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Target

Located 20 kilometres north of Welkom, Target mine consists of a single surface shaft system with a sub-shaft and a decline. In the second half of FY10, a Pamodzi asset (Loraine 3) was incorporated into this operation and renamed Target 3 shaft. Ore is processed at the Target plant adjacent to 1 shaft. Both mechanised (86%) and conventional (14%) mining occur on the geologically complex Elsburg and Dreyerskraal reefs, with mining operations extending to a depth of some 2 350 metres.

Safety

The concerted effort in recent years to improve safety at Target paid off during the review period when the mine reached one million fatality-free shifts for a fatality-free year (FY10: two). The LTIFR, however, regressed to 7.71 per million hours worked (FY10: 3.73).

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

Target employed 3 219 people in FY11, including 408 contractors.

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

Operations review

Target 3 has been incorporated with Target 1 into a single operation. As a result, volumes milled rose 4% to 805 000 tonnes. Grade decreased by 3% while gold produced increased by 12% for the year to 127 992oz, of which 17 073oz were capitalised.

Target 1

In FY11, the benefits of improved planning and design in the prior year resulted in greater availability of the massive stopes. In addition, with ventilation and cooling issues resolved, all ten narrow-reef, conventional mining panels were in production during the review period, supported by a clean-mining initiative. Collectively, this has enabled Target to manage its ore reserves better, which is crucial to the mine’s success. Overall grade decreased slightly (1.1%) during the year from 4.40g/t to 4.35g/t.

Unplanned stoppages caused by problems with the decline belt and delayed delivery of the new belt affected production in the third and fourth quarters, which in turn affected tonnages and grade.

Target 3

The focus during the year was on continued shaft build-up and infrastructural improvements. In September 2010 we decided to abandon the shaft below 71 level after the collapse of orepasses, and create a new belt level on 71 level. Commendably, the new belt was designed, manufactured and installed in four weeks. This has greatly assisted in the build-up of the sub-shaft on Basal Reef, which offers better grades.

Several challenges remain in improving sub-shaft conditions. After protracted delays, the fridge plant was commissioned by year end, which will enable access to more panels in the sub-shaft, contributing in turn to higher grades. Good progress has been made in cleaning sub-shaft infrastructure to access the higher-grade Basal Reef mining area. Once all infrastructural improvements have been completed, we expect further improvements in gold production.

Financial review

Higher production and a higher gold price achieved for the year contributed to revenue rising in both rand and dollar terms by 23% and 33% respectively to R1 080 million and US$154 million. Cash operating costs were 19% up in rand terms at R227 178/kg (29% to US$1 011/oz). This was mainly due to the delayed start-up of the sub shaft at Target 3 and labour transfers earlier than planned from other Harmony operations to avoid retrenchments.

Capital expenditure of R439 million (US$63 million) included R199 million (US$29 million) for ongoing development, R35 million (US$5 million) on major equipment maintenance and R205 million (US$29 million) on other shaft capital and major projects.

Key statistics

Production		FY11	FY10	FY09
Volumes milled	000t (metric)	805	777	644
	000t (imperial)	888	857	710
Gold produced††	kg	3 981	3 539	2 713
	oz	127 992	113 782	87 225
Average grade	g/t	4.29	4.40	4.21
	oz/t	0.125	0.128	0.123
Financial
Revenue	R million	1 080	878	688
	US$ million	154	116	76
Operating cost*	R/kg	227 178	190 720	186 749
	US$/oz	1 011	783	645
Operating profit	R million	265	214	152
	US$ million	37	28	16
Capital expenditure	R million	439	382	342
	US$ million	63	51	38
People
Number of employees
Employees		2 811	2 676
Contractors		408	402
Total		3 219	3 078
HDSAs in management	%	35	34
Women in mining	%	10	11
Expenditure on training and development	R million	16	13
Safety
fatalities		0	2
LTIFR	per million hours worked	7.71	3.73
Environment
Electricity used	000MWh	337	228
Water used for primary activities**	000m3	891	2 755
GHG emissions	000t CO2e	366	279
Expenditure on local economic development	R million	6	3
Status of mining right	New-order mining right granted in December 2007

* Includes royalty payment in FY10 and FY11.

** Previous year includes waste rock dust suppression.

†† FY11: 531kg (17 073oz) and FY10: 117kg (3 762oz) capitalised.