Go Back Email this Link to a friend


Harmony - Potential merger between Harmony and Gold Fields Limited

Release Date: 18/10/2004 08:45:03      Code(s): HAR
Harmony - Potential merger between Harmony and Gold Fields Limited              
Harmony Gold Mining Company Limited                                             
(Incorporated in the Republic of South Africa)                                  
(Registration number 1950/038232/06)                                            
Share code: HAR     ISIN: ZAE000015228                                          
("Harmony")                                                                     
Announcement regarding a potential merger between Harmony and Gold Fields       
Limited ("Gold Fields")                                                         
1.   Introduction                                                               
     The board of Harmony hereby announces the terms of a proposed merger       
     between Harmony and Gold Fields (the "proposed merger"), under which       
Harmony proposes to acquire the entire issued share capital of Gold Fields 
     in exchange for the issue to Gold Fields shareholders of new shares in     
     Harmony.                                                                   
     Harmony has conveyed the terms of the proposed merger to the board of Gold 
Fields and is hopeful that the proposed merger will be recommended by the  
     directors of Gold Fields.  However, in view of the proposed transaction    
     between Gold Fields and IAMGold Corporation Inc. ("IAMGold") (the "proposed
     IAMGold transaction"), which Harmony considers to be contrary to the best  
interests of Gold Fields shareholders, Harmony believes that Gold Fields   
     shareholders should be afforded the opportunity to decide on the merits of 
     the proposed merger at the earliest opportunity.  To this end, Harmony will
     shortly post to Gold Fields shareholders an offer document containing the  
detailed terms and conditions of the proposed merger.                      
     The proposed merger is conditional, inter alia, on the proposed IAMGold    
     transaction not proceeding and the approval of the proposed merger by      
     Harmony shareholders.                                                      
The proposed merger will be implemented in accordance with the rules of the
     Securities Regulation Panel ("SRP") and the US Securities and Exchange     
     Commission ("SEC").                                                        
     Your attention is drawn to important information at the end of this        
announcement.                                                              
2.   The proposed merger                                                        
     The proposed merger, which will be on the terms and subject to the         
     conditions precedent set out in this announcement, will be made on the     
following basis:                                                           
     for each Gold Fields share       1.275 new Harmony shares,                 
     for each Gold Fields ADS         1.275 new Harmony ADSs                    
     (the "proposed merger ratio") and will value the entire issued ordinary    
share capital of Gold Fields at approximately R52.9 billion (US$8.1        
     billion), based on the closing price of R84.41 per Harmony share on the JSE
     Securities Exchange South Africa ("JSE") on 14 October 2004, the last      
     practicable date prior to the date of this announcement.                   
The proposed merger ratio represents:                                      
     -    a premium of approximately 29%, calculated by comparing the closing   
          Harmony share price of R84.41 on 14 October 2004, multiplied by the   
          proposed merger ratio, to the average of the daily volume weighted    
average price of Gold Fields shares on the JSE for the 30 business    
          days ending 14 October 2004; and                                      
     -    an implied Gold Fields price to net present value ("P/NPV") multiple  
          of 2.4x.                                                              
The premium of approximately 29% compares favourably to the average premia 
     of:                                                                        
     -    22% paid in public offers in the South African market between 2001 and
          2003; and                                                             
-    25% paid in unsolicited all-share offers in the international market  
          since January 2001.                                                   
     The implied Gold Fields P/NPV multiple of 2.4x compares favourably to:     
     -    the trading P/NPV multiples of comparable gold companies:             
-    the average P/NPV of the international gold majors (Barrick Gold 
               Corp, Newmont Mining Corp and Placer Dome Inc) of 2.4x;          
          -    the average P/NPV of the South African gold majors (AngloGold    
               Ashanti Ltd, Gold Fields and Harmony) of 1.9x; and               
-    the average P/NPV of the international mid-cap gold companies    
               (Agnico-Eagle Mines Ltd, Compania de Minas Buenaventura S.A.A.,  
               Glamis Gold Corp, Goldcorp Inc, IAMGold, Kinross Gold Corp,      
               Meridian Gold Inc, Newcrest Mining Ltd and Wheaton River Minerals
Ltd) of 1.9x.                                                    
     -    the P/NPV multiples paid on comparable acquisitions:                  
          -    the average of all such transactions since 1999 of 1.4x;         
          -    the average of all such transactions with a consideration of over
US$1 billion since 1998 of 1.7x;                                 
          -    the average paid for South African targets since 1998 of 0.9x;   
          -    the average paid by South African acquirors since 1998 of 1.3x;  
          -    the multiple paid by AngloGold Ltd for Ashanti Goldfields Co Ltd 
of 1.6x; and                                                     
          -    the multiple in the proposed IAMGold transaction of 1.1x.        
3.   Gold Fields shareholder undertakings to support the proposed merger        
     Harmony has received an irrevocable undertaking from MMC Norilsk Nickel    
("Norilsk") to accept the subsequent offer (defined below) in respect of   
     98,467,758 Gold Fields shares, representing approximately 20.03% of the    
     entire issued share capital of Gold Fields.                                
4.   Structure of the proposed merger                                           
Harmony has designed a mechanism to allow Gold Fields shareholders to      
     realise, within as short a time period as reasonably practicable, the      
     benefit of the premium inherent within the proposed merger.  However, in   
     order to allow all Gold Fields shareholders to benefit from this mechanism,
Harmony must comply with the regulatory requirements in the United States  
     of America ("US").  As a result, the proposed merger is to be structured as
     two immediately consecutive offers, each subject to the respective         
     conditions precedent set out in paragraph 13.                              
Through the making of this announcement, Harmony has irrevocably committed 
     to offer to acquire the entire issued share capital of Gold Fields in the  
     following manner:                                                          
     -    early settlement offer: an initial offer to acquire up to 34.9% of the
entire issued share capital of Gold Fields on the basis set out below,
          not subject to the tender of any minimum number of shares (the "early 
          settlement offer"); and                                               
     -    subsequent offer: an immediate follow-on offer on the same terms as   
the early settlement offer for the balance of the entire issued share 
          capital of Gold Fields not already acquired by Harmony under the early
          settlement offer (the "subsequent offer").  The subsequent offer will 
          be subject to the conditions precedent set out in paragraph 13.2.     
5.   The early settlement offer                                                 
     Subject to the conditions precedent set out in paragraph 13.1, Harmony will
     make the early settlement offer to Gold Fields shareholders on the         
     following basis:                                                           
-    Harmony will settle unconditionally valid acceptances received in     
          respect of up to a maximum of 34.9% of the entire issued share capital
          of Gold Fields;                                                       
     -    to qualify for settlement under the early settlement offer, Harmony   
must receive valid acceptances, complete in all respects, by no later 
          than 12h00 (South African time) on Friday, 26 November 2004 (the      
          "early settlement closing date");                                     
     -    Gold Fields shareholders will be entitled to tender for acceptance up 
to their entire holdings of Gold Fields shares; and                   
     -    in the event that valid acceptances in excess of 34.9% of Gold Fields"
          entire issued share capital are received by the early settlement      
          closing date, Harmony will only settle that number of Gold Fields     
shares which equates to 34.9% of the entire issued share capital of   
          Gold Fields, on a pro rata basis, with the Gold Fields shares tendered
          by accepting Gold Fields shareholders scaled back accordingly.        
     In addition, to the extent that Harmony increases the consideration offered
under the proposed merger after the early settlement closing date, those   
     Gold Fields shareholders who have already accepted the early settlement    
     offer and have received the consideration due to them under the early      
     settlement offer will remain entitled to receive the full benefit of any   
increased consideration due under any increased offer by Harmony,          
     regardless of whether they had subsequently disposed of their new Harmony  
     shares.                                                                    
     Norilsk has irrevocably committed not to accept the early settlement offer 
in respect of its entire holding of approximately 20.03% of the entire     
     issued share capital of Gold Fields.  As a consequence, other Gold Fields  
     shareholders will be able to maximise their opportunity to participate in  
     the early settlement offer, and will be able to realise a minimum of       
approximately 44% of their Gold Fields holdings under the early settlement 
     offer.  To the extent that any further Gold Fields shareholders do not take
     advantage of the early settlement offer, Gold Fields shareholders could    
     receive settlement for a greater percentage of their Gold Fields holdings, 
up to 100%.                                                                
     Those Gold Fields shareholders who do not accept the early settlement offer
     do not have any restrictions on the tradeability of their Gold Fields      
     shares.                                                                    
Harmony intends to vote those Gold Fields shares that it acquires pursuant 
     to the early settlement offer against any resolutions to be proposed to    
     implement the proposed IAMGold transaction.                                
6.   The subsequent offer                                                       
Harmony irrevocably undertakes, following completion of the early          
     settlement offer, to make an immediate follow-on offer on the same terms as
     the early settlement offer for the balance of the issued share capital of  
     Gold Fields not already acquired by Harmony under the early settlement     
offer.  The subsequent offer will be subject to the conditions precedent   
     set out in paragraph 13.2.                                                 
7.   Background to and reasons for the proposed merger                          
     Harmony is one of the world"s largest independent growth-oriented gold     
mining companies, distinguished by the focused operational and management  
     philosophies that it employs throughout the Harmony group.  Harmony"s      
     strategy is focused on building a leading international gold mining company
     through acquisitions (26 over the past six years), organic growth and      
focused exploration.  This strategy has resulted in the growth of Harmony"s
     attributable production from 0.65 million ounces in 1995 to 3.3 million    
     ounces for the financial year ended 30 June 2004.                          
     Harmony has successfully achieved its growth strategy through evolving and 
implementing a set of management systems and philosophies, which Harmony   
     refers to as the "Harmony Way" and which Harmony believes are unique in the
     South African gold mining industry, and applying them to the assets that it
     operates.  The Harmony Way is underpinned by the concepts of empowered     
management teams, active strategic management by the Harmony board,        
     increased productivity, reduced management tiers, a no-frills, low cost    
     ethic and the introduction of sophisticated cost accounting systems and    
     strict ore accounting and ore reserve management systems.                  
A significant component of the success of Harmony"s strategy to date has   
     been its ability to acquire under-performing mining assets, including      
     assets purchased from Gold Fields, mainly in South Africa, and, in a       
     relatively short time-frame, to transform these mining assets into cost-   
effective production units, thereby creating significant value for Harmony 
     and Harmony shareholders.                                                  
     Pursuant to its ongoing assessment of the various investment opportunities 
     within South Africa and the broader global gold mining industry, Harmony   
has identified Gold Fields as an attractive merger candidate, with a       
     compelling rationale from an operational and growth perspective.           
     Gold Fields is one of the world"s largest unhedged gold mining companies   
     with annual gold production of approximately 4.2 million ounces for the    
financial year ended 30 June 2004, with proven and probable attributable   
     gold reserves of 77 million ounces and mineral resources of 183 million    
     ounces as at 30 June 2004.  Gold Fields has operations in South Africa,    
     Australia and Ghana (West Africa).  In addition, Gold Fields has a         
geographically diverse exploration portfolio, as well as the Arctic        
     Platinum Project ("APP"), an advanced stage Platinum Group Metals project  
     in Northern Finland and the Cerro Corona Copper/Gold Project in Peru       
     ("Cerro Corona").                                                          
The proposed merger will allow Harmony to build on its position as the     
     premier South African operator and will create a new international major in
     the global gold mining industry.                                           
8.   Rationale for the proposed merger                                          
The proposed merger is driven by Harmony"s pursuit of a number of key      
     strategic objectives, including:                                           
     -    creating significant value through the application of the Harmony Way 
          to generate cost efficiencies from Gold Fields" South African assets, 
together with operational synergies from Harmony"s and Gold Fields"   
          contiguous assets;                                                    
     -    revitalising Gold Fields" assets within the Southern African          
          Development Community ("SADC") (the "South African asset portfolio"); 
-    accessing the value of Gold Fields" exploration portfolio;            
     -    retaining the true value within Gold Fields" international asset      
          portfolio for the benefit of its shareholders;                        
     -    ensuring a well balanced portfolio of assets spread across the life-  
cycle of mines; and                                                   
     -    creating a new international major with a compelling equity story and 
          enhanced investor appeal.                                             
     Substantial operational synergies                                          
Harmony firmly believes that it can achieve significant reductions in Gold 
     Fields" cost base.  Harmony estimates that, in order to justify the premium
     offered to Gold Fields shareholders, it only needs to achieve unit cost    
     reductions equivalent to at least 15% per annum in Gold Fields" South      
African asset portfolio cost structure, over and above Gold Fields" current
     efficiency initiatives, equating to an estimated improvement in pre-tax    
     operating profit of approximately R1 billion per annum.                    
     These cost benefits are expected to be achieved, inter alia, through:      
improving operational efficiencies;                                        
     -    rationalising corporate overhead and administrative infrastructures;  
     -    rationalising activities in areas such as procurement and insurance;  
     -    improved capital programme management;                                
-    improved services management and mine planning systems; and           
     -    empowering local operational management.                              
     Harmony believes that its ability to deliver cost savings in South Africa  
     is borne out by its demonstrable track record in applying its low cost     
culture and high productivity mining methods to previously acquired assets:
     Asset               Net investment  Payback period   Unit (underground     
                            (R million)                    mining R/t) cost     
                                                            reduction (June     
2004 terms)     
     Acquired from                                                              
     Gold Fields                                                                
     Evander                        452     10 quarters                 31%     
St Helena (50%)                 60               -                 27%     
     Weighted average                                                   31%     
     Other                                                                      
     acquisitions                                                               
Randfontein                    854      9 quarters                 16%     
     Freegold (50%)               1,416     11 quarters                 27%     
     Elandsrand                   1,053               -                 16%     
     Weighted average of above                                          22%     
acquisitions                                                               
     A strategy for value and growth, both domestically and internationally     
     Harmony considers that Gold Fields" management has prematurely accelerated 
     the exploitation of the South African asset portfolio"s reserves through   
mining higher grades and reducing development metreage ("harvest mode") and
     believes that, through the application of the Harmony Way, Harmony can     
     revitalise this valuable asset base.  Harmony believes that the application
     of the Harmony Way to Gold Fields" South African asset portfolio will      
produce significantly reduced overall unit costs, which, together with the 
     introduction of improved ore reserve management systems, will lead to      
     increased operational and financial flexibility.  Harmony believes that    
     this will have the effect of not only increasing profitability but will    
also convert below margin areas into economically viable areas.  Based on  
     past experience, this process is expected to increase reserves and extend  
     and enhance the economic life of Gold Fields" South African mines.         
     As a result, Harmony believes that it will re-establish the viability and  
future competitiveness of Gold Fields" South African asset portfolio,      
     putting mature assets or assets currently in harvest mode back into growth 
     mode, transforming current replacement projects into genuine growth        
     opportunities and allowing projects that were previously abandoned to be   
reconstituted as economically feasible.                                    
     Harmony believes that its ability to deliver is further demonstrated by its
     track record in turning terminal assets back into growth assets.  The table
     below sets out the details of new reserves created by Harmony from assets  
and projects that had been abandoned by previous operators.  When          
     completed, the projects will produce an aggregate of over 1.5 million      
     higher grade, lower cost additional ounces per annum:                      
     Project               Mineable reserve     Total funding    Production per 
(`000 ounces)    cost per ounce    annum (ounces) 
                                                      (US$) *                   
     Masimong expansion               2,530                12           315,000 
     Elandsrand new                   6,300                33           450,000 
mine                                                                       
     Tshepong decline                 1,300                28           167,000 
     Phakisa shaft                    4,100                18           265,000 
     Doornkop South                   3,700                46           330,000 
Reef shaft                                                                 
     Total                           17,930                27         1,527,000 
     * Includes acquisition, exploration and capital expenditure figures        
     Harmony believes that positive socio-economic benefits, primarily from the 
creation of further employment opportunities and extending the life of     
     existing jobs, accrue from applying the Harmony Way to increase reserves   
     and extend the life of mines.  In addition, the resultant increase in      
     profitability and financial flexibility will enable the enlarged group to  
fund capital and development expenditure, offering long term growth        
     opportunities, improving the overall quality of the enlarged group"s asset 
     portfolio and maximising shareholder returns.                              
     Harmony believes that a revitalised South African asset base will provide  
the platform from which to develop the combined international asset        
     portfolio.  Harmony will continue to explore new business opportunities and
     pursue suitable acquisitions both within South Africa and internationally. 
     Harmony intends to manage actively the combined international asset        
portfolio and continue to support and expand exploration activities as     
     another important avenue for increasing the size of its reserve base.      
     Harmony will examine the real potential of Gold Fields" APP (Finland) and  
     Cerro Corona (Peru) projects and plans to continue to further develop the  
known potential of its own Hidden Valley (Papua New Guinea) and Wafi/Golpu 
     (Papua New Guinea) projects.  Harmony will also consider, on an ongoing    
     basis, value creation opportunities for the international portfolio, both  
     collectively and on an individual basis.  Such opportunities might include 
a future listing or collective disposal of the international asset         
     portfolio, or the disposal of participations in an individual asset.       
     Should Harmony decide to realise the value in, or valorise all or part of, 
     its international asset portfolio, Harmony would plan to do so only for    
full value in a manner that ensured that shareholders fully participated in
     the upside and at a valuation that incorporated the full benefit of any    
     international rating.                                                      
     Creation of a new international major with enhanced investor appeal        
Harmony and Gold Fields are currently the world"s 6th and 4th largest gold 
     mining companies, respectively, in terms of attributable production,       
     producing approximately 3.3 and 4.2 million ounces during the financial    
     year ended 30 June 2004 respectively.                                      
The proposed merger will create a new international major with true global 
     scale and relevance, an attractive stock for both gold and other investors.
     The enlarged group will be:                                                
     -    the world"s largest gold mining company by:                           
-    attributable production of approximately 7.5 million ounces per  
               annum;                                                           
          -    attributable reserves amounting to approximately 139 million     
               ounces; and                                                      
-    attributable resources amounting to approximately 593 million    
               ounces.                                                          
     The above is based on publicly available information as at 30 June 2004.   
     -    the world"s second largest gold mining company with a:                
-    market capitalisation of approximately US$11.0 billion, based on 
               the closing prices of Harmony and Gold Fields shares on the JSE  
               on 14 October 2004, the last practicable date prior to the date  
               of this announcement, on a pro forma basis, prior to any market  
re-rating which may result from the recognition of the benefits  
               expected from the proposed merger.                               
     The enlarged group will retain an integrated geographic strategy, led by a 
     strong management team with a proven track record both operationally and in
terms of delivering value-enhancing acquisitions.  The combination of the  
     two companies and the subsequent increase in market capitalisation will    
     increase the weighting in all relevant investment indices, leading to      
     greater liquidity and access to a greater universe of potential investors. 
As a new international major, Harmony believes that the enlarged group will
     have the requisite financial strength and flexibility to continue to       
     deliver value to its shareholders through:                                 
     -    profit enhancement at existing operations through the continued       
implementation of Harmony"s unique management structure, systems and  
          philosophy;                                                           
     -    growth in production resulting from organic projects;                 
     -    growth from contiguous acquisitions in South Africa and               
internationally; and                                                  
     -    continued expansion of its reserve base through its current and future
          exploration and development projects.                                 
9.   The proposed IAMGold transaction                                           
9.1  Background                                                            
          In a detailed terms announcement published in the press on 1 October  
          2004, Gold Fields announced that it had signed a definitive agreement 
          with IAMGold, a public company listed on the Toronto Stock Exchange,  
pursuant to which it is intended that IAMGold would, subject to       
          certain conditions precedent, acquire substantially all of Gold       
          Fields" net cash resources and all of Gold Fields" mining, development
          and exploration assets located outside SADC.                          
Under the terms of the agreement, IAMGold would, subject to           
          adjustment, issue to Gold Fields 351,690,218 shares in IAMGold in     
          consideration for such assets, which would result in Gold Fields      
          owning approximately 70% of the fully diluted equity of the enlarged  
IAMGold.  In addition, prior to completion of the proposed IAMGold    
          transaction, IAMGold shareholders would receive a special cash        
          dividend of C$0.50 per IAMGold share.                                 
          Gold Fields" stated rationale for the proposed IAMGold transaction is 
that it would create an entity that is better equipped to compete with
          international gold companies through more direct access to            
          international capital and debt markets, with increased flexibility to 
          react more swiftly to acquisition and project development             
opportunities as they arise.  Gold Fields further contends that the   
          injection of its non-South African asset portfolio into a separately  
          listed, independent company could present an opportunity for further  
          value creation in that the market might be expected to benchmark these
assets against those of an international peer group, which Gold Fields
          indicates is rated at a premium to Gold Fields.                       
     9.2  Analysis of the proposed IAMGold transaction                          
          Harmony believes that Gold Fields" rationale for the proposed IAMGold 
transaction is unconvincing and difficult to justify from both a value
          and structural perspective.  In addition, Harmony believes that the   
          proposed IAMGold transaction has significant negative implications for
          Gold Fields, its shareholders, its South African asset portfolio and  
all of its stakeholders.                                              
          9.2.1     From a value perspective                                    
                    Disposal of Gold Fields" international asset portfolio at   
                    substantially less than fair value                          
Gold Fields is disposing of its international asset         
                    portfolio, including almost all of its existing net cash    
                    reserves, at an implied P/NPV multiple of only 1.1x.        
                    This represents:                                            
-    a discount of 48% to the current analyst consensus     
                         average P/NPV multiple of 2.1x for Gold Fields.  The   
                         extent of the discount is even greater in the context  
                         of Gold Fields" stated rationale for the transaction,  
that the relative rating of its international asset    
                         portfolio should be higher than the rating ascribed to 
                         its South African asset portfolio and thus its overall 
                         rating;                                                
-    a discount of 42% to the current analyst consensus     
                         average P/NPV multiple of 1.9x for the South African   
                         gold majors;                                           
                    -    a discount of 42% to the current analyst consensus     
average P/NPV multiple of 1.9x for international mid-  
                         cap gold companies; and                                
                    -    a discount of 54% to the current analyst consensus     
                         average P/NPV multiple of 2.4x for the international   
gold majors.                                           
                    The market has recognised this value leakage and has        
                    reflected it through the relative share price performances  
                    of Gold Fields and IAMGold.  In the six weeks following the 
announcement of the proposed IAMGold transaction on 11      
                    August 2004, the Gold Fields share price only performed in  
                    line with its South African peers, whilst over the same     
                    period, IAMGold substantially outperformed Gold Fields,     
Harmony and the HSBC Global Gold Index, moving from C$6.99  
                    to C$10.05 (cum-dividend) as at 14 October 2004, an increase
                    of over 40%, fully supporting Joe Conway"s (Chief Executive 
                    Officer of IAMGold) statement that the transaction is       
"highly accretive to us" (source: management interview with 
                    Joe Conway on 11 August 2004).                              
                    Substantial premium paid to IAMGold shareholders on a       
                    relative contribution basis                                 
Based on the metrics used by Gold Fields in its market      
                    presentation on 11 August 2004, Gold Fields is contributing 
                    the following:                                              
                    -    73% of net asset value;                                
-    72% of operating cash flows;                           
                    -    74% of resources;                                      
                    -    76% of reserves; and                                   
                    -    76% of production.                                     
In return, Gold Fields is only receiving approximately 70%  
                    of the fully diluted equity of the enlarged IAMGold, prior  
                    to taking into account the negative impact of the C$0.50 per
                    share special cash dividend payable to IAMGold shareholders.
Other metrics not examined by Gold Fields, based on 30 June 
                    2004 numbers, imply an even more favourable deal for        
                    IAMGold, with Gold Fields contributing the following:       
                    -    75% of revenues;                                       
-    75% of operating profit before interest, tax,          
                         depreciation and amortisation ("EBITDA");              
                    -    79% of operating profit before interest and tax        
                         ("EBIT")                                               
-    87% of net earnings;                                   
                    -    79% of attributable reserves; and                      
                    -    82% of attributable resources (measured and indicated).
                    Moreover, Gold Fields is contributing its entire exploration
portfolio as well as approximately US$400 million in cash,  
                    representing almost all of Gold Fields" existing net cash   
                    resources.                                                  
                    Gold Fields is clearly paying a substantial premium to      
IAMGold shareholders, even before the payment to them of the
                    US$60 million special cash dividend.                        
                    This is recognised by Gold Fields, as evidenced by Chris    
                    Thompson"s (Chairman of Gold Fields) statement: "In the     
final determination, we made sure that there was an edge    
                    given to IAMGold on all these determinants.  So whichever   
                    way you looked at them, whichever metric you wanted to focus
                    on, there was an advantage, if you will an embedded premium,
given to IAMGold on all of these things.  Then in addition  
                    to that, we threw in a C$0.50 dividend." (source: management
                    interview with Chris Thompson on 11 August 2004).           
                    Challenging for Gold Fields shareholders to break even under
the proposed IAMGold transaction                            
                    Gold Fields states that the injection of its international  
                    asset portfolio into IAMGold could create value for Gold    
                    Fields shareholders due to a re-rating of the enlarged      
IAMGold.                                                    
                    Harmony considers that the basis for a substantial re-rating
                    of the enlarged IAMGold is not intuitive from an operational
                    perspective, given that there are no operating fundamentals 
to support a re-rating:                                     
                    -    no real addition of critical mass through the inclusion
                         of IAMGold"s assets;                                   
                    -    IAMGold has no operational control over its principal  
assets;                                                
                    -    no apparent upside in the IAMGold portfolio;           
                    -    no obvious synergistic benefits; and                   
                    -    a duplicated corporate structure with a resultant      
likely increase in fixed overheads.                    
                    Furthermore, there are no market fundamentals to support a  
                    re-rating:                                                  
                    -    the enlarged IAMGold will remain a mid-cap producer;   
-    its shares will face substantial illiquidity due to the
                         small free-float of the enlarged IAMGold; and          
                    -    the enlarged IAMGold will still be impacted by the     
                         Exchange Control requirements applied by the South     
African Reserve Bank ("SARB").                         
                    Given the disproportionately low valuation ascribed to Gold 
                    Fields" international asset portfolio, Gold Fields          
                    shareholders are starting from an unnecessarily low relative
value base, requiring a significant rise in the IAMGold     
                    share price to enable Gold Fields shareholders just to break
                    even.  Harmony estimates that, for Gold Fields shareholders 
                    to break even, the IAMGold share price would need to        
increase to approximately C$14.54 (cum-dividend).           
                    Put another way, in the event that Gold Fields shareholders 
                    do break even under the proposed IAMGold transaction,       
                    IAMGold shareholders would have received a premium of       
approximately 108% or some US$900 million.                  
     9.2.2     Structural issues relating to the proposed IAMGold transaction   
               The proposed IAMGold transaction will result in a complex and    
               inefficient corporate structure, which creates potential value   
leakage due to:                                                  
               -    the possible holding company discount;                      
               -    the non-compete undertaking restricting Gold Fields itself  
                    to a small geographic territory;                            
-    multiple investment entry points into the portfolio through 
                    both Gold Fields itself as well as the enlarged IAMGold; and
               -    a lack of financial flexibility to allow for the optimal    
                    allocation of scarce financial resources.                   
Gold Fields is losing control even though it is paying a premium 
               Post implementation of the proposed IAMGold transaction, Gold    
               Fields would have only 2 directors out of a possible 10 on the   
               board of directors of the enlarged IAMGold.  In accordance with  
directors" fiduciary duties and corporate governance best        
               practice, the enlarged IAMGold would be a stand-alone company run
               by a board on an arm"s length basis that has to be fully         
               independent of Gold Fields.  Accordingly, Gold Fields" ability to
exert influence over the assets of the enlarged IAMGold is       
               significantly reduced and any attempt to do so would serve to    
               reduce the rating of the new vehicle.                            
               Gold Fields is left with little cash and is giving away control  
of its cash flows                                                
               In addition to transferring almost all of its existing net cash  
               resources to the enlarged IAMGold, Gold Fields has further       
               reduced its future access to cash flow by disposing of its       
international asset portfolio, which, during the financial year  
               ended 30 June 2004, generated approximately 75% of Gold Fields"  
               operating cash flows.                                            
               Following completion of the proposed IAMGold transaction, Gold   
Fields" ability to freely access cash flows from the enlarged    
               IAMGold would be restricted to dividend flows, which themselves  
               would be impacted by:                                            
               -    the requirement for such dividends to be declared by the    
independent board of the enlarged IAMGold, which Gold Fields
                    does not control;                                           
               -    the fact that mid-cap international gold companies          
                    traditionally do not pay material dividends;                
-    the cash requirements of the enlarged IAMGold, particularly 
                    in the context of its stated commitment to increase its     
                    production from 2 million to 3.5 million ounces per annum   
                    within a 3 year period;                                     
-    the impairment effect of tax inefficiencies; and            
               -    the 30% equity leakage to the enlarged IAMGold"s minority   
                    shareholders.                                               
               Harmony believes that completion of the proposed IAMGold         
transaction is likely to lead to a loss of financial control for 
               Gold Fields, potentially prejudicing the optimal allocation of   
               scarce cash resources with negative implications for Gold Fields 
               and its South African asset portfolio.                           
Gold Fields is giving away control of its growth                 
               Gold Fields has given a commitment not to compete with the       
               enlarged IAMGold for future international growth opportunities,  
               excluding the SADC region.  Limiting Gold Fields" growth         
potential to SADC is inadequate for a company of its size and    
               status, especially given that the non-SADC part of the Gold      
               Fields asset portfolio has delivered all of its growth over the  
               past 4 years.  In this time, Gold Fields" asset portfolios       
achieved the following rates of growth/decline:                  
               -    international asset portfolio - compound annual growth in   
                    production of 54%; and                                      
               -    South African asset portfolio - compound annual decline in  
production of 6%.                                           
               It appears, therefore, that under the proposed IAMGold           
               transaction, Gold Fields is transferring all of its growth       
               potential to the enlarged IAMGold.                               
In addition, the pursuit of a segregated geographic model further
               raises doubt about the future growth potential of Gold Fields due
               to:                                                              
               -    the transfer to the enlarged IAMGold of Gold Fields" entire 
exploration portfolio.  Harmony considers that the timing in
                    respect of the APP and Cerro Corona projects appears to be  
                    particularly sub-optimal from a value achieved and growth   
                    perspective, as evidenced by Chris Thompson"s statements:   
"What we can all agree is that if some of our expectations  
                    do come true over the next five years, or the next six to   
                    eight months frankly, APP might become extremely valuable   
                    indeed." (source: management interview with Chris Thompson  
on 11 August 2004) and "We expect a final feasibility (of   
                    APP) to be completed by the end of 2004 and, if the results 
                    are what I expect, we will be well into construction of     
                    Europe"s largest platinum group mine by this time next year"
(source: Gold Fields 2004 Annual Report); and               
               -    reliance on dividend flows from the enlarged IAMGold to fund
                    the development of Gold Fields and its remaining South      
                    African assets.  As noted above, it is unclear whether these
dividends will be forthcoming.                              
               On the basis of the above, Harmony questions whether Gold Fields 
               will be able to deliver replacement reserves in South Africa, let
               alone growth.                                                    
Harmony believes that, following completion of the proposed      
               IAMGold transaction, Gold Fields shareholders will be left with  
               control of orphaned, mature, capital expenditure-intensive assets
               in South Africa that have been prematurely put into harvest mode.
Aside from this, Gold Fields shareholders will only have a 70%   
               interest in their own international assets and development       
               portfolio, with such interest subject to potential further       
               dilution as the enlarged IAMGold uses its paper to fund          
acquisitions.                                                    
               Gold Fields is jeopardising its ability to pay future dividends  
               In the event that the proposed IAMGold transaction is effected,  
               Gold Fields" ability to maintain its historic dividend payout    
ratio is greatly reduced in the absence of any substantial       
               dividend receipts from the enlarged IAMGold.                     
               In addition, prior to Gold Fields being in a position to declare 
               dividends to its shareholders, it must fund the capital          
expenditure requirements of its current South African assets, not
               to mention any growth projects, as well as the financing of      
               approximately R400 million per annum interest payable on the loan
               from Mvelaphanda Resources Limited ("Mvelaphanda"), under the    
Mvelaphanda Black Economic Empowerment transaction announced in  
               the press on 26 November 2003.                                   
10.  The proposed merger - putting the proposed IAMGold transaction into        
     perspective                                                                
In contrast to the proposed IAMGold transaction, Harmony believes that the 
     proposed merger provides Gold Fields shareholders with, inter alia, the    
     following benefits:                                                        
     -    a full and upfront premium of 29% to Gold Fields" average 30 business 
day volume weighted average price on the JSE on 14 October 2004;      
     -    significant operational value enhancements and synergies from the     
          application of the Harmony Way to Gold Fields" assets;                
     -    prevention of the disposal of Gold Fields" international asset        
portfolio and exploration portfolio at significantly less than fair   
          value;                                                                
     -    retained access to the existing asset portfolio and future growth     
          opportunities both locally and internationally and the prospective    
exploration development potential;                                    
     -    retained access to existing cash resources and future cash flows from 
          which to fund capital expenditure, development and pay dividends;     
     -    full financial flexibility, allowing for the optimum allocation of    
cash resources between all assets, whether in South Africa or         
          elsewhere, subject to SARB conditions;                                
     -    the creation, rather than the potential erosion, of value in South    
          Africa, through the revitalisation of Gold Fields" South African asset
portfolio;                                                            
     -    retention of a simple corporate structure, avoiding any of the        
          potential value leakage implicit within the structure of the proposed 
          IAMGold transaction;                                                  
-    full management control, further enhanced by gaining access to        
          Harmony"s management team, with their proven deal-making skills and   
          their reputation as highly regarded gold mining operators; and        
     -    the creation of the world"s largest gold producer with global scale   
and relevance and the firepower to grow both the domestic and         
          international businesses.                                             
11.  Shareholder support in respect of general meetings                         
     11.1 Gold Fields shareholder undertaking to vote against the proposed      
IAMGold transaction                                                   
          Harmony has received an irrevocable undertaking from Norilsk to vote  
          against the proposed IAMGold transaction at the Gold Fields general   
          meeting which, as confirmed by Gold Fields at its presentation to the 
Investment Analyst"s Society on 8 October 2004, will be held on 7     
          December 2004 (the "Gold Fields general meeting") in respect of       
          98,467,758 Gold Fields shares, representing approximately 20.03% of   
          the entire issued share capital of Gold Fields.                       
11.2 Harmony shareholder undertaking to vote in favour of the proposed     
          merger                                                                
          Harmony has received an irrevocable undertaking from African Rainbow  
          Minerals Limited ("ARM") to vote in favour of the resolutions (the    
"Harmony resolutions") to be considered and, if deemed fit, passed at 
          the Harmony general meeting (the "Harmony general meeting") for the   
          successful implementation of the proposed merger, including the       
          requisite resolutions approving the increase in the authorised share  
capital of Harmony and the allotment and issue of the Harmony         
          consideration shares (the "Harmony consideration shares") in respect  
          of 63,632,922 Harmony shares, representing approximately 19.8% of the 
          entire issued share capital of Harmony.                               
12.  Pro forma financial effects of the proposed merger                         
     The following tables set out the pro forma financial effects of the        
     proposed merger.  The pro forma financial effects have been prepared for   
     illustrative purposes only and may not give a fair reflection of the       
financial position of the enlarged Group.  The pro forma financial effects 
     are the responsibility of the board of Harmony.                            
     12.1 Harmony pro forma - acceptances representing 50% of the entire issued 
          share capital of Gold Fields                                          
Published     Pro forma  % change  
                                            before the     after the            
                                              proposed      proposed            
                                            merger (1)    merger (2)            
(3) (4)            
          Basic loss per share (cents)           (206)         (193)        6%  
          (5)                                                                   
          Basic headline loss per share          (308)         (202)       34%  
(cents) (5)                                                           
          Fully diluted loss per share           (205)         (192)        6%  
          (cents) (6)                                                           
          Fully diluted headline loss            (306)         (201)       34%  
per share (cents) (6)                                                 
          Net asset value per share              6,479         7,449       15%  
          (cents) (3)                                                           
          Net tangible asset value per           5,772         6,424       11%  
share (cents) (3)                                                     
          Number of shares in issue        320,741,577   634,068,059       98%  
     Notes:                                                                     
     1.   The figures in the "Published before the proposed merger" column have 
been extracted from Harmony"s audited annual financial statements for 
          the financial year ended 30 June 2004.                                
     2.   The figures in relation to Gold Fields have been extracted from Gold  
          Fields" audited annual financial statements for the financial year    
ended 30 June 2004.                                                   
     3.   The following assumptions were taken into account in arriving at net  
          asset value and tangible net asset value:                             
          (i)  the "pro forma after the proposed merger" column assumes that the
proposed merger was implemented on 30 June 2004;                 
          (ii) the adjustment to share capital for the issue of 313,326,482     
               (representing 50% of the Gold Fields shares in issue at 30 June  
               2004 multiplied by 1.275, being the ratio of Harmony shares to be
issued for each Gold Fields share) Harmony consideration shares  
               at the nominal value of 50 cents per share as settlement for the 
               offer consideration;                                             
          (iii)     the adjustment to share premium represents the excess of the
closing market price of Harmony shares on the JSE of 8441 cents  
               as at the last practicable date above the nominal value of 50    
               cents per share;                                                 
          (iv) the calculation of the pro forma net asset value per share and   
net tangible asset value per share assumes that the Harmony      
               consideration shares were issued on 30 June 2004;                
          (v)  the adjustment to property, plant and equipment represents the   
               net book value of Gold Fields" property, plant and equipment as  
at 30 June 2004 of R15,829 million and an adjustment of R27,521  
               million which is based on the difference between 50% of the      
               market capitalisation of the Gold Fields group (Gold Fields      
               shares in issue at 30 June 2004 multiplied by the Gold Fields    
share price of 9089 cents as at the last practicable date) less  
               50% of the net asset value of the Gold Fields group at 30 June   
               2004 as per the audited annual financial statements, increased by
               the related deferred tax liability using the mining statutory tax
rate of 46%;                                                     
          (vi) the adjustment to intangible assets represents the goodwill      
               arising from the implementation of the proposed merger,          
               calculated as the consideration paid (Harmony shares issued as   
consideration multiplied by the Harmony share price on the last  
               practicable date) less 50% of the market capitalisation of Gold  
               Fields (Gold Fields shares in issue at 30 June 2004 multiplied by
               the Gold Fields share price on the last practicable date) and    
estimated transaction costs of R116 million;                     
          (vii)     the adjustment to deferred tax liabilities includes an      
               amount of R12,660 million arising on the adjustment of R27,521   
               million to the carrying value of Gold Fields" property, plant and
equipment using the statutory mining rate of 46% as per note (v) 
               above;                                                           
          (viii)    all other adjustments represent the carrying value of Gold  
               Fields" assets and liabilities as at 30 June 2004 as extracted   
from its audited annual financial statements as at 30 June 2004; 
               and                                                              
          (ix) IFRS 3 has not been taken into account in preparing the pro forma
               balance sheet, as this was not the accounting policy of Harmony  
for the year ended 30 June 2004.                                 
     4.   The following assumptions were taken into account in determining basic
          loss per share, headline loss per share, fully diluted loss per share 
          and fully diluted headline loss per share:                            
(i)  the "pro forma after the proposed merger" assumes that the       
               proposed merger was implemented with effect from 1 July 2003;    
          (ii) except for the adjustments to amortisation and depreciation of   
               goodwill, property, plant and equipment, taxation and minority   
interests, all adjustments represent the income statement of Gold
               Fields for the financial year ended 30 June 2004 as extracted    
               from the audited annual financial statements for the year ended  
               30 June 2004;                                                    
(iii)     included in the adjustment to amortisation and depreciation 
               is an additional charge amounting to R1,587 million as a result  
               of the amortisation of the increase in fair value of property,   
               plant and equipment and goodwill which is amortised over a period
of twenty years;                                                 
          (iv) included in the adjustment to taxation is a reversal of R633     
               million of the deferred tax liability arising from the adjustment
               to property, plant and equipment; and                            
(v)  included in the adjustment to headline earnings is the           
               amortisation of the goodwill arising from the transaction        
               amounting to R211 million.                                       
     5.   A weighted average of 566,884,482 shares in issue during the twelve-  
month period ended 30 June 2004 for the purposes of calculating basic 
          loss per share and headline loss per share.                           
     6.   A weighted average of 569,921,365 shares in issue during the twelve-  
          month period ended 30 June 2004 for the purposes of calculating fully 
diluted loss per share and fully diluted headline loss per share.     
     12.2 Harmony pro forma - acceptances representing 100% of the entire issued
          share capital of Gold Fields                                          
                                              Published     Pro forma  % change 
before the     after the           
                                               proposed      proposed           
                                             merger (1)    merger (2)           
                                                              (3) (4)           
Basic loss per share (cents)            (206)         (189)        8% 
          (5)                                                                   
          Basic headline loss per share           (308)         (171)       45% 
          (cents) (5)                                                           
Fully diluted loss per share            (205)         (188)        8% 
          (cents) (6)                                                           
          Fully diluted headline loss             (306)         (170)       45% 
          per share (cents) (6)                                                 
Net asset value per share               6,479         7,777       20% 
          (cents) (3)                                                           
          Net tangible asset value per            5,772         6,637       15% 
          share (cents) (3)                                                     
Number of shares in issue         320,741,577   947,394,540      195% 
     Notes:                                                                     
     1.   The figures in the "Published before the proposed merger" column have 
          been extracted from Harmony"s audited annual financial statements for 
the financial year ended 30 June 2004.                                
     2.   The figures in relation to Gold Fields have been extracted from Gold  
          Fields" audited annual financial statements for the financial year    
          ended 30 June 2004.                                                   
3.   The following assumptions were taken into account in arriving at net  
          asset value and net tangible asset value:                             
          (i)  the "pro forma after the proposed merger" assumes that the       
               proposed merger was implemented on 30 June 2004;                 
(ii) the adjustment to share capital for the issue of 626,652,963     
               (representing the Gold Fields shares in issue at 30 June 2004    
               multiplied by 1.275 being the ratio of Harmony shares to be      
               issued for each Gold Field share) Harmony consideration shares at
the nominal value of 50 cents per share as settlement for the    
               proposed merger consideration;                                   
          (iii)     the adjustment to share premium representing the excess of  
               the closing market price of Harmony shares on the JSE of 8441    
cents as at the last practicable date above the nominal value of 
               50 cents per share;                                              
          (iv) the calculation of the pro forma net asset value per share and   
               net tangible asset value per share assumes that the Harmony      
consideration shares were issued on 30 June 2004;                
          (v)  the adjustment to property, plant and equipment represents the   
               net book value of Gold Fields" property, plant and equipment as  
               at 30 June 2004 of R15,829 million and an adjustment of R55,042  
million which is based on the difference between the market      
               capitalisation of the Gold Fields group (Gold Fields shares in   
               issue at 30 June 2004 multiplied by the Gold Fields share price  
               of 9089 cents as at the last practicable date) less the net asset
value of the Gold Fields group at 30 June 2004 as per the audited
               annual financial statements, increased by the related deferred   
               tax liability using the mining statutory tax rate of 46%;        
          (vi) the adjustment to intangible assets represents the goodwill      
arising from the implementation of the proposed merger,          
               calculated as the consideration paid (Harmony shares issued as   
               consideration multiplied by the Harmony share price on the last  
               practicable date) less the market capitalisation of the Gold     
Fields group (Gold Fields shares in issue at 30 June 2004        
               multiplied by the Gold Fields share price on the last practicable
               date) and estimated transaction costs of R308 million;           
          (vii)     the adjustment to deferred tax liabilities includes an      
amount of R25,319 million arising on the adjustment of R55,042   
               million to the carrying value of the Gold Fields" property, plant
               and equipment as per note (v) above;                             
          (viii)    all other adjustments represent the carrying value of Gold  
Fields" assets and liabilities as at 30 June 2004 as extracted   
               from its audited annual financial statements; and                
          (ix) IFRS 3 has not been taken into account in preparing the pro forma
                 sheet, as this was not the accounting policy of Harmony for the
June 2004.                                                     
     4.   The following assumptions were taken into account in determining basic
          loss per share, headline loss per share, fully diluted loss per share 
          and fully diluted headline loss per share:                            
(i)  the "pro forma after the proposed merger" assumes that the       
               proposed merger was implemented with effect from 1 July 2003;    
          (ii) except for the adjustments to amortisation and depreciation of   
               goodwill, property, plant and equipment and taxation, all        
adjustments represent the income statement of Gold Fields for the
               financial year ended 30 June 2004 as extracted from the included 
               in the adjustment to amortisation and depreciation is an         
               additional charge amounting to R3,179 million as a result of the 
amortisation of the increase in fair value of property, plant and
               equipment and goodwill which is amortised over a period of twenty
               years;                                                           
          (iii)     included in the adjustment to taxation is a reversal of     
R1,266 million of the deferred tax liability arising from the    
               adjustment to property, plant and equipment; and                 
          (iv) included in the adjustment to headline earnings is the           
               amortisation of the goodwill arising from the transaction        
amounting to R427 million.                                       
     5.   A weighted average of 880,210,963 shares in issue during the twelve-  
          month period ended 30 June 2004 for the purposes of calculating basic 
          loss per share and headline loss per share.                           
6.   A weighted average of 884,954,731 shares in issue during the twelve-  
          month period ended 30 June 2004 for the purposes of calculating fully 
          diluted loss per share and fully diluted headline loss per share.     
13.  Conditions precedent                                                       
The proposed merger will be subject to the fulfilment or waiver, in whole  
     or in part, of all or any of the following conditions precedent:           
     13.1.     with regard to the early settlement offer:                       
          13.1.1    the passing and, where applicable, registration of the      
Harmony resolutions; and                                    
          13.1.2    the registration statement with respect to the Harmony      
                    consideration shares in the US offer having been declared   
                    effective by the SEC.                                       
13.2 with regard to the subsequent offer:                                  
          13.2.1    the passing and, where applicable, registration of the      
                    Harmony resolutions;                                        
          13.2.2    Harmony receiving valid acceptances of the subsequent offer 
from Gold Fields shareholders in respect of in excess of 50%
                    of the entire issued share capital of Gold Fields (including
                    those Gold Fields shares settled by Harmony under the early 
                    settlement offer and those Gold Fields shares in respect of 
which Norilsk has irrevocably undertaken to accept the      
                    subsequent offer);                                          
          13.2.3    the proposed IAMGold transaction not being implemented for  
                    whatever reason including, inter alia, Gold Fields          
shareholders failing to approve the proposed IAMGold        
                    transaction at the Gold Fields general meeting;             
          13.2.4    the proposed merger being approved by the South African     
                    Competition Authorities under the Competition Act, 1998 (Act
89 of 1998), as amended;                                    
          13.2.5    the registration statement with respect to the Harmony      
                    consideration shares in the US offer having been declared   
                    effective by the SEC; and                                   
13.2.6    the approval of all regulatory authorities whose approval is
                    required for the implementation of the proposed merger.     
14.  Further terms of the proposed merger                                       
     14.1 Mechanics                                                             
Harmony is extending the early settlement offer and the subsequent    
          offer (the "offers") to Gold Fields shareholders to acquire all of    
          their Gold Fields shares in terms of Section 440 of the Companies Act,
          1973 (Act 61 of 1973), as amended (the "Companies Act").  Should the  
board of Gold Fields recommend the proposed merger, Harmony may wish  
          to implement the proposed merger by way of a scheme of arrangement    
          between Gold Fields and Gold Fields shareholders in terms of Section  
          311 of the Companies Act.  Insofar as may be necessary, the mechanics 
and structure of the offers have been approved by the JSE, the SRP and
          the SEC.                                                              
     14.2 Harmony consideration shares                                          
          Following their issue, all Harmony consideration shares to be issued  
to Gold Fields shareholders will rank pari passu in all respects with 
          the Harmony shares currently in issue, including the right to all     
          future dividends.  Harmony will apply to the JSE for the listing of   
          the Harmony consideration shares.  The Harmony consideration shares to
be issued under the US offer will be subject to a listing application 
          at the New York Stock Exchange, Inc. ("NYSE"), in the form of ADSs.   
          Any Harmony consideration shares to be issued on the London Stock     
          Exchange, Euronext Paris and Euronext Brussels will be subject to     
listing applications in those markets as necessary.                   
     14.3 The early settlement offer                                            
          Subject to the conditions precedent set out in paragraph 13.1 above,  
          Harmony will make the early settlement offer to Gold Fields           
shareholders on the following basis:                                  
          -    Harmony will settle unconditionally valid acceptances received in
               respect of up to a maximum of 34.9% of the entire issued share   
               capital of Gold Fields;                                          
-    to qualify for settlement under the early settlement offer,      
               Harmony must receive valid acceptances, complete in all respects,
               by no later than the early settlement closing date;              
          -    Gold Fields shareholders will be entitled to tender for          
acceptance up to their entire holdings of Gold Fields shares; and
          -    in the event that valid acceptances in excess of 34.9% of Gold   
               Fields" entire issued share capital are received by the early    
               settlement closing date, Harmony will only settle that number of 
Gold Fields shares which equates to 34.9% of the entire issued   
               share capital of Gold Fields, on a pro rata basis, with the      
               shares tendered by accepting Gold Fields shareholders scaled back
               accordingly.                                                     
To the extent that Harmony increases the consideration offered under  
          the proposed merger after the early settlement closing date, those    
          Gold Fields shareholders who have already accepted the early          
          settlement offer and received the consideration due to them under the 
early settlement offer will remain entitled to receive the full       
          benefit of any increased consideration due under any increased offer  
          by Harmony, regardless of whether they had subsequently disposed of   
          their new Harmony shares.                                             
To the extent that shares tendered by Gold Fields shareholders for    
          valid acceptance under the early settlement offer are not settled as a
          result of Harmony having received valid acceptances in excess of 34.9%
          of Gold Fields" entire issued share capital, such Gold Fields         
shareholders can elect to either:                                     
          -    have those Gold Fields shares which have not been settled under  
               the early settlement offer returned to them; or                  
          -    tender those Gold Fields shares which have not been settled under
the early settlement offer for acceptance under the subsequent   
               offer.                                                           
          If Gold Fields shareholders make no such election, shareholders will  
          be deemed to have elected to tender those Gold Fields shares which    
have not been settled under the early settlement offer for acceptance 
          under the subsequent offer.                                           
          The last day to trade on the JSE in order to participate in the early 
          settlement offer will be Friday, 19 November 2004.                    
Due to the difficulty in determining the precise number of Gold Fields
          shares validly received for acceptance under the early settlement     
          offer, Harmony may require some time to determine the final pro rated 
          numbers.  Accordingly, Harmony will only settle the consideration due 
under the early settlement offer once the final pro rated numbers have
          been determined. It is expected that settlement will be despatched to 
          both dematerialised and certificated shareholders as soon as          
          practicable, but in any event by no later than Friday, 3 December     
2004.  The decision of Harmony as to the number of Harmony            
          consideration shares allocated under the early settlement offer will  
          be final and binding on all accepting Gold Fields shareholders.       
     14.4 Withdrawal rights for the early settlement offer                      
Gold Fields shareholders have the right to withdraw any Gold Fields   
          shares that they tender at any time up to and including the date upon 
          which the early settlement offer becomes or is declared unconditional 
          in all respects.  For a withdrawal to be effective, the transfer      
secretaries must receive a written notice of withdrawal prior to the  
          date upon which the early settlement offer becomes or is declared     
          unconditional in all respects.                                        
          Gold Fields shares that have been withdrawn from the early settlement 
offer may be tendered for acceptance under the subsequent offer.      
     14.5 Subsequent offer                                                      
          Harmony irrevocably undertakes, following completion of the early     
          settlement offer, to make an immediate follow-on offer on the same    
terms as the early settlement offer for the balance of the entire     
          issued share capital of Gold Fields not already acquired by Harmony   
          under the early settlement offer.  The subsequent offer will be       
          subject to the conditions precedent set out in paragraph 13.2 above.  
14.6 Withdrawal rights for the subsequent offer                            
          Gold Fields shareholders have the right to withdraw any Gold Fields   
          shares that they tender at any time up to and including the date upon 
          which the subsequent offer becomes or is declared unconditional in all
respects.  For a withdrawal to be effective, the transfer secretaries 
          must receive a written notice of withdrawal prior to the date upon    
          which the subsequent offer becomes or is declared unconditional in all
          respects.  Withdrawal rights will not apply upon the subsequent offer 
becoming or being declared unconditional in all respects.             
     14.7 Fractions                                                             
          Any fraction of a Harmony consideration share to which any Gold Fields
          shareholder is entitled will, if it comprises 0.5 or more of a Harmony
share, be rounded up, otherwise will be rounded down to the nearest   
          whole Harmony share.                                                  
     14.8 Basis of acquisition of Gold Fields shares                            
          Full title in the Gold Fields shares will be acquired by Harmony and  
the Gold Fields shares will be free from all liens, pledges, cessions,
          charges and encumbrances, rights of pre-emption and other third party 
          rights and interests of any nature whatsoever and together with all   
          rights now or hereafter attaching thereto, including the right to     
receive and retain all dividends and other distributions announced,   
          declared, made or paid on or after the date of this announcement.     
     14.9 Intention to invoke the provisions of Section 440K of the Companies   
          Act                                                                   
In the event that acceptances under the offers are received from the  
          holders of not less than nine-tenths of the entire issued share       
          capital of Gold Fields, Harmony intends to invoke the provisions of   
          Section 440K of the Companies Act in order to compulsorily acquire    
those Gold Fields shares in respect of which acceptances have not been
          received.  In those circumstances, it is the intention of Harmony to  
          effect the delisting of Gold Fields shares from the JSE, NYSE and any 
          other relevant securities exchange as soon as reasonably practicable  
after the implementation of the proposed merger.                      
15.  The proposed merger in other jurisdictions                                 
     As part of the proposed merger, in order to comply with the regulations in 
     other jurisdictions in which Gold Fields shares trade, Harmony will, on    
substantially similar terms to those described herein, make the offers in  
     such other jurisdictions as may be required.  A registration statement     
     containing the prospectus used in connection with the proposed merger in   
     the US will be filed with the SEC.                                         
16.  Opinions and recommendations                                               
     The directors of Harmony have considered the terms and conditions of the   
     proposed merger and are of the opinion that the proposed merger is in the  
     best interests of Harmony and its shareholders.  Accordingly, the board of 
Harmony supports the proposed merger and recommends that Harmony           
     shareholders vote in favour of the Harmony resolutions to be proposed at   
     the Harmony general meeting.  Those directors of Harmony who hold Harmony  
     shares intend to vote in favour of the Harmony resolutions in respect of   
their own Harmony shares.                                                  
17.  Notice of general meeting                                                  
     A general meeting of Harmony shareholders will be held at Harmony"s        
     corporate office, Randfontein Office Park, Corner Main Reef Road and Ward  
Avenue, Randfontein, on or about 12 November 2004 at 11h00 (South African  
     time) for the purpose of considering and, if deemed fit, passing, with or  
     without modification, the Harmony resolutions.                             
18.  Documentation                                                              
An offer document to Gold Fields shareholders (the "offer document")       
     setting out the detailed information in relation to the proposed merger and
     the manner in which it will be implemented will be posted to Gold Fields   
     shareholders shortly.                                                      
A circular to Harmony shareholders (the "circular") setting out the        
     detailed information in relation to the proposed merger and a notice of    
     general meeting, including the resolutions to be proposed at the Harmony   
     general meeting will be posted to Harmony shareholders shortly.            
Should any Harmony or Gold Fields shareholder have any questions regarding 
     the proposed merger, the Harmony general meeting or require assistance in  
     completing either the form of acceptance accompanying the offer document or
     the form of proxy included in the circular, or have any other questions, US
shareholders are encouraged to make use of the toll free Shareholder       
     Information Hotline on 1 800 322 2885 (or +1 212 929 5500 if calling from  
     outside the US); shareholders in South Africa are encouraged to make use of
     the toll free Shareholder Information Hotline on 09800 3231 3233; and      
shareholders in the United Kingdom, France and Germany are encouraged to   
     make use of the toll free Shareholder Information Hotline on 00 800 3231   
     3233 (or +44 20 7814 5018 from outside these countries).                   
By order of the board                                                           
Marian van der Walt                                                             
Secretary                                                                       
Virginia                                                                        
18 October 2004                                                                 
ENQUIRIES                                                                       
HARMONY                                                                         
Ferdi Dippenaar     +27 11 684 0140   Corne Bobbert        +27 11 684 0146      
Marketing Director  +27 82 807 3684   Investor Relations   +27 83 380 6614      
HSBC                                  INVESTEC                                  
Adrian Coates       +44 20 7991 8888  Dennis Tucker        +27 11 286 7324      
Andrew Bell                           George Nakos                              
Jan Sanders                           Andrew Brady                              
Tim Morgan-Wynne                      Kevin Kerr                                
Graham Shuttleworth                                                             
BEACHHEAD                             FINANCIAL DYNAMICS                        
Jennifer Cohen      +27 11 214 2400   Nic Bennett          +44 20 7831 3113     
Patrick Lawlor                        Charles Watenphul                         
Important Information for US Shareholders                                       
In connection with the proposed merger, Harmony will file with the SEC, a       
registration statement on Form F-4, which will include a preliminary prospectus 
and related exchange offer materials, to register the Harmony ordinary shares   
(including Harmony ordinary shares represented by Harmony ADSs) to be issued in 
exchange for Gold Fields ordinary shares held by Gold Fields shareholders       
located in the US and for Gold Fields ADSs held by Gold Fields shareholders     
wherever located, as well as a Statement on Schedule TO.  Investors and holders 
of Gold Fields securities are strongly advised to read the registration         
statement and the preliminary prospectus, the related exchange offer materials  
and the final prospectus (when available), the Statement on Schedule TO and any 
other relevant documents filed with the SEC, as well as any amendments and      
supplements to those documents, because they will contain important information.
Investors and holders of Gold Fields securities may obtain free copies of the   
registration statement, the preliminary and final prospectus and related        
exchange offer materials and the Statement on Schedule TO, as well as other     
relevant documents filed with the SEC, at the SEC"s web site at www.sec.gov and 
will receive information at an appropriate time on how to obtain transaction-   
related documents for free from Harmony or its duly designated agent.           
This communication is for information purposes only.  It shall not constitute an
offer to purchase or exchange or the solicitation of an offer to sell or        
exchange any securities of Gold Fields or an offer to sell or exchange or the   
solicitation of an offer to buy or exchange any securities of Harmony in the US,
nor shall there be any sale or exchange of securities in any jurisdiction in    
which such offer, solicitation or sale or exchange would be unlawful prior to   
the registration or qualification under the laws of such jurisdiction.  The     
distribution of this communication may, in some countries, be restricted by law 
or regulation.  Accordingly, persons who come into possession of this document  
should inform themselves of and observe these restrictions.  The solicitation of
offers to buy Gold Fields ordinary shares (including Gold Fields ordinary shares
represented by Gold Fields ADSs) in the US will only be made pursuant to a      
prospectus and related offer materials that Harmony expects to send to holders  
of Gold Fields securities.  The Harmony ordinary shares (including Harmony      
ordinary shares represented by Harmony ADSs) may not be sold, nor may offers to 
buy be accepted, in the US prior to the time the registration statement becomes 
effective.  No offering of securities shall be made in the US except by means of
a prospectus meeting the requirements of Section 10 of the United States        
Securities Act of 1933, as amended.                                             
Disclaimer                                                                      
Information included in this announcement relating to Gold Fields and its       
business has been derived solely from publicly available sources.               
While Harmony has included information in this announcement regarding Gold      
Fields that is known to Harmony based on publicly available information, Harmony
has not had access to non-public information regarding Gold Fields and could not
use such information for the purpose of preparing this announcement.  Although  
Harmony is not aware of anything that would indicate that statements relating to
Gold Fields contained in this announcement are inaccurate or incomplete, Harmony
is not in a position to verify information concerning Gold Fields.  Harmony and 
its directors and officers are not aware of any errors in such information.     
Subject to the foregoing and to the maximum extent permitted by law, Harmony and
its directors and officers disclaim all liability for information concerning    
Gold Fields included in this announcement.                                      
The pro forma financial information presented is not necessarily indicative of  
the operating results or financial condition that would have been achieved had  
Harmony"s offer for Gold Fields been completed during the periods or at the     
times presented, nor is this information necessarily indicative of future       
results or conditions of Harmony after it has acquired Gold Fields.  The pro    
forma financial information does not reflect the impact of synergies that       
Harmony expects to realise or time or the costs associated with the integration 
of operations necessary to achieve such synergies.                              
Forward-looking Statements                                                      
Statements in this announcement include "forward-looking statements" that       
express or imply expectations of future events or results.  Forward-looking     
statements are statements that are not historical facts.  These statements      
include financial projections and estimates and their underlying assumptions,   
statements regarding plans, objectives and expectations with respect to future  
operations, products and services, and statements regarding future performance. 
Forward-looking statements are generally identified by the words "expect,"      
"anticipates," "believes," "intends," "estimates" and similar expressions.  All 
forward-looking statements involve a number of risks, uncertainties and other   
factors, and Harmony cannot give assurances that such statements will prove to  
be correct.  Risks, uncertainties and other factors that could cause actual     
events or results to differ from those expressed or implied by the forward-     
looking statements include, without limitation, the satisfaction of closing     
conditions, the acceptance or rejection of any agreement by regulators, delays  
in the regulatory processes, changes in the economic or political situation in  
South Africa, the European Union, the US and/or any other relevant jurisdiction,
changes in the gold industry within any such country or area or worldwide and   
the performance of (and cost savings realised by) Harmony.  Although Harmony"s  
management believes that the expectations reflected in such forward-looking     
statements are reasonable, investors and holders of Gold Fields securities are  
cautioned that forward-looking information and statements are subject to various
risks and uncertainties, many of which are difficult to predict and generally   
beyond the control of Harmony, that could cause actual results and developments 
to differ materially from those expressed in, or implied or projected by, the   
forward-looking information and statements.  These risks and uncertainties      
include those discussed or identified in the public filings with the SEC made by
Harmony and Gold Fields, including those listed under "Cautionary Statement     
Concerning Forward-Looking Statements" and "Risk Factors" in the preliminary    
prospectus included in the registration statement on Form F-4 that Harmony will 
file with the SEC.  Harmony does not undertake any obligation to update any     
forward-looking information or statements. You may obtain a free copy of the    
registration statement and preliminary and final prospectus (when available) and
other public documents filed with the SEC in the manner described above.        
No Profit Forecasts                                                             
Nothing in this announcement should be construed as a profit forecast to be     
interpreted to mean that the future earnings per share of Harmony or the        
enlarged group will necessarily be greater than the historic published earnings 
per share of Harmony or the enlarged group.                                     
No Offer of Securities                                                          
This announcement does not constitute an offer or an invitation to purchase any 
securities.                                                                     
General                                                                         
This announcement is published by and is the sole responsibility of Harmony.    
HSBC Bank plc ("HSBC") is acting for Harmony and no one else in connection with 
the proposed merger and will not be responsible to anyone other than Harmony for
providing the protections afforded to customers of HSBC, nor for providing      
advice in relation to the proposed merger.                                      
Investec Bank Limited ("Investec") is acting for Harmony and no one else in     
connection with the proposed merger and will not be responsible to anyone other 
than Harmony for providing the protections afforded to customers of Investec,   
nor for providing advice in relation to the proposed merger.                    
The information contained in this announcement speaks only as of the date       
indicated on the cover of this announcement unless the information specifically 
indicates that another date applies.                                            
Copies of this announcement are not being made, and must not be mailed,         
forwarded, transmitted or otherwise distributed or sent in or into Australia,   
Canada, Japan, the Republic of Ireland, the US or any other jurisdiction in     
which it is illegal to make the offer and persons receiving this announcement   
(including custodians, nominees and trustees) must not distribute, forward,     
mail, transmit or send it in or into or from Australia, Canada, Japan, the      
Republic of Ireland, the US or any such other jurisdiction.                     
Date: 18/10/2004 08:45:49 AM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2019 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.