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Tshepong

Tshepong is Harmony’s largest operation, with a single vertical shaft extending 2 161 metres below collar. Ore is transported 23 kilometres to the Harmony 1 plant. The Tshepong sub-71 decline project under way will extend mining to 2 366 metres below surface and the sub-66 project is currently building up production. The mine uses conventional undercut mining on the Basal Reef while the B Reef is exploited as a high-grade secondary reef.

Safety

Despite achieving 750 000 fatality-free shifts during the year, overall safety performance deteriorated slightly, with the LTIFR at 12.60 (FY10: 12.22). There were regrettably two fatalities during the year (FY10: two).

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

Tshepong employed 5 188 people in FY11, including 206 contractors.

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

Operations review

Tonnes milled decreased by 12% to 1.34 million in FY11, while grade improved 8% to 4.82g/t. Gold produced dropped to 207 950oz. Tshepong is one of Harmony’s lowest-cost producers, although its grade remains sensitive to stoping width. This is rigorously controlled by the under-cut mining method used at this mine.

Development of sub-71 decline progressed well during the year, despite the area being directly affected by the fire at neighbouring Phakisa in the first quarter. After commissioning the belt and completing the temporary tip on 73 level, the development rate improved for the rest of the period. The sub-71 project, which will connect Tshepong with Phakisa, remains on track for completion in May 2012. This project extends the existing double decline from 71 to 76 level to enable mining on both 73 and 75 levels. The project’s goal is to sink the decline to 76 level by May 2012.

Financial review

Revenue rose by 10% to R2 007 million and by over 19% to US$287 million. Cash operating cost rose by 10% to R182 042/kg and by 20% to US$810/oz with cost pressure coming from increased wages, electricity tariffs and the cost of supplies and equipment.

Capital expenditure was 5% higher at R273 million (US$39 million), primarily for ongoing development, major equipment maintenance and other shaft capital, and the sub-71 decline project. Total expenditure to date on this project is R189 million (US$27 million).

Key statistics

Production		FY11	FY10	FY09
Volumes milled	000t (metric)	1 343	1 518	1 375
	000t (imperial)	1 481	1 674	1 516
Gold produced	kg	6 468	6 749	7 178
	oz	207 950	216 986	230 778
Average grade	g/t	4.82	4.45	5.22
	oz/t	0.140	0.130	0.152
Financial
Revenue	R million	2 007	1 823	1 780
	US$ million	287	241	198
Operating cost*	R/kg	182 042	164 938	139 901
	US$/oz	810	677	483
Operating profit	R million	835	676	802
	US$ million	119	90	89
Capital expenditure	R million	273	261	249
	US$ million	39	35	28
People
Number of employees
Employees		4 982	4 901
Contractors		206	163
Total		5 188	5 064
HDSAs in management	%	31	30
Women in mining	%	9	11
Expenditure on training and development	R million	22	23
Safety
fatalities		2	2
LTIFR	per million hours worked	12.60	12.22
Environment
Electricity used	000MWh	314	288
Water used for primary activities**	000m³	9 351	1 144
GHG emissions	000t CO₂e	348	347
Expenditure on local economic development	R million	10	6
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.

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