Harmony Gold Well Positioned for Growth with Expanding Gold and Copper Operations

• Harmony Gold is a leading gold producer in South Africa with growing copper operations. The company has a strong project pipeline and is investing in quality ounces to improve margins.
• Safety has improved significantly, with a lost time injury frequency rate below 6 for two consecutive years. Harmony is also focused on sustainability, including renewable energy projects.
• Gold production was steady in 2023 at 1.47 million ounces, achieving guidance. Costs were controlled despite inflationary pressures. $330 million in operating cash flow was generated.
• The acquisition of Evo Copper in Australia expands Harmony's footprint. Other growth projects like Wafi-Golpu in PNG will further boost copper-gold production over time.
• Harmony has a robust balance sheet and continues to deliver operationally. With tailwinds from a higher rand gold price, the company sees exciting growth ahead.

Harmony Gold CEO Peter Steenkamp presented an upbeat outlook for the South African gold miner at the 2023 Denver Gold Forum, highlighting the company's steady operational performance, strong balance sheet, and expanding production profile.

With 73 years of gold mining experience in South Africa, Harmony has transformed in recent years from a domestic gold-focused company into an international gold and copper producer. The company now has assets in Papua New Guinea and Australia, providing commodity and geographic diversification.

Safety and Sustainability Momentum

Harmony has made tremendous progress on safety, with Steenkamp noting that the company's "lost time injury frequency rate is now below six for two consecutive years, a first in our 73-year history." He added that "Most importantly, our loss of life injury frequency rate has also declined to 0.06 per million hours worked, the lowest in our company's history."

The company is also integrating sustainability into its operations. Steenkamp explained that "True sustainability is embedded in all our decisions and we believe in actions over words." Harmony is undertaking renewable energy projects to work towards net zero carbon emissions by 2045.

Steady Operational Performance

Despite inflationary pressures, Harmony maintained steady production and controlled costs in 2023. Gold production was 1.47 million ounces, achieving guidance of 1.38-1.48 million ounces. All-in sustaining costs were $1,465/oz, below the guidance range of $1,510-$1,550/oz.

"Gold production remains steady year-on-year at 1.47 million ounces, exceeding the upper end of guidance and improving by 8% to 5.8 grams per tonne," said Steenkamp.

Harmony generated $330 million in operating cash flow, enabling the company to maintain a flexible balance sheet with net debt to EBITDA of just 0.2x. A final dividend of 5 U.S. cents per share was paid, delivering returns to shareholders.

Expanding Production Profile

With a robust project pipeline and active exploration program, Harmony aims to sustain gold production of 1.4 million ounces per year well into the future. The company is investing in its highest-quality assets to improve margins.

"Our quality growth pipeline will unlock further value as we take our projects up the value curve," explained Steenkamp. "We are investing in quality ounces now to ensure stronger future cash flows at higher margins."

Among the key growth projects highlighted:

• Evo copper project in Australia, which could begin production in 2027 following an updated feasibility study
• Wafi-Golpu in PNG, which requires a special mining lease but could significantly boost copper-gold output
• Zyplus underground project in South Africa, which could start production in 2027 at grades over 9 g/t

Steenkamp emphasized the long-term opportunity in copper, with demand forecast to double by 2035.

"Copper represents 23% of Harmony's resources through the Evo copper in Australia and Wafi-Golpu in Papua New Guinea," he said. "There is meaningful upside potential to our mineral reserves once Evo copper and the Wafi-Golpu extension feasibility studies are completed."

Poised to Benefit from Higher Gold Price

With its South African assets, Harmony stands to benefit from a stronger Rand gold price. Steenkamp noted that "for every 1,000 Rand per kilogram increase in the gold price, Harmony would have generated about $200 million in additional operating free cash flow."

The company has hedged around 20% of expected production to reduce volatility. But with the Rand gold price currently above 700,000 R/kg, Harmony continues to generate strong cash flow.

"It is because of this volatility that we have an effective hedging strategy in place," said Steenkamp. "The Rand gold hedge book is currently filled to 20% of our limit as at an average hedge cover of R1.1 million per kilogram for the 2024 financial year."

Steenkamp expressed confidence in Harmony's future growth prospects:

"Harmony is a sizable and exciting company with a significant project pipeline ahead. Our projects are catalysts to meaningfully expand margins over the next four years as we continue to drive down costs and improve the quality of the portfolio."

With its operational track record, flexible balance sheet, exposure to a rising gold price, and expanding production profile, Harmony appears poised to deliver growth in the years ahead. Steenkamp and his team laid out a compelling investment case for shareholders at the 2023 Denver Gold Forum.

The Investment Thesis for Harmony Gold

• Leading gold producer in South Africa with over 70 years of experience and extensive reserves and resources. Steady gold output with over 1.4 million ounces of annual production.
• Expanding into a multi-asset, multi-jurisdictional gold and copper producer. Acquisitions in Australia and PNG provide commodity diversification into copper and geographic diversification outside South Africa.
• Strong margins and cash flow generation from high-grade South African underground gold mines. These assets generated 57% of the company's operating cash flow in 2023.
• Commitment to safety and sustainability initiatives evident. Lost time injury frequency rate reduced substantially over the past two years. Major renewable energy projects are underway.
• Maintaining solid operational performance and cost control despite inflationary pressures. Achieved guidance for both production and costs in 2023.
• Flexible balance sheet with low net debt to EBITDA ratio of just 0.2x. Provides funding capacity for growth.
• Significant organic growth pipeline, including copper projects and underground extensions. Aims to sustain a 1.4 million ounce gold production rate over the long term.
• Exposure to rising Rand gold price provides upside. R1,000/kg increase generates ~$200 million in extra cash flow. Rand gold price is currently above 700,000 R/kg.
• Valuation upside potential if Harmony executes on growth projects and benefits from higher gold price. Well positioned for long-term growth.

Harmony Gold offers a compelling investment opportunity as an undervalued gold producer poised for growth from both existing operations and an exciting pipeline of expansion projects.