Harmony Gold Mining Company Ltd (HMY) 2020 Q4 法說會逐字稿

Good morning, everyone. Thank you for joining us on our annual results for the financial year 2020.

To continue observing all safety and health protocols, we have, similarly to other companies, decided to present to you on a virtual platform. I hope this is not a new norm. And hopefully we will be able to see [one] in the near future.

Joining me today, we've got Boipelo in the room now. We've got Boipelo Lekubo, our Financial Director; Frank Abbott; Mashego; Marian van der Walt; and Herman Perry; and also Max. We also have some of our executives on standby on the call. And we also, I believe, have a few of our nonexecutive directors on the call. Thank you very much for joining us today.

Just take note of the safe harbor statement and disclaimers on Slide 2. It's important for you to read them.

To start with. Harmony's strategic focus remains to the production of safe, profitable ounces and improve our margins through operational excellence and value-accretive acquisitions. Our values inform our strategic pillars, ensuring resilience against uncertainty, profitability at any gold price and [locking] and sharing of our values to everybody in our organizations. Harmony's people have shown a resilience once again during the extremely trying times earlier this year and COVID hit us as a company. As we take you through operational and financial results, you will see that we have done well to deliver against these pillars. And this delivery growth and leverage through the gold price puts us in an ideal position to benefit in the months and years ahead.

Our first pillar from Harmony is responsible stewardship. I think, for the past 70 years, Harmony has, more than any other gold mining company in South Africa, demonstrated true sustainability. From our enduring history to the product that we mined and the way in which we mined it, to the care that we give to preserve the environment and the support we give to our communities, Harmony has illustrated time and again that the sustainability is driving the force of our business.

But our most telling sign of sustainability is not how -- longevity but rather the way in which we are able to turn our assets [into account] by extracting maximum value over the longer life period of mines. Many of our mines, I mean, have a very short life when it was not in the hands of mining of Harmony. And we -- I also use the example. We're now closing down Unisel. Unisel would have been closed down in 1979, if it was not for Harmony. But by applying our way of doing business and a responsible mindset, Harmony has prolonged the life of these assets to the sustained benefit of the employees, communities, shareholders and other stakeholders.

So safety is our #1 value [and underpins] anything that we do. There has been an evident improvement in our safety performance, with a 33.3% decline in our fatality injury frequency rate to 0.08, the second best we've ever done in the history of Harmony. And many operations reported fatality-free records during the year.

We have found that the COVID-19 pandemic has emphasized the importance of both existing and new safety protocols across operations, with many of our employees that said that they felt safer at work than away from our mines due to the various COVID-specific protocols that we've adopted. But Harmony is -- the 6 fatalities we had is 6 too many, and Harmony is determined to eradicate all fatalities and injuries at all its operations. Sadly, as I said, we've lost 6 of our employees and colleagues in mining-related incidents in this financial year, which have shown that even more has to be done. Our overall safety performance improved in 2020, but we recorded a 2.7% increase in lost time injury frequency rate and really hit a plateau as far as that is concerned. And we continue to address the specific causes of work-related events resulting in injury and death [by and] reinforcing the key elements to our safety strategy. These are leadership, risk management and attainment of proactive safety culture.

This program, you're quite familiar with. This is a proactive safety culture, the journey that we started 3 years ago. And we're glad to say that we have managed to move quite substantially through the phase 1 now. And we're in the start of phase 2 and really starting with leadership circles, which we believe will have a big impact in terms of building the culture and build momentum in terms of trying to stop -- or on this journey that we have as far as safety is concerned. And we certainly have the foundation part of that now really embedded in our operations and looking forward to the next circles and really starting to get some traction on that going forward.

Next slide is really about the -- our COVID response. So Harmony's response to COVID-19 demonstrates once again our ability to respond quickly to challenging issues. Really a miner likes a crisis, and this crisis really brought us all together. In this case, protecting the lives and livelihoods of our employees and ensuring the continued viability of our business and continued with the well-being of the communities in which we operate.

I would like to make a tribute to many people that was involved to our response to COVID-19. And first of all, I'd like to give a lot of credit to the DMRE, and specifically the Minister, Minister Mantashe, the minister of mines, that really did a lot of -- to help the industry to actually get through COVID-19. We're probably the first industry that really got our act together and started to work again and actually save the lives and livelihoods of our employees. Then also to his team, the DG and the chief inspector of mines that really helped us a lot. I also want to make tribute to the minerals council and the leadership of the CEO there, Roger Baxter, that has done a fantastic job and actually, frankly, get the industry together, trying to work together getting to a final product that actually could be sold and could actually get everybody to agree that we could go and continue with our operations.

I would like to also give tribute to the teams that we have on the ground, specifically in South Africa and the leadership of Beyers Nel and [Dr. Tule. Dr. Tule] really helped us a lot in terms of putting all the protocols together, the things how we responded. Those people worked right through the days. We also had our -- health care workers that really were in the forefront of all of this. And I really would like, as a company, to thank them for the work that they've done.

And then not to mention also in PNG. Although we didn't close mines in PNG, we couldn't travel in PNG. I mean our general manager at Hidden Valley actually stayed on site for close to 5 months, not being able to travel away from the mine and not to be -- travel to his families. And those sacrifices are unknown of, and we really ought to tribute to that. And if was not for that response, we would have been in quite difficult times.

At the end of August 2020, about [2.4%] of the company's employees had been infected. And about -- of those, about 94 have recovered. Now we currently have 61 of our employees in active cases. And we also have -- unfortunately, we have lost 29 of our colleagues due to COVID-related injury -- illness.

Let me just move the slide. It is pleasing that notwithstanding the challenges presented by the COVID pandemic, we have also been able to deliver on the sustainability part of ESG during the time of crisis, bringing emergency help and support in various forms to our employees and families most in need of -- in our neighboring communities both in South Africa and Papua New Guinea. We were pleased to learn that Harmony outperformed the gold and basic metals sector in the FTSE4Good Index. That is the slide that you see that's got bars there. As you know, the global index aims to measure the ESG performance of companies, and our rating is testament that our drive to create sustainable environment and communities will benefit from our presence beyond the immediate future. All our stakeholders are critical partners in ensuring a sustainable future, and we'll continue to nurture the relationship with them and operate our mines in a responsible [matter].

On the operational excellence, everything that underpins Harmony. Obviously, safety first. And during the fourth quarter of the financial year, with COVID's grip firmly on the mining industry, Harmony employees reaffirmed their resilience and ability to operate as responsible mining experts.

Some key -- 2020 key features year-on-year. We had a 101% (sic) [106%] of increase in operating free cash flow, the better-than-expected final quarter production delivery, a 15% decline in gold production and an annual production of 1.2 million ounces. And so we actually released a solid set of financials, better-than-expected operational numbers despite the COVID-19 impact that we had. We have and continue to manage the risks driven by COVID-19 in our operations and our communities going forward. Despite the shifts lost to lockdown, we managed to deliver 75% of our estimated production during the last quarter of 2020 financial year. Year-on-year, our total annual production was 15% lower to [37.8 tonnes] of gold or 1.2 million ounces, mainly due to the impact of the COVID-19 national lockdown and the phased recovery in South Africa. Due to the lower production year-on-year, the all-in sustaining costs were 18% higher. And obviously, inflationary increases that we still have with [assets on] labor and electricity costs were obviously impactive on our production costs.

At current prices, all operations are in a cash-generative position. That's the current spot prices. We believe that had it not been for the impact of COVID-19 had -- on operations and the production, we'd have achieved our amended guidance shared in February this year. The preparations had very good momentum and those that needed extra attention showed improvements during the (inaudible). Of course, this also led to the grade improved dramatically in the last part of the year.

Whilst we are grateful to have been in position to benefit from the higher gold price, you should all look at our operations that performed using the planned gold price of cash flow versus in FY '21, which is a ZAR 750,000 a kilogram. You'll note that more than 80% of our operations are -- at gold prices at ZAR 750,000 a -- will be profitable. And obviously, the bubble sizes in that graph also depict the -- indicate each mine's contribution to production.

Just looking -- going forward. I mean one of the areas is that I think we just need to mention some of the mines that we in actual fact are close to the line. Tshepong is obviously one of the bigger operations. That -- we believe that, that would move down the cost curve as we improve our flexibility on the mine. Tshepong also has to have a very high rate of development. And obviously, through the COVID processes, that has also taken a little bit of a dent. We managed to in actual fact continue with our developments at Tshepong, we haven't bring all the people early back into stoping to keep this flexibility going. And Tshepong, I believe, will have a tough but a good year going ahead of them.

At Target, we are busy with our project, and we're actually moving -- making good progress as far as that's concerned, bringing the infrastructure closer to the mining phases. And this mine will go down the cost curve the moment that, that project is finished. Joel, we in actual fact had completed the project. The final part of the chairlift has just been completed as we speak. The project for all intended purposes have completed. And as the mine moves now to the higher-grade payshoot of the lower levels, we'll see the improvement of Joel.

And then obviously, Kusasalethu had a tough first quarter of -- and first 6 months, really on the back of grade. And now with the acquisition of Mine Waste Solutions and Mponeng mine, specifically Mponeng mine, there are some synergies that we can put in place. But certainly, we've seen some very good recoveries from grade at Kusasalethu.

Turning our resources into reserves. Our attributable gold and gold equivalent mineral resources at the 30th of June were 18.6 million ounces (sic) [118.6 million ounces]. That's about a 1.12% increase year-on-year. And that is obviously -- and that is really we're quite pleased with that. And it's really attributed from the increases we found at Tshepong operations, Moab Khotsong operations and Kusasalethu. The total gold contained in the mineral resources at the South African operations represent 62% of the company's total, with the PNG operations representing 38% of Harmony's total gold and gold equivalent mineral resources.

Attributable gold and gold equivalent mineral reserves amount to about [36.459 million ounces]. That's a small increase from the previous year's, actually staying stable, which is not too bad if we think about the fact that we didn't do a lot of development in the final quarter. And I think it's also -- what to note is that PNG is 52% of that. So PNG is a very, very big component of our reserves and our plans going forward. But it's very important that we actually return (sic) [turn] these resources into reserves.

Based on our planning for FY '21, we believe that -- and at the bottom of that thing, you will see our production guidance. That we are able to produce between 1.26 million to 1.3 million ounces of gold at all-in sustaining cost between ZAR 690,000 or (sic) [to] ZAR 710,000 a kilogram. It was very difficult to put a guidance together. And certainly, we have put a lot of effort and time on it, trying to take all possible risks into consideration, specifically that of COVID. And we certainly would, by the middle of the year, guide again and see where we are. And obviously, we will also integrate putting mine resolutions into operations as from the 1st of October, and that will also then be incorporated in our guidance going forward. So it was a difficult thing to guide, but I think we can safely say that this guidance is on the conservative side.

If we look at our future growth. Our exploration strategy is to pursue brownfield operational targets close to existing infrastructure. And I think that's what the mining company should be doing. This will drive the short to medium organic growth -- ore reserve replacement and growth to support our current strategy of increasing quality ounces and to mitigate the risk of depleting ore reserve base.

Our key work streams underpinned the FY '20 exploration program include the brownfield exploration at Hidden Valley and also Kalgold to optimize existing open pits operations and extend the life of mines; and then also brownfield exploration, underground operations, in South Africa. And we have very strong pipeline of projects to supplement or replace some of our mining ounces. And certainly at this gold price and the grades that we have in Moab Khotsong and now with -- now from Mponeng, certainly very, very good projects in the pipeline. Of course, Wafi-Golpu remains a potential game changer for Harmony, and we are encouraged by the written statement by the Prime Minister of Papua New Guinea that Wafi-Golpu is a project that -- nationally a priority and is urgent -- and they're urgently advancing and -- the project, and we are really grateful for that. We hope to see some traction of that in the coming few months and before the end of the year.

I'm very glad to say that, finally, we concluded the Mponeng and Mine Waste Solutions transaction from AngloGold Ashanti. As you've seen in the announcements yesterday, we will take over on the 1st of October. In the intermediate term, our plan is to finalize the acquisition of or actually to integrate the assets of AngloGold Ashanti assets into South Africa, both Mine Waste Solutions and Mponeng, I believe, is good fit for our portfolio. Both contribute quality replacement ounces to our reserves and resources and present potentially synergies with our existing infrastructure, adding to our cash flows. And we have a proven track record both in terms of extending the economic life of mature deep-level underground mines like Mponeng and operating successful lower-risk surface retreatment operations like Mine Waste Solutions. Acquiring these assets is really to the benefit of Harmony and its stakeholders. And I think also, with the current gold -- rand gold price, these gold assets will immediately hit the ground running and will do very well.

So all of [these conditions present have now been met]. So we -- as we said, we'll take over on the 1st of October. And we're also very pleased to welcome the AngloGold employees to Harmony and believe that they will continue to be partners with us and stakeholders with us and they would have a happy stay with Harmony going forward.

Okay. I will now hand over to our Financial Director, Boipelo, to take you through the cash certainty part of the operation -- presentation.

Thank you, Peter, and good morning to everybody joining us on the call today.

Just starting off on Slide 17. Despite the challenges of the last year, we've created balance sheet flexibility by creating adequate headroom and reducing our net debt significantly. In June of this year, we raised $200 million through a share placement to part fund our acquisition of the Mponeng and Mine Waste Solutions. This and ZAR 6.2 billion that we generated by our operations was used to significantly reduce our debt. And as a result, net debt decreased by ZAR 3.6 billion to ZAR 1.4 billion as at the end of June of this year. With the headroom that has been created through our agile response to COVID, we've increased our balance sheet flexibility really in order to support the company's future growth.

There have been some swings and roundabouts with our hedging. However, we continue to benefit from hedging only 20% of our total gold production, with 80% of our revenue linked to the actual gold price. The year-on-year weakening of the rand against the U.S. dollar negatively impacted on the translation of the company's U.S. dollar facility while also affecting valuation of the foreign exchange derivatives. The increase in the gold price both in U.S. dollar and in rand terms negatively impacted on the valuation of the gold hedges. While we recognize that the derivatives recorded a net loss in the financial year '20, particularly due to the loss on the rand gold derivatives, the hedging program has realized gains of ZAR 2.2 billion since the inception in financial year '16. The high gold price presents a great opportunity for us to lock-in the higher price for the future. We believe that to hedge responsibly with the type of assets that we have remains a good strategy in -- well good strategy to lock-in healthy margins going forward.

Moving on to Slide 19. Our operating free cash flow is highly leveraged to the gold price. You'll note that for each ZAR 100,000 per kilogram increase in the rand per kilogram gold price, there's almost a ZAR 2 billion jump in our operating free cash flow. This year's 25% improvement in the rand gold price contributed to the doubling of our operating cash flow to roughly ZAR 6.2 billion. The 106% increase in the operating free cash flow saw operating cash flow margins increase to 13% compared with 7% of the year before.

Throughout our engagement with investors during the lockdown, we were asked about our capital allocation priorities post COVID. And before I go into that, I think what's also important to note is that the capital related to COVID has already been spent. I think, to date, we've spent roughly $100 million mostly related to quarantining, et cetera.

In terms of Slide 21, looking at our capital allocation. Our capital allocation is aimed at ensuring returns. That's just first and foremost. We prefer a lower risk profile, assessing financial versus safety risks. Some of our mines are older and therefore, realistically, we believe that it should maintain a 5% net cash margin. This is, of course, much higher at the current gold price. But at the 5% level, the mines' future is obviously at risk. Our capital is spent at our longer-life mines, and we only pursue a project if the IRR is higher than the 15%. We prefer a lower-geared balance sheet and keep our net debt-to-EBITDA at below 1. We are currently at 0.8, and that's obviously normalized for the share placement that we concluded in June. And we'll be able to reduce our debt much quicker at current gold price levels.

Ultimately, our aim is to pay dividends again but, more importantly, sustainable dividends. Peter already mentioned then the pipeline of projects that we have but with the lower -- and we'll be able to repay our debt much quicker given the higher gold price.

Harmony's share price increased by 248% from July 2019 to date, gaining 82% in June 2020 alone. The share price improved 316% since January 2016 to the 30th of June 2020. This gives us a market capitalization of ZAR 43.3 billion or USD 2.5 billion at 30 June 2020 compared to ZAR 17.1 billion or USD 1.2 billion at 30 June 2019.

We're very pleased to learn that we'll join the FTSE/JSE Africa top 40 index, with effect from 18 September 2020, which is really a tremendous effort for us. Inclusion in the index points to investor interest in and support both for our strategy to produce safe, profitable ounces and increase margins through operational excellence and value-accretive acquisitions and in our project -- or product gold.

Global health and economic risks continue to support higher gold prices, and while there's still much uncertainty in the world, gold remains a classic investment. But we are a price taker. And while the gold price is expected to continue its run in the short to medium term, this is, of course, out of our control. Like always, we continue to actively manage the aspects of our business within our control. We are well positioned to benefit from anticipated continuing strength of the gold price and are firmly established as a profitable producer regardless of the gold price.

Thank you. Peter, I'll hand over to you.

Thank you, Boipelo.

I think, in conclusion then, Harmony is a solid investment case. If one then -- our [equity story, cap] is what we do best -- and that slide is now so small. I have to read it here. So let me just get to that. Sorry for that.

Okay. We are South African gold mining champion delivering value-enhancing consolidation. I think we can safely say that we are emerging market specialists both in South Africa and Papua New Guinea. We have significantly increased our South African production from initial Moab Khotsong [trend] acquisition and now the Mponeng and Mine Waste Solution transaction. And we have got meaningful value-enhancing improvements in overall South African recovered grade through the acquisition and development. And I mean really, by buying these 2 assets, we actually really had a much better grade looking forward. There's a lot of synergies that still need to be recovered through this acquisition. And obviously, that will also drive down our all-in sustaining cost. And I think for that reason, we are really a champion of doing what we do the best at this point in time.

We've got a proven expertise in safely driving efficiencies. Safety is our core value, as I said. We focus on quality ounces and cost reduction and aimed at lowering the all-in sustaining cost. And we've got a -- quite a proven track record sustaining and prolonging operating lives of our mines. And I think, very importantly, we've got a wealth of expertise throughout the company that can actually mine these operations well in any one of operations, not necessarily the easiest operations, but we certainly have the best management team we possibly can find to mine these assets.

Elevating our margins and operating free cash flows. We've been positioned to benefit from the gold price and foreign exchange and specifically on the rand gold price, the fluctuations that we see therein. We're locking in high margins for future returns. Strengthening our balance sheet enables future growth and capital returns. And unlock significant value, synergies and scale throughout regional consolidations in South Africa. And our portfolio value supported by joint ownership of Wafi-Golpu.

I think, in conclusion, if that is the only bit of information you take out with you today is really this last slide and which is really Harmony is growing its quality ounces to be more than a 1.6 million ounce per annum producer. We continue to benefit from the strong gold prices. We have a number of opportunities to further [growth of] ounces and our margins. And our balance sheet supports our growth aspirations.

With that, I will hand over to questions. Thank you very much.

Thank you very much, Peter. I'm going to start off with any questions that are from the conference call. And then we will then head over to the webcast after that. Do we have any calls on the conference call?

(Operator Instructions) The first question comes from Shilan Modi from UBS.

Congrats on a good set of results given a tough, call it, calendar year 2020, so far. A couple of questions from my side. Previously, when we went into lockdown, you did mention that you would be potentially mining some of the higher-grade material in the nearer term. Just give us an idea of what that does to your grade profile going forward. So for the next 2 years. Like do you have to play catch-up at some point in time? And then please just remind us on your hedging policy and how does the acquisition of Mponeng impact that. Are you going to be increasing the amount of hedges that you have ahead of what's in the booklet? And then just last question from my side, but is there potential for cost reduction at Mponeng and Mine Waste Solutions as these are integrated into our operations? Kusasalethu is next to Mponeng. So maybe can you please talk to that?

Thanks, Shilan. I'll take that first 2 questions, and I'll ask Boipelo maybe just to come join me here, and she will take the rest. Just on the grade, yes, obviously, when we get back to preserve cash, we went and mined all the high-grade panels first. And then, well in the high-grade areas, we remained first. And that had an impact. And I think we've been catering for that in terms of our guidance and everything else going forward. We've really looked at very critically in terms of where we are and what we should be doing. And we had a fairly good flexibility prior to the time in most of the mines, except for maybe Tshepong. Even Kusasalethu, we actually managed to get out of the lower-grade areas, into the higher grade, prior to the lockdowns started. So we're confident that the guidance that we put out will be met. We obviously -- development is a key thing for us now. We need to make sure we've got [control rooms] on every mine, managing development. The teams are very, very focused on that. And I just want to say maybe in the case of Tshepong, we also -- some of the people that we brought back, we've actually put them back into development and not to fall into the trap of bringing that -- our flexibility later on. So that is in place.

As far as the synergies are concerned with Mponeng, yes, I mean, that's probably one of the biggest issues that we have. We believe there will be a cost reduction and in going forward. We've always seen that, if we look at Moab. We've seen a fairly good cost reduction at Moab. And then also, we've seen -- we will have that. At this point in time, obviously, we don't know. We haven't been able to really kick all the tires and be underground and look at how we can look at the structures, et cetera. But certainly, we've been able to cut costs in all these mines that we've done.

I just want to emphasize that, all the cost cutting and things that we've done, we never go out into a forced retrenchment position or anything like that. But certainly, as we move around and we move people in different vacancies and areas that we need people to go and work, we can see a lot of possibilities to add costs. And obviously, integrate Kusasalethu in that whole region, to look at things. I think the most exciting thing about that is really the fact that we can now do a little bit more of surface retreatment, which I think is going to be a very, very good add-on, a very cheap add-on and a very profitable add-on. And Boipelo, would you take the hedging questions?

[Sure]. I mean ours is quite a conservative policy. You know that our border proof limits are 20% on production and 25% on ForEx. So the intention is to maintain those limits. I think we benefit quite nicely on the 80% that is unhedged. So that -- we have no intention on revising that policy.

The next question comes from Adrian Hammond from Standard Bank.

Yes. A couple of questions. Firstly, for Peter. Peter, could you give us some color on the impacts of Eskom power disruptions happening on the group, what it's been like in the past and how you see it going forward? Could you just -- so you've given us, on the last slide, that production could exceed 1.6 million ounces, including Mponeng and MWS. What do you see the impact on the group costs, if you may? And also, I mean, curious to know what your thinking is around reserves below infrastructure at Mponeng, which are substantial. You don't normally -- or in the group, you don't have [ready] reserves below infrastructure. So would be interested to know what you're thinking around doing incorporating those reserves.

And then in terms of the dividends outlook, for Boipelo, could we expect a dividend at the interim? And are you -- could you give us perhaps a bit of color on what the policy may look like? And then lastly, for Peter again, what's -- post the M&A you've been doing in South Africa, what is -- how does the group see themselves diversifying out of South Africa with regards to M&A?

Thanks, Adrian. Okay. First of all, on Eskom. I think as far as the last quarter is concerned, we certainly didn't have too much of an impact in terms of the [latest] load shedding that we had with Eskom. We managed to be able to hoist all our tonnes and do everything that we're supposed to be doing. Obviously, I think, when we had this very long -- at the start of the year, we had the load shedding at the time. That had an effect, but we reported on that already. So we -- that was quite a tough time for us at the time. We were running issues with -- we had to cut back and cut back every time that we -- every day. And in a very long period of time, that actually caught you. But as we are at the moment, we -- I think we are fine. And so as far as the group cost is concerned with Mponeng, yes, I think Mponeng, at the moment, is very much on the same cost curve, cost levels as we are. We believe that we -- after assessing those things, we probably can drop that a bit. So it should be -- go lower than average for Harmony, so to have a better impact on cost. And we will guide you at the end of this -- or middle of the financial year, end of this calendar year, the next round of things in terms of what we see at Mponeng and what we can possibly do there.

Mining below infrastructure. I mean, yes, obviously, we're excited about the high-grade ore body we have below infrastructure there. We haven't done any work on that since what -- we looked at it in due diligence. And at that period of time, we really looked at the [Anglo] way of looking at it. Obviously, they had different gold prices in there. You plug-in today's view of gold prices, and most probably it would be very, very attractive. We certainly -- or one of the first things for Phillip and the team to do is -- when we get there is to actually dust off these feasibility studies and look at possibility to extend that. I must also add that we do have a very good high-grade ore body also as Zaaiplaats, just below infrastructure, with the Moab Khotsong transaction. And that also -- or we are doing some work to prepare that. I think feasibility is not completed, but we're doing some work to prepare to be possibly go down that -- mine that ore body, yes.

And now on talking about where we are now, I think we need to consolidate first in terms of where we are as a company, looking at possible potential next growth areas for us. And growth in gold is not that -- in South Africa is not necessarily possible. So if we want [to stay] a pure gold company, we have to really look at looking at frontiers outside of South Africa, we obviously are very keen to pursue a team that's operating from Brisbane. We can look at possibilities to give them more responsibilities. But certainly, also, we always had a dream to go into Africa. And I think it's probably time to look at the possibility of doing that. There's nothing concrete on the table at the moment, nothing that we're specifically looking at. The Mponeng transaction kept us quite busy for quite a few days. So we still want to bank that first and celebrate that first. And then certainly, we'll have a look at what can be possibly our next step. Thanks. And Adrian, I'll leave it to...

So on the dividend, Adrian, I mean, our Board considers a dividend at each reporting -- interim reporting period. And it's really based on a number of factors, cash generation, debt position, et cetera. I mean, given the current gold price environment, our priority would obviously be to repay the debt. And I believe we'd be able to do that quite quickly, following which then, obviously, the intention is to have a look at a dividend. What that policy will look like, we'll obviously only come back with once that decision is made.

We have no further questions on the audio line.

Okay. Thank you very much, Judith. I'm going to move over to the questions sent through from the webcast. And Peter, I think you touched on this early in your presentation, but the first question is from [Carl Robinson], and he wants to know when can shareholders expect their dividend. [I believe we] just touched on it as well so yes...

I think we just covered that. Thanks. Unless there any further questions from [Carl]...

No, that's it. I'm going to move on to the next one. (inaudible) wants clarity on capital allocation priorities.

I think I partly covered that one as well. I think priorities would obviously be to repay the debt, which we believe we'll be able to do quite quickly given the current gold price environment. Obviously then also look at projects that will increase returns. And definitely then our priority is to consider starting to pay dividends.

Okay. His follow-up question is now have we seen any geographical shift with regards to major shareholders over the past 6 months. I think (inaudible) I can sort of take that. Our shareholding has pretty much stayed the same. Just over 50% of our shareholding is on American depository receipts, and about 34% or so South African shareholders, with the rest being split between the U.K. and the rest of Europe.

I will then move over to [Sandile Magagula]. He wants to know, how many ounces of gold is expected to be contributed by Mponeng in the first half of FY '21? And secondly, what is the overall all-in sustaining cost guidance going forward?

Okay. [Sandile], thanks for that. And so the first part of that is really about Mponeng's performance. And the plan is around about -- roughly about 250,000 ounces. Obviously, when we get there, we will have a look and see and what we possibly can extract from that. Can we improve? Or is it at all possible to do that? If we look at the last year's performance, we're very close to that. I think it's about 240,000 ounces, if I remember correctly, for the year, yes. So yes. So that -- we will obviously take their plans over as is and then obviously integrate it as we go forward. Sorry, Max, what's the second part of that question?

What's the all-in sustaining cost guidance?

Yes. All-in sustaining cost guidance, we gave in that slide presentation there, which is the -- let me just get...

[ZAR 690,000 to ZAR 710,000] (inaudible) yes.

Yes, ZAR 690,000 to ZAR 710,000. And again, as I say, we will -- obviously, after the Mponeng integration, we'll come back to everybody to see what we think it should be for the rest of the year. Because obviously, the unknown -- that does not include Mponeng and Mine Waste Solutions.

Thanks, Peter. [Peter Cambridge] would like to know if Harmony has any appetite for M&A following the integration of Mponeng.

Yes. I think as a company, we always have kind of appetite for that because we do have ore bodies that come to the end of their lives. And Bambanani, which is a very, very, very profitable ore body for us, has got about 3 years left. Kusasalethu has got about 4 years left. So certainly, we are always on the outlook for something that is value accretive. So that -- if you look at the transactions we've done, I think they've been good transactions for Harmony. We bought them at the right price. And we obviously also -- it's this kind of thing that we do well. So yes, there will be similar things like that. And again, like I said, there's not that many opportunities available in South Africa, so it will be -- most probably be in other countries.

Thanks, Peter. 2 questions from Jared Hoover. The first one says COVID-19. With the change in shift arrangements post COVID-19, have you seen any opportunities to structurally adjust your shift patterns to allow for better productivity going forward? Or has it all just been short-term measures which are unsustainable over the long term?

Yes. I think COVID [have learned us] a lot. I mean that's -- certainly, we've seen a lot of things that we can take forward. One of the things are this whole thing about shift structures and also changing some -- I'm talking about South African operations. The other very important thing that we learned is that we can -- with paired panels, we can actually get very high efficiencies, and we can -- because, obviously, we couldn't man every panel, so we paired panels. We saw some very, very good results as a part of that. We're taking all of that into consideration and taking it going forward and looking at opportunities to, in actual fact, deal with that and operate these mines in a much different way, yes.

I think one of the biggest impacts that we had, as I said in that presentation, is Papua New Guinea because there we couldn't -- many of the experts left us the moment COVID started because they certainly didn't want to stay in Papua New Guinea for long periods of time, and then they have to go into quarantine of 14 days on one side and 14 days on the other side. So we actually had to manage the mines from -- with locals. And then some of the experts that -- like I said, our general manager was very close to 5 months on site, which is quite a big sacrifice. Now these kind of things, we're taking consideration. We've got a roster now that we believe is -- that works well for us. So we've changed quite a lot of -- as far as that roster is concerned. Short periods of quarantine, making sure people is not positive, and then we actually get them back on to the mines. We're still obviously waiting for Australia and other places of [labor sending areas] to -- PNG to open up and allow people in.

Okay. Peter, we got another interesting question from [Martin Creamer]. He wants to know how many decades do you estimate Harmony to have in front of it, taking into account its current assets put together and your listed future growth plans.

Well [Martin], we've been doing it now for 70 years. So I think we can safely say we can go for another -- at least another 70. Obviously, it will evolve. It will be a different Harmony going forward. I mean it will not be the same Harmony. 70 years ago, Harmony was a mine in a Virginia area, a single [farm]. Harmony today is totally a different company than it was in the past. So it will evolve. It has to adapt and evolve all the time.

Boipelo, I have another one for you on the hedges. Jared Hoover wants to know, given the sustained higher gold price outlook and your near-term hedges being underwater, is it not financially feasible to restructure or buy out the hedges over, say, the next 6 months or so?

I mean what you saw that we did, especially with COVID, is we did restructure some of the hedges that were underwater. That is obviously not sustainable because you're merely just delaying the inevitable. And again, I mean, if I go back to -- remember 80%. We only hedge 20% of the production. So these hedges are working themselves out over time. If you refer to the hedging position that we've disclosed in our annual reports, you'll quite clearly see that. And I think in our results presentation we've also included the position as at August. So you'll be able to see the hedges that we've added on. Obviously, we will only realize that bit -- that benefit much later, but it will be there. And again, on 80% of the production, we benefit on full spot. So we believe that, our strategy, it's the right thing to do.

I just want to make one more comment on the hedges. One must understand that given the fact that we actually sell these production -- or the production levels in -- on an estimate going forward -- with COVID, we, in actual fact, had much lower production, so much more of our kilograms were -- percentage-wise was actually then exposed to the hedge price than on the spot price. Going forward, we should be on a much better scale, and we are now back to normal production. And that would obviously have, really, only 20% of our -- yes, ounces should be as at this point in time, not more than 20%.

Yes.

Sorry (inaudible).

Thanks, Peter. I got a -- I'm going to take this as the final question. This is from Arnold Van Graan at Nedbank CIB. With expansion of your SA portfolio in recent years, is there now a renewed focus on growing outside of South Africa? Golpu is the natural choice, but given the continued delays there, will you consider other offshore opportunities?

Max, yes, I think -- and we always have to look at in terms of what is the best value for our money that we will get. Is it a brownfields exploration, brownfields expansion that we can possibly do, or will it be that we should go out and buy a new asset? I think what we paid for Moab and what we paid for mine -- or for Mponeng and Mine Waste Solutions was good prices. It was very, very valuable transactions for us. Going forward, I mean, obviously, we need to have a look at that. So the M&A, Wafi-Golpu is a project that is still there, still going, and then we hope to see a lot of traction in the next year and especially for the end of the year in terms of getting the negotiations started. And certainly, in the current gold prices and the current copper prices actually makes a huge amount of sense going forward. But having looked at that, we always have to weigh it up and see what we have to do. Outside of South Africa, if the price is right and it's the right type of transaction, we will consider that. But we certainly will not go out and just pay huge premiums for operations just because for the fact of expanding, and we have to weigh it up in terms of our own brownfields and our own opportunities internally.

Thank you very much, Peter.

The investor relations team will be available to answer the rest of your questions should you guys have any more throughout the rest of the day. But thank you very much for being with us today.

Yes. Thank you very much for joining us today. Really appreciate that.