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PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
(Jurisdiction of incorporation or organization)
(Address of principal executive offices)
(Title of Class)
each representing one ordinary share
(Title of Class)
(Title of Class)
each representing one ordinary share
(Title of Class)
* | Not for trading, but only in connection with the registration of American Depositary Shares, pursuant to the requirements of the Securities and Exchange Commission. |
Identity of Directors, Senior Management and Advisers | 5 | |||||||
Offer Statistics and Expected Timetable | 5 | |||||||
Key Information | 5 | |||||||
Information on the Company | 19 | |||||||
Unresolved Staff Comments | 133 | |||||||
Operating and Financial Review and Prospects | 133 | |||||||
Directors, Senior Management and Employees | 165 | |||||||
Major Shareholders and Related Party Transactions | 181 | |||||||
Financial Information | 183 | |||||||
The Offer and Listing | 185 | |||||||
Additional Information | 189 | |||||||
Quantitative and Qualitative Disclosures About Market Risk | 202 | |||||||
Description of Securities Other than Equity Securities | 207 | |||||||
Defaults, Dividend Arrearages and Delinquencies | 213 | |||||||
Material Modifications to the Rights of Security Holders and Use of Proceeds | 213 | |||||||
Controls and Procedures | 214 | |||||||
Item 16 | [Reserved] | |||||||
Audit Committee Financial Expert | 214 | |||||||
Code of Ethics | 215 | |||||||
Principal Accountant Fees and Services | 215 | |||||||
Exemptions from Listing Standards for Audit Committees | 216 | |||||||
Purchases of Equity Securities by the Issuer and Affiliates | 216 | |||||||
Financial Statements | 216 | |||||||
Financial Statements | 216 | |||||||
Exhibits | 216 | |||||||
SIGNATURE | 221 | |||||||
INDEX TO FINANCIAL STATEMENTS | 222 | |||||||
EX-4.20 | ||||||||
EX-4.21 | ||||||||
EX-12.1 | ||||||||
EX-12.2 | ||||||||
EX-13.1 | ||||||||
EX-13.2 |
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• | 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 Harmony operates. |
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Fiscal Year Ended June 30, | ||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
(adjusted) | (adjusted) | (adjusted) | (adjusted) | |||||||||||||||||
(in $ thousands, except per share amounts) | ||||||||||||||||||||
Income Statement Data | ||||||||||||||||||||
Revenues | 1,263,333 | 1,265,200 | 1,240,339 | 781,792 | 675,287 | |||||||||||||||
Operating (loss)/income | (36,551 | ) | (422,316 | ) | (59,689 | ) | 466 | 104,386 | ||||||||||||
Equity income of joint venture | 445 | — | 9,503 | 52,843 | 13,176 | |||||||||||||||
Equity (loss)/income of associate companies | (16,444 | ) | — | 2,020 | (1,233 | ) | (473 | ) | ||||||||||||
(Loss)/Income before taxes and minority interests | (160,572 | ) | (641,360 | ) | (33,956 | ) | 119,560 | 133,027 | ||||||||||||
Minority interests | — | — | 1,281 | (468 | ) | (1,575 | ) | |||||||||||||
(Loss)/income before cumulative effect of change in accounting principles | (157,783 | ) | (552,549 | ) | 184 | 89,597 | 113,983 | |||||||||||||
Cumulative effect of change in accounting principles, net of tax | 2,058 | — | — | 14,770 | — | |||||||||||||||
Net (loss)/income | (155,725 | ) | (552,549 | ) | 184 | 104,367 | 113,983 | |||||||||||||
Basic (loss)/earnings per share($) before cumulative effect of change in accounting principles | (0.39 | ) | (1.52 | ) | 0.00 | 0.50 | 0.74 | |||||||||||||
Basic (loss)/earnings per share($) | (0.39 | ) | (1.52 | ) | 0.00 | 0.59 | 0.74 | |||||||||||||
Diluted (loss)/earnings per share before cumulative effect of change in accounting principles | (0.39 | ) | (1.52 | ) | 0.00 | 0.49 | 0.69 |
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Fiscal Year Ended June 30, | ||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
(adjusted) | (adjusted) | (adjusted) | (adjusted) | |||||||||||||||||
(in $ thousands, except per share amounts) | ||||||||||||||||||||
Diluted (loss)/earnings per share | (0.40 | ) | (1.52 | ) | 0.00 | 0.57 | 0.69 | |||||||||||||
Weighted average number of shares used in the computation of basic earnings per share | 394,409,512 | 362,499,012 | 254,240,500 | 177,954,245 | 153,509,862 | |||||||||||||||
Weighted average number of shares used in the computation of diluted earnings per share | 394,409,512 | 362,499,012 | 255,570,834 | 182,721,629 | 165,217,088 | |||||||||||||||
Cash dividends per share ($)(1) | — | 0.05 | 0.26 | 0.57 | 0.07 | |||||||||||||||
Cash dividends per share (R)(1) | — | 0.30 | 1.90 | 5.50 | 0.75 | |||||||||||||||
Other Financial Data | ||||||||||||||||||||
Cash cost per ounce of gold ($/oz)(2) | 436 | 378 | 338 | 239 | 185 |
At June 30, | ||||||||||||||||||||
2006 | 2005 | 2004 | 2003 | 2002 | ||||||||||||||||
(adjusted) | (adjusted) | (adjusted) | (adjusted) | |||||||||||||||||
(in $ thousands) | ||||||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||
Cash and cash equivalents | 89,189 | 266,746 | 217,022 | 189,040 | 90,223 | |||||||||||||||
Other current assets | 339,156 | 324,611 | 294,502 | 162,487 | 109,397 | |||||||||||||||
Property, plant and equipment — net | 3,306,555 | 3,451,963 | 3,769,971 | 1,188,910 | 835,014 | |||||||||||||||
Goodwill | 28,256 | 30,367 | 32,480 | — | — | |||||||||||||||
Restricted cash | 35,599 | 7,798 | 9,922 | — | — | |||||||||||||||
Investments in associates | 266,331 | — | 19,908 | 63,782 | 42,791 | |||||||||||||||
Investment in joint ventures | 2,065 | — | —— | 272,754 | 102,578 | |||||||||||||||
Other long-term assets | 395,048 | 655,333 | 435,058 | 79,562 | 137,399 | |||||||||||||||
Total assets | 4,462,199 | 4,736,818 | 4,778,863 | 1,956,535 | 1,317,402 | |||||||||||||||
Current liabilities | 343,802 | 428,756 | 393,764 | 189,668 | 138,677 | |||||||||||||||
Provision for environmental rehabilitation | 110,164 | 120,450 | 125,917 | 62,977 | 63,125 | |||||||||||||||
Provision of social plan | 2,259 | 2,109 | 1,958 | — | — | |||||||||||||||
Deferred income and mining taxes | 521,000 | 541,188 | 580,086 | 218,995 | 102,833 | |||||||||||||||
Provision for post-retirement benefits | 14,964 | 13,276 | 1,584 | 1,017 | 737 | |||||||||||||||
Deferred financial liability | 150,038 | 76,720 | 91,513 | 37,228 | 87,226 | |||||||||||||||
Long-term loans | 394,608 | 409,486 | 509,195 | 301,572 | 152,461 | |||||||||||||||
Minority interest | — | — | — | 18,408 | ||||||||||||||||
Shareholders’ equity | 2,925,364 | 3,144,833 | 3,074,846 | 1,126,670 | 772,343 | |||||||||||||||
Total liabilities and shareholders’ equity | 4,462,199 | 4,736,818 | 4,778,863 | 1,956,535 | 1,317,402 | |||||||||||||||
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(1) | Reflects dividends related to fiscal 2004, 2003 and 2002 that were declared on July 30, 2004, August 1, 2003 and August 2, 2002 respectively. | |
(2) | Total cash costs and total cash costs per ounce are non-GAAP measures. Harmony has calculated cash costs per ounce by dividing total cash costs, as determined using the guidance provided by the Gold Institute, by gold ounces sold for all periods presented. 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 provided by the Gold Institute, include mine production costs, transport and refinery costs, applicable general and administrative costs, costs associated with movements in production inventories and ore stockpiles, 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 and have been adjusted for the accounting changes associated with underground development costs and stripping costs incurred during the production phase of the mine. 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 US 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 operating income/(loss) or net income/(loss) or any other U.S. GAAP measure or an indicator of our performance. In particular depreciation and amortization would be included in a measure of total costs of producing gold under U.S. GAAP, but it is not included in total cash costs under the guidance provided by the Gold Institute. 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, Harmony believes 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, seeItem 5. “Operating and Financial Review and Prospects — Costs — Reconciliation of non-GAAP measures.” |
Fiscal Year Ended | ||||||||
June 30, | Average(1) | Period End | ||||||
2002 | 10.20 | 10.39 | ||||||
2003 | 9.13 | 7.51 | ||||||
2004 | 6.89 | 6.23 | ||||||
2005 | 6.18 | 6.67 | ||||||
2006 | 6.36 | 7.17 |
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Month of | High | Low | ||||||
April 2006 | 6.17 | 5.99 | ||||||
May 2006 | 6.71 | 6.00 | ||||||
June 2006 | 7.43 | 6.63 | ||||||
July 2006 | 7.29 | 6.81 | ||||||
August 2006 | 7.20 | 6.72 | ||||||
September 2006 | 7.79 | 7.05 | ||||||
October 2006 (through October 24th) | 7.74 | 7.59 |
(1) | The average of the noon buying rates provided by the Federal Reserve Bank of New York on the last day of each full month during the relevant period. |
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• | the demand for gold for industrial uses and for use in jewelry; | ||
• | international or regional political and economic trends; | ||
• | the strength of the US 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 (because Harmony does not normally enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of its future gold production, Harmony is not protected against decreases in the gold price and if the gold price decreases significantly, Harmony runs the risk of reduced revenues in respect of any gold production that is not hedged); and | ||
• | the production and cost levels for gold in major gold-producing nations, such as South Africa, the rest of Africa and Australia. |
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Price per Ounce | ||||||||||||
Year | High | Low | Average | |||||||||
($) | ($) | ($) | ||||||||||
1996 | 415 | 367 | 388 | |||||||||
1997 | 367 | 283 | 331 | |||||||||
1998 | 313 | 273 | 294 | |||||||||
1999 | 326 | 253 | 279 | |||||||||
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 (through October 24). | 606 | 593 | 599 |
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• | it will be able to identify appropriate acquisition candidates or negotiate acquisitions on favorable terms; | ||
• | it will be able to obtain the financing necessary to complete future acquisitions; or | ||
• | the issuance of Harmony’s ordinary shares or other securities in connection with any future acquisition will not result in a substantial dilution in ownership interests of holders of Harmony’s securities. |
• | locating orebodies; | ||
• | identifying the metallurgical properties of orebodies; | ||
• | estimating the economic feasibility of mining orebodies; | ||
• | developing appropriate metallurgical processes; | ||
• | obtaining necessary governmental permits; and |
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• | constructing mining and processing facilities at any site chosen for mining. |
• | 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 operating costs. |
• | the availability and timing of necessary environmental and governmental permits; | ||
• | the timing and cost necessary to construct 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. |
• | difficulties in assimilating the operations of the acquired business; | ||
• | difficulties in maintaining the financial and strategic focus of Harmony 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 |
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• | to the extent Harmony acquires mining operations outside South Africa or Australia encountering difficulties relating to operating in countries in which Harmony has not previously operated. |
• | rockbursts; | ||
• | seismic events; | ||
• | underground fires; | ||
• | cave-ins or falls of ground; | ||
• | discharges of gases and toxic chemicals; | ||
• | release of radioactive hazards; | ||
• | flooding; | ||
• | accidents; and | ||
• | other conditions resulting from drilling, blasting and the removal and processing of material from a deep-level mine. |
• | flooding of the open pit; | ||
• | collapse of the open pit walls; | ||
• | accidents associated with the operation of large open pit mining and rock transportation equipment; and | ||
• | accidents associated with the preparation and ignition of large scale open pit blasting operations. |
• | accidents associated with operating a waste dump and rock transportation; and | ||
• | production disruptions due to weather. |
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• | is generally not permitted to export capital from South Africa or to hold foreign currency without the approval of the South African exchange control authorities; | ||
• | is generally required to repatriate to South Africa profits of foreign operations; and | ||
• | is limited in its ability to utilize profits of one foreign business to finance operations of a different foreign business. |
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• | 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 the State’s custodianship of the nation’s mineral and petroleum resources; | ||
• | to promote equitable access to South Africa’s mineral and petroleum resources to all the people of South Africa and redress the impact of past discrimination; | ||
• | to substantially and meaningfully expand opportunities for historically disadvantaged persons, 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; | ||
• | to follow the principle that mining companies keep and use their mineral rights, with no expropriation and with guaranteed compensation for mineral rights; and | ||
• | to ensure that holders of mining and production rights contribute towards the socio-economic development of areas in which they are operating. |
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• | 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; |
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• | 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. |
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• | theQuality Assets, which typically have a larger reserve base and hence a longer life. These form the core of our operations; | ||
• | theLeveraged Assetsare those that provide significant upside in the event of a rising gold price (as has been evident in the latter part of fiscal 2006); and | ||
• | theGrowth Assets, which comprise the expansion projects/new mines currently being constructed in South Africa. |
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Leveraged | Surface | |||||
Quality Assets | Assets | Growth Assets | Operations | |||
Target | Bambanani | Elandsrand mine and project | Kalgold | |||
Tshepong | Joel | Doornkop mine and project | Freegold | |||
Masimong shaft complex | West Shaft | Phakisa project | Free State | |||
Evander 2, 3 & 5 | St. Helena | Randfontein | ||||
Evander 7 | Harmony 2 | Target | ||||
Evander 8 | Merriespruit 1 | |||||
Cooke 1 | Merriespruit 3 | |||||
Cooke 2 | Unisel | |||||
Cooke 3 | Brand 3 | |||||
Orkney 2 | ||||||
Orkney 4 | ||||||
Orkney 7 |
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• | Empowered management teams.At each mining site Harmony has established small, multi-disciplinary, focused management teams responsible for planning and implementing the mining operations at the site. Each of these teams is accountable for the results at its particular site and reports directly to Harmony’s Board. | ||
• | Active strategic management by the Board.Annual operational goals and targets, including cost, volume and grade targets are established in consultation with Harmony’s executive committee for each mining site. Each |
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management team develops an operational plan to implement the goals and targets for its mine site. Members of Harmony’s executive committee reviews and measures the results at each mining site on a regular basis throughout the year. | |||
• | Increased productivity.Gold mining in South Africa is very labor intensive with labor accounting for approximately 50% of Harmony’s costs. To control these costs, Harmony structures its operations to achieve maximum productivity with the goal of having 60% of Harmony’s workforce directly engaged in stoping, or underground excavation, and development rock breaking activities. In addition, Harmony has implemented productivity-based bonuses designed to maximize productivity. | ||
• | A no-frills, low cost ethic.Harmony has an obsession about lowering its cost base and, to this end, Harmony extensively benchmarks its costing parameters both internally between operations within Harmony and externally against other gold producers. | ||
• | Ongoing maintenance.The company applies a principle of “appropriate maintenance” which allows it to spend capital commensurate with the life of a specified operation. This principle ensures safe operation on the one hand and minimizes capital that may be used ineffectively on mines that have a limited life. | ||
• | Systems.Harmony has implemented cost accounting systems and strict ore accounting and ore reserve management systems to measure and track costs and ore reserve depletion accurately, so as to enable it to be proactive in its decision making. |
• | to make acquisitions in addition to pursuing greenfield and brownfield developments when it is economical to do so; | ||
• | to acquire mature assets with turnaround potential; | ||
• | to utilize the synergy that exists within the various regions that the company mines in order to reduce overhead costs; | ||
• | to acquire assets that fit Harmony’s management model; and | ||
• | to acquire assets that enhance Harmony’s overall resource base. |
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• | 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. |
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• | Access to the orebody.In Harmony’s 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. In Harmony’s Australian underground mines access to the orebody is by means of declines. Horizontal development at various intervals of the decline extends access to the horizon of the ore to be mined. The declines are advanced on a continuous basis to keep ahead of the mining taking place on the levels above. In Harmony’s 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. |
• | 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 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. |
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Randfontein Cooke shafts
Elandsrand
Orkney Operations
Kalgold
Target
Tshepong
Masimong
Bambanani
Brand Shafts
Virginia Operations
Joel
- | The role of the Ore Reserve Manager is to optimize the extraction of ore reserves, and they are also responsible for geology and ore reserve declarations. | |
- | The role of the Business Analyst, is to ensure business optimization, cost reductions and financial discipline within the operations. | |
- | The Human Resources Leader is responsible for employee mobilization and for creating a business culture within the operation. |
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Hectares | Acres | |||||||
Cooke | 8,696 | 21,488 | ||||||
Lindum | 3,143 | 7,766 | ||||||
Doornkop | 2,941 | 7,267 | ||||||
Elandskraal | 5,113 | 12,634 | ||||||
Freestate | 22,583 | 55,802 | ||||||
Freegold | 21,173 | 52,318 | ||||||
Kalgold | 615 | 1,520 | ||||||
Evander | 36,898 | 91,174 | ||||||
Target | 7,952 | 19,649 |
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Gold | ||||
(million ounces) | ||||
Balance at June 30, 2005 | 54.1 | |||
Mined during fiscal 2006 | (2.4 | )* | ||
Added ounces from associate — Western Areas | 4.2 | ** | ||
Other adjustments | 0.1 | |||
Balance at June 30, 2006 | 56.0 |
* | Ounces based on mill delivered grades | |
** | Based on the Western Areas Annual Report dated December 2005 taking account of depletion for the period January 2006 to end June 2006. |
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• | the database of measured and indicated resource blocks (per shaft section); | ||
• | an assumed gold price which, for this ore reserve statement, was taken as R105,000 per kilogram; | ||
• | planned production rates; | ||
• | the mine recovery factor (MRF) which is equivalent to the mine call factor multiplied by the plant recovery factor; and | ||
• | planned cash operating costs (Rand per tonne). |
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Operations | Proven Reserves | Probable Reserves | Total Reserves | |||||||||||||||||||||||||||||||||
Tons | Grade | 1 Gold oz | Tons | Grade | 1 Gold oz | Tons | Grade | 1 Gold oz | ||||||||||||||||||||||||||||
(million) | (oz/ton) | (million) | (million) | (oz/ton) | (million) | (million) | (oz/ton) | (million) | ||||||||||||||||||||||||||||
S.A. Underground | ||||||||||||||||||||||||||||||||||||
Elandskraal | 5.16 | 0.242 | 1.25 | 27.28 | 0.217 | 5.91 | 32.44 | 0.221 | 7.16 | |||||||||||||||||||||||||||
Free State | 12.61 | 0.153 | 1.93 | 14.37 | 0.140 | 2.01 | 26.98 | 0.146 | 3.94 | |||||||||||||||||||||||||||
Randfontein | 4.73 | 0.210 | 0.99 | 7.21 | 0.175 | 1.26 | 11.94 | 0.189 | 2.25 | |||||||||||||||||||||||||||
Evander | 5.57 | 0.210 | 1.17 | 17.54 | 0.199 | 3.48 | 23.11 | 0.201 | 4.65 | |||||||||||||||||||||||||||
Evander (below infrastructure) | 41.80 | 0.236 | 9.87 | 41.80 | 0.236 | 9.87 | ||||||||||||||||||||||||||||||
Target | 8.14 | 0.232 | 1.89 | 13.11 | 0.185 | 2.43 | 21.25 | 0.203 | 4.31 | |||||||||||||||||||||||||||
Free Gold | 17.51 | 0.211 | 3.69 | 45.01 | 0.220 | 9.91 | 62.51 | 0.218 | 13.60 | |||||||||||||||||||||||||||
Orkney | 4.29 | 0.196 | 0.84 | 3.13 | 0.146 | 0.46 | 7.42 | 0.175 | 1.30 | |||||||||||||||||||||||||||
Total S.A. Underground | 58.01 | 0.203 | 11.76 | 169.45 | 0.209 | 35.33 | 227.46 | 0.207 | 47.09 | |||||||||||||||||||||||||||
S.A. Surface | ||||||||||||||||||||||||||||||||||||
Randfontein | 0.00 | 0.00 | 2.10 | 0.022 | 0.05 | 2.10 | 0.022 | 0.05 | ||||||||||||||||||||||||||||
Kalgold | 4.07 | 0.022 | 0.09 | 5.35 | 0.047 | 0.25 | 9.42 | 0.036 | 0.34 | |||||||||||||||||||||||||||
Free Gold | 74.56 | 0.011 | 0.82 | 10.88 | 0.017 | 0.19 | 85.44 | 0.012 | 1.01 | |||||||||||||||||||||||||||
Total S.A. Surface | 78.63 | 0.011 | 0.90 | 18.33 | 0.027 | 0.49 | 96.96 | 0.014 | 1.39 | |||||||||||||||||||||||||||
Australian Operations 2 | ||||||||||||||||||||||||||||||||||||
Mt. Magnet | 1.77 | 0.068 | 0.12 | 1.76 | 0.107 | 0.19 | 3.54 | 0.087 | 0.31 | |||||||||||||||||||||||||||
South Kalgoorlie | 0.85 | 0.053 | 0.05 | 3.56 | 0.062 | 0.22 | 4.41 | 0.060 | 0.27 | |||||||||||||||||||||||||||
Total Australian Operations | 2.62 | 0.063 | 0.17 | 5.32 | 0.077 | 0.41 | 7.95 | 0.072 | 0.57 | |||||||||||||||||||||||||||
Papua New Guinea 3 | ||||||||||||||||||||||||||||||||||||
Hidden Valley | 5.62 | 0.064 | 0.36 | 36.38 | 0.055 | 2.01 | 42.00 | 0.056 | 2.37 | |||||||||||||||||||||||||||
Kaveroi and Hamata | 5.40 | 0.064 | 0.35 | 5.40 | 0.064 | 0.35 | ||||||||||||||||||||||||||||||
Total Papua New Guinea | 5.62 | 0.064 | 0.36 | 41.78 | 0.056 | 2.35 | 47.40 | 0.057 | 2.71 | |||||||||||||||||||||||||||
Western Areas 4 | ||||||||||||||||||||||||||||||||||||
South Deep (29.2% Equity) | 1.96 | 0.213 | 0.42 | 21.58 | 0.177 | 3.83 | 23.54 | 0.180 | 4.25 | |||||||||||||||||||||||||||
GRAND TOTAL | 146.84 | 0.093 | 13.61 | 256.46 | 0.165 | 42.41 | 403.30 | 0.139 | 56.02 |
40
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R94,500/kilogram (1) | R105,000/kilogram | R115,500/kilogram | ||
51.1 million | 56.0 million | 57.7 million |
(1) | Harmony calculated the 3 year average Rand gold price to be approximately R93,500/kilogram ($448/ounce). |
• | Elandskraal | ||
• | the Free State | ||
• | Randfontein | ||
• | Evander | ||
• | Free Gold | ||
• | ARMgold and | ||
• | Avgold |
• | the Free State | ||
• | Randfontein | ||
• | Free Gold | ||
• | Kalgold and | ||
• | Target |
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42
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43
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Average Milled for the | ||||||||
Processing | Fiscal Year | |||||||
Plant | Capacity | June 30, 2006 | ||||||
(tons/month) | (tons/month) | |||||||
Elandsrand Plant | 140,000 | * | 73,739 |
* | Processing capacity assumes optimal capacity upon completion of the Elandsrand New Mine Project. |
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45
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Average Milled for the | ||||||||
Processing | Fiscal Year Ended | |||||||
Plant | Capacity | June 30, 2006 | ||||||
(tons/month) | (tons/month) | |||||||
Cooke | 280,000 | 208,000 | ||||||
Doornkop | 220,000 | 181,000 |
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Average Milled | ||||||||
for the Fiscal Year | ||||||||
Processing | Ended | |||||||
Plant | Capacity | June 30, 2006 | ||||||
(tons/month) | (tons/month) | |||||||
Central | 220,000 | 152,833 | ||||||
Saaiplaas | 220,000 | 96,167 |
47
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Average Milled for the | ||||||||
Processing | Fiscal Year Ended | |||||||
Plant | Capacity | June 30, 2006 | ||||||
(tons/month) | (tons/month) | |||||||
Kinross-Winkelhaak | 148,000 | 134,000 |
48
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49
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Average Milled for the | ||||||||
Processing | Fiscal Year Ended | |||||||
Plant | Capacity | June 30, 2006 | ||||||
(tons/month) | (tons/month) | |||||||
CIL | 130,000 | 151,745 | ||||||
Heap Leach | — | 6,825 | * |
* | Active use of heap leaching was discontinued in July 2001; however, the Heap Leach is treated through the current circuit on a monthly basis. |
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51
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Average Milled for | ||||||||
Processing | the Fiscal Year | |||||||
Plant | Capacity | Ended June 30, 2006 | ||||||
(tons/month) | (tons/month) | |||||||
FS 1 | 420,000 | 380,333 |
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54
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Average Milled For the | ||||||||
Processing | Fiscal Year Ended | |||||||
Plant | Capacity | June 30, 2006 | ||||||
(tons/month) | (tons/month) | |||||||
Target Plant | 105,000 | 67,750 |
55
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Fiscal Year Ended June 30, | ||||||||||||
2006 | 2005(1) | 2004(1) | ||||||||||
Production | ||||||||||||
Tons (‘000) | 6,814 | 7,464 | 7,756 | |||||||||
Recovered grade (ounces/ton). | 0.167 | 0.185 | 0.173 | |||||||||
Gold sold (ounces) | 1,141,166 | 1,378,167 | 1,343,713 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 606,435 | 588,360 | 523,305 | |||||||||
Cash cost (‘000) | 437,193 | 436,018 | 381,384 | |||||||||
Cash profit (‘000) | 169,242 | 152,342 | 141,921 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 383 | 316 | 284 | |||||||||
Capex(‘000)($) | 89,587 | 81,615 | 73,790 |
(1) | - During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated.See Item 5 “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | |||||||||||||||
Target | 2006 | 2005(1) | 2004*(1) | ||||||||||||
Production | |||||||||||||||
Tons (‘000) | 813 | 1,178 | 228 | ||||||||||||
Recovered grade (ounces/ton) | 0.185 | 0.178 | 0.234 | ||||||||||||
Gold sold (ounces) | 150,196 | 209,847 | 53,434 | ||||||||||||
Results of operations($) | |||||||||||||||
Product sales (‘000) | 81,178 | 89,233 | 19,772 | ||||||||||||
Cash cost (‘000) | 51,904 | 54,391 | 11,514 | ||||||||||||
Cash profit (‘000) | 29,274 | 34,842 | 8,258 | ||||||||||||
Cash costs | |||||||||||||||
Per ounce of gold($) | 346 | 259 | 215 | ||||||||||||
Capex(‘000)($) | 9,644 | 10,818 | 1,175 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated.See Item 5 “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” For further information on the effects of this change on Harmony. | |
* | The fiscal 2004 operating and production results for Target comprise of the two months ended June 30, 2004. |
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Fiscal Year Ended June 30, | ||||||||||||
Tshepong | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons(‘000) | 1,786 | 1,700 | 1,814 | |||||||||
Recovered grade (ounces/ton) | 0.188 | 0.224 | 0.215 | |||||||||
Gold sold (ounces) | 335,289 | 380,695 | 390,747 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 179,626 | 162,958 | 158,161 | |||||||||
Cash cost (‘000) | 111,462 | 101,091 | 90,186 | |||||||||
Cash profit (‘000) | 68,164 | 61,867 | 67,975 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 332 | 266 | 231 | |||||||||
Capex(‘000)($) | 23,529 | 23,346 | 21,866 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectivlely, and comparative numbers have been restated.See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” For further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Masimong Shaft Complex | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 1,020 | 1,046 | 1,378 | |||||||||
Recovered grade (ounces/ton) | 0.133 | 0.153 | 0.170 | |||||||||
Gold sold (ounces) | 136,153 | 159,981 | 234,307 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 72,854 | 68,342 | 90,164 |
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Fiscal Year Ended June 30, | ||||||||||||
Masimong Shaft Complex | 2006 | 2005(1) | 2004(1) | |||||||||
Cash cost (‘000) | 66,563 | 65,388 | 69,774 | |||||||||
Cash profit (‘000) | 6,291 | 2,954 | 20,390 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 489 | 409 | 298 | |||||||||
Capex(‘000)($) | 14,520 | 10,630 | 10,615 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated.See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Evander 2 | 2006* | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | 357 | 491 | |||||||||
Recovered grade (ounces/ton) | — | 0.137 | 0.176 | |||||||||
Gold sold (ounces) | — | 48,764 | 86,172 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | 20,695 | 33,216 | |||||||||
Cash cost (‘000) | — | 27,404 | 29,018 | |||||||||
Cash profit (‘000) | — | (6,709 | ) | 4,198 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | 562 | 337 | |||||||||
Capex(‘000)($) | — | 15 | 619 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated.See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. | |
* | Due to the recent economic climate, mining operations at Evander 2 shaft were combined with those at Evander 5 shaft and downscaled during fiscal 2005. |
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Fiscal Year Ended June 30, | ||||||||||||
Evander 5 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 450 | 245 | 223 | |||||||||
Recovered grade (ounces/ton) | 0.139 | 0.192 | 0.216 | |||||||||
Gold sold (ounces) | 62,388 | 47,093 | 48,103 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 32,183 | 20,078 | 18,559 | |||||||||
Cash cost (‘000) | 33,068 | 15,912 | 14,192 | |||||||||
Cash (loss)/profit (‘000) | (885 | ) | 4,166 | 4,367 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 530 | 338 | 295 | |||||||||
Capex(‘000)($) | 6,453 | 7,006 | 5,811 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated.See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Evander 7 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 435 | 541 | 577 | |||||||||
Recovered grade (ounces/ton) | 0.191 | 0.240 | 0.160 | |||||||||
Gold sold (ounces) | 83,202 | 130,009 | 92,505 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 42,365 | 55,502 | 35,566 | |||||||||
Cash cost (‘000) | 32,648 | 32,795 | 29,297 | |||||||||
Cash profit (‘000) | 9,717 | 22,707 | 6,269 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 392 | 252 | 317 | |||||||||
Capex(‘000)($) | 10,021 | 7,948 | 8,705 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated.See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Evander 8 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 815 | 734 | 692 | |||||||||
Recovered grade (ounces/ton) | 0.158 | 0.207 | 0.158 | |||||||||
Gold sold (ounces) | 128,849 | 151,936 | 109,513 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 67,325 | 64,912 | 41,945 | |||||||||
Cash cost (‘000) | 44,863 | 41,500 | 35,280 | |||||||||
Cash profit (‘000) | 22,462 | 23,412 | 6,665 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 348 | 273 | 322 | |||||||||
Capex(‘000)($) | 9,726 | 8,216 | 9,519 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Cooke 1 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 490 | 520 | 605 | |||||||||
Recovered grade (ounces/ton) | 0.164 | 0.152 | 0.172 | |||||||||
Gold sold (ounces) | 80,495 | 79,101 | 104,168 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 42,978 | 33,888 | 39,891 |
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Fiscal Year Ended June 30, | ||||||||||||
Cooke 1 | 2006 | 2005(1) | 2004(1) | |||||||||
Cash cost (‘000) | 32,274 | 31,115 | 29,472 | |||||||||
Cash profit (‘000) | 10,704 | 2,773 | 10,419 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 401 | 393 | 283 | |||||||||
Capex(‘000)($) | 3,759 | 2,811 | 2,985 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Cooke 2 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 353 | 403 | 749 | |||||||||
Recovered grade (ounces/ton) | 0.170 | 0.135 | 0.121 | |||||||||
Gold sold (ounces) | 59,836 | 54,441 | 90,761 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 32,025 | 23,274 | 34,748 | |||||||||
Cash cost (‘000) | 23,082 | 24,144 | 30,615 | |||||||||
Cash profit (‘000) | 8,943 | (870 | ) | 4,133 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 386 | 443 | 337 | |||||||||
Capex(‘000)($) | 3,738 | 2,538 | 4,411 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated.See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Cooke 3 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 652 | 740 | 999 | |||||||||
Recovered grade (ounces/ton) | 0.161 | 0.157 | 0.134 | |||||||||
Gold sold (ounces) | 104,758 | 116,300 | 134,003 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 55,901 | 49,478 | 51,283 | |||||||||
Cash cost (‘000) | 41,329 | 42,278 | 42,036 | |||||||||
Cash profit (‘000) | 14,572 | 7,200 | 9,247 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 395 | 364 | 314 | |||||||||
Capex(‘000)($) | 8,197 | 8,287 | 8,084 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” For further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
2006 | 2005(1) | 2004(1) | ||||||||||
Production | ||||||||||||
Tons (‘000) | 5,122 | 5,990 | 9,238 | |||||||||
Recovered grade (ounces/ton) | 0,133 | 0.140 | 0.140 | |||||||||
Gold sold (ounces) | 683,450 | 841,280 | 1,295,315 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 361,178 | 358,139 | 491,690 | |||||||||
Cash cost (‘000) | 336,695 | 402,695 | 490,421 | |||||||||
Cash profit (‘000) | 24,483 | (44,556 | ) | 1,269 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 493 | 479 | 379 | |||||||||
Capex(‘000)($) | 40,072 | 33,068 | 46,795 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Bambanani | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 1,196 | 1,090 | 1,606 | |||||||||
Recovered grade (ounces/ton) | 0.147 | 0.181 | 0.181 | |||||||||
Gold sold (ounces) | 175,214 | 197,535 | 290,210 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 93,111 | 84,165 | 110,244 | |||||||||
Cash cost (‘000) | 87,064 | 83,289 | 95,447 | |||||||||
Cash profit (‘000) | 6,047 | 876 | 14,797 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 497 | 422 | 329 | |||||||||
Capex(‘000)($) | 14,870 | 12,178 | 14,756 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Evander 9 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | 31 | 202 | |||||||||
Recovered grade (ounces/ton) | — | 0.083 | 0.116 | |||||||||
Gold sold (ounces) | — | 2,573 | 23,440 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | 1,078 | 9,079 | |||||||||
Cash cost (‘000) | (21 | ) | 3,005 | 9,042 | ||||||||
Cash profit (‘000) | (21 | ) | (1,927 | ) | 37 | |||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | 1,168 | 386 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Joel | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 436 | 498 | 565 | |||||||||
Recovered grade (ounces/ton) | 0.134 | 0.129 | 0.122 | |||||||||
Gold sold (ounces) | 58,595 | 64,464 | 68,694 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 31,346 | 27,282 | 25,526 | |||||||||
Cash cost (‘000) | 29,170 | 28,990 | 24,240 | |||||||||
Cash profit (‘000) | 2,176 | (1,708 | ) | 1,286 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 498 | 450 | 353 | |||||||||
Capex(‘000)($) | 3,644 | 2,582 | 1,922 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Kudu/Sable | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 13 | 194 | 275 | |||||||||
Recovered grade (ounces/ton) | 0.156 | 0.130 | 0.145 | |||||||||
Gold sold (ounces) | 2,024 | 25,175 | 39,848 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 890 | 10,764 | 14,612 | |||||||||
Cash cost (‘000) | 895 | 18,885 | 16,073 | |||||||||
Cash profit (‘000) | (5 | ) | (8,121 | ) | (1,461 | ) | ||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 442 | 750 | 403 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
West Shaft | 2006 | 2005(1) | 2004(1) | |||||||||
Production | �� | |||||||||||
Tons (‘000) | 206 | 176 | 200 | |||||||||
Recovered grade (ounces/ton) | 0.124 | 0.160 | 0.180 | |||||||||
Gold sold (ounces) | 25,525 | 28,165 | 36,071 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 13,117 | 12,049 | 14,039 | |||||||||
Cash cost (‘000) | 13,650 | 12,907 | 10,995 | |||||||||
Cash profit (‘000) | (533 | ) | (858 | ) | 3,044 | |||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 535 | 458 | 305 | |||||||||
Capex(‘000)($) | 887 | 107 | 622 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” For further information on the experts of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Nyala | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 2 | 198 | 112 | |||||||||
Recovered grade (ounces/ton) | 0.092 | 0.119 | 0.108 | |||||||||
Gold sold (ounces) | 184 | 23,503 | 12,073 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 81 | 9,897 | 4,645 | |||||||||
Cash cost (‘000) | 226 | 17,587 | 4,063 | |||||||||
Cash profit (‘000) | (145 | ) | (7,690 | ) | 582 | |||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 1,228 | 748 | 337 | |||||||||
Capex(‘000)($) | 3 | 1,440 | 7,276 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Eland | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 21 | 175 | 347 | |||||||||
Recovered grade (ounces/ton) | 0.193 | 0.153 | 0.146 | |||||||||
Gold sold (ounces) | 4,058 | 26,782 | 50,697 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 2,026 | 11,436 | 17,447 | |||||||||
Cash cost (‘000) | 1,066 | 13,404 | 24,501 | |||||||||
Cash profit (‘000) | 960 | (1,968 | ) | (7,054 | ) | |||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 263 | 500 | 483 | |||||||||
Capex(‘000)($) | — | — | 274 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Deelkraal | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | 1 | 522 | |||||||||
Recovered grade (ounces/ton) | — | 2.284 | 0.131 | |||||||||
Gold sold (ounces) | — | 2,284 | 68,127 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | 958 | 26,206 | |||||||||
Cash cost (‘000) | — | 714 | 37,796 | |||||||||
Cash profit (‘000) | — | 244 | (11,590 | ) | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | 313 | 555 | |||||||||
Capex(‘000)($) | — | — | 1,305 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
St. Helena | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 127 | 245 | 507 | |||||||||
Recovered grade (ounces/ton) | 0.101 | 0.122 | 0.140 | |||||||||
Gold sold (ounces) | 12,791 | 29,965 | 71,027 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 6,867 | 12,660 | 25,124 | |||||||||
Cash cost (‘000) | 10,802 | 24,191 | 29,864 | |||||||||
Cash profit (‘000) | (3,935 | ) | (11,531 | ) | (4,740 | ) | ||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 845 | 807 | 420 | |||||||||
Capex(‘000)($) | 443 | 901 | 1,538 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Harmony 2 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 598 | 559 | 643 | |||||||||
Recovered grade (ounces/ton) | 0.116 | 0.123 | 0.136 | |||||||||
Gold sold (ounces) | 69,446 | 68,547 | 87,472 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 36,716 | 29,295 | 33,541 | |||||||||
Cash cost (‘000) | 33,527 | 30,021 | 29,690 | |||||||||
Cash profit (‘000) | 3,189 | (726 | ) | 3,851 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 483 | 438 | 339 | |||||||||
Capex(‘000)($) | 3,964 | 3,555 | 2,526 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Merriespruit 1 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 410 | 414 | 477 | |||||||||
Recovered grade (ounces/ton) | 0.117 | 0.110 | 0.124 | |||||||||
Gold sold (ounces) | 48,069 | 45,559 | 59,062 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 25,685 | 19,428 | 22,681 | |||||||||
Cash cost (‘000) | 24,061 | 21,719 | 21,222 | |||||||||
Cash profit (‘000) | 1,624 | (2,291 | ) | 1,459 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 501 | 477 | 359 | |||||||||
Capex(‘000)($) | 2,445 | 2,833 | 3,328 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Merriespruit 3 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 452 | 548 | 743 | |||||||||
Recovered grade (ounces/ton) | 0.097 | 0.100 | 0.104 | |||||||||
Gold sold (ounces) | 43,691 | 54,690 | 76,956 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 23,078 | 23,325 | 29,570 | |||||||||
Cash cost (‘000) | 24,188 | 24,379 | 30,220 | |||||||||
Cash profit (‘000) | (1,110 | ) | (1,054 | ) | (650 | ) | ||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 554 | 446 | 393 | |||||||||
Capex(‘000)($) | 1,783 | 1,696 | 2,287 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Unisel | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 500 | 494 | 677 | |||||||||
Recovered grade (ounces/ton) | 0.146 | 0.132 | 0.134 | |||||||||
Gold sold (ounces) | 72,963 | 65,011 | 91,020 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 38,172 | 27,798 | 35,014 |
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Fiscal Year Ended June 30, | ||||||||||||
Unisel | 2006 | 2005(1) | 2004(1) | |||||||||
Cash cost (‘000) | 28,789 | 31,055 | 32,253 | |||||||||
Cash profit (‘000) | 9,383 | (3,257 | ) | 2,761 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 395 | 478 | 354 | |||||||||
Capex(‘000)($) | 3,907 | 4,147 | 6,181 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Brand 3 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 405 | 448 | 531 | |||||||||
Recovered grade (ounces/ton) | 0.103 | 0.103 | 0.112 | |||||||||
Gold sold (ounces) | 41,647 | 46,299 | 59,558 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 22,147 | 19,807 | 22,985 | |||||||||
Cash cost (‘000) | 23,272 | 22,883 | 22,625 | |||||||||
Cash profit (‘000) | (1,125 | ) | (3,076 | ) | 360 | |||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 559 | 494 | 380 | |||||||||
Capex(‘000)($) | 987 | 1,267 | 1,390 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Brand 5 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 3 | — | 153 | |||||||||
Recovered grade (ounces/ton) | 0.156 | 0 | 0.126 | |||||||||
Gold sold (ounces) | 469 | 33 | 19,262 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 236 | 8 | 7,442 | |||||||||
Cash cost (‘000) | 975 | 2,120 | 13,331 | |||||||||
Cash profit (‘000) | (739 | ) | (2,112 | ) | (5,889 | ) | ||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 2,079 | 64,242 | 692 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended | ||||||||||||
June 30, | ||||||||||||
Orkney 1 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 3 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.107 | |||||||||
Gold sold (ounces) | — | — | 322 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 123 | |||||||||
Cash cost (‘000) | — | — | 194 | |||||||||
Cash profit (‘000) | — | — | (71 | ) |
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Fiscal Year Ended | ||||||||||||
June 30, | ||||||||||||
Orkney 1 | 2006 | 2005(1) | 2004(1) | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 602 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended June 30, | ||||||||||||
Orkney 2 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 347 | 413 | 387 | |||||||||
Recovered grade (ounces/ton) | 0.201 | 0.190 | 0.210 | |||||||||
Gold sold (ounces) | 69,877 | 78,449 | 81,434 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 36,589 | 33,279 | 31,435 | |||||||||
Cash cost (‘000) | 29,716 | 31,495 | 25,026 | |||||||||
Cash profit (‘000) | 6,873 | 1,784 | 6,409 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 425 | 401 | 307 | |||||||||
Capex(‘000)($) | 2,380 | 1,443 | 1,866 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Orkney 3 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 137 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.083 | |||||||||
Gold sold (ounces) | — | — | 11,413 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 4,425 | |||||||||
Cash cost (‘000) | — | — | 6,440 | |||||||||
Cash profit (‘000) | — | — | (2,015 | ) | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 564 | |||||||||
Capex(‘000)($) | — | — | 464 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Orkney 4 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 406 | 455 | 401 | |||||||||
Recovered grade (ounces/ton) | 0.145 | 0.169 | 0.169 | |||||||||
Gold sold (ounces) | 58,897 | 76,971 | 67,931 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 31,117 | 32,720 | 26,269 | |||||||||
Cash cost (‘000) | 29,273 | 29,616 | 19,543 | |||||||||
Cash profit (‘000) | 1,844 | 3,104 | 6,726 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 497 | 385 | 288 | |||||||||
Capex(‘000)($) | 4,759 | 915 | 860 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Orkney 6 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 157 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.070 | |||||||||
Gold sold (ounces) | — | — | 11,060 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 4,304 | |||||||||
Cash cost (‘000) | — | — | 5,378 | |||||||||
Cash profit (‘000) | — | — | (1,074 | ) | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 486 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended June 30, | ||||||||||||
Orkney 7 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 28 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.162 | |||||||||
Gold sold (ounces) | — | — | 4,533 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 1,760 | |||||||||
Cash cost (‘000) | — | — | 1,970 | |||||||||
Cash profit (‘000) | — | — | (210 | ) | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 435 | |||||||||
Capex(‘000)($) | — | — | — |
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(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended June 30, | ||||||||||||
Saaiplaas 3 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | 30 | 254 | |||||||||
Recovered grade (ounces/ton) | — | 0.085 | 0.105 | |||||||||
Gold sold (ounces) | — | 2,541 | 26,783 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | 1,026 | 10,331 | |||||||||
Cash cost (‘000) | — | 4,831 | 13,485 | |||||||||
Cash profit (‘000) | — | (3,805 | ) | (3,154 | ) | |||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | 1,901 | 503 | |||||||||
Capex(‘000)($) | — | 4 | 200 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Welkom 1 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | 21 | 159 | |||||||||
Recovered grade (ounces/ton) | — | 0.130 | 0.121 | |||||||||
Gold sold (ounces) | — | 2,734 | 19,226 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | 1,164 | 7,415 | |||||||||
Cash cost (‘000) | — | 1,604 | 9,939 | |||||||||
Cash profit (‘000) | — | (440 | ) | (2,524 | ) | |||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | 587 | 517 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended June 30, | ||||||||||||
Welkom 2 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 12 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.113 | |||||||||
Gold sold (ounces) | — | — | 1,350 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 525 | |||||||||
Cash cost (‘000) | — | — | 547 | |||||||||
Cash profit (‘000) | — | — | (22 | ) | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 405 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Welkom 3 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 15 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.101 | |||||||||
Gold sold (ounces) | — | — | 1,511 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 592 | |||||||||
Cash cost (‘000) | — | — | 581 | |||||||||
Cash profit (‘000) | — | — | 11 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 385 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended June 30, | ||||||||||||
Welkom 4 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 13 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.302 | |||||||||
Gold sold (ounces) | — | — | 3,922 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 1,531 | |||||||||
Cash cost (‘000) | — | — | 1,496 | |||||||||
Cash profit (‘000) | — | — | 35 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 381 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Welkom 6 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 24 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.100 | |||||||||
Gold sold (ounces) | — | — | 2,411 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 935 | |||||||||
Cash cost (‘000) | — | — | 894 | |||||||||
Cash profit (‘000) | — | — | 41 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 371 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended June 30, | ||||||||||||
Welkom 7 | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 88 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.113 | |||||||||
Gold sold (ounces) | — | — | 9,902 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 3,890 | |||||||||
Cash cost (‘000) | — | — | 3,566 | |||||||||
Cash profit (‘000) | — | — | 324 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 360 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
2006 | 2005(1) | 2004(1) | ||||||||||
Production | ||||||||||||
Tons (‘000) | 1,502 | 1,545 | 2,004 | |||||||||
Recovered grade (ounces/ton) | 0.143 | 0.168 | 0.158 | |||||||||
Gold sold (ounces) | 214,460 | 260,066 | 315,815 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 113,391 | 111,055 | 121,744 | |||||||||
Cash cost (‘000) | 113,671 | 112,172 | 111,173 | |||||||||
Cash profit (‘000) | (280 | ) | (1,117 | ) | 10,571 | |||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 530 | 431 | 352 | |||||||||
Capex(‘000)($) | 78,076 | 73,458 | 59,751 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Elandsrand | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 987 | 1,019 | 1,437 | |||||||||
Recovered grade (ounces/ton) | 0.173 | 0.204 | 0.174 | |||||||||
Gold sold (ounces) | 170,867 | 207,371 | 250,581 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 90,097 | 88,577 | 96,831 | |||||||||
Cash cost (‘000) | 89,349 | 88,599 | 90,627 | |||||||||
Cash profit (‘000) | 748 | (22 | ) | (6,204 | ) | |||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 523 | 427 | 362 | |||||||||
Capex(‘000)($) | 30,523 | 26,081 | 26,087 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Doornkop | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 515 | 526 | 567 | |||||||||
Recovered grade (ounces/ton) | 0.085 | 0.100 | 0.115 | |||||||||
Gold sold (ounces) | 43,593 | 52,695 | 65,234 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 23,294 | 22,478 | 24,913 | |||||||||
Cash cost (‘000) | 24,322 | 23,573 | 20,546 | |||||||||
Cash profit (‘000) | (1,028 | ) | (1,095 | ) | 4,367 | |||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 558 | 447 | 315 | |||||||||
Capex(‘000)($) | 26,031 | 28,621 | 16,819 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Phakisa | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | — | |||||||||
Recovered grade (ounces/ton) | — | — | — | |||||||||
Gold sold (ounces) | — | — | — | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | — | |||||||||
Cash cost (‘000) | — | — | — | |||||||||
Cash profit (‘000) | — | — | — | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | — | |||||||||
Capex(‘000)($) | 21,522 | 18,756 | 16,845 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
2006 | 2005(1) | 2004(1) | ||||||||||
Production | ||||||||||||
Tons (‘000) | 3,984 | 6,528 | 11,026 | |||||||||
Recovered grade (ounces/ton) | 0.029 | 0.029 | 0.019 | |||||||||
Gold sold (ounces) | 116,388 | 188,904 | 208,744 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 59,833 | 80,222 | 80,321 | |||||||||
Cash cost (‘000) | 49,543 | 73,679 | 71,498 | |||||||||
Cash profit (‘000) | 10,290 | (6,543 | ) | 8,823 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 426 | 390 | 343 | |||||||||
Capex(‘000)($) | 13,259 | 5,675 | 14,099 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended June 30, | ||||||||||||
Kalgold | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 2,008 | 1,855 | 1,530 | |||||||||
Recovered grade (ounces/ton) | 0.038 | 0.058 | 0.054 | |||||||||
Gold sold (ounces) | 77,071 | 108,195 | 82,756 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 39,341 | 46,331 | 31,532 | |||||||||
Cash cost (‘000) | 31,740 | 40,341 | 28,511 | |||||||||
Cash profit (‘000) | 7,601 | (5,990 | ) | 3,021 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 412 | 373 | 345 | |||||||||
Capex(‘000)($) | 389 | (4,145 | ) | 4,405 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Elandsrand | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 451 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.012 | |||||||||
Gold sold (ounces) | — | — | 5,301 |
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Fiscal Year Ended June 30, | ||||||||||||
Elandsrand | 2006 | 2005(1) | 2004(1) | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 2,047 | |||||||||
Cash cost (‘000) | — | — | 2,640 | |||||||||
Cash profit (‘000) | — | — | (593 | ) | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 498 | |||||||||
Capex(‘000)($) | — | 7 | 294 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended June 30, | ||||||||||||
Evander | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 101 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.019 | |||||||||
Gold sold (ounces) | — | — | 1,961 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 756 | |||||||||
Cash cost (‘000) | — | — | 496 | |||||||||
Cash profit (‘000) | — | — | 260 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 253 | |||||||||
Capex(‘000)($) | — | — | 2,367 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
Freegold | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 336 | 1,361 | 4,148 | |||||||||
Recovered grade (ounces/ton) | 0.033 | 0.027 | 0.018 | |||||||||
Gold sold (ounces) | 11,019 | 36,420 | 73,122 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 5,366 | 15,407 | 28,507 | |||||||||
Cash cost (‘000) | 5,386 | 15,436 | 23,972 | |||||||||
Cash profit (‘000) | (20 | ) | (29 | ) | 4,535 | |||||||
Cash costs Per ounce of gold($) | 489 | 424 | 328 | |||||||||
Capex (‘000)($) | 340 | 314 | 21 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended June 30, | ||||||||||||
Free State | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 897 | 467 | 2,368 | |||||||||
Recovered grade (ounces/ton) | 0.018 | 0.020 | 0.011 | |||||||||
Gold sold (ounces) | 15,902 | 9,542 | 26,732 |
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Fiscal Year Ended June 30, | ||||||||||||
Free State | 2006 | 2005(1) | 2004(1) | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 8,614 | 3,720 | 10,215 | |||||||||
Cash cost (‘000) | 6,427 | 3,318 | 9,289 | |||||||||
Cash profit (‘000) | 2,187 | 402 | 926 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 404 | 348 | 347 | |||||||||
Capex(‘000)($) | 3,818 | 1,589 | 2,501 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended June 30, | ||||||||||||
Randfontein | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 539 | 2,757 | 2,428 | |||||||||
Recovered grade (ounces/ton) | 0.022 | 0.012 | 0.008 | |||||||||
Gold sold (ounces) | 11,650 | 33,397 | 18,872 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 6,108 | 14,185 | 7,264 | |||||||||
Cash cost (‘000) | 5,022 | 14,117 | 6,590 | |||||||||
Cash profit (‘000) | 1,086 | 68 | 674 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 431 | 423 | 349 | |||||||||
Capex(‘000)($) | 8,712 | 6,120 | 4,511 |
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(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
Fiscal Year Ended June 30, | ||||||||||||
Target | 2006 | 2005(1) | 2004(1) | |||||||||
Production | ||||||||||||
Tons (‘000) | 204 | 88 | — | |||||||||
Recovered grade (ounces/ton) | 0.004 | 0.015 | — | |||||||||
Gold sold (ounces) | 746 | 1,350 | — |
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Fiscal Year Ended June 30, | ||||||||||||
Target | 2006 | 2005(1) | 2004(1) | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 404 | 579 | — | |||||||||
Cash cost (‘000) | 968 | 467 | — | |||||||||
Cash profit (‘000) | (564 | ) | 112 | — | ||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 1,298 | 346 | — | |||||||||
Capex(‘000)($) | — | 1,790 | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Fiscal Year Ended June 30, | ||||||||||||
2006 | 2005 | 2004(1)(2) | ||||||||||
Production | ||||||||||||
Tons (‘000) | 3,398 | 4,148 | 5,227 | |||||||||
Recovered grade (ounces/ton) | 0.068 | 0.072 | 0.065 | |||||||||
Gold sold (ounces) | 231,461 | 296,848 | 338,288 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 122,496 | 125,669 | 131,435 | |||||||||
Cash cost (‘000) | 96,950 | 100,178 | 110,475 | |||||||||
Cash profit (‘000) | 25,546 | 25,491 | 21,960 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 419 | 337 | 327 | |||||||||
Capex(‘000)($) | 43,296 | 40,042 | 30,502 |
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(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policy and Estimates.” for further information on the effects of this change on Harmony. | |
(2) | Includes gold sales from Abelle’s Gidgee Operations for 5 months until November 2003. |
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Fiscal Year Ended June 30, | ||||||||||||
2006 | 2005 | 2004(1)(2) | ||||||||||
Production | ||||||||||||
Tons (‘000) | — | — | 120 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.096 | |||||||||
Gold sold (ounces) | — | — | 11,574 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | — | — | 4,079 | |||||||||
Cash cost (‘000) | — | — | 3,713 | |||||||||
Cash profit (‘000) | — | — | 366 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | — | — | 321 | |||||||||
Capex(‘000)($) | — | — | — |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated. See Item 5. “Operating and Financial Review and Prospects – Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. | |
(2) | Production consists of plant clean up tons and ounces during July 2003. Big Bell ceased operations for the remainder of fiscal 2004 and was subject to cleanup and rehabilitation work. |
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Fiscal Year Ended June 30, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Production | ||||||||||||
Tons (‘000) | 1,918 | 2,743 | 3,058 | |||||||||
Recovered grade (ounces/ton) | 0.078 | 0.066 | 0.057 | |||||||||
Gold sold (ounces) | 148,822 | 181,233 | 173,228 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 80,090 | 77,242 | 67,714 | |||||||||
Cash cost (‘000) | 59,427 | 60,915 | 58,202 | |||||||||
Cash profit (‘000) | 20,663 | 16,327 | 9,512 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 399 | 336 | 336 | |||||||||
Capex(‘000)($) | 22,651 | 15,652 | 13,596 |
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Average Milled for the | ||||||||
Processing | Fiscal Year Ended | |||||||
Plant | Capacity | June 30, 2006 | ||||||
(tons/month) | (tons/month) | |||||||
Mt. Magnet | 243,000 | 159,932 |
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Fiscal Year Ended June 30, | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
Production | ||||||||||||
Tons (‘000) | 1,480 | 1,405 | 1,843 | |||||||||
Recovered grade (ounces/ton) | 0,056 | 0.082 | 0.065 | |||||||||
Gold sold (ounces) | 82,639 | 115,615 | 120,532 | |||||||||
Results of operations($) | ||||||||||||
Product sales (‘000) | 42,406 | 48,427 | 46,651 | |||||||||
Cash cost (‘000) | 37,523 | 39,263 | 38,848 | |||||||||
Cash profit (‘000) | 4,883 | 9,164 | 7,803 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 454 | 340 | 322 | |||||||||
Capex(‘000)($) | 2,320 | 10,161 | 5,435 |
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Average Milled for the | ||||||||
Processing | Fiscal Year Ended | |||||||
Plant | Capacity | June 30, 2006 | ||||||
(tons/month) | (tons/month) | |||||||
Jubilee | 122,000 | 123,353 | ||||||
New Celebration | 138,000 | * |
* | The New Celebration plant was sold in fiscal 2006. |
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Five Months Ended | ||||
November 30, | ||||
2003(1) | ||||
Production | ||||
Tons (‘000) | 206 | |||
Recovered grade (ounces/ton) | 0.160 | |||
Gold sold (ounces) | 32,954 | |||
Results of operations($) | ||||
Product sales (‘000) | 12,991 | |||
Cash cost (‘000) | 9,712 | |||
Cash profit (‘000) | 3,279 | |||
Cash costs | ||||
Per ounce of gold($) | 295 | |||
Capex(‘000)($) | 9,614 |
(1) | Consists of 5 months of production up to November 2003 included in Harmony Australia’s results. |
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• | A 36% increase in recoverable ounces and a 50% increase in life-of-mine. | ||
• | A 37% reduction in the average annual bulk cubic metres (bcm) mined, and | ||
• | Throughput rising by 20% to 4.6 Million tons per annum as a result of the new plant design. |
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Gold Production (oz) | Royalty (%) | |||
200,000 | 0.0 | |||
200,001 — 1,000,000 | 2.0 | |||
1,000,001 — 5,000,000 | 3.5 | |||
> 5,000,000 | 2.0 |
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Link Zone Resource – 4.8Mt at 8.5g/t
A and B Zone primary refractory ore – 82.8Mt at 1.5g/t
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1. | Supergene domain; | ||
2. | Advanced Argillic alteration domain; | ||
3. | Phyllic alteration domain; and | ||
4. | Potassic alteration domain. |
• | Geotechnical and resource definition drilling | ||
• | Mining optimisation studies | ||
• | Metallurgical test work and process route selection |
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• | Infrastructure studies (on and off site requirements) | ||
• | Environment data collection and studies | ||
• | External Relation data collection and studies | ||
• | Concentrate marketing development |
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• | 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 and redress the impact of past discrimination; | ||
• | to substantially and meaningfully expand opportunities for historically disadvantaged persons 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; | ||
• | to follow the principle that mining companies keep and use their mineral rights, with no expropriation and with guaranteed compensation for mineral rights; and | ||
• | to ensure that holders of mining and production rights contribute towards socio-economic development of the areas in which they are operating. |
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• | clean up the surface environment after mining and ensure certificates of closure; | ||
• | promote “clean” mining and minerals processing; | ||
• | support the company’s social plan requirements (such as the Mineral and Petroleum Resources Development Act (MPRDA) and Mining Charter), BEE and local community involvement; | ||
• | reduce environmental liabilities by 10% per annum; and | ||
• | self-fund environmental rehabilitation through economic activities/savings, thus contributing to the bottom line. |
• | all relevant environmental risks should be identified and prioritized; | ||
• | environmental issues should be dealt with promptly; | ||
• | environmental issues, particularly relating to continuous non-compliance or potentially serious environmental impacts, should be dealt with at the board level; and | ||
• | we will adopt the best practicable environmental option; that is, the option that has most benefit, or causes the least damage to the environment, at a cost acceptable to society and affordable to us. |
• | that environmental management is a corporate priority; | ||
• | that environmental policies, programs and practices will be integrated into the activities of the company; | ||
• | that we will strive for continued improvement and efficiency; | ||
• | that we will work with government departments and the public to come up with the best sustainable solutions; | ||
• | that contractors and suppliers will be required to comply with the Harmony policy; and | ||
• | that employees will be informed and educated regarding their environmental responsibilities. |
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• | environmental inspection:general inspections are performed routinely and systematically with collected data entered into the system to enable follow up actions. | ||
• | risk assessment:detailed and specific risk assessments are conduced to help identify deviations that may not have been otherwise anticipated. |
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• | stakeholder communication:all communication is managed and may result in action items for the organization for which the stakeholder will require follow up feedback. All such communication is logged. | ||
• | monitoring:impact monitoring is focused on collecting and analyzing environmental data that may well result in follow up actions. | ||
• | licenses/permits:all details relating to licenses or permits can be registered in the system. | ||
• | major loss, incident and accident notification:when an incident occurs, initial information about the incident is recorded to trigger a notification process. |
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• | Development and implementation of environmental management procedures. |
• | Monitoring of environmental impacts and performance. | ||
• | Review of procedures to ensure continual improvement. |
• | to protect the health and safety of persons at mines; | ||
• | 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 the health and safety committees at mines; | ||
• | to provide for effective monitoring of health and safety conditions at mines; | ||
• | to provide for enforcement of health and safety measures at mines; | ||
• | to provide for investigations and inquiries to improve health and safety at mines; and | ||
• | to promote: | ||
• | a culture of health and safety in the mining industry; | ||
• | training in health and safety in the mining industry; and | ||
• | co-operation and consultation on health and safety between the State, employers, employees and their |
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representatives. |
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• | theQuality Assets, which typically have a larger reserve base and hence a longer life. These form the core of our operations; | ||
• | theLeveraged Assetsare those that provide significant upside in the event of a rising gold price (as has been evident in the latter part of fiscal 2006); and | ||
• | theGrowth Assets, which comprise the expansion projects/new mines currently being constructed in South Africa. |
Leveraged | Surface | |||||
Quality Assets | Assets | Growth Assets | Operations | |||
Target | Bambanani | Elandsrand mine and project | Kalgold | |||
Tshepong | Joel | Doornkop mine and project | Freegold | |||
Masimong shaft complex | West Shaft | Phakisa project | Free State | |||
Evander 2, 3 & 5 | St. Helena | Randfontein | ||||
Evander 7 | Harmony 2 | Target | ||||
Evander 8 | Merriespruit 1 | |||||
Cooke 1 | Merriespruit 3 | |||||
Cooke 2 | Unisel | |||||
Cooke 3 | Brand 3 | |||||
Orkney 2 | ||||||
Orkney 4 |
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Fiscal Year Ended | ||||||||||||
June 30 | ||||||||||||
2006 | 2005 | 2004 | ||||||||||
($/oz) | ||||||||||||
Average | 527 | 422 | 389 | |||||||||
High | 726 | 454 | 427 | |||||||||
Low | 418 | 387 | 343 | |||||||||
Harmony’s average sales price(1) | 529 | 427 | 385 |
(1) | Harmony’s average sales price differs from the average gold price due to the timing of its sales of gold within each year and due to the effect of delivering under the commodity hedge contracts acquired in the New Hampton and Hill 50 transactions. |
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2005 | 2004 | |||||||||||
2006 | (adjusted) | (adjusted) | ||||||||||
$'000 | $'000 | $'000 | ||||||||||
Total production costs per ounce calculation — under U.S. GAAP | 1,234,999 | 1,298,437 | 1,233,771 | |||||||||
Depreciation and amortization expense (excluding depreciation on non-mining assets) | (159,433 | ) | (145,325 | ) | (136,729 | ) | ||||||
Other items to be excluded from GAAP measure (1) | (18,735 | ) | (16,155 | ) | 3,646 | |||||||
Production costs exclusive of depreciation and amortization per financial statements | 1,056,831 | 1,136,957 | 1,100,688 | |||||||||
Less: share-based compensation | (17,055 | ) | (15,618 | ) | (9,446 | ) | ||||||
Total cash costs per ounce calculation — using Gold Institute guidance | 1,039,776 | 1,121,339 | 1,091,242 | |||||||||
Per ounce calculation: | ||||||||||||
Ounces sold | 2,386,925 | 2,965,265 | 3,225,188 | |||||||||
Total cash cost per ounce — using Gold Institute guidance | 436 | 378 | 338 | |||||||||
Total production cost per ounce — under U.S. GAAP | 517 | 438 | 383 |
(1) | Includes corporate costs and decrease in rehabilitation cost. |
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Percentage | ||||||||||||||||||||
Year Ended June 30, | Year Ended June 30, | Increase | ||||||||||||||||||
2006 | 2005 | in Cash | ||||||||||||||||||
(oz) | ($/oz) | (oz) | ($/oz)(1) | Costs | ||||||||||||||||
Adjusted | ||||||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||
Free State operations | ||||||||||||||||||||
Quality assets | ||||||||||||||||||||
Masimong | 136,153 | 489 | 159,981 | 409 | 20 | |||||||||||||||
Leveraged assets | ||||||||||||||||||||
Harmony 2 | 69,446 | 483 | 68,547 | 438 | 10 | |||||||||||||||
Merriespruit 1 | 48,069 | 501 | 45,559 | 477 | 5 | |||||||||||||||
Merriespruit 3 | 43,691 | 554 | 54,690 | 446 | 24 | |||||||||||||||
Unisel | 72,963 | 395 | 65,011 | 478 | (17 | ) | ||||||||||||||
Brand 3 | 41,647 | 559 | 46,299 | 494 | 13 | |||||||||||||||
Brand 5 | 469 | 2,079 | 33 | 64,242 | (97 | ) | ||||||||||||||
Saaiplaas 3 | — | — | 2,541 | 1,901 | — | |||||||||||||||
Surface operations | 15,902 | 404 | 9,542 | 348 | 16 | |||||||||||||||
Evander operations |
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Percentage | ||||||||||||||||||||
Year Ended June 30, | Year Ended June 30, | Increase | ||||||||||||||||||
2006 | 2005 | in Cash | ||||||||||||||||||
(oz) | ($/oz) | (oz) | ($/oz)(1) | Costs | ||||||||||||||||
Adjusted | ||||||||||||||||||||
Quality assets | ||||||||||||||||||||
Evander 2 | — | — | 48,764 | 562 | — | |||||||||||||||
Evander 5 | 62,388 | 530 | 47,093 | 338 | 57 | |||||||||||||||
Evander 7 | 83,202 | 392 | 130,009 | 252 | 56 | |||||||||||||||
Evander 8 | 128,849 | 348 | 151,936 | 273 | 27 | |||||||||||||||
Leveraged assets | ||||||||||||||||||||
Evander 9 | — | — | 2,573 | 1,168 | — | |||||||||||||||
Randfontein operations | ||||||||||||||||||||
Quality assets | ||||||||||||||||||||
Cooke 1 | 80,495 | 401 | 79,101 | 393 | 2 | |||||||||||||||
Cooke 2 | 59,836 | 386 | 54,441 | 443 | (13 | ) | ||||||||||||||
Cooke 3 | 104,758 | 395 | 116,300 | 364 | 9 | |||||||||||||||
Growth assets | ||||||||||||||||||||
Doornkop | 43,593 | 558 | 52,695 | 447 | 25 | |||||||||||||||
Surface operations | 11,650 | 431 | 33,397 | 423 | 2 | |||||||||||||||
Elandskraal operations | ||||||||||||||||||||
Growth assets | ||||||||||||||||||||
Elandsrand | 170,867 | 523 | 207,371 | 427 | 22 | |||||||||||||||
Leveraged assets | ||||||||||||||||||||
Deelkraal | — | — | 2,284 | 313 | — | |||||||||||||||
Freegold operations | ||||||||||||||||||||
Quality assets | ||||||||||||||||||||
Tshepong | 335,289 | 332 | 380,695 | 266 | 25 | |||||||||||||||
Growth assets | ||||||||||||||||||||
Phakisa | — | — | — | — | — | |||||||||||||||
Leveraged assets | ||||||||||||||||||||
Bambanani | 175,214 | 497 | 197,535 | 422 | 18 | |||||||||||||||
Joel | 58,595 | 498 | 64,464 | 450 | 11 | |||||||||||||||
Eland | 4,058 | 263 | 26,782 | 500 | (48 | ) | ||||||||||||||
Kudu/Sable | 2,024 | 442 | 25,175 | 750 | (41 | ) | ||||||||||||||
West Shaft | 25,525 | 535 | 28,165 | 458 | 17 | |||||||||||||||
Nyala | 184 | 1,228 | 23,503 | 748 | 64 | |||||||||||||||
St. Helena | 12,791 | 845 | 29,965 | 807 | 5 | |||||||||||||||
Surface operations | 11,019 | 489 | 36,420 | 424 | 15 | |||||||||||||||
ARMgold operations | ||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||
Orkney 2 | 69,877 | 425 | 78,449 | 401 | 6 | |||||||||||||||
Orkney 4 | 58,897 | 497 | 76,971 | 385 | 29 | |||||||||||||||
Welkom 1 | — | — | 2,734 | 587 | — | |||||||||||||||
Avgold operations | ||||||||||||||||||||
Quality assets | ||||||||||||||||||||
Target | 150,196 | 346 | 209,847 | 259 | 34 | |||||||||||||||
Surface operations | 746 | 1,298 | 1,350 | 346 | 275 | |||||||||||||||
Kalgold operations | ||||||||||||||||||||
Surface operations | 77,071 | 412 | 108,195 | 373 | (10 | ) | ||||||||||||||
AUSTRALASIA | ||||||||||||||||||||
Mt. Magnet | 148,822 | 399 | 181,233 | 336 | 19 | |||||||||||||||
South Kal | 82,639 | 454 | 115,615 | 340 | 34 | |||||||||||||||
Papua New Guinea | — | — | — | — | — | |||||||||||||||
Other entities | — | — | — | — | — | |||||||||||||||
Total | 2,386,925 | 2,965,265 | ||||||||||||||||||
Weighted average | 436 | 378 | 15 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated.See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. |
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Income and Mining Tax | 2006 | 2005 | ||||||
Effective tax rate benefit | 2 | % | 14 | % |
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Percentage | ||||||||||||||||||||
Year Ended June 30, | Year Ended June 30, | Increase | ||||||||||||||||||
2005(1) | 2004(1)(2) | in Cash | ||||||||||||||||||
(oz) | ($/oz) | (oz) | ($/oz) | Costs | ||||||||||||||||
Adjusted | Adjusted | |||||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||
Free State operations | ||||||||||||||||||||
Quality assets | ||||||||||||||||||||
Masimong | 159,981 | 409 | 234,307 | 323 | 27 | |||||||||||||||
Leveraged assets | ||||||||||||||||||||
Harmony 2 | 68,547 | 438 | 87,472 | 365 | 20 | |||||||||||||||
Merriespruit 1 | 45,559 | 477 | 59,062 | 405 | 18 | |||||||||||||||
Merriespruit 3 | 54,690 | 446 | 76,956 | 419 | 6 | |||||||||||||||
Unisel | 65,011 | 478 | 91,020 | 403 | 19 | |||||||||||||||
Brand 3 | 46,299 | 494 | 59,558 | 401 | 23 |
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Percentage | ||||||||||||||||||||
Year Ended June 30, | Year Ended June 30, | Increase | ||||||||||||||||||
2005(1) | 2004(1)(2) | in Cash | ||||||||||||||||||
(oz) | ($/oz) | (oz) | ($/oz) | Costs | ||||||||||||||||
Adjusted | Adjusted | |||||||||||||||||||
Brand 5 | 33 | 64,242 | 19,262 | 692 | 9,184 | |||||||||||||||
Saaiplaas 3 | 2,541 | 1,901 | 26,783 | 503 | 278 | |||||||||||||||
Surface operations | 9,542 | 348 | 26,732 | 347 | 0.29 | |||||||||||||||
Evander operations | ||||||||||||||||||||
Quality assets | ||||||||||||||||||||
Evander 2 | 48,764 | 562 | 86,172 | 337 | 67 | |||||||||||||||
Evander 5 | 47,093 | 338 | 48,103 | 295 | 15 | |||||||||||||||
Evander 7 | 130,009 | 252 | 92,505 | 317 | (21 | ) | ||||||||||||||
Evander 8 | 151,936 | 273 | 109,513 | 322 | (15 | ) | ||||||||||||||
Leveraged assets | ||||||||||||||||||||
Evander 9 | 2,573 | 1,168 | 23,440 | 386 | 203 | |||||||||||||||
Surface operations | — | — | 1,961 | 253 | (100 | ) | ||||||||||||||
Randfontein operations | ||||||||||||||||||||
Quality assets | ||||||||||||||||||||
Cooke 1 | 79,101 | 393 | 104,168 | 283 | 39 | |||||||||||||||
Cooke 2 | 54,441 | 443 | 90,761 | 337 | 32 | |||||||||||||||
Cooke 3 | 116,300 | 364 | 134,003 | 314 | 13 | |||||||||||||||
Growth assets | ||||||||||||||||||||
Doornkop | 52,695 | 447 | 65,234 | 315 | 42 | |||||||||||||||
Surface operations | 33,397 | 423 | 18,872 | 349 | 21 | |||||||||||||||
Elandskraal operations | ||||||||||||||||||||
Growth assets | ||||||||||||||||||||
Elandsrand | 207,371 | 427 | 250,581 | 362 | 18 | |||||||||||||||
Leveraged assets | ||||||||||||||||||||
Deelkraal | 2,284 | 313 | 68,127 | 555 | (44 | ) | ||||||||||||||
Surface operations | — | — | 5,301 | 498 | (100 | ) | ||||||||||||||
Freegold operations | ||||||||||||||||||||
Quality assets | ||||||||||||||||||||
Tshepong | 380,695 | 266 | 287,771 | 354 | 25 | |||||||||||||||
Growth assets | ||||||||||||||||||||
Phakisa | — | — | — | — | ||||||||||||||||
Leveraged assets | ||||||||||||||||||||
Bambanani | 197,535 | 422 | 213,730 | 478 | (12 | ) | ||||||||||||||
Joel | 64,464 | 450 | 50,590 | 5,175 | (91 | ) | ||||||||||||||
Eland | 26,782 | 500 | 37,337 | 656 | (24 | ) | ||||||||||||||
Kudu/Sable | 25,175 | 750 | 29,347 | 548 | 37 | |||||||||||||||
West Shaft | 28,165 | 458 | 26,565 | 435 | 5 | |||||||||||||||
Nyala | 23,503 | 748 | 8,891 | 457 | 64 | |||||||||||||||
St. Helena | 29,965 | 807 | 52,309 | 597 | 35 | |||||||||||||||
Surface operations | 36,420 | 424 | 49,262 | 487 | (13 | ) | ||||||||||||||
ARMgold operations | ||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||
Orkney 1 | — | — | 322 | 602 | (100 | ) | ||||||||||||||
Orkney 2 | 78,449 | 401 | 81,434 | 307 | 31 | |||||||||||||||
Orkney 3 | — | — | 11,413 | 564 | (100 | ) | ||||||||||||||
Orkney 4 | 76,971 | 385 | 67,931 | 288 | 34 | |||||||||||||||
Orkney 6 | — | — | 11,060 | 486 | (100 | ) | ||||||||||||||
Orkney 7 | — | — | 4,533 | 435 | (100 | ) | ||||||||||||||
Welkom 1 | 2,734 | 587 | 19,226 | 517 | 14 | |||||||||||||||
Welkom 2 | — | — | 1,350 | 405 | (100 | ) | ||||||||||||||
Welkom 3 | — | — | 1,511 | 385 | (100 | ) | ||||||||||||||
Welkom 4 | — | — | 3,922 | 381 | (100 | ) | ||||||||||||||
Welkom 6 | — | — | 2,411 | 371 | (100 | ) | ||||||||||||||
Welkom 7 | — | — | 9,902 | 360 | (100 | ) | ||||||||||||||
Avgold operations | ||||||||||||||||||||
Quality assets | ||||||||||||||||||||
Target | 209,847 | 259 | 53,434 | 215 | 20 | |||||||||||||||
Surface operations | 1,350 | 346 | — | — | — |
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Percentage | ||||||||||||||||||||
Year Ended June 30, | Year Ended June 30, | Increase | ||||||||||||||||||
2005(1) | 2004(1)(2) | in Cash | ||||||||||||||||||
(oz) | ($/oz) | (oz) | ($/oz) | Costs | ||||||||||||||||
Adjusted | Adjusted | |||||||||||||||||||
Kalgold operations | ||||||||||||||||||||
Surface operations | 108,195 | 373 | 82,756 | 345 | 8 | |||||||||||||||
AUSTRALASIA | ||||||||||||||||||||
Mt. Magnet | 181,233 | 336 | 173,228 | 336 | 0 | |||||||||||||||
South Kal | 115,615 | 340 | 120,532 | 322 | 6 | |||||||||||||||
Papua New Guinea | — | — | — | — | — | |||||||||||||||
Other entities | — | — | 44,528 | 302 | (100 | ) | ||||||||||||||
Total | 2,965,265 | 3,225,188 | ||||||||||||||||||
Weighted average | 378 | 338 | 12 |
(1) | During 2006, the Company changed its accounting policy for the capitalization of mine development costs. This change was made retrospectively, and comparative numbers have been restated.See Item 5. “Operating and Financial Review and Prospects — Critical Accounting Policies and Estimates.” for further information on the effects of this change on Harmony. | |
(2) | Includes nine months of production from Free Gold and ARMgold and two months from production from Avgold’s Target operations |
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Income and Mining Tax | 2005 | 2004 | ||||||
Effective tax rate benefit | 14 | % | 75 | % |
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Payments Due by Period | ||||||||||||||||||||
Less Than | 12-36 | 36-60 | After 60 | |||||||||||||||||
12 Months | Months | Months | Months | |||||||||||||||||
July 1, 2006 | July 1, 2007 | July 1, 2009 | Subsequent | |||||||||||||||||
to June 30, | to June 30, | to June 30, | June 30, | |||||||||||||||||
Total | 2007 | 2009 | 2011 | 2011 | ||||||||||||||||
($’000) | ($’000) | ($’000) | ($’000) | ($’000) | ||||||||||||||||
Convertible uncollaterized bonds(1) | 271,643 | 11,567 | 11,567 | 248,509 | — | |||||||||||||||
Africa Vanguard Resources(1) | 4,466 | — | — | — | 4,466 | |||||||||||||||
Nedbank — AVR(1) | 26,659 | — | 26,659 | — | — | |||||||||||||||
Gold Fields(1) | 705 | 705 | — | — | — | |||||||||||||||
Nedbank — ARM 1(1) | 86,264 | — | — | 86,264 | — | |||||||||||||||
Nedbank — ARM 2(1) | 113,511 | — | — | 113,511 | — | |||||||||||||||
RMB loan facility (1) | 142,436 | 142,436 | — | — | ||||||||||||||||
Auriel Alloys (1) | 202 | 84 | 118 | |||||||||||||||||
Post retirement health care(2) | 14,964 | — | — | — | 14,964 | |||||||||||||||
Environmental obligations(3) | 236,541 | — | — | — | 236,541 | |||||||||||||||
Total contractual obligations | 897,391 | 154,792 | 38,344 | 448,284 | 255,971 |
(1) | SeeItem 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 2002. | |
(3) | Harmony makes provision for environmental rehabilitation costs and related liabilities based on management’s interpretations of current environmental and regulatory requirements. SeeItem 5. “Operating and Financial Review and Prospects — Critical Accounting Policies.” |
Payment Due by Period | ||||||||||||||||||||
Less | ||||||||||||||||||||
Than 12 | 12-36 | 36-60 | ||||||||||||||||||
Months | Months | Months | After 60 | |||||||||||||||||
July 1, | July 1, | July 1, | Months | |||||||||||||||||
2006 | 2007 | 2009 | Subsequent | |||||||||||||||||
to June | to June | to June | to June | |||||||||||||||||
30, | 30, | 30, | 30, | |||||||||||||||||
Total | 2007 | 2009 | 2011 | 2011 | ||||||||||||||||
($’000) | ($’000) | ($’000) | ($’000) | ($’000) | ||||||||||||||||
Melrose Arch, South Africa | 48 | 48 | — | — | — | |||||||||||||||
Musuku | 3 | 3 | — | — | — | |||||||||||||||
Perth Office, Australia | 214 | 107 | 107 | — | — | |||||||||||||||
Brisbane Office, Australia | 307 | 205 | 102 | — | — | |||||||||||||||
PNG Offices (1) | ||||||||||||||||||||
Total Contractual Obligations Off Balance Sheet | 572 | 353 | 209 | — | — |
(1) | The PNG offices are rented on a monthly basis and the agreement may be cancelled within a months notice. |
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As the obligation has no fixed expiry date it has been excluded from the above table. |
$’000 | ||||
Authorized and contracted for | 21,398 | |||
Authorized but not yet contracted for | 373,794 | |||
Total | 395,192 |
Amount of Commitments Expiring by Period | ||||||||||||||||||||||
Less | ||||||||||||||||||||||
Than 12 | 12-36 | 36-60 | ||||||||||||||||||||
Months | Months | Months | After 60 | |||||||||||||||||||
July 1, | July 1, | July 1, | Months | |||||||||||||||||||
2006 to | 2007 to | 2009 to | Subsequent | |||||||||||||||||||
June 30, | June 30, | June 30, | to June 30, | |||||||||||||||||||
Total | 2007 | 2009 | 2011 | 2011 | ||||||||||||||||||
($’000) | ($’000) | ($’000) | ($’000) | ($’000) | ||||||||||||||||||
Guarantees(1) | 20,535 | — | — | — | 20,535 | |||||||||||||||||
Capital commitments(2) | 21,398 | 21,398 | — | — | ||||||||||||||||||
Total commitments expiring by period | 41,933 | 21,398 | — | — | 20,535 |
(1) | Reflects guarantees for environmental rehabilitation expenses, principally environmental performance bonds required for Harmony’s Australian operations. SeeItem 4. “Information on the Company — Regulation — Environmental Matters.” | |
(2) | Capital commitments consist only of amounts committed to external suppliers, although a total of $683.3 million has been approved by the Board for capital expenditures. |
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Bob Atkinson | Operations Director (Projects) | |
Jaco Boshoff | Ore Reserves | |
Graham Briggs | Country Manager, Australia and PNG | |
Philip Kotze* | Investor Relations, Harmony of Tomorrow | |
Jackie Mathebula | Corporate Affairs | |
Nomfundo Qangule | Group Finance | |
De Wet Schutte | Exploration and New Business | |
Peter Steenkamp | Chief Operating Officer | |
Bernard Swanepoel | Chief Executive | |
Boetie Swanepoel | Operational Finance and Services | |
Johannes van Heerden | Finance (Australasia) | |
Marian van der Walt | Company Secretary; Legal and Compliance | |
Abre van Vuuren | Human Resources Processes and Strategy |
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§ | Health | ||
§ | HIV/AIDS | ||
§ | Safety | ||
§ | Social investment | ||
§ | Environmental management |
§ | Ensuring that a sustainable organisational culture, structures and processes are in place that will support the development of empowerment in the company in line with the Company’s needs and requirements. | ||
§ | Auditing and monitoring the development and progress of empowerment within the Company. | ||
§ | Addressing inequalities that may exist in staff profiles and organisational practices. | ||
§ | Reviewing and monitoring whether appropriate support is given to previously disadvantaged staff in order to equip them for successful careers in the Company. | ||
§ | Meeting at least once a year or more often, should the need arise. One meeting was held during the 2006 financial year, and it is planned that in future, this committee should meet on a quarterly basis. |
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Retirement | ||||||||||||||||||||||||||||||||||||||||
Contributions | ||||||||||||||||||||||||||||||||||||||||
Salaries and | During the | Total | ||||||||||||||||||||||||||||||||||||||
Directors’ Fees | Benefits (1) | Year | Bonuses Paid | Compensation | ||||||||||||||||||||||||||||||||||||
Name | ($000) | (R000) | ($000) | (R000) | ($000) | (R000) | ($000) | (R000) | ($000) | (R000) | ||||||||||||||||||||||||||||||
Patrice Motsepe | 18 | 115 | — | — | — | — | — | — | 18 | 115 | ||||||||||||||||||||||||||||||
Frank Abbott (2) | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Joaquim Chissano | 9 | 60 | — | — | — | — | — | — | 9 | 60 | ||||||||||||||||||||||||||||||
Fikile De Buck | — | — | — | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Nolitha Fakude | 22 | 140 | — | — | — | — | — | — | 22 | 140 | ||||||||||||||||||||||||||||||
Dr. Simo Lushaba | 21 | 130 | — | — | — | — | — | — | 21 | 130 | ||||||||||||||||||||||||||||||
Modise Motloba | 16 | 100 | — | — | — | — | — | — | 16 | 100 | ||||||||||||||||||||||||||||||
Cedric Savage | 22 | 140 | — | — | — | — | — | — | 22 | 140 | ||||||||||||||||||||||||||||||
Executive (3) | ||||||||||||||||||||||||||||||||||||||||
Bernard Swanepoel(6) | — | — | 325 | 2,066 | 51 | 326 | — | — | 376 | 2,392 | ||||||||||||||||||||||||||||||
Ferdi Dippenaar (4) | — | — | 101 | 644 | 16 | 103 | — | — | 117 | 747 | ||||||||||||||||||||||||||||||
Ted Grobicki (5) | — | — | 443 | 2,818 | 41 | 257 | — | — | 484 | 3,075 | ||||||||||||||||||||||||||||||
Nomfundo Qangule (6) | — | — | 207 | 1,317 | 19 | 124 | — | — | 226 | 1,441 | ||||||||||||||||||||||||||||||
TOTAL (7) | 131 | 830 | 1,076 | 6,845 | 127 | 810 | — | — | 1,334 | 8,485 |
(1) | Increase granted to executive directors in March 2006. | |
(2) | Frank Abbott has waived his non-executive Directors’ fee. | |
(3) | Our executive directors have waived their director’s fees in terms of our Articles of Association. | |
(4) | Ferdi Dippenaar resigned on December 6, 2005 and his remuneration is only reflected up to December 31, 2005. | |
(5) | Ted Grobicki’s salary is paid in A$. The conversion rate from A$ to R is based on the average exchange rate of R4.80/A$. | |
(6) | Includes increases awarded as from March 1, 2006. | |
(7) | The total Directors’ fee in FY06 also includes R120,000 (US$19,000) paid to Rick Menell and R25,000 (US$4,000) paid to Dr Morley Nkosi. |
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Current fee | New fee | |||
Board | R80,000 annually | R110,000 annually | ||
Audit Committee | R20,000 annually | R45,000 annually | ||
Empowerment Committee | R20,000 annually | R30,000 annually | ||
Investment Committee | R20,000 annually | R30,000 annually | ||
Nomination Committee | R20,000 annually | R30,000 annually | ||
Remuneration Committee | R20,000 annually | R30,000 annually | ||
Sustainable Development Committee | R20,000 annually | R40,000 | ||
Special fee for additional work performed | R4,000 per day | R5,000 per day |
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Current fee | New fee (per annum) | |||
Chairman of Board | No additional payment to act as chairman | R495,000 (4,5 times the individual director’s fee) annually | ||
Chairman of Board committees | No additional payment to act as chairman | Double the amount that the individual Board committee member receives annually |
Average | ||||||||||||
Number of | Strike | |||||||||||
Directors and | Share | Price | Expiration | |||||||||
Senior Management | Options | (R) | Dates | |||||||||
Bernard Swanepoel | 340,967 | 52.58 | 2015 | |||||||||
Nomfundo Qangule | 160,124 | 52.58 | 2015 | |||||||||
Patrice Motsepe | — | — | — | |||||||||
Frank Abbott | — | — | ||||||||||
Joaquim Chissano | — | — | — | |||||||||
Fikile De Buck | — | — | — | |||||||||
Dr. Simo Lushaba | — | — | — | |||||||||
Modise Motloba | — | — | — | |||||||||
Cedric Savage | — | — | — | |||||||||
Senior Management (12 persons) | 1,151,206 | 53.26 | 2015 | |||||||||
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Ordinary | ||||||||||||||||
Ordinary | Shares | |||||||||||||||
Shares Number | Number as at | |||||||||||||||
as at | October 24, | |||||||||||||||
Holder | June 30, 2006 | Percentage | 2006 | Percentage | ||||||||||||
Directors Non-executive | ||||||||||||||||
P. Motsepe* | — | — | — | — | ||||||||||||
F. Abbott | — | — | — | — | ||||||||||||
J. Chissano | — | — | — | — | ||||||||||||
F De Buck | — | — | — | — | ||||||||||||
Dr. S. Lushaba | — | — | — | — | ||||||||||||
M. Motloba | — | — | — | — | ||||||||||||
C. Savage | — | — | — | — | ||||||||||||
Executive Directors | — | — | — | — | ||||||||||||
B. Swanepoel | — | — | — | — | ||||||||||||
N. Qangule | — | — | — | — | ||||||||||||
Total Directors (9 persons) | — | — | — | — | ||||||||||||
Total Senior Management (12 persons) | — | — | — | — |
* | The 14% indirect shareholding held by P. Motsepe was transferred to ARM Limited in accordance with the ARM transaction in April 2004. See Item 7. “—Related Party Transactions”. |
Harmony Employees at | Outside Contractors at | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2006 | 2005 | 2004 | 2006 | 2005 | 2004 | |||||||||||||||||||
South Africa | 43,283 | 46,669 | 55,397 | 5,287 | 359 | 359 | ||||||||||||||||||
Australia | 204 | 198 | 516 | 416 | 512 | 512 | ||||||||||||||||||
Papua New Guinea | 237 | 200 | 269 | 73 | 5 | 5 | ||||||||||||||||||
Grand total | 43,724 | 47,067 | 56,182 | 5,776 | 876 | 876 |
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(1) | This represents Harmony’s 50% interest in the Free Gold Joint Venture for 2003 and 2004. | |
(2) | This includes St. Helena’s employees. |
Summary of Employment Reduction FY06 | ||||
Voluntary separations | 1,477 | |||
Compulsory separations | 1,779 | |||
Total employment opportunity reduction | 3,256 |
• | prescribed minimum levels of compensation and benefits; | ||
• | trade union access and membership; | ||
• | the right to strike; | ||
• | mandatory compensation in the event of termination for operational reasons; | ||
• | affirmative action policies and programs; | ||
• | compensation in the event of occupational illness or injury; and | ||
• | financing of training programs. |
• | NUM 76% | ||
• | UASA 8% |
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• | Solidarity 2% | ||
• | Collective bargaining fund 7% | ||
• | Balance (not unionized) 7%. |
• | reskilling, retraining and redeployment of surplus employees for alternative vacant positions that may exist at a particular operation or other Harmony operations; | ||
• | implementation of CONOPS (described below) to create additional job opportunities; | ||
• | transferring surplus or redundant employees to other Harmony operations that have placement opportunities; | ||
• | opening up voluntary retrenchment to minimize the impact of restructuring and/or closure of shafts/mines; and | ||
• | replacing contractors, who are involved in non-specialized work, with Harmony employees. |
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• | First, we aim to eliminate a backlog of disputes relating to issues which are sources of grievance and unhappiness for our employees and their representatives. These include such concerns as labor differential and inconsistent rates of payment across the group, the housing policy being unevenly applied and perceptions of poor medical care at the hospital. This lengthy process involves many hours of discussion and negotiation to arrive at mutually acceptable solutions. It also involves the implementation of agreements that were entered into over the past couple of years but not implemented for a variety of reasons, for example, job grading and the appointmen ot HIV/Aids co-ordinators. | ||
• | Secondly, we aim to structure our relations with the unions so that issues are dealt with as quickly and efficiently as possible and at the appropriate level in the organization. This has involved appointing regional employee relations managers and educating both management and the unions in making use of the correct structure in their dealings with each other. The objective is to reduce corporate-level involvement in employee relations at the operational level, but also to ensure that where an issue has group-wide ramifications it is dealt with at group level. To this end we have resurrected the Harmony Leadership Council which involves the chairpersons and secretaries of all the branch ommittees of our major unions which meets every month. Every six months we hold a “bosberaad” (meeting) with the general secretary of the NUM present. | ||
• | Third, through these deliberations we are attempting to create a co-operative atmosphere and positive work ethic, with the aim of having management and unions jointly tackling the problem, rather than having a “them/us” approach with management defending itself against perceived union attacks. For example, the training and development working party has looked at the way in which we deliver Adult Basic Education and Training (ABET) and come up with an agreement to improve it. The working party on the housing policy has engaged in discussions on accommodation arrangements and policies have been jointly developed and solutions proposed. |
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• | guaranteed remuneration of executives to be pitched at close to median (50 percentile level) of comparable South African executive remuneration; and | ||
• | through performance-related annual bonuses, capped at a maximum of 50% and long-term incentive plans, executives will be able to earn up to the top quartile (75 percentile level), based on superior company and individual performance. |
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Number of | ||||
Holder | Shares | Percentage | ||
1. The Bank of New York(1) | 126,326,506 | 31.8% | ||
2. ARM Ltd.(2) | 63,632,922 | 16.0% | ||
3. Allan Gray Asset Management Ltd. | 49,949,710 | 12.6% | ||
4. JP Morgan Chase Bank(3) | 37,626,426 | 9.5% |
(1) | Depository with respect to the ADRs held on the U.S. register. | |
(2) | Patrice Motsepe, the Chairman of Harmony, has an indirect holding in ARM Limited. | |
(3) | Depository with respect to Harmony’s International Depository Shares. |
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Total Net | ||||
Dividends per | ||||
Ordinary Share | ||||
(in ZAR) | ||||
Final Dividend June 30, 2003 | 1.50 | |||
Interim Dividend December 31, 2003 | 0.40 | |||
Final Dividend June 30, 2004 | 0.30 | |||
Interim Dividend December 31, 2004 | 0 | |||
Final Dividend June 30, 2005 | 0 | |||
Interim Dividend December 31, 2005 | 0 | |||
Final Dividend June 30, 2006 | 0 |
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JSE Limited | HAR | |
New York Stock Exchange | HMY | |
NASDAQ | HMY | |
London Stock Exchange | HRM | |
Euronext Brussels | HG | |
Euronext Paris | HMY | |
Berlin Stock Exchange | HAM1 |
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Harmony Ordinary | ||||||||
Shares | ||||||||
(Rand per Ordinary | ||||||||
Share) | ||||||||
High | Low | |||||||
Fiscal year ended June 30, 2004 | ||||||||
First Quarter | 117.20 | 84.00 | ||||||
Second Quarter | 108.50 | 92.48 | ||||||
Third Quarter | 122.51 | 95.76 | ||||||
Fourth Quarter | 97.25 | 61.00 | ||||||
Full Year | 122.51 | 61.00 | ||||||
Fiscal year ended June 30, 2005 Month of | ||||||||
First Quarter | 88.55 | 58.00 | ||||||
Second Quarter | 93.30 | 51.00 | ||||||
Third Quarter | 58.50 | 47.50 | ||||||
Fourth Quarter | 58.80 | 36.40 | ||||||
Full Year | 93.30 | 36.40 | ||||||
Fiscal year ended June 30, 2006 Month of | ||||||||
First Quarter | 71.99 | 46.62 | ||||||
Second Quarter | 88.35 | 65.50 | ||||||
Third Quarter | 117.05 | 76.00 | ||||||
Fourth Quarter | 114.21 | 80.51 | ||||||
Full Year | 117.05 | 46.62 | ||||||
Month of | ||||||||
June 2006 | 114.21 | 80.51 | ||||||
July 2006 | 121.54 | 93.47 | ||||||
August 2006 | 104.00 | 88.76 | ||||||
September 2006 | 105.32 | 86.10 |
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NYSE | NASDAQ | |||||||||||||||
Harmony ADRs | Harmony ADRs | |||||||||||||||
($ per ADR) | ($ per ADR) | |||||||||||||||
High | Low | High | Low | |||||||||||||
Fiscal year ended June 30, 2004 | ||||||||||||||||
First Quarter | 15.95 | 10.90 | — | — | ||||||||||||
Second Quarter | 16.75 | 13.10 | — | — | ||||||||||||
Third Quarter | 17.80 | 13.90 | — | — | ||||||||||||
Fourth Quarter | 15.62 | 9.25 | — | — | ||||||||||||
Full Year | 17.80 | 9.25 | — | — | ||||||||||||
Fiscal year ended June 30, 2005 | ||||||||||||||||
First Quarter | 13.74 | 9.75 | — | — | ||||||||||||
Second Quarter | 14.29 | 9.05 | — | — | ||||||||||||
Third Quarter | 9.58 | 7.51 | — | — | ||||||||||||
Fourth Quarter | 8.80 | 5.96 | — | — | ||||||||||||
Full Year | 14.29 | 5.96 | — | — | ||||||||||||
Fiscal year ended June 30, 2006 | ||||||||||||||||
First Quarter | 11.23 | 7.21 | 11.06 | 7.20 | ||||||||||||
Second Quarter | 13.64 | 9.71 | 13.64 | 9.71 | ||||||||||||
Third Quarter | 18.84 | 12.25 | 18.84 | 12.25 | ||||||||||||
Fourth Quarter | 17.76 | 11.90 | 17.76 | 11.90 | ||||||||||||
Full Year | 18.84 | 7.21 | 18.84 | 7.21 | ||||||||||||
Month of | ||||||||||||||||
June 2006 | 16.38 | 11.90 | 16.38 | 15.70 | ||||||||||||
July 2006 | 17.10 | 13.38 | 14.55 | 14.20 | ||||||||||||
August 2006 | 14.75 | 13.13 | 14.75 | 13.59 | ||||||||||||
September 2006 | 14.56 | 11.91 | 13.18 | 12.92 |
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• | 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 Harmony’s 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 the property of Harmony or otherwise. |
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• | any arrangement for giving the director a security or indemnity in respect of money lent, or an obligation undertaken, by such director for the benefit of Harmony; | ||
• | any arrangement by which Harmony gives any security to a third party in respect of a debt or obligation of Harmony 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; | ||
• | any contract by the director to subscribe for or underwrite shares or debentures of Harmony; | ||
• | any contract or arrangement with a company other than Harmony, in which the director holds or controls, directly or indirectly, no more than one percent 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. |
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• | 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. |
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• | increase its authorized or paid-up share capital; | ||
• | consolidate and divide all or any part of its shares into shares of a larger amount; | ||
• | increase the number of its no par value shares without an increase of its stated capital; | ||
• | sub-divide all or any part of its shares having a par value; | ||
• | convert all of its 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 its 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; |
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• | convert any of its issued or unissued shares into shares of another class; | ||
• | convert any of its paid-up shares into stock, and reconvert any stock into any number of paid-up shares of any denomination; | ||
• | convert any of its 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. |
• | reduce its issued share capital; | ||
• | reduce its stated capital; or | ||
• | reduce its capital redemption reserve fund and share premium account. |
• | 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. |
• | the consideration of the annual financial statements and report of the auditors; |
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• | the election of directors; | ||
• | the appointment of auditors; and | ||
• | any business arising from the annual financial statements considered at the meeting. |
• | 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. |
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• | the names and address of the members; | ||
• | 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. |
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100 F Street, NW
Room 1580
Washington D.C. 20549
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• | both the hedged item and the hedging instrument are specifically identified and documented; | ||
• | management documents the nature of the hedging risk and identifies how the effectiveness of the hedge will be assessed; | ||
• | the effectiveness of the hedge is tested regularly throughout the life of the hedge, and a hedging instrument is identified as highly effective if it is able to offset changes in the fair value of cash flows from the hedged item by between 80% and 125% of the price at which it was fixed; | ||
• | any ineffectiveness of hedged instruments is recognized immediately in the income statement; and | ||
• | in the case of a hedge of an anticipated future transaction, there is a high probability that the transaction will occur. |
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Maturity - Scheduled for Delivery | Mark-to- | |||||||||||||||||||||||
in Fiscal Year | Market | |||||||||||||||||||||||
2007 | 2008 | 2009 | Total | $ 000 | ||||||||||||||||||||
FORWARD SALES AGREEMENTS | ||||||||||||||||||||||||
Ounces | 147,000 | 100,000 | 100,000 | 347,000 | (86,277 | ) | ||||||||||||||||||
A$/ounce | 515 | 518 | 518 | 516 | ||||||||||||||||||||
CALL OPTIONS SOLD | ||||||||||||||||||||||||
Ounces | 10,000 | — | — | 10,000 | (1,842 | ) | ||||||||||||||||||
A$/ounce | 562 | — | — | 562 | ||||||||||||||||||||
Total | 157,000 | 100,000 | 100,000 | 495,000 | (88,119 | ) |
Gold Spot Price at June 30, 2006 | ||||||||||||||||||||||||||||
Sensitivity to $ gold spot price | $ | 30 | $ | 20 | $ | 10 | $ | 600 | $ | (10 | ) | $ | (20 | ) | $ | (30 | ) | |||||||||||
Mark-to-market ($ million) | (102.5 | ) | (97.7 | ) | (92.9 | ) | (88.1 | ) | (83.3 | ) | (78.5 | ) | (73.7 | ) |
Weighted Average Interest Rate at June 30, 2006 | ||||||||||||||||||||||||||||
Sensitivity to Australian dollar interest rates | 1.5 | % | 1.0 | % | 0.5 | % | 6.26 | % | (0.5 | )% | (1.0 | )% | (1.5 | )% | ||||||||||||||
Mark-to-market ($ million) | (91.4 | ) | (90.3 | ) | (89.2 | ) | (88.1 | ) | (87.0 | ) | (85.9 | ) | (84.7 | ) |
US$/A$ Exchange Rates at June 30, 2006 $1.00 = | ||||||||||||||||||||||||||||
Sensitivity to $/A$ exchange rates | A$0.15 | A$0.10 | A$0.05 | A$1.35 | (A$0.05 | ) | (A$0.10 | ) | (A$0.15 | ) | ||||||||||||||||||
Mark-to-market ($ millions) | (127.8 | ) | (113.4 | ) | (100.2 | ) | (88.1 | ) | (76.9 | ) | (66.6 | ) | (57.0 | ) |
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Maturity - | ||||||||||||
Scheduled for | Mark-to- | |||||||||||
Fiscal Year | Market | |||||||||||
2006 | Total | $ 000 | ||||||||||
Forward Exchange Contracts | ||||||||||||
US$ million | ||||||||||||
Average strike ZAR/US | 39.5 | 39.5 | 16,467 | |||||||||
(Buy US$, sell ZAR, at the agreed exchange rate) | $ | 9.54 | 9.54 | |||||||||
Forward Exchange Call Contracts SoldUS$ million | ||||||||||||
Average strike ZAR/US | 39.5 | 39.5 | 0.4 | |||||||||
(Sell US$, buy ZAR, at the agreed exchange rate) | $ | 9.54 | 9.54 | |||||||||
Total | 16,467 |
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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 |
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• | development of additional reserves; | ||
• | depletion of existing reserves through production; | ||
• | actual mining experience; and | ||
• | price forecasts. |
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Fiscal year ended June 30, 2005 | $1.211 million | |
Fiscal year ended June 30, 2006 | $1.634 million |
Fiscal year ended June 30, 2005 | $0.915 million | |
Fiscal year ended June 30, 2006 | $0.688 million |
Fiscal year ended June 30, 2005 | $0.20 million | |
Fiscal year ended June 30, 2006 | $0.24 million |
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Fiscal year ended June 30, 2005 | $0.123 million | |
Fiscal year ended June 30, 2006 | $0.0 million |
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 September 3, 2004 in respect of the Annual General Meeting held on November 12, 2004 (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). | |
2.2 | Notice to Shareholders dated September 2, 2005 in respect of the Annual General Meeting to be held on November 4, 2005 (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). | |
2.3 | Share Exchange Agreement between Avmin and Harmony to acquire the shareholding in Avgold dated February 16, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). |
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2.4 | 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). | ||
2.5 | Form of ADR (included in Exhibit 2.4). | ||
2.6 | Form of Harmony’s senior unsecured 13% bonds due June 14, 2006 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2001 filed on September 26, 2001). | ||
2.9 | Shareholder Circular to Avgold shareholders dated April 8, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | ||
2.10 | Shareholder Circular to Anglovaal Mining Limited’s (“ARM”) shareholders dated March 23, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | ||
2.11 | Trust Deed entered into between Harmony and JPMorgan Corporate Trustee Services Limited dated May 21, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | ||
2.12 | Agency Agreement between Harmony, JPMorgan Corporate Trustee Services Limited, JPMorgan Chase Bank and JPMorgan Luxembourg SA dated May 21, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | ||
2.13 | Form of Global Bond (incorporated by reference to Harmony’s |
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Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |||
2.14 | Bond Offering Circular dated October 14, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | ||
3 | Voting Agreement between ARMI and Clidet 454 (Pty) Ltd signed on February 16, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | ||
4.1 | Acquisition and Disposal Agreement between ARMI and Anglovaal Mining Limited’s (“ARM”) holding in Harmony, ARM Platinum (Pty) Ltd (“ARMPlats”) and the African Rainbow Minerals Consortium Limited’s debt, signed on February 16, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | ||
4.2 | Addendum to Acquisition and Disposal Agreement between ARMI and Anglovaal Mining Limited signed on March 15, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | ||
4.3 | Voting Agreement between ARMI and Clidet 454 (Pty) Ltd signed on February 16, 2004 (see Exhibit 3). | ||
4.4 | 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). | ||
4.5 | Form of Harmony’s senior unsecured 13% bonds due June 14, 2006 (see Exhibit 2.6). | ||
4.6 | Joint Venture Agreement between ARMgold Limited, Harmony and Clidet 383 (Proprietary) Limited, dated April 5, 2002 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | ||
4.7 | Merger Agreement between ARMgold Limited and Harmony dated September 22, 2003 (incorporated by reference to Harmony’s Registration Statement on Form 20-F filed on December 17, 2003). | ||
4.8 | Sale of Business Agreement between Anglogold Limited, Clidet 383 (Pty) Ltd and Harmony Gold Mining Company Limited and ARM (Pty) Ltd in respect of the Free Gold assets entered into on December 24, 2001 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year |
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ended June 30, 2004, as amended, filed on October 14, 2004). | |||
4.9 | Sale of Shares Agreement amongst Harmony, ARMgold Harmony Joint Investment Company (Proprietary) Limited, and The ARM Broad-Based Empowerment Trust signed on April 15, 2005 (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). | ||
4.10 | Subordination Agreement amongst Harmony, Nedbank Limited and The ARM Broad-Based Empowerment Trust signed on April 15, 2005 (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). | ||
4.11 | First Loan Agreement between Nedbank Limited and The ARM Broad-Based Empowerment Trust signed on April 15, 2005 (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). | ||
4.12 | First Ranking Cessation and Pledge between The ARM Broad-Based Empowerment Trust and Nedbank Limited signed on April 15, 2005 (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). | ||
4.13 | Second Loan Agreement between Nedbank Limited and The ARM Broad-Based Empowerment Trust signed on April 15, 2005 (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). | ||
4.14 | Second Ranking Cessation and Pledge between The ARM Broad-Based Empowerment Trust and Nedbank Limited signed on April 15, 2005 (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). | ||
4.15 | Flow of Funds Agreement amongst Nedbank Limited, ARMgold Harmony Joint Investment Company (Proprietary) Limited, Harmony and The ARM Broad-Based Empowerment Trust signed on April 15, 2005 (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). | ||
4.16 | Right of Pre-emption and Deed of Adherence between Nedbank Limited, Harmony, African Rainbow Minerals & Exploration Investments (Proprietary) Limited and ARMgold Harmony Joint Investment Company (Proprietary) Limited signed on April 15, 2005 (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). | ||
4.17 | Agreement of Assignment between African Rainbow Minerals & Exploration Investments (Proprietary) Limited, Harmony, ARMgold Harmony Joint Investment Company (Proprietary) Limited and The Trustees of The ARM Broad-Based Empowerment Trust signed on April 15, 2005 (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). | ||
4.18 | Harmony Option Agreement between Harmony and Nedbank Limited signed on April 15, 2005 (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). | ||
4.19 | Harmony Undertaking amongst Harmony, ARMgold Harmony Joint Investment Company (Proprietary) Limited and Nedbank Limited signed on April 15, 2005 (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). | ||
4.20 | Term Loan Agreement with Rand Merchant Bank dated March 9, 2006. | ||
4.21 | Pledge Agreement in favor of FirstRand Bank Limited (acting through its Rand Merchant Bank division) dated March 9, 2006. | ||
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, 2005, filed on November 3, 2005). |
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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 chief executive officer, pursuant to Section 906 of the Sarbanes Oxley Act of 2002. | |
13.2 | Certification of the chief financial officer, pursuant to Section 906 of the Sarbanes Oxley Act of 2002. |
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By: | /s/ Zacharias Bernardus Swanepoel | |||
Z. B. Swanepoel | ||||
Chief Executive Officer | ||||
Date: October 30, 2006 |
221
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Page | ||||
Harmony Gold Mining Company Limited | ||||
Consolidated Statements of Changes in Shareholders’ Equity for the years ended June 30, 2006, 2005 and 2004 | ||||
222
Table of Contents
Johannesburg, Republic of South Africa
F-1
Table of Contents
For the years ended June 30
2006 | 2005 | 2004 | ||||||||||
A s adjusted | As adjusted | |||||||||||
(note 3) | (note 3) | |||||||||||
$’000 | $’000 | $’000 | ||||||||||
REVENUES | ||||||||||||
Product sales | 1,263,333 | 1,265,200 | 1,240,339 | |||||||||
COSTS AND EXPENSES | ||||||||||||
Production costs exclusive of depreciation and amortization | 1,056,831 | 1,136,957 | 1,100,688 | |||||||||
Depreciation and amortization | 166,120 | 151,967 | 139,829 | |||||||||
Impairment of assets | 15,951 | 243,124 | 3,145 | |||||||||
Employment termination and restructuring costs | (12,289 | ) | 73,215 | 31,668 | ||||||||
Care and maintenance cost of restructured shafts | 27,387 | 29,975 | — | |||||||||
Corporate expenditure | 19,971 | 17,969 | 14,193 | |||||||||
Exploration expenditure | 16,803 | 11,676 | 15,810 | |||||||||
Marketing and new business expenditure | 9,171 | 15,310 | 12,533 | |||||||||
Decrease in rehabilitation costs | (1,236 | ) | (1,814 | ) | (17,839 | ) | ||||||
Post retirement benefits expense | 1,175 | 9,137 | — | |||||||||
1,299,884 | 1,687,516 | 1,300,027 | ||||||||||
OPERATING LOSS | (36,551 | ) | (422,316 | ) | (59,688 | ) | ||||||
OTHER (EXPENSES)/INCOME | ||||||||||||
Dividends received | 3,321 | 2,785 | 533 | |||||||||
Loss on derivative financial instruments | (131,444 | ) | (17,672 | ) | (32,385 | ) | ||||||
Profit/(loss) on sale of listed investments | 45,345 | (93,470 | ) | 4,910 | ||||||||
Impairment of listed investment | — | (63,234 | ) | — | ||||||||
Profit on sale and loss on dilution of investment in associates — net | — | — | 65,097 | |||||||||
Profit/(loss) on sale of subsidiaries | 3,035 | (114 | ) | 115 | ||||||||
Interest income | 32,505 | 21,396 | 28,029 | |||||||||
Interest expense — net of amounts capitalized of $2.3 million, $1.9 million and $1.7 in 2006, 2005 and 2004, respectively | (56,537 | ) | (65,074 | ) | (64,289 | ) | ||||||
Other (expenses)/income | (3,802 | ) | (3,661 | ) | 14,155 | |||||||
(107,577 | ) | (219,044 | ) | 16,165 | ||||||||
LOSS BEFORE TAX, MINORITY INTERESTS, EQUITY INCOME OF JOINT VENTURE, EQUITY (LOSS)/INCOME OF ASSOCIATED COMPANIES, IMPAIRMENT OF INVESTMENT IN ASSOCIATE AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE | (144,128 | ) | (641,360 | ) | (43,523 | ) | ||||||
Income and mining tax benefit | 2,344 | 88,811 | 32,859 | |||||||||
LOSS BEFORE MINORITY INTERESTS, EQUITY INCOME OF JOINT VENTURE, EQUITY (LOSS)/INCOME OF ASSOCIATED COMPANIES, IMPAIRMENT OF INVESTMENT IN ASSOCIATE AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE | (141,784 | ) | (552,549 | ) | (10,664 | ) | ||||||
Minority interests | — | — | 1,281 | |||||||||
LOSS BEFORE EQUITY INCOME OF JOINT VENTURE, EQUITY (LOSS)/INCOME OF ASSOCIATED COMPANIES, IMPAIRMENT OF INVESTMENT IN ASSOCIATE AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE | (141,784 | ) | (552,549 | ) | (9,383 | ) | ||||||
Equity income of joint venture | 445 | — | 9,503 | |||||||||
Equity (loss)/income of associated companies | (16,444 | ) | — | 2,020 | ||||||||
Impairment of investment in associate | — | — | (1,956 | ) | ||||||||
(LOSS)/INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLE | (157,783 | ) | (552,549 | ) | 184 | |||||||
Cumulative effect of change in accounting principle, net of tax | 2,058 | — | — | |||||||||
NET (LOSS)/INCOME | (155,725 | ) | (552,549 | ) | 184 | |||||||
BASIC (LOSS)/EARNINGS PER SHARE ($) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE | (0.39 | ) | (1.52 | ) | 0.00 | |||||||
FULLY DILUTED (LOSS)/EARNINGS PER SHARE ($) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE | (0.39 | ) | (1.52 | ) | 0.00 | |||||||
BASIC (LOSS)/EARNINGS PER SHARE ($) | (0.39 | ) | (1.52 | ) | 0.00 | |||||||
FULLY DILUTED (LOSS)/EARNINGS PER SHARE ($) | (0.39 | ) | (1.52 | ) | 0.00 | |||||||
WEIGHTED AVERAGE NUMBER OF SHARES USED IN THE COMPUTATION OF BASIC EARNINGS PER SHARE | 394,409,512 | 362,499,012 | 254,240,500 | |||||||||
WEIGHTED AVERAGE NUMBER OF SHARES USED IN THE COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE | 394,409,512 | 362,499,012 | 255,570,834 | |||||||||
DIVIDEND PER SHARE ($) | — | 0.05 | 0.26 |
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Table of Contents
Consolidated Statements of Comprehensive Income
For the years ended June 30
2006 | 2005 | 2004 | ||||||||||
As adjusted | As adjusted | |||||||||||
(note 3) | (note 3) | |||||||||||
$’000 | $’000 | $’000 | ||||||||||
(Loss)/income — before cumulative effect of change in accounting principle | (157,783 | ) | (552,549 | ) | 184 | |||||||
Cumulative effect of change in accounting principle, net of tax | 2,058 | — | — | |||||||||
Net (loss)/income | (155,725 | ) | (552,549 | ) | 184 | |||||||
Other comprehensive (loss)/income | ||||||||||||
Mark-to-market of listed and other investments — unrealized | 119,713 | (44,674 | ) | (52,338 | ) | |||||||
Mark-to-market of listed and other investments — realized | (38,253 | ) | 105,892 | (6,006 | ) | |||||||
Foreign currency translation adjustment | (191,651 | ) | (197,665 | ) | 388,397 | |||||||
Other comprehensive (loss)/income | (110,191 | ) | (136,447 | ) | 330,053 | |||||||
Comprehensive (loss)/income | (265,916 | ) | (688,996 | ) | 330,237 | |||||||
F-3
Table of Contents
2006 | 2005 | |||||||
As adjusted | ||||||||
(note 3) | ||||||||
$’000 | $’000 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | 89,189 | 266,746 | ||||||
Receivables | 100,175 | 94,730 | ||||||
Inventories | 91,998 | 86,829 | ||||||
Materials contained in heap leach pads | 515 | 553 | ||||||
Income and mining taxes | 4,359 | 3,980 | ||||||
Deferred income and mining taxes | 142,109 | 138,519 | ||||||
Total current assets | 428,345 | 591,357 | ||||||
Property, plant and equipment | 3,306,555 | 3,451,963 | ||||||
Other assets | 3,605 | 12,817 | ||||||
Goodwill | 28,256 | 30,367 | ||||||
Restricted cash | 35,599 | 7,798 | ||||||
Receivables | 4,047 | — | ||||||
Listed and other investments | 387,396 | 642,516 | ||||||
Investments in associates | 266,331 | — | ||||||
Investments in joint ventures | 2,065 | — | ||||||
TOTAL ASSETS | 4,462,199 | 4,736,818 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and other liabilities | 78,391 | 119,224 | ||||||
Short term portion of long term loans | 140,344 | 200,451 | ||||||
Payroll and leave liabilities | 87,909 | 62,814 | ||||||
Accrued liabilities | 36,182 | 45,056 | ||||||
Dividends payable | 976 | 1,211 | ||||||
Total current liabilities | 343,802 | 428,756 | ||||||
Long-term loans | 394,608 | 409,486 | ||||||
Deferred income and mining taxes | 521,000 | 541,188 | ||||||
Derivative financial liabilities | 150,038 | 76,720 | ||||||
Provision for environmental rehabilitation | 110,164 | 120,450 | ||||||
Provision for social plan | 2,259 | 2,109 | ||||||
Provision for post retirement benefits | 14,964 | 13,276 | ||||||
Commitments and contingencies (Note 31) | — | — | ||||||
SHAREHOLDERS’ EQUITY | ||||||||
Share capital - 1,200,000,000 (2005: 1,200,000,000) authorized ordinary shares of 50 South African cents each. Shares issued 397,616,950 (2005: 394,023,694) | 31,730 | 31,448 | ||||||
Additional paid-in capital | 3,429,775 | 3,383,610 | ||||||
Accumulated loss | (540,587 | ) | (384,862 | ) | ||||
Accumulated other comprehensive income | 4,446 | 114,637 | ||||||
Total shareholders’ equity | 2,925,364 | 3,144,833 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 4,462,199 | 4,736,818 | ||||||
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Consolidated Statements of Changes in Shareholders’ Equity
For the years ended June 30
(Accumulated | ||||||||||||||||||||||||||||
loss)/retained | Accumulated | |||||||||||||||||||||||||||
Number of | Number of | earnings | other | Total | ||||||||||||||||||||||||
ordinary shares | warrants | Additional | As adjusted | comprehensive | As adjusted | |||||||||||||||||||||||
issued | issued | Share capital | paid-in capital | (note 3) | income/(loss) | (note 3) | ||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | ||||||||||||||||||||||||
BALANCE — JUNE 30, 2003 | 185,536,615 | 2,368,030 | 15,712 | 952,967 | 236,961 | (78,969 | ) | 1,126,671 | ||||||||||||||||||||
Issue of shares | ||||||||||||||||||||||||||||
- - Acquisition of 11.5% interest in Avgold | 6,960,964 | — | 455 | 83,941 | — | — | 84,396 | |||||||||||||||||||||
- Acquisition of ARMgold | 63,666,672 | — | 4,308 | 678,089 | — | — | 682,397 | |||||||||||||||||||||
- Acquisition of 42.2% interest in Avgold | 28,630,526 | — | 2,048 | 411,927 | — | — | 413,975 | |||||||||||||||||||||
- Acquisition of Avgold minorities | 33,574,367 | — | 2,474 | 482,986 | — | — | 485,460 | |||||||||||||||||||||
Exercise of employee share options | 703,800 | — | 51 | 12,493 | — | — | 12,544 | |||||||||||||||||||||
Share issue expenses | — | — | — | (11,781 | ) | — | — | (11,781 | ) | |||||||||||||||||||
Conversion of warrants | 2,351,133 | (2,351,133 | ) | 156 | 13,222 | — | — | 13,378 | ||||||||||||||||||||
Warrants expired | — | (16,897 | ) | — | — | — | — | — | ||||||||||||||||||||
Consolidation of share trusts | — | — | — | (7,425 | ) | — | — | (7,425 | ) | |||||||||||||||||||
Net income | — | — | — | — | 184 | — | 184 | |||||||||||||||||||||
Dividends declared | — | — | — | — | (55,005 | ) | — | (55,005 | ) | |||||||||||||||||||
Mark-to-market of listed and other investments | — | — | — | — | — | (58,344 | ) | (58,344 | ) | |||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | — | 388,397 | 388,397 | |||||||||||||||||||||
BALANCE — JUNE 30, 2004 | 321,424,077 | — | 25,204 | 2,616,419 | 182,140 | 251,084 | 3,074,847 | |||||||||||||||||||||
Issue of shares | ||||||||||||||||||||||||||||
- Acquisition of 11.5% interest in Gold Fields | 72,173,265 | — | 6,210 | 760,980 | — | — | 767,190 | |||||||||||||||||||||
Exercise of employee share options | 426,352 | — | 34 | 18,844 | — | — | 18,878 | |||||||||||||||||||||
Share issue expenses | — | — | — | (12,957 | ) | — | — | (12,957 | ) | |||||||||||||||||||
Consolidation of share trusts | — | — | — | 324 | — | — | 324 | |||||||||||||||||||||
Net loss | — | — | — | — | (552,549 | ) | — | (552,549 | ) | |||||||||||||||||||
Dividends declared | — | — | — | — | (14,453 | ) | — | (14,453 | ) | |||||||||||||||||||
Mark-to-market of listed and other investments | — | — | — | — | — | 61,218 | 61,218 | |||||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | — | (197,665 | ) | (197,665 | ) | |||||||||||||||||||
BALANCE — JUNE 30, 2005 | 394,023,694 | — | 31,448 | 3,383,610 | (384,862 | ) | 114,637 | 3,144,833 | ||||||||||||||||||||
Issue of shares | ||||||||||||||||||||||||||||
Exercise of employee share options | 3,593,256 | — | 282 | 43,399 | — | — | 43,681 | |||||||||||||||||||||
Consolidation of share trusts | — | — | — | 2,766 | — | — | 2,766 | |||||||||||||||||||||
Net loss | — | — | — | — | (155,725 | ) | — | (155,725 | ) | |||||||||||||||||||
Mark-to-market of listed and other investments | — | — | — | — | — | 81,460 | 81,460 | |||||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | — | (191,651 | ) | (191,651 | ) | |||||||||||||||||||
BALANCE — JUNE 30, 2006 | 397,616,950 | — | 31,730 | 3,429,775 | (540,587 | ) | 4,446 | 2,925,364 | ||||||||||||||||||||
F-5
Table of Contents
2006 | 2005 | 2004 | ||||||||||
A s adjusted | As adjusted | |||||||||||
(note 3) | (note 3) | |||||||||||
$’000 | $’000 | $’000 | ||||||||||
CASH FLOW FROM OPERATIONS | ||||||||||||
Sources of cash | ||||||||||||
Cash received from customers | 1,263,333 | 1,265,200 | 1,240,339 | |||||||||
Interest and dividends received | 35,826 | 24,181 | 28,562 | |||||||||
Cash provided by operating activities | 1,299,159 | 1,289,381 | 1,268,901 | |||||||||
Uses of cash | ||||||||||||
Cash paid to suppliers and employees | 1,213,910 | 1,353,887 | 1,150,471 | |||||||||
Interest paid | 31,609 | 42,156 | 44,189 | |||||||||
Income and mining taxes paid | 1,829 | 8,952 | 83,881 | |||||||||
Cash used in operating activities | 1,247,348 | 1,404,995 | 1,278,541 | |||||||||
NET CASH GENERATED/(UTILIZED) BY OPERATIONS | 51,811 | (115,614 | ) | (9,640 | ) | |||||||
CASH FLOW FROM INVESTING ACTIVITIES | ||||||||||||
Amounts invested in environmental trusts | (4,318 | ) | (251 | ) | (5,529 | ) | ||||||
Restricted cash | (31,913 | ) | 1,585 | (8,973 | ) | |||||||
Cash held by subsidiaries on acquisition | — | 723 | 100,872 | |||||||||
Cash held by subsidiaries at disposal | — | (1,830 | ) | (69 | ) | |||||||
Cash paid for Abelle Mines | — | — | (85,168 | ) | ||||||||
Other direct costs of acquisition of ARMgold | — | — | (195 | ) | ||||||||
Other direct costs of acquisition of Avgold | — | — | (256 | ) | ||||||||
Cash received for Bissett | — | — | 2,598 | |||||||||
Other direct costs of investment in Gold Fields | — | (13,802 | ) | — | ||||||||
Cash paid for Villiage | (64 | ) | — | — | ||||||||
Cash paid for Western Areas | (321,477 | ) | — | — | ||||||||
Cash received for Buffalo Creek | 3,058 | — | — | |||||||||
Cash paid for Orpheo | (733 | ) | — | — | ||||||||
Proceeds on disposal of listed investments | 364,974 | 380,363 | 146,350 | |||||||||
Decrease/(increase) in other non-current investments | 2,824 | (1,204 | ) | (7,677 | ) | |||||||
Proceeds on disposal of mining assets | 12,509 | 20,892 | 28,981 | |||||||||
Additions to property, plant and equipment | (271,755 | ) | (228,524 | ) | (193,457 | ) | ||||||
NET CASH (UTILIZED)/GENERATED BY INVESTING ACTIVITIES | (246,895 | ) | 157,952 | (22,523 | ) | |||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Long-term borrowings raised | 160,149 | 231,554 | 271,012 | |||||||||
Long-term borrowings paid | (204,414 | ) | (199,655 | ) | (228,245 | ) | ||||||
Ordinary shares issued — net of expenses | 28,684 | (9,695 | ) | 7,729 | ||||||||
Dividends paid | (1,034 | ) | (14,495 | ) | (54,943 | ) | ||||||
NET CASH (UTILIZED)/GENERATED BY FINANCING ACTIVITIES | (16,615 | ) | 7,709 | (4,447 | ) | |||||||
EFFECTS OF EXCHANGE RATES ON CASH AND CASH | ||||||||||||
EQUIVALENTS | 34,142 | (323 | ) | 64,592 | ||||||||
NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS | (177,557 | ) | 49,724 | 27,982 | ||||||||
CASH AND CASH EQUIVALENTS — JULY 1 | 266,746 | 217,022 | 189,040 | |||||||||
CASH AND CASH EQUIVALENTS — JUNE 30 | 89,189 | 266,746 | 217,022 | |||||||||
F-6
Table of Contents
(a) | USE OF ESTIMATES:The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the Company’s consolidated financial statements requires the Company’s management to make estimates and assumptions about current and future events 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. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgement based on various assumptions and other factors such as historical experience, current and expected economic conditions, and in some cases actuarial techniques. Actual results ultimately may differ from those estimates. | ||
The more significant areas requiring the use of management estimates and assumptions relate to mineral reserves that are the basis for future cash flow estimates and units-of-production depreciation, depletion and amortization calculations; environmental, reclamation and closure obligations; estimates of recoverable gold and other materials in heap leach pads; asset impairments (including impairments of goodwill, long-lived assets, and investments); write-downs of inventory to net realizable value; post employment, post retirement and other employee benefit liabilities (including valuation of share options); valuation allowances for deferred tax assets; reserves for contingencies and litigation; and the fair value and accounting treatment of financial instruments. | |||
The following are the accounting policies used by the Company which, except as described in note 3, have been consistently applied: | |||
(b) | CONSOLIDATION: | ||
(i) | Consolidated entities: The Company’s consolidated financial statements include the financial statements of the Company, its subsidiaries, and its investments in joint ventures and associates. A company in which the Group has, directly or indirectly, through subsidiary undertakings, a controlling interest is classified as a subsidiary undertaking. The Company also reviews its relationships with other entities to assess if the Company is the primary beneficiary of a variable interest entity. If the determination is made that the Company is the primary beneficiary, then that entity is consolidated. See note 5. The results of any subsidiary acquired or disposed of during the year are consolidated from the effective date of acquisition and up to the effective date of disposal. | ||
Any excess between the purchase price and the fair value of the identifiable net assets of subsidiaries, joint ventures and associates at the date of acquisition is capitalized as goodwill. | |||
Intercompany profits, transactions and balances have been eliminated. | |||
(ii) | Investments in associates: An associate is an entity, other than a subsidiary, in which the Company has a material long-term interest and in respect of which the Company exercises significant influence over operational and financial policies, normally owning between 20% and 50% of the voting equity. | ||
Investments in associates are accounted for by using the equity method of accounting based on the most recent audited financial statements of those entities. Equity accounting involves recognizing in the income statement the Group’s share of the associates’ profit or loss for the period. The Group’s interest in the associate is carried in the balance sheet at an amount that reflects the cost of the investment, the Group’s share of post acquisition earnings and other movement in reserves. 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 permanent impairment is identified. |
F-7
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(iii) | Investment in joint ventures: A joint venture is an entity in which the Company holds a long-term interest and which is jointly controlled by the Company and one or more venturers under a contractual arrangement. The Company’s interest in jointly controlled entities is accounted for under the equity method as described in note 2(b)(ii) above. | |
(c) | FOREIGN CURRENCIES: | |
(i) | Foreign entities: For self-sustaining foreign entities, assets and liabilities are translated using the closing rates at year-end, and income statements are translated at average rates. Differences arising on translation are taken directly to shareholders’ equity, until the foreign entity is sold or disposed of when the translation differences are recognized in the income statement as part of the gain or loss on sale. | |
Fair value adjustments arising on the acquisition of the foreign entities are treated as assets and liabilities of the foreign entity are translated at the closing rate. | ||
(ii) | Foreign currency transactions: Transactions in foreign currencies are converted at the rates of exchange ruling at the date of these transactions. Monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange ruling at balance sheet date. Gains, losses and costs associated with foreign currency transactions are recognized in the income statement in the period to which they relate. These transactions are included in the determination of other (expenses)/income. | |
(iii) | Functional currency: The functional currency of the majority of the Company’s operations is the South African Rand. The translation differences arising as a result of converting to US dollars using the current exchange rate method are included as a separate component of shareholders’ equity. | |
References to “A$” refers to Australian currency, “R” to South African currency, and “$” or “US$” to United States currency. | ||
(d) | FINANCIAL INSTRUMENTSare initially measured at cost. Subsequent to initial recognition these instruments are measured as set out below in terms of the applicable accounting policy. Financial instruments carried on the consolidated balance sheets include cash and cash equivalents, money market instruments, investments, receivables, accounts payable, long term loans, interest free loans, forward sales contracts, option contracts, interest rate swaps and gold leases. | |
(e) | CASH AND CASH EQUIVALENTSare defined as cash on hand, deposits held at call with banks and short term highly liquid investments with insignificant interest rate risk and original maturities of three months or less. Cash and cash equivalents are measured at fair value. | |
(f) | NON-CURRENT INVESTMENTS:Management determines the appropriate classification of its investments in equity securities at the time of purchase and re-evaluates such determinations at each reporting date. Non-current investments comprise of the following: | |
(i) | Listed investments: Investments in listed companies, other than investments in subsidiaries, joint ventures and associates, are carried at fair value. These investments are considered to be available-for-sale investments. Changes in the carrying amount of available-for-sale investments, are excluded from earnings and included as a separate component of shareholders’ equity. On disposal of available-for-sale investments, amounts previously included as a separate component of shareholders’ equity, are transferred to income/(loss) and included in the determination of the gain/(loss) on disposal of available-for-sale securities. The amount transferred out of equity is determined by reference to the amounts previously included as a seperate component of shareholders’ equity relating to the specific investment. Unrealized losses are recognized in the determination of net income/(loss) when the market value decreases below the carrying value of the investment and this decrease is determined by management to be other than temporary in nature. |
F-8
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(ii) | Unlisted investments are reflected at cost. If the directors are of the opinion that there has been an impairment in the value of these investments they are written down, with the write down recognized as an expense in the period in which the impairment is determined to have taken place. | |
(g) | INVENTORIESare valued at the lower of cost and net realizable value. The Company’s inventories comprise of consumable stores, gold-in-process and ore stockpiles and are accounted for as follows: Consumable storesare valued at average cost, after appropriate provision for redundant and slow moving items. | |
Gold-in-processinventories 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 of 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 applicable depreciation relating to the process facility, incurred to that point in the process. Where mechanized mining is used in underground operations, gold-in-process is accounted for at the earliest stage of production when reliable estimates of quantities and costs are capable of being made, normally from when ore is broken underground. | ||
Stockpilesrepresents coarse ore that has been extracted from the mine and is available for further processing. Stockpiles are measured by estimating the number of tons (via truck counts and/or in-put surveys of the ore before stockpiling) added and removed from the stockpile, the number of contained ounces (based on assay data) and the recovery percentage (based on the process for which the ore is destined). Stockpile tonnages are verified by periodic surveys. Stockpiles are valued based on mining costs incurred up to the point of stockpiling the ore, including applicable depreciation and amortization relating to mining operations. Value is added to a stockpile based on the current mining cost per ton plus applicable depreciation and amortization and removed at the average cost per recoverable ounce of gold in the stockpile. | ||
(h) | MATERIALS CONTAINED IN HEAP LEACH PADS:The recovery of gold from certain oxide ores is best achieved through the heap leaching process. Under this method, ore is placed on leach pads where it is permeated with a chemical solution, which dissolves the gold contained in the ore. The resulting “pregnant” solution is further processed in a leach plant where the gold in solution is recovered. For accounting purposes, value is added to leach pads based on current mining costs, including applicable depreciation and amortization relating to mining operations. Value is removed from the leach pad as ounces are recovered in circuit at the leach plant based on the average cost per recoverable ounce of gold on the leach pad. | |
The engineering estimates of recoverable gold on the heap leach pads are calculated from quantities of ore placed on the pads (measured tons added to the leach pads), the grade of ore placed on the leach pads (based on assay data) and a recovery percentage (based on the leach process and the ore type). In general, the leach pad production cycles project recoveries of approximately 50% to 70% of the placed recoverable ounces during the leaching process, declining at the end of the leaching process. | ||
Although the quantities of recoverable gold placed on the leach pads are reconciled by comparing the grades of ore placed on the pads to the quantities of gold actually recovered (metallurgical balancing), the nature of the leaching process inherently limits the ability to precisely monitor inventory levels. As a result, the metallurgical balancing process is constantly monitored and engineering estimates are refined based on actual results over time. Variations between actual and estimated quantities resulting from changes in assumptions and estimates that do not result in write-downs to net realizable value are accounted for on a prospective basis. The ultimate recovery of gold from the pad will not be known until the leaching process is terminated. |
F-9
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
The current portion of leach pad inventories is determined based on engineering estimates of the quantities of gold at the balance sheet date that are expected to be recovered during the next twelve months. | ||
(i) | RECEIVABLES:Accounts receivable are stated at the gross invoice value adjusted for payments received and an allowance for doubtful debt, where appropriate, to reflect the fair value of the anticipated realizable value. Bad debts are written off during the period in which they are identified. | |
(j) | ACCOUNTS PAYABLEare stated at cost adjusted for payments made to reflect the value of the anticipated economic outflow of resources. | |
(k) | HEDGING:The Company accounts for its hedging activities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 133 (“SFAS No. 133”), Accounting for Derivative instruments and Hedging Activities, as amended by Statements of Financial Accounting Standards Nos. 137, 138 and 149. | |
Under SFAS No. 133, all derivatives are recognized on the balance sheet at their fair value, unless they meet the criteria for the normal purchases normal sale exemption. On the date a derivative contract is entered into, the Company designates the derivative as (1) a hedge of the fair value of a recognized asset or liability (fair value hedge), (2) a hedge of a forecasted transaction (cash flow hedge), or (3) a hedge of a net investment in a foreign entity. Certain derivative transactions, while providing effective economic hedges under the Company’s risk management policies, do not qualify for hedge accounting. The Company does not currently hold or issue derivative financial instruments for trading or speculative purposes. | ||
Changes in the fair value of a derivative that is highly effective, and that is designated and qualifies as a fair value hedge, are recorded in the income statement, along with the change in fair value of the hedged asset or liability that is attributable to the hedged risk. | ||
Changes in the fair value of a derivative that is highly effective, and that is designated and qualifies as a cash flow hedge, are recognized directly as a separate component of shareholders’ equity. Amounts deferred as a component of shareholders’ equity are included in the income statement in the same periods during which the hedged firm commitment or forecasted transaction affects net profit or loss. | ||
Hedges of net investment in foreign entities are accounted for similarly to cash flow hedges. | ||
Recognition of derivatives which meet the criteria for the normal purchases, normal sales exemption under SFAS No. 133 are deferred until settlement. Under these contracts the group must physically deliver a specified quantity of gold at a future date at a specified price to the contracted counter party. | ||
Gains and losses arising from a change in the fair value of a contract before the contract’s designated delivery date are therefore not recorded, but the contract price recognized in Product sales following settlement of the contract by physical delivery of production to the counterparty at contract maturity. | ||
Changes in the fair value of derivatives which are not designated as hedges and do not qualify for hedge accounting and the ineffective portion of the derivatives are recognized in the income statement. |
F-10
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
The Group formally documents all relationships between hedging instruments and hedged items, as well as its risk management objective and strategy for undertaking various hedge transactions. This process includes linking derivatives designed as hedges to specific assets and liabilities or to specific firm commitments or forecasted transactions. The Group also formally assesses, both at the hedge inception date and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items. | ||
(l) | EXPLORATION COSTSare expensed as incurred prior to the completion of a final feasibility study to establish proved and probable reserves. | |
(m) | PROPERTY, PLANT AND EQUIPMENT | |
(i) | Mining assets including mine development costs and mine plant facilities are recorded at cost. | |
At the Company’s surface mines, when it has been determined that a mineral property can be economically developed as a result of establishing proven and probable reserves, costs incurred to develop the property are capitalized as incurred until saleable minerals are extracted from the mine and are amortized using the units-of-production method over the estimated life of the ore body based on estimated recoverable ounces or pounds mined from proven and probable reserves. These costs include costs to further delineate the ore body and remove overburden to initially expose the ore body. Subsequent mine development costs at the Company’s surface mines are treated as variable production costs. See note 3. | ||
At the Company’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 as a result of establishing proven and probable reserves associated with specific ore blocks or areas of operations. 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. The Company previously capitalized underground development costs only until the reef horizons were intersected. See note 3. | ||
Interest on borrowings incurred in respect of assets requiring a substantial period of time to prepare for their intended use are capitalized to the date on which the assets are substantially completed and ready for their intended use. | ||
(ii) | Mining operations placed on care and maintenance: The net assets of operations placed on care and maintenance are written down to net realizable value. Expenditure on the care and maintenance of these operations is charged against income, as incurred. | |
(iii) | Non mining fixed assets: Land is shown at cost and not depreciated. Other non-mining fixed assets are shown at cost less accumulated depreciation. | |
(iv) | Mineral and surface use rightsrepresent mineral and surface use rights for parcels of land both owned and not owned by the Company. Mineral and surface rights include acquired mineral use rights in production, development and exploration stage properties. The amount capitalized related to a mineral and surface rights represents its fair value at the time it was acquired, either as an individual asset purchase or as part of a business combination and are recorded at cost of acquisition. |
F-11
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
Production stage mineral interests represent interests in operating properties that contain proven and probable reserves. Development stage mineral interests represent interests in properties under development that contain proven and probable reserves. Exploration stage 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 proven and probable reserves; and inferred material in close proximity to proven 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 other production, development or exploration stage property as described above. | ||
The Company’s mineral use rights are enforceable regardless of whether proven 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 proven and probable reserves. The Company has the ability and intent to renew mineral use rights where the existing term is not sufficient to recover all identified and valued proven and probable reserves and/or undeveloped mineral interests. | ||
(v) | Depreciation and amortization of mineral property interests, minedevelopment costs and mine plant facilitiesare computed principally by the units of production method based on estimated proven and probable reserves. Costs incurred and capitalized to enable access to specific ore blocks or areas of the mine, and which only provide an economic benefit over the period of mining that ore block or area, are attributed to earnings using the units-of-production method where the denominator is estimated recoverable ounces of gold contained in proven and probable reserves within that ore block or area. If capitalized underground development costs provide an economic benefit over the entire mine life, the costs are attributed to earnings using the units-of-production method, where the denominator is the estimated recoverable ounces of gold contained in total accessible proven and probable reserves. Other non-mining fixed assets are depreciated by straight line over estimated useful lives of two to five years. | |
(vi) | Amortization of mineral and surface use rights: Mineral rights associated with production stage 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 stage mineral interests are not amortized until such time as the underlying property is converted to the production stage. | |
(vii) | Impairment: The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on 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 and capital, all based on life-of-mine plans. | |
The term “recoverable minerals” refers to the estimated amount of gold that will be obtained from proven and probable reserves 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 |
F-12
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
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. | ||
(n) | GOODWILL:Goodwill represents the excess of the cost of an acquisition over the fair value of the Company’s share of the net assets of the acquired subsidiary, associate, joint venture or business at the date of acquisition. Goodwill on acquisition of subsidiaries and businesses is presented seperately within non-current assets. Goodwill on acquisition of associates and joint ventures are included in the carrying value of investments in associates and joint ventures. | |
Goodwill is not subject to amortization. Instead, the Company evaluates, 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. To accomplish this, the Company compares the fair value of its reporting units to their carrying amounts. If the carrying value of a reporting unit were to exceed its fair value, the Company would perform the second step of the impairment test. In the second step, the Company would compare the implied fair value of the reporting unit’s goodwill to its carrying amount and any excess of the carrying value over the implied fair value would be charged to operations. | ||
The gain or loss on disposal of an entity includes the carrying amount of goodwill relating to the entity sold. | ||
(o) | ENVIRONMENTAL OBLIGATIONS:SFAS No. 143, Accounting for Asset Retirement Obligations (“SFAS No. 143”) applies to legal obligations associated with the retirement of a long-lived asset that result from the acquisition, construction, development and/or the normal operation of a long-lived asset. | |
SFAS No. 143 applies to legal obligations associated with the retirement of a long-lived asset that result from the acquisition, construction, development and/or the normal operation of a long-lived asset. Under SFAS No. 143 the Company records the fair value of a liability for an asset retirement obligation in the period in which it is incurred. When the liability is initially recorded, the Company capitalizes the cost by increasing the carrying value of the related long-lived asset. Changes resulting from revisions in the amount of estimated cash flows are recognized as an increase or decrease in the carrying amount of the rehabilitation liability and the associated capitalized retirement cost. Decreases in the rehabilitation liability in excess of capitalized retirement costs (net of accumulated depreciation) are recognized in the income statement asDecrease in rehabilitation costs. Over time, the liability is increased to reflect an interest element (accretion) considered in its initial measurement at fair value, and the capitalized cost is amortized over the useful life of the related asset. Upon settlement of the liab will record a gain or loss if the actual cost incurred is different than the liability recorded. | ||
Environmental liabilities, other than rehabilitation costs which relate to liabilities from specific events, are expensed as incurred. | ||
(p) | ENVIRONMENTAL TRUST FUNDS:Contributions are made to the Company’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 Company’s South African mines. Contributions are determined on the basis of the estimated environmental obligation over the life of the mine. Income earned on monies paid to environmental trust funds is accounted for as investment income. The funds contributed to the trusts plus growth in the trust funds are included under investments on the balance sheet. | |
(q) | PROVISIONSare recognized when information is available prior to the issuance of financial statements which indicates that it is probable that an asset has been impaired or a liability has been incurred as at the date of the financial statements and can be reasonably estimated. |
F-13
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(r) | DEFERRED TAXATION:The Company follows the comprehensive liability method of accounting for deferred tax using the balance sheet approach. Under this method deferred income and mining taxes are recognized for the tax consequences of temporary differences by applying expected future mining tax rates to the differences between the tax base of certain assets or liabilities and their balance sheet carrying amount. The effect on deferred tax of any changes in tax rates is recognized in the income statement during the period in which the change in tax rate occurs. | |
The principal temporary differences arise from amortization and depreciation on property, plant and equipment, provisions, deferred financial liability and unredeemed capital expenditure. A valuation allowance is recorded to reduce the carrying value of deferred tax assets if it is more likely than not that such assets will not be realized. | ||
(s) | PENSION PLANS AND OTHER EMPLOYEE BENEFITS: | |
(i) | Pension plans are funded through annual contributions. The Company’s contributions to the defined contribution pension plans are charged to the income statement in the year to which they relate. The Company’s liability is limited to its annually determined contributions. | |
(ii) | Medical plans: The Company 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 market yields consistent with the term and risks of the obligation. Actuarial gains and losses as a result of these valuations are recognised in the income statement at re-valuation date. A liability for retirees and their dependents is accrued in full based on actuarial valuations every year. | |
(iii) | Share-based compensation: Effective July 1, 2005, the Company adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based Payments (“SFAS No. 123(R)”). Prior to that date, the Company applied SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”) in accounting for options granted after July 1, 2001 and Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”) together with its related interpretations in accounting for options granted prior to July 1, 2001. | |
The Company adopted SFAS No. 123(R) using the modified retrospective transition method. Under this method, share-based payment expense for the year ended June 30, 2006 includes: (a) compensation cost for all share-based payments granted prior to, but not yet vested as of July 1, 2005, based on the grant-date fair value estimated in accordance with the original provisions of SFAS No. 123, and (b) compensation cost for all share-based payments granted subsequent to July 1, 2005, based on the grant-date fair value estimated in accordance with the provisions of SFAS No. 123(R). Results for all prior periods presented have been adjusted based on the amounts previously recognized under SFAS No. 123 for purposes of pro forma disclosures. See note 3(c). In both cases, the Company has recognised the share-based payment expense associated with options with graded-vesting features over the requisite service period for each separately vesting tranche of the award as though the award were, in substance, multiple awards. | ||
(t) | REVENUE RECOGNITION: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, including title being passed, 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 met when the gold leaves the Company’s smelt-houses. | |
Revenue further excludes value-added tax but includes the net profit and losses arising from hedging transactions from matched gold sales contracts, which are designated as normal sales contracts. Revenues from silver and other by-products sales are credited to production costs as a by-product credit. |
F-14
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(u) | 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. | |
(v) | DIVIDEND INCOMEis recognized when the shareholders’ right to receive payment is established, recognized at the last date of registration. | |
(w) | DIVIDENDS DECLARED:Dividends proposed and the related transactions thereon are recognized when declared by the the Board of directors. Dividends paid therefore relate to those declared in the current fiscal year. Dividends are payable in South African Rands. | |
Dividends declared which are payable to foreign shareholders are subject to approval by the South African Reserve Bank in terms of South African foreign exchange control regulations. In practice, dividends are freely transferable to foreign shareholders. | ||
(x) | (LOSS)/EARNINGS PER SHARE:(Loss)/earnings per share is based on net (loss)/income divided by the weighted average number of ordinary shares in issue during the year. Diluted (loss)/earnings per share is presented when the inclusion of potential ordinary shares has a dilutive effect on earnings per share. | |
(y) | RECENT ACCOUNTING PRONOUNCEMENTS: | |
In September 2006, The Financial Accounting Standards Board (“FASB”) issued SFAS No. 157 “Fair Value Measurements” (“SFAS No. 157”). This Statement defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. This Statement does not require any new fair value measurements, it emphasizes that fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. SFAS No. 157 expands disclosures about the use of fair value to measure assets and liabilities in interim and annual periods subsequent to initial recognition. This statement applies for derivatives and other financial instruments measured at fair value under SFAS No. 133, “Derivative Financial Instruments” at initial recognition and in all subsequent periods. The group will be required to adopt SFAS No. 157 on July 1, 2008, and is currently evaluating the impact of SFAS No. 157 on its financial position and results of operations. | ||
In June 2006, the FASB issued FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes, (“FIN No. 48”) an interpretation of FASB Statement No. 109, Accounting for Income Taxes. FIN No. 48 prescribes a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. The Interpretation requires that the Company recognize in the financial statements, the impact of a tax position, if that position is more likely than not of being sustained on audit, based on the technical merits of the position. FIN No. 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. The provisions of FIN No. 48 are effective for the years beginning after December 31, 2006 (July 1, 2007), with the cumulative effect of the change in accounting principle recorded as an adjustment to the opening balance of retained earnings. The Company is currently evaluating the impact of adopting FIN No. 48 on its financial statements. |
F-15
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(a) | Underground development costs |
F-16
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(b) | Stripping costs incurred during the production phase of a mine | |
On July 1, 2005, the Company adopted Emerging Issues Task Force Issue No. 04-06, Accounting for Stripping Costs Incurred during Production in the Mining Industry (“EITF 04-06”) . EITF 04-06 addresses the accounting for stripping costs incurred during the production phase of a mine and refers to these costs as variable production costs that should be included as a component of inventory to be recognized inProduction costs exclusive of depreciation and amortisationin the same period as the revenue from the sale of inventory. As a result, capitalization of post-production stripping costs is appropriate only to the extent product inventory exists at the end of a reporting period. | ||
Prior to July 1, 2005, at the Company’s Kalgold operations, deferred stripping costs were charged toProduction costs exclusive of depreciation and amortizationas gold was produced and sold using the units of production method based on estimated recoverable quantities of proven and probable gold or copper reserves, using a stripping ratio calculated as the ratio of total tons to be moved to total proven and probable ore reserves, which resulted in the recognition of the costs of waste removal activities over the life of the mine as gold was produced. The application of the deferred stripping accounting method previously generally resulted in the recognition of an asset (deferred stripping costs). | ||
(c) | Share-based payments | |
On July 1, 2005, the Company adopted the fair value recognition provisions of SFAS No. 123(R), Share-Based Payments (“SFAS No. 123(R)”). Prior to that date, the Company applied SFAS No. 123, “Accounting for Stock-Based Compensation” (“SFAS No. 123”) in accounting for options granted after July 1, 2001 and Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”) together with its related interpretations in accounting for options granted prior to July 1, 2001. | ||
(d) | Effect of accounting changes | |
In connection with the changes relating to underground development costs and stripping costs incurred during the production phase of a mine, the Company early adopted SFAS No. 154, Accounting Changes and Error Corrections (“SFAS No. 154”), which established new standards on accounting for changes in accounting principles. Voluntary changes in accounting principles were previously required to be recognized by including in net (loss) income of the period of the change the cumulative effect of changing to the new accounting principle. SFAS No. 154 requires retrospective application to prior periods’ financial statements of changes in accounting principle, unless it is impracticable to do so. The Company has therefore adjusted its financial statements for the years ended June 30, 2005 and 2004 as if the revised principles had always been used. | ||
In connection with the change relating to share-based payments, the Company followed the modified retrospective approach permitted by SFAS No. 123(R). Under this method, the Company has adjusted its financial statements for the years ended June 30, 2005 and 2004 based on the amounts previously recognized under SFAS No. 123 for purposes of pro forma disclosures, without adjustment. Prior to the adoption of SFAS No. 123(R) however, the Company recognized actual forfeitures when they occurred (as opposed to estimating forfeitures at the grant date and subsequently adjusting their estimated forfeitures to actuals). In accordance with SFAS No. 123(R)’s specific transition provisions, the Company recorded a cumulative effect adjustment on July 1, 2005 related to outstanding awards that are not expected to vest based on an estimate of forfeitures as of that date. |
F-17
Table of Contents
Year ended June 30, | ||||||||||||
2005 | 2004 | |||||||||||
$’000 | $’000 | |||||||||||
Net income | 63,918 | 31,585 | ||||||||||
Effect on per share amounts: | ||||||||||||
Increase in basic (loss)/earnings before cumulative effect of changes in accounting principal — ($) | 17.63 | 12.42 | ||||||||||
Increase in basic (loss)/earnings per share — ($) | 17.63 | 12.42 | ||||||||||
Increase in fully diluted (loss)/earnings before cumulative effect of change in accounting principal — ($) | 17.63 | 12.36 | ||||||||||
Increase in fully diluted (loss)/earnings per share — ($) | 17.63 | 12.36 |
June 30, | ||||||||
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Increase in retained earnings as at July 1, 2003 | — | 42,525 |
F-18
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
Year ended June 30, | ||||||||
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Decrease in production costs as a result of capitalizing underground development costs after the reef horizon has been intersected (exclusive of depreciation and amortization) | 96,223 | 81,241 | ||||||
Increase in depreciation and amortization as a result of amortization of capitalized underground development costs after the reef horizon has been intersected | (34,498 | ) | (35,786 | ) | ||||
Decrease in production costs (inclusive of depreciation and amortization) | 61,725 | 45,455 | ||||||
Increase in equity income of joint venture | — | 1,585 | ||||||
Increase in deferred income tax expense | (11,882 | ) | (9,025 | ) | ||||
Effect on (loss)/income before cumulative effect of change in accounting principle | 49,843 | 38,015 | ||||||
Effect on net (loss)/income | 49,843 | 38,015 | ||||||
Effect on per share amounts: | ||||||||
Increase in basic (loss)/earnings before cumulative effect of change in accounting principle — ($) | 13.75 | 14.95 | ||||||
Increase in basic (loss)/earnings per share — ($) | 13.75 | 14.95 | ||||||
Increase in fully diluted (loss)/earnings before cumulative effect of change in accounting principle — ($) | 13.75 | 14.87 | ||||||
Increase in fully diluted (loss)/earnings per share — ($) | 13.75 | 14.87 | ||||||
June 30, | ||||||||
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Increase in inventories | 708 | — | ||||||
Increase in property, plant and equipment, net | 180,944 | 133,197 | ||||||
Increase in deferred income taxes | 30,890 | 21,275 | ||||||
Increase in retained earnings as at July 1, 2003 | 45,375 | |||||||
Year ended June 30, | ||||||||
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Elimination of deferred stripping costs | 15,362 | (4,119 | ) | |||||
Decrease/(increase) in production costs | 15,362 | (4,119 | ) | |||||
Effect on (loss)/income before cumulative effect of change in accounting principle | 15,362 | (4,119 | ) | |||||
Effect on net (loss)/income | 15,362 | (4,119 | ) | |||||
F-19
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
Year ended June 30, | ||||||||
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Effect on per share amounts: | ||||||||
Increase/(decrease) in basic (loss)/earnings before cumulative effect of change in accounting principle — ($) | 4.24 | (1.62 | ) | |||||
Increase/(decrease) in basic (loss)/earnings per share — ($) | 4.24 | (1.62 | ) | |||||
Increase/(decrease) in fully diluted (loss)/earnings before cumulative effect of change in accounting principle — ($) | 4.24 | (1.62 | ) | |||||
Increase/(decrease) in fully diluted (loss)/earnings per share — ($) | 4.24 | (1.62 | ) | |||||
June 30, | ||||||||
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Decrease in other assets | (1,511 | ) | (16,157 | ) | ||||
Decrease in retained earnings as at July 1, 2003 | (9,621 | ) | ||||||
Year ended June 30, | ||||||||
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Increase in share-based compensation costs | (1,287 | ) | (2,311 | ) | ||||
Effect on (loss)/income before cumulative effect of change in accounting principle | (1,287 | ) | (2,311 | ) | ||||
Effect on net (loss)/income | (1,287 | ) | (2,311 | ) | ||||
Effect on per share amounts: | ||||||||
Decrease in basic (loss)/earnings before cumulative effect of change in accounting principle — ($) | (0.36 | ) | (0.91 | ) | ||||
Decrease in basic (loss)/earnings per share — ($) | (0.36 | ) | (0.91 | ) | ||||
Decrease in fully diluted (loss)/earnings before cumulative effect of change in accounting principle — ($) | (0.36 | ) | (0.91 | ) | ||||
Decrease in fully diluted (loss)/earnings per share — ($) | (0.36 | ) | (0.91 | ) | ||||
June 30, | ||||||||
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Increase in retained earnings as at July 1, 2003 | 6,771 | |||||||
The Company’s aggregate interest in the outstanding share capital of Highland Gold, a Jersey based company holding various Russian gold interests, amounted to 31.7% at July 1, 2003. This investment was accounted for under the equity method since Harmony exercised significant influence over its financial and operating policies. On October 14, 2003, Harmony disposed of its investment in Highland Gold for $119.7 million, resulting in a profit on sale of associate of $77.6 million. See note 11.
F-20
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2004 | ||||
$’000 | ||||
Total purchase price | 85,168 | |||
Plus: Fair value of liabilities assumed by Harmony Deferred tax | 24,034 | |||
Less: Fair value of assets acquired by Harmony Property, plant and equipment | (80,115 | ) | ||
Minority interest | (29,087 | ) | ||
Residual purchase price allocated to goodwill | — | |||
(d) | Acquisition and disposal of African Rainbow Minerals Limited (“ARM”) (formerly Anglovaal Mining Limited) (“Avmin”) |
F-21
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(e) | Acquisition of Avgold Limited (“Avgold”) |
F-22
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2004 | ||||
$’000 | ||||
Shares issued | 977,515 | |||
Direct costs of acquisition | 257 | |||
Total purchase price | 977,772 | |||
Plus: Fair value of liabilities assumed by Harmony | ||||
Accounts payable and accrued liabilities | 13,536 | |||
Income and mining taxes | 7,003 | |||
Deferred financial liability | 35,777 | |||
Provision for environmental rehabilitation | 1,299 | |||
Minority interest | 2,621 | |||
Less: Fair value of assets acquired by Harmony | ||||
Cash and cash equivalents at acquisition | (183 | ) | ||
Inventories | (6,036 | ) | ||
Accounts receivable | (5,510 | ) | ||
Investments | (5,793 | ) | ||
Property, plant and equipment | (1,020,486 | ) | ||
Residual purchase price allocated to goodwill | — | |||
F-23
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(f) | Acquisition of African Rainbow Minerals Gold Limited (“ARMgold”) |
2004 | ||||
$’000 | ||||
Shares issued | 696,775 | |||
Direct costs of acquisition | 195 | |||
Total purchase price | 696,970 | |||
Plus: Fair value of liabilities assumed by Harmony | ||||
Accounts payable and accrued liabilities | 57,837 | |||
Income and mining taxes | 50,517 | |||
Long-term loans | 66,092 | |||
Deferred tax | 206,951 | |||
Provision for environmental rehabilitation | 30,236 | |||
Provision for post retirement benefits | 154 | |||
Less: Fair value of assets acquired by Harmony | ||||
Cash and cash equivalents at acquisition | (100,689 | ) | ||
Inventories | (4,106 | ) | ||
Accounts receivable | (31,266 | ) | ||
Investments | (171,588 | ) | ||
Property, plant and equipment | (754,795 | ) | ||
Residual purchase price allocated to goodwill | 46,313 | |||
(g) | Disposal of Harmony Gold (Canada) Incorporated (“Bissett”) |
F-24
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(h) | Disposal of interest in Bendigo Mining NL (“Bendigo”) |
(i) | Acquisition and disposal of Gold Fields Limited (“Gold Fields”) |
(j) | Acquisition of Orpheo by Harmony (Proprietary) Limited (“Orpheo”) |
(k) | Acquisition of Western Areas Limited (“Western Areas”) |
F-25
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(l) | Disposal of Buffalo Creek Mines (Proprietary) Limited (“Buffalo Creek”) |
(m) | Acquisition of Village Main Reef Gold Mining Company (1934) Limited (“Village”) |
(n) | Pro-forma information relating to Avgold, ARMgold and Abelle |
2004 | ||||
As adjusted | ||||
(note 3) | ||||
$’000 | ||||
Unaudited | ||||
Revenues | 1,479,265 | |||
(Loss)/income before cumulative effect of change in accounting principles | (14,866 | ) | ||
Net (loss)/income | (14,866 | ) | ||
Basic (loss)/earnings per share before cumulative effect of change in accounting principles—$ | (0.06 | ) | ||
Fully diluted (loss)/earnings per share before cumulative effect of change in accounting principles—$ | (0.06 | ) | ||
Basic (loss)/earnings per share—$ | (0.06 | ) | ||
Fully diluted (loss)/earnings per share—$ | (0.06 | ) | ||
Average shares used in the computation of basic (loss)/earnings | 254,240,500 | |||
Average shares used in the computation of fully diluted (loss)/earnings | 254,240,500 |
F-26
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
F-27
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2006 | 2005 | 2004 | ||||||||||
As adjusted | As adjusted | |||||||||||
(note 3) | (note 3) | |||||||||||
$’000 | $’000 | $’000 | ||||||||||
Production costs include mine production, transport and refinery costs, general and administrative costs, movement in inventories and ore stockpiles as well as transfers to and from deferred stripping. Ongoing employee termination cost is included, however employee termination costs associated with major restructuring and shaft closures are excluded. These costs, analyzed by nature, consist of the following: | ||||||||||||
Labor costs, including contractors | 673,322 | 707,798 | 626,818 | |||||||||
Stores and materials | 213,744 | 234,187 | 237,443 | |||||||||
Water and electricity | 116,532 | 128,993 | 115,443 | |||||||||
Hospital costs | 12,788 | 21,968 | 15,785 | |||||||||
Changes in inventory | (18,775 | ) | (4,393 | ) | 16,433 | |||||||
Share-based compensation | 17,055 | 15,618 | 9,446 | |||||||||
Other | 42,165 | 32,786 | 79,320 | |||||||||
1,056,831 | 1,136,956 | 1,100,688 | ||||||||||
2006 | 2005 | 2004 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
South African operations: | ||||||||||||
Free State operations | — | 42,018 | — | |||||||||
Lydenburg Exploration | 15,951 | — | — | |||||||||
Evander operations | — | 15,324 | — | |||||||||
Kalgold operations | — | 12,441 | — | |||||||||
Freegold operations | — | 52,557 | — | |||||||||
ARMgold operations | — | 479 | — | |||||||||
Australian operations | — | 120,305 | 3,145 | |||||||||
15,951 | 243,124 | 3,145 | ||||||||||
F-28
Table of Contents
For the years ended June 30
2006 | 2005 | 2004 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Free State | (8,695 | ) | 20,909 | 9,083 | ||||||||
Evander | 917 | 4,005 | 3,841 | |||||||||
Kalgold | 4 | 143 | — | |||||||||
Randfontein and Elandskraal | 751 | 16,721 | 8,245 | |||||||||
Freegold | (4,867 | ) | 28,076 | 6,756 | ||||||||
ARMgold (Welkom and Orkney) | (914 | ) | 1,872 | 3,743 | ||||||||
Avgold | 369 | 1,489 | — | |||||||||
Musuku (Refinery) | 146 | — | — | |||||||||
(12,289 | ) | 73,215 | 31,668 | |||||||||
F-29
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Balance at July 1, 2005 and 2004 | 32,910 | 26,368 | ||||||
Employment termination costs paid | (22,001 | ) | (57,244 | ) | ||||
(Benefit from)/provision for employment termination costs | (12,480 | ) | 66,174 | |||||
Foreign currency translation adjustment | 1,571 | (2,388 | ) | |||||
Balance at June 30, 2006 and 2005 | — | 32,910 | ||||||
2006 | 2005 | 2004 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Profit on sale of investment in Atlas Gold Limited | 79 | — | — | |||||||||
Loss on sale of investment in San Gold Corporation | (121 | ) | — | — | ||||||||
Profit/(loss) on sale of investment in Gold Fields Limited | 45,387 | (60,168 | ) | — | ||||||||
Profit on sale of investment in Gindalbie Gold NL | — | 9 | — | |||||||||
Loss on sale of investment in ARM Limited | — | (38,242 | ) | — | ||||||||
Profit on sale of investment in Bendigo NL | — | 4,931 | — | |||||||||
Profit on sale of investment in Legend Mining Limited | — | — | 1,755 | |||||||||
Profit on sale of investment in Midas Resources Limited | — | — | 12 | |||||||||
Profit on sale of investment in High River Gold Mines Limited | — | — | 3,143 | |||||||||
45,345 | (93,470 | ) | 4,910 | |||||||||
F-30
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2006 | 2005 | 2004 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Impairment of shares in listed companies | — | (63,234 | ) | — | ||||||||
2006 | 2005 | 2004 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Profit on sale of investment in Highland Gold Limited | — | — | 77,596 | |||||||||
Loss on dilution of investment in ARM | — | — | (12,499 | ) | ||||||||
— | — | 65,097 | ||||||||||
2006 | 2005 | 2004 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Profit on sale of investment in Buffalo Creek | 3,035 | — | — | |||||||||
Profit on sale of investment in Ubuntu | — | 1,125 | — | |||||||||
Loss on sale of investment in Future | — | (1,367 | ) | — | ||||||||
Profit on sale of investment in NACS | — | 128 | — | |||||||||
Profit on sale of investment in Bissett | — | — | 115 | |||||||||
3,035 | (114 | ) | 115 | |||||||||
F-31
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2006 | 2005 | 2004 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Profit on sale of property, plant and equipment | 10,148 | 12,542 | 22,303 | |||||||||
Foreign exchange (losses)/gains | (3,959 | ) | 452 | (4,279 | ) | |||||||
Non-mining bad debts | 854 | (6,079 | ) | — | ||||||||
Other expenditure — net | (10,845 | ) | (10,576 | ) | (3,869 | ) | ||||||
(3,802 | ) | (3,661 | ) | 14,155 | ||||||||
2006 | 2005 | 2004 | ||||||||||
As adjusted | As adjusted | |||||||||||
(note 3) | (note 3) | |||||||||||
$’000 | $’000 | $’000 | ||||||||||
Current income and mining taxes | (642 | ) | (12,255 | ) | (5,820 | ) | ||||||
Deferred income and mining taxes | 2,986 | 101,066 | 38,679 | |||||||||
Total income and mining taxation benefit | 2,344 | 88,811 | 32,859 | |||||||||
F-32
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2006 | 2005 | 2004 | ||||||||||
As adjusted | As adjusted | |||||||||||
(note 3) | (note 3) | |||||||||||
$’000 | $’000 | $’000 | ||||||||||
South Africa | (69,024 | ) | (538,791 | ) | 2,453 | |||||||
Foreign | (91,104 | ) | (102,569 | ) | (36,409 | ) | ||||||
Total | (160,128 | ) | (641,360 | ) | (33,956 | ) | ||||||
2006 | 2005 | 2004 | ||||||||||
As adjusted | As adjusted | |||||||||||
(note 3) | (note 3) | |||||||||||
$’000 | $’000 | $’000 | ||||||||||
Income and mining tax benefit on loss before tax, minority interests and cumulative effect of changes in accounting principles at the maximum statutory mining tax rate | 71,770 | 287,641 | 12,074 | |||||||||
Valuation allowance raised against deferred tax assets | 4,004 | — | — | |||||||||
Non-taxable income / additional deductions | (39,006 | ) | (25,273 | ) | 30,677 | |||||||
Difference between estimated effective mining tax rate and maximum mining statutory rate on timing differences | 6,048 | 18,602 | (2,467 | ) | ||||||||
Difference between South African mining formula tax rate and maximum mining statutory rate on mining income | 1,534 | (108,338 | ) | 9,861 | ||||||||
Difference between South African formula tax rate and maximum mining statutory rate on non-mining income | (11,950 | ) | (12,552 | ) | 262 | |||||||
Change in estimated effective mining tax rate on deferred tax | (30,056 | ) | (71,269 | ) | (17,547 | ) | ||||||
Income and mining tax benefit | 2,344 | 88,811 | 32,859 | |||||||||
Effective income and mining tax rate | 2 | % | 14 | % | 75 | % | ||||||
2006 | 2005 | |||||||
As adjusted | ||||||||
(note 3) | ||||||||
$’000 | $’000 | |||||||
Deferred income and mining tax assets: | ||||||||
Derivative financial liability | 10,101 | 11,346 | ||||||
Unredeemed capital expenditure | 95,088 | 90,482 | ||||||
Provisions, including rehabilitation accruals | 25,754 | 19,515 | ||||||
Tax losses | 65,262 | 52,707 | ||||||
Other | — | 173 | ||||||
196,205 | 174,223 | |||||||
Valuation allowance for deferred tax assets | (4,004 | ) | — | |||||
Total deferred income and mining tax assets | 192,200 | 174,223 | ||||||
F-33
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2006 | 2005 | |||||||
As adjusted | ||||||||
(note 3) | ||||||||
$’000 | $’000 | |||||||
Deferred income and mining tax liabilities: | ||||||||
Mining assets | (560,559 | ) | (574,429 | ) | ||||
Product inventory not taxed | (8,939 | ) | (2,463 | ) | ||||
Other | (1,593 | ) | — | |||||
Total deferred income and mining tax liabilities | (571,091 | ) | (576,892 | ) | ||||
Net deferred income and mining tax liabilities | (378,891 | ) | (402,670 | ) | ||||
Net deferred income and mining tax liabilities comprise of: | ||||||||
Current deferred income and mining tax assets | 142,109 | 138,519 | ||||||
Non-current deferred income and mining tax liabilities | (521,000 | ) | (541,189 | ) | ||||
Net deferred income and mining tax liabilities | (378,891 | ) | (402,670 | ) | ||||
For the year ended June 30, 2006 | ||||||||||||
Loss | Shares | Per-share | ||||||||||
(Numerator) | (Denominator) | amount | ||||||||||
$’000 | ($) | |||||||||||
Basic loss per share | ||||||||||||
Shares outstanding July 1, 2005 | — | 394,023,694 | — | |||||||||
Weighted average number of ordinary shares issued during the year | — | 385,818 | — | |||||||||
Loss available to common shareholders | (155,725 | ) | 394,409,512 | (0.39 | ) | |||||||
Effect of dilutive securities | ||||||||||||
Share options issued to employees | — | — | — | |||||||||
Diluted loss per share | (155,725 | ) | 394,409,512 | (0.39 | ) | |||||||
F-34
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
For the year ended June 30, 2005 | ||||||||||||
Loss | Shares | Per-share | ||||||||||
(Numerator) | (Denominator) | amount | ||||||||||
As adjusted | As adjusted | |||||||||||
(note 3) | (note 3) | |||||||||||
$’000 | ($) | |||||||||||
Basic loss per share | ||||||||||||
Shares outstanding July 1, 2004 | — | 321,424,077 | — | |||||||||
Weighted average number of ordinary shares issued during the year | — | 41,074,935 | — | |||||||||
Loss available to common shareholders | (552,549 | ) | 362,499,012 | (1.52 | ) | |||||||
Effect of dilutive securities | ||||||||||||
Share options issued to employees | — | — | — | |||||||||
Diluted loss per share | (552,549 | ) | 362,499,012 | (1.52 | ) | |||||||
For the year ended June 30, 2004 | ||||||||||||
Earnings | Shares | Per-share | ||||||||||
(Numerator) | (Denominator) | amount | ||||||||||
As adjusted | As adjusted | |||||||||||
(note 3) | (note 3) | |||||||||||
$’000 | ($) | |||||||||||
Basic earnings per share | ||||||||||||
Shares outstanding July 1, 2003 | — | 185,536,615 | — | |||||||||
Weighted average number of ordinary shares issued during the year | — | 68,703,885 | — | |||||||||
Income available to common shareholders | 184 | 254,240,500 | 0.00 | |||||||||
Effect of dilutive securities | ||||||||||||
Share options issued to employees | — | 1,330,334 | — | |||||||||
Diluted earnings per share | 184 | 255,570,834 | 0.00 | |||||||||
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Current | ||||||||
Trade receivables (gold) | 40,738 | 43,133 | ||||||
Other mining related receivables — net of allowance for doubtful accounts of $1.8 million and $1.1 million in 2006 and 2005, respectively | 12,422 | 9,779 | ||||||
Value Added Tax | 15,098 | 15,009 | ||||||
Insurance claims and prepayments | 8,339 | 5,013 | ||||||
Employee receivables | 5,621 | 5,240 | ||||||
Deferred consideration for sale of Buffalo Creek | 6,531 | — | ||||||
Interest and other | 11,426 | 16,556 | ||||||
100,175 | 94,730 | |||||||
Non-current | ||||||||
Deferred consideration for sale of Buffalo Creek | 4,047 | — | ||||||
Total receivables | 104,222 | 94,730 | ||||||
F-35
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2006 | 2005 | |||||||
As adjusted | ||||||||
(note 3) | ||||||||
$’000 | $’000 | |||||||
Gold in-process | 63,465 | 50,645 | ||||||
Consumable stores | 28,533 | 36,184 | ||||||
91,998 | 86,829 | |||||||
2006 | 2005 | |||||||
As adjusted | ||||||||
(note 3) | ||||||||
$’000 | $’000 | |||||||
Mining properties, mine development costs and mine plant facilities — cost | 4,832,328 | 4,916,547 | ||||||
Other non-mining assets — cost | 57,518 | 53,321 | ||||||
Accumulated depreciation and amortization | (1,583,291 | ) | (1,517,905 | ) | ||||
3,306,555 | 3,451,963 | |||||||
2006 | 2005 | |||||||
As adjusted | ||||||||
(note 3) | ||||||||
$’000 | $’000 | |||||||
Mineral subscriptions, participation rights and slimes dams | — | 7,084 | ||||||
Bond issue costs, net of amortization | 3,605 | 5,733 | ||||||
3,605 | 12,817 | |||||||
F-36
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Bissett proceeds held in trust | 182 | 143 | ||||||
Australian dissentient shareholders funds | 1,064 | 1,334 | ||||||
Security deposits | 34,353 | 6,321 | ||||||
35,599 | 7,798 | |||||||
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Listed investments | ||||||||
Investments in listed shares (a) | 196,346 | 453,712 | ||||||
Other investments | ||||||||
Unlisted investments and loans (b) | 11,383 | 13,109 | ||||||
Amounts contributed to environmental trust funds (c) | 179,667 | 175,695 | ||||||
191,050 | 188,804 | |||||||
Total non-current investments | 387,396 | 642,516 | ||||||
(a) | On January 25, 2005 the Company received 5 million ordinary shares in Peninsula Minerals Limited, issued at A$0.02 per share, as partial consideration for the sale of tenements. The market value of the investment was $0.07 million (A$0.02 per share) on June 30, 2006 (2005: $0.04 million (A$0.01 per share)). | ||
During January 2006 the Company disposed of the 500 000 ordinary held in Atlas Gold Limited (“Atlas”) for $0.2 million (A$0.2 million). See note 9. The Company received the shares in Atlas, issued at A$0.20 per share, on January 13, 2005, as partial consideration for the sale of tenements. The market value of the investment was $0.07 million (A$0.20 per share) on 30 June 2005. | |||
On November 30, 2004 the Company acquired 56,606,482 ordinary shares in Gold Fields, representing 11.5% of their issued share capital, at a total cost of $767.2 million by the issue of 1.275 Harmony shares for every Gold Fields’ share. Gold Fields is a mineral resources company, primarily gold, which is listed on the JSE and has a secondary listing on the New York Stock Exchange. The investment was classified as an available-for-sale investment since acquisition. On June 3, 2005 the Company disposed of 30 million shares in Gold Fields, representing 6.5% of their issued share capital, for $297.6 million. These shares were acquired at a total cost of $415.2 million, resulting in a loss of $60.2 million. The Company disposed of its remaining investment held in Gold Fields Limited (Gold Fields) for $361.8 million, through market disposals which commenced on November 10, 2005 and an open market offering on November 15 and 16, 2005. This resulted in a realized gain of $45.4 million. See note 9. | |||
The market value of the remaining investment was $304.0 million (R76.20 per share) on June 30, 2005, resulting in a decrease of $17.5 million since acquisition, which was reflected as a component of shareholders’ equity. Dividends to the value of $1.7 million were received from this investment during the year ended June 30, 2006 (2005: $2.7 million). |
F-37
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
F-38
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
ARM | 85,767 | 23,111 | ||||||
San Gold | — | 153 | ||||||
Gold City | — | (649 | ) | |||||
Gold Fields | — | (20,748 | ) | |||||
GBS Gold | (735 | ) | — | |||||
Alloy Resources | (57 | ) | — | |||||
84,975 | 1,867 | |||||||
(b) | Unlisted investments comprise of various industry related investments and loans, which have been recorded at cost. The directors of the Company perform independent valuations of the investments on an annual basis to ensure that no permanent diminution in the value of the investments has occurred. No dividends were received from these investments in the 2006, 2005 and 2004 fiscal years. | ||
(c) | The environmental trust funds are irrevocable trusts under the Company’s control. The cash in the trusts are invested primarily in interest bearing short-term and other investments and approximate their fair value. |
Carrying amounts | ||||||||||||||||||||
Investment | Description of business | Ownership % | 2006 | 2005 | ||||||||||||||||
2006 | 2005 | $’000 | $’000 | |||||||||||||||||
Western Areas Limited | Gold mining | 29.2 | % | — | 266,267 | — | ||||||||||||||
Village Main Reef Gold Mining Company(1934) Limited | Dormant | 37.8 | % | — | 64 | — | ||||||||||||||
266,331 | — | |||||||||||||||||||
100% | 29.2% | |||||||
$’000 | $’000 | |||||||
Revenue | 7,933 | 2,316 | ||||||
Production costs | (25,949 | ) | (7,577 | ) | ||||
(18,016 | ) | (5,261 | ) | |||||
Net loss | (56,317 | ) | (16,444 | ) | ||||
F-39
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
100% | 29.2% | |||||||
$’000 | $’000 | |||||||
Non-current assets | 843,364 | 246,262 | ||||||
Current assets | 34,947 | 10,205 | ||||||
Total assets | 878,311 | 256,467 | ||||||
Equity | 123,838 | 36,161 | ||||||
Non-current liabilities | 647,927 | 189,195 | ||||||
Current liabilities | 106,546 | 31,111 | ||||||
Total equity and liabilities | 878,311 | 256,467 | ||||||
The difference between the cost of the Company’s investment and the underlying net assets has been allocated to undeveloped properties ($187.7 million) and goodwill ($66.9 million). | |||
On June 21, 2006 Harmony acquired 37.8% of the issued share capital of Village at a total cost of $0.06 million. The equity stake was purchased from ARM at a price of 20 cents per share. Village is listed on the JSE Limited in the gold sector and has been dormant for some time without any operating mines. The acquisition forms part of Harmony’s strategic positioning. See note 4(m). | |||
The following table summarizes the change in value of the Group’s investments in associates: |
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Opening carrying amount | — | 19,908 | ||||||
Shares at cost | 321,541 | — | ||||||
Net share of results of associates | (16,444 | ) | — | |||||
Associate becoming a listed investment on dilution | — | (20,303 | ) | |||||
Foreign currency translation differences | (38,766 | ) | 395 | |||||
Closing carrying amount | 266,331 | — | ||||||
The investment in Bendigo was made during fiscal 2002. The Company did not receive any dividends from Bendigo during the 2005 and 2004 fiscal years. On July 7, 2004 Bendigo announced that it had raised A$100 million in a capital raising exercise, through the issuing of new Bendigo shares at A$0.72 per share. As a result, Harmony’s shareholding in Bendigo has been diluted from 31.6% to 12.7%. From this date, Bendigo was classified as an available-for-sale investment. See note 4(h). | |||
24 | INVESTMENT IN JOINT VENTURES | ||
(a) | Interest in Orpheo by Harmony (Pty) Ltd | ||
The Company acquired 50% of the Orpheo by Harmony company on July 2, 2005. Orpheo by Harmony operates as a gold jewelry manufacturer and retailer, with operations in Johannesburg and Cape Town. The 50% stake in Orpheo was capitalized by means of a R5 million (US$ 1 million) cash capital contributions from Harmony. (See note 4(j) for more details regarding the joint venture formation and the acquisition of the Orpheo assets). | |||
(b) | Interest in Healthshare Solutions (Pty) Ltd | ||
The Company acquired the 45% of Healthshare on July 1, 2004, for a total cash consideration of R45 ($7). Healthshare was capitalized by means of capital contributions and loans from the joint venture partners. The Company, together with the joint venture partner, Network Healthcare Holdings Limited, control the entire shareholding of Healthshare, and have treated it as a subsidiary since the acquisition date. |
F-40
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
25 | ACCOUNTS PAYABLE AND OTHER LIABILITIES |
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Trade payables | 72,947 | 49,664 | ||||||
Short term borrowings | 1,107 | 2,726 | ||||||
Employment termination costs | — | 32,910 | ||||||
Other liabilities | 4,337 | 33,924 | ||||||
78,391 | 119,223 | |||||||
26 | LONG TERM LOANS |
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Uncollateralized | ||||||||
Senior uncollaterized fixed rate bonds (a) | — | 179,991 | ||||||
Fair value adjustment of cash flow hedge | — | (3,577 | ) | |||||
Less : amortized discount | — | (245 | ) | |||||
— | 176,169 | |||||||
Less : short term portion | — | (176,169 | ) | |||||
— | — | |||||||
Convertible uncollaterized fixed rate bonds (b) | 237,264 | 254,987 | ||||||
Africa Vanguard Resources (Proprietary) Limited (c) | 4,467 | 4,800 | ||||||
Total uncollateralized long term loans | 241,731 | 259,787 | ||||||
Collateralized | ||||||||
Nedbank Limited (d) | 21,544 | 20,970 | ||||||
Gold Fields Limited (e) | 705 | 822 | ||||||
Less : short term portion | (705 | ) | (308 | ) | ||||
— | 514 | |||||||
BOE Bank Limited (f) | — | 23,864 | ||||||
Less : short term portion | — | (23,864 | ) | |||||
— | — | |||||||
Nedbank Limited (g) | 56,065 | 54,542 | ||||||
Nedbank Limited (h) | 75,173 | 73,494 | ||||||
Auriel Alloys (i) | 167 | 248 | ||||||
Less : short term portion | (72 | ) | (69 | ) | ||||
95 | 179 | |||||||
Rand Merchant Bank Limited (j) | 139,567 | — | ||||||
Less: short term portion | (139,567 | ) | — | |||||
— | — | |||||||
Total collateralized long term loans | 152,877 | 149,699 | ||||||
Total long term loans | 394,608 | 409,486 | ||||||
F-41
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(a) | On June 16, 2001, Harmony launched and priced an issue of South African Rand denominated senior uncollateralized fixed rate bonds in an aggregate principal amount of R1, 200 million ($115.5 million), with semi-annual interest payable at a rate of 13% per annum. The bonds were listed on the Bond Exchange of South Africa and issued to settle existing debt and fund the purchase of Elandskraal and New Hampton. As long as the bonds were outstanding, Harmony was not permitted encumber its present or future assets or revenues to secure indebtedness for borrowed money, without collateralizing the outstanding bonds equally and ratably with such indebtedness, except for certain specified permitted encumbrances. Issuance costs of $1.9 million were incurred and capitalized and are being amortized over the life of the bonds. Included in the amortization charge in the income statement is $0.8 million (2005: $0.6 million) (2004: $0.7 million) for amortization of the bond issue costs. On July 6, 2005 a total of $45.0 million of the bond’s notional value was repurchased at a cost of some $47.1 million. This represented 23.5% of the total issue due for redemption. The remaining balance of the bond was settled on June 14, 2006 (original redemption date) at a total cost of $134.5 million. | |
(b) | On May 21, 2004, Harmony issued an international unsecured fixed rate convertible bond in an aggregate principal amount of R1,700 million ($252 million). Interest at a rate of 4.875% per annum is payable semi-annually in arrears on May 21 and November 21 of each year, commencing November 21, 2004. The bonds mature 5 years from the issue date at their nominal value of R1 700 million unless converted into the Company’s ordinary shares. The bonds are convertible at the option of the bondholders at any time on or after July 1, 2004 and up to and including May 15, 2009, unless previously redeemed, converted or purchased and cancelled, into fully paid ordinary shares, at nominal value Rand 0.50 per share. The number of ordinary shares to be issued at such a conversion shall be determined by dividing the principal amount of each bond by the conversion price in effect on the relevant conversion date. The bonds are listed on the London Stock Exchange for Bonds. The terms and conditions of the bonds prohibit Harmony and its material subsidiaries from creating any encumbrance or security interest over any of its assets to secure any relevant debt (or any guarantee or indemnity in respect of any relevant debt) without according the same security to the bondholders or without obtaining the prior approval of the bondholders. Included in the amortisation charge as per the income statement is $1.4 million (2005: $1.4 million) (2004: $0.1 million) for amortization of the bond issue costs. | |
(c) | During the 2005 fiscal year Africa Vanguard borrowed an additional R18 million ($2.8 million) (2004: R14 million ($2.0 million)) from its holding company Africa Vanguard Resources to service working capital commitments. The loan is uncollateralized and interest free, with no fixed terms of repayment. See note 5. | |
(d) | On July 30, 2003, Africa Vanguard Resources (Doornkop) (Proprietary) Limited (AVR) entered into a term loan facility of R116 million ($16 million) with Nedbank Limited for the purpose of partially funding AVR’s purchase of an undivided 26% share of the Mining titles, to be contributed to the Doornkop joint venture with Randfontein. See note 5. Interest at a fixed rate equal to JIBAR plus the applicable margin plus stamp duties and holding costs shall be repayable to the extent that the borrower received profit participation interest for the interest periods. Unpaid interest shall be accrued and repaid with the loan amount. The loan amount and any interest accrued is repayable on July 30, 2008. Interest capitalized during the year ended June 30, 2006 amounted to $2.3 million (2005: $1.9 million and 2004: $1.7 million). | |
(e) | On July 1, 2002 Freegold entered into an agreement with St Helena Gold Mines Limited, a fully owned subsiadiary of Gold Fields Limited, to purchase its St Helena assets for R129 million ($12.8 million). R120 million ($11.9 million) was payable on October 29, 2002, being the effective date after the fulfilment of all the conditions precedent. The balance of R9 million ($0.9 million) is payable by way of a 1 % royalty on turnover, monthly in arrears, for a period of 48 months, commencing on the 10th of the month following the effective date. |
F-42
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(f) | On April 5, 2002, ARMgold entered into a term loan facility of R500 million ($45.3 million) with BOE Bank Limited for the purpose of partially funding ARMgold’s acquisition of shares in Freegold and loans made by ARMgold to Freegold in connection with the acquisition of mining assets from AngloGold Limited. The facility was collateralized by a pledge of the following: | |
(i) ARMgold’s shares in Freegold; | ||
(ii) The proceeds to ARMgold from the exercise of call options of Harmony as set out in the Freegold Joint Venture Agreement; | ||
(iii)The proceeds to ARMgold of put options purchased by ARMgold to create downside protection on the gold price, | ||
(iv) All amounts owing to ARMgold by Freegold; and | ||
(v) Monies held to the account of the Distribution Account, being the account to which all distributions by Freegold to ARMgold in the form of the distribution on shares or repayments of interest or capital in respect of unsecured shareholder loans, must be credited. | ||
The loan was repayable over a 4 year period in bi-annual installments of R90 million ($14.4 million), the first was on December 31, 2002 and the final installment was settled on June 30, 2006. The loan bore interest, compounded monthly, at a fixed interest rate of 15,49%. | ||
(g) | On April 15, 2005 the ARM Trust entered into a term loan facility of R356 million ($56.7 million) with Nedbank Limited for the purpose of funding the ARM Trust’s partial acquisition of the shares, the Company held in ARM (See note 4(d)). The loan bears interest, compounded monthly, at a fixed rate of 10.02%. Interest accrued during the year ended June 30, 2006 amounted to $6.0 million (2005: $1.3 million). The loan is repayable on the 5th anniversary of the advance date. | |
(h) | On April 15, 2005 the ARM Trust entered into a second term loan facility of R474 million ($75.4 million) with Nedbank Limited for the purpose of funding the balance of the ARM Trust’s acquisition of the shares, the Company held in ARM (See note4(d)). The loan bears interest, compounded monthly, at a fixed rate of 9.52%. Interest accrued during the year ended June 30, 2006 amounted to $7.6 million. Interest and additional charges accrued during the year ended June 30, 2005 amounted to $1.4 million and $1.1 million, respectively. The loan is repayable on the 5th anniversary of the advance date. | |
(i) | During December 2003 Musuku Beneficiation Systems (Proprietary) Limited, a wholly owned subsidiary of the Company, entered into a long term loan facility of R2 million ($0.3 million) with Auriel Alloys for the purpose of financing the acquisition of Dental Alloy equipment. The loan bears interest at 11% and is payable by way of 60 instalments of R50,000 each. | |
(j) | On March 9, 2006, Harmony entered into a term loan facility of R1,000 million ($159.7 million) with Rand Merchant Bank, for the purpose of partially funding the acquisition of the 29.2% stake in Western Areas. Interest is charged at a fixed rate equal to a 3 month JIBAR plus 1.5%. The loan amount is repayable on March 13, 2007 and interest accrued is repayable every quarter commencing on June 13, 2006. The loan facility is collateralized by the Western Areas shares. |
The maturity of current and non-current borrowings is as follows: |
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Current | 140,344 | 200,451 | ||||||
Between 1 to 2 years | 95 | 693 | ||||||
Between 2 to 5 years | 390,046 | 403,993 | ||||||
Over 5 years | 14,467 | 4,800 | ||||||
Total borrowings | 534,952 | 609,937 | ||||||
F-43
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
27 | DERIVATIVE FINANCIAL LIABILITY |
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Mark-to-market of financial instruments at year end | 88,680 | 57,863 | ||||||
ARM Empowerment Trust | 61,358 | 18,857 | ||||||
150,038 | 76,720 | |||||||
During the year ended June 30, 2006 Harmony closed out 30,000oz call options sold and 108,000oz forward sales agreements of the New Hampton Gold and Hill 50 hedge books at a cost of R213 million (US$34 million). During the previous year, Harmony closed out the remaining gold lease rate swaps which were inherited through the acquisition of New Hampton Gold and Hill 50. These close outs are in accordance with Harmony’s strategy of being unhedged. | |||
All forward-pricing commitments and forward exchange contracts do not meet the criteria to qualify for hedge accounting and the mark-to-market movements are reflected in the income statement. | |||
The liability of $61.4 million (2005: $18.9 million) represents the fair value of the net increase in the ARM Empowerment Trust. See note 4(d). Changes in the fair value of this derivative financial liability have been accounted for in the consolidated income statements. | |||
Refer to note 34 for more detail on the outstanding financial instruments. | |||
28 | PROVISION FOR ENVIRONMENTAL REHABILITATION | ||
The Company’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 Company 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: |
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Balance as at July 1, 2005 and 2004 | 120,450 | 125,917 | ||||||
Revisions in estimates | (10,184 | ) | (3,891 | ) | ||||
Accretion expenses | 6,917 | 4,053 | ||||||
Foreign currency translation adjustment | (7,019 | ) | (5,629 | ) | ||||
Balance as at June 30, 2006 and 2005 | 110,164 | 120,450 | ||||||
The Company intends to finance the ultimate rehabilitation costs of the South African operations from the money invested with the 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 Company will finance the ultimate rehabilitation costs of the non-South African operations from funds to be set aside for that purpose. |
F-44
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
29 | PROVISION FOR SOCIAL PLAN |
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Opening balance | 2,109 | 1,958 | ||||||
Charge to income statement | 334 | 299 | ||||||
Foreign currency translation adjustment | (184 | ) | (148 | ) | ||||
Closing balance | 2,259 | 2,109 | ||||||
The company has undertaken to donate R50 million ($8.0 million) over a period of 10 years to The Harmony Gold Mining Company Social Plan Trust in terms of an agreement signed on November 3, 2003. R18.5 million ($2.7 million) was donated during the 2004 year and the balance will be donated in instalments of R3.5 million ($0.6 million) annually over 9 years. The purpose of the trust is to fund the social plan to reduce the negative effects of retructuring on the company’s workforce, to put measures in place to ensure that the technical and life skills of the company’s workforce are developed and to develop the company’s workforce in such a manner to avoid or minimize job losses and a decline in employment through turnaround or redeployment strategies. | |||
30 | PROVISION FOR POST-RETIREMENT BENEFITS | ||
Most of the supervisory and managerial workers in South Africa participate in the Minemed defined contribution medical scheme, as well as other medical schemes. The Company contributes to these schemes on behalf of current employees and retired employees who retired prior to December 31, 1996 (the “Minemed scheme”). The Company’s contributions to these schemes on behalf of retired and current employees amounted to $13.9 million, $10.0 million and $6.6 million for 2006, 2005 and 2004 respectively. | |||
With the exception of some Freegold employees, included from date of acquisition, no post-retirement benefits are available to other workers. No liability exists for employees who were members of these schemes who retired after the date noted above. The medical schemes pay certain medical expenses for both current and retired employees and their dependents. Current and retired employees pay an annual fixed contribution to these schemes. | |||
Assumptions used to determine the liability relating to the Minemed medical scheme included, a discount rate of 9%, no increases in employer subsidies (in terms of the agreement) and mortality rates according to the SA ‘‘a mf’’ tables, which are generally used in South Africa to represent the mortality of CAWMs, and a medical inflation rate of 6.34%. | |||
The company operates a post retirement medical aid benefit scheme. The amounts were based on an actuarial valuation conducted during the year ended June 30, 2006, on the Minemed medical scheme, following the last actuarial valuation on June 30, 2005. The liability was valued using the projected unit credit method. The next actuarial valuation will be performed on June 30, 2007. | |||
The movements in the present value of the unfunded obligations of the accrued post-retirement health care costs recognised in the balance sheet are as follows: |
F-45
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2006 | 2005 | 2004 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Opening balance at the beginning of the year | 13,276 | 1,584 | 1,017 | |||||||||
Acquired through purchase of subsidiary | — | — | 157 | |||||||||
Additional provision for the current employees | — | 6,470 | — | |||||||||
Contributions paid | (333 | ) | (971 | ) | — | |||||||
Other expenses included in staff costs: | ||||||||||||
Current service cost | 528 | 971 | — | |||||||||
Interest cost | 1,237 | 3,235 | — | |||||||||
Net actuarial gains recognised during the year | 1,507 | 3,074 | — | |||||||||
Foreign currency translation adjustments | (1,251 | ) | (1,087 | ) | 413 | |||||||
Balance at the end of the year | 14,964 | 13,276 | 1,584 | |||||||||
The principal actuarial assumptions used for accounting purposes were: | ||||||||||||
Discount rate | 9 | % | 9 | % | 4% - 12 | % | ||||||
Healthcare inflation rate | 6.34 | % | 6.34 | % | 0 | % - 7 | % | |||||
Normal retirement age | 60 | 60 | 60 |
The obligation has been valued using the projected unit credit funding method on past service liabilities. |
Period Ending June 30: | $'000 | |||
2007 | 348 | |||
2008 | 361 | |||
2009 | 375 | |||
2010 | 391 | |||
2011 | 406 | |||
Thereafter | 2,308 |
31 | COMMITMENTS AND CONTINGENCIES |
2006 | 2005 | |||||||
$’000 | $’000 | |||||||
Capital expenditure commitments | ||||||||
Contracts for capital expenditure | 21,398 | 4,226 | ||||||
Authorized by the directors but not contracted for | 373,794 | 274,318 | ||||||
395,192 | 278,544 | |||||||
Contingent liabilities | ||||||||
Guarantees and suretyships | 2,481 | 2,666 | ||||||
Environmental guarantees | 18,054 | 20,107 | ||||||
20,535 | 22,773 | |||||||
F-46
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
Occupational healthcare services are made available by Harmony to employees from its existing facilities. There is a risk that the cost of providing such services could increase in the future depending upon changes in the nature of underlying legislation and the profile of employees. This increased cost, should it transpire, is currently indeterminate. The group is monitoring developments in this regard. | |||
Action was instituted by 10 Plaintiffs employed at Elandsrand Mine in December 2004. The First Defendant in these matters is Anglo American Corporation of South Africa Limited (Anglo American), with Harmony cited as the Second Defendant. These 10 claims constitute test cases in relation to claims for damages for silicosis allegedly contracted by the Plaintiffs over their period of employment with Anglo American and Harmony at Elandsrand. The Board of directors do not believe that the present 10 test cases present a significant risk and the probabilities vastly favour a dismissal of the actions. At this stage, any potential liability can not be reasonably quantified. | |||
32 | DISCLOSURES REGARDING FAIR VALUE OF FINANCIAL INSTRUMENTS | ||
Cash and equivalents | |||
The carrying amount approximates fair value as a result of the short-term maturity of these instruments. | |||
Investments | |||
It is not practical to determine the fair value of unlisted equity investments. These investments are carried at their original cost in the balance sheet. The fair value of listed equity investments is determined with reference to their market value at the end of each reporting period. | |||
Receivables, accounts payable and accrued liabilities | |||
The carrying amount of receivables, accounts payable and accrued liabilities approximates fair value as a result of the short-term maturity of these items. | |||
Long-term and short-term debt | |||
The fair value of long-term debt is estimated based on the effective interest rate and expected future cash flows. The fair value of short-term debt approximates the carrying value as a result of the short-term maturity periods. | |||
Interest rate swaps | |||
The fair value of interest rate swaps is determined by reference to quoted market prices for similar instruments. | |||
Derivative liabilities | |||
The fair value of a derivative liability is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. | |||
The fair values of financial instruments were as follows: |
2006 | ||||||||
Carrying value | Fair Value | |||||||
$’000 | $’000 | |||||||
Cash and cash equivalents | 89,189 | 89,189 | ||||||
Receivables | 104,222 | 104,222 | ||||||
Investments in listed securities | 196,346 | 196,346 | ||||||
Investments in unlisted securities | 11,383 | 11,382 | ||||||
Accounts payable and accrued liabilities | 78,391 | 78,391 | ||||||
Long and short-term debt | 534,952 | 526,420 | ||||||
Derivative liabilities | 150,038 | 150,038 |
F-47
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2005 | ||||||||
Carrying value | Fair Value | |||||||
$’000 | $’000 | |||||||
Cash and cash equivalents | 266,746 | 266,746 | ||||||
Receivables | 94,730 | 94,730 | ||||||
Investments in listed securities | 453,712 | 453,712 | ||||||
Investments in unlisted securities | 13,109 | 13,109 | ||||||
Accounts payable and accrued liabilities | 119,224 | 119,224 | ||||||
Long and short-term debt | 609,937 | 649,693 | ||||||
Derivative liabilities | 76,720 | 76,720 | ||||||
Interest rate swaps | 3,577 | 3,577 |
33 | EMPLOYEE BENEFIT PLANS | ||
(a) | PENSION AND PROVIDENT FUNDS:The Company contributes to several defined contribution pension and provident funds governed by the Pension Funds Act, 1946 for the employees of its South African subsidiaries. The pension funds are multi-employer industry plans. The Company’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 Superannuation Guarantee Contributions were set at a minimum of 9% of gross salary and wages for the year ended June 30, 2006 (2005: 9% and 2004: 9%). | |||
Substantially all the Company’s employees are covered by the above mentioned retirement benefit plans. Funds contributed by the Company for the year ended June 30, 2006, amounted to $49.8 million (2005 : $56.0 million and 2004 : $43.4 million). | |||
(b) | SHARE OPTION SCHEMES | ||
(i) | HARMONY SHARE OPTION SCHEMES:The Company currently has three employee share option schemes, being the Harmony (1994) Share Option Scheme (“HSOS 1994 Scheme”), the Harmony (2001) Share Option Scheme (“HSOS 2001 Scheme”) and the Harmony (2003) Share Option Scheme (“HSOS 2003 Scheme”). Pursuant to the rules of the HSOS 1994 Scheme, the HSOS 2001 Scheme and the HSOS 2003 Scheme certain qualifying employees may be granted options to purchase shares in the Company’s authorized but unissued ordinary shares. The HSOS 2001 Scheme was established following approval by the Company’s shareholders during fiscal 2002. The HSOS 2001 Scheme came into effect on November 16, 2001 and the HSOS 2003 Scheme came into effect on November 12, 2003, however, options previously issued under the HSOS 1994 Scheme remain in force. The terms of the HSOS 2001 Scheme and the HSOS 2003 Scheme are substantially equivalent to the terms of the HSOS 1994 Scheme, except that the maximum number of share options that may be granted under the HSOS | ||
2001 Scheme is a fixed amount (8,000,000), rather than a percentage of share capital. Options granted under the HSOS 1994 Scheme are not counted against this maximum. Of the 8,000,000 ordinary shares under the specific authority of the directors in terms of the HSOS 2001 Scheme, 7,572,500 shares have been offered to participants leaving a balance of 427,500 to be offered to eligible employees. Upon the date of adoption of the HSOS 2001 Scheme, 1,065,400 shares were still outstanding under the HSOS 1994 Scheme. Following the adoption of the HSOS 2001 Scheme, no further option grants have been made under the HSOS 1994 Scheme. On June 30, 2005 13,532,997 shares of the 23,204,960 ordinary shares have been offered to participants in terms of the HSOS 2003 Scheme, leaving a balance of 9,671,963. In terms of the rules of the HSOS 1994 Scheme, the HSOS 2001 Scheme and the HSOS 2003 Scheme, the exercise price of the options granted is equal to fair market value of the shares at the date of the grant. |
F-48
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
On November 29, 1999, the Company adopted a share purchase scheme (the “Share Purchase Scheme”), in which eligible employees may participate. The Share Purchase Scheme provides for a share purchase trust controlled by the Company. The share purchase trust provides recourse loans to enable employees to acquire shares or exercise their options under the HSOS 1994 Scheme. To date, the Share Purchase Scheme has only been used for the purpose of making recourse loans to employees to enable them to exercise their options under the HSOS 1994 Scheme. The shares acquired by an employee pursuant to the exercise of the option are then pledged by that employee to the share purchase trust to secure repayment of the recourse loan granted by the share purchase trust, plus any interest thereon. The share purchase trust is funded by a loan from the Company, which it repays once it receives repayment of the loans granted to employees. Three non-executive directors of the Company serve as trustees of the share purchase trust. The trustees are not eligible to receive loans from the trust. The Company cancelled the share purchase scheme on March 21, 2003. | |||
Options currently expire no later than 10 years from the grant date. Pursuant to the HSOS 1994 Scheme rules, annually upon anniversary of the grant date, a third of the total options granted are exercisable. Pursuant to the HSOS 2001 Scheme rules, annually upon anniversary of the grant date, a third or a fifth of the total options granted are exercisable, depending on the vesting terms of the respective grant. Pursuant to the HSOS 2003 Scheme rules, annually upon anniversary of the grant date, a fifth of the total options granted are exercisable. Proceeds received by the Company from the exercise are credited to share capital and additional paid in capital. | |||
Details of the activity in the HSOS 1994 Scheme, the HSOS 2001 Scheme and the HSOS 2003 Scheme were as follows (For convenience of the reader, the Rand amounts have been converted to US$ at the balance sheet date for the respective fiscal years): |
Average | Average | |||||||||||||||
Number of | exercise price | exercise price | ||||||||||||||
Available for | share options | per share | per share | |||||||||||||
grant | granted | SA Rand | US Dollar | |||||||||||||
Balance as at June 30, 2003 | 4,291,400 | 7,763,154 | — | — | ||||||||||||
Share options exercised during the year | — | (874,808 | ) | 41.82 | 6.07 | |||||||||||
Share options forfeited during the year | 786,388 | (786,388 | ) | — | — | |||||||||||
Balance as at June 30, 2004 | 5,077,788 | 6,101,958 | — | — | ||||||||||||
Share options reserved during the year | 23,204,960 | — | — | — | ||||||||||||
Share options granted during the year | (13,611,762 | ) | 13,611,762 | — | — | |||||||||||
Share options exercised during the year | — | (471,962 | ) | 45.69 | 7.39 | |||||||||||
Share options forfeited during the year | 883,695 | (883,695 | ) | — | — | |||||||||||
Balance as at June 30, 2005 | 15,554,681 | 18,358,063 | — | — | ||||||||||||
Share options exercised during the year | — | (4,167,575 | ) | 49.76 | 7.82 | |||||||||||
Share options forfeited during the year | 1,449,181 | (1,449,181 | ) | — | — | |||||||||||
Balance as at June 30, 2006 | 17,003,862 | 12,741,307 | — | — | ||||||||||||
The options exercisable on June 30, 2006 and 2005 were 1,525,234 and 2,596,250, respectively. | |||
The range of exercise prices for options outstanding at June 30, 2006 was R22.90 to R91.60. The range of exercise prices for options is wide primarily due to the fluctuation of the prices of the Company’s shares over the period of the grants. |
F-49
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
The following tables summarize information relating to the options outstanding at June 30, 2006 (Tables are denominated in South African Rand and US$ where applicable): |
Outstanding options weighted average | ||||||||||||||||||||
Range of prices | Number of | Contractual life | Exercise price | Exercise price | ||||||||||||||||
SA Rand | US$ | shares | (in years) | SA Rand | US$ | |||||||||||||||
22.90 - 27.20 | 3.20 - 3.80 | 37,600 | 3.90 | 25.42 | 3.55 | |||||||||||||||
35.40 - 49.60 | 4.94 - 6.92 | 8,832,806 | 7.83 | 40.19 | 5.61 | |||||||||||||||
66.00 - 66.15 | 9.21 - 9.23 | 3,203,901 | 8.04 | 66.14 | 9.23 | |||||||||||||||
91.60 | 12.78 | 667,000 | 6.75 | 91.60 | 12.78 | |||||||||||||||
Total | 12,741,307 | 8.20 | 49.36 | 6.89 | ||||||||||||||||
Exercisable options | ||||||||||||||||
Weighted | Weighted | |||||||||||||||
average | average | |||||||||||||||
Range of prices | Number of | exercise price | exercise price | |||||||||||||
SA Rand | US$ | shares | Rand | US$ | ||||||||||||
22.90 - 27.20 | 3.20 - 3.80 | 37,600 | 25.42 | 3.55 | ||||||||||||
35.40 - 49.60 | 4.94 - 6.92 | 898,152 | 39.32 | 5.49 | ||||||||||||
66.00 - 66.15 | 9.21 - 9.23 | 221,282 | 66.12 | 9.23 | ||||||||||||
91.60 | 12.78 | 368,200 | 91.60 | 12.78 | ||||||||||||
Total | 1,525,234 | 55.49 | 7.74 | |||||||||||||
These options will expire if not exercised at specific dates ranging from September 2009 to April 2015. The market prices for options exercised during the three years ended June 30, 2006 ranged from R50.85 (US$7.09) to R117.02 (US$16.32). | |||
The Company used the following assumptions under FAS No. 123 and FAS No. 123(R), as applicable, in valuing the option grants: |
April 26, | August 10, | March 27 , | November | |||||||||||||
2005 option | 2004 option | 2003 option | 20, 2001 | |||||||||||||
grant | grant | grant | option grant | |||||||||||||
Expected life (in years) | 5.0 | 5.0 | 5.0 | 3.5 | ||||||||||||
Risk free interest rate (%) | 8.37 | % | 9.94 | % | 11.63 | % | 11.50 | % | ||||||||
Volatility (%) | 35.00 | % | 40.00 | % | 45.00 | % | 40.00 | % | ||||||||
Dividend yield (%) | 0.00 | % | 0.00 | % | 1.52 | % | 4.00 | % | ||||||||
Price at date of grant (Rand per share) | 39.00 | 66.15 | 91.60 | 49.60 | ||||||||||||
Vesting period (in years) | 5.0 | 5.0 | 5.0 | 3.0 to 5.0 |
The Company used the binomial method in determining the fair value of the options granted. |
F-50
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
(ii) | ABELLE SHARE OPTION SCHEME:Prior to the Company’s acquisition of the entire outstanding shareholdings in Abelle, Abelle also had a share option scheme (the “Abelle Scheme”). Abelle established the Abelle Scheme to incentivize and to assist in the recruitment, reward and retention of employees of Abelle. All employees may have been granted options to purchase shares in Abelle’s authorized but unissued ordinary shares pursuant to the Abelle Scheme rules. The Abelle Scheme was established following approval by Abelle’s shareholders during fiscal 2002. The Abelle Scheme came into effect on April 29, 2002. The maximum number of share options that may have been granted under the Abelle Scheme were not to exceed 5% of the total number of Abelle shares in issue. In terms of the rules of the Abelle Scheme, the exercise price of the options granted must be equal to at least 112% of the fair market value of the shares at the date the participant is invited to apply for an option. | ||
Options currently expire no later than 3 years from the grant date. 12 months after the options were granted, 50% of the total option grant are exercisable. 18 months after the options were granted, the remaining 50% of the total option grant is exercisable. Proceeds received by Abelle from the exercise of options are credited to share capital and additional paid in capital. | |||
Details of the activity in the Abelle Scheme was as follows (For convenience of the reader, the Australian dollar amounts have been converted to US$ at the balance sheet date for the respective fiscal years): |
Average | Average | |||||||||||||||
Number of | exercise price | exercise price | ||||||||||||||
Available for | share options | per share | per share | |||||||||||||
grant | granted | AUS$ | US$ | |||||||||||||
Balance as at June 30, 2003 | 5,460,382 | 4,440,000 | — | — | ||||||||||||
Acquisition of outstanding options by Harmony | (5,460,382 | ) | (4,440,000 | ) | ||||||||||||
Balance as at June 30, 2004 | — | — | — | — | ||||||||||||
Upon acquisition by Harmony of Abelle on May 1, 2003, the 2,662,500 Abelle options outstanding at a weighted average exercise price of A$0.53 per option were fair valued. The weighted average fair value of the outstanding options was determined to be A$0.70 per option, and accordingly deferred share based compensation expense of $1.3 million was recorded. $0.78 million was recognized as share based compensation expense related to these option grants in fiscal 2004. A further 1,800,000 Abelle options were granted on June 15, 2003 at A$1.01 per option. These options were fair valued at A$0.47 per option and deferred share based compensation of $0.5 million was recorded. $0.42 million was recognized as share based compensation expense during fiscal 2004. As part of the acquisition of the remaining interest in Abelle on March 15, 2004, the Company acquired all the outstanding share options. The Company used the following assumptions in valuing the option grants: |
2004 | ||||
Expected life (in years) | 3.0 | |||
Risk free interest rate | 4.64 | % | ||
Volatility | 53.00 | % | ||
Dividend yield | 0.00 | % |
The Company used the binomial method in determining the fair value of the Abelle options granted. |
F-51
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
34 | DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE AND CREDIT RISK OF FINANCIAL INSTRUMENTS | ||
Harmony is exposed to various market risks, including commodity price risk, foreign currency risk, interest rate risk, liquidity risk and credit risk associated with the underlying assets and liabilities of the company as well as with anticipated transactions. Harmony does not issue derivative financial instruments for trading or speculative purposes. However, following periodic evaluation of these exposures, Harmony may enter into derivative financial instruments to manage these exposures. | |||
Commodity price sensitivity As a general rule, the Company sells its gold production at market prices. The Company, generally, does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of its future gold production. A significant proportion of New Hampton and Hill 50’s production was already hedged when acquired by the Company. During the 2006 fiscal year, in accordance with Harmony’s strategy, a significant portion of the inherited hedge books of both New Hampton and Hill 50, were closed out. Harmony closed out 30,000oz call options sold and 108,000 farward sale agreements at a cost of US$34 million. | |||
It is Harmony’s strategy to continuously evaluate the hedge agreements as well as market conditions in order to close these contracts out at the most beneficial time. | |||
The group had the following net forward-pricing commitments against future production at June 30, 2006. | |||
Summary of the group’s gold hedge position at June 30, 2006 |
Mark-to- | ||||||||||||||||||||||
June 30, | June 30, | June 30, | market | |||||||||||||||||||
Year | 2007 | 2008 | 2009 | Total | $’000 | |||||||||||||||||
AUSTRALIAN DOLLAR GOLD | ||||||||||||||||||||||
Forward contracts | Kilograms | 4,573 | 3,110 | 3,110 | 10,793 | |||||||||||||||||
Ounces | 147,000 | 100,000 | 100,000 | 347,000 | (86,276 | ) | ||||||||||||||||
A$ per oz | 515 | 518 | 518 | 516 | ||||||||||||||||||
Call options sold | Kilograms | 311 | — | — | 311 | |||||||||||||||||
Ounces | 10,000 | — | — | 10,000 | (1,842 | ) | ||||||||||||||||
A$ per oz | 562 | — | — | 562 | ||||||||||||||||||
Total commodity | Kilograms | 4,884 | 3,110 | 3,110 | 11,104 | |||||||||||||||||
contracts | Ounces | 157,000 | 100,000 | 100,000 | 357,000 | (88,118 | ) | |||||||||||||||
The mark-to-market of these contracts was a negative R631 million (negative USD88 million) at June 30, 2006. The values at June 30, 2006 were based on a gold price of USD600 (AUD808) per ounce, exchange rates of USD1 / R7.17 and AUD1 / USD0.74 and prevailing market interest rates and volatilities at that date. These valuations were provided by independent risk and treasury management experts. | |||
Summary of the group’s gold hedge position at June 30, 2005 |
Mark-to | ||||||||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | market | ||||||||||||||||||||||||
Year | 2006 | 2007 | 2008 | 2009 | Total | $’000 | ||||||||||||||||||||||
AUSTRALIAN DOLLAR GOLD | ||||||||||||||||||||||||||||
Forward contracts | Kilograms | 3,359 | 4,573 | 3,110 | 3,110 | 14,152 | ||||||||||||||||||||||
Ounces | 108,000 | 147,000 | 100,000 | 100,000 | 455,000 | (36,828 | ) | |||||||||||||||||||||
A$ per oz | 510 | 515 | 518 | 518 | 515 | |||||||||||||||||||||||
Call options sold | Kilograms | 933 | 311 | — | — | 1,244 | ||||||||||||||||||||||
Ounces | 30,000 | 10,000 | — | — | 40,000 | (994 | ) | |||||||||||||||||||||
A$ per oz | 552 | 562 | — | — | 554 | |||||||||||||||||||||||
Total commodity | Kilograms | 4,292 | 4,884 | 3,110 | 3,110 | 15,396 | ||||||||||||||||||||||
contracts | Ounces | 138,000 | 157,000 | 100,000 | 100,000 | 495,000 | (37,822 | ) | ||||||||||||||||||||
The mark-to-market of these contracts was a negative R252 million (US$38 million) at June 30, 2005. The values at June 30, 2005 were based on a gold price of US$435 (A$571) per ounce, exchange rates of US$1 / R6.6670 and A$1 / US$0.7622 and prevailing market interest rates and volatilities at that date. These valuations were provided by independent risk and treasury management experts. These contracts are classified as speculative and the marked-to-market movement is reflected in the income statement. | |||
These marked-to-market valuations are not predictive of the future value of the hedge position, nor of the future impact on the revenue of the company. The valuation represents the cost of buying all hedge contracts at the time of the valuation, at market prices and rates avaliable at the time. |
F-52
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
Mark-to- | ||||||||||||||
June 30, | market | |||||||||||||
Year | 2006 | Total | $’000 | |||||||||||
Forward exchange contracts | US$ million | 39 | 39 | (16,467 | ) | |||||||||
(Buy US$, sell ZAR at the agreed exchange rate) | Average strike ZAR/US$ | 9.54 | 9.54 | |||||||||||
Forward exchange call contracts sold | US$ million | 39 | 39 | — | ||||||||||
(Sell US$, buy ZAR at the agreed exchange rate) | Average strike ZAR/US$ | 9.54 | 9.54 | |||||||||||
(16,467 | ) | |||||||||||||
F-53
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
2006 | 2005 | 2004 | ||||||||||
As adjusted | As adjusted | |||||||||||
(note 3) | (note 3) | |||||||||||
$’000 | $’000 | $’000 | ||||||||||
Reconciliation of loss before taxation to cash generated from operations: | ||||||||||||
Loss before taxation, minority interest and effect of change in accounting principal | (160,127 | ) | (641,360 | ) | (33,955 | ) | ||||||
Adjustments for: | ||||||||||||
(Profit)/loss on sale of listed investments | (45,345 | ) | 93,470 | (4,910 | ) | |||||||
Profit on sale and loss on dilution of investment in associates — net | — | — | (65,097 | ) | ||||||||
(Profit)/loss on sale of subsidiaries | (3,035 | ) | 114 | (115 | ) | |||||||
Profit on sale of mining assets | (10,148 | ) | (12,542 | ) | (22,303 | ) | ||||||
Depreciation and amortization | 166,120 | 151,967 | 139,829 | |||||||||
Impairment of assets | 15,951 | 243,124 | 3,145 | |||||||||
Loss on derivative financial instruments | 131,444 | 17,672 | 32,385 | |||||||||
Equity income of joint venture | (445 | ) | — | (9,503 | ) | |||||||
Equity loss/(profit) of associated companies | 16,444 | — | (2,020 | ) | ||||||||
Impairment of investment in associate | — | — | 1,956 | |||||||||
Permanent diminution in value of listed investment | — | 63,234 | — | |||||||||
Net decrease in provision for environmental rehabilitation | (2,162 | ) | (2,828 | ) | (19,461 | ) | ||||||
Provision for post retirement benefits | 1,175 | 9,137 | — | |||||||||
Other non cash transactions | 12,778 | 13,256 | 5,564 | |||||||||
Income and mining taxes paid | (1,829 | ) | (8,952 | ) | (83,881 | ) | ||||||
Cash cost to close out hedges | (54,045 | ) | (34,248 | ) | (19,349 | ) | ||||||
Share-based compensation | 17,055 | 15,618 | 9,446 | |||||||||
Effect of changes in operating working capital items: | ||||||||||||
Receivables | (8,702 | ) | 38,092 | 25,400 | ||||||||
Inventories | (12,822 | ) | (8,121 | ) | (700 | ) | ||||||
Accounts payable and accrued liabilities | (10,496 | ) | (53,247 | ) | 33,929 | |||||||
Cash generated/(utilized) by operations | 51,811 | (115,614 | ) | (9,640 | ) | |||||||
F-54
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
On June 21, 2006 Harmony announced that it had acquired 37.8% of the issued share capital of Village. Due to the fact that the acquisition exceeded 35% of Villiage’s issued share capital, Harmony was obliged under the Securities Regulation Code on Takeovers and Mergers to extend an offer to the remaining shareholders of Village to acquire all of their shares at the same price at which it acquired the 37.8% stake. On August 14, 2006 Harmony announced that minority shareholders holding 3,163 shares in Village (being 8.38% of the shares in respect of which the offer was made) had accepted its offer. Harmony currently holds 2,295,663 shares representing 37.83% of the issued share capital of Village. (See note 4(m) and 23). | ||
On October 19, 2006 Harmony entered into an agreement with Simmers and Jack Mines Limited and Enzulwini Mining Company (Pty) Ltd (a 100% subsidiary of Simmers and Jack Mines Limited) to sell certain land and infrastructure around the old Randfontein 4 Shaft for R55 million (US$7.7 million at the closing balance sheet rate) in cash. This shaft was placed on care and maintenance by Harmony in 2001. The carrying value of the assets sold in Harmony’s balance sheet at June 30, 2006 was US$nil. The R25.6 million (US$3.6 million at the closing balance sheet rate) environmental rehabilitation liability and the associated rehabilitation fund of R19 million (U$2.7 million at the closing balance sheet rate) of the asset is to be assumed by Simmers and Jack Mines Limited. The transaction is subject to a number of conditions precedent, including regulatory approvals. | ||
During the first quarter of fiscal 2007, Harmony took the decision to refine all our South African production through Rand Refinery. Prior to this date approximately 84% of our annual production was refined by the Harmony Refinery. The decision was made to close the Harmony Refinery due to the historic lossess incurred by the refinery. In fiscal 2006, the Harmony Refinery incurred losses of US$1.9 million. The staff in the refinery is to be offered alternative positions within Harmony, and some of the assets of the company are to be sold to Rand Refinery. The terms of this sale are currently being negotiated. |
F-55
Table of Contents
38 | GEOGRAPHICAL AND SEGMENT INFORMATION | |
The company is primarily involved in gold mining, exploration and related activities. Activities are conducted and investments held both inside and outside of South Africa. | ||
The Company’s operations are managed on a shaft-by-shaft (geographical) basis and discrete financial information under International Financial Reporting Standards (“IFRS”) for each shaft is reviewed by the Company’s chief operating decision maker to assess performance and allocate resources. The accompanying geographical and segment information has therefore been presented on a shaft by shaft basis and reconciled to U.S. GAAP. | ||
These segments have been grouped together in the regions in which they operate, being the Free State, Evander, Kalgold, Randfontein, Elandskraal, Free Gold, ARMgold and Avgold. The Bissett mine in Canada, which ceased operations at the end of fiscal 2001, has been reported as part of the “other” segment for fiscal 2004. The Big Bell, Mt Magnet, South Kal and Abelle mines are located primarily in Western Australia. The Hidden Valley project is located in Papua New Guinea. The Company also has exploration interests in Southern Africa and Australia which are included in Other. Selling, administrative, general charges and corporate costs are allocated between segments based on the size of activities based on production results. | ||
In addition to the grouping of its operating segments by geographic region, management has also categorized its South African underground operations as follows: |
o | Quality assets,which are typically those with a larger reserve base and hence a longer life which form the core of the group’s operations; | ||
o | Leveraged assets,which are those that supplement operations and provide significant upside in the event of a rising gold price; | ||
o | Growth assets,which comprise the expansion projects/new mines in South Africa; and | ||
o | Surface operations |
Notes to the Consolidated Financial Statements
For the years ended June 30
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||||||||||||||||||||||
Free State operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Masimong | 72,854 | 66,563 | 6,291 | 65,928 | — | 65,928 | 14,520 | 136,153 | 1,020 | |||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Harmony 2 | 36,716 | 33,527 | 3,189 | 6,933 | — | 6,933 | 3,964 | 69,446 | 598 | |||||||||||||||||||||||||||||||
Merriespruit 1 | 25,685 | 24,061 | 1,624 | 6,217 | — | 6,217 | Information not allocated at shaft level | 2,445 | 48,069 | 410 | ||||||||||||||||||||||||||||||
Merriespruit 3 | 23,078 | 24,188 | ( 1,110 | ) | 5,175 | — | 5,175 | 1,783 | 43,691 | 452 | ||||||||||||||||||||||||||||||
Unisel | 38,172 | 28,789 | 9,383 | 29,519 | — | 29,519 | 3,907 | 72,963 | 500 | |||||||||||||||||||||||||||||||
Brand 3 | 22,147 | 23,272 | ( 1,125 | ) | 2,557 | — | 2,557 | 987 | 41,647 | 405 | ||||||||||||||||||||||||||||||
Brand 5 | 236 | 975 | ( 793 | ) | — | — | — | — | 469 | 3 | ||||||||||||||||||||||||||||||
— | ||||||||||||||||||||||||||||||||||||||||
Surface operations | 8,614 | 6,427 | 2,187 | 33,666 | — | 33,666 | 3,818 | 15,902 | 897 |
Table of Contents
]
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Other | — | — | — | 61,711 | 126,700 | 188,411 | — | — | — | — | ||||||||||||||||||||||||||||||
Total Free State | 227,502 | 207,802 | 19,700 | 211,706 | 126,700 | 338,406 | 506,639 | 31,424 | 428,340 | 4,285 | ||||||||||||||||||||||||||||||
Evander operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Evander 5 (note b) | 32,183 | 33,068 | ( 885 | ) | 33,020 | — | 33,020 | 6,453 | 62,388 | 450 | ||||||||||||||||||||||||||||||
Evander 7 | 42,365 | 32,648 | 9,717 | 47,034 | — | 47,034 | 10,021 | 83,202 | 435 | |||||||||||||||||||||||||||||||
Evander 8 | 67,325 | 44,863 | 22,462 | 40,464 | — | 40,464 | 9,726 | 128,849 | 815 | |||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Evander 9 | — | 21 | ( 21 | ) | — | — | — | — | — | — | ||||||||||||||||||||||||||||||
Surface operations | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Other | — | — | — | 38,025 | 26,212 | 64,237 | 1,033 | — | — | |||||||||||||||||||||||||||||||
Total Evander | 141,873 | 110,600 | 31,273 | 158,543 | 26,212 | 184,755 | 45,017 | 27,233 | 274,439 | 1,700 | ||||||||||||||||||||||||||||||
Randfontein operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Cooke 1 | 42,978 | 32,274 | 10,704 | 11,835 | — | 11,835 | 3,759 | 80,495 | 490 | |||||||||||||||||||||||||||||||
Cooke 2 | 32,025 | 23,082 | 8,943 | 12,962 | — | 12,962 | 3,738 | 59,836 | 353 | |||||||||||||||||||||||||||||||
Cooke 3 | 55,901 | 41,329 | 14,572 | 27,692 | — | 27,692 | 8,197 | 104,758 | 652 | |||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Growth assets | ||||||||||||||||||||||||||||||||||||||||
Doornkop | 23,294 | 24,322 | ( 1,028 | ) | 200,096 | — | 200,096 | 26,031 | 43,593 | 515 | ||||||||||||||||||||||||||||||
Surface operations | 6,108 | 5,022 | 1,086 | 5,143 | — | 5,143 | 8,712 | 11,650 | 539 | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 114,154 | 114,154 | — | — | — | |||||||||||||||||||||||||||||||
Total Randfontein | 160,306 | 126,029 | 34,277 | 257,728 | 114,154 | 371,882 | 130,543 | 50,437 | 300,332 | 2,549 | ||||||||||||||||||||||||||||||
Elandsrand operations | ||||||||||||||||||||||||||||||||||||||||
Growth assets | ||||||||||||||||||||||||||||||||||||||||
Elandsrand | 90,097 | 89,349 | 748 | 259,500 | — | 259,500 | 30,523 | 170,867 | 987 | |||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Deelkraal | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Surface operations | — | — | — | 300 | — | 300 | — | — | — | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 91,572 | 91,572 | — | — | — | |||||||||||||||||||||||||||||||
Total Elandsrand | 90,097 | 89,349 | 748 | 259,800 | 91,572 | 351,372 | 80,720 | 30,523 | 170,867 | 987 | ||||||||||||||||||||||||||||||
Table of Contents
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Freegold operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Tshepong | 179,626 | 111,462 | 68,164 | 429,453 | — | 429,453 | 23,529 | 335,289 | 1,786 | |||||||||||||||||||||||||||||||
Growth assets | ||||||||||||||||||||||||||||||||||||||||
Phakisa | — | — | — | 260,966 | — | 260,966 | 21,522 | — | — | |||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Bambanani | 93,111 | 87,064 | 6,047 | 98,472 | — | 98,472 | 14,870 | 175,214 | 1,196 | |||||||||||||||||||||||||||||||
Joel | 31,346 | 29,170 | 2,176 | 10,239 | — | 10,239 | 3,644 | 58,595 | 436 | |||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Eland | 2,026 | 1,066 | 960 | — | — | — | — | 4,058 | 21 | |||||||||||||||||||||||||||||||
Kudu/Sable | 890 | 895 | ( 5 | ) | 0 | — | 0 | — | 2,024 | 13 | ||||||||||||||||||||||||||||||
West Shaft | 13,117 | 13,650 | ( 533 | ) | 8,900 | — | 8,900 | 887 | 25,525 | 206 | ||||||||||||||||||||||||||||||
Nyala | 81 | 226 | ( 145 | ) | — | — | — | 3 | 184 | 2 | ||||||||||||||||||||||||||||||
St Helena | 6,867 | 10,802 | ( 3,935 | ) | 6,416 | — | 6,416 | 443 | 12,791 | 127 | ||||||||||||||||||||||||||||||
Surface operations | 5,366 | 5,386 | ( 20 | ) | 858 | — | 858 | 340 | 11,019 | 336 | ||||||||||||||||||||||||||||||
Other | — | — | — | 160,980 | 257,043 | 418,023 | — | — | — | |||||||||||||||||||||||||||||||
Total Freegold | 332,430 | 259,721 | 72,709 | 976,284 | 257,043 | 1,233,327 | 402,860 | 65,238 | 624,699 | 4,123 | ||||||||||||||||||||||||||||||
ARMgold operations | ||||||||||||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Orkney 2 | 36,589 | 29,716 | 6,873 | 9,231 | — | 9,231 | 2,380 | 69,877 | 347 | |||||||||||||||||||||||||||||||
Orkney 4 | 31,117 | 29,273 | 1,844 | 11,690 | — | 11,690 | 4,759 | 58,897 | 406 | |||||||||||||||||||||||||||||||
Welkom 1 | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Surface operations | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Other | — | — | — | 671 | 340,179 | 340,850 | — | — | — | |||||||||||||||||||||||||||||||
Total ARMgold | 67,706 | 58,989 | 8,717 | 21,592 | 340,179 | 361,771 | 20,065 | 7,139 | 128,774 | 753 | ||||||||||||||||||||||||||||||
Avgold operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Target | 81,178 | 51,904 | 29,274 | 279,852 | — | 279,852 | 9,644 | 150,196 | 813 | |||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Surface operations | 404 | 968 | ( 564 | ) | 678 | — | 678 | — | 746 | 204 | ||||||||||||||||||||||||||||||
Other | — | — | — | 717,182 | 19,180 | 736,362 | — | — | — | |||||||||||||||||||||||||||||||
Total Avgold | 81,582 | 52,872 | 28,710 | 997,712 | 19,180 | 1,016,892 | 5,309 | 9,644 | 150,942 | 1,017 | ||||||||||||||||||||||||||||||
Kalgold operations | ||||||||||||||||||||||||||||||||||||||||
Surface operations | 39,341 | 31,740 | 7,601 | 12,190 | — | 12,190 | 389 | 77,071 | 2,008 | |||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | — | 5,402 | 5,402 | — | — | — | |||||||||||||||||||||||||||||||
Total Kalgold | 39,341 | 31,740 | 7,601 | 12,190 | 5,402 | 17,592 | 1,933 | 389 | 77,071 | 2,008 | ||||||||||||||||||||||||||||||
Table of Contents
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Other entities | — | — | — | 1,450 | 429,445 | 430,895 | 133,630 | — | — | — | ||||||||||||||||||||||||||||||
TOTAL SOUTH AFRICA | 1,140,837 | 937,102 | 203,735 | 2,897,005 | 1,409,887 | 4,306,892 | 1,326,716 | 222,027 | 2,155,464 | 17,422 | ||||||||||||||||||||||||||||||
AUSTRALASIA | ||||||||||||||||||||||||||||||||||||||||
Mt Magnet | 80,090 | 59,427 | 20,663 | 71,897 | 9,401 | 81,298 | 23,669 | 22,651 | 148,822 | 1,918 | ||||||||||||||||||||||||||||||
South Kal | 42,406 | 37,523 | 4,883 | 42,637 | 8,367 | 51,004 | 12,213 | 2,320 | 82,639 | 1,480 | ||||||||||||||||||||||||||||||
Papua New Guinea | — | — | — | 212,166 | 851 | 213,017 | 3,164 | 18,221 | — | — | ||||||||||||||||||||||||||||||
Other | — | — | — | 21,367 | 93,253 | 114,620 | 162,640 | 104 | — | — | ||||||||||||||||||||||||||||||
TOTAL AUSTRALASIA | 122,496 | 96,950 | 25,546 | 348,067 | 111,872 | 459,939 | 201,686 | 43,296 | 231,461 | 3,398 | ||||||||||||||||||||||||||||||
TOTAL HARMONY | 1,263,333 | 1,034,052 | 229,281 | 3,245,072 | 1,521,759 | 4,766,831 | 1,528,402 | 265,323 | 2,386,925 | 20,820 | ||||||||||||||||||||||||||||||
Reconciliation of segment data to consolidated financial statements | — | 200,947 | 51,141 | (355,773 | ) | ( 304,632 | ) | 8 432 | — | — | — | |||||||||||||||||||||||||||||
1,263,333 | 1,234,999 | 3,296,213 | 1,165,986 | 4,462,199 | 1,536,834 | 265,323 | 2,386,925 | 20,820 | ||||||||||||||||||||||||||||||||
(*) | Production statistics are unaudited |
F-56
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||||||||||||||||||||||
Free State operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Masimong | 68,342 | 65,388 | 2,954 | 48,026 | — | 48,026 | 10,630 | 159,981 | 1,046 | |||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Harmony 2 | 29,295 | 30,021 | (726 | ) | 6,234 | — | 6,234 | 3,555 | 68,547 | 559 | ||||||||||||||||||||||||||||||
Merriespruit 1 | 19,428 | 21,719 | (2,291 | ) | 5,865 | — | 5,865 | 2,833 | 45,559 | 414 | ||||||||||||||||||||||||||||||
Merriespruit 3 | 23,325 | 24,379 | (1,054 | ) | 5,091 | — | 5,091 | 1,696 | 54,690 | 548 | ||||||||||||||||||||||||||||||
Unisel | 27,798 | 31,055 | (3,257 | ) | 21,106 | — | 21,106 | Information not allocated at shaft level | 4,147 | 65,011 | 494 | |||||||||||||||||||||||||||||
Brand 3 | 19,807 | 22,883 | (3,076 | ) | 3,435 | — | 3,435 | 1,267 | 46,299 | 448 | ||||||||||||||||||||||||||||||
Brand 5 | 8 | 2,120 | (2,112 | ) | — | — | — | — | 33 | — | ||||||||||||||||||||||||||||||
Saaiplaas 3 | 1,026 | 4,831 | (3,805 | ) | 475 | — | 475 | 4 | 2,541 | 30 | ||||||||||||||||||||||||||||||
Surface operations | 3,720 | 3,318 | 402 | 37,481 | — | 37,481 | 1,589 | 9,542 | 467 | |||||||||||||||||||||||||||||||
Other | — | — | — | 66,795 | 604,336 | 671,131 | 30 | — | — | |||||||||||||||||||||||||||||||
Total Free State | 192,749 | 205,714 | (12,965 | ) | 194,508 | 604,336 | 798,844 | 539,519 | 25,751 | 452,203 | 4,006 | |||||||||||||||||||||||||||||
Evander operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Evander 2 | 20,695 | 27,404 | (6,709 | ) | 10,872 | — | 10,872 | 15 | 48,764 | 357 | ||||||||||||||||||||||||||||||
Evander 5 | 20,078 | 15,912 | 4,166 | 10,499 | — | 10,499 | 7,006 | 47,093 | 245 | |||||||||||||||||||||||||||||||
Evander 7 | 55,502 | 32,795 | 22,707 | 44,770 | — | 44,770 | 7,948 | 130,009 | 541 | |||||||||||||||||||||||||||||||
Evander 8 | 64,912 | 41,500 | 23,412 | 40,526 | — | 40,526 | 8,216 | 151,936 | 734 | |||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Evander 9 | 1,078 | 3,005 | (1,927 | ) | — | — | — | Information not allocated at shaft level | — | 2,573 | 31 | |||||||||||||||||||||||||||||
Surface operations | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Other | — | — | — | 40,101 | 31,242 | 71,343 | — | — | — | |||||||||||||||||||||||||||||||
Total Evander | 162,265 | 120,616 | 41,649 | 146,768 | 31,242 | 178,010 | 46,946 | 23,185 | 380,375 | 1,908 | ||||||||||||||||||||||||||||||
F-57
Table of Contents
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Randfontein operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Cooke 1 | 33,888 | 31,115 | 2,773 | 13,317 | — | 13,317 | 2,811 | 79,101 | 520 | |||||||||||||||||||||||||||||||
Cooke 2 | 23,274 | 24,144 | (870 | ) | 13,848 | — | 13,848 | 2,538 | 54,441 | 403 | ||||||||||||||||||||||||||||||
Cooke 3 | 49,478 | 42,278 | 7,200 | 24,610 | — | 24,610 | 8,287 | 116,300 | 740 | |||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Growth assets | ||||||||||||||||||||||||||||||||||||||||
Doornkop | 22,478 | 23,573 | (1,095 | ) | 192,666 | — | 192,666 | 28,621 | 52,695 | 526 | ||||||||||||||||||||||||||||||
Surface operations | 14,185 | 14,117 | 68 | 2,676 | — | 2,676 | 6,120 | 33,397 | 2,757 | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 69,082 | 69,082 | — | — | — | |||||||||||||||||||||||||||||||
Total Randfontein | 143,303 | 135,227 | 8,076 | 247,117 | 69,082 | 316,199 | 59,469 | 48,377 | 335,934 | 4,946 | ||||||||||||||||||||||||||||||
Elandsrand operations | ||||||||||||||||||||||||||||||||||||||||
Growth assets | ||||||||||||||||||||||||||||||||||||||||
Elandsrand | 88,577 | 88,599 | (22 | ) | 257,670 | — | 257,670 | 26,081 | 207,371 | 1,019 | ||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Deelkraal | 958 | 714 | 244 | 2,514 | — | 2,514 | — | 2,284 | 1 | |||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Surface operations | — | — | — | 334 | — | 334 | 7 | — | — | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 98,919 | 98,919 | — | — | — | |||||||||||||||||||||||||||||||
Total Elandsrand | 89,535 | 89,313 | 222 | 260,518 | 98,919 | 359,437 | 100,437 | 26,088 | 209,655 | 1,020 | ||||||||||||||||||||||||||||||
Freegold operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Tshepong | 162,958 | 101,091 | 61,867 | 642,328 | — | 642,328 | 23,346 | 380,695 | 1,700 | |||||||||||||||||||||||||||||||
Growth assets | ||||||||||||||||||||||||||||||||||||||||
Phakisa | — | — | — | 258,424 | — | 258,424 | 18,756 | — | — | |||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Bambanani | 84,165 | 83,289 | 876 | 101,291 | — | 101,291 | 12,178 | 197,535 | 1,090 | |||||||||||||||||||||||||||||||
Joel | 27,282 | 28,990 | (1,708 | ) | 8,271 | — | 8,271 | 2,582 | 64,464 | 498 | ||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Eland | 11,436 | 13,404 | (1,968 | ) | — | — | — | — | 26,782 | 175 | ||||||||||||||||||||||||||||||
Kudu/Sable | 10,764 | 18,885 | (8,121 | ) | — | — | — | — | 25,175 | 194 | ||||||||||||||||||||||||||||||
West Shaft | 12,049 | 12,907 | (858 | ) | 10,230 | — | 10,230 | 107 | 28,165 | 176 | ||||||||||||||||||||||||||||||
Nyala | 9,897 | 17,587 | (7,690 | ) | — | — | — | 1,440 | 23,503 | 198 | ||||||||||||||||||||||||||||||
St Helena | 12,660 | 24,191 | (11,531 | ) | 2,227 | — | 2,227 | 901 | 29,965 | 245 | ||||||||||||||||||||||||||||||
Surface operations | 15,407 | 15,436 | (29 | ) | 3,376 | — | 3,376 | 314 | 36,420 | 1,361 | ||||||||||||||||||||||||||||||
Other | — | — | — | — | 596,686 | 596,686 | — | — | — | |||||||||||||||||||||||||||||||
Total Freegold | 346,618 | 315,780 | 30,838 | 1,026,147 | 596,686 | 1,622,833 | 455,720 | 59,624 | 812,704 | 5,637 | ||||||||||||||||||||||||||||||
ARMgold operations | ||||||||||||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Orkney 2 | 33,279 | 31,495 | 1,784 | 9,666 | — | 9,666 | 1,443 | 78,449 | 413 | |||||||||||||||||||||||||||||||
Orkney 4 | 32,720 | 29,616 | 3,104 | 10,321 | — | 10,321 | 915 | 76,971 | 455 | |||||||||||||||||||||||||||||||
Welkom 1 | 1,164 | 1,604 | (440 | ) | — | — | — | — | 2,734 | 21 | ||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Surface operations | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 21,088 | 21,088 | 394 | — | — | |||||||||||||||||||||||||||||||
Total ARMgold | 67,163 | 62,715 | 4,448 | 19,987 | 21,088 | 41,075 | 48,872 | 2,752 | 158,154 | 889 | ||||||||||||||||||||||||||||||
F-58
Table of Contents
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Avgold operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Target | 89,233 | 54,391 | 34,842 | 303,491 | — | 303,491 | Information not allocated at shaft level | 10,818 | 209,847 | 1,178 | ||||||||||||||||||||||||||||||
Surface operations | 579 | 467 | 112 | 942 | — | 942 | 1,790 | 1,350 | 88 | |||||||||||||||||||||||||||||||
Other | — | — | — | 770,753 | 16,303 | 787,056 | — | — | — | |||||||||||||||||||||||||||||||
Total Avgold | 89,812 | 54,858 | 34,954 | 1,075,186 | 16,303 | 1,091,489 | 29,989 | 12,608 | 211,197 | 1,266 | ||||||||||||||||||||||||||||||
Kalgold operations | ||||||||||||||||||||||||||||||||||||||||
Surface operations | 46,331 | 40,341 | 5,990 | 20,442 | — | 20,442 | Information not allocated at shaft level | (4,145 | ) | 108,195 | 1,855 | |||||||||||||||||||||||||||||
Other | — | — | — | 1,217 | 7,403 | 8,620 | — | — | — | |||||||||||||||||||||||||||||||
Total Kalgold | 46,331 | 40,341 | 5,990 | 21,659 | 7,403 | 29,062 | 4,621 | (4,145 | ) | 108,195 | 1,855 | |||||||||||||||||||||||||||||
Other entities | 1,755 | — | 1,755 | 900 | 172,201 | 173,102 | 122,657 | 2,035 | — | — | ||||||||||||||||||||||||||||||
TOTAL SOUTH AFRICA | 1,139,531 | 1,024,564 | 114,967 | 2,992,790 | 1,617,260 | 4,610,051 | 1,408,230 | 196,275 | 2,668,417 | 21,527 | ||||||||||||||||||||||||||||||
AUSTRALASIA | ||||||||||||||||||||||||||||||||||||||||
Mt Magnet | 77,242 | 60,915 | 16,327 | 78,172 | — | 78,172 | 74,686 | 15,652 | 181,233 | 2,743 | ||||||||||||||||||||||||||||||
South Kal | 48,427 | 39,263 | 9,164 | 55,289 | — | 55,289 | 52,123 | 10,161 | 115,615 | 1,405 | ||||||||||||||||||||||||||||||
Papua New Guinea | — | — | — | 200,749 | — | 200,749 | 2,680 | 12,051 | — | — | ||||||||||||||||||||||||||||||
Other | — | — | — | 24,265 | 103,357 | 127,622 | 51,541 | 2,178 | — | — | ||||||||||||||||||||||||||||||
TOTAL AUSTRALASIA | 125,669 | 100,178 | 25,491 | 358,475 | 103,357 | 461,832 | 181,030 | 40,042 | 296,848 | 4,148 | ||||||||||||||||||||||||||||||
TOTAL HARMONY | 1,265,200 | 1,124,742 | 140,458 | 3,351,265 | 1,720,617 | 5,071,883 | 1,589,260 | 236,317 | 2,965,265 | 25,675 | ||||||||||||||||||||||||||||||
Reconciliation of segment data to consolidated financial statements | — | 173,695 | 85,334 | (420,399 | ) | (335,065 | ) | 2 724 | — | — | — | |||||||||||||||||||||||||||||
1,265,200 | 1,298,437 | 3,436,599 | 1,300,218 | 4,736,818 | 1,591,984 | 236,317 | 2,965,265 | 25,675 | ||||||||||||||||||||||||||||||||
(*) | Production statistics are unaudited |
F-59
Table of Contents
Notes to the Consolidated Financial Statements
For the years ended June 30
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||||||||||||||||||||||
Free State operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Masimong | 84,119 | 69,774 | 20,390 | 57,468 | — | 57,468 | Information not allocated at shaft level | 10,615 | 234,307 | 1,378 | ||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Harmony 2 | 31,213 | 27,362 | 3,851 | 5,401 | — | 5,401 | 2,526 | 81,317 | 643 | |||||||||||||||||||||||||||||||
Merriespruit 1 | 20,980 | 19,521 | 1,459 | 8,209 | — | 8,209 | 3,328 | 54,565 | 477 | |||||||||||||||||||||||||||||||
Merriespruit 3 | 27,376 | 28,026 | (650 | ) | 5,005 | — | 5,005 | 2,287 | 71,156 | 743 | ||||||||||||||||||||||||||||||
Unisel | 32,475 | 29,713 | 2,762 | 29,009 | — | 29,009 | 6,181 | 84,308 | 677 | |||||||||||||||||||||||||||||||
Brand 3 | 21,412 | 21,052 | 360 | 7,957 | — | 7,957 | 1,390 | 55,400 | 531 | |||||||||||||||||||||||||||||||
Brand 5 | 5,702 | 11,591 | (5,889 | ) | 3,022 | — | 3,022 | — | 14,662 | 153 | ||||||||||||||||||||||||||||||
Saaiplaas 3 | 10,331 | 13,485 | (3,154 | ) | 5,291 | — | 5,291 | 200 | 26,783 | 254 | ||||||||||||||||||||||||||||||
Surface operations | 10,215 | 9,289 | 926 | 55,246 | — | 55,246 | 2,501 | 26,732 | 2,368 | |||||||||||||||||||||||||||||||
Other | — | — | — | 71,834 | 215,497 | 287,331 | 1,717 | — | — | |||||||||||||||||||||||||||||||
Total Free State | 243,823 | 223,768 | 20,055 | 248,442 | 215,497 | 463,939 | 592,666 | 30,745 | 633,248 | 7,224 | ||||||||||||||||||||||||||||||
Evander operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Evander 2 | 33,216 | 29,018 | 4,198 | 13,564 | — | 13,564 | Information not allocated at shaft level | 619 | 86,172 | 491 | ||||||||||||||||||||||||||||||
Evander 5 | 18,559 | 14,192 | 4,367 | 20,062 | — | 20,062 | 5,811 | 48,103 | 223 | |||||||||||||||||||||||||||||||
Evander 7 | 35,566 | 29,297 | 6,269 | 44,007 | — | 44,007 | 8,705 | 92,505 | 577 | |||||||||||||||||||||||||||||||
Evander 8 | 41,945 | 35,280 | 6,665 | 39,136 | — | 39,136 | 9,519 | 109,513 | 692 | |||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Evander 9 | 9,079 | 9,042 | 37 | — | — | — | — | 23,440 | 202 | |||||||||||||||||||||||||||||||
Surface operations | 756 | 496 | 260 | — | — | — | 2,367 | 1,961 | 101 | |||||||||||||||||||||||||||||||
Other | — | — | — | 42,881 | 24,613 | 67,494 | — | — | — | |||||||||||||||||||||||||||||||
Total Evander | 139,121 | 117,325 | 21,796 | 159,650 | 24,613 | 184,263 | 40,628 | 27,021 | 361,694 | 2,286 | ||||||||||||||||||||||||||||||
Randfontein operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Cooke 1 | 39,891 | 29,472 | 10,419 | 16,900 | — | 16,900 | Information not allocated at shaft level | 2,985 | 104,168 | 605 | ||||||||||||||||||||||||||||||
Cooke 2 | 34,748 | 30,615 | 4,133 | 14,853 | — | 14,853 | 4,411 | 90,761 | 749 | |||||||||||||||||||||||||||||||
Cooke 3 | 51,283 | 42,036 | 9,247 | 21,828 | — | 21,828 | 8,084 | 134,003 | 999 | |||||||||||||||||||||||||||||||
Growth assets | ||||||||||||||||||||||||||||||||||||||||
Doornkop | 24,913 | 20,546 | 4,367 | 183,313 | — | 183,313 | 16,819 | 65,234 | 567 | |||||||||||||||||||||||||||||||
Surface operations | 7,264 | 6,590 | 674 | 5,542 | — | 5,542 | 4,511 | 18,872 | 2,428 | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 62,252 | 62,252 | — | — | — | |||||||||||||||||||||||||||||||
Total Randfontein | 158,099 | 129,259 | 28,840 | 242,436 | 62,252 | 304,688 | 93,053 | 36,810 | 413,038 | 5,348 | ||||||||||||||||||||||||||||||
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Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Elandsrand operations | ||||||||||||||||||||||||||||||||||||||||
Growth assets | ||||||||||||||||||||||||||||||||||||||||
Elandsrand | 96,831 | 90,627 | 6,204 | 210,309 | — | 210,309 | 26,087 | 250,581 | 1,437 | |||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Deelkraal | 26,206 | 37,796 | (11,590 | ) | 50,630 | — | 50,630 | 1,305 | 68,127 | 522 | ||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Surface operations | 2,047 | 2,640 | (593 | ) | 891 | — | 891 | 294 | 5,301 | 451 | ||||||||||||||||||||||||||||||
Other | — | — | — | — | 17,777 | 17,777 | — | — | — | |||||||||||||||||||||||||||||||
Total Elandsrand | 125,084 | 131,063 | (5,979 | ) | 261,830 | 17,777 | 279,607 | 31,067 | 27,686 | 324,009 | 2,410 | |||||||||||||||||||||||||||||
Freegold operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Tshepong | 130,491 | 74,494 | 55,997 | 686,493 | — | 686,493 | 21,866 | 339,259 | 1,584 | |||||||||||||||||||||||||||||||
Growth assets | ||||||||||||||||||||||||||||||||||||||||
Phakisa | — | — | — | 258,043 | — | 258,043 | 16,845 | — | — | |||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Bambanani | 96,943 | 83,793 | 13,150 | 117,453 | — | 117,453 | 14,756 | 251,970 | 1,403 | |||||||||||||||||||||||||||||||
Joel | 22,906 | 21,481 | 1,425 | 10,587 | — | 10,587 | 1,922 | 59,642 | 494 | |||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Eland | 16,952 | 22,465 | (5,513 | ) | — | — | — | 274 | 44,017 | 303 | ||||||||||||||||||||||||||||||
Kudu/Sable | 13,331 | 14,473 | (1,142 | ) | 14,341 | — | 14,341 | — | 34,597 | 240 | ||||||||||||||||||||||||||||||
West Shaft | 12,061 | 9,546 | 2,515 | 11,744 | — | 11,744 | 622 | 31,318 | 175 | |||||||||||||||||||||||||||||||
Nyala | 4,033 | 3,578 | 455 | 15,663 | — | 15,663 | 7,276 | 10,482 | 98 | |||||||||||||||||||||||||||||||
St Helena | 23,643 | 27,012 | (3,369 | ) | 21,975 | — | 21,975 | 1,538 | 61,668 | 443 | ||||||||||||||||||||||||||||||
Surface operations | 23,850 | 20,427 | 3,423 | 3,368 | — | 3,368 | 21 | 61,192 | 3,538 | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 520,795 | 520,795 | 228,305 | — | — | |||||||||||||||||||||||||||||||
Total Freegold | 344,210 | 277,269 | 66,941 | 1,139,667 | 520,795 | 1,660,462 | 453,412 | 293,425 | 894,145 | 8,278 | ||||||||||||||||||||||||||||||
ARMgold operations | ||||||||||||||||||||||||||||||||||||||||
Leveraged assets | ||||||||||||||||||||||||||||||||||||||||
Orkney 1 | 123 | 194 | (71 | ) | — | — | — | — | 322 | 3 | ||||||||||||||||||||||||||||||
Orkney 2 | 31,435 | 25,026 | 6,409 | 11,581 | — | 11,581 | 1,866 | 81,434 | 387 | |||||||||||||||||||||||||||||||
Orkney 3 | 4,425 | 6,440 | (2,015 | ) | 427 | — | 427 | 464 | 11,413 | 137 | ||||||||||||||||||||||||||||||
Orkney 4 | 26,269 | 19,543 | 6,726 | 12,295 | — | 12,295 | 860 | 67,931 | 401 | |||||||||||||||||||||||||||||||
Orkney 6 | 4,304 | 5,378 | (1,074 | ) | — | — | — | — | 11,060 | 157 | ||||||||||||||||||||||||||||||
Orkney 7 | 1,760 | 1,970 | (210 | ) | 19 | — | 19 | — | 4,533 | 28 | ||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
welkom 1 | 7,415 | 9,939 | (2,524 | ) | — | — | — | — | 19,226 | 159 | ||||||||||||||||||||||||||||||
welkom 2 | 525 | 547 | (22 | ) | — | — | — | — | 1,350 | 12 | ||||||||||||||||||||||||||||||
welkom 3 | 592 | 581 | 11 | — | — | — | — | 1,511 | 15 | |||||||||||||||||||||||||||||||
welkom 4 | 1,531 | 1,496 | 35 | — | — | — | — | 3,922 | 13 | |||||||||||||||||||||||||||||||
welkom 6 | 935 | 894 | 41 | — | — | — | — | 2,411 | 24 | |||||||||||||||||||||||||||||||
welkom 7 | 3,890 | 3,566 | 324 | — | — | — | — | 9,902 | 88 | |||||||||||||||||||||||||||||||
Surface operations | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 20,097 | 20,097 | 614,962 | — | — | |||||||||||||||||||||||||||||||
Total ARMgold | 83,204 | 75,574 | 7,630 | 24,322 | 20,097 | 44,419 | 73,715 | 618,152 | 215,015 | 1,424 | ||||||||||||||||||||||||||||||
Avgold operations | ||||||||||||||||||||||||||||||||||||||||
Quality assets | ||||||||||||||||||||||||||||||||||||||||
Target | 19,772 | 11,514 | 8,258 | 384,862 | — | 384,862 | 1,175 | 53,434 | 228 | |||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
Other | — | — | — | 772,158 | 22,766 | 794,924 | 1,106,736 | — | — | |||||||||||||||||||||||||||||||
Total Avgold | 19,772 | 11,514 | 8,258 | 1,157,020 | 22,766 | 1,179,786 | 75,671 | 1,107,911 | 53,434 | 228 | ||||||||||||||||||||||||||||||
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Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Kalgold operations | ||||||||||||||||||||||||||||||||||||||||
Surface operations | 31,532 | 28,511 | 3,021 | 38,066 | — | 38,066 | 4,405 | 82,756 | 1,530 | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 17,509 | 17,509 | — | — | — | |||||||||||||||||||||||||||||||
Total Kalgold | 31,532 | 28,511 | 3,021 | 38,066 | 17,509 | 55,575 | 3,293 | 4,405 | 82,756 | 1,530 | ||||||||||||||||||||||||||||||
Other entities | — | — | — | — | 278,676 | 278,676 | 2,617 | 1,278 | — | — | ||||||||||||||||||||||||||||||
Information not allocated at shaft level | ||||||||||||||||||||||||||||||||||||||||
TOTAL SOUTH AFRICA | 1,144,84 | 994,283 | 150,562 | 3,271,433 | 1,179,982 | 4,451,415 | 1,366,122 | 2,147,433 | 2,977,339 | 28,728 | ||||||||||||||||||||||||||||||
AUSTRALASIA | ||||||||||||||||||||||||||||||||||||||||
Mt Magnet | 67,714 | 58,202 | 9,512 | 122,297 | — | 122,297 | 50,794 | 13,596 | 173,228 | 3,058 | ||||||||||||||||||||||||||||||
South Kal | 46,651 | 38,848 | 7,803 | 81,053 | — | 81,053 | 28,052 | 5,435 | 120,532 | 1,843 | ||||||||||||||||||||||||||||||
Papua New Guinea | — | — | — | 211,671 | — | 211,671 | 1,222 | 1,857 | — | — | ||||||||||||||||||||||||||||||
Other entities | 17,103 | 13,457 | 3,646 | 12,332 | 100,353 | 112,685 | 73,026 | 9,614 | 44,528 | 326 | ||||||||||||||||||||||||||||||
TOTAL AUSTRALASIA | 131,468 | 110,507 | 20,961 | 427,353 | 100,353 | 527,706 | 153,094 | 30,502 | 338,288 | 5,227 | ||||||||||||||||||||||||||||||
TOTAL HARMONY | 1,276,313 | 1,104,790 | 171,523 | 3,698,786 | 1,280,335 | 4,979,121 | 1,519,216 | 2,177,935 | 3,315,627 | 33,955 | ||||||||||||||||||||||||||||||
Reconciliation of segment data to consolidated financial statements | ||||||||||||||||||||||||||||||||||||||||
(35,974 | ) | 128,981 | 35,524 | (235,781 | ) | (200,257 | ) | 184,800 | (1,964,093 | ) | (90,439 | ) | — | |||||||||||||||||||||||||||
1,240,339 | 1,233,771 | 3,734,310 | 1,044,554 | 4,778,864 | 1,704,016 | 213,842 | 3,225,188 | 33,955 | ||||||||||||||||||||||||||||||||
(*) | Production statistics are unaudited |
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\
Notes to the Consolidated Financial Statements
For the years ended June 30
a) | Reversal of proportionate consolidation | |
For management reporting purposes, the Free Gold Company was proportionately consolidated until its acquisition on September 22, 2003. Under US GAAP, the equity method of accounting is applied in accounting for joint ventures. | ||
b) | Exploration costs | |
For management reporting purposes, certain exploration costs are capitalized. US GAAP does not permit the capitalization of exploration and evaluation expenditure. | ||
(c) | Business combinations – goodwill | |
For management reporting purposes, prior to 2004, goodwill was amortized using the straight-line method over the estimated life of the underlying asset. Under US GAAP, goodwill is not subject to amortization. Instead, the Company evaluates, 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. From July 1, 2004, this is in line with management’s reporting. | ||
d) | Business combinations — acquisition date | |
For management reporting purposes, the Free Gold Company results have been included from the date upon which the Company assumed joint operational control of the assets together with the seller. Under US GAAP, the Company accounts for its interest in the Free Gold Company from the date that all the conditions precedent to the transaction were met, and the assets were no longer subject to joint operational control. | ||
e) | Business combinations — purchase price | |
In addition, for management reporting purposes, the purchase price of the initial investment in Free Gold was determined as the sum of a cash payment, the fair value of an interest free loan and the taxes payable on the transaction by the seller. Under US GAAP, the purchase price was determined as the sum of a cash payment, the fair value of the interest free loan, the taxes payable on the transaction by the seller, offset by the cash flows generated by the joint venture during the period the assets were subject to joint operational control with the seller, as the cash flows generated during this period were for the account of the joint venture. | ||
f) | Reversal of previously recognized impairments | |
For management reporting purposes, certain impairments recognized in prior periods have been reversed. Under US GAAP, the reversal of previously recognized impairments is not permitted. | ||
g) | Provision for environmental rehabilitation | |
(i) Revisions to the asset retirement obligation | ||
For management reporting purposes, all changes in the carrying amount of the obligation are recognized in the income statement. Changes resulting from revisions in the timing or amount of estimated cash flows are recognized as an increase or decrease in the carrying amount of the asset retirement obligation and the associated capitalized retirement cost for US GAAP. | ||
In addition, the current discount rate is applied to measure the retirement obligation for management reporting purposes. Under US GAAP any decreases in the asset retirement obligation as a result of downward revisions in cash flow estimates should be treated as a modification of an existing asset retirement obligation, and should be measured at the historical discount rate used to measure the initial asset retirement obligation. |
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(ii) Amortization of rehabilitation asset | ||
The rehabilitation assets carrying value for management reporting purposes is different to that under US GAAP, mainly as a result of the unique transition provisions under SFAS No. 143 and revisions to the asset retirement obligation described above, which results in a different amortization charge. | ||
h) | Share-based compensation | |
For management reporting purposes, share-based compensation expense has been recognized on a fair value basis for all grants subsequent to November 2002. Under US GAAP, the Company has recognized share-based compensation expense for the fair value of options granted subsequent to January 2001. It has adopted FAS 123(R) using the modified prospective approach effective July 1, 2005. | ||
i) Transfer of ARM shares to the ARM Trust | ||
Although the transfer of the ARM shares to the ARM Trust was also not recognised for management reporting purposes, the Company ceased accounting for the increase in the fair value of ARM shares subsequent to the transfer of those shares to the ARM Trust. Under US GAAP, the Company has continued to account for the investment as “available-for sale” with gains and losses arising from changes in the fair value of the shares excluded from earnings and included as a separate component of stockholders’ equity. In turn, under US GAAP only, the Company recorded a derivative financial liability in respect of the increase in fair value of the shares and to reflect the fact that the upside on appreciation of the ARM shares now legally belongs to the intended beneficiaries of the ARM Trust. |
F-64