SEC Company Response from HARMONY GOLD MINING CO LTD (HMY, HGMCF) (CIK 0001023514) (HMY) — Jul 21, 2011
HARMONY GOLD MINING CO LTD (HMY, HGMCF) (CIK 0001023514)
Date: July 21, 2011 · CIK: 0001023514 · Accession: 0001193125-11-193229
AI Filing Summary & Sentiment
Referenced dates: July 7, 2011, May 11, 2011
Letter
UNITED STATES SECURITIES DIVISION OF CORPORATION FINANCE Form 20-F for Fiscal Year Ended June 30, 2010 Filed October 25, 2010 Response Letter dated May 11, 2011 File No. 1-31545
Dear Sirs:
Reference is made to the Staff’s comment letter dated July 7, 2011 in respect of the Harmony Gold Mining Company Limited (the “Company”) Form 20-F for the year ended June 30, 2010 and the response letter dated May 11, 2011. Set forth below in detail are the responses to the Staff’s comments, which corresponds to the text of the comment in the Staff letter:
Form 20-F for Fiscal Year Ended June 30, 2010
Operating and Financial Review and Prospects, page 88
Critical Accounting Policies and Estimates, page 88
Carrying Value of Goodwill, page 89
1. We note your response to prior comment one. With respect to the Phakisa cash generating unit, please provide us a copy of the discounted cash flow model used for purposes of impairment testing for each of the last three years. In addition, tell us the actual amount of net cash flows realized during such timeframe and discuss any material variations between assumptions used in the model and actual results and events. Your discussion of material variations between assumptions used and actual results should include, but should not be limited to, price, ounces produced, grade, cash costs in total and per ounce.
Directors:
PT Motsepe* (Chairman), GP Briggs (Chief Executive), HO Meyer (Financial Director), HE Mashego (Executive Director), F Abbott* JA Chissano*#, FFT De Buck*, KV Dicks*, Dr DS Lushaba*, CE Markus*, MJ Motloba*, M Msimang*, D Noko*, CML Savage*, J Wetton*, AJ Wilkens*
*Non-Executive; #Mozambican
Secretary:
iThemba Governance and Statutory Solutions (Pty) Ltd
Registration Number: 1950/038232/06
Response: The Company acknowledges the Staff’s comment regarding the discounted cash flow model (“DCF”) for Phakisa. On a supplemental basis, the Company has provided for each of the fiscal years ended June 30, 2010, 2009 and 2008 a summary of the DCF for Phakisa as well as reasons for any material variations when comparing the year one actual cash flows to the relevant DCF estimated cash flows.
Results of Operations, page 96
2. We note your response to prior comment six. It remains unclear why you are unable to provide information regarding items within your control that impact the quality and potential variability of earnings and cash flow, so readers can ascertain the likelihood that past performance is indicative of future performance. Such information could include but should not be limited to, operating information such as production, operating costs, taxes, etc.
Response: The Company acknowledges the Staff’s comment regarding providing information on issues that impact the quality and potential variability of earnings and cash flows that are under the Company’s control. The Company will endeavour to provide such information in its future filings where possible in addition to the operating and production information already provided.
Engineering Comments
Reserves page 28
3. We note your response to our previous comment two. Please reconcile for us the Evander and Evander (below infrastructure) reserve reported in your FYE 2010 annual filing to the reserve reported in your technical document.
Response: The Company acknowledges the Staff’s comment and wishes the Staff to note that the supplementary technical document provided to the Staff is dated February 2010. As such, the reserve figures shown in this document should not be reconciled with the reserve declaration done in June 2010 but should rather be compared with the 2009 reserve declaration, which used the same information on which the technical document is based. The reserve declaration for 2010 will differ from the document as new information was available and a different viewpoint was taken by management as a result.
The Company wishes the Staff to note that as disclosed in the 2010 Form 20F in Item 4. “Information on the Company - Business - Description of Mining Business -Exploration” the Company is currently busy with a drilling programme at Poplar and investigating different mining approaches for Project Libra. The results of these activities may have an impact on future reserve declarations.
EVANDER - 2009 (Annual Report) - Dated 30 June 2009
ORE RESERVES
PROVEN
PROBABLE
TOTAL
OPERATIONS
Tonnes (Mt)
g/t
Gold (‘000 oz)
Tonnes (Mt)
g/t
Gold (‘000 oz)
Tonnes (Mt)
g/t
Gold (‘000 oz)
Underground
Evander 2/5
0.8
6.35
0.2
6.17
1.0
6.32
Evander 7
0.2
4.64
0.0
8.48
0.2
4.81
Evander 8
1.8
5.66
7.0
6.21
1 394
8.8
6.09
1 726
Total
2.8
5.79
7.2
6.21
1 434
10.0
6.09
1 956
Projects - Below Infrastructure
Evander South
—
—
—
11.5
4.80
1 773
11.5
4.80
1 773
Rolspruit
—
—
—
24.4
8.71
6 842
24.4
8.71
6 842
Poplar
—
—
—
13.5
7.45
3 234
13.5
7.45
3 234
Total
—
—
—
49.4
7.45
11 849
49.4
7.45
11 849
Grand Total
2.8
5.79
56.6
7.30
13 283
59.4
7.22
13 805
EVANDER - Feb 2010 (Technical Document) - Dated Feb 2010
ORE RESERVES
PROVED
PROBABLE
TOTAL
OPERATIONS
Tonnes (Mt)
g/t
Gold (‘000 oz)
Tonnes (Mt)
g/t
Gold (‘000 oz)
Tonnes (Mt)
g/t
Gold (‘000 oz)
Underground
Evander 8
1.5
5.90
7.0
6.29
1 394
8.5
6.15
1 674
Total
1.5
5.90
7.0
6.29
1 394
8.5
6.15
1 674
Projects - Below Infrastructure
Evander South
11.5
4.80
1 773
11.5
4.80
1 773
Rolspruit
—
—
—
24.5
8.71
6 842
24.5
8.71
6 842
Poplar
—
—
—
13.5
7.45
3 234
13.5
7.45
3 234
Total
—
—
—
49.5
7.28
11 848
49.5
7.28
11 848
Grand Total
1.5
5.90
56.4
7.29
13 241
57.9
7.25
13 521
EVANDER - 2010 (Annual Report) - Dated 30 June 2010
ORE RESERVES
PROVEN
PROBABLE
TOTAL
OPERATIONS
Tonnes (Mt)
g/t
Gold (‘000 oz)
Tonnes (Mt)
g/t
Gold (‘000 oz)
Tonnes (Mt)
g/t
Gold (‘000 oz)
Underground
Evander 8
2.2
7.20
1.6
9.12
3.8
8.00
Total
2.2
7.20
1.6
9.12
3.8
8.00
Projects - Below Infrastructure
Rolspruit
—
—
—
26.2
8.08
6 790
26.2
8.08
6 790
Poplar
—
—
—
16.1
5.99
3 105
16.1
5.99
3 105
Total
—
—
—
42.3
7.28
9 895
42.3
7.28
9 895
Grand Total
2.2
7.20
43.9
7.35
10 365
46.1
7.34
10 885
4. Considering that under Industry Guide 7 a feasibility study is required prior to the reporting of a reserve with the Commission, please tell us how you have made the determination that you have a mineral reserve for your Evander South, Rolspruit and Poplar projects.
Response: As at June 30, 2010 we did not declare any ore reserves for Evander South following an update of the geological model. The Company wishes to advise the Staff that the decision to report mineral reserves for Rolspruit and Poplar, as well as for Evander South in previous reporting periods, is based on comprehensive technical studies that have been carried out on these projects. These include substantial geo-scientific, engineering, economic and social studies. These studies show that these projects are economically and legally viable.
These studies were completed in-house in partnership with recognized industry consultants. As part of this process, the Company also involved industry experts to conduct third party audits across all studies. An Independent Competent Persons Audit Report (“CPR”) is undertaken annually that includes all of the Company’s mineral reserves to ensure that the reserve reporting is consistent with the stringent JORC/SAMREC, NI 43-101 and Industry Guide 7 guidelines.
The Company can provide supplemental supporting documentation in the form of the annual audit reports.
The Company acknowledges that it is responsible for the adequacy and accuracy of the disclosure in the filings it makes with the Commission. It understands that staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing and that the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.
Yours faithfully
/s/ H Meyer
H Meyer
Chief Financial Officer
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CORRESP 1 filename1.htm Correspondence Letter HARMONY GOLD MINING COMPANY LIMITED Randfontein Office Park Cnr Main Reef Road and Ward Avenue, Randfontein 1759 PO Box 2, Randfontein, 1760 Johannesburg South Africa T +27 11 411 2000 F +27 11 411 W www.harmony.co.za NYSE trading symbol HMY JSE trading symbol HAR UNITED STATES SECURITIES AND EXCHANGE COMMISSION DIVISION OF CORPORATION FINANCE 100 F STREET, NE WASHINGTON, D.C. 20549 21 July 2011 FOR ATTENTION: BRAD SKINNER SENIOR STAFF ACCOUNTANT JOHN COLEMAN MINING ENGINEER MARK WOJCIECHOWSKI AND JOHN CANNARELLA STAFF ACCOUNTANTS RE: Harmony Gold Mining Company Limited Form 20-F for Fiscal Year Ended June 30, 2010 Filed October 25, 2010 Response Letter dated May 11, 2011 File No. 1-31545 Dear Sirs: Reference is made to the Staff’s comment letter dated July 7, 2011 in respect of the Harmony Gold Mining Company Limited (the “Company”) Form 20-F for the year ended June 30, 2010 and the response letter dated May 11, 2011. Set forth below in detail are the responses to the Staff’s comments, which corresponds to the text of the comment in the Staff letter: Form 20-F for Fiscal Year Ended June 30, 2010 Operating and Financial Review and Prospects, page 88 Critical Accounting Policies and Estimates, page 88 Carrying Value of Goodwill, page 89 1. We note your response to prior comment one. With respect to the Phakisa cash generating unit, please provide us a copy of the discounted cash flow model used for purposes of impairment testing for each of the last three years. In addition, tell us the actual amount of net cash flows realized during such timeframe and discuss any material variations between assumptions used in the model and actual results and events. Your discussion of material variations between assumptions used and actual results should include, but should not be limited to, price, ounces produced, grade, cash costs in total and per ounce. Directors: PT Motsepe* (Chairman), GP Briggs (Chief Executive), HO Meyer (Financial Director), HE Mashego (Executive Director), F Abbott* JA Chissano*#, FFT De Buck*, KV Dicks*, Dr DS Lushaba*, CE Markus*, MJ Motloba*, M Msimang*, D Noko*, CML Savage*, J Wetton*, AJ Wilkens* *Non-Executive; #Mozambican Secretary: iThemba Governance and Statutory Solutions (Pty) Ltd Registration Number: 1950/038232/06 Response: The Company acknowledges the Staff’s comment regarding the discounted cash flow model (“DCF”) for Phakisa. On a supplemental basis, the Company has provided for each of the fiscal years ended June 30, 2010, 2009 and 2008 a summary of the DCF for Phakisa as well as reasons for any material variations when comparing the year one actual cash flows to the relevant DCF estimated cash flows. Results of Operations, page 96 2. We note your response to prior comment six. It remains unclear why you are unable to provide information regarding items within your control that impact the quality and potential variability of earnings and cash flow, so readers can ascertain the likelihood that past performance is indicative of future performance. Such information could include but should not be limited to, operating information such as production, operating costs, taxes, etc. Response: The Company acknowledges the Staff’s comment regarding providing information on issues that impact the quality and potential variability of earnings and cash flows that are under the Company’s control. The Company will endeavour to provide such information in its future filings where possible in addition to the operating and production information already provided. Engineering Comments Reserves page 28 3. We note your response to our previous comment two. Please reconcile for us the Evander and Evander (below infrastructure) reserve reported in your FYE 2010 annual filing to the reserve reported in your technical document. Response: The Company acknowledges the Staff’s comment and wishes the Staff to note that the supplementary technical document provided to the Staff is dated February 2010. As such, the reserve figures shown in this document should not be reconciled with the reserve declaration done in June 2010 but should rather be compared with the 2009 reserve declaration, which used the same information on which the technical document is based. The reserve declaration for 2010 will differ from the document as new information was available and a different viewpoint was taken by management as a result. The Company wishes the Staff to note that as disclosed in the 2010 Form 20F in Item 4. “Information on the Company - Business - Description of Mining Business -Exploration” the Company is currently busy with a drilling programme at Poplar and investigating different mining approaches for Project Libra. The results of these activities may have an impact on future reserve declarations. EVANDER - 2009 (Annual Report) - Dated 30 June 2009 ORE RESERVES PROVEN PROBABLE TOTAL OPERATIONS Tonnes (Mt) g/t Gold (‘000 oz) Tonnes (Mt) g/t Gold (‘000 oz) Tonnes (Mt) g/t Gold (‘000 oz) Underground Evander 2/5 0.8 6.35 163 0.2 6.17 38 1.0 6.32 201 Evander 7 0.2 4.64 27 0.0 8.48 2 0.2 4.81 29 Evander 8 1.8 5.66 332 7.0 6.21 1 394 8.8 6.09 1 726 Total 2.8 5.79 522 7.2 6.21 1 434 10.0 6.09 1 956 Projects - Below Infrastructure Evander South — — — 11.5 4.80 1 773 11.5 4.80 1 773 Rolspruit — — — 24.4 8.71 6 842 24.4 8.71 6 842 Poplar — — — 13.5 7.45 3 234 13.5 7.45 3 234 Total — — — 49.4 7.45 11 849 49.4 7.45 11 849 Grand Total 2.8 5.79 522 56.6 7.30 13 283 59.4 7.22 13 805 EVANDER - Feb 2010 (Technical Document) - Dated Feb 2010 ORE RESERVES PROVED PROBABLE TOTAL OPERATIONS Tonnes (Mt) g/t Gold (‘000 oz) Tonnes (Mt) g/t Gold (‘000 oz) Tonnes (Mt) g/t Gold (‘000 oz) Underground Evander 8 1.5 5.90 280 7.0 6.29 1 394 8.5 6.15 1 674 Total 1.5 5.90 280 7.0 6.29 1 394 8.5 6.15 1 674 Projects - Below Infrastructure Evander South 11.5 4.80 1 773 11.5 4.80 1 773 Rolspruit — — — 24.5 8.71 6 842 24.5 8.71 6 842 Poplar — — — 13.5 7.45 3 234 13.5 7.45 3 234 Total — — — 49.5 7.28 11 848 49.5 7.28 11 848 Grand Total 1.5 5.90 280 56.4 7.29 13 241 57.9 7.25 13 521 EVANDER - 2010 (Annual Report) - Dated 30 June 2010 ORE RESERVES PROVEN PROBABLE TOTAL OPERATIONS Tonnes (Mt) g/t Gold (‘000 oz) Tonnes (Mt) g/t Gold (‘000 oz) Tonnes (Mt) g/t Gold (‘000 oz) Underground Evander 8 2.2 7.20 520 1.6 9.12 470 3.8 8.00 990 Total 2.2 7.20 520 1.6 9.12 470 3.8 8.00 990 Projects - Below Infrastructure Rolspruit — — — 26.2 8.08 6 790 26.2 8.08 6 790 Poplar — — — 16.1 5.99 3 105 16.1 5.99 3 105 Total — — — 42.3 7.28 9 895 42.3 7.28 9 895 Grand Total 2.2 7.20 520 43.9 7.35 10 365 46.1 7.34 10 885 4. Considering that under Industry Guide 7 a feasibility study is required prior to the reporting of a reserve with the Commission, please tell us how you have made the determination that you have a mineral reserve for your Evander South, Rolspruit and Poplar projects. Response: As at June 30, 2010 we did not declare any ore reserves for Evander South following an update of the geological model. The Company wishes to advise the Staff that the decision to report mineral reserves for Rolspruit and Poplar, as well as for Evander South in previous reporting periods, is based on comprehensive technical studies that have been carried out on these projects. These include substantial geo-scientific, engineering, economic and social studies. These studies show that these projects are economically and legally viable. These studies were completed in-house in partnership with recognized industry consultants. As part of this process, the Company also involved industry experts to conduct third party audits across all studies. An Independent Competent Persons Audit Report (“CPR”) is undertaken annually that includes all of the Company’s mineral reserves to ensure that the reserve reporting is consistent with the stringent JORC/SAMREC, NI 43-101 and Industry Guide 7 guidelines. The Company can provide supplemental supporting documentation in the form of the annual audit reports. The Company acknowledges that it is responsible for the adequacy and accuracy of the disclosure in the filings it makes with the Commission. It understands that staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing and that the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. Yours faithfully /s/ H Meyer H Meyer Chief Financial Officer