As filed with the Securities and Exchange Commission on October 26, 2009

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

o		REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2009

OR

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

o		SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Date of event requiring this shell company report

For the transition period from       to

Commission file number: 001 - 31545

HARMONY GOLD MINING COMPANY LIMITED

(Exact name of registrant as specified in its charter)

REPUBLIC OF SOUTH AFRICA

(Jurisdiction of incorporation or organization)

RANDFONTEIN OFFICE PARK, CNR WARD AVENUE AND MAIN REEF ROAD,
RANDFONTEIN, SOUTH AFRICA, 1760

(Address of principal executive offices)

Khanya Maluleke, Company Secretary
tel: +27 11 411 2019, khanya.maluleke@harmony.co.za , fax: +27 11 411 2070,
Randfontein Office Park, CNR Ward Avenue and Main Reef Road, Randfontein, South Africa, 1760

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person )

Securities registered or to be registered pursuant to Section 12(b) of the Act:

Ordinary shares, with nominal value Rand 50 cents per share*

(Title of Class)

American Depositary Shares (as evidenced by American Depositary Receipts),
each representing one ordinary share

(Title of Class)

Securities registered or to be registered pursuant to Section 12(g) of the Act:

Ordinary shares, with nominal value Rand 50 cents per share*

(Title of Class)

American Depositary Shares (as evidenced by American Depositary Receipts),
each representing one ordinary share

(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

The number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the last full fiscal year covered by this Annual Report was:

425,986,836 ordinary shares, with nominal value of Rand 50 cents per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES  þ    NO  o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

YES  o    NO  þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days:

YES  þ    NO  o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes o       No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP  o		International Financial Reporting Standards as issued by the International Accounting Standards Board þ		Other o

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17  o    Item 18  þ

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES  o    NO  þ

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

YES  þ    NO  o

 

 

TABLE OF CONTENTS

Part I			5
Item 1 . Identity of Directors, Senior Management and Advisors			5
Item 2 . Offer Statistics and Expected Timetable			5
Item 3 . Key Information			5
Item 4 . Information on the Company			19
Item 4A . Unresolved Staff Comments			90
Item 5 . Operating and Financial Review and Prospects			90
Item 6 . Directors, Senior Management and Employees			118
Item 7 . Major Shareholders and Related Party Transactions			136
Item 8 . Financial Information			138
Item 9 . The Offer and Listing			140
Item 10 . Additional Information			143
Item 11 . Quantitative and Qualitative Disclosures About Market Risk			159
Item 12 . Description of Securities Other than Equity Securities			162
Part II			168
Item 13 . Defaults, Dividend Arrearages and Delinquencies			168
Item 14 . Material Modifications to the Rights of Security and Use of Proceeds			169
Item 15 . Disclosure Controls and Procedures			170
Item 16A . Audit Committee Financial Expert			171
Item 16B . Code of Ethics			171
Item 16C . Principal Accountant Fees and Services			172
Item 16D . Exemptions from Listing Standards for Audit Committees			172
Item 16E . Purchases of Equity Securities by the Issuer and Affiliated Purchasers			172
Item 16F . Change in Registrant’s Certifying Accountant			173
Item 16G . Corporate Governance			173
Part III			174
Item 17 . Financial Statements			174
Item 18 . Financial Statements			175
Item 19 . Exhibits			176
SIGNATURE			179
INDEX TO FINANCIAL STATEMENTS			F-1
Deed of Extinguishment of Royalty (Wafi-Golpu Project)
Master Purchase and Farmin Agrement
Hidden Valley Joint Venture Agreement
Master Co-operation Agreement
Significant subsidiaries of Harmony Gold Mining Company Limited
CEO Certification
CFO Certification
Section 906 CEO Certification
Section 906 CFO Certification

USE OF TERMS AND CONVENTIONS IN THIS ANNUAL REPORT

     Harmony Gold Mining Company Limited is a corporation organized under the laws of the Republic of South Africa. As used in this Annual Report on Form 20-F, or this annual report, unless the context otherwise requires, the term “ Harmony ” refers to Harmony Gold Mining Company Limited; the term “ South Africa ” refers to the Republic of South Africa; the terms “ we ”, “ us ” and “ our ” refer to Harmony and, as applicable, its direct and indirect subsidiaries as a “ Group ”.

     In this annual report, references to “ R ”, “ Rand ” and “ c ”, “cents” are to the South African Rand, the lawful currency of South Africa, “ A$ ” refers to Australian dollars, “ K ” or “ Kina ” refers to Papua New Guinean Kina and references to “ $ ”, “ U.S.$ ” and “ U.S. dollars ” are to United States dollars.

     This annual report contains information concerning our gold reserves. While this annual report has been prepared in accordance with the regulations contained in Securities and Exchange Commission Guide 7, it is based on assumptions which may prove to be incorrect. See Item 3. “Key Information — Risk Factors — Harmony’s gold reserve figures are estimated based on a number of assumptions, including assumptions as to mining and recovery factors, future cash costs or production and the price of gold and may yield less gold under actual production conditions than currently estimated.”

     This annual report contains descriptions of gold mining and the gold mining industry, including descriptions of geological formations and mining processes. We have explained some of these terms in the Glossary of Mining Terms included at the end of this annual report. This glossary may assist you in understanding these terms.

PRESENTATION OF FINANCIAL INFORMATION

     We are a South African company and the majority of our operations are located in our home country. Accordingly, our books of account are maintained in South African Rand and our annual and interim financial statements are prepared in accordance with International Financial Reporting Standards (“ IFRS ”) as issued by the International Accounting Standards Board (“ IASB ”). Prior to fiscal year ended June 30, 2008, our annual financial statements (translated into U.S. dollars) were prepared and filed with the U.S. Securities and Exchange Commission (“ SEC ”) in accordance with generally accepted accounting principles in the United States (“ U.S. GAAP ”). On December 21, 2007, the SEC adopted rules allowing foreign private issuers that file Annual Reports on Form 20-F to file financial statements with the SEC in accordance with IFRS as issued by the IASB without reconciliation to U.S. GAAP. As per these rules, we include in this annual report our consolidated financial statements prepared in accordance with IFRS as issued by the IASB, translated into U.S. dollars. All financial information, except as otherwise noted, are stated in accordance with IFRS as issued by the IASB.

     In this annual report, we also present “total cash costs” and “total cash costs per ounce”, which have been determined using industry standards promulgated by the Gold Institute and are non-GAAP measures. The Gold Institute was a non-profit international industry association of miners, refiners, bullion suppliers and manufacturers of gold products that ceased operation in 2002, which developed a uniform format for reporting production costs on a per ounce basis. The Gold Institute has now been incorporated into the National Mining Association. The guidance was first adopted in 1996 and subsequently revised in November 1999. An investor should not consider these items in isolation or as alternatives to production costs, cost of sales or any other measure of financial performance presented in accordance with IFRS as issued by the IASB. While the Gold Institute has provided definitions for the calculation of total cash costs, the calculation of total cash costs and total cash costs per ounce may vary significantly among gold mining companies and, by themselves, do not necessarily provide a basis for comparison with other gold mining companies. For further information, See Item 5 . “ Operating and Financial Review and Prospects — Costs — Reconciliation of Non-GAAP Measures ”.

     We have included the U.S. dollar equivalent amounts of certain information and transactions in Rand, Kina and A$. Unless otherwise stated, we have translated (i) balance sheet items at the noon buying rate of the Federal Reserve Bank of New York on the last business day of the period (R7.72 per U.S.$1.00 as at June 30, 2009 and R7.80 per U.S.$1.00 as at June 30, 2008), (ii) acquisitions, disposals and specific items included within equity at the rate prevailing at the date the transaction was entered into and (iii) income statement items at the average rate for the year (R9.00 per U.S.$1.00 for fiscal 2009, R7.26 per U.S.$1.00 for fiscal 2008 and R7.20 per U.S.$1.00 for fiscal 2007). Capital expenditures for fiscal 2010 have been translated at the rates used for balance sheet items. By including these U.S. dollar equivalents in this annual report, we are not representing that the Rand, Kina and A$ amounts actually represent the U.S. dollar amounts, as the case may be, or that these amounts could be converted at the rates indicated.

FORWARD-LOOKING STATEMENTS

     This annual report contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations, business strategies, operating efficiencies, competitive positions, growth opportunities for existing services, plans and objectives of management, markets for stock and other matters. In particular, among other statements, certain statements in Item 4. “Information on the Company,” Item 5. “Operating and Financial Review and Prospects” and Item 11. “Quantitative and Qualitative Disclosures About Market Risk” are forward-looking in nature. Statements in this annual report that are not historical facts are “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and Section 27A of the Securities Act of 1933, as amended.

     These forward-looking statements, including, among others, those relating to our future business prospects, revenues and income, wherever they may occur in this annual report and the exhibits to this annual report, are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. As a consequence, these forward-looking statements should be considered in light of various important factors, including those set forth in this annual report. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation:

	•		overall economic and business conditions in South Africa and elsewhere;
	•		the ability to achieve anticipated efficiencies and other cost savings in connection with past and future acquisitions;
	•		fluctuations in the market price of gold;
	•		the occurrence of hazards associated with underground and surface gold mining;
	•		the occurrence of labor disruptions;
	•		availability, terms and deployment of capital;
	•		changes in government regulation, particularly mining rights and environmental regulation;
	•		fluctuations in exchange rates;
	•		currency devaluations/appreciations and other macroeconomic monetary policies; and
	•		socio-economic instability in South Africa and other countries in which we operate.

     We undertake no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this annual report or to reflect the occurrence of unanticipated events.

PART I

Operations ”, “ Information of the Company — Business — Orkney Operations,” Item 4 . ” Information of the Company — Business — Cooke Operations ”.

EXCHANGE RATES

     Unless otherwise stated, balance sheet item amounts are translated from Rand to U.S. dollars at the exchange rate prevailing on the last business day of the period (R7.72 per U.S.$1.00 as at June 30, 2009), except for acquisitions, disposals and specific items included within equity that are converted at the exchange rate prevailing on the date the transaction was entered into, and income statement item amounts that are translated from Rand to U.S. dollars at the average exchange rate for the period (R9.00 per U.S.$1.00 for fiscal 2009).

     As of October 19, 2009, the noon buying rate of the Federal Reserve Bank of New York per U.S.$1.00 was R7.33.

     The following table sets forth, for the past five fiscal years, the average and period end noon buying rates in New York City for cable transfers in Rand and, for the past six months, the high and low noon buying rates in New York City for cable transfers in Rand, in each case, as certified for customs purposes by the Federal Reserve Bank of New York for Rand expressed in Rand per U.S.$1.00.

Fiscal Year Ended
June 30,		Average (1)				Period End
2005			6.18				6.67
2006			6.36				7.17
2007			7.20				7.04
2008			7.26				7.80
2009			9.00				7.72

Month of		High				Low
May 2009			8.71				7.93
June 2009			8.21				7.72
July 2009			8.26				7.65
August 2009			8.15				7.72
September 2009			7.87				7.32
October 2009 (through October 19, 2009)			7.70				7.26

     Fluctuations in the exchange rate between Rand and the U.S. dollar will affect the dollar equivalent of the price of ordinary shares on the Johannesburg Stock Exchange, which may affect the market price of the American Depositary Shares (“ ADSs ”) on the New York Stock Exchange. These fluctuations will also affect the dollar amounts received by owners of ADSs on the conversion of any dividends on ordinary shares paid in Rand.

CAPITALIZATION AND INDEBTEDNESS

     Not applicable.

REASONS FOR THE OFFER AND USE OF PROCEEDS

     Not applicable.

RISK FACTORS

      In addition to the other information included in this annual report and the exhibits, you should also carefully consider the following factors related to our ordinary shares and ADSs. There may be additional risks that we do not currently know of or that we currently deem immaterial based on information currently available to us. Although Harmony has a formal risk policy framework in place, the maintenance and development of which is undertaken on an ongoing basis so as to help management address systematic categories of risk associated with its business operations, any of these risks could have a material adverse effect on our business, financial condition or results of operations, leading to a decline in the trading price of our ordinary shares or our ADSs. The risks described below may, in retrospect, turn out to be incomplete and therefore may not be the only risks to which we are exposed. Additional risks and uncertainties not presently known to us or that we now believe are immaterial (and have therefore not been included), could also adversely affect our businesses, results of operations or financial condition. The order of presentation of the risk factors below does not indicate the likelihood of their occurrence or the magnitude or the significance of the individual risks. The risks described below could occur individually or cumulatively and intensify in case of a cumulative occurrence.

Risks Relating to Our Business and the Gold Mining Industry

The profitability of our operations, and the cash flows generated by those operations, are affected by changes in the Rand price of gold, such that a fall in the price of gold below our cash cost of production for any sustained period may lead us to experience losses and to curtail or suspend certain operations.

     Substantially all of our revenues come from the sale of gold. Historically, the market price for gold has fluctuated widely and has been affected by numerous factors over which we have no control, including:

	•		the demand for gold for industrial uses and for use in jewelry;
	•		international or regional political and economic trends;
	•		the strength or weakness of the U.S. dollar (the currency in which gold prices generally are quoted) and of other currencies;
	•		financial market expectations regarding the rate of inflation;
	•		interest rates;
	•		speculative activities;
	•		actual or expected purchases and sales of gold bullion held by central banks or other large gold bullion holders or dealers;
	•		forward sales by other gold producers; and
	•		the production and cost levels for gold in major gold-producing nations, such as South Africa, China, the United States and Australia.

     In addition, the current demand for and supply of gold affects the price of gold, but not necessarily in the same manner as current demand and supply affect the prices of other commodities. Historically, gold has retained its value in relative terms against basic goods in times of inflation and monetary crisis. As a result, central banks, financial institutions and individuals hold large amounts of gold as a store of value and production in any given year constitutes a very small portion of the total potential supply of gold. Since the potential supply of gold is large relative to mine production in any given year, normal variations in current production will not necessarily have a significant effect on the supply of gold or its price.

     The volatility of gold prices is illustrated in the following table, which shows the annual high, low and average of the afternoon London Bullion Market fixing price of gold in U.S. dollars for the past ten calendar years:

     On October 19, 2009, the afternoon fixing price of gold on the London Bullion Market was U.S.$1,050.50 per ounce.

     While the aggregate effect of these factors is impossible for us to predict, if gold prices should fall below our cash cost of production and remain at such levels for any sustained period, we may experience losses and may be forced to curtail or suspend some or all of our operations. In addition, we would also have to assess the economic impact of low gold prices on our ability to recover any losses we may incur during that period and on our ability to maintain adequate reserves. Our cash cost per ounce of gold produced from continuing operations was U.S.$583 in fiscal 2009, U.S.$598 in fiscal 2008 and U.S.$487 in fiscal 2007.

As the majority of our production costs are incurred in Rand and other non-U.S. currencies, and gold is sold in U.S. dollars, our financial condition could be materially harmed by an appreciation in the value of the Rand and other non-U.S. currencies against the U.S. dollar.

     Gold is sold throughout the world in U.S. dollars, but most of our operating costs are incurred in Rand and other non-U.S. currencies. As a result, any significant and sustained appreciation of the South African Rand or other non-U.S. currencies against the dollar will serve materially to reduce our revenues and overall net income.

As we currently do not enter into forward sales, commodity, derivatives or hedging arrangements with respect to our future gold production, we are exposed to the impact of any significant decrease in the gold price.

     As a general rule, we sell our gold at the prevailing market price. Currently, we generally do not enter into forward sales, commodity, derivative or hedging arrangements to establish a price in advance for the sale of future gold production, although we may do so in the future. As a result, we may realize the benefit of any short-term increase in the gold price, but are not protected against decreases in the gold price, and if the gold price decreases significantly, our revenues may be materially adversely affected.

Estimations of our gold reserves are based on a number of assumptions, including assumptions as to mining and recovery factors, future cash costs of production and the price of gold and may yield less gold under actual production conditions than currently estimated.

     The ore reserve estimates contained in this annual report are estimates of the mill delivered quantity and grade of gold in our deposits and stockpiles. They represent the amount of gold which we believe can be mined, processed and sold at prices sufficient to recover our estimated future cash costs of production, remaining investment and anticipated additional capital expenditures. Our ore reserves are estimated based upon a number of assumptions, and are stated in accordance with SEC Industry Guide 7. Our ore reserve estimates are calculated based on estimates of:

	•		future cash costs (which in some cases are assumed to decrease significantly);
	•		future gold prices; and
	•		future currency exchange rates.

     These factors, which are beyond our control, significantly impact these ore reserve estimates. As a result, the reserve estimates contained in this annual report should not be interpreted as assurances of the economic life of our gold and other precious metal deposits or the future profitability of operations.

     Since these ore reserves are estimates based on assumptions related to the factors detailed above, should there be changes to these, we may in the future need to revise these estimates. In particular, if our cash operating and production costs increase or do not decrease as assumed (whether in dollar, Rand, or other non-U.S. currencies terms, or in relative terms due to appreciation of the Rand and other non-U.S. currencies against the U.S. dollar) or the gold price decreases, the recovery of a portion of our ore reserves may become uneconomical. This will, in turn, lead us to reduce our estimated reserves.

In order to maintain gold production beyond the expected lives of our existing mines or to increase production materially above projected levels, we will need to access additional reserves through exploration or discovery.

     Our operations have limited proven and probable reserves and exploration and discovery is necessary to maintain current gold production levels at these operations. Exploration for gold and other precious metals is speculative in nature, is frequently unsuccessful and involves many risks, including those related to:

	•		locating orebodies;
	•		identifying the metallurgical properties of orebodies;
	•		estimating the economic feasibility of mining orebodies;
	•		developing appropriate metallurgical processes;
	•		obtaining necessary governmental permits; and
	•		constructing mining and processing facilities at any site chosen for mining.

     Our exploration efforts might not result in the discovery of mineralization, and any mineralization discovered might not result in an increase in our proven and probable reserves. To access additional reserves, we will need to successfully complete development projects, including extensions to existing mines and, possibly, that of new mines. Development projects would also be necessary to access any new mineralization discovered through our exploration activities around the world. We typically use feasibility studies to determine whether or not to undertake significant development projects. Feasibility studies include estimates of expected or anticipated economic returns, which are based on assumptions about:

	•		future gold and other metal prices;
	•		anticipated tonnage, grades and metallurgical characteristics of ore to be mined and processed;
	•		anticipated recovery rates of gold and other metals from the ore, and
	•		anticipated total costs of the project, including capital expenditure and cash costs.

Actual cash costs of exploration, production and economic returns may differ significantly from those anticipated by our feasibility studies for new development projects.

     It can take a number of years from the initial feasibility study until development is completed and, during that time, the economic feasibility of production may change. In addition, there are a number of uncertainties inherent in the development and construction of an extension to an existing mine or any new mine, including:

	•		the availability and timing of necessary environmental and governmental permits;
	•		the timing and cost of constructing mining and processing facilities, which can be considerable;
	•		the availability and cost of skilled labor, power, water and other materials;
	•		the accessibility of transportation and other infrastructure, particularly in remote locations;
	•		the availability and cost of smelting and refining arrangements; and
	•		the availability of funds to finance construction and development activities.

     We currently maintain a range of focused exploration programs, concentrating on areas not too distant from our operational mines, as well as a number of prospective known gold mineralized regions around the world. During fiscal years 2009 and 2008, the bulk of exploration expenditure was allocated to activities in South Africa and Papua New Guinea (“ PNG ”). However, there is no assurance that any future development projects will extend the life of our existing mining operations or result in any new commercial mining operations.

The costs associated with the pumping of water inflows from closed mines adjacent to our operations could adversely affect our results of operations.

     Certain of our mining operations are located adjacent to the mining operations of other mining companies. A mine closure may have an adverse impact on the continued operations at an adjacent mine if appropriate preventative steps are not taken. In particular, this impact can include the ingress of underground water where pumping operations at the closed mine are suspended. Such ingress could result in damage to property, operational disruptions and additional pumping costs, which would adversely affect any one of our adjacent mining operations.

The supply of electricity and increases in the cost of power may adversely affect our results of operations and our financial condition.

     Each of our mining operations is dependent on electrical power generated by the state utility Eskom, which holds a monopoly on the South African market. As a result of an increase in demand exceeding available generating capacity, South Africa has been subject to disruptions in electrical power supply. During fiscal 2008, the electricity supply was interrupted by Eskom thereby halting production at certain of our mines. This led to management restructuring operating processes to control and reduce our consumption of electricity at all our operations. There have been no further disruptions and we have been able to continue production at 90% electricity allocation as required by the Energy Conservation Scheme (“ ECS ”) and interim rules imposed by Eskom. All operations were allocated an ECS allocation in line with the Eskom allocation and equipment and management structures were put in place to monitor and manage real-time consumption. Applications submitted to Eskom for additional energy allocation to the four future growth projects were approved, enabling us to proceed with the projects and to ramp-up to full capacity utilising Eskom power. We also submitted applications for additional power allocation for four future projects in the Free State, which were also approved by Eskom. Nevertheless, an insufficient supply of electricity may adversely affect our results of operations and financial condition.

     As a result of Eskom’s planned capital expansion program to deal with the current power constraints, several increases in rates charged to consumers have been approved by the National Energy Regulator South Africa (“ NERSA ”) in the past 18 months. More increases are anticipated in the future, which will also be driven by increases in input costs, primarily coal. These increases will have a negative impact on our results of operations going forward.

We may experience problems in identifying, financing and managing new acquisitions and integrating them with our existing operations.

     Acquiring new gold mining operations involves a number of risks including:

	•		our ability to identify appropriate assets for acquisition and/or to negotiate acquisitions on favorable terms;
	•		obtaining the financing necessary to complete future acquisitions;
	•		difficulties in assimilating the operations of the acquired business;
	•		difficulties in maintaining our financial and strategic focus while integrating the acquired business;
	•		problems in implementing uniform standards, controls, procedures and policies;
	•		increasing pressures on existing management to oversee a rapidly expanding company; and
	•		to the extent we acquire mining operations outside South Africa or Australasia, encountering difficulties relating to operating in countries in which we have not previously operated.

     Our ability to make successful acquisitions and any difficulties or time delays in achieving successful integration of any of such acquisitions could have a material adverse effect on our business, operating results, financial condition and share price.

Certain factors may affect our ability to support the carrying value of our property, plant and equipment, goodwill and other assets on our balance sheet.

     We review and test the carrying value of our assets on an annual basis when events or changes in circumstances suggest that the carrying amount may not be recoverable.

     If there are indications that impairment may have occurred, we prepare estimates of expected future cash flows for each group of assets. These estimates of future cash flows are prepared at the lowest level for which identifiable cash flows are identified as being independent of the cash flows of other mining assets and liabilities. Expected future cash flows are inherently uncertain, and could materially change over time. Such cash flows are significantly affected by reserve and production estimates, together with economic factors such as spot and forward gold prices, discount rates, currency exchange rates, estimates of costs to produce reserves and future capital expenditures.

     As of June 30, 2009, we have substantial amounts of property, plant and equipment, goodwill and other assets on our consolidated balance sheets. We have recorded impairment charges relating to these assets and, if any one or a combination of the uncertainties described above occur, management may be required to recognize further impairment charges, which could adversely affect our financial results and condition.

Given the nature of mining and the type of gold mines we operate, we face a material risk of liability, delays and increased cash costs of production from environmental and industrial accidents and pollution.

     The business of gold mining by its nature involves significant risks and hazards, including environmental hazards and industrial accidents. In particular, hazards associated with underground mining include:

	•		rock bursts;
	•		seismic events;
	•		underground fires;
	•		cave-ins or falls of ground;
	•		discharges of gases and toxic chemicals;
	•		release of radioactive hazards;
	•		flooding;
	•		pillar mining;
	•		accidents; and
	•		other conditions resulting from drilling, blasting and the removal and processing of material from a deep-level mine.

     Hazards associated with open cast mining (also known as open-pit mining) include:

	•		flooding of the open-pit;
	•		collapse of the open-pit walls;
	•		accidents associated with the operation of large open-pits and rock transportation equipment; and
	•		accidents associated with the preparation and ignition of large-scale open-pit blasting operations.

     Hazards associated with waste-rock mining include:

	•		accidents associated with operating a waste dump and rock transportation; and
	•		production disruptions caused by weather.

     We are at risk of experiencing any or all of these environmental or other industrial hazards. The occurrence of any of these hazards could delay production, increase cash costs and result in our financial liability.

The nature of our mining operations presents safety and security risks.

     The environmental and industrial risks identified above also present safety risks for our operations and our employees and can lead to the suspension and potential closure of operations for indeterminate periods. For example, in October 2007, an incident occurred at the Elandsrand operation involving a compressed pipe column which broke off below the shaft surface bank and fell to the bottom of the men-and-material shaft, causing extensive damage to the shaft steel work and electrical cables. The incident resulted in 3,000 workers being underground for more than 30 hours. Mining operations were temporarily suspended for 42 days to allow for repairs to be undertaken at the shaft. These and other safety risks, even in situations where no injuries occur, can have a material adverse effect on our operations and production. In addition, security issues need to be continually addressed, including the problem of criminal mining.

     These and other safety and security risks, even in situations where no injuries occur, can have a material adverse effect on our operations and production. See Item 4 . “ Health and Safety Matters ”.

Our insurance coverage may prove inadequate to satisfy future claims against us.

     We have third-party liability coverage for most potential liabilities, including environmental liabilities. While we believe that our current insurance coverage for the hazards described above is adequate and consistent with industry practice, we may be subject to liability for pollution (excluding sudden and accidental pollution) or other hazards against which we have not insured or cannot insure, including those in respect of past mining activities. Further, we maintain and intend to continue to maintain, property and liability insurance consistent with industry practice, but such insurance contains exclusions and limitations on coverage. In addition, there can be no assurance that insurance will continue to be available at economically acceptable premiums. As a result, in the future, our insurance coverage may not cover the extent of claims against us for environmental or industrial accidents or pollution.

Our operations may be negatively impacted by inflation.

     Our operations have been materially affected by inflation. Inflation in South Africa has fluctuated widely in recent years, reaching 11.6% at the end of fiscal 2008 before it decreased significantly to 6.9% at the end of fiscal 2009. This decrease was due to inflation targeting by the South African Reserve Bank (“ SARB ”), a task that it will continue in fiscal 2010. However, working costs and wages especially, have increased considerably over the past three years resulting in significant cost pressures for the mining industry. Our profits and financial condition could also be affected adversely in the absence of a concurrent devaluation of the Rand and an increase in the price of gold.

The socio-economic framework in the regions in which we operate may have an adverse effect on our operations and profits.

     We have operations in South Africa and PNG. As a result, changes or instability to the economic or political environment in any of these countries or in neighboring countries could affect our operations and profits. It is difficult to predict the future political, social and economic direction in these countries, or any other country in which we operate, and the impact government decisions may have on our business.

Actual and potential shortages of production inputs may have an adverse effect on our operations and profits.

     Our results of operations may be affected by the availability and pricing of raw materials and other essential production inputs. The price of raw materials may be substantially affected by changes in global supply and demand, along with weather conditions, governmental controls and other factors. A sustained interruption to the supply of any of these materials would require us to find acceptable substitute suppliers and could require us to pay higher prices for such materials. Any significant increase in the prices of these materials would increase our operating costs and affect production considerations.

Our financial flexibility could be materially constrained by exchange control regulations as imposed by the SARB.

     In terms of South Africa’s exchange control regulations, the export of capital from South Africa is restricted. As a result, our ability to raise and deploy capital outside South Africa is limited. In particular, we are:

•

generally not permitted to export capital from South Africa, to hold foreign currency or incur indebtedness denominated in foreign currencies without the approval of the South African exchange control authorities;

	•		generally not permitted to acquire an interest in a foreign venture without the approval of the South African exchange control authorities and first having complied with the investment criteria of the South African exchange control authorities;
	•		generally required to repatriate to South Africa profits of foreign operations; and
	•		limited in our ability to utilize profits of one foreign business to finance operations of a different foreign business.

     These restrictions could hinder our normal corporate functioning, including our ability to make foreign investments and procure foreign currency denominated financings in the future.

     Since 1995, certain exchange controls in South Africa have been relaxed. The extent to which the South African government may further relax such exchange controls cannot be predicted with certainty, although the government has committed itself to a gradual approach to the relaxation of exchange control.

We compete with mining and other companies for key human resources .

     We compete with mining and other companies on a global basis to attract and retain key human resources at all levels with the appropriate technical skills and operating and managerial experience necessary to continue to operate our business. The need to recruit, develop and retain skilled employees is particularly critical with respect to Historically Disadvantaged South Africans (“ HDSAs ”), women in mining in South Africa and the recruitment and training of local landowners in PNG. The global shortage of key mining industry human resource skills, including geologists, mining engineers, metallurgists and skilled artisans has been exacerbated in the current environment of increased mining activity across the globe. There can be no assurance that we will attract and retain skilled and experienced employees and, should we lose any of our key personnel, our business may be harmed and our results of operations and financial condition could be adversely affected. See Item 6. “ Employees”

Since our South African labor force has substantial trade union participation, we face the risk of disruption from labor disputes and new South African labor laws.

     Despite a history of positive and constructive engagement with labor unions, there are periods during which the various stakeholders are unable to agree on dispute resolution processes. Disruptive activities on the part of labor, which normally differ in intensity, then become unavoidable. Due to the high level of union membership among our employees, we are at risk of having production stoppages for indefinite periods due to strikes and other disputes. Significant labor disruptions have affected our operations and financial condition before and we are not able to predict whether or not we will experience significant labor disputes in the future.

     South African employment law sets out minimum terms and conditions of employment for employees. Though these minimum terms and conditions may be improved by agreements between us and the trade unions, the prescribed minimum terms and conditions form the benchmark for all employment contracts. See Item 6. “Employees”

     We are required to submit a report in terms of South African employment law detailing the progress made towards achieving employment equity in the workplace. In the event this report is not submitted, we could incur substantial penalties.

     Developments in South African employment law may increase our cash costs of production or alter our relationship with our employees and trade unions, which may have an adverse effect on our business, operating results and financial condition.

We may suffer adverse consequences as a result of our reliance on outside contractors to conduct our operations.

     A portion of our operations are currently conducted by outside contractors. As a result, our operations are subject to a number of risks, including:

	•		negotiating agreements with contractors on acceptable terms;
	•		the inability to replace a contractor and its operating equipment in the event that either party terminates the agreement;
	•		reduced control over those aspects of operations which are the responsibility of the contractor;
	•		failure by a contractor to perform in terms of its agreement with us;
	•		interruption of operations in the event that a contractor ceases to operate due to insolvency or other unforeseen events;

	•		failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; and
	•		contractor’s problems regarding management of its workforce, labor unrest or other employment issues.

     In addition, we may incur liability to third parties as a result of the actions of its contractors. The occurrence of one or more of these risks could have a material adverse effect on our business, operational results and financial condition. See Item 6. “Directors, Senior Management and Employee s — Employees .”

HIV & AIDS poses risks to us in terms of productivity and costs.

     The incidence of HIV & AIDS in South Africa and PNG, which is forecast to increase over the next decade, poses risks to us in terms of potentially reduced productivity, and increased medical and other costs. If a significant increase in the incidence of HIV & AIDS infection and HIV & AIDS-related diseases among the workforce over the next several years occurs, this may have an adverse impact on our operations, projects and financial condition. See Item 4. “ Regulation — Health and Safety Matters.”

The cost of occupational healthcare services may increase in the future.

     Our operations in South Africa are subject to health and safety regulations which could impose significant costs and burdens. The present Mine Health and Safety Act 29 of 1996 (“ Mine Health and Safety Act ”) imposes various duties on us at our mines, and grants the authorities broad powers to, among other things, close unsafe mines and order corrective action relating to health and safety matters.

     The Occupational Diseases in Mines and Works Act 78 of 1973 (the “ Occupational Diseases Act ”), governs the payment of compensation and medical costs related to certain illnesses contracted by persons employed in mines or at sites where activities ancillary to mining are conducted. Occupational healthcare services are available to our employees from our existing healthcare facilities in South Africa. There is a risk that the cost of providing such services could increase in future depending on changes in the nature of underlying legislation and the profile of our employees. This increased cost, should it transpire, is currently indeterminate. We have embarked on a number of initiatives focused on improving the quality of life of our workforce, although there can be no guarantee that such initiatives will not be adversely affected by increased costs.

Laws governing mineral rights affect our business.

     We are governed by the South African Mineral and Petroleum Resources Development Act 2002 ( “MPRDA” ). See Item 4. “Regulation — South Africa” for a description of the principal objectives set out in the MPRDA.

     Under the MPRDA, tenure over established mining operations is secured for up to 30 years (and renewable for periods not exceeding 30 years each thereafter), provided that mining companies apply for new order mining rights over existing operations within five years of May 1, 2004 or before the existing right expires, whichever is the earlier date and fulfill requirements specified in the MPRDA and the Broad-Based Socio-Economic Empowerment Charter for the South African mining industry ( “Mining Charter” ).

     The Mining Charter was signed by government and stakeholders in October 2002, and contains principles relating to the transfer, over a 10-year period, of 26% of South Africa’s mining assets (as equity or attributable units of production) to HDSAs, as defined in the Mining Charter. An interim target of 15% HDSA participation over five years has also been set and to this end, the South African mining industry has committed to securing financing to fund participation by HDSAs in an amount of R100.0 billion within the first five years of the Mining Charter’s tenure. The Mining Charter provides for the review of the participation process after five years to determine what further steps, if any, are needed to achieve target participation of 26%. In order to measure progress in meeting the requirements of the Mining Charter, companies are required to complete a Scorecard, in which the levels of compliance with the objectives of the Mining Charter can be “ticked off” after five and ten years, respectively. The Mining Charter and Scorecard require programs for black economic empowerment and the promotion of value-added production, such as jewelry-making and other gold fabrication, in South Africa. In particular, targets are set out for broad-based black economic empowerment in the areas of human resources and skills development; employment equity; procurement and beneficiation. In addition, the Mining Charter addresses socio-economic issues, such as migrant labor, mine community and rural development and housing and living conditions.

     We actively carry out mining and exploration activities in all of our material mineral rights areas. All of our South African operations have been granted their mining licenses. We will be eligible to apply for new licenses over existing operations, provided

that we comply with the Mining Charter. We have taken steps to comply with the expected provisions of the Mining Charter, such as promoting value-added production, exploring black empowerment initiatives and increasing worker participation. Failure to comply with the conditions of the mining licenses could have a material adverse effect on our operations and financial condition.

     The MPRDA also makes reference to royalties payable to the South African state in terms of the Mineral and Petroleum Resources Royalty Act (Act 28 of 2008). The Act provides for the payment of a royalty according to a formula based on earnings before interest, tax and depreciation, after the deduction of capital expenditure. This rate is then applied to revenue to calculate the royalty amount due, with a minimum of 0.5% and a maximum of 5% for gold mining companies. It is estimated that the formula could translate to a royalty rate of more than 2% of gross sales in terms of current pricing assumptions. The royalty is to become effective on March 1, 2010. The introduction of the Mining and Petroleum Royalty Act will have an adverse impact on the profits generated by our operations in South Africa.

     Once production in PNG is commenced, our PNG mining operations will be subject to royalty payments to the government of PNG. Should we desire to expand any of our initiatives in PNG operations into additional areas under exploration, these operations would need to convert the existing exploration licenses prior to the start of mining, and that process could require landowner title approval. There can be no assurance that any approval would be received. Please also see Item 4. “ Regulation ” for further information.

We are subject to extensive environmental regulations.

     As a gold mining company, we are subject to extensive environmental regulation. We have experienced and expect to continue to experience increased cash costs of production arising from compliance with South African and PNG environmental laws and regulations. The MPRDA, certain other environmental legislation and the administrative policies of the South African government regulate the impact of our prospecting and mining operations on the environment.

     Pursuant to these regulations, upon the suspension, cancellation, termination or lapsing of a prospecting permit or mining authorization, we will remain liable for compliance with the provisions of the various relevant regulations, including any rehabilitation obligations. This liability will continue until such time as the appropriate authorities certify that we have complied with such provisions.

     In the future, we may incur significant costs associated with complying with the increasingly stringent requirements being imposed under new legislation and regulations. This may include the need to increase and accelerate expenditure on environmental rehabilitation and to alter provisions for this expenditure, which could have a material adverse effect on our results and financial condition. We may also face increased environmental costs should other mines in the vicinity of our mines fail to meet their obligations with regard to the pumping or treatment of water.

     The South African government has reviewed requirements imposed upon mining companies to ensure environmental restitution. For example, following the introduction of an environmental rights clause in South Africa’s constitution, a number of environmental legislative reform processes have been initiated. Legislation passed as a result of these initiatives has tended to be materially more onerous than laws previously applied in South Africa. Examples of such legislation include the MPRDA, the South African National Nuclear Regulator Act 1999, the South African National Water Act of 1998 and the South African National Environmental Management Act 1998, which include stringent “polluter-pays” provisions. The adoption of these or additional or more comprehensive and stringent requirements, in particular with regard to the management of hazardous waste, the pollution of ground and ground-water systems and the duty to rehabilitate closed mines, may result in additional costs and liabilities.

     Our PNG operations are also subject to various laws and regulations relating to the protection of the environment, which are similar in scope to those of South Africa. See Item 4. “ Regulation — Environmental Matters ”.

Investors in the United States may have difficulty bringing actions, and enforcing judgments, against us, our directors and our executive officers based on the civil liabilities provisions of the federal securities laws or other laws of the United States or any state thereof.

     We are incorporated in South Africa. Each of our directors and executive officers (and our independent registered public accounting firm) reside outside of the United States. Substantially all of the assets of these persons and substantially all of our assets are located outside the United States. As a result, it may not be possible for investors to enforce a judgment against these persons or ourselves obtained in a court of the United States predicated upon the civil liability provisions of the federal securities or other laws of

the United States or any state thereof. A foreign judgment is not directly enforceable in South Africa, but constitutes a cause of action which will be enforced by South African courts provided that:

	•		the court that pronounced the judgment had jurisdiction to entertain the case according to the principles recognized by South African law with reference to the jurisdiction of foreign courts;
	•		the judgment is final and conclusive;
	•		the judgment has not lapsed;
	•		the recognition and enforcement of the judgment by South African courts would not be contrary to public policy, including observance of the rules of natural justice which require that the documents initiating the United States proceeding were properly served on the defendant and that the defendant was given the right to be heard and represented by counsel in a free and fair trial before an impartial tribunal;
	•		the judgment does not involve the enforcement of a penal or revenue law; and
	•		the enforcement of the judgment is not otherwise precluded by the provisions of the Protection of Business Act 99 of 1978, as amended, of the Republic of South Africa.

Compliance with new and changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies and increases our costs of compliance.

     Laws, regulations and standards relating to accounting, corporate governance and public disclosure, new SEC regulations and other listing regulations applicable to us are subject to change and can create uncertainty for companies like us. New or changed laws, regulations and standards could lack specificity or be subject to varying interpretations. Their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such governance standards.

     Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to furnish a report by our management on our internal control over financial reporting. The report in this annual report contains, among other matters, an assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year, including a statement as to whether or not our internal controls over financial reporting are effective. If we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with the Sarbanes-Oxley Act. The requirement to evaluate and report on our internal controls also applies to companies that we may acquire and therefore, this assessment may be complicated by any future acquisitions we may complete. While we continue to dedicate resources and management time to ensuring that we have effective controls over financial reporting, failure to achieve and maintain an effective internal control environment could have a material adverse effect on the market’s perception of our business and our stock price. See Item 15 . “ Disclosure Controls and Procedures ” for management assessment as of June 30, 2009. In addition to management’s assessment of internal controls over financial reporting, we are required to have our independent registered public accounting firm publicly disclose their conclusions regarding the effectiveness of Harmony’s internal controls over financial reporting.

     We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulations and standards in this regard have resulted in, and are likely to continue to result in, increased general and administrative expenses.

Sales of large quantities of our ordinary shares and ADSs, or the perception that these sales may occur, could adversely affect the prevailing market price of such securities.

The market price of our ordinary shares or ADSs could fall if large quantities of ordinary shares or ADSs are sold in the public market, or there is the perception in the marketplace that such sales could occur. Subject to applicable securities laws, holders of our ordinary shares or ADSs may decide to sell them at any time. The market price of our ordinary shares or ADSs could also fall as a result of any future offerings it makes of ordinary shares, ADSs, or securities exchangeable or exercisable for its ordinary shares or ADSs, or the perception in the marketplace that these sales might occur. We may make such offerings of additional ADS rights, letters of allocation or similar securities at any time or from time to time in the future.

Because we have a significant number of outstanding share options, our ordinary shares are subject to dilution.

     We have employee share option schemes as well as other share schemes. The employee share option schemes came into effect in 1994, 2001, 2003 and 2006. Our Board has authorized up to 14% of the issued share capital to be used for these plans. As a result, shareholders’ equity interests in us are subject to dilution to the extent of the future exercises of the options, through share schemes.

We may not pay dividends or make similar payments to our shareholders in the future.

     We pay cash dividends only if funds are available for that purpose. Whether funds are available depends on a variety of factors, including the amount of cash available and our capital expenditures and other cash requirements existing at the time. Under South African law, we are only entitled to pay a dividend or similar payment to shareholders if we meet the solvency and liquidity tests set out in the Companies Act and our Articles of Association. Cash dividends or other similar payments may not be paid in the future.

     In February 2007, the South African Government announced a proposal to replace Secondary Tax on Companies with a 10% withholding tax on dividends and other distributions payable to shareholders. This proposal is expected to be implemented in phases to be completed by the end of the 2010 calendar year. Although this may reduce the tax payable by our South African operations, thereby increasing distributable earnings, the withholding tax will generally reduce the amount of dividends or other distributions received by shareholders.

Item 4. INFORMATION ON THE COMPANY

BUSINESS

History and Development

     We conduct underground and surface gold mining and related activities, including exploration, processing and smelting. We are currently the third largest producer of gold in South Africa, producing approximately 23% of the country’s annual gold output, and we ranked among the top 10 gold producers in the world, with operations and projects in South Africa and PNG. Our gold sales have increased from 650,312 ounces of gold in fiscal 1995 to approximately 1.5 million ounces of gold in fiscal 2009. As at June 30, 2009, our mining operations reported total proven and probable reserves of 48.2 million ounces, primarily from South African sources. In fiscal 2009, we processed approximately 21.1 million tons of ore.

     In fiscal 2009, all of our total gold production took place in South Africa. In fiscal 2009, approximately 93% of our South African gold came from underground mines, and approximately 7% came from our surface operations (which include the Kalgold opencast operation and the Phoenix operation). For more detailed information about our activities, See Item 4. “Information on the Company — Business — Harmony’s Mining Operations — Overview” and the notes to the consolidated financial statements included in this annual report. Mining is a highly regulated industry, and we operate under a variety of statutes and regulations. For more detailed information about these statutes and regulations, See Item 4. “Information on the Company — Regulation” and Item 10. “Additional Information — Memorandum and Articles of Association” .

     The majority of our exploration and evaluation done during fiscal 2009 has been focused on PNG. Our PNG exploration and evaluation opportunities are handled through the international office in Brisbane, Australia. Exploration in South Africa focused on the Evander South project, Joel and Tshepong.

     We were incorporated and registered as a public company in South Africa on August 25, 1950 (under registration number 1950/038232/06). We poured our first gold on September 11, 1954. In the early 1970’s, we merged with the Anglovaal mines, Merriespruit and Virginia, forming Harmony Gold Mining Company Limited. We then expanded from a single lease-bound mining operation into an independent, world-class gold producer. We acquired additional mineral rights in the Free State, Mpumalanga, Gauteng and North West provinces in South Africa when we acquired Lydex in 1997, Evander in 1998, Kalgold in 1999, Randfontein in 2000, ARMgold in 2003 and Avgold in 2004. In building our Australian portfolio, we acquired Hill 50 and New Hampton in Western Australia in 2001 and 2002, respectively, and started our exploration portfolio in PNG with projects in the Morobe province originally through our acquisition of Abelle in 2003. During fiscal 2009 and 2008, we disposed of several operations in South Africa and Australia, as well as 50% of our interest in gold and copper assets in PNG. See Item 4. “Disposals” .

     Our principal executive offices are located at Randfontein Office Park, Corner of Main Reef Road and Ward Avenue, Randfontein, 1760, South Africa and the telephone number at this location is +27-11-411-2000.

South African Operations

     In South Africa, we operate a total of 10 underground operations, one open cast mine, and eight processing plants which are located in all of the currently known goldfields in the Witwatersrand basin of South Africa as well as the Green Stone belt. These operations produced approximately 1.5 million ounces in fiscal 2009, and South Africa represented approximately 96% (or 46.1 million ounces) of our total proven and probable reserves. The deep level gold are located in four provinces in this basin, being the Free State province, Mpumalanga, the West Rand Goldfields in Gauteng province and the North West province. Surface operations are located in all these provinces as well.

     Ore from the shafts and surface material are treated at eight metallurgical plants in South Africa, located near the operations (four in the Free State province, one in the North West province, one in Mpumalanga and two in Gauteng). There are two plants on care and maintenance which can be restarted if additional processing capacity is required (Joel and St. Helena plants in the Free State province).

     As part of our “Back-to-Basics” strategy, which we embarked on in August 2007, management reassessed and restructured the manner in which operations are managed and evaluated. Each operation, consisting anywhere from a single shaft to a group of shafts, is managed by a team headed up by a general manager. See Item 4 . “ Operational Strategy: Back-to-Basics ” and “ Harmony’s Management Structure ”.

     Operations are classified as “Underground” or “Surface” with the reportable segments in South Africa being as follows:

	•		Tshepong, Phakisa, Bambanani, Doornkop, Elandsrand, Target, Evander, Masimong, Virginia (the Cooke operations were considered to be a reportable segment in fiscal 2008 and have been disclosed under discontinued operations for all periods presented); and
	•		all other shafts and surface operations, including those that treat historic sand dumps, rock dumps and tailings dams, are grouped together under “Other — Underground” or “Other — Surface”. Other includes Joel, Kalgold and Phoenix.

International Operations

     Our interests internationally are currently mainly located in PNG and represent 4% (or 2.1 million ounces) of our total proven and probable reserves.

     Our interests in Australia now consist solely of one site located at Mount Magnet in Western Australia. This site has been closed down and the plant has been put on care and maintenance since December 2007. The South Kalgoorlie operational assets and tenements, which we previously owned and which were also located in Western Australia, were sold to Dioro Exploration NL (“ Dioro ”) on November 30, 2007. Ore from the underground and surface material were treated at the two metallurgical plants in Australia (one at Mount Magnet and, prior to it being sold, at South Kalgoorlie).

     In July 2007, we entered into an agreement with Dioro pursuant to which Dioro acquired our South Kalgoorlie assets. The total purchase price was A$45 million (U.S.$39.8 million), consisting of both a cash and share component. The share component entailed the issuance of 11.4 million Dioro shares valued at A$20 million (U.S.$17.7 million), and a cash component of A$25 million (U.S.$22.1 million). The transaction was subject to various conditions precedent, including a minimum capital raising by Dioro of A$35 million (U.S.$30.9 million) by the completion date. On November 30, 2007, all conditions precedent were satisfied, and the transaction was completed and accounted for on that date.

     During fiscal 2008, we entered into an agreement with Monarch for the sale of our Mount Magnet operation and classified the operations as held-for-sale. However, during July 2008, we were advised that Monarch had placed itself in voluntary administration and, on August 1, 2008, the Administrator indicated that Monarch will not proceed with the proposed purchase and consequently the purchase agreement has been terminated. We have since resumed management of the Mount Magnet operation. The sales process was resumed but due to various factors could not be finalised by the end of fiscal 2009. We have started an intensive drilling program at Mount Magnet and may thus be able to carry out feasibility studies or we may re-embark on a sale process. Accordingly, we have reclassified the Mount Magnet operation to continuing operations.

     In PNG, we, through our wholly-owned PNG-based subsidiaries, Morobe Consolidated Goldfields Limited (“ Morobe ”) and Wafi Mining Limited (“ Wafi ”), own development and exploration prospects in the Morobe Province. In August 2008, Newcrest Mining Limited (“ Newcrest ”) acquired a 30.01% interest in our PNG assets and tenements through the Morobe Mining Joint Venture. By the end of fiscal 2009, Newcrest had earned an additional 19.99% in terms of the farm-in agreement, resulting in Newcrest and us each owning a 50% interest in the joint venture. Through the joint venture, we continued with the process of building the Hidden Valley mine, with partial commissioning of the plant completed by the end of fiscal 2009. The commissioning of the full plant and achieving commercial levels of production is scheduled and planned for the December 2009 quarter. Following the end of fiscal 2009, we announced that we had acquired new exploration projects, the Amanab and the Mount Hagen Projects. See Item 8. “Recent Developments” .

Strategy

     During fiscal 2008, we set ourselves several objectives to achieve financial stability as part of our Back-to Basics strategy. One of those objectives was to be net debt-free (where positive cash balances exceed debt balances), which we achieved in fiscal 2009 after concluding two major asset disposal transactions and paying off our major debt. We still retained a cash balance of R2 billion (U.S.$253 million) by year end. As a result, we have a healthy balance sheet and are geared to make further investments in our organic growth projects as well as any suitable acquisitions.

     In August 2007, we embarked on a three-phase, three-component strategy to guide us through 2012:

	•		Stabilization Phase — this phase extended over a five-month period and included the focused implementation of the first component of the strategy, called “Back-to-Basics”. Back-to-Basics, which continued until the end of fiscal 2009, has now become a guiding philosophy for the overall strategy.
	•		Recovery Phase — the second component of the strategy, which focuses on Recovery/Organic Growth, began in fiscal 2008 and will extend into the third phase.
	•		Growth Phase — the third and final Organic/Acquisition component will be initiated as the Recovery/Organic Growth component of the strategy delivers results, and will extend through 2012.

Back-to-Basics

     The initial Back-to-Basics component of our strategy, designed to stabilize and kick-start recovery, comprised four primary objectives:

	•		Disciplined mining
	•		Cost control
	•		Ore reserve management
	•		Efficiency

     Key drivers of these objectives and their primary characteristics were:

•

Safety

	•		The commitment to zero harm initiated at top management, filtering to every level through a deliberate and programmed effort.
	•		Comprehensive safety auditing.
	•		Agreement on key non-negotiable principles, specifically management to lead by example; continuous verbal communication with all team members; visible creation of awareness of safety-related issues; recognition of and rewarding for safety achievements; and involving all stakeholders.
	•		Management focus on improving underground conditions, in particular areas deemed to be of the highest risk — shaft infrastructure and the underground workplace.

•

Empowered management teams

	•		Establishment of small, multi-disciplinary, focused management teams at each mining site, responsible for planning and implementing mining operations.
	•		Setting of annual operational goals — including volume, grade and cost targets — by each mining site management team in consultation with the executive committee; development by each management team of an operational plan to attain set goals; and regular review of results by the executive committee.

•

Focus on increased productivity:

•

To maximize productivity by structuring the operations such that 60% of the workforce is directly engaged in production mining.

•

Commitment to cost control including the benchmarking of costing parameters, internally between operations and externally against other gold producers:

•

In particular, the control of labor costs which average 50% of operating costs at the South African operations.

	•		Pro-active maintenance practices.
	•		Application of the ‘appropriate maintenance’ principle, involving capital expenditure commensurate with the life of the operation.
	•		Implementation of cost accounting, ore accounting and reserve management systems to track and measure costs and ore reserve depletion accurately.

•

Increasing operational consistency:

•

Commitment to increasing operational consistency in respect of both grade and production in order to extract optimal value from orebodies by increasing development expenditure and a focus on comprehensive ore reserve management.

•

Review of opportunities to develop certain assets — uranium in particular, underground resources of which are not currently reflected in the balance sheet or reserve statement — independently of the core gold business:

	•		Selected acquisitions to diversify the company’s operations and complement its competitive strengths.
	•		Targeted disposals to upgrade the company’s overall portfolio quality.

Organic growth

Harmony’s organic growth strategy focuses on:

•		extracting high-quality ounces; and
•		developing and operating the company’s long-life mines.

Key drivers of these objectives are:

•		the Company’s extensive experience in and established track record for identification, exploration and development of its own projects;
•		its ongoing exploration programme focused on both on-mine exploration targeting resources within the economic radius of existing mines and new mine exploration targeting early to advanced stage projects around the world;
•		expansion of the production base in South Africa and PNG, with a focus on developing new mines at competitive cash costs and upgrading the overall quality of the company’s portfolio;
•		a diverse project pipeline comprising five well-advanced projects — Elandsrand new mine, Doornkop South Reef, Tshepong sub-66 and 71 Declines, Phakisa in South Africa, and Hidden Valley in PNG — which could deliver up to 1.4 million low-cost production ounces by 2012 and a reduction in overall cash costs per ounce;
•		a number of additional development projects — including surface sand dumps, rock dumps and tailings dams; the company’s uranium deposits; and the Wafi-Golpu copper-gold deposit in PNG — which could increase production ounces; and
•		expansion of the Company’s exploration skills base.

Delivering on strategy

Key deliveries on Harmony’s strategy to end of fiscal 2009 included:

•		improvements in two key safety indicator rates — the frequency rates of lost-time injuries and of reportable injuries — and the receipt of several safety-related industry awards;
•		reversal of five years of accumulated losses;
•		achievement of zero net debt;
•		strong cash flow;
•		establishment of Rand Uranium (Proprietary) Limited (“ Rand Uranium ”), a significant step in turning to account its uranium resources;
•		creation of the Morobe Mining Joint Venture, a 50:50 partnership in the PNG assets with Newcrest of Australia;
•		start of production at all five of the companies’ major projects — Phakisa, Doornkop South Reef, Elandsrand and Tshepong in South Africa and Hidden Valley in PNG; and
•		stepping up of the company’s exploration programme, with a focus on the Wafi-Golpu copper-gold tenements in PNG and the Evander South project, the St Helena tailings project and several underground areas associated with existing operations in South Africa.

Competitive Strengths

     We believe that the following strengths provide us with a competitive advantage:

Leading market position in the attractive gold industry

	•		We believe that our size and leading market position enables us to undertake exploration and simultaneously develop multiple projects around the world, as well as secure capital on competitive terms.
	•		The global gold industry offers a number of attractive industry fundamentals from which we benefit. This includes the absence of available substitutes, relatively high barriers to entry, and increasing gold producer concentration.
	•		We are developing new mines at a planned lower cost per ounce than our current operations, which we believe will help make them robust enough to survive any margin squeeze and to withstand any reversal in the gold price. We expect the gold price to continue its upward trend in the medium term.

Significant reserves with long mine lives

	•		Our ore reserves as of June 30, 2009 amounted to 48.2 million ounces of gold spread across our assets in South Africa and PNG. This ore reserve base is sufficient to support our existing production profile in excess of 10 years at current production levels. There has been a 2.3 million ounces year-on-year negative variance in ore reserves due to normal depletion of 1.6 million ounces and the equity adjustment at Papua New Guinea to 50% attributable to Harmony which resulted in a further decrease of 0.9 million ounces. On the positive side, there is a net addition of 0.2 million ounces of ore reserves from surface stockpiles and other positive adjustments from the operations.
	•		Of our 48.2 million ounces of reserves, 36.4 million ounces are classified as above infrastructure and 11.8 million ounces are classified as below infrastructure (reserves for which capital expenditure has still to be approved).

Highly attractive project pipeline

	•		We have a diverse portfolio of gold development projects spread across South Africa and PNG. These projects include Elandsrand, Doornkop, Tshepong and Phakisa in South Africa, and Hidden Valley in PNG, which, when developed, could deliver up to 1.4 million ounces of additional production by 2012.
	•		We believe the relatively higher grade of these South African deposits and/or lower cost base will result in these ounces being produced at highly competitive cash costs. This in turn may result in a reduction in our overall cash cost position as these new projects are commissioned.
	•		In addition to these projects, we have a number of additional development prospects that are being considered and progressed, including the processing of sand dumps and tailings dams in our tailings projects, the processing of rock dumps, and developing the Wafi-Golpu copper/gold deposit in PNG, which, when all developed, could increase production ounces per annum.
	•		We have also expanded our exploration skill base, evidenced by our progress in PNG.
	•		We formed Rand Uranium, to which we have transferred our Cooke assets to optimize the value of our uranium deposits.

Positive gold market outlook

	•		In the midst of volatile tumultuous global investment markets, the gold market has demonstrated great resilience and a positive upside. The price performance throughout fiscal 2009 supports our positive outlook for gold and, given our operational imperatives, we will seek to contain costs, increase output and optimize our margins.
	•		Post June 30, 2009, the gold price hit a high of U.S.$1,059.50 per ounce and, while it was U.S.$1,050.50 per ounce as of October 19, 2009, this is 32% higher than it was for the same time the previous year.
	•		We believe the fundamental drivers behind increased demand and decreased new supply of gold will remain in the future, which will in turn support a higher gold price over this period. As an unhedged gold producer, we will benefit from a rising gold price environment.

Increased focus on earnings margins and cost

	•		Our aim remains to return to profitability. At an operational level we have put in place an intensive process of business planning, with benchmarks and targets we believe to be realistic.
	•		We are committed to lower our cost base and extensively benchmark our costing parameters both internally among our operations, and externally against other gold producers. Stringent cost cutting and cost control programs have been implemented.
	•		We are confident that the benefits of our restructuring process and ongoing cost focus will be sustained in the long term, and as a result, our ability to withstand any future adverse market conditions has been significantly enhanced.

Conservative balance sheet and low gearing

	•		We maintain a conservative gearing policy and seek to fund ongoing capital expenditure (excluding growth projects) through cash generated from existing operations.
	•		Our low level of gearing should provide us with the ability to utilize debt to fund capital and development expenditure requirements for our new projects.

Experienced management team with significant industry expertise

	•		Our senior management team consists of experienced mining executives with extensive industry backgrounds combined with geological and metallurgical expertise.
	•		Our senior management team has a proven track record in developing and managing the operations under its control, and has demonstrated an ability to optimize underperforming assets as well as developing new projects around the world.

Leading Black Economic Empowerment strategy

	•		We are proud to be a South African company that fully embraces the country’s transformation initiatives. We are approximately 15% owned by African Rainbow Minerals Limited (“ ARM Limited ”), a black empowerment company in which our chairman, Patrice Motsepe, owns an interest. Of our total production profile, 36% of our South African ounces are attributed empowerment ounces.
	•		We believe that we have gone beyond the requirements of the Mining Charter by ensuring that our HDSA partners are truly empowered, that we are largely managed by a HDSA Board, and that we continue to engage with black shareholders and/or partners to find more opportunities to invest in BEE transactions and involve HDSA partners.
	•		We will continue to embrace empowerment as part of our growth strategy and we acknowledge that empowerment forms a fundamental part of our business into the future.

Principal Investments

     See Item 8. “Recent Developments” for investments made after the reporting date.

     We have concluded several other strategic transactions within and outside South Africa in the last three fiscal years, which are summarized below.

     On April 17, 2009, we exchanged our interest in Dioro for shares in Avoca Resources Limited (“ Avoca ”). See Item 4. “Disposals” . In terms of the offer by Avoca, we received one Avoca share for every three Dioro shares held. The market value of the Avoca shares on the date was U.S.$4.2 million (A$1.50 per share).

     On December 1, 2008, we issued 3,364,675 shares to Rio Tinto plc (“ Rio Tinto ”) for the purchase of Rio Tinto’s rights to the royalty agreement entered into prior to our acquisition of the Wafi deposits in PNG. The shares were valued at $23 million on the transaction date. An additional $10 million in cash will be payable when the decision to mine is made. Of this amount, Harmony is responsible for paying the first $6 million, with the balance of $4 million being borne equally by the joint venture partners. The effect of the transaction will be to reduce the cost of any gold produced at Wafi.

     On November 21, 2008, we transferred our Cooke operations to Rand Uranium in exchange for cash of $209 million and a 40% interest in Rand Uranium. See Item 4. “Disposals” .

     On February 27, 2008, the Group acquired a 32.4% interest in Pamodzi Gold Limited (“ Pamodzi ”) after disposing of its Orkney assets. See Item 4 . “ Disposals ”.

     In March 2007, we concluded negotiations with Rio Tinto in which we purchased Rio Tinto’s rights to the royalty agreement entered into prior to our acquisition of the Hidden Valley and Kerimenge deposits in PNG. The final condition precedent, which was to obtain approval of the relevant PNG minister on the recommendation of the Mining Advisory Council that the royalty rights may be transferred to us, was met in March 2008. Our cost of U.S.$22.5 million was met through the issue of shares and a cash payment of U.S.$2.5 million. The effect of the transaction will be to reduce the cost of gold produced at Hidden Valley and all further extensions to the project, mine life and reserves will be free of this royalty.

     On December 8, 2006 we exchanged our Western Areas Limited (“ Western Areas ”) shares for Gold Fields Limited (“ Gold Fields ”) ordinary shares. See Item 4 . “ Disposals ”. We received 15.7 million Gold Fields shares, issued at R135.02 (U.S.$19.15) per share, for our 44.9 million Western Areas shares. During the fiscal years 2008 and 2007, we disposed of our interest in Gold Fields. See Item 4 . “ Disposals ”.

Disposals

     On April 17, 2009, we disposed of our Dioro shares in exchange for shares in Avoca. On that date, the market value of the Dioro shares were A$0.50 per share, or U.S.$4.2 million.

     On November 21, 2008, we transferred our Cooke assets to our wholly-owned, newly formed subsidiary, Rand Uranium, for the consideration of U.S.$328 million, settled with Rand Uranium shares. In a related transaction on the same date, 60% of these shares were sold to Pamodzi Resources Fund 1 LLP (“ PRF ”) for U.S.$197 million. U.S.$40 million was paid on the effective date and the balance of U.S.$157 million, together with interest at 5% per annum, was paid on April 20, 2009. The conditions precedent for the second part of the Rand Uranium transaction, relating to the sale of the Old Randfontein assets, were fulfilled on April 22, 2009. Additional shares were issued in settlement and 60% of these shares were sold to PRF. PRF paid its portion of the purchase price, amounting to U.S.$12 million, in cash on April 20, 2009. We recognized a gain of U.S.$171 million on these transactions.

     During fiscal 2009, we disposed of 50% of our interest in our PNG assets in three tranches to Newcrest. The first tranche of 30.01% was disposed of on July 31, 2008 in exchange for $229 million in cash, which was received on August 7, 2008. On February 28, 2009, the second tranche of 10% was disposed of in terms of the farm-in agreement. Newcrest earned in a further 9.99% interest by contributing to the capital expenditure at Hidden Valley as well as with a cash payment of $6 million on June 30, 2009. A net profit of $112 million was realized for the total disposal.

     On February 27, 2008, we disposed of our Orkney operations to Pamodzi in exchange for 30 million listed ordinary shares, the market value of which was R345 million (U.S.$46.5 million).

     On November 30, 2007 the South Kalgoorlie operations were sold to Dioro in exchange for 11.4 million listed ordinary shares, the market value of which was, when issued on December 5, 2007, U.S.$17.7 million (A$20 million), as well as cash of U.S.$22.1 million (A$25 million). A loss of U.S.$8.8 million (A$9.8 million), net of tax, was realized.

     On August 24, 2007, the Group disposed of the remaining 13,095,079 ordinary Gold Fields shares. The proceeds amounted to R1,310 million (U.S.$182.9 million), resulting in a loss of R459 million (U.S.$63.2 million).

     In April 2007, the surface assets and metallurgical plant at Deelkraal was sold to Ogoerion Construction CC for R98 million (U.S.$13.7 million). It was agreed that the purchase price be paid in installments over a 24-month period. Due to various reasons, the agreement was renegotiated and the metallurgical plant was excluded from the new sale agreement. The consideration for the surface assets was set at R45 million (U.S.$6 million), which had already been received.

     In a range of transactions between January 22, 2007 and February 12, 2007, we disposed of 1,150,000 Gold Fields shares for U.S.$19.7 million. The total cost of these shares was U.S.$21.4 million, resulting in a loss of U.S.$1.7 million. During May and June 2007, a further 1.5 million shares with a cost of U.S.$28.3 million were disposed of for U.S.$25.1 million, resulting in a loss of U.S.$3.2 million.

     On December 8, 2006, we disposed of our 29.2% interest in Western Areas in exchange for ordinary shares in Gold Fields. This was in terms of an offer by Gold Fields whereby every 100 Western Areas Shares were exchanged for 35 Gold Fields shares.

     On October 19, 2006, Randfontein 4 Shaft was sold to Simmer & Jack Limited for an amount of R60 million (U.S.$8.5 million).

Hedging Policy

     We have consistently maintained a policy of not entering into forward sales, commodity, derivatives or hedging arrangements to establish a price in advance for the sale of our future gold production, although we may do so in the future.

     Where any such gold hedging position is acquired, our policy is to eliminate any such positions existing within acquired companies as soon as this can be achieved through sound, commercially advantageous transactions. There may, however, be instances where certain hedge positions in acquired companies need to be kept in place for contractual or other reasons. In line with this policy, we have historically closed out hedging arrangements inherited through our acquisitions. Our revenues are sensitive to the exchange rate of the Rand and other non-U.S. currencies to the U.S. dollar, as all the revenues are generated by gold sales denominated in U.S. dollars. We do not enter into forward sales, commodity, derivatives or other hedging arrangements to establish a Rand to U.S. dollar exchange rate in advance for the sales of our future gold production, although we may do so in the future.

     In May 2007, we closed out the remainder of our Australian hedge book, which we inherited with the acquisition of the Hill 50 mine. In these transactions, some 220,000 ounces were closed out at an average spot rate of A$809/ounce, for a total cost of A$72.8 million (U.S.$60.0 million). As a result, we are completely unhedged.

Description of Mining Business

Exploration

     Exploration activities are focused on the extension of existing orebodies and identification of new orebodies, both at existing sites and at undeveloped sites.

     Our gold-focused exploration program has two components:

	•		on-mine exploration, which looks for resources within the economic radius of existing mines, and
	•		new mine exploration, which is the global search for early to advanced stage projects.

     Once a potential orebody has been discovered, exploration is extended and intensified in order to enable clearer definition of the orebody and the potential portions to be mined. Geological techniques are constantly refined to improve the economic viability of prospecting and mining activities.

     We conduct exploration activities on our own or with joint venture partners. As at June 30, 2009, our prospecting interest in South Africa measured 48,983 hectares (121.037 acres), 327,600 hectares (809,514 acres) in PNG and 80,123 hectares (197,988 acres) in Australia. We spent U.S.$32 million on exploration in fiscal 2009 and the bulk of exploration expenditure was allocated to activities in PNG and South Africa. In fiscal 2010, we intend to carry out exploration in PNG and South Africa.

Mining

     The mining process can be divided into two main phases: (i) accessing the orebody and (ii) mining the orebody. This basic process applies to both underground and surface operations.

	•		Accessing the orebody.
			In our South African underground mines, access to the orebody is by means of shafts sunk from the surface to the lowest economically and practically mineable level. Horizontal development at various intervals of a shaft (known as levels) extends access to the horizon of the reef to be mined. On-reef development then provides specific mining access. Horizontal development at various intervals of the decline extends access to the horizon of the ore to be mined. The declines are advanced on a continuous basis to keep ahead of the mining taking place on the levels above. In our open-pit mines, access to the orebody is provided by overburden stripping, which removes the covering layers of topsoil or rock, through a combination of drilling, blasting, loading and hauling, as required.

	•		Mining the orebody.
			The process of ore removal starts with drilling and blasting the accessible ore. The blasted faces are then cleaned, and the ore is transferred to the transport system. In open-pit mines, gold-bearing material may require drilling and blasting, and is usually collected by bulldozers or shovels to transfer it onto trucks, which transport it to the mill.

     In our South African underground mines, once ore has been broken, train systems collect ore from the faces and transfer it to a series of ore passes that gravity feed the ore to hoisting levels at the bottom of the shaft. The ore is then hoisted to the surface in dedicated conveyances and transported either by conveyor belts directly or via surface railway systems or roads to the treatment plants. In addition to ore, waste rock broken to access reef horizons must similarly be hoisted and then placed on waste rock dumps.

Processing

     We currently have eight operational metallurgical plants and two metallurgical plants on care and maintenance in South Africa. We also have a metallurgical plant at the Hidden Valley project in PNG. The principal gold extraction processes we use are carbon in leach, or CIL, and carbon in pulp, or CIP.

     The gold plant circuit consists of the following:

	•		Comminution.
			Comminution is the process of breaking up the ore to expose and liberate the gold and make it available for treatment. Conventionally, this process occurs in multi-stage crushing and milling circuits, which include the use of jaw and gyratory crushers and rod and tube and ball mills. Our more modern milling circuits include semi- or fully-autogenous milling where the ore itself is used as the grinding medium. Typically, ore must be ground to a minimum size before proceeding to the next stage of treatment.
	•		Treatment.
			In most of our metallurgical plants, gold is extracted into a leach solution from the host ore by leaching in agitated tanks. Gold is then extracted onto activated carbon from the solution using the CIL or CIP processes.

     Gold in solution, at one of our plants, is recovered using zinc precipitation. Recovery of the gold from the loaded carbon takes place by elution and electro-winning. Cathode sludge or dore bars produced from electro- winning is now currently sent directly to Rand Refinery. Most of the South African plants no longer use smelting to produce rough gold bars (dore). Our South African zinc precipitation plants continue to smelt precipitate to produce rough gold bars. These bars are then transported to the Rand Refinery which is responsible for refining the bars to a minimum of good delivery status.

     In fiscal 2006, we operated the only independent gold refinery and fabrication plant in South Africa. In fiscal 2006, approximately 84% of our South African gold production was refined at our refinery and the remainder was refined at the Rand Refinery, which is owned by a consortium of the major gold producers in South Africa. Since July 2006, all of our gold produced in South Africa has been sent to the Rand Refinery, as a decision was made to close the Harmony Refinery for economic reasons. The Australian gold production for fiscal years 2007 to 2009 was refined in Australia at an independent refiner, AGR Matthey.

     The South African government has emphasized that the production of value-added fabricated gold products, such as jewelry, is an important means for creating employment opportunities in South Africa and has made the promotion of these beneficiation activities a requirement of the Mining Charter described in Item 4. “Information on the Company-Regulation — Mineral Rights”. We support jewelry ventures in South Africa.

Harmony’s Management Structure

     We have a de-centralized management structure that is based on small, empowered management teams led by General Managers at each of our operations. In South Africa, the General Managers report to Alwyn Pretorius and Tom Smith, the Chief Operations Officers, and are responsible for business optimization, ore reserve optimization, and for developing a business culture at the operations. They also focus on long-term viability and growth of the operations. The General Managers are supported by an Ore Reserve Manager, a Financial Manager, a Human Resources Manager and a Technical Manager in ensuring the growth and long-term sustainability of the operations.

Capital Expenditures

     Capital expenditures for continuing operations, including the non-cash portion, incurred for fiscal 2009 totalled U.S.$487 million compared with U.S.$504 million for fiscal 2008 and U.S.$340 million for fiscal 2007. In Rand terms, the capital expenditure increased by 19% from fiscal 2008. The decrease in dollar terms can be attributed to the weakening of the Rand against the US dollar during the year. For fiscal 2009, the capital development at PNG accounted for 41% of the total. The majority of the PNG development was funded by Newcrest in terms of the farm-in agreement. The increase in capital expenditure was due to the capital development at the Doornkop South Reef Project, Tshepong Sub 71 Decline, Phakisa and Elandsrand new mine. The increase in capital expenditure in fiscal 2008 compared with 2007 was primarily related to the development of the PNG assets, which accounted for 39% of the project capital expended at the continuing operations. Capital was also expended on the Doornkop South Reef Project, Tshepong Sub 66 and 71 Declines, Phakisa and Elandsrand new mine. During fiscal 2007, the increased development in PNG accounted for 21% of the project capital expended in the year at the continuing operations, with the balance being expended at the Doornkop South Reef Project, Phakisa, Tshepong Sub 66 Decline and Elandsrand new mine.

     The focus of our capital expenditures in recent years has been underground development and plant improvement and upgrades. Construction in certain areas at these projects are close to completion and will start building up production in the next 12 months. The remainder of the projects will still require a great deal of capital expenditure over the next two to three years until they are substantially completed. During fiscal 2009, the projects were funded from the Company’s cash reserves, as well as by the partnering agreement entered into with Newcrest for the PNG assets.

     Capital expenditure for discontinued operations, including the non-cash portion, incurred for fiscal 2009 totaled U.S.$10 million, compared with U.S.$38 million for fiscal 2008 and U.S.$41 million for fiscal 2007.

     We have budgeted approximately U.S.$410 million for capital expenditures in fiscal 2010. Details regarding the capital expenditures for each operation are found in the individual mine sections under “ Business — Harmony’s Mining Operations ”. We currently expect that our planned operating capital expenditures will be financed from operations and new borrowings as needed. However, if we decide to expand major projects such as the Poplar Project and the Rolspruit Project at Evander beyond our current plans, we may consider alternative financing sources. See Item 4. “ Information on the Company — Business — Harmony’s Mining Operations — Evander Operations ” .

Reserves

     As at June 30, 2009, we have declared proven and probable reserves of 48.2 million ounces, broken down as follows: 46.1 million ounces in South Africa and 2.1 million ounces in PNG. Of our 48.2 million ounces of ore reserves, 11.8 million ounces are classified as below infrastructure (that is, reserves for which capital expenditure has yet to be approved). There has been a 2.3 million ounces year-on-year negative variance in ore reserves due to the following reasons:

	•		normal depletion of 1.6 million ounces;
	•		the equity adjustment at Papua New Guinea to 50% attributable to Harmony resulted in a further decrease of 0.9 million ounces; and
	•		a net addition of 0.2 million ounces of ore reserves from surface stockpiles and other positive adjustments from the operations.

     We use the South African Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (“ SAMREC Code ”), which sets out the internationally recognized procedures and standards for reporting of mineral resources and ore reserves. We use the term “ore reserves’’ herein, which has the same meaning as “mineral reserves”, as defined in the SAMREC code. Our reporting of the PNG Ore Reserves complies with the Australian Code for the Reporting of Mineral Resources and Ore Reserves (“ JORC ”) of the Australian Institute of Mining and Metallurgy. This code is materially the same as the SAMREC Code. In reporting of reserves, we have complied with Industry Guide 7 of the U.S. Securities and Exchange Commission.

     For the reporting of Ore Reserves at our South African and PNG operations, we use a gold price of U.S.$750 per ounce. An exchange rate of R9.33 per U.S. dollar is used for South Africa and for PNG an exchange rate of U.S.$0.75 per Australian dollar is used giving a gold price of R225,000 per kilogram and AU$1,000 per ounce, respectively. These gold prices have also been used in mine planning.

     In order to define that portion of a measured and indicated mineral resource that can be converted to a proven and probable ore reserve at our underground operations, we apply the concept of a cut-off grade. This is done by defining the optimal cut-off grade as the lowest grade at which an orebody can be mined such that the total profits, under a specified set of mining parameters, are maximized. The cut-off grade is determined using our Optimizer computer program which requires the following as input:

	•		the database of measured and indicated resource blocks (per shaft section);
	•		an assumed gold price which, for this ore reserve statement, was taken as R225,000 per kilogram;
	•		planned production rates;
	•		the mine recovery factor (“ MRF ”) which is equivalent to the mine call factor (“ MCF ”) multiplied by the plant recovery factor; and
	•		planned cash costs (cost per tonne).

     Rand per tonne cash costs of the mines are historically based, but take into account distinct changes in the cost environment, such as the future production profile, restructuring, right-sizing, and other cost reduction initiatives which we expect in the aggregate to lead to lower unit costs, and for below-infrastructure ounces, an estimate of capital expenditure.

     The block cave reserve at Golpu (PNG) used the PCBC computer program to define the optimal mine plan and sequencing.

     The open pit reserve at Hidden Valley (PNG) is constrained by the capacity of the tailings storage facility with Whittle optimization program guiding the most efficient mine design given this constraint.

     The ore reserves represent that portion of the measured and indicated resources above cut-off in the life-of-mine plan and have been estimated after consideration of the factors affecting extraction, including mining, metallurgical, economic, marketing, legal, environmental, social, and governmental factors. A range of disciplines which includes geology, survey, planning, mining engineering, rock engineering, metallurgy, financial management, human resources management, and environmental management have been involved at each mine in the life-of-mine planning process and the conversion of resources into reserves. The ore flow-related modifying factors used to convert the mineral resources to ore reserves through the life-of-mine planning process are stated for each individual shaft. For these factors, historical information is used, except if there is a valid reason to do otherwise. Because of depth and rock engineering requirements, some shafts design stope support pillars into their mining layouts which accounts for approximately 7% to 10% discounting. Further discounting relates to the life-of-mine extraction to provide for unpay and geological losses.

     Our standard for narrow reef sampling with respect to both proven and probable reserve calculations for underground mining operations in South Africa is applied on a 6 meter by 6 meter grid. Average sample spacing on development ends is at 2 meter intervals in development areas. For the massive mining at the Target operations, our standard for sampling with respect to both proven and probable reserves are fan drilling with “B” sized diamond drill holes (43mm core) sited at 50 meter spaced sections along twin access drives. The Kalgold open cast operations are sampled on diamond drill and reverse circulation drill spacing of no more than 25 meters on average. Surface mining at South African operations other than Kalgold involves recovering gold from areas previously involved in mining and processing, such as metallurgical plants, waste rock dumps and tailing dams (slimes and sand) for which random sampling is used.

     The PNG resources are hosted in large porphyry or related mesothermal geological systems. Data is gained through diamond drilling using PQ down to NQ sized core. The core is cut in half, one half sampled at a maximum of 2 meter intervals and the other half stored in designated core storage facilities. Drill spacing is typically on less than 20 meter centers for Measured category, 20 to 40 meter centers for the Indicated category and greater than 40m for Inferred category material. Assaying for gold is by fire assay and various methods are used for copper and other elements. All assays informing the resource calculation are analyzed at a National Association of Testing Authorities accredited commercial laboratory. Some sample preparation is done at the mine site laboratory. Extensive Quality Assurance/Quality Control work is undertaken and data is stored in an electronic database.

     Our mining operations’ reported total proven and probable reserves as of June 30, 2009 are set out below:

Ore Reserves statement (Imperial) as at June 30, 2009

Note: 1 ton = 907 kg = 2,000 lbs

     In addition to the gold reserves, we also report our equity reserves for silver, copper and molybdenum from our PNG operations. Metal prices are assumed at U.S.$10/oz for silver, U.S.$2.27/lb for copper and U.S.$13/lb for molybdenum.

Note: 1 ton = 907 kg = 2,000 lbs

     Our methodology for determining our reserves is subject to change and is based upon estimates and assumptions made by management regarding a number of factors as noted above in this section.

Worldwide Operations

Description of Property

     The following is a map of our worldwide operations:

     Our operational mining areas in South Africa are set forth below:

     In Australia and PNG, we hold granted tenements as set forth below:

We acquired new tenements in PNG for exploration after June 30, 2009. See Item 8. “Recent Developments” .

     In line with the rest of the South African mining industry, and in an effort to reduce costs, we have been rationalizing our mineral rights holdings in recent years. Accordingly, over the past three years, we have disposed of our shares and participation rights in areas within and outside of South Africa in which we have not actively pursued mining. However, in some cases we have retained certain participation rights and option clauses in disposed-of properties and mining rights. We may continue to investigate further disposals.

Geology

     The major portion of our South African gold production is derived from mines located in the Witwatersrand Basin in South Africa. The Witwatersrand Basin is an elongated structure that extends approximately 300 kilometers in a northeast-southwest direction and approximately 100 kilometers in a northwest-southeast direction. It is an Archean sedimentary basin containing a six kilometer thick stratigraphic sequence consisting mainly of quartzites and shales with minor volcanic units. The majority of production is derived from auriferous placer reefs situated at different stratigraphic positions and at varying depths below the surface in three of the seven defined goldfields of the Witwatersrand Basin.

     Our Hidden Valley project comprises low sulphidation carbonate-base metal-gold epithermal deposits within the Morobe Goldfield, in the Morobe Province of PNG. In the Hidden Valley project area, a batholith of Morobe Granodiorite (locally a coarse grained monzogranite) is flanked by fine metasediments of the Owen Stanley Metamorphics. Both are cut by dykes of Pliocene porphyry ranging from hornblende-biotite to feldspar-quartz porphyries. A number of commonly argillic altered and gold anomalous breccias are known, including both hydrothermal and over printing structural breccias. The Hidden Valley deposit area is dominated by a series of post Miocene faults controlling the gold mineralization, including an early north trending set and the main northwest faulting.

     Our Wafi project comprises the sedimentary/volcaniclastic rocks of the Owen Stanley Formation that surround the Wafi Diatreme and host the gold mineralization. Gold mineralization occurs as extensive high-sulphidation epithermal alteration overprinting porphyry mineralization and epithermal style vein-hosted and replacement gold mineralization with associated wall-rock alteration. The Golpu Copper-Gold project is located about one kilometer northeast of the Wafi gold orebody. It is a porphyry (diorite) copper-gold deposit. The host lithology is a diorite that exhibits a typical zoned porphyry copper alteration halo and the mineralized body can be described as a porphyry copper-gold “pipe”.

Harmony’s Mining Operations — Overview

     In South Africa, we conduct underground mining at 10 operations:

	•		Tshepong
	•		Phakisa
	•		Bambanani
	•		Doornkop
	•		Elandsrand
	•		Masimong
	•		Virginia (consists of Harmony 2, Merriespruit 1 & 3, Unisel and Brand 3 & 5)
	•		Target
	•		Evander (consists of Evander 2, 5, 7 and 8)
	•		Joel (included under “Other — Underground”)

     During fiscal 2008, the Cooke operations (consists of Cooke 1, 2 and 3 shafts) were considered to be a reportable segment. An effective 60% interest in these operations was sold on November 21, 2008 and the results for the five months up to that date have been included in discontinued operations for fiscal 2009.

     We conduct surface mining at four sites (all included in “Other — Surface”):

	•		Free State (also known as Phoenix)
	•		Freegold
	•		Kalgold
	•		Target

     Surface mining was conducted at Randfontein’s Cooke operations up to the date of sale and the Cooke plant has been classified as discontinued operations along with the Cooke operations.

     Surface mining conducted at the South African operations other than Kalgold involves recovering gold from areas previously involved in mining and processing, such as metallurgical plants, waste rock dumps and tailings dams (slimes and sand). We are conducting studies to determine the feasibility of further retreatment projects in the Free State and at Evander.

     Internationally, our mining was previously conducted at the following two sites in Australia:

	•		Mount Magnet — The site was put on care and maintenance at the end of December 2007. We have commenced with a drilling program in order to further define the orebody. Management may decide to resume the sale process as soon as the drilling results are available. — See “ International Operations ” above.
	•		South Kalgoorlie — we finalized the sale of this operation with Dioro on November 30, 2007 — See “ Disposals ” above.

     Underground and surface mining was conducted at each of these operations, with underground access through two declines at Mount Magnet and one decline at South Kalgoorlie and surface access principally through open-pits. Surface mining at South Kalgoorlie ceased in fiscal 2006 with treatment consisting of Mount Marion ore and low grade stockpiles. Open-pit mining

recommenced at South Kalgoorlie mines during fiscal 2007. The Mount Marion underground operation at South Kalgoorlie ceased in June 2007, with only open-pit operations continuing on that site until the date of sale to Dioro.

     The following discussion is a two-part presentation of our operations:

	•		an overview of our South African mining operations with a discussion and production analysis of each of our operating segments; and
	•		an overview of our International (Australian and PNG) operations.

     Previously, we disclosed cash costs and cash cost per ounce which including the movement in inventory and calculated using gold ounces sold as a denominator. These amounts have been re-presented for all comparative periods in the discussions and production analyses below following the changes to the calculation of these measures, See Item 3 . “ Selected Financial Data — Selected Historical Consolidated Financial Data .”

     Where we have translated the Rand amount budgeted for capital expenditures in 2010 into U.S. dollars, we have used the closing rate at the balance sheet date.

South African Mining Operations

Unless indicated otherwise, the discussions below are for continuing operations.

Underground

Tshepong, Phakisa and Bambanani

Introduction: We acquired Tshepong, Phakisa and Bambanani when we, in January 2002, acquired the Freegold operations from AngloGold Ashanti Limited (“ Anglogold ”) through a 50% joint venture with African Rainbow Minerals Gold Limited (“ ARMgold ”). In September 2003, we acquired 100% of these operations when ARMgold became a wholly owned subsidiary. These operations are located in the Free State province. Production from the operations is processed through Harmony One Plant.

History: Exploration, development and production history in the area of the Freegold assets dates from the early 1900’s, leading to commercial production by 1932. Subsequent consolidation and restructuring led to the formation of Free State Consolidated Gold Mine (Operations) Limited, which became a wholly-owned subsidiary of AngloGold in June 1998.

Geology: The operations are located in the Free State Goldfield, which is on the southwestern edge of the Witwatersrand basin. The Bambanani, Tshepong and Phakisa mines are located to the north and west of Welkom. Mining is primarily conducted in the Basal reef, with limited exploitation of the B Reef at Tshepong. The reefs generally dip towards the east or northeast while most of the major faults strike north-south. B Reef is being mined at Tshepong with potential of being exploited elsewhere.

Mining Operations: These operations are subject to the underground mining risks detailed in the Risk Factors section. The management teams regularly revisit their mining strategy and management procedures in order to minimize risks.

     Mining is conducted at depths ranging from 1,911 and 3,680 meters at Bambanani. The primary mining challenges at these operations are seismic risks, ventilation and fire avoidance. Bambanani is classified as a seismically active operation with seismic activity monitoring systems installed to do active seismic risk evaluation. Seismic activity monitoring systems are upgraded on a continuous basis to ensure that it is kept abreast of emerging technology. Operations at Tshepong were hampered by fires, safety stoppages and major equipment repairs during fiscal 2009.

     Bambanani was restructured during the third quarter of fiscal 2008 due to the power shortages in the country. This resulted in the tonnages being reduced by 50%. There was also a significant reduction in the labor complement, with 2,086 people leaving through transfers and voluntary retrenchments. Implementation of the revised mining plan to convert Bambanani to a high-grade, low-volume operation continued during fiscal 2009, but there were some set-backs. While tons mined were on target, several fires occurred in the second quarter in high-grade areas. The average grade for the year was negatively affected as a result, as crews had to be deployed to lower grade panels. In addition, the mine was affected by troublesome industrial relations activities which were resolved by year-end. The split reef/waste hoisting process put in place to some extent ameliorated this loss in grade. Two of the affected areas are being systematically reopened, and will become available in fiscal 2010. Plans are in place to prepare for mining of the high-grade shaft pillar in such as way as to minimize risk and maximize the opportunity this presents. The Bambanani Shaft Pillar Project will be accessed from West Shaft (which will be reopened for this purpose) and release an expected 87% of the resource. The cost of the project is expected to be some R309 million (US$40 million) and is expected to reach full production in June 2013.

     Mining is conducted at depths ranging from 1,671 and 2,154 meters at Tshepong. Operations at Tshepong were hampered during fiscal 2009 as a series of operational, infrastructural and safety-related problems affected the mine. These included a fire in the first quarter that affected 18 panels for a period of a week and constrained flexibility during the year, safety-related stoppages, a power supply failure and a labour go-slow in the second quarter. By the fourth quarter some improvement in volumes were seen. Management spent much time during the year addressing industrial relations issues; these were largely resolved by year-end. The self-directed work team training that was originally pioneered at Tshepong has been reintroduced.

     The average grade declined by 6% during fiscal 2009 This was primarily as a result of mining taking place at the edge of the orebody’s main pay shoot, where grades are more variable. Once the Sub 66-decline project has been completed, mining will move into higher-grade, less variable grade zones and grades are expected to rise from fiscal 2011. As impacting on the lower grade was higher than planned off-reef mining in the lower grade north-west area. To mitigate against this grade decline, Tshepong has focussed on quality mining, with attention being paid to improved sweepings, and reduced off-reef mining and stoping widths. By its nature the under-cut mining method employed at Tshepong results in the liberation of gold from finely fragmented ore. Historically, the MCF at Tshephong has been low. Pleasingly, the MCF improved year-on-year from 62% to 67%. The full commissioning of the belt level in the sub-66 decline will also result in higher grades being achieved.

     To improve flexibility, particular emphasis was placed on development in the second half of fiscal 2009. Other key issues that are being addressed by this mine to return it to optimal performance are the performance of the refrigeration plant and pumping infrastructure.

     Given the proximity of Tshepong to Phakisa, there are access, ventilation and service synergies that can be exploited to allow access at depth.

     The Tshepong Decline project, which started in April 2003, has accessed an additional two levels (69 and 71) of the Tshepong Shaft. The Sub 66 project neared completion at the end of June 2008 with a total capital expenditure of R289 million (U.S.$39.8 million). The final development component was completed in June 2008. Poor ground condition necessitated intense secondary support and ore pass lining delayed completion. All secondary support has been completed and the lining of orepasses was completed safely during fiscal 2009. Following design alterations recommendations on box front infrastructure installations on 72 Level Cross Belt, all work is scheduled for completion by February 2010. Production commenced at Sub 66 Decline during the year, with the build-up to continue over the next three years. Emphasis is being placed on increasing mineable reserves from this area.

     Sub 71 Project made good progress until November 2008 when extreme poor ground conditions were experienced in the developed section. A decision was taken to stop all development and install secondary support in the area. The stoppage continued for seven months until end fiscal 2009. The work was completed safely, without disrupting the production operations from the Sub 66 decline. Cumulatively a total of 1,582 meters have been completed. To date the baseline variation on the original plan is one year. The escalation of input costs, combined with delays and additional material required had a negative impact on the project. First production is expected in August 2012, with full production anticipated in July 2017. The total estimated cost of this project is R194 million (U.S. $25.1 million).

     The development at Phakisa, a surface shaft, sunk to 75 level elevations and a planned decline shaft to 85 level will access the ore reserves to a depth of 2,662 meters below surface. It is estimated that the area will yield 22.6 million tons, recovering 180.9 tons of gold over a project life of 21 years. Project completion requires sinking, equipping and commissioning of a decline shaft up to 85 level. The major project includes access development and stoping to maximum production build-up at a capital cost of R1.6 billion (U.S.$190 million). To date, R1.2 billion (U.S.$158.4 million) has already been spent. Good progress was achieved during fiscal 2009, with completion of all infrastructures except the permanent water handling system. Installation of the permanent water handling systems (i.e., Settlers, Main Pump Station on 77 Level, Mud press and underground dams) have been delayed requiring extensive sealing of the dams and re-torque of all the bolts in the shaft pump column to avoid leaks on gaskets, but expected completion is September 2009. The second train on the Rail-veyor was successfully commissioned in November 2008 and the third train planned for October 2009. Three of the 10 ice plant modules have been successfully commissioned and to complete the first phase of the 10 MW cooling system, seven more modules must be commissioned with due date December 2010. The first phase of surface offices and change houses have been successfully completed with the second phase scheduled for June 2010. Phakisa started the first production during September 2007 and will be opening up ore reserves going forward. The project is expected to be in full production in September 2011 at 91,492 tons per month. The average production rate per annum over the peak period of life of mine is 245,243 ounces.

     During fiscal 2009, Tshepong accounted for 15% (14% in 2007 and 2008) of our total gold production, with Phakisa accounting for 1.5% (nil for 2007, 0.2% in 2008) and Bambanani 8% (8% in 2007 and 2008).

      Safety: During fiscal 2009, the safety statistics for the operations compared to the Group average for lost time injury frequency rate (“ LTIFR ”) of 9.35 (2008: 12.83) per million hours worked and fatality frequency injury rate (“ FFIR ”) of 0.21 (2008: 0.18) are as follows:

     Phakisa was awarded, for the second consecutive year, the trophy for the safest mine in the Harmony group for fiscal 2009. There were no fatal accidents in fiscal 2009, and there has not been a fall of ground accident for more than 18 months.

     Regrettably there were seven fatalities at Tshepong during fiscal 2009 (2008: 2), five of which were outside the stoping areas and in areas that would generally be considered lower risk. A behaviour-based safety programme has been implemented to promote safety awareness, particularly in the services areas, so as to address this issue.

Plants: The ore from these operations are sent to Harmony 1 Plant for processing. This plant, which processes underground ore, waste rock and various surface accumulations, was commissioned in 1986 and is a conventional CIP plant processing ore that has been milled by semi-autogenous grinding. Gold is recovered from the eluate solution using zinc precipitation and a precoat vacuum filter. The precipitate recovered from the filter is calcined and smelted to bullion.

     The following table sets forth processing capacity and average tons milled during the fiscal 2009 for the Harmony 1 Plant:

     In fiscal 2009, Harmony 1 Plant recovered approximately 95.9% of the gold contained in the ore delivered for processing.

     Tons milled declined by 10% from 1,824,000 tons in fiscal 2007 to 1,649,000 in fiscal 2008, with gold production decreasing by 17% from 319,192 ounces in fiscal 2007 to 265,914 ounces in fiscal 2008. The decrease was attributable to the decrease in the recovery grade to 0.161 ounces per ton in fiscal 2008, compared with 0.175 ounces per ton in fiscal 2007. The decrease in recovery grade was primarily due to the decrease in the shaft call factor and the average mining grade which was 1,275 cmg/t in fiscal 2008, compared to 1,365 cmg/t in fiscal 2007. The drop in the average mining grade is in line with the Life of Mine profile. During fiscal 2007 the mining in the east south block was in the main high grade pay shoot and as we continued mining south during fiscal 2008 we were mining closer to the edge of this high grade channel. The continuation of this channel will be mined once the sub 66 and sub 71 decline is completed. Tshepong was hampered by a number of fires and seismic events that significantly affected production in the first half of fiscal 2008. The cessation of Conops also resulted in lower production.

     Cash costs for the Tshepong shaft were U.S.$125 million in fiscal 2008, compared with U.S.$112 million in fiscal 2007. Cash costs per ounce were U.S.$455 in fiscal 2008, compared with U.S.$360 in fiscal 2007. This increase in unit cost is attributable primarily to decrease in the number of ounces of gold produced. Cash costs have increased by 11% in fiscal 2008, primarily due to increases in the costs of labor and supplies and the effect of inflation on supply contracts.

     Tons milled declined by 8% from 1,649,000 tons in fiscal 2008 to 1,516,000 in fiscal 2009, with gold production decreasing by 13% from 265,914 ounces in fiscal 2008 to 230,778 ounces in fiscal 2009. The decrease was attributable to the decrease in the recovery grade to 0.152 in fiscal 2009, compared with 0.161 in fiscal 2008. The decrease in recovery grade was primarily due to a decrease in the average mining grade which was 1,153 cmg/t in fiscal 2009, compared to 1,275 cmg/t in fiscal 2008. The drop in the average mining grade is in line with the Life of Mine profile. During fiscal 2008 the mining in the east south block was on the edge of

the main high grade pay shoot and as mining continued south during fiscal 2009, mining have moved out of this high grade channel. The continuation of this channel will be mined once Sub 66 and Sub 71 decline is completed.

     Production volume at Tshepong was negatively influenced due to the phasing out of Conops year on year as well as business interruptions due to a fire, safety, national stay away actions and repairs on major engineering equipment.

     Cash costs for the Tshepong shaft were U.S.$108.6 million in fiscal 2009, compared with U.S.$124.7 million in fiscal 2008. Cash costs per ounce was U.S.$483 in fiscal 2009, compared with U.S.$455 in fiscal 2008. This increase in unit cost is attributable primarily to decrease in the number of ounces of gold produced. Cash cost for fiscal 2009 was impacted by increases in the costs of labor and electric power.

     Assuming no additional reserves are identified, at expected production levels and, at the current planned gold price, it is foreseen that the reported proven and probable ore reserves of 26.7 million tons (4.3 million ounces) will be sufficient for Tshepong to maintain underground production until approximately 2026. Any future changes to the assumptions upon which the ore reserves are based, as well as any unforeseen events affecting production levels, could have an effect on the expected period of future operations.

      Capital Expenditure: Tshepong incurred approximately R249.4 million (U.S.$27.7 million) in capital expenditure during fiscal 2009. The expenditure was primarily for the decline project and ongoing development. For fiscal 2010 capital expenditure of R243 million (U.S.$31.5 million) is planned, primarily for ongoing capital development.

		Fiscal Year Ended June 30,
Phakisa		2009				2008				2007
Production
Tons (‘000)			204				34				—
Recovered grade (ounces/ton)			0.109				0.118				—
Gold produced (ounces)			22,216				4,024				—
Gold sold (ounces)			21,477				4,212				—
Results of operations ($)
Product sales (‘000)			19,009				3,891				—
Cash cost (‘000)			11,903				2,348				—
Cash profit (‘000)			7,106				1,543				—
Cash costs
Per ounce of gold ($)			555				497				—
Capex (‘000) ($)			51,210				40,335				31,593

     Tons milled increased from 34,000 tons in fiscal 2008 to 204,000 tons in fiscal 2009, with gold production increasing from 4,024 ounces to 22,216 ounces. This was as a result of the planned ramp up in production during the year. Grade was lower in fiscal 2009 at 0.109 ounces per ton, compared to 0.118 in fiscal 2008. This was due to the fact that mining was confined to a single raise line in a lower grade area.

     Cash costs per ounce for Phakisa was $555 per ounce in fiscal 2009, compared with $497 per ounce in fiscal 2008. This increase is primarily attributable to the increase in tons mined.

     The expected capacity of the Phakisa shaft will be 131,175 tons per month. Phakisa has no rock hoisting facilities and all rock will be transported via a rail system on 55 level to the Nyala shaft for hoisting to surface. First production took place during October 2007, with a build up to full production expected in the next two to three years.

     Proven and probable underground ore reserves of 22.6 million tons (5.3 million ounces) will be sufficient for the Phakisa shaft to, once production commences, maintain production until approximately fiscal 2030. Any future changes to the assumptions upon which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

      Capital Expenditure: Phakisa incurred approximately R460.9 million (U.S.$51.2 million) in capital expenditures in the fiscal year ended June 30, 2009, primarily for the main project. Planned capital expenditure for fiscal 2010 is R489 million (US$63 million) — R141 million (US$18 million) on on-going development and R52 million (US$7 million) on major equipment maintenance and other shaft capital. Capital planned for the main project is R296 million (US$38 million).

     Tons milled from the Bambanani shaft decreased to 912,000 in 2008 compared with 1,283,000 in fiscal 2007. Ounces produced were 154,879 in fiscal 2008, compared with 197,084 in fiscal 2007. This decrease was due to the restructuring of the shaft due to power constraints but was offset by a better recovered grade, which increased from 0.154 in fiscal 2007 to 0.170 in fiscal 2008.

     Cash costs per ounce for Bambanani were U.S.$639 in fiscal 2008, compared with U.S.$599 in fiscal 2007. The costs per ounce increased by 7% in fiscal 2008, due to the slow start up after the collapsing of the old ore pass system increases in the costs of labor and supplies and the effect of inflation on supply contracts.

     Tons milled from the Bambanani shaft decreased to 570,000 in 2009 compared with 912,000 in fiscal 2008. Ounces produced were 121,530 in fiscal 2009, compared with 154,879 in fiscal 2008. This decrease was due to the restructuring of the shaft due to power constraints but was offset by a better recovered grade, which increased from 0.170 in fiscal 2008 to 0.213 in fiscal 2009.

     Cash costs per ounce for Bambanani were U.S.$611 in fiscal 2009, compared with U.S.$639 in fiscal 2008. The costs per ounce decreased by 4% in fiscal 2009, due to an increase in grade mined offset by an increases in the cost of labor and supplies and the effect of inflation on supply contracts.

     The rock hoisting capacity at Bambanani is 116,000 tons per month. The average tons milled in fiscal 2009 was 47,500 tons per month. 52,900 tons per month are planned for fiscal 2010.

     Assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven and probable ore reserves of 5.2 million tons (1.4 million ounces) will be sufficient for Bambanani to maintain underground production until approximately 2021. Any future changes to the assumptions upon which the ore reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

Capital Expenditure: Bambanani incurred approximately R52 million (U.S.$5.8 million) in capital expenditure in fiscal 2009, primarily for ongoing development. We budgeted R73 million (U.S.$9.4 million) for capital expenditure in fiscal 2010 for access development for the shaft pillar extraction and R25.5 million (U.S.$2.8 million) for ongoing development with R18.4 million (U.S.$2.0 million) for major equipment maintenance.

Doornkop

Introduction : Doornkop is located in the Gauteng Province of South Africa, approximately thirty kilometers west of Johannesburg. The operation is owned by Randfontein Estates Limited (“ Randfontein ”). Doornkop currently operates under its own mining authorization of 2,941 hectares. Production is treated at the Doornkop plant.

History : Harmony acquired this operation when it took over Randfontein.

Geology : These operations are situated in the West Rand Goldfield of the Witwatersrand Basin, the structure of which is dominated by the Witpoortjie and Panvlakte Horst blocks, which are superimposed over broad folding associated with the southeast plunging West Rand Syncline.

     The Doornkop shaft lease area is bounded by and lies to the south-east of the major north-easterly striking Roodepoort Fault, which dips to the south and constitutes the southern edge of the Witpoortjie Horst Block or Gap. This Horst Block is comprised of the stratigraphically older sediments of the West Rand Group, the overlying Central Rand Group sediments having been removed by erosion. A number of other faults,forming part of and lying southeast of the Roodepoort Fault, including the Saxon Fault, also constitute conspicuous structural breaks. A second major fault, the Doornkop Fault, which trends in an east west direction occurs towards the southern portion of the lease area. This fault dips to the south and has an up-throw to the north. Nearly the entire upper Witwatersrand section is present in the lease area and therefore all the major zones are present, though due to the distance of the area from the fan head, the number of economic bands and their payability is limited. Eight of the well-known reefs are present in the area, but only the Kimberley Reef and South Reef are considered viable at this stage. The resource is concentrated in the Kimberley and South Reefs. The Kimberley Reef is contained in the Vlakfontein Member of the Westonaria Formation. This reef, also known as the K9 Reef horizon, rests on an unconformity and is a complex multi-pulse conglomerate, which can be separated into four facies or cycles. All four cycles consist on average of an upper conglomerate and a lower quartzite. The characteristics of every cycle are area-dependent and the grades are variable within each cycle. The South Reef is approximately 900 metres below the current Kimberley Reef mining, and between 7.5 and 60 metres above the Main Reef horizon. The hanging wall to the South Reef consists of siliceous quartzites with non-persistent bands of “blue-shot” grit and thin argillite partings. The footwall to the South Reef is a light coloured and fairly siliceous quartzite. Secondary conglomerate bands and stringers in the hanging wall and footwall of the South Reef may contain sporadic gold values. The general strike of the reef is east-west, with a dip from 10 to 20 degrees. The orebody at Doornkop has a strike length of 4km and a width of 4 km from west to east.

     During the fiscal 2009 year, the gathering of additional geological information from on-reef development and exploration drilling on the South Reef has continued. This has further increased our knowledge of the sedimentology and grade characteristics of this ore body. The latest data supports the sheet-type depositional model as described in fiscal 2008. The geological, depositional, facies & evaluation models receive regular attention and are being expanded as the new data becomes available. An exercise is underway to capture all data electronically and have a 3-D geological model as an end product. This model will incorporate the Kimberley, South & Main Reefs and forms part of the geological risk mitigation strategy.

Mining Operations: These operations are subject to the underground mining risks detailed in the Risk Factors section. Due to the shallow to moderate depths of the operations, seismicity and high rock stress related problems are infrequent. There is a risk of subterranean water and/or gas intersections in some areas of the mines. However, this risk is mitigated by active and continuous management and monitoring, which includes the drilling of boreholes in advance of faces. Where water and/or gas are indicated in the drilling, appropriate preventative action is taken.

     Production from the Kimberley reef section of the mine continued in the trackless sections and will continue for a further two years while the build-up of production from the south reef sections continues. Grades from the Kimberley reef mining on level 106 declined and steps are being taken to move to level 71. Volumes were also affected by the lack of availability of trackless vehicles. Production volumes from the higher grade South Reef areas was slower than planned, largely as a result of logistical constraints and delays which related to transport of men and material as well as the hoisting of rock from the project areas. By April 2009, both the dual purpose winder, which was fully commissioned to a depth of 2,000 meters, and the dedicated rock winder to hoist Kimberley reef ore were commissioned which assisted to relieve the rock hoisting bottleneck that had been experienced. During May and June of fiscal 2009 the operation achieved record monthly hoisting volumes and meters of development.

     The Doornkop South Reef Project was announced on January 22, 2003. The project involved the deepening of the Doornkop main shaft to 1,973 meters to access the South Reef between 1,650 and 2,000 meters below surface, and includes development towards these mining areas. The estimated final capital cost is R1,740 million (U.S.$193.33 million) with R1,251 million (U.S.$139.0 million) spent as of June 30, 2009.

     The most significant achievement for fiscal 2009 was the commissioning of both the dual purpose winder and the dedicated rock winder (to level 132) which resulted in South Reef ore being hoisted separately from waste and further ensured that the rock hoisting bottleneck was alleviated. In addition, level 197 in the South Reef area came into production. Remaining work includes the commissioning of the pump station on level 207 and the Rock winder commissioned to level 212, the lowest working level, by February 2010. Full production is expected by March 2015.

     During fiscal 2009, Doornkop accounted for 3% (2% in 2007 and 2008) of our total gold production.

Safety : The safety record at these operations during fiscal 2009 was as follows: in terms of LTIFR of 6.25 per million hours worked achieved at Doornkop compared favorably with the group average of 9.35. The FFIR (0.0) compared favorably with the group average of 0.21.

     Safety at the operations receives constant and high-level attention and where problems are identified, steps are taken to address the risks.

Plants : The processing facilities presently comprises of one operating plant, the Doornkop metallurgical plant, which is serviced by a surface rail network. The Doornkop metallurgical plant, commissioned in 1985, is a conventional CIP plant, which was used to treat waste rock and other surface accumulations. It is now treating all ore from underground mining at the Doornkop operation and Rand Uranium’s Cooke operations.

The following table sets forth processing capacity and average tons milled during fiscal 2009 for the Doornkop plant:

     In fiscal 2009, the Doornkop plant recovered approximately 94.7% of the gold contained in the ore delivered for processing.

     Tons milled from Doornkop shaft were 494,000 in fiscal 2008, compared with 597,000 in fiscal 2007. Volumes were negatively affected mainly as a result of an 18 day planned production stoppage to facilitate required shaft work and a reduction in volume at the conventional Kimberley mining section due to low grades.

     The shaft work was related to the South Reef project sinking program. In addition three days were lost to the industry through the Eskom power management process. Ounces produced were 44,038 in fiscal 2008, compared 56,810 in fiscal 2007.

     The decrease in ounces produced was primarily due to the lower recovery grade and decrease in tons milled. The recovered grade deteriorated to 0.089 in fiscal 2008, compared with 0.095 in fiscal 2007, due to the depletion of higher grade reserves in the Kimberley reef section of the mine. The conventional mining sections of this reef mined in the channel edge areas and production was stopped during June 2008. Production from trackless areas will continue during the build-up phase of mining from the project South Reef areas.

     Cash costs per ounce of gold were U.S.$749 in fiscal 2008, compared with U.S.$438 in fiscal 2007. This increase was attributable primarily to the lower production volumes and industry wide cost increases. It was also adversely influenced by the movement out of

Capital areas into production areas which resulted in costs previously incurred as capital expenditure, now being spent as operational costs.

     Tons milled from Doornkop shaft were 605,000 in fiscal 2009, compared with 494,000 in fiscal 2008. Volumes increased, largely as a function of the increase in tons mined at the South Reef workings (96,000), as well as an increase in the stoping width at the Kimberley reef mining. Ounces produced were 42,150 in fiscal 2009, compared 44,038 in fiscal 2008.

     The decrease in ounces sold was primarily due to the lower recovery grade. The recovered grade deteriorated to 0.070 in fiscal 2009, compared with 0.089 in fiscal 2008, mainly due to the decline in the grade mined from the Kimberley reef trackless mining sections. Production from trackless areas will continue during the build-up phase of mining from the South Reef project areas. Grade from the South Reef project was negatively affected by the large unavoidable volumes of development waste rock that were included in the reef stream which resulted in diluted head-grade. South Reef ore is now hoisted separately from waste which resulted in much improved recovered grades during the final two months of fiscal 2009.

     Cash costs per ounce of gold were U.S.$804 in fiscal 2009, compared with U.S.$749 in fiscal 2008.The increase was mainly from labor, consumables and services cost. Labour cost increased due to an increase in labor to cater for the new South reef production levels and from annual wage increases. Consumable costs increased as a result of the South reef production build-up where additional metres were mined. In addition significant increases in power cost (38%) and company overhead cost (78%) were incurred, measured against fiscal 2008.

     The hoisting capacity of the Doornkop shaft is 185,000 tons per month. The average tons milled in fiscal 2009 were 50,416 tons per month.

     Assuming no additional resources are identified, at expected production levels, it is foreseen that the reported proven and probable ore reserve of 2.0 million tons (0.223 million ounces) will be sufficient for the Doornkop shaft to maintain production until approximately fiscal 2013. Any future changes to the assumptions upon which the reserves & resources are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

Capital Expenditure: Harmony incurred R395 million (U.S.$43.9 million) in capital expenditure in fiscal 2009 at Doornkop, primarily for shaft equipping, supporting infrastructure, development and rolling stock for material and rock transport. The planned capital expenditure for fiscal 2010 is R283 million (US$36.7 million), of which R62 million ($8 million) is for on-going development, R12 million (US$1.55 million) for other shaft capital and major equipment maintenance and R209 million (US$27.1 million) for the South Reef project. South Reef project. Total project capital expenditure incurred amounts to R1,251 million (U.S.$139.0 million) as of June 30, 2009.

Elandsrand

Introduction: Elandsrand is located near Carletonville on the Gauteng/North West province border in South Africa. The assets and associated liabilities were purchased during fiscal 2001 for approximately R1 billion (U.S.$128.4 million) from Anglogold. Ore from the operation is treated at the Elandskraal plant.

History: Gold mining began at Elandsrand in 1978 following approval of the project in 1974 by Elandsrand Gold Mining Company. Two surface shafts and two adjoining sub-vertical shafts were sunk at Elandsrand. The sub-vertical shafts at Elandsrand, which accessed the deeper part of the VCR reef in the lease area, were completed in 1984. The deepening of the sub-vertical shafts to approximately 3,600 meters below surface has been completed by the previous owners after the deepening project was commissioned in 1991. Activities are currently focused on accessing and opening up areas of the new mine and on the development and construction of support infrastructure.

Geology: At Elandsrand we primarily exploit the Ventersdorp Contact Reef, or VCR, the Carbon Leader Reef, or CLR, with the Middelvlei Reef and the Mondeor Conglomerate Reef Zone as secondary targets. Only the VCR is economic to mine and has been mined at depths below surface between 1,600 and 2,800 meters with future production to take place up to 3,600 meters below surface at the Elandsrand operations. The VCR consists of a narrow (20 centimeters to 2 meters) tabular orebody of quartz pebble conglomerates hosting gold, with extreme lateral continuity.

     At the Elandsrand operation, the vertical separation between the VCR and CLR increases east to west from 900 meters to 1,300 meters as a result of the relative angle of the VCR unconformity surface to the regional stratigraphic strike and dip. The VCR strikes east-northeast and has a regional dip of 21 degrees to the south-southeast. Local variations in dip are largely due to the terrace-and-slope palaeotopography surface developed during VCR deposition.

      Mining Operations: The Elandsrand mine is subject to the underground mining risks detailed in the Risk Factors section.

     The Elandsrand mine, a mature mine with a declining production profile, has the challenge of a new mine being developed underneath the old mine. The implementation of Conops between August 2004 and February 2005 improved production. However, after an assessment done during fiscal 2007, Conops was stopped during February 2008. The operation is still hampered by the lack of flexibility, an issue that will be addressed by the full commissioning of the new mine. Due to the operating depths of the Elandsrand underground operations, seismicity and high rock stress are significant risks at the mine. We regularly review our mining strategy and management procedures at all of the mining operations in our efforts to mitigate these risks. The primary challenges facing the Elandsrand operations are seismicity, lack of mining flexibility, high cash costs, and the timely completion of the Elandsrand New Mine project by fiscal 2011.

     During fiscal 2009, good progress continued to be made with the development and the build-up of production on the Elandsrand new mine project. The winder and headgear for the No 3 backfill shaft were installed and commissioned in May 2009 and sinking started. This shaft will supply feed and return chilled water to 109 and 113 levels. By year-end both 22 kV transformers had been installed and commissioned at 100 level, as had two of eight bulk air coolers. Commissioning of the second settler dam will begin once the dam wall and suction piping on 115 level has been completed. Progress was also made with the installation of the refrigeration plant pipes and the ventilation system. Commissioning of the pump station at 115 level, scheduled for the end of fiscal 2009, was delayed owing to leaks in the No 1 settler dam. Access development on 113 level was completed in February 2009.

     The project is expected to be completed by fiscal 2011 and is expected to have a life of mine of 28 years. From the inception of the project through to the end of fiscal 2009, R940 million (U.S.$104.0 million) has been expended. A further R160 million (U.S.$20.7 million) has been budgeted to complete the project.

     In fiscal 2009, our Elandsrand operations accounted for approximately 11% (9% in fiscal 2008 and 8% in fiscal 2007) of our total gold production.

Safety : During fiscal 2009, the safety record at the Elandsrand mine in terms of LTIFR, 12.67 per million hours worked, compared unfavorably with the group average of 9.35. Although this is a good improvement compared to fiscal 2008 (16.24), the benchmark has still not been achieved. During the second half of fiscal 2009, a LTIFR of less than 10 has been achieved consistently due to the implementation of the Qaphelangozi safety campaign, which was started during the period. Significant work was done to address the seismic risk described above and the FFIR (0.36) returned to a more consistent ratio with the group average of 0.21 for underground operations.

Plants: Commissioned in 1978, the Elandsrand Plant consist of milling in closed circuit with primary and secondary hydrocyclones, secondary ball milling in closed circuit with hydrocyclones, thickening and cyanide leaching in a CIP pump cell carousel circuit. The CIP was commissioned after an upgrade of the facility in 1999. Loaded carbon from the Elandsrand Plant is transported by road to the Central Plant at Virginia for elution, electro-winning and smelting to produce gold. Residues from the CIP are pumped either to a backfill plant or directly to the tailings facility. Ore from Elandsrand underground operations is delivered to the plant for treatment via conveyor belt after being hoisted from underground. Due to a high percentage of freegold, a gravity concentration circuit is used to extract a large percentage of the gold. The sludge from this concentrator is then transported by air to the Target Plant for extraction and smelting.

     The following table sets forth processing capacity and average tons milled during fiscal 2009 for the plant:

     In fiscal 2009, the Elandsrand Plant recovered approximately 96.6% of the gold contained in the ore delivered for processing.

     Tons milled from the Elandsrand shaft were 981,000 in fiscal 2008, compared with 1,117,000 in fiscal 2007, and ounces produced were 164,215 in fiscal 2008, compared with 195,412 in fiscal 2007. Volumes were negatively affected, mainly as a result of days lost to the shaft accident, namely 42, and the continued lack of flexibility in face length to deal with erratic face grades and seismicity. The recovered grade declined during fiscal 2008 as a result of higher channel widths on the Western section of the mine, as well as a delay in starting up some of the higher grade areas, due to it taking longer than expected to bring the environmental conditions within standard in deeper mining areas, after the shaft incident in October 2007.

     The increase in labor rates and inflation were the main contributors to the increase in cash cost from U.S.$535 per ounce in fiscal 2007 to U.S.$652 per ounce in fiscal 2008. Costs per ounce have increased in fiscal 2008 by 22%, due primarily to the reduced ounces as a result of the shaft incident causing the mine to stand for 42 days. Increases in the costs of labor and supplies, especially steel and the effect of inflation on supply.

     Tons milled from the Elandsrand shaft were 1,061,000 in fiscal 2009, compared with 981,000 in fiscal 2008. Ounces produced increased to 174,321 in fiscal 2009, compared with 164,215 in fiscal 2008 as a result of the increased volumes in production. Mining continues in the old, upper areas of the mine, while the new mine project is completed. Recovered grades decreased marginally during fiscal 2009, resulting in an average of 0.164 ounces per ton in fiscal 2009, compared to the average of 0.167 onces per ton in fiscal 2008.

     The increase in electricity costs, labor rates and inflation were the main contributors to the increase in cash cost from U.S.$652 per ounce in fiscal 2008 to U.S.$660 per ounce in fiscal 2009. Cash cost per ounce only increased by 1% due to increased ounces produced which neutralized the higher than normal increases in labor rates and electricity increases approved by the NERSA. Electricity rates are expected to continue rising above the norm until Eskom has developed additional power generating plants.

     Elandsrand shaft has a hoisting capacity of 190,000 tons per month which will be utilized to its full capacity once the Elandsrand New Mine Project is complete and the production buildup reaches its maximum. The average tons milled in fiscal 2009 was 83,951 tons per month.

     Assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven and probable ore reserves of 41.5 million tons, or 7.5 million ounces will be sufficient for the Elandsrand shaft to maintain underground production until approximately calendar year 2037. Any future changes to the assumptions upon which the ore reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

Capital Expenditure: Harmony incurred R422.3 million (U.S.$46.9 million) in capital expenditure at the Elandsrand operations in fiscal 2009 mainly for the sub shaft deepening project and ongoing development. An additional project, the Emergency Escape project was started during fiscal 2009, to improve the effectiveness of evacuation of people from underground during a shaft emergency.

     Harmony budgeted R513 million (U.S.$66.5 million), for capital expenditure at the Elandsrand operations in fiscal 2010, primarily for the sub-shaft deepening project and ongoing development expenditure.

Masimong

Introduction: Masimong is located in the Free State province, near Riebeeckstad. The Masimong complex comprises of an operating shaft — 5 shaft — and 4 shaft which, although closed, is used for ventilation, pumping and as a second outlet. Mining is conducted at depths ranging from 1,518 meters to 2,300 meters. Ore is treated at the Harmony One Plant.

History: Masimong is located in the Free State Goldfield on the south-western edge of the Witwatersrand Basin. The company purchased the Masimong complex (formerly know as Saaiplaas Shafts 4 and 5) during September 1998.

Geology: The operation, exploits the Basal Reef, which varies from a single pebble lag to channels on more than 2m thick. It is commonly overlain by shale, which thickens northwards. Masimong is also mining secondary reefs, most notably the Leader Reef (15-20m above Basal) and the B Reef (140m above Basal). The Leader Reef consists of multiple conglomerate units, separated by thin quartzitic zones, often totalling up to 4 metres thick. A selected mining cut on the most economic horizon is often undertaken. The B Reef is a highly channelised orebody. Within the channels, grades are excellent, but this falls away to nothing outside of the channels. Consequently, the operation has undertaken extensive exploration to locate these pay channels.

Mining Operations: The operations are subject to the underground mining risks detailed in the Risk Factors section. Due to the shallow to moderate depths of the underground operations, seismicity related problems are relatively infrequent. We regularly revisit our mining strategy and management procedures in connection with our efforts to mitigate risks of these problems. There is a risk of subterranean water and/or gas intersections in some areas of the mine. However, this risk is mitigated by active and continuous management and monitoring, which includes the drilling of boreholes in advance of faces. Where water and/or gas are indicated in the drilling, appropriate preventative action is taken.

     The restructuring programme which began in fiscal 2008 at Masimong has taken this operation from the brink of closure to being among the lowest cost-per-kilogram-producers in the Harmony stable. This restructuring included management positions, as well as the termination of continuous operations. Masimong is now a steady-state operation, although further improvements in efficiencies are envisaged. Volumes improved by 10% in fiscal 2009. This was despite a fire in the B reef area and ventilation incidents relating to illegal mining activities. Damaged ventilation seals in the disused 4 shaft area caused major airflow problems at 5 shaft, particularly in the third and fourth quarters, and repairs are likely to be effected by December 2009. A booster fan will be installed between 4 and 5 shafts to partially address this ventilation issue.

     A focus on training (People Transformation Project), in which all production crews received training on safety and health, business awareness, productivity improvement and team-building, presented positive results. Supervisory training, specifically aimed at front line supervisors, was also completed during the year.

     An infrastructural upgrade involving tracks, locomotives, refrigeration, ventilation and compressors was recently begun and will continue in fiscal 2010. Steps were also taken to improve ore reserve management and quality mining on the Basal Reef stopes. Good grades achieved from the B reef further contributed to the overall improvement in grade.

     In fiscal 2009, Masimong accounted for approximately 10% (6% in fiscal 2007 and fiscal 2008) of our total gold production.

Safety : The safety record at Masimong during fiscal 2009 in terms of LTIFR of 8.67 per million hours worked compared favorably with the group average of 9.35. The FFIR of 0.27 at Masimong doesn’t compare favorably with the group average of 0.21 for underground operations. A Behavioral Safety program is in place to correct and reduce the human element in accidents.

Plants : The ore from theses operations are sent to Harmony One Plant for processing. This plant, which processes underground ore, waste rock and various surface accumulations, was commissioned in 1986 and is a conventional CIP plant processing ore that has been milled by semi-autogenous grinding. Gold is recovered from the eluate solution using zinc precipitation and a precoat vacuum filter. The precipitate recovered from the filter is calcined and smelted to bullion.

     Tons milled from the Masimong shaft complex were 892,000 in fiscal 2008, compared with 1,074,000 in fiscal 2007. Ounces produced were 116,424 in fiscal 2008, compared with 146,575 in fiscal 2007. This is mainly attributable to the reduction in tons milled.

     The drop in recovered grade by 0.005 ounces per ton from fiscal 2008 to fiscal 2007 can be attributed to a 3.7% drop in grade mined and a 0.72% drop in the MCF. Both these parameters were negatively influenced by the B Reef, as mining of B Reef in fiscal 2008 was significantly focused in the South Eastern portion of the 5 shaft lease area. This area is typically a highly channelized deposit with economic channels occurring at oblique to perpendicular angles to the normal depositional axis of the B Reef. These channels are generally small measured on the latitudinal axis and highly unpredictable, thus making mining and valuation extremely difficult.

     Cash costs were U.S.$87.6 million in fiscal 2008 compared with U.S.$82.8 million in fiscal 2007 with cash costs per ounce at U.S.$756 in fiscal 2008 compared with U.S.$543 in fiscal 2007. This increase in cash cost is mainly attributable to increase in labor costs as a result of the annual wage increases.

     Tons milled from the Masimong shaft complex were 981,000 in fiscal 2009, compared with 892,000 in fiscal 2008, and ounces produced were 154,034 in fiscal 2009, compared with 116,424 in fiscal 2008. Year on year gold production increased due to an increase in tons as well as the recovered grade.

     Cash costs were U.S.$73.5 million in fiscal 2009 compared with U.S.$87.6 million in fiscal 2008 with cash costs per ounce at U.S.$476 in fiscal 2009 compared with U.S. $756 in fiscal 2008. This decrease in cash cost is mainly attributable to a 9.7% decrease in labor. Labor efficiencies contributed significantly to the improved performance. This was the first year that Masimong was fully off the Conops cycle.

     The increase in recovered grade by 0.026 ounces per ton from fiscal 2008 to fiscal 2009 can be attributed to an increase in quality mining discipline. Most notable was the 6.9% increase in MCF and a 20% increase in face grade mined. This was achieved on the back of the Masimong transformation process initiated in April 2008. Furthermore the amount of B reef mining was decreased from 25% of total mining to 16% of total mining. This step reduced the high risk with regards to grade associated with the traditionally variable B Reef ore body.

     Assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven and probable ore reserves of 6.4 million tons (0.984 million ounces) will be sufficient for the Masimong shaft complex to maintain underground production until approximately fiscal 2021. Any future changes to the assumptions upon which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.

Capital Expenditure: Masimong incurred approximately R130.3 million (U.S.$14.5 million) in capital expenditures in fiscal 2009, primarily on refrigeration infrastructure. We have budgeted a total of R238 million ($30.8 million) for capital expenditures at Masimong in fiscal 2010, primarily for upgrading of the rail bound equipment as well as for back up generators for Masimong Complex.

Virginia operations

Introduction: The Virginia operations are located in the Free State province, near Virginia and Welkom. The Virginia operations consist of the original Harmony mines, the Unisel mine, Brand shafts 1 and 3(mined from Brand 1 shaft). Mining is conducted at these operations at depths ranging from 682 meters to 2,042 meters. Ore is treated at the Central Plant and Harmony One Plant.

History: Our operations in the Free State began with the Harmony mine, which is an amalgamation of the Harmony, Virginia and Merriespruit mines. Beginning in 1996, we began purchasing neighboring mine shafts. The Unisel mine was purchased in September 1996, the Saaiplaas mine Shafts 2 and 3 were purchased in April 1997, the Brand mine Shafts 1, 2, 3 and 5 were purchased in May 1998.

Geology: These operations are located in the Free State Goldfield on the south-western edge of the Witwatersrand Basin. The basin, situated on the Kaapvaal Craton, has been filled by a 6-kilometre thick succession of sedimentary rocks, which extends laterally for hundreds of kilometres. The Free State goldfield is divided into two sections, cut by the north-south striking De Bron Fault. This major structure has a vertical displacement of about 1,500m in the region of Bambanani, as well as a lateral shift of 4km. This lateral shift can allow a reconstruction of the orebodies of Unisel to the west of the De Bron and Merriespruit to the east.

     A number of other major faults (Stuirmanspan, Dagbreek, Arrarat and Eureka) lie parallel to the De Bron Fault.

     Unisel and Brand are situated to the west of the De Bron. Dips are mostly towards the east, averaging 30 degrees but become steeper approaching the De Bron Fault. To the east of the fault lie Merriespruit 1 and 3 and Harmony 2 mines. These mostly dip towardsthe west at 20 degrees, although Masimong is structurally complex and dips of up to 40 degrees have been measured. Between these two blocks lies the uplifted horst block of West Rand Group sediments with no reef preserved. The western margin area is bound by synclines and reverse thrusts faults and is structurally complex. Towards the south and east, reefs sub-crop against overlying strata, eventually cutting out against the Karoo to the east of the lease area.

     Most of the Ore Resource tends to be concentrated in reef bands located on one or two distinct unconformities. A minority of the Mineral Resource is located on other unconformities. Mining that has taken place is mostly deep-level underground mining, exploiting the narrow, generally shallow dipping tabular reefs.

     The Basal Reef is the most common reef horizon and is mined at all shafts. It varies from a single pebble lag to channels on more than 2m thick. It is commonly overlain by shale, which thickens northwards.