Thank you. Morning, everyone. Thank you for the opportunity to speak here today. I'm Boipelo Lekubo, Financial Director of Harmony, which is South Africa's largest gold producer, and a company with an exciting and growing copper story. Just please take note of our Safe Harbor Statement. We encourage you to read the cautionary language in full. For complete details on our interim results, refer to our results booklet, which is on our website. Mining with Purpose means we put people and safety first. We are building a resilient portfolio by investing continuously in our ore bodies and growing deliberately in copper to protect cash flows through the commodity cycle. Gold underpins stability and cash generation, while copper provides durability and growth. Our strategy is aimed at building enduring long-term value. We're doing this through safe, profitable ounces, quality reserve conversion, and disciplined copper scale alongside our sizable gold portfolio.
Our four strategic pillars, responsible stewardship, operational excellence, cash certainty, and capital allocation guide everything we do. Harmony's a geographically diversified producer with assets in South Africa, Papua New Guinea, and Australia. We've consistently delivered for over a decade and continue to upgrade our asset quality. The portfolio is underpinned by approximately 136 million ounces of Mineral Resources and about 37 million ounces of Mineral Reserves, providing scale, longevity, and optionality. Long-term shareholder value is built through consistent delivery across six performance areas that underpin safe, reliable, and profitable mining. Everything begins with safety. Our lost time injury frequency rate reached an all-time low of 4.23 and has remained below five for three consecutive quarters. Operational fundamentals are sound, and we produced 724,000 ounces of gold in the first half of the financial year. Underground recovered grades decreased to 5.7 grams a ton due to lower recoveries.
However, face grades remain in line with plan and recoveries have normalized. Group all-in sustaining cost rose to ZAR 1.18 million per kilogram, or $2,115 per ounce on the back of lower volumes and higher royalties. We remain on track to meet our full-year production cost and grade guidance. We're generating strong free cash flows, increased our operating profit by 61%, while basic earnings for the first half year period increased by 24% to $0.90 per share. On the back of consistent, strong operational and financial results, we have revised our dividend policy to reflect a higher base dividend and additional performance-linked related payout. This means shareholders could receive up to 50% of net free cash as a dividend. Our interim dividend has more than doubled to $204 million , rewarding our shareholders alongside our growth aspirations.
Gold and copper are both intrinsically important to us, and Harmony is well-positioned for growth. CSA is being integrated into our portfolio, and Eva Copper is advancing through development as we continue our sustained investment in our other brownfield assets. Our portfolio is changing not just in size but also in quality. Gold remains our core, while copper is a strategic growth lever. As the high cost-optimized ounces, which is the red part, taper, high-grade gold and copper equivalents step in, resulting in margin expansion. We plan to bring approximately 100,000 tons per annum of copper online from CSA and Eva within the next three-five years to address the production gap and smooth growth cash flows. While not yet permitted, Wafi-Golpu is a generational asset that once in production, could move Harmony towards a first quartile cost producer.
Guided by long-term asset optimization and disciplined capital allocation, we prioritize value over volume to build a more profitable and sustainable Harmony over the long term. We're not targeting a fixed gold to copper ratio. Decisions are driven by fundamentals, economic value, and reserve strength. The chart on the right represents our current plans a decade from now. By financial year 2035, approximately 40% of production may be copper from Eva, CSA, and Wafi-Golpu, complementing our South African gold base and enhancing resilience and margins. Our diversified portfolio is delivering strong adjusted free cash flow margins. This mix supports operating leverage, funds growth, and underpins disciplined life of mine extensions. Hidden Valley and South African surface margins remain excellent at 48% and 42% respectively. Our South African High-Grade Underground mines are producing at a solid 37% margin, while margins at the South African Optimized Underground doubled to 22%.
We remain highly leveraged to the gold price. Every $100 per ounce increase adds roughly $50 million to adjusted free cash flow at the operational level. While this environment provides optionality, we remain focused on these factors which are in our control to protect margins. Harmony has significant headroom with around $900 million in cash and undrawn facilities. We're therefore in a strong position to fund our growth pipeline. We have the capacity, the flexibility, and importantly, the discipline to continue delivering on our strategy. Our updated capital guidance now includes CSA and Eva Copper for this financial year only. For FY 2026, we expect Eva capital of around $322 million and CSA capital of $65 million ., bringing total group capital to just over $1 billion .
While the increase in total capital is meaningful, it is affordable and necessary to invest in CSA and build one of the largest, most significant new greenfield copper developments in Australia. The strength of our balance sheet has been recognized by the three key ratings agencies, where we hold a BB, Ba1, and BB in our inaugural public ratings. At current levels, and even after paying for the acquisition of CSA, we expect to be back in a net cash position by the financial year-end. We remain confident in our cash flows and our ability to fund all of our major projects and pay a consistent dividend in line with our upward revised policy. Now to our next growth chapter, the Eva Copper Project and CSA Mine in Australia.
Starting with Eva Copper, we conducted a robust three-year feasibility program that has significantly de-risked the project and delivered a high-confidence capital estimate. We have a clear roadmap with full construction at Eva now underway. Ramp-up to first production is expected before the end of the 2028 calendar year. Eva is a project with low execution risk and delivers a long-life mine with solid fundamentals. Average grades of 0.4% copper and 0.07 grams per ton gold underpin the decision to scale processing capacity to 18 million tons per annum. The mine is planned to produce approximately 65,000 tons of copper per annum for the first five years, with average annual production of 60,000 tons over the life of mine. Eva is a scalable mine and has the potential to be a significant producer in our portfolio.
The mine plan consolidates six deposits and 10 open pits with a low strip ratio of 1.6, supporting solid margins. The mine life of at least 15 years is underpinned by sizable resources and reserves. Total capital is spread over a three-year period and is expected to come between $1.55 billion-$1.7 billion. The capital is spread over three years in an estimated 20/40/40 split. This equates to a competitive capital intensity of around $26,000-$29,000 per ton. C1 cash costs in the first five years are attractive and expected to be approximately $2.07 per lb on base assumptions. We will maintain funding flexibility and protect leverage guardrails during construction. If you would like to see more information on this project, there is a two-minute video on the Eva Project on our website and on social media. I'd encourage you to have a look.
Harmony CSA is Australia's highest-grade copper mine, with a reserve grade of above 3.4% and more than 12 years of reserve life. Integration is progressing well as we embed Harmony's governance, operating standards, and disciplined approach to capital and risk management. Since taking full ownership towards the end of October last year, we have done the following. Number one, welcomed CSA employees and aligned the team to Harmony's culture and values. Secondly, we've implemented a seven-day safety stoppage to upgrade a secondary egress system. Thirdly, we are establishing the correct geotechnical sequence at the mine and prioritizing disciplined development and critical ventilation projects. Fourthly, the development of the upper Merrin mine has been paused pending further drilling to improve our ore body confidence.
An upgrade of the shaft steelwork on two levels is underway, resulting in a one-month stoppage in quarter three. I can gladly state that that has now been completed. Roughly $18 million in costs has been removed since acquisition, mainly related to corporate overheads and finance costs. Full optimization of the mine is expected to take around 18-24 months. We expect copper production of 17,500-18,500 tons at a recovered grade of above 3.5% for financial year 2026. This despite the one-month planned stoppage. The C1 cash costs at CSA remain low and are expected to be between $2.65-$2.80 per pound. We continue to harmonize the CSA Mine and will provide long-term guidance in August of this year when we release our full-year financial results.
The CSA ore body is exceptional, and recent exploration indicates material growth potential with significant high-grade intercepts already evidenced, as you can see at the bottom of the slide. We're planning an extensive underground and surface drilling program over 24 months to improve geological, geotechnical, and metallurgical understanding for mine design, long-term planning, and potential expansion. Harmony is positioning CSA for long-term value creation through safe, predictable production and unlocking potential regional synergies as our footprint in Australia grows. In conclusion, Harmony offers a compelling pathway to growth, resilient, scaled, and purpose-driven. We reaffirm our annual gold production guidance and cost guidance, while gold CapEx guidance has been reduced by ZAR 1 billion, or $60 million. Our total CapEx guidance for this financial year now includes Eva Copper and CSA. This is the Harmony of today and tomorrow.
We are internationally transitioning into a significant global gold and copper producer. This journey is grounded in Mining with Purpose, ensuring that everything we do creates value for all stakeholders wherever we operate. On top of our solid gold foundation, we're diversifying and enhancing our portfolio through our various copper assets. Anchored in our strategic pillars and capital allocation framework designed for durable returns, we remain unwavering in our pursuit of zero harm, operational excellence, and long-term value creation. Thank you for choosing to be part of our compelling story.
Thank you, Boipelo. Any questions coming from the audience? If not, I'll ask the first question to Boipelo. As Financial Director, how do you look at capital allocation? You've talked about the dividend now based on profitability, but as you mentioned, there's also all these different projects that Harmony is in the midst of building at this point in time. How do you allocate capital between the different buckets?
It's always a balance. First and foremost, everything always starts with safety. I think our journey towards zero harm is something that is a continuous effort. It's something that never really stops. Second to that is then investing in our overall portfolio, and ultimately, everything is about creating value, hence what we've done with the acquisition of CSA, the final investment decision that was taken on Eva Copper. A lot of value we saw in copper as opposed to gold under the current environment. It's a balanced approach. We have revised our dividend policy, as I've stated. It's creating value and giving back to shareholders alongside the growth that we are pursuing.
I guess in more detail, is there a targeted yield that you're trying to achieve for dividend? Is there a hurdle rate that you look at in terms of project development? What kind of gold and copper price assumption would you assume in looking at those hurdle rates?
So we are generally quite conservative. In terms of assessing projects, generally, we'd look for something that is greater than our weighted average cost of capital. But ultimately, these things, as I mentioned, it's a balance. It depends on many factors. In terms of a yield, there's no specific yield that we've publicly quoted. I think tracking Harmony over the years, a lot has gone into improving the overall portfolio that we have. Yeah. So, I think I'll leave it at that.
Great. As you talk about balance, as you mentioned, there's a gold foundation, there is copper growth coming up, and as you mentioned in your presentation, you're not really trying to have a number for copper exposure. Is there a point where the balance might be imbalanced? Is there a point where copper might become too large of a portion of the pie, or should we not look at it that way?
As I said, we're not looking at a particular split. The pie chart that I showed previously showed by FY 2035, we should be about 60% S.A. gold, 40% copper. That mix will change depending on how we look at it. Fundamentally, our base is still gold. We have significant resources and reserves, and there still is that potential to convert those resources into reserves. Gold is core. It just has been a catalyst towards our growth in copper.
Maybe one last question. A lot's been happening in the world, causing potential inflationary pressure, especially in the mining space. As you look at your gold operations versus your copper operations, are you seeing differences in terms of pressures on input cost? As you operate in three different countries here, is there, again, pressure in a particular country that you'd like to speak to?
If I look at our cost base, 90% is rand-based. We do have that benefit relative to our peers. Obviously with the gold depending on strengthening or weakening of the rand, our cost base, I'd say 70% is largely predictable in that it's labor and electricity. We are in the third year of a five-year wage agreement, so we're fairly aware of what that labor cost inflation increase will be, with electricity as well. Obviously, things will change as we progress and develop more in Australia with copper. It's always a balancing act, but fairly well managed at this stage.
Thanks. That's all the time we have. Thanks again, Boipelo.
Thank you.
Very good presentation. Thank you.