Company announcements

Harmony’s task team completes Conops due diligence

November 15, 2007

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Johannesburg. Thursday, 15 November 2007. Harmony Gold Mining Company’s Conops Task Team has completed its internal due diligence of Harmony’s continuous mining method (Conops).

The internal due diligences were conducted at the Tshepong, Elandsrand, Masimong, Evander No. 8 and Winkelhaak shafts, as well as Cooke 2 operations. These and Target are the only shafts in Harmony that use Conops.

The objective of the due diligence was three–fold:

• To establish whether Conops has been successfully implemented at the mines where it was introduced and to what extent the original objective of improved profitability without compromising safety was met. Theoretically, Conops should result in increased production of 26% and a cost increase of 18%, leading to increased profitability.
• To understand the gap that exists between the current performance of the operations and the potential performance after implementation of Conops at these operations.
• To understand the reasons for the underperformance versus the Conops potential and propose actions to the operations to close the gap. These actions are based on best practice and knowledge sharing within the group.

The due diligence was conducted in a three–step approach:

Step 1:

An internal perception survey was undertaken and responses to the questionnaire indicated that the management–team–level employees are positively disposed toward and understand the strategic importance of Conops. In addition, it also showed that mine employees, including unions and associations generally prefer Conops to the traditional working cycle, especially foreign labour, because of the extended breaks, the Conops allowances and job creation. It is at middle–management–level that miss–alignment towards Conops is being experienced.

Step 2:

An evaluation of pre– and post–Conops results was done and the results were measured against a defined benchmark for the operation. This exercise revealed amongst other indicators that productivity pre– and post–Conops implementation increased between a low of 2% at Elandsrand and a high of 18.5% at Evander 8. It also revealed that all these operations generally showed improvement in safety statistics over last few year’s as a result of different initiatives that were implemented to improve safety throughout Harmony.

Step 3:

A thorough fact finding process was conducted within the Mining, Engineering (production as well as shafts and services), Human Resources and Financial disciplines. The task team obtained the facts creating the gaps that currently prevent the full realisation and potential of Conops.

As part of the process, all service functions, engineering maintenance, response time to breakdowns, weekend service level requirements as well as commissioning and maintaining of related equipment were scrutinised.

Action plans have been drawn up by each shaft management team at each operation to address those issues that have been identified as requiring attention. After the recommended actions have been implemented, progress with regards to improvements will be monitored.

Conops will be reviewed again within 3 months and it is our intention to phase out Conops at those operations that do not deliver on our objectives.

Graham Briggs
Acting Chief Executive
+27(0)83 265 0274

Lizelle du Toit
Investor Relations Officer
+27(0)82 465 1244