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HAR - Harmony - Realises value for its Uranium assets at Randfontein and

Release Date: 19/12/2007 08:00:02      Code(s): HAR
HAR - Harmony - Realises value for its Uranium assets at Randfontein and        
participates in the future development of these assets                          
Harmony Gold Mining Company Limited                                             
("Harmony")                                                                     
Incorporated in the Republic of South Africa                                    
Registration number: 1950/038232/06                                             
JSE Limited: HAR                                                                
New York Stock Exchange, Inc.: HMY                                              
NASDAQ HMY                                                                      
London Stock Exchange plc: HRM                                                  
Euronext Paris: HG                                                              
Euronext Brussels: HMY                                                          
Berlin Stock Exchange: HAM1                                                     
JSE share code: HAR                                                             
Issuer code: HAPS                                                               
ISIN: ZAE000015228                                                              
HARMONY REALISES VALUE FOR ITS URANIUM ASSETS AT RANDFONTEIN AND PARTICIPATES IN
THE FUTURE DEVELOPMENT OF THESE ASSETS                                          
Introduction                                                                    
In line with Harmony`s stated strategy of realising value for its uranium       
assets, Randfontein Estates Limited ("Randfontein"), a wholly owned subsidiary  
of Harmony, has entered into binding agreements ("Transaction Agreements") with 
Pamodzi Resources Fund 1. LLP ("PRF"), whereby certain of the uranium and gold  
assets of Randfontein, known as Cooke Section, are to be sold into a special    
purpose vehicle ("Newco"). Newco is a wholly owned subsidiary of ARMgold/Harmony
Joint Investment Company (Proprietary) Limited ("Investco"), which is in turn a 
wholly owned subsidiary of Harmony.                                             
Newco and Randfontein have further agreed to enter into a sale agreement, in    
terms of which the Old Randfontein Section assets are to be sold by Randfontein 
to Newco ("the Old Randfontein Sale Agreement").                                
The purchase price payable by Newco for Cooke Section and the Old Randfontein   
Section assets shall be US$420 million.                                         
PRF is to acquire a 60% shareholding in Newco from Investco for a purchase      
consideration of US$252 million, with Harmony retaining a 40% shareholding in   
Newco ("the Proposed Transaction").                                             
Rationale for the Proposed Transaction                                          
With the significant increase in the uranium spot price over the past four years
from approximately US$10 per pound to the current spot price of more than US$90 
per pound, the Proposed Transaction provides for a new lease of life and value  
realisation for Cooke Section. Further highlights of the Proposed Transaction   
include:                                                                        
-    in line with Harmony`s stated "Back to Basics" strategy, a new dedicated   
    executive management team will assume responsibility for developing the     
uranium potential of Cooke Section;                                         
-    a credible and experienced financial partner, PRF, has been selected to    
    partner with Harmony in pursuance of its uranium strategy;                  
-    Harmony retains a significant (40%) shareholding in Newco, which provides  
for future upside participation;                                            
-    with the introduction of PRF as a 60% shareholder in Newco, Harmony is able
    to realise some of the future potential of Cooke Section upfront;           
-    a capital injection into Cooke Section over the next three years will      
extend the life of the existing gold operations through the joint           
    exploitation of the uranium resource; and                                   
-    through the reprocessing of various dumps within Cooke Section and Old     
    Randfontein Section, a significant amount of environmental rehabilitation   
will take place.                                                            
Future strategy for Newco                                                       
Harmony and PRF have agreed on a common strategy for Newco, whereby the initial 
focus will be to recapitalise and develop the full potential of both the uranium
and gold resources at Cooke Section. Newco will be responsible for concluding   
its own project finance arrangements, to the extent possible. The proceeds of   
the proposed transaction will be utilised in Harmony`s capital expenditure      
programme as well as for partial repayment of debt.                             
Post project development stage, it is currently the intention to publicly list  
Newco on a recognised securities exchange, which will present an attractive     
investment opportunity to investors seeking dual exposure to both uranium and   
gold.                                                                           
Terms of the Proposed Transaction                                               
Randfontein has agreed, with effect from the date of successful fulfilment of   
the conditions precedent to the Transaction Agreements, to sell Cooke Section   
and the Old Randfontein Section assets as a going concern to Newco for a        
purchase consideration of US$420 million.                                       
The Cooke Section assets include:                                               
-    Cooke 1,2 and 3 Shafts;                                                    
-    Cooke Plant;                                                               
-    Fixed Assets;                                                              
-    Immovable Property;                                                        
-    Goodwill;                                                                  
-    Stock;                                                                     
-    New Order Mining Right;                                                    
-    New Order Prospecting Right; and                                           
-    Tailing Dumps.                                                             
The Old Randfontein Section assets include:                                     
-    Lindum Dumps;                                                              
-    Dump 20;                                                                   
-    the Lindum Dump and Dump 20 Mineral Rights; and                            
-    the Old Randfontein immovable property.                                    
PRF is to acquire 60% of the shares and claims in Newco for an amount of US$252 
million which will be settled in cash in one lump sum.  The remaining           
shareholding of 40% is to be retained by Harmony.                               
Conditions precedent to the Proposed Transaction                                
The Proposed Transaction is subject to, inter alia, the fulfilment of the       
following conditions precedent:                                                 
-    the approval by the Minister of Minerals and Energy and the necessary      
    approvals required in terms of the Minerals and Petroleum Resources         
Development Act, 2002;                                                      
-    the entering into of the Old Randfontein Sale Agreement;                   
-    the entering into of a written toll milling agreement between Newco and    
    Randfontein, in terms of which the Newco is granted the right to make use   
of certain of the toll milling capacity at Randfontein`s processing plant   
    known as the "Doornkop Plant";                                              
-    the entering into a shared services agreement between Newco and            
    Randfontein; and                                                            
-    the approval by the Competition Authorities in terms of the Competition    
    Act, 1998.                                                                  
It is anticipated that all conditions precedent will be met in the second       
quarter of 2008.                                                                
Profile of Pamodzi Resources Fund                                               
Pamodzi Investment Holdings (Proprietary) Limited ("Pamodzi") is a fund advisor 
to PRF, South Africa`s largest private equity fund. With US$1.3 billion in funds
available for investment and a strong and experienced management team, PRF is   
well-positioned as strategic partner to Harmony.                                
Pamodzi, South Africa`s Black Management Forum Progressive Company of the Year  
2007, is a leading diversified investment company. Founded in 1996 by black     
South African professionals and entrepreneurs, the company has raised more than 
R16 billion in debt and equity over the past decade, of which R12 billion has   
come from offshore investors.                                                   
Since inception, the company has built a solid reputation in local and          
international markets for bringing strategic value to its investments and       
generating superior financial returns.                                          
Overview of Cooke Section                                                       
The Cooke 1, 2 and 3 gold mines, which are situated approximately 35 kilometres 
south-west of Johannesburg, are part of Randfontein. The mines are serviced by  
an excellent network of mining and civil infrastructure, with electrical power  
and water readily available. Tailings and waste disposal sites have been        
identified and are currently in use. The Cooke 3 mine is a historical producer  
of gold and uranium, with the uranium section closing down in the late 1980`s   
due to the poor state of the uranium market. Production commenced at the Cooke 1
mine in 1973, at the Cooke 2 mine in 1977 and in 1983 at the Cooke 3 mine. The  
underground orebodies are exploited by means of conventional hard rock mining   
methods involving drilling, blasting, scraping, tramming and hoisting. Ore is   
currently treated at the Doornkop Plant. This plant comprises Run of Mine       
("ROM") milling, thickening, cyanide leaching, CIP adsorption, carbon elution,  
electro-winning, smelting, regeneration and tailings disposal. The Dump 20 sand 
resources are currently treated at the Cooke Plant. Current production for the  
financial year to June 2007 at Cooke 1 was 386,000 tons treated, yielding 2,354 
kg of gold, at Cooke 2 was 349,000 tons, yielding 1,780 kg of gold and treatment
at Cooke 3 was 564,000 tons, yielding 2,841 kg of gold. The surface operation at
Cooke Plant treated 811,000 tons of sand, yielding 590 kg of gold. Total gold   
production planned for the 2007/08 year is 8,425 kg of gold. The Life of Mine   
("LOM") plan for Cooke 1 includes mineable reserves to 2009, for Cooke 2 to 2011
and for Cooke 3 to 2019. However, the Cooke 3 LOM plan only takes into account  
the current reserve blocks of gold. The dual (gold and uranium) pay limits are  
expected to increase both the production volumes and the life of the operations.
The recent rise in uranium prices has made the uranium resources economical. The
tailings dumps will be mined using high-pressure water cannons to re-pulp the   
slurry, which will then be pumped to processing plants and separated into gold  
and uranium using a leach process. The location, ease of processing and the dual
commodity mix should combine to make Cooke Section a viable, low-cost operation.
The following is a summary of the estimated mineral resources which has been    
produced in accordance with the South African Code for the Reporting of Mineral 
Resources and Mineral Reserves (The SAMREC Code) and the Australian Code (The   
JORC Code) contained in the various sections that comprise the Cooke Section and
Old Randfontein Section assets as at 30 November 2007:                          
Total Resources - Gold                                                          
MEASURED                                                       
MINE              TONNES    GRADE                                               
                 (Mt)                                                           
                           Au (g/t)    Au (`000                                 
ounces)                                  
Surface           332.3     0.28        3,027                                   
Underground       36        5.34        6,183                                   
Total             368.3                 9,210                                   
INDICATED                                                      
MINE              TONNES    GRADE                                               
                 (Mt)                                                           
                           Au (g/t)    Au (`000                                 
ounces)                                  
Surface           0,9       0.48        14                                      
Underground       32.2      3.68        3,810                                   
Total             33.1                  3,824                                   
INFERRED                                                       
MINE              TONNES    GRADE                                               
                 (Mt)                                                           
                           Au (g/t)    Au (`000                                 
ounces)                                  
Surface           0         0           0                                       
Underground       224,8     2.39        17,264                                  
Total             224.8                 17,264                                  
TOTAL                                                          
MINE              TONNES    GRADE                                               
                 (Mt)                                                           
                           Au (g/t)    Au (`000                                 
ounces)                                  
Surface           333.2     0.28        3,041                                   
Underground       293.1     2.89        27,257                                  
Total             626.3                 30,298                                  
Underground Reserves - Gold                                                     
                 PROVEN                                                         
MINE              TONNES          GRADE                                         
                 (Mt)                                                           
Au (g/t)   Au (`000                            
                                            ounces)                             
Surface           3               0.68       64                                 
Underground       2.5             8.42       684                                
Total             5.5                        748                                
                 PROBABLE                                                       
MINE              TONNES           GRADE                                        
                 (Mt)                                                           
Au (g/t)   Au (`000                           
                                             ounces)                            
Surface           0.1              1.60       3                                 
Underground       2.6              5.46       465                               
Total             2.7                         468                               
                 TOTAL                                                          
MINE              TONNES           GRADE                                        
                 (Mt)                                                           
Au (g/t)   Au (`000                           
                                             ounces)                            
Surface           3                           67                                
Underground       5.2              6.91       1,149                             
Total             8.2                         1,216                             
Total Resources - Uranium                                                       
                 MEASURED                                                       
MINE              TONNES           GRADE                                        
(Mt)                                                           
                                  U3O8       U3O8 (`000                         
                                  (Kg/t)     pounds)                            
Surface           311.5            0.098      67,555                            
Underground       7.1              0.424      6,638                             
Total             318.6            0.106      74,193                            
                 INDICATED                                                      
MINE              TONNES           GRADE                                        
(Mt)                                                           
                                  U3O8       U3O8 (`000                         
                                  (Kg/t)     pounds)                            
Surface           0.9              0.055      108                               
Underground       3.4              0.547      4,099                             
Total             4.3              0.445      4,207                             
                 INFERRED                                                       
MINE              TONNES           GRADE                                        
(Mt)                                                           
                                  U3O8       U3O8 (`000                         
                                  (Kg/t)     pounds)                            
Surface           0                0.000      0                                 
Underground       27.2             0.500      29,968                            
Total             27,2             0.500      29,968                            
                 TOTAL                                                          
MINE              TONNES           GRADE                                        
(Mt)                                                           
                                  U3O8       U3O8 (`000                         
                                  (Kg/t)     pounds)                            
Surface           312.4            0.098      67,663                            
Underground       37.7             0.490      40,705                            
Total             350.1            0.140      108,367                           
Total Reserve - Uranium                                                         
                 PROVEN                                                         
MINE              TONNES           GRADE                                        
                 (Mt)                                                           
                                  U3O8       U3O8 (`000                         
                                  (Kg/t)     pounds)                            
Cooke Dump        0                0.000      0                                 
Underground       0                0.000      0                                 
Total             0                0.000      0                                 
                 PROBABLE                                                       
MINE              TONNES           GRADE                                        
                 (Mt)                                                           
                                  U3O8       U3O8 (`000                         
                                  (Kg/t)     pounds)                            
Cooke Dump        83.2             0.215      39,446                            
Underground       0                0.000      0                                 
Total             83.2             0.215      39,446                            
                 TOTAL                                                          
MINE              TONNES           GRADE                                        
                 (Mt)                                                           
                                  U3O8       U3O8 (`000                         
                                  (Kg/t)     pounds)                            
Cooke Dump        83.2             0.215      39,446                            
Underground       0                0.000      0                                 
Total             83.2             0.215      39,446                            
Unaudited pro forma financial effects of the Proposed Transaction               
The table below sets out the unaudited pro forma financial effects of the       
Proposed Transaction on Harmony. The unaudited pro forma effects are prepared   
for illustrative purposes only and may not fairly present Harmony`s results,    
financial position and changes in equity after the Proposed Transaction. It has 
been assumed for the purposes of the pro forma financial effects that the       
Proposed Transaction took place with effect from 1 July 2006 for income         
statement purposes and 30 June 2007 for balance sheet purposes.                 
The unaudited pro forma financial effects are the responsibility of the         
directors of Harmony.                                                           
                        Before the    Pro forma     Change                      
                        Proposed      after the     (%)                         
                        Transaction   Proposed                                  
Transaction                               
Basic profit - cents     86            487           466%                       
per share                                                                       
Headline profit - cents  43            63            46%                        
per share                                                                       
Net asset value ("NAV")  5 902         6 291         7%                         
- cents per share                                                               
Net tangible asset       5 325         5 714         7%                         
value ("NTAV") - cents                                                          
per share                                                                       
Number of shares in      397 910 797   397 910 797   -                          
issue                                                                           
Notes:                                                                          
The "Before the Proposed Transaction" financial information is based on         
Harmony`s published audited results for the financial year ended 30 June 2007.  
The "Pro forma after the Proposed Transaction" column is based on the assumption
that the disposal was effective on 1 July 2006 for basic profit per share and   
headline profit per share. It is assumed that the cash proceeds from the        
Proposed Transaction have been placed on deposit and generated interest at a    
rate of 10.5% per annum before tax.                                             
The "Pro forma after the Proposed Transaction" column is based on the assumption
that the Proposed Transaction was effective on 30 June 2007 for NAV and NTAV    
purposes.                                                                       
Randfontein                                                                     
19 December 2007                                                                
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Enquiries                                                                       
Graham Briggs                                                                   
Acting Chief Executive                                                          
+27(0)11 411 2012                                                               
+27 (0) 83 265 0274                                                             
Amelia Soares                                                                   
General Manager, Investor Relations                                             
+27 11 411 2314 or                                                              
+27(0)82 654 9241                                                               
Date: 19/12/2007 08:00:01 Supplied by www.sharenet.co.za                     
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