Harmony Gold Mining Company Limited Q4 FY2025 earnings call

Management Statement and Operational Highlights

• Safety: LTIFR reached company all-time low of 5.39 per million hours worked, safety culture improving despite safety stoppages in second half.
• Financial Performance: Record high cash flows with adjusted free cash flow over ZAR 11 billion at 16% margin; headline earnings per share rose 26% to ZAR 23.37 per share; final dividend of ZAR 2.4 billion declared.
• Production: Hit upper end of production guidance at 46 tonnes of gold (1.48 million ounces); underground recovered grade increased to 6.27 grams per tonne.
• Sustainability: Included in FTSE4Good Index for eighth consecutive year; MSCI upgraded to BB; CDP scored A- for water stewardship; conforms with SBTi for global climate goals.
• Projects: Progressing 100-megawatt renewable solar plant at Moab Khotsong; acquired MAC Copper, awaiting shareholder vote; Eva Copper project advancing with feasibility update target by end of 2025.

Segment Performance

• High-grade operations: Mponeng production increased by 8% to 16.5 tonnes, grade improved by 10% to 9.89 grams per tonne; all-in sustaining costs increased by 9% to ~ZAR 860,000 per kilogram, generating ZAR 8.8 billion in adjusted free cash flow at 35% margin. Hidden Valley production steady at 5.1 tonnes, grade 1.35 grams per tonne; all-in sustaining costs increased by 7% to ZAR 868,000 per kilogram, free cash flow margins at 48% with ZAR 3.8 billion in adjusted free cash flow.
• South African surface operations: Production decreased by 13% to 7.9 tonnes due to heavy rainfall; margins stayed at 36%, all-in sustaining costs increased to ZAR 853,000 per kilogram.
• Optimized underground portfolio: Produced 16.5 tonnes at 4.58 grams per tonne; all-in sustaining costs increased by 26% to ZAR 1.4 million per kilogram, generating ZAR 2.3 billion in adjusted free cash flow.

Guidance

• FY '26: Production guidance 1.4 million to 1.5 million ounces; underground recovered grades above 5.8 grams per tonne; all-in sustaining costs planned to rise to between ZAR 1.15 million and ZAR 1.22 million per kilogram; capital expenditure ZAR 12.95 billion.
• Acquisitions: Expect to close MAC Copper transaction in October; final investment decision on Eva Copper project later in the year.

Risks

• Safety: Full of ground and safety stoppages; LTIFR trends and safety incidents in second half.
• Operational: Reliance on Eskom; wage inflation; power tariffs; royalties impacting costs.

Question and Answer

Q: Bruce Williamson on Mponeng grade and mining method A: Beyers Nel stated Harmony is not high grading but using sequential grid mining; Mponeng has overperformed planned reserve grade, but grade should be considered in line with reserve grade, with grade management as a hedge against cost inflation.

Q: Unidentified Analyst on Wafi-Golpu opportunity cost A: Beyers Nel emphasized Wafi-Golpu is a Tier 1 copper-gold bulk block cave mine of significant value, worth the wait despite delays.

Q: Arnold Van Graan on MAC Copper and optimized assets A: Beyers Nel said Harmony will spend time planning MAC Copper post-acquisition; optimized assets are managed with flexibility, using sustaining CapEx to roll mines over while maintaining production.

Q: René Hochreiter on production gap, Target, and Mponeng grade A: Beyers Nel explained production profile is not just volume but value; Target is showing green shoots; Mponeng's grade is in line with reserve grade, with no prediction on exact time frame for grade decline.