SecProbe.io

CORRESP
1
filename1.htm

		Document

HARMONY GOLD MINING COMPANY LIMITED

Randfontein Office Park

 P O Box 2, Randfontein, 1760

 T +27 11 411 2000

 NYSE trading symbol HMY

Cnr Main Reef Road and Ward

 Johannesburg, South Africa

 F +27 11 692 3879

 JSE trading symbol HAR

Avenue, Randfontein, 1759

 W www.harmony.co.za

VIA EDGAR

United States Securities and Exchange Commission

Division of Corporation Finance

100 F Street, NE

Washington, D.C.  20549

United States of America

Attn:

 John Coleman, Division of Corporation Finance, Office of Energy & Transportation

March 6, 2020

RE:

 Harmony Gold Mining Company Limited

Form 20-F for Fiscal Year Ended June 30, 2019

Filed October 24, 2019

File No. 001-31545

Dear Mr. Coleman,

Harmony Gold Mining Company Limited (the “Company” or “we”) hereby responds to the comments of the staff (the “Staff”) of the United States Securities and Exchange Commission contained in your letter dated February 6, 2020 (the “Comment Letter”) regarding the Company’s Annual Report on

Form 20-F for the fiscal year ended June 30, 2019 (“2019 Form 20-F”).

For the convenience of the Staff, we have set forth below the comments contained in the Comment Letter followed by the Company’s response to each comment.  All references to page numbers and captions correspond to the 2019 Form 20-F, unless otherwise specified.

Form 20-F for Fiscal Year Ended June 30, 2019

Item 4.    Information on the Company

B.

 Business Overview, page 26

1.

 We note the disclosure of mineral reserves on page 29 of your filing. Please revise to disclose the metallurgical recovery factor for each of your mineral reserves.

Response: The Company respectfully acknowledges the Staff’s comment. Set forth below are the metallurgical recovery factors for each of the Company’s mineral reserves.  We confirm that we will include this disclosure in future filings.

Directors:

 PT Motsepe* (Chairman), JM Motloba* (Deputy Chairman), PW Steenkamp (Chief Executive), B Lekubo (Financial Director), F Abbott (Executive Director), HE Mashego (Executive Director), JA Chissano*#, FFT De Buck*, KV Dicks*, Dr DSS Lushaba*, M Msimang*, JL Wetton*, AJ Wilkens*, KT Nondumo*, VP Pillay*, MV Sisulu*, HG Motau*, GR Sibiya*

*Non-Executive;   #Mozambican

Acting Secretary

 Shela Mohatla

Registration Number:

 1950/038232/06

Operations

 Plant Recovery Factor (%)

South Africa Underground

Bambanani

 96

Joel

 96

Masimong

 96

Unisel

 96

Target 1

 95

Tshepong Operations

 96

Doornkop

 96

Kusasalethu

 93

Moab Khotsong

 97

South Africa Surface

Kalgold

 84

Phoenix

 45

St Helena

 45

Central Plant

 52

WRD Tailings

 51

Papua New Guinea

Hidden Valley

 88

Hamata

 88

Golpu

 61

D.

 Property, Plant and Equipment., page 44

2.

 Please revise to provide an overview for each of your significant properties pursuant to Item 102 of Regulation S-K and the guidance in paragraph (b) of Industry Guide 7. It appears that this type of disclosure for your mining operations was provided in your Form20-F for the fiscal year ended June 30, 2018, but is not included in your filing for the fiscal year ended June 30, 2019.

Response: The Company respectfully acknowledges the Staff’s comment. The information was provided on our website as part of our 2019 Integrated Reporting suite, which includes the Form 20F. It is set out in the supplementary document called Operations 2019. We have included the disclosure in Annexure A to this letter.

Exhibit 15.1, page 63

3.

 We note the disclosure of mineral resources in your filing, including on pages 63 and 66 of your integrated annual report. Only proven and probable reserves may be disclosed in filings with the United States Securities and Exchange Commission pursuant to the Instructions to paragraph (b)(5) of Industry Guide 7. Please revise to remove the disclosure of mineral resources.

Response: The Company respectfully acknowledges the Staff’s comment and will revise its future filings to omit references to mineral resources in accordance with Industry Guide 7 for so long as Industry Guide 7 remains effective.

Please feel free to contact me by telephone at +27 11 411 6061 or by email at boipelo.lekubo@harmony.co.za should you have any questions or comments. You may also contact John M. Basnage of Anthem Legal Services, LLC by telephone at +1 212 380 6548 or by email at jmb@anthemlex.com.

Sincerely,

/s/ Boipelo Lekubo

Boipelo Lekubo

Financial Director

cc:

 Ethan Horowitz, Branch Chief, Office of Natural Resources

John M. Basnage, Anthem Legal Services, LLC

ANNEXURE A

OPERATIONAL PERFORMANCE

SOUTH AFRICA - UNDERGROUND OPERATION

Tshepong Operations

 FY19*

 FY18*

 FY17*

Number of employees

- Permanent

 8  091

 8 347

 8 110

- Contractors

 724

 673

 588

Total

 8 815

 9 020

 8 698

Operational

Volumes milled

 (000t) (metric)

 1 612

 1 716

 1 695

 (000t) (imperial)

 1 777

 1 893

 1 869

Gold produced

 (kg)

 7 967

 9 394

 8 828

 (oz)

 256 146

 302 026

 283 827

Gold sold

 (kg)

 7 922

 9 338

 8 816

 (oz)

 254 698

 300 223

 283 439

Grade

 (g/t)

 4.94

 5.47

 5.21

 (oz/t)

 0.144

 0.160

 0.152

Productivity

 (g/TEC)

 84.62

 93.93

 92.28

Development results

Total metres

  23 259

 23 089

 19 462

Reef metres

  3 323

 3 159

 3 028

Capital metres

  809

 588

 599

Financial

Revenue

 (Rm)

 4 685

 5 389

 5 062

 (US$m)

 330

 419

 372

Average gold price received

 (R/kg)

 591 331

 577 058

 574 165

 (US$/oz)

 1 297

 1 397

 1 314

Cash operating cost

 (Rm)

 4 008

 3 829

 3 677

 (US$m)

 283

 298

 270

Production profit

 (Rm)

 712

 1 590

 1 391

 (US$m)

 50

 123

 102

Capital expenditure

 (Rm)

 1 130

 1 008

 717

 (US$m)

 80

 78

 52

Operating free cash flow 1

 (Rm)

 (453)

 552

 668

 (US$m)

 (32)

 43

 50

Cash operating cost

 (R/kg)

 503 033

 407 575

 416 493

 (US$/oz)

 1 103

 987

 953

All-in sustaining cost

 (R/kg)

 636 281

 514 537

 507 368

 (US$/oz)

 1 396

 1 245

 1 161

Average exchange rate

 (R/US$)

 14.18

 12.85

 13.60

Safety

Number of fatalities

 4

 2

 1

Lost-time injury frequency rate per million hours worked

 7.75

 7.80

 7.09

Environment

Electricity consumption

 (GWh)

 466

 454

 466

Water consumption - primary activities

 (ML)

 2 778

 2 701

 2 719

Greenhouse gas emissions

 (000t CO2e)

 535

 441

 463

Intensity data per tonne treated

- energy

 0.29

 0.26

 0.27

- water

 1.72

 1.57

 1.60

- greenhouse gas emissions

 0.33

 0.26

 0.27

Number of reportable environmental incidents

 0

 0

 0

Community

Local economic development

 (Rm)

 18

 9

 12

Training and development

 (Rm)

 86

 92

 74

* From FY18, the Tshepong and Phakisa mines have been integrated and reported on as a single entity, Tshepong operations

1 Operating free cash flow = revenue - cash operating cost - capital expenditure ± impact of run of mine (ROM) costs as per operating results

Other salient features

Status of operation

 Steady state operation: development continues

Life of mine

 19 years

Nameplate hoisting capacity (per month)

 283 000 tonnes (312 000 tons)

Compliance and certification

 New order mining right - December 2007

ISO 14001

ISO 9001

Mineral reserve estimates as at 30 June 2019

 Proved reserves

 Probable reserves

 Total mineral reserves

Reserves

(metric)

 Tonnes

(Mt)

 Grade

(g/t)

 Gold

(000kg)

 Tonnes

(Mt)

 Grade

(g/t)

 Gold

(000kg)

 Tonnes

(Mt)

 Grade

(g/t)

 Gold

(000kg)

 20.0

 5.87

 117

 3.8

 4.70

 18

 23.8

 5.68

 135

Reserves (imperial)

 Tons

(Mt)

 Grade

(oz/t)

 Gold

(000oz)

 Tons

(Mt)

 Grade

(oz/t)

 Gold

(000oz)

 Tons

(Mt)

 Grade

(oz/t)

 Gold

(000oz)

 22.0

 0.171

 3 774

 4.2

 0.137

 576

 26.2

 0.166

 4 350

Overview of operations

Tshepong Operations is located in the Free State province, near Welkom, approximately 250km from Johannesburg, and includes the Tshepong and Phakisa underground mines. The close proximity of these mines allowed for this integration, which has resulted in the use of excess hoisting capacity and underused infrastructure at Tshepong and the debottlenecking of Phakisa’s restrained infrastructure. The integration and reporting of the Tshepong operations as a single entity began in FY18.

Mining is conducted at depths ranging from 1 500m to 2 300m. The Tshepong section is a mature underground operation, using conventional undercut mining. The Phakisa section primarily uses the conventional mining method. Rock from Phakisa is transported via a rail-veyor system from Phakisa to the Nyala shaft, from where the rock is hoisted to surface. The principal gold-bearing orebody is the Basal Reef and the B Reef is exploited as a high-grade secondary reef. Ore mined is processed at the Harmony One plant. Gold is recovered by means of gold cyanide leaching.

Operating performance FY19

Tshepong Operations had a challenging operational performance in FY19, mainly impacted by a lack of flexibility due to a reduction in the availability of stoping panels to mine. Safety-related stoppages and measures taken to halt the spate of illegal mining incidents further impacted the momentum and performance of the operation in FY19. A strong and stable management team has been re-enforced. An increased focus on improving flexibility, speeding up development, disciplined mining and grade management have already resulted in improved overall performance post the financial year end.

Regrettably, four fatalities occurred at Tshepong Operations in FY19.

In FY19, Tshepong Operations was the group’s largest gold operation (contributing 18% of group gold production). However, the lower production performance compared to FY18, due to the challenging operating performance in FY19, significantly impacted operating free cash flow generation1. An operating free cash flow loss of R453 million (US$32 million loss) was recorded in FY19 compared to R552 million profit (US$43 million profit) in FY18.

1 Operating free cash flow = revenue - cash operating cost - capital expenditure ± impact of run of mine (ROM) costs as per operating results

Gold production decreased by 15% to 7 967kg (256 146oz) in FY19. The lack of available stoping panels resulted in a 6% decrease in ore milled to 1 612 000 tonnes (1 777 000 tons) and a 10% decrease in underground recovered grade to 4.94g/t (0.144oz/t). The average rand gold price received increased by 2% to R591 331kg (in dollar terms the gold price received decreased by 7% mainly due to the weakening of the average rand/ US$ exchange rate in FY19). Revenue decreased 13% year on year to R4 685 million (21% decrease to US$330 million). Cash operating costs increased by 5% to R4 008 million (decreased by 5% to US$283 million) mainly due to inflationary increases in wages and salaries and Eskom electricity tariff increases.

Capital expenditure increased by 12% to R1 130 million (increased by 3% to US$80 million). Capital expenditure increased mainly due to increased growth or major capital expenditure related to the Sub-75 decline project and the optimisation and ventilation projects to support the integration.

B Reef exploration at Tshepong Operations continued during FY19 and a new block of ground was identified at the Phakisa section where development towards the B Reef will begin in FY20.

Key focus areas in FY20 will be to improve safety performance, quality mining and focusing on development in order to sustainably create available face length.

Moab Khotsong

 FY19

 FY18*

Number of employees

- Permanent

 5 421

 5 804

- Contractors

 1 036

 1 014

Total

 6 457

 6 818

Operational

Volumes milled

 (000t) (metric)

 970

 327

 (000t) (imperial)

 1 069

 360

Gold produced

 (kg)

 7 928

 3 296

 (oz)

 254 891

 105 969

Gold sold

 (kg)

 7 794

 3 165

 (oz)

 250 583

 101 757

Grade

 (g/t)

 8.17

 10.08

 (oz/t)

 0.238

 0.294

Productivity

 (g/TEC)

 120.67

 135.17

Development results

Total metres

  10 472

 9 527

Reef metres

  1 202

 1 328

Capital metres

  1 432

 380

Financial

Revenue

 (Rm)

 4 470

 1 672

 (US$m)

 315

 130

Average gold price received

 (R/kg)

 573 522

 528 387

 (US$/oz)

 1 258

 1 279

Cash operating cost

 (Rm)

 3 167

 1 037

 (US$m)

 223

 81

Production profit

 (Rm)

 1 369

 720

 (US$m)

 96

 56

Capital expenditure

 (Rm)

 559

 173

 (US$m)

 39

 13

Operating free cash flow 1

 (Rm)

 745

 462

 (US$m)

 53

 36

Cash operating cost

 (R/kg)

 399 414

 314 526

 (US$/oz)

 876

 761

All-in sustaining cost

 (R/kg)

 477 581

 420 286

 (US$/oz)

 1 048

 1 017

Average exchange rate

 (R/US$)

 14.18

 12.85

Safety

Number of fatalities

 1

 1

Lost-time injury frequency rate per million hours worked

 9.75

 11.18

Environment

Electricity consumption

 (GWh)

 766

 114

Water consumption - primary activities

 (ML)

 6 898

 1 702

Greenhouse gas emissions

 (000t CO2e)

 700

 110

Intensity data per tonne treated

- energy

 0.79

 0.35

- water

 7.11

 5.20

- greenhouse gas emissions

 0.72

 0.35

Number of reportable environmental incidents

 0

 0

Community

Local economic development

 (Rm)

 19

 7

Training and development

 (Rm)

 48

 13

* Incorporated into Harmony’s portfolio from 1 March 2018. The figures reported for FY18 are for the four months from March 2018 to June 2018

1 Operating free cash flow = revenue - cash operating cost - capital expenditure ± impact of run of mine (ROM) costs as per operating results

Other salient features

Status of operation

 Steady state operation: development continues

Life of mine

 9 years

Nameplate hoisting capacity (per month)

 160 000 tonnes (176 000 tons)

Compliance and certification

 New order mining right

ISO 14001

Mineral reserve estimates as at 30 June 2019

 Proved reserves

 Probable reserves

 Total mineral reserves

Reserves

(metric)

 Tonnes

(Mt)

 Grade

(g/t)

 Gold

(000kg)

 Tonnes

(Mt)

 Grade

(g/t)

 Gold

(000kg)

 Tonnes

(Mt)

 Grade

(g/t)

 Gold

(000kg)

 4.0

 7.29

 29

 2.8

 9.70

 28

 6.9

 8.28

 57

Reserves (imperial)

 Tons

(Mt)

 Grade

(oz/t)

 Gold

(000oz)

 Tons

(Mt)

 Grade

(oz/t)

 Gold

(000oz)

 Tons

(Mt)

 Grade

(oz/t)

 Gold

(000oz)

 4.4

 0.213

 945

 3.1

 0.283

 887

 7.6

 0.242

 1 832

Overview of operations

Harmony acquired Moab Khotsong from AngloGold Ashanti Limited in March 2018. Moab Khotsong, which includes the mining and surface infrastructure of the adjacent Great Noligwa mine, is located near the towns of Orkney and Klerksdorp, about 180km south-west of Johannesburg. The mining lease area lies just south of the Vaal River, which forms a natural boundary between South Africa’s North West and Free State provinces.

Mining is based on a scattered mining method together with an integrated backfill support system that incorporates bracket pillars. The geology at Moab Khotsong is structurally complex with large fault-loss areas between the three mining areas (top mine (Great Noligwa), middle mine and lower mine (growth project and Zaaiplaats project in prefeasibility study phase). Vaal Reef is the primary reef exploited. The economic reef horizons are mined between 1 791m and 3 052m below surface. Ore mined is processed at the Great Noligwa gold plant. The plant uses the reverse gold leach method, with gold and uranium being recovered through gold cyanide and acid uranium leaching.

Operating performance FY19

The acquisition of Moab Khotsong in March of FY18 met Harmony’s strategic objective of increasing the quality of its asset portfolio and increasing margins. The inclusion of Moab Khotsong for the full financial year boosted both group production and free cash flow in FY19.

Moab Khotsong is the group’s second largest gold operation and largest contributor to operating free cash flow. In FY19, Moab Khotsong processed 970 000 tonnes (1 069 000 tons), producing 7 928kg (254 891oz) at a recovered g