Company announcements

Harmony well geared to deal with strength of SA Rand

April 29, 2003

---

Harmony Gold Mining Company Limited (NYSE: HMY: JSE: HAR) today reported that the past quarter saw cash operating profit decreasing by 37% or R285 million to R478,4 million. The company’s performance was severely influenced by the continued strengthening of the South African Rand, increasing from R9,61 to the US Dollar, to R8,37 per US Dollar. This 13% appreciation contributed R125 million to the decrease in cash operating profit.

The strength of the SA Rand more than negated the benefits from a higher US Dollar gold price.

Harmony’s results were also affected by the number of public holidays over the Christmas and New Year period. Although recovery grades were at similar levels, the loss of six working days (8%) resulted in a 8% reduction in tonnages from underground. This translates into a reduction of 1 500 kg or R142 million in revenue.

The company achieved a US$80/oz or 23% cash operating profit margin with cash costs of US$272/oz. When measured in R/kg terms, the gold price received was 5,5% lower at R94 687/kg to the R100 171/kg received previously. Over the past 3 quarters, the gold price received in South African Rand terms decreased by 11% from R106 463/kg to R94 687/kg.

In R/kg terms costs increased by 7% to R73 150/kg. This cost increase can directly be related to the decrease in tonnage from underground. Actual working costs were a very pleasing 2% lower at R1 625 million. Despite the lower tonnage from underground, unit costs in Rand/tonne were lower at R230/tonne. Cost reduction is the main short-term measure we have to counter the lower R/kg gold price.

The higher US Dollar gold price levels created an opportunity to further restructure the Australian hedge books. As at 31 December 2002, the company’s total commitments within the Australian portfolio totalled 1 608 675 ounces. The outstanding commitments have decreased by 613 675 ounces to 995 000 ounces as at 31 March 2003.

In terms of ounces produced, Harmony remains a South African producer with the bulk of its production coming from this country, thereby exposing investors to the volatility of the South African Rand. As much as we now experience the effect of a strengthening South African Rand, investors in Harmony have leveraged exposure to a weakening Rand as well as a rising US Dollar gold price.

On 26 February 2003 Harmony announced that it had agreed to subscribe for new shares and intended to make a public takeover offer for Australian listed gold producer Abelle Limited. As at 24 April 2003, Harmony’s total interest in Abelle was 115 915 732 (71,8%) ordinary shares and 33 014 410 (43,5%) listed options. The offer is now scheduled to close on 30 April 2003.

“On 20 March 2003, the South African Government released the draft Mineral and Petroleum Royalty Bill. We are of the opinion that any new royalty imposed will impact significantly on our financial results and the cost of mining in South Africa. As a concerned custodian of our shareholders’ investment, we have submitted our comments to both the Treasury Department and the Department of Minerals and Energy” commented chief executive, Bernard Swanepoel.

Operationally, the company is well geared for the impact of the strong Rand. The Masimong Expansion Project, a growth project in the Free State, is progressing well with higher grades and tonnages and lower costs being achieved. The operational performance of Evander 8 Shaft continues to improve satisfactorily, underground tonnage is returning back to levels of 60 000 tonnes per month whilst the grade is showing similar improvement to recovery grades of 6,0 g/t. Overall production results from Evander are expected to return to the levels achieved before the seismic event of some nine months ago.

The benefits from the increased development programme to improve the flexibility at Elandsrand will deliver increased tonnages and grade over a period of six months. Deelkraal, which has been suffering from the lack of face availability, have holed two new raises in March. These will be available for mining within the next two months. A third raise line is expected to be available during May 2003.

The Free Gold Joint Venture operations reported a 29% or R58 million reduction in cash operating profit on a 50% attributable basis, down to R141 million. Working costs in R/kg terms increased by 10% to R62 545/kg, but working costs in R/tonne terms decreased by 4% to R223/tonne. At US$232/oz the Free Gold operations remain the most profitable assets in Harmony’s portfolio.

The lower US Dollar gold price and stronger Australian Dollar are affecting the operating margins at all the existing Australian operations. There will be an ongoing need for capital to explore and develop replacements for the existing short life projects. The company’s focus will however be on restricting mining activities to only those areas which will produce profitable ounces on a total cost basis.

“Whilst the current gold price environment is becoming more challenging with the unexpected strengthening of the South African currency, this is the environment which is similar to that in which the company grew substantially. It was during this time, with South African producers’ margins under pressure that the company grew its production base from 580 000 ounces per annum to the plus 3,0 million ounces for the current financial year,” concluded Bernard Swanepoel, chief executive.

For more details contact:

Bernard Swanepoel
+27 83 303 9922

Ferdi Dippenaar
Marketing Director
+27(0)82 807 3684

Corné Bobbert
Investor Relations Officer
Tel: +27 11 684 0146
Office: +27 11 684 0188
Mobile: +27(0)83 380 6614
cbobbert@harmony.co.za