 2020 period.
(b) Deferred taxation
Deferred tax expense
The R350 million increase in the deferred tax expense during the
December 2020 period is attributable to increased net taxable
temporary differences due primarily to the utilisation of the
assessed losses and unredeemed capital expenditure in certain
companies as a result of higher taxable profits.
Deferred tax balance
The increase in the deferred tax liability is due in part to the
deferred tax balances for the Mponeng operations and related
assets, with the exception of Chemwes (see below). This increase
amounted to R251 million at acquisition date. The deferred tax
rates for Golden Core Trade and Invest (Pty) Ltd (Mponeng) and
Chemwes (Pty) Ltd (Chemwes) are 10.1% and 18.0% respectively. The
inclusion of the Vaal River Closure business into Moab increased
its rate from 17.3% to 20.8% which also contributed to the increase
in the liability balance. The increase in taxable temporary
differences, as discussed above in the deferred tax expense, and
changes in the net derivative asset/(liability) position from 30
June 2020 had an impact on the majority of the companies within the
group.
As at 30 June 2020 a deferred tax asset was recognised in Harmony
Company and Randfontein Estates. Subsequently, the net deferred tax
asset balance has decreased due to the utilisation of assessed
losses, unredeemed capital expenditures and a decrease in the net
derivative liability. Harmony Company's deferred tax asset balance
reduced to R223 million and Randfontein Estates' asset became a
deferred tax liability.
The net deferred tax asset position of Harmony Company is as
follows:
|
|
|
|
|
|
|
|
|
|
Figures in million |
31 December
2020
(Reviewed) |
30 June
2020
(Audited) |
|
Deductible temporary differences |
750 |
1 079 |
|
Assessed losses |
— |
574 |
|
Total |
750 |
1 653 |
|
Deferred tax rate |
29.8 |
% |
29.8 |
% |
|
Deferred tax asset |
223 |
492 |
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
continued
FOR THE SIX MONTHS ENDED 31 DECEMBER 2020 (RAND)
7. TAXATION
continued
Furthermore, the newly acquired Chemwes company is in a net
deferred tax asset position as disclosed below:
|
|
|
|
|
|
|
Figures in million |
31 December
2020
(Reviewed) |
|
Deductible temporary differences |
491 |
|
Total |
491 |
|
Deferred tax rate |
18.0 |
% |
|
Deferred tax asset |
88 |
Due to the higher short-term Rand gold price it is probable that
sufficient future taxable profits will be available against which
the remaining deductible temporary differences existing at the
reporting date can be utilised. Consequently, a deferred tax asset
continues to be recognised for Harmony Company and the Chemwes
Company.
8. EARNINGS/(LOSS) PER ORDINARY
SHARE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
Year ended |
|
|
|
31 December
2020
(Reviewed) |
31 December
2019
(Reviewed) |
30 June
2020
(Audited) |
|
Weighted average number of shares (million) |
|
599 |
|
535 |
|
535 |
|
|
Weighted average number of diluted shares (million) |
|
613 |
|
549 |
|
547 |
|
|
Total earnings/(loss) per share (cents): |
|
|
|
|
|
Basic earnings/(loss) |
|
966 |
|
249 |
|
(164) |
|
|
Diluted earnings/(loss) |
|
943 |
|
240 |
|
(166) |
|
|
Headline earnings/(loss) |
|
775 |
|
249 |
|
(154) |
|
|
Diluted headline earnings/(loss) |
|
758 |
|
240 |
|
(157) |
|
Reconciliation of headline earnings:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six months ended |
Year ended |
|
Figures in million |
|
31 December
2020
(Reviewed) |
31 December
2019
(Reviewed) |
30 June
2020
(Audited) |
|
Net profit/(loss) for the period attributable to owners of the
parent |
|
5 785 |
|
1 332 |
|
(878) |
|
|
Adjusted for: |
|
|
|
|
|
Gain on bargain purchase1
|
|
(1 153) |
|
— |
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
Profit on sale of property, plant and equipment |
|
(4) |
|
(1) |
|
(2) |
|
|
Taxation effect on profit on sale of property, plant and
equipment |
|
1 |
|
— |
|
— |
|
|
Loss on scrapping of property, plant and equipment |
|
19 |
|
— |
|
62 |
|
|
Taxation effect on loss on scrapping of property, plant and
equipment |
|
(4) |
|
— |
|
(10) |
|
|
Headline earnings/(loss) |
|
4 644 |
|
1 331 |
|
(828) |
|
1
There is no tax effect on this item.
9. PROPERTY, PLANT AND EQUIPMENT AND
INTANGIBLE ASSETS
The major movements in property, plant and equipment are related to
the acquisition of AngloGold Ashanti Limited's remaining South
African producing assets and related liabilities Refer to note 13
for further information on the acquisition.
At 31 December 2020, management performed an assessment for
potential indicators of impairment of assets in terms of IAS
36,
Impairment of Assets.
The following operations were considered to have such indicators
due to the specific circumstances experienced during the six months
since the last impairment assessment:
•Target
1 – Production was severely hampered by a collapse of
infrastructure and spillover issues resulting from the collapse. A
revised life-of-mine plan for the remaining portion of FY21 has
been approved by the board of directors.
•Bambanani
– Grade was lower than planned due to the interception of a lower
grade block sooner than expected. Seismicity is a risk due to the
nature of the mining.
•Joel
– Grade and kilograms produced is the main reason for the loss for
the six months, due to mining discipline.
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
continued
FOR THE SIX MONTHS ENDED 31 DECEMBER 2020 (RAND)
9. PROPERTY, PLANT AND EQUIPMENT AND
INTANGIBLE ASSETS
continued
These circumstances were considered to be impairment triggers and
an impairment test was performed. All key assumptions disclosed
remained the same as at 30 June 2020, with the exception of the
discount rates for Bambanani and Target 1, which were adjusted for
additional risk factors that are not included in the cash flows.
The gold price was also increased to the following
prices:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short term
Year 1 |
Medium term
Year 2 |
Medium term
Year 3 |
Long term
Year 4 |
|
Gold price (R/kg) |
938 000 |
|
895 000 |
|
805 000 |
|
700 000 |
|
The recoverable amounts of these assets have been determined on a
fair value less costs to sell basis. These are fair value
measurements classified as level 3.
Based on the impairment tests performed, no impairments were
recorded for the period under review. On assessing for a potential
reversal of previously recognised impairment losses, management
concluded, similarly to the position at 30 June 2020, that although
on an overall basis the gold price had improved from the time that
the impairment losses had been recognised, the specific
circumstances that led to the original impairments had not
reversed. Management also considered the level of uncertainty of
the impact of COVID-19 on production and therefore on the cash
flows. Due to the volatility embedded in the potential upside
driven by the higher gold prices in the short to medium term,
coupled with the fact that the factors resulting in the previously
recognised impairment losses had not reversed, management resolved
it to be appropriate for no reversal of previously recognised
impairment losses to be recorded for the period under
review.
One of the most significant assumptions that influences the
life-of-mine plans and therefore the impairment assessment is the
expected commodity prices. The sensitivity scenario of a 10%
decrease in the commodity price used in the discounted cash flow
models and the resource values used (with all other variables held
constant) would have resulted in the following impairment being
recorded as at 31 December 2020:
•Joel
– a 10% decrease in the gold price would have resulted in a R77
million impairment charge being recorded.
10. DERIVATIVE
FINANCIAL INSTRUMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Figures in million |
Rand gold hedging contracts (a) |
US$ gold hedging contracts |
US$ silver contracts |
Foreign exchange contracts |
Rand gold derivative contracts |
Total |
|
As at 31 December 2020 (Reviewed) |
|
|
|
|
|
|
|
Derivative financial assets |
811 |
|
10 |
|
— |
|
510 |
|
— |
|
1 331 |
|
|
Non-current |
508 |
|
8 |
|
— |
|
97 |
|
— |
|
613 |
|
|
Current |
303 |
|
2 |
|
— |
|
413 |
|
— |
|
718 |
|
|
Derivative financial liabilities |
(1 203) |
|
(290) |
|
(180) |
|
(8) |
|
(61) |
|
(1 742) |
|
|
Non-current |
(22) |
|
(45) |
|
(48) |
|
— |
|
— |
|
(115) |
|
|
Current |
(1 181) |
|
(245) |
|
(132) |
|
(8) |
|
(61) |
|
(1 627) |
|
|
|
|
|
|
|
|
|
Net derivative financial instruments |
(392) |
|
(280) |
|
(180) |
|
502 |
|
(61) |
|
(411) |
|
|
Unamortised day one net loss included above |
30 |
|
10 |
|
— |
|
— |
|
— |
|
40 |
|
|
Unrealised losses included in other reserves, net of
tax |
287 |
|
271 |
|
— |
|
— |
|
— |
|
558 |
|
|
Realised losses included in revenue |
(1 595) |
|
(176) |
|
— |
|
— |
|
— |
|
(1 771) |
|
|
Unrealised gains/(losses) on gold contracts recognised in other
comprehensive income |
1 670 |
|
(164) |
|
— |
|
— |
|
— |