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HARMONY GOLD MINING COMPANY LIMITED - Harmony announces new plan to return Kusasalethu to profitability

Release Date: 02/12/2014 12:00:00      Code(s): HAR       PDF(s):  
Harmony announces new plan to return Kusasalethu to profitability

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 announces new plan to return Kusasalethu to profitability

Harmony Gold Mining Company Limited („Harmony") advises that, following
an intensive performance review of its Kusasalethu mine near
Carletonville, a new plan is being implemented to return the mine to
profitability.

Graham Briggs, Harmony chief executive officer, said “Kusasalethu has
not returned to profitability after various setbacks. We need to be
both decisive and mindful in our actions so that we preserve the
viability of this mine for several decades to come. Without these
actions, this mine will not survive and that would indeed be a tragedy
for our company, our employees, our communities and our country.”

Kusasalethu has consistently recorded losses since September 2012. The
mine recorded negative free cash flow of R392million in the financial
year ended June 2014 and negative free cash flow of R112 million
between July and October 2014.   This is despite ongoing improvement
initiatives and continued investment in the mine (some R3.9 billion in
capital since 2001) to improve the mine's performance. Engineering
infrastructure and water reticulation failures in the past year
exacerbated the underperformance at the mine further, as have excessive
stoppages for various reasons, including illegal mining activities.

The current situation is clearly unsustainable. Harmony's intention is
to restore the mine to profitability in the fourth quarter of the
current financial year and – in so doing – preserve as many jobs as
possible. The new plan will entail mining lower volumes at higher
grades at a reduced cost.

Kusasalethu has commenced a Section 189 consultation process in terms
of the Labour Relations Act and will seek to engage with representative
unions in evaluating various options. The parties will, over the next
60 day consultation period consider a number of avoidance measures that
may include offering voluntary separation and, early retirement
packages to employees and seek to transfer as many employees as
possible to vacancies that exist elsewhere in the company. Kusasalethu
currently employs about 6 300 people (including contractors).

In conclusion, Mr Briggs reiterated Harmony's commitment to work with
its social partners – government, unions, employees and shareholders –
in arriving at a sustainable solution.
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)



2 December 2014

Sponsor:
J.P. Morgan Equities South Africa Proprietary Limited

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