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Harmony Reports 2008 Financial Year-End Results

Johannesburg. Friday, 15 August 2008. Harmony Gold Mining Company Limited (Harmony) today announced its fourth quarter and financial results for the year ended 30 June 2008.

Cash operating profit for the financial year 2008 increased by 26% to R2 537 million from R2 016 million. The company’s total gold production for the quarter was 11 694 kg, a 13% increase from the previous quarter, but gold production for the financial year declined from 54 340kg (1.7Moz) to 48 227kg (1.6Moz).

Revenue for the year from continuing operations was up by 14.6% to R9.210 million from R8 037 million for financial year 2007 on the back of an improved gold price in dollar terms of $818/oz and a steady ZAR/US$ exchange rate of R7.26. The Group’s operating profit declined to R503 million from R1 074 million.

Cash operating costs increased year-on-year by R652 million from R6 021 million to R6 673 million for the year under review.

Chief Executive Officer Graham Briggs says, “Stringent measures for cost containment have been implemented throughout the company, however, inflationary pressures were evident not only in most of our consumables such as electricity, steel and fuel (to a lesser degree), but also salaries.”

Harmony reported a net loss of R245 million compared with a net profit of R382 million for the financial year ended June 2007. “This is mainly due to non-cash item losses from the sale of Gold Fields shares amounting to R459 million, the loss from associates primarily from Pamodzi Gold amounting to R78 million, impairment of investments in associates (Pamodzi Gold) of R95 million and impairment of assets totalling R318 million,” explains Briggs.

Harmony’s total cash operating costs hiked 7.1% quarter-on-quarter to R1,6 billion from R1.5 billion. Briggs attributes this increase partially to the increase in production tonnages and the bonus incentives paid to mine overseers and shift bosses after the change in the mining structure and electicity cost.

At the beginning of the 2008 financial year, the group’s restructuring process reduced its staff complement by 5 119 employees and 13 101 employees were transferred internally. All capital expenditure was reviewed and all frills expended with without disrupting the delivery of its projects. Lack of efficiency and productivity led the company to terminate Conops at Elandsrand, Evander 2 and 5, Cooke and 3 shafts, Masimong and Tshepong.

The Elandsrand incident on 3 October 2007, brought the South African mining industry’s safety squarely under the spotlight, triggering a heightened sense of corporate awareness towards the critical issues of occupational safety and health.

Safety continues to be one of the company’s top priorities and non-negotiable safety standards have been formulated which are reviewed and performances audited.

Graham Briggs says “We are pleased to announce that last year’s positive safety performance was maintained in the 2008 financial year and there was a remarkable 18.2% improvement in fatality injury frequency rate on our mines for 2008.”

Briggs remains positive for the financial year ahead and explains that Harmony’s outlook will remain focused on sustainable organic growth. “We will exploit opportunities for further optimisation, improved production and production cost management, and enhanced cash flow will be used prudently to reduce our debt and finance new mine capacity and other growth initiatives,” he adds.

Papua New Guinea and the Wafi-Golpu area in particular, because of its proximity from the company’s Hidden Valley project, will remain a major exploration focus for Harmony. “This region presents opportunities for shareholders because of the possibilities of a longer and larger pipeline of quality and diversified commodity projects,” says Briggs.

Furthermore, in South Africa, Evander South in Mpumalanga offers several new opportunities for additional reserves. The strong Rand/Dollar gold price also paves the way for growth opportunities from the one billion tonnes of surface tailings in the Free State of which the possibility of treating 12Mt a year at St Helena over the next 20 years will be investigated.

“Harmony has been and will remain an acquisitive company should opportunities exist or rise and we will continue to look for value opportunities during 2009.” Briggs concludes.

For more details contact:

Graham Briggs
Chief Executive Officer
+27(0)11 411 2012
+27 (0)83 265 0274

Amelia Soares
General Manager, Investor Relations
+27 11 411 2314
+27 (0)82 654 9241

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