Harmony(HMY) - 2026 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company announced an interim dividend of ZAR 5.30 or $0.32 per share, with a record payout of ZAR 3.4 billion or $204 million, representing 43% of net free cash [3] - The rolling 12 months dividend yield is 2.2% [3] - Cash flow generation strength led to a revised dividend policy to enhance shareholder participation [3] Business Line Data and Key Metrics Changes - Gold production guidance remains between 1.4-1.5 million ounces, with underground recovered grades above 5.8 grams per ton [4] - All-in sustaining costs for gold operations are projected between ZAR 1.15 million and ZAR 1.22 million per kilogram [4] - Copper production guidance for FY26 is set at 17,500-18,500 tons, with C1 cash costs between $265-$280 per pound [4] Market Data and Key Metrics Changes - The company is experiencing a favorable gold price environment, contributing to strong financial performance [2] - The operational performance is on track to meet full-year production cost and grade guidance [2] Company Strategy and Development Direction - The company aims to reinforce its position as a higher quality, lower risk global producer of gold and copper [2] - Focus on safety and sustaining operations, with capital allocated to organic projects and advancing copper and gold scale where risk-adjusted returns are favorable [2] - The company is transitioning into a significant global gold and copper producer, emphasizing value creation for stakeholders [55] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in meeting production guidance despite challenges such as a cyanide shortage impacting recoveries [12][14] - The company is working to reduce reliance on a sole supplier of liquid cyanide and has commissioned a cyanide dissolution plant [15] - Management is optimistic about the potential for upside in the CSA mine based on recent intercepts and ore body quality [20] Other Important Information - Group CapEx for FY26 has been updated to ZAR 18.5 billion, including capital expenditure for CSA and Eva Copper [4] - The company is addressing operational issues at Moab Khotsong and Mponeng, with management confident in the stated reserve grades [17][41] Q&A Session Summary Question: What caused the underground grade drop at Moab and Mponeng? - Management indicated that the drop was due to being out of the high-grade channel at Mponeng and operational issues at Moab [7][14] Question: What is the update on the Special Mining Lease at Wafi-Golpu? - Management noted ongoing negotiations and the appointment of an independent review team to facilitate progress [9][10] Question: How is the cyanide shortage affecting operations? - The shortage led to reduced recoveries, particularly in surface re-mining operations, but management is working to normalize supply and recoveries [12][14] Question: What are the challenges at CSA? - Management acknowledged challenges but expressed satisfaction with the ore body quality and ongoing improvements [19][20] Question: What is the potential for extending the life of the Hidden Valley mine? - Management believes it is possible to extend the mine life by lifting the tailings dam and is studying further options for significant extensions [46][48]