HMY 20-F DEF-14A Report June 30, 2010 | Alphaminr
HARMONY GOLD MINING CO LTD
ALPHAMINR

HMY 20-F Report ended June 30, 2010

Balance Sheet
Cash Flow
Income Statement
Debt
20-F 1 u09898e20vf.htm FORM 20-F e20vf
As filed with the Securities and Exchange Commission on October 25, 2010
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
o REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended June 30, 2010
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
o SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
For the transition period from      to
Commission file number: 001 — 31545
HARMONY GOLD MINING COMPANY LIMITED
(Exact name of registrant as specified in its charter)
REPUBLIC OF SOUTH AFRICA
(Jurisdiction of incorporation or organization)
RANDFONTEIN OFFICE PARK, CNR WARD AVENUE AND MAIN REEF ROAD,
RANDFONTEIN, SOUTH AFRICA, 1760
(Address of principal executive offices)
Khanya Maluleke, Company Secretary
tel: +27 11 411 2019, khanya.maluleke@harmony.co.za , fax: +27 11 411 2070,
Randfontein Office Park, CNR Ward Avenue and Main Reef Road, Randfontein, South Africa, 1760
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person )
Securities registered or to be registered pursuant to Section 12(b) of the Act:
Ordinary shares, with nominal value Rand 50 cents per share*
(Title of Class)
American Depositary Shares (as evidenced by American Depositary Receipts),
each representing one ordinary share
(Title of Class)
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Ordinary shares, with nominal value Rand 50 cents per share*
(Title of Class)
American Depositary Shares (as evidenced by American Depositary Receipts),
each representing one ordinary share
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
The number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the last full fiscal year covered by this Annual Report was:
428,654,779 ordinary shares, with nominal value of Rand 50 cents per share
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES þ NO o
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
YES o NO þ
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days:
YES þ NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES o NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer þ Accelerated filer o Non-accelerated filer o
(Do not check if a smaller reporting company) 		Smaller reporting company o
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP o International Financial Reporting Standards as issued Other o
by the International Accounting Standards Board þ
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:
Item 17 o Item 18 þ
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o NO þ
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
YES þ NO o
* Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission.

TABLE OF CONTENTS
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F-1
EX-2.1
EX-4.14
EX-4.15
EX-4.16
EX-4.17
EX-4.18
EX-4.19
EX-4.20
EX-12.1
EX-12.2
EX-13.1
EX-13.2

1

USE OF TERMS AND CONVENTIONS IN THIS ANNUAL REPORT
Harmony Gold Mining Company Limited is a corporation organized under the laws of the Republic of South Africa. As used in this Annual Report on Form 20-F, or this annual report, unless the context otherwise requires, the term “ Harmony ” refers to Harmony Gold Mining Company Limited; the term “ South Africa ” refers to the Republic of South Africa; the terms “ we ”, “ us ” and “ our ” refer to Harmony and, as applicable, its direct and indirect subsidiaries as a “ Group ”.
In this annual report, references to “ R ”, “ Rand ” and “ c ”, “cents” are to the South African Rand, the lawful currency of South Africa, “ A$ ” refers to Australian dollars, “ K ” or “ Kina ” refers to Papua New Guinean Kina and references to “ $ ”, “ US$ ” and “ U.S. dollars ” are to United States dollars.
This annual report contains information concerning our gold reserves. While this annual report has been prepared in accordance with the regulations contained in Securities and Exchange Commission Guide 7, it is based on assumptions which may prove to be incorrect. See Item 3. “Key Information — Risk Factors — Harmony’s gold reserve figures are estimated based on a number of assumptions, including assumptions as to mining and recovery factors, future cash costs or production and the price of gold and may yield less gold under actual production conditions than currently estimated.”
This annual report contains descriptions of gold mining and the gold mining industry, including descriptions of geological formations and mining processes. We have explained some of these terms in the Glossary of Mining Terms included at the end of this annual report. This glossary may assist you in understanding these terms.
PRESENTATION OF FINANCIAL INFORMATION
We are a South African company and the majority of our operations are located in our home country. Accordingly, our books of account are maintained in South African Rand and our annual and interim financial statements are prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“ IFRS ”). Prior to fiscal year ended June 30, 2008, our annual financial statements (translated into U.S. dollars) were prepared and filed with the U.S. Securities and Exchange Commission (“ SEC ”) in accordance with generally accepted accounting principles in the United States (“ U.S. GAAP ”). On December 21, 2007, the SEC adopted rules allowing foreign private issuers that file Annual Reports on Form 20-F to file financial statements with the SEC in accordance with IFRS without reconciliation to U.S. GAAP. As per these rules, we include in this annual report our consolidated financial statements prepared in accordance with IFRS, translated into U.S. dollars. All financial information, except as otherwise noted, is stated in accordance with IFRS.
In this annual report, we also present “total cash costs” and “total cash costs per ounce”, which have been determined using industry standards previously promulgated by the Gold Institute and are non-GAAP measures. The Gold Institute was a non-profit international industry association of miners, refiners, bullion suppliers and manufacturers of gold products that ceased operation in 2002, which developed a uniform format for reporting production costs on a per ounce basis. The Gold Institute has now been incorporated into the National Mining Association. An investor should not consider these items in isolation or as alternatives to production costs, cost of sales or any other measure of financial performance presented in accordance with IFRS. While the Gold Institute has provided definitions for the calculation of total cash costs, the calculation of total cash costs and total cash costs per ounce may vary significantly among gold mining companies and, by themselves, do not necessarily provide a basis for comparison with other gold mining companies. For further information, see Item 5 . “ Operating and Financial Review and Prospects — Costs — Reconciliation of Non-GAAP Measures ”.
We have included the U.S. dollar equivalent amounts of certain information and transactions in Rand, Kina and A$. Unless otherwise stated, we have translated (i) balance sheet items at the closing rate as reported by Reuters on the last business day of the period (R7.63 per US$1.00 as at June 30, 2010 and R7.72 per US$1.00 as at June 30, 2009), (ii) acquisitions, disposals and specific items included within equity at the rate prevailing at the date the transaction was entered into and (iii) income statement items at the average rate for the year (R7.58 per US$1.00 as at June 30, 2010, R9.00 per US$1.00 as at June 30, 2009 and R7.26 per US$1.00 for fiscal 2008). Capital expenditures for fiscal 2011 have been translated at the rates used for balance sheet items at June 30, 2010. By including these U.S. dollar equivalents in this annual report, we are not representing that the Rand, Kina and A$ amounts actually represent the U.S. dollar amounts, as the case may be, or that these amounts could be converted at the rates indicated.

2

FORWARD-LOOKING STATEMENTS
This annual report contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results of operations, business strategies, operating efficiencies, competitive positions, growth opportunities for existing services, plans and objectives of management, markets for stock and other matters. In particular, among other statements, certain statements in Item 4. “Information on the Company,” Item 5. “Operating and Financial Review and Prospects” and Item 11. “Quantitative and Qualitative Disclosures About Market Risk” are forward-looking in nature. Statements in this annual report that are not historical facts are “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “ Exchange Act ”), and Section 27A of the Securities Act of 1933, as amended.
These forward-looking statements, including, among others, those relating to our future business prospects, revenues and income, wherever they may occur in this annual report and the exhibits to this annual report, are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks and uncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. As a consequence, these forward-looking statements should be considered in light of various important factors, including those set forth in this annual report. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation:
• overall economic and business conditions in South Africa and elsewhere;
• the ability to achieve anticipated efficiencies and other cost savings in connection with past and future acquisitions;
• fluctuations in the market price of gold;
• the occurrence of hazards associated with underground and surface gold mining;
• the occurrence of labor disruptions;
• availability, terms and deployment of capital;
• changes in government regulation, particularly mining rights and environmental regulation;
• fluctuations in exchange rates;
• currency devaluations/appreciations and other macroeconomic monetary policies; and
• socio-economic instability in South Africa and other countries in which we operate.
We undertake no obligation to update publicly or release any revisions to these forward-looking statements to reflect events or circumstances after the date of this annual report or to reflect the occurrence of unanticipated events.

3

PART I
Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS
Not applicable.
Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not applicable.
Item 3. KEY INFORMATION
SELECTED FINANCIAL DATA
The selected consolidated financial data below should be read in conjunction with, and are qualified in their entirety by reference to, our consolidated financial statements and the notes thereto and with Item 5. “Operating and Financial Review and Prospects”, both included elsewhere in this annual report. Historical results are not necessarily indicative of results to be expected for any future period.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA
We are a South African company and the majority of our operations are located in our home country. Accordingly, our books of account are maintained in South African Rand and our annual and interim financial statements are prepared in accordance with IFRS. Prior to fiscal year ended June 30, 2008, our annual financial statements (translated into U.S. dollars) were prepared and filed with the SEC in accordance with U.S. GAAP. On December 21, 2007, the SEC adopted rules allowing foreign private issuers that file Annual Reports on Form 20-F to file financial statements with the SEC in accordance with IFRS without reconciliation to U.S. GAAP . As per these new rules, we changed our basis of presentation and have included in this annual report our consolidated financial statements prepared in accordance with IFRS, translated into U.S. dollars.
The selected historical consolidated income statement and balance sheet data for the last five fiscal years are, unless otherwise noted, stated in accordance with IFRS, and has been extracted from the more detailed information and financial statements prepared in accordance with IFRS, including our audited consolidated financial statements as of June 30, 2010 and 2009 and for each of the years in the three years ended June 30, 2010 and the related notes, which appear elsewhere in this annual report. The historical consolidated financial data at June 30, 2008, 2007 and 2006, and for each of the years in the two years ended June 30, 2007, has been extracted from our audited consolidated financial statements not included in this annual report as adjusted for discontinued operations and the accounting changes described below.
During fiscal 2008, we early adopted IAS 23 (Revised) — Borrowing Costs. In accordance with the Revised Standard’s transitional provisions, we designated July 1, 2000 as the effective date and applied the requirements of the Revised Standard to all qualifying projects for which the commencement date of capitalization was on or after that date. The effect of this change on the 2007 and 2006 years has been included in the selected consolidated information below.
Discontinued operations for the periods below include our Cooke and Orkney operations in South Africa, as well as our South Kalgoorlie and Mount Magnet operations in Australia, up to the date of their disposal. The assets and liabilities of the Cooke operation were first classified as held for sale in fiscal 2008 and the results of this operation presented as discontinued operations until the time of its disposal to Rand Uranium (Proprietary) Limited (“ Rand Uranium ”) in November 2008. The assets and liabilities of the Orkney and Australia’s South Kalgoorlie operations were first classified as held for sale in fiscal 2007, and the results of these operations reflected as discontinued operations in anticipation of their disposal in fiscal 2008. In fiscal 2010, Australia’s Mount Magnet operations were classified as held for sale and the results of the Mount Magnet operation presented as discontinued operations when an agreement for its disposal to Ramelius Resources Limited (“ Ramelius ”) was concluded. The reclassifications in respect of discontinued operations were done in terms of IFRS 5 — Non-Current Assets Held for Sale and Discontinued Operations. See note 14 of the consolidated financial statements and Item 4 . “ Information of the Company — Business — International Operations ”, “ Information of the Company — Business — Orkney Operations,” Item 4 . “ Information of the Company — Business — Cooke Operations ”.

4

Fiscal year ended June 30,
2010 2009 2008 2007 2006
($ in millions, except per share amounts)
Income Statement Data
Revenue
1,489 1,277 1,269 1,116 937
Operating profit/(loss)
22 236 73 154 (104 )
Profit/(loss) from associates
7 1 (11 ) (3 ) (17 )
Profit/(loss) from continuing operations before taxation
24 238 (39 ) 156 (91 )
Taxation
(44 ) (22 ) (65 ) (39 ) (22 )
(Loss)/profit from continuing operations
(20 ) 216 (104 ) 117 (113 )
(Loss)/profit from discontinued operations
(4 ) 95 74 (66 ) 22
Net (loss)/profit
(24 ) 311 (30 ) 51 (91 )
Basic (loss)/earnings per share from continuing operations ($)
(0.05 ) 0.52 (0.26 ) 0.29 (0.29 )
Diluted (loss)/earnings per share from continuing operations ($)
(0.05 ) 0.51 (0.26 ) 0.29 (0.29 )
Basic (loss)/earnings per share ($)
(0.06 ) 0.75 (0.08 ) 0.12 (0.23 )
Diluted (loss)/earnings per share ($)
(0.06 ) 0.74 (0.08 ) 0.12 (0.23 )
Weighted average number of shares used in the computation of basic (loss)/earnings per share
426,381,581 414,120,732 400,750,167 397,910,797 393,727,012
Weighted average number of shares used in the computation of diluted (loss)/earnings per share
427,846,547 415,962,899 402,894,248 402,382,011 393,727,012
Dividends per share
0.06 — — — —
Other Financial Data
Cash cost per ounce of gold from continuing operations ($/oz) (1)
801 583 600 484 448
Total cash cost per ounce of gold ($/oz) (1)
801 586 602 489 443
Balance Sheet Data
Assets
Property, plant and equipment
3,874 3,614 3,531 3,484 3,263
Assets of disposal groups classified as held for sale
32 — 197 182 —
Other assets
1,235 1,311 982 1,494 1,432
Total assets
5,141 4,925 4,710 5,160 4,695
Equity and liabilities
Total equity
3,828 3,824 3,172 3,366 3,249
Borrowings (current and non-current)
156 47 525 653 500
Liabilities of disposal groups held for sale
18 — 64 77 —
Other liabilities
1,139 1,054 949 1,064 946
Total equity and liabilities
5,141 4,925 4,710 5,160 4,695
(1) Total cash costs and total cash costs per ounce are non-GAAP measures. Previously, we calculated cash costs per ounce by dividing total cash costs, as determined using the guidance previously provided by the Gold Institute, by gold ounces sold. During fiscal 2009, we changed the calculation, using gold produced as the denominator and therefore excluded the effect of the movement in the gold inventory from the cash cost amount. We believe that this change provides a better indication of the cash generating capabilities of our operations and also allows for a better comparison with other companies. The cash costs and cash cost per ounce have been re-presented for all periods prior to fiscal 2009. The Gold Institute was a non-profit industry association comprised of leading gold producers, refiners, bullion suppliers and manufacturers. This institute has now been incorporated into the National Mining Association. The guidance was first issued in 1996 and was revised in November 1999. Total cash costs, as defined in the guidance previously provided by the Gold Institute, include mine production costs, transport and refinery costs, applicable general and administrative costs, ongoing environmental rehabilitation costs as well as transfers to and from deferred stripping and costs associated with royalties. Ongoing employee termination costs are included, however, employee termination costs associated with major restructuring and shaft closures are excluded. Total cash costs have been calculated on a consistent basis for all periods presented. Changes in cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and the U.S. dollar. Because total cash costs and total cash costs per ounce are non-GAAP measures, they should therefore not be considered by investors in isolation or as an alternative to production costs, cost of sales, or any other measure of financial performance calculated in accordance with IFRS. While the Gold Institute has provided a definition for the calculation of total cash costs and total cash costs per ounce, the calculation of cash costs per ounce may vary from company to company and may not be comparable to other similarly titled measures of other companies. However, we believe that cash costs per ounce is a useful indicator to investors and management of a mining company’s performance as it provides (1) an indication of the cash generating capacities of the mining operations, (2) the trends in cash costs as the company’s operations mature, (3) a measure of a company’s performance, by comparison of cash costs per ounce to the spot price of gold and (4) an internal benchmark of performance to allow for comparison against other companies. For further information, see Item 5. “Operating and Financial Review and Prospects — Costs — Reconciliation of non-GAAP measures”.

5

EXCHANGE RATES
Unless otherwise stated, balance sheet item amounts are translated from Rand to U.S. dollars at the exchange rate prevailing on the last business day of the period (R7.63 per US$1.00 as at June 30, 2010), except for acquisitions, disposals and specific items included within equity that are converted at the exchange rate prevailing on the date the transaction was entered into, and income statement item amounts that are translated from Rand to U.S. dollars at the average exchange rate for the period (R7.58 per US$1.00 for fiscal 2010).
As of October 18, 2010, the exchange rate per US$1.00 was R6.90. (1)
The following table sets forth, for the past five fiscal years, the average and period end rates for Rand expressed in Rand per US$1.00. For periods prior to December 31, 2008, the following tables express the exchange rates in terms of the noon buying rate in New York City for cable transfers in Rand as certified for customs purposes by the Federal Reserve Bank of New York. As of December 31, 2008, the Federal Reserve Bank ceased publication of the noon buying rate and, as such, the exchange rates for fiscal 2009 and 2010 are sourced from Reuters, being the closing rate at period end.
Fiscal Year Ended
June 30, Average Period End
2006
6.36 (2) 7.17
2007
7.20 (2) 7.04
2008
7.26 (2) 7.80
2009
9.00 (3) 7.72
2010
7.58 (3) 7.63
Month of High Low
May 2010
7.95 7.41
June 2010
7.82 7.50
July 2010
7.75 7.29
August 2010
7.38 7.19
September 2010
7.26 6.94
October 2009 (through October 18, 2010)
7.00 6.78
(1) Based on the interbank rate as reported by Reuters.
(2) The average of the noon buying rates on the last day of each full month during the relevant period as certified for customs purposes by the Federal Reserve Bank of New York.
(3) The daily average of the closing rate during the relevant period as reported by Reuters.
Fluctuations in the exchange rate between Rand and the U.S. dollar will affect the dollar equivalent of the price of ordinary shares on the Johannesburg Stock Exchange, which may affect the market price of the American Depositary Shares (“ ADSs ”) on the New York Stock Exchange. These fluctuations will also affect the dollar amounts received by owners of ADSs on the conversion of any dividends on ordinary shares paid in Rand.

6

CAPITALIZATION AND INDEBTEDNESS
Not applicable.
REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
RISK FACTORS
In addition to the other information included in this annual report and the exhibits, you should also carefully consider the following factors related to our ordinary shares and ADSs. There may be additional risks that we do not currently know of or that we currently deem immaterial based on information currently available to us. Although Harmony has a formal risk policy framework in place, the maintenance and development of which is undertaken on an ongoing basis so as to help management address systematic categories of risk associated with its business operations, any of these risks could have a material adverse effect on our business, financial condition or results of operations, leading to a decline in the trading price of our ordinary shares or our ADSs. The risks described below may, in retrospect, turn out to be incomplete and therefore may not be the only risks to which we are exposed. Additional risks and uncertainties not presently known to us or that we now believe are immaterial (and have therefore not been included), could also adversely affect our businesses, results of operations or financial condition. The order of presentation of the risk factors below does not indicate the likelihood of their occurrence or the magnitude or the significance of the individual risks. The risks described below could occur individually or cumulatively and intensify in case of a cumulative occurrence.
Risks Relating to Our Business and the Gold Mining Industry
The profitability of our operations, and the cash flows generated by those operations, are affected by changes in the Rand price of gold, such that a fall in the price of gold below our cash cost of production for any sustained period may lead us to experience losses and to curtail or suspend certain operations.
Substantially all of our revenues come from the sale of gold. Historically, the market price for gold has fluctuated widely and has been affected by numerous factors over which we have no control, including:
• the demand for gold for industrial uses and for use in jewelry;
• international or regional political and economic trends;
• the strength or weakness of the U.S. dollar (the currency in which gold prices generally are quoted) and of other currencies;
• financial market expectations regarding the rate of inflation;
• interest rates;
• speculative activities;
• actual or expected purchases and sales of gold bullion held by central banks or other large gold bullion holders or dealers;
• forward sales by other gold producers; and
• the production and cost levels for gold in major gold-producing nations, such as South Africa, China, the United States and Australia.
In addition, the current demand for and supply of gold affects the price of gold, but not necessarily in the same manner as current demand and supply affect the prices of other commodities. Historically, gold has retained its value in relative terms against basic goods in times of inflation and monetary crisis. As a result, central banks, financial institutions and individuals hold large amounts of gold as a store of value and production in any given year constitutes a very small portion of the total potential supply of gold. Since the potential supply of gold is large relative to mine production in any given year, normal variations in current production will not necessarily have a significant effect on the supply of gold or its price.

7

The volatility of gold prices is illustrated in the following table, which shows the annual high, low and average of the afternoon London Bullion Market fixing price of gold in U.S. dollars for the past ten calendar years:
Price per ounce
Calendar Year High Low Average
($) ($) ($)
2000
313 264 282
2001
293 256 271
2002
332 278 309
2003
412 322 361
2004
427 343 389
2005
476 411 434
2006
725 525 604
2007
841 608 695
2008
1,011 713 872
2009
1,212 810 972
2010 (through October 18, 2010)
1,373 1,058 1,188
On October 18, 2010, the afternoon fixing price of gold on the London Bullion Market was US$1,367.25 per ounce.
While the aggregate effect of these factors is impossible for us to predict, if gold prices should fall below our cash cost of production and remain at such levels for any sustained period, we may experience losses and may be forced to curtail or suspend some or all of our operations. In addition, we would also have to assess the economic impact of low gold prices on our ability to recover any losses we may incur during that period and on our ability to maintain adequate reserves. Our cash cost per ounce of gold produced from continuing operations was US$801 in fiscal 2010, US$583 in fiscal 2009 and US$600 in fiscal 2008.
As the majority of our production costs are incurred in Rand and other non-U.S. currencies, and gold is sold in U.S. dollars, our financial condition could be materially harmed by an appreciation in the value of the Rand and other non-U.S. currencies against the U.S. dollar.
Gold is sold throughout the world in U.S. dollars, but most of our operating costs are incurred in Rand and other non-U.S. currencies. As a result, any significant and sustained appreciation of the South African Rand or other non-U.S. currencies against the dollar will serve materially to reduce our revenues and overall net income.
As we currently do not enter into forward sales, commodity derivatives or hedging arrangements with respect to our future gold production, we are exposed to the impact of any significant decrease in the gold price.
As a general rule, we sell our gold at the prevailing market price. Currently, we generally do not enter into forward sales, commodity derivative or hedging arrangements to establish a price in advance for the sale of future gold production, although we may do so in the future. As a result, we may realize the benefit of any short-term increase in the gold price, but are not protected against decreases in the gold price, and if the gold price decreases significantly, our revenues may be materially adversely affected.
Estimations of our gold reserves are based on a number of assumptions, including assumptions as to mining and recovery factors, future cash costs of production and the price of gold and may yield less gold under actual production conditions than currently estimated.
The mineral reserve estimates contained in this annual report are estimates of the mill delivered quantity and grade of gold in our deposits and stockpiles. They represent the amount of gold which we believe can be mined, processed and sold at prices sufficient to recover our estimated future cash costs of production, remaining investment and anticipated additional capital expenditures. Our mineral reserves are estimated based upon a number of assumptions, and are stated in accordance with SEC Industry Guide 7. Our mineral reserve estimates are calculated based on estimates of:
• future cash costs (which in some cases are assumed to decrease significantly);
• future gold prices; and
• future currency exchange rates.

8

These factors, which are beyond our control, significantly impact these mineral reserve estimates. As a result, the reserve estimates contained in this annual report should not be interpreted as assurances of the economic life of our gold and other precious metal deposits or the future profitability of operations.
Since these mineral reserves are estimates based on assumptions related to the factors detailed above, should there be changes to these, we may in the future need to revise these estimates. In particular, if our cash operating and production costs increase or do not decrease as assumed (whether in dollar, Rand, or other non-U.S. currencies terms, or in relative terms due to appreciation of the Rand and other non-U.S. currencies against the U.S. dollar) or the gold price decreases, the recovery of a portion of our mineral reserves may become uneconomical. This in turn will lead us to reduce our estimated reserves.
In order to maintain gold production beyond the expected lives of our existing mines or to increase production materially above projected levels, we will need to access additional reserves through exploration or discovery.
Our operations have limited proven and probable reserves and exploration and discovery is necessary to maintain current gold production levels at these operations. Exploration for gold and other precious metals is speculative in nature and may be unsuccessful, and involves many risks, including those related to:
• locating orebodies;
• identifying the metallurgical properties of orebodies;
• estimating the economic feasibility of mining orebodies;
• developing appropriate metallurgical processes;
• obtaining necessary governmental permits; and
• constructing mining and processing facilities at any site chosen for mining.
Our exploration efforts might not result in the discovery of mineralization, and any mineralization discovered might not result in an increase in our proven and probable reserves. To access additional reserves, we will need to successfully complete development projects, including extensions to existing mines and, possibly, that of new mines. Development projects would also be necessary to access any new mineralization discovered through our exploration activities around the world. We typically use feasibility studies to determine whether or not to undertake significant development projects. Feasibility studies include estimates of expected or anticipated economic returns, which are based on assumptions about:
• future gold and other metal prices;
• anticipated tonnage, grades and metallurgical characteristics of ore to be mined and processed;
• anticipated recovery rates of gold and other metals from the ore; and
• anticipated total costs of the project, including capital expenditure and cash costs.
Actual cash costs of exploration, production and economic returns may differ significantly from those anticipated by our feasibility studies for new development projects.
It can take a number of years from the initial feasibility study until development is completed and, during that time, the economic feasibility of production may change. In addition, there are a number of uncertainties inherent in the development and construction of an extension to an existing mine or any new mine, including:
• the availability and timing of necessary environmental and governmental permits;
• the timing and cost of constructing mining and processing facilities, which can be considerable;
• the availability and cost of skilled labor, power, water and other materials;
• the accessibility of transportation and other infrastructure, particularly in remote locations;
• the availability and cost of smelting and refining arrangements; and
• the availability of funds to finance construction and development activities.
We currently maintain a range of focused exploration programs, concentrating on areas not too distant from our operational mines, as well as a number of prospective known gold mineralized regions around the world. During fiscal 2010 and 2009, the bulk of exploration expenditure was allocated to activities in South Africa and Papua New Guinea (“ PNG ”). However, there is no assurance that any future development

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projects will extend the life of our existing mining operations or result in any new commercial mining operations.
The costs associated with the pumping of water inflows from closed mines adjacent to our operations could adversely affect our results of operations.
Certain of our mining operations are located adjacent to the mining operations of other mining companies. A mine closure may have an adverse impact on the continued operations at an adjacent mine if appropriate preventative steps are not taken. In particular, this impact can include the ingress of underground water where pumping operations at the closed mine are suspended. Such ingress could result in damage to property, operational disruptions and additional pumping costs, which would adversely affect any one of our adjacent mining operations.
The supply of electricity and increases in the cost of power may adversely affect our results of operations and our financial condition.
Each of our mining operations is dependent on electrical power generated by the state utility Eskom, which holds a monopoly on the South African market. As a result of an increase in demand exceeding available generating capacity, South Africa has been subject to disruptions in electrical power supply. During fiscal 2008, the electricity supply was interrupted by Eskom thereby halting production at certain of our mines. This led to management restructuring operating processes to control and reduce our consumption of electricity at all our operations. There have been no further disruptions and we have been able to continue production at 90% electricity allocation as required by the Energy Conservation Scheme (“ ECS ”) and interim rules imposed by Eskom. All operations were allocated an ECS allocation in line with the Eskom allocation and equipment and management structures were put in place to monitor and manage real-time consumption. Applications submitted to Eskom for additional energy allocation to the four future growth projects were approved, enabling us to proceed with the projects and to ramp-up to full capacity utilising Eskom power. We also submitted applications for additional power allocation for four metallurgical projects in the Free State, which were also approved by Eskom. Nevertheless, an insufficient supply of electricity may adversely affect our results of operations and financial condition.
As a result of Eskom’s planned capital expansion program to deal with the current power constraints, an average 25% per annum tariff increase for the three year multi-year price determination period has been approved by the National Energy Regulator South Africa (“ NERSA ”). The first increase became effective on April 1, 2010. These increases will have a negative impact on our results of operations going forward.
Also, see Item 5. “Electricity in South Africa.”
We may experience problems in identifying, financing and managing new acquisitions and integrating them with our existing operations.
Acquiring new gold mining operations involves a number of risks including:
• our ability to identify appropriate assets for acquisition and/or to negotiate acquisitions on favorable terms;
• obtaining the financing necessary to complete future acquisitions;
• difficulties in assimilating the operations of the acquired business;
• difficulties in maintaining our financial and strategic focus while integrating the acquired business;
• problems in implementing uniform standards, controls, procedures and policies;
• increasing pressures on existing management to oversee a rapidly expanding company; and
• to the extent we acquire mining operations outside South Africa or Australasia, encountering difficulties relating to operating in countries in which we have not previously operated.
Our ability to make successful acquisitions and any difficulties or time delays in achieving successful integration of any of such acquisitions could have a material adverse effect on our business, operating results, financial condition and share price.
Certain factors may affect our ability to support the carrying value of our property, plant and equipment, goodwill and other assets on our balance sheet.
We review and test the carrying value of our assets on an annual basis when events or changes in circumstances suggest that the carrying amount may not be recoverable.

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If there are indications that impairment may have occurred, we prepare estimates of expected future cash flows for each group of assets. These estimates of future cash flows are prepared at the lowest level for which identifiable cash flows are identified as being independent of the cash flows of other mining assets and liabilities. Expected future cash flows are inherently uncertain, and could materially change over time. Such cash flows are significantly affected by reserve and production estimates, together with economic factors such as spot and forward gold prices, discount rates, currency exchange rates, estimates of costs to produce reserves and future capital expenditures.
As of June 30, 2010, we have substantial amounts of property, plant and equipment, goodwill and other assets on our consolidated balance sheets. We have recorded impairment charges relating to these assets and, if any one or a combination of the uncertainties described above occurs, management may be required to recognize further impairment charges, which could adversely affect our financial results and condition.
Given the nature of mining and the type of gold mines we operate, we face a material risk of liability, delays and increased cash costs of production from environmental and industrial accidents and pollution.
The business of gold mining by its nature involves significant risks and hazards, including environmental hazards and industrial accidents. In particular, hazards associated with underground mining include:
• rock bursts;
• seismic events;
• underground fires;
• cave-ins or falls of ground;
• discharges of gases and toxic chemicals;
• release of radioactive hazards;
• flooding;
• pillar mining;
• accidents; and
• other conditions resulting from drilling, blasting and the removal and processing of material from a deep-level mine.
Hazards associated with open cast mining (also known as open-pit mining) include:
• flooding of the open-pit;
• collapse of the open-pit walls;
• accidents associated with the operation of large open-pits and rock transportation equipment; and
• accidents associated with the preparation and ignition of large-scale open-pit blasting operations.
Hazards associated with waste-rock mining include:
• accidents associated with operating a waste dump and rock transportation; and
• production disruptions caused by weather.
We are at risk of experiencing any or all of these environmental or other industrial hazards. The occurrence of any of these hazards could delay production, increase cash costs and result in our financial liability.
The nature of our mining operations presents safety and security risks.
The industrial risks identified above also present safety risks for our operations and our employees and can lead to the suspension and potential closure of operations for indeterminate periods. These and other safety risks, even in situations where no injuries occur, can have a material adverse effect on our operations and production. In addition, security issues need to be continually addressed, including the problem of criminal mining. See Item 4. “ Regulation — Health and Safety Matters ”.
Our insurance coverage may prove inadequate to satisfy future claims against us.
We have third-party liability coverage for most potential liabilities, including environmental liabilities. While we believe that our current insurance coverage for the hazards described above is adequate and consistent with industry practice, we may be subject to liability for pollution (excluding sudden and accidental pollution) or other hazards against which we have not insured or cannot insure, including

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those in respect of past mining activities. Further, we maintain and intend to continue to maintain, property and liability insurance consistent with industry practice, but such insurance contains exclusions and limitations on coverage. In addition, there can be no assurance that insurance will continue to be available at economically acceptable premiums. As a result, in the future, our insurance coverage may not cover the extent of claims against us for environmental or industrial accidents or pollution.
Our operations may be negatively impacted by inflation.
Our operations have been materially affected by inflation. Inflation in South Africa has fluctuated widely in recent years, reaching 11.6% at the end of fiscal 2008 before it decreased significantly to 6.9% at the end of fiscal 2009 and to 4.2% by the end of 2010 fiscal year. However, working costs and wages especially, have increased considerably over the past three years resulting in significant cost pressures for the mining industry. In addition, electricity prices have increased by 25% in the current year and are expected to increase by 25% per year for the next two years as the national electricity provider, Eskom, incurs significant capital to expand capacity. Therefore the electricity trend in inflation has not yet filtered through to the mining industry. See Item 5. “Electricity in South Africa” .
The inflation rate in PNG eased to 7.0% in the 2009 fiscal year (from 10.6% in 2008) and remained relatively stable at 7% for the 2010 fiscal year. Although the recent trend in the inflation figures point to a moderation in inflationary pressures, annual inflation remains significantly above those levels recorded in the years prior to 2008. While the strong international cost pressures experienced in 2008 were picked up in the official statistics, primarily through higher food and fuel prices, there is a concern that current domestic inflationary pressures are being understated in the official statistics produced by the National Statistical Office. For example, there are a number of domestic expenditure items such as the price of dwelling rentals which are reported to have been unchanged for the past two decades. This is despite the enormous increase in dwelling rents that have been observed over the past few years, which highlights inadequacies in the official statistics. Based on business liaison visits, anecdotal evidence suggests that inflation has been running at closer to 8.0% to 10.0% in the past year, with a number of businesses factoring these figures into their negotiations rather than using the official figures. Looking ahead to 2011, inflation is projected to be 8.0% compared to the budget estimate of 7.5%. The reason for the increase in forecast is mainly due to the Liquid Natural Gas project and the recovery in the global economy leading to high international food and energy prices. Labor costs have also increased due to availability of skilled labor as a direct consequence of major projects in PNG. The PNG currency has also remained relatively strong against the Australian and US dollar.
Our profits and financial condition could be affected adversely if the cost inflation discussed above is not offset by a concurrent devaluation of the Rand and other non-U.S. currencies and/or an increase in the price of gold.
The socio-economic framework in the regions in which we operate may have an adverse effect on our operations and profits.
We have operations in South Africa and PNG. As a result, changes or instability to the economic or political environment in any of these countries or in neighboring countries could affect our operations and profits. It is difficult to predict the future political, social and economic direction in these countries, or any other country in which we operate, and the impact government decisions may have on our business.
Actual and potential shortages of production inputs may have an adverse effect on our operations and profits.
Our results of operations may be affected by the availability and pricing of raw materials and other essential production inputs. The price of raw materials may be substantially affected by changes in global supply and demand, along with weather conditions, governmental controls and other factors. A sustained interruption to the supply of any of these materials would require us to find acceptable substitute suppliers and could require us to pay higher prices for such materials. Any significant increase in the prices of these materials would increase our operating costs and affect production considerations.
Our financial flexibility could be materially constrained by exchange control regulations as imposed by SARB.
In terms of South Africa’s exchange control regulations, the export of capital from South Africa is restricted. As a result, our ability to raise and deploy capital outside South Africa is limited. In particular, we are:
• generally not permitted to export capital from South Africa, to hold foreign currency or incur indebtedness denominated in foreign currencies without the approval of the South African exchange control authorities;
• generally not permitted to acquire an interest in a foreign venture without the approval of the South African exchange control authorities and first having complied with the investment criteria of the South African exchange control authorities;
• generally required to repatriate to South Africa profits of foreign operations; and

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• limited in our ability to utilize profits of one foreign business to finance operations of a different foreign business.
These restrictions could hinder our normal corporate functioning, including our ability to make foreign investments and procure foreign currency denominated financings in the future.
Since 1995, certain exchange controls in South Africa have been relaxed. The extent to which the South African government may further relax such exchange controls cannot be predicted with certainty, although the government has committed itself to a gradual approach to the relaxation of exchange control.
We compete with mining and other companies for key human resources .
We compete with mining and other companies on a global basis to attract and retain key human resources at all levels with the appropriate technical skills and operating and managerial experience necessary to continue to operate our business. The need to recruit, develop and retain skilled employees is particularly critical with respect to Historically Disadvantaged South Africans (“ HDSAs ”), women mining in South Africa and the recruitment and training of local landowners in PNG. The global shortage of key mining industry human resource skills, including geologists, mining engineers, metallurgists and skilled artisans has been exacerbated in the current environment of increased mining activity across the globe. Despite various initiatives in place, there can be no assurance that we will attract and retain skilled and experienced employees and, should we lose any of our key personnel, our business may be harmed and our results of operations and financial condition could be adversely affected. See Item 6. “ Employees ”.
Since our South African labor force has substantial trade union participation, we face the risk of disruption from labor disputes and new South African labor laws.
Despite a history of positive and constructive engagement with labor unions, there are periods during which the various stakeholders are unable to agree on dispute resolution processes. Disruptive activities on the part of labor, which normally differ in intensity, then become unavoidable. Due to the high level of union membership among our employees, we are at risk of having production stoppages for indefinite periods due to strikes and other disputes. Significant labor disruptions have affected our operations and financial condition before and we are not able to predict whether or not we will experience significant labor disputes in the future.
South African employment law sets out minimum terms and conditions of employment for employees. Though these minimum terms and conditions may be improved by agreements between us and the trade unions, the prescribed minimum terms and conditions form the benchmark for all employment contracts. See Item 6. “ Employees ”.
We are required to submit a report in terms of South African employment law detailing the progress made towards achieving employment equity in the workplace. In the event this report is not submitted, we could incur substantial penalties.
Developments in South African employment law may increase our cash costs of production or alter our relationship with our employees and trade unions, which may have an adverse effect on our business, operating results and financial condition.
HIV & AIDS poses risks to us in terms of productivity and costs.
The incidence of HIV & AIDS in South Africa and PNG, which is forecast to increase over the next decade, poses risks to us in terms of potentially reduced productivity, and increased medical and other costs. If a significant increase in the incidence of HIV & AIDS infection and HIV & AIDS-related diseases among the workforce over the next several years occurs, this may have an adverse impact on our operations, projects and financial condition. See Item 4. “ Regulation — Health & Safety Matters ”.
The cost of occupational healthcare services may increase in the future.
Operations in PNG are subject to the following PNG Acts and Regulations: PNG Mining Act 1992, PNG Mining Safety Act 1997, PNG Mining Safety Regulation 1935 (updated 2006), and the PNG Environment Act 2000. As in other countries, enforcement of these acts and regulations has the potential to cause interruption to mining activities. The PNG Minerals Resources Authority (“ MRA ”) administers the safety and environmental legislation on behalf of the PNG Government and has the power to stop work or in extreme cases close a mine until the mine owner complies with the requirements of the MRA. The MRA also mediates in disputes between mine owners and landowners or between landowner groups.
PNG has minimal health services in country and rural communities. We are putting in place health programs that will assist communities within our area of operations to have better access to health services in a sustainable manner through assistance with health facility upgrades, mentoring and education assistance to community health staff, malaria prevention programs, potable water solutions, as well as assistance with the development of small agriculture business.

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Our operations in South Africa are subject to health and safety regulations which could impose significant costs and burdens. The present Mine Health and Safety Act 29 of 1996 (“ Mine Health and Safety Act ”) imposes various duties on us at our mines, and grants the authorities broad powers to, among other things, close unsafe mines and order corrective action relating to health and safety matters.
The Occupational Diseases in Mines and Works Act 78 of 1973, governs the payment of compensation and medical costs related to certain illnesses contracted by persons employed in mines or at sites where activities ancillary to mining are conducted. Occupational healthcare services are available to our employees from our existing healthcare facilities in South Africa.
There is a risk that the cost of providing such services and implementing the various programs could increase in future depending on changes in the nature of underlying legislation and the profile of our employees. This increased cost, should it transpire, is currently indeterminate. We have embarked on a number of initiatives focused on improving the quality of life of our workforce, although there can be no guarantee that such initiatives will not be adversely affected by increased costs.
Laws governing mineral rights affect our business.
Our operations in South Africa and PNG are subject to legislation regulating mineral rights and the mining of those rights. In South Africa, we are governed by the South African Mineral and Petroleum Resources Development Act 2002 (“ MPRDA ”). See Item 4. “Regulation —South Africa” for a description of the principal objectives set out in the MPRDA.
Under the MPRDA, tenure over established mining operations is secured for up to 30 years (and renewable for periods not exceeding 30 years each thereafter), provided that mining companies applied for new order mining rights over existing operations within five years of May 1, 2004 or before the existing right expires, whichever was the earlier date and fulfill requirements specified in the MPRDA and the Broad-Based Socio-Economic Empowerment Charter for the South African mining industry (“ Mining Charter ”). The licenses for all of our South African operations have been granted. We will be eligible to apply for new licenses over existing operations, provided we comply with the Mining Charter. Failure to comply with the conditions of the mining licenses could have a material adverse effect on our operations and financial condition.
The Mining Charter was signed by government and stakeholders in October 2002, and contains principles relating to the transfer, over a 10-year period, of 26% of South Africa’s mining assets (as equity or attributable units of production) to HDSAs as defined in the Mining Charter. An interim target of 15% HDSA participation over five years was also set and to this end, the South African mining industry committed to securing financing to fund participation by HDSAs in an amount of R100 billion within the first five years of the Mining Charter’s tenure. The Mining Charter provides for the review of the participation process after five years to determine what further steps, if any, are needed to achieve target participation of 26%. In order to measure progress in meeting the requirements of the Mining Charter, companies are required to complete a scorecard, in which the levels of compliance with the objectives of the Mining Charter can be “ticked off” after five and ten years, respectively. The Mining Charter and Scorecard require programs for black economic empowerment and the promotion of value-added production, such as jewelry-making and other gold fabrication, in South Africa. In particular, targets are set out for broad-based black economic empowerment in the areas of human resources and skills development; employment equity; procurement and beneficiation. In addition, the Mining Charter addresses socio-economic issues, such as migrant labor, mine community and rural development and housing and living conditions.
Following a review of the progress made by the mining industry after five years of implementing the provisions of the Mining Charter , the Department of Mineral Resources (“ DMR ”) recently amended the Mining Charter and the Revised Mining Charter was released on September 13, 2010. The requirement under the Mining Charter for mining entities to achieve a 26% HDSA ownership of mining assets by the year 2014 has been retained. Amendments to the Mining Charter in the Revised Mining Charter include, inter alia, the requirement by mining companies to
(i) facilitate local beneficiation of mineral commodities;
(ii) procure a minimum of 40% of capital goods, 70% of services and 50% of consumer goods from HDSA suppliers (i.e. suppliers of which a minimum of 25% + 1 vote of their share capital must be owned by HDSAs) by 2014. These targets will however be exclusive of non-discretionary procurement expenditure;
(iii) achieve a minimum of 40% HDSA demographic representation by 2014 at executive management (board) level, senior management (EXCO) level, core and critical skills, middle management level and junior management level;
(iv) invest up to 5% per cent of annual payroll in essential skills development activities; and
(v) implement measures to improve the standards of housing and living conditions for mineworkers by converting or upgrading mineworkers’ hostels into family units, attaining an occupancy rate of one person per room and facilitating home ownership options for all mineworkers in consultation with organised labour, all of which must be achieved by 2014.

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In addition, mining companies are required to monitor and evaluate their compliance to the Revised Mining Charter, and must submit annual compliance reports to the DMR. The Scorecard for the Broad-Based Socio-Economic Empowerment Charter for the South African Mining Industry attached to the Revised Mining Charter (“ the Scorecard ”) makes provision for a phased-in approach for compliance with the above targets over the five year period ending in 2014. For measurement purposes, the Scorecard allocates various weightings to the different elements of the Revised Mining Charter. Failure to comply with the provisions of the Revised Mining Charter will amount to a breach of the MPRDA and may result in the cancellation or suspension of a mining company’s existing mining rights. Harmony obtained all of its licenses two years ago and has no reason to believe that our mining licenses will be cancelled or suspended.
The MPRDA also makes reference to royalties payable to the South African state in terms of the Mineral and Petroleum Resources Royalty Act (Act 28 of 2008). The Act provides for the payment of a royalty according to a formula based on earnings before interest, tax and depreciation, after the deduction of capital expenditure. This rate is then applied to revenue to calculate the royalty amount due, with a minimum of 0.5% and a maximum of 5% for gold mining companies. For the period since the royalty became effective on March 1, 2010 until June 30, 2010, the average royalty rate for our South African operations was 1.5% of gross sales.
The Mining Act of 1992 (PNG) stipulates that mineral rights in PNG belong to the government of PNG and they have a statutory right to obtain up to a 30% participating interest in mining development projects. The government then issues and administers mining tenements under the relevant mining legislation, and mining companies must pay royalties to the government based on production.
Production has commenced at our PNG mining operations and they are now subject to a 2% royalty payment to the government of PNG and local community groups. Should we desire to expand any of our initiatives in PNG operations into additional areas under exploration, these operations would need to convert the existing exploration licenses prior to the start of mining, and that process could require landowner title approval. There can be no assurance that any approval would be received.
Please also see Item 4. “ Regulation ” for further information.
We are subject to extensive environmental regulations.
As a gold mining company, we are subject to extensive environmental regulation. We have experienced and expect to continue to experience increased cash costs of production arising from compliance with South African and PNG environmental laws and regulations.
The MPRDA, certain other environmental legislation and the administrative policies of the South African government regulate the impact of our prospecting and mining operations on the environment. Pursuant to these regulations, upon the suspension, cancellation, termination or lapsing of a prospecting permit or mining authorization, we will remain liable for compliance with the provisions of the various relevant regulations, including any rehabilitation obligations. This liability will continue until such time as the appropriate authorities certify that we have complied with such provisions.
In the future, we may incur significant costs associated with complying with the increasingly stringent requirements being imposed under new legislation and regulations. This may include the need to increase and accelerate expenditure on environmental rehabilitation and to alter provisions for this expenditure, which could have a material adverse effect on our results and financial condition. We may also face increased environmental costs should other mines in the vicinity of our mines fail to meet their obligations with regard to the pumping or treatment of water.
The South African government has reviewed requirements imposed upon mining companies to ensure environmental restitution. For example, following the introduction of an environmental rights clause in South Africa’s constitution, a number of environmental legislative reform processes have been initiated. Legislation passed as a result of these initiatives has tended to be materially more onerous than laws previously applied in South Africa. Examples of such legislation include the MPRDA, the South African National Nuclear Regulator Act 1999, the South African National Water Act of 1998 and the South African National Environmental Management Act 1998, which include stringent “polluter-pays” provisions. The adoption of these or additional or more comprehensive and stringent requirements, in particular with regard to the management of hazardous waste, the pollution of ground and ground-water systems and the duty to rehabilitate closed mines, may result in additional costs and liabilities.
Our PNG operations are also subject to various laws and regulations relating to the protection of the environment, which are similar in scope to those of South Africa. See Item 4. “ Regulation — Environmental Matters ” for further discussion on the applicable legislation and our policies on environmental matters.

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Our operations in South Africa are subject to water use licenses, which could impose significant costs and burdens.
Under South African law, our South African operations are subject to water use licenses that govern each operation’s water usage and that require, among other things, that mining operations achieve and maintain certain water quality limits regarding all water discharges, where these are applicable. The majority of the South African operations are lawful users having existing water permits in terms of the Water Act of 1954. Nevertheless, the South African operations have made applications to the relevant regional directors for water use licences in terms of the National Water Act, 1998. Submissions were made as early as 2003 and the organisation has been working closely with the Regional Directors in the review process and in fact a number of our operations have been issued with licences and / or draft licences.
It is anticipated that the conditions of the licences may require Harmony to consider and implement alternate water management measures that may have a significant cost implication on our business. Any failure on our part to achieve or maintain compliance with the requirements of these licenses with respect to any of its operations may result in Harmony being subject to penalties, fees and expenses or business interruption due to revoked water licences. Any of the above could have a material adverse effect on our business, operating results and financial condition.
Compliance with emerging climate change regulations could result in significant costs to the Group, and climate change may present physical risks to our operations.
Greenhouse gases (“ GHGs ”) are emitted directly by our operations and indirectly as a result of the consumption of electricity from external utilities. Emissions from electricity consumption are indirectly attributable to our operations. There are currently a number of international and national measures to address or limit GHG emissions, including the Kyoto Protocol and the Copenhagen Accord, in various phases of discussion or implementation. Both South Africa and PNG are non-Annex I countries and therefore do not have emission reduction targets under the Kyoto Protocol in the First Commitment Period, ending 2012. After the Climate Summit in Copenhagen in December 2009, South Africa committed to 30% clean energy by 2025 with the vision that South Africa’s GHG emissions should peak by 2020-2025 at the latest, plateau for a decade and then decline by 40% by 2050. South Africa is currently also developing a National Climate Change Response Policy which is expected to be completed by 2012. This policy will be translated into a legislative, regulatory and fiscal package from now until 2012.
Our largest portion of GHG emissions are predominantly electricity related, with our electricity expenditure amounting to 10% of its operational costs in South Africa. While cost management is clearly a strategic issue for Harmony, of even greater importance is that energy supply be constant and reliable, given the implications that the loss of energy has on both production and for health and safety reasons. GHG emissions regulation which would increase the price of energy, within reason, will not affect Harmony as significantly as regulation which stipulates emission thresholds, or sets technology standards which may result in an insecurity of energy supply. Already certain compliance costs from our power suppliers are being passed through to the group in the form of price increases. For instance, in South Africa since 2009, we pay a levy of R0.02 per kilowatt hour for electricity generated by fossil fuels. These levies may increase over time and additional levies may be introduced in the future in South Africa or PNG, which could result in a significant increase in our costs.
As our current mines have a life expectancy of up to 24 years, we are undertaking capital projects to sustain and increase production at the Phakisa, Doornkop, Kusasalethu, Tshepong and Hidden Valley operations. These expansions would extend the company’s mining operations by another 10 years or more, by which time GHG regulations are expected to be a permanent feature of the global economy. Future climate change regulation will therefore need to be considered for all Harmony’s extensions and acquisitions. All new greenfields and brownfield projects are required by company policy to consider the impact of climate change in their design and planning.
Harmony is also likely to be exposed to GHG emission regulation thresholds specifically regarding leakage from refrigerant gas usage. Harmony will therefore be required to manage CFC-free refrigerant gas, and will consider using absorption chillers. This could have cost implications for the company.
In addition, our operations could be exposed to a number of physical risks from climate change, such as increased rainfall, reduced water availability, higher temperatures and extreme weather events. Events or conditions such as flooding or inadequate water supplies could disrupt our operations and rehabilitation efforts, and could increase the health and safety risks at the operations. In addition, such events or conditions could have adverse effects on our workforce and in communities in close proximity to our operations.
See Item 4. “Environmental Matters” for disclosure regarding our GHG emissions.

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We may have potential exposure to rehabilitate ground water and radiation that may exist where we have operated and/or continue to operate.
Due to the interconnected nature of mining operations, any proposed solution for potential flooding and potential decant risk posed by deep ground water, needs to be a combined one supported by all the mines located in the goldfields. As a result, the DMR and affected mining companies are involved in the development of a Regional Mine Closure Strategy. In view of the limitation of current information for the accurate estimation of a liability, no reliable estimate can be made for the obligation.
We have initiated analytical assessments to identify, quantify and mitigate impacts if and when (or as and where) these impacts may arise. Numerous scientific, technical and legal studies are under way to assist in determining the magnitude of possible contamination of ground water and to find sustainable remediation solutions. We have instituted processes to reduce possible future potential seepage and it has been demonstrated that Monitored Natural Attenuation (“ MNA ”) by the existing environment will contribute to improvement in some instance. The ultimate outcome of the matter cannot presently be determined and no provision for any liability that may result has been made in the financial statements.
Investors in the United States may have difficulty bringing actions, and enforcing judgments, against us, our directors and our executive officers based on the civil liabilities provisions of the federal securities laws or other laws of the United States or any state thereof.
We are incorporated in South Africa. Each of our directors and executive officers (and our independent registered public accounting firm) resides outside of the United States. Substantially all of the assets of these persons and substantially all of our assets are located outside the United States. As a result, it may not be possible for investors to enforce a judgment against these persons or ourselves obtained in a court of the United States predicated upon the civil liability provisions of the federal securities or other laws of the United States or any state thereof. A foreign judgment is not directly enforceable in South Africa, but constitutes a cause of action which will be enforced by South African courts provided that:
• the court that pronounced the judgment had jurisdiction to entertain the case according to the principles recognized by South African law with reference to the jurisdiction of foreign courts;
• the judgment is final and conclusive;
• the judgment has not lapsed;
• the recognition and enforcement of the judgment by South African courts would not be contrary to public policy, including observance of the rules of natural justice which require that the documents initiating the United States proceeding were properly served on the defendant and that the defendant was given the right to be heard and represented by counsel in a free and fair trial before an impartial tribunal;
• the judgment does not involve the enforcement of a penal or revenue law; and
• the enforcement of the judgment is not otherwise precluded by the provisions of the Protection of Business Act 99 of 1978, as amended, of the Republic of South Africa.
Compliance with new and changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies and increases our costs of compliance.
Laws, regulations and standards relating to accounting, corporate governance and public disclosure, new SEC regulations and other listing regulations applicable to us are subject to change and can create uncertainty for companies like us. New or changed laws, regulations and standards could lack specificity or be subject to varying interpretations. Their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such governance standards.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to furnish a report by our management on our internal control over financial reporting. The report in this annual report contains, among other matters, an assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year, including a statement as to whether or not our internal controls over financial reporting are effective. If we fail to maintain the adequacy of our internal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with the Sarbanes-Oxley Act. The requirement to evaluate and report on our internal controls also applies to companies that we may acquire and therefore, this assessment may be complicated by any future acquisitions we may complete. While we continue to dedicate resources and management time to ensuring that we have effective controls over financial reporting, failure to achieve and maintain an effective internal control environment could have a material adverse effect on the market’s perception of our business and our stock price. See Item 15 . “ Disclosure Controls and Procedures ” for management

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assessment as of June 30, 2010. In addition to management’s assessment of internal controls over financial reporting, we are required to have our independent registered public accounting firm publicly disclose their conclusions regarding the effectiveness of Harmony’s internal controls over financial reporting.
We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulations and standards in this regard have resulted in, and are likely to continue to result in, increased general and administrative expenses.
Sales of large quantities of our ordinary shares and ADSs, or the perception that these sales may occur, could adversely affect the prevailing market price of such securities
The market price of our ordinary shares or ADSs could fall if large quantities of ordinary shares of ADSs are sold in the public market, or there is a perception in the marketplace that such sales could occur. Subject to applicable securities laws, holders of our ordinary shares or ADSs may decide to sell them at any time. The market price of our ordinary shares or ADSs could also fall as a result of any future offerings it makes of ordinary shares, ADRs or securities exchangeable or exercisable for its ordinary shares or ADSs, or the perception in the marketplace that these sales might occur. We may make such offerings of additional ADS rights, letters of allocation or similar securities at any time or from time to time in the future.
Because we have a significant number of outstanding share options, our ordinary shares are subject to dilution.
We have employee share option schemes as well as other share schemes. The employee share option schemes came into effect in 2001, 2003 and 2006. Our board has authorized up to 60,011,669 shares of the issued share capital to be used for these plans. As a result, shareholders’ equity interests in us are subject to dilution to the extent of the future exercises of the options, through share schemes.
We may not pay dividends or make similar payments to our shareholders in the future.
We pay cash dividends only if funds are available for that purpose. Whether funds are available depends on a variety of factors, including the amount of cash available and our capital expenditures and other cash requirements existing at the time. Under South African law, we are only entitled to pay a dividend or similar payment to shareholders if we meet the solvency and liquidity tests set out in the Companies Act of South Africa and our Articles of Association. Cash dividends or other similar payments may not be paid in the future.
In February 2007, the South African Government announced a proposal to replace Secondary Tax on Companies with a 10% withholding tax on dividends and other distributions payable to shareholders. The amendments will be implemented in phases and are expected to become effective in the near future. Although this may reduce the tax payable on our South African operations, thereby increasing distributable earnings, the withholding tax will generally reduce the amount of dividends or other distributions received by shareholders.

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Item 4. INFORMATION ON THE COMPANY
BUSINESS
History and Development
We conduct underground and surface gold mining and related activities, including exploration, processing and smelting. We are currently the third largest producer of gold in South Africa, producing approximately 22% of the country’s annual gold output, and we ranked among the top 10 gold producers in the world, with operations and projects in South Africa and PNG. Our gold sales were approximately 1.4 million ounces of gold in fiscal 2010. As at June 30, 2010, our mining operations reported total proven and probable reserves of 48.1 million ounces, primarily from South African sources. In fiscal 2010, we processed approximately 19.8 million tons of ore.
In fiscal 2010, 96% of our total gold production took place in South Africa. In fiscal 2010, approximately 91% of our South African gold came from underground mines, and approximately 9% came from our surface operations (which include the Kalgold opencast operation and the Phoenix operation). For more detailed information about our activities, see Item 4. “Information on the Company — Business — Harmony’s Mining Operations — Overview” and the notes to the consolidated financial statements included in this annual report. Mining is a highly regulated industry, and we operate under a variety of statutes and regulations. For more detailed information about these statutes and regulations, see Item 4. “Information on the Company — Regulation” and Item 10. “Additional Information — Memorandum and Articles of Association” .
The majority of our exploration and evaluation done during fiscal 2010 has been focused on PNG. Our PNG exploration and evaluation opportunities are handled through the international office in Brisbane, Australia. Exploration in South Africa focused on the Evander South project, Joel North, Poplar and Tshepong.
We were incorporated and registered as a public company in South Africa on August 25, 1950 (under registration number 1950/038232/06). We poured our first gold on September 11, 1954. In the early 1970’s, we merged with the Anglovaal mines, Merriespruit and Virginia, forming Harmony Gold Mining Company Limited. We then expanded from a single lease-bound mining operation into an independent, world-class gold producer. We acquired additional mineral rights in the Free State, Mpumalanga, Gauteng and North West provinces in South Africa when we acquired Lydex in 1997, Evander in 1998, Kalgold in 1999, Randfontein in 2000, ARMgold in 2003 and Avgold in 2004. We acquired the President Steyn 1 and 2 shafts, Loraine 3 shaft, Freddies 7 and 9 shafts as well as the President Steyn gold plant, collectively known as the Pamodzi Free State assets, from Pamodzi Gold Free State (Proprietary) Limited (In Liquidation) (“ Pamodzi FS ”) during fiscal 2010. These shafts have been included in the Bambanani and Target operations. In building our Australian portfolio, we acquired Hill 50 and New Hampton in Western Australia in 2001 and 2002, respectively, and started our exploration portfolio in PNG with projects in the Morobe province originally through our acquisition of Abelle in 2003. During fiscal 2009 and 2008, we disposed of several operations in South Africa and Australia, as well as 50% of our interests in gold and copper assets in PNG. See Item 4. “ Disposals ”.
Our principal executive offices are located at Randfontein Office Park, Corner of Main Reef Road and Ward Avenue, Randfontein, 1760, South Africa and the telephone number at this location is +27-11-411-2000.
South African Operations
In South Africa, we operate a total of 10 underground operations, several surface operations including an open cast mine, and nine processing plants which are located in all of the currently known goldfields in the Witwatersrand basin of South Africa as well as the Kraaipan Greenstone Belt. These operations produced approximately 1.4 million ounces in fiscal 2010, and South Africa represented approximately 95% (or 45.6 million ounces) of our total proven and probable reserves. The deep level gold mines are located in four provinces in this basin, being the Free State province, Mpumalanga, the West Rand Goldfields in Gauteng province and the North West province. Surface operations are located in all these provinces.
Ore from the shafts and surface material are treated at nine metallurgical plants in South Africa, located near the operations (five in the Free State province, two in the North West province, one in Mpumalanga and one in Gauteng). There is one plant on care and maintenance which can be restarted if additional processing capacity is required (St. Helena plant in the Free State province). We are currently demolishing two plants in the Free State — the Virginia plant’s demolishment is almost completed, while the process for Steyn plant will continue until fiscal 2012. Winkelhaak plant at the Evander operations was placed on care and maintenance during fiscal 2010, and the demolishment of the plant is expected to commence during the first half of fiscal 2011 and be completed by the end of the first half of 2012.

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As part of our “Back-to-Basics” strategy, which we embarked on in August 2007, management reassessed and restructured the manner in which operations are managed and evaluated. Each operation, consisting anywhere from a single shaft to a group of shafts, is managed by a team headed up by a general manager. See Item 4 . “ Harmony’s Management Structure ”.
Operations are classified as “Underground” or “Surface” with the reportable segments in South Africa being as follows:
• Bambanani (includes Steyn 1 and 2 shafts), Doornkop, Evander, Joel, Kusasalethu (previously known as Elandsrand), Masimong, Phakisa, Target (includes Loraine 3, now known as Target 3), Tshepong and the Virginia operations (the Cooke operations were considered to be a reportable segment in fiscal 2008 and have been disclosed under discontinued operations until the time of its disposal in November 2008); and
• All other shafts and surface operations, including those that treat historic sand dumps, rock dumps and tailings dams, are grouped together under “Other — Underground” and “Other — Surface”.
International Operations
Our interests internationally are currently mainly located in PNG and represent 5% (or 2.5 million ounces) of our total proven and probable reserves.
PNG operations
In PNG, through our wholly-owned PNG-based subsidiaries, Morobe Consolidated Goldfields Limited (“ Morobe Consolidated Goldfields ”), Wafi Mining Limited (“ Wafi ”), Morobe Exploration Limited (“ MEL ”) and Harmony Gold (PNG) Exploration Limited (“ HGEL ”) we own development and exploration prospects.
In August 2008, Newcrest Mining Limited (“ Newcrest ”) acquired a 30.01% interest in our assets and tenements in the Morobe Province through the Morobe Mining Joint Venture. By the end of fiscal 2009, Newcrest had earned an additional 19.99% in terms of the farm-in agreement, resulting in Newcrest and us each owning a 50% interest in the joint venture. Through the joint venture, we continued with the process of building the Hidden Valley mine, with partial commissioning of the plant completed by the end of fiscal 2009. The plant was fully commissioned during the June 2010 quarter. The project at Wafi Golpu is at a Concept Study level, examining underground and open pit mining options. The project is expected to enter into pre-feasibility study in the new fiscal year.
Australian operations
At June 30, 2010, our interests in Australia consist solely of one site located at Mount Magnet in Western Australia. This site has been closed down and the plant has been put on care and maintenance since December 2007. Subsequent to the end of fiscal 2010, the Mount Magnet operations were sold to Ramelius, a mining company in Australia listed on the Australian Securities Exchange (“ ASX ”). The South Kalgoorlie operational assets and tenements, which we previously owned and which was also located in Western Australia, were sold to Dioro Exploration NL (“ Dioro ”) on November 30, 2007. Ore from the underground and surface material were treated at the two metallurgical plants in Australia (at Mount Magnet and at South Kalgoorlie prior to their sale).
In July 2007, we entered into an agreement with Dioro pursuant to which Dioro acquired our South Kalgoorlie assets. The total purchase price was A$45 million (US$39.8 million), consisting of both a cash and share component. The share component entailed the issuance of 11.4 million Dioro shares valued at A$20 million (US$17.7 million), and a cash component of A$25 million (US$22.1 million). The transaction was subject to various conditions precedent, including a minimum capital raising by Dioro of A$35 million (US$30.9 million) by the completion date. On November 30, 2007, all conditions precedent were satisfied, and the transaction was completed and accounted for on that date.
During fiscal 2009, we started an intensive drilling program at Mount Magnet and carried out feasibility studies in order to support our decision to either resume mining operations or sell it. A decision was taken by management during May 2010 to sell Mount Magnet, and at June 30, 2010, Mount Magnet is disclosed as held for sale and discontinued operation. We entered into a Share Sales Agreement with Ramelius for a total consideration of A$35.3 million (US$31.6 million) in cash plus replacement environmental bonds of A$4.7 million (US$4.2 million) totaling A$40.0 million (US$35.8 million) consideration. Final settlement of the transaction took place in July 2010.

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Strategy
Our focused strategy is based on two main pillars: safety and the competitive production of profitable ounces of gold. This strategy has its overall goal the production of 2 million safe and profitable ounces of gold by 2013. In striving for this, the intention is to transform Harmony into a sustainable company that has free cash flow that is able to generate earnings to fund both growth and dividends.
Growing the company and generating free cash flow will entail:
• growth in production ounces, by delivering into production the South African growth projects and by fully exploiting growth opportunities in PNG. An important element of this growth objective is the pursuit of geographic diversity;
• exploring and expanding into new geographic regions, developing mines, acquiring low-cost assets and entering into joint ventures;
• increasing levels of operational efficiency and productivity, to which end capital projects are being commissioned and achievable operational plans have been compiled; and
• optimizing our asset portfolio, so as to yield lower-cost, more profitable, high-margin ounces. To this end our portfolio was reviewed and restructured.
Together, these actions will help us to achieve the targeted growth in ounces and generate free cash flow.
(FLOW CHART)
Achievement of these objectives will be driven by the following:
Safety
Safety is our first priority. We are committed to zero fatalities, with various initiatives throughout the Group, from top management, filtering to every level through conscious and pragmatic effort. We also perform comprehensive safety auditing, and currently have 180 health and safety personnel trained as lead auditors on the OHSAS 18001 Standard in South Africa. We also conduct extensive back analysis to determine the root causes of accidents, to identify what could have been done to prevent them and what can be done in the future to prevent similar incidents.
To ensure that the only acceptable production is safe production, we have linked remuneration to safety performance at all levels of the organization. We have focused a great deal of effort on addressing behavior, creating an awareness of safety-related issues and acknowledging and rewarding safety achievements.

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Increasing production
In the past few years, we have invested a great deal in the expansion of the production base in South Africa and PNG, with a focus on developing new mines at competitive cash costs and upgrading the overall quality of our portfolio. Production has started at our five projects, being Kusasalethu new mine, Doornkop South Reef, Tshepong sub 66 and sub 71 declines and Phakisa in South Africa, and Hidden Valley in PNG. These projects could deliver up to 1.1 million low-cost production ounces by 2013 and a reduction on overall cash costs per ounce. As these assets reach full production in the next few years, they will provide the cash flow necessary to allow us to fund growth in our exploration projects and other opportunities that may arise.
We also have a number of additional development projects in South Africa, including surface sand dumps, rock dumps and tailings dams, where various feasibility and pre-feasibility studies are being conducted. We are investigating the treatment of the current arisings from the Tshepong, Phakisa and Masimong mines primarily for uranium, after which the gold will be extracted. In PNG, we have several greenfields and brownfields exploration projects, several within the Morobe Mining Joint Venture as well as prospects of which are wholly owned by us. Drilling results at the various sites are very encouraging, with Wafi-Golpu being rated as a world class discovery.
Adding to our asset portfolio
We are always looking out for quality assets offering lower costs to add to our asset portfolio. We have identified and evaluated a number of assets in South Africa, elsewhere in Africa and in South East Asia, which may potentially fit our portfolio. Although we have not been able to identify any projects of sufficient value at a reasonable price, we continue to assess acquisition opportunities, provided they meet our acquisition criteria.
We have, however, been very successful in acquiring valuable exploration tenements. Our aim is to enhance our competitive edge at an earlier stage in the pipeline, to expand our geographic diversity and to leverage off our existing base in one of the world’s premier new gold regions, PNG. As a result we have increased our exploration budget in the region by 72% for fiscal 2011. While returns may only be generated in the long term, we are confident that those returns will indeed be generated.
Restructuring for efficiency
In the past year, we reviewed our asset base and in line with our strategy to deliver safe, profitable and sustainable ounces, and we restructured our asset portfolio. We closed several shafts that were no longer economically viable to operate, and entered into agreements to dispose of assets that no longer fit into our asset profile. These changes will allow us to focus on growing, developing and operating our portfolio of quality assets in South Africa and PNG.
Competitive Strengths
We believe that the following strengths provide us with a competitive advantage:
Leading market position in the attractive gold industry
• We believe that our size and leading market position enables us to undertake exploration and simultaneously develop multiple projects around the world, as well as secure capital on competitive terms.
• The global gold industry offers a number of attractive industry fundamentals from which we benefit. This includes the absence of available substitutes, relatively high barriers to entry, and increasing gold producer concentration.
• We are developing new mines at a planned lower cost per ounce than our current operations, which we believe will help make them robust enough to survive any margin squeeze and to withstand any reversal in the gold price. We expect the gold price to continue its upward trend in the medium term.
Significant reserves with long mine lives
• Our mineral reserves as of June 30, 2010 amounted to 48.1 million ounces of gold spread across our assets in South Africa and PNG. This mineral reserve base is sufficient to support our existing production profile in excess of 10 years at current production levels. There has been a 0.1 million ounces year-on-year negative variance in mineral reserves due to normal depletion of 1.7 million ounces. Mine closures, the exclusion of projects previously included in reserves (Evander South), geology and scope changes resulted in a decrease of 2.6 million ounces. On the positive side, there is a net addition of 4.3 million ounces of mineral reserves from new acquisitions, Rand Uranium (attributable interest of 40%), surface projects and other positive adjustments from the operations.

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• Of our 48.1 million ounces of reserves, 38.2 million ounces are classified as above infrastructure and 9.9 million ounces re classified as below infrastructure (reserves for which capital expenditure has still to be approved).
Highly attractive project pipeline
• We have a diverse portfolio of gold development projects spread across South Africa and PNG. These projects include Kusasalethu, Doornkop, Tshepong and Phakisa in South Africa, and Hidden Valley in PNG, which, when developed, could deliver up to 1.1 million ounces of production by 2013.
• We believe the relatively higher grade of these South African deposits and/or lower cost base will result in these ounces being produced at highly competitive cash costs. This in turn may result in a reduction in our overall cash cost position as these new projects are commissioned.
• In addition to these projects, we have a number of additional development prospects that are being considered and progressed, including the processing of sand dumps and tailings dams in our tailings projects, the processing of rock dumps, and developing the Wafi-Golpu copper/gold deposit in PNG, which, when all developed, could increase production.
• We have also expanded our exploration skill base, evidenced by our progress in PNG.
• We formed Rand Uranium, to which we have transferred our Cooke assets to optimize the value of our uranium deposits.
Positive gold market outlook
• In the midst of volatile tumultuous global investment markets, the gold market has demonstrated great resilience and a positive upside. The price performance throughout fiscal 2010 supports our positive outlook for gold and, given our operational imperatives, we will seek to contain costs, increase output and optimize our margins.
• The gold price hit a high of US$1,261 per ounce on June 28, 2010 and, subsequent to year-end, an all-time high of US$1,373.25 on October 14, 2010. On October 18, 2010, it was US$1,367.25 per ounce, which is 30% higher than it was for the same time the previous year.
• We believe the fundamental drivers behind increased demand and decreased new supply of gold will remain in the future, which will in turn support a higher gold price over this period. As an unhedged gold producer, we will benefit from a rising gold price environment.
Increased focus on earnings margins and cost
• Our aim remains to improve profitability. At an operational level we have put in place an intensive process of business planning, with benchmarks and targets we believe to be realistic.
• We are committed to lower our cost base and extensively benchmark our costing parameters both internally among our operations, and externally against other gold producers. Stringent cost cutting and cost control programs have been implemented.
• We are confident that the benefits of our restructuring process and ongoing cost focus will be sustained in the long term, and as a result, our ability to withstand any future adverse market conditions has been significantly enhanced.
Conservative balance sheet and low gearing
• We maintain a conservative gearing policy and seek to fund ongoing capital expenditure (excluding growth projects) through cash generated from existing operations.
• Our low level of gearing should provide us with the ability to utilize debt to fund capital and development expenditure requirements for our new projects.

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Experienced management team with significant industry expertise
• Our senior management team consists of experienced mining executives with extensive industry backgrounds combined with geological and metallurgical expertise.
• Our senior management team has a proven track record in developing and managing the operations under its control, and has demonstrated an ability to optimize underperforming assets as well as developing new projects around the world.
Leading Black Economic Empowerment strategy
• We are proud to be a South African company that fully embraces the country’s transformation initiatives. We are approximately 14.6% owned by African Rainbow Minerals Limited (“ ARM Limited ”), a black empowerment company in which our chairman, Patrice Motsepe, owns an interest. Of our total production profile, 36% of our South African ounces are attributed empowerment ounces.
• We believe that we have gone beyond the requirements of the Mining Charter by ensuring that our HDSA partners are truly empowered, that we are largely managed by a HDSA Board, and that we continue to engage with black shareholders and/or partners to find more opportunities to invest in BEE transactions and involve HDSA partners.
• We will continue to embrace empowerment as part of our growth strategy and we acknowledge that empowerment forms a fundamental part of our business into the future.
Principal Investments
We have concluded several other strategic transactions within and outside South Africa in the last three fiscal years, which are summarized below.
During fiscal 2010, we acquired the President Steyn 1 and 2 shafts, Loraine 3 and the Freddies 7 and 9 shafts, along with the President Steyn gold plant, collectively known as the Pamodzi Free State assets, for R405 million (US$53 million). The assets were acquired from Pamodzi FS, a subsidiary of Pamodzi Gold Limited (“ Pamodzi ”), which is an associate of Harmony.
During fiscal 2009, we reached an agreement with African Vanguard Resources (Doornkop) (Proprietary) Limited (“ AVRD ”) to re-acquire AVRD’s 26% interest in the Doornkop mining right. In March 2010, the condition precedent to the agreement became effective. As a result the 26% interest in the Doornkop mining right was transferred from AVRD to Harmony in exchange for our repayment of the Nedbank loan of R244 million (US$33.4 million) and the issue of 2,162,359 Harmony ordinary shares. In terms of the agreement, 975,419 of these shares are to remain in escrow until May 2014.
In August 2009, we acquired 100% interest in two new exploration tenements, the Mount Hagen and Amanab Projects, in PNG.
On April 17, 2009, we exchanged our interest in Dioro for shares in Avoca Resources Limited (“ Avoca ”). See Item 4.“Disposals” . In terms of the offer by Avoca, we received one Avoca share for every three Dioro shares held. The market value of the Avoca shares on the date was US$4.2 million (A$1.50 per share).
On December 1, 2008, we issued 3,364,675 shares to Rio Tinto plc (“ Rio Tinto ”) for the purchase of Rio Tinto’s rights to the royalty agreement entered into prior to our acquisition of the Wafi deposits in PNG. The shares were valued at US$23 million on the transaction date. An additional US$10 million in cash will be payable when the decision to mine is made. Of this amount, Harmony is responsible for paying the first US$6 million, with the balance of US$4 million being borne equally by the joint venture partners. The effect of the transaction will be to reduce the cost of any gold produced at Wafi.
On November 21, 2008, we transferred our Cooke operations to Rand Uranium in exchange for cash of US$209 million and a 40% interest in Rand Uranium. See Item 4. “Disposals” .
On February 27, 2008, the Group acquired a 32.4% interest in Pamodzi after disposing of its Orkney assets. See Item 4 . “ Disposals ”.

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Disposals
See Item 8. “Recent Developments” for disposal made after the reporting date.
In June 2010, the group sold the Jeanette prospecting rights to Taung Gold Limited for a total consideration and profit of R75 million (US$10 million).
On January 18, 2010, we disposed of our investment in our Australian subsidiary, Big Bell Operations (Proprietary) Limited (“ BBGO ”), to Fulcrum Resources (Proprietary) Limited (“ Fulcrum ”) for A$3.5 million (US$3.2 million) in cash and replacement environmental bonds of A$3.2 million (US$3.0 million), resulting in total consideration of A$6.7 million (US$6.2 million).
During September and October 2009, we sold our interest in Avoca into the market for a total consideration of R42 million (US$5.8 million).
On April 17, 2009, we disposed of our Dioro shares in exchange for shares in Avoca. On that date, the market value of the Dioro shares was A$0.50 per share, or US$4.2 million.
On November 21, 2008, we transferred our Cooke assets to our wholly-owned, newly formed subsidiary, Rand Uranium, for the consideration of US$328 million, settled with Rand Uranium shares. In a related transaction on the same date, 60% of these shares were sold to Pamodzi Resources Fund 1 LLP (“ PRF ”) for US$197 million. US$40 million was paid on the effective date and the balance of US$157 million, together with interest at 5% per annum, was paid on April 20, 2009. The conditions precedent for the second part of the Rand Uranium transaction, relating to the sale of the Old Randfontein assets, were fulfilled on April 22, 2009. Additional shares were issued in settlement and 60% of these shares were sold to PRF. PRF paid its portion of the purchase price, amounting to US$12 million, in cash on April 20, 2009. We recognized a gain of US$171 million on these transactions.
During fiscal 2009, we disposed of 50% of our interest in our PNG assets in three tranches to Newcrest. The first tranche of 30.01% was disposed of on July 31, 2008 in exchange for US$229 million in cash, which was received on August 7, 2008. On February 28, 2009, the second tranche of 10% was disposed of in terms of the farm-in agreement. Newcrest earned in a further 9.99% interest by contributing to the capital expenditure at Hidden Valley as well as with a cash payment of US$6 million on June 30, 2009. A net profit of US$112 million was realized for the total disposal.
On February 27, 2008, we disposed of our Orkney operations to Pamodzi in exchange for 30 million listed ordinary shares, the market value of which was R345 million (US$46.5 million).
On November 30, 2007 the South Kalgoorlie operations were sold to Dioro in exchange for 11.4 million listed ordinary shares, the market value of which was, when issued on December 5, 2007, US$17.7 million (A$20 million), as well as cash of US$22.1 million (A$25 million). A loss of US$8.8 million (A$9.8 million), net of tax, was realized.
On August 24, 2007, the Group disposed of 13,095,079 ordinary Gold Fields shares. The proceeds amounted to R1,310 million (US$182.9 million), resulting in a loss of R459 million (US$63.2 million).
Hedging Policy
We have consistently maintained a policy of not entering into forward sales, commodity derivatives or hedging arrangements to establish a price in advance for the sale of our future gold production, although we may do so in the future. As a result of this policy, board approval is required when hedging arrangements are proposed.
Where any such gold hedging position is acquired, our policy is to eliminate any such positions existing within acquired companies as soon as this can be achieved through sound, commercially advantageous transactions. There may, however, be instances where certain hedge positions in acquired companies need to be kept in place for contractual or other reasons. In line with this policy, we have historically closed out hedging arrangements inherited through our acquisitions. Our revenues are sensitive to the exchange rate of the Rand and other non-U.S. currencies to the U.S. dollar, as all the revenues are generated by gold sales denominated in U.S. dollars. We do not enter into forward sales, commodity derivatives or other hedging arrangements to establish a Rand and/or other non-U.S. currency to U.S. dollar exchange rate in advance for the sales of our future gold production, although we may do so in the future.

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Description of Mining Business
Exploration
Exploration activities are focused on the extension of existing orebodies and identification of new orebodies, both at existing sites and at undeveloped sites.
Our gold-focused exploration program has two components:
• on-mine exploration, which looks for resources within the economic radius of existing mines, and
• new mine exploration, which is the global search for early to advanced stage projects.
Once a potential orebody has been discovered, exploration is extended and intensified in order to enable clearer definition of the orebody and the potential portions to be mined. Geological techniques are constantly refined to improve the economic viability of prospecting and mining activities.
We conduct exploration activities on our own or with joint venture partners. As at June 30, 2010, our prospecting interest in South Africa measured 67,922 hectares (167,833 acres), 344,522 hectares (851,329 acres) in PNG and 39,885 hectares (98,560 acres) in Australia (including Mount Magnet). We spent US$29 million on exploration in fiscal 2010 and the bulk of exploration expenditure was allocated to activities in PNG and South Africa. In fiscal 2011, we intend to carry out exploration in PNG and at Poplar, Masimong and Joel North in South Africa.
Mining
The mining process can be divided into two main phases: (i) accessing the orebody and (ii) mining the orebody. This basic process applies to both underground and surface operations.
• Accessing the orebody.
In our South African underground mines, access to the orebody is by means of shafts sunk from the surface to the lowest economically and practically mineable level. Horizontal development at various intervals of a shaft (known as levels) extends access to the horizon of the reef to be mined. On-reef development then provides specific mining access. Horizontal development at various intervals of the decline extends access to the horizon of the mineral to be mined. The declines are advanced on a continuous basis to keep ahead of the mining taking place on the levels above. In our open-pit mines, access to the orebody is provided by overburden stripping, which removes the covering layers of topsoil or rock, through a combination of drilling, blasting, loading and hauling, as required.
• Mining the orebody.
The process of ore removal starts with drilling and blasting the accessible ore. The blasted faces are then cleaned, and the ore is transferred to the transport system. In open-pit mines, gold-bearing material may require drilling and blasting, and is usually collected by bulldozers or shovels to transfer it onto trucks, which transport it to the mill.
In our South African underground mines, once ore has been broken, train systems collect ore from the faces and transfer it to a series of ore passes that gravity feed the ore to hoisting levels at the bottom of the shaft. The ore is then hoisted to the surface in dedicated conveyances and transported either by conveyor belts directly or via surface railway systems or roads to the treatment plants. In addition to ore, waste rock broken to access reef horizons must similarly be hoisted and then placed on waste rock dumps.
Processing
We currently have nine operational metallurgical plants in South Africa. We also have a metallurgical plant at the Hidden Valley project in PNG. The principal gold extraction processes we use are carbon in leach, or CIL, and carbon in pulp, or CIP.
The gold plant circuit consists of the following:
• Comminution.
Comminution is the process of breaking up the ore to expose and liberate the gold and make it available for treatment. Conventionally, this process occurs in multi-stage crushing and milling circuits, which include the use of jaw and gyratory crushers and rod and tube and ball mills. Our more modern milling circuits include semi- or fully-autogenous milling where the ore itself is used as the

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grinding medium. Typically, ore must be ground to a minimum size before proceeding to the next stage of treatment.
• Treatment.
In most of our metallurgical plants, gold is extracted into a leach solution from the host ore by leaching in agitated tanks. Gold is then extracted onto activated carbon from the solution using the CIL or CIP processes. Gold in solution at one of our plants is recovered using zinc precipitation. Recovery of the gold from the loaded carbon takes place by elution and electro-winning. Cathode sludge or dore bars produced from electro- winning is now currently sent directly to the Rand Refinery. Most of the South African plants no longer use smelting to produce rough gold bars (dore). Our South African zinc precipitation plants continue to smelt precipitate to produce rough gold bars. These bars are then transported to the Rand Refinery, which is responsible for refining the bars to a minimum of good delivery status.
All the production from our South African operations is sent to the Rand Refinery, which is owned by a consortium of the major gold producers in South Africa. The Australian and PNG gold production for fiscal years 2008 to 2010 was refined in Australia at an independent refiner, The Perth Mint Australia (previously known as AGR Matthey).
The South African government has emphasized that the production of value-added fabricated gold products, such as jewelry, is an important means for creating employment opportunities in South Africa and has made the promotion of these beneficiation activities a requirement of the Mining Charter described in Item 4. “Information on the Company — Regulation — Mineral Rights”. We support jewelry ventures in South Africa.
Harmony’s Management Structure
We have a de-centralized management structure that is based on small, empowered management teams led by General Managers at each of our operations. In South Africa, the General Managers report to Alwyn Pretorius and Tom Smith, the Chief Operations Officers, and are responsible for business optimization, mineral reserve optimization, and for developing a business culture at the operations. They also focus on long-term viability and growth of the operations. The General Managers are supported by a Mineral Reserve Manager, a Financial Manager, a Human Resources Manager and a Technical Manager in ensuring the growth and long-term sustainability of the operations
Morobe Mining Joint Venture consists of three unincorporated joint ventures (Hidden Valley Mine Joint Venture (“ HVJVM ”), Wafi-Golpu Mine Joint Venture (“ WGMJV ”) and Morobe Exploration Joint Venture (“ MEJV ”) which are owned 50/50 by respective Harmony and Newcrest 100% owned subsidiaries (“ owners ”).
The Joint Ventures are managed by a Joint Venture Committee (“ JVC ”) appointed by the respective owners. The JVC is responsible for the supervision of each of the three Joint Ventures, and implementation of the owners’ policy and strategy. The members act as owner representatives within the unincorporated joint ventures.
Three legal operator entities (“ operator co. ”), Hidden Valley Services Proprietary Limited, Wafi Golpu Services Limited and Morobe Exploration Services Limited have been established and appointed as operator of / agent for the respective unincorporated joint ventures (HVMJV, WGMJV and MEJV). Shareholding is held equally by the owners who appoint a board of directors (“ board ”) for each operator co.
The respective operator co . boards appoint Operational Steering Committees and General Managers who are responsible for implementation of the operating plan as approved by the JVC as well as making recommendation to the JVC for growth and sustainability. The General Managers report to the Operational Steering Committees. The General Managers are supported by functional managers.
Capital Expenditures
Capital expenditures for continuing operations incurred for fiscal 2010 totaled US$442 million compared with US$487 million for fiscal 2009 and US$500 million for fiscal 2008. In Rand terms, the capital expenditure decreased by 23% from fiscal 2009. For fiscal 2010, the capital development at PNG accounted for 16% of the total, with development at Phakisa and Kusasalethu accounting for 14% and 13%, respectively. Capital development also took place at the Doornkop South Reef Project and Tshepong Sub 71 Declines, as well as at the newly acquired President Steyn and Loraine shafts. The capital expenditure, including the non-cash portion, in fiscal 2009 was primarily related to the development of the PNG assets, which accounted for 41% of the project capital expended. The majority of this development was funded by Newcrest in terms of the farm-in agreement. Capital was also expended on the Doornkop South Reef Project, Tshepong Sub 71 Decline, as well as Phakisa and the Kusasalethu New Mine. During fiscal 2008, the increased development in PNG accounted for 39% of the project capital expended in the year, with the balance being expended at the Doornkop South Reef Project, Phakisa, Tshepong Sub 66 and 71 Declines and the Kusasalethu New Mine.

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The focus of our capital expenditures in recent years has been underground development and plant improvement and upgrades. Construction at these projects has been completed in certain areas, and production, if not yet at full capacity, has started from these areas at all our current growth projects. Capital will still be expended at these projects in the next two to three years to complete construction. During fiscal 2010, the projects were funded from the Company’s cash reserves, as well as by the loan facility from Nedbank.
Capital expenditure for discontinued operations, incurred for fiscal 2010 totaled US$nil, compared with US$10 million for fiscal 2009 and US$42 million for fiscal 2008.
We have budgeted approximately US$452 million for capital expenditures in fiscal 2011. Details regarding the capital expenditures for each operation are found in the individual mine sections under “ Business — Harmony’s Mining Operations ”. We currently expect that our planned operating capital expenditures will be financed from operations and new borrowings as needed.
Reserves
As at June 30, 2010, we have declared proven and probable reserves of 48.1 million ounces, broken down as follows: 45.6 million ounces in South Africa and 2.5 million ounces in PNG. Of our 48.1 million ounces of mineral reserves, 9.9 million ounces are classified as below infrastructure (that is, reserves for which capital expenditure has yet to be approved). There has been a 0.1 million ounces year-on-year negative variance in mineral reserves due to the following reasons:
• normal depletion of 1.7 million ounces;
• mine closures, the exclusion of projects previously included in reserves (Evander South), geology and scope changes resulted in a decrease of 2.6 million ounces; and
• a net addition of 4.3 million ounces of mineral reserves from new acquisitions, Rand Uranium (attributable interest of 40%), surface projects and other positive adjustments from the operations.
We use the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (“ SAMREC Code ”), which sets out the internationally recognized procedures and standards for reporting of mineral resources and mineral reserves. We use the term “mineral reserves” herein, which has the same meaning as “ore reserves”, as defined in the SAMREC code. Our reporting of the PNG Mineral Reserves complies with the Australian Code for the Reporting of Mineral Resources and Mineral Reserves (“ JORC ”) of the Australian Institute of Mining and Metallurgy. This code is materially the same as the SAMREC Code. In reporting of reserves, we have complied with Industry Guide 7 of the U.S. Securities and Exchange Commission.
For the reporting of Mineral Reserves at our South African and PNG operations, we use a gold price of US$950 per ounce. An exchange rate of R8.19 per U.S. dollar is used for South Africa and for PNG an exchange rate of US$0.83 per Australian dollar is used giving a gold price of R250,000 per kilogram and A$1,145 per ounce, respectively. These gold prices have also been used in mine planning.
In order to define that portion of a measured and indicated mineral resource that can be converted to a proven and probable mineral reserve at our underground operations, we apply the concept of a cut-off grade. This is done by defining the optimal cut-off grade as the lowest grade at which an orebody can be mined such that the total profits, under a specified set of mining parameters, are maximized. The cut-off grade is determined using our Optimizer computer program which requires the following as input:
• the database of measured and indicated resource blocks (per operation);
• an assumed gold price which, for this mineral reserve statement, was taken as R250,000 per kilogram;
• planned production rates;
• the mine recovery factor which is equivalent to the mine call factor (“ MCF ”) multiplied by the plant recovery factor; and
• planned cash costs (cost per tonne).
Rand per tonne cash costs of the mines are historically based, but take into account distinct changes in the cost environment, such as the future production profile, restructuring, right-sizing, and other cost reduction initiatives which we expect in the aggregate to lead to lower unit costs, and for below-infrastructure ounces, an estimate of capital expenditure.
The block cave reserve at Golpu (PNG) used the PCBC computer program to define the optimal mine plan and sequencing.

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The open pit reserve at Hidden Valley (PNG) is defined by a pit design based on the Whittle open pit optimization program guiding the most efficient mine design given this constraint.
The mineral reserves represent that portion of the measured and indicated resources above cut-off in the life-of-mine plan and have been estimated after consideration of the factors affecting extraction, including mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors. A range of disciplines which includes geology, survey, planning, mining engineering, rock engineering, metallurgy, financial management, human resources management and environmental management have been involved at each mine in the life-of-mine planning process and the conversion of resources into reserves. The mineral flow-related modifying factors used to convert the mineral resources to mineral reserves through the life-of-mine planning process are stated for each individual operation. For these factors, historical information is used, except if there is a valid reason to do otherwise. Because of depth and rock engineering requirements, some shafts design stope support pillars into their mining layouts which accounts for approximately 7% to 10% discounting. Further discounting relates to the life-of-mine extraction to provide for unpay and geological losses.
Our standard for narrow reef sampling with respect to both proven and probable reserve calculations for underground mining operations in South Africa is applied on a 6 meter by 6 meter grid. Average sample spacing on development ends is at 2 meter intervals in development areas. For the massive mining at the Target operations, our standard for sampling with respect to both proven and probable reserves are fan drilling with “B” sized diamond drill holes (43mm core) sited at 50 meter spaced sections along twin access drives. The Kalgold open cast operations are sampled on diamond drill and reverse circulation drill spacing of no more than 25 meters on average. Surface mining at South African operations other than Kalgold involves recovering gold from areas previously involved in mining and processing, such as metallurgical plants, waste rock dumps and tailing dams (slimes and sand) for which random sampling is used.
The PNG resources are hosted in large porphyry or related mesothermal geological systems. Data is gained through diamond drilling using PQ down to NQ sized core. The core is cut in half, one half sampled at a maximum of 2 meter intervals and the other half stored in designated core storage facilities. Drill spacing is typically on less than 20 meter centers for Measured category, 20 to 40 meter centers for the Indicated category and greater than 40 meters for Inferred category material. Assaying for gold is by fire assay and various methods are used for copper and other elements. All assays informing the resource calculation are analyzed at a National Association of Testing Authorities accredited commercial laboratory. Some sample preparation is done at the mine site laboratory. Extensive Quality Assurance/Quality Control work is undertaken and data is stored in an electronic database.

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Our mining operations’ reported total proven and probable reserves as of June 30, 2010 are set out below:
Mineral Reserves statement (Imperial) as at June 30, 2010
OPERATIONS PROVEN RESERVES PROBABLE RESERVES TOTAL RESERVES
GOLD Tons Grade Gold oz (1) Tons Grade Gold oz (1) Tons Grade Gold oz (1)
(million) (oz/ton) (000) (million) (oz/ton) (000) (million) (oz/ton) (000)
South Africa Underground
Bambanani
4.8 0.294 1,406 0.1 0.202 25 4.9 0.292 1,431
Joel
1.3 0.182 240 1.6 0.163 264 2.9 0.172 504
Masimong
6.0 0.149 894 2.1 0.148 306 8.1 0.149 1,200
Phakisa
0.7 0.136 94 21.3 0.237 5,065 22.0 0.234 5,159
Target
5.5 0.173 954 12.5 0.148 1,847 18.0 0.156 2,801
Tshepong
14.5 0.155 2,247 10.4 0.156 1,626 24.9 0.156 3,873
Virginia
3.0 0.134 407 1.7 0.135 223 4.7 0.134 630
Doornkop
1.7 0.092 160 2.7 0.103 277 4.4 0.098 437
Kusasalethu
13.8 0.195 2,680 25.8 0.187 4,834 39.6 0.190 7,514
Evander
2.5 0.210 520 1.8 0.266 470 4.3 0.234 990
Evander(below infrastructure)
— — — 46.6 0.212 9,895 46.6 0.212 9,895
Rand Uranium (2)
2.4 0.122 299 4.8 0.100 484 7.2 0.108 783
Total South Africa Underground
56.2 0.176 9,901 131.4 0.193 25,316 187.6 0.188 35,217
South Africa Surface
Kalgold
24.1 0.024 575 8.3 0.031 258 32.4 0.026 833
Free State Surface
— — — 1,021.3 0.007 7,212 1,021.3 0.007 7,212
Evander Surface
— — — 223.7 0.008 1,897 223.7 0.008 1,897
Rand Uranium Surface (2)
33.8 0.008 286 9.7 0.013 127 43.5 0.010 413
Total South Africa Surface
57.9 0.015 861 1,263.0 0.008 9,494 1,320.9 0.008 10,355
Total South Africa
114.1 10,762 1,394.4 34,810 1,508.5 45,572
Papua New Guinea (3)
Hidden Valley
4.2 0.062 260 26.8 0.052 1,382 31.0 0.053 1,642
Hamata
— — — 3.2 0.061 196 3.2 0.061 196
Golpu
— — — 39.0 0.018 694 39.0 0.018 694
Total Papua New Guinea
4.2 0.062 260 69.0 0.033 2,272 73.2 0.035 2,532
GRAND TOTAL
118.3 11,022 1,463.4 37,082 1,581.7 48,104

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In addition to the gold reserves, we also report our attributable reserves for silver, copper and molybdenum from our PNG operations. Metal prices are assumed at US$14/oz for silver, US$2/lb for copper and US$13/lb for molybdenum.
SILVER Tons Grade Silver oz (1) Tons Grade Silver oz (1) Tons Grade Silver oz (1)
(million) (oz/ton) (000) (million) (oz/ton) (000) (million) (oz/ton) (000)
Papua New Guinea (3)
Hidden Valley
4.2 1.038 4,320 26.8 1.036 27,726 31.0 1.036 32,046
COPPER Tons Grade Cu lb (1) Tons Grade Cu lb (1) Tons Grade Cu lb (1)
(million) (%) (million) (million) (%) (million) (million) (%) (million)
Papua New Guinea (3)
Golpu
— — — 39.0 1.025 882 39.0 1.025 882
MOLYBDENUM Tons Grade Mo lb (1) Tons Grade Mo lb (1) Tons Grade Mo lb (1)
(million) (lb/ton) (million) (million) (lb/ton) (million) (million) (lb/ton) (million)
Papua New Guinea (3)
Golpu
— — — 39.0 0.231 9 39.0 0.231 9
(1) Metal figures are fully inclusive of all mining dilutions and gold losses, and are reported as mill delivered tons and head grades. Metallurgical recovery factors have not been applied to the reserve figures.
(2) Represents Harmony’s attributable interest of 40%
(3) Represents Harmony’s attributable interest of 50%
Note: 1 ton = 907 kg = 2,000 lbs
Our methodology for determining our reserves is subject to change and is based upon estimates and assumptions made by management regarding a number of factors as noted above in this section.

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Worldwide Operations
Description of Property
The following is a map of our worldwide operations:
(GRAPHIC)

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Our operational mining areas in South Africa are set forth below:
Hectares Acres
Doornkop
2,941 7,267
Kusasalethu
5,113 12,634
Free State (includes Masimong and Virginia operations)
22,583 55,802
Tshepong and Phakisa
10,799 26,683
Bambanani
2,356 5,821
Joel
2,162 5,342
St Helena
5,856 14,471
Kalgold
615 1,520
Evander
36,898 91,174
Target (includes Loraine)
7,952 19,649
Total
97,275 240,363
In Australia and PNG, we hold granted tenements as set forth below:
Hectares Acres
Mount Magnet (sold in July 2010)
39,885 98,560
PNG
344,522 851,329
Total International Operations
384,407 949,889
TOTAL
481,682 1,190,252
We acquired new tenements in PNG for exploration in fiscal 2010.
In line with the rest of the South African mining industry, and in an effort to reduce costs, we have been rationalizing our mineral rights holdings in recent years. Accordingly, over the past three years, we have disposed of our shares and participation rights in areas within and outside of South Africa in which we have not actively pursued mining. However, in some cases we have retained certain participation rights and option clauses in properties and mining rights we have disposed of. We may continue to investigate further disposals.
Geology
The major portion of our South African gold production is derived from mines located in the Witwatersrand Basin in South Africa. The Witwatersrand Basin is an elongated structure that extends approximately 300 kilometers in a northeast-southwest direction and approximately 100 kilometers in a northwest-southeast direction. It is an Archean sedimentary basin containing a six kilometer thick stratigraphic sequence consisting mainly of quartzites and shales with minor volcanic units. The majority of production is derived from auriferous placer reefs situated at different stratigraphic positions and at varying depths below the surface in three of the seven defined goldfields of the Witwatersrand Basin.
Our Hidden Valley project comprises low sulphidation carbonate-base metal-gold epithermal deposits within the Morobe Goldfield, in the Morobe Province of PNG. In the Hidden Valley project area, a batholith of Morobe Granodiorite (locally a coarse grained monzogranite) is flanked by fine metasediments of the Owen Stanley Metamorphics. Both are cut by dykes of Pliocene porphyry ranging from hornblende-biotite to feldspar-quartz porphyries. A number of commonly argillic altered and gold anomalous breccias are known, including both hydrothermal and over printing structural breccias. The Hidden Valley deposit area is dominated by a series of post Miocene faults controlling the gold mineralization, including an early north trending set and the main northwest faulting.
Our Wafi project comprises the sedimentary/volcaniclastic rocks of the Owen Stanley Formation that surround the Wafi Diatreme and host the gold mineralization. Gold mineralization occurs as extensive high-sulphidation epithermal alteration overprinting porphyry mineralization and epithermal style vein-hosted and replacement gold mineralization with associated wall-rock alteration. The Golpu Copper-Gold project is located about one kilometer northeast of the Wafi gold orebody. It is a porphyry (diorite) copper-gold deposit. The host lithology is a diorite that exhibits a typical zoned porphyry copper alteration halo together with mineralization in the surrounding metasediment. The mineralized body can be described as a porphyry copper-gold “pipe”.

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Harmony’s Mining Operations — Overview
In South Africa, we conduct underground mining at 10 operations:
• Bambanani (includes Steyn 1 & 2 Shafts from February 2010);
• Doornkop;
• Evander (consists of Evander 2 & 5, 7 and 8);
• Joel;
• Kusasalethu (formerly Elandsrand);
• Masimong;
• Phakisa;
• Target (consists of Target 1, and as of February 2010 Loraine 3 (now Target 3) and Freddies 7 & 9 shafts);
• Tshepong; and
• Virginia operations (consists of Harmony 2, Merriespruit 1 & 3, Unisel and Brand 3 & 5).
During fiscal 2008, the Cooke operations (consists of Cooke 1, 2 and 3 Shafts) were considered to be a reportable segment. An effective 60% interest in these operations was sold on November 21, 2008 and the results for the five months up to that date have been included in discontinued operations for fiscal 2009.
We conduct surface mining at five sites (all included in “Other — Surface”):
• Evander;
• Free State (also known as Phoenix);
• Freegold;
• Kalgold;
• Target.
Surface mining was conducted at Randfontein’s Cooke operations up to the date of sale in fiscal 2009 and the Cooke plant has been classified as discontinued operations along with the Cooke operations.
Surface mining conducted at the South African operations other than Kalgold involves recovering gold from areas previously involved in mining and processing, such as metallurgical plants, waste rock dumps and tailings dams (slimes and sand). We are conducting studies to determine the feasibility of further retreatment projects in the Free State, including uranium extraction from material.
Internationally, we conduct mining activities in PNG at the Hidden Valley mine, which is a joint venture, known as Morobe Mining Joint Venture, between Harmony and Newcrest in which we each have a 50% interest.
We previously conducted mining at the following two sites in Australia:
• Mount Magnet — The site was put on care and maintenance at the end of December 2007. A decision was taken by management during May 2010 to sell the operation and in July 2010 the disposal was finalized — See Item 8 “ Recent Developments” .
• South Kalgoorlie — we finalized the sale of this operation with Dioro on November 30, 2007 — See “ Disposals ” above.
Underground and surface mining was conducted at each of these operations, with underground access through two declines at Mount Magnet and one decline at South Kalgoorlie and surface access principally through open-pits. Surface mining at South Kalgoorlie ceased in fiscal 2006 with treatment consisting of Mount Marion ore and low grade stockpiles. Open-pit mining recommenced at South Kalgoorlie mines during fiscal 2007. The Mount Marion underground operation at South Kalgoorlie ceased in June 2007, with only open-pit operations continuing on that site until the date of sale to Dioro.

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The following discussion is a two-part presentation of our operations:
• an overview of our South African mining operations with a discussion and production analysis of each of our operating segments; and
• an overview of our International (Australian and PNG) operations.
Previously, we disclosed cash costs and cash cost per ounce which including the movement in inventory and calculated using gold ounces sold as a denominator. These amounts have been re-presented for all comparative periods in the discussions and production analyses below following the changes to the calculation of these measures. See Item 3 . “ Selected Financial Data — Selected Historical Consolidated Financial Data .”
Where we have translated the Rand amount budgeted for capital expenditures in 2011 into U.S. dollars, we have used the closing rate at the balance sheet date.
South African Mining Operations
Unless indicated otherwise, the discussions below are for continuing operations.
(GRAPHIC)

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Underground
Bambanani
Introduction: We acquired Bambanani when we, in January 2002, acquired the Freegold operations from AngloGold Ashanti Limited (“ Anglogold ”) through a 50% joint venture with African Rainbow Minerals Gold Limited (“ ARMgold ”). In September 2003, we acquired 100% of these operations when ARMgold became a wholly owned subsidiary. During February 2010, we acquired President Steyn 1 & 2 Shafts in the transaction with Pamodzi FS. These shafts have been incorporated into Bambanani. These operations are located in the Free State province. Production from the operations is processed through Harmony 1 Plant.
History: Exploration, development and production history in the area of the Freegold assets dates from the early 1900’s, leading to commercial production by 1932. Subsequent consolidation and restructuring led to the formation of Free State Consolidated Gold Mine (Operations) Limited, which became a wholly-owned subsidiary of Anglogold in June 1998.
In 1998, President Steyn Gold Mine (Free State) (Proprietary) Limited (“ PSGM ”) was formed after purchasing shafts from various individuals. During 2002, the mine was sold to Thistle Mining Inc, an international company with interests in the Philippines and South Africa. The mine struggled to make operational profits, and Thistle undertook a restructuring program in 2006, which together with an increase in the Rand gold price resulted in positive operational cash flows. In February 2008, PSGM was purchased by Pamodzi FS. The mine was operated from that time until March 2009, when Pamodzi FS was placed into liquidation.
Geology: The operations are located in the Free State Goldfield, which is on the southwestern edge of the Witwatersrand basin. The Free State Goldfield is divided into two sections, cut by the north-south striking De Bron Fault. This major structure has a vertical displacement of about 1 500 metres in the region of Bambanani, as well as a lateral shift of 4 kilometres. Bambanani is to the west of the De Bron Fault. The reefs generally dip towards the east. Mining is conducted in the Basal reef.
Mining Operations: These operations are subject to the underground mining risks detailed in the Risk Factors section. The management teams regularly revisit their mining strategy and management procedures in order to minimize risks.
The Bambanani mine consists of a surface shaft and a sub-shaft. Mining is conducted at depths ranging from 1,911 and 3,680 meters. Activities at the mine include mining the Basal Reef and remnant pillar extraction. The primary mining challenges at these operations are seismic risks, ventilation and fire avoidance. Bambanani is classified as a seismically active operation with seismic activity monitoring systems installed to do active seismic risk evaluation. The seismic activity monitoring systems were upgraded during fiscal 2010.
The conversion of Bambanani into a high-grade, low-volume operation continued during fiscal 2010. There was greater emphasis on disciplined mining through the year and in particular on the achievement of daily tramming and hoisting targets, as well as efficient vamping and clean mining. Following a fatal fall of ground in the second quarter of fiscal 2010, extensive changes were made to the mining method in the steeply dipping, high-stope-width panels in the lower levels of the sub-shaft. Although these changes, from breast to down-dip mining, temporarily led to reduced volumes mined while alterations to mining plans and methods were implemented, these revisions proved successful regarding both safety and production performance.
Greater attention is also being given to the improvement of the blast cycle by increasing the number of blasts per panel in the sub-shaft (historically difficult, high channel steep stopes) and the delivery of higher volumes to maintain plant throughput at targeted levels.
Two raise lines were completed in the sub-shaft area and on-reef development has come to an end here. Development is under way in preparation for the extraction of the shaft pillar. Mining in the sub-shaft area will come to an end in the next three years, following which the remaining mining will take place around the high-grade shaft pillar. Mining of the shaft pillar will take eight years. Backfill will be used to minimize ground control-related risks when mining begins in the shaft pillar in June 2012.
Steyn 1 consists of a main shaft and two sub-decline shafts. No mining activities have taken place at the shaft since acquisition due to an underground fire. The shaft has been placed on care and maintenance.
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Steyn 2 consists of a main shaft and two sub-decline shafts. Equipping of the Steyn 2 shaft is underway. Face length flexibility, infrastructural shortcomings and heat are the main obstacles to production here. Progress was made with the decline shaft infrastructure and the haulage from 73 level to Bambanani is being rehabilitated to assist Steyn 2 in maintaining its shaft bottom and keeping it clean of spillage. Areas affected by heat problems at Steyn 2 are now being supplied with chilled water from Bambanani and temperatures have substantially improved. A feasibility study is being conducted on the extraction of the shaft pillar, which is expected to cost US$2.4 million.
During fiscal 2010, Bambanani accounted for 9% (8% in 2009 and 8% in 2008) of our total gold production.
Safety: Regrettably a fatality occurred at Bambanani during fiscal 2010 (2009: one) and the lost time injury frequency rate (“ LTIFR ”) was reported as 9.29 per million hours worked (2009: 7.48). After year-end, during September 2010, a fall of ground resulted in eight employees being trapped. Tragically, two employees died, with the other six being rescued, several having sustained injuries.
Safety at these operations receives constant and high-level attention.
Plants: The ore from Bambanani, along with ore from Tshepong and Phakisa, is sent to Harmony 1 Plant for processing. This plant, which processes underground ore, waste rock and various surface accumulations, was commissioned in 1986 and is a conventional CIP plant processing ore that has been milled by fully-autogenous grinding. Gold is recovered from the eluate solution using zinc precipitation and a precoat vacuum filter. The precipitate recovered from the filter is calcined and smelted to bullion.
The following table sets forth processing capacity and average tons milled during the fiscal 2010 for the Harmony 1 Plant:
Average Milled for
Processing the Fiscal Year
Plant Capacity Ended June 30, 2010
(tons/month) (tons/month)
FS 1
463,000 429,000
In fiscal 2010, Harmony 1 Plant recovered approximately 95.9% of the gold contained in the ore delivered for processing. The plant achieved one year lost time injury free during fiscal 2010.
Production analysis:
Fiscal Year Ended June 30,
Bambanani 2010 2009 2008
Production
Tons (‘000)
582 570 912
Recovered grade (ounces/ton) (1)
0.227 0.213 0.170
Gold produced (ounces) (1)
133,007 121,530 154,879
Gold sold (ounces) (1)
134,165 119,665 158,985
Results of operations ($)
Product sales (‘000)
146,971 102,645 128,346
Cash cost (‘000)
98,289 72,343 101,962
Cash profit (‘000)
48,682 30,302 26,384
Cash costs
Per ounce of gold ($) (1)
723 611 639
Capex (‘000) ($)
27,300 5,779 14,737
(1) 1,061 ounces were produced by Steyn 2 and sold. The revenue has been credited against capital expenditure as the shaft is not in production yet. The cost of these ounces has not been included in the cash cost per ounce amount. The calculation of grade also excludes these ounces.
Tons milled from Bambanani decreased to 570,000 in fiscal 2009 compared with 912,000 in fiscal 2008. Ounces produced were 121,530 in fiscal 2009, compared with 154,879 in fiscal 2008. This decrease was due to the restructuring of the shaft due to power constraints but was offset by a better recovered grade, which increased from 0.170 in fiscal 2008 to 0.213 in fiscal 2009.
Cash costs per ounce for Bambanani were US$611 in fiscal 2009, compared with US$639 in fiscal 2008. The costs per ounce decreased by 4% in fiscal 2009, due to an increase in grade mined offset by an increase in the cost of labor and supplies and the effect of inflation on supply contracts.

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Tons milled from Bambanani increased to 582,000 in fiscal 2010 compared with 570,000 in fiscal 2009. Ounces produced were 133,007 in fiscal 2010 compared with 121,530 in fiscal 2009. This increase was due to better recovered grade, which increased by 0.014 ounces per ton compared to fiscal 2009.
Cash costs per ounce for Bambanani were US$723 in fiscal 2010, compared with US$611 in fiscal 2009. The costs per ounce increased by 18% in fiscal 2010 compared with fiscal 2009, due to increases in the costs of labor and supplies, combined with the increase in power and water costs year on year of 37% (utility costs comprise approximately 22% of cash costs).
The rock hoisting capacity at Bambanani is 116,000 tons per month. The average tons milled in fiscal 2010 were 48,500 tons per month where we planned 54,500 tons per month for fiscal 2010.
Assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven and probable mineral reserves of 4.9 million tons (1.4 million ounces) will be sufficient for Bambanani to maintain underground production until approximately 2021. Any future changes to the assumptions upon which the mineral reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.
Capital Expenditure: Bambanani incurred approximately R207 million (US$27.3 million) in capital expenditure in fiscal 2010, primarily to extract the shaft pillar (R72 million (US$9.4 million)) and to equip the two Steyn shafts (R94 million (US$12.4 million).We budgeted R250 million (US$32.8 million) for capital expenditure in fiscal 2011, primarily for the access development for the shaft pillar extraction (R163 million (US$21.4 million)) and the Steyn shafts (R66 million (US$8.7 million).
Doornkop
Introduction : Doornkop is located in the Gauteng Province of South Africa, approximately thirty kilometers west of Johannesburg. The operation is owned by Randfontein Estates Limited (“ Randfontein ”). Doornkop currently operates under its own mining authorization of 2,941 hectares. Production is treated at the Doornkop plant.
History : Harmony acquired this operation when it took over Randfontein.
Geology : These operations are situated in the West Rand Goldfield of the Witwatersrand Basin, the structure of which is dominated by the Witpoortjie and Panvlakte Horst blocks, which are superimposed over broad folding associated with the southeast plunging West Rand Syncline.
The Doornkop operation lease area is bounded by and lies to the south-east of the major north-easterly striking Roodepoort Fault, which dips to the south and constitutes the southern edge of the Witpoortjie Horst Block or Gap. This Horst Block is comprised of the stratigraphically older sediments of the West Rand Group, the overlying Central Rand Group sediments having been removed by erosion. A number of other faults, forming part of and lying southeast of the Roodepoort Fault, including the Saxon Fault, also constitute conspicuous structural breaks. A second major fault, the Doornkop Fault, which trends in an east west direction occurs towards the southern portion of the lease area. This fault dips to the south and has an up-throw to the north. Nearly the entire upper Witwatersrand section is present in the lease area and therefore all the major zones are present, though due to the distance of the area from the fan head, the number of economic bands and their payability is limited. Eight of the well-known reefs are present in the area, but only the Kimberley Reef and South Reef are considered viable at this stage. The resource is concentrated in the Kimberley and South Reefs. The Kimberley Reef is contained in the Vlakfontein Member of the Westonaria Formation. This reef, also known as the K9 Reef horizon, rests on an unconformity and is a complex multi-pulse conglomerate, which can be separated into four facies or cycles. All four cycles consist on average of an upper conglomerate and a lower quartzite. The characteristics of every cycle are area-dependent and the grades are variable within each cycle. The South Reef is approximately 900 meters below the current Kimberley Reef mining, and between 7.5 and 60 meters above the Main Reef horizon. The hanging wall to the South Reef consists of siliceous quartzites with non-persistent bands of “blue-shot” grit and thin argillite partings. The footwall to the South Reef is a light colored and fairly siliceous quartzite. Secondary conglomerate bands and stringers in the hanging wall and footwall of the South Reef may contain sporadic gold values. The general strike of the reef is east-west, with a dip from 10 to 20 degrees. The orebody at Doornkop has a strike length of 4km and a width of 4km from west to east.
During fiscal 2010, the gathering of additional geological information from on-reef development and exploration drilling on the South Reef resulted in an increase in confidence to successfully build up maximum production. The geological, depositional, facies & evaluation models receive regular attention and are being expanded as the new data becomes available. A 3-D geological model was developed for the mine. This model incorporates the Kimberley, South & Main Reefs.
Mining Operations: These operations are subject to the underground mining risks detailed in the Risk Factors section. Due to the shallow to moderate depths of the operations, seismicity and high rock stress related problems are infrequent. There is a risk of subterranean water

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and/or gas intersections in some areas of the mines. However, this risk is mitigated by active and continuous management and monitoring, which includes the drilling of boreholes in advance of faces. Where water and/or gas are indicated in the drilling, appropriate preventative action is taken.
The Doornkop South Reef Project was announced on January 22, 2003. The project involved the deepening of the Doornkop main shaft to 1,973 meters to access the South Reef between 1,650 and 2,000 meters below surface, and includes development towards these mining areas. The estimated final capital cost is R1,772 million (US$233.7 million) with R1,470 million (US$193.9 million) spent as of June 30, 2010.
Production from the Kimberley reef section of the mine continued in the trackless sections and will continue for a further four years while the build-up of production from the South Reef sections continues. The development of the geological model of the Kimberley reef to identify target areas for exploration may result in an extension of the four year plan currently in place. The Kimberley section constantly underperformed during the 2010 year, mainly due to the low availability of trackless equipment. The purchase of a new trackless fleet will improve production in fiscal 2011.
The South Reef exceeded planned gold production for the year as a result of the logistical constraints being alleviated and the grade being higher than expected. The main pump station on 207 level was completed in August 2009 and is now able to provide sufficient pumping capacity to support the build-up to maximum production in 2015. During fiscal 2010, the winder compartments were subsequently equipped and the conveyor belt on 212 level (shaft bottom) was completed. There were however delays encountered with the equipping of the shafts as a result of shaft time constraints. These constaints resulted in a change in the scope of the project following the delays.
The most significant achievement for fiscal 2010 was the build-up achieved in gold production that increased by 49% from fiscal 2009. This increase was driven by an increase in production from the South Reef.
During fiscal 2010, Doornkop accounted for 5% (3% in 2009 and 2% in 2008) of our total gold production.
Safety : The safety record at Doornkop during fiscal 2010 was as follows: in terms of LTFR of 5.50 (2009: 6.25) per million hours worked achieved at Doornkop compared favorably with the group average of 7.72 (2009: 9.35). Regrettablly there were two fatalities at Doornkop during fiscal 2010.
A greater focus on safety-related matters led to streamlined procedures and improved training, maintenance and behavior.
Plants : The processing facilities presently comprises of one operating plant, the Doornkop metallurgical plant. The Doornkop metallurgical plant, commissioned in 1985, is a conventional CIP plant, which was used to treat waste rock and other surface accumulations. It is now treating all ore from underground mining at the Doornkop and some of the ore from Rand Uranium’s Cooke operations. The plant is serviced by a surface rail network from the Cooke shafts and by a conveyor belt configuration system from Doornkop shaft.
The following table sets forth processing capacity and average tons milled during fiscal 2010 for the Doornkop plant:
Average Milled for the
Processing Fiscal Year Ended
Plant Capacity June 30, 2010
(tons/month) (tons/month)
Doornkop
242,500 146,429
In fiscal 2010, the Doornkop plant recovered approximately 94.6% of the gold contained in the ore delivered for processing. During fiscal 2010 a split-stream configuration that isolates the Doornkop ore from the Rand Uranium ore was adopted to improve the accuracy of gold accounting to the respective companies.
Production analysis:
Fiscal Year Ended June 30,
Doornkop 2010 2009 2008
Production
Tons (‘000)
595 605 494
Recovered grade (ounces/ton)
0.105 0.070 0.089
Gold produced (ounces)
62,694 42,150 44,038
Gold sold (ounces)
62,275 43,211 44,143

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Fiscal Year Ended June 30,
Doornkop 2010 2009 2008
Results of operations ($)
Product sales (‘000)
68,169 38,128 35,489
Cash cost (‘000)
54,042 31,253 31,014
Cash profit (‘000)
14,127 6,875 4,475
Cash costs
Per ounce of gold ($)
822 804 749
Capex (‘000) ($)
45,097 43,918 48,039
Tons milled from Doornkop were 605,000 in fiscal 2009, compared with 494,000 in fiscal 2008. Volumes increased, largely as a function of the increase in tons mined at the South Reef workings (296,000), as well as an increase in the stoping width at the Kimberley reef mining. Ounces produced were 42,150 in fiscal 2009, compared 44,038 in fiscal 2008. The decrease in ounces sold was primarily due to the lower recovery grade. The recovered grade deteriorated to 0.070 in fiscal 2009, compared with 0.089 in fiscal 2008, mainly due to the decline in the grade mined from the Kimberley reef trackless mining sections. Production from trackless areas will continue during the build-up phase of mining from the South Reef project areas. Grade from the South Reef project was negatively affected by the large unavoidable volumes of development waste rock that were included in the reef stream which resulted in diluted head-grade. South Reef ore is now hoisted separately from waste which resulted in much improved recovered grades during the final two months of fiscal 2009.
Cash costs per ounce of gold were US$804 in fiscal 2009, compared with US$749 in fiscal 2008. The increase was mainly from labor, consumables and services cost. Labor cost increased due to an increase in labor to cater for the new South reef production levels and from annual wage increases. Consumable costs increased as a result of the South reef production build-up where additional square meters were mined. In addition significant increases in power cost (38%) and company overhead cost (78%) were incurred, measured against fiscal 2008.
Tons milled from Doornkop were 595,000 in fiscal 2010, compared with 605,000 in fiscal 2009. Although throughput remained flat, the higher grade South Reef made up a much larger portion of total ore milled than in fiscal 2009. This change in the mix of milled tons resulted in an increase in recovered grade to 0.105 in fiscal 2010, compared with 0.070 in fiscal 2009. Ounces produced were 62,694 in fiscal 2010, compared with 42,150 in fiscal 2009.
Production from trackless areas in the Kimberley Reef section will continue through the build-up phase of mining from the South Reef project areas.
Cash costs per ounce of gold were US$822 in fiscal 2010, compared with US$804 in fiscal 2009. This increase was mainly from labor, services and consumables costs. Labor costs increased due to an increase in labor to cater for the new South Reef production levels and from annual wage increases. Consumable costs increased as a result of the South Reef production build-up where additional square meters were mined. In addition, significant increases in power cost (35%) were incurred, measured against fiscal 2009.
The hoisting capacity of the Doornkop shaft is 185,000 tons per month. The average tons milled in fiscal 2010 were 49,583 tons per month.
On a simplistic basis, assuming no additional resources are identified, at expected production levels, it is foreseen that: the reported proven and probable mineral reserve of 4.4 million tons (0.4 million ounces) will be sufficient for the Doornkop shaft to maintain production until approximately fiscal 2024.
Capital Expenditure: Harmony incurred R342 million (US$45.1 million) in capital expenditure in fiscal 2010 at Doornkop, primarily for shaft equipping, supporting infrastructure, development and rolling stock for material and rock transport. The planned capital expenditure for fiscal 2011 is R320 million (US$41.9 million) at the Doornkop South Reef project. Total project expenditure incurred amounts to R1,470 million (US$193.9 million) as of June 30, 2010.
Evander Operations
Introduction: The Evander operations are located in the province of Mpumalanga in South Africa and comprise of an amalgamation of the former Kinross, Bracken, Leslie and Winkelhaak mines into a mining right of 36,898 hectares and additional adjacent Prospecting Rights comprising 19,933 hectares. Ore is treated at the Kinross plant, after the closure of the Winkelhaak plant following the closure of Evander 7 and 2 and 5 shafts.
History: Gold mining in the Evander Basin began in 1955. Eventually, four mining operations were established at Evander. In 1996, as a result of the depletion of mineral reserves, all four mining areas were merged to form Evander Gold Mines Limited. In August 1998, Harmony acquired Evander as a wholly-owned subsidiary.

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Geology: The area covered by Evander’s mining authorization and mineral rights is situated within the Evander basin, a geologically discrete easterly extension of the main Witwatersrand Basin. Only one economic reef type, the Kimberley Reef, is mined at Evander. In addition to the faulting of the reef horizon, there are numerous dykes and sills that complicate the mining layouts, the most significant of which is an extensively developed dolerite footwall sill that occasionally intersects the Kimberley Reef, causing displacements within it.
Mining Operations: The Evander operations are primarily engaged in underground mining but a limited amount of surface material, containing gold, from the surface cleanup operations are also processed. These operations are subject to the underground mining risks detailed in the Risk Factors section. Due to the shallow to moderate depths of the Evander underground operations, seismicity and high rock stress related problems are relatively infrequent. There is a risk of subterranean water and/or gas intersections in some areas of the mine. However, this risk is mitigated by active and continuous management and monitoring, which includes the drilling of boreholes in advance of faces. Where water and/or gas is indicated in the drilling, appropriate preventative action is taken. In fiscal 2004, an agreement was reached with the unions for the implementation of Conops at Evander. Downsizing and restructuring of the 7 Shaft area resulted in labor surpluses and it was also decided to stop Conops in fiscal 2008 at Evander 5 Shaft. Subsequently, Conops has also been stopped at Evander 8 Shaft in June 2010.
A due diligence of the operations during fiscal 2010 led to the conclusion that the only economically viable shaft was Evander 8. Mining operations at Evander 2 and 5 and 7 shafts ceased during the year and Evander 8 was restructured. The shaft infrastructure at Evander 7 will be utilised by Evander 8 for the pumping of water and the hoisting of rock as well as being available for use as a second escape. High temperatures underground, caused by ventilation return capacity restrictions at Evander 8 remained problematic and hampered production.
Once the restructuring of Evander had been completed, a feasibility study was undertaken which proved the viability of Evander 8. Greater attention was given to this shaft and a re-engineering project was implemented which involves not just the deepening of the decline but its repositioning within the high grade payshoot. This will give immediate access to the high-grade areas between 24 and 25 level, and will contribute to improved productivity with consequent financial benefits. The project’s parameters include the optimisation of logistics, cooling and ventilation as well as an upgrade of the refrigeration plant.
Following the closure of the Evander 2 and 5 shafts as well as the Winkelhaak plant, a one-year clean up program commenced at and in the vicinity of the plant. The aim of this program, which will continue into fiscal 2011, is to clean up any metal contained in the plant footprints, to process rock from the rock dumps in the vicinity, to rehabilitate the Winkelhaak plant, and to clean the surface rail network.
Evander 9 Shaft was re-opened to establish the feasibility of mining high grade areas in limited quantities in an effort to improve the mine call factor. It was subsequently decided to put the exercise on hold in fiscal 2010 due to discouraging results.
Because of the closure of Evander 2 and 5 and 7 Shafts, the services departments at Evander were downsized and incorporated under the management of Evander 8 Shaft during fiscal 2010.
Potential exists at several areas in Evander:
Evander South
• The exploration drilling program was completed and the pre-feasibility study re-done.
• The pre-feasibility study gave a negative net present value and it was decided not to proceed to the feasibility study at this stage.
Shaft 7 portion of the 2010 Payshoot
• Project at exploration stage following the geological study.
• Underground development, to be used as an underground drilling platform, advanced 233 meters (or 19%). This is intended for investigation of the 7 Shaft flank of the postulated 2010 payshoot.
• Feasibility study to follow, pending confirmation of the mineral resource in this area.
• This project is on hold following the closure of the shaft.
Twistdraai and Shaft 6
• Joint Venture with the African Precious Minerals (“ APM ”) was formed to explore these two target areas.
• APM may earn in a 52% equity stake upon completion of the full bankable feasibility study for each area.
• A conceptual study was completed and approval given during fiscal 2010 for the project to proceed to pre-feasibility.
• Surface drilling will commence in fiscal 2011.
• Subsequent to year-end, we entered into an agreement with Taung Gold Mining Limited for the sale of these assets. Refer to Item 8 . “ Recent Developments .”

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Rolspruit
• This is a future mining area on the down-dip extension of the 8 shaft payshoot.
• Synergies with the current 8 Shaft deepening are being considered.
Poplar
• Surface exploration drilling is required to bring this project into the full bankable feasibility study.
• Surface drilling was started in fiscal 2010 and is continuing throughout 2011.
• Results from the drilling will be used to update the pre-feasibility study.
In fiscal 2010, the Evander operations accounted for approximately 8% (12% in fiscal 2009 and 12% in fiscal 2008) of Harmony’s total gold production.
Safety: The safety record at the Evander operations in terms of LTIFR of 7.41 (2009: 10.39) per million hours worked during fiscal 2010 is favorable when compared to the group average of 7.72 (2009: 9.35). There were regrettably two fatalities at Evander during fiscal 2010 (2009: two fatalities).
Plants: Evander has one active processing plant, the Kinross plant. Ore from Evander 8 is hoisted directly to and treated at the Kinross plant, which is a hybrid CIP/CIL plant.
The following table sets forth processing capacity and average tons milled during fiscal 2010 for the operating plant:
Average Milled for the
Processing Fiscal Year Ended
Plant Capacity June 30, 2010
(tons/month) (tons/month)
Kinross
220,460 97,788
In fiscal 2010, the plant at Evander operations recovered approximately 94.2% of the gold contained in the ore delivered for processing.
Production analysis:
Fiscal Year Ended June 30,
Evander operations 2010 2009 2008
Production
Tons (‘000)
869 1,241 1,447
Recovered grade (ounces/ton)
0.129 0.153 0.160
Gold produced (ounces)
111,724 190,075 231,799
Gold sold (ounces)
111,499 195,668 240,037
Results of operations ($)
Product sales (‘000)
120,092 168,180 192,978
Cash cost (‘000)
113,327 110,869 125,995
Cash profit (‘000)
6,765 57,311 66,983
Cash costs
Per ounce of gold ($)
1,018 572 526
Capex (‘000) ($)
23,100 23,352 33,388
Tons milled at the Evander operations were 1,241,000 in fiscal 2009, compared with 1,447,000 in fiscal 2008, and ounces produced were 190,075 in fiscal 2009, compared with 231,799 in fiscal 2008. The decrease in tons milled is partially attributable to the reduction of the development at Evander 7 in November 2007 and the closure of the pillar section in February 2008. At Evander 8, tons milled decreased by 56,000 tons due to unfavorable environmental conditions in the decline area that affected mining from this area. The shaft completed a raise-borehole from 17 Level to 24 Level during fiscal 2009 that enables chilled ventilation to reach 24 level on the decline directly which alleviated the medium term ventilation constraints. Recovered grade was 0.153 ounces per ton in fiscal 2009, compared with 0.160 ounces per ton in fiscal 2008.
The increase in cash costs from US$526 per ounce in fiscal 2008 to US$572 per ounce in fiscal 2009 was attributable primarily to the decrease in gold ounces produced in fiscal 2009 compared to fiscal 2008 due to the successful restructuring and downscaling at Evander 7 that was implemented in January 2008. Cash costs decreased from US$125.9 million to US$110.9 million, primarily as a result of the closure of Evander 7.

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Tons milled at the Evander operations were 869,000 in fiscal 2010, compared with 1,241,000 in fiscal 2009, and ounces produced 111,724 in fiscal 2010 compared with 190,075 in fiscal 2009. The decrease in tons milled is predominantly attributable to the closure of Evander 2 and 5 and 7 Shafts. Recovered grade was 0.129 ounces per ton in fiscal 2010, compared with 0.153 in fiscal 2009.
The increase in cash costs from US$572 per ounce in fiscal 2009 to US$1,018 per ounce in fiscal 2010 was attributable primarily to the decrease in gold ounces produced in fiscal 2010 compared to fiscal 2009 due to the closure of Evander 2 & 5 and 7.
Assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven and probable mineral reserves of 4.3 million tons (0.99 million ounces) (excluding the below infrastructure reserves) will be sufficient for the Evander operations to maintain production until approximately fiscal 2021 at Evander 8. Any future changes to the assumptions upon which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.
Capital Expenditure: Harmony incurred approximately R175 million (US$23.1 million) in capital expenditures at the Evander operations in fiscal 2010. The expenditure was primarily for ongoing development, abnormal expenditure for the upgrading of the infrastructures as well as phase 6 of the No 2 Decline at Evander 8 and 2 ventilation bore holes. Harmony budgeted R196 million (US$25.7 million) for capital expenditures in fiscal 2011 primarily for ongoing development and the upgrading of major equipment.
Joel
Introduction: Joel is located in the Free State province, on the south-western edge of the Witwatersrand basin. The mine comprises of two shafts, North and South shafts. Previously ore mined at Joel was transported to Central Plant, 38 kilometers away, for processing, but since the recommissioning of the Joel plant in November 2009, the ore is now processed on site.
History: Joel was purchased from a subsidiary of AngloGold at the same time as the rest of the Freegold assets in January 2002.
Geology : Joel is mining the shallow flat-dipping Beatrix/VS5 Reef. This varies from a single-pebble lag to a multiple conglomerate, often showing mixing of the reef with some of the overlying lower grade VS5 (mixed pebble conglomerate) material. None of the other reefs are present this far south, having sub-cropped against the Beatrix Reef.
Mining operations : These operations are subject to the underground mining risks detailed in the Risk Factors section.
Scattered mining takes place on the Beatrix Reef, down to a depth of some 1,400 meters. Upgrading of the infrastructure at North Shaft is currently in progress.
Volumes mined during fiscal 2010 were negatively affected by a mud slide at the bottom of North shaft, a guided rope shaft. A temporary mud press was subsequently installed and mud is removed daily from the bottom of the shaft. Despite this, raise boring of the North shaft expansion to 129 level was completed although hoisting constraints resulted in the equipping of the shaft deepening project to 129 level being delayed. An extensive program to rectify the problems experienced with North shaft had begun by the end of June 2010. While production at Joel has progressively moved to the deeper portions of the mine, the North Shaft, which accesses these areas, was never fully equipped for this and adjustments to the shaft spillage arrangements are now being made retrospectively. The modifications being made include:
• changing the winder from sinking to production mode;
• installing larger skips; ensuring that emergency egress is available; raise boring the lift shaft from 121 to 129 level; and
• improving cleaning arrangements at the shaft bottom.
Operations were halted while these changes were under way. The shaft resumed operations in August 2010, once repairs to the shaft bottom had been completed. In the interim, the Joel plant has been processing waste to maximise gold production. The opportunity will be taken to install the permanent spillage arrangement during December 2010.
Once mining from 129 level has begun, production is expected to peak at around 78,000 ounces annually. To ensure that the production targets are met, plans have been put in place to ensure the operability of the North shaft and conduct a planned maintenance program to minimise breakdowns, to maintain blast advances and to assess the feasibility of mining below 129 level to 137 level. A successful drilling program has been completed and a pre-feasibility study is in progress.
During fiscal 2010, Joel accounted for 5% of our total gold production (4% in fiscal 2009 and 3% in fiscal 2008).

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Safety : Safety at Joel deteriorated during fiscal 2010. After having no fatalities for two years, there was tragically one fatality, the result of a rockfall, during fiscal 2010. However, the LTIFR at Joel of 4.26 (2009: 2.59) per million hours worked compared favorably with the group average of 7.72 (2009: 9.35).
Plants: The Joel plant is a hybrid CIP/CIL plant and was commissioned in 1987. During fiscal 2005, it was decided to close the Joel Plant and place the plant under care and maintenance. Joel Plant was re-commissioned in November 2009 and the plant is currently running with two mills at 80,000 tons per month. The current monthly capacity is 88,185 tons of rock, which is made up of 55% reef and 45% waste rock dumps.
The following table sets forth processing capacity and average tons milled during fiscal 2010 for the operating plant:
Average Milled for the
Processing Fiscal Year Ended
Plant Capacity June 30, 2010
(tons/month) (tons/month)
Joel Plant
88,185 71,378
In fiscal 2010, the Joel Plant operations recovered approximately 93% of the gold ore delivered for processing.
Production analysis:
Fiscal Year Ended June 30,
Joel 2010 2009 2008
Production
Tons (‘000)
484 566 449
Recovered grade (ounces/ton)
0.133 0.116 0.133
Gold produced (ounces)
64,495 65,684 59,557
Gold sold (ounces)
63,788 64,784 61,215
Results of operations ($)
Product sales (‘000)
69,150 55,862 51,557
Cash cost (‘000)
50,017 40,649 39,131
Cash profit (‘000)
19,133 15,213 12,426
Cash costs
Per ounce of gold ($)
792 636 638
Capex (‘000) ($)
11,587 6,183 5,375
Tons milled from Joel increased to 556,000 in fiscal 2009, compared with 449,000 in fiscal 2008. This was due to the rehabilitation work done on North Shaft. Further work was done to improve the smooth operation, which included the reconditioning of the liquid controller, installing an additional cooling tower, increasing lubrication intervals of the guide ropes on the south side. There was also a significant increase in square meters from 60,752 in fiscal 2008 to 83,413 in fiscal 2009.
Grade was affected by the loss of two high-grade raise lines which necessitated a move to lower grade raise lines. Higher than expected stoping widths were encountered which affected the face grade. Joel has a centralized high grade area with the outskirts being of lower grade. Due to flexibility and availability constraints Joel was forced to move to the outskirts therefore causing a lower recovery grade.
Ounces produced were 65,684 in fiscal 2009, compared with 59,557 in fiscal 2008. The increase in tons positively influenced ounces produced. Recovery grade decreased to 0.116 in fiscal 2009, compared with 0.133 in fiscal 2008.
The cash costs for Joel increased to US$40.6 million in fiscal 2009, compared with US$39.1 million in fiscal 2008. This increase was due to wage and salary increases granted to labor, as well as an increase in labor complement to increase stoping panels from 16 to 18. Development labor also increased as development meters increased from 2,141 meters in 2008 to 3,554 meters in 2009. An afternoon shift was also introduced to reduce the underground lockup tons. This was done with contract labor, which increased the contractor costs. There was a substantial increase in electricity charges, which came about due to the electricity shortage experienced.
Cash costs per ounce were US$636 in fiscal 2009, compared with US$638 in fiscal 2008. This decrease was primarily attributable to the increased tonnage due to the increase in square meters in 2009 compared to 2008 as well as a decrease in lockup tons year on year.

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The decrease in tons milled from 566,000 in fiscal 2009 to 484,000 in fiscal 2010 is mainly due to the lift shaft between 110 level and 121 level being stopped as a project was initiated to deepen this shaft from 121 level down to 129 level to enable the mining of 129 level. This entailed raising a borehole from 129 level to 121 level. This extension was then equipped, resulting in all men and material having to travel down raise lines, which slowed the delivery of material to the working places and also impacted on stoping and development crews’ face time. This also resulted in a decrease in square meters from 83,413 in fiscal 2009 to 78,229 in fiscal 2010.
The increase in cash costs for Joel from US$40.6 million in fiscal 2009 to US$50.0 million in fiscal 2010 is due to wage and salary increases granted. Development labor also increased as development meters increased from 3,554 meters in 2009 to 4,537 meters in 2010. Development costs were also severely impacted by costs to contain excessive fissure water encountered during development of level 129. Also impacting on costs was a substantial increase of 32% in electricity rates.
Cash costs per ounce were US$792 in fiscal 2010, compared with US$636 in fiscal 2009. This decrease was primarily attributable to the increase in costs as discussed above, and the reduction in ounces recovered due to the drop in tonnage due to closure of the lift shaft.
The rock hoisting capacity at Joel is 50,000 tons per month. The average tons milled in fiscal 2010 was 40,333 tons per month.
Assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven and probable mineral reserves of 2.9 million tons (0.5 million ounces) will be sufficient for Joel to maintain underground production until approximately 2017. Any future changes to the assumptions upon which the mineral reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.
Capital Expenditure: We incurred R88 million (US$11.4 million) in capital expenditures at Joel in fiscal 2010 on the shaft bottom cleaning at North Shaft, the lift deepening project, and general replacement and maintenance. Capital budgeted for fiscal 2011 is R66 million (US$8.7 million) , primarily for deepening the lift shaft from 121 level to 129, to enable mining on 129 level and to equip it, spillage skip at North Shaft and LED projects.
Kusasalethu (formerly Elandsrand)
Introduction: Kusasalethu is located near Carletonville in the North West province of South Africa. The assets and associated liabilities were purchased during fiscal 2001 for approximately R1 billion (US$128.4 million) from Anglogold. Ore from the operation is treated at the Kusasalethu plant. The name of Elandsrand was changed to Kusasalethu on January 23, 2010. The rebranding and name change was based on entrenching a culture, endorsed by both management and the unions, to ensure safe, productive mining.
History: Gold mining began at Kusasalethu in 1978 following approval of the project in 1974 by Elandsrand Gold Mining Company. Two surface shafts and two adjoining sub-vertical shafts were sunk at Elandsrand. The sub-vertical shafts at Elandsrand, which accessed the deeper part of the VCR reef in the lease area, were completed in 1984. The deepening of the sub-vertical shafts to approximately 3,600 meters below surface has been completed after the deepening project was commissioned in 1991. Activities are currently focused on accessing and opening up areas of the new mine and on the development and construction of support infrastructure.
Geology: At Kusasalethu we primarily exploit the Ventersdorp Contact Reef, or VCR, the Carbon Leader Reef, or CLR and the Elsburg Reef. Only the VCR is economic to mine and has been mined at depths below surface between 1,600 and 3,400 meters with future production to take place up to 3,600 meters below surface at the Kusasalethu operations. The VCR consists of a narrow (20 centimeters to 2 meters) tabular orebody of quartz pebble conglomerates hosting gold, with extreme lateral continuity. The VCR strikes east-northeast and has a regional dip of 21 degrees to the south-southeast. Local variations in dip are largely due to the terrace-and-slope palaeotopography surface developed during VCR deposition.
Mining Operations: The Kusasalethu mine is subject to the underground mining risks detailed in the Risk Factors section.
The Kusasalethu mine has the challenge of developing a new mine underneath the original mine after the shaft was deepened to access the deeper part of the VCR orebody. The operation is still hampered by the lack of flexibility, an issue that will be addressed by the full commissioning of the new mine. Due to the operating depths of the Kusasalethu underground operations, seismicity and high rock stress are significant risks at the mine. Steps were taken during fiscal 2010 to improve the quality of the pre-conditioning at the stope face and seismic management systems so as to reduce the possibility of face ejection during small, volatile seismic events.

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Under-performance on square metres broken was the mine’s biggest challenge in fiscal 2010. Scaling in the main reef and waste ore pass systems resulted in blockages in both systems, which contributed to waste dilution and resulted in the lower recovered grade during the year. By year-end it was decided to separate reef and waste and to continue with the removal of the blockage in the waste pass system between the old mine (above 100 level) and the new mine (below 100 level). Once the blockage has been removed, waste rock and reef ore will again be tipped into one ore pass system to accommodate the rehabilitation of both ore pass systems. While this will dilute the recovered grade, it will not affect gold production.
The mine deepening project infrastructure is 95% complete. The shaft infrastructure is in place and work over the next two years will focus mainly on the provision of sufficient cooling and ventilation into the new mine areas. The project is expected to be completed by fiscal 2012 and is expected to have a life of mine of 26 years. From the inception of the project through to the end of fiscal 2010, R1,035 million (US$136.5 million) has been expended. A further R77 million (US$10.2 million) has been budgeted to complete the project.
In fiscal 2010, our Kusasalethu operations accounted for approximately 12% (11% in 2009 and 9% in fiscal 2008) of our total gold production.
Safety : Over the past year, an improvement was noted in the safety record at Kusasalethu. During fiscal 2010, LTIFR was 6.68 (2009: 12.67) per million hours worked. Regrettably there were two fatalities during fiscal 2010 (2009: five fatalities).
Plants: Commissioned in 1978, the Kusasalethu Plant consist of milling in closed circuit with primary and secondary hydrocyclones, thickening and cyanide leaching in a CIP pump cell carousel circuit. The CIP was commissioned after an upgrade of the facility in 1999. Ore from Kusasalethu underground operations is delivered to the plant for treatment via conveyor belt after being hoisted from underground. Loaded carbon from the Kusasalethu Plant is transported by road to the Evander Plant for elution, electro-winning and smelting to produce gold. Residues from the CIP are pumped either to a backfill plant or directly to the tailings facility.
The following table sets forth processing capacity and average tons milled during fiscal 2010 for the plant:
Average Milled for the
Processing Fiscal Year
Plant Capacity June 30, 2010
(tons/month) (tons/month)
Kusasalethu Plant
203,925 (1) 102,753
(1) Processing capacity will reach its optimal capacity upon completion of the Kusasalethu New Mine Project.
In fiscal 2010, the Kusasalethu Plant recovered approximately 95.0% of the gold contained in the ore delivered for processing.
Production analysis:
Fiscal Year Ended June 30,
Kusasalethu 2010 2009 2008
Production
Tons (‘000)
1,141 1,061 981
Recovered grade (ounces/ton)
0.153 0.164 0.167
Gold produced (ounces)
175,029 174,321 164,215
Gold sold (ounces)
168,244 183,676 158,631
Results of operations ($)
Product sales (‘000)
183,603 157,956 132,699
Cash cost (‘000)
143,985 117,321 103,351
Cash profit (‘000)
39,618 40,635 29,348
Cash costs
Per ounce of gold ($)
857 660 652
Capex (‘000) ($)
56,687 46,915 43,830
Tons milled from Kusasalethu were 1,061,000 in fiscal 2009, compared with 981,000 in fiscal 2008. Ounces produced increased to 174,321 in fiscal 2009, compared with 164,215 in fiscal 2008 as a result of the increased volumes in production. Mining continues in the old, upper areas of the mine, while the new mine project is completed. Recovered grades decreased marginally during fiscal 2009, resulting in an average of 0.164 ounces per ton in fiscal 2009, compared to the average of 0.167 ounces per ton in fiscal 2008.

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The increase in electricity costs, labor rates and inflation were the main contributors to the increase in cash cost from US$652 per ounce in fiscal 2008 to US$660 per ounce in fiscal 2009. Cash cost per ounce only increased by 1% due to increased ounces produced which neutralized the higher than normal increases in labor rates and electricity increases approved by the NERSA. Electricity rates are expected to continue rising above the norm until Eskom has developed additional power generating plants.
Tons milled from Kusasalethu were 1,141,000 in fiscal 2010, compared with 1,061,000 in fiscal 2009. Ounces produced increased to 175,029 in fiscal 2010, compared with 174,321 in fiscal 2009 as a result of the increased volumes in production. Mining continues in the old, upper areas of the mine, while the new mine project is completed. Recovered grades decreased during fiscal 2010, resulting in an average of 0.153 ounces per ton in fiscal 2010, compared to the average of 0.164 ounces per ton in fiscal 2009.
The increase in labor rates and the higher than normal electricity increases approved by NERSA were the main contributors to the increased cash cost. Electricity rates are expected to continue rising by an estimated 25% annually for the next two years. Potable water previously received from Rand Water Board was increased by 32% for fiscal 2010 by the Merafong Local Council due to a change in legislation allowing local councils to take over this service from Rand Water Board. The increase in electricity costs, labor rates and inflation were the main contributors to the increase in cash cost from US$660 per ounce in fiscal 2009 to US$857 per ounce in fiscal 2010.
Kusasalethu has a hoisting capacity of 209,440 tons per month. The average tons milled in fiscal 2010 was 95,083 tons per month.
Assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven and probable mineral reserves of 39.5 million tons, or 7.5 million ounces will be sufficient for the Kusasalethu shaft to maintain underground production until approximately calendar year 2035. Any future changes to the assumptions upon which the mineral reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.
Capital Expenditure: Harmony incurred R429.7 million (US$56.7 million) in capital expenditure at the Kusasalethu operations in fiscal 2010 mainly for the sub shaft deepening project and ongoing development. An additional project, the Emergency Escape project was started during fiscal 2009, to improve the effectiveness of evacuation of people from underground during a shaft emergency, and is expected to be completed in fiscal 2011.
Harmony budgeted R414 million (US$54.2 million), for capital expenditure at the Kusasalethu operations in fiscal 2011, primarily for the sub-shaft deepening project and ongoing development expenditure.
Masimong
Introduction: Masimong is located in the Free State province, near Riebeeckstad. The Masimong complex comprises an operating shaft, 5 shaft and 4 shaft which, although closed, is used for ventilation, pumping, and as a second outlet. Mining is conducted at depths ranging from 1,518 meters to 2,300 meters. Ore is treated at the Harmony 1 Plant, approximately 23 kilometers away.
History: Masimong is located in the Free State Goldfield on the south-western edge of the Witwatersrand Basin. The company purchased the Masimong complex (formerly know as Saaiplaas Shafts 4 and 5) during September 1998.
Geology: The operation exploits the Basal Reef, which varies from a single pebble lag to channels on more than 2m thick. It is commonly overlain by shale, which thickens northwards. Masimong is also mining secondary reefs, most notably the Leader Reef (15-20m above Basal) and the B Reef (140m above Basal). The Leader Reef consists of multiple conglomerate units, separated by thin quartzitic zones, often totaling up to 4 meters thick. A selected mining cut on the most economic horizon is often undertaken. The B Reef is a highly channelized orebody. Within the channels, grades are excellent, but this falls away to nothing outside of the channels. Consequently, the operation has undertaken extensive exploration to locate these pay channels.
Mining Operations: The operations are subject to the underground mining risks detailed in the Risk Factors section. Due to the shallow to moderate depths of the underground operations, seismicity related problems are relatively infrequent. We regularly revisit our mining strategy and management procedures in connection with our efforts to mitigate risks of these problems. There is a risk of subterranean water and/or gas intersections in some areas of the mine. However, this risk is mitigated by active and continuous management and monitoring, which includes the drilling of boreholes in advance of faces. Where water and/or gas are indicated in the drilling, appropriate preventative action is taken.

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Maintaining grades on the B Reef proved challenging as mining moved out of the high-grade channels while those mined on the Basal Reef generally remained constant. Nevertheless grades were maintained overall for the year at 0.157 oz/t. The infrastructural upgrade, begun in fiscal 2009 and which included improved resource management and the installation of new tracks, locomotives, and compressors, was completed in fiscal 2010. Masimong will reap the benefits of this upgrade by way of improved productivity, efficiencies and output in coming years.
Ventilation is a challenge at Masimong as the booster fans currently installed themselves generate heat and consume electricity. Steps are being taken to counter this. Pressure doors have been installed as an interim measure and a new ventilation system is being installed. A new refrigeration plant is to be installed by September 2011 at a cost of R61 million (US$8.0 million). Following the upgrade program, full production is scheduled for 2012. To achieve this, every effort has been made to ensure that panels are well equipped and crews motivated, and steps have been taken to overcome the erratic grade of the B reef.
In fiscal 2010, Masimong accounted for approximately 11% (10% in fiscal 2009 and 6% in fiscal 2008) of our total gold production.
Safety : The safety record at Masimong during fiscal 2010 in terms of LTIFR of 7.37 (2009: 8.67) per million hours worked compared favorably with the group average of 7.72 (2009: 9.35). Tragically, there was one fatality during fiscal 2010 (2009: two fatalities). Various initiatives are in place to correct and reduce the human element in accidents.
Plants : The ore from theses operations are sent to Harmony 1 Plant for processing. See Item 4.“Information of the Company — Business — Bambanani” for a discussion on the plant.
Production analysis:
Fiscal Year Ended June 30,
Masimong Shaft Complex 2010 2009 2008
Production
Tons (‘000)
991 981 892
Recovered grade (ounces/ton)
0.157 0.157 0.131
Gold produced (ounces)
155,609 154,034 116,424
Gold sold (ounces)
153,937 154,581 117,575
Results of operations ($)
Product sales (‘000)
168,439 135,025 96,147
Cash cost (‘000)
92,571 73,494 87,630
Cash profit (‘000)
75,868 61,531 8,517
Cash costs
Per ounce of gold ($)
602 476 756
Capex (‘000) ($)
23,407 14,479 15,686
Tons milled from Masimong were 981,000 in fiscal 2009, compared with 892,000 in fiscal 2008, and ounces produced were 154,034 in fiscal 2009, compared with 116,424 in fiscal 2008. Year on year gold production increased due to an increase in tons as well as the recovered grade.
Cash costs were US$73.5 million in fiscal 2009 compared with US$87.6 million in fiscal 2008 with cash costs per ounce at US$476 in fiscal 2009 compared with US$756 in fiscal 2008. This decrease in cash cost is mainly attributable to a 9.7% decrease in labor. Labor efficiencies contributed significantly to the improved performance. This was the first year that Masimong was fully off the Conops cycle.
The increase in recovered grade by 0.026 ounces per ton from fiscal 2008 to fiscal 2009 can be attributed to an increase in quality mining discipline. Most notable was the 6.9% increase in MCF and a 20% increase in face grade mined. This was achieved on the back of the Masimong transformation process initiated in April 2008.
Furthermore the amount of B reef mining was decreased from 25% of total mining to 16% of total mining. This step reduced the high risk with regards to grade associated with the traditionally variable B Reef ore body.
Tons milled from Masimong were 991,000 in fiscal 2010, compared with 981,000 in fiscal 2009, and ounces produced were 155,609 in fiscal 2010, compared with 154,034 in fiscal 2009. Year-on-year gold production increased due to an increase in tons.
Cash costs were US$92.6 million in fiscal 2010 compared with US$73.5 million in fiscal 2009 with cash costs per ounce at US$602 in fiscal 2010 compared with US$476 in fiscal 2009. This increase in cash cost is mainly attributable to a 16% lower R/US$ exchange rate and annual

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cost increases. The biggest cost increase contributors were annual labor cost and electricity cost increases.
Recovered grade remained unchanged in fiscal 2010 compared to fiscal 2009.
Assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven and probable mineral reserves of 8.1 million tons (1.2 million ounces) will be sufficient for the Masimong shaft complex to maintain underground production until approximately fiscal 2023. Any future changes to the assumptions upon which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.
Capital Expenditure: Masimong incurred approximately R177 million (US$23.4 million) in capital expenditures in fiscal 2010. We have budgeted a total of R208 million (US$27.2 million) for capital expenditures at Masimong in fiscal 2011. Of this, R19 million (US$2.5 million) is for upgrading of the rail bound equipment and R28 million (US$3.7 million) for the fridge plant on Masimong 5.
Phakisa
Introduction: We acquired Phakisa when we, in January 2002, acquired the Freegold operations from Anglogold through a 50% joint venture with ARMgold. In September 2003, we acquired 100% of these operations when ARMgold became a wholly owned subsidiary. The operation is located in the Free State province. Production from the operations is processed through Harmony 1 Plant.
History: Exploration, development and production history in the area of the Freegold assets dates from the early 1900’s, leading to commercial production by 1932. Subsequent consolidation and restructuring led to the formation of Free State Consolidated Gold Mine (Operations) Limited, which became a wholly-owned subsidiary of Anglogold in June 1998.
Geology: The operation is located in the Free State Goldfield, which is on the southwestern edge of the Witwatersrand basin. The Goldfield is divided into two sections, cut by the north-south striking De Bron Fault. The Phakisa mine is located to the west of the De Bron Fault. Mining is conducted in the Basal reef. The reefs generally dip towards the east.
Mining Operations: These operations are subject to the underground mining risks detailed in the Risk Factors section. The management teams regularly revisit their mining strategy and management procedures in order to minimize risks.
The development at Phakisa, a surface shaft, sunk to 75 level elevations and a planned decline shaft to 85 level will access the mineral reserves to a depth of 2,662 meters below surface. It is estimated that the area will yield 22.1 million tons, recovering 4.96 million ounces of gold over a project life of 19 years. Project completion requires sinking, equipping and commissioning of a decline shaft up to 85 level. The major project includes access development and stoping to maximum production build-up at a capital cost of R2,074 million (US$273.6 million). To date, R1,508 million (US$199 million) has already been spent.
Good progress was achieved during fiscal 2010, with completion of all infrastructures except the underground cooling plants. Installation of the permanent water handling systems (i.e., Settlers, Main Pump Station on 77 Level, Mud press and underground dams) have been completed and are operative. The third train on the Rail-veyor was successfully commissioned in December 2009. Eight of the ten ice plant modules have been commissioned, although five were found to be underperforming and the orginal equipment manufacturers have been engaged to assist with remedial action and to advise on ways of improving performance. The first phase of surface offices and change houses have been successfully completed with the second phase scheduled to start in September 2010. Two critical issues to be completed are the installation of underground cooling plants and upgrading the return air system with the installation of 4m raise bore hole from 75 level to 66 level and a booster fan on 59 level. All this work is planned for fiscal 2011.
Phakisa started the first production during September 2007 and will be opening up mineral reserves going forward. The project is expected to be in full production in July 2013 at 93,476 tons per month. The average production rate per annum over the peak period of life of mine is 245,234 ounces. During fiscal 2010, the build-up in production has been hampered by geological issues, illegal mining activities and down-time on the new infrastructure. Since it is a new mine, development at Phakisa is currently centred close to the shaft in the lower grade southern areas. The major drive is on development of the area to the north to access higher grade areas and to move closer to the average reserve grade. Grades will improve as development progresses towards the north and more reef is exposed within the major north-west to south-east tranding Basal Reef payshoot. Mining was also undertaken at Nyala shaft during fiscal 2010 were payable pillars are available for mining.
During fiscal 2010, Phakisa accounted for 3% (1.4% in 2009 and 0.2% in 2008) of our total gold production.

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Safety: During fiscal 2010, the safety statistics for Phakisa was 8.4 (2009: 9.19) per million hours worked. Three fatal accidents occurred during fiscal 2010, two resulting from a fall of ground in the development section and one caused by a training accident. Post year-end, an explosion underground tragically resulted in five fatalities.
Plants: The ore from these operations are sent to Harmony 1 Plant for processing. See Item 4.“Information of the Company — Business — Bambanani” for a discussion on the plant.
Fiscal Year Ended June 30,
Phakisa 2010 2009 2008
Production
Tons (‘000)
374 204 34
Recovered grade (ounces/ton)
0.118 0.109 0.118
Gold produced (ounces)
44,079 22,216 4.024
Gold sold (ounces)
44,496 21,477 4,212
Results of operations ($)
Product sales (‘000)
49,458 19,009 3,891
Cash cost (‘000)
43,040 11,903 2,348
Cash profit (‘000)
6,418 7,106 1,543
Cash costs
Per ounce of gold ($)
953 555 497
Capex (‘000) ($)
64,106 51,210 40,335
Tons milled increased from 34,000 tons in fiscal 2008 to 204,000 tons in fiscal 2009, with gold production increasing from 4,024 ounces to 22,216 ounces. This was as a result of the planned ramp up in production during the year. Grade was lower in fiscal 2009 at 0.109 ounces per ton, compared to 0.118 in fiscal 2008. This was due to the fact that mining was confined to a single raise line in a lower grade area.
Cash costs per ounce for Phakisa was US$555 per ounce in fiscal 2009, compared with US$497 per ounce in fiscal 2008. This increase is primarily attributable to the increase in tons mined.
Tons milled increased from 204,000 tons in fiscal 2009 to 374,000 tons in fiscal 2010, with gold production increasing from 22,216 ounces to 44,079 ounces. This was as a result of the planned ramp up in production during the year. Grade was higher in fiscal 2010 at 0.118 ounces per ton, compared to 0.109 in fiscal 2009.
Cash costs per ounce for Phakisa was US$953 per ounce in fiscal 2010, compared with $555 per ounce in fiscal 2009. This increase is primarily attributable to the increase in tons mined, as well as the cost of employees transferred to Phakisa from shafts that were closed during fiscal 2010.
The expected capacity of Phakisa will be 131,175 tons per month. Phakisa has no rock hoisting facilities and all rock will be transported via a rail system on 55 level to the Nyala shaft for hoisting to surface. First production took place during September 2007, with a build up to full production expected by fiscal 2013.
On a simplistic basis reported proven and probable underground mineral reserves of 22.1 million tons (5.16 million ounces) will be sufficient for the Phakisa shaft to, once production commence, maintain production until approximately fiscal 2029. Any future changes to the assumptions upon which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.
Capital Expenditure: We incurred approximately R486 million (US$64.1 million) in capital expenditures at the Phakisa operations in the fiscal year ended June 30, 2010. We have budgeted R391 million (US$51.2 million) for capital expenditures in fiscal 2011, primarily for the establishing and development of the shaft.
Target operation
Introduction: The Target operation consists of Target 1, Target 3 and Freddies 7 & 9 shafts. We acquired Target 1 when Avgold became a wholly owned subsidiary in fiscal 2004. Target 3, previously Loraine 3, and Freddies 7 & 9 shafts were acquired from Pamodzi FS in Feburary 2010. They have been incorporated into our Target operation. Target is situated near the town of Allanridge in the Free State Province,

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some 270 kilometers southwest of Johannesburg. Located on the northern limit of the Welkom Goldfields, the site is accessed via the R30 motorway situated between the towns of Bothaville and Welkom.
History: Target 1 was initially explored through surface drilling in the late 1980s with further exploration being undertaken from a 5.6 kilometers long decline, commenced in 1995, driven from 203L at Loraine No. 1 Shaft. A positive feasibility study into the development of a 105 ktpm operation was produced in May 1998 resulting in the decision to develop Target 1. A detailed mine design was produced in 2000 and the mine officially opened in May 2002. Upon closure of the Loraine mine in August 1998, the Loraine No. 1 and No. 2 Shafts were transferred to the Target mine, becoming Target No. 1 and No. 2 Shafts, respectively. No 5 Shaft being the up-cast Ventilation Shaft.
Numerous corporate actions since the 1940’s until the 1990’s saw the Loraine 3 and Freddies 7 & 9 shafts change ownership a number of times. Previous owners include the Free State Development and Investment Corporation, Johannesburg Consolidated Investment, Avgold and Anglogold. In 1998, PSGM was formed after purchasing Loraine 3 and Freddies 7 & 9 shafts from various individuals. During 2002, the mine was sold to Thistle Mining Inc, an international company with interests in the Philippines and South Africa. The mine struggled to make operational profits, and Thistle undertook a restructuring program in 2006, which together with an increase in the Rand gold price resulted in positive operational cash flows. In February 2008, PSGM was purchased by Pamodzi FS. The mine was operated from that time until March 2009, when Pamodzi FS was placed into liquidation.
Geology: The gold mineralization currently exploited by Target is contained within a succession of Elsburg and Dreyerskuil quartz pebble conglomerate reefs hosted by the Van Heeverrust and Dreyerskuil Members of the Eldorado Formation, respectively. Additional mineral resources have been delineated in the Big Pebble Reefs of the Kimberley Formation but these are not planned to be exploited in the current life of mine plan.
The majority of the mineral reserves at Target are contained within the Eldorado fan, a structure with dimensions of some 135 meters vertically, 450 meters down-dip and 500 meters along strike. The Eldorado fan is connected to the subsidiary Zuurbron fan by a thinner and lower grade sequence of Elsburg reefs termed the Interfan area. To the north of the Eldorado fan, a number of fans have been intersected by surface drilling of which the Siberia and Mariasdal fans are the most significant. These fans are subject to ongoing technical studies and do not form part of the current Target life of mine mineral reserve.
A number of faults that displace the reefs of Target have been identified of which the most prominent are the north-south trending Eldorado fault and the east-west trending Dam and Blast faults. The Eldorado uplifts the more distal portions of the Elsburg and Dreyerskuil Reefs while the Blast fault forms the northern border of Target.
Target North is sub-divided into the Paradise, Siberia and Mariasdal areas by the east-west trending Siberia and Mariasdal faults. To the north of the Siberia fault, the Eldorado fault continues trending more to the northwest and an additional north-south trending fault, the Twin fault has uplifted the distal portions of the reefs. North of the Maraisdal fault, the reef horizons are at a depth greater than 2,500 meters below surface. Resources have been delineated on strike up to 15 kilometers north of Target mine.
Approximately 40 kilometers north of Target 1, surface boreholes have intersected gold bearing reefs in the Oribi area close to the town of Bothaville. Resources have been delineated at Oribi on the VCR and Elsburg at depths of approximately 2,750 meters below surface.
Mining operations: Target is subject to the risks associated with underground mining detailed in the Risk Factors section.
Mining operations at Target 1 comprise one primary underground mine commissioned in May 2002, making use of information systems and mechanization, combined with process-driven organizational design that relies on a multi-skilled workforce. The majority of the production is derived from mechanized mining; however, conventional stoping is still employed primarily to de-stress areas ahead of the mechanized mining.
The mine had successful and consistent production throughout fiscal 2010. Improved volumes resulted from an increase in massive availability, improved environmental conditions in the narrow reef stoping section, maintained development levels and improved discrepancy figures due to clean mining. Grade also improved due to a program of geological remodeling and re-estimation of the orebody, which led to better estimates of ore mined. Concerted efforst, including back-analysis of the orebody, resulted in improved planning and the implementation of more effective control systems. Block 3 remains an important future mining area and the orebody re-assessment process was completed in December 2009.
The infrastructural upgrade program enabled the mine to maintain its current levels of production by June 30, 2010 and the benefits of this upgrade is fully felt in fiscal 2010. A 15-point turnaround plan continues at Target. In particular, a great deal of attention is being paid to development and improving flexibility. Some of the improvements effected during fiscal 2009 bore fruit by the end of fiscal 2010.

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Target 3 is unique in that, for a mature mine, there still remains an excellent mix of remnant ore blocks including shaft pillar blocks where scattered mining can be exploited and ample areas of virgin ground where conventional mining can take place and even potential to exploit the Golden Triangle in the Freddies 9 Shaft area.The Target 3 orebody also has characteristics that suit massive mining techniques in the Eldorados which enables design to be centred on a mechanized operation making use of Target 1 skilled employees and the latest proven technology to produce gold at low cash costs.
The origin of massive mining methods on Target 3 is derived from the massive mining techniques used currently at Target 1 Shaft workings, in particular the open stoping method used in the No. 1 Shaft area where a stope of 30m x 25m x 400m was excavated.
The depth of the workings at Target would normally eliminate the potential massive mining methods; however narrow reef mining can be done to create a de-stressed environment for the areas to be mined by massive mining techniques. The complex multiple reefs may require backfill as a support medium in association with the various mining methods.
In order to exploit the above mentioned reef horizons an extensive program of opening up of collapsed or caved airways has been embarked upon and the repair/reconditioning of both the York and Carrier Fridge Plants in order to improve the mine cooling conditions to the required standard.
The shaft bottom, which was damaged during flooding in May and June 2009 as a result of the pumps that were not repaired or maintained by Pamodzi FS, is in the process of rehabilitation.
In fiscal 2010, Target’s operations accounted for 8% of our total gold production, compared to 6% in fiscal 2009 and 4% in fiscal 2008.
Safety: The safety statistics at Target during fiscal 2010 in terms of LTIFR of 3.39 (2009: 9.66) per million hours worked is lower than the group average of 7.72. Regrettablly there were two fatalities at Target during fiscal 2010 (2009: two fatalities).
Safety at the operation remains the number one priority and received constant and high-level attention. Our mission is to create and maintain a positive Health and Safety awareness and mindset amongst all our employees. More focus is also placed on being proactive by reporting and addressing incidents. Good safety improvements were evident during fiscal 2010.
Plants: Target Plant was commissioned in November 2001 and currently treats both underground ore and surface sources, which include both waste rock dump and plant clean up material. The process route comprise of a closed circuit SAG mill as well as a closed circuit ROM mill. Both these mills are in closed circuit with hydro-cyclones. The milling circuit is followed by thickening, cyanide leaching, CIP adsorption, elution, electro-winning, smelting and tailings disposal. Both the milling circuits are incorporated in the gravity concentration circuit and the concentrates from this circuit are processed via intensive cyanidation and electro-winning.
The ROM mill was commissioned in November 2008 and it was installed in order to reduce the steel ball consumption on the plant. The initial objective was to save R 1.2 million (US$0.13 million) on grinding media monthly, but when a review of the project was done in June 2009 it was found that the actual saving amounted to R1.4 million (US$0.16 million) per month.
In February 2010 the plant obtained substantial ICMI accreditation, which will change to full accreditation in January 2011. During the year the plant also embarked on a reagent saving campaign, especially on cyanide, and through some minor process modifications cyanide consumption was reduced by 76.09 tons year on year. Several power saving initiatives have also been implemented on the plant to reduce the power consumption of the plant, and during the fourth quarter of fiscal 2010 there were already indications that this initiative was paying dividends.
The following table sets forth processing capacity and average tons milled during fiscal 2010:
Average Milled For the
Processing Fiscal Year Ended
Plant Capacity June 30, 2010
(tons/month) (tons/month)
Target Plant
105,000 101,935
In fiscal 2010, the Target Plant recovered approximately 95.3% of the gold contained in the ore delivered for processing.

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Production analysis:
Fiscal Year Ended June 30,
Target (includes Target 1 and 3) 2010 2009 2008
Production
Tons (‘000)
857 710 686
Recovered grade (ounces/ton) (1)
0.128 0.123 0.116
Gold produced (ounces) (1)
113,782 87,225 79,602
Gold sold (ounces) (1)
110,598 87,611 85,006
Results of operations ($)
Product sales (‘000)
115,772 76,435 69,469
Cash cost (‘000)
87,563 59,599 51,463
Cash profit (‘000)
28,209 16,836 18,006
Cash costs
Per ounce of gold ($) (1)
783 645 716
Capex (‘000) ($)
50,446 37,994 35,307
(1) 3,762 ounces were produced by Target 3 and sold. The revenue has been credited against capital expenditure as the shaft is not in production yet. The costs and ounces were not used in the cash cost per ounce calculation. The ounces were also excluded from the grade calculation.
Tons milled from Target increased from 686,000 in fiscal 2008 to 710,000 in fiscal 2009. Target experienced a number of issues impacting on production. These include:
• infrastructural problems with the belts, fridge plants and other environmental infrastructure, resulting in higher face temperatures and lower efficiencies;
• water handling; and
• low availability of massive stopes.
The conveyor belt system was extensively rehabilitated during the course of fiscal 2009. An executive audit was done by Good Year which formed the basis of the rehabilitation plan that was implemented. The belt availability and reliability has increased. The crusher plant, which feeds the belts, is in the process of rehabilitation.
During 2009 a campaign was started to update the reticulation, clean out the dams and getting the dewatering equipment to a standard. In addition to updating the reticulation in the mining areas, flow meters and dual pressure reducing valve systems are being installed to better understand, measure and manage the water usage in the actual workplaces. This campaign was completed in fiscal 2010. Electrical substations are being reviewed for compliance purposes.
Availability of massive stopes has been improved with increased focus on planning and development.
Ounces produced were 87,225 in fiscal 2009, compared with 79,602 in fiscal 2008. The increase in ounces produced was due to higher milled tonnages and improved recovered grade. The recovery grade increased marginally from 0.116 in fiscal 2008 to 0.123 in fiscal 2009.
Cash costs for Target were US$59.6 million in fiscal 2009, compared with US$51.5 million in fiscal 2008. This increase was primarily attributed to increased tonnages produced, increase in total employees costed and inflationary cost increases. Cash costs per ounce were US$645 in fiscal 2009, compared with US$716 in fiscal 2008. This reduction in $/oz terms was due to more ounces produced.
Ounces produced were 113,782 in fiscal 2010, compared with 87,225 in fiscal 2009. The increase in ounces produced was due to higher milled tonnages and improved recovered grade.
Continued upgrading of infrastructure, resulting improved environmental conditions and higher availability of the mechanized fleet have led to increasing and consistent production levels. Tonnages milled from the Target 1 Shaft increased significantly from 710,000 in fiscal 2009 to 857,000 in fiscal 2010.
Maintenance of the average mining grades, and continuing focus on clean-up and clean mining resulted in an improved recovery grade which increased marginally from 0.123 ounces per ton in fiscal 2009 to 0.128 ounces per ton in fiscal 2010.

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Cash costs for Target were US$87.6 million in fiscal 2010, compared with US$59.6 million in fiscal 2009. This increase was primarily attributed to increased tonnages produced, increase in total employees costed and inflationary cost increases, as well as the effect of the appreciation of the Rand against the US$ dollar. Cash costs per ounce were US$783 in fiscal 2010, compared with US$645 in fiscal 2009. This increase was due to higher production levels and the appreciation of the Rand against the US$ exchange rate.
A major review of the geological modeling and evaluation of Target’s mineral resources was completed as planned. This resource was then utilized in a “Life of Mine” planning exercise which was completed in December 2009. The outcomes should lead to improved confidence in short-term and strategic planning. Plans to increase tonnages to 75,000 tons per month together with a capital project to access Mining Block 3 through an additional decline are well advanced.
Assuming no additional reserves are identified, at expected production levels and, at the current planned gold price, it is foreseen that the reported proven and probable mineral reserves of 18.0 million tons (2.8 million ounces) will be sufficient for Tshepong to maintain underground production until approximately 2023. Any future changes to the assumptions upon which the mineral reserves are based, as well as any unforeseen events affecting production levels, could have an effect on the expected period of future operations.
Capital Expenditure: Target incurred approximately R382 million (US$50.4 million) in capital expenditures in fiscal 2010, principally for on-going underground development, Phase 1 of Block 3 to improve environmental conditions, continuing replacement of the underground vehicle fleet and infrastructural rehabilitation. We have budgeted R457 million (US$59.9 million) in fiscal 2011, of which R101 million (US$13.2 million) will be spent on Block 3.
Tshepong
Introduction: We acquired Tshepong when we, in January 2002, acquired the Freegold operations from Anglogold through a 50% joint venture with ARMgold. In September 2003, we acquired 100% of these operations when ARMgold became a wholly owned subsidiary. These operations are located in the Free State province. Production from the operations is processed through Harmony 1 Plant.
History: Exploration, development and production history in the area of the Freegold assets dates from the early 1900’s, leading to commercial production by 1932. Subsequent consolidation and restructuring led to the formation of Free State Consolidated Gold Mine (Operations) Limited, which became a wholly-owned subsidiary of Anglogold in June 1998.
Geology: The operations are located in the Free State Goldfield, which is on the southwestern edge of the Witwatersrand basin. The Tshepong mine is located to the north and west of Welkom. Mining is primarily conducted in the Basal reef, with limited exploitation of the B Reef. The reefs generally dip towards the east or northeast while most of the major faults strike north-south.
Mining Operations: These operations are subject to the underground mining risks detailed in the Risk Factors section. The management teams regularly revisit their mining strategy and management procedures in order to minimize risks.
Mining is conducted at depths ranging from 1,671 and 2,245 meters at Tshepong. Operations at Tshepong were hampered during fiscal 2010 by safety stoppages, following two fatal accidents.
Given the proximity of Tshepong to Phakisa, there are access, ventilation and service synergies that can be exploited to allow access at depth.
The Tshepong Decline project, which started in April 2003, has accessed an additional two levels (69 and 71) of the Tshepong Shaft. The Sub 66 project was completed at the end of June 2010 with a total capital expenditure of R295 million (US$36 million). Production commenced at Sub 66 Decline during fiscal 2010, with the build-up to continue over the next three years. Emphasis is being placed on increasing mineable reserves from this area. The final development component was completed in June 2008. Poor ground condition necessitated intense secondary support and ore pass lining delayed completion. Secondary support has been completed and the lining of orepasses was completed safely during fiscal 2010.
Sub 71 Project made good progress until November 2008 when extreme poor ground conditions were experienced in the developed section. A decision was taken to stop all development and install secondary support in the area. The stoppage continued for seven months until end fiscal 2009. The work was completed safely, without disrupting the production operations from the Sub 66 decline. The development of the Material Decline and Chairlift ends commenced during July 2009 as planned following the stoppage of the ends due to bad ground conditions in November 2008. Progressive a total of 2,146 meters have been completed. The material decline is 50% complete and the chairlift is 62% complete. The installation of the Sub 71 main conveyor has commenced with the civil work and mechanical erecting of steelwork. To date the baseline variation on the original plan is one year. During fiscal 2010 the project was negatively impacted by mine stoppages resulting

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from two fatalities, as well as flooding incidents and long hauling distances from the working faces to the temporary tipping arrangements. The escalation of input costs, combined with delays and additional material required had a negative impact on the project. First production is expected in towards the end of fiscal 2012, with full production anticipated in July 2019. The total estimated cost of this project is R247 million (US$30.2 million).
During fiscal 2010, Tshepong accounted for 15% (15% in 2009 and 14% in 2008) of our total gold production.
Safety: During fiscal 2010, the LTIFR for Tshepong was 12.2 (2009: 15.8) per million hours. There were regrettably two fatalities during the year (2009: 7). Tshepong achieved 1 million fatality-free shifts on February 18, 2010 and came seventh in the category for the most improved LTIFR at the second Hard Rock Safety Summit. Safety at these operations receives constant and high-level attention.
Plants: The ore from these operations are sent to Harmony 1 Plant for processing. See Item 4. Information of the Company — Business — Bambanani” for a discussion on the plant.
Production analysis:
Fiscal Year Ended June 30,
Tshepong 2010 2009 2008
Production
Tons (‘000)
1,674 1,516 1,649
Recovered grade (ounces/ton)
0.130 0.152 0.161
Gold produced (ounces)
216,986 230,778 265,914
Gold sold (ounces)
219,332 227,113 273,119
Results of operations ($)
Product sales (‘000)
240,473 197,726 223,185
Cash cost (‘000)
151,382 108,605 124,720
Cash profit (‘000)
89,091 89,121 98,465
Cash costs
Per ounce of gold ($)
677 483 455
Capex (‘000)($)
34,402 27,711 26,834
Tons milled declined by 8% from 1,649,000 tons in fiscal 2008 to 1,516,000 in fiscal 2009, with gold production decreasing by 13% from 265,914 ounces in fiscal 2008 to 230,778 ounces in fiscal 2009. The decrease was attributable to the decrease in the recovery grade to 0.152 in fiscal 2009, compared with 0.161 in fiscal 2008. The decrease in recovery grade was primarily due to a decrease in the average mining grade which was 1153 cmg/t in fiscal 2009, compared to 1275 cmg/t in fiscal 2008. The drop in the average mining grade is in line with the Life of Mine profile. During fiscal 2008 the mining in the east south block was on the edge of the main high grade pay shoot and as mining continued south during fiscal 2009 mining have moved out of this high grade channel. The continuation of this channel will be mined once Sub 66 and Sub 71 decline is completed.
Cash costs for Tshepong were US$108.6 million in fiscal 2009, compared with US$124.7 million in fiscal 2008. Cash costs per ounce were US$483 in fiscal 2009, compared with US$455 in fiscal 2008. This increase in unit cost is attributable primarily to decrease in the number of ounces of gold produced. Cash cost for fiscal 2009 was impacted by increases in the costs of labor and electric power.
Tons milled increased year on year by 10% (1,516,000 tons in fiscal 2009 compared with 1,674,000 tons in fiscal 2010), with gold production decreasing by 6% from 230,778 ounces in fiscal 2009 to 216,986 ounces in fiscal 2010. The decrease was attributable to the decrease in the recovery grade to 0.130 in fiscal 2010 compared with 0.152 in fiscal 2009. The decrease in recovery grade was primarily due to a decrease in the average mining grade, which was 1039 cmg/t in fiscal 2010 compared with 1153 cmg/t in fiscal 2009. The drop in the average mining grade is in line with the Life of Mine profile. During fiscal 2009 the mining in the east south block was on the edge of the main high grade pay shoot and as mining continued south during fiscal 2010 mining has moved out of this high grade channel. The continuation of this channel will be mined in the decline area once Sub 71 decline reaches full production.
Cash costs for Tshepong were US$151.4 million in fiscal 2010, compared with US$108.6 million in fiscal 2009. Cash costs per ounce were US$677 in fiscal 2010, compared with US$483 in fiscal 2009. The increase in unit cost is attributable primarily to the decrease in the number of ounces of gold produced. The increase in cash costs were primarily due to increases in the costs of labor and abnormal tariff increases in electrical power rates as well as the effect of inflation on costs of materials and supply contracts. In addition, the cost of medical separation was included in operational cost. This was historically not included in operational cost. Also, the effect of the appreciation of the Rand against the US dollar had a negative impact in US$ dollar terms.

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Assuming no additional reserves are identified, at expected production levels and, at the current planned gold price, it is foreseen that the reported proven and probable mineral reserves of 24.9 million tons (3.9 million ounces) will be sufficient for Tshepong to maintain underground production until approximately 2026. Any future changes to the assumptions upon which the mineral reserves are based, as well as any unforeseen events affecting production levels, could have an effect on the expected period of future operations.
Capital Expenditure: Tshepong incurred approximately R261 million (US$34.4 million) in capital expenditure during fiscal 2010. The expenditure was primarily for the decline project and ongoing development. For fiscal 2011 capital expenditure of R273 million (US$35.8 million) is planned, primarily for ongoing capital development.
Virginia operations
Introduction: The Virginia operations are located in the Free State province, near Virginia and Welkom. The Virginia operations consist of the original Harmony mines, the Unisel mine, Brand shafts 1 and 3 (mined from Brand 1 shaft). Mining is conducted at these operations at depths ranging from 1,000 meters to 2,000 meters. Ore is treated at the Central Plant and Harmony 1 Plant. During fiscal 2010, Harmony 2, Merriespruit 3 and Brand 3 shafts were placed on care and maintenance.
History: Our operations in the Free State began with the Harmony mine, which is an amalgamation of the Harmony, Virginia and Merriespruit mines. Beginning in 1996, we began purchasing neighboring mine shafts. The Unisel mine was purchased in September 1996, the Saaiplaas mine Shafts 2 and 3 were purchased in April 1997, the Brand mine Shafts 1, 2, 3 and 5 were purchased in May 1998.
Geology: These operations are located in the Free State Goldfield on the south-western edge of the Witwatersrand Basin. The basin, situated on the Kaapvaal Craton, has been filled by a 6-kilometre thick succession of sedimentary rocks, which extends laterally for hundreds of kilometers. The Free State goldfield is divided into two sections, cut by the north-south striking De Bron Fault. This major structure has a vertical displacement of about 1,500m in the region of Bambanani, as well as a lateral shift of 4km. This lateral shift can allow a reconstruction of the orebodies of Unisel to the west of the De Bron and Merriespruit to the east.
A number of other major faults (Stuirmanspan, Dagbreek, Arrarat and Eureka) lie parallel to the De Bron Fault.
Unisel and Brand are situated to the west of the De Bron. Dips are mostly towards the east, averaging 30 degrees but become steeper approaching the De Bron Fault. To the east of the fault lie Merriespruit 1 and 3 and Harmony 2 mines. These mostly dip towards the west at 20 degrees, although Masimong is structurally complex and dips of up to 40 degrees have been measured. Between these two blocks lies the uplifted horst block of West Rand Group sediments with no reef preserved. The western margin area is bound by synclines and reverse thrusts faults and is structurally complex. Towards the south and east, reefs sub-crop against overlying strata, eventually cutting out against the Karoo to the east of the lease area.
Most of the Mineral Resource tends to be concentrated in reef bands located on one or two distinct unconformities. A minority of the Mineral Resource is located on other unconformities. Mining that has taken place is mostly deep-level underground mining, exploiting the narrow, generally shallow dipping tabular reefs.
The Basal Reef is the most common reef horizon and is mined at all shafts. It varies from a single pebble lag to channels on more than 2m thick. It is commonly overlain by shale, which thickens northwards.
The second major reef is the Leader Reef, located 15-20m above the Basal Reef. This is mostly mined at the shafts to the south — Unisel, Harmony 2, Merriespruit 1 and Merriespruit 3. Further north, it becomes poorly developed with erratic grades. The reef consists of multiple conglomerate units, separated by thin quartzitic zones, often totaling up to 4 meters thick. A selected mining cut on the most economic horizon is often undertaken.
Mining Operations: The operations are subject to the underground mining risks detailed in the Risk Factors section. Due to the shallow to moderate depths of the underground operations, seismicity related problems are relatively infrequent with the exception of Unisel and Harmony shafts and Merriespruit 1 shaft pillar, where these problems receive constant attention. We regularly revisit our mining strategy and management procedures in connection with our efforts to mitigate risks of these problems. There is a risk of subterranean water locally at Merriespruit 1, referred to as water pillar area, and/or gas intersections in some areas of the mine. However, this risk is mitigated by active and continuous management and monitoring, which includes the drilling of boreholes in advance of faces. Where water and/or gas are indicated in the drilling, appropriate preventative action is taken. The principal challenges at the operations of achieving optimal volumes and grades of ore production are addressed by stringent mineral reserve management.

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The inner Basal Reef shaft pillar at Merriespruit 1 is being successfully mined. Approximately 90% of the pillar is mined out. A decision was taken on April 14, 2010 to issue a section 189 to close this operation. After negotiation with organized labor, it was decided to continue operating the shaft, as long as it is profitable. Subsequent to year-end, the decision was made to close the shaft as it failed to meet the agreed targets. See Item 8.“Recent Developments. ” A decision was taken on April 14, 2010 to issue a section 189 to close Merriespruit 3 Shaft, and the shaft was placed on care and maintenance.
A decision was taken during November 2009 to close Brand 3 and the shaft has been placed on care and maintenance. Brand 5 serves as a major pumping shaft for the Steyn, Brand, Unisel and Bambanani mining areas. Harmony 2 was also placed on care and maintenance during fiscal 2010.
Unisel mining is scattered to the south of the shaft and in the decline area towards the east of the shaft. Mining also takes place to the west in the Tarka block. Development is targeted towards Basal and Leader Reef channels which cut the lease area in a west to east direction. Prospecting for A and B Reefs is in progress. Prospecting did not prove any significant values and was discontinued during 2010.
In fiscal 2010, Virginia operations accounted for approximately 12% (17% in fiscal 2009 and 13% in fiscal 2008) of Harmony’s total gold production. This reduction is attributable to the closures of Brand 1, Harmony 2 and Merriespruit 3 during fiscal 2010.
Safety: The safety record during fiscal 2010 in terms of LTIFR of 12.86 (2009: 12.38) per million hours worked compared unfavorably to the group average of 7.72. Regrettably there were five fatalities during fiscal 2010 (2009: 1).
Plants: Ore from Virginia operations is treated at Central plant. The Central plant was commissioned in 1986 and employs CIP/CIL hybrid technology. It is currently dedicated to the treatment of both underground ore and waste rock.
The following table sets forth processing capacity and average tons milled during fiscal 2010 for the Central plant:
Average Milled
for the Fiscal Year
Processing Ended
Plant Capacity June 30, 2010
(tons/month) (tons/month)
Central
185,190 152,120
In fiscal 2010, Central plant recovered approximately 92.3% of the gold contained in the ore delivered for processing.
Production analysis:
Fiscal Year Ended June 30,
Virginia operations 2010 2009 2008
Production
Tons (‘000)
1,826 2,493 2,349
Recovered grade (ounces/ton)
0.093 0.104 0.106
Gold produced (ounces)
170,013 258,170 247,820
Gold sold (ounces)
173,035 259,070 250,324
Results of operations ($)
Product sales (‘000)
186,649 225,897 204,807
Cash cost (‘000)
176,774 165,274 180,133
Cash profit (‘000)
9,875 60,623 24,674
Cash costs
Per ounce of gold ($)
1,036 638 726
Capex (‘000) ($)
23,744 22,133 20,868
Tons milled from the Virginia operations increased to 2,493,000 in fiscal 2009, compared with 2,349,000 in fiscal 2008. This is partially attributable to the fire in the Basal pillar as well as power shortages in 2008.
Ounces produced were 258,170 in fiscal 2009, compared with 247,820 in fiscal 2008. The increase in ounces produced was as a result of improved volumes.

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Cash costs were US$165.3 million in fiscal 2009, compared with US$180.1 million in fiscal 2008. Cash costs per ounce were US$638 in fiscal 2009, compared with US$726 in fiscal 2008. This decrease was attributable primarily to higher tons produced resulting in higher ounces as well as the effect of the weakening Rand/US$ exchange rate.
Tons milled from the Virginia operations decreased to 1,826,000 in fiscal 2010, compared with 2,493,000 in fiscal 2009. This is mainly attributable to the closure of Brand 3 during November 2009, and Harmony 2 and Merriespruit 3 during April 2010. Merriespruit 1 has downscaled production from February 2010.
Ounces produced were 170,013 in fiscal 2010, compared with 258,170 in fiscal 2009. The decrease in ounces produced was as a result of volumes that decreased due to the closure of the three shafts as mentioned above during fiscal 2010, while Merriespruit 1 has downscaled production from February 2010.
Cash costs were US$176.8 million in fiscal 2010, compared with US$165.3 million in fiscal 2009. Cash costs per ounce were US$1,036 in fiscal 2010, compared with US$638 in fiscal 2009. This increase was attributable primarily to lower tons produced resulting in lower ounces as well as an increase in our cash costs and the effect of the appreciation of the Rand against the US dollar.
Assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven and probable mineral reserves of 4.7 million tons (0.6 million ounces) will be sufficient for the Virginia operations to maintain production until approximately 2018, but at a reduced rate from 2012 as some shafts have closed. However, any future changes to the assumptions upon which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of the future operations.
Capital Expenditure : Virginia incurred approximately R180 million (US$23.7 million) in capital expenditures at the Virginia operations in fiscal 2010, principally for ongoing capital development. We have only budgeted R57 million (US$7.4 million) for ongoing capital development in fiscal 2011, as well as R21 million (US$2.8 million) for maintaining/upgrading the shaft infrastructure of Unisel due to the closure of the other three shafts during fiscal 2010.
Other — Surface
Introduction : Other — Surface consists of Kalgold, Phoenix and the surface operations owned by the Freegold, Avgold and Evander companies. As the results of operations for Other — Surface consists primarily of the results from Kalgold and Phoenix, these two operations are discussed separately.
Kalgold
Introduction: Harmony’s only open pit mining operation in South Africa is the Kalgold gold mine that is situated 60 kilometers south of Mafikeng in the North West Province of South Africa. Through Kalgold, Harmony also control extensive mineral rights on the Kraaipan Greenstone Belt in the North West Province of South Africa.
History: Harmony acquired Kalgold on July 1, 1999 and fully incorporated Kalgold into its existing operations in October 1999. Prior to Harmony’s acquisition of the Kalgold mine, the mine had already been in operation for three years.
Geology: The Kalgold operation is located within the Kraaipan Greenstone Belt, 60km south of Mafikeng. This is part of the larger Amalia-Kraaipan Greenstone terrain, consisting of north trending linear belts of Archaean meta-volcanic and metasedimentary rocks, separated by granitoid units. Mineralization occurs in shallow dipping quartz veins, which occur in clusters or swarms, within the steeply dipping magnetitechert banded iron formation. Disseminated sulphide mineralization, dominated mostly by pyrite, occurs around and between the shallow dipping quartz vein swarms. The D Zone is the largest orebody encountered and has been extensively mined within a single open-pit operation, along a strike length of 1,300m. Mineralization has also been found in the Mielie Field Zone (adjacent to the D Zone), the A Zone and A Zone West (along strike to the north of the D Zone), and the Watertank and Windmill areas to the north of the A Zone.
Mining Operations: The Kalgold operation is engaged in open-pit mining. This operation is subject to the open cast mining risks detailed in the Risk Factors section. Small subterranean water intersections in the pit are common and are actively managed and appropriate action is taken when necessary. The primary mining challenges at the Kalgold operations of achieving optimal volumes and grades of ore production are addressed by stringent mineral reserve management. The processing design capacity of the Kalgold operation is 150,000 tons per month. The average tons milled in fiscal 2010 were 156,083 tons per month.
Gold production declined by 24% to 49 063 ounces in fiscal 2010, a result of the planned decline in grade as operations at the high-grade D Zone pit came to an end in March 2009. The sulphide material, which does not present the same problems as the oxidised material, is now

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being mined at the lower-grade Watertank pit. Mining at the A zone pit, where grades will be similar to those at the Watertank pit, is scheduled to start in 18 months’ time. Harmony continued with the brownfields exploration in areas surrounding the Kalgold operation.
In fiscal 2010, the Kalgold operations accounted for approximately 3% (4% in fiscal 2009 and 5% in fiscal 2008) of our total gold production.
Safety: The Kalgold operations had a LTIFR of 1.49 (2009: 2.94) per million hours worked in fiscal 2010, and recorded no fatal accidents in fiscal 2010. Kalgold achieved 2,250,000 fatality free shifts on June 14, 2010.
Plants: Ore is trucked from the pit and is directly tipped into the feed bin of the pre-primary crusher or stockpiled. The ore then undergoes a four phase crushing process before it reaches the Dome stockpile. Three ball mills are used to grind the ore down to between 70-80% less than 75 micron for the leaching process.
The following table sets forth processing capacity and average tons milled during fiscal 2010 for the plant:
Average Milled for the
Processing Fiscal Year Ended
Plant Capacity June 30, 2010
(tons/month) (tons/month)
CIL
165,345 141,681
Heap Leach (1)
— —
(1) Active use of heap leaching was discontinued in July 2001.
In fiscal 2010, the plant at our Kalgold operations recovered approximately 85.6% of the gold contained in the ore delivered for processing.
Production analysis:
Fiscal Year Ended June 30,
Kalgold 2010 2009 2008
Production
Tons (‘000)
1,873 1,700 1,687
Recovered grade (ounces/ton)
0.026 0.038 0.055
Gold produced (ounces)
49,063 64,784 92,229
Gold sold (ounces)
48,097 66,841 93,172
Results of operations ($)
Product sales ($) (‘000)
51,437 56,915 76,685
Cash cost ($) (‘000)
36,162 32,390 38,272
Cash profit ($) (‘000)
15,275 24,525 38,413
Cash costs
Per ounce of gold ($)
748 506 404
Capex ($) (‘000)
1,389 1,090 1,347
Tons milled increased from 1,687,000 in fiscal 2008 to 1,700,000 in fiscal 2009. Ounces produced decreased to 64,784 in fiscal 2009, compared with 92,229 in fiscal 2008, due to a lower recovered grade.
Cash costs decreased from US$38.3 million in fiscal 2008 to US$32.4 million in 2009 mainly due to the deferred stripping write off from the previous financial year.
Tons milled increased from 1,700,000 in fiscal 2009 to 1,873,000 in fiscal 2010. Ounces produced decreased to 49,063 in fiscal 2010, compared with 64,784 in fiscal 2009, due to the a lower recovered grade.
Cash costs increased from US$32.4 million in fiscal 2009 to US$36.2 million in 201, mainly due to an increase in plant costs in lieu of engineering breakdowns.
The processing design capacity of the Kalgold operation is 165,345 tons per month. The average tons milled in fiscal 2010 were 141,681 tons per month.

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Assuming no additional reserves are identified and at expected production levels, it is foreseen that the reported proven and probable mineral reserves of 32.4 million tons (0.8 million ounces) will be sufficient for the Kalgold operations to maintain production until approximately fiscal 2024. However, any future changes to the assumptions upon which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations.
Capital Expenditure: Harmony incurred approximately R11 million (US$1.4 million) in capital expenditures at the Kalgold operations in the fiscal 2010. Harmony budgeted R67 million (US$8.8 million) for capital expenditures in fiscal 2011, primarily for CIL tank farm replacement and replacing some of the plant structures.
Phoenix
Introduction : Phoenix is a tailings retreatment operation, located at Virginia and adjacent to our current and historical mining operations in the Free State province. The Saaiplaas plant is used for the treatment of the material from this project.
History : The project commenced during fiscal 2007 and is aimed at treating the surface sources from our operations in the Free State province.
Safety: Safety at the Phoenix operations improved year-on-year in fiscal 2010. The LTIFR improved by 32.4% to 1.46 per million hours worked from 2.16 in fiscal 2009. There were no fatalities during fiscal 2010.
Plant: The Saaiplaas plant, commissioned in the late 1950’s, has been converted from the zinc precipitation filter process to the CIL. During 2007, the ROM mills were de-commissioned and the plant started treating slime from Dam 22 and Brand A tailings storage facilities. The plant currently processes reclaimed slime at 6 million tons per annum.
The following table sets forth processing capacity and average tons milled during fiscal 2010 for the Saaiplaas plant:
Average Milled
for the Fiscal Year
Processing Ended
Plant Capacity June 30, 2010
(tons/month) (tons/month)
Saaiplaas
551,155 507,063
In fiscal 2010, Saaiplaas plant recovered approximately 40.6% of the gold contained in the ore delivered for processing.
Mining operations : Slimes tonnage reclamation decreased during fiscal 2010, to an average of 459,812 tons per month by year end, adversely affected by heavy rain, low slurry densities, and critical equipment breakdown. The focus during the year was on improving efficiencies, recoveries and ultimately profitability.
Slime deposition capacity constraints played a major factor in the treatment capacity of Phoenix. Two new deposition sites were earmarked for use by Phoenix late in fiscal 2009. These Tailing Storage Facilities (“ TSF’s ”) were commissioned in fiscal 2010. Although the FSS 1 and FSS 4 dams were commissioned to provide additional deposition capacity, residue slime deposition remained problematic due to low pulp densities below 1,300, heavy rain, pipe bursts and penstock failure on the newly commissioned FSS 4. A floating penstock and new ring main have been installed at FSS 4 and the dam was re-commissioned during August 2010.
Fiscal 2010 was characterized by tonnage production problems mainly due to heavy rain, low reclamation slurry densities and thickener breakdown and settling problems. The mining mix from the Brand A source was changed to move from reclaiming top low grade only to 50:50 top:bottom with the bottom higher grade lifting the average grade from the source to above 0.30g/t, though the recovery from this source remains below 40%. The dam 22 source is depleting fast and will be replaced by dam 21 towards the end of fiscal 2011. Dam 21 is planned to deliver 60% of plant feed to improve the average recovery grade once commissioned.
Upgrading of the flocculent plant storage capacity at the end of fiscal 2010 yielded improved thickener settling and throughput capacity to achieve target tonnage, which greatly improves the outlook for fiscal 2011. The installation and commissioning of cluster dewatering cyclones ahead of the thickeners is expected to improve the ability to operate at ideal 50% solids through the plant even further.
During fiscal 2010, Phoenix accounted for 1.5% of our total gold production (1.4% in fiscal 2009 and 1.7% in fiscal 2008).

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Production analysis:
Fiscal Year Ended June 30,
Free State (Phoenix) 2010 2009 2008
Production
Tons (‘000)
6,083 6,578 7,033
Recovered grade (ounces/ton)
0.003 0.003 0.005
Gold produced (ounces)
20,801 22,345 32,215
Gold sold (ounces)
20,801 22,345 32,215
Results of operations ($)
Product sales (‘000)
22,723 19,448 26,247
Cash cost (‘000)
15,856 11,924 12,286
Cash profit (‘000)
6,867 7,524 13,961
Cash costs
Per ounce of gold ($)
762 534 381
Capex (‘000) ($)
0.660 0.279 0.492
Tons treated from Phoenix decreased to 6,578,000 tons in fiscal 2009, compared with 7,033,000 in fiscal 2008. Ounces produced decreased to 22,345 ounces in fiscal 2009, compared with 32,215 in fiscal 2008, primarily due to the decrease in tons treated as well as the lower recovery grade.
Cash costs decreased to US$11.9 million in fiscal 2009 from US$12.3 million in fiscal 2008, despite the increase in some reagent costs, rising by as much as 40%. Cash costs per ounce increased to US$534 per ounce, primarily due to the decrease in ounces produced for fiscal 2009.
Tons treated from Phoenix were 6,083,000 in fiscal 2010, compared with 6,578,000 in fiscal 2009. Ounces produced dropped to 20,801 in fiscal 2010, compared with 22,345 in fiscal 2009, primarily due to the decrease in tons treated. The recovered grade remained at 0.003 ounces/ton in fiscal 2010. The grade of the tons treated is dependent on the waste grade at the time at which the original deposition was done.
Cash costs were US$15.9 million in fiscal 2010, compared with US$11.9 million in fiscal 2009, primarily due to the decrease in volumes as well as the higher costs of reagents. Cash costs per ounce increased during fiscal 2010 to US$762 per ounce, compared with US$534 in fiscal 2009 due to the decrease in volume and increase in transport rates and the price of consumables and electricity.
Capital Expenditure: We incurred approximately R5 million (US$0.7 million) in capital expenditures at the Free State operations in fiscal 2010. For 2011, R30 million (US$3.9 million) is planned for commissioning of Dam 21, plant feed dewatering cluster cyclones, pipeline replacement, completion of additional adsorption stage, flotation pilot plant trials and other minor plant upgrades.
Cooke operations
Introduction : The Cooke operations are located in the Gauteng Province of South Africa, approximately thirty kilometers west of Johannesburg.
During fiscal 2008, an agreement was entered into for the sale of the Cooke operations, together with the associated surface assets. As a result, the assets and related liabilities were classified as held for sale and the results from operations have been included under “Discontinued Operations” in the income statement. On November 21, 2008, the conditions precedent were fulfilled and the sale of an effective 60% interest in the operations was recognized. The discussion below relates to the period up to the effective date of the sale.
Geology : These operations are situated in the West Rand Goldfield of the Witwatersrand Basin, the structure of which is dominated by the Witpoortjie and Panvlakte Horst blocks, which are superimposed over broad folding associated with the southeast plunging West Rand Syncline. At the Cooke operations, two major fault trends are present. The first is parallel to the Panvlakte Fault and strikes north to north-east, having small throws and no lateral shift. The second trend, which runs north-west to west, has small throws, but significant lateral shift, resulting in the payshoots becoming displaced.
There are six identified main reef groupings in the area of these operations: the Black Reef; the Ventersdorp Contact Reef; the Elsburg Formations; the Kimberleys; the Livingstone Reefs; and the South Reef. Within these, several economic reef horizons have been mined at depths below surface between 600 and 1,260 meters.

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The reefs comprise fine to coarse grained pyritic mineralization within well developed thick quartz pebble conglomerates or narrow single pebble lags, which in certain instances are replaced by narrow carbon seams.
Mining Operations: The Cooke assets and related liabilities were classified as a disposal group and held-for-sale during fiscal 2008.
Production at the Cooke operations was negatively affected in fiscal 2008 by a change in the mining mix, with less ore from the high grade VCR reef at Cooke 3 Shaft and lower than expected grades from 128 South project at Cooke 3 Shaft and from the 90 North 6 area at Cooke 2 Shaft. The power shortages during the third quarter in 2008 also impacted negatively on volumes.
The Cooke operations accounted for 5% and 12% in fiscal 2009 and 2008, respectively of our total gold production.
Plants: The processing facilities at the operations presently comprises of the Cooke metallurgical plant, which is serviced by a surface rail network. The Cooke metallurgical plant, commissioned in 1977, is a hybrid CIP/CIL plant, which processes the tailings from the surface sands dumps around Randfontein.
Feasibility studies are being done for a proposed Uranium Plant of an approximate capacity of 500,000 tons per month. It is envisaged that the plant will be completed in approximately three years once approved, when it will treat uranium ore from the Cooke dumps as well as from the Cooke 3 underground operations.
Production analysis:
Fiscal Year Ended June 30,
Cooke operations 2010 2009 (1) 2008
Production
Tons (‘000)
— 1,419 3,905
– Underground
— 514 1,322
– Surface
— 905 2,583
Recovered grade (ounces/ton)
— 0.057 0.060
– Underground
— 0.137 0.152
– Surface
— 0.011 0.013
Gold produced (ounces)
— 80,377 236,170
– Underground
— 70,378 201,884
– Surface
— 9,999 34,286
Gold sold (ounces)
— 85,746 236,242
– Underground
— 75,747 201,939
– Surface
— 9,999 34,305
Results of operations ($)
Product sales (‘000)
— 68,204 193,613
Cash cost (‘000)
— 49,625 121,978
Cash profit (‘000)
— 18,579 71,635
Cash costs
Per ounce of gold ($)
— 644 511
– Underground
— 613 545
– Surface
— 868 525
Capex ( ‘000 ) ($)
— 9,655 22,357
(1) As the operations were sold on November 21, 2008, the results are for the five months then ended and are not comparable with the prior years.
During fiscal 2008, the assets and related liabilities for Cooke 1, 2 and 3 as well as the Cooke plant were classified as a disposal group and are held for sale. The results from the operations were also classified as discontinued operations in the income statement. The table above and the discussion below include the results of the surface operations.
Other — Discontinued operations
Introduction: The results of operation from Other — Discontinued Operations in fiscal 2008 consists of results from the Orkney operations and South Kalgoorlie. South Kalgoorlie formed part of our International operations. Refer to “ Western Australia ” below for a discussion on its operations and results.
The discussion on Orkney follows below.

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Introduction: We acquired the Orkney operations when on September 22, 2003, we merged with ARMgold via a share exchange which resulted in ARMgold becoming our wholly-owned subsidiary. In September 2007, we announced that we had entered into formal agreements with Pamodzi for the sale of the Orkney Shafts. The sale was finalized on February 27, 2008 and the related assets and liabilities derecognized.
History: Exploration and development at Orkney started from 1886 and following dormant periods, large-scale production commenced during the 1940s with the formation of Vaal Reefs Gold Mining and Exploration Company Limited in 1944.
Geology: At the Orkney operations, the Vaal Reef is the most significant reef mined. The reef strikes northeast, dipping southeast and is heavily faulted to form a series of graben structures. The dip is generally less than 30 degrees but can vary locally in direction and magnitude to exceed 45 degrees. The VCR is also exploited, as well as the Elsburg Reef. There are several major faults in the lease area, being Nooitgedacht, Buffelsdoorn, Witkop, WK2, No 3 BU, No 5 BU and No 2 BU Fault. These faults typically have throws of tens of meters and further divide the reef into blocks of up to 100 meters in width.
Mining operations: During February 2008, the Orkney shafts were sold to Pamodzi. These shafts had been managed by Pamodzi since October 2007.
For fiscal 2008, the Orkney operations accounted for approximately 2% of our total gold production.
Plants: Ore from the Orkney operations was treated at Vaal River Operations (“ VRO ”) No. 1 Gold Plant (of Anglogold). Various agreements between us and VRO governed the supply and quality of the ore and gold apportionment.
Production analysis:
Fiscal Year Ended June 30,
Orkney operations 2010 2009 2008 (1)
Production
Tons (‘000)
— — 571
Recovered grade (ounces/ton)
— — 0.100
Gold produced (ounces)
— — 46,655
Gold sold (ounces)
— — 57,132
Results of operations ($)
Product sales (‘000)
— — 42,810
Cash cost (‘000)
— — 51,482
Cash (loss)/profit (‘000)
— — (8,672 )
Cash costs
Per ounce of gold ($)
— — 1,093
Capex ($)
— — 3,579
(1) The results are for the eight months ended February 2008.
The Orkney operations were sold to Pamodzi during fiscal 2008 and therefore the results for fiscal 2008 are only for eight months.

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International Mining Operations
Western Australia Operations
Corporate Action — Mount Magnet and Big Bell Operations
As indicated previously in various applications Harmony has been pursuing an exit strategy from its Western Australian assets. This led to an agreement by Harmony to sell Mount Magnet and Big Bell Gold Operations (“ BBGO ”) to Monarch Gold Mining Company Limited (“ Monarch ”).
However, the transaction fell through as Monarch was subsequently liquidated in July 2008. Still in pursuant of the Western Australia exit strategy, Harmony opened a competitive bidding process with three Australian companies for the disposal and sale of Mount Magnet and BBGO.
The highest and most attractive offer for the purchase of Mount Magnet was received from Ramelius in July 2010. Harmony entered into a Share Sales Agreement with Ramelius for a total consideration of A$35.3 million in cash plus replacement environmental bonds of A$4.7 million totaling A$40.0 million consideration. Final settlement of the transaction took place in July 2010.
In accordance with IFRS requirements the Mount Magnet disposal group is classified as a held-for-sale and discontinued operation at 30 June 2010.
The highest and most attractive offer for the purchase of BBGO was received from Fulcrum in November 2009. Harmony entered into a Share Sales Agreement with Fulcrum for a total consideration of A$3.5 million in cash plus replacement environmental bonds of A$3.2 million totaling A$6.7 million consideration. The sale effective on January 18, 2010 and final settlement of the transaction took place in May 2010.
As of June 30, 2010, our Western Australian operations had 14 employees (these include care and maintenance and exploration personnel on the Mount Magnet site).
In fiscal 2010, our Australian operations accounted for 0% of our total gold production, as compared to 0% in fiscal 2009 and 4% in fiscal 2008.
Mount Magnet Operations
Introduction: In 2002, we acquired Mount Magnet as part of the Hill 50 transaction. In fiscal 2009, Mount Magnet’s operations accounted for approximately 0% of our total gold production, as compared to 4% and 6% respectively in fiscal years 2008 and 2007. This change was the result of the site being placed on care and maintenance as from December 31, 2007.
History: Mining at Mount Magnet began after the discovery of gold in 1896. From that time to June 30, 2009, the Mount Magnet area has produced approximately 6 million ounces. The most recent Mount Magnet operations commenced production in the late 1980s on the Hill 50 and Star underground mines and nearby open-pits, and the processing of low grade ore from previously accumulated stockpiles. Production ceased at the Star underground mine in June 2005. The Star underground mine was subsequently replaced by St. George, a new underground mine. The Mount Magnet site was put on care and maintenance as from December 31, 2007.
Geology: The Mount Magnet operations are located near the town of Mount Magnet in the Murchison region, some 600 kilometers northeast of Perth. The geology consists of folded basaltic and komatiitic greenstones with intercalated banded iron formations and volcaniclastic units. In addition to having been intensely folded, the area has undergone substantial faulting and later intrusion by felsic intrusives. Mineralization within the Murchison belt consists of sulphide replacement style (characteristic of the Hill 50 mine) and quartz lode and shear-hosted hydrothermally emplaced bodies proximal to fault conduits. Smaller stockwork bodies within felsic intrusives are also common. As is typical of the Archaean Shield, the deep weathering profile at Mount Magnet has resulted in supergene enrichment and hypogene dispersion of gold in the oxidizing environments. These effects lend themselves well to the process of small scale open-pit mining. Historically underground mining of primary lodes was the largest contributor to Mount Magnet’s gold production.
Mining Operations: . The Mount Magnet operations were engaged in underground, open-pit and waste rock mining prior to site closure. These operations are subject to the underground, open-pit, and waste rock mining risks detailed in the Risk Factors section.

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Underground operations at Mount Magnet consisted of the Hill 50 and St. George mines, each of which operated a decline. The Hill 50 mine, which approached 1,525 meters in depth, was one of Australia’s deepest underground mines. The St. George Mine was approximately 300 meters in depth. Underground mining was conducted by decline tunnel access. The principal challenges confronted by the Hill 50 underground mine related to its continuing depth and the geotechnical, ventilation and cost impediments that increased depth imposes, including increased ground stress and potential increased seismic activity. A decision was made in May 2007 which placed the Hill 50 mine’s decline development on hold due to significant seismic activity, and effectively put the mine in harvest mode at that time.
With the closure of Star, the development of the new underground mine at the St. George open-pit provided additional underground tonnage for the Mount Magnet operations. Underground development at St. George started in December 2005. The first stope was mined in the second quarter of fiscal 2006. Underground mining continued at this mine during fiscal 2007. This mine reached its economic depth limit during fiscal 2007, and was put in harvest mode, with mining operations ceasing in October 2007. Open-pit production was hindered by the delay in the start up of the Cue open-pits until the last quarter of fiscal 2005 as a result of delayed mining approvals and extended contractor negotiations, although these were subsequently resolved and mining commenced in fiscal 2006. Open-pit mining mainly took place around Mount Magnet during fiscal years 2007 and 2008.
Surface operations at Mount Magnet exploited several medium-sized open-pits, as well as numerous smaller open-pits. Surface materials from areas previously involved in production, including waste rock dumps and tailings dams, are also processed at Mount Magnet. The principal challenge faced by the Mount Magnet operations involved the short mine lives which result from the open-pits being situated on small orebodies. The Mount Magnet site was put on care and maintenance as from December 31, 2007.
Plant : The Mount Magnet operations include one metallurgical plant which was built in 1989 as a CIL plant and upgraded in 1999 to a CIP plant. Actual throughputs of the Mount Magnet plant varies based upon the blend of oxide and sulphide ores in their feed. Processing capacity is an estimate of nominal throughput based on a 70% hard (sulphide) and 30% oxide (soft) blend.
Throughput rates at Mount Magnet were at zero during in fiscal 2009 and 2010 due to the site being closed and the plant being placed on care and maintenance.
Production analysis:
Fiscal Year Ended June 30,
Mount Magnet 2010 2009 2008
Production
Tons (‘000)
— — 966
Recovered grade (ounces/ton)
— — 0.080
Gold produced (ounces)
— — 75,297
Gold sold (ounces)
— — 77,097
Results of operations ($)
Product sales (‘000)
— — 56,215
Cash cost (‘000)
— — 41,405
Cash profit (‘000)
— — 14,810
Cash costs
Per ounce of gold ($)
— — 545
Capex (‘000) ($)
— — 3,909
The majority of declared mineral reserves were mined during fiscal 2008. The mines were closed and the processing plant has been put on care and maintenance in December 2007.
Capital Expenditure: We spent A$0 million on capital expenditure at the Mount Magnet operations in fiscal 2009 and 2010, primarily due to the fact that the site was put on care and maintenance during 2009 and a feasibility study was commenced during April 2009. No capital expenditure was therefore incurred.
Exploration: Activities at Mount Magnet, Western Australia, were performed to the minimum level required to keep the tenements in good standing as the site and the plant is currently on care and maintenance.

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South Kalgoorlie Operations
Introduction: The South Kalgoorlie Operations are made up of New Hampton’s Jubilee Operations and Hill 50’s New Celebration operations. Since the commencement of operations to November 30, 2007, total gold production from the mines in the South Kalgoorlie area has exceeded 2.5 million ounces. In fiscal 2008, South Kalgoorlie operations accounted for 1% of Harmony’s total gold production, and accounted for 4% of our total gold production in 2007.
In July 2007, we announced the sale of the South Kalgoorlie Mine to Dioro. The total purchase price was A$45 million (US$39.8 million), which consisted of a cash and a shares component. On November 30, 2007, all conditions precedent to the transaction were satisfied. The results for fiscal 2008 below reflect only the 5 months ended November 30, 2007.
History: The South Kalgoorlie operations included several open-pits at Jubilee and New Celebration, as well at the Mount Marion underground mine. The Jubilee operations were originally comprised of the large Jubilee open-pit and a number of smaller open-pits. The New Celebration operations were initially developed in 1987 by Newmont exploiting the same ore body that hosted the Jubilee Pit. Hill 50 acquired these operations from Newcrest in June 2001. The Mount Marion decline was established in 1998. Open-pit mining ceased at the South Kalgoorlie Operations at the end of fiscal 2005, with only low grade stockpiles treated during fiscal 2006 together with Mount Marion ore. During fiscal years 2008 and 2007, open-pit mining recommenced at South Kalgoorlie Mines, with a cutback on the HBJ pit, as well as the Shirl open-pit.
Geology: The South Kalgoorlie mines were located approximately 30 kilometers south of Kalgoorlie in the Eastern Goldfields region of Western Australia. The South Kalgoorlie orebodies were located in a number of geological domains including the Kalgoorlie-Kambalda belt, the Boulder-Lefroy Structure, the Zuleika Shear, the Coolgardie Belt and Yilgarn-Roe Structures. At South Kalgoorlie, the mining tenure and geology straddled the three major fault systems or crystal sutures considered to be the main ore body plumbing systems of the Kalgoorlie Goldfield. The geology consisted of Archaean greenstone stratigraphy of basalts and komatiites with intercalated sediments, tuffs, volcaniclastics and later felsic intrusives. Late stage and large scale granitic (Proterozoic) intrusion stoped out large sections of the greenstone. Quartz filled lode and shear-hosted bodies are the most dominant among many mineralization styles. Large scale stockwork bodies hosted in felsic volcanics were an important contributor to bulk tonnage of relatively low grade deposits.
Mining Operations: The South Kalgoorlie operations are engaged in open-pit, underground and waste rock mining. These operations are subject to the underground, open pit and waste rock mining risks detailed in the Risk Factors section.
At the South Kalgoorlie operations during fiscal 2008, open cast mining took place at Shirl open-pit, together with a cutback project on the HBJ open-pit. The HBJ open-pit had a mine life of three years and consisted of 3.3 million tons of 0.048 ounces per ton at the time the cutback was completed. The discovery of the Shirl prospect during fiscal 2006, which resulted in an open-pit reserve of 50,000 ounces and a 15 month mine life, together with an improved gold price environment, lead to the recommencement of open-pit mining at South Kalgoorlie mines during fiscal years 2008 and 2007. The primary challenge that faced the South Kalgoorlie operations involved identifying adequate sources of new open-pit and underground reserves and managing the geotechnical risk on the HBJ pit cutback. See Item 3. “Key Information — Risk Factors — Risks Relating to Our Business and Our Industry — To maintain gold production beyond the expected lives of Harmony’s existing mines or to increase production materially above projected levels, Harmony will need to access additional reserves through development or discovery.”
Plant: . The South Kalgoorlie operation had a metallurgical plant located at Jubilee. This CIL treatment plant was capable of treating the planned production from the mining operations. Ore was hauled from the open-pits and from low grade Shirl stockpiles to the treatment plant by conventional road trains. Actual throughputs of the Jubilee plant varied based upon the blend of oxide and sulphide ores in their feed. Processing capacity was an estimate of nominal throughput based on a 70% hard (sulphide) and 30% soft (oxide) blend.
Production analysis:
Fiscal Year Ended June 30,
South Kalgoorlie 2010(1) 2009(1) 2008(1)
Production
Tons (‘000)
— — 477
Recovered grade (ounces/ton)
— — 0.058
Gold produced (ounces)
— — 27,778
Gold sold (ounces)
— — 27,778

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Fiscal Year Ended June 30,
South Kalgoorlie 2010(1) 2009(1) 2008(1)
Results of operations ($)
Product sales (‘000)
— — 18,858
Cash cost (‘000)
— — 14,453
Cash profit (‘000)
— — 4,405
Cash costs
Per ounce of gold($)
— — 517
Capex (‘000) ($)
— — 12,526
(1) The South Kal Operations sales process was concluded on November 30, 2007. The results for fiscal 2008 are for the five months ended November 2007.

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(MAP)
Papua New Guinean Operations and Exploration
Overview
Introduction: Fiscal 2010 was the second year of the Morobe Mining Joint Venture between Harmony and Newcrest. The Morobe Mining Joint Venture is a 50:50 Joint Venture encompassing:
1. the Hidden Valley Operation;
2. the Wafi-Golpu Project; and
3. an Exploration Joint Venture on the surrounding tenement package.
Outside of the Morobe province Harmony have expanded the PNG exploration portfolio with four new projects that are 100% owned:
1. Mount Hagen in the Western Highlands
2. Amanab in the Sandaun Province
3. Two tenement applications in the Central Province
4. Two tenement applications in the Southern Highlands Province
In addition several tenement applications have been lodged with the MRA including ELA1785-1786 In the Southern Highlands and ELA1784-1785 in the Central Province. However, grant notifications for these applications had not been received by the end of fiscal 2010.
In terms of regional geological setting, Harmony’s tenement interests are all located within the New Guinea mobile belt. The mobile belt comprises tracts of metamorphosed Lower Jurassic and Cretaceous sediments and oceanic crust. These rocks have undergone deformation in the collision zone between the Australian and Pacific Plates and multiple intrusive events including Tertiary granodiorite and younger mineralized porphyries.
Exploration expenditure in PNG for fiscal 2010 was A$22.4 million (US$19.8 million). This breaks down into A$18.5 million (US$16.3 million) as Harmony’s 50% contribution to the Morobe Mining Joint Venture exploration program and A$3.9 million (US$3.4 million) for Harmony 100% projects. Results from exploration work have been highly encouraging, with a major Resource expansion achieved at the Wafi-Golpu Project, and a number of targets with the potential for major stand-alone gold and copper/gold deposits identified and advanced to the drill testing phase.

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Hidden Valley Operation
Introduction: The Hidden Valley project is an open pit gold-silver mine and processing plant. Two separate open pits are in operation, being Hidden Valley-Kaveroi (“ HVK ”) pit, and Hamata pit. The mill has been constructed to process a nominal 4.2 million tonnes (dry metric) of ore per year from the two pits, with de-bottlenecking of the plant planned up to 4.7 million tonnes per year.
Newcrest purchased an initial 30.01% interest in the project on June 30, 2008, and provided sole funding of the project to June 30, 2009 to earn a further 19.99%. On June 30, 2009 Newcrest formally achieved 50% ownership in the project, such that the project is now a 50:50 joint venture between Newcrest and Harmony.
The mine is located in a highly prospective exploration lease area and it is envisaged that, as active exploration continues, the life of the process facility may be extended as it is fed from a number of sources.
The project comprises four exploration licenses of 966 square kilometers in the Wau District of Morobe Province, PNG and is located 210 kilometers north-northwest of Port Moresby and 90 kilometers south-southwest of Lae, the two largest cities in PNG. Access to the project is presently by sealed road from the deepwater port of Lae to Bulolo. Harmony constructed an all-weather gravel road from Bulolo to the Hidden Valley mine site to access the site.
History: Alluvial gold was first discovered at Hidden Valley in 1928 but it was not until the early 1980’s that the area was investigated by CRA Exploration using modern exploration techniques that resulted in the discovery of the Hidden Valley and Kaveroi gold deposits on EL 677. A number of feasibility studies have been prepared for the Hidden Valley Project by the various owners, including one by Abelle in 2003. Harmony extensively reviewed and updated the Abelle feasibility study during fiscal 2006 in order to: (a) reflect changes in the project’s ore body interpretation; (b) incorporate increases in capital and operating costs as a result of energy prices and scarce resources in the mining industry as well; and (c) resolve technical aspects that were outstanding from the previous study. The updated feasibility study was presented to the board during June 2006 with subsequent approval given for construction of the project. In late 2007, Harmony began a search for a partner to partake in all of our PNG mining and exploration activities, culminating in the selection of Newcrest as a partner.
Project Overview: Currently ramping up to full production, the Hidden Valley Mine is expected to initially process 4.6 million tons (short) of ore per annum from ore mined at two open-pits, The HVK pit and the Hamata pit. Currently planned de-bottlenecking is expected to increase the processing rate to 5.2 million tons (short) of ore per annum by year three of operations.
The HVK pit, at an elevation of between 2,500 m and 2,700 m above sea level, is the larger pit supplying the majority of the ore. The HVK pit is located some 5 to 6 kilometers from the processing plant.
The smaller Hamata pit is directly adjacent to the processing plant on the northern side of the processing plant and is at an elevation of between 1,850 m and 2,040 m above sea level.
Current estimates are that at annual full production over 14 years, Hidden Valley will process an average of 4.7Mt from both pits to produce around 250 000oz of gold and 3.4Moz of silver annually.
The resources will be mined in a sequence that sees the low silver, high gold Hamata ore mined first, with plant and infrastructure development for the project developed in close proximity to the Hamata deposit. The next ore mined will be the Hidden Valley/Kaveroi oxide/transition ores (high silver) followed by the Hidden Valley/Kaveroi primary ores.
Geology: The major gold-silver deposits of the Morobe Goldfield, and the Hidden Valley project are hosted in the Wau Graben. The Wau Graben developed as a back-arc rift basin in the southern extension of the New Guinea Mobile Belt (Owen Stanley Foreland Thrust Belt) covering an area of approximately 850 square kilometers in which the Morobe Goldfield, including the Hidden Valley and Hamata deposits are developed.
The Hidden Valley Deposit is interpreted as a low-sulphidation or adularia-sericite-type epithermal gold-silver system. The Hidden Valley deposit further forms part of the carbonate-base-metal-gold subgroup, with abundant carbonate vein-gangue. Other gold-silver deposits around the Pacific Rim in this sub-group are Kelian (Indonesia), Woodlark (PNG) and Gold Ridge (Solomon Islands).
Discrete zones of intense stockwork fracture and mineralized veining comprise individual lodes. At the Hidden Valley deposit, gold and silver are related to steeply dipping (Hidden Valley Zone, “ HVZ ”) and flat-lying (Kaveroi Creek Zone, “ KCZ ”) sheeted vein swarms associated with an underlying shallow thrust.
Reserves: The proven and probable gold reserves for the Hidden Valley/Kaveroi/Hamata deposits (50% attributable interest) are 1.8 million ounces at 0.054 ounces per ton. Silver proven and probable reserves at Hidden Valley/Kaveroi and Hamata amount to 32.0 million ounces at 1.036 ounces per ton. See Item 4. “Reserves.”

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Site Access: The Hidden Valley site is located approximately 90 kilometers south-southwest of Lae, which is the nearest deepwater port for the project, and the Capital of Morobe Province. Access to the site from Lae uses an existing 110 kilometers sealed two-lane main road to the town of Bulolo, continuing to Hidden Valley via an all-weather two-lane gravel access road constructed by Harmony.
Power Supply: The ability to obtain an alternate power supply from PNG’s national power supplier, PNG Power Limited (“ PPL ”), is of importance to the project. On May 14, 2007, Harmony announced that it had signed an agreement with PPL to supply the Hidden Valley mine with electricity. PPL has committed to construct new transmission lines and infrastructure in order to supply hydro-electricity from the Yonki Dam. Contracts for this work have already been awarded. Construction on site of the connecting supply power lines and pylons is currently underway. We expect to receive our full quota of electricity from PPL by the end of December 2010.
Harmony acquired and installed sufficient diesel generators for the purpose of providing 100% backup power supply to the project, and has to date been powering the site with these diesel generators.
Customs and Excise: In November 2006 the PNG National Executive Committee approved exemptions to customs and excise on a range of commodities that will be required for the construction of the project. This was gazetted, and customs officials at Lae port are already applying the exemptions, based on the draft gazettal notice.
Environment: The environmental investigation and completion of the Environmental Impact Statement (EIS), was undertaken by Enesar Consulting Pty Ltd. The investigation applied the data and knowledge gathered since 1987 and baseline studies undertaken as part of the 2004 Feasibility Study, to establish the environmental impacts of the revised development plan.
The EIS has been approved by the Minister for Environment and Conservation of the PNG Government and Environment (Waste Discharge) and Environment (Water Extraction) permits were granted in March 2005. The Hidden Valley Project is the first mining project in PNG to be completely permitted under the new Environment Act 2000.
A condition of the Environmental Permit is the development and submission for approval of an Environmental Management Plan (“ EMP ”). The EMP was approved in April 2006. Other conditions of the Environmental Permit included the development of an Acid Mine Drainage (“ AMD ”) management strategy and a waste management strategy, which were submitted in 2007. Management of AMD and waste disposal remain a critical issue being tackled by the site.
Hidden Valley is the first major open pit mine in PNG to build a Tailings Storage Facility (“ TSF ”) to contain all tailings, followed by discharge of treated decant (involving cyanide detoxification).
Community affairs/landowner discussions: Through its subsidiary Morobe Consolidated Gold (“ MCG ”), Harmony worked extensively with the landowners, local and national government to agree an appropriate sharing of the benefits of the Hidden Valley proposed mine. This culminated in the signing of a Memorandum of Agreement (“ MOA ”) between MCG and relevant affected parties on the August 5, 2005. These parties were PNG National Government, the Morobe Provincial Government, the immediate area Local Level Government units and the local Landowner Association. This MOA clearly defines the roles and responsibilities of each signatory and in particular removes any of the “grey” area with regards to the distribution of proceeds from mineral royalties.
Community support and development of the mine in compliance with the MOA with landowner groups is critical to the success of the project. Meetings are held regularly with these groups and officials from the provincial and national government to monitor progress and ensure these objectives are met. A range of opportunities for the commercial participation of landowner groups in the development of the project have occurred, and community relations initiatives focused on positive outcomes for health, education and infrastructure are ongoing.
Mining and Mining Fleet: The mine is being developed by conventional open pit mining techniques. The primary mining fleet consists of three Komatsu PC-2000 hydraulic backhoe excavators, two Komatsu PC-800 hydraulic backhoe excavators, two Komatsu WA-900 front-end loaders and 25 Komatsu 785-7 rigid dump trucks (100 t class). Drilling equipment comprises seven Atlas Copco ECM720 drill rigs, drilling 6.5 meter holes at 127 mm diameter. A range of ancillary equipment includes track dozers, graders, a fuel truck, and numerous light vehicles.
Ore is delivered by truck to the Hamata and Hidden Valley crusher stations. Crushed Hamata ore is delivered by conventional conveyor to the primary stockpile and Hidden Valley ore is delivered via an overland pipe conveyor to the same stockpile.

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Plant: Once fully operational the processing plant is expected to process ore at a rate of approximately 4.6 million tons of ore per annum and has been designed with three distinct process routes that complement the metallurgical characteristics of the three ore types to be mined. The processing plant will commence as:
(a) a primary crushing, grinding (with the incorporation of a gravity gold recovery circuit), CIL, Merrill-Crowe zinc precipitation, goldroom and tailings detox plant for the low silver Hamata ores, and
(b) will revert to a primary and secondary crushing, grinding, flotation, concentrate regrind, counter-current decantation circuit with Merrill-Crowe zinc precipitation, flotation concentrate and tailing CIL, goldroom and tailings detox for the high silver oxide/transition ores, and
(c) then a similar circuit without flotation tail CIL for high silver sulphide ores from Hidden valley/Kaveroi ores.
The gravity gold recovered will be processed through an intensive cyanide leach followed by electro-winning circuit to produce a high quality ore product.
All tailings will be stored in a tailings storage facility, and all water recovered will be subject to detoxification prior to being re-cycled or released to the environment. The processing plant and tailings storage facility will be built to meet or exceed the requirement of the International Cyanide Management Code. Gold production commenced in August 2009, and the plant is currently ramping up to nameplate production.
Government royalty and other rights: The gold and silver production from the Hidden Valley Project will be subject to a 2% royalty, payable on the net return from refined production if refined in PNG or 2% royalty on the realized price if refined out of PNG.
The government of PNG also has a statutory right to acquire up to a 30% participatory interest in mining development projects, at sunk cost. Once an interest is acquired by the government of PNG, it contributes to the further exploration and development costs on a pro rata basis. This right was not exercised by the government over Hidden Valley, however the memorandum of agreement signed between the government and ourselves negotiated a participation right of 5%, for the landowners. Subsequent negotiations have seen this right transferred into a Benefit Sharing Agreement. The benefit is equivalent to a 0.2% royalty on gold and silver production and payable into an agreed community trust structure, the Hidden Valley Mine Trust. This Trust is administered by a reputable corporate trustee, who is guided by the recommendations of a Board of Governors, comprising representatives of the three landowner villages, the Morobe Provincial government, the MRA and the Hidden Valley Mine Joint Venture.
Third Party Royalties: On March 28, 2007, we announced that we had concluded negotiations with Rio Tinto pursuant to which we would purchase the Rio Tinto rights under a royalty agreement relating to Hidden Valley, which was entered into prior to our acquisition of the Hidden Valley and Kerimenge deposits in PNG. Under the royalty agreement, Rio Tinto had the right to receive a portion of between 2% and 3.5% of future ounces produced by the Hidden Valley mine in PNG. The consideration we paid to Rio Tinto totaled US$22.5 million, which was settled with our issue of ordinary shares valuing US$20 million, with the balance of US$2.5 million paid in cash.
The transaction will reduce the cash costs per ounce of gold produced at Hidden Valley, and all further extensions to the project, mine life and reserves will be free of this royalty.
Production analysis: Full production began in May 2010 and by the end of fiscal 2010 monthly production had risen to 300KMt, equivalent to 87% of nameplate capacity and reflecting the more stable operating performance and consistent plant use. In all for fiscal 2010, 2.7 million tons were processed to yield 122,346 ounces of gold and 445,435 ounces of silver.
Capital Expenditure: Capital expenditure on the project for fiscal 2010 was US$121 million (A$143 million) compared to the US$319 million (A$399 million) spent in fiscal 2009. Capital was mainly spent on completing the overland pipe conveyor, flotation and regrind circuit in the processing plant and capitalization of commissioning costs prior to reaching commercial levels of production on 1st May 2010. The total project capital cost was US$661 million (A$781 million), which represents a 1.6% increase in A$ terms on the last reported budget. There were no significant changes in the scope of work of the project. This value excludes US$37 million for mine fleet repayments post the construction phase which is not considered part of the construction capital.

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Wafi-Golpu Project
Introduction: The Wafi prospect is a 50:50 joint venture with Newcrest of Australia. Harmony’s ownership is through its wholly owned subsidiary, Wafi Mining Limited. The first exploration at Wafi dates back to the nationwide porphyry copper search by CRA Exploration Ltd in the late 1960’s. Elders Resources farmed-in to the project from 1989-1991, and AGF subsequently farmed-in to the project for a short period in 1997 prior to going into administration in 1998. Aurora subsequently acquired the project from Rio Tinto (CRA) in 1999, with ownership passing to Abelle when it merged with Aurora in 2002. We assumed control of the Wafi Project by way of the acquisition of Abelle in 2003. The project is held under 2 contiguous exploration licenses (EL 440, and EL 1105), totaling 130.5 square kilometers. The Wafi Golpu Project comprises a porphyry and epithermal copper and gold systems within a 2.5km x 2.5km area and contains numerous lodes including the Golpu copper gold porphyry, the Nambonga gold copper porpyryr and the Wafi epithermal gold lodes. The Wafi gold mineralization is hosted by sedimentary/volcanoclastic rocks of the Owen Stanley Formation which surrounds the intrusive Wafi Diatreme. Gold mineralization occurs in the form of extensive high-sulphidation epithermal alteration overprinting porphyry mineralization and epithermal style vein-hosted and replacement gold mineralization with associated wall-rock alteration. Exploration expenditure (including Pre-feasibility studies) on the project for fiscal 2010 was US$17.1 million (A$20.2 million).
Geography: The Wafi prospect is located near Mount Watut in the Morobe Province of PNG, approximately 60 kilometers southwest of Lae and about 60 kilometers northwest of Wau. The Wafi camp is located at an elevation of approximately 400 meters above sea level in terrain that is mountainous and forested in most areas. The site is accessed by sealed road (Lae to Bulolo) which comes within 5 kilometers of the eastern edge of the tenements and 15 kilometers from the Wafi camp. From the sealed road, a 38 kilometer dirt-base access track to the prospect is accessible during most weather conditions. The site is serviced by helicopter when the road access is cut due to extreme wet weather. Watut Valley is located immediately west of the project, and the foothills of Watut Valley provide an option for placement of ore processing and mine infrastructure. Alternatively, the processing plant may be located in the Markham River valley closer to Lae.
Mining Reserves . Following completion of the Golpu Copper/Gold pre-feasibility study, a probable mineral reserve has been declared. See Item 4. “Reserves” .
The Golpu Mineral Reserve is derived from the 2007 Golpu Stand Alone Project Pre Feasibility Study. This study assumes a block cave underground mine with ore processed on site to produced a copper and gold concentrate for shipping to smelter. Metallurgical Studies indicate that recoveries of 88% for copper, 54% for gold and 36% for molybdenum can be expected. Metal prices are assumed at US$2.30/lb for copper, US$520/oz gold and US$20/lb for molybdenum in this declaration
In declaring the probable reserve, the following considerations are required:
1. The PFS is completed to industry accepted standards for a PFS (±20-25% accuracy). The outcome of further more detailed studies may affect the reserve.
2. The location for the tailings storage facility has not been finalized, however potential sites proximal to the project have been defined.
3. There are outstanding issues associated with traditional land owners required to be resolved before the project is able to be constructed.
4. The board has not yet committed to completing subsequent phases of study, or to project construction.
Subsequent drilling has expanded the Resource considerably. This new Resource is allowing a re working of the Pre Feasibility study and a new Reserve will be declared upon completion of the study, which is expected in 2011.
A reserve for the Wafi gold ore bodies has not been declared.
Government Royalty and Other Rights : The metal production from the Wafi Project is subject to a 2% royalty payable on the net return from refined production if refined in PNG or a 2% royalty payable on the realized price if refined outside of PNG. The government royalty has been accounted for in project financial models. PNG also has a statutory right to acquire up to a 30% participatory interest in mining development projects at sunk cost. Once an interest is acquired by the government of PNG, it contributes to the further exploration and development costs on a pro rata basis.
Third Party Royalties : There are no third party royalties. A royalty that was over the project was bought out from Rio Tinto in 2008.
Capital Expenditures: No capital expenditures were incurred during fiscal 2010 as exploration drilling work was still underway, and costs were expensed as a result.

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Concept Study: Due to the increased resource at Golpu a Concept study was completed for Wafi-Golpu that builds on previous studies and is updated based on new information and enhanced development approaches.
The objective of the concept study is to:
• Outline the key drivers and major development options;
• Define at least one technically and commercially viable business case; and
• Establish further value building opportunities and a work plan for Prefeasibility;
The concept study evaluated a number of development alternatives for Wafi and Golpu respectively. A range of potential viable alternatives were identified. The base case involves the integrated development of Wafi and Golpu in a number of sequenced development stages.
The initial development focuses on the early establishment of open pit mining and oxide process plant to treat the gold rich Wafi and Golpu oxide ores to minimize upfront capital and reduce the timeframe from execution to production.
The second phase of development focuses on increasing gold production through the expansion of the Wafi orebody at depth and expansion of the process plant to increase throughput and treat the refractory ore.
The last phase of development is the construction of the Golpu underground block cave and construction of a 14mtpa copper concentrator with a pyrite circuit integrated into the refractory treatment plant. Significant additional resources have been identified below the current Golpu mining footprint and are likely to result in a second mining lift directly below the current design.
The development strategy generates future opportunities for value creation that are not currently included in the project, including:
• Expansion of the Golpu resources to the north;
• Improved Wafi resource recovery through enhanced resource modeling;
• Development of Wafi at depth and the Western zone adjacent to Wafi A zone;
• Further refractory process development and enhancement; and
• Produce a Molybdenum concentrate from Golpu copper concentrate.
It is estimated that capital investment of between US$2,000 and US$2,600 million (real) is required to develop all necessary mining openings and physical infrastructure to allow establishment of all three stages. The range reflects the range of potential mining methods and refractory processing routes.
Wafi-Golpu open pits and Golpu underground produce standalone positive NPV projects.
Wafi Gold Projects
Introduction: The Wafi Gold resource is comprised of three main zones: Zone A, Zone B and the Link Zone (high grade lenses within Zone B). In addition to the Wafi resource, the Western Zone is an advanced exploration project.
Geology: The Wafi-Golpu deposit is hosted by the regionally extensive Owen Stanley Metamorphics in a location characterized by a north-west trending structural corridor and an associated intrusive cluster. About 60 km to the south the same structural corridor forms Wau Graben which is host to the Hidden Valley-Kaveroi deposits.
Mineralization covers an approximate aerial extent of 1.5 km square and a known depth of 1,500 meters. Trends indicate mineralization may extend to 2000 meters or more. Exploration drilling is in progress to systematically evaluate the depth extents. This exploration is driven by indications that significant tonnage may yet remain to be discovered that is higher in gold grade and copper grade.
The mineralization is associated with an intermediate intrusive complex comprising diorite-dacite-andesite intrusives. At one point an explosive release from the intrusive complex produced a large diatreme breccia which occupies the central part of the deposit. Evolution of the mineralizing system continued through a porphyry mineralization phase (which produced the Golpu and Nambonga deposits) and into an epithermal veining phase which produced advanced argillic mineralization and both high sulphidation (pyrite) and low sulphidation — carbonate base metal mineralization for example the Zone A-B-Link deposits.

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The combination of low grades and the partially refractory nature of the ore, means in order to achieve the desired business outcomes the processing scale and geo-metallurgical knowledge required will be at or greater than that achieved elsewhere for a refractory gold deposit.
Geological activities will provide key geo-metallurgical inputs to ongoing exploration, geotechnical, mining, metallurgical and environmental studies inclusive of a structural model, oxidation surface, geochemistry, mineralogy and ore types.
Project Status: The Wafi lodes will be taken in Pre Feasibility study testing the various mining and milling options identified in the Concept Study. This will include but not be limited to geotechnical, mining, infrastructure, and environmental investigations.
Golpu Copper-Gold Project
Introduction: The Golpu Copper-Gold Project, or Golpu Project, is located approximately one kilometer northeast of the Wafi gold orebodies and is part of the same geological system.
Geology: The Golpu copper gold deposit is a typical zoned porphyry copper system. Alteration grades from potassic to phyllic to advanced argillic upwards from the core. Outwards from the core, the alteration grades from intense potassic to propylitic alteration around the margin. Sulphide species are also zoned from chalcopyrite dominant core to pyrite dominant around the margins. The mineralized body is a porphyritic diorite intrusive, approximately 300 meters by 200 meters plan dimension. However this mineralized body still remains open to the north.
Copper and gold mineralization extends some way into the metasediment host rock immediately adjacent to the porphyry body by virtue of a stock vein network containing chalcopyrite and molybdenum. As vein density decreases away from the porphyry contact, the copper-gold grades also decreases. The overall footprint of the system is currenty 500m by 700m with drilling continuing to extend mineralisation to the north.
The surface expression is oxidized and leached to about 150 meters vertical depth, resulting in a residual gold only mineralization from which the copper has been leached. At the oxidation interface, a strong 20- to 30 meters thick zone of supergene copper enrichment is developed which transitions at depth into a lower grade covellite-enargite ore. Beneath this is a zone of more covellite rich mineralization that contains lesser enargite and consequently less arsenic. From approximately 300 meters below surface, the ore exists in a covellite-rich (arsenic-poor) form grading into a chalcopyrite rich zone from approximately 500 meters to its current known depth of approximately 1.4 kilometers.
Project Status: Both Wafi gold and the Golpu copper-gold deposits were considered as part of a concept study with Golpu and Wafi integrated into one operation. This concept study has been based on:
• previous work carried out by Harmony (at PFS level) in 2007;
• further study work carried out by the MMJV during mid 2009 and early 2010;
• mine re-design using a new integrated geological model extrapolated based on new drill results from Golpu deposit extensions in February 2010;
• process re-design and thinking to process Wafi refractory ores; and
• re-evaluation of hydropower generation.
The studies have been based on the February 2010 geological model, and has since been revised to include additional drilling results and provide an updated Mineral Resource. The new resource model has validated the Golpu deeps extrapolation and as a result the model used for the study is considered satisfactory at the concept stage.
The standard of mine design engineering is satisfactory for a concept level study. The mining study has utilized a block model, and recognized open pit and block cave modeling packages. Costing completed for mining the ore deposit is considered to be of a satisfactory standard for this level of study and within the +/-35% accuracy level. The major exposure to the mining plan is the limited geotechnical knowledge of the deposit and surrounding country rock. The Wafi area is geologically very complex, and as such the limited geotechnical drilling which has been completed gives an indication only of the likely structural, hydrological, and lithological conditions to be encountered. Planning has commenced for the exploration decline which will be important for collecting data necessary to complete the geotechnical and mine designs.
The standard for process engineering is of an acceptable level for the concept study. The primary processing plant requirements for the oxide and Golpu copper porphyry have been established, allowing a reasonable estimate or recovery and costs to be calculated. The basis for the refractory ore processing alternatives are less defined and a number of enhancements have little basis, but are considered acceptable at the concept stage. Reagent consumption and other parameters such as power and water requirements, as well as manning levels have been established to a level to allow the calculation of a concept level operating estimate for the project. Costs have been calculated using factors.

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It is considered that the on site infrastructure investigations have been completed to a concept level. Conceptual level studies have been completed for all major infrastructure areas and these studies will be used to assess which options should be progressed to pre-feasibility stage.
A Competent Independent Review (“ CIR ”) has been completed for study. The CIR forms a key part of the submission of the project proposal to the MMJV and the respective partner’s boards to ensure that due diligence and corporate governance are maintained.
Additional Prospects and Exploration Potential: The Golpu and Wafi pre-feasibility studies focused on developing the Golpu copper-gold, the high-grade gold link zone mineralization and the non-refractory (oxide) portion of the A and B zone gold mineralization. However, excellent prospects remain in the immediate vicinity of the existing resource areas for porphyry Cu-Au and related epithermal Au mineralization. During fiscal 2008, the focus of the exploration program was within a 2 km radius of the Wafi Golpu deposits, and the Nambonga North Prospect has been identified where drilling has obtained a number of significant porphyry Cu-Au intercepts. At Western Zone, drilling has intersected high-grade Au mineralization similar to that of the Link Zone.
Wafi Transfer Structure & Regional Targets
Introduction: The Wafi Transfer structure comprises approximately 17km of strike and includes the Wafi-Golpu Project area. The area has seen little exploration and remains highly prospective for gold and porphyry copper gold resources similar to those at Wafi Golpu. A major regional exploration program commenced during fiscal 2010 which included both grid based and ridge and spur soil sampling (1252 samples), stream sediment sampling (208 samples), rock chip sampling (688 samples), magnetic interpretation and geological mapping (48 line kilometers). Drilling included 4 holes at the Kesiago prospect for 2508m.
Geology: The Wafi Transfer structure separates the Tertiary Babwaf conglomerate in the west from Jurassic and Cretaceous metasedimentary rocks of the Owen Stanley Metamorphic group in the east. Regional magnetics show the contact is intruded by a number of magnetic intrusive bodies similar to those at the Wafi-Golpu project and suggest excellent potential for additional mineralized porphyry copper-gold and related gold deposits.
Project Status: Work completed to date has defined three high priority prospect areas , Mount Tonn, Pekumbe, and Bavaga, all located within a 7 km radius of the Wafi-Golpu project
Bavaga is located approximately 5 km north of Wafi-Golpu. Results for stream sediment reconnaissance over the area has been particularly encouraging with a large high tenor Au anomaly defined from first pass sampling. A program of follow-up ridge and spur soils and reconnaissance mapping and sampling is underway.
At Pekumbe prospect, grid based soil sampling defined a high tenor, coherent, coincident copper, gold, molybdenum anomaly. Four drill holes have been approved for the first quarter of fiscal 2010 to test the core of the anomaly over approximately 600m of strike
At Mount Tonn, grid based surface soil sampling has defined a significant Au anomaly associated with a magnetic intrusive complex on the Wafi Transfer structure. Infill sampling is underway to provide detail for optimizing first pass drilling in fiscal 2011.
Mount Hagen Project (Harmony 100%)
Introduction: Exploration work on the Mount Hagen project comprised ridge and spur soil sampling (906 samples), trench sampling (9 trenches / 186 samples) and mapping (426 samples). First pass drilling was completed at Kurunga prospect for a total of 4 holes for 1501.2 meters.
Project Status: During the year, the focus of exploration activities was drill testing the Kurunga prospect where local artisanal miners were actively recovering gold from outcropping copper-gold skarn mineralization.
Initial field-work involved the trenching of the area surrounding the outcropping Au mineralization, in order to determine the orientation and controls to mineralization. A systematic program of ridge and spur soil sampling was also undertaken in order to obtain geochemical coverage over the surrounding area and the associated strong aeromagnetic anomalies. Ridge and spur soil sampling was accompanied by creek traverses and mapping by geologists, in order to provide not only a background geological context to the area, but also to delineate potential controlling structures and pathfinder features.

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The soil sampling and mapping were successful in delineating the extent of the potential mineralized system at Kurunga, along with a series of further targets hosting structurally controlled Au and Cu mineralization. An eight hole diamond drilling program was designed to test these targets, with four holes completed during the reporting period. Drilling was successful in intersecting the observed surface Au and Cu mineralization at depth below the artisanal workings. Additionally, other potential mineralization styles including epithermal style Au mineralization was also intersected. The drill program and compilation of results was ongoing at the end of the reporting period.
With the commencement of drilling operations at Kurunga, further reconnaissance mapping and sampling was undertaken at the Bakil prospect, approximately 8km southwest of Kurunga. This prospect was identified by visual observation of a significant area of landslip activity in an area of no previous exploration activity, possibly corresponding to a large alteration system. Subsequent initial investigations revealed an extensive system of altered volcaniclastic sediments and intrusive units, with visible structurally hosted Cu mineralization. Several float samples demonstrating visual Cu mineralization were also observed and sampled from local creeks and rivers. Further reconnaissance work is ongoing at Bakil at the reporting period end including ridge and spur soil sampling, with the goal of defining suitable drill targets for testing in the first half of the fiscal 2011.
Amanab Project (Harmony 100%)
Introduction: Exploration work on the Amanab project commenced during the fourth quarter of fiscal 2010 with initial field visits to plan activities, and develop community contacts and support. This is an extremely remote area of western PNG and only accessible by air, with the nearest regional centre at Vanimo some 180kms to the north. Fly camps were in place and surface sampling commenced at year end.
Project Status: The Amanab project consists of one granted lease, EL1708, with in the Sandaun Province of PNG. During the reporting period, the final grant was received for EL1708. A thorough review of previous exploration activities was undertaken by Brisbane based technical staff, resulting in the definition of several highly prospective target areas (Yup River East, Yup River West, Biaka, Dio River, Akraminag, Mouri and Akrani Nth). However, initial field work was postponed until exploration activities could successfully be established at Mount Hagen.
An initial field team was established at Amanab station, with construction of a fly camp at Oweniak village. Initial sampling commenced with ridge and spur soil sampling at the Yup East prospect, which was defined from an examination of historic exploration results and reported local alluvial gold mining. This program will continue with additional ridge and spur soil sampling campaigns planned for Yup River West, and the Biaka prospects during fiscal 2011.
Hidden Valley ML Exploration
Introduction: Exploration work on the Hidden Valley ML (outside of the deposit areas) comprised ridge and spur soil sampling (803 samples), trench sampling and mapping (1080 samples). First pass drilling was completed at Apu Creek, Big Wau, and Yafo prospects for a total of 3 holes/1253 meters.
Project Status: With major drill programs undertaken for Hidden Valley resource definition and the Wafi Golpu resource expansion, drilling activities on grassroots prospects on the ML was curtailed during 2010. Work focused on integrating the geological and geochemical datasets with detailed helimagnetics to generate new targets for fiscal 2011.
Project generation work together with continuous channel sampling and mapping south of the Hidden Valley Kaveroi deposits generated several high priority targets for drill testing. These include the Tais Creek and Waterfall prospect areas.
Follow-up drilling at Apu creek returned several zones of base metal mineralization with associated alteration. Interpretation of alteration patterns and the metal zonation through the main deposit, as well as, prospects along strike such as Hidden Valley South and Apu Creek, is being completed to develop a mineralization model.
Drilling at Big Wau has downgraded the prospect and no further work is planned at this stage.
Kerimenge and the broader prospect potential
Introduction: The Broader Kerimenge project area lies approximately 7 kilometers east of the Hidden Valley — Kaveroi deposit. The area is being targeted for high grade satellite mineralization to supplement the ore feed through Hamata Processing Plant . Work completed during fiscal 2010 focused on trenching and reconnaissance sampling over the broader project area. A total of 433 surface samples were collected and assayed, and over 22.3 line kilometers of creek mapping completed.
Project Status: Results from the work have highlighted the Kauri — Wara Muli areas located approximately 2km north of the Kerimenge Prospect. First pass ridge and spur soils was completed over a 7 square kilometer. Results have highlighted a mineralized contact with anomalous gold and base metal assays with potential for up to 4 km of strike. Mapping has confirmed prospectivity with mineralized vein stockworks along the porphyry-granodiorite contact. Follow-up work and first pass drilling is planned for fiscal 2011.

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Figure 1: Morobe Mining Joint Venture (Harmony 50%) Tenement Location Map
(MAP)
Morobe Coast Exploration License
Introduction: The Morobe Coast exploration license, EL1403, encompasses 520.2 square kilometers of tenure. A compulsory 50% reduction was completed in April 2010, although a application (ELA 1849) encompassing the relinquished portion was successful in securing priority to the ground. The area lies to the southeast of the Morobe Goldfield, and we believe it presents grassroots exploration potential. Historical exploration work has been limited, but returned anomalous gold assays in rock chip and stream sediment samples from the Lokaniu volcanics.
Wiwo and Giu Prospect . The Giu and Wiwo prospect areas fall approximately 10 kilometers southwest of the Morobe township on the east coast of PNG, and has been the main focus of exploration activities on EL1403. A detailed airborne magnetic survey was completed during fiscal 2010 for over 8000 line kilometers. 563 surface soil samples were completed as part of a first pass ridge and spur soil sampling program over the Wiwo prospect area
Mapping to date has outlined several areas of structurally controlled epithermal vein mineralization, hosted in vesicular basalts. Rock chip results continue to be encouraging with anomalous values of copper, gold, molybdenum and zinc returned.
Project Status: Integration of new geochemical and geophysical datasets is currently underway to define targets for follow-up work.

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REGULATION
Mineral Rights
South Africa
South African law no longer provides for the separate ownership of surface and mineral rights. Prior to the promulgation of the MPRDA on May 1, 2004, it was therefore possible for one person to own the surface of a property, another to own rights to precious metals, and yet another to own rights to base minerals. In terms of the MPRDA, all mineral rights in South Africa are now vested in the South African State. The principal objectives of the Act are:
• to recognize the internationally accepted right of the state of South Africa to exercise full and permanent sovereignty over all the mineral and petroleum resources within South Africa;
• to give effect to the principle of South Africa’s custodianship of its mineral and petroleum resources;
• to promote equitable access to South Africa’s mineral and petroleum resources to all the people of South Africa;
• to substantially and meaningfully expand opportunities for HDSAs including women, to enter the mineral and petroleum industry and to benefit from the exploitation of South Africa’s mineral and petroleum resources;
• to promote economic growth and mineral and petroleum resources development in South Africa;
• to promote employment and advance the social and economic welfare of all South Africans;
• to provide security of tenure in respect of prospecting, exploration, mining and production operations;
• to give effect to Section 24 of the South African Constitution by ensuring that South Africa’s mineral and petroleum resources are developed in an orderly and ecologically sustainable manner while promoting justifiable social and economic development; and
• to ensure that holders of mining and production rights contribute towards socio-economic development of the areas in which they are operating.
Under the MPRDA, tenure over established mining operations is secured for up to 30 years (and renewable for periods not exceeding 30 years each thereafter), provided that mining companies apply for new order mining rights over existing operations within five years of May 1, 2004, or before the existing right expires, whichever is the earlier date and fulfill requirements specified in the MPRDA, its Regulations and the Mining Charter.
The Mining Charter was signed by government and stakeholders in October 2002 and contains principles relating to the transfer, over a ten-year period, of 26% of South Africa’s mining assets (as equity or attributable units of production) to HDSAs, as defined in the Mining Charter. An interim target of 15% HDSA participation over five years was set and to this end, the South African mining industry committed to securing financing to fund participation of HDSAs in an amount of R100.0 billion within the first five years of the Mining Charter’s tenure. The Mining Charter provides for the review of the participation process after five years to determine what further steps, if any, are needed to achieve the 26% target participation. In order to measure progress in meeting the requirements of the Mining Charter, companies are required to complete a “scorecard”, in which the levels of compliance with the Mining Charter can be ticked-off after five and ten years respectively. The Mining Charter and Scorecard require programs for black economic empowerment and the promotion of value-added production (mineral beneficiation), such as jewelry-making and other gold fabrication, in South Africa. In particular, targets are set out for broad-based black economic empowerment in the areas of human resource and skills development; employment equity; procurement beneficiation and direct ownership. In addition, the Mining Charter addresses socio-economic issues such as migrant labor, mine community and rural development, and housing and living conditions.
Following a review of the progress made by the mining industry after five years of implementing the provisions of the Mining Charter , the DMR recently amended the Mining Charter and the Revised Mining Charter was released on September 13, 2010. The requirement under the Mining Charter for mining entities to achieve a 26% HDSA ownership of mining assets by the year 2014 has been retained. Amendments to the Mining Charter in the Revised Mining Charter include, inter alia, the requirement by mining companies to:
(i) facilitate local beneficiation of mineral commodities;

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(ii) procure a minimum of 40% of capital goods, 70% of services and 50% of consumer goods from HDSA suppliers (i.e. suppliers of which a minimum of 25% + 1 vote of their share capital must be owned by HDSAs) by 2014. These targets will however be exclusive of non-discretionary procurement expenditure;
(iii) achieve a minimum of 40% HDSA demographic representation by 2014 at executive management (board) level, senior management (EXCO) level, core and critical skills, middle management level and junior management level;
(iv) invest up to 5% per cent of annual payroll in essential skills development activities; and
(v) implement measures to improve the standards of housing and living conditions for mineworkers by converting or upgrading mineworkers’ hostels into family units, attaining an occupancy rate of one person per room and facilitating home ownership options for all mineworkers in consultation with organised labour, all of which must be achieved by 2014.
In addition, mining companies are required to monitor and evaluate their compliance to the Revised Mining Charter, and must submit annual compliance reports to the DMR. The Scorecard makes provision for a phased-in approach for compliance with the above targets over the five year period ending in 2014. For measurement purposes, the Scorecard allocates various weightings to the different elements of the Revised Mining Charter. Failure to comply with the provisions of the Revised Mining Charter will amount to a breach of the MPRDA and may result in the cancellation or suspension of a mining company’s existing mining rights.
We actively carry out mining and exploration activities in all of our material mineral rights areas. Accordingly, the MPRDA has not had a significant impact on these mining and exploration activities because we applied for and were granted the conversion of all of our old order mining rights into mining rights in terms of the MPRDA. We now have to comply with the required annual and bi-annual reporting to the DMR on the Social and Labor Plans, Environmental Management Programmes, and Progress Reports on our prospecting rights.
We have already complied with the requirements of the Mining Charter, with an equivalent of 36% of production ounces qualifying as empowerment credit ounces. We have been working on our program of licensing since 2004, which involved the compilation of a mineral assets register and the identification of all of our economic, mineral and mining rights. We have secured all “old mining rights” and validated existing mining authorizations. Our strategy has been to secure all strategic mining rights on a region-by-region basis. The first application for conversion from “old order” to “new order” mining rights was for the Evander Operations and was lodged on May 21, 2004. The Evander mining license was the first conversion application in the region and in October 2004 we became the first senior company to convert “old order” to “new order” mining rights for our Evander and Randfontein operations. We have worked closely with the DMR to help ensure, to the extent we are able, that the licenses are granted as swiftly as possible. The conversion of licenses for all our remaining operations were granted during November 2007 and Doornkop was executed in October 2008. All of our mining areas are therefore secured/supported by new order mining rights.
The Mineral and Petroleum Royalty Act 28 of 2008 and the Mineral and Petroleum Royalty Administration Act 29 of 2008 were assented to on November 21, 2008 with the commencement date set as May 1, 2009. However, the date on which royalties became payable was deferred to March 1, 2010. Royalties are payable to the government according to formula based on earnings before interest and tax. This rate is then applied to revenue to calculate the royalty amount due, with a minimum of 0.5% and a maximum of 5% for gold. Since the effective date of March 1, 2010, the average royalty rate for our South African operations is 1.5% of gross sales.
The MPRDA intends to, among other things:
• give effect to the Minister’s stated intention to promote investment in the South African mining industry;
• establish objective criteria for compliance with the MPRDA’s socio- economic objectives;
• remove the technical deficiencies of the MPRDA;
• align the MPRDA with the Promotion of Administrative Justice Act, 2000; and
• coordinate the environmental requirements between the MPRDA and the National Environmental Management Act.
Papua New Guinea
According to the Mining Act of 1992 (PNG) mineral rights in PNG belong to the government of PNG and they have a statutory right to obtain up to a 30% participating interest in mining development projects. The government then issues and administers mining tenements under the relevant mining legislation, and mining companies must pay royalties to the government based on production.

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The key difference in PNG is that citizens have the right to carry out non-mechanized mining of alluvial minerals on land owned by them. These customary rights do not extend over a mining lease, unless an alluvial mining lease is obtained.
Almost all land in PNG is owned by a person or group of persons, and is not generally overlaid by landowner title issues. There is, however, considerable difficulty in identifying landowners of a particular area of land because land ownership may arise from both contract and inheritance, and because of the absence of a formal written registration system.
Prior to commencing exploration, compensation for loss or damage must be agreed with the landowners. Prior to commencing mining, a written agreement must be entered into with landowners dealing with compensation and other matters.
In PNG, Morobe Consolidated Goldfields Limited and Newcrest PNG 1 Limited hold a mining lease and various exploration licenses granted by the Department of Mineralogy and Geohazards Management for the Hidden Valley Project. Both parties have obligations under a memorandum of agreement with the state, local government and the landowners.
Wafi Mining Limited and Newcrest PNG 2 Limited hold various exploration licenses granted by the Department of Mineralogy and Geohazards Management for the Wafi-Golpu Project, and has entered into a compensation agreement with landowners on one of its exploration licenses.
Harmony Gold (PNG) Exploration Limited manages three exploration licences granted in the Western Highlands and the Sandaun Provinces. The company has also applied for four tenements in the Central and Southern Highlands Provinces and is still awaiting ministerial approval.
In PNG there are no applicable exchange control restrictions but the PNG central bank does have to be informed of all transactions and has to approve lending facilities and interests rates charged.
Environmental Matters
South Africa
We are committed to conducting our business in an ethically, morally, socially and environmentally responsible manner that will protect human health, natural resources and the environment in which we live. We aim to balance our economic, social and environmental goals and responsibilities to achieve sustainable, profitable growth in our business and, more importantly, to work with communities and regulatory agencies to implement sound management practices which will ensure that our mining is conducted in an environmentally-safe manner. In addition, with regard to legacy mining impacts, we remain committed to identifying and implementing coordinated remediation plans that are acceptable to all relevant parties.
Harmony has recently approved its environmental strategy which is geared towards:
• managing the business with environment as an integral part of the business processes;
• focusing relentlessly on effectiveness of risk controls;
• radically reducing the environmental liability in the organisation;
• create a sharing, learning, challenging and innovative enviromental culture.
In support of the above commitment, our environmental policy stipulates that:
• Compliance
We will strive to comply with all applicable municipal, provincial and national laws and regulations, as well as the other requirements to which the company subscribes that are relevant to the environmental aspects of our activities.
• Continual Improvement
We will evaluate and continually improve the effectiveness of our Environmental Management System (“ EMS ”) through periodic audits and management reviews, and we will review our environmental policy on an annual basis.
• Pollution Prevention
We will actively design our operations and undertake our mining activities so as to prevent pollution. We will strive towards the continual reduction of adverse environmental effects and support the principle of sustainable development.

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• Awareness
We will communicate our environmental policies to our employees, contractors and suppliers, and will provide appropriate training to all employees to ensure their continuing awareness of our environmental responsibilities.
To address and minimize the impact of the company’s operations on the environment, taking into account regulatory requirements, the board has approved a number of five year targets relating to emissions to air, water consumption and usage, energy consumption, recycling and land use based on fiscal 2008, namely:
• Compliance
The Company will reduce the number of significant incidents to zero.
• Air Pollution
All sites with emissions > 100,000 tonnes per year CO2 equivalent is required to have and maintain energy conservation plans by 2012.
Harmony’s aggregate group target for reduction in energy consumption per ton milled is 10% by 2013 based on a 2005 base year.
Harmony’s aggregate group target for reduction in GHG per ton milled is 5% by 2013 based on a 2005 base year.
• Biodiversity
All sites will have a biodiversity action plan by 2012.
• Water Management
The aggregate group target for increased affected water consumption per ton milled is a 5% improvement by 2013 based on a 2008 base year.
The aggregate group target for reducing fresh water consumption per ton milled is a 2% improvement by 2013 based on a 2008 base year.
• Recycling
All steel, plastic and timber waste to be handled through designated areas, to improve levels of recycling, and 50% of all oil and grease to be recycled.
• Land Use
The aggregate group target is a 5% reduction in the land available for rehabilitation.
Environmental performance
ISO14001 implementation
An ISO14001 EMS is being introduced progressively across our operations, and it is planned that the implementation program at the longer-life operations will be completed in 2012. Formal certification will be sought progressively. By the end of June 2010, the implementation status at the various operations was estimated as follows:
• Doornkop — shaft achieved certification in fiscal 2010; Doornkop plant is scheduled for certificate in November 2010;
• Kusasalethu — Certification audit planned for March 2011;
• Evander 8 Shaft — Certification audit planned for October 2010;
• Kalgold — Certification audit planned for October 2010; and
• Free State Harmony 1 plant — December 2011.

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The EMS forms the basis for the implementation of the environmental policy and monitoring compliance, while the Environmental Management Programme Report (“ EMPR ”) developed in line with legislative requirements, contain specific as well as general principles governing environmental management during the life of the mine. The EMPRs identify individual impacts, mitigation measures and rehabilitation requirements.
Generic closure objectives are set and high-level closure plans formulated within the EMPR, including investigation of the potential for re-use of existing infrastructure, preparation of a rehabilitation plan, rehabilitation and vegetation of the affected area and post-closure monitoring. These EMPRs are legally binding and forms part of our submission for, and receipt, of mining rights conversions. Revised EMPRs (aligned with new minerals legislation) were developed for Doornkop, Kalgold, Joel, St Helena, Target, Evander, the Virginia operations and Kusasalethu in fiscal 2009, and submitted to the regulatory authorities for approval. As part of this process, public participation meetings have been held with interested and affected parties.
A number of annual compliance audits were undertaken during the year, most notably by the DMR. Areas of non-compliance identified by the audits have been and are being addressed.
Significant environmental incidents
Significant incidents are defined as those that have an impact outside the Group’s boundaries, which may cause irreparable harm or which require significant expenditure to remedy. In fiscal 2010, five significant environmental incidents were reported. These related primarily to:
• localised sewage spill onto adjacent land (one incident);
• localised slimes spillage into the Winkelhaakspruit (two incidents);
• overflow of affected water from a water containment facility into a tributary stream as a result of flash floods (one incident); and
• overflow of affected water from a water containment facility into the adjoining storm water facility (one incident).
Financial provision
In accordance with legislation, Harmony has constituted independent environmental rehabilitation trust funds to make adequate financial provision for the expected cost of environmental rehabilitation at mine closure and for the discharge of its obligations and contingent liabilities. Each operation reviews and updates the financial provision for its expected environmental closure liability annually in consultation with a consultant. This estimate is then used to calculate the contributions to be made to the rehabilitation trust funds, and, if necessary, adjustments are made to the trust fund provisions.
The accumulated amount in the various South African rehabilitation trust funds was R1,702 million (US$223.2 million) at the end of June 2010 (compared with fiscal 2009, which was R1,597 (US$206.8 million)), while the total rehabilitation liability was estimated at R2,229 million (US$292.2 million) (compared with fiscal 2009, which was R1,918 (US$248.3 million)). During the year, we contributed R5 million (US$0.7 million) to the trust funds.We also arranged guarantees for the environmental liabilities with Nedbank Limited amounting to R286 million (US$37.5 million).
The assets of each mine within each fund are ring-fenced and may not be used directly to cross-subsidise one another.
Papua New Guinea
Our PNG operations are in various phases of activity including exploration, pre-feasibility study and commissioning. We are subject to applicable environmental legislation including specific site conditions attached to the mining tenements imposed by the PNG Government DEC, the terms and conditions of operating licenses issued by the PNG MRA and DEC, and the Environment Permits for water extraction and waste discharge issued by DEC.
Some non-compliances with these requirements have been identified at the Hidden Valley Mine and remedial actions are being implemented in consultation with DEC and MRA. All other operations in PNG are compliant with their respective statutory requirements.
All PNG operations have departments and personnel dedicated to environmental matters who are responsible for implementing the company environmental management programs, monitoring the impact of mining on the environment and responding to impacts that require specific attention outside of the normal program of environmental activities.

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A framework for a Sustainable Business Management System (“ SBMS ”) has been completed which complies with relevant Australian and international standards and principles for safety, environment, quality and sustainable development (including AS/NZS ISO14001:Environmental Management Systems, Equator Principles, and the Cyanide Code). This system will be implemented at all PNG operations over the next two years.
Significant environmental incidents
There were a number of environmental incidents reports in PNG that may have had a moderate impact on the receiving environment but were not considered major or at a level that would have affected ecosystem function.

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Health and Safety Matters
South Africa
The Mine Health and Safety Act
For many years, the safety of persons working in South African mines and quarries was controlled by the Mines and Works Act of 1956 and then by the Minerals Act of 1991 which was replaced by the Mine Health and Safety Act. The Minerals Act of 1991 has subsequently been repealed and the MPRDA promulgated. The Mine Health and Safety Act has since been amended by Act 74 of 2008. The objectives of the Mine Health and Safety Act are:
• to protect the health and safety of employees and other persons at mines;
• to promote a culture of health and safety;
• to require employers and employees to identify hazards and eliminate, control and minimize the risks relating to health and safety at mines;
• to give effect to the public international law obligations of South Africa that concern health and safety at mines;
• to provide for employee participation in matters of health and safety through health and safety representatives and health and safety committees at mines;
• to provide for the effective monitoring of health and safety conditions at mines;
• to provide for the enforcement of health and safety measures at mines; and
• to foster and promote co-operation and consultation on health and safety between the DMR, employers, employees and their representatives.
The Mine Health and Safety Act prescribes general and specific duties for employers and others, determines penalties and a system of administrative fines, and provides for employee participation by requiring the appointment of health and safety representatives and the establishment of health and safety committees. It also entrenches the right of employees to refuse to work in dangerous conditions. Key amendments to this Act are the following:
• Training records to be kept
• Employer investigations
• Permanent committees of the MHSC
• Health and Safety Management system
• Administrative fines increased from R200,000 to R1million
• Offences — applicable to the Employer
Government, through the DMR, ordered the institution of audit teams to conduct legal compliance and systems and explosives control audits on mines across all commodities.
It is anticipated that Harmony will incur additional expenditure in order to comply with the prescribed legislative requirements. Management anticipates that such additional expenditure will not have a material adverse effect upon our operational results or financial condition.

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Criminal mining
Security issues with regard to criminal mining came to the fore during fiscal 2009. In June 2009, criminal mining resulted in the deaths of criminal miners. Harmony continues to address the issue of criminal mining on a daily basis with enhanced security, together with the South African Police Services, the Department of Justice, the National Prosecuting Authority and other affected mining companies. We are doing everything reasonably practicable to ensure that the unauthorized miners do not get access to shafts in order to prevent them from going underground illegally and to prevent them from destroying existing infrastructure. We have invested a significant amount of money in infrastructure and systems to achieve this.
Healthcare services
In South Africa, approximately 80% of primary health care and occupational health services are provided to employees and their dependants through company-managed healthcare facilities which include two private hospitals, one mine hospital and three private pharmacies. Casualty departments at these hospitals provide 24-hour emergency services to local communities as well as to the company’s employees. The health and well-being of the remainder of Harmony employees, their dependants and contractors is ensured through medical aid membership or third-party service-providers, as part of their employment benefits.
In fiscal 2010, we embarked on a pro-active healthcare strategy with a shift in focus from curative care towards preventative healthcare. Integrated individual healthcare was provided to employees with the assistance of management information systems which enable Harmony Healthcare to monitor and track the risk profile of each individual in terms of health and well-being. An individual disease management plan is then developed and continually reviewed to assess progress.
Occupational health
In compliance with the Mine Health and Safety Act, medical surveillance continued at the group’s four medical surveillance centres. Medical surveillance examinations were conducted including entry examinations (for new employees), annual examinations, exit (end of service) examinations, and out-of-cycle examinations (for transfers, for example).
We align our occupational health statistics reporting to international standards such as the International Labour Organization’s Code of Practice on the Recording and Notification of Occupational Accidents and Diseases, as well as the Mine Health and Safety Act. In the case of an employee being identified as having a compensable occupational illness, the company submits his or her details on the employee’s behalf to the Medical Bureau for Occupational Diseases (“ MBOD ”) or to the Rand Mutual Assurance Company (“ RMA ”), depending on the illness and legislation that covers it. The MBOD is a statutory body, responsible for certification and compensation in terms of the Occupational Diseases in Mines and Works Act, 1973, to which Harmony contributes. RMA is an industry body that provides compensation under the Compensation for Occupational Injuries and Diseases Act of 1993.
The primary occupational health risk areas in fiscal 10 were silicosis, noise induced hearing loss (“ NIHL ”), tuberculosis (“ TB ”) and occupational injuries.
HIV & AIDS Policy
We have managed to look at HIV & AIDS awareness campaigns holistically with our South African workforce. Our HIV and AIDS campaigns are in line with the national HIV counseling and testing (“ HCT ”) campaigns. Our treatment policy is also in line with the National Guidelines on Anti Retroviral Treatment, which assists employees who decide to leave their place of work and return home for care and are cared for at their homes through the TEBA home based care system, to which we contribute. See Item 3. “ Key Information — Risk Factors — Risks Relating to Our Business and Our Industry — HIV & AIDS poses risks to Harmony in terms of productivity and costs” and Item 3. “Key Information — Risk Factors — Risks Relating to Our Business and Our Industry — The cost of occupational healthcare services may increase in the future ”.
In South Africa, we have an agreement with the relevant stakeholders concerning the management of HIV & AIDS in the workplace. This agreement, originally signed in 2002 with the National Union of Mine Workers (“ NUM ”) and the United Association of South Africa (“ UASA ”) has been subsequently amended, the latest in August 2006. While many aspects of the policy have remained unaltered, the most fundamental change is the inclusion in the policy of a broad spectrum of chronic manageable diseases other than HIV & AIDS such as diabetes, asthma and hypertension. This was done in order to minimize the stigma surrounding stand alone HIV & AIDS treatment centers and also to emphasize our view that HIV & AIDS should no longer be viewed as a death sentence, but rather a chronic, manageable disease. We have decentralized some of the functions of the HIV and AIDS centers to the clinics at the shafts where these functions can be easily accessed by employees. The agreement also serves to reassure our employees of our commitment to the respect of all human rights and commitment to non-discriminatory practices and zero tolerance to discrimination of any of our employees. During the early stages of the implementation of the

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HIV & AIDS program, the agreement was also used as a marketing tool to encourage employee participation in the Harmony HIV & AIDS Program.
Management of HIV & AIDS & Tuberculosis (TB)
The HIV & AIDS pandemic continues to have a significant impact on the company (through absenteeism, reduced performance, loss of skills) and employees and their families. At Harmony HIV & AIDS is managed at three levels.
• At a clinical level, the symptoms of the illness are managed by the Group’s health care services.
• Company-wide and mine-specific initiatives are conducted. Shaft-based HIV & AIDS committees form an integral part of the Health and Safety Committees, which meet on a monthly basis.
• Group policy and practice is overseen by a specialist health care professional.
A revised integrated clinical strategy, developed as part of the new strategy to address TB and HIV & AIDS was implemented during the year. This strategy was developed through a workshopping process that was led by academics and experts drawn from the Universities of Cape Town, Pretoria and Witwatersand, and with the participation of the 19 Harmony health care staff, ranging from medical doctors, to occupational health practitioners, nursing sisters and others.
A number of key issues have been highlighted in this new strategy that integrate and consolidate the traditional HIV &AIDS and TB approaches. These include:
• Concerted efforts will be made to enhance and sustain the group’s Voluntary Counselling and Testing (“ VCT ”) programs.
• Enhanced education and counselling will be provided to employees who are HIV-negative.
• Anti-retroviral therapy (“ ART ”) will be introduced at an earlier stage, which is expected to have a significant impact on reducing HIV & AIDS incidence rates.
• In addition, efforts will be made to intensify case findings, introduce isoniazid preventative treatment and improve infection control with further infection control measures such as the use of masks, ultra-violet lights, etc.
HIV & AIDS performance
It is currently estimated (based on estimates within the gold mining industry) that around 27% of Harmony’s employees are HIV positive. It is possible, however, that actual prevalence rates are higher than this as a result of the current treatment campaigns (including ART). We continue to focus on early detection and treatment to increase the likelihood of extended, healthy lives for infected employees. New electronic data collation systems were implemented in fiscal 2009 and we envisage that there will be an improvement in monitoring and evaluation of the program outcomes in fiscal 2011. During fiscal 2010, a total of 18,971 individuals were tested (2009: 22,806 tests), a decrease of 17%. The decrease is because the initial VCT campaigns targeted a broader spectrum of candidates and included the community as well as dependants.
Australia
Australia, via each State and Territory has a well regulated system of occupational health and safety (OH&S), comprised of legislation (Acts and Regulations) and Codes of Practice. Australia is moving to National OH&S Legislation and Draft Legislation has been circulated to the various levels of government and industry for consultation. Several of these specifically apply to the mining industry, including specific legislation and extensive codes of practice and guidelines. There is also a well developed certification and licensing system for employees for the usage of certain items of plant and equipment. The legislation governing this area also refers to the many Australian Standards and specifically AS/NZS 4801 — Occupational health and safety management systems — Specification with guidance for use which is the specific AS for the management of Safety Systems.
In the event of injury while at work, employees are protected by a compulsory workers compensation scheme, which are different for each state.

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Papua New Guinea
PNG has a significant mining industry, and a developing system of occupational health and safety. The PNG Mining (Safety) Act of 1977 is the principal legislation that addresses a range of issues such as working hours, minimum safety and reporting requirements. Other legislation and regulations also apply.
Although reliable statistics with regard to infection rates are not readily available, preliminary results indicate that PNG is in the early stages of an AIDS pandemic. As part of the development of the Hidden Valley project, and other exploration activities carried out by us in PNG, we have rolled out a health care strategy for our employees to increase AIDS awareness. See Item 3. “ Key Information — Risk Factors — Risks Relating to Our Business and Our Industry — HIV/AIDS poses risks to Harmony in terms of productivity and costs” and Item 3. “ Key Information — Risk Factors — Risks Relating to Our Business and Our Industry — The cost of occupational healthcare services may increase in the future ”.

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Item 4A. UNRESOLVED STAFF COMMENTS
Not applicable.
Item 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
You should read the following discussion and analysis together with the consolidated financial statements, including the related notes, appearing elsewhere in this annual report.
Overview
We conduct underground and surface gold mining and related activities, including exploration, processing, smelting and beneficiation. We are currently the third largest producer of gold in South Africa, producing some 22% of the country’s gold output, and are among the world’s top ten gold producers. Our gold sales for fiscal 2010 were approximately 1.4 million ounces of gold. As at June 30, 2010, our mining operations reported total proven and probable reserves of approximately 48.1 million ounces and in fiscal 2010, we processed approximately 19.8 million tons of ore.
For segment purposes, management distinguishes between “Underground” and “Surface”, with each shaft or group of shafts managed by a team (headed by a single general manager) being considered to be an operating segment.
Our reportable segments are as follows:
Bambanani, Doornkop, Evander, Joel, Kusasalethu (previously Elandsrand), Masimong, Phakisa, Target, Tshepong, Virginia and PNG;
Cooke operations (sold in November 2008) and Mount Magnet are classified as discontinued operations; and
All other shafts and surface operations, including those that treat historic sand dumps, rock dumps and tailings dams, are grouped together under “Other — Underground” and “Other — Surface”.
Critical Accounting Policies and Estimates
The preparation of our financial statements in accordance with IFRS requires management to make estimates and assumptions that affect the reported results of our operations. Actual results may differ from those estimates. We have identified the most critical accounting policies upon which our financial results depend. Some of our accounting policies require the application of significant judgment and estimates by management in selecting the appropriate assumptions for calculating financial estimates. By their nature, these judgments are subject to an inherent degree of uncertainty and are based on our historical experience, terms of existing contracts, management’s view on trends in the gold mining industry and information from outside sources.
Our significant accounting policies are described in more detail in note 2 to the consolidated financial statements. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included in Item 18. “ Financial Statements ”. Management has identified the following as critical accounting policies because estimates used in applying these policies are subject to material risks and uncertainties. Management believes the following critical accounting policies, together with the other significant accounting policies discussed in the notes to the consolidated financial statements, affect its more significant judgments and estimates used in the preparation of the consolidated financial statements and could potentially impact our financial results and future financial performance.
Gold mineral reserves
Gold mineral reserves are estimates of the amount of ounces that can be economically and legally extracted from the Group’s properties. In order to calculate the gold mineral reserves, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, commodity prices and exchange rates.
Estimating the quantities and/or grade of the reserves requires the size, shape and depth of the orebodies to be determined by analyzing geological data such as the logging and assaying of drill samples. This process may require complex and difficult geological judgments and calculations to interpret the data. These reserves are determined in accordance with SAMREC, JORC and SEC Industry Guide 7.
Because the economic assumptions used to estimate the gold mineral reserves change from year to year, and because additional geological data is generated during the course of operations, estimates of the mineral reserves may change from year to year. Changes in the proven and

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probable reserves may affect the Group’s financial results and financial position in a number of ways, including depreciation and amortization charged in the income statement may change as they are calculated on the units-of-production method.
The estimate of the total expected future lives of our mines could be materially different from the actual amount of gold mined in the future. See Item 3. “Key Information — Risk Factors — Harmony’s gold reserve figures are estimated based on a number of assumptions, including assumptions as to mining and recovery factors, future cash costs of production and the price of gold and may yield less gold under actual production conditions than currently estimated.”
Impairment of Property, Plant and Equipment
We review and evaluate our mining assets for impairment when events or changes in circumstances indicate the related carrying amounts may not be recoverable. An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Each operating shaft, along with allocated common assets such as plants and administrative offices, is considered to be a cash generating unit as each shaft is largely independent of the cash flows of other shafts and assets.
Future cash flows are estimated based on estimated quantities of recoverable minerals, expected gold prices (considering current and historical prices, price trends and related factors), production levels and cash costs of production, capital and reclamation costs, all based on detailed life-of-mine plans. The significant assumptions in determining the future cash flows for each individual operating mine at June 30, 2010, apart from production cost and capitalized expenditure assumptions unique to each operation, included a long-term gold price of US$1,050 per ounce and South African and Australian dollar exchange rates of US$1 = R8.19 and A$1 = US$0.80, respectively. The term “recoverable minerals” refers to the estimated amount of gold that will be obtained from proven and probable reserves and related exploration stage mineral interests, except for other mine-related exploration potential and greenfields exploration potential discussed separately below, after taking into account losses during ore processing and treatment. Estimates of recoverable minerals from such exploration stage mineral interests are risk adjusted based on management’s relative confidence in such materials. With the exception of other mine-related exploration potential and Greenfields exploration potential, estimates of future undiscounted cash flows are included on an area of interest basis, which generally represents an individual operating mine, even if the mines are included in a larger mine complex. In the case of mineral interests associated with other mine-related exploration potential and Greenfields exploration potential, cash flows and fair values are individually evaluated based primarily on recent exploration results and recent transactions involving sales of similar properties.
As discussed above under “Gold mineral reserves”, various factors could impact our ability to achieve our forecasted production schedules from proven and probable reserves. Additionally, gold prices, capital expenditure requirements and reclamation costs could differ from the assumptions used in the cash flow models used to assess impairment. The ability to achieve the estimated quantities of recoverable minerals from exploration stage mineral interests involves further risks in addition to those factors applicable to mineral interests where proven and probable reserves have been identified, due to the lower level of confidence that the identified mineralized material can ultimately be mined economically. Assets classified as other mine-related exploration potential and Greenfields exploration potential have the highest level of risk that the carrying value of the asset can be ultimately realized, due to the still lower level of geological confidence and economic modeling.
During fiscal 2010, 2009 and 2008, we recorded impairments of US$43 million, US$89 million and US$27 million respectively, on property, plant and equipment, all from continuing operations. Reversal of previously recorded impairments amounted to US$28 million and US$5 million in fiscal 2009 and fiscal 2008 respectively. These reversals related to the Mount Magnet operation, which has been classified as discontinued operations. Material changes to any of these factors or assumptions discussed above could result in future impairment charges, particularly around future gold price assumptions. A 10% decrease in gold price at June 30, 2010 would have resulted in the additional impairments amounting to US$1.8 million at the Steyn 2 shaft in the Bambanani segment.
Carrying Value of Goodwill
We evaluate, on at least an annual basis, the carrying amount of goodwill to determine whether current events and circumstances indicate that such carrying amount may no longer be recoverable. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Each operating shaft, along with allocated common assets such as plants and administrative offices, is considered to be a cash generating unit as each shaft is largely independent of the cash flows of other shafts and assets. To accomplish this, we compare the recoverable amounts of our cash generating units to their carrying amounts. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. If the carrying value of a cash generating unit were to exceed its recoverable amount at the time of the evaluation, an impairment loss is recognized by first reducing goodwill, and then the other assets in the

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cash generating unit on a pro rata basis. Assumptions underlying fair value estimates are subject to risks and uncertainties. If these assumptions change in future, we may need to record impairment charges on goodwill not previously recorded.
During fiscal 2008, we recorded an impairment of US$13 million on goodwill. No impairment was recorded during fiscal 2009 and 2010.
Provision for environmental rehabilitation
Our mining and exploration activities are subject to various laws and regulations governing the protection of the environment. Estimated long term environmental obligations, comprising pollution control, rehabilitation and mine closure, are based on the Group’s environmental management plans. Annual changes in the provision consist of finance costs relating to the change in the present value of the provision and inflationary increases in the provision estimate, as well as changes in estimates. The present value of environmental disturbances created is capitalized to mining assets against an increase in the rehabilitation provision. The rehabilitation asset is depreciated as discussed above. Rehabilitation projects undertaken, included in the estimates are charged to the provision as incurred. The cost of ongoing current programs to prevent and control pollution is charged against income as incurred.
Deferred taxes
The taxable income from gold mining at our South African operations is subject to a formula to determine the taxation expense. The tax rate calculated using the formula is capped to a maximum mining statutory rate of 43% or 34%, depending on whether or not the taxpayer has elected to be exempt from Secondary Taxation on Companies. See Item 5. “ Results of Operations—Continuing Operations—Income and Mining Taxes ”. Taxable income is determined after the deduction of qualifying mining capital expenditure to the extent that it does not result in an assessed loss. Excess capital expenditure is carried forward as unredeemed capital and is eligible for deduction in future periods, taking the assessed loss criteria into account. Further to this, mines are ring-fenced and are treated separately for tax purposes, with deductions only being utilised against the mining income of the relevant ring-fenced mine.
In terms of IAS 12 — Income Taxes, deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realised or the liability is settled, and at our South African operations, such average tax rates are directly impacted by the profitability of the relevant ring-fenced mine. The deferred tax rate is therefore based on the current estimate of future profitability of an operation when temporary differences will reverse, based on tax rates and tax laws that have been enacted at balance sheet date.
The future profitability of each ring-fenced mine, in turn, is determined by reference to the life-of-mine plan for that operation. The life-of-mine plan is based on parameters such as the Group’s long term view of the US$ gold price and the Rand/US$ exchange rate, as well as the reserves declared for the operation. As some of these parameters are based on market indicators, they differ from one year to the next. In addition, the reserves may also increase or decrease based on updated or new geological information.
We do not recognize a deferred tax asset when it is more likely than not that the asset will not be utilized. Assessing recoverability of deferred tax assets requires management to make significant estimates related to expectation of future taxable income. Estimates of future taxable income are based on forecasted cash flows from operations, reversals of deferred tax liabilities and the application of existing tax laws in each jurisdiction. To the extent that future taxable income differs significantly from estimates, our ability to realize the net deferred tax assets recorded at the balance date could be impacted. Additionally, future charges in tax laws in the jurisdictions in which we operate could limit our ability to obtain the future tax benefits represented by deferred tax assets recorded at the balance date.
Revenue
Substantially most of our revenues are derived from the sale of gold. As a result, our operating results are directly related to the price of gold. Historically, the price of gold has fluctuated widely. The gold price is affected by numerous factors over which we do not have control. See Item 3. “Key Information — Risk Factors — The profitability of Harmony’s operations, and the cash flows generated by those operations, are affected by changes in the market price for gold, which in the past has fluctuated widely”.
As a general rule, we sell our gold produced at market prices to obtain the maximum benefit from increases in the prevailing gold price and do not enter into hedging arrangements such as forward sales or derivatives that establish a price in advance for the sale of our future gold production.

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Significant changes in the price of gold over a sustained period of time may lead us to increase or decrease our production in the near-term.
Harmony’s Realized Gold Price
The average gold price in U.S. dollars received by us has generally increased since January 1, 2002. In fiscal 2010, the average gold price in U.S. dollars received by us for continuing operations was US$1,092 per ounce. The market price for gold (and, accordingly, the price received by us) is affected by numerous factors over which we have no control. See Item 3. “Key Information — Risk Factors — The profitability of Harmony’s operations, and the cash flows generated by those operations, are affected by changes in the market price for gold, which in the past has fluctuated widely”.
The following table sets out the average, the high and the low London Bullion Market price of gold and our average U.S. dollar sales price during the past three fiscal years:
Fiscal Year Ended
June 30,
2010 2009 2008
($/oz)
Average
1,089 874 821
High
1,261 989 1,011
Low
908 713 649
Harmony’s average sales price — continuing operations (1)
1,092 867 818
(1) Our average sales price differs from the average gold price due to the timing of our sales of gold within each year.
Costs
Our cash costs and expenses typically make up over 80% of our total costs. The remainder of our total costs consists primarily of exploration costs, employment termination costs, corporate and sundry expenditure, and depreciation and amortization. Our cash costs consist primarily of production costs exclusive of depreciation and amortization. Production costs are incurred on labor, equipment, consumables and utilities. Labor costs are the largest component and typically comprise approximately 54% of our production costs.
Our cash costs for continuing operations has increased from US$600 per ounce in fiscal 2008 to US$801 per ounce in fiscal 2010, mainly as a result of lower production volumes, the impact of increased labor and energy costs as well as inflationary pressures on supply contracts. In U.S. dollar terms, the appreciation of the Rand-U.S. dollar exchange rate added to these increases.
Our U.S. translated costs are very sensitive to the exchange rate of the Rand and other non-U.S. currencies to the U.S. dollar. See Item 5. “Operating and Financial Review and Prospects — Exchange Rates”. Appreciation of the Rand and other non-U.S. currencies against the U.S. dollar increases working costs at our operations when those costs are translated into U.S. dollars. See Item 3. “Key Information — Risk Factors — Because most of Harmony’s production costs are in Rand and other non-U.S. currencies, while gold is generally sold in U.S. dollars, Harmony’s financial condition could be materially harmed by an appreciation in the value of the Rand and other non-U.S. currencies”.
The average rate of the South African Rand appreciated approximately 16% against the U.S. dollar in fiscal 2010 compared to fiscal 2009. In the case of our International operations, the Australian dollar appreciated approximately 18%, while the Kina remained steady against the U.S. dollar in fiscal 2010 compared to fiscal 2009.
Reconciliation of Non-GAAP Measures
Total cash costs and total cash costs per ounce are non-GAAP measures.
Our cash costs consist primarily of production costs and are expensed as incurred. The cash costs are incurred to access ore to produce current mined reserves. Cash costs do not include capital development costs, which are incurred to allow access to the ore body for future mining operations and are capitalized and amortized when the relevant reserves are mined.
We have previously calculated total cash costs and total cash costs per ounce by dividing total cash costs, as determined using the guidance previously provided by the Gold Institute, by gold ounces sold. Total cash costs, as defined in the guidance provided by the Gold Institute, include mine production costs, transport and refinery costs, applicable general and administrative costs, costs associated with movements in

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production inventories, ore stockpiles, as well as ongoing environmental rehabilitation costs as well as transfers to and from deferred stripping and costs associated with royalties. Ongoing employee termination cost is included, however, employee termination costs associated with major restructuring and shaft closures are excluded. Management has recalculated these measures to exclude the costs associated with movements in production inventories, and in line with this change, now use gold ounces produced as the denominator. The measures have been re-presented for all comparative periods shown.
Changes in cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and the U.S. dollar and, in the case of the International operations, the Australian dollar and Kina. Total cash costs and total cash costs per ounce are non-GAAP measures. Total cash costs and total cash costs per ounce should not be considered by investors in isolation or as an alternative to production costs, cost of sales, or any other measure of financial performance calculated in accordance with IFRS. In addition, while the Gold Institute has provided guidance for the calculation of total cash costs and total cash costs per ounce, the calculation of total cash costs and total cash costs per ounce may vary from company to company and may not be comparable to other similarly titled measures of other companies. However, we believe that cash costs per ounce is a useful indicator to investors and management of a mining company’s performance as it provides (1) an indication of the cash generating capacities of our mining operations, (2) the trends in cash costs as the company’s operations mature, (3) a measure of a company’s performance, by comparison of cash costs per ounce to the spot price of gold and (4) an internal benchmark of performance to allow for comparison against other companies.
Continuing operations
The following is a reconciliation of total cash costs from continuing operations, as a non-GAAP measure, to the nearest comparable GAAP measure, cost of sale from continuing operations:
Fiscal year ended June 30,
2010 2009 2008
(in $ millions, except per ounce amounts)
Total cost of sales from continuing operations — under IFRS
1,383 1,083 1,122
Depreciation and amortization expense
(181 ) (139 ) (117 )
Rehabilitation costs
(4 ) (1 ) (1 )
Care and maintenance costs of restructured shafts
(8 ) (5 ) (10 )
Employment termination and restructuring costs
(27 ) (4 ) (29 )
Share-based payments
(20 ) (13 ) (6 )
Impairment of assets
(43 ) (71 ) (40 )
Reversal/(provision) for post retirement benefits
3 — (1 )
Gold inventory movement
— 2 (4 )
Total cash costs from continuing operations — using Gold Institute guidance
1,103 852 914
Per ounce calculation:
Ounces produced (1)
1,377,499 1,460,831 1.524,557
Total cash cost per ounce from continuing operations — using Gold Institute guidance
801 583 600
(1) The ounces produced for fiscal 2010 exclude ounces from Hidden Valley, Target 3 and Steyn 2 for the period in which these shafts were not in production. The associated costs have been capitalized.

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Discontinued operations
The following is a reconciliation of total cash costs from discontinued operations, as a non-GAAP measure, to the nearest comparable GAAP measure, cost of sales from discontinued operations:
Fiscal year ended June 30,
2010 2009 2008
(in $ millions, except per ounce amounts)
Total cost of sales from discontinued operations — under IFRS
1 71 237
Depreciation and amortization expense
— (28 ) (7 )
Rehabilitation costs
— (2 ) (1 )
Care and maintenance costs of restructured shafts
(1 ) (1 ) —
Employment termination and restructuring costs
— — (4 )
Share-based payments
— — —
Reversal of impairment of assets
— 10 5
Gold inventory movement
— 2 6
Total cash costs from discontinued operations — using Gold Institute guidance
— 52 236
Per ounce calculation:
Ounces produced
— 80,377 385,900
Total cash cost per ounce from discontinued operations — using Gold Institute guidance
— 644 612
Total Harmony — Continuing and discontinued operations
The following is a reconciliation of total cash costs, as a non-GAAP measure, to the nearest comparable GAAP measure, cost of sales under IFRS:
Fiscal year ended June 30,
2010 2009 2008
(in $ millions, except per ounce amounts)
Total production costs — under IFRS
1,384 1,154 1,359
Depreciation and amortization expense
(181 ) (167 ) (124 )
Rehabilitation costs
(4 ) (3 ) (2 )
Care and maintenance costs of restructured shafts
(9 ) (6 ) (10 )
Employment termination and restructuring costs
(27 ) (4 ) (33 )
Share-based payments
(20 ) (13 ) (6 )
(Impairment)/reversal of impairment of assets
(43 ) (61 ) (35 )
Reversal/(provision) for post retirement benefits
3 — (1 )
Gold inventory movement
— 4 2
Total cash costs — using Gold Institute guidance
1,103 904 1,150
Per ounce calculation:
Ounces produced
1,377,499 1,541,208 1,910,457
Total cash cost per ounce — using Gold Institute guidance
801 586 602
Within this disclosure document, our discussion and analysis is focused on the total cash costs measure as defined by the Gold Institute, as modified to exclude the effects of changes in production inventory.
While recognizing the importance of reducing cash costs, our chief focus is on controlling and, where possible, reducing total costs, including overhead costs. We aim to control total unit costs per ounce produced by maintaining our low total cost structure at our existing operations. We have been able to reduce total costs by implementing a management structure and philosophy that is focused on reducing management and administrative costs, implementing an mineral reserve management system that allows for greater grade control and acquiring higher grade reserves. See Item 4 . “ Information on the Company — Business — Strategy ”.
Exchange Rates
Our revenues are very sensitive to the exchange rate of the Rand and other non-U.S. currencies to the U.S. dollar.
Currently, the majority of our earnings are generated in South Africa and, as a result, most of our costs are incurred in Rand. Since gold is generally sold in U.S. dollars, most of our revenues are received in U.S. dollars. The average gold price received by us during fiscal 2010 increased US$225 per ounce to US$1,092 per ounce from US$867 per ounce during fiscal 2009. Appreciation of the Rand against the U.S. dollar increases our U.S. dollar working costs at our South African operations when those costs are translated into U.S. dollars, which serves to reduce operating margins and net income from our South African operations. Depreciation of the Rand against the U.S. dollar reduces these

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costs when they are translated into U.S. dollars, which serves to increase operating margins and net income from our South African operations. Accordingly, strength in the Rand generally results in poorer earnings for us if there is not a similar increase in the gold price.
The exchange rates obtained when converting U.S. dollars to Rand are determined by foreign exchange markets, over which we have no control. The conversion rate for balance sheet items as at June 30, 2010 is R7.63 per US$1.00, expect for specific items within equity that are converted at the exchange rate prevailing on the date the transaction was entered into. This compares with a conversion rate of R7.72 per US$1.00 as at June 30, 2009, reflecting an appreciation of 1% of the Rand against the U.S. dollar when compared with June 30, 2009. Income statement items were converted at the average exchange rate for the fiscal 2010 (R7.58 per US$1.00), reflecting an appreciation of 16% of the Rand against the U.S. dollar when compared with fiscal 2009. The majority of our working costs are incurred in Rands and as a result this appreciation of the Rand against the U.S. dollar would increase our working costs when translated into U.S. dollars. Adding to this increase are increases in our labor costs as well as inflationary pressures on our consumable stores and energy cost, which served to decrease operating margins and net income reflected in our consolidated income statement for fiscal 2010. Depreciation of the Rand against the U.S. dollar would cause a decrease in our costs in U.S. dollar terms. Similarly, at our International operations, depreciation of the Australia dollar or Kina against the U.S. dollar would cause a decrease in our costs in U.S. dollar terms. See Item 3 . “ Key Information — Risk Factors — Because most of Harmony’s production costs are in Rand and other non-U.S. currencies, while gold is generally sold in U.S. dollars, Harmony’s financial condition could be materially harmed by an appreciation in the value of the Rand and other non-U.S. currencies ”.
Inflation
Our operations have been materially affected by inflation. At the end of fiscal 2010, inflation in South Africa was 4.2%, although it reached 6.9% in fiscal 2009 and over 12% in fiscal 2008. However, working costs, and wages especially, have increased considerably over the past three years resulting in significant cost pressures for the mining industry. In addition, the effect on inflation of the increase in electricity tariffs of 25% during fiscal 2010, together with two more increases of approximately 26% each in the next two years, will have a negative effect on the profitability of our operations.
The inflation rate in PNG eased from 10.6% to 7.0% in fiscal 2009 and remained relatively stable at 7% in fiscal 2010. Due to higher food and energy prices, as well as increased labor prices, the inflation rate is expected to be 8.0% in fiscal 2011. This increase in inflation together with the strength of the Kina against the US and Australian dollar could have an adverse effect on the profitability of the PNG operations.
Our profits and financial condition could be adversely affected if the cost inflation is not offset by a concurrent devaluation of the Rand and other non-U.S. currencies and/or an increase in the price of gold. See Item 3. “Key Information — Risk Factors — Our operations may be negatively impacted by inflation ”.
South African Socio-Economic Environment
We are a South African company and the majority of our operations are in South Africa. As a result, we are subject to various economic, fiscal, monetary and political policies and factors that affect South African companies generally. See Item 3. “Key Information — Risk Factors — Socio-economic instability in South Africa or regionally may have an adverse effect on Harmony’s operations and profits”.
South African companies are subject to exchange control limitations. While exchange controls have been relaxed in recent years, South African companies remain subject to restrictions on their ability to deploy capital outside of the Southern African Common Monetary Area. See Item 10. “Additional Information — Exchange Controls”.
Social and Labor Plans, or SLPs, have been developed for each of our South African operations. These SLPs are prepared in line with legislation governing the participation of HDSAs in mining assets.
We have been granted all of our mining licenses under the MPRDA. We have therefore already started to incur expenses relating to HDSA participation. We believe the biggest challenge will lie in maintaining these licenses, as we will have a responsibility in respect of human resource development, procurement and local economic development. We are unable, however, to provide a specific amount of what the estimated cost of compliance will be but we will continue to monitor these costs on an ongoing basis.

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Royalties
The MPRDA makes reference to royalties payable to the South African state in terms of the Mineral and Petroleum Resources Royalty Act (Act 28 of 2008). The Act provides for the payment of a royalty according to a formula based on earnings before interest, tax and depreciation, after the deduction of capital expenditure. This rate is then applied to revenue to calculate the royalty amount due, with a minimum of 0.5% and a maximum of 5% for gold mining companies. At the end of fiscal 2010, the average royalty rate for the South African operations was 1.5%. The royalty became effective on March 1, 2010 and will have an adverse impact on the profits generated by our operations in South Africa.
As our operation at Hidden Valley is now in production, they are subject to a 2% royalty payable to the PNG government and local community groups.
Cost control
As part of our Back-to-Basics strategy in fiscal 2008, we reinstated the focus on monthly reviews to ensure that stringent cost control measures are in place and enforced. This will assist us in monitoring and reducing consumable costs.
Due to the fact that the new mines are expected to start producing high volumes of ore, with better economies of scale, at higher grades, we expect that real cash operating costs in dollar per ounce terms will be reduced. This will be dependent on our achieving our operational plans. An increase is expected in revenue due to the increase in the gold price, as per our long term view on the various factors influencing the Rand gold price.
We reassessed our labor force and implemented several measures to reduce labor costs. These measures included terminating some contractors and offering voluntary severance packages to employees.
Conops
For some years, mining companies have been trying to implement the concept of Conops on the basis that it is, in theory, a better practice to utilize the company’s capital intensive, fixed assets for every day (excluding public holidays) of the year rather than for 80% of the year. It was estimated that Conops should result in increased production of around 25%, with a cost increase in the region of 18%, which would lead to increased profitability. We have been one of the few companies that has actually been able to implement Conops, with some degree of success and with the cooperation of the labor unions.
However as part of our complete review of the operations in fiscal 2008, our Executive Committee took a long and hard look at the real benefits of Conops. In essence, we undertook a due diligence as if we were evaluating it for the first time.
As a result of these assessments, Conops was stopped at all operations by the end of fiscal 2008, with the exception of Evander 8 and Target. During 2009 and 2010, Conops continued at these two operations. It was, however, decided to cease Conops at Evander 8 during June 2010.
Productivity
The decline in productivity has been one of the challenges facing the South African gold industry for a number of years. This decline in our productivity mainly came as a result of an aging workforce, the health of the workforce that has been negatively impacted by HIV and AIDS, increased working distances from shafts and aging infrastructure. We reacted to these challenges through various initiatives including the “Healthy workforce” drive, the VCT campaign, upgrade of rail bound equipment and track work and other improvement projects.
Electricity in South Africa
Supply
Historically, South Africa has enjoyed both low-cost electrical energy provision, and a stable supply. In early 2008, however, the national power utility Eskom experienced a major capacity shortage resulting in country-wide blackouts and reduced energy supply. The mining industry was severely affected for a period of five days in January 2008, and thereafter Eskom imposed limitations which continued to have an impact. We have devised new strategies so as to optimize our usage of 90% of our previous electricity supply allowed in terms of the Energy Conservation Scheme (“ ECS ”) and interim rules imposed by Eskom. All operations were allocated an ECS allocation in line with the Eskom allocation and equipment and management structures were put in place to monitor and manage real-time consumption. Since 2008, we have reduced our electricity consumption by 28%.

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Applications submitted to Eskom for additional energy allocation to the four future growth projects were approved, enabling us to proceed with the projects and to ramp-up to full capacity utilizing Eskom power. We also submitted applications for additional power allocation for four metallurgical projects in the Free State, which were also approved by Eskom. Annual re-submissions for the verification of the fiscal 2010/2011 allocations, including additional allocation for all approved projects, and Nominated Maximum Demand (“ NMD ”) to secure adequate network capacity were made to Eskom in June 2010 as required by the interim ECS and new NMD rules.
Government at national level intervened to develop an integrated resource plan in order to arrest the supply constraint situation and map a long-term plan to add much needed generation capacity to the grid according to projected electricity demand increase. It is also expected that the electricity supply constraint situation will intensify towards the end of calendar 2010 and that it will continue to worsen until the first generators at the 4 800 MW Medupi power station are commissioned in calendar 2012. Alleviation of the situation will however remain dependant on Eskom’s ability to execute the build program successfully and on time as well as the successful development and implementation of the integrated resource plan. We will remain a voluntary participant in the ECS until such time that the national ECS becomes compulsory and Eskom relationships are maintained on this basis. The challenge for us is to improve production to the required levels without compromising the cost-saving initiatives achieved during fiscal 2008 and 2009.
Cost
The average 25% per annum tariff increase for the three year multi-year price determination period (“ MYPD ”), as approved by NERSA, contributes significantly to escalate the cost of production well above inflationary figures in the foreseeable future. Electricity price projections based on the approved tariffs and extrapolations indicate that electricity costs could be as high as 25% of the total cost of production within the next five years. Spiralling electricity costs sparked renewed electrical consumption awareness where operations and service departments alike are actively analysing all opportunities to improve energy efficiency and optimising electricity usage.
Renewable energy
The Eskom supply constraint renewed South African industry’s interest in renewable energy and various companies have obtained access to internationally-proven technology that was previously not readily available or affordable in South Africa. Investigations into solar heating and solar electricity generation initiatives are currently underway to identify viable projects that could potentially contribute towards our energy efficiency improvement and carbon footprint reduction.
Although progress has been made with the investigations, capital cost and subsequent cost of generation remain high and are not yet comparable to Eskom-projected tariffs. This has not deterred the willingness of industry to participate in such projects, a number of which are being considered currently. Technical development of renewable technologies are however accelerating, with international implementation contributing towards cost reduction. International investors with access to green funds are also interested in South African renewable projects. This latest development can open the door to enter into direct private power agreements at Eskom with comparable tariffs in the foreseeable future.
Results of Operations
Years Ended June 30, 2010 and 2009
Continuing Operations
Revenues
Revenue increased by US$212 million, or 17%, from US$1,277 million in fiscal 2009 to US$1,489 million in fiscal 2010. This increase can primarily be attributed to the higher average price of gold received by us, US$1,092 per ounce in fiscal 2010 compared to US$867 per ounce in 2009. This was offset by a decrease in ounces sold.
Our gold sales decreased 109,699 ounces, or 7%, from 1,473,562 in fiscal 2009 to 1,363,863 (excluding the capitalized ounces from Target 3, Steyn 2 and Hidden Valley) in fiscal 2010. The grade recovered was constant, at 0.07 ounces per ton in fiscal 2010 and 2009.The decrease in ounces can be attributed to the operations in Evander and Virginia being placed on care and maintenance.
At Bambanani ounces sold increased by 11%, from 119,665 in fiscal 2009 to 133,105 in fiscal 2010. This was due to a better recovery grade which increased from 0.213 in fiscal 2009 to 0.227 in fiscal 2010.

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At Doornkop ounces sold increased by 44% from 43,211 in fiscal 2009 to 62,275 in fiscal 2010. This is due to the higher recovery grade, which improved from 0.070 in fiscal 2009 to 0.105 in fiscal 2010 due to the change in the mining mix by the increase in higher grade ore from the South Reef section.
At Evander ounces sold decreased by 43%, from 195,668 in fiscal 2009 to 111,499 in fiscal 2010. This was primarily due to a decrease in production volumes as a result of the closure of Evander 2, 5 and 7 shafts.
At Phakisa ounces sold increased from 21,477 in fiscal 2009 to 44,496 in fiscal 2010. This was due to an increase in production volumes as the various sections moved into production, building up to full production in the next three to five years.
At Target ounces sold increased by 22% from 87,611 in fiscal 2009 to 106,837 in fiscal 2010. This is due to higher production volumes of 857,000 tons in fiscal 2010, compared with 710,000 tons in fiscal 2009.
At Virginia ounces sold decreased to 173,035 ounces from 259,070 in fiscal 2009. This is due to the closure of Harmony 2, Brand 3 and Merriespruit 3 shafts during fiscal 2010.
At Hidden Valley in PNG ounces sold was 8,327 in fiscal 2010. This was the first year that production has been recognized from the operation.
Cost of sales
Cost of sales includes production costs, depreciation and amortization, impairment of assets and employment termination and restructuring costs.
a) Production costs (cash costs)
The following table sets out our total ounces produced and weighted average cash costs per ounce for fiscal 2010 and fiscal 2009:
Percentage
Year Ended June 30, Year Ended June 30, (Increase)/decrease
2010 2009 in Cash
(oz) ($/oz) (oz) ($/oz) Costs per ounce
SOUTH AFRICA
Bambanani (1)
133,007 723 121,530 611 (18.3 )
Doornkop
62,694 822 42,150 804 (2.2 )
Evander
111,724 1,018 190,075 572 (78.0 )
Joel
64,495 792 65,684 636 (24.3 )
Kusasalethu (2)
175,029 857 174,321 660 (29.8 )
Masimong
155,609 602 154,034 476 (26.5 )
Phakisa
44,079 953 22,216 555 (71.7 )
Target (3)
113,782 783 87,225 645 (21.4 )
Tshepong
216,986 677 230,778 483 (40.2 )
Virginia
170,013 1,036 258,170 638 (62.4 )
Other — surface
119,954 680 114,648 521 (30.5 )
INTERNATIONAL
PNG (4)
61,173 1,003 — — (100 )
Total continuing operations
1,428,544 1,460,831
Weighted average
801 583 (37.4 )
(1) Includes 1,061 ounces from President Steyn 2 shaft, which have not been included in the cash cost calculation as the shaft was not in production.
(2) Previously known as Elandsrand.
(3) Includes 3,762 ounces from Target 3, which have not been included in the cash cost calculation as the shaft was not in production.
(4) Includes 46,223 ounces for the period ended April 2010, which have not been included in the cash cost calculation as the operation was not in production during that period.
Our average cash costs from continuing operations increased by US$218 per ounce, or 37.4%, from US$583 per ounce in fiscal 2009 to U.S$801 per ounce in fiscal 2010. Cash costs per ounce vary with the working costs per ton (which is, in turn, affected by the number of tons

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processed) and grade of ore processed. Cash costs expressed in U.S. dollars per ounce also vary with fluctuations in the Rand-U.S. dollar exchange rate, because most of our working costs are incurred in Rand. The increase in cash cost expressed in U.S. dollars per ounce in fiscal 2010 was attributable primarily to the appreciation of the South African Rand against the U.S. dollar, as well as an increase in operating cost and the decrease in ounces produced when compared to fiscal 2009. Annual increases in labor cost as well as inflationary pressures on our consumable stores and energy costs were the main contributors towards a higher operating cost.
At Evander, the cash costs per ounce increased by 78%, from US$572 in fiscal 2009 to US$1,018, primarily due to a decrease in ounces produced as a result of the closure of Evander 2, 5 and 7 shafts.
At Joel, the cash costs per ounce increased from US$636 in fiscal 2009 to US$792. This increase is due to the increase in labor and energy costs as well as additional costs related to the development of level 129.
At Kusasalethu the cash costs per ounce increased by 30% from US$660 in fiscal 2009 to US$857 in fiscal 2010. This increase is primarily due to the increase in labor and utility costs as well as inflationary pressures on supply costs.
At Masimong, the cash costs per ounce increased by 27% from US$476 in fiscal 2009 to US$602 in fiscal 2010, primarily due to the higher labor and electricity costs, as well as the appreciation of the Rand against the US dollar.
At Phakisa, the cash costs per ounce increased from US$555 to US$953, or 72%, in fiscal 2010. This was due to the increase in tons mined as a result of the planned ramp-up in production.
At Target, the cash costs per ounce increased from US$645 in fiscal 2009 to US$783, or by 21%. This increase was due to higher production volumes, an increase in employees at the operation as well as inflationary cost increases.
At Tshepong, the cash costs per ounce increased from US$483 in fiscal 2009 to US$677, or 40%, in fiscal 2010. This was due to the decrease in ounces produced in fiscal 2010, increases in labor and electricity costs as well as inflationary increases in material and supply costs.
At Virginia, the cash costs per ounce increased from US$638 to US$1,036 in fiscal 2010, primarily due to the decrease in ounces produced in fiscal 2010, increases in labor and electricity costs, as well as other inflationary cost increases.
At Hidden Valley in PNG, the cash costs per ounce was US$1,003 in fiscal 2010. The operation has started ramping up and this is the first year that its production has been included.
b) Depreciation and amortization
Depreciation and amortization increased from US$139 million in fiscal 2009 to US$181 million in fiscal 2010, or 30%. In Rand terms, the increase was 9.7%. The increase in US dollar terms was partially due to the appreciation of the Rand against the US dollar in fiscal 2010. Also contributing to the increase was the commencement of depreciation at Hidden Valley in PNG, Doorkop and Phakisa as these operations were brought into production.
c) Employment termination and restructuring costs
The charge for employment termination and restructuring costs increased from US$4 million in fiscal 2009 to US$27 million in fiscal 2010. The charge in fiscal 2010 relates primarily to the cost of placing the Evander and Virginia shafts on care and maintenance. The charge for fiscal 2009 relates to the voluntary retrenchment process that was commenced in December 2007 when management decided to de-centralize certain of the central services departments and the cessation of continuous operations at several of the shafts.
d) Impairment of assets
The impairment charge decreased from US$71 million in fiscal 2009 to US$43 million in fiscal 2010. The charge in 2010 primarily relates to the impairments at the Virginia and Evander operations when several shafts at these operations were placed on care and maintenance. These operations were approaching the end of their planned lives, with between two and four years left in marginal areas. The closures were due to it no longer being economically viable to continue operating these shafts as a result of the increase in costs such as labor and electricity. The charge in fiscal 2009 relates to impairments at the Virginia, Evander and Target operations amounting to US$71 million. These impairments resulted primarily from a decrease in the expected life of mine of these operations, as well as an increase in the costs to operate the shafts. At Target and Evander, additional capital expenditure has been included in the revised life-of-mine plans in order to access reserve ounces in

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areas where geological anomalies have been discovered. These changes resulted in the carrying amount exceeding the recoverable amount.
e) Share based compensation
The charge for share based compensation increased from US$13 million in fiscal 2009 to US$20 million in fiscal 2010. This increase is primarily attributable to the appreciation of the Rand against the US dollar, as well as the granting of additional share awards in November 2009.
Corporate, administration and other expenditure
The charge increase from US$36 million in fiscal 2009 to US$50 million in fiscal 2010. The increase in US dollar terms was partially due to the appreciation of the Rand and Australian dollar against the US dollar.
Corporate social investment expenditure
In fiscal 2010, the charge for corporate social investment expenditure increased from US$4 million in fiscal 2009 to US$11 million. This increase is primary due to the increase of costs related to meeting our obligations in terms of our social and labor plans, or SLPs.
Profit on sale of property, plant and equipment
The profit decreased from US$114 million in fiscal 2009 to US$14 million in fiscal 2010. The profit for fiscal 2009 included the sale of 50% of our interest in the PNG gold and copper assets to Newcrest, which contributed US$112 million to the total. The profit for fiscal 2010 includes the sale of the Jeanette prospecting rights to Taung Gold Limited for a total consideration and profit of US$10 million, and the sale of royalty rights in Australia to Regis Resources Limited for a total consideration and profit of US$4 million.
Other expenses — net
The charge for other expenses increased to US$8 million, compared with a charge of US$3 million in fiscal 2009. The charge for fiscal 2010 includes a loss of US$12 million relating to the translation of intercompany loans within the Australian operations which do not form part of the net investment in foreign operations. Included in the total for fiscal 2009 is a charge of US$22 million recognized in the income statement for the foreign exchange movements after the de-designation of loans previously designated as forming part of the net investment in foreign operations. Also included in the total for fiscal 2009 is an amount of US$53 million relating to the reclassification to the income statement, following the partial repayment of the loans, of a portion of the accumulated gains recorded in equity that arose while these loans were considered to form part of the net investment in the foreign operations. During fiscal 2010, bad debts written off increased from US$3 million in fiscal 2009 to US$4 million. A credit of US$2 million was recorded against the provision for bad debts in fiscal 2010. This compared favorably with the provision for bad debts of US$11 million in fiscal 2009.
Profit from associates
The profit from associates was US$7 million in fiscal 2010, compared to US$1 million in fiscal 2009. The increase relates primarily to inclusion of a full year of profits from Rand Uranium in fiscal 2010, compared to the seven months in fiscal 2009 since acquisition on November 21, 2008. Also contributing to the increase was the fact that no losses where included for Pamodzi in fiscal 2010, compared to losses amounting to US$4 million in fiscal 2009.
Impairment of investment in associate
The charge in fiscal 2009 for the impairment of investment in associate relates primarily to the impairment of the investment in Pamodzi. When Pamodzi was placed into liquidation and the trading of its shares on the JSE suspended during fiscal 2009, the investment was fully impaired.
Loss on sale of investment in subsidiary
The amount in fiscal 2010 relates to the sale of the Australian subsidiary, Big Bell, after taking the reclassification of foreign exchange losses recorded in other reserves into account.

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Net gain/(loss) on financial instruments
The gain of US$5 million in fiscal 2010 relates primarily to the fair value gains on the equity-linked deposits held by the environmental trusts, which are classified as fair value through profit or loss investments. Also contributing to the gain is the realized portion of mark-to-market gains prevously recognized in other reserves being reclassified to the income statement on the disposal of certain listed investments during the year. The loss in fiscal 2009 relates primarily to the impairment of the investment in Dioro of US$11 million reclassified from other reserves to the income statement when the investment was considered to be permanently impaired at December 31, 2008. This was offset by the subsequent gain recognized in the income statement on the disposal of the investment in April 2009.
Investment income
Investment income decreased from US$49 million in fiscal 2009 to US$25 million in fiscal 2010, primarily due to the reduction in interest received on cash balances and loans receivables, where the balances were lower, throughout the year. Interest received from the investments held by the environmental trusts was also lower as the profile of these investment portfolios were diversified from cash only to include equity-linked deposits.
Finance costs
Finance costs increased from US$24 million in fiscal 2009 to US$32 million in fiscal 2010. This was due primarily to the decrease in interest capitalized to qualifying assets, from US$31 million in fiscal 2009 to US$nil in fiscal 2010, as well as the increase of US$6 million in the time value of money and inflation component of rehabilitation costs from fiscal 2009.
Income and Mining Taxes
South Africa. We pay taxes on mining income and non-mining income. The amount of our South African mining income tax is calculated on the basis of a formula that takes into account our total revenue and profits from, and capital expenditures for, mining operations in South Africa. 5% of total mining revenue is exempt from taxation in South Africa as a result of the application of the applicable gold mine formula. The amount of revenue subject to taxation is calculated by deducting qualifying capital expenditures from taxable mining income. The amount by which the taxable mining income exceeds 5% of mining revenue constitutes taxable mining income. We and our subsidiaries each make our own calculation of taxable income.
The tax rate applicable to the mining and non-mining income of a gold mining company depends on whether the company has elected to be exempt from the Secondary Tax on Companies (“ STC ”). STC is a tax on dividends declared and, at present, the STC tax rate is equal to 10% (previously 12.5%). To the extent we receive dividends, such dividends received are offset against the amount of dividends paid for purposes of calculating the amount subject to STC. In 1993, all existing South African gold mining companies had the option to elect to be exempt from STC. If the election was made, a higher tax rate would apply for both mining and non-mining taxable income. In 2009 and 2008, the tax rates for companies that elected the STC exemption were 43% for mining income and 35% for non-mining income, compared with 34% for mining income and 28% for non-mining income if the STC exemption election was not made. In 1993, the Harmony Company elected to pay the STC tax. All of our South African subsidiaries, excluding Avgold, elected the STC exemption.
Income and Mining Tax 2010 2009
Effective tax rate expense
183 % 9 %
The effective tax rate for fiscal 2010 was higher than the statutory tax rate of 43% for us and our subsidiaries as a whole. The higher effective tax rate results primarily from non-deductible expenses and changes in the rates used to provide deferred tax at our South African operations, offset by the additional capital allowance we receive at our Avgold operation (effectively resulting in no tax payable at this operation).
Deferred tax rates for the South African operations are calculated based on estimates of the future profitability of each ring-fenced mine when temporary differences will reverse. The future profitability of each ring-fenced mine, in turn, is determined by reference to the life-of-mine plan for that operation, which is is based on parameters such as the Group’s long term view of the US$ gold price and the Rand/US$ exchange rate, as well as the reserves declared for the operation. As some of these parameters are based on market indicators, they differ from one year to the next. In addition, the reserves may also increase or decrease based on updated or new geological information. Changes in the future profitability if each ring-fenced mine impact the deferred tax rates used to recognize temporary differences at these operations. See “ — Critical Accounting Policies and Estimates — Deferred taxes. ” The increase in deferred tax on temporary differences due to changes in estimated effective tax rates results primarily from increases in the effective deferred tax rate at Evander Gold Mines Limited and Harmony Gold Mining Company Limited. The deferred tax rate for Evander Gold Mines Limited increased from 6.9% in fiscal 2009 to 22.9% in fiscal 2010 due to the increased estimated profitability of the operation over the life-of-mine as a result of the closure of loss-making shafts, as well as an increase in the gold price and a planned decrease in capital expenditure. Similarly, Harmony Gold Mining Company Limited’s deferred tax rate increased from 17.1% to 23.1 mainly as a result of the closure of loss-making shafts.

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Australia . Generally, Australia imposes tax on the worldwide income (including capital gains) of all of our Australian incorporated and tax resident entities. The current income tax rate for companies is 30%. Ongoing business, mining, exploration and rehabilitation costs incurred each year are fully deductible. The cost of plant and capital mining expenditure may be depreciated and deducted over its effective life.
Harmony Gold Australia Proprietary Limited and its wholly owned Australian subsidiary companies are recognized and taxed as a single entity. Under the consolidations rules all of the Australian subsidiary companies are treated as divisions of the Head Company, Harmony Gold Australia. As a result inter company transactions between group members are generally ignored for tax purposes. This allows the group to transfer assets between group members without any tax consequences, and deems all tax losses to have been incurred by the Head Company of the group.
Withholding tax is payable on dividends, interest and royalties paid by Australian residents to non-residents, which would include any dividends on the shares of our Australian subsidiaries that are paid to us. In the case of dividend payments to non-residents, a 30% withholding tax applies. However, where the recipient of the dividend is a resident of a country with which Australia has concluded a double taxation agreement, the rate of withholding tax is generally limited to 15% (or in the case of South Africa 5% where the dividend is paid to a company which controls at least 10% of the Australian dividend paying company). Where dividends are fully franked, no withholding tax applies as an effective credit is allowed against any withholding tax otherwise payable, regardless of whether a double taxation agreement is in place. However, due to the tax profile of Harmony Gold Australia it is not expected to have any franking credits in the foreseeable future.
PNG . The Hidden Valley Project in PNG commenced operations in fiscal 2010. We are also reviewing other potential projects and carrying out extensive exploration.
PNG mining projects are taxed on a project basis. Therefore each project is taxed as a separate entity, even though it may be one of a number of projects carried on by the same company. In certain circumstances there is an ability to transfer the tax benefit obtained through exploration expenditure between projects and wholly owned companies. Tax losses are generally quarantined and cannot be transferred between projects.
PNG mining companies are taxed at a rate of tax of 30%. Mining operations in PNG are subject to a 2% royalty which is payable to the PNG Government.
Capital development and exploration expenditure incurred in PNG is capitalized for tax purposes and can be generally deducted at 25% per annum on a diminishing value basis against project income, with the deduction being limited to the lesser of 25% of the diminished value or the income of the project for the year.
PNG imposes dividend withholding tax of 10% on dividends paid by PNG mining operations to non residents. Although PNG also imposes interest withholding tax on interest paid off-shore, the PNG Tax Act exempts interest paid to non resident lenders from withholding tax where the PNG company is engaged in mining operations in PNG.
Discontinued Operations
Revenues
Revenues decreased from US$69 million in fiscal 2009 to US$nil in fiscal 2010. This was due to the fact that the Cooke operation was sold in November 2008 and that Mount Magnet was placed on care and maintenance in December 2007.
Costs
Costs decreased from US$103 million in fiscal 2009 to US$4 million in fiscal 2010. This was due to fact that the sale of the Cooke operation was recognized in November 2008.
Reversal of impairment
The gain recognized in fiscal 2009 relates to the reversal of impairment when Mount Magnet was re-measured in terms of IFRS 5 on no longer being classified as held for sale.
Profit on sale of shares
The profit on shares in fiscal 2009 relates to the sale of the Cooke operations in November 2008.

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Income and Mining Taxes
South Africa . We pay taxes on mining income and non-mining income. For details, refer to the discussion under “ Income and Mining Taxes ” in the Continuing Operations section.
In 2010 and 2009, the tax rates for companies that elected the STC exemption were 43% for mining income and 35% for non-mining income, compared with 34% for mining income and 28% for non-mining income if the STC exemption election was not made.
Australia . We pay taxes on mining income and non-mining income. For details, refer to the discussion under “Income and Mining Taxes” in the Continuing Operations section. In fiscal 2010 and 2009, the income tax rate for companies was 30%.
Continuing and discontinued operations
Net (loss)/profit
The net (loss)/profit decreased from a net profit of US$311 million in fiscal 2009 to a net loss of US$24 million. This is due to the factors discussed above.
Years Ended June 30, 2009 and 2008
Continuing Operations
Revenues
Revenue increased US$8 million, or 1%, from US$1,269 million in fiscal 2008 to US$1,277 million in fiscal 2009. This was mainly due to the higher average price of gold received by us, US$867 per ounce in 2009 compared to US$813 per ounce in 2008. This was offset by the decrease in ounces sold.
Our gold sales decreased 76,965 ounces, or 5%, from 1,550,527 in fiscal 2008 to 1,473,562 in fiscal 2009. The grade recovered was lower, at 0.07 ounces per ton in fiscal 2009 compared to 0.08 ounces per ton in fiscal 2008, negatively impacting on the ounces produced. The lower recovery grade was as a result of the increase in tons treated from surface tailings dams at a lower recovery grade.
At Bambanani ounces sold decreased by 25%, from 158,985 in fiscal 2008 to 119,665 in fiscal 2009. This was due to a lower production as a result of the restructuring due to power constraints. This was offset by a better recovery grade which increased from 0.170 ounces per ton in fiscal 2008 to 0.213 ounces per ton in fiscal 2009.
At Doornkop ounces sold decreased from 44,143 in fiscal 2008 to 43,211 in fiscal 2009. This is due to the lower recovery grade, which deteriorated to 0.070 in fiscal 2009, compared with 0.089 in fiscal 2008.
At Evander ounces sold decreased by 18%, from 240,037 in fiscal 2008 to 195,668 in fiscal 2009. This was due to a decrease in production volumes as a result of the closure of the pillars in the old mine and poor environment conditions in the decline area which affected mining.
The ounces sold at Kalgold decreased by 28% from 93,172 in fiscal 2008 to 66,841 in fiscal 2009. This was due to a 31% decrease in recovery grade from 0.055 ounces per ton in fiscal 2008 to 0.038 ounces per ton in fiscal 2009. This was due to the depletion of the D-zone.
At Kusasalethu (previously known as Elandsrand ounces increased from 158,631 in fiscal 2008 to 183,676 in fiscal 2009. This was due to an increase in the production volumes.
At Masimong ounces sold increased by 31%, or 37,006 ounces, from 117,575 in fiscal 2008 to 154,581 in fiscal 2009. This was due to an increase in production volumes from 892,000 tons to 981,000 tons in fiscal 2009 and a higher recovery grade of 0.157 ounces per ton due to a higher face grade being mined.
At Phakisa ounces sold increased from 4,212 in fiscal 2008 to 21,477 in fiscal 2009. This was due to an increase in production volumes as the various sections moved into production, building up to full production in the next two to three years.

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At Tshepong ounces sold decreased by 17%, from 273,119 in fiscal 2008 to 227,113 in fiscal 2009. This was due to a lower recovery grade of 0.152 ounces per ton compared with 0.161 ounces per ton in fiscal 2008.
Cost of sales
Cost of sales includes production costs, depreciation and amortization, impairment of assets and employment termination and restructuring costs.
a) Production costs ( cash costs )
The following table sets out our total ounces produced and weighted average cash costs per ounce for fiscal 2009 and fiscal 2008:
Percentage
Year Ended June 30, Year Ended June 30, (Increase)/decrease
2009 2008 in Cash
(oz) ($/oz) (oz) ($/oz) Costs per ounce
SOUTH AFRICA
Bambanani
121,530 611 154,879 639 4.4
Doornkop
42,150 804 44,038 749 (7.3 )
Evander
190,075 572 231,799 526 (8.7 )
Joel
65,684 636 59,557 638 —
Kusasalethu
174,321 660 164,215 652 (1.2 )
Masimong
154,034 476 116,424 756 37.0
Phakisa
22,216 555 4,024 497 (11.7 )
Target
87,225 645 79,602 716 9.9
Tshepong
230,778 483 265,914 455 (6.2 )
Virginia
258,170 638 247,820 726 12.1
Other — underground
— — 8,305 1,565 (100 )
Other — surface
114,648 521 147,980 378 (37.8 )
INTERNATIONAL
PNG
— — — — —
Other
— — — — —
Total continuing operations
1,460,831 1,524,557
Weighted average
583 600 2.8
Our average cash costs from continuing operations decreased by US$17 per ounce, or 2.8%, from US$600 per ounce in fiscal 2008 to US$583 per ounce in fiscal 2009. Cash costs per ounce vary with the working costs per ton (which is, in turn, affected by the number of tons processed) and grade of ore processed. Cash costs expressed in U.S. dollars per ounce also vary with fluctuations in the Rand-U.S. dollar exchange rate, because most of our working costs are incurred in Rand. The decrease in cash cost expressed in U.S. dollars per ounce in fiscal 2009 was attributable primarily to the depreciation of the South African Rand against the U.S. dollar. This was offset by an increase in operating cost as well as the decrease in ounces produced when compared to fiscal 2008. Annual increases in labor cost as well as inflationary pressures on our consumable stores and energy costs were the main contributors towards a higher operating cost.
At Doornkop, the cash costs per ounce increased by 7%, from US$749 in fiscal 2008 to US$804 in fiscal 2009, primarily due to labor, consumables and services cost increases.
At Evander, the cash costs per ounce increased by 9%, from US$526 in fiscal 2008 to US$572 in fiscal 2009, primarily due to a decrease in ounces produced.
At Masimong, the cash costs per ounce decreased by 37% from US$756 in fiscal 2008 to US$476 in fiscal 2009, primarily due to the restructuring and cessation of Conops, as well as an increase in ounces produced.
At Phakisa, the cash costs per ounce increased from US$497 in fiscal 2008 to US$555, or 12%, in fiscal 2009. This was due to an increase in tons mined as a result of the planned ramp-up in production.
At Target, the cash costs per ounce decreased from US$716 in fiscal 2008 to US$645, or 10%, in fiscal 2009. This reduction was due to higher gold production.

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At Tshepong, the cash costs per ounce increased from US$455 in fiscal 2008 to US$483, or 6%, in fiscal 2009. This was due to the decrease in ounces produced in fiscal 2009 as well as increases in labor and electricity costs.
Under Other — Surface, the cash costs per ounce at Kalgold increased by 26% from US$401 in fiscal 2008 to US$506 in fiscal 2009, primarily due to the decrease in ounces produced. Also contributing was an increase of 40% at Phoenix, from US$381 to US$534, as a result of a decrease in grade.
b) Depreciation and amortization
Depreciation and amortization increased to US$139 million in fiscal 2009 from US$117 million in fiscal 2008. This increase relates to the increase is the commencement of depreciation at Tshepong’s Sub 66 Decline as well as the acceleration at Evander and Bambanani as a result of the decrease in the reserves used as a denominator in the calculation.
c) Employment termination and restructuring costs
The charge for employment termination and restructuring costs decreased from US$29 million in fiscal 2008 to US$4 million in fiscal 2009. The charges relate to the voluntary retrenchment process that was initiated in December 2007 when management decided to decentralize certain of the central services departments and the cessation of Conops at several of the operations.
d) Impairment of assets
The impairment charge increased from US$40 million in fiscal 2008 to US$71 million in fiscal 2009. The charge in fiscal 2009 relates to impairments at the Virginia, Evander and Target operations amounting to US$71 million. These impairments resulted primarily from a decrease in the expected life of mine of these operations, as well as an increase in the costs to operate the shafts. At Target and Evander, additional capital expenditure has been included in the revised life of mine plans in order to access reserve ounces in areas where geological anomalies have been discovered. These changes resulted in the carrying amount exceeding the recoverable amount. The charge in fiscal 2008 relates to impairments at the Evander and other underground operations as well as surface operations (Kalgold). Included in the amount is US$13 million for goodwill related to certain shafts that were included under “Other — Underground”. These impairments resulted primarily from a decrease in the expected life of mine of these operations, as well as an increase in the costs to operate the shafts. These changes resulted in the carrying amount exceeding the recoverable amount.
e) Share based compensation
The charge for share based compensation increased from US$6 million in fiscal 2008 to US$13 million in fiscal 2009. This increase is primarily attributable to the higher grant date fair value of share options granted to eligible employees in December 2008. Also included in the charge for 2009 is the acceleration of the cost relating to unvested shares attributable to the employees at the Cooke operations who were transferred to Rand Uranium.
Corporate, administration and other expenditure
The charge increase from US$30 million in fiscal 2008 to US$36 million in fiscal 2009, primarily as a result of the allocation of certain central service departments and employees to the corporate budget, which is not included in production costs.
Profit on sale of property, plant and equipment
The profit increased from US$nil in fiscal 2008 to US$114 million in fiscal 2009, primarily as a result of the sale of 50% of our interest in the PNG gold and copper assets to Newcrest.
Other expenses — net
The charge for other expenses decreased to US$3 million, compared with a charge of US$15 million in fiscal 2008. Included in the total for fiscal 2009 is a charge of US$22 million recognized in the income statement for the foreign exchange movements after the de-designation of loans previously designated as forming part of the net investment in foreign operations. The amount in fiscal 2008 was a credit of US$15 million. Also included in the total for fiscal 2009 is an amount of US$53 million relating to the reclassification to the income statement, following the partial repayment of the loans, of a portion of the accumulated gains recorded in equity that arose while these loans were considered to form part of the net investment in the foreign operations. During fiscal 2009, bad debts amounting to US$3 million were written off. A provision for bad debts of US$11 million was also raised in fiscal 2009, a decrease from fiscal 2008 of US$2 million.

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Profit/(loss) from associates
The profit from associates was US$1 million in fiscal 2009, compared to the loss of US$11 million in fiscal 2008. The increase relates primarily to inclusion of profits from Rand Uranium since acquisition on November 21, 2008. This was offset by the losses from Pamodzi of US$4 million in fiscal 2009. The loss in fiscal 2008 relates to losses from Pamodzi recognized from the date of acquisition.
Impairment of investment in associate
The charges in fiscal 2009 and 2008 for the impairment of investment in associate relates primarily to the impairment of the investment in Pamodzi. When Pamodzi was placed into liquidation and the trading of its shares on the JSE suspended during fiscal 2009, the investment was fully impaired. At June 30, 2008, management determined that the recoverable amount of the investment was US$19 million, which represented the market value of the listed shares on that date.
Net (loss)/gain on financial instruments
The loss in fiscal 2009 relates primarily to the impairment of the investment in Dioro of US$11 million reclassified from other reserves to the income statement when the investment was considered to be permanently impaired at December 31, 2008. This was offset by the subsequent gain recognized in the income statement on the disposal of the investment in April 2009. The gain in fiscal 2008 relates to the investment in ARM Limited held by the ARM Empowerment Trust, where the increase in the share value of the ARM Limited shares above R29 (US$4.62) per share was limited to the interest capitalized on the Nedbank loan.
Loss on sale of listed investments
The loss on sale of listed investments of US$63 million in fiscal 2008 relates to the sale of the remainder of the investment in Gold Fields.
Investment income
Investment income increased from US$39 million in fiscal 2008 to US$49 million in fiscal 2009, primarily due to the increase in interest received on cash balances, which were higher throughout the year, as well as on held-to-maturity investments held by our environmental trust funds.
Finance costs
Finance costs decreased from US$70 million in fiscal 2008 to US$24 million in fiscal 2009. This was due primarily to the decrease in interest rates as well as the decrease in the balance of the outstanding debt. Also contributing to the decrease in finance cost expensed was the increase in interest capitalized to qualifying assets, from US$22 million in fiscal 2008 to US$31 million in fiscal 2009.
Income and Mining Taxes
South Africa. We pay taxes on mining income and non-mining income. The amount of our South African mining income tax is calculated on the basis of a formula that takes into account our total revenue and profits from, and capital expenditures for, mining operations in South Africa. 5% of total mining revenue is exempt from taxation in South Africa as a result of the application of the applicable gold mine formula. The amount of revenue subject to taxation is calculated by deducting qualifying capital expenditures from taxable mining income. The amount by which the taxable mining income exceeds 5% of mining revenue constitutes taxable mining income. We and our subsidiaries each make our own calculation of taxable income.
The tax rate applicable to the mining and non-mining income of a gold mining company depends on whether the company has elected to be exempt from the Secondary Tax on Companies, (“ STC ”). STC is a tax on dividends declared and, at present, the STC tax rate is equal to 10% (previously 12.5%). To the extent we receive dividends, such dividends received are offset against the amount of dividends paid for purposes of calculating the amount subject to STC. In 1993, all existing South African gold mining companies had the option to elect to be exempt from STC. If the election was made, a higher tax rate would apply for both mining and non-mining taxable income. In 2009 and 2008, the tax rates for companies that elected the STC exemption were 43% for mining income and 35% for non-mining income, compared with 34% for mining income and 28% for non-mining income if the STC exemption election was not made. In 1993, the Harmony Company elected to pay the STC tax. All of our South African subsidiaries, excluding Avgold, elected the STC exemption.

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Income and Mining Tax 2009 2008
Effective tax rate expense
9 % (167 %)
The effective tax rate for fiscal 2009 was lower than the statutory tax rate of 43% for us and our subsidiaries as a whole. The lower effective tax rate results primarily from changes in the rates used to provide deferred tax at our South African operations and the additional capital allowance we receive at our Avgold operation (resulting in no tax payable at the operation). Offsetting this is non-deductible expenses and prior year adjustments. Included in the non-deductible expenses is non-deductible interest of US$17 million, impairments of US$20 million, as well as US$24 million relating to transfer pricing.
Deferred tax rates for the South African operations are calculated based on estimates of the future profitability of each ring-fenced mine when temporary differences will reverse. The future profitability of each ring-fenced mine, in turn, is determined by reference to the life-of-mine plan for that operation, which is is based on parameters such as the Group’s long term view of the US$ gold price and the Rand/US$ exchange rate, as well as the reserves declared for the operation. As some of these parameters are based on market indicators, they differ from one year to the next. In addition, the reserves may also increase or decrease based on updated or new geological information. Changes in the future profitability if each ring-fenced mine impact the deferred tax rates used to recognize temporary differences at these operations. See “ — Critical Accounting Policies and Estimates — Deferred taxes. ” The decrease in deferred tax on temporary differences due to changes in estimated effective tax rates results primarily from a decrease in the effective deferred tax rate for Evander Gold Mines Limited and Randfontein Estates Limited. The deferred tax rate for Evander Gold Mines Limited decreased from 27.7% in fiscal 2008 to 6.9% in fiscal 2009. This was primarily due to a decrease in profitability over the life-of-mine as a result of the significant increase in working costs as well as capital expenditure. This was offset by an increase in the gold price. Similarly, Randfontein Estates Limited’s deferred tax rate increased from 28.4% to 20.0% for the same reasons.
Australia . Generally, Australia imposes tax on the worldwide income (including capital gains) of all of our Australian incorporated and tax resident entities. The current income tax rate for companies is 30%. Ongoing business, mining, exploration and rehabilitation costs incurred each year are fully deductible. The cost of plant and capital mining expenditure may be depreciated and deducted over its effective life.
Harmony Gold Australia Proprietary Limited and its wholly owned Australian subsidiary companies are recognized and taxed as a single entity. Under the consolidations rules all of the Australian subsidiary companies are treated as divisions of the Head Company, Harmony Gold Australia. As a result all inter company transactions between group members are ignored for tax purposes. This allows the group to transfer assets between group members without any tax consequences, and deems all tax losses to have been incurred by the Head Company of the group.
Mining operations in Western Australia are also subject to a 2.5% gold royalty because the mineral rights are owned by the State Government. All gold production from the Mount Magnet operations is subject to this royalty.
Withholding tax is payable on dividends, interest and royalties paid by Australian residents to non-residents, which would include any dividends on the shares of our Australian subsidiaries that are paid to us. In the case of dividend payments to non-residents, a 30% withholding tax applies. However, where the recipient of the dividend is a resident of a country with which Australia has concluded a double taxation agreement, the rate of withholding tax is generally limited to 15% (or in the case of South Africa 5% where the dividend is paid to a company which controls at least 10% of the Australian dividend paying company). Where dividends are fully franked, no withholding tax applies as an effective credit is allowed against any withholding tax otherwise payable, regardless of whether a double taxation agreement is in place.
PNG . The Hidden Valley Project in PNG is expected to commence operations in fiscal 2010. We are also reviewing other potential projects and carrying out extensive exploration.
PNG mining projects are taxed on a project basis. Therefore each project is taxed as a separate entity, even though it may be one of a number of projects carried on by the same company. In certain circumstances there is an ability to transfer the tax benefit obtained through exploration expenditure between projects and wholly owned companies. Tax losses are generally quarantined and cannot be transferred between projects.
PNG mining companies are taxed at a rate of tax of 30%.
Capital development and exploration expenditure incurred in PNG is capitalized for tax purposes and can be generally deducted at 25% per annum on a diminishing value basis against project income.

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PNG imposes dividend withholding tax of 10% on dividends paid by PNG mining operations to non residents. Although PNG also imposes interest withholding tax on interest paid off-shore, the PNG Tax Act exempts interest paid to non resident lenders from withholding tax where the PNG company is engaged in mining operations in PNG.
Discontinued Operations
Revenues
Revenues decreased from US$312 million in fiscal 2008 to US$69 million in fiscal 2009, due to the fact that the Cooke operation was sold in November 2008 and Mount Magnet was placed on care and maintenance during December 2007.
Costs
Costs decreased from US$243 million in fiscal 2008 to US$75 million in fiscal 2009. This was due to the recognition of the sale of the Cooke operation in November 2008.
Reversal of impairment
The gain recognized in fiscal 2009 relates to the reversal of impairment when Mount Magnet was re-measured in terms of IFRS 5 on no longer being classified as held for sale.
Profit on sale of shares
The profit on shares in fiscal 2009 relates to the sale of the Cooke operations in November 2008. The profit on sale of shares for fiscal 2008 relates to the profit of US$9 million on the sale of Orkney.
Profit on sale of property, plant and equipment
The profit of US$4 million in fiscal 2008 relates primarily to the profit on sale of tenements in Australia of US$14 million. This was offset by the loss of US$13 million on the sale of South Kalgoorlie.
Income and Mining Taxes
South Africa . We pay taxes on mining income and non-mining income. For details, refer to the discussion under “ Income and Mining Taxes ” in the Continuing Operations section.
In 2009 and 2008, the tax rates for companies that elected the STC exemption were 43% for mining income and 35% for non-mining income, compared with 34% for mining income and 28% for non-mining income if the STC exemption election was not made.
Australia . We pay taxes on mining income and non-mining income. For details, refer to the discussion under “Income and Mining Taxes” in the Continuing Operations section. In fiscal 2009 and 2008, the income tax rate for companies was 30%.
Continuing and discontinued operations
Net profit/(loss)
The net profit/(loss) increased from a net loss of US$30 million in fiscal 2008 to a net profit of US$311 million. This is due to the factors discussed above.
Recent Accounting Pronouncements
IFRS 1 (Amendment): First-time Adoption of International Financial Reporting Standards — Additional Exemptions for First-time Adopters (effective for periods beginning on or after January 1, 2010). The amendment addresses the retrospective application of IFRSs to particular situations including: the use of deemed cost for oil and gas assets; determination of whether an arrangement contains a lease; and decommissioning liabilities included in the cost of property, plant and equipment and is aimed at ensuring that the entities applying IFRSs will not face undue cost or effort in the transition process. This amendment will not have an impact on the group.
IFRS 1 (Amendment): First-time Adoption of International Financial Reporting Standards — Limited Exemptions from Comparative IFRS 7 Disclosures for First-time Adopters (effective for periods beginning on or after July 1, 2010). The additional amendment relieves first-time

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adopters of IFRSs from presenting comparative information for new three level classification disclosures required by the March 2009 amendments to IFRS 7 “Financial Instruments: Disclosures”. It thereby ensure that first-time adopters benefit from the same transition provisions that amendments to IFRS 7 provides to current IFRS preparers. This amendment will not have an impact on the group.
IFRS 2 (Amendment) — Group cash-settled and share-based payment transactions (effective from periods beginning January 1, 2010). The amendment provide a clear basis to determine the classification of share based payments in consolidated and separate financial statements. In addition to incorporating IFRIC 8, ‘Scope of IFRS 2’, and IFRIC 11, ‘IFRS 2 — group and treasury share transactions’, the amendment also expand on the guidance in IFRIC 11 to address group arrangements that were not considered by that interpretation. The group does not have a cash settled share based payments scheme.
IFRS 5 (Amendment) — Measurement of non-current assets (or disposal groups) classified as held for sale (effective from periods beginning January 1, 2010). The amendment is part of the International Accounting Standards Board’s (“ IASB ”) annual improvements project published in April 2009. The amendment provides clarification on disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations. It also clarifies that the general requirement of IAS 1 still apply, particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimation uncertainty). The group is still in process of determining the effect of this amendment on the financial statements.
IFRS 9 — Financial instruments (effective from periods beginning January 1, 2013). IFRS 9 simplifies accounting for financial assets as requested by many constituents and stakeholders. In particular, it replaces multiple measurement categories in IAS 39 with a single principle-based approach to classification. IFRS 9 removes complex rule-driven embedded derivative guidance in IAS 39 and requires financial assets to be classified in their entirety. IFRS 9 eliminates the need for multiple impairment models, such that only one impairment model for financial assets carried at amortized cost will be required. The group is still in the process of determining the effect of this standard on the financial statements.
IAS 1 (Amendment) — Presentation of financial statements (effective from periods beginning January 1, 2010). The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non current. By amending the definition of current liability, the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time.
IAS 7 (Amendment) — Statement of cash flows (effective from periods beginning January 1, 2010). The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment clarifies that only expenditure that results in a recognized asset in the statement of financial position can be classified as a cash flow from investing activities. The group currently does not expect the amendment to impact the financial statements.
IAS 17 (Amendment) — Leases (effective from periods beginning January 1, 2010). The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment deletes relevant guidance regarding classification of leases of land, so as to eliminate inconsistency with the general guidance on lease classification. As a result, leases of land should be classified as either finance or operating, using the general principles of IAS 17.
IAS 24 (Revised) — Related-party disclosures (effective from periods beginning January 1, 2011). The revised standard removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. It also clarifies and simplifies the definition of a related party.
IAS 32 (Amendment) — Classification of rights issues (effective from periods beginning February 1, 2010). The amendment recognizes that the previous requirement to classify foreign-currency denominated rights issued to all existing shareholders on a pro rata basis as derivative liabilities is not consistent with the substance of the transaction, which represents a transaction with owners acting in their capacity as such. The amendment therefore creates an exception to the ‘fixed for fixed’ rule in IAS 32 and requires rights issues within the scope of the amendment to be classified as equity.
IAS 36 (Amendment) — Impairment of Assets (effective from periods beginning January 1, 2010). The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment clarifies that the largest cash generating unit (or group of units) to which goodwill should be allocated for the purposes of impairment testing is an operating segment as defined by paragraph 5 of IFRS 8 — ‘Operating segments’, that is; before the aggregation of segments with similar economic characteristics permitted by paragraph 12 of IFRS 8.
IAS 38 (Amendment) — Intangible assets (effective from periods beginning January 1, 2010). The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment clarifies the description of valuation techniques commonly used by entities when measuring the fair value of intangible assets acquired in a business combination, where there is no active market. The effect of the amendment will be recorded in future periods when such transactions are entered into.

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IAS 39 (Amendment) — Financial instruments: Recognition and measurement (effective from periods beginning January 1, 2010). There were 3 amendments made to IAS 39 as part of the IASB’s annual improvements project published in April 2009.
(i) The scope exemption within IAS 39.2(g) was amended to clarify that it only applies to forward contracts that will result in a business combination at a future date, as long as the term of the forward contract does ‘not exceed a reasonable period normally necessary to obtain any required approvals and to complete the transaction’.
(ii) Clarification that amounts deferred in equity are only reclassified to profit or loss when the underlying hedged cash flows affect profit or loss.
(iii) An additional example of a closely related embedded prepayment option in a debt instrument was added to the adoption guidance in IAS 39 AG 30. Wording with respect to the assessment of put and call features in convertible instruments was clarified.
IFRIC 14 (Amendment): The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction — Prepayment of Minimum Funding Requirements (effective for financial periods beginning on or after January 1, 2011). This amendment applies in the limited circumstances when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements. The amendment permits such an entity to treat the benefit of such an early payment as an asset. The group does not believe the amendment will have an impact on the group.
IFRIC 19 — Extinguishing financial liabilities with equity instruments (effective from periods beginning July 1, 2010). This interpretation addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability. It does not address the accounting by the creditor, nor does it apply to situations where the liability may be extinguished with equity instruments in accordance with the agreed terms of the instrument (for example, convertible bonds). The group currently does not expect this interpretation to have a material effect on the financial statements.
Improvements projects . Certain improvements to IFRS 2009 (periods beginning on or after January 1, 2010) and IFRS 2010 (each has its own effective date, the earliest being periods beginning on or after July 1, 2010).
Liquidity and Capital Resources
We centrally manage our funding and treasury policies. There are no legal or economic restrictions on the ability of our subsidiaries to transfer funds to us. We have generally funded our operations and our short-term and long-term liquidity requirements from (i) cash generated from operations, (ii) credit facilities and other borrowings and (iii) sales of equity securities.
Cash Resources
Fiscal year ended June 30,
2010 2009 2008
($ in millions)
Continuing operations
Operating cash flows
216 246 165
Investing cash flows
(453 ) (108 ) (313 )
Financing cash flows
85 (233 ) 78
Foreign exchange differences
6 8 5
Total cash flows from continuing operations
(146 ) (87 ) (65 )
Discontinued operation
Operating cash flows
(6 ) 8 71
Investing cash flows
— 202 (16 )
Financing cash flows
— — —
Foreign exchange differences
— 77 (7 )
Total cash flows from discontinued operations
(6 ) 287 48
Operations
Net cash provided by operations is primarily affected by the quantities of gold sold, the gold price, the Rand-U.S. dollar exchange rate, cash costs per ounce and, in the case of the International operations, the Australian dollar and Kina versus U.S. dollar exchange rate. A significant adverse change in one or more of these parameters could materially reduce cash provided by operations as a source of liquidity.
Net cash generated by operations was US$210 million in fiscal 2010, as compared with US$254 million in fiscal 2009. The decrease is attributed primarily to the increase in production costs. Also contributing to the decline is the decrease in interest received from US$51

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million in fiscal 2009 to US$25 million. Offsetting this was a decrease in interest and taxation paid of US$19 million and US$68 million, respectively.
Net cash generated by operations was US$254 million in fiscal 2009, as compared with US$236 million in fiscal 2008. This improvement is attributable primarily to the higher gold price received during the year as well as the increase in interest received of US$13 million to US$51 million. Also contributing to the improvement is the decrease of interest paid of US$26 million to US$31 million as a result of a decrease in the outstanding debt balances. Negating the effect of the improvement was the increase in taxation paid of US$67 million to US$85 million.
Investing
Net cash utilized by investing activities was US$453 million in fiscal 2010, as compared with net cash generated of US$94 million in fiscal 2009. This movement is mainly due to an increase in capital expenditure of US$442 million during fiscal 2010, as well as the acquisition of the Pamodzi Free State assets for US$36 million. The inclusion of proceeds on disposal of mining assets in fiscal 2009 of US$444 million as contributed to the decrease year-on-year.
Net cash generated by investing activities was US$94 million in fiscal 2009, as compared with net cash utilized of US$329 million in fiscal 2008. This movement was mainly due to the decrease in capital expenditure during fiscal 2009 from US$552 million to US$339 million. Also contributing was an increase in proceeds on disposal of mining assets, relating to the disposal of the PNG assets to Newcrest and the Rand Uranium transaction (US$444 million). Offsetting this was an increase in the restricted cash balance (US$9 million).
Financing
Net cash generated by financing activities was US$85 million in fiscal 2010, as compared with net cash utilized of US$233 million in fiscal 2009. This movement is primarily attributed to the reduction in repayment of borrowings of US$427 million in fiscal 2009 to US$57 million in fiscal 2010. Also contributing is the raising of the Nedbank term facility in fiscal 2010. During fiscal 2010, dividends of US$29 million was paid.
Net cash utilized by financing activities was US$233 million in fiscal 2009, as compared with net cash generated of US$78 million in fiscal 2008. This movement was mainly due to the repayment of the convertible bond and the Nedbank loan during the year. This decrease was partially offset by the cash raised by the two share issues during the year, raising US$188 million, net of transaction costs.
Outstanding Credit Facilities and Other Borrowings
On December 11, 2009, we entered into a loan facility with Nedbank Limited (“ Nedbank ”), comprising a term facility of R900 million (US$119 million) and a revolving credit facility of R600 million (US$80 million). Interest accrues on a day to day basis over the term of the loan at a variable interest rate, equal to 3 month Johannesburg Interbank Agreed Rate (“ JIBAR ”) plus 3.5%. Interest is repayable quarterly. The term facility is repayable bi-annually in equal instalments of R90 million (US$12 million) over five years. The revolving credit facility is repayable after three years. The term facility was fully drawn during fiscal 2010 and R300 million (US$41 million) was drawn on the revolving credit facility on April 15, 2010. We need to comply with certain debt covenants, including that the interest cover ratios shall not be less than two times and the current ratio not less than one time. We complied with the relevant covenants during fiscal 2010.
During July 2007, Morobe Consolidated Goldfields entered into a finance lease agreement with Westpac Bank for the purchase of mining fleet to be used on the Hidden Valley project amounting to US$37 million. Interest is charged at U.S. — LIBOR plus 1.25% per annum. Interest is accrued monthly and lease instalments are repayable quarterly terminating June 30, 2013. The mining fleet financed is used as collateral for these loans. During fiscal 2009, 50% of the liability was transferred to Newcrest as part of the sale of the PNG gold and copper assets. The balance at June 30, 2010 was US$11.9 million.
Recently Retired Credit Facilities and Other Borrowings
On July 30, 2003, AVRD entered into a term loan facility of R140 million (US$19 million) with Nedbank for the purpose of partially funding AVR’s purchase of an undivided 26% share of the Mining titles, to be contributed to the Doornkop South Reef Project with Randfontein. Interest at a fixed rate equal to JIBAR plus 2%, compounded monthly, and any stamp duties and holding costs. The terms of the loan were extended from the original maturity of July 30, 2008, to September 30, 2009. It was then extended again until March 31, 2010,, at which date all loan amounts and any interest accrued were paid in terms of the agreement between AVRD and Harmony for the disposal of AVRD’s 26% interest in Doornkop. Interest capitalized during fiscal 2010 was US$2.2 million compared to US$3.3 million in fiscal 2009 (US$4.1 million in fiscal 2008). During fiscal 2005, AVRD borrowed an additional R18 million (US$2.8 million) from its holding company

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Africa Vanguard Resources to service working capital commitments. When the disposal of AVRD’s 26% interest in Doornkop to Harmony was finalized, the loan was derecognized as AVRD was no longer considered to be an SPE. The loan was uncollateralized and interest free.
On November 12, 2009 the Australian operations raised a new loan with BMW Finance of US$3.6 million for insurance premium funding. A deposit of US$0.7 million was paid. The loan bore interest at 6.1% and was repayable monthly in equal installments of US$0.4 million with the last installment paid in June 2010.
On May 21, 2004, we issued R1.7 billion (US$252.0 million) in international unsecured fixed-rate convertible bonds in order to refinance our domestic Rand debt. Interest was calculated on the convertible bonds at a rate of 4.875% per annum, payable semi-annually in arrears on May 21 and November 21 of each year. The bonds were convertible at the option of the bondholders into fully paid up ordinary shares at any time on or after July 1, 2004 and up to, and including, May 15, 2009, unless they had been previously redeemed, converted or purchased and cancelled by us. The trust deed for the convertible bonds contained clauses that restricted certain of our activities, including a negative pledge, according to which we were not permitted to create or permit any mortgage, charge, lien, pledge or other form of encumbrance of security interest with respect to any part of our undertaking or assets, present or future, to secure any relevant debt, guarantee or indemnity. In addition, the trust deed contained covenants that required us to, among other things, maintain the listing of the bonds with the UK Listing Authority and to do all things necessary, in the opinion of the trustee, to give effect to the trust deed. Included in the amortization charge as per the income statement is US$0.9 million compared to US$1.2 million in fiscal 2008 and US$1.2 million in 2007 for amortization of the bond issue costs. On May 20, 2009, we repaid the convertible bond.
On September 28, 2007, we entered into a term loan facility of R2 billion (US$283.9 million) with Nedbank Limited, for the purpose of partially funding capital expenditure in respect of projects, as well as to repay the short term bridging loan amounting to R500 million (US$68.6 million). Interest accrued on a day to day basis over the term of the loan at a variable interest rate, which is fixed for three month periods, equal to the JIBAR plus 2.75% plus banking costs. The interest is repayable every quarter commencing on September 28, 2007. During fiscal 2009, the loan was repaid in tranches, with the last tranche of R750 million (US$83.6 million) being repaid on April 21, 2009.
Contractual Obligations and Commercial Commitments
Our contractual obligations and commercial commitments consist primarily of credit facilities, post-retirement healthcare and environmental obligations.
Contractual Obligations on the Balance Sheet
The following table summarizes our contractual obligations as of June 30, 2010:
Payments Due by Period
Less Than 12-36 36-60 After 60
12 Months Months Months Months
July 1, 2010 July 1, 2011 July 1, 2013 Subsequent
to June 30, to June 30, To June 30, June 30,
Total 2011 2013 2015 2015
($’million) ($’million) ($’million) ($’million) ($’million)
Nedbank facility (1)
181 37 106 38 —
Westpac Bank (1)
12 4 8 — —
Post retirement health care (2)
20 — — — 20
Environmental obligations (3)
222 — — — 222
Total contractual obligations
435 41 114 38 242
(1) See Item 5. “Operating and Financial Review and Prospects — Liquidity and Capital Resources — Credit Facilities and Other Borrowings — Outstanding Credit Facilities and Other Borrowings” .
(2) This liability relates to post-retirement medical benefits of former employees who retired prior to December 31, 1996 and is based on actuarial valuations conducted during fiscal 2010.
(3) We make provision for environmental rehabilitation costs and related liabilities based on management’s interpretations of current environmental and regulatory requirements. See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies”.

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Contractual Obligations off the Balance Sheet
Our obligation with regards to operating leases is US$5 million for the next year and relates to the International office in Brisbane as well as expenditure on mineral tenements. Of this amount, US$4 million is due within 12 months.
Capital Expenditure
The following table sets forth our authorized capital expenditure as of June 30, 2010:
$’million
Authorized and contracted for (1)
44
Authorized but not yet contracted for
132
Total
176
(1) Including our share of the PNG joint venture’s capital expenditure of US$27 million.
Commercial Commitments
The following table provides details regarding our commercial commitments as of June 30, 2010:
Amount of Commitments Expiring by Period
Less
Than 12 12-36 36-60
Months Months Months After 60
July 1, July 1, July 1, Months
2010 to 2011 to 2013 to Subsequent
June 30, June 30, June 30, to June 30,
Total 2011 2013 2015 2015
($’million) ($’million) ($’million) ($’million) ($’million)
Guarantees (1)
70 — — — 70
Capital commitments (2)
44 44 — — —
Total commitments expiring by period
114 44 — — 70
(1) Amount of Commitments Expiring by Period.
(2) Capital commitments consist only of amounts committed to external suppliers, although a total of US$132 million has been approved by the board for capital expenditures.
Trend Information
Information on recent trends in our operations is discussed in Item 4 . “ Information on the Company — Business — Strategy” and “— Results of Operations ” above.
Working Capital and Anticipated Financing Needs
The board believes that our working capital resources, by way of cash generated from operations and existing cash on hand, are sufficient to meet our present working capital needs. Several of the Growth projects will require additional capital expenditure over the next two to three years to complete construction, most of which will be funded from cash generated by operations and the balance by debt. For more information on our planned capital expenditures, see “— Capital Expenditures” above and Item 4. “Information on the Company — Business — Harmony’s Mining Operations”. We may, in the future, explore debt and/or equity financing in connection with our acquisition strategy. See Item 3. “Key Information — Risk Factors — Harmony’s strategy depends on its ability to make additional acquisitions”. Our board believes that we will have access to adequate financing on reasonable terms given our cash-based operations and modest leverage. Our ability to generate cash from operations could, however, be materially adversely affected by increases in cash costs, decreases in production, decreases in the price of gold and appreciation of the Rand and other non-US$ currencies against the U.S. dollar. Future financing arrangements would also be subject to the limits on the board’s borrowing powers described in Item 10. “Additional Information — Memorandum and Articles of Association — Directors — Borrowing Powers”. In addition, South African companies are subject to significant exchange control limitations, which may impair our ability to fund overseas operations or guarantee credit facilities entered into by overseas subsidiaries. See Item “10. Additional Information — Exchange Controls”.

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Other Financial Information
Export Sales
In fiscal years 2008, 2009 and 2010, 100% of our gold produced in South Africa was refined by Rand Refinery, which is owned by a consortium of the major gold producers in South Africa. All of our gold produced in Australia and PNG in those periods was sold to The Perth Mint Australia (previously known as AGR Matthey), a Perth-based refinery.

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Item 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
Directors and Senior Management
The members of the board, their principal past affiliations, information on their business experiences and principal outside activities and selected other information are set forth below:
Board of directors
Name Date of appointment
Patrice Motsepe (1)
September 23, 2003
Frank Abbott (1)(2)
October 1, 1994
Graham Briggs
August 6, 2007
Joaquim Chissano (1)
April 20, 2005
Fikile De Buck (1) (3)(4)
March 30, 2006
Ken Dicks (1) (3)
February 13, 2008
Cheick Diarra (1) (3)
March 5, 2008
Dr Simo Lushaba (1) (3)
October 18, 2002
Cathie Markus (1) (3)
May 31, 2007
Harry Ephraim Mashego
February 24, 2010
Hannes Meyer
November 1, 2009
Modise Motloba (1) (3)
July 30, 2004
Cedric Savage (1) (3)
September 23, 2003
André Wilkens (1)
August 7, 2007
(1) Non-executive directors
(2) Frank Abbott served as a non-executive director until August 20, 2007 and was appointed interim financial director on August 21, 2007. Frank retired at the end of July 2010, and was appointed as non-executive director on August 1 , 2010 .
(3) Independent
(4) Appointed lead independent director after June 30, 2010.
Non-Executive Chairman
Patrice Motsepe (48) BA (Legal), LLB. Patrice was appointed to the board in 2003. Patrice was a partner in one of the largest law firms in South Africa, Bowman Gilfillan Inc. He was a visiting attorney in the USA with the law firm, McGuire Woods Battle and Boothe. In 1994 he founded Future Mining, which grew rapidly to become a successful contract mining company. He then formed ARMgold in 1997, which listed on the JSE in 2002. ARMgold merged with Harmony in 2003 and this ultimately led to the takeover of Anglovaal Mining (“ Avmin ”) by African Rainbow Minerals Limited (“ ARM ”). In 2002 he was voted South Africa’s Business Leader of the Year by the CEOs of the top 100 companies in South Africa. In the same year, he was winner of the Ernst & Young Best Entrepreneur of the Year Award. He is also the Executive Chairman of ARM and the Deputy Chairman of Sanlam. His various business responsibilities included being President of Business Unity South Africa (BUSA) from January 2004 to May 2008, which is the voice of organized business in South Africa. He is also President of Mamelodi Sundowns Football Club.
Executive Directors
Frank Abbott (55), BCom, CA (SA), MBL. Frank was appointed executive interim financial director in August 2007. Frank initially joined the Harmony board as a non-executive director in 1994, after which he was appointed Financial Director in 1997. In 2004 Frank was appointed financial director of ARM, while remaining on the Harmony board as non-executive director. In August 2007, Frank was seconded to Harmony as interim financial director, a position he held until handing over to Hannes Meyer in November 2009. Frank remained executive director until his early retirement on July 31, 2010. Post-retirement, Frank serves as non-executive director of Harmony and ARM.
Graham Briggs (57), BSc (Hons) (Geology), PrSciNat, Chief Executive Officer. Graham was appointed as chief executive officer in January 2008, after his appointment to the board in 2007. Having joined Harmony as new business manager in 1995, Graham’s previous positions include that of chief executive of Harmony Australia. A geologist by training, Graham has more than 35 years’ experience in the field and in an operational capacity at a number of South African gold mines. Graham serves as a director on Harmony’s subsidiary companies and is a member of the board of Virtual Metals Group in the United Kingdom.
Harry Ephraim “Mashego” Mashego (46), BA Ed, BA (Hons), GEDP, JMDP, Executive: Organizational Development and Transformation. Mashego joined Harmony in July 2005 as Group Human Resources Development Manager. Mashego, who has more than 20 years’ experience in human resources, began his career as Human Resources Manager at Eskom. He then progressed in the field at JCI,

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Atlantis Diesel Engines and Foskor Ltd. He was promoted to General Manager at Harmony’s Evander Operations in November 2005 and was appointed Executive: Human Resources in August 2007. Mashego was appointed to the board as executive director in February 2010.
Hannes Meyer (40), CA (SA), BCom (Hons), Financial Director. Hannes joined Harmony in August 2009. During his 14 year career in the mining industry, he gained extensive mining and financial experience at Randgold and Exploration Limited, Randgold Resources Limited, AngloGold and TEAL Exploration and Mining Limited (“ TEAL ”). His exposure extended to gaining knowledge of mines in Africa, corporate finance and business development. Before joining Harmony, Hannes served as chief financial officer of TEAL, and served as acting chief executive officer of TEAL from May 2008. He also serves as director on various Harmony subsidiaries and the board of Rand Uranium (Proprietary) Limited.
Non-Executive Directors
Joaquim Chissano (70), Non-Executive Director. Joaquim was appointed to the board in April 2005. Formerly President of Mozambique (1986 — 2004), Joaquim also served as chairman of the African Union for 2003/2004. On leaving the presidency, he established the Joaquim Chissano Foundation for Peace Development and Culture, and has led various international peace initiatives on behalf of the United Nations, African Union and the Southern African Development Community to Guinea Bissau, the Democratic Republic of the Congo, Uganda and Madagascar. In 2006 he was awarded the annual Chatham House Prize for significant contributions to improving international relations and was the recipient of the inaugural Mo Ibrahim Prize for Achievement in African Leadership in 2007. He is also a non-executive director of ARM Limited and TEAL. Joaqim was appointed to the Bill and Melinda Gates Foundation in December 2009.
Fikile De Buck (49), BA (Economics), FCCA (UK), Lead independent Non-Executive Director. Fikile joined the board on March 30, 2006. A chartered certified accountant, she is a fellow of the Association of Chartered Certified Accountants (ACCA) (UK) and a member. From fiscal 2000 to fiscal 2008, Fikile worked in various capacities at the Council for Medical Schemes in South Africa, including that of chief financial officer and chief operations officer. Prior to that she was treasurer at the Botswana Development Corporation. Fikile is also a non-executive director and chairman of the Audit Committee of Rand Uranium (Proprietary) Ltd and of Anooraq Resources Corporation. In August 2010 Fikile was appointed lead independent non-executive director and chairman of the Nomination Committee.
Dr Cheick Diarra (58), PhD (Mechanical and Aerospace Engineering), Independent Non-Executive Director. Dr Cheick Diarra joined the board in March 2008. He is also the chairman for Africa at Microsoft. Dr Diarra graduated from the Pierre and Marie Curie University in Paris, France, and obtained his PhD in mechanical and aerospace engineering from Howard University, Washington DC, USA. After six years as an Assistant Professor at Howard, he joined the National Aeronautic and Space Association (NASA) Jet Propulsion Laboratory. Dr Diarra has served as a UNESCO goodwill ambassador and, in 2002 and 2003, he was chief executive officer of the African Virtual University based in Kenya. He is a member of several international and African scientific organisations, and was awarded an African Lifetime Achievement Award for Outstanding Contributions to Science.
Ken Dicks (71), Mine Managers Certificates (Metalliferous and Fiery Coal Mines), Management Development Diploma and Management Diploma, Independent Non-Executive Director. Ken joined the board in February 2008. He has 39 years’ experience in the mining industry, mainly in the Anglo American group. He has served on the boards of mining companies such as Freegold, Western Deep Levels and Elandsrand. He is also a non-executive director of Gold One International, following a reverse takeover by Aflease Gold Limited and Bauba Platinum Limited.
Dr Simo Lushaba (44), BSc (Hon), MBA and DBA, Independent Non-Executive Director. Simo joined the Harmony board in October 2002. An entrepreneur and an executive business coach, he previously held senior management positions at Spoornet and Lonmin plc and was chief executive of Rand Water. Simo is a member of the board of the Nepad Business Foundation (SA), chairman of Spescom Limited and a board member of Gidani.
Cathie Markus (53), BA LLB, Independent Non-Executive Director. Cathie joined the board in May 2007. Cathie spent 16 years at Impala Platinum Holdings Limited (Implats), initially as legal advisor and latterly, from 1998 to 2007, as executive director with responsibility for legal compliance and public affairs. Having graduated from the University of the Witwatersrand, Cathie served articles at Bell Dewar & Hall. On qualifying as an attorney, notary and conveyancer, she joined the legal department of Dorbyl Limited. She is currently a trustee of the Impala Bafokeng Trust.
Modise Motloba (44), BSc, Diploma in Strategic Management, Independent Non-executive Director. Modise joined the board in July 2004. Currently the chief executive of Quartile Capital (Proprietary) Limited, Modise is also a director of Rand Merchant Bank Structured Insurance, Deutsche Bank Securities SA (Proprietary) Limited, the Land Bank and the Small Enterprise Foundation. Modise’s 17 years’ experience in investment banking, treasury and fund management includes appointments at Rand Merchant Bank, African Harvest Fund

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Managers and Goldman Sachs. Modise is a former President of the Association of Black Securities and Investment Professionals (ABSIP) where he was instrumental in formulating and negotiating the historic Financial Services Charter in October 2003.
Cedric Savage (71), BSc (Eng), MBA, ISMP (Harvard), Independent Non-executive Director. Cedric joined the board in September 2003. He retired as the chairman of the Tongaat Hulett Group in May 2009 but remains a trustee of the Tongaat Hulett Group Pension Fund. He started his career in the United Kingdom in 1960 as a graduate engineer with Fairey Aviation. He returned to South Africa in 1963 and worked in the oil (Mobil), textile (Felt & Textiles) and chicken (Rainbow Chickens Limited) industries. He was President of the South African Chamber of Business from 1993 to 1994. He has also served as Chairman of the Board of Governors of the University of KwaZulu-Natal’s Development Foundation and as a Member of Council of that university. He joined the Tongaat-Hulett Group Limited in 1977 as Managing Director of Tongaat Foods and progressed to Executive Chairman of the Building Materials Division; he became Chief Executive Officer of the group in 1991. In May 2000, he assumed the dual roles of Chief Executive Officer and Executive Chairman. He currently serves on the board of Denel (Proprietary) Limited. He also served on the Nedbank board from 2002 until May 2008 when he retired as Non-Executive Director, and on the board of Datatec Limited from 2001 and Datatec International from 2004, after which he retired from both boards in August 2009.
André Wilkens (61), Mine Manager’s Certificate of Competency, MDPA, RMIIA, Non-Executive Director. André joined the board in August 2007. He is currently the chief executive officer of ARM Limited and previously held the same position at ARM Platinum. Prior to this, he was the chief operating officer at Harmony, following the merger of Harmony with ARMgold in 2003. André has a wealth of experience in the mining industry, having joined Anglo American in 1969 and moved up the ranks to mine manager of Vaal Reefs’ south mine.
Management
The members of our management, their principal past affiliations, information on their business experiences and principal outside activities and selected other information are set forth below:
Bob Atkinson (58), NHD (Metalliferous Mining), Executive: New Business and Projects. Bob joined Harmony as a Section Manager in 1986 and served as Operations Director on the Executive Committee from June 2001 to May 2003. He was appointed Chief Operating Officer at Harmony Gold Australia and was appointed as Executive: Sustainable Development (Safety and Occupational Health) at Harmony in South Africa in July 2004. He has more than 32 years’ experience in the mining industry.
Jaco Boshoff (41), BSc (Hons), MSc (Geology), MBA, PrSciNat, Executive: Reserves and Resources. Jaco joined Harmony in April 1996. He has served as the Executive: Reserves and Resources and Competent Person since March 2004. Prior to this, he was a Ore Reserve Manager from 1998 to 2004 and before that was a geologist at Harmony and at Gengold. Jaco is registered as a professional geological scientist with the South African Council for Natural Scientific Professions and has worked in the mining industry for more than 12 years. In July 2010 Projects and New Business were added to his portfolio.
Matthews Pheello Dikane (44), LLB, LLM (Labor Law), Postgraduate Diploma In Management Practice, Postgraduate Diploma in Corporate Law, Executive: Legal and Compliance . Matthews joined Harmony in 2009. He has more than 20 years’ experience in the mining industry, working his way up through the ranks from learner official to production mine overseer at AngloGold Ashanti Limited. During this time, he studied for his law degree and served his articles at Perrott Van Niekerk Woodhouse Incorporated. He also completed his Master’s degree in Labor Law and Postgraduate Diplomas in Management Practice and Corporate Law. He returned to AngloGold Ashanti’s corporate office as a Legal Counsel, later joining Brink Cohen Le Roux as a senior associate where he was made a director.
Leon le Roux (54), NHD (Mechanical and Electrical Engineering), Executive: Risk Management and Engineering. Leon joined Harmony on its merger with ARMgold in 2003. Having begun his mining career as a learner official in 1979 and obtaining his GCC (Mines and Works), he worked as an engineer on several AngloGold operations. He joined ARMgold on its formation in 1999 where he held a number of positions in the management team and was later seconded to ARMplatinum. He was appointed to the Harmony executive team in June 2009. Post year-end, in September 2010, Leon was deployed to Harmony’s South East Asian operations.
Jackie Mathebula (40), B Admin Honours, MBA, Master of Management (MM, HR), Executive: Corporate Affairs. Jackie joined Harmony in September 2002 as Employee and Industrial Relations Executive. In 2005, his portfolio became Training, Human Resource Development and Occupational Health, and in 2005 he was appointed Executive: Corporate Affairs. Prior to joining Harmony, he worked at Gensec Bank, Gold Fields Limited and then Iscor group (now ArcelorMittal South Africa). He also worked for the South African government in the Gazankulu Public Service Commission.
Melanie Naidoo-Vermaak (36), MSc (Sustainable Development), Executive: Environment. Melanie joined Harmony in August 2009. She is an experienced environmental specialist who has worked for both the private sector in the mining industry, as well as the public

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sector in the Departments of Water Affairs and Forestry and Minerals and Energy. She has spent more than 10 years in this discipline and has international environmental management exposure gained in Australia, Papua New Guinea, Fiji as well as Africa. She has held various positions at some of the leading mining companies, including BHP Billiton, Anglo American PLC and De Beers Consolidated Mines Limited.
Alwyn Pretorius (39), BSc Mining Engineering, BSc Industrial Engineering, Chief Operating Officer: North Region. Alwyn joined Harmony on its merger with ARMgold in 2003. He began his career at Vaal Reefs mine as a mining graduate in training in 1993 and was appointed shift boss in 1995, gaining experience in remnant mining. Alwyn obtained his BSc in Industrial Engineering in 1998 and joined ARMgold in 1999 at its Orkney operations progressing to become mine manager in 2003. Alwyn was appointed Executive, South African Operations at Harmony in March 2007, and is the Chief Operating Officer: North Region.
Tom Smith (54), NHD (Mine Surveying and Metalliferous Mining), Chief Operating Officer: South Region. Tom joined Harmony in 2002. Tom began his career in the mining industry in 1975 as a sampler at Vaal Reefs mine, becoming chief surveyor in 1988. He made a career change in 1991 to mining and worked as a section manager on Great Noligwa, Elandsrand and Mponeng mines. He was also involved in projects at Tau Lekoa and Moab Khotsong, acquiring experience in conventional, trackless, pillar and deep-level mining. Tom was promoted to Production Manager at Mponeng in 1998. He was appointed General Manager of Tshepong in 2000. Following the merger with ARMgold he was involved in the restructuring of the Free State operations. He joined the executive team in September 2007 and is the Chief Operating Officer: South Region.
Marian van der Walt (37), BCom (Law), LLB, Higher Diploma in Tax, Diploma in Corporate Governance, Diploma in Insolvency Law, Certificate in Business Leadership; Executive: Corporate and Investor Relations. Marian, who has more than 12 years’ legal experience, was appointed Company Secretary in 2003. She completed her articles at Routledges Modise Attorneys and was admitted as an attorney and conveyancer in 1998. She then joined Deloitte and Touche as an insolvency practitioner/administrator. She held legal and management positions at the Standard Bank of South Africa Limited in the Commercial Properties Division prior to joining Harmony. Marian was appointed to the Executive Committee in October 2005 with responsibility for legal, compliance and risk management. Internal audit and Sarbanes-Oxley compliance were added to her portfolio in September 2007. In October 2008, she resigned as company secretary enabling her to accept the position of Executive: Corporate and Investor Relations.
Johannes van Heerden (38), BCompt (Hons), CA(SA), Chief Executive Officer: South East Asia . Johannes joined Harmony in 1998 as Financial Manager of the Free State operations. Here he obtained broad financial management experience at an operational level. He was subsequently appointed Group Financial Manager in 2001, before being relocated to Harmony Australasia as Chief Financial Officer in 2003. Johannes presently holds the position of Chief Financial Officer: South East Asia.
Abre van Vuuren (50), BComm, MDP, DPLR, Executive: Services. Abre joined Harmony in 1997 when the Group acquired Grootvlei Gold Mine ( “Grootvlei” ). Abre’s career in the mining industry started in 1982 where he joined the Finance department at the Blyvooruitzicht Gold Mine. He gained experience in Human Resources and progressed through the ranks at various gold mines and collieries in the Rand Mines Group, including Grootvlei. On Harmony’s acquisition of Grootvlei, Abre was included in the management team and has since held various positions in services and human resource management. He was promoted to the Executive Committee in 2000 when he became the Industrial Relations Executive. In 2007, Abre was appointed to his current portfolio of Executive: Services. In September 2010, Risk and Insurance were added to his portfolio following the deployment of Leon le Roux to the Harmony’s South East Asian operations.
Board Practices
Our Articles of Association provide that the board must consist of no less than four and no more than twenty directors at any time. The board currently consists of fourteen directors.
Our Articles of Association provide that the longest serving one-third of directors retire from office at each annual general meeting. Retiring directors normally make themselves available for re-election and are re-elected at the annual general meeting at which they retire. Members of our senior management who are also directors retire as directors in terms of the Articles of Association, but their service as officers is regulated by standard industry employment agreements. According to the Articles of Association, the board meets not less than quarterly.
Details of directors’ service contracts are described under “— Compensation of Directors and Senior Management” and “— Directors’ Terms of Employment,” below. We also describe significant ways in which our corporate governance practices differ from practices followed by U.S. companies listed on the NYSE on our website under “Corporate Governance.”

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In order to ensure good corporate governance, the board has formed an Audit Committee, a Remuneration Committee, a Nomination Committee, an Investment Committee, an Empowerment Committee, a Sustainable Development Committee and a Technical Committee. All of the board committees are comprised of a majority of independent, non-executive directors.
Executive Management Committee
Our Executive Committee comprises our executive directors and selected senior officers, each with his or her own area of responsibility. The Executive Committee consists of 11 executives who meet on a weekly basis and more often if required.
The composition of the Executive Management Committee (with areas of responsibility indicated) is as follows:
Graham Briggs
Chief Executive Officer
Hannes Meyer
Financial Director
Harry Ephraim Mashego
Executive Director: Organisational Development and Transformation
Frank Abbott
Executive Director (1)
Bob Atkinson
New Business and Projects
Jaco Boshoff
Reserves and Resources
Jackie Mathebula
Corporate Affairs
Alwyn Petorius
Chief Operating Officer North Operations South Africa
Tom Smith
Chief Operating Officer South Operations South Africa
Marian van der Walt
Corporate and Investor Relations
Johannes van Heerden
Chief Executive Officer: South East Asia
Abre van Vuuren
Services (2)
Leon le Roux
Risk Management and Engineering (2)
Melanie Naidoo-Vermaak
Environment
Matthews Dikane
Legal and Compliance
(1) Frank Abbott retired as executive director on July 31, 2010 and was appointed non-executive director on August 1, 2010.
(2) In September 2010 Leon le Roux was deployed to the South East Asian operations and Risk and Insurance were added to Abre van Vuuren’s portfolio.
Audit Committee
Members
In terms of its charter this committee must comprise at least three members. As at June 30, 2010, the members of this committee were:
Cedric Savage
Chairman; appointed to the committee on January 26, 2004 and chairman as from August 5, 2005
Fikile De Buck
Appointed to the committee on March 30, 2006
Dr. Simo Lushaba
Appointed to the committee on January 24, 2003
Modise Motloba
Appointed to the committee on July 30, 2004
The internal and external auditors, the chief executive officer, the financial director and executive managers are all invited to the Audit Committee meeting.
Frequency of meetings
The Audit committee is, in terms of its charter, required to meet at least four times a year, or more frequently as circumstances dictate. During fiscal 2010, the committee met on five occasions.

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Purpose and function
The Audit Committee was established to assist the board in discharging its duties relating to the safeguarding of assets; the operation of adequate system and internal controls and control processes; the preparation of accurate financial reporting and statements in compliance with all applicable legal requirements, corporate governance and accounting standards. It also provides support to the board on the risk profile and risk management of the group. The Audit Committee ensures that there is an internal audit function in place and that the roles of the internal and external audit functions are co-ordinated.
The Audit Committee recommends the appointment of the external auditors to the board and shareholders, and also approved non-audit services provided by the external auditors. The Audit Committee has reviewed the independence of the external auditors and is satisfied that the external auditors are independent.
The Audit Committee reports and makes recommendations to the board, and the board retains responsibility for implementing such recommendations.
The Committee considered the appropriateness of the expertise and experience of the Financial Director and concluded that the Financial Director has the necessary expertise and experience. The Committee is also satisfied that the expertise, resources and experience of the finance function are adequate.
Independence/compliance
All members of the Audit Committee are independent, non-executive directors.
Currently, we do not have an individual audit committee financial expert as defined by the rules of the SEC. It is our contention that the audit committee members, through their collective experience, do meet the majority of the definitions of the SEC for an audit committee financial expert in both the public and private sectors. The members have served as directors and officers of numerous public companies and have over the years developed a good knowledge and understanding of IFRS, overseeing the preparation, audit and evaluation of financial statements. We believe that the combined knowledge, skills and experience of the Audit Committee, and their authority to engage outside experts to provide them with advice on matters relating to their responsibilities as they deem appropriate, enables them as a group to act effectively in the fulfillment of tasks and responsibilities required under U.S. Sarbanes-Oxley Act of 2002.
Empowerment Committee
Members
The Empowerment Committee must comprise of at least three members. As at June 30, 2010, the members of this committee were as follows:
Joaquim Chissano
Chairman; appointed as chairman with effect from May 3, 2006
Modise Motloba
Appointed to the committee on May 3, 2006
Cathie Markus
Appointed to the committee on October 29, 2007
The chief executive officer and executive managers are all invited to attend the Empowerment Committee meetings.
Frequency of meetings
The Empowerment Committee met on four occasions during fiscal 2010. The Empowerment Committee charter requires that at least two members are present to constitute a quorum. Cathie Markus acted as chairman of the meetings when Joaquim Chissano was unable to attend.
Purpose and function
The Empowerment Committee was established by the board to ensure that the company meets not only regulations stipulated in the Employment Equity Act, the Labor Relations Act and the Mineral and Petroleum Resources Development Act’s Mining Charter Scorecard, but also in fulfilment of our own empowerment imperatives.
The responsibilities of the Empowerment Committee include ensuring that a sustainable organizational culture, structures and processes are in place to support the development of empowerment in the company in line with the company’s needs and requirements; to monitor the

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development and progress of empowerment within the company; to address inequalities that may exist in staff profiles and organizational practices; and to review and monitor whether appropriate support is given to previously disadvantaged staff in order to equip them for successful careers in the company.
Independence/compliance
Even though the chairman is not considered an independent non-executive director, the rest of the committee comprises of independent non-executive directors.
Investment Committee
Members
The Investment Committee must comprise of at least three members. As at June 30, 2010, the members were:
Dr. Simo Lushaba
Chairman; appointed to the committee on January 26, 2004 and as Chairman with effect from August 5, 2005)
Fikile De Buck
Appointed to the committee on May 3, 2006
Ken Dicks
Appointed to the committee on February 13, 2008
Cathie Markus
Appointed to the committee on October 29, 2007
Cedric Savage
Appointed to the committee on January 26, 2004
André Wilkens
Appointed to the committee on August 7, 2007
The chief executive officer, the financial director and executive managers are invited to attend the meetings.
Frequency of meetings
The committee should meet at least four times a year, but may, at its discretion, meet more often depending on the circumstances. The committee met on five occasions in fiscal 2010.
Purpose and function
The primary purpose of the Investment Committee is to consider projects, acquisitions and the disposal of assets in line with the Group’s overall strategy. This includes performing such other investment related functions as may be designated by the board from time to time, considering the viability of the capital project and/or acquisition and/or disposal and the effect it may have on the Group’s cash flow, as well as whether these will fit the Group’s overall strategy. This committee’s remit includes ensuring that due diligence procedures are followed when acquiring or disposing of assets.
Independence/compliance
The Investment Committee consists of six non-executive members. Of the six non-executive members, five are independent. The chairman is an independent, non-executive director.
Nomination Committee
Members
The Nomination Committee must comprise of at least three members. As at June 30, 2010, the members of this committee were:
Patrice Motsepe
Chairman; appointed to the committee on October 24, 2003
Frank Abbott
Appointed to the committee August 5, 2005
Joaquim Chissano
Appointed to the committee on May 3, 2006
In August 2010 Fikile De Buck was appointed Chairman of the Nomination Committee.
Frequency of meetings
Members of this committee are required to meet annually or more often at the committee’s discretion, depending on prevailing circumstances. The committee met three times in fiscal 2010 to consider new appointments to the board in fiscal 2010.

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Purpose and function
The primary purpose of the Nomination Committee is to ensure that the procedures for appointments to the board are formal and transparent, by making recommendations to the board on all new board appointments and reviewing succession planning for directors. The duties and responsibilities of this committee are set out in the Nomination Committee charter.
Independence/compliance
The chairman of the Nomination Committee was until August 2010 non-executive, but not independent. Fikile De Buck was appointed as Chairman in August 2010. Frank Abbott retired as an executive director in July 2010, and remained on the Board and the Committee as a non-executive director.
Remuneration Committee
Members
The Remuneration Committee must comprise of at least three members. As at June 30, 2010, the members of this committee were:
Cedric Savage
Chairman; appointed to the committee on January 24, 2004, and as chairman from May 3, 2006
Simo Lushaba
Appointed to the committee on August 5, 2005
André Wilkens
Appointed to the committee on August 7, 2007
The chief executive officer, the financial director and the executive: organizational development and transformation are invited to attend all meetings.
Frequency of meetings
The Remuneration committee is expected to meet at least on a quarterly basis or to pass a resolution by round robin if and when a formal meeting cannot be held. In fiscal 2010, the committee met on six occasions, including two special meetings held on July 1, 2009 and March 18, 2010 (for approval of the share allocation and incentive schemes and appointment of the financial director).
Purpose and function
The primary purposes of the Remuneration Committee are to ensure that the group’s directors and senior executives are fairly rewarded for their individual contributions to our overall performance and to demonstrate to all stakeholders that the remuneration of our senior executive members is set by a committee of board members who have no personal interest in the outcome of their decisions, and who will give due regard to the interests of our shareholders and to our financial and commercial health.
The committee’s primary objectives are to monitor and strengthen the objectivity and credibility of our directors’ and senior executives’ remuneration system, and to make recommendations to the board on remuneration packages and policies applicable to directors. A formal reward philosophy was adopted by the Remuneration Committee in March 2006. This philosophy is reviewed annually by the committee.
Independence/compliance
The committee comprises three non-executive directors, of which two are independent. It is therefore not compliant with King III which requires that the committee comprise independent directors only. The chairman of the Remuneration Committee is, however, an independent non-executive director and ensures that decisions are fair and not biased. The chairman, as independent non-executive director, was elected on the basis of his vast business knowledge and experience, and his familiarity with the challenges facing directors and executive managers.

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Sustainable Development Committee
Members
The Sustainable Development Committee must comprise of at least three members. As at June 30, 2010, the following were members of this committee:
Modise Motloba
Chairman; appointed as chairman on August 5, 2005
Joaquim Chissano
Appointed to the committee on May 3, 2006
Fikile De Buck
Appointed to the committee on May 3, 2006
The chief executive officer and executive managers are invited to attend the meetings.
Frequency of meetings
The Sustainable Development Committee should meet at least four times a year, or more frequently as circumstances dictate. In fiscal 2010, four meetings of this committee were held. The charter requires that at least two members are present to constitute a quorum.
Purpose and function
The objective of the Sustainable Development Committee is to assist the board in ensuring that we are and remain a committed socially responsible corporate citizen. The committee’s primary role is to supplement, support, advise and provide guidance on the effectiveness or otherwise of management’s efforts in respect of sustainable development.
The committee considers the following sustainable development issues: occupational health, safety, HIV/Aids, social investment and environmental management.
Independence/compliance
The committee comprises three non-executive directors, two of whom are independent.
Technical Committee
Members
The Technical Committee must comprise of at least four members. As at June 30, 2010, the following were members of this committee:
Andre Wilkens
Chairman; appointed as chairman on January 22, 2008
Fikile De Buck
Appointed to the committee on July, 14, 2008
Ken Dicks
Appointed to the committee on February 13, 2008
Modise Motloba
Appointed to the committee on January 22, 2008
Cedric Savage
Appointed to the committee on January 22, 2008
The chief executive and executive managers are all invited to attend the meetings.
Frequency of meetings
The Committee should meet at least six times a year. The Committee, at its discretion, may decide to change this requirement, depending on the circumstances. In fiscal 2010, six meetings of this committee were held.
Purpose and function
The Technical Committee was formed in January 2008 to provide a platform for the chief executive officer to discuss the company’s strategy, its performance against targets and its operational results and projects. The Technical Committee keeps the board informed of the developments, progress and challenges facing the company’s operations. The strategic plans are considered by the Technical Committee and recommended for approval to the Investment Committee and the board. In addition, the Technical Committee provides guidance and support to Management to ensure that the Company remains sustainable and successful.

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Independence/compliance
The committee comprises four independent, non-executive directors. The chairman is not independent, but it was agreed that he was best suited to be appointed as chairman, due to his vast knowledge of the company’s assets and his years’ of mining experience.
Compensation of Directors and Senior Management
The following table shows the compensation of directors and senior management for fiscal 2010:
Retirement
Contributions
Directors’ Salaries and during Bonuses
fee Benefits the year Paid Total
($’000) ($’000) ($’000) ($’000) ($’000)
Name 2010 2010 2010 2010 2010
Non-executive
Patrice Motsepe
105 — — — 105
Joaquim Chissano
49 — — — 49
Fikile De Buck
60 — — — 60
Cheick Diarra
20 — — — 20
Ken Dicks
41 — — — 41
Dr Simo Lushaba
49 — — — 49
Cathie Markus
33 — — — 33
Modise Motloba
63 — — — 63
Cedric Savage
85 — — — 85
Andre Wilkens
52 — — — 52
Executive
Graham Briggs
— 665 — 206 871
Hannes Meyer (1)
— 219 — 19 238
Harry Ephraim Mashego (2)
— 79 7 18 104
Frank Abbott
— 365 18 68 451
TOTAL
557 1,328 25 311 2,221
1) November 2009 - June 2010 (appointed November 1, 2009)
2) March 2010 to June 2010 (appointed February 24, 2010)
Directors’ Terms of Employment
None of our directors have a service contract with us or any of our subsidiaries with a notice or contract period of one year or more or with provisions for pre-determining compensation on termination of an amount which equals or exceeds one year’s salary and benefits in kind.
The terms of employment of our executive directors continue until terminated by reaching the mandatory retirement age of 60 or on service of three months’ notice by either us or the employee. Each of our executive directors participates in our share option scheme and a discretionary executive profit share scheme, the latter provided that certain profit targets, set by the Remuneration Committee, are achieved. They have all waived their rights to directors’ fees.
The executive directors also benefit from pension contributions, provident funds, life insurance and medical aid, the value of which is included in the salary details listed above. The total amount currently set aside or accrued by us and our subsidiaries for the payment of these pension, life insurance, medical aid and retirement benefits is US$nil million. The non-executive directors are entitled to fees as agreed at our annual general meeting from time to time, reimbursement of out-of-pocket expenses incurred on our behalf and remuneration for other services, such as serving on committees. For fiscal 2010, total directors’ remuneration amounted to US$2.2 million and senior management’s remuneration to US$3.2 million.
Non-executive directors are paid as per the chart below. Executives participate in an executive bonus scheme and bonuses (if any) are determined for a financial year by the Remuneration Committee, in line with our reward philosophy. A bonus of US$206,000 was awarded to the chief executive officer during the past financial year.
The board has agreed to an increase in non-executive directors’ fees, effective from July 1, 2009. Shareholders approved the increase in fees at the annual general meeting held on November 23, 2009.

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For fiscal 2010 non-executive directors received the following fees:
Annual Fee
Board
R 150,000 annually (US$19,800)
Audit Committee
R 75,000 annually (US$9,895)
Empowerment Committee
R 50,000 annually (US$6,596)
Investment Committee
R 50,000 annually (US$6,596)
Nomination Committee
R 50,000 annually (US$6,596)
Remuneration Committee
R 50,000 annually (US$6,596)
Sustainable Development Committee
R 65,000 annually (US$8,575)
Technical Committee
R 65,000 annually (US$8,575)
Chairman of board
R 700,000 annually (US$92,348)
Chairman of board committees
Double the amount that the individual
board committee member received annually
The terms of employment of the non-executive directors are not set out in any written agreements.
Share Options
At October 18, 2010, our executive directors and senior management held the following share options, totalling less than 1% of our share capital:
Average
Number of Strike
Directors and Share Price Expiration
Senior Management Options (R) Dates
Graham Briggs
91,938 48.55 2014 - 2015
Hannes Meyer
— — —
Harry Ephraim Mashego
— — —
Frank Abbott
— — —
Senior Management (as a group)
314,150 52.67 2013 - 2015
Total
406,088 51.73 2013 - 2015
Options to purchase a total of 2,028,341 ordinary shares were outstanding on October 18, 2010. The exercise prices of the outstanding options range between R36.50 and R91.60 per share and they expire between 2011 and 2015. Of the outstanding options, options to purchase 406,088 ordinary shares were held by our directors and senior management, as described above. No consideration was payable on the grant of these options. See Note 34 to the Consolidated Financial Statements included herein.
Shares issued in terms of the Harmony 2006 Share Plan
At October 18, 2010, our executive directors and senior management held the following share appreciation rights and performance shares, totaling less than 1% of our share capital:
PS
Directors and Share Appreciation Weighted Performance Shares Price Expiration
Senior Management Rights (SAR) SAR Price (R) (PS) (R) Dates
Graham Briggs
251,774 78.09 227,424 — 2010 - 2015
Hannes Meyer
8,557 77.28 27,902 — 2015
Frank Abbott
— — — — —
Harry Ephraim Mashego
62,310 74.81 67,912 — 2010 - 2015
Senior management (as a group)
658,891 73.64 656,063 — 2010 - 2015
Awards to purchase a potential maximum of 9,984,077 ordinary shares were outstanding on October 18, 2010. The exercise prices of the outstanding options range between R77.65 and R112.64 per share and they expire between 2010 and 2015. Of the outstanding awards, awards to purchase a potential maximum of 1,960,833 ordinary shares were held by our directors and senior management, as described above. No consideration was payable on the grant of these options. See Note 34 to the Consolidated Financial Statements included herein.
Share Ownership
The following sets forth, as at June 30, 2010 and at October 18, 2010, the total amount of ordinary shares directly or indirectly owned by our directors and senior management, including shares issued under the 2006 Share Plan. Our directors and senior management do not own any preference shares.

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Ordinary
Ordinary Shares
Shares Number Number as at
as at October
Holder June 30, 2010 Percentage 18, 2010 Percentage
Non-executive chairman
Patrice Motsepe (1)
— — — —
Directors Non-executive
Fikile De Buck
— — — —
Joaqium Chissano
— — — —
Dr Cheick Diarra
— — — —
Ken Dicks
— — — —
Dr. Simo Lushaba
— — — —
Cathie Markus
— — — —
Modise Motloba
— — — —
Cedric Savage
— — — —
André Wilkens
101,303 (2) 101,303 (2)
Executive Directors
Graham Briggs
— — — —
Hannes Meyer
— — — —
Frank Abbott
— — — —
Harry Ephraim Mashego
— — — —
Total Directors (14 persons)
101,303 — 101,303 —
(1) Patrice Motsepe, our Chairman, has an indirect holding through ARM
(2) Less than 1%.
Employees
General
Set out below is the number of people working at each of our operations and the number at our operations who are employed by outside contractors as at the end of each of fiscal years 2010, 2009 and 2008.
Harmony Employees at Outside Contractors at
June 30, June 30,
2010 2009 2008 2010 2009 2008
South Africa
35,788 37,316 40,751 4,331 4,962 6,309
International
1,105 979 862 1,373 2,482 846
Grand total
36,893 38,295 41,543 5,704 7,390 7,155
These numbers show a substantial reduction in the number of both employees and of outside contractors which was achieved over the 12 month period ended June 30, 2010. It represents the consequences of the restructuring program on the employee numbers (see below).
South Africa
South Africa is a signatory to all the International Labor Organization conventions in respect of employment and fair labor practices. Consequently, South African labor relations are characterized by a high degree of regulation, with legislation covering all aspects of the employment relationship, including but not restricted to the following:
• minimum conditions of employment (note there is no prescribed basic minimum wage, but laws cover most aspects of employment, from hours of work to prohibitions on child labor);
• trade union access and membership;
• training and development;
• mandatory compensation in the event of termination for operational reasons;

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• affirmative action policies and programs;
• compensation for occupational illness and injury;
• mechanisms for collective bargaining;
• procedures for the resolution of disputes; and
• regulation of strikes and dismissals.
Harmony invests in the training and development of its current and potential employees. During fiscal 2010 a significant number of South African employees received some form of training in areas such as mining, engineering, metallurgy, mineral reserve, human resources and soft skills. In South Africa, we have various programs in place to attract and develop university and young school leavers through apprenticeships, bridging programs and bursaries, as well as extensive in-house and external training programs.
In the mining industry, our relationship with the unions and the government is well established and provides a structure for negotiation between independent representative Trade Unions and employer associations of all conditions of employment and the provision of benefits, including retirement benefits and health care for employees and their dependants. This structure also allows for consultation on many operational issues including for example, recruitment and selection, training and development and health and safety. We are no different from the other major gold producers in this regard; we fully participate, and in some instances have played a major role, in the industry’s industrial relations structures, including the Chamber of Mines of South Africa (which represents the interest of the major employers in the mining sector), the various statutory training bodies and benefit structures.
The major unions present and recognized by us are the (i) National Union of Mineworkers (“ NUM ”), (ii) United Association of South Africa (“ UASA ”) and (iii) Mineworkers’ Solidarity. The unions are represented as follows:
NUM
75 %
UASA
9 %
Solidarity
2 %
Collective Bargaining Fund
2 %
Non-union
12 %
Certain employees are subject to Agency Shop arrangements (termed the “Collective Bargaining Fund” above) whereby the terms and conditions of service negotiated and agreed to with the recognized Trade Unions are extended to apply to non-union members who, in turn, then pay a small fee to the union) and the rest of the employees either do not belong to a union or belong to one of the more insignificant unions active in Harmony from time to time.
As a result of our highly unionized labor force and the fact that labor costs constitute approximately 54% of production costs, we have attempted over the years to balance union demands for improvements in wages and conditions of employment with the need to contain and reduce cash costs in order to ensure the long-term viability of our operations.
While no statutory minimum notice period in respect of operational changes is stipulated in Harmony’s collective agreements, there are prescribed processes both in the statutes and collective agreements that have to be completed before any significant operational change can be implemented. The Labor Relations Act in South Africa governs the minimum notice period required in respect of organizational change affecting 50 or more employees. A 60-day notice and consultation period regarding any proposed restructuring or organizational change is allowed in terms of Section 189A of the Act.
The most significant event in our employee relations during fiscal 2010 was the closure of a number of operations in Virginia and Evander potentially affect some 3,000 employees. A workforce reduction of this size by a South African company is a very sensitive issue; however we were able to place a large number of employees in other operations in consultation with recognised Trade Unions. Consequently the exercise went off without any operational disruptions and negative publicity. Once again the success of an exercise of this nature is attributable to the excellent relationship that our management has cultivated with the unions over the last five years. Employees who were not fortunate enough to find placement elsewhere were given severance packages and many were placed in alternative training programs funded by the Company’s social plan.
The industry wage negotiations were successfully completed in July 2009, and the unions reached an agreement with the Chamber of Mines which provided for a better-than-inflation wage agreement (ranging from 10.5% for lower level semi-skilled employees down to 9% for the more skilled employees). Also agreed was that the minimum wage be increased to R4,000 (US$528) a month with effect from July 2010 for category 3 employees. The wage increases are supplemented by non-contributory medical aid, as well as a living-out allowance or free accommodation and food, as has been practice in the South African mining industry. A guaranteed wage increase of 7.5%, or Consumer Price

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Index plus 1%, whichever is the higher of the two, was agreed for the second year of the two-year settlement agreement. Special arrangements were also agreed to attempt to address the skills shortage in the industry and certain key job categories now receive scarcity allowances of various kinds in an attempt to make the industry attractive to them.
An additional element in the wage agreement was the company’s agreement to engage with recognised trade unions in discussion regard the creation of an Employee Share Ownership (“ ESOP ”) scheme. By October 2010 these discussions had reached an advanced stage and the forthcoming months will see the share holders consider a proposal in this regard at the Annual General Meeting in December 2010.
Work Stoppages
There were no group-wide work stoppages in fiscal 2010.
A series of disruptions did occur at our Bambanani operation as a result of rivalry between leadership factions in the NUM. This resulted from a breakaway from the NUM of some 800 employees who then embarked on the disruptions, including two work stoppages, in pursuit of various demands relating to organisational rights. These actions were not supported by the majority of employees or the recognized unions’ leadership. After a number of warnings that such disruption cannot continue, we dismissing some 287 employees. The dismissals were referred to a tribuneral consisting of three prominent advocates who found that we had acted fairly in dismissing the employees. The findings of the tribuneral have now been referred to the Labour Court for review.
A further work stoppage occurred in May 2010 at the Target operation which lasted over two shifts. The matter was dealt with through a number of meetings with the NUM and operational management and with the intervention of the Commission for Conciliation Mediation and Arbitration (“ CCMA ”) it was decided, in a spirit of compromise and reconciliation, to take no action against offending employees.
Women in mining
The Mining Charter stipulates that 10% of the total workforce should be made up of women by 2009. We have exceeded this target at some of the operations. At the end of June 2010, there were 4,423 women in the group (1%), compared with 3,952 in fiscal 2009, or 11% of women in the total workforce. Various steps have been taken to accommodate women in the underground mining environment. The percentage of women in management was 16% and 9% (2009: 8%) in the core disciplines of engineering, mining, ore reserve management and metallurgy.
There is no differentiation in salary scales for men and women at Harmony.
Australia
Employee relations in Australia are regulated by a combination of federal and state statutes that stipulate minimum standards and provide for collective bargaining and action. All employment contracts are based on Fair Work Act of 2009 and the National Employment Standards. Our Australian workforce is not unionized.
Papua New Guinea
Employee relations in PNG are regulated by the Employment Act of 1978 (PNG) and the Employment of Non-Citizens Act 1978 (PNG). Individual contracts are entered into, and the workforce is not unionized.
The workforce comprises both expatriates and national citizens, with most expatriates (8% of the workforce) working a fly-in fly-out roster.
In PNG, wages are guided by independent market research that compares mining, oil and gas companies in the region. Industrial relations at Hidden Valley have been established through regular dialogue between management and employees via the Employee Relations Committee (“ ERC ”). Employees at PNG are not unionized, however, employment is guided by a Memorandum of Agreement (“ MOA ”) between the Landowner Association, the company and the government. The MOA governance process requires that, when qualifications and experience are equivalent, employment preference is given to local and landowner candidates before individuals from other provinces or countries. Compliance with this agreement is a critical issue in maintaining Harmony’s license to operate.

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PNG obtained government approval to recruit females specifically in the surface mining environment. As a result, there are plans in place across Morobe Mining to address the gender balance of employees. Aptitude tests of women landowners are ongoing to establish a pool of available candidates. In fiscal 2010, 18% of the workforce in PNG was women, compared to 16% in fiscal 2009, exceeding the 15% target set in fiscal 2008.
Long Term Incentive Schemes
In addition to employees’ annual salaries, Harmony has implemented various share option schemes, including the Harmony 2006 Share Plan. In all, 60,011,669 shares of Harmony’s share capital is reserved for long-term incentive schemes.
The 2001 and 2003 share option schemes
Harmony has two share option schemes, namely the 2001 Share Option Scheme and the 2003 Share Option Scheme (collectively the existing schemes), which all have similar rules. Since the implementation of the 2006 Share Plan, no options have been nor will be issued in terms of the existing schemes. Options granted before the implementation of the 2006 Share Plan remain open for acceptance for 10 years after the date of grant, subject to the terms of the relevant option scheme.
Broad-Based Employee Share Scheme (“ ESOP ”)
The Group intends to implement a broad-based ESOP and intends to structure the scheme so as to maximise the recognition of black participation therein, both from the perspective of the MPRDA and the Broad-Based Black Economic Empowerment Act. Discussions relating to option benefits for non- managerial employees are ongoing with unions representing these employees.
The Harmony 2006 Share Plan
The Harmony 2006 Share Plan (“ the Plan ”) was adopted by shareholders at the annual general meeting held on November 10, 2006. The Plan incorporates the following elements: equity- settled share appreciation rights, performance shares and performance allocated restricted shares. The Plan is in line with global best practice and emerging South African practice, which in combination serves to reward the required attributes of shareholder alignment and long- term, sustained performance.
In terms of the Plan, executive directors and senior employees of Harmony and its subsidiaries and associates are awarded rights to receive shares in Harmony. This is based on the value of these awards when time and performance conditions have been met, the awards have vested and, in the case of the Share Appreciation Rights (SARs), the rights have been exercised.
The primary intent of the Plan is to reward executives and senior management for long term, sustained performance achievements which are aligned to shareholder value.
The nature of the Plan, which is linked to performance conditions, is not as dilutive as a normal share option scheme.
Annual allocations of SARs awards of performance shares and grants of restricted shares are governed by Harmony’s reward philosophy, in which ( inter alia ) the ‘expected value’ of long-term incentive rewards is set for defined categories of executives and senior management. The expected value is defined as the present value of the future reward outcome of an allocation/award/grant, given the targeted future performance of Harmony and its share price.
The 2006 allocations and awards became eligible for vesting during fiscal 2010. The SARs vested as the performance conditions were met, but the performance conditions for the performance shares were not met. All performance shares for the 2006 allocations therefore did not vest and these awards lapsed.
Annual incentive scheme
Our Remuneration Committee ensures that our directors and senior executives are fairly rewarded for their individual contributions to our overall performance.
In September 2006, the Remuneration Committee approved an annual incentive scheme as part of Harmony’s Reward Philosophy to benefit executive directors and members of management. Since July 2008 the shaft management teams get paid a quarterly bonus and are excluded from the annual incentive schemes.

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Item 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
Major Shareholders
We are an independent gold producer, with no single shareholder exercising control. As of October 18, 2010, our issued share capital consisted of 428,873,695 ordinary shares. To our knowledge, (A) we are not directly or indirectly owned or controlled (i) by another corporation or (ii) by any foreign government and (B) there are no arrangements (including any announced or expected takeover bid), the operation of which may at a subsequent date result in a change in our control.
The voting rights of our major shareholders do not differ from the voting rights of other holders of the same class of shares.
Significant changes in the percentage ownership held by major shareholders in the past three years are described below on “Related Party Transactions”.
A list of the 5% holders of our securities as of October 18, 2010 is set forth below:
Number of
Holder Shares Percentage
1. Bank of New York (1)
114,814,698 26.8
2. ARM Ltd. (2)
63,632,922 14.6
3. Allan Gray
56,670,554 13.3
4. Blackrock Investment Management (UK) Ltd.
41,074,797 9.6
( 1) Depository with respect to the ADRs held on the U.S. register.
(2) Patrice Motsepe, our Chairman, has an indirect holding in ARM Limited.
As of October 18, 2010, there were 2,136 record holders of our ordinary shares in the United States.
Capital Raising
During fiscal 2009, Harmony engaged in capital raising by issuing two tranches of shares following the resolution passed by shareholders at the Annual General Meeting held on November 24, 2008, that allowed directors to issue shares for cash. In the first tranche, completed between November 25, 2008 and December 19, 2008, 10,504,795 Harmony shares were issued at an average subscription price of R93.20, resulting in R979 million (US$98 million) before costs being raised.
The second tranche of shares was issued between February 10, 2009 and March 6, 2009 and consisted of 7,540,646 Harmony shares being issued at an average subscription price of R124.45, resulting in R938 million (US$94 million) before costs being raised. The combined share issue amounts to R1.9 billion (US$192 million) at a cost of R30 million (US$3.5 million).
Related Party Disclosure and Transactions
None of our directors or major shareholders or, to our knowledge, their families, had any interest, direct or indirect, in any transaction since July 1, 2007 or in any proposed transaction that has affected or will materially affect us or our subsidiaries, other than as stated below.
ARM Limited currently holds approximately 14.6% of our shares. Patrice Motsepe, André Wilkens, Joaquim Chissano and Frank Abbott are directors of ARM Limited.
Included in the Group’s consolidated balance sheet at June 30, 2009 is a loan to the Morobe Mining Joint Venture amounting to US$9.7 million, being Newcrest’s portion of the loan to the PNG joint venture companies.
We have three directors on the board of Rand Uranium, being Graham Briggs, Hannes Meyer and Fikile De Buck. Dr Simo Lushaba is a member of the Rand Uranium Investment Committee. Rand Uranium owes the Group US$5 million (2009: US$4.8 million) for services and goods provided in terms of the service level agreements entered into between the Group and Rand Uranium. The Group has subordinated a loan of US$8.3 million (2009: US$8.5 million) owed by Rand Uranium. The loan bears interest at a rate equal to the 91 Day JIBAR plus 250 basis points and is repayable on November 21, 2015.

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During fiscal 2010 we concluded separate purchase agreements with the liquidators of Pamodzi FS for the purchase of its Free State assets and inventories. The consideration paid for the mining assets was US$36.6 million and US$16.0 million was paid for the inventories. Pamodzi FS was a subsidiary of Pamodzi, which is an associate of Harmony. A balance of US$2.2 million is owed by Pamodzi FS at June 30, 2010 in terms of the asset purchase agreements, for the rehabilitation trust funds to be released to the group.
On March 19, 2010, Harmony Gold Mining Company Limited concluded an agreement with AVRD, for the purchase of its 26% share of the mining titles of the Doornkop South Reef. The 26% interest was transferred from AVRD to Harmony in exchange for Harmony repaying the AVRD Nedbank loan of US$33.4 million and the issue of 2,162,359 Harmony shares, valued at US$20.5 million. In terms of the agreement, 975,419 of these shares will be held in escrow until May 1, 2014.
On November 21, 2008, the Group disposed of its Randfontein Cooke assets to Rand Uranium in exchange for 100% interest in the company. On the same date the Group disposed of 60% of the interest held in Rand Uranium to PRF which resulted in a 40% interest held and Rand Uranium became an associate. The conditions precedent for the second part of the Rand Uranium transaction relating to the sale of the Old Randfontein assets were fulfilled on April 22, 2009. 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 in cash on April 20, 2009. The total value of these transactions was US$348 million.
In fiscal 2008 Morobe Consolidated Goldfields Limited and Wafi Mining Limited, subsidiaries of Harmony Gold (Australia) (Proprietary) Limited entered into a Master Purchase and Farm-in Agreement with Newcrest. This agreement provided for Newcrest to purchase a 30.01% participating interest (stage 1) and a further buy-out of an additional 19.99% participating interest in Harmony’s PNG Gold and copper assets, giving them a 50% interest.
On July 11, 2008, we sold our 37.8% share in Village Main Reef Gold Mining Company (1934) Limited for R1.1 million (US$0.1 million) to To the Point Investments. ZB Swanepoel, our former Chief Executive Officer, is a director and founder of To the Point Investments.
On February 27, 2008, the Group sold its Orkney assets to Pamodzi in exchange for shares, whereby it obtained an interest of 32.4% and Pamodzi became an associate. Subsequent to this, we provided goods and services to Pamodzi at cost plus an applicable margin as set out in the service level agreement. The balance of the unsecured loan at June 30, 2008 was R103 million (US$13.2 million). Interest was charged at prime rate. When Pamodzi was placed into liquidation in March 2009, interest was no longer charged on the loan and the loan was provided for in full. The balance of the loan at that time was R116 million (US$15.0 million).
In fiscal 2005, as part of the disposal of our investment in ARM Limited to the ARM Broad-based Economic Empowerment Trust (“ BEE Trust ”), various agreements were put in place to which we accepted and resulted in the majority of the risk not being transferred away from us. Included in these agreements were two guarantees by us to Nedbank relating to the loans obtained by the BEE Trust to acquire the shares from us. On September 28, 2007, the guarantees were cancelled by Nedbank and, consequently, we have no further obligation to Nedbank in this regard. The ARM investment (and associated Nedbank loan) have been derecognized from this date.
INTERESTS OF EXPERTS AND COUNSEL
Not applicable.

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Item 8. FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS
Please refer to Item 18. “Financial Statements” of this annual report.
Legal Proceedings
None of our properties is the subject of pending material legal proceedings. We have experienced a number of claims and legal and arbitration proceedings incidental to the normal conduct of our business, such as the ones described below. The directors, however, do not believe that liabilities related to such claims and proceedings are likely to be, individually or in the aggregate, material to the company’s consolidated financial condition.
Class Action
There is a pending class action in the United States whereby certain ADR holders are seeking damages against us pertaining to our business practices for the period April 7, 2007 to August 6, 2007. We have filed with the court a Motion to Dismiss all claims asserted in the class action case, the plaintiffs have filed an opposing response, and we have subsequently replied to that response. On March 19, 2010 the Court denied the Company’s application for dismissal and subsequently the Company filed a Motion for Reconsideration in which it requested the Court to reconsider its judgement. This matter was heard on April 27, 2010 and the Company’s request for reconsideration of judgement was denied. The Company is defending the matter and the legal process is taking its course. It is currently not possible to estimate if there will be a financial effect, or what that effect might be.
ArcelorMittal South Africa Limited (“ArcelorMittal”)
On September 14, 2009 Harmony and DRDGold withdrew a complaint to the Competition Commission against ArcelorMittal originally made in 2002. The complaint alleged that ArcelorMittal had abused its dominant position in the local market for flat steel products by charging excessive prices. Following several years of litigation, Harmony, DRDGold and ArcelorMittal entered into a settlement agreement, the terms of which are confidential.
Dividends and Dividend Policy
We paid interim and final dividends on our ordinary shares in 2003 and 2004. Due to operating conditions and our commitment to expenditure on long-term growth projects, we were not able to declare any dividends in fiscal 2005, fiscal 2006, fiscal 2007 or fiscal 2008. On August 13, 2009, the board approved a final dividend for fiscal 2009 of R0.50 per share, that was paid on September 21, 2009. The total amount of the dividend paid was R213 million (US$28.6 million). As the dividend was declared after the reporting date of June 30, 2009, the dividend was not recorded in fiscal 2009. On August 13, 2010, the board approved a final dividend for fiscal 2010 of R0.50 per share, that was paid on September 20, 2010. The total amount of the dividend paid was R214 million (US$29.3 million). As the dividend was declared after the reporting date of June 30, 2010, the dividend was not recorded in fiscal 2010. For information on our accounting policy relating to dividends, see note 2.20 to the consolidated financial statements.
South African law was relaxed to permit the distribution of a company’s equity as a dividend, provided that the necessary shareholder or board approval is obtained and, after the distribution of the dividend, the company remains solvent and liquid. Cash dividends, however, may only be paid out of accumulated profits or other distributable reserves. Previously under South African law, a company’s equity could not be distributed as a dividend. The amount of dividends, if any, paid in the future will depend on our results of operations, financial condition, cash requirements and other factors deemed relevant by the board.
Recent Developments
Closure of Merrespuit 1
On October 18, 2010, Harmony announced that it will be closing the Merrespuit 1 shaft in Virginia at the end of October 2010.
Sale of Mount Magnet Gold in Australia
On July 20, 2010 Harmony executed a share sale agreement with the Australian-based gold miner Ramelius Resources Limited for the sale of the Mount Magnet Gold Project for A$40 million cash.
Dividends
On August 13, 2010, the board approved a final dividend for fiscal 2010 of 50 SA cents per share, paid on September 20, 2010. The total

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dividend amounts to R214 million (US$29.3 million).
Merriespruit South region and Freegold option
On September 3, 2010, Harmony concluded two transactions with Witwatersrand Consolidated Gold Resources Limited (“ Wits Gold ”), in which Wits Gold will obtain a prospecting right over Harmony’s Merriespruit South area and the option held by ARMGold/Harmony Freegold Joint Venture Company (Proprietary) Limited (“ Freegold ”), a wholly owned subsidiary of Harmony. The option was to acquire a beneficial interest of up to 40% in any future mines established by Wits Gold on certain properties in the Southern Free State (Freegold option), which will be cancelled. Harmony will abandon a portion of its mining right in respect of the Merriespruit South area to enable Wits Gold to include this area in its prospecting right, which is located immediately south of the Merriespruit South area.
The total consideration was R336 million (US$47 million), (R61 million (US$9 million) for the prospecting area and R275 million (US$38 million) for the cancellation of the option agreement), which will be settled in cash or in a combination of cash and shares in Wits Gold, when all remaining conditions precedent to the transaction have been fulfilled.
Evander 6 and Twistdraai
On September 10, 2010, Harmony concluded a sale of assets agreement with Taung Gold Limited (“ Taung ”), in which Taung acquired the Evander 6 shaft, the related infrastruture and surface right permits as well as a mining right over the Evander 6 and Twistdraai areas. The total purchase consideration is R225 million (US$29 million at 30 June 2010 exhange rate) which will be settled in cash, when all remaining conditions precedent to the transaction have been fulfilled.
Closure of Merriespruit 1
On October 4, 2010, the decision was made to finally close Merriespruit 1 shaft, under the Section 189 (of the Labour Relations Act) already in place. The closure was postponed in terms of an agreement reached with organized labour to keep the shaft open while it remained profitable.

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Item 9. THE OFFER AND LISTING
Markets
Stock Exchange Listings and Ticker Codes
The primary listing of our ordinary shares is on the JSE Limited. Our ordinary shares are also listed on stock exchanges in London and Berlin, as well as being quoted in Brussels in the form of International Depositary Receipts (IDRs) and on the New York Stock Exchange in the form of ADSs. We notified NASDAQ on June 9, 2010 of our intention to voluntarily terminate our listing on NASDAQ. The last day of trading of Harmony’s ADSs on NASDAQ was June 21, 2010. We voluntarily delisted from Euronext Paris on August 30, 2010.
JSE Limited
HAR
New York Stock Exchange
HMY
London Stock Exchange
HRM
Euronext Brussels
HMY
Berlin Stock Exchange
HAM1
Offering and Listing Details
The high and low sales prices in Rand for our ordinary shares on the JSE for the periods indicated were as follows:
Harmony Ordinary
Shares
(Rand per Ordinary
Share)
High Low
Fiscal year ended June 30, 2008
First Quarter
104.05 60.00
Second Quarter
83.05 63.00
Third Quarter
118.50 69.00
Fourth Quarter
104.41 82.98
Full Year
118.52 60.00
Fiscal year ended June 30, 2009
First Quarter
97.00 54.99
Second Quarter
103.75 62.50
Third Quarter
129.50 92.50
Fourth Quarter
104.40 75.50
Full Year
129.50 54.99
Fiscal year ended June 30, 2010
First Quarter
87.51 69.05
Second Quarter
87.00 74.00
Third Quarter
80.77 68.80
Fourth Quarter
81.40 68.65
Full Year
87.51 68.65
Month of
July 2010
81.10 71.90
August 2010
80.50 73.00
September 2010
83.80 74.69
As of October 18, 2010
81.40 76.80
On October 18, 2010, the share price of our ordinary shares on the JSE was R77.50.

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Our ADRs are listed on the New York Stock Exchange. We were listed on NASDAQ from November 29, 2005 until we voluntarily de-listed on June 21, 2010. The high and low sales prices in U.S. dollars for our ADRs for the periods indicated, as reported on the NYSE and NASDAQ, were as follows:
NYSE NASDAQ
Harmony ADRs Harmony ADRs
($ per ADR) ($ per ADR)
High Low High Low
Fiscal year ended June 30, 2008
First Quarter
15.27 8.42 15.27 8.41
Second Quarter
11.90 9.35 11.90 9.35
Third Quarter
14.56 9.34 14.56 9.34
Fourth Quarter
13.20 10.45 13.20 10.45
Full Year
15.27 8.42 15.27 8.74
Fiscal year ended June 30, 2009
First Quarter
12.51 6.39 12.47 6.40
Second Quarter
10.97 5.58 10.97 5.54
Third Quarter
13.06 9.12 13.07 9.13
Fourth Quarter
12.10 8.17 12.03 8.20
Full Year
13.06 5.58 13.07 5.54
Fiscal year ended June 30, 2010
First Quarter
11.75 8.50 11.78 8.50
Second Quarter
11.98 9.73 11.94 9.74
Third Quarter
11.11 8.79 11.10 8.81
Fourth Quarter
10.57 9.04 10.54 9.03
Full Year
11.98 8.50 11.94 8.50
Month of
July 2010
10.71 9.72 n/a n/a
August 2010
11.02 9.95 n/a n/a
September 2010
11.74 10.10 n/a n/a
As of October 18, 2010
11.87 11.20 n/a n/a
On October 18, 2010, the closing share price of our ordinary shares on the NYSE was US$11.20.
The Securities Exchange in South Africa
The JSE is the sixth largest emerging market exchange and by far the leading exchange in Africa, playing a leadership role in the continent, supporting South Africa’s role as the African financial hub. It is also recognized as a leading exchange in the global resources sector.
As South Africa’s only full service securities exchange, the JSE connects buyers and sellers in five different markets; equities, which includes a primary and secondary board, equity derivatives, agricultural derivatives and interest rate instruments. The JSE is one of the top 20 exchanges in the world in terms of market capitalization. The market capitalization of the JSE equities market was R5,635 billion (US$736 billion) at June 30, 2010. The mining market capitalization was, at June 30, 2010, 28% of the overall JSE market capitalization and constituted 33% in terms of value traded.
The JSE is the market of choice for local and international investors looking to gain exposure to the leading capital markets in South Africa and the broader African continent.
History
The Securities Exchange in South Africa, now known as JSE Limited, was formed in November 1887. In 1993 the JSE became an active member of the African Stock Exchanges Association. On May 15, 1996, the formal bond market passed from the JSE to the Bond Exchange of South Africa and is separately licensed as a financial market in terms of the Financial Markets Control Act.
Following the closure of the open outcry trading floor on June 7, 1996, an order driven, centralized automated trading system known as the JSE Equities Trading, or JET, system was introduced together with dual trading and negotiated brokerage. On August 18, 1997, the Listings division of the JSE introduced a real time news service for the dissemination of company announcements and price sensitive information. Stock Exchange News Service (“ SENS ”) ensures early, equal and wide dissemination of all information that is expected to have an effect on the prices of securities that trade on the JSE. In 1998, the JSE introduced an Internet-based Service, the Emerging Enterprise Zone, or the EEZ, to match seekers and providers of capital for small and medium business. In November 1999, the electronic clearing and settlement system, Share Transactions Totally Electronic (“ STRATE ”) was introduced and the JET system was modified to prepare for the implementation of an open interface to the system via the Application Program Interface. The Alternative Exchange, known as the “AltX”, aimed at attracting smaller companies to the JSE, was launched in October 2003 and at June 30, 2010 boasts 70 listings. Yield-X, which trades spot and derivative interest rate products across the yield curve on an automated central order book was introduced in February 2005. The JSE’s Single Stock Futures market is the world leader in terms of contracts traded, according to the World Federation of Exchanges’ IOMA Derivative Markets Survey.

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Concurrent with its loss of tax-exempt status on July 1, 2005, the JSE Securities Exchange South Africa de-mutualized, ending its 118 year history as a tax-exempt, member owned, voluntary association to become JSE Limited, a public but unlisted company.
STRATE Settlement
Under STRATE there are essentially two types of clients: controlled and non-controlled. A controlled client is one who elects to keep his shares and cash with his broker and these shares are held in custody at the broker’s chosen Custodian Bank, the CSDP. A non-controlled client is one who appoints his own CSDP to act as custodian on his behalf. Equity settlements take place on a contractual T+5 (where T= trade date) settlement cycle. Securities and funds become due for settlement a set number of business days after the trade. Contractual settlement is a market convention embodied in the rules of the JSE which states that a client has a contractual obligation to cause a JSE trade to settle on settlement day. The JSE, in its capacity as Settlement Authority, ensures that all on-market trades entered into by two JSE member firms settle five days after the trade date.
PLAN OF DISTRIBUTION
Not applicable.
SELLING SHAREHOLDERS
Not applicable.
DILUTION
Not applicable.
EXPENSES OF THE ISSUE
Not applicable.

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Item 10. ADDITIONAL INFORMATION
Memorandum and Articles of Association
This section summarizes certain material provisions of Harmony’s Memorandum and Articles of Association, the Companies Act and the JSE listings requirements, each as currently in effect. These descriptions do not purport to be complete and are qualified in their entirety by reference to all of the provisions of those sources. Directions on how to obtain a complete copy of Harmony’s Articles of Association are provided under “— Documents on Display” below.
General
We are a public company with limited liability, and is registered under the Companies Act with the Registrar of Companies, Department of Trade and Industry under Registration number 1950/038232/06. We are governed by our Memorandum of Association and Articles of Association, the provisions of the Companies Act and the various Listings Requirements. Our operations are also subject to various laws and regulations, including those described in Item 4 . “ Information on the Company Regulation ”.
Objects and Purposes
Our objects are set forth in Paragraph 3 of our Memorandum of Association and include:
• to acquire by purchase, cession, grant, lease, exchange or otherwise any movable or immovable property, mines, mineral property, claims, mineral rights, mining rights, mining leases, mining titles, mynpachts, lands, farms, buildings, water rights, concessions, grants, rights, powers, privileges, surface rights of every description, servitudes or other limited rights or interests in land and mineral contracts of every description; and any interest therein and rights over the same; and to enter into any contract, option or prospecting contract in respect thereof, and generally to enter into any arrangement that may seem conducive to our objects or any of them;
• to carry out all forms of exploration work and in particular to search for, prospect, examine, explore and obtain information in regard to mines, mineral properties, claims, mineral rights, mining rights, mining leases, mining titles, mynpachts, mining districts or locations and ground and soil supposed to contain or containing precious stones, minerals or metals of every description;
• to open, work, develop and maintain gold, silver, diamond, copper, coal, iron and other mines, mineral and other rights, properties and works, and to carry on and conduct the business of raising, crushing, washing, smelting, reducing and amalgamating ores, metals, minerals and precious stones, and to render the same merchantable and fit for use and to carry on all or any of the businesses of miners, mineralogists, metallurgists, amalgamators, geophysicists, smelters, quarry owners, quarrymen and brickmakers;
• to buy, sell, refine and deal in bullion, specie, coin and precious and base metals, and also precious stones and other products of mining; and
• to employ and pay mining experts, agents and other persons, partnerships, companies or corporations, and to organize, equip and dispatch expeditions for prospecting, exploring, reporting on, surveying, working and developing lands, farms, districts, territories and properties in any part of the world, whether the same are our property or otherwise.
Directors
Disclosure of Interests
A Harmony director may not vote in respect of any contract or arrangement in which he or she is interested, and may not be counted in the quorum for the purpose of any resolution regarding such a contract or arrangement. This restriction does not apply, however, to:
• any arrangement for giving the director a security or indemnity in respect of money lent, or an obligation undertaken, by such director for our benefit;
• any arrangement by which we give any security to a third party in respect of our debt or obligation for which the director himself or herself has assumed responsibility, in whole or in part, whether under a guarantee or indemnity or by the deposit of a security;

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• any contract by the director to subscribe for or underwrite our shares or debentures;
• any contract or arrangement with a company other than us, in which the director holds or controls, directly or indirectly, no more than 1% of shares representing either (i) any class of the equity share capital of that company or (ii) the overall voting rights of that company; or
• any retirement scheme or fund which relates to both directors and to employees (or a class of employees) and does not accord to any director, as such, any privilege or advantage not generally accorded to the employees to which such scheme or fund relates.
The restrictions preventing directors from voting in respect of contracts or arrangement in which they are interested may be suspended or relaxed at any time, either generally or in respect of particular circumstances, by the holders of 75% of our ordinary shares who are present and voting in a general meeting.
A director, notwithstanding his of her interest, may be counted in the quorum present at any meeting where: (i) he or she or any other director is appointed to hold any office or position of profit in Harmony; (ii) the directors resolve to exercise any of our rights to appoint, or concur in the appointment of, a director to hold any office or position of profit in any other company; or (iii) the terms of any such appointment are considered or varied. At this meeting, each director may vote on the matters listed above, but no director may vote in respect of his or her own appointment, or the arrangement or variation of the terms of his or her own appointment.
The restrictions described above do not prevent or debar any director, as a holder of any class of our shares, from taking part in or voting upon any question submitted to a vote by that class at a general meeting, regardless of that director’s personal interest or concern.
Compensation
The remuneration of our directors in their capacity as directors, including fees per directors meeting, and additional compensation for the performance of other services, such as serving on committees, may be established either by a majority of the holders of our ordinary shares, present and voting in a general meeting, or by a majority of disinterested directors at a meeting of directors, provided they constitute a quorum.
Borrowing Powers
Our directors may raise, borrow or secure the payment of any sums of money for our purposes as they see fit. However, without the consent of a majority of the holders of our ordinary shares present and voting in a general meeting, the aggregate principal amount outstanding in respect of monies raised, borrowed or secured by us and any of our subsidiaries may not exceed the greater of (i) R40 million or (ii) the aggregate amount, from time to time, of our issued and paid up capital, plus the aggregate of the amounts standing to the credit of all distributable and non-distributable reserves, plus our share premium account and the share premium accounts of our subsidiaries.
The Companies Act provides that a company may only make a loan to its owner, director or manager with the prior consent of all the members of the company or pursuant to a special resolution relating to a specific transaction.
Rotation
At each of our annual general meetings, one-third of the directors, or, if the number is not a multiple of three, then the number nearest to but not exceeding one-third, shall retire from office by rotation. Those directors who have been longest in office since their last election or re-election shall retire. As between directors of equal seniority, the directors to retire by rotation shall, in the absence of agreement, be selected by lot. If at the date of any annual general meeting, any director shall have held office for a period of at least three years since his or her last election or re-election, he or she shall retire at such meeting, either as one of the directors resigning pursuant to the aforementioned rotation principles, or in addition thereto. Retiring directors are eligible for re-election and said directors have made themselves available for re-election.
If a director is appointed to any Harmony executive office, his or her employment contract may provide that he or she shall be exempt from rotation for the lesser of (i) a period of 5 years or (ii) the period during which he or she continues to hold the relevant executive office. During the relevant period, the director in question shall not be taken into account in determining the retirement of directors by rotation. The number of directors who may be exempt from retirement by rotation in this manner shall not equal or exceed one-half of the total number of the directors at the time of the relevant director’s appointment. Currently none of our directors are exempted from retirement under these provisions.

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Qualifications
There is no age limit requirement with regard to retirement or non-retirement of directors. Directors are not required to hold any of our shares to qualify them for appointment as directors.
Share Capital
As of June 30, 2010, our issued share capital consisted of 428,654,779 ordinary shares with a par value of R0.50 each. As of October 18, 2010, our issued share capital consisted of 428,873,695 ordinary shares with a par value of R0.50 each. Our authorized share capital is 1,200,000,000 ordinary shares with a par value of R0.50 each. The terms of the ordinary shares are described in “— Description of Ordinary Shares” below.
Description of Ordinary Shares
This section summarizes the material provisions of Harmony’s ordinary shares as set out in Harmony’s Memorandum and Articles of Association, the Companies Act and the JSE listings requirements, each as currently in effect. It does not purport to be complete and is qualified in its entirety by reference to all of the provisions of those sources.
Dividends
Either the board or a majority of the holders of our ordinary shares, voting in a general meeting, may, from time to time, declare a dividend to be paid to the registered holders of ordinary shares according to their respective rights and interests in the profits, measured in proportion to the number of ordinary shares held by them. Under South African law, a company’s equity may be distributed as a dividend, provided that any necessary shareholder approval is obtained and, after the distribution of the dividend, the company remains solvent and liquid. Cash dividends, however, may only be paid out of the profits of the company. Cash dividends paid by us will not bear any interest payable by us. Dividends may be declared either free of, or subject to, the deduction of income tax and any other tax or duty which may be chargeable. There is currently no tax payable in South Africa by the recipients of dividends who are outside South Africa.
Dividends are declared payable to holders of ordinary shares who are registered as such on a record date determined by the board, which must be after the later of the date of the dividend declaration or the date of confirmation of the dividend. The period between the record date and the date of the closing of the transfer registers in respect of the dividend shall be not less than 14 days.
Holders of our ordinary shares, voting in a general meeting, may not declare a dividend greater than the amount recommended by the directors, but may declare a smaller dividend. Dividends will be paid to the holders of our ordinary shares in proportion to the number of their shares. All unclaimed dividends may be invested or otherwise utilized by the board for our benefit until claimed; provided that dividends unclaimed after a period of twelve years from the date of declaration may be declared forfeited by the board. Forfeited dividends revert to us.
Any dividend or other sum payable in cash to a holder may be transmitted by a payment method determined by the directors, such as electronic bank transfer or ordinary post to the address of the holder recorded in the register or any other address the holder may previously have given to us in writing. We will not be responsible for any loss in transmission.

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Any dividend may be paid and satisfied, either wholly or in part, by the distribution of specific assets, including shares and debentures of any other company, in cash, or by one or more of such methods, as the board may determine and direct at the time of the dividend declaration.
When any holders of our ordinary shares reside outside of South Africa, the board has the power, subject to any applicable laws or regulations, to declare a dividend in a relevant currency other than the Rand and to determine the date on which and the rate of exchange at which the dividend shall be converted into the other currency.
All cash dividends paid by us are expected to be in Rand. Holders of ADRs on the relevant record date will be entitled to receive any dividends payable in respect of the ordinary shares underlying the ADRs, subject to the terms of the Deposit Agreement. Cash dividends paid in Rand will be converted by the depository to U.S. dollars and paid by the depository to holders of ADRs, to the extent it can do so on a reasonable basis and can transfer the U.S. dollars to the United States, net of conversion expenses of the depository, and in accordance with the Deposit Agreement.
Voting Rights
Subject to any rights or restrictions attached to any class of ordinary shares, every holder of our ordinary shares who is present in person at a shareholder meeting, or a person present as a representative of holders of one or more ordinary shares, shall on a show of hands have one vote, irrespective of the number of ordinary shares he holds or represents. Every holder of ordinary shares shall, on a poll, have one vote for every ordinary share held by him. A shareholder is entitled to appoint a proxy to attend and speak and vote at any meeting on his or her behalf. The proxy need not be a shareholder. On a poll, a shareholder entitled to more than one vote (or his representative, proxy or agent) need not, if he votes, use all of his votes or cast all of his votes in the same way.
Distribution of Assets on Liquidation
In the event of voluntary or compulsory liquidation, dissolution or winding up, the assets remaining after payment of all our debts and liabilities, including the costs of liquidation, will be applied to repay the amount paid up on our issued capital to holders of our ordinary shares and, thereafter, the balance will be divided pro rata among the holders of our ordinary shares, subject to any special rights or conditions attaching to any shares. Any portion of our assets may, upon such liquidation, dissolution or winding up, and with the approval of a special resolution, be paid to the ordinary shareholders by the distribution of specific assets or may be vested in trustees for the benefit of such ordinary shareholders.
Redemption/Purchase of Shares
No shares shall be issued which are redeemable by their terms or at the option of any party.
The Companies Act permits companies to establish share incentive trusts and provide funds with which such trusts may purchase securities (including debt and equity securities) of a company or its holding company. These securities are to be held by or for the benefit of employees, including salaried directors. The Companies Act also permits such a trust to loan funds to company employees for the purpose of purchasing or subscribing for our securities, provided that such trusts may not loan funds to directors who do not hold salaried employment or office.
The Companies Amendment Act provides that a company may approve the acquisition of its own shares by special resolution, if authorized to do so by its articles. A company is not, however, permitted to make any form of payment to acquire any of its own shares if there are reasonable grounds for believing that the company is or, after the payment, would be unable to pay its debts or if, after the payment, the consolidated assets of the company fairly valued would be less than the consolidated liabilities of the company. The procedure for acquisition of shares by a company is regulated, in the case of listed companies, both by the Companies Amendment Act and the Listings Requirements of the JSE. The Companies Amendment Act further provides that a company may make payments to its shareholders if authorized by its articles subject to the liquidity and solvency requirements described above.
We are authorized pursuant to our Articles of Association to approve the acquisition of our shares by special resolution from time to time. We are also authorized pursuant to our Articles of Association to make payments in cash or in specie to any class of our shareholders.

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Issue of Additional Shares and Pre-emptive Rights
The Companies Act does not provide holders of any class of our shares with pre-emptive rights. However, the JSE requires that any new issues of equity shares by companies listed on the exchange must first be offered to existing holders of such shares, in proportion to their current holding.
The JSE will, however, allow a company to issue shares to third parties without first offering them to existing shareholders, in circumstances such as the following:
• pursuant to an employee share incentive scheme the terms of which have been approved by the holders of the relevant class of shares in a general meeting;
• for the acquisition of an asset, provided that if the issue is more than 30% of the company’s issued share capital, a simple majority of holders of ordinary shares present and voting, must vote in favor of the acquisition;
• to raise cash by way of a general issue in the discretion of the directors (but not to related parties) of up to 15% of the issued share capital in any one fiscal year at an issue price with a discount not exceeding 10% of the 30-day weighted average trading price prior to the determination date, provided that the holders of ordinary shares, present and voting at a general meeting, must approve the granting of such authority to the directors by a 75% vote; or
• to raise cash by way of a specific issue of a specified number or a maximum number of shares for cash provided that the holders of ordinary shares, other than controlling shareholders, present and voting, vote in favor of the resolution to issue the shares at a general meeting by a 75% vote. In terms of JSE listings requirements, the circular to be sent to all shareholders informing them of the general meeting must include, inter alia:
• details of the persons to whom the shares are to be issued if such persons fall into the following categories or other categories identified by the JSE: directors of the company or its subsidiaries or their associates; trustees of employee or directors’ share scheme or pension funds; any person having the right to nominate directors of the company; and certain shareholders holding more than 10% of the issued share capital;
• if the persons to whom the shares are to be issued are related parties, an independent expert’s opinion that the issue price is fair and reasonable; and
• should the maximum size of the issue equal or exceed 30% of the company’s issued share capital, full listing particulars, which include, inter alia, a reporting accountant’s report and, in the case of a mining company, a competent person’s report setting out technical details of the company’s operations and assets.
Transfer of Shares
Owners of our ordinary shares may transfer any or all of their shares in writing in any common form or in any form approved by our directors. Every instrument of transfer must be executed by the transferor or, if the directors so determine, by the transferor and the transferee. The transferor will remain the holder of the ordinary shares transferred until the name of the transferee is entered in our register of members in respect of such ordinary shares.
The board may refuse to recognize any instrument of transfer that is not duly stamped (if required) or is not accompanied by appropriate evidence of the transferor’s title. Such right of refusal will not prevent dealings occurring on an open and proper basis. We retain all instruments of transfer that are registered. Any instrument of transfer that the board refuses to register is, except in the case of fraud, returned on demand to the person depositing such instrument.
Rights of Minority Shareholders and Fiduciary Duties
Majority shareholders of South African companies have no fiduciary obligations under South African common law to minority shareholders. However, under the Companies Act, a shareholder may, under certain circumstances, seek relief from the court if he has been unfairly prejudiced by the company. The provisions in the Companies Act are designed to provide relief for oppressed shareholders without necessarily overruling the majority’s decision. There may also be common law personal actions available to a shareholder of a company.
Although the concepts are similar, the specific interpretations of fiduciary obligations of directors in South Africa may differ from those in the U.S. and certain other countries. In South Africa, the common law imposes on directors a duty to act with care, skill and diligence and fiduciary duties, which include the duty to conduct the company’s affairs honestly and in the best interests of the company.

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Variation of Rights
We may vary the rights attached to any issued or not yet issued shares by special resolution. However, if at any time the issued share capital is divided into different classes of shares, the rights attached to any class may not be varied except with the consent in writing of the holders of at least 75% of the issued shares of that class or through a resolution passed at a separate general meeting of the holders of the shares of that class. The quorum for such a meeting shall be the lesser of (i) 3 shareholders or (ii) 75% of the shareholders of that class, present in person or by their representatives, agents or proxies, provided that such shareholders must control or hold at least one half of the issued shares of that class. A share shall be a share of a different class from another share if the two shares do not rank pari passu in every respect.
Changes in Capital or Objects and Powers of Harmony
The provisions of our Memorandum and Articles of Association pertaining to changes in our share capital and powers are substantially equivalent to the provisions of the Companies Act. We may by special resolution:
• increase our authorized or paid-up share capital;
• consolidate and divide all or any part of our shares into shares of a larger amount;
• increase the number of our no par value shares without an increase of our stated capital;
• sub-divide all or any part of our shares having a par value;
• convert all of our ordinary or preference share capital consisting of shares having a par value into stated capital constituted by shares of no par value and vice versa;
• convert our stated capital constituted by ordinary or preference shares of no par value into share capital consisting of shares having a par value;
• vary the rights attached to any shares whether issued or not yet issued;
• convert any of our issued or unissued shares into shares of another class;
• convert any of our paid-up shares into stock, and reconvert any stock into any number of paid-up shares of any denomination;
• convert any of our issued shares into preference shares which can be redeemed;
• cancel shares which, at the date of passing of the resolution, have not been taken or agreed to be taken by any person, and diminish the amount of the authorized share capital by the amount of the shares so cancelled; or
• reduce the authorized share capital.
We may by ordinary resolution:
• reduce our issued share capital;
• reduce our stated capital; or
• reduce our capital redemption reserve fund and share premium account.

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Meetings of Shareholders
Our directors may at any time convene general meetings of our shareholders. The directors shall convene a general meeting upon request of shareholders in accordance with the provisions of the Companies Act. No more than fifteen months may elapse between the date of one annual general meeting and the next, and the annual general meeting shall be held within six months after the expiration of each of our financial years.
We are required to provide our members with written notice of meetings, which shall specify the place, the day and time of the meeting. In every notice calling a meeting of Harmony or of any class of members of Harmony, there shall appear with reasonable prominence a statement that a member entitled to attend and vote is entitled to appoint a proxy to attend and vote in lieu of such person and that a proxy need not also be a member. Notice of a general meeting shall be given to the JSE and to the following persons and no other person shall be entitled to receive notice of general meetings:
• to every member of Harmony except any member who has not supplied to Harmony a registered address for the giving of notices;
• to every person entitled to a share in consequence of the death or insolvency of a member;
• to the directors and auditor for the time being of Harmony; and
• by advertisement to the holders of share warrants to bearer.
Annual general meetings and meetings calling for the passage of a special resolution require twenty-one days’ notice in writing. Any other general meeting requires no less than fourteen days’ notice in writing. A meeting called upon shorter notice shall be deemed to have been duly called if a majority in number of the members having a right to attend and vote at the meeting agree to such a shortened notice period, and if such members hold no less than 95% of the total voting rights of all members.
Our business may be transacted at a general meeting only when a quorum of members is present. Three members present personally or by representative and entitled to vote are a quorum.
The annual general meeting deals with and disposes of all matters prescribed by our Articles of Association and by the Companies Act, including:
• the consideration of the annual financial statements and report of the auditors;
• the election of directors;
• the appointment of auditors; and
• any business arising from the annual financial statements considered at the meeting.
The holder of a general or special power of attorney given by a member, whether the holder is a member or not, shall be entitled to attend meetings of Harmony or of any class of members of Harmony and to vote at such meetings if so authorized by the power of attorney. Any member may appoint a proxy, who need not be a member, to attend, speak and, subject to the provisions of the Companies Act, to vote in his place on a show of hands and on a poll at any general meeting or at any meeting of any class of members. The instrument appointing a proxy to vote at a meeting of Harmony and the power of attorney or other authority shall be deposited at our transfer office not later than 48 hours (excluding Saturdays, Sundays and Public Holidays) before the meeting at which the person empowered proposes to vote. No instrument appointing a proxy shall be valid after the end of a period of 6 months commencing on the date on which it is signed unless otherwise expressly stated in the proxy.

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Title to Shares
The registered holder or holders of any shares shall, during his or their respective lifetimes and while not subject to any legal incapacity, be the only person or persons recognized by us as having any right to, or in respect of, such shares and, in particular, we shall not be bound to recognize:
• that the registered holder or holders hold such shares upon trust for, or as the nominee of, any other person; or
• that any person, other than the registered holder or holders, holds any contingent, future or partial interest in such shares or any interest in any fractional part of any of such shares.
Where any share is registered in the names of two or more persons they shall be deemed to be joint holders. Accordingly where any member dies, the survivor or survivors, where the deceased was a joint holder, and the executor of the deceased, where the deceased was the sole holder, shall be the only persons recognized by us as having any right to the interest of the deceased in any of our shares.
We may enter in the register as member, no mine official, of Harmony, the name of any person who submits proof of his appointment as the executor, administrator, trustee, curator or guardian in respect of the estate of a deceased member of Harmony or of a member whose estate has been sequestrated or of a member who is otherwise under disability or as liquidator of any body corporate in the course of being wound up which is a member of Harmony, and any person whose name has been so entered in the register shall be deemed to be a member of Harmony.
Non-South African Shareholders
There are no limitations imposed by South African law or by our Articles of Association on the rights of non-South African shareholders to hold or vote our ordinary shares or securities convertible into ordinary shares.
Disclosure of Interest in Shares
Pursuant to the Companies Amendment Act Number 37 of 1999, where securities of an issuer are registered in the name of a person and that person is not the holder of the beneficial interest in all of the securities so held, it is obliged, at the end of every three-month period after June 30, 1999 (i.e., commencing on September 30, 1999), to disclose to the issuer the identity of each person on whose behalf the registered holder holds securities and the number and class of securities issued by that issuer held on behalf of each such person. Moreover, an issuer of securities may, by notice in writing, require a person who is a registered shareholder, or whom the issuer knows or has reasonable cause to believe to have a beneficial interest in, a security issued by the issuer, to confirm or deny whether or not such person holds that beneficial interest and, if the security is held for another person, to disclose to the issuer the identity of the person on whose behalf a security is held. The addressee of the notice may also be required to give particulars of the extent of the beneficial interest held during the three years preceding the date of the notice. All issuers of securities are obliged to establish and maintain a register of the disclosures described above and to publish in their annual financial statements a list of the persons who hold beneficial interests equal to or in excess of 5% of the total number of securities of that class issued by the issuer together with the extent of those beneficial interests.
Changes in Control
There are various procedures under the Companies Act whereby mergers and takeovers can be effected. These procedures are not exclusive and there are a variety of techniques that can be used to acquire control. All of these procedures are, however, subject to control by the Securities Regulation Panel and the requirements embodied in the Securities Regulation Code on Takeovers and Mergers shall be adhered to. The JSE Listing Requirements also contain certain requirements with regard to the process involved in a merger or takeover. While the requirements of the Securities Regulation Panel and the JSE Listings Requirements might have the general effect of delaying, deferring or preventing a change in control of a company, our Memorandum and Articles of Association do not impose additional restrictions on mergers or takeovers.
Register of Members
We keep a register of shareholders at our office and at the office of our transfer secretaries in South Africa, and our transfer secretaries in the United Kingdom keep a branch shareholders’ register at their offices.
The register of members includes:
• the names and address of the members;

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• the shares held by each member, distinguishing each share by its denoting number, if any, by its class or kind, and by the amount paid or deemed to be paid thereon;
• the date on which the name of any person was entered in the register as a member; and
• the date on which any person ceased to be a member.
Annual Report and Accounts
The board is required to keep such accounting records and books of account as are prescribed by the Companies Act.
The directors will cause to be prepared annual financial statements and a South African annual report as required by the Companies Act and the JSE rules. We will deliver a copy of the South African annual report and annual financial statements to every member not less than twenty-one days prior to the date of each annual general meeting.
Our annual report on Form 20-F is available on our website at www.harmony.co.za. We will deliver a paper copy of the annual report containing our IFRS audited financial statements, free of charge, to any shareholder upon request.
Material Contracts
We enter into material contracts in connection with our business, as described in Item 4. “Information on the Company — Business” and in connection with financing arrangements, as described in Item 5. “Operating and Financial Review and Prospects — Liquidity and Capital Resources” .
Exchange Controls
Introduction
The following is a general outline of South African exchange controls. Investors should consult a professional adviser as to the exchange control implications of their particular investments.
The Republic of South Africa’s exchange control regulations provide for restrictions on exporting capital from a Common Monetary Area consisting of South Africa, the Republic of Namibia and the Kingdoms of Lesotho and Swaziland. Transactions between South African residents (including corporations) and between residents of the Common Monetary Area are subject to these exchange controls, which are regulated by the South African Reserve Bank (“ SARB ”).
Since 1995 a number of exchange control regulations have been relaxed with regard to both residents and non-residents. The government remains committed to the total abolition of exchange controls, but has stated its intention of following a gradual approach. This gradual approach to the abolition of exchange controls adopted by the South African government is designed to allow the economy to adjust more smoothly to the removal of controls that have been in place for a considerable period of time. The stated objective of the authorities is to reach a point where there is equality of treatment between residents and non-residents in relation to inflows and outflows of capital. South Africa, being classified as an emerging market, is therefore still regarded as a capital importer, hence the controls over capital flows. Unlimited outward transfers of capital are not permitted at this stage, but the emphasis of regulation is expected to be increasingly on the positive aspects of prudential financial supervision.
A considerable degree of flexibility is built into the system of exchange controls, and the SARB possesses substantial discretionary powers in approving or rejecting the applications that fall outside the authority granted to authorized dealers.
The main purpose of exchange controls is to ensure the timely repatriation of funds into the South African banking system of certain foreign currency acquired by residents of South Africa, whether through transactions of a current or of a capital nature. Timely repatriation of funds will help avoid undue pressure on the country’s gold and foreign reserves and an undue depreciation of the exchange rate of the Rand. Payment of foreign currency and the use of gold and foreign reserves for importation of goods and services into the country are relatively freely allowed.
These comments relate to exchange controls in force at June 30, 2010. These controls are subject to change at any time without notice. It is not possible to predict whether existing exchange controls will be abolished, continued or modified by the South African government in the future.

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Government Regulatory Considerations
Shares
A foreign investor may invest freely in shares in a South African company, whether listed on the JSE or not. The foreign investor may also sell his or her share investment in a South African company and transfer the proceeds out of South Africa without restriction. However, when the company is not listed on the JSE, the SARB must be satisfied that the sales price of any shares reflects fair market value.
Under present South African exchange control regulations, our ordinary shares and ADSs are freely transferable outside the Common Monetary Area between non-residents of the Common Monetary Area. No prior SARB approval is required for the transfer of proceeds to South Africa, in respect of shares listed on the JSE, provided these funds enter the country through the normal banking channels. In addition, the proceeds from the sale of ordinary shares on the JSE on behalf of those holders of ordinary shares who are not residents of the Common Monetary Area are freely remittable to those holders. Share certificates and warrant certificates held by non-residents will be endorsed with the words “non-resident.”
Loans
Generally, the making of loans to us or our subsidiaries, our or our subsidiaries’ ability to borrow from non-South African sources and the repatriation of dividends, interest and royalties by Harmony will be regulated by the Exchange Control Department of the SARB. If a foreign investor wishes to lend capital to a South African company, the prior approval of the SARB must be sought mainly in respect of the interest rate and terms of repayment applicable to such loan.
Interest on foreign loans is freely remittable abroad, provided the loans received prior approval from the SARB.
Investments
We are also required to seek approval from the SARB to use funds held in South Africa to make investments outside of South Africa.
Dividends
Dividends declared by a quoted company are freely transferable out of South Africa from both trading and non-trading profits earned in South Africa through a major bank as agent for the SARB.
Where 75% or more of a South African company’s capital, voting power, power of control or earnings is directly or indirectly controlled by non-residents, such a company is designated an “affected person” by the SARB, and certain restrictions are placed on its ability to obtain local financial assistance. We are not, and have never been, designated an “affected person” by the SARB.
If an affected person made use of local borrowing facilities, the affected persons must apply for SARB approval prior to remitting dividends offshore. As a general matter, an affected person that has accumulated historical losses may not declare dividends out of current profits unless and until such time that the affected person’s local borrowings do not exceed the local borrowing limit.
Certain South African Tax Considerations
The discussion in this section is based on current law and our interpretation thereof. Changes in the law may alter the tax treatment of our ordinary shares or ADSs, as applicable, possibly on a retroactive basis. The following summary is not a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase, own or dispose of our ordinary shares or ADSs, and does not cover the tax consequences that depend upon your particular tax circumstances. In particular, the following summary addresses tax consequences for holders of ordinary shares or ADSs who are not tax residents of South Africa. It specifically excludes the tax consequences for non-tax residents whose holding of shares or ADSs is effectively connected with a permanent establishment in South Africa through which the holder carries on business activities, or who is not a beneficial recipient of the dividends, or where the source of the transaction is to be in South Africa. In addition, it does not cover the tax consequences for the holder that is not entitled to the benefits of the double taxation agreement concluded between the Republic of South Africa and the United States of America signed on February 17, 1997 (“ U.S. Treaty ”). It also assumes that the holders would hold the ordinary shares or ADSs on capital account (that is, for investment purpose). We recommend that you consult your own tax adviser about the consequences of holding our ordinary shares or ADSs, as applicable, in your particular situation.

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Dividends
South Africa does not currently levy any withholding tax on dividends. Rather, it currently imposes a corporate tax known as Secondary Tax on Companies (“ STC ”) at a rate of 10% on dividends declared by a South African company. It is important to appreciate that STC is not a withholding tax on dividends, but a tax on profits of a company. However, it was announced that STC would be abolished and be replaced by a traditional dividend withholding tax. At this stage it is expected that the new dividend withholding tax will be introduced in the near future. The rate of the new dividend withholding tax will be 10%. The new withholding tax will be imposed on, amongst others, non-resident shareholders, and it would be withheld by the company declaring and paying the dividend to its shareholders or the regulatory intermediary, as the case may be.
Article 10 of the U.S. Treaty provides that a dividend withholding tax may be levied by South Africa. However, it may not exceed 5% of the gross amount of the dividends if the beneficial owner is a company which holds directly at least 10% of the voting stock of the South African company paying the dividends. Although the U.S. Treaty refers to a maximum withholding tax rate of 15% in other cases, the rate would be 10%.
Capital Gains Tax
A Capital Gains Tax (“ CGT ”) was introduced with effect from October 1, 2001. In the case of an individual, 25% of the capital gain is included in its taxable income. In the case of a corporate entity, 50% of such gain is included in its taxable income. CGT is only applicable to non-residents if the proceeds from the sale are attributable to a permanent establishment of the non-resident shareholder. The terms of the U.S. Treaty (which will prevail in case of conflict) provides that the U.S. holder of ordinary shares or ADSs will not be subject to CGT if the assets have been held as capital assets, unless they are linked to a permanent establishment of such non-resident shareholder in South Africa. To the extent that shares or ADSs are held on revenue account, a similar principle would apply with reference to the payment of income tax, and income tax will only be payable to the extent that the holder carries on business in South Africa through a permanent establishment situation therein. The current corporate rate is equal to 28%. Any gains realized on the disposal of equity shares are automatically deemed to be of a capital nature if they have been held for a continuous period of 3 years. Such provision applies automatically and is not elective.
Generally the domestic laws of South Africa provide that a capital gain will be deemed to have been sourced in South Africa and be subject to South African tax to the extent that the asset related to an interest in immovable property situated in South Africa. It includes any equity shares held by a person in a company if —
• 80% or more of the market value of the equity shares at the time of disposal thereof is attributable directly or indirectly to immovable property held otherwise than as trading stock; and
• The person directly or indirectly holds at least 20% of the equity share capital of that company.
The provisions of the U.S. Treaty will override the deemed source rules to the extent applicable. Article 13 of the U.S. Treaty provides that South Africa may tax a gain that is attributable to the alienation of real property situated in South Africa, which concept includes the equivalent of a U.S. real property interest, even if held through shares.
Security Transfer Tax
A Security Transfer Tax (“ STT ”) is applicable in respect of the transfer of any security issued by a South African company at a rate of 0.25% of the taxable amount of the security concerned (generally the market value thereof). A security is defined to include depository receipt in a company, in addition to company shares. STT is not payable on the issue of any security.
Although ADSs in respect of our shares are not listed on the JSE, reference is specifically made to the transfer of depository receipts in a South African company. As a consequence, STT will therefore be payable on the transfer of ADSs. In addition, the process of depositing shares listed on the JSE in return for ADSs, or withdrawing such shares from the deposit facility, may attract STT as and when the shares are transferred to or from the depository institution.
STT is payable by the broker or participant if a transaction is effected through a stockbroker or a strata participant, but it may be recovered from the person acquiring the beneficial ownership of the rights concerned. In other instances, STT is payable by the person acquiring beneficial ownership.
STT is also payable on the subsequent redemption or cancellation of shares or cancellation of shares or ADSs.

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Interest
It was recently announced that South Africa will ignore a traditional withholding tax on interest at the rate of 10%, which would be reduced to zero in the case of the U.S. Treaty. However, the South African government announced that the treaties will be renegotiated to refer generally to a minimum 5% withholding tax on interest unless one is dealing with a developed tax system such as the U.S.
Capitalization Shares
Capitalization shares distributed at the option of holders of shares in lieu of cash dividends are currently not subject to STC. However, this position may change to the extent that the new withholding tax on dividends is introduced.
Voting Rights
There are no limitations imposed by South African law or by our charter on the right of non-resident or foreign owners to hold or vote our ordinary shares.
Certain United States Federal Income Tax Considerations
Except as described below under the heading “Non-U.S. Holders,” the following is a discussion of certain material U.S. federal income tax consequences for a U.S. holder of purchasing, owning and disposing of the ordinary shares (for purposes of this summary, references to the ordinary shares include the ADSs, unless the context otherwise requires). This summary does not purport to be a comprehensive description of all of the tax considerations that may be relevant to a decision to purchase the ordinary shares. In particular, this summary deals only with U.S. holders that will hold the ordinary shares as capital assets. It does not address considerations that may be relevant to you if you are an investor that is subject to special tax rules, such as a bank, real estate investment trust, regulated investment company, insurance company, dealer in securities or currencies, trader in securities or commodities that elects mark-to-market treatment, person that will hold the ordinary shares as a hedge against currency risk or as a position in a “straddle” or conversion transaction, tax-exempt organization, person whose “functional currency” is not the U.S. dollar, person liable for alternative minimum tax, or a person who owns directly, indirectly or by attribution, at least 10 percent of our stock.
You will be a U.S. holder if you are a beneficial owner of ordinary shares and you are:
• an individual who is a citizen or resident of the United States;
• a U.S. domestic corporation, or other entity treated as a domestic corporation for U.S. federal income tax purposes;
• an estate whose income is subject to U.S. federal income tax regardless of its source; or
• a trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust.
If a partnership (including for this purpose any entity treated as a partnership for U.S. tax purposes) is a beneficial owner of the ordinary shares, the U.S. tax treatment of a partner in the partnership generally will depend on the status of the partner and the activities of the partnership. A holder of the ordinary shares that is a partnership and partners in such a partnership should consult their own tax advisors about the U.S. federal income tax consequences of holding and disposing of the ordinary shares.
A “non-U.S. holder” is a beneficial owner of ordinary shares that is not a U.S. person for U.S. federal income tax purposes. If you are a “non-U.S. holder,” the discussion below under “— Non-U.S. Holders” will apply to you.
This summary is based on the U.S. Internal Revenue Code of 1986, as amended, or the Code, its legislative history, existing and proposed U.S. Treasury regulations, rulings, and decisions, all as now in effect and all of which may change. Any change could apply retroactively and could affect the continued validity of this summary.
In general, if you hold ADSs, you will be treated as the holder of the ordinary shares represented by those ADSs for U.S. federal income tax purposes.
We believe that we will not be a passive foreign investment company, or PFIC, for U.S. federal income tax purposes for the current taxable year. However, we cannot assure you that we will not be considered a PFIC in the current or future years. The determination whether or not we are a PFIC is a factual determination that is based on the types of income we earn and the value of our assets and cannot be made until the

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close of the applicable tax year. If we were currently or were to become a PFIC, U.S. holders of ordinary shares would be subject to special rules and a variety of potentially adverse tax consequences under the Code.
Taxation of Dividends
Subject to the PFIC rules referred to below, under U.S. federal income tax laws, if you are a U.S. holder, the gross amount of dividends that you receive in cash (or that are part of a distribution that any shareholder has the right to receive in cash) in respect of the ordinary shares generally will be subject to U.S. federal income taxation as dividend income to the extent paid out of our current or accumulated earnings and profits (as determined for U.S. federal income tax purposes). You must include the amount of any South African tax withheld from the dividend payment in this gross amount even though you do not in fact receive it. Dividends received by an individual taxpayer during taxable years beginning before January 1, 2011 will be taxed at a maximum rate of 15% where certain holding period and other requirements are satisfied, if such dividends constitute qualified dividend income. Qualified dividend income includes dividends paid by a Qualified Foreign Corporation, and we believe that we are, and will continue to be, a Qualified Foreign Corporation. Holders of ordinary shares should consult their own tax advisors regarding the availability of the reduced dividend tax rate in light of their own particular circumstances. Dividends will not be eligible for the dividends-received deduction generally allowed to U.S. corporations in respect of dividends received from other corporations.
Dividends paid in South African Rand will be includible in your gross income in a U.S. dollar amount calculated by reference to the exchange rate in effect on the day you receive (or the depository receives, in the case of the ADSs) the dividend, regardless of whether the payment is in fact converted into U.S. dollars. If the foreign currency received as a dividend is not converted into U.S. dollars on the date of receipt, a U.S. holder will have a basis in the foreign currency equal to its U.S. dollar value on the date of receipt. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date you include the dividend payment in income to the date you convert the payment into U.S. dollars will be treated as ordinary income or loss. The gain or loss generally will be income or loss from sources within the United States for foreign tax credit limitations. You generally should not be required to recognize any foreign currency gain or loss to the extent such dividends paid in South African Rand are converted into U.S. dollars immediately upon receipt by the applicable party. If we distribute non-cash property as a dividend, you generally will include in income an amount equal to the fair market value of the property, in U.S. dollars, on the date that it is distributed. Subject to certain limitations, a U.S. holder may be entitled to a credit or deduction against its U.S. federal income taxes for the amount of any South African taxes that are withheld from dividend distributions made to such U.S. holders. The decision to claim either a credit or deduction must be made annually, and will apply to all foreign taxes paid by the U.S. holder to any foreign country or U.S. possession with respect to the applicable tax year.
Dividends received from us will generally be income from non-United States sources, for U.S. foreign tax credit purposes, subject to various classifications and other limitations. The rules relating to computing foreign tax credits are complex. You should consult your own tax advisor to determine the foreign tax credit implications of owning ordinary shares.
Distributions in excess of current and accumulated earnings and profits, as determined for U.S. federal income tax purposes, will be treated as a non-taxable return of capital to the extent of your basis in the ordinary shares and thereafter as capital gain.
Capital Gains
Subject to the PFIC rules referred to below, if you are a U.S. holder and you sell your ordinary shares, you will recognize capital gain or loss in an amount equal to the difference between the U.S. dollar value of the amount you realize on the sale and your adjusted tax basis in the ordinary shares, determined in U.S. dollars. Such gain or loss generally will be long-term capital gain or loss if you held the ordinary shares for more than one year. Prior to January 1, 2011, long-term capital gain recognized by a non-corporate U.S. holder is generally subject to a maximum tax rate of 15%. In general, any capital gain or loss recognized upon the sale or exchange of ordinary shares will be treated as U.S. source income or loss, as the case may be, for U.S. foreign tax purposes. Your ability to offset capital losses against income is subject to limitations.
Deposits and withdrawals of ordinary shares by U.S. holders in exchange for ADSs will not result in the realization of gain or loss for U.S. federal income tax purposes.
To the extent that you incur South African stamp duty, MST or uncertified securities tax (to be replaced with STT) in connection with a transfer or withdrawal of ordinary shares as described under “— Certain South African Tax Considerations — Security Transfer Tax ” above, such stamp duty, MST or uncertified securities tax will not be a creditable tax for U.S. foreign tax credit purposes.

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Medicare Tax on Unearned Income
Newly enacted legislation requires certain U.S. holders that are individuals, estates or trusts to pay an additional 3.8% tax on, among other things, dividends on and capital gains from the sale or other disposition of ordinary shares for taxable years beginning after December 31, 2012. U.S. holders that are individuals, estates or trusts should consult their tax advisors regarding the effect, if any, of this legislation on their ownership and disposition of our ordinary shares.
Non-U.S. Holders
If you are a non-U.S. holder of the ordinary shares, you generally will not be subject to U.S. federal income or withholding tax on dividends received on such ordinary shares, unless such income is effectively connected with your conduct of a trade or business in the United States, and the dividends are attributable to a permanent establishment (or in the case of an individual, a fixed place of business) that you maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to U.S. taxation on a net income basis. In such cases, you generally will be taxed in the same manner as a U.S. holder, and will not be subject to U.S. federal income tax withholding. If you are a corporate non-U.S. holder, “effectively connected” dividends may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.
If you are a non-U.S. holder of the ordinary shares, you will also generally not be subject to U.S. federal income or withholding tax in respect of gain realized on the sale of such ordinary shares, unless (i) such gain is effectively connected with your conduct of a trade or business in the United States, and the gain is attributable to a permanent establishment (or in the case of an individual, a fixed place of business) that you maintain in the United States if that is required by an applicable income tax treaty as a condition for subjecting you to U.S. taxation on a net income basis; or (ii) in the case of gain realized by an individual non-U.S. holder, you are present in the United States for 183 days or more in the taxable year of the sale and certain other conditions are met. In the first case, the non-U.S. holder will be taxed in the same manner as a U.S. holder. In the second case, the non-U.S. holder will be subject to U.S. federal income tax at a rate of 30% on the amount by which such non-U.S. holder’s U.S.-source capital gains exceed such non-U.S. holder’s U.S.-source capital losses. If you are a corporate non-U.S. holder, “effectively connected” dividends may, under certain circumstances, be subject to an additional “branch profits tax” at a 30% rate or a lower rate if you are eligible for the benefits of an income tax treaty that provides for a lower rate.
PFIC Rules
We believe that our ordinary shares will not be treated as stock of a PFIC for U.S. federal income tax purposes for the current tax year. The determination of whether or not we are a PFIC is a factual determination that cannot be made until the close of the applicable tax year and that is based on the types of income we earn and the value of our assets (including goodwill), both of which are subject to change. In calculating goodwill for this purpose, we will value our total assets based on the total market value, determined with reference to the then market price of the ordinary shares, and will make determinations regarding the amount of this value allocable to goodwill. Because the determination of goodwill will be based on the market price of the ordinary shares, it is subject to change. It is possible that the U.S. Internal Revenue Service may challenge our valuation of our assets (including goodwill), which may result in us being classified as a PFIC. Thus, it is possible that we may be or become a PFIC in the current or any future taxable year and we cannot assure you that we will not be considered a PFIC in any such tax year.
In general, if you are a U.S. holder, we will be a PFIC with respect to you if for any taxable year in which you held the ordinary shares:
• at least 75% of our gross income for the taxable year is passive income; or
• at least 50% of the value, determined on the basis of a quarterly average, of our assets is attributable to assets that produce or are held for the production of passive income.
Passive income generally includes dividends, interest, royalties, rents (other than certain rents and royalties derived in the active conduct of a trade or business), the excess of gains over losses from certain types of transactions in commodities, annuities and gains from assets that produce passive income. If a foreign corporation owns at least 25% by value of the stock of another corporation, the foreign corporation is treated for purposes of the PFIC tests as owning its proportionate share of the assets of the other corporation, as receiving directly its proportionate share of the other corporation’s income.
If we are treated as a PFIC, and you are a U.S. holder that did not make a mark-to-market election, as described below, you will be subject to special rules with respect to:
• any gain you realize on the sale or other disposition of your ordinary shares; and
• any excess distribution that we make to you (generally, any distributions to you during a single taxable year that are greater than 125% of

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the average annual distributions received by you in respect of the ordinary shares during the three preceding taxable years or, if shorter, your holding period for the ordinary shares).
Under these rules:
• the gain or excess distribution will be allocated ratably over your holding period for the ordinary shares;
• the amount allocated to the taxable year in which you realized the gain or excess distribution will be taxed as ordinary income;
• the amount allocated to each prior year, with certain exceptions, will be taxed at the highest tax rate in effect for that year; and
• the interest charge generally applicable to underpayments of tax will be imposed in respect of the tax attributable to each such year.
Special rules apply for calculating the amount of the foreign tax credit with respect to excess distributions by a PFIC.
If you own shares in a PFIC that are treated as marketable stock, you may make a mark-to-market election. If you make this election in a timely fashion, you will not be subject to the PFIC rules described above. Instead, in general, you will include as ordinary income each year the excess, if any, of the fair market value of your ordinary shares at the end of the taxable year over your adjusted basis in your ordinary shares. You will also be allowed to take an ordinary loss in respect of the excess, if any, of the adjusted basis of your ordinary shares over the fair market value at the end of the taxable year (but only to the extent of the net amount of previously included income as a result of the mark-to-market election). Your basis in the ordinary shares will be adjusted to reflect any such income or loss amounts.
We do not intend to furnish you with the information that you would need in order to make a “qualified electing fund” election to include your share of its income on a current basis.
If you own ordinary shares during any year that we are a PFIC, you must file U.S. Internal Revenue Service Form 8621 that describes the distribution received on the ordinary shares and the gain realized on the disposition of the ordinary shares. The reduced tax rate for dividend income, discussed in “Taxation of Dividends,” is not applicable to dividends paid by a PFIC.
U.S. Information Reporting and Backup Withholding Rules
Payments of dividends and sales proceeds that are made within the United States or through certain U.S.-related financial intermediaries are subject to information reporting and may be subject to backup withholding at a rate currently of 28% unless the holder (i) is a corporation or other exempt recipient or (ii) provides a taxpayer identification number and certifies that no loss of exemption from backup withholding has occurred. Backup withholding is not an additional tax, and the amount of any backup withholding from a payment to a U.S. holder will be allowed as a credit against the U.S. holder’s U.S. federal income tax liability provided that the appropriate returns are filed. A non-U.S. holder generally may eliminate the requirement for information reporting and backup withholding by providing certification of its foreign status to the payor, under penalties of perjury, on IRS Form W-8BEN.
Recently Enacted Legislation Related to Disclosure of Information with Respect to Foreign Financial Assets
Recently enacted legislation requires a U.S. holder that holds an interest in “specified foreign financial assets” to disclose certain information related to these holdings. This applies for any year in which the aggregate value of all such holdings is greater than US$50,000. For these purposes, “specified foreign financial assets” include (i) any depository or custodial account maintained by certain foreign financial institutions and foreign investment vehicles, (ii) certain interest in, or securities issued by, non-U.S. persons, and (iii) certain other financial instruments or contracts held for investment where the issuer or counterparty is a non-U.S. person. In addition, a U.S. holder may be required to furnish certain information to avoid a presumption that the aggregate value of the U.S. holder’s holdings of specified foreign financial assets are in excess of US$50,000. Penalties may apply in the event of noncompliance. These disclosure requirements are effective for taxable years beginning after March 18, 2010. As with all new legislation, the application of certain of these requirements in any particular circumstance may not be entirely clear. Prospective investors should consult their own tax advisors regarding the effect of this legislation in their particular circumstances.
THE PRECEDING DISCUSSION OF CERTAIN UNITED STATES FEDERAL INCOME TAX CONSEQUENCES IS INTENDED FOR GENERAL INFORMATION ONLY AND DOES NOT CONSTITUTE TAX ADVICE. ACCORDINGLY, EACH INVESTOR SHOULD CONSULT ITS OWN TAX ADVISER AS TO PARTICULAR TAX CONSEQUENCES TO IT OF PURCHASING, HOLDING AND DISPOSING OF THE ORDINARY SHARES, INCLUDING THE APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN LAWS, AND PROPOSED CHANGES IN APPLICABLE LAWS .

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DIVIDENDS AND PAYING AGENTS
Not applicable.
STATEMENTS BY EXPERTS
Not applicable.
DOCUMENTS ON DISPLAY
Our Memorandum and Articles of Association may be examined at our principal place of business at: Randfontein Office Park, Corner of Main Reef Road and Ward Avenue, Randfontein, 1760, South Africa. We also file annual and furnish interim reports and other information with the Securities and Exchange Commission, or the SEC. You may read and copy any reports or other information on file at the SEC’s public reference room at the following location:
Public Reference Room
100 F Street, NW
Room 1580
Washington D.C. 20549
Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. The SEC filings are also available to the public from commercial document retrieval services. We file electronically with the SEC, and the documents it files are available on the website maintained by the SEC at www.sec.gov.
SUBSIDIARY INFORMATION
Not applicable.

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Item 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
General
We are exposed to market risks, including credit risk, foreign currency risk, commodity price risk and interest rate risk associated with underlying assets, liabilities and anticipated transactions. Following periodic evaluation of these exposures, we may enter into derivative financial instruments to manage these exposures. We have policies in areas such as counterparty exposure and hedging practices, which have been approved by our senior management. We do not hold or issue derivative financial instruments for trading or speculative purposes.
We did not apply hedge accounting to incidental hedges held in the past.
In accordance with IAS 39 — Financial Instruments: Recognition and Measurement, we account for our derivative financial instruments as hedging transactions if the following criteria are met:
• in the case of a hedge of an anticipated future transaction, there is a high probability that the transaction will occur.
Foreign Currency Sensitivity
In the ordinary course of business, we enter into transactions denominated in foreign currencies (primarily U.S. dollars, Australian dollars and Kina). In addition, we incur investments and liabilities in U.S. dollars, Canadian dollars, British pounds sterling and Australian dollars from time to time. As a result, we are subject to transaction and translation exposure from fluctuations in foreign currency exchange rates. We do not generally hedge our exposure to foreign currency exchange rates.
Our revenues and costs are very sensitive to the exchange rate of the Rand and other non-U.S. currencies to the U.S. dollar because gold is generally sold throughout the world in U.S. dollars, but most of our operating costs are incurred in Rand and other non-U.S. currencies. Appreciation of the Rand and other non-U.S. currencies against the U.S. dollar increases working costs at our operations when those costs are translated into U.S. dollars, which reduces operating margins and net income from our operations. Depreciation of the Rand and other non-U.S. currencies against the U.S. dollar reduces these costs when they are translated into U.S. dollars, which increases operating margins and net income from our operations. See Item 3. “Key Information — Exchange Rates” and Item 3. “Key Information — Risk Factors — Because most of Harmony’s production costs are in Rand and other non-U.S. currencies, while gold is generally sold in U.S. dollars, Harmony’s financial condition could be materially harmed by an appreciation in the value of the Rand and other non-U.S. currencies”.
We did not have any currency contracts in place as of June 30, 2010, 2009 or 2008.
Commodity Price Sensitivity
General
The market price of gold has a significant effect on our results of operations, our ability to pay dividends and undertake capital expenditures, and the market prices of our ordinary shares.
Gold prices have historically fluctuated widely and are affected by numerous industry factors over which we do not have any control. See Item 3. “Key Information — Risk Factors — The profitability of Harmony’s operations, and the cash flows generated by those operations, are affected by changes in the market price for gold, which in the past has fluctuated widely”. The aggregate effect of these factors, all of which are beyond our control, is impossible for us to predict.
Harmony’s Hedging Policy
As a general rule, we sell our gold production at market prices. We generally do not enter into forward sales, commodity, derivatives or hedging arrangements to establish a price in advance for the sale of our future gold production, although we may do so in the future. For more detailed information on our hedging policy, see Item 4. “Information on the Company — Business — Hedge Policy”.
Commodity Sales Agreements
We did not have any forward commodity sales agreements in place during fiscal 2010, 2009 and 2008.

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Interest Rate Sensitivity
Our interest rate risk arises mainly from long-term borrowings. We have variable interest rate borrowings. Variable rate borrowings expose us to cash flow interest rate risk. We have not entered into interest rate swap agreements in fiscal years 2008, 2009 and 2010.
Sensitivity analysis
A change of 100 basis points in interest rates at June 30, 2010, 2009 and 2008 would have increased (decreased) profit or loss before tax by the amounts shown below. This analysis assumes that all other variables remain constant.
June 30,
2010 2009 2008
($ in millions)
Increase in 100 basis points
2 — 3
Decrease in 100 basis points
(2 ) — (3 )
The above table excludes the fixed rate convertible bond for fiscal 2009 and 2008. As it was accounted for at amortized cost, and had a fixed coupon interest rate rather than a floating coupon interest, interest rate changes did not affect reported profit and loss.
For further information on sensitivities, see note 4 of the consolidated financial statements in Item 18.

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Item 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not applicable.

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GLOSSARY OF MINING TERMS
The following explanations are not intended as technical definitions, but rather are intended to assist the general reader in understanding certain terms as used in this annual report.
Alluvial: the product of sedimentary processes in rivers, resulting in the deposition of alluvium (soil deposited by a river).
Arenaceous: said of a sediment or sedimentary rock consisting wholly or in part of sand-sized fragments or having a sandy texture or the texture of such a sediment or rock.
Auriferous: a substance that contains gold (AU).
Beneficiation: the process of adding value to gold products by transforming gold bullion into fabricated gold products.
By-products : Any products that emanate from the core process of producing gold, including silver and uranium in South Africa and copper, silver and molybdenum in Papua New Guinea.
Calc-silicate rock : A metamorphic rock consisting mainly of calcium-bearing silicates such as diopside and wollastonite, and formed by metamorphism of impure limestone or dolomite.
Carbon in leach (CIL) : Gold is leached from a slurry of gold ore with cyanide in agitated tanks and adsorbed on to carbon granules in the same circuit. The carbon granules are separated from the slurry and treated in an elution circuit to remove the gold.
Carbon In Pulp (CIP): a common process used to extract gold from cyanide leach slurries. The process consists of carbon granules suspended in the slurry and flowing counter-current to the process slurry in multiple-staged agitated tanks. The process slurry, which has been leached with cyanide prior to the CIP process, contains solubilized gold. The solubilized gold is absorbed onto the carbon granules, which are subsequently separated from the slurry by screening. The gold is then recovered from the carbon by electrowinning onto steel wool cathodes or by a similar process.
Carbon In Solution (CIS): a process similar to CIP except that the gold, which has been leached by the cyanide into solution, is separated by the process of filtration (solid/liquid separation). The solution is then pumped through six stages where the solution comes into contact with the activated carbon granules.
Cash cost: a measure of the average cost of producing an ounce of gold, calculated by dividing the total cash working costs in a period by the total gold production over the same period. Working costs represent total operating costs less certain administrative expenses, royalties and depreciation. In determining the cash cost of different elements of the operations, production overheads are allocated pro rata.
Conglomerate: a coarse-grained classic sedimentary rock, composed of rounded to sub-angular fragments larger than 2mm in diameter (granules, pebbles, cobbles, boulders) set in a fine-grained matrix of sand or silt, and commonly cemented by calcium carbonate, iron oxide, silica or hardened clay.
Crosscut: a mine working that is driven horizontally and at right angles to an adit, drift or level.
Cut and fill: a method of underground mining in which a stope is excavated and refilled with material (waste or tailings).
Cut-off grade: the grade at which the total profit from mining the orebodies, under a specified set of mining parameters, is maximized.
Cyanide leaching: the extraction of a precious metal from an ore by its dissolution in a cyanide solution.
Decline: an inclined underground access way.
Deferred Stripping: the removal of overburden through stripping in the current period to access ore expected to be exploited in a future period. Costs incurred with deferred stripping are deferred until the ore is accessed, in order to ensure matching of costs and revenues.
Depletion: the decrease in quantity of ore in a deposit or property resulting from extraction or production.
Development: activities (including shaft sinking and on-reef and off-reef tunneling) required to prepare for mining activities

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and maintain a planned production level and those costs to enable the conversion of mineralized material to reserves.
Electro-winning: the process of removing gold from solution by the action of electric currents.
Elution: removal of the gold from the activated carbon before the zinc precipitation stage.
Exploration: activities associated with ascertaining the existence, location, extent or quality of mineralized material, including economic and technical evaluations of mineralized material.
Fabricated gold: gold on which work has been performed to turn it into a product, such as jewelry, which differs from a pure investment product, such as a gold bullion bar.
Fatal injury frequency rate: the number of fatal injuries per million hours worked.
Fluvial: produced by the action of a stream or river.
Footwall: the underlying side of a fault, orebody or stope.
Forward purchase: an agreement for the purchase of a commodity at a specified future date at a fixed price.
Forward sale: the sale of a commodity for delivery at a specified future date and price.
Gold reserves: the gold contained within proven and probable reserves on the basis of recoverable material (reported as mill delivered tons and head grade).
Gold lease rate swap: an agreement to pay a floating lease rate in exchange for the fixed lease rate inherent in establishing the fixed price in one or more forward gold sales.
Grade: the quantity of metal per unit mass of ore expressed as a percentage or, for gold, as ounces of gold per ton of ore.
Greenfield: a potential mining site of unknown quality.
Greenstone: a field term applied to any compact dark-green altered or metamorphosed basic igneous rock that owes its color to the presence of chlorite, actinolite or epidote.
Grinding: reducing mineralized rock to the consistency of fine sand by crushing and abrading in a rotating steel grinding mill.
Head grade: the grade of the ore as delivered to the metallurgical plant.
Heap leaching: a low-cost technique for extracting metals from ore by percolating leaching solutions through heaps of ore placed on impervious pads. Generally used on low-grade ores.
Leaching: dissolution of gold from the crushed and milled material, including reclaimed slime, for absorption and concentration on to the activated carbon.
Level: the workings or tunnels of an underground mine that are on the same horizontal plane.
Littoral: of or pertaining to a shore.
Longhole sub-level caving: a process for removing ore in which relatively thin blocks of ore are caused to cave in by successively undermining small panels of ore. The broken and caved ore is then extracted by mechanical means.
Lost time injury frequency rate: the number of lost time injuries per million hours.

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Measures: conversion factors from metric units to U.S. units are provided below.
Metric unit U.S. equivalent
1 tonne
= 1 t = 1.10231 short tons
1 gram
= 1 g = 0.03215 ounces
1 gram per tonne
= 1 g/t = 0.02917 ounces per short ton
1 kilogram per tonne
= 1 kg/t = 29.16642 ounces per short ton
1 kilometer
= 1 km = 0.621371 miles
1 meter
= 1 m = 3.28084 feet
1 centimeter
= 1 cm = 0.3937 inches
1 millimeter
= 1 mm = 0.03937 inches
1 hectare
= 1 ha = 2.47105 acres
Metallurgical plant: a processing plant used to treat ore and extract the contained gold.
Mill delivered tons: a quantity, expressed in tons, of ore delivered to the metallurgical plant.
Milling/mill: the comminution of the ore, although the term has come to cover the broad range of machinery inside the treatment plant where the gold is separated from the ore.
Mineable: that portion of a mineralized deposit for which extraction is technically and economically feasible.
Mineralization: the presence of a target mineral in a mass of host rock.
Mineralized material: a mineralized body that has been delineated by appropriately spaced drilling and/or underground sampling to support a sufficient tonnage and average grade of metals to warrant further exploration. Such a deposit does not qualify as a reserve until a comprehensive evaluation based upon unit cost, grade, recoveries, and other material factors conclude legal and economic feasibility.
Morphology: the form or shape of a crystal or mineral aggregate.
Open-pit/Open cast/Open cut: mining in which the ore is extracted from a pit. The geometry of the pit may vary with the characteristics of the orebody.
Ore: a mixture of mineralized material from which at least one of the contained minerals can be mined and processed at an economic profit.
Ore grade: the average amount of gold contained in a ton of gold bearing ore expressed in ounces per ton.
Mineral reserves: that part of mineralized material which at the time of the reserve determination could be economically and legally extracted or produced. Mineral reserves are reported as general indicators of the life of mineralized materials. Changes in reserves generally reflect:
• development of additional reserves;
• depletion of existing reserves through production;
• actual mining experience; and
• price forecasts.
Grades of ore actually processed may be different from stated reserve grades because of geologic variation in different areas mined, mining dilution, losses in processing and other factors. Recovery rates vary with the metallurgical characteristics and grade of ore processed. Neither reserves nor projections of future operations should be interpreted as assurances of the economic life of mineralized material nor of the profitability of future operations.
Orebody: a well defined mass of mineralized material of sufficient mineral content to make extraction economically viable.
Ounce: one Troy ounce, which equals 31.1035 grams.
Overburden: the soil and rock that must be removed in order to expose an ore deposit.
Overburden tons: tons that need to be removed to access an ore deposit.

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Palaeotopography: the topography implied at some time in the past.
Pay limit: the breakeven grade at which the orebody can be mined without profit or loss, calculated using the forecast gold price, working costs and recovery factors.
Placer: a sedimentary deposit containing economic quantities of valuable minerals mainly formed in alluvial environments.
Precipitate: the solid product of chemical reaction by fluids such as the zinc precipitation referred to below.
Probable reserves: reserves for which quantity and grade and/or quality are computed from information similar to that used for proven reserves, but the sites for inspection, sampling, and measurement are farther apart or are otherwise less adequately spaced. The degree of assurance, although lower than that for proven reserves, is high enough to assume continuity between points of observation.
Prospect: an area of land with insufficient data available on the mineralization to determine if it is economically recoverable, but warranting further investigation.
Prospecting license: an area for which permission to explore has been granted.
Proven reserves: reserves for which: (a) quantity is computed from dimensions revealed in outcrops, trenches, workings or drill holes; grade and/or quality are computed from the results of detailed sampling; and (b) the sites for inspection, sampling and measurement are spaced so closely and the geologic character is so well defined that size, shape, depth and mineral content of reserves are well-established.
Pyrite: a brassy-colored mineral of iron sulphide (compound of iron and sulfur).
Quartz: a mineral compound of silicon and oxygen.
Recovery grade: the actual grade of ore realized after the mining and treatment process.
Reef: a gold-bearing sedimentary horizon, normally a conglomerate band, that may contain economic levels of gold.
Refining: the final stage of metal production in which final impurities are removed from the molten metal by introducing air and fluxes. The impurities are removed as gases or slag.
Rehabilitation: the process of restoring mined land to a condition approximating its original state.
Sampling: taking small pieces of rock at intervals along exposed mineralization for assay (to determine the mineral content).
Shaft: a shaft provides principal access to the underground workings for transporting personnel, equipment, supplies, ore and waste. A shaft is also used for ventilation and as an auxiliary exit. It is equipped with a surface hoist system that lowers and raises conveyances for men, materials and ore in the shaft. A shaft generally has more than one conveyancing compartment.
Slimes: the finer fraction of tailings discharged from a processing plant after the valuable minerals have been recovered.
Slurry: a fluid comprising fine solids suspended in a solution (generally water containing additives).
Smelting: thermal processing whereby molten metal is liberated from beneficiated mineral or concentrate with impurities separating as lighter slag.
Spot price: the current price of a metal for immediate delivery.
Stockpile: a store of unprocessed ore.
Stockwork: mineralized material consisting of a three-dimensional network of planar to irregular veinlets closely enough spaced that the whole mass can be mined.
Stope: the underground excavation within the orebody where the main gold production takes place.

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Stripping: the process of removing overburden to expose ore.
Sulphide: a mineral characterized by the linkages of sulfur with a metal or semi-metal, such as pyrite, FeS.
Syncline: a basin-shaped fold.
Tailings: finely ground rock from which valuable minerals have been extracted by milling.
Tailings dam (slimes dam) : Dam facilities designed to store discarded tailings.
Ton: one ton is equal to 2,000 pounds (also known as a “short” ton).
Tonnage: quantities where the ton or tonne is an appropriate unit of measure. Typically used to measure reserves of gold-bearing material in situ or quantities of ore and waste material mined, transported or milled.
Tonne: one tonne is equal to 1,000 kilograms (also known as a “metric” ton).
Trend: the arrangement of a group of ore deposits or a geological feature or zone of similar grade occurring in a linear pattern.
Unconformity: the structural relationship between two groups of rock that are not in normal succession.
Waste: ore rock mined with an insufficient gold content to justify processing.
Waste rock: the non-mineralized rock and/or rock that generally cannot be mined economically that is hoisted to the surface for disposal on the surface normally close to the shaft on an allocated dump.
Yield: the actual grade of ore realized after the mining and treatment process.
Zinc precipitation: a chemical reaction using zinc dust that converts gold solution to a solid form for smelting into unrefined gold bars.

159

PART II
Item 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
Not applicable.

160

Item 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS
At a general meeting held on November 23, 2009, our shareholders authorized the board to (i) place 10% of the unissued ordinary shares of the company under directors’ control and (ii) authorizing the board to allot and issue up to 5% of all or any of our authorized but unissued ordinary shares for cash to such persons and on such terms as the board may, without restriction, from time to time, deem fit as and when suitable opportunities arise, but subject to the requirements of the JSE.
At a general meeting held on November 24, 2008, our shareholders authorized the board to (i) place 10% of the unissued ordinary shares of the company under directors’ control and (ii) authorizing the board to allot and issue up to 10% of all or any of our authorized but unissued ordinary shares for cash to such persons and on such terms as the board may, without restriction, from time to time, deem fit as and when suitable opportunities arise, but subject to the requirements of the JSE.
At a general meeting held on November 26, 2007, our shareholders authorized the board to (i) place 10% of the unissued ordinary shares of the company under directors’ control and (ii) authorizing the board to allot and issue up to 10% of all or any of our authorized but unissued ordinary shares for cash to such persons and on such terms as the board may, without restriction, from time to time, deem fit as and when suitable opportunities arise, but subject to the requirements of the JSE.
USE OF PROCEEDS
Not applicable.

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Item 15. DISCLOSURE CONTROLS AND PROCEDURES
(a) Disclosure Controls and Procedures
As of June 30, 2010, our management, with the participation of our Chief Executive Officer (“ CEO ”) and Chief Financial Officer (“ CFO ”), carried out an evaluation, pursuant to Rule 13a-15 promulgated under the Exchange Act of the effectiveness of our “disclosure controls and procedures”. Based on the foregoing, our management, including the CEO and CFO, concluded that our disclosure controls and procedures were effective as of June 30, 2010.
(b) Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining effective internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting. Our internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. Harmony’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. Where appropriate, the necessary actions are taken to remedy any failings or weaknesses identified from review of the effectiveness of the internal control system.
Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human error. Internal control over financial reporting also can be circumvented by collusion or improper management override. Also, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of change in conditions, or that the degree of compliance with the policies or procedures may deteriorate. Because of such limitations, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Management conducted an evaluation of the effectiveness of its internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (“ COSO ”). Management has assessed the effectiveness of internal control over financial reporting, as of June 30, 2010, and has concluded that such internal control over financial reporting was effective based upon those criteria.
PricewaterhouseCoopers Inc, an independent registered public accounting firm, which has audited the consolidated financial statements included in this Annual Report, has issued an attestation report on the effectiveness of Harmony’s internal control over financial reporting as of June 30, 2010.
(c) Attestation Report of the Registered Public Accounting Firm
See report of PricewaterhouseCoopers Inc, an independent registered public accounting firm, on page F-2.
(d) Changes in Internal Control over Financial Reporting
There has been no change in Harmony’s internal control over financial reporting that occurred during fiscal 2010 that has materially affected or is reasonably likely to materially affect, Harmony’s internal control over financial reporting.

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Item 16A. AUDIT COMMITTEE FINANCIAL EXPERT
At this time, we do not have an individual “audit committee financial expert” as defined by the rules of the SEC.
The audit committee members through their collective experience do meet a majority of the definitions of the SEC for an “audit committee financial expert” in both the private and public sectors. The members have served as directors and officers of numerous public companies and have over the years developed a strong knowledge and understanding of IFRS as issued by the IASB, overseeing the preparation, audit and evaluation of financial statements. We believe that the combined knowledge, skills and experience of the Audit Committee, and their authority to engage outside experts as they deem appropriate to provide them with advice on matters related to their responsibilities, enable them, as a group, to act effectively in the fulfillment of their tasks and responsibilities required under the Sarbanes-Oxley Act of 2002. See Item 7. “Directors and Management — Board Practices — Audit Committee”.
Item 16B. CODE OF ETHICS
The Harmony Code of Ethics has been developed to respond to the challenge of ethical conduct in a business environment. The Code of Ethics goes beyond the company’s legal and institutional responsibilities by formalizing our values. The purpose of the code is to guide employees’ behavior, not to provide specific answers to every conceivable situation in the workplace. We approached the development and the annual review of the Code of Ethics in a fully inclusive manner, with broad consultation and information gathering at all levels of the company. Employees have been kept fully informed about the Code of Ethics and all employees are expected to comply with its contents. (The term ‘employees’ is used in the broadest sense and includes all staff with which a service contract exists, including management, non-management, directors, contractors, consultants, suppliers and temporary staff.) An Ethics Committee was formed in May 2006, which consists of five executive managers and the Company Secretary (who chairs the meeting). This committee is required to meet quarterly to monitor the gift registers and any reported unethical behavior. The Code of Ethics is available on our website at www.harmony.co.za.

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Item 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
AUDIT FEES
The following sets forth the aggregate fees billed for each of the two past fiscal years for professional fees to our principal accountants for the audit of the annual financial statements or for services normally provided by the accountant in connection with statutory and regulatory filings or engagements for those fiscal years.
Fiscal year ended June 30, 2009
US$1.631 million
Fiscal year ended June 30, 2010
US$2.128 million
AUDIT-RELATED FEES
The following sets forth additional aggregate fees to those reported under “Audit Fees” in each of the last two fiscal years that were provided by the principal accountant that are reasonably related to the performance of the audit or review of the financial statements:
Fiscal year ended June 30, 2009
US$0.331 million
Fiscal year ended June 30, 2010
US$0.413 million
Fees related to interim reviews and review of interim reports, other SEC filings as well as guidance on section 404 Sarbanes Oxley compliance.
TAX FEES
The following sets forth the aggregate fees billed in each of the last two fiscal years for professional services rendered by the principal accountant for tax compliance, tax advice and tax planning:
Fiscal year ended June 30, 2009
US$0.038 million
Fiscal year ended June 30, 2010
US$0.107 million
Services comprised advice on capital gains tax issues, treatment of tax in respect of acquisitions, guidance on share option schemes.
ALL OTHER FEES
The following sets forth the aggregate fees billed in each of the last two fiscal years for products and services provided by the principal accountant not described above:
Fiscal year ended June 30, 2009
US$0.300 million
Fiscal year ended June 30, 2010
US$0.066 million
AUDIT COMMITTEE APPROVAL
Our audit committee pre-approves our engagement of PricewaterhouseCoopers Inc to render audit or non-audit services. All of the services described above were approved by the audit committee.
Item 16D. EXEMPTIONS FROM LISTING STANDARDS FOR AUDIT COMMITTEES
Not applicable.
Item 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
Not applicable.
Item 16F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT
Not applicable.

164

Item 16G. CORPORATE GOVERNANCE
Significant ways in which Harmony’s corporate governance practices differ from practices followed by publicly-listed US companies.
Foreign private issuers, such as Harmony, must briefly highlight any significant ways in which their corporate governance practices differ from those following by US-listed companies. Set out below is a brief, general summary of the significant differences:
US-listed companies are required to have a nominating/corporate governance committee and all members of this committee must be non-executive directors. Harmony has a Nomination Committee which comprises three non-executive board members. Post-financial year end an independent non-executive director was appointed Chairman of the Nomination Committee.
For US-listed companies, the chairperson of this committee is required to be the chairperson of the Board of Directors. The current chairman of the Harmony Board of Directors, Patrice Motsepe, is Chairman of one of Harmony’s largest shareholders, African Rainbow Minerals Limited, and is thus not independent. A lead independent non-executive director was appointed in August 2010.
US-listed companies are required to have a remuneration committee composed entirely of independent directors. Harmony has appointed a Remuneration Committee, comprising three board members, all of whom are non-executive and two of whom are independent.
The non-management directors of US-listed companies must meet at regularly scheduled executive sessions without management. Although Harmony does not specifically require such meetings of its non-executive directors, the board has unrestricted access to all company information, records, documents and property. Directors may, if necessary, take independent professional advice at the company’s expense and non-executive directors have access to management and may meet separately with management, without the attendance of executive directors.
US-listed companies are required to publish and distribute to shareholders an annual report within 120 days from the end of its fiscal year. Non-US companies such as Harmony are given 225 days from the end of the fiscal year.

165

PART III
Item 17. FINANCIAL STATEMENTS
We have elected to provide financial statements for the fiscal year ended June 30, 2010 and the related information pursuant to Item 18.

166

Item 18. FINANCIAL STATEMENTS
Financial Statements
The financial statements appear in this annual report on Form 20-F beginning on page F-4. The report of the independent registered public accounting firm appears on page F-2.

167

Item 19. EXHIBITS
1.1
Memorandum of Association of Harmony, as amended (incorporated by reference to Harmony’s Registration Statement (file no. 333-13516) on Form F-3 filed on June 21, 2001).
1.2
Articles of Association of Harmony, as amended (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2005, filed on November 3, 2005).
*2.1
Notice to shareholders dated October 26, 2009 in respect of the Annual General Meeting held on November 23, 2009.
2.2
Deposit Agreement among Harmony, The Bank of New York, as Depositary, and owners and holders of American Depositary Receipts, dated as of August 12, 1996, as amended and restated as of October 2, 1996, as further amended and restated as of September 15, 1998 (incorporated by reference to Post-Effective Amendment No. 1 to Harmony’s Registration Statement (file no. 333-5410) on Form F-6 filed on May 17, 2001).
2.3
Form of ADR (included in Exhibit 2.2).
4.1
Harmony (2003) Share Option Scheme, as amended (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2005, filed on November 3, 2005).
4.2
Harmony 2006 Share Scheme (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2007, filed on December 7, 2007).
4.3
Draw Down Facility Agreement with Westpac Bank dated June 27, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2007, filed on December 7, 2007).
4.4
Sale Agreement with Randfontein Estates Limited, Clidet No. 726 (Proprietary) Limited and Clidet No. 770 (Proprietary) Limited dated December 18, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008).
4.5
Shareholders Agreement between ARMGold/Harmony Joint Investment Company (Proprietary) Limited, Clidet No. 770 (Proprietary) Limited and Clidet No. 726 (Proprietary) Limited dated December 18, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008).
4.6
Sale of Shares and Claim Agreement with Randfontein Estates Limited, ARMGold/Harmony Joint Investment Company (Proprietary) Limited and Clidet No. 770 (Proprietary) Limited dated December 18, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008).
4.7
Deed of Extinguishment of Royalty (Hidden Valley Project) dated May June 11, 2008 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008).
4.8
Senior Facility Agreement with Nedbank Limited dated September 28, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008).
4.9
Master Lease Facility Agreement between Morobe Consolidated Goldfields Limited and Westpac Bank PNG Limited (Hidden Valley Project) dated June 14, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008).
4.10
Deed of Extinguishment of Royalty (Wafi-Golpu Project) dated February 16, 2009.
4.11
Master Purchase and Farmin Agrement dated May 22, 2008 between Morobe Consolidated Goldfields Limited, Wafi Mining Limited, Morobe Exploration Limited, Newcrest PNG 1 Limited, Newcrest PNG 2 Limited and Newcrest PNG 1 Limited.
4.12
Hidden Valley Joint Venture Agreement dated May 22, 2008 between Morobe Consolidated Goldfields Limited, Newcrest PNG 1 Limited and Hidden Valley Services Limited.
4.13
Master Co-operation Agreement dated on or about August 5, 2008 between Hidden Valley Services Limited, Wafi-

168

Golpu Services Limited, Morobe Exploration Services Limited, Harmony Gold (PNG Services) Pty Limited and Newcrest Mining Limited.
*4.14
Administration Expenses Agreement dated August 11, 2009 between Pamodzi Gold Free State (Proprietary) Limited (in provisional liquidation) and Harmony Gold Mining Company Limited
*4.15
Sale of Assets Agreement (South) dated September 8, 2009 between Pamodzi Gold Free State (Proprietary) Limited (in provisional liquidation) and Harmony Gold Mining Company Limited
*4.16
Sale of Assets Agreement (Waste Rock Dump) dated September 8, 2009 between Pamodzi Gold Free State (Proprietary) Limited (in provisional liquidation) and Avgold Limited
*4.17
Sale of Assets Agreement (North) dated September 8, 2009 between Pamodzi Gold Free State (Proprietary) Limited (in provisional liquidation), Avgold Limited and Harmony Gold Mining Company Limited
*4.18
Sale of Assets Agreement (Plant) dated September 8, 2009 between Pamodzi Gold Free State (Proprietary) Limited (in provisional liquidation) and Harmony Gold Mining Company Limited
*4.19
Facilities Agreement dated December 11, 2009 between Nedbank Limited, Harmony Gold Mining Company Limited and the Guarantors listed in Schedule 2
*4.20
Amended and Restated Sale Agreement dated March 18, 2010 between Harmony Gold Mining Company Limited, Africa Vanguard Resources (Doornkop) (Proprietary) Limited and Randfontein Estates Limited
8.1
Significant subsidiaries of Harmony Gold Mining Company Limited (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2009, filed on October 26, 2009).
*12.1
Certification of the principal executive officer required by Rule 13a-14(a) or Rule 15(d)-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
*12.2
Certification of the principal financial officer required by Rule 13a-14(a) or Rule 15(d)-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002.
*13.1
Certification of the principal executive officer, pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
*13.2
Certification of the principal financial officer, pursuant to Section 906 of the Sarbanes Oxley Act of 2002.
* Filed herewith

169

SIGNATURE
Pursuant to the requirements of Section 12 of the Exchange Act, we hereby certify that we meets all of the requirements for filing on Form 20-F and that we have duly caused this annual report to be signed on our behalf by the undersigned, thereunto duly authorized.
HARMONY GOLD MINING COMPANY LIMITED
By: /s/ Graham Briggs
Graham Briggs
Chief Executive Officer
Date: October 25, 2010

170

Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of Harmony Gold Mining Company Limited
In our opinion, the accompanying consolidated balance sheets and the related consolidated income statements, statements of other comprehensive income, of changes in shareholders’ equity and cash flows present fairly, in all material respects, the financial position of Harmony Gold Mining Company Limited and its subsidiaries at June 30, 2010 and 2009 and the results of their operations and their cash flows for each of the three years in the period ended June 30, 2010 in conformity with International Financial Reporting Standards as issued by the International Accounting Standards Board. Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of June 30, 2010, based on criteria established in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15 (b). Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our integrated audits. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
PricewaterhouseCoopers Inc
Johannesburg, Republic of South Africa
October 25, 2010

F-2

Consolidated income statements
For the years ended June 30, 2010
US Dollar
Figures in million Note 2010 2009 * 2008 *
Continuing operations
Revenue
1,489 1,277 1,269
Cost of sales
5 (1,383 ) (1,083 ) (1,122 )
Production costs
(1,103 ) (850 ) (918 )
Amortization and depreciation
(181 ) (139 ) (117 )
Impairment of assets
(43 ) (71 ) (40 )
Employment termination and restructuring costs
(27 ) (4 ) (29 )
Other items
(29 ) (19 ) (18 )
Gross profit
106 194 147
Corporate, administration and other expenditure
(50 ) (36 ) (30 )
Social investment expenditure
(11 ) (4 ) (1 )
Exploration expenditure
(29 ) (29 ) (28 )
Profit on sale of property, plant and equipment
6 14 114 —
Other expenses — net
7 (8 ) (3 ) (15 )
Operating profit
8 22 236 73
Profit/(loss) from associates
21 7 1 (11 )
Impairment of investment in associate
21 — (14 ) (12 )
Loss on sale of investment in subsidiary
9 (3 ) — —
Net gain/(loss) on financial instruments
10 5 (10 ) (58 )
Investment income
11 25 49 39
Finance cost
12 (32 ) (24 ) (70 )
Profit/(loss) before taxation
24 238 (39 )
Taxation
13 (44 ) (22 ) (65 )
Net (loss)/profit from continuing operations
(20 ) 216 (104 )
Discontinued operations
(Loss)/profit from discontinued operations
14 (4 ) 95 74
Net (loss)/profit
(24 ) 311 (30 )
Attributable to:
Owners of the parent
(24 ) 311 (30 )
Non-controlling interest
— — —
(Loss)/earnings per ordinary share (cents):
15
(Loss)/earnings from continuing operations
(5 ) 52 (26 )
(Loss)/earnings from discontinued operations
(1 ) 23 18
Total (loss)/earnings for the period
(6 ) 75 (8 )
Diluted (loss)/earnings per ordinary share (cents):
15
(Loss)/earnings from continuing operations
(5 ) 51 (26 )
(Loss)/earnings from discontinued operations
(1 ) 23 18
Total diluted (loss)/earnings for the period
(6 ) 74 (8 )
* The comparative periods have been re-presented for a change in discontinued operations. Refer to note 14.
The accompanying notes are an integral part of these consolidated financial statements.

F-3

Consolidated statements of other comprehensive income
For the years ended June 30, 2010
US Dollar
Figures in million Note 2010 2009 2008
Net (loss)/profit for the year
(24 ) 311 (30 )
Other comprehensive income/(loss) for the year, net of income tax
25 111 (204 )
Foreign exchange translation
26 25 105 (246 )
Fair value movement of available-for-sale investments
26 — 6 42
Total comprehensive income/(loss) for the year
1 422 (234 )
Attributable to:
Owners of the parent
1 422 (234 )
Non-controlling interest
— — —
The accompanying notes are an integral part of these consolidated financial statements.

F-4

Consolidated balance sheets
As at June 30, 2010
US Dollar
Figures in million Note 2010 2009
Assets
Non-current assets
Property, plant and equipment
16 3,874 3,614
Intangible assets
17 290 288
Restricted cash
18 19 21
Restricted investments
19 228 212
Investment in financial assets
20 2 7
Investment in associates
21 50 43
Deferred tax asset
13 246 222
Inventories
23 28 —
Trade and other receivables
24 10 10
Total non-current assets
4,747 4,417
Current assets
Inventories
23 129 134
Trade and other receivables
24 122 115
Income and mining taxes
10 6
Cash and cash equivalents
101 253
362 508
Assets of disposal groups classified as held for sale
14 32 —
Total current assets
394 508
Total assets
5,141 4,925
Equity and liabilities
Share capital and reserves
Share capital
25 4,027 4,004
Other reserves
26 (40 ) (72 )
Accumulated loss
(159 ) (108 )
Total equity
3,828 3,824
Non-current liabilities
Deferred tax
13 709 643
Provision for environmental rehabilitation
27 222 198
Retirement benefit obligation and other provisions
28 22 22
Borrowings
29 129 14
Total non-current liabilities
1,082 877
Current liabilities
Borrowings
29 27 33
Income and mining taxes
1 2
Trade and other payables
30 185 189
213 224
Liabilities of disposal groups classified as held for sale
14 18 —
Total current liabilities
231 224
Total equity and liabilities
5,141 4,925
The accompanying notes are an integral part of these consolidated financial statements.

F-5

Consolidated statements of changes in shareholders’ equity
For the years ended June 30, 2010
Number of
ordinary Share Accumulated Other
shares issued Share capital premium loss reserves Total
Figures in million (US Dollar)
Note
25 26
Balance — June 30, 2007
399,608,384 32 3,720 (388 ) 2 3,366
Dividends declared
— — — (1 ) — (1 )
Issue of shares
- Exercise of employee share options
1,786,213 — 12 — — 12
- Exchange for PNG Royalty
1,859,159 — 20 — — 20
Share-based payments
— — 3 — 6 9
Total comprehensive loss for the year
— — — (30 ) (204 ) (234 )
Balance — June 30, 2008
403,253,756 32 3,755 (419 ) (196 ) 3,172
Issue of shares
- Exercise of employee share options
1,322,964 — 7 — — 7
- Exchange for PNG Royalty
3,364,675 — 23 — — 23
- Capital raising
18,045,441 1 186 — — 187
Share-based payments
— — — — 13 13
Total comprehensive income for the year
— — — 311 111 422
Balance — June 30, 2009
425,986,836 33 3,971 (108 ) (72 ) 3,824
Issue of shares
- Exercise of employee share options
505,584 — 3 — — 3
- Issued for AVRD investment
2,162,359 — 21 — — 21
Share-based payments
— — (1 ) — 20 19
Repurchase of equity interest (note 26(f))
— — — — (13 ) (13 )
Total comprehensive income for the year
— — — (24 ) 25 1
Dividends paid (1)
— — — (27 ) — (27 )
Balance — June 30, 2010
428,654,779 33 3,994 (159 ) (40 ) 3,828
(1) Dividend per share is disclosed under the earnings per share note. Refer to note 15
The accompanying notes are an integral part of these consolidated financial statements.

F-6

Consolidated cash flow statements
For the years ended June 30, 2010
US Dollar
Figures in million Notes 2010 2009 2008
Cash flow from operating activities
Cash generated by operations
31 214 319 268
Interest received
25 51 38
Dividends received
— — 5
Interest paid
(12 ) (31 ) (57 )
Income and mining taxes paid
(17 ) (85 ) (18 )
Cash generated by operating activities
210 254 236
Cash flow from investing activities
Increase in amounts invested in environmental trusts
(1 ) — (11 )
Decrease/(increase) in restricted cash
2 (9 ) 28
Proceeds on disposal of Big Bell operation
31 3 — —
Acquisition of Steyn 2 and Target 3
31 (36 ) — —
Proceeds on disposals of Papua New Guinea joint venture
31 — 235 —
Proceeds on disposals of Randfontein Cooke assets
31 — 209 —
Proceeds on disposal of South Kal Mine operation
31 — — 18
Proceeds on disposal of available-for-sale financial assets
7 — 184
Increase in intangible assets
(2 ) (4 ) (3 )
Decrease/(increase) in other non-current investments
1 (4 ) (11 )
Proceeds on disposal of property, plant and equipment
16 6 18
Additions to property, plant and equipment
(443 ) (339 ) (552 )
Cash (utilised)/generated by investing activities
(453 ) 94 (329 )
Cash flow from financing activities
Borrowings raised
168 — 323
Borrowings paid
(57 ) (427 ) (256 )
Ordinary shares issued
3 194 12
Dividends paid
(29 ) — (1 )
Cash generated/(utilised) by financing activities
85 (233 ) 78
Foreign currency translation adjustments
6 85 (2 )
Net (decrease)/increase in cash and equivalents
(152 ) 200 (17 )
Cash and equivalents — beginning of period
253 53 70
Cash and equivalents — end of period
101 253 53
The accompanying notes are an integral part of these consolidated financial statements.

F-7

Notes to the consolidated financial statements
For the years ended June 30, 2010
1 General information
Harmony Gold Mining Company Limited (“ the Company ”) and its subsidiaries (collectively “Harmony” or the “group” ) are engaged in gold mining and related activities, including exploration, extraction and processing. Gold bullion, the group’s principal product, is currently produced at its operations in South Africa and Papua New Guinea, where the construction of the Hidden Valley Mine is substantially complete. Hidden Valley Mine reached commercial levels of production during May 2010.
The Company is a public company, incorporated and domiciled in South Africa. The address of its registered office is Randfontein Office Park, Corner Main Reef Road and Ward Avenue, Randfontein, 1759.
The consolidated financial statements were authorized for issue by the board of directors on October 11, 2010
2 Accounting policies
The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied in all years presented, unless otherwise stated.
2.1 Basis of preparation
The financial statements of the group have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“ IFRS ”), IFRIC Interpretations and the Companies Act of South Africa applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of available-for-sale financial assets and financial assets and financial liabilities at fair value through profit or loss.
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires management to exercise its judgement in the process of applying the group’s accounting policies. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.
New standards, amendments to standards and interpretations to existing standards adopted by the group:
* The following amendment to a standard has become effective and the effect has been disclosed by the group:
IFRS 7 (Amendment) — Financial Instruments disclosures: Improving Disclosures about Financial Instruments (effective from periods beginning January 1, 2009).
The amendment increases the disclosure requirements about fair value measurement and reinforces existing principles for disclosure about liquidity risk. The amendment introduces a three-level hierarchy for fair value measurement disclosure and requires some specific quantitative disclosures for financial instruments in the lowest level in the hierarchy. In addition, the amendment clarifies and enhances existing requirements for the disclosure of liquidity risk primarily requiring a separate liquidity risk analysis for derivative and non-derivative financial liabilities. The effect of the amendment has been disclosed in note 4, Financial Risk Management.
* The following standards or amendments to standards have become effective but was not relevant to the group:
IFRS 1 and IAS 27 (Amendment) — IFRS 1 First-Time Adoption of International Financial Reporting Standards and IAS 27 Consolidated and Separate Financial Statements: Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate.
IAS 39 (Amendment) — IAS 39 Financial Instruments: Recognition and Measurement Exposures Qualifying for Hedge Accounting.
IFRIC 15 — Agreements for the Construction of Real Estate.
* The following standards or amendments to standards have become effective but had no impact on the results of the group:
IFRS 2 (Amendment) — Share-Based Payment: Vesting Conditions and Cancellations (effective from periods beginning January 1, 2009).
The amendment deals with two matters. It clarifies that vesting conditions are service conditions and performance conditions only. Other features of a share-based payment are not vesting conditions. It also specifies that all cancellations, whether by the entity or by other parties, should receive the same accounting treatment.
IFRS 3 (Revised) — Business Combinations (effective from periods beginning July 1, 2009).
The new standard continues to apply the acquisition method to business combinations, with some significant changes. For example, all payments to purchase a business are to be recorded at fair value at the acquisition date, with some contingent payments subsequently re-measured at fair value through income. Goodwill may be calculated based on the parent’s share of net assets or it may include goodwill related to the minority interest. All transaction costs will be expensed.

F-8

Notes to the consolidated financial statements
For the years ended June 30, 2010
IAS 18 (Amendment) — Revenue (no effective date, amendment is made to the appendix which is not part of the standard, effective on date of publication)
The amendment is part of the International Accounting Standards Board (“ IASB ”) annual improvements project published in April 2009. An additional paragraph has been added to the appendix to IAS 18, providing guidance on whether an entity is acting as principal or agent.
IAS 27 (Revised) — Consolidated and separate financial statements (effective from periods beginning July 1, 2009)
The revised standard requires the effects of all transactions with non-controlling interests to be recorded in equity if there is no change in control. They will no longer result in goodwill or gains and losses. The standard also specifies the accounting when control is lost. Any remaining interest in the entity is re-measured to fair value and a gain or loss is recognized in profit or loss. A corresponding amendment to IAS 21 was made as a result of IAS 27 (Revised) that clarifies that upon partial disposal of a subsidiary that includes a foreign operation, the group is required to re-attribute the proportionate share of the cumulative exchange differences recognized in other comprehensive income to the non-controlling interests in that foreign operation (i.e. the transaction is recognized in equity). Only upon loss of control of a subsidiary that includes a foreign operation is the cumulative amount of exchange differences relating to that foreign operation reclassified from other comprehensive income to profit or loss.
IAS 32 and IAS 1 (Amendment) — IAS 32 Financial Instruments: Presentation and IAS 1 Presentation of financial statements: Puttable Financial Instruments and Obligations Arising on Liquidation (effective from periods beginning January 1, 2009).
The amendments require entities to classify the following types of financial instruments as equity, provided they have particular features and meet specific conditions: a) puttable financial instruments (for example, some shares issued by co-operative entities); b) instruments, or components of instruments, that impose on the entity an obligation to deliver to another party a pro rata share of the net assets of the entity only on liquidation (for example, some partnership interests and some shares issued by limited life entities). Additional disclosures are required about the instruments affected by the amendments.
IFRIC 9 and IAS 39 — Embedded Derivatives (effective from periods beginning 1 July 2009)
The amendment results in a mandatory assessment of an embedded derivative following reclassification of a financial assets out of the fair value through profit or loss category. The assessment will not have taken place at initial recognition, as the entire asset was accounted for at fair value. The amendment is necessary to ensure that, following a reclassification from the fair value category, entities apply the requirements for the separation of an embedded derivative that is not closely related to the host contract. The assessment should be made on the basis of the circumstances that existed when the entity first became a party to the contract. In addition, if the fair value of the embedded derivative that would have to be separated cannot be reliably measured, the hybrid financial asset in its entirety should remain in the fair value through profit or loss category.
IFRIC 16 — Hedges of a Net Investment in a Foreign Operation (effective from periods beginning October 1, 2008)
IFRIC 16 provides guidance on identifying the foreign currency risks that qualify as a hedged risk (in the hedge of a net investment in a foreign operation). It secondly provides guidance on where, within a group, hedging instruments that are hedges of a net investment in a foreign operation can be held to qualify for hedge accounting. Thirdly, it provides guidance on how an entity should determine the amounts to be reclassified from equity to profit or loss for both the hedging instrument and the hedged item.
IFRIC 17 — Distributions of Non-cash Assets to Owners (effective from periods beginning July 1, 2009)
IFRIC 17 applies to the accounting for distributions of non-cash assets (commonly referred to as dividends in specie) to the owners of the entity. The interpretation clarifies that: a dividend payable should be recognized when the dividend is appropriately authorized and is no longer at the discretion of the entity; an entity should measure the dividend payable at the fair value of the net assets to be distributed; and an entity should recognize the difference between the dividend paid and the carrying amount of the net assets distributed in profit or loss.
IFRIC 18 — Transfers of assets from customers (effective from periods beginning July 1, 2009)
The interpretation clarifies the accounting treatment for transfers of property, plant and equipment received from customers. This Interpretation applies to agreements with customers in which the entity receives cash from a customer when that amount of cash must be used only to construct or acquire an item of property, plant and equipment and the entity must then use the item of property, plant and equipment either to connect the customer to a network or to provide the customer with on-going access to a supply of goods and services, or to do both.
Improvements projects
These amendments are the result of conclusions the Board reached on proposals made in its annual improvement project. Unless otherwise specified, the amendments are effective for annual accounting periods beginning on or after January 1, 2009, although entities are permitted to adopt them earlier. The group does not expect the new or revised statements and revised interpretations to have a significant effect on the financial statements.

F-9

Notes to the consolidated financial statements
For the years ended June 30, 2010
Standards, amendments to standards and interpretations to existing standards that are not yet effective and have not been early adopted by the group:
At the date of authorization of these financial statements, the standards, amendments to standards and interpretations listed below were in issue but not yet effective. These new standards and interpretations have not been early adopted by the group and a reliable estimate of the impact of the adoption thereof for the group cannot yet be determined for all of them, as management is still in the process of determining the impact of these standards and interpretations on future financial statements. The group plans on adopting these standards, amendments to standards and interpretations on the dates when they become effective.
IFRS 1 (Amendment): First-time Adoption of International Financial Reporting Standards — Additional Exemptions for First-time Adopters (effective for periods beginning on or after January 1, 2010)
The amendment addresses the retrospective application of IFRSs to particular situations including: the use of deemed cost for oil and gas assets; determination of whether an arrangement contains a lease; and decommissioning liabilities included in the cost of property, plant and equipment and is aimed at ensuring that the entities applying IFRSs will not face undue cost or effort in the transition process. This amendment will not have an impact on the group.
IFRS 1 (Amendment): First-time Adoption of International Financial Reporting Standards — Limited Exemptions from Comparative IFRS 7 Disclosures for First-time Adopters (effective for periods beginning on or after July 1, 2010)
The additional amendment relieves first-time adopters of IFRSs from presenting comparative information for new three level classification disclosures required by the March 2009 amendments to IFRS 7 “Financial Instruments: Disclosures”. It thereby ensure that first-time adopters benefit from the same transition provisions that amendments to IFRS 7 provides to current IFRS preparers. This amendment will not have an impact on the group.
IFRS 2 (Amendment) — Group cash-settled and share-based payment transactions (effective from periods beginning January 1, 2010)
The amendment provide a clear basis to determine the classification of share based payments in consolidated and separate financial statements. In addition to incorporating IFRIC 8, ‘Scope of IFRS 2’, and IFRIC 11, ‘IFRS 2 – group and treasury share transactions’, the amendment also expand on the guidance in IFRIC 11 to address group arrangements that were not considered by that interpretation. The group does not have a cash settled share based payments scheme.
IFRS 5 (Amendment) — Measurement of non-current assets (or disposal groups) classified as held for sale (effective from periods beginning January 1, 2010)
The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment provides clarification on disclosures required in respect of non-current assets (or disposal groups) classified as held for sale or discontinued operations. It also clarifies that the general requirement of IAS 1 still apply, particularly paragraph 15 (to achieve a fair presentation) and paragraph 125 (sources of estimation uncertainty). The group is still in process of determining the effect of this amendment on the financial statements.
IFRS 9 — Financial instruments (effective from periods beginning January 1, 2013)
IFRS 9 simplifies accounting for financial assets as requested by many constituents and stakeholders. In particular, it replaces multiple measurement categories in IAS 39 with a single principle-based approach to classification. IFRS 9 removes complex rule-driven embedded derivative guidance in IAS 39 and requires financial assets to be classified in their entirety. IFRS 9 eliminates the need for multiple impairment models, such that only one impairment model for financial assets carried at amortized cost will be required. The group is still in the process of determining the effect of this standard on the financial statements.
IAS 1 (Amendment) — Presentation of financial statements (effective from periods beginning January 1, 2010)
The amendment is part of the International Accounting Standards Board’s (IASB) annual improvements project published in April 2009. The amendment provides clarification that the potential settlement of a liability by the issue of equity is not relevant to its classification as current or non current. By amending the definition of current liability, the amendment permits a liability to be classified as non-current (provided that the entity has an unconditional right to defer settlement by transfer of cash or other assets for at least 12 months after the accounting period) notwithstanding the fact that the entity could be required by the counterparty to settle in shares at any time.
IAS 7 (Amendment) — Statement of cash flows (effective from periods beginning January 1, 2010)
The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment clarifies that only expenditure that results in a recognized asset in the statement of financial position can be classified as a cash flow from investing activities. The group currently does not expect the amendment to impact the financial statements.

F-10

Notes to the consolidated financial statements
For the years ended June 30, 2010
IAS 17 (Amendment) — Leases (effective from periods beginning January 1, 2010)
The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment deletes relevant guidance regarding classification of leases of land, so as to eliminate inconsistency with the general guidance on lease classification. As a result, leases of land should be classified as either finance or operating, using the general principles of IAS 17.
IAS 24 (Revised) — Related-party disclosures (effective from periods beginning January 1, 2011)
The revised standard removes the requirement for government-related entities to disclose details of all transactions with the government and other government-related entities. It also clarifies and simplifies the definition of a related party.
IAS 32 (Amendment) — Classification of rights issues (effective from periods beginning February 1, 2010)
The amendment recognizes that the previous requirement to classify foreign-currency denominated rights issued to all existing shareholders on a pro rata basis as derivative liabilities is not consistent with the substance of the transaction, which represents a transaction with owners acting in their capacity as such. The amendment therefore creates an exception to the ‘fixed for fixed’ rule in IAS 32 and requires rights issues within the scope of the amendment to be classified as equity.
IAS 36 (Amendment) — Impairment of Assets (effective from periods beginning January 1, 2010)
The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment clarifies that the largest cash generating unit (or group of units) to which goodwill should be allocated for the purposes of impairment testing is an operating segment as defined by paragraph 5 of IFRS 8 — ‘Operating segments’, that is; before the aggregation of segments with similar economic characteristics permitted by paragraph 12 of IFRS 8.
IAS 38 (Amendment) — Intangible assets (effective from periods beginning January 1, 2010)
The amendment is part of the IASB’s annual improvements project published in April 2009. The amendment clarifies the description of valuation techniques commonly used by entities when measuring the fair value of intangible assets acquired in a business combination, where there is no active market. The effect of the amendment will be recorded in future periods when such transactions are entered into.
IAS 39 (Amendment) — Financial instruments: Recognition and measurement (effective from periods beginning January 1, 2010)
There were 3 amendments made to IAS 39 as part of the IASB’s annual improvements project published in April 2009.
(i) The scope exemption within IAS 39.2(g) was amended to clarify that it only applies to forward contracts that will result in a business combination at a future date, as long as the term of the forward contract does ‘not exceed a reasonable period normally necessary to obtain any required approvals and to complete the transaction’.
(ii) Clarification that amounts deferred in equity are only reclassified to profit or loss when the underlying hedged cash flows affect profit or loss.
(iii) An additional example of a closely related embedded prepayment option in a debt instrument was added to the adoption guidance in IAS 39 AG 30. Wording with respect to the assessment of put and call features in convertible instruments was clarified.
IFRIC 14 (Amendment): The Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction — Prepayment of Minimum Funding Requirements (effective for financial periods beginning on or after January 1, 2011).
This amendment applies in the limited circumstances when an entity is subject to minimum funding requirements and makes an early payment of contributions to cover those requirements. The amendment permits such an entity to treat the benefit of such an early payment as an asset. The group does not believe the amendment will have an impact on the group.
IFRIC 19 — Extinguishing financial liabilities with equity instruments (effective from periods beginning July 1, 2010)
This interpretation addresses the accounting by an entity when the terms of a financial liability are renegotiated and result in the entity issuing equity instruments to a creditor of the entity to extinguish all or part of the financial liability. It does not address the accounting by the creditor, nor does it apply to situations where the liability may be extinguished with equity instruments in accordance with the agreed terms of the instrument (for example, convertible bonds). The group currently does not expect this interpretation to have a material effect on the financial statements.
Improvements projects
Certain improvements to IFRS 2009 (periods beginning on or after January 1, 2010) and IFRS 2010 (each has its own effective date, the earliest being periods beginning on or after July 1, 2010).

F-11

Notes to the consolidated financial statements
For the years ended June 30, 2010
2.2 Consolidation
The consolidated financial information includes the financial statements of the Company, its subsidiaries, its proportionate interest in joint ventures, special purpose entities (“ SPEs ”) and its interests in associates.
(i) Subsidiaries, which are those entities in which the group generally has an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies, are consolidated. Subsidiaries are consolidated from the date on which control is transferred to the group and are no longer consolidated when control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given, shares issued or liabilities assumed at the date of exchange plus costs directly attributable to the exchange. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests. Non-controlling interests are carried at a proportion of the net identifiable assets acquired.
The excess of the cost of acquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the income statement.
In situations of successive share purchases when control already existed at the date of further acquisition, no fair value adjustment is made to the identifiable net assets acquired and any excess/deficit purchase price over the carrying value of non-controlling interests acquired is accounted for in equity.
Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated on consolidation. Unrealized losses are also eliminated and may provide evidence of an impairment that should be recognized. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the group.
(ii) Associates are those entities over in which the group has significant influence, but not control over operational and financial policies, generally accompanying a shareholding of between 20% and 50% of the voting rights.
Investments in associates are accounted for by using the equity method of accounting, and are initially recognized at cost. The cost of an acquisition is measured as the fair value of the assets given, shares issued or liabilities assumed at the date of exchange plus costs directly attributable to the acquisition.
The group’s share of the associates’ post-acquisition profits or losses is recognized in the income statement, and its share of post-acquisition movement in reserves is recognized in other reserves. Cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the group’s shares of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate.
The group’s investment in associates includes goodwill identified on acquisition, net of any accumulated impairment losses.
The carrying value of an associate is reviewed on a regular basis and, if an impairment in the carrying value has occurred, it is written off in the period in which such impairment is identified.
Unrealized gains on transactions between the group and its associates are eliminated to the extent of the group’s interest in the associates. Unrealized losses are also eliminated unless the transaction provide evidence of an impairment that should be recognized.
Accounting policies of associates have been reviewed to ensure consistency with the policies adopted by the group.
(iii) Joint venture entities are those entities in which the group holds an interest and shares joint control over strategic, financial and operating decisions with one or more other ventures under a contractual arrangement. The group’s interest in jointly controlled entities is accounted for by proportionate consolidation. Under this method, the group includes its share of the joint venture’s individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the group’s financial statements.
The group recognizes the portion of gains or losses on the sale of assets by the group to the joint venture that is attributable to the other ventures. The group does not recognize its share of profits or losses from the joint venture that result from the purchase of assets by the group from the joint venture until it resells the assets to an independent party. However, if a loss on the transaction provides evidence of a reduction in the net realizable value of current assets or an impairment loss, the loss is recognized immediately.

F-12

Notes to the consolidated financial statements
For the years ended June 30, 2010
Joint ventures operations and assets: The group and company has contractual arrangements with other participants to engage in joint activities or invest in joint assets other than through a separate entity. The group and company includes its assets, liabilities and share of income and expenditure in such joint venture operations with similar items in its financial statements.
(iv) Special purpose entities (SPEs) are those undertakings that are created to satisfy specific business needs of the group, These are consolidated where the group has the right to the majority of the benefits of the SPE and/or is exposed to the majority of the risk thereof. SPEs are consolidated in the same manner as subsidiaries when the substance of the relationship indicates that the SPE is controlled by the group.
(v) Transactions with non-controlling interests. The group applies a policy of treating transactions with minority interests as transactions with equity owners of the group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying value of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity.
2.3 Foreign currency translation
(i) Functional and presentation currency : Items included in the financial statements of each of the group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The consolidated financial statements are presented in South African Rand and US dollars for the benefit of local and international users. The Company’s financial statements are presented in its functional currency, being South African Rand.
For translation of the Rand financial statement items to US dollar, the average of R7.58 (2009 :R9.00) (2008: R7.26) per US$1 was used for income statement items (unless this average was not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case these items were translated at the rate on the date of the transactions) and the closing rate of R7.63 (2009: R7.72) per US$1 for asset and liability items. Equity items were translated at historic rates.
References to “A$” refers to Australian currency, “R” to South African currency, “$” or “US$” to United States currency and “K” or “Kina” to Papua New Guinean currency.
(ii) Transactions and balances: Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation to year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement, except where deferred in equity as qualifying cash flow hedges and qualifying investment hedges. Gains and losses recognized in the income statement are included in the determination of “other expenses — net”.
Changes in the fair value of monetary securities denominated in a foreign currency classified as available for sale are analyzed between translation differences resulting from changes in the amortized cost of the security, and other changes in the carrying amount of the security. Translation differences related to the changes in amortized cost are recognized in profit or loss, and other changes in carrying amount are recognized in other comprehensive income.
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available for sale are included in other comprehensive income.
(iii) Group companies: The results and financial position of all group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows:
a) assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet;
b) income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the date of the transactions);
c) all resulting exchange differences are recognized as a separate component of other comprehensive income;
d) equity items are translated at historic rates.

F-13

Notes to the consolidated financial statements
For the years ended June 30, 2010
On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to other comprehensive income. When a foreign operation is sold or control is otherwise lost, exchange differences that were recorded in other comprehensive income are recognized in profit or loss in the period in which the foreign operation is sold or control is otherwise lost.
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign entity and translated at the closing rate.
2.4 Segmental reporting
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the executive committee. Refer to note 38 for detailed guidance on the identification of an operating and reportable segment.
2.5 Property, plant and equipment
(i) Mining assets including mine development costs and mine plant facilities are initially recorded at cost, where after it is measured at cost less accumulated depreciation and impairment. Costs includes expenditure that is directly attributable to the acquisition of the items. Subsequent costs are included in the asset’s carrying amount or recognized as a separate assets as appropriate only when it is probable that future economic benefits associated with the item will flow to the group and the cost of the item can be measured reliably.
At the group’s surface mines, when it has been determined that a mineral property can be economically developed as a result of establishing proved and probable reserves, costs incurred to develop the property are capitalized as incurred until the mine is considered to have moved into the production phase. These costs include costs to further delineate the ore body and remove overburden to initially expose the ore body. Stripping costs incurred during the production phase to remove waste ore are deferred and charged to production costs on the basis of the average life-of-mine stripping ratio. The average stripping ratio is calculated as the number of tonnes of waste material removed per tonne of ore mined. The average life-of-mine ratio is revised annually in the light of additional knowledge and change in estimates. The cost of “excess stripping” is capitalized as mine development costs when the actual stripping ratio exceeds the average life-of-mine stripping ratio. Where the average life-of-mine stripping ratio exceeds the actual stripping ratio, the cost is charged to the income statement.
At the group’s underground mines, all costs incurred to develop the property, including costs to access specific ore blocks or other areas of the underground mine, are capitalized to the extent that such costs will provide future economic benefits. These costs include the cost of shaft sinking and access, the costs of building access ways, lateral development, drift development, ramps, box cuts and other infrastructure development.
During the development stage, the group may enter into arrangements whereby it agrees to transfer a part of its mineral interest in consideration for an agreement by another party (the farmee) to meet certain expenditure which would otherwise have to be undertaken by the group. Such arrangements, referred to as farm-in transactions, are accounted for as executory contracts – particularly when the expenditures to be incurred by the farmee are discretionary in nature, and the mineral interest to be transferred may vary depending upon such discretionary spend. At the date of completion of each party’s obligations under the farm-in arrangement, the group derecognizes the proportion of the mining assets and liabilities associated with the joint venture that it has sold to the farmee, and recognizes its interest in the capital expenditure (consideration received) at fair value within operating assets. The difference between the net disposal proceeds and the carrying amount of the asset disposed of is recognized in profit or loss.
Borrowing costs are capitalized to the extent that they are directly attributable to the acquisition and construction of qualifying assets. Qualifying assets are assets that take a substantial time to get ready for their intended use. These costs are capitalized until the asset moves into the production phase. Other borrowing costs are expensed.
The net assets of operations placed on care and maintenance are impaired to their recoverable amount. Expenditure on the care and maintenance of these operations is charged against income, as incurred.
Where a depreciable asset is used in the construction or extension of a mine, the depreciation is capitalized against the mines cost.
(ii) Non-mining assets: Land is shown at cost and not depreciated. Other non-mining fixed assets are shown at cost less accumulated depreciation and accumulated impairment losses.

F-14

Notes to the consolidated financial statements
For the years ended June 30, 2010
(iii) Undeveloped properties are initially valued at the fair value of resources obtained through acquisitions. The carrying value of these properties are annually tested for impairment. Once development commences, these properties are transferred to mining properties and accounted for in accordance with the related accounting policy.
(iv) Mineral and surface use rights represent mineral and surface use rights for parcels of land both owned and not owned by the group. Mineral and surface rights include acquired mineral use rights in production, development and exploration phase properties. The amount capitalized related to a mineral and surface right represents its fair value at the time it was acquired, either as an individual asset purchase or as part of a business combination, and is recorded at cost of acquisition.
Production phase mineral interests represent interests in operating properties that contain proved and probable reserves. Development phase mineral interests represent interests in properties under development that contain proved and probable reserves. Exploration phase mineral interests represent interests in properties that are believed to potentially contain (i) other mineralized material such as inferred material within pits; measured, indicated and inferred material with insufficient drill spacing to qualify as proved and probable reserves; (ii) around-mine exploration potential such as inferred material not immediately adjacent to existing reserves and mineralization but located within the immediate mine infrastructure; (iii) other mine-related exploration potential that is not part of measured, indicated or inferred material and is comprised mainly of material outside of the immediate mine area; or (iv) greenfield exploration potential that is not associated with any production, development or exploration phase property as described above.
The group’s mineral use rights are enforceable regardless of whether proved or probable reserves have been established. In certain limited situations, the nature of a use changes from an exploration right to a mining right upon the establishment of proved and probable reserves. the group has the ability and intent to renew mineral use rights where the existing term is not sufficient to recover all identified and valued proved and probable reserves and/or undeveloped mineral interests.
(v) Leased assets: The group leases certain property, plant and equipment. Leases of property, plant and equipment where the group has substantially all the risks and rewards of ownership are classified as finance leases. The assets are capitalized at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments.
Finance lease payments are allocated using the rate implicit in the lease, which is included in finance costs, and the capital repayment, which reduces the liability to the lessor. The corresponding rental obligations, net of finance charges, are included in non current Borrowings, with the current portion included under Current Liabilities.
Capitalized lease assets are depreciated over the shorter of their estimated useful lives and the lease terms.
(vi) Depreciation and amortization of mineral property interests, mineral and surface rights, mine development costs and mine plant facilities are computed principally by the units of production method over the life of mine based on estimated quantities of economically recoverable proved and probable reserves, which can be recovered in future from known mineral deposits.
In most instances, proved and probable reserves provide the best indication of the useful life of the Group’s mines (and related assets). However, in some instances, proved and probable reserves may not provide a realistic indication of the useful life of the mine (and related assets). This may be the case, for example, where management is confident that further resources will be converted into reserves and are approaching economic decisions affecting the mine on this basis, but has chosen to delay the work required to designate them formally as reserves. Management’s confidence in the economical recovery of such resources may be based on historical experience and available geological information. In instances where management is able to demonstrate the economic recovery of such resources with a high level of confidence, such additional resources, as well as the associated future development costs of accessing those resources, are included in the calculation of depreciation and amortization.
Changes in management’s estimates of economically recoverable reserves and resources impact depreciation and amortization on a prospective basis. During fiscal 2010, the Group revised its estimate of the useful lives of the Doornkop and Masimong operations to include certain resources in addition to proved and probable reserves. The inclusion of such resources resulted from increased confidence in the economic extraction of resources due to additional surface and underground drilling undertaken in the current year. The effect of including such resources in the useful life of these operations decreased annual depreciation by approximately US$1 million.

F-15

Notes to the consolidated financial statements
For the years ended June 30, 2010
(vii) Depreciation and amortization of non-mining fixed assets: Other non-mining fixed assets are depreciated on a straight line basis over their estimated useful lives as follows:
• Vehicles at 20% per year;
• Computer equipment at 33.3% per year; and
• Commercial, off-the-shelf software at 50% per year; and
• Furniture and equipment at 16.67% per year.
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date.
Gains and losses on disposals are determined by comparing proceeds with carrying amount and are recognized in the income statement.
(viii) Depreciation and amortization of mineral and surface use rights: Mineral rights associated with production phase mineral interests are amortized over the life of mine using the units-of-production method in order to match the amortization with the expected underlying future cash flows. Mineral interests associated with development and exploration phase mineral interests are not amortized until such time as the underlying property is converted to the production stage.
For details on the group’s accounting policy on impairments, refer to note 2.8.
2.6 Exploration costs
The group expenses all exploration and evaluation expenditures until it is concluded that a future economic benefit is more likely to be realized than not, i.e. ‘probable’. The information used to make that determination depends on the level of exploration as well as the degree of confidence in the ore body.
Exploration and evaluation expenditure on greenfield sites, being those where the group does not have any mineral deposits which are already being mined or developed, is expensed as incurred until a final feasibility study has been completed, after which the future pre-commercial production expenditure is capitalized within development costs if the final feasibility study demonstrates that future economic benefits are probable. Capitalization of pre-production cost ceases when commercial levels of production are reached. Commercial levels of production is discussed under “production start date” in note 3.12.
Exploration and evaluation expenditure on brownfield sites, being those adjacent to mineral deposits which are already being mined or developed, is expensed as incurred until the group is able to demonstrate that future economic benefits are probable through the completion of a feasibility study, after which the expenditure is capitalized as mine development cost. A ‘feasibility study’ consists of a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and which, if an effective method of mineral processing has been determined, includes a financial analysis based on reasonable assumptions of technical, engineering, operating economic factors and the evaluation of other relevant factors. The feasibility study, when combined with existing knowledge of the mineral property that is adjacent to mineral deposits that are already being mined or developed, allows the group to conclude that it is more likely than not that it will obtain future economic benefit from the expenditures.
Exploration and evaluation expenditure relating to extensions of mineral deposits which are already being mined or developed, including expenditure on the definition of mineralization of such mineral deposits, is capitalized as a mine development cost following the completion of an economic evaluation equivalent to a feasibility study. This economic evaluation is distinguished from a feasibility study in that some of the information that would normally be determined in a feasibility study is instead obtained from the existing mine or development. This information when combined with existing knowledge of the mineral property already being mined or developed allow the directors to conclude that more likely than not the group will obtain future economic benefit from the expenditures.
Exploration properties acquired are recognized in the balance sheet within development cost and are shown at cost less provisions for impairment determined in accordance with the group’s accounting policy on impairment of non-financial assets (note 2.8).
2.7 Intangible assets
Intangible assets consist of all identifiable non-monetary assets without physical substance. They are stated at cost less accumulated amortization and accumulated impairment losses, if any. The following are the main categories of intangible assets:

F-16

Notes to the consolidated financial statements
For the years ended June 30, 2010
(i) Intangible assets with an indefinite useful life
Intangible assets with an indefinite useful life are not amortized but tested for impairment on an annual basis. Goodwill represents the excess of the cost of an acquisition over the fair value of the group’s share of the net identifiable assets of the acquired subsidiary, associate, joint venture or business at the date of acquisition. Goodwill on acquisition of subsidiaries, joint ventures and businesses are included in intangible assets. Goodwill on acquisition of associates is included in investments in associates and tested for impairment as part of the overall balance.
Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are recognized immediately in the income statement and are not reversed. The impairment testing is performed annually on June 30 or when events or changes in circumstances indicate that it may be impaired.
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. If the composition of one or more cash-generating units to which goodwill has been allocated changes due to a re-organization, the goodwill is re-allocated to the units affected.
The gain or loss on disposal of an entity includes the carrying amount of goodwill relating to the entity sold.
(ii) Intangible assets with a finite useful life
Acquired computer software licenses that requires further internal development are capitalized on the basis of costs incurred to acquire and bring to use the specific software. Cost to bring to use the specific software, includes software development employee costs and attributable overheads. Development expenditure incurred that will not likely generate probable future economic benefits and cannot be reliability measured are recognized as an expense as incurred. Intangible assets with a finite useful life are amortized on a straight line basis of over their estimated useful lives, which are reviewed annually, as follows:
• Computer software at 20% per year.
2.8 Impairment of non-financial assets
Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment.
Assets that are subject to amortization are reviewed annually on June 30 for impairment or whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognized in the income statement for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Each operating shaft, along with allocated common assets such as plants and administrative offices, is considered to be a cash generating unit as each shaft is largely independent from the cash flows of other shafts and assets belonging to the group.
Fair value less cost to sell is generally determined by using discounted estimated future cash flows. Future cash flows are estimated based on quantities of recoverable minerals, expected gold prices (considering current and historical prices, price trends and related factors), production levels and cash costs of production, all based on life-of-mine plans. Future cash flows are discounted to their present value using a post tax discount rate that reflect current market assessments of the time value of money and risk specific to the asset.
The term “recoverable minerals” refers to the estimated amount of gold that will be obtained from reserves and resources and all related exploration stage mineral interests (except for other mine-related exploration potential and greenfields exploration potential discussed separately below) after taking into account losses during ore processing and treatment. Estimates of recoverable minerals from such related exploration stage mineral interests will be risk adjusted based on management’s relative confidence in such materials. In estimating future cash flows, assets are grouped at the lowest level for which there are identifiable cash flows that are largely independent of cash flows from other asset groups. With the exception of other mine-related exploration potential and greenfields exploration potential, estimates of future undiscounted cash flows are included on an area of interest basis, which generally represents an individual operating mine, even if the mines are included in a larger mine complex.
In the case of mineral interests associated with other mine-related exploration potential and greenfields exploration potential, cash flows and fair values are individually evaluated based primarily on recent exploration results and recent transactions involving sales of similar properties, if any. Assumptions underlying future cash flow estimates are subject to significant risks and uncertainties.

F-17

Notes to the consolidated financial statements
For the years ended June 30, 2010
Non-financial assets other than goodwill that suffered an impairment are reviewed annually for possible reversal of the impairment at June 30. Reversal of impairments is also considered when there is objective evidence to indicate that the asset is no longer impaired. Where an impairment subsequently reverses, the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount, but not higher than the carrying value that would have been determined had no impairment been recognized in prior years.
2.9 Financial instruments
Financial instruments are initially measured at fair value when the group becomes a party to their contractual arrangements. Transaction costs are included in the initial measurement of financial instruments, with the exception of financial instruments classified as at fair value through profit or loss. The subsequent measurement of financial instruments is discussed below.
A financial asset is derecognized when the right to receive cash flows from the asset has expired or the group has transferred its rights to receive cash and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the assets.
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires.
On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss recognized in equity is recognized in profit and loss.
On derecognition of a financial liability, the difference between the carrying amount of the liability extinguished or transferred to another party and the amount paid is recognized in profit or loss.
Financial assets and liabilities are offset and the net amount reported in the balance sheet when there is a legally enforceable right to offset the recognized amounts and there is an intention to settle on a net basis, or realize the asset and settle the liability simultaneously.
Financial assets
The group classifies its financial assets in the following categories: loans and receivables, available-for-sale, held-to-maturity and at fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition.
Purchases and sales of financial assets are recognized on trade-date, the date on which the group commits to purchase or sell the asset.
(i) Loans and receivables, are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the group provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables are subsequently measured at amortized cost using the effective interest method. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables include trade and other receivables (excluding VAT and prepayments), restricted cash and cash and cash equivalents.
Cash and cash equivalents
Cash and cash equivalents are defined as cash on hand, deposits held at call with banks and short-term highly liquid investments with original maturities of three months or less. Cash and cash equivalents exclude restricted cash (discussed below).
Restricted cash
Restricted cash consists of cash collateral posted for guarantees and performance bonds related to environmental rehabilitation and as security deposits on mining tenements.
Trade and other receivables
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. If collection is expected in one year or less, they are classified as current assets. If not, they are presented as non-current assets. A provision for impairment of receivables is established when there is objective evidence that the group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The carrying amount of the asset is reduced through the use of a provision for impairment (allowance account) and the amount of the loss is recognized in the income statement. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in the income statement.

F-18

Notes to the consolidated financial statements
For the years ended June 30, 2010
(ii) Available-for-sale financial assets , are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless the investment matures or management intends to dispose of the investment within 12 months of the balance sheet date.
Available-for-sale financial assets are subsequently carried at fair value. Changes in the fair value of monetary securities denominated in a foreign currency and classified as available for sale are analyzed between translation differences resulting from changes in amortized cost of the security and other changes in the carrying amount of the security. The translation differences on monetary securities are recognized in profit or loss, while translation differences on non-monetary securities are recognized in other comprehensive income. Changes in the fair value of monetary and non-monetary securities classified as available for sale are recognized in other comprehensive income.
When securities classified as available for sale are sold or impaired, the accumulated fair value adjustments recognized in other comprehensive income are reclassified in the income statement as profit or loss from investment securities. Dividends on available-for-sale equity instruments are recognized in the income statement as part of investment income when the group’s right to receive payments is established. Interest on available-for-sale securities calculated using the effective interest method is recognized in the income statement as part of investment income.
The fair values of quoted investments are based on current bid prices. If the value for a financial instrument cannot be obtained from an active market, the group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances. The valuation techniques make maximum use of market inputs and rely as little as possible on entity-specific inputs.
The group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available for sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If considered impaired, the cumulative loss – measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss – is removed from other reserves and recognized in the income statement. Subsequent increases in the fair value are recognized in equity — impairment losses recognized in the income statement on equity instruments are not reversed through the income statement.
(iii) Held-to-maturity investments are non-derivative financial assets with fixed or determinable payments and fixed maturities that the group’s management has the positive intention and ability to hold to maturity. The group’s held-to-maturity investments are subsequently measured at amortized cost using the effective interest method.
A portion of restricted investments held by the trust funds (refer note 19) are classified as held-to-maturity investments.
The group assesses at the end of each reporting period whether there is objective evidence that a held-to-maturity investment is impaired as a result of an event. The amount of the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future credit losses that have not been incurred) discounted at the held-to-maturity investment’s original effective interest rate. The asset’s carrying amount of the asset is reduced and the amount of the loss is recognized in the consolidated income statement. If a held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate determined under the contract.
If, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognized, the reversal of the previously recognized impairment loss is recognized in the consolidated income statement.
(iv) Financial assets at fair value through profit or loss have two sub-categories: financial assets held for trading, and those designated at fair value through profit or loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management in terms of specified criteria. Derivatives are also categorized as held for trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held for trading or are expected to be realized within 12 months of the balance sheet date. These assets are subsequently measured at fair value with gains or losses arising from changes in fair value recognized in the income statement in the period in which they arise. Dividend income from these assets is recognized in the income statement as part of investment income when the group’s right to receive payment is established.

F-19

Notes to the consolidated financial statements
For the years ended June 30, 2010
Financial liabilities
Borrowings
Borrowings are initially recognized at fair value net of transaction costs incurred and subsequently measured at amortized cost, comprising original debt less principal payments and amortization, using the effective yield method. Any difference between proceeds (net of transaction cost) and the redemption value is recognized in the income statement over the period of the borrowing using the effective interest rate method.
Fees paid on the establishment of loan facilities are capitalized as a pre-payment and amortized over the period of the facility to which it relates.
Borrowings are classified as current liabilities unless the group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date.
Trade and other payables
Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. Payables are classified as current liabilities if payment is due within a year or less. If not, they are presented as non-current liabilities.
2.10 Inventories
Inventories which include bullion on hand, gold in process, gold in lock-up, ore stockpiles and stores and materials, are measured at the lower of cost and net realizable value after appropriate allowances for redundant and slow moving items. Cost of bullion, gold in process and gold in lock-up is determined by reference to production cost, including amortization and depreciation at the relevant stage of production. Ore stockpiles are valued at average production cost. Stockpiles and gold in lock-up are classified as a non current asset where the stockpile exceeds current processing capacity and where a portion of static gold in lock-up is expected to be recovered more than 12 months after balance sheet date.
Stores and materials consist of consumable stores and are valued at weighted average cost.
Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to perform the sale.
Gold in process inventories represent materials that are currently in the process of being converted to a saleable product. Conversion processes vary depending on the nature of the ore and the specific mining operation, but include mill in-circuit, leach in-circuit, flotation and column cells, and carbon in-pulp inventories. In-process material is measured based on assays of the material fed to process and the projected recoveries at the respective plants. In-process inventories are valued at the average cost of the material fed to process attributable to the source material coming from the mine, stockpile or leach pad plus the in-process conversion costs, including the applicable depreciation relating to the process facility, incurred to that point in the process. Gold in process includes gold in lock-up which is generally measured from the plants onwards. Gold in lock-up is estimated as described under the section dealing with critical accounting estimates and judgements (refer to note 3). It is expected to be extracted when plants are demolished at the end of its useful lives, which is largely dependant on the estimated useful life of the operations feeding the plants. Where mechanized mining is used in underground operations, in-progress material is accounted for at the earliest stage of production when reliable estimates of quantities and costs are capable of being made. Given the varying nature of the group’s open pit operations, gold in process represents either production in broken ore form or production from the time of placement on heap leach pads.
2.11 Non-current assets or disposal group held for sale and discontinued operations
A non-current asset or disposal group (a business grouping of assets and their related liabilities) is designated as held for sale and stated at lower of carrying value and fair value less cost to sell, when its carrying amount will be recovered principally through a sale transaction rather than through continuing use. The classification as held for sale of a non-current asset or disposal group occurs when it is available for immediate sale in its present condition and the sale is highly probable. A sale is considered highly probable if management is committed to a plan to sell the non-current asset or disposal group, an active divestiture programme has been initiated, the non-current assets or disposal group is marketed at a price reasonable to its fair value and the disposal will be completed within one year from classification.
Upon classification of a non-current asset or disposal group as held for sale, it is reviewed for impairment. The impairment charged to the income statement is the excess of the carrying value of the non-current asset or disposal group over its expected net selling price (fair value less costs to sell). At each subsequent reporting date, the carrying values are remeasured for possible impairment. A reversal of impairment is recognized for any subsequent increase in net selling price but not in excess of the cumulative impairment loss already recognized.
No depreciation is provided on non-current assets from the date they are classified as held for sale.

F-20

Notes to the consolidated financial statements
For the years ended June 30, 2010
When a disposal group is classified as held for sale it is also necessary to assess whether or not the criteria for discontinued operations are met. If the criteria are met, the results of the disposal group are classified as discontinued operations in the income statement and the comparative amounts restated for all periods presented. No restatement of balance sheet comparative amounts are done.
If a non-current asset or disposal group is classified as held for sale but the criteria for classification as held for sale are no longer met, the disclosure of such non-current asset or disposal group as held for sale is ceased.
On ceasing such classification, the non-current assets are reflected at the lower of:
• the carrying amount before classification as held for sale adjusted for any depreciation or amortization that would have been recognized had the assets not been classified as held for sale; or
• the recoverable amount at the date the classification as held for sale ceases. The recoverable amount is the amount at which the asset would have been recognized after the allocation of any impairment loss arising on the cash generating unit as determined in accordance with the group’s policy on impairment of non-financial assets.
Any adjustment required to be made on reclassification is charged to the income statement on reclassification, and included in income from continuing operations.
Where the disposal group was also classified as a discontinued operation, the subsequent classification from held for sale also requires that the discontinued operation be included in continuing operations. Comparative information in the income statement and cash flow note disclosures relating to the classification as a discontinued operation is re-presented accordingly. Comparative information in the balance sheet is not re-presented for this change.
2.12 Environmental obligations
Estimated long-term environmental obligations, comprising pollution control, rehabilitation and mine closure, are based on the group’s environmental management plans in compliance with current technological, environmental and regulatory requirements.
Based on disturbances to date, the net present value of expected rehabilitation cost estimates are recognized and provided for in full in the financial statements. The estimates are reviewed annually and are discounted using a pre-tax risk-free rate that is adjusted to reflect the current market assessments of the time value of money and the risks specific to the obligation.
Annual changes in the provision consist of finance costs relating to the change in the present value of the provision and inflationary increases in the provision estimate, as well as changes in estimates. The present value of environmental disturbances created are capitalized to mining assets against an increase in the rehabilitation provision. If a decrease in liability exceed the carrying amount of the asset, the excess is recognized immediately in the income statement. If the asset value is increased and there is an indication that the revised carrying value is not recoverable, an impairment test is performed in accordance with the accounting policy dealing with impairments of non financial assets. Rehabilitation projects undertaken, included in the estimates are charged to the provision as incurred. The cost of on-going current programmes to prevent and control pollution is charged against income as incurred. Over time, the liability is increased to reflect an interest element, and the capitalized cost is depreciated over the life of the related asset.
2.13 Environmental trust funds
Contributions are made to the group’s trust funds, created in accordance with statutory requirements, to fund the estimated cost of pollution control, rehabilitation and mine closure at the end of the life of the group’s mines. The trusts are consolidated into the group as the group exercises full control of the trust. Income earned on investments classified as held-to-maturity is accounted for as investment income and accrues on a time proportion basis. Fair value movements on investments designated as fair value through profit or loss are reflected in the net gain/(loss) on financial instruments. The funds in the trust funds are included under restricted investments on the balance sheet.
2.14 Provisions
Provisions are recognized when the group has a present legal or constructive obligation as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made.
The amount recognized as a provision is the present value of the best estimate of the expenditure required to settle the present obligation at balance sheet date using a pre-tax rate that reflects current market assessment of the time value of money and the risks specific to the obligation. This estimate takes into account the associated risks and uncertainties. The increase in the provision due to the passage of time is recognized as interest expense.
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic benefits will be required, the provision is reversed.

F-21

Notes to the consolidated financial statements
For the years ended June 30, 2010
2.15 Current and deferred taxation
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities.
The group follows the comprehensive liability method of accounting for deferred tax using the balance sheet approach. Under this method deferred income taxes are recognized for the tax consequences of temporary differences by applying expected tax rates to the differences between the tax base of all assets or liabilities and its balance sheet carrying amount, except to the extent that deferred tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and does not affect the accounting or taxable profit or loss at the time of the transaction. Deferred tax is charged to profit or loss, except where the tax relates to items recognized in other comprehensive income or directly in equity in which case the tax is also recognized in other comprehensive income or directly in equity. The effect on deferred tax of any changes in tax rates is recognized in the income statement, except to the extent that it relates to items previously charged or credited directly to equity.
The principal temporary differences arise from amortization and depreciation on property, plant and equipment, provisions, post retirement benefits, unutilized tax losses and unutilized capital allowances carried forward. Deferred tax assets relating to the carry forward of unutilized tax losses and unutilized capital allowances are recognized to the extent that it is probable that future taxable profit will be available against which the unutilized tax losses and unutilized capital allowances can be utilized.
Deferred income tax is provided on temporary differences arising from investments in subsidiaries, joint ventures and associates, except where the timing of the reversal of the temporary difference is controlled by the group and it is probable that the temporary difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities and when the deferred income taxes assets and liabilities relate to income taxes levied by the same taxation authority on either the taxable entity or different taxable entities where there is an intention to settle the balances on a net basis.
2.16 Employee benefits
(i) Pension and provident plans are funded through annual contributions . The group pays fixed contributions into a separate entity in terms of the defined contribution pension and provident plans which is charged to the income statement in the year to which they relate. The group’s liability is limited to its annually determined contributions and has no further liability, legally or constructive if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods.
(ii) Medical plans: The group provides medical cover to current employees and certain retirees through certain funds. The medical accounting costs for the defined benefit plan are assessed using the projected unit credit method. The health care obligation is measured as the present value of the estimated future cash outflows using high quality government bond interest rates consistent with the term and risks of the obligation less the fair value of plan assets together with adjustments for unrecognized past service cost. Actuarial gains and losses as a result of these valuations are recognized in the income statement at revaluation date. The future liability for current and retired employees and their dependents is accrued in full based on actuarial valuations obtained annually.
(iii) Equity compensation benefits: The group operates an equity-settled, share-based payments plan, where the group grants share options to certain employees in exchange for services received. Equity share-based payments are measured at fair value that includes market performance conditions but excluded the impact of any service and non market performance conditions of the equity instruments at the date of the grant. The share-based payments are expensed over the vesting period, based on the group’s estimate of the shares that are expected to eventually vest. the group used an appropriate option pricing model in determining the fair value of the options granted. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the estimates of the number of options that are expected to become exercisable are revised. The impact of the revision of original estimates, if any, are recognized in the income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised.
(iv) Termination benefits are payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. the group recognizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value.

F-22

Notes to the consolidated financial statements
For the years ended June 30, 2010
(v) Leave pay: The group accrues for the cost of the leave days granted to employees during the period in which the leave days accumulate.
2.17 Share capital
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.
2.18 Leases
Leases in which a significant portion of the risk and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease.
For the group’s policy on finance leases, refer to note 2.5 (v).
2.19 Revenue recognition
(i) Revenue arising from gold sales is recognized when the price is determinable, the product has been delivered in accordance with the terms of the contract, the significant risks and rewards of ownership have been transferred to the customer and collection of the sales price is reasonably assured. These criteria are typically met when the gold arrives at the refinery.
Revenue further excludes value-added tax. Revenues from silver and other by-products sales are credited to production costs as a by-product credit.
(ii) Interest income : Interest is recognized on a time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the group.
(iii) Dividend income is recognized when the shareholder’s right to receive payment is established. This is recognized at the last date of registration.
2.20 Dividends declared
Dividends declared are recognized in the period in which they are approved by the Board of directors. Dividends are payable in South African Rand.
3 Critical accounting estimates and judgements
The preparation of the financial statements in conformity with IFRS requires the group’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Estimates and judgements are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.
The resulting accounting estimates may differ from actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below:
3.1 Impairment of mining assets
The recoverable amount of mining assets is generally determined utilizing discounted future cash flows. Management also considers such factors as the quality of the individual orebody, market risk, asset specific risks and country risk in determining the fair value.
Key assumptions for the calculations of the mining assets’ recoverable amounts are the gold price, marketable discount rates (cost-to-sell), exchange rates and the annual life-of-mine plans. In determining the gold price to be used, management assess the long-term views of several reputable institutions on the gold price and based on this, derive the gold price. The life-of-mine plans are based on the proved and probable reserves as included in the Reserve Declaration, which are determined in terms of SAMREC and JORC, as well as resources where management has high confidence in the ore-body and economical recovery of gold, based on historic and similar geological experience. The marketable discount rate was estimated at 2%.

F-23

Notes to the consolidated financial statements
For the years ended June 30, 2010
During the year under review, the group calculated the recoverable amounts (generally fair value less costs to sell) based on updated life of mine plans, a gold price of R275 000 per kilogram (US$1050 per ounce) and a post tax real discount rate, which ranges between 5.92% and 10.72% depending on the asset (2009: R225 000 per kilogram (US$750 per ounce) and a 9.34% discount rate) (2008: R180 000 per kilogram (US$750 per ounce) and a discount rate of 11.36%). Cash flows used in the impairment calculations are based on life-of-mine plans which exceed five years for the majority of the mines. Refer to note 5 for details of impairments recorded.
Should management’s estimate of the future not reflect actual events, further impairments may be identified. Factors affecting the estimates include:
• changes to proved and probable ore reserves;
• economical recovery of resources
• the grade of the ore reserves may vary significantly from time to time;
• review of strategy;
• differences between actual commodity prices and commodity price assumptions;
• unforeseen operational issues at the mines;
• changes in capital, operating mining, processing and reclamation costs.
Sensitivity analysis
One of the most significant assumptions that influence the life-of-mine plans and therefore impairments is the expected gold price. A 10% decrease in the gold price at June 30, 2010 would have resulted in an additional impairment at Steyn 2 Shaft of US$1.8 million. This analysis assumes that all other variables remain constant.
3.2 Impairment of investment in associate
The investments in associates are evaluated annually for impairment by comparing the entire carrying value of the investment to the recoverable amount, which is the higher of value in use or fair value less costs to sell.
3.3 Valuation of available-for-sale financial assets
If the value of financial instruments cannot be obtained from an active market, the group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis and option pricing models refined to reflect the issuer’s specific circumstances. When considering indications of an impairment, management considers a prolonged decline to be longer than 12 months. The significance of the decline is assessed for each security individually.
3.4 Estimate of exposure and liabilities with regard to rehabilitation costs
Estimated long-term environmental obligations, comprising pollution control, rehabilitation and mine closure, are based on the group’s environmental management plans in compliance with current technological, environmental and regulatory requirements.
Significant judgement is applied in estimating ultimate rehabilitation cost that will be required in future to rehabilitate the group’s mines. Ultimate cost may significantly differ from current estimates.
Management used an inflation rate of 6.23% (2009: 6%) (2008: short-term (two years): 9% and long term: 6%) and the expected life of the mines according to the life-of-mine plans in the calculation of the estimated net present value of the rehabilitation liability. The discount rates used for the calculation are dependant on the shaft’s life of mine and are as follows: for 12 months — 6.75% (2009: 6.75%) (2008: 12.25%); for 1 — 5 years — 8% (2009: 8.25%) (2008: 11.75%); for 6 — 9 years — 8.5% (2009: 8.25%) (2008: 10.5%) and for 10 years or more — 9% (2009: 8.75%) (2008: 10.25%). These estimates were based on recent yields determined on government bonds.
3.5 Estimate of employee benefit liabilities
An updated actuarial valuation is carried out at the end of each financial year. Assumptions used to determine the liability included a discount rate of 10.3%, no increases in employer subsidies (in terms of the agreement) and mortality rates according to the SA 1956/62 mortality table ( SA “a mf” tables) (60 years) and a medical inflation rate of 8.14% (2009: discount rate of 10%, 60 years and 7.8% inflation rate) (2008: discount rate of 12%, 60 years and 9.8% inflation rate).
Management determined the discount rate by assessing financial instruments with similar terms to the liability. The changes to the discount rate and medical inflation rate are similar to changes in interest and inflation rates in South Africa.
3.6 Estimate of taxation
The group is subject to income tax in numerous jurisdictions. Significant judgement is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The group recognizes liabilities for anticipated tax audit queries based on estimates of whether additional taxes will be due. Where the final tax outcome of these matters are different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made.

F-24

Notes to the consolidated financial statements
For the years ended June 30, 2010
Management has to exercise judgement with regards to deferred tax assets. Where the possibility exists that no future taxable income may flow against which these assets can be offset, the deferred tax assets are not recognized.
Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled. When different tax rates apply to different levels of taxable income, deferred tax assets and liabilities are measured using the average tax rates that are expected to apply to the taxable profit (tax loss) of the periods in which the temporary differences are expected to reverse. At the group’s South African operations, such average tax rates are directly impacted by the profitability of the relevant mine. The deferred tax rate is therefore based on the current estimate of future profitability of an operation when temporary differences will reverse, based in tax rates and tax laws that have been enacted at the balance sheet date.
The future profitability of each mine, in turn, is determined by reference to the Life-of-Mine (“LoM”) plan for that operation. The LoM plan is influenced by factors as disclosed in note 3.1, which may differ from one year to the next and ultimately result in the deferred tax rate changing from one year to the next. Refer to note 13 for further detail.
3.7 Fair value of share-based payments
The fair value of options granted are being determined using either a binominal, Black-Scholes or a Monte Carlo valuation model. The significant inputs into the model are: vesting period, risk free interest rate, volatility, price on date of grant and dividend yield. (Refer to note 34 for detail on each of the share option schemes.)
3.8 Impairment of goodwill
Due to the wasting nature of mining assets and the finite life of a mine’s reserves, the allocation of goodwill to a shaft will eventually result in an impairment charge for the goodwill. The group tests annually whether separately identifiable goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2.8. These calculations require the use of estimates as stated in note 3.1.
3.9 Gold in lock-up
Gold in lock-up is estimated based on the expected volumes treated and calculated plant call factor. Plant call factor is the efficiency measurement of the percentage of gold extracted from the ore. Management need to exercise judgement with regards to lock-up volumes, life-of-mine plans, gold prices, exchange rates and post tax real discount rates.
3.10 Assessment of contingencies
Contingencies will only realize when one or more future events occur or fail to occur. The exercise of significant judgement and estimates of the outcome of future events are required during the assessment of the impact of such contingencies.
3.11 Gold mineral reserves and resources
Gold mineral reserves and resources are estimates of the amount of ounces that can be economically and legally extracted from the group’s properties. In order to calculate the gold mineral reserves and resources, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, commodity prices and exchange rates.
Estimating the quantities and/or grade of the reserves and resources requires the size, shape and depth of the ore bodies to be determined by analyzing geological data such as the logging and assaying of drill samples. This process may require complex and difficult geological judgements and calculations to interpret the data.
Because the economic assumptions used to estimate the gold mineral reserves and resources change from year to year, and because additional geological data is generated during the course of operations, estimates of the mineral reserves and resources may change from year to year. Changes in the reserves and resources may affect the group’s financial results and financial position in a number of ways, including:
• asset carrying values may be affected due to changes in estimated cash flows;
• depreciation and amortization charged in the income statement may change as they are calculated on the units-of-production method; and
• environmental provisions may change as the timing and/or cost of these activities may be affected by the change in mineral reserves.
At the end of each financial year, the estimate of proved and probable gold mineral reserves and resources is updated. Depreciation of mining assets is prospectively adjusted, based on these changes.

F-25

Notes to the consolidated financial statements
For the years ended June 30, 2010
3.12 Production start date
Various relevant criteria are considered in order to assess when the mine is substantially complete and ready for its intended use and moves into the production phase. Some of the criteria would include but are not limited to the following:
• the level of capital expenditure compared to the total project cost estimates;
• the ability to produce gold in a saleable form (where more than an insignificant amount of gold has been produced); and
• the ability to sustain the on-going production of gold.

F-26

Notes to the consolidated financial statements
for the years ended June 30, 2010
4 Financial risk management
The group’s financial instruments expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and other price risk), credit risk and liquidity risk. The group may use derivative financial instruments to hedge certain risk exposures.
The group’s financial instruments are set out below:
Available- Financial
for-sale Held-to- Fair value liabilities at
Loans and financial maturity through profit amortized
Figures in million (US Dollar) receivables assets investments or loss cost
At June 30, 2010
Restricted cash
19 — — — —
Restricted investments
— — 53 175 —
Investments in financial assets
— 2 — — —
Trade and other receivables
97 — — — —
Cash and cash equivalents
101 — — — —
Borrowings
— — — — 156
Trade and other payables
— — — — 59
At June 30, 2009
Restricted cash
21 — — — —
Restricted investments
— — 212 — —
Investments in financial assets
— 7 — — —
Trade and other receivables
90 — — — —
Cash and cash equivalents
253 — — — —
Borrowings
— — — — 47
Trade and other payables
— — — — 71
The carrying amount of loans and receivables, held-to-maturity investments and financial liabilities at amortized cost approximate their fair value.
Risk management is carried out by a central treasury department (group treasury) under policies approved by the Board of Directors. Group treasury identifies, evaluates and hedges certain selected financial risks in close co-operation with the group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and the investment of excess liquidity.
(a) Market risk
(i) Foreign exchange risk
The group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar (US$). Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency. Harmony’s revenues are sensitive to the R/US$ exchange rate as all revenues are generated by gold sales denominated in US$. Harmony generally does not enter into forward sales, derivatives or other hedging arrangements to establish exchange rates in advance for the sale of its future gold production.
The group is exposed to foreign exchange risk arising from intercompany loans denominated in a currency other than the functional currency of that entity. Harmony generally does not enter into forward sales, derivatives or other hedging arrangements to manage this risk.

F-27

Notes to the consolidated financial statements
for the years ended June 30, 2010
Sensitivity analysis
The group has reviewed its foreign currency exposure on financial assets and financial liabilities and has identified the following sensitivities for a 10% change in the exchange rate.
US Dollar
Figures in million 2010 2009
A$ against US$
Increase by ten percent
1 1
Decrease by ten percent
(1 ) (1 )
Closing rate
0.85 0.81
Kina against A$
Increase by ten percent
30 17
Decrease by ten percent
(30 ) (17 )
Closing rate
2.31 2.71
(ii) Other price risk
The group is exposed to the risk of fluctuations in the fair value of the available-for-sale financial assets as a result of changes in market prices (other than changes in interest rates and foreign currencies). Harmony generally does not use any derivative instruments to manage this risk.
Sensitivity analysis
A one percent increase in the share price at the reporting date, with all other variables held constant, would have increased other comprehensive income by US$1.8 million (2009: US$0.1 million); an equal change in the opposite direction would have decreased other comprehensive income by US$1.8 million (2009: US$0.1 million). The analysis is performed on the same basis for 2009.
Commodity price sensitivity
The profitability of the group’s operations, and the cash flows generated by those operations, are affected by changes in the market price of gold. Harmony generally does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of future gold production.
(iii) Cash flow and fair value Interest rate risk
The group’s interest rate risk arises mainly from long-term borrowings. The group has variable interest rate borrowings. Variable rate borrowings expose the group to cash flow interest rate risk. The group has not entered into interest rate swap agreements.
Sensitivity analysis
A change of 100 basis points in interest rates at the reporting date would have increased/(decreased) profit or loss before tax by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2009.
US Dollar
Figures in million 2010 2009
Increase by 100 basis points
2 —
Decrease by 100 basis points
(2 ) —
(b) Credit risk
Credit risk is the risk that a counterparty may default or not meet its obligations timeously. Financial instruments, which subject the group to concentrations of credit risk, consist predominantly of restricted cash, restricted investments, trade and other receivables (excluding non-financial instruments) and cash and cash equivalents.
Exposure to credit risk on trade and other receivables is monitored on a regular basis. The credit risk arising from restricted cash, cash and cash equivalents and restricted investments is managed by ensuring amounts are only invested with financial institutions of good credit quality. The group has policies that limit the amount of credit exposure to any one financial institution.

F-28

Notes to the consolidated financial statements
for the years ended June 30, 2010
Cash and cash equivalents and restricted cash
Financial institutions’ credit rating by exposure:
US Dollar
Figures in million 2010 2009
Credit rating
South African operations
AAA
57 92
AA (1)
7 13
AA- (1)
25 81
A+
5 47
A
2 —
Total South African operations
96 233
International operations
AA (1)
24 40
Total International operations
24 40
Total cash and cash equivalents and restricted cash
120 273
(1) Includes restricted cash
AA
7 9
AA-
12 12
Total restricted cash
19 21
It is the policy of the group to renegotiate credit terms with long-standing customers who have a good credit history with the group. These customers are monitored on an ongoing basis to ensure that the customer remains within the renegotiated terms.
The group’s maximum exposure to credit risk is represented by the carrying amount of all financial assets determined to be exposed to credit risk, amounting to US$445.5 million as at June 30, 2010 (2009: US$575.8 million).
(c) Liquidity Risk
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, and the availability of funding through an adequate amount of committed credit facilities.
In the ordinary course of business, the group receives cash from its operations and is required to fund working capital and capital expenditure requirements. The cash is managed to ensure that surplus funds are invested in a manner to achieve market-related returns and to provide sufficient liquidity at the minimum risk. The group is able to actively source financing at competitive rates.

F-29

Notes to the consolidated financial statements
for the years ended June 30, 2010
The following are the contractual maturities of financial liabilities (including principle and interest payments):
US Dollar
More than
Figures in million Current 1 year
2010
Borrowings (1)(2)(3)
41 152
Trade and other payables (excluding non-financial liabilities)
59 —
100 152
2009
Borrowings (1)(2)
33 15
Trade and other payables (excluding non-financial liabilities)
71 —
104 15
(1) US$21 million is due between 0 to 6 months. (2009: nil).
(2) US$20 million is due between 6 to 12 months. (2009: US$32.9 million).
(3) US$40 million is due between 1 to 2 years. (2009: US$4.6 million).
(d) Capital risk management
The primary objective of managing the group’s capital is to ensure that there is sufficient capital available to support the funding requirements of the group, in a way that optimizes the cost of capital and matches the current strategic business plan.
The group manages and makes adjustments to the capital structure, which consists of debt and equity as and when borrowings mature or when funding is required. This may take the form of raising equity, market or bank debt or hybrids thereof. The group may also adjust the amount of dividends paid, sell assets to reduce debt or schedule projects to manage the capital structure.
There were no changes to the group’s approach to capital management during the year.
(e) Fair value determination
Effective July 1, 2009, the group adopted the amendment to IFRS 7 for financial instruments that are measured in the balance sheet at fair value. This requires disclosure of fair value measurements by level of the following fair value measurement hierarchy:
1) Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
2) Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
3) Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The following table presents the group’s assets and liabilities that are measured at fair value at June 30, 2010.
Figures in million US Dollar
Assets Level 1 Level 2 Level 3
Available-for-sale financial assets
— — 2
Fair value through profit or loss
— 175 —
The following table presents the group’s assets and liabilities that are measured at fair value at June 30, 2009.
Figures in million US Dollar
Assets Level 1 Level 2 Level 3
Available-for-sale financial assets
— 6 1
Fair value through profit or loss
— — —

F-30

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009 2008
5 Cost of sales
Production costs (a)
1,103 850 918
Amortization and depreciation of mining properties, mine development costs and mine plant facilities
175 130 107
Amortization and depreciation of assets other than mining and mining related assets (b)
6 9 10
Rehabilitation expenditure (c)
4 1 1
Care and maintenance cost of restructured shafts
8 5 10
Employment termination and restructuring costs (d)
27 4 29
Share-based payments (e)
20 13 6
Impairment of assets (f)
43 71 40
Provision for post retirement benefits (g)
(3 ) — 1
Total cost of sales
1,383 1,083 1,122
(a) Production costs include mine production, transport and refinery costs, applicable general and administrative costs, movement in inventories and ore stockpiles and ongoing environmental rehabilitation costs as well as transfers to and from deferred stripping. Ongoing employee termination costs are included, however employee termination costs associated with major restructuring and shaft closures are excluded. Production costs, analyzed by nature, consist of the following:
US Dollar
Figures in million 2010 2009 2008
Labor costs, including contractors
762 540 632
Stores and materials
302 215 229
Water and electricity
160 93 90
Insurance
24 25 19
Transportation
19 15 9
Changes in inventory
(3 ) (2 ) 11
Capitalization of mine development costs
(157 ) (106 ) (109 )
Deferred stripping
1 — —
By-products sales
(5 ) (3 ) (4 )
Royalty expense
4 — —
Other
(4 ) 73 41
Total production cost
1,103 850 918
(b) Amortization and depreciation of assets other than mining and mining related assets consist of the following:
US Dollar
Figures in million 2010 2009 2008
Other non-mining assets
2 1 4
Intangible assets
4 3 2
Amortization of issue costs
— 5 4
Total amortization and depreciation
6 9 10
(c) For the assumptions used to calculate the rehabilitation costs, refer to note 3.4.
This expense includes the change in estimate for the rehabilitation provision as well as ongoing rehabilitation cost.

F-31

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009 2008
(d) Employment termination and restructuring costs consist of the following:
Harmony Gold Mining Company Limited (Harmony)
9 1 10
Randfontein Estates Limited (Randfontein)
1 1 5
Evander Gold Mines Limited (Evander)
15 1 3
ARMGold/Harmony Freegold Joint Venture Company (Proprietary) Limited (Freegold)
2 1 10
Avgold Limited (Avgold)
— — 1
Total employment termination and restructuring cost
27 4 29
During fiscal 2010 certain shafts in Virginia (included in Harmony) and Evander were closed and placed on care and maintenance. These closures was due to mining no longer being economically viable as a result of the current economic situation. The group also engaged in a voluntary retrenchment process during the year, resulting in retrenchment costs for various operations.
(e) Refer to note 34 for details on the share-based payments schemes operated by the group.
(f) Impairment consist of the following:
US Dollar
Figures in million 2010 2009 2008
Virginia (1)
33 7 —
Target (1)
1 31 —
Evander (1)
9 33 16
Kalgold (1)
— — 8
Other underground — assets (2)
— — 3
Other underground — goodwill (2)
— — 13
Total impairment of assets
43 71 40
(1) During fiscal 2010 impairments to the value of US$40 million were recognized mainly as a result of the shaft closures discussed under note 5(d) above. The remaining balance for 2010 and the impairment recognized in 2009 resulted from revised business (life-of-mine) plans, which are completed in June of each year and included increases in electricity cost and labor cost. Included in the business plans in 2009 for Evander and Target was additional capital expenditure that was needed to access reserve ounces in areas where geological anomalies have been discovered.
These adjustments impacted negatively on the recoverable amount of property, plant and equipment and contributed to the recognition of the impairments at the shafts. Impairment tests were performed as required by IAS 36, Impairment of Assets , and as a result these impairments were recorded. For assumptions used to calculate the recoverable amount, refer to note 3.1.
(2) During 2008 certain underground operations, classified as Other — underground, was also impaired. For further details on the allocation of goodwill, refer to note 17.

F-32

Notes to the consolidated financial statements
for the years ended June 30, 2010
(g) The net credit of US$2.5 million is a result of curtailments in 124 members’ post employment subsidies due to renegotiation of employment contracts. These members were transferred from Freegold employment conditions to Harmony employment conditions.
US Dollar
Figures in million 2010 2009 2008
6 Profit on sale of property, plant and equipment
Profit on sale of property, plant and equipment
14 114 —
During fiscal 2010 the group concluded the sale of the Jeanette prospecting rights to Taung Gold Limited for a total consideration and profit of US$10 million.
During June 2010 the group concluded a sale of royalty rights in Australia to Regis Resources Limited for a total consideration and profit of US$3.5 million.
Included in the total for 2009 is US$111.9 million profit on sale of 50% of Harmony’s gold and copper assets in Morobe province, PNG, to Newcrest Mining Limited (“ Newcrest ”) in terms of the Master Purchase and Farm-in agreement. The sale was concluded in three stages. Refer to note 22.
US Dollar
Figures in million 2010 2009 2008
7 Other expenses — net
Foreign exchange loss/(gain) — net (a)
10 (14 ) (13 )
Loss on financial instruments
— — 1
Bad debts provision (credit)/expense (b)
(2 ) 11 14
Bad debts written off (b)
4 3 —
Other (income)/expenses — net
(4 ) 3 13
Total other expenses — net
8 3 15
(a) (i) During fiscal 2010, foreign exchange losses relating to the Australasian intercompany loans amounting to US$12.2 million (2009: loss of US$22.3 million) (2008: gain of US$15.3 million) were recognized in the consolidated income statement.
During fiscal 2008, two intercompany loans, previously designated as forming part of the net investment of the group’s international operations, were de-designated, mainly as a result of the expected repayment of these loans. In accordance with the group’s accounting policies, accumulated exchange gains that arose while the loans were considered to form part of the group’s net investment in its international operations remain in equity and are only reclassified to the consolidated income statements as and when the loans are repaid. The repayment of these loans resulted in an exchange gain of US$53.1 million being recognized in the consolidated income statement in the 2009 financial year. Following the adoption of the amendment to IAS 21, The Effects of Changes in Foreign Exchange Rates, on 1 July 2009, the remaining accumulated exchange reserves relating to these de-designated loans will remain in equity until the Australian and or PNG operations are sold, or control is otherwise lost.

F-33

Notes to the consolidated financial statements
for the years ended June 30, 2010
(ii) In fiscal 2010 foreign exchange gains amounting to US$2.9 million were realized on the liquidation of Harmony Gold Peru SA and Harmony Precious Metal Services SAS, wholly owned subsidiaries of Harmony.
(iii) During fiscal 2009, foreign exchange losses of US$30.0 million were recognised relating to the exchange movements on the US$ denominated Pamodzi Resources Fund 1 LLP (PRF) loan for the Cooke transaction. Refer to note 21 for further detail.
In anticipation of the receipt of the purchase consideration for the Cooke assets, the group arranged a forward exchange contract, allowing the group to sell the proceeds at R10.27 per US$1 on 21 April 2009. The gain on this arrangement was US$21.1 million.
(b) In 2010 financial year, trade debt and loans of US$3.8 million) (2009: US$3.4 million) was written off as the group considered the debts irrecoverable. During 2010 a net credit to the doubtful debt provision of US$2.1 million was made, where debt was no longer considered doubtful. During the 2009 financial year a provision of US$11.2 million was made where the group considered the recoverability of the debts to be doubtful. Refer to note 24.
The provision amount in 2008 includes a provision for the outstanding balance of US$6.4 million on the sale of Deelkraal to Ogoerion Construction CC.
US Dollar
Figures in million 2010 2009 2008
8 Operating profit
The following have been included in operating profit:
Auditors’ remuneration
3 3 4
External
Fees — current year
2 2 2
Fees — prior year under provision
— — —
Fees — other services
— — 1
Internal
Fees — current year
1 1 1
9 Loss on sale of investment in subsidiary
Loss on sale of Big Bell Operations (Proprietary) Limited
3 — —
During January 2010 the group concluded the sale of Big Bell Operations (Proprietary) Limited (Big Bell), an operation in Western Australia, for a total consideration of US$3.2 million. The group realized a net loss of US$3.3 million after recycling a foreign currency reserve of US$4 million on disposal date from other comprehensive income to the consolidated income statement. An amount of US$3.0 million was released to the group as a result of the performance bonds being replaced by the purchaser.

F-34

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009 2008
10 Net gain/(loss) on financial instruments
Available-for-sale
Impairment recognized in profit or loss (a)
— (12 ) —
Loss on sale of investments (b)
— — (63 )
Realized portion of fair value movement (b)
1 2 —
1 (10 ) (63 )
Fair value through profit or loss
Fair value gain on environmental trust funds
4 — —
Fair value adjustment (c)
— — 5
4 — 5
Total net gain/(loss) on financial instruments
5 (10 ) (58 )
(a) The impairment in the 2010 and 2009 financial years relates to the portion of fair value losses reclassified from other reserves to the income statement when certain investments were considered to be permanently impaired. The amount in 2010 relates to several small investments, while the amount in 2009 relates to the Dioro Exploration NL (Dioro) investment.
(b) The group disposed of its entire shareholding in Avoca Resources Limited (Avoca), Alloy Resources Limited (Alloy) and various other smaller investments during the 2010 financial year for a total consideration of US$6.6 million. Total fair value gains of US$1 million relating to these investment were reclassified from other reserves to the income statement. Refer to note 20 and 26 in this regard.
The amount in the 2009 financial year relates to the realised portion of the fair value gains reclassified from other reserves to the income statement on the disposal of the Dioro investment. Refer to note 20(b) and 26 for further detail.
During the 2008 financial year the group disposed of its remaining investment (7 348 079 shares) in Gold Fields Limited for a loss of US$63 million, which was acquired in December 2006 in exchange for its interest in Western Areas Limited.
(c) The sale agreement of African Rainbow Minerals Limited (“ ARM ”) shares gave rise to a non-derivative financial instrument that was designated as at “fair value through profit or loss”. The fair value movement recognized is equivalent to the interest paid on the Nedbank loans, which were guaranteed by the group. These guarantees were cancelled in September 2007.
US Dollar
Figures in million 2010 2009 2008
11 Investment income
Interest received
25 49 34
Loans and receivables
3 10 5
Held-to-maturity investments
10 19 18
Cash and cash equivalents
12 20 11
Dividend income on available-for-sale investments
— — 5
Total investment income
25 49 39

F-35

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009 2008
12 Finance costs
Financial liabilities
Bank and short-term facilities
— 2 5
Convertible unsecured fixed rate bonds
— 15 22
Nedbank Limited
11 23 38
Westpac Bank
— — —
Rand Merchant Bank
— — 2
Other creditors
— — 1
Total finance costs from financial liabilities
11 40 68
Non-financial liabilities
Post-retirement benefits
2 2 1
Time value of money and inflation component of rehabilitation costs
17 11 15
South African Revenue Services (SARS)
2 2 8
Total finance costs from non-financial liabilities
21 15 24
Total finance cost before interest capitalized
32 55 92
Interest capitalized
— (31) (22)
Total finance costs
32 24 70
The capitalization rate used to determine the amount of borrowing costs eligible for capitalization during the year is 10.6% (2009: 12.3% and 2008: 11.7%).
US Dollar
Figures in million 2010 2009 2008
13 Taxation
SA normal taxation
Mining tax (a)
- current year
6 14 5
- prior year
— 5 15
Non-mining tax (b)
- current year
5 18 1
- prior year
— 1 1
Deferred tax (c)
- deferred tax
48 40 55
Foreign normal taxation
- deferred tax (d)
(15 ) (56 ) (12 )
Total normal taxation
44 22 65
(a) Mining tax on gold mining income in South Africa is determined according to a formula, based on the taxable income from mining operations. Gold mining companies within the group that have elected to be exempt from Secondary Tax on Companies (STC) are taxed at higher rates than those that have not made the election.
All qualifying mining capital expenditure is deducted from taxable mining income to the extent that it does not result in an assessed loss. Accounting depreciation is eliminated when calculating the South African mining tax income. Excess capital expenditure is carried forward as unredeemed capital to be claimed from future mining taxable income. The group has several tax paying entities in South Africa. In terms of the mining ring-fencing application, each ring-fenced mine is treated separately and deductions can normally only be utilized against mining income generated from the relevant ring-fenced mine.

F-36

Notes to the consolidated financial statements
for the years ended June 30, 2010
The formulas for determining the South African gold mining tax rates for the 2008, 2009 and 2010 financial years are:
Y = 43 - 215/X (entities whom elected not to pay STC)
Y = 34 - 170/X (entities whom did not make the election)
Where Y is the percentage rate of tax payable and X is the ratio of taxable income, net of any qualifying capital expenditure that bears to mining income so derived, expressed as a percentage.
(b) Non-mining income is taxed at 35% (exempt from STC) and 28% (no election made). Non-mining companies are taxed at the statutory corporate rate of 28%.
(c) The deferred tax rate used to calculate deferred tax is based on the current estimate of future profitability when temporary differences will reverse, based on tax rates and tax laws that have been enacted at balance sheet date. Depending on the profitability of the operations, the deferred tax rate can consequently be significantly different from year to year.
(d) Mining and non-mining income of Australian and PNG operations are taxed at a standard tax rate of 30%.
Income and mining tax rates
The tax rates remained unchanged for the 2010 and 2009 financial years.
Major items causing the group’s income tax provision to differ from the maximum mining statutory tax rate of 43% (2009: 43% and 2008: 43%) were:
US Dollar
Figures in million 2010 2009 2008
Tax on net profit from continuing operations at the maximum mining statutory tax rate
(10 ) (102 ) 17
Non-allowable deductions
(19 ) (33 ) (93 )
Profit/(loss) from associates
3 1 (5 )
Difference between effective mining tax rate and statutory mining rate on mining income
2 14 4
Difference between non-mining tax rate and statutory mining rate on non-mining income
3 11 —
Effect on temporary differences due to changes in effective tax rates
(95 ) 53 (10 )
Prior year adjustment — mining and non-mining tax
— (5 ) (16 )
Capital allowance, sale of business and other rate differences
72 39 38
Income and mining taxation
(44 ) (22 ) (65 )
Effective income and mining tax rate
183 % 9 % -167 %

F-37

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009
Deferred tax
Deferred tax liabilities and assets on the balance sheet as at June 30, 2010 and June 30, 2009 relate
to the following:
Gross deferred tax liability
711 643
Amortization and depreciation
709 620
Product inventory not taxed
— 12
Other
2 11
Gross deferred tax asset
(248 ) (222 )
Unredeemed capital expenditure
(198 ) (183 )
Provisions, including non-current provisions
(35 ) (30 )
Tax losses
(15 ) (9 )
Disposal groups classified as held for sale
— —
Net deferred tax liability
463 421
Movement in the net deferred tax liability recognized in the balance sheet is as follows:
Balance at beginning of year
421 383
Total charge per income statement
33 29
Foreign currency translation
9 9
Tax directly charged to equity
— —
Balance at end of year
463 421
The following amounts that is expected to realize or be recovered in the next 12 months have been
included in the deferred tax liabilities and assets:
Deferred tax liabilities
37 15
Deferred tax assets
(25 ) (12 )
Net current deferred tax liability
12 3
As at June 30, certain subsidiaries in the group had the following tax credits:
Unredeemed capital expenditure available for utilization against future mining taxable income
1,783 1,586
Tax losses carried forward utilizable against taxable income
52 25
Capital Gains Tax (CGT) losses available to be utilized against future CGT gains.
61 74
As at June 30, the group has not recognized the following deferred tax asset amounts
386 379
The unrecognized temporary differences are:
Unredeemed capital expenditure
1,070 926
Tax losses
15 27
CGT losses
61 74
Temporary differences relating to investments in associates
156 154
Secondary Taxation on Companies
STC is a tax levied on South African companies at a rate of 10% with effect from October 1, 2007 on dividends distributed.

F-38

Notes to the consolidated financial statements
for the years ended June 30, 2010
Current and deferred tax are measured at the tax rate applicable to undistributed income and therefore only take STC into account to the extent that dividends have been received or paid.
On declaration of a dividend, the Company includes the STC on this dividend in its computation of the income tax expense in the period of such declaration.
US Dollar
Figures in million 2010 2009
Available STC credits at end of year
18 35
On August 13, 2010, the Board of Directors approved a final dividend for the 2010 financial year of 50 SA cents per share. The total dividend amounts to US$29.3 million As the dividends declared exceed the STC credits available, STC on the amount of US$9.6 million is payable at a rate of 10%.
14 Disposal groups classified as held for sale and discontinued operations
i) The assets and liabilities relating to the Mount Magnet operation (operation in Western Australia) have been presented as held for sale following the approval of the group’s management on May 17, 2010, on which date the formal process was started to find a willing buyer. These operations also met the criteria to be classified as discontinued operations. Consequently, the consolidated income statements, earnings per share and related notes for comparative periods have been re-presented to include income and expenses relating to the Mount Magnet operation in discontinued operations.
The conditions precedent for the sale of Mount Magnet assets were fulfilled and the transaction became effective on July 20, 2010. Refer to note 37.
ii) The assets and liabilities relating to the Cooke 1, Cooke 2, Cooke 3, Cooke plant and relating surface operations (operations in the Gauteng province) have been presented as held for sale following the approval of the group’s management on October 16, 2007 to sell these assets to Rand Uranium (Proprietary) Limited (Rand Uranium). These operations were also deemed to be discontinued operations. The two part sale was concluded on November 21, 2008 and April 22, 2009. Refer to note 21.
(iii) During 2008, the assets and liabilities related to South Kal (operation in Australia) and Orkney operations (operations in Northwest province) have been presented as held for sale following approval of the group’s management and Board of Directors on April 20, 2007. The operations met the criteria to be classified as discontinued operations and were reported in the “Discontinued Operations — other” segment in the segment report.
On December 6, 2007, the sale relating to the South Kal operation (operation in Australia) was concluded at a loss, net of tax, of US$7.6 million and the assets were derecognized.
On February 27, 2008, the sale relating to the Orkney operations (operations in the Northwest province) was concluded at a profit of US$8.9 million and the assets were derecognized.

F-39

Notes to the consolidated financial statements
for the years ended June 30, 2010
The assets and liabilities for the operations classified as held for sale at the reporting dates are as follows:
US Dollar
Figures in million 2010 2009
Balance sheet
Assets of disposal groups classified as held for sale
Property, plant and equipment
29 —
Deferred income tax
2 —
Inventories
1 —
Total assets of disposal groups classified as held for sale
32 —
Balance sheet
Liabilities of disposal groups classified as held for sale
Deferred income tax
2 —
Provision for environmental rehabilitation
16 —
Trade and other payables
— —
Total liabilities of disposal groups classified as held for sale
18 —
The analysis of the results and cash flows of discontinued operations are disclosed in the tables below:
US Dollar
Figures in million 2010 2009 2008
Income statement
Revenue
— 69 312
Reversal of impairment (a)
— 28 5
Expenses — net
(4 ) (103 ) (251 )
Profit on sale of shares
— 171 9
Profit on sale of property, plant and equipment
— 2 4
(Loss)/profit from discontinued operations before tax
(4 ) 167 79
Taxation
— (72 ) (5 )
(Loss)/profit for the year from discontinued operations
(4 ) 95 74
Cash flows
Operating cash flows
(6 ) 8 71
Investing cash flows
— 202 (16 )
Foreign exchange translation adjustment
— 77 (7 )
Total cash flows
(6 ) 287 48
a) Mount Magnet was previously classified as held for sale for a period until June 2009. On ceasing to be classified as held for sale, the carrying value was re-measured as per IFRS 5 (see note 2.11) and depreciation amounting to US$28 million was recorded in 2009. This also lead to the recording of a reversal of impairment of US$28 million.
15 (Loss)/earnings per share
Basic (loss)/earnings per share is calculated by dividing the net income attributable to shareholders by the weighted number of ordinary shares in issue during the year.
US Dollar
Figures in million 2010 2009 2008
Weighted average number of ordinary shares in issue (‘000)
426,382 414,121 400,750
Net (loss)/profit from continuing operations
(20 ) 216 (104 )
Net (loss)/profit from discontinued operations
(4 ) 95 74
Total net (loss)/profit attributable to shareholders
(24 ) 311 (30 )

F-40

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009 2008
Basic (loss)/earnings per share from continuing operations (cents)
(5 ) 52 (26 )
Basic (loss)/earnings per share from discontinued operations (cents)
(1 ) 23 18
Total basic (loss)/earnings per share (cents)
(6 ) 75 (8 )
Fully diluted (loss)/earnings per share
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of all potential dilutive ordinary shares as a result of share options granted to employees under the share option schemes in issue. A calculation is performed to determine the number of shares that could have been acquired at fair value, determined as the average annual market share price of the Company’s shares, based on the monetary value of the subscription rights attached to the outstanding share options. The number of shares calculated as above is compared with the number of shares that would have been issued assuming the exercise of the share options.
US Dollar
Figures in million 2010 2009 2008
Weighted average number of ordinary shares in issue (‘000)
426,382 414,121 400,750
Potential ordinary shares (‘000)
1,465 1,842 2,144
Weighted average number of ordinary shares for fully diluted earnings per share (‘000)
427,847 415,963 402,894
Fully diluted (loss)/earnings per share from continuing operations (cents)
(5 ) 51 (26 )
Fully diluted (loss)/earnings per share from discontinued operations (cents)
(1 ) 23 18
Total fully diluted (loss)/earnings per share (cents)
(6 ) 74 (8 )
The inclusion of share options issued to employees, as potential ordinary shares, has a dilutive effect on the earnings per share.
Dividend per share
Dividend declared in terms of dividend notice no. 79 to all registered shareholders on the recording date of August 13, 2009.
6.2 US cents — —
US Dollar
Figures in million 2010 2009
16 Property, plant and equipment
Mining properties, mine development costs and mine plant facilities
2,910 1,628
Mining assets under construction
108 725
Undeveloped properties
839 1,253
Deferred stripping
9 —
Other non-mining assets
8 8
Total property, plant and equipment
3,874 3,614

F-41

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009
Mining properties, mine development costs and mine plant facilities
Cost
Balance at beginning of year
3,236 2,521
Acquisition — Pamodzi Gold Free State (Proprietary) Limited (Pamodzi FS) assets (a)
37 —
Additions
379 219
Disposals
(52 ) (324 )
Adjustment to rehabilitation asset
24 27
Transfers and other movements
1,060 160
Translation
82 (113 )
Net reclassification (to)/from held for sale
(226 ) 746
Balance at end of year
4,540 3,236
Accumulated depreciation and impairments
Balance at beginning of year
1,608 989
Impairment of assets
43 71
Disposals
(17 ) (141 )
Depreciation (b)
175 153
Depreciation capitalized to mining assets under construction
6 5
Translation
35 (89 )
Net reclassification (to)/from held for sale
(220 ) 620
Balance at end of year
1,630 1,608
Net book value
2,910 1,628
Mining assets under construction
Cost
Balance at beginning of year
725 561
Additions (c)
51 300
Finance costs capitalized
— 31
Disposals
— (186 )
Transfers and other movements
(667 ) 13
Translation
(1 ) 6
Book value
108 725
Undeveloped property
Cost
Balance at beginning of year
1,320 1,436
Additions
— 23
Disposals
(9 ) (39 )
Transfers and other movements
(393 ) (173 )
Translation
15 (40 )
Net reclassification (to)/from held for sale
(28 ) 113
Balance at end of year
905 1,320
Accumulated depreciation and impairment
Balance at beginning of year
67 2
Reversal on impairment of assets (b)
— (10 )
Translation
3 (12 )
Net reclassification (to)/from held for sale
(4 ) 87
Balance at end of year
66 67
Net book value
839 1,253

F-42

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009
Deferred stripping
Cost
Balance at beginning of year
— —
Additions
10 —
Transferred to production cost
(1 ) —
Book value
9 —
Other non-mining assets
Cost
Balance at beginning of year
49 44
Additions
3 4
Disposals
(1 ) —
Translation
1 —
Net reclassification from held for sale
— 1
Balance at end of year
52 49
Accumulated depreciation and impairments
Balance at beginning of year
41 40
Disposals
— —
Depreciation for the year
2 1
Impairment of fixed assets
— —
Translation
1 —
Balance at end of year
44 41
Net book value
8 8
Total net book value
3,874 3,614
(a) During the 2010 financial year the group concluded separate purchase agreements with the liquidators of Pamodzi FS for the purchase of its Free State assets and inventories (refer to note 23). The consideration paid for the mining assets was US$36.6 million and US$16.0 million was paid for the inventories.
(b) For 2009 and 2010 the amounts include both continuing and discontinued operations.
(c) On 1 December 2008, Harmony issued 3.4 million shares to Rio Tinto Limited to cancel the Rio Tinto royalty rights over Wafi-Golpu in Papua New Guinea. The value of the issued shares were US$23.4 million.
(d) Additional disclosures
US Dollar
Figures in million 2010 2009
Leased assets
Carrying value of capitalized leased assets (included in mining properties, mine development costs and mine plant facilities)
14 17
Cost
21 21
Accumulated depreciation
(7 ) (4 )
Finance lease additions
2 1
Except for the leased assets mentioned above, none of the assets listed above have been pledged or otherwise committed as security for any liabilities.

F-43

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009
17 Intangible assets
Goodwill
Cost
Balance at beginning of year
307 304
Acquired through purchase of subsidiaries
— —
Translation
4 3
Balance at end of year
311 307
Accumulated amortization and impairments
Balance at beginning of year
27 27
Translation
1 —
Balance at end of year
28 27
Net book value (a)
283 280
Computer software (b)
Cost
Balance at beginning of year
13 8
Acquired during the year
2 4
Translation
1 1
Balance at end of year
16 13
Accumulated amortization and impairments
Balance at beginning of year
5 2
Amortization charge for the year
4 3
Balance at end of year
9 5
Net book value
7 8
Total net book value
290 288
(a) The net book value of goodwill has been allocated to the cash generating units:
Bambanani
29 29
Tshepong
73 72
Phakisa
174 172
Joel
5 5
Other
2 2
283 280
(b) The amount relates to the implementation of an Oracle ERP software application.
US Dollar
Figures in million 2010 2009
18 Restricted cash
Environmental guarantees call account (a)
15 15
Security deposits (b)
— —
Cash management account (c)
4 6
Total restricted cash
19 21
(a) The amount relates to funds set aside for guarantees made to the Department of Mineral Resources in South Africa for environmental and rehabilitation obligations.
(b) The amount relates to security deposits on mining tenements.

F-44

Notes to the consolidated financial statements
for the years ended June 30, 2010
(c) The amount relates to funds set aside by the international operations for guarantee related performance bonds for Australia environmental obligations. Following the sale of Mount Magnet this cash will again be available for general corporate purposes. Refer to note 37.
US Dollar
Figures in million 2010 2009
19 Restricted investments
Investments held by Environmental Trust Funds (a)
223 207
Investments held by Social Trust Fund (b)
5 5
Total restricted investments
228 212
(a) Environmental Trust Funds consist of:
- Held-to-maturity financial assets
48 207
- Fair value through profit or loss financial assets
175 —
Total Environmental Trust Funds
223 207
The environmental trust funds are irrevocable trusts under the group’s control. Contributions to the trusts are invested in interest-bearing short term investments or medium term equity-linked notes issued by commercial banks that provide guaranteed interest and additional interest or growth linked to the growth of the Shareholder Weighted Top 40 index (SWIX 40) of the JSE. The equity-linked notes are designated fair value through profit or loss investments and recorded at fair value whilst the interest-bearing short term investments are classified as held-to-maturity and recorded at amortized cost. These investments provide for the estimated cost of rehabilitation at the end of the life of the group’s mines. Income earned on the investments is retained in the funds and reinvested.
Reconciliation of the movement in the Environmental Trust Funds:
US Dollar
Figures in million 2010 2009
Balance at beginning of year
207 206
Interest income
9 21
Fair value movement
4 —
Disposal of business
— (20 )
Contributions made
1 —
Translation
2 —
Balance at end of year
223 207
(b) The social trust fund is an irrevocable trust under the group’s control and is classified as a held to maturity investment. The group has undertaken to donate over a period of 10 years to The Harmony Gold Mining Group Social Plan Trust in terms of an agreement signed on 3 November 2003. An initial donation of R19 million (US$2.7 million) was made during the 2004 year. Thereafter installments of R3.5 million (US$0.45 million) per annum was and will be made with the final installment to be made in 2013. The purpose of the Trust is to fund the social plan to reduce the negative effects of restructuring on the group’s workforce, to put measures in place to ensure that the technical and life skills of the group’s workforce are developed and to develop the group’s workforce in such a manner to avoid or minimize the effect of job losses and a decline in employment through turnaround or redeployment strategies.

F-45

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009
Reconciliation of the movement in the Social Trust Fund:
Balance at beginning of year
5 5
Contributions made*
1 —
Interest accrued*
— —
Claims paid*
(1 ) —
Balance at end of year
5 5
* Please note that for the 2009 financial year when these amounts were translated into US dollars, the amounts were less than US$0.5 million and were rounded down, resulting in no movement being shown for the year.
US Dollar
Figures in million 2010 2009
20 Investment in financial assets
Balance at beginning of year
7 9
Additions
— 8
Disposals
(6 ) (4 )
Fair value movement of available-for-sale investments
— (3 )
Translation
1 (3 )
Balance at end of year
2 7
The carrying amount consists of the following:
Available-for-sale financial assets
Investment in Alloy (a)
— —
Investment in Avoca (b)
— 5
Investment in other listed and unlisted shares (c)
2 2
Total available-for-sale financial assets
2 7
(a) During 2006, the group received 5 million shares, valued at A$0.20 per share in Alloy as consideration for the sale of mining tenements. During fiscal 2009, the investment was considered permanently impaired, resulting in a cumulative loss of US$0.4 million, net of tax, recognized in other reserves, being reclassified from other reserves to the consolidated income statement. Subsequent to the impairment, a gain of US$0.04 million) was recognized in other comprehensive income. Tax on this revaluation amounted to R0.1 million (US$0.01 million), which has been charged directly to equity.
During fiscal 2010 these shares were sold resulting in a net loss of US$0.1 million. Refer to note 10.
(b) On 17 April 2009, the group received 3 809 524 Avoca shares, valued at A$1.50 per share, as consideration for the disposal of its Dioro shares. During fiscal 2010 a fair value loss of US$0.3 million (2009: US$0.5 million fair value gain) have been recognized in other comprehensive income, net of tax.
During fiscal 2010 these shares were sold resulting in a net profit of US$0.1 million. Refer to note 10.

F-46

Notes to the consolidated financial statements
for the years ended June 30, 2010
(c) These investments are evaluated by the directors on an annual basis to ensure that no significant prolonged decline in the value of the investments has occurred. During fiscal 2010 the group disposed of certain listed investments for a net loss of US$0.2 million. Refer to note 10. Fair value gains recognized in other comprehensive income for the year totaled US$0.8 million (2009: Nil). During fiscal 2010 the group did not receive any income from these investments (2009: Nil).
21 Investment in associates
US Dollar
Figures in million 2010 2009
Balance at beginning of year
43 19
Subsidiary becoming associate
— 25
Share of profit after tax
7 1
Impairment of share in associate
— (14 )
Translation
— 12
Balance at end of year
50 43
The carrying amount consists of:
Pamodzi Gold Limited (a)
— —
Rand Uranium (Proprietary) Limited (b)
50 43
Total investment in associates
50 43
(a) On February 27, 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 US$46.5 million being US$1.54 per share on acquisition date. Pamodzi was listed on the JSE and had interests in operating gold mines in South Africa.
An impairment of the investment in associate of US$12.3 million was recognized at June 30, 2008, as the market value of the share had decreased to US$0.62 per share. The fair value of the investment was US$18.6 million. For the four months to June 30, 2008, the group recognized US$10.6 million as its share of losses from associates.
On September 30, 2008, an impairment test was performed and an impairment of US$13.5 million was recorded, bringing the total impairment recorded on the investment to date to US$25.8 million. After taking into account the Group’s share of losses of US$3.7 million, the carrying value at December 31, 2008 was R0. Total share in losses to date was US$14.3 million. Subsequently, the Group has not recognized 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 finalized no audited financial statements were available for years ending December 31, 2009 and 2008. The extract below represents unaudited information for the nine months ended March 31, 2009. No financial information subsequent to this date is available, and therefore no information has been disclosed for 2010.

F-47

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009
100 %
Revenue
69
Production costs
(89 )
Operating loss
(20 )
Net loss
(40 )
The financial position as at March 31, 2009 is disclosed below:
Non-current assets
260
Current assets
18
Total assets
278
Current liabilities
241
Non-current liabilities
62
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 November 21, 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, 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. US$40 million was paid on the effective date and the balance of US$157 million was paid on April 20, 2009. Interest was charged on the outstanding balance at 5% per annum, resulting in US$3.3 million being recognized in the income statement. The interest was also received on April 20, 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 April 22, 2009. These assets were valued at US$20 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, in cash on April 20, 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 November 21, 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 US$171.1 million (before tax) on these transactions during the 2009 year. This profit is included in the profit from discontinued operations. Refer to note 14.

F-48

Notes to the consolidated financial statements
for the years ended June 30, 2010
The group recognized its share of the post-acquisition profits of US$7 million (7 months ending June 30, 2009: US$5.1 million).
Rand Uranium has a year end of June 30. The audited financial information of Rand Uranium for the years ended June 30, 2010 and at June 30, 2010 and June 30, 2009 are as follows:
US Dollar
Figures in million 2010 2009
100 % 100 %
Revenue
223 101
Production costs
(172 ) (75 )
Gross profit
51 26
Net profit
18 12
Non-current assets
612 577
Current assets
27 29
Total assets
639 606
Current liabilities
23 24
Non-current liabilities
100 91
Total liabilities
123 115
22 Investment in Joint Venture
Morobe Mining Joint Venture (MMJV) Partnership agreement (50%)
The group has a 50% interest in gold and copper assets located in the Morobe province. Newcrest owns the remaining 50% interest in these assets. This partnership was formed during the 2009 financial year through a range of transactions, which are discussed below.
On April 22, 2008 Morobe Consolidated Goldfields Limited and Wafi Mining Limited, subsidiaries of Harmony Australia, entered into a Master Purchase and Farm-in Agreement with Newcrest. This agreement provided for Newcrest to purchase a 30.01% participating interest (stage 1) and a further farm-in of an additional 19.99% participating interest in Harmony’s Morobe gold and copper assets, giving them a 50% interest. The total value of the transaction was estimated at US$530 million.
On July 16, 2008, the conditions to the Master Purchase and Farm-in agreement were finalized, which included regulatory and statutory approvals by the PNG Government. Stage 1 completion took place on July 31, 2008, and a total consideration of US$229.8 million was received on August 7, 2008, of which US$50.0 million was placed in a jointly controlled escrow account. This amount was subsequently released to Harmony following confirmation of approval of an exploration license during September 2008 by the PNG Mining authorities.
Harmony recognized a profit of US$57.9 million on the completion of stage 1, which represented a sale of a 30.01% undivided interest of Harmony’s PNG gold and copper assets and liabilities comprising the joint venture.

F-49

Notes to the consolidated financial statements
for the years ended June 30, 2010
During the farm-in period, Harmony agreed to transfer a further 19.99% interest to Newcrest in consideration for an agreement by Newcrest to meet certain expenditure which would otherwise have to be undertaken by Harmony. The interest to be transferred was conditional on the level of capital expenditures funded by Newcrest at certain milestones, and by the end of February 2009, Newcrest acquired another 10% through the farm-in arrangement. The final 9.99% was acquired by June 30, 2009.
At the date of completion of each party’s obligations under the farm-in arrangement, Harmony derecognized the proportion of the mining assets and liabilities in the joint venture that it had sold to Newcrest, and recognized its interest in the capital expenditure at fair value. The difference between the net disposal proceeds and the carrying amounts of the asset disposed of during the farm-in arrangement amounted to a gain of US$54 million, which has been included in the consolidated income statement for 2009.
The following are the group’s effective share of income, expenses, assets and liabilities, which are included in the 2010 consolidated financial statements:
US Dollar
Figures in million 2010 2009
50 % 50 %
Revenue
10 —
Production costs
(8 ) —
Gross profit
2 —
Other costs
(40 ) (12 )
Net loss
(38 ) (12 )
Non-current assets
382 185
Current assets
48 44
Total assets
430 229
Non-current liabilities
22 161
Current liabilities
19 36
Total liabilities
41 197
US Dollar
Figures in million 2010 2009
23 Inventories
Gold in lock-up
27 37
Gold in process, ore stockpiles and bullion on hand
68 43
Stores and materials at weighted average cost
63 54
Total inventories
158 134
Non-current portion of gold in lock-up and gold in-process
(28 ) —
130 134
Net reclassification to held for sale
(1 ) —
Total current portion of inventories
129 134
Included in the balance above is:
Inventory valued at net realizable value
27 30
During the year the group acquired a waste rock dump valued at US$2.7 million and a gold plant containing gold in lock-up valued at US$13.3 million from Pamodzi FS, which have been included in the cost of inventory.

F-50

Notes to the consolidated financial statements
for the years ended June 30, 2010
During the year, US$3.9 million (2009:US$0.6 million) was provided for slow moving stock. The total provision at June 30, 2010 was US$7.5 million (2009:US$3.6 million).
US Dollar
Figures in million 2010 2009
24 Trade and other receivables
Current
Financial assets:
Trade receivables (gold)
44 33
Other trade receivables (a)
30 34
Provision for impairment
(13 ) (15 )
Trade receivables — net
61 52
Loans to associates and joint ventures (b)
5 15
Interest and other receivables (c)
12 11
Employee receivables
2 2
Insurance claims receivable (d)
7 —
Non-financial assets:
Prepayments
9 10
Value added tax
26 25
Total current trade and other receivables
122 115
Non-current
Financial assets:
Loans to associates (e)
23 24
Other loans receivable
2 2
Provision for impairment (f)
(15 ) (16 )
Total non-current trade and other receivables
10 10
(a) Included in other trade receivables is an amount of US$0.7 million (2009: US$9.1 million) owed by Rand Uranium.
(b) An amount of US$5 million (2009: US$4.8 million) is due from Rand Uranium for services and goods supplied in terms of the service level agreements entered into between the group and Rand Uranium. Also included in 2009 is an amount of US$9.7 million receivable by Harmony’s Australian operations, from Newcrest for their portion of the loan to the MMJV companies.
(c) Included in interest and other receivables is an amount of US$2.2 million owing by Pamodzi FS in terms of the asset purchase agreements, for rehabilitation trust funds to be released to the group.
(d) The insurance claim receivable of US$7.1 million relates to damage caused by an underground fire at the Bambanani operation. The claim was settled subsequent to the 2010 financial year end.
(e) Included in the balance for 2010 is a loan of US$8.3 million (2009: US$8.5 million) to Rand Uranium. The loan bears interest at a 3 month JIBAR plus 250 basis points and is repayable on November 21, 2015. The loan has been subordinated. Also included in this balance is a loan of US$15.2 million, (2009: US$15.0 million) owed by Pamodzi. The loan bore interest at prime rate until March 2009 when Pamodzi was placed into liquidation. Harmony is a concurrent creditor in the Pamodzi Orkney liquidation.

F-51

Notes to the consolidated financial statements
for the years ended June 30, 2010
(f) Included in this balance is the amount of US$15.2 million, (2009: US$15.0 million) relating to the loan owed by Pamodzi. In 2009 an amount of US$1.1 million relating to the loan owed by Ubuntu, included in other loans receivable, was also provided for and subsequently written off during the 2010 financial year. Interest of US$1.5 million was charged on these loans in fiscal 2009. No interest was charged in fiscal 2010.
The movement in the provision for impairment of trade receivables during the year was as follows:
US Dollar
Figures in million 2010 2009
Balance at beginning of year
15 17
Provision for impairment of receivables
2 4
Unused amounts reversed
(4 ) (6 )
Receivables written off during the year
— —
Balance at end of year
13 15
The movement in the provision for impairment of loans receivables during the year was as follows:
Balance at beginning of year
16 2
Provision for impairments of loans
— 13
Loans written off during the year
(1 ) (1 )
Translation
— 2
Balance at end of year
15 16
The ageing of trade receivables at the reporting date was:
Gross Impairment
June 30, 2010
Fully performing
55 —
Past due by 1 to 30 days
3 —
Past due by 31 to 60 days
2 —
Past due by 61 to 90 days
1 —
Past due by more than 90 days
4 4
Past due by more than 361 days
9 9
74 13
Gross Impairment
June 30, 2009
Fully performing
35 —
Past due by 1 to 30 days
14 —
Past due by 31 to 60 days
1 —
Past due by 61 to 90 days
1 —
Past due by more than 90 days
7 6
Past due by more than 361 days
9 9
67 15
The ageing of loans receivable at the reporting date was:
Gross Impairment
June 30, 2010
Fully performing
10 —
Past due by 1 to 30 days
— —
Past due by 31 to 60 days
— —
Past due by 61 to 90 days
— —
Past due by more than 90 days
— —
Past due by more than 361 days
15 15
25 15

F-52

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009
Gross Impairment
June 30, 2009
Fully performing
10 —
Past due by 1 to 30 days
— —
Past due by 31 to 60 days
— —
Past due by 61 to 90 days
— —
Past due by more than 90 days
2 2
Past due by more than 361 days
14 14
26 16
Based on past experience, the group believes that no impairment allowance is necessary in respect of fully performing receivables as the amount relates to customers that have a good track record with the group. Similarly, the other loans and receivables noted above, other than those provided for, are fully performing and considered to be a low credit risk.
During fiscal 2008, the balance of US$6 million due from Ogoerion Construction CC for the purchase of the Deelkraal surface assets was impaired. In fiscal 2009, the deal was renegotiated and the Deelkraal plant was excluded from the transaction. The purchase price was revised and as a result, the balance due and the related provision for impairment of trade receivables was reversed.
During fiscal 2010 and 2009 there was no renegotiation of the terms of any receivable, other than as discussed above.
As at June 30, 2010 and June 30, 2009, there was no collateral pledged or held for any of the receivables.
25 Share capital
Authorized
1 200 000 000 (2008: 1 200 000 000) ordinary shares of SA 50 cents each
10 958 904 (2009: 10 958 904) redeemable convertible preference shares of SA 50 cents each
Issued
428 654 779 (2009: 425 986 836) ordinary shares of SA 50 cents each. All issued shares are fully paid.
Included in the total of issued shares is an amount of 2 314 shares held by Lydenburg Exploration Limited, a wholly owned subsidiary of the Company.
10% of the authorised but unissued shares are under the control of the directors until the forthcoming annual general meeting. Note 34 set out details in respect of the share option scheme and shares held in trust for employees of the group.
The directors of the Company has a general authority to issue shares for cash up to a maximum of 5% of the issued share capital in any one financial year. This is in terms of the annual general meeting of shareholders on November 23, 2009 and valid until the forthcoming annual general meeting. The general authority is subject to the Listings Requirements of the JSE Securities Exchange South Africa and the Companies Act no 61 of 1973 of South Africa, as amended.

F-53

Notes to the consolidated financial statements
for the years ended June 30, 2010
Share issues
2010 Financial year
On March 19, 2010, Harmony concluded an agreement with Africa Vanguard Resources (Doornkop) (Proprietary) Limited (AVRD) for the purchase of its 26% share of the mining titles on the Doornkop South Reef. Part of the purchase consideration was the issuance of 2 162 359 Harmony shares to AVRD. In terms of the purchase agreement 975 419 Harmony shares are held in escrow until May 1, 2014. Refer to note 26
2009 Financial year
On December 1, 2008, Harmony issued 3 364 675 shares to Rio Tinto. The Harmony shares were issued to cancel the Rio Tinto royalty rights over Wafi-Golpu in PNG. The value of issued shares was US$23 million at R71.98 per share.
Harmony engaged in capital raising by issuing two tranches of shares following the resolution passed by shareholders at the Annual General Meeting held on November 24, 2008. The first tranche was issued into the open market between November 25, 2008 and December 19, 2008. In this tranche, 10 504 795 Harmony shares were issued at an average subscription price of R93.20, resulting in US$97.9 million before costs being raised. The cost of the issue was US$1.9 million, or 1.5%, of the value of shares issued.
A second tranche of shares was issued for cash into the open market between February 10, 2009 and March 6, 2009. This tranche consisted of 7 540 646 Harmony shares at an average subscription price of R124.45, resulting in US$93.5 million before costs being raised. The cost of the issue was US$1.6 million or 1.6% of the value of shares issued. The combined share issue amounts to US$192 million, or 4.5%, of the issued share capital as at September 30, 2008.
US Dollar
Figures in million 2010 2009
26 Other reserves
Foreign exchange translation reserve (a)
(86 ) (111 )
Fair value movement of available-for-sale financial assets (b)
4 4
Equity component of convertible bond (c)
41 41
Acquisition of non-controlling interest in subsidiary (d)
(57 ) (57 )
Share-based payments (e)
75 55
Repurchase of equity interest (f)
(13 ) —
Other
(4 ) (4 )
Total other reserves
(40 ) (72 )
The different categories of other reserves are made up as follows:
Foreign exchange translation reserve
Balance at beginning of year
(111 ) (216 )
Realized portion reclassified through profit or loss
1 (53 )
Current year’s foreign exchange movement
24 158
Balance at end of year
(86 ) (111 )

F-54

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009
Fair value movement of available-for-sale financial assets
Balance at beginning of year
4 (2 )
Impairment recognized in profit or loss
— 12
Tax on impairment
— (3 )
Realized portion reclassified through profit or loss
(1 ) (2 )
Tax on realized portion
— —
Fair value movement — unrealized
— (3 )
Tax on fair value movement
— 1
Translation
1 1
Balance at end of year
4 4
Equity component of convertible bond
Balance at beginning/end of year
41 41
Acquisition of non-controlling interest in subsidiary
Balance at beginning/end of year
(57 ) (57 )
Share-based payments
Balance at beginning of year
55 42
Share-based payments expensed
20 13
Balance at end of year
75 55
Repurchase of equity interest
Acquired equity interest during the year
(13 ) —
Balance at end of year
(13 ) —
Other reserves
Balance at beginning/end of year
(4 ) (4 )
(a) The balance of the foreign exchange translation reserve movement represents the cumulative translation effect of the group’s off-shore operations. The US dollar amount includes the translation effect from Rand to US dollar.
The realized portion reclassified through profit or loss relates to the sale of Big Bell operations in Australia and the liquidation of Harmony Gold Peru SA and Harmony Precious Metal Services SAS. Refer to note 7 for further detail.
(b) The balance of the fair value movement reserve represents the movement in the fair value of the available-for-sale financial assets. For details on the movement, refer to note 20. For details regarding the realised portion reclassified to profit or loss refer to note 10(b).
(c) On May 24, 2004, the group issued a convertible bond. The amount representing the value of the equity conversion component is included in other reserves, net of deferred income taxes. The equity conversion component is determined on the issue of the bonds and is not changed in subsequent periods.
(d) On March 15, 2004 Harmony announced that it had made an off market cash offer to acquire all the ordinary shares, listed and unlisted options of Abelle, held by non-controlling interests. The excess of the purchase price of US$86.5 million over the carrying amount of the non-controlling interest acquired, amounting to US$55 million, has been accounted for under other reserves.

F-55

Notes to the consolidated financial statements
for the years ended June 30, 2010
(e) The group issues equity-settled instruments to certain qualifying employees under an Employee Share Option Scheme to purchase shares in the Company’s authorised but unissued ordinary shares. Equity share-based payments are measured at the fair value of the equity instruments at the date of the grant. Share-based payments are expensed over the vesting period, based on the group’s estimate of the shares that are expected to eventually vest. During fiscal 2010 a share-based payment expense of US$19.5 million (2009: US$12.6 million) was charged to the income statement. (Refer to note 34 for more detail).
(f) On March 19, 2010, Harmony Gold Mining Company Limited concluded an agreement with AVRD, for the purchase of its 26% share of the mining titles of the Doornkop South Reef. From an accounting perspective, the sale of the 26% share in the mining titles was never recognized and accounted for as an in-substance call option by AVRD over the 26% mineral right. This was due to AVRD not being exposed to any losses relating to the Doornkop mineral right, and entitled at any point in time to repay the Nedbank loan guaranteed by Harmony — thereby becoming unconditionally entitled to the ‘upside’ in the mineral right. The agreement to purchase AVRD’s 26% interest during fiscal 2010 is therefore considered to be a repurchase of the option (equity interest). The difference between the value of the shares issued of US$20.5 million (see note 25), the liability to African Vanguard Resources (Proprietary) Limited (see note 29(a)) and transaction costs, have been taken directly to equity.
27 Provision for environmental rehabilitation
The group’s mining and exploration activities are subject to extensive environmental laws and regulations. These laws and regulations are continually changing and are generally becoming more restrictive. The group has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. Estimated future reclamation costs are based principally on legal and regulatory requirements. The following is a reconciliation of the total liability for environmental rehabilitation:
US Dollar
Figures in million 2010 2009
Provision raised for future rehabilitation
Balance at beginning of year
198 196
Disposal of assets
(6 ) (32 )
Change in estimate — Balance sheet
7 27
Change in estimate — Income statement
4 —
Additions to assets
17 —
Time value of money and inflation component of rehabilitation costs (a)
16 13
Translation
2 (6 )
Balance at end of year
238 198
Disposal groups classified as held for sale
(16 ) —
Total provision for environmental rehabilitation
222 198
(a) Includes both continuing and discontinued operations. During fiscal 2010 the group recognized time value of money credit adjustments of US$2.2 million relating to both the sale of Big Bell and reclassification of Mount Magnet to held for sale.
While the ultimate amount of rehabilitation costs to be incurred

F-56

Notes to the consolidated financial statements
for the years ended June 30, 2010
in the future is uncertain, the group has estimated that, based on current environmental and regulatory requirements, the total cost for the mines, in current monetary terms, is approximately US$346.6 million (2009: US$285.4 million). Refer to note 3.4 for the estimations and judgements used in the calculations.
Included in the charge to the income statement is an amount of US$3 million (2009: US$4 million) relating to the time value of money.
US Dollar
Figures in million 2010 2009
Future net obligations
Ultimate estimated rehabilitation cost
347 285
Amounts invested in environmental trust funds (Refer to note 19)
(223 ) (207 )
Total future net obligations
124 78
The group intends to finance the ultimate rehabilitation costs from the money invested in environmental trust funds, ongoing contributions, as well as the proceeds on sale of assets and gold from plant clean-up at the time of mine closure. The group has guarantees in place relating to the environmental liabilities. Refer to notes 19 and 36.
US Dollar
Figures in million 2010 2009
28 Retirement benefit obligation and other provisions
Non-current
Retirement benefit obligation (Refer to note 32)
20 20
Other
2 2
Total non-current provisions
22 22
29 Borrowings
Unsecured borrowings
Africa Vanguard Resources (Proprietary) Limited (a)
— 4
Total unsecured non-current borrowings
— 4
Secured borrowings
Nedbank Limited (b)
— —
Liability amount
— 29
Less: current portion
— (29 )
Westpac Bank (c)
8 10
Liability amount
12 14
Less: current portion
(4 ) (4 )
Nedbank Limited (d)
121 —
Principal amount
146 —
Less: unamortized issue costs
(2 ) —
Less: current portion
(23 ) —
Total secured non-current borrowings
129 10
Total non-current borrowings
129 14
Total current portion of borrowings
27 33
Total borrowings
156 47

F-57

Notes to the consolidated financial statements
for the years ended June 30, 2010
(a) The loan to AVRD from its holding company African Vanguard Resources (Proprietary) Limited has been derecognized during the year. Refer to note 26(f). The loan was unsecured and interest free.
(b) On July 30, 2003, AVRD partially funded the purchase of an undivided 26% share of the Mining titles relating to the Doornkop South Reef project, with a R140 million (US$19.1 million) Nedbank term loan facility. This facility to AVRD was guaranteed by Harmony and certain of its subsidiaries. As a result of this guarantee and other factors, the company was required to consolidate AVRD into the group.
On March 31, 2010, the company settled this facility as part of the purchase consideration. Refer to note 26(f). Interest on the loan facility accrued at a variable rate equal to JIBAR plus 2% and was payable on settlement of the loan amount. Interest accrued and capitalized during the year, up to settlement date, amounted to US$2.2 million (2009: US$3.3 million).
Following the settlement of the loan facility Harmony is no longer required to consolidate AVRD as part of the group.
(c) In July 2007, Morobe Consolidated Goldfields (MCG) entered into a finance lease agreement with Westpac Bank for the purchase of mining fleet to be used on the Hidden Valley project.
During the 2009 financial year, MCG sold 50% of the finance lease liability to Newcrest in terms of the Master Purchase and Farm-In agreement.
Interest is charged at US — LIBOR plus 1.25% per annum. Interest is accrued monthly and lease installments are repayable quarterly terminating June 30, 2013. The mining fleet financed is used as security for these loans.
The future minimum lease payments are as follows:
US Dollar
Figures in million 2010 2009
Due within one year
4 4
Due between one and two years
5 5
Due between two and five years
3 6
12 15
Future finance charges
— (1 )
12 14
(d) On December 11, 2009, the Company entered into a loan facility with Nedbank Limited, comprising a term facility of R900 million (US$119.4 million) and a revolving credit facility of R600 million (US$79.6 million). The facility was utilized to fund the acquisition of the Pamodzi FS assets (refer note 16) as well as the group’s major capital projects and working capital requirements. Interest accrues on a day to day basis over the term of the loan at a variable interest rate, equal to 3 month JIBAR plus 3.5%. Interest is repayable quarterly.
The term facility is repayable bi-annually in equal installments of R90 million (US$11.8 million) over five years. The revolving credit facility is repayable after three years. The term facility is fully drawn and R300 million (US$40.5 million) was drawn on the revolving credit facility.

F-58

Notes to the consolidated financial statements
for the years ended June 30, 2010
(e) On November 12, 2009 the Australian operations raised a new loan with BMW Finance of US$3.6 million for insurance premium funding. A deposit of US$0.7 million was paid. The loan bore interest at 6.1% and was repayable monthly in equal installments of US$0.4 million with the last installment paid in June 2010.
US Dollar
Figures in million 2010 2009
The exposure of the group’s borrowings to changes in interest rates and contractual repricing is as follows:
Variable
156 10
Current
— 33
Between 1 to 2 years
— —
Between 2 to 5 years
— —
Over 5 years
— 4
Total borrowings
156 47
Variable
100.0 % 21.6 %
Current
0.0 % 69.6 %
Between 1 to 2 years
0.0 % 0.0 %
Between 2 to 5 years
0.0 % 0.0 %
Over 5 years
0.0 % 8.8 %
Total borrowings
100.0 % 100.0 %
The maturity of borrowings is as follows:
Current
27 33
Between 1 to 2 years
28 4
Between 2 to 5 years
101 6
Over 5 years
— 4
Total borrowings
156 47
The effective interest rates at the balance sheet date were as follows:
Africa Vanguard Resources (Proprietary) Limited (a) #
0.0 % 0.0 %
Nedbank Limited (b)*
0.0 % 11.9 %
Westpac Bank (c)
2.0 % 2.0 %
Nedbank Limited (d)
10.1 % 0.0 %
BMW Financing (e) *
0.0 % 0.0 %
# Derecognized as AVRD is no longer a SPE
* Loan repaid in full
Other borrowings
The level of the Harmony’s borrowing powers, as determined by its Articles of Association, shall not except with the consent of the Harmony’s general meeting, exceed R40 million or the aggregate from time to time of the issued and paid-up share capital of the company, together with the aggregate of the amounts standing to the credit of all distributable and non-distributable reserves (including minority interests in subsidiary companies and provisions for deferred taxation) and any share premium accounts of the group.

F-59

Notes to the consolidated financial statements
for the years ended June 30, 2010
30 Trade and other payables
US Dollar
Figures in million 2010 2009
Financial liabilities:
Trade payables
54 63
Other liabilities
5 8
Non-financial liabilities:
Payroll accruals
44 39
Leave liabilities
34 31
Shaft related accruals
21 20
Other accruals
23 27
Value added tax
4 1
185 189
Disposal groups classified as held for sale
— —
Total trade and other payables
185 189
Leave liability
Employee entitlements to annual leave are recognized on an ongoing basis. An accrual is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date. The movement in the liability recognized in the balance sheet is as follows:
US Dollar
Figures in million 2010 2009
Balance at beginning of year
31 29
Benefits paid
(35 ) (27 )
Movement due to sale of business
— (2 )
Translation
— (1 )
Total expense per income statement
38 32
34 31
Disposal groups classified as held for sale
— —
Balance at end of year
34 31
31 Cash generated by operations
All amounts disclosed include discontinued operations.
Reconciliation of profit before taxation to cash generated by operations:
US Dollar
Figures in million 2010 2009 2008
Profit before taxation (1)
20 405 33
Adjustments for:
Amortization and depreciation
181 167 123
Impairment of assets
43 61 36
Loss on financial instruments
— — 1
Profit on sale of mining assets
(14 ) (287 ) (15 )
Net (decrease)/increase in provision for post retirement benefits
(3 ) 1 1
Net increase in provision for environmental rehabilitation
2 — 2
(Profit)/loss from associates
(7 ) (1 ) 11
Impairment of investment in associate
— 14 12
Share-based payments
20 13 6
Net (gain)/loss on financial instruments
(5 ) 10 59
Loss on sale of investment of subsidiary
3 — —
Dividends received
— — (5 )
Interest received
(25 ) (51 ) (38 )
Interest paid
30 26 76
Provision for doubtful debts
(2 ) 11 —
Bad debts written off
4 3 —
Other non cash transactions
8 — —
Effect of changes in operating working capital items:
Receivables
(13 ) (15 ) 4
Inventories
(20 ) (20 ) 7
Accounts payable and accrued liabilities
(8 ) (18 ) (45 )
Cash generated by operations
214 319 268

F-60

Notes to the consolidated financial statements
for the years ended June 30, 2010
(1) Includes discontinued operations
Additional cash flow information
The income and mining taxes paid in the statement of cash flow represents actual cash paid less refunds received.
Acquisitions and disposals of Subsidiaries / Businesses:
For the financial year ended June 30, 2010
(a) Disposal of Big Bell Operations
During January 2010 the group concluded the sale of Big Bell Operations (Proprietary) Limited, a wholly owned subsidiary and operation in Western Australia, for a total consideration of US$3.2 million.
The aggregate fair values of assets and liabilities sold were:
US Dollar
Figures in million 2010 2009 2008
Property, plant and equipment
8 — —
Rehabilitation liability
(6 ) — —
Profit on disposal
1 — —
Proceeds received in cash
3 — —
(b) Acquisition of Pamodzi FS assets
On February 18, 2010 the group concluded the acquisition of the Pamodzi FS assets for a total consideration of R405 million (US$53 million), of which R280 million (US$36 million) is attributable to property, plant and equipment and R120 million (US$16 million) to inventories.
The principal non-cash transactions for the year were the issue of shares for the acquisition of 26% share of the mining titles on Doornkop South Reef from AVRD (refer to note 25) and the share based-payments (refer to note 34).
For the financial year ended June 30, 2009
(a) Disposal of Randfontein Cooke Assets
During the year, the group disposed of its Cooke and Old Randfontein assets to Rand Uranium, a wholly owned subsidiary. In a related transaction, 60% of Rand Uranium shares were disposed of to PRF in two tranches. For detail, refer to note 21(b).
The aggregate fair value of the assets and liabilities sold were:
US Dollar
Figures in million 2010 2009 2008
Transaction one
Property, plant and equipment
— 42 —
Environmental trust fund
— 3 —
Rehabilitation liability
— (4 ) —
Other costs
— (2 ) —
Foreign exchange movements
— 5 —
Profit on disposal
— 153 —
Proceeds received in cash
— 197 —

F-61

Notes to the consolidated financial statements
for the years ended June 30, 2010
US Dollar
Figures in million 2010 2009 2008
Transaction two
Property, plant and equipment
— 1 —
Environmental trust fund
— 8 —
Rehabilitation liability
— (13 ) —
Foreign exchange movements
— (2 ) —
Profit on disposal
— 18 —
Proceeds received in cash
— 12 —
(b) MM Joint Venture
During the year Harmony and Newcrest entered into a joint venture agreement, which provided that Newcrest would purchase a 30.01 participating interest and a further buy-out of an additional 19.99% participating interest in Harmony’s MMJV gold and copper assets.
The aggregate fair value of the assets and liabilities sold were:
US Dollar
Figures in million 2010 2009 2008
Stage 1: 30.01% Participating interest
Property, plant and equipment
— 185 —
Trade and other receivables
— 6 —
Inventory
— 1 —
Non-current loans
— (10 ) —
Rehabilitation liability
— — —
Foreign exchange movements
— (11 ) —
Profit on disposal
— 58 —
Proceeds received in cash
— 229 —
Stage 2: 10% Participating interest
Property, plant and equipment
— 52 —
Trade and other receivables
— 1 —
Inventory
— 1 —
Non-current loans
— (3 ) —
Trade and other payables
— (5 ) —
Rehabilitation liability
— — —
Profit on disposal
— 44 —
Disposal proceeds
— 90 —
Proceeds received in cash
— — —
Proceeds received by way of the farm-in agreement
— 90 —
Stage 3: 9.99% Participating interest
Property, plant and equipment
— 72 —
Trade and other receivables
— 2 —
Inventory
— 3 —
Non-current loans
— (3 ) —
Trade and other payables
— (6 ) —
Rehabilitation liability
— (3 ) —
Profit on disposal
— 10 —
Disposal proceeds
— 75 —
Proceeds received in cash
— (6 ) —
Proceeds received by way of the farm-in agreement
— 69 —
The principal non-cash transactions for the year were the acquisition of PNG royalty agreement (refer to note 16(c), share-based payments (refer to note 34) and share exchange of Dioro for Avoca (refer to note 20(b)).

F-62

Notes to the consolidated financial statements
for the years ended June 30, 2010
For the financial year ended June 30, 2008
(a) On December 6, 2007, the group disposed of its assets and liabilities in South Kal Mine to Dioro. The aggregate fair value of the assets and liabilities sold were:
US Dollar
Figures in million 2010 2009 2008
Property, plant and equipment
— — 50
Consumables
— — 3
Shares
— — 3
Rehabilitation liability
— — (8 )
Loss on disposal
— — (12 )
Disposal proceeds
— — 36
Proceeds received by way of shares
— — (18 )
Proceeds received in cash
— — 18
(b) On February 27, 2008, the group disposed of its assets and liabilities in its Orkney operations to Pamodzi Gold Limited. The aggregate fair value of assets and liabilities sold were:
US Dollar
Figures in million 2010 2009 2008
Property, plant and equipment
— — 38
Environmental trust fund
— — 4
Leave liability
— — (2 )
Rehabilitation liability
— — (7 )
Profit on disposal
— — 13
Disposal proceeds
— — 46
Proceeds received by way of shares
— — (46 )
Cash and cash equivalent at disposal
— — —
The principal non-cash transactions for the year were the acquisition of the PNG royalty agreement (refer to note 16(b)), share-based payments (refer to note 34) and the purchase of assets under finance lease (refer to note 27).
32 Retirement benefit obligations
(a) Pension and provident funds: The group contributes to several pension and provident funds governed by the Pension Funds Act, 1956 for the employees of its South African subsidiaries. The pension funds are multi-employer industry plans. The group’s liability is limited to its annually determined contributions.
The provident funds are funded on the “money accumulative basis” with the member’s and employer’s contributions having been fixed in the constitution of the funds.
The Australian group companies make contributions to each employee’s Superannuation (pension) funds in accordance with the Superannuation Guarantee Scheme (SGS). The SGS is a Federal Government initiative enforced by law which compels employers to make regular payments to regulated funds providing for each employee on their retirement. The SGS were set at a minimum of 9% of gross salary and wages for the 2010 financial year (2009: 9%). The fund is a defined contribution plan.
Substantially all the group’s employees are covered by the above mentioned retirement benefit plans. Funds contributed by the group for the 2010 financial year amounted to US$55.2 million (2009: US$39.8 million).

F-63

Notes to the consolidated financial statements
for the years ended June 30, 2010
(b) Post-retirement benefits other than pensions : Most of the supervisory and managerial workers in South Africa participate in the Minemed medical scheme, as well as other medical schemes. The group contributes to these schemes on behalf of current employees and retired employees who retired prior to December 31, 1996 (Minemed scheme). The annual contributions for these retired employees are fixed. The group’s contributions to these schemes on behalf of current employees amounted to US$13.9 million for 2010 and US$8.6 million for 2009.
Harmony inherited a post-retirement medical benefit obligation, which existed at the time of the Freegold acquisition in 2002. The group’s obligation in this regard is to pay a subsidy of 2% for every completed year of employment up to a maximum of 50% of total medical aid contributions, commencing on date of retirement. Should the employee die, either in service or after retirement, this benefit will transfer to his/her dependents. The medical aid tariffs are based on the Minemed medical scheme options. Except for the pre-mentioned employees, Harmony has no other post-retirement obligation for the other group employees.
Assumptions used to determine this liability include, a discount rate of 10.3%, a mortality rate according to the SA 1956/62 mortality table and a medical inflation rate of 8.1%. It is also assumed that all members will retire at the age of 60 and will remain on the current benefit option.
The liability is based on an actuarial valuation conducted during the financial year ended June 30, 2010, using the projected unit credit method. The next actuarial valuation will be performed on June 30, 2011.
US Dollar
Figures in million 2010 2009
Present value of unfunded obligations
20 20
Movement in the liability recognized in the balance sheet
Balance at beginning of year
20 17
Contributions paid
(1 ) —
Other expenses included in staff costs/current service cost
1 1
Interest cost
2 2
Net actuarial loss recognized during the year (1)
1 —
Curtailments (2)
(3 ) —
Balance at end of year
20 20
(1) The net actuarial loss recognized during the 2008 financial year was US$2 million, in the 2007 financial year a gain of US$2 million and in the 2006 financial year a loss of US$1.3 million.
(2) The terms of employment of 124 members changed, resulting in a reduction of the liability of US$2.8 million.

F-64

Notes to the consolidated financial statements
for the years ended June 30, 2010
The principal actuarial assumptions used for accounting purposes were:
US Dollar
Figures in million 2010 2009
Discount rate
10.3 % 10.0 %
Healthcare inflation rate
8.1 % 7.8 %
Normal retirement age
60 60
The net liability of the defined benefit plan is as follows:
Present value of defined benefit obligation
20 20
Fair value of plan assets
— —
Net liability
20 20
The present value of the defined benefit obligation was US$17 million in the 2008 financial year, US$15.2 million in the 2007 financial year and US$14.9 million in 2006 financial year.
The effect of a one percentage point increase and decrease in the assumed medical cost trend rates is as follows:
1% 1%
Increase Increase
Effect on:
Aggregate of service cost and interest cost
1 —
Defined benefit obligation
4 3
1% 1%
Decrease Decrease
Effect on:
Aggregate of service cost and interest cost
1 —
Defined benefit obligation
4 3
The group expects to contribute approximately US$0.6 million to its benefit plan in 2011.
US Dollar
Figures in million 2010 2009
33 Employee benefits
Number of permanent employees as at June 30:
South African operations*
36,204 37,316
International operations**
1,105 979
Total number of permanent employees
37,309 38,295
Aggregated earnings
The aggregate earnings of employees including directors were:
Salaries and wages and other benefits
716 509
Retirement benefit costs
55 40
Medical aid contributions
14 9
Total aggregated earnings
785 558
* There was no employees attributable to the discontinued operations at June 30, 2010 (2009: 0; 2008: 3 618).
** The total employees at Australian operations at June 30, 2010 was 56 (2009: 48, 2008: 873). Of this total, 12 employees (2009: 0; 2008: 0) were attributable to the discontinued operations. The total for the international operations includes the MMJV employees.
During fiscal 2010, US$5 million (2009: US$2 million; 2008: US$0.7 million) was included in the payroll cost for termination costs. This excludes the cost for voluntary retrenchment process (refer to note 5).

F-65

Notes to the consolidated financial statements
for the years ended June 30, 2010
Directors’ remuneration
During fiscal 2010, the directors received remuneration of US$1.8 million, comprising of US$1.3 million for salaries, US$0.03 million for retirement contributions and US$0.31 million for bonuses. The non-executive directors received US$0.6 million in directors’ fees. The aggregate of remuneration received by senior management was US$3.2 million.
During fiscal 2009, the directors received remuneration of US$1.1 million, comprising of US$0.74 million for salaries, US$0.03 million for retirement contributions and US$0.33 million for bonuses. The non-executive directors received US$0.4 million in directors’ fees. The aggregate of remuneration received by senior management was US$2.7 million.
34 Share option scheme
The group currently has the 2001, 2003 schemes and the 2006 share plan that are active. The objective of these schemes is to recognise the contributions of senior staff to the group’s financial position and performance and to retain key employees.
The options granted under the 2001 and 2003 schemes
A fifth of the options granted under the 2001 and 2003 schemes are exercisable annually from the grant date with an expiry date of 10 years from the grant date. The offer price of these options equaled the closing market price of the underlying shares on the trading date immediately preceding the granting of the options.
On resignation and retirement, share options which have not yet vested will lapse and share options which have vested may be taken up at the employee’s election before the last day of service. Payment of shares forfeited will therefore not be required. On death, all options vest immediately and the deceased estate has a period of twelve months to exercise these options.
Following the introduction of the 2006 share plan, no further options are expected to be allocated under these two schemes.
Number of share options relating to the 2001 and 2003 option schemes 2010 2009
Share options granted
28,442,420 28,442,420
Exercised
19,133,887 18,570,971
Vested but not exercised
2,264,585 1,791,215
Unvested
— 1,059,343
Forfeited and lapsed
7,043,948 7,020,891
Vesting periods of unvested shares
Within one year
— 1,059,343
Total number of shares unvested
— 1,059,343
No options were granted in fiscal 2010 and 2009 for the 2001 and 2003 option schemes.

F-66

Notes to the consolidated financial statements
for the years ended June 30, 2010
Weighted
average
option price
Activity on share options granted but not yet exercised Shares (SA Rand)
For the year ended June 30, 2010
Balance at beginning of year
2,850,558 47.58
Options exercised
(562,916 ) 44.16
Options forfeited and lapsed
(23,057 ) 43.75
Balance at end of year
2,264,585 48.47
For the year ended June 30, 2009
Balance at beginning of year
4,528,239 49.14
Options exercised
(1,321,303 ) 51.42
Options forfeited and lapsed
(356,378 ) 53.12
Balance at end of year
2,850,558 47.58
At June Option price Remaining
List of options granted but not yet exercised (listed by grant date) 30, 2010 (SA Rand) life (years)
April 24, 2001
17,000 36.50 0.8
November 20, 2001
167,901 49.60 1.4
September 23, 2002
— 66.00 2.2
March 27, 2003
125,300 91.60 2.7
August 10, 2004
482,967 66.15 4.1
April 26, 2005
1,471,417 39.00 4.8
Total option granted but not yet exercised
2,264,585
The number of shares held by the Harmony Share Trust at year end amounted to 63 500 (2009: 63 500). This trust is considered to be an SPE and is therefore consolidated in accordance with the group’s accounting policies.
List of options granted but not yet vested (listed by grant date) 2010 2009
August 10, 2004
— 316 498
April 26, 2005
— 742 845
Total options granted but not yet vested
— 1,059,343
US Dollar
Figures in million 2010 2009
Average market price options traded during the year
6 11
Average fair value of share options vested during the year
8 14
Share based cost recognised
— 1
The share based cost is calculated using the binominal valuation model based on the following assumptions at grant date:
Option allocation
August 10, April 26,
2004 2005
Price at date of grant (SA Rand per share)
66.15 39.00
Risk-free interest rate:
9.9 % 8.4 %
Expected volatility:
40.0 % 35.0 %
Expected dividend yield:
0.0 % 0.0 %
Vesting period:
5 years 5 years
Share based payments are measured at the fair value of the equity instruments at the date of the grant. The cost is expensed over the vesting period, based on the group’s estimate of the options that are expected to eventually vest.
The only vesting conditions for the 2001 and 2003 schemes is that the employees should be in the employment of the group.
The volatility measured at the standard deviation of expected share price returns were based on statistical analysis of daily share prices over the last three years before grant date.

F-67

Notes to the consolidated financial statements
for the years ended June 30, 2010
The shares granted under the 2006 share plan
The 2006 share plan consist of both performance shares (PS) and share appreciation rights (SARs). The PS will vest after three years from the grant date, if and to the extent that the performance conditions have been satisfied. The SARs will vest in equal thirds in year 3, 4 and 5 after grant date, subject to the performance conditions having been satisfied. The SARs have an expiry date of 6 years from the grant date and the offer price equals the closing market price of the underlying shares on the trading date immediately preceding the grant.
The aggregate number of shares which may be allocated to the share plan on any day, when added to the total number of unexercised SARs, unvested performance shares, and restricted shares which have been allocated for SAR’s and PS, and any other employee share scheme operating by the company, shall not exceed 14% of the number of issued ordinary shares of the company from time to time. On June 30, 2010, 4 361 937 PS and 7 992 023 SARS (2009: 3 718 127 PS and 5 284 500 SARs) had been allocated to participating employees.
Termination of employees participation in the share plan is based on “No Fault” and “Fault” definitions.
In the case of SARs, if employment is terminated for No Fault reasons, then the value of the appreciation in all unvested and un-exercised SARs is settled in shares or cash at the option of the employer as at the date of termination of employment, after the deduction of any tax payable. The employer has no past practice of settling in cash.
In the case of performance shares, if employment is terminated for No Fault reasons, then
• First the maximum number conditionally awarded is pro-rated for the time period until the termination date;
• Then this adjusted number is reduced to a third on the assumption that Harmony’s performance was a median one with one third vesting, after taking into account any portion of shares that have banked already in terms of the 2009 issue;
• And then settled in shares sold on the market for cash, and paid to the participant after the deduction of any tax payable.
In either case, if employment is terminated for Fault reasons, all unvested and un-exercised SARs and all PS not yet vested are lapsed and cancelled.
Number of shares relating to the 2006 share plan at June 30, 2010 2009
Shares granted
12,353,960 9,002,627
Vested
185,473 —
Performance shares
— —
Share appreciation rights
185,473 —
Unvested
10,082,512 7,854,749
Performance shares
3,492,402 3,302,163
Share appreciation rights
6,590,110 4,552,586
Shares forfeited
2,085,975 1,147,878
Performance shares
869,536 415,964
Share appreciation rights
1,216,439 731,914
Vesting periods of unvested shares:
Within one year
1,550,416 503,589
One to two years
3,463,496 1,651 892
Two to three years
2,728,330 3,675 954
Three to four years
1,492,598 1,329 960
Four to five years
847,672 693,354
Total number of unvested shares
10,082,512 7,854,749

F-68

Notes to the consolidated financial statements
for the years ended June 30, 2010
2010 2009
Weighted Weighted
average average
For the year ended June 30, option price option price
Activity on PS and SARs granted but not yet exercised Shares (SA Rand) Shares (SA Rand)
Balance at beginning of year
7,854,749 4,236,938
Performance shares
3,302,164 n/a 1,341,444 n/a
Share appreciation rights
4,552,585 79.38 2,895,494 81.04
Options granted
3,351,333 4,325 907
Performance shares
643,810 n/a 2,206,026 n/a
Share appreciation rights
2,707,523 77.28 2,119,881 77.81
Options lapsed
(938,097 ) (708,096 )
Performance shares
(453,572 ) n/a (245,306 ) n/a
Share appreciation rights
(484,525 ) 78.54 (462,790 ) 92.79
Options vested
(185,473 ) —
Performance shares
— n/a — —
Share appreciation rights
(185,473 ) 112.64 — —
Balance at end of year
10,082,512 7,854,749
Performance shares
3,492,402 n/a 3,302,164 n/a
Share appreciation rights
6,590,110 77.65 4,552,585 79.38
At June 30, Strike price Remaining
List of shares granted but not yet exercised (listed by grant date) 2010 (SA Rand) life (years)
Performance shares
November 15, 2007
777,910 n/a 0.40
March 07, 2008
12,308 n/a 0.70
December 05, 2008
2,058,372 n/a 1.40
November 15, 2009
643,810 n/a 2.40
Share appreciation rights
November 15, 2006
336,552 112.64 2.38
November 15, 2007
1,729,611 70.54 3.38
March 07, 2008
46,154 102.00 3.69
December 05, 2008
1,934,780 77.81 4.44
November 16, 2009
2,543,015 77.28 5.40
Total options granted but not yet exercised
10,082,512
US Dollar
Figures in million 2010 2009
Average fair value of share options vested during the year
3 0
Share based cost recognised
19 12

F-69

Notes to the consolidated financial statements
for the years ended June 30, 2010
The share based cost is calculated using the Monte Carlo simulation on the market-linked PS and Black-Scholes on the SARs. For the 2009 PS allocation the group linked 50% of the share allocation to market conditions and the remaining 50% to non-market internal conditions. The following assumptions were applied at grant date:
Performance
shares SAR’s
Price at date of grant (SA Rand per share)
- November 15, 2006 share allocation
n/a 112.64
- November 15, 2007 share allocation (valuation date December 21, 2007)
n/a 68.44
- November 15, 2007 share allocation (valuation date April 21, 2008)
n/a 92.25
- March 7, 2008 share allocation
n/a 102.00
- December 5, 2008 share allocation (valuation date December 5, 2008)
n/a 77.81
- December 5, 2008 share allocation (valuation date February 16, 2009)
n/a 116.90
- November 16, 2009 share allocation (valuation date November 27, 2009)
n/a 81.50
- November 16, 2009 share allocation (valuation date December 23, 2009)
n/a 75.60
- November 16, 2009 share allocation (valuation date May 3, 2010)
n/a 72.14
Risk-free interest rate:
- November 15, 2006 share allocation
9.58 % 8.79 %
- November 15, 2007 share allocation (valuation date December 21, 2007)
10.81 % 9.84 %
- November 15, 2007 share allocation (valuation date April 21, 2008)
11.71 % 10.68 %
- March 7, 2008 share allocation
11.04 % 10.44 %
- December 5, 2008 share allocation (valuation date December 5, 2008)
8.55 % 8.43 %
- December 5, 2008 share allocation (valuation date February 16, 2009)
8.18 % 8.30 %
- November 16, 2009 share allocation (valuation date November 27, 2009)
0.00 % 8.63 %
- November 16, 2009 share allocation (valuation date December 23, 2009)
0.00 % 8.57 %
- November 16, 2009 share allocation (valuation date May 3, 2010)
7.29 % 0.00 %
Expected volatility*:
- November 15, 2006 share allocation
34.71 % 26.37 %
- November 15, 2007 share allocation (valuation date December 21, 2007)
46.32 % 35.10 %
- November 15, 2007 share allocation (valuation date April 21, 2008)
49.52 % 41.72 %
- March 7, 2008 share allocation
50.49 % 54.50 %
- December 5, 2008 share allocation (valuation date December 5, 2008)
56.62 % 48.61 %
- December 5, 2008 share allocation (valuation date February 16, 2009)
70.86 % 49.03 %
- November 16, 2009 share allocation (valuation date November 27, 2009)
— 49.29 %
- November 16, 2009 share allocation (valuation date December 23, 2009)
— 49.21 %
- November 16, 2009 share allocation (valuation date May 3, 2010)
37.34 % —
Expected dividend yield:
- for all allocations
0.00 % 0.00 %
Vesting period (from grant date):
- for all allocations
3 years 5 years
* The volatility is measured as an annualised standard deviation of historical share price returns, using an exponentially weighted moving average (EWMA) model, with a lambda of 0.99. The volatility is calculated on the grant date, and takes into account the previous three years of historical data.

F-70

Notes to the consolidated financial statements
for the years ended June 30, 2010
Share based costs are measured at the fair value of the equity instruments at the date of the grant as defined in IFRS 2. The grant date is the date of which the entity and counterparty have a shared understanding of the terms and conditions of the share-based payment arrangement. The cost is expensed over the vesting period, based on the group’s estimate of the options that are expected to eventually vest, within the rules of IFRS2.
For November 15, 2006, November 15, 2007 and March 7, 2008 issue:
The performance criteria imposed by the board and which must be satisfied before settlement of any PS under these awards are linked to the Company’s TSR in comparison to the Philadelphia XAU index of international gold and precious metal mining companies (50%) and the JSE Gold Mining index (50%).
The following performance criteria was imposed per the Harmony (2006) Share Plan which must be satisfied before the settlement of any SARs:
• that the Company’s headline earnings per share have grown since the allocation date by a minimum of CPI plus 3%;
• that the Company’s performance has since the allocation date been a satisfactory achievement in terms of the Company’s sustainability index.
For December 5, 2008 issue:
The Performance Criteria imposed by the Board and which must be satisfied before the Settlement of any PS under this Award are linked to the Company’s TSR (Total Shareholder Return) in comparison to the SA Gold Index (50%) and the SA Resource Index (50%);
The following performance criteria was imposed per the Harmony (2006) Share Plan which must be satisfied before the settlement of any SARs:
• that the Company’s headline earnings per share have grown since the allocation date by more than the CPI.
For November 16, 2009 issue:
The Performance Criteria imposed by the Board, and which must be satisfied before the Settlement of any Performance Shares under this Award, are as follows:
• 50% of the number shares awarded are to be linked to the annual gold production of the company in relation to the targets set annually.
• 50% of the number shares awarded are linked to the Company’s TSR (Total Shareholder Return) in comparison to the South African Gold peers.
The following performance criteria was imposed per the Harmony (2006) Share Plan which must be satisfied before the settlement of any SARs:
• the Company’s headline earnings per share should grow, since the allocation date, by more than the CPI.
For options granted during the year, the following fair values were used as a basis to recognise share-based payment cost:
• For options measured on November 27, 2009, the value is R44.52 per share for SARs.
• For options measured on December 23, 2009, the value is R39.26 for SARs.
• For options measured on May 3, 2010, the value is R38.49 for PS.
35 Related parties
None of the directors or major shareholders of Harmony or, to the knowledge of Harmony, their families, had interest, direct or indirectly, in any transaction since July 1, 2007 or in any proposed transaction that has affected or will materially affect Harmony or its subsidiaries, other than as stated below.
Key management personnel are those persons having authority and responsibility for planning, directing and controlling the activities of the group, directly or indirectly, including any director (whether executive or otherwise) of the group.
Directors’ and executive management’s remuneration is disclosed in note 33.
African Rainbow Minerals Limited (ARM) currently holds 14.6% of Harmony’s shares. Patrice Motsepe, Andre Wilkens, Joaquim Chissano and Frank Abbott are directors of ARM.
Harmony currently holds 40% of the shares of Rand Uranium. Graham Briggs, Hannes Meyer and Fikile De Buck are directors of Rand Uranium. Dr Simo Lushaba is a member of the Rand Uranium Investment Committee.
A list of the group’s subsidiaries, associates and joint ventures has been included in Annexure A.

F-71

Notes to the consolidated financial statements
for the years ended June 30, 2010
Material transactions with associates and joint ventures:
Besides the transactions disclosed below, the group concluded the following transactions with related parties:
• Pamodzi — Refer to note 16.
• AVRD — Refer to note 26.
• On July 10, 2008, the group disposed of its interest in Village Reef Gold Mining Company to To the Point Growth Specialists Investments 2 (Pty) Ltd (To the Point). Bernard Swanepoel was an executive director of both Harmony and To the Point during 2008.
US Dollar
Figures in million 2010 2009
Sales and services rendered to related parties
Associates
58 24
Joint Venture
1 —
59 24
Purchases and services acquired from related parties
Associates
4 1
Outstanding balances due by related parties
Associates
16 22
Joint Ventures
130 10
146 32
Outstanding balances due to related parties
Associates
4 —
Refer to note 24 for detail on the items relating to the loans to/(from) associates and joint ventures and provisions raised against these loans.
US Dollar
Figures in million 2010 2009
36 Commitments and Contingencies
Capital expenditure commitments
Contracts for capital expenditure
17 32
Share of Joint Venture’s contract for capital expenditure
27 30
Authorised by the directors but not contracted for
132 95
Total capital commitments
176 157
This expenditure will be financed from existing resources and where appropriate, borrowings.
The group is contractually obliged to make the following payments in respect of operating leases, including for land and buildings, and for mineral tenement leases:
US Dollar
Figures in million 2010 2009
Within one year
4 5
Between one year and five years
1 1
5 6
This includes US$0.9 million for the MMJV. For details on the group’s finance leases, refer to note 29.
US Dollar
Figures in million 2010 2009
Contingent liabilities
Guarantees and suretyships
3 3
Environmental guarantees (i)
67 39
70 42
(i) Included in the balance for fiscal 2010 is an amount of US$17.0 million (2009: US$16.8 million) relating to guarantees provided for the Rand Uranium transaction. These guarantees will be cancelled once Rand Uranium puts its own guarantees in place. US$14.6 million has been pledged as collateral for environmental guarantees in favour of certain financial institutions. Refer to note 18.

F-72

Notes to the consolidated financial statements
for the years ended June 30, 2010
Contingent liability
(a) Class action: On April 18, 2008, Harmony Gold Mining Company Limited was made aware that it has been named or may be named as a defendant in a lawsuit filed in the U.S. District Court in the Southern District of New York on behalf of certain purchasers and sellers of Harmony’s American Depository Receipts (ADRs) and options with regard to certain of its business practices. Harmony has retained legal counsel.
During January 2009, the plaintiff filed an Amended Complaint with the United States District Court (“Court”). Subsequently, the Company filed a Motion to Dismiss all claims asserted in the Class Action Case. On March 19, 2010 the Court denied the Company’s application for dismissal and subsequently the Company filed a Motion for Reconsideration in which it requested the Court to reconsider its judgement. This matter was heard on April 27, 2010 and the Company’s request for reconsideration of judgement was denied. The Company is defending the matter and the legal process is taking its course. It is currently not possible to estimate if there will be a financial effect, or what that effect might be.
(b) The group may have a potential exposure to rehabilitate groundwater and radiation that may exist where the group has and/or continues to operate. The group has initiated analytical assessments to identify, quantify and mitigate impacts if and when (or as and where) they arise. Numerous scientific, technical and legal studies are underway to assist in determining the magnitude of the contamination and to find sustainable remediation solutions. The group has instituted processes to reduce future potential seepage and it has been demonstrated that Monitored Natural Attenuation (MNA) by the existing environment will contribute to improvement in some instance. The ultimate outcome of the matter cannot presently be determined and no provision for any liability that may result has been made in the financial statements. Should the Group determine that any part of these contingencies require them being recorded and accounted for as liabilities, i.e. where they become quantifiable and probable, it could have a material impact on the financial status of the Group.
(c) Due to the interconnected nature of mining operations, any proposed solution for potential flooding and potential rdecant risk posed by deep groundwater needs to be a combined one, supported by all the mines located in these goldfields. As a result, the Department of Mineral Resource and affected mining companies are involved in the development of a Regional Mine Closure Strategy. In view of the limitation of current information for the accurate estimation of a liability, no estimate can be made for the obligation.
(d) On December 1, 2008, the group issued 3 364 675 to Rio Tinto for the purchase of Rio Tinto’s rights to the royalty agreement entered into prior ro the group’s acquisition of the Wafi deposits in PNG. The shares were valued at US$23 million on the transaction date. An additional US$10 million in cash will be payable when the decision to mine is made. Of this amount, Harmony is responsible for paying the first US$6 million, with the balance of US$4 million being borne equally by the joint venture partners.
(e) In terms of the sale agreements entered into with Rand Uranium (refer note 14), Harmony retained financial exposure relating to environmental disturbances and degradation caused by the group before the effective date, in excess of US$10 million of potential claims. Rand Uranium is therefore liable of all claims up to US$10 million and retains legal liability. The likelihood of potential claims cannot be determined presently and no provision for any liability has been made in the financial statements.
37 Subsequent events
Sale of Mount Magnet
On July 20, 2010, the group concluded an agreement with Ramelius Resources Limited to sell its 100% share in Mount Magnet Gold NL (Mount Magnet) for a total consideration of US$35 million. The group recognised a profit of US$18.4 million. Refer to note 14 in this regard.

F-73

Notes to the consolidated financial statements
for the years ended June 30, 2010
Dividends
On August 13, 2010, the Board of Directors approved a final dividend for the 2010 financial year of 50 SA cents per share. The total dividend amounts to US$29.3 million. As this dividend was declared after the reporting date, it has not been reflected in the financial statements for the period ended June 30, 2010. The dividend was paid on September 20, 2010.
Merriespruit South region and Freegold option
On September 3, 2010, Harmony Gold Mining Company Limited (Harmony) concluded two transactions with Witwatersrand Consolidated Gold Resources Limited (“ Wits Gold ”), in which Wits Gold will obtain a prospecting right over Harmony’s Merriespruit South area and the option held by ARMGold/Harmony Freegold Joint Venture Company (Proprietary) Limited (Freegold), a wholly owned subsidiary of Harmony. The option was to acquire a beneficial interest of up to 40% in any future mines established by Wits Gold on certain properties in the Southern Free State (Freegold option), which will be cancelled. Harmony will abandon a portion of its mining right in respect of the Merriespruit South area to enable Wits Gold to include this area in its prospecting right, which is located immediately south of the Merriespruit South area.
The total consideration was US$47 million, (US$9 million for the prospecting area and US$38 million for the cancellation of the option agreement), which will be settled in cash or in a combination of cash and shares in Wits Gold, when all remaining conditions precedent to the transaction have been fulfilled.
Evander 6 and Twistdraai
On September 10, 2010, Harmony concluded a sale of assets agreement with Taung Gold Limited (“ Taung ”), in which Taung acquired the Evander 6 shaft, the related infrastruture and surface right permits as well as a mining right over the Evander 6 and Twistdraai areas. The total purchase consideration is US$29 million, which will be settled in cash when all remaining conditions precedent to the transaction have been fulfilled.
Closure of Merriespruit 1
On October 4, 2010, the decision was made to finally close Merriespruit 1 shaft, under the Section 189 (of the Labour Relations Act) already in place. The closure was postponed in terms of an agreement reached with organized labour to keep the shaft open while it remained profitable.
38 Segment report
The group has only one product, being gold. In order to determine operating and reportable segments, management reviewed various factors, including geographical location as well as managerial structure. It was determined that an operating segment consists of a shaft or a group of shafts managed by a single general manager and management team.
After applying the quantitative thresholds from IFRS 8, the reportable segments were determined as:
Bambanani, Doornkop, Evander, Joel, Kusasalethu, Masimong, Phakisa, Target, Tshepong, Virginia, Papua New Guinea and Mount Magnet (classified as held for sale and discontinued operation). In 2008 and 2009 the Cooke operations were also classified as held for sale and discontinued operations. All other operating segments have been grouped together under All other surface operations , under their classification as either continuing or discontinued.
When assessing profitability, the chief operating decision maker (“ CODM ”) considers the revenue and production costs of each segment. The net of these amounts is the operating profit or loss. Therefore, operating profit has been disclosed in the segment report as the measure of profit or loss.
The CODM does not consider depreciation or impairment and therefore these amounts have not been disclosed in the segment report, but does consider capital expenditure which has been disclosed.
Segment assets consist of mining assets included under property, plant and equipment which can be attributed to the shaft or group of shafts. Current and non-current group assets that are not allocated at a shaft level, form part of the reconciliation to total assets.
A reconciliation of the segment totals to the group financial statements has been included in note 39.

F-74

Notes to the consolidated financial statements
for the years ended June 30, 2010
Segment report — 2010 (US dollar)
Production Production Mining Capital Ounces Tons
Revenue cost profit assets expenditure produced* milled*
US$m US$m US$m US$m US$m oz t’000
Continuing operations
South Africa
Underground
Bambanani
147 98 49 125 28 133,007 582
Doornkop
68 54 14 372 45 62,694 595
Evander operations
120 113 7 121 23 111,724 869
Joel
69 50 19 23 10 64,495 484
Kusasalethu
184 144 40 390 57 175,029 1,141
Masimong
168 93 75 105 23 155,609 991
Phakisa
50 43 7 533 64 44,079 374
Target
116 88 28 333 51 113,782 857
Tshepong
241 151 90 478 35 216,986 1,674
Virginia operations
187 177 10 89 24 170,013 1,826
Surface
All other surface operations
129 84 45 17 11 119,954 10,077
Total South Africa
1,479 1,095 384 2,586 371 1,367,372 19,470
International
Papua New Guinea
10 8 2 494 71 61,173 335
Total international
10 8 2 494 71 61,173 335
Total continuing operations
1,489 1,103 386 3,080 442 1,428,545 19,805
Discontinued operations
Mount Magnet
— — — 29 — — —
Total discontinued operations
— — — 29 — — —
Total operations
1,489 1,103 386 3,109 442 1,428,545 19,805
Reconciliation of the segment information to the consolidated income statement and balance sheet (refer to note 39)
— — 2,032
1,489 1,103 5,141
* Production statistics are unaudited.

F-75

Notes to the consolidated financial statements
for the years ended June 30, 2010
Segment report — 2009 (US dollar)
Production Production Mining Capital Ounces Tons
Revenue cost profit assets expenditure produced* milled*
US$m US$m US$m US$m US$m oz t’000
Continuing operations
South Africa
Underground
Bambanani
103 72 31 91 6 121,530 570
Doornkop
38 31 7 330 44 42,150 605
Evander operations
168 111 57 122 24 190,075 1,241
Joel
56 41 15 31 6 65,684 566
Kusasalethu
158 117 41 352 47 174,321 1,061
Masimong
135 73 62 86 14 154,034 981
Phakisa
19 12 7 474 51 22,216 204
Target
76 60 16 287 38 87,225 710
Tshepong
198 109 89 471 28 230,778 1,516
Virginia operations
226 165 61 116 22 258,170 2,493
Surface
All other surface operations
100 59 41 18 9 114,648 9,778
Total South Africa
1,277 850 427 2,378 289 1,460,831 19,725
International
Papua New Guinea
— — — 458 198 — —
Total international
— — — 458 198 — —
Total continuing operations
1,277 850 427 2,836 487 1,460,831 19,725
Discontinued operations
Cooke operations
69 50 19 — 10 80,377 1,419
Mount Magnet
— — — 34 — — —
Total discontinued operations
69 50 19 34 10 80,377 1,419
Total operations
1,346 900 446 2,870 497 1,541,208 21,144
Reconciliation of the segment information to the consolidated income statement and balance sheet (refer to note 39)
(69 ) (50 ) 2,055
1,277 850 4,925
* Production statistics are unaudited.

F-76

Notes to the consolidated financial statements
for the years ended June 30, 2010
Segment report — 2008 (US dollar)
Production Production Mining Capital Ounces Tons
Revenue cost profit assets expenditure produced* milled*
US$m US$m US$m US$m US$m oz t’000
Continuing operations
South Africa
Underground
Bambanani
128 102 26 98 15 154,879 912
Doornkop
35 31 4 273 48 44,038 494
Kusasalethu
133 103 30 304 44 164,215 981
Evander operations
193 127 66 131 33 231,799 1,447
Joel
52 39 13 16 5 59,557 449
Masimong
96 88 8 94 16 116,424 892
Phakisa
4 2 2 312 40 4,024 34
Target
69 51 18 275 35 79,602 686
Tshepong
223 125 98 404 27 265,914 1,649
Virginia operations
204 180 24 107 20 247,820 2,349
Other operations
6 13 (7 ) 13 1 8,305 86
Surface
All other surface operations
126 57 69 19 19 147,980 9,524
Total South Africa
1,269 918 351 2,046 303 1,524,557 19,503
International
Papua New Guinea
— — — 580 197 — —
Total international
— — — 580 197 — —
Total continuing operations
1,269 918 351 2,626 500 1,524,557 19,503
Discontinued operations
Cooke operations
194 123 71 86 22 236,170 3,906
Mount Magnet
56 41 15 66 4 75,297 966
Other operations
59 66 (7 ) — 16 74,433 1,048
Total discontinued operations
309 230 79 152 42 385,900 5,920
Total operations
1,578 1,148 430 2,778 542 1,910,457 25,423
Reconciliation of the segment information to the consolidated income statement and balance sheet (refer to note 39)
(309 ) (230 ) 1,932
1,269 918 4,710
* Production statistics are unaudited.

F-77

Notes to the consolidated financial statements
for the years ended June 30, 2010
39 Reconciliation of segment information to consolidated income statements and balance sheet:
The “reconciliation of segment data to consolidated financials” line item in the segment reports is broken down into the following elements, to give a better understanding of the differences between the income statement, balance sheet and the segment report.
Revenue from:
US Dollar
Figures in million 2010 2009 2008
Discontinued operations
— 69 309
Production costs from:
Discontinued operations
— 50 230
Reconciliation of cash operating profit to consolidated profit/(loss) before taxation and discontinued operations:
Total segment revenue
1,489 1,346 1,578
Total segment production costs
(1,103 ) (900 ) (1,148 )
Cash operating profit
386 446 430
Less discontinued operations
— (19 ) (79 )
386 427 351
Cost of sales items other than production costs
(280 ) (233 ) (204 )
Amortisation and depreciation of mining properties, mine development cost and mine plant facilities
(175 ) (130 ) (107 )
Amortisation and depreciation of other than mining and mining related assets
(6 ) (9 ) (10 )
Rehabilitation expenditure
(4 ) (1 ) (1 )
Care and maintenance cost of restructured shafts
(8 ) (5 ) (10 )
Employment termination and restructuring costs
(27 ) (4 ) (29 )
Share-based payments
(20 ) (13 ) (6 )
Impairment of assets
(43 ) (71 ) (40 )
Provision for post retirement benefits
3 — (1 )
Gross profit
106 194 147
Corporate, administration and other expenditure
(50 ) (36 ) (30 )
Social investment expenditure
(11 ) (4 ) (1 )
Exploration expenditure
(29 ) (29 ) (28 )
Profit on sale of property, plant and equipment
14 114 —
Other expenses — net
(8 ) (3 ) (15 )
Operating profit
22 236 73
Profit/(loss) from associates
7 1 (11 )
Impairment of investment in associate
— (14 ) (12 )
Loss on sale of investment in subsidiary
(3 ) — —
Net gain/(loss) on financial instruments
5 (10 ) (58 )
Investment income
25 49 39
Finance cost
(32 ) (24 ) (70 )
Profit/(loss) before taxation and discontinued operations
24 238 (39 )

F-78

Notes to the consolidated financial statements
for the years ended June 30, 2010
Reconciliation of total segment assets to consolidated assets includes the following:
US Dollar
Figures in million 2010 2009 2008
Non-current assets
Property, plant and equipment
794 744 906
Intangible assets
290 288 283
Restricted cash
19 21 10
Restricted investments
228 212 188
Investment in financial assets
2 7 9
Investment in associates
50 43 19
Deferred tax asset
246 222 190
Inventories
28 — —
Trade and other receivables
10 10 18
Current assets
Inventories
129 134 89
Trade and other receivables
122 115 112
Income and mining taxes
10 6 11
Cash and cash equivalents
101 253 53
Restricted cash
— — —
Assets of disposal groups classified as held for sale
3 — 44
2,032 2,055 1,932

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