Harmony(US:HMY)2023-03-03 19:04Financial Data and Key Metrics Changes - Revenue increased by 6% to R23.3 billion from R22 billion, while headline earnings per share rose by 18% to R2.93 [25] - EBITDA decreased by 12% to R8.1 billion from R9.3 billion [25] - Group operating free cash flow decreased by 14% to R1.9 billion from R2.3 billion, attributed to major capital projects [25] - Net debt increased to R4.7 billion from R757 million, with net debt to EBITDA remaining below one times [26] Business Line Data and Key Metrics Changes - Year-on-year gold production was down 5%, primarily due to the closure of Bambanani, but production was largely flat when adjusted for this closure [16] - Operating free cash flow from South African underground operations increased by 96% to R815 million, contributing significantly to group production [18] - High-grade assets, Mponeng and Moab Khotsong, showed strong performance with recovered grades improving by 6% to nearly 8 grams per tonne [20] Market Data and Key Metrics Changes - The first 30 megawatts of renewable solar energy is expected to come online in the fourth quarter of the financial year, contributing to cost savings [29] - The acquisition of Eva Copper was completed for US$170 million, enhancing Harmony's copper portfolio [26] Company Strategy and Development Direction - Harmony aims to produce safe, profitable ounces and improve margins through operational excellence and value-accretive acquisitions [33] - The company is focusing on high-grade and higher-margin projects, with a clear set of investment criteria to lower overall risk and improve margins [32] - The strategic objective includes progressing renewable energy projects to enhance energy security and reduce costs [28][29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in maintaining good grades at high-grade mines despite variability, emphasizing the importance of mining practices and seismic response management [36][38] - The company is actively managing load curtailment impacts and has implemented strategies to mitigate its effects on operations [53] Other Important Information - The company has a strong focus on sustainability and ESG practices, with initiatives aimed at improving safety and reducing environmental impact [12][13] - Harmony's dividend policy is to pay a return of 20% of net free cash generated, but no interim dividend was declared for this reporting period due to capital requirements [26][39] Q&A Session Summary Question: Variability at Moab and Mponeng grades - Management indicated that grade variability is special in nature and attributed to mining practices and seismic response management [36][38] Question: Outlook on final dividend - The decision not to declare a dividend was based on capital requirements and net debt considerations, with future dividends at the discretion of the Board [39] Question: Renewable energy program costs and risks - The first phase of the renewable energy program is expected to yield significant cost savings, with further phases planned to enhance energy security [44][29] Question: Investment in digital technologies for operational excellence - The company is actively investing in technology to improve operational efficiency and safety protocols [41][43] Question: Broader strategy for diversification into other metals - Harmony is currently focused on gold and copper, with no immediate plans to diversify into other metals [62] Question: Ability to extract cash from Papua New Guinea amid FX shortages - Management acknowledged the challenges but expressed confidence in their ability to manage cash extraction from PNG [68]