Harmony Gold Mining Company Limited — FY2020 Form 20-F
Period clarification: The supplied metadata says “2019 Q4,” but this filing is the annual report for the fiscal year ended June 30, 2020, filed October 29, 2020. It does not provide a standalone 2019 Q4 results summary. Financial amounts below are in South African rand (R) unless stated otherwise; financial statements follow IFRS.
Business context
Harmony is a gold producer operating principally in South Africa, with operations and projects in Papua New Guinea (PNG). FY2020 gold sales were 38,481 kg (1.24 million ounces), and the company processed approximately 25.4 million tonnes of ore. Reported attributable proved and probable reserves were 36.5 million gold-equivalent ounces.
Key financial and operating metrics
| Metric | FY2020 | FY2019 |
|---|---|---|
| Revenue | R29.245bn | R26.912bn |
| Operating profit/(loss) | (R358m) | (R2.538bn) |
| Profit/(loss) before tax | (R595m) | (R2.746bn) |
| Net profit/(loss) | (R850m) | (R2.607bn) |
| Basic loss per share | 164 SA cents | 498 SA cents |
| Operating cash flow | R4.723bn | R4.679bn |
| Investing cash flow | (R3.558bn) | (R4.797bn) |
| Financing cash flow | R4.305bn | R380m |
| Capital expenditure | R3.610bn | R5.037bn |
| Borrowings, current and non-current | R7.718bn | R5.915bn |
| Total assets / total equity | R44.692bn / R23.375bn | R36.736bn / R22.614bn |
The filing reports total cash costs of R553,513/kg (US$1,099/oz) and all-in sustaining costs (AISC) of R651,356/kg (US$1,293/oz). These are non-GAAP measures and are not directly comparable across all miners. The average gold sales price, including realized hedge gains, was R735,569/kg (US$1,461/oz). No dividend per share was recorded for FY2020.
The excerpt does not provide a clear year-end cash balance or net debt figure. It reports total cash flows of R5.364bn for the year, including foreign-exchange differences.
Material changes versus FY2019
- Revenue rose R2.333bn, as the average gold price received increased 25.4%; gold production declined 18.1%, reflecting power constraints, South Africa’s COVID-19 lockdown and the phased restart.
- Gold sold fell to 38,481 kg from 44,568 kg. Higher prices and a weaker rand supported revenue despite lower volumes.
- Operating loss narrowed substantially, and net loss decreased to R850m from R2.607bn. No impairment charge was recorded in FY2020, compared with R3.898bn in FY2019; management also recorded no reversal of prior impairments.
- Cash costs per kilogram increased about 26% and AISC per kilogram increased 18%, driven by lower production, COVID-related disruption, wage and electricity costs, royalties and other input-cost pressures.
- Operating cash flow was broadly stable. Investing outflow decreased, largely due to reduced capital additions and cost-saving measures during the lockdown.
- Borrowings increased by R1.803bn. Financing cash flow included a placement of 60.3 million shares that raised approximately R3.5bn gross, as well as net borrowings.
Outlook, management commentary and risks
- COVID-19: South African underground mines were temporarily placed on care and maintenance, then resumed at restricted capacity before labor-capacity restrictions were lifted on June 1, 2020. The company said the pace and effects of the recovery remained uncertain. Hidden Valley in PNG continued operating under quarantine controls after a positive case.
- Capital plans: FY2021 capital expenditure was budgeted at approximately R5.057bn, including R1.376bn for Hidden Valley and R50m for Wafi-Golpu. Management expected funding from operations and existing or new borrowing as needed.
- Acquisition: Harmony agreed to acquire AngloGold Ashanti’s remaining South African assets, including Mponeng and Mine Waste Solutions, for US$200m cash plus contingent consideration. The acquisition closed effective October 1, 2020, after the reporting date. Harmony said the transaction was funded in part through the share placement; the purchase and subsequent debt movements affect post-year-end leverage.
- Liquidity and debt: Management considered working capital resources adequate, citing operating cash generation, cash on hand and borrowing facilities. The company had drawn US$350m of its US$400m syndicated facility at year-end. It reported no covenant breaches in FY2019 or FY2020; lenders temporarily relaxed one covenant through December 2020.
- Key exposures: Results are sensitive to gold prices, rand and other currency movements, production interruptions, electricity supply and tariffs, labor and safety events, input costs, COVID-19, and regulatory changes in South Africa and PNG. Environmental rehabilitation, water management and climate-related costs also present uncertainties.
- Contingencies and unusual items: The silicosis and tuberculosis settlement became effective in December 2019. The recorded provision was R892m at June 30, 2020; actual costs could differ. The Wafi-Golpu project’s permitting timeline remained uncertain, and proposed PNG mining-law changes could affect its economics. A potential carbon-tax impact from electricity use after 2022 was not yet clear.
Important facts for investors to verify
- Confirm full-year audited cash, net debt, debt maturities and post-acquisition leverage in the incorporated financial statements; the supplied text does not state a clear year-end cash or net debt value.
- Assess whether FY2021 production recovery and the R5.057bn capital budget were achieved, and how COVID-19, power availability and operating costs affected output.
- Review the Mponeng acquisition’s final consideration, contingent-payment exposure, acquired liabilities and resulting financing needs.
- Check the assumptions behind reserves, impairment testing and the R892m silicosis provision, including sensitivity to gold prices, exchange rates and claimant outcomes.
- Track Wafi-Golpu permitting and changes to South African and PNG mining, environmental, tax and ownership rules.