Harmony Gold Mining Company Limited

Good. Can we start? Good morning. My name is Peter Steenkamp. I'm the CEO of Harmony. And it's a pleasure to be here today presenting the full year results for the financial year that ended on the 30th of June, 2024. Please note of the safe harbor statement. And allow me to start with a short update on Harmony and our strategy. Harmony is a gold mining specialist with a growing international copper footprint. We also produce small amounts of silver and uranium, and we have over 74 years of gold mining experience in South Africa, and we have been operating for over two decades in Papua New Guinea. Our mineral resources and mineral reserve declaration of close to 137 million ounces and 40 million ounces of gold and gold equivalents respectively positions Harmony as a significant global mining company. Currently, our diversified portfolio of operating assets include nine underground mines, two open pit mines, and a significant tailings retreatment business. Service retreatment is a great ESG story with the potential for another 100 years of hydro mining across South Africa. And at present, over 90% of our current production comes from South African gold. Now, based on the current planning parameters, we expect approximately 20% of future production to be copper within the next 10 years. Now, copper production will be from our Tier 1 Wafi Gold Proof Project in Papua New Guinea and the EVA Copper Project in Australia. These copper projects will be transformational, moving Harmony further down the global cost curve and diversify it into a future-facing metal. Our excellent FY24 results perfectly demonstrate the benefits and the value we have created for all our stakeholders. This is what we call mining with purpose. Australia is aimed at producing safe, profitable ounces and improving margins through operational excellence and value-creative acquisitions. All decisions are underpinned by our four strategic pillars, namely responsible stewardship, operational excellence, cash certainty, and effective capital allocation. Major capital is being allocated towards the higher-quality assets, namely Moab, Kotsong, and Penang, as well as key projects that will lower our risk profile, such as EVA Copper and Wafi Gold Group. This ensures we continue growing our reserves and delivering improved margins and high profitability, especially at these high-grade assets. We continue to invest in our optimized asset, or the red quadrant, which you will recall was the old Harmony, and to maintain flexibility and ensure optimal cash generation over the life of the assets. Investing in our existing assets is essential for funding our growth paths for the future. Harmony has adopted a proactive approach to safety through the use of leading indicators. Our focus has shifted towards the integration and sustainability of a safety culture, and we are emphasizing the importance of personal ownership of safety in the workplace. While we have implemented comprehensive systems and controls, it ultimately remains our responsibility as Harmonites to work safely at all times. We have a centralized operational risk management team providing support to all operations, and are using leading indicators to help drive further safety improvements. Through digitization and modernization, we have real-time dashboards to monitor and continue to improve these leading indicators. We are currently monitoring over 9 million golden control data points. This ensures we prevent significant unwanted events before they occur. And as a company, we have embraced a culture of learning and strive for continuous improvement. Our cultural transformation journey has reached about 80% completion to date, and we are progressing this through regular visible felt leadership engagements along with other safety awareness initiatives across the operations. We continue to equip our teams through ongoing leadership development and training. I'm confident that we have the correct safety strategy in place and firmly believe that zero loss of life is possible. In the past financial year, Harmony delivered an exceptional combined performance across its operations. This achievement was a result of clear strategic intent and successful execution, enabling us to deliver above plan and capitalize on higher gold price. This results in a record year for the company. We aim to excel at what we do, and I believe that we achieved this goal. As I touched on the previous slide, safety is embedded in our strategy. The last time injury frequency rate per million ounces worked for FY24 was at 5.53. This has remained below the 6 for three consecutive financial years and indicates we are on the right track. We are delivering on our ESG commitments evident in our 1.2 billion employee share ownership scheme and our expanded renewable energy program. Coal production increased by 6% to 1.56 million ounces, beating our upward revised guidance. Underground recover grades also exceeded the guidance, improving by 6% to 6.11 grams per ton. Our costs remained under control, with oil and sustaining costs coming in at R901,000 per kilogram, which was well below the guidance. In dollars, oil and sustaining costs decreased by 4% to $1,500 per ounce. And operating free cash flow increased by over 100% to record 13 billion or 681 million US dollars at a margin of 22%. This was driven by high recovered grades and strong gold prices. As a result, our balance sheet has strengthened further and is in a net cash position of 2.9 billion or 159 million US dollars. Now headline earnings per share increased by 132%. to 1,852 South African cents, or 99 US cents per share. In line with our dividend policy, we are paying a full-year dividend of 94 South African cents, or 5 cents per share. This demonstrates confidence in our planning as we aim to reward our shareholders alongside our growth aspirations. Our FD by Pelo Lucubo will unpack the financials in detail a little bit later. So responsible stewardship is embedded in our operating model. Our sustainable development strategy aims to reduce risk while maximizing opportunities, leaving a positive impact through shared value creation. As a result, our actions, we continue to receive positive external recognition for our embedded approach to sustainability and disclosure transparency. We have been included in the Fujifilm Good Index for the seventh consecutive year. Our inclusion in the Bloomberg Gender Equality Index for six consecutive years demonstrates that we embrace gender diversity, inclusivity, and treat all our employees fairly. Our best practice water management strategy has once again resulted in a score A from the CDP. As you can see, mining with purpose is what we are all about. Now, grading our quality answers is critical for long-term success and longevity. We continue to invest in converting resources to reserves while striking a balance between capital intensity and shareholder returns. Albany has a globally significant mineral resource and reserve base. We have demonstrated that the reserve conversion is still one of the most cost-effective ways of creating value. There is therefore a substantial opportunity to continue investing in this exciting gold-copper story. Our mineral reserves increased by around 2% on the back of an Pune extension, and EVO copper is expected to underpin further resource conversion once the study is complete. Our production profile has been significantly de-risked, and further future production will come from a combination of South African surface and underground gold, Papua New Guinea copper and gold, and Australian copper. As we target growth, we will only pursue those opportunities that meet our strict investment criteria. and improve the quality of our portfolio. Further expansion would either be through the acquisition of a late-stage project, or preferably through the acquisition of a producing asset that immediately cash flow positive for Harmony. Any new investment opportunities must, first of all, lower our overall risk profile, improve our margins, deliver meaningful returns, extend our production profile with quality answers, and of course, remain affordable through the cycle. The acquisition of Mpuneng, Mohamkotsong and Mineway Solutions were transformational. When we acquired this asset, we had hoped that we would be able to extend the lives of these assets. Now, after comprehensive studies, these acquisitions all received approval for extension. We are pleased that the first deposition of the Carrera-Rand extension at Mineway Solutions, our mega tailings free treatment operation, will happen in October. This project extends the life of Mineway Solutions to 14 years, And encouragingly, the streaming contract concludes towards the end of this calendar year. Once this ends, we expect to see a 20% uplift in the gold price received from mine waste solutions. The extension projects at Moab Kotsong and Mpuneng are progressing well, and we have extended the life of these mines to at least 20 years. Declined work at Moab Kotsong and the development of the carbon leader section of Mpuneng are underway. We have also commenced rehabilitation of the Totona shaft pillar, which we will be mining through in Penang. These projects have added a combined 5.2 million ounces of gold reserves and will ensure steady-state production at each mine of over 200,000 ounces at a recoverable grade of 9 grams a ton. As a result, these high-grade mines will continue delivering excellent margins at an all-encompassing cost for many years to come. The feasibility study update at Eva Copper is also progressing well. Due to its importance, the Eva Copper project has been given a prescribed project status, and the Queensland government has provided $20.7 million in conditional grant funding to help accelerate the project. Early works have commenced, and we are continuing with resource drilling. Subject to the feasibility study outcome, Evo Copper is expected to produce between 50,000 and 60,000 tons of copper per annum and 14,000 ounces of gold over its 15-year life of mine. The all-in sustaining cost is anticipated to be in the middle of the global cost curve. That Wafi Golpu negotiations between the state negotiation team, Harmony and our JV partner, are ongoing as we work to convert the signed memorandum of understanding into a mining development contract. Capital expenditure is necessary for ounce replacement and growth as we maintain and improve the quality of our portfolio. As we invest across all of these assets, we expect total capital expenditure for FY25 to increase to $10.8 billion or just under $600 million. Despite this increase, total capital intensity remains low at approximately R250,000 per kilogram or $415 per ounce based on the FY25 production guidance. Again, this slide is just in US dollars. Let me just make sure I'm done. Slide 16. Let me break this down per operation. Although Harmony is in a period of higher capital expenditure, we have a balance between growth and flexibility. Most of our major capital continues to be allocated to high-grade underground projects such as Moab Kotsong and Kooning as well as our high-margin, low-risk surface retreatment operations. Sustaining capital is also increasing mainly as a result of an increase in development meters across the underground mines to maintain flexibility, and you will notice that the increase is mainly at our four optimized underground operations. We're also factoring in inflationary increases in cost in line with our planning parameters. We are increasing our spend on information technology as part of our ongoing upgrades, And there's also ongoing management of our tailings storage facilities, remains of utmost importance, as well as bringing harmony in line with the global standard of tailings management. This is the same slide, just in US dollars. So our continuous investment across all our operations will ensure that we not only improve our margins, but remain a sustainable 1.4 million ounce producer well into the future. As we mined out our optimized assets, represented by the red section, you will notice that the quality of our answers improved, driving the margins higher over time. Our portfolio also has a long life, but the potential for further life of mine extensions, especially at these higher growth prices. As I mentioned, our international projects introduced a significant copper into the production mix. Bayer Snell, our group chief operating officer, will now take you through the operational results. So over to you, Bayer Snell.

Thank you, Peter. The strong results in this reporting period were due to our ongoing investment and commitment to operational excellence. This has underpinned our success and enabled Harmony to take advantage of the high gold prices. However, everything we do starts with safety, and I must emphasize that is not negotiable. A safe mine, we argue, is a profitable mine. Harmony has a healthy organizational culture, which we believe is a true differentiator amongst our peers. Operational flexibility and predictability in our planning ensure we consistently deliver the tons alongside higher quality ounces. We have achieved guidance for the ninth consecutive year now if we factor in the COVID revision. We are continuing to invest in productivity enhancements and infrastructure reliability to reduce stoppages and maintain momentum. Our underground recovered grades have improved remarkably and productivity enhancements will ensure we deliver the the required square meters each month. As Peter said, Puneng and Mobkotsong and Hidden Valley outperformed in FY24 on the back of excellent grades. We do, however, expect lower grades at Hidden Valley, while at Doernkopf, production will be lower after we revised our plans to ensure safe ounces. Our stable and predictable cost structure has moved us down the global cost curve. Not only have we benefited from having a rent cost base, but the five-year wage agreement ensures fixed labour escalations are predictable. Our power supply from ESCOM is also regulated, with further savings expected from our renewable energy programme. The strong partnerships we have built with our stakeholders ensure we remain the partner of choice, enabling us to continue operating successfully. Our substantial mineral resource base of almost 137 million ounces is presents an abundance of opportunities to grow our mineral reserve through internal investment and greenfields projects. Earlier, Peter touched on the safety strategy and the work being done to continuously improve our leading indicators. It requires a daily commitment and we are confident that we will ultimately achieve our goal of zero loss of life. The emphasis on improving our leading indicators has ensured our lagging indicators are trending in the right direction. And we have seen a remarkable improvement in that since 2016 when we started. Although our group lost time injury frequency rate remains below six at 5.53 per million hours worked, we have lost the lives of seven of our colleagues during the financial year. And we extend our deepest condolences to the families of our late colleagues. Clearly more needs to be done. And more will be done to ensure each and every employee returns home safely every day. Through operational excellence and good mining discipline, we have improved recovered grades, delivering consistent production growth. Our investment in Mpuneng and Mopkotsong is the primary driver behind the consistent higher underground grades we are now achieving. At Hidden Valley, the recent outperformance was a result of the high-grade Big Red ore body, which we have now mined through. as planned. Recovered grades at our surface operations have also improved, driven mainly by mine waste solutions. While 96% of our revenue is from gold, our byproducts play an important role in offsetting some of our costs. 3% of our revenue is from silver produced at Eden Valley, and 1% is from uranium mined at Moab Kotsong. Silver production increased by 39% to a record 3.7 million ounces in generating revenue of 1.7 billion rand. Uranium production increased by 13% to 590,000 pounds, generating revenue of just under 900 million rand. Our South African high-grade operations in Penang and Mobkotsong have introduced high-grade quality ounces to the portfolio. Average recovered grades from these mines exceed 9 grams per tonne, with production over 15,000 kilograms at an operating free cash flow margin of 32%. Both mines delivered an impressive performance in FY24, exceeding their plans across all operational metrics. And as we head into the new financial year, we will focus on major extension projects at these mines. To that end, R2.2 billion has been allocated towards these declined projects for FY25. Harmony's investment in quality ounces has resulted in record operating free cash flow this financial year. We can attribute some of this to the gold price. However, the real driver has been the improvement in margins on the back of our minds achieving their plans. Total operating free cash flow for the group increased by 111% to 12.7 billion rand or 681 million U.S. dollars. Allow me now to touch on each of the quadrants to illustrate our confidence in our cash flows going forward. Our South African high-grade operations, namely Mpuneng and Mo Kutsung, have introduced high-grade quality ounces to the portfolio. Average recovered grades from these mines exceed 9 grams per tonne, with production over 15,000 kilograms at an operating free cash flow modern of 32%. Both these mines delivered an impressive performance in financial year 24, exceeding their plans across all metrics. As we head into the new financial year, we will focus on major extension projects at these mines. To this end, 2.2 billion rand has been allocated towards these decline projects. The South African optimized portfolio consists of our seven underground mines and contribute close to 40% of our total production, or 19,000 kilograms of gold. While margins are typically lower, these mines still generate $2 billion in operating free cash flow and play a critical role in funding our growth strategy. In order to ensure optimal free cash flow generation over the life of mine, it is necessary to maintain flexibility to achieve our plans and reduce costs. Capital expenditure at these operations is therefore predominantly sustaining capital for ongoing development. Our focus remains on ensuring that these mines achieve their planned targets, especially Durenkop and Target 1, with studies underway for the potential extension of Tupung North. Now, South African surface operations delivered a phenomenal performance with production increasing by 21% to around 9,000 kilograms. This now represents 11% of group production, with all its sustaining costs decreased to just over R700,000 a kilogramme illustrating how profitable these operations are at current gold prices. These operations generated R2.6 billion in operating free cash flow at a margin of 25% in FY24. As Peter said, we are pleased that the legacy streaming contract comes to an end before the end of this calendar year. Once this ends, we expect the gold price received for gold sales at Mineway Solutions to increase by around 20%. This is expected to generate over 900 million rand in additional cash flow for the group. The extension of the career on tailings storage facility will continue into FY25, and we have around 1.8 billion earmarked for capital expenditure at our surface operations. Further feasibility studies are underway to determine whether we can create another mega tailings treatment operation in the free state, where we have 5.7 million ounces in resources in our old tailings dams. We believe there's good potential to remine our old tailings dams in South Africa for possibly another 100 years. Our international portfolio, of which Hidden Valley is currently the only operating mine, delivered a standout performance in FY24. Hidden Valley generated over 2 billion rand in operating free cash flow at a margin of 35%. Production increased by 17% to over 5,100 kilograms. As mentioned earlier, having mined through the Big Red ore body, grades will be lower in FY25 now that we have commenced with stage eight stripping. This is all in line with the mine's life of mine plan. We are busy conducting studies to determine whether the life of mine at Hidden Valley can be extended further. And we are progressing the feasibility study update on Eva Copper and Wafi Gold for permitting, as Peter alluded. This slide is a good summary or comparison of our operational performance across our various business units. This illustrates the Harmony portfolio has changed significantly over the past eight years, having de-risked with vastly improved profitability. Boapela Lukubo, our financial director, will now discuss our financial performance for the past year. financial year. Popelo, over to you.

Thank you, Bez. Harmony delivered an excellent financial performance and outstanding earnings growth in FY24 on the back of the information shared by Bez and Peter. Group revenue increased by 25% to R61 billion on the back of the higher production and the excellent gold price. Net profit increased by 78% to 8.7 billion rand, while the rolling 12-month EBITDA increased by 54% to just under 19 billion rand. As mentioned in our trading update, Target North has been impaired by 2.8 billion rand. Adjusting for this, headline earnings per share increased by 132% to 1,852 South African cents. Strong operating free cash flows resulted in our balance sheet shifting further into a net cash position, and as of 30 June 2024, we had a net debt cash position of 2.9 billion rand. This is just our financials translated into dollars. Group revenue increased by 18% to $3.3 billion, and headline earnings were up 122% to 99 US cents per share. Harmony has a balanced capital allocation framework which focuses on five core areas, namely ongoing safety and production optimization as we aim for zero loss of life, maintaining a strong balance sheet and a net debt to EBITDA below one times, which is what we've done, organic and inorganic growth, which improves the quality of our portfolio, and returning capital to shareholders in line with our dividend policy. We've delivered a consistent increase in revenue over the past three years, and headline earnings per share has also increased by over 700% in the past eight years on the back of our acquisitions and investment in quality ounces. Moving on to costs, the majority of our costs remain predictable and manageable. It is split between labor, consumables, and electricity. Sustaining capital represents only 10% of our total all-in sustaining costs, as you can see, and we've not seen any major changes in the split year-on-year. Going forward, we anticipate cost escalations to remain predictable and in line with planned inflationary increases due to our RAN cost base. Cash operating costs, as I've mentioned, remained well under control. In RAN per kilogram terms, costs increased only 3%, as a result of annual salary escalations, electricity tariff hikes, and higher royalties. Byproduct credits from silver and uranium increased by 91%. In U.S. dollar per ounce terms, cash operating costs decreased by 2% to $1,262 an ounce. The 5% depreciation of the rand against the U.S. dollar helped drive cash operating costs per ounce lower in dollar terms. Based on our FY25 planning parameters, all of our asset groupings have a life of mine margin of over 20%. And just to highlight that this is at a gold price of 1.25 million rand a kilogram. We spend capital to ensure we remain a profitable 1.4 to 1.5 million ounce producer well into the future. Capital expenditure remains well sequenced. And at current gold prices, all of our approved projects are comfortably funded through internal cash generation and available facilities. With double digit margins, we remain well positioned heading into the new financial year. Our FY24 total capital intensity was also low at around R210,000 a kilogram or $350 an ounce. As Peter mentioned earlier, capital expenditure will increase in FY25 But capital intensity, however, remains affordable at 250,000 rand a kilogram or $415 per ounce based on our FY25 production plans. Apologies, I moved too early. We are also protecting margins through an effective hedging program. We typically hedge between 10% and 30% of production over 36 months as per our 30-20-10 amended program limits. Harmony has been in a net cash position since the beginning of this calendar year. Through financial discipline, we've built a strong balance sheet, which, as mentioned earlier, is now in a sizable net cash position of 2.9 billion rand. Financial flexibility places Harmony in a strong position to continue on its growth trajectory. This is just the same slide in U.S. dollar terms. With over 12 billion rand, or $600 million in headroom, made up of cash and undrawn facilities, our balance sheet remains quite robust. Solid cash flows and balance sheet strength have once again allowed us to pay a dividend while pursuing our growth aspirations. Our final dividend payment is 94 South African cents per share, or 5 US cents per share. We've delivered a geared year-on-year dividend increase, meaning that our dividend increase exceeded the increase in the gold price. Total cash returned to shareholders in FY24 is close to 1.4 billion rand. This clearly demonstrates confidence in our plans and our cash flows. Allow me to hand back to Peter to conclude.