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Harmony adjusts to its changed environment

Harmony Gold Mining Company Limited (NYSE: HMY JSE: HAR) today announced its results for the quarter ended March 2004. Harmony reported cash operating profits down by 50% from R271,0 million to R134,2 million. The company managed to soften the impact of the reduced working days in South Africa over Christmas. This is evident from the only 5% reduction in tonnage. Cash working costs were well controlled, decreasing by 8% or R174,0 million to R2 049 million. This is well in line with the reduction in working days during the quarter. In R/kg terms, cash working costs increased from R75 888/kg to R82 852/kg, which was mainly due to the 16% reduction in gold produced. A 3% increase in the US Dollar gold price resulted in a R/kg gold price which was higher at R88 277/kg. In US Dollar terms, the cash operating profit margin decreased from US$43/oz (12%) to US$25/oz (7%).

“The past quarter has been one of the most challenging that we have experienced over the last three years. The company’s operating environment has beenseverely influenced by the current cycle of a low Rand /kg gold price received, which has impacted on our short term profitability. We have also in the past been exposed to downward phases in the cycles of the gold price in South African R/kg terms, which has created opportunities for growth. As management we need to recognise the cycles and take the necessary action to ensure the short term viability and long term sustainability of our operations,” commented Bernard Swanepoel, Chief Executive.

A closer analysis of a breakdown of quarterly production shows that at the gold price of R88 278/kg achieved during the quarter, 66% or 16 359 kg were mined from profitable shafts. These kilograms contributed R198,5 million in cash operating profits. The remaining 34% or 8 376 kg were mined from shafts making a loss of R64,3 million.

The impact of a lower gold price and higher costs was more severe at the older mature shafts which saw more of their ore reserves becoming uneconomical. This necessitated fairly drastic action which culminated in an announcement on 2 April 2004 in which shareholders were informed of our plans on how to structurally adjust to a changed environment. Four shafts, Welkom 1, Orkney 6, Eland (which is part of Free Gold) and Merriespruit 3 are nearing the end of their economic life and have been earmarked for closure. Two shafts, Masimong and Nyala were also given notice of a 60-day statutory review period.

“We are in consultations with the respective unions on the restructuring plans and at a meeting held on 16 April 2004, Harmony and the various unions agreed to support the establishment of a multi-party process. This joint task team has subsequently met to evaluate the financial situation of the shafts and will report back early in May 2004,” continued Bernard.

Harmony announced on 1 April 2004 that it intends to raise R1,7 billion by way of a specific issue of convertible bonds to international investors which will reduce South African interest payments by approximately R85 million per year whilst strengthening the company’s balance sheet.

On 7 April 2004 it was announced that the parties concerned (Harmony/ARMI/Avmin) had received approval from the Competition Tribunal to proceed with the range of indivisible transactions announced on 13 November 2003. Subsequently at a general meeting of Avmin shareholders held on 15 April 2004, shareholders approved the disposal of its 42,1% shareholding in Avgold, to Harmony. In a share exchange agreement, AVMIN / ARM will receive 1 Harmony share for every 10 Avgold shares held. A similar offer to minorities is expected to be concluded in the third week of May 2004.

On 15 March 2004 Harmony announced an offer to minority shareholders in Abelle Limited valued at approximately R620 million or A$125 million. Abelle has been a majority owned subsidiary of Harmony since the closure of our initial offer to Abelle’s shareholders in May 2003. Since then Abelle has pursued a strategy of focusing on exploration and development of its three projects in PNG. “These assets are a natural fit with our pipeline of five quality growth projects which we are currently developing in South Africa. We remain on track with our strategy of delivering growth in Harmony's international production base,” concluded Bernard.


Quarter on quarter pro-forma combined operating profit analysis of the various operations:

Quarter on quarter combined operating profit
DEC 2003
Free Gold   104149(45)
Free State(5)25(30)
Randfontein   1428(14)
Welkom/Orkney   1926(7)
Australian Operations   2641(15)
Total   134271(137)
For more details contact:

Bernard Swanepoel
on +27(0)83 303 9922


Ferdi Dippenaar
on +27(0)82 807 3684

Investor Relations Officer
Corné Bobbert
Office: +27 11 684 0146
Mobile: +27(0)83 380 6614


This document includes certain information that is based on management’s reasonable expectations and assumptions. These “forward-looking statements” include, but are not limited to, statements regarding estimates, intentions and beliefs, as well as anticipated future production, mine life, market conditions and costs. While management has prepared this information using the best of their experience and judgment, and in all good faith, there are risks and uncertainties involved which could cause results to differ from projections.

Cautionary Note to US Investors – The United States Securities and Exchange Commission (the “SEC”) permits mining companies, in their filings with the SEC, to disclose only those mineral deposits that a company can economically and legally extract or produce. We may use certain terms in this document, such as “resources”, that the SEC guidelines strictly prohibit us from including in our filings with the SEC. U.S. Investors are urged to consider closely the disclosure in our public filings with the SEC available from us at Harmony Gold Mining Company Limited, Suite Nr. 1, Private Bag X 1, Melrose Arch, 2076 South Africa, for the attention of: Mr. Ferdi Dippenaar, Commercial Director. You can also obtain these filings from the SEC by calling 1-800-SEC-0330.

Annual report

Integrated annual report 2016
Integrated annual report 2017


Investor brief

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

(PDF - 6.5MB)

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