Full year operational performance elevates Harmony to new heights on the back of sustained operational excellence, high recovered grades and record gold prices
Release of FY24 condensed financial statements (“financial results”) delayed until 5 September 2024 pending new external auditors’ completion of work relating to an undeveloped property
Johannesburg, Monday, 26 August 2024. In terms of paragraph 3.4(b) of the Listings Requirements of the JSE Limited (“JSE”), a company listed on the JSE is required to publish a trading statement as soon as they are satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported upon next will differ by at least 20% from the financial results for the previous comparable period.

“Harmony delivered an exceptional combined performance across all our operations in FY24. This achievement was a result of clear strategic intent and successful execution, enabling us to deliver ahead of plan and capitalise on higher gold prices. Our aim is to be consistent and excel at what we do and I believe we achieved this goal.

We have exceeded our upward revised production guidance of 1550 000 ounces (48 210 kg) while all-in-sustaining costs will come in comfortably below R920 000/kg. Underground recovered grades will also be higher than the guided 6g/t for FY24.

Group production for this reporting period increased by 6% to 48 578kg (1 561 815oz) from 45 651kg (1 467 715oz) in FY23. This was mainly due to higher recovered grades at Mponeng, Hidden Valley and Mine Waste Solutions.

Recovered grades at the South African underground operations increased by 6% to 6.11g/t from 5.78g/t in the previous reporting period. This was driven by our high-grade operations, Mponeng and Moab Khotsong.

Recovered grades at Hidden Valley increased by 33% to 1.52g/t from 1.14g/t in FY23 while Mine Waste Solutions delivered a 36% increase in recovered grade of 0.166g/t in this financial year from 0.122g/t.

All-in sustaining costs (AISC) increased by 1% to R901 550/kg (US$1 500/oz) from R889 766/kg (US$1 558/oz).

We continued to allocate most of our project capital to our higher-grade, higher-quality, and lower-risk assets. This aligns with our strategy of producing safe, profitable ounces and improving margins through operational excellence and value-accretive acquisitions.

By growing our higher-grade gold mines, expanding our surface retreatment business, and our international gold and copper assets, we will continue to transform and de-risk Harmony as we go from strength to strength,” said Peter Steenkamp, chief executive officer of Harmony.

EXPECTED BASIC AND HEADLINE EARNINGS FOR FY24
Shareholders of Harmony are advised that a reasonable degree of certainty exists that basic earnings for FY24 will be higher than for the financial year ended 30 June 2023 (“the previous comparable period” or “FY23”) primarily due to an increased gross profit as a result of:

higher recovered grades
an increase in gold production
a higher average gold price received
In addition, an increase in the production of silver and uranium at the Hidden Valley and Moab Khotsong operations respectively, coupled with a meaningful increase in the average prices received for both commodities also contributed to a better performance.
The increase in earnings was partially offset by the following:

Impairment of the Target North asset
Post year-end, management received preliminary Mineral Resource estimates relating to the recent exploration drilling programme conducted at Target North. The new geological model is more robust and differs from previous interpretations as a result of the new information obtained from the drilling. The application of modern industry best practice estimation techniques on the updated geological model resulted in a preliminary Mineral Resource estimate of 13.8 million ounces (58.8Mt at 7.29g/t) in the inferred category, at the time of publishing this report. The latest Mineral Resource estimations were done focusing on a portion of the orebody and indicates reduced ounces at a higher grade than the previous estimate. The new estimates are currently under review by our external mining consultants.

We believe that based on current available information, the new Mineral Resource estimate indicate a recoverable amount of R888 million for Target North and a resulting impairment of R2 793 million.

Brief history of Target North:

In May 2004, Harmony concluded the acquisition of Avgold, which included the Target 1 mine in the Free State. The acquisition also included an extensive exploration programme in an area known as Target North. At the time it was estimated that Target North had a resource base of 67 million ounces, which included the Oribi exploration area. The property was classified as undeveloped property in property, plant and equipment and valued at R5.1 billion.
In 2007, Harmony became severely capital constrained and a strategic review led to the suspension of all greenfields exploration projects in South Africa – including Target North. A review was also done on the Reasonable Prospects for Eventual Economic Extraction (“RPEEE”) of minor reefs at various operations. The same assessment was also done on shafts that were placed on care and maintenance or closed at the time. It was the view of the competent persons at the time that these mineral resources (including Target North), no longer met RPEEE from a Harmony perspective. Since 2007, Target North has therefore been excluded from the reported Mineral Resources. The valuation using a resource multiple price supported the carrying amount at the time.
At 30 June 2018, an impairment of R1 458 million was recognised for Target North following a decrease in the resource multiple price applied in the valuation. The multiple price is derived from recent market transactions, which then included Harmony’s acquisition of the Moab Khotsong operations in March 2018.
In financial year 2019, Harmony restarted drilling at Target North to confirm the geological model. As part of our ongoing exploration activities at Target North, additional drilling was conducted to improve the granularity of our data and get a better geological understanding of the orebody.
an increase in production costs mainly due to inflationary pressures on costs including labour, contractors and electricity. Increased production-based bonuses also contributed to higher labour cost;
an increase in exploration expenditure, mainly due to costs incurred for: the updated feasibility study of the Eva Copper project, a significant drill program and the start of early work site activities;
an increase in the taxation expense predominately due to current taxation. Current taxation moved from R643 million (US$36 million)in FY23 to R2 416 million (US$129 million) in FY24 mainly due to the impact of higher gold production and an increased gold price received on mining tax.
Consequently, earnings per share (“EPS”) are expected to be at least 1 385 South African (“SA”) cents per share, which is an increase of at least 78% on the EPS of 780 SA cents per share for the previous comparable period. In United States (“US”) dollar terms, the earnings per share is expected to be at least 72 US cents per share, which is an increase of at least 64% on the 44 US cents earnings per share reported for the previous comparable period.

Headline earnings per share (“HEPS”) are expected to be at least 1 852 SA cents per share, which represents an increase of more than 100% from the HEPS of 800 SA cents per share reported in the previous comparable period. In US dollar terms, the headline earnings per share is expected to be at least 98 US cents per share, which is an increase of more than 100% on the HEPS of 45 US cents per share reported for the previous comparable period.

The Company will provide an update regarding the range for the EPS and HEPS as soon as reasonable certainty has been established.

DELAY OF PUBLICATION OF FINANCIAL RESULTS UNTIL 5 SEPTEMBER 2024
Following the transition of external auditors from PricewaterhouseCoopers Inc (“PwC”) to the current external auditors, Ernst & Young Inc, (“EY”), EY is in the process of assessing the approach followed by management in determining the ounces used in the calculation of the valuation of Target North, an undeveloped property, dating back to 2004. This is the only outstanding item under review and has resulted in a delay in concluding our reviewed financial statements, necessitating a postponement of the financial results for FY24.

We remain confident in the accuracy of our Mineral Resources and Mineral Reserve Statements. Target North has not been included in our Mineral Resources since 2007 and therefore does not impact our Mineral Resources declared to date.

Harmony’s chief executive officer and financial director will host the following conference calls:

Sell-side analysts at 13h00 (South African time. Please register at: https://www.diamondpass.net/8901990
Media at 14h00 (South African time. Please register at: https://www.diamondpass.net/2619524
Investors at 15h00 (South African time. Please register at: https://www.diamondpass.net/9480926
Harmony will publish its financial results for the financial year ended 30 June 2024 on 5 September 2024. Please see Harmony’s website for more details: www.harmony.co.za.

The financial information on which this trading statement and operational update, has been based has not been reviewed or reported on by Harmony’s external auditors.

FORWARD-LOOKING STATEMENTS
This market release contains forward-looking statements within the meaning of the safe harbour provided by Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), with respect to our financial condition, results of operations, business strategies, operating efficiencies, competitive positions, growth opportunities for existing services, plans and objectives of management, markets for stock and other matters.