Harmony Gold FD Boipelo Lekubo.
Photo by: Creamer Media
JOHANNESBURG (miningweekly.com) – Gold mining company Harmony Gold realised a R1-billion gain on derivatives in the 12 months to June 30.
“This confirms that our more definitive hedging programme is yielding positive results, and we’ll still see that in future,” said Harmony Gold FD Boipelo Lekubo on Tuesday, in presenting what she described as an exceptional financial year 2021 (FY21) performance. (Also watch attached Creamer Media video.)
“Our existing hedge book is also favourably positioned, relative to the current gold price,” Lekubo said in reporting a nigh 700% surge in headline earnings per share to 923c from a loss in FY20 of 154c.
“FY21 has indeed been a fantastic year for us,” she reiterated during a presentation covered by Mining Weekly.
Earnings before interest, taxes, depreciation and amortisation (Ebitda) increased by 64% to R9.8-billion from R6-billion in FY20.
Higher production, combined with a 16% higher rand kilogram gold price, resulted in a net FY21 profit of R5.6-billion, compared with the R850-million loss of the Johannesburg- and New York-listed company in FY20.
The operational free cash flow margin rose to a 23%-higher 16% year-on-year.
Net debt is down by a further R819-million and net debt to Ebitda of 0.1 times is well below the target of 1 times and half of the 0.2 times of the previous financial year.
The balance sheet, which Harmony has managed to deleverage considerably over the last three years, has continued to strengthen.
A slide displayed Ebitda as being hoisted high as a result of the acquisition of assets Mponeng, Moab and Mine Waste Solutions from AngloGold Ashanti.
“In addition to reducing its debt, we have created flexibility and now have R7-billion in available headroom through cash and undrawn facilities.
“This gives us substantial room to manoeuvre and provides a strong buffer during times of uncertainty,” said Lekubo.
It has also allowed the company to take advantage of opportunities to invest capital into the high-grade Zaaiplaats, and the quick-yielding Mine Waste Solutions, as well as Hidden Valley, in Papua New Guinea.
Harmony now has a clear dividend policy of returning 20% of net free cash generated to shareholders.
‘We’ll be paying a final dividend of 27c a share in FY21, which combined with its interim dividend of 110c, results in a dividend yield of 2.4% based on the share price of August 27.
“We’re confident in our ability to pay a dividend alongside our growth aspirations as we’re in a strong position to fund capex from our retained cash,” said Lekubo.