Executive Summary

In this report, we review Harmony Gold’s most recent released statement on production, grade, and cost guidance for FY25. The information includes:
•    Harmony Gold expects to meet FY25 guidance on production, grade, and costs.
•    FY25 production expected between 1 400 000 and 1 500 000 ounces (in line with guidance).
•    All-in-sustaining costs (AISC) to fall within R1 020 000/kg to R1 100 000/kg guidance range.
•    Underground recovered grades will surpass guided 6g/t.
•    Total capital expenditure will be slightly below the R10.8 billion guidance.
•    Highlights for FY25 include:
o    Achieving or beating all guidance metrics for the 10th consecutive year.
o    Record interim dividend of R1.4 billion.
o    Potential acquisition of MAC Copper in Australia, which would add over 40 000 tonnes of annual copper production (pending conclusion in H2 2025).
o    On-time and on-budget completion of Mine Waste Solutions extension project (Phase 1).
o    MSCI ESG rating upgraded to BB (from B) in June 2025 due to sustainable mining practices.
•    Strong operational free cash flows underpinned results and supported strategic objectives, including expanding into copper.
•    Looking ahead to FY26:
o    Focused capital allocation to high-grade, high-quality, lower-risk assets.
o    Key projects include extensions at Hidden Valley, Moab Khotsong, and Mponeng.
o    Awaiting feasibility study conclusion for the Eva Copper project.
o    Continuing permitting for the Wafi-Golpu copper-gold project.
•    FY25 year-end results presentation scheduled for 28 August 2025.

The gold price has stayed relatively steady within a defined range, with a high of approximately $3 450/oz and a low of $3 300/oz, since the previous report. The only significant development during this period was the announced potential acquisition of MAC Copper, an Australian mining company. As a result, we have raised the likelihood of a higher share price to reflect the anticipated impact of including MAC Copper in the portfolio of Harmony Gold.

Analyst thesis

 
Although Harmony is the most attractively valued among its South African gold producer peers (GFI and ANG), it also has the greatest exposure to South Africa, where electricity - despite being stable at present - has historically been unreliable and labour costs remain volatile. Harmony also faces higher operating costs compared to its peers, largely due to its reliance on underground mining. The company has already extracted much of its high-yield ore, and we anticipate that future production growth will be challenging as ore grades decline. Furthermore, Harmony has significantly outperformed its peers to date, but we believe this trend is unlikely to persist as previous tailwinds subside. To support long-term sustainability, Harmony is seeking opportunities to expand its operations.