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Findings presented to DME on 19 november, 2007

November 22, 2007

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On Monday, 19th November, 2007 a presentation by Mine Management and the Mine Joint Health and Safety Forum was given to the Department of Minerals and Energy regarding the findings and remedial actions of the investigations into the incident at Elandsrand, where a compressed air column fell down the shaft on 03 October, 2007.

The Sect 11.5 investigation required by the Mine Health and Safety Act, was conducted by a Harmony task team, who made use of the CSIR, an independent Consulting Engineer, as well as technical expertise from within Harmony Gold.

The following areas were investigated; the mode and cause of the pipe failure, emergency electrical power supply, emergency preparedness, supply of drinking water in the event of an emergency, and the impact of continuous operations on maintenance of the infrastructure.

The findings are as follows:

Pipe Failure

The pipe failure which took place on a vertically positioned section of pipe, situated just below the entrance to the shaft, came as a result of thinning of the pipe on the side adjacent to the shaft wall, which when it failed exhibited a split several meters long.

The thinning of the pipe took place from the inside, making it undetectable from the outside, and was due to a combination of erosion by water droplets in the air flow, and corrosion.

The Newtonian forces resulting from the air leaking under pressure from the split then forced the pipe away from the wall, causing the pipe bend on the bank to fail on the welded joint as a result of the cantilever forces on the joint and then the pipe subsequently fell down the shaft.

The loss of material is attributed to the period of service and no deficiencies in either the material selection or the construction of the pipe itself were found that could have contributed to the failure.

The remedial action that will be incorporated into the normal maintenance that is done is to conduct a once off scan of the entire shaft column, at a predetermined number of positions per length of pipe.

The results of this scan, as well as the design calculations and the discard criteria for a pipe working at these pressures will be used to determine the frequency at which the pipe wall thickness testing should be conducted in the future.

Tests have been conducted on a representative sample of pipes removed from the shaft, and the indication thus far, is that the pipes below the position of failure are in a good working condition, making the cause of failure a small localised condition. The tests showed a maximum of 28.8% material loss over the 31 years in use. This compared to a possible design reduction in material before failure of 77.8%.

Emergency Power

The existing firm supply from two independent Eskom power sub stations, as well as an additional source of emergency power from a neighbouring mine was deemed to be adequate.

All power, interrupted by the damage to the electrical cables feeding the underground operations, has been successfully restored. A schedule of additional electrical cables that will supply power to the underground winders, pumps, fridge plants and ancillary equipment has been compiled.

These electrical cables will provide an additional source of power to the above plant and equipment.

This includes emergency power to the communication (telephone) exchange situated underground.

Emergency Evacuation

An extensive risk assessment of the means and routes of evacuating employees have been conducted, and these plans have been presented and were found to be acceptable with the emphasis placed on frequent exercising of the emergency procedure for evacuating employees from underground.

All emergency procedures have been revised, and Harmony as a group is in the process of completing the new Code of Practice relating to emergency preparedness.

Drinking Water

Elandsrand makes use of reverse osmosis purification of their service water into drinking water.

In the event of an emergency, when the aforementioned is rendered inoperable, drinking water, stored in large tanks positioned at accessible places will ensure that persons stranded underground for lengthy periods will have access to water.

Continuous Operations (Conops)

Continuous Operations were investigated by an independent Engineer, with respect to the possible impact on maintenance of engineering and shaft infrastructure.

The report pointed out certain areas that required attention, however the general standard of maintenance, verified by audits, physical availability and utilisation of plant and machinery, indicate that continuous operations does not have a negative impact on maintenance.

The areas requiring attention are related more to discipline and shaft utilisation, which are being addressed through recommendations from Industrial Engineers, who investigated the shaft schedule with the objective of optimising the utilisation of shaft time available.

Although not relevant to the incident, annual maintenance to sub-stations, was raised in the report and will be given the necessary attention through the optimisation of time available for maintenance.

The DME inquiry into the incident will begin on 29 November, 2007.

The predicted gold loss is 1 000 kg and the final figure will be released at the end of the December 2007 quarter.

An insurance claim to the effect has already been submitted.

Conditions in the working places, following a 44 day period during which no production took place, were found to be better than expected.

Production at Elandsrand has resumed, and it is anticipated that the shaft will be back on full production within seven days.

Harmony management would like to thank the Employees of Elandsrand, Organised Labour, all those who so willingly offered to assist, and the Department of Minerals and Energy, for their assistance during the incident, and subsequent restoration of the shaft.

For more details contact:

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

Alwyn Pretorius
Chief Operating Officer
+27 (0)82 806 0872

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