Harmony Gold Mining Company Ltd (HMY) 2021 Q2 法說會逐字稿

Max, you can go ahead, sir.

Good day, everyone, and welcome to Harmony's interim results for the period ended 31 December 2020. My name is Max Manoeli from the Investor Relations team. And I'm joined today by Harmony Management's CEO, Peter Steenkamp; Boipelo Lekubo, Financial Director; Marian van der Walt, the Senior Group Executive for Enterprise Risk Management and Investor Relations; our CFO for Treasury, Herman Perry; and our Executive Director, Mashego Mashego; as well as Jared Coetzer, who is the new Head of Investor Relations; and [Jennifer Globe] as well from the IR team. Thank you very much for joining us.

And I will now hand over to Harmony's CEO, Peter Steenkamp.

Thank you, Max. Good morning, everyone. Without repeating the highlights published both in the results booklet and the presentation, let's get immediately into what Harmony looks like in 2021.

The exceptional performance achieved during the first half of 2021 substantiates the growth strategy that we set out to pursue at the beginning of 2016. With the astute acquisitions, we have successfully added quality ounces and derisked our asset portfolio. Harmony is no longer a marginal gold producer, but I believe an emerging market mining specialist. We have transformed into a company capable of creating value throughout the cycle. We have optimized our existing portfolio and improved our asset mix and continue to make decisions that benefit all our stakeholders. We have acquired assets and lengthened the lives when others no longer saw it fit to do so.

All of these actions have resulted in better margins, which have been able to lock throughout the effective hedging strategy. These effective business practices have allowed us to create a robust yet flexible balance sheet with award chest of available cash and facilities deploy in both opportune or the uncertain times. All of this has been done to ensure that we deliver a positive shareholder return through sustainable practices.

We are, therefore, pleased to declare an interim dividend of ZAR 1.10. With that, I hand over to -- for you for any questions.

(Operator Instructions) The first question we have is from Martin Creamer from Mining Weekly.

I like the work, no longer marginal, diversified and derisked. But I'd like you to just expand on what you mean by emerging market mining specialists. What does this mean? Do you then just go into emerging markets? How does this work? What is emerging market mining specialist business do?

Thanks, Martin. Yes. I mean, we actually operate in emerging markets. If you think about Papua New Guinea and South Africa, our emerging markets, I think we are well positioned in terms of our stakeholder relationships. We are able to perform well in these kind of environments. Obviously, we will be looking for other areas maybe in the future, nothing at this point in time, but we really believe that through our stakeholder relationships, the way in which we manage, we actually quite manage the company quite well in these kind of emerging markets.

And just on risk and costs, I'm just looking at power, are you looking at the tariffs that are increasing at the moment? You are deep level. And what are you going to do with the decision of the President that he will now -- he will allow a higher threshold, people to go to 50 megawatts or you plan -- what are you planning with regard to renewable energy effect to also be clean?

Yes. Martin, we -- actually, in the process of now doing 30 megawatts of power generation on our own solar power. We already started with the first 10-megawatt of that, then we are very clean to pursue the other 20-megawatt of that to be able to generate our own power. But it's also been quite successful over the years to cut our light -- our electricity bill, specifically in the light of -- by being more effective in terms of our electricity usage. So we've done -- we've got very big projects going at this point in time to improve that. And we've seen some very, very good results as far as that's concerned.

But certainly, I mean, generating our own power from solar power is the way to go, and we already had Board approval to start with the first step in that.

And my final one, you see Peter Turner coming in, another Peter around. What is he going to bring, Peter Turner, to your company?

Well, our Peter Turner has got a wealth of experience in mining, both here in South Africa and also, obviously, on our African continent. So we are very keen to have him on board. As you know that Ken Dicks retired from the Board some time ago, and I think Peter is a suitable replacement to that, to Ken. I think, importantly, that we also bring to the table is, in Sibanye, he run the safety and technology side of it. Looking forward for that kind of input that we can also make to Harmony. And obviously, he's a mining person of great stature.

The next question we have is from David McKay from Miningmx.

Congrats on the dividend. What's the dividend policy sort of just of informing that?

I'll ask Boipelo to just answer that. Thanks, David.

Thanks, David. So it was really around the dividend policy being predictable and meaningful and sustainable. So as we've stated, we will now be paying 20% of net free cash flow to shareholders. It is obviously subject to the discretion of the Board, and we did indicate a few caveats in terms of what that discretion means. So for Harmony we believe that this would be quite meaningful to shareholders, and that's what we're quite excited really at this point.

Yes. As well, I've got you there, just on things financial. What are the debt plans?

So at the end of December, we were sitting at a net debt of ZAR 580 million. With the strong cash flows that we generated, we've reduced debt quite significantly, which we're very pleased with. We do anticipate to be in a net cash positive position towards the end of the third quarter.

Obviously, all things being equal, and we are seeing the gold price come down a little bit. But we anticipate that, that will get beat towards the end of the third quarter.

All right. Perfect. And just off what you said about the gold prices, I can ask Peter, just my final question. So Peter, I mean, a sense of arrival with the dividend payments and following the acquisitions you've done. Where to from here, though? Do you take a bit of a pause and kind of catch your breath and establish the dividend? Or where you are in the gold cycle with easing a little bit? Do you think there's an opportunity to pick up additional assets? Just your thoughts on your strategic plans, short to medium term.

Yes. David, I think the short term is really and probably still the medium is really to just embed this asset that we just inherited. There's a lot of things that we can do. The low-hanging fruits are by putting these 2 companies together, the old AngloGold Ashanti, a South African company and ourselves. There's quite a few surface opportunities. There's also underground and other kind of opportunities. There's still a lot of work to be done.

We only had the assets in our hands now for the last 4 months. And obviously, we're still on the -- at the moment, we are migrating to the Harmony systems because we had a 4-month delay in terms of still running AngloGold Ashanti systems just to make a very smooth and very well-planned transition.

So there's nothing on the cards at this point in time for further expansions. We really have a handful to integrate these assets into our hand.

The next question we have is from Tanisha Heiberg from Reuters.

I just have a quick clarification question. If I understand correctly, you didn't pay an interim dividend last year. And can you just remind me when last you have paid a dividend?

Yes. So no, we didn't pay a dividend last year in the interim. The last time we paid a dividend was 2017.

And was that an interim or a final?

It was a final.

Final dividend, yes.

And how much was that, sorry?

That final dividend was ZAR 0.35.

(Operator Instructions) The next question we have is from Ed Stoddard.

Nice set of results. I just wanted to ask you, Peter. I believe that there are gold wage talks with the unions later this year. And the fact that you guys and other gold producers are making very good money right now will not be lost on them. Given that backdrop, how do you see the way it starts possibly panning out?

I don't want to speculate. Obviously, we do come at an end of a 3-year wage deal that we had with our unions. And so we haven't started with the news with a bit of negotiations, so we haven't even got demands yet. But yes, we will be, in the next few months, starting with that negotiations. And I think we have paid a very good wage in Harmony and the gold industry as a whole. So yes, we will see how things go from here forward. I don't want to speculate. We obviously need to have a sustainable business. And I think the unions will always -- will also support that.

Sorry, it's Marian here. Just to add. I mean throughout the COVID period also, we looked after our employees. We continued paying salaries. They've all done well on the back of bonuses in the last couple of months. So our people are well looked after.

Well, I hope you got a bonus, too, Marian.

Yes, of course, Ed.

(Operator Instructions) Sir, at this stage, it seems we have no further questions.

Good. Can I then conclude?

Yes.

Thank you very much, everybody. So in conclusion, Harmony remains committed to safely operating our mines and expanding our reserves and margins while delivering on our ESG objectives. As we move into next phase of our growth plans, we will continue to service our communities, stakeholders and employees by doing what we do best, mining gold.

We thank you for listening to us this morning, and feel free to reach out to our IR team for follow-up questions. Thank you very much.

Thank you, sir. Ladies and gentlemen, that then concludes today's conference. Thank you for joining us. You may now disconnect your lines.