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Hidden Valley

Hidden Valley mine, part of the 50:50 joint venture between Harmony and Newcrest, is in a highly prospective area of Morobe Province PNG, some 300 kilometres north-west of Port Moresby. The first quarter of the review period marked an exciting milestone for Harmony when the mine was officially opened at a ceremony on 30 September 2010 attended by PNG dignitaries, directors and senior management of Harmony and Newcrest and employees. Hidden Valley, with its significant gold and silver reserves, is Harmony’s first offshore greenfields project, and is an important step in our company’s strategy for geographical and asset diversification. Equally, the experience gained in developing Hidden Valley will be valuable as we continue to seek growth, both in Morobe Province as part of the joint venture and elsewhere in PNG on our exploration portfolio.

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 the annual report
.

Safety

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.

Operations review

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.

Key statistics

Production		FY11†	FY10     production*†	FY10     capitalised*†
Volumes milled	000t (metric)	1 679	304	–
	000t (imperial)	1 852	335	–
Gold produced	kg	3 118	465	1 438
	oz	100 246	14 939	46 234
Silver produced	kg	20 934	2 423	4 504
	oz	673 032	77 896	144 821
Gold – average recovered grade	g/t	1.86	1.53	–
	oz/t	0.054	0.045	–
Silver – average recovered grade	g/t	12.47	7.97	–
	oz/t	0.401	0.233	–
Financial
Revenue	R million	976	79	–
	US$ million	140	10	–
Operating costs	R/kg	223 019	244 721	–
	US$/oz	993	1 003	–
Operating profit	R million	261	16	–
	US$ million	37	2	–
Capital expenditure	R million	289	44	497
	US$ million	42	6	65
People
Number of employees
Employees		950	806
Contractors		1 440	892
Total		2 390	1 698
Training and development expenditure	R million	2.8	2.9
Safety
Fatalities		0	1
LTIFR	Per million hours worked	0.2	0.7
Environment
Electricity used	000MWh	108	105
Water used for primary activities	000m3	1 533	1 843
GHG emissions	000t CO2e	675	128

* Commercial production began in May 2010.

† Represents Harmony’s 50%.