Annual Report 2010 Annual Report 2010


Contribution to group production – FY10

Contribution to group production – FY10
Map of South Africa indicating the location of Target


Located in the Free State, Target mine consists of a single surface shaft system with a sub-shaft and a decline. Ore is processed at the Target plant situated adjacent to the shaft. Both mechanised (86%) and conventional (14%) mining are undertaken on the geologically complex Elsburg and Dreyerskraal reefs. Mining operations extend to a depth of some 2 350 metres. With the acquisition of Pamodzi’s Free State assets, one of these, the Target 3 shaft (formerly Loraine 3) was incorporated into Harmony’s Target operation in the second half of the year.

Target employed 3 078 in FY10, of which 2 676 were employees and 402 contractors.

Detailed information on Target’s resources and reserves are available in the Mineral resources and mineral reserves section of this annual report.


A concerted effort has been made in recent years to improve safety at Target. Although safety performance improved in terms of LTIFR in FY10, there were regrettably two fatalities during the year (FY09: two), the result of falls of ground. These are now a major focus of the safety programme at Target. The LTIFR improved to 3.39 per million hours worked (FY09: 9.66).

More detailed information on safety performance and Harmony’s sustainable development concerns in South Africa can be found in the online Sustainable Development Report. A summary of this can be found under Harmony and sustainability.

Target key statistics
Volumes milled000t (metric)777644622
 000t (imperial)857710686
Gold producedkg3 5392 7132 476
 oz113 78287 22579 602
Average gradeg/t4.404.213.98
RevenueR million878688503
 US$ million1167669
Operating cost*R/kg190 720186 749167 990
Operating profitR million214152129
 US$ million281618
Capital expenditureR million382342256
 US$ million513835
Number of employees  
    Employees 2 676
    Contractors 402
    Total 3 078
HDSAs in management**%34
Women in mining**%11
Expenditure on training and developmentR million13
No. of fatalities 2
LTIFRper million hours worked3.73
Energy used000MWh228
Water used for primary activities000m32 755
GHG emissions000t CO2e279
Expenditure on local economic developmentR million3
Status of mining rightNew order mining right granted
in December 2007

* Includes royalty payment in FY10

** Indicator reported in terms of the MPRDA and the South African Mining Charter

Includes Target plant

†† 117 kilograms (3 762 ounces) capitalised

Operations review

Work done in FY09 to open up and increase the availability of the massive stopes at Target resulted in increased output. Volumes milled rose by 21% to 777 000 tonnes and this together with a 5% increase in grade resulted in ounces produced being 31% up on the year at 113 782 ounces.

FY10 at Target was notable for the consistent quarterly performance achieved, in line with plans. The programme to remodel and re-estimate the Target orebody was completed early in the year and led to much improved planning and design, which resulted in greater availability of the massive stopes, and the resolution of ventilation and cooling problems which enabled the return to production of all 10 narrow-reef, conventional mining panels. This programme will also permit Target to better manage its ore reserves which is crucial to the mine’s future success.

The pre-feasibility study for the Block 3 project was completed, giving management a more thorough understanding of the orebody, which facilitated grade predictions and the mine planning function.

Good values were sampled in two raises currently being developed for narrow stoping at Target 1. Development at Target 3 is being done on the Elsburg Reef while, owing to logistical constraints, development of the better grade Basal reef has been delayed.

At Target 3, there were several challenges to be resolved including face length flexibility, infrastructural shortcomings and the build-up of mud and water at the bottom of the shaft. Progress is being made with the cleaning of the sub-shaft infrastructure so as to access the higher-grade Basal Reef mining area. A fridge plant has been installed and should be operational by the first quarter of FY11. This will enable access to more panels in the sub-shaft, contributing in turn to higher grades.

Financial review

Higher production and a higher gold price achieved for the year contributed to revenue rising in terms of both rand and dollars by 28% and 53% to R878 million and US$116 million. Cost increases were well controlled. Cash operating costs were 2% up in rand terms at R190 720/kg and in terms of dollars, up 21% to US$783/oz.

Capital expenditure of R382 million (US$51 million) included R178 million (US$23 million) on on-going development, R44 million (US$6 million) on major equipment maintenance and R77 million (US$10 million) on other shaft capital and major projects. In addition, R70 million (US$9 million) was spent on preparing the Target 3 shaft for full production following the Pamodzi acquisition.

Over-expenditure related mostly to ongoing development which was necessary to achieve the additional development metres required to provide the desired level of mining flexibility. This was achieved and had a positive impact on both tonnes milled and the grade recovered.


Target 1: The revised and improved geological modelling will continue to bear fruit in FY11 and volumes produced are expected to increase to 814 000 tonnes, and the grade to increase to 4.51g/t. Grades should continue to rise to a peak of around 5g/t in FY16. Gold production in FY11 is planned to be around 3 979 kilograms (127 928 ounces) at a cash cost** of approximately R183 060/kg (US$ 746/oz).

Target 3: Volumes for FY11 are expected to be around 283 000 tonnes in FY11, and the grade, 5.16g/t. Gold production in FY11 is planned at around 1 462 kilograms (47 000 ounces) at a cash cost** of approximately R202 736/kg (US$826/oz).

Combined capital expenditure** for both the Target 1 and Target 3 shafts of R457 million (US$60 million) is planned for FY11 – R202 million (US$27 million) on on-going development, R47 million (US$6 million) on major equipment maintenance and R207 million (US$27 million) on other shaft capital and major capital (R101 million; US$13 million) on Block 3.

Current productivity levels of 156g/TEC (Target 1) are forecast to improve to an annual average of 216g/TEC at Target 1 and 153g/TEC at Target 3 during peak production.

* Please refer to the forward-looking statements

** June 2010 money terms. The exchange rate of R7.63/US$ as at 30 June 2010 has been used for all forward-looking conversions.