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Doornkop

Doornkop is a single-shaft operation mining to a depth of just under 2 000 metres. Located 30km west of Johannesburg, Doornkop mines the Kimberley and South Reefs using both mechanised bord-and-pillar and narrow-reef conventional mining, with ore processed at its carbon-in-pulp plant. Production at Doornkop’s South Reef project, which accesses the higher-grade South Reef, continues to ramp up to scheduled full production in FY15.

Safety

Safety improved at Doornkop in FY11, with no fatalities recorded (FY10: two fatalities). The LTIFR deteriorated to 8.04 per million hours worked (FY10: 5.50). Commendably, the mine achieved one million fatality-free shifts and four million fall-of-ground/fatality-free shifts during the year. The increased focus on safety has streamlined procedures and improved training, maintenance and behaviour. The fall-of-ground initiative being piloted at Doornkop and Kusasalethu has produced encouraging results, particularly from netting development sections.

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

Doornkop employed 3 691 people, including 853 contractors, in FY11.

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

Operations review

The massive improvement in year-on-year production at Doornkop reflects the production build-up on the South Reef and introduction of new trackless machinery on the Kimberley Reef during the year. The transfer of an additional 13 production crews from the closed Merriespruit 1 shaft in the December 2010 quarter supported build-up on the South Reef and preserved the jobs of employees affected by restructuring.

Tonnes mined from the South Reef areas accounted for 58% of total tonnes mined in FY11 – up from 50% the year before – while the contribution from the Kimberley Reef declined from 50% to 42%. The average grade of South Reef tonnes mined deteriorated to 4.5g/t while grade in the Kimberley Reef increased to 2.17g/t.

Overall results were affected by plant constraints in the third quarter, particularly a breakdown in the thickener. A project to optimise equipment availability and the beneficiation process in the plant was launched in the final quarter of the year, with phase 1 scheduled for completion by March 2012. The project is focused on installing or replacing equipment to minimise downtime in the plant and optimise gold recovery.

In addition, the surface rock winder was commissioned and fully automated during the year to give the shaft more flexibility to hoist rock available from underground. The conveyor belts on 212 level were commissioned and are now fully automated, and a second settler on 205 level has been commissioned. All locomotives have been fitted with anti-collision systems, enhancing safety and preventing accidents or damage to rail-bound equipment. The smart rail system on 192 level was installed and fully commissioned, improving ore accounting on that level. This will be rolled out to other levels in the next year.

Development metres increased by 44% or 3 868 metres from the previous year to ensure build-up in the South Reef project is achieved and targets are met.

As more mining takes place on the South Reef, the level of confidence on the geology of this reef improves. Few surprises were encountered during the year in terms of geology. The exploration programme to further improve confidence will continue. The conversion of the South Reef resource to reserves continued, with an increase of 236 000oz of gold (75%) and 1 087 370 tonnes (51%). This brings total South Reef reserves to 3.2Mt and 553 000oz of gold (17.189t Au) at a grade of 5.34g/t.

A business case conducted during the year indicated that the Kimberley Reef can add economic benefit to the operation over the life-of-mine and not only for four years as initially anticipated. The Kimberley Reef has therefore been planned over the total life-of-mine and will contribute 12% of total gold produced over that period.

Financial review

Cash operating profit increased by 68% to R180 million due to the higher gold price received and growth in ounces produced. Capital expenditure of R292 million (US$42 million) was R42 million less than budget, mainly due to fewer development metres completed than planned. Of this capital expenditure, 44% was spent on the South Reef project and 37% on ongoing capital development.

Unit costs increased 18% mainly as a result of the gradual transition from capital expenditure to operating expenditure in line with the production build up. In addition, labour rate increases and a significant rise in electricity tariffs contributed to higher costs.

Key statistics

Production		FY11	FY10	FY09
Volumes milled	000t (metric)	718	540	549
	000t (imperial)	792	595	605
Gold produced	kg	2 512	1 950	1 311
	oz	80 763	62 694	42 150
Average grade	g/t	3.50	3.61	2.38
	oz/t	0.102	0.105	0.070
Financial
Revenue	R million	781	517	343
	US$ million	112	68	38
Operating cost*	R/kg	236 810	200 324	232 699
	US$/oz	1 054	822	804
Operating profit	R million	180	107	62
	US$ million	26	14	7
Capital expenditure	R million	292	342	395
	US$ million	42	45	44
People
Number of employees
Employees		2 838	1 645
Contractors		853	1 004
Total		3 691	2 649
HDSAs in management	%	35	38
Women in mining	%	9	8
Expenditure on training and development	R million	19	10
Safety
fatalities		0	2
LTIFR	per million hours worked	8.04	5.50
Environment
Electricity used	000MWh	161	155
Water used for primary activities	000m3	2 750	2 725
GHG emissions	000t CO2e	165	184
Expenditure on local economic development	R million	4	4
Status of mining right	New-order mining right granted in December 2007

*Includes royalty payment in FY10 and FY11.