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HARMONY GOLD MINING COMPANY LIMITED - Harmony refocuses assets for long term sustainability

Release Date: 19/08/2014 10:45:00      Code(s): HAR       PDF(s):  
Harmony refocuses assets for long term sustainability

Harmony Gold Mining Company Limited
Registration number 1950/038232/06
Incorporated in the Republic of South Africa
ISIN: ZAE000015228
JSE share code: HAR
(“Harmony” or “the Company”)

Harmony refocuses assets for long term sustainability

• Target 3 to be placed on care and maintenance
• Consultation with labour has begun - job loss avoidance measures a
• Engagement with relevant stakeholders at all levels
• Production guidance provided for FY2015

Further to the announcements made during the reporting of Harmony Gold
Mining Company Limited’s (“Harmony” and/or “the Company”) results for
the quarter and year ended 30 June 2014 on Thursday, 14 August 2014,
the Company advises of the following:

Target 3 to be placed on care and maintenance

Despite numerous initiatives by both management and organised labour to
return Target 3 to profitability, this operation has continued to
record cash flow losses. Given the current gold price environment, and
the significant capital investment required to sustain operations at
this shaft, Target 3 is predicted to continue to make a loss in the
foreseeable future. Target 3 made a cumulative loss of approximately
R260 million in the past 4,5 years. Additional development and
equipping is required to access the targeted South Block to sustain
operations at Target 3 and, in particular the build-up in Basal reef
stoping. While the targeted South Block remains a valuable resource,
the shaft will be placed on care and maintenance once the requirements
of a section 189 process have been fulfilled. Target 3 currently
employs approximately 1 500 people.

Consultation and engagement

The cessation of operations at Target 3 will have an impact on
employees and contractors. As far as it is possible to do so, measures
will be taken to minimise and/or avoid job losses. Such measures
include offering voluntary separation packages to eligible employees,
early retirements, transferring employees where skills match current
vacancies at other Harmony operations and re-skilling employees for
redeployment into alternative jobs where possible within the company.

Engagement with the Department of Mineral Resources, the Matjhabeng
Local Municipality and the Free State Provincial government has begun.
Harmony CEO Graham Briggs, said: “In developing our safe and realistic
operational plans for FY15, we were informed by the need to improve our
margins, carefully assessing the ability of each of our assets to be
profitable at current gold prices.”

Production guidance

Harmony’s guidance of approximately 1.2 million ounces at an all-in
sustaining cost of R410 000- R430 000/kg (~US$1 150 - 1 300oz¹) for
FY15 supports the Company’s medium and long-term objective of
positioning it as a competitive, value-focused gold mining company.
Below is the production guidance for each of Harmony’s operations for

¹ An exchange rate of R10.50/US$ was used

                FY14 - gold
                                Range for FY15
 Operation      production
                                production (oz)
                results (oz)
Kusasalethu           150 916   190 000 - 200 000
Doornkop              83 687     95 000 - 105 000
Phakisa               95 680     95 000 - 105 000

Tshepong             135 772    135 000 - 145 000

Masimong              87 385      85 000 - 90 000

Hidden Valley        105 840    100 000 - 110 000

Target 1             144 453    120 000 - 130 000

Bambanani             82 821      80 000 - 90 000

Joel                  75 072      70 000 - 80 000

Unisel                59 093      55 000 - 60 000

Target 3              45 429      11 000 - 14 500
                      55 878      60 000 - 70 000
Kalgold               37 358      40 000 - 45 000

Total               1.17moz       ~ 1.2moz

For more details contact:

Henrika Ninham
Investor Relations Manager
+27 (0) 82 759 1775 (mobile)

Marian van der Walt
Executive: Corporate and Investor Relations
+27 (0) 82 888 1242 (mobile)

19 August 2014

J.P. Morgan Equities South Africa Proprietary Limited

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