Other South African operations

There was regrettably one fatality at Unisel during the period (FY10: five), with the LTIFR at 11.57 per million hours worked (FY10: 12.86).

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.

Unisel employed 1 870 people in FY11, including 68 contractors.

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

The FY10 review of Harmony’s asset portfolio included the economic viability of the Virginia operations, characterised by depleted orebodies, mature infrastructure and low grades. Accordingly, Brand 3, Harmony 2 and Merriespruit 3 were closed.

After careful review, the company announced in October 2010 that it would also close Merriespruit 1 shaft. Earlier in the period, a productivity-linked deal with trade unions was reached allowing Merriespruit 1 to continue operations, provided it did not make a loss (on a total cost basis, including capital expenditure) for two consecutive months and total costs remained under R250 000/kg. Despite the best endeavours of the operational team, Merriespruit 1 failed to meet these conditions and closure procedures started. After formal consultation with employees on alternatives to retrenchment, 1 200 of the 1 470 employees affected by closure were transferred to our growth operations, resulting in minimal and mainly voluntary retrenchments. The company also successfully renegotiated mortgage conditions for affected employees to preserve their homes.

As a result of restructuring the Virginia operations, production for the year was down 65% to 576 000 tonnes milled. However grade improved markedly, validating the decision to close the loss-making shafts. Gold production decreased 58% to 71 149oz.

At Unisel, both Basal and Leader Reef development produced good results after environmental constraints in the E block were removed by the completion of the cooling project. Middle reef development focused on the decline area pillars and was affected by seismicity and poor ground conditions. No development was undertaken on the A or B Reefs. Overall, the shaft produced reserves on the Basal and Leader Reefs. Future development will continue to focus more on the better-grade E block and portions of the Brand 5 shaft pillar.

Revenue decreased 52% to R682 million. Following the closure of Merriespruit 1, cash operating costs decreased by less than 1% to R250 193/kg (US$1 114/oz). However, operating profit rose by 60% to R120 million (US$18 million) after the closure of loss-making units. Capital expenditure of R79 million (US$11 million) was spent largely on ongoing development (69%), maintenance and other shaft capital (31%).