Harmony Gold Mining Company Ltd (HMY) 2012 Q4 法說會逐字稿

Good afternoon, ladies and gentlemen, and welcome to the Harmony Gold Mining Company Limited fourth quarter and financial year end 2013 international conference. All participants will be in listen-only mode and there will be an opportunity for you to ask questions at the end of today's presentation. (Operator Instructions). Please also note that this conference is being recorded. I would now like to turn the conference over to Mr. Graham Briggs. Please go ahead, sir.

Thank you very much. And welcome, ladies and gentlemen, or good morning if you are in that time zone, or good afternoon in South Africa. This is our quarter four for the financial year '13 results. We'll also be talking about the year-end results for financial year '13 and have an outlook for year '14 -- financial year '14.

I am certainly hoping you've all got the presentation as per our website. If so, page two, should be the Safe Harbor statement and then we go over to page three, which is the agenda. I am going to be -- start talking about strategy and talk about the three legs of our strategy, optimizing operational delivery, growth and sharing rewards and then I'll conclude. It is a little bit of a longer presentation, so please be aware -- bear with me.

Slide five is our strategy, has not changed much over the past few years, been refined a little bit. The three legs are there, our operational delivery, growth, sharing rewards, and I'm going to take you through each of those areas to display a little bit of where we are and what we intend to do.

Slide six, share price is obviously not the greatest on any gold company, but particularly in South Africa, and really dealing with the current gold investment climate is a difficult thing for investors [and] as well for us. Investors are obviously seeking returns. We are aware that most investors are averse to large capital investments, big capital projects and so on.

Gold price is certainly much lower than a year ago and no longer are companies existing for growth at all costs. And balance sheet is one of the important aspects of a gold mining company.

Just some information on how we went about preparing our plans, and start with slide seven. We really looked each operation by operation and tried to maximize the revenue, obviously, setting ourselves a relatively conservative gold price. Grade came up as one of the king things that we should be looking at and, therefore, 'grade is king' is the word that we've used there.

Need to look at the de-bottlenecking, those areas where we can de-bottleneck and get better volumes through, and we believe we've got a good reserve base on all our operations for -- that matches our plans.

We looked at the risks and there are several measures on mitigation of risks that we looked at. And then the reducing of costs, you heard us last quarter talking about costs and the reduction. We are re-sensitizing the whole business as to waste or cost management. We have done some improvements. We'll give you the numbers on services, on corporate costs and also looking at capital. Rationalizing and really improving productivity is what we've been looking at, rationalizing the operational levels to see where we can improve it.

On slide eight, fairly conservative with respect to our business planning. We have adjusted them for the risks that we see and, therefore, they are really aligned to our strategy. We need to do our best to manage the impacts of the external environment. There are many impacts. And whether they be legislated, whether they be issues of a local nature, communities around our mines, or even the gold price, we need to adapt to those very quickly and I think we have got to the position where we can.

We need to look at productivity. There is a continuous improvement drive looking at optimization, investigating some of the technology. We've been very proactive on our health strategy. A few years ago our health strategy was simply talking about hospitals and the number of sick people. Now our shift has moved into the very proactive area of trying to keep people healthy and, therefore, keep them healthy at work.

Balance sheet very good, and we have been looking at, operation by operation, at the total cost of that operation, not just the cash cost, but the costs including capital and all the allocated costs. Then the -- really balancing how much we should be spending on capital, what exploration we should be spending and so on.

Slide nine, our eight major risks. Labor disputes; and I'm sure I'll be answering some questions a little bit later on labor and the wage negotiation. That's a top risk that we've got here. Safety risks; we've done a huge amount. I will show you a graph on safety.

Gold price, naturally, and foreign exchange fluctuations, certainly, that can affect a business very badly and we've seen major changes in a lot of companies around the world in this last release, half year or quarterly releases.

Looking at major environmental infrastructure incidents, it's certainly affected Phakisa. There is good progress on that ventilation shaft that it would be -- it should be back in operation by December and it's all geared for that.

No matter which country you're in socioeconomic or political or regulatory changes can happen and do happen. We need to manage through that and, therefore, need to stay close to governments, stay close to our communities, obviously, monitor these things very carefully.

Integrating and managing projects, well, we've spent a great deal of money here in South Africa on these assets that are busy building up. And that's one of the issues that we need to continue to drive. And then looking at acquisition or longer-term ore reserves is also a strategic issue that we need to look at.

We'll talk about financing of Golpu and the development around there. That's our only large capital project. And then looking at competition for human resources. Those are really the eight major risks that we've identified.

Going to slide 11 and then on to 12, looking at production and really the slide 11 titled 'safe production', slide 12 gives you a graph of various matrices that we measure and you can see that they are all declining. They've all improved dramatically over the last few years.

We have had some very good reports on safety and the work that we are doing. However, we still have more work to do. Obviously, we just have too many fatals still and -- but we are still getting them reduced and we need to work harder on all those things.

Slide 13, quarter-on-quarter results. We had two fatalities during the quarter, which were very unfortunate and, obviously, that affects operations badly, it affects people, families and so on, so we are very cognizant of that. Gold production improved by 12%, mainly Kusasalethu starting to come back into production. By the end of the quarter Kusasalethu was back at full production, back in the -- at the tail end of June.

Cash operating costs decreased by 3%. Operating profit, however, was lower, at ZAR639m, mainly again due to the Kusasalethu issue. And Frank will be talking more about losses and so on, the headline loss per share for the quarter of ZAR1.86. There are -- as I said, Frank will talk about deferred taxes and so on. And there was a full amount of retrenchment costs in the quarter.

Slide 14, year-on-year results, a very pleasing 7% increase in underground grade. We had the lowest recorded annual lost time incident frequency rate, so that's a credit to all the safety work that we are doing.

The Evander sale was completed, that transaction. We did have a watershed agreement signed at Kusasalethu with labor. That agreement subsequently got mimicked in the various areas of what the Minister was doing on getting a labor stability agreement out. Gold production was down by 2%. And I'll show you the details on the year-on-year analysis both with and without Kusasalethu and give you the information on operating costs as well in the unit operating costs.

Again, Frank will take us through the financials. And then we have no final dividend declared. We did have an interim dividend of ZAR0.50. Our policy is normally to pay dividend out of profits and, of course, you can see that the last six months were not good.

Slide 15, a waterfall graph showing the financial year '12, 36,273 kilograms of gold and the differences there between the winners and the gainers, the -- sorry, the losers and the gainers, the losers being Kusasalethu, Tshepong, Surface Dumps which was really a filler for the moulds that's not very significant, Hidden Valley and Phakisa. And then the rest really gaining and giving us the total of 35,374 for the financial year '13.

If we look at the Group operating results quarter on quarter, slide 16, you can see the 12% increase in kilograms or ounces there. The rand per kilogram price at ZAR427,000. Today's price is around about ZAR425,000 a kilogram. It has been lower, closer to ZAR400,000, but it's hovering above the ZAR420,000 as we speak.

And then the cash costs and other information there, noteworthy to see, of course, the difference between the gold price in rand per kilogram and US dollars an ounce. And that's due to the exchange rate, which is the bottom line.

Slide 17, Group operating results year on year divided into two there, the results including Kusasalethu and, on the right, results excluding Kusasalethu. So if you just take Kusasalethu out of the financial year '13, as well as financial year '12, you can see that there was actually a 7% increase in gold produced. Rand per kilogram the gold price is slightly different because of the timing of sales and so on.

And then the cash operating costs decreased. It was worse by 11% even including the poor performance like Tshepong and, of course, Hidden Valley. But it's quite interesting to look at these differences to see how much the Kusasalethu issue caused us in the last year.

We've been doing a lot on our mine call factor and our grade. A graph on slide 18 displaying the mine call factor, where it's come from, at about, what, 74% there and heading towards the 80% and over. So we have done a lot of clean mining, getting our valuations much better and making sure that we try to recover all the gold that we've lost.

On slide 19 history which goes back to quarter one financial year '09 and that's looking at development grades. You can see the steady increase in development grades. They are a little bit all over the place, but the trend is good.

And the interesting thing about development grades, of course, is that when you develop a raised line you are likely to be mining it within 24 months or maybe 36 months from the time you've developed it. So you can see this is a good indication of future recovered grades.

Slide 20, financial-year '12 underground actual grade, at 4.26, financial-year '13, at 4.54, and our planning for the next year, financial-year '14, at 4.79 gram a tonne.

Slide 21, I won't take you through that slide in particular, but we really break down each of the operations, operation by operation. And you can see that the 4.79 at the bottom is the same as the 4.79 of the previous graph. And you can see the financial-year '12, financial-year '13 and the recovered grade forecast for '14. Operation by operation, a dramatic change in some of them, and an example of that, of course, is Bambanani. You can see that's come from a 6.79, closer to 10 grams in the last -- towards the end of last year.

If you go over to slide 23 and this is dollars per ounce. You have to remember, of course, the previous slide is on rand per kilogram, so there are exchange rate fluctuations here. But they are done in the quarter that the exchange rate applies, so you can see our cash costs plus maintenance capital and growth capital on top of that and that gives you effectively the total cost of the operation. Costs that aren't included here are corporate costs and exploration.

I'm now going to hand over to Frank who will take us through the finances.

Thank you, Graham. If we turn to slide 26 we have our cash flow summary year on year in US dollars. Our cash flow from operations $434m compared to the $650m the year before. If we add the $130m from Kusasalethu we would have been very much in line with the previous year.

Exploration expenditure $76m, $73m of that spent in PNG and that was some drilling, exploration and the feasibility study; income and mining taxes paid that's actual taxes paid; proceeds from the sale of Evander $143m; capital expenditure $430m; and then we paid a dividend of $49m during the year. Our net debt position at the end of June 2013 is $46m. We've got cash balance of $209m and the debt of $255m.

And if we page over to the income statement year on year in US dollars, that's page 28 -- slide 28. Before I go through this I'd like to just talk about a few accounting entries. And one is to the impairment and the -- also the tax -- the deferred tax reversal.

Now, what happened is at Hidden Valley we had an impairment of $310m that's the [convenience] conversion translation from the rand figure to this income statement, and we had a very small impairment of ZAR58m in South Africa.

The deferred tax asset which we reversed was $65m and that was in Papua New Guinea. How did we get to that figure? In Hidden Valley -- in Papua New Guinea there are special deductions for tax and there is a double deduction for exploration costs and over the years we've built up this deferred tax asset.

Because of the impairment of the Hidden Valley asset we've reversed the deferred tax asset, because it means at these gold prices we would not be utilizing this assessed loss. Should the gold price go up that is still available in the future to be offset against our profits. If we go through the income statement -- and the deferred tax asset, sorry, is not added back for headline earnings [when] we do add back impairment for headline earnings.

If we go through the income statement, our revenue for the year was $1.8b. That was 8% lower than the year before. That was -- the gold price was 5% down and our gold sold was also 3% down. And that was mainly because of the Kusasalethu labor unrest when it was temporarily closed.

Cash operating costs went up by 2%. A large portion of the cash operating costs increase was at Hidden Valley where we had a number of cost pressures during the period. Our operating profit $511m, amortization and depreciation very much in line with the year before.

We discussed the impairment that's on Hidden Valley, $310m; exploration expenditure; taxation, which is the reversal of the deferred tax asset; and then profit from discontinued operations, the profits from Evander during the period. And this resulted in a net loss of $267m. Our headline earnings per share is $0.05.

If we page over, we tried to normalize it -- this is to page 30. We've tried to normalize our profit and add back some of these accounting entries and exceptional items during this period. Our net loss in terms of -- from the income statement was $267m. If we add back the impairment of $310m, other items of $20m, which was profit on sale of some assets, we reported a headline earnings of $23m.

If we add back the impact of Kusasalethu of $136m, the deferred tax written off at Hidden Valley of $55m and the foreign exchange translation loss on the dollar loan of $40m, our normalized profit would have been $254m.

Thank you, Graham.

Thanks, Frank. Now I'm going to talk about growth and slide 32 captures that our focus has been more not on growth in ounces, but growth in margin.

Slide 33 gives you our assets and you can see where our assets lie on this building from exploration through to steady state. Doornkop is getting closer to steady state. It will get to steady state during this next financial-year 2014. Target three may take a little bit longer. And Doornkop and Kusasalethu should show good progress. Phakisa still some work going on, the ventilation shaft, as I said. And Hidden Valley certainly there is a lot of restructuring that's happened there.

In our quarterly report you have quite a few pages on the mineral resources reserves. I've just got this slide here on reserve reconciliation, looking at June 2012 to June '13 and where the differences occur.

Mined during the year are 1.5m ounces, adjustments on surface sources of 800,000 ounces, scope changes which were positive, on 900,000, and that gives us a gold reserve for 2013 at 37.7m ounces, and then gold equivalents, which is the same as the year before, and that's for Golpu. You can see underground resources 22.8m ounces at 5.87 gram a tonne.

Very much forward-looking statements on slide 35, asset by asset, expected potential ounces for financial-year '14, giving a total for the whole business at somewhere between 1.3m and 1.4m ounces. We've given some cash costs there. We've put average annual capital costs and cash costs. Please read the bullets at the bottom, which means that those costs include cash costs, royalties, maintenance capital, growth capital and the various local economic developments we do.

And that takes us to a rand figure of somewhere between ZAR325,000 and ZAR360,000 a kilogram, and at ZAR9.45, which we've used in this, a US dollar price of somewhere between $1,070 an ounce and $1,180 an ounce.

When you look at the detail of that operation you will see that in our planning we released ZAR400,000 a kilogram as the benchmark where no operation should exceed that and so they should be profitable below that. You will see that Phakisa is the one outlier there. There is quite a bit of capital still going in Phakisa and it's relatively small production still compared to where it should be, so it is building up.

Another operation is Hidden Valley and that one we should look at the dollars per ounce. Our intent was to try and get Hidden Valley profitable at $1,400. That's going to be sailing, looks like, fairly close to the margin, but we have done a lot of changes and restructuring there. We'll see how that develops over the while.

And then if you go further down the page, Kalgold is one of those operations where the cash cost is fairly good, but we have been basically rebuilding the plant over the last year and a bit and we've got another two years to go on that plant, so basically rebuilding that plant.

Should the gold price go down lower than the ZAR400,000, or we don't achieve our plan, certainly, that consideration on what we do, put it in care and maintenance or whatever, needs to be taken. So those are the three operations that are sailing, I think, fairly close to the wind, if you like.

We have reviewed our capital, slide 36. We've given, in the grey shading there, our guidance that we gave last year this time, August 2012. And we said for this year, financial-year '13, we'd spend about ZAR4.1b. The real number is about ZAR3.6b. And this is in rands. And then you can see the forecast for year '14 and '15 there. We were forecasting ZAR5.1b. In fact, we've got to [a number] of ZAR3b. You can look at that over the slide, for slide 37, and see the numbers in dollars -- in capital dollars. So quite a change in where we are in the capital of what we were predicting a year ago to what we are predicting now.

Slide 38, that's in graphical form, but we've gone back to 2012, and forecasting here to 2018. Of note, of course, is the grey blob, if you like, on it. And that's where we haven't put any capital for Golpu from the year 2016 onwards. And we'll talk a little bit about Golpu and our plans for that. So we have forecast for the next two years, financial-year '14 and financial-year '15, mainly on drilling and various studies, and we'll talk a little bit about the capital of Wafi-Golpu going forward.

We have made some progress on cost cutting and capital. You've seen the capital there. So this just gives a bit more detail on the reduced costs in South Africa, corporate cost, services and exploration totaling ZAR450m, and the capital expenditure you've seen in the previous graphs. Don't envisage any mine or shaft closures. I've talked a little bit about those that are sailing a bit close to the wind.

On Wafi-Golpu, slide 42, great ore body, this, but the Golpu 2012 pre-feasibility study doesn't deliver adequate returns on the current investment gold and copper prices and, therefore, we found it prudent to reposition Golpu and rethink the whole process of how we build a mine there.

In the last year we've done a lot of drilling, mainly in the upper part of the mine, where you've seen before and you'll see in our quarterly report, you can see the detail of some of that drilling. Higher grades in the top portion, is more porphyry and we're getting better metallurgical recoveries, so we know a lot more about the upper portion of the ore body.

And that has led us into the conclusion that we can probably build a smaller mine and albeit modular and expandable, so we can come in with much lower capital and expand this operation in the future.

So in our budget we've got funding for drilling and study expenditure in the next two years. And beyond year '15, in other words, from year -- financial-year '16 onwards we'll consider external funding options. By then we'll have more detail and more certainty on what the capital costs would be, but safe to say that it will be a lot less than what was predicted in the pre-feasibility study.

We'll be reviewing and giving you feedback, hopefully, within the next nine months to 12 months, and -- but we will certainly make sure that the development of this project is aligned with the strategy.

43 gives you a little bit of detail of where we were on the 2012 pre-feasibility. Yes, a world-class greenfield copper porphyry resource, no doubt about that, extensive infrastructure that we have had to do to get down to it. Now we are thinking more in line with sinking shafts, which means that we can get to the ore body quicker, especially if it's in the upper portion of the ore body.

Slide 44, it just recaps some of the things which you all know very well. If you look at the copper price there's a downtrend there. On the gold price, certainly' you've got a large downtrend. Capital costs on new developments is the orange portion to those graphs, where various mining companies have also had a big increase in their capital costs. That's due to several factors.

One is that there's been big competition to draw -- sorry, to develop these projects. There's been time delays as well. And it's safe to say that a lot of these contractors and issues have really been under the microscope and there's a lot of sharper pencils out there. So our expectation is that capital costs will be very much more competitive in the future.

Operating costs for mines, this is just a graph showing world and Australian -- I'm sure the world one includes the South African costs. You can see our costs are going up. And of course if you look at the gold price, now that it's down at much lower, at $1,300, you'll see that there's certainly a tight squeeze on margins worldwide.

Slide 45 tries to put that into words of what we're planning to do, so the 2012 pre-feasibility outcome was really a big-bang solution. It's going to be a big mine, capital intensive, lots of dollars have to be spent to get it into early production, and a fairly high-risk profile.

The new targeted outcome is looking at a more modular, expandable solution with much lower capital and an achievable but competitive schedule, really a lower-risk profile. So there are various areas of focus, a cost-effective solution considering even temporary or sacrificial infrastructure that would certainly last for a few years, but may to last the whole mine life.

Minimizing the footprint is important, because footprint in bulk moving of material in Papua New Guinea is quite expensive, so really the aim is to improve the value and reduce the risk of the project that we build. And that has to fit in with our strategy now of, obviously, investors seeking return, getting better value for this project with lower capital and nearer-term cash flow, but also looking at a scalable mine, something we can scale up in the future. And we think this will create better shareholder value through this approach.

Golpu is a world-class resource. I've got two plan views on slide 46, the one of the Wafi transfer area and the other one of the immediate area around Wafi and Golpu, several ore bodies that are there. More importantly known is the Golpu one, but Wafi is also there. Also some other gold anomalies that are showing there. Some of the drill results are giving some nice pleasing numbers.

Slide 47, again, you've seen this slide before, but just to reaffirm that when it comes to grade the Golpu project is certainly one of the best when it comes to copper and gold grades around. So it's -- this is of the Southeast Asian copper-gold deposits.

We give an indicative timeline on slide 48. We're right down in the orange area at the moment. You will see in that -- in those various stages that it looks like we're advancing on underground studies and looking at underground access a lot earlier than we were in the original timeline. And that's because we believe we need to get down and fully understand this ore body to be able to plan the mine properly.

The last leg of our strategy really, slide 50, balancing the stakeholder needs. I guess no matter where you are in the world there are a whole lot of stakeholders, whether it be the governments, or the local community, or employees, or even your shareholders. You need to try and balance those needs. And what we have on slide 51 is just a bit of a list of all our various stakeholders and, of course, our shareholders are most important to us and -- but we need to balance all the other needs of the stakeholders.

Some of the issues on social relations there. I think health and safety initiatives, we've had very good success on those. We continue to look at social upliftment in the areas surrounding our mines, relatively been quite stable around our mines. Ongoing looking at managing the relationships and these are probably pretty common to whether one looks at South Africa or international. And the last point there is really the wage negotiations.

So that's our scorecard. This is how you should measure us going forward. Slide 54 is just capturing that strategy again. And just to conclude with, I think -- in fact, I know we remain undervalued despite a great deal of improved safety, greater capital discipline, have got free cash flow. We are displaying those cost reductions.

We've got a great asset portfolio and Golpu is one of those parts of the assets. It's great and we need to see the value of that. We have got balance sheet strength, low debt numbers. You saw that from Frank's -- what Frank was saying.

Increase in grade, we've seen that in the last year, and we're planning that going forward. We think we've been quite responsible in getting the right sort of balance between corporate social investment.

We have paid dividends during this year. We paid a ZAR0.50 interim. Because of the last six months, and us not being profitable, we haven't been -- we haven't paid a final dividend, but it's certainly our intention to pay dividends. And we believe we've got experienced management teams.

Ladies and gentlemen, I think that's it from my side. Let me open myself for questions to either Frank or myself.

Thank you very much, sir. (Operator Instructions). Our first question comes from David Haughton from BMO. Please go ahead.

Good morning, Graham and Frank. Thank you for the update. I've got a question about the impairments. It seems that the impairments are really pivoting around Hidden Valley. I'm just wondering whether that's because you inherited that from Newcrest who had also recorded an impairment, or whether you had run the carrying value tests right across your portfolio.

Hello, David. This is Frank, if I can answer you on that. Yes, we had done -- David, we did run those tests on all our operations. We had small impairments in South Africa, but the -- 95%, 98% of the impairment was in Hidden Valley.

I think the one thing is that the rand gold price didn't come down as much as the dollar gold price. That helped us in testing for impairment. But the second thing is also that most of our South African operations, or we built it as operations some time ago, and our [cutting] value for those assets are much lower than was the case of Hidden Valley, which was recently built from nothing.

All right. And what kind of economic parameters did you put around those tests, Frank, as far as your rand-per-kilo prices etc.?

So what we would have done is we would have used real terms. We would have done the gold price in rand at real terms, say, ZAR400,000. And our discount factors would -- depending on which operation, would have been in real terms between 6% and 10%. And at Hidden Valley I think our discount rate was 8.52%, if I remember correctly.

And the gold price for the first year was $1,250, and then we had a gold price of $1,300, and then we had a long-term gold price of $1,400.

Okay, so that's a fairly reasonable go at it.

Yes.

If I can just now switch topics, CapEx revision, shown on page 36, that's quite a significant improvement and, obviously, a lot of hard decisions gone into that. If we wanted to think about how we build that CapEx up, should we be thinking about the data that you gave us on page 35 and look at the difference between your operate costs and your operating cost plus capital cost? Would that (technical difficulty)?

Yes, David, if I can -- you need to maybe flick between page 39 and page 35.

Yes.

If you look at 39 and you look at the yellow, grey -- light grey color and green, that's all in South Africa. So if you look at the top, the green, at around about $300m for this year and for next year, that's all South African capital in the various categories.

That capital will all be in the difference between the cash costs and the average annual capital there in unit costs on slide 35. Except the Hidden Valley one is the purple one, and that's the delta between roughly the cash costs and the average all-in costs. But you have to, when you look at Hidden Valley, take note of the exchange rate that we have used here.

Okay, so I just wanted to confirm I've got all the bits and pieces between those various slides to be able to get it down to the individual operation level.

Yes. The only exception would be on slide 39, the red. That's the Wafi-Golpu.

Okay.

Because the capital spend we haven't included in any of those operations.

All right. And when we're having a look at the costs, as you were going through, Graham, you identified the ones that were the problem child, and Hidden Valley clearly one of those. Are you comfortable that you'd be able to get those costs down to something that you would find acceptable, or are you thinking something more drastic there?

David, the guys have done a lot of work. There's been some significant management changes, in that we are starting to get -- instead of fly in, fly out, we're starting to look at residential and, therefore, management decisions should be carried forward without the non-handover, if you like, or the difficult handover that's normally associated with fly in, fly out. It also reduces the number of managers you actually have to have, because you don't have to have two managers for each job. So there's significant changes in numbers of people.

In total I think the whole P&G, including exploration, Hidden Valley and Golpu are about 1,000 people less than they were just two months ago. And the big change there is obviously the crusher now starting to perform, which means that we won't be hauling the ore down to the plants, that five-kilometer haul down the hill, and getting the trucks back again. So that's a significant change in the cost.

So it's certainly -- it is still a plan. There's still a lot of promise in that and I think the guys seem to be fairly convinced that they can do it. And they're getting measured on a daily basis. So there's a lot of focus on that, David.

Yes. Obviously, some very hard decisions had gone into all of these outcomes that you're putting forward for 2014, so thank you for all of that and good luck.

Thank you very much.

Thank you very much. Our next question comes from [David Barbuscia] from [Detoir]. Please go ahead.

Yes, hello. Thank you very much for the presentation. I just wanted to ask you a question regarding your outstanding debt facilities. From what I understand, you were planning to renegotiate or renew a revolving credit facility that you obtained from NetBank, which maturing in December 2015, plus a term loan of ZAR762m and a syndicated loan of $300m that is supposed to mature in August 2015. What's the situation? And do you still plan to renegotiate this debt?

Yes, thank you. I think that we are going to, beginning of -- our thinking was to -- in the next 12 months to renegotiate and to replace those loans facilities with a new loan facility, a dollar facility. We've been very fortunate the current interest rate that we're paying is 2.6% plus Libor, so I'm not sure if we will be able to get the same rate going forward. But we will be looking at the best interest rate and replace those facilities in the next 12 months.

Right, I understand. And do you have a target in terms of maturity on the new facilities that you're going to obtain to replace the old ones?

The old ones were four years, and we're not certain yet, but it would at least be four to five years.

All right. Okay, thanks.

Thank you very much. (Operator Instructions). We have a question from Stephanie Barsdorf from Noah Capital. Please go ahead.

Stephanie?

I'm sorry. Hi, everyone. Thank you very much for the presentation. I was just wondering if you could elaborate on the -- you spoke about mechanization innovation. I was wondering if you could go into detail on what exactly you're looking at there.

Yes, Stephanie, a good question. There's quite a lot of new technology that we are using on our mines which is really often available in various industries and it requires a bit of adaptation to be used on the mines. Certainly, when it comes to our safety systems there's quite a lot there.

I can give you an example, for instance. And lately we have on several of our operations, basically, drill rigs which you would find in normal mines internationally, they're either rail bound or rubber wheeled, but in a lot of our mines because we rail a lot of things they are rail bound. And it's a case of getting them to adapt and work in the conditions that we have and for us to get full advantage of that.

At the moment we're in the situation where we haven't seen that technology working greatly for us in, obviously, a productivity advantage. So that's the type of thing that we're looking at. We're in the industry together in South Africa obviously spent some time with the other companies talking about their technology and we do a lot of, hopefully, learning from each other.

So we don't want to reinvent the wheel. So I know AngloGold is doing a lot of technology changes; we're aware of those. They're doing some development. A lot of the companies are trying to perfect the equipment to be able to operate under the underground conditions and then the companies, obviously, will be keen to sell us some of their equipment as well. So there are various programs, but it's a case of really getting them to adapt to the conditions that we're working underground.

Thank you.

Thanks, Stephanie.

Thank you very much. (Operator Instructions). We will pause again to see if there are any further questions.

Well, let me complete and just finish off the presentation, if you don't mind. I believe that we've done a lot of work on repositioning Harmony for the future. Safety wise, we've done a great job. We need to continue to do that job so that we eventually can claim not to kill anybody in our operations.

We've done a lot of work on health as well. We've got very much more proactive health planning. We've done a lot of planning on our operations with respect to production and grade and looking at the bottleneck. We've done some cost savings. You've seen the capital view that we have. A new idea and new thoughts on Golpu and the way to take it forward is starting to emerge and we'll obviously give that information through as and when we get it.

And then most of our operations are in South Africa. We are still very much South Africans. And the gold price hasn't been that bad. Today's gold price, at ZAR425,000 a kilogram, that's not too shabby. It takes us into similar gold prices that we had during our last while. So we certainly are really well positioned to look at the future and fairly confident about our plan going forward.

Ladies and gentlemen, thank you very much and have a great day.

Thank you very much, sir. Ladies and gentlemen, on behalf of Harmony Gold Mining Company Limited that concludes this afternoon's conference. Thank you for joining us and you may now disconnect your lines.