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o | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934 |
þ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
o | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
RANDFONTEIN, SOUTH AFRICA, 1760
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
(Title of Class)
each representing one ordinary share
(Title of Class)
Ordinary shares, with nominal value Rand 50 cents per share*
(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. |
Large accelerated filerþ | Accelerated filero | Non-accelerated filero |
U.S. GAAPo | International financial Report Standards as issued | Othero | ||
by the International Accounting Standards Boardþ |
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• | Loss reported under U.S. GAAP to its profit/(loss) under IFRS for the fiscal years ended June 30, 2007 and 2006, respectively; and | ||
• | Shareholders’ equity reported under U.S. GAAP to its shareholders’ equity under IFRS as of June 30, 2007. |
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EX-12.1 | ||||||||
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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 we operate. |
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Fiscal year ended June 30, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
($ in millions, except per share amounts) | ||||||||||||||||||||
Income Statement Data | ||||||||||||||||||||
Revenue | 1,269 | 1,116 | 937 | 953 | 955 | |||||||||||||||
Operating profit/(loss) | 73 | 154 | (104 | ) | (322 | ) | (73 | ) | ||||||||||||
Loss from associates | (11 | ) | (3 | ) | (17 | ) | — | — | ||||||||||||
(Loss)/profit from continuing operations before taxation | (39 | ) | 156 | (91 | ) | (517 | ) | (3 | ) | |||||||||||
Taxation | (65 | ) | (39 | ) | (22 | ) | 87 | 1 | ||||||||||||
(Loss)/profit from continuing operations | (104 | ) | 117 | (113 | ) | (430 | ) | (2 | ) | |||||||||||
Profit/(loss) from discontinued operations | 74 | (66 | ) | 22 | (70 | ) | (35 | ) | ||||||||||||
Net (loss)/profit | (30 | ) | 51 | (91 | ) | (500 | ) | (37 | ) |
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Fiscal year ended June 30, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
($ in millions, except per share amounts) | ||||||||||||||||||||
Basic (loss)/earnings per share from continuing operations ($) | (0.26 | ) | 0.29 | (0.29 | ) | (1.19 | ) | (0.01 | ) | |||||||||||
Diluted (loss)/earnings per share from continuing operations ($) | (0.26 | ) | 0.29 | (0.29 | ) | (1.19 | ) | (0.01 | ) | |||||||||||
Basic (loss)/earnings per share ($) | (0.08 | ) | 0.12 | (0.23 | ) | (1.38 | ) | (0.15 | ) | |||||||||||
Diluted (loss)/earnings per share ($) | (0.08 | ) | 0.12 | (0.23 | ) | (1.38 | ) | (0.15 | ) | |||||||||||
Weighted average number of shares used in the computation of basic (loss)/earnings per share | 400,750,167 | 397,910,797 | 393,727,012 | 361,816,512 | 253,558,000 | |||||||||||||||
Weighted average number of shares used in the computation of diluted (loss)/earnings per share | 402,894,248 | 402,382,011 | 393,727,012 | 361,817,512 | 254,888,334 | |||||||||||||||
Dividends per share | — | — | — | 0.05 | 0.10 | |||||||||||||||
Other Financial Data | ||||||||||||||||||||
Cash cost per ounce of gold from continuing operations ($/oz)(1) | 591 | 479 | 440 | 383 | 339 | |||||||||||||||
Total cash cost per ounce of gold ($/oz)(1) | 589 | 486 | 436 | 379 | 333 |
June 30, | ||||||||||||||||||||
2008 | 2007 | 2006 | 2005 | 2004 | ||||||||||||||||
($ in millions) | ||||||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||
Assets | ||||||||||||||||||||
Property, plant and equipment | 3,531 | 3,484 | 3,263 | 3,385 | 3,731 | |||||||||||||||
Non-current assets classified as held for sale | 197 | 182 | — | — | — | |||||||||||||||
Other assets | 982 | 1,494 | 1,432 | 1,433 | 1,256 | |||||||||||||||
Total assets | 4,710 | 5,160 | 4,695 | 4,818 | 4,987 | |||||||||||||||
Equity and liabilities | ||||||||||||||||||||
Total equity | 3,172 | 3,366 | 3,249 | 3,489 | 3,464 | |||||||||||||||
Borrowings (current and non-current) | 525 | 653 | 500 | 563 | 461 | |||||||||||||||
Other liabilities | 1,013 | 1,141 | 946 | 766 | 1,062 | |||||||||||||||
Total equity and liabilities | 4,710 | 5,160 | 4,695 | 4,818 | 4,987 |
(1) | Total cash costs and total cash costs per ounce are non-GAAP measures. We have 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. |
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Ongoing employee termination costs are included, however, employee termination costs associated with major restructuring and shaft closures are excluded. Total cash costs have been calculated on a consistent basis for all periods presented. Changes in cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and the U.S. dollar. Because total cash costs and total cash costs per ounce are non-GAAP measures, they should therefore not be considered by investors in isolation or as an alternative to production costs, cost of sales, or any other measure of financial performance calculated in accordance with IFRS as issued by the IASB. While the Gold Institute has provided a definition for the calculation of total cash costs and total cash costs per ounce, the calculation of cash costs per ounce may vary from company to company and may not be comparable to other similarly titled measures of other companies. However, we believe that cash costs per ounce is a useful indicator to investors and management of a mining company’s performance as it provides (1) an indication of the cash generating capacities of the mining operations, (2) the trends in cash costs as the company’s operations mature, (3) a measure of a company’s performance, by comparison of cash costs per ounce to the spot price of gold and (4) an internal benchmark of performance to allow for comparison against other companies. For further information, seeItem 5. “Operating and Financial Review and Prospects — Costs — Reconciliation of non-GAAP measures”. |
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Fiscal Year Ended | ||||||||
June 30, | Average(1) | Period End | ||||||
2004 | 6.89 | 6.23 | ||||||
2005 | 6.18 | 6.67 | ||||||
2006 | 6.36 | 7.17 | ||||||
2007 | 7.20 | 7.04 | ||||||
2008 | 7.26 | 7.80 |
Month of | High | Low | ||||||
May 2008 | 7.76 | 7.47 | ||||||
June 2008 | 8.12 | 7.70 | ||||||
July 2008 | 7.92 | 7.31 | ||||||
August 2008 | 7.90 | 7.24 | ||||||
September 2008 | 8.28 | 7.77 | ||||||
October 2008 (through October 21, 2008) | 10.67 | 8.27 |
(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 or weakness of the U.S. dollar (the currency in which gold prices generally are quoted) and of other currencies; | ||
• | financial market expectations regarding the rate of inflation; | ||
• | interest rates; | ||
• | speculative activities; | ||
• | actual or expected purchases and sales of gold bullion held by central banks or other large gold bullion holders or dealers; | ||
• | forward sales by other gold producers; and | ||
• | the production and cost levels for gold in major gold-producing nations, such as South Africa, China, the United States and Australia. |
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Price per ounce | ||||||||||||
High | Low | Average | ||||||||||
Calendar Year | ($) | ($) | ($) | |||||||||
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 | 725 | 525 | 604 | |||||||||
2007 | 841 | 608 | 695 | |||||||||
2008 (through October 21, 2008) | 1,011 | 741 | 775 |
• | future cash costs (which in some cases are assumed to decrease significantly); | ||
• | future gold prices; and | ||
• | future currency exchange rates. |
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• | locating orebodies; | ||
• | identifying the metallurgical properties of orebodies; | ||
• | estimating the economic feasibility of mining orebodies; | ||
• | developing appropriate metallurgical processes; | ||
• | obtaining necessary governmental permits; and | ||
• | constructing mining and processing facilities at any site chosen for mining. |
• | future gold and other metal prices; | ||
• | anticipated tonnage, grades and metallurgical characteristics of ore to be mined and processed; | ||
• | anticipated recovery rates of gold and other metals from the ore, and | ||
• | anticipated total costs of the project, including capital expenditure and cash costs. |
• | the availability and timing of necessary environmental and governmental permits; | ||
• | the timing and cost of constructing mining and processing facilities, which can be considerable; | ||
• | the availability and cost of skilled labor, power, water and other materials; | ||
• | the accessibility of transportation and other infrastructure, particularly in remote locations; | ||
• | the availability and cost of smelting and refining arrangements; and | ||
• | the availability of funds to finance construction and development activities. |
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• | our ability to identify appropriate assets for acquisition and/or to negotiate acquisitions on favorable terms; | ||
• | obtaining the financing necessary to complete future acquisitions; | ||
• | difficulties in assimilating the operations of the acquired business; | ||
• | difficulties in maintaining our financial and strategic focus while integrating the acquired business; | ||
• | problems in implementing uniform standards, controls, procedures and policies; | ||
• | increasing pressures on existing management to oversee a rapidly expanding company; and | ||
• | to the extent we acquire mining operations outside South Africa or Australasia, encountering difficulties relating to operating in countries in which we have not previously operated. |
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• | Rock bursts; | ||
• | seismic events; | ||
• | underground fires; | ||
• | cave-ins or falls of ground; | ||
• | discharges of gases and toxic chemicals; | ||
• | release of radioactive hazards; | ||
• | flooding; | ||
• | pillar mining | ||
• | accidents; and | ||
• | other conditions resulting from drilling, blasting and the removal and processing of material from a deep-level mine. |
• | flooding of the open-pit; | ||
• | collapse of the open-pit walls; | ||
• | accidents associated with the operation of large open-pits and rock transportation equipment; and | ||
• | accidents associated with the preparation and ignition of large-scale open-pit blasting operations. |
• | accidents associated with operating a waste dump and rock transportation; | ||
• | pillar mining; and | ||
• | production disruptions caused by weather. |
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• | generally not permitted to export capital from South Africa, to hold foreign currency or incur indebtedness denominated in foreign currencies without the approval of the South African exchange control authorities; | ||
• | generally not permitted to acquire an interest in a foreign venture without the approval of the South African exchange control authorities and first having complied with the investment criteria of the South African exchange control authorities; | ||
• | generally required to repatriate to South Africa profits of foreign operations; and | ||
• | limited in our ability to utilize profits of one foreign business to finance operations of a different foreign business. |
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• | negotiating agreements with contractors on acceptable terms; | ||
• | the inability to replace a contractor and its operating equipment in the event that either party terminates the agreement; | ||
• | reduced control over those aspects of operations which are the responsibility of the contractor; | ||
• | failure by a contractor to perform in terms of its agreement with us; | ||
• | interruption of operations in the event that a contractor ceases to operate due to insolvency or other unforeseen events; | ||
• | failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; and | ||
• | contractor’s problems regarding management of its workforce, labor unrest or other employment issues. |
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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; | ||
• | 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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• | Tshepong, Phakisa, Bambanani, Doornkop, Elandsrand, Target, Evander operations, Masimong, Virginia operations and Cooke operations (classified as discontinued operations); and | ||
• | all other shafts and surface operations, including those that treat historic sand dumps, rock dumps and tailings dams, are grouped together under “Other — Underground” or “Other — Surface”. |
• | Golpu stand alone (an update of the Golpu PFS scenario); | ||
• | Golpu + Link Zone (high grade lenses within Zone B); and | ||
• | Golpu + Link Zone + Non-Refractory gold ore (“NRG1”); |
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• | First, we undertook to review our operational performance and maintain a clear operational focus. This entailed developing an understanding of what our operations were capable of delivering, devising and putting in place the plans to ensure delivery, and holding management responsible for that delivery. | ||
• | Second, we assessed our assets, to focus our attention on those operations that were core to the business and had the ability to be profitable. At the same time, we identified and initiated joint ventures we believed where these assets could better cater for the medium- and longer-term health of the company and bring about greater value. | ||
• | Finally, we undertook to improve the financial viability of the business and to substantially overhaul the balance sheet. In so doing, we focused on improving operational performance, combined with the sale of non-core assets and partnering in joint ventures. We undertook to identify opportunities to sustain and grow production. While our exploration work in PNG continues, we are also about to begin with some organic exploration work at Evander in South Africa. This element of our strategy is at an early stage and will be an area of increased attention during the year ahead. |
• | We believe that our size and leading market position enables us to undertake exploration and simultaneously develop multiple projects around the world, as well as secure capital on competitive terms. | ||
• | The global gold industry offers a number of attractive industry fundamentals from which we benefit. This includes the absence of available substitutes, relatively high barriers to entry, and increasing gold producer concentration. | ||
• | We are developing new mines at a planned lower cost per ounce than our current operations, which we believe will help make them robust enough to survive any margin squeeze and to withstand any reversal in the gold price. We expect the gold price to continue its upward trend in the medium term |
• | Our ore reserves as of June 30, 2008 amounted to 50.5 million ounces of gold spread across our assets in South Africa and PNG. This ore reserve base is sufficient to support our existing production profile in excess of 10 years at current production levels. Year-on-year depletion accounted for a decrease of 1.9 million ounces in the reserves. Corporate activity, the exclusion of operations held for sale, restructuring of certain shafts and geological related changes accounts for a further decrease of 5.7 million ounces of reserves. On the positive side there is a net addition of 4.4 million ounces of reserves from surface stockpiles. | ||
• | Of our 50.5 million ounces of reserves, 38.3 million ounces are classified as above infrastructure and 12.2 million ounces are classified as below infrastructure (reserves for which capital expenditure has still to be approved). |
• | We have a diverse portfolio of gold development projects spread across South Africa and PNG. These projects include Elandsrand, Doornkop, Tshepong and Phakisa in South Africa, and Hidden Valley in PNG, which, when developed, could deliver up to 1.4 million ounces of additional production by 2012. |
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• | We believe the relatively higher grade of these South African deposits and/or lower cost base will result in these ounces being produced at highly competitive cash costs. This in turn may result in a reduction in our overall cash cost position as these new projects are commissioned. | ||
• | In addition to these projects, we have a number of additional development prospects that are being considered and progressed, including the processing of sand dumps and tailings dams in our Mega Dumps projects, the processing of rock dumps, and developing the Wafi/Golpu copper/gold deposit in PNG, which, when all developed, could increase production by 1.0 million ounces per annum. | ||
• | We have also expanded our exploration skill base, evidenced by our progress in PNG. | ||
• | We formed Rand Uranium (Proprietary) Limited (“Rand Uranium”), to which we will transfer our Cooke assets to optimize the value of our uranium deposits. |
• | In the midst of volatile tumultuous global investment markets, the gold market has demonstrated great resilience and a positive upside. The price performance throughout fiscal 2008 supports our positive outlook for gold and, given our operational imperatives, we will seek to contain costs, increase output and optimize our margins. | ||
• | The gold price hit a high of U.S.$1,030 per ounce on March 17, 2008 and, while it was a more subdued U.S.$772 per ounce as of October 21, 2008, this is 3% higher than it was for the same time the previous year. | ||
• | We believe the fundamental drivers behind increased demand and decreased new supply of gold will remain in the future, which will in turn support a higher gold price over this period. As an unhedged gold producer, we will benefit from a rising gold price environment. |
• | Our aim remains to return to profitability. At an operational level we have put in place an intensive process of business planning, with benchmarks and targets we believe to be realistic. | ||
• | We are committed to lower our cost base and extensively benchmark our costing parameters both internally among our operations, and externally against other gold producers. Stringent cost cutting and cost control programs have been implemented. | ||
• | We are confident that the benefits of our restructuring process and ongoing cost focus will be sustained in the long term, and as a result, our ability to withstand any future adverse market conditions has been significantly enhanced. |
• | We maintain a conservative gearing policy and seek to fund ongoing capital expenditure (excluding growth projects) through cash generated from existing operations. | ||
• | Our low level of gearing should provide us with the ability to utilize debt to fund capital and development expenditure requirements for our new projects. |
• | Our senior management team consists of experienced mining executives with extensive industry backgrounds combined with geological and metallurgical expertise. | ||
• | Our senior management team has a proven track record in developing and managing the operations under its control, and has demonstrated an ability to optimize underperforming assets as well as developing new projects around the world. |
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• | We are proud to be a South African company and fully embraces the country’s transformation initiatives. We are 16% owned by African Rainbow Minerals Limited (“ARM Limited”), a black empowerment company in which our chairman, Patrice Motsepe, owns an interest. | ||
• | We believe that we have gone beyond the requirements of the Mining Charter by ensuring that our HDSA partners are truly empowered, that we are largely managed by a HDSA Board, and that we continue to engage with black shareholders and/or partners to find more opportunities to invest in BEE transactions and involve HDSA partners. | ||
• | We will continue to embrace empowerment as part of our growth strategy and we acknowledge that empowerment forms a fundamental part of our business into the future. |
• | Our extensive experience and established track record of successfully identifying, exploring and developing our own projects is a core component of our value creation strategy. | ||
• | Our ongoing exploration program is focused on both on-mine exploration, which targets resources within the economic radius of existing mines, and new mine exploration, which targets promising early to advanced stage projects around the world. | ||
• | We are currently expanding our production base in South Africa and PNG, with a focus on developing new mines at competitive cash costs and upgrading the overall quality of our portfolio. | ||
• | We currently have a diverse project pipeline, comprising five projects that are well advanced and, if all developed, could deliver up to 1.4 million ounces of low-cost production by 2012. These projects include Elandsrand New Mine, Doornkop South Reef, Tshepong Sub 66 and Sub 71 Declines and Phakisa in South Africa, and Hidden Valley in PNG, which, if all developed, would contribute to a reduction in our overall cash costs per ounce when they come on-stream. | ||
• | In addition to these projects, we have a number of additional development prospects that are being progressed, including surface sand dumps, rock dumps and tailings dams, reviewing the potential of our uranium deposits, and developing the Wafi/Golpu copper/gold deposit in PNG, which, when an investment decision is taken by the board to develop them once feasibility studies are complete, could increase production by up to 1.0 million ounces. | ||
• | We have also expanded our exploration skill base, evidenced by our progress in PNG. |
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• | management to lead by example; | ||
• | continuous verbal communication with all team members; | ||
• | visible creation of awareness of safety-related issues; | ||
• | award and recognize safety achievements; and | ||
• | the involvement of all stakeholders. |
• | At each mining site, we have 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 the Board. |
• | Annual operational goals and targets, including cost, volume and grade targets are established in consultation with our executive committee for each mining site. Each management team develops an operational plan to implement the goals and targets for its mine site. Members of our executive committee review and measure the results at each mining site on a regular basis throughout the year. |
• | Gold mining in South Africa is labor intensive, accounting for about 50% of our South African operating costs. To control these costs, we structures our operations to achieve maximum productivity with the goal of having 60% of our workforce directly engaged in stoping, or underground excavation, and development rock breaking activities. |
• | We are committed to reducing our cost base and, to this end, we benchmark our costing parameters both internally among our operations and externally against other gold producers. |
• | We apply a principle of “appropriate maintenance” which allows us to spend capital commensurate with the life of a specified operation. This principle ensures safe operation and reduces capital that may be used ineffectively on mines that have a limited life. |
• | We have 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 us to be proactive in our decision-making. |
• | We are committed to increasing the consistency of our operations, in terms of both gold ore grades and production levels, in order to extract optimal value from our orebodies. To achieve this, we are continuing with our intensive program to significantly improve the mining flexibility of our operations by increasing our development expenditure and focusing on comprehensive ore |
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reserve management. We have made significant progress on this objective, as evidenced by our development rates. | |||
• | We are currently reviewing potential opportunities in respect of certain deposits and assets which we may develop independently of our core gold business, and in particular, our uranium assets, of which the underground resources are not currently reflected on our balance sheet or reserve statement. |
• | We have a long track-record of acquisitions, having completed over 25 transactions and successfully integrating each of these operations into the Company. | ||
• | We possess broad and extensive gold mining experience gained through the development and operation of both surface, opencast mines and mechanized, underground mines. This breadth of expertise provides us with a competitive advantage when evaluation acquisition opportunities. |
• | We have accumulated a diverse portfolio of assets, a number of which are nearing the end of their productive lives for us and are considered non-core to our business. However, these assets may be of higher value to smaller producers who are less concerned about short mine lives, and can still profitably operate these assets for a number of years. | ||
• | As a result, we believe our disposal strategy will create value through the targeted sale of these assets, which for us have relatively higher cost bases and/or shorter mine lives. See “Disposals” below. |
• | We acknowledge significant capital expenditure and a commitment to a long time horizon are required to develop our projects into new mines. However, we firmly believe that this is the foundation of our future, and to this end, have made substantial investments in our major projects both in South Africa and PNG. |
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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. |
• | Accessing the orebody. | ||
In our South African underground mines, access to the orebody is by means of shafts sunk from the surface to the lowest economically and practically mineable level. Horizontal development at various intervals of a shaft (known as levels) extends access to the horizon of the reef to be mined. On-reef development then provides specific mining access. Horizontal development at various intervals of the decline extends access to the horizon of the 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 our open-pit mines, access to the orebody is provided by overburden stripping, which removes the covering layers of topsoil or rock, through a combination of drilling, blasting, loading and hauling, as required. | |||
• | Mining the orebody. | ||
The process of ore removal starts with drilling and blasting the accessible ore. The blasted faces are then cleaned, and the ore is transferred to the transport system. In open-pit mines, gold-bearing material may require drilling and blasting, and is usually collected by bulldozers or shovels to transfer it onto trucks, which transport it to the mill. |
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• | 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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• | normal depletion of 1.9 million ounces; | ||
• | corporate activity, the exclusion of operations held for sale, restructuring of certain shafts and geological-related changes resulting in a decrease of 5.7 million ounces; and | ||
• | a net addition of 4.4 million ounces of ore reserves from surface stockpiles. |
• | the database of measured and indicated resource blocks (per shaft section); | ||
• | an assumed gold price which, for this ore reserve statement, was taken as R180,000 per kilogram; | ||
• | planned production rates; | ||
• | the mine recovery factor (MRF) which is equivalent to the mine call factor (“MCF”) multiplied by the plant recovery factor; and | ||
• | planned cash costs (cost per tonne). |
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PROVEN | PROBABLE | TOTAL | ||||||||||||||||||||||||||||||||||
Tons | Grade | Gold(1) | Tons | Grade | Gold(1) | Tons | Grade | Gold(1) | ||||||||||||||||||||||||||||
Operations | (million) | (oz/ton) | (Moz) | (million | (oz/ton) | (Moz) | (millions) | (oz/ton) | (Moz) | |||||||||||||||||||||||||||
South Africa Underground | ||||||||||||||||||||||||||||||||||||
Tshepong | 6.64 | 0.177 | 1.18 | 19.32 | 0.176 | 3.39 | 25.96 | 0.176 | 4.57 | |||||||||||||||||||||||||||
Phakisa | 0.09 | 0.217 | 0.02 | 21.87 | 0.243 | 5.30 | 21.96 | 0.242 | 5.32 | |||||||||||||||||||||||||||
Bambanani | 3.15 | 0.283 | 0.89 | 1.09 | 0.268 | 0.29 | 4.24 | 0.279 | 1.18 | |||||||||||||||||||||||||||
Doornkop | 0.37 | 0.118 | 0.04 | 1.11 | 0.124 | 0.14 | 1.48 | 0.123 | 0.18 | |||||||||||||||||||||||||||
Elandskraal | 4.83 | 0.186 | 0.90 | 39.56 | 0.195 | 7.73 | 44.39 | 0.194 | 8.63 | |||||||||||||||||||||||||||
Masimong | 4.01 | 0.147 | 0.59 | 1.09 | 0.155 | 0.17 | 5.1 | 0.148 | 0.76 | |||||||||||||||||||||||||||
Virginia operations | 5.92 | 0.127 | 0.75 | 2.63 | 0.144 | 0.38 | 8.55 | 0.132 | 1.13 | |||||||||||||||||||||||||||
Evander | 3.08 | 0.202 | 0.62 | 8.12 | 0.163 | 1.32 | 11.20 | 0.173 | 1.94 | |||||||||||||||||||||||||||
Evander(below infrastructure) | — | — | — | 57.24 | 0.213 | 12.21 | 57.24 | 0.213 | 12.21 | |||||||||||||||||||||||||||
Target | 9.22 | 0.214 | 1.97 | 12.72 | 0.179 | 2.28 | 21.94 | 0.194 | 4.25 | |||||||||||||||||||||||||||
Other — underground | 0.90 | 0.144 | 0.13 | 2.14 | 0.149 | 0.32 | 3.04 | 0.145 | 0.45 | |||||||||||||||||||||||||||
Total S.A. Underground | 38.21 | 0.185 | 7.09 | 166.89 | 0.201 | 33.53 | 205.10 | 0.198 | 40.62 | |||||||||||||||||||||||||||
South Africa surface | ||||||||||||||||||||||||||||||||||||
Kalgold | 12.46 | 0.026 | 0.33 | 1.79 | 0.037 | 0.07 | 14.25 | 0.028 | 0.39 | |||||||||||||||||||||||||||
Free Gold | 803.16 | 0.007 | 5.68 | 77.39 | 0.010 | 0.80 | 880.55 | 0.007 | 6.47 | |||||||||||||||||||||||||||
Total S.A. Surface | 815.62 | 0.007 | 6.01 | 79.18 | 0.011 | 0.87 | 894.80 | 0.008 | 6.88 | |||||||||||||||||||||||||||
PNG | ||||||||||||||||||||||||||||||||||||
Hidden Valley and Kaveroi | 3.64 | 0.067 | 0.24 | 24.46 | 0.059 | 1.46 | 28.10 | 0.060 | 1.70 | |||||||||||||||||||||||||||
Hamata | — | — | — | 4.33 | 0.074 | 0.32 | 4.33 | 0.074 | 0.32 | |||||||||||||||||||||||||||
Golpu | — | — | — | 54.63 | 0.018 | 0.97 | 54.63 | 0.018 | 0.97 | |||||||||||||||||||||||||||
Total PNG | 3.64 | 0.067 | 0.24 | 83.42 | 0.033 | 2.75 | 87.06 | 0.034 | 2.99 | |||||||||||||||||||||||||||
Grand total | 857.47 | 0.016 | 13.34 | 329.49 | 0.113 | 37.15 | 1,186.96 | 0.043 | 50.49 |
(1) | Gold oz figures are fully inclusive of all mining dilutions and gold losses, and are reported as mill-delivered tons and head grades. Metallurgical recovery factors have not been applied to the reserve figures stated above. The approximate metallurgical recovery factors for the table above are as follows: Elandskraal 96%; Free State 95%; Randfontein 95%; Evander 97%; Kalgold 90%; Freegold 96%; Target 97%; PNG 93%. In order to derive the appropriate plant recovery factors for ore reserve estimates a process have been followed where realistic assumptions based on historical performance have been applied. There may be short term fluctuation either positive or negative which can lead to small discrepancies between actual and planned recovery factors. | |
(2) | Cut-off grades are calculated per individual shaft, each having its own unique cost structure, ore flow and recovery factors, which are entered into our “Optimizer” software for a cut-off calculation per shaft and expressed in oz/t units. |
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SILVER | ||||||||||||||||||||||||||||||||||||
Proven | Probable | Total | ||||||||||||||||||||||||||||||||||
Reserves | Reserves | Reserves | ||||||||||||||||||||||||||||||||||
Tons | Grade | Silver oz | Tons | Grade | Silver oz | Tons | Grade | Silver oz | ||||||||||||||||||||||||||||
PNG | (millions) | (oz/ton) | (millions) | (millions) | (oz/ton) | (millions) | (millions) | (oz/ton) | (millions) | |||||||||||||||||||||||||||
Hidden Valley and Kaveroi | 3.64 | 1.197 | 4.36 | 24.46 | 1.077 | 26.35 | 28.10 | 1.093 | 30.71 | |||||||||||||||||||||||||||
GRAND TOTAL | 3.64 | 1.197 | 4.36 | 24.46 | 1.077 | 26.35 | 28.10 | 1.093 | 30.71 |
COPPER | ||||||||||||||||||||||||||||||||||||
Proven | Probable | Total | ||||||||||||||||||||||||||||||||||
Reserves | Reserves | Reserves | ||||||||||||||||||||||||||||||||||
Tons | Grade | Cu lbs | Tons | Grade | Cu lbs | Tons | Grade | Cu lbs | ||||||||||||||||||||||||||||
PNG | (millions) | (%) | (millions) | (millions) | (%) | (millions) | (millions) | (%) | (millions) | |||||||||||||||||||||||||||
Golpu | — | — | — | 54.63 | 1.025 | 1,234.0 | 54.63 | 1.025 | 1,234.0 | |||||||||||||||||||||||||||
GRAND TOTAL | — | — | — | 54.63 | 1.025 | 1,234.0 | 54.63 | 1.025 | 1,234.0 |
MOLYBDENUM | ||||||||||||||||||||||||||||||||||||
Proven | Probable | Total | ||||||||||||||||||||||||||||||||||
Reserves | Reserves | Reserves | ||||||||||||||||||||||||||||||||||
Tons | Grade | Mo lbs | Tons | Grade | Mo lbs | Tons | Grade | Mo lbs | ||||||||||||||||||||||||||||
PNG | (millions) | (lbs/ton) | (millions) | (millions) | (lbs/ton) | (millions) | (millions) | (lbs/ton) | (millions) | |||||||||||||||||||||||||||
Golpu | — | — | — | 54.63 | 0.238 | 13.00 | 54.63 | 0.238 | 13.00 | |||||||||||||||||||||||||||
GRAND TOTAL | — | — | — | 54.63 | 0.238 | 13.00 | 54.63 | 0.238 | 13.00 |
Hectares | Acres | |||||||
Doornkop | 2,941 | 7,267 | ||||||
Elandsrand | 5,113 | 12,634 | ||||||
Free State (includes Masimong and Virginia operations) | 22,583 | 55,802 | ||||||
Tshepong and Phakisa | 10,799 | 26,683 | ||||||
Bambanani | 2,356 | 5,821 | ||||||
Joel | 2,162 | 5,342 | ||||||
St Helena | 5,856 | 14,471 | ||||||
Kalgold | 615 | 1,520 | ||||||
Evander | 36,898 | 91,174 | ||||||
Target (includes Loraine) | 7,952 | 19,649 | ||||||
Total | 97,275 | 240,363 |
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Hectares | Acres | |||||||
Mt. Magnet | 97,491 | 240,906 | ||||||
Cooke (Randfontein) | 7,875 | 19,460 | ||||||
Lindum (Randfontein) | 3,231 | 7,983 | ||||||
Total | 108,597 | 268,349 |
Hectares | Acres | |||||||
PNG | 220,600 | 545,114 | ||||||
Total Worldwide Operations | 426,472 | 1,053,826 |
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• | Tshepong (formerly part of Freegold) | ||
• | Phakisa (formerly part of Freegold) | ||
• | Bambanani (formerly part of Freegold) | ||
• | Doornkop (formerly part of Randfontein) | ||
• | Cooke operations (consists of Cooke 1, 2 and 3 shafts, formerly part of Randfontein) | ||
• | Elandsrand | ||
• | Masimong (formerly part of the Free State region) | ||
• | Virginia operations (consists of Harmony 2, Merriespruit 1 & 3, Unisel and Brand 3 & 5, all formerly part of the Free State region) | ||
• | Target (forms part of Avgold’s operations) | ||
• | Evander (consists of Evander 5, 7 and 8) | ||
• | Joel (formerly part of Freegold, now included under “Other — Underground”) |
• | Free State (also known as Phoenix) | ||
• | Randfontein (Cooke plant has been classified as discontinued operations along with the Cooke operations) | ||
• | Freegold | ||
• | Kalgold | ||
• | Target |
• | Mt. Magnet — The site has put on care and maintenance as at the end of December 2007. On August 1, 2008, the Monarch Gold’s administrator indicated that Monarch Gold would not proceed with the proposed purchase, and consequently the agreement was terminated. We have since resumed management of the of the Mt. Magnet operations and recommenced the sales process — See “International Operations” above. | ||
• | South Kalgoorlie — we finalized the sale of this operation with Dioro on November 30, 2007 — See “Disposals” above. |
• | an overview of our South African mining operations with a discussion and production analysis of each of our operating segments; and | ||
• | an overview of our International (Australian and PNG) operations. |
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LTFR | FFR | |||||||||||
Tshepong | 18.52 | 0.17 | ||||||||||
Phakisa | 4.83 | 0.37 | ||||||||||
Bambanani | 11.18 | 0.40 | ||||||||||
Average Milled for | ||||||||
Processing | the Fiscal Year | |||||||
Plant | Capacity | Ended June 30, 2008 | ||||||
(tons/month) | (tons/month) | |||||||
FS 1 | 420,000 | 416,447 |
Fiscal Year Ended June 30, | ||||||||||||
Tshepong | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 1,649 | 1,824 | 1,786 | |||||||||
Recovered grade (ounces/ton) | 0.166 | 0.175 | 0.188 | |||||||||
Gold sold (ounces) | 273,119 | 318,887 | 335,289 |
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Fiscal Year Ended June 30, | ||||||||||||
Tshepong | 2008 | 2007 | 2006 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 223 | 203 | 180 | |||||||||
Cash cost | 125 | 112 | 111 | |||||||||
Cash profit | 98 | 91 | 69 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 457 | 351 | 332 | |||||||||
Capex(millions) ($) | 27 | 26 | 21 |
Fiscal Year Ended June 30, | ||||||||||||
Phakisa | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 34 | — | — | |||||||||
Recovered grade (ounces/ton) | 0.123 | — | — | |||||||||
Gold sold (ounces) | 4,212 | — | — |
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Fiscal Year Ended June 30, | ||||||||||||
Phakisa | 2008 | 2007 | 2006 | |||||||||
Results of operations (millions) ($) | ||||||||||||
Product sales | 4 | — | — | |||||||||
Cash cost | 2 | — | — | |||||||||
Cash profit | 2 | — | — | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 556 | — | — | |||||||||
Capex (millions) ($) | 40 | 32 | 23 |
Fiscal Year Ended June 30, | ||||||||||||
Bambanani | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 912 | 1,283 | 1,402 | |||||||||
Recovered grade (ounces/ton) | 0.174 | 0.154 | 0.143 | |||||||||
Gold sold (ounces) | 158,985 | 197,060 | 200,739 | |||||||||
Results of operations (millions) ($) | ||||||||||||
Product sales | 128 | 126 | 106 | |||||||||
Cash cost | 102 | 115 | 101 | |||||||||
Cash profit | 26 | 11 | 5 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 641 | 586 | 502 | |||||||||
Capex(millions) ($) | 15 | 17 | 14 |
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Average Milled for the | ||||||||
Processing | Fiscal Year Ended | |||||||
Plant | Capacity | June 30, 2008 | ||||||
(tons/month) | (tons/month) | |||||||
Doornkop | 220,000 | 144,537 |
Fiscal Year Ended June 30, | ||||||||||||
Doornkop | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 494 | 597 | 515 | |||||||||
Recovered grade (ounces/ton) | 0.089 | 0.096 | 0.085 | |||||||||
Gold sold (ounces) | 44,413 | 57,364 | 43,593 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 35 | 37 | 23 | |||||||||
Cash cost | 31 | 25 | 24 | |||||||||
Cash profit | 4 | 12 | (1 | ) | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 703 | 439 | 558 | |||||||||
Capex(millions) ($) | 48 | 38 | 26 |
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• | 22 kv system to 100 level was completed and commissioned. | ||
• | The turbine dam between 92 and 95 level was completed during the year. | ||
• | The development of the refrigeration chambers on 98 and 100 level was completed. | ||
• | The centre hole of the No.3 Backfill shaft was drilled during the year and the preparation for the sinking of the sub-bank was started in June 2008. | ||
• | The end of capital position was reached on 113 level RAW East. | ||
• | The centralized blasting system was installed and commissioned on 102, 105, 109 and 113 levels. | ||
• | All piping associated with the pumping on 115 level was installed during the year including all electrical panels associated with the pumping. | ||
• | The chilled water feed and return shaft columns were installed in No.2 Backfill shaft from 95 to 105 level. |
Average Milled for the | ||||||||
Processing | Fiscal Year | |||||||
Plant | Capacity | June 30, 2008 | ||||||
(tons/month) | (tons/month) | |||||||
Elandsrand Plant | 185,000 | (1) | 81,713 |
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(1) | Processing capacity will reach its optimal capacity upon completion of the Elandsrand New Mine Project. |
Fiscal Year Ended June 30, | ||||||||||||
Elandsrand | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 981 | 1,117 | 987 | |||||||||
Recovered grade (ounces/ton) | 0.162 | 0.174 | 0.173 | |||||||||
Gold sold (ounces) | 158,631 | 194,710 | 170,867 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 133 | 124 | 90 | |||||||||
Cash cost | 103 | 103 | 89 | |||||||||
Cash profit | 30 | 21 | 1 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 652 | 527 | 523 | |||||||||
Capex(millions) ($) | 44 | 33 | 31 |
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Fiscal Year Ended June 30, | ||||||||||||
Masimong Shaft Complex | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 892 | 1,074 | 1,020 | |||||||||
Recovered grade (ounces/ton) | 0.132 | 0.138 | 0.133 | |||||||||
Gold sold (ounces) | 117,575 | 147,958 | 136,153 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 96 | 95 | 73 | |||||||||
Cash cost | 88 | 82 | 67 | |||||||||
Cash profit | 8 | 13 | 6 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 745 | 559 | 489 | |||||||||
Capex(millions) ($) | 16 | 15 | 14 |
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Average Milled | ||||||||
for the Fiscal Year | ||||||||
Processing | Ended | |||||||
Plant | Capacity | June 30, 2008 | ||||||
(tons/month) | (tons/month) | |||||||
Central | 168,000 | 141,500 | ||||||
Saaiplaas | 500,000 | 583,650 |
Fiscal Year Ended June 30, | ||||||||||||
Virginia operations | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 2,349 | 2,507 | 2,368 | |||||||||
Recovered grade (ounces/ton) | 0.107 | 0.106 | 0.117 | |||||||||
Gold sold (ounces) | 250,324 | 266,948 | 276,285 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 204 | 172 | 146 | |||||||||
Cash cost | 180 | 147 | 135 | |||||||||
Cash profit | 24 | 25 | 11 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 719 | 546 | 487 | |||||||||
Capex(millions) ($) | 20 | 19 | 14 |
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Average Milled For the | ||||||||
Processing | Fiscal Year Ended | |||||||
Plant | Capacity | June 30, 2008 | ||||||
(tons/month) | (tons/month) | |||||||
Target Plant | 105,000 | 97,973 |
Fiscal Year Ended June 30, | ||||||||||||
Target | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 686 | 904 | 813 | |||||||||
Recovered grade (ounces/ton) | 0.124 | 0.158 | 0.185 | |||||||||
Gold sold (ounces) | 85,006 | 142,433 | 150,196 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 69 | 91 | 81 | |||||||||
Cash cost | 51 | 53 | 52 | |||||||||
Cash profit | 18 | 38 | 29 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 605 | 370 | 346 | |||||||||
Capex(millions)($) | 35 | 16 | 10 |
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• | Project currently at an exploration stage following the prefeasibility study; | ||
• | Surface exploration drilling to be carried out in order to improve quality of and confidence in the current estimate; and | ||
• | Drilling to commence in October 2008. |
• | Project at an initial exploration stage following the geological study; | ||
• | Underground development and drilling, underground and from surface, is planned in order to investigate the 7 Shaft flank of the postulated payshoot; and | ||
• | Feasibility study to follow, pending confirmation of the ore resource in this area. |
• | Joint Venture with the African Precious Minerals (“APM”) is being formed to explore these two target areas; | ||
• | APM is going to earn in the 52% equity stake upon completion of the full bankable feasibility study for each area; and | ||
• | The geological studies are under way and drilling will commence in fiscal 2009. |
• | It is a future mining area of the current Shaft 8; | ||
• | Pre-feasibility study is being updated with more recent cost and gold price factors; and | ||
• | Synergies with the current Shaft 8 deepening could be considered. |
• | Surface exploration drilling is required to bring this project into the full bankable feasibility study; | ||
• | Pre feasibility study is due to be updated (after the Rolspruit study) with costs and gold price factors; and | ||
• | The surface exploration drilling at Evander South is likely to produce information that will enhance the Poplar geological interpretation. |
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Average Milled for the | ||||||||
Processing | Fiscal Year Ended | |||||||
Plant | Capacity | June 30, 2008 | ||||||
(tons/month) | (tons/month) | |||||||
Kinross-Winkelhaak | 200,000 | 120,564 |
Fiscal Year Ended June 30, | ||||||||||||
Evander operations | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 1,447 | 1,667 | 1,700 | |||||||||
Recovered grade (ounces/ton) | 0.166 | 0.141 | 0.161 | |||||||||
Gold sold (ounces) | 240,037 | 235,443 | 274,439 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 193 | 151 | 142 | |||||||||
Cash cost | 127 | 113 | 111 | |||||||||
Cash profit | 66 | 38 | 31 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 525 | 481 | 404 | |||||||||
Capex(millions) ($) | 33 | 28 | 26 |
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Fiscal Year Ended June 30, | ||||||||||||
Joel | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 449 | 504 | 436 | |||||||||
Recovered grade (ounces/ton) | 0.136 | 0.158 | 0.134 | |||||||||
Gold sold (ounces) | 61,215 | 79,923 | 58,595 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 52 | 51 | 31 | |||||||||
Cash cost | 39 | 33 | 29 | |||||||||
Cash profit | 13 | 18 | 2 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 639 | 418 | 498 | |||||||||
Capex(millions) ($) | 5 | 4 | 4 |
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Average Milled for the | ||||||||
Processing | Fiscal Year Ended | |||||||
Plant | Capacity | June 30, 2008 | ||||||
(tons/month) | (tons/month) | |||||||
CIL | 135,000 | 127,552 | ||||||
Heap Leach(1) | — | — |
(1) | Active use of heap leaching was discontinued in July 2001. |
Fiscal Year Ended June 30, | ||||||||||||
Kalgold | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 1,687 | 1,740 | 2,008 | |||||||||
Recovered grade (ounces/ton) | 0.055 | 0.032 | 0.038 | |||||||||
Gold sold (ounces) | 93,172 | 56,129 | 77,071 |
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Fiscal Year Ended June 30, | ||||||||||||
Kalgold | 2008 | 2007 | 2006 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales ($) | 77 | 36 | 39 | |||||||||
Cash cost ($) | 38 | 27 | 32 | |||||||||
Cash profit ($) | 39 | 9 | 8 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 411 | 485 | 412 | |||||||||
Capex($) | 1 | — | — |
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Fiscal Year Ended June 30, | ||||||||||||
Free State (Phoenix) | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 7,033 | 2,368 | 897 | |||||||||
Recovered grade (ounces/ton) | 0.005 | 0.009 | 0.018 | |||||||||
Gold sold (ounces) | 32,215 | 21,346 | 15,902 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 26 | 14 | 9 | |||||||||
Cash cost | 12 | 6 | 6 | |||||||||
Cash profit | 14 | 8 | 3 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 381 | 293 | 404 | |||||||||
Capex(millions) ($) | 5 | 5 | 4 |
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Average Milled for the | ||||||||
Processing | Fiscal Year Ended | |||||||
Plant | Capacity | June 30, 2008 | ||||||
(tons/month) | (tons/month) | |||||||
Cooke | 280,000 | 215,241 |
Fiscal Year Ended June 30, | ||||||||||||
Cooke operations | 2008 | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 3,906 | 2,327 | 2,034 | |||||||||
- Underground | 1,323 | 1,432 | 1,495 | |||||||||
- Surface | 2,583 | 895 | 539 |
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Fiscal Year Ended June 30, | ||||||||||||
Cooke operations | 2008 | 2007 | 2006 | |||||||||
Recovered grade (ounces/ton) | 0.060 | 0.105 | 0.126 | |||||||||
- Underground | 0.153 | 0.157 | 0.163 | |||||||||
- Surface | 0.013 | 0.021 | 0.022 | |||||||||
Gold sold (ounces) | 236,242 | 243,219 | 256,739 | |||||||||
- Underground | 201,937 | 224,245 | 245,089 | |||||||||
- Surface | 34,305 | 18,974 | 11,650 | |||||||||
Results of operations (millions) ($) | ||||||||||||
Product sales | 194 | 154 | 137 | |||||||||
Cash cost | 123 | 118 | 102 | |||||||||
Cash profit | 71 | 36 | 35 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 517 | 484 | 396 | |||||||||
- Underground | 516 | 499 | 395 | |||||||||
- Surface | 520 | 305 | 431 | |||||||||
Capex (millions)($) | 22 | 19 | 25 |
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Fiscal Year Ended June 30, | ||||||||||||
Orkney operations | 2008(1) | 2007 | 2006 | |||||||||
Production | ||||||||||||
Tons (‘000) | 571 | 947 | 753 | |||||||||
Recovered grade (ounces/ton) | 0.100 | 0.126 | 0.171 | |||||||||
Gold sold (ounces) | 57,132 | 119,109 | 128,774 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 40 | 77 | 68 | |||||||||
Cash cost | 52 | 64 | 59 | |||||||||
Cash (loss)/profit | (12 | ) | 13 | 9 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 910 | 543 | 458 | |||||||||
Capex(millions) ($) | 4 | 15 | 7 |
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(1) | The results are for the eight months ended February 2008. |
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Average Milled for | ||||||||
the Year Ended June 30, 2008 | ||||||||
Plant | Processing Capacity | (for 6 operational months) | ||||||
(tons/month) | (tons/month) | |||||||
Mt. Magnet | 243,000 | 161,000 |
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Fiscal Year Ended June 30, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Production | ||||||||||||
Tons (‘000) | 966 | 1,875 | 1,918 | |||||||||
Recovered grade (ounces/ton) | 0.080 | 0.073 | 0.078 | |||||||||
Gold sold (ounces) | 77,097 | 136,428 | 148,822 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 56 | 86 | 80 | |||||||||
Cash cost | 41 | 71 | 59 | |||||||||
Cash profit | 15 | 15 | 21 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 537 | 518 | 399 | |||||||||
Capex(millions) ($) | 4 | 20 | 24 |
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Average Milled for | ||||||||
the Year Ended June | ||||||||
Plant | Processing Capacity | 30, 2008 | ||||||
(tons/month) | (tons/month) | |||||||
Jubilee | 122,000 | 95,400 |
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Fiscal Year Ended June 30, | ||||||||||||
2008(1) | 2007 | 2006 | ||||||||||
Production | ||||||||||||
Tons (‘000) | 477 | 1,391 | 1,480 | |||||||||
Recovered grade (ounces/ton) | 0.058 | 0.064 | 0.056 | |||||||||
Gold sold (ounces) | 27,778 | 88,371 | 82,639 | |||||||||
Results of operations(millions) ($) | ||||||||||||
Product sales | 19 | 56 | 42 | |||||||||
Cash cost | 14 | 45 | 38 | |||||||||
Cash profit | 5 | 11 | 4 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold($) | 517 | 504 | 454 | |||||||||
Capex(millions)($) | 12 | 7 | 4 |
(1) | The results are for the five months ended November 2007. |
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• | Golpu stand alone (an update of the Golpu PFS scenario); | ||
• | Golpu + Link Zone; and | ||
• | Golpu + Link Zone + NRG1; |
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• | Major new stand alone discoveries; | ||
• | High-grade drivers to improve cash flows of the Hidden Valley Project; and | ||
• | Additional reserves to substantially increase mine life of the Hidden Valley Project. |
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1. | The PFS is completed to industry accepted standards for a PFS (±20-25% accuracy). The outcome of further more detailed studies may affect the reserve. | ||
2. | The location for the tailings storage facility has not been finalized, however two potential sites proximal to the project have been defined. | ||
3. | There are outstanding issues associated with traditional land owners required to be resolved before the project is able to be constructed. | ||
4. | The Board has not yet committed to completing subsequent phases of study, or to project construction. |
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• | Golpu stand alone (an update of the Golpu PFS scenario); | ||
• | Golpu + Link Zone; and | ||
• | Golpu + Link Zone + NRG1; |
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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; | ||
• | to substantially and meaningfully expand opportunities for HDSAs including women, to enter the mineral and petroleum industry and to benefit from the exploitation of South Africa’s mineral and petroleum resources; | ||
• | to promote economic growth and mineral and petroleum resources development in South Africa; | ||
• | to promote employment and advance the social and economic welfare of all South Africans; | ||
• | to provide security of tenure in respect of prospecting, exploration, mining and production operations; | ||
• | to give effect to Section 24 of the South African Constitution by ensuring that South Africa’s mineral and petroleum resources are developed in an orderly and ecologically sustainable manner while promoting justifiable social and economic development; and | ||
• | to ensure that holders of mining and production rights contribute towards socio-economic development of the areas in which they are operating. |
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• | give effect to the Minister’s stated intention to promote investment in the South African mining industry; | ||
• | establish objective criteria for compliance with the MPRDA’s socio- economic objectives; | ||
• | remove the technical deficiencies of the MPRDA; | ||
• | align the MPRDA with the Promotion of Administrative Justice Act, 2000; and | ||
• | coordinate the environmental requirements between the MPRDA and the National Environmental Management Act. |
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• | Compliance | ||
We will integrate environmental policies, programs and practices into all activities and policies of the organization as well as monitor the performance of these programs. We will strive to comply with all applicable municipal, provincial and national laws and regulations, as well as the other requirements to which we subscribe that are relevant to the environmental aspects of our activities, and encourage such compliance from those organizations with whom we do business; | |||
• | Continual Improvement We will evaluate and continually improve the effectiveness of our environmental management system through periodic audits, management reviews, and by achieving our environmental objectives. We will review this Environmental Policy annually and make it available to the public; | ||
• | Pollution Prevention We will actively design, operate, and maintain our mining activities with a focus on pollution prevention. We will strive towards the continual reduction of adverse environmental effects, supporting the principle of sustainable development; | ||
• | Awareness We will communicate this Environmental Policy to employees, contractors and suppliers to ensure their awareness of our commitment to the environment. We will provide appropriate training to all employees to ensure their continuing awareness of environmental responsibilities. |
Scope of | Measurement | Comparable | ||||||||
Regulation | Aspect | Element | Criteria | Standard (GRI) | Target | |||||
APPA/AQA | Air Emissions | Electricity | kWh/ton treated/mined | x | 15% reduction | |||||
Fuels (Diesel/Petrol) | Litres/CO2 equivalents | √ | 15% reduction | |||||||
Dust | g/m2/day | x | 15% reduction | |||||||
Methane | CO2 equivalents | √ | 30% reduction | |||||||
Coal (domestic) | t/year | √ | 50% reduction | |||||||
NWA | Water | Consumptive Use | m3/ton treated/mined | x | 10% reduction | |||||
Metal/Salt Discharge: | ||||||||||
- surface | tons | x | 70% reduction | |||||||
- underground | tons | x | 20% reduction | |||||||
MPRDA and NNRA | Land - recycle | steel | tons | √ | All waste will be handled through designated areas. | |||||
plastic | tons | x | ||||||||
timber | tons | √ | ||||||||
Oil/grease | litres | √ | 50% recycled | |||||||
Land - use | impacted | ha | √ | 10% reduction |
• | 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 notified and dealt with at the board level; and |
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• | 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 our activities; | ||
• | 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 our policy; and | ||
• | that employees will be informed and educated regarding their environmental responsibilities. |
Operation: | Implementation Status: | |
Doornkop | 85% (with the Stage 1 external audit scheduled by end of November 2008) | |
Target | 65% | |
Elandsrand | 65% | |
Phakisa | 55% |
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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. | ||
• | 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; and | ||
• | review of procedures to ensure continual improvement. |
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• | to protect the health and safety of employees and other persons at mines; | ||
• | to promote a culture of health and safety; | ||
• | to require employers and employees to identify hazards and eliminate, control and minimize the risks relating to health and safety at mines; | ||
• | to give effect to the public international law obligations of South Africa that concern health and safety at mines; | ||
• | to provide for employee participation in matters of health and safety through health and safety representatives and health and safety committees at mines; | ||
• | to provide for the effective monitoring of health and safety conditions at mines; | ||
• | to provide for the enforcement of health and safety measures at mines; and | ||
• | to foster and promote co-operation and consultation on health and safety between the Department of Minerals and Energy, employers, employees and their representatives. |
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• | Tshepong, Phakisa, Bambanani, Doornkop, Elandsrand, Target, Evander operations, Masimong, Virginia operations and Cooke operations (classified as discontinued operations); and | ||
• | all other shafts and surface operations, including those that treat historic sand dumps, rock dumps and tailings dams, are grouped together under “Other — Underground” or “Other — Surface”. |
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Fiscal Year Ended | ||||||||||||
June 30 | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
($/oz) | ||||||||||||
Average | 821 | 638 | 527 | |||||||||
High | 1,011 | 692 | 726 | |||||||||
Low | 649 | 561 | 418 |
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Fiscal Year Ended | ||||||||||||
June 30 | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
($/oz) | ||||||||||||
Harmony’s average sales price — continuing operations(1) | 818 | 638 | 529 |
(1) | Our average sales price differs from the average gold price due to the timing of our sales of gold within each year. |
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Fiscal year ended June 30, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in $ millions, except per ounce amounts) | ||||||||||||
Total cost of sales from continuing operations — under IFRS | 1,122 | 929 | 909 | |||||||||
Depreciation and amortization expense | (117 | ) | (106 | ) | (138 | ) | ||||||
(Provision)/reversal of provision for rehabilitation costs | (1 | ) | 6 | 3 | ||||||||
Care and maintenance costs of restructured shafts | (10 | ) | (8 | ) | (22 | ) | ||||||
Employment termination and restructuring costs | (29 | ) | — | 12 | ||||||||
Share-based payments | (6 | ) | (6 | ) | (15 | ) | ||||||
(Impairment)/reversal of impairment of assets | (40 | ) | 19 | 30 | ||||||||
Provision for post retirement benefits | (1 | ) | 2 | (1 | ) | |||||||
Total cash costs from continuing operations — using Gold Institute guidance | 918 | 836 | 778 | |||||||||
Per ounce calculation: | ||||||||||||
Ounces sold | 1,550,527 | 1,747,071 | 1,769,951 | |||||||||
Total cash cost per ounce from continuing operations — using Gold Institute guidance | 591 | 479 | 440 |
Fiscal year ended June 30, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in $ millions, except per ounce amounts) | ||||||||||||
Total cost of sales from discontinued operations — under IFRS | 237 | 418 | 300 | |||||||||
Depreciation and amortization expense | (7 | ) | (57 | ) | (35 | ) | ||||||
(Provision)/reversal of provision for rehabilitation costs | (1 | ) | (5 | ) | (1 | ) | ||||||
Care and maintenance costs of restructured shafts | — | (1 | ) | (6 | ) | |||||||
Employment termination and restructuring costs | (4 | ) | — | 1 | ||||||||
Share-based payments | — | (1 | ) | (1 | ) | |||||||
(Impairment)/reversal of impairment of assets | 5 | (56 | ) | — | ||||||||
Total cash costs from discontinued operations — using Gold Institute guidance | 230 | 298 | 258 | |||||||||
Per ounce calculation: | ||||||||||||
Ounces sold | 398,249 | 587,127 | 616,974 | |||||||||
Total cash cost per ounce from discontinued operations — using Gold Institute guidance | 576 | 507 | 418 |
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Fiscal year ended June 30, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
(in $ millions, except per ounce amounts) | ||||||||||||
Total production costs — under IFRS | 1,359 | 1,347 | 1,209 | |||||||||
Depreciation and amortization expense | (124 | ) | (163 | ) | (173 | ) | ||||||
(Provision)/reversal of provision for rehabilitation costs | (2 | ) | 1 | 2 | ||||||||
Care and maintenance costs of restructured shafts | (10 | ) | (9 | ) | (28 | ) | ||||||
Employment termination and restructuring costs | (33 | ) | — | 13 | ||||||||
Share-based payments | (6 | ) | (7 | ) | (16 | ) | ||||||
(Impairment)/reversal of impairment of assets | (35 | ) | (37 | ) | 30 | |||||||
Provision for post retirement benefits | (1 | ) | 2 | (1 | ) | |||||||
Total cash costs — using Gold Institute guidance | 1,148 | 1,134 | 1,036 | |||||||||
Per ounce calculation: | ||||||||||||
Ounces sold | 1,948,776 | 2,334,198 | 2,386,925 | |||||||||
Total cash cost per ounce — using Gold Institute guidance | 589 | 486 | 436 |
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Percentage | ||||||||||||||||||||
Year Ended June 30, | Year Ended June 30, | Increase | ||||||||||||||||||
2008 | 2007 | in Cash | ||||||||||||||||||
(oz) | ($/oz) | (oz) | ($/oz) | Costs per ounce | ||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||
Tshepong | 273,119 | 457 | 318,887 | 351 | 30 | |||||||||||||||
Phakisa | 4,212 | 558 | — | — | — | |||||||||||||||
Bambanani | 158,985 | 641 | 197,060 | 586 | 9 | |||||||||||||||
Doornkop | 44,143 | 703 | 57,364 | 439 | 60 | |||||||||||||||
Elandsrand | 158,631 | 652 | 194,710 | 527 | 24 | |||||||||||||||
Target | 85,006 | 605 | 142,433 | 370 | 64 | |||||||||||||||
Masimong | 117,575 | 745 | 147,958 | 559 | 33 | |||||||||||||||
Evander operations | 240,037 | 525 | 235,443 | 481 | 9 | |||||||||||||||
Virginia operations | 250,324 | 719 | 266,948 | 546 | 32 | |||||||||||||||
Other — underground | 69,574 | 744 | 104,507 | 488 | 52 | |||||||||||||||
Other — surface | 148,921 | 390 | 81,761 | 428 | (9 | ) | ||||||||||||||
INTERNATIONAL | ||||||||||||||||||||
PNG | — | — | — | — | — | |||||||||||||||
Total continuing operations | 1,550,527 | 1,747,071 | ||||||||||||||||||
Weighted average | 591 | 479 | 23 |
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Income and Mining Tax | 2008 | 2007 | ||||||
Effective tax rate (expense)/benefit | 172 | % | (25 | )% |
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Percentage | ||||||||||||||||||||
Year Ended June 30, | Year Ended June 30, | Increase | ||||||||||||||||||
2007 | 2006 | in Cash | ||||||||||||||||||
(oz) | ($/oz) | (oz) | ($/oz) | Costs per ounce | ||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||
Tshepong | 318,887 | 351 | 335,289 | 335 | 5 | |||||||||||||||
Phakisa | — | — | — | — | — | |||||||||||||||
Bambanani | 197,06 | 586 | 200,739 | 502 | 17 | |||||||||||||||
Doornkop | 57,364 | 439 | 43,593 | 558 | (21 | ) | ||||||||||||||
Elandsrand | 194,710 | 527 | 170,867 | 523 | 1 | |||||||||||||||
Target | 142,433 | 370 | 150,196 | 346 | 7 | |||||||||||||||
Masimong | 147,958 | 559 | 136,153 | 489 | 14 | |||||||||||||||
Evander operations | 235,443 | 481 | 274,439 | 403 | 19 | |||||||||||||||
Virginia operations | 266,948 | 546 | 276,285 | 488 | 12 | |||||||||||||||
Other — Underground | 104,507 | 488 | 77,652 | 541 | (8 | ) | ||||||||||||||
Other — Surface | 81,761 | 428 | 104,738 | 439 | (3 | ) | ||||||||||||||
INTERNATIONAL | ||||||||||||||||||||
PNG | — | — | — | — | — | |||||||||||||||
Total continuing operations | 1,747,071 | 1,769,951 | ||||||||||||||||||
Weighted average | 479 | 440 | 9 |
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Income and Mining Tax | 2007 | 2006 | ||||||
Effective tax rate (expense)/benefit | (25 | )% | 24 | % |
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Fiscal year ended June 30, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
($ in millions) | ||||||||||||
Continuing operations | ||||||||||||
Operating cash flows | 165 | 176 | 38 | |||||||||
Investing cash flows | (313 | ) | (318 | ) | (291 | ) | ||||||
Financing cash flows | 78 | 132 | 8 | |||||||||
Foreign exchange differences | 5 | 6 | 42 | |||||||||
Total cash flows from continuing operations | (65 | ) | (4 | ) | (203 | ) |
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Fiscal year ended June 30, | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
($ in millions) | ||||||||||||
Discontinued operations | ||||||||||||
Operating cash flows | 71 | (17 | ) | 17 | ||||||||
Investing cash flows | (16 | ) | — | 41 | ||||||||
Financing cash flows | — | — | (25 | ) | ||||||||
Foreign exchange differences | (7 | ) | — | (6 | ) | |||||||
Total cash flows from discontinued operations | 48 | (17 | ) | 27 |
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Payments Due by Period | ||||||||||||||||||||
Less Than | 12-36 | 36-60 | After 60 | |||||||||||||||||
12 Months | Months | Months | Months | |||||||||||||||||
July 1, 2008 | July 1, 2009 | July 1, 2011 | Subsequent | |||||||||||||||||
to June 30, | to June 30, | To June 30, | June 30, | |||||||||||||||||
Total | 2009 | 2011 | 2013 | 2013 | ||||||||||||||||
($’million) | ($’million) | ($’million) | ($’million) | ($’million) | ||||||||||||||||
Convertible uncollaterized bonds(1) | 229 | 229 | — | — | — | |||||||||||||||
Africa Vanguard Resources(1) | 4 | 4 | — | — | — | |||||||||||||||
Nedbank — AVR(1) | 25 | 25 | — | — | — | |||||||||||||||
Westpac Bank(1) | 33 | 4 | 6 | 23 | — | |||||||||||||||
Nedbank(1) | 256 | 256 | — | — | — | |||||||||||||||
Post retirement health care(2) | 16 | — | — | — | 16 | |||||||||||||||
Environmental obligations(3) | 145 | — | — | — | 145 | |||||||||||||||
Total contractual obligations | 708 | 518 | 6 | 23 | 161 |
(1) | SeeItem 5. “Operating and Financial Review and Prospects — Liquidity and Capital Resources — Credit Facilities and Other Borrowings — Outstanding Credit Facilities and Other Borrowings”. | |
(2) | This liability relates to post-retirement medical benefits of former employees who retired prior to December 31, 1996 and is based on actuarial valuations conducted during fiscal 2008. | |
(3) | We make provision for environmental rehabilitation costs and related liabilities based on management’s interpretations of current environmental and regulatory requirements. SeeItem 5. “Operating and Financial Review and Prospects — Critical Accounting Policies”. |
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$’million | ||||
Authorized and contracted for | 149 | |||
Authorized but not yet contracted for | 221 | |||
Total | 370 |
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 | |||||||||||||||||
2008 to | 2009 to | 2011 to | Subsequent | |||||||||||||||||
June 30, | June 30, | June 30, | to June 30, | |||||||||||||||||
Total | 2009 | 2011 | 2013 | 2013 | ||||||||||||||||
($’million) | ($’million) | ($’million) | ($’million) | ($’million) | ||||||||||||||||
Guarantees(1) | 24 | — | — | — | 24 | |||||||||||||||
Capital commitments(2) | 149 | 149 | — | — | — | |||||||||||||||
Total commitments expiring by period | 173 | 149 | — | — | 24 |
(1) | Amount of Commitments Expiring by Period. | |
(2) | Capital commitments consist only of amounts committed to external suppliers, although a total of U.S.$380 million has been approved by the Board for capital expenditures. |
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Name | Date of appointment | Date of resignation | ||
Patrice Motsepe(1) | September 23, 2003 | By rotation or resignation | ||
Bernard Swanepoel | May 16, 1995 | Resigned on August 6, 2007 | ||
Frank Abbott(2) | October 1, 1994 | By rotation or resignation | ||
Graham Briggs | August 6, 2007 | By rotation or resignation | ||
Joaquim Chissano(1) (3) | April 20, 2005 | By rotation or resignation | ||
Fikile De Buck(1) (3) | March 30, 2006 | By rotation or resignation | ||
Ken Dicks(1) (3) | February 13, 2008 | By rotation or resignation | ||
Cheick Diarra(1) (3) | March 5, 2008 | By rotation or resignation | ||
Dr Simo Lushaba(1) (3) | October 18, 2002 | By rotation or resignation | ||
Cathie Markus(1) (3) | May 1, 2007 | By rotation or resignation | ||
Modise Motloba(1) (3) | July 30, 2004 | By rotation or resignation | ||
Nomfundo Qangule | July 26, 2004 | Resigned on August 21, 2007 | ||
Cedric Savage(1) (3) | September 23, 2003 | By rotation or resignation | ||
André Wilkens(1) | August 6, 2007 | By rotation or resignation |
(1) | Non-executive directors | |
(2) | Frank Abbott served as a non-executive director until August 20, 2007 and was appointed interim financial director on August 21, 2007. | |
(3) | Independent |
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Graham Briggs | Chief Executive | |
Frank Abbott | Interim Chief Financial Officer |
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Bob Atkinson | Projects | |
Jaco Boshoff | Ore Reserves | |
Mashego Mashego | Human Resources | |
Jackie Mathebula | Corporate Affairs | |
Alwyn Petorius | Chief Operating Officer (North) | |
Tom Smith | Chief Operating Officer (South) | |
Marian van der Walt | Company Secretary; Legal and Compliance (as from October 1, 2008, Corporate and Investor Relations) | |
Johannes van Heerden | Chief Executive Officer South East Asia | |
Abre van Vuuren | Corporate Services |
Cedric Savage | Chairman; appointed to the committee on January 26, 2004 and chairman as from August 5, 2005 | |
Fikile de Buck | Appointed to the committee on March 30, 2006 | |
Dr. Simo Lushaba | Appointed to the committee on January 24, 2003 | |
Modise Motloba | Appointed to the committee on July 30, 2004 |
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Joaquim Chissano | Chairman; Appointed as chairman with effect from May 3, 2006 | |
Modise Motloba | Appointed to the committee on May 3, 2006 | |
Cathie Markus | Appointed to the committee on October 29, 2007 |
Dr. Simo Lushaba | Chairman; Appointed to the committee on January 26, 2004 and as Chairman with effect from August 5, 2005) | |
Frank Abbott | Appointed to the committee on July 30, 2004 and resigned from the committee following his appointment as Interim Financial Director on August 21, 2007 | |
Fikile De Buck | Appointed to the committee on May 3, 2006 | |
Cedric Savage | Appointed to the committee on January 26, 2004 | |
André Wilkens | Appointed to the committee on August 7, 2007 | |
Cathie Markus | Appointed to the committee on October 29, 2007 | |
Ken Dicks | Appointed to the committee on February 13, 2008 |
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Patrice Motsepe | Chairman; Appointed to the committee on October 24, 2003 as Chairman | |
Joaquim Chissano | Appointed to the committee on May 3, 2006 | |
Frank Abbott | Appointed to the committee August 5, 2005 |
Cedric Savage | Chairman; Appointed to the committee on January 24, 2004, and as chairman from May 3, 2006 |
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Dr. Simo Lushaba | Appointed to the committee on August 5, 2005 | |
Patrice Motsepe | Appointed to the committee on January 26, 2004 | |
André Wilkens | Appointed to the committee on August 7, 2007 |
Modise Motloba | Chairman; Appointed as chairman on August 5, 2005 | |
Joaquim Chissano | Appointed to the committee on May 3, 2006 | |
Fikile de Buck | Appointed to the committee on May 3, 2006 |
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Andre Wilkens | Chairman; Appointed as chairman on February 13, 2008 | |
Ken Dicks | Appointed to the committee on February 13, 2008 | |
Modise Motloba | Appointed to the committee on February 13, 2008 | |
Cedric Savage | Appointed to the committee on February 13, 2008 |
Retirement | ||||||||||||||||||||
Contributions | ||||||||||||||||||||
Directors’ | Salaries and | during | Bonuses | |||||||||||||||||
fee(1) | Benefits | the year | Paid | Total | ||||||||||||||||
($’000) | ($’000) | ($’000) | ($’000) | ($’000) | ||||||||||||||||
Name | 2008 | 2008 | 2008 | 2008 | 2008 | |||||||||||||||
Non-executive | ||||||||||||||||||||
Patrice Motsepe | 87 | — | — | — | 87 | |||||||||||||||
Mr Joaquim Chissano | 36 | — | — | — | 36 | |||||||||||||||
Ms Fikile de Buck | 33 | — | — | — | 33 | |||||||||||||||
Mr. Ken Dicks | 11 | 11 | ||||||||||||||||||
Mr. Cheick Diarra(1) | — | — | — | — | — | |||||||||||||||
Dr Simo Lushaba | 36 | — | — | — | 36 | |||||||||||||||
Cathie Markus | 26 | — | — | — | 26 | |||||||||||||||
Modise Motloba | 44 | — | — | — | 44 | |||||||||||||||
Cedric Savage | 46 | — | — | — | 46 | |||||||||||||||
Andre Wilkens | 31 | — | — | — | 31 |
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Retirement | ||||||||||||||||||||
Contributions | ||||||||||||||||||||
Directors’ | Salaries and | during | Bonuses | |||||||||||||||||
fee(1) | Benefits | the year | Paid | Total | ||||||||||||||||
($’000) | ($’000) | ($’000) | ($’000) | ($’000) | ||||||||||||||||
Name | 2008 | 2008 | 2008 | 2008 | 2008 | |||||||||||||||
Executive | ||||||||||||||||||||
Nomfundo Qangule(2) | — | — | 254 | — | 254 | |||||||||||||||
Bernard Swanepoel(3) | — | — | 265 | 83 | 348 | |||||||||||||||
Frank Abbott(4) | — | 199 | 30 | — | 229 | |||||||||||||||
Graham Briggs(5) | — | 355 | — | 219 | 574 | |||||||||||||||
TOTAL | 1,755 |
(1) | Dr Cheick Diarra has waived his directors’ fees. | |
(2) | Nomfundo Qangule resigned as Financial Director on August 21, 2007 | |
(3) | Bernard Swanepoel resigned as Chief Executive Officer on August 1, 2007 | |
(4) | Repayment of a portion of Frank Abbott’s salary to ARM Limited | |
(5) | Graham Briggs was appointed Acting Chief Executive Officer on 6 August 2007 and Chief Executive Officer on January 1, 2008 |
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Annual Fee | ||
Board | R118,000 annually | |
Audit Committee | R48,000 annually | |
Empowerment Committee | R32,000 annually | |
Investment Committee | R32,000 annually | |
Nomination Committee | R32,000 annually | |
Remuneration Committee | R32,000 annually | |
Sustainable Development Committee | R43,000 annually | |
Technical Committee | R60,000 annually | |
Chairman of Board | R530,000 (4.5 times the individual director’s fee) annually | |
Chairman of Board committees | Double the amount that the individual Board committee member received annually |
Average | ||||||||||||
Number of | Strike | |||||||||||
Directors and | Share | Price | Expiration | |||||||||
Senior Management | Options | (R) | Dates | |||||||||
Directors (total) | 91,938 | 48.55 | 2012-2015 | |||||||||
Senior Management (as a group) | 583,403 | 54.00 | 2012-2015 | |||||||||
Total | 675,341 | 53.26 | 2012-2015 | |||||||||
PS | ||||||||||||||||||||
Directors and | Share Appreciation | Performance Shares | Price | Expiration | ||||||||||||||||
Senior Management | Rights (SAR) | SAR Price (R) | (PS) | (R) | Dates | |||||||||||||||
Frank Abbott | — | — | — | — | ||||||||||||||||
Graham Briggs | 209,111 | 78.18 | 66,163 | n/a | 2013/2014 | |||||||||||||||
Senior Management (as a group) | 542,013 | 72.33 | 219,546 | n/a | 2013/2014 |
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Ordinary | ||||||||||||||||
Ordinary | Shares | |||||||||||||||
Shares Number | Number as at | |||||||||||||||
as at | November | |||||||||||||||
Holder | June 30, 2008 | Percentage | 28, 2008 | Percentage | ||||||||||||
Non-executive chairman | ||||||||||||||||
P. Motsepe | — | — | — | — | ||||||||||||
Directors Non-executive | ||||||||||||||||
J. Chissano | — | — | — | — | ||||||||||||
F De Buck | — | — | — | — | ||||||||||||
Ken Dick | — | — | — | — | ||||||||||||
Cheick Diarra | — | — | — | — | ||||||||||||
Dr. S. Lushaba | — | — | — | — | ||||||||||||
C. Markus | — | — | — | — | ||||||||||||
M. Motloba | — | — | — | — | ||||||||||||
C. Savage | — | — | — | — | ||||||||||||
A. Wilkens | 203,000 | (1) | 203,000 | (1) | ||||||||||||
Executive Directors | — | — | — | — | ||||||||||||
G. Briggs | — | — | — | — | ||||||||||||
F. Abbott | — | — | — | — | ||||||||||||
Total Directors (12 persons) | 203,000 | — | 203,000 | — |
(1) | Less than 1%. |
Harmony Employees at | Outside Contractors at | |||||||||||||||||||||||
June 30, | June 30, | |||||||||||||||||||||||
2008 | 2007 | 2006 | 2008 | 2007 | 2006 | |||||||||||||||||||
South Africa | 40,751 | 47,600 | 43,283 | 6,309 | 9,075 | 5,287 | ||||||||||||||||||
International | 862 | 516 | 237 | 846 | 350 | 73 | ||||||||||||||||||
Grand total | 41,543 | 48,325 | 43,724 | 7,155 | 9,851 | 5,776 |
• | minimum conditions of employment (note there is no prescribed basic minimum wage); | ||
• | trade union access and membership; |
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• | training and development; | ||
• | mandatory compensation in the event of termination for operational reasons; | ||
• | affirmative action policies and programs; | ||
• | compensation for occupational illness and injury; | ||
• | mechanisms for collective bargaining;. | ||
• | procedures for the resolution of disputes; and | ||
• | regulation of strikes and dismissals. |
• NUM | 77 | % | ||
• Solidarity | 2 | % | ||
• UASA | 9 | % | ||
• Collective Bargaining Fund | 4 | % | ||
• Other | 1 | % | ||
• Un-unionised | 7 | % |
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• | establish whether Conops has been successfully implemented at the mines where it was introduced and to what extent the original objective of improved profitability without compromising safety was met; | ||
• | understand the gap that exists between the current performance of the operations and the potential performance after implementation of Conops at these operations; and | ||
• | understand the reasons for the underperformance versus the Conops potential and propose actions to the operations to close the gap. |
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Number of | ||||||||
Holder | Shares | Percentage | ||||||
1. Allan Gray | 74,729,579 | 18.60 | % | |||||
2. ARM Ltd.(2) | 63,632,922 | 15.84 | % | |||||
3. Blackrock Investment Management (UK) Ltd. | 33,069,140 | 8.231 | % | |||||
4. Orbis Investment Management Ltd.(3) | 21,029,121 | 5.23 | % |
(1) | Depository with respect to the ADRs held on the U.S. register. | |
(2) | Patrice Motsepe, our Chairman, has an indirect holding in ARM Limited. | |
(3) | Depository with respect to our International Depository Shares. |
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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 |
Harmony Ordinary | ||||||||
Shares | ||||||||
(Rand per Ordinary | ||||||||
Share) | ||||||||
High | Low | |||||||
Fiscal year ended June 30, 2006 | ||||||||
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 | ||||||
Fiscal year ended June 30, 2007 | ||||||||
First Quarter | 121.54 | 86.10 | ||||||
Second Quarter | 123.00 | 101.00 | ||||||
Third Quarter | 113.45 | 90.85 | ||||||
Fourth Quarter | 117.85 | 94.30 | ||||||
Full Year | 123.00 | 86.10 | ||||||
Fiscal year ended June 30, 2008 | ||||||||
First Quarter | 104.05 | 60.00 | ||||||
Second Quarter | 83.05 | 63.00 | ||||||
Third Quarter | 118.50 | 69.00 | ||||||
Fourth Quarter | 104.41 | 82.98 | ||||||
Full Year | 118.52 | 60.00 | ||||||
Month of | ||||||||
July 2008 | 99.00 | 75.10 | ||||||
August 2008 | 80.49 | 56.45 | ||||||
September 2008 | 87.78 | 52.10 | ||||||
As of October 21, 2008 | 92.74 | 88.00 |
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NYSE | NASDAQ | |||||||||||||||
Harmony ADRs | Harmony ADRs | |||||||||||||||
($ per ADR) | ($ per ADR) | |||||||||||||||
High | Low | High | Low | |||||||||||||
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 | ||||||||||||
Fiscal year ended June 30, 2007 | ||||||||||||||||
First Quarter | 17.10 | 11.91 | 17.10 | 11.91 | ||||||||||||
Second Quarter | 17.26 | 12.81 | 17.26 | 12.81 | ||||||||||||
Third Quarter | 15.97 | 12.80 | 15.97 | 12.80 | ||||||||||||
Fourth Quarter | 16.70 | 13.15 | 16.70 | 13.15 | ||||||||||||
Full Year | 16.76 | 12.67 | 16.76 | 12.67 | ||||||||||||
Fiscal year ended June 30, 2008 | ||||||||||||||||
First Quarter | 15.27 | 8.42 | 15.27 | 8.41 | ||||||||||||
Second Quarter | 11.90 | 9.35 | 11.90 | 9.35 | ||||||||||||
Third Quarter | 14.56 | 9.34 | 14.56 | 9.34 | ||||||||||||
Fourth Quarter | 13.20 | 10.45 | 13.20 | 10.45 | ||||||||||||
Full Year | 15.27 | 8.42 | 15.27 | 8.74 | ||||||||||||
Month of | ||||||||||||||||
July 2008 | 12.65 | 10.26 | 12.70 | 10.76 | ||||||||||||
August 2008 | 10.67 | 7.22 | 10.22 | 7.22 | ||||||||||||
September 2008 | 10.74 | 6.38 | 10.77 | 6.39 | ||||||||||||
As of October 21, 2008 | 10.43 | 9.82 | 10.43 | 9.80 |
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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 our objects or any of them; | ||
• | to carry out all forms of exploration work and in particular to search for, prospect, examine, explore and obtain information in regard to mines, mineral properties, claims, mineral rights, mining rights, mining leases, mining titles, mynpachts, mining districts or locations and ground and soil supposed to contain or containing precious stones, minerals or metals of every description; | ||
• | to open, work, develop and maintain gold, silver, diamond, copper, coal, iron and other mines, mineral and other rights, properties and works, and to carry on and conduct the business of raising, crushing, washing, smelting, reducing and amalgamating ores, metals, minerals and precious stones, and to render the same merchantable and fit for use and to carry on all or any of the businesses of miners, mineralogists, metallurgists, amalgamators, geophysicists, smelters, quarry owners, quarrymen and brickmakers; | ||
• | to buy, sell, refine and deal in bullion, specie, coin and precious and base metals, and also precious stones and other products of mining; and | ||
• | to employ and pay mining experts, agents and other persons, partnerships, companies or corporations, and to organize, equip and dispatch expeditions for prospecting, exploring, reporting on, surveying, working and developing lands, farms, districts, territories and properties in any part of the world, whether the same are our property or otherwise. |
• | any arrangement for giving the director a security or indemnity in respect of money lent, or an obligation undertaken, by such director for our benefit; |
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• | any arrangement by which we give any security to a third party in respect of our debt or obligation for which the director himself or herself has assumed responsibility, in whole or in part, whether under a guarantee or indemnity or by the deposit of a security; |
• | any contract by the director to subscribe for or underwrite our shares or debentures; | ||
• | any contract or arrangement with a company other than us, in which the director holds or controls, directly or indirectly, no more than 1% of shares representing either (i) any class of the equity share capital of that company or (ii) the overall voting rights of that company; or | ||
• | any retirement scheme or fund which relates to both directors and to employees (or a class of employees) and does not accord to any director, as such, any privilege or advantage not generally accorded to the employees to which such scheme or fund relates. |
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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 |
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• | 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. |
• | increase our authorized or paid-up share capital; | ||
• | consolidate and divide all or any part of our shares into shares of a larger amount; | ||
• | increase the number of our no par value shares without an increase of our stated capital; | ||
• | sub-divide all or any part of our shares having a par value; |
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• | convert all of our ordinary or preference share capital consisting of shares having a par value into stated capital constituted by shares of no par value and vice versa; | ||
• | convert our stated capital constituted by ordinary or preference shares of no par value into share capital consisting of shares having a par value; | ||
• | vary the rights attached to any shares whether issued or not yet issued; | ||
• | convert any of our issued or unissued shares into shares of another class; | ||
• | convert any of our paid-up shares into stock, and reconvert any stock into any number of paid-up shares of any denomination; | ||
• | convert any of our issued shares into preference shares which can be redeemed; | ||
• | cancel shares which, at the date of passing of the resolution, have not been taken or agreed to be taken by any person, and diminish the amount of the authorized share capital by the amount of the shares so cancelled; or | ||
• | reduce the authorized share capital. |
• | reduce our issued share capital; | ||
• | reduce our stated capital; or | ||
• | reduce our 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; | ||
• | the election of directors; |
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• | 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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• | 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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June 30, | ||||||||
2008 | 2007 | |||||||
($ in millions) | ||||||||
Increase in 100 basis points | 3 | 16 | ||||||
Decrease in 100 basis points | (3 | ) | (16 | ) |
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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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• | failure to maintain an effective information technology control environment; | ||
• | failure to maintain effective preventative and detective monitoring controls over the accuracy of depreciation expense on mining assets under construction; | ||
• | failure to maintain effective preventative and detective monitoring controls over the completeness of capitalised borrowing costs on qualifying assets; | ||
• | failure to maintain effective preventative and detective monitoring controls over the completeness and accuracy of the reconciliation of stores inventory; and | ||
• | failure to maintain effective preventative and detective monitoring controls over the reconciliation of certain adjustments to deferred tax. |
• | the appointment of senior financial personnel to expand the capacity of the financial departments and strengthen the overall governance structure of the company; | ||
• | the reimplementation of Enterprise Resource Planning (“ERP”) system. In connection the reimplementation, we: |
• | appointed a System Implementation Partner to assist with the reimplementation of the ERP system; | ||
• | implemented rigorous project and resource planning, testing strategies, user training, communication management and change management during the life cycle of the ERP system reimplementation; | ||
• | implemented a detail governance structure and process during the life cycle of the ERP system implementation, which included the Internal Audit activities. We also established an ERP Management Committee and Project Steering Committee to monitor the ERP reimplementation; | ||
• | designed and implemented change and access control procedures that apply to all systems, including any configuration changes to ERP. This includes a Change Advisory Panel which is responsible to oversee, monitor and approve all changes made to the system; |
• | implemented manual controls during the ERP reimplementation process to ensure reliable and accurate financial information was produced; | ||
• | the implementation and strengthening of manual quarterly preventative and detective monitoring controls to mitigate the risk of material misstatement in the financial records; | ||
• | the implementation of preventative and detective monitoring controls over the accuracy of depreciation expense on mining assets, and the completeness of borrowing costs capitalized, including management reviews on a quarterly basis; | ||
• | the controls over stores inventory were improved, including regular cycle counts and manual reconciliations; and |
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• | the implementation of a manual control whereby the deferred tax balance is reconciled on a quarterly basis to ensure the accuracy and completeness of deferred tax and the validity of prior year entries still included in the deferred tax balance. |
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Fiscal year ended June 30, 2007 | U.S.$1.343 million | |||
Fiscal year ended June 30, 2008 | U.S.$1.949 million |
Fiscal year ended June 30, 2007 | U.S.$0.451 million | |||
Fiscal year ended June 30, 2008 | U.S.$0.316 million |
Fiscal year ended June 30, 2007 | U.S.$0.168 million | |||
Fiscal year ended June 30, 2008 | U.S.$0.052 million |
Fiscal year ended June 30, 2007 | — | |||
Fiscal year ended June 30, 2008 | — |
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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 25, 2007 in respect of the Annual General Meeting held on November 26, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2007, filed on December 7, 2007). | |
2.2 | 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). | |
2.3 | 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). | |
2.4 | Form of ADR (included in Exhibit 2.3). | |
2.5 | 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). | |
2.6 | Form of Global Bond (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). | |
2.7 | 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). | |
4.1 | Harmony (2003) Share Option Scheme, as amended (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2005, filed on November 3, 2005). | |
4.2 | Harmony 2006 Share Scheme (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2007, filed on December 7, 2007). | |
4.3 | 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). | |
4.4 | 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). | |
4.5 | 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). | |
4.6 | 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). | |
4.7 | 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 |
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fiscal year ended June 30, 2005, filed on November 3, 2005). |
4.8 | 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). | |
4.9 | 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). | |
4.10 | 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). | |
4.11 | 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). | |
4.12 | 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). | |
4.13 | 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). | |
4.14 | Term Loan Agreement with Rand Merchant Bank dated March 9, 2006 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2006, filed on October 31, 2006). | |
4.15 | Pledge Agreement in favor of FirstRand Bank Limited (acting through its Rand Merchant Bank division) dated March 9, 2006 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2006, filed on October 31, 2006). | |
4.16 | Senior Facility Agreement among Nedbank Limited and Harmony Gold Mining Company Limited and the Guarantors named therein dated on or about September 28, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2007, filed on December 7, 2007). | |
4.17 | Cessation and Pledge in Security by African Rainbow Minerals Gold Limited in favour of Nedbank dated on or about September 28, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2007, filed on December 7, 2007). | |
4.18 | Cessation and Pledge in Security by Harmony Gold Mining Company Limited in favour of Nedbank dated on or about September 28, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2007, filed on December 7, 2007). | |
4.19 | Preference Share Subscription Agreement dated March 20, 2007 by and among FirstRand Bank Limited (RMB), Harmony and the subsidiaries named therein (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2007, filed on December 7, 2007). | |
4.20 | Senior Bridge Loan Facility with RMB dated June 29, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2007, filed on December 7, 2007). | |
4.21 | Draw Down Facility Agreement with Westpac Bank dated June 27, 2007 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2007, filed on December 7, 2007). |
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4.22 | Sale Agreement with Randfontein Estates Limited, Clidet No. 726 (Proprietary) Limited and Clidet No. 770 (Proprietary) Limited dated December 18, 2007 (incorporated by reference to Harmony's Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008). | |
4.23 | Shareholders Agreement between ARMGold/Harmony Joint Investment Company (Proprietary) Limited, Clidet No. 770 (Proprietary) Limited and Clidet No. 726 (Proprietary) Limited dated December 18, 2007 (incorporated by reference to Harmony's Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008). | |
4.24 | Sale of Shares and Claim Agreement with Randfontein Estates Limited, ARMGold/Harmony Joint Investment Company (Proprietary) Limited and Clidet No. 770 (Proprietary) Limited dated December 18, 2007 (incorporated by reference to Harmony's Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008). | |
4.25 | Deed of Extinguishment of Royalty (Hidden Valley Project) dated May June 11, 2008 (incorporated by reference to Harmony's Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008). | |
4.26 | Senior Facility Agreement with Nedbank Limited dated September 28, 2007 (incorporated by reference to Harmony's Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008). | |
4.27 | Master Lease Facility Agreement between Morobe Consolidated Goldfields Limited and Westpac Bank PNG Limited (Hidden Valley Project) dated June 14, 2007 (incorporated by reference to Harmony's Annual Report on Form 20-F for the fiscal year ended June 30, 2008, filed on October 29, 2008). | |
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). | |
*12.1 | Certification of the principal executive officer required by Rule 13a-14(a) or Rule 15(d)-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002. | |
*12.2 | Certification of the principal financial officer required by Rule 13a-14(a) or Rule 15(d)-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002. | |
*13.1 | Certification of the principal executive officer, pursuant to Section 906 of the Sarbanes Oxley Act of 2002. | |
*13.2 | Certification of the principal financial officer, pursuant to Section 906 of the Sarbanes Oxley Act of 2002. |
* | Filed herewith |
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By: | /s/ Graham Briggs | |||
Graham Briggs | ||||
Chief Executive Officer | ||||
Date: July 27, 2009 |
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Page | ||||
Harmony Gold Mining Company Limited | ||||
F-2 | ||||
Consolidated Income Statements for the years ended June 30, 2008, 2007 and 2006 | F-3 | |||
Consolidated Statements of Other Comprehensive Income for the years ended June 30, 2008, 2007 and 2006 | F-4 | |||
Consolidated Balance Sheets at June 30, 2008 and 2007 | F-5 | |||
Consolidated Statements of Changes in Shareholders’ Equity for the years ended June 30, 2008, 2007 and 2006 | F-6 | |||
Consolidated Statements of Cash Flows for the years ended June 30, 2008, 2007 and 2006 | F-7 | |||
Notes to the Consolidated Financial Statements | F-8 | |||
Report on Financial Statement Schedule | S-1 | |||
Financial Statement Schedule | S-2 |
F-1
Table of Contents
Johannesburg, Republic of South Africa
October 27, 2008
F-2
Table of Contents
For the years ended June 30
U.S. Dollar | ||||||||||||||||
Figures in million | Notes | 2008 | 2007 | 2006 | ||||||||||||
Continuing operations | ||||||||||||||||
Revenue | 1,269 | 1,116 | 937 | |||||||||||||
Cost of sales | 5 | (1,122 | ) | (929 | ) | (909 | ) | |||||||||
Production costs | (918 | ) | (836 | ) | (778 | ) | ||||||||||
Amortization and depreciation | (117 | ) | (106 | ) | (138 | ) | ||||||||||
Impairment of assets | (40 | ) | 19 | 30 | ||||||||||||
Employment termination and restructuring costs | (29 | ) | — | 12 | ||||||||||||
Other items | (18 | ) | (6 | ) | (35 | ) | ||||||||||
Gross profit | 147 | 187 | 28 | |||||||||||||
Corporate, administration and other expenditure | (31 | ) | (31 | ) | (24 | ) | ||||||||||
Exploration expenditure | (28 | ) | (27 | ) | (11 | ) | ||||||||||
Other (expenses)/income — net | 6 | (15 | ) | 25 | (97 | ) | ||||||||||
Operating profit | 7 | 73 | 154 | (104 | ) | |||||||||||
Loss from associates | 20 | (11 | ) | (3 | ) | (17 | ) | |||||||||
Profit on sale of investment in associate | 8 | — | 33 | — | ||||||||||||
Impairment of investment in associate | 20 | (12 | ) | — | — | |||||||||||
Profit on sale of investment in subsidiary | — | — | 2 | |||||||||||||
Fair value of non-derivative financial instruments | 9 | 5 | 15 | 14 | ||||||||||||
(Loss)/profit on sale of listed investments | 10 | (63 | ) | (5 | ) | 45 | ||||||||||
Investment income | 11 | 39 | 27 | 31 | ||||||||||||
Finance cost | 12 | (70 | ) | (65 | ) | (62 | ) | |||||||||
(Loss)/profit before taxation | (39 | ) | 156 | (91 | ) | |||||||||||
Taxation | 13 | (65 | ) | (39 | ) | (22 | ) | |||||||||
Net (loss)/profit from continuing operations | (104 | ) | 117 | (113 | ) | |||||||||||
Discontinued operations | ||||||||||||||||
Profit/(loss) from discontinued operations | 14 | 74 | (66 | ) | 22 | |||||||||||
Net (loss)/profit | (30 | ) | 51 | (91 | ) | |||||||||||
(Loss)/earnings per ordinary share (cents): | 15 | |||||||||||||||
(Loss)/profit from continuing operations | (26 | ) | 29 | (29 | ) | |||||||||||
Profit/(loss) from discontinued operations | 18 | (17 | ) | 6 | ||||||||||||
Total (loss)/profit for the period | (8 | ) | 12 | (23 | ) | |||||||||||
Diluted (loss)/earnings per ordinary share (cents): | 15 | |||||||||||||||
(Loss)/profit from continuing operations | (26 | ) | 29 | (29 | ) | |||||||||||
Profit/(loss) from discontinued operations | 18 | (17 | ) | 6 | ||||||||||||
Total (loss)/profit for the period | (8 | ) | 12 | (23 | ) | |||||||||||
F-3
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For the years ended June 30
US Dollar | ||||||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||||||
Net (loss)/profit for the period | (30 | ) | 51 | (91 | ) | |||||||||||
Attributable to: | ||||||||||||||||
Owners of the parent | (30 | ) | 51 | (91 | ) | |||||||||||
Non-controlling interest | — | — | — | |||||||||||||
Other comprehensive (loss)/income for the period, net of income tax | (204 | ) | 41 | (196 | ) | |||||||||||
Foreign exchange translation profit and loss | (246 | ) | 87 | (214 | ) | |||||||||||
Mark-to-market of available-for-sale investments | 42 | (46 | ) | 18 | ||||||||||||
Total comprehensive (loss)/income for the period | (234 | ) | 92 | (287 | ) | |||||||||||
Attributable to: | ||||||||||||||||
Owners of the parent | (234 | ) | 92 | (287 | ) | |||||||||||
Non-controlling interest | — | — | — | |||||||||||||
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As at June 30
US Dollar | ||||||||||||||||
Figures in million | Notes | 2008 | 2007 | |||||||||||||
Assets | ||||||||||||||||
Non-current assets | ||||||||||||||||
Property, plant and equipment | 16 | 3,531 | 3,484 | |||||||||||||
Intangible assets | 17 | 283 | 328 | |||||||||||||
Restricted cash | 24 | 10 | 1 | |||||||||||||
Restricted investments | 18 | 188 | 195 | |||||||||||||
Investments in financial assets | 19 | 9 | 8 | |||||||||||||
Investments in associates | 20 | 19 | 1 | |||||||||||||
Deferred tax asset | 13 | 190 | 216 | |||||||||||||
Trade and other receivables | 22 | 18 | 8 | |||||||||||||
Total non-current assets | 4,248 | 4,241 | ||||||||||||||
Current assets | ||||||||||||||||
Inventories | 23 | 89 | 105 | |||||||||||||
Investments in financial assets | 19 | — | 353 | |||||||||||||
Trade and other receivables | 22 | 112 | 130 | |||||||||||||
Income and mining taxes | 11 | 9 | ||||||||||||||
Restricted cash | 24 | — | 39 | |||||||||||||
Cash and cash equivalents | 25 | 53 | 101 | |||||||||||||
265 | 737 | |||||||||||||||
Non-current assets classified as held for sale | 14 | 197 | 182 | |||||||||||||
Total current assets | 462 | 919 | ||||||||||||||
Total assets | 4,710 | 5,160 | ||||||||||||||
Equity and liabilities | ||||||||||||||||
Share capital and reserves | ||||||||||||||||
Share capital | 26 | 3,787 | 3,752 | |||||||||||||
Other reserves | 27 | (196 | ) | 2 | ||||||||||||
Accumulated loss | (419 | ) | (388 | ) | ||||||||||||
Total equity | 3,172 | 3,366 | ||||||||||||||
Non-current liabilities | ||||||||||||||||
Borrowings | 28 | 31 | 248 | |||||||||||||
Deferred tax | 13 | 573 | 602 | |||||||||||||
Provision for environmental rehabilitation | 29 | 145 | 156 | |||||||||||||
Provisions for other liabilities and charges | 30 | 18 | 18 | |||||||||||||
Total non-current liabilities | 767 | 1,024 | ||||||||||||||
Current liabilities | ||||||||||||||||
Trade and other payables | 31 | 213 | 257 | |||||||||||||
Borrowings | 28 | 494 | 405 | |||||||||||||
Bank overdraft | 25 | — | 31 | |||||||||||||
707 | 693 | |||||||||||||||
Liabilities directly associated with non-current assets classified as held for sale | 14 | 64 | 77 | |||||||||||||
Total current liabilities | 771 | 770 | ||||||||||||||
Total equity and liabilities | 4,710 | 5,160 | ||||||||||||||
F-5
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Number of | ||||||||||||||||||||||||||
ordinary | Share | Accumulated | Other | |||||||||||||||||||||||
shares issued | Share capital | premium | loss | reserves | Total | |||||||||||||||||||||
Figures in million (US Dollar) | ||||||||||||||||||||||||||
Notes | 26 | 27 | ||||||||||||||||||||||||
Balance — June 30, 2005 (as previously reported) | 393,341,194 | 31 | 3,669 | (352 | ) | 135 | 3,483 | |||||||||||||||||||
Change in accounting policy for the capitalization of interest on assets under construction (note 2.1) | — | — | 6 | — | 6 | |||||||||||||||||||||
Balance — June 30, 2005 (restated) | 393,341,194 | 31 | 3,669 | (346 | ) | 135 | 3,489 | |||||||||||||||||||
Dividends declared | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||||
Issue of shares | — | |||||||||||||||||||||||||
- Exercise of employee share options | 3,593,256 | 1 | 28 | — | — | 29 | ||||||||||||||||||||
Deferred share-based payments | — | — | 3 | — | 16 | 19 | ||||||||||||||||||||
Total comprehensive income for the year | — | — | — | (91 | ) | (196 | ) | (287 | ) | |||||||||||||||||
Balance — June 30, 2006 | 396,934,450 | 32 | 3,700 | (438 | ) | (45 | ) | 3,249 | ||||||||||||||||||
Dividends declared | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||||
Issue of shares | ||||||||||||||||||||||||||
- Exercise of employee share options | 2,673,934 | — | 19 | — | — | 19 | ||||||||||||||||||||
Deferred share-based payments | — | — | 1 | — | 6 | 7 | ||||||||||||||||||||
Total comprehensive income for the year | — | — | — | 51 | 41 | 92 | ||||||||||||||||||||
Balance — June 30, 2007 | 399,608,384 | 32 | 3,720 | (388 | ) | 2 | 3,366 | |||||||||||||||||||
Dividends declared | — | — | — | (1 | ) | — | (1 | ) | ||||||||||||||||||
Issue of shares | ||||||||||||||||||||||||||
- Exercise of employee share options | 1,786,213 | — | 12 | — | — | 12 | ||||||||||||||||||||
- Exchange for PNG Royalty | 1,859,159 | — | 20 | — | — | 20 | ||||||||||||||||||||
Deferred share-based payments | — | — | 3 | — | 6 | 9 | ||||||||||||||||||||
Total comprehensive income for the year | — | — | — | (30 | ) | (204 | ) | (234 | ) | |||||||||||||||||
Balance — June 30, 2008 | 403,253,756 | 32 | 3,755 | (419 | ) | (196 | ) | 3,172 | ||||||||||||||||||
F-6
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US Dollar | ||||||||||||||||
Figures in million | Notes | 2008 | 2007 | 2006 | ||||||||||||
Cash flow from operating activities | ||||||||||||||||
Cash generated by operations | 32 | 268 | 164 | 53 | ||||||||||||
Interest received | 38 | 25 | 33 | |||||||||||||
Dividends received | 5 | 3 | 3 | |||||||||||||
Interest paid | (57 | ) | (31 | ) | (32 | ) | ||||||||||
Income and mining taxes paid | (18 | ) | (2 | ) | (2 | ) | ||||||||||
Cash generated by operating activities | 236 | 159 | 55 | |||||||||||||
Cash flow from investing activities | ||||||||||||||||
Amounts invested in restricted investments | (11 | ) | (2 | ) | (5 | ) | ||||||||||
Decrease/(increase) in restricted cash | 28 | (4 | ) | (32 | ) | |||||||||||
Investment in Orpheo by Harmony acquired | 32 | — | — | (1 | ) | |||||||||||
Proceeds on disposal of South Kal Mine | 32 | 18 | — | — | ||||||||||||
Proceeds on disposals of Buffalo Creek | 32 | — | — | 3 | ||||||||||||
Proceeds on disposal of available-for-sale financial assets | 184 | 55 | 365 | |||||||||||||
Acquisition of associate | — | — | (321 | ) | ||||||||||||
Increase in intangible assets | (3 | ) | (6 | ) | — | |||||||||||
(Increase)/decrease in other non-current investments | (11 | ) | (5 | ) | 3 | |||||||||||
Proceeds on disposal of property, plant and equipment | 18 | 27 | 13 | |||||||||||||
Additions to property, plant and equipment | (552 | ) | (383 | ) | (275 | ) | ||||||||||
Cash utilized by investing activities | (329 | ) | (318 | ) | (250 | ) | ||||||||||
Cash flow from financing activities | ||||||||||||||||
Long-term borrowings raised | 323 | 253 | 160 | |||||||||||||
Long-term borrowings paid | (256 | ) | (139 | ) | (205 | ) | ||||||||||
Ordinary shares issued | 12 | 19 | 29 | |||||||||||||
Dividends paid | (1 | ) | (1 | ) | (1 | ) | ||||||||||
Cash generated by financing activities | 78 | 132 | (17 | ) | ||||||||||||
Foreign currency translation adjustments | (2 | ) | 6 | 36 | ||||||||||||
Net decrease in cash and equivalents | (17 | ) | (21 | ) | (176 | ) | ||||||||||
Cash and equivalents — beginning of period | 70 | 91 | 267 | |||||||||||||
Cash and equivalents — end of period | 25 | 53 | 70 | 91 | ||||||||||||
F-7
Table of Contents
1 | General information | |
Harmony Gold Mining Company Limited (“the Company”) and its subsidiaries (collectively “Harmony” or “the Group”) are engaged in gold mining and related activities, including exploration, extraction and processing. Gold bullion, the Group’s principal product, is currently produced at its operations in South Africa. As discussed in note 14, Harmony classified its Australian operations as non-current assets held for sale. One of these operations were disposed of during the 2008 financial year. | ||
The Company is a public company, incorporated and domiciled in South Africa. The address of the registered office is Randfontein Office Park, Corner Main Reef Road and Ward Avenue, Randfontein, 1759. | ||
These consolidated financial statements were authorized for issue by the board of directors on October 10, 2008. |
2 | Accounting policies | |
The principal accounting policies applied in the preparation of the consolidated financial statements are set out below. These policies have been consistently applied in all years presented. IAS 23 (Revised) and IFRS 8 have been retrospectively applied. |
2.1 | Basis of preparation | ||
The annual financial statements are prepared on the historical cost basis, as modified by available-for-sale financial assets, and financial assets and liabilities, which have been brought to account at fair value. The financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). | |||
New accounting standards and interpretations | |||
During the current financial year, the following new and revised accounting standards, amendments to standards and new interpretations were adopted by the Group: | |||
IFRS 7 — Financial Instruments : Disclosure | |||
In addition, the following new and revised accounting standards and amendments to standards were early adopted by the Group during the current financial year: | |||
IAS 1 (Revised) — Presentation of Financial Statements | |||
IAS 23 (Revised) — Borrowing Costs | |||
IFRS 8 — Operating Segments | |||
The effect of the adoption of these standards and amendments to standards are as follows: | |||
IFRS 7 — Financial Instruments: Disclosure | |||
The Group adopted this standard as of July 1, 2007. The standard introduces new disclosures to improve the information regarding financial instruments. It requires the disclosures of qualitative and quantitative information about the exposure to risks arising from financial instruments, including a sensitivity analysis to market risk. There was no effect on the financial position or performance of the Group as a result of the adoption of this standard. | |||
IAS 1 (Revised) — Presentation of Financial Statements | |||
The Group early adopted this amendment as of July 1, 2007. The amendment requires that changes in equity resulting from transactions with owners (holders of instruments classified as equity) be presented separately from non-owner changes in equity (also known as other comprehensive income). There are also additional disclosures for components of other comprehensive income. There was no effect on the financial position or performance of the Group as a result of the adoption of this amendment. | |||
IAS 23 (Revised) — Borrowing Costs | |||
The Group early adopted the revised standard on Borrowing Costs as of July 1, 2007. The standard requires that all borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset be capitalized as part of the cost of the asset. All other borrowing costs are recognized as an expense in the period in which they are incurred. | |||
In accordance with the revised standard’s transitional provisions, the Group designated July 1, 2000 (the earliest commencement date of current qualifying projects) as the effective date and applied the requirements of the revised standard to all qualifying projects for which the commencement date of capitalization was on or after that date. |
F-8
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The impact of the adjustment was as follows: |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Effect on net loss: | ||||||||||||
Decrease in finance cost | 18 | 8 | 4 | |||||||||
Income tax | (5 | ) | (2 | ) | (1 | ) | ||||||
13 | 6 | 3 | ||||||||||
Effect on Earnings per share (cents): | ||||||||||||
Basic earnings per share | 3 | 2 | 1 | |||||||||
Diluted earnings per share | 3 | 2 | 1 | |||||||||
Effect on opening accumulated loss: | ||||||||||||
Decrease in finance cost | 9 | |||||||||||
Income tax | (3 | ) | ||||||||||
Decrease in accumulated loss | 6 | |||||||||||
The average capitalization rate was 10.6% for 2008 (2007: 6.7%; 2006: 7.3%). | |||
IAS 1 (Revised) requires the presentation of a balance sheet as at the beginning of the earliest comparative period whenever the Group applies an accounting policy retrospectively. Such a balance sheet has been included in note 38. | |||
IFRS 8 — Operating Segments | |||
The Group early adopted this standard as of July 1, 2007. The standard replaces IAS 14, “Segment Reporting”, and aligns segment reporting with the requirements of the US GAAP standard SFAS 131, “Disclosures about segments of an enterprise and related information”. The new standard requires a “management approach”, under which segment information is presented on the same basis as that used for internal reporting to the chief operating decision maker. | |||
At the date of authorization of these financial statements, the standards, amendments and interpretations listed below were in issue but not yet effective. These new standards, amendments and interpretations have not been early adopted by the Group and a reliable estimate of the impact of the adoption thereof for the Group cannot yet be determined for all of them, as management is still in the process of determining the impact of these standards and interpretations on future financial statements. |
Title | Effective date | |||||
Amendments | ||||||
• | IAS 1 (Amendment) and IAS 32 (Amendment) — Puttable Financial Instruments and Obligations arising on Liquidation | ^ Financial year commencing on or after January 1, 2009 | ||||
• | IAS 27 (Revised) — Consolidated and Separate Financial Statements | # Financial year commencing on or after July 1, 2009 | ||||
• | IAS 27 (Amendment) and IFRS 1 (Amendment) — Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate | # Financial year commencing on or after January 1, 2009 | ||||
• | IAS 39 (Amendment) — Eligible Hedged items | ^ Financial year commencing on or after July 1, 2009 | ||||
• | IFRS 2 (Amendment) — Vesting conditions and cancellations | # Financial year commencing on or after January 1, 2009 | ||||
• | IFRS 3 (Revised) — Business Combinations | # Financial year commencing on or after July 1, 2009 | ||||
• | Annual improvements to IFRS | # Financial year commencing on or after July 1, 2009 | ||||
New interpretations | ||||||
• | IFRIC 14 — IAS19 The Limit on a Defined Benefit asset, Minimum Funding Requirements and their interactions | ^ Financial year commencing on or after January 1, 2008 | ||||
• | IFRIC 16 — Hedges of a Net Investment in a Foreign Operation | ^ Financial year commencing on or after October 1, 2008 |
The Group plans to apply the above new standards, amendments and interpretations on their respective effective dates. |
# | The impact of the standard/amendment/interpretation is not currently known or reasonably estimable. | |
^ | The standard/amendment/interpretation is not expected to have a material impact on the Group’s financial statements. |
F-9
Table of Contents
2.2 | Consolidation | ||
The consolidated financial information includes the financial statements of the Company, its subsidiaries, its proportionate interest in joint ventures, special purpose entities (SPE’s) and its interests in associates. |
(i) | Subsidiaries, which are those entities in which the Group has an interest of more than one half of the voting rights or otherwise has power to govern the financial and operating policies, are consolidated. Subsidiaries are consolidated from the date on which control is acquired and are no longer consolidated when control ceases. The purchase method of accounting is used to account for the acquisition of subsidiaries. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities assumed at the date of acquisition plus costs directly attributable to the acquisition. | ||
Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, irrespective of the extent of any non-controlling interests. Non-controlling interests are carried at a proportion of the net identifiable assets acquired. | |||
The excess of the cost of acquisition over the fair value of the Group’s share of the identifiable net assets acquired is recorded as goodwill (refer to 2.7). | |||
In situations of successive share purchases when control already existed at the date of further acquisition, no fair value adjustment is made to the identifiable net assets acquired and any excess/deficit purchase price over the carrying value of non-controlling interests acquired is accounted for in equity. | |||
Intercompany transactions, balances and unrealized gains on transactions between group companies are eliminated on consolidation. Unrealized losses are also eliminated and may provide evidence of an impairment that should be recognized. Where necessary, accounting policies of subsidiaries have been changed to ensure consistency with the policies adopted by the Group. | |||
(ii) | Associatesare those entities, other than a subsidiary, in which the Group has a material interest and in respect of which the Group exercises significant influence over operational and financial policies, normally owning between 20% and 50% of the voting equity, but which it does not control. | ||
Investments in associates are accounted for by using the equity method of accounting, and are initially recognized at cost. The cost of an acquisition is measured as the fair value of the assets given up, shares issued or liabilities assumed at the date of acquisition plus costs directly attributable to the acquisition. | |||
The Group’s share of the associates’ post-acquisition profits or losses is recognized in the income statement, and its share of post-acquisition movement in reserves is recognized in other reserves. Cumulative post-acquisition movements are adjusted against the carrying amount of the investment. When the Group’s shares of losses in an associate equals or exceeds its interest in the associate, including any other unsecured receivables, the Group does not recognize further losses, unless it has incurred obligations or made payments on behalf of the associate. | |||
The Group’s investment in associates includes goodwill identified on acquisition. | |||
The carrying value of an associate is reviewed on a regular basis and, if an impairment in the carrying value has occurred, it is written off in the period in which such impairment is identified. | |||
Unrealized gains on transactions between the Group and its associates are eliminated to the extent of the Group’s interest in the associates. Unrealized losses are also eliminated and may provide evidence of an impairment that should be recognized. | |||
Accounting policies of associates have been reviewed to ensure consistency with the policies adopted by the Group. | |||
(iii) | Joint ventures are those entities in which the Group holds a interest and which is jointly controlled by the Group and one or more ventures under a contractual arrangement. The Group’s interest in jointly controlled entities is accounted for by proportionate consolidation. Under this method, the Group includes its share of the joint venture’s individual income and expenses, assets and liabilities and cash flows on a line-by-line basis with similar items in the Group’s financial statements. | ||
The Group recognizes the portion of gains or losses on the sale of assets by the Group to the joint venture that is attributable to the other ventures. The Group does not recognize its share of profits or losses from the joint venture that results from the purchase of assets by the Group from the joint venture until it resells the assets to an independent party. However, if a loss on the transaction provides evidence of a reduction in the net realizable value of current assets or an impairment loss, the loss is recognized immediately. |
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(iv) | Special purpose entities (SPE’s) are those undertakings that are created to satisfy specific business needs of the Group, These are consolidated where the Group has the right to the majority of the benefits of the SPE and/or is exposed to the majority of the risk thereof. SPE’s are consolidated in the same manner as subsidiaries when the substance of the relationship indicates that the SPE is controlled by the Group. |
2.3 | Foreign currency transactions |
(i) | Functional and presentation currency:Items included in the financial statements of each of the Group’s entities are measured using the currency of the primary economic environment in which the entity operates (the functional currency). The functional currency of the Company is the South African Rand. The presentation currency of these financial statements is the US Dollar. | ||
References to “A$” refers to Australian currency, “R” or “Rand” to South African currency, “$” or “US$” to United States currency and “K” or “Kina” to Papua New Guinea currency. | |||
(ii) | Transactions and balances:Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation to year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the income statement. These transactions are included in the determination of other (expenses)/income — net. | ||
Changes in the fair value of monetary securities denominated in a foreign currency classified as available-for-sale are analyzed between translation differences resulting from changes in the amortized cost of the security, and other changes in the carrying amount of the security. Translation differences are recognized in profit or loss, and other changes in carrying amount are recognized in other reserves. | |||
Translation differences on non-monetary financial assets and liabilities such as equities held at fair value through profit or loss are recognized in profit or loss as part of the fair value gain or loss. Translation differences on non-monetary financial assets such as equities classified as available-for-sale are included in other comprehensive income. | |||
(iii) | Group companies: The results and financial position of all Group entities (none of which has the currency of a hyperinflationary economy) that have a functional currency different from the presentation currency are translated into the presentation currency as follows: |
a) | assets and liabilities for each balance sheet presented are translated at the closing rate at the date of that balance sheet; | ||
b) | income and expenses for each income statement are translated at average exchange rates (unless this average is not a reasonable approximation of the cumulative effect of the rates prevailing on the transaction dates, in which case income and expenses are translated at the rate on the date of the transactions); | ||
c) | all resulting exchange differences are recognized as a separate component of other reserves. d) equity items are translated at historic rates. | ||
d) | equity items are translated at historic rates. |
On consolidation, exchange differences arising from the translation of the net investment in foreign operations, and of borrowings and other currency instruments designated as hedges of such investments, are taken to other reserves. When a foreign operation is sold, exchange differences that were recorded in equity are recognized in profit or loss as part of the gain or loss on sale. | |||
Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate. |
2.4 | Segmental reporting | ||
Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decision-maker. The chief operating decision-maker has been identified as the executive committee. The accounting policies of the segments are the same as those described in the accounting policy notes to the financial statements. |
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2.5 | Property, plant and equipment |
(i) | Mining assetsincluding mine development costs and mine plant facilities are initially recorded at cost, where after it is measured at cost less accumulated amortization and impairment. | ||
At the Group’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 the mine is considered to have moved into the production phase, 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. Stripping costs incurred during the production phase to remove waste ore are deferred and charged to production costs on the basis of the average life-of-mine stripping ratio. The average stripping ratio is calculated as the number of tonnes of waste material removed per tonne of ore mined. The average life-of-mine ratio is revised annually in the light of additional knowledge and change in estimates. The cost of “excess stripping” is capitalized as mine development costs when the actual stripping ratio exceeds the average life of mine stripping ratio. Where the average life of mine stripping ratio exceeds the actual stripping ratio, the cost is charged to the income statement. | |||
At the Group’s underground mines, all costs incurred to develop the property, including costs to access specific ore blocks or other areas of the underground mine, are capitalized to the extent that such costs will provide future economic benefits 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. | |||
Borrowing costs are capitalized to the extent that they are directly attributable to the acquisition and construction of qualifying assets. Qualifying assets are assets that take a substantial time to get ready for their intended use. These costs are capitalized until the asset moves into the production phase. Other borrowing costs are expensed. | |||
The net assets of operations placed on care and maintenance are impaired to their recoverable amount. Expenditure on the care and maintenance of these operations is charged against income, as incurred. | |||
Where a depreciable asset is used in the construction or extension of a mine, the depreciation is capitalized against the mines cost. | |||
(ii) | Non-mining assets:Land is shown at cost and not depreciated. Other non-mining fixed assets are shown at cost less accumulated depreciation and accumulated impairment losses. | ||
(iii) | Undeveloped properties are initially valued at the fair value of resources obtained through acquisitions. The carrying value of these properties are annually tested for impairment. Once development commences, these properties are transferred to mining properties and accounted for in accordance with the related accounting policy. | ||
(iv) | Mineral and surface use rightsrepresent mineral and surface use rights for parcels of land both owned and not owned by the Group. Mineral and surface rights include acquired mineral use rights in production, development and exploration phase properties. The amount capitalized related to a mineral and surface right represents its fair value at the time it was acquired, either as an individual asset purchase or as part of a business combination, and is recorded at cost of acquisition. | ||
Production phase mineral interests represent interests in operating properties that contain proven and probable reserves. Development phase mineral interests represent interests in properties under development that contain proven and probable reserves. Exploration phase mineral interests represent interests in properties that are believed to potentially contain (i) other mineralized material such as inferred material within pits; measured, indicated and inferred material with insufficient drill spacing to qualify as 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 production, development or exploration phase property as described above. | |||
The Group’s mineral use rights are enforceable regardless of whether proven or probable reserves have been established. In certain limited situations, the nature of mineral use rights change from exploration rights to mining rights upon the establishment of proven and probable reserves. The Group has the ability and intent to renew mineral use rights where the existing term is not sufficient to recover all identified and valued proven and probable reserves and/or undeveloped mineral interests. |
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(v) | Leased assets:The Group leases certain property, plant and equipment. Leases of property, plant and equipment where the Group has substantially all the risks and rewards of ownership are classified as finance leases. The assets are capitalized at the lease’s commencement at the lower of the fair value of the leased property and the present value of the minimum lease payments. | ||
Finance lease payments are allocated using the rate implicit in the lease, which is included in finance costs, and the capital repayment, which reduces the liability to the lessor. The corresponding rental obligations, net of finance charges, are included in Borrowings, with the current portion included under Current Liabilities. | |||
Capitalized lease assets are depreciated over the shorter of their estimated useful lives and the lease terms. | |||
(vi) | Depreciation and amortization of mining assets:Depreciation and amortization of mineral property interests, mineral and surface rights, mine development costs and mine plant facilities are computed principally by the units of production method based on estimated proven and probable reserves. Changes in management’s estimates of the quantities of economically recoverable reserves impact amortization and depreciation on a prospective basis. | ||
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 amortized 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 life-of-mine, the costs are amortized using the unit-of-production method, where the denominator is the estimated recoverable ounces of gold contained in total accessible proven and probable reserves. | |||
Proven and probable ore reserves reflect estimated quantities of economically recoverable reserves which can be recovered in future from known mineral deposits. Amortization is first charged on mining ventures from the date on which the mining ventures are considered to have moved into the production phase. | |||
(vii) | Depreciation and amortization of non-mining fixed assets:Other non-mining fixed assets are depreciated on a straight line basis over their estimated useful lives as follows: |
• | Vehicles at 20% per year; | ||
• | Computer equipment at 33.3% per year; | ||
• | Furniture and equipment at 16.67% per year. |
The assets’ residual values and useful lives are reviewed, and adjusted if appropriate, at each balance sheet date. | |||
Gains and losses on disposals are determined by comparing proceeds with carrying amount. These are included in the income statement. | |||
(viii) | Depreciation and amortization of mineral and surface use rights: Mineral rights associated with production phase mineral interests are amortized over the life of mine using the units-of-production method in order to match the amortization with the expected underlying future cash flows. Mineral interests associated with development and exploration phase mineral interests are not amortized until such time as the underlying property is converted to the production stage. |
2.6 | Exploration costs | ||
The Group expenses all exploration and evaluation expenditures until the directors conclude that a future economic benefit is more likely to be realized than not, i.e. “probable”. The information that the directors use to make that determination depends on the level of exploration as well as the degree of confidence in the ore body. | |||
Exploration and evaluation expenditure on Greenfield sites, being those where the Group does not have any mineral deposits which are already being mined or developed, is expensed as incurred until a final feasibility study has been completed, after which the expenditure is capitalized within development costs if the final feasibility study demonstrates that future economic benefits are probable. | |||
Exploration and evaluation expenditure on Brownfield sites, being those adjacent to mineral deposits which are already being mined or developed, is expensed as incurred until the directors are able to demonstrate that future economic benefits are probable through the completion of a prefeasibility study, after which the expenditure is capitalized as a mine development cost. A “prefeasibility study” consists of a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and which, if an effective method of mineral processing has been determined, includes a financial analysis based on reasonable assumptions of technical, engineering, operating economic factors and the evaluation of other relevant factors. The prefeasibility study, when combined with existing knowledge of the mineral property that is adjacent to mineral deposits that are already being mined or developed, allows the directors to conclude that it is more likely than not that the Group will obtain future economic benefit from the expenditures. |
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Exploration and evaluation expenditure relating to extensions of mineral deposits which are already being mined or developed, including expenditure on the definition of mineralization of such mineral deposits, is capitalized as a mine development cost following the completion of an economic evaluation equivalent to a feasibility study. This economic evaluation is distinguished from a feasibility study in that some of the information that would normally be determined in a feasibility study is instead obtained from the existing mine or development. This information when combined with existing knowledge of the mineral property already being mined or developed allow the directors to conclude that more likely than not the Group will obtain future economic benefit from the expenditures. Costs relating to property acquisitions are also capitalized. These costs are capitalized within development costs. | |||
2.7 | Intangible assets | ||
Intangible assets consist of all identifiable non-monetary assets without physical substance. They are stated at cost less accumulated amortization and accumulated impairment losses, if any. The following are the main categories of intangible assets: |
(i) | Intangible assets with an indefinite useful life | ||
Intangible assets with an indefinite useful life are not amortized but tested for impairment on an annual basis. Goodwill represents the excess of the cost of an acquisition over the fair value of the Group’s share of the net assets of the acquired subsidiary, associate, joint venture or business at the date of acquisition. Goodwill on acquisition of subsidiaries, joint ventures and businesses are included in intangible assets. Goodwill on acquisition of associates is included in investments in associates and tested for impairment as part of the overall balance. | |||
Goodwill is tested annually for impairment and carried at cost less accumulated impairment losses. Impairment losses on goodwill are not reversed. The impairment testing is performed on April 30. | |||
Goodwill is allocated to cash-generating units for the purpose of impairment testing. The allocation is made to those cash-generating units or groups of cash-generating units that are expected to benefit from the business combination in which the goodwill arose. If the composition of one or more cash-generating units to which goodwill has been allocated changes due to a reorganisation, the goodwill is reallocated to the units affected. | |||
The gain or loss on disposal of an entity includes the carrying amount of goodwill relating to the entity sold. | |||
(ii) | Intangible assets with a finite useful life | ||
Acquired computer software licenses are capitalized on the basis of costs incurred to acquire and bring to use the specific software. Intangible assets with a finite useful life are amortized on a straight line basis of over their estimated useful lives, which are reviewed annually, as follows: |
• | Computer software at 20% per year. |
2.8 | Impairment of non-financial assets | ||
Assets that have an indefinite useful life are not subject to amortization and are tested annually for impairment. | |||
Assets that are subject to amortization are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. | |||
An impairment loss is recognized for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable amount is the higher of an asset’s fair value less costs to sell and value in use. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash generating units). Each operating shaft, along with allocated common assets such as plants and administrative offices, is considered to be a cash generating unit as each shaft is largely independent from the cash flows of other shafts and assets belonging to the Group. | |||
The assets’ recoverable amount is generally determined using discounted estimated future cash flows. Future cash flows are estimated based on quantities of recoverable minerals, expected gold prices (considering current and historical prices, price trends and related factors), production levels and cash costs of production, all based on life-of-mine plans. | |||
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 mine, even if the mines are included in a larger mine complex. |
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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. | |||
Non-financial assets other than goodwill that suffered an impairment are reviewed for possible reversal of the impairment at each reporting date. | |||
2.9 | Financial instruments | ||
Financial instruments are initially measured at fair value when the Group becomes a party to their contractual arrangements. Transaction costs are included in the initial measurement of financial instruments, with the exception of financial instruments classified as at fair value through profit or loss. The subsequent measurement of financial instruments is discussed below. | |||
A financial asset is derecognized when the right to receive cash flows from the asset has expired or the Group has transferred its rights to receive cash and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the assets. | |||
A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expires. | |||
On derecognition of a financial asset, the difference between the carrying amount and the sum of the consideration received and any cumulative gain or loss recognized in equity is recognized in profit and loss. | |||
On derecognition of a financial liability, the difference between the carrying amount of the liability extinguished or transferred to another party and the amount paid is recognized in profit and loss. | |||
Financial assets | |||
The Group classifies its financial assets in the following categories: loans and receivables, available-for-sale, held-to-maturity and at fair value through profit or loss. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. | |||
Purchases and sales of financial assets are recognized on trade-date, the date on which the Group commits to purchase or sell the asset. |
(i) | Loans and receivables,are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They arise when the Group provides money, goods or services directly to a debtor with no intention of trading the receivable. Loans and receivables are subsequently measured at amortized cost using the effective interest method. They are included in current assets, except for those with maturities greater than 12 months after the balance sheet date which are classified as non-current assets. Loans and receivables include trade and other receivables (excluding VAT and prepayments), restricted cash and cash and cash equivalents. | ||
Cash and cash equivalents | |||
Cash and cash equivalents are defined as cash on hand, deposits held at call with banks and short-term highly liquid investments with original maturities of three months or less. Cash and cash equivalents exclude restricted cash (discussed below). | |||
Restricted cash | |||
Restricted cash consists of cash held for performance bonds, as security deposits on mining tenements, cash held to acquire shares in subsidiaries as part of the compulsory takeover of shares as well as cash held on margin call in terms of certain conditions of borrowing agreements. | |||
Trade and other receivables | |||
Trade and other receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method, less provision for impairment. A provision for impairment of receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganization, and default or delinquency in payments are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the effective interest rate. The carrying amount of the asset is reduced through the use of a provision for impairment (allowance account) and the amount of the loss is recognized in the income statement. When a trade receivable is uncollectible, it is written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off are credited in the income statement. |
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(ii) | Available-for-sale financial assets, are non-derivatives that are either designated in this category or not classified in any of the other categories. They are included in non-current assets unless management intends to dispose of the investment within 12 months of the balance sheet date. | ||
Available-for-sale financial assets are subsequently carried at fair value. Changes in the fair value of monetary securities denominated in a foreign currency and classified as available-for-sale are analyzed between translation differences resulting from changes in amortized cost of the security and other changes in the carrying amount of the security. The translation differences on monetary securities are recognized in profit or loss, while translation differences on non-monetary securities are recognized in other reserves. Changes in the fair value of monetary and non-monetary securities classified as available-for-sale are recognized in other reserves. | |||
When securities classified as available-for-sale are sold or impaired, the accumulated fair value adjustments recognized in other comprehensive income are reclassified in the income statement as profit or loss on sale of listed investments. Dividends on available-for-sale equity instruments are recognized in the income statement as part of investment income when the Group’s right to receive payments is established. | |||
The fair values of quoted investments are based on current bid prices. If the value for a financial instrument cannot be obtained from an active market, the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis, and option pricing models refined to reflect the issuer’s specific circumstances. The valuation techniques make maximum use of market inputs and rely as little as possible on entity-specific inputs. | |||
The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or a group of financial assets is impaired. In the case of equity securities classified as available-for-sale, a significant or prolonged decline in the fair value of the security below its cost is considered in determining whether the securities are impaired. If, in the opinion of the directors, permanent diminution in value exists for available-for-sale financial assets, the cumulative loss — measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss — is removed from other reserves and recognized in the income statement. Impairment losses recognized in the income statement on equity instruments are not reversed through the income statement. | |||
(iii) | Held-to-maturity investmentsare non-derivative financial assets with fixed or determinable payments and fixed maturities that the Group’s management has the positive intention and ability to hold to maturity. The Group’s held-to-maturity investments are subsequently measured at amortized cost using the effective interest method. | ||
The restricted investments (refer note 18) are classified as held-to-maturity investments. | |||
(iv) | Financial assets at fair value through profit or lossFinancial assets at fair value through profit or loss have two sub-categories: financial assets held-for-trading, and those designated at fair value through profit and loss at inception. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or if so designated by management in terms of specified criteria. Derivatives are also categorized as held-for-trading unless they are designated as hedges. Assets in this category are classified as current assets if they are either held-for-trading or are expected to be realized within 12 months of the balance sheet date. These assets are subsequently measured at fair value with gains or losses arising from changes in fair value recognized in the income statement in the period in which they arise. |
Financial liabilities | |||
Borrowings | |||
Borrowings are initially recognized at fair value net of transaction costs incurred and subsequently measured at amortized cost, comprising original debt less principal payments and amortization, using the effective yield method. | |||
The fair value of the liability portion of a convertible bond is determined using a market interest rate for an equivalent non-convertible bond. This amount is recorded as a liability on an amortized cost basis until extinguished on conversion or maturity of the bonds. The remainder of the proceeds are allocated to the conversion option. This is recognized and included in equity, net of income tax effects. | |||
Borrowings are classified as current liabilities unless the Group has an unconditional right to defer settlement of the liability for at least 12 months after the balance sheet date. | |||
Trade and other payables | |||
Trade and other payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method. |
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2.10 | Inventories | ||
Inventories which include bullion on hand, gold in process and stores and materials, are measured at the lower of cost and net realizable value after appropriate allowances for redundant and slow moving items. Cost of bullion and gold in process is determined by reference to production cost, including amortization and depreciation at the relevant stage of production. | |||
Stores and materials consist of consumable stores and are valued at weighted average cost. | |||
Net realizable value is the estimated selling price in the ordinary course of business less the estimated cost of completion and the estimated cost necessary to perform the sale. | |||
Gold-in-process inventories represent materials that are currently in the process of being converted to a saleable product. Conversion processes vary depending on the nature of the ore and the specific mining operation, but include mill in-circuit, leach in-circuit, flotation and column cells, and carbon in-pulp inventories. In-process material is measured based on assays of the material fed to process and the projected recoveries at the respective plants. In-process inventories are valued at the average cost of the material fed to process attributable to the source material coming from the mine, stockpile or leach pad plus the in-process conversion costs, including the applicable depreciation relating to the process facility, incurred to that point in the process. Bullion on hand and gold in process at certain of the underground operations include gold in lockup which can be reliably measured, and generally this is from the smelter onwards. Where mechanized mining is used in underground operations, in-progress material is accounted for at the earliest stage of production when reliable estimates of quantities and costs are capable of being made, normally from when ore is broken underground. Given the varying nature of the Group’s open pit operations, gold in process represents either production in broken ore form or production from the time of placement on heap leach pads. | |||
2.11 | Non-current assets or disposal group held for sale | ||
A non-current asset or disposal group (a business grouping of assets and their related liabilities) is designated as held for sale when its carrying amount will be recovered principally through a sale transaction rather that through continuing use. The classification as held for sale of a non-current asset or disposal group occurs when it is available for immediate sale in its present condition and the sale is highly probable. A sale is considered highly probable if management is committed to a plan to sell the non-current asset or disposal group, an active divestiture programme has been initiated, the non-current assets or disposal group is marketed at a price reasonable to its fair value and the disposal will be completed within one year from classification. | |||
Upon classification of a non-current asset or disposal group as held for sale, it is reviewed for impairment. The impairment charged to the income statement is the excess of the carrying value of the non-current asset or disposal group over its expected net selling price (fair value less costs to sell). At each subsequent reporting date, the carrying values are remeasured for possible impairment. A gain is recognized for any subsequent increase in net selling price but not in excess of the cumulative impairment loss already recognized. | |||
No depreciation is provided on non-current assets from the date they are classified as held for sale. | |||
When a disposal group is classified as held for sale it is also necessary to assess whether or not the criteria for discontinued operations are met. If the criteria are met, the results of the disposal group are classified as discontinued operations in the income statement and the comparative amounts restated for all periods presented. | |||
If a non-current asset or disposal group is classified as held for sale but the criteria for classification as held for sale are no longer met, the disclosure of such non-current asset or disposal group as held for sale is ceased. | |||
On ceasing such classification, the non-current assets are reflected at the lower of: |
• | the carrying amount before classification as held for sale adjusted for any depreciation or amortization that would have been recognized had the assets not been classified as held for sale; or | ||
• | the recoverable amount at the date the classification as held for sale ceases. The recoverable amount is the amount at which the asset would have been recognized after the allocation of any impairment loss arising on the cash generating unit as determined in accordance with the group’s policy on impairment of non-financial assets. |
Any adjustment required to be made on reclassification is charged to the income statement on reclassification, and included in income from continuing operations. | |||
Where the disposal group was also classified as a discontinued operations, the subsequent classification as held for sale and used also requires that the discontinued operation be included in continuing operations. Comparative information in the income statement relating to the classification as a discontinued operation is restated accordingly. | |||
2.12 | Environmental obligations | ||
Estimated long term environmental obligations, comprising pollution control, rehabilitation and mine closure, are based on the Group’s environmental management plans in compliance with current technological, environmental and regulatory requirements. |
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Based on damage done to date, the net present value of expected rehabilitation cost estimates are recognized and provided for in full in the financial statements. The estimates are reviewed annually and are discounted using a pre-tax risk-free rate that is adjusted to reflect the current market assessments of the time value of money and the risks specific to the obligation. | |||
Annual changes in the provision consist of finance costs relating to the change in the present value of the provision and inflationary increases in the provision estimate, as well as changes in estimates. The present value of environmental disturbances created are capitalized to mining assets against an increase in the rehabilitation provision. Rehabilitation projects undertaken, included in the estimates are charged to the provision as incurred. The cost of ongoing current programmes to prevent and control pollution is charged against income as incurred. Over time, the liability is increased to reflect an interest element, and the capitalized cost is depreciated over the life of the related asset. | |||
2.13 | Environmental trust funds | ||
Annual contributions are made to the Group’s trust funds, created in accordance with statutory requirements, to fund the estimated cost of pollution control, rehabilitation and mine closure at the end of the life of the Group’s mines. Contributions are determined on the basis of the estimated environmental obligation over the life of the mine. The trusts are consolidated into the Group. 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 restricted investments on the balance sheet. | |||
2.14 | Provisions | ||
Provisions are recognized when the Group has a present legal or constructive obligation as a result of past events where it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. | |||
The amount recognized as a provision is the present value of the best estimate of the expenditure required to settle the present obligation at balance sheet date. This estimate takes into account the associated risks and uncertainties. The increase in the provision due to the passage of time is recognized as interest expense. | |||
Provisions are reviewed at each balance sheet date and adjusted to reflect the current best estimate. If it is no longer probable that an outflow of economic benefits will be required, the provision is reversed. | |||
2.15 | Current and deferred taxation | ||
The current income tax charge is calculated on the basis of the tax laws enacted or substantively enacted at the balance sheet date in the countries where the Group operates and generates taxable income. Management periodically evaluates positions taken in tax returns with respect to situations in which applicable tax regulations is subject to interpretation and establishes provisions where appropriate on the basis of amounts expected to be paid to the tax authorities. | |||
The Group follows the comprehensive liability method of accounting for deferred tax using the balance sheet approach. Under this method deferred income taxes are recognized for the tax consequences of temporary differences by applying expected tax rates to the differences between the tax base of all assets or liabilities and its balance sheet carrying amount. Deferred tax is charged to the income statement, except to the extent that deferred tax arises from the initial recognition of an asset or liability in a transaction that is not a business combination and does not affect the accounting or taxable profit or loss at the time of the transaction. The effect on deferred tax of any changes in tax rates is recognized in the income statement, except to the extent that it relates to items previously charged or credited directly to equity. | |||
The principal temporary differences arise from amortization and depreciation on property, plant and equipment, provisions, post retirement benefits, tax losses and unutilized capital allowances carried forward. Deferred tax assets relating to the carry forward of unutilized tax losses and unutilized capital allowances are recognized to the extent that it is probable that future taxable profit will be available against which the unused tax losses and unutilized capital allowances can be utilized. | |||
Deferred income tax is provided on temporary differences arising on investments in subsidiaries and associates, except where the timing of the reversal of the temporary difference is controlled by the Group and it is probable that the temporary difference will not reverse in the foreseeable future. | |||
2.16 | Employee benefits |
(i) | Pension and provident plansare funded through annual contributions. The Group’s contributions to the defined contribution pension and provident plans are charged to the income statement in the year to which they relate. The Group’s liability is limited to its annually determined contributions. | ||
(ii) | Medical plans:The Group provides medical cover to current employees and certain retirees through certain funds. The medical accounting costs for the defined benefit plan are assessed using the projected unit credit method. The health care obligation is measured as the present value of the estimated future cash outflows using market yields consistent with the term and risks of the obligation. Actuarial gains and losses as a result of these valuations are recognized in the income statement at revaluation date. The future liability for current and retired employees and their dependents is accrued in full based on actuarial valuations obtained annually. |
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(iii) | Equity compensation benefits:The Group operates an equity-settled, share-based payments plan, where the Group grants share options to certain employees. Equity share-based payments are measured at fair value of the equity instruments at the date of the grant. The share-based payments is expensed over the vesting period, based on the Group’s estimate of the shares that are expected to eventually vest. The Group used an appropriate option pricing model in determining the fair value of the options granted. Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. At each balance sheet date, the estimates of the number of options that are expected to become exercisable are revised. The impact of the revision of original estimates, if any, are recognized in the income statement, with a corresponding adjustment to equity. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. | ||
(iv) | Termination benefitsare payable when employment is terminated before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognizes termination benefits when it is demonstrably committed to either: terminating the employment of current employees according to a detailed formal plan without possibility of withdrawal; or providing termination benefits as a result of an offer made to encourage voluntary redundancy. Benefits falling due more than 12 months after balance sheet date are discounted to present value. | ||
(v) | Leave pay:The Group accrues for the cost of the leave days granted to employees during the period in which the leave days accumulate. |
2.17 | Share capital | ||
Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds. | |||
2.18 | Leases | ||
Leases in which a significant portion of the risk and rewards of ownership are retained by the lessor are classified as operating leases. Payments made under operating leases (net of any incentives received from the lessor) are charged to the income statement on a straight-line basis over the period of the lease. | |||
For the Group’s policy on finance leases, refer to note 2.5 (v). | |||
2.19 | Revenue recognition |
(i) | Revenuearising from gold sales is recognized when the price is determinable, the product has been delivered in accordance with the terms of the contract, the significant risks and rewards of ownership have been transferred to the customer and collection of the sales price is reasonably assured. These criteria are typically met when the gold arrives at the refinery. | ||
Revenue further excludes value-added tax but includes the net realized profit and losses arising from hedging transactions from matched gold sales contracts. Revenues from silver and other by-products sales are credited to production costs as a by-product credit. | |||
(ii) | Interest income:Interest is recognized on a time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group. | ||
(iii) | Dividend incomeis recognized when the shareholder’s right to receive payment is established. This is recognized at the last date of registration. |
2.20 | Dividends declared | ||
Dividends declared are recognized in the period in which they are approved by the shareholders. Dividends are payable in South African Rand. | |||
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. |
3 | Critical accounting estimates and judgments | |
The preparation of the financial statements in conformity with IFRS requires the Group’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. | ||
Estimates and judgments are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. |
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The resulting accounting estimates may differ from actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below: |
3.1 | Impairment of mining assets | ||
The recoverable amount of mining assets is generally determined utilizing discounted future cash flows. Management also considers such factors as the quality of the individual ore body and country risk in determining the fair value. | |||
Key assumptions for the calculations of the mining assets’ recoverable amounts are the forward gold price and the annual life of mine plans. In determining the gold price to be used, management assess the long term views of several reputable institutions on the gold price and based on this, derive the forward gold price. The life of mine plans are based on the proven and probable reserves as included in the Reserve Declaration, which are determined in terms of SAMREC and JORC. | |||
During the year under review, the Group calculated the recoverable amounts (generally fair value less costs to sell) based on updated life of mine plans, a gold price of R180 000 per kilogram and a discount rate of 11.36% (2007: R115 000 per kilogram and a 9.18% discount rate) (2006: R105 000 per kilogram and a 8.38% discount rate). Cash flows used in the impairment calculations are based on life of mine plans which exceed five years for the majority of the mines. Refer to note 5 for details of impairments recorded. | |||
Should management’s estimate of the future not reflect actual events, further impairments may be identified. Factors affecting the estimates include: |
• | changes to proven and probable ore reserves; | ||
• | the grade of the ore reserves may vary significantly from time to time; | ||
• | review of strategy; | ||
• | differences between actual commodity prices and commodity price assumptions; | ||
• | unforeseen operational issues at the mines; | ||
• | changes in capital, operating mining, processing and reclamation costs. |
It is impracticable to disclose the extent of the possible effects the changes in assumptions for the forward gold price and life of mine plans at June 30, 2008, as these assumptions are inextricably linked. | |||
3.2 | Impairment of investment in associate | ||
The investments in associates are evaluated for impairment by comparing the entire carrying value of the investment to the recoverable amount, which is the higher of value in use or fair value less costs to sell. In calculating fair value less cost to sell, the cash flows from disposal are looked at: with reference to the closing share price on year end, average share price over a reasonable period thereafter as well as recent transactions. | |||
3.3 | Valuation of available for sale financial assets | ||
If the value of financial instruments cannot be obtained from an active market, the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis and option pricing models refined to reflect the issuer’s specific circumstances. | |||
3.4 | Estimate of exposure and liabilities with regard to rehabilitation costs | ||
Estimated long term environmental obligations, comprising pollution control, rehabilitation and mine closure, are based on the Group’s environmental management plans in compliance with current technological, environmental and regulatory requirements. | |||
Management used a short term (two years) inflation rate of 9%, a long term inflation rate of 6% (2007: 5%) (2006: 5.5%) and the expected life of the mines according to the life-of-mine plans in the calculation of the estimated net present value of the rehabilitation liability. The discount rates used for the calculation are dependant on the shaft’s life of mine and are as follows: for 12 months — 12.25% (2007: 13.77%); for 1 — 5 years — 11.75% (2007:10.61%); for 5 — 9 years — 10.5% (2007: 9.49%) and for 10 years or more — 10.25% (2007: 9.25%) (2006: discount rate of 12.88%). These estimates were based on recent yields determined on government bonds. | |||
3.5 | Estimate of employee benefit liabilities | ||
An updated actuarial valuation is carried out at the end of each financial year. Assumptions used to determine the liability included a discount rate of 12%, no increases in employer subsidies (in terms of the agreement) and mortality rates according to the SA 1956/62 mortality table ( SA “a mf” tables) (60 years) and a medical inflation rate of 9.8% (2006 and 2007: discount rate of 9%, 60 years and 6.34% inflation rate). | |||
Management determined the discount rate by assessing financial instruments with similar terms to the liability. The increases to the discount rate and medical inflation rate are similar to changes in interest and inflation rates in South Africa. | |||
3.6 | Estimate of taxation | ||
The Group is subject to income tax in numerous jurisdictions. Significant judgment is required in determining the worldwide provision for income taxes. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. The Group recognizes liabilities for anticipated tax audit issues based on estimates of |
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whether additional taxes will be due. Where the final tax outcome of these matters is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determination is made. |
Management has to exercise judgment with regards to deferred tax assets. Where the possibility exists that no future taxable income may flow against which these assets can be offset, the deferred tax assets are not raised. | |||
3.7 | Fair value of share-based payments | ||
The fair value of options granted are being determined using either a binominal or a Monte Carlo valuation model. The significant inputs into the model are: vesting period and conditions, risk free interest rate, volatility, price on date of grant and dividend yield. (Refer to note 35 for detail on each of the share option schemes.) | |||
3.8 | Impairment of goodwill | ||
The Group tests annually whether separately identifiable goodwill has suffered any impairment, in accordance with the accounting policy stated in note 2.8. Refer to note 17 for the method used in determining the recoverable amounts of cash-generating units. These calculations require the use of estimates as stated in note 3.1. | |||
3.9 | Gold in lock-up | ||
Gold in lock-up in certain plants is estimated based on the calculated plant call factor. Plant call factor is the efficiency measurement of the percentage of gold extracted from the ore. | |||
3.10 | Assessment of contingencies | ||
Contingencies will only realize when one or more future events occur or fail to occur. The exercise of significant judgment and estimates of the outcome of future events are required during the assessment of the impact of such contingencies. | |||
3.11 | Gold mineral reserves | ||
Gold mineral reserves are estimates of the amount of ounces that can be economically and legally extracted from the Group’s properties. In order to calculate the gold mineral reserves, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, grades, production techniques, recovery rates, production costs, commodity prices and exchange rates. | |||
Estimating the quantities and/or grade of the reserves requires the size, shape and depth of the ore bodies to be determined by analyzing geological data such as the logging and assaying of drill samples. This process may require complex and difficult geological judgments and calculations to interpret the data. | |||
Because the economic assumptions used to estimate the gold mineral reserves change from year to year, and because additional geological data is generated during the course of operations, estimates of the mineral reserves may change from year to year. Changes in the proven and probable reserves may affect the Group’s financial results and financial position in a number of ways, including; |
• | asset carrying values may be affected due to changes in estimated cash flows; | ||
• | depreciation and amortization charged in the income statement may change as they are calculated on the units-of-production method; | ||
• | environmental provisions may change as the timing and/or cost of these activities may be affected by the change in mineral reserves. |
At the end of each financial year, the estimate of proven and probable gold mineral reserve is updated. Depreciation of mining assets is prospectively adjusted, based on these changes. | |||
3.12 | Production start date | ||
Various relevant criteria are considered in order to assess when the mine is substantially complete and ready for its intended use and moves into the production phase. Some of the criteria would include but are not limited to the following: |
• | the level of capital expenditure compared to the total project cost estimates; | ||
• | the ability to produce gold in a saleable form (where more than an insignificant amount of gold has been produced); | ||
• | the ability to sustain the ongoing production of gold. |
4 | Financial risk management |
The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and other price risk), credit risk and liquidity risk. The Group may use derivative financial instruments to hedge certain risk exposures. | |||
Risk management is carried out by a central treasury department (“Group Treasury”) under policies approved by the Board of Directors. Group Treasury identifies, evaluates and hedges financial risks in close co-operation with the Group’s operating units. The Board provides written principles for overall risk management, as well as written policies covering specific areas, such as |
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foreign exchange risk, interest rate risk, credit risk, use of derivative financial instruments and non-derivative financial instruments, and the investment of excess liquidity. |
(a) | Market risk | ||
(i)Foreign exchange risk | |||
The Group operates internationally and is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar (US$). Foreign exchange risk arises from future commercial transactions, recognized assets and liabilities and net investments in foreign operations. Foreign exchange risk arises when future commercial transactions or recognized assets or liabilities are denominated in a currency that is not the entity’s functional currency. Harmony’s revenues are sensitive to the Rand/US$ exchange rate as all revenues are generated by gold sales denominated in US$. Harmony generally, does not enter into forward sales, derivatives or other hedging arrangements to establish a Rand/US$ exchange rate in advance for the sale of its future gold production. | |||
The Group has certain investments in foreign operations, whose net assets are exposed to foreign currency translation risk. | |||
Harmony generally does not enter into forward sales, derivatives or other hedging arrangements to manage this risk. | |||
Sensitivity analysis | |||
The Group has reviewed its foreign currency exposure on financial assets and financial liabilities and has identified the following sensitivities for a 10% change in the exchange rate. |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
A$ against the US$ | ||||||||
Increase by ten percent | 3 | — | ||||||
Decrease by ten percent | (3 | ) | — | |||||
Closing rate | 0.96 | 0.85 | ||||||
A$ against the Rand | ||||||||
Increase by ten percent | 30 | 14 | ||||||
Decrease by ten percent | (30 | ) | (14 | ) | ||||
Closing rate | 7.51 | 6.00 | ||||||
Kina against the A$ | ||||||||
Increase by ten percent | 35 | 12 | ||||||
Decrease by ten percent | (35 | ) | (12 | ) | ||||
Closing rate | 2.42 | 2.43 | ||||||
(ii)Other price risk | |||
The Group is exposed to the risk of fluctuations in the fair value of the available-for-sale financial assets as a result of changes in market prices (other than changes in interest rates and foreign currencies). Harmony generally does not use any derivative instruments to manage this risk. | |||
Sensitivity analysis | |||
The equity investments are listed on the Australian Securities Exchange. A one percent increase in the share price at the reporting date, with all other variables held constant, would have increased other comprehensive income by US$0.1 million (2007: US$3.5 million); an equal change in the opposite direction would have decreased other comprehensive income by US$0.1 million (2007: US$3.5 million). The analysis is performed on the same basis for 2007. | |||
Commodity price sensitivity | |||
The profitability of the Group’s operations, and the cash flows generated by those operations, are affected by changes in the market price of gold. Harmony generally does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of future gold production. | |||
(iii)Cash flow and fair value interest rate risk | |||
The Group’s interest rate risk arises mainly from long-term borrowings. The Group has both fixed and variable interest rate borrowings. Fixed rate borrowings expose the Group to fair value interest rate risk. Variable rate borrowings expose the Group to cash flow interest rate risk. The Group has not entered into interest rate swap agreements. |
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Sensitivity analysis | |||
A change of 100 basis points in interest rates at the reporting date would have increased (decreased) profit or loss before tax by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2007. |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Increase in 100 basis points | 3 | 16 | ||||||
Decrease in 100 basis points | (3 | ) | (16 | ) | ||||
The above table excludes the fixed rate convertible bond. As it is accounted for at amortized cost, interest rate changes do not affect reported profit and loss. | |||
(b) | Credit risk | ||
Credit risk is the risk that a counterparty may default or not meet its obligations timeously. Financial instruments, which subject the Group to concentrations of credit risk, consist predominantly of restricted cash, restricted investments, trade and other receivables (excluding non-financial instruments) and cash and cash equivalents. | |||
Exposure to credit risk on trade and other receivables is monitored on a regular basis. The credit risk arising from restricted cash, cash and cash equivalents and restricted investments is managed by ensuring amounts are only invested with financial institutions of good credit quality. The Group has policies that limit the amount of credit exposure to any one financial institution. | |||
It is the policy of the Group to renegotiate credit terms with long-standing customers who have a good credit history with the Group. These customers are monitored on an ongoing basis to ensure that the customer remains within the renegotiated terms. | |||
The Group’s maximum exposure to credit risk is represented by the carrying amount of all financial assets determined to be exposed to credit risk, amounting to US$361.2 million as at June 30, 2008 (2007: US$409.4 million). | |||
(c) | Liquidity Risk | ||
Prudent liquidity risk management implies maintaining sufficient cash and marketable securities, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, Group Treasury aims to maintain flexibility in funding by keeping committed credit lines available. | |||
In the ordinary course of business, the Group receives cash from its operations and is required to fund working capital and capital expenditure requirements. The cash is managed to ensure that surplus funds are invested in a manner to achieve market-related returns and to provide sufficient liquidity at the minimum risk. The Group is able to actively source financing at competitive rates. |
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The following are the contractual maturities of financial liabilities (including principal and interest payments): |
More than 1 | ||||||||
Current | year | |||||||
Figures in million | US Dollar | |||||||
2008 | ||||||||
Borrowings(1)(2) | 518 | 29 | ||||||
Trade and other payables (excluding non-financial instruments) | 101 | — | ||||||
619 | 29 | |||||||
2007 | ||||||||
Borrowings(1)(2) | 422 | 277 | ||||||
Trade and other payables (excluding non-financial instruments) | 114 | — | ||||||
Bank overdraft | 31 | — | ||||||
567 | 277 | |||||||
(1) | US$226.8 million is due between 6 to 12 months (2007: US$5.8 million) | |
(2) | US$7.4 million is due between 1 to 2 years (2007: US$277.4 million) |
(d) | Capital risk management | ||
The primary objective of managing the Group’s capital is to ensure that there is sufficient capital available to support the funding requirements of the Group, in a way that optimizes the cost of capital and matches the current strategic business plan. | |||
The Group manages and makes adjustments to the capital structure, which consists of debt (borrowings and bank overdraft) and equity, as and when borrowings mature or when funding is required. This may take the form of raising equity, market or bank debt or hybrids thereof. The Group may also adjust the amount of dividends paid, sell assets to reduce debt or schedule projects to manage the capital structure. | |||
There were no changes to the Group’s approach to capital management during the year. | |||
The Group is subject to externally imposed capital requirements in the form of loan covenants relating to interest cover, which may have an impact on the manner in which capital is utilized. The Group has complied with these capital requirements during the periods under review. | |||
(e) | Fair value determination | ||
The carrying values (less any impairment allowance) of short-term financial instruments are assumed to approximate their fair values. | |||
The fair value of available-for-sale financial assets and derivative financial instruments are determined by reference to quoted market prices. The fair value of other non-current financial instruments are determined using a discounted cash flow model with market observable inputs, such as market interest rates. |
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Carrying | ||||||||
Fair Value | Value | |||||||
Figures in million | US Dollar | |||||||
2008 | ||||||||
Financial assets | ||||||||
Restricted investments | 211 | 211 | ||||||
Investment in financial assets | 9 | 9 | ||||||
Trade and other receivables | 87 | 87 | ||||||
Restricted cash | 10 | 10 | ||||||
Cash and cash equivalents | 53 | 53 | ||||||
370 | 370 | |||||||
Financial liabilities | ||||||||
Borrowings * | 526 | 526 | ||||||
Trade and other payables | 94 | 94 | ||||||
620 | 620 | |||||||
2007 | ||||||||
Financial assets | ||||||||
Restricted investments | 195 | 195 | ||||||
Investment in financial assets | 8 | 8 | ||||||
Trade and other receivables | 65 | 65 | ||||||
Restricted cash | 41 | 41 | ||||||
Cash and cash equivalents | 101 | 101 | ||||||
410 | 410 | |||||||
Financial liabilities | ||||||||
Borrowings | 682 | 653 | ||||||
Trade and other payables | 96 | 96 | ||||||
Bank overdraft | 31 | 31 | ||||||
809 | 780 | |||||||
* | Included under borrowings is an uncollateralized convertible fixed rate bond which has a fair value of US$209.2 million (US$247.2 million) being 96% of the nominal value as at June 30, 2008 (2007: 102.36% of the nominal value). |
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5 | Cost of sales |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Production costs (a) | 918 | 836 | 778 | |||||||||
Amortization and depreciation of mining properties, mine development costs and mine plant facilities | 107 | 102 | 129 | |||||||||
Amortization and depreciation of assets other than mining properties, mine development costs and mine plant facilities (b) | 10 | 4 | 9 | |||||||||
Provision/(reversal of provision) for rehabilitation costs (c) | 1 | (6 | ) | (3 | ) | |||||||
Care and maintenance cost of restructured shafts | 10 | 8 | 22 | |||||||||
Employment termination and restructuring costs (d) | 29 | — | (12 | ) | ||||||||
Share-based payments | 6 | 6 | 15 | |||||||||
Impairment/(reversal of impairment) of assets (e) | 40 | (19 | ) | (30 | ) | |||||||
Provision for former employees’ post retirement benefits | 1 | (2 | ) | 1 | ||||||||
Total cost of sales | 1,122 | 929 | 909 | |||||||||
(a) | Production costs include mine production, transport and refinery costs, applicable general and administrative costs, movement in inventories and ore stockpiles and ongoing environmental rehabilitation costs as well as transfers to and from deferred stripping. Ongoing employee termination costs are included, however employee termination costs associated with major restructuring and shaft closures are excluded. Production costs, analyzed by nature, consist of the following: |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Labor costs, including contractors | 632 | 612 | 561 | |||||||||
Stores and materials | 229 | 196 | 184 | |||||||||
Water and electricity | 90 | 91 | 95 | |||||||||
Hospital costs | 10 | 4 | 11 | |||||||||
Changes in inventory | 11 | (10 | ) | (16 | ) | |||||||
Capitalization of mine development costs | (109 | ) | (64 | ) | (84 | ) | ||||||
By-products sales | (4 | ) | (3 | ) | (1 | ) | ||||||
Other | 59 | 10 | 28 | |||||||||
Total production cost | 918 | 836 | 778 | |||||||||
(b) | Amortization and depreciation of assets other than mining properties, mine development costs and mine plant facilities consist of the following: |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Other non-mining assets | 4 | 2 | 7 | |||||||||
Intangible assets | 2 | 1 | — | |||||||||
Borrowings’ issue costs | 4 | 1 | 2 | |||||||||
Total amortization and depreciation | 10 | 4 | 9 | |||||||||
(c) | For the assumptions used to calculate the rehabilitation costs, refer to note 3.4. | |
(d) | Employment termination and restructuring costs consist of the following: |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Free State | 10 | — | (9 | ) | ||||||||
Randfontein and Elandskraal | 5 | — | 1 | |||||||||
Evander | 3 | — | 1 | |||||||||
Freegold | 10 | — | (5 | ) | ||||||||
Avgold | 1 | — | — | |||||||||
Total employment termination and restructuring cost | 29 | — | (12 | ) | ||||||||
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(e) | Impairment/(reversal of impairment) consist of the following: |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Free State | — | 2 | (22 | ) | ||||||||
Lydex | — | — | 16 | |||||||||
Evander | 16 | — | (11 | ) | ||||||||
Kalgold | 8 | (19 | ) | — | ||||||||
Bambanani | — | — | (7 | ) | ||||||||
Other underground — assets | 3 | (2 | ) | (6 | ) | |||||||
Other underground — goodwill | 13 | — | — | |||||||||
Total impairment/(reversal of impairment) | 40 | (19 | ) | (30 | ) | |||||||
6 | Other (expenses)/income — net |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Foreign exchange gains/(losses) — net (a) | 13 | 2 | (4 | ) | ||||||||
(Loss)/gain on financial instruments (b) | (1 | ) | 6 | (81 | ) | |||||||
Profit on sale of property, plant and equipment (c) | — | 25 | 10 | |||||||||
Non-mining bad debts (d) | (14 | ) | (1 | ) | (1 | ) | ||||||
Other expenses — net | (13 | ) | (7 | ) | (21 | ) | ||||||
Total other (expenses)/income — net | (15 | ) | 25 | (97 | ) | |||||||
(a) | Included in 2008 is a US$15.3 million foreign exchange gain related to the two loans to the International operations. The loans, which were previously designated as net investments of the Group’s International operations, were de-designated in 2008, mainly as a result of the expected proceeds from the PNG Partnership Agreement (see note 39). Foreign exchange gains/(losses) arising after de-designation of the loans have been included in the consolidated income statements. Accumulated foreign exchange gains/(losses) that arose while the loans were considered to form part of the Group’s net investment in its International operations, will be reclassified to the consolidated income statements as and when the loans are repaid. | |
(b) | The amounts in prior years mainly relate to the Australian hedge book which was closed in 2007. | |
(c) | The Randfontein 4 Shaft was sold to Ezulwini Mining Company (Pty) Ltd on December 29, 2006, resulting in a profit of US$9.8 million. | |
The Deelkraal surface assets were disposed of at a profit of US$13.7 million to Ogoerion Construction CC on April 5, 2007. | ||
(d) | The amount in 2008 includes a provision for the outstanding balance of US$6.4 million on the sale of Deelkraal to Ogoerion Construction CC. |
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7 | Operating profit/(loss) |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Auditors’ remuneration | 3 | 2 | 2 | |||||||||
8 | Profit on sale of investment in associate |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Profit on the sale of Western Areas Limited | — | 33 | — | |||||||||
9 | Fair value of non-derivative financial instruments |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Mark-to-market adjustment | 5 | 15 | 14 | |||||||||
10 | Loss on sale of investment |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
(Loss)/profit on sale of investment in Gold Fields Limited | (63 | ) | (5 | ) | 45 | |||||||
11 | Investment income |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Interest received | 34 | 24 | 29 | |||||||||
Loans and receivables | 5 | 1 | 3 | |||||||||
Held-to-maturity investments | 18 | 14 | 9 | |||||||||
Cash and cash equivalents | 11 | 9 | 17 | |||||||||
Dividend income on available-for-sale | 5 | 3 | 2 | |||||||||
Total investment income | 39 | 27 | 31 | |||||||||
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12 | Finance costs |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Financial instruments | ||||||||||||
Bank and short-term facilities | 5 | — | — | |||||||||
Senior uncollateralized fixed rate bonds | — | — | 14 | |||||||||
Convertible uncollateralized fixed rate bonds | 22 | 21 | 23 | |||||||||
Nedbank Limited | 38 | 18 | 16 | |||||||||
Rand Merchant Bank | 2 | 13 | 4 | |||||||||
Other creditors | 1 | 5 | — | |||||||||
68 | 57 | 57 | ||||||||||
Non-financial instruments | ||||||||||||
Post-retirement benefits | 1 | 1 | 1 | |||||||||
Time value of money and inflation component of rehabilitation costs | 15 | 15 | 10 | |||||||||
South African Revenue Services (SARS) | 8 | 2 | — | |||||||||
24 | 18 | 11 | ||||||||||
92 | 75 | 68 | ||||||||||
Interest capitalized | (22 | ) | (10 | ) | (6 | ) | ||||||
Total finance costs | 70 | 65 | 62 | |||||||||
13 | Taxation |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
SA normal taxation | ||||||||||||
Mining tax(a) | ||||||||||||
- current year | (5 | ) | — | — | ||||||||
- prior year | (15 | ) | — | — | ||||||||
Non-mining tax(b) | ||||||||||||
- current year | (1 | ) | (2 | ) | (2 | ) | ||||||
- prior year | (1 | ) | 1 | — | ||||||||
Deferred tax(c) | ||||||||||||
- deferred tax | (55 | ) | (60 | ) | (31 | ) | ||||||
Foreign normal taxation | ||||||||||||
- deferred tax (d) | 12 | 22 | 11 | |||||||||
Total normal taxation | (65 | ) | (39 | ) | (22 | ) | ||||||
(a) | Mining tax on gold mining income in South Africa is determined according to a formula, based on the taxable income from mining operations. Gold Mining Companies within the Group that have elected to be exempt from Secondary Tax on Companies (“STC”) are taxed at higher rates than those that have not made the election. | |
All qualifying mining capital expenditure is deducted from taxable mining income to the extent that it does not result in an assessed loss and accounting depreciation is eliminated when calculating the South African mining tax income. Excess capital expenditure is carried forward as unredeemed capital to be claimed from future mining taxable income. The Group has several tax paying entities in South Africa. In terms of the mining ring-fencing application, each ring-fenced mine is treated separately and deductions can normally only be utilized against mining income generated from the relevant ring-fenced mine. | ||
The formulas for determining the South African gold mining tax rates are: | ||
Y = 43 - 215/X (elect not to pay STC) | ||
Y = 45 - 225/X (elect not to pay STC for 2007 and 2006) | ||
Y = 34 - 170/X (no election made) | ||
Y = 35 - 175/X (no election made for 2007 and 2006) | ||
Where Y is the percentage rate of tax payable and X is the ratio of taxable income, net of any qualifying capital expenditure that bears to mining income so derived, expressed as a percentage. |
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(b) | Non-mining income is taxed at 35% (exempt from STC) (2007: 37% and 2006: 37%) and 28% (no election made) (2007: 29% and 2006: 29%). Non-mining companies are taxed at the statutory corporate rate of 28% (2007: 29% and 2006: 29%). | |
(c) | The tax rate used to calculate deferred tax is based on the current estimate of future profitability when temporary differences will reverse based on tax rates (and tax laws) that have been enacted at balance sheet date. Depending on the profitability of the operations, the tax rate can consequently be significantly different from year to year. | |
(d) | Mining and non-mining income of Australia operations are taxed at a standard rate of 30% (2007: 30% and 2006: 30%). Deferred tax is provided at the estimated expected future mining tax rate for temporary differences, based on tax rates enacted at balance sheet date. | |
The taxation rates in South African were changed in the 2008 year after an announcement of a reduction in the applicable rates by the Finance Minister in his annual budget speech in February 2008. | ||
Major items causing the Group’s income tax provision to differ from the maximum mining statutory tax rate of 43% (2007: 45% and 2006: 45%) were: |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Tax on net income at the maximum mining statutory tax rate | (33 | ) | (34 | ) | 28 | |||||||
Non-taxable income / non-allowable deductions | (50 | ) | (12 | ) | (15 | ) | ||||||
Difference between effective mining tax rate and statutory mining rate on mining income | 4 | — | 6 | |||||||||
Difference between non-mining tax rate and statutory mining rate on non-mining income | — | 1 | (12 | ) | ||||||||
Effect on temporary differences due to changes in effective tax rates | (8 | ) | 5 | (29 | ) | |||||||
Prior year adjustment — mining and non-mining tax | (16 | ) | 1 | — | ||||||||
Capital allowance and sale of business | 38 | — | — | |||||||||
Income and mining taxation | (65 | ) | (39 | ) | (22 | ) | ||||||
Effective income and mining tax rate | 172 | % | -25 | % | 24 | % |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Deferred tax liabilities | ||||||||
Gross deferred tax liability | 579 | 599 | ||||||
Amortization and depreciation | 540 | 581 | ||||||
Product inventory not taxed | 13 | 14 | ||||||
Convertible bonds | 1 | 3 | ||||||
Other | 25 | 1 | ||||||
Gross deferred tax assets | (190 | ) | (216 | ) | ||||
Deferred financial liability | — | (4 | ) | |||||
Unredeemed capital expenditure | (105 | ) | (124 | ) | ||||
Provisions, including non-current provisions | (27 | ) | (37 | ) | ||||
Tax losses | (58 | ) | (51 | ) | ||||
Non-current assets reclassified as held for sale | (6 | ) | 3 | |||||
Net deferred tax liability | 383 | 386 | ||||||
Movement in the net deferred tax liability recognized in the balance sheet is as follows: | ||||||||
At the beginning of the year | 386 | 324 | ||||||
Total charge per income statement (a) | 47 | 46 | ||||||
Foreign currency translation adjustments | (41 | ) | 13 | |||||
Tax directly charged to equity (b) | (4 | ) | — | |||||
Non-current assets reclassified as held for sale | (5 | ) | 3 | |||||
At the end of the year | 383 | 386 | ||||||
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US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Deferred tax liabilities | 38 | 16 | ||||||
Deferred tax assets | (21 | ) | (17 | ) | ||||
17 | (1 | ) | ||||||
(a) | The charge includes the amounts for both continuing and discontinued operations. | ||
(b) | The charge relates to deferred tax asset on the downward mark-to-market adjustment during the year on available-for-sale financial assets by Australian operations. See notes 19 and 27 in this regard. |
14 | Non-current assets or disposal group held for sale and discontinued operations |
US Dollar | ||||||||
Figures are in million | 2008 | 2007 | ||||||
Balance sheet | ||||||||
Non-current assets classified as held for sale | ||||||||
Property, plant and equipment | 152 | 124 | ||||||
Restricted cash | — | 1 | ||||||
Restricted investments | 22 | 8 | ||||||
Investment financial assets | — | 1 | ||||||
Deferred income tax | — | 17 | ||||||
Inventories | 22 | 17 | ||||||
Trade and other receivables | 1 | 12 | ||||||
Income and mining taxes | — | 2 | ||||||
Total non-current assets classified as held for sale | 197 | 182 | ||||||
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US Dollar | ||||||||
Figures are in million | 2008 | 2007 | ||||||
Balance sheet | ||||||||
Liabilities directly associated with non-current assets classified as held for sale | ||||||||
Deferred income tax | 6 | 14 | ||||||
Provisions for other liabilities and charges | 50 | 36 | ||||||
Trade and other payables | 8 | 19 | ||||||
Accrued liabilities | — | 8 | ||||||
Total liabilities directly associated with non-current assets classified as held for sale | 64 | 77 | ||||||
US Dollar | ||||||||||||
Figures are in million | 2008 | 2007 | 2006 | |||||||||
Income statement | ||||||||||||
Analysis of the results of discontinued operations, and the results recognized on the re-measurement of assets for disposal by the Group | ||||||||||||
Revenue | 312 | 372 | 327 | |||||||||
Expenses — net | (238 | ) | (373 | ) | (300 | ) | ||||||
Reversal of impairment/(impairment) | 5 | (56 | ) | — | ||||||||
Profit/(loss) from discontinued operations before tax | 79 | (57 | ) | 27 | ||||||||
Taxation | (5 | ) | (9 | ) | (5 | ) | ||||||
Taxation on impairment | (2 | ) | 16 | — | ||||||||
Taxation on discontinued operations | (3 | ) | (25 | ) | (5 | ) | ||||||
Profit/(loss) for the year from discontinued operations | 74 | (66 | ) | 22 | ||||||||
US Dollar | ||||||||||||
Figures are in million | 2008 | 2007 | 2006 | |||||||||
Cash flows | ||||||||||||
Operating cash flows | 71 | (17 | ) | 17 | ||||||||
Investing cash flows | (16 | ) | — | 41 | ||||||||
Financing cash flows | — | — | (25 | ) | ||||||||
Foreign exchange translation adjustment | (7 | ) | — | (6 | ) | |||||||
Total cash flows | 48 | (17 | ) | 27 | ||||||||
15 | (Loss)/earnings per share |
US Dollar | ||||||||||||
2008 | 2007 | 2006 | ||||||||||
Weighted average number of ordinary shares in issue (‘000) | 400,750 | 397,911 | 393,727 | |||||||||
Net (loss)/profit from continuing operations | (104 | ) | 117 | (113 | ) | |||||||
Net profit/(loss) from discontinued operations | 74 | (66 | ) | 22 | ||||||||
Total net (loss)/profit attributable to shareholders | (30 | ) | 51 | (91 | ) | |||||||
Basic (loss)/earnings per share from continuing operations (cents) | (26 | ) | 29 | (29 | ) | |||||||
Basic earnings/(loss) per share from discontinued operations (cents) | 18 | (17 | ) | 6 | ||||||||
Total basic (loss)/earnings per share (cents) | (8 | ) | 12 | (23 | ) | |||||||
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US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Weighted average number of ordinary shares in issue (‘000) | 400,750 | 397,911 | 393,727 | |||||||||
Potential ordinary shares (‘000) | 2,144 | 4,471 | — | |||||||||
Weighted average number of ordinary shares for fully diluted earnings per share (‘000) | 402,894 | 402,382 | 393,727 | |||||||||
Fully diluted (loss)/earnings per share from continuing operations (cents) | (26 | ) | 29 | (29 | ) | |||||||
Fully diluted earnings/(loss) per share from discontinued operations (cents) | 18 | (17 | ) | 6 | ||||||||
Total fully diluted (loss)/earnings per share (cents) | (8 | ) | 12 | (23 | ) | |||||||
16 | Property, plant and equipment |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Mining properties, mine development costs and mine plant facilities | 1,532 | 1,438 | ||||||
Mining assets under construction | 561 | 404 | ||||||
Undeveloped properties | 1,434 | 1,621 | ||||||
Deferred stripping | — | 12 | ||||||
Other non-mining assets | 4 | 9 | ||||||
Total property, plant and equipment | 3,531 | 3,484 | ||||||
Mining properties, mine development costs and mine plant facilities | ||||||||
Cost | ||||||||
Balance at beginning of year | 2,745 | 2,791 | ||||||
Additions | 316 | 204 | ||||||
Disposals | (174 | ) | (2 | ) | ||||
Adjustment to rehabilitation asset | 13 | 54 | ||||||
Transfers and other movements | 166 | — | ||||||
Translation | (176 | ) | 108 | |||||
Net reclassification to held for sale | (369 | ) | (410 | ) | ||||
Balance at end of year | 2,521 | 2,745 | ||||||
Accumulated depreciation | ||||||||
Balance at beginning of year | 1,307 | 1,387 | ||||||
Impairment of fixed assets (a) | 13 | 55 | ||||||
Disposals | (104 | ) | — | |||||
Depreciation for the year (a) | 118 | 158 | ||||||
Depreciation for the year capitalized to mining assets under construction | 6 | — | ||||||
Transfers and other movements | — | — | ||||||
Translation | (34 | ) | 36 | |||||
Net reclassification to held for sale | (317 | ) | (329 | ) | ||||
Balance at end of year | 989 | 1,307 | ||||||
Net book value | 1,532 | 1,438 | ||||||
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US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Mining assets under construction | ||||||||
Cost | ||||||||
Balance at beginning of year as previously reported | 384 | 208 | ||||||
Effect of change in accounting policy (note 2.1) | 20 | 11 | ||||||
Restated balance at beginning of year | 404 | 219 | ||||||
Additions (b) | 233 | 166 | ||||||
Finance costs capitalized | 22 | 8 | ||||||
Disposals | (4 | ) | — | |||||
Transfers and other movements | (84 | ) | — | |||||
Translation | (13 | ) | 14 | |||||
Net reclassification from/(to) held for sale | 3 | (3 | ) | |||||
Book value | 561 | 404 | ||||||
Undeveloped property | ||||||||
Cost | ||||||||
Balance at beginning of year | 1,630 | 1,705 | ||||||
Additions | — | 5 | ||||||
Disposals | (24 | ) | (3 | ) | ||||
Transfers and other movements | (74 | ) | — | |||||
Translation | (80 | ) | 29 | |||||
Net reclassification to held for sale | (16 | ) | (106 | ) | ||||
Balance at end of year | 1,436 | 1,630 | ||||||
Accumulated depreciation | ||||||||
Balance at beginning of year | 9 | 76 | ||||||
Reversal on impairment of fixed assets (a) | (6 | ) | (10 | ) | ||||
Depreciation for the year (a) | — | 1 | ||||||
Transfers and other movements | 9 | — | ||||||
Translation | 16 | 9 | ||||||
Net reclassification to held for sale | (26 | ) | (67 | ) | ||||
Balance at end of year | 2 | 9 | ||||||
Net book value | 1,434 | 1,621 | ||||||
Deferred stripping | ||||||||
Cost | ||||||||
Balance at beginning of year | 12 | 13 | ||||||
Translation | (1 | ) | — | |||||
Reversal of deferred costs | (3 | ) | (1 | ) | ||||
Balance at end of year | 8 | 12 | ||||||
Accumulated depreciation | ||||||||
Balance at beginning of year | — | 9 | ||||||
Impairment/(reversal of impairment) of fixed assets | 8 | (9 | ) | |||||
Balance at end of year | 8 | — | ||||||
Net book value | — | 12 | ||||||
Other non-mining assets | ||||||||
Cost | ||||||||
Balance at beginning of year | 46 | 48 | ||||||
Additions | 2 | — | ||||||
Disposals | (5 | ) | — | |||||
Transfers and other movements | 4 | — | ||||||
Translation | (6 | ) | 2 | |||||
Net reclassification from/(to) held for sale | 3 | (4 | ) | |||||
Balance at end of year | 44 | 46 | ||||||
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US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Accumulated depreciation | ||||||||
Balance at beginning of year | 37 | 38 | ||||||
Disposals | (4 | ) | — | |||||
Depreciation for the year (a) | 4 | 2 | ||||||
Transfers and other movements | 4 | — | ||||||
Translation | (4 | ) | — | |||||
Net reclassification from/(to) held for sale | 3 | (3 | ) | |||||
Balance at end of year | 40 | 37 | ||||||
Net book value | 4 | 9 | ||||||
Total net book value | 3,531 | 3,484 | ||||||
(a) | The amounts include both continuing and discontinued operations. | |
(b) | Included in these additions are royalty agreements that Rio Tinto had over the Hidden Valley and Kerimenge deposits in Papua New Guinea (“PNG”). In terms of the royalty agreement, Rio Tinto had the rights to receive a portion of between 2% and 3.5% of future ounces produced by the Hidden Valley mine in PNG. During March 2008, Harmony concluded the buy back of these royalty rights for US$22.5 million through the issue of US$20 million Harmony shares and US$2.5 million in cash. | |
(c) | Additional disclosures |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Leased assets | ||||||||
Carrying value of capitalized leased assets (included in mining assets under construction) | 34 | — | ||||||
Cost | 37 | — | ||||||
Accumulated depreciation | (3 | ) | — | |||||
Finance lease additions | 35 | — | ||||||
17 | Intangible assets |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Goodwill | ||||||||
Cost | ||||||||
Balance at beginning of year (a) | 337 | 331 | ||||||
Translation | (33 | ) | 6 | |||||
Balance at end of year | 304 | 337 | ||||||
Accumulated impairment | ||||||||
Balance at beginning of year | 15 | 15 | ||||||
Impairment loss (b) | 13 | — | ||||||
Translation | (1 | ) | — | |||||
Balance at end of year | 27 | 15 | ||||||
Net book value | 277 | 322 | ||||||
Computer software | ||||||||
Cost | ||||||||
Balance at the beginning of year (c) | 6 | — | ||||||
Acquired during the year (d) | 3 | 7 | ||||||
Translation | (1 | ) | — | |||||
Balance at end of year | 8 | 7 | ||||||
�� | ||||||||
Accumulated amortization | ||||||||
Balance at the beginning of year | 1 | — | ||||||
Amortization charge for the year | 2 | 1 | ||||||
Translation | (1 | ) | — | |||||
Balance at end of year | 2 | 1 | ||||||
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US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Net book value | 6 | 6 | ||||||
Total net book value | 283 | 328 | ||||||
(a) | The opening carrying value of goodwill relates to the acquisition of ARMgold on September 22, 2003. |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Bambanani | 29 | 32 | ||||||
Tshepong | 72 | 152 | ||||||
Phakisa | 170 | 116 | ||||||
Other | 6 | 22 | ||||||
277 | 322 | |||||||
(b) | The impairment of goodwill relates to goodwill allocated to other underground segments. The related mining assets have also been impaired. Refer to note 5 (e). | |
(c) | The opening net book value relates to the acquisition of the Oracle ERP software implemented in December 2006. | |
(d) | The amount above relates to additional development costs for the Oracle ERP software during the year. |
18 | Restricted investments |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Investments held by Environmental trust funds (a) | 206 | 198 | ||||||
Investments held by Social trust fund (b) | 5 | 5 | ||||||
Total restricted investments | 211 | 203 | ||||||
Reclassified as non-current assets held for sale | (23 | ) | (8 | ) | ||||
188 | 195 | |||||||
(a) | The environmental trust funds are irrevocable trusts under the Group’s control. Contributions to the trust are invested primarily in interest-bearing short-term investments. The costs of these investments approximate their fair values. The investments provide for the estimated cost of rehabilitation during and at the end of the life of the Group’s mines. Income earned on the investments are restricted in use and may only be used to fund the Group’s approved rehabilitation costs. |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Opening balance | 197 | 180 | ||||||
Interest accrued | 21 | 16 | ||||||
Disposal of business | (4 | ) | — | |||||
Contributions made | 11 | 2 | ||||||
Reimbursement of costs incurred | — | (2 | ) | |||||
Translation | (19 | ) | 2 | |||||
Closing balance | 206 | 198 | ||||||
Non-current assets held for sale | (23 | ) | (8 | ) | ||||
183 | 190 | |||||||
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(b) | The Social trust fund is an irrevocable trust under the Group’s control. The Group has undertaken to donate over a period of 10 years to The Harmony Gold Mining Group Social Plan Trust in terms of an agreement signed on November 3, 2003. An initial donation of US$2.7 million was made during the 2004 year. The balance will be donated in installments of R3.5 million (US$0.45 million) per annum with the final installments to be made in 2013. The purpose of the Trust is to fund the social plan to reduce the negative effects of restructuring on the Group’s workforce, to put measures in place to ensure that the technical and life skills of the Group’s workforce are developed and to develop the Group’s workforce in such a manner to avoid or minimize the effect of job losses and a decline in employment through turnaround or redeployment strategies. |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Opening balance | 5 | 4 | ||||||
Contributions made | 1 | 1 | ||||||
Interest accrued | — | — | ||||||
Claims paid | (1 | ) | — | |||||
Closing balance | 5 | 5 | ||||||
19 | Investment in financial assets |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Beginning of the year | 361 | 137 | ||||||
Additions | 20 | 309 | ||||||
Disposals | (362 | ) | (50 | ) | ||||
Mark-to-market | (8 | ) | (50 | ) | ||||
Profit on non-derivative financial instruments (refer note 9) | 5 | 16 | ||||||
Translation | (7 | ) | — | |||||
9 | 362 | |||||||
Reclassified as current assets | — | (353 | ) | |||||
Reclassified as non-current assets held for sale | — | (1 | ) | |||||
End of the year | 9 | 8 | ||||||
Available-for-sale financial assets | ||||||||
Investment in Clidet No. 700 (Pty) Ltd (a) | — | 7 | ||||||
Investment in Alloy Resources (b) | — | 1 | ||||||
Investment in Gold Fields Limited (c) | — | 204 | ||||||
Investment in Dioro Exploration NL (d) | 8 | — | ||||||
Investment in other unlisted shares(e) | 1 | 1 | ||||||
9 | 213 | |||||||
Reclassified as current assets | — | (353 | ) | |||||
Reclassified as non-current assets held for sale | — | (1 | ) | |||||
Total available-for-sale financial assets | 9 | (141 | ) | |||||
At fair value through profit or loss | ||||||||
Investment in African Rainbow Minerals Limited (f) | — | 149 | ||||||
9 | 8 | |||||||
(a) | On December 11, 2006, Harmony subscribed to 50,000 cumulative redeemable participating preference shares in Clidet No 700 (Proprietary) Limited (“Clidet 700”) for US$7.1 million. The purchase consideration was paid on January 3, 2007. Clidet 700 used these funds to purchase 4,106,667 ordinary shares in Pamodzi Gold Limited (“Pamodzi”), which listed on the JSE Limited (JSE) on December 11, 2006. Clidet 700 has ceded the Pamodzi shares to Harmony as security for the amounts owing in terms of the redemption of the preference shares. The preference shares may be redeemed after May 1, 2009 by Clidet 700, or after three years and one day from the issue date by Harmony. Dividends are accumulated and are payable on the redemption date, if not paid before. |
(b) | On April 3, 2006, Big Bell Gold Operations (Pty) Ltd, a subsidiary of Harmony Gold (Australia) (Proprietary) Limited, received |
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(c) | On December 8, 2006, the Group received 15,745,079 ordinary shares in Gold Fields, issued at R135.02 (US$19.15) per share, in exchange for its interest in Western Areas. This was in terms of the offer by Gold Fields to exchange every 100 Western Areas shares held for 35 Gold Fields shares. 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. |
(d) | On December 5, 2007, the Group concluded an agreement with Dioro Exploration NL (Dioro) to sell its South Kal operation (Australia) in exchange for 11,428,571 shares in Dioro, constituting an investment of 17.6%. At that date the shares were valued at US$18.9 million being A$1.75 (US$1.52) per share. The shares are listed on the Australian Securities Exchange. At year end the shares were valued at A$0.74 (US$0.71), resulting in US$8.1 million being recognized in other comprehensive income, net of tax. | |
(e) | Investments are held in various shares of unlisted industry-related companies. These investments have been valued by the directors by performing independent valuations on an annual basis to ensure that no permanent impairment in the value of the investments has occurred. During the financial year under review, the Group did not receive any income from these investments (2007: Nil). | |
(f) | During the 2005 financial year, the Group transferred its remaining 13.68% of the investment in ARM to the ARM Broad-Based Economic Empowerment Trust (“the ARM Trust”) for an aggregate cash consideration of $132.1 million, representing a price of R29 (US$4.62) per ARM share. |
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20 | Investments in associates |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Opening carrying amount | 1 | 266 | ||||||
Disposal of share in associate (a) | — | (268 | ) | |||||
Joint venture becoming associate (c) | — | 1 | ||||||
Shares acquired at cost (d) | 46 | — | ||||||
Elimination of unrealized profits | (5 | ) | — | |||||
Share of loss after tax | (11 | ) | (3 | ) | ||||
Impairment of share in associate | (12 | ) | — | |||||
Foreign currency translation reserve | — | 5 | ||||||
Total investments in associates | 19 | 1 | ||||||
The carrying amount consists of the following: | ||||||||
Village Main Reef Gold Mining Company Ltd (b) | — | — | ||||||
Orpheo (c) | — | 1 | ||||||
Pamodzi Gold Limited (d) | 19 | — | ||||||
Total investments in associates | 19 | 1 | ||||||
(a) | On March 9, 2006, the Group acquired a 29.2% interest in the issued share capital of Western Areas (44,985,939 shares) through its subsidiary, the ARMgold/Harmony Joint Investment Company (Proprietary) Limited, for a total cost of US$321.4 million. Western Areas was listed on the JSE Limited, with interests in operating gold mines in South Africa. |
(b) | On June 21, 2006, Harmony acquired 37.8% of the issued share capital of Village Main Reef Gold Mining Company (1934) Limited (“Village”) at a total cost of US$0.07 million. The equity stake was purchased from ARM at a price of R0.20 (US$0.03) per share. Village is listed on the JSE Limited in the gold sector and has been dormant for some time without any operating mines. |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
100% | 100% | |||||||
Revenue | — | — | ||||||
Net loss | — | — | ||||||
Total assets | 1 | 1 | ||||||
Total liabilities | 1 | — | ||||||
(c) | During 2007, the Group disposed of 17% of its share in Orpheo by Harmony (Proprietary) Limited (“Orpheo”), which had been accounted for as a joint venture. After the transaction, the Group held a 33% interest in Orpheo. |
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US Dollar | ||||||||
2008 | 2007 | |||||||
Figures in million | 100% | 100% | ||||||
Revenue | 1 | 1 | ||||||
Net profit | — | — | ||||||
Total assets | 1 | 1 | ||||||
Total liabilities | 1 | — | ||||||
(d) | On February 27, 2008, Pamodzi bought the Orkney operations from Harmony for a consideration of 30,000,000 Pamodzi shares. This resulted in Harmony owning 32.4% of Pamodzi. On the purchase date the value of the investment was R11.50 per share (US$1.54 per share) resulting in US$46.5 million investment. Pamodzi is listed on the JSE Limited and has interests in operating gold mines in South Africa. | ||
As at June 30, 2008 the fair value of the investment was calculated at US$18.6 million (R4.85 (US$0.62) per share). The carrying value exceeded the fair value and as a result, an impairment of US$12.3 million was recognized. During the four months to June 2008, the Group’s share of the post acquisition losses was a loss of US$10.6 million. | |||
Pamodzi has a December 31 year-end and the latest audited financials are for the year ended December 31, 2007. The unaudited financial information of Pamodzi for the period since acquisition of the investment on February 27, 2008 to June 2008 and as at June 30, 2008 are as follows: |
US Dollar | ||||
2008 | ||||
Figures in million | 100% | |||
Revenue | 57 | |||
Production costs | (74 | ) | ||
Operating loss | (17 | ) | ||
Net loss | (34 | ) | ||
Non-current assets | 214 | |||
Current assets | 21 | |||
Total assets | 235 | |||
Current liabilities | 170 | |||
Non-current liabilities | 31 | |||
Total liabilities | 201 | |||
21 | Investment in joint venture |
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22 | Trade and other receivables |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Current | ||||||||
Financial assets: | ||||||||
Trade receivables (gold) | 30 | 11 | ||||||
Other trade receivables | 44 | 20 | ||||||
Provision for impairment | (17 | ) | (3 | ) | ||||
Trade receivables — net | 57 | 28 | ||||||
Interest and other receivables | 9 | — | ||||||
Employee receivables | 3 | 8 | ||||||
Insurance claims receivable | — | 16 | ||||||
Deferred consideration for sale of Buffalo Creek (a) | — | 5 | ||||||
Non-financial assets: | ||||||||
Prepayments | 5 | 5 | ||||||
Value added tax | 38 | 68 | ||||||
Total current trade and other receivables | 112 | 130 | ||||||
Non-current | ||||||||
Financial assets: | ||||||||
Loans receivables (b) | 20 | 10 | ||||||
Provision for impairment | (2 | ) | (2 | ) | ||||
Total non-current trade and other receivables | 18 | 8 | ||||||
(a) | On March 31, 2006, the Group disposed of the entire share capital of Buffalo Creek for US$17.2 million. The last installment of the receivable was settled in cash on September 30, 2007. | |
(b) | Loans comprise various loans, which have been valued by the directors. These loans are uncollateralized with interest charged at the South African prime lending rate (“prime”). These loans are due within two years. Included in this balance is US$13.2 million owed by an associate. |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Balance at July 1 | 3 | 2 | ||||||
Impairment loss recognized | 14 | 1 | ||||||
Balance at June 30 | 17 | 3 | ||||||
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Balance at July 1 | 2 | — | ||||||
Impairment loss recognized | 1 | 2 | ||||||
Loans written off during the year | (1 | ) | — | |||||
Balance at June 30 | 2 | 2 | ||||||
US Dollar | ||||||||
Figures in million | Gross | Impairment | ||||||
The ageing of trade and other receivables at the reporting date was: | ||||||||
June 30, 2008 | ||||||||
Fully performing | 51 | — | ||||||
Past due by 1 to 30 days | 3 | — | ||||||
Past due by 31 to 60 days | — | — | ||||||
Past due by 61 to 90 days | 1 | — | ||||||
Past due by more than 90 days | 19 | 17 | ||||||
Balance at June 30, 2008 | 74 | 17 | ||||||
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US Dollar | ||||||||
Figures in million | Gross | Impairment | ||||||
June 30, 2007 | ||||||||
Fully performing | 23 | — | ||||||
Past due by 1 to 30 days | 1 | — | ||||||
Past due by 31 to 60 days | — | — | ||||||
Past due by 61 to 90 days | 3 | — | ||||||
Past due by more than 90 days | 5 | 3 | ||||||
Balance at June 30, 2007 | 32 | 3 | ||||||
US Dollar | ||||||||
Figures in million | Gross | Impairment | ||||||
The ageing of loans receivables at the reporting date was: | ||||||||
June 30, 2008 | ||||||||
Fully performing | 18 | — | ||||||
Past due by 1 to 30 days | — | — | ||||||
Past due by 31 to 60 days | — | — | ||||||
Past due by 61 to 90 days | — | — | ||||||
Past due by more than 90 days | 2 | 2 | ||||||
Balance at June 30, 2008 | 20 | 2 | ||||||
June 30, 2007 | ||||||||
Fully performing | 8 | — | ||||||
Past due by 1 to 30 days | — | — | ||||||
Past due by 31 to 60 days | — | — | ||||||
Past due by 61 to 90 days | — | — | ||||||
Past due by more than 90 days | 2 | 2 | ||||||
Balance at June 30, 2007 | 10 | 2 | ||||||
23 | Inventories |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Gold in lock-up | 26 | 23 | ||||||
Gold in-process and bullion on hand | 17 | 49 | ||||||
Stores and materials at weighted average cost | 46 | 33 | ||||||
Total inventories | 89 | 105 | ||||||
Gold in-process at the following operations is valued at net realizable value: | ||||||||
Free State | — | 4 | ||||||
Evander | — | 11 | ||||||
Freegold | — | 12 | ||||||
Target | — | 13 | ||||||
Gold in-process carried at net realizable value | — | 40 | ||||||
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24 | Restricted cash |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
RMB margin call account (a) | — | 39 | ||||||
Security deposits (b) | — | 2 | ||||||
Cash Management Account (c) | 10 | — | ||||||
Reclassified as current | — | (39 | ) | |||||
Reclassified as non-current assets held for sale | — | (1 | ) | |||||
Total restricted cash | 10 | 1 | ||||||
(a) | In terms of the financing agreement with RMB, US$39 million was placed in a security deposit account with RMB. Refer to note 28 (f). | |
(b) | The amount was held in respect of security deposits on mining tenements. | |
(c) | The amount relates to funds set aside by the International operations for performance bonds related to guarantees for environmental obligations. |
25 | Cash and cash equivalents |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Cash at bank and deposits on call | 53 | 101 | ||||||
Overdraft facilities | — | (31 | ) | |||||
Total cash and cash equivalents | 53 | 70 | ||||||
26 | Share capital |
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Table of Contents
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Foreign exchange translation reserve (a) | (216 | ) | 30 | |||||
Mark-to-market of available-for-sale financial instruments (b) | (2 | ) | (44 | ) | ||||
Equity component of convertible bond (c) | 41 | 41 | ||||||
Acquisition of non-controlling interest in subsidiary (d) | (57 | ) | (57 | ) | ||||
Deferred share-based payments (e) | 42 | 36 | ||||||
Other | (4 | ) | (4 | ) | ||||
Total other reserves | (196 | ) | 2 | |||||
The different categories are made up as follows: | ||||||||
Foreign exchange translation reserve | ||||||||
At the beginning of the year | 30 | (57 | ) | |||||
Current year’s foreign exchange movement | (246 | ) | 87 | |||||
At the end of the year | (216 | ) | 30 | |||||
Mark-to-market of available-for-sale financial assets | ||||||||
At the beginning of the year | (44 | ) | 2 | |||||
Realized portion reclassified through profit or loss | 47 | 4 | ||||||
Mark-to-market — unrealized | (9 | ) | (50 | ) | ||||
Deferred tax asset | 4 | — | ||||||
At the end of the year | (2 | ) | (44 | ) | ||||
Equity component of convertible bond | ||||||||
At the beginning/end of the year | 41 | 41 | ||||||
Acquisition of non-controlling interest in subsidiary | ||||||||
At the beginning/end of the year | (57 | ) | (57 | ) | ||||
Deferred share-based payments | ||||||||
At the beginning of the year | 36 | 30 | ||||||
Share-based payments expensed | 6 | 6 | ||||||
At the end of the year | 42 | 36 | ||||||
Other reserves | ||||||||
At the beginning/end of the year | (4 | ) | (4 | ) | ||||
(a) | The movement of the foreign exchange translation reserve represents the cumulative translation effect of the Group’s off-shore operations. It also includes the translation effect from Rand to US Dollar. | |
(b) | The balance of the mark-to-market reserve represents the movement in the fair value of the available-for-sale financial assets. For details on the movement, refer to note 19. | |
(c) | On May 21, 2004, the Group issued a convertible bond. As a result, an amount representing the value of the equity conversion component is included in other reserves, net of deferred tax. The equity conversion component is determined on the issue of the bonds and is not changed in subsequent periods. Refer to note 28 (a) for more detail. | |
(d) | On March 15, 2004 Harmony announced that it had made an off market cash offer to acquire all the ordinary shares, listed and unlisted options of Abelle, held by non-controlling interests. The excess of the purchase price of US$86.5 million (A$123 million) over the carrying amount of non-controlling interests acquired, amounting to US$55 million, has been accounted for under other reserves. |
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(e) | The Group issues equity-settled instruments to certain qualifying employees under an Employee Share Option Scheme to purchase shares in the Company’s authorized but unissued ordinary shares. Equity share-based payments are measured at the fair value of the equity instruments at the date of the grant. Share-based payment are expensed over the vesting period, based on the Group’s estimate of the shares that are expected to eventually vest. During 2008 a share-based payment expense of US$5.9 million (2007: US$6.3 million) was charged to the income statement. (Refer to note 35 for more detail.) |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Uncollateralized borrowings | ||||||||
Convertible uncollateralized fixed rate bonds (a) | — | 219 | ||||||
Principal amount | 218 | 241 | ||||||
Equity conversion component, net of deferred tax liability | (41 | ) | (41 | ) | ||||
Deferred tax liability | (9 | ) | (9 | ) | ||||
Liability component on initial recognition | 168 | 191 | ||||||
Unwinding of time value of money portion | 40 | 29 | ||||||
Less: amortized bond issue costs | (1 | ) | (2 | ) | ||||
Translation | 1 | 1 | ||||||
208 | 219 | |||||||
Less: current portion | (208 | ) | — | |||||
Africa Vanguard Resources (Proprietary) Limited (b) | 4 | 5 | ||||||
Total uncollateralized long-term borrowings | 4 | 224 | ||||||
Collateralized borrowings | ||||||||
Nedbank Limited (c) | — | 24 | ||||||
Liability amount | 25 | 24 | ||||||
Less: current portion | (25 | ) | — | |||||
Nedbank Limited (d) | — | — | ||||||
Liability amount | — | 85 | ||||||
Less: current portion | — | (85 | ) | |||||
Nedbank Limited (e) | — | — | ||||||
Liability amount | — | 64 | ||||||
Less: current portion | — | (64 | ) | |||||
Rand Merchant Bank (f) | — | — | ||||||
Liability amount | — | 107 | ||||||
Less: current portion | — | (107 | ) | |||||
Rand Merchant Bank (g) | — | — | ||||||
Liability amount | — | 78 | ||||||
Less: current portion | — | (78 | ) | |||||
Rand Merchant Bank (h) | — | — | ||||||
Liability amount | — | 71 | ||||||
Less: current portion | — | (71 | ) | |||||
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US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Westpac Bank (i) | 27 | — | ||||||
Liability amount | 33 | — | ||||||
Less: current portion | (6 | ) | — | |||||
Nedbank Limited (j) | — | — | ||||||
Principal amount | 256 | — | ||||||
Less: amortized issue costs | (1 | ) | — | |||||
255 | — | |||||||
Less: current portion | (255 | ) | — | |||||
Total uncollateralized long-term borrowings | 27 | 24 | ||||||
Total long-term borrowings | 31 | 248 | ||||||
Total current portion of borrowings | 494 | 405 | ||||||
Total borrowings | 525 | 653 | ||||||
(a) | On May 21, 2004, Harmony issued an international uncollateralized fixed rate convertible bond in an aggregate principal amount of US$251.9 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 five years from the issue date at their nominal value of US$218 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. 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 initial conversion price is R121 (US$15.51) per ordinary share subject to certain standard anti-dilutive provisions such as a rights offering, that are designed to maintain the value of the conversion option. The fair values of the liability component and the equity conversion component were determined on the issue of the bond. The fair value of the liability component, included in long term borrowings, was calculated using a market interest rate for an equivalent non-convertible bond (10%). | |
The residual amount, representing the value of the equity conversion component, is included in other reserves net of deferred taxes. In subsequent periods, the liability component continues to be presented on the amortized cost basis, until extinguished on conversion or maturity of the bonds. The equity conversion component is determined on the issue of the bonds and is not changed in subsequent periods. 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 (defined as bonds, notes, debentures, loan stock or other securities which are tradable on a securities market) without according the same security to the bondholders or without obtaining the prior approval of the bondholders. Included in the amortization charge as per the income statement is US$1.2 million (2007: US$1.2 million) for amortization of the bond issue costs. | ||
(b) | The loan to Africa Vanguard Resources (Doornkop) (Proprietary) Limited (“AVRD”) from its holding company African Vanguard Resources (Proprietary) Limited remained unchanged from the previous year. In 2005 AVRD borrowed an additional R18 million (US$2.3 million) to service working capital commitments. This increased the initial loan of US$1.8 million to US$4.1 million. The loan is unsecured and interest free, with no fixed terms of repayment over the short term. Refer to note 28 (c). | |
(c) | On July 30, 2003, AVRD entered into a term loan facility of US$19.1 million with Nedbank Limited for the purpose of partially funding AVRD’s purchase of an undivided 26% share of the Mining titles, to be contributed to the Doornkop South Reef project. Interest at a variable rate equal to JIBAR plus 2% shall be repayable to the extent that AVRD received a portion of the profit from the project. Unpaid interest shall be capitalized 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, 2008 amounted to US$4.1 million (2007: US$2.2 million). | |
The facility from Nedbank to AVRD is guaranteed by Harmony and certain of its subsidiaries. As a result of this guarantee and other factors, the Group is required to consolidate AVRD and has therefore included the loans from Nedbank and Africa Vanguard Resources (Proprietary) Limited in its consolidated borrowings. | ||
(d) | On April 15, 2005, the ARM Trust entered into a term loan facility of US$75.4 million with Nedbank for the purpose of funding the balance of the ARM Trust’s acquisition of the shares the Group held in ARM. The loan bears interest, compounded monthly, at a rate of JIBAR plus 1.5% per annum. Interest capitalized during the year ended June 30, 2008 amounted to US$2.5 million (2007: US$8.6 million) (refer to note 12). On September 28, 2007, the ARM Trust guarantee was cancelled by Nedbank and consequently Harmony has no further obligation to Nedbank in this regard. The ARM investment and associated Nedbank loans was deconsolidated from this date. Refer to note 19 (f). |
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(e) | On April 15, 2005, the ARM Trust entered into a second term loan facility of US$56.7 million with Nedbank for the purpose of funding the ARM Trust’s partial acquisition of the shares the Company held in ARM (Refer note 19 (f)). The loan bears interest, compounded monthly, at a rate of JIBAR plus 1.5% per annum. Interest capitalized during the year ended June 30, 2008 amounted to US$2.1 million (2007: US$6.8 million) (refer to note 12). The loan is repayable on the 5th anniversary of the advance date. On September 28, 2007, the loan was consolidated as per note 28 (d). | |
(f) | During March 2007, the Group entered into a financing agreement with RMB. In terms of the financing agreement, 5,747,000 Gold Fields ordinary shares were pledged as collateral. The financing amounted to US$103.4 million. Of this amount, US$82.3 million was used to repay a portion of the term loan obtained in March 2006. | |
Interest is payable to RMB at a rate equal to the SAFEX Financial Derivatives overnight deposit rate (SAFEX overnight rate) plus 35 basis points. | ||
The Group placed a 20% deposit of the notional amount with RMB in an initial margin account for any change in the Gold Fields share price below the reference price of R130.88 (US$17.81) per share. Interest is payable by RMB to the Group at the SAFEX overnight rate less 15 basis points. | ||
On August 24, 2007, the Group entered into an agreement to sell its Gold Fields ordinary shares for a consideration of US$185 million. The proceeds were used to settle the Randfontein redeemable preference shares issued to RMB in April 2007, as well as the financing arranged with RMB in March 2007. Refer to note 28 (g). | ||
(g) | During April 2007, Randfontein Estates Limited (“Randfontein”) (a wholly owned subsidiary of Harmony) issued 55,000,000 cumulative, floating rate, redeemable preference shares to RMB for US$75.4 million. US$54.9 million of the consideration was used to repay a portion of the term loan obtained in March 2006. The obligation to redeem the preference shares is secured by the cession of shares in Gold Fields in a ratio of 1.5:1. | |
The preference shares are redeemable on the date that falls three years and a day after the issue date, but may be redeemed by Randfontein at any time before this date . The amount to be redeemed is the issue price together with any accumulated dividends and dividends that have been declared but not paid. | ||
The first dividend date is March 1, 2008. The dividend rate is variable and is set out as follows: | ||
- for the period from the issue date until August 31, 2007, the variable dividend rate is equal to 35% of the prime rate; | ||
- for the period from September 1, 2007 until February 29, 2008, the variable dividend rate is equal to 50% of the prime rate; | ||
- on March 1, 2008, the variable dividend rate is equal to 83% of the prime rate. | ||
In August 2007, the preference shares were redeemed as per note 28 (f). | ||
(h) | On June 29, 2007, RMB advanced US$68.6 million in terms of a short term bridging loan. The loan became due on July 31, 2007 along with interest, calculated at the rate equal to the SAFEX overnight rate plus 2.4%. In the event that Harmony elected to extend the loan facility until September 30, 2007, the interest would be calculated at the rate equal to the SAFEX overnight rate plus 3.6% during the extension period. | |
On September 29, 2007, the short term bridging loan from RMB was repaid. Refer to note 28 (j) for details on the funds utilized. | ||
(i) | During July 2007, Morobe Consolidated Goldfields entered into a finance lease agreement with Westpac Bank for the purchase of mining fleet to be used on the Hidden Valley project. | |
Interest is charged at US — LIBOR plus 1.25% per annum. Interest is accrued monthly and lease installments are repayable quarterly terminating June 30, 2013. The mining fleet financed is used as security for these loans. |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
The future minimum lease payments are as follows: | ||||||||
Due within one year | 7 | — | ||||||
Due between one and two years | 7 | — | ||||||
Due between two and five years | 23 | — | ||||||
37 | — | |||||||
Future finance charges | (4 | ) | — | |||||
33 | — | |||||||
(j) | On September 28, 2007, Harmony entered into a term loan facility of US$283.9 million with Nedbank, for the purpose of partially funding capital expenditure in respect of projects, as well as to repay the short term bridging loan amounting to US$68.6 million (refer to note 28 (h)). Interest accrues on a day to day basis over the term of the loan at a variable interest |
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rate, which is fixed for three month periods, equal to the JIBAR plus 2.75% plus banking costs. The loan is repayable on December 29, 2008 and interest is repayable every quarter commencing on September 28, 2007. |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Variable rate | 27 | 24 | ||||||
Current | 494 | 405 | ||||||
Between 1 to 2 years | — | 219 | ||||||
Between 2 to 5 years | — | — | ||||||
Over 5 years | 4 | 5 | ||||||
Total borrowings | 525 | 653 | ||||||
Variable rate | 5.1 | % | 3.7 | % | ||||
Current | 94.1 | % | 62.1 | % | ||||
Between 1 to 2 years | 0.0 | % | 33.5 | % | ||||
Between 2 to 5 years | 0.0 | % | 0.0 | % | ||||
Over 5 years | 0.8 | % | 0.7 | % | ||||
Total borrowings | 100.0 | % | 100.0 | % | ||||
The maturity of borrowings is as follows: | ||||||||
Current | 494 | 405 | ||||||
Between 1 to 2 years | 6 | 243 | ||||||
Between 2 to 5 years | 21 | — | ||||||
Over 5 years | 4 | 5 | ||||||
Total borrowings | 525 | 653 | ||||||
2008 | 2007 | |||||||
Convertible unsecured fixed rate bonds (a) | 10.0 | % | 10.0 | % | ||||
Africa Vanguard Resources (Proprietary) Limited (b) | 0.0 | % | 0.0 | % | ||||
Nedbank Limited (c) | 13.4 | % | 11.9 | % | ||||
Nedbank Limited (d)* | 0.0 | % | 9.5 | % | ||||
Nedbank Limited (e)* | 0.0 | % | 10.0 | % | ||||
Rand Merchant Bank (f)* | 0.0 | % | 9.4 | % | ||||
Rand Merchant Bank (g)* | 0.0 | % | 4.6 | % | ||||
Rand Merchant Bank (h)* | 0.0 | % | 12.7 | % | ||||
Westpac Bank (i) | 4.1 | % | 0.0 | % | ||||
Nedbank Limited (j) | 14.5 | % | 0.0 | % |
* | Loan repaid in full |
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29 | Provision for environmental rehabilitation |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Provision raised for future rehabilitation | ||||||||
Opening balance | 192 | 120 | ||||||
Disposal of assets | (16 | ) | (4 | ) | ||||
Change in estimate — Balance sheet | 12 | 53 | ||||||
Change in estimate — Income statement | 1 | (1 | ) | |||||
Inflation present value adjustment and time value of money component | 22 | 17 | ||||||
Foreign currency translation adjustments | (15 | ) | 7 | |||||
Closing balance | 196 | 192 | ||||||
Provision associated with non-current assets held for sale | (51 | ) | (36 | ) | ||||
145 | 156 | |||||||
Future net obligations | ||||||||
Ultimate estimated rehabilitation cost | 269 | 276 | ||||||
Amounts invested in Environmental trust funds (note 18)* | (206 | ) | (198 | ) | ||||
Total future obligations | 63 | 78 | ||||||
* | This includes amounts related to non-current assets held for sale. |
30 | Provision for other liabilities and charges |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Non-current | ||||||||
Retirement benefit obligation (Refer to note 33) | 17 | 15 | ||||||
Other | 1 | 3 | ||||||
Closing balance | 18 | 18 | ||||||
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31 | Trade and other payables |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Financial liabilities | ||||||||
Trade payables | 86 | 88 | ||||||
Other liabilities | 8 | 8 | ||||||
Non-financial liabilities | ||||||||
Payroll accruals | 37 | 65 | ||||||
Leave liabilities | 27 | 34 | ||||||
Shaft related accruals | 16 | 17 | ||||||
Other accruals | 21 | 21 | ||||||
Value added tax | 6 | 17 | ||||||
Taxation | 12 | 7 | ||||||
Total trade and other payables | 213 | 257 | ||||||
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
At the beginning of the year | 36 | 31 | ||||||
Benefits paid | (38 | ) | (26 | ) | ||||
Foreign currency translation adjustments | (1 | ) | — | |||||
Total expense per income statement | 32 | 31 | ||||||
29 | 36 | |||||||
Reclassified as non-current assets held for sale | (2 | ) | (2 | ) | ||||
At the end of the year | 27 | 34 | ||||||
32 | Cash generated by operations |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Profit/(loss) before taxation | 33 | 90 | (58 | ) | ||||||||
Adjustments for: | ||||||||||||
Amortization and depreciation | 123 | 163 | 171 | |||||||||
Impairment/(reversal of impairment) of assets | 36 | 38 | (30 | ) | ||||||||
Loss/(gain) on financial instruments | 1 | (6 | ) | 82 | ||||||||
Profit on sale of mining assets | (15 | ) | (25 | ) | (10 | ) | ||||||
Net increase/(decrease) in provision for post retirement benefits | 1 | (2 | ) | 1 | ||||||||
Net increase/(decrease) in provision for environmental rehabilitation | 2 | (1 | ) | (3 | ) | |||||||
Loss from associates | 11 | 3 | 17 | |||||||||
Impairment of investment in associate | 12 | — | — | |||||||||
Share-based payments | 6 | 6 | 16 | |||||||||
Fair value of non-derivative financial instrument | (4 | ) | (15 | ) | (14 | ) | ||||||
Loss/(profit) on sale of listed investments | 63 | 3 | (45 | ) | ||||||||
Profit on sale of subsidiary | — | — | (2 | ) | ||||||||
Profit on sale of investment in associate | — | (33 | ) | — | ||||||||
Dividends received | (5 | ) | (3 | ) | (3 | ) | ||||||
Interest received | (38 | ) | (25 | ) | (33 | ) | ||||||
Interest paid — cash | 57 | 31 | 32 | |||||||||
Interest paid — non cash | 19 | 35 | 39 | |||||||||
Cost on closure of hedge positions | — | (80 | ) | (54 | ) | |||||||
Other non cash transactions | — | (15 | ) | (14 | ) |
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Table of Contents
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Effect of changes in operating working capital items: | ||||||||||||
Receivables | 4 | (27 | ) | (9 | ) | |||||||
Inventories | 7 | (30 | ) | (6 | ) | |||||||
Accounts payable and accrued liabilities | (45 | ) | 57 | (24 | ) | |||||||
Cash generated by operations | 268 | 164 | 53 | |||||||||
US Dollar | ||||
Figures in million | 2008 | |||
For the year ended June 2008 | ||||
On December 6, 2007, the Group disposed of its assets and liabilities in South Kal Mine to Dioro. The aggregate fair value of the assets and liabilities sold were: | ||||
Property, plant and equipment | 50 | |||
Consumables | 3 | |||
Shares | 3 | |||
Rehabilitation liability | (8 | ) | ||
Loss on disposal | (12 | ) | ||
Disposal proceeds | 36 | |||
Proceeds received by way of shares | (18 | ) | ||
Proceeds received in cash | 18 | |||
On February 27, 2008, the Group disposed of its assets and liabilities in its Orkney operations to Pamodzi. The aggregate fair value of assets and liabilities sold were: | ||||
Property, plant and equipment | 38 | |||
Rehabilitation trust fund | 4 | |||
Leave liability | (2 | ) | ||
Provision for environmental rehabilitation liability | (7 | ) | ||
Profit on disposal | 13 | |||
Disposal proceeds | 46 | |||
Proceeds received by way of shares | (46 | ) | ||
Cash and cash equivalent at disposal | — | |||
US Dollar | ||||
Figures in million | 2007 | |||
For the year ended June 2007 | ||||
On May 28, 2007, the Group disposed of 17% of its 50% share in Orpheo to AngloGold Ashanti Limited. The aggregate fair value of the assets acquired and liabilities assumed, and subsequently disposed of, were : | ||||
Inventories | — | |||
Property, plant and equipment | 1 | |||
Investment in associate | (1 | ) | ||
Accounts payable and accrued liabilities | — | |||
Total purchase price | — | |||
Proceeds received by way of accounts receivable | — | |||
Cash and cash equivalents at disposal | — | |||
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US Dollar | ||||
Figures in million | 2006 | |||
For the year ended June 2006 | ||||
On July 1, 2005, the Group acquired a 50% share in Orpheo. The aggregate fair value of the assets acquired and liabilities assumed were: | ||||
Inventories | — | |||
Property, plant and equipment | 1 | |||
Accounts payable and accrued liabilities | — | |||
Total purchase price | 1 | |||
Paid for by way of accounts payable | (1 | ) | ||
Cash and cash equivalents at acquisition | — | |||
On December 20, 2005, the Group acquired a 45% share in MP Britz and H. Taute Pharmacies through its joint venture agreement with Healthshare. The aggregate fair value of the assets acquired and liabilities assumed were: | ||||
Inventories | — | |||
Accounts receivable | — | |||
Property, plant and equipment | — | |||
Intangible assets | 1 | |||
Accounts payable and accrued liabilities | (1 | ) | ||
Total purchase price | — | |||
Paid for by way of accounts payable | — | |||
Cash and cash equivalents at acquisition | — | |||
On March 31, 2006, the Group disposed of its shareholding in Buffalo Creek. The aggregate fair value of the assets and liabilities sold were: | ||||
Inventories | — | |||
Property, plant and equipment | 18 | |||
Deferred tax | (3 | ) | ||
Provision for rehabilitation liability | — | |||
Accounts payable and accrued liabilities | — | |||
Foreign exchange | — | |||
Profit on disposal sale of subsidiary | 2 | |||
Disposal proceeds | 17 | |||
Proceeds received by way of accounts receivable | (10 | ) | ||
Proceeds received by way of shares | (4 | ) | ||
Proceeds received by way of cash | 3 | |||
33 | Retirement benefit obligations |
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US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Present value of unfunded obligations | 17 | 15 | ||||||
Movement in the liability recognized in the balance sheet | ||||||||
Opening balance as previously stated | 15 | 15 | ||||||
Contributions paid | — | — | ||||||
Other expenses included in staff costs/current service cost | 1 | 1 | ||||||
Interest cost | 1 | 1 | ||||||
Net actuarial loss/(gains) recognized during the year | 2 | (2 | ) | |||||
Foreign currency translation reserve | (2 | ) | — | |||||
Balance at the end of the year | 17 | 15 | ||||||
The principal actuarial assumptions used for accounting purposes were: | ||||||||
Discount rate | 12.0 | % | 9.0 | % | ||||
Healthcare inflation rate | 9.8 | % | 6.3 | % | ||||
Normal retirement age | 60 | 60 | ||||||
The history of the defined benefit plan is as follows: | ||||||||
Present value of defined benefit obligation | 17 | 15 | ||||||
Fair value of plan assets | — | — | ||||||
Net liability | 17 | 15 | ||||||
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
1% | 1% | |||||||
Increase / | Increase / | |||||||
decrease | decrease | |||||||
Effect on: | ||||||||
Aggregate of service cost and interest cost | — | — | ||||||
Defined benefit obligation | 3 | 3 | ||||||
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34 | Employee benefits |
Number of permanent employees as at June 30: | 2008 | 2007 | ||||||
South Africa operations* | 36,839 | 41,118 | ||||||
International operations** | 871 | 466 | ||||||
Total | 37,710 | 41,584 | ||||||
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Aggregate earnings: | ||||||||
The aggregate earnings of employees including directors were: | ||||||||
Salaries and wages and other benefits | 584 | 432 | ||||||
Retirement benefit costs | 47 | 42 | ||||||
Medical aid contributions | 10 | 9 | ||||||
Total aggregate earnings | 641 | 483 | ||||||
* | The employees attributable to the discontinued operations were 3 618 (2007: 6 313). | |
** | The total employees at Australian operations at 30 June 2008 was 873 (2007: 695). Of this total, 2 employees (2007: 229) were attributable to the discontinued operations. |
35 | Share option schemes |
Number of share options relating to the 2001 and 2003 option schemes | 2008 | 2007 | ||||||
Share options granted | 28,442,420 | 28,442,420 | ||||||
Exercised | 17,249,668 | 15,485,536 | ||||||
Vested but not exercised | 1,792,796 | 1,843,156 | ||||||
Unvested | 2,735,443 | 6,286,513 | ||||||
Forfeited and lapsed | 6,664,513 | 4,827,215 | ||||||
Vesting periods of unvested options: | ||||||||
Within one year | 1,367,722 | 2,186,819 | ||||||
One to two years | 1,367,721 | 2,049,847 | ||||||
Two to three years | — | 2,049,847 | ||||||
Total number of unvested options | 2,735,443 | 6,286,513 | ||||||
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Table of Contents
Weighted average | ||||||||
option price | ||||||||
Activity on share options granted but not yet exercised | Shares | (Rand) | ||||||
For the year ended June 30, 2007 | ||||||||
Balance at beginning of year | 12,543,207 | 49.38 | ||||||
Options exercised | (2,627,249 | ) | 51.82 | |||||
Options forfeited and lapsed | (1,786,289 | ) | 50.37 | |||||
Closing balance | 8,129,669 | 48.38 | ||||||
For the year ended June 30, 2008 | ||||||||
Balance at beginning of year | 8,129,669 | 48.38 | ||||||
Options exercised | (1,764,132 | ) | 49.16 | |||||
Options forfeited and lapsed | (1,837,298 | ) | 45.77 | |||||
Closing balance | 4,528,239 | 49.14 | ||||||
At June 30, | Option price | Remaining life | ||||||||||
List of options granted but not yet exercised (listed by grant date) | 2008 | (Rand) | (years) | |||||||||
April 24, 2001 | 21,000 | 36.50 | 2.8 | |||||||||
November 20, 2001 | 221,260 | 49.60 | 3.4 | |||||||||
September 23, 2002 | 33,768 | 66.00 | 4.2 | |||||||||
March 27, 2003 | 261,000 | 91.60 | 4.7 | |||||||||
August 10, 2004 | 1,066,713 | 66.15 | 6.1 | |||||||||
April 26, 2005 | 2,924,498 | 39.00 | 6.8 | |||||||||
Total option granted but not yet exercised | 4,528,239 | |||||||||||
List of options granted but not yet vested (listed by grant date) | 2008 | 2007 | ||||||
September 23, 2002 | — | 35,371 | ||||||
March 27, 2003 | — | 101,600 | ||||||
August 10, 2004 | 817,660 | 1,763,665 | ||||||
April 26, 2005 | 1,917,783 | 4,385,877 | ||||||
Total options granted but not yet vested | 2,735,443 | 6,286,513 | ||||||
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Average market price of options traded during the year | 22 | 40 | ||||||
Average fair value of share options vested during the year | 41 | 72 | ||||||
Share-based payments | — | 5 | ||||||
Option allocation | ||||||||||||
March 27, 2003 | August 10, 2004 | April 26, 2005 | ||||||||||
The share-based payments are calculated using the binominal valuation model based on the following assumptions at grant date: | ||||||||||||
Price at date of grant (SA Rand per share) | 91.60 | 66.15 | 39.00 | |||||||||
Risk-free interest rate: | 11.6 | % | 9.9 | % | 8.4 | % | ||||||
Expected volatility: | 45.0 | % | 40.0 | % | 35.0 | % | ||||||
Expected dividend yield: | 0.0 | % | 0.0 | % | 0.0 | % | ||||||
Vesting period: | 5 years | 5 years | 5 years |
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Table of Contents
• | First the maximum number conditionally awarded is pro-rated for the time period until the termination date; |
• | Then this adjusted number is reduced to a third on the assumption that Harmony’s performance was a median one with one third vesting; | ||
• | And then settled in cash or shares after the deduction of any tax payable. |
Number of shares relating to the 2006 share plan at June 30 | 2008 | 2007 | ||||||
Shares granted | 4,676,720 | 1,481,107 | ||||||
Unvested | 4,236,938 | 1,468,510 | ||||||
Performance shares | 1,341,444 | 538,516 | ||||||
Share appreciation rights | 2,895,494 | 929,994 | ||||||
Shares forfeited | 439,782 | 12,597 | ||||||
Performance shares | 170,658 | — | ||||||
Share appreciation rights | 269,124 | 12,597 | ||||||
Vesting periods of unvested shares granted: | ||||||||
One to two years | 603,399 | — | ||||||
Two to three years | 1,932,502 | 848,514 | ||||||
Three to four years | 965,165 | 309,998 | ||||||
Four to five years | 735,872 | 309,998 | ||||||
Total number of unvested shares granted | 4,236,938 | 1,468,510 | ||||||
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Table of Contents
Weighted average | ||||||||
option price | ||||||||
Activity on PS and SARs granted but not yet exercised | Shares | (Rand) | ||||||
For the year ended June 30, 2007 | ||||||||
Opening balance | — | |||||||
Performance shares | — | n/a | ||||||
Share appreciation rights | — | — | ||||||
Options granted | 1,481,107 | |||||||
Performance shares | 538,516 | n/a | ||||||
Share appreciation rights | 942,591 | 112.64 | ||||||
Options lapsed | (12,597 | ) | ||||||
Performance shares | — | n/a | ||||||
Share appreciation rights | (12,597 | ) | 112.64 | |||||
Closing balance | 1,468,510 | |||||||
Performance shares | 538,516 | n/a | ||||||
Share appreciation rights | 929,994 | 112.64 | ||||||
For the year ended June 30, 2008 | ||||||||
Opening balance | 1,468,510 | |||||||
Performance shares | 538,516 | n/a | ||||||
Share appreciation rights | 929,994 | 112.64 | ||||||
Options granted | 3,195,613 | |||||||
Performance shares | 973,586 | n/a | ||||||
Share appreciation rights | 2,222,027 | 71.19 | ||||||
Options lapsed | (427,185 | ) | ||||||
Performance shares | (170,658 | ) | n/a | |||||
Share appreciation rights | (256,527 | ) | 110.27 | |||||
Closing balance | 4,236,938 | |||||||
Performance shares | 1,341,444 | n/a | ||||||
Share appreciation rights | 2,895,494 | 81.04 | ||||||
At June 30, | Strike price | Remaining life | ||||||||||
List of shares granted but not yet exercised (listed by grant date) | 2008 | (Rand) | (years) | |||||||||
Performance shares | ||||||||||||
November 15, 2006 | 374,106 | n/a | 1.4 | |||||||||
November 15, 2007 | 955,030 | n/a | 2.4 | |||||||||
March 7, 2008 | 12,308 | n/a | 2.7 | |||||||||
Share appreciation rights | ||||||||||||
November 15, 2006 | 687,880 | 112.64 | 4.4 | |||||||||
November 15, 2007 | 2,161,460 | 70.54 | 5.4 | |||||||||
March 7, 2008 | 46,154 | 102.00 | 5.7 | |||||||||
Total option granted but not yet exercised | 4,236,938 | |||||||||||
US Dollar | ||||||||
Figures in millions | 2008 | 2007 | ||||||
Share-based payments | 5 | 1 | ||||||
Performance | ||||||||
shares | SARs | |||||||
The share-based cost is calculated using the Monte Carlo simulation, based on the following assumptions at grant date. | ||||||||
Price at date of grant (SA Rand per share) | ||||||||
- November 15, 2006 share allocation | n/a | 112.64 | ||||||
- November 15, 2007 share allocation | n/a | 70.54 | ||||||
- March 7, 2008 share allocation | n/a | 102.00 | ||||||
Risk-free interest rate: | ||||||||
- November 15, 2006 share allocation | 9.6 | % | 8.8 | % | ||||
- November 15, 2007 share allocation (valuation date December 21, 2007) | 10.8 | % | 9.8 | % |
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Table of Contents
Performance | ||||||||
shares | SARs | |||||||
- November 15, 2007 share allocation (valuation date April 21, 2008) | 11.7 | % | 10.7 | % | ||||
- March 7, 2008 share allocation | 11.0 | % | 10.4 | % | ||||
Expected volatility*: | ||||||||
- November 15, 2006 share allocation | 34.7 | % | 26.4 | % | ||||
- November 15, 2007 share allocation (valuation date December 21, 2007) | 46.3 | % | 35.1 | % | ||||
- November 15, 2007 share allocation (valuation date April 21, 2008) | 49.5 | % | 41.7 | % | ||||
- March 7, 2008 share allocation | 50.5 | % | 54.5 | % | ||||
Expected dividend yield: | ||||||||
- November 15, 2006 share allocation | 0.0 | % | 0.0 | % | ||||
- November 15, 2007 share allocation (valuation date December 21, 2007) | 0.0 | % | 0.0 | % | ||||
- November 15, 2007 share allocation (valuation date April 21, 2008) | 0.0 | % | 0.0 | % | ||||
- March 7, 2008 share allocation | 0.0 | % | 0.0 | % | ||||
Vesting period (from grant date): | ||||||||
- November 15, 2006 share allocation | 3 years | 5 years | ||||||
- November 15, 2007 share allocation | 3 years | 5 years | ||||||
- March 7, 2008 share allocation | 3 years | 5 years |
• | that the Group’s headline earnings per share have grown since the allocation date by a minimum of CPIX plus 3%; | ||
• | that the Group’s performance has since the allocation date been a satisfactory achievement in terms of the Company’s sustainability index. |
* | The volatility is measured as an annualized standard deviation of historical share price returns, using an exponentially weighted moving average (EWMA) model, with a lambda of 0.99. The volatility is calculated on the grant date, and takes into account the previous three years of historical data. |
36 | Related parties |
37 | Commitments and Contingencies |
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Capital expenditure commitments | ||||||||
Contracts for capital expenditure | 149 | 50 | ||||||
Authorized by the directors but not contracted for | 221 | 267 | ||||||
Total capital commitments | 370 | 317 | ||||||
This expenditure will be financed from existing resources and where appropriate, borrowings. |
F-58
Table of Contents
US Dollar | ||||||||
Figures in million | 2008 | 2007 | ||||||
Contingent liabilities | ||||||||
Guarantees and suretyships | 2 | 3 | ||||||
Environmental guarantees | 22 | 18 | ||||||
24 | 21 | |||||||
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Table of Contents
38 | Third year balance sheet |
US Dollar | ||||
Figures in million | 2005 | |||
Assets | ||||
Non-current assets | ||||
Property, plant and equipment (a) | 3,385 | |||
Intangible assets | 340 | |||
Restricted cash | 8 | |||
Restricted investments | 176 | |||
Investments in financial assets | 448 | |||
Deferred tax | 9 | |||
Total non-current assets | 4,366 | |||
Current assets | ||||
Inventories | 87 | |||
Trade and other receivables | 96 | |||
Income and mining taxes | 4 | |||
Cash and cash equivalents | 265 | |||
Total current assets | 452 | |||
Total assets | 4,818 | |||
Equity and liabilities | ||||
Share capital and reserves | ||||
Share capital | 3,700 | |||
Other reserves | 135 | |||
Accumulated loss | (346 | ) | ||
Total equity | 3,489 | |||
Non-current liabilities | ||||
Borrowings | 363 | |||
Deferred tax (b) | 339 | |||
Derivative financial instruments | 58 | |||
Provision for environmental rehabilitation | 126 | |||
Provisions for other liabilities and charges | 15 | |||
Total non-current liabilities | 901 | |||
Current liabilities | ||||
Trade and other payables | 228 | |||
Borrowings | 200 | |||
Total current liabilities | 428 | |||
Total equity and liabilities | 4,818 | |||
(a) | The opening balance of assets under construction (included in Property, Plant and Equipment) increased by US$5.8 million. The interest capitalized for 2005 amounted to US$3.4 million. | |
(b) | Deferred tax liability increased by US$1.7 million. |
39 | Subsequent events |
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Table of Contents
40 | Segment report |
F-61
Table of Contents
For the year ended June 30, 2008
Cash | Cash | ||||||||||||||||||||||||||||
operating | operating | Mining | Capital | ||||||||||||||||||||||||||
Revenue | cost | profit | assets | expenditure | Ounces* | Tons milled* | |||||||||||||||||||||||
Figures in million (US Dollar) | t’000 | ||||||||||||||||||||||||||||
Continuing operations | |||||||||||||||||||||||||||||
South Africa | |||||||||||||||||||||||||||||
Underground | |||||||||||||||||||||||||||||
Tshepong | 223 | 125 | 98 | 404 | 27 | 273,119 | 1,649 | ||||||||||||||||||||||
Phakisa | 4 | 2 | 2 | 312 | 40 | 4,212 | 34 | ||||||||||||||||||||||
Bambanani | 128 | 102 | 26 | 98 | 15 | 158,985 | 912 | ||||||||||||||||||||||
Doornkop | 35 | 31 | 4 | 273 | 48 | 44,143 | 494 | ||||||||||||||||||||||
Elandsrand | 133 | 103 | 30 | 304 | 44 | 158,631 | 981 | ||||||||||||||||||||||
Target | 69 | 51 | 18 | 275 | 35 | 85,006 | 686 | ||||||||||||||||||||||
Masimong | 96 | 88 | 8 | 94 | 16 | 117,575 | 892 | ||||||||||||||||||||||
Evander operations | 193 | 127 | 66 | 131 | 33 | 240,037 | 1,447 | ||||||||||||||||||||||
Virginia operations | 204 | 180 | 24 | 107 | 20 | 250,324 | 2,349 | ||||||||||||||||||||||
Other operations | 58 | 52 | 6 | 29 | 6 | 69,574 | 535 | ||||||||||||||||||||||
Surface | |||||||||||||||||||||||||||||
Other operations | 126 | 57 | 69 | 19 | 19 | 148,921 | 9,524 | ||||||||||||||||||||||
Total South Africa | 1,269 | 918 | 351 | 2,046 | 303 | 1,550,527 | 19,503 | ||||||||||||||||||||||
International | |||||||||||||||||||||||||||||
Papua New Guinea | — | — | — | 580 | 197 | — | — | ||||||||||||||||||||||
Total international | — | — | — | 580 | 197 | — | — | ||||||||||||||||||||||
Total continuing operations | 1,269 | 918 | 351 | 2,626 | 500 | 1,550,527 | 19,503 | ||||||||||||||||||||||
Discontinued operations | |||||||||||||||||||||||||||||
Cooke operations | 194 | 123 | 71 | 86 | 22 | 236,242 | 3,906 | ||||||||||||||||||||||
Other operations | 115 | 107 | 8 | 66 | 20 | 162,007 | 2,014 | ||||||||||||||||||||||
Total discontinued operations | 309 | 230 | 79 | 152 | 42 | 398,249 | 5,920 | ||||||||||||||||||||||
Total operations | 1,578 | 1,148 | 430 | 2,778 | 542 | 1,948,776 | 25,423 | ||||||||||||||||||||||
(309 | ) | (230 | ) | 1,932 | |||||||||||||||||||||||||
1,269 | 918 | 4,710 | |||||||||||||||||||||||||||
* | Production statistics are unaudited |
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Table of Contents
For the year ended June 30, 2007
Cash | Cash | ||||||||||||||||||||||||||||
operating | operating | Mining | Capital | ||||||||||||||||||||||||||
Revenue | cost | profit | assets | expenditure | Ounces* | Tons milled* | |||||||||||||||||||||||
Figures in million (US Dollar) | t’000 | ||||||||||||||||||||||||||||
Continuing operations | |||||||||||||||||||||||||||||
South Africa | |||||||||||||||||||||||||||||
Underground | |||||||||||||||||||||||||||||
Tshepong | 203 | 112 | 91 | 442 | 26 | 318,887 | 1,824 | ||||||||||||||||||||||
Phakisa | — | — | — | 303 | 32 | — | — | ||||||||||||||||||||||
Bambanani | 126 | 115 | 11 | 105 | 17 | 197,060 | 1,283 | ||||||||||||||||||||||
Doornkop | 37 | 25 | 12 | 247 | 38 | 57,364 | 597 | ||||||||||||||||||||||
Elandsrand | 124 | 103 | 21 | 299 | 33 | 194,710 | 1,117 | ||||||||||||||||||||||
Target | 91 | 53 | 38 | 287 | 16 | 142,433 | 904 | ||||||||||||||||||||||
Masimong | 95 | 82 | 13 | 79 | 15 | 147,958 | 1,074 | ||||||||||||||||||||||
Evander operations | 151 | 113 | 38 | 143 | 28 | 235,443 | 1,667 | ||||||||||||||||||||||
Virginia operations | 172 | 147 | 25 | 67 | 19 | 266,948 | 2,507 | ||||||||||||||||||||||
Other operations | 65 | 51 | 14 | 28 | 6 | 104,507 | 770 | ||||||||||||||||||||||
Surface | |||||||||||||||||||||||||||||
Other operations | 52 | 35 | 17 | 66 | 17 | 81,761 | 4,557 | ||||||||||||||||||||||
Total South Africa | 1,116 | 836 | 280 | 2,066 | 247 | 1,747,071 | 16,300 | ||||||||||||||||||||||
International | |||||||||||||||||||||||||||||
Papua New Guinea | — | — | — | 320 | 73 | — | — | ||||||||||||||||||||||
Total international | — | — | — | 320 | 73 | — | — | ||||||||||||||||||||||
Total continuing operations | 1,116 | 836 | 280 | 2,386 | 320 | 1,747,071 | 16,300 | ||||||||||||||||||||||
Discontinued operations | |||||||||||||||||||||||||||||
Cooke operations | 154 | 118 | 36 | 72 | 19 | 243,219 | 2,327 | ||||||||||||||||||||||
Other operations | 219 | 180 | 39 | 125 | 42 | 343,908 | 4,213 | ||||||||||||||||||||||
Total discontinued operations | 373 | 298 | 75 | 197 | 61 | 587,127 | 6,540 | ||||||||||||||||||||||
Total operations | 1,489 | 1,134 | 355 | 2,583 | 381 | 2,334,198 | 22,840 | ||||||||||||||||||||||
( 373 | ) | (298 | ) | 2,577 | |||||||||||||||||||||||||
1,116 | 836 | 5,160 | |||||||||||||||||||||||||||
* | Production statistics are unaudited |
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Table of Contents
For the year ended June 30, 2006
Cash | Cash | ||||||||||||||||||||||||||||
Operating | Operating | Mining | Capital | ||||||||||||||||||||||||||
Revenue | cost | profit | assets | expenditure | Ounces* | Tons milled* | |||||||||||||||||||||||
Figures in million (US Dollar) | t’000 | ||||||||||||||||||||||||||||
Continuing operations | |||||||||||||||||||||||||||||
South Africa | |||||||||||||||||||||||||||||
Underground | |||||||||||||||||||||||||||||
Tshepong | 180 | 111 | 69 | 430 | 21 | 335,289 | 1,786 | ||||||||||||||||||||||
Phakisa | — | — | — | 264 | 23 | — | — | ||||||||||||||||||||||
Bambanani | 106 | 101 | 5 | 107 | 14 | 200,739 | 1,402 | ||||||||||||||||||||||
Doornkop | 23 | 24 | (1 | ) | 203 | 26 | 43,593 | 515 | |||||||||||||||||||||
Elandsrand | 90 | 89 | 1 | 264 | 31 | 170,867 | 987 | ||||||||||||||||||||||
Target | 81 | 52 | 29 | 280 | 10 | 150,196 | 813 | ||||||||||||||||||||||
Masimong | 73 | 67 | 6 | 65 | 14 | 136,153 | 1,020 | ||||||||||||||||||||||
Evander operations | 142 | 111 | 31 | 120 | 26 | 274,439 | 1,700 | ||||||||||||||||||||||
Virginia operations | 146 | 135 | 11 | 51 | 14 | 276,285 | 2,368 | ||||||||||||||||||||||
Other operations | 42 | 42 | — | 16 | 4 | 77,652 | 599 | ||||||||||||||||||||||
Surface | |||||||||||||||||||||||||||||
Other operations | 54 | 46 | 8 | 48 | 7 | 104,738 | 3,445 | ||||||||||||||||||||||
Total South Africa | 937 | 778 | 159 | 1,848 | 190 | 1,769,951 | 14,635 | ||||||||||||||||||||||
International | |||||||||||||||||||||||||||||
Papua New Guinea | — | — | — | 213 | 15 | — | — | ||||||||||||||||||||||
Total international | — | — | — | 213 | 15 | — | — | ||||||||||||||||||||||
Total continuing operation | 937 | 778 | 159 | 2,061 | 205 | 1,769,951 | 14,635 | ||||||||||||||||||||||
Discontinued operations | |||||||||||||||||||||||||||||
Cooke operations | 137 | 102 | 35 | 58 | 25 | 256,739 | 2,034 | ||||||||||||||||||||||
Other operations | 190 | 156 | 34 | 157 | 35 | 360,235 | 4,151 | ||||||||||||||||||||||
Total discontinued operations | 327 | 258 | 69 | 215 | 60 | 616,974 | 6,185 | ||||||||||||||||||||||
Total operations | 1,264 | 1,036 | 228 | 2,276 | 265 | 2,386,925 | 20,820 | ||||||||||||||||||||||
Reconciliation of segment data to consolidated financial statements (refer note 41): | |||||||||||||||||||||||||||||
( 327 | ) | (258 | ) | 2,419 | |||||||||||||||||||||||||
937 | 778 | 4,695 | |||||||||||||||||||||||||||
* | Production statistics are unaudited |
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41 | Reconciliation of segment information to consolidated income statements and balance sheet: |
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
The “reconciliation of segment data to consolidated financials” line item in the segment reports are broken down in the following elements, to give a better understanding of the differences between the income statement, balance sheet and the segment report. | ||||||||||||
Revenue from: | ||||||||||||
Discontinued operations | 309 | 373 | 327 | |||||||||
Production costs from: | ||||||||||||
Discontinued operations | 230 | 298 | 258 | |||||||||
US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Reconciliation of cash operating profit to consolidated loss before taxation and discontinued operations: | ||||||||||||
Total segment revenue | 1,578 | 1,489 | 1,264 | |||||||||
Total segment production costs | (1,148 | ) | (1,134 | ) | (1,036 | ) | ||||||
Cash operating profit | 430 | 355 | 228 | |||||||||
Less discontinued operations | (79 | ) | (75 | ) | (69 | ) | ||||||
351 | 280 | 159 | ||||||||||
Cost of sales items other than production costs | (204 | ) | (93 | ) | (131 | ) | ||||||
Amortization and depreciation of mining properties, mine development cost and mine plant facilities | (106 | ) | (102 | ) | (129 | ) | ||||||
Amortization and depreciation of other than mining properties, mine development cost and mine plant facilities | (11 | ) | (4 | ) | (9 | ) | ||||||
Provision/(reversal of provision) for rehabilitation cost | (1 | ) | 6 | 3 | ||||||||
Care and maintenance cost of restructured shafts | (10 | ) | (8 | ) | (22 | ) | ||||||
Employment termination and restructuring costs | (29 | ) | — | 12 | ||||||||
Share-based payments | (6 | ) | (6 | ) | (15 | ) | ||||||
Impairment/(reversal of impairment) of assets | (40 | ) | 19 | 30 | ||||||||
Provision for post retirement benefits | (1 | ) | 2 | (1 | ) | |||||||
147 | 187 | 28 | ||||||||||
Corporate, administration and other expenditure | (31 | ) | (31 | ) | (24 | ) | ||||||
Exploration expenditure | (28 | ) | (27 | ) | (11 | ) | ||||||
Other expenses/income | (15 | ) | 25 | (97 | ) | |||||||
Operating profit | 73 | 154 | (104 | ) | ||||||||
Loss from associate | (11 | ) | (3 | ) | (17 | ) | ||||||
Profit on sale of investment in associate | — | 33 | — | |||||||||
Impairment of investment in associate | (12 | ) | — | — | ||||||||
Profit on sale of investment in subsidiary | — | — | 2 | |||||||||
Fair value of non-derivative financial instruments | 5 | 15 | 14 | |||||||||
Loss on sale of listed investments | (63 | ) | (5 | ) | 45 | |||||||
Investment income | 39 | 27 | 31 | |||||||||
Finance cost | (70 | ) | (65 | ) | (62 | ) | ||||||
(Loss)/profit before taxation and discontinued operations | (39 | ) | 156 | (91 | ) | |||||||
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US Dollar | ||||||||||||
Figures in million | 2008 | 2007 | 2006 | |||||||||
Reconciliation of total segment assets to consolidated assets includes the following: | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment not allocated to a segment | 906 | 1,026 | 987 | |||||||||
Intangible assets | 283 | 328 | 316 | |||||||||
Restricted cash | 10 | 1 | 36 | |||||||||
Restricted investments | 188 | 195 | 184 | |||||||||
Investment in financial assets | 9 | 8 | 137 | |||||||||
Investments in associates | 19 | 1 | 266 | |||||||||
Deferred tax asset | 190 | 216 | 194 | |||||||||
Trade and other receivables | 18 | 8 | 8 | |||||||||
Current assets | ||||||||||||
Inventories | 89 | 105 | 93 | |||||||||
Investment in financial assets | — | 353 | — | |||||||||
Trade and other receivables | 112 | 130 | 103 | |||||||||
Income and mining taxes | 11 | 9 | 4 | |||||||||
Restricted cash | — | 39 | — | |||||||||
Cash and cash equivalents | 53 | 101 | 91 | |||||||||
Non-current assets classified as held-for-sale excluding mining assets | 44 | 57 | — | |||||||||
1,932 | 2,577 | 2,419 | ||||||||||
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Financial Statement Schedule
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U.S. Dollar | ||||||||||||
Year ending 30 June, | ||||||||||||
Figures in million | Notes | 2007 | 2006 | |||||||||
Net loss under U.S. GAAP | (295 | ) | (156 | ) | ||||||||
Reconciling items | 346 | 65 | ||||||||||
Borrowings | d | (10 | ) | (10 | ) | |||||||
Impairment of listed investment | e | 51 | — | |||||||||
Impairment of property, plant and equipment | f | 11 | 40 | |||||||||
Provision for environmental rehabilitation | g | (11 | ) | (6 | ) | |||||||
Transfer of ARM shares to the ARM Trust | h | 300 | 63 | |||||||||
Other items | i | 1 | 1 | |||||||||
Tax | 4 | (23 | ) | |||||||||
Net profit/(loss) under IFRS | 51 | (91 | ) | |||||||||
U.S. Dollar | ||||||||
As at 30 June, | ||||||||
Figures in million | Notes | 2007 | ||||||
Equity under U.S. GAAP | 3,062 | |||||||
Reconciling items | 304 | |||||||
Business combinations — goodwill | a | (14 | ) | |||||
Business combinations — purchase price | b | 300 | ||||||
Business combinations — acquisition of minorities | c | (53 | ) | |||||
Borrowings | d | 17 | ||||||
Impairment of property, plant and equipment | f | 52 | ||||||
Provision for environmental rehabilitation | g | (27 | ) | |||||
Other items | i | 9 | ||||||
Tax | 20 | |||||||
Equity under IFRS | 3,366 | |||||||
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S-3
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S-4