Harmony Gold Mining Company Limited Q4 FY2024 earnings call

Management Statement and Operational Highlights

• Strategy: Focus on responsible stewardship, operational excellence, cash certainty, and effective capital allocation. Major capital to high-grade assets (Moab Khotsong, Mponeng, Eva Copper, Wafi-Golpu).
• Safety: Injury frequency rate 5.53 (below 6 for 3 years), emphasis on personal safety and leading indicators.
• Financial Performance: FY '24: gold production beat guidance, all-in sustaining cost ZAR 901,000/kg (USD 1,500/ounce), operating free cash flow >100% to ZAR 13B (USD 681M), net cash ZAR 2.9B (USD 159M), EPS up 132% to 1,852 cents (USD 0.99/share), dividend paid.
• Projects: Mponeng, Moab Khotsong extensions progressing; Eva Copper feasibility study ongoing (Queensland govt provided 20.7M AUD grants); Wafi-Golpu negotiations for mining dev contract.
• Capital Expenditure: FY '25 cap ex to ZAR 10.8B (USD 106M), mainly for high-grade underground and surface retreatment

Segment Performance

• Gold Production: In FY '24, gold production increased by 6% to 1.56 million ounces. Over 90% of current production comes from South African gold.
• Copper Production: ~20% of future production expected within 10 years from Wafi-Golpu (Papua New Guinea) and Eva Copper (Australia) projects.
• Silver and Uranium: Silver production increased 39% to 3.7 million ounces in FY '24; uranium production increased 13% to 590,000 pounds.
• South African High-Grade Operations (Mponeng, Moab Khotsong): Average recovered grades >9 grams per tonne, production >15,000 kg, operating free cash flow margin 32%.
• South African Optimized Portfolio: ~7 underground mines contribute ~40% of total production, generated ZAR 2 billion in operating free cash flow.
• South African Surface Operations: Production up 21% to ~9,000 kg, all-in sustaining costs <ZAR 700,000/kg, generated ZAR 2.6 billion in operating free cash flow in FY '24.
• International Portfolio (Hidden Valley): FY '24 operating free cash flow >ZAR 2 billion at 35% margin, production up 17% to >5,100 kg

Guidance

• FY '25 Production: Expect 1.4-1.5 million ounces.
• Cost Guidance: All-in sustaining cost ZAR 1.02-1.1M/kg.
• Capital Expenditure: FY '25 cap ex increase to ZAR 10.8B, capital intensity affordable at ZAR 250,000/kg (USD 415/ounce) based on production guidance

Risks

• Safety: Need to improve leading indicators to achieve zero loss of life; 7 colleagues lost lives in FY '24.
• Operational: Water constraints in Free State tailings projects, Eskom power uncertainties, cyber threats.
• Project Execution: Timely execution of Eva Copper, Wafi-Golpu mining dev contract

Question and Answer

• Q: Thoughts on underground operations grade improvement? A: Major drive was acquiring high-grade assets like Mponeng and Moab Khotsong; also due to quality and operational excellence with strong grade discipline.
• Q: FY '25 guidance conservatism, Free State tailings opportunity, CapEx increases? A: Guidance conservative but confident of beating it; Free State has massive resources, feasibility study underway for partial plant build; CapEx increase due to development, inflation, and growth projects like Mponeng extension.
• Q: Key Man risk, succession plan, To-do list before leaving, cash intentions? A: Intends to step down Dec 31, 2024; succession plan advanced; To-do list includes Wafi-Golpu permit; cash maintained with balance between growth and dividends, headroom of ZAR 12B (USD 600M).
• Q: Grade evolution, Target project, Uranium sustainability, New business geography? A: Grades sustained with long-term plans; Target project now cash flow positive; uranium sustainable with good grades at Moab; new business focuses on quality assets, Eva Copper and Wafi-Golpu as key projects.