INTEGRATED ANNUAL REPORT 2017
Key features YEAR-ON-YEAR
- FIFTH CONSECUTIVE ANNUAL INCREASE IN
UNDERGROUND GRADE RECOVERED (FY17: 5.07g/t) (FY16: 5.02g/t)
- PRODUCTION GUIDANCE MET FOR
SECOND CONSECUTIVE YEAR (FY17: 1.088Moz) (FY16: 1.082Moz)
- NET DEBT REDUCED TO
R887 million (US$68 million) (FY16: R1.08 billion, US$74 million)
- HEDGING STRATEGY
SECURES CASH MARGINS (FY17: R1.7 billion (US$126 million) realised)
- HEADLINE EARNINGS PER SHARE UP 35%
298 SA CENTS (21 US cents) (FY16: 221 SA cents (15 US cents))
- TOTAL DIVIDEND DECLARED FOR THE YEAR OF
85 SA CENTS (7 US cents)
Harmony, a gold mining and exploration company, conducts its activities in South Africa, one of the world’s best-known gold mining regions, and in Papua New Guinea, one of the world’s premier new gold-copper regions. With 67 years of experience, Harmony is South Africa’s third largest gold producer.
Headquartered in Randfontein, South Africa, Harmony is listed on the Johannesburg Stock Exchange and on the New York Stock Exchange, on which its shares are quoted as American Depositary Receipts.
WHAT WE DO
Our activities cover the entire spectrum of the mining pipeline.
EXPLORATION AND ACQUISITION
EXPLORING FOR AND EVALUATING ECONOMICALLY VIABLE ORE BODIES AND/OR VALUE-ACCRETIVE ACQUISITIONS
Our mining activities are supported by brownfields and greenfields exploration programmes – in South Africa and Papua New Guinea respectively. Our greenfields exploration programme, which focuses on highly prospective areas has been instrumental in establishing a significant gold-copper portfolio and underpins our ability to sustain long-term value creation.
MINING AND PROCESSING
ESTABLISHING, DEVELOPING AND OPERATING MINES AND RELATED PROCESSING INFRASTRUCTURE
Our principal activities are the mining of gold-bearing ore which is then processed on site to extract gold and produce unrefined gold bars known as doré. Silver is produced as a by-product.
REFINING AND MARKETING
All our gold is fully refined and beneficiated to final product by the Rand Refinery (Pty) Limited in South Africa and by the Perth Mint Australia for gold produced in Papua New Guinea. The refined gold, which is 99.5% pure, is sold to bullion banks and commodity houses.
REHABILITATING LAND AND CLOSURE
Once our mines have reached the end of their economic lives, mine closure plans are implemented. These plans include rehabilitation, which is ongoing throughout a mine’s operating life, to restore impacted land, making it suitable for an alternative economic use.
WHERE WE OPERATE
- Gold production totalled
1.09Moz (FY16: 1.08Moz)
- Silver production totalled
1.05Moz (FY16: 1.33Moz)
- Total gold mineral resources
104.3Moz (FY16: 105.2Moz)
- Total gold mineral reserves
36.7Moz (FY16: 36.9Moz)
- 33 201 employees
including contractors (FY16: 30 547)
- Tshepong operations (including Phakisa) PDF
- Bambanani PDF
- Target 1 PDF
- Joel PDF
- Masimong PDF
- Unisel PDF
- Doornkop PDF
- Kusasalethu PDF
How we create value
Our business is to unlock and create value from the ore bodies that we own by safely, profitably and cost effectively extracting gold.
OUR STRATEGY AND STRATEGIC OBJECTIVES
Our strategy is to mine safe, profitable ounces and increase our margins.
Our medium-term growth aspiration for FY19 is to achieve annual gold production of 1.5Moz
Prioritising safety, strict control and management of grades mined, disciplined mining and improved productivity
- Safety performance – the number of fatalities and related fatality frequency rate – improved. Safety is a priority
- Achieved production guidance for second consecutive year
- Increased underground grade recovered for fifth year in a row
Achieving operational plans, supported by the current hedging strategy, contributes to cash flow certainty, in turn leading to balance sheet flexibility
- Successful hedging strategy strengthened cash flow margins
- Low levels of net debt contribute to improved balance sheet flexibility
EFFECTIVE CAPITAL ALLOCATION
Evaluating and prioritising organic growth opportunities and value-accretive acquisitions to ensure positive stakeholder returns (dividends only paid out of profits)
- Interim and final dividends declared for FY17
- Acquired full ownership of Hidden Valley and invested in stage 5 and 6 cut-backs
- Organic growth – the integration of Tshepong and Phakisa approved and development of the Joel decline nearing completion
“Good production results for the year combined with positive market conditions enabled us to increase our margins”DOWNLOAD PDF
Chief executive officer’s review
“Operational excellence was key in improving safety performance, and we achieved annual production guidance for a second consecutive year”DOWNLOAD PDF
Financial director’s report
“Good production results for the year combined with market conditions contributed to positive earnings”DOWNLOAD PDF
Social and ethics committee: chairman’s report
“Our moral obligation to our host communities extends beyond providing direct employment opportunities and financial benefits”DOWNLOAD PDF
“Harmony’s reward strategy underpins our business strategy to produce profitable ounces, safely, and increase our margins”DOWNLOAD PDF
Audit and risk committee: chairman’s report
“Sound governance and independent assurance confirmed an effective control environment for quality internal and external reporting and legislative compliance”DOWNLOAD PDF
About this report
Our Integrated Annual Report 2017 covers Harmony’s performance for the 2017 financial year (FY17), from 1 July 2016 to 30 June 2017. Certain comparative historical information is presented where relevant and to provide insight into our future plans.
The report covers all of Harmony’s operations in South Africa as well as its operational and exploration activities (joint venture and own) in Papua New Guinea. It details the material environmental, socio-economic and governance aspects of our operations, and of Harmony as a whole.