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Harmony Gold Mining Company Limited isn’t one of the 30 most popular stocks among hedge funds at the end of the third quarter (see the details here).

Peter Steenkamp: Good morning or good afternoon, wherever you may be across the world. I am Peter Steenkamp, CEO of Harmony. Thank you for joining us virtually today as we present our Interim Results for the Half Year Ended 31st of December 2023 for the current reporting period. Please take note of our safe statement. Let me begin with a summary to remind you who we are and what our strategy is. Harmony is a specialized gold producer with a growing international copper footprint. We also produce small amounts of silver and uranium. We have over 73 years of gold mining experience in South Africa and have been operating for over two decades in Papua New Guinea. Our strategy is aimed at producing safe, profitable ounces and improving margins through operational excellence and value-adaptive acquisitions.

Our mineral resources and mineral reserves declaration of 138 million ounces and 39 million ounces respectively, presents an incredible opportunity to convert the quality ounces into shared value for our shareholders and stakeholders. Our gold tailings re-treatment business or recycling as you may know it, is the largest globally and is set to grow supporting the circular economy. The Tier 1 Moafie Gold Project in Papua New Guinea and Eva Copper in Australia give Harmony a sizable copper gold footprint, which will be transformational. Currently, our diversified portfolio of operating assets including nine underground mines, two open pit mines, and a significant failings re-treatment business. Production comes from four business areas, namely our South African high-grade underground mines, our South African optimized underground mines, a large and growing surface sources business in South Africa, and a growing international copper gold portfolio, of which Hidden Valley is the only producing mine at this stage.

Mining with purpose ensures that our stakeholders share in the benefits of the minerals we extract. In our presentation today, we will provide further insights in how we are creating long term value, shared value for all of us. Over the past few years, we have set ourselves ambitious goals, and I’m proud to say that we’ve largely achieved them. Reflecting on the first half of the financial year of 2024, we have delivered significant improvement in safety with our last time injury frequency rate improving to from above seven in 2017. The 9 or 5.19 per million ounce worked in a supporting period. We maintain the belief that the safe mine is a profitable mine. We have reduced our gearing and built a strong balance sheet, which is now in the net cash position of ZAR 74 million or US$ 4 million.

Through organic growth and investment, we continue to convert our mineral resources to quality mineral reserves, focusing on higher grades and margins. This is evident of our comprehensive pipeline of projects in execution. Group all-in sustaining cost improved to ZAR 843 and ZAR 43,000 a kilogram or US$1,403 per ounce. We achieved higher underground recovered grades at 6.29 grams per tonne. Harmony generated a record operating free cash flow of ZAR 7.1 billion or $381 million. This equates to a group operating free cash flow margin of 24%. Our acquisitions have transformed Harmony completely, having added quality ounces and copper to our asset portfolio. We are a new company with a long and exciting future ahead of us. The effective allocation of capital has created is in a position to return capital to our shareholders, rewarding them for investing in Harmony story.

Allow me to unpack the operational performance for this reporting period. The stellar results in this reporting period were a result of our ongoing investment in operational excellence. This has enabled us to deliver consistency throughout the gold cycle. We are, therefore, well-positioned to take advantage of the current high gold price. Let me give six reasons why I strongly believe Harmony will continue to deliver. First, everything we do starts with safety, which I again want to emphasize is non-negotiable. This is supported by a healthy organizational culture. Operational flexibility and predictability in our planning ensures that we consistently deliver on the tonnes alongside higher-grade ounces. Harmony has always controlled what we can with cost being one key factor.

With the rand cost base, we have a stable and predictable cost structure. The strong partnerships that we have built with our stakeholders enable us to maintain a social license and continue operating successfully. Our substantial mineral resource based on other 174 million ounces, presents an abundance of opportunity to grow our mineral reserves through internal investments. Let’s look at the numbers supporting these statements. We are seeing a continued improvement in safety performance. It requires a daily commitment, and we are confident that we will ultimately achieve this zero of – the goal of zero loss of life. Our proactive culture of safety and care has resulted in our lost time injury frequency rate trending lower. Group lost time injury frequency rates improved from 5.1 — improved to $5.19 per million ounces worth in the first half of this financial year.

Our operational results demonstrate that the safe mine is a productive mine. An incredible amount of work goes into ensuring that our workplaces are made safe. We have continued safety awareness initiatives to reinforce that safety always comes first. Regretly four of our colleagues have lost their lives in the mine-related incidents since the start of this financial year. Each loss of life is a sharp reminder that more needs to be done. We mourn the passing of these colleagues and we work tirelessly to ensure that each Harmonian [ph] returns home on safely. Improved planning allows for better flexibility and predictability. This combined with the acquisition of higher-quality assets resulted in a multiple improvement in recovered grades. Underground recovered grade in this reporting period increased by 11% to the 6.29 grams a tonne from the 5.6 grams per tonne year-on-year.

This now exceeds the upper end of our full year guidance. This has primarily been driven by the high-grade underground mines in Penang at North Tshepong. Consequently, production increased by 14% to 36 tonnes of gold or 832,000 ounces, and we expect to meet or exceed the upper end of our FY 2024 production guidance. These charts perfectly illustrate our effective capital allocation has transformed Harmony. We continue to see an improvement in our all-in sustaining costs in both rand and US dollar terms. Our rand all-in sustaining costs improved by 5% to 843,000 rand a kilogram. However, we delivered a remarkable 12% improvement in US dollar all-in sustaining costs to just over $1,400 per ounce. This considerable shift down in global all-in sustaining cost growth has been a function of the higher grades, well-managed cost increases and increased the production and prices of [indiscernible] at Hidden Valley Mine and Moab Khotsong operational, respectively.

With over 90% of our input source in South Africa, we have been largely protected from the rampant global information. In addition, our labor electricity cost increases are predictable, allowing us to manage our cost effectively and deliver this guidance. We’re a proud South African gold producer and are fortunate to sell our gold in U.S. dollars. As a result, our all-in sustaining cost margins are now over ZAR 350,000 per kilogram or $600 an ounce. Improved safety and higher-grade grades translated into high production. This was further supported by a strong rand per kilogram gold price received. This allowed for higher margins, driving record operating free cash flows. Total operating free cash flows increased by 265% to ZAR 7.1 billion, while operating free cash flow margins expanded to 24% from the 9%.

In U.S. dollars, we generated $381 million in operating free cash flow, up 237% year-on-year. To put this in perspective, we generated more operating free cash flows in rand over the past six months than we have in the previously full year period. The majority of our total free fresh operating flow comes from our South African high-grade operations at Hidden Valley in Papua New Guinea. Our South African high-grade underground mines contributed 51% of the total production, but delivered 45% of operating free cash flows at a margin of 34%. Let me remind you that the South African optimized underground assets continue to serve the company well. This mine produced 40% of the total production and generated 90% of group operating free cash flows at a margin of 11%.

Bearing in mind that we are investing significant capital to expand our South African surface operations. These assets produced 17% of the group production, generating 11% of the operating free cash flow at a margin of 17%. Hidden Valley produced at 12% of the group production but contributed 25% to the total operating free cash flows and had a phenomenal 50% margin. Sustainability and ethical mining are integral to our operating model at Harmony. The sub-multiples stewardship is about managing all aspects of ESG. We support the circular economy through decarbonization, more specifically through energy efficiencies, renewable energy programs and green energy mix. Effective waste management through waste rock and planning street treatment. We also donate waste rock dumps to our communities for aggregate production.

We promote good water stewardships good for the prioritizing the recycling and efficient use of this scarce resource. And we contribute to the resilience and the prosperity of our host committees through benefit sharing. This makes Harmony a partner of choice. Mining with purpose is what we are all about. Through sustainability is embedded in all we are our decisions that we make. At Harmony, we believe in actions over words. As a result, we continue to receive positive external recognition for our efforts in sustainability. We have once again been included in the FTSE4Good Index. On inclusion in the Bloomberg Gender-Equality Index for five consecutive years demonstrate we foster gender diversity and inclusivity. We always treat our employees fairly without bias or prejudices of any kind.

We have received a score A from the CDP for best practice in water management strategy in 2023. And our near-term and longer-term carbon reduction targets have been validated by design-based target initiative as we aim for net carbon zero by 2045. Because Life of Mine is finite, we are continually investing in converting our resource to reserves, while striking a balance between capital intensity and shareholder returns. Harmony presents a substantial opportunity to invest in an exciting gold copper story. Our resource base, which includes copper is to big to ignore. We are in a fortunate position that we can deliver on our long-term plans for internal investment, as we convert these resources to reserves. Our production profile has been significantly derisked and future production will come from combination of South African surface and underground gold, Papua New Guinea copper and gold and Australian copper.

Our quality growth pipeline is aimed at creating long-term value, as we take our projects up the value curve. Feasibility studies to determine the possibility of safely extending Mponeng and conducting the pillar extraction of the Tau Tona have been completed. I’m delighted to announce that we have received Board approval and will commence with the life of mine extension project at Mponeng in the West region. I will impact more on Mponeng in the next few slides. We are conducting various exploration drilling activities across all other jurisdictions. The Eva Copper feasibility studies are being updated and negotiations to permit Wafi-Golpu are also continuing. We are making good progress with various projects currently in execution. The Moab Khotsong extension, Mine Waste Solution, TSF Extension and Hidden Valley extension are all progressing well and further details are available in the next year.

Now moving to Mponeng life of mine extension project. Mponeng was acquired in 2020, we began a comprehensive update of the feasibility study to determine if we could extend Mponeng life of mine. After the two-year study, we now have an optimized mine design, which ensures we can extend the life of Mponeng both safely and profitably. The project means all our investment criteria. Mponeng is in incredible mine with an existing world-class infrastructure. There’s a mine with access to both — to two excellent ore bodies, namely of carbon leader and the [indiscernible]. Both of these economic horizons have exceptional grades north of nine grams a tonne. This major project will convert over three million ounces into mineral reserves, delivering at an average steady-state production of 260,000 ounces per annum or 8 tonnes per annum of gold.

Once the project is complete, we are forecasting a cash contribution of about ZAR 2.5 billion per annum from this project at a real gold price of ZAR 1.1 million kilogram. Because of this high grade, the projects will have an attractive real all-in sustaining cost of ZAR 768,000 a kilogram or $1,290 per ounce based on current assumptions and estimations. The life of mine will be extended from the 7 to 20 years, ensuring Mponeng remains a top performing asset in our portfolio until at least 2044. Capital expenditure for these projects will be manageable and affordable. This project will be self-funded through internal cash flows. With a substantial mineral resource of 24 million ounces, that’s another example of how we continue to extend our reduced production profile by converting mineral resources to mineral reserves.

We are proud that in our hands, Mponeng will reach its true potential and deliver a significant positive social impact. This embodies our Harmony creates long-term value for the shareholders and stakeholders. A derisked modular approach will be taken to access three high-grade blocks. State Health were at the forefront of our design methodology and mining practices. The project will focus on mining the two ore bodies landed the VCR and carbon leader. This will ensure that we maintain a high level of flexibility. The extension is only about 270 meters deeper. This will target early gold by accessing the Harmony go through a ramp system at 120 level and the VCR will be actually through the West and the eastern side. Lastly, we will also remind the VCR portion of the Tau Tona shafts pillars, which provides additional high-grade ounces.

This is truly for illustrative purposes and includes both approved plans and projects still in feasibility. Adding the Mponeng extension, Eva Copper and Wafi Golpu, Harmony going to remain at 1.5 million producer well into the future. Importantly, the Mponeng extension combined with Moab Khotsong extension will deliver over 400,000 ounces high-quality, low-cost ounces per annum for more than two decades. This will ensure strong future cash flows at higher margins. There is a significant potential within our asset base for further value to be unlocked through future mineral resource conversion. Bear in mind that this illustration also excludes any potential future value-accretive acquisitions that form part of our strategy. Capital guidance for FY 2024 remains unchanged.

Capital for early work development from Mponeng was provided for in the FY 2024 capital budget. We estimate a ZAR7.9 billion in project capital over the life of the project in real terms. Capital guidance for FY 2025 onwards will now include the Mponeng extension project. Mponeng generated ZAR1.9 billion in operating free cash flow in the reporting period in this particular six months. At an annual estimated CapEx of ZAR1 billion or approximately US$50 million, this project is therefore affordable and at a low capital intensity. Harmony is sizeable and well-sequenced project pipeline. Our project timing is deliberate and ensures our project capital remains affordable and does not put pressure on our balance sheet. These projects are catalysts for meaningful, sustainable production and expand our margins within driving costs down in the future.

Now allow me to hand over to my colleague and Financial Director, Boipelo Lekubo to run through the financials. Over to you, Boipelo.

Boipelo Lekubo: Thank you, Peter. I’m pleased to present our exceptional financial performance for this reporting period. All US dollar figures and conversions are in their exchange. Group revenue for this financial half year increased by 35% to ZAR31 billion. EBITDA increased by 114% to ZAR17 billion. As a result, headline earnings per share increased by 226% to ZAR 956 per share. With ZAR 9.8 billion in available headroom through cash and undrawn facilities, our balance sheet is well positioned to execute on our project pipeline and acquisition ambitions. Through operational excellence and consistent production, we have healthy margins at current gold prices. At ZAR1.2 million per kilogram or $2,000 an ounce, our all-in cost margin is at 33%.

This is essentially the margin available after all major capital. Our all-in sustaining cost margin is 42% and our cash operating cost margin is 68%. We are therefore well positioned with good buffers to absorb any adverse movements in the gold price. We have an effective hedging program in place with 20% of our production hedged over 24 months. The Rand gold hedge book was maintained at 20% or 558,000 ounces at an average forward hedge cover of over ZAR1.256 million a kilogram. Returning cash to shareholders alongside our growth aspirations remains a key priority. Harmony’s dividend policy is to pay a return of 20%, net free cash generated to shareholders, at the discretion of the directors — of the Board of Directors. The strong operational performance and exceptional net free cash generation, resulted in a record interim dividend of ZAR1.47 or US$ 0.80 per share declared, which will result in a record payment to shareholders of over ZAR1 billion.

This has resulted in a 12-month dividend yield of just over 2%. Cumulatively, we’ve paid ZAR2.7 billion in dividends, since 2016. With ongoing confidence in our plans, controlling what we can, such as safety, production and costs, we aim to fed true to our dividend policy. Thank you, and back to you, Peter.

Peter Steenkamp: Thank you, Boipelo. So in conclusion, Harmony is a company that delivers sustainable, predictable and flexible operational performance with a well-managed, fixed cost structure. Our guidance for FY 2024 remains unchanged. And we are confident that we will reach the upper-end of our production guidance and the lower-end of our cost guidance. Through our embedded sustainability practices and quality ounces, we have a company with a long reserve life. Our geared exposure to the Rand per kilogram gold price continues to provide us with good tailwinds on both the revenue and marginal perspective. We have two significant international copper projects that complement our existing gold assets. We understand our ore bodies.

We have a strong technical and exploration capabilities. And we are the partners of choice wherever we operate. As Boipelo mentioned, our flexible and strong balance sheet supports our growth pipeline. As a gold mining specialist with a growing international copper footprint, we are passionate about what we do and about transforming our goal into long-term value for all stakeholders. This is mining with purpose. Thank you. And I’ll now hand over for questions.

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Operator: Thank you very much, sir. Ladies and gentlemen, our first question is from Adrian Hammond of SBG. Please go ahead.

Adrian Hammond: Hi Peter. Thanks for the presentation and well-done on a great set of results you share. Your share of course has been the best performer globally over the past year. So I guess the question is can you sustain this incredible rating of yours? One of them, reference Slide 21, where you see a gap in your production profile, even with the international projects you have in the pipeline. So is that something that bothers the team that they wish to fill and does that mean you’re going to do more M&A? That’s the first question. Secondly, ever, we don’t have a CapEx number yet on that, and perhaps you can enlighten us. But how do you manage to de-risk this project going forward? Do you think you’re going to need a partner there?

Doesn’t it make sense? And then thirdly, I like your comments in the commentary around Uranium, which has become more of the material revenue generator for you, but you do say you’re going to explore further potential. Can you expand on that, please? Thank you.

Peter Steenkamp: Okay. So let me just get to the first question. So we, obviously, in that status where we want to get the mines to the gap that will probably go down to about 1.2 million ounces. But one must remember that there’s also a much better quality ounces at the time. I think the margins of the portfolio of assets we have at the time is very good. So there are some opportunities to fill that gap. One is, obviously, to do more surface sources. But I mean we are also always looking at what we can do in terms of an acquisition or a kind of a merger that potentially can take us over that and take us forward. And, obviously, when we do an acquisition, it needs to be a real — very near-term production or already in production kind of operations.

So we have a team that — new business team and the leadership of Johannes van Heerden that reduced a wonderful work. And we’re currently in Miami, there at the BMO and Johannes is here with us and trying to find why we can do that. So we are always looking at that — opportunities that’s going to get there. The EVA Copper CapEx, we are — people will know the work that we’ve done thus far and EVA shows that it will be a slightly bigger mine, but a much longer life mine that we currently have there. There is a few amendments we want to do in terms of the permits that — remember, we bought this mine with the full feasibility study and fully permitted. But we want to make some few amendments to that permit and it’s really on the back of energy mix, water management on the mine and also the diversion of a creek that now has to be a little bit different than we originally thought it should be.

We hope that these things will be viewed by the Queensland government as minor. If it’s minor, we can most likely take you to the Board middle of next year, the EVO project and then obviously try and get approval for that. If it’s major, we actually have to go through a bunch of different process, which is now to get public participation, although nothing of that will be something that we think that will either stop the project. It’s just going to delay it for a while. Talking about the CapEx for that then. I mean, we would obviously come with a CapEx plan as part of the feasibility study and when we bring into the market. But most likely, it will be a combination of proceeds out of our current facilities and also cash flow from operations, and maybe a little bit of a project finance on that.

Remember, EVA will be a short-term two-year bulk – short-term and immediately after that, we will generate capital cash because of the low strip ratios and everything else that we have there. On the uranium, that’s a very interesting question there, Adrian. There is a few opportunities, obviously, we get uranium from the ore that we take through our plants, which is both our ore and also the ore from Kopanang mine that goes through our [indiscernible]. And so beginning of that, we had uranium facilities. But they are obviously either through also retreating of dumps good uranium operations. Obviously, Sipes [ph] is a massive uranium mine that used to operate in that area, currently is in business rescue. So we haven’t got a plan in terms of how to increase uranium, but at the moment, it’s a massive big tailwind in terms of cost because we obviously get it as cost credits in Moab Khotsong.

Unfortunately, that’s the only uranium plant that we have. And potentially, we’re always — but we have a project team at the moment that’s doing a lot of work to see how we can potentially increase that.

Adrian Hammond: Sure. Do you see the partnerships with local players there?

Peter Steenkamp: Yes. Potentially, we can. But remember, all of this one plant and the plant is pretty full at this point in time. We are factoring our ore and through the Moab Khotsong we also fitting [indiscernible]

Adrian Hammond: Okay. Understood. Enjoy your time in Miami. Thank you.

Peter Steenkamp: Thanks.

Operator: Thank you very much. Next question is from Arnold Van Graan of Nedbank CIB. Please go ahead.

Arnold Van Graan: Yes. Good morning, Peter and good afternoon, everyone else. First of all, well done on the results. It’s good to see Harmony crystallizing the value of the gold price. So, well done on the back of not just the high price but also, very good operational performance. So my question very similar to Adrian’s question, maybe a bit more detail. But I just want to get a sense of how sustainable the higher grades are more up in Pune [ph]. I mean it’s phenomenal to see that, we love to see that. But are you going to continue mining at these rates for the next year or so? And then I guess the question that goes with that is what’s driving these high-grade? Is it where you are in those ore bodies? Is it a result of your operating performance and additional developments?

Can you just give us some comfort that in six months or 12 months from now, where we are back, we’ll still be seeing similar grades and not a big step down? And yes, that’s it for me. Thanks Peter.

Peter Steenkamp: Yes, Arnold. South African grades are quite sustainable. I mean where we’re mining now at Mponeng is obviously, we mined through the lower-grades assets. We’re now in the higher-grade assets. Remember, that was always the argument when we also mine from AngloGold Ashanti time, actually the grades is low now, but it’s going to be much higher going forward. So we — yes, so we are really putting there, and obviously, mining up is a great restarting always more — you have to have a great mix with the middle mine that’s perform well. Now the middle mine performed very well in the last six months and will most likely continue to perform well going forward. But there’s always the one that is actually quite complex and have some sort of issue always for seismicity and things like that.

But I mean, we think — where we plan to mine is what we’re going to get the grades. And there’s also something very good grades from the Sponsouth operation, which is the — that is that we’re mining in, which is — was better than we expected. All the other grades were actually according to plan. Although it was high, it was planned that way. The one area where we’ll have a great drop in the latter part of this year will be at Hidden Valley. We are mining for that b grade that we’ve explained to the market that we’re going to hit. We actually last six months, we were in a b grade. There will be some of that still coming through in this quarter. And we’re in — we still have haven’t processed all the b grade are yet. But then we’ll go into lower grades, the typical 1.1% versus the 1.6% that we currently have.

So it’s quite a — but still that’s 10% of our production. So that will be — we’re very comfortable with the great guidance that we said we’ll be at the upper end of it, and we are in good grades going forward. So it’s — all in all, but all the operations performed going, not only [indiscernible] was spectacular. But the other — every other mine has actually done quite well as far as grade is concerned.

Arnold Van Graan: Thank you, Peter. That’s all from me.

Peter Steenkamp: Thanks, Arnold.

Operator: Thank you. The next question is from Leroy Mnguni of HSBC. Please go ahead.

Leroy Mnguni: Hi, good afternoon. Thanks Peter. My first question is around your guidance. You’ve had excellent operational performance in the first half of the year. I understand the seasonality going into the second half of the year, which is normally a bit weaker. But are you anticipating anything either the normal seasonality that’s going to have an adverse impact on your operational performance because keeping your guidance flat or unchanged does sort of suggest that? So, if you could please give us a bit of color on that? And then just an update on the turnaround efforts at Target and how those are going? Are you still on track to have turned that mine around by the middle of the calendar year? And then my third question is, has the fatality at Mponeng had a significant impact on your operational momentum at that mine?

Peter Steenkamp: Now, the guidance, we said that we’ll, at least, get to the upper end and probably beat that. We don’t foresee any issues other than seasonality, but I’ve talked about in value that, that obviously will have lower grades in the fourth quarter and even in this quarter, probably in the March month will be to normal grade. But yes, we don’t — other than seasonality, there’s nothing that we believe that is in our horizon that will really drop production. I mean everything is going well. But we always have a slow start up after Christmas. It’s like I wish I can one day say that we can get through Christmas without having issues with the restart up. But there was nothing — everything over the Christmas period in terms of restarting the mines and everything else like that was done barring what happened at Mponeng was actually certainly on plan and executed [ph].

Target, we are glad to say the project is behind us. The crushers are running. The conveyor systems are running. Everything is down now to the bottom of the mine. We’re still just completing the final parts of the workshops down there. So, we will have a much better Target going forward. And we obviously now can have that much shorter travel businesses et cetera. So, I’m very happy with that. And then so — yes, Target will now, obviously, create the flexibility that we need and everything else because I mean it was a very difficult project to execute on without any saying. In Mponeng, we had quite a senior person in our operation that actually went into a hot area, a very experienced person, one captain level, that’s obviously also experienced the terms that it used to be a proto captain.

And unfortunately, went into a hot area where he shouldn’t, actually struck as not to go. And yes, so that had quite impact on the mine more from a model perspective or the culture because I mean this was quite a strong individual tastemaker in on the mine, a very sad incident. But I mean, other than that, we — it was actually in an area that was not really a production, it was actually a vamping area that we went into. So, I think we got through that. But a very sad event and obviously, always reminding us about not taking risks, not doing things that we shouldn’t be doing. And it’s a culture that we want to emphasize in Harmony. But I don’t think the Mponeng event will have a big impact on Mponeng itself.

Leroy Mnguni: Thank you. That’s helpful. And maybe just one follow-up. Where do you expect the all-in sustaining costs for Target to land now that you’ve executed on all that you needed to change there?

Peter Steenkamp: Will come down. I think in the next year, we would certainly be in a good profit situation at target. So yeah, so I’m looking forward to that. Obviously, we got a planning process now. The cycle — planning cycle is well underway. So — but yeah, we expect it to come in nice profit situations for Target going forward. So — but this year will still be tight because of the flexibility that we still know to have in the ore body, and that will be a busy rating as we speak.

Leroy Mnguni: Perfect. Thanks, Peter.

Operator: Thank you very much. So we have no further questions on the conference call.

Unidentified Company Representative: There are some questions here. Can you hear me? All right. So we were to start here? Yeah. I think, Peter, it’s also just a couple of questions here from a few of the analysts that have questions about just the second half production, I mean relative to first half. I know we have spoken about the guidance that was unchanged. But I mean, really just asking if there’s going to be any material change in the second half given that we’re tracking north of 55% in terms of goes from the first half.

Peter Steenkamp: Yeah. No. And again, like you said, when we gave feedback to Arnold and there’s nothing actually different from this year to last year for this after pretty resolved except for Hidden Valley, which will have a lower grade going forward. But the rest of the operations are in the same space, same areas that they’re mining and operations actually should continue. But barring the seasonality that we have with a slow start in January and February. Other than that, I think we are — we’ll be good.

Unidentified Company Representative: Okay. Just another question from Arnold here in terms of the CapEx numbers. Obviously, we haven’t updated the market yet based on the numbers. But maybe just some indication as to how far out could we expect this project to be pushed. I think you did touch on it briefly, Peter.

Peter Steenkamp: Yeah. As I said, I mean, it all depends if we get these amendments to be minor or major. If it’s minor, we can not likely start the latter part of this calendar year, start — I mean, obviously, titrated take it to the Board. in the final year results, which is more less August when we take it to a Board for approval. And then after that start with early works. So that will be the target a best-case scenario. Obviously, if we have to go on an amendment of the conditions or the permits that take a little bit longer, we may agree to do some early works earlier, but we just want to make sure that we get that answer first from the Queensland government in terms of those amendments to the permits that we would like to introduce.

Unidentified Company Representative: Could take some questions here in Johannesburg. I see we’ve got some pulling specific ones that we could direct at Baas.

Operator: We have another follow-up question on the conference call from Leroy Mnguni. Please go ahead.

Leroy Mnguni: Hi. Thank you. Peter, I was just curious, the Benin life extension project, does that trigger any of the resources that have that deferred consideration payable back to Anglo Gold attached to them. I know there were certain areas of the mine where if you extend it into that area, you have to pay like a royalty or a deferred consideration and back to AngloGold Ashanti. Does that at all?

Peter Steenkamp: Yes, it is. It’s a small amount per tonnes. What’s that amount again?

Boipelo Lekubo: Yes. In terms of the existing infrastructure, I think it’s $20 an ounce.

Peter Steenkamp: Yes, above $250, but it’s $5 an ounce, or something like that for the below infrastructure that will trigger it, it was taken into account also in the feasibility study. So yes, so we are — the old trigger and below infrastructure. Everything below structure. Well, that’s obviously the shaft pillar will not affect that, but everything below infrastructure will attract that deferred payment. At the moment, we are also paying — because we are doing more than 250,000 as per calendar year. We are all doing — we are paying a royalty of $20 ounce to everything above 250. So that’s also — as part of our results in the results here.

Boipelo Lekubo: It’s in the book to as well — you can see under in the high-grade section point 1 and 2 under the — it just tells you what the deferred components of that sale agreement were.

Leroy Mnguni: All right. Got it. Thank you.

Marian van der Walt: Jared, and then perhaps we can just take some questions here in Johannesburg as it relates to Pruning specifically. Let’s perhaps touch on one that Rene raises, Bayers. Can ask this question to you, it’s just about the development of the ramp at 4,000 meters. It is concerning according to Rene. Usually, you carry development at those depths behind over stoped areas and distressed areas. How will you handle the stresses with our distressed over stoping?

Peter Steenkamp: Thank you, Marian, and Rene for the question. So I think perhaps just a bit more color on the improved mine design for the Mponeng deepening project. It will, in fact, be three separate sets of infrastructure for three target areas of the ore body, starting at the first one, which is the carbon leader early gold. That’s, in fact, infrastructure, Rene or a ramp that will be created from 120 levels. So that’s above levels where we’re currently mining so well within the capability of understanding the rock mass and the stress regime and the seismic response in that area. On the deeper side of the mine, it’s the two sets of infrastructure towards the east and the west on the VCR horizon. So on the East, it’s going to be a two-level decline sync.

And on the West, it’s going to be a three-level spiral ramp on the west. Now it’s important to realize it’s only about 270 meters that the mine will be made deeper. So from the four-kilometer base, it’s not that we’re doubling the depth of the mine. So we’re quite comfortable that we do understand the support requirements and the rock mass behavior, Rene at that depth. So it’s a little bit — we’re taking that ramp in the picture on the screen now, the green ramp is the ramp that is going to be developed at depth deeper.

Leroy Mnguni: Thank you, Peter.

Marian van der Walt : Yes, I may add, Rene, is that we do have the kind of support systems now that can be in actual fact, when we do the declines in any case, we don’t do it under distressed areas. So we do have a support regime to in actual fact support that. So we also — there’s obviously one of the biggest, biggest concerns was to do we have the capabilities and management of seismicity in these deep level mines? And Mponeng’s seismic activity over 1,000 square meters per 7 square meters mine, the seismic release rates actually came down because of the configurations were used. The pillar configurations — The pillar configuration we currently use the lease and lags that we manage, the support systems that we put in, the quality of backfill that improved over years.

And then obviously, also the steel nets that we currently have in all our working places. So we think we’ve got — we’ve really got the state of the art and the understanding and the know-how to do this. And that is what we make our specialists in this environment, specifically there. So — and we have a very strong track record of seismic management since army took over there. And even prior to that, the work at [indiscernible]. So we are very comfortable that we tick that box as far as safety is concerned.

A –Unidentified Company Representative: Peter, thank you and Jared, again, I’m just going to ask Boipelo. We’ve been asked by Arnold Sankaran. — just to chat a little bit about stream coming to an end at Mine Waste Solutions and what that would do to the free cash flow. And then — while we’re addressing questions to you, there was a question which has since disappeared. Just the IRR that was assumed for the Mponeng extension and specifically also the gold price that was used in finalizing that feasibility study, please?

Boipelo Lekubo: Sure, Marion. So from Mponeng gold price was ZAR 1.1 million a kilogram, the IRR at 17%. Yes. And then just on the first question with regards to the stream, I think that adds about its 25,000 ounces that remain, and that will add about ZAR 700 million to revenue.

A –Unidentified Company Representative: Thanks, Boipelo And perhaps just the last question for Asia in Johannesburg, and then we’ll hand over to Miami again that all feels quite multinational. And I ask this question is a tough one, but I’m going to ask you, this is from Chris Nicholson at RMB — he wants to know gram per-tonne costs were at 22%, Chris, but I’m sure you’ve seen that our all-in sustaining cost is coming down gram per kilogram, if you noticed, it’s actually moving towards the left of that graph just saying. So the gram per tonne on costs were up 2% year-on-year at the South African underground with the South African underground assets, 14% at SA overall. Could you comment on this high level of inflation? And what do you expect the gram per tonne inflation to run at into 2024?

Jared Hoover: Thank you for the question, Chris. So Harmony has always targeted improvement in our grade to help us manage inflation. And so we’re not immune as the other mines to inflation. And the key drivers of higher-than-normal inflation were, in fact, in our electricity costs in South Africa. That number increased by 19%. So which obviously added to the gram per tonne inflation number. The other one that was slightly elevated, although we believe it’s well understood, and it’s fairly manageable for us on our long-term agreements is our wage number. So South African wage is escalated by 9% over the period. And then the third one, which we made mention in the bucket as well as royalties, which was actually quite a significant increase. So those were the ones that stood out. But obviously, we continuously managing our production in a consistent predictable production as well as improvement in grades to help us manage inflation.

A –Unidentified Company Representative: Thank you, Jared. We’ll hand over to you and Peter in Miami, should there be any further questions…

Peter Steenkamp: But nothing on this side. I don’t know if there’s anything on the line on Chorus Call store that’s potentially coming through.

Jared Hoover: We have no further questions on the conference call.

Peter Steenkamp: Yes. And then maybe I could just wrap it up there. If that’s okay, Jared. I just thank you, everybody, for calling in today. It’s an odd time for actually South Africa to do it in the afternoon, but it’s early morning here. There’s a wonderful sunrise here with impending ocean that we witnessed out of our room. But fantastic to have you guys here. Looking forward to come back to South Africa at the end of the week. And yes, thanks again for dialing in. We appreciate that.