Our focus on operations will include internal due diligence studies. Consistently loss-making shafts will be closed down and
employees redeployed within the company.
The upgrading of our Growth portfolio to increase our production by 1.4 million ounces remains core to our organic growth
ambitions. All projects will be scrutinised and capital expenditure commitments carefully understood. Some project delays may
occur as Harmony’s current financial constraints may affect project scheduling and the time taken to bring these new mines
on stream. During the next six months, our Growth portfolio’s expenditure commitments will be communicated to shareholders
as well as delays, if any, in production build-up.
Ore reserves
At 30 June 2007, Harmony’s ore reserves reflected a year-on-year depletion of 2.4 million ounces when compared with the
combined ore reserves for 30 June 2006. Disposals of assets, shaft closures and the loss of the Western Areas equity ounces
accounted for a further decrease of 5.3 million ounces of reserves.
The pre-feasibility studies at Harmony’s Evander South Project as well as Golpu in Papua New Guinea (PNG) added 3.5 million
ounces to the reserves. Copper and molybdenum reserves have not been included as gold equivalents. A further increase of
1.8 million ounces is attributable to growth in the reserves from the South African operations. After accounting for the
depletion and replacements, Harmony’s current gold ore reserves amount to 53.6 million ounces.
A gold price of US$520/oz was used for the conversion of Mineral Resources to Ore Reserves at our South African and
Australasian operations. An exchange rate of USD/ZAR6.88 for South Africa and AUD/USD0.73 for Australia has been used,
resulting in a gold price of R115 000/kg or AUD712/oz , respectively.
Following an extensive drilling exploration programme, Harmony declared its uranium mineral resources, within the measured
resource category. Five tailings dams in Randfontein delivered 360 million tonnes containing 79 million pounds of U3O8;and six
tailings dams in the Free State with 190 million tonnes containing 30 million pounds of U3O8. These resources represent the total
contained dump resources and no economic cut-offs have been applied. Economics of dual pay limits have also not been applied.
Later in the year, Harmony’s Ore Resources Executive, Jaco Boshoff, will deliver a presentation to Harmony’s investment
community on our ore reserves. We will highlight the areas where our ore reserves are located, quantify current reserves being
mined and reserves to be mined in the longer term. In addition, we will illustrate how our stated ore reserves relate to our
future production and yields.
After a recent inspection of some of Harmony’s Quality mines, I can safely state that Harmony has excellent ore-bodies.
I am confident that through team work, a diligent and dedicated management and workforce, each mine should be in a
position to produce at maximum grade levels.
Management
Executive management had in the past months been depleted and no replacements had been made. This key issue of
management capacity had been raised by concerned shareholders and critics. In order to address these vacancies, one external
and two internal appointments were made. We recognise that further appointments will be required especially from the mining
engineering and financial fields.
Until recently, executive management was too thinly stretched and had too large a span of control. Going forward we will have
disciplined, committed management, to support future growth. Management has undertaken to reverse the downward trend
of the gold production and the unsatisfactory upward trend of the operating cost and consequently the unit cost.
Dividend
Harmony is committed to large capital expenditures for the next four years in order to increase production volumes. During
this period, cash generated by the operations will be utilised to fund our Growth projects. Accordingly, no final dividend was
declared by the Board of Directors for the financial year ended 30 June 2007.
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