HARMONY GOLD MINING COMPANY LIMITED - HARMONY ACTS TO ADJUST TO THE WEAK
RAND/Kg GOLD PRICE
HARMONY GOLD MINING COMPANY LIMITED
JSE :HAR HAR
ISIN No. :ZAE000015228
HARMONY ACTS TO ADJUST TO THE WEAK RAND/Kg GOLD PRICE
Johannesburg, Friday 2 April 2004 - Harmony Gold Mining Company Limited
(NYSE: HMY JSE: HAR) today announced that the company has commenced a process
that may result in the restructuring of some of its operations due to the impact
of the weak gold price environment.
"We have seen our cash operating profit levels decrease substantially. The
lower R/kg gold price we receive increases our cut-offs (breakeven grade),
resulting in some ore reserves becoming uneconomical to mine. Some of our older
marginal shafts, Welkom 1, Orkney 6, Eland (in the Free State) and Merriespruit
3 are nearing the end of their economic life and may unfortunately be closed,"
commented Bernard Swanepoel, Chief Executive. Masimong 4 shaft and Nyala shaft
have also been given notice of a 60 day statutory review period which has
commenced. All service functions and other areas of the company will also
subsequently be rightsized.
Harmony has notified and met with the respective unions and associations
involved. Consultations are in progress and the restructuring process is
expected to be completed over a period of two to three months. The company is
looking at alternatives to reduce cost and to minimise the impact of the
restructuring process, and these will include input from the unions and
In terms of alternative job opportunities the company is continuing with its
implementation of CONOPS. "The successful phased introduction of CONOPS at the
various operations at which we have negotiated agreements will result in some
new employment opportunities becoming available," continued Bernard.
In terms of cost reduction, Harmony has also announced on April 1st that it has
successfully completed the placement of a R1,7 billion convertible bond. This
will reduce its South African interest payments by approximately R85 million per
With regard to sustainable organic growth, the company recently provided the
market with feedback on progress of its five growth projects in South Africa.
These projects, undertaken at a total cost in excess of R3,0 billion, will
increase Harmony"s production base and lower its cost profile. "We have
committed ourselves to completing the projects which will result in benefits to
all our stakeholders. Whilst we expect to create some 7 500 employment
opportunities over the next 5 years with the completion of these growth
projects, our shareholders will receive benefits as well. Our principle focus
in the short term however is to remain profitable with adequate cash flows to
fund these investments thereby ensuring our future," concluded Bernard.
Harmony, South Africa"s largest gold producer employs approximately 53 000
people in the six principal gold producing regions in South Africa.
About CONOPS (continuous operations)
CONOPS refers to the practice where a mine operates on all the days of the year,
including Sundays. Workers work on a roster or shift arrangement which sees them
work the same amount of hours per week and therefore the company needs to employ
more people in order to facilitate working the additional days. Currently gold
mines in South Africa operate for approximately 273 days per year. The
successful introduction of CONOPS can increase this number to 353 days per year.
Issued by Harmony Gold Mining Company Limited
2 April 2004
For more details contact:
on +27(0)82 807 3684
Investor Relations Officer
Tel +27 11 684 0146
Mobile +27(0)83 380 6614
JSE: HAR HAR
ISIN No.: ZAE000015228
Date: 02/04/2004 02:09:19 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department