SA rand   US dollar
20092010Figures in million20102009


Investment in associates

145329 Balance at beginning of year4319
284 Subsidiary becoming associate25
1256 Share of profit after tax71
(112) Impairment of share in associate(14)
329385 Balance at end of year5043
   The carrying amount consists of:  
 Pamodzi Gold Limited (a)
329385 Rand Uranium (Proprietary) Limited (b)5043
329385 Total investment in associates5043
    (a)On 27 February 2008, Pamodzi Gold Limited (Pamodzi) bought the Orkney operations from the group for a consideration of 30 million Pamodzi shares. This resulted in Harmony owning 32.4% of Pamodzi valued at R345 million (US$46.5 million) being R11.50 (US$1.54) per share on acquisition date. Pamodzi was listed on the JSE and had interests in operating gold mines in South Africa.  
     On 30 September 2008, an impairment test was performed and an impairment of R112 million (US$13.5 million) was recorded, bringing the total impairment recorded on the investment to date to R207 million (US$25.8 million). After taking into account the group's share of losses of R33 million (US$3.7 million), the carrying value at 31 December 2008 was R0. Total share in losses to date was R110 million (US$14.3 million). Subsequently, the group has not recognised its share of any further losses.  
     Pamodzi was placed in liquidation and the trading of its shares on the JSE was suspended.  
     At the time of this report being finalised no audited financial statements were available for years ending 31 December 2009 and 2008. The extract below represents unaudited information for the nine months ended 31 March 2009. No financial information subsequent to this date is available and therefore no information has been disclosed for 2010.  
100%      100%
623    Revenue 69
(801)    Production costs (89)
(178)    Operating loss (20)
(361)    Net loss (40)
     The financial position as at 31 March 2009 is disclosed below:  
2 005    Non-current assets 260
145    Current assets 18
2 150    Total assets 278
1 863    Current liabilities 241
478    Non-current liabilities 62
2 341    Total liabilities 303
    (b)The group owns a 40% share of Rand Uranium, which is an unlisted company registered in South Africa, with gold mining operations in the Gauteng province of South Africa.  
     The group's interest was obtained by the completion of two transactions, discussed below.  
     On 21 November 2008, the company's wholly-owned subsidiary Randfontein Estates Limited disposed of its Randfontein Cooke assets to a newly formed wholly-owned subsidiary Rand Uranium, for a consideration of US$328 million (R3 484 million), settled with Rand Uranium shares. In a related transaction on the same date, 60% of these shares were sold to PRF for US$197 million (R2 093 million). US$40 million was paid on the effective date and the balance of US$157 million was paid on 20 April 2009. Interest was charged on the outstanding balance at 5% per annum, resulting in R32 million (US$3.3 million) being recognised in the income statement. The interest was also received on 20 April 2009.  
     The conditions precedent for the second part of the Rand Uranium transaction relating to the sale of the Old Randfontein assets to Rand Uranium were fulfilled on 22 April 2009. These assets were valued at US$20 million (R212 million). Additional shares were issued in settlement and 60% of these shares were sold to PRF in terms of the agreement. PRF paid its portion of the purchase price, US$12 million (R109 million), in cash on 20 April 2009.  
     The shareholders' agreement includes certain restrictions on the group's ability to dispose of its shares in Rand Uranium for a period of up to four years from the effective date, being 21 November 2008. In addition, PRF has the right, for a period of up to four years after the effective date, to have first claim on the proceeds, up to a specified amount, in the event of a disposal of the operations. Harmony has first right of refusal in such an event. However due to the contingent nature of the provision, the group has made no adjustments to the associate’s carrying amount.  
     The group recognised a profit of R1 786 million (US$171 million) (before tax) on these transactions during the 2009 financial year. This profit is included in the profit from discontinued operations. Refer to note 14.  
     The group recognised its share of the post-acquisition profits of R56 million (US$7 million) (7 months ending 30 June 2009: R46 million (US$5.1 million)).  
     Rand Uranium has a year end of 30 June. The audited financial information of Rand Uranium for the years ended 30 June 2010 and at 30 June 2010 and 30 June 2009 is as follows:  
100%100%    100%100%
9131 691 Revenue223101
(678)(1 306) Production costs(172)(75)
235385 Gross profit5126
112137 Net profit1812
4 4564 666 Non-current assets612577
222206 Current assets2729
4 6784 872 Total assets639606
183173 Current liabilities2324
699766 Non-current liabilities10091
882939 Total liabilities123115