Apr 4, 2010

Harmony continues growth despite challenges

 HARMONY Gold Mining Company Limited (Harmony) with operations in PNG has announced that the past quarter saw continued focus on safety and disciplined mining, but was not without its challenges.

The South African based company in releasing the production update for third quarter 2010 financial year (FY2010) based on preliminary estimates, gold production for the quarter decreased between 1,000kg and 1,300kg compared with the previous quarter.

Loss-making shafts that were closed during the quarter resulted in a reduction of approximately 620kg of gold, as compared with the previous quarter. Restructuring costs in respect of these closures amount to approximately R120 million. Going forward, only care and maintenance costs for the closed shafts will be incurred. "Longer term the effect of this decision will be shown to have been the correct one, lowering the cash costs and eliminating losses, however, the first 3 to 6 months of these decisions are always painful", said Harmony's Chief Executive Officer, Graham Briggs.

The remaining loss in kilograms was from South African operations, of which the main contributing operations to this decrease include Tshepong, Masimong, Joel and Kusasalethu (previously known as Elandsrand). Tshepong and Masimong had a slow start-up after the Christmas break. Joel saw lower grades, mainly as a result of the commissioning of the plant and Kusasalethu faced ore-pass problems during the quarter, which are being investigated.

Hidden Valley continued its commissioning process, with the silver flotation circuit being commissioned in the March quarter. As mentioned in the previous quarter, we expect the Hidden Valley mine and processing plant to reach its original design capacity and throughput in the June 2010 quarter. The mine`s March quarter results will be capitalised.

"This has been a difficult quarter. Shortly after having recorded 99 days fatality-free, a fatal accident occurred at Evander. Slow start ups following the Christmas break and the closure of shafts resulted in a decrease in forecasted production and Kusasalethu, in particular, had a disappointing quarter. Our management team is working hard to try and understand the ore pass situation better and aims to find a solution as soon as possible. Having just visited Hidden Valley, good progress is being made in dealing with the commissioning phase. In general, we expect to see improved results during the June 2010 quarter, with all of our management teams dedicated to meeting production targets," Briggs said.

Harmony`s results for the third quarter of FY2010 ending 31 March 2010 will be announced on Monday, 10 May 2010 at 09h00 and 15h00 SA time.

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