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HARMONY - QUARTERLY REPORT

Release Date: 19/10/1998 12:01:20      Code(s): HAR HARO
HARMONY GOLD MINING COMPANY
REPORT FOR THE QUARTER ENDED SEPTEMBER 1998
HIGHLIGHTS
   ACQUISITION OF EVANDER GOLD MINES LIMITED
   CASH OPERATING PROFITS INCREASE 165%
   GOLD PRODUCTION INCREASES 63%
OPERATIONS
  CASH COSTS                           R46 393/KG      $232/OZ
  GOLD PRODUCED                        9 191 KG        295 000 OZ
OPERATING RESULTS
                                       QUARTER         QUARTER
                                       30 SEPTEMBER    30 JUNE
                                       1998            1998
FREE STATE
UNDERGROUND ORE MILLED - T'000         1 092           976
GOLD PRODUCED - KG*                    5 332           4 665
YIELD - G/T*                           4.88            4.78
*INCLUDING 43 KG (JUNE 1998 - 123 KG)
FROM SURFACE OPERATIONS
UNDERGROUND CASH OPERATING COSTS
- R/T MILLED                           217             198
TOTAL CASH OPERATING COSTS - R/KG      44 741          42 684
EAST RAND
UNDERGROUND ORE MILLED - T'000         194             249
GOLD PRODUCED - KG*                    752             990
YIELD - G/T*                           3.88            3.98
*INCLUDING 19 KG (JUNE 1998 - 0 KG)
FROM SURFACE OPERATIONS
UNDERGROUND CASH OPERATING COSTS
- R/T MILLED                           204             203
TOTAL CASH OPERATING COSTS - R/KG      53 140          51 103
EVANDER                                                EXCLUDED
                                                       FROM RESULTS
UNDERGROUND ORE MILLED - T'000         453             425
GOLD PRODUCED - KG*                    3 107           3 053
YIELD - G/T*                           6.86            7.18
*INCLUDING 37 KG FROM SURFACE OPERATIONS
UNDERGROUND CASH OPERATING COSTS
- R/T MILLED                           326             361
TOTAL CASH OPERATING COSTS - R/KG      47 596          50 221
TOTAL OPERATIONS
GOLD PRODUCED          - KG            9 191           5 655
GOLD PRICE RECEIVED   - R/KG           57 750          51 118
CASH OPERATING COSTS - R/KG            46 393          44 158
FINANCIAL
  CASH OPERATING PROFITS               R104 MILLION    $17 MILLION
  EARNINGS                             R78 MILLION     $12 MILLION
  CASH OPERATING EARNINGS PER SHARE    153 CENTS       25 US CENTS
  EARNINGS PER SHARE                   114 CENTS       18 US CENTS
FINANCIAL RESULTS
OPERATIONS R'000
        QUARTER ENDED 30 SEPTEMBER 1998     QUARTER ENDED 30 JUNE 1998
        FREE      EAST      EVANDER    TOTAL     FREE      EAST     TOTAL
        STATE     RAND                           STATE     RAND
GOLD
SALES   310 050   43 446    177 288    530 784   238 052   51 018   289 070
CASH
OPERATING
COSTS   238 557   39 961    147 882    426 400   199 119   50 592   249 711
CASH
OPERATING
PROFIT  71 493    3 485     29 406     104 384   38 933    426      39 359
OTHER INCOME
- NET                                  7 289               2 834
EMPLOYMENT TERMINATION                 (290)               (1 098)
PROVISION FOR NON CASH ITEMS
- AMORTISATION                         (24 222)            (14 949)
- DEFERRED TAXATION                    (4 561)             (1 184)
- OTHER                                (3 076)             (209)
PROFIT BEFORE TAXATION                 79 524              24 753
TAXATION                               (1 345)             4 039
PROFIT AFTER TAXATION                  78 179              28 792
CASH OPERATING EARNINGS
PER SHARE - CENTS                      153                 73
EARNINGS PER SHARE - CENTS             114                 53
ABRIDGED BALANCE SHEET
                                       AT                  AT
R'000                                  30 SEPTEMBER        30 JUNE
                                       1998                1998
CAPITAL EMPLOYED
SHAREHOLDERS' EQUITY                   1 692 115           1 319 469
EMPLOYMENT OF CAPITAL
NET MINING ASSETS AFTER
DEPRECIATION                           2 104 545           1 488 650
INVESTMENTS                            52 806              29 570
LONG TERM PROVISIONS
- DEFERRED TAX                         (211 243)           (132 872)
- REHABILITATION                       (195 498)           (128 934)
- PROVISION FOR POST RETIREMENT
BENEFITS                               (43 436)            (22 238)
LOAN - FREEGOLD                        (70 777)            (77 147)
LOAN - ROTHSCHILDS (BISSETT)           (50 393)            (26 635)
SHARES ISSUED RELATING TO PURCHASE
OF EVANDER                             -                   122,080
NET CURRENT LIABILITIES                (81 005)            (75 886)
CASH AND SHORT TERM INVESTMENTS        187 116             142 881
                                       1 692 115           1 319 469
ISSUED SHARE CAPITAL: 68 374 000 ORDINARY SHARES OF 50 CENTS EACH (JUNE 1998:
53 927 000 SHARES).
DEVELOPMENT RESULTS
                                            CHANNEL    CHANNEL   AU
                                SAMPLED     WIDTH      VALUE     CONTENT
                                METRES      CM         G/T       CM.G/T
FREE STATE
BASAL REEF                      310         85         9.61      817
LEADER REEF                     1 382       136        4.46      607
"A" REEF                        500         139        6.06      843
MIDDLE REEF                     8           70         7.39      517
EAST RAND
BLACK REEF                      244         101        4.27      431
KIMBERLEY REEF                  1 165       135        4.13      558
EVANDER
KIMBERLEY REEF                  903         47         23.57     1 108
PREPARED IN ACCORDANCE WITH INTERNATIONAL ACCOUNTING STANDARDS CURRENCY
CONVERSION RATE: US$1 = R6.21 (JUNE 1998 - R5.22)OVERVIEW
CASH OPERATING PROFITS INCREASED BY R65 MILLION TO R104.3 MILLION. THIS
INCREASE IS ATTRIBUTED TO THE IMPROVED RAND GOLD PRICE RECEIVED AND THE
INCLUSION IN THE RESULTS OF NEWLY-ACQUIRED OPERATIONS (BRAND 2 AND 3 SHAFTS AND
EVANDER). GOLD PRODUCTION INCREASED BY 63 PER CENT TO 9 191KG (295 000 OZ) FOR
THE QUARTER AT A CASH COST OF R46 393/KG (US$232/OZ). EARNINGS PER SHARE
IMPROVED TO 114 CENTS, (BASED ON 68.4 MILLION SHARES) COMPARED WITH 53 CENTS
(BASED ON 53.9 MILLION SHARES) THE PREVIOUS QUARTER.
OPERATIONS
FREE STATE
THE OPERATIONS GENERATED A CASH PROFIT OF R71.5 MILLION FOR THE QUARTER (R38.9
MILLION FOR THE JUNE QUARTER). THE INCLUSION OF BRAND 2 AND 3 SHAFTS RESULTED
IN AN INCREASE IN TONNES MILLED AND GRADE COMPARED WITH THE PREVIOUS QUARTER,
HOWEVER AS THESE SHAFTS HAVE NOT YET REACHED OPTIMUM PRODUCTION LEVELS, THE
UNIT COST PER TONNE AND PER KG, INCREASED BY 5 PER CENT. BRAND 5 SHAFT, WHICH
IS IN A PRE-PRODUCTION PHASE, RECORDED A LOSS OF R5.6 MILLION. THIS LOSS HAS
BEEN CAPITALISED, AS WERE THE PROFITS OF R0.9 MILLION RECORDED BY BRAND 2 AND 3
SHAFTS DURING THE PREVIOUS QUARTER.
EAST RAND
THE OPERATIONS GENERATED A CASH PROFIT OF R3.4 MILLION COMPARED WITH R0.4
MILLION THE PREVIOUS QUARTER. TONNES MILLED DECREASED TO 194 000 IN LINE WITH
EXPECTATIONS AFTER THE CLOSURE OF GROOTVLEI 4 SHAFT AT THE END OF THE PREVIOUS
QUARTER. THE COST PER TONNE REMAINED CONSTANT, DESPITE THE IMPACT OF ANNUAL
WAGE INCREASES AND A 25 PER CENT (R1.5 MILLION/QUARTER) REDUCTION IN THE
PUMPING ASSISTANCE FROM THE DEPARTMENT OF MINERALS AND ENERGY. THE RESULTS
INCLUDE A PUMPING SUBSIDY OF R4.5 MILLION, WHICH HAS BEEN APPROVED BUT NOT YET
RECEIVED. FOLLOWING THIS REDUCTION IN ASSISTANCE THE BOARD IS EVALUATING THE
FOLLOWING ALTERNATIVES:
  DISPOSAL OF THE MINE AS A GOING CONCERN
  PHASED FLOODING AND MINING OF THE REMAINING RESERVES
  CLOSURE OF THE MINE
EVANDER
THE ACQUISITION OF EVANDER GOLD MINES LIMITED WAS CONCLUDED ON 31 AUGUST 1998,
EFFECTIVE FOR THE FULL QUARTER. THE CONSIDERATION WAS SETTLED BY WAY OF R254
MILLION IN CASH AND THE ISSUE OF 11.9 MILLION NEW HARMONY SHARES. GOLD FIELDS
LIMITED, WHO RECEIVED 8.9 MILLION OF THESE SHARES, HAVE SINCE PLACED THEIR
HARMONY SHARES SUCCESSFULLY.
THE OPERATIONS CONTRIBUTED R29.4 MILLION TO CASH PROFITS FOR THE THREE MONTHS
ENDED SEPTEMBER, MAINLY AS A RESULT OF THE IMPROVED RAND GOLD PRICE.
NEGOTIATIONS ARE CURRENTLY UNDER WAY WITH RELEVANT STAKEHOLDERS IN ORDER TO
FINALISE THE RESTRUCTURING PROCESS DURING THE FORTHCOMING QUARTER.
BISSETT
CAPITAL EXPENDITURE OF R12.7 MILLION (BUDGET OF R18 MILLION) AND PRE-PRODUCTION
COSTS OF R9.1 MILLION (BUDGET OF R12 MILLION) WERE CAPITALISED DURING THE
CURRENT QUARTER.
THE HOISTS, SHAFTS AND METALLURGICAL PLANT HAVE BEEN COMMISSIONED. LONGHOLE AND
SHRINKAGE STOPING AS WELL AS MILLING COMMENCED DURING OCTOBER 1998. MINE
DEVELOPMENT IS ON SCHEDULE AND IT IS EXPECTED THAT IN EXCESS OF 200 KG (6 400
OZ) WILL BE PRODUCED DURING THE COMING QUARTER.
ACQUISITION
THE COMPANY ACQUIRED MASIMONG MINE (SAAIPLAAS 4 AND 5 SHAFTS) AND THE SAAIPLAAS
GOLD PLANT FROM FREEGOLD SUBSEQUENT TO THE QUARTER END FOR A CONSIDERATION OF
R110 MILLION. THIS WAS SETTLED IN PART BY THE CESSION OF OUR INTERESTS IN AREA
ONE EAST TO ANGLOGOLD FOR R22.75 MILLION. AN UPFRONT CASH PAYMENT OF R45
MILLION WAS MADE, WITH THE BALANCE OF R42.25 MILLION PAYABLE IN 15 EQUAL
MONTHLY INSTALMENTS COMMENCING JANUARY 1999 AT AN INTEREST RATE OF 10 PER CENT
PER ANNUM.
THE SAAIPLAAS OPERATIONS WILL CONTRIBUTE, IF ANNUALISED APPROXIMATELY 4 600 KG
(150 000 OZ) TO PRODUCTION. FURTHER SYNERGISTIC BENEFITS WILL BE REALISED USING
THE SAAIPLAAS PLANT TO TREAT SAAIPLAAS AND CURRENT HARMONY TONNAGES, AS THE
PLANT IS BETTER SITUATED AND MORE COST-EFFICIENT THAN THE EXISTING MERRIESPRUIT
PLANT.
CAPITAL EXPENDITURE
                                                                      *
                                           QUARTER          QUARTER
                                           ENDED            ENDED
                                           30 SEPTEMBER     31 DECEMBER
                                           1998             1998
                                           R MILLION        R MILLION
FREE STATE                                 14.0             15.0
BRAND SHAFTS
CAPITALISED                                5.6              -
EAST RAND                                  (1.1)            (0.7)
EVANDER                                    3.4              4.8
BISSETT
  PRE-PRODUCTION COSTS                     9.1              4.2
  CAPITAL EXPENDITURE                      12.7             6.7
NET CAPITAL
EXPENDITURE                                43.7             30.0
* FORECAST
NET CAPITAL EXPENDITURE FOR THE QUARTER WAS R43.7 MILLION, MAINLY DUE TO THE
CAPITALISATION OF BRAND 5 SHAFT'S RESULTS AND PRE-PRODUCTION EXPENDITURE AT
BISSETT. FORECAST EXPENDITURE FOR THE DECEMBER QUARTER IS R30 MILLION OF WHICH
R10.9 MILLION WILL BE INCURRED AT THE BISSETT OPERATIONS.
BALANCE SHEET
THE MAJOR MOVEMENTS ON THE BALANCE SHEET ARE MAINLY AS A RESULT OF THE
INCORPORATION OF EVANDER.
PROSPECTS
GOLD PRODUCTION IS EXPECTED TO FURTHER INCREASE WITH THE INCORPORATION OF
SAAIPLAAS 4 AND 5 SHAFTS, AS WELL AS BRAND 2, 3 AND 5 SHAFTS REACHING OPTIMUM
PRODUCTION LEVELS.
CONTINUED RESTRUCTURING OF THE EVANDER OPERATIONS WILL RESULT IN LOWER UNIT AND
CASH COSTS IN FUTURE QUARTERS. EVANDER WILL COMMENCE WITH THE TREATMENT OF
APPROXIMATELY 35 000 TONS OF WASTE ROCK PER MONTH AT A RECOVERED GRADE OF 1
G/T, IN NOVEMBER 1998.
THE FLUCTUATIONS IN THE RAND-DOLLAR EXCHANGE RATE DIRECTLY IMPACT ON THE
COMPANY'S REVENUES AND THEREFORE ON OUR PROFITS.
THIS REPORT WAS APPROVED BY THE BOARD OF DIRECTORS AND IS SIGNED ON ITS BEHALF
BY:
Z B SWANEPOEL       F ABBOTT
CHIEF EXECUTIVE     FINANCIAL DIRECTOR
VIRGINIA
19 OCTOBER 1998
DIRECTORS
L HEWITT*(CHAIRMAN), ZB SWANEPOEL (CHIEF EXECUTIVE), F ABBOTT, RA ANDREW*
(BRITISH), RAL ATKINSON, GP BRIGGS (ALTERNATE), F DIPPENAAR, NJ FRONEMAN, TSA
GROBICKI*, PC PIENAAR (ALTERNATE), MF PLEMING*, FR SULLIVAN     *NON EXECUTIVE
DIRECTORS
HARMONY GOLD MINING COMPANY LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 05/38232/06)
NASDAQ TRADING SYMBOL HGMCY
WEBSITE: WWW.HARMONY.CO.ZA
BUSINESS ADDRESS
HARMONY GOLD MINING COMPANY LIMITED
SECOND FLOOR, BUILDING 26, THE WOODLANDS
WESTERN SERVICE ROAD, WOODMEAD
POSTNET SUITE 27, PRIVATE BAG X23, GALLO MANOR, 2052
E-MAIL: CORPORATE@HARMONY.CO.ZA
TELEPHONE: +27 (11) 802-1822. TELEFAX: +27 (11) 802-2363
SHAREHOLDER ENQUIRIES
FOR FURTHER INFORMATION CONTACT
CHRISTINE LEONARDI AT
TELEPHONE: +27 (11) 802-1822
TELEFAX: +27 (11) 802-2363
E-MAIL: CLEONARDI@HARMONY.CO.ZA
SHARE TRANSFER SECRETARIES
OPTIMUM REGISTRARS (PROPRIETARY) LIMITED
EDURA HOUSE, 41 FOX STREET
JOHANNESBURG, 2001
PO BOX 62391, MARSHALLTOWN, 2107
SOUTH AFRICA
TELEPHONE: +27 (11) 834-1050. TELEFAX: +27 (11) 834-2446
UNITED KINGDOM REGISTRARS
COMPUTERSHARE SERVICES PLC
PO BOX 82, CAXTON HOUSE
REDCLIFFE WAY
BRISTOL BS99 7NH, ENGLAND
TELEPHONE: +44 (117) 930-6600
TELEFAX: +44 (117) 930-6509
UNITED STATES DEPOSITORY
AMERICAN DEPOSITORY RECEIPTS
THE BANK OF NEW YORK
SHAREHOLDER RELATIONS DEPARTMENT
101 BARCLAY STREET
NEW YORK NY 10286, USA
TELEPHONE +1 (800) 524-4458
HARMONY - PRESS RELEASE
HARMONY'S CASH PROFITS IMPROVE FOR FOURTH CONSECUTIVE QUARTER
JOHANNESBURG, MONDAY 19 OCTOBER 1998 - HARMONY SIGNIFICANTLY IMPROVED ON ITS
PERFORMANCE FOR THE FOURTH CONSECUTIVE QUARTER BY RAISING ITS CASH OPERATING
PROFIT BY 165% TO R104 MILLION.  GOLD PRODUCTION FOR THE QUARTER INCREASED BY
63 PER CENT TO 9 191KG (295 000 OZ) AT A CASH COST OF R46 393/KG (US$232/OZ).
CHIEF EXECUTIVE BERNARD SWANEPOEL SAYS THIS PERFORMANCE IS LARGELY DUE TO THE
IMPROVED RAND GOLD PRICE AND THE INCLUSION OF HARMONY'S LATEST ACQUISITIONS,
BRAND 2 AND 3 SHAFTS AND EVANDER, IN THE RESULTS. ALTHOUGH OUR ISSUED SHARE
CAPITAL WAS INCREASED BY 39 PER CENT DUE TO THE ACQUISITION OF EVANDER,
EARNINGS PER SHARE IMPROVED TO 114 CENTS COMPARED WITH 53 CENTS THE PREVIOUS
QUARTER.
THE FREE STATE OPERATIONS BOOSTED ITS CASH PROFITS FROM R38.9 MILLION IN THE
PREVIOUS QUARTER TO R71.5 MILLION.  THE INCLUSION OF BRAND 2 AND 3 SHAFTS ALSO
RESULTED IN AN INCREASE IN TONNES MILLED AND RECOVERED GRADE. SWANEPOEL NOTES
THAT THESE SHAFTS HAVE NOT YET REACHED OPTIMUM PRODUCTION LEVELS, INCREASING
THE AVERAGE UNIT COST PER TONNE AND PER KILOGRAM BY 5 PER CENT. THE COST OF
R5.6 MILLION OF THE BRAND 5 SHAFT, WHICH IS STILL IN A PRE-PRODUCTION PHASE,
WAS CAPITALISED.
THE EAST RAND OPERATIONS RETURNED A CASH PROFIT OF R3.4 MILLION FOR THE QUARTER
COMPARED WITH R0.4 MILLION IN THE PREVIOUS QUARTER.  IN LINE WITH EXPECTATIONS,
TONNES MILLED DECREASED TO 194 000 AFTER THE CLOSURE OF GROOTVLEI 4 SHAFT
TOWARD THE END OF THE PREVIOUS QUARTER. THE COST PER TONNE WAS HELD CONSTANT
DESPITE ANNUAL WAGE INCREASES AND A 25 PER CENT REDUCTION IN THE PUMPING
ASSISTANCE FROM THE DEPARTMENT OF MINERALS AND ENERGY.  "AS A RESULT OF THIS
REDUCTION IN ASSISTANCE, THE BOARD IS CURRENTLY REVIEWING THE FUTURE OF THE
OPERATION.  THE ALTERNATIVES INCLUDE THE DISPOSAL OF THE MINE AS A GOING
CONCERN, FASED FLOODING WHILST MINING THE REMAINING RESERVES OR THE CLOSURE OF
THE MINE, " SAYS SWANEPOEL.
THE EVANDER OPERATIONS CONTRIBUTED R29.4 MILLION TO CASH PROFITS FOR THE THREE
MONTHS ENDED 30 SEPTEMBER, MAINLY AS A RESULT OF THE IMPROVED RAND GOLD PRICE.
IT IS EXPECTED THAT THE CONTINUED RESTRUCTURING OF THESE OPERATIONS WILL RESULT
IN LOWER UNIT AND CASH COSTS IN FUTURE QUARTERS.  SWANEPOEL SAYS DISCUSSIONS TO
FINALISE RATIONALISATION IN THE NEXT QUARTER ARE CURRENTLY UNDER WAY WITH ALL
RELEVANT STAKEHOLDERS.
CAPITAL EXPENDITURE AND PRE-PRODUCTION COSTS AT THE BISSETT OPERATIONS IN
CANADA, WERE MUCH LOWER THAN ANTICIPATED, AMOUNTING TO R12.7 MILLION AND R9.1
MILLION. THE HOISTS, SHAFTS AND METALLURGICAL PLANT WERE BROUGHT INTO
PRODUCTION. AS A RESULT STOPING AND MILLING COMMENCED IN OCTOBER 1998. MINE
DEVELOPMENT IS ON TRACK AND IT IS ANTICIPATED THAT IN EXCESS OF 200 KG (6 400
OZ) OF GOLD WILL BE PRODUCED IN THE NEXT QUARTER.
NET CAPITAL EXPENDITURE FOR THE QUARTER AMOUNTED TO R43.7 MILLION, MAINLY AS A
RESULT OF THE CAPITALISATION OF BRAND 5 SHAFT'S RESULTS AND PRE-PRODUCTION
EXPENDITURE AT BISSETT. THE FORECASTED EXPENDITURE FOR THE DECEMBER QUARTER IS
R30 MILLION OF WHICH R10.9 MILLION WILL BE INCURRED BY THE BISSETT OPERATIONS.
ACCORDING TO SWANEPOEL HARMONY'S ACQUISITION OF MASIMONG MINE (SAAIPLAAS 4 AND
5 SHAFTS) AND THE SAAIPLAAS GOLD PLANT FROM FREEGOLD SUBSEQUENT TO THE QUARTER
END MADE SENSE FROM A BUSINESS AND PRODUCTION POINT OF VIEW. "IF ANNUALISED, WE
EXPECT THE SAAIPLAAS OPERATIONS TO CONTRIBUTE APPROXIMATELY 4 600 KG (150 000
OUNCES) TO PRODUCTION.  SYNERGISTIC BENEFITS WILL ALSO BE ACHIEVED BY USING THE
SAAIPLAAS PLANT TO TREAT SAAIPLAAS AND HARMONY TONNAGES, AS THE PLANT IS BETTER
SITUATED AND MORE COST-EFFICIENT THAN THE EXISTING MERRIESPRUIT PLANT."
"WE EXPECT GOLD PRODUCTION TO FURTHER INCREASE WITH THE INCORPORATION OF
SAAIPLAAS 4 AND 5 SHAFTS AND WITH THE BRAND 2, 3 AND 5 SHAFTS REACHING OPTIMUM
PRODUCTION LEVELS" SAYS SWANEPOEL.  "HARMONY'S TRANSFORMATION INTO A
SIGNIFICANT SOUTH AFRICAN GOLD PRODUCER IS WELL ON TRACK."
ENDS
ISSUED BY HARMONY GOLD MINING COMPANY LIMITED. CONTACT: CHRISTINE LEONARDI.
TEL: +27(11) 802-1822. FAX: +27(11) 802-2363.



                                        
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