Harmony(HMY)2021-02-23 21:37Harmony Gold Mining Company Limited Q2 2021 Earnings Conference Call Summary Company Overview - Company: Harmony Gold Mining Company Limited (NYSE:HMY) - Date of Call: February 23, 2021 - Participants: - Max Manoeli - Investor Relations Manager - Peter Steenkamp - Chief Executive Officer - Boipelo Lekubo - Financial Director Key Points Financial Performance - Harmony reported exceptional performances in the first half of 2021, supporting its growth strategy initiated in 2016 through acquisitions and portfolio optimization [4][5] - The company declared an interim dividend of ZAR 1.10, reflecting its commitment to delivering positive shareholder returns [5] Dividend Policy - The dividend is based on 20% of net free cash, defined as operating free cash flow after capital, interest, tax, and other expenses [7][9] - Future major capital expenditures and net debt to EBITDA ratios will influence dividend decisions [9][30] Cost Guidance - All-in sustaining cost guidance for the year increased to ZAR 700,000/kg to ZAR 720,000/kg due to additional production from acquired assets and increased royalties [8][13] - COVID-related costs and high royalties are impacting overall costs, but the company maintains that its all-in sustaining costs are in line with guidance [45][46] Asset Management and Acquisitions - Harmony has transformed into an emerging market mining specialist, focusing on creating value throughout the mining cycle [4] - The company has successfully integrated assets from AngloGold Ashanti, which are expected to enhance production and operational efficiency [12][14] Project Development - The Wafi-Golpu project in Papua New Guinea (PNG) has received environmental approval, and the company is re-engaging with the PNG government for further development [21][23] - The company holds 170 million ounces of resources, with a significant portion expected to convert to reserves, particularly from the Wafi-Golpu project [22] Hedging Strategy - Harmony's hedging policy remains unchanged, targeting to hedge 20% of gold production over 24 months, with a focus on locking in margins of 25% above costs [31][32] - The company aims to be selective in hedging to avoid opportunity losses during periods of high market prices [32][35] Stakeholder Engagement - Harmony emphasizes its commitment to sustainable mining practices and community engagement as part of its growth strategy [50] Risks and Challenges - The company faces challenges related to negotiations with various stakeholders in PNG regarding project licensing and fiscal arrangements [24][25] - There is a recognition that if gold prices drop significantly, the company may need to restructure, as hedging alone cannot mitigate all risks [36][37] Additional Insights - The integration of AngloGold assets is expected to yield synergies, with potential conversions of plants to retreatment facilities [16][18] - The company is cautious about its future capital expenditures, indicating that increased spending could impact dividend payouts [30] This summary encapsulates the key discussions and insights from the Harmony Gold Mining Company Limited Q2 2021 earnings conference call, highlighting the company's financial performance, strategic initiatives, and future outlook.