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Harmony financial results for the quarter and year ended June 2007

Harmony Gold Mining Company Limited (NYSE/NASDAQ:HMY, JSE:HAR) today announced headline earnings improved to 43 cents per SA share for the 2007 financial year compared to a headline loss of 269 SA cents per share for the 2006 financial year. A headline loss of 133 SA cents per share is however reported for the June 2007 quarter compared to a headline profit of 58 SA cents per share in the March 2007 quarter.

US$ headline earnings improved from a loss of 42 cents per share in the 2006 financial year to a profit of 6 cents per share for the 2007 financial year.

Total operating profit decreased to R39 million (R869 million) quarter on quarter.

A net profit of R341 million was reported for FY07. The June 2007 quarter net loss was R653 million compared to a net profit of R247 million in the March 2007 quarter.

SA underground tonnes were 6.6% lower for the June 2007 quarter due to the re-engineering of the Joel shaft and an orepass blockage at Bambanani necessitating the temporary closure of the mine and thereby losing two months worth of production. Grades at the SA underground operations were also lower at 4.76g/t (4.97g/t), mainly attributable to mining a lower grade area at Tshepong. This as well as the inaccurate cost allocation between the March and June quarters from the implementation of the accounting software resulted in a 48.8% increase cash operating costs.

An internal review of our new accounting system is currently underway to address the shortcomings of the system in order to understand the underlying issues, establish the current backlog to improve cost management. Employee’s knowledge of the system will be established and where necessary retraining will be provided to ensure the highest proficiency. We anticipate the findings of the review within the next four months.

Total cash operating costs for the Group were up at R149 180/kg (R103 608/kg) quarter on quarter and 26.8% higher year on year.

The last six months’ increasing costs have been a major concern for management and cost control is already being actively addressed at all levels of the operations, but more specifically in areas of capital expenditure and services. We will, however, have to work harder to reduce the overhead costs linked to Rand per tonne and simultaneously increase our grades by working smarter to ensure that ultimately our Rand per kilogram cost is also reduced.

The remaining 230 000 ounces of the West Australia hedge book were closed out at an average cost of A$ 809 per ounce, for a total cost of A$ 75.8 million.

We believe that Harmony’s capital projects are central to the growth of the company and we are therefore reluctant to disrupt any capital expenditure that could delay the delivery of the projects. In order to sustain the capex schedule, the Growth projects will be trimmed of all non-essential expenditure or excesses.

Graham Briggs, Acting Chief Executive of Harmony says: “The major challenges ahead for Harmony are to increase gold production and reduce costs. Our back to basics approach and focus on disciplined mining should have the management and workforce concentrate on reversing the direction of the downward trend of our production and the upward trend in our cost graphs. We have commenced our new strategy to realize our full potential. To this end, our SA operations will not be sub-divided nor are any further assets for sale.

We are aware that good management and intensive cost controls should enhance the company’s prospects. Although no dramatic upturn should be expected in the next two quarters, productivity improvements will, however, be demanded from each employee throughout the company,” concludes Briggs.

Comprehensive results for the quarter ending June 2007

For more details contact:

Graham Briggs
Acting Chief Executive
+27(0)83 265 0274

Amelia Soares
Investor Relations General Manager
+27(0)82 654 9241

Lizelle du Toit
Investor Relations Officer
+27(0)82 465 1244

Annual report

Integrated annual report 2016
Integrated annual report 2016

(HTML & PDFs)

Investor brief

Harmony Investor brief, Sep 2017
September 2017 -
Harmony Investor brief

(PDF - 6.5MB)

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