Steady-state operations

Overall safety performance at Masimong improved in FY11, with the mine achieving one million fatality-free shifts at the interim stage. Regrettably, there was a subsequent fatality (FY10: one). The LTIFR deteriorated to 13.13 per million hours worked (FY10: 7.37).

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 6 to 15 of this report.

Masimong employed 3 187 people in FY11, including 137 contractors.

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

Masimong remains one of Harmony’s lowest-cost producers. Volumes milled decreased marginally year on year by 3% to 868 000 tonnes with gold produced 12% lower at 137 605oz.

In line with Masimong’s mine plan, grade declined by 8% to 4.93g/t, mainly on lower grades from B Reef. Maintaining grades on the B Reef is challenging as mining moves out of the high-grade channels. Grades mined on the Basal Reef were consistently good, but started to decline towards the end of the year, due to an underlying sill in the north-east area, and completion of mining in the high-grade south-west 7 line.

The infrastructural upgrade completed in FY10 is producing the expected improvements in productivity, efficiencies and output, facilitated by the process of cycle mining in which specific tasks are performed on specific days.

However, results for the period were affected by an underground lock-up of tonnes at the interim stage, caused by a ventilation change-over process and unwarranted stoppages by the Department of Mineral Resources. To address Masimong’s historical ventilation issues, the whole ventilation circuit was changed from a booster fan system which itself generated heat. The process was completed in three days and improved ventilation conditions are already evident. A new refrigeration plant will be installed by September 2011.

Following the upgrade programme, production face advances are planned to increase and every effort made to ensure that panels are well equipped and crews motivated. In addition, steps have been taken to overcome the erratic grade of the B reef.

Revenue was 4% up to R1 326 million and by 13% to US$190 million. Costs rose by 21% to R177 130/kg and, in dollars, by 31% to US$788/oz, making Masimong the lowest-cost producer among Harmony’s operations. The higher gold price achieved in dollars and the weaker rand resulted in operating profit decreasing by 1% to R570 million and increasing by 8% to US$82 million.

Capital expenditure of R178 million (US$26 million) was spent largely on the refrigerator plant, Masimong 4 plug, e-learning and the infrastructure upgrade.