Annual Report 2010 Annual Report 2010

South Africa

Brownfields exploration

Evander South

An 18-month drilling programme was completed early in FY10 involving 24 671 metres of percussion and diamond drilling from 43 holes. The information provided was used to evaluate and update the geological resource model. These results were in turn incorporated into the pre-feasibility study.

Results of the initial drilling programme showed a shift in the location of the Kimberley Reef sub-crop to the east, which removed a significant portion of the shallow part of the target area. However, an additional, larger, less shallow resource was identified. New estimates are of a total resource of 8.1 million ounces (64.31 million tonnes at an average grade of 3.92g/t), a slight increase when compared to the 2007 estimate.

The results of a new pre-feasibility study showed that the orebody could be mined profitably, however insufficient higher grade ore exists to significantly overcome the initial capital cost. A further phase of drilling to convert inferred resources to higher grade indicated resources is required to improve this project's ranking within Harmony’s portfolio of projects


Exploration at the Poplar area, which is located six kilometres to the north of Evander South, has been conducted by the many previous owners of this property over the past 50 years. The June 2010 resource and reserve declaration reports an indicated resource of 17.2Mt at an in-situ grade of 9.28g/t.

The Poplar resource is located at relatively shallow depths of between 500 metres and 1 300 metres, which will allow the project, once it has been approved, to produce its first gold within five years.

Harmony began a 12-month drilling programme in the last quarter of FY10. This programme involves the drilling of 20 holes, (19 000 metres) made up of holes that are to be twinned alongside old boreholes, infill drilling and holes drilled to test the location of the sub-crop. By year end, 4 180 metres had been drilled and two holes completed, both of which intersected the Kimberley reef facies. Sample results are awaited. Results from this drilling programme will be used to update and revise the 2003 pre-feasibility study.

Joel North

A surface drilling programme was undertaken and completed at Joel during the course of FY10. In all, 8 883 metres were drilled. The results of this programme, which involved the drilling to a depth of between 1 250 and 1 400 metres in the area to the north of the current working of the Joel mine, will be used to upgrade the Joel mine’s resource between levels 129 (currently the lowest operational level at Joel) and 137. Accessing this ground will involve either the re-equipping of the main shaft, deepening of the lift shaft or the development of a one level decline.

Initial drilling results indicate a wide variety of facies types are present from west to east. In the west (LB27 and LB28), the presence of the Aandenk reef below the Beatrix reef appears to considerably enhance the grade. All intersections showed unfaulted reef bands except for LB25, in the centre, which intersected two reefs, separated by a small reverse fault. The reef is a hybrid composite of VS5, Beatrix and Aandenk. LB24 indicates Beatrix reef, while in the east (LB23 and LB22), VS5 and BV (a reworked VS5/Beatrix composite) dominate.

As a result of this drilling programme and on-shaft facies investigation, the geozones for Joel have been altered to include the area of Aandenk reef in the north-west. This resulted in a re-evaluation of 129, 137 and 145 levels, based on the new geozones. Initial indications are that the Joel North resource has been substantially increased.

Retreatment projects

Project Saints

Project Saints, a proposed retreatment project similar to that of Project Phoenix, has been approved by the board at a cost of R792 million. Project Saints, which is also located in Free State province, involves demothballing and upgrading the St Helena gold plant to enable the retreatment of 1 million tonnes of tailings per month. The focus of this project will be the eight tailings dams found in the Virginia and Welkom area which together make up about a third of the total resource available for retreatment.

Detailed modelling of each dam and the project feasibility study was completed, with particular attention paid to grade distribution and the mining methodology to be used. Additional drilling was undertaken, and the models updated once the assay results had been received. The environmental management programmes have been approved by the Department of Environment and Tourism (DEAT). A final feasibility gate-keeping session was held during the year.

The first phase of the project has an estimated capital expenditure budget of R792 million (the R314 million capital budget for the second and last phase of this project will only be spent in year 8 and will be funded by the project itself). Project Saints is expected to yield a monthly average of 4 225 ounces of gold over a projected life of 20 years. Production should begin 15 months from the start of construction.

A related pre-feasibility study has begun on extracting uranium from exactly the same Free State tailings dam material as will be treated by Project Saints. This will involve the construction of a newly built uranium extraction plant at an estimated cost of R1 097 million. This pre-feasibility study is due to be completed by the end of December 2010. Indications are that this related project could yield 930 000lbs per annum of U3O8.

Project Saints and its related uranium treatment project has several environmental advantages. Following the reprocessing of the material from the eight old tailings dams, the resultant waste material will be disposed of in two larger new tailings dams, to be built using modern, improved technology that incorporates stricter design and construction specifications and is more environmentally friendly. As material from these old dams is re-treated, the resultant tailings will be deposited onto the new larger tailings dams, the first of which will be full after eight years (hence the need for further capital in year 8) and the second of which will have enough capacity to see the project through to completion. This project is expected to create approximately 200 permanent jobs in the Free State.

Project Libra

Based on an extensive drilling programme undertaken in the vicinity of Evander, a planned surface retreatment project is being considered. Results from drilling done on three tailings dams (Kinross, Winkelhaak and Bracken/Leslie) indicate that a viable business case can be made for such a project, Project Libra. The three tailings dams contain 203 million tonnes of plant tailings at an average grade of 0.29g/t.

Having considered various options, it was decided to conduct an initial pre-feasibility study on a mini-retreatment (mini-Libra), lower tonnage option that makes use of spare capacity at the Kinross plant. This initial evaluation of the Kinross plant equipment and the available deposition sites has indicated that such an operation could be implemented at a cost of R126 million. If successful, the pre-feasibility study, scheduled for completion by December 2010, will be followed by a feasibility study that is due to be completed by May 2011. Should mini-Libra be approved, it will require a 12-month construction period. Estimates are that mini Libra will yield 370 kilograms (12 000 ounces) per annum at an operating cost of R126 300/kg over the 10-year duration of the operation.

Project TPM

Ore from Harmony’s Free State mines contains uranium as a by-product of gold processing and the TPM Project envisages treating current arisings from the Tshepong, Phakisa and Masimong (TPM) mines primarily for uranium. The initial concept is to reroute the milled ore from these mines, which is treated at the Harmony 1 gold plant, to a uranium plant initially, from where, once the uranium has been extracted, the arisings will be returned to the gold plant for gold extraction. This has the added advantage of improving subsequent gold recovery rates.

A sampling programme was conducted over a period of 12 months and the results used to develop resource models for the TPM shafts. A comprehensive set of procedures relating to uranium sampling and assaying was also finalised. Environmental impact specialist studies on the building of a new uranium plant were completed and incorporated in the environmental management plan (EMP) that was submitted in March 2010.

A pilot flotation plant was constructed and flotation test work performed. The primary aim of the plant was to confirm sulphur recoveries and to optimise the reagent suite for uranium extraction, using live feed from the Harmony 1 plant.

Capital was approved for a feasibility study, which will include a resin-in-pulp demonstration plant, that is scheduled for completion in May 2011. The demonstration plant will start in October 2010 with the test work programme scheduled for completion by the end of December 2010. The feasibility study will develop and present a comprehensive and detailed description of the final optimised process and plant design for the project. Thereafter, and upon final project approval, the actual plant is scheduled to take two years to build, after which first production will begin.

The aim is to have a plant that can extract 750 000lbs/annum of U3O8 at a cost of around US$25/lb. The initial capital outlay is estimated to be around R1.4 billion.

In addition, studies to investigate the viability of extracting uranium from tailings facilities at Harmony’s other Free State operations are under way. The most likely source of tailings for such a venture would be directly from the current gold tailings retreatment operation of Project Phoenix (Saaiplaas plant) and the envisaged Project Saints (St Helena).