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HAR - Harmony Gold Mining Company Ltd - Press release

Release Date: 07/02/2011 08:00:01      Code(s): HAR
HAR - Harmony Gold Mining Company Ltd - Press release                           
Harmony Gold Mining Company Ltd                                                 
Incorporated in the Republic of South Africa                                    
Registration number: 1950/038232/06                                             
Share code: HAR                                                                 
ISIN: ZAE000015228                                                              
PRESS RELEASE                                                                   
Growth projects starting to deliver results - higher production and lower       
Johannesburg, 7 February 2011: Harmony today announced its results for the      
second quarter and six months ended 31 December 2010 of financial year 2011.    
"Growth projects are clearly starting to deliver results with higher            
production and lower costs. We have seen continued progress from numerous       
management initiatives at Doornkop, Phakisa and Hidden Valley. The star of      
the show has been our Papua New Guinean operations. It has been particularly    
pleasing to see good progress here, with improved production at Hidden Valley   
and positive exploration developments at Wafi-Golpu", said chief executive      
officer Graham Briggs.                                                          
He added that "operating profit for the quarter increased by R215 million       
(33%) to R867 million, compared with R652 million in the September 2010         
Commenting in greater detail on the results, Briggs notes that production at    
Doornkop, Phakisa and Hidden Valley improved substantially, by 19%, 34% and     
23% respectively. While total gold production decreased by 4% quarter-on-       
quarter, from 10 471kg to 10 055kg, this was mainly as a result of safety       
stoppages at Bambanani and Kusasalethu, and this trend is set to recover.       
While volumes were 8% lower than the previous quarter at 4 675 000t, the        
average yield was 4% higher at 2.11g/t. Underground gold production was 5%      
lower at 8 273kg, as volumes were 4% lower at 1 759 000t and the underground    
grade declined by 2% to 4.6g/t.                                                 
Both Tshepong and Masimong showed a steady production performance, with         
Masimong still the lowest cost producer at R168 907/kg.  Target 3 is back on    
track, with a 57% improvement in tonnes mined. Joel is also back in             
production. Following the closure of Merriespruit 1, the Virginia operations,   
now comprising solely of Unisel,  produced net free cash of R43 million         
(compared with a loss of R36 million in the previous quarter), validating the   
decision to close the loss-making shafts.                                       
Gold production at Hidden Valley increased by 23% to 53 169oz and silver        
production increased by 44% to 382 655oz quarter-on-quarter (50% attributable   
to Harmony). Hidden Valley is a high value asset for Harmony and it is          
particularly pleasing to see improved results after some commissioning          
Countering these production improvements was Evander 8, which experienced a     
drop in face grade causing gold production to decrease by 6%. Kalgold`s grade   
and volume was lower quarter-on-quarter and gold production decreased by 8%.    
Bambanani`s volume declined by 19%, as grade rose by 3%. The Steyn 2            
production plan was revised and the major focus will now be to get the shaft    
pillar into production by August 2011.                                          
Briggs said that "we faced operational challenges during the quarter, such as   
the unplanned production stoppage at Kusasalethu, but the necessary measures    
to rectify this have been implemented and I am confident the operation will     
meet its targets next quarter."                                                 
The rock/ventilation shaft accident which occurred in October 2010 at           
Kusasalethu restricted hoisting and was the main contributor to the group`s     
overall lower production. The shaft is now back to hoisting capacity and the    
underground accumulations of the December 2010 quarter will be rectified.       
The rand per kilogram unit cost for the December 2010 quarter decreased by 5%   
quarter-on-quarter to R216 595/kg from R228 658/kg. This is mainly              
attributable to the decrease in cash operating costs, which declined by R225    
million (10%). The primary factors for the decrease were the lower              
electricity (winter tariffs of R147 million) and lower labour costs, as a       
result of Harmony`s restructuring efforts.                                      
In rand per kilogram terms, the gold price received increased by 6% from R287   
401/kg in the September 2010 quarter to R303 354/kg in the current quarter. A   
decrease in the gold sold for the December 2010 quarter of 823kg (8%) to 10     
046kg resulted in a drop in revenue of 3% compared to the previous quarter.     
Capital expenditure increased by R88 million (12%) to R835 million in the       
quarter under review compared with R747 million in the September 2010           
quarter, in line with the company`s mine plans.                                 
The Golpu resource continues to expand to the north as drilling continues to    
define further mineralisation. A significant intersection of 595m @ 2.03%       
copper and 1.65g/t gold (5.0g/t gold equivalent) has been reported. The         
drilling campaign this quarter included the drilling of boreholes to gain       
metallurgical samples of Wafi and geotechnical information for the Watut        
decline. The pre-feasibility study technical work packages have been            
allocated to various consultants and are progressing well.                      
"We remain confident that we will reach our long-term targets and our focus     
is to increase production to 2Moz of gold by FY13, with costs per tonne         
milled in the lowest quartile of South African producers. The company has       
turned the corner - unprofitable operations were closed and our longer-life     
lower cost operations are profitable and sustainable. With the closure of       
some shafts and unplanned production setbacks during the first six months of    
financial year 2011, production for the financial year 2011 will most likely    
be between 1.45Moz and 1.5Moz", said Briggs.                                    
For more details contact:                                                       
Marian van der Walt                                                             
Executive: Corporate and Investor Relations                                     
+27 82 888 1242 (mobile)                                                        
Henrika Basterfield                                                             
Investor Relations Officer                                                      
+27 82 759 1775 (mobile)                                                        
Corporate Office:                                                               
Randfontein Office Park                                                         
P O Box 2                                                                       
South Africa 1760                                                               
T: +27 11 411 2000                                                              
7 February 2011                                                                 
J.P. Morgan Equities Limited                                                    
Date: 07/02/2011 08:00:01 Supplied by www.sharenet.co.za                     
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