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Kusasalethu

Kusasalethu mine, on the Gauteng/North West border, comprises twin vertical and twin sub-vertical shaft systems. Mining is via conventional methods in a sequential grid layout. Ore mined is treated at the Kusasalethu plant.

Safety

The focus on creating a safe working environment at Kusasalethu continued to add value, with the mine recording one million fatality-free shifts during the year. Regrettably there were two fatalities after this achievement (FY10: two, FY09: five). The LTIFR regressed to 7.74 per million hours worked (FY10: 6.88).

Seismicity remains a risk and management continues to focus on improving the quality of pre-conditioning at the stope face to reduce the risk presented by small, but damaging, seismic events.

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

Kusasalethu employed 5 756 people (including 773 contractors) in FY11.

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

Operations review

Volumes milled rose by 6% to just over 1Mt, and gold produced by 3% to 180 334oz, despite a 3% decline in grade in FY11 to 5.10g/t. Currently, 70% of production at Kusasalethu is from production areas below 100 level (the new mine expansion project) and 30% from production areas in the old mine, above 100 level.

Planned build-up at Kusasalethu was hampered by an accident that caused one fatality, damaged the hoisting shaft and therefore constrained hoisting ore to surface.

The largely completed deepening project has extended the sub-vertical shafts, accessing the Ventersdorp Contact Reef up to 3 388 metres below collar. Remaining project work is focused on extending the service shaft to 113 level, completing the refrigeration complex at 100 level and commissioning the 92 level turbine complex.

In terms of grades, Kusasalethu has now reached an area of localised enrichment although the higher grade was diluted by waste being hoisted with reef and delivered to the plant. A decision to rehabilitate the shaft orepass system after major scaling took place inside these excavations resulted in only one orepass system being available for production. Estimates are that the rehabilitation work will take around two years to complete.

The sub-station for the 100-level refrigeration complex and 98-level complex was commissioned early in the year, and mechanical construction work on the refrigeration plants was completed by year end. Sinking was completed to 113 level from 109 level during the year. The mechanical installation of the turbine on 92 level was completed in March 2011.

Other engineering initiatives include greater use of thermal scanning to detect potential ‘hot connections’ on electrical panels, protection relays to prevent power outages and a central monitoring system for all pumps. Rotational dam cleaning has eliminated the risk of silting, which has compromised dam capacity in the past and constrained pumping. Additional instrumentation has been installed on all large dams to monitor their levels and prevent mud from being drawn into the valves, causing production delays.

These and other initiatives are expected to improve productivity.

Financial review

Revenue and cash operating profit increased as a result of the higher average gold price and increase in ounces sold. Revenue was R1 774 million (US$254 million), up 27%. Cash operating profit rose by 50% to R453 million (US$65 million). The cash operating cost increased 8% to R226 398/kg (US$1 008/oz), mainly after annual labour increases and higher electricity tariffs.

Capital expenditure for the year totalled R380 million (US$54 million), mostly for ongoing development (R267 million, US$38 million), maintaining equipment and shaft capital (R63 million, US$9 million) and developing the new mine project (R50 million, US$7 million).

Key statistics

Production		FY11	FY10	FY09
Volumes milled	000t (metric)	1 099	1 035	962
	000t (imperial)	1 212	1 141	1 061
Gold produced	kg	5 609	5 444	5 422
	oz	180 334	175 029	174 321
Average grade	g/t	5.10	5.26	5.64
	oz/t	0.149	0.153	0.164
Financial
Revenue	R million	1 774	1 392	1 422
	US$ million	254	184	158
Operating cost*	R/kg	226 398	208 864	191 097
	US$/oz	1 008	857	660
Operating profit	R million	453	301	366
	US$ million	65	40	41
Capital expenditure	R million	380	430	422
	US$ million	54	57	47
People
Number of employees
Employees		4 983	5 049
Contractors		773	636
Total		5 756	5 685
HDSAs in management	%	40	33
Women in mining	%	10	10
Expenditure on training and development	R million	35	39
Safety
fatalities		2	2
LTIFR	per million hours worked	7.74	6.68
Environment
Electricity used	000MWh	663	629
Water used for primary activities	000m3	2 497	2 138
GHG emissions	000t CO2e	683	765
Expenditure on local economic development	R million	5	10
Status of mining right	New-order mining right granted in December 2007

* Includes royalty payment in FY10 and FY11.