Miningweb: Harmony posts record R11.1bn cash flow, R2.4bn dividend despite 17% cost surge, pivots to gold-and-copper future

Key topics:Record free cash flow of R11.1bn, dividend payout rises to R2.4bnEarnings surge, balance sheet strengthened with R11.1bn net cashStrategic copper expansion positions Harmony for long-term growthSign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here.Support South Africa’s bastion of independent journalism, offering balanced insights on investments, business, and the political economy, by joining BizNews Premium. Register here.If you prefer WhatsApp for updates, sign up for the BizNews channel here..BizNews Reporter.Harmony Gold Mining Company Limited has announced its financial and operational results for the year ended 30 June 2025 (FY25), highlighting a period of value-driven growth, strong margins, record cash flows, high grades, and strategic copper expansion. CEO Beyers Nel emphasised the company's "decade of consistent performance" rooted in responsible mining, safety, sustainability, and operational excellence, positioning Harmony for a future driven by gold and copper. Nel further stated that in FY25, Harmony demonstrated resilience and consistency, delivering on its production guidance for the tenth consecutive year and generating record free cash flows. This underlines that while gold remains core, the company is transforming into a global, high-margin gold and copper producer. This strategic evolution into copper, a critical enabler of the global energy transition, enhances Harmony's portfolio. It strengthens its long-term growth strategy, de-risking the asset base, safeguarding cash flows, and strengthening its investment case.Financial performance highlightsHarmony demonstrated remarkable financial strength in FY25, marked by a record adjusted free cash flow of R11.1 billion (US$614 million), representing a 54% increase from FY24. This significant growth was primarily driven by higher recovered grades and an elevated average gold price received, leading to an improved adjusted free cash flow margin of 16%, up from 12% in FY24. The company reported outstanding earnings growth, with headline earnings per share (HEPS) rising by 26% to 2,337 SA cents (129 US cents), and basic earnings per share increasing substantially by 67% to 2,313 SA cents (127 US cents). In line with its dividend policy of returning 20% of net free cash generated, Harmony declared a final gross cash dividend of 155 SA cents (approximately 8.9 US cents) per ordinary share, bringing the total FY25 payout to a record R2.4 billion (US$133 million). The company's balance sheet also showed robust health, with its net cash position surging by 285% to R11.1 billion (US$628 million) and maintaining substantial liquidity of R20.9 billion (US$1,179 million) in cash and undrawn facilities, providing significant headroom for future investments. Group revenue grew by 20% to R73.9 billion (US$4.07 billion), mainly attributed to a 27% increase in the average gold price received to R1,529,358/kg (US$2,620/oz). This was partially offset by a realised gold hedge book loss of R4.59 billion (US$253 million). By-product contributions included a 9% increase in silver revenue to R1.81 billion (US$100 million) due to a 26% rise in silver prices, despite a 15% decrease in production. In comparison, uranium revenue decreased by 5% to R822 million (US$45 million) due to a 17% decline in production.Harmony Gold experienced a 17% increase in its All-in sustaining costs (AISC) to R1,054,346/kg (US$1,806/oz) in FY25, which remained within guidance. This rise was primarily driven by lower planned production and general inflation. Specific factors included a 6% increase in labour costs, which constitute 52% of cash operating costs, due to salary hikes and production bonuses. Electricity and water costs rose by 16%, largely due to higher Eskom tariffs, making up 20% of cash operating costs. Additionally, royalties surged by 50%, reflecting higher gold prices, revenue, and profitability. Higher sustaining capital expenditure from increased development metres also contributed to the elevated AISC. The company noted that over 90% of its cash operating costs are rand-denominated, which can lead to volatility from exchange rate fluctuations.Operational excellenceHarmony's operational performance reflected a disciplined approach, marked by an all-time low lost-time injury frequency rate (LTIFR) of 5.39 per million hours worked, demonstrating continued progress towards zero harm despite the tragic loss of ten colleagues in the second half of FY25. The Group achieved its best six-month safety performance in 75 years during the first half of FY25. Harmony met its production, grade, and cost guidance for the tenth consecutive year. Underground recovered grades increased by 3% to 6.27g/t, exceeding the revised guidance of 6g/t and primarily driven by the exceptional performance of Mponeng. Group gold production stood at 46,023kg (1.48Moz), a 5% decrease year-on-year. Still, it remained within guidance, with the reduction attributed to planned lower production, safety-related stoppages, and adverse weather conditions in the latter half of FY25. Mponeng delivered a phenomenal performance with an 8% increase in production to 16,554kg and an exceptional recovered grade of 11.27g/t, generating R8.84 billion in adjusted free cash flow at a 35% margin. Cost management was effective, with All-in sustaining costs (AISC) increasing by 17% to R1,054,346/kg (US$1,806/oz), remaining in line with guidance. This increase was due to lower planned production, inflation, higher labour costs (up 6%), electricity and water costs (up 16% mainly from Eskom tariffs), and a significant 50% rise in royalties due to higher gold prices, revenue, and profitability.Strategic growth and portfolio transformationHarmony is actively transforming its portfolio, focusing on quality gold and copper assets. Copper is expected to contribute approximately 40% of production by FY35. The Eva Copper Project in Australia is progressing, with its final Feasibility Study Update (FSU) imminent. Its mineral Resource has increased by 31% to 1.93Mt of contained copper, and gold is up 12% to 492koz. First production from Eva Copper is anticipated in calendar year 2028, with an expected annual output of 55,000 to 60,000 tonnes of copper and approximately 14,000 ounces of gold. The acquisition of MAC Copper, owner of the high-grade CSA Mine in Australia, is expected to conclude in October 2025, providing immediate copper production and accelerating portfolio diversification. Negotiations continue with the Papua New Guinea Government for the Wafi-Golpu Project, a Tier 1 copper-gold asset. Harmony declared globally significant mineral resources of 135.5Moz and mineral reserves of 36.8Moz in gold and gold equivalents as of 30 June 2025. The reduction in reserves was primarily driven by mining depletion and a lower conversion of copper to gold equivalent ounces, influenced by a higher percentage increase in the gold price compared to the copper price in the gold equivalent conversion calculation. Harmony continues to receive external recognition for its embedded sustainability approach, including an upgrade to a BB MSCI ESG rating and an 'A-' rating from CDP for water management. The company's decarbonisation roadmap aims for a 63% reduction in Scope 1 and 2 emissions by FY36 and plans to generate nearly 600MW of renewable energy by 2028.FY26 outlookFor the upcoming financial year (FY26), Harmony has provided guidance for production between 1.4 Moz and 1.5 Moz. The underground recovered grade is expected to be above 5.8g/t, and All-in sustaining costs (AISC) are projected to be between R1,150,000/kg and R1,220,000/kg. Capital expenditure is forecasted to increase to R12.95 billion (US$699 million), driven by significant capital projects such as the Moab Khotsong and Mponeng extension projects, the 100MW renewable energy plant at Moab Khotsong, and fleet replacement at Hidden Valley.Harmony intends to revisit and update its guidance in H1 FY26 following the successful conclusion of the MAC Copper acquisition and the Eva Copper feasibility update. Harmony is well-positioned to execute these plans reliably and deliver consistently, enabling long-term positive returns..Download the results PDF below:

Miningweb: Harmony posts record R11.1bn cash flow, R2.4bn dividend despite 17% cost surge, pivots to gold-and-copper future

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