Company announcements

Steady improvement in performance for Harmony

November 01, 2010

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Positioned to deliver

Johannesburg. Monday, 1 November 2010. Harmony Gold Mining Company Limited (Harmony) today announced the company’s results for the quarter ended 30 September 2010, all in line with previously provided guidance.

CEO, Graham Briggs, said: “Production from our growth projects during the quarter was pleasing, reinforcing our pursuit of lower-cost, better quality assets, and taking us a step closer to achieving our production target of 2 million ounces by 2013. The ramp up of Hidden Valley in Papua New Guinea (PNG) continued and exploration drilling at Wafi/Golpu showed tremendously positive results, emphasising the potential for the Morobe Mining Joint Venture to establish another high quality, world-class operation in PNG,” says Briggs.

Harmony’s growth in the short to medium term will come from four projects, three in South Africa – (Doornkop, Kusasalethu and Phakisa) and an open pit mine in PNG, being Hidden Valley. Most of the capital on these projects has been spent and production benefits have already started to be seen, driving the company down the cost curve.

These four growth projects were responsible for a 193kg rise in gold production quarter-on-quarter, which largely offset the closure of some of our older shafts, a lower grade at Bambanani and continued work on Joel’s shaft bottom. Overall gold production for the group declined by 2.9% to 10 471kg for the quarter ended September 2010.

Specific highlights for the quarter include:

• Kusasalethu, where gold production rose by 113kg;
• Hidden Valley, which recorded an 86kg increase in production;
• Doornkop, which recorded a 33kg increase in production;
• Masimong, an increase of 62kg in production; and the
• South African surface operations, which saw gold production rise by 52kg.

The rand per kilogram gold price received decreased by 2.8% to an average of R287 401/kg in the September 2010 quarter, from R295 580/kg in the previous quarter. However, gold sold increased by 130kg compared with the previous quarter, which resulted in a R38 million increase in revenue.

As expected, cash operating costs for the quarter increased by R238 million (11.2%), mainly due to increased electricity costs (due to winter tariffs and price increases) and higher labour costs as the mid-year wage increase came into effect. Cash operating profit for the September 2010 quarter, of R652 million, was 30.8% lower when compared with the June 2010 quarter’s cash operating profit of R942 million. However, earnings per share increased to 33 cents per share.

Excellent progress was made and reported at our Wafi/Golpu joint venture during the quarter. The concept study was finalised in September 2010, indicating that a copper gold mine at Wafi/Golpu is technically and financially viable, and that a number of development options could be considered in a pre-feasibility study. Production could potentially be between 400 000 – 700 000oz of gold and 100 000 to 200 000t of copper per annum. This could be sustainable over a 20-year mine life.

“This could conceivably be the gold find of the century,” says Briggs.

Our strategy of asset optimization is a tough one,” said Briggs, “and will almost inevitably see short-term setbacks in production. Yet we managed to pursue our strategic goals, with a number of corporate activities having been concluded during the quarter. As a result of this strategy, certain non-core assets were divested and shafts closed so that the management team may focus its resources on growing, developing and operating its portfolio of core, quality assets. “Safe, profitable ounces continue to be our focus,” said Briggs.

For more details contact:

Marian van der Walt
Executive: Corporate and Investor Relations
+27 82 888 1242(mobile)

Henrika Basterfield
Investor Relations Officer
+27 82 759 1775(mobile)