As reported in FY10, an explosion underground shortly after year end tragically resulted in five fatalities (FY10: three). There were no further fatalities in the review period. The LTIFR for FY11 was 10.27 per million hours worked (FY10: 8.40).

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.

Phakisa employed 3 105 people in FY11, including 239 contractors.

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

Milled volumes increased by 14% year on year. This, together with a 13% improvement in recovered grade mined, contributed to a 29% increase in gold produced to 56 649oz as part of the build-up strategy.

The start of the review period was tragically marred for Phakisa after an explosion, caused by an underground fire, in which five mine rescue team members died while manning a fresh-air base. This event also resulted in the loss of 13 production days, exacerbated by an ice-pipe failure in the shaft and fire in the 66 – 63 stope.

The production build-up was affected by geological issues, illegal mining activities and down-time on the new infrastructure. Pleasingly, Phakisa set a record of 1 763t ice per day, resulting in water temperatures of <6°C which in turn improved both ventilation and productivity. Some remaining issues with the ice plant as well as settler failure at Nyala are being addressed.

Phakisa key statistics

Equipment salvaged from the closed Merriespruit 1 shaft early in the period reduced the need for capital spent on equipment. Most of phase 1 infrastructure was completed before the interim stage and modifications to loading boxes on 77 level by the new year.

Since it is still a new mine, development at Phakisa is currently centred close to the shaft in the lower-grade areas. The major drive is on developing the area to the north to access higher-grade zones and move closer to the average reserve grade. Grades will improve further as development progresses towards the north and more reef is exposed in the major north-west to south-east trending Basal Reef payshoot.

Revenue for the year rose by 47% to R551 million, boosted by the increase in production and higher gold price received. In dollar terms, revenue was up 58% to US$79 million. Costs increased as a result of production build-up costs and the cost of employees transferred from closed shafts to Phakisa. With the transition from project phase into production, a portion of Phakisa’s commissioning costs were capitalised. Cash operating costs in rands increased by 16% to R269 531/kg and were 26% up in dollar terms to US$1 200/oz.

Capital expenditure for the year was R369 million (US$53 million), the bulk of which was spent on the expansion project as well as ongoing development and maintenance of major equipment.