HMY

Business Context and Reporting Period

Company: Harmony Gold Mining Company Limited
Filing Type: Form 6-K (Interim Results)
Reporting Period: Six months ended 31 December 2025 (H1FY26)
Key Strategic Shift: Harmony is transitioning from a pure-play gold producer to a diversified gold and copper miner following the acquisition of MAC Copper (CSA mine) in October 2025. The company announced a revised dividend policy, committing to return up to 50% of net free cash to shareholders.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Driven primarily by a 36% increase in the average gold price received (R1,909,849/kg vs R1,405,020/kg) and the inclusion of maiden copper revenue (R417 million) from the CSA mine.
• Production Volume: Group gold production decreased 9% to 22,522kg (724,099oz) due to lower metallurgical recoveries, a mill motor failure at Hidden Valley, and industry-wide cyanide shortages. Conversely, copper production commenced with 3,913 tonnes from CSA.
• Cost Inflation: All-in sustaining costs (AISC) increased 21% to R1,180,367/kg (US$2,115/oz). This was largely volume-driven (lower production) and impacted by higher electricity tariffs and royalties, though unit costs remained within guidance.
• Derivative Impact: Realised hedge losses of R4,483 million (US$258 million) offset some revenue gains, primarily due to silver spot prices exceeding locked-in caps.
• Acquisition Costs: Net profit was impacted by R1,379 million in acquisition-related costs (stamp duty, fees) and R861 million in non-cash fair value adjustments related to the MAC Copper deal.

Guidance, Outlook, and Risks

• Dividend Policy: Revised to pay up to 50% of net free cash. An interim dividend of 530 SA cents (32 US cents) was declared, totaling R3,383 million.
• Production Guidance:
  • Gold: FY26 guidance remains 1.4M – 1.5M ounces.
  • Copper: CSA guidance for the remaining 8 months of FY26 is 17,500 – 18,500 tonnes at C1 cash costs of US$2.65–2.80/lb.
• Capital Allocation: FY26 capital guidance updated to R18,545 million (US$1,068 million), incorporating the Eva Copper Project (AUD2.3–2.6 billion) and CSA integration. Construction on Eva Copper is underway.
• Risks & Contingencies:
  • Operational: Ongoing integration of CSA mine; temporary production halts for safety upgrades at CSA; potential for further metallurgical variability.
  • Financial: Exposure to commodity price volatility (hedging program covers 10–30% of gold production); currency fluctuations (ZAR/USD).
  • Regulatory: Permitting negotiations for the Wafi-Golpu project in Papua New Guinea continue.

Investor Verification Checklist

• Dividend Sustainability: Verify the calculation of "net free cash" under the new 50% payout policy and its sensitivity to capital expenditure on the Eva Copper project.
• CSA Integration: Monitor the timeline for CSA mine optimization (estimated 24 months) and the impact of the planned one-month safety stoppage on copper guidance.
• Cost Control: Assess the trajectory of AISC as production volumes normalize, specifically regarding electricity cost inflation in South Africa.
• Hedging Strategy: Review the exposure to silver price volatility given the significant realised losses in the current period.
• Balance Sheet: Confirm the repayment schedule of the US$1.25 billion bridge facility used for the MAC Copper acquisition and the path to returning to a net cash position.