Harmony Gold Mining Company Limited

Good morning or good afternoon wherever you may be across the world. I am Peter Steenkamp, CEO of Harmony. Thank you for joining us virtually today as we present our interim results for the half year ended 31st of December 2023 or the current reporting period. Please take note of our safe statement. Let me begin with a summary to remind you who we are and what our strategy is. Almond is a specialized gold producer with a growing international copper footprint. We also produce small amounts of silver and uranium. We have over 73 years of gold mining experience in South Africa and have been operating for over two decades in Papua New Guinea. Our strategy is aimed at producing safe, profitable ounces and improving margins through operational excellence and value-creative acquisitions. Our mineral resources and mineral reserves declaration of 138 million ounces and 39 million ounces, respectively, presents an incredible opportunity to convert the quality ounces into shared value for our shareholders and stakeholders. Our gold tailings retreatment business, or recycling as you may know it, is the largest globally and is set to grow, supporting the circular economy. The Tier 1 Mwafi Gold Blue project in Papua New Guinea and Eva Copper in Australia give Harmony a sizeable copper and gold footprint, which will be transformational. Currently, our diversified portfolio of operating assets, including nine underground mines, two open pit mines, and a significant tailings retreatment business. Production comes from four business areas, namely our South African high-grade underground mines, our South African optimized underground mines, a large and growing surface sources business in South Africa, and a growing international copper gold portfolio, of which Hidden Valley is the only producing mine at this stage. Mining with purpose ensures that our stakeholders share in the benefits of the minerals we extract. In our presentation today, we will provide further insights in how we are creating long-term value, shared value for all of us. Over the past few years, we have set ourselves ambitious goals, and I'm proud to say that we've largely achieved them. Reflecting on the first half of the financial year of 2024, we have delivered significant improvement in safety with our last time injury frequency rate improving from above 7 in 2017 to 5.19 per million ounce worth in its reporting period. We maintain the belief that a safe mine is a profitable mine. We have reduced our gearing and built a strong balance sheet, which is now in the net cash position of 74 million rand, or 4 million US dollars. Through organic growth and investment, we continue to convert our mineral resources to quality mineral reserves, focusing on higher grades and margins. This is evident of our comprehensive pipeline of projects in execution. Group oil and sustaining costs improved to 843 and 43,000 rand a kilogramme, or US$1,403 per ounce. We achieved higher underground recovery rates at 6.29 grams per tonne. Harmony generated a record operating free cash flow of US$7.1 billion or US$381 million. This equates to a group operating free cash flow margin of 24%. Our acquisitions have transformed Harmony completely, having added quality ounces and copper to our asset portfolio. We are a new company with a long and exciting future ahead of us. The effective allocation of capital has placed us in a position to return capital to our shareholders, rewarding them for investing in Harmony Story. Allow me to unpack the operational performance for this reporting period. The stellar results in this reporting period were a result of our ongoing investment in operational excellence. This has enabled us to deliver consistently throughout the gold cycle. We are therefore well positioned to take advantage of the current high gold price. Let me give six reasons why I strongly believe Harmonic will continue to deliver. First, everything we do starts with safety, which I again want to emphasize is non-negotiable. This is supported by a healthy organizational culture. Operational flexibility and predictability in our planning ensures that we consistently deliver on the tons alongside higher grade ounces. Harmony has always controlled what we can, with cost being one key factor. With a rank cost base, we have a stable and predictable cost structure. The strong partnerships that we have built with our stakeholders enable us to maintain a social license and continue operating successfully. Our substantial mineral resource, based on almost 140 million ounces, presents an abundance of opportunity to grow our mineral reserves through internal investments. But let's look at the numbers supporting these statements. We are seeing a continued improvement in safety performance. It requires a daily commitment, and we are confident that we will ultimately achieve the goal of zero loss of life. Our proactive culture of safety and care has resulted in our last-time injury frequency rate trending lower. Group last-time injury frequency rates improved to 5.19 per million ounces worked in the first half of this financial year. Our operational results demonstrate that a safe mine is a productive mine. An incredible amount of work goes into ensuring that our workplaces are made safe. We have continuous safety awareness initiatives to reinforce That safety always comes first. Regrettably, four of our colleagues have lost their lives in a mine-related incident since the start of this financial year. Each loss of life is a stark reminder that more needs to be done. We mourn the passing of these colleagues and will work tirelessly to ensure that each harmonite returns home safely. Improved planning allows for better flexibility and predictability. This, combined with the acquisition of higher quality assets, resulted in a remarkable improvement in recovered grains. Underground recovered grains in this reporting period increased by 11% to the 6.29 grams per tonne from the 5.68 grams per tonne year-on-year. This now exceeds the upper end of our full-year guidance. This has primarily been driven by the high-grade underground mines in Penang and Noak Godzong. Consequently, production increased by 14% to 36 tons of gold or 832,000 ounces, and we expect to meet or exceed the upper end of our FY24 production guidance. These charts perfectly illustrate how effective capital allocation has transformed Harmony. We continue to see an improvement in our oil and sustaining costs in both rent and US dollar terms. Our rand oil and sustaining costs improved by 5% to 843,000 rand a kilogram. However, we delivered a remarkable 12% improvement in U.S. dollar oil and sustaining costs to just over $1,400 per ounce. This considerable shift down in the global oil and sustaining cost curve has been a function of the higher rates, well-managed cost increases, and increase in the production and prices of silver and uranium at the Eden Valley mine and Moab Katsong operational, respectively. With over 90% of our input sourced in South Africa, we have been largely protected from the rampant global information. In addition, our labour electricity cost increases are predictable, allowing us to manage our cost effectively and deliver as guidance. We are a proud South African gold producer and are fortunate to sell our gold in US dollars. As a result, Our oil and sustaining cost margins are now over 350,000 rands per kilogram, or $600 an ounce. Improved safety and higher grades translated into higher production. This was further supported by a strong rand per kilogram gold price received. This allowed for higher margins, driving record operating free cash flows. total operating free cash flows increased by 265% to 7.1 billion rand, while operating free cash flow margins expanded to 24% from the 9%. In US dollars, we generated $381 million in operating free cash flows, up 237% year on year. To put this in perspective, we generated more operating free cash flows in rand over the past six months than we have in the previously full year period. The majority of our total free cash operating flow comes from our South African high-grade operations at the Hidden Valley in Papua New Guinea. Our South African high-grade underground mines contributed 31% of the total production but delivered 45% of our operating free cash flows at a margin of 34%. Let me remind you that the South African optimized underground assets continue to serve the company well. These mines produced 40% of the total production and generated 20% of group operating free cash flows at the margin of 11%. Keeping in mind that we are investing significant capital to expand our South African surface operations, these assets produced 17% of the group production, generating 11% of the operating free cash flow at the margin of 17%. Hidden Valley produced 12% of the group production but contributed 25% to the total operating free cash flows and has a phenomenal 50% margin. Sustainability and ethical mining are integral to our operating model at Harmony. The responsible stewardship is about managing all aspects of E, S, and G. We support the circular economy through decarbonization, more specifically through energy efficiencies, renewable energy programs, and green energy mix. Effective waste management through waste rock and tannery treatment We also donate waste rock dumps to our communities for aggregate production. We promote good water steverships, prioritizing the recycling and efficient use of this scarce resource. And we contribute to the resilience and prosperity of our host communities through benefit sharing. This makes Harmony a partner of choice. Mining with purpose is what we are all about. True sustainability is embedded in all our decisions that we make. At Harmony, We believe in actions over words. As a result, we continue to receive positive external recognition for our efforts in sustainability. We have once again been included in the Futsi for Good Index. Our inclusion in the Bloomberg Gender Equality Index for five consecutive years demonstrate we foster gender diversity and inclusivity. We always treat our employees fairly without bias or prejudices of any kind. We have received the score A from the CDP for best practice in water management strategy in 2023. And our near-term and long-term carbon reduction targets have been validated by the Science-Based Targets Initiative as we aim for net carbon zero by 2045. Because life of mine is finite, we are continually investing in converting our resources to reserves, while striking a balance between capital intensity and shareholder returns. Harmony presents a substantial opportunity to invest in an exciting gold-copper art story. Our resource base, which includes copper, is too big to ignore. We are in a fortunate position that we can deliver on our long-term plans through internal investment as we convert these resources to reserves. Our production profile has been significantly de-risked and future production will come from the combination of South African surface and underground gold, Upper New Guinea copper and gold, and Australian copper. Our quality growth pipeline is aimed at creating long-term value as we take our projects up the value curve. The feasibility studies to determine the possibility of safely extending Mpuneng and conducting the pillar extraction of the Tautana have been completed. I'm delighted to announce that we have received board approval and will commence with the life of mine extension project at Mpuneng in the West Red Sea region. I will unpack more on Buneng in the next few slides. We are conducting various exploration drilling activities across all our jurisdictions. The Iwa Kapa feasibility studies are being updated, and negotiations to permit Wafi Gulfru are also continuing. We are making good progress with various projects currently in execution. The Muap Kotsong extension, Mineway Solutions tailings extension, and Indian Valley Extension are all progressing well and further details are available in the next year. Now moving to Mpuneng Life of Mine Extension project. After Mpuneng was acquired in 2020, we began a comprehensive update of the feasibility study to determine if we could extend Mpuneng's life of mine. After a two-year study, we now have an optimized mine design, which ensures we can extend the life of Mpuneng both safely and profitably. The project meets all our investment criteria. Mpuneng is an incredible mine with an existing world-class infrastructure. It is a mine with access to excellent ore bodies, namely the carbon leader and the Fentisdop contact reef, or VCR as we call it. Both of these economic horizons have exceptional grades, north of 9 grams a tonne. This major project will convert over 3 million ounces into mineral reserves, delivering an average steady state production of 260,000 ounces per annum or 8 tons per annum of gold. Once the project is complete, we are forecasting a cash contribution of about 2.5 billion per annum from this project at a real gold price of 1.1 million rand a kilogram. Because of this high grace, The projects will have an attractive real oil and sustaining cost of R768,000 a kilogram, or $1,290 per ounce, based on current assumptions and estimations. The life of mine will be extended from the seven to 20 years, ensuring Mpuneng remains a top-performing asset in our portfolio until at least 2044. Capital expenditure for these projects will be manageable and affordable. This project will be self-funded through internal cash flows. With a substantial mineral resource of 24 million ounces, this is another example of how we continue to extend our production profile by converting mineral resources to mineral reserves. We are proud that in our hands, opening will reach its true potential and deliver a significant positive social impact. This embodies how Harmony creates long-term value for its shareholders and stakeholders. A de-risked modular approach will be taken to access three high-grade blocks. Safety and health were at the forefront of our design, methodology, and mining practices. The project will focus on mining the two ore bodies named the VCR and carbon leader. This will ensure we maintain a high level of flexibility. The extension is only about 270 meters deeper. This will target early gold by accessing the carbon leader through a ramp system at 120 level, and the VCR will be accessed through both the west and the eastern side. Lastly, we will also mine the VCR portion of the Totono shaft pillar, which provides additional high-grade ounces. This profile is purely for illustrative purposes and includes both approved plans and projects still in feasibility. Adding the Umpuneng extension, Iwa Copper and Wafi Golpu, Harmony can remain a 1.5 million producer well into the future. Importantly, the opening extension combined with Moab Kotsong extension will deliver over 400,000 ounces high-quality, low-cost ounces per annum for more than two decades. This will ensure strong future cash flows at higher margins. There is significant potential within our asset base for further value to be unlocked through future middle resource conversion. Bear in mind that this illustration also excludes any potential future value-creative acquisitions that form part of our strategy. Capital guidance for FY24 remains unchanged. Capital for early works development for Penang was provided for in the FY24 capital budget. We estimate $7.9 billion in project capital over the life of the project in real terms. Capital guidance for FY25 onwards will now include the Mpuneng extension project. Mpuneng generated R1.9 billion in operating fee cash flow in the reporting period in this particular six months. At an annual estimated capex of R1 billion, or approximately R50 million, this project is therefore affordable and at a low capital intensity. Harmony has a sizable and well-sequenced project pipeline ahead, Our project timing is deliberate and ensures our project capital remains affordable and does not put pressure on our balance sheet. These projects are catalysts for meaningful sustainable production and expand our margins within the driving cost down in the future. Now allow me to hand over to my colleague and financial director, Boipelo Nkobu, to run through the financials. Over to you, Boipelo.

Thank you, Peter. I'm pleased to present our exceptional financial performance for this reporting period. All US dollar figures and conversions are in their next years. Group revenue for this financial half year increased by 35% to R31 billion. EBITDA increased by 114% to R17 billion. As a result, headline earnings per share increased by 226% to R956 per share. With 9.8 billion in available headroom through cash and undrawn facilities, our balance sheet is well positioned to execute on our project pipeline and acquisition ambitions. Through operational excellence and consistent production, we have healthy margins at current gold prices. At 1.2 million rand per kilogram or $2,000 an ounce, our all-in cost margin is at 33%. This is essentially the margin available after all major capital. Our all-in sustaining cost margin is 42% and our cash operating cost margin is 68%. We are therefore well positioned with good buffers to absorb any adverse movements in the gold price. We have an effective hedging program in place with 20% of our production hedged over 24 months. The Rand Gold hedge book was maintained at 20% or 558,000 ounces at an average forward hedge cover of over 1.256 million Rand a kilogram. Returning cash to shareholders alongside our growth aspirations remains a key priority. Harmony's dividend policy is to pay a return of 20% net free cash generated to shareholders at the discretion of the board of directors. The strong operational performance and exceptional net free cash generation resulted in a record interim dividend of 147 South African cents or 8 US cents per share declared, which will result in a record payment to shareholders of over 1 billion rand. This has resulted in a 12-month dividend yield of just over 2%. Cumulatively, we've paid 2.7 billion rand in dividends since 2016. With ongoing confidence in our plans, controlling what we can, such as safety, production, and costs, we aim to stay true to our dividend policy. Thank you, and back to you, Peter.

Thank you, Boitello. So, in conclusion... Harmony is a company that delivers sustainable, predictable, and flexible operational performance with well-managed fixed cost structure. Our guidance for FY24 remains unchanged, and we are confident that we will reach the upper end of our production guidance and the lower end of our cost guidance. Through our embedded sustainability practices and quality answers, we are a company with a long-deserved life. Our geared exposure to the rand per kilogram gold price continues to provide us with good tailwinds from both the revenue and marginal perspective. We have two significant international copper projects that complement our existing gold assets. We understand our ore bodies, we have strong technical and exploration capabilities, and we are the partner of choice wherever we operate. As Boyd-Pillow mentioned, our flexible and strong balance sheets support our growth pipelines. As a gold mining specialist with a growing international copper footprint, we are passionate about what we do and about transforming our gold into long-term value for all stakeholders. This is mining with purpose. Thank you, and I'll now hand over for questions.