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Masimong

Masimong consists of the operating 5 shaft and the closed 4 shaft which is used for ventilation, pumping and as a second outlet. Ore mined at Masimong is processed at the Harmony 1 plant 23 kilometres away. Conventional drilling, blasting and scraping operations are focused on the Basal and B Reefs. The shafts are intermediate, extending to around 2 300 metres.

Safety

Overall safety performance at Masimong improved in FY11, with the mine achieving one million fatality-free shifts at the interim stage. Regrettably, there was a subsequent fatality (FY10: one). The LTIFR deteriorated to 13.13 per million hours worked (FY10: 7.37).

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

Masimong employed 3 187 people in FY11, including 137 contractors.

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

Operations review

Masimong remains one of Harmony’s lowest-cost producers. Volumes milled decreased marginally year on year by 3% to 868 000 tonnes with gold produced 12% lower at 137 605oz.

In line with Masimong’s mine plan, grade declined by 8% to 4.93g/t, mainly on lower grades from B Reef. Maintaining grades on the B Reef is challenging as mining moves out of the high-grade channels. Grades mined on the Basal Reef were consistently good, but started to decline towards the end of the year, due to an underlying sill in the north-east area, and completion of mining in the high-grade south-west 7 line.

The infrastructural upgrade completed in FY10 is producing the expected improvements in productivity, efficiencies and output, facilitated by the process of cycle mining in which specific tasks are performed on specific days.

However, results for the period were affected by an underground lock-up of tonnes at the interim stage, caused by a ventilation change-over process and unwarranted stoppages by the Department of Mineral Resources. To address Masimong’s historical ventilation issues, the whole ventilation circuit was changed from a booster fan system which itself generated heat. The process was completed in three days and improved ventilation conditions are already evident. A new refrigeration plant will be installed by September 2011.

Following the upgrade programme, production face advances are planned to increase and every effort made to ensure that panels are well equipped and crews motivated. In addition, steps have been taken to overcome the erratic grade of the B reef.

Financial review

Revenue was 4% up to R1 326 million and by 13% to US$190 million. Costs rose by 21% to R177 130/kg and, in dollars, by 31% to US$788/oz, making Masimong the lowest-cost producer among Harmony’s operations. The higher gold price achieved in dollars and the weaker rand resulted in operating profit decreasing by 1% to R570 million and increasing by 8% to US$82 million.

Capital expenditure of R178 million (US$26 million) was spent largely on the refrigerator plant, Masimong 4 plug, e-learning and the infrastructure upgrade.

Key statistics

Production		FY11	FY10	FY09
Volumes milled	000t (metric)	868	899	890
	000t (imperial)	957	991	981
Gold produced	kg	4 280	4 840	4 791
	oz	137 605	155 609	154 034
Average grade	g/t	4.93	5.38	5.38
	oz/t	0.144	0.157	0.157
Financial
Revenue	R million	1 326	1 277	1 215
	US$ million	190	168	135
Operating cost*	R/kg	177 130	146 674	137 598
	US$/oz	788	602	476
Operating profit	R million	570	575	554
	US$ million	82	76	62
Capital expenditure	R million	178	177	130
	US$ million	26	23	14
People
Number of employees
Employees		3 050	3 067
Contractors		137	138
Total		3 187	3 205
HDSAs in management	%	29	19
Women in mining	%	10	12
Expenditure on training and development	R million	15	14
Safety
fatalities		1	1
LTIFR	per million hours worked	13.13	7.37
Environment
Electricity used	000MWh	249	229
Water used for primary activities**	000m3	4 063	1 722
GHG emissions	000t CO2e	275	274
Expenditure on local economic development	R million	15	13
Status of mining right	New-order mining right granted in December 2007

* Includes royalty payment in FY10 and FY11.

** New definitions used in FY11 have resulted in a revised calculation methodology.