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Bambanani

Bambanani mine is near Welkom. It has two surface shafts (including Steyn 2) and a sub-shaft, with ore conveyed 7 kilometres to Harmony 1 plant for processing. This deep-level operation conducts mostly scattered mining on the Basal Reef with roughly a quarter of mining activities focused on remnant pillar extraction. Development is under way in preparation for the extraction of the shaft pillar, due to begin in 2013.

Safety

Bambanani regrettably had three fatalities in FY11 (FY10: one) and reported an LTIFR of 10.74 per million hours worked (FY10: 9.29). This is an unsatisfactory performance, and more work is being done to improve safety behaviour.

• More detailed information on safety performance and Harmony’s sustainable development concerns in South Africa can be found in the online sustainable development report.

Bambanani employed 3 820 people in FY11 (including 402 contractors).

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

Operations review

In FY11, 426 000 tonnes were milled, down 19% from FY10. Recovered grade decreased 11% to 6.95g/t. Both contributed to the lower gold produced.

Volumes were severely affected by refrigeration constraints from September 2010 to January 2011. Following the seismic event in September, which resulted in two fatalities, we conducted a safety risk review on the remnant pillars. Mining on all remnant pillars along the major fault structure was stopped. These were very high-grade pillars, which affected the overall grade of the operation.

Bambanani is preparing to mine the shaft pillar in the near future and production in the sub-shaft will therefore stop soon, as the orebody in this area of the mine is almost depleted. We anticipate that the shaft pillar will be mined for around eight years from 2013.

Shaft-pillar preparation has proceeded well, with major equipping in the incline shaft set to begin in December 2011. The incline shaft is alternative infrastructure to replace the main shaft infrastructure which will be destroyed below 60 level during shaft pillar extraction.

The only development left at Bambanani is capital waste metres for the shaft pillar project and follow-on development for cleaning purposes. Similarly, at Steyn 2, only capital waste metres for the shaft pillar project are outstanding.

Mining in the decline area will end in the next six months, after which mining will take place around the high-grade shaft pillar over the next eight to ten years. Backfill will be used to minimise ground control-related risks when mining begins in the shaft pillar in 2013.

Equipping of the Steyn 2 shaft, in build-up phase, continues to improve face length flexibility.

Financial review

Revenue and cash operating profit decreased significantly in both rand and dollar terms, despite the higher average gold price received for the year. This was due to lower ounces sold. Revenue was R921 million (US$132 million) and cash operating profit R93 million (US$14 million), down by 17% and 75% respectively. Production cost of R828 million (US$118 million) for the year was 11% higher (20% up in dollar terms).

The year-on-year cash operating cost increased mainly on a 26% increase in the cost of electricity, which now constitutes 28% of the total cost of operation. Excluding this, operating costs rose 8.9% year on year. A higher labour cost reflects annual salary increases as well as an increase in the average staff complement of 278.

Capital expenditure rose by 55% in FY11 to R321 million, including R162 million in capital costs for the Steyn operations. The majority of the remaining capital at Bambanani East was for the shaft-pillar work other south african operations

Key statistics

Production		FY11	FY10	FY09
Volumes milled	000t (metric)	426	528	517
	000t (imperial)	470	582	570
Gold produced††	kg	3 051	4 137	3 780
	oz	98 092	133 007	121 530
Average grade	g/t	6.95	7.77	7.32
	oz/t	0.203	0.227	0.213
Financial
Revenue	R million	921	1 114	924
	US$ million	132	147	103
Operating cost*	R/kg	280 075	176 253	176 834
	US$/oz	1 247	723	611
Operating profit	R million	93	369	273
	US$ million	14	49	31
Capital expenditure	R million	321	207	52
	US$ million	46	28	6
People
Number of employees
Employees		3 418	3 611
Contractors		402	276
Total		3 820	3 887
HDSAs in management**	%	39	44
Women in mining**	%	9	9
Expenditure on training and development	R million	18	13
Safety
fatalities		3	1
LTIFR	per million hours worked	10.74	9.29
Environment
Energy used	000MWh	471	467
Water used for primary activities	000m3	2 655	3 505
GHG emissions	000t CO2e	652	559
Expenditure on local economic development	R million	6	4
Status of mining right	New order mining right granted in December 2007

* Includes royalty payment in FY10 and FY11.

†† FY11: 90kg (2 894oz) and FY10: 33kg (1 061oz) were capitalised.