While there were challenges in developing Hidden Valley – given its remote location and relative lack of infrastructure – the government and communities of PNG and Morobe Province have provided enormous support, and worked closely with the joint venture partners to ensure this development makes a long-term, positive and sustainable contribution to the region.

Hidden Valley has two open pits in production, some 5km apart: the Hamata pit exploits the Hamata gold orebody, and the larger Hidden Valley pit exploits the Hidden Valley and Kaveroi gold and silver orebodies. The joint venture is actively exploring on the mining lease and if additional resources are identified, the life of the operation could be extended. The resource development drilling programme under way is detailed on page 115 and potential plant expansion studies are being reviewed.

Hidden Valley employed an average of 2 390 people in FY11, including 1 440 contractors.

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

As production ramps up at Hidden Valley, the implementation of a comprehensive risk management strategy is evident in the excellent safety performance for the year, with zero fatality (FY10: one) and only one lost-time injury, resulting in an LTIFR of 0.2 (FY10: 0.7). A key aspect of the risk management strategy is ensuring that each work function is undertaken within a risk management framework, and that hazards are identified and managed to maintain this safety performance.

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

In FY11, 3.4Mt were processed to yield 200 492oz of gold and 1 346 064oz of silver, 50% attributable to Harmony.

The planned ramp-up of throughput rates were interrupted in the third quarter when a conveyor belt splice failed on the Hidden Valley conveying circuit. The work required to reinstate and recommission the belt was scheduled to be completed by the end of quarter 1 in the new financial year. Much of the production impact of this event was mitigated via rapid mobilisation of additional contractor haulage trucks, which were used to haul ore from the Hidden Valley stockpile to the process plant. As a result of this unexpected situation annual production came in at the lower end of management guidance, with gold recoveries reaching nameplate levels and a significant increase in silver recoveries compared to 2010 levels.

Hidden Valley key statistics

A programme to systematically identify constraints in the process plant and to optimise plant capacity and performance is under way. This will facilitate plant throughput rates achieving nameplate in the second quarter of FY12, after reinstatement of the Hidden Valley overland conveyor.

Hidden Valley mine was connected to the national electricity grid in the third quarter, and is receiving up to 10MW of grid power (50% – 60% of total requirements). This has already reduced operational costs in terms of trucking diesel to site, with concomitant environmental benefits, and lessened demand on the site’s diesel-fired power station. In terms of the offtake agreement in place, the national utility benefits from securing a large customer which, in turn, will support its infrastructural development and rural electrification programme.

In FY11, additional waste dump capacity was created as part of a long-term strategy to match waste dump capacity to the target mining rate. This ensures that all waste rock mined at Hidden Valley is retained on site and that the potential for impacts on the Watut River is minimised and managed effectively.

Innovative waste dump designs that require less rock are successfully addressing this requirement and have allowed a steady ramp-up in the open-pit mining rate in FY11.

Implementation of Hidden Valley’s policy of community engagement and local employment, as well as training local employees, continued throughout the year. The progress made in mitigating the mine’s impact on the Watut River is detailed in the environmental section of the sustainable development report.

Hidden Valley generated revenue of R976 million (US$140 million) for the year, with total cash operating costs after silver credits of R223 019/kg (US$993/oz). Attributable capital expenditure by Harmony during the year was R289 million (US$42 million), which included work on approved mine development (sustaining capital) projects, process plant debottlenecking, new mobile equipment and mine expansion feasibility studies.