Only (i) the information included in the Harmony 2024 Form 20-F, (ii) the information in the Integrated Annual Report for the 20-F 2024 that is expressly incorporated by reference in the Harmony 2024 Form 20-F and (iii) the exhibits to the Harmony 2024 Form 20-F that are required to be filed pursuant to the Form 20-F (the “Exhibits”), shall be deemed to be filed with the Securities and Exchange Commission (“SEC”) for any purpose. Any information in the Integrated Annual Report for the 20-F 2024 which is not referenced in the Harmony 2024 Form 20-F or filed as an Exhibit, shall not be deemed to be so incorporated by reference.
USE OF TERMS AND CONVENTIONS IN THIS ANNUAL REPORT
Harmony Gold Mining Company Limited is a corporation organized under the laws of the Republic of South Africa. As used in this Harmony 2024 Form 20-F, unless the context otherwise requires, the terms “Harmony” and “Company” refer to Harmony Gold Mining Company Limited; the term “South Africa” refers to the Republic of South Africa; the terms “we”, “us” and “our” refer to Harmony and, as applicable, its direct and indirect subsidiaries as a “Group”.
This annual report contains information concerning our gold reserves. While this annual report has been prepared in accordance with United States Securities and Exchange Commission Regulation S-K 1300, it is based on assumptions which may prove to be incorrect. See Item 3: “Key Information - Risk Factors- Risks Related to Our Operations and Business -Estimations of our reserves are based on a number of assumptions, including mining and recovery factors, future cash costs of production, exchange rates, and relevant commodity prices; as a result, metals produced in future may differ from current estimates.”
Harmony is a South African company and the majority of the Group operations are located in South Africa. Accordingly, our books of account are maintained in South African Rand and our annual financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). This annual report includes our consolidated financial statements prepared in accordance with IFRS presented in the functional currency of the Company, being South African Rand. All financial information, except as otherwise noted, is stated in accordance with IFRS.
We have included the US dollar equivalent amounts of certain information and transactions in Rand, Kina and A$. Unless otherwise stated, we have translated assets and liabilities at the spot rate for the day, while the US$ equivalents of cash costs and all-in sustaining costs have been translated at the average rate for the year (R18.70 per US$1.00 for fiscal 2024 and R17.76 per US$1.00 for fiscal 2023). By including these US dollar equivalents in this annual report, we are not representing that the Rand, Kina and A$ amounts actually represent the US dollar amounts, as the case may be, or that these amounts could be converted at the rates indicated.
CAUTIONARY STATEMENT ABOUT FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements within the meaning of the safe harbor provided by Section 21E of the Exchange Act and Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), with respect to our financial condition, results of operations, business strategies, operating efficiencies, competitive positions, growth opportunities for existing services, plans and objectives of management, markets for stock and other matters.
These forward-looking statements, including, among others, those relating to our future business prospects, revenues, and the potential benefit of acquisitions (including statements regarding growth and cost savings) wherever they may occur in this annual report and the exhibits to this annual report, and including any climate change-related statements, targets and metrics, are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. As a consequence, these forward-looking statements should be considered in light of various important factors, including those set forth in this annual report. All statements other than statements of historical facts included in this report may be forward-looking statements. Forward-looking statements also often use words such as “will”, “forecast”, “potential”, “estimate”, “expect” and words of similar meaning. By their nature, forward-looking statements involve risk and uncertainty because they relate to future events and circumstances and should be considered in light of various important factors, including those set forth in this disclaimer. Readers are cautioned not to place undue reliance on such statements. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation:
•overall economic and business conditions in South Africa, Papua New Guinea, Australia and elsewhere;
•the impact from, and measures taken to address, the coronavirus disease ("Covid-19") pandemic and other contagious diseases, such as HIV and tuberculosis;
•high and rising inflation, supply chain issues, volatile commodity costs and other inflationary pressures exacerbated by the Russian invasion of Ukraine and subsequent sanctions;
•estimates of future earnings, and the sensitivity of earnings to gold and other metals prices;
•estimates of future gold and other metals production and sales;
•estimates of future cash costs;
•estimates of future cash flows, and the sensitivity of cash flows to gold and other metals prices;
•estimates of provision for silicosis settlement;
•increasing regulation of environmental and sustainability matters such as greenhouse gas (“GHG”) emission and climate change, and the impact of climate change on our operations;
•estimates of future tax liabilities under the Carbon Tax Act (as defined below);
•statements regarding future debt repayments;
•estimates of future capital expenditures;
•the success of our business strategy, exploration and development activities and other initiatives;
•future financial position, plans, strategies, objectives, capital expenditures, projected costs and anticipated cost savings and financing plans;
•estimates of reserves statements regarding future exploration results and the replacement of reserves;
•the ability to achieve anticipated efficiencies and other cost savings in connection with past and future acquisitions, as well as at existing operations;
•fluctuations in the market price of gold and other metals;
•the occurrence of hazards associated with underground and surface gold mining;
•the occurrence of labor disruptions related to industrial action or health and safety incidents;
•ageing infrastructure, unplanned breakdowns and stoppages that may delay production, increase costs and industrial accidents;
•power cost increases as well as power stoppages, fluctuations and usage constraints;
•supply chain shortages and increases in the prices of production imports and the availability, terms and deployment of capital;
•our ability to hire and retain senior management, sufficiently technically-skilled employees, as well as our ability to achieve sufficient representation of historically disadvantaged persons in management positions or sufficient gender diversity in management positions or at Board level;
•our ability to comply with requirements that we operate in a sustainable manner and provide benefits to affected communities;
•potential liabilities related to occupational health diseases;
•changes in government regulation and the political environment, particularly tax and royalties, mining rights, health, safety, environmental regulation and business ownership including any interpretation thereof;
•court decisions affecting the mining industry, including, without limitation, regarding the interpretation of mining rights;
•our ability to protect our information technology and communication systems and the personal data we retain;
•risks related to the failure of internal controls;
•the outcome of pending or future litigation or regulatory proceedings;
•fluctuations in exchange rates and currency devaluations and other macroeconomic monetary policies, as well as the impact of South Africa exchange control regulations;
•the adequacy of the Group’s insurance coverage;
•any further downgrade of South Africa's credit rating;
•socio-economic or political instability in South Africa, Australia, Papua New Guinea and other countries in which we operate;
•changes in technical and economic assumptions underlying our mineral reserves estimates;
•geotechnical challenges due to the ageing of certain mines and a trend toward mining deeper pits and more complex, often deeper underground, deposits; and
•actual or alleged breach or breaches in governance processes, fraud, bribery or corruption at our operations that leads to censure, penalties or negative reputational impacts.
The foregoing factors and others described under “Risk Factors” should not be construed as exhaustive.
We undertake no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this annual report or to reflect the occurrence of unanticipated events, except as required by law. All subsequent written or oral forward-looking statements attributable to Harmony or any person acting on its behalf are qualified by the cautionary statements herein.
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
ITEM 3. KEY INFORMATION
A. [Reserved]
B. CAPITALIZATION AND INDEBTEDNESS
Not applicable.
C. REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
D. RISK FACTORS
In addition to the other information included in this annual report and the exhibits, you should also carefully consider the following factors related to our ordinary shares and American Depositary Shares ("ADSs"). There may be additional risks that we do not currently know of or that we currently deem immaterial based on information currently available to us. Although we have a formal risk policy framework in place, the maintenance and development of which is undertaken on an ongoing basis so as to help management address systematic categories of risk associated with our business operations, any of these risks could have a material adverse effect on our business, financial condition or results of operations, leading to a decline in the trading price of our ordinary shares or our ADSs. The risks described below may, in retrospect, turn out to be incomplete and therefore may not be the only risks to which we are exposed. Additional risks and uncertainties not presently known to us or that we now believe are immaterial (and have therefore not been included), could also adversely affect our business, results of operations or financial condition. The order of presentation of the risk factors below does not indicate the likelihood of their occurrence or the magnitude or the significance of the individual risks.
Summary of Risk Factors
Risks Related to Our Industry
1.We are exposed to the impact of any significant decreases in the commodity prices on our production
2.The impact from, and measures taken to address infectious and communicable diseases, such as Covid-19, HIV/AIDS and tuberculosis, pose risks to us in terms of productivity and costs and may adversely affect our people, and may impact our business continuity, operating results, cash flows and financial condition
3.The nature of our mining operations presents safety risks
4.Mining companies face strong competition and industry consolidation
5.Laws governing health and safety affect our business and could impose significant costs and burdens
6.Since our labor force has substantial trade union participation, we face the risk of disruption from labor disputes and non-procedural industrial action resulting in loss of production and increased labor costs impacting negatively on production and financial results
7.Laws governing mineral rights affect our business and could impose significant costs and obligations; mineral rights in the countries in which we operate could be altered, suspended or canceled for a variety of reasons, including breaches in our obligations in respect of such mining rights
8.Our financial flexibility could be constrained by the Exchange Control Regulations of the countries in which we operate
Risks Related to Our Operations and Business
1.Risks associated with pumping water inflows from closed mines adjacent to our operations, including related closure liabilities, could adversely affect our operational results
2.Infrastructure constraints and aging infrastructure could adversely affect our operations
3.Disruptions to electricity supply and rising power costs: Impact on operations and financial results
4.Illegal mining and other criminal activity at our operations, including theft of gold and gold-bearing material, could pose a threat to the safety of employees, result in damage to property and could expose us to losses, business disruption and liability
5.Actual and potential shortages of production inputs and supply chain disruptions may affect our operational results
6.Fluctuations in insurance cost and availability could adversely affect our operating results and our insurance coverage may prove inadequate to satisfy future claims
7.We compete with mining and other companies for key human resources with critical skills and our inability to retain key personnel could have an adverse effect on our business
8.The use of contractors at certain of our operations may expose us to delays or suspensions in mining activities and increases in mining costs
9.We are dependent on a number of highly-integrated communication and information and technology (''IT'') systems, any major disruption to which could have an adverse effect on our operations and financial results
10.Estimations of our reserves are based on a number of assumptions, including mining and recovery factors, future cash costs of production, exchange rates, and the relevant commodity prices; as a result, metals produced in future may differ from current estimates
11.Our operations have limited proved and probable reserves; exploration for additional resources and reserves is speculative in nature, may be unsuccessful and involves many risks
12.We are subject to the risk of litigation, the causes and costs of which are not always known
13.The risk of unforeseen difficulties, delays or cost in implementing our business strategy and projects may lead to us not delivering the anticipated benefits of our strategy and projects; in addition, actual cash costs, capital expenditure, production and economic returns may differ significantly from those anticipated by feasibility studies for new development projects
Risks Related to ESG
1.Increasing scrutiny and changing expectations from our stakeholders, including communities, governments and non-governmental organization ("NGOs") as well as investors, lenders and other market participants, with respect to our ESG performance and policies may impose additional costs or expose us to additional risks
2.We are subject to extensive environmental regulations in the countries in which we operate
3.The socio-economic framework in the regions in which we operate may have an adverse effect on our operations and profits
4.Given the nature of mining and the type of mines we operate, we face a material risk of liability, delays and increased cash costs of production from environmental and industrial accidents and pollution compliance breaches
5.Mining companies are increasingly expected to provide benefits to affected communities; failure to comply with, and beyond, our legal obligations could result in lawsuits, additional operational costs, investor divestment and impact our “social license to operate”, which could adversely impact our business, operating results and financial condition; we are finding increasing expectations on our business to provide social investment beyond our legal obligations especially as communities demand services and basic infrastructure from companies such as Harmony (where local government has failed the communities)
6.We may not be able to meet our ESG targets due to unforeseen factors beyond our control
7.Compliance with emerging climate change regulations could result in significant costs for us
8.Climate change may present physical risks to our operations and carbon tax projections may have serious financial implications to our business profitability and sustainability
9.The cost of occupational health care services and the potential liabilities related to occupational health diseases may increase in future and may be substantial
10.Our operations are subject to water use and other licenses, which could impose significant costs
11.Compliance with tailings management requirements and standards, and potential liabilities in the event of a failure to timely comply or an incident involving a tailings storage facility, could adversely impact our financial condition, our operational results and our reputation
12.We may have exposure to rehabilitate potential groundwater and land pollution, which may include salination, and radiation contamination that may exist where we have operated or continue to operate; implementation of the financial provision regulations may require us to include provision in our financial statements for rehabilitation
13.Compliance with new and changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies and increases our costs of compliance
Risks Related to Our Corporate and Financing Structure and Strategy
1.Our inability to maintain effective disclosure controls and procedures, and an effective system of internal control over financial reporting may have an adverse effect on investors’ confidence in the reliability of our financial statements and other disclosures
2.We may experience problems in identifying, financing and managing new acquisitions or other business combination transactions and integrating them with our existing operations; we may not have full management control over future joint venture projects
3.Certain factors may affect our ability to support the carrying value of our property, plant and equipment, and other assets on our balance sheet, resulting in impairments
4.Our ability to service our debt will depend on our future financial performance and other factors
5.We are subject to the imposition of various regulatory costs, such as mining taxes and royalties, changes to which may have a material adverse effect on our operations and profits; our operations and financial condition could also be adversely affected by policies and legislation related to greater state intervention in the mining sector and potentially the expropriation of mining assets without compensation
6.Sales of large quantities of our ordinary shares and ADSs, or the perception that these sales may occur, could adversely affect the prevailing market price of such securities
7.As we have a significant number of shares that may be issued in terms of the employee share schemes, our ordinary shares are subject to dilution
8.The continued status of South Africa’s credit rating as non-investment grade, as well as the grey-listing of South Africa by the Financial Action Task Force ("FATF"), may have an adverse effect on our ability to secure financing on favorable terms.
9.We may not pay dividends or make similar payments to our shareholders in the future
Market Risks
1.The profitability of our operations, and cash flows generated by those operations, are affected by changes in the price of gold and other metals; a fall in the gold price below our cash cost of production and capital expenditure required to maintain production for any sustained period may lead to losses and require us to curtail or suspend certain operations
2.Fluctuations in input production prices linked to commodities may adversely affect our operational results and financial condition
3.Foreign exchange fluctuations could have a material adverse effect on our operational results and financial condition
4.Fluctuations in the exchange rate of currencies may reduce the market value of our securities, as well as the market value of any dividends or distributions paid by us
5.Rising inflation and geopolitical risks may have a material adverse effect on our business, operating results and financial condition
6.Investors may face liquidity risk in trading our ordinary shares on the JSE Limited
7.Shareholders outside South Africa may not be able to participate in future issues of securities (including ordinary shares)
8.Global, social, political and economic conditions could adversely affect the profitability of our operations
Other Regulatory and Legal Risks
1.Breaches in our IT security processes and violations of data protection laws may adversely impact our business activities and lead to public and private censure, regulatory penalties, fines and/or sanctions and may damage our reputation
2.Failure to comply with laws, regulations, codes and standards, policies and procedures or contractual obligations may lead to fines and penalties, loss of licenses or permits, may negatively affect our financial results, and adversely affect our reputation
3.Investors in the United States may have difficulty bringing actions, and enforcing judgments, against us, our directors and our executive officers based on the civil liabilities provisions of the federal securities laws or other laws of the United States or any state thereof
4.US securities laws do not require us to disclose as much information to investors as a US company is required to disclose, and investors may receive less information about us than they might otherwise receive from a comparable US company
We are exposed to the impact of any significant decreases in the commodity prices on our production
As a rule, we sell our gold and silver at the prevailing market price. In order to manage commodity price risk we maintain a commodity hedging program. Our remaining unhedged future production is not protected against decreases. If the gold or silver price should decrease significantly, our revenues may be materially adversely affected, which could in turn, materially adversely affect our operating results and financial condition.
The impact from, and measures taken to address infectious and communicable diseases, such as Covid-19,
HIV/AIDS and tuberculosis, pose risks to us in terms of productivity and costs and may adversely affect our people, and may impact our business continuity, operating results, cash flows and financial condition
Many of our employees and contractors work in close proximity to each other in underground and surface mines, and live in close quarters in accommodation provided or supported by us. This renders them particularly vulnerable to the spread of communicable diseases.
The World Health Organization ("WHO") has downgraded Covid-19 from a global emergency to a disease monitored at a country level. In South Africa the disease remains a threat (especially to our HIV positive population) due to the emergence of new variants which may be more infectious and/or more lethal. Considering the geographic distribution of our mining operations across South Africa, there is a risk of disruptions to workforce health and safety.
The prevalence of HIV in Harmony remains high due to historical migrant labor repercussions, as well as other factors. A high proportion of employees have been identified and placed on treatment, however, the status of a significant population remains unknown - potentially posing labor availability and cash flow uncertainty. Furthermore, tuberculosis ("TB") in Harmony (and in the gold-mining industry generally) remains high despite the progress made by Harmony's management program. Although there is a declining trend in the TB incident rate, Harmony's rate is above the national incidence rate mainly due to HIV and exposure to silica.
We are committed to allocating financial resources on preventative measures such as vaccine rollouts, promotion and education. Any new measures may result in additional costs incurred or interference with management's and/or employees’ productivity.
Our property and business interruption insurance and liability may not cover or be sufficient to fully cover any of our losses resulting from public health emergencies and other events that could disrupt our operations. See “– Risks related to Our Operations and Business - Fluctuations in insurance cost and availability could adversely affect our operating results and our insurance coverage may prove inadequate to satisfy future claims”.
The full extent to which infectious and communicable diseases will impact our operational and financial performance, whether directly or indirectly, will depend on future developments, which are highly uncertain and cannot be predicted. Any disruption to production or increased operational costs as a result of these diseases could have a material adverse effect on our business, operating results and financial condition.
The nature of our mining operations presents safety risks
Mining, and particularly the conduct of activities underground, is an inherently risky activity, presenting potential health, safety, industrial, environmental and other risks for our operations, employees and communities within which we operate. These and other risks identified elsewhere in this annual report also could lead to the suspension and potential closure of operations for indeterminate periods. Safety risks, even in situations where no injuries occur, can have a material adverse effect on our results of operations and financial condition. See Item 4: “Information on the Company - Business Overview - Regulation - Health and Safety - South Africa” and “Integrated Annual Report for the 20-F 2024 – Social – Safety and Health and wellness" on pages 168 to 179 and180 to 188.
Mining companies face strong competition and industry consolidation
The mining industry is competitive in all of its phases. We compete with other mining companies and individuals for specialized equipment, components and supplies necessary for exploration and development, for mining claims and leases on exploration properties and for the acquisition of mining assets. These competitors may have greater financial resources, operational experience and technical capabilities than us. Competition may increase our cost of acquiring suitable claims, properties and assets, which could have a material adverse effect on our financial condition.
Further, industry consolidation may lead to increased competition due to lesser availability of mining and exploration assets. Similar consolidations in the form of acquisitions, business combinations, joint ventures, partnerships or other strategic relationships may continue in the future. The companies or alliances resulting from these transactions or any further consolidation involving our competitors may benefit from greater economies of scale as well as significantly larger and more diversified asset bases than us.
Such developments could have a material adverse effect on our business, operating results and financial condition.
Laws governing health and safety affect our business and could impose significant costs and burdens
South Africa
In South Africa, the Mine Health and Safety Act, 29 of 1996 (“MHSA”), requires that employers implement various measures to ensure the safety and health of persons working at a mine as far as reasonably practicable. This obligation may be extended by the employer in terms of an agreement with independent contractors who work at the mine. However, contractor employees are regarded as the employees of the employer for purposes of the MHSA. The obligations of the employer include the identification and assessment of risk, implementation of codes of practice and standards setting out safe work procedures, proper and appropriate training, supervision, medical surveillance and the provision of safe equipment, machinery and personal protective equipment. Further, pursuant to the MHSA we must ensure compliance with various licenses, permissions or consents that have been issued to it pursuant to the various provisions of applicable legislation.
In June 2022, the Minister of Mineral Resources and Energy ("Minister") released a draft Mine Health and Safety Amendment Bill 2022 (the "MHSA Amendment Bill") for public comment which closed July 29, 2022 and no subsequent changes have been made to the proposed legislation. At present there is no indication whether the final bill will be published for further comment or when the MHSA Amendment Bill will be enacted as a final statute. In terms of the MHSA Amendment Bill certain provisions of the MHSA will be amended. The MHSA Amendment Bill contains a number of provisions which, if enacted in their present form, could have a material adverse effect on our business, operating results and financial condition. The MHSA Amendment Bill provides for (among others things) an increase in the monetary value of the fines that may be imposed in respect of instances of non-compliance, more direct involvement of executives (particularly CEOs), stricter liability in instances of non-compliance, and changes to the obligations relating to training and the formulation of training programs. The MHSA Amendment Bill also introduces a new offence of corporate manslaughter, being that the employer will contravene or fail to comply with the MHSA if it fails to comply with a duty in terms of the MHSA and if such conduct resulted in a person’s death or in serious injury or illness of a person. The effect of the provisions in the MHSA Amendment Bill are of that the defenses on which the employer may rely to escape liability, are limited. See Item 4: “Information on the Company - Business Overview - Regulation - Health and Safety - South Africa”
Australia
In the State of Queensland, where our Eva Copper Project is situated, the safety of employees, contractors and third parties concerning mining operations is regulated by the Mining and Quarrying Safety and Health Act 1999 (Qld) (the "MQSH Act") and the Mining and Quarrying Safety and Health Regulation 2017 (the "MQSH Regulations"). The MQSH Act and the MQSH Regulations contain provisions that place certain obligations on Harmony to protect the safety and health of persons at mines and persons who may be affected by its operations.
Resources Safety and Health Queensland (“RSHQ”) is the independent regulator responsible for administering, monitoring and enforcing compliance with the MQSH Act. Responsibility for prosecution of “serious offences” under the MQSH Act fall with the independent Office of the Work Health and Safety Prosecutor of Queensland (the "WHS Prosecutor"). A “serious offence” is committed where a person who has a safety and health obligation breaches it in circumstances where the breach:
•causes death, or grievous bodily harm, or bodily harm, or
•involves exposure of a person to a substance likely to cause death or grievous bodily harm; or
•is an offence under the Industrial Manslaughter provisions of the MQSH Act; or
•amounts to an offence prescribed by the MQSH Regulations.
Other offences (i.e., non-serious offences) may be prosecuted by either the WHS Prosecutor or the chief executive officer of RSHQ. Queensland legislation also allows any person to request that the WHS Prosecutor commence a prosecution against another person in certain circumstances, i.e., when the person reasonably considers the other person has committed a “serious offence” and no prosecution has been brought in relation to the act, in which instance the WHS Prosecutor has three months to investigate and respond.
Breaches of these obligations may result in prosecutions leading to material fines and other penalties including imprisonment; they may also result in a direction to suspend operations. Any such penalties could have a material adverse effect on our business, operating results and financial condition.
See Item 4: “Information on the Company – Business Overview – Regulation – Health and Safety – Australia”.
Papua New Guinea
In the Independent State of Papua New Guinea (“PNG”), the safety of employees, contractors and third parties at our mining operations is regulated by the PNG Mining (Safety) Act 1977 (the "PNG Mining (Safety) Act") and the Regulations issued thereunder. Pursuant to section 6(1)(e)(i) of the PNG Mining (Safety) Act, an inspector has the power to order the cessation of operations on any part of a mine for such unlimited time as he or she considers may be necessary to satisfy the safety provisions of the PNG Mining (Safety) Act. Such order for cessation can often result in lower or a total stoppage of production resulting in significant financial losses during and following the cessation.
The mining regime in PNG, including the PNG Mining (Safety) Act and Regulations, is currently the subject of comprehensive ongoing review, which may result in changes which will affect our operations and projects in PNG. In 2021, the PNG Ministry of Mining’s Department of Mineral Policy and Geohazards Management (“DMPGM”) released a draft Mine and Works (Safety and Health) Bill 2021 (the "MWSH Bill") and has subsequently proposed various other amendments to the PNG Mining (Safety) Act, however has not enacted the MWSH Bill or other amendments.
New laws, if enacted, could increase the overall regulatory burden on our operations and projects in PNG. See Item 4: “Information on the Company – Business Overview - Regulation - Health and Safety – Papua New Guinea”.
General - Fines, Penalties and Costs of Compliance
An employer may be subjected to significant penalties and/or administrative fines for non-compliance under applicable health and safety laws and regulations in the jurisdictions in which we operate.
Depending on the particular circumstances, litigation (criminal and/or civil) may be instituted against the employer in respect of an accident or incident which has resulted in the injury, death or occupational disease contracted by an employee (or contractor employee). In some of the jurisdictions in which we operate, the regulatory authority also issues closure notices for the operation or parts thereof, following the threat of potential occurrence of an injury or death. In the past, certain of our operations have also been temporarily suspended for safety reasons. Such closure notices or suspensions, if of sufficient magnitude, could have a material adverse effect on our business, operating results or financial condition.
Any further changes to the health and safety laws and regulations in the jurisdictions in which we operate which increase the burden of compliance on the employer and impose higher penalties for non-compliance may result in us incurring further significant costs, which could have a material adverse effect on our business, operating results and financial condition. In addition, our reputation could be damaged by any significant governmental investigation or enforcement of health and safety laws, regulations, codes or standards, which could also have a material adverse effect on our business, operating results and financial condition.
Since our labor force has substantial trade union participation, we face the risk of disruption from labor disputes and non-procedural industrial action resulting in loss of production and increased labor costs impacting negatively on production and financial results
South Africa
In South Africa, our labor force has substantial trade union participation. There are periods when various stakeholders are unable to resolve disputes through resolution processes. Disruptive activities on the part of labor, which normally differ in intensity, then become unavoidable. Due to the high level of union membership, which is about 95% among our employees, we are at risk of production stoppages for indefinite periods due to strike action, especially in the form of wildcat strike action. Inter-union rivalry may increase the risk of labor relations instability. In addition, in South Africa, a variety of legacy issues such as housing, migrant labor, education, poor service delivery and youth unemployment can lead to communities and unions working together to create instability in and around mining operations.
On April 4, 2024, Harmony announced the acceptance of a five-year wage agreement by the unions, effective from July 1, 2024. However, we are not able to predict whether we will experience significant labor disputes in the future, nor what the financial impact of any such disputes may be. Any labor unrest and disruptions caused by such labor disputes could have a material adverse effect on our results of operations and financial condition. See Item 4: “Information on the Company – Business Overview – Regulation – Labor Relations”, “Integrated Annual Report for the 20-F 2024 – Social – Caring for our employees” on pages 189 to 196. South African employment law sets out minimum terms and conditions of employment for employees. Although these may be improved by agreements between us and the trade unions, prescribed minimum terms and conditions form the benchmark for all employment contracts. See “Integrated Annual Report for the 20-F 2024 – Harmony – Material matters” on pages36 to 43.
We are required to submit a report under South African employment law detailing the progress made towards achieving employment equity in the workplace. If this report is not submitted, we could incur substantial penalties.
Developments in South African employment law may increase our cash costs of production or alter our relationship with our employees and trade unions, which may have an adverse effect on our business, operating results and financial condition.
Australia
In Queensland, there are a number of well-established mining unions, particularly in the coal and energy sectors. At present, our Australian workforce is not unionized. However, if the Eva Copper Project moves into the development and operational phases, there is a risk that the level of unionization may rise significantly.
Increased unionization may give rise to increased costs or labor disruptions, which could have a material adverse effect on our results of operations and financial condition.
Papua New Guinea
In PNG, the workforce in our mining operations is not significantly unionized, and attempts to unionize have had little employee support.
General
In the event that we experience industrial relations related interruptions at any of our operations or in other industries that impact our operations, or increased employment-related costs due to union or employee activity, these may have a material adverse effect on our business, production levels, operating costs, production targets, operating results, financial condition, reputation and future prospects. In addition, mining conditions can deteriorate during extended periods without production, such as during and after strikes; lower levels of mining activity can have a longer term impact on production levels and operating costs, which may affect our mines’ operating life, which could have a material adverse effect on our business, operating results and financial condition.
Laws governing mineral rights affect our business and could impose significant costs and obligations; mineral rights in the countries in which we operate could be altered, suspended or canceled for a variety of reasons, including breaches in our obligations in respect of such mining rights
Our operations in South Africa, Australia and PNG are subject to legislation regulating mineral rights. Certain of the Company’s properties may be subject to the rights or the asserted rights of various community stakeholders, including indigenous peoples. The presence of those stakeholders may therefore have an impact on our ability to develop or operate our mining interests.
South Africa
In South Africa, we are governed by the Mineral and Petroleum Resources Development Act, 28 of 2002 (“MPRDA”). See Item 4: “Information on the Company - Business Overview - Regulation - Mineral Rights - South Africa - MPRDA” for a description of the principal objectives set out in the MPRDA.
On July 11, 2024, during the Department of Mineral Resources and Energy ("DMRE'') 2024/25 Budget announcement following South Africa's general elections, the Minister announced that the DMRE would split into two separate ministries: the Department of Mineral and Petroleum Resources and the Department of Electricity and Energy, which split has been subsequently implemented. In addition, the Minister indicated that the DMRE (as it still is currently) was in the process of drafting amendments to the MPRDA to address certain perceived deficiencies and to bring the legislation in line with international best practice. On August 16, 2024, the DMRE released a high-level presentation on its proposed amendments to the MPRDA which will be introduced through the Mineral Resources Development Amendment Bill, 2024 ("Amendment Bill"). In September 2024, the DMRE hosted presentations and Q&A sessions with various stakeholders. The Amendment Bill will in due course be gazetted and published for public comment for a period of 60 days. While we have an idea of what amendments the DMRE want to introduce, no stakeholders and/or industry players have seen the actual proposed amendments to the MPRDA. At this point, the above is a recordal of the current position in relation to any proposed amendments and that it is unknown as to what risk the proposed amendments will present. Once the proposed amendments are published in draft form for public comment – and again, we are unsure as to the timing of this – then specific risks can be raised at that point in time.
Regulations under the MPRDA
On March 27, 2020 the Minister published for implementation amendments to the regulations promulgated pursuant to the MPRDA in 2004 (the “MPRDA Regulations” and as amended the “Amended Regulations”). The Amended Regulations include the following notable changes:
•Mining right applicants must “meaningfully consult” with landowners, lawful occupiers and interested and affected parties in accordance with the procedures contemplated under the Environmental Impact Assessment Regulations, 2014 (the “EIA Regulations”). The office of the Regional Manager is permitted to participate as an observer in these processes.
•Mining right holders must, pursuant to their social and labor plans (“SLPs”), contribute to the socio-economic development in the areas in which they operate and labor sending areas (i.e. a local municipality which a majority of mine workers consider to be their primary residence). This requirement may impose obligations on mining right holder to effect measures in communities that are located far away from the mine and / or could give rise to some social issues.
•Although most of the provisions regulating environmental matters have been deleted from the Amended Regulations, those sections dealing with mine closure have been retained but have been amended to state that mine closure must be regulated pursuant to the National Environmental Management Act, 107 of 1998 (“NEMA”), the EIA Regulations and the Financial Provision Regulations, 2015 (as they may be amended). As discussed in Item 4: “Information on the Company – Business Overview – Regulation - Laws and Regulations Pertaining to Environmental Protection – South Africa” it is anticipated that the Financial Provision Regulations, 2015 will be replaced by revised regulations following further engagement with the mining industry.
•The appeal process in the MPRDA Regulations has been replaced with a more comprehensive procedure that includes specific time periods within which appellants, respondents and the competent authority must submit appeals, responses or consider appeals (as the case may be). Although there is no guarantee that the parties will comply with these time periods, the time periods are intended to hold the parties accountable and to ensure that appeals are resolved in a timely manner.
The Mining Charter
On September 27, 2018, the Minister published the Broad-Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018 (“Mining Charter III”), on which date it also became effective, as amended by the notice published in the Government Gazette on December 19, 2018 and read with the Implementation Guidelines for the Broad Based Socio-Economic Empowerment Charter for the Mining and Minerals Industry, 2018 (“Implementation Guidelines”) published on the same date. It replaces, in their entirety, the original Mining Charter negotiated in 2002 and gazetted in 2004 (the "Original Charter") and the amended Charter gazetted in September 2010 (the “Amended Charter”).
Mining Charter III imposes obligations and increased participation by historically disadvantaged South Africans (''HDSAs'') in relation to a mining company’s ownership, procurement of goods and services, enterprise and supplier development, human resource development and employment equity requirements. The first annual reporting for compliance with Mining Charter III June 1, 2020. Harmony submitted its first report under Mining Charter III within the specified deadline and has subsequently submitted its compliance report for the year 2021, 2022 and 2023 as per the annual reporting requirement.
While the ownership requirement for HDSAs in relation to existing mining rights has not increased (provided that we met the 26% requirement under the Amended Charter), we may be required to comply with new HDSA ownership requirements in relation to any renewals, consolidations and transfers of our existing rights and any applications for new mining rights. The increased HDSA requirements in relation to employment equity, procurement of goods and services and enterprise and supplier development may result in additional costs being incurred by us, which could have a material adverse effect on our results of operations and financial condition.
While Mining Charter III was effective from September 27, 2018, many of its provisions are vague and untested despite the publication of the Implementation Guidelines. See Item 4: “Information on the Company - Business Overview - Regulation - Mineral Rights - South Africa - Mining Charter”.
On March 26, 2019, the Minerals Council South Africa (previously the Chamber of Mines) (“MCSA”) filed an application for the judicial review and setting aside of certain clauses of Mining Charter III. The MCSA had engaged in ongoing attempts to reach a compromise with the Minister on certain provisions that are problematic for the industry, and which would be detrimental to its sustainability.
The MCSA’s judicial review application was heard before a full bench of judges in May 2021. Judgment was handed down on September 21, 2021 (the "2021 Judgement") setting aside certain of the problematic provisions, while providing that the remainder of Mining Charter III should continue in force. In November 2021, the DMRE informed the National Assembly's Portfolio Committee on Mineral Resources and Energy that it did not intend to appeal the outcome of the 2021 Judgement, but instead would consider steps to achieve the empowerment objectives through legislative amendments to the MPRDA.
We cannot guarantee that we will meet all the targets set out by Mining Charter III. Should we breach any obligations in complying with the MPRDA or Mining Charter III, our existing mining rights in South Africa could be suspended or canceled by the Minister in accordance with the provisions of the MPRDA. It may also influence our ability to obtain any new mining rights. Any such suspension or cancellation could have a material adverse effect on our results of operations and financial condition.
Australia
In Australia, mining is regulated by the laws of the State in which the deposit is situated. Presently, our only mining activity in Australia is the Eva Copper Project, located in the State of Queensland. Mining in Queensland is regulated by the Mineral Resources Act 1989 (Qld) (the "Queensland MRA"), the Mineral and Energy Resources (Common Provisions) Act 2014, the MQSH Act, and the regulations, practice manual, operational policies and guidelines thereunder. See Item 4: “Information on the Company - Business Overview - Regulation - Mineral Rights - Australia”.
Generally, all mineral resources in Queensland are owned by the State of Queensland. These resources are managed by the Queensland Department of Resources. Under the Queensland MRA, the Department of Resources requires all large mining projects to apply for an applicable resource authority, being (as the case may be) an exploration permit ("EP"), a mining lease ("ML") or a mineral development license.
An EP allows the holder to carry out exploration activities to determine what minerals exist and their quality and quantity in or under land or in the waters or sea above such land, in accordance with agreed work programs and subject to compliance with prescribed security and financial obligations. If the holder of an EP wishes to develop a mine to exploit discovered resources, application must be made for an ML. This entitles the holder to machine-mine specified minerals and carry out activities associated with mining, including infrastructure to support mining operations.
The Queensland MRA, and resource authorities issued thereunder, contain provisions and conditions, the breach of which may result in the imposition of a fine, imprisonment or the cancellation of the tenement.
Should we breach any obligations in complying with the Queensland MRA or any other laws and regulations relating to our exploration and mining activities in Queensland, our resource authorities in Queensland could be suspended or cancelled, or we could be subject to fines or other sanctions. Any such suspension, cancellation, fine or sanction could have a material adverse effect on our operational and financial results.
Papua New Guinea
In PNG, mining is primarily regulated by the PNG Mining Act 1992 (the “PNG Mining Act”) and the PNG Mining (Safety) Act and their respective Regulations. All minerals are owned by the PNG Government, which grants rights to explore for or mine such minerals under a concessionary tenement system. See Item 4: "Information on the Company – Business Overview – Regulation - Mineral Rights - Papua New Guinea"
Since 2009, the mining regime in PNG has been the subject of a comprehensive ongoing review involving various PNG Government agencies and various draft revisions of the PNG mining legislation have subsequently been circulated for comment. In addition to the review of applicable legislation, PNG mineral policy and mining-specific sector policies are also being reviewed and drafted, including a biodiversity offsets policy, a national oceans policy, a sustainable development policy, an involuntary relocation policy, a national content policy, and a mine closure policy and mining project rehabilitation and closure guideline.See Item 4: "Information on the Company – Business Overview – Regulation - Mineral Rights - Papua New Guinea".
Certain of the proposed changes, such as increased royalties and equity participation by the State or the introduction of a production sharing regime if adopted and applied to our operations and projects in PNG, could have a material adverse effect on our business, operating results and financial condition.
PNG mining legislation and mining tenements contain provisions and conditions, the breach of which may result in the imposition of a fine, imprisonment or the cancellation of the tenement. Should we breach any obligations in complying with
the PNG Mining Act or any other laws and regulations relating to our exploration and mining activities in PNG, our existing mining rights in PNG could be suspended or cancelled, or we could be subject to fines or other sanction. Any such suspension, cancellation or sanction could have a material adverse effect on our results of operations and financial condition.
Our financial flexibility could be constrained by the Exchange Control Regulations of the countries in which we operate
South Africa’s Exchange Control Regulations restrict the export of capital from South Africa. Transactions between South African residents (including companies) and non-residents (excluding residents of the Republic of Namibia and the Kingdoms of Lesotho and Eswatini, known collectively as the Common Monetary Area (“CMA”)) are subject to exchange controls enforced by South African Reserve Bank ("SARB"). While South African exchange controls have been relaxed in recent years, South African companies remain subject to restrictions on their ability to deploy capital outside of South Africa. These restrictions could hinder our financial and strategic flexibility, particularly our ability to raise funds outside South Africa and could therefore have a material adverse effect on our business, operating results and financial condition.
Our operations in PNG (including the export of gold and the operation of approved offshore foreign currency accounts) are subject to the foreign exchange control and other directives of the Bank of Papua New Guinea. PNG is presently subject to severe shortages of foreign currency. The withdrawal of existing approvals or the imposition of restrictions could potentially hinder our financial and strategic flexibility, and could have a material adverse effect on our business, operating results and financial condition.
Risks associated with pumping water inflows from closed mines adjacent to our operations, including related closure liabilities, could adversely affect our operational results
Certain of our mining operations in South Africa are adjacent to the mining operations of other companies. A mine closure can affect continued operations at an adjacent mine if appropriate preventative steps are not taken. In particular, this could include the ingress of underground water when pumping operations at the closed mine are suspended. This can result in damage to property, operational disruptions and additional pumping costs, which could adversely affect any one of our adjacent mining operations and, in turn could adversely affect our business, operating results and financial condition.
In connection with our acquisition in 2018 of the Moab Khotsong and Great Noligwa mines from AngloGold Ashanti Limited ("AngloGold"), together with other assets and related infrastructure (the “Moab Acquisition”), we acquired a two-thirds interest in the Margaret Water Company NPC ("Margaret Water") for all pumping and water-related infrastructure at its Margaret shaft. The shaft operates for the purpose of de-watering the Klerksdorp, Orkney, Stilfontein, Hartbeesfontein (“KOSH”) basin groundwater. This is to allow Moab Khotsong operations and the mine operated by Kopanang Gold Mining Company Proprietary Limited (the mining company holding the remaining one–third interest in Margaret Water and the only other mining company continuing to operate in the area) to remain dry and to prevent flooding of operational areas. Therefore, it remains imperative for the shaft to continue pumping water.
Flooding and potential decant in the future resulting from a failure in pumping and water-related infrastructure could pose an unpredicted “force majeure” type event, which could result in financial liability for us, and could have an adverse impact on our results of operations and financial condition. Although studies indicate that we do not currently have a decant risk at our Doornkop and Kusasalethu operations, due to the interconnectivity, any long-term water management solution would require a regional strategy co-created with neighboring and inter-connected mines. Although we have installed water treatment plants at both sites for current treatment needs, which could serve as water plants for final decant should the situation arise, there can be no assurance that such plants will be sufficient to address such risks. There is also a flooding risk at operations assumed as part of our acquisition with effect on October 1, 2020 of the remainder of AngloGold’s South African business (the “Mponeng Acquisition”). This relates to the Mponeng mine, requiring the continuous pumping arrangement with Covalent Water Company (Pty) Limited (a wholly-owned subsidiary) to stay in place.
Obligations in respect of the pumping and treatment of extraneous water must also be addressed in connection with our final closure plans for each of our operations. We are responsible for these liabilities until a closure certificate is issued pursuant to the MPRDA and possibly thereafter under the NEMA. The occurrence of any of the risks discussed above could have an adverse effect on our operating results and financial condition. This liability is discussed in more details in Item 4: “Information on the Company – Business Overview – Regulation – Law and Regulations Pertaining to Environmental Protection – South Africa – NEMA”. See also “– We are subject to extensive environmental regulations in the countries in which we operate” below.
Infrastructure constraints and aging infrastructure could adversely affect our operations
Mining, processing, development and exploration activities depend on adequate infrastructure. Reliable rail, ports, roads, bridges, power sources, power transmission facilities and water supply are critical to the Company’s business operations and affect capital and operating costs. The infrastructure and services are often provided by third parties whose operational activities are outside the control of the Company.
Interference to the maintenance or provision of infrastructure, including by extreme weather conditions, scarcity of equipment, sabotage or social unrest, could impede our ability to deliver products on time and adversely affect our business results of operations and financial condition.
Once a shaft or a processing plant has reached the end of its intended lifespan, higher than normal maintenance and care is required. Maintaining this infrastructure requires skilled human resources, capital allocation, management and planned maintenance. Although we have implemented a comprehensive maintenance strategy, incidents resulting in production delays, increased costs or industrial accidents may occur. Such incidents may have an adverse effect on our operating results and financial condition.
Disruptions to electricity supply and rising power costs: Impact on operations and financial results
South Africa
South Africa's mining sector, including our operations, is heavily dependent on electricity supplied by Eskom Holdings SOC Limited ("Eskom"), the state-owned utility that primarily relies on fossil fuels. Over the past decade, Eskom has faced significant challenges, such as aging infrastructure, financial limitations, and inconsistent generation performance, leading to frequent power disruptions and curtailment.
Since March 6, 2024, no load curtailment events have occurred. While the outlook is more positive, risks related to Eskom's aging infrastructure and financial constraints remain. The utility's substantial debt burden continues to challenge its ability to sustain maintenance efforts and execute necessary upgrades, potentially affecting plant availability and electricity stability in the future.
Given these factors, the risk of power supply disruptions remains a concern for Harmony’s South African operations and may have an adverse effect on our operational results..
Papua New Guinea
In Papua New Guinea, our Hidden Valley mine relies on power from the state utility, PNG Power Limited, which also grapples with challenges such as aging infrastructure and financial limitations. About 65% of the mine's daily power needs
are met by PNG Power, with the remaining 35% supplied by the mine’s diesel power station. While we have the capability to generate power independently, diesel generation is subject to fluctuations in oil prices, and reliable logistics are critical to maintain sufficient fuel supplies. The increased self-generation may have an adverse effect on our operating results and financial condition.
See Item 5: “Operating and Financial Review and Prospects – Operating Results – Key factors affecting our results - Electricity in South Africa.” and “Integrated Annual Report for the 20-F 2024 – Environment – Climate change, energy and emissions management” on pages 103 to 111.
Illegal mining and other criminal activity at our operations, including theft of gold and gold-bearing material, could pose a threat to the safety of employees, result in damage to property and could expose us to losses, business disruption and liability
The activities of illegal and artisanal miners, which include theft, has increased over the years and had become more violent and threatens both the safety of employees and sustainability of the mining industry. Artisanal and illegal miners are active on, or adjacent to, several of our properties, but are mostly active on surface the last year. Artisanal and illegal miners at times may lead to interference with our operations and results in conflict that presents a security threat to property and human life. The environmental, social, safety and health impacts of artisanal mining are frequently attributed to formal mining activity, and it is often assumed that artisanal-mined gold is channeled through large-scale mining operators, even though artisanal and large-scale miners have distinct supply chains. These misconceptions impact negatively on the reputation of the industry.
The activities of the illegal miners, which include theft, can cause damage to our properties, including by way of pollution, copper cable theft, underground fires, critical infrastructure damage, operational disruption, project delays or personal injury or death, for which we could potentially be held responsible. Illegal and artisanal mining could contribute to the depletion of mineral deposits, potentially making the future mining of such deposits uneconomic. Most illegal miners are found at abandoned shafts or old work places.
Illegal and artisanal mining (which may be by employees or third parties) is associated with a number of negative impacts, including environmental degradation and human rights abuse, such as forced labor, human trafficking, child labor, corruption, money laundering and other violent crimes in the communities and at the mines. Effective local government administration is often lacking in the locations where illegal and artisanal miners operate, due to rapid population growth and the lack of functioning structures, which can create a complex, unstable social environment. The disbandment of specialized South African Police Service ("SAPS") units has also left a huge gap in the apprehension of high-ranking criminals in the illicit gold trade.
The presence of illegal miners could lead to project delays and disputes regarding the development or operation of commercial gold deposits. In addition, illegal mining could lead to an increase in the level of organization and funding of criminal activity around some of our operations. Criminal activities such as trespassing, illegal and artisanal mining, and related sabotage, theft and vandalism could lead to damage to, and disruptions at, our operations.
Rising gold and copper prices may result in an increase in gold and copper thefts; moreover, incidences of illegal mining may escalate as a result of social and economic conditions. The occurrence of any of these events could have a material adverse effect on our financial condition on results of our operations.
Actual and potential shortages of production inputs and supply chain disruptions may affect our operational results
Our operational results may be affected by the availability and pricing of consumables such as fuel, chemical reagents, explosives, tires, steel and other essential production inputs. Issues with regards to availability of consumables may result from shortages, long lead times to deliver and supply chain disruptions, which could result in production delays and production shortfalls. We expect cost increases and longer lead time to continue in fiscal 2024 across our operations, including as a result of factors such as the price of oil, inflationary increases and labor costs. See “— Rising inflation, and geopolitical risks may have a material adverse effect on our business, operating results and financial condition”.
These shortages can be attributed to geopolitical uncertainty as well as ongoing consequences of the power outages and unplanned breakdowns that resulted in rising input costs and longer lead times. Concurrently, the steel and chemical industry has witnessed a surge in protests related to wage concerns. This trend has affected major local steelmakers and retailers, making it challenging for them to meet the increased demand for steel. The national shortage of steel, primarily due to intermittent plant breakdowns and protest-related disruptions, is having effects on numerous engineering companies within our extensive supply chain network, regardless of their size.
The recent Red Sea disruption where attacks by Yemen’s Houthi’s rebels in the Red Sea have disrupted maritime trade along major trade routes via the Suez Canal and Bab-Al Mandeb Strait had an impact on supply chain and our mining operations causing longer lead times for goods due to alternative longer routes and capacity constraints on vessels which was exacerbated by SA Durban ports clearance issues. The impact on our operations relates to increases in freight with freight rates likely to remain volatile in the near term, higher insurance premiums for cost of war-risk insurance with underwriters charging between 0.75% and 1% of the value of the ship to sail through the region.
The pricing of consumables could continue to be impacted by these challenges, particularly if shortages become more prevalent. Factors such as global supply and demand dynamics, governmental regulations including import parities on steel and chemical-related products, and industrial actions, may contribute to price fluctuations. A sustained interruption in the supply of these consumables would necessitate swift identification of alternative suppliers, potentially resulting in higher costs. Moreover, such interruptions could adversely affect our ability to pursue our development projects. Any significant
increase in the prices of these consumables would escalate operating costs and have adverse effects on profitability. Consequently, this could impact our financial and operating results.
Fluctuations in insurance cost and availability could adversely affect our operating results and our insurance coverage may prove inadequate to satisfy future claims
Fluctuations in insurance costs and availability can significantly impact our operating results, and our current insurance coverage may not fully address future claims. We maintain global insurance policies that cover general liability, directors' and officers' liability, cyber-security, accidental loss, and material damage to our property, including resultant business interruptions. However, the costs of sustaining adequate insurance coverage continue to rise and may persist in doing so, potentially adversely affecting our financial performance.
We also have comprehensive third-party liability coverage, which includes unforeseen sudden and accidental environmental liabilities. Despite this, we may still face liability for pollution or other hazards that are not insured or insurable, including those related to past mining activities. Our property and liability insurance is aligned with industry practices but, like all insurance policies, contains exclusions and limitations.
Additionally, there is no guarantee that insurance will always be available at economically feasible premiums. Consequently, our insurance coverage might not protect against certain claims related to environmental or industrial accidents, pollution, public health emergencies, data protection and cybersecurity breaches, and other events that could disrupt our operations, such as the Covid-19 pandemic or the National Grid Collapse. These factors could materially and adversely affect our financial and operating results.
We compete with mining and other companies for key human resources with critical skills and our inability to retain key personnel could have an adverse effect on our business
The risk of losing senior management or being unable to hire and retain sufficient technically skilled employees or sufficient representation by HDSAs in management positions, or sufficient gender diversity in management positions or at Board level, may materially impact on our ability to achieve our objectives.
We compete with mining and other companies globally to attract and retain key human resources at all levels with the appropriate technical skills and operating and managerial experience necessary to continue operating our business. The need to recruit, develop and retain skilled employees is particularly critical with HDSAs and women in mining in South Africa. The global shortage of key mining specialists, including geologists, mining engineers, mechanical and electrical engineers, metallurgists and skilled artisans has been exacerbated by increased mining activity across the globe. There can be no assurance that we will attract and retain skilled and experienced employees. Should we lose any of our key personnel, our business may be harmed and our operational results and financial condition could be adversely affected. See Item 4: “Information on the Company – Business Overview – Regulation – Labor Relations” and “Integrated Annual Report for the 20-F 2024 – Social – Caring for our employees” on pages 189 to 196.
Although it is presently uncertain the extent to which, and how, the PNG Department of Commerce and Industry’s draft Papua New Guinea National Content Policy for Resource Sectors 2023-2027 will be applied to our current operations and projects in PNG, if the localization of the workforce policy provisions are introduced, we believe that they would severely restrict the utilization of offshore-based “fly-in, fly out” expatriate employees, and potentially also result in a tightening of legislation around the granting of work permits and visas to foreign skilled employees. This would, in turn, adversely affect our ability in PNG to engage and retain appropriately skilled human resources, and could necessitate the application of additional resources to the construction or provision of housing for residential employees and the recruiting and training of local landowners and landowner businesses, all of which may have an adverse effect on our business, operating results and financial condition.
The use of contractors at certain of our operations may expose us to delays or suspensions in mining activities and increases in mining costs
We use contractors at certain of our operations to mine and deliver ore to processing plants as well as for other purposes. At mines employing mining contractors, contracting costs represent a significant proportion of the total operating costs of these operations and we do not own all of the mining equipment.
Our operations could be disrupted, resulting in additional costs and liabilities, if the mining contractors at affected mines have financial difficulties, if a dispute arises in renegotiating a contract, or if there is a delay in replacing an existing contractor and its operating equipment to meet business needs at expected cost levels. Increases in contract mining rates, in the absence of associated productivity increases, will also have an adverse impact on our results of operations and financial condition.
Contractors can adversely affect our reputation, results of operations and financial condition by:
•our reduced control over those aspects of operations which are the responsibility of contractors;
•their failure to comply with applicable legal, human rights and regulatory requirements; and
•their inability to manage their workforce to provide high quality services and a high level of productivity.
This may result in us incurring liability to third parties due to the actions of contractors, which could have a material adverse effect on our business, operating results and financial condition.
Although it is presently uncertain the extent to which, and how, the PNG Department of Commerce and Industry’s draft “Papua New Guinea National Content Policy for Resource Sectors 2023-2027" will be applied to our current operations and projects in PNG, if these provisions are introduced, we believe they will prescribe increased levels of participation by locally-
owned businesses in the provision of goods and services, which could adversely affect our ability in PNG to manage the costs of goods and services to our operations, which would, in turn, have an adverse effect on our business, operating results and financial condition.
We are dependent on a number of highly-integrated communication and IT systems, any major disruption to which could have an adverse effect on our operations and financial results
We utilize and rely on various internal and external IT systems to support our business activities. Significant damage or interruption of our IT systems, whether due to accidents, human error, natural events or malicious acts, may lead to disruptions to our business operations and/or essential data being irretrievably lost, exposed or damaged, thereby adversely affecting our business, operating results and financial condition.
Estimations of our reserves are based on a number of assumptions, including mining and recovery factors, future cash costs of production, exchange rates, and the relevant commodity prices; as a result, metals produced in future may differ from current estimates
The mineral reserve estimates in this annual report are estimates of the mill-delivered quantity and grade of metals in our deposits and stockpiles. They represent the amount of metals that we believe can be mined, processed and sold at prices sufficient to recover our estimated future cash costs of production, remaining investment and anticipated additional capital expenditures. Our mineral reserves are estimated based on a number of factors, which have been stated in accordance with the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves, 2016 edition (“SAMREC, 2016”). For the purposes of this report on Form 20-F, our Mineral Resources and Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. Calculations of our mineral reserves are based on estimates of:
•future cash costs;
•future commodity prices;
•future currency exchange rates; and
•metallurgical and mining recovery rates.
These factors, which significantly impact mineral reserve estimates, are beyond our control. As a result, reserve estimates in this annual report should not be interpreted as assurances of the economic life of our gold and other precious metal deposits or the future profitability of operations.
Since these mineral reserves are estimates based on assumptions related to factors detailed above, should there be changes to any of these assumptions, we may in future need to revise these estimates. In particular, if our cash operating and production costs increase or the gold price decreases, recovering a portion of our mineral reserves may become uneconomical. This will lead, in turn, to a reduction in estimated reserves. Any reduction in our mineral reserves estimate could materially adversely affect our business, operating results and financial condition.
Our operations have limited proved and probable reserves; exploration for additional resources and reserves is speculative in nature, may be unsuccessful and involves many risks
Our operations have limited proved and probable reserves, and exploration and discovery of new resources and reserves are necessary to maintain current gold production levels at these operations. Exploration for gold and other precious metals is speculative in nature, may be unsuccessful and involves risks including those related to:
•locating orebodies;
•geological nature of the orebodies;
•identifying the metallurgical properties of orebodies;
•estimating the economic feasibility of mining orebodies;
•developing appropriate metallurgical processes;
•obtaining necessary governmental permits; and
•constructing mining and processing facilities at any site chosen for mining.
Our exploration efforts might not result in the discovery of mineralization, and any mineralization discovered might not result in an increase in resources or proved and probable reserves. To access additional resources and reserves, we will need to complete development projects successfully, including extensions to existing mines and, possibly, establishing new mines. Development projects would also be required to access any new mineralization discovered by exploration activities around the world. We typically use feasibility studies to determine whether to undertake significant development projects. These studies often require substantial expenditure. Feasibility studies include estimates of expected or anticipated economic returns, which are based on assumptions about:
•future gold and other metal prices;
•anticipated tonnage, grades and metallurgical characteristics of ore to be mined and processed;
•anticipated recovery rates of gold and other metals from the ore; and
•anticipated total costs of the project, including capital expenditure and cash costs.
All projects are subject to project study risk. There is no certainty or guarantee that a feasibility study, if undertaken, will be successfully concluded or that the project that is the subject of the study will satisfy our economic, technical, risk and other criteria in order to progress that project to development.
A failure in our ability to discover new resources and reserves, enhance existing resources and reserves or develop new operations in sufficient quantities to maintain or grow the current level of our resources and reserves could negatively affect our business, operating results and financial condition.
We are subject to the risk of litigation, the causes and costs of which are not always known
We are subject to litigation, arbitration and other legal proceedings arising in the normal course of business, and we may be involved in disputes that may result in litigation. Potential future litigation may arise from a variety of causes, including among other things, business activities, environmental, health and safety matters, share price volatility, unlawful community protest actions and failure to comply with disclosure obligations. The results of litigation, arbitration and other legal proceedings cannot be predicted with certainty, but could include costly damage awards or settlements, fines, and the loss of licenses, concessions, or rights, among other things.
In the event of a dispute, we may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in South Africa. An adverse or arbitrary decision of a foreign court could have a material adverse impact on our financial performance, cash flow and results of operations.
We are subject to numerous claims, including class actions or similar group claims relating to silicosis and other occupational health diseases, and could be subject to similar claims in the future. A settlement in the silicosis class action claims has been reached and a provision for silicosis has been made. A provision of R255 million has been recognized at June 30, 2024, for our potential cost to settle the silicosis and TB class actions that have been instituted against us in South Africa. Significant judgment was applied in estimating the costs that will be incurred to settle the silicosis class action claims and related expenditure and the final costs may differ from current cost estimates. Management believes the assumptions are appropriate, however changes in the assumptions may materially affect the provision and final costs of settlement. There can be no assurance that the ultimate resolution of this matter will not result in losses in excess of the recorded provision and the ultimate settlement may have a material adverse effect on our financial position. For further information, see Item 8: “Financial Information – Consolidated Statements and Other Financial Information – Legal Proceedings” and “Integrated Annual Report for the 20-F 2024 – Social – Health and wellness” on pages 180 to 188 for further information. See note 27 “Other Provisions –Provision for silicosis settlement” to our consolidated financial statements set forth beginning on page F-1.
It is possible that additional class actions and/or individual claims relating to silicosis and/or other occupational health diseases will be filed against us in the future. We will defend all and any subsequent claims as filed on their merits. Should we be unsuccessful in defending any such claims, or in otherwise favorably resolving perceived deficiencies in the national occupational disease compensation framework that were identified in the earlier decision by the Constitutional Court, such matters would have an adverse effect on our financial position, which could be material.
In PNG, it is proposed to utilize deep sea tailings placement (“DSTP”) as the tailings management method for the Wafi-Golpu Project, which method is authorized under the environment permit issued for the project. The grant of the permit is currently the subject of two judicial reviews, the first applied for in March 2021 by the previous Governor of the Morobe Province in PNG, who was opposed to DSTP, and the second in December 2022 by coastal villagers represented by the Centre for Environmental Law and Community Rights Inc. ("CELCOR"). The present Governor, who was appointed in September 2022, is not opposed to DSTP and has stated publicly that he intends to withdraw the proceedings instituted by his predecessor, however as at June 30, 2024 has not yet done so. Notwithstanding the change of position of the Governor or the outcome of the judicial review instituted by CELCOR, it is possible that a class action or individual claim relating to DSTP may be filed against us in the future, which (if successful) could have a material adverse impact on the Wafi-Golpu Project.
Should we be unable to resolve disputes favorably or to enforce our rights, this may have a material adverse impact on our financial performance, cash flow and results of operations.
The risk of unforeseen difficulties, delays or costs in implementing our business strategy and projects may lead to us not delivering the anticipated benefits of our strategy and projects; in addition, actual cash costs, capital expenditure, production and economic returns may differ significantly from those anticipated by feasibility studies for new development projects
The successful implementation of our business strategy and projects depends upon many factors, including those outside our control. For example, the successful management of costs will depend on prevailing market prices for input costs. The ability to grow our business will depend on the successful implementation of our existing and proposed projects and continued exploration success, as well as on the availability of attractive acquisition opportunities, all of which are subject to the relevant mining and company specific risks as outlined in these risk factors.
It can take a number of years from the initial feasibility study until development/construction of a project is completed and, during that time, the economic feasibility of production may change. In addition, there are a number of inherent uncertainties in project development and construction including:
•the time to secure and provisions of necessary governmental and third party permits, licenses and permissions;
•timing and cost of constructing mining and processing facilities;
•availability and cost of skilled labor, power, water, fuel, mining equipment and other materials;
•accessibility of transportation and other infrastructure, particularly in remote locations;
•availability and cost of smelting and refining arrangements;
•availability of funds to finance construction and development activities; and
•spot and expected future commodity prices of metals including gold, silver, copper, uranium and molybdenum.
All of these factors, and others, could result in our actual cash costs, capital expenditures, production and economic returns differing materially from those anticipated by feasibility studies.
We currently maintain a range of focused exploration programs, concentrating mainly on a number of prospective known gold and copper mineralized areas in PNG, the Kraaipan Greenstone belt and the Witwatersrand area in South Africa. In order to maintain or expand our operations and reserve base, we have sought, and may continue to seek to:
•enter into joint ventures or other alliance arrangements with third parties. For example, we have since August 2008 participated (through our respective wholly-owned subsidiary companies) in a 50:50 unincorporated joint venture with Newmont Corporation (“Newmont”) in our Wafi-Golpu Project in PNG. See “– Risks Related to Our Corporate and Financing Structure and Strategy – We may experience problems in identifying, financing and managing new acquisitions or other business combination transactions and integrating them with our existing operations, we may not have full management control over future joint venture projects”; and
•make acquisitions of primarily gold and copper producing companies or assets. For example, with effect on October 1, 2020, acquired the remainder of AngloGold’s South African business, including the Mponeng mine and Mine Waste Solutions (''MWS''), in the Mponeng Acquisition. In October 2022, Harmony entered into an agreement with Copper Mountain Mining Corporation ("Copper Mountain"), to acquire its wholly-owned Eva Copper Project and its 2,295km2 exploration land package in Queensland, Australia. The acquisition was completed in December 2022. See “– Risks Related to Our Corporate and Financing Structure and Strategy – We may experience problems in identifying, financing and managing new acquisitions or other business combination transactions and integrating them with our existing operations, we may not have full management control over future joint venture projects”
However, there is no assurance that any future development projects will extend the life of our existing mining operations or result in any new commercial mining operations. Unforeseen difficulties, delays or costs may adversely affect the successful implementation of our business strategy and projects, and such strategy and projects may not result in the anticipated benefits, which could have a material adverse effect on our results of operations, financial condition and prospects.
Increasing scrutiny and changing expectations from our stakeholders, including communities, governments and NGOs as well as investors, lenders and other market participants, with respect to our ESG performance and policies may impose additional costs or expose us to additional risks
Companies across all industries are facing increasing scrutiny related to ESG matters, including their internal ESG policies and governance practices. Investor advocacy groups, certain institutional investors, investment funds, lenders and other market participants are increasingly focused on ESG-related matters and in recent years have placed increasing importance on the environmental and social costs and impact of their investments. The increased focus and activism related to ESG and similar matters may hinder access to capital, as investors and lenders may decide to reallocate capital or to not commit capital as a result of their assessment of a company’s ESG practices. In addition, host communities, as well as certain governmental and non-government actors, are increasingly focused on a company’s ability to operate in a sustainable manner and to mitigate related risks, as well as the public commitments and quantitative metrics used to demonstrate performance and track progress.
For us, this includes, in particular, the safe operation of our mines, mitigating our impact to local environments and affected communities, reducing GHG emissions in line with our voluntary commitments, working to high ethical standards, maintaining a healthy work culture, protecting and promoting human rights, operating to acceptable levels of compliance and focusing on supplier credibility. If our performance fails to meet internal or adopted external ESG standards, or we otherwise fail to satisfy stakeholder expectations with respect to our commitments and performance, regardless of whether there is a legal requirement to do so, such failure could result in reputational damage to and litigation against us and our business, losing our license to operate, financial condition, and/or share price could be materially and adversely affected.
In addition to compliance with local laws and regulations, our operations are also increasingly subject to the application of stringent internationally-recognized environmental, health and safety and social standards and benchmarks, whether by virtue of stakeholder expectations concerning their application or in consequence of our operating in jurisdictions where those standards and benchmarks have been specifically adopted. For example, under the Organisation for Economic Co-operation and Development (“OECD”) Rules, companies registered in OECD-member countries may be the subject of OECD complaint processes in respect of breaches of OECD Guidelines occurring anywhere in the world.
Certain financial institutions from whom we borrow money may also require compliance with any of these standards, the subsequent deviation from which could prevent or adversely affect our financial condition, existing financing arrangements and ability to secure future financing. The application of such standards could impose significant costs on us.
We may be required to implement even more stringent ESG practices or standards to meet the expectations of existing and future stakeholders and, if we fail to achieve these objectives or to adhere to internal or adopted external standards or benchmarks, or are perceived to be insufficiently committed to addressing ESG concerns across all of our operations and activities, our reputation and brand image could be damaged. Further, we could lose the trust of our stakeholders (including governments, NGOs, investors, customers and employees) or be subject to litigation brought by those stakeholders and our business, financial condition and results of operations could be adversely impacted.
We are subject to extensive environmental regulations in the countries in which we operate
As a gold mining company, we are subject to extensive environmental regulation. These regulations relate to, among other things, the protection of the environment, pollution prevention, water management, adequate waste disposal practices, promoting biodiversity conservation measures, occupational health and safety, including mine safety, toxic substances and the closure of mining operations. We expect the trend of rising production costs due to compliance with environmental laws and regulations in South Africa, Australia and PNG to continue.
In particular, we face heightened pressures from stakeholders, who are increasingly focused on climate change, to prioritize energy efficiency in our operations, reduce our carbon footprint and improve water and other resource consumption, as well as to be transparent about how climate-related risks and opportunities are managed throughout the supply chain to foster and promote business resiliency, accountability and stakeholder value.
South Africa
In South Africa, the MPRDA and NEMA, along with various other environmental statutes, regulations and standards regulate the impact of our prospecting and mining operations on the environment. These statutes, regulations and standards are regularly updated, amended and supplemented, imposing additional obligations on mining companies to, among other things, minimize emissions, reduce, re-use and recycle waste and improve the quality of effluent and wastewater discharged from the operations. See Item 4: “Information on the Company – Business Overview – Regulation – Laws and Regulations Pertaining to Environmental Protection - South Africa – NEMA”.
Under the MPRDA, a mining title holder remains responsible for any environmental liability, pollution, ecological degradation, the pumping and treatment of extraneous water and the sustainable closure of mining operations until such time as the Minister issues a closure certificate. Notwithstanding this, the NEMA states that a mining right holder will remain responsible for these obligations even after a closure certificate is issued. In a recent High Court judgement (Ezulwini Mining Company (Pty) Ltd v Minister of Mineral Resources and Others), the court found that upon a proper interpretation of the relevant provisions of the MPRDA and NEMA, mining companies are obliged to continue to pump and treat extraneous water from their underground mining areas until authorized to cease pumping following the issuance of a closure certificate by the Minister.
In South Africa, until such time as a closure certificate is issued, a mining right holder is required to assess annually the environmental liabilities associated with the mining operation (including the pumping and treatment of extraneous water) and put up financial provision for the rehabilitation, closure and ongoing post decommissioning management of negative environmental impacts. This financial provision may be released when the Minister issues a closure certificate. However, he or she may determine to retain a portion of the financial provision in perpetuity for any latent environmental liabilities.
The manner in which the amount of the financial provision is calculated may in future be regulated under the Financial Provision Regulations, 2015 (as they may be amended), which were published by the Minister of Environmental Affairs in November 2015. Prior to this, the amount of financial provision has been calculated pursuant to the Guideline Document for the Evaluation of the Quantum of Closure-related Financial Provision Provided by a Mine (the “DMRE Guidelines”) of the DMRE. The DMRE Guidelines were criticized for undervaluing the costs of environmental rehabilitation thus exposing the DMRE to potential liability in the event that the mining right holder was unable to fulfill its environmental obligations. The Financial Provision Regulations, 2015 place an emphasis on post-closure water pumping and treatment and the need for upfront provision to be set aside for the management of these types of impacts.
The Financial Provision Regulations, 2015 sought to rectify the inadequacies of the DMRE Guidelines by, among other things, including preliminary and general costs in the financial provision calculations, imposing VAT (at 15%) on the total amount, prohibiting the withdrawal of trust funds for concurrent rehabilitation (even in circumstances where the financial provision exceeds the evaluated environmental liability) and ceding a portion of the funds to the Minister as security for possible latent and residual post-closure environmental impacts.
Compliance with these obligations would result in a significant increase in the required financial provision and, consequently, has been strongly opposed by the mining industry. In response to this opposition, the Department of Forestry, Fisheries and the Environment (“DFFE”), the competent authority for drafting the Financial Provision Regulations, 2015, undertook to engage further with mining industry and other stakeholders to amend or develop new financial provision regulations.
We continue to engage with the DFFE and the DMRE regarding matters relating to financial provision including the Financial Provision Regulations, 2015, as well as the adjustment of financial provision in respect of the mining operations. There are concerns about the ambiguity of the provisions and how they can be operationalized within the prescribed transitional time frames, which may result in misinterpretation, mis-application and potential disputes with the DFFE, any of which could have a material adverse effect on our business, operating results and financial condition. See note 24 “Provision for environmental rehabilitation” to our consolidated financial statements set forth beginning on page F-1.
In addition, we may also face increased environmental costs should other mines in the vicinity fail to meet their obligations related to the pumping or treatment of water. The adoption of these, or additional or more comprehensive and stringent requirements, particularly for the management of hazardous waste, pollution of ground and groundwater systems and duty to rehabilitate closed mines, may result in additional costs and liabilities, which could have a material adverse effect on our business, operating results and financial condition.
Other key environmental legislation includes the South African National Water Act, 36 of 1998 (“NWA”), the National Environmental Management: Air Quality Act, 39 of 2004 (the "Air Quality Act"), the National Environmental Management: Waste Act, 59 of 2008 (the "Waste Act"), the National Nuclear Regulator Act, 47 of 1999, the National Environmental Management: Biodiversity Act, 10 of 2004, the National Heritage Resources Act, 25 of 1999, the Carbon Tax Act, 15 of 2019 (the “Carbon Tax Act”), the Climate Change Act and the MPRDA.
The National Environmental Management Laws Amendment Act, 2 of 2022 (“NEMLAA”) was assented to on June 21, 2022. The majority of the provisions in NEMLAA came into effect on June 30, 2023, as determined by the Environment Minister. The NEMLAA contains numerous amendments to NEMA, many of which are intended to resolve several issues linked to the roll-out of the "One Environmental System" including the jurisdiction, responsibility and enforcement powers of the DFFE, DMRE and local authorities. The NEMLAA has been described as the most significant piece of environmental legislation since the implementation of the One Environmental System, bringing with it a major shift in South Africa’s environmental legislative landscape. One of the material amendments arising from the NEMLAA is that the Environment Minister may prescribe that financial provision is set aside for activities which historically have not been required to put up financial rehabilitation including the reclamation of historic residue stockpiles and deposits.
In terms of the NEMLAA, the financial provision retained by the Environment Minister must be transferred to an account administered by the Environment Minister or, where the financial provision is an insurance policy, the Environment Minister must access the funds. Harmony will have no right to regulate the way these funds are spent to rectify any latent and residual environmental impacts. Notwithstanding this, Harmony will remain liable for any such liabilities. If the latent and residual environmental liabilities do not materialize, there is no mechanism in terms of which the funds will be returned. See Item 4: “Information on the Company – Business Overview – Regulation – Laws and Regulations Pertaining to Environmental Protection - South Africa”.
The Climate Change Act 22 of 2024 (“the Climate Change Act”) was signed into law on 23 July 2024, but only becomes effective on a future date to be set by the President.
The Climate Change Act confirms that sectoral emissions targets (“SETs”) will be set for greenhouse gas (“GHG”) emitting sectors and sub-sectors which shall be reviewed and revised every 5 years. It is anticipated that the SETs will become more stringent over time. The Minister responsible for environmental affairs must identify GHG emitting activities and permissible GHG emission thresholds above which entities will be allocated a carbon budget and need to submit a GHG mitigation plan. It is anticipated that transitional arrangements will be developed which mirror the approach adopted under the Minimum Emissions Regulations published under National Environmental Management: Air Quality Act, 2004 (“NEMAQA”). Carbon budgets set out the GHG that may be emitted. At the time the carbon budget is allocated, all pollution prevention plans contemplated under the NEMAQA and the National Pollution Prevention Plans Regulations, 2017 will be deemed to be a GHG plan for the first 5-year cycle. The person to whom a carbon budget is allocated must implement the GHG plan, monitor compliance with the GHG plan and evaluate and report their performance in terms of the GHG plan. If the report indicates that the person failed, is failing or will fail to comply with the carbon budget, it will need to provide a description of the measures it will implement in order to remain within the carbon budget. The Minister may declare certain GHGs to be synthetic GHGs and specify if these must be phased out or phased down and the timeframes by when this must be achieved. One particular concern is that organs of state must review
and if necessary amend “decisions” in order to ensure that the risks of climate change impacts and associated vulnerabilities are taken into consideration; and give effect to the principles and objects of the Act (“the Review”). These decisions may include existing administrative decisions such as environmental authorisations, atmospheric emissions licences, mining or production rights and tenders granted to bidders under power procurement programmes for coal or gas. Before amending these decisions, the relevant organ of state must give a the holder of such consents, approvals or awards (“the Consents”)
(i) adequate notice of the proposed amendments to or withdrawal of Consents pursuant to the Review; and
(ii) a reasonable opportunity to make representations regarding the amendments or withdrawal. If the relevant organs of state fail to undertake the Review, third parties such as non-governmental organisations (“NGOs”), may seek to compel these organs of state to undertake the Review in respect of particular Consents or classes of Consents. The proposed amendments to the Consents may have material implications on existing business and operations and may have a chilling effect on investment.
Compliance with existing or new environmental legislation, which increases the burden of compliance or the penalties for non-compliance may cause us to incur further significant costs and could have a material adverse effect on our business, operating results and financial condition.
Australia
In the State of Queensland, mining operations are subject to the Environmental Protection Act 1994 (Qld) (the "Queensland EPA") and Environmental Protection Regulations 2019. The Queensland EPA and Regulations prescribe the preparation and assessment of environmental impact studies for purposes of the issuance of Environmental Authorities ("EAs") to perform "environmentally relevant activities (“ERAs”), which are assessed by the Queensland Department of Environment, Science and Innovation. See Item 4: “Information on the Company – Business Overview – Regulation – Laws and Regulations Pertaining to Environmental Protection – Australia”.
The Eva Copper Project was initially granted an EA on July 12, 2012 following approval of an Environmental Impact Statement (“EIS”) and an Environmental Management Plan, (“EMP”). The Eva Copper Project has since undergone various amendments, both major and minor in nature, with the current EA issued by the Queensland Department of Environment, Science and Innovation on June 12, 2024.
In addition, various other environmental legislation applies, including the Commonwealth Environment Protection and Biodiversity Conservation Act 1999 (“EPBC Act”) and the National Greenhouse and Energy Reporting Act 2007(“NGER Act”).
The EPBC Act is administered by the Commonwealth Department of Climate Change, Energy, the Environment and Water (the "DCCEEW") and provides a legal framework to protect and manage unique plants, animals, habitats and places in Australia. Projects that could have a significant impact on Commonwealth protected matters must be referred to the Commonwealth Minister for Environment, who will determine whether the proposed action requires assessment and approval under the EPBC Act. The decision to refer a project under the EPBC Act is a self-assessment process. The Eva Copper Project does not hold any approvals under the EPBC Act.
In 2024, a detailed self-assessment of the Eva Copper Project’s impacts to “matters of national environmental significance” (“MNES”) was completed which confirmed previous self-assessment outcomes being that the Eva Copper Project, as currently approved, is unlikely to have a significant residual impact on any MNES. Consequently, the risk to the Eva Copper Project as a result of not previously being referred to the Commonwealth Minister for Environment is considered to be low. Referrals under the EPBC Act may be necessary to support future amendments and will be assessed and determined on a case-by-case basis.
The Australian Government is preparing to undertake reforms to Australian environmental law. Under the Nature Positive Plan, the EPBC Act will be repealed and replaced by a package of new legislation. A new independent statutory entity called Environment Protection Australia ("EPA") will be established and will be responsible for compliance and enforcement as well as assessments and making decisions under the new legislation. National Environmental Standards ("NES") will be established to underpin the operation of the new environmental laws. Consultation has been ongoing with industry since the release of the draft bill in 2023. It is understood that the Australian Government intends to progress delivery of the Nature Positive Plan in 2024-25.
The NGER Act establishes the NGER Scheme, which is a national framework for reporting greenhouse gas emissions, greenhouse gas projects and energy consumption and production by corporations in Australia. The NGER Act makes registration and reporting mandatory for corporations whose energy production, energy use or greenhouse gas emissions meet specified thresholds.
In addition to reporting obligations, the NGER Act introduces a mechanism (the “Safeguard Mechanism”) that provides a framework for Australia's largest emitters to measure, report and manage their emissions. It does this by requiring large facilities, whose net emissions exceed the Safeguard Mechanism threshold, to keep their emissions at or below emissions baselines. The Safeguard Mechanism applies to facilities with scope 1 covered emissions of more than 100,000 tonnes of carbon dioxide equivalent ("CO2-e") per year. Reforms to the Safeguard Mechanisms came into effect on July 1, 2023 which apply a decline rate to facilities’ baselines so that they are reduced predictably and gradually over time on a trajectory consistent with achieving Australia’s emission reduction targets of 43% below 2005 levels by 2030 and net zero by 2045.
As part of the feasibility study currently in progress, the Eva Copper Project is quantifying its predicted emissions under the NGER Act to determine the potential applicability of monitoring and reporting obligations and the Safeguard Mechanism.
A Progressive Rehabilitation and Closure Plan has been prepared for the Eva Copper Project pursuant to section 754 of the Queensland EPA. This plan outlines how the project will progressively rehabilitate and eventually close the site after mining activities have concluded.
In addition, in accordance with the Queensland EPA, it is a condition of an EA for a resource activity that the holder must not carry out, or allow the carrying out of, a resource activity under the authority unless:
•an Estimated Rehabilitation Cost ("ERC") decision is in effect for the resource activity when the activity is carried out;
•the holder has paid a contribution to the scheme fund or given a surety for the authority under the Mineral and Energy Resources (Financial Provisioning) Act 2018 (the "MERFP Act"); and
•the holder has complied with the requirements under the MERFP Act for paying a contribution to the scheme fund, or giving a surety for the authority, as required from time to time.
An ERC is currently in place for preliminary site access and exploration activities at the Eva Copper Project. Revised ERC applications will need to be prepared and determined from time to time to authorize disturbance activities prior to the commencement of further construction and mining activities. As progressive rehabilitation is completed, the ERC may be adjusted to reflect the reduced liability.
Compliance with existing or new environmental legislation, which increases the burden of compliance or the penalties for non-compliance may cause us to incur further significant costs and could have a material adverse effect on our business, operating results and financial condition.
Papua New Guinea
Our PNG operations are subject to the PNG Environment Act 2000 (“PNG Environment Act”) and various related regulations and guidelines. The PNG Environment Act regulates discharges to air, land and water, and sets out the requirements for proponents to obtain an environment permit for the construction, operation and closure of prescribed activities having the potential to cause environmental harm.
An EIS is required for activities that are likely to have a significant adverse impact on the environment and other socio-economic or cultural heritage aspects. The PNG Government uses the EIS in accordance with statutory processes as the means to assess a project's impacts and benefits, and to decide whether the Environment Minister should grant approval in principle for the project under the PNG Environment Act. Thereafter, the Managing Director of the Conservation and Environment Protection Authority ("CEPA") may grant the Level 3 environment permit for the project. The environment permit presents the conditions with which we must comply, and reports outlining our performance against each condition are provided to CEPA annually.
In 2010, the PNG Government engaged the Scottish Association for Marine Science ("SAMS") to conduct an independent assessment of deep-sea tailings placement ("DSTP") systems in PNG in 2010 with consideration to international best practice, and to prepare Draft General Guidelines for DSTP in PNG ("SAMS 2010"). These guidelines are referenced in the PNG Government’s Terms of Reference for an EIS for DSTP projects.
An EIS was submitted to CEPA on June 25, 2018, and an environment permit for the Wafi-Golpu Project was issued on December 18, 2020. The environment permit includes conditions relating to DSTP.
Compliance with existing or new environmental legislation, which increases the burden of compliance or the penalties for non-compliance may cause us to incur further significant costs and could have a material adverse effect on our business, operating results and financial condition.
A process of mining regime review is underway within PNG and a number of environmental matters are under consideration. These include a Biodiversity Offsets Policy (which anticipates biodiversity offset payments to support biodiversity initiatives), and a National Oceans Policy.
Harmony's operations and projects in PNG will potentially be affected by changes to PNG environmental laws, and Harmony continues to engage with the PNG Government on these matters through the offices of PNG CORE, and directly with CEPA and (in the case of mine closure) the PNG MRA. See Item 4: “Information on the Company – Business Overview – Regulation – Laws and Regulations pertaining to Environmental Protection – Papua New Guinea”.
General
Failure by Harmony to comply with the conditions of our mining rights and mineral rights and environmental legislation and regulation in any of the jurisdictions in which we operate may result in fines, penalties and reputational damage or cause us to lose the right to mine, or fail to acquire new rights to mine, each potentially having a material adverse effect on our business, operating results and financial condition.
See "Integrated Annual Report for the 20-F 2024 – Environment – Environmental stewardship” on pages 91 to 98 for further discussion on the applicable legislation and our policies on environmental matters.
The socio-economic framework in the regions in which we operate may have an adverse effect on our operations and profits
We have operations in South Africa, Australia and PNG. As a result, changes to or instability in the social, economic or political environment in any of these countries or in countries proximate to them could affect an investment in us. Without limitation, political risks may include the following: political instability and terrorism; nationalization; change in legislative, regulatory or fiscal frameworks; renegotiation or nullification of existing contracts, leases, permits or other agreements; restrictions on repatriation of earnings or capital; changes in laws and policy; and socio-economic risks including civil unrest and criminality. The impact of future long-term health related issues may heighten social tensions and demands, as individuals look to the mining industry for job creation opportunities and other resources and benefits.
The African National Congress (“ANC”) has been the governing party since 1994. In March 2019, the President of South Africa, Cyril Ramaphosa, announced in parliament that South Africa would move forward with the nationalization of the SARB. Since the announcement, there have been various contradictory statements made by government officials regarding the government’s plans to nationalize the SARB, which have created uncertainty around this issue, notwithstanding that the SARB’s independence is constitutionally guaranteed. Although statements of the ANC suggest that nationalizing the SARB is still part of their policy, it appears that the nationalization process has been put on hold and a final resolution of the matter is still pending.
After a national election in 2024, the ANC was unable to secure an outright majority for the first time and entered into a coalition government with various other national parties, which could adversely impact the socio-economic framework in South Africa and thus on our operating results and financial condition.
Papua New Guinea
Since 2019, the government of Prime Minister James Marape has advocated a policy of "Take Back PNG", intended to increase the PNG Government’s share of the proceeds from mining, enhance landholder and provincial government equity participation in mining projects and promote direct involvement in mining and exploration by State-owned enterprises. This policy has witnessed the presentation of various proposed revisions to the mining regime which (if introduced and applied to our operations and projects) would have a materially adverse impact. In 2024, PNG has experienced heightened volatility and incidents of civil unrest, sparked by increased economic challenges, shortages of foreign currency and national fuel supply issues.
It is difficult to predict the future political, social and economic environment in these countries, or any other country in which we operate save to state that any social, economic or political changes or instability may adversely affect the general business environment and our business, results of operations and financial condition, including the movement of funds into or out of South Africa and PNG.
Given the nature of mining and the type of mines we operate, we face a material risk of liability, delays and increased cash costs of production from environmental and industrial accidents and pollution compliance breaches
The business of gold mining involves significant risks and hazards, including environmental hazards and industrial accidents. In particular, hazards associated with underground mining include:
• rock bursts;
• seismic events;
• underground fires;
• cave-ins or fall-of-ground;
• discharges of gases and toxic chemicals;
• release of radioactive hazards;
• flooding or droughts;
• mining of pillars (integrity of shaft support structures may be compromised and cause increased seismicity);
• processing plant fire and explosion;
• critical equipment failures;
• inability to access methane filled shafts for rehabilitation;
• accidents and loss-of-life incidents; and
• other conditions resulting from drilling, blasting and the removal and processing of material from a deep-level mine.
Hazards associated with opencast mining (also known as open-pit mining) include:
• flooding of the open-pit;
• collapse of open-pit walls or slope failures;
• processing plant fire and explosion;
• accidents associated with operating large open-pit and rock transportation equipment;
• accidents associated with preparing and igniting of large-scale open-pit blasting operations; and
• major equipment failures.
Hazards associated with construction and operation of waste rock dumps and tailings storage facilities include:
• accidents associated with operating a waste dump and rock transportation;
• production disruptions caused by natural phenomena, such as floods and droughts and weather conditions, potentially exacerbated by climate change;
We are at risk from any or all of these environmental and industrial hazards. In addition, the nature of our mining operations presents safety risks. Our operations are subject to health and safety regulations, which could impose additional costs and compliance requirements. We may face claims and liability for breaches, or alleged breaches, of such regulations and other applicable laws. Any legislative changes relating to financial provisions could add to the costs. The occurrence of any of these events could disrupt production, increase cash costs and, individually or in the aggregate, have a material adverse effect on our business, results of operations and our financial condition.
Mining companies are increasingly expected to provide benefits to affected communities; failure to comply with, and beyond, our legal obligations could result in lawsuits, additional operational costs, investor divestment and impact our “social license to operate”, which could adversely impact our business, operating results and financial condition: we are finding increasing expectations on our business to provide social investment beyond our legal obligations especially as communities demand services and basic infrastructure from companies such as Harmony (where local government has failed the communities)
As a result of public concern about the perceived ill effects of economic globalization, businesses in general and large international companies such as our company, in particular, face increasing public scrutiny of their activities.
Like other mining companies, we are under pressure to demonstrate that while we seek a satisfactory return on investment for shareholders, other stakeholders including employees, contractors, regulators, communities surrounding the operations and the countries in which we operate, also seek to benefit from our commercial activities. Such pressures tend to be particularly focused on companies whose activities are perceived to generate significant revenues and/or have a high impact on the social and physical environment.
Stakeholder pressure takes many forms, including the loss of license to operate, lawsuits and investor withdrawal. The potential consequences of these pressures include reputational damage and increased social spending obligations. There is also increasing action by members of the general financial and investment communities, such as asset managers, sovereign wealth funds, public pension funds, universities and other groups, to promote improvements in ESG performance by us and others.
Existing and proposed mining operations are often located at or near existing towns and villages and other infrastructure, or natural water courses. The impacts of dust generation, waste storage, water quality or shortages may be immediate and directly adverse to those communities; poor environmental management practices, in particular, adverse changes in the supply or quality of water can result in community protest, regulatory sanctions or ultimately in the withdrawal of community and government support. While mining operations are intended to be designed to mitigate the impact on such communities and the environment, there can be no assurance that they will do so, and the occurrence of any of these events could disrupt production, increase cash costs and, individually or in the aggregate, have a material adverse effect on our business, results of operations and our financial condition.
Australia
Mining in Australia is subject to the Native Title Act 1993 (Cth) (the “Native Title Act”). Any "future act" on land or waters that will affect native title rights and cultural heritage interests is subject to native title processes intended to protect such rights and interests through a right to negotiate enabling affected parties to reach agreement on the terms of consent concerning the proposed future acts, including monetary compensation, employment and training, contracting opportunities and cultural heritage. These arrangements are captured in Indigenous Land Use Agreements, which are then registered with the National Native Title Tribunal.
The Company has an agreement in place with the Native Title party, the Kalkadoon People, covering the full area of the Eva Copper Project mining leases.
Papua New Guinea
In PNG, we are required under the PNG Mining Act and PNG Environment Act to pay landowners compensation for any loss or damage sustained by them arising from our exploration or mining activities. In certain prescribed instances, the quantum of these payments is regulated, but otherwise is negotiated (with determination by a mine warden in the event of disagreement).
In addition, it is practice under the PNG mining regime for Mining Lease and Special Mining Lease holders to enter into a negotiated Memorandum of Agreement (“MOA", and also referred to as a "Community Development Agreement" ("CDA")) with the PNG Government, the affected provincial and local level governments, the affected landowner(s) and other stakeholder organizations regarding the sharing of benefits derived from the mining operations. These shared benefits generally include a participation in royalties payable by the tenement holders to the PNG Government but may further extend to local infrastructure projects and other social performance objectives.
Under the Hidden Valley Mine MOA, which was executed in 2005, an agreed share of the royalties paid by us to the PNG Government is allocated among the Morobe Provincial and local level governments and various landowner groups. Also, the MOA contains agreed national content, localization and social performance plans, which address various aspects of procurement, business development, employment and training and other community support.
A Wafi-Golpu CDA will be entered into in the course of the permitting of the Wafi-Golpu Project, pursuant upon the conduct of a consultative Development Forum convened by the PNG Government at which all directly-affected landowner community groups will be represented.
Disruptions to operations or delays in projects attributable to a lack of community support or community actions can translate directly into a loss of production and increase in operational costs, a decrease in the value of a project or an inability to bring a project to, or maintain, production. For example, our PNG operations have on occasion been disrupted by the blockading of access routes by landowners and occupants of the land the subject of such operations. These disruptions arise from a range of operational and non-operational grievances, including non-distribution by the PNG Government to local communities of mine-
derived royalties and other benefits, inter-community land ownership disputes, unhappiness with local or regional infrastructure or services delivery, and local business rivalries regarding the provision of goods and services to the operations.
The cost of implementing measures to support sustainable development could increase capital expenditure and operating costs and therefore adversely impact our reputation, business, operational results and financial condition. See "Integrated Annual Report for the 20-F 2024 –Harmony – Material matters" on pages 36 to 43 and "Harmony – Stakeholder engagement” on pages 44 to 49.
We may not be able to meet our ESG targets due to unforeseen factors beyond our control
We have announced a range of net zero and other ESG-related targets for the next five years, including environmental management, land rehabilitation, climate change, energy and emissions management, water use optimization, tailings and waste management, air quality, biodiversity and conservation, employee health and safety, wellness and healthcare, community empowerment, corporate social investment and corporate governance. We cannot guarantee that we will meet all these targets. For instance, the climate crisis cannot be addressed by Harmony, or any organization, on its own. Our progress is dependent not only on our own actions but on (i) the governments of the countries in which we operate, (ii) clear, early regulatory policy to help drive the change needed to meet our targets and (iii) actions of those in our value chain and wider society. Failure to meet these targets could have a material adverse effect on our business, operating results and financial condition, as well as pose reputational and litigation risks. See "Integrated Annual Report for the 20-F 2024– Environment" set forth on pages 91 to 164.
Compliance with emerging climate change regulations could result in significant costs for us
Increased global awareness that GHGs contribute to climate change has resulted in legislative mechanisms obliging companies to report GHG emissions and implement measures to reduce GHG emissions and imposing penalties or taxes on GHG emissions. The manner in which these legislative mechanisms and sustainability measures will affect the Company are set out in more detail below.
Reporting GHG Emissions
In South Africa, the National Greenhouse Gas Emission Reporting Regulations require that we register our operations that involve fuel combustion activities associated with mining and quarrying in excess of 10MW as well as certain other activities associated with the mineral industry. We must report our GHG emissions and activity data in respect of these operations in accordance with the Technical Guidelines for Monitoring, Reporting and Verification of Greenhouse Gas Emissions by Industry (“Technical Guidelines”) for each of the relevant GHGs and the Intergovernmental Panel on Climate Change (“IPCC”), emission sources by March 31st of each year. The Technical Guidelines are a companion to the South African National GHG Regulations and describe the reporting methodology as specified in the Air Quality Act.
Reduction in GHGs
GHGs are emitted directly by our operations, as well as indirectly as a result of consuming electricity generated by external utilities. Emissions from electricity consumption are indirectly attributable to our operations.
A number of international measures seeking to mitigate or limit GHG emissions have been ratified by South Africa, Australia and PNG, including the Paris Agreement, a treaty negotiated at the Conference of the Parties of the UN Framework Convention on Climate Change in Paris in December 2015 (the “Paris Agreement”), pursuant to which member countries set out the manner and period in which they plan to reduce emissions. This commitment or “nationally-determined contribution” is informed by each member country’s circumstances:
•Pursuant to South Africa’s nationally-determined contribution, GHG emissions will peak between 2020 and 2025, plateau from 2025 to 2035 and thereafter decline from 2036 onwards.
•The Australian government has committed to reaching net zero emissions by 2050 and, in 2022, announced additional emissions reduction targets of 43% on 2005 levels by 2030.
•PNG’s GHG emissions have historically been negligible. However, according to PNG’s nationally-determined contribution, economic development in PNG will see an increased reliance on fuel. The PNG Government therefore plans to reduce fossil fuel emissions in the electricity generation sector and transition to 100% renewable energy by 2030, provided that funding is available.
The Carbon Tax Act was enacted to assist South Africa in meeting its objectives under its nationally-determined contribution. The Carbon Tax Act came into effect on June 1, 2019. Pursuant to the Carbon Tax Act, a party is liable to pay a carbon tax if it conducts an activity in South Africa resulting in GHG emissions above the threshold set out in Schedule 2 to the Carbon Tax Act. The tax is charged at a rate of R159 per tonne of GHG emissions generated by burning fossil fuels, unintentionally emitting GHGs during the extraction, processing, delivery and burning of fossil fuels for energy production, including from industrial plant and pipelines, and conducting manufacturing processes that chemically and physically transform materials.
The tonnage of GHGs in respect of these activities is determined by multiplying GHG emission factors contained in the Schedules to the Carbon Tax Act by the mass of fossil fuels or raw materials used or produced, as the case may be. Until December 31, 2025 the tax rate will be increased annually by the consumer price index (“CPI”) plus 2%. Thereafter, the rate will increase annually by the CPI.
In order to reduce the significant tax that results by multiplying the total tonnage of GHG by R159, the Carbon Tax Act makes provision for various “allowances” which could result in a decrease of the carbon tax payable by up to 95%. These allowances include:
These allowances reduce the effective carbon tax rate to between R8 and R64 per tonne of GHG. Pursuant to section 19 of the Carbon Tax Act, the South African Minister of Finance ("Minister of Finance") must make regulations regarding: the sub sector GHG emissions intensity benchmark required in order to calculate the performance allowance, the manner in which the trade exposure allowance must be determined and carbon offsets which have all now been promulgated. The South African National Treasury published amendments to the National Greenhouse Gas Emission Reporting Regulations in May 2024, which extended the validity of offset projects to December 31, 2025, to align it with the already approved extension of the phase 1 carbon tax process.
As discussed above under "–Risks Related to ESG", the Climate Change Act was signed into law on July 18, 2024, and was published on July 23, 2024. However, in terms of Section 35 of the Act, it will only come into effect on a date fixed by the President, by proclamation in the Government Gazette, which has not yet occurred. The Climate Change Act would impose carbon budgets on entities in certain high-emitting industries, such as mining. It also requires companies, including Harmony, to submit pollution prevention plans covering the period from January 1, 2021 to December 31, 2025. The carbon budgets are intended to operate as statutory limits for CO2e emissions in excess of which may entail a fine, or other punitive measures. It is expected that the Carbon Tax Act will be aligned with the Climate Change, such that it will set out the amount that companies will be required to pay for CO2e emissions exceeding the applicable carbon budget. Until the sectoral emission targets and carbon budgets are published, it is expected that businesses will continue to submit progress reports on their pollution prevention plans in terms of the Pollution Prevention Plan Regulations, which form the basis for the greenhouse gas mitigation plans in terms of the Climate Change Act.
Our tax liability due to the carbon tax has been provisionally estimated post 2030. However, at this time it is not possible to determine the ultimate impact of the Carbon Tax Act on the Company. Nevertheless, we have set our internal carbon price (for the South African operations) to match that of the carbon tax. We may also be liable for potential pass-through costs from our suppliers in the short term from increased fuel prices. Simultaneously with the introduction of the carbon tax under the Carbon Tax Act, a carbon fuel levy was introduced under the Customs and Excise Act 91 of 1964 ("Customs and Excise Tax"), as part of the current South African fuel levy regime. The carbon tax on liquid fuels will be imposed at the fuel source. It is estimated that the increased fuel price would be R0.11/liter for petrol and R0.14/liter for diesel. This will have an impact on our operational expenses.
The carbon tax poses a relatively low cost to us until December 31, 2025 after which it is anticipated that the “allowances” discussed above will be reduced and the tax will be increased. It is also anticipated that carbon taxes will be imposed on electricity usage generated from fossil fuels. The impact of the carbon tax on us arising from electricity usage after December 31, 2025 is estimated to range from R100m to R600m by 2030. Although these rates as well as the longer term assumptions have been built into our business plans, with a 300% absolute increase in the price of carbon over the next seven years, it is set to put significant pressure on our business.
The largest portion of GHG emissions is predominantly electricity-related, with electricity expenditure amounting to approximately 15% of our cash costs in South Africa. While cost management is clearly a strategic issue for us, of even greater importance is that energy supply be constant and reliable, given the implications of a loss of energy on both production and health and safety. Additional taxes on energy will affect us significantly, as will regulation that may include, among other things, emission measurement and reduction, audit processes and human resource costs. There is some sentiment expressed by South African National Treasury that the taxes may be increased but this is not supported by regulation at present.
Assessments of the potential impact of future climate change regulations are still uncertain, given the wide scope of potential regulatory change in South Africa. Such regulatory initiatives and related costs could have a material adverse effect on the business, operating results and financial condition.
Climate Change legislation and policy
South Africa
As mentioned above, the Climate Change Act was published on July 23, 2024, in response to the international commitments made under the Paris Agreement. It aims to address climate change in the long-term by aiming for a climate resilient and low carbon economy in South Africa.
Australia
In 2022, Australia passed the Climate Change Act 2022 (Cth) which enacts the 2030 and 2050 emission reduction targets in legislation. The Australian government has also progressed reforms in a number of sectors to align with its climate targets, including amendments to the Safeguard Mechanism, the primary tool to limit emissions from large emitting facilities. See “– We are subject to extensive environmental regulations in the countries in which we operate – Australia”. Such regulatory initiatives and related costs, while they are not expected to have significant impact in the near term, could have a material adverse effect on the business, operating results and financial condition in the future.
In PNG, the PNG Climate Change (Management) Act 2015 provides the regulatory framework with respect to climate change in PNG, and establishes PNG’s Climate Change and Development Authority as the coordinating entity for climate change related policies and actions across PNG and the designated National Authority under the UN Framework Convention on Climate Change. Implementation actions under this policy to date have been very limited, however in January 2021 the PNG Climate Change Fees and Charges came into effect which include taxes on carbon in fuel products and a Green Fee (a departure tax for non-residents leaving PNG), and in August 2022 a draft Climate Change (Management) (Carbon Markets) Regulation was circulated for discussion. Future implications of the climate change policy on our operations in PNG are still being established and while they are not expected to have significant impact in the near term, they may potentially have a material adverse effect on our business, operating results and financial condition in the future.
Additionally, a number of regulators are adopting or considering new environmental disclosure rules. For example, in March 2024, the SEC adopted final rules under SEC Release No.34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors (the “SEC Climate Disclosure Rules”), which will require registrants to provide certain climate-related information in their registration statements and annual reports. While the SEC stayed the effectiveness of the SEC Climate Disclosure Rules in April 2024 and it is uncertain if or when compliance will be mandated, a number of other jurisdictions are also mandating disclosure of climate-related risks and effects. These recently enacted and proposed regulations may impose meaningful costs and demand significant attention from management, all of which could affect our business and our results of operations.
See "Integrated Annual Report for the 20-F 2024 – Environment – Environmental stewardship", and "Environment – Climate change, energy and emissions management” on pages 91 to 98 and 103 to 111 for disclosure regarding our GHG emissions.
Climate change may present physical risks to our operations and carbon tax projections may have serious financial implications to our business profitability and sustainability
Our operations could be exposed to a number of physical risks posed by climate change, such as changes in rainfall, rising sea levels, reduced water availability, higher temperatures and more frequent extreme weather events. Events or conditions such as fires, flooding or inadequate water supplies could disrupt our mining and transport operations, mineral processing and rehabilitation efforts, create resource or energy shortages, damage property or equipment and increase health and safety risks. Such events or conditions could have other adverse effects on our workforce and on the communities around our mines, such as an increased risk of food insecurity, water scarcity and prevalence of disease. Each of these potential physical impacts of climate change could disrupt our operations and have a material adverse effect on our business, operating results and financial condition.
The cost of occupational health care services and the potential liabilities related to occupational health diseases may increase in future and may be substantial
Our operations are subject to health and safety regulations which could impose significant cost burdens.
South Africa
In South Africa, the MHSA imposes various duties on mines and grants the authorities broad powers to, among others, close mines which are unsafe or hazardous to the health of persons and order corrective action on health and safety matters.
There is a risk that the cost of providing health services, complying with applicable regulations, including the Compensation for Occupational Injuries and Diseases Act, 130 of 1993 ("COIDA"), and the Occupational Diseases in Mines and Works Act, 78 of 1973 ("ODMWA"), and implementing various programs could increase in future, depending on changes to underlying legislation, legal claims and the profile of our employees. This increased cost, should it transpire, could be substantial, but is currently indeterminate.
The Occupational Lung Disease Working Group (“Working Group”), was formed in fiscal 2014 to address issues relating to compensation and medical care for occupational lung disease in the South African gold mining industry. The Working Group, made up of African Rainbow Minerals Limited, Anglo American SA, AngloGold, Gold Fields Limited, Harmony and Sibanye Gold Limited, has had extensive engagements with a wide range of stakeholders since its formation, including government, organized labor, other mining companies and the legal representatives of claimants who have filed legal actions against the companies.
We have been subject to numerous claims, including class actions or similar group claims relating to silicosis and other occupational lung diseases, and could be subject to similar claims in the future. For instance, in May 2016, the High Court of South Africa (Gauteng Division) certified a class action by current and former mine workers against gold mining companies in South Africa, including us.
The matter was subsequently settled in May 2018. The terms of the settlement are available on our website. Accordingly, the Tshiamiso Trust was created for purposes of administering the settlement funds. On January 31, 2020, the Working Group commenced the payment of their quarterly administration and benefit contributions to the Tshiamiso Trust to enable the trustees to settle benefits of eligible claimants. See Item 8: “Financial Information – Consolidated Statements and Other Financial Information – Legal Proceedings” and "Integrated Annual Report for the 20-F 2024 – Social – Health and wellness” on pages 180 to 188 for further information. See note 25 “Other Provisions – Provision for silicosis settlement” to our consolidated financial statements set forth beginning on page F-1.
At June 30, 2024 the provision in our statement of financial position was R255 million. We believe that this remains a reasonable estimate of our share of the estimated cost in relation to the Working Group of the settlement of the class action claims and related costs. The final settlement costs and related expenditure may, however, be higher than the recorded provision
depending on various factors, such as, among other things, differences in the number and profile of eligible claimants actually compensated compared to current estimates.
Australia
Operations in the State of Queensland, where our Eva Copper Project is situated, are subject to similar duties and powers, including under the following laws and regulations: the MQSH Act and the MQSH Regulations.
We are not aware of any occupational health claims, including class actions or similar group claims, presently being made in relation to any of our operations in Queensland, but as a mining operator there is a risk we could be subject to such claims in the future. There is also a risk that the cost of providing health services, complying with applicable regulations, and implementing various programs could increase in future, depending on changes to underlying legislation, legal claims and the profile of our employees. This increased cost, should it transpire, could be substantial, but is currently indeterminate
Papua New Guinea
Operations in PNG are subject to similar duties and powers, including under the following laws and regulations: the PNG Mining (Safety) Act, the PNG Mining Safety Regulation 1935 (updated in 2006), the PNG Mining Act, the Industrial Safety, Health and Welfare Act 1961 (PNG), the Industrial Safety, Health and Welfare Regulations 1965 (PNG) and the PNG Environment Act. In June 2021, the PNG Ministry of Mining released the draft Mine & Works (Safety & Health) Bill 2021 which, if enacted in its present form, will repeal and replace the PNG Mining (Safety) Act.
We are not aware of any occupational health claims, including class actions or similar group claims, presently being made in relation to any of our operations in PNG, but as a mining operator there is a risk we could be subject to such claims in the future. There is also a risk that the cost of providing health services, complying with applicable regulations, and implementing various programs could increase in future, depending on changes to underlying legislation, legal claims and the profile of our employees. This increased cost, should it transpire, could be substantial, but is currently indeterminate.
If we or any of our subsidiaries in South Africa, Australia or PNG were to face a significant number of additional such claims and the claims were suitably established against it, the payments of compensation to the claimants could have a material adverse effect on our results of operations and financial condition. In addition, we may incur significant additional costs, including costs relating to the payment of fees, levies or other contributions in respect of compensatory or other funds established (if any), and expenditures arising out of our efforts to resolve any such claims or other potential actions, any of which could have a material adverse effect on our results of operations and financial condition.
Our operations are subject to water use and other licenses, which could impose significant costs
South Africa
Under the NWA a person may only undertake a “water use” subject to a water use license (and the conditions contained therein) issued under the NWA, a general authorization issued by the Minister of Water and Sanitation or in terms of a prior existing water use, such as a water permit issued under the NWA’s predecessor, Water Act, 54 of 1954 (“Water Act”). Persons undertaking water use under a general authorization or prior existing water use are required to register this use with the Department of Water and Sanitation (“DWS”) and are required to comply with the conditions contained in the published general authorization or any conditions contained in any prior existing water use (to the extent there are any).
Our South African operations are predominantly regulated under water permits issued pursuant to the Water Act, with some having been converted to water use licenses under the NWA. Notwithstanding this, the South African operations have elected to convert all prior existing water uses into water use licenses under the NWA to ensure these operations are carried out in accordance with current best practice and water quality standards. Submissions were made as early as 2003 and we have been working closely with the regional directors in the review process.
Some operations have received draft licenses for review and comment before finalization by the regional directors at the DWS. Kusasalethu, Moab, Mponeng, Mine Waste Solutions, Kareerand and Kalgold received their final water use licenses. These licenses, however, contain conditions that are impossible to meet and, as a result, we have applied to amend the relevant conditions.
In future, when new water licenses are issued, we may need to implement alternate water management measures that may require significant cost implication for our business. We intend to work collaboratively with the regional departments and catchment management agencies (which are aimed at decentralizing water management and facilitating inclusive stewardship of water resources) to reach a sustainable outcome for both us and the water resource/environment.
Failing to comply with the conditions of a water use license may result in the competent authority issuing a compliance notice or directive to us instructing it to take measures to correct the non-compliance and, in some instances, to cease operations pending the resolution of the non-compliance. In addition, failing to comply with a water use license is an offense that may result in prosecution. If we are successfully prosecuted, the court may impose fines, damages, director and employee liability and imprisonment.
Any of these could have a material effect on our business, operating results and financial condition.
In addition to the licensing requirements mentioned above, the NWA imposes a duty of care on us to take reasonable measures to prevent pollution or contamination of water resources. The nature and extent of the reasonable measures will depend on the circumstances of each case. If we fail to implement the measures required of it, a directive may be issued by the competent authority instructing us to implement certain measures within a prescribed period. Failing to comply with a directive is an offense and may result in prosecution and the penalties contemplated above. In addition, the competent authority could implement the necessary measures using its own methods and resources, and thereafter recoup the costs from us.
Any such environmental levy could have a material effect on our business, operating results and financial condition. In addition, the occurrence of Acid Mine Drainage at any of our mines could affect our ability to comply with our water use license requirements.
Obligations in respect of the pumping and treatment of extraneous water must also be addressed in connection with our final closure plans for each of our operations and we are responsible for these liabilities until a closure certificate is issued pursuant to the MPRDA and possibly thereafter under the NEMA. This liability is discussed in more details in Item 4: “Information on the Company – Business Overview – Regulation – Law and Regulations Pertaining to Environmental Protections in South Africa – NEMA”. Refer to "– Risks associated with pumping water inflows from closed mines adjacent to our operations, including related closure liabilities, could adversely affect our operational results".
Australia
Under the conditions of the mining leases for the Eva Copper Project, Eva Copper Mine Pty Limited is permitted to construct groundwater bores within the area subject to the mining leases.
To authorize the take of groundwater from a bore/borefield, a water license is required only if the bore is in an area where groundwater is managed (i.e. within an identified groundwater unit of a relevant water plan). The applicability of water license requirements is under investigation as part of ongoing studies into water supply options for the Eva Copper Project.
Should we breach any obligations in complying with the provisions of any permit or license or any laws and regulations under which they were issued, our permit or license could be suspended or cancelled, or we could be subject to fines or other sanction. Any such suspension, cancellation or sanction could have a material adverse effect on our results of operations and financial condition.
Papua New Guinea
In PNG, a single, project-comprehensive environment permit is issued by the Managing Director of CEPA under the provisions of the PNG Environment Act. The permit includes provisions for both water extraction and waste discharge. An annual administration fee is payable for this permit.
Should we breach any obligations in complying with the provisions of our environment permit or the PNG Environment Act, our permit could be suspended or cancelled, or we could be subject to fines or other sanction. Any such suspension, cancellation or sanction could have a material adverse effect on our results of operations and financial condition.
See "Integrated Annual Report for the 20-F 2024 – Environment – Water use” on pages 112 to 120.
Compliance with tailings management requirements and standards, and potential liabilities in the event of a failure to timely comply or an incident involving a tailings storage facility, could adversely impact our financial condition, our operational results and our reputation
Mining companies face inherent risks in their management of uneconomical milled ore residue and water, known as tailings, which includes the operation of tailings storage facilities and other tailings disposal systems, like DSTP. Tailings storage facilities are engineered structures built for the containment of tailings, and DSTP facilities are engineered pipeline and mixing infrastructure for the placement of tailings in the sea.
We presently operate only tailings storage facilities, but DSTP is the approved tailings management system for the proposed Wafi-Golpu Project. The proposed use of DSTP facilities at the Wafi-Golpu Project may expose us to reputational risk or litigation by way of class action or individual claims, which (if successful) could have a material adverse impact on the Wafi-Golpu Project.
The use of tailings storage facilities exposes us to certain risks, including the failure of a tailings dam due to events such as high rainfall, overtopping of the dam, piping or seepage failures. The potential occurrence of a dam failure at one of our tailings storage facilities could lead to the loss of human life and extensive property and environmental damage.
We maintain measures to manage the safety of our tailings storage facilities, including compliance with the International Council on Mining and Metals’ Tailings Governance Position Statement, our Code of Practice and undertakes routine reviews by independent consulting companies.
Although we have a tailings storage facility management system, the effectiveness of its designs, construction quality or regular monitoring cannot be guaranteed throughout its operations and it cannot be guaranteed that these measures will prevent the failure of one or more of its tailings dams or that such potential failure will be detected in advance. In addition, although we generally require our partners to maintain such systems, we cannot guarantee that our partners maintain similar safety precautions or monitoring systems on their tailings storage facilities. There is no assurance that any safety measures implemented will prevent the failure of any tailings storage facility.
The failure of a tailings storage facility will lead to multiple legal proceedings and investigations, which could include securities class actions, criminal proceedings and public civil actions (against us or individuals) for significant amounts of damages. Furthermore, the elimination of the “conventional” practice of storing wet tailings (e.g. alternatively filtering, “dry” stacking and compacting the tailings) could require the research and development of new technologies, which could lead to additional large expenditures. As a result of the dam failure in Brazil in 2015 and 2019, and Canada in 2014 (neither of which are associated with us) or as a result of future dam failures, additional environmental and health and safety laws and regulations may be forthcoming globally, including in jurisdictions where we operate, which may ban the storage of wet tailings completely. In addition, changes in laws and regulations may impose more stringent conditions in connection with the construction of tailings dams, particularly with respect to upstream tailings dams which could also be made illegal. Further, we may see changes in the licensing process of projects and operations, the imposition of significant financial assurance requirements, and increased criminal and civil liability for companies, officers and contractors.
Furthermore, the unexpected failure of a dam at a tailings storage facility could lead to the need for a large expenditure on contingencies and on recovering the regions and people affected, extensive and permanent environmental damage and the payment of penalties, fines or other money damages. The occurrence of any of such risks could have a material adverse effect on our business, operating results and financial condition. See "Integrated Annual Report for the 20-F 2024 – Environment – Tailings and waste management” on pages 121 to 129.
We may have exposure to rehabilitate potential groundwater and land pollution, which may include salination, and radiation contamination that may exist where we have operated or continue to operate; implementation of the financial provision regulations may require us to include provision in our financial statements for rehabilitation
Due to the interconnected nature of mining operations at Doornkop, Kusasalethu, Mponeng, MWS and Moab Khotsong, any proposed solution for potential flooding and decant risk posed by deep groundwater needs to comprise a regional solution supported by all mines located in the goldfields and the government in the event of legacy issues. As a result, the DMRE and affected mining companies are involved in developing a regional mine closure strategy. In view of the status of the Financial Provision Regulations, 2015, no reliable estimate can be made for any possible obligations or liabilities, which could be material and have an adverse impact on our financial condition.
See “—Risks Related to Our Industry - We are subject to extensive environmental regulations in the countries in which we operate”.
We are implementing the following steps to ensure that funds are available to top up our financial provision, if necessary:
• facilitating concurrent rehabilitation;
• re-purposing infrastructure and mining affected land; and
• accelerating mine closure rehabilitation where operations have reached the end of its geological life.
Currently, no provision for any potential liability has been made in our financial statements under the Financial Provision Regulations, 2015. If provision needs to be made, and is substantial, this could have a material adverse effect on our business, operating results and financial condition.
Compliance with new and changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies and increases our costs of compliance
Laws, regulations and standards relating to accounting, corporate governance and public disclosure, “conflict minerals” and “responsible” gold, SEC regulations and other listing regulations applicable to us are subject to change and can create uncertainty for companies like us. New or changed laws, regulations, codes and standards could lack specificity or be subject to varying interpretations. Their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty on compliance matters and higher costs of compliance as a result of ongoing revisions to such governance standards.
We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulations, codes and standards in this regard have resulted in, and are likely to continue to result in, increased general and administrative expenses, which could have a material adverse effect on our business, operating results and financial condition.
Risks Related to Our Corporate and Financing Structure and Strategy
Our inability to maintain effective disclosure controls and procedures, and an effective system of internal control over financial reporting may have an adverse effect on investors’ confidence in the reliability of our financial statements and other disclosures
Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with IFRS as issued by the IASB. Disclosure controls and procedures are designed to ensure that information required to be disclosed by a company in reports that it files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We have invested in resources to manage the documentation and assessment of our system of disclosure controls and our internal control over financial reporting. However, a control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance with respect to the reliability of financial reporting, financial statement preparation and other disclosures. If we were unable to maintain effective disclosure controls and procedures as well as an effective system of internal control over financial reporting, investors may lose confidence in the reliability of our financial statements, and this may have an adverse impact on investors’ abilities to make decisions about their investment in us. See Item 15: “Controls and Procedures”.
We may experience problems in identifying, financing and managing new acquisitions or other business combination transactions and integrating them with our existing operations; we may not have full management control over future joint venture projects
In order to maintain or expand our operations and reserve base, we have sought, and may continue to seek to enter into joint ventures or other business combination transactions or to make acquisitions of selected precious metal producing companies or assets. For example, with effect on October 1, 2020, acquired the remainder of AngloGold’s South African business, including the Mponeng mine and MWS, in the Mponeng Acquisition. In December 2022, Harmony acquired its Eva Copper Project in Queensland, Australia.
Acquiring new mining operations or entering into other business combination transactions involves a number of risks including:
•our ability to identify appropriate assets for acquisition and/or to negotiate an acquisition or combination on favorable terms;
•obtaining the financing necessary to complete future acquisitions;
•difficulties in assimilating the operations of the acquired business;
•the changing regulatory environment as it relates to the Mining Charter (as defined below) and the general policy uncertainty in South Africa;
•difficulties in maintaining our financial and strategic focus while integrating the acquired business;
•problems in implementing uniform quality, standards, controls, procedures and policies;
•management capacity, and skills to supplement that capacity, to integrate new assets and operations;
•increasing pressures on existing management to oversee an expanding company; and
•to the extent we acquire mining operations or enter into another business combination transaction outside South Africa, Australia or PNG, encountering difficulties relating to operating in countries in which we have not previously operated.
Any such acquisition or joint venture may change the scale of our business and operations and may expose us to new geographic, geological, political, social, operating, financial, legal, regulatory and contractual risks. Our ability to make successful acquisitions and any difficulties or time delays in achieving successful integration of any of such acquisitions could have a material adverse effect on our business, operating results and financial condition.
In addition, to the extent that we participate in the development of a project through a joint venture or other multi-party commercial structure, there could be disagreements, legal or otherwise or divergent interests or goals among the parties, which could jeopardize the success of the project, particularly if we do not have full management control over the joint venture. There can be no assurance that any joint venture will achieve the results intended and, as such, any joint venture could have a material adverse effect on our revenues, cash and other operating costs. See Item 5. “Operating and Financial Review and Prospects - Liquidity and Capital Resources - Cash flows from investing activities”.
Certain factors may affect our ability to support the carrying value of our property, plant and equipment, and other assets on our balance sheet, resulting in impairments
We review and test the carrying value of our assets when events or changes in circumstances suggest that this amount may not be recoverable and impairments may be recorded as a result of testing performed.
Our market capitalization on any reporting date is calculated on the basis of the price of our shares and ADSs on that date. Our shares and ADSs may trade in a wide range through the fiscal year depending on the changes in the market, including trader sentiment on various factors including gold price. Therefore, there may be times where our market capitalization is greater than the value of our net assets, or “book value”, and other times when our market capitalization is less than our book value. Where our market capitalization is less than our net asset or book value, this could indicate a potential impairment and we may be required to record an impairment charge in the relevant period.
At least on an annual basis for goodwill, and when there are indications that impairment of property, plant and equipment and other non-financial assets may have occurred, estimates of expected future cash flows for each group of assets are prepared in order to determine the recoverable amounts of each group of assets. These estimates are prepared at the lowest
level at which identifiable cash flows are considered as being independent of the cash flows of other mining assets and liabilities. Expected future cash flows are inherently uncertain, and could materially change over time. Such cash flows are significantly affected by reserve and production estimates, together with economic factors such as spot and forward gold prices, discount rates, currency exchange rates, estimates of costs to produce reserves and future capital expenditures.
As at June 30, 2024, we had substantial amounts of property, plant and equipment and other assets on our consolidated balance sheet. The impairment charges relating to property, plant and equipment, and other assets recorded in fiscal 2024 was R2.8 billion. If management is required to recognize impairment charges in the future, this could have a material adverse effect on our results of operations and financial condition.
Our ability to service our debt will depend on our future financial performance and other factors
Our ability to service our debt and maintain compliance with financial covenants depends on our financial performance, which in turn will be affected by our operating performance as well as by financial and other factors, and in particular the gold price, certain of which are beyond our control. Various financial and other factors may result in an increase in our indebtedness, which could adversely affect us in several respects, including:
•limiting our ability to access the capital markets;
•hindering our flexibility to plan for or react to changing market, industry or economic conditions;
•limiting the amount of cash flow available for future operations, acquisitions, dividends, or other uses, making us more vulnerable to economic or industry downturns, including interest rate increases;
•increasing the risk that we will need to sell assets, possibly on unfavorable terms, to meet payment obligations; or
•increasing the risk that we may not meet the financial covenants contained in our debt agreements or timely make all required debt payments.
The occurrence of any of these events could adversely affect our results of operations and our financial condition. See “ – The impact from, and measures taken to address communicable diseases, such as Covid-19, HIV/AIDS and tuberculosis, pose risks to us in terms of productivity and costs and may adversely affect our people, and may impact our business continuity, operating results, cash flows and financial condition.''
Our ability to service our debt also depends on the amount of our indebtedness.
In May 2022 we entered into a US$400 million sustainability-linked syndicated term and revolving credit facility, a R2.5 billion sustainability-linked revolving credit facility, as well as a R1.5 billion Green term loan. The first two facilities have a three-year term and include two extension options of one year each and the last facility has a six and one-half year term. The second extension option on the US$400 million and the R2.5 billion sustainability-linked loan was exercised during the year, extending the maturity date to May 2027. At June 30, 2024, US$100 million was drawn against the US$ facility but there was no amounts drawn against either of the Rand facilities. See Item 5: “Operating and Financial Review and Prospects - Liquidity and Capital Resources - Cash flows from financing activities” and “- Outstanding Credit Facilities and Other Borrowings”.
In the near term, we expect to manage our liquidity needs from cash generated by our operations, cash on hand, committed and unutilized facilities, as well as additional funding opportunities. However, if our cost of debt were to increase or if we were to encounter difficulties in obtaining financing in the future, our sources of funding may not match our financing needs, which could have a material adverse effect on our business, operating results and financial condition.
We are subject to the imposition of various regulatory costs, such as mining taxes and royalties, changes to which may have a material adverse effect on our operations and profits; our operations and financial condition could also be adversely affected by policies and legislation related to greater state intervention in the mining sector and potentially the expropriation of mining assets without compensation
With increasing resource nationalism in recent years, governments, communities, non-government organizations and trade unions in several jurisdictions have sought and, in some cases, have imposed greater participatory imposts on the mining industry. In South Africa, draft legislation has been proposed that would envisages greater state intervention in the mining industry, including the revision of existing royalties, the imposition of new taxes, an increase in the South African government’s holdings in mining companies and potentially the expropriation of mining assets without compensation. Such imposts, whether in the form of taxes, royalties and levies, interference in project management, mandatory social investment requirements, local content requirements or creeping expropriation, are an increasing feature of the global mining industry and could materially adversely affect our business, operating results and financial condition. See Item 4 "Business Overview - Land expropriation", "- Assessed losses", "- Base erosion and profit shifting" and "- Renewable energy".
Australia
Harmony Gold Australia Pty Ltd ("HGA") is the head company of the South-east Asia Group, and the holding company for the Harmony assets held in Australia and PNG. HGA acquired 100% of the shares in Copper Mountain in December 2022 which included acquisition of the Eva Copper Project in Queensland, Australia.
Australia operates a system of self-assessment with regard to taxation and the Australian Taxation Office ("ATO") accepts the information given in relevant filings and disclosure as complete and accurate. The ATO will review information provided if they have reason to think information provided is not complete or accurate or if a transaction is considered high risk.
We believe that the key risks in relation to the Australian operations are:
•Transfer pricing risk in relation to interest free loans advanced from HGA to its PNG subsidiaries and related parties: The appropriateness of the interest free nature of the loans is currently subject to an ATO review. Harmony has provided its response and analysis to the ATO pending feedback; and
•Ability to use tax losses inherited by Copper Mountain against taxable income of the Eva Copper Project once it reaches production: ATO is likely to review and assess whether the relevant business continuity tests are satisfied to allow these losses to be utilized and deducted against project income in the future.
Papua New Guinea
In PNG, taxes take a variety of forms.
Taxes on Group companies are governed by the PNG Income Tax Act 1959 ("PNG Income Tax Act") and the Goods and Services Tax Act 2003, while under the PNG Mining Act and the Mineral Resources Authority Act 2018, holders of mining leases must pay royalties to the PNG Government based on production (currently 2% of the net proceeds of sale of minerals).
In addition to the PNG Government’s entitlement to taxes and royalties, all tenement holders pay area-based rents and mining lease holders pay a mineral production levy (currently 0.5% of assessable income derived by a producer of minerals) to the PNG MRA. In addition, CEPA imposes "user pays" levies.
PNG exploration licenses each contain a condition that the PNG Government may, at any time prior to the commencement of mining, purchase an equitable interest of up to 30% in any mineral discovery arising from the license at a price pro rata to the accumulated exploration expenditure. The PNG Government has indicated that it intends to exercise the PNG Government's option in full in respect of the Wafi-Golpu Project.
Since 2009, the mining regime in PNG has been the subject of a comprehensive ongoing review involving various PNG Government agencies. Over that period, various draft revisions of the PNG Mining Act have been submitted to the PNG CORE for its comments, most recently in 2018 and 2020. Proposed revisions include significant increases in the rate of royalties payable to the PNG Government, and changes to the terms governing the PNG Government's option to purchase an interest in a mineral discovery. If enacted and applied to our operations and projects in PNG, these revisions could have a material adverse effect on our business, operating results and financial condition. We continue to engage with the PNG Government and relevant regulators on these matters, indirectly through the offices of PNG CORE, and directly with the PNG MRA, the CEPA and the DMPGM.
A new Income Tax Act (to simplify and modernize the PNG income law) is in the process of being drafted and is expected to be passed in the 2024 budget, with an expected commencement date of January 1, 2025. If enacted, there will be a transition period of 13 months given to taxpayers to enable them to familiarize themselves with the new Income Tax Act and its requirements. The draft regulations are expected to be ready in the first half of 2024 and will be circulated for consultation. The income tax act will include the introduction of a capital gains tax, which is expected to tax capital gains at a rate of 15%.
To date, the key outstanding issue is the transitional rules for treatment of existing Mining Capital and Exploration Expenditure, which rules are still to be written. We understand that these rules will be drafted and included in the final draft of the legislation that is currently in progress.
The effect of the proposals, measures and developments described above, as well as the imposition of additional restrictions, obligations, operational costs, taxes or royalty payments, could have a material adverse effect on Harmony’s business, operating results and financial condition.
Sales of large quantities of our ordinary shares and ADSs, or the perception that these sales may occur, could adversely affect the prevailing market price of such securities
The market price of our ordinary shares or ADSs could fall if large quantities of ordinary shares or ADSs are sold in the public market, or there is a perception in the marketplace that such sales could occur. Subject to applicable securities laws, holders of our ordinary shares or ADSs may decide to sell them at any time. The market price of our ordinary shares or ADSs could also fall as a result of any future offerings it makes of ordinary shares, ADSs or securities exchangeable or exercisable for our ordinary shares or ADSs, or the perception in the marketplace that these sales might occur. We may make such offerings of additional ADS rights, letters of allocation or similar securities from time to time in the future.
As we have a significant number of shares that may be issued in terms of the employee share schemes, our ordinary shares are subject to dilution
We have a Deferred Share Plan as part of our Total Incentive Plan that came into effect in 2020. Our shareholders have authorized up to 25,000,000 shares of the issued share capital to be used for this plan.
As a result, shareholders’ equity interests in us are subject to dilution to the extent of the potential future exercises of the options through the share plan.
A new Employee share ownership plan ("ESOP'') was implemented in 2024 and shares have been issued.
The continued status of South Africa’s credit rating as non-investment grade, as well as the recent grey-listing of South Africa by the FATF, may have an adverse effect on our ability to secure financing on favorable terms
Adverse credit ratings deter some investors, threatening our ability to create and protect value in the long term, and affecting our market capitalization. Over the past several years, the slowing economy, rising sovereign debt, escalating labor disputes and the structural challenges facing the mining industry and other sectors have resulted in the downgrading of South Africa’s sovereign credit ratings.
Currently, South Africa’s sovereign credit is rated as non-investment grade: Fitch has assigned South Africa a sovereign credit rating of BB-, Moody’s has assigned South Africa a sovereign credit rating of Ba2 and S&P has assigned South Africa a sovereign credit rating of BB-. Most recently, on January 19, 2024, Fitch affirmed South Africa’s sovereign credit rating as BB- and maintained the outlook as stable. Previously:
•on November 17, 2023, S&P affirmed South Africa’s sovereign credit rating as BB- and maintained the outlook as stable;
•in February 2023, the FATF, an inter-governmental body, published their 'Mutual Evaluation Report' that highlighted several shortcomings of the criminal justice system insofar it relates to the prosecution and conviction of commercial crimes as well as acts of money laundering. South Africa was classified as a country under increased monitoring (also referred to as "grey-listing"); and
•on April 1, 2022, Moody’s affirmed South Africa’s sovereign credit rating as Ba2 and upgraded the outlook to stable.
The continued status of South Africa’s credit rating as non-investment grade and any downgrading by any of these agencies, as well as the grey-listing by the FATF, may adversely affect the South African mining industry and our business, operating results and financial condition by making it more difficult to obtain external financing or could result in any such financing being available only at greater cost or on more restrictive terms than might otherwise be available.
Australia’s credit rating outlook was affirmed as stable in September 2023 with long-term foreign and local currency sovereign credit ratings of AAA, and while PNG’s credit rating outlook was affirmed as stable in June 2024 with long-term foreign (B-) and local currency (B) sovereign credit ratings. While impact and risk is currently primarily driven by the South Africa’s sovereign risk rating, once the Eva Copper Project and the Wafi-Golpu Project are completed and operational, management anticipations that reliance and dependencies on South Africa’s sovereign credit ratings may change.
We may not pay dividends or make similar payments to our shareholders in the future
Our dividend policy is to pay cash dividends only if funds are available for that purpose; specifically our policy is set at 20% of net free cash subject to future major capital expenditure and meeting solvency and liquidity requirements as well as current banking covenants. Whether funds are available depends on a variety of factors, including the amount of cash available, our capital expenditures and other current or future anticipated cash requirements existing at the time. Under South African law, we are only entitled to pay a dividend or similar payment to shareholders if we meet the solvency and liquidity tests set out in the Companies Act, 71 of 2008 (as amended) including its Regulations (the “Companies Act”), and our current Memorandum of Incorporation. Cash dividends or other similar payments may not be paid in the future. It should be noted that there is currently a 20% withholding tax on dividends declared by South African resident companies to non-resident shareholders or non-resident ADS holders.
In addition, our foreign shareholders face investment risk from currency exchange rate fluctuations affecting the market value of any dividends or distributions paid by us.
The profitability of our operations, and cash flows generated by those operations, are affected by changes in the price of gold and other metals; a fall in the gold price below our cash cost of production and capital expenditure required to maintain production for any sustained period may lead to losses and require us to curtail or suspend certain operations
Substantially all of our revenues come from the sale of gold. Historically, the market price for gold has fluctuated widely and has been affected by numerous factors, over which we have no control, including:
•demand for gold for industrial uses, jewelry and investment;
•international or regional social, political and economic events and trends;
•strength or weakness of the US dollar (the currency in which gold prices generally are quoted) and of other currencies;
•monetary policies announced or implemented by central banks, including the US Federal Reserve;
•financial market expectations on the rate of inflation;
•changes in the supply of gold from production, divestment, scrap and hedging;
•interest rates;
•speculative activities;
•gold hedging or de-hedging by gold producers;
•actual or expected purchases and sales of gold bullion held by central banks or other large gold bullion holders or dealers; and
•production and cost levels for gold in major gold-producing nations, such as South Africa, China, the United States and Australia.
In addition, current demand and supply affects the price of gold, but not necessarily in the same manner as current demand and supply affect the prices of other commodities. Historically, gold has retained its value in relative terms against basic goods in times of inflation and monetary crisis. As a result, central banks, financial institutions and individuals hold large amounts of gold as a store of value and production in any given year constitutes a very small portion of the total potential supply of gold. However, as gold has historically been used as a hedge against unstable or lower economic performance, improved economic performance may have a negative impact on the price for gold. Since the potential supply of gold is large relative to mine production in any given year, normal variations in current production will not necessarily have a significant effect on the supply of gold or its price. Uncertainty in global economic conditions has impacted the price of gold significantly in the past and continued to do so in fiscal 2024. These include high inflation and interest rates,as well as increasing geopolitical tension which is currently creating increased demand for gold by central banks amongst others which may continue to result in increased volatility.
The volatility of gold prices is illustrated in the table, which shows the annual high, low and average of the afternoon London bullion market fixing price of gold in US dollars for each of the past ten years:
Annual gold price: 2015 - 2024
Price per ounce (US$)
Calendar year
High
Low
Average
2015
1,296
1,049
1,160
2016
1,366
1,077
1,251
2017
1,346
1,151
1,253
2018
1,355
1,178
1,268
2019
1,546
1,270
1,393
2020
2,067
1,474
1,770
2021
1,943
1,684
1,799
2022
2,039
1,629
1,800
2023
2,135
1,804
1,953
2024 (up to and including October 25, 2024)
2,751
1,985
2,330
On October 25, 2024, the afternoon fixing price of gold on the London bullion market was US$2,731.
While the price volatility is difficult to predict, if gold prices should fall below our cash cost of production and capital expenditure required to sustain production and remain at these levels for any sustained period, we may record losses and be forced to curtail or suspend some or all of our operations, which could materially adversely affect our business, operating results and financial condition.
In addition, we would also have to assess the economic impact of low gold prices on our ability to recover any losses that may be incurred during that period and on our ability to maintain adequate reserves. The use of lower gold prices in reserve calculations and life-of-mine ("LOM") plans could also result in material impairments of our investment in gold mining properties or a reduction in our reserve estimates and corresponding restatements of our reserves and increased amortization, reclamation and closure charges.
Fluctuations in input production prices linked to commodities may adversely affect our operational results and financial condition
Fuel, energy, and consumables, including diesel, heavy fuel oil, chemical reagents, explosives, tires, steel, and mining equipment, contribute a significant portion of a mining company's operating costs and capital expenditures. In 2024, the price of Brent crude oil exhibited a volatile though downward sloping trend in recent months, due to weakness in the Chinese economy, which pressured the demand for crude oil.
The latest monthly average data indicates that Brent crude oil prices decreased by a significant 21.0% on a year-on-year basis to average at US$74.29 per barrel in September 2024. When considering quarterly data, Brent crude oil prices averaged at US$80.15 per barrel in the third quarter of 2024, a significant decrease of 7.6% when compared to the average of US$86.75 per barrel recorded during the third quarter of 2023.
When highlighting recent daily movements, Brent crude oil futures prices decreased by more than 4.0% to trade at a near two-week low of US$73.95 per barrel October 15, 2024. The decline in oil prices was driven by a combination of factors, including the release of weaker global oil demand forecasts for 2024 from both the Organization of the Petroleum Exporting Countries (''OPEC'') and the International Energy Agency (''IEA''), with China accounting for much of the downgrades. The IEA forecasts a significant oil market surplus in the coming year, as public inventory exceeded 1.2 billion barrels; along with spare capacity from OPEC+ at historic highs. The agency also lowered its global oil demand growth forecast for this year amid weak demand from China. Global oil demand is expected to increase by 860 000 barrels per day (''bpd'') in 2024, which is 40 000 bpd less than the previous forecast. Furthermore, oil demand is expected to increase by 1.0 million bpd in 2025, an upward adjustment of nearly 50,000 bpd from the previous forecast.
The conflict in the Middle East and the potential impact on oil supply from Iran remain a concern.
Fluctuations in oil has a substantial impact on both operating costs and capital expenditure estimates. In the absence of other economic fluctuations, such price variations have the potential to cause significant changes in the overall expenditure estimates for new mining projects. In certain cases, these changes could render specific projects non-viable, which would have a material adverse effect on our business, operating results, and financial condition.
Foreign exchange fluctuations could have a material adverse effect on our operational results and financial condition
Gold is priced throughout the world in US dollars and, as a result, our revenue is realized in US dollars, but most of our operating costs are incurred in Rand and other non-US currencies, including the Australian dollar and Kina. From time to time, we may implement currency hedges intended to reduce exposure to changes in the foreign currency risk, which we started doing in fiscal 2016 and will continue as long as it remains part of our risk management policy. This hedging strategy is currently implemented up to 25% of our estimated exposure, and our unhedged foreign exchange exposure will continue to be subject to market fluctuations. Any significant and sustained appreciation of the Rand and other non-US currencies against the dollar will materially reduce our Rand revenues and overall net income, which could materially adversely affect our operating results and financial condition. See Item 11 – “Quantitative and Qualitative Disclosure about Market Risk”.
Fluctuations in the exchange rate of currencies may reduce the market value of our securities, as well as the market value of any dividends or distributions paid by us
We have historically declared all dividends in South African Rand. As a result, exchange rate movements may have affected the US dollar value of these dividends, as well as of any other distributions paid by the Depositary to holders of ADSs.
Furthermore, our Memorandum of Incorporation allows for dividends and distributions to be declared in any currency at the discretion of the board of directors or the Company’s shareholders at a general meeting. If, and to the extent that, we opt to declare dividends and distributions in US dollars, exchange rate movements will not affect the US dollar value of any dividends or distributions. Nevertheless, the value of any dividend or distribution in Australian dollars, Kina, British pounds or South African Rand will continue to be affected. If, and to the extent that, dividends and distributions are declared in South African Rand in the future, exchange rate movements will continue to affect the Australian dollar, Kina, British pound and US dollar value of these dividends and distributions. This may reduce the value of the Company’s securities to investors. Additionally, the market value of our securities as expressed in Australian dollars, Kina, British pounds, US dollars and South African Rand will continue to fluctuate in part as a result of foreign exchange fluctuations.
Rising inflation and geopolitical risks may have a material adverse effect on our business, operating results and financial condition
While inflation in South Africa has fluctuated in a narrow band in recent years, remaining within or just outside the inflation range of 3% - 6% set by the SARB, it began to increase significantly in the latter half of fiscal 2022. At the end of fiscal 2022, 2023 and 2024, inflation was 7.4%, 5.4% and 5.1%, respectively, in South Africa. Prolonged periods of inflation may impact our profitability by negatively impacting our fixed costs and expenses, including raw material, transportation and labor costs. If these increased costs are not offset by an increase in gold prices, they could have a material adverse effect on Harmony’s business, operating results and financial condition.
Geopolitical risks and conflicts around the world could further disrupt supply chains and create additional inflationary pressures. Specifically, Russia’s invasion of Ukraine has led to sanctions, travel bans, and asset or financial freezes being levied by the governments of the United States, the EU, the United Kingdom and other jurisdictions against Russian entities and individuals, with additional sanctions being proposed. These sanctions and other measures have had a significant impact on commodity prices, including increased oil, gas, steel and gold prices. Additionally, ongoing conflicts in the Middle East may cause increased inflationary pressures and could cause general global economic conditions to deteriorate. The oil price is a driver of a number of input costs, including diesel and transport costs, while gas prices have an impact on power costs, and other commodity prices drive direct mining and processing costs. These inflationary pressures could also cause interest rates and the
cost of borrowing to increase and could have a material adverse effect on the financial markets and economic conditions throughout the world. The extent and duration of the invasion, sanctions and resulting market disruptions are impossible to predict. Any inflationary impacts or disruptions caused by the invasion or resulting sanctions may have a material adverse effect on Harmony’s business, operating results and financial condition, and may magnify the impact of other risks described in this annual report.
At the end of fiscal 2022, 2023 and 2024, inflation was 5.25%, 2.3% and 5.0% (forecast) respectively, in PNG and 6.1%, 6.0% and 3.8% respectively, in Australia.
Our results of operations, profits and financial condition could be adversely affected to the extent that cost inflation is not offset by devaluation in operating currencies or an increase in the price of gold.
Investors may face liquidity risk in trading our ordinary shares on the JSE Limited
The primary listing of our ordinary shares is on the JSE Limited. Historically, the trading volumes and liquidity of shares listed on the JSE have been low relative to other major markets. The ability of a holder to sell a substantial number of our ordinary shares on the JSE in a timely manner, especially in a large block trade, may be restricted by this limited liquidity. See Item 9: “The Offer and Listing - Markets - The Securities Exchange in South Africa.”
Shareholders outside South Africa may not be able to participate in future issues of securities (including ordinary shares)
Securities laws of certain jurisdictions may restrict our ability to allow participation by certain shareholders in future issues of securities (including ordinary shares) carried out by us or an affiliate. In particular, holders of our securities who are located in the United States (including those who hold ordinary shares or ADSs) may not be able to participate in securities offerings by or on behalf of us unless a registration statement under the Securities Act is effective with respect to such securities or an exemption from the registration requirements of the Securities Act is available. Securities laws of certain other jurisdictions may also restrict our ability to allow the participation of all holders in such jurisdictions in future issues of securities. Holders who have a registered address or are resident in, or who are citizens of, countries other than South Africa should consult their professional advisors as to whether they require any governmental or other consents or approvals or need to observe any other formalities to enable them to participate in any offering of our securities.
Global, social, political and economic conditions could adversely affect the profitability of our operations
Our operations and performance depend on global economic conditions. Global economic conditions remain fragile with significant uncertainty regarding recovery prospects, level of recovery and long-term economic growth effects. A global economic downturn may have follow-on effects on our business. These could include:
•key suppliers or contractors becoming insolvent, resulting in a break-down in the supply chain;
•a reduction in the availability of credit which may make it more difficult for us to obtain financing for our operations and capital expenditures or make that financing more costly;
•exposure to the liquidity and insolvency risks of our lenders and customers; or
•the availability of credit being reduced, which may make it more difficult for us to obtain financing for our operations and capital expenditure or make financing more expensive.
Coupled with the volatility of commodity prices as well as the rising trend of input costs, such factors could result in initiatives relating to strategic alignment, portfolio review, restructuring and cost-cutting, temporary or permanent shutdowns and divestments. Further, sudden changes in a LOM plan or the accelerated closure of a mine may result in the recognition of impairments and give rise to the recognition of liabilities that are not anticipated.
Due to the ongoing geopolitical tensions and armed conflict between Russia and Ukraine following Russia’s military invasion, various sanctions have been imposed on Russia by the United States, EU, United Kingdom, and other jurisdictions. Although our direct commercial interests in Russia, Ukraine, and affected areas are limited, these sanctions, any further restrictions, and potential retaliatory actions by Russia or other nations have contributed to a sharp rise in oil and energy costs, which are significant input expenses for our operations.
The conflict and the retaliatory measures already taken, and that could be imposed in the future by the United States, EU, United Kingdom, and other governments have escalated global security concerns. This escalation raises the risk of broader regional or global conflict and could have a lasting impact on regional and global economies, any or all of which could adversely impact our business and financial performance.
In addition to the Russia-Ukraine conflict, escalating tensions in the Middle East, particularly recent conflicts and instability, present further geopolitical risks that may impact Harmony. Disruptions in this region, which is a crucial supplier of global energy, could drive up oil and energy prices even more, intensifying our operational costs. Furthermore, heightened instability may affect global supply chains, potentially delaying essential materials and equipment critical to our operations. These dynamics also increase the likelihood of broader regional or international conflicts, further straining markets and potentially impacting the global economy, which in turn could adversely affect our business performance and strategic planning.
In addition to the potentially adverse impact on the profitability of our operations, any uncertainty on global economic conditions may also increase volatility or negatively impact the market value of our securities. Any of these events could materially adversely affect our business, operating results and financial condition.
Breaches in our IT security processes and violations of data protection laws may adversely impact our business activities and lead to public and private censure, regulatory penalties, fines and/or sanctions and may damage our reputation
We maintain global IT systems to support our business activities. Our IT systems may experience service outages that may adversely impact our business activities. This includes potential cybercrime and disruptive cyber attacks. Our vulnerability to such cyber-attacks could also be increased due to a proportion of our employees working remotely. The sophistication and magnitude of cybersecurity incidents are growing and include malicious software, attempts to gain unauthorized access to data and other electronic security and protected information breaches that could lead to production downtimes, operational delays, the compromising of confidential or otherwise protected information, destruction or corruption of data, other manipulation or improper use of Harmony’s IT systems or financial losses from remedial actions. See Item 16K: ''Cybersecurity''.
We may also adopt AI and other emerging technologies into its own IT systems or integrate AI within its mining operations. Such tools may additionally be utilized by our contractors and third parties that we conduct business with. The use of AI may not meet the existing and rapidly evolving regulatory standards and could introduce security risks that may expose confidential data, lead to the loss of competitive information and result in operational failures. Limited expertise and skills shortages could prevent Harmony from effectively using or promptly implementing AI and other technologies.
A sharp increase in ransomware-related threats has also been recorded throughout the mining industry, with several high-profile organizations experiencing disruptions. The information security management system, or ISMS, protecting our IT and operating technology ("OT") systems may not prevent future malicious action, including denial-of-service attacks, ransomware attacks or fraud by individuals, groups or organizations resulting in the unavailability of IT systems and data, theft of commercially sensitive data, including commercial price outlooks, mergers and acquisitions and divestment transactions, misappropriation of funds and disruptions to our business operations, the occurrence of any of which could have a material adverse effect on our business and results of operations.
South Africa’s comprehensive privacy law, the Protection of Personal Information Act, 4 of 2013 (the “POPIA”), became effective on July 1, 2020. All processing of personal information was required to comply with the POPIA’s provisions by July 1, 2021. Failure to comply with POPIA may lead to penalties and fines between R1 million – R10 million and/or imprisonment. We may also have insufficient insurance coverage for any data protection breaches, including concerning POPIA. See “– Risks Related to Our Operations and Business - Fluctuations in insurance cost and availability could adversely affect our operating results, and our insurance coverage may prove inadequate to satisfy future claims”.
In Australia, our data practices must comply with the Privacy Act 1988 (Cth) ("Australian Privacy Act") and state-based surveillance laws. The Australian Privacy Act regulates the way an individual’s personal information is handled. Under the Australian Privacy Act, there is a mandatory scheme requiring entities to report data breaches to the Office of the Australian Information Commissioner (“OAIC”) and affected individuals if the breach is likely to result in serious harm to an individual whose personal information is involved. Following a series of high profile data breaches in 2022 involving both government agencies and public companies, the Australian Parliament passed the Privacy Legislation Amendment (Enforcement and Other Measures) Act 2022, which introduced significantly increased penalties for serious and/or repeated privacy breaches and increased the OAIC’s ability to resolve breaches.
On May 25, 2018, the General Data Protection Regulation (“GDPR”) came into force. The GDPR is an EU-wide framework for protecting personal data being processed in or outside the EU based on certain application criteria. The GDPR enhances existing legal requirements through several new rules, including more substantial rights for data subjects’ cross-border transfer of information and mandatory data breach notification requirements, and increases penalties for non-compliance. Failure to comply with the GDPR may lead to a fine of up to four percent of a company’s worldwide turnover or up to €20 million.The GDPR was implemented in law of England and Wales by the European Union (Withdrawal) Act 2018 (the “UK GDPR”), which may require a fine of up to £17,500,000, or four percent, of the total worldwide annual turnover of the preceding financial year, whichever is higher. Furthermore, both the GDPR and the UK GDPR have a scope that extends beyond the borders of the European Union and the United Kingdom, respectively, and therefore do not only affect EU or UK operations.
The interpretation and application of consumer and data protection laws in South Africa, the United States, Australia, Papua New Guinea and elsewhere are ambiguous and evolving. It is possible that these laws may be interpreted and applied in a manner that is inconsistent with our data practices. Complying with these various laws is complex and could cause Harmony to incur substantial costs or require us to change our business practices in a manner adverse to our business.
Failure to comply with laws, regulations, codes and standards, policies and procedures or contractual obligations may lead to fines and penalties, loss of licenses or permits, may negatively affect our financial results, and adversely affect our reputation
We operate in multiple jurisdictions, including those with less developed political and regulatory environments, and within numerous and complex frameworks. Our governance and compliance processes may not prevent potential breaches of law, accounting principles or other governance practices.
Our Code of Conduct and Behavioral Code, among other policies and procedures, standards and guidance, and training thereon may not prevent instances of unethical or unlawful behavior, including bribery or corruption, nor do they guarantee compliance with legal and regulatory requirements, and breaches may not be detected by management.
To the extent that we suffer from any actual or alleged breach or breaches of relevant laws, including South African anti-bribery and corruption legislation or the US Foreign Corrupt Practices Act of 1977 under any circumstances, they may lead to investigations and examinations, fines, penalties, imprisonment of officers, litigation, and loss of operating licenses or permits,
suspensions of operations, negative effects on our reported financial results and may damage our reputation. Such sanctions could have a material adverse impact on our business, operating results and financial condition.
Investors in the United States may have difficulty bringing actions, and enforcing judgments, against us, our directors and our executive officers based on the civil liabilities provisions of the federal securities laws or other laws of the United States or any state thereof
We are incorporated in South Africa. Each of our directors and executive officers (and our independent registered public accounting firm) resides outside the United States. Substantially all of the assets of these persons and substantially all our assets are located outside the United States. As a result, it may not be possible for investors to enforce a judgment against these persons or ourselves obtained in a court of the United States predicated upon the civil liability provisions of the federal securities or other laws of the United States or any state thereof. A foreign judgment is not directly enforceable in South Africa, but constitutes a cause of action which may be enforced by South African courts provided that:
•the court that pronounced the judgment had jurisdiction to entertain the case according to the principles recognized by South African law with reference to the jurisdiction of foreign courts;
•the judgment is final and conclusive;
•the judgment has not lapsed;
•the recognition and enforcement of the judgment by South African courts would not be contrary to public policy, including observance of the rules of natural justice which require that the documents initiating the United States proceeding were properly served on the defendant and that the defendant was given the right to be heard and represented by counsel in a free and fair trial before an impartial tribunal;
•the judgment does not involve the enforcement of a penal or revenue law; and
•the enforcement of the judgment is not otherwise precluded by the provisions of the Protection of Business Act 99 of 1978, as amended, of the Republic of South Africa.
US securities laws do not require us to disclose as much information to investors as a US company is required to disclose, and investors may receive less information about us than they might otherwise receive from a comparable US company
We are subject to the periodic reporting requirements of the SEC and the NYSE that apply to “foreign private issuers”. The periodic disclosure required of foreign private issuers under applicable rules is more limited than the periodic disclosure required of US issuers. Investors may receive less timely financial reports than they otherwise might receive from a comparable US company or from certain of our peers in the industry. This may have an adverse impact on investors’ abilities to make decisions about their investment in us.
ITEM 4. INFORMATION ON THE COMPANY
A. HISTORY AND DEVELOPMENT OF THE COMPANY
Harmony Gold Mining Company Limited is a public limited company incorporated in South Africa, with its registered office at Randfontein Office Park, Corner Main Reef Road and Ward Avenue, Randfontein, 1759, telephone number +27 11 411 2000. Harmony was incorporated and registered as a public limited company in South Africa under registration number 1950/038232/06 on August 25, 1950. Harmony Gold Mining Company Limited is the ultimate holding company of the Group.
The information set forth under the headings:
•“– Harmony – About Harmony” on pages 4 to 5;
•“– Harmony – Business model” on pages 13 to 14;
•“– Delivering profitable ounces – Operational performance on pages 50 to 88; and
•“– Delivering profitable ounces – Exploration and projects” on pages 89 to 90
of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference. Also see note 19 “Investments in Associates” and note 20 “Investment in Joint Operations” of our consolidated financial statements, set forth beginning on page F-1.
For information concerning our principal capital expenditures currently in progress, including the distribution of these investments geographically and the method of financing, refer to Item 4: "Information on the Company – Business Overview –Capital Expenditures” and Item 5: “Operating and Financial Review and Prospects – Liquidity and Capital Resources”.
In fiscal 2024, we did not receive any public takeover offers by third parties or make any public takeover offers in respect of other companies’ shares.
The SEC maintains an internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC (www.sec.gov). As a foreign private issuer, we are exempt from the rules under the Exchange Act that prescribe the furnishing and content of proxy statements to shareholders. Our corporate website is www.harmony.co.za.
•During August 2024, management received information relating to the preliminary results of the exploration drilling program conducted for Target North. These preliminary results indicated that a decrease of the mineral resource estimation attributable to Target North is likely. The decrease in the attributable ounces as indicated by the preliminary results constitutes an indication of impairment. The indicator is considered to be an adjusting event as it provides more reliable information of circumstances that already existed as at June 30, 2024. Therefore an impairment assessment was performed for Target North at the reporting date.
•On July 30, 2024, the Queensland Government announced its decision to provide conditional grant funding of A$20.7 million for Eva Copper under the Mount Isa Mining Acceleration Programme. The grant is subject to a number of conditions, including that Harmony reach a positive final investment decision by January 2026. This constitutes a non-adjusting subsequent event. Management is still assessing the 2025 financial year accounting treatment and impact of the government grant
•On September 4, 2024, a final dividend of 94 SA cents was declared, which was paid on October 14, 2024.
•Effective from September 1, 2024, Harmony has entered into an agreement with RMA Life Assurance Company Limited ("RMA") to transfer the liability in respect of the medical promise and medical aid subsidy, and the administration thereof, from Harmony to RMA. During September 2024, Harmony will transfer a once-off amount of R350 million to RMA as a single premium for the transfer of the on-balance sheet liability of R290 million. Once Harmony and RMA have fulfilled all the relevant clauses per the contract, the liability will be derecognized.
•On October 23, 2024, Harmony fulfilled all its obligations stemming from the streaming arrangement with Franco Nevada. See note 29 “Streaming arrangements” to our consolidated financial statements set forth beginning on page F-1, for further information on the Franco-Nevada streaming arrangement. Going forward, all gold revenue generated by the Mine Waste Solutions operation will be based on quoted market prices. This constitutes a non-adjusting subsequent event.
B. BUSINESS OVERVIEW
The information set forth under the headings:
•“– Harmony – About Harmony” on pages4 to 5;
•"– Harmony – Our strategy" on pages 6 to 12;
•"– Harmony – Business model" on pages13 to 14;
•“– Harmony – Our operating context” on pages 24 to 30;
•"– Harmony – Our risks and opportunities" on pages 31 to 35;
•"– Harmony – Material matters" on pages 36 to 43;
•"– Harmony – Stakeholder engagement" on pages 44 to 49;
•“– Delivering profitable ounces – Operational performance" on pages 50 to 88;
•“– Delivering profitable ounces – Exploration and projects” on pages 89 to 90;
•“– Environment" on pages 91 to 164; and
•“– Social” on pages 165 to 211
of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference.
Capital Expenditures
Capital expenditures for all operations and capitalized exploration incurred for fiscal 2024 amounted to R8,327 million, compared with R7,598 million in fiscal 2023. During fiscal 2024, capital expenditures at Hidden Valley accounted for 19% of the total, with Mine Waste Solutions for 18%, Moab Khotsong for 16%, Mponeng for 11% and Doornkop at 8%. During fiscal 2023, capital expenditures at Hidden Valley accounted for 23% of the total, with Moab Khotsong for 15%, Mine Waste Solutions for 12%, Doornkop and Mponeng each at 9%.
The focus of our capital expenditures in recent years has been underground development, major projects such as Zaaiplaats and Kareerand, as well as plant improvement and upgrades. During fiscal 2024, the capital expenditure was funded from Harmony's cash generated by operations. See Item 5: “Operating and Financial Review and Prospects - Liquidity and Capital Resources”.
We have budgeted approximately R10,781 million, excluding capital allocated for renewables, other international projects, Eva Copper and Wafi-Golpu, for operational capital expenditures in fiscal 2025. We currently expect that our planned operational capital expenditures will be financed from cash generated by operations and new borrowings as needed. Details regarding the capital expenditure for each operation is included in the table below.
2 Includes capital expenditure for the life-of-mine extension project
3 Includes capitalized stripping costs.
Regulation
Mineral Rights – South Africa
MPRDA
The MPRDA was promulgated as effective legislation on May 1, 2004 and is the primary legislation regulating the mining industry in South Africa. Pursuant to the MPRDA, the South African government is the custodian of South Africa’s mineral and petroleum resources and has a duty to administer these resources for the benefit of all South Africans. As a consequence, an owner of the surface rights has no claim to the minerals found in, on or under the surface of his or her land. The MPRDA extinguished private ownership of minerals. The DMRE is the government body which, through its regional offices, implements and administers the MPRDA.
Any person (including the owner of the surface rights) who wishes to exploit mineral resources in South Africa is required to first apply for and obtain the appropriate right under the MPRDA. The Minister is authorized to grant or refuse applications for rights under the MPRDA. Provided that an applicant meets all the requirements relating to the right for which the applicant has applied, the Minister is obliged to grant the right. Once the right is granted in terms of the MPRDA and registered in terms of the Mining Titles Registration Act, 16 of 1967, the holder holds a limited real right in respect of the mineral and the land to which such right relates.
In accordance with the MPRDA, the holder of a mining right must comply with the terms of the right, the provisions of the MPRDA, the environmental authorization (issued under the NEMA), the mining work program and the SLP approved as part of the right. The SLP relates to the obligations placed on the mining right holder to, among other things, train employees of the mine in accordance with prescribed training methodologies, achieve employment equity and human resource development in the mining company, improve housing and living conditions of employees and set up local economic development projects.
Compliance with each of the provisions of the MPRDA, environmental authorization, mining work program and SLP is monitored by submission of monthly, bi-annual and annual returns and reports by the holder of the right to the DMRE in accordance with the provisions of the MPRDA and the right. A prospecting or mining right can be suspended or canceled if the holder conducts mining operations in breach of the MPRDA, a term or condition of the right or an EMPr, or if the holder of the right submits false, incorrect or misleading information to the DMRE. The MPRDA sets out a process which must be followed before the Minister is entitled to suspend or cancel the prospecting or mining right.
We have been working on our program of licensing since 2004, which involved the compilation of a mineral assets register and the identification of all of our economic, mineral and mining rights. We actively carry out mining and exploration activities in all of our material mineral rights areas in South Africa. In the period following the MPRDA taking effect, we applied for and were granted conversion of all of our "old order" mining rights into "new order" mining rights in terms of the MPRDA.
Our strategy has been to secure all strategic mining rights on a region-by-region basis, which we have achieved as we have secured all “old order" mining rights and validated existing mining authorizations. All mining operations have valid mining rights in terms of the MPRDA and we now have to continue complying with the required monthly, annual and bi-annual reporting obligation to the DMRE.
On June 21, 2013, the Minister introduced the MPRDA Bill into Parliament. The DMRE briefed the National Assembly's Portfolio Committee on Mineral Resources in July 2013. The MPRDA Bill was passed by both the National Assembly and the National Council of Provinces (“NCOP”) on March 27, 2014. In January 2015, the former President, Jacob Zuma, referred the MPRDA Bill back to Parliament for reconsideration and on November 1, 2016, the Portfolio Committee on Mineral Resources
tabled non-substantial revisions to the MPRDA Bill in the National Assembly and a slightly revised version of the MPRDA Bill was passed by the National Assembly and referred to the NCOP. On March 3, 2017, the National Assembly passed certain minor amendments to the MPRDA Bill. The National Assembly referred the MPRDA Bill to the NCOP where the Select Committee received comments on the draft legislation. While the chairperson of the Select Committee had targeted January or February of 2018 to pass the legislation in August 2018, the Minister announced that, given certain concerns with the MPRDA Bill, his recommendation would be to withdraw it entirely. The South African Cabinet subsequently supported the Minister's proposal to withdraw the MPRDA Bill. While the MPRDA Bill was not formally withdrawn by Parliament, it lapsed on March 28, 2019. Although Parliament has the ability to revive a lapsed Bill, it seems unlikely that it will revive the MPRDA Bill given both the Minister's and Cabinet's support for its withdrawal.
Among other things, the MPRDA Bill, if promulgated, would achieve the following:
•Concentration of rights
The MPRDA Bill seeks to introduce a system whereby the Minister invites applications for prospecting rights, exploration rights, mining rights, technical co-operation permit, production rights and mining permits in respect of any area of land. Applicants for rights will no longer be able to rely on the "first come, first served" principle when submitting an application.
•Ownership of tailings created before May 1, 2004
The MPRDA provides that historic tailings are not regulated in terms of the MPRDA; however, the MPRDA Bill purports to amend the MPRDA so as to render historic tailings subject to regulation under the MPRDA, resulting in the South African government gaining custodianship of historic tailings.
•Transfers of interests in companies
The MPRDA Bill seeks to require the consent of the Minister for the transfer of any interest in an unlisted company or any controlling interest in a listed company where such companies hold a prospecting right or mining right.
•Mineral beneficiation
A key change is that the MPRDA Bill seeks to make it mandatory for the Minister to “initiate or promote the beneficiation of minerals and petroleum resources in the Republic of South Africa”. The MPRDA Bill affords the broad discretion over beneficiation, without providing any criteria under which such discretion should be exercised.
•Issue of a closure certificate
The MPRDA Bill envisages that a rights holder will remain liable for any latent or residual environmental and associated damage caused by prospecting and mining operations, even after (and notwithstanding) the issue of a closure certificate by the Minister. This means that a rights holder will no longer be indemnified from liability after the issue of a closure certificate.
There is a large degree of uncertainty regarding the changes that will be brought about in the unlikely event that the MPRDA Bill is revived and made law.
In 2023, the DMRE indicated that certain amendments to the MPRDA would be made. To this end, the DMRE convened a MPRDA Review Summit which was held on July 13, 2023 where a number of stakeholders were invited and participated in preparatory discussions aimed at establishing what aspects of the current MPRDA legislation need to be amended.
On July 11, 2024, during the DMRE 2024/25 Budget announcement following South Africa’s general elections, Minister Gwede Mantashe announced that the DMRE would be split into two separate Ministries: the Department of Mineral and Petroleum Resources and the Department of Electricity and Energy. In addition,the Minister indicated that the DMRE (as it still is currently) was in the process of drafting amendments to the MPRDA to address certain perceived deficiencies and to bring the legislation in line with international best practice. The proposed amendments have not yet been made public and it is not clear whether the DMRE intends to overhaul the MPRDA Bill in its entirety, or if its new draft amendments will be part of a revival of the lapsed MPRDA Bill.
More clarity on the impact of any suggested changes to the MPRDA would be obtained once the suggested MPRDA amendments have been circulated for public comment. The Minister stated in his July 11, 2024 speech that the incoming MPRDA amendments would form part of a wider review of the sector’s regulations policies. Illegal mining, retrenchments in the mining sector, mine health and safety, South Africa’s current licensing regime, and support for emerging and junior mining operations were cited as areas of the DMRE’s focus.
Mining Charter
The South African government has identified the South African mining industry as a sector in which significant participation by HDSAs is required. One of the objects of the MPRDA is to substantially and meaningfully encourage HDSAs to enter the mineral and petroleum industries and to benefit from the exploitation of the nation’s mineral and petroleum resources. In terms of section 100 of the MPRDA, the Minister was empowered to develop a broad-based socio-economic charter in order to set the framework for targets and time periods for giving effect to these objectives.
Among other things, the Original Charter stated that mining companies agreed to achieve 26% HDSA ownership of South African mining industry assets within 10 years (i.e. by the end of 2014). Ownership could comprise active involvement, through HDSA-controlled companies (where HDSAs own at least 50% plus one share of the company and have management control), strategic joint ventures or partnerships (where HDSAs own at least 25% plus one vote of the joint venture or partnership interest and there is joint management and control), collective investment vehicles, the majority ownership of which is HDSA based, or passive involvement, particularly through broad-based vehicles such as employee stock option plans.
The Original Charter was subsequently amended by the Amended Charter which included targets and timelines for HDSA participation in procurement and enterprise development, beneficiation, employment equity, human resources development, mine community development, housing and living conditions, sustainable development and growth of the mining industry and reporting (monitoring and evaluation). It required mining companies to achieve the following, among other things, by no later than December 31, 2014:
•have a minimum effective HDSA ownership of 26%;
•procure a minimum of 40% of capital goods, 70% of services and 50% of consumer goods from HDSA suppliers (i.e. suppliers in which a minimum of 25% + one vote of their share capital must be owned by HDSAs) by 2014 (exclusive of non-discretionary procurement expenditure);
•ensure that multinational suppliers of capital goods contribute a minimum of 0.5% of their annual income generated from South African mining companies into a social development fund from 2010 towards the socio-economic development of South African communities;
•achieve a minimum of 40% HDSA demographic representation at executive management (board) level, senior management (executive committee) level, core and critical skills, middle management level and junior management level;
•invest up to 5% of annual payroll in essential skills development activities; and
•implement measures to improve the standards of housing and living conditions for mineworkers by converting or upgrading mineworkers’ hostels into family units, attaining an occupancy rate of one person per room and facilitating home ownership options for all mineworkers in consultation with organized labor.
In addition, mining companies were required to monitor and evaluate their compliance with the Amended Charter and submit annual compliance reports to the DMRE. The "scorecard" attached to the Amended Charter made provision for a phased-in approach for compliance with the above targets over the five-year period ending on December 31, 2014. For measurement purposes, the scorecard allocated various weightings to the different elements of the Amended Charter. Failure to comply with the provisions of the Amended Charter would, according to its provisions, ostensibly amount to a breach of the MPRDA and could have resulted in the cancellation or suspension of a mining company’s mining rights.
In March 2015, the DMRE prepared an interim report of consolidated results of the self-assessment by reporting companies of compliance with the Amended Charter, reporting relatively broad compliance with the non-ownership requirements of the Amended Charter. However, the DMRE did not report the results of compliance with the HDSA ownership guidelines of the Amended Charter and noted that there was no consensus on certain principles applicable to the interpretation of the ownership element.
On March 31, 2015, the MCSA and the DMRE jointly agreed to approach the High Court of South Africa (Gauteng Division) to seek a declaratory order that would provide a ruling on the relevant legislation and the status of the Original Charter and the Amended Charter, including clarity on the status of previous empowerment (i.e., HDSA ownership) transactions concluded by mining companies and a determination on whether the ownership element of the Original Charter and the Amended Charter should be a continuous compliance requirement for the duration of the mining right as argued by the DMRE, or a once-off requirement as argued by the MSCA, on the “once empowered always empowered” principle. The MCSA and the DMRE filed papers in court (the "Main Application") and the matter was placed on the roll to be heard on March 15, 2016. On February 16, 2017, the High Court of South Africa (Gauteng Division) postponed the hearing of the application indefinitely to allow the MCSA and the South African government to engage in further discussion on this matter.
The Minister published the Broad-Based Black Socio-Economic Empowerment Charter for the South African Mining and Minerals Industry, 2017 ("2017 Mining Charter") which came into effect on June 15, 2017. The MCSA launched an urgent application in the High Court of South Africa (Gauteng Division) to interdict the implementation of the 2017 Mining Charter (the "Interdict Application") pending a judicial review application on the basis that it was unilaterally developed and imposed on the industry and that the process that was followed by the DMRE in developing the 2017 Mining Charter had been seriously flawed (the "2017 Review Application"). However, the Minister and the MCSA reached an agreement on September 13, 2017 under which the Interdict Application did not proceed as the Minister undertook to suspend the 2017 Mining Charter pending the outcome of the 2017 Review Application by the MCSA. The 2017 Review Application was subsequently indefinitely postponed by agreement between the DMRE and the MCSA on the basis that the MCSA had entered into a new round of discussions with the President of South Africa, Cyril Ramaphosa, and the Minister. On February 19, 2018, the High Court of South Africa (Gauteng Division) ordered that the DMRE and the MCSA also involve communities affected by mining activities in these new discussions relating to the 2017 Mining Charter.
When the 2017 Mining Charter was published, the MCSA re-enrolled the Main Application for hearing and the High Court of South Africa (Gauteng Division) hearing was held in December 2017.
On April 4, 2018, the High Court of South Africa (Gauteng Division) delivered its judgment (the "2018 Judgment"). The effect of the 2018 Judgement is that mining companies are not required to re-empower themselves after their HDSA shareholders have sold out and that the DMRE cannot rely on the provisions of the MPRDA to enforce compliance with the Amended Charter, unless the provisions which the DMRE seeks to enforce were made a term or condition of the mining right. The High Court of South Africa (Gauteng Division) also held that the Minister's promulgation of the Amended Charter did not occur in terms of or in compliance with the duty imposed under section 100(2) of the MPRDA and, as such, the terms of the Amended Charter can have legal consequences or significance only insofar as they are, by any means, reflected in the terms of conditions subject to which the Minister grants a mining right. It also brings the validity and enforceability of any subsequent mining charter into question unless it is legislatively authorized. On April 19, 2018, the DMRE filed a notice of intention to appeal the judgment of the High Court of South Africa (Gauteng Division), but later withdrew its appeal in August 2020.
On September 27, 2018, the Minister published the Mining Charter III on which date it also became effective, as amended by the notice published in the Government Gazette on December 19, 2018 and read with the Implementation Guidelines. It replaces, in their entirety, the Original Charter and the Amended Charter. Mining Charter III imposes new obligations and increased participation by HDSAs in relation to a mining company's ownership, procurement of goods and services, enterprise and supplier development, human resource development and employment equity requirements. The first annual reporting for compliance with Mining Charter III was on or before March 31, 2020, although on April 11, 2020, the Minister gazetted Directions under the regulations of the Disaster Management Act as part of the measures to address, prevent and combat the spread of Covid-19, which extended the date for submission of the first annual report to June 1, 2020. Harmony submitted its first report under Mining Charter III within the specified deadline, and has timeously submitted subsequent reports.
Some of the material changes introduced by Mining Charter III include:
•in relation to existing mining rights, the continuing consequences of historical black economic empowerment (''BEE'') transactions will be recognized and existing right holders will not be required to increase their HDSA shareholding for the duration of their mining right in circumstances where they either achieved and maintained 26% HDSA ownership or where they achieved the 26% HDSA ownership but their HDSA shareholder has since exited;
•in relation to the renewal and transfer of existing mining rights, historical BEE credentials will not be recognized and mining companies will be required to comply with the ownership requirements in relation to new mining rights (see below);
•in relation to new mining rights (granted after September 27, 2018) mining companies must have a minimum of 30% BEE shareholding distributed as follows: a minimum of 5% non-transferable carried interest to qualifying employees; a minimum of 5% non-transferable carried interest to host communities, or a minimum 5% equity equivalent benefit; and a minimum of 20% to a BEE entrepreneur, 5% of which must preferably be for women; "carried interest" is defined as "shares issued to qualifying employees and host communities at no cost to them and free of any encumbrances. The cost for the carried interest shall be recovered by a right holder from the development of the asset";
•applications for mining rights lodged and accepted prior to September 27, 2018, will be processed in terms of the Amended Charter (i.e. with a 26% HDSA ownership requirement) but with a further obligation to increase their HDSA shareholding to 30% within five years of the granting of the right;
•BEE shareholding may be concluded at holding company level, mining right level, on units of production, shares or assets and where it is concluded at any level other than mining right level, the flow-through principle will apply;
•the permitted beneficiation off-set of up to 11% against the HDSA ownership requirement contained in the Original Charter and Amended Charter has been reduced to 5% unless it was "claimed" prior to September 27, 2018;
•a minimum of 70% of total mining goods procurement spend (including non-discretionary expenditure) must be on South African manufactured goods, allocated amongst HDSA owned and controlled companies, women and youth owned and controlled companies and BEE compliant companies;
•a minimum of 80% of the total spend on services (including non-discretionary expenditure) must be sourced from South African companies, allocated among HDSA owned and controlled companies, women and youth owned and controlled companies and BEE compliant companies;
•mining companies must achieve a minimum representation of HDSAs in the following management positions: 50% on the Board of directors (20% of which must be women), 50% in executive (20% of which must be women), 60% in senior management (25% of which must be women); 60% in middle level (25% of which must be women); 70% in junior level (30% of which must be women) and 60% in core and critical skills. In addition; HDSAs with disabilities must constitute 1.5% of all employees;
•the Minister may, by notice in the Government Gazette, review Mining Charter III;
•the ownership and mine community development elements are ring-fenced and require 100% compliance at all times; and
•a mining rights holder that has not complied with the ownership element and falls between levels 6 and 8 of the Mining Charter scorecard shall be in breach of the MPRDA and its mining right may be suspended or canceled in accordance with the provisions of the MPRDA.
While Mining Charter III is now effective, there are transitional arrangements in relation to compliance with the procurement and the employment equity element targets.
On March 26, 2019, the MCSA instituted judicial review proceedings in High Court of South Africa (Gauteng Division) for an order reviewing and setting aside certain provisions of Mining Charter III. The provisions challenged by the MCSA relate to those which, among other things:
•provide that mining rights holders must at all times comply with the ownership requirements imposed under
Mining Charter III;
•stipulate that the continuing consequences of historic empowerment transactions will not be recognized if existing mining rights are renewed or transferred to third parties;
•impose the procurement thresholds for goods and services; and
•indicate that the Minister may invoke the sanctions prescribed under the MPRDA, if a mineral right holder fails to comply with the threshold requirements imposed under the Charter.
The application aligns with the MCSA’s previously stated view that most aspects of the Mining Charter III represent a reasonable and workable framework. However, the MCSA’s application contended that Mining Charter III does not fully recognize the continuing consequences of previous empowerment transactions, particularly in relation to mining right renewals and
transfers of such rights. According to the MCSA, this constitutes a breach of the declaratory order on the matter issued by the High Court of South Africa (Gauteng Division) in April 2018. On June 30, 2020, the High Court of South Africa (Gauteng Division) ordered that various mine-affected communities and trade unions be joined as parties to the MCSA's application. The MCSA's application was heard before a full bench of judges in May 2021. The 2021 Judgement was handed down on September 21, 2021, setting aside certain of the problematic provisions, while providing that the remainder of Mining Charter III should continue in force. In November 2021, the DMRE informed National Assembly's Portfolio Committee on Mineral Resources and Energy that it does not intend to appeal the outcome of the 2021 Judgment, but instead will consider steps to achieve the empowerment objectives through legislative amendments to the MPRDA.
The 2021 Judgement was discussed at the parliamentary mineral resources and energy committee meeting on March 18, 2022. The meeting involved various stakeholders such as labor unions and the MCSA to present their views on the 2021 Judgement. To date, there have been no developments with regards to the above-mentioned views of the stakeholders.
For details of our compliance in the regard, see “Integrated Annual Report for the 20-F 2024 – Governance – Mining Charter III – compliance scorecard” on pages 251 to 252.
Regulations under the MPRDA
On March 27, 2020 the Minister published for implementation the Amended Regulations, which amended the original MPRDA Regulations. The Amended Regulations include the following notable changes:
•Mining rights applicants must "meaningfully consult" with landowners, lawful occupiers and interested and affected parties in accordance with the procedures contemplated under the EIA Regulations. The office of the Regional Manager is permitted to participate as an observer in these processes.
•Mining rights holders must pursuant to their SLPs contribute to the socio-economic development in the areas in which they operate and "labor sending" areas (i.e. a local municipality which a majority of mine workers consider to be their primary residence). This requirement may impose obligations on mining rights holder to effect measures in communities that are located far away from the mine and / or could give rise to some social issues.
•Although most of the provisions regulating environmental matters have been deleted from the Amended Regulations, those sections dealing with mine closure have been retained but have been amended to state that mine closure must be regulated in terms of the NEMA, the EIA Regulations and the Financial Provision Regulations, 2015 (as they may be amended). As discussed below, it is anticipated that the Financial Provision Regulations, 2015 will be replaced by revised regulations following further engagement with the mining industry.
•The appeal process in the MPRDA Regulations has been replaced with a more comprehensive procedure that includes specific time periods within which appellants, respondents and the competent authority must submit appeals, responses or consider appeals (as the case may be). Although there is no guarantee that the parties will comply with these time periods, the time periods are intended to hold the parties accountable and to ensure that appeals are resolved in a timely manner.
The Royalty Act
The Mineral and Petroleum Royalty Act, 28 of 2008, and the Mineral and Petroleum Royalty Administration Act, 29 of 2008, were assented to on November 21, 2008 with the commencement date set as May 1, 2009. However, the date on which royalties became payable was deferred to March 1, 2010. Royalties are payable by the holders of mining rights to the government according to formula based on a defined earnings before interest and tax. This rate is then applied to a defined gross sales leviable amount to calculate the royalty amount due, with a minimum of 0.5% and a maximum of 5% for gold. For 2024, the average royalty rate for our South African operations was 2.39% of the gross sales leviable amount.
The BBBEE Act and the BBBEE Amendment Act
The BBBEE Act, 53 of 2003 (the "BBBEE Act"), which came into effect on April 21, 2004, established a national policy on broad-based black economic empowerment with the objective to (i) remedy historical racial imbalances in the South Africa economy and (ii) achieve economic transformation, by increasing the number of black people who participate in the mainstream South African economy. The BBBEE Act provides for various measures to promote BEE participation, including empowering the Minister of Trade and Industry to issue Codes of Good Practice (the "BBBEE Codes"), with which organs of state and public entities and parties interacting with them or obtaining rights and licenses from them would be required to comply. The BBBEE Codes were first published in 2007, and were revised in 2013 (although the revisions only came into effect in 2015). The BBBEE Codes sought to provide a standard framework, in the form of a "generic scorecard", for the measurement of BBBEE across all sectors and industries operating within the South African economy and sought to regularize such sectors and industries by providing clear and comprehensive criteria for the measurement of BBBEE.
On October 24, 2014, the BBBEE Amendment Act, 46 of 2013 (the “BBBEE Amendment Act”), came into effect. The BBBEE Amendment Act inserted a new provision in the BBBEE Act, whereby the BBBEE Act would trump the provisions of any other law in South Africa which conflicts with the provisions of the BBBEE Act, provided such conflicting law was in force immediately prior to the effective date of the BBBEE Amendment Act. The BBBEE Amendment Act also stipulates that this provision would only be effective one year after the BBBEE Amendment Act is brought into effect, on October 24, 2015. On October 27, 2015, the Minister of Trade and Industry published a government gazette notice declaring an exemption in favor of the DMRE from applying the requirements contained in section 10(1) of the BBBEE Act for a period of 12 months.
There has been some debate as to whether or to what extent the mining industry was subject to the BBBEE Act and the policies and codes provided for thereunder. The BBBEE Codes apply in the absence of sector specific codes which have been agreed to by interested and affected parties active within a specific sector. By way of background, various sectors within the South African economy may negotiate and agree Codes of Good Practice which would govern transformation in that specific sector. In addition, certain codes fall outside of the regulatory framework established by the BBBEE Act and BBBEE Codes
promulgated by the Minister of Trade and Industry thereunder. One such sector is the mining industry, where the Original Charter, the Amended Charter and Mining Charter III (which we refer to generally in this section as the Mining Charter), govern the implementation of BBBEE, among other things, within the mining industry.
For purposes of the BBBEE Act, the Mining Charter is not a "sector code". It is not clear at this stage how the Mining Charter and BBBEE Codes relate to each other. The government may designate the Mining Charter as a sector code, in which case it will be under the auspices of the BBBEE Act. On the other hand, the Mining Charter may remain a stand-alone document under the auspices of the MPRDA and may be subject to the trumping provision, discussed above, to the extent that there is a conflict between the two. This uncertainty may be resolved through either government clarification or judicial attention. The exemption by the Minister of Trade and Industry can be read as confirmation that the Department of Trade and Industry regards the BBBEE Codes as “applicable” to the Mining Industry after the exemption was lifted on October 27, 2016.
On February 17, 2016, the Minister of Trade and Industry published a gazette notice which repealed and confirmed the validity of a number of sector codes. The omission of the Mining Charter from the notice can be interpreted as confirmation that the Mining Charter is not contemplated as a sector code. This supports the interpretation BBBEE Act did not intend to trump the Mining Charter. While it remains to be seen how this will be interpreted, it appears that the BBBEE Act and the BEE Codes will not overrule the Mining Charter in the future and, in any event, our view is that the DMRE is likely to continue implementing the Mining Charter and it is unlikely that the DMRE will begin applying the BBBEE Act and BBBEE Codes in administering the MPRDA, since in order to do so will potentially require an amendment of the MPRDA.
Housing and Living Standards
On December 11, 2019 the Minister published the Housing and Living Conditions Standard for the Minerals Industry (the "Housing and Living Conditions Standard"). The purpose of the Housing and Living Conditions Standard is to ensure that mine employees are provided with adequate housing, healthcare services, balanced nutrition and water. The Housing and Living Conditions Standard repeals the previous iteration of the Housing and Living Conditions Standard from 2009 and applies to existing and new mining right holders. The underlying purpose of the Housing and Living Conditions Standard is to develop decent single and family housing units for mine employees and their families.
Mining right holders are required to develop, in consultation with organized labor, relevant municipalities and the DWS, a housing and living conditions plan taking into account various principles in giving effect to the above objectives including, engaging with all relevant stakeholders, ensuring equity in the implementation and administration of the housing of employees, providing employees with a range of housing options (such as subsidized rental, private ownership, living out allowances and government subsidized ownership) and ensuring that all housing facilities are developed or redeveloped with access to electricity, water and ablutions in accordance with the requisite norms and standards.
Resettlement Guidelines
The Minister published the draft Mine Community Resettlement Guidelines, 2019 (Draft Resettlement Guidelines) for public comment in December 2019. The Minister published the final Mine Community Resettlement Guidelines, 2022 ("Resettlement Guidelines") for implementation on March 30, 2022, on which date they also became effective. The Resettlement Guidelines apply to applicants and holders of mining rights, prospecting rights and mining permits pursuant to the MPRDA, which result in the displacement of parties. Resettlement is guided by several fundamental principles including meaningful consultation, gender equality, the avoidance of resettlement, where possible, rules concerning meetings and the protection of existing rights.
Applicants and holders of mining rights will need to make provision for a Resettlement Plan, Resettlement Action Plan and a Resettlement Agreement. The Resettlement Plan sets out the nature of the project, its expected impacts, the manner in which consultation will be implemented and the various cost implications for the resettlement. The Resettlement Action Plan sets out the specific steps that the holder will need to meet to implement the Resettlement Plan and the Resettlement Agreement records the commitments made by the holder. There are no specific requirements in the Resettlement Guidelines regarding the content of these agreements. However, all stakeholders should be engaged and commit to their respective obligations.
No mining activities may commence until such time as the Resettlement Agreement has been concluded. This includes agreement on the compensation that should be paid to affected parties. Any disputes between the parties regarding the Resettlement Agreement or associated plans, should be resolved between the parties. To the extent that the parties are unable to reach an amicable solution, only then should the Regional Manager-led process in section 54 of the MPRDA be invoked.
Geoscience Regulations
The Minister published the draft regulations to the Geoscience Act, 100 of 1993 (the "Geoscience Act") for public comment on March 4, 2021. On March 30, 2022, the Minister published the final version of the Geoscience Act Regulations, 2022 (the "GeoscienceRegulations"), on which date they also became effective.
The Geoscience Regulations obligate the lodgment of geoscience data and information in respect of reconnaissance and prospecting with the Council for Geoscience ("CG"). The Geoscience Regulations require that the owners of onshore and offshore geoscience data and geoscience information must submit this information to the CG.
The Geoscience Regulations state that the lodgment of geoscience data and information should include several categories of information such as geology, geochemistry, borehole profile logs and physical borehole core, and geophysical data. The requirement to submit physical borehole material has been qualified to only be necessary upon a specific request by the CG as well the fact that physical core materials drilled for research purposes may only be discarded after obtaining consent from the CG. All physical materials recovered from boreholes drilled for infrastructure and development purposes can only be discarded after consultation with the CG.
In terms of the Geoscience Regulations, entities which hold historical information relating to onshore and offshore geoscience data and information are obliged to notify the CG that such data and information is in their possession.Following
such notification, the CG, at its expense, must arrange to collect the data and/or information. Lastly, the Geoscience Regulations classify all geoscience data and information not related to prospecting and reconnaissance, preceding the coming into operation of these Geoscience Regulations, as historical data, and the same provisions and time described above will apply.
The Geoscience Regulations provide for the disclosure and accessibility of geoscience data, geoscience information, and prescribed services through digital and non-digital media as well as data requests that may be made directly to the CG. The Geoscience Regulations contain confidentiality provisions relating to geoscience data and information, which are consistent with the confidentiality provisions found in the MPRDA. However, the confidentiality provisions are subject to the provision that geoscience data or information relating to a prospecting permit or reconnaissance may not be disclosed until the permit has lapsed or been abandoned in line with section 30(5) of the MPRDA. Additionally, the Geoscience Regulations state that geoscience data and information not relating to reconnaissance or prospecting are considered confidential and will only be disclosed in limited circumstances.
Mineral Rights – Australia
In Australia, mining is regulated by the laws of the state in which the deposit is situated and the mining activity occurs. Our only current mining activity in Australia is the Eva Copper Project, located in the State of Queensland. Mining in Queensland is regulated by the Queensland MRA, the Mineral and Energy Resources (Common Provisions) Act 2014, the MQSH Act, and the regulations, practice manual, operational policies and guidelines thereunder.
Generally, all mineral resources in Queensland are owned by the State of Queensland. These resources are managed by the Queensland Department of Resources. Under the Queensland MRA, the Queensland Department of Resources requires all large mining projects to apply for an applicable resource authority, being (as the case may be) an EP, ML and/or a mineral development license. An EP allows the holder to carry out exploration activities to determine what minerals exist and their quality and quantity in or under land or in the waters or sea above such land, in accordance with agreed work programs and subject to compliance with prescribed security and financial obligations.
If the holder of an EP wishes to develop a mine to exploit discovered resources, application must be made for an ML. This entitles the holder to machine-mine specified minerals and carry out activities associated with mining, including infrastructure to support mining operations. The Queensland MRA and mining tenements issued thereunder contain provisions and conditions, the breach of which may result in the imposition of a fine, imprisonment or the cancellation of the tenement.
Mining in Queensland is also subject to the Native Title Act. Any "future act" on land or waters that will affect native title rights and interests is subject to native title processes intended to protect such rights and interests through a right to negotiate enabling affected parties to reach agreement on the terms of consent concerning the proposed future acts, including monetary compensation, employment and training, contracting opportunities and cultural heritage. These arrangements are captured in Indigenous Land Use Agreements, which are then registered with the National Native Title Tribunal.
Mineral Rights –Papua New Guinea
Mineral Rights in PNG are regulated by the PNG Mining Act. The PNG Mining Act stipulates that all minerals are the property of the PNG Government and, subject to the PNG Mining Act, all land is available for exploration and mining. The issuance and administration of mining tenements under the PNG Mining Act is effected through the offices of the PNG MRA established under the PNG Mineral Resources Authority Act 2018, and mining operations are administered by the Chief Inspector of Mines under the PNG Mining (Safety) Act. Mineral policy is administered by the Department of Mineral Policy and Geohazards Management, all three branches falling within the PNG Department of Mining. The permitting process can be very time consuming, and (subject to the applicable legislation) there is no assurance that a mining tenement will be granted or extended.
Mining tenements include:
•exploration licenses, issued for a term not exceeding two years, renewable on application for further two year terms subject to compliance with expenditure and other conditions. Each license contains a condition conferring on the PNG Government the right to make a single purchase up to 30% equitable interest in any mineral discovery under the license at a price pro rata to the accumulated exploration expenditure;
•mining leases, issued for a term not exceeding 20 years, renewable on application for up to ten years at the discretion of the PNG Minister for Mining after considering PNG Mining Advisory Board recommendations;
•Special Mining Leases, issued for a term not exceeding 40 years, renewable on application for up to twenty years at the discretion of the PNG Minister for Mining after considering PNG Mining Advisory Board recommendations and subject to the provisions of any mining development contract which may have been entered into between the PNG Government and the tenement holder;
•mining easements; and
•leases for mining purposes.
These tenements generally confer exclusive rights on the holder to exercise their rights thereunder. However, in PNG, citizens have the right to carry out non-mechanized mining of alluvial minerals on land owned by them, provided that an alluvial mining lease is obtained and provided there is not already a mining lease or Special Mining Lease over the subject land.
PNG exploration licenses contain a condition that the PNG Government may, at any time prior to the commencement of mining, acquire a participating interest of up to 30% in any mineral discovery at historical exploration cost. This condition confers on PNG or its nominee the option to take up a direct equity of participating interest in new mining projects. The PNG Government has indicated that it intends to exercise the PNG Government's option in full in respect of the Wafi-Golpu Project.
In addition, PNG mining legislation and mining tenements contain provisions and conditions, the breach of which may result in the imposition of a fine, imprisonment or the cancellation of the tenement.
Almost all land in PNG is owned by a person or group of persons under customary ownership and is not generally overlaid by landowner title. The customary owners of the land have in some instances been formally identified through the work of the Land Titles Commission. However, there is often considerable difficulty in identifying landowners of a particular area of land because land ownership may arise from both contract and inheritance, and because of the absence of a formal written registration system.
Prior to commencing exploration, compensation for loss or damage must be agreed with the landowners. Prior to commencing mining, written agreements must be entered into with landowners dealing with compensation and, in company with the PNG Government as a party, a memorandum of agreement dealing with such other matters as the sharing of royalties and other mining benefits among and between landowner groups and Provincial and local government entities.
Along with standard corporate and other taxes and levies, mining companies must pay royalties to the PNG Government and a levy to the PNG MRA, based on production.
Since 2009, the mining regime in PNG has been the subject of a comprehensive ongoing review involving various PNG Government agencies. In addition to the review of applicable legislation, PNG mineral policy and mining-specific sector policies are also being reviewed and drafted, including a biodiversity offsets policy, a national oceans policy, a sustainable development policy, an involuntary relocation policy, a national content policy, and a mine closure policy and mining project rehabilitation and closure guideline.
In May 2019, Hon James Marape M.P. was appointed Prime Minister of PNG following a vote of no confidence in the previous government. Following a national general election in September 2022, he was re-appointed as Prime Minister for a second term. Since his appointment, the PNG Government has advocated a policy of "Take Back PNG", including a review and restructuring of resource laws so as to increase the PNG Government's share of the proceeds from mining, enhance landholder and provincial government equity participation in mining projects, and promote direct involvement in mining and exploration by a State-owned entity ("SOE").
Various draft revisions of the PNG mining legislation have subsequently been circulated for comment and/or introduced:
•In June 2020 proposed revisions of the PNG Mining Act were circulated for comment, including an increase in the royalty rate and changes to the terms of the PNG Government's option to acquire an interest in a mineral discovery, the percentage extent of such option, the consideration payable for it, and the contributions to be made by the PNG Government pursuant to it. Other proposed revisions included the introduction of a development levy and a waste fee, the introduction of an obligation to maintain production at minimum prescribed levels, a prohibition on non-local “fly-in, fly-out” employment practices, and the introduction of downstream processing obligations (including a national gold refinery and bullion bank). It is presently uncertain if the proposed revisions will be progressed, or (if adopted) whether or how they will be applied to our current operations and projects in PNG. If enacted in their proposed form and applied to our operations and projects in PNG, the revisions will potentially affect those operations and projects and could have a material adverse effect on our business, operating results and financial condition.
•In June 2020 the Mining (Amendment) Act 2020 (the "PNG Mining (Amendment) Act") was enacted, which requires the real-time provision of production and mineral sales data to the PNG MRA. The PNG Mining (Amendment) Act also amended the PNG Mining Act to provide that the PNG Government has the power to reserve land that is subject to an expired, cancelled, surrendered or relinquished tenement. Wholly or majority PNG-owned entities, including an SOE, then have a statutory priority in applying for a new tenement over the reserved land.
•In July 2020 a proposed Organic Law on Ownership and Development of Hydrocarbons and Minerals and the Commercialization of State Businesses (the “PNG Organic Law") was tabled for reading in Parliament. The PNG Organic Law (if adopted) will materially alter the legislative and regulatory regime governing mining in PNG, including the transfer of ownership of minerals from the PNG Government to an SOE (which will not be subject to the PNG Mining Act or the regulation of the PNG MRA), and the transformation of the methodology of its participation in mining operations from a concessionary to a production sharing regime. The PNG Organic Law is silent on the form and content of the production sharing regime to be entered into, which arrangements it envisages will be negotiated by the SOE on a case-by-case basis. The PNG Organic Law was not progressed and it is presently uncertain if it will be adopted, or (if adopted) whether or how the PNG Organic Law will be applied to our current operations and projects in PNG. We continue to engage with the PNG Government and relevant regulators on these matters, indirectly through the offices of PNG CORE and directly with the PNG MRA and the DMPGM.
•In August 2023, the PNG Department of Commerce and Industry presented a draft "Papua New Guinea National Content Policy for Resource Sectors 2023-2027", which policy is designed to encourage greater national participation and partnership in major resource investments in PNG. It has five key focus areas, namely domestic procurement of goods and services and supplier development; localization of employment opportunities; skilled workforce development; greater equity participation by PNG; and sustainable development of project impacted communities. It is presently uncertain the extent to which, and how, the proposed policy will be applied to our current operations and projects in PNG.
•In April 2024, proposed revisions of the PNG Mining Act circulated for comment included introduction of a right to the PNG Government to acquire 30% equity in a project at no cost to the PNG Government, a provision requiring that applicants demonstrate their financial capacity to develop the project as a condition precedent for grant of a mining lease, including proof of readily available funds of no less than 50% of the projected capital costs of the development, and an increase in mining royalties between the range of 5% and 10%. It is presently uncertain if the proposed revisions will be progressed, or (if adopted) whether or how they will be applied to our current operations and projects in PNG. We continue to engage with
the PNG Government and relevant regulators on these matters, indirectly through the offices of PNG CORE and directly with the PNG MRA and the DMPGM.
•In May 2024, a National Gold Corporation Bill was tabled proposing to establish a statutory monopoly over gold refining, whereby all refining of all PNG gold products would by force of law be required to be performed exclusively by a refinery operated, nominated or appointed by the National Gold Corporation, and compelling all PNG gold producers (including alluvial miners) by force of law to deliver their gold products to it for refining. These provisions would have material commercial and legal implications for all producers, and after strong public resistance and objections from PNG CORE, the Bill was formally withdrawn. It is presently uncertain if the proposed provisions will be progressed at some future time, or (if adopted) whether or how they will be applied to our current operations and projects in PNG.
Health and Safety - South Africa
Mining operations in South Africa are governed by the MHSA, as well as the Regulations binding thereunder. The objectives of the MHSA are:
•to protect the health and safety of persons at mines;
•to require employers and employees to identify hazards and eliminate, control and minimize the risks relating to health and safety at mines;
•to give effect to the public international law obligations of the Republic (South Africa) that concern health and safety at mines;
•to provide for employee participation in matters of health and safety through health and safety representatives and the health and safety committees at mines;
•to provide for effective monitoring of health and safety conditions at mines;
•to provide for enforcement of health and safety measures at mines;
•to provide for investigations and inquiries to improve health and safety at mines;
•to promote a culture of health and safety in the mining industry;
•to promote training in health and safety in the mining industry; and
•to promote co-operation and consultation on health and safety between the State (Government), employers, employees and their representatives.
One of the most important objectives of the MHSA is to protect the health and safety of all persons directly affected by the activities at mines and not merely the health and safety of employees. An employer is obliged, in terms of the MHSA and the related regulations binding in terms thereof, to protect, as far as reasonably practicable, the health and safety of non-employees (such as visitors to a mine and the public who live in close proximity to the mine) and employees (which includes employees of independent contractors) performing work at a mine.
The word “employer” is defined in section 102 of the MHSA as the owner of the mine. In turn, an “owner” of a mine is defined to include: (i) the holder of the prospecting permit or mining authorization issued under the MPRDA; (ii) if a prospecting permit or mining authorization does not exist, the person for whom the activities in connection with the winning of a mineral are undertaken, but excluding an independent contractor; or (iii) the last person who worked the mine or that person’s successor in title.
The employer remains responsible to ensure that applicable provisions of the MHSA and the Regulations binding in terms thereof, are complied with to ensure the health and safety of persons, as far as reasonably practicable and to prevent damage to property.
The MHSA prescribes, among other things, general and specific duties for employers and other persons, determines penalties for non-compliance with the MHSA and Regulations binding thereunder, and provides for employee participation by requiring the appointment of health and safety representatives and the establishment of health and safety committees. The MHSA also entrenches the right of employees to refuse to work in dangerous conditions. The MHSA further places an obligation on employees to protect their own health and safety, as well as the health and safety of other persons.
See “Integrated Annual Report for the 20-F 2024 – Social – Caring for our employees” on pages 189 to 196 and "Integrated Annual Report for the 20-F 2024 – Social – Health and wellness” on pages 180 to 188.
The Mine Health and Safety Inspectorate ("MHSI") of the DMRE is responsible for the enforcement of the MHSA and the regulations binding in terms thereof. The DMRE also plays an important role in the promotion of health and safety at mines. The MHSI comprises of a Chief Inspector of Mines, Deputy General, Principal Inspectors of Mines for each region and various Senior Inspectors and Inspectors of Mines for each region. Should employers or employees fail to comply with their obligations under the MHSA, the MHSI may take a number of enforcement measures which may include the following:
•the issuing of statutory instructions (for example notices in terms of section 54 or section 55 of the MHSA) if an Inspector of Mines has reason to believe that any occurrence, practice or condition at a mine endangers the health and safety of any person at a mine, or alternatively if an Inspector of Mines has reason to believe that a provision of the MHSA has not been complied with. A notice in terms of section 54 of the MHSA, may halt all mining operations undertaken at a mine or part thereof. If a mine receives notices in terms of section 54 of the MHSA regularly, the production stoppages and the additional costs incurred as a result thereof will not only affect the production results of a mine but also the reputation and business of a mine. If, however, a notice in terms of section 54 of the MHSA has been issued unlawfully, the mine may appeal the said
notice to the Chief Inspector of Mines. It must be noted that the aforesaid appeal does not suspend the operation of the notice issued in terms of section 54 of the MHSA. To suspend the operation of the notice in the above instance, a mine must lodge an urgent application to the Labour Court (being the court with jurisdiction) requesting the suspension of the operation of the notice issued in terms of section 54 of the MHSA, pending the outcome of the appeal to the Chief Inspector of Mines;
•the Chief Inspector of Mines may suspend or cancel certificates of competency issued in terms of the MHSA if the holder of that certificate is guilty of gross negligence or misconduct or has not complied with the MHSA or the regulations binding thereunder;
•a Principal Inspector of Mines may recommend prosecution to the National Director of Public Prosecutions if satisfied that there is sufficient admissible evidence that an offense has been committed. Any person convicted of an offence in terms of the MHSA may be issued with a fine or sentenced to imprisonment as may be prescribed; and
•a Principal Inspector of Mines may, after considering the recommendation of an Inspector of Mines and the written representations of the employer, impose an administrative fine for the failure to comply with, amongst others, the provisions of the MHSA and the regulations binding thereunder. In terms of Table 2 of Schedule 8 to the MHSA, the maximum administrative fine which may be imposed on an employer is R1 million per transgression. The MHSA does not make provision for any internal appeal against an administrative fine which has been issued unlawfully. However, if a mine receives an administrative fine which has been issued unlawfully, the mine may lodge an application in the Labour Court (being the court with jurisdiction) to review the decision to impose an administrative fine.
Over and above the aforesaid, investigation and/or inquiry proceedings in terms of the MHSA are instituted by the MHSI following an accident or occurrence at a mine, which results in the death of any person.
In South Africa COIDA and ODMWA established two statutory systems for the payment of compensation for occupationally related injuries and certain occupationally related diseases. COIDA applies to the compensation of all occupational injuries (including payment of compensation in the event of the death of the injured employee), whether or not it occurs in or outside the mining industry. ODMWA applies to diseases which are defined as “compensatable diseases”, being primarily occupationally related lung diseases like silicosis.
COIDA indemnifies the employer against claims by the employee or his/her dependents for damages incurred as a result of occupational injuries and diseases. However, the Constitutional Court held in Mankayi v AngloGold Ashanti Limited 2011 (3) SA 237 (CC) that although COIDA applies to occupational diseases in general, COIDA does not apply in instances where the disease in question is a compensatable disease in terms of ODMWA and which was contracted as a result of the performance of “risk work” at a “controlled mine”. The Court further held that if an employee contracts a compensatable disease as defined in ODMWA, the employee would still be entitled to claim common law damages from the employer.
In June 2022, the Minister released the draft MHSA Amendment Bill for public comment. At present there is no indication whether the final bill will be published for further comment or when the MHSA Amendment Bill will be enacted as a final statute. In terms of the MHSA Amendment Bill certain provisions of the MHSA will be amended. The MHSA Amendment Bill contains a number of provisions which, if enacted in their present form, could have a material adverse effect on our business, operating results and financial condition. The MHSA Amendment Bill provides for (among others things) an increase in the monetary value of the fines that may be imposed in respect of instances of non-compliance, more direct involvement of executives (particularly CEOs), stricter liability in instances of non-compliance, and changes to the obligations relating to training and the formulation of training programs. The MHSA Amendment Bill also introduces a new offence of corporate manslaughter, being that the employer will contravene or fail to comply with the MHSA if it fails to comply with a duty in terms of the MHSA and if such conduct resulted in a person’s death or in serious injury or illness of a the person. The effect of the provisions in the MHSA Amendment Bill are of that the defenses on which the employer may rely to escape liability, are limited.
Health and Safety – Australia
In Queensland, where our Eva Copper Project is situated, the safety of employees, contractors and third parties concerning mining operations is regulated by the MQSH Act and the MQSH Regulations. Risk is effectively managed when all persons individually and as part of their respective workgroups and organizations take action to keep risk at an acceptable level, being the conduct of operations so that the level of risk from the operations is within acceptable limits and as low as reasonably achievable, taking into account the likelihood of injury and the severity of the injury.
Workers or other persons at mines or persons who may affect safety and health at mines or as a result of operations, have “safety and health obligations” under Division 2 of the MQSH Act. Persons including (a) (mining tenement) holder; (b) operator; (c) site senior executive; (d) contractor; (e) designer, manufacturer, importer and supplier of plant for use at a mine; (f) erector and installer of plant at a mine; (g) manufacturer, importer and supplier of substances for use at a mine; and (h) person who supplies a service at a mine have “safety and health obligations” which are specified under Division 3 of the MQSH Act.
The objects of the MQSH Act are to protect the safety and health of persons at mines and persons who may be affected by operations; and require that the risk of injury or illness to any person resulting from operations is at an acceptable level. Risk is considered effectively managed when all persons individually, or as part of their respective workgroups and organizations, take action to keep risk to an acceptable level; i.e., conducting operations so that the level of risk from the operations is within acceptable limits and as low as reasonably achievable, taking into account the likelihood of injury or illness to the person, and the severity of injury or illness. In some cases this is demonstrated by following applicable regulations or guidelines and adopting stated measures, or where no regulation or guidelines are in place, by taking reasonable precautions, and exercises proper due diligence.
The RSHQ is the independent regulator responsible for administering, monitoring and enforcing compliance with the MQSH Act. Responsibility for prosecution of “serious offences” under the MQSH Act fall with the WHS Prosecutor.A “serious offence” is committed where a person who has a safety and health obligation breaches it in circumstances where the breach either:
•causes death or bodily harm, or the breach involves exposure of a person to a substance likely to cause death or grievous bodily harm; or
•amounts to an offence that may be prescribed by a regulation to the MQSH Act.
Other offences (i.e., non-serious offences) may be prosecuted by either the WHS Prosecutor or the chief executive officer of RSHQ. Queensland legislation also allows any person to request that the WHS Prosecutor commence a prosecution against another person in certain circumstances, i.e., when the person reasonably considers the other person has committed a “serious offence:, in which instance the WHS Prosecutor has three months to investigate and respond.
Where a person holds a safety and health obligation under the MQSH Act and fails to discharge this obligation, the maximum penalty where the contravention leads to multiple deaths is 30,000 penalty units for a corporation; or 6,000 penalty units or three years imprisonment for an offence committed by an officer of a corporation. Civil penalties may also be imposed under the MQSH Act where a corporation or an officer/employee or agent of the corporation contravenes a civil penalty obligation; civil penalties range between 500 and 1000 penalty units. At time of writing, 1 penalty unit = A$161.30.
Other persons who have specific obligations under the MQSH Act include health and safety representatives (elected by the workers in Queensland mines), district worker representatives, and Inspectors and other officers. Where an appointee to these positions reasonably believes a risk from operations may reach an unacceptable level, they may give a directive to any person to take stated corrective or preventative action, or to suspend all or partial operations. Failure to comply with a directive may lead to a penalty (up to 800 penalty units or two years imprisonment.
The legislation places obligations on the operator of a mine, the site senior executive and others to ensure that, among other things, the risk to persons from operations is at an acceptable level and that safety and health management systems are developed and implemented. The legislation contemplates that operators and site senior executives will be assisted by site safety and health representatives elected by the workers at the mine site, site safety and health committees, District workers’ representatives and appointed inspectors, inspection officers and authorized officers with powers inter alia of site access, inspection and seizure.
Significant penalties may be imposed if safety and health obligations under the Act are not appropriately discharged.
Health and Safety – Papua New Guinea
PNG has a significant mining industry, and a developing system of occupational health and safety. The PNG Mining (Safety) Act is the principal legislation, which addresses a range of issues such as working hours, minimum safety and reporting requirements. Other legislation and regulations also apply.
The PNG Mining (Safety) Act and the Regulations issued thereunder are currently the subject of comprehensive ongoing review, which may result in changes which will affect our operations and projects in PNG. In 2021, the DMPGM released the MWSH Bill and has subsequently proposed various other amendments to the PNG Mining (Safety) Act. The MWSH Bill deals (among other matters) with the increase in monetary value of the fines which may be imposed in in respect of instances of non-compliance, the more direct involvement of executives (particularly CEOs), the imposition of stricter liability in respect of obligations under the PNG Mining (Safety) Act, and changes to obligations relating to training and formulation of training programs. If enacted in its present form, the MWSH Bill will repeal and replace the PNG Mining (Safety) Act.
The DMPGM proposed further one-on-one consultation with mining operations in 2023 but appears to have suspended the consultation process and has not enacted the MWSH Bill or other amendments.
See above under "– Regulation – Mineral Rights – Papua New Guinea".
See “Integrated Annual Report for the 20-F 2024 – Social – Caring for our employees” on pages 189 to 196 and "Integrated Annual Report for the 20-F 2024 – Social – Health and wellness” on pages 180 to 188.
Laws and Regulations Pertaining to Environmental Protection - South Africa
In South Africa, environmental matters are regulated by national, provincial and municipal laws based on the competencies afforded to each of these spheres of government under South Africa's Constitution and relevant legislation. As a result, there are many statutes and by-laws that are applicable to construction, operation, decommissioning and closure of mining operations. The key legislation includes the NEMA, the NWA, the Air Quality Act, the National Environmental Management: Waste Act, the National Nuclear Regulator Act, 47 of 1999, the National Environmental Management: Biodiversity Act, 10 of 2004, the National Heritage Resources Act, 25 of 1999, the Carbon Tax Act, the Climate Change Act, and the MPRDA.
This legislation commonly requires businesses whose operations may have an impact on the environment to obtain permits, authorizations and other approvals for those operations. The rationale behind this is to ensure that companies with activities that are reasonably expected to have environmental impacts, can initially assess the extent of the environmental impacts from such activities, as well as to put reasonable and practicable mitigation measures in place to manage these impacts. In addition, businesses and authorities must monitor compliance to ensure that the requirements under the relevant permits, authorization and other approvals are achieved. In addition, the legislation may require compliance with standards or levels for which authorization is not required and impose a duty of care on businesses to ensure that reasonable measures are implemented to prevent pollution or environmental degradation from occurring, continuing or recurring.
Section 24 of South Africa's Constitution is the cornerstone of South African environmental law. It affords every person the right to an environment that promotes their health and well-being and places an obligation on the state to create legislation and other instruments to give effect to this right taking into consideration the principles of sustainable development.
In accordance with this obligation, the Minister of Environmental Affairs and Tourism (as he was then) introduced the NEMA. The NEMA is “framework legislation”; which provides the core principles and structures in terms of which all environmental legislation and decisions are interpreted, administered and applied. These principles include (but are not limited to) the principles of inter-generational equity, the polluter pays principle, the cradle to grave principle and the principle of sustainable development (the “Section 2 Principles”).
Listed Activities and competent authorities
The NEMA introduces environmental management tools aimed at ensuring that the Section 2 Principles are incorporated into all decisions that may have an effect on the environment. Chief among these tools is the environmental authorization process. Under section 24(1) of the NEMA, the Environment Minister may identify activities that may not commence without an environmental authorization (the “Listed Activities”).
The Environment Minister published the EIA Regulations and three lists of Listed Activities (the "Listing Notices"). The EIA Regulations contemplate two application processes for an environmental authorization: a "basic assessment" process and a "scoping and environmental impact assessment" process. The basic assessment is an abridged assessment process that considers the impacts of the proposed activity on the environment, while the scoping and environmental impact assessment is a much more detailed assessment that is reserved for those activities that are expected to have a greater impact on the environment. The activities listed in Listing Notices 1 and 3 trigger a basic assessment process, while the activities contained in Listing Notice 2 require the applicant to complete a scoping and environmental impact assessment. The period from the date of application until the granting or refusal of an environmental authorization should take no more than 300 days, excluding any appeal process that suspends the environmental authorization for the duration of the appeal. Due to departmental limitations and other hindering factors, the 300 day time period is not always adhered to.
The EIA Regulations and Listing Notices were published with effect from December 8, 2014, along with various amendments to the NEMA and the MPRDA pursuant to an agreement (referred to as the "One Environmental System”) concluded between the Environment Minister, the Minister of MRE and the Minister of Water and Sanitation as such ministries were then called. In terms of the One Environmental System, the DFFE is responsible for the creation of all legislation and regulation relating to the environment. The DMRE, however, is the competent authority responsible for implementing and enforcing this legislation as far as it directly relates to prospecting and mining activities, including the granting of environmental authorizations for these activities.
Prior to the One Environmental System, the powers and responsibilities of the DFFE and DMRE overlapped. Any person applying for a prospecting right, mining permit or mining right was required under the MPRDA to conduct an environmental impact assessment and obtain approval (referred to as an Environmental Management Programme or "EMPr") from the DMRE. To the extent that the proposed prospecting or mining activities also triggered any Listed Activities and prior versions of the EIA Regulations, an environmental authorization was required from the provincial environmental authorities. In practice, applicants for an EMPr and environmental authorization would conduct one environmental impact assessment and submit the final report to both the DMRE and provincial authority for their respective approvals. This dual system resulted in conflicting conditions with which the applicants were required to comply.
With effect from December 8, 2014, the DMRE became the competent authority in relation to all environmental matters directly related to prospecting, extraction and primary processing of mineral resources, including those ancillary Listed Activities associated with prospecting and mining operations previously governed by the provincial environmental authorities. Today, any person that seeks to obtain a prospecting right, mining permit or mining right must apply for an environmental authorization from the DMRE. This environmental authorization must be granted before a prospecting right, mining permit or mining right may be granted.
The NEMLAA was assented to on June 21, 2022. The majority of the provisions in NEMLAA came into effect on June 30, 2023, as determined by the Environment Minister, whilst other provisions will come into effect at a later date. The NEMLAA amended the Minister's jurisdiction to only include “mining activities” which refers "an activity which requires a permission, right, permit or consent under the MPRDA". This amendment has created uncertainty as to whether the Minister is the competent authority for ancillary activities for which a permission, right, permit or consent under the MPRDA is (in itself) not required.
The commencement of a Listed Activity without an environmental authorization is an offence but could possibly be corrected by submitting an application in terms of section 24G of the NEMA, which is an application for retrospective authorization. There is no guarantee that the competent authority will grant an environmental authorization in terms of this process. They may instruct the applicant to rehabilitate the environment or take any other measures to rectify the unlawful conduct. Even if the authority agrees to grant an environmental authorization, it may only do so after the applicant has paid an administrative fine. The granting of an environmental authorization under section 24G does not absolve the applicant of potential criminal liability for commencing with an activity without the requisite authorization.
The NEMLAA introduced important changes to the section 24G process, extending the scope such that “successors in title” and “persons in control” of land on which a listed activity has commenced unlawfully are now permitted to submit rectification applications under section 24G. Prior to this amendment, only the person who commenced with the activity without the requisite approval was eligible to apply for rectification. Furthermore, the competent authority must now direct a person making a rectification application to cease undertaking the unlawful activity pending a decision on such application. The maximum quantum of the fine payable in terms of section 24G has also been increased from R5 million to R10 million. The NEMLAA also inserted a similar section into the Air Quality Act.
The NEMA requires applicants for environmental authorizations in respect of prospecting and mining to assess the environmental liabilities arising from their mining operations and to put up financial provision (in the form of cash, guarantees or certain insurance policies) to the satisfaction of the Minister. The amount of financial provision is assessed annually and, to the extent necessary, the financial provision is adjusted to the satisfaction of the Minister. If, at any point, the holder of environmental authorization fails to fulfill its obligations under the authorization or in terms of environmental laws, the Minister may call upon the financial provision to implement any necessary measures.
Prior to September 2, 2014, financial provision was regulated under section 41 of the MPRDA read with regulation 53 and 54 of the MPRDA Regulations. These sections and regulations required that a mining right applicant make financial provision for the rehabilitation of negative environmental impacts arising from their mining activities. The initial amount and subsequent increases thereof were determined in accordance with the DMRE Guidelines. Pursuant to the DMRE Guidelines and the MPRDA Regulations, the selected financial provision must cater for the actual costs associated with the premature closing, decommissioning and final closure and post closure management of residual and latent environmental impacts.
With effect from September 2, 2014, section 41 of the MPRDA was deleted and replaced with section 24P of the NEMA. Like section 41 of the MPRDA, section 24P of the NEMA states that the prospecting/ mining right holder must annually assess their environmental liability in the prescribed manner and adjust the financial provision to the satisfaction of the Minister. The only material difference between section 41 of the MPRDA and section 24P of NEMA is that, in terms of the latter, the prospecting or mining right holder is required to maintain financial provision notwithstanding the issuing of a closure certificate by the Minister, while the former stated that the holder would be absolved of environmental liability once a closure certificate is used.
From September 2, 2014 until November 20, 2015, the amount of financial provision was calculated in accordance with the DMRE Guidelines as the Environment Minister had not published regulations in support of section 24P. The DMRE Guidelines were criticized for undervaluing the costs of environmental rehabilitation thus exposing the DMRE to potential liability if the mining right holder was unable to fulfill its environmental obligations.
On November 20, 2015, the Environment Minister published the Financial Provision Regulations, 2015. The Financial Provision Regulations, 2015 sought to rectify the inadequacies of the DMRE Guidelines by, among other things, including preliminary and general costs in the financial provision calculations, imposing VAT (at 15%) on the total amount, prohibiting the withdrawal of trust funds for concurrent rehabilitation (even in circumstances where the financial provision exceeds the evaluated environmental liability) and ceding a portion of the funds to the Minister, as security for possible latent and residual post-closure environmental impacts.
Compliance with these obligations would have resulted in a significant increase in the required financial provision, and were consequently strongly opposed by the mining industry. In response to this opposition, the DFFE undertook to engage further with mining industry and other stakeholders to amend or develop new financial provision regulations. Draft amendments to the Financial Provision Regulations, 2015 were published by the Environment Minister in May 2019 and again on August 27, 2021. An amended draft incorporating certain comments submitted by Harmony was published on July 11, 2022. Harmony has submitted additional comments on these latest draft amendments to address some of the remaining issues. Considering the on-going consultation, the date by which mining companies are required to align their financial provision with the Financial Provision Regulations, 2015 was extended to September 19, 2023, and then further extended until February 2024. However, on February 1, 2024, the Environment Minister amended the transitional arrangements as contained in the Financial Provision Regulations 2015, to a later date, which such date must be published in the Government Gazette, thus leaving the date in which existing mining right holders are required to comply with the Regulation open-ended.
Notwithstanding these on-going discussions, as stated above, the NEMLAA came into effect on June 30, 2023. The NEMLAA replaced section 24P of NEMA with two new sections: a new section 24P (financial provision for the remediation of environmental damage) which applies to mining and non-mining activities and section 24PA (financial provision for mining) which only relates to mining activities. In terms of the new section 24P, the Environment Minister can require that activities, other than mining are required to put up financial provision. Although the Environment Minister has not yet published such a list, it is anticipated that it would include the processing/reclamation of residue stockpiles and residue deposits created prior to May 1, 2004 which currently fall outside the scope of the definition of mining under the MPRDA and thus do not require financial provision.
The NEMLAA also restricts mining right holders’ ability to drawn down against their financial provision where there are more than 10 years before the final decommissioning and closure of the mine. This restriction does not take into consideration the actual environmental liability that may exist at the mine and sterilizes any surplus funds that a mining right holder may have in a rehabilitation trust. That is, these funds could only be used to offset any future increases in the holder’s environmental liability.
The financial provision must also be subjected to independent audits by the DMRE and the “review decision” must be published by Harmony.
Upon the suspension, cancellation, termination or lapsing of a prospecting or mining right, Harmony will have to comply with various regulatory requirements including applying for a closure certificate and will remain liable for compliance with the provisions of various relevant regulations, including any latent significant environmental impacts that manifest post-closure, notwithstanding the issuance of a closure certificate by the DMRE.
Until a closure certificate is granted, Harmony is required to obtain and maintain financial provision for rehabilitation. Upon the issuing of a closure certificate, the Minister may retain a portion of the financial provision for future latent and residual environmental liabilities. In terms of the NEMLAA amendments, the financial provision retained by the Minister must be transferred to an account administered by the Environment Minister or, where the financial provision is an insurance policy, the Environment Minister must access the funds. Harmony will have no right to regulate the way these funds are spent to rectify any latent and residual environmental impacts. Notwithstanding this, Harmony will remain liable for any such liabilities. If the latent
and residual environmental liabilities do not materialize, there is no mechanism in terms of which the funds will be returned to the holder. See Item 5: "Operating and Financial Review and Prospects - Operating Results – Key factors affecting our results –Electricity in South Africa – Climate Change, Environmental Factors and Carbon tax" for a discussion regarding carbon tax.
Duty of care
NEMA imposes a statutory obligation on every person who has caused, is causing or is likely to cause significant contamination to take reasonable measures in relation thereto, failing which the director-general of the DFFE, the head of a province of the relevant environmental department, the director-general of the DMRE, or, since the NEMLAA, a municipal manager (collectively the "competent authority”) may issue a directive instructing a person to implement measures specified in the directive.
If the person fails to comply with the directive, the competent authority may apply to court for an order compelling various persons (including persons in control of the activities at the time the pollution / environmental degradation occurred, owners of property and persons who failed to prevent pollution / environmental degradation from occurring) to contribute towards the costs of effecting the reasonable measures. Amendments to the rights of the competent authority to delegate responsible activities under the NEMLAA have also been extended.
Enforcement
The NEMLAA extends the powers and responsibilities of environmental mineral and petroleum inspectors such that they have the same powers currently only afforded to environmental inspectors to conduct investigations, search and seizure operations.
The costs of preventing, controlling or remedying pollution, environmental degradation and consequent adverse health effects must be paid for by those responsible for harming the environment. This duty applies retrospectively and therefore includes contamination caused prior to 1998, when the NEMA came into effect.
Liabilities
A failure to comply with this duty to obtain or comply with an environmental authorization and other offenses may, upon successful prosecution, result in significant fines of up to R10 million and/or 10 years imprisonment being imposed. In addition, it may result in damages claims, obligations to rehabilitate the environment, paying the costs of the prosecution and even director and employee liability. Any person may use the relevant provisions in the NEMA to initiate the prosecution of an entity, its directors and/or employees in their personal capacity.
Waste management
Pursuant to section 19 of the Waste Act, the Minister is authorized to publish a list of waste management activities that are likely to have a detrimental effect on the environment. No one may commence or undertake a waste management activity except in accordance with the norms and standards created in terms of section 19(3) of the Waste Act or in terms of the provisions of a waste management license. The list of waste management activities that have, or are likely to have, a detrimental effect on the environment set out the various activities for which a waste management license is required. A basic assessment is required in respect of those activities listed in Category A, while a scoping and environmental impact assessment is required in respect of Category B listed activities. In respect of those activities listed in Category C, a waste management license is not required but the person seeking to undertake those activities must comply with published norms and standards.
Regulatory uncertainty exists regarding the management and re-processing of residue stockpiles and residue deposits created prior to May 1, 2004, being the date on which so-called “new order” and “old order” mining rights were created by the MPRDA. These residue deposits and residue stockpiles fall outside the scope of the MPRDA (and therefore outside the jurisdiction of the DMRE) and, as such, it is not possible to obtain a mining right or a mining permit over such residue stockpiles or deposits. Amendments were included in 2014 that sought to incorporate the reclamation of residue stockpiles and residue deposits within the scope of the Waste Act and within the jurisdiction of the DMRE. The amendments, however, are unclear and render it uncertain whether the DMRE or the DFFE is the competent authority in respect of these residue stockpiles and deposits. This may lead to possible legal challenges in circumstances where waste management licenses are obtained from the incorrect authority. The NEMLAA includes certain changes related to residue stockpiles and residue deposits. The definitions of each are inserted into NEMA, and both have the meaning assigned to them in section 1 of the MPRDA. The effect of the amendments is that residue stockpiles and residue deposits are now managed in terms of NEMA and are excluded from the scope of the Waste Act. This does not apply to residue stockpiles and residue deposits created prior to May 1, 2004 which fall outside of the definitions under the MPRDA. As a result, these residue stockpiles and deposits may fall within the scope of the broader definition of hazardous substances contemplated in the NEMLAA. These amendments under the NEMLAA related to residue stockpiles and residue deposits are not yet in effect.
Other waste management facilities constructed and/or operated by our operations may also be subject to licensing requirements, including hazardous waste disposal sites and central salvage yards.
In addition to licensing, mines must also comply with the management measures prescribed for residue stockpiles and deposits in the Regulations for Residue Stockpiles and Residue Deposits from a Prospecting, Mining, Exploration or Production Operation in GNR 632 of July 24, 2015. These regulations do not retrospectively apply to the management of existing stockpiles and deposits, provided they are in an approved EMPr. These regulations have notable cost implications for new residue stockpiles and deposits established after this date as they impose certain liner/barrier requirements for them.
The Waste Act also regulates contaminated land, whether or not the contamination occurred before the commencement of the Waste Act or at a different time from the actual activity that caused the contamination. Consequently, historic, as well as present or future arising, contaminated land which is identified as an investigation area by the environmental authorities, or which is notified as being contaminated by the landowner must be assessed and reported on. The direction of taking monitoring and
management measures, or of undertaking site remediation, may follow depending on the level of risk associated with the contamination.
Failure to comply with the provisions of the Waste Act may result in penalties similar to those discussed under the NEMA above.
Water use and pollution
The NWA regulates the management and water quality of water resources, including watercourses, surface water, estuaries and aquifers to ensure the sustainability of all water resources in the interests of all water users.
The NWA defines a water use as:
•taking water from a water resource;
•storing water;
•impeding or diverting the flow of water in a watercourse;
•engaging in stream flow activities contemplated in the NWA;
•engaging in a controlled activity identified in terms of s37(1) of the NWA or declared in terms of s38(1);
•discharging waste or water containing waste into a water resource through a pipe, canal, sewer, sea outfall or other conduit;
•disposing of waste in a manner which may detrimentally impact on a water resource;
•disposing in any manner of water which contains waste from, or which has been heated in, any industrial or power generation process;
•altering the bed, banks, course or characteristics of a watercourse;
•removing, discharging or disposing of water found underground if it is necessary for the efficient continuation of an activity or for the safety of people; and
•using water for recreational purposes.
From a permitting perspective, water resources are regulated through the issuing of water use licenses, publishing of general authorizations and/ or permitting persons to continue undertaking water uses that they were undertaking when the NWA came into effect in October 1998.
Most mining operations require a water use license in order to conduct their operations, particularly for activities relating to water abstraction, storage, effluent discharge, diversions, and facilities which have the potential to pollute groundwater resources. Water use licenses are difficult to obtain and usually involve a lengthy and delayed application process. Mines are also required to comply with the regulations which were specifically published for the use of water for mining and related activities in GN 704, which was published in the Government Gazette on June 4, 1999. These regulations provide for limitations on the location of mining infrastructure and requirements for the separation of dirty and clean water systems and the design of certain water management infrastructure.
In addition to the permitting requirements, the NWA includes a duty of care similar to that discussed in the section above in respect of NEMA. Failure to comply with the NWA will result in penalties similar to those set out above in respect of NEMA.
Emissions
In South Africa, the National Greenhouse Gas Emission Reporting Regulations, 2016, require that we register our operations that involve fuel combustion activities associated with mining and quarrying in excess of 10MW as well as certain other activities associated with the mineral industry. We must report our GHG emissions and activity data in respect of these operations in accordance with the Technical Guidelines for each of the relevant GHGs and the IPCC emission sources by March 31st of each year. The Technical Guidelines are a companion to the South African National GHG Regulations and describe the reporting methodology as specified in the Air Quality Act.
See Item 3: “Key Information - Risk Factors - Risks Related to ESG - Compliance with emerging climate change regulations and other sustainability measures could result in significant costs for us” for a discussion regarding the laws governing GHG emissions.
Carbon Tax Act
The South African government introduced a carbon tax under the Carbon Tax Act with effect from June 1, 2019. The Carbon Tax Act (together with the Customs and Excise Act, which contains provisions related to the administrative arrangements for the collection of carbon tax revenues by the South African Revenue Service) aims to reduce greenhouse gas emissions. For more information regarding the Carbon Tax Act, see Item 3: “Key Information - Risk Factors - Risks Related to ESG - Compliance with emerging climate change regulations and other sustainability measures could result in significant costs for us” and Item 5: "Operating and Financial Review and Prospects - Operating Results – Key factors affecting our results – Electricity in South Africa" and " – Climate Change, Environmental Factors and Carbon tax" for a discussion regarding carbon tax.
On February 18, 2022, the DFFE introduced the 2022 Climate Change Bill for public consultation. The Climate Change was signed into law on July 18, 2024, and was published on July 23, 2024. However, in terms of Section 35 of the Climate Change Act, it will only come into effect on a date fixed by the President, by proclamation in the Government Gazette. The President has not yet fixed the date of effectiveness. The most significant impact of the Climate Change Act for the private sector is the framework for the regulation of greenhouse gas emitting sectors. Until the sectoral emission targets and carbon budgets are published, businesses are required to continue to submit progress reports on their pollution prevention plans in terms of the Pollution Prevention Plan Regulations, 2017 under the Air Quality Act, which will form the basis for the greenhouse gas mitigation plans in terms of the Climate Change Act.
Laws and Regulations Pertaining to Environmental Protection – Australia
In the State of Queensland, mining operations are subject to the Queensland EPA and Environmental Protection Regulations 2019. The Queensland EPA has as its object the protection of Queensland’s environment while allowing for development that improves the total quality of life, both now and in the future, in a way that maintains the ecological processes on which life depends (ecologically sustainable development). The Queensland EPA and Environmental Protection Regulations prescribe the preparation and assessment of environmental impact studies for purposes of the issuance of EAs to perform ERAs, which are assessed by the Queensland Department of Environment, Science and Innovation. It includes the preparation and assessment of environmental impact studies under the Act, and the process of grant and administration of Environmental Authorities.
The Eva Copper Project was initially granted an EA on July 12, 2012 following approval of an EIS and an EMP. The Eva Copper Project has since undergone various amendments, both major and minor in nature, with the current EA issued by the Queensland Department of Environment, Science and Innovation on June 12, 2024. Eva Copper Mining Pty Limited is the holder of the EA, which will be amended from time to time to align with project updates and optimizations.
In addition, various other environmental legislation applies, including the EPBC Act and the NGER Act.
The EPBC Act is administered by the Commonwealth Department of Climate Change, Energy, the Environment and Water and provides a legal framework to protect and manage unique plants, animals, habitats and places in Australia. Projects that could have a significant impact on Commonwealth protected matters, must be referred to the Commonwealth Minister for Environment who will determine whether the proposed action requires assessment and approval under the EPBC Act. The decision to refer a project under the EPBC Act is a self-assessment process. The Eva Copper Project does not hold any approvals under the EPBC Act.
In 2024, a detailed self-assessment of the Eva Copper Project’s impacts to MNES was completed, which confirmed previous self-assessment outcomes being that the project, as currently approved, is unlikely to have a significant residual impact to any MNES. Consequently, the risk to the Eva Copper Project as a result of not previously being referred to the Commonwealth Minister for Environment is considered to be low. Referrals under the EPBC Act may be necessary to support future amendments and will be assessed and determined on a case-by-case basis.
The Australian Government is preparing to undertake reforms to Australian environmental law. Under the Nature Positive Plan, the EPBC Act will be repealed and replaced by a package of new legislation. The EPA will be established and will be responsible for compliance and enforcement as well as assessments and making decisions under the new legislation. NES will be established to underpin the operation of the new environmental laws. Consultation has been ongoing with industry since the release of the draft bill in 2023. It is understood that the Australian Government intends to progress delivery of the Nature Positive Plan in 2024-25.
The NGER Act establishes the legislative framework for the NGER Scheme which is a national framework for reporting greenhouse gas emissions, greenhouse gas projects and energy consumption and production by corporations in Australia. The NGER Act makes registration and reporting mandatory for corporations whose energy production, energy use or greenhouse gas emissions meet specified thresholds.
In addition to reporting obligations, the NGER Act introduces the Safeguard Mechanism which provides a framework for Australia's largest emitters to measure, report and manage their emissions. It does this by requiring large facilities, whose net emissions exceed the Safeguard threshold, to keep their emissions at or below emissions baselines. The Safeguard Mechanism applies to facilities with scope 1 covered emissions of more than 100,000 tonnes of CO2e per year. Reforms to the Safeguard Mechanisms came into effect on July 1, 2023 which apply a decline rate to facilities’ baselines so that they are reduced predictably and gradually over time on a trajectory consistent with achieving Australia’s emission reduction targets of 43% below 2005 levels by 2030 and net zero by 2050.
As part of the feasibility study currently in progress, the Eva Copper Project is quantifying its predicted emissions under the NGER Act to determine the potential applicability of monitoring and reporting obligations and the Safeguard Mechanism.
A Progressive Rehabilitation and Closure Plan has been prepared for the Eva Copper Project pursuant to section 754 of the Queensland EPA. This plan outlines how the project will progressively rehabilitate and eventually close the site after mining activities have concluded.
In addition, in accordance with the Queensland EPA, it is a condition of an EA for a resource activity that the holder must not carry out, or allow the carrying out of, a resource activity under the authority unless:
•an ERC decision is in effect for the resource activity when the activity is carried out;
•the holder has paid a contribution to the scheme fund or given a surety for the authority under the MERFP Act; and
•the holder has complied with the requirements under the MERFP Act for paying a contribution to the scheme fund, or giving a surety for the authority, as required from time to time.
An ERC is currently in place for preliminary site access and exploration activities at the Eva Copper Project. Revised ERC applications will need to be prepared and determined from time to time to authorize disturbance activities prior to the commencement of further construction and mining activities. As progressive rehabilitation is completed, the ERC may be adjusted to reflect the reduced liability.
Laws and Regulations Pertaining to Environmental Protection – Papua New Guinea
The PNG Environment Act and various related regulations and guidelines regulate the impact of industry and other activities on the environment and sets out the environmental permitting requirements for developments, including mining projects. The PNG Environment Act regulates discharges to air, land and water, and sets out the requirements for proponents to obtain an environment permit for the construction, operation and closure of prescribed activities having the potential to cause environmental harm.
The PNG Environment Act requires a person or company that intends to carry out a proposed Level 3 activity to prepare and submit an Environmental Inception Report (“EIR”). This requirement should be fulfilled prior to carrying out a detailed Environmental Impact Assessment and submitting an EIS. The EIR is intended to identify, at an early stage, all the potential environmental impacts that need to be addressed. It is effectively a scoping document for the preparation of the EIS, and also assists with commencement of the essential consultation process with all relevant stakeholders.
An EIS is required for activities that are likely to have a significant adverse impact on the environment and other socio-economic and/or cultural heritage aspects. This statement must be lodged with CEPA for assessment, which includes a public review and referral phase. For large projects, the review process may also involve an independent peer review.
An EIS provides a full documentation of all environmental and social issues and committing to the employment of relevant mitigation measures in relation to the development activity. Typically, it addresses such matters as:
•overview of proposal;
•description of proposed activity;
•characteristics of receiving environment (physical, biological and social);
•waste minimization; and
•environmental management, monitoring and reporting.
The PNG Government uses the EIS in accordance with statutory processes as the means to assess a project's impacts and benefits, and to decide whether the PNG Environment Minister should grant approval in principle for the project under the PNG Environment Act. Thereafter, the Managing Director of CEPA may grant a Level 3 environment permit for the activity. The environment permit presents the conditions with which we must comply, and reports outlining our performance against each condition are provided to CEPA annually.
In 2010, the PNG Government engaged the SAMS to conduct an independent assessment of DSTP systems in PNG with consideration to international best practice, and to prepare SAMS 2010. These guidelines are referenced in the PNG Government’s Terms of Reference for an EIS for DSTP projects.
An EIS for the Wafi-Golpu Project was submitted to CEPA on June 25, 2018, and an environment permit was issued on December 18, 2020. The environment permit includes conditions relating to DSTP.
The PNG Mining Act and PNG Environment Act do not deal expressly with mine closure and environmental rehabilitation, which matters are dealt with by means of PNG MRA and CEPA policies. The existing closure policy is the “Mining Project Rehabilitation and Closure Guidelines” issued in 2019, which stipulates “It is a primary duty of a tenement holder to plan, implement and fund mine and mine-related site rehabilitation and closure in accordance with the principles of sustainable development, including preventative measures for the protection of the environment, communities, and human and wildlife health and safety”. The policy envisages:
•early and continuous mining project rehabilitation and closure planning;
•early development and tabling of a rehabilitation and mine closure plan and regular updating of the plan over the life of the mine; and
•tenement holders will provide adequate and accessible financial assurance for implementing mining project closure obligations that is supported by independent expert review. This assurance can take various forms, including letters of credit, securities and guarantees and trust funds, alone or in combination.
Cultural heritage sites are protected under the PNG Conservation Areas Act 1978, which regulates the conservation of sites having particular historic, scientific and social importance in coordination with the provisions of environmental permits issued under the PNG Environment Act, and archaeological permits issued by the PNG National Museum and Art Gallery.
Potential Changes to PNG Environment Laws
A process of mining regime review is underway within PNG and a number of environmental matters are under consideration. These include a Biodiversity Offset Policy (which anticipates biodiversity offset payments to support biodiversity incentives) and a National Oceans Policy.
Harmony's operations and projects in PNG will potentially be affected by changes to PNG environmental laws, and Harmony continues to engage with the PNG Government on these matters through the offices of the PNG Chamber of Mines and Petroleum (''CORE'') and directly with CEPA and (in the case of mine closure) the PNG MRA.
Employee relations in South Africa are guided by the Labour Relations Act, 66 of 1995, as well as by the Employee Relations Framework Policy and mine-based recognition agreements. In South Africa, Harmony recognizes four labor unions (save for the Moab Khotsong, Moab Khotsong Off-Mine and Target where the National Union of Metalworkers of South Africa ("NUMSA") is also recognized). As at fiscal year-end, these unions and their corresponding representation were as follows, namely the National Union of Mineworkers (at 50%); the Association of Mineworkers and Construction Union (at 30%); the United Association of South Africa (at 5%) NUMSA (7%) and Solidarity (at 2%). About 95% of our South African workforce is unionized, with the balance not belonging to a union. See “Integrated Annual Report for the 20-F 2024 – Social – Caring for our employees” on pages 189 to 196.
Australia
Employee relations in Australia are regulated by a combination of federal and state statutes that stipulate minimum standards and provide for collective bargaining and action. All employment contracts are based on the Australian Fair Work Act, 28 of 2009 and the National Employment Standards.
In Queensland, there are a number of well-established mining unions, particularly in the coal and energy sectors. At present, our Australian workforce is not unionized. However, if the Eva Copper Project moves into the development and operational phases, we expect a portion of our workforce to become unionized. This process of unionization may also be further prompted by the possible passage of a proposed Industrial Relations and other Legislation Amendment Bill 2022 (Qld).
Papua New Guinea
Employee relations in PNG are regulated by the PNG Employment Act of 1978 and the PNG Employment of Non-Citizens Act 1978. Individual contracts are entered into, and the workforce is not unionized.
In PNG, wages are guided by independent market research that compares mining, oil and gas companies in the region. Industrial relations at Hidden Valley have been established through regular dialogue between management and employees via the Employee Relations Committee.
In addition, Hidden Valley mine employment is guided by the Employment and Training Plan appended to the Hidden Valley MOA dated August 2005 between Morobe Consolidated Goldfields Limited, the PNG Government, provincial and local governments and the Landowner Association. The Hidden Valley MOA requires that, as far as is reasonably possible, preference in training and employment is given to local and landowner candidates before individuals from other provinces or countries. Compliance with this agreement is a critical issue in maintaining Hidden Valley mine’s license to operate.
In PNG, the PNG Government is considering revisions of its local content policy. In August 2023, the Department of Commerce and Industry presented a draft “Papua New Guinea National Content Policy for Resource Sectors 2023-2027", which policy is designed to encourage greater national participation and partnership in major resource investments in PNG. It has five key focus areas, namely domestic procurement of goods and services and supplier development; localization of employment opportunities; skilled workforce development; greater equity participation by PNG; and sustainable development of project impacted communities. It is presently uncertain the extent to which, and how, the proposed policy will be applied to our current operations and projects in PNG.
Intellectual Property
Harmony is not dependent on intellectual property (including patents or licenses), industrial, commercial or financial contracts (including contracts with customers or suppliers) or new manufacturing processes for the conduct of its business as a whole.
Seasonality
Subject to other factors and unforeseen circumstances, in the third quarter production is generally lower than production during the rest of the year as a result of the ramp-up of operations after annual holiday production declines.
Raw Materials
Harmony uses chemicals, including cyanide, hydrochloric acid and caustic soda, as key reagents in the production of gold. These chemicals are available from a limited number of suppliers and with the exception of cyanide do not represent a material portion of the Company’s costs. Given the challenges associated with suppliers, aging production plants and reliability thereof, Harmony is currently experiencing continued interrupted supply of the foregoing stated reagents as well as other critical consumables utilized in the production of gold across our global operations. The latter has negatively impacted Harmony’s purchasing power and security of supply. As a result of sourcing from third-party raw materials suppliers importing consumables internationally, the security of supply is at a higher premium. Additionally, our stocking strategies account for potential lead time variation and supply constraints, thus minimizing the risk of changes in the marketplace. While commodity pricing is subject to volatility over time, we believe our contractual terms which include rise and fall clauses are dynamic enough to mitigate the market movement volatility.
The ongoing war in the Ukraine, along with the heighted tensions in the Middle East caused significant disruptions on financial markets and key commodities. Additional factors impacting commodity prices include supply conditions, declined property investments in China and major climate changes. While some commodities reached higher levels, there were certain commodities that displayed bearish trends. In the precious metal market, gold and silver prices reached record highs in 2024, due to escalating geopolitical tensions and safe haven demand. The industrial metal market exhibited mixed trends with copper prices at elevated levels due to somewhat stronger demand, whilst aluminum prices strengthened on supply concerns. Prices of lead and nickel, even though at higher levels, lost slight momentum due to sufficient supply levels and weak demand growth in major economies. Energy prices, which serves as a major contributing factor in the production of key gold producing chemicals such as cyanide, caustic soda, hydrochloric acid and other reagents, decreased during 2024. The price of brent crude oil
remained low due to the ongoing political tensions and are further pressured by weak oil demand from top oil importer, China, as a result of a weak Chinese economy. Natural gas prices decreased in 2024 with the focus remaining on the conflict- and geopolitics-related developments, lower U.S. exports, and weather events. Furthermore, soft commodity prices remain a concern and the impact on food inflation, with extreme weather conditions experienced throughout 2024, including prolonged droughts or flooding in many countries which are subsequently pressuring food prices. Keeping the above in mind, while the majority of commodities reached high levels due to the ongoing geopolitical tensions, there are a number of key commodities that decreased due to the relatively low demand from China as a result of weak economic activity within the country. Item 3: "Key Information - Risk Factors – Market Risks - Rising inflation, and geopolitical risks may have a material adverse effect on our business, operating results and financial condition”.
Land Expropriation
South Africa
In December 2017, during its national conference, the ANC resolved that as a matter of policy, the ANC should pursue the expropriation of land without compensation, provided that such expropriation is carried out without destabilizing the agricultural sector, endangering food security or undermining economic growth and job creation. In February 2018, the National Assembly assigned the Constitutional Review Committee (“CRC”), to review section 25 of South Africa’s Constitution and other relevant clauses to make it possible for the state to expropriate land in the public interest without compensation. On December 4, 2018, South Africa’s Parliament adopted the CRC’s report dated November 15, 2018 in which it recommended that section 25 of South Africa’s Constitution be amended to make explicit that expropriation of land without compensation is a legitimate option for land reform. On March 13, 2019, the CRC announced that the work to amend section 25 of South Africa’s Constitution would not be finished before the South African general elections in May 2019 and that consequently the matter would be taken up by Parliament after the elections. In the event that the CRC recommends a Constitutional amendment in favor of expropriation, various procedural milestones would need to occur, including a bill amending section 25 of the Constitution approved by a majority of the National Assembly as well as six of the nine provinces of the NCOP and signed by the President, among others. The legislative process to give effect to the proposed Constitutional amendment, has not yet been finalized. The National Assembly re-established the Ad-Hoc Committee tasked with initiating and introducing the legislation required to amend Section 25 of the Constitution in 2020. The Ad-Hoc Committee engaged in a public participation process which consisted of public hearings that took place from December 2019 to the end of February 2020. These public hearings were held in the nine provinces. The Ad-Hoc committee released the report on its findings on the public participation process on April 16, 2021. In a media statement on April 16, 2021, the Ad-Hoc Committee advised that it had adopted the report and in a subsequent media statement on September 8, 2021, it advised that both the report and the Bill would be sent to the National Assembly for consideration.
The Draft Constitution Eighteenth Amendment Bill was published for comment at the end of 2019. The aim of the Draft Constitution Eighteenth Amendment Bill is to amend the Constitution of the Republic of South Africa, 1996 so as to provide that where land and any improvements thereon are expropriated for the purpose of land reform, the amount of compensation payable may be nil. The Draft Constitution Eighteenth Amendment Bill failed to receive the required two-thirds approval of the National Assembly in December 2021 and the proposed Amendment Bill is no longer being pursued.
In 2019, prior to the introduction of the Draft Constitution Eighteenth Amendment Bill, a draft expropriation bill (the “Draft Expropriation Bill”) was published for public comment by the South African Minister for Public Works (the “Minister for Public Works”), which would allow the state to expropriate land without compensation where doing so would be for a public purpose or in the public interest. In determining to expropriate land without compensation, this legislation would also require the consideration of “all relevant circumstances”, which include, among other things, whether the land is held purely for speculative purposes, is owned by the state or is abandoned. Following significant comments raised by the public on the Draft Expropriation Bill, in October 2020, a new draft expropriation bill (the “New Draft Expropriation Bill”) was introduced by the Minister for Public Works of South Africa. The New Draft Expropriation Bill was approved by the National Assembly on September 28, 2022. It has been referred to the NCOP for consideration, and the public was invited to comment and make written submissions on the New Draft Expropriation Bill by June 23, 2023.
On March 19, 2024, the NCOP passed the New Draft Expropriation Bill but resolved to return the Bill to the National Assembly with proposed amendments. Following a meeting of the National Assembly, the amended Bill was published and sent to the President on March 27, 2024 for assent into law. The President does have the ability to refer the Bill to South Africa's Constitutional Court for a determination on the constitutionality of any of its provisions if he deems this necessary. In addition, should the President assent to the Bill, it may be open to constitutional challenges brought in South Africa's courts.
While the South African government has stated that it does not intend to nationalize mining assets or mining companies, certain political parties have stated publicly and in the media that the government should embark on a program of nationalization. For instance, the ANC has adopted two recommended approaches to interacting with the mining industry. While the ANC has rejected the possibility of mine nationalization for now, the first approach contemplates, among other things, greater state intervention in the mining industry, including the revision of existing royalties, the imposition of new taxes, royalty tax and an increase in the South African government’s holdings in mining companies. The second approach contemplates the South African government taking a more active role in the mining sector, including through the introduction of a state mining company to be involved in new projects either through partnerships or individually.
The proposed amendment to section 25 of South Africa’s Constitution or any legislation resulting in the expropriation of land or greater government intervention could disrupt our operations, which could have a material adverse effect on our business, operating results and financial condition.
The former President, Jacob Zuma, appointed the Davis Tax Committee to look into and review the current South African tax regime, including the mining tax regime. The committee’s first interim report on mining, which was released for public comment on August 13, 2015, proposed no changes to the royalty regime but recommended the discontinuation of the upfront capital expenditure write-off regime in favor of an accelerated capital expenditure depreciation regime. In addition, the report recommended retaining the so called “gold formula” for existing gold mines only, as new gold mines would be unlikely to be established in circumstances where profits are marginal or where gold mines would conduct mining of the type intended to be encouraged by the formula. The Davis Tax committee also recommended the phasing out of additional capital allowances available to gold mines in order to bring the gold mining corporate income tax regime in line with the tax system applicable to all taxpayers. In December 2016, following a period of public comment, the committee issued its second and final report to the Minister of Finance, which largely reaffirmed the David Tax committee’s initial recommendations. The final reports were published in November 2017. The South African National Treasury will continue to consider the committee’s final recommendations. It is not clear at this stage which, if any, of the recommendations will be adopted as legislation. Such legislation could, however, have a material adverse effect on our business, results of operations and financial condition.
On July 31, 2020, the South African National Treasury published for public comment the 2020 Draft Taxation Laws Amendments Bill which proposed, amongst others, amendments to disallow contract miners from benefiting from the accelerated capital expenditure allowance and the elimination of the Minister of Finance’s discretion to uplift the ring-fencing of capital expenditure per mine. Various stakeholders raised issues with the draft bill during the public consultation period. The Taxation Law Amendment Act, 23 of 2020 came into force on January 20, 2021. The amendments proposed in the Bill relating to contract miners and the Minister of Finance's discretion to uplift the ring-fencing of capital expenditure per mine were not included in the final Act and no substituted legislation has been proposed since then.
On December 11, 2020, the Minister published the Housing and Living Conditions Standard, which requires us to revise our current housing and living condition plans in terms of its SLPs, which could result in increased costs. See Item 4: "Information on the Company – Business Overview – Regulation – Mining rights – South Africa – Housing and Living Standards".
Assessed Losses
In line with the 2020 Budget announcement, government broadened the corporate income tax base in terms of the Taxation Laws Amendment Act, No 20 of 2021, by restricting the offset of the balance of assessed losses carried forward to 80 percent of taxable income, which came into effect for years of assessment ending on or after March 31, 2023.
To the extent that the balance of assessed loss exceeds 80 percent of current-year taxable income, companies are able to set off the higher of R1 million or 80 percent of taxable income when calculating their tax liability. Stated differently, the assessed loss balance can be set off against 80 percent of taxable income and the remainder remains deductible in future years. The remaining assessed loss that is not utilized in any given year may be carried forward indefinitely as previously. This limitation does not apply to assessed capital losses, which in most cases remain fully available for set-off against capital gains of the taxpayer.
In the case of mining companies, the legislation has been clarified to state that the deduction of the mining capital expenditure is calculated after the set-off of the assessed loss. The balance of unredeemed capital expenditure will be carried forward to the following year of assessment.
If the current year’s taxable income calculation results in an assessed loss before taking into account an assessed loss carried forward from the previous year of assessment, the loss limitation rule does not apply. In such a case the full amount of the current year’s assessed loss is added to the previous year’s assessed loss and the entire aggregate balance of assessed loss is carried forward to the following year of assessment. In terms of draft legalization the restriction will not apply should a company have taken steps to liquidate.
Base Erosion and Profit Shifting
The South African Government is fully committed to implement the Inclusive Framework of the OECD relating to Base Erosion and Profit Shifting that were developed by the OECD/G20 countries even though it is not a member country on the basis that South Africa is an early adopter of the relevant measures. Consistent with this approach, it has not only implemented and strengthened the rules relating to the ability to deduct interest, but it has also widened the scope of the transfer pricing rules to include associated enterprises. In addition it also strengthened the laws relating to hybrid equity and hybrid interest and the returns from these instruments.
South Africa is also a signatory to the Multilateral Convention to Implement Tax Treaty related Measures to Prevent Base Erosion and Profit Shifting. In this context the so-called The Multilateral Instrument was incorporated into South African tax law with effect from January 1, 2023. Among other things South Africa adopted the Principal Purpose Test to deal with treaty abuse.
In addition, South Africa also signed the so-called Pillar 1 and Pillar 2 proposals that are aimed to reduce opportunities for tax planning and tax avoidance for multinational entities by limiting tax competition and the place where taxes are in fact paid. Effectively Pillar 1 aims to allocate business profits based on actual business activities in a specific country, whereas Pillar 2 aims to establish a minimum global tax rate of 15%. In February 2024 South Africa released a Draft Global Minimum Tax Bill with an effective date of 1 January 2024 with a deadline for comments to be submitted by the end of March 2024, which legislation focuses on the implementation of the principles in Pillar 2. Effectively the draft legislation incorporates the GloBE Model Rules on the basis that a Domestic Minimum Top-up Tax is applicable. The draft legislation will not have a monetary impact on the 2024 year of assessment.
South Africa is not only committed to reduce the carbon footprint consistent with the OECD Guidelines, but it has also introduced additional measures to increase the carbon tax over the next few years. In addition and to cater for constant loadshedding, it introduced measures to incentivize taxpayers to invest in renewable energy projects by allowing an allowance of up to 125% if the project is brought into use before March 1, 2025. See “– Laws and Regulations Pertaining to Environmental Protection - South Africa” above.
C. ORGANIZATIONAL STRUCTURE
Harmony is a holding company with its significant ownership interests organized as set forth in Exhibit 8.1 "Significant Subsidiaries of Harmony Gold Mining Company Limited”.
The information set forth under the heading:
•“– Harmony – About Harmony” on pages4 to 5 of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference. Also see note 2.1 “Consolidation” of our consolidated financial statements, set forth beginning on page F-1.
D. PROPERTY, PLANT AND EQUIPMENT
The information set forth under the headings:
•“– Delivering profitable ounces – Operational performance” on pages 50 to 88; and
•“– Environment – Environmental stewardship” on pages 91 to 98.
of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference. Also see note 14 “Property, Plant and Equipment” and note 32 “Cash Generated by Operations” of our consolidated financial statements, set forth beginning on page F-1.
Also see Item 4: “Information on the Company - Business Overview - Regulation - Laws and Regulations Pertaining to Environmental Protection - South Africa”, “- Laws and Regulations Pertaining to Environmental Protection - Papua New Guinea" and “- Capital Expenditures” and Item 5: “Operating and Financial Review and Prospects - Liquidity and Capital Resources".
MINERAL RESOURCE AND MINERAL RESERVE SUMMARY DISCLOSURE
Harmony is providing disclosure in compliance with Subpart 1300 (17 CFR 229.1300) of Regulation S-K (“Regulation S-K 1300”) for its fiscal year ending June 30, 2024, and will continue to do so going forward.
Harmony has developed a process to determine which properties are material to its business or financial condition for purposes of the individual property disclosure requirements of Item 1304 of Regulation S-K (17 CFR § 229.1304). The key considerations taken into account by Harmony in its materiality assessment include qualitative and quantitative factors in the context of our overall business and financial condition. The materiality assessment covers all of our mining properties (regardless of the stage of the mining property) and all of its mining and related activities from exploration through extraction, and is reviewed by us on an annual basis. Based on the above considerations, Harmony has determined that, as of June 30, 2024, its material properties for purposes of Regulation S-K 1300 are Doornkop, Free State Surface Operations, Joel, Kalgold, Kusasalethu, Moab Khotsong, Mponeng, Target, Tshepong North, Tshepong South, Mine Waste Solutions, Hidden Valley, Wafi-Golpu Project, Eva Copper Project.
With respect to Target, Moab Khotsong, Mponeng, Kalgold, Mine Waste Solutions, Doornkop, Wafi-Golpu Project, Tshepong South, and Tshepong North, updated Technical Report Summary ("TRSs") have been prepared by the relevant Qualified Persons (“QPs"), and are filed as Exhibits 96.1, 96.4 to 96.7, 96.9 and 96.11 to 96.13 hereto. With respect to Joel, Kusasalethu, Free Sate Surface Operations, Hidden Valley, Eva Copper Project, Harmony has determined that, as of June 30, 2024 (i) there have not been any material changes to the Mineral Resource or Mineral Reserve reported in the TRSs for these properties and (ii) all material assumptions and information pertaining to the disclosure of the Mineral Resource and Mineral Reserve for Joel, Kusasalethu, Free Sate Surface Operations, Hidden Valley, Eva Copper Project, remain current in all material respects, based on all facts and circumstances, both quantitative and qualitative. As a result, the previously filed TRSs for Joel, Free Sate Surface Operations, Kusasalethu, Hidden Valley, Eva Copper Project are re-filed as Exhibits 96.2, 96.3, 96.8, 96.10 and 96.14, respectively, hereto.
Mineral Resources and Mineral Reserves are estimates that contain inherent risk and depend upon geologic interpretation and statistical inferences drawn from drilling and sampling analysis, which may prove to be unreliable. For additional information on the risks and uncertainties associated with Harmony’s mining properties, see Item 3: "Key Information – Risk Factors".
Harmony’s South African operations include nine deep-level mines, an open pit mining operation and several surface retreatment facilities. Combined, these account for gold Mineral Resources (exclusive of Mineral Reserves) of 64.4 million ounces and gold Mineral Reserves of 22.5 million ounces at June 30, 2024.
Harmony has three underground mining operations in the West Rand: Doornkop, Kusasalethu and Mponeng. As at June 30, 2024, their combined Mineral Resources (exclusive of Mineral Reserves) were 26.7 million ounces and the combined Mineral Reserves were 6.8 million ounces. Harmony has one underground mining operation in the Klerksdorp goldfield: Moab Khotsong. As at June 30, 2024, the estimated Mineral Resources (exclusive of Mineral Reserves) were 4.6 million ounces and the estimated Mineral Reserves were 3.5 million ounces. Harmony has five underground mining operations in the Free State: Joel, Masimong, Tshepong South, Tshepong North, and Target 1. Target 3 is also situated in the Free State, but is currently held under care and maintenance. As at June 30, 2024, their combined estimated Mineral Resources (exclusive of Mineral Reserves) were 29.0 million ounces and the combined estimated Mineral Reserves were 2.6 million ounces.
Harmony has one open pit mine and several surface retreatment facilities in South Africa. These include: Kalgold, various surface sources in the Free State (including several tailings retreatment operations and waste rock dumps ("WRDs"), located largely in the vicinity of Welkom), marginal ore rock dumps and tailings (Mispah and Kop Paydam) associated with Moab Khotsong that are available for retreatment, Mine Waste Solutions, Vaal River and West Wits. As at June 30, 2024, their combined estimated Mineral Resources (exclusive of Mineral Reserves) were 4.1 million ounces and the combined estimated Mineral Reserves were 9.6 million ounces.
In PNG, Harmony has one wholly-owned open-pit, gold and silver mine: Hidden Valley, and a 50% interest in the Wafi-Golpu Project. As at June 30, 2024, our combined estimated gold and gold equivalent Mineral Resources (exclusive of Mineral Reserves) in PNG were 20.5 million ounces and the combined estimated Mineral Reserves were 17.7 million ounces.
In Australia, Harmony acquired the Eva Copper Project. As at June 30, 2024, our combined estimated gold and gold equivalent Mineral Resources (exclusive of Mineral Reserves) in Australia were 7.8 million ounces. The combined estimated Mineral Reserves may be declared once the feasibility study is concluded.
Maps showing the location of individual properties as well as infrastructure and licenses are shown in “—Individual Property Disclosure” below. All operations are 100 percent owned unless otherwise indicated.
The following table sets out the aggregate production of Harmony’s mining operations for the years ended June 30, 2024, 2023 and 2022.
The following information is detailed for each material property in “—Individual Property Disclosure” below:
•the location of the properties;
•the type and amount of ownership interests;
•the identity of the operator or operators;
•titles, mineral rights, leases or options and acreage involved;
•the stages of the properties (exploration, development or production);
•key permit conditions;
•mine types and mineralization styles; and
•processing plants and other available facilities.
Methodology
Mineral Resources
A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction. The location, quantity, grade, continuity and other geological characteristics of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge, including sampling.
An Inferred Mineral Resource is that part of a Mineral Resource for which quantity and grade or quality are estimated based on limited geological evidence and sampling. Geological evidence is sufficient to imply but not verify geological and grade or quality continuity. An Inferred Resource has a lower level of confidence than that applying to an Indicated Mineral Resource and must not be converted to a Mineral Reserve. It is reasonably expected that the majority of an Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.
An Indicated Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics are estimated with sufficient confidence to allow the application of modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and is sufficient to assume geological and grade or quality continuity between points of observation.
A Measured Mineral Resource is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics are estimated with confidence sufficient to allow the application of modifying factors to support detailed mine planning and final evaluation of the economic viability of the deposit. Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient to confirm geological and grade or quality continuity between points of observation. A Measured Mineral Resource has a higher level of confidence than that applying to either an Indicated or an Inferred Mineral Resource. It may be converted to either a Proven Mineral Reserve or a Probable Mineral Reserve.
Mineral Resource estimation
To meet SAMREC, 2016’s requirements that this solid material reported as a Mineral Resource should have “reasonable and realistic prospects for eventual economic extraction”, Harmony has determined an appropriate cut-off grade which has been applied to the quantified mineralized body according to a process incorporating a long-term view on future economic modifying factors. In applying this process, Harmony uses a gold price of R1 100,000/kg to derive a cut-off grade to determine the Mineral Resources at each of its South African underground operations.
The estimation of Mineral Resources is based on geoscientific knowledge and borehole and sampling data (obtained by means of chip sampling on the reef horizon in a shaft-specific grid), with input from the company’s Ore Reserve managers, geologists and geostatistical staff. All sampling done is subject to quality assurance and quality control, as prescribed by SAMREC, 2016, to ensure data quality and accuracy. Each mine’s Mineral Resource is categorized – based on similarities in geology, facies, grade and structure, the orebody is divided into geozones. It is then blocked-out and ascribed an estimated value. A computerized geostatistical estimation process is used at all our mines.
To define that portion of a Measured and Indicated Mineral Resource that can be converted to a Proven and Probable Mineral Reserve, Harmony applies the concept of a cut-off grade. At our underground South African mines, this is done by defining the optimal cut-off as the lowest grade at which an orebody can be mined such that the total profits, under a specified set of mining parameters, are maximized. The cut-off grade is determined using the company’s Optimiser software, which requires the following as inputs:
•the database of Measured and Indicated Resource blocks (per shaft section);
•an assumed gold price which, for our Mineral Reserves, was taken as R1 040,000/kg;
•planned production rates;
•the mine recovery factor which is equivalent to the mine call factor multiplied by the plant recovery factor; and
Rand per tonne cash operating costs are historically based but take cognizance of distinct changes in the cost environment such as restructuring, right-sizing, and other cost-reduction initiatives and, for below-infrastructure ounces, an estimate of capital expenditure.
In PNG, the block cave reserve at Golpu uses block cave optimization software to define the optimal mine plan and sequencing. The open-pit reserve at Hidden Valley is determined using the Whittle optimization program to guide the most efficient mine design given the commodity prices and cost inputs assumed.
Mineral Reserves represent that portion of the Measured and Indicated Mineral Resources above the cut-off grade in the LOM plan and are estimated after consideration of the factors affecting extraction, including mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. At our underground mines, the reported Mineral Reserves are accessible from existing infrastructure and/or infrastructure that is in the process of being developed.
A range of disciplines, including geology, survey, planning, mining engineering, rock engineering, metallurgy, financial management, human resources management and environmental management, are involved at each mine in the LOM planning process and the conversion of Mineral Resources into Mineral Reserves.
The modifying factors related to the ore flow that are used to convert Mineral Resources to Mineral Reserves through the LOM planning process are stated for each shaft. For these factors, historical information is used, except if there is a valid reason to do otherwise. As a result of the depth at which mining occurs and the resulting rock engineering requirements at our South African underground mines, some shafts include stope support pillars into the design of their mining layouts which accounts for discounts of 7% to 10%. A further 15% discount is applied as a LOM factor to provide for unpay and off-reef mining. In general, LOM plan extraction factors do not exceed 85% and are reflected in Mineral Reserves.
While there are some differences between the definition of SAMREC, 2016 and that of Regulation S-K 1300, only the Mineral Reserves at each of Harmony’s operations and advanced projects as at June 30, 2024 that qualify as Mineral Reserves for purposes of Regulation S-K 1300 are presented in the tables below.
Mineral Reserves
Modifying factors are considerations used to convert Mineral Resources to Mineral Reserves. These include, but are not restricted to, mining, processing, metallurgical, infrastructure, economic, marketing, legal, environmental, social and governmental factors. A Mineral Reserve is the economically mineable part of a Measured and/or Indicated Mineral Resource. It includes diluting materials and allowances for losses, which may occur when the material is mined or extracted and is defined by studies at prefeasibility or feasibility level as appropriate that include application of modifying factors. Such studies demonstrate that, at the time of reporting, extraction could reasonably be justified. The reference point at which Mineral Reserves are defined, usually the point where the ore is delivered to the processing plant, must be stated. It is important that in all situations where the reference point is different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully informed as to what is being reported.
A Probable Mineral Reserve is the economically mineable part of an Indicated, and in some circumstances, a Measured Mineral Resource. The confidence in the modifying factors applying to a Probable Mineral Reserve is lower than that applying to a Proven Mineral Reserve.
A Proven Mineral Reserve is the economically mineable part of a Measured Mineral Resource. A Proven Mineral Reserve implies a high degree of confidence in the modifying factors. A Scoping Study is an order of magnitude technical and economic study of the potential viability of Mineral Resources that includes appropriate assessments of realistically assumed modifying factors together with any other relevant operational factors that are necessary to demonstrate at the time of reporting that progress to a prefeasibility study can be reasonably justified.
A prefeasibility study is a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a preferred mining method, in the case of underground mining, or the pit configuration, in the case of an open-pit, is established and an effective method of mineral processing is determined. It includes a financial analysis based on reasonable assumptions on the modifying factors and the evaluation of any other relevant factors which are sufficient for a competent person, acting reasonably, to determine if all or part of the Mineral Resource may be converted to a Mineral Reserve at the time of reporting. A prefeasibility study is at a lower confidence level than a feasibility study.
A feasibility study is a comprehensive technical and economic study of the selected development option for a mineral project that includes appropriately detailed assessments of applicable modifying factors together with any other relevant operational factors and detailed financial analysis that are necessary to demonstrate at the time of reporting that extraction is reasonably justified (economically mineable). The results of the study may reasonably serve as the basis for a final decision by a proponent or financial institution to proceed with, or finance, the development of the project. The confidence level of the study will be higher than that of a prefeasibility study.
For the reporting of Mineral Reserves the following parameters were applied:
•a gold price of US$1,772/oz;
•an exchange rate of R18.26 per US dollar;
•the above parameters resulting in a gold price of R1 040,000/kg for the South African assets;
•the Hidden Valley operation used prices of US$1,772/oz gold (“Au”), US$23.00/oz silver (“Ag”), US$ and US$4.00/lb copper (“Cu”) at an exchange rate of A$1.42 per US$;
•the Wafi-Golpu Joint venture used prices of US$1,200/oz and US$3.00/lb Cu;
•gold equivalent ounces are calculated assuming a US$1,772/oz Au, US$ 4.00/lb Cu and US$23.00/oz Ag with 100% recovery for all metals; and
•“gold equivalent” is computed as the value of Harmony's gold, silver and copper from all Mineral Resources/ Mineral Reserves classifications divided by the price of gold. All calculations are done using metal prices as stipulated.
Gold equivalent ounces
In instances where individual deposits may contain multiple valuable commodities with a reasonable expectation of being recovered (for example gold and copper in a single deposit) Harmony computes a gold equivalent to more easily assess the value of the deposit against gold-only mines. Harmony does this by calculating the value of each of the commodity, then dividing the product by the price of gold. For example, the gold equivalent of a gold and copper deposit would be calculated as follows: ((gold ounces x gold price per ounce) + (copper pounds x copper price per pound)) / gold price per ounce. All calculations are done using metal prices as stipulated above. Harmony assumes a 100% metallurgical recovery in its calculations unless otherwise stated.
As at June 30, 2024, Harmony had aggregate attributable Measured and Indicated Resources (exclusive of Mineral Reserves) of approximately 43.1 million ounces of gold, 12.7 million ounces of gold equivalents, 29.8 thousand ounces of silver, 5.7 million pounds of copper, 71.5 million pounds of molybdenum and 51.4 million pounds of uranium.
¹ Total attributable Gold equivalent ounces are calculated assuming a US$1,772/oz Au, US$4.00/lb Cu and US$23.00/oz Ag with 100% recovery for all metals.
As at June 30, 2024, Harmony had aggregate attributable Proven and Probable Mineral Reserves of approximately 28.5 million ounces of gold, 11.8 million ounces of gold equivalents, 13.5 thousand ounces of silver, 5.1 million pounds of copper and 10.5 million pounds of uranium.
¹ Total attributable Gold equivalent ounces are calculated assuming a US$1,772/oz Au, US$4.00/lb Cu and US$23.00/oz Ag with 100% recovery for all metals.
² Metal figures are fully inclusive of all mining dilutions and gold losses, and are reported as mill-delivered tonnes and head grades. Metallurgical recovery factors have not been applied to the reserve figures.
Note: rounding of numbers may result in slight computational discrepancies.
As at June 30, 2024, Harmony’s attributable gold and gold equivalent Mineral Reserves were 40.3 million ounces of gold, a increase from 39.3 million ounces at June 30, 2023. The year on year Mineral Reserve reconciliation is shown below.
Description
(000kg)
Moz
June 30, 2023 Gold and gold equivalents
1,224
39.3
Changes during fiscal 2024
Mined
-57
-1.8
Other losses (geology, planning)
-20
-0.6
Reserve additions from Operations
131
4.2
Gold equivalents
-26
-0.8
June 30, 2024 Gold and gold equivalents
1,252
40.3
Note: rounding of numbers may result in slight computational discrepancies.
MINERAL RESOURCE AND MINERAL RESERVE INDIVIDUAL PROPERTY DISCLOSURE
For more information about Harmony’s mines, including a summary of the Company’s mining rights and licenses refer to Item 4: "Information on the Company - Business Overview – Regulation”. For detailed information about Harmony’s mines, including the mining rights and licenses refer to the TRS on each individual property, filed as an Exhibit to this annual report on Form 20-F.
Doornkop is an underground gold mine located in the West Wits mining district southwest of Johannesburg, in the Gauteng Province. At longitude 27°47'26.55"E and latitude 26°13'03.2"S, the mine forms part of Harmony's West Rand (“West Wits”) operations. Doornkop is wholly-owned and operated by Harmony.
The following graphic illustrates the location of the Doornkop mine, along with certain infrastructure.
The Doornkop shaft complex is located south of Krugersdorp, 30km west of Johannesburg, in Gauteng Province, South Africa. The property lies between Sibanye Stillwater Limited’s Cooke 1 shaft and Durban Roodepoort Deep Limited. Doornkop form part of Harmony’s West Rand operations and extends to a maximum depth of approximately 2,000m below surface. Current mining operations extract the South Reef, with the Mineral Reserves being comprised entirely of this reef. Mineral Resources are comprised of the South Reef and the Kimberley Reef, and a limited (<0.5%) amount of the Main Reef.
There is no material litigation against Harmony that threatens its mineral rights, tenure, or operations.
Operational Infrastructure
Infrastructure in the region is well established, supporting the numerous operational gold mines in the area. The regional infrastructure includes national and provincial paved road networks, power transmission and distribution networks, water supply networks and communication infrastructure. Doornkop’s surface and underground infrastructure, including its power and water supplies, is sufficient for the current and planned production level requirements.
Doornkop’s main and vent shaft systems are currently exploiting the South Reef to approximately 2,000m below surface. The narrow South Reef is exploited by means of conventional stoping. The ore mined at Doornkop is processed at the mine’s carbon-in-pulp (“CIP”) plant, which is located adjacent to the shaft. Operations are powered by electricity from Eskom.
Doornkop is an established operation, and the currently available infrastructure is sufficient to support the mine plan. Doornkop is accessible via the national and provincial roads. The general layout of Doornkop infrastructure is displayed in the graphic below.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R3,924 million.
Doornkop did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
Geology
Doornkop is situated on the northwestern margin of the Witwatersrand Basin of South Africa, one of the most prominent gold provinces in the world. While there are several gold-bearing conglomerate reefs present within the mining right area, only the Kimberley Reef and South Reef are considered to have prospects for economic extraction at this stage.
In the West Rand Goldfield, the Kimberley Reefs include a number of different gold-bearing conglomerate horizons. At Doornkop, it is the Kimberley K9 Reef horizon which comprises the Mineral Resources along with the South Reef. The Kimberley K9 Reef rests on an unconformity and is a multi-pulse conglomerate which is divided into four cycles, each consisting of an upper conglomerate and a lower quartzite.
The South Reef comprises a basal conglomerate unit and a cycle of trough cross-bedded sediments. The South Reef is dominated by silicate phases such as quartz, carbon (seam and specks), as well as sulphide phases such as pyrite, pyrrhotite and chalcopyrite. While the upper cycles may carry some gold values, up to 95% of the gold present is located in the lower cycle.
Both the Kimberley Reef and the South Reef have been subjected to faulting and are intruded by a series of dykes and sills of various ages that cut across the reefs. The gold mineralization is interpreted to have succeeded a period of deep burial, fracturing, and alteration. The gold and other elements are believed to have precipitated through the reaction of hydrothermal fluids at high temperatures along the reef horizons.
History
Although exploration in the Doornkop area dates back to the early 1930s, and multiple phases of exploration and mining activities have taken place in the intervening years, the sinking of the Main and Ventilation Shafts at Doornkop only commenced in 1983. At the time, Doornkop was owned by Johannesburg Consolidated Industries Limited (“JCI”).
It was initially planned to mine both the Kimberley and the South Reefs. However, a decision was then taken by JCI to target the shallower Kimberley Reef only, mining it by mechanized methods. In addition, the deepening of the Main Shaft required to access to the South Reef was deferred. During 1989, the planned production rates from the Kimberley Reefs were achieved, but the anticipated grades were not recovered. Adverse geological structures were encountered, and the decrease in grades were attributed to difficulties associated with the mechanized mining methods resulting in dilution.
A review of the operation was undertaken in 1991, and the mining approach was changed to a more selective mining cut, targeting higher grade areas of Kimberley Reef only. In 1999, the deepening project was stopped, as a result of the low prevailing gold prices. The sub-vertical shaft sinking had been completed with the shaft bottom at 1,953m below surface. The deepening of the Main Shaft stopped at 1,340m below surface.
Harmony acquired Doornkop when it took over control of Randfontein Estates Limited ("REL"), in early 2000. Harmony continued mining the Kimberley Reef using mechanized mining methods, but revisited the work done toward extracting the South Reef. The mining method for the Kimberley Reef was subsequently changed to the conventional stoping approach, in order to extract a reduced tonnage at an improved grade.
In 2021 a capital project was approved to extend mining to new mining levels on 207 and 212 levels. Both the levels are currently busy with access development, which commenced from the shaft position in 2017 as early works. The shaft infrastructure is also being upgraded and an ore handling system is being established on 215 level in order to handle the production from the 207 and 212 levels.
Mineral Tenure
Refer to Item 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – South Africa” above for a summary of the regulatory environment in South Africa.
The current mining right is held by REL, a wholly owned subsidiary of Harmony. The right encompasses an area of 2,941.02ha and was successfully converted, executed and registered as a new order mining right at the Mineral and Petroleum Resources Titles Office ("MPRTO"). As such, it is secured under Mining Authorisation number ML 13/97. The DMRE reference GP30/5/1/2/2/09MR was issued for a period of 30 years expiring on October 6, 2038, and Harmony has the exclusive right to renew the right.
A summary of the status of environmental permits and licenses issued as at June 30, 2024, related to Doornkop operation is presented in the table below.
Permit / License
Reference No.
Issued By
Date Granted
Validity
EMPr
GP30/5/1/2/2/(09) EM
DMRE
June 7, 2010
LOM
Certificate of Registration (Nuclear)
01/0025/06
National Nuclear Regulator
May 31, 2003
LOM
Water Use Permit
33/2/323/24
DWS
December 1, 1977
LOM
Integrated WUL (Draft)
16/2/7/C221/C024
DWS
January 1, 2010
LOM
ISO 14001 Certification
631282
BSI
November 1, 2021
November 1, 2024
Cyanide Management Certification
N/A
ICMC
April 1, 2021
April 1, 2024
Precious Metal Refining License
1889/000251/66
SA Diamond & Precious Metals Regulator
June 1, 2011
June 1, 2041
Environmental Authorisation for Water Treatment Plant
GP30/5/1/2/2/(09) EM
DMRE
August 1, 2016
LOM
License to impound water in a dam with Safety risk
12/2/C221/69
DWS
July 17, 2009
LOM
Notes: BSI - British Standard Institute, ICMC - International Cyanide Management Code.
Mining Method
Doornkop is a deep level underground gold mine currently operating at depths ranging between 1,870m and 1,950m below surface.
The mining method used at Doornkop is conventional breast mining, in a sequential grid, also known as sequential grid mining (“SGM”).
Doornkop does not use backfill for the support of stopes. The SGM method makes use of dip pillars and reduced mining spans with pre-developed tunnels, aimed at controlling geotechnical stress.
The mining sequence at Doornkop is typically a V-shaped configuration, colloquially referred to as the “inverted Christmas tree”. An underhand face configuration is adopted when mining towards the west and an overhand face configuration when mining towards the east.
Primary development is done off-reef (in waste rock), while secondary development is done on-reef (in the mineralized zone).
Mineral Processing
Doornkop's gold processing facility has been in operation since the mid-1980s. The technology used to process the gold-bearing ore is well established and is suitable for the style of mineralization.
The milled ore from Doornkop follows a standard cyanide leach, CIP and electrowinning process in order to extract the gold bullion.
The plant is currently operating below its designed throughput capacity and in the past has operated at the throughput required to deliver the forecasted ounces of gold in the LOM.
The QP preparing the TRS was employed on a full-time basis by Harmony. The QP's qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Qualified Person
Professional Organization
Qualification
TRS Section Responsibility
Personal Insp.
Mr. H Chirambadare
SACNASP
BSc. (Geol, Math), BSc. (Hons) Geol, MENG, MBA
All
Full time
Exploration
Exploration at Doornkop has been focused on improving confidence in the geological model, as well as adding and upgrading additional Mineral Resources to the mine as existing Mineral Resources are depleted through mining. Over the years, geological data has been obtained through surface drilling, a seismic survey, underground drilling, underground channel (chip) sampling and geological mapping.
Surface exploration drilling has taken place over several different campaigns since exploration was initially undertaken in the 1930s. Surface drilling provides widely spaced initial grade and channel width information, upon which mine development decisions are based.
Underground exploration drilling is a continuous process which would have been in place since the operation commenced. The underground drilling provides geological information, which is used for the Mineral Resource estimates, as well as for mine planning purposes
Diamond core drilling was used for all underground drill holes. Diamond core drilling has been undertaken using hydraulic and pneumatic drill rigs.
Drilling and logging practices are based on the Harmony company standards, which have been in place since Harmony took over Doornkop
The QP is of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
Mineral Resource Estimate
The Mineral Resource estimate for Doornkop is considered to have reasonable prospects for economic extraction. The cut-off value for the Mineral Resources has been determined as 490cmg/t, based on the economic assumptions presented in the table below at June 30, 2024.
Description
Unit
Value
Gold price
US$/oz
1,878
FX rate
R:US$
18.26
Gold price
R/kg
1,100,000
Plant recovery factor
%
96.65
Unit cost
R/t
3,395
This cut-off value represents typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
The Mineral Resources were originally prepared, classified and reported according to the SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024. The Mineral Resource estimate, as at June 30, 2024, exclusive of the reported Mineral Reserves, is summarized in the table below.
Fiscal Year Ended June 30,
% Change
2024
2023
Mineral Resource Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Measured
19.360
3.64
70,440
17.334
3.44
59,656
18.1
Indicated
12.201
3.21
39,137
10.345
2.86
29,598
32.2
Total / Ave. Measured + Indicated
31.561
3.47
109,578
27.679
3.22
89,254
22.8
Inferred
12.126
4.15
50,357
13.262
4.53
60,050
(16.1)
Notes
1.Mineral Resources are reported with an effective date of June 30, 2024 were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. H. Chirambadare, who is Ore Reserve Manager at Doornkop, and a Harmony employee.
2.The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3.No modifying factors or dilution sources have been included to in-situ Reserve which was subtracted from the SAMREC Resource in order to obtain the S-K 1300 Resource.
4.The Mineral Resources are reported using a cut-off value of 490 cmg/t determined at a gold price of US$1,878/oz.
5.Tonnes are reported rounded to three decimal places. Gold values are rounded to zero decimal places.
6.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
7.Rounding as required by reporting guidelines may result in apparent summation differences.
8.The Mineral Resource estimate is for Harmony’s 100% interest.
The increase in Mineral resources is mainly as result if the decrease in the resources cut-off grade from 650 cmg/t to 490 cmg/t.
Mineral Reserve Estimate
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational mine planning processes. Mine planning utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, dilution, ore losses, minimum mining widths, planned mine call and plant recovery factors.
The Mineral Reserve estimate, as at June 30, 2023 and 2024, is summarized in the table below.
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Proven
4.822
4.01
19,317
5.203
4.35
22,651
(14.7)
Probable
8.734
4.51
39,379
8.212
4.44
36,467
8.0
Total / Ave. Proven + Probable
13.556
4.33
58,696
13.414
4.41
59,118
(0.7)
Notes:
1.The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. H. Chirambadare, who is the Doornkop Ore Reserve Manager, and a Harmony employee.
2.Tonnes, grade, and gold content (oz) are declared as net delivered to the mills.
3.Figures are fully inclusive of all mining dilutions, gold losses and are reported as mill delivered tonnes and head grades. Metallurgical recovery factors have not been applied to the reserve figures.
4.Gold content is recovered gold content after taking into consideration the modifying factors.
5.Mineral Reserves are reported using a cut-off grade of 500cmg/t determined using a gold price of US$1,772/oz.
6.Rounding as required by reporting guidelines may result in apparent summation differences.
The decrease in Mineral Reserves is due to normal depletion that was not fully offset by long inclined borehole ("LIB") exploration drilling and on reef development which increased ore body confidence classification. LIB exploration drilling confirmed a flatter dipping reef which resulted in additional resources above infrastructure that were converted to reserves.
The table below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for Doornkop. The modifying Factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Modifying Factor
Unit
Value
Relative Density
t/mᶟ
2.77
Stoping width
cm
124
Gully (dilution)
%
6.01
Off Reef
%
2.36
Waste to Reef
%
0.33
Flushing tons
%
—
Discrepancy
%
18.55
Mine Call Factor
%
81.00
Plant Recovery Factor
%
96.65
Mine Recovery Factor
%
78.29
Plant Call Factor
%
100.00
Mineral Reserve cut-off
cmg/t
500
For additional information, see the TRS on each individual property, filed as an Exhibit of this annual report on Form 20-F.
The Free State Surface Operations are located near the towns of Welkom and Virginia, Free State Province, South Africa. The operations reclaim and re-treat local surface tailings storage facilities (“TSFs”) and WRDs.
The Free State Surface Operations comprise Mineral Resources located in 26 TSFs and 6 WRDs; three of the TSFs are actively being mined and processed through two processing plants. The Free State Surface Operations comprise the following:
•Phoenix Project: this project is currently reclaiming two TSFs which are processed through the Saaiplaas Plant;
•Central Plant Reclamation. this operation is currently reclaiming one TSF which is processed through the Central Plant;
•Other Free Sate Tailings: this project is at pre-feasibility study ("PFS") level and will include the treatment of 21 TSFs. These TSFs will be processed through any of the plants; and
•WRDs located across Harmony's Free State mining operations.
The Free-State Surface Operations and their associated mineral rights are wholly owned by Harmony, except for the Phoenix Project. The Phoenix Project is 100% owned by Harmony’s BBBEE subsidiary, Tswelopele Beneficiation Operation (Pty) Limited, of which Harmony is a 77% shareholder (5% is held by the Harmony Community Trust).
The location of the WRDs is presented in the figure below.
Phoenix Project is a tailings retreatment operation located approximately 6km north of the town of Virginia; it currently re-treats material from the Dam A (PB Dam A) and Dam 21 TSFs using the Saaiplaas Plant. The Saaiplaas Plant is located at latitude 28°03’37.68”S and longitude 26°53’14.59”E.
The Phoenix Project is nearing the end of its current ore sources and the next source that will be introduced is the FSS6 TSF.
The Central Plant Reclamation currently re-treats material from the FSS5 TSF using the Central Plant. The FSS5 TSF is located close to the southern edge of the town of Welkom, while the Central Plant is located approximately 7km southeast of the Saaiplaas Plant at a latitude of 28°02’8.36”S and a longitude of 26°52’8.99”E.
The Other Free State Tailings is currently at PFS stage. Although the results of the study completed in 2009 indicate a positive net present value, the project has not yet been commissioned. The Reserve Reclamation Financial Model done for these Other Free State Tailings for our 2025 business plan is also showing a positive free cash flow. The project currently comprises the 21 TSFs.
There is no material litigation against Harmony that threatens its mineral rights, tenure, or operations.
The surrounding areas of Welkom and Virginia are well developed in terms of access and mining-related infrastructure supporting the numerous operational gold mines in the area. The regional infrastructure includes national and provincial paved road networks, power transmission and distribution networks, water supply networks and communication infrastructure.
Operations are powered by electricity from Eskom.
The Free State Surface Operations have adequate access to the infrastructure required to meet the planned LOM production schedules. In addition, all provisions and plans required for the Free State Tailings have been made. The surface infrastructure located in the vicinity of Welkom and Virginia is displayed in the graphic below.
Free State Surface Sources had no “Property, Plant, and Equipment” as of June 30, 2024.
Free State Surface Operations did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
Geology
Material contained in the TSFs and WRDs originates from deep level gold mines, operated by Harmony and other mining companies. The mining operations predominantly extract narrow, tabular gold-bearing conglomerate reefs, namely the Basal, B, Elsburg ("EA"), Dreyerskruil and Beatrix Reefs.
These reefs occur within the Archean Witwatersrand Basin which hosts the Witwatersrand Supergroup succession. The Basal Reef is located at the base of the Harmony Formation, within the Johannesburg Subgroup of the Central Rand Group (“CRG”). The B Reef is part of the Spec Bona Member at the base of the Aandenk Formation, within the Turffontein Subgroup of the CRG. The Beatrix Reef is part of the Earls Court Member of the Aandenk Formation, within the Turffontein Subgroup of the CRG. The EA and Dreyerskruil Reefs occur within the Eldorado Formation of the Turffontein Subgroup, capping the CRG in the Free State Goldfield.
The TSF material is the waste product of crushing, milling and gold extraction by carbon-in-leach (“CIL”) or CIP methods. As man-made deposits the TSFs are not the result of natural sedimentary processes. The grade of the TSFs is a function by the grade of the original reef sources, and the efficiency of the processing method at the time of treatment.
The WRDs comprise unconsolidated, untreated, low-grade gold-bearing rock extracted from underground workings during the mining process. These WRDs are also man-made and are not formed as a result of natural sedimentary processes. They exhibit no structure or continuity. The grade of the WRDs is a function of the grade of the original reef sources.
The most significant mineral in the TSFs and WRDs is quartz, which makes up more than 60% of the bulk mineral composition. The gold predominantly occurs in association with pyrite. Other minerals identified include silver, copper, iron oxide, nickel, bismuth, uranium, lead and zinc from the Basal, B, EA, Dreyerskruil and Beatrix conglomerates.
History
The Saaiplaas plant originally processed ore from Saaiplaas 1, 2 and 3 shafts. Saaiplaas 1 closed around 1980, Saaiplaas 2 around 1996, and Saaiplaas 3 around 2000. The Saaiplaas plant once also processed ore from the Erfdeel (now Masimong) shafts. With the decline of mining in the area, the plant was relegated to processing unmilled surface source material (waste) at a rate of 110,000tpm until July 2007. As all material currently processed by the plant is recovered by hydro-mining from old, desiccated tailings dams in the area, crushing or milling is not required. The ore-receiving silos were demolished in July 2007 when milling ceased.
Plant commissioning began for the Central Plant Reclamation in June 2017 with ramp-up to a capacity of 300,000t a month. Central Plant, which had previously processed WRDs, was converted into a tailings retreatment operation during 2016 and started treating TSF material only in fiscal 2017.
Mineral Tenure
Refer to Item 4:“Information on the Company – Business Overview – Regulation – Mineral Rights – South Africa”above for a summary of the regulatory environment in South Africa.
The mineral tenure of the Free State Surface Operations, under which the activity of reclaiming TSFs and WRDs are permitted, falls within the mining rights held by Harmony. The different mining right areas and associated TSFs and WRDs that form part of the Free State Surface Operations is detailed in the table below.
A summary of the status of environmental permits and licenses issued as at June 30, 2024 related to Free State Surface operations is presented in the table below.
Operation
Permit / License
Reference No.
Issued By
Date Granted
Validity
Phoenix Project
Atmospheric Air Emission License- Exemption
LDM/AEL/YMK/017
Lejweleputswa District Municipality
November 5, 2018
N/A
Water Permit
1214N
DWS
N/A
LOM
575N
DWS
September 30, 1987
LOM
718N
DWS
October 5, 1993
LOM
Water Use Registration
23007522
DWS
July 19, 2024
LOM
Central Plant Reclamation
Atmospheric Air Emission License
LDM/AEL/YMK/017
Lejweleputswa District Municipality
November 5, 2018
N/A
Water Permit
1214N
DWS
N/A
LOM
General
Environmental Management Programme
FS30/5/1/2/3/2/1(82) EM
DMRE
March 12, 2010
Valid
Mining Method
The mining methods used at Free State Surface Operations is hydro-mining for the TSFs, and reclamation of WRDs using tracked dozers and front-end loaders (“FELs”).
The tailings material is reclaimed by blasting the TSF face with high pressure water, resulting in the slurry gravitating towards the pumping stations. Several hydraulic monitoring guns deliver high pressure water to the face of the TSF. The hydro-mining method allows for flexibility as the monitoring guns can be positioned to selectively reclaim the required areas in the TSF. The bench heights are constrained by the force delivered by the monitoring gun nozzle, taking safety measures into account.
For safety reasons, the top down method of hydro-mining is implemented. The gun is positioned at the top of the face, where it will cut downwards at a safe angle (a maximum angle of 45°). The horizontal distance between the cutting face and the bottom of the bench varies between 10m and 15m, depending on the bench angle. The track for the monitoring gun is located 2m from the cutting face, allowing for a safe angle of repose, taking geotechnical parameters into account.
The pump stations are located at the lowest point of the TSF, which ensures that the slurry material gravitates towards the pump stations, where it is then pumped to the processing plant.
With respect to WRD, dozers are positioned on top of the WRD. The dozers are used to create safe loading faces and blend the rock. The material is then loaded from the face onto trucks using FELs and transported to the relevant gold plants for processing. When loading is done at the bottom of the WRD, precaution must be taken to ensure that the face is not undercut. This precaution measure is put in place to prevent rock falls from the dump. A slope with a maximum inclination angle of 15° is created towards the loading point, where the WRD material is pushed down. The slope angle is monitored and maintained on a continuous basis.
As a safety measure, two red indicating poles are located at the top of the dump in the area where the dozer is working. The dozer must not go beyond the indicating poles, and dozing does not take place vertically above a loading point where an FEL loading. A 30m advance is required between the dozer and the point vertically above an active loading point. As an additional safety consideration, operations at the WRDs take place during hours of daylight.
The WRD material is loaded onto rail hoppers using the FELs and transported to the relevant processing plant.
Mineral Processing
Two plants, namely the Central Plant and the Saaiplaas Plant, are currently dedicated to the processing of tailings material. Reclaimed tailings are pumped as slurry via pipelines and WRD material is transported on trucks, to the respective plants for processing.
The Saaiplaas Plant forms part of the Phoenix Project and is currently treating reclaimed tailings at a rate of 503ktpm from Brand A (PB Dam A) and Dam 21 TSFs.
Reclaimed tailings from FSS5 TSF are processed through the Central Plant at a rate of 320ktpm. The rate of treatment will remain unchanged for the duration of the LOM even when new TSFs form part of the feed to the plant.
The PFS proposes the processing of additional TSFs at both the following plants:
•Harmony One Plant: production will be ramped up in 300ktpm increments as the plant modules become available and the plant is repurposed in 2026, 2032 and 2041; and
•Target plant: this plant will be repurposed to 300ktpm tailings retreatment in 2028.
Qualified Persons
The QP preparing the TRS was employed on a full-time basis by Harmony. The QP's qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Qualified Person
Professional Organization
Qualification
TRS Section Responsibility
Personal Insp.
Mr. BJ. Selebogo
SAGC
MSCC, HND (MRM), Mine Survey CoC
All Sections
Full time
Exploration
Various auger drilling and sampling campaigns have been undertaken and are on record from 2007 to 2020. The most recent drilling of nine TSFs (including Saaiplaas Complex, FSS1, FSS4, FSN6, FSS6, FSS7) began in January 2017 and was completed February 2020.
WRDs cannot be explored using drilling as they are comprised of unconsolidated rock. Instead, they are sampled around the periphery using pitting.
A total of 248 drill holes were drilled into nine TSFs (including Saaiplaas Complex, FSS1, FSS4, FSN6, FSS6, FSS7) between January 2017 and February 2020. The purpose of the drilling was the determination of grade estimate.
The drilling and sampling methodology in use for Harmony’s Free State TSFs has been developed specifically for the challenges posed by these deposits and is aligned with industry best practice. An internal protocol is in place, and the drilling components are applied by contractors who are experienced in this specific methodology.
The drill hole samples are deemed to be representative as they provide both vertical and horizontal coverage of each TSF. Drill holes are positioned at regular intervals across the TSFs.
The data spacing, density and distribution is sufficient to support the estimation of Mineral Resources for the various TSFs.
WRDs are not explored using exploration methods due to their unconsolidated nature.
The QP is of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
Mineral Resource Estimate
The Mineral Resources were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024.
The Mineral Resource estimate for TSF, as at June 30, 2024 exclusive of the reported Mineral Reserves, is summarized in the table below:
1.The Mineral Resources were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with § 229.1302(d)(1)(iii)(A) (Item 1302(d)(1)(iii)(A) of Regulation S-K). The QP responsible for the estimate is Mr. BJ Selebogo, who is Ore Reserve Manager, and a Harmony employee.
2.The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3.No cut-off grade has been applied for the estimation of Mineral Resources. Mineral Resource tonnes are reported based on a gold price of US$1,878/oz.
4.Tonnes are reported as million tonnes rounded to three decimal places. Gold values are rounded to zero decimals places.
5.Uranium content is not reported for any of the projects.
6.Metal content does not include allowances for processing losses.
7.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
8.Rounding as required by reporting guidelines may result in apparent summation differences
9.The Mineral Resource estimate is for Harmony’s 100% interest.
The change in Mineral Resources is as a result of estimation model and survey updates.
The Mineral Resource estimate for WRD, Mineral Resources as at June 30, 2024 (exclusive of the reported Mineral Reserves), is summarized in the table below:
Fiscal Year Ended June 30,
2024
2023
Mineral Resource Category
Operation / Project
Tonnes (Mt)
Gold Grade
(g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade
(g/t)
Gold Content (kg)
% Change
Measured
WRD
—
—
—
—
—
—
—
Indicated
WRD
0.078
0.55
43
0.802
0.34
274
(84.1)
Total / Ave. Indicated
0.078
0.55
43
0.802
0.34
274
(84.1)
Inferred
WRD
11.591
0.44
5,080
17.095
0.43
7,354
(30.9)
Notes:
1.The Mineral Resources were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. BJ. Selebogo, who is Ore Reserve Manager, and a Harmony employee.
2.The Mineral Resource tonnes are reported as in situ with reasonable prospects for economic extraction.
3.No cut-off grade has been applied for the estimation of Mineral Resources. Mineral Resource tonnes are reported based on a gold price of US$1,878/oz.
4.Tonnes are reported as million tonnes rounded to three decimal places. Gold values are rounded to zero decimal places.
5.Uranium content is not reported for any of the projects.
6.Metal content does not include allowances for processing losses.
7.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
8.Rounding as required by reporting guidelines may result in apparent summation differences.
9.The Mineral Resource estimate is for Harmony’s 100% interest.
The change in Mineral Resources is due to the depletion replaced with new WRDs.
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational planning processes. The planning team utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors , plant call factor, and plant recovery factors.
The Mineral Reserve estimate for Free State Surface Operations, as at June 30, 2023 and 2024, is summarized in the table below.
There are no Mineral Reserves for the WRDs.
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Operation / Project
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Proven
Phoenix Project
24.343
0.29
6,952
30.371
0.28
8,652
(19.6)
Free State Tailings
86.527
0.27
23,410
86.527
0.27
23,410
—
Sub Total / Ave Proven
110.870
0.27
30,363
116.898
0.27
32,063
(5.3)
Probable
Central Plant Reclamation
41.243
0.28
11,393
45.087
0.27
11,964
(4.8)
Free State Tailings
585.517
0.22
130,775
585.517
0.22
130,775
—
Sub Total / Ave Probable
626.760
0.23
142,169
630.605
0.23
142,739
(0.4)
Total / Ave Proven + Probable
737.630
0.23
172,531
747.503
0.23
174,802
(1.3)
Notes:
1.The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. BJ. Selebogo, who is the Ore Reserve Manager, and a Harmony employee.
2.Tonnes, grade, and gold content (oz) are declared as net delivered to the mills.
3.Gold content is recovered gold after taking into consideration the modifying factors.
4.Mineral Reserves are reported using a cut-off grade of 0.20g/t and a gold price of US$1,772/oz.
5.Recovered gold (kg) is based on a conversion factor of 32.1507oz/kg.
6.Rounding as required by reporting guidelines may result in apparent summation differences.
The decrease in Mineral Reserves is mainly due to depletions.
The table below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for the Free State Surface Operations. The modifying factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Operation / Project
Source
Cut-off Grade (g/t Au)
Plant Recovery (%)
Phoenix Project
No. 21 (H3)
0.21
45.00
Brand A (PB Dam A)
0.21
45.00
FSS6
0.21
45.00
Central Plant Reclamation
FSS5
0.21
48.00
FSS3
0.21
48.00
Free State Tailings
Free State South 1 (FSS1)
0.19
51.71
Free State South 2 East & West (FSS2 E&W)
0.19
51.71
Free State South 4 (FSS4)
0.19
51.71
Free State South 7 (FSS7)
0.20
48.67
Free State South 8 (FSS8-E)
0.19
51.71
Free State South 8 (FSS8-W)
0.19
51.71
Free State North 6 (FSN6)
0.23
43.32
ARM (1+2+3+4)(Welkom Slimes Dam)
0.22
45.00
Brand D
0.19
52.57
Saaiplaas 1
0.19
52.57
Saaiplaas 3 & 2
0.19
52.57
Saaiplaas 5b
0.19
52.57
Saaiplaas 6
0.19
52.57
No. 23 (Central Plant)
0.19
52.57
No. 30a
0.19
52.57
No. 33b
0.20
48.97
No. 34a
0.19
52.57
No. 32
0.20
49.89
No 33A
0.19
52.51
Target Slimes Dam
0.19
52.00
Pres Steyn 9 (Freddies 9)
0.19
52.00
For additional information, see the TRS on each individual property, filed as an Exhibit of this annual report on Form 20-F.
Joel is located on the southern edge of the Witwatersrand Basin in the Free State Gold Field and lies 270km south southwest of Johannesburg at a longitude of 26°48'40"E and latitude 28°16'17"S. Joel is the most southern of the gold mines mined within the Harmony stable and is situated approximately 40km south of Welkom, 30km southeast of Virginia and 20km north of Theunissen. The mine has a common boundary with Beatrix Mine to the west of the mine property, but there are no underground connections between the two mines.
Joel mine is accessible via the national and provincial roads. The general layout of Joel infrastructure in relation to the other Harmony Free State mines, is displayed in the graphic below.
Joel is an intermediate-depth underground gold mine that consists of two shaft complexes interconnected via a triple decline system, spanning four levels and mining at depths of 1,379m below mine datum (“BMD”). Joel currently has a LOM expectancy of six years, which includes mining up to 137 level and in a block of ground swapped with the neighboring Beatrix Mine.
There is no material litigation against Harmony that threatens its mineral rights, tenure, or operations.
Operational Infrastructure
The surrounding areas of Welkom and Virginia are well developed in terms of access and mining-related infrastructure supporting the numerous operational gold mines in the area. The regional infrastructure includes national and provincial paved road networks, power transmission and distribution networks, water supply networks and communication infrastructure.
Joel has two operational shaft complexes namely North Shaft and South Shaft, which service and support the mining operation as defined in the LOM plan. The Joel gold plant located near North Shaft was decommissioned in 2019. Joel ore is currently trucked over a distance of 35km to the Bambanani ore transfer site. The ore is then transported by rail to the Harmony One Plant, over a distance of 7km.
Operations are powered by electricity from Eskom.
Joel’s surface and underground infrastructure, including its power and water supplies, are sufficient for the LOM plan production requirements.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R1,372 million.
Joel did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
Geology
Joel is situated in the Free State Goldfield, on the southwestern margin of the Witwatersrand Basin of South Africa, one of the most prominent gold provinces in the world. The major gold bearing conglomerate reefs are mostly confined to the CRG of the Witwatersrand Supergroup.
The Free State Goldfield is structurally divided into two sections, cut by the north-south striking De Bron Fault, which has a downward vertical displacement to the west of about 1,500m in the region of Bambanani, as well as a dextral shift of 4km. This known lateral shift allows a reconstruction of the reefs to the west and east of the De Bron Fault. Several other major faults lie parallel to the De Bron Fault. Joel lies to the west of the De Bron Fault. Dips of the reef are mostly towards the east, averaging 30° but become steeper approaching the De Bron Fault. Between the east and west blocks lies the uplifted horst block of WRG sediments with no reef preserved.
The reef currently exploited at Joel is the Beatrix Reef, which covers approximately 90% of the mine. The other economic reefs are the VS5 Reef and the footwall reef (“Aandenk”) which cover the remaining 10% of Joel.
Mineralization is associated with the presence of medium to coarse, clast-supported oligomictic pebble horizons. The significant minerals in the deposit are quartz (60%), pyrite (35%) and garnets (5%) within medium to coarse, clast-supported oligomictic pebble horizons. Detrital carbon is also common.
History
Active prospecting in the area began on the farms Leeuwbult 580 and Leeuwfontein 256 in 1981. Construction of the twin-shaft system began in September 1985 and was completed by December 1987. Joel South was designed to be a fully trackless mining operation.
Previously known as HJ Joel Mine, its name was changed to Joel in 1998 when the then AngloGold Ashanti was established. The mine’s name changed again to Taung in 1999 and finally reverted to Joel in January 2002 when the Freegold Joint Venture between Harmony and African Rainbow Minerals Limited Gold Division ("ARMGold") assumed responsibility for the operation.
Mineral Tenure
Refer to Item 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – South Africa” above for a summary of the regulatory environment in South Africa.
The current mining rights (30/5/1/2/2/10044 MR ) that encompasses an area of 2,166.92ha was successfully converted, executed and registered as a new order mining right at the MPRTO on August 6, 2010. The right was granted on December 3, 2007 for a period of 11 years, ending on December 2, 2018. The right further renewed in terms of section 24 (1) of the Mineral and Petroleum Resources Development Act on February 15, 2019 for a further 11 years, ending on February 14, 2030.
Joel is an intermediate-depth underground gold mine that consists of two shaft complexes interconnected via a triple decline system, spanning four levels and mining at depths of up to 1,350m BMD. Joel currently has a LOM expectancy of six years, which includes mining up to 137 level and in a block of ground swapped with the neighboring Beatrix Mine.
Joel was originally designed to adopt trackless mechanized mining when production commenced at South Shaft, but in 1994 a decision was made to change to conventional mining mainly due to the high operating costs of trackless mining. Joel consists of two interconnected shaft complexes, the South Shaft complex which is the main operational shaft and the North Shaft which is available for hoisting ore.
Joel’s upper mining levels are in a mature phase of operation. The decline project development, from 129 to 137 levels, which started in 2011, is complete. This included mining up to 137 level and the Beatrix Mine block swap. The decline project to access the orebody from 137 level included two declines that were developed at 12° from 129 level – a chairlift decline and a conveyor belt decline. The belt, main tips and chairlifts have been completed. Primary footwall development is currently underway on 137 level and production from the 137 level E3 Raise and 137 E4 Raise is ongoing.
Joel has adopted conventional breast mining on a scattered grid (or scattered mining) which is tailored to the variable grades intersected as well as the associated rock-related hazards anticipated at this depth. Stoping panel stability in an intermediate stress environment may require additional stabilizing pillars be left to support the immediate hanging wall. These take the form of inter-panel crush pillars between neighboring mining panels.
The primary economic reef mined is the narrow tabular Beatrix Reef, accessed via conventional grid development. Mining consists of horizontal footwall development to access the reef horizon with inclined development on the reef plane to establish mining faces. Ore is cleared from the stopes through ore passes into the underlying cross-cuts.
Mineral Processing
The Joel gold plant designed and commissioned during the construction of the mine was decommissioned in fiscal 2009 and all ore mined at Joel is now processed at the Harmony One Plant.
Harmony One Plant is Harmony’s largest gold processing plant and processes underground ore from multiple shafts, as well as surface ore from nearby mine waste facilities. The plant was commissioned in 1986 and comprises three independent modules, each consisting of four feed silos, two run-of-mine ("ROM") mills, two conventional thickeners, cyanide leach, CIP absorption, elution, zinc precipitation and smelting. The plant CIP process reflects the technology which was current at the time of construction.
The Harmony One Plant has a steady state design capacity of 390ktpm with its conventional CIP flowsheet. The Harmony One plant is in good working condition and the equipment is also in good order with audits done on regular bases to check the operating performance of the plant.
Qualified Persons
The QP preparing the TRS was employed on a full-time basis by Harmony. The QP's qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Geological data has been obtained through initial surface drilling, followed by underground drilling, mapping and channel (chip) sampling.
Since the inception of Joel in 1986, 48 exploration drill holes have been drilled from surface. Forty of the holes were drilled by the previous owners of the mine and eight holes, totaling 10,800m, have been drilled during Harmony’s tenure.
Surface exploration drilling by Harmony began in 2010, with the eight planned holes and their associated deflections. The purpose was to determine the facies and value in 137 level for the extension of the shaft to 137 level because at that time little information was known about 137 level.
In 2019, five holes were drilled with the purpose to also explore for the VS5 boundary in the eastern side of the shaft in 129 level and to determine the facies and value towards 145 level for the extension of the shaft to 145 level.
Underground exploration drilling has been ongoing throughout the operational life of Joel as the mine deepens. Underground exploration drilling is undertaken to supplement the surface drilling on a closer grid spacing. Underground drilling is undertaken ahead of the face to determine the location of the reef, the grade and the presence of structure.
The underground infill drilling system is in place to improve data density in specific areas and are drilled from the underground development access drives. The drill hole spacing is typically every 30m along strike and 30m down dip, with higher density in the western limb of the asymmetric syncline to the north-west of the mine. The underground drill holes are short drill holes rarely exceeding 200m in length.
The QP is of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
Mineral Resource Estimate
The Mineral Resource estimate at Joel is considered to have reasonable prospect for economic extraction by underground mining methods. The cut-off grade for the Mineral Resource is determined at 558cmg/t gold based on the economic assumptions presented in the table below at June 30, 2024.
Description
Unit
Value
Gold Price
US$/oz
1,878
Exchange Rate
R:US$
18.26
Gold Price
R/kg
1,100,000
Plant Recovery Factor
%
94.67
Unit Cost
R/t
4,076
Note: Unit cost includes cash-operating cost, royalty and on-going development capital.
This cut-off value represents typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
The Mineral Resources were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024. The Mineral Resource estimate, as at June 30, 2024, exclusive of the reported Mineral Reserves is summarized in the table below.
Fiscal Year Ended June 30,
% Change
2024
2023
Mineral Resource Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Measured
1.738
8.69
15,103
1.392
9.83
13,690
10.3
Indicated
2.750
7.38
20,306
2.940
7.07
20,802
(2.4)
Total / Ave. Measured + Indicated
4.488
7.89
35,410
4.332
7.96
34,491
2.7
Inferred
0.395
8.27
3,264
0.762
7.87
6,001
(45.6)
Notes:
1.Mineral Resources are reported with an effective date of June 30, 2024 were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. JD Ackermann, who is Ore Reserve Manager at Joel, and a Harmony employee.
2.The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3.No modifying factors or dilution sources have been included to in-situ Reserve which was subtracted from the SAMREC Resource in order to obtain the S-K 1300 Resource.
4.4. The Mineral Resources are reported using a cut-off value of 558cmg/t determined at a gold price of US$1,878/oz.
5.Tonnes are reported as rounded to three decimal places. Gold values are rounded to zero decimal places.
6.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
7.Rounding as required by reporting guidelines may result in apparent summation differences.
8.The Mineral Resource estimate is for Harmony’s 100% interest.
The decrease in Mineral Resources was due to depletion, as well as additional geological data, leading to reinterpretation of the Klippan erosion channel boundary in the East.
Mineral Reserve Estimate
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational mine planning processes. Mine planning utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, dilution, ore losses, minimum mining widths, planned mine call and plant recovery factors.
The Mineral Reserve estimate, as at June 30, 2023, and 2024, is summarized in the table below.
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Proven
2.140
4.70
10,062
2.933
4.87
14,284
(29.6)
Probable
0.802
4.36
3,495
0.545
4.33
2,358
48.2
Total / Ave. Proven + Probable
2.941
4.61
13,557
3.478
4.79
16,642
(18.5)
Notes:
1.The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. JD Ackermann, who is the Joel Ore Reserve Manager, and a Harmony employee.
2.Tonnes, grade, and gold content (oz) are declared as net delivered to the mills.
3.Figures are fully inclusive of all mining dilutions, gold losses and are reported as mill delivered tonnes and head grades. Metallurgical recovery factors have not been applied to the reserve figures.
4.Gold content is recovered gold content after taking into consideration the modifying factors.
5.Mineral Reserves are reported using a cut-off grade of 915cmg/t determined using a gold price of US$1,772/oz gold.
6.Rounding as required by reporting guidelines may result in apparent summation differences.
The decrease in Mineral Reserves was due to depletion, as well as additional geological data, leading to reinterpretation of the Klippan erosion channel boundary in the East. These decreases were partially offset by additional ounces identified.
The table below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for Joel. The modifying factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Modifying Factor
Unit
Value
Relative Density
t/m3
2.75
Average Stoping Width
cm
174
Gully
%
4.17
Off reef
%
0.97
Waste to Reef
%
7.75
Flushing Tons
%
0.00
Discrepancy
%
0.00
Mine Call Factor (MCF)
%
82.00
Plant Recovery Factor (PRF)
%
94.67
Mine Recovery Factor
%
77.63
Plant Call Factor
%
100.00
Mineral Reserve Cut Off
cmg/t
915
For additional information, see the TRS on each individual property, filed as an Exhibit of this annual report on Form 20-F.
Kalgold is located at latitude 26°10.0’S and longitude 25°14.5’E, 55km southwest of Mahikeng, between Mahikeng and Stella, along the Mahikeng-Vryburg road (N18) in North West Province, South Africa. The Kalgold Mine is serviced by well-maintained sealed roads with good access to all nearby towns and cities. The mine is surrounded by farmland and the closest community is at Kraaipan, approximately 15km to the south of the mine. The Kalgold Mine has been in operation since 1997 and is the only significant mining operation in the region. Kalgold is wholly-owned and operated by Harmony.
The following graphic illustrates the location of the Kalgold mine, along with certain infrastructure.
Kalgold is a open-pit mining operation, extracting ore from a series of satellite orebodies.
There is no material litigation against the Company which threatens its mineral rights, tenure, or operations.
Operational Infrastructure
Infrastructure in the region is well established. The regional infrastructure includes national and provincial paved road networks, power transmission and distribution networks, water supply networks and communication infrastructure. Schools, clinics and hospitals are readily available in the surrounding areas. Operations are powered by electricity from Eskom.
Ore and waste material are transported separately, with ore being trucked from the pit to the plant ROM pad, and waste rock going to the mine's waste dumps. Low-grade ore is transported by truck and stockpiled for future processing. Kalgold has its own processing plant situated adjacent to the mine.
Kalgold is accessible via the provincial roads. The detailed surface infrastructural layout includes established haul roads for the transport of ore and waste, the waste dumps, and stockpiles for the associated pits.
The general layout of Kalgold infrastructure is displayed in the graphic below.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R1,025 million.
Kalgold did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
The Kalgold lode deposit is located within the geological terrane known as the Archaean Kraaipan Greenstone Belt ("KGB"). The KGB forms part of the Kaapvaal Craton of South Africa and comprises a linear belt of weakly metamorphosed mafic volcanic rocks with interbedded metasedimentary rocks and Banded Iron Formation (“BIF”). The belt extends in a roughly north/south direction over 250km from South Africa into southern Botswana.
The belt is intruded by several granitoid suites which range from tonalitic and trondhjemitic gneisses through to granodiorite-monzonite suites. There is a general paucity of outcrop owing to the variably developed weathering profile and to the Tertiary-to-Recent cover, including transported Kalahari sands. Due to the younger cover rocks and lack of surface exposure, the mineralization potential of the belt was poorly understood for many years.
The Kalgold lode deposit is accessed through five discrete mining areas, namely the D Zone, A Zone and A Zone south extension (Henrys), Watertank, and Windmill pits. Watertank pit can be split into Watertank Main and North. Watertank North refers to the northern extension of the pit. The geology of the D Zone Pit is used as a benchmark for the other pits. The geology consists of mafic schist, which forms the immediate footwall, a BIF horizon as the main mineralized zone and a succession of clastic sediments consisting of shale, greywacke, and volcanic conglomerates as the hanging wall. Mining is currently taking place at the A Zone, Watertank, Henry and Windmill pits.
Mineralization at Kalgold is essentially strata bound to the BIF packages, resulting from intense silica, carbonate, sulphide, potassium alteration and metasomatic replacement of the BIF lenses. The mineralization is manifested primarily as quartz veined and sulphidized BIF, with sulphides dominated by pyrrhotite and pyrite. Gold predominantly occurs as small grains of native gold, in association with pyrrhotite and trace chalcopyrite and sphalerite.
History
Kalgold was previously known as Shamrock, formed in 1982 as a wholly owned exploration and development subsidiary of Shell.
Exploration of the Kraaipan Greenstone belt by Shell began in the 1980s. In 1994, West Rand Consolidated Mines (“WRCM”) acquired Shamrock. The company changed its name to Kalahari Goldridge Mining Company Limited in May 1996 and was listed on the Johannesburg Stock Exchange on October 14, 1996, via an issue of 18.4% of the shares of the company, as a dividend in specie, to shareholders of WRCM.
Harmony acquired Kalgold in July 1999.
Mineral Tenure
Refer to Item 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – South Africa” above for a summary of the regulatory environment in South Africa.
The Kalgold mining right, which encompassed 615ha, was successfully converted, executed, and registered as a new order mining right on February 24, 2015, as MR12/2015 under Mining Right Protocol 574/2008. A Section 102, in terms of the MPRDA, to include portions of the farms Goldridge 632 IO and Ferndale 544 IO was executed on November 9, 2010, under Mining Right Protocol 774/2010.
The mining right now encompasses 988.23ha. The mining right was issued for a period of 30 years, expiring on August 27, 2038, and Kalgold has the exclusive right to renew the right for a further 30 years. The Kalgold mineral rights are held by Harmony. Under the MPRDA, Harmony is entitled to apply to renew the mining right on its expiry. At June 30, 2024, Harmony was still awaiting the approval of the new prospecting right application lodged on January 31, 2024 to secure the area where the section 102 application was refused by DMRE in 2021. The prospecting rights will be an extension to the current Mining Right which will be converted to a mining right as soon as the resource has been confirmed.
Harmony is the holder of the following mining rights:
•NW30/5/1/2/2/77MR valid from August 28, 2008 to August 27, 2038.
•NW30/5/1/1/2/14264 PR. A prospecting rights application was lodged January 31, 2024, was still pending approval at June 30, 2024.
A summary of the status of environmental permits and licenses issued as at June 30, 2024, related to Kalgold operation is presented in the table below.
Permit / License
Reference No.
Issued By
Date Granted
Validity
EMPr (Amendment)
NW30/5/1/2/2/77MR
DMRE
March 8, 2022
LOM
Environmental Authorization
(NW) 30/5/1/2/3/2/1/77 EM
DMRE
October 4, 2022
LOM
Water Use License
07/D41B/ABCGIJ/4754
DWS
February 22, 2021
15 years
Certificate of Registration Inflammable Liquids and Substances
Kalgold is an open-pit mining operation located in the geological terrane of the Archaean KGB. Gold mineralization is hosted by steeply dipping BIF interbedded with schist, shale, and greywacke. The nature of the orebody requires the selective mining of the ore blocks, defined by the east and west mineralized limbs, to separate the ROM destined ore, above the Mineral Reserve cut-off of 0.58g/t. Based on the gold grade, properties of the host rock, and shallow depth of mineralization, open pit mining is appropriate for Kalgold. The gold deposit is mined most cost effectively, using a modular approach with multiple small to medium open pits defined by mineralized zones.
Mineral Processing
Kalgold's gold processing facility has been in operation since 1996. The technology used to process the gold-bearing ore is well established and has proven to be suitable for the style of mineralization. Kalgold processes the ore using a well-established cyanide and CIL process for their recovery of gold. The average planned milling tonnages per month is 126.071ktpm at the planned feed grade of 1.09g/t. The plant is operating at its designed throughput capacity and has shown its ability to produce the forecasted ounces of gold at said capacity.
Qualified Persons
The QP preparing the TRS was employed by Harmony. The QP's qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Qualified Person
Prof. Assoc.
Qualifications
TRS Section Responsibility
Personal Insp.
Mr. RF. Gaelejwe
SACNASP
BSc. Hons (Geol), PgDip, EMBA
All
Full time
Exploration
In the period 2017 to 2019, definition and exploration drilling were undertaken over the Kalgold line of lode deposit. This exploration was aimed at validating and expanding the Mineral Resource estimate at that time. The drilling yielded significant extensions to the Mineral Resource area, expanding on the understanding of the deposit. The drilling results were analyzed and incorporated into the geological model to upgrade the Mineral Resource estimates, and in-fill the areas between the A Zone and Watertank mining pits, known as the Bridge Zone.
Further exploration drilling took place during 2021 - 2023. The results from this exploration drilling extended the mineralized area beyond the current resource limits. The exploration drilling and subsequent definition of the Mineral Resources are ongoing whereby new data is incorporated into the geological model and Mineral Resource estimate.
Exploratory work planned to the south of the D zone will commence as soon as the pending prospecting right application approval is received. This drilling is aimed at expanding Mineral Resources and Mineral Reserves beyond the current mining limits.
The QP is of the opinion that the drilling and survey processes, the geological and geotechnical logging and the sampling and assaying data is appropriate for the Kalgold modelled deposit and mineralization style.
Mineral Resource Estimate
The Mineral Resources at Kalgold are considered to have reasonable prospects of economic extraction by open pit mining methods. Kalgold is an on-going operation with a well-defined set of operating parameters and costs. These parameters are used to generate a series of open pit Mineral Resource shells based on various gold prices, to constrain the Mineral Resource block model for reporting purposes. Based on the parameters presented in the table below, the cut-off grade reporting to the Kalgold Mineral Resources at June 30, 2024, is 0.55g/t gold.
Description
Unit
Value
Gold price
R/kg
1,100,000
Planned recovery factor
%
86.00
Mining costs
R/t
Modelled based on Andru mining rates
Processing costs
R/t
310
Plant throughput
ktpm
130
Planned dilution (Weighted planned per pit)
%
6.94
This cut-off value represents typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
The Mineral Resources were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024.
The Mineral Resource estimate, as at June 30, 2024, exclusive of the reported Mineral Reserves, is summarized in the table below.
1. Mineral Resources are reported with an effective date of June 30, 2024 were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with § 229.1302(d)(1)(iii)(A) (Item 1302(d)(1)(iii)(A) of Regulation S-K). The QP responsible for the estimate is Mr. RF Gaelejwe, who is Ore Reserve Manager at Kalgold, and a Harmony employee.
2. The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3. No modifying factors or dilution sources have been included to in-situ Reserve which was subtracted from the SAMREC Resource in order to obtain the S-K 1300 Resource.
4.The Mineral Resources are reported using a cut-off value of 0.55g/t and a gold price of US$1,878/oz; for an assumed plant throughput of 130Ktpa.
5. Tonnes are reported as rounded to three decimal places. Gold values are rounded to zero decimal places.
6. Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
7. Rounding as required by reporting guidelines may result in apparent summation differences.
8. The inferred portion of the Mineral Resource includes the historical Surface tailings of 6 263Kg (0,201Moz)
9. The Mineral Resource estimate is for Harmony’s 100% interest.
The decrease in Mineral Resources was due to the pit shell design that was optimized to mine higher grades in Watertank Main.
Mineral Reserve Estimate
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational mine planning processes. Mine planning utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, dilution, ore losses, minimum mining widths, planned mine call and plant recovery factors.
The Mineral Reserve estimate, as at June 30, 2024, is summarized in the table below.
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Proven
10.342
0.99
10,207
5.384
0.93
4,991
104.5
Probable
8.369
1.18
9,854
8.529
0.85
7,217
36.5
Total / Ave. Proven + Probable
18.711
1.07
20,061
13.913
0.88
12,208
64.3
Notes:
1.The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. RF. Gaelejwe, who is the Kalgold Ore Reserve Manager, and a Harmony employee.
2.Tonnes, grade, and gold content are dec ared as net delivered to the mills.
3.Figures are fully inclusive of all mining dilutions, gold losses and are reported as mill delivered tonnes and head grades. Metallurgical recovery factors have not been applied to the reserve figures.
4.Gold content is recovered gold content after taking into consideration the modifying factors.
5.Mineral Reserves are reported using a cut-off grade of 0.58g/t determined using a gold price of US$1,772/oz gold.
6.Rounding as required by reporting guidelines may result in apparent summation differences.
The increase in Mineral Reserves is attributed to the Inclusion of Watertank Main mining at an improved strip ratio.
The table below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for Kalgold. The modifying factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Dilution - Pit Mineral Reserves (Weighted planned per pit)
%
6.94
Plant Recovery Factor - Pit Mineral Reserves
%
86.00
Plant Recovery Factor - Stockpile Mineral Reserves
%
70.00
Kusasalethu
Property Description
Kusasalethu is a deep level gold mine, operating at depths ranging between 2,800m and 3,300m BMD, extracting the Ventersdorp Contact Reef ("VCR") and located in the West Wits mining district, Gauteng Province. At longitude 27°21'32.91"E and latitude 26°27'16.23"S, the mine is approximately 70km southwest of Johannesburg and 15km south southwest of Carletonville and forms part of Harmony's West Wits operations. Kusasalethu is wholly-owned and operated by Harmony.
The following graphic illustrates the location of the Kusasalethu mine, along with certain infrastructure.
All relevant underground mining and surface right permits, and any other permit related to the work conducted on the property have been obtained and are valid. There are no known legal proceedings against Harmony, which threaten its mineral rights, tenure, or operations.
Operational Infrastructure
Infrastructure in the region is well established supporting the numerous operational gold mines in the area. The regional infrastructure includes national and provincial paved road networks, power transmission and distribution networks, water supply networks and communication infrastructure.
Kusasalethu comprises a twin-shaft system with two surface vertical shafts and two vertical sub-shafts. Ore is hoisted to surface and is delivered to the plant by road. Although Kusasalethu has its own processing plant situated adjacent to the mine, this plant does not treat the mine’s ore and only supplies backfill material for underground support purposes. The ore mined from Kusasalethu is processed at the Mponeng Plant, located adjacent to the Mponeng shaft approximately 17km away. Operations are powered by electricity from Eskom.
Kusasalethu is accessible via the national and provincial roads. The general layout of Kusasalethu infrastructure in relation to the neighboring Harmony mines is displayed in the graphic below.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R520 million.
Kusasalethu did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
Geology
Kusasalethu is located on the north-western margin of the Archean Witwatersrand Basin, one of the prominent gold provinces in the world. There are seven gold-bearing conglomerates within the mining right area, of which only the VCR is economically viable.
The VCR is a tabular, inclined, gold-bearing quartz pebble conglomerate of intermediate to high grade. It forms the base of the Ventersdorp Supergroup, which caps the CRG of the Witwatersrand Supergroup via an angular unconformity. This reef is characterized by its palaeomorphology, where a thick reef is preserved in the form of terraces separated stratigraphically by a thin inter-terrace slope reef.
The Kusasalethu mining right area is also intruded by dolerite sills and syenite dykes of different ages (Manzi et al., 2015). Many of these dykes strike north to north–northeast with thicknesses that vary from 1m to 90m.
History
Kusasalethu was previously known as Elandsrand Gold Mine when it was owned by AngloGold Ashanti. The shaft system (i.e., the vertical twin shaft) together with the gold plant were commissioned in 1978.
In 2001, Harmony took control and ownership of Elandsrand Gold Mine and Deelkraal Gold Mine from AngloGold Ashanti. The name Elandsrand was changed to Kusasalethu in 2010.
Kusasalethu is part of the West Wits mining district that includes the former Western Deep Levels shafts which include the Mponeng, TauTona and Savuka mines, all now also 100% owned by Harmony.
Mineral Tenure
Refer to Item 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – South Africa” above for a summary of the regulatory environment in South Africa.
A single mining right covers Kusasalethu which was successfully converted, executed and registered as a new order mining right at the MPRTO. The principal mining right (GP30/5/1/2/2/(07) MR) covers an area of 7,000ha for the mining of gold. This mining right was granted on December 18, 2007, and, unless cancelled or suspended, will continue in force for 30 years ending December 17, 2037.
A section 102 application was submitted in 2018 to combine the contiguous farms Buffelsdoorn 143IQ and Deelkraal 142IQ, which increased the extent of the original mining right from 5,100ha to the current 7,000ha.
The following mining rights make up the full mining lease area of approximately 7,000ha:
•GP30/5/1/2/2(07) MR valid from December 18, 2007 to December 17, 2037.
A summary of the status of environmental permits and licenses issued as at June 30, 2022, related to Kusasalethu operation is presented in the table below.
Permit / License
Reference No.
Issued By
Date Granted
Validity
EMPr
GP30/5/1/2/3/2/1(07) EM
DMRE
December 18, 2007
LOM
Water Use License
08/C23J/AJFG/10192
DWS
December 14, 2020
December 13, 2040
Mining Method
Kusasalethu is a deep level underground gold mine, currently operating at depths ranging between 2,900m and 3,300m BMD. Access to the orebody is gained through a twin shaft system from surface to 73 level. The twin sub shaft system extends from 73 level to 115 level.
The VCR horizon is extracted at Kusasalethu, and mining is conducted over five levels (98 level to 113 level) using SGM techniques.
Due to the current mining depths at Kusasalethu, the SGM method with backfill and pre-conditioning is used. The SGM method is preferred due to the variability of the VCR orebody with respect to value, and the seismic risk associated with deep level mining. The mining sequence used for breast mining is a V-shaped configuration, colloquially referred to as the “inverted Christmas tree”. An underhand face configuration is adopted when mining towards the west, and an overhand face configuration when mining towards the east. The SGM method makes use of dip pillars and reduced mining spans with pre-developed tunnels, aimed at further control of stresses experienced during rock movement.
Primary development is done off-reef (in waste rock), while secondary development is done on-reef (in the mineralized zone).
Mineral Processing
The ore from Kusasalethu is processed at Mponeng’s gold processing facility which has been in operation since 1986. The technology used to process the gold-bearing ore is well established and suitable for the style of mineralization (i.e., VCR ore).
The ore milled at the Mponeng Plant follows a standard cyanide leach, CIP, and electrowinning process in order to extract the gold bullion. The plant is designed to process 95tph of ore. The plant capacity is well-matched to accommodate the total ore feed from Kusasalethu and Mponeng, and the gold produced is in line with the forecast ounces.
Qualified Persons
The QP preparing the TRS was employed on a full-time basis by Harmony. The QP's qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Qualified Person
Professional Organization
Qualification
TRS Section Responsibility
Personal Insp.
Mr JM Modise
SAGC
MSCC, NHD (MRM)
All
Full time
Exploration
Exploration at Kusasalethu has mainly focused on improving confidence in the geological model, as well as adding and upgrading additional Mineral Resources to the mine to replace depletion. Geological data has been obtained through underground channel (chip) sampling, underground mapping and underground drilling. The close spaced underground data gathering was preceded by a surface geophysical seismic survey, as well as surface diamond core drilling. Exploration from underground platforms continues to improve geological confidence for the VCR.
Exploration work on the Kusasalethu mining right area commenced in the early 1940s as part of the Western Deep Levels evaluation program. The work was initially limited to surface platforms, where anextensive surface exploration program was conducted across the Western Deep Levels leases by Anglo American Corporation Limited (“AAC”).
As the underground areas were accessed, platforms were generated for underground drilling.
Underground exploration drilling has been on-going throughout the operational life of Kusasalethu. Most of the underground drill holes used in the estimation of the current Mineral Resources were drilled by AAC and AngloGold Ashanti before Harmony acquired the mine.
The drilling of exploration holes is limited by the availability of sufficient drilling platforms or development ends. This however has a marginal effect on estimation, due to the limited amount of development being done on the mine.
During fiscal 2024 the mine drilled 18 underground exploration holes, totaling 5,748m at a capital cost of R6.2m.
The underground infill drilling system is in place to improve data density in specific areas and are drilled from the underground development access drives. Drilling and logging practices are based on the Harmony company standards, which have been in place since Harmony took over Kusasalethu in 2001.
The QP is of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
Mineral Resource Estimate
The Mineral Resource estimate for Kusasalethu is considered to have reasonable prospects for economic extraction. The cut-off value for the Mineral Resources is determined at 1,086cmg/t gold based on the economic assumptions presented in the table below at June 30, 2024.
Description
Unit
Value
Gold Price
US$/oz
1,878
Exchange Rate
R:US$
18.26
Gold Price
R/kg
1,100,000
Plant Recovery Factor
%
95.70
Unit Cost
R/t
5,857
This cut-off value represents typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
The Mineral Resources were originally prepared, classified and reported according to the SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024. The Mineral Resource estimate, as at June 30, 2024, exclusive of the reported Mineral Reserves is summarized in the table below.
Fiscal Year Ended June 30,
% Change
2024
2023
Mineral Resource Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Measured
—
—
—
0.189
37.32
7,045
(100.0)
Indicated
5.739
9.99
57,327
6.457
10.11
65,278
(12.2)
Total / Ave. Measured + Indicated
5.739
9.99
57,327
6.646
10.88
72,323
(20.7)
Inferred
2.394
8.81
21,096
2.454
8.85
21,722
(2.9)
Notes:
1.Mineral Resources are reported with an effective date of June, 30 2024 were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. JM Modise, who is Ore Reserve Manager at Kusasalethu, and a Harmony employee.
2.The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3.No modifying factors or dilution sources have been included to in-situ Mineral Reserve which was subtracted from the SAMREC Resource in order to obtain the S-K 1300 Resource.
4.The Mineral Resources are reported using a cut-off value of 1,086cmg/t determined at a gold price of US$1,878/oz.
5.Tonnes are reported rounded to three decimal places. Gold values are rounded to zero decimal places.
6.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
7.Rounding as required by reporting guidelines may result in apparent summation differences.
8.The Mineral Resource estimate is for Harmony’s 100% interest.
The decrease in Mineral Resources was due to depletion which was partially offset by the extension of LOM that resulted in the conversion of Mineral Resources to Mineral Reserves.
Mineral Reserve Estimate
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K.
Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational mine planning processes. Mine planning utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, dilution, ore losses, minimum mining widths, planned mine call and plant recovery factors.
The Mineral Reserve estimate, as at June 30, 2023, and 2024, is summarized in the table below.
1.The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. JM Modise, who is the Kusasalethu Ore Reserve Manager, and who is a Harmony employee.
2.Tonnes, grade, and gold content (oz) are declared as net delivered to the mills.
3.Figures are fully inclusive of all mining dilutions, gold losses and are reported as mill delivered tonnes and head grades. Metallurgical recovery factors have not been applied to the Mineral Reserve figures.
4.Gold content is recovered gold content after taking into consideration the modifying factors.
5.Mineral Reserves are reported using a cut-off grade of 1,096cmg/t determined using a gold price of US$1,772/oz gold.
6.Rounding as required by reporting guidelines may result in apparent summation differences.
The decrease in Mineral Reserves was a result of depletion that was partially offset by the extension of the LOM by 19 months. Promising exploration drilling results were returned for the period 2023 to 2024.
The table below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for Kusasalethu. The modifying factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Modifying Factor
Unit
Value
RD
t/m³
2.78
Stoping Width
cm
132.7
Gully
%
5.21
Off Reef
%
2.97
Waste to Reef
%
0.83
Flushing
%
0.23
Discrepancy
%
11.99
Mine Call Factor
%
85.24
Plant Recovery Factor
%
95.70
Mine Recovery Factor
%
81.57
Plant Call Factor
%
100.00
Mineral Reserves Cut Off
cmg/t
1096
For additional information, see the TRS on each individual property, filed as an Exhibit of this annual report on Form 20-F.
Moab Khotsong
Property Description
Moab Khotsong comprises two operating underground deep level gold mines, namely the Moab Khotsong Mine and the Great Noligwa Mine. Moab Khotsong is sub-divided by major faults into three distinct geographical mining areas. These mining areas are referred to as Top Mine, accessed through Great Noligwa and Moab Khotsong shafts, Middle Mine, accessed through Moab Khotsong shaft, and Zaaiplaats, a Board approved project to be accessed through a decline system from Moab Khotsong.
At longitude 26°48'03.3"E and latitude 26°59'12.7"S, Moab Khotsong is approximately 180km from Johannesburg. The mine is located approximately 10km east of Orkney and directly south of the Vaal River, which forms the border between the North West and Free State provinces. Moab Khotsong is wholly-owned and operated by Harmony.
The following graphic illustrates the location of Moab Khotsong and the associated mines, along with certain infrastructure.
Moab Khotsong comprises the underground and surface assets associated with two mines, namely Moab Khotsong Mine and Great Noligwa Mine, which Harmony acquired from AngloGold Ashanti in 2018. Both are deep level gold mines, operating at depths of between 2km and 3km. They are situated directly south of the Vaal River approximately 10km east of the town of Orkney, in the Free State Province of South Africa. The primary reef mined is the Vaal Reef ("VR"), with additional production being sourced from the C Reef.
Moab Khotsong is sub-divided by major faults into three distinct geographical mining areas. These are referred to as Top Mine, accessed through Great Noligwa shaft, Middle Mine, accessed through Moab Khotsong shaft, and Zaaiplaats, accessed through a decline system off the base of the Moab Khotsong shaft.
There is no material litigation against Harmony that threatens its mineral rights, tenure, or operations.
Operational Infrastructure
Infrastructure in the region is well established supporting the numerous operational gold mines in the area. The regional infrastructure includes national and provincial paved road networks, power transmission and distribution networks, water supply networks and communication infrastructure.
The operations are powered by electricity from Eskom, and they have the necessary water and power infrastructure to support their remaining lives, including Zaaiplaats.
Moab Khotsong Mine has a single vertical shaft. Great Noligwa Mine has a twin vertical shaft and a dedicated ore processing plant.
The infrastructural layout includes hoisting facilities; logistical support for ore handling, sampling, and transporting; the processing plant; waste rock facilities; tailings and leaching infrastructure; roads; water and power supply; ventilation and refrigeration systems; stores and workshop support; electrical supply; offices; housing and security.
The location of the surface infrastructure is displayed in the graphic below.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R6,017 million.
Moab Khotsong did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
Moab Khotsong is situated within the Klerksdorp Goldfield on the western margin of the Witwatersrand Basin of South Africa, one of the most prominent gold provinces in the world. The major gold bearing conglomerate reefs are mostly confined to the CRG of the Witwatersrand Supergroup.
The CRG is up to 2,100m thick in the Vaal River area and the general orientation of the Witwatersrand Supergroup succession in this goldfield is interpreted as southwest-trending and southeast dipping. A series of northeast-trending faults including the Buffelsdoorn, the Kromdraai, the Buffels East and the Jersey Faults, is a key feature of the Klerksdorp Goldfield and the key structural features at Moab Khotsong are related to this series of faults.
Moab Khotsong exploits gold mineralization occurring in the VR. This reef is stratigraphically located near the top of the Johannesburg Sub-group, within the CRG. The VR ranges in depth at Moab Khotsong from 1,500m BMD to 3,400m BMD. Gold mineralization also occurs in the stratigraphically higher C Reef, which lies approximately 225m above the VR. However, the C Reef typically contributes less than 5% to the mining production.
History
Great Noligwa Mine was developed by AAC and was originally known as Vaal River No. 8 Shaft. Work on Great Noligwa was initiated in 1968, and the mine produced its first gold in 1972. Great Noligwa reached its production peak of around 1,000koz per annum in the late 1990s and at present, mining activity at Great Noligwa Mine is concentrated on the extraction of pillars.
The Moab Khotsong Mine was developed by AngloGold Ashanti and is the youngest of South Africa’s deep-level gold mines. It came into production in 2003 and has been continuously economically exploited since then. The Great Noligwa Mine was merged with Moab Khotsong Mine in 2014, and since the merger of the two mines, annual production has been in the order of 250koz of gold.
Harmony assumed ownership of Moab Khotsong in March 2018, and has since added the Zaaiplaats area to the Mineral Resources and Mineral Reserves. The inclusion of Zaaiplaats in the LOM plan has extended the life of Moab Khotsong for 22 years up to 2044 and the overall production is expected to be in the order of 200koz of gold per annum.
Mineral Tenure
Refer toNote 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – South Africa” above for a summary of the regulatory environment in South Africa.
Harmony holds two mining rights, which have been successfully converted, executed and registered as new order mining rights at the MPRTO. These rights cover a total combined area of 10,991.13ha for the mining of gold, silver, nickel and uranium. Both mining rights are valid and remain effective unless cancelled or suspended. Under the MPRDA, Harmony is entitled to apply to review the mining right on its expiry.
Harmony’s Moab Khotsong mineral tenure comprises two mining rights covering approximately 10,991ha, namely:
•NW30/5/1/2/2/15 MR valid from September 12, 2007 to September 11, 2037; and
•NW30/5/1/1/2/16 MR valid from August 20, 2008 to August 19, 2038.
A summary of the status of environmental permits and licenses issued as at June 30, 2024 related to Moab Khotsong operation is presented in the table below.
Permit Holder
Permit / License
Reference No.
Issued By
Date Granted
Validity
Harmony
EMPr
NW30/5/1/2/2/15&16MR
DMRE
October 21, 2022
LOM
Harmony
Atmospheric Emission License
AEL/FS/MKO- HGM/14/10/2019F
DFFE
January 29, 2021
January 30, 2026
Harmony
Waste Management License
NWP/WM/DK2/ 2018/04/01/02
DARD
March 13, 2019
LOM
Harmony
Water Use License
08/C24B/AGJ/9799
DWS
November 12, 2020
November 12, 2040
Mining Method
The tabular nature of the orebody, along with its depth and structural complexity, dictates the mining method employed at Moab Khotsong. The primary mining method used at Moab Khotsong is conventional breast mining, on a scattered grid. This method, as opposed to the SGM, is necessitated by the complex geology at Moab Khotsong, which prevents the implementation of a strict mining sequence. Moab Khotsong makes extensive use of backfill for the support of stopes. The economic reef horizons of Top and Middle Mine are exploited between depths of 1,698m and 3,054m below surface.
Zaaiplaats is located between the elevations of 3,054m and 3,526m below surface. Zaaiplaats will be accessed by declines from the northeastern end of the Zaaiplaats property to take advantage of the existing access development in place.
The Scattered Mining makes use of pillars with a pre-developed grid of tunnels, aimed at providing geological information ahead of the mining face, in order to control geotechnical stress. The Geotechnical Engineering department provides detailed numerical modelling and guidance regarding the best mining practices to be applied to minimize the risk associated with seismicity.
Primary development is done off-reef (in waste rock), while secondary development is done on-reef (in the mineralized zone).
The gold processing facility at Great Noligwa has been in operation since the 1960s and is hence a well-established operation. The technology used to process the gold-bearing ore is well established, being used across the majority of South African gold operations and suitable for the style of mineralization. The milled ore follows a reverse gold leach method using an acid uranium leach, gold cyanide leach, CIP and electrowinning process in order to extract the gold bullion. The current plant capacity is 260ktpm, or daily treatment rate of approximately 9,420tpd at 92% availability. The plant is operating below its designed throughput capacity and has the potential to process the additional ore planned from Zaaiplaats.
Qualified Persons
The QP preparing the TRS was employed on a full-time basis by Harmony. The QP's qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Qualified Person
Professional Organization
Qualification
TRS Section Responsibility
Personal Insp.
Mr. V. Esterhuizen
SACNASP, GSSA
B.Sc. Hons (Geol)
All sections
Full time employed on the property
Exploration
Exploration at Moab Khotsong has focused on improving confidence in the geological model, as well as adding and upgrading additional Mineral Resources to the mine. Geological data has been obtained from an initial geophysical seismic survey and later through surface drilling, underground channel (chip) sampling, underground mapping and underground drilling.
The surface drill holes used in the estimation of the current Mineral Resources were drilled by AAC and AngloGold Ashanti before Harmony acquired Moab Khotsong.
Underground exploration drilling has been on-going throughout the operational life of Moab Khotsong as the mine deepens. Underground drilling intersections are sampled where possible and, if acceptable and representative, are used in the estimation process. For estimation purposes 134 Surface, LIB and underground intersections were used.
The QP is of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
Mineral Resource Estimate
The Mineral Resource estimate for Moab Khotsong is considered to have reasonable prospects for economic extraction. The cut-off value for the Mineral Resources is determined per mining area as follows: Top Mine 500cmg/t, Middle Mine 1,000cmg/t and Zaaiplaats 1,350cmg/t based on the economic assumptions presented in the table below at June 30, 2024.
Description
Unit
Value
Gold Price
US$/oz
1,878
Exchange Rate
R:US$
18.26
Gold Price
R/kg
1,100,000
Plant Recovery Factor
%
96.60
Unit Cost (Specific cost applied per mining area)
R/t
6,135
This cut-off value represents typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
The Mineral Resources were originally prepared, classified and reported according to the SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024. The Mineral Resource estimate, as at June 30, 2024, exclusive of the reported Mineral Reserves is summarized in the table below.
1.The Mineral Resources were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. V. Esterhuizen, who is the Acting Ore Reserve Manager, and who is a Harmony employee.
2.The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3.No modifying factors or dilution sources have been included to in-situ Reserve which was subtracted from the SAMREC Resource in order to obtain the S-K 1300 Resource.
4.The Gold Mineral Resources are reported using a cut-off value per area of 500cmg/t, 1000cmg/t and 1350cmg/t determined a gold price of US$1,878/oz.
5.Tonnes are reported as rounded to three decimal places. Gold values are rounded to zero decimal places.
6.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
7.Rounding as required by reporting guidelines may result in apparent summation differences.
8.The Mineral Resource estimate is for Harmony’s 100% interest.
9.Uranium is reported as a byproduct of Gold.
The Mineral Resource increased due to structural gains in the Zaaiplaats project area.
Mineral Reserve Estimate
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K.
Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational mine planning processes. Mine planning utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, dilution, ore losses, minimum mining widths, planned mine call and plant recovery factors.
The Mineral Reserve estimate, as at June 30, 2023, and 2024, is summarized in the table below.
Gold
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Proven
3.360
7.69
25,848
3.897
7.80
30,396
(15.0)
Probable
10.277
8.14
83,671
9.447
8.90
84,106
(0.5)
Total / Ave. Proven + Probable
13.637
8.03
109,519
13.345
8.58
114,502
(4.4)
Uranium
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Tonnes
(Mt)
U3O8
(kg/t)
U3O8
(t)
Tonnes
(Mt)
U3O8
(kg/t)
U3O8
(t)
% Change
Proven
—
—
—
—
—
—
—
Probable
13.637
0.35
4,763
13.345
0.32
4,260
11.8
Total / Ave. Proven + Probable
13.637
0.35
4,763
13.345
0.32
4,260
11.8
Notes:
1.The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is V Esterhuizen, who is the Acting Ore Reserve Manager, and who is a Harmony employee.
2.Tonnes, grade, and gold content (oz) are declared as net delivered to the mills.
3.Figures are fully inclusive of all mining dilutions, gold losses and are reported as mill delivered tonnes and head grades. Metallurgical recovery factors have not been applied to the Mineral Reserve figures.
4.Gold content is recovered gold content after taking into consideration the modifying factors.
5.Gold Mineral Reserves are reported using a cut-off grades per mining area of 1,200cmg/t, 1,300cmg/t and 1,800 cmg/t determined using a gold price of US$1,772/oz gold.
7.Rounding as required by reporting guidelines may result in apparent summation differences.
The decrease in Mineral Reserves is due to depletion.
The table below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for Moab Khotsong. The modifying factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Modifying Factor
Unit
Moab Khotsong Middle Mine
Zaaiplaats
Great Noligwa Top Mine
Relative Density
t/m³
2.78t/m³
2.78t/m³
2.78t/m³
Stoping width
cm
178cm
154.0cm
182cm
Gully
%
10.13
10.10
10.43
Off Reef
%
15.25
12.00
15.25
Waste to Reef
%
—
—
6.57
Flushing tons
%
7.98
7.98
—
Discrepancy
%
17.50
18.70
14.04
Mine Call Factor
%
68.98
78.00
68.98
Plant Recover Factor
%
96.60
96.50
96.60
Mine Recover Factor
%
66.63
75.27
66.63
Plant Call Factor
%
100.00
100.00
100.00
Mineral Reserve cut-off
cmg/t
1,300
1,800
1,200
For additional information, see the TRS on each individual property, filed as an Exhibit of this annual report on Form 20-F.
Mponeng
Property Description
Mponeng is an underground gold producing mine located in the West Wits mining district south-west of Johannesburg, on the border between Gauteng and the North West Province. At longitude 27°25'53.62"E and latitude 26°26'12.27"S, the mine is approximately 65km from Johannesburg and 15km from Carletonville and forms part of Harmony's West Wits operations. Mponeng is wholly-owned and operated by Harmony.
The following graphic illustrates the location of the Mponeng mine, along with certain infrastructure.
Mponeng is the deepest mine in the world with development currently at 3,841m BMD. The primary reef mined is the VCR, and some limited mining from the Carbon Leader Reef ("CLR"), with future expansion planned on both the VCR and the CLR horizon. The original vertical twin shaft sinking from the surface commenced in 1981 and was commissioned along with the gold plant complex in 1986.
There is no material litigation against Harmony that threatens its mineral rights, tenure, or operations.
Infrastructure in the region is well established supporting the numerous operational gold mines in the area. The regional infrastructure includes national and provincial paved road networks, power transmission and distribution networks, water supply networks and communication infrastructure.
Mponeng comprises a twin-shaft system with two surface vertical shafts and two sub-vertical shafts. Ore and waste material are hoisted separately with ore being delivered to the plant by means of a conveyor belt and the waste rock going to the low-grade stockpile. Mponeng has its own processing plant situated adjacent to the mine. Operations are powered by electricity from Eskom.
Mponeng is accessible via the national and provincial roads. The general layout of Mponeng infrastructure in relation to the neighboring Harmony mines, TauTona and Savuka is displayed in the graphic below.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R4,438 million.
Mponeng did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
Geology
Mponeng is situated on the northwestern margin of the Witwatersrand Basin of South Africa, one of the prominent gold provinces in the world. There are seven gold-bearing conglomerates within the lease area, of which only the VCR and CLR are economically viable.
The VCR is a gold bearing quartz pebble conglomerate of intermediate to high grade. It forms the base of the Ventersdorp Supergroup, which caps the Witwatersrand Supergroup through an angular unconformity. A characteristic of this horizon is the pronounced palaeomorphology, where a thick reef is preserved in the form of terraces separated stratigraphically by a thin inter-terrace slope reef.
The CLR, historically mined at the adjacent Harmony wholly-owned TauTona and Savuka Mines, is reported as part of the Mponeng Mineral Resource. It is a c.20cm thick tabular, auriferous quartz pebble conglomerate. It lies 800-900m stratigraphically deeper than the VCR, near the base of the Johannesburg Subgroup of the CRG of the Witwatersrand Supergroup.
Both the VCR and the CLR have been subjected to faulting and are intruded by a series of igneous dykes and sills of various ages that cut across the reefs. The gold mineralization at Mponeng succeeded a period of deep burial, fracturing, and alteration. The gold and other elements are believed to have precipitated through the reaction of hydrothermal fluids at high temperatures along the reef horizons.
History
Mponeng was formerly known as Western Deep Levels South Shaft, or No.1 Shaft when AAC first owned the operation. The No. 1 South Shaft system (i.e., the vertical twin shaft) together with the gold plant were commissioned in 1986. The shaft system allowed access to the deeper VCR in the southern part of the lease area.
The name changed in 1999 to Mponeng and was 100% owned and operated until recently by AngloGold Ashanti. As at October 1, 2020, Harmony took full control and ownership of Mponeng as part of the acquisition of AngloGold Ashanti's South African business pursuant to the Mponeng Acquisition.
Mponeng is part of the West Wits mining district that includes the Savuka Mine (previously known as Western Deep Levels No.2 Shaft) and the TauTona Mine (previously known as Western Deep Levels No. 3 Shaft) (both now also 100% owned by Harmony). These two mines predominantly exploited the CLR within the lease area, which is now mostly mined out resulting in them being placed on care and maintenance in 2017. The Mineral Resources and Mineral Reserves for TauTona were transferred to Mponeng during the same year.
During February 2024, the LOM extension project was approved allowing further access development into the VCR and CLR reefs.
Mineral Tenure
Refer to Item 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – South Africa” above for a summary of the regulatory environment in South Africa.
The following mining rights make up the full mining lease area of approximately 6,673ha:
•GP30/5/1/2/2(01) MR valid from February 14, 2006, to February 13, 2036; and
•GP30/5/1/2/2(248) MR (for Sand) valid from October 16, 2012, to October 15, 2024.
As part of the acquisition of AngloGold Ashanti's South African business, all mining rights related to Mponeng were transferred and are now held by Harmony. There are two mining rights that form the Mponeng area which were successfully converted, executed and registered at the MPRTO. The principal mining right (GP30/5/1/2/2(01) MR) covers an area of 6,477ha for the mining of gold, silver, nickel and uranium. This mining right, granted on February 14, 2006, unless cancelled or suspended will continue in force for 36 years ending February 13, 2036. The other mining right, GP30/5/1/2/2(248) MR, is planned to be incorporated into the principal mining right (GP30/5/1/2/2(01) MR.
The mining rights 01MR and 248MR were ceded from AngloGold Ashanti to Golden Core, a wholly owned subsidiary of Harmony, on October 1, 2020 and were successfully registered in the Mining Titles Office on the June 14, 2021 as part of AngloGold Ashanti's sale of their last remaining South African assets to Harmony, including its West Wits Operations as part of the Mponeng Acquisition.
A section 102 Application in terms of the MPRDA was submitted previously by AngloGold Ashanti in March 2017 to consolidate its West Wits mining rights into a single mining right (GP30/5/1/2/2(01) MR) ("AngloGold Ashanti Application"). The AngloGold Ashanti Application was approved by the DMRE in August 2020, but was, however, not implemented due to a change in circumstances as a result of the Mponeng Acquisition and will consequently be withdrawn by AngloGold Ashanti. On February 15, 2022, Golden Core submitted an application in terms of section 102 of the MPRDA, substantively similar to the AngloGold Ashanti Application, to consolidate the mining rights and mining right areas into a single mining right (GP30/5/1/2/2(01) MR) ("Golden Core Application"). The Golden Core Application is currently pending at the DMRE.
A summary of the status of environmental permits and licenses issued as at June 30, 2024 related to Mponeng’s operation is presented in the table below.
Permit / License
Reference No.
Issued By
Date Granted
Validity
EMPr (Amendment)
(GP) 30/5/1/2/3/2/1 (01)
DMRE
April 12, 2012
LOM
Waste Management License
GAUT 002/09-10/W0011
GDARD
June 22, 2015
Expired July 2019. New application submitted.
Hazardous Waste Generator Certificate
GPG-01-513
GDARD
July 14, 2015
In perpetuity
Water Use License
08/C23E/AEFGCEI/12157
DWS
Licensed issued under Harmony Gold issued September 27, 2022
9 years
Certificate of Registration Inflammable Liquids and Substances
RP438/ptn5
West Rand District Municipality
February 28, 2024
Annually
Mining Method
Mponeng is a deep level underground gold mine currently operating at depths ranging between 3,160m and 3,740m BMD, and currently the deepest mine in the world with development at 3,841m BMD. Potential future mining operations at Mponeng are expected to deepen the shaft bottom to 4,227m BMD. The reef portion currently being mined at Mponeng is accessible between 3,000 – 3,600m BMD.
There are two mining methods in practice at Mponeng. Historically, longwall mining was practiced at Mponeng until the breast mining method was used, aimed at reducing the occurrence of large seismic events. However, this has evolved to the SGM method with backfill support. The SGM method makes use of dip pillars and reduced mining spans with pre-developed tunnels, aimed at further control of stresses experienced in rock movement. While Mponeng’s business plan is based primarily on the SGM method, there are sections of the mine that are still operating using the breast mining method. The mining sequence is a V-shaped configuration, colloquially referred to as the “inverted Christmas tree”. An underhand face configuration is adopted when mining towards the west and an overhand face configuration when mining towards the east.
Mponeng's gold processing facility has been in operation since 1986. The technology used to process the gold-bearing ore is well established and is suitable for the style of mineralization (VCR and CLR ore). The current capacity of the plant is designed to process 95tph ore. The plant is operating below its designed throughput capacity and has shown its ability to produce the forecasted ounces of gold at said capacity.
Qualified Persons
The QP preparing the TRS was employed on a full-time basis by Harmony. The QP's qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Qualified Person
Professional Organization
Qualification
TRS Section Responsibility
Personal Insp.
Mr. W. Oliver
SAGC (No. MS 0136)
GDE (Mining Engineering) Government Certificate of Competency in Mine Survey
All sections
Full time
Exploration
Exploration at Mponeng has mainly focused on improving confidence in the geological model, as well as adding and upgrading additional Mineral Resources to the mine. Geological data has been obtained through structured underground channel (chip) sampling, mapping and drilling. This underground detailed, closer spaced data gathering exercise has been preceded by surface exploration of the lease area using a historical geophysical seismic survey, as well as surface diamond core drilling.
Exploration from underground platforms is currently continuing for the VCR in the east and west of the current mining levels, between 3,500m and 3,700m below surface, to improve geological confidence.
Exploration of the VCR target areas west and east of the 126-level mining front continues for the 2024/2025 period. These will form part of the approved exploration campaign. These targets will generate the needed information in two areas, on the Booysens/Kimberley transition towards the east, ahead of the planned LOM extension areas and the area west of the Kimberley estimation domains.
Both areas are currently showing high levels of variability that will benefit from the additional information that will be generated for the completion of these exploration drill holes. VCR variability limits the forward confidence in the Mineral Resource estimation. More data collected can assist the QP define the zones of high variability.
Mponeng Mine infill exploration drilling of the VCR from 2023 to 2024 completed 4224m of drilling and increased confidence of the estimated ounces on the eastern area of the Booysens Shale footwall zone. For the 2024 to 2025 period an additional 4975m is planned to improve confidence of the Indicated Mineral Resource portions and continue to focus on the below 126 level LOM extension area..
The QP is of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
Mineral Resource Estimate
The Mineral Resource estimate is reported in situ within the Mponeng lease area (which includes TauTona and Savuka), as determined through the analysis of the reasonable prospect for economic extraction by underground mining method. The cut-off value for the Mineral Resources is determined at 761cmg/t gold based on the economic assumptions presented in the table below at June 30, 2024.
Description
Unit
Value
Gold price
US$/oz
1,878
FX rate
R:US$
18.26
Gold price
R/kg
1,100,000
Plant recovery factor
%
98.00
Unit cost
R/t
6,292
Note: Unit cost includes cash operating cost, royalty and ongoing development capital.
This cut-off value represents typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
The Mineral Resources were originally prepared, classified and reported according to the SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024.
The Mineral Resource estimate, as at June 30, 2024, exclusive of the reported Mineral Reserves is summarized in the table below.
Fiscal Year Ended June 30,
% Change
2024
2023
Mineral Resource Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Measured
2.688
15.55
41,800
2.843
17.99
51,126
(18.2)
Indicated
13.719
13.48
184,915
18.632
13.92
259,408
(28.7)
Total / Ave. Measured + Indicated
16.407
13.82
226,716
21.474
14.46
310,534
(27.0)
Inferred
32.105
11.34
364,070
31.520
11.70
368,729
(1.3)
Notes:
1.Mineral Resources are reported with an effective date of June 30, 2024 were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. WH. Olivier, who is Ore Reserve Manager at Mponeng, and a Harmony employee.
2.The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3.No modifying factors or dilution sources have been included to in-situ Reserve which was subtracted from the SAMREC Resource in order to obtain the S-K 1300 Resource.
4.The Mineral Resources are reported using a cut-off value of 761cmg/t determined using a gold price of US$1,878/oz.
5.Tonnes are reported as rounded to three decimal places. Gold values are rounded to zero decimal places.
6.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
7.Rounding as required by reporting guidelines may result in apparent summation differences.
8.The Mineral Resource estimate is for Harmony’s 100% interest.
The decrease in Mineral Resource is due to the approval of the LOM extension project whereby Mineral Resources were converted into Mineral Reserves.
Mineral Reserve Estimate
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational mine planning processes. Mine planning utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, dilution, ore losses, minimum mining widths, planned mine call and plant recovery factors.
The Mineral Reserve estimate, as at June 30, 2023, and 2024, is summarized in the table below.
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Proven
4.466
9.67
43,190
2.678
9.68
25,929
66.6
Probable
10.940
8.86
96,875
3.316
8.87
29,410
229.4
Total/ Ave. Proven + Probable
15.406
9.09
140,065
5.994
9.23
55,340
153.1
Notes:
1.The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. WH. Olivier, who is the Mponeng Ore Reserve Manager, and a Harmony employee.
2.Tonnes, grade, and gold content are declared as net delivered to the mills.
3.Figures are fully inclusive of all mining dilutions, gold losses and are reported as mill delivered tonnes and head grades. Metallurgical recovery factors have not been applied to the reserve figures.
4.Gold content is recovered gold content after taking into consideration the modifying factors.
5.Mineral Reserves are reported using a cut-off grade of 971cmg/t determined using a gold price of US$1,772/oz gold.
6.Rounding as required by reporting guidelines may result in apparent summation differences.
The increase in the Mineral Reserves is due principally to the approval of the LOM extension project whereby Mineral Resources were converted into Mineral Reserves.
The table below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for Mponeng. The modifying factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Target is an advanced, single-shaft, deep-level gold mine which has been operational for approximately 30 years. While most of the gold mineralization extracted comes from mechanized mining (massive mining techniques), conventional stoping is still employed for extraction of gold and also to de-stress areas ahead of mechanized mining. The mine is located in the Free State Province of South Africa, approximately 270km southwest of Johannesburg and 30km north of the town of Welkom, at longitude 26°38'24.92"E and latitude 27°45'42.59"S. Target is wholly-owned and operated by Harmony.
The following graphic illustrates the location of the Target mine, along with certain infrastructure.
All relevant underground mining and surface right permits, and any other permit related to the work conducted on the property have been obtained and are valid. There are no known legal proceedings against Harmony, which threaten its mineral rights, tenure, or operations.
Operational Infrastructure
The surrounding areas of Welkom and Virginia are well developed in terms of access and mining-related infrastructure supporting the numerous operational gold mines in the area. The regional infrastructure includes national and provincial paved road networks, power transmission and distribution networks, water supply networks and communication infrastructure. Target’s surface and underground infrastructure, including its power and water supplies, are sufficient for the LOM plan production requirements.
Target includes a single underground mine constructed as an extension to the Loraine Gold Mine (“Loraine”) and uses a single shaft as access. The ore and development rock are hoisted together, with ore milled and processed at the Target Plant adjacent to the mine. Operations are powered by electricity from Eskom.
The Target mining area is well developed in terms of access and mining-related infrastructure. Access to the Target shafts (1, 2, 3 and 5) is via a well-maintained paved road. Adequately maintained roads is used to access other areas of the mine such as the explosives magazines, sewage works, tailings dam and the evaporation ponds. The area also has access to rail links and an airfield within proximity.
The surface infrastructure associated with Target is presented in the graphic below.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R1,951 million.
Target did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
Geology
Target is situated on the north-western margin of the Witwatersrand Basin of South Africa, one of the prominent gold provinces in the world. The major gold bearing conglomerate reefs are mostly confined to the CRG of the Witwatersrand Supergroup.
Folding forms the major structural feature within the lease is and is manifested as an asymmetric syncline whose axis trends N15°W, with a general plunge of 10° to 12° north, although this is variable due to local structural features. The dip of the western limb of the syncline is often more than 55° eastwards. Numerous minor faults are also present.
These faults, with a displacement generally of less than 15m and traceable over a strike distance of less than 150m are too numerous to classify, however, it can be said that the eastern limb of the trough is less faulted than the western limb.
Gold mineralization currently exploited is hosted within a succession of EA and Dreyerskuil ("DK") quartz pebble conglomerate reefs hosted by the van den Heeversrust and Dreyerskuil (Uitkyk) Members of the Eldorado (Elsburg) Formation, respectively.
Additional mineralization occurs in the Big Pebble Reef of the underlying the Kimberley (formerly Aandenk) Formation. All these units are within the Turffontein Subgroup of the CRG. Mineralization is associated with the presence of medium to coarse, clast-supported oligomictic pebble horizons. The presence of allogenic (buckshot) pyrite and detrital carbon is also common.
Anglovaal Limited ("Anglovaal") previously held the mineral rights for the Target property. Target Exploration Company Limited ("Target Exploration Company"), a company formed by Anglovaal specifically for the purpose of exploration, later acquired this area.
Options to the mineral rights north of Target were acquired by Sun Mining and Prospecting Company (Pty) Limited (“Sun”). The formation of Avgold Limited in 1996 was intended to further the gold mining and exploration interests of Anglovaal.
Harmony acquired Target in May 2004 by acquiring 100% of Avgold Limited's shares. During 2017 an optimization project commenced with the aim of reducing hauling distances and to improve gold production. The surface bulk-air-cooler and the No8 fridge plant were commissioned in November 2021. The 291 level crusher installation and 282-291 level belt extension were completed and commissioned in November 2023.
Mineral Tenure
Refer to Item 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – South Africa” above for a summary of the regulatory environment in South Africa.
The current mining rights encompasses an area of 7,952.78ha. Harmony holds several mining rights for Target, which were successfully converted and executed as new order mining rights. Certain of these rights are still to be registered at the MPRTO.
The summary of mineral tenure and the approved mining rights include the following:
•FS30/5/1/2/2/14MR, which is valid from November 30, 2007, to December 29, 2025, and covers 4,237.00ha; and
•FS30/5/1/2/2/225MR, which is valid from December 12, 2013, to December 11, 2026, and 3,715.78ha.
A summary of the status of environmental permits and licenses issued as at June 30, 2024, related to Target is presented in the table below.
Permit / License
Reference No.
Issued By
Date Granted
Validity
EMPr
FS 30/5/1/2/3/2/1(14) EM
DMRE
April 16, 2010
LOM
Atmospheric Emission License
LDM/RAEL/01/2024
Lejweleputswa District Municipality
February, 2024
January, 2029
Water Permit
789N
DWS
November 4, 2008
Valid pending issue of new license
Water Permit
1046B
DWS
November 4, 2008
Valid pending issue of new license
Mining Method
The Target Mine deposit is made up of stacked mineralized multiple reef bands interbedded with quartzites and quartzwackes. The EA reefs are composited into thick mineralized packages to enable the application of massive open stoping mining method, while the Dreyerskuil Reefs are separated into thinner discrete horizons that enable narrow reef conventional mining method.
Target Mine is essentially a trackless mining operation with a combination of highly mechanized massive open stope, sub-level open stope mining, and labor-intensive narrow reef stoping, the latter being more typical of South African gold mines’ conventional stoping.
The primary ore extraction method adopted at Target is massive mining of the thick mining horizons (EA1, EA3, EA7 and EA8) through a combination of scattered open stoping supplemented with the use of a 6%-cement backfill, and sub-level open stoping which does not make use of backfilling.
The balance of the ore is mined using a narrow reef mining ("NRM") method on the thinner Dreyerskuil Reefs, which does not make use of backfilling either.
Massive open stoping accounts for ±75% of the ore production with ±15% coming from conventional narrow reef stoping. The ±10% balance of production comes from trackless on-reef development sections.
Mineral Processing
The Target Plant was designed and commissioned in November 2001. The plant was designed to treat a total tonnage of 105ktpm with a potential to expand to 160ktpm for future demand. Currently the plant treats ore from Target and Target 2 waste dump.
Qualified Persons
The QP preparing the TRS was employed on a full-time basis by Harmony. The QP's qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Geological data has been obtained through initial surface drilling, followed by underground drilling, mapping and channel (chip) sampling.
Initial surface drilling carried out during the 1980s, under the auspices of Sun, was designed to delineate the northward continuation of the synclinal axis, around which most of Loraine’s gold deposits are located. Following the incorporation of Target Exploration Company in 1990, a total of 17 drillholes and three long deflections from existing drillholes were drilled in three arrays parallel to the western margin, namely the Western, Central and Eastern arrays.
The Central Array targeted the EA Reefs, while the Western and Eastern arrays focused on definition of the proximal (steep west limb) and distal Kimberley and Basal Reefs, respectively.
The positive surface drilling results led to the construction of an underground drilling platform. Underground exploration drilling has been on-going throughout the operational life of Target as the mine deepens. Most of the underground drillholes are used in the geological modelling and estimation of the current Mineral Resources.
Underground diamond core drilling is conducted using hydraulic driven drill rigs, which typically drill BX core. Drill holes are typically short, rarely exceeding 300m in length.
Fans of drill holes are drilled from diamond drilling bays, which are developed at 50m intervals along the decline return airway (“RAW”) decline. The drilling fans consist of up to ten individual drill holes at inclinations ranging from -15° East to +30° West of vertical, or as dictated by local geological structures. Maximum drillhole lengths of 350m are required for complete Dreyerskuil intersections in the synclinal axis. Drill holes are stopped once the Ventersdorp lava has been intersected, or, in the case of flatter drill holes, once the trough axis has been identified and the drill hole is drilling parallel to the bedding.
Exploration drilling is currently in progress to determine the economic potential of EA3 reefs and DK reefs along the sub-crop of the EA reefs. Additional to the capital exploration, an underground infill drilling program is in place to improve data density to enhance the estimation model.
The QP is of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
Mineral Resource Estimate
The Mineral Resource estimate is reported in situ within the Target lease area, as determined through the analysis of the reasonable prospect for economic extraction by underground mining methods. The cut-off grade for the Mineral Resource is determined at 3.08g/t gold based on the economic assumptions presented in the table below at June 30, 2024.
Description
Unit
Value
Gold Price
US$/oz
1,878
Exchange Rate
R:US$
18.26
Gold Price
R/kg
1,100,000
Plant Recovery Factor
%
94.49
Unit Cost
R/t
2,880
Note: Unit cost includes cash-operating cost, royalty and on-going development capital.
This cut-off value represents typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
The Mineral Resources were originally prepared, classified and reported according to the SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024.
The Mineral Resource estimate, as at June 30, 2024, exclusive of the reported Mineral Reserves is summarized in the table below.
Fiscal Year Ended June 30,
% Change
2024
2023
Mineral Resource Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Measured
4.814
8.41
40,488
4.745
8.60
40,795
(0.8)
Indicated
3.890
6.82
26,538
3.820
7.09
27,098
(2.1)
Total / Ave. Measured + Indicated
8.704
7.70
67,025
8.564
7.93
67,893
(1.3)
Inferred
3.868
5.75
22,237
4.046
5.68
22,990
(3.3)
Notes:
1.Mineral Resources are reported with an effective date of June 30, 2024 were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. S Motlatla, who is the Target Ore Reserve Manager, and a Harmony employee.
2.The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3.No modifying factors or dilution sources have been included to in-situ Reserve which was subtracted from the SAMREC Resource in order to obtain the S-K 1300 Resource.
4.The Mineral Resources are reported using a cut-off grade of 3.08g/t determined at a gold price of US$1,878/oz.
5.Tonnes are reported as rounded to three decimal places. Gold values are rounded to zero decimal places.
6.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
7.Rounding as required by reporting guidelines may result in apparent summation differences.
8.The Mineral Resource estimate is for Harmony’s 100% interest.
The decrease in Mineral Resources was due to depletions and the conversion of Mineral Resources to Mineral Reserves.
Mineral Reserve Estimate
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational mine planning processes. Mine planning utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, dilution, ore losses, minimum mining widths, planned mine call and plant recovery factors.
The Mineral Reserve estimate, as at June 30, 2023 and 2024, is summarized in the table below.
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Proven
2.459
4.27
10,508
2.567
4.38
11,233
(6.5)
Probable
1.145
4.87
5,577
1.242
4.46
5,539
0.7
Total / Ave. Proven + Probable
3.605
4.46
16,085
3.810
4.40
16,772
(4.1)
Notes:
1.The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. S. Motlatla, who is the Target Ore Reserve Manager, and a Harmony employee.
2.Tonnes, grade, and gold content are declared as net delivered to the mills.
3.Figures are fully inclusive of all mining dilutions, gold losses and are reported as mill delivered tonnes and head grades. Metallurgical recovery factors have not been applied to the reserve figures.
4.Gold content is recovered gold content after taking into consideration the modifying factors.
5.The NRM Mineral Reserves are reported using a cut-off value of 818cmg/t determined using a gold price of US$1,772/oz. The massive open stoping Mineral Reserves are reported using a cut-off grade of 3.45g/t determined using a gold price of US$1,772/oz.
6.Rounding as required by reporting guidelines may result in apparent summation differences.
The decrease in Mineral Reserves is mainly due to depletion that was partially off-set by the inclusion of additional massives stopes in the LOM based on new geological information and design changes.
The table below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for Target. The modifying factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Modifying Factor
Unit
Value
Relative Density
t/m3
2.71
Average Stoping Width
cm
178
Mine Call Factor
%
93.99
Plant Recovery Factor
%
94.49
Mineral Reserve Paylimit - NRM
cmg/t
818
Mineral Reserve Cut-off - Massive Open Stoping
g/t
3.45
Mineral Reserve Cut-off - Development
g/t
3.45
Dilution - Massive Open Stoping
%
6.00
For additional information, see the TRS on each individual property, filed as an Exhibit of this annual report on Form 20-F.
The Tshepong North comprise the underground and surface assets, situated between the towns of Welkom and Odendaalsrus in the Free State Province of South Africa. The mine is a moderate to deep-level gold mines, operating at depths of between 1.6km and 2.4km BMD.
The mine is located in the Free State Province of South Africa, approximately 250km southwest of Johannesburg and 15km to the north of the town of Welkom, situated at a latitude of 27°51’56.45”S and longitude of 26°42’45.15”E.
The following graphic illustrates the location of the Tshepong North, along with certain infrastructure.
The primary reef mined is the Basal Reef although the B reef mining has increased in the past 4 years from 8% to 32%.
All relevant underground mining and surface right permits, and any other permit related to the work conducted on the property have been obtained and are valid. There are no known legal proceedings against Harmony, which threaten its mineral rights, tenure, or operations.
Operational Infrastructure
The areas surrounding Welkom and Odendaalsrus are well-equipped with access and mining-related infrastructure, which effectively supports the region's numerous operational gold mines. This infrastructure includes national and provincial paved road networks, power transmission and distribution systems, water supply networks, and communication facilities.
Tshepong North operates with a single shaft system, where ore and waste are hoisted to the surface through the main vertical shaft. Additionally, a twin decline system extends from the 66 to the 75 level, with ongoing capital work to deepen it to the 77 level. The initial reef is projected to commence mining in April 2029. Ore and waste are transported separately using a conveyor belt system.
Ore extracted from Tshepong North is transported by rail from the shaft to the Harmony One Plant in Welkom for processing. The operations are powered by electricity supplied by Eskom.
The surface infrastructure associated with Tshepong North is displayed in the graphic below.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R2,369 million.
Tshepong North did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
Geology
Tshepong North is situated in the Free State Goldfield, on the southwestern margin of the Witwatersrand Basin of South Africa, one of the most prominent gold provinces in the world. The major gold bearing conglomerate reefs are mostly confined to the CRG of the Witwatersrand Supergroup.
The general orientation of the Witwatersrand Supergroup succession in this goldfield is interpreted as north-trending, within a syncline that is plunging to the north. The syncline has been divided by faults into the Odendaalsrus, Central Horst and Virginia sections. The Tshepong North mining right area is also affected by the Ophir and Dagbreek faults.
Tshepong North exploited primarily the Basal Reef, which occurs within the Harmony Formation of the Johannesburg Subgroup of the CRG.
Mineralization also occurs within the stratigraphically higher A and B reefs of the Kimberley (formerly Aandenk) Formation, within the Turffontein subgroup of the CRG. However, only the B Reef can be economically extracted.
Mineralization is associated with the presence of medium to coarse, clast-supported oligomictic pebble horizons. The presence of allogenic pyrite and detrital carbon is also common.
History
The Feasibility Study for the initial development of Tshepong North was concluded in 1984. Work to establish the site started in September 1984 and, by 1986, shaft sinking was underway. Sinking and equipping of the shaft were completed in 1991, with the mine being commissioned in November 1991.
The Tshepong South and Tshepong North were merged into the Tshepong Operations in 2017 and split into separate entities in 2021.
Mineral Tenure
Refer toItem 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – South Africa”above for a summary of the regulatory environment in South Africa.
The current mining right for the Tshepong North encompasses an area of 10,798.74ha. Harmony holds several mining rights in the Free State goldfields which have been successfully converted and executed as new order mining rights, some of which are still to be registered at the MPRTO.
Tshepong North is wholly owned by Harmony, including the associated mineral rights. Harmony commenced acquiring the assets through the acquisition of AngloGold Ashanti's Free State operations in 2001.
Mining at Tshepong North is carried out under the following mining right, covering both Tshepong North and Tshepong South:
•FS30/5/1/284MR, which is valid from December 11, 2007, to December 10, 2029, and covers an area of 10,798.74ha.
A summary of the status of environmental permits and licenses issued as at June 30, 2024, related to both Tshepong North and Tshepong South is presented in the table below.
Permit / License
Reference No.
Issued By
Date Granted
Validity
Environmental Management Programme
FS 30/5/1/2/3/2/1(84)EM
DMRE
April 16, 2010
LOM
Environmental Management Updated
FS 30/5/1/2/2/84MR
DWAFEC
Pending Approval Submitted in 2020
LOM
Water Permit 936B. Harmony. Free State Geduld Mines. Discharge of untreated effluents
B33/2/340/31
DWAFEC
April 2, 1981
LOM
Water Permit 870B. Harmony. Discharge of untreated effluents.
B33/2/340/25
DWAFEC
May 27, 1991
LOM
Water Permit 1214N. Free State Consolidated Gold Mine. Tshepong, Freddie’s and Phakisa shafts.
B33/2/340/12
DWAFEC
Not indicated.
LOM
Notes: DWAFEC - Department of Water Affairs, Forestry and Environmental Conservation.
Mining Method
Tshepong North mine is categorized as a moderate to deep-level underground gold mining operation, currently extending to depths of up to 2,427 meters below the surface. SGM is the preferred mining technique employed at Tshepong North. This method utilizes dip pillars and reduced mining spans in conjunction with pre-developed tunnels to enhance control over rock stress. The SGM configuration follows a V-shaped sequence, often referred to as the “inverted Christmas tree.” SGM is particularly effective for narrow reef mining in underground environments. The method is characterized by its distinct layout, where primary development occurs off-reef (in waste rock) and secondary development takes place on-reef (within the mineralized zone).
This approach is designed for deeper mining operations and offers several advantages, with safety being a primary benefit. A notable aspect of the SGM method is its advance from raises in one direction at a time, towards stabilizing or regional pillars. This practice minimizes the formation of remnant pillars, thereby reducing the risk of seismic activity.
While the primary focus of Tshepong North’s business plan is on the SGM methodology and sequencing, certain sections of the mine also employ alternative mining methods, including breast stoping, undercut stoping, and open stoping.
Mineral Processing
All ore mined at Tshepong North is processed at Harmony One Plant located west of Welkom. Harmony One Plant is Harmony’s largest gold processing plant and processes underground ore from multiple shafts, as well as surface ore from nearby mine waste facilities. The plant was commissioned in 1986 and comprises three independent modules, each consisting of four feed silos, two ROM mills, two conventional thickeners, cyanide leach, CIP adsorption, elution, zinc precipitation and smelting. The plant CIP process reflects the technology which was current at the time of construction.
The Harmony One Plant has a steady state design capacity of 390ktpm with its conventional CIP flowsheet. The Harmony One plant is in good working condition and the equipment is also in good order with audits done on regular bases to check the operating performance of the plant.
Qualified Persons
The QP preparing the TRS was employed on a full-time basis by Harmony. The QP's qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Qualified Person
Professional Organization
Qualification
TRS Section Responsibility
Personal Insp.
Mr. A. Louw
SACNASP
BSc. Hons. (Geohydro)
All Sections
Full Time
Exploration
Geological data has been obtained through initial surface drilling, followed by underground drilling, mapping and channel (chip) sampling.
Exploration from underground platforms is currently continuing for the Tshepong sub-75 development, to improve geological confidence.
Tshepong North is engaged in ongoing exploration drilling of the B Reef to assess the potential extension of existing pay shoots and their connection to adjacent mines. Footwall development at the 71 level (decline area) commenced during FY22 and is being utilized as a platform for drilling to confirm and delineate the anticipated B Reef channel, which is projected to extend in an east-north-southwest direction.
Throughout the mine’s operational life, underground exploration drilling has been conducted as the mine deepens. This drilling is performed using hydraulic and pneumatic drill rigs for diamond core drilling.
Drill holes are executed from diamond drilling bays, developed at 50-meter intervals along the ends of footwall developments (X/Cs) and at 100-meter intervals along haulages and RAWs (raise and winzes). The drilling fans typically consist of up to ten individual drill holes, with inclinations varying from -15° to +30° of vertical, or adjusted based on local geological structures.
The underground infill drilling system is in place to improve data density in specific areas and are drilled from the underground development access drives.
Logging procedures are conducted as per the Harmony company standards, which are used on all surface and underground mines and are best practice and have been in place consistently since 2001.
The QP is of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
Mineral Resource Estimate
The Mineral Resource estimate for the Tshepong North is considered to have reasonable prospects for economic extraction. The cut-off value for the Mineral Resources is determined at 700cmg/t for the gold based on the economic assumptions presented in the table below at June 30, 2024.
Tshepong North
Description
Unit
Value
Gold price
US$/oz
1,878
FX rate
R:US$
18.26
Gold price
R/kg
1,100,000
Plant recovery factor
%
95.26
Unit cost
R/t
4,608
Note: Unit cost includes cash operating cost, royalty and ongoing development capital
This cut-off values represents typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
The Mineral Resources were originally prepared, classified and reported according to the SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024.
The Mineral Resource estimate for Tshepong North, as at June 30, 2024, exclusive of the reported Mineral Reserves, is summarized in the table below.
1.Mineral Resources are reported with an effective date of June 30, 2024 were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. A. Louw, who is Ore Reserve Manager at Tshepong, and a Harmony employee.
2.The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3.No modifying factors or dilution sources have been included to in-situ Reserve which was subtracted from the SAMREC Resource in order to obtain the S-K 1300 Resource.
4.The Mineral Resources are reported using a cut-off value of 700cmg/t determined at a gold price of US$1,878/oz.
5.Tonnes are reported as rounded to three decimal places. Gold values are rounded to zero decimal places.
6.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
7.Rounding as required by reporting guidelines may result in apparent summation differences.
8.The Mineral Resource estimate is for Harmony’s 100% interest.
The increase in the Mineral Resources is due to the increase B-Reef Mineral Resources as result of new geological information.
Mineral Reserve Estimate
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K.
Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational mine planning processes. Mine planning utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, dilution, ore losses, minimum mining widths, planned mine call and plant recovery factors.
The Mineral Reserve estimate for Tshepong North, as at June 30, 2023, and 2024, is summarized in the table below.
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Proven
3.009
4.77
14,347
2.997
4.79
14,341
—
Probable
1.990
5.57
11,083
0.766
5.73
4,390
152.5
Total / Ave. Proven + Probable
4.999
5.09
25,430
3.763
4.98
18,731
35.8
Notes:
1.The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. A. Louw, who is Ore Reserve Manager at Tshepong, and a Harmony employee.
2.Tonnes, grade, and gold content are declared as net delivered to the mills.
3.Figures are fully inclusive of all mining dilutions, gold losses and are reported as mill delivered tonnes and head grades. Metallurgical recovery factors have not been applied to the reserve figures.
4.Gold content has not taken metallurgical recovery factors into account.
5.Mineral Reserves are reported using a cut-off grade of 750cmg/t determined using a gold price of US$1,772/oz gold.
6.Rounding as required by reporting guidelines may result in apparent summation differences.
The increase in Mineral Reserve was due to the upgrade and conversion of Mineral Resources to Mineral Reserves.
The table below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for Tshepong North. The modifying factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Modifying Factor
Unit
Value
Relative Density
t/m3
2.72
Stoping Width
cm
118
Gully
%
8.16
Off Reef
%
4.81
Waste to Reef
%
2.03
Flushing tons
%
2.13
Discrepancy
%
7.16
Mine Call Factor
%
70.00
Plant Recover Factor
%
95.26
Mine Recover Factor
%
66.68
Plant Call Factor
%
100.00
Mineral Reserve cut-off
cmg/t
750
Notes: Development waste to reef, including the decline development.
For additional information, see the TRS on each individual property, filed as an Exhibit of this annual report on Form 20-F.
The Tshepong South mine comprises one operating underground gold mine namely “Tshepong South”. Tshepong South is a mature, moderate to deep-level underground operation using conventional underground mining methods to depths of 2,427m BMD. The mine utilizes the Tshepong North and Nyala shafts. Tshepong South’s success is greatly dependent on the services rendered via Nyala where four main compressors are commissioned and Tshepong South’s ore is being hoisted.
The mines are located in the Free State Province of South Africa, approximately 250km southwest of Johannesburg and 15km to the north of the town of Welkom.Tshepong South is situated adjacent to the south of Tshepong North, and is located at a latitude of 27°54’1.27”S and longitude of 26°43’30.05”E.
The following graphic illustrates the location of Tshepong South, along with certain infrastructure.
The primary reef mined is the Basal Reef, with additional gold mineralization being found in the B Reef and A Reef. The B Reef, which lies between 140m and 170m stratigraphically above the Basal Reef, contributes just less than 20% to the mining production at Tshepong South.
All relevant underground mining and surface right permits, and any other permit related to the work conducted on the property have been obtained and are valid. There are no known legal proceedings against Harmony, which threaten its mineral rights, tenure, or operations.
Operational Infrastructure
The surrounding areas of Welkom and Odendaalsrus are well developed in terms of access and mining-related infrastructure, which supports the numerous operational gold mines in the area. The regional infrastructure includes national and provincial paved road networks, power transmission and distribution networks, water supply networks and communication infrastructure.
Tshepong South operates a single vertical shaft for man and materials. Rock is transported from the underground working via a RailVeyorTM system to the Nyala shaft for hoisting.
The Tshepong South ore is transported, by rail, from Nyala shaft to the Harmony One Plant in Welkom for processing.
Tshepong South is powered by electricity from Eskom.
The surface infrastructure associated with Tshepong South is displayed in the graphic below.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R2,326 million.
Tshepong South did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
Geology
Tshepong South is situated in the Free State Goldfield, on the southwestern margin of the Witwatersrand Basin of South Africa, one of the most prominent gold provinces in the world. The major gold bearing conglomerate reefs are mostly confined to the CRG of the Witwatersrand Supergroup.
The general orientation of the Witwatersrand Supergroup succession in this goldfield is interpreted as north-trending, within a syncline that is plunging to the north. The syncline has been divided by faults into the Odendaalsrus, Central Horst and Virginia sections. The Tshepong South mining right area is also affected by the Tribute fault (~270m) and Arrarat Fault (~180m) to the far south-east of the shaft.
Tshepong South exploited primarily the Basal Reef, which occurs within the Harmony Formation of the Johannesburg Subgroup of the CRG.
Mineralization also occurs within the stratigraphically higher A and B reefs of the Kimberley (formerly Aandenk) Formation, within the Turffontein subgroup of the CRG. However, only the B Reef can be economically extracted.
Mineralization is associated with the presence of medium to coarse, clast-supported oligomictic pebble horizons. The presence of allogenic pyrite and detrital carbon is also common.
History
Tshepong South was formerly known as FSG 4, Freddies 4 and Phakisa. Tshepong South development commenced in October 1993 and shaft sinking was started in February 1994. In 1995, shaft sinking was halted on 59 Level due to the prevailing low gold price. Operations at Tshepong South recommenced in September 1996 and sinking was completed to 75 Level, before being halted again in 1999.
Harmony acquired Tshepong South as part of the acquisition from AngloGold Ashanti’s Free State operations (previously known as Freegold), which completed in September 2003. Sinking and equipping was completed to a depth of 2,427m in 2006.
Tshepong South and Tshepong North were merged into the Tshepong Operations by Harmony in 2017 and split into separate entities in 2021.
Mineral Tenure
Refer toItem 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – South Africa”above for a summary of the regulatory environment in South Africa.
The current mining right for Tshepong South and Tshepong North encompasses an area of 10,798.74ha. Harmony holds several mining rights in the Free State goldfields which have been successfully converted and executed as new order mining rights, some of which are still to be registered at the MPRTO.
Tshepong South is wholly owned by Harmony, including the associated mineral rights. Harmony commenced acquiring the assets through the acquisition of AngloGold Ashanti's Free State operations in 2001, together with ARMGold. ARMGold was subsequently incorporated into Harmony in 2003, giving Harmony 100% ownership and control of the Tshepong South.
Mining at Tshepong South is carried out under the following mining right, covering both Tshepong and Tshepong South:
•FS30/5/1/284MR, which is valid from December 11, 2007 to December 10, 2029 and covers an area of 10,798.74ha.
A summary of the status of environmental permits and licenses issued as at June 30, 2024, related to both Tshepong South and Tshepong North is presented in the table below.
Permit / License
Reference No.
Issued By
Date Granted
Validity
EMPr
FS 30/5/1/2/3/2/1(84)EM
DMRE
April 16, 2010
LOM
Environmental Management Updated
FS 30/5/1/2/2/84MR
DWAFEC
Pending Approval Submitted in 2020
LOM
Water Permit 936B. Harmony. Free State Geduld Mines. Discharge of untreated effluents
B33/2/340/31
DWAFEC
April 2, 1981
LOM
Water Permit 870B. Harmony. Discharge of untreated effluents.
B33/2/340/25
DWAFEC
May 27, 1991
LOM
Water Permit 1214N. Free State Consolidated Gold Mine. Tshepong, Freddie’s and Phakisa shafts.
B33/2/340/12
DWAFEC
Not indicated.
LOM
Mining Method
Tshepong South may be classified as moderate to deep level underground gold mine currently operating at depths of up to 2,427m below surface.
The orebody at Tshepong South Mine is broken up into blocks by geological structures with large throws. Due to the orebody being broken up into these small blocks, a Scattered mining method is used at Tshepong South Mine. Scattered mining
is when mining is done between the major geological structures. The mine design criteria is based on the sequential grid mining method where the crosscuts are spaced at fixed distance of 160m however additional development can be required in some instances and/or crosscut spacing reduced/increased depending on the prevailing geological structures. Primary Waste Development is done ahead of the stoping front in the virgin stress environment.
Primary development is done off-reef (in waste rock), while secondary development is done on-reef (in the mineralized zone). In primary development, horizontal haulages are developed from the vertical shaft, extending to the extremities of the mining level. Inter-level spacing is the perpendicular distance between two consecutive level stations underground. Further development is done at set intervals along the haulages towards the mineralized zones in the form of crosscuts. For secondary development, an inclined excavation that connects two levels is established, referred to as a raise or winze, depending on the upwards or downwards direction of the development.
A key feature of Scattered mining is that the mine design includes pillars in the stoping areas that are designed to cave in a planned and controlled manner. These pillars are referred to as crush pillars and the dimensions of the pillars are determined by the geotechnical properties of the host rock. The use of crush pillars minimizes the risk of unpredicted collapse of stoping areas. These collapses can compromise the safety of mining operations and may lead to permanent closure of stoping panels or sterilization of ore.
Mineral Processing
All ore mined at Tshepong South is processed at Harmony One Plant located west of Welkom. Harmony One Plant is Harmony’s largest gold processing plant and processes underground ore from multiple shafts, as well as surface ore from nearby mine waste facilities. The plant was commissioned in 1986 and comprises three independent modules, each consisting of four feed silos, two ROM mills, two conventional thickeners, cyanide leach, CIP adsorption, elution, zinc precipitation and smelting. The plant CIP process reflects the technology which was current at the time of construction. Overall the plant has been operating with no significant challenges and target metallurgical recoveries have been achieved.
The Harmony One Plant has a steady state design capacity of 390ktpm with its conventional CIP flowsheet. The Harmony One plant is in good working condition and the equipment is also in good order with audits done on regular bases to check the operating performance of the plant.
Qualified Persons
The QP preparing the TRS was employed on a full-time basis by Harmony. The QP's qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Qualified Person
Professional Organization
Qualification
TRS Section Responsibility
Personal Insp.
Mr. C. Pienaar
SACNASP
B.Sc (Hons) Geology
All Sections
Full Time
Exploration
Geological data has been obtained through initial surface drilling, followed by underground drilling, mapping and channel (chip) sampling. The underground infill drilling system is in place to improve data density in specific areas and are drilled from the underground development access drives.
Since 2022 capital exploration drilling has been ongoing to determine areas of economic value in the B Reef channels extrapolated from the high grade channels being mined in the west-south area of Tshepong North shaft.
Underground exploration drilling has been ongoing throughout the operational life of Tshepong South. Underground diamond core drilling is conducted using hydraulic driven and pneumatic drill rigs.
Fans of drill holes are drilled from diamond drilling bays, which are developed at 50m intervals along footwall development ends (X/Cs) and 100m intervals along haulages and RAWs. The drilling fans consist of up to ten individual drill holes at inclinations ranging from +5° to +90° of vertical, or as dictated by local geological structures.
The underground infill drilling system is in place to improve data density in specific areas and are drilled from the underground development access drives.
Logging procedures are conducted as per the Harmony company standards, which are used on all surface and underground mines and are best practice and have been in place consistently since 2001.
The QP is of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
Mineral Resource Estimate
The Mineral Resource estimate for the Tshepong South is considered to have reasonable prospects for economic extraction. The cut-off value for the Mineral Resources is determined at 780cmg/t for the gold, based on the economic assumptions presented in the table below at June 30, 2024.
Note: Unit cost includes cash operating cost, royalty and ongoing development capital.
This cut-off values represents typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
The Mineral Resources were originally prepared, classified and reported according to the SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024.
The Mineral Resource estimate for Tshepong South, as at June 30, 2024, exclusive of the reported Mineral Reserves is summarized in the table below.
Fiscal Year Ended June 30,
% Change
2024
2023
Mineral Resource Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Measured
6.155
12.80
78,768
5.661
13.02
73,695
6.9
Indicated
8.687
11.10
96,434
6.680
11.67
77,950
23.7
Total / Ave. Measured + Indicated
14.843
11.80
175,202
12.341
12.29
151,645
15.5
Inferred
22.799
11.03
251,447
25.090
10.67
267,678
(6.1)
Notes:
1.Mineral Resources are reported with an effective date of June 30, 2024 were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. Conrad Pienaar who is the Geology HOD at Tshepong South, and a Harmony employee.
2.The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3.No modifying factors or dilution sources have been included to in-situ Reserve which was subtracted from the SAMREC Resource in order to obtain the S-K 1300 Resource.
4.The Mineral Resources are reported using a cut-off value of 780cmg/t determined at a gold price of US$1,878/oz.
5.Tonnes are reported as rounded to three decimal places. Gold values are rounded to zero decimal places.
6.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
7.Rounding as required by reporting guidelines may result in apparent summation differences.
8.The Mineral Resource estimate is for Harmony’s 100% interest.
The increase in Mineral Resources was due to an increase in the Mineral Resource grade.
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K.
Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational mine planning processes. Mine planning utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, dilution, ore losses, minimum mining widths, planned mine call and plant recovery factors.
The Mineral Reserve estimate for Tshepong South, as at June 30, 2023, and 2024, is summarized in the table below.
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Proven
2.355
8.02
18,900
2.882
7.79
22,466
(15.9)
Probable
0.229
7.08
1,621
0.563
7.06
3,972
(59.2)
Total / Proven + Probable
2.584
7.94
20,521
3.445
7.67
26,438
(22.4)
Notes:
1.The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. Conrad Pienaar who is the Geology HOD at Tshepong South, and a Harmony employee.
2.Tonnes, grade, and gold content are declared as net delivered to the mills.
3.Figures are fully inclusive of all mining dilutions, gold losses and are reported as mill delivered tonnes and head grades. Metallurgical recovery factors have not been applied to the reserve figures.
4.Gold content has not taken metallurgical recovery factors into account.
5.Mineral Reserves are reported using a cut-off grade of 790cmg/t determined using a gold price of US$1,772/oz gold.
6.Rounding as required by reporting guidelines may result in apparent summation differences.
The decrease in Mineral Reserves was mainly due to depletions.
The table below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for Tshepong South. The modifying factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Modifying Factor
Unit
Value
Relative Density
t/m3
2.72
Stoping Width
cm
133
Gully
%
6.27
Off Reef
%
4.72
Waste to Reef
%
0.23
Flushing tons
%
—
Discrepancy
%
7.02
Mine Call Factor
%
83.00
Plant Recover Factor
%
95.28
Mine Recover Factor
%
79.09
Plant Call Factor
%
100.00
Mineral Reserve cut-off
cmg/t
790
For additional information, see the TRS on each individual property, filed as an Exhibit of this annual report on Form 20-F.
Mine Waste Solutions is comprised of two distinct, geographically separated, operations namely the MWS operation located on the Free State - North West provincial boundary, and the West Wits operation situated in the West Rand region of the Gauteng Province. Each operation will be discussed separately due to their geographical locations.
Mine Waste Solutions and its associated mineral rights are wholly owned by Harmony. Harmony acquired the assets as part of the transaction to take full ownership and control of AngloGold Ashanti's remaining South African business, as of October 1, 2020.
The location of the MWS operation and the West Wits operation is presented in figure below.
The following graphic illustrates the location of the MWS operation, along with certain infrastructure.
The MWS operation is located in the Vaal River area, and straddles the Free State, North West provincial border of South Africa, close to the town of Klerksdorp. The MWS gold plant (26° 50’8.66”E; 26° 47’41.83”S) is situated close to the town of Stilfontein, while the TSFs and WRD for this operation are scattered over an area that stretches approximately 13.5km north to south and 14.0km east to west.
The West Wits operation is situated in the West Rand region of the Gauteng Province. The West Wits operation is situated approximately 75km west of Johannesburg. The site is approximately 7km south of Carletonville. West Wits operation occupies an area of 4,176ha in extent and is close to the boundary between Gauteng and North West Province.
The West Wits operation reprocesses tailings from the Old North TSF dumps at the Savuka plant (26° 25’20.31”E and 27° 24’11.30”S).
There is no material litigation against Harmony that threatens its mineral rights, tenure, or operations.
Operational Infrastructure
Infrastructure in the region is well established supporting the numerous operational gold mines in the area. The regional infrastructure includes national and provincial paved road networks, power transmission and distribution networks, water supply networks and communication infrastructure. Operations are powered by electricity from Eskom.
The MWS operation is accessible from Johannesburg via the N12 national road and R502 regional road in Klerksdorp, North West. A large network of either tarred roads or well-maintained gravel roads exist between the tailing dams, WRDs and the MWS plant that are scattered in the area. The West Wits operations near Carletonville are accessible via the N12 national road and R500 regional road from Johannesburg.
The surface infrastructure associated with the MWS operation and the West Wits operation is presented in the graphic under "– Property Description" above.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R3,546 million.
Mine Waste Solutions did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
Geology
Material contained in the TSFs and WRDs predominantly originates from deep level gold mines, operated by Harmony and others, mostly located in Klerksdorp and Carletonville. The West Wits mining operations predominantly extract tabular gold-bearing conglomeratic reefs, namely the CLR and VCR. The MWS operation, however, mainly exploits TSFs and WRD derived from the VR.
The Witwatersrand reefs occur within the Archean Witwatersrand Basin which hosts the Witwatersrand Supergroup succession. The VCR horizon is located at the top of the Turffontein Subgroup of the CRG, capping the Witwatersrand Supergroup. The VR horizon is situated within the Krugersdorp Formation, in the Johannesburg Subgroup of the CRG. The CLR is situated near the base of the Johannesburg Subgroup.
The TSF material comprises previously treated residues of gold-bearing conglomeratic reefs processed by CIL. They are man-made “deposits” and are not the result of natural sedimentary processes. The grade of the TSFs is determined by the grade of the ore source at the time that they were processed, and the processing efficiency.
The WRDs are unconsolidated and are comprised of untreated, low grade, gold-bearing material from underground workings. The WRDs are also man-made deposits, with very little structure or continuity, and one in which the grade does not behave as a natural mineral deposit.
The most significant mineral in the TSFs and WRDs is quartz, which makes up more than 60% of the bulk mineral composition. The gold predominantly occurs in pyrite. Other minerals identified include uranium, iron oxide, titanium oxide and calcite from the VR, VCR and CLR conglomerates.
History
The MWS operation commenced production in 1952 and was the original gold processing plant for the Stilfontein Gold Mine. Following the rise in the uranium price in the 1970s, the operation investigated uranium recovery from the Stilfontein Gold Mine’s gold tailings dams and commissioned the uranium plant in mid-1979. The plant operated until 1989, processing 29.4Mt of tailings and recovering 4.56t of U3O8. In 2003, the plant was converted into a gold tailings treatment operation and no further uranium was produced at that stage.
In 2007, First Uranium (Pty) Ltd (South Africa) ("First Uranium") acquired the MWS operation with the purpose of treating the tailings dams for both gold and uranium. The second and third processing plants were commissioned between 2007 and 2012.
On July 20, 2012, the MWS operation was acquired by AngloGold Ashanti from First Uranium. The MWS uranium plant and flotation plants were commissioned in 2014, and were further reconfigured into a more efficient operation during 2016, as part of an optimization drive. In 2017, the uranium and flotation plants were discontinued resulting in the MWS operation again producing only gold.
On October 1, 2020, Harmony acquired all of AngloGold Ashanti’s surface operations, including the MWS operation.
The Savuka plant was commissioned in 1961 and originally designed to treat ore from Savuka Mine and TauTona Mine. In 2015, upon the change in strategy to process the reef from the aforementioned shafts at Mponeng plant, the plant was converted
into a tailings and WRD treatment facility. The Savuka plant treats tailings material from Savuka and Mponeng TSFs, and waste rock from the WRDs from the same operations. On October 1, 2020, Harmony acquired all of AngloGold Ashanti’s South African business, including the surface assets which constitute the West Wits operation.
Mineral Tenure
Refer to Item 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – South Africa” above for a summary of the regulatory environment in South Africa.
The MWS operation’s license to operate is covered by the Environmental Authorization under the National Environmental Management Act No. 107 of 1998. In terms of the current legislation, the MPRDA, a mining right is not required to reclaim TSFs.
Following the acquisition of MWS operation, all relevant permits and licenses were acquired by Harmony and there is financial provision for rehabilitation liabilities for the MWS operations, as well as the historic surface rights permits for MWS operation. All of these permits are still valid. MWS no longer operates under any mining right. All relevant environmental and water-use permits are in place and cover the environmental, archaeological, and hydrological components of Mine Waste Solutions. All permits are audited regularly for compliance. The latest of EA is applicable to the Kareerand TSF expansion activities, issued to MWS in 2022. MWS recently received an environmental authorization to increase its piping capacity from Kareerand TSF to enable more return water to be pumped back to the MWS plant and reclamation activities.
Mining Method
The mining methodologies adopted at Mine Waste Solutions entail the hydro-mining of the TSFs and reclamation of WRDs using FELs.
The TSF material is reclaimed using several hydraulic monitoring guns which deliver high-pressure water to the face. High pressure water is transferred to the monitoring guns observing the maximum design capacity of the equipment, limited to 40 bars. Typically, a 25m mining face length is achieved with a water pressure in the range of 27b to 30b.
The tailings material can be selectively mined based on the positioning of the monitoring guns. The TSF face is broken by the water pressure, resulting in the slurry gravitating towards the collection sumps that deliver the slurry to the pumping stations, which is then pumped via overland pipelines to the respective plant streams. The TSFs are fed into one of the three respective plant streams, which comprise the MWS operation. The tailings material size is appropriate for high-pressure water to re-pulp the consolidated slimes to a slurry at a minimum relative density of around 1.45. No milling is required, as the material has previously been milled through the CIL plant treatment process.
Waste rock arises from underground development and is conveyed to large dumps where it is stockpiled. The grade values are inconsistently distributed amongst these rock deposits. Waste rock from off-reef development can also become contaminated during transport to surface by mineralized rock from unpay and marginal areas.
Tracked bulldozers are used on the top of WRDs during daylight hours, demarcated by surveyed markers, in accordance with safety standards. Vertical dozing operations are prohibited. During dozing operations, the geotechnical considerations and the materials’ natural angle of repose is adhered to, so as to maintain the WRD slope stability during loading operations.
Bulldozers are also used at the bottom of the WRDs to create a safe loading distance between the base of the WRD and the loading face. Loading measures take careful consideration of the existing dump design and ensures that extraction of the material is done safely. Front end loaders are used to load the dozed material into rail hoppers or trucks, which is transported to milling and mineral processing.
Mineral Processing
There are two plants, namely the MWS gold plant and the Savuka gold plant, which are dedicated to the processing of tailings material. Reclaimed tailings are pumped as slurry via pipelines to MWS and Savuka gold plants and WRD material is transported on trucks to the Mponeng plant for processing.
The MWS gold plant is currently capable of processing 78,000tpd. This excludes Stream 4 which is planned for commissioning in 2024, at an expected capacity of 8,000tpd.
The Savuka plant is a single process flow with a current processing capacity of 10,600tpd.
Qualified Persons
The QP preparing the TRS was employed on a full-time basis by Harmony. The QP's qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Qualified Person
Professional Organization
Qualification
TRS Section Responsibility
Personal Insp.
Mr. BJ. Selebogo
SAGC
MSCC, HND (MRM)
All Sections
Full time
Exploration
Prior to 2011, grade estimations for the TSFs were based on residue grades obtained from the process plants, as well as various sampling projects in selected areas. Most of these TSFs have since been re-sampled by means of an extensive auger drilling exercise which commenced in 2011. The remaining TSFs will be re-sampled once they go out of service and become dormant.
A total of 1,577 drill holes have been drilled in these TSFs between 2011 and present.
WRDs cannot be explored using drilling because they are comprised of unconsolidated rock. No drilling is undertaken on the MWS and West Wits WRDs.
The drilling and sampling methodology in use for Harmony’s TSFs has been developed specifically for the challenges posed by these deposits and is aligned with industry best practice. This protocol has been in place since 2011, and the drilling components are applied by contractors who are experienced in this specific methodology.
The drill hole samples are deemed to be representative as they provide both vertical and horizontal coverage of each TSF. Drill holes are positioned at regular intervals across the TSF.
The data spacing, density and distribution is sufficient to support the estimation of Mineral Resources for the various TSFs.
WRDs are not explored using exploration methods due to their unconsolidated nature.
The QP is of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
The Mineral Resources were originally prepared, classified and reported according to the SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024.
The Mineral Resource estimate for the MWS operation, as at June 30, 2024, exclusive of the reported Mineral Reserves, is summarized in the table below:
Fiscal Year Ended June 30,
2024
2023
Grade
Metal Content
Grade
Metal Content
Mineral Resource Category
Source
Tonnes (Mt)
Gold (g/t)
U3O8
(kg/t)
Gold (kg)
U3O8
(t)
Tonnes (Mt)
Gold (g/t)
U3O8
(kg/t)
Gold (kg)
U3O8
(t)
% Change
Measured
TSF
52.334
0.20
0.067
10,513
3,507
54.061
0.20
0.061
10,902
3,272
(4)
WRD
—
—
—
—
—
—
—
—
—
—
—
Sub Total / Ave. Measured
52.334
0.20
0.067
10,513
3,507
54.061
0.20
0.061
10,902
3,272
(4)
Indicated
TSF
52.459
0.24
0.088
12,613
4,616
52.912
0.24
0.096
12,840
5,076
(2)
WRD
1.872
0.30
—
563
—
2.060
0.30
—
619
—
(9)
Sub Total / Ave. Indicated
54.331
0.24
0.085
13,176
4,616
54.972
0.24
0.092
13,459
5,076
(2)
Total / Ave. Measured + Indicated
106.665
0.22
0.076
23,689
8,123
109.033
0.22
0.077
24,361
8,348
(3)
Inferred
TSF
79.585
0.13
0.039
10,505
3,067
77.701
0.13
0.039
9,984
3,031
5
WRD
2.502
0.24
—
611
—
2.502
0.24
—
611
—
—
Total / Ave Inferred
82.087
0.14
0.037
11,116
3,067
80.203
0.13
0.038
10,595
3,031
5
Notes:
1.The Mineral Resources were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. BJ. Selebogo, who is Ore Reserve Manager, and a Harmony employee.
2.The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3.No cut-off grade has been applied for the estimation of Mineral Resources. Mineral Resource tonnes are reported based on a gold price of US$1,878/oz.
4.Tonnes are reported as million tonnes rounded to three decimal places. Gold values are rounded to zero decimal places.
5.Uranium content is reported as part of the MWS Mineral Resource estimate only.
6.Metal content does not include allowances for processing losses.
7.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
8.Rounding as required by reporting guidelines may result in apparent summation differences .
9.The Mineral Resource estimate is for Harmony’s 100% interest.
The decrease in Mineral Resources for the MWS Operation is a result of estimation model and survey updates.
The Mineral Resource estimate for the West Wits Operation, as at June 30, 2023, and 2024, is summarized in the table below:
Fiscal Year Ended June 30,
2024
2023
Grade
Metal Content
Grade
Metal Content
Mineral Resource Category
Source
Tonnes (Mt)
Gold (g/t)
U3O8
(kg/t)
Gold (kg)
U3O8
(t)
Tonnes (Mt)
Gold (g/t)
U3O8
(kg/t)
Gold (kg)
U3O8
(t)
% Change
Measured
TSF
—
—
—
—
—
—
—
—
—
—
—
WRD
—
—
—
—
—
—
—
—
—
—
—
Sub Total / Ave. Measured
—
—
—
—
—
—
—
—
—
—
—
Indicated
TSF
25.736
0.32
—
8,321
—
25.427
0.32
—
8,259
—
0.8
WRD
0.152
0.37
—
56
—
0.272
0.37
—
100
—
(44.0)
Sub Total Indicated
25.888
0.32
—
8,376
—
25.699
0.33
—
8,359
—
0.2
Total / Ave. Measured + Indicated
25.888
0.32
—
8,376
—
25.699
0.33
—
8,359
—
0.2
Inferred
TSF
—
—
—
—
—
—
—
—
—
—
—
WRD
—
—
—
—
—
—
—
—
—
—
—
Total / Ave. Inferred
—
—
—
—
—
—
—
—
—
—
—
Notes:
1.The Mineral Resources were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. BJ. Selebogo, who is Ore Reserve Manager, and a Harmony employee.
2.The Mineral Resource tonnes are reported as in-situ with reasonable prospects for economic extraction.
3.No cut-off grade has been applied for the estimation of Mineral Resources. Mineral Resource tonnes are reported based on a gold price of US$1,878/oz.
4.Tonnes are reported as million tonnes rounded to three decimal places. Gold values are rounded to zero decimal places.
5.Uranium content is reported as part of the MWS Mineral Resource estimate only.
6.Metal content does not include allowances for processing losses.
7.Mineral Resources are exclusive of Mineral Reserves. Mineral Resources are not Mineral Reserves and do not necessarily demonstrate economic viability.
8.Rounding as required by reporting guidelines may result in apparent summation differences .
9.The Mineral Resource estimate is for Harmony’s 100% interest.
Inclusion of additional dam compartment (L22) previously excluded.
The slight increase in Mineral Resources for the West Wits Operation is a result of estimation model and survey updates.
Mineral Reserve Estimate
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K.
Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational planning processes. The planning team utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, plant call factor, and plant recovery factors.
The Mineral Reserve estimate for the MWS operation, as at June 30, 2023, and 2024, is summarized in the table below:
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Source
Tonnes (Mt)
Gold Grade
(g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade
(g/t)
Gold Content (kg)
% Change
Proven
TSF
7.499
0.28
2,099
14.215
0.27
3,823
(45.1)
WRD
—
Sub Total / Ave Proven
7.499
0.28
2,099
14.215
0.27
3,823
(45.1)
Probable
TSF
367.071
0.28
101,389
381.126
0.28
105,832
(4.2)
WRD
—
Sub Total / Ave Probable
367.071
0.28
101,389
381.126
0.28
105,832
(4.2)
Total / Ave. Proven + Probable
374.570
0.28
103,488
395.341
0.28
109,655
(5.6)
Notes:
1. The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. BJ. Selebogo, who is the Ore Reserve Manager, and a Harmony employee.
2. Tonnes, grade, and content are declared as net delivered to the mills.
3. Gold content is recovered gold after taking into consideration the modifying factors.
4. Mineral Reserves are reported using a cut-off grade of 0.219g/t and a gold price of US$1,772/oz.
5. Recovered gold (kg) is based on a conversion factor of 32.1507oz/kg.
6. Rounding as required by reporting guidelines may result in apparent summation differences.
The decrease in Mineral Reserves for the MWS Operation is due to estimation model update, change in the confidence classification resulting in the reduction of reserves in LOM.
The Mineral Reserve estimate for the West Wits operation, as at June 30, 2023, and 2024, is summarized in the table below:
Fiscal Year Ended June 30,
2024
2023
Mineral Reserve Category
Source
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Proven
TSF
—
—
—
—
—
—
—
WRD
—
—
—
—
—
—
—
Sub Total / Ave Proven
—
—
—
—
—
—
—
Probable
TSF
12.281
0.32
3,931
17.357
0.32
5,485
(28.3)
WRD
—
—
—
—
—
—
—
Sub Total / Ave Proven
12.281
0.32
3,931
17.357
0.32
5,485
(28.3)
Total / Ave. Proven + Probable
12.281
0.32
3,931
17.357
0.32
5,485
(28.3)
Notes:
1. The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. BJ. Selebogo, who is the Ore Reserve Manager, and a Harmony employee.
2. Tonnes, grade, and gold content are declared as net delivered to the mills.
3. Gold content is recovered gold after taking into consideration the modifying factors.
4. Mineral Reserves are reported using a cut-off grade of 0.221g/t and a gold price of US$1,772/oz
5. Recovered gold (kg) is based on a conversion factor of 32.1507oz/kg.
6. Rounding as required by reporting guidelines may result in apparent summation differences.
Change in Mineral Reserve is due to the increase in the LOM processing volumes.
The tables below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for the MWS operation. The modifying factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Modifying Factor
Unit
Value
Gold Accounted For (“GAF”) - Grade Cut-off
g/t
0.22
Recovery Factor
%
45.35
Plant Call Factor
%
100.00
Dilution
%
N/A
Conversion factor
oz/kg
32.1507
The tables below presents a summary of the modifying factors used to convert the Mineral Resource to the Mineral Reserve for the West Wits operation. The modifying factors are consistent with the modelling, planning and computing estimates used in determining the Mineral Reserves, which are also consistent with historical performance.
Modifying Factor
Unit
Value
GAF - Grade Cut-off
g/t
0.22
Recovery Factor
%
42.50
Mine Call Factor
%
100.00
Dilution
%
N/A
For additional information, see the TRS on each individual property, filed as an Exhibit of this annual report on Form 20-F.
The Hidden Valley mine is located in the Morobe Province of Papua New Guinea and is 100% owned and operated by Morobe Consolidated Goldfields Limited, a wholly-owned subsidiary of Harmony. Hidden Valley mine consists of the Hidden Valley Kaveroi open pit ("HVK") and the Hamata open pit (which are located approximately 6km apart) and an ore processing facility in steep, heavily forested, mountainous terrain. The deposit is located at latitude 7°22”S and longitude 146°39E, approximately 20km southwest of Wau within Mining Lease ML151.
The following graphic illustrates the location of the Hidden Valley mine.
The mineral tenure is presented in the table below.
License Holder
License Type
Reference No.
Effective Date
Expiry Date
Area (ha)
Morobe Consolidated Goldfields Limited
Mining Lease
ML151
March 4, 2005
March 3, 2030
4,098.29
Operational Infrastructure
Wau is the closest town, with an estimated population of 5,800 (2011 census). This town was the center of the gold rush in the 1920s and 1930s in the Morobe Goldfield. An airstrip is operational in the town. The nearest large town is Bulolo, with a population estimated at 20,000 in 2010. In the 1930s, this town was the center of gold dredging on the Bulolo River. The town has an airport, schools, clinics and hospitals. Forestry is currently the dominant industry in the area.
Lae is an urban area, a major transport hub, and a commercial, administrative, industrial, residential, and educational center for both the Morobe Province and PNG, with a population in 2011 (the most recent year for which PNG census data are available) of approximately 149,000.
The existing infrastructure located at the mine site is sufficient to support the current mine plan.
The Property, Plant, and Equipment of Hidden Valley as of June 30, 2024, including buildings and mine infrastructure, mining assets, decommissioning assets and assets under construction, had a carrying value of US$306 million. For information on assets and liabilities (including costs after depreciation) of Hidden Valley see “Annual Financial Report—Notes to the Consolidated Financial Statements—Note 41 “Segment Report”.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R5,570 million.
Hidden Valley did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
The surface infrastructure plan for the mine area is presented in the graphic below.
Geology
The HVK deposit is a vein-stockwork gold-silver deposit located in the southeast corner of the Wau Graben and is hosted by the Morobe Granodiorite. The Kaindi Metamorphics occur as a cap to the HVK Mineralization. It comprises grey-black and green-brown, variably carbonaceous, schistose, quartz-rich psammites and pelites that have undergone regional greenschist metamorphism and localized, higher grade contact metamorphism on intrusive contacts with Morobe Granodiorite. The granodiorite comprises two parts; an upper homogenous granodiorite of uniform texture cut by thin aplite dykes and feldspar porphyry dykes. Below the HVK fault is a lower, more heterogeneous unit comprising granodiorite, diorite, adamellite, tonalite and feldspar porphyry. The lower unit tends to contain gypsum veining, not regularly seen in the upper unit.
Numerous porphyry dykes of the Edie Creek Suite intrude both the Kaindi Metamorphics and the Morobe Granodiorite. Porphyry composition varies from hornblende-biotite to feldspar-quartz phenocryst varieties. These bodies are not general mineralized but do commonly show some alteration.
Surficial weathering, mainly by downward percolation of oxygenated meteoric water, is variable over the gold-silver deposit due to lithological, alteration and structural discontinuities. The granodiorite is usually more deeply weathered than the metasediment of the two main rock units. At the HVK deposit, four distinct oxidation zones are recognized; an oxide zone, partial oxidation zone, a zone of fracture oxidation, and a fresh (primary) zone. However, the effects of supergene gold enrichment or depletion (if present) are minimal for the HVK deposit.
History
Gold was discovered in Hidden Valley Creek by W.H. Chapman in 1927 (Lowensteub, 1982), and worked until 1929. In 1945, stream alluvial gold samples were taken close to the HVK discovery outcrop, but the deposit remained hidden. In 1984, CRA Exploration (Pty) Ltd ("CRAE") discovered the HVK deposit when it carried out a regional stream sediment sampling program in the headwaters of the Upper Watut River, -80mesh sediment samples returned values of 54ppm gold. Mapping up the creeks revealed a landslide on the northern bank of Hidden Valley Creek had exposed altered and mineralized granodiorite with initial chip sampling returning 55m at 3.8ppm gold. Drilling commenced in 1985, with the third and fourth holes intersecting wide zones of mineralization.
CRAE completed a Pre-Feasibility Study in 1989, and concluded the deposit was too marginal at that time to develop. In 1992, Placer Pacific Limited entered into a joint venture with CRAE but withdrew from the joint venture in 1993. In that time Placer drilled 13 holes and tested some adjacent targets. The project went through a hiatus until 1995, when CRA reviewed the project. In 1997, CRAE (now known as Rio Tinto Limited) sold its interest in the HVK deposit to a wholly-owned subsidiary of Australian Gold Fields NL ("AGF"), which was subsequently placed into administration. Aurora Gold Limited ("Aurora") acquired the deposit from the administrators of AGF in September 1998. Aurora completed a pre-feasibility study on the project in 2002. Abelle Limited ("Abelle") obtained 100% ownership of the deposit in February 2003, following the merger of Abelle with Aurora.
Harmony effectively acquired 100% of Abelle on May 1, 2003. A Memorandum of Agreement between landowners and the PNG Government was signed on August 5, 2005, resulting in the mining lease for the Hidden Valley project being granted. Harmony commenced and completed a feasibility project on the deposit and commenced construction in 2008.
In August 2008, Harmony and Newcrest Mining Limited ("Newcrest") commenced a joint venture relationship in the Morobe Province of PNG, and the Hidden Valley Joint Venture was established as an unincorporated 50:50 joint venture between Morobe Consolidated Goldfields Limited (Harmony) and Newcrest PNG1 Limited (Newcrest). The Hidden Valley mine (comprising HVK and Hamata open pits) has been in operation since 2009, and was officially opened in September 2010.
In October 2016, Harmony acquired Newcrest’s joint venture interest, and Morobe Consolidated Goldfields Limited took 100% ownership of the Hidden Valley mine.
Mineral Tenure
Hidden Valley operates within Mining Lease, ML151, and also within Mining Easement ME 82 and Lease for Mining Purposes LMP 80. All tenements are registered in the name of Morobe Consolidated Goldfields Limited and are valid until 2030.
In accordance with the PNG Environment Act, an Environmental Impact Statement ("EIS") was submitted to the Department of Environment and Conservation (now CEPA) in February 2004. The EIS was approved in January 2005, and Waste Discharge and Water Extraction permits issued. In October 2017, these permits were amalgamated as Environment Permit EP-L3(578).
In December 2020, Morobe Consolidated Goldfields Limited submitted an application to CEPA for a minor amendment to Environment Permit EP-L3(578), in support of the Stage 8 expansion, in accordance with the Environment (Prescribed Activities) Regulation 2002. An amendment to Environment Permit EP-L3(578) was issued by CEPA in March 2023.
The mine presently operates in accordance with the 41 conditions prescribed by Environment Permit EP-L3(578), which will expire on March 29, 2030. The existing environmental and tenure permits and licenses are summarized below.
In accordance with Environment Permit EP-L3(578), condition 4, Morobe Consolidated Goldfields Limited reviews and updates its Hidden Valley Environmental Management Plan every three years. The most recent iteration (2021-2024) was submitted to CEPA for approval in March 2023.
A summary of the status of environmental permits and tenements issued as at June 30, 2024, is presented in the table below.
Permit / License
Status
Mining Lease
ML151 current. Amended May 25, 2021. Expiry March 3, 2030.
Lease for Mining Purpose
LMP80 current. Amended May 25, 2021. Expiry March 3, 2030.
Mining Easement
ME82 current. Amended May 25, 2021. Expiry March 3, 2030.
Environment Permit EP-L3 (578)
Awarded October 2017. Amended March 2021. Expires March 2030.
EIS
Approved January 2005.
Mining Method
Hidden Valley is an open pit gold-silver operation, operating conventional truck/excavator open pits and an ore-processing plant. Two separate open pits are currently in operation; the HVK pit and the Hamata pit. The HVK pit is the larger pit supplying the majority of the ore and is located some 6km from the processing plant. Hamata ore is predominately exhausted and is used for Tailings dam wall construction material. Hamata will be used for Tailing Storage Facility #2 once complete.
Mining operations employ conventional open pit mining techniques with back-hoe excavators and rigid dump trucks as the primary load and haul equipment. Front-end loaders are used for crusher feed and stockpile reclaim. A number of articulated smaller dump trucks are used for construction, and mining in Hamata. Mining bench configuration consists of 18m inter-berm heights, mined as 2 x 9m benches or 3 x 3m flitches (typically in ore).
Waste is disposed in engineered valley fill waste dumps, with toes keyed in and buttressed using competent non-acid producing rock. The construction of the Neikwiye valley toe buttress and underdrain network was completed in the 2018 fiscal year and waste rock will be disposed in this dump envelope through the remainder of the mine life. Similarly under drain construction and toe buttress will be completed in the Kaveroi Valley with selective placement to continue in this area for the LOM.
The Hidden Valley processing plant was designed to treat nominally 4.2Mtpa of gold/silver bearing ore although operational issues have prevented the plant reaching its design nameplate capacity. The processing plant treats gold/silver ore from the HVK and Hamata deposits. Crushed ore is conveyed from the HVK pit via a 4.5km long overland pipe conveyor. Ore from the Hamata pit is trucked to the Hamata crushing station, located next to the Hidden Valley processing plant.
Tailings are stored in a TSF located to the southwest of the process plant. Dam-wall construction of the TSF is ongoing and largely constitutes placement of suitable oxide and fresh competent material sourced from mining in the Hamata pit. The processing inventory in this Mineral Reserve estimate is constrained by remaining TSF capacity. TFS1 has a remaining capacity of ~11.3Mt with TSF2 adding an additional 8.0Mt3 of capacity. The overall remaining TSF capacity is currently estimated at 19.3Mt.
Mineral Processing
The Hidden Valley CIL processing plant, located adjacent to the Hamata open pit, was commissioned in 2009. The Hidden Valley processing plant is designed to treat nominally 4.2Mtpa of gold bearing ore from three separate open pits. Three distinct ore types are to be treated through two alternate treatment routes:
•whole ore processing: used to process the blend containing ore from the Hamata deposit, and oxide, transitional and primary ore from the HVK deposits; and
•primary ore processing: used when processing only the primary ore from the HVK deposit.
The Hamata ore is typically a gold: silver ratio of 1:1 with varying sulphur grades from 0.5% to 5.0%. Transition and primary ores have a significantly higher silver content with a gold: silver ratio of 1:15. Transition sulphur averages 0.96% while primary ore has a sulphur grade of 1.81%.
Qualified Persons
The QPs preparing the TRS were employed on a full-time basis by Harmony. The QPs’ qualifications, areas of responsibility and personal inspection of the property are summarized in the graphic below.
Qualified Person
Prof. Assoc.
Qualifications
TRS Section Responsibility
Personal Insp.
Mr. R. Reid
FAIG, MAusIMM
BSc.(Hons), Grad.Dip (Sc)
3, 4, 5, 6, 7, 8, 9, 11
Regular. Last June 2024
Mr. G. Job
FAusIMM
BSc. MSc (Min Econ)
1, 2, 3, 15, 21, 22, 23
Regular. Last February 2023
Mr. D. Ross
MAusIMM (CP), RPEQ
BEng (Mining)
12, 13
Regular. Last June 2024
Mr. M. Swart
FAusIMM(CP), RPEQ
BMetEng, MBA
10, 14
Regular. Last June 2024
Ms. S. Watson
MAusIMM
MSc, BSc.(Hons)
17
Regular. Last February 2023
Mr. D. Hall
MAHRI
Bachelor Commerce (HR & Industrial Psychology)
17
Regular. Last March 2024
Mr. M. Koehler
CAANZ
BBus Acc, Grad Dip (CA)
16, 18, 19
Regular Last August 2021
Exploration
The HVK deposit has had a long history of exploration dating back to the 1980s. The amount of exploration carried out over the Hidden Valley area is significant, and the volume of the results is too large to enable detailed reporting herein.
A large mapping dataset exists from detailed work completed over the years. The geological model used in the Mineral Resource estimate has been based upon combined drill hole data and surface mapping that has been completed over time. Structural mapping in and around the site and within the open pits has been conducted on a number of occasions. Observations gathered during open pit mapping have been combined with more regional mapping work completed over time by site geologists and consultants to construct a robust geological model that will support the grade estimate.
Available regional government geophysical datasets include a 1000m spaced fixed-wing airborne magnetic survey, a 400m spaced helicopter airborne magnetic survey and a 2000m spaced fixed-wing gravity survey. Available company geophysical datasets include a 50m spaced helicopter airborne magnetic survey, some prospect-specific ground magnetic survey stations, and induced polarization surveys.
Regional stream sediment and "Ridge and Spur" soil sampling was completed by CRAE between 1983 and 1989. Additional soils and trenches were completed prior to and post the commencement of drilling. Drilling data and mining have superseded the information in the trenching programs.
Available geochemical sampling on ML151 includes a total of 24,844 surface samples. These are a mix of historical company data and Harmony collected sampling. Surface geochemical sampling techniques include soil (8,741), rock chip (12,468), wacker (2,033), auger (920) and stream sediment (245), plus some other less common techniques. Available assay suites for both historical company data and Harmony collected sampling vary widely, with assay suites generally extended to more elements in more modern times.
CRAE discovered the HVK deposit using stream sediment sampling campaign up the headwaters of the Upper Watut River in 1984. Sediment samples (-80mesh) returned values of 54ppm Au. No further information is available on the stream sediment sampling campaign. These data are not, however, used in geological modelling and Mineral Resource estimation.
Surface drilling completed to date included diamond core and reverse circulation (“RC”) drilling. Drilling was undertaken continuously between 2009 to 2012, with some minor additional drilling done since. Some targeted deeper RC holes and diamond holes have been drilled into the deposit during 2014 to 2022, with various degrees of success to close up the drill spacing. A total of 34,086 holes measuring 1,099,053m of drilling were used in the generation of the 2022 geology and domain mode. This includes both blast and RC operational grade control drilling. A total of 1,586 drill holes, comprising 275,491m of drilling was used in the Mineral Resource estimate. It should be noted that these numbers exclude grade control drilling. This drilling was not included in the Mineral Resource estimate due to sample support issues which would result from such closely spaced drilling.
The QPs are of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
Mineral Resource Estimate
The Mineral Resource estimate is reported in situ within the Hidden Valley lease area, as determined through the analysis of the reasonable prospect for economic extraction by opencut mining method. The cut-off value for the Mineral Resources is determined at 0.65g/t gold based on the economic assumptions presented set forth in the table below at June 30, 2024.
Plant recovery factor – (ave of multi variate curve)
%
88.0
Unit cost
K/t
10.21
Note: Unit cost includes cash operating cost, royalty and ongoing development capital.
This cut-off value represents typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
The Mineral Resources were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. These Mineral Resources account for mining depletion recorded from July 2023 to June 2024.
The Mineral Resource estimate, as at June 30, 2024, exclusive of the reported Mineral Reserves, is summarized in the table below.
Fiscal Year Ended June 30,
2024
2023
Grade
Metal Content
Grade
Metal Content
Mineral Resource Category
Source
Tonnes (Mt)
Gold (g/t)
Silver
(g/t)
Gold (kg)
Silver
(kg)
Tonnes (Mt)
Gold (g/t)
Silver
(g/t)
Gold (kg)
Silver
(kg)
% Change
Measured
HVK
0.738
0.78
18.09
572
13,348
—
—
—
—
—
—
%
Hamata
—
—
—
—
—
—
—
—
—
—
—
%
Sub Total / Ave. Measured
0.738
0.78
18.09
572
13,348
—
—
—
—
—
—
%
Indicated
HVK
29.901
1.17
15.81
34,928
472,725
28.500
1.26
17.44
36,000
498,000
(3)
%
Hamata
1.738
1.93
—
3,353
—
1.900
1.57
—
3,000
—
12
%
Sub Total / Ave. Indicated
31.638
1.21
14.94
38,280
472,725
30.500
1.28
16.35
39,000
498,000
(2)
%
Total / Ave. Measured + Indicated
32.376
1.20
15.01
38,853
486,073
30.500
1.28
16.35
39,000
498,000
—
%
Inferred
HVK
1.013
1.12
26.29
1,136
26,637
0.900
1.20
24.09
1,100
22,000
3
%
Hamata
0.184
1.49
—
274
—
0.200
1.44
—
300
—
(9)
%
Total / Ave. Inferred
1.197
1.18
22.25
1,410
26,637
1.100
1.25
19.62
1,400
22,000
1
%
Notes:
1.Mineral Resources are reported with an effective date of June 30, 2024 using the SAMREC Code, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. R. Reid, Group Resource Geologist, and employee of Harmony PNG.
2.Mineral Resources are adjusted for mining depletion to end April 2024, with assumed production for May and June, 2024.
3.Measured Resources include surface stockpiles only.
4.Mineral Resources are reported on a 100% basis. Harmony holds a 100% interest.
5.Mineral Resources are reported exclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
6.Mineral Resources at HVK are reported assuming a bulk open pit mining metallurgical recovery for silver and gold by sulphide flotation. Mineral Resources are reported above a gold grade cut-off of 0.60g/t on the results of a profit algorithm; this equates to a marginal ore cut-off grade. The profit algorithm takes account of metal price, grade, ore processing route, recoveries and costs. Metal price assumptions are US$1,878/oz gold, US$23.00/oz silver and a 0.71 US$/A$ exchange rate. Adjustments to these figures will potentially impact upon the economic cut-off grade.
7.Tonnages are metric tonnes. Gold and silver ounces are estimates of metal contained in tonnages and do not include allowances for processing losses.
8.Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content. Rounding is to three significant figures.
9.The decrease in Resource tonnes is a product of the increased Reserve and depletion related to mining over the past year.
Mineral Reserve Estimate
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K.
Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational mine planning processes. Mine planning utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, dilution, ore losses, minimum mining widths, planned mine call factors.
The Mineral Reserve estimate, as at June 30, 2024, is summarized in the table below.
Fiscal Year Ended June 30,
2024
2023
Grade
Metal Content
Grade
Metal Content
Mineral Reserve Category
Open Pit
Tonnes (Mt)
Gold (g/t)
Silver (g/t)
Gold (Kg)
Silver (Kg)
Tonnes (Mt)
Gold (g/t)
Silver (g/t)
Gold (Kg)
Silver (Kg)
% Change
Proven
HVK
1.030
0.92
19.58
943
20,176
1.600
0.98
21.20
1,600
34,500
(41)
%
Hamata
—
—
—
—
—
—
—
—
—
—
—
%
Total / Ave. Proven
1.030
0.92
19.58
943
20,176
1.600
0.98
21.20
1,600
34,500
(41)
%
Probable
HVK
15.382
1.68
26.02
25,875
400,298
17.600
1.78
27.82
31,400
489,700
(18)
%
Hamata
0.127
1.68
—
214
—
0.200
1.90
—
300
—
(29)
%
Total / Ave. Probable
15.509
1.63
25.81
26,089
400,298
17.800
1.79
27.58
31,700
489,700
(18)
%
Total / Ave. Proven + Probable
16.540
1.63
25.42
27,032
420,473
19.400
1.72
27.04
33,300
524,200
(19)
%
Notes:
1.Mineral Reserves are reported with an effective date of June 30, 2024, using the SAMREC Code, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. D. Ross, Group Mine Planning Engineer, and employee with Harmony PNG.
2.Mineral Resources are reported on a 100% basis. Harmony holds a 100% interest.
3.Mineral Reserves are reported using the following assumptions: open pit mining method, gold price of US$1,772/oz, silver price of US$23.00/oz at US$/A$ 0.71 exchange rate.
4.Not all “ore” as defined at the economic cut off reports to the Mineral Reserve due to the constrained tailing storage facility with some marginal grade ore material remaining on stockpile. The Proven Mineral Reserve is limited to stockpiles. Probable Mineral Reserve is derived from the Indicated Mineral Resource.
5.Gold and silver ounces are estimates of metal contained in tonnages and do not include allowances for processing losses.
6.Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content. Rounding is to three significant figures.
7.The increase in Mineral Reserve was due to an increase in TSF capacity allowing for a larger pit design
Modifying Factor
Unit
Value
Gold Price
US$/oz
1,772
Silver Price
US$/oz
23
Exchange Rate
A$ : US$
:
0.71
K : US$
:
3.70
Tonnage Recovery
%
100
Gold Modifying Factor (ave)
HVK
%
94
Hamata
%
90
For additional information, see the TRS on each individual property, filed as an Exhibit of this annual report on Form 20-F.
The Wafi-Golpu Project is situated within the Morobe Province of PNG, approximately 65km southwest of Lae, the nearest commercial center. The Wafi-Golpu Project comprises the Golpu copper–gold porphyry deposit (“Golpu deposit”), the Wafi epithermal gold deposit ("Wafi deposit") and the Nambonga copper-gold porphyry deposit ("Nambonga deposit"). Mineral Resources and Mineral Reserves were estimated for the Golpu deposit. Additional Mineral Resources were estimated for the Wafi deposit and the Nambonga deposits however, these deposits are not currently included in the mine plan. No production has yet occurred at this property. The Wafi-Golpu Project is situated at a latitude of 6°51’46.63”S and longitude of 146°27’08.20”E.
The Property, Plant, and Equipment of Wafi-Golpu as of June 30, 2024, including buildings and infrastructure, had a carrying value of US$157.3 million. For information on assets and liabilities (including costs after depreciation) of Wafi-Golpu see “Annual Financial Report—Notes to the Consolidated Financial Statements—Note 41 “Segment Report”.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R2,861 million.
Wafi-Golpu did not incur any fines or penalties for non-compliance during the year ended June 30, 2024 and no significant encumbrances exist.
The following graphic illustrates the location of the Wafi-Golpu Project.
In August 2008, Harmony and Newcrest commenced a joint venture relationship in the Morobe Province of PNG, and the Wafi-Golpu Joint Venture ("WGJV") was established as a 50%:50% unincorporated joint venture between Wafi Mining Limited ("Wafi Mining") and Newcrest PNG2 Limited ("Newcrest PNG2"), subsidiaries respectively of Harmony and Newcrest and together referred to as the "WGJV participants". In November 2023, Newmont Corporation ("Newmont") completed the acquisition of Newcrest.
The WGJV participants hold two exploration licenses ("ELs") covering a total area of 12,984 ha. The deposits are located within EL440, with a range of major surface facilities to be located on EL1105.
The WGJV participants also hold an environment permit for the project issued under the PNG Environment Act. The permit authorizes the utilization of DSTP as the tailings management method for the Wafi-Golpu Project.
Both tenements were in good standing as at June 30, 2024. There is no material litigation (including violations or fines) that threatens its mineral rights, tenure, or operations. However, the grant of the environment permit is currently the subject of two judicial reviews, the first applied for in March 2021 by the previous Governor of the Morobe Province in PNG, who was opposed to DSTP, and the second in December 2022 by coastal villagers represented by the CELCOR.
The present Governor, who was appointed in September 2022, is not opposed to DSTP and has stated publicly that he intends to withdraw his proceedings, but as at June 30, 2024 has not yet done so. Notwithstanding the change of position of the Governor or the outcome of the judicial review instituted by CELCOR, it is possible that a class action or individual claim relating to DSTP may be filed against us in the future, which (if successful) could have a material adverse impact on the Wafi-Golpu Project. See Item 3: “Risk Factors - We are subject to the risk of litigation, the causes and costs of which are not always known”.
Operational Infrastructure
The closest major community is Lae. Lae is an urban area, a major transport hub, and a commercial, administrative, industrial, residential, and educational center for both the Morobe Province and PNG, with a population in 2011 (the most recent year for which PNG census data are available) of approximately 149,000.
The Wafi-Golpu Project is located in a mountainous area of PNG. A combination of roads and access tracks exist between Lae and the project site. However, the track components are suitable for four-wheel drive vehicles and purpose-built trucks only. During major rainfall events this access route may become closed to vehicular traffic.
Current access to the planned mine site is via a partly-sealed road from Lae to Timini, and a gravel road from Timini (Demakwa) to Wafi, with the trip taking about three to four hours depending on the weather. As part of project development, a new road (including bridges) (the "northern access road"), will be constructed, running from the Highlands highway to the mine site, and linking up with the current exploration access road. A private mine access road will be constructed from the intersection of the northern access road and the current exploration access road.
Commercial airlines operate flights between the national capital, Port Moresby, and Nadzab airport, which is approximately a one-hour drive by road from Lae. The Nadzab airstrip is sealed. Helicopter access to the mine site area is available, with a suitable area at the proposed mine site cleared for landing.
The Golpu project is a greenfield site that currently does not have any infrastructure to support the planned mining and processing operations. There is no effective local infrastructure with respect to power, water, and roads that are trafficable by vehicles other than all-wheel drive vehicles. Water supply for drilling was sourced from rivers, and power at the exploration camp (Wafi Camp) is locally generated. The surface infrastructure plan for the mine area is displayed in the graphic below, along with the start of the infrastructure corridor.
Wafi–Golpu is a complex, multiphase mineralized system comprising the:
•Golpu porphyry copper–gold deposit;
•Wafi epithermal gold deposit; and
•Nambonga porphyry gold–copper deposit.
The Golpu Intrusive Complex consists of multiple, hornblende-bearing diorite porphyries intruded into the host sedimentary lithologies. The porphyries are separated based on their spatial position and, where not texturally destroyed, into coarse hornblende-rich variants, feldspathic-rich units and porphyries containing quartz-eye inclusions. Intrusions range from small dykes to small stocks/bosses and apotheoses. Single intrusions pinch and swell vertically over tens of meters and form dykes, pipes and stocks.
The Wafi Diatreme complex is a roughly rectangular shaped feature, 800m by 400m at surface with steep, inward-dipping sides. The diatreme comprises intrusive and sedimentary breccias, volcaniclastic rocks and tuffs, and was intruded by several phases of unmineralized dacitic porphyries.
The Nambonga diorite porphyry stock is typically medium-grained, containing plagioclase and hornblende phenocrysts set in a feldspathic matrix. The diorite is cut by a late barren diorite phase at depth. The diorite has intruded lithologies of the Owen Stanley Metamorphic Complex, consisting of metasandstone and minor metaconglomerate.
History
Historical exploration dates back to 1977 and has included regional exploration sampling, geophysical surveys, geochemical sampling, reverse circulation and diamond core drilling.
CRAE identified mineralized float in a regional geochemical sampling program and discovered the outcropping mineralization of the Wafi A Zone near Mount Golpu in 1979. The Mt Wanion Exploration License (EL440) was granted in 1980. The discovery of the Golpu copper–gold porphyry deposit occurred in 1990.
Aurora acquired project ownership in 2001 and updated Wafi resource estimate on A Zone, B Zone and Link Zone in 2002. Completed check resource estimate at Wafi in 2002. Aurora merged with Abelle in 2003. An updated Wafi Mineral Resource estimate was completed in 2003.
Harmony acquired Abelle in 2004 and completed the Wafi–Golpu Concept Study. Resource estimates for selected deposits were updated in 2005, 2006 and 2007. The Golpu Standalone Pre-Feasibility Study, was completed 2007. The Wafi–Golpu Integrated Pre-Feasibility Study was completed 2007. The Nambonga porphyry was discovered in 2007.
In 2008, Harmony and Newcrest commenced a joint venture relationship in the Morobe Province of PNG, and the WGJV was established as an unincorporated 50:50 joint venture between Wafi Mining and Newcrest PNG2.
The Golpu Development Project Desktop Study was completed 2009. This was followed by the Wafi Concept Study (2010), the Wafi–Golpu Pre-Feasibility Study (2012), and the Wafi Golpu Pre-Feasibility Optimization Study (2014). Regional geological mapping and geological synthesis was completed in 2015, which led to a re-evaluation of the development approach and the Golpu Stage 2 Pre-Feasibility Study, completed in 2015. Golpu Feasibility Study was then completed 2016.
On August 25, 2016 the WGJV submitted a Special Mining Lease ("SML") application to the PNG MRA for an SML area including the Golpu, Wafi and Nambonga deposits. The SML application included applications for ancillary mining tenements, a Proposal for Development, which incorporated the 2016 Feasibility Study report, and supporting application documents such as a National Content Plan. Further data collection and technical assessment undertaken in 2016–2017. The Feasibility Study Update was completed in December 2017 and submitted to the PNG MRA in March 2018. Permitting negotiations for the grant of the SML application are ongoing.
An EIS was submitted to CEPA on June 25, 2018, and an environment permit for the Wafi-Golpu Project was issued on December 18, 2020.
In November 2023, Newmont completed the acquisition of Newcrest.
Refer to Item 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – Papua New Guinea” above for a summary of the regulatory environment in PNG.
The WGJV holds two ELs covering a total area of 12,894ha, each of which is registered in the names of Wafi Mining and Newcrest PNG2. The deposits are all located within EL440, with a range of major surface facilities to be located on EL1105. The summary of mineral tenure is presented in the table below.
License Holder
License Type
Reference No.
Effective Date
Expiry Date
Area (ha)
Wafi Mining and Newcrest PNG2
Wafi Mining and Newcrest PNG2
Exploration License
EL440
March 11, 2022
March 10, 20241
9,501
Exploration License
EL1105
January 21, 2023
February 25, 2025
3,393
Notes: 1. Renewal submitted on November 21, 2023.
Both tenements are in good standing and are currently under renewal. The WGJV participants lodged an application to extend the terms of EL440 for a further two years on November 21, 2023, in accordance with the requirements of the PNG Mining Act.
Each EL is subject to the condition that, “Subject to any agreement made under Section 17 of the Act, the State reserves the right to elect at any time, prior to the commencement of mining, to make a single purchase of up to 30% equitable interest in any mineral discovery arising from this license, at a price pro-rata to the accumulated exploration expenditure and then to contribute to further exploration and development in relation to the lease on a prorate basis unless otherwise agreed”. If the PNG State chooses to take-up its full 30% interest, the interest of each of Wafi Mining and Newcrest PNG 2 will become of a 35%.
The tenements required to develop and operate the Wafi-Golpu Project and which, as at June 30, 2024 are under application, are summarized below:
•SML 10. For Block cave mines, Watut declines portal terrace, process plant terrace, Watut process plant, Nambonga decline portal terrace, waste rock storage facilities ("WRSFs"), Miapilli clay borrow pit, water treatment facilities, sedimentation dams, raw water dam, explosives magazine facilities, waste management facility, concrete batch plants, electrical substations, workshops and administration buildings, accommodation facility;
•LMP 100. For Finchif construction accommodation facility and power generation facilities;
•LMP 104. For Port facilities area (including concentrate filtration plant);
•LMP 105. For outfall area;
•ME 91. For Infrastructure corridor pipelines from the northern boundary of the SML application to Lae for pipelines and power transmission lines from the power generation facilities to the northern boundary of the SML;
•ME 92. For Mine access road;
•ME 93. For northern access road;
•ME 94. For wastewater discharge pipeline (for mine dewatering) to the Watut River and co-located raw water make-up pipeline;
•ME 96. For terrestrial tailings pipeline – Lae to Wagang; and
•ME 97. For component of outfall system, specifically the seawater intake and deep sea tailings placement outfall pipelines.
•ML 183. Northern Access Road Quarry
•ML 184. Madzim Gravel Pit
•ML 185. Lense Sibal Beamena Hard Rock Quarry
•ML 186. South Papas Gravel Pit
•ME 115. Madzim Gravel Pit Access Track
Environment Permit
The WGJV Participants hold a Level 3 Environment Permit (EP-L3 (767)) for the Wafi-Golpu Project.
An Environmental Inception Report ("EIR") was submitted to CEPA in May 2017, and approved in June 2017. An EIS was submitted to CEPA on June 25, 2018, and approved on November 19, 2020. The environment permit was issued on December 18, 2020 and has a term of 50 years. The EIS included a framework Environment Management Plan and it will be necessary, as a condition of the Environment Permit, to prepare an Environmental Management and Monitoring Plan ("EMMP")and submit it to CEPA for its approval.
The proposed mining method is block caving on three levels, namely BC40, BC42 and BC44. The BC44 and BC42, underground services, and infrastructure areas are designed to a feasibility level of confidence. The BC40 cave footprint and thus extraction level layout are designed at a pre-feasibility confidence level. The infrastructure for BC40 is identical to that of BC44 and BC42 and is at a feasibility level of confidence. There will be no additional surface infrastructure for BC40.
Block caving was selected for the following reasons:
•orebody geometry and geotechnical conditions;
•high productivity, low operating cost mining method; and
•higher-value material located at depth can be accessed earlier in the mine plan.
The proposed mine plan uses technology conventional to block cave operations, including mine design and equipment. The mine is planned to operate 24 hours per day, every day of the year, apart from scheduled and unscheduled shutdowns.
Access to the mine workings will be via the Watut and Nambonga declines, with each generating waste rock that will either be used in construction activities, processed or deposited within the WRSFs. Block cave mining will not result in the production of waste rock because all material extracted from the block cave will be fed to the Watut process plant. Block cave mining will cause a subsidence zone of fractured rock to develop that will propagate to surface.
During caving operations, ore from the block cave drawpoints will be delivered by vehicles to an underground crusher. The crushed ore will then be conveyed to the surface. The ore conveyor emerging at the Watut declines portal terrace will continue overland for approximately 600m to deliver crushed ore to a coarse ore stockpile adjacent to the Watut process plant for processing.
Mineral Processing
The proposed Watut process plant will be a compact copper concentrator that is progressively built (in line with the profile of the mine ramp-up) to be capable of processing approximately 17Mtpa of crushed ore at peak capacity to produce a high-grade copper concentrate. The plant is designed to cater for the ore composition changes over the LOM, and blending is not expected to be required.
A two-stage ramp-up philosophy will be used. The plant will run intermittently (campaign treatment) and in 50% turndown mode for the first three years. During the mine ramp-up period, the total volume of the coarse ore stockpile and start-up stockpile will be used to maintain plant utilization as high as practicable, minimizing the number of plant stops.
Models for the two process flowsheet variations were derived from the validated base case flowsheets, using standard metal balance techniques per unit operation.
Qualified Persons
The QPs preparing the TRS were employed on a full-time basis by Harmony. The QPs’ qualifications, areas of responsibility and personal inspection of the property are summarized in the table below:
Qualified Person
Prof. Assoc.
Qualifications
TRS Section Responsibility
Personal Insp.
Mr. R. Reid
FAIG, MAusIMM
BSc(Hons), Grad.Dip(Sc)
3, 4, 5, 6, 7, 8, 9, 11
Regular Last Aug 2019
Mr. G. Job
MAusIMM
BSc. MSc (Min Econ)
1, 2, 3, 15, 21, 22, 23
Regular, last 2020
Caveman Consulting
N/A
N/A
12, 13
2016
Mr. M. Swart
FAusIMM, RPEQ, MIEPNG
BE (Met Eng), MBA
10, 14
None1
Ms. S. Watson
MAusIMM
MSc, BSc. (Hons)
17
Regular
Mr. M. Koehler
CAANZ
BBus Acc, Grad Dip (CA)
16, 18, 19
None1
Notes: 1. Not deemed necessary as no plant nor infrastructure has yet been constructed on site.
Exploration
The Wafi-Golpu Project has had a long history of exploration dating back to the 1980s. The amount of exploration carried out over the Wafi-Golpu Project area is significant and the volume of the results are too large to enable detailed reporting herein. The exploration results that have been used in the estimation of the Mineral Resources are identified.
A number of mapping programs were conducted over the Wafi-Golpu Project area including 1:10,000 fact mapping of available outcrop. Mapping data and subsequent interpretations were used together with drill hole data to model the deposit geology and structure. A structural model for the Wafi–Golpu area was compiled in 2011.
WGJV staff re-examined some of the geophysical data in 2018, as follows:
•the 1985 survey, conducted using 100m and 200m dipole spacing, was compiled and inverted in three-dimensions (“3D”). Generally high chargeability values were noted, and clearly defined the lithocap as a strong resistor above a relatively conductive zone of clay alteration; and
•the 1990 EM survey data were inverted in 3D and show a clear conductor that coincides with the top of the Golpu deposit. This conductor is probably due to sulphide veining which, unlike magnetite, has not been affected by late advanced argillic alteration.
CRAE completed ridge and spur sampling programs from 1980–1982. CRAE also conducted an initial trenching program comprising 102 trenches, varying in length from 1–1,840m, for a total 34,129m of trenching. Information from these programs was superseded by drill data.
Drilling completed to date included diamond core drilling and RC. A total of 791 drill holes (including wedges) were completed in the project area by Harmony and its JV partners between 1983 and 2018, comprising 285,757m of core drilling and 17,180m of RC drilling.
In fiscal 2024 four drill holes were completed for 782m into the Wafi gold resource. The objective of the drilling was to provide sample for column leach test work to investigate oxide and sulphide leach characteristics. The drill core was dispatched to Perth, Australia where is was run through the Corescan hyperspectral system before being sampled for geochemical assay and metallurgical testwork.
The QPs are of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources and Mineral Reserves.
Mineral Resource Estimate
The Mineral Resource estimate assumes a bulk mining underground extraction method such as block caving and metallurgical recovery for copper and gold by sulphide flotation.
The Mineral Resource estimate is reported based on mass mining by block cave with no internal selectivity. The 40m x 40m x 40m parent block size was an appropriate cell size for the planned bulk mining method. The shell did not represent a conceptual block cave footprint and associated draw column height of draw. However, it did represent the economic material potentially recoverable from a major block cave. The primary model was passed through a net smelter return ("NSR") calculation sheet and a breakeven value shell was generated at margin 0 to remove isolated projections and incorporate a small volume of internal waste.
The metallurgical recovery model was based on copper flotation with copper and gold recovered to concentrate. Extensive testwork was completed to establish algorithms developed from variability modelling. Metallurgical domains were based on both the host rock type and alteration style. Each metallurgical domain was assigned a recovery algorithm, typically subdivided based on Cu:S and Au:S ratios.
The NSR estimation was required only to establish the Mineral Resource reporting breakeven value shell. Mining and milling costs were based on a block caving mining method and milling through a copper concentrator. The breakeven value shell spatially constraining the grade model includes internal waste, and excluded isolated above-cut-off blocks, which reflected the potential bulk mining scenario. There was no revenue assumed from silver or molybdenum in the NSR estimate; however, these elements were estimated as part of the Mineral Resource estimation process as there may be potential for these metals to be recovered with minor circuit modifications or concentrate contract negotiations, and therefore included in future Mineral Resource estimates.
Description
Unit
Value
Gold price
US$/oz
1,200
Copper price
US$/oz
3.00
A$ FX rate
US$:A$
0.75
K FX rate
K:US$
3.10
Plant recovery factor - calculated
%
Varies
Note:
1 Unit cost includes cash operating cost, royalty and ongoing development capital.
The cut-off value is a NSR value that contains typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
The Mineral Resources were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. There has been no mining at Wafi-Golpu.
The Mineral Resource estimate for Golpu, as at June 30, 2024, exclusive of the reported Mineral Reserves is summarized in the table below.
Fiscal Year Ended June 30,
% Change
Gold
2024
2023
Mineral Resource Category
Tonnes (Mt)
Gold Grade
(g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade
(g/t)
Gold Content (kg)
Measured
—
—
—
—
—
—
—
Indicated
155.000
0.58
90,372
145.000
0.54
78,000
15.9
Total / Ave. Measured + Indicated
155.000
0.58
90,372
145.000
0.54
78,000
15.9
Inferred
70.000
0.62
44,000
70.000
0.62
44,000
—
Fiscal Year Ended June 30,
% Change
Copper
2024
2023
Mineral Resource Category
Tonnes (Mt)
Copper Grade
(%)
Copper Content (Mt)
Tonnes (Mt)
Copper Grade
(%)
Copper Content (Mt)
Measured
—
—
—
—
—
—
—
Indicated
155.000
0.95
1.470
145.000
0.93
1.350
8.9
Total / Ave. Measured + Indicated
155.000
0.95
1.470
145.000
0.93
1.350
8.9
Inferred
70.000
0.86
0.600
70.000
0.86
0.600
—
Fiscal Year Ended June 30,
% Change
Silver
2024
2023
Mineral Resource Category
Tonnes (Mt)
Silver Grade
(g/t)
Silver Content (kg)
Tonnes (Mt)
Silver Grade
(g/t)
Silver Content (kg)
Measured
—
—
—
—
—
—
—
Indicated
155.000
1.30
201,500
145.000
3.05
442,000
(54.4)
Total / Ave. Measured + Indicated
155.000
1.30
201,500
145.000
3.05
442,000
(54.4)
Inferred
70.000
1.10
77,000
70.000
1.06
74,000
4.1
Notes:
1.Mineral Resources are reported with an effective date of June 30, 2024 using the SAMREC Code, 2016. For the purposes of thisTRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. R. Reid, FAIG, MAusIMM, whose job title is Group Resource Geologist with Harmony Gold (PNG Services) Pty Limited.
2.Mineral Resources are reported on a 50% basis as Harmony holds a 50% interest in the WGJV.
3.Mineral Resources are reported exclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
4.Mineral Resources at Golpu are reported assuming a bulk mining underground extraction method and metallurgical recovery for copper and gold by sulphide flotation. Mineral Resources are reported above a NSR cut-off, which assumes a gold price of US$1,300/oz Au, a copper price of US$3.40/lb Cu, mining cost of US$8.37/t mined, processing cost of US$9.75/t processed, general and administrative (G&A) costs of US$4.17/t processed, copper concentrate treatment charge of US$100/dmt of concentrate, transport cost of US$33.50/wet tonne of concentrate, and copper refining charges of US$0.10/lb of recovered copper. Silver and molybdenum were not valued in the NSR cut-off; however, these elements were reported within the Mineral Resource as they were expected to be recovered with minor circuit modifications or concentrate contract negotiations. Over the LOM, it is anticipated that copper recoveries will average 94% and gold recoveries will average 68%.
5.Metal contents reported do not include allowances for processing losses.
6.Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content. Rounding is to three significant figures.
Mineral Resource estimate for Wafi, as at June 30, 2024, exclusive of the reported Mineral Reserves is summarized in the table below:
1.Mineral Resources are reported with an effective date of June 30, 2024 using the SAMREC Code, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The Qualified Person responsible for the estimate is Mr. R. Reid, FAIG, MAusIMM, whose job title is Group Resource Geologist with Harmony Gold (PNG Services) Pty Limited.
2.Mineral Resources are reported on a 50% basis as Harmony holds a 50% interest in the WGJV.
3.Mineral Resources are reported exclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
4.Mineral Resources at Wafi are reported assuming open pit mining methods with limited internal selectivity, and a process method that is anticipated to be a combination of CIP and CIL operation, with a flotation sulphide recovery mill process. The estimates are reported at cut-offs of 0.4g/t Au for non-refractory gold mineralization ("NRG") and 0.9g/t Au for refractory gold mineralization ("RG"). Mineral Resources are constrained within a conceptual open pit shell that uses the following input assumptions: gold price of US$1,400/oz; mining costs of US$5.40/t mined, and process and general and administrative costs of US$17.30/t processed. Metallurgical recovery is estimated at 91% gold recovery NRG and minimum of 47% recovery for RG. Pit slope approximate overall angles range from 33° in oxidized material to 65° in fresh rock.
5.Metal contents reported do not include allowances for processing losses.
6.Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content. Rounding is to three significant figures.
Mineral Resource estimate for Nambonga, as at June 30, 2024, exclusive of the reported Mineral Reserves is summarized below:
Fiscal Year Ended June 30,
Gold
2024
2023
Mineral Resource Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Measured
—
—
—
—
—
—
—
Indicated
—
—
—
—
—
—
—
Total / Ave. Measured + Indicated
—
—
—
—
—
—
—
Inferred
24.000
0.69
16,000
24.000
0.69
16,000
—
Fiscal Year Ended June 30,
% Change
Copper
2024
2023
Mineral Resource Category
Tonnes (Mt)
Copper Grade
(%)
Copper Content (Mt)
Tonnes (Mt)
Copper Grade
(%)
Copper Content (Mt)
Measured
—
—
—
—
—
—
—
Indicated
—
—
—
—
—
—
—
Total / Ave. Measured + Indicated
—
—
—
—
—
—
—
Inferred
24.000
0.20
0.047
24.000
0.20
0.047
—
Notes:
1.Mineral Resources are reported with an effective date of June 30, 2024 using the SAMREC Code, 2016. For the purposes of this TRS, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Mr. R. Reid, FAIG, MAusIMM, whose job title is Group Resource Geologist with Harmony Gold (PNG Services) Pty Limited.
2.Mineral Resources are reported on a 50% basis as Harmony holds a 50% interest in the WGJV.
3.Mineral Resources are reported exclusive of Mineral Reserves. Mineral Resources that are not Mineral Reserves do not have demonstrated economic viability.
4.Mineral Resources at Nambonga are reported assuming a bulk mining underground extraction method. The Mineral Resource is reported using an assumed 0.5g/t Au cut-off grade. This cut-off grade is based on the adjacent Golpu deposit as an analogue, assumes an overall mining, processing, and G&A operating cost estimate of about US$15.50/t, a gold price of US$1,300/oz, and a metallurgical recovery of 85% for gold. This equates to a cut-off grade of approximately 0.46g/t Au, based on gold only. Conceptual costs associated with copper and silver recovery were approximated as equivalent to 0.04g/t Au. The total cutoff grade for reporting purposes was 0.5g/t Au.
5.Metal contents reported do not include allowances for processing losses.
6.Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content. Rounding is to three significant figures.
Mineral Reserve Estimate
The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K.
Mineral Reserves are derived from the Mineral Resources, a detailed business plan and the operational mine planning processes. Mine planning utilizes and takes into consideration historical technical parameters achieved. In addition, Mineral Resource conversion to Mineral Reserves considers certain modifying factors, dilution, ore losses, minimum mining widths, planned mine call and plant recovery factors.
The Mineral Reserve estimate for Golpu, as at June 30, 2023 and 2024, is summarized in the table below.
Fiscal Year Ended June 30,
Gold
2024
2023
Mineral Reserve Category
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
Tonnes (Mt)
Gold Grade (g/t)
Gold Content (kg)
% Change
Proven
—
—
—
—
—
—
—
Probable
190.000
0.83
158,628
200.000
0.86
171,000
(7.2)
Total / Ave. Proven + Probable
190.000
0.83
158,628
200.000
0.86
171,000
(7.2)
Fiscal Year Ended June 30,
% Change
Copper
2024
2023
Mineral Reserve Category
Tonnes (Mt)
Copper Grade
(%)
Copper Content (Mt)
Tonnes (Mt)
Copper Grade
(%)
Copper Content (Mt)
Proven
—
0.00
—
—
0.00
—
—
Probable
190.000
1.23
2.330
200.000
1.20
2.450
(4.9)
Total / Ave. Proven + Probable
190.000
1.23
2.330
200.000
1.23
2.450
(4.9)
Notes:
1.Mineral Reserves are reported with an effective date of June 30, 2024, using the SAMREC Code, 2016. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP responsible for the estimate is Caveman Consulting.
2.Mineral Reserves are reported on a 50% basis as Harmony holds a 50% interest in the WGJV.
3.Mineral Reserves are reported using the following assumptions: block cave mining method, gold price of US$1,200/oz Au, copper price of US$3.00/lb Cu, above a NSR cut-off of US$10/t (development), US$60/t (BC44), US$40/t (BC42), US$19.15/t (BC40), variable metallurgical recoveries by metallurgical domain. The total dilution is estimated to be about 17% with toppling contributing approximately 1.5%.
4.Tonnes, grade, and content are declared as net delivered to the mills. Metal contained in tonnages do not include allowances for processing losses.
5.Rounding as required by reporting guidelines may result in apparent differences between tonnes, grade and contained metal content. Rounding is to three significant figures.
The June 30, 2024 Mineral Reserve estimate was modified from the June 30, 2023 estimate by zeroing out the grade of the Inferred material. This material will report through the block cave and will be mined. There is no change to the mine plan, just the reported metal.
The modifying factors are presented in the table below:
Modifying Factor
Unit
Value
Gold Price
US$/oz
1,200
Copper Price
US$/lb
3.00
Exchange Rate
A$ : US$
0.75
K : US$
3.10
NSR Cutoff
Development
US$/t
10.00
BC44
US$/t
60.00
BC42
US$/t
40.00
BC40
US$/t
19.15
Metallurgical Recoveries (by Domain)
%
Various
Total Dilution
%
17.00
Including Toppling
%
1.50
There were no Mineral Reserves at Wafi or Nambonga.
For additional information, see the TRS on each individual property, filed as an Exhibit of this annual report on Form 20-F.
The Eva Copper Project is located in Queensland, Australia, 76 km by road northwest of Cloncurry (pop. 3,000), and 194 km by road from the regional mining center of Mount Isa (pop. 22,000). Access to the project from Cloncurry is via the sealed Burke Developmental Road which passes 8.5 km to the east of the proposed plant site, current access is via cattle station and exploration tracks. The planned site for the plant and major infrastructure is also 11 km north of the major Dugald River Zinc Mine, which is owned by MMG Limited. The Eva Copper Project is situated at a latitude of 19'51"26 S and 140'10"15 E.
All operations on site at this stage are exploratory and feasibility studies in nature with no mining having yet commenced. The operation is proposed as a large, open-pit copper-gold mining operation with an associated gravity and flotation processing plant. The project comprises the main Little Eva and Blackard open Resources and four smaller Resources, expected to deliver an ore mixture with a maximum of 25% native copper ore to a copper concentrator processing plant adjacent to the Little Eva and Turkey Creek pits.
The Property, Plant, and Equipment of Eva Copper Project as of June 30, 2024, including buildings and mine infrastructure, and assets under construction, had a carrying value of US$182 million. For information on assets and liabilities (including costs after depreciation) of Eva Copper Project see “Annual Financial Report—Notes to the Consolidated Financial Statements—Note [41] “[Segment Report]”.
The “Property, Plant, and Equipment” as of June 30, 2024, including buildings and mine infrastructure, mining assets, rehabilitation and assets under construction, had a carrying value of R3,305 million.
Eva Copper Project incurred a fine for environment non-compliance (minor spill from a drill sump) and no significant encumbrances exist.
The following graphic illustrates the location of the Eva Copper Project.
Operational Infrastructure
There is no operational infrastructure on site beside access roads.
Geology
The Eva Copper Project is situated in the Mary Kathleen (“MK”) domain of the Mount Isa Province of Queensland, Australia, an area that has a history of mining dating back to the 1860s. The Mount Isa area hosts numerous base metal copper, zinc and lead deposits of global significance, including the Mount Isa, Ernest Henry, Century, Dugald River, Cannington and Selwyn deposits. The Eva Copper Project is hosted by Proterozoic-aged, metamorphosed and poly-deformed marine
sedimentary and volcanic rocks of the MK domain of the Eastern Fold Belt Inlier. Deformation, metamorphism and plutonic activity took place during the Isan Orogeny, approximately 1,600 to 1,500 million years ago.
There are twelve known mineral deposits in the project area, of which six have been included in the current mine plan. Mineral deposits are grouped into two types: copper-gold and copper only. There are five of the copper-gold deposits, four of which are in the mine plan. These deposits are classified as iron oxide copper-gold deposits, where mineralization is associated with regional-scale haematite and albite alteration (red-rock alteration) and localized magnetite alteration. Copper sulphide mineralization, primarily chalcopyrite with lesser bornite, occurs as veins, breccias, fracture fill and disseminations in mafic to intermediate volcanic or intrusive rocks. Gold is generally correlated with copper and is recovered in the copper concentrate. Mineralization appears to be localized and/or bounded by faults and other deformation-related structures,
All of the deposits have a 10m to 25m thick overlying zone of oxidation, where the rock is extensively weathered and copper sulphide minerals have been leached or converted to various oxide minerals that cannot be recovered by flotation. The oxide zones are treated as waste, but tonnages and copper grades have been estimated and the oxide mineralization will be stockpiled separately. With the exception of the Turkey Creek deposit, the copper-only deposits commonly have a significant thickness of supergene material, where carbonate has been leached from the rock, reducing hardness and density and the copper occurs as native-copper, chalcocite and other low-sulphur copper species. The carbonate-leached zone is separated from the underlying sulphide zone by a thin transition zone. Each of these mineralogical zones has been modelled so that resources can be estimated for each and the appropriate metallurgical recoveries can be applied for reserve estimation.
History
The Eva Copper Project has a long history and has been held under various tenures by a variety of exploration and mining companies. Small-scale mining dating back to the early 1900s has occurred at deposits such as Little Eva, Bedford and Lady Clayre.
Early work on the project area was undertaken by Ausminda Pty. Ltd. and CRAE between 1990 and 1996. In 1996, Pasminco Limited (“Pasminco”) acquired the property and who undertook further exploration and drilling on the copper-only deposits. Pasminco excised and retained the Dugald River zinc deposit and sold the remainder of the tenements to Universal Resources (“URL”) in 2001. URL also purchased the tenement hosting the Ivy Ann deposit from Dominion Metals Pty. Ltd. and Pan Australian Resources NL. From 2001 to 2004, exploration work on the copper-only deposits was carried out under a joint venture between URL and Bolnisi Logistics (“Bolnisi”). URL focused its own 2001–2004 drilling on the Little Eva and Bedford copper-gold deposits. In 2004, URL acquired Bolnisi and completed a 2005 feasibility study on mining and processing a blend of sulphide ore from the Little Eva and Bedford deposits with native copper ore from the Blackard and Scanlan deposits.
In 2005 URL entered into a joint venture option agreement with Xstrata, where Xstrata had the right to explore the central area of the tenements. Xstrata completed some significant work, but elected not to proceed in January 2013. URL completed a second feasibility study between 2007 and 2009 based on the same blend of sulphide ore and native copper ore used in the 2005 study.
In December 2009, URL merged with Vulcan Resources Limited, under the name of Altona Mining Limited (“Altona”). In 2012 Altona completed a definitive feasibility study based on the copper-gold sulphide deposits, but excluding the native copper deposits. Mining Leases (“MLs”) and an Environmental Authority (“EA”) were granted in 2012 based on the 2009 definitive feasibility study mine plan. Altona completed additional drilling at the Bedford, Lady Clayre, Ivy Ann, Blackard, Legend and Scanlan deposits, and discovered and delineated major prospects at Turkey Creek, Anzac, Whitcher, Matchbox and Quamby from 2015 to 2016. An EA amendment was granted in 2016 based on the revised 2012 definitive feasibility study mine plan and the integration of Turkey Creek into that mine plan.
In 2018, Altona became a wholly owned subsidiary of Copper Mountain Mining Company (“CMMC”) and was renamed CMMPL. In 2022, Harmony (through its wholly-owned subsidiary, Harmony Gold (Australia) Pty Limited) purchased the project from CMMC and, in February 2023, commenced a confirmatory and expansion drilling program and other studies designed to progress the project to a decision to mine.
Mineral Tenure
Refer to Item 4: “Information on the Company – Business Overview – Regulation – Mineral Rights – Australia” above for a summary of the regulatory environment in Australia.
The Eva Copper Project consists of five MLs and one exploration permit for minerals (“EPM”). All six of the planned pits are located within the MLs, except for the Ivy Ann deposit, which lies within the EPM.
The MLs were granted in 2012 and are currently owned by the Company’s wholly-owned subsidiary Eva Copper Mine Pty. Ltd. (“ECMPL”). The MLs total area is 143km2 and are situated across from two pastoral lease holdings and within one Native Title determination area.
The following table sets forth relevant information in relation to ECMPL's MLs as at June 30, 2024.
ECMPL holds the following EPM as at June 30, 2024, as presented in the table below.
Number
Name
Holder
Granted
Expiry
Area (ha)
25760
King
ECMPL
November 17, 2015
November 16, 2025
28,601
Harmony also holds 17 EPMs surrounding the MLs and in the broader Mount Isa region through the Company’s wholly-owned subsidiaries, Roseby Copper Pty. Ltd. and Roseby Copper (South) Pty. Ltd.
Queensland state legislation requires that, where significant disturbance will occur from exploration and mining activities, the license holder must reach an agreement for “Conduct and Compensation” with the pastoral leaseholder. Such agreements have been secured for all the MLs and those portions of the EPM where ground disturbance has occurred or is anticipated.
Mining Method
There is currently no mining occurring on the leases with all activities confined to exploratory and resource confirmation drilling. Additional work comprises geotechnical, metallurgical and hydrological drilling. Mining is to be via open pit methods using conventional drill and blast, excavators and trucks.
Mineral Processing
There is currently no processing occurring on the leases with all activities confined to exploratory and resource confirmation drilling. The feasibility study is considering a copper concentrator located close to the Little Eva deposit.
Feasibility studies are ongoing with the aim to declaring a Mineral Reserve upon completion of a successful feasibility study update.
Qualified Persons
The QPs preparing the TRS were employed on a full-time basis by Harmony. The QPs’ qualifications, areas of responsibility and personal inspection of the property are summarized in the table below:
Qualified Person
Prof. Assoc.
Qualifications
TRS Section Responsibility
Personal Insp.
Mr. R Reid
FAIG, MAusIMM
BSc(Hons), Grad.Dip(Sc)
3, 4, 5, 6, 7, 8, 9, 11
Regular Last June 2024
Mr. G Job
FAusIMM
BSc. MSc (Min Econ)
1, 2, 3, 15, 21, 22, 23
Regular, last Dec 2023
Exploration
Extensive geophysical surveying, primarily induced polarization over the copper deposit areas and electromagnetic or controlled source audio-frequency magnetotellurics (“CSAMT”) over the Dugald River zinc deposit host rocks, as well as gravity and magnetic surveys, were undertaken in the area by CRAE. All of the deposits subcrop and were initially identified by surface sampling and mapping. Airborne magnetic surveys over the project area are available from various government agencies. Satellite hyperspectral surveys have also been used with some success by various companies in the area.
CRAE's bedrock and soil geochemical programs outside the Roseby copper deposits were not systematic, with minimal assessment of gold mineralization and left most of the surrounding area untested by geochemical surveys. CRAE’s focus at the time was on the copper only (no gold containing) deposits due to their relatively high grades and the Little Eva and Lady Clayre areas were of secondary exploration interest. The Little Eva copper-gold prospect was drilled by CRAE to an inferred resource status, but the gold content was not assessed. The Lady Clayre prospect was also drilled by CRAE at the time, but no resource estimate was completed. Metallurgical sampling and testing were conducted at Blackard and Lady Clayre, but not at Little Eva.
Following the acquisition of the project from CRAE by Pasminco, drilling and sampling programs focused primarily on the Lady Clayre copper-gold sulphide prospect, Caroline (Lady Clayre East) and the copper-gold potential of the Mount Rose Bee Fault area. This drilling was insufficient to define a formal resource at either deposit. Pasminco also initiated a soil and rock sampling program designed to examine the Mount Rose Bee Fault and related splay faults. While this program detected widespread but weak copper-gold mineralization, generally in close spatial relationship with copper and gold soil geochemical anomalies, Pasminco divested the Roseby copper project before the exploration program was completed.
Xstrata conducted exploration in the central Roseby area under the terms of an option and earn-in agreement with Altona. Xstrata also completed deep drilling below the Little Eva, Blackard, Great Southern and Longamundi deposits demonstrating the presence of large mineralized systems. Xstrata also discovered a mineralized system under cover at Cabbage Tree Creek some 3km north of Little Eva. Xstrata has also completed extensive geochemical, rock sampling, mapping and geophysical surveys generating numerous targets, some of which have been subject to initial drill testing with positive results.
Altona carried out systematic soil geochemistry work over much of the claim area and this work was continued by CMMC. This work has established numerous copper-in-soils targets within the Eva Copper Project tenure and surrounding EPM. Shallow drilling of these targets has established numerous mineralized positions with opportunities to established new copper and gold mineral resources.
In fiscal 2024 64,973m of drilling (227 holes) was completed at the Eva Copper Project. Since acquiring the Project in December 2022 some 82,017m (351 holes) of drilling has been completed. The drilling was undertaken as part of the Eva Feasibility Study Update, designed to increase confidence in the resource base and support study elements including metallurgical testwork, geotechnical aspects, primary water supply, and infrastructure sterilization. At year end the work program was on going with three drill rigs on-site.
Over the broader tenement package fiscal 2024 regional exploration activities comprised the following:
•A regional surface gravity survey (2,228 stations) was completed over an approximate 80km by 20km area extending from the Barkly Highway in the south to north of the Little Eva Deposit. Station spacing was nominally 1000m by 500m. Further, detailed infill gravity surveys were completed over the Little Eva, Legend, Lady Clayre and Ivy Ann deposit areas to help characterize the geophysical footprints for each of the deposits. This work comprised an additional 3,438 stations collected on nominal 200m by 50m spacing over each of the deposits. The gravity data is particularly useful for discriminating and prioritizing prospective targets
•Compilation of historic geochemical, geophysical and geophysical and historic drill datasets continued. Over 200 prospect areas within the tenement area have been identified and ranked to date
The QPs are of the opinion that the quality and quantity of the exploration methods and information gathered is sufficient to support the estimation of Mineral Resources.
Mineral Resource Estimate
The Mineral Resource estimate for the Eva Copper Project is considered to have reasonable prospects for economic extraction. Mineral Resources are reported at a 0.17% Cu cut-off by deposit type, based on the economic assumptions presented in the table below at June 30, 2024.
Description
Unit
Value
Gold price
US$/oz
1,582
Copper price
US$/lb
5.50
FX rate
US$:A$
0.70
This cut-off value represents typical costs for the mining method and preliminary mining and metallurgical recovery assumptions.
Mineral Resources for the three largest deposits were prepared by SRK and Harmony personnel, based on all drilling conducted up to October 2019. The resource models from CMMC were audited and retained for the other deposits. The Mineral Resources were originally prepared, classified and reported according to the SAMREC, 2016. For the purposes of this report on Form 20-F, the Mineral Resources have been classified in accordance with Item 1302(d)(1)(iii)(A) of Regulation S-K. The Mineral Resource estimate, as at June 30, 2023, exclusive of Mineral Reserves (however no Mineral Reserve are declared), is summarized in the table below. There are no Measured Resources
Fiscal Year Ended June 30,
2024
2023
METRIC
Grade
Metal Content
Grade
Metal Content
Mineral Resource Category
Open Pit
Tonnes (Mt)
Gold (g/t)
Copper (%)
Gold (kg)
Copper (Kt)
Tonnes (Kt)
Gold (g/t)
Copper (%)
Gold (kg)
Copper (Kt)
Total / Ave. Measured
0.0
0.00
0.00
0
0
0.0
0.00
0.00
0
0
Indicated
Little Eva
155.9
0.06
0.34
10103
531
136.1
0.07
0.39
9393
530
Bedford
2.1
0.15
0.57
320.
12
2.7
0.19
0.60
498
16
Lady Clayre
5.1
0.15
038
761
19
5.1
0.15
0.38
761
19
Ivy Ann
5.2
0.07
0.34
382
18
5.2
0.07
0.34
382
18
Turkey Creek
22.4
0.42
95
25.4
0.45
115
Blackard
79.0
0.48
375
82.5
0.45
374
Scanlan
17.4
0.58
101
18.2
0.38
102
Total / Ave. Indicated
287.2
0.04
0.40
11,566
1,150
275.3
0.04
0.43
11034
1,174
Total / Ave. Measured + Indicated
287.2
0.04
0.40
11,566
1,150
275.3
0.04
0.43
1174
1,174
Inferred
Little Eva
24.1
0.07
0.34
1788
81
31.1
0.07
0.36
1986
112
Bedford
1.3
0.13
0.46
167
6
1.5
0.14
0.46
219
7
Lady Clayre
1.1
0.08
0.37
97
4
1.1
0.09
0.37
97
4
Ivy Ann
1.2
0.07
0.33
78
4
1.2
0.07
0.33
78
4
Turkey Creek
3.6
0.43
15
2.5
0.40
10
Blackard
40.3
0.44
176
33.6
0.43
146
Scanlan
7.6
0.45
34
8.5
0.37
36
Total / Ave. Inferred
79.1
0.03
0.41
2,129
321
79.5
0.03
0.4
2,380
318
Notes:
Resources are reported at a cut-off grade are based on approximate net smelter return values which equate to a copper grade of 0.17% Cu for sulphide ore and 0.2% Cu for native copper ore.
1.The Mineral Reserves were originally prepared, classified and reported according to SAMREC, 2016 and CIM. For the purposes of this TRS, the Mineral Reserves have been classified in accordance with § 229.1302(d)(1)(iii)(A) (Item 1302(d)(1)(iii)(A) of Regulation S-K. The QP for the estimate is Mr. R. Reid, FAIG, MAusIMM, whose job title is Group Resource Geologist with Harmony Gold (PNG Services) Pty Limited.
2.Mineral Resources are exclusive of Mineral Reserves (however no Mineral Reserves are declared)
3.Mineral Resources are constrained within a Whittle pit shell generated with a copper price of $4.00/lb, a gold price of $1,772/oz and an exchange rate of AU$1.00 = US$0.71.
4.Density measurements were applied (ranges from 2.4 t/m3 to 3.0 t/m3).
5.Significant figures have been reduced to reflect uncertainty of estimations and therefore numbers may not add due to rounding.
Mineral Reserve Estimate
Not applicable
Mineral Resource and Mineral Reserve Internal Controls Disclosure
Harmony’s Mineral Resources and Mineral Reserves estimates are subject to internal Competent Persons reviews administered by the Central Ore Reserve Management team and cyclically by external and independent experts.
Harmony’s Mineral Reserve is an outcome of the Company’s business planning process which runs annually. This process operates within a comprehensive framework where all inputs, including costs and capital requirements, are generated by the operation, and reviewed at a regional and corporate level within the Company, thereby providing confidence in the estimates.
Harmony follows an embedded process of third-party reviews to provide expert independent assurance regarding the Mineral Resources and Mineral Reserves estimates and compliance to the appropriate reporting codes.
In line with Harmony’s policy that each material operation will be reviewed by an independent third party on average no less than once every three years, or when triggered by a material new Mineral Resource and/or Mineral Reserve declaration, the following operations were subject to external review during 2024: Mponeng, Doornkop and Joel. No material issues were identified in the estimation processes and LOM plans and Compliance Certificates have been issued by the independent consultants for these operations. The certificates state that the Mineral Resources and Mineral Reserves have been estimated and reported in accordance with SAMREC, 2016. Importantly, third-party audits are also configured to assist with continuous improvement regarding leading practice in Resources and Reserves estimation and reporting.
ITEM 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and analysis together with our consolidated financial statements, including the related notes, set forth beginning on page F-1.
A discussion of the changes in our financial condition and results of operations between the fiscal years ended June 30, 2022 and 2023, has been omitted from this Harmony 2024 Form 20-F, but may be found in Item 5: "Operating and Financial Review and Prospects", of the Harmony 2023 Form 20-F for the year ended June 30, 2023, filed with the SEC on October 31, 2023, which is available free of charge on the SEC’s website at www.sec.gov and our website at www.harmony.co.za.
Overview
Harmony is currently the largest producer of gold in South Africa and is furthermore an important producer in PNG. Our gold sales for fiscal 2024 were 48,222 kilograms of gold (1.6 million ounces of gold) and in fiscal 2024 we processed approximately 51 million tonnes of ore. As at June 30, 2024, our mining operations and projects reported total Proved and Probable Mineral Reserves of approximately 40.3 million gold and gold equivalent ounces, Measured and Indicated Mineral Resources (exclusive of Mineral Reserves) of approximately 99.7 million gold and gold equivalent ounces and Inferred Mineral Resources (exclusive of Mineral Reserves) of approximately 36.8 million gold and gold equivalent ounces. For further information on the company’s Mineral Resources and Mineral Reserves, see Item 4: "Information on the Company - Property, Plant and Equipment - Mineral Resource and Mineral Reserve Summary Disclosure”.
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision maker. See note 39 "Segment report" of our consolidated financial statements set forth beginning on page F-1 for further details.
For segment purposes, management distinguishes between “Underground” and “Surface”, with each shaft or group of shafts or open-pit mine managed by an operational team.
Our reportable segments are as follows:
•Moab Khotsong, Mponeng, Tshepong North, Tshepong South, Doornkop, Joel, Target 1, Kusasalethu, Masimong, Bambanani (closed June 2022), MWS and Hidden Valley; and
•All other surface operations, including those that treat historic tailings, include Phoenix, Central Plant Reclamation, Savuka Tailings, WRDs and Kalgold, are grouped together under “All other surface operations”.
Most of our revenues are derived from the sale of gold. As a result, our operating results are directly related to the price of gold. Historically, the price of gold has fluctuated widely. The gold price is affected by numerous factors over which we do not have control. See Item 3: “Key Information - Risk Factors - Market Risks - The profitability of our operations, and cash flows generated by those operations, are affected by changes in the price of gold and other metals; a fall in the gold price below our cash cost of production and capital expenditure required to maintain production for any sustained period may lead to losses and require us to curtail or suspend certain operations” and “- Rising inflation and geopolitical risks may have a material adverse effect on our business, operating results and financial condition”. As a general rule, we sell the majority of our gold produced at market prices to obtain the maximum benefit from increases in the prevailing gold price.
Since fiscal 2017, Harmony entered into derivative contracts to manage the variability in cash flows from the Group’s production, in order to create cash certainty and protect the Group against lower commodity prices. Our hedging strategy was expanded during the second half of the fiscal 2024 to introduce gold zero cost collars to the derivative program and to set a new limit.
As at June 30, 2024 the new limit set by the Board was 30%, 20% and 10% of production in a 12-, 24- and 36-month period, respectively, for derivative contracts going forward. Prior to the change, the limit set by the Board was for 20% of the production from gold over a 24-month period. As at June 30, 2024 the limit set by the Board for silver is 50% of the exposure over a 24-month period. Management continues to top up these programs as and when opportunities arise to lock in attractive margins for the business, but are not required to maintain hedging at these levels.
A portion of the production of the South African operations is linked to Rand gold forward contracts and Rand gold zero cost collar contracts. US$ gold forward contracts and US$ gold zero cost collar contracts were entered into for the production from Hidden Valley. The exposure to the variability in the price of silver for Hidden Valley is managed by entering into US$ silver zero cost collars. The US$ silver zero collars have not been designated as hedging instruments for hedge accounting and the gains and losses are accounted for in the income statement.
Harmony's indirect subsidiary, MWS, has a contract with Franco-Nevada Barbados ("Franco-Nevada"). The Franco-Nevada contract is a streaming agreement to purchase 25% of the gold production through MWS for a fixed amount of consideration until the balance of gold cap is delivered. The gold cap is a provision included in the contract, which stipulates the maximum quantity of gold to be sold to Franco-Nevada over the term of the contract. The consideration is determined as the lower of the quoted spot gold price as per the London Metals Exchange or US$400 per ounce, subject to an annual escalation adjustment. As the performance obligation to deliver gold is met, the contract liability unwinds into revenue. The contract was concluded on October 23, 2024.
Significant changes in the price of gold over a sustained period of time may lead us to increase or decrease our production in the near term.
Harmony’s Realized Gold Price
In fiscal 2024, the average gold price received by us was R1,201,653 per kilogram or $1,999/oz. This average gold price includes the net realized effective portion of the hedge-accounted gold derivatives.
The price of gold in US$ terms closed at US$2,325/oz on June 30, 2024, up from the closing price of US$1,920/oz on June 30, 2023. The range traded during the year reaffirms gold's safe haven status with investors during times of global uncertainty and market volatility. The average spot gold price received (that is, excluding the impact of hedging gains or losses) for the 2024 year was US$2,042/oz compared to US$1,816/oz in fiscal 2023.
Harmony is exposed to the impact of any significant decreases in the commodity prices on its production. This is mitigated to some extent by commodity derivatives and hedging arrangements, but as Harmony has limitations for the volume of forward sales, commodity derivatives or hedging arrangements it may enter into for its future production, it is exposed to the impact of decreases in the commodity prices on the remainder of its unhedged production. See Item 3: “Key Information - Risk Factors - Risk Related to Our Industry - We are exposed to the impact of any significant decreases in the commodity prices on our production", and “ - Market Risks - The profitability of our operations, and cash flows generated by those operations, are affected by changes in the price of gold and other metals; a fall in the gold price below our cash cost of production and capital expenditure required to maintain production for any sustained period may lead to losses and require us to curtail or suspend certain operations”.
In addition to the US$ gold price, the gold price received is impacted by the exchange rate of the Rand and other non-US$ currencies to the US dollar. An appreciation of the Rand and other non-US$ currencies against the US dollar will result in a decrease in the revenue recorded, without considering the impact of the hedging instruments. Conversely, a depreciation of these currencies against the US dollar would result in an increase of revenue recorded. See Item 3: “Key Information - Risk Factors - Market Risks - Foreign exchange fluctuations could have a material adverse effect on our operational results and financial condition”. During fiscal 2024, the exchange rate depreciated from R17.76/US$1.00 in fiscal 2023, to R18.70/US$1.00 in fiscal 2024. See "- Exchange Rates" below for a further discussion.
The following table sets out the average, the high and the low London Bullion Market price of gold and our average sales price during the past two fiscal years:
1Our average sales price differs from the average gold price due to the timing of our sales of gold within each year. In addition, the effect of hedge accounting i.e. realized gains/losses from the cash flow hedges have been included in revenue.
Costs
Our cash costs are approximately between 80% and 85% of our total costs (excluding impairments and disposal/loss on scrapping of assets). The remainder of our total costs consists primarily of exploration costs, employment termination costs, corporate and sundry expenditure, and amortization and depreciation. Our cash costs consist primarily of production costs. Production costs are incurred on labor, equipment, consumables and utilities. Labor costs are the largest component and typically comprise between 55% and 60% of our production costs.
Our US dollar translated costs are very sensitive to the exchange rate of the Rand and other non-US currencies to the US dollar. See "- Exchange Rates" below. Appreciation of the Rand and other non-US currencies against the US dollar increases working costs at our operations when those costs are translated into US dollars. See Item 3: “Key Information - Risk Factors -Market Risks - Foreign exchange fluctuations could have a material adverse effect on our operational results and financial condition”.
All-in sustaining costs for the Group increased by 1.3% to R901,550 per kilogram in fiscal 2024, remaining relatively flat due to the increase in gold production, which was offset by an increase in cash costs. Royalties increased due to a higher rate being applied due to higher profits, as well as the increased revenue base to which it is applied.
Our cash costs have increased from R735,634 per kilogram in fiscal 2023 to R758,736 per kilogram in fiscal 2024, mainly due to increased electricity costs, royalties costs and labor increases as well as bonuses related to higher gold production.
Management conducts a thorough review of costs at all operations to ensure that costs are properly managed and within budget. However, it should be noted that there are risks beyond our control such as safety stoppages, which would result in production being negatively affected while certain costs would still be incurred. This is discussed in more detail in Item 3: “Key Information - Risk Factors - Risks Related to ESG - Given the nature of mining and the type of mines we operate, we face a material risk of liability, delays and increased cash costs of production from environmental and industrial accidents and pollution compliance breaches” and “- Risks Related to Our Industry - The nature of our mining operations presents safety risks”. We are also exposed to price increases on electricity, which is regulated, as well as the implementation of other levies such as carbon tax. See Item 3: "Key Information - Risk Factors - Risks Related to Our Operations and Business - Disruptions to electricity supply and rising power costs: Impact on operations and financial results" and "- Risks Related to ESG - Compliance with emerging climate change regulations could result in significant costs for us".
We remain subject to risks related to the volatility of commodity prices, as well as the potential shortage of supply and disruptions of supply chains due to geopolitical instability, including impacts of the ongoing conflicts in the Middle East. See Item 3: "Key Information - Risk Factors - Risks Related to Our Industry - The impact from, and measures taken to address infectious and communicable diseases, such as Covid-19, HIV/AIDS and tuberculosis, pose risks to us in terms of productivity and costs and may adversely affect our people, and may impact our business continuity, operating results, cash flows and financial condition"- Market Risks - Fluctuations in input production prices linked to commodities may adversely affect our operational results and financial condition","- Risks Related to Our Operations and Business - Actual and potential shortages of production inputs and supply chain disruptions may affect our operational results" and “- Market Risks - Rising inflation and geopolitical risks may have a material adverse effect on our business, operating results and financial condition”.
Production levels
In addition to gold prices, Harmony’s gold income in any year is also influenced by its level of gold production. Production levels are in turn influenced by grades, tonnages mined and processed through the plant and metallurgical recoveries. Gold production increased by 6% between 2023 and 2024, from 1,467,715 ounces in 2023 to 1,561,815 ounces in 2024. For more information on our business and operations, see Item 4: “Information on the Company -– Business Overview” and “- Property, Plant and Equipment - Mineral Resource and Mineral Reserve Summary Disclosure”.
Exchange Rates
Our revenues are very sensitive to the exchange rate of the Rand and other non-US currencies to the US dollar. Since gold is generally sold in US dollars, most of our revenues are received in US dollars. Currently, the majority of our earnings are generated in South Africa. Appreciation of the Rand against the US dollar decreases our revenues, which serves to reduce operating margins and net income from our South African operations. Depreciation of the Rand against the US dollar increases the revenue, which serves to increase operating margins and net income from our South African operations. Accordingly, strengthening of the Rand generally results in poorer earnings for us if there is not a similar increase in the gold price.
The exchange rates obtained when converting US dollars to Rand are determined by foreign exchange markets, over which we have no control. The spot rate as at June 30, 2024 was R18.19 per US$1.00, compared with R18.83 per US$1.00 as at
June 30, 2023, reflecting an appreciation of 3% of the Rand against the US dollar. The average exchange rate for fiscal 2024, however, was R18.70 per US$1.00, reflecting a depreciation of 5% of the Rand against the US dollar when compared with fiscal 2023. In fiscal 2024, the Rand strengthened against the Australian dollar and closed at R12.14/A$1.00 (2023: R12.56/A$1.00), reflecting an appreciation of 3.3% of the Rand against Australian dollar. The Kina weakened against the Australian dollar and closed at PGK2.57/A$1.00 (2023: PGK2.38/A$1.00), reflecting a depreciation of 8.0%. The average gold price received by us during fiscal 2024, before including the effect of the cash flow hedges, increased by R191,202 per kilogram to R1,227,884 per kilogram from R1,036,682 per kilogram during fiscal 2023.
The majority of our working costs are incurred in Rand and, as a result of this, any appreciation of the Rand against the US dollar would increase our working costs when translated into US dollars. Depreciation of the Rand against the US dollar would cause a decrease in our costs in US dollar terms. Similarly, at our international operations, appreciation of the Australia dollar or Kina against the US dollar would cause an increase in our costs in US dollar terms. See Item 3: “Key Information - Risk Factors -Market Risks - Foreign exchange fluctuations could have a material adverse effect on our operational results and financial condition”.
We have several credit facilities and loans denominated in US dollars. This exposes us to the changes in the Rand against the US dollar, which would affect our borrowings as well as the interest recognized. This will also affect the cash flows when the borrowings are raised and repaid as well as at the time of the payments of the interest.
These movements in the currencies expose the Group's operations to foreign currency gains and losses on foreign-denominated receivables and liabilities, including derivatives. They also impact the Group’s translation of its international operating results and net assets into its Rand presentation currency, which resulted in a foreign exchange translation loss of R943 million for fiscal 2024 (2023: R1,123 million gain).
Harmony has entered into foreign exchange derivative contracts in the form of zero cost collars, which establish a minimum (floor) and maximum (cap) Rand/US dollar exchange rate at which to convert US dollars to Rand. The Group also uses forward exchange contracts to manage the risks. At June 30, 2024, the nominal amount of the derivative contracts was US$390 million and is over a two-year period with a weighted average cap price of US$1.00=R20.93 and weighted average floor price of US$1.00=R18.93. Additionally, at June 30, 2024 Harmony had open forward exchange forward contracts which had a nominal amount of US$187 million spread over a two-year period at an average exchange rate of US$1.00 = R19.79.
The Bank of Papua New Guinea has systematically allowed the Kina to weaken against the US dollar over several years. The Kina weakened by 1.4% and 7.8% in fiscal 2023 and fiscal 2024 respectively. Since the introduction of a 150 basis point trading band in June 2014, the Kina weakened by 57.8% against the US dollar as at June 30, 2024. Should the trading band continue and depending on the level the exchange rate is set at, it could have a negative impact on the results of the Hidden Valley operation, as well as the cost of development at Wafi-Golpu and other PNG exploration sites.
Geopolitical tensions
Our business remains exposed to geopolitical risks, although the impact of the Russia-Ukraine conflict, which was significant in fiscal 2023, subsided in fiscal 2024 as energy and commodity prices have stabilized. However, the ongoing conflicts in the Middle East, could potentially disrupt global economies and supply chains, affecting key inputs such as fuel and equipment critical to mining and production operations. We are actively monitoring these risks, as they may influence costs, production schedules, and financial performance. See Item 3: "Key Information - Risk Factors - Market Risks - Fluctuations in input production prices linked to commodities may adversely affect our operational results and financial condition” and “- Rising inflation and geopolitical risks may have a material adverse effect on our business, operating results and financial condition”.
Inflation
Although inflation in South Africa was 5.1% at the end of fiscal 2024, down from 5.4% at the end of fiscal 2023, our operations continued to experience the impact thereof on input costs. Working costs have continued to increase over the last several years resulting in cost pressures for the mining industry.
We have seen increases in labor, contractors and electricity costs for our mining operations as a result of the inflation experienced during fiscal 2024. Combined with geopolitical risks and further compounding inflationary pressure, we believe we will see continued increases through 2025.
On April 4, 2024, Harmony announced the acceptance of a new five-year wage agreement by the unions, effective from July 1, 2024 to June 30, 2029. This agreement will result in an increase of approximately 6% per annum over the five-year period which is within our planning parameters.
The inflation rate in PNG at the end of fiscal 2023 was 2.3%, while inflation closed at 2.4% at the end of fiscal 2024.
Our profits and financial condition could be adversely affected if, increased costs due to inflation, are not offset by a concurrent devaluation of the Rand and other non-US currencies and/or an increase in the price of gold. See Item 3: “Key Information - Risk Factors - Market Risks - Rising inflation and geopolitical risks may have a material adverse effect on our business, operating results and financial condition”.
South African Socio-Economic Environment
We are domiciled in South Africa and the majority of our operations are also there. The primarily listing for our shares is also on the Johannesburg Stock Exchange. As a result, we are subject to various economic, fiscal, monetary and political policies and factors that affect South African companies generally. See Item 3: “Key Information - Risk Factors - Risks Related to ESG - The socio-economic framework in the regions in which we operate may have an adverse effect on our operations and profits”.
In particular, South African companies are subject to exchange control limitations. While exchange controls have been relaxed in recent years, South African companies remain subject to restrictions on their ability to deploy capital outside of the Southern African Common Monetary Area. See Item 10: “Additional Information - Exchange Controls”.
We must also comply with the SLPs that have been developed for each of our South African operations. These SLPs are prepared in line with legislation governing the participation of HDSAs in mining assets. See Item 3: "Key Information - Risk Factors - Risk Related to Our Industry - Laws governing mineral rights affect our business and could impose significant costs and obligations; mineral rights in the countries in which we operate could be altered, suspended or canceled for a variety of reasons, including breaches in our obligations in respect of such mining rights.”
We have been granted mining licenses under the MPRDA necessary for the conduct of our current operations. As such we have therefore already incurred expenses relating to HDSA participation. We believe the biggest challenge will lie in maintaining these licenses, as we will have a responsibility in respect of human resource development, procurement and local economic development. We are however unable to provide a specific amount of what the estimated cost of compliance will be, but we will continue to monitor these costs on an ongoing basis. See Item 4: "Information on the Company - Business Overview - Regulation - Mineral Rights - South Africa – Mining Charter."
Electricity in South Africa
The South African state utility, Eskom, generates approximately 90% of the electricity used in South Africa and approximately 30% of the electricity used in Africa. Eskom generates, transmits and distributes electricity to industrial, mining, commercial, agricultural and residential customers and redistributors. During fiscal 2024, the electricity supply in South Africa remained constrained, however with fewer power interruptions (also referred to as load shedding). Since April 2024 Eskom has suspended load shedding as the Generation Recovery Plan continues to deliver efficiencies. The power interruptions did not have a material impact on production during the current fiscal year. Increasing global demand for energy, concerns about nuclear power and the limited growth of new supply are also impacting the price and supply of energy. Actual and proposed pricing, uncertainty around the implementation of carbon taxes as well as the potential through-flow of costs to the consumer from Eskom, unrest and the ongoing conflict in the Middle East as well as the armed conflict between Russia and Ukraine, among other factors, have resulted in volatility, increased demand or constrained supply, and escalating oil and energy prices.
The supply and demand for electricity is still very tight especially during the evening peak periods between 5:00 p.m. and 8:00 p.m. Harmony has signed up four sites in fiscal 2022, which provide pumping and/or ventilation services, to participate in a pilot from Eskom called Critical Peak Pricing. For a limited number of hours, when the electrical network is under pressure, Eskom notifies the operation that tariffs will be increased significantly. For the rest of the time there is a saving on energy tariffs compared to non-participating shafts.
The South African government has included the roll-out of the independent power producer program as an integral part of the energy mix. This will assist in the provision of reliable and sustainable electricity supply, as part of mitigating the risk of carbon emissions. In 2019 the South African President announced that Eskom would be unbundled into three wholly owned subsidiaries, being Generation, Transmission and Distribution to better manage the operations. The initial plan was for Transmission to be unbundled by December 31, 2021, with Generation and Distribution to follow in December 2022. As of July 2023, Eskom’s transmission division has been legally separated into the National Transmission Company of South Africa ("NTCSA"), a wholly-owned subsidiary of Eskom. The National Energy Regulator of South Africa ("NERSA") approved the NTCSA's license to operate the national transmission system. NERSA approved the license to operate the transmission system within the boundaries of South Africa. More recently, work to unbundle the company has hit several key milestones, with formal commencement of trading on July 1, 2024. See Item 3: "Key Information - Risk Factors - Risks Related to Our Operations and Business - Disruptions to electricity supply and rising power costs: Impact on operations and financial results".
Renewable energy
Energy is the critical component of the country’s future policy mix. Future supply of electricity will be influenced by the extent to which renewables, primarily wind, are efficient, sustainable and ensure security of electricity supply at competitive economic prices.
Forecasts predict that renewable energy technologies, predominantly solar- and wind-based systems, will grow further in the coming decades, overcoming coal-based electricity around 2030 (International Energy Agency, 2023). South Africa is no exception and renewable energy has entered the country’s electricity landscape as a significant trend.
Discussions around other technologies, such as gas-to-power and nuclear energy, are also adding to this dynamic. Significant vested interests are still at play alongside substantial state support to maintain the domination of the coal industry over the electricity supply industry in South Africa. On August 12, 2021, the Minister released the exemption which raises the registration threshold for self-generation facilities from 1MW to 100MW. This allowed us to move forward with Phase 2 and Phase 3 of our solar power plans with limited restrictions, whereas Phase 1 required a lengthy approval process through the NERSA approval channels.
Harmony is also looking at its own energy security and decarbonization, as well as ways to managing the rising cost of energy supply. To this end, we have devised our phased decarbonization strategy which includes:
•Phase 1 - 30MW solar power, which is complete and was commissioned in May 2023. The project successfully generated 64.5GWh of energy in fiscal 2024;
•Phase 2 - 137MW solar energy (Phase 2a: 100MW and Phase 2b:37MW), which will be installed at our longer-life mines behind the meter. The delay in the roll-out of Phase 2 was as a result of outstanding geotechnical studies, and additional procurement processes due to inflated contractor pricing. It is expected to generate 320GWh per annum (Phase 2a: 230GWh and Phase 2b: 90GWh). Phase 2a and 2b are expected to be completed in fiscal 2026 and 2027, respectively;
•Phase 3 and 4 - 56MW and 100MW of additional solar power and is expected to be completed in fiscal 2027 and 2028 respectively; and
•Wind - procurement of circa 260MV of wind energy is underway and is expected to be completed in fiscal 2028.
Additionally, the bidding process for the short-term Power Purchase Agreements (the "PPA") for 200MW of energy has been completed and PPA negotiations are underway. Once concluded, we expect to generate 460GWh of energy per annum for a period of five years.
This will be facilitated through funding obtained including:
•Phase 1 was constructed by our independent power producer partners and consists of three 30MW across three solar plants in the Free State; we have a 15-year power purchase agreement in place for this project; and
•The R1.5 Billion Green Term Loan is expected to largely fund phase 2 of our solar photovoltaic (PV) initiatives after planned restructuring and alignment.
All additional funding required will be drawn from our general facilities including:
•R2.5 Billion Syndicated Revolving Credit Facility; and
•US$400 Million Syndicated Facility.
See Item 10: “Material Contracts - R1.5 Billion Green Term Loan” “– R2.5 Billion Syndicated Revolving Credit Facility”, and “- US$400 Million Syndicated Facility”. See also “– Governance – Social and ethics committee: Chairperson's report” on pages 248 to 250, “– Environment – Environmental stewardship” on pages 91 to 98 and Climate change, energy and emissions management" on page 103 to 111 of the Integrated Annual Report for the 20-F 2024.
Electricity tariffs
As a major electricity consumer and mostly being supplied by Eskom, Harmony is exposed to significant additional costs as a result of rising electricity tariffs. In March 2024, Eskom was granted a 12.7% tariff increase, which is effective from April 1, 2024. The expected impact will be a R800 million increase in operating costs. Eskom's high debt and falling sales are likely to continue to contribute to further above-inflation tariff increases. This is likely to result in further self-generation activity by Eskom's customers, which could further weaken Eskom. Although a new Multi Year Price Determination ("MYPD'') should provide price stability, challenges remain. See Item 3: “Key Information - Risk Factors - Risks Related to Our Operations and Business - Disruptions to electricity supply and rising power costs: Impact on operations and financial results".
Energy efficiency
Harmony has worked closely with Eskom to manage electricity use and peak demand, underlining our commitment to reduce energy consumption. This includes demand-side management (“DSM”) strategies to reduce electricity consumption in peak periods; timing the use of our services (pumping, hoisting, compressed air, refrigeration and ventilation) with cheaper off-peak periods, making more efficient use of Eskom tariffs that reward load-shifting, and improving the efficiency of the services provided for mining operations.
In 2016 Harmony contracted an ESCO to improve its energy management practices and aggressively mitigate the impact of higher-than-inflation electricity price increases on its operational costs. Energy management assists in maintaining the performance of implemented initiatives. This way Harmony focuses on continuously implementing new initiatives and technologies, while eliminating the risk of forfeiting the benefit of completed projects. Energy management has led to R2.2 billion (US$143 million) of saving on electricity over the contract period. For the 2024 fiscal year Harmony implemented and maintained 43 energy optimization initiatives resulting in an estimated energy saving of 324.4Gwh and a cost saving of R532 million (US$22 million).
We have implemented various energy efficiency projects in recent years. See , “– Environment – Environmental stewardship” on pages 91 to 98 and "Climate change, energy and emissions management" on pages 103 to 111 of the Integrated Annual Report for the 20-F 2024.
Climate Change, Environmental Factors and Carbon tax
Rising temperatures, changing rainfall patterns and severe weather conditions believed to be caused or exacerbated by climate change remain growing concerns for businesses, investors, broader society and governments. This has led to increased pressure on companies, including those in the mining sector, to reduce GHG emissions consistent with national commitments made by numerous countries under the Paris Agreement, to promote responsible corporate practices and to increase transparency about the risks and opportunities of transitioning to a low-carbon economy. Pressure from governments, investors and broader society for mining companies to improve environmental stewardship and reduce GHG emissions, both in terms of absolute emissions and in intensity of emissions per tonne mined, is likely to increase in the future. On June 1, 2019 the Carbon Tax Act became effective. The carbon tax has been designed to fix liability on the person who conducts an activity in South Africa that results in GHG emissions above a certain threshold. The carbon tax design requires the calculation of liability to be based on the sum of GHG emissions, which result from fuel combustion, industrial processes and fugitive emissions. Taxpayers must determine emissions in accordance with the reporting methodology approved by DFFE. The tax will be phased in over time. The first phase, which was originally expected to end on December 31, 2022, has been extended to December 31, 2025, is designed to largely be revenue-neutral in terms of its aggregated impact, given the complementary tax energy incentives and reduction or credit for the current electricity levy. Tax-free allowances will then change and fall away with the basic tax-free allowance (60%) being reduced and is likely to fall away from 2026 to 2030. In phase 2 the carbon offset allowance is due to increase by 5%, the trade exposure allowance from the current 10% and the carbon budget allowance could fall away completely. See Item 3: “Key Information - Risk Factors - Risks Related to ESG - Compliance with emerging climate change regulations could result in significant costs for us” and Item 4: "Information on the Company - Business Overview - Regulation - Laws and Regulations Pertaining to Environmental Protection - South Africa”.
The National Treasury announced an alternative increase structure which is expected to see the current carbon price (US$9 per tonne) increase to US$20 per tonne by 2026, US$30 per tonne by 2030 and finally US$120 per tonne by 2050.
Based on published legislation, commentary and governmental information, management believes that the carbon tax poses a low cost to Harmony until December 31, 2025. Gas emissions reported to the DFFE for a company’s National Greenhouse Gas Emission Reporting submission will be taxed at a base value increasing from R159 to R236 per tonne of carbon dioxide equivalent (before allowances) making the effective tax rate increase from R48 to R70 per tonne of carbon dioxide equivalent for years 2023 to 2025. From the second phase onwards, carbon tax might also affect the price of electricity. The impact of the carbon tax on the Company arising from electricity usage after December 31, 2025 has been modelled to grow over time as allowances are anticipated to fall away therefore progressively increasing from approximately R500m to R800m by the end of fiscal 2030.
Harmony has set its internal carbon price (for the South African operations) to match that of the proposed carbon tax. Harmony is also at risk due to potential pass-through costs from its suppliers in the short term from increased fuel prices. The carbon tax on liquid fuels will be imposed at the source. It is estimated that the increased fuel price would be R0.11/liter and R0.14/liter for petrol and diesel respectively. This is expected to have an impact on the Company’s operational expenses.
Estimates are included in the LOM plans and resource base models used for impairment assessments and has affected the forecast profitability of all operations, and in some cases, the impact is significant.
Various regulators have released guidance or proposed regulations for required disclosures during the year. In June 2023, the International Sustainability Standards Board ("ISSB") issued its first two IFRS Sustainability Disclosure Standards, IFRS S1 General Requirements for Disclosure of Sustainability-related Financial Information and IFRS 2 Climate-related Disclosures. IFRS S1 and IFRS S2 are effective for annual reporting periods beginning on or after January 1, 2024. On March 6, 2024, the SEC adopted rules that are intended to provide more consistent, comparable and reliable information so that investors can better evaluate the impact of climate-related matters on entities. However, on March 15, 2024, a federal appellate court imposed a temporary stay on the rules pending judicial review. Litigation will proceed while the SEC continues to stay the rules. Once the litigation is resolved, and assuming the rules stand, the SEC will announce a new effective date. As adopted, final rules will require information about a registrant’s climate-related risks that have materially impacted, or are reasonably likely to have a material impact on, its business strategy, results of operations, or financial condition. In addition, under the final rules, certain disclosures related to severe weather events and other natural conditions will be required in a registrant’s audited financial statements.
See Item 3: "Key Information - Risk Factors - Risks Related to ESG - Compliance with emerging climate change regulations could result in significant costs for us" for further discussion on the potential impact.
Production
The information set forth under the headings, “– Delivering profitable ounces – Operational performance” on pages 50 to 88 of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference.
Results of Operations
Years Ended June 30, 2024 and 2023
Revenue
Revenue increased by R12,104 million to R61,379 million in fiscal 2024, compared to R49,275 million in fiscal 2023, mainly due to the increase in the average US$ gold price received, combined with the weakening of the Rand/US$ exchange rate from an average of R17.76/US$ to R18.70/US$. The average gold price received (including hedging) increased by 16.4% from R1,032,646 per kilogram in fiscal 2023 to R1,201,653 per kilogram in fiscal 2024.
Overall gold sales increased by 5.5% from 45,690kg in fiscal 2023 to 48,222kg. The details of these changes are discussed below:
The Mponeng mine sold 8,648 kilograms of gold, a 15.6% increase from the 7,480 kilograms sold in fiscal 2023, mainly as a result of a significant increase of 17.9% in the recovered grade from 8.43g/t to 9.94g/t in fiscal 2024. This was as a result of the operation mining high grade areas.
Tshepong South's gold sold decreased by 10.9% from 3,458 kilograms in fiscal 2023 to 3,082 kilograms in fiscal 2024. This was mainly due to a 8.1% decrease in tonnes milled in fiscal 2024 to 465,000 tonnes (2023: 506,000 tonnes). Production was affected by geological and mining related challenges resulting in lower square meters being achieved and consequently a decrease in tonnes milled.
At Doornkop, gold sold decreased by 18.0% from 4,233 kilograms in fiscal 2023 to 3,469 kilograms in fiscal 2024 due to decrease in tonnes milled of 9.2% from 898,000 tonnes in fiscal 2023 to 815,000 tonnes in fiscal 2024. This was as a result of flexibility challenges in the final quarter of the financial year. Recovered grade decreased by 9.2% from 4.69g/t to R4.26g/t. The previous year also included additional gold from mill clean-up operations that did not recur in fiscal 2024.
At Target 1, gold sold increased by 47.6% from 1,256 kilograms in fiscal 2023 to 1,854 kilograms in fiscal 2024. This was mainly due to the continued build-up in production post completion of the optimization project that involved moving infrastructure closer to the mining area. This resulted in higher tonnes milled as well as an improvement in grade of 15.2% from 3.49g/t in fiscal 2023 to 4.02g/t in fiscal 2024. Tonnes milled increased by 26.6% from 365,000 tonnes in fiscal 2023 to 462,000 tonnes in fiscal 2024.
At Kusasalethu, gold sold increased by 9.0% to 3,795 kilograms in fiscal 2024 from 3,481 kilograms in fiscal 2023 as a result of a 3.0% increase in tonnes milled and the recovered grade increasing by 7.9% from 6.10g/t in fiscal 2023 to 6.58g/t in fiscal 2024. This was mainly due to mining of areas with higher grades in the latter part of fiscal 2024.
At Mine Waste Solutions gold sold increased by 34.6% from 2,781 kilograms in fiscal 2023 to 3,742 kilograms in fiscal 2024. This was as a result of a 36.1% increase in the recovered grade, from 0.122g/t in fiscal 2023 to 0.166g/t in fiscal 2024.
At Hidden Valley, gold sold increased 19.9% from 4,214 kilograms in fiscal 2023 to 5,052 kilograms in fiscal 2024 mainly as a result of an increase in recovered grade of 33.3% from 1.14g/t in fiscal 2023 to 1.52g/t in fiscal 2024. The higher grade was as a result of mining through high grade areas in the first half of the fiscal year. This was offset by decreased tonnes milled of 12.6% from 3,846 tonnes in fiscal 2023 to 3,360 tonnes in fiscal 2024.
Export Sales
All of our gold produced in South Africa during fiscal 2022 to 2024 was refined by Rand Refinery Proprietary Limited ("Rand Refinery"). Rand Refinery is owned by a consortium of the major gold producers in South Africa and Harmony held a 10.4% interest at June 30, 2024. All of our gold and silver produced in PNG during fiscal 2022 to 2024 was sold to the Australian Bullion Corporation.
Cost of sales
Cost of sales includes production costs, impairments, amortization and depreciation and other items, including employment termination and restructuring costs. Cost of sales increased by 19.5% from R39,535 million in fiscal 2023 to R47,233 million in fiscal 2024. Factors affecting the increase are discussed below.
Production costs (cash costs/all-in sustaining costs)
The following table sets out, for our reportable segments, total kilograms produced and weighted average cash costs per kilogram and total kilograms sold and weighted average all-in sustaining costs per kilogram for fiscal 2023 and fiscal 2024:
Year ended June 30, 2024
Year ended June 30, 2023
Percentage (increase)/decrease
Cash costs
All-in sustaining
costs
Cash costs
All-in sustaining
costs
Cash costs per kg
All-in sustain-ing costs per kg
(kg
pro-duced)
(R/kg)
(kg sold)
(R/kg)
(kg
pro-duced)
(R/kg)
(kg sold)
(R/kg)
South Africa
Moab Khotsong
6,599
699,300
6,650
798,866
6,668
683,995
6,715
782,441
(2)
(2)
Mponeng
8,751
670,811
8,648
785,108
7,449
671,474
7,480
784,093
—
—
Tshepong North
3,248
884,464
3,196
1,078,897
3,354
797,069
3,391
975,498
(11)
(11)
Tshepong South
3,129
833,307
3,082
1,002,141
3,431
691,925
3,458
841,983
(20)
(19)
Doornkop
3,470
880,229
3,469
1,031,845
4,213
708,908
4,233
831,553
(24)
(24)
Joel
1,733
975,319
1,708
1,145,064
1,947
823,291
1,964
950,713
(18)
(20)
Target 1
1,859
1,266,487
1,854
1,558,946
1,275
1,594,661
1,256
1,903,111
21
18
Kusasalethu
3,842
965,284
3,795
1,058,639
3,460
956,938
3,481
1,068,851
(1)
1
Masimong
1,780
1,057,287
1,756
1,121,951
1,961
871,508
1,980
925,703
(21)
(21)
Bambanani(1)
—
—
—
—
—
—
19
827,789
—
100
MWS
3,770
545,310
3,742
605,710
2,804
649,264
2,781
721,034
16
16
All other surface operations
5,296
700,971
5,270
719,354
4,719
716,657
4,718
719,354
2
—
International
Hidden Valley
5,101
477,360
5,052
814,375
4,370
486,754
4,214
1,014,228
2
20
Total kg
48,578
48,222
45,651
45,690
Weighted average(2)
758,736
901,550
735,634
889,766
(3)
(1)
1 The Bambanani operation closed in June 2022.
2 The offsetting of the by-product income for management's reporting purposes has the effect of decreasing the cash costs and the all-in sustaining costs.
For further information about the use of non-GAAP measures, see “Reconciliation of Non-GAAP Measures” below.
Our average cash costs increased by 3.1%, or R23,102 per kilogram, from R735,634 per kilogram in fiscal 2023 to R758,736 per kilogram in fiscal 2024. Cash costs per kilogram vary with the working costs per tonne (which are, in turn, affected by the number of tonnes processed) and grade of ore processed. Production costs increased by 11.6% from R34,866 million in fiscal 2023 to R38,923 million in fiscal 2024, mainly due to inflationary pressures on costs including labor, contractors and electricity as well as production-based bonuses. Additionally, the royalty tax increased due to a higher rate being applied as a result of higher profits, as well as the increased revenue base to which it is applied.
At Tshepong North, all-in sustaining cost increased by 10.6% from R975,498 per kilogram in fiscal 2023 to R1,078,897 per kilogram in fiscal 2024, mainly due to the increase in production costs and decrease in gold production. The production costs increase was mainly due to annual wage and electricity tariff increases as well as significantly higher MPRDA royalties. The decrease in gold production was driven by a 8.7% decrease in the volumes of ore milled to 726 000 tonnes (2023: 795 000 tonnes).
At Tshepong South, all-in sustaining cost increased by 19.0% to R1,002,141 per kilogram in fiscal 2024, compared with R841,983 per kilogram in fiscal 2023, mainly due to the increase in the production costs and lower gold production which decreased from 3,431 kilograms in fiscal 2023 to 3,129 kilograms in fiscal 2024. Production was affected by geological and mining related challenges resulting in lower square meters and as a result, ore milled for the year decreased to 465 000 tonnes (2023: 506 000 tonnes). Production costs increased mainly due to annual wage and electricity tariff increases as well as significantly higher MPRDA royalties.
At Doornkop, all-in sustaining cost increased by 24.1% from R831,553 per kilogram in fiscal 2023 to R1,031,845 per kilogram in fiscal 2024. This was mainly due to significant decrease of 17.6% in gold production to 3,470 kilograms from 4,213 kilograms, driven by lower tonnes treated. This was as a result of flexibility challenges in the final quarter of fiscal 2024.
At Joel, all-in sustaining cost increased by 20.4% from R950,713 per kilogram in fiscal 2023 to R1,145,064 per kilogram in fiscal 2024, mainly as a result of an 11.0% decrease in gold production to 1,733 kilograms from 1,947 kilograms. This was driven by a decrease in tonnes treated as a result of a sheave wheel breakdown in the December 2023 quarter with production further hampered by numerous mining related challenges.
At Target 1, all-in sustaining costs decreased year on year by 18.1% from R1,903,111 per kilogram in fiscal 2023 to R1,558,946 per kilogram in fiscal 2024. This was as a result of an increase in gold production of 45.8% from 1,275 kilograms in fiscal 2023 to 1,859 kilograms in fiscal 2024, mainly due to increase in tonnes milled as well as grade recovery.
At Masimong, all-in sustaining costs increased by 21.2% from R925,703 per kilogram in fiscal 2023 to R1,121,951 per kilogram in fiscal 2024, mainly due to annual wage increases, electricity tariff increases. Further, this was impacted by a decrease in gold production of 9.2% to 1,780 kilograms in fiscal 2024 from 1,961 kilograms in fiscal 2023 due to the lower recovered grade, decreasing from 4.17g/t in 2023 to 3.76g/t in 2024.
At MWS, all-in sustaining costs decreased year on year by 16.0% from R721,034 per kilogram in fiscal 2023 to R605,710 per kilogram in fiscal 2024. This was mainly as a result of the increased gold production during the year from 2,804 kilograms in fiscal 2023 to 3,770 kilograms in fiscal 2024, driven by improved grade recovery of 36.1%.
At Hidden Valley, all-in sustaining cost decreased by 19.7% from R1,014,228 per kilogram in fiscal 2023 to R814,375 per kilogram in fiscal 2024. This was mainly due to the higher recovered grades and record silver production. Recovered grades in fiscal 2024 increased by 33% to 1.52g/t in fiscal 2024 compared to 1.14g/t in fiscal 2023.
Amortization and depreciation
Amortization and depreciation increased from R3,454 million in fiscal 2023 to R4,642 million in fiscal 2024, primarily due to 16.7% and 21.3% higher production at the Hidden Valley and Kalgold operations respectively, primarily for stripping activities. A further increase relates to assets brought into use during the year, in addition to the impact of the increased production and the year-on-year change in the reserve tonnes which is used to calculate depreciation based on the units-of-production method.
Impairment of assets
An impairment charge of R2,793 million was recorded in fiscal 2024. This was as a result of new preliminary Mineral Resources estimates for the Target North project received during August 2024 by management after the completion of the exploration drilling program. Additional drilling information and the application of modern industry best practice estimation techniques indicated a decrease in the Mineral Resource estimate due to a better understanding of the geological complexity and the application of constrained estimation domains. The Mineral Resource estimate used to determine the recoverable amount of Target North changed from the previous estimate of 56.4 million resource ounces, consisting of 22 million Indicated Resources and 34.4 million Inferred Resources, to the current Mineral Resource estimate of 13.8 million ounces of Inferred Resources. The gold resource multiple price in US dollar terms was unchanged from previous assessments. Any reasonable possible changes to the unobservable inputs of the Mineral Resource estimate for Target North would have resulted in immaterial changes. There are no declared Mineral Resources attributable to Target North. The post-tax recoverable amount was determined to be R888 million. See note 5(f) “Cost of Sales", to our consolidated financial statements set forth beginning on page F-1.
No impairment charge was recorded in fiscal 2023. The results of the fiscal 2023 impairment calculations, based on trigger assessments performed, resulted in headroom for the assets identified for testing, being Target 1, Kusasalethu and Kalgold. There was no reversal of impairments previously recognized during fiscal 2024 or fiscal 2023.
Employee terminations and restructuring costs
Employment termination and restructuring costs decreased in 2024 fiscal year to R86 million (2023: R597 million) as a result of fewer employees taking up voluntary severance packages compared to fiscal 2023. The higher costs in 2023 were attributable to the voluntary severance packages that were taken up following the disaggregation of the Tshepong Operations into Tshepong North and Tshepong South and the closure of Bambanani in June 2022.
Income statement items other than revenue and cost of sales
Exploration expenditure
Exploration expenditure increased from R506 million in 2023 fiscal year to R1,047 million in fiscal 2024 predominantly due to the updated feasibility study for the Eva Copper Project, a significant drill program and the start of early work site activities.
Gains/losses on derivatives
Gains on derivatives amounted to R453 million in fiscal 2024, compared to losses of R194 million in fiscal 2023. Gains/losses on derivatives include the fair value movements of derivatives which have not been designated as hedging instruments for hedge accounting purposes or where hedge accounting has been discontinued, the amortization of day-one gains and losses for derivatives and the hedging ineffectiveness. The day-one adjustment arises from the difference between the contract price and market price on the day of the transaction. Factors affecting gains/losses on derivatives are discussed below.
(a) Foreign exchange derivatives
Harmony maintains a foreign exchange derivative program in the form of zero cost collars, which establish a floor and cap US$/Rand exchange rate at which to convert US dollars to Rand, and forward exchange contracts. As hedge accounting is not
applied, the resulting gains and losses have been recorded in the income statement. In fiscal 2024, a gain amounting to R670 million was recorded compared to a loss of R145 million in fiscal 2023.
(b) US$ commodity contracts
Harmony maintains a derivative program for Hidden Valley by entering into commodity derivative contracts. The contracts comprise US$ gold forward sale and US$ gold collars derivative contracts as well as silver zero cost collars which establish a minimum (floor) and maximum (cap) silver sales price. Hedge accounting has been applied to US$ gold contracts and these are shown separately from the silver zero cost collars that are not hedge accounted. Losses of R50 million were recognized in revenue for fiscal 2024 compared to a gain of R25 million in fiscal 2023. During fiscal 2024 and 2023 a negligible amount of hedge ineffectiveness was experienced. The gains and losses for the silver zero cost collars are recorded in gains/(losses) on derivatives in the income statement. In fiscal 2024, losses on derivative of R98 million were recorded in the income statement compared to a gain of R21 million in fiscal 2023.
(c) Rand gold contracts
Harmony utilizes Rand gold forward sale and gold collar derivative contracts to hedge the risk of lower Rand gold prices. Cash flow hedge accounting is applied to these contracts, resulting in the effective portion of the unrealized gains and losses being recorded in other comprehensive income (other reserves). The contracts that matured realized losses of R209 million in fiscal 2023 compared to a loss of R1,215 million in fiscal 2024, which has been included in revenue.
During fiscal 2024 and 2023 a negligible amount of hedge ineffectiveness was experienced.
Foreign exchange translation gain/loss
A foreign exchange translation loss of R634 million was recorded during fiscal 2023 compared to a gain of R97 million in fiscal 2024. The gain in 2024 was predominantly caused by favorable translations on US dollar loan balances. The favorable translations on US dollar loans are attributable to the Rand strengthening against the US dollar evidenced by a closing exchange rate of R18.19/US$1.00 (2023: R18.83/US$1.00).
Other operating expenses
Other operating expenses increased to R679 million in fiscal 2024 from R268 million in fiscal 2023 principally as a result of the factors discussed below.
(a) Remeasurement of contingent consideration
A remeasurement of the contingent consideration liability of R484 million (2023: R64 million) relating to the change in the Mponeng operation’s production profile, which is based on its LOM plan. The change in 2024 includes the valuation of the below infrastructure ounces at R303 million, following the approval of the Mponeng extension project. Further, changes in assumptions applied in determining the Eva Copper Project contingent consideration impacted the liability. These changes relate to a decrease in the discount rate and higher forecasted copper price and inflation rate.
(b) Silicosis settlement provision
During fiscal 2024, a credit of R174 million was recorded for the decrease in the liability for Harmony’s potential cost to settle the silicosis and TB class actions, compared to a R183 million credit in fiscal 2023, as a result of a change in the assumptions used in the actuary model.
Acquisition-related costs
The cost of R214 million in fiscal 2023 relates to acquisition of the Eva Copper Project assets. No such transactions were entered into during fiscal 2024.
Investment income
During fiscal 2024 investment income amounted to R809 million compared to R663 million in fiscal 2023. This was mainly due to favorable balances of restricted cash and investments and bank balances as well as higher interest rates experienced during fiscal 2024.
Finance costs
During fiscal 2024 finance costs amounted to R796 million compared to R994 million in fiscal 2023. The decrease was mainly as a result of the higher interest capitalization of R237 million in fiscal 2024 compared to R123 million in fiscal 2023. This increase in the capitalized interest is due to the higher cumulative balances, which includes the weighted average of the current year's expenditure, for the qualifying assets.
Income and mining taxes
In fiscal 2024 the tax rates for companies remained 33% for mining income and 27% for non-mining income. The income tax rate remained 30% for Australian companies and PNG mining companies.
Harmony’s effective income and mining tax rates for fiscal 2023 and 2024 are presented in the table below:
The effective tax rate for fiscal 2024 was lower than the mining statutory tax rate of 33% for Harmony and our subsidiaries as a whole. This is mainly due to capital allowances and non-deductible items. Refer to note 11 "Taxation" of our consolidated financial statements beginning on page F-1 for further detail.
During fiscal 2024 taxation amounted to R3,082 million, compared to R1,723 million in fiscal 2023, mainly due to the increases in current taxation resulting from increased revenue following from the higher gold prices experienced during fiscal 2024. The deferred tax movement was affected by changes in the life-of-mine rates (see below) as well as changes in the temporary differences. These changes had the following impacts:
•Increase of temporary differences related to the carrying value of property, plant and equipment resulted in an increase of R510 million in the deferred tax expense (2023: R377 million decrease);
•Unwinding of temporary differences related to unredeemed capital expenditure and assessed loss balances resulted in a decrease of R74 million in the deferred tax expense (2023: R169 million);
•The change in deferred tax rates of Mponeng from 17.7% to 8.1%, applied to balances excluding hedge accounted derivatives, resulted in a decrease in the deferred tax expense and liability to the amount of R379 million (2023: R144 million increase); and
•The change in deferred tax rates of the remaining legal entities in the group, applied to balances excluding hedge accounted derivatives, resulted in an increase in the deferred tax expense and liability to the amount of R239 million (2023: R444 million increase).
Deferred tax rates for the South African operations are calculated based on estimates of the future profitability of each ring-fenced mine when temporary differences will reverse. The future profitability of each ring-fenced mine, in turn, is determined by reference to the LOM plan for that operation, which is based on parameters such as the Group’s long-term view of the US$ gold price and the Rand/US$ exchange rate, as well as the reserves declared for the operation. As some of these parameters are based on market indicators, they differ from one year to the next. In addition, the reserves may also increase or decrease based on updated or new geological information. Changes in the future profitability of each ring-fenced mine impact the deferred tax rates used to recognize temporary differences at these operations. The movement in deferred tax on temporary differences due to changes in estimated effective tax rates results primarily from the movement in the effective deferred tax rate at Harmony (includes Masimong), Freegold (includes Joel, Tshepong North and Tshepong South), REL (includes Doornkop and Kusasalethu), Moab Khotsong, Mponeng and Kalgold. The deferred tax rates for Harmony remained flat at 26.4% from fiscal 2023 to fiscal 2024; for the following companies deferred taxes changed from fiscal 2023 to fiscal 2024 as follows: Freegold, from 11.4% to 12.6%; REL, from 10.5% to 12.3%; Moab Khotsong, from 16.7% to 19.0%; Mponeng, from 17.7% to 8.1%; Mine Waste Solutions, from 11.0% to 18.1%; and Kalgold from 17.1% to 21.5% in fiscal 2024.
South Africa
Generally, South Africa imposes tax on worldwide income (including capital gains) of all our South African incorporated tax resident entities at a rate of 27% (2023: 27%) on non-mining income. The South African entities pay taxes separately on mining income and non-mining income. The amount of our South African mining income tax is calculated on the basis of a gold mining formula that takes into account our total revenue and profits from, and capital expenditure for, mining operations in South Africa. 5% of total mining revenue is exempt from taxation in South Africa as a result of the application of the gold mining formula. The amount of revenue subject to taxation is calculated by deducting qualifying capital expenditure from taxable mining income. The amount by which taxable mining income exceeds 5% of mining revenue constitutes taxable mining income. We and our subsidiaries account for taxes separately that are determined in respect of each entity. Hence, South Africa does not make use of any Group basis of taxation.
Previously, Harmony was able to carry forward assessed losses indefinitely and offset the total accumulated balance against taxable income in the relevant year of assessment.
However, this has been amended from fiscal year 2023 and remains unchanged as at June 30, 2024. Assessed losses utilized are limited to the higher of R1 million or 80% of taxable income, and the balance remaining will be carried forward to the following year of assessment. This essentially results in a minimum taxable income of 20%. The restriction on utilizing losses has been made on the basis that the calculation of the assessed loss restriction must be determined before any capital expenditure is deducted.
South Africa has a Controlled Foreign Company regime which effectively attributes certain types of passive income derived by offshore subsidiaries and imputes that income in taxable income as if it had been derived in South Africa under South African tax rules.
Australia
Generally, Australia also imposes tax on the worldwide income (including capital gains) of all of our Australian incorporated and tax resident entities. The current income tax rate for companies is 30%.
HGA and its wholly-owned Australian subsidiary companies are recognized and taxed as a single entity, called a consolidated Group. Under the Australian Tax Consolidation rules all of the Australian subsidiary companies are treated as divisions of the Head Company, HGA. As a result, inter-company transactions between group members are generally ignored for tax purposes. This allows the Group to transfer assets between group members without any tax consequences, and deems all tax losses to have been incurred by HGA.
PNG mining projects are taxed on a project basis. Therefore, each project is taxed as a separate entity, even though it may be one of a number of projects carried on by the same company. Capital development and exploration expenditure incurred in PNG is capitalized for tax purposes and can be deducted at 25% per annum on a diminishing value basis against project income, with the deduction being limited to the lesser of 25% of the diminished value or the income of the project for the year.
PNG mining companies are taxed at a rate of tax of 30%. Mining operations in PNG are subject to a 2% royalty and 0.5% Production Levy which are payable to the PNG Government.
Operating performance per Segment
For a further discussion on operating performance on a segment basis, refer to “– Delivering profitable ounces – Operational Performance – Performance by Operation” on pages 50 to 88 of the Integrated Annual Report for the 20-F 2024. Also refer to note 39 “Segment report” to our consolidated financial statements set forth beginning on page F-1.
Reconciliation of Non-GAAP Measures
The World Gold Council (“WGC”) published revised industry guidance in November 2018 on the calculation of “all-in sustaining costs” and “all-in cost”. These measures were developed to create a better understanding of the overall costs associated with producing gold. Although Harmony is not a member of the WGC, we disclose these measures. The all-in sustaining cost measure is an extension of the cash cost measure (referenced below) and incorporates costs related to sustaining production. We also use operating free cash flow as a metric to assess profitability.
Cash costs, cash costs per ounce/kilogram, all-in sustaining costs, all-in sustaining costs per ounce/kilogram and operating free cash flows are all non-GAAP measures. These measures should not be considered by investors in isolation or as an alternative to production costs, cost of sales, or any other measure of financial performance calculated in accordance with IFRS.The calculation of these measures may vary significantly among gold mining companies and, by themselves, do not necessarily provide a basis for comparison with other gold mining companies. Nevertheless, Harmony believes that these measures are useful indicators to investors and management as they provide an indication of profitability, efficiency and cash flows, the trend in costs as the mining operations mature over time on a consistent basis and an internal benchmark of performance to allow for comparison against other mines, both within the Group and at other gold mining companies. They are also a measure of a operation's performance by comparison of cash costs per ounce/kilogram to the spot price of gold.
Our cash costs consist primarily of production costs and are expensed as incurred. The cash costs are incurred to access ore to produce current mined reserves. Cash costs do not include capital development costs, which are incurred to allow access to the orebody for future mining operations and are capitalized and amortized when the relevant reserves are mined.
Total cash costs include mine production costs, transport and refinery costs, applicable general and administrative costs, ore stockpiles, as well as ongoing environmental rehabilitation costs, transfers for stripping activities and costs associated with royalties. Employee termination costs are included, however employee termination costs associated with major restructuring and shaft closures are excluded. The costs associated with movements in production inventories are excluded from total cash costs. Gold ounces/kilograms produced are used as the denominator in the total cash costs per ounce/kilogram calculation.
All-in sustaining costs include mine production costs, transport and refinery costs, applicable general and administrative costs, costs associated with movements in production inventories, ore stockpiles, as well as ongoing environmental rehabilitation costs, transfers for stripping activities and costs associated with royalties. Employee termination costs are included, however employee termination costs associated with major restructuring and shaft closures are excluded. The following costs are also included: local economic development (“LED”) expenditure for continuing operations, corporate costs, sustaining exploration costs and sustaining capital expenditure including ongoing capital development (“OCD”) expenditure and rehabilitation accretion and amortization for continuing operations. Gold ounces/kilograms sold are used as the denominator in the all-in sustaining costs per ounce/kilogram calculation. Depreciation costs are excluded.
Operating free cash flow is determined as revenue after deducting cash costs, capital expenditure, non-cash adjustments (consideration from streaming contract) and the impact of run-of-mine (''ROM'') costs.
Changes in all-in sustaining costs per ounce/kilogram and cash costs per ounce/kilogram are affected by operational performance. In US dollar terms, these measures are also affected by the changes in the currency exchange rate between the Rand and the US dollar and, in the case of the PNG operations, the Kina.
While recognizing the importance of reducing all-in sustaining costs and cash costs, our chief focus is on controlling and, where possible, reducing total costs, including overhead costs. We aim to control total unit costs per ounce/kilogram produced by maintaining our low total cost structure at our existing operations. We have been able to reduce total costs by implementing a management structure and philosophy that is focused on reducing management and administrative costs.
The following is a reconciliation of total all-in sustaining costs, as a non-GAAP measure, to the nearest comparable GAAP measure, cost of sales under IFRS:
The following is a reconciliation of total operating free cash flows, as a non-GAAP measure, to the nearest comparable GAAP measure, gross profit, under IFRS:
Fiscal year ended June 30,
2024
2023
Total gross profit - under IFRS
14,146
9,740
Toll treatment services
(576)
(430)
Toll treatment costs
420
323
Impairment
2,793
—
Amortization and depreciation expense
4,642
3,454
Other
455
892
Production profit
21,880
13,979
Consideration from streaming contract
(323)
(338)
Gold and uranium inventory movement
(468)
(41)
Run-of-mine adjustment and deferred stripping
(19)
29
Total capital expenditure
(8,327)
(7,598)
Total operational free cash flows
12,743
6,031
Within this report, our discussion and analysis is focused on the all-in sustaining costs, total cash costs and operating free cash flows measure.
B. LIQUIDITY AND CAPITAL RESOURCES
We centrally manage our funding and treasury policies. There are no legal or economic restrictions on the ability of our subsidiaries to transfer funds to us. We have generally funded our operations and our short-term and long-term liquidity requirements from: (i) cash generated from operations; (ii) credit facilities and other borrowings and (iii) sales of equity securities.
Harmony intends to finance its capital expenditure, other purchase obligations and debt repayment requirements in 2024 from cash on hand, cash flow from operations, and existing credit facilities.
Fiscal year ended June 30,
2024
2023
(in R millions)
Operating cash flows
15,650
9,948
Investing cash flows
(8,361)
(10,596)
Financing cash flows
(5,435)
1,194
Foreign exchange differences
(28)
(127)
Total cash flows
1,826
419
Cash flows from operating activities
Net cash provided by operations is primarily affected by the quantities of gold sold, the gold price, the Rand/US$ exchange rate, cash costs per ounce and, in the case of the international operations, the Australian dollar and PNG Kina versus US dollar exchange rate. A significant adverse change in one or more of these parameters could materially reduce cash provided by operations as a source of liquidity.
Net cash generated by operations increased from R9,948 million in fiscal 2023 to R15,650 million in fiscal 2024. This increase is mainly due to higher revenue generated through the year as a result of higher gold prices received. The increase was slightly offset by the increase in operational costs such as production costs and exploration expenditure.
Income and mining tax paid in fiscal 2024 amounted to R2,388 million, and R518 million in fiscal 2023.
Cash flows from investing activities
Net cash utilized by investing activities decreased from R10,596 million in fiscal 2023 to R8,361 million in fiscal 2024. The decrease principally relates to the Eva Copper acquisition (R2,996 million) that occurred during fiscal 2023, resulting in a higher value in fiscal 2023. This was offset in part by an increase of R758 million in additions to property, plant and equipment.
Cash flows from financing activities
Financing activities generated R1,194 million in fiscal 2023, compared to cash utilized of R5,435 million in fiscal 2024. This was mainly due to borrowing repayments and higher dividend payments in fiscal 2024.
In fiscal 2024, borrowings repaid amounted to R4,047 million as compared to repayments of R2,071 million made during fiscal 2023. The repayments made during fiscal 2024 were partially offset by draw downs, resulting in a net outflow on the borrowings of R3,747 million compared to the inflow of R1,548 million seen in fiscal 2023.
In fiscal 2024, a total dividend of R1,437 million (2023: R154 million) was recognized and it relates to the final dividend of 75 SA cents for the 2023 year, amounting to R465 million which was paid on October 16, 2023 (2023: 22 SA cents per share with payment of R136 million on October 17, 2022) and an interim ordinary dividend of 147 SA cents during fiscal 2024, amounting to R930 million which was paid on April 15, 2024. The board did not declare an interim ordinary dividend for fiscal 2023.
See note 30 “Borrowings", note 32 “Cash Generated by Operations” and note 38 "Subsequent events" to our consolidated financial statements set forth beginning on page F-1.
Outstanding Credit Facilities and Other Borrowings
On May 25, 2022 Harmony concluded a R1.5 billion six- and a- half-year term green loan facility with a syndicate of banks led by ABSA Bank Limited and Nedbank Limited (the "R1.5 Billion Green Term Loan"). The terms of the R1.5 Billion Green Term Loan provide that amounts borrowed may be used in respect of eligible green projects, which relate to the construction, development, acquisition, maintenance, and/or operation of renewable energy installations.
The R1.5 Billion Green Term Loan became available in four quarterly increments of R375 million starting in November 2022. During fiscal 2024, no draw down was made on the R1.5 Billion Green Term Loan. Consequently, the first R150 million is no longer available.
The key terms of the R1.5 Billion Green Term Loan are:
Term facility: R1.5 billion
Margin: 2.65% over 3-month Johannesburg Interbank Average Rate ("JIBAR")
Maturity: Six and a half years
Security: Unsecured
On May 25, 2022 Harmony concluded a R2.5 billion sustainability-linked revolving credit facility with a syndicate of banks led by ABSA Bank Limited and Nedbank Limited (the “R2.5 Billion Syndicated Revolving Credit Facility”). Under the terms of the R2.5 Billion Syndicated Revolving Credit Facility all amounts borrowed must be used (i) in repayment of the R2 billion four-year syndicated term loan and revolving credit facility and (ii) for ongoing general corporate costs, working costs and working capital requirements of the Group. During fiscal 2024, a R300 million draw down was made and was subsequently repaid. During March 2024 a 12-month extension was granted from May 2026.
At June 30, 2024, the full amount on the R2.5 Billion Syndicated Revolving Credit Facility was available.
The key terms of the R2.5 Billion Syndicated Revolving Credit Facility are:
Revolving facility: R2.5 billion
Margin on revolving facility: 2.40% over 3-month JIBAR
Maturity: Five years
Security: Unsecured
On May 25, 2022 Harmony and a syndicate of local and international lenders, which was jointly arranged by Nedbank Limited and ABSA Bank Limited, concluded a US$400 million sustainability-linked syndicated term loan facility (the “US$400 Million Syndicated Facility”) comprising a US$100 million term facility and a US$300 million revolving credit facility.
The US$400 Million Syndicated Facility is a sustainability-linked facility. Sustainability-linked metrics have been included into the agreement which would result in specific increases/decreases in the interest rate charged to the facility. During fiscal 2024, a total of US$200 million (R3,747 million) was repaid. During March 2024 a 12-month extension was granted from May 2026.
The key terms of the US$400 Million Syndicated Facility are:
Term facility: US$100 million
Revolving facility: US$300 million
Margin on term facility: 2.85% over Secured Overnight Financing Rate (''SOFR'')
Margin on revolving facility: 2.70% over SOFR
Maturity: Five years
Security: Unsecured
The R2.5 Billion Syndicated Revolving Credit Facility and the US$400 Million Syndicated Facility are both sustainability-linked facilities. These facilities are linked to certain key performance indicators ("ESG KPIs") which will be measured annually for the current financial year as well as the next two financial years and will result in changes to interest rate margins. The rate will be adjusted annually by one basis point for each metric achieved (decrease) or not (increase), with these adjustments being cumulative over the three-year measuring period. The adjustments to interest rate margins for each financial year's ESG performance would impact the following financial year. The respective ESG KPIs are as follows:
Renewable energy consumption as % of total electricity consumed
SA operations
2
%
8
%
20
%
Water consumption
Potable water consumed (Mℓ)
SA operations
20,453
19,833
19,436
Depending on Harmony's performance in relation to these ESG KPIs, the potential change in interest rate margin is as follows:
Cumulative benefit/penalty for each financial year (basis points)
Fiscal 2023
Fiscal 2024
Fiscal 2025
KPI
Greenhouse gas emissions
1
2
3
Renewable Energy
1
2
3
Water consumption
1
2
3
We need to comply with certain debt covenants for the US$400 Million Syndicated Facility, the R2.5 Billion Syndicated Revolving Credit Facility and the R1.5 Billion Green Term Loan.
The debt covenant tests are as follows:
The Group’s interest cover ratio shall be more than five (EBITDA1/Total interest paid).
Leverage2 shall not be more than 2.5 times.
1Earnings before interest, taxes, depreciation and amortization (EBITDA), as defined in the agreement excludes extraordinary items such as impairment and restructuring cost and gains/losses on disposal of fixed assets.
2Leverage is defined as total net debt to EBITDA.
Debt covenants tests were performed for the loan facilities for both fiscal 2024 and 2023 and no breaches were noted. For fiscal 2024, the Group's interest cover ratio was 44.1 times (2023: 26.0 times), while the Group's leverage was negative 0.2 (2023: 0.2). Management believes that it is very likely that the covenant requirements will be met in the foreseeable future given the current earnings and interest levels, as well as the net cash position.
Current borrowings
Current borrowings at June 30, 2024 consist solely of R9 million (2023: R103 million) accrued interest on the US$100 million term facility.
Non-current borrowings
US$200 million repayment was made under the US$300 million revolving credit facility which is undrawn as at June 30, 2024. The non-current borrowings total of US$98 million (R1,785 million) at June 30, 2024 relates to the US$100 million term facility.
Capital Expenditure
Total budgeted capital expenditures for fiscal 2025, excluding the capital outlay for renewable projects, are R10,781 million. See Item 4: “Information on the Company - Business Overview - Capital Expenditures” fordetails regarding the budgeted capital expenditures for each operation. We currently expect that our planned operating capital expenditures will be financed from operations, including use of our current facilities, as described in “-Outstanding Credit Facilities and Other Borrowings” above, and new borrowings as needed.
The following table sets forth our authorized capital expenditure as of June 30, 2024:
R’millions
Authorized and contracted for1
1,702
Authorized but not yet contracted for
14,442
Total
16,144
1 Including our share of the capital expenditure amounting to R21 million for the joint operation in PNG.
Total capital expenditure was R8,398 million in 2024, compared to R7,640 million in 2023. This represents a R758 million increase from 2023. This increase was mainly due to increases related to the ramping up of the Kareerand project. This was offset by lower capitalized stripping of Hidden Valley's stage 7.
The board believes that our working capital resources, by way of cash generated from operations, borrowings and existing cash on hand, are sufficient to meet our present working capital needs. The South African operations are generally expected to fund their capital internally. The Wafi-Golpu Project in PNG and Eva Copper Project in Australia are, however, expected to require additional capital expenditure over the next two to five years and next four years respectively to complete construction, some of which will be funded from cash generated by operations and the balance by debt. We may also consider other options or structures to finance Harmony's portion of the Wafi-Golpu and the Eva Copper Project. For more information on our planned capital expenditures, see “-Capital Expenditure” above. Also see Item 3: “Key Information - Risk Factors - Risks Related to Our Operations and Business - Our operations have limited proved and probable reserves; exploration for additional resources and reserves is speculative in nature, may be unsuccessful and involves many risks”. Our board believes that we will have access to adequate financing on reasonable terms given our cash-based operations and modest leverage. Our ability to generate cash from operations could, however, be materially adversely affected by increases in cash costs, decreases in production, decreases in the price of gold and appreciation of the Rand and other non-US dollar currencies against the US dollar. In addition, South African companies are subject to significant exchange control limitations, which may impair our ability to fund overseas operations or guarantee credit facilities entered into by overseas subsidiaries. See Item 10: “Additional Information - Exchange Controls”.
The information set forth under the heading: “– Delivering profitable ounces – Operational performance” on pages 50 to 88 of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference. See also note 30 “Borrowings”, note 36 “Commitments and contingencies” and note 32 “Cash generated by operations” to our consolidated financial statements set forth beginning on page F-1.
Contractual obligations and contingencies
Our contractual obligations and commercial commitments consist primarily of credit facilities, post-retirement health care and environmental obligations.
The following table summarizes our contractual obligations as of June 30, 2024:
Payments Due by Period
Total
Less Than 12 Months July 1, 2024 to June 30, 2025
12-36 Months July 1, 2025 to June 30, 2027
36-60 Months July 1, 2027 To June 30, 2029
After 60 Months Subsequent June 30, 2029
(R’millions)
(R’millions)
(R’millions)
(R’millions)
(R’millions)
Bank facilities1
2,251
149
149
1,953
—
Post-retirement health care2
290
—
—
—
290
Environmental obligations3
8,387
—
—
—
8,387
Silicosis settlement obligation4
355
19
95
125
116
Contingent consideration5
2116
115
124
132
1,745
Streaming contract liability6
85
85
—
—
—
Total contractual obligations
13,484
368
368
2,210
10,538
1 See “- Liquidity and Capital Resources - Outstanding Credit Facilities and Other Borrowings” above. The amounts include the interest payable over the terms of the facilities. Where a variable rate is applicable, the rate at the reporting date has been used for the future periods.
2 This liability relates to post-retirement medical benefits of Freegold, Moab Khotsong and Mponeng employees at the time of acquisition as well as for former employees who retired prior to December 31, 1996 and is based on actuarial valuations conducted during fiscal 2024. See note25 “Other provisions – Retirement benefit obligations” to our consolidated financial statements set forth beginning on page F-1. Subsequently to fiscal 2024, a decision was made to transfer the liability to RMA Life Assurance Company Limited.
3 We make provision for environmental rehabilitation costs and related liabilities based on management’s interpretations of current environmental and regulatory requirements. See note 24 “Provision for environmental rehabilitation” to our consolidated financial statements set forth beginning on page F-1.
4 This liability relates to potential cost of settling the silicosis and TB class actions that were instituted against the Group in South Africa. See Item 3: “Key Information - Risk Factors - Risks Related to ESG - The cost of occupational health care services and the potential liabilities related to occupational health diseases may increase in future and may be substantial” and note 25 “Other provisions” to our consolidated financial statements set forth beginning on page F-1.
5 The liability was included as part of the consideration transferred for the acquisition of the Mponeng operations and related assets and, as of fiscal 2023, Eva Copper. See note 13 "Acquisitions and business combinations" and note 27 "Contingent consideration" to our consolidated financial statements set forth beginning on page F-1.
6 The liability relates to the contractual obligation to deliver the stipulated gold ounces to Franco-Nevada over the remaining term of the agreement. See note 29 “Streaming arrangements” and note 38 “Subsequent events” to our consolidated financial statements set forth beginning on page F-1.
The following table provides details regarding our commercial commitments as of June 30, 2024:
Amount of Commitments Expiring by Period
Total
Less Than 12 Months July 1, 2024 to June 30, 2025
12-36 Months July 1, 2025 to June 30, 2027
36-60 Months July 1, 2027 To June 30, 2029
After 60 Months Subsequent June 30, 2029
(R’millions)
(R’million)
(R’million)
(R’million)
(R’millions)
Guarantees1
1,028
—
—
—
1,028
Capital commitments2
1,702
1,702
—
—
—
Total commitments expiring by period
2,730
1,702
—
—
1,028
1 R509 million of these guarantees relate to our environmental and rehabilitation obligation.
2 Capital commitments consist only of amounts committed to external suppliers, although a total of R16,144 million has been approved by the board for capital expenditures.
See note 36“Commitments and contingencies” to our consolidated financial statements set forth beginning on page F-1.
Off-balance Sheet Arrangements
The Group does not have any off-balance sheet arrangements, as defined by the SEC for the purposes of the Form 20-F, that have or are reasonably likely to have a material current or future effect on the Group’s financial position or results of operations.
Recent Developments
See Item 4: “Information on the Company - History and Development of the Company - Recent Developments - Developments since June 30, 2024”.
Related Party Transactions
For a detailed discussion of related party transactions, seeItem 7: "Related Party Transactions”.
Recent Accounting Pronouncements
Recently adopted accounting policies, as well as recent accounting pronouncements with the potential for impact on the consolidated financial statements, are described in note 2 “Accounting policies” to our consolidated financial statements set forth beginning on page F-1.
Accounting Policies
Harmony’s accounting policies are described in note 2 “Accounting policies” to our consolidated financial statements set forth beginning on page F-1.
Use of Estimates and Making of Assumptions
The preparation of the financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities as well as disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Some of our accounting policies require the application of significant judgment and estimates by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty and are based on our historical experience, terms of existing contracts, management’s view on trends in the gold mining industry and information from outside sources.
Our critical accounting estimates and judgments are described in more detail in note3 “Critical accounting estimates and judgments”, to our consolidated financial statements set forth beginning on page F-1. This discussion and analysis should be read in conjunction with such consolidated financial statements and the relevant notes.
C. RESEARCH AND DEVELOPMENT, PATENTS AND LICENSES, ETC.
Not applicable.
D. TREND INFORMATION
The information set forth under the heading: “– Delivering profitable ounces - Operational performance” on pages 50 to 88 of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference.
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the year ended June 30, 2024 that are reasonably likely to have a material and adverse effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future results of operations or financial conditions.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. DIRECTORS AND SENIOR MANAGEMENT
The information set forth under the heading:
•“– Harmony – Our leadership” on pages 15 to 17.
of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference.
B. COMPENSATION
The information set forth under the heading:
•“– Governance – Remuneration report” on pages 230 to 243
of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference.
C. BOARD PRACTICES
The information set forth under the headings:
•“– Governance – Corporate governance” on pages 212 to 223;
•“– Governance – Board committees” on pages 224 to 229
•“– Governance – Remuneration report” on pages 230 to 243 and
•“– Governance – Audit and risk committee: chairperson’s report” on pages 244 to 247.
of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference.
D. EMPLOYEES
The information set forth under the heading:
•“– Social – Caring for our employees” on pages 189 to 196
of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference.
E. SHARE OWNERSHIP
See note 35 “Related Parties” of our consolidated financial statements, set forth beginning on page F-1.
F. DISCLOSURE OF A REGISTRANT'S ACTION TO RECOVER ERRONEOUSLY AWARDED COMPENSATION
Not applicable.
ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. MAJOR SHAREHOLDERS
We are an independent gold producer, with no single shareholder exercising control. As of October 25, 2024, our issued share capital consisted of 634,767,724 ordinary shares. To our knowledge, (a) we are not directly or indirectly owned or controlled: (i) by another corporation; or (ii) by any foreign government, and (b) there are no arrangements (including any announced or expected takeover bid), the operation of which may at a subsequent date result in a change in our control.
The voting rights of our major shareholders do not differ from the voting rights of other holders of the same class of shares.
A list of the beneficial holders that hold 5% or more of our securities as at June 30, 2024 is set forth below:
Holder
Number of shares
Percentage
Public Investment Corporation of South Africa
93,118,439
14.72
%
Van Eck Associates Corporation
75,421,989
11.92
%
African Rainbow Minerals Ltd
74,665,545
11.80
%
1 Patrice Motsepe, our Chairman, has an indirect holding in African Rainbow Minerals Ltd.
The table below shows the significant changes in the percentage ownership held by major shareholders, to the knowledge of Harmony's management, during the past three years.
Beneficial ownership as at June 30, 2024
2024
2023
2022
%
%
%
Public Investment Corporation of South Africa
14.72
12.68
10.28
Van Eck Associates Corporation
11.92
9.53
8.98
African Rainbow Minerals Ltd
11.80
12.08
12.12
B. RELATED PARTY TRANSACTIONS
Between July 1, 2023 and June 30, 2024, none of the directors or major shareholders of Harmony or, to the knowledge of Harmony, their families, had an interest, directly or indirectly, in any transaction or in any proposed transaction that has affected or will materially affect Harmony or its subsidiaries, other than as stated in note 35 “Related Parties” of our consolidated financial statements, set forth beginning on page F-1. Also see note 16 (b) “Other non-current assets”, note 19 “Investments in associates” and note 20 “Investment in joint operations” of our consolidated financial statements, set forth beginning on page F-1.
A. CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION
Please refer to Item 18: "Financial Statements". For a discussion of our export sales, see Item 5: "Operating and Financial Review and Prospects”.
Legal Proceedings
None of our properties is the subject of pending material legal proceedings. We have been involved in a number of claims and legal and arbitration proceedings incidental to the normal conduct of our business, such as the ones described below.
Provision for silicosis settlement
A provision of R917 million was recognized during fiscal 2017 for Harmony’s potential cost to settle the silicosis and TB class actions that have been instituted against it in South Africa. At June 30, 2024 and June 30, 2023 the provision was R255 million and R549 million respectively. The decrease in fiscal 2024 is primarily due to a change in estimate (R174 million) mainly as a result of a change in the assumptions due to the availability of actual exit data and an adjustment to the take-up rate. Payments of R153 million were made to the trust overseeing the processing and payment of claims during the year. This was partially offset by time value of money accretion (R33 million).
The provision recorded in the financial statements is subject to adjustment or reversal in the future, depending on a number of factors, including changes in benefit take-up.
See Item 3: “Key Information - Risk Factors - Risks related to ESG - The cost of occupational health care services and the potential liabilities related to occupational health diseases may increase in future and may be substantial” and to note 25 “Other Provisions - Provision for silicosis settlement” of our consolidated financial statements set forth beginning on page F-1.
Dividend Policy
Dividends are proposed by and approved by our board of directors based on our financial performance and compliance with applicable laws, including in respect of the solvency and liquidity test contemplated in the Companies Act. Dividends are recognized when declared by the board. Our board may exercise its discretion on an annual basis, taking into consideration the prevailing market conditions, balance sheet flexibility and future capital commitments of the Group. Our dividend policy is to pay a return of 20% on net free cash generated to shareholders. Under South African law, we may declare and pay dividends from any reserves included in total shareholder’s equity (including share capital and share premium) calculated in accordance with IFRS, subject to the solvency and liquidity test.
See Item 3: “Key Information – Risk Factors – Risks Related to Our Corporate and Financing Structure and Strategy – We may not pay dividends or make similar payments to our shareholders in the future” and “– Market Risks – Fluctuations in the exchange rate of currencies may reduce the market value of our securities, as well as the market value of any dividends or distributions paid by us”. Also see Item 10: “Additional Information – Exchange Controls – Introduction”, "– Exchange Controls – Government Regulatory Considerations – Dividends”, “– Taxation - Certain South African Tax Considerations – Dividends” and “– Certain Material United States Federal Income Tax Considerations – Taxation of Dividends”.
B. SIGNIFICANT CHANGES
See Item 4: “Information on the Company - History and Development of the Company - Recent Developments -Developments since June 30, 2024.”
ITEM 9 THE OFFER AND LISTING
A. OFFER AND LISTING DETAILS
The principal trading market for our ordinary shares is the JSE, where they trade under the symbol "HAR". Our ordinary shares trade on the New York Stock Exchange Inc. ("NYSE") in the form of ADSs, under the symbol "HMY".
B. PLAN OF DISTRIBUTION
Not applicable.
C. MARKETS
The Securities Exchange in South Africa
The JSE is the premier stock exchange in Africa and is based in South Africa where it has operated as a marketplace for the trading of financial products for over 130 years.
The JSE connects buyers and sellers in a variety of financial markets that include equities and equity derivatives, commodity derivatives, currency derivatives and interest rate instruments. It is one of the top 20 exchanges in the world in terms of market capitalization and a member of the World Federation of Exchanges.
The market capitalization of the JSE equities index (FTSE/JSE Africa All Shares Index) was R6,773 billion (US$371 billion) at June 30, 2024. The JSE mining index (FTSE/JSE Precious Metals and Mining Index) market capitalization was R698 billion (US$38 billion)1 at June 30, 2024, 13.4% of the overall JSE market capitalization.
Under Strate Pty Limited, South Africa’s Central Securities Depository (“CSD”), there are essentially two types of clients: controlled and non-controlled. A controlled client is one who elects to keep his shares and cash with his broker and these shares are held in custody at the broker’s chosen Custodian Bank, the CSD Participant (“CSDP”). A non-controlled client is one who appoints his own CSDP to act as custodian on his behalf. Equity settlements take place on a contractual T+3 (where T= trade date) settlement cycle. Securities and funds become due for settlement three business days after the trade. Contractual settlement is a market convention embodied in the rules of the JSE which states that a client has a contractual obligation to cause a JSE trade to settle on settlement day. The JSE, in its capacity as Settlement Authority, ensures that all on-market trades entered into by two JSE member firms settle three days after the trade date.
D. SELLING SHAREHOLDERS
Not applicable.
E. DILUTION
Not applicable.
F. EXPENSES OF THE ISSUE
Not applicable.
ITEM 10. ADDITIONAL INFORMATION
A. SHARE CAPITAL
Not applicable.
B. MEMORANDUM OF INCORPORATION
Information on our Memorandum of Incorporation can be found in Exhibit 1.1 filed with this Harmony 2024 Form 20-F.
Voting Rights
There are no limitations imposed by South African law or by our charter on the right of non-resident or foreign owners to hold or vote our ordinary shares.
C. MATERIAL CONTRACTS
R1.5 Billion Green Term Loan
On May 25, 2022, Harmony and a syndicate of local and international lenders entered into a R1.5 billion six and a half year syndicated green term loan. The R1.5 Billion Green Term Loan matures in November 2028.
Under the terms of the R1.5 Billion Green Term Loan, funds borrowed must be used in respect of "eligible green projects", which relate to the construction, development, acquisition, maintenance, and/or operation of renewable energy installations.
The R1.5 Billion Green Term Loan bears interest at 2.65% over the three-month JIBAR.
Harmony was permitted to draw down on the R1.5 Billion Green Term Loan commencing after November 2022. As at June 30, 2024, there were no drawdowns on the R1.5 Billion Green Term Loan.
US$400 Million Syndicated Facility
On May 25, 2022, Harmony and a syndicate of local and international lenders, which was jointly arranged by Nedbank Limited and ABSA Bank Limited, concluded the US$400 Million Syndicated Facility comprising a US$100 million term facility and a US$300 million revolving credit facility. The US$400 Million Syndicated Facility matures in May 2027.
Under the terms of the US$400 Million Syndicated Facility funds borrowed must be used (i) in repayment of the September 2019 US$400 million three-year syndicated term loan and revolving credit facility and (ii) for exploration activities, feasibility costs, capital costs, operational costs, other corporate expenses and other strategic objectives relating to the Group outside of South Africa.
The US$100 million term loan facility bears interest of 2.85% over the three-month SOFR; the US$300 million revolving credit facility bears interest of 2.7% over the three month SOFR.
During fiscal 2024, no withdrawals were made on the US$400 Million Syndicated Facility. US$100 million (R1,785 million) remained outstanding as at June 30, 2024
R2.5 Billion Syndicated Revolving Credit Facility
On May 25, 2022, Harmony and a syndicate of local and international lenders entered the R2.5 Billion Syndicated Revolving Credit Facility. The R2.5 Billion Syndicated Revolving Credit Facility matures in May 2027.
Under the terms of the R2.5 Billion Syndicated Revolving Credit Facility, funds borrowed must be used (i) in repayment of the November 2018 R2 billion four-year syndicated term loan and revolving credit facility and (ii) for ongoing general corporate costs, working costs and working capital requirements of the Group.
The R2.5 Billion Syndicated Revolving Credit Facility bears interest at 2.40% over the three-month JIBAR.
As at June 30, 2024, the total R2.5 billion was available under the R2.5 Billion Syndicated Revolving Credit Facility.
In June 2022, Harmony entered into three PPA and three Land Lease Agreements with Tshepong Photovoltaic (Pty) Ltd, Eland Photovoltaic (Pty) Ltd and Nyala Photovoltaic (Pty) Ltd ("collectively, the "seller"). The details of the agreements states that Photovoltaic generation facilities ("energy facilities") will be constructed by the seller on the land that Harmony will lease to the seller and the energy output produced by the facility will be sold exclusively to Freegold, a subsidiary of Harmony. The term of the PPA is for 15 years.
Harmony will purchase energy output produced by the energy facilities, and although there is a fixed rate per megawatt-hour ("MWh"), there is no fixed volume of power to be delivered. Thus all payments are variable based on consumption. Energy output rates are stipulated between R838 per MWh to R930 per MWh as indexed annually.
As defined in the PPA, a bank guarantee is required to be issued on behalf of Freegold to the seller for an amount equal to three months’ worth of the estimated energy output payments as at financial close. Lombards Attorneys is responsible for issuing guarantees to the seller for the required amounts as stipulated in the PPA.
The equity-settled Katleho ya Moruo Employee Share Ownership Plan (Katleho ya Moruo ESOP)
Following the expiration of the Sisonke Employee Share Ownership Plan (''ESOP'') in 2022, Harmony approved the establishment of the Katleho ya Moruo ESOP in January 2024. The scheme aims to continue facilitating beneficial interest and ownership by non-managerial employees in South Africa (the beneficiaries) of Harmony shares in order to:
•Facilitate economic empowerment of Harmony’s employees;
•Incentivize Harmony’s employees, so as to promote the shared interests of employees and shareholders in the value growth of Harmony; and
•Further align the interests of the Harmony shareholders and those of the employees of Harmony.
The shares were issued to the Harmony ESOP Trust (the ''Trust'') on January 31, 2024. Each beneficiary under the scheme was awarded 360 Participation Units (''PU'') if they qualified for the scheme upon its formation or within six months of the formation thereof. Thereafter, qualifying employees will be awarded PU on a pro-rata basis in line with the scheme rules. The PU will vest after a service period of five years commencing on April 4, 2024. The Katleho ya Moruo ESOP is equity-settled.
D. EXCHANGE CONTROLS
Introduction
The following is a general outline of South African exchange controls. Investors should consult a professional adviser pertaining to the exchange control implications of their particular investments.
The Republic of South Africa’s exchange control regime provide for restrictions on the exportation of capital from a Common Monetary Area member, consisting of South Africa, the Republic of Namibia, the Kingdoms of Lesotho and Eswatini. Transactions between South African residents (including corporations) and non-residents are subject to these exchange control regulations, which are administered by the Financial Surveillance Department of the SARB.
Since 1995 a number of exchange control regulations have been relaxed with regard to both residents and non-residents. Following the initial reforms, ongoing relaxations have been introduced with the aim of achieving a macroprudential risk-based approach to the management of foreign exchange. The reforms are being made to, among other things, enable international firms to make investments through South Africa to the rest of Africa and to further enhance opportunities for offshore portfolio diversification for resident investors.
A considerable degree of flexibility is built into the system of exchange controls, and the SARB possesses substantial discretionary powers in approving or rejecting the applications that fall outside the authority granted to authorized dealers.
These comments relate to exchange controls in force at June 30, 2024. These controls are subject to change at any time(including retrospectively), however, the government has previously announced most changes during the annual budget statement in February. It is not possible to predict whether existing exchange controls will be changed or relaxed by the South African government in the future. Investors are urged to consult a professional adviser as to the exchange control implications of their particular investments.
Government Regulatory Considerations
Shares
A foreign investor may invest freely in shares in a South African company, whether listed on the JSE or not, through normal banking channels against settlement in foreign currency or Rand from a non-resident Rand account. A foreign investor may also sell its share investment in a South African company and transfer the proceeds out of South Africa without restriction. However, when the Company is not listed on the JSE, the supporting confirmation must be provided to the SARB that the sale price of any shares reflects fair market value.
Under present South African exchange control regulations, our ordinary shares and ADSs are freely transferable outside the Common Monetary Area between non-residents of the Common Monetary Area. No prior SARB approval is required for the transfer of proceeds to South Africa, in respect of shares listed on the JSE, provided these funds enter the country through the normal banking channels. In addition, the proceeds from the sale of ordinary shares on the JSE on behalf of those holders of ordinary shares who are not residents of the Common Monetary Area are freely remittable to those holders. Share certificates and warrant certificates held by non-residents will be endorsed with the words “non-resident.”
Generally, the granting of loans to us or our subsidiaries, and our ability to borrow from non-South African sources and the repatriation of dividends, interest and royalties by us are regulated by the Financial Surveillance Department of the SARB. If a foreign investor wishes to lend capital to a South African company, the prior approval of the SARB must be sought mainly in respect of the interest rate and terms of repayment applicable to such loan.
Interest on foreign loans is subject to a withholding tax of 15% and freely remittable abroad, provided that the terms of the loans received prior approval from the SARB. However, this rate may be reduced depending on the applicability of a double taxation treaty.
Investments
We are required to seek approval from the SARB to use funds held in South Africa to make investments outside of South Africa.
Dividends
Dividends declared by a listed company are subject to a withholding tax of 20% and freely transferable out of South Africa from both trading and non-trading profits earned in South Africa through a major bank as agent for the SARB to non-resident shareholders. However, this rate may be reduced depending on the applicability of a double taxation treaty.
Where 75% or more of a South African company’s capital, voting power, power of control or earnings is directly or indirectly controlled by non-residents, such a company is designated an “affected person” by the SARB, and certain restrictions are placed on its ability to obtain local financial assistance. We are not, and have never been, designated an “affected person” by the SARB.
If an affected entity made use of local borrowing facilities, the affected entity must apply for SARB approval prior to remitting dividends offshore. As a general rule, an affected entity that has accumulated historical losses may not declare dividends out of current profits unless and until such time that the affected entity’s local borrowings do not exceed the local borrowing limit.
E. TAXATION
Certain South African Tax Considerations
The summary set out in this section is based on current tax law and our interpretation thereof. Amendments to the tax law may change the tax treatment of acquiring, holding or disposing of our ordinary shares or ADSs, as applicable, which changes may possibly occur on a retrospective basis. The following summary is not a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase, own or dispose of our ordinary shares or ADSs, and does not cover the tax consequences that depend upon your particular tax circumstances. This summary is not intended to constitute tax advice. This summary does not address the foreign tax consequences for persons that are not residents of South Africa and specifically excludes the tax consequences for persons (a) who are not residents of South Africa whose holding of shares or ADSs is effectively connected with a permanent establishment in South Africa through which the holder carries on business activities, or (b) who is not the beneficial recipient of the dividends, or (c) where the source of the transaction or dividends is deemed to be in South Africa. In addition, it does not cover the tax consequences for a holder that is not entitled to the benefits of the double taxation agreement concluded between the Republic of South Africa and the United States of America signed on February 17, 1997 (“US Treaty”). It also assumes that the holders hold the ordinary shares or ADSs on capital account (that is, for investment purposes) as opposed to on revenue account (that is for speculative purposes or as trading stock). The Supreme Court of Appeal in South Africa indicated that gains will be on revenue account if they are derived as part of a business in carrying out a scheme of profit making. We recommend that you consult your own tax adviser concerning the consequences of holding our ordinary shares or ADSs, as applicable, in your particular situation.
Dividends
With effect from April 1, 2012, South Africa introduced a Dividends Tax, which is a withholding tax on dividends effectively borne by the shareholder receiving the dividend. The rate at which Dividends Tax is levied is 20% effective from February 22, 2017 (previously 15%). Dividends Tax is imposed on, amongst others, non-resident shareholders, and it is withheld by the company declaring and paying the dividend to its shareholders or the regulated intermediary, as the case may be, as a withholding agent. Dividends Tax is not payable to the extent that the recipient is, amongst others, a South African resident company that has provided the relevant declaration and undertaking to the company declaring and paying the dividend.
Article 10 of the US Treaty provides that a dividend paid by a company that is a resident of South Africa for tax purposes to a resident of the US for tax purposes may be taxed in the US. Article 10 of the US Treaty further provides that such a dividend may also be taxed in South Africa. However, the tax charged in South Africa may not exceed 5% of the gross amount of the dividends if the beneficial owner is a company that holds directly at least 10% of the voting stock of the South African company paying the dividends. In all other cases, the US Treaty provides for a withholding tax of 15% of the gross amount of the dividends.
It is deemed that an amount will be derived by a person from a source within South Africa if the amount constitutes a dividend received by or accrued to that person. Residents of the US can make use of the lower rate as provided for in the US Treaty if the relevant declaration and undertaking are provided to Harmony or the regulated intermediary beforehand. The declaration and undertaking should be renewed after a five-year period effective from July 1, 2020. No time limitation will be imposed on the validity of the declarations and undertakings if a regulated intermediary applies the Financial Intelligence Centre legislation, the common reporting standard regulations in relation to the declarations or the agreement between the Government of South Africa and the Government of the US to improve International Tax Compliance and to Implement the US Foreign Account Tax Compliance Act.
Capital Gains Tax (“CGT”) was introduced in South Africa with effect from October 1, 2001. In the case of an individual, 40% in respect of years of assessment commencing March 1, 2016 (previously 33.3%) of the capital gain is included in the individual’s taxable income (effectively 18%) should the individual pay tax at the marginal rate of 45% from March 1, 2017. In the case of a corporate entity or trust, 80% in respect of years of assessment commencing March 1, 2016 of such gain is included in its taxable income (effectively a rate of 22.4% previously and currently 21.6% for years of assessments ending on or after March 31, 2023 for a corporate entity and 36% for a trust). The conduit principle that enabled trusts to transfer the tax liability to a beneficiary no longer applies to trusts with foreign beneficiaries and these trusts are taxed in South Africa on the amounts concerned. CGT is only applicable to non-residents if the proceeds from the sale of the shares or ADSs are sourced in South Africa or are attributable to a permanent establishment of the non-resident shareholder. The US Treaty (which will prevail in the event of a conflict) provides that the US holder of ordinary shares or ADSs will not be subject to CGT if the assets have been held as capital assets, unless they are linked to a permanent establishment of such non-resident shareholder in South Africa. To the extent that shares or ADSs are held on revenue account, a similar principle applies with reference to the payment of income tax. Subject to Article 13 of the US Treaty (as indicated below) income tax is only payable to the extent that the gain is attributable to the carrying on of a business in South Africa through a permanent establishment situated in South Africa. The current corporate rate is equal to 27%. This results in the effective CGT rate of a corporate entity being 21.6%. Any gains realized on the disposal of equity shares are automatically deemed to be of a capital nature if the equity shares have been held for a continuous period of at least three years. Such provision applies automatically and is not elective. However, this deeming provision does not include an ADS.
Generally, the domestic laws of South Africa provide that an amount received or accrued in respect of the disposal of an asset that constitutes immovable property held by that person or any interest or right of whatever nature of that person to or in intellectual property where that property is situated in South Africa is deemed to have been sourced in South Africa and be subject to South African tax. It includes the disposal of any equity shares held by a person in a company if:
•80% or more of the market value of the equity shares, ownership or right to ownership or vested interest, as the case may be, at the time of disposal thereof is attributable directly or indirectly to immovable property held otherwise than as trading stock. This requirement will include rights to variable or fixed payments as consideration for the working of, or the right to work mineral deposits, sources and other natural resources in the South Africa; and
•the person directly or indirectly holds at least 20% of the equity shares in the company or ownership or right to ownership of the other entity.
The provisions of the US Treaty override the deemed source rules to the extent applicable. Article 13 of the US Treaty provides that South Africa is entitled to tax a capital gain that is attributable to the alienation of real property situated in South Africa, which concept includes the equivalent of a US real property interest, even if held through means of shares.
Securities Transfer Tax
Securities Transfer Tax (“STT”) is payable in respect of the transfer of any security issued by a South African company. STT is levied at a rate of 0.25% of the taxable amount of the security concerned (generally the market value). A security is defined to include a depository receipt in a company, in addition to shares in a company. STT is not payable on the issue of any security.
Although ADSs in respect of our shares are not listed on the JSE, reference is specifically made in the legislation to the transfer of depository receipts in a South African company. As a consequence, STT will therefore be payable on the transfer of ADSs. In addition, the process of depositing shares listed on the JSE in return for ADSs, or withdrawing such shares from the deposit facility, will attract STT as and when the shares are transferred to or from the depository institution.
STT is payable by the broker or participant if a transaction is effected through a stockbroker or an exchange participant, but it may be recovered from the person acquiring the beneficial ownership of the rights concerned. In other instances, STT is payable by the person acquiring beneficial ownership.
STT is also payable on the subsequent redemption or cancellation of shares or ADSs.
Interest
South Africa has imposed a withholding tax on interest paid by any person to or for the benefit of any foreign person to the extent that the interest is regarded as having been received or accrued from a source within South Africa at the rate of 15% with effect from March 1, 2015. In terms of the US Treaty this rate is reduced to zero. However, the rate may change to 5% or 10% once the US Treaty is renegotiated. US residents can only make use of the lower rate as provided for in the US Treaty if the relevant declaration and undertaking are provided to the company paying the interest. It was recently enacted that the declaration and undertaking should be renewed after a five-year period effective from July 1, 2020. No time limitation will be imposed on the validity of the declarations and undertakings if a regulated intermediary applies the Financial Intelligence Centre legislation, the common reporting standard regulations in relation to the declarations or the agreement between the Government of South Africa and the Government of the US to improve International Tax Compliance and to Implement the US Foreign Account Tax Compliance Act.
In terms of the latest amendments to the income tax laws that are effective from January 1, 2025 interest that is incurred by a holder of debt (lender) on a loan that the lender raised in order to acquire the debt issued by Harmony is only deductible up to the interest accrued in circumstances where the interest is incurred in the income of that person even though that person may not be carrying on a trade.
There is no separate withholding tax on service fees. The monitoring of service fees is now dealt with on the basis that these types of arrangements must be reported to South African Revenue Service ("SARS"). Transactions between residents and non-residents must thus be reported if they relate to consultancy, construction, engineering, installation, logistical, managerial, supervisory, technical or training services, in circumstances where the expenditure exceeds or is anticipated to exceed R10 million in aggregate and does not otherwise qualify as remuneration.
Capitalization Shares
Capitalization shares or bonus shares issued to holders of shares in lieu of cash dividends do not constitute dividends and are currently not subject to Dividends Tax. However, these shares have a base cost of zero for income tax purposes.
Certain Material United States Federal Income Tax Considerations
The following is a discussion of certain material US federal income tax consequences of acquiring, holding and disposing of the ordinary shares (for purposes of this summary, references to the ordinary shares include the ADSs, unless the context otherwise requires).
You will be a “US holder” if you are a beneficial owner of ordinary shares and you are:
•an individual who is a citizen or resident of the United States;
•a corporation (or other entity taxable as a corporation for US federal income tax purposes) organized under the laws of the United States, any state thereof, or the District of Columbia;
•an estate whose income is subject to US federal income tax regardless of its source; or
•a trust if: (i) a US court can exercise primary supervision over the trust’s administration and one or more US persons are authorized to control all substantial decisions of the trust or (ii) it has a valid election in effect under applicable US Treasury regulations to be treated as a US person.
This summary only applies to US holders that hold ordinary shares or ADSs as capital assets. This summary is based on the US Internal Revenue Code of 1986, as amended, (the “Code”), its legislative history, existing and proposed US Treasury regulations, published Internal Revenue Service ("IRS") rulings, the US Treaty and court decisions that are now in effect, any and all of which are subject to differing interpretations and which could be materially and adversely changed. Any such change could apply retroactively and could affect the continued validity of this summary. This summary does not consider the potential effects, both adverse and beneficial, of any proposed legislation which, if enacted, could be applied, possibly on a retroactive basis, at any time.
This summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase the ordinary shares. In particular, this summary deals only with US holders that will hold the ordinary shares as capital assets within the meaning of Section 1221 of the Code. It does not address considerations that may be relevant to you if you are an investor that is subject to special tax rules, such as a bank, real estate investment trust, regulated investment company, insurance company, dealer in securities or currencies, trader in securities or commodities that elects mark-to-market treatment, person that will hold the ordinary shares as a hedge against currency risk or as a position in a “straddle” or conversion transaction, tax-exempt organization, person whose “functional currency” is not the US dollar, person liable for alternative minimum tax, person required to accelerate the recognition of any item of gross income with respect to shares or ADSs as a result of such income being recognized on an applicable financial statement or a person who owns directly, indirectly or by attribution, at least 10% of our stock. This summary also does not address any aspect of US federal non-income tax laws, such as gift or estate tax laws, or state, local, or non-US tax laws, or, except as discussed below, any tax reporting obligations of a holder of our ordinary shares.
If a partnership (including for this purpose any entity treated as a partnership for US federal income tax purposes) is a beneficial owner of the ordinary shares, the US federal income tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. A holder of the ordinary shares that is a partnership and partners in such a partnership should consult their own tax advisors about the US federal income tax consequences of acquiring, holding, and disposing of the ordinary shares.
We believe that we will not be a passive foreign investment company (“PFIC”), for US federal income tax purposes for the current taxable year and do not expect to become a PFIC in the foreseeable future. However, we cannot assure you that we will not be considered a PFIC in the current or future years. If Harmony were to be treated as a PFIC, US holders of ordinary shares or ADSs would be required (i) to pay a special US addition to tax on certain distributions and gains on sale and (ii) to pay tax on any gain from the sale of ordinary shares or ADSs at ordinary income (rather than capital gains) rates in addition to paying the special addition to tax on this gain. Such holder may also be required to file IRS Form 8621. Additionally, dividends paid by Harmony would not be eligible for the reduced rate of tax described below under "- Taxation of Dividends". The remainder of this discussion assumes that Harmony is not a PFIC for US federal income tax purposes. You should consult your own tax advisers regarding the potential application of the PFIC regime.
Each prospective purchaser should consult his or her tax advisor with respect to the US federal, state, local and non-US tax consequences of acquiring, owning, or disposing of shares or ADSs.
For US federal income tax purposes, a US holder of ADSs generally will be treated as the owner of the corresponding number of underlying ordinary shares held by The Bank of New York Mellon as depositary ("Depositary") for the ADSs, and references to ordinary shares in the following discussion refer also to ADSs representing the ordinary shares.
Deposits and withdrawals of ordinary shares by US holders in exchange for ADSs will in general not result in the realization of gain or loss for US federal income tax purposes. Your tax basis in withdrawn ordinary shares will be the same as your tax basis in the ADSs surrendered, and your holding period for the ordinary shares will include the holding period of the ADSs.
Taxation of Dividends
Distributions paid out of Harmony’s current or accumulated earnings and profits (as determined for US federal income tax purposes), before reduction for any South African withholding tax paid by Harmony with respect thereto, will generally be taxable to you as dividend income, and will not be eligible for the dividends received deduction allowed to corporations. Distributions that exceed Harmony’s current and accumulated earnings and profits will be treated as a non-taxable return of capital to the extent of your basis in the ordinary shares and thereafter as capital gain. However, we do not maintain calculations of our earnings and profits in accordance with US federal income tax accounting principles. You should therefore assume that any distribution by us with respect to the shares will be reported as ordinary dividend income. You should consult your own tax advisers with respect to the appropriate US federal income tax treatment of any distribution received from us.
Dividends paid by Harmony generally will be taxable to non-corporate US holders at the reduced rate normally applicable to long-term capital gains, provided that either (i) Harmony qualifies for the benefits of the US Treaty, or (ii) with respect to dividends paid on the ADSs, the ADSs are considered to be "readily tradable" on the NYSE, and certain other conditions are met. You will be eligible for this reduced rate only if you are an individual, and have held the ordinary shares or ADSs for more than 60 days during the 121 day period beginning 60 days before the ex-dividend date.
For US federal income tax purposes, the amount of any dividend paid in Rand will be included in income in a US dollar amount calculated by reference to the exchange rate in effect on the date the dividends are received by you or the Depositary (in the case of ADSs), regardless of whether they are converted into US dollars at that time. If you or the Depositary, as the case may be, convert dividends received in Rand into US dollars on the day they are received, you generally will not be required to recognize foreign currency gain or loss in respect of this dividend income.
Effect of South African Withholding Taxes
As discussed above in "- Taxation - Certain South African Tax Considerations - Dividends", under current law, South Africa imposes a withholding tax of 20% on dividends paid by Harmony. A US holder will generally be entitled, subject to certain limitations, to a foreign tax credit against its US federal income tax liability, or a deduction in computing its US federal taxable income, for South African income taxes withheld by Harmony (at a rate not exceeding any applicable Treaty rate). The rules governing foreign tax credits are complex and recently issued final US Treasury Regulations (“Final FTC Regulations”) have imposed additional requirements that must be met for a foreign tax to be creditable and Harmony does not intend to determine whether such requirements will be met in the case that non-US taxes are withheld (if any). However, recent notices from the IRS (the “Notices”) indicate that the US Treasury and the IRS are considering proposing amendments to the Final FTC Regulations and allow taxpayers, subject to certain conditions, to defer the application of many aspects of the Final FTC Regulations until the date when a notice or other guidance withdrawing or modifying this temporary relief is issued (or any later date specified in such notice or other guidance).
US holders that receive payments subject to South African withholding tax will be treated, for US federal income tax purposes, as having received the amount of South African taxes withheld by Harmony, and as then having paid over the withheld taxes to the South African taxing authorities. As a result of this rule, the amount of dividend income included in gross income for US federal income tax purposes by a US holder with respect to a payment of dividends may be greater than the amount of cash actually received (or receivable) by the US holder from Harmony with respect to the payment.
The rules governing foreign tax credits are complex. You should consult your tax adviser concerning the foreign tax credit implications of the payment of South African withholding taxes.
Taxation of a Sale or other Disposition
Upon a sale or other disposition of ordinary shares or ADSs, other than an exchange of ADSs for ordinary shares and vice versa, you will generally recognize US source capital gain or loss for US federal income tax purposes equal to the difference between the amount realized and your adjusted tax basis in the ordinary shares or ADSs. Your tax basis in an ordinary share or ADS will generally be its US dollar cost. This capital gain or loss will be long-term capital gain or loss if your holding period in the ordinary shares or ADSs exceeds one year. However, regardless of your actual holding period, any loss may be treated as long-term capital loss to the extent you receive a dividend that qualifies for the reduced rate described above under " - Taxation of Dividends" and also exceeds 10% of your basis in the ordinary shares. The deductibility of capital losses is subject to significant limitations.
Foreign currency received on the sale or other disposition of an ordinary share will have a tax basis equal to its US dollar value on the settlement date. Foreign currency that is purchased will generally have a tax basis equal to the US dollar value of the foreign currency on the date of purchase. Any gain or loss recognized on a sale or other disposition of a foreign currency (including its use to purchase ordinary shares or upon exchange for US dollars) will be US source ordinary income or loss.
To the extent you incur STT in connection with a transfer or withdrawal of ordinary shares as described under "- Certain South African Tax Considerations - Securities Transfer Tax" above, such securities transfer tax will not be a creditable tax for US foreign tax credit purposes.
Information with Respect to Foreign Financial Assets
US holders of “specified foreign financial assets” with an aggregate value in excess of US$50,000 at the end of the taxable year, or US$75,000 at any time during the taxable year, are generally required to file an information report with respect to such assets with their tax returns. “Specified foreign financial assets” may include financial accounts maintained by foreign financial institutions, as well as the following, but only if they are not held in accounts maintained by financial institutions: (i) stocks and securities issued by non-United States persons, (ii) financial instruments and contracts held for investment that have non-United States issuers or counter parties and (iii) interests in foreign entities. US holders are urged to consult their tax advisors regarding the application of this reporting requirement to their ownership of the ordinary shares.
US Information Reporting and Backup Withholding Rules
Payments of dividends and other proceeds with respect to ordinary shares or ADSs by US persons will be reported to you and to the IRS as may be required under applicable regulations. Backup withholding may apply to these payments if you fail to provide an accurate taxpayer identification number or certification of exempt status or fail to comply with applicable certification requirements. Some holders are not subject to backup withholding. You should consult your tax adviser as to your qualification for an exemption from backup withholding and the procedure for obtaining an exemption.
F. DIVIDENDS AND PAYING AGENTS
Not applicable.
G. STATEMENT BY EXPERTS
Not applicable.
H. DOCUMENTS ON DISPLAY
Our current Memorandum of Incorporation may be examined at our principal place of business at: Randfontein Office Park, Corner of Main Reef Road and Ward Avenue, Randfontein, 1759, South Africa.
We file annual reports on Form 20-F with, and furnish periodic reports on Form 6-K to, the SEC. You can obtain access to the documents filed via the Electronic Data Gathering, Analysis, and Retrieval (EDGAR) system on the SEC’s website (http://www.sec.gov).
This Harmony 2024 Form 20-F reports information primarily regarding Harmony’s business, operations and financial information relating to the fiscal year ended June 30, 2024. For more recent updates regarding Harmony, you may inspect any reports, statements or other information that Harmony files with the SEC.
No material referred to in this annual report as being available on our website is incorporated by reference into, or forms any part of, this annual report. References herein to our website shall not be deemed to cause such incorporation.
I. SUBSIDIARY INFORMATION
Not applicable.
ITEM 11 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The information set forth under the heading “Cautionary statement about forward-looking statements” on the inside front cover is incorporated herein by reference.
General
We are exposed to market risks, including credit risk, foreign currency risk, commodity price risk and interest rate risk associated with underlying assets, liabilities and anticipated transactions. Following periodic evaluation of these exposures, we may enter into derivative financial instruments to manage these exposures. We have policies in areas such as counterparty exposure and hedging practices, which have been approved by our audit and risk committee. We do not hold or issue derivative financial instruments for trading or speculative purposes.
We did not apply hedge accounting to incidental hedges held in the past.
In accordance with IFRS 9 - Financial Instruments, we account for our derivative financial instruments as hedging transactions if the following criteria are met:
•in the case of a hedge of an anticipated future transaction, there is a high probability that the transaction will occur, and
•in the case of a cash flow hedge, the hedging instrument is expected to be highly effective.
During fiscal 2024 and 2023, we designated all of the gold forward sales as well as (from April 2024) gold zero cost collar contracts as cash flow hedging instruments and applied hedge accounting to these transactions. See "- Commodity Price Sensitivity" below.
Foreign Currency Sensitivity
In the ordinary course of business, we enter into transactions denominated in foreign currencies (primarily US dollars, Australian dollars and PNG Kina). In addition, we incur investments and liabilities in US dollars, Australian dollars and PNG Kina from time to time. As a result, we are subject to transaction and translation exposure from fluctuations in foreign currency exchange rates.
Harmony enters into foreign exchange hedging contracts to manage these risks. This can take the form of zero cost collars, which establish a minimum (floor) and maximum (cap) Rand/US dollar exchange rate at which to convert the US dollars we
receive on our gold sales to Rand or outright forward contracts that fix the forward exchange rate. At June 30, 2024, the nominal amount of the zero cost collars is US$390 million spread over a 24-month period with a weighted average cap price of US$1=R20.93 and weighted average floor price of US$1=R18.93. Additionally, at June 30, 2024 Harmony had open foreign exchange forward contracts which had a nominal amount of US$187 million spread over a 24-month period at an average exchange rate of US$1=R19.79.
Commodity Price Sensitivity
General
Our revenue is sensitive to the spot price of gold as newly mined gold production is typically sold at the ruling market price of gold, and in the case of Hidden Valley, silver as well. During fiscal 2024 and 2023, Harmony entered into forward sales to establish the sales price in advance of its future gold production. During April 2024 Harmony introduced gold collar hedging contracts to its derivative programme to hedge the risk of lower gold prices and a new limit for gold hedging was approved by the Board as 30%, 20% and 10% of production in a 12-, 24- and 36-month period, respectively, for contracts going forward.
The market price of gold has a significant effect on our results of operations, our ability to pay dividends and undertake capital expenditures, and the market price of our ordinary shares.
Gold prices have historically fluctuated widely and are affected by numerous industry factors over which we do not have any control. See Item 3: “Key Information - Risk Factors - Strategic and Market Risks - The profitability of our operations, and cash flows generated by those operations, are affected by changes in the price of gold and other metals; a fall in the gold price below our cash cost of production and capital expenditure required to sustain production for any sustained period may lead to losses and require us to curtail or suspend certain operations”. The aggregate effect of these factors, all of which are beyond our control, is impossible for us to predict.
Harmony’s Hedging Policy
As a general rule, we sell our gold production at market prices. However, commencing in fiscal 2017, Harmony started entering into derivative contracts to manage the variability in cash flows from the Group’s production, in order to create cash certainty and protect the Group against lower commodity prices. See Item 5: “Operating and Financial Review and Prospects - Operating Results - Revenue".
Commodity Sales Agreements
At June 30, 2024, the open Rand gold forward sale contracts amounted to 638,000 ounces spread over 36 months at an average of R1,373,000/kg. The open US$ gold forward contracts amounted to 75,000 ounces spread over 36 months at an average of US$2,273/oz. The open Rand gold zero cost collar contracts amounted to 170,000 ounces at a weighted average floor of R1,524,000/kg and a weighted average cap of R1,722,000/kg spread over 36 months. The open US$ gold zero cost collar contracts amounted to 31,000 ounces spread over 36 months at a weighted average floor of US$ 2,447/oz and a weighted average cap of US$ 2,721/oz.
The open US$ silver zero cost collars amounted to 2,230,000 ounces spread over 24 months at a weighted average floor of US$27.22/oz and a weighted average cap of US$30.20/oz.
At June 30, 2023, the open Rand gold forward sale contracts amounted to 552,000 ounces spread over 24 months at an average of R1,181,000/kg. The open US$ gold forward contracts amounted to 55,000 ounces spread over 24 months at an average of US$2,043/oz. The open US$ silver zero cost collars amounted to 1540,000 ounces spread over 24 months with a weighted average floor of US$24.62/oz and a weighted average cap of US$27.50/oz.
Interest Rate Sensitivity
Our interest rate risk arises mainly from long-term borrowings. We have variable interest rate borrowings. Variable rate borrowings expose us to cash flow interest rate risk. Interest rate risk arising from long-term borrowings is offset by cash, restricted cash and restricted investments held at variable rates.
The sensitivity analysis was performed based on 50 basis points for all Rand denominated financial assets and 15 basis points for US$ denominated borrowings in fiscal 2023 as an indicator of the potential impact of interest rate changes to the Group. Management has reassessed this during fiscal 2024 to ensure that it is still a reasonable estimation of possible changes. In fiscal 2024, the analysis was performed on a sensitivity of 53 basis points for US$ denominated borrowings and 41 basis points for Rand denominated financial assets. The analysis assumes that all other variables remain constant.
Sensitivity analysis-borrowings
Fiscal year ended June 30,
2024
2023
(R in millions)
US$ denominated borrowings
Increase in 53 basis points (2023:15 basis points)
(10)
(9)
Decrease in 53 basis points (2023:15 basis points)
Increase in 41 basis points (2023:50 basis points)
38
34
Decrease in 41 basis points (2023:50 basis points)
(38)
(34)
For further information on sensitivities, see note 37 “Financial Risk Management” to our consolidated financial statements set forth beginning on page F-1.
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
A. DEBT SECURITIES
Not applicable.
B. WARRANTS AND RIGHTS
Not applicable.
C. OTHER SECURITIES
Not applicable.
D. AMERICAN DEPOSITARY SHARES
On October 7, 2011, Harmony appointed Deutsche Bank Trust Company Americas in place of The Bank of New York Mellon as its Depositary for the ADSs evidenced by American Depositary Receipts (“ADRs"). A copy of our form of amended and restated deposit agreement (the “Deposit Agreement”) among the Depositary, owners and beneficial owners of ADSs and Harmony was filed with the SEC as an exhibit to our Form F-6 filed on August 15, 2024.
The Depositary collects fees for delivery and surrender of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. In addition, the Depositary collects an annual fee, or Depositary Service Fee for the operation and maintenance costs in administering the ADSs. The Depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of the distributable property to pay the fees.
The principal terms regarding fees and charges that an ADS holder might have to pay, as well as any fee and other payments made by the Depositary to us as part of the Deposit Agreement, are summarized below:
Fees and Expenses
Persons depositing shares or withdrawing shares holders must pay:
For:
$5.00 (or less) per 100 ADSs (or portion of 100 ADSs)
•The execution and delivery of ADSs
•The surrender of ADSs
$0.02 (or less) per ADS
•Any cash distributions
$0.02 (or less) per ADS
•Annual Depositary Service Fee for the operation and maintenance costs in administering the ADSs
•$0.01 currently being administered as a fee
A fee equivalent to the fee that would be payable if securities distributed to you had been shares and the shares had been deposited for issuance of ADSs
•Distribution of securities distributed to holders of deposited securities which are distributed by the Depositary to ADS holders
Registration or transfer fees
•Transfer and registration of equity shares on our share register to or from the name of the Depositary or its agent when you deposit or withdraw shares
•
Expenses of the Depositary
•Cable, telex and facsimile transmissions (when expressly provided in the Deposit Agreement)
•Converting foreign currency
Taxes and other governmental charges the Depositary or the custodian have to pay on any ADS or share underlying an ADS, for example, stock transfer taxes, stamp duty or withholding taxes
•As necessary
Any charges incurred by the Depositary or its agents for servicing the deposited securities
In addition, ADS holders must pay any tax or other governmental charge payable by the Depositary or its custodian on any ADS, deposited security or distribution. If an ADS holder owes any tax or other governmental charge, the Depositary may:
•refuse to effect any transfer of such ADSs or any withdrawal of ADSs;
•withhold any dividends or other distributions; or
•sell part or all of the ADSs evidenced by such ADS,
and may apply dividends or other distributions or the proceeds of any sale in payment of the outstanding tax or other governmental charge. The ADS holder remains liable for any shortfall.
Fees and payments made by the Depositary
The Depositary has agreed to reimburse Harmony for expenses Harmony incurs that are related to the maintenance expenses of our ADR facility. The Depositary has agreed to pay the standard out-of-pocket maintenance costs for the ADRs, which consist of the expenses of printing and distributing dividend checks, electronic filing of US federal tax information, mailing required tax forms, stationery, postage, facsimile, and telephone calls. The amount of reimbursement available to Harmony is not necessarily tied to the amount of fees the Depositary collects from investors.
During the fiscal year ended June 30, 2024, Harmony received net direct and indirect payments of R14,160,762 from the Depositary.
PART II
ITEM 13 DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.
ITEM 14 MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
Not applicable.
ITEM 15 CONTROLS AND PROCEDURES
A. DISCLOSURE CONTROLS AND PROCEDURES
As of June 30, 2024, Harmony's management, with the participation of our Chief Executive Officer (“CEO”) and Financial Director (“FD”), carried out an evaluation, pursuant to Rule 13a-15 promulgated under the Exchange Act of the effectiveness of our “disclosure controls and procedures” (as defined in Rule 13a-15(e) under the Exchange Act). Based on the foregoing, our management, including the CEO and FD, concluded that our disclosure controls and procedures were effective as of June 30, 2024.
B. MANAGEMENT’S ANNUAL REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Harmony's management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) and 15d-15(f) under the Exchange Act. Under Section 404 of the Sarbanes-Oxley Act of 2002 (the "Sarbanes-Oxley Act"), management is required to assess the effectiveness of our internal control over financial reporting as of the end of each financial year and report, based on that assessment, whether Harmony's internal control over financial reporting is effective.
Harmony's internal control over financial reporting is a process designed under the supervision of the CEO and FD to provide reasonable assurance regarding the reliability of our financial reporting and the preparation of financial statements for external purposes in accordance with IFRS issued by the IASB.
Harmony’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Harmony's internal control over financial reporting as of June 30, 2024. In making this assessment, management used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission in "Internal Control – Integrated Framework (2013)". Based on this assessment, our management has determined that, as of June 30, 2024, Harmony's internal control over financial reporting was effective.
Ernst & Young Inc. ("EY"), an independent registered public accounting firm, which has audited the consolidated financial statements included in this Annual Report, has issued an attestation report on the effectiveness of Harmony’s internal control over financial reporting as of June 30, 2024.
C. ATTESTATION REPORT OF THE REGISTERED PUBLIC ACCOUNTING FIRM
See the report of Ernst & Young Inc., an independent registered public accounting firm, which is included on page F-2 of exhibit 99.1. The consolidated financial statements, together with the report of Ernst & Young Inc., are incorporated by reference to exhibit 99.1 and shall be deemed filed as part of the Harmony 2024 Form 20-F. Also see the report of PricewaterhouseCoopers Inc. ("PwC"), being the predecessor registered public accounting firm, which is included on page F-5 of exhibit 99.1. The report of PwC is for the comparative information in the consolidated financial statements, being the two financial years in the two-year period ended 30 June 2023, and is incorporated by reference in exhibit 99.1 and shall be deemed filed as part of Harmony 2024 Form 20-F.
D. CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING
There has been no change in Harmony’s internal control over financial reporting that occurred during fiscal 2024 that has materially affected or is reasonably likely to materially affect, Harmony’s internal control over financial reporting.
ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Mr. John Wetton, independent non-executive chairman of the audit and risk committee, is regarded as being the Company’s “audit committee financial expert” as defined by the rules of the SEC.
In addition, the audit and risk committee members through their collective experience meet a majority of the definitions of the SEC for an “audit committee financial expert” in both the private and public sectors. The members have served as directors and officers of numerous public companies and have over the years developed a strong knowledge and understanding of IFRS, overseeing the preparation, audit and evaluation of financial statements. We believe that the combined knowledge, skills and experience of the audit and risk committee, and their authority to engage outside experts as they deem appropriate to provide them with advice on matters related to their responsibilities, enable them, as a group and under the guidance of Mr. Wetton, to act effectively in the fulfillment of their tasks and responsibilities required under the Sarbanes-Oxley Act.
ITEM 16B. CODE OF ETHICS
The information set forth under the heading:
•“- Governance – Corporate governance” on pages 212 to 223 of the Integrated Annual Report for the 20-F 2024 is incorporated herein by reference.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
PwC resigned as independent principal accountant of the Group on conclusion of its responsibilities relating to the June 30, 2023 financial year audit. This after having served as Harmony’s independent principal accountant for each of the two financial years in the two-year period ended 30 June 2023, for each of which audited financial statements appear in this annual report on Form 20-F. EY was appointed as the Company’s independent principal accountant for the financial year ending June 30, 2024. See Item 16F: Change in registrant's certifying accountant.
A. AUDIT FEES
The following sets forth the aggregate fees billed for each of the last two fiscal years for professional fees to our principal accountants for the audit of the annual financial statements or for services normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
Fiscal year ended June 30, 2023
Rand
51 million
Fiscal year ended June 30, 2024
Rand
55 million
B. AUDIT-RELATED FEES
The following sets forth additional aggregate fees to those reported under “Audit Fees” in each of the last two fiscal years that were provided by the principal accountant that are reasonably related to the performance of the audit or review of the financial statements:
Fiscal year ended June 30, 2023
Rand
7 million
Fiscal year ended June 30, 2024
Rand
8 million
Fees related to interim reviews.
C. TAX FEES
The following sets forth the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning:
The following sets forth the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant not described above:
Fiscal year ended June 30, 2023
Rand
—
Fiscal year ended June 30, 2024
Rand
—
E. AUDIT AND RISK COMMITTEE PRE-APPROVAL POLICIES AND PROCEDURES
Our audit and risk committee pre-approves our engagement of the independent principal accountant to render audit or non-audit services in terms of its non-audit services policy. All of the services described above were approved in terms of the Company’s delegation of authority framework and the audit and risk committee’s policy on non-audit services.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
ITEM 16E. PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
None.
ITEM 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
On June 27, 2022, EY was appointed by the Harmony Gold Mining Company Limited’s Board of Directors as the Company’s independent principal accountant for the financial year ending June 30, 2024 after a formal tender process to appoint a new independent registered public accounting firm. The appointment of EY was approved by Harmony’s shareholders at the AGM on November 29, 2022. During the fiscal years ended June 30, 2023 and 2022 and the subsequent interim period through October 31, 2023, Harmony did not consult with EY regarding any of the matters described in Item 16F(a)(2)(i) or Item 16F(a)(2)(ii) of Form 20-F.
PwC resigned as independent principal accountant of the Group on conclusion of its responsibilities relating to the June 30, 2023 financial year audit, which was concluded during December 2023. The reports of PwC on the Company’s consolidated financial statements for the June 30, 2023 fiscal year did not contain an adverse opinion or a disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope, or accounting principles. In connection with the audits of the Company’s financial statements for the fiscal year ended June 30, 2023, there were (i) no disagreements with PwC, as that term is used in Item 16F(a)(1)(iv) of Form 20-F over any matters of accounting principles or practices, financial statement disclosure, or auditing scope or procedures, which, if not resolved to the satisfaction of PwC, would have caused PwC to make reference to the matter in their report and (ii) there were no “reportable events” as defined in Item 16F(a)(1)(v) of Form 20-F.
Harmony provided PwC with a copy of the foregoing disclosure and requested PwC to provide it with a letter addressed to the SEC stating whether or not PwC agreed with the above statements. A copy of such letter, dated October 31, 2023, in which PwC state they agree with such disclosure filed as Exhibit 15.2 to our annual report on Form 20-F for the year ended June 30, 2023, filed with the SEC on October 31, 2023 and is incorporated here by reference.
ITEM 16G. CORPORATE GOVERNANCE
Significant ways in which Harmony’s corporate governance practices differ from practices followed by US domestic companies under the listing standards of the NYSE
Foreign private issuers, such as Harmony, must briefly highlight any significant ways in which their corporate governance practices differ from those followed by US domestic companies subject to the listing standards of the NYSE. Set out below is a brief summary of the significant differences.
US domestic companies are required to have a nominating/corporate governance committee and all members of this committee must be non-executive directors. The JSE Listing Requirements also require the appointment of such a committee, and stipulate that all members of this committee must be non-executive directors, the majority of whom must be independent. Harmony has a nomination committee comprised of four non-executive board members, three of whom are independent. The lead independent non-executive director serves as chairman of the nomination committee. For US domestic companies, all members of this committee are required to be independent. The current chairman of our board of directors, Dr Patrice Motsepe, is a member of the nomination committee and is also chairman of one of Harmony’s largest shareholders, African Rainbow Minerals Limited, and is thus not independent. He is, however, in terms of South African governance practices, permitted to be a member of the nomination committee.
US domestic companies are required to have a compensation committee composed entirely of independent directors. Harmony has appointed a remuneration committee, comprised of three independent non-executive board members.
The non-executive directors of US domestic companies must meet at regularly scheduled executive sessions without management. Although the JSE Listing Requirements do not require such meetings, the board meets without executives after each board meeting. The board also has unrestricted access to all company information, records, documents and property. Directors may, if necessary, take independent professional advice at the Company’s expense and non-executive directors have access to management and may meet separately with management, without the attendance of executive directors.
US domestic companies are required to have an audit committee composed entirely of independent directors. The Companies Act requires that the members of the audit committee be approved by shareholders on an annual basis at a company’s annual general meeting. Both the Companies Act and the JSE Listings Requirements require that the audit committee be composed entirely of independent directors. Harmony has appointed an audit and risk committee, currently comprising five non-executive directors, all of whom are independent, as defined under the Companies Act, the JSE Listings Requirements and the listing standards of the NYSE.
The listing standards of the NYSE generally require shareholder approval for the adoption of, or any material revisions to, equity compensation plans. However, under the listing standards of the NYSE, Harmony is permitted to follow home country practice in lieu of such requirements and has elected to do so.
The Companies Act and the JSE Listings Requirements require the appointment of a Social and Ethics Committee. Harmony has appointed a Social Ethics and Sustainability Committee, currently comprised of four independent non-executive directors. There is no such requirement under the listing standards of the NYSE.
ITEM 16H. MINE SAFETY DISCLOSURE
Not applicable.
GLOSSARY OF MINING TERMS
The following explanations are not intended as technical definitions, but rather are intended to assist the general reader in understanding certain terms as used in this annual report.
Alluvial: the product of sedimentary processes in rivers, resulting in the deposition of alluvium (soil deposited by a river).
All-in sustaining costs: all-in sustaining costs include mine production costs, transport and refinery costs, applicable general and administrative costs, costs associated with movements in production inventories, ore stockpiles, as well as ongoing environmental rehabilitation costs as well as transfers for stripping activities and costs associated with royalties. Employee termination costs are included, however employee termination costs associated with major restructuring and shaft closures are excluded. The following costs are also included: LED expenditure for continuing operations, share-based payments for continuing operations, corporate costs, sustaining exploration costs and sustaining capital expenditure including OCD expenditure and rehabilitation accretion and amortization for continuing operations. Depreciation costs are excluded. All-in sustaining costs per ounce and per kilogram are attributable all-in sustaining costs divided by attributable ounces or kilograms of gold sold.
Auriferous: a substance that contains gold (Au).
Beneficiation: the process of adding value to gold products by transforming gold bullion into fabricated gold products.
By-products: Any products emanating from the core process of producing gold, including silver and uranium in South Africa and copper, silver and molybdenum in Papua New Guinea.
Carbon in leach (CIL): Gold is leached from a slurry of gold ore with cyanide in agitated tanks and adsorbed on to carbon granules in the same circuit. Granules are separated from the slurry and treated to remove the gold.
Carbon in pulp (CIP): Gold is leached conventionally from a slurry of gold ore with cyanide in agitated tanks. The leached slurry passes into the CIP circuit where carbon granules are mixed with the slurry and gold is absorbed onto the carbon. Granules are separated from the slurry and treated to remove gold.
Carbon in solution (CIS): a process similar to CIP except that the gold, which has been leached by the cyanide into solution, is separated by the process of filtration (solid/liquid separation). The solution is then pumped through six stages where the solution comes into contact with the activated carbon granules.
Cash costs: total cash costs include site costs for all mining, processing and administration, reduced by contributions from by-products and include royalties and production taxes. Depreciation, rehabilitation, corporate administration, retrenchment, capital and exploration costs are excluded. Total cash costs per ounce and per kilogram are attributable total cash costs divided by attributable ounces or kilogram of gold produced.
Conglomerate: a coarse-grained classic sedimentary rock, composed of rounded to sub-angular fragments larger than 2mm in diameter (granules, pebbles, cobbles, boulders) set in a fine-grained matrix of sand or silt, and commonly cemented by calcium carbonate, iron oxide, silica or hardened clay.
Cut-off grade: the grade (i.e. the concentration of metal or mineral in rock) that determines the destination of the material during mining. For purposes of establishing “prospects of economic extraction,” the cut-off grade is the grade that distinguishes material deemed to have no economic value (it will not be mined in underground mining or if mined in surface mining, its destination will be the waste dump) from material deemed to have economic value (its ultimate destination during mining will be a processing facility). Other terms used in similar fashion as cut-off grade include net smelter return, pay limit, and break-even stripping ratio.
Decline: an inclined underground access way.
Depletion: the decrease in quantity of ore in a deposit or property resulting from extraction or production.
Development: process of accessing an orebody through shafts or tunneling in underground mining.
Dilution: unmineralized rock that is by necessity, removed along with ore during the mining process that effectively lowers the overall grade of the ore.
Economically viable: when used in the context of Mineral Reserve determination, means that the qualified person has determined, using a discounted cash flow analysis, or has otherwise analytically determined, that extraction of the Mineral Reserve is economically viable under reasonable investment and market assumptions.
Electro-winning: the process of removing gold from solution by the action of electric currents.
Elution: removal of the gold from the activated carbon before the zinc precipitation stage.
Exploration: activities associated with ascertaining the existence, location, extent or quality of mineralized material, including economic and technical evaluations of mineralized material.
Fabricated gold: gold on which work has been performed to turn it into a product, such as jewelry, which differs from a pure investment product, such as a gold bullion bar.
Footwall: the underlying side of a fault, orebody or stope.
Forward sale: the sale of a commodity for delivery at a specified future date and price.
Gold reserves: the gold contained within proven and probable reserves on the basis of recoverable material (reported as mill delivered tons and head grade).
Gold produced: refined gold derived from the mining process, measure in ounces or kilograms in saleable form.
Grade: quantity of gold contained in a unit weight of gold-bearing material, generally expressed in ounces per short ton of ore or in kilograms per metric tonne.
Greenfield: a potential mining site of unknown quality.
Head grade: the grade of the ore as delivered to the metallurgical plant.
Indicated Mineral Resource: that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of adequate geological evidence and sampling. The level of geological certainty associated with an Indicated Mineral Resource is sufficient to allow a qualified person to apply modifying factors in sufficient detail to support mine planning and evaluation of the economic viability of the deposit. Because an Indicated Mineral Resource has a lower level of confidence than the level of confidence of a Measured Mineral Resource, an Indicated Mineral Resource may only be converted to a probable Mineral Reserve.
Inferred Mineral Resource: that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of limited geological evidence and sampling. The level of geological uncertainty associated with an Inferred Mineral Resource is too high to apply relevant technical and economic factors likely to influence the prospects of economic extraction in a manner useful for evaluation of economic viability. Because an Inferred Mineral Resource has the lowest level of geological confidence of all Mineral Resources, which prevents the application of the modifying factors in a manner useful for evaluation of economic viability, an Inferred Mineral Resource may not be considered when assessing the economic viability of a mining project and may not be converted to a Mineral Reserve.
Leaching: dissolution of gold from crushed or milled material, including reclaimed slime, prior to absorption on to activated carbon.
Level: the workings or tunnels of an underground mine that are on the same horizontal plane.
Measured Mineral Resource: that part of a Mineral Resource for which quantity and grade or quality are estimated on the basis of conclusive geological evidence and sampling. The level of geological certainty associated with a Measured Mineral Resource is sufficient to allow a qualified person to apply modifying factors, as defined in this section, in sufficient detail to support detailed mine planning and final evaluation of the economic viability of the deposit. Because a Measured Mineral Resource has a higher level of confidence than the level of confidence of either an Indicated Mineral Resource or an Inferred Mineral Resource, a Measured Mineral Resource may be converted to a Proven Mineral Reserve or to a Probable Mineral Reserve.
Measures: conversion factors from metric units to US units are provided below.
Metric unit
US equivalent
1 tonne
= 1 t
= 1.10231 short tons
1 gram
= 1 g
= 0.03215 ounces
1 gram per tonne
= 1 g/t
= 0.02917 ounces per short ton
1 kilogram per tonne
= 1 kg/t
= 29.16642 ounces per short ton
1 kilometer
= 1 km
= 0.621371 miles
1 meter
= 1 m
= 3.28084 feet
1 centimeter
= 1 cm
= 0.3937 inches
1 millimeter
= 1 mm
= 0.03937 inches
1 hectare
= 1 ha
= 2.47105 acres
Metallurgical plant: a processing plant used to treat ore and extract the contained gold.
Mill delivered tons: a quantity, expressed in tons, of ore delivered to the metallurgical plant.
Milling/mill: the comminution of the ore, although the term has come to cover the broad range of machinery inside the treatment plant where the gold is separated from the ore.
Mine Call Factor:the ratio, expressed as a percentage, of the total quantity of recovered and unrecovered mineral product after processing with the amount estimated in the ore based on sampling.
Mineralization: the presence of a target mineral in a mass of host rock.
Mineralized material: a mineralized body that has been delineated by appropriately spaced drilling and/or underground sampling to support a sufficient tonnage and average grade of metals to warrant further exploration. Such a deposit does not qualify as a reserve until a comprehensive evaluation based upon unit cost, grade, recoveries, and other material factors conclude legal and economic feasibility.
Mineral Reserves: an estimate of tonnage and grade or quality of Indicated and Measured Mineral Resources that, in the opinion of the qualified person, can be the basis of an economically viable project. More specifically, it is the economically mineable part of a Measured or Indicated Mineral Resource, which includes diluting materials and allowances for losses that may occur when the material is mined or extracted.
Mineral Resource: a concentration or occurrence of material of economic interest in or on the Earth’s crust in such form, grade or quality, and quantity that there are reasonable prospects for economic extraction. A Mineral Resource is a reasonable estimate of mineralization, taking into account relevant factors such as cut-off grade, likely mining dimensions, location or continuity, that, with the assumed and justifiable technical and economic conditions, is likely to, in whole or in part, become economically extractable. It is not merely an inventory of all mineralization drilled or sampled.
Modifying factors: the factors that a qualified person must apply to Indicated and Measured Mineral Resources and then evaluate in order to establish the economic viability of Mineral Reserves. A qualified person must apply and evaluate modifying factors to convert Measured and Indicated Mineral Resources to Proven and Probable Mineral Reserves. These factors include but are not restricted to: mining; processing; metallurgical; infrastructure; economic; marketing; legal; environmental compliance; plans, negotiations, or agreements with local individuals or groups; and governmental factors. The number, type and specific characteristics of the modifying factors applied will necessarily be a function of and depend upon the mineral, mine, property, or project.
Open-pit/Opencast/Open cut: mining in which the ore is extracted from a pit. The geometry of the pit may vary with the characteristics of the orebody.
Ore: a mixture of mineralized material from which at least one of the contained minerals can be mined and processed at an economic profit.
Ore grade: the average amount of gold contained in a ton of gold bearing ore expressed in ounces per ton or grams per tonne.
Orebody: a well-defined mass of mineralized material of sufficient mineral content to make extraction economically viable.
Ounce: one Troy ounce, which equals 31.1035 grams.
Overburden: the soil and rock that must be removed in order to expose an ore deposit.
Placer: a sedimentary deposit containing economic quantities of valuable minerals mainly formed in alluvial environments.
Pre-feasibility study: a comprehensive study of a range of options for the technical and economic viability of a mineral project that has advanced to a stage where a qualified person has determined (in the case of underground mining) a preferred mining method, or (in the case of surface mining) a pit configuration, and in all cases has determined an effective method of mineral processing and an effective plan to sell the product. A pre-feasibility study includes a financial analysis based on reasonable assumptions, based on appropriate testing, about the modifying factors and the evaluation of any other relevant factors that are sufficient for a qualified person to determine if all or part of the Indicated and Measured Mineral Resources may be converted to Mineral Reserves at the time of reporting. The financial analysis must have the level of detail necessary to demonstrate, at the time of reporting, that extraction is economically viable. A pre-feasibility study is less comprehensive and results in a lower confidence level than a feasibility study. A pre-feasibility study is more comprehensive and results in a higher confidence level than an initial assessment.
Precipitate: the solid product of chemical reaction by fluids such as the zinc precipitation referred to below.
Probable Mineral Reserves: the economically mineable part of an Indicated and, in some cases, a Measured Mineral Resource
Prospect: an area of land with insufficient data available on the mineralization to determine if it is economically recoverable, but warranting further investigation.
Prospecting license: an area for which permission to explore has been granted.
Proven Mineral Reserves: (i) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling; and (ii) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
Pyrite: a brassy-colored mineral of iron sulphide (compound of iron and sulfur).
Qualified Person: (i) a mineral industry professional with at least five years of relevant experience in the type of mineralization and type of deposit under consideration and in the specific type of activity that person is undertaking on behalf of the registrant and (ii) an eligible member or licensee in good standing of a recognized professional organization at the time the technical report is prepared. Regulation S-K 1300 details further recognized professional organizations and also relevant experience.
Quartz: a mineral compound of silicon and oxygen.
Recovery grade: the actual grade of ore realized after the mining and treatment process.
Reef: a gold-bearing sedimentary horizon, normally a conglomerate band, which may contain economic levels of gold.
Refining: the final stage of metal production in which final impurities are removed from the molten metal by introducing air and fluxes. The impurities are removed as gases or slag.
Rehabilitation: the process of restoring mined land to a condition approximating its original state.
Sampling: taking small pieces of rock at intervals along exposed mineralization for assay (to determine the mineral content).
Shaft: a shaft provides principal access to the underground workings for transporting personnel, equipment, supplies, ore and waste. A shaft is also used for ventilation and as an auxiliary exit. It is equipped with a surface hoist system that lowers and raises conveyances for men, materials and ore in the shaft. A shaft generally has more than one conveyancing compartment.
Slimes: the finer fraction of tailings discharged from a processing plant after the valuable minerals have been recovered.
Slurry: a fluid comprising fine solids suspended in a solution (generally water containing additives).
Smelting: thermal processing whereby molten metal is liberated from beneficiated mineral or concentrate with impurities separating as lighter slag.
Spot price: the current price of a metal for immediate delivery.
Stockpile: a store of unprocessed ore.
Stope: the underground excavation within the orebody where the main gold production takes place.
Stripping: the process of removing overburden to expose ore.
Sulphide: a mineral characterized by the linkages of sulfur with a metal or semi-metal, such as pyrite, FeS.
Syncline: a basin-shaped fold.
Tailings: finely ground rock of low residual value from which valuable minerals have been extracted is discarded and stored in a designed dam facility.
Tailings dam (slimes dam): Dam facilities designed to store discarded tailings.
Ton: one ton is equal to 2,000 pounds (also known as a “short” ton).
Tonnage: quantities where the ton or tonne is an appropriate unit of measure. Typically used to measure reserves of gold-bearing material in situ or quantities of ore and waste material mined, transported or milled.
Tonne: one tonne is equal to 1,000 kilograms (also known as a “metric” tonne).
(in this Annual Report we have used metric tonnes unless specified otherwise and we may have used Ton(s) and Tonne(s) interchangeably)
Trend: the arrangement of a group of ore deposits or a geological feature or zone of similar grade occurring in a linear pattern.
Unconformity: the structural relationship between two groups of rock that are not in normal succession.
Waste: ore rock mined with an insufficient gold content to justify processing.
Waste rock: the non-mineralized rock and/or rock that generally cannot be mined economically that is hoisted to the surface for disposal on the surface normally close to the shaft on an allocated dump.
Yield: the actual grade of ore realized after the mining and treatment process.
Zinc precipitation: a chemical reaction using zinc dust that converts gold solution to a solid form for smelting into unrefined gold bars.
ITEM 16I: DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
ITEM 16J: INSIDER TRADING POLICIES
Not applicable.
ITEM 16K: CYBERSECURITY
Risk Management and Strategy
Harmony’s cybersecurity governance employs a comprehensive and integrated approach to risk management, engaging both internal teams and third-party service providers. Harmony has established protocols for continuous monitoring and proactive management of cybersecurity threats through daily and weekly meetings and continuous interactions with its third-party around-the-clock Cyber Security Operations Centre (the “SOC”). The SOC regularly engages in discussions with Harmony’s internal cybersecurity team to address identified threats and vulnerabilities.
Harmony’s strategy includes monthly cross-departmental management meetings where cyber risk is discussed. Harmony conducts external penetration tests and internal phishing simulations bi-monthly to evaluate and enhance its incident response capabilities and employee alertness to cyber threats. Cyber incident response plans are documented including detailed playbooks in order to respond and recover in the event of a cyber-incident. Harmony’s cybersecurity processes are integrated into its broader enterprise-wide risk management systems.
The routine engagement between Harmony’s internal cybersecurity team and other technology stakeholders, other internal departments and the SOC underscores Harmony’s comprehensive approach to risk assessment and mitigation. The head of department for cybersecurity (''HOD: CyberSecurity''), meets with the Group Chief Information Officer (“CIO”) on a weekly basis. In addition, there are quarterly Technology and Information Systems Steering Committee meetings involving members from Group Internal Audit, Enterprise Risk Management, Security, Operations, Safety and Compliance, among other.
Harmony routinely engages third parties in its cybersecurity operations. This engagement includes:
•Periodically consulting with external experts to provide specialized services on cybersecurity (such as penetration test exercises).
•Utilizing a third-party training platform to conduct and report upon cyber safety awareness training, which includes a range of predefined training modules Centre for Internet Security (''CIS''). This training is designed to ensure staff remain updated on the latest cyber safety practices.
•We are in the initial phases of collaboration with a dedicated partner focused on operational technology cybersecurity. Harmony believes partnerships of this type are essential for addressing specific cybersecurity challenges in operational technology environments.
•Outsourcing Harmony’s SOC to a managed service provider. The SOC operates around the clock, offering continuous monitoring and proactive response to potential cybersecurity threats.
Periodic reviews are also conducted by Harmony’s Group Internal Audit, using the National Institute of Standards and Technology (''NIST") and CIS frameworks as a benchmark to gauge Harmony’s cybersecurity readiness.
Harmony started reaching out specifically to vendors with access to the Harmony network, ensuring they comply with its Cyber Security Awareness Training mandate. This initiative emphasizes the importance of completing training campaigns and increasing cyber awareness about various cyber risks, such as clicking on malicious links. This targeted outreach to Harmony’s vendors with access to the Harmony network forms a vital part of Harmony’s strategy to manage cybersecurity threats from third-party service providers. Further, Harmony has initiated a process to include a cybersecurity clause in new vendor contracts to assert a proactive cyber defense posture, ensuring service level agreements, roles and responsibilities for managing cybersecurity threats are established from the outset of its commercial relationships. For contracts that were in place prior to this initiative, Harmony expects to incorporate cybersecurity clauses upon their amendment and/or renewal. This initiative is part of a broader effort to embed Harmony’s cybersecurity standards into all third-party relationships.
Governance
Management Systems
Harmony has established governance procedures to manage cybersecurity threats. Several individuals in management positions, including the CIO, the HOD: CyberSecurity and specific management committees, e.g. the Enterprise Architecture, Change / Project Delivery, and Technology Steering Committees, are tasked with gauging cybersecurity threats and formulating strategies to counteract them. These forums all subscribe to the Group Technology Strategy that provides for a cohesive approach and focus.
Management at Harmony plays a pivotal role in both assessing and managing Harmony’s risks stemming from cybersecurity threats. Harmony’s CIO is accountable for Harmony’s technology and information function. Harmony’s HOD: CyberSecurity leads Harmony’s cybersecurity strategy and initiatives. Alongside internal legal expertise, Harmony has engaged external counsel for cybersecurity legal matters to provide specialized knowledge and legal insight. This partnership enhances Harmony’s cybersecurity framework and ensures that Harmony is proactive in legal compliance and risk management. With this collective expertise, both internal and external, each individual and committee member is strategically positioned to further Harmony’s efforts against potential cybersecurity threats.
There are well-defined processes in place through which these individuals and management committees are kept informed about cybersecurity matters. This includes regular updates on the prevention of potential threats, detection of actual threats, mitigation strategies, and post-incident remediation efforts. These processes are designed so that Harmony’s management is aware of the current threat landscape and the actions being taken to address it. The CIO is consistently kept informed of any cyber-related topics by the HOD: CyberSecurity during the monthly Group Technology Management Committee meetings as well as weekly one-on-one meetings. The HOD: CyberSecurity develops a comprehensive understanding of all activities within the cyber safety team through weekly one-on-one meetings. This structured and layered approach of communication is designed to ensure that the CIO is equipped to provide updates on cybersecurity matters directly to the executive Committee and the Audit and Risk Committee.
Harmony’s Group Enterprise Risk Management and Group Internal Audit functions have also incorporated cybersecurity into their mandate, reinforcing the importance of cybersecurity across all levels of the Company. Members from Group Internal Audit and Group Risk Management participate in quarterly Technology and Information Steering Committee meetings together with members from Group Security and Group Compliance. From a disclosure perspective, Harmony assesses the materiality of reported cybersecurity incidents through the Executive Committee against the relevant disclosure standards.
Key Cyber Management
Hendrik Kotze – Group CIO
B Com (Commercial Computer Science) - University of Pretoria
MBA International Business
Candidate Doctor of Philosophy – Kairos University
The Group CIO is responsible for managing the entire technology infrastructure of Harmony, including hardware, software, networks, and data centers, ensuring that these systems are reliable, secure, and scalable to meet the organization's evolving needs.
Stanley Pautz – HOD: Cybersecurity
B Com (Internal Audit), University of Pretoria
Certified Information Systems Auditor - ISACA
Certified in Risk and Information Systems Control - ISACA
CIA – Certified Internal Auditor (IIA – not maintained)
The HOD: CyberSecurity ensures that the entire technology landscape is overseen, secure and safe in line with the business and technology strategies.
Dr Christiaan Roos - Lead: Cybersecurity operations
D Com (PhD), IT Audit, IT Governance and Ethical Hacking, University of Johannesburg
CEH – Certified Ethical Hacker
Project Management Professional (PMP), Project Management Institute
Dr Roos was contracted as vCISO of Harmony with effect from 1 March 2021
Board Oversight
Harmony has set up mechanisms to regularly inform both the board of directors and the Audit and Risk Committee about any potential cybersecurity threats and the measures and strategies taken to counteract them. This includes active engagement in discussions with Executive management on material cybersecurity incidents, related threats, vulnerabilities, defenses and planned responses during the Committee meetings referenced above. The quarterly committee meetings are designed to ensure ongoing diligence in managing cybersecurity risks. Integral to this process is the role of the CIO. Harmony’s CIO, who is regularly updated in the weekly update sessions as well as in the monthly Group Technology Management Committee meetings about cybersecurity matters serves as the primary interface to the board of directors via the Audit and Risk Committee. To this end, the CIO attends the Audit and Risk Committee meetings, accompanied by the HOD: CyberSecurity as required.
The CIO reports any questions and advice from the Audit and Risk Committee back to the management experts, providing for a responsive approach to cyber risk management. Together, when appropriate, the CIO and HOD: CyberSecurity provide a robust channel of communication with the board of directors through the Audit and Risk Committee, facilitating the escalation of cyber risks to the board of directors where necessary via the Audit and Risk Committee. This approach aims to keep the board of directors consistently informed about the state of cybersecurity threats and the strategies employed to tackle them. Furthermore, the Chief Audit Executive (which has cybersecurity within its purview) also has a direct line of communication with the Audit and Risk Committee as well as the Chairperson of the board of directors, which structure complements Harmony’s reporting mechanism in order to keep the board of directors informed from multiple perspectives about cybersecurity matters.
For additional information regarding how cybersecurity threats are reasonably likely to materially affect Harmony’s business, financial condition, results of operations, cash flows, ability to pay dividends and/or stock price, see “Item 3D: Risk Factors—Other Regulatory and Legal Risks - Breaches in our IT security processes and violations of data protection laws may adversely impact our business activities and lead to public and private censure, regulatory penalties, fines and/or sanctions and may damage our reputation'' of this Form 20-F.
PART III
ITEM 17 FINANCIAL STATEMENTS
Not applicable.
ITEM 18 FINANCIAL STATEMENTS
The following consolidated financial statements, together with the report of Ernst & Young Inc., Johannesburg, Republic of South Africa (PCAOB ID No. 1698) and the report of PricewaterhouseCoopers Inc., Johannesburg, Republic of South Africa (PCAOB ID No. 1308), are incorporated by reference to exhibit 99.1 and shall be deemed filed as part of the Harmony 2024 Form 20-F:
•Index to Financial Statements;
•Reports of Independent Registered Public Accounting Firms; and
Amended Memorandum of Incorporation of Harmony dated February 1, 2018 (incorporated by reference to Harmony’s annual report for the fiscal year ended June 30, 2019 filed on October 24, 2019)
Amended and Restated Deposit Agreement among Harmony, Deutsche Bank Trust Company Limited, as Depositary, and owners and holders of American Depositary Receipts, dated as of October 7, 2011 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2011, filed on October 24, 2011) https://www.sec.gov/Archives/edgar/data/1023514/000119312511278584/d242812dex22.htm
Common terms agreements for Harmony Gold Mining Company Limited with Nedbank Limited (acting through its Nedbank Corporate and Investment Banking division) (as Original Lender, Original Hedge Provider, Global coordinator and Bookrunner, Mandated Lead Arranger and Sustainability Coordinator) and Nedbank Limited (London Branch) (as Original Lender) and Absa Bank Limited (acting through its Corporate and Investment Banking Division) (as Original Lender, Original Hedge Provider, Global Goordinator and Bookrunner, Mandated Lead Arranger, Sustainability Coordinator, Sustainability Agent and Facility Agent) and Firstrand Bank Limited (acting through its Rand Merchant Bank Division) (as Mandated Lead Arranger, Original Hedge Provider and Original Lender) and J.P. Morgan Securities PLC (as Lead Arranger) and Citibank, N.A., South African branch (as Lead Arranger and Original Lender) and HSBC Bank PLC - Johannesburg branch (as Arranger and Original Lender) and State Bank of India (acting through its Johannesburg Branch) (as Mandated Lead Arranger and Original Lender) and JPMORGAN Chase Bank, N.A., London branch (Original Lender) and Project and Trade Finance core fund (as Original Lender) and Federated Hermes Project and Trade Finance Tender Fund (as Original Lender) and Federated Hermes Project and Trade Finance Master Fund (as Original Lender) and Bank of China Limited, Johannesburg branch (as Mandated Lead Arranger and Original Lender) and Goldman Sachs International Bank (as Original Lender) and Industrial Development Corporation of South Africa Limited (as Original Lender) and Investec Bank Limited (acting through its Investment Banking division: Corporate Solutions) (as Original Lender and Lead Arranger) and Ninety One SA Proprietary Limited (acting as agent and portfolio manager of Ninety One Assurance Limited) (as Original Lender) and HSBC Bank PLC (as Original Hedge Provider) and JPMORGAN Chase Bank, N.A. (as Original Hedge Provider) and Citibank N.A., London branch (as Original Hedge Provider).
Common terms agreements for Harmony Gold Mining Company Limited with Nedbank Limited (acting through its Nedbank Corporate and Investment Banking division) (as Original Lender, Original Hedge Provider, Global coordinator and Bookrunner, Mandated Lead Arranger and Sustainability Coordinator) and Nedbank Limited (London Branch) (as Original Lender) and Absa Bank Limited (acting through its Corporate and Investment Banking Division) (as Original Lender, Original Hedge Provider, Global Goordinator and Bookrunner, Mandated Lead Arranger, Sustainability Coordinator, Sustainability Agent and Facility Agent) and Firstrand Bank Limited (acting through its Rand Merchant Bank Division) (as Mandated Lead Arranger, Original Hedge Provider and Original Lender) and J.P. Morgan Securities PLC (as Lead Arranger) and Citibank, N.A., South African branch (as Lead Arranger and Original Lender) and HSBC Bank PLC - Johannesburg branch (as Arranger and Original Lender) and State Bank of India (acting through its Johannesburg Branch) (as Mandated Lead Arranger and Original Lender) and JPMORGAN Chase Bank, N.A., London branch (Original Lender) and Project and Trade Finance core fund (as Original Lender) and Federated Hermes Project and Trade Finance Tender Fund (as Original Lender) and Federated Hermes Project and Trade Finance Master Fund (as Original Lender) and Bank of China Limited, Johannesburg branch (as Mandated Lead Arranger and Original Lender) and Goldman Sachs International Bank (as Original Lender) and Industrial Development Corporation of South Africa Limited (as Original Lender) and Investec Bank Limited (acting through its Investment Banking division: Corporate Solutions) (as Original Lender and Lead Arranger) and Ninety One SA Proprietary Limited (acting as agent and portfolio manager of Ninety One Assurance Limited) (as Original Lender) and HSBC Bank PLC (as Original Hedge Provider) and JPMORGAN Chase Bank, N.A. (as Original Hedge Provider) and Citibank N.A., London branch (as Original Hedge Provider).
Revolving USD Facility Agreement, amongst Harmony Gold Mining Company Limited (as Borrower and (Obligors' Agent) with The Financial Institutions Listed In Schedule 1 and Absa Bank Limited (acting through its Corporate and Investment Banking division) (as Facility Agent) (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2022, filed on October 31, 2022) https://www.sec.gov/Archives/edgar/data/1023514/000162828022027359/revolvingusdfacilityagreem.htm
4.5
Term Facility A Agreement amongst Harmony Gold Mining Company Limited (as Borrower and Obligors' Agent) with The Financial Institutions Listed in Schedule 1 and Absa Bank Limited (acting through its Corporate and Investment Banking division) (as Facility Agent) (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2022, filed on October 31, 2022) https://www.sec.gov/Archives/edgar/data/1023514/000162828022027359/termfacilityaagreement_exe.htm
4.6
Term Facility B Agreement amongst Harmony Gold Mining Company Limited (as Borrower and Obligors' Agent) with The Financial Institutions Listed in Schedule 1 and Nedbank Limited (acting through its Nedbank Corporate and Investment Banking division) (as Sustainability Coordinator) and Absa Bank Limited (acting through its Corporate and Investment Banking division) (as Sustainability Agent, Sustainability Coordinator and Facility Agent) (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2022, filed on October 31, 2022) https://www.sec.gov/Archives/edgar/data/1023514/000162828022027359/termfacilitybagreement_exe.htm
Harmony Gold Mining Company Limited Deferred Share Plan 2018 Scheme Rules (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2019, filed on October 24, 2019)
ARM - BBEE Loan Agreement, dated June 28, 2021, entered between Harmony Gold Mining Limited and the trustees for the time being of ARM - Broad Based Economy Empowerment Trust (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2021, filed on October 29, 2021)
Share sale deed, dated October 6, 2022 entered into between Copper Mountain Mining Corporation (Seller), Harmony Gold (Australia) Pty Limited (Buyer) and Harmony Gold Mining Company Limited (Buyer's Guarantor) (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2023, filed on October 31, 2023) https://www.sec.gov/Archives/edgar/data/1023514/000162828023035632/sharesaledeed.htm
† This certification will not be deemed “filed” for purposes of Section 18 of the of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except to the extent that the Registrant specifically incorporates it by reference.
†† Certain of the information included in Exhibit 15.1 is incorporated by reference into the Harmony 2024 Form 20-F, as specified elsewhere in this report, in accordance with Rule 12b-23(a) of the Exchange Act. With the exception of the items so specified, the Integrated Annual Report for the 20-F 2024 is not deemed to be filed as part of Harmony 2024 Form 20-F.
Pursuant to the requirements of Section 12 of the Exchange Act, we hereby certify that we meet all of the requirements for filing on Form 20-F and that we have duly caused this annual report to be signed on our behalf by the undersigned, thereunto duly authorized.
