Other South African operations

Bambanani regrettably had three fatalities in FY11 (FY10: one) and reported an LTIFR of 10.74 per million hours worked (FY10: 9.29). This is an unsatisfactory performance, and more work is being done to improve safety behaviour.

More detailed information on safety performance and Harmony’s sustainable development concerns in South Africa can be found in the online sustainable development reports, with a summary on pages 6 to 15.

Bambanani employed 3 820 people in FY11 (including 402 contractors).

Detailed information on Bambanani’s resources and reserves appears in the mineral resources and mineral reserves section of this annual report.

In FY11, 426 000 tonnes were milled, down 19% from FY10. Recovered grade decreased 11% to 6.95g/t. Both contributed to the lower gold produced.

Volumes were severely affected by refrigeration constraints from September 2010 to January 2011. Following the seismic event in September, which resulted in two fatalities, we conducted a safety risk review on the remnant pillars. Mining on all remnant pillars along the major fault structure was stopped. These were very high-grade pillars, which affected the overall grade of the operation.

Bambanani is preparing to mine the shaft pillar in the near future and production in the sub-shaft will therefore stop soon, as the orebody in this area of the mine is almost depleted. We anticipate that the shaft pillar will be mined for around eight years from 2013.

Shaft-pillar preparation has proceeded well, with major equipping in the incline shaft set to begin in December 2011. The incline shaft is alternative infrastructure to replace the main shaft infrastructure which will be destroyed below 60 level during shaft pillar extraction.

The only development left at Bambanani is capital waste metres for the shaft pillar project and follow-on development for cleaning purposes. Similarly, at Steyn 2, only capital waste metres for the shaft pillar project are outstanding.

Mining in the decline area will end in the next six months, after which mining will take place around the high-grade shaft pillar over the next eight to ten years. Backfill will be used to minimise ground control-related risks when mining begins in the shaft pillar in 2013.

Equipping of the Steyn 2 shaft, in build-up phase, continues to improve face length flexibility.

Revenue and cash operating profit decreased significantly in both rand and dollar terms, despite the higher average gold price received for the year. This was due to lower ounces sold. Revenue was R921 million (US$132 million) and cash operating profit R93 million (US$14 million), down by 17% and 75% respectively. Production cost of R828 million (US$118 million) for the year was 11% higher (20% up in dollar terms).

The year-on-year cash operating cost increased mainly on a 26% increase in the cost of electricity, which now constitutes 28% of the total cost of operation. Excluding this, operating costs rose 8.9% year on year. A higher labour cost reflects annual salary increases as well as an increase in the average staff complement of 278.

Capital expenditure rose by 55% in FY11 to R321 million, including R162 million in capital costs for the Steyn operations. The majority of the remaining capital at Bambanani East was for the shaft-pillar work other south african operations