SECURITIES EXCHANGE ACT OF 1934,
(Jurisdiction of incorporation or organization)
Private Bag X1
Melrose Arch, 2076
South Africa
(Address of principal executive offices)
each representing one ordinary share
pursuant to the requirements of the Securities and Exchange Commission.
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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; |
• | decreases 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 and other macroeconomic monetary policies; and |
• | socio-economic instability in South Africa and regionally. |
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FISCAL YEAR ENDED JUNE 30, | ||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||
(in $ thousands, except per share amounts) | ||||||||||||||||||||
Income statement data | ||||||||||||||||||||
Revenues1 | 1,265,200 | 1,240,339 | 781,792 | 675,287 | 590,634 | |||||||||||||||
Operating (loss)/income | (498,116 | ) | (98,714 | ) | (21,580 | ) | 75,017 | 21,978 | ||||||||||||
Equity income of joint venture | — | 7,918 | 52,843 | 13,176 | — | |||||||||||||||
Equity income/(loss) of associate companies | — | 2,020 | (1,233 | ) | (473 | ) | — | |||||||||||||
(Loss)/Income before taxes and minority interests | (717,159 | ) | (74,568 | ) | 97,515 | 103,659 | 29,804 | |||||||||||||
Minority interests | — | 1,281 | (468 | ) | (1,575 | ) | (349 | ) | ||||||||||||
(Loss)/income before cumulative effect of change in accounting principles | (616,467 | ) | (31,403 | ) | 71,792 | 87,716 | 14,830 | |||||||||||||
Cumulative effect of change in accounting principles, net of tax | — | — | 14,770 | — | (5,822 | ) | ||||||||||||||
Net (loss)/income | (616,467 | ) | (31,403 | ) | 86,562 | 87,716 | 9,008 | |||||||||||||
Basic (loss)/earnings per share ($) before cumulative effect of change in accounting principles | (1.70 | ) | (0.12 | ) | 0.40 | 0.57 | 0.15 | |||||||||||||
Basic (loss)/earnings per share ($) | (1.70 | ) | (0.12 | ) | 0.49 | 0.57 | 0.09 | |||||||||||||
Diluted (loss)/earnings per share before cumulative effect of change in accounting principles | (1.70 | ) | (0.12 | ) | 0.39 | 0.53 | 0.14 | |||||||||||||
Diluted (loss)/earnings per share | (1.70 | ) | (0.12 | ) | 0.47 | 0.53 | 0.09 | |||||||||||||
Weighted average number of shares used in the computation of basic earnings per share | 362,499,012 | 254,240,500 | 177,954,245 | 153,509,862 | 102,156,205 | |||||||||||||||
Weighted average number of shares used in the computation of diluted earnings per share | 362,499,012 | 254,240,500 | 182,721,629 | 165,217,088 | 105,504,328 | |||||||||||||||
Cash dividends per share ($)2 | 0.05 | 0.26 | 0.57 | 0.07 | 0.16 | |||||||||||||||
Cash dividends per share (R)2 | 0.30 | 1.90 | 5.50 | 0.75 | 1.20 | |||||||||||||||
Other financial data | ||||||||||||||||||||
Cash cost per ounce of gold ($/oz)3 | 412 | 362 | 253 | 196 | 234 |
1 | Revenues comprise only product (gold) sales. See note 2 to the consolidated financial statements – “Comparatives”. | |
2 | Reflects dividends related to fiscal 2004, 2003 and 2002 that were declared on July 30, 2004, August 1, 2003 and August 2, 2002 respectively. | |
3 | Total cash costs and total cash costs per ounce are non-GAAP measures. Harmony has calculated cash costs per ounce by dividing total cash costs, as determined using the guidance provided by the Gold Institute, by gold ounces sold for all periods presented. The Gold Institute was a non-profit industry association comprised of leading gold producers, refiners, bullion suppliers and manufacturers. This institute has now been incorporated into the National Mining Association. The guidance was first issued in 1996 and was revised in November 1999. Total cash costs, as defined in the guidance provided by the Gold Institute, include mine production costs, transport and refinery costs, applicable general and administrative costs, costs associated with movements in production inventories and ore stockpiles, ongoing environmental rehabilitation costs as well as transfers to and from deferred stripping and costs associated with royalties. Ongoing employee termination costs are included, however, employee termination costs associated with major restructuring and shaft closures are excluded. Total cash costs have been calculated on a consistent basis for all periods presented. Changes in cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and the US dollar. Total cash costs and total cash costs per ounce are non GAAP measures. Total cash costs and total cash costs per ounce should therefore |
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AT JUNE 30, | ||||||||||||||||||||
2005 | 2004 | 2003 | 2002 | 2001 | ||||||||||||||||
(in $ thousands) | ||||||||||||||||||||
Balance sheet data | ||||||||||||||||||||
Cash and cash equivalents | 266,746 | 217,022 | 189,040 | 90,223 | 144,096 | |||||||||||||||
Other current assets | 323,903 | 294,502 | 162,487 | 109,397 | 136,794 | |||||||||||||||
Property, plant and equipment — net | 3,271,019 | 3,636,773 | 1,121,592 | 812,753 | 667,113 | |||||||||||||||
Goodwill | 30,367 | 32,480 | — | — | — | |||||||||||||||
Restricted cash | 7,798 | 9,992 | — | — | — | |||||||||||||||
Investments in associates | — | 19,908 | 63,782 | 42,791 | — | |||||||||||||||
Investment in joint venture | — | — | 272,754 | 102,578 | — | |||||||||||||||
Other long-term assets | 656,844 | 451,216 | 89,183 | 137,399 | 81,822 | |||||||||||||||
Total assets | 4,556,677 | 4,661,823 | 1898,838 | 1,295,141 | 1,029,825 | |||||||||||||||
Current liabilities | 428,755 | 393,764 | 189,668 | 138,677 | 152,886 | |||||||||||||||
Provision for environmental rehabilitation | 120,450 | 125,917 | 62,977 | 63,125 | 53,136 | |||||||||||||||
Provision of social plan | 2,109 | 1,958 | — | — | — | |||||||||||||||
Deferred income and mining taxes | 510,298 | 558,812 | 209,628 | 99,789 | 47,050 | |||||||||||||||
Provision for post-retirement benefits | 13,275 | 1,584 | 1,017 | 737 | 1,002 | |||||||||||||||
Deferred financial liability | 76,720 | 91,513 | 37,228 | 87,226 | 49,374 | |||||||||||||||
Long-term loans | 409,486 | 509,195 | 301,572 | 152,461 | 151,466 | |||||||||||||||
Preference shares | — | — | — | — | 681 | |||||||||||||||
Minority interest | — | — | 18,408 | 331 | ||||||||||||||||
Shareholders’ equity | 2,995,584 | 2,979,080 | 1,078,340 | 573,126 | 573,899 | |||||||||||||||
Total liabilities and shareholders’ equity | 4,556,677 | 4,661,823 | 1898,838 | 1,295,141 | 1,029,825 | |||||||||||||||
not be considered by investors in isolation or as an alternative to operating income/(loss) or net income/(loss) or any other U.S. GAAP measure or an indicator of our performance. In particular depreciation and amortization would be included in a measure of total costs of producing gold under U.S. GAAP, but it is not included in total cash costs under the guidance provided by the Gold Institute. While the Gold Institute has provided a definition for the calculation of total cash costs and total cash costs per ounce, the calculation of cash costs per ounce may vary from company to company and may not be comparable to other similarly titled measures of other companies. However, Harmony believes that cash costs per ounce is a useful indicator to investors and management of a mining company’s performance as it provides (1) an indication of the cash generating capacities of the mining operations, (2) the trends in cash costs as the company’s operations mature, (3) a measure of a company’s performance, by comparison of cash costs per ounce to the spot price of gold and (4) an internal benchmark of performance to allow for comparison against other companies. For further information, seeItem 5. “Operating and Financial Review and Prospects – Costs – Reconciliation of non-GAAP measures.” |
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Fiscal year ended June 30, | Average 1 | Period End | ||||||
2001 | 7.61 | 8.04 | ||||||
2002 | 10.20 | 10.39 | ||||||
2003 | 9.13 | 7.51 | ||||||
2004 | 6.89 | 6.23 | ||||||
2005 | 6.18 | 6.67 |
Month of | High | Low | ||||||
April 2005 | 6.28 | 6.03 | ||||||
May 2005 | 6.75 | 5.96 | ||||||
June 2005 | 6.92 | 6.63 | ||||||
July 2005 | 6.90 | 6.53 | ||||||
August 2005 | 6.55 | 6.34 | ||||||
September 2005 | 6.45 | 6.26 | ||||||
October (through October 21) | 6.65 | 6.44 |
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 industrial uses and for use in jewelry; |
• | international or regional political and economic trends; |
• | the strength of the US dollar (the currency in which gold prices generally are quoted) and of other currencies; |
• | financial market expectations regarding the rate of inflation; |
• | interest rates; |
• | speculative activities; |
• | actual or expected purchases and sales of gold bullion holdings by central banks or other large gold bullion holders or dealers (which are likely to result in a decrease in the price of gold); |
• | forward sales by other gold producers (because Harmony does not normally enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of its future gold production, Harmony is not protected against decreases in the gold price and if the gold price decreases significantly, Harmony runs the risk of reduced revenues in respect of any gold production that is not hedged); and |
• | the production and cost levels for gold in major gold-producing nations, such as South Africa, the rest of Africa and Australia. |
Price per Ounce | ||||||||||||
Year | High | Low | Average | |||||||||
($) | ($) | ($) | ||||||||||
1995 | 396 | 372 | 384 | |||||||||
1996 | 415 | 367 | 388 | |||||||||
1997 | 367 | 283 | 331 | |||||||||
1998 | 313 | 273 | 294 | |||||||||
1999 | 326 | 253 | 279 | |||||||||
2000 | 313 | 264 | 282 | |||||||||
2001 | 293 | 256 | 271 | |||||||||
2002 | 332 | 278 | 309 | |||||||||
2003 | 412 | 322 | 361 | |||||||||
2004 | 427 | 343 | 389 | |||||||||
2005 (through October 21, 2005) | 476 | 411 | 434 |
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• | it will be able to identify appropriate acquisition candidates or negotiate acquisitions on favorable terms; |
• | it will be able to obtain the financing necessary to complete future acquisitions; or |
• | the issuance of Harmony’s ordinary shares or other securities in connection with any future acquisition will not result in a substantial dilution in ownership interests of holders of Harmony’s ordinary shares. |
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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 operating costs. |
• | the availability and timing of necessary environmental and governmental permits; |
• | the timing and cost necessary to construct mining and processing facilities, which can be considerable; |
• | the availability and cost of skilled labor, power, water and other materials; |
• | the accessibility of transportation and other infrastructure, particularly in remote locations; |
• | the availability and cost of smelting and refining arrangements; and |
• | the availability of funds to finance construction and development activities. |
• | difficulties in assimilating the operations of the acquired business; |
• | difficulties in maintaining the financial and strategic focus of Harmony while integrating the acquired business; |
• | problems in implementing uniform standards, controls, procedures and policies; |
• | increasing pressures on existing management to oversee a rapidly expanding company; and |
• | to the extent Harmony acquires mining operations outside South Africa or Australia encountering difficulties relating to operating in countries in which Harmony has not previously operated. |
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• | rockbursts; |
• | seismic events; |
• | underground fires; |
• | cave-ins or falls of ground; |
• | discharges of gases and toxic chemicals; |
• | release of radioactive hazards; |
• | flooding; |
• | accidents; and |
• | other conditions resulting from drilling, blasting and the removal and processing of material from a deep-level mine. |
• | collapse of the open pit walls; |
• | accidents associated with the operation of large open pit mining and rock transportation equipment; and |
• | accidents associated with the preparation and ignition of large scale open pit blasting operations. |
• | accidents associated with operating a waste dump and rock transportation; and |
• | production disruptions due to weather. |
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• | is generally not permitted to export capital from South Africa or to hold foreign currency without the approval of the South African exchange control authorities; |
• | is generally required to repatriate to South Africa profits of foreign operations; and |
• | is limited in its ability to utilize profits of one foreign business to finance operations of a different foreign business. |
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• | to recognize the internationally accepted right of the state of South Africa to exercise full and permanent sovereignty over all the mineral and petroleum resources within South Africa; |
• | to give effect to the principle of the State’s custodianship of the nation’s mineral and petroleum resources; |
• | to promote equitable access to South Africa’s mineral and petroleum resources to all the people of South African and redress the impact of past discrimination; |
• | to substantially and meaningfully expand opportunities for historically disadvantaged persons, including women, to enter the mineral and petroleum industry and to benefit from the exploitation of South Africa’s mineral and petroleum resources; |
• | to promote economic growth and mineral and petroleum resources development in South Africa; |
• | to promote employment and advance the social and economic welfare of all South Africans; |
• | to provide security of tenure in respect of prospecting, exploration, mining and production operations; |
• | to give effect to Section 24 of the South African Constitution by ensuring that South Africa’s mineral and petroleum resources are developed in an orderly and ecologically sustainable manner while promoting justifiable social and economic development; |
• | to follow the principle that mining companies keep and use their mineral rights, with no expropriation and with guaranteed compensation for mineral rights; and |
• | to ensure that holders of mining and production rights contribute towards the socio-economic development of areas in which they are operating. |
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• | the court that pronounced the judgment had jurisdiction to entertain the case according to the principles recognized by South African law with reference to the jurisdiction of foreign courts; |
• | the judgment is final and conclusive (that is, it cannot be altered by the court which pronounced it); |
• | 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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• | quality shafts, which are typically those with a larger reserve base and longer life, which form the core of the group’s production; |
• | leveraged shafts, which are those that supplement production and provide the upside in the event of a positive swing in the Rand gold price; |
• | growth shafts, which comprise the expansion projects established through existing infrastructure, as well as the three new mines we are building in South Africa; and |
• | surface operations, which comprise the Kalgold opencast mine, all previously mined rock, whether waste or reef and any clean-up operations as well as plant and other infrastructure. |
Quality Shafts | Leveraged Shafts | Growth Shafts | Surface Operations | |||
Target | Bambanani | Elandsrand mine and project | Kalgold | |||
Tshepong | Joel | Doornkop mine and project | Freegold | |||
Masimong shaft complex | West Shaft | Phakisa project | Free State | |||
Evander 5 | St. Helena | Randfontein | ||||
Evander 7 | Harmony 2 | Target | ||||
Evander 8 | Merriespruit 1 | |||||
Cooke 1 | Merriespruit 3 | |||||
Cooke 2 | Unisel | |||||
Cooke 3 | Brand 3 | |||||
Orkney 2 | ||||||
Orkney 4 |
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• | Empowered management teams.At each mining site Harmony has established small, multi-disciplinary, focused management teams responsible for planning and implementing the mining operations at the site. Each of these teams is accountable for the results at its particular site and reports directly to Harmony’s Board. |
• | Active strategic management by the Board.Annual operational goals and targets, including cost, volume and grade targets are established in consultation with the Harmony’s executive committee for each mining site. Each management team develops an operational plan to implement the goals and targets for its mine site. Harmony’s executive committee reviews and measures the results at each mining site on a regular basis throughout the year. |
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• | Increased productivity.Gold mining in South Africa is very labor intensive with labor accounting for approximately 50% of Harmony’s costs. To control these costs, Harmony structures its operations to achieve maximum productivity with the goal of having 60% of Harmony’s workforce directly engaged in stoping, or underground excavation, and development rock breaking activities. In addition, Harmony has implemented productivity-based bonuses designed to maximize productivity. |
• | A no-frills, low cost ethic.Harmony has an obsession about lowering its cost base and, to this end, Harmony extensively benchmarks its costing parameters both internally between operations within Harmony and externally against other gold producers. |
• | Systems.Harmony has implemented sophisticated cost accounting systems and strict ore accounting and ore reserve management systems to measure and track costs and ore reserve depletion accurately, so as to enable it to be proactive in its decision making. |
• | to make acquisitions in addition to pursuing greenfield and brownfield developments when it is economical to do so; |
• | to acquire mature assets with turnaround potential; |
• | to acquire assets that fit Harmony’s management model; and |
• | to acquire assets that enhance Harmony’s overall resource base. |
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June 30, 2005 | June 30, 2006 | Total | ||||||||||
Forward exchange contracts & calls sold US$ million | — | 39.5 | 39.5 | |||||||||
Average Strike US$/R | — | 9.54 | 9.54 |
Ø | on-mine exploration which looks for resources within the economic radius of existing mines, and | ||
Ø | new mine exploration, which is the global search for early to advanced stage projects. |
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• | Access to the orebody.In Harmony’s South African underground mines, access to the orebody is by means of shafts sunk from the surface to the lowest economically and practically mineable level. Horizontal development at various intervals of a shaft (known as levels) extends access to the horizon of the reef to be mined. On-reef development then provides specific mining access. In Harmony’s Australian underground mines access to the orebody is by means of declines. Horizontal development at various |
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intervals of the decline extends access to the horizon of the ore to be mined. The declines are advanced on a continuous basis to keep ahead of the mining taking place on the levels above. In Harmony’s open pit mines, access to the orebody is provided by overburden stripping, which removes the covering layers of topsoil or rock, through a combination of drilling, blasting, loading and hauling, as required. | ||
• | Mining the orebody.The process of ore removal starts with drilling and blasting the accessible ore. The blasted faces are then cleaned and the ore is transferred to the transport system. In open pit mines, gold-bearing material may require drilling and blasting and is usually collected by bulldozers or shovels to transfer it onto trucks which transport it to the mill. |
• | Comminution.Comminution is the process of breaking up the ore to expose and liberate the gold and make it available for treatment. Conventionally, this process occurs in multi-stage crushing and milling circuits, which include the use of jaw and gyratory crushers and rod and tube and ball mills. Our more modern milling circuits include semi or fully autogenous milling where the ore itself is used as the grinding medium. Typically, ore must be ground to a minimum size before proceeding to the next stage of treatment. |
• | Treatment.In most of our metallurgical plants, gold is extracted into a leach solution from the host ore by leaching in agitated tanks. Gold is then extracted onto activated carbon from the solution using the CIL, CIP or CIS process. |
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Gold | ||||
(million | ||||
ounces) | ||||
Balance at June 30, 2004 | 62.2 | |||
Re-statements | (3.1 | )* | ||
Mined during fiscal 2005 | (3.1 | )** | ||
Less impact of re-structuring shafts | (3.0 | ) | ||
Added through exploration | 1.1 | |||
Balance at June 30, 2005 | 54.1 |
* | Exclusive of depletion | |
** | Ounces based on mill delivered grades |
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• | the database of measured and indicated resource blocks (per shaft section); |
• | an assumed gold price which, for this ore reserve statement, was taken as R92,000 per kilogram; |
• | planned production rates; |
• | the mine recovery factor (MRF) which is equivalent to the mine call factor multiplied by the plant recovery factor; and |
• | planned cash operating costs (Rand per tonne). |
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Operations | Proven Reserves | Probable Reserves | Total Reserves | |||||||||||||||||||||||||||||||||
Tons | Grade | Gold oz | Tons | Grade | Gold oz | Tons | Grade | Gold oz1 | ||||||||||||||||||||||||||||
(million) | (oz/ton) | (million) | (million) | (oz/ton) | (million) | (million) | (oz/ton) | (million) | ||||||||||||||||||||||||||||
S.A. Underground | ||||||||||||||||||||||||||||||||||||
Elandskraal | 4.72 | 0.251 | 1.18 | 23.59 | 0.275 | 6.48 | 28.31 | 0.271 | 7.66 | |||||||||||||||||||||||||||
Free State | 11.55 | 0.146 | 1.69 | 17.72 | 0.141 | 2.49 | 29.27 | 0.143 | 4.18 | |||||||||||||||||||||||||||
Randfontein | 5.22 | 0.180 | 0.94 | 12.42 | 0.141 | 1.75 | 17.64 | 0.153 | 2.69 | |||||||||||||||||||||||||||
Evander | 8.40 | 0.182 | 1.53 | 20.04 | 0.200 | 4.02 | 28.44 | 0.195 | 5.55 | |||||||||||||||||||||||||||
Evander (below infrastructure) | 44.61 | 0.219 | 9.78 | 44.61 | 0.219 | 9.78 | ||||||||||||||||||||||||||||||
Target | 7.68 | 0.206 | 1.58 | 19.72 | 0.162 | 3.20 | 27.40 | 0.175 | 4.78 | |||||||||||||||||||||||||||
Kalgold (open cast) | 0.30 | 0.078 | 0.02 | 1.62 | 0.067 | 0.11 | 1.91 | 0.069 | 0.13 | |||||||||||||||||||||||||||
Free Gold | 16.94 | 0.204 | 3.45 | 46.49 | 0.211 | 9.81 | 63.42 | 0.209 | 13.26 | |||||||||||||||||||||||||||
Orkney (ARMgold) | 6.30 | 0.186 | 1.17 | 7.56 | 0.136 | 1.03 | 13.87 | 0.159 | 2.20 | |||||||||||||||||||||||||||
Total S.A. Underground | 61.12 | 0.189 | 11.57 | 193.76 | 0.200 | 38.66 | 254.88 | 0.197 | 50.23 | |||||||||||||||||||||||||||
S.A. Surface | ||||||||||||||||||||||||||||||||||||
Target | 0.24 | 0.018 | 0.004 | 0.24 | 0.018 | 0.004 | ||||||||||||||||||||||||||||||
Free State | 24.17 | 0.012 | 0.29 | 2.89 | 0.014 | 0.04 | 27.06 | 0.012 | 0.33 | |||||||||||||||||||||||||||
Randfontein | 2.16 | 0.021 | 0.05 | 0.53 | 0.043 | 0.02 | 2.69 | 0.025 | 0.07 | |||||||||||||||||||||||||||
Kalgold (surface stockpile) | 0.59 | 0.037 | 0.02 | 0.59 | 0.037 | 0.02 | ||||||||||||||||||||||||||||||
Free Gold | 2.73 | 0.012 | 0.03 | 7.00 | 0.022 | 0.16 | 9.73 | 0.020 | 0.19 | |||||||||||||||||||||||||||
Total S.A. Surface | 29.65 | 0.013 | 0.39 | 10.66 | 0.021 | 0.22 | 40.31 | 0.015 | 0.61 | |||||||||||||||||||||||||||
Australian Operations2 | ||||||||||||||||||||||||||||||||||||
Northern Territory | 0.06 | 0.406 | 0.02 | 0.99 | 0.083 | 0.08 | 1.05 | 0.101 | 0.11 | |||||||||||||||||||||||||||
Mt. Magnet | 2.03 | 0.047 | 0.10 | 3.87 | 0.138 | 0.53 | 5.91 | 0.106 | 0.63 | |||||||||||||||||||||||||||
South Kalgoorlie | 2.25 | 0.050 | 0.11 | 2.30 | 0.091 | 0.21 | 4.55 | 0.070 | 0.32 | |||||||||||||||||||||||||||
Total Australian Operations | 4.34 | 0.053 | 0.23 | 7.16 | 0.115 | 0.82 | 11.50 | 0.092 | 1.05 | |||||||||||||||||||||||||||
Papua New Guinea3 | ||||||||||||||||||||||||||||||||||||
Hidden Valley | 3.00 | 0.099 | 0.30 | 19.57 | 0.086 | 1.69 | 22.57 | 0.088 | 1.99 | |||||||||||||||||||||||||||
Hamata | 0.82 | 0.080 | 0.07 | 2.25 | 0.085 | 0.19 | 3.07 | 0.084 | 0.26 | |||||||||||||||||||||||||||
Total Papua New Guinea Operations | 3.82 | 0.095 | 0.37 | 21.82 | 0.086 | 1.88 | 25.64 | 0.087 | 2.25 | |||||||||||||||||||||||||||
TOTAL OPERATIONS | 98.93 | 0.127 | 12.56 | 233.40 | 0.178 | 41.58 | 332.33 | 0.163 | 54.14 |
1 | Gold oz figures are fully inclusive of all mining dilutions and gold losses, and are reported as mill delivered tons and head grades. | |
2 | Includes reserves from underground and surface mining at each of the Australian operations. | |
3 | Includes reserves from underground and surface mining at the Papua New Guinea operations. |
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Ø | Elandskraal |
Ø | the Free State |
Ø | Randfontein |
Ø | Evander |
Ø | Free Gold |
Ø | ARMgold and |
Ø | Avgold |
Ø | the Free State |
Ø | Randfontein |
Ø | Free Gold |
Ø | Kalgold and |
Ø | Target |
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Average | ||||||||
milled for the | ||||||||
Processing | fiscal year | |||||||
Capacity | June 30, 2005 | |||||||
Plant | (tons/month) | (tons/month) | ||||||
Elandsrand Plant | 190,000 | * | 84,877 |
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Average | ||||||||
milled | ||||||||
for the fiscal | ||||||||
Processing | year ended | |||||||
Capacity | June 30, 2005 | |||||||
Plant | (tons/month) | (tons/month) | ||||||
Cooke | 280,000 | 205,030 | ||||||
Doornkop | 220,000 | 207,234 |
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Average | ||||||||
milled | ||||||||
for the fiscal | ||||||||
Processing | year ended | |||||||
Capacity | June 30, 2005 | |||||||
Plant | (tons/month) | (tons/month) | ||||||
Central | 220,000 | 151,017 | ||||||
Saaiplaas | 195,000 | 101,413 |
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Average | ||||||||
milled | ||||||||
for the fiscal | ||||||||
Processing | year ended | |||||||
Capacity | June 30, 2005 | |||||||
Plant | (tons/month) | (tons/month) | ||||||
Kinross-Winkelhaak | 148,000 | 143,300 |
37
Average | ||||||||
milled | ||||||||
for the fiscal | ||||||||
Processing | year ended | |||||||
Capacity | June 30, 2005 | |||||||
Plant | (tons/month) | (tons/month) | ||||||
CIL | 150,000 | 154,320 | ||||||
Heap Leach | — | * |
* | Active use of heap leaching was discontinued in July 2001; however, Harmony expects to apply leaching solution occasionally in the future to recover any available gold. |
38
39
40
Average | ||||||||
milled | ||||||||
for the fiscal | ||||||||
Processing | year ended | |||||||
Capacity | June 30, 2005 | |||||||
Plant | (tons/month) | (tons/month) | ||||||
FS 1 | 440,000 | 413,366 | ||||||
Joel | 53,000 | 55,116 | ||||||
St. Helena | 110,200 | 80,469 |
41
42
Average | ||||||||
milled | ||||||||
For the fiscal | ||||||||
Processing | year ended | |||||||
Capacity | June 30, 2005 | |||||||
Plant | (tons/month) | (tons/month) | ||||||
Target Plant | 115,000 | 112,436 |
43
Fiscal year ended June 30, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Production | ||||||||||||
Tons (’000) | 7,464 | 7,756 | 7,730 | |||||||||
Recovered grade (ounces/ton) | 0.185 | 0.173 | 0.172 | |||||||||
Gold sold (ounces) | 1,378,167 | 1,343,713 | 1,332,180 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 588,360 | 523,305 | 438,156 | |||||||||
Cash cost (’000) | 491,369 | 428,238 | 274,468 | |||||||||
Cash profit (’000) | 96,991 | 95,067 | 163,688 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 357 | 319 | 206 | |||||||||
Capex(‘000) ($) | 27,028 | 26,936 | 18,368 |
Fiscal year ended June 30, | ||||||||||||
Target | 2005 | 2004* | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 1,178 | 228 | — | |||||||||
Recovered grade (ounces/ton) | 0.178 | 0.234 | — | |||||||||
Gold sold (ounces) | 209,847 | 53,434 | — |
44
Fiscal year ended June 30, | ||||||||||||
Target | 2005 | 2004* | 2003 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 89,233 | 19,772 | — | |||||||||
Cash cost (’000) | 57,273 | 11,514 | — | |||||||||
Cash profit (’000) | 31,960 | 8,258 | — | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 273 | 215 | — | |||||||||
Capex(‘000) ($) | 8,699 | 1,175 | — |
* | The fiscal 2004 operating and production results for Target comprise of the two months ended June 30, 2004. |
Fiscal year ended June 30, | ||||||||||||
Tshepong | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 1,700 | 1,814 | 1,834 | |||||||||
Recovered grade (ounces/ton) | 0.224 | 0.215 | 0.232 | |||||||||
Gold sold (ounces) | 380,695 | 390,747 | 424,766 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 162,958 | 158,161 | 139,552 | |||||||||
Cash cost (’000) | 117,592 | 103,321 | 67,966 | |||||||||
Cash profit (’000) | 45,366 | 54,840 | 71,586 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 309 | 264 | 160 | |||||||||
Capex(‘000) ($) | 6,845 | 8,731 | 2,228 |
45
Fiscal year ended June 30, | ||||||||||||
Masimong shaft complex | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 1,046 | 1,378 | 1,266 | |||||||||
Recovered grade (ounces/ton) | 0.153 | 0.170 | 0.142 | |||||||||
Gold sold (ounces) | 159,981 | 234,307 | 179,632 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 68,342 | 90,164 | 60,857 | |||||||||
Cash cost (’000) | 72,282 | 76,269 | 43,898 | |||||||||
Cash profit (’000) | (3,940 | ) | 13,895 | 16,959 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 452 | 326 | 244 | |||||||||
Capex(‘000) ($) | 3,736 | 4,120 | 7,169 |
46
Fiscal year ended June 30, | ||||||||||||
Evander 2 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 357 | 491 | 522 | |||||||||
Recovered grade (ounces/ton) | 0.137 | 0.176 | 0.170 | |||||||||
Gold sold (ounces) | 48,764 | 86,172 | 88,575 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 20,695 | 33,216 | 28,881 | |||||||||
Cash cost (’000) | 30,967 | 32,428 | 20,373 | |||||||||
Cash profit (’000) | (10,272 | ) | 788 | 8,508 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 635 | 376 | 230 | |||||||||
Capex(‘000) ($) | 15 | 619 | 459 |
47
Fiscal year ended June 30, | ||||||||||||
Evander 5 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 245 | 223 | 227 | |||||||||
Recovered grade (ounces/ton) | 0.192 | 0.216 | 0.219 | |||||||||
Gold sold (ounces) | 47,093 | 48,103 | 49,769 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 20,078 | 18,559 | 16,293 | |||||||||
Cash cost (’000) | 19,353 | 16,095 | 11,356 | |||||||||
Cash profit (’000) | 725 | 2,464 | 4,937 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 411 | 335 | 228 | |||||||||
Capex(‘000) ($) | 2 | 498 | 259 |
48
Fiscal year ended June 30, | ||||||||||||
Evander 7 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 541 | 577 | 566 | |||||||||
Recovered grade (ounces/ton) | 0.240 | 0.160 | 0.188 | |||||||||
Gold sold (ounces) | 130,009 | 92,505 | 106,419 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 55,502 | 35,566 | 34,644 | |||||||||
Cash cost (’000) | 36,872 | 32,968 | 22,518 | |||||||||
Cash profit (’000) | 18,630 | 2,598 | 12,126 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 284 | 356 | 212 | |||||||||
Capex(‘000) ($) | 3,871 | 5,034 | 4,044 |
49
Fiscal year ended June 30, | ||||||||||||
Evander 8 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 734 | 692 | 676 | |||||||||
Recovered grade (ounces/ton) | 0.207 | 0.158 | 0.139 | |||||||||
Gold sold (ounces) | 151,936 | 109,513 | 94,008 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 64,912 | 41,945 | 30,123 | |||||||||
Cash cost (’000) | 46,245 | 39,708 | 27,293 | |||||||||
Cash profit (’000) | 18,667 | 2,237 | 2,830 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 304 | 363 | 290 | |||||||||
Capex(‘000) ($) | 3,472 | 5,091 | 3,977 |
50
Fiscal year ended June 30, | ||||||||||||
Cooke 1 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 520 | 605 | 741 | |||||||||
Recovered grade (ounces/ton) | 0.152 | 0.172 | 0.163 | |||||||||
Gold sold (ounces) | 79,101 | 104,168 | 120,819 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 33,888 | 39,891 | 39,722 | |||||||||
Cash cost (’000) | 33,660 | 31,632 | 23,017 | |||||||||
Cash profit (’000) | 228 | 8,259 | 16,705 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 426 | 304 | 191 | |||||||||
Capex(‘000) ($) | 266 | 825 | — |
51
Fiscal year ended June 30, | ||||||||||||
Cooke 2 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 403 | 749 | 790 | |||||||||
Recovered grade (ounces/ton) | 0.135 | 0.121 | 0.148 | |||||||||
Gold sold (ounces) | 54,441 | 90,761 | 116,639 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 23,274 | 34,748 | 38,255 | |||||||||
Cash cost (’000) | 26,560 | 34,237 | 22,281 | |||||||||
Cash profit (’000) | (3,286 | ) | 511 | 15,974 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 488 | 377 | 191 | |||||||||
Capex(‘000) ($) | 122 | 789 | — |
52
Fiscal year ended June 30, | ||||||||||||
Cooke 3 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 740 | 999 | 1,108 | |||||||||
Recovered grade (ounces/ton) | 0.157 | 0.134 | 0.137 | |||||||||
Gold sold (ounces) | 116,300 | 134,003 | 151,553 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 49,478 | 51,283 | 49,829 | |||||||||
Cash cost (’000) | 50,565 | 50,066 | 35,766 | |||||||||
Cash profit (’000) | (1,087 | ) | 1,217 | 14,063 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 435 | 374 | 236 | |||||||||
Capex(‘000) ($) | — | 54 | 232 |
53
Fiscal year ended June 30, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Production | ||||||||||||
Tons (’000) | 5,990 | 9,238 | 7,550 | |||||||||
Recovered grade (ounces/ton) | 0.140 | 0.140 | 0.146 | |||||||||
Gold sold (ounces) | 841,280 | 1,295,315 | 1,101,204 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 358,139 | 491,690 | 367,665 | |||||||||
Cash cost (’000) | 429,619 | 518,392 | 278,619 | |||||||||
Cash profit (’000) | (71,480 | ) | (26,702 | ) | 89,046 | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 511 | 400 | 253 | |||||||||
Capex(‘000) ($) | 6,144 | 18,824 | 15,664 |
Fiscal year ended June 30, | ||||||||||||
Bambanani | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 1,090 | 1,606 | 1,652 | |||||||||
Recovered grade (ounces/ton) | 0.181 | 0.181 | 0.226 | |||||||||
Gold sold (ounces) | 197,535 | 290,210 | 373,258 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 84,165 | 110,244 | 123,362 | |||||||||
Cash cost (’000) | 91,573 | 102,703 | 73,938 | |||||||||
Cash profit (’000) | (7,408 | ) | 7,541 | 49,424 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 464 | 354 | 198 | |||||||||
Capex(‘000) ($) | 3,893 | 7,500 | 2,660 |
54
Fiscal year ended June 30, | ||||||||||||
Evander 9 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 31 | 202 | 153 | |||||||||
Recovered grade (ounces/ton) | 0.083 | 0.116 | 0.113 | |||||||||
Gold sold (ounces) | 2,573 | 23,440 | 17,297 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 1,078 | 9,079 | 5,698 | |||||||||
Cash cost (’000) | 3,005 | 9,042 | 4,660 | |||||||||
Cash profit (’000) | (1,927 | ) | 37 | 1,038 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 1,168 | 386 | 269 | |||||||||
Capex(‘000) ($) | — | — | — |
55
Fiscal year ended June 30, | ||||||||||||
Joel | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 498 | 565 | 520 | |||||||||
Recovered grade (ounces/ton) | 0.129 | 0.122 | 0.119 | |||||||||
Gold sold (ounces) | 64,464 | 68,694 | 61,652 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 27,282 | 25,526 | 20,148 | |||||||||
Cash cost (’000) | 31,408 | 26,162 | 17,584 | |||||||||
Cash profit (’000) | (4,126 | ) | (636 | ) | 2,564 | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 487 | 381 | 285 | |||||||||
Capex(‘000) ($) | 165 | — | — |
56
Fiscal year ended June 30, | ||||||||||||
Kudu/Sable | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 194 | 275 | 210 | |||||||||
Recovered grade (ounces/ton) | 0.130 | 0.145 | 0.161 | |||||||||
Gold sold (ounces) | 25,175 | 39,848 | 33,814 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 10,764 | 14,612 | 11,026 | |||||||||
Cash cost (’000) | 18,885 | 16,073 | 8,912 | |||||||||
Cash profit (’000) | (8,121 | ) | (1,461 | ) | 2,114 | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 750 | 403 | 264 | |||||||||
Capex(‘000) ($) | — | — | 194 |
57
Fiscal year ended June 30, | ||||||||||||
West shaft | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 176 | 200 | 154 | |||||||||
Recovered grade (ounces/ton) | 0.160 | 0.180 | 0.169 | |||||||||
Gold sold (ounces) | 28,165 | 36,071 | 26,034 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 12,049 | 14,039 | 8,626 | |||||||||
Cash cost (’000) | 13,014 | 11,616 | 6,112 | |||||||||
Cash profit (’000) | (965 | ) | 2,423 | 2,514 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 462 | 322 | 235 | |||||||||
Capex(‘000) ($) | — | 1 | 205 |
58
Fiscal year ended June 30, | ||||||||||||
Nyala | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 198 | 112 | — | |||||||||
Recovered grade (ounces/ton) | 0.119 | 0.108 | — | |||||||||
Gold sold (ounces) | 23,503 | 12,073 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 9,897 | 4,645 | — | |||||||||
Cash cost (’000) | 17,587 | 4,063 | — | |||||||||
Cash profit (’000) | (7,690 | ) | 582 | — | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 748 | 337 | — | |||||||||
Capex(‘000) ($) | 1,440 | 7,276 | — |
Fiscal year ended June 30, | ||||||||||||
Eland | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 175 | 347 | 402 | |||||||||
Recovered grade (ounces/ton) | 0.153 | 0.146 | 0.238 | |||||||||
Gold sold (ounces) | 26,782 | 50,697 | 95,670 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 11,436 | 17,447 | 31,664 | |||||||||
Cash cost (’000) | 13,404 | 24,501 | 19,016 | |||||||||
Cash profit (’000) | (1,968 | ) | (7,054 | ) | 12,648 | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 500 | 483 | 199 | |||||||||
Capex(‘000) ($) | — | 274 | 164 |
59
Fiscal year ended June 30, | ||||||||||||
Deelkraal | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 1 | 522 | 598 | |||||||||
Recovered grade (ounces/ton) | 2.284 | 0.131 | 0.138 | |||||||||
Gold sold (ounces) | 2,284 | 68,127 | 82,751 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 958 | 26,206 | 27,520 | |||||||||
Cash cost (’000) | 714 | 37,796 | 26,077 | |||||||||
Cash profit (’000) | 244 | (11,590 | ) | 1,443 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 313 | 555 | 315 | |||||||||
Capex(‘000) ($) | — | 1,305 | 2,070 |
60
Fiscal year ended June 30, | ||||||||||||
St. Helena | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 245 | 507 | 406 | |||||||||
Recovered grade (ounces/ton) | 0.122 | 0.140 | 0.127 | |||||||||
Gold sold (ounces) | 29,965 | 71,027 | 51,370 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 12,660 | 25,124 | 16,100 | |||||||||
Cash cost (’000) | 25,092 | 31,402 | 20,140 | |||||||||
Cash profit (’000) | (12,432 | ) | (6,278 | ) | (4,040 | ) | ||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 837 | 442 | 392 | |||||||||
Capex(‘000) ($) | — | — | 8,240 |
61
Fiscal year ended June 30, | ||||||||||||
Harmony 2 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 559 | 643 | 586 | |||||||||
Recovered grade (ounces/ton) | 0.123 | 0.136 | 0.118 | |||||||||
Gold sold (ounces) | 68,547 | 87,472 | 69,174 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 29,295 | 33,541 | 23,816 | |||||||||
Cash cost (’000) | 33,576 | 32,216 | 15,765 | |||||||||
Cash profit (’000) | (4,281 | ) | 1,325 | 8,051 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 490 | 368 | 228 | |||||||||
Capex(‘000) ($) | — | — | 46 |
62
Fiscal year ended June 30, | ||||||||||||
Harmony 4 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | — | 3 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.096 | |||||||||
Gold sold (ounces) | — | — | 289 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | — | 105 | |||||||||
Cash cost (’000) | — | — | 496 | |||||||||
Cash profit (’000) | — | — | (391 | ) | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | — | 1,716 | |||||||||
Capex(‘000) ($) | — | — | — |
Fiscal year ended June 30, | ||||||||||||
Merriespruit 1 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 414 | 477 | 438 | |||||||||
Recovered grade (ounces/ton) | 0.110 | 0.124 | 0.115 | |||||||||
Gold sold (ounces) | 45,559 | 59,062 | 50,545 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 19,428 | 22,681 | 17,191 | |||||||||
Cash cost (’000) | 24,552 | 24,235 | 12,340 | |||||||||
Cash profit (’000) | (5,124 | ) | (1,554 | ) | 4,851 | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 539 | 410 | 244 | |||||||||
Capex(‘000) ($) | — | 315 | 221 |
63
Fiscal year ended June 30, | ||||||||||||
Merriespruit 3 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 548 | 743 | 718 | |||||||||
Recovered grade (ounces/ton) | 0.100 | 0.104 | 0.091 | |||||||||
Gold sold (ounces) | 54,690 | 76,956 | 65,189 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 23,325 | 29,570 | 22,327 | |||||||||
Cash cost (’000) | 25,447 | 32,507 | 18,696 | |||||||||
Cash profit (’000) | (2,122 | ) | (2,937 | ) | 3,631 | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 465 | 422 | 287 | |||||||||
Capex(‘000) ($) | 628 | — | — |
64
Fiscal year ended June 30, | ||||||||||||
Unisel | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 494 | 677 | 778 | |||||||||
Recovered grade (ounces/ton) | 0.132 | 0.134 | 0.097 | |||||||||
Gold sold (ounces) | 65,011 | 91,020 | 75,439 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 27,798 | 35,014 | 26,102 | |||||||||
Cash cost (’000) | 35,202 | 37,105 | 21,362 | |||||||||
Cash profit (’000) | (7,404 | ) | (2,091 | ) | 4,740 | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 541 | 408 | 283 | |||||||||
Capex(‘000) ($) | — | 1,329 | 1,825 |
65
Fiscal year ended June 30, | ||||||||||||
Brand 3 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 448 | 531 | 422 | |||||||||
Recovered grade (ounces/ton) | 0.103 | 0.112 | 0.111 | |||||||||
Gold sold (ounces) | 46,299 | 59,558 | 46,736 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 19,807 | 22,985 | 16,044 | |||||||||
Cash cost (’000) | 24,150 | 24,015 | 14,009 | |||||||||
Cash profit (’000) | (4,343 | ) | (1,030 | ) | 2,035 | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 522 | 403 | 300 | |||||||||
Capex(‘000) ($) | — | — | — |
66
Fiscal year ended June 30, | ||||||||||||
Brand 5 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 153 | 507 | |||||||||
Recovered grade (ounces/ton) | 0 | 0.126 | 0.102 | |||||||||
Gold sold (ounces) | 33 | 19,262 | 51,696 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 8 | 7,442 | 17,832 | |||||||||
Cash cost (’000) | 2,120 | 13,331 | 19,261 | |||||||||
Cash profit (’000) | (2,112 | ) | (5,889 | ) | (1,429 | ) | ||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 64,242 | 692 | 373 | |||||||||
Capex(‘000) ($) | — | — | 39 |
Fiscal year ended June 30, | ||||||||||||
Virginia | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | — | 3 | |||||||||
Recovered grade (ounces/ton) | — | — | 0.097 | |||||||||
Gold sold (ounces) | — | — | 290 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | — | 104 | |||||||||
Cash cost (’000) | — | — | 251 | |||||||||
Cash profit (’000) | — | — | (147 | ) | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | — | 866 | |||||||||
Capex(‘000) ($) | — | — | — |
67
Fiscal year ended June 30, | ||||||||||||
Orkney 1 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 3 | — | |||||||||
Recovered grade (ounces/ton) | — | 0.107 | — | |||||||||
Gold sold (ounces) | — | 322 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 123 | — | |||||||||
Cash cost (’000) | — | 194 | — | |||||||||
Cash profit (’000) | — | (71 | ) | — | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 602 | — | |||||||||
Capex(‘000) ($) | — | — | — |
Fiscal year ended June 30, | ||||||||||||
Orkney 2 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 413 | 387 | — | |||||||||
Recovered grade (ounces/ton) | 0.190 | 0.210 | — | |||||||||
Gold sold (ounces) | 78,449 | 81,434 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 33,279 | 31,435 | — | |||||||||
Cash cost (’000) | 32,938 | 26,892 | — | |||||||||
Cash profit (’000) | 341 | 4,543 | — | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 420 | 330 | — | |||||||||
Capex(‘000) ($) | — | — | — |
68
Fiscal year ended June 30, | ||||||||||||
Orkney 3 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 137 | — | |||||||||
Recovered grade (ounces/ton) | — | 0.083 | — | |||||||||
Gold sold (ounces) | — | 11,413 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 4,425 | — | |||||||||
Cash cost (’000) | — | 6,440 | — | |||||||||
Cash profit (’000) | — | (2,015 | ) | — | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 564 | — | |||||||||
Capex(‘000) ($) | — | 464 | — |
Fiscal year ended June 30, | ||||||||||||
Orkney 4 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 455 | 401 | — | |||||||||
Recovered grade (ounces/ton) | 0.169 | 0.169 | — | |||||||||
Gold sold (ounces) | 76,971 | 67,931 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 32,720 | 26,269 | — | |||||||||
Cash cost (’000) | 30,517 | 20,243 | — | |||||||||
Cash profit (’000) | 2,203 | 6,026 | — | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 396 | 298 | — | |||||||||
Capex(‘000) ($) | 14 | 160 | — |
69
Fiscal year ended June 30, | ||||||||||||
Orkney 6 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 157 | — | |||||||||
Recovered grade (ounces/ton) | — | 0.070 | — | |||||||||
Gold sold (ounces) | — | 11,060 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 4,304 | — | |||||||||
Cash cost (’000) | — | 5,378 | — | |||||||||
Cash profit (’000) | — | (1,074 | ) | — | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 486 | — | |||||||||
Capex(‘000) ($) | — | — | — |
Fiscal year ended June 30, | ||||||||||||
Orkney 7 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 28 | — | |||||||||
Recovered grade (ounces/ton) | — | 0.162 | — | |||||||||
Gold sold (ounces) | — | 4,533 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 1,760 | — | |||||||||
Cash cost (’000) | — | 1,970 | — | |||||||||
Cash profit (’000) | — | (210 | ) | — | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 435 | — | |||||||||
Capex(‘000) ($) | — | — | — |
70
Fiscal year ended June 30, | ||||||||||||
Saaiplaas 3 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 30 | 254 | — | |||||||||
Recovered grade (ounces/ton) | 0.085 | 0.105 | — | |||||||||
Gold sold (ounces) | 2,541 | 26,783 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 1,026 | 10,331 | — | |||||||||
Cash cost (’000) | 4,831 | 13,485 | — | |||||||||
Cash profit (’000) | (3,805 | ) | (3,154 | ) | — | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 1,901 | 503 | — | |||||||||
Capex | 4 | 200 | — |
Fiscal year ended June 30, | ||||||||||||
Welkom 1 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 21 | 159 | — | |||||||||
Recovered grade (ounces/ton) | 0.130 | 0.121 | — | |||||||||
Gold sold (ounces) | 2,734 | 19,226 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 1,164 | 7,415 | — | |||||||||
Cash cost (’000) | 1,604 | 9,939 | — | |||||||||
Cash profit (’000) | (440 | ) | (2,524 | ) | — | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 587 | 517 | — | |||||||||
Capex(‘000) ($) | — | — | — |
71
Fiscal year ended June 30, | ||||||||||||
Welkom 2 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 12 | — | |||||||||
Recovered grade (ounces/ton) | — | 0.113 | — | |||||||||
Gold sold (ounces) | — | 1,350 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 525 | — | |||||||||
Cash cost (’000) | — | 547 | — | |||||||||
Cash profit (’000) | — | (22 | ) | — | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 405 | — | |||||||||
Capex(‘000) ($) | — | — | — |
Fiscal year ended June 30, | ||||||||||||
Welkom 3 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 15 | — | |||||||||
Recovered grade (ounces/ton) | — | 0.101 | — | |||||||||
Gold sold (ounces) | — | 1,511 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 592 | — | |||||||||
Cash cost (’000) | — | 581 | — | |||||||||
Cash profit (’000) | — | 11 | — | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 385 | — | |||||||||
Capex(‘000) ($) | — | — | — |
Fiscal year ended June 30, | ||||||||||||
Welkom 4 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 13 | — | |||||||||
Recovered grade (ounces/ton) | — | 0.302 | — | |||||||||
Gold sold (ounces) | — | 3,922 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 1,531 | — | |||||||||
Cash cost (’000) | — | 1,496 | — | |||||||||
Cash profit (’000) | — | 35 | — | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 381 | — | |||||||||
Capex(‘000) ($) | — | — | — |
72
Fiscal year ended June 30, | ||||||||||||
Welkom 6 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 24 | — | |||||||||
Recovered grade (ounces/ton) | — | 0.100 | — | |||||||||
Gold sold (ounces) | — | 2,411 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 935 | — | |||||||||
Cash cost (’000) | — | 894 | — | |||||||||
Cash profit (’000) | — | 41 | — | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 371 | — | |||||||||
Capex(‘000) ($) | — | — | — |
Fiscal year ended June 30, | ||||||||||||
Welkom 7 | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 88 | — | |||||||||
Recovered grade (ounces/ton) | — | 0.113 | — | |||||||||
Gold sold (ounces) | — | 9,902 | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 3,890 | — | |||||||||
Cash cost (’000) | — | 3,566 | — | |||||||||
Cash profit (’000) | — | 324 | — | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 360 | — | |||||||||
Capex(‘000) ($) | — | — | — |
Fiscal year ended June 30, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Production | ||||||||||||
Tons (’000) | 1,545 | 2,004 | 1,991 | |||||||||
Recovered grade (ounces/ton) | 0.168 | 0.158 | 0.166 | |||||||||
Gold sold (ounces) | 260,066 | 315,815 | 330,431 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 111,055 | 121,744 | 108,476 | |||||||||
Cash cost (’000) | 126,121 | 123,706 | 84,990 | |||||||||
Cash profit (’000) | (15,066 | ) | (1,962 | ) | 23,486 | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 485 | 392 | 257 | |||||||||
Capex(‘000) ($) | 59,509 | 47,218 | 14,392 |
73
Fiscal year ended June 30, | ||||||||||||
Elandsrand | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 1,019 | 1,437 | 1,468 | |||||||||
Recovered grade (ounces/ton) | 0.204 | 0.174 | 0.180 | |||||||||
Gold sold (ounces) | 207,371 | 250,581 | 264,525 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 88,577 | 96,831 | 86,926 | |||||||||
Cash cost (’000) | 99,150 | 100,657 | 69,864 | |||||||||
Cash profit (’000) | (10,573 | ) | (3,826 | ) | 17,062 | |||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 478 | 402 | 264 | |||||||||
Capex(‘000) ($) | 15,530 | 16,057 | 12,757 |
74
Fiscal year ended June 30, | ||||||||||||
Doornkop | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 526 | 567 | 523 | |||||||||
Recovered grade (ounces/ton) | 0.100 | 0.115 | 0.126 | |||||||||
Gold sold (ounces) | 52,695 | 65,234 | 65,906 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 22,478 | 24,913 | 21,550 | |||||||||
Cash cost (’000) | 26,971 | 23,049 | 15,126 | |||||||||
Cash profit (’000) | (4,493 | ) | 1,864 | 6,424 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 512 | 353 | 230 | |||||||||
Capex(‘000) ($) | 25,223 | 14,316 | 1,635 |
75
Fiscal year ended June 30, | ||||||||||||
Phakisa | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | — | — | |||||||||
Recovered grade (ounces/ton) | — | — | — | |||||||||
Gold sold (ounces) | — | — | — | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | — | — | |||||||||
Cash cost (’000) | — | — | — | |||||||||
Cash profit (’000) | — | — | — | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | — | — | |||||||||
Capex(‘000) ($) | 18,756 | 16,845 | — |
76
Fiscal year ended June 30, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Production | ||||||||||||
Tons (’000) | 6,528 | 11,026 | 11,146 | |||||||||
Recovered grade (ounces/ton) | 0.029 | 0.019 | 0.022 | |||||||||
Gold sold (ounces) | 188,904 | 208,744 | 248,075 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 80,222 | 80,321 | 81,546 | |||||||||
Cash cost (’000) | 84,892 | 71,498 | 55,636 | |||||||||
Cash profit (’000) | (4,670 | ) | 8,823 | 25,910 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 449 | 343 | 224 | |||||||||
Capex(‘000) ($) | 5,675 | 14,099 | 11,691 |
Fiscal year ended June 30, | ||||||||||||
Kalgold | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 1,855 | 1,530 | 1,195 | |||||||||
Recovered grade (ounces/ton) | 0.058 | 0.054 | 0.062 | |||||||||
Gold sold (ounces) | 108,195 | 82,756 | 74,590 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 46,331 | 31,532 | 24,536 | |||||||||
Cash cost (’000) | 51,554 | 28,511 | 16,552 | |||||||||
Cash profit (’000) | (5,223 | ) | 3,021 | 7,984 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 476 | 345 | 222 | |||||||||
Capex(‘000) ($) | (4,145 | ) | 4,405 | 4,265 |
77
Fiscal year ended June 30, | ||||||||||||
Elandsrand | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 451 | 1,228 | |||||||||
Recovered grade (ounces/ton) | — | 0.012 | 0.016 | |||||||||
Gold sold (ounces) | — | 5,301 | 19,323 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 2,047 | 6,442 | |||||||||
Cash cost (’000) | — | 2,640 | 4,518 | |||||||||
Cash profit (’000) | — | (593 | ) | 1,924 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 498 | 234 | |||||||||
Capex(‘000) ($) | 7 | 294 | 161 |
78
Fiscal year ended June 30, | ||||||||||||
Evander | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | — | 101 | 201 | |||||||||
Recovered grade (ounces/ton) | — | 0.019 | 0.020 | |||||||||
Gold sold (ounces) | — | 1,961 | 4,116 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 756 | 1,278 | |||||||||
Cash cost (’000) | — | 496 | 913 | |||||||||
Cash profit (’000) | — | 260 | 365 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 253 | 221 | |||||||||
Capex(‘000) ($) | — | 2,367 | 1,181 |
Fiscal year ended June 30, | ||||||||||||
Freegold | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 1,361 | 4,148 | 5,146 | |||||||||
Recovered grade (ounces/ton) | 0.027 | 0.018 | 0.017 | |||||||||
Gold sold (ounces) | 36,420 | 73,122 | 88,864 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 15,407 | 28,507 | 28,924 | |||||||||
Cash cost (’000) | 15,436 | 23,972 | 19,108 | |||||||||
Cash profit (’000) | (29 | ) | 4,535 | 9,816 | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 424 | 328 | 215 | |||||||||
Capex(‘000) ($) | 314 | 21 | 25 |
79
Fiscal year ended June 30, | ||||||||||||
Free State | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 467 | 2,368 | 1,164 | |||||||||
Recovered grade (ounces/ton) | 0.020 | 0.011 | 0.021 | |||||||||
Gold sold (ounces) | 9,542 | 26,732 | 24,209 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 3,720 | 10,215 | 8,067 | |||||||||
Cash cost (’000) | 3,318 | 9,289 | 6,550 | |||||||||
Cash profit (’000) | 402 | 926 | 1,517 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 348 | 347 | 271 | |||||||||
Capex(‘000) ($) | 1,589 | 2,501 | 4,364 |
80
Fiscal year ended June 30, | ||||||||||||
Randfontein | 2005 | 2004 | 2003 | |||||||||
Production | ||||||||||||
Tons (’000) | 2,757 | 2,428 | 2,212 | |||||||||
Recovered grade (ounces/ton) | 0.012 | 0.008 | 0.017 | |||||||||
Gold sold (ounces) | 33,397 | 18,872 | 36,973 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 14,185 | 7,264 | 12,299 | |||||||||
Cash cost (’000) | 14,117 | 6,590 | 7,995 | |||||||||
Cash profit (’000) | 68 | 674 | 4,304 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 423 | 349 | 216 | |||||||||
Capex(‘000) ($) | 6,120 | 4,511 | 1,695 |
81
Fiscal year ended June 30, | |||||||||||||
Target | 2005 | 2004 | 2003 | ||||||||||
Production | |||||||||||||
Tons (’000) | 88 | — | — | ||||||||||
Recovered grade (ounces/ton) | 0.015 | — | — | ||||||||||
Gold sold (ounces) | 1,350 | — | — | ||||||||||
Results of operations ($) | |||||||||||||
Product sales (’000) | 579 | — | — | ||||||||||
Cash cost (’000) | 467 | — | — | ||||||||||
Cash profit (’000) | 112 | — | — | ||||||||||
Cash costs | |||||||||||||
Per ounce of gold ($) | 346 | — | — | ||||||||||
Capex(‘000) ($) | 1,790 | — | — |
82
Fiscal year ended June 30, | ||||||||||||
2005 | 20041 | 20032 | ||||||||||
Production | ||||||||||||
Tons (’000) | 4,139 | 5,227 | 7,883 | |||||||||
Recovered grade (ounces/ton) | 0.072 | 0.065 | 0.065 | |||||||||
Gold sold (ounces) | 296,848 | 338,288 | 509,654 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 125,669 | 131,435 | 165,351 | |||||||||
Cash cost (’000) | 100,176 | 110,475 | 138,808 | |||||||||
Cash profit (’000) | 25,493 | 21,960 | 31,246 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 337 | 327 | 272 | |||||||||
Capex(‘000) ($) | 40,042 | 30,502 | 157,100 |
1 | Includes gold sales from Abelle’s Gidgee Operations for 5 months until November 2003. | |
2 | Includes gold sales from Abelle’s Gidgee Operations for two months from May 1, 2003. |
83
84
Fiscal year ended June 30, | ||||||||||||
2005 | 20041 | 2003 | ||||||||||
Production | ||||||||||||
Tons (’000) | — | 120 | 2,147 | |||||||||
Recovered grade (ounces/ton) | — | 0.096 | 0.062 | |||||||||
Gold sold (ounces) | — | 11,574 | 132,579 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | — | 4,079 | 42,922 | |||||||||
Cash cost (’000) | — | 3,713 | 44,824 | |||||||||
Cash profit (’000) | — | 366 | (1,902 | ) | ||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | — | 321 | 338 | |||||||||
Capex(‘000) ($) | — | — | 1,080 |
1 | Production consists of plant clean up tons and ounces during July 2003. Big Bell ceased operations for the remainder of fiscal 2004 and was subject to cleanup and rehabilitation work. |
85
Fiscal year ended June 30, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Production | ||||||||||||
Tons (’000) | 2,743 | 3,058 | 2,922 | |||||||||
Recovered grade (ounces/ton) | 0.066 | 0.057 | 0.063 | |||||||||
Gold sold (ounces) | 181,233 | 173,228 | 182,690 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 77,242 | 67,714 | 61,676 | |||||||||
Cash cost (’000) | 60,914 | 58,202 | 42,595 | |||||||||
Cash profit (’000) | 16,328 | 9,512 | 19,081 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 336 | 336 | 233 | |||||||||
Capex(‘000) ($) | 15,652 | 13,596 | 14,870 |
86
Average | ||||||||
Milled | ||||||||
for the fiscal | ||||||||
Processing | year ended | |||||||
Capacity | June 30, 2005 | |||||||
Plant | (tons/month) | (tons/month) | ||||||
Mt. Magnet | 243,000 | 228,583 |
87
88
Fiscal year ended June 30, | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
Production | ||||||||||||
Tons (’000) | 1,266 | 1,843 | 2,749 | |||||||||
Recovered grade (ounces/ton) | 0.091 | 0.065 | 0.067 | |||||||||
Gold sold (ounces) | 115,615 | 120,532 | 182,851 | |||||||||
Results of operations ($) | ||||||||||||
Product sales (’000) | 48,427 | 46,651 | 57,372 | |||||||||
Cash cost (’000) | 39,262 | 38,848 | 49,139 | |||||||||
Cash profit (’000) | 9,165 | 7,803 | 8,233 | |||||||||
Cash costs | ||||||||||||
Per ounce of gold ($) | 340 | 322 | 269 | |||||||||
Capex(‘000) ($) | 10,161 | 5,435 | 6,299 |
Average | ||||||||
Milled | ||||||||
for the fiscal | ||||||||
Processing | year ended | |||||||
Capacity | June 30, 2005 | |||||||
Plant | (tons/month) | (tons/month) | ||||||
Jubilee | 122,000 | 105,500 | ||||||
New Celebration | 138,000 | * |
* | The New Celebration plant is currently on care-and-maintenance. |
89
90
91
Five months | Fiscal year | |||||||
ended | ended | |||||||
November 30, | June 30, | |||||||
20031 | 20032 | |||||||
Production | ||||||||
Tons (’000) | 206 | 65 | ||||||
Recovered grade (ounces/ton) | 0.160 | 0.177 | ||||||
Gold sold (ounces) | 32,954 | 11,534 | ||||||
Results of operations ($) | ||||||||
Product sales (‘000) | 12,991 | 3,381 | ||||||
Cash cost (’000) | 9,712 | 2,251 | ||||||
Cash profit (’000) | 3,279 | 1,130 | ||||||
Cash costs | ||||||||
Per ounce of gold ($) | 295 | 195 | ||||||
Capex(‘000) ($) | 9,614 | 123,575 |
1 | Consists of 5 months of production up to November 2003 included in Harmony Australia’s results. | |
2 | Consists of 2 months of production included in Harmony Australia’s results. |
92
93
Gold production (oz) | Royalty (%) | |||
< 200,000 | 0.0 | |||
200,001 – 1,000,000 | 2.0 | |||
1,000,001 – 5,000,000 | 3.5 | |||
> 5,000,000 | 2.0 |
94
• | Oxide mineralization with recoveries of 95% by conventional cyanidation | |
• | Transitional mineralization with recoveries of 86% via conventional cyanidation, and | |
• | Primary mineralization which is further divided into two ore types these being Zones A and B primary mineralization with conventional cyanidation recoveries of 50% and the high grade (5 g/t) Link Zone mineralization with conventional cyanidation recoveries of 20%. |
95
• | Gold Cap – which has had no metallurgical test work, but indications are the ore will be free milling, however the presence of copper will need to be considered. | |
• | Supergene /transitional zone – which consists of an oxidized supergene copper enriched zone overlaying a lower grade covellite-enargite porphyry. Preliminary metallurgical test work undertaken by Rio Tinto has shown that the flotation response is poor with copper recoveries of 70% into a copper concentrate of 25% copper. Blending has been proposed for this ore zone. | |
• | High Arsenic Zone – which consists of a complex suite of copper minerals including arsenic rich enargite and tennatite. Flotation response is good, however the arsenic floats with the concentrate resulting in copper concentrates containing 1 to 3% arsenic, which would incur significant smelter penalties. Controlled blending is also proposed for this ore zone. |
96
• | Low Arsenic Zone – which consists of almost exclusively chalcopyrite, the flotation response is excellent with recoveries of 92% into a 30% copper concentrate. |
¨ Geotechnical and resource definition drilling |
¨ Road upgrades to improve site access |
¨ Mining optimisation studies |
¨ Metallurgical testwork and conceptual process route selection |
¨ Infrastructure studies |
¨ Human Resource management |
¨ Environment data collection and studies |
¨ External Relation data collection and studies |
¨ Concentrate marketing development |
97
98
• | to recognize the internationally accepted right of the state of South Africa to exercise full and permanent sovereignty over all the mineral and petroleum resources within South Africa; | |
• | to give effect to the principle of South Africa’s custodianship of its mineral and petroleum resources; | |
• | to promote equitable access to South Africa’s mineral and petroleum resources to all the people of South Africa and redress the impact of past discrimination; | |
• | to substantially and meaningfully expand opportunities for historically disadvantaged persons including women, to enter the mineral and petroleum industry and to benefit from the exploitation of South Africa’s mineral and petroleum resources; | |
• | to promote economic growth and mineral and petroleum resources development in South Africa; | |
• | to promote employment and advance the social and economic welfare of all South Africans; | |
• | to provide security of tenure in respect of prospecting, exploration, mining and production operations; | |
• | to give effect to Section 24 of the South African Constitution by ensuring that South Africa’s mineral and petroleum resources are developed in an orderly and ecologically sustainable manner while promoting justifiable social and economic development; | |
• | to follow the principle that mining companies keep and use their mineral rights, with no expropriation and with guaranteed compensation for mineral rights; and | |
• | to ensure that holders of mining and production rights contribute towards socio-economic development of the areas in which they are operating. |
99
100
• | clean up the surface environment after mining and ensure certificates of closure; | |
• | promote “clean” mining and minerals processing; | |
• | support the company’s social plan requirements (such as the Mineral and Petroleum Resources Development Act (MPRDA) and Mining Charter), BEE and local community involvement; | |
• | reduce environmental liabilities by 10% per annum; and | |
• | self-fund environmental rehabilitation through economic activities/savings, thus contributing to the bottom line. |
• | all relevant environmental risks should be identified and prioritized; | |
• | environmental issues should be dealt with promptly; | |
• | environmental issues, particularly relating to continuous non-compliance or potentially serious environmental impacts, should be dealt with at the board level; and | |
• | we will adopt the best practicable environmental option; that is, the option that has most benefit, or causes the least damage to the environment, at a cost acceptable to society and affordable to us. |
• | that environmental management is a corporate priority; | |
• | that environmental policies, programs and practices will be integrated into the activities of the company; | |
• | that we will strive for continued improvement and efficiency; | |
• | that we will work with government departments and the public to come up with the best sustainable solutions; | |
• | that contractors and suppliers will be required to comply with the Harmony policy; and | |
• | that employees will be informed and educated regarding their environmental responsibilities. |
101
• | 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. |
102
103
• | to protect the health and safety of persons at mines; | |
• | to require employers and employees to identify hazards and eliminate, control and minimize the risks relating to health and safety at mines; | |
• | to give effect to the public international law obligations of South Africa that concern health and safety at mines; | |
• | to provide for employee participation in matters of health and safety through health and safety representatives and the health and safety committees at mines; | |
• | to provide for effective monitoring of health and safety conditions at mines; | |
• | to provide for enforcement of health and safety measures at mines; | |
• | to provide for investigations and inquiries to improve health and safety at mines; and | |
• | to promote: |
– | a culture of health and safety in the mining industry; | ||
– | training in health and safety in the mining industry; and | ||
– | co-operation and consultation on health and safety between the State, employers, employees and their representatives. |
104
105
o | quality shafts, which are typically those with a larger reserve base and longer life, which form the core of the group’s production; | |
o | leveraged shafts, which are those that supplement production and provide the upside in the event of a positive swing in the Rand gold price; | |
o | growth shafts, which comprise the expansion projects established through existing infrastructure, as well as the three new mines we are building in South Africa; and | |
o | surface operations, which comprise the Kalgold opencast mine, all previously mined rock, whether waste or reef and any clean-up operations as well as plant and other infrastructure. |
Quality Shafts | Leveraged Shafts | Growth Shafts | Surface Operations | |||
Target | Bambanani | Elandsrand mine and | Kalgold | |||
project | ||||||
Tshepong | Joel | Doornkop mine and | Freegold | |||
project | ||||||
Masimong shaft complex | West Shaft | Phakisa project | Free State | |||
Evander 5 | St. Helena | Randfontein | ||||
Evander 7 | Harmony 2 | Target | ||||
Evander 8 | Merriespruit 1 | |||||
Cooke 1 | Merriespruit 3 | |||||
Cooke 2 | Unisel | |||||
Cooke 3 | Brand 3 | |||||
Orkney 2 | ||||||
Orkney 4 |
106
107
108
109
Fiscal year ended June 30 | ||||||||||||
2005 | 2004 | 2003 | ||||||||||
($/oz) | ||||||||||||
Average | 422 | 389 | 333 | |||||||||
High | 454 | 427 | 382 | |||||||||
Low | 387 | 343 | 302 | |||||||||
Harmony’s average sales price1 | 427 | 385 | 330 |
1 | Harmony’s average sales price differs from the average gold price due to the timing of its sales of gold within each year and due to the effect of delivering under the commodity hedge contracts acquired in the New Hampton and Hill 50 transactions. |
110
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Production costs per financial statements | 1,217,561 | 1,172,483 | 601,143 | |||||||||
Deferred stripping costs | 15,362 | (4,119 | ) | (1,397 | ) | |||||||
Total cash costs for per ounce calculation – using Gold Institute guidance | 1,232,923 | 1,168,364 | 599,746 | |||||||||
Depreciation and amortization (excluding depreciation on non-mining assets) | 110,826 | 100,943 | 56,752 | |||||||||
Other items to be included in GAAP measure | 16,155 | (3,646 | ) | (1,081 | ) | |||||||
Total production cost for per ounce calculation – under U.S. GAAP | 1,359,904 | 1,265,661 | 655,417 |
Ounces sold | 2,965,265 | 3,225,187 | 2,366,116 | |||||||||
Total cash cost per ounce – using Gold Institute guidance | 416 | 362 | 253 | |||||||||
Total production cost per ounce – under U.S. GAAP | 459 | 392 | 277 |
1 | Includes corporate costs and decrease in rehabilitation cost. |
111
112
113
Year ended | Year ended | Percentage | ||||||||||||||||||
June 30, 2005 | June 30, 20041 | increase in | ||||||||||||||||||
(oz) | ($/oz) | (oz) | ($/oz) | cash costs | ||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||
Free State operations | ||||||||||||||||||||
Quality ounces | ||||||||||||||||||||
Masimong | 159,981 | 452 | 234,307 | 326 | 39 | |||||||||||||||
Leveraged ounces | ||||||||||||||||||||
Harmony 2 | 68,547 | 490 | 87,472 | 368 | 33 | |||||||||||||||
Merriespruit 1 | 45,559 | 539 | 59,062 | 410 | 31 | |||||||||||||||
Merriespruit 3 | 54,690 | 465 | 76,956 | 422 | 10 | |||||||||||||||
Unisel | 65,011 | 541 | 91,020 | 408 | 33 | |||||||||||||||
Brand 3 | 46,299 | 522 | 59,558 | 403 | 30 | |||||||||||||||
Brand 5 | 33 | 64,242 | 19,262 | 692 | 9,184 | |||||||||||||||
Saaiplaas 3 | 2,541 | 1,901 | 26,783 | 503 | 278 | |||||||||||||||
Surface | 9,542 | 348 | 26,732 | 347 | — | |||||||||||||||
Evander operations | ||||||||||||||||||||
Quality ounces | ||||||||||||||||||||
Evander 2 | 48,764 | 635 | 86,172 | 376 | 69 | |||||||||||||||
Evander 5 | 47,093 | 411 | 48,103 | 335 | 23 | |||||||||||||||
Evander 7 | 130,009 | 284 | 92,505 | 356 | (20 | ) | ||||||||||||||
Evander 8 | 151,936 | 304 | 109,513 | 363 | (16 | ) | ||||||||||||||
Leveraged ounces | ||||||||||||||||||||
Evander 9 | 2,573 | 1,168 | 23,440 | 386 | 203 | |||||||||||||||
Surface | — | — | 1,961 | 253 | — | |||||||||||||||
Randfontein operations | ||||||||||||||||||||
Quality ounces | ||||||||||||||||||||
Cooke 1 | 79,101 | 426 | 104,168 | 304 | 40 | |||||||||||||||
Cooke 2 | 54,441 | 488 | 90,761 | 377 | 29 | |||||||||||||||
Cooke 3 | 116,300 | 435 | 134,003 | 374 | 16 | |||||||||||||||
Growth projects | ||||||||||||||||||||
Doornkop | 52,695 | 512 | 65,234 | 353 | 45 | |||||||||||||||
Surface | 33,397 | 423 | 18,872 | 349 | 21 | |||||||||||||||
Elandskraal operations | ||||||||||||||||||||
Growth projects | ||||||||||||||||||||
Elandsrand | 207,371 | 478 | 250,581 | 402 | 19 | |||||||||||||||
Leveraged ounces | ||||||||||||||||||||
Deelkraal | 2,284 | 313 | 68,127 | 555 | (44 | ) | ||||||||||||||
Surface | — | — | 5,301 | 498 | — | |||||||||||||||
Freegold operations | ||||||||||||||||||||
Quality ounces | ||||||||||||||||||||
Tshepong | 380,695 | 309 | 287,771 | 359 | (14 | ) |
114
Year ended | Year ended | Percentage | ||||||||||||||||||
June 30, 2005 | June 30, 20041 | increase in | ||||||||||||||||||
(oz) | ($/oz) | (oz) | ($/oz) | cash costs | ||||||||||||||||
Growth projects | ||||||||||||||||||||
Phakisa | — | — | — | — | — | |||||||||||||||
Leveraged ounces | ||||||||||||||||||||
Bambanani | 197,535 | 464 | 213,730 | 481 | 94 | ) | ||||||||||||||
Joel | 64,464 | 487 | 50,590 | 5179 | (6 | ) | ||||||||||||||
Eland | 26,782 | 500 | 37,337 | 656 | (24 | ) | ||||||||||||||
Kudu/Sable | 25,175 | 750 | 29,347 | 548 | 37 | |||||||||||||||
West Shaft | 28,165 | 462 | 26,565 | 437 | 6 | |||||||||||||||
Nyala | 23,503 | 748 | 8,891 | 4578 | 64 | |||||||||||||||
St. Helena | 29,965 | 837 | 52,309 | 600 | 40 | |||||||||||||||
Surface | 36,420 | 424 | 49,262 | 487 | (913 | ) | ||||||||||||||
ARMgold operations | ||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||
Orkney 1 | — | — | 322 | 602 | — | |||||||||||||||
Orkney 2 | 78,449 | 420 | 81,434 | 330 | 27 | |||||||||||||||
Orkney 3 | — | — | 11,413 | 564 | — | |||||||||||||||
Orkney 4 | 76,971 | 396 | 67,931 | 298 | 33 | |||||||||||||||
Orkney 6 | — | — | 11,060 | 486 | — | |||||||||||||||
Orkney 7 | — | — | 4,533 | 435 | — | |||||||||||||||
Welkom 1 | 2,734 | 587 | 19,226 | 517 | 14 | |||||||||||||||
Welkom 2 | — | — | 1,350 | 405 | — | |||||||||||||||
Welkom 3 | — | — | 1,511 | 385 | — | |||||||||||||||
Welkom 4 | — | — | 3,922 | 381 | — | |||||||||||||||
Welkom 6 | — | — | 2,411 | 371 | — | |||||||||||||||
Welkom 7 | — | — | 9,902 | 360 | — | |||||||||||||||
Avgold operations | ||||||||||||||||||||
Quality ounces | ||||||||||||||||||||
Target | 209,847 | 273 | 53,434 | 215 | 27 | |||||||||||||||
Surface | 1,350 | 346 | — | — | — | |||||||||||||||
Kalgold operations | ||||||||||||||||||||
Surface | 108,195 | 373 | 82,756 | 345 | 8 | |||||||||||||||
AUSTRALASIA | ||||||||||||||||||||
Mt. Magnet | 181,233 | 336 | 173,228 | 336 | — | |||||||||||||||
South Kal | 115,615 | 340 | 120,532 | 322 | 6 | |||||||||||||||
Papua New Guinea | — | — | — | — | — | |||||||||||||||
Other entities | — | — | 44,528 | 302 | — | |||||||||||||||
Total | 2,965,265 | 3,225,187 | ||||||||||||||||||
Weighted average | 412 | 362 | 14 |
1 | Includes nine months of production from Free Gold and ARMgold and two months from production from Avgold’s Target operations |
115
116
117
118
Income and mining tax | 2005 | 2004 | ||||||
Effective tax rate expense | 15 | % | 56 | % |
119
120
121
Year ended | Year ended | Percentage | ||||||||||||||||||
June 30, 20041 | June 30, 20032 | increase in | ||||||||||||||||||
(oz) | ($/oz) | (oz) | ($/oz) | cash costs | ||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||
Free State operations | ||||||||||||||||||||
Quality ounces | ||||||||||||||||||||
Masimong | 234,307 | 326 | 179,632 | 244 | 34 | |||||||||||||||
Leveraged ounces | ||||||||||||||||||||
Harmony 2 | 87,472 | 368 | 69,174 | 228 | 61 | |||||||||||||||
Harmony 4 | — | — | 292890 | 1,716 | — | |||||||||||||||
Merriespruit 1 | 59,062 | 410 | 50,545 | 244 | 68 | |||||||||||||||
Merriespruit 3 | 76,956 | 422 | 65,189 | 287 | 47 | |||||||||||||||
Unisel | 91,020 | 408 | 75,439 | 283 | 44 | |||||||||||||||
Brand 3 | 59,558 | 403 | 46,736 | 300 | 34 | |||||||||||||||
Brand 5 | 19,262 | 692 | 51,696 | 373 | 85 | |||||||||||||||
Virginia | — | — | 290 | 866 | — | |||||||||||||||
Saaiplaas 3 | 26,783 | 503 | — | — | — | |||||||||||||||
Surface | 26,732 | 347 | 24,209 | 271 | 28 | |||||||||||||||
Evander operations | ||||||||||||||||||||
Quality ounces | ||||||||||||||||||||
Evander 2 | 86,172 | 376 | 88,575 | 230 | 63 | |||||||||||||||
Evander 5 | 48,103 | 335 | 49,769 | 228 | 47 | |||||||||||||||
Evander 7 | 92,505 | 356 | 106,419 | 212 | 68 | |||||||||||||||
Evander 8 | 109,513 | 363 | 94,008 | 290 | 25 | |||||||||||||||
Leveraged ounces | ||||||||||||||||||||
Evander 9 | 23,440 | 386 | 17,297 | 269 | 43 | |||||||||||||||
Surface | 1,961 | 253 | 4,116 | 221 | 14 | |||||||||||||||
Randfontein operations | ||||||||||||||||||||
Quality ounces | ||||||||||||||||||||
Cooke 1 | 104,168 | 304 | 120,819 | 191 | 59 | |||||||||||||||
Cooke 2 | 90,761 | 377 | 116,639 | 191 | 97 | |||||||||||||||
Cooke 3 | 134,003 | 374 | 151,553 | 236 | 58 | |||||||||||||||
Growth projects | ||||||||||||||||||||
Doornkop | 65,234 | 353 | 65,906 | 230 | 53 | |||||||||||||||
Surface | 18,872 | 349 | 36,973 | 216 | 62 | |||||||||||||||
Elandskraal operations | ||||||||||||||||||||
Growth projects | ||||||||||||||||||||
Elandsrand | 250,581 | 402 | 264,525 | 264 | 52 | |||||||||||||||
Leveraged ounces | ||||||||||||||||||||
Deelkraal | 68,127 | 555 | 82,751 | 315 | 76 | |||||||||||||||
Surface | 5,301 | 498 | 19,323 | 234 | 113 | |||||||||||||||
Freegold operations | ||||||||||||||||||||
Quality ounces | ||||||||||||||||||||
Tshepong | 287,771 | 359 | — | — | — | |||||||||||||||
Growth projects | ||||||||||||||||||||
Phakisa | — | — | — | — | — | |||||||||||||||
Leveraged ounces | ||||||||||||||||||||
Bambanani | 213,730 | 481 | — | — | — | |||||||||||||||
Joel | 50,590 | 517 | — | — | — | |||||||||||||||
Eland | 37,337 | 656 | — | — | — |
122
Year ended | Year ended | Percentage | ||||||||||||||||||
June 30, 20041 | June 30, 20032 | increase in | ||||||||||||||||||
(oz) | ($/oz) | (oz) | ($/oz) | cash costs | ||||||||||||||||
Kudu/Sable | 29,347 | 548 | — | — | — | |||||||||||||||
West Shaft | 26,565 | 437 | — | — | — | |||||||||||||||
Nyala | 8,891 | 457 | — | — | — | |||||||||||||||
St. Helena | 52,309 | 600 | — | — | — | |||||||||||||||
Surface | 49,262 | 487 | — | — | — | |||||||||||||||
ARMgold operations | ||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||
Orkney 1 | 322 | 602 | — | — | — | |||||||||||||||
Orkney 2 | 81,434 | 330 | — | — | — | |||||||||||||||
Orkney 3 | 11,413 | 564 | — | — | — | |||||||||||||||
Orkney 4 | 67,931 | 298 | — | — | — | |||||||||||||||
Orkney 6 | 11,060 | 486 | — | — | — | |||||||||||||||
Orkney 7 | 4,533 | 435 | — | — | — | |||||||||||||||
Welkom 1 | 19,226 | 517 | — | — | — | |||||||||||||||
Welkom 2 | 1,350 | 405 | — | — | — | |||||||||||||||
Welkom 3 | 1,511 | 385 | — | — | — | |||||||||||||||
Welkom 4 | 3,922 | 381 | — | — | — | |||||||||||||||
Welkom 6 | 2,411 | 371 | — | — | — | |||||||||||||||
Welkom 7 | 9,902 | 360 | — | — | — | |||||||||||||||
Avgold operations | ||||||||||||||||||||
Quality ounces | ||||||||||||||||||||
Target | 53,434 | 215 | — | — | — | |||||||||||||||
Kalgold operations | ||||||||||||||||||||
Surface | 82,756 | 345 | 74,590 | 222 | 55 | |||||||||||||||
AUSTRALASIA | ||||||||||||||||||||
Big Bell | — | — | 132,579 | 338 | — | |||||||||||||||
Mt. Magnet | 173,228 | 336 | 182,690 | 233 | 44 | |||||||||||||||
South Kal | 120,532 | 322 | 182,851 | 269 | 20 | |||||||||||||||
Abelle | — | — | 11,534 | 195 | — | |||||||||||||||
Other entities | 44,528 | 302 | — | — | — | |||||||||||||||
Total | 3,225,187 | 2,366,116 | ||||||||||||||||||
Weighted average | 362 | 253 | 43 |
1 | Includes nine months of production from Free Gold and ARMgold and two months from production from Avgold’s Target operations | |
2 | Includes two months of production from Abelle. |
123
124
125
Income and mining tax | 2004 | 2003 | ||||||
Effective tax rate expense | 56 | % | 25.9 | % |
126
127
128
129
130
Payments Due by Period | ||||||||||||||||||||
Less than | ||||||||||||||||||||
12 months | 12-36 Months | 36-60 Months | After | |||||||||||||||||
July 1, 2005 | July 1, 2006 | July 1, 2008 | 60 Months | |||||||||||||||||
to | to | to | Subsequent | |||||||||||||||||
Dollars in thousands | Total | June 30, 2006 | June 30, 2008 | June 30, 2010 | June 30, 2010 | |||||||||||||||
Senior unsecured fixed-rate bonds1 | 192,495 | 192,495 | — | — | — | |||||||||||||||
Convertible uncollaterized bonds1 | 304,710 | 12,431 | 24,861 | 267,418 | — | |||||||||||||||
BoE Bank Limited loan facility1 | 26,543 | 26,543 | — | — | — | |||||||||||||||
Africa Vanguard Resources1 | 4,800 | — | — | — | 4,800 | |||||||||||||||
Nedbank – AVR1 | 20,970 | — | — | 20,970 | — |
131
Payments Due by Period | ||||||||||||||||||||
Less than | ||||||||||||||||||||
12 months | 12-36 Months | 36-60 Months | After | |||||||||||||||||
July 1, 2005 | July 1, 2006 | July 1, 2008 | 60 Months | |||||||||||||||||
to | to | to | Subsequent | |||||||||||||||||
Dollars in thousands | Total | June 30, 2006 | June 30, 2008 | June 30, 2010 | June 30, 2010 | |||||||||||||||
Gold Fields1 | 822 | 308 | 514 | — | — | |||||||||||||||
Nedbank – ARM 11 | 80,149 | — | — | 80,149 | — | |||||||||||||||
Nedbank – ARM 21 | 104,938 | — | — | 104,938 | — | |||||||||||||||
Post retirement health care2 | 13,275 | 153 | 721 | 722 | 11,679 | |||||||||||||||
Environmental obligations3 | 208,561 | — | — | — | 208,561 | |||||||||||||||
Total contractual obligations | 957,263 | 231,930 | 26,096 | 474,197 | 225,040 |
1 | SeeItem 5. “Operating and Financial Review and Prospects – Liquidity and Capital Resources – Credit Facilities and Other Borrowings – Outstanding Credit Facilities and Other Borrowings.” | |
2 | This liability relates to post-retirement medical benefits of former employees who retired prior to December 31, 1996 and is based on actuarial valuations conducted during fiscal 2002. | |
3 | Harmony makes provision for environmental rehabilitation costs and related liabilities based on management’s interpretations of current environmental and regulatory requirements. SeeItem 5. “Operating and Financial Review and Prospects – Critical Accounting Policies.” |
Payment Due by Period | ||||||||||||||||||||
Less than | After | |||||||||||||||||||
12 Months | 12-36 Months | 36-60 Months | 60 Months | |||||||||||||||||
July 1, 2005 | July 1, 2006 | July 1, 2008 | Subsequent | |||||||||||||||||
to | to | to | to | |||||||||||||||||
Total | June 30, 2006 | June 30, 2008 | June 30, 2010 | June 30, 2010 | ||||||||||||||||
($’000) | ($’000) | ($’000) | ($’000) | ($’000) | ||||||||||||||||
Melrose Arch, South Africa | 223 | 114 | 109 | — | — | |||||||||||||||
Musuku | 72 | 33 | 39 | — | — | |||||||||||||||
Perth Office, Australia | 336 | 112 | 224 | — | — | |||||||||||||||
Peru Office | 12 | 12 | — | — | — | |||||||||||||||
Peru flat | 7 | 7 | — | — | — | |||||||||||||||
650 | 278 | 372 | — | — |
Capital Expenditure | $’000 | |||
Authorized and contracted for | 4,226 | |||
Authorized but not yet contracted for | 274,318 | |||
278,544 |
132
Amount of Commitments Expiring by Period | ||||||||||||||||||||
Less than | After | |||||||||||||||||||
12 Months | 12-36 Months | 36-60 Months | 60 Months | |||||||||||||||||
July 1, 2004 | July 1, 2005 | July 1, 2007 | Subsequent | |||||||||||||||||
to | to | to | to | |||||||||||||||||
Total | June 30, 2005 | June 30, 2007 | June 30, 2009 | June 30, 2009 | ||||||||||||||||
($’000) | ($’000) | ($’000) | ($’000) | ($’000) | ||||||||||||||||
Guarantees1 | 22,773 | — | — | — | 22,773 | |||||||||||||||
Capital commitments2 | 4,226 | 4,226 | — | — | — | |||||||||||||||
Total commitments expiring by period | 26,999 | 4,226 | — | — | 22,773 |
1 | Reflects guarantees for environmental rehabilitation expenses, principally environmental performance bonds required for Harmony’s Australian operations. SeeItem 4. “Information on the Company – Regulation – Environmental Matters.” | |
2 | Capital commitments consist only of amounts committed to external suppliers, although a total of $683.3 million has been approved by the Board for capital expenditures. |
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Bob Atkinson | Sustainable Development (Safety, Health and Environment), Operations Director (growth shafts) | |
Jaco Boshoff | Ore Reserves | |
Graham Briggs | Chief Executive, Harmony Australia | |
Ferdi Dippenaar | Service Delivery Departments, Corporate Affairs and Investor Relations | |
Ted Grobicki | Strategic Planning | |
Yusuf Jardien | Information Technology and Change Management | |
Tracey Jonkheid | Internal Strategy | |
Philip Kotze | Operations Director (quality shafts) | |
Jackie Mathebula | Sustainable Development (Training, Human Resource Development and Occupational Health) | |
Dawie Mostert | Industrial Relations | |
Nomfundo Qangule | Group Finance | |
De Wet Schutte | Exploration and New Business | |
Peter Steenkamp | Operations Director (leveraged shafts) | |
Bernard Swanepoel | Chief Executive | |
Boetie Swanepoel | Operational Finance | |
Johannes van Heerden | Finance (Australasia) | |
Abre van Vuuren | Human Resources Processes and Strategy |
• | Cedric Savage (chairman) |
• | Dr Simo Lushaba |
• | Modise Motloba |
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• | Patrice Motsepe (chairman) |
• | Nolitha Fakude |
• | Frank Abbott |
• | Patrice Motsepe (chairman) |
• | Dr Simo Lushaba |
• | Cedric Savage |
• | Dr Simo Lushaba (chairman) |
• | Frank Abbott |
• | Cedric Savage |
Ø | to develop the framework, policies and guidelines for safety, health, social, HIV/AIDS and environmental management; | ||
Ø | to review the policies and performance of the company, its divisions and its managed subsidiaries and the progressive implementation of its policies; | ||
Ø | to encourage independently managed subsidiaries, associates and significant investments to develop policies, guidelines and practices congruent with our safety, health, social, HIV/AIDS and environmental policies; |
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Ø | to monitor key indicators on accidents and incidents and, where appropriate, ensure that they are communicated to other companies managed by or associated with the company; | ||
Ø | to consider material national and international regulatory and technical developments in the fields of safety, health, social, HIV/AIDS and environmental management; and | ||
Ø | to facilitate participation, co-operation and consultation on safety, health, social, HIV/AIDS and environmental matters with government, industry, national and international organizations and institutions. |
• | Modise Motloba (chairman) |
• | Nolitha Fakude |
• | Rick Menell |
Ø | ensuring that a sustainable organizational culture, structures and processes are in place that will support the development of employees and to optimize their potential, in line with the Company’s needs and requirements; | ||
Ø | auditing, monitoring and reviewing the development and progress of these employees; | ||
Ø | addressing inequalities that may exist in staff profiles and organizational practices; | ||
Ø | reviewing and monitoring whether appropriate support is given to previously disadvantaged staff in order to equip them for successful careers within Harmony. |
• | Nolitha Fakude (chairman) |
• | Modise Motloba |
• | Rick Menell |
Salaries | Retirement | |||||||||||||||||||
Directors’ | and | contributions | Total | |||||||||||||||||
fees | benefits1 | during the | Bonuses | Compensation | ||||||||||||||||
Name | ($000) | ($000) | year ($000) | paid ($000) | ($000) | |||||||||||||||
Patrice Motsepe | 18 | — | — | — | — | |||||||||||||||
Frank Abbott2 | — | |||||||||||||||||||
Nolitha Fakude | 22 | — | — | — | — | |||||||||||||||
Dr. Simo Lushaba | 19 | — | — | — | — | |||||||||||||||
Rick Menell | 13 | — | — | — | — |
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Salaries | Retirement | |||||||||||||||||||
Directors’ | and | contributions | Total | |||||||||||||||||
fees | benefits1 | during the | Bonuses | Compensation | ||||||||||||||||
Name | ($000) | ($000) | year ($000) | paid ($000) | ($000) | |||||||||||||||
Dr. Morley Nkosi | 16 | — | — | — | — | |||||||||||||||
Modise Motloba | 14 | — | — | — | — | |||||||||||||||
Mike Pleming3 | 25 | — | — | — | — | |||||||||||||||
Lord Robin Renwick4 | 4 | — | — | — | — | |||||||||||||||
Cedric Savage | 23 | — | — | — | — | |||||||||||||||
Executive5 | ||||||||||||||||||||
Bernard Swanepoel | — | 296 | 44 | — | 340 | |||||||||||||||
Ferdi Dippenaar | — | 196 | 32 | — | 228 | |||||||||||||||
Ted Grobicki6 | — | 382 | 34 | — | 416 | |||||||||||||||
Mangisi Gule7 | — | 69 | 2 | — | 71 | |||||||||||||||
Nomfundo Qangule8 | — | 175 | 15 | — | 190 | |||||||||||||||
Senior Management (as a group)9 | — | 2,423 | — | — | 2,423 | |||||||||||||||
TOTAL | 154 | 3,541 | 127 | — | 3,668 | |||||||||||||||
1 | 4% increase granted to executive directors in October 2004. | |
2 | Frank Abbott has waived his non-executive Directors’ fee. Frank was the financial director of Harmony until June 30, 2004. | |
3 | Retired from the Board on June 30, 2005. | |
4 | Resigned from the Board October 17, 2004. | |
5 | Our executive directors have waived their Directors’ fees in terms of our Articles of Association. | |
6 | Ted Grobicki’s salary is paid in $Aus. | |
7 | Mangisi Gule’s salary was paid from July 1, 2004 to December 24, 2004, when he resigned from the Board. | |
8 | Appointed on 26 July 2004, Nomfundo Qangule’s salary is reflected for the 11 month period since the date of her appointment. | |
9 | Includes salaries paid to Brenton Saunders and Mohamed Madhi who resigned on September 2, and September 30, 2005, respectively. |
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Number of | Average strike | |||||||||||
Directors | Share Options | price | Expiration Dates | |||||||||
Bernard Swanepoel | 469,767 | 51.58 | August 2014 | |||||||||
Ferdi Dippenaar | 237,141 | 51.58 | August 2014 | |||||||||
Ted Grobicki | 303,700 | 44.19 | August 2014 | |||||||||
Nomfundo Qangule | 186,124 | 52.58 | August 2014 | |||||||||
Patrice Motsepe | — | — | — | |||||||||
Frank Abbott | 73,400 | 49.6 | June 2006 | |||||||||
Joaquim Chissano | — | — | — | |||||||||
Nolitha Fakude | — | — | — | |||||||||
Dr. Simo Lushaba | — | — | — | |||||||||
Rick Menell | — | — | — | |||||||||
Modise Motloba | — | — | — | |||||||||
Cedric Savage | — | — | — | |||||||||
Senior Management (13 persons) | 2,184,395 | 54.03 | August 2014 | |||||||||
Ordinary Shares | Ordinary Shares | |||||||||||||||
Number | Number | |||||||||||||||
as at | as at | |||||||||||||||
Holder | June 30, 2005 | Percentage | October 21, 2005 | Percentage | ||||||||||||
Directors | ||||||||||||||||
Non-executive | ||||||||||||||||
P. Motsepe** | — | — | — | — | ||||||||||||
F. Abbott | — | — | — | — | ||||||||||||
J. Chissano | — | — | — | — | ||||||||||||
N. Fakude | — | — | — | — | ||||||||||||
Dr. S. Lushaba | — | — | — | — | ||||||||||||
R. Menell | 800 | * | 800 | * | ||||||||||||
M. Motloba | — | — | — | — | ||||||||||||
Dr. M. Nkosi† | — | — | — | — | ||||||||||||
M. Pleming† | — | — | — | — | ||||||||||||
C. Savage | — | — | — | — | ||||||||||||
Executive Directors | — | — | — | — | ||||||||||||
B. Swanepoel | — | — | 10,000 | * | ||||||||||||
F. Dippenaar | — | — | — | — | ||||||||||||
N. Qangule | — | — | — | — | ||||||||||||
T. Grobicki *** | 30,000 | * | 30,000 | * | ||||||||||||
Total Directors (12 persons) | 30,800 | * | 40,800 | * | ||||||||||||
Total Senior Management (13 persons) | — | — | — | — | ||||||||||||
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† | Resigned from the Board on June 30, 2005. | |
* | Indicates beneficial ownership of less than 1% of the relevant class of securities. | |
** | The 14% indirect shareholding held by P Motsepe was transferred to ARM Limited in accordance with the ARM transaction in April 2004. See “Related Party Transactions.” | |
*** | All holdings are beneficial, other than the 30,000 held by T. Grobicki on behalf of a trust of which he is a trustee, but not a beneficiary. |
Harmony employees at June 30, | Outside contractors at June 30, | |||||||||||||||||||||||
2005 | 2004 | 2003 | 2005 | 2004 | 2003 | |||||||||||||||||||
South Africa | ||||||||||||||||||||||||
Elandskraal | 4,149 | 6,213 | 6,611 | 14 | 24 | 490 | ||||||||||||||||||
Free State (old) | 11,365 | 10,974 | 12,317 | 78 | 69 | 686 | ||||||||||||||||||
Free Gold | 15,404 | 17,975 | 8,573 | 1,2 | 61 | 84 | 839 | |||||||||||||||||
Evander | 5,895 | 7,344 | 6,770 | 7 | 15 | 1,425 | ||||||||||||||||||
Randfontein | 5,640 | 6,756 | 7,154 | 86 | 92 | 589 | ||||||||||||||||||
Kalgold | 180 | 188 | 229 | 2 | — | 282 | ||||||||||||||||||
ARMgold | 3,530 | 4,746 | — | 78 | 75 | — | ||||||||||||||||||
Avgold | 435 | 534 | — | 5 | — | — | ||||||||||||||||||
Other | 71 | 667 | 12 | — | — | — | ||||||||||||||||||
Australia | 198 | 516 | 255 | 555 | 512 | 309 | ||||||||||||||||||
Canada | ||||||||||||||||||||||||
Bissett | — | — | 6 | — | — | — | ||||||||||||||||||
Papua New Guinea | 200 | 269 | 215 | 35 | 5 | 12 | ||||||||||||||||||
Total | 47,067 | 55,913 | 41,927 | 921 | 871 | 4,945 | ||||||||||||||||||
1 | This represents Harmony’s 50% interest in the Free Gold Joint Venture for 2003 and 2004. | |
2 | This includes St. Helena’s employees. |
• | prescribed minimum levels of compensation and benefits; |
• | trade union access and membership; |
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• | the right to strike; |
• | mandatory compensation in the event of termination for operational reasons; |
• | affirmative action policies and programs; |
• | compensation in the event of occupational illness or injury; and |
• | financing of training programs. |
o | NUM 78.5% | ||
o | UASA 7.2% | ||
o | Solidarity 2.0% | ||
o | SAEWA 0.2% | ||
o | Balance (not unionized) 12.10%. |
• | reskilling, retraining and redeployment of surplus employees for alternative vacant positions that may exist at a particular operation or other Harmony operations; |
• | implementation of CONOPS (described below) to create additional job opportunities; |
• | transferring surplus or redundant employees to other Harmony operations that have placement opportunities; |
• | opening up voluntary retrenchment to minimize the impact of restructuring and/or closure of shafts/mines; and |
• | replacing contractors, who are involved in non-specialized work, with Harmony employees; |
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Number of | ||||||||
Holder | Shares | Percentage | ||||||
1. The Bank of New York1 | 145,265,225 | 36.9 | % | |||||
2. ARM Ltd. 2 | 63,632,922 | 16.2 | % | |||||
3. Allan Gray Ltd. | 55,349,494 | 14.1 | % | |||||
4. JP Morgan Chase Bank3 | 24,096,371 | 6.13 | % |
1 | Depository with respect to the ADRs held on the U.S. register. | |
2 | Patrice Motsepe has an indirect holding in ARM Limited. | |
3 | Depository with respect to Harmony’s International Depository Shares. |
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Total net dividends | ||||
per ordinary share | ||||
(in ZAR) | ||||
Final Dividend June 30, 2002 | 4.25 | |||
Interim Dividend December 31, 2002 | 1.25 | |||
Final Dividend June 30, 2003 | 1.50 | |||
Interim Dividend December 31, 2003 | 0.40 | |||
Final Dividend June 30, 2004 | 0.30 |
• | A non-refundable deposit of A$0.25 million. | ||
• | A cash payment of A$4.0 million and an issue of A$5.0 million of shares (20 million Northern Gold shares) on completion (within six months) and the replacement of a A$1.0 million performance bond. | ||
• | A cash payment of A$5.0 million and the issue of A$4.4 million shares (at an issue price equal to the higher of A$0.25/share and the prevailing 30 day volume weighted average market price) six months after completion, and | ||
• | A cash payment of A$5.35 million payable 18 months after the completion date. |
JSE Limited | HAR | |
New York Stock Exchange | HMY | |
London Stock Exchange | HRM | |
Euronext Brussels | HG |
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Euronext Paris | HMY | |
Berlin Stock Exchange | HAM1 |
Harmony ordinary shares | Harmony warrants1 | |||||||||||||||
(Rand per ordinary share) | (Rand per warrant) | |||||||||||||||
High | Low | High | Low | |||||||||||||
Fiscal year ended June 30, 2003 | ||||||||||||||||
First Quarter | 179.90 | 106.00 | 135.00 | 68.10 | ||||||||||||
Second Quarter | 161.45 | 116.90 | 124.00 | 76.00 | ||||||||||||
Third Quarter | 154.00 | 90.00 | 56.21 | 56.21 | ||||||||||||
Fourth Quarter | 115.20 | 73.44 | 59.33 | 57.08 | ||||||||||||
Full Year | 179.90 | 73.44 | 135.00 | 56.21 | ||||||||||||
Fiscal year ended June 30, 2004 | ||||||||||||||||
First Quarter | 117.20 | 84.00 | ||||||||||||||
Second Quarter | 108.50 | 92.48 | ||||||||||||||
Third Quarter | 122.51 | 95.76 | ||||||||||||||
Fourth Quarter | 97.25 | 61.00 | ||||||||||||||
Full Year | 122.51 | 61.00 | ||||||||||||||
Fiscal year ended June 30, 2005 | ||||||||||||||||
Month of | ||||||||||||||||
First Quarter | 88.55 | 58.00 | ||||||||||||||
Second Quarter | 93.30 | 51.00 | ||||||||||||||
Third Quarter | 58.50 | 47.50 | ||||||||||||||
Fourth Quarter | 58.80 | 36.40 | ||||||||||||||
Full Year | 93.30 | 36.40 | ||||||||||||||
Month of | ||||||||||||||||
June 2005 | 58.80 | 47.80 | ||||||||||||||
July 2005 | 61.50 | 52.10 | ||||||||||||||
August 2005 | 58.50 | 46.62 | ||||||||||||||
September 2005 | 71.99 | 47.50 | ||||||||||||||
October 2005 | 74.29 | 66.00 |
1 | Warrants expired as of June 30, 2003. |
Harmony ADRs | ||||||||
($ per ADR) | ||||||||
High | Low | |||||||
Fiscal year ended June 30, 2003 | ||||||||
First Quarter | 17.27 | 9.98 | ||||||
Second Quarter | 18.45 | 11.62 | ||||||
Third Quarter | 18.47 | 11.08 | ||||||
Fourth Quarter | 14.90 | 10.14 | ||||||
Full Year | 18.47 | 9.98 | ||||||
Fiscal year ended June 30, 2004 | ||||||||
First Quarter | 15.95 | 10.90 | ||||||
Second Quarter | 16.75 | 13.10 | ||||||
Third Quarter | 17.80 | 13.90 | ||||||
Fourth Quarter | 15.62 | 9.25 | ||||||
Full Year | 17.80 | 9.25 | ||||||
Fiscal year ended June 30, 2005 | ||||||||
First Quarter | 13.74 | 9.75 | ||||||
Second Quarter | 14.29 | 9.05 | ||||||
Third Quarter | 9.58 | 7.51 |
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Harmony ADRs | ||||||||
($ per ADR) | ||||||||
High | Low | |||||||
Fourth Quarter | 8.80 | 5.96 | ||||||
Full Year | 14.29 | 5.96 | ||||||
Month of | ||||||||
June 2005 | 8.80 | 7.13 | ||||||
July 2005 | 9.01 | 7.85 | ||||||
August 2005 | 8.99 | 7.21 | ||||||
September 2005 | 11.23 | 7.57 | ||||||
October (through October 21, 2005) | 10.27 | 9.83 |
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• | to acquire by purchase, cession, grant, lease, exchange or otherwise any movable or immovable property, mines, mineral property, claims, mineral rights, mining rights, mining leases, mining titles, mynpachts, lands, farms, buildings, water rights, concessions, grants, rights, powers, privileges, surface rights of every description, servitudes or other limited rights or interests in land and mineral contracts of every description; and any interest therein and rights over the same; and to enter into any contract, option or prospecting contract in respect thereof, and generally to enter into any arrangement that may seem conducive to Harmony’s objects or any of them; |
• | to carry out all forms of exploration work and in particular to search for, prospect, examine, explore and obtain information in regard to mines, mineral properties, claims, mineral rights, mining rights, mining leases, mining titles, mynpachts, mining districts or locations and ground and soil supposed to contain or containing precious stones, minerals or metals of every description; |
• | to open, work, develop and maintain gold, silver, diamond, copper, coal, iron and other mines, mineral and other rights, properties and works, and to carry on and conduct the business of raising, crushing, washing, smelting, reducing and amalgamating ores, metals, minerals and precious stones, and to render the same merchantable and fit for use and to carry on all or any of the businesses of miners, mineralogists, metallurgists, amalgamators, geophysicists, smelters, quarry owners, quarrymen and brickmakers; |
• | to buy, sell, refine and deal in bullion, specie, coin and precious and base metals, and also precious stones and other products of mining; and |
• | to employ and pay mining experts, agents and other persons, partnerships, companies or corporations, and to organize, equip and dispatch expeditions for prospecting, exploring, reporting on, surveying, working and developing lands, farms, districts, territories and properties in any part of the world, whether the same are the property of Harmony or otherwise. |
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• | any arrangement for giving the director a security or indemnity in respect of money lent, or an obligation undertaken, by such director for the benefit of Harmony; |
• | any arrangement by which Harmony gives any security to a third party in respect of a debt or obligation of Harmony for which the director himself or herself has assumed responsibility, in whole or in part, whether under a guarantee or indemnity or by the deposit of a security; |
• | any contract by the director to subscribe for or underwrite shares or debentures of Harmony; |
• | any contract or arrangement with a company other than Harmony, in which the director holds or controls, directly or indirectly, no more than one percent of shares representing either (i) any class of the equity share capital of that company or (ii) the overall voting rights of that company; or |
• | any retirement scheme or fund which relates to both directors and to employees (or a class of employees) and does not accord to any director, as such, any privilege or advantage not generally accorded to the employees to which such scheme or fund relates. |
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• | pursuant to an employee share incentive scheme the terms of which have been approved by the holders of the relevant class of shares in a general meeting; |
• | for the acquisition of an asset, provided that if the issue is more than 30% of the company’s issued share capital, a simple majority of holders of ordinary shares present and voting, must vote in favor of the acquisition; |
• | to raise cash by way of a general issue in the discretion of the directors (but not to related parties) of up to 15% of the issued share capital in any one fiscal year at an issue price with a discount not exceeding 10% of the 30-day weighted average trading price prior to the determination date, provided that the holders of ordinary shares, present and voting at a general meeting, must approve the granting of such authority to the directors by a 75% vote; or |
• | to raise cash by way of a specific issue of a specified number or a maximum number of shares for cash provided that the holders of ordinary shares, other than controlling shareholders, present and voting, vote in favor of the resolution to issue the shares at a general meeting by a 75% vote. In terms of JSE listings requirements, the circular to be sent to all shareholders informing them of the general meeting must include, inter alia: |
o | 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; | ||
o | 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 | ||
o | should the maximum size of the issue equal or exceed 30% of the company’s issued share capital, full listing particulars, which include, inter alia, a reporting accountant’s report and, in the case of a mining company, a competent person’s report setting out technical details of the company’s operations and assets. |
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• | increase its authorized or paid-up share capital; |
• | consolidate and divide all or any part of its shares into shares of a larger amount; |
• | increase the number of its no par value shares without an increase of its stated capital; |
• | sub-divide all or any part of its shares having a par value; |
• | convert all of its ordinary or preference share capital consisting of shares having a par value into stated capital constituted by shares of no par value and vice versa; |
• | convert its stated capital constituted by ordinary or preference shares of no par value into share capital consisting of shares having a par value; |
• | vary the rights attached to any shares whether issued or not yet issued; |
• | convert any of its issued or unissued shares into shares of another class; |
• | convert any of its paid-up shares into stock, and reconvert any stock into any number of paid-up shares of any denomination; |
• | convert any of its issued shares into preference shares which can be redeemed; |
• | cancel shares which, at the date of passing of the resolution, have not been taken or agreed to be taken by any person, and diminish the amount of the authorized share capital by the amount of the shares so cancelled; or |
• | reduce the authorized share capital. |
• | reduce its issued share capital; |
• | reduce its stated capital; or |
• | reduce its capital redemption reserve fund and share premium account. |
• | to every member of Harmony except any member who has not supplied to Harmony a registered address for the giving of notices; |
• | to every person entitled to a share in consequence of the death or insolvency of a member; |
• | to the directors and auditor for the time being of Harmony; and |
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• | 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; |
• | 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
164
• | both the hedged item and the hedging instrument are specifically identified and documented; |
• | management documents the nature of the hedging risk and identifies how the effectiveness of the hedge will be assessed; |
• | the effectiveness of the hedge is tested regularly throughout the life of the hedge, and a hedging instrument is identified as highly effective if it is able to offset changes in the fair value of cash flows from the hedged item by between 80% and 125% of the price at which it was fixed; |
• | any ineffectiveness of hedged instruments is recognized immediately in the income statement; and |
• | in the case of a hedge of an anticipated future transaction, there is a high probability that the transaction will occur. |
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Mark-to- | ||||||||||||||||||||||||
Maturity – Scheduled for Delivery in Fiscal Year | market | |||||||||||||||||||||||
2006 | 2007 | 2008 | 2009 | Total | $000 | |||||||||||||||||||
FORWARD SALES AGREEMENTS | ||||||||||||||||||||||||
Ounces | 108,000 | 147,000 | 100,000 | 100,000 | 455,000 | (36,828 | ) | |||||||||||||||||
A$/ounce | 510 | 515 | 518 | 518 | 515 | |||||||||||||||||||
CALL OPTIONS SOLD | ||||||||||||||||||||||||
Ounces | 30,000 | 10,000 | — | — | 40,000 | (994 | ) | |||||||||||||||||
A$/ounce | 552 | 562 | — | — | 554 | |||||||||||||||||||
Total | 148,000 | 157,000 | 100,000 | 100,000 | 495,000 | (37,822 | ) |
Gold spot price at June 30, 2005 | ||||||||||||||||||||||||||||
Sensitivity to $ gold spot price | $30 | $20 | $10 | $435 | ($10 | ) | ($20 | ) | ($30 | ) | ||||||||||||||||||
Mark-to-market ($ million) | (23.5 | ) | (28.2 | ) | (32.9 | ) | (37.8 | ) | (42.6 | ) | (47.5 | ) | (52.4 | ) |
Weighted average interest rate at June 30, 2005 | ||||||||||||||||||||||||||||
Sensitivity to Australian dollar interest rates | 1.5 | % | 1.0 | % | 0.5 | % | 5.83 | % | (0.5 | %) | (1.0% | ) | (1.5 | %) | ||||||||||||||
Mark-to-market ($ million) | (42.3 | ) | (40.8 | ) | (39.3 | ) | (37.8 | ) | (36.2 | ) | (34.6 | ) | (33.0 | ) |
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US$/A$ exchange rates at June 30, 2005 | ||||||||||||||||||||||||||||
$1.00= | ||||||||||||||||||||||||||||
Sensitivity to $/A$ exchange rates | A$0.15 | A$0.10 | A$0.05 | A$1.31 | (A$0.05 | ) | (A$0.10 | ) | (A$0.15 | ) | ||||||||||||||||||
Mark-to-market ($ millions) | (55.9 | ) | (49.5 | ) | (43.3 | ) | (37.8 | ) | (28.4 | ) | (20.0 | ) | (12.5 | ) |
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Mark-to- | ||||||||||||
Maturity – Scheduled for Fiscal Year | market | |||||||||||
2006 | Total | $000 | ||||||||||
Forward Exchange Contracts | ||||||||||||
US$ million | 39.5 | 39.5 | 16,467 | |||||||||
Average strike ZAR/US$ | 9.54 | 9.54 | ||||||||||
(Buy US$, sell ZAR, at the agreed exchange rate) | ||||||||||||
Forward Exchange Call Contracts Sold US$ million | 39.5 | 39.5 | 0.4 | |||||||||
Average strike ZAR/US$ | 9.54 | 9.54 | ||||||||||
(Sell US$, buy ZAR, at the agreed exchange rate) | ||||||||||||
Total | 16,467 |
US$ /ZAR spot rate June 30, 2005 | ||||||||||||||||||||||||||||
$1= | ||||||||||||||||||||||||||||
Sensitivity to US $/ZAR spot rate | R0.15 | R0.10 | R0.05 | R6.67 | (R0.05 | ) | (R0.10 | ) | (R0.15 | ) | ||||||||||||||||||
Mark-to-market ($ millions) | (15.6 | ) | (15.9 | ) | (16.2 | ) | (16.5 | ) | (16.8 | ) | (17.1 | ) | (17.3 | ) |
Weighted average interest rate at June 30, 2005 | ||||||||||||||||||||||||||||
Sensitivity to ZAR interest rates | 1.5 | % | 1.0 | % | 0.5 | % | 7.00 | % | (0.5% | ) | (1.0% | ) | (1.5% | ) | ||||||||||||||
Mark-to-market ($ millions) | (16.3 | ) | (16.3 | ) | (16.4 | ) | (16.5 | ) | (16.5 | ) | (16.6 | ) | (16.7 | ) |
168
Weighted average ZAR interest rate at June 30, 2005 | ||||||||||||||||||||||||||||
Sensitivity to South African Interest Rates | 1.5 | % | 1.0 | % | 0.5 | % | 7.00 | % | (0.5 | %) | (1.0 | %) | (1.5 | %) | ||||||||||||||
Mark-to-market ($ millions) | (2.6 | ) | (2.9 | ) | (3.2 | ) | (3.6 | ) | (3.9 | ) | (4.2 | ) | (4.5 | ) |
169
170
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 |
• | development of additional reserves; |
• | depletion of existing reserves through production; |
• | actual mining experience; and |
• | price forecasts. |
171
172
173
174
Fiscal year ended June 30, 2004 | $1.1 million | |
Fiscal year ended June 30, 2005 | $1.121 million |
Fiscal year ended June 30, 2004 | $0.6 million | |
Fiscal year ended June 30, 2005 | $0.915 million |
Fiscal year ended June 30, 2004 | $0.1 million | |
Fiscal year ended June 30, 2005 | $0.20 million |
175
Fiscal year ended June 30, 2004 | $0.1 million | |
Fiscal year ended June 30, 2005 | $0.123 million |
176
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. | |
2.1 | Notice to shareholders dated September 3, 2004 in respect of the Annual General Meeting held on November 12, 2004. | |
2.2 | Notice to Shareholders dated September 2, 2005 in respect of the Annual General Meeting to be held on November 4, 2005. | |
2.3 | Share Exchange Agreement between Avmin and Harmony to acquire the shareholding in Avgold dated February 16, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |
2.4 | Deposit Agreement among Harmony, The Bank of New York, as Depositary, and owners and holders of American Depositary Receipts, dated as of August 12, 1996, as amended and restated as of October 2, 1996, as further amended and restated as of September 15, 1998 (incorporated by reference to Post-Effective Amendment No. 1 to Harmony’s Registration Statement (file no. 333-5410) on Form F-6 filed on May 17, 2001). | |
2.5 | Form of ADR (included in Exhibit 2.4). | |
2.6 | Excerpts of relevant provisions of the South African Companies Act (incorporated by reference to Harmony’s Registration Statement (file no. 0-28798) on Form 20-F filed on September 20, 1996). | |
2.7 | Excerpts of relevant provisions of the JSE Securities Exchange South Africa listing requirements (incorporated by reference to Harmony’s Registration Statement (file no. 0-28798) on Form 20-F filed on September 20, 1996). | |
2.8 | Form of Harmony’s senior unsecured 13% bonds due June 14, 2006 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2001 filed on September 26, 2001). | |
2.9 | Shareholder Circular to Avgold shareholders dated April 8, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |
2.10 | Shareholder Circular to Anglovaal Mining Limited’s (“ARM”) shareholders dated March 23, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |
2.11 | Trust Deed entered into between Harmony and JPMorgan Corporate Trustee Services Limited dated May 21, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |
2.12 | Agency Agreement between Harmony, JPMorgan Corporate Trustee Services Limited, JPMorgan Chase Bank and JPMorgan Luxembourg SA dated May 21, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |
2.13 | Form of Global Bond (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |
2.14 | Bond Offering Circular dated October 14, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |
3 | Voting Agreement between ARMI and Clidet 454 (Pty) Ltd signed on February 16, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |
4.1 | Acquisition and Disposal Agreement between ARMI and Anglovaal Mining Limited’s (“ARM”) holding in Harmony, ARM Platinum (Pty) Ltd (“ARMPlats”) and the African Rainbow Minerals Consortium Limited’s debt, signed on February 16, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |
4.2 | Addendum to Acquisition and Disposal Agreement between ARMI and Anglovaal Mining Limited signed on March 15, 2004 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). |
177
4.3 | Voting Agreement between ARMI and Clidet 454 (Pty) Ltd signed on February 16, 2004 (see Exhibit 3). | |
4.4 | Harmony (2003) Share Option Scheme, as amended. | |
4.5 | Form of Harmony’s senior unsecured 13% bonds due June 14, 2006 (see Exhibit 2.8). | |
4.6 | Joint Venture Agreement between ARMgold Limited, Harmony and Clidet 383 (Proprietary) Limited, dated April 5, 2002 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |
4.7 | Merger Agreement between ARMgold Limited and Harmony dated September 22, 2003 (incorporated by reference to Harmony’s Registration Statement on Form 20-F filed on December 17, 2003). | |
4.8 | Sale of Business Agreement between Anglogold Limited, Clidet 383 (Pty) Ltd and Harmony Gold Mining Company Limited and ARM (Pty) Ltd in respect of the Free Gold assets entered into on December 24, 2001 (incorporated by reference to Harmony’s Annual Report on Form 20-F for the fiscal year ended June 30, 2004, as amended, filed on October 14, 2004). | |
4.9 | Sale of Shares Agreement amongst Harmony, ARMgold Hamony Joint Investment Company (Proprietary) Limited, and The ARM Broad-Based Empowerment Trust signed on April 15, 2005. | |
4.10 | Subordination Agreement amongst Harmony, Nedbank Limited and The ARM Broad-Based Empowerment Trust signed on April 15, 2005. | |
4.11 | First Loan Agreement between Nedbank Limited and The ARM Broad-Based Empowerment Trust signed on April 15, 2005. | |
4.12 | First Ranking Cessation and Pledge between The ARM Broad-Based Empowerment Trust and Nedbank Limited signed on April 15, 2005. | |
4.13 | Second Loan Agreement between Nedbank Limited and The ARM Broad-Based Empowerment Trust signed on April 15, 2005. | |
4.14 | Second Ranking Cessation and Pledge between The ARM Broad-Based Empowerment Trust and Nedbank Limited signed on April 15, 2005. | |
4.15 | Flow of Funds Agreement amongst Nedbank Limited, ARMgold Harmony Joint Investment Company (Proprietary) Limited, Harmony and The ARM Broad-Based Empowerment Trust signed on April 15, 2005. | |
4.16 | Right of Pre-emption and Deed of Adherence between Nedbank Limited, Harmony, African Rainbow Minerals & Exploration Investments (Proprietary) Limited and ARMgold Harmony Joint Investment Company (Proprietary) Limited signed on April 15, 2005. | |
4.17 | Agreement of Assignment between African Rainbow Minerals & Exploration Investments (Proprietary) Limited, Harmony, ARMgold Harmony Joint Investment Company (Proprietary) Limited and The Trustees of The ARM Broad-Based Empowerment Trust signed on April 15, 2005. | |
4.18 | Harmony Option Agreement between Harmony and Nedbank Limited signed on April 15, 2005. | |
4.19 | Harmony Undertaking amongst Harmony, ARMgold Harmony Joint Investment Company (Proprietary) Limited and Nedbank Limited signed on April 15, 2005. | |
8.1 | Significant subsidiaries of Harmony Gold Mining Company Limited. | |
12.1 | Certification of the principal executive officer required by Rule 13a-14(a) or Rule 15(d)-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002. | |
12.2 | Certification of the principal financial officer required by Rule 13a-14(a) or Rule 15(d)-14(a), pursuant to Section 302 of the Sarbanes Oxley Act of 2002. | |
13.1 | Certification of the chief executive officer, pursuant to Section 906 of the Sarbanes Oxley Act of 2002. | |
13.2 | Certification of the chief financial officer, pursuant to Section 906 of the Sarbanes Oxley Act of 2002. |
178
HARMONY GOLD MINING COMPANY LIMITED | ||||
By: | /s/ Zacharias Bernardus Swanepoel | |||
Z. B. Swanepoel | ||||
Chief Executive Officer | ||||
Date: November 2, 2005 |
Page | ||||
Harmony Gold Mining Company Limited | ||||
Report of the Independent Registered Public Accounting Firm | F-2 | |||
Consolidated Income Statements for the years ended June 30, 2005, 2004 and 2003 | F-3 | |||
Consolidated Balance Sheets at June 30, 2005 and 2004 | F-6 | |||
Consolidated Statements of Cash Flows for the years ended June 30, 2005, 2004 and 2003 | F-7 | |||
Consolidated Statements of Changes in Shareholders’ Equity for the years ended June 30, 2005, 2004 and 2003 | F-8 | |||
Notes to the Consolidated Financial Statements | F-10 |
Page | ||||
ARMgold/Harmony Freegold Joint Venture Company (Proprietary) Limited | ||||
Report of the Independent Auditors | F-73 | |||
Income Statement for the three month period ended September 30, 2003, the year ended June 30, 2003 and the six month period ended June 30, 2002 | F-74 | |||
Balance Sheet as at June 30, 2003 | F-75 | |||
Statement of Shareholders’ Equity for the year ended June 30, 2003 and the six month period ended June 30, 2002 | F-76 | |||
Statement of Cash Flows for the three month period ended September 30, 2003, the year ended June 30, 2003, and the six month period ended June 30, 2002 | F-77 | |||
Notes to the Financial Statements | F-78 |
F-1
Chartered Accountants (SA)
Registered Accountants & Auditors
Johannesburg, Republic of South Africa
F-2
For the years ended June 30
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
REVENUES | ||||||||||||
Product sales | 1,265,200 | 1,240,339 | 781,792 | |||||||||
COSTS AND EXPENSES | ||||||||||||
Production costs exclusive of depreciation and amortization | 1,217,562 | 1,172,483 | 601,143 | |||||||||
Deferred stripping costs | 15,362 | (4,119 | ) | (1,397 | ) | |||||||
Depreciation and amortization | 117,469 | 104,045 | 60,931 | |||||||||
Impairment of assets | 243,124 | 3,145 | 117,594 | |||||||||
Employment termination and restructuring costs | 73,215 | 31,668 | 5,098 | |||||||||
Care and maintenance cost of restructured shafts | 29,975 | — | — | |||||||||
Corporate expenditure | 17,969 | 14,193 | 7,941 | |||||||||
Exploration expenditure | 11,676 | 15,810 | 10,980 | |||||||||
Marketing and new business expenditure | 15,310 | 12,533 | 7,839 | |||||||||
Share-based compensation | 14,331 | 7,135 | 1,761 | |||||||||
Decrease in rehabilitation costs | (1,814 | ) | (17,839 | ) | (9,022 | ) | ||||||
Post retirement benefits expense | 9,137 | — | 503 | |||||||||
1,763,316 | 1,339,054 | 803,371 | ||||||||||
OPERATING LOSS | (498,116 | ) | (98,715 | ) | (21,579 | ) | ||||||
OTHER (EXPENSES)/INCOME | ||||||||||||
Dividends received | 2,785 | 533 | 341 | |||||||||
(Loss)/gain on financial instruments | (17,672 | ) | (32,385 | ) | 43,154 | |||||||
(Loss)/profit on sale of listed investments | (93,470 | ) | 4,910 | 59,243 | ||||||||
Impairment of listed investment | (63,234 | ) | — | — | ||||||||
Profit on sale and loss on dilution of investment in associates — net | — | 65,097 | — | |||||||||
(Loss)/profit on sale of subsidiaries | (114 | ) | 115 | — | ||||||||
Interest received | 21,396 | 28,029 | 21,924 | |||||||||
Interest paid — net of amounts capitalized of $1.9 million, $1.7 million and $nil in 2005, 2004 and 2003, respectively | (65,074 | ) | (64,289 | ) | (36,066 | ) | ||||||
Other (expenses)/income | (3,661 | ) | 14,155 | (21,112 | ) | |||||||
(219,044 | ) | 16,165 | 67,484 | |||||||||
(LOSS)/INCOME BEFORE TAX, MINORITY INTERESTS, EQUITY INCOME, IMPAIRMENT OF ASSOCIATES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLES | (717,160 | ) | (82,550 | ) | 45,905 | |||||||
Income and mining tax benefit/(expense) | 100,693 | 41,884 | (25,255 | ) | ||||||||
(LOSS)/INCOME BEFORE MINORITY INTERESTS, EQUITY INCOME, IMPAIRMENT OF ASSOCIATES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLES | (616,467 | ) | (40,666 | ) | 20,650 | |||||||
Minority interests | — | 1,281 | (468 | ) | ||||||||
(LOSS)/INCOME BEFORE EQUITY INCOME, IMPAIRMENT OF ASSOCIATES AND CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLES | (616,467 | ) | (39,385 | ) | 20,182 | |||||||
Equity income of joint venture | — | 7,918 | 52,843 | |||||||||
Equity profit/(loss) of associated companies | — | 2,020 | (1,233 | ) | ||||||||
Impairment of investment in associate | — | (1,956 | ) | — | ||||||||
(LOSS)/INCOME BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES | (616,467 | ) | (31,403 | ) | 71,792 | |||||||
Cumulative effect of changes in accounting principles, net of tax | — | — | 14,770 | |||||||||
NET (LOSS)/INCOME | (616,467 | ) | (31,403 | ) | 86,562 | |||||||
BASIC (LOSS)/EARNINGS PER SHARE ($) BEFORE CUMULATIVE EFFECT OF CHANGES IN ACCOUNTING PRINCIPLES | (1.70 | ) | (0.12 | ) | 0.40 |
F-3
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
FULLY DILUTED (LOSS)/EARNINGS PER SHARE ($) BEFORE CUMULATIVE EFFECT OF CHANGES IN | ||||||||||||
ACCOUNTING PRINCIPLES | (1.70 | ) | (0.12 | ) | 0.39 | |||||||
BASIC (LOSS)/EARNINGS PER SHARE ($) | (1.70 | ) | (0.12 | ) | 0.49 | |||||||
FULLY DILUTED (LOSS)/EARNINGS PER SHARE ($) | (1.70 | ) | (0.12 | ) | 0.47 | |||||||
WEIGHTED AVERAGE NUMBER OF SHARES USED IN THE COMPUTATION OF BASIC EARNINGS PER SHARE | 362,499,012 | 254,240,500 | 177,954,245 | |||||||||
WEIGHTED AVERAGE NUMBER OF SHARES USED IN THE COMPUTATION OF FULLY DILUTED EARNINGS PER SHARE | 362,499,012 | 254,240,500 | 182,721,629 | |||||||||
DIVIDEND PER SHARE ($) | 0.05 | 0.26 | 0.57 |
F-4
For the years ended June 30
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
(Loss)/income — before cumulative effect of changes in accounting principles | (616,467 | ) | (31,403 | ) | 71,792 | |||||||
Cumulative effect of changes in accounting principles, net of tax | — | — | 14,770 | |||||||||
Net (loss)/income | (616,467 | ) | (31,403 | ) | 86,562 | |||||||
Other comprehensive (loss)/income | ||||||||||||
Mark-to-market of listed and other investments — unrealized | (43,656 | ) | (52,274 | ) | 4,498 | |||||||
Mark-to-market of listed and other investments — realized | 105,892 | (6,006 | ) | (65,208 | ) | |||||||
Mark-to-market of environmental trust funds | (1,018 | ) | (64 | ) | — | |||||||
Mark-to-market of cash flow hedging instruments | — | — | (5,088 | ) | ||||||||
Foreign currency translation adjustment | (185,944 | ) | 374,859 | 250,142 | ||||||||
Other comprehensive (loss)/income | (124,726 | ) | 316,515 | 184,344 | ||||||||
Comprehensive (loss)/income | (741,193 | ) | 285,112 | 270,906 | ||||||||
F-5
At June 30
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
ASSETS | ||||||||
CURRENT ASSETS | ||||||||
Cash and cash equivalents | 266,746 | 217,022 | ||||||
Receivables | 94,730 | 138,118 | ||||||
Inventories | 86,121 | 84,659 | ||||||
Materials contained in heap leach pads | 553 | 593 | ||||||
Income and mining taxes | 3,980 | — | ||||||
Deferred income and mining taxes | 138,519 | 71,132 | ||||||
Total current assets | 590,649 | 511,524 | ||||||
Property, plant and equipment | 3,271,019 | 3,636,773 | ||||||
Other assets | 14,328 | 31,838 | ||||||
Goodwill | 30,367 | 32,480 | ||||||
Restricted cash | 7,798 | 9,922 | ||||||
Investments | 642,516 | 419,378 | ||||||
Investments in associates | — | 19,908 | ||||||
TOTAL ASSETS | 4,556,677 | 4,661,823 | ||||||
LIABILITIES AND SHAREHOLDERS’ EQUITY | ||||||||
CURRENT LIABILITIES | ||||||||
Accounts payable and accrued liabilities | 427,544 | 382,858 | ||||||
Income and mining taxes | — | 9,565 | ||||||
Dividends payable | 1,211 | 1,341 | ||||||
Total current liabilities | 428,755 | 393,764 | ||||||
Long-term loans | 409,486 | 509,195 | ||||||
Deferred income and mining taxes | 510,298 | 558,812 | ||||||
Deferred financial liabilities | 76,720 | 91,513 | ||||||
Provision for environmental rehabilitation | 120,450 | 125,917 | ||||||
Provision for social plan | 2,109 | 1,958 | ||||||
Provision for post retirement benefits | 13,276 | 1,584 | ||||||
Commitments and contingencies (Note 29) | ||||||||
SHAREHOLDERS’ EQUITY | ||||||||
Share capital — 1 200,000,000 (2004: 350,000,000) authorized ordinary shares of 50 South African cents each. Shares issued 394,023,694 (2004: 321,424,077) | 31,448 | 25,204 | ||||||
Additional paid-in capital | 3,425,296 | 2,624,721 | ||||||
(Accumulated loss)/retained earnings | (522,891 | ) | 108,029 | |||||
Deferred share-based compensation | (38,294 | ) | (3,624 | ) | ||||
Accumulated other comprehensive income | 100,024 | 224,750 | ||||||
Total shareholders’ equity | 2,995,583 | 2,979,080 | ||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 4,556,677 | 4,661,823 | ||||||
F-6
For the years ended June 30
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
CASH FLOW FROM OPERATIONS | ||||||||||||
Sources of cash | ||||||||||||
Cash received from customers | 1,265,200 | 1,240,339 | 781,792 | |||||||||
Interest and dividends received | 24,181 | 28,562 | 22,265 | |||||||||
Cash provided by operating activities | 1,289,381 | 1,268,901 | 804,057 | |||||||||
Uses of cash | ||||||||||||
Cash paid to suppliers and employees | 1,449,346 | 1,231,713 | 580,516 | |||||||||
Interest paid | 42,156 | 44,189 | 27,396 | |||||||||
Income and mining taxes paid | 8,952 | 83,881 | 43,514 | |||||||||
Cash used in operating activities | 1,500,454 | 1,359,783 | 651,426 | |||||||||
NET CASH (UTILIZED)/GENERATED BY OPERATIONS | (211,073 | ) | (90,882 | ) | 152,631 | |||||||
CASH FLOW FROM INVESTING ACTIVITIES | ||||||||||||
Net increase in amounts invested in environmental trusts | (251 | ) | (5,529 | ) | (3,733 | ) | ||||||
Restricted cash | 1,585 | (8,973 | ) | — | ||||||||
Cash held by subsidiaries on acquisition | 723 | 100,872 | 10,770 | |||||||||
Cash held by subsidiaries at disposal | (1,830 | ) | (69 | ) | — | |||||||
Loan repaid by Free Gold Company | — | — | 21,768 | |||||||||
Cash paid for Abelle Mines | — | (85,168 | ) | (105,433 | ) | |||||||
Investment in Highland Gold | — | — | (7,635 | ) | ||||||||
Investment in ARM | — | — | (115,442 | ) | ||||||||
Investment in High River | — | — | (14,514 | ) | ||||||||
Other direct costs of acquisition of ARMgold | — | (195 | ) | — | ||||||||
Other direct costs of acquisition of Avgold | — | (256 | ) | — | ||||||||
Cash received for Bissett | — | 2,598 | — | |||||||||
Other direct costs of investment in Gold Fields | (13,802 | ) | — | — | ||||||||
Proceeds on disposal of listed investments | 380,363 | 146,350 | 89,618 | |||||||||
Increase in other non-current investments | (1,204 | ) | (7,677 | ) | (9,352 | ) | ||||||
Proceeds on disposal of mining assets | 20,892 | 28,981 | 3,055 | |||||||||
Additions to property, plant and equipment | (133,065 | ) | (112,215 | ) | (99,114 | ) | ||||||
NET CASH GENERATED/(UTILIZED) BY INVESTING ACTIVITIES | 253,411 | 58,719 | (230,012 | ) | ||||||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
Long-term borrowings raised — net | 31,899 | 42,767 | 102,478 | |||||||||
Ordinary shares issued — net of expenses | (9,695 | ) | 7,729 | 151,285 | ||||||||
Dividends paid | (14,495 | ) | (54,943 | ) | (98,632 | ) | ||||||
NET CASH GENERATED/(UTILIZED) BY FINANCING ACTIVITIES | 7,709 | (4,447 | ) | 155,131 | ||||||||
EFFECTS OF EXCHANGE RATES ON CASH AND CASH EQUIVALENTS | (323 | ) | 64,592 | 21,067 | ||||||||
NET INCREASE IN CASH AND CASH EQUIVALENTS | 49,724 | 27,982 | 98,817 | |||||||||
CASH AND CASH EQUIVALENTS — JULY 1 | 217,022 | 189,040 | 90,223 | |||||||||
CASH AND CASH EQUIVALENTS — JUNE 30 | 266,746 | 217,022 | 189,040 | |||||||||
F-7
For the years ended June 30
Accumulated | ||||||||||||||||||||||||||||||||
Additional | (Accumulated | other | Deferred share- | |||||||||||||||||||||||||||||
Number of | Number of | Share | paid-in | loss)/retained | comprehensive | based | ||||||||||||||||||||||||||
ordinary | warrants | capital | capital | earnings | income/(loss) | compensation | Total | |||||||||||||||||||||||||
shares issued | issued | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | |||||||||||||||||||||||||
BALANCE — JUNE 30, 2002 | 169,929,849 | 8,013,446 | 14,852 | 814,491 | 206,544 | (276,109 | ) | (6,652 | ) | 753,126 | ||||||||||||||||||||||
Net income | — | — | — | — | 86,562 | — | — | 86,562 | ||||||||||||||||||||||||
Dividends declared | — | — | — | — | (98,669 | ) | — | — | (98,669 | ) | ||||||||||||||||||||||
Issue of shares | — | |||||||||||||||||||||||||||||||
— Public offerings | 8,000,000 | — | 468 | 123,785 | — | — | — | 124,253 | ||||||||||||||||||||||||
— Correction of Randfontein offer | 114,750 | — | 7 | 479 | — | — | — | 486 | ||||||||||||||||||||||||
Exercise of employee share options | 1,846,600 | — | 93 | 6,623 | — | — | — | 6,716 | ||||||||||||||||||||||||
Share issue expenses | — | — | — | (5,318 | ) | — | — | — | (5,318 | ) | ||||||||||||||||||||||
Conversion of warrants | 5,645,416 | (5,645,416 | ) | 292 | 24,856 | — | — | — | 25,148 | |||||||||||||||||||||||
Deferred share-based compensation | — | — | — | 8,890 | — | — | (8,890 | ) | — | |||||||||||||||||||||||
Amortization of deferred share-based compensation | — | — | — | — | — | — | 3,986 | 3,986 | ||||||||||||||||||||||||
Share-based compensation | — | — | — | (2,294 | ) | — | — | — | (2,294 | ) | ||||||||||||||||||||||
Mark-to-market of listed and other investments — unrealized | — | — | — | — | — | 4,498 | — | 4,498 | ||||||||||||||||||||||||
Mark-to-market of listed and other investments — realized | — | — | — | — | — | (65,208 | ) | — | (65,208 | ) | ||||||||||||||||||||||
Mark-to-market of cash flow hedging instruments | — | — | — | — | — | (5,088 | ) | — | (5,088 | ) | ||||||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | — | 250,142 | — | 250,142 | ||||||||||||||||||||||||
BALANCE — JUNE 30, 2003 | 185,536,615 | 2,368,030 | 15,712 | 971,512 | 194,437 | (91,765 | ) | (11,556 | ) | 1,078,340 | ||||||||||||||||||||||
Net loss | — | — | — | — | (31,403 | ) | — | — | (31,403 | ) | ||||||||||||||||||||||
Dividends declared | — | — | — | — | (55,005 | ) | — | — | (55,005 | ) | ||||||||||||||||||||||
Issue of shares | — | |||||||||||||||||||||||||||||||
— Acquisition of 11.5% interest in Avgold | 6,960,964 | — | 455 | 83,941 | — | — | — | 84,396 | ||||||||||||||||||||||||
— Acquisition of ARMgold | 63,666,672 | — | 4,308 | 678,089 | — | — | — | 682,397 | ||||||||||||||||||||||||
— Acquisition of 42.2% interest in Avgold | 28,630,526 | — | 2,048 | 411,927 | — | — | — | 413,975 | ||||||||||||||||||||||||
— Acquisition of Avgold minorities | 33,574,367 | — | 2,474 | 482,986 | — | — | — | 485,460 | ||||||||||||||||||||||||
Exercise of employee share options | 703,800 | — | 51 | 4,401 | — | — | — | 4,452 | ||||||||||||||||||||||||
Share issue expenses | — | — | — | (11,781 | ) | — | — | — | (11,781 | ) | ||||||||||||||||||||||
Conversion of warrants | 2,351,133 | (2,351,133 | ) | 156 | 13,222 | — | — | — | 13,378 | |||||||||||||||||||||||
Warrants expired | — | (16,897 | ) | — | — | — | — | — | — | |||||||||||||||||||||||
Consolidation of share trusts | — | — | — | (7,425 | ) | — | — | — | (7,425 | ) | ||||||||||||||||||||||
Deferred share-based compensation | — | — | — | (2,151 | ) | — | — | 797 | (1,354 | ) | ||||||||||||||||||||||
Amortization of deferred share-based compensation | — | — | — | — | — | — | 7,135 | 7,135 | ||||||||||||||||||||||||
Mark-to-market of listed and other investments — unrealized | — | — | — | — | — | (52,274 | ) | — | (52,274 | ) | ||||||||||||||||||||||
Mark-to-market of listed and other investments — realized | — | — | — | — | — | (6,006 | ) | — | (6,006 | ) | ||||||||||||||||||||||
Mark-to-market of environmental trust funds | — | — | — | — | �� | — | (64 | ) | — | (64 | ) | |||||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | — | 374,859 | — | 374,859 | ||||||||||||||||||||||||
BALANCE — JUNE 30, 2004 | 321,424,077 | — | 25,204 | 2,624,721 | 108,029 | 224,750 | (3,624 | ) | 2,979,080 | |||||||||||||||||||||||
Net loss | — | — | — | — | (616,467 | ) | — | — | (616,467 | ) | ||||||||||||||||||||||
Dividends declared | — | — | — | — | (14,453 | ) | — | — | (14,453 | ) | ||||||||||||||||||||||
Issue of shares | ||||||||||||||||||||||||||||||||
— Acquisition of 11.5% interest in Gold Fields | 72,173,265 | — | 6,210 | 760,980 | — | — | — | 767,190 | ||||||||||||||||||||||||
Exercise of employee share options | 426,352 | — | 34 | 3,227 | — | — | — | 3,261 | ||||||||||||||||||||||||
Share issue expenses | — | — | — | (12,957 | ) | — | — | — | (12,957 | ) | ||||||||||||||||||||||
Consolidation of share trusts | — | — | — | 324 | — | — | — | 324 | ||||||||||||||||||||||||
Deferred share-based compensation | — | — | — | 49,001 | — | — | (49,001 | ) | — | |||||||||||||||||||||||
Amortization of deferred share-based compensation | — | — | — | — | — | — | 14,331 | 14,331 | ||||||||||||||||||||||||
Mark-to-market of listed and other investments — unrealized | — | — | — | — | — | (43,656 | ) | — | (43,656 | ) | ||||||||||||||||||||||
Mark-to-market of listed and other investments — realized | — | — | — | — | — | 105,892 | — | 105,892 | ||||||||||||||||||||||||
Mark-to-market of environmental trust funds | — | — | — | — | — | (1,018 | ) | — | (1,018 | ) | ||||||||||||||||||||||
Foreign exchange translation adjustment | — | — | — | — | — | (185,944 | ) | — | (185,944 | ) | ||||||||||||||||||||||
BALANCE — JUNE 30, 2005 | 394,023,694 | — | 31,448 | 3,425,296 | (522,891 | ) | 100,024 | (38,294 | ) | 2,995,583 | ||||||||||||||||||||||
F-8
For the years ended June 30
Mark-to-market | Foreign | |||||||||||||||
Mark-to-market of | of listed and | currency | Accumulated other | |||||||||||||
cash flow hedging | other | translation | comprehensive | |||||||||||||
instruments | investments | adjustment | income/(loss) | |||||||||||||
$’000 | $’000 | $’000 | $’000 | |||||||||||||
BALANCE — JUNE 30, 2002 | 5,142 | 59,771 | (341,022 | ) | (276,109 | ) | ||||||||||
Mark-to-market of cash flow hedging instruments | (5,088 | ) | — | — | (5,088 | ) | ||||||||||
Mark-to-market of listed and other investments — unrealized | — | 4,498 | — | 4,498 | ||||||||||||
Mark-to-market of listed and other investments — realized | — | (65,208 | ) | — | (65,208 | ) | ||||||||||
Foreign currency translation adjustment | — | — | 250,142 | 250,142 | ||||||||||||
BALANCE — JUNE 30, 2003 | 54 | (939 | ) | (90,880 | ) | (91,765 | ) | |||||||||
Mark-to-market of listed and other investments — unrealized | — | (52,274 | ) | — | (52,274 | ) | ||||||||||
Mark-to-market of listed and other investments — realized | — | (6,006 | ) | — | (6,006 | ) | ||||||||||
Mark-to-market of environmental trust funds | — | (64 | ) | — | (64 | ) | ||||||||||
Foreign currency translation adjustment | — | — | 374,859 | 374,859 | ||||||||||||
BALANCE — JUNE 30, 2004 | 54 | (59,283 | ) | 283,979 | �� | 224,750 | ||||||||||
Mark-to-market of listed and other investments — unrealized | — | (43,656 | ) | — | (43,656 | ) | ||||||||||
Mark-to-market of listed and other investments — realized | — | 105,892 | — | 105,892 | ||||||||||||
Mark-to-market of environmental trust funds | — | (1,018 | ) | — | (1,018 | ) | ||||||||||
Foreign currency translation adjustment | (54 | ) | (68 | ) | (185,822 | ) | (185,944 | ) | ||||||||
BALANCE — JUNE 30, 2005 | — | 1,867 | 98,157 | 100,024 | ||||||||||||
F-9
For the years ended June 30
1 | NATURE OF OPERATIONS | |
Harmony Gold Mining Company Limited (“Harmony”, the “Company” or the “Group”) is engaged in gold mining and related activities, including exploration, extraction, processing and refining. Gold bullion, the Company’s principal product, is currently produced at its operations in South Africa and Australia. | ||
2 | ACCOUNTING POLICIES |
(a) | USE OF ESTIMATES:The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of the Company’s consolidated financial statements requires the Company’s management to make estimates and assumptions about current and future events that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Future events and their effects cannot be determined with absolute certainty. Therefore, the determination of estimates requires the exercise of judgement based on various assumptions and other factors such as historical experience, current and expected economic conditions, and in some cases actuarial techniques. Actual results ultimately may differ from those estimates. | ||
The more significant areas requiring the use of management estimates and assumptions relate to mineral reserves that are the basis for future cash flow estimates and units-of-production depreciation, depletion and amortization calculations; environmental, reclamation and closure obligations; estimates of recoverable gold and other materials in heap leach pads; asset impairments (including impairments of goodwill, long-lived assets, and investments); write-downs of inventory to net realizable value; post employment, post retirement and other employee benefit liabilities; valuation allowances for deferred tax assets; reserves for contingencies and litigation; and the fair value and accounting treatment of financial instruments. | |||
The following are accounting policies used by the Company which, except as described in note 2(m)(iv) and note 2(o) below, have been consistently applied: | |||
(b) | CONSOLIDATION: |
(i) | Consolidated entities:The Group’s consolidated financial statements include the financial statements of the Company, its subsidiaries, and its investments in joint ventures and associates. A company in which the Group has, directly or indirectly, through subsidiary undertakings, a controlling interest is classified as a subsidiary undertaking. In addition, the Company reviews its relationships with other entities to assess if the Company is the primary beneficiary of a variable interest entity. If the determination is made that the Company is the primary beneficiary, then that entity is consolidated. See note 4. The results of any subsidiary acquired or disposed of during the year are consolidated from the effective date of acquisition and up to the effective date of disposal. | ||
Any excess between the purchase price and the fair value of the identifiable net assets of subsidiaries, joint ventures and associates at the date of acquisition is capitalized as goodwill. | |||
Intercompany profits, transactions and balances have been eliminated. | |||
(ii) | Investments in associates:An associate is an entity, other than a subsidiary, in which the Group has a material long-term 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. | ||
Investments in associates are accounted for by using the equity method of accounting based on the most recent audited financial statements of those entities. Equity accounting involves recognizing in the income statement the Group’s share of the associates’ profit or loss for the period. The Group’s interest in the associate is carried in the balance sheet at an amount that reflects the cost of the investment, the Group’s share of post acquisition earnings and other movement in reserves. The carrying value of an associate is reviewed on a regular basis and, if an impairment in the carrying value has occurred, it is written off in the period in which such permanent impairment is identified. |
F-10
For the years ended June 30
(iii) | Investment in joint ventures:A joint venture is an entity in which the group holds a long-term interest and which is jointly controlled by the Group and one or more venturers under a contractual arrangement. The Group’s interest in jointly controlled entities is accounted for under the equity method as described in note 2(b)(ii) above. | ||
(iv) | Goodwillrepresents 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 and businesses is included in intangible assets. Goodwill on acquisition of associates and joint ventures are included in the carrying value of investments in associates and joint ventures. | ||
Goodwill is not subject to amortization. Instead, the Company evaluates, on at least an annual basis, the carrying amount of goodwill to determine whether current events and circumstances indicate that such carrying amount may no longer be recoverable. To accomplish this, the Company compares the fair value of its reporting units to their carrying amounts. If the carrying value of a reporting unit were to exceed its fair value, the Company would perform the second step of the impairment test. In the second step, the Company would compare the implied fair value of the reporting unit’s goodwill to its carrying amount and any excess of the carrying value over the implied fair value would be charged to operations. | |||
The gain or loss on disposal of an entity includes the carrying amount of goodwill relating to the entity sold. |
(c) | FOREIGN CURRENCIES: |
(i) | Foreign entities:For self-sustaining foreign entities, assets and liabilities are translated using the closing rates at year-end, and income statements are translated at average rates. Differences arising on translation are taken directly to shareholders’ equity, until the foreign entity is sold or disposed of when the translation differences are recognized in the income statement as part of the gain or loss on sale. | ||
Fair value adjustments arising on the acquisition of the foreign entities are treated as assets and liabilities of the foreign entity are translated at the closing rate. | |||
(ii) | Foreign currency transactions:Transactions in foreign currencies are converted at the rates of exchange ruling at the date of these transactions. Monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange ruling at balance sheet date. Gains, losses and costs associated with foreign currency transactions are recognized in the income statement in the period to which they relate. These transactions are included in the determination of other income — net. | ||
(iii) | Functional currency:The functional currency of the majority of the Group’s operations is the South African Rand. The translation differences arising as a result of converting to US dollars using the current exchange rate method are included as a separate component of shareholders’ equity. | ||
References to “A$” refers to Australian currency, “R” to South African currency, and “$” or “US$” to United States currency. |
(d) | FINANCIAL INSTRUMENTSare initially measured at cost. Subsequent to initial recognition these instruments are measured as set out below in terms of the applicable accounting policy. Financial instruments carried on the balance sheet include cash and cash equivalents, money market instruments, investments, receivables, accounts payable, long term loans, interest free loans, forward sales contracts, option contracts, interest rate swaps and gold leases. |
F-11
Notes to the Consolidated Financial Statements
For the years ended June 30
(e) | CASH AND CASH EQUIVALENTSare defined as cash on hand, deposits held at call with banks and short term highly liquid investments with insignificant interest rate risk and original maturities of three months or less. Cash and cash equivalents are measured at fair value. | |
(f) | NON-CURRENT INVESTMENTS: Management determines the appropriate classification of its investments in equity securities at the time of purchase and re-evaluates such determinations at each reporting date. Non-current investments comprise of the following: |
(i) | Listed investments: Investments in listed companies, other than investments in subsidiaries, joint ventures and associates, are carried at fair value. These investments are considered to be available-for-sale investments. Changes in the carrying amount of available-for-sale investments, are excluded from earnings and included as a separate component of shareholders’ equity. On disposal of available-for-sale investments, amounts previously included as a separate component of shareholders’ equity, are transferred to income/(loss) and included in the determination of the gain/(loss) on disposal of available-for-sale securities. The amount transferred out of equity is determined by reference to the amounts previously included as a seperate component of shareholders’ equity relating to the specific investment. Unrealized losses are recognized in the determination of net income/(loss) when it is determined that an, other than temporary, significant decline in the value of the investment has occurred. | ||
(ii) | Unlisted investmentsare reflected at cost. If the directors are of the opinion that there has been an impairment in the value of these investments they are written down, with the write down recognized as an expense in the period in which the impairment is determined to have taken place. |
(g) | INVENTORIESare valued at the lower of cost and net realizable value. The Company’s inventories comprise of consumable stores, gold-in-process and ore stockpiles and are accounted for as follows: |
(h) | MATERIALS CONTAINED IN HEAP LEACH PADS:The recovery of gold from certain oxide ores is best achieved through the heap leaching process. Under this method, ore is placed on leach pads where it is permeated with a chemical solution, which dissolves the gold contained in the ore. The resulting “pregnant” solution is further processed in a leach plant where the gold in ( solution is recovered. For accounting purposes, value is added to leach pads based on current mining costs, including applicable depreciation and amortization relating to mining operations. Value is removed from the leach pad as ounces are recovered in circuit at the leach plant based on the average cost per recoverable ounce of gold on the leach pad. |
F-12
Notes to the Consolidated Financial Statements
For the years ended June 30
(i) | RECEIVABLES:Accounts receivable are stated at the gross invoice value adjusted for payments received and an allowance for doubtful debt, where appropriate, to reflect the fair value of the anticipated realizable value. Bad debts are written off during the period in which they are identified. | |
(j) | ACCOUNTS PAYABLEare stated at cost adjusted for payments made to reflect the value of the anticipated economic outflow of resources. | |
(k) | HEDGING:The Company accounts for its hedging activities in accordance with Statement of Financial Accounting Standards (“SFAS”) No. 133 (“SFAS No. 133”), Accounting for Derivative instruments and Hedging Activities, as amended by Statements of Financial Accounting Standards Nos. 137, 138 and 149. |
F-13
Notes to the Consolidated Financial Statements
For the years ended June 30
(l) | EXPLORATION COSTSare expensed as incurred prior to the completion of a final feasibility study to establish proved and probable reserves. | |
(m) | PROPERTY, PLANT AND EQUIPMENT |
(i) | Mining assetsincluding mine development costs and mine plant facilities are recorded at cost. |
(ii) | Mining operations placed on care and maintenance: The net assets of operations placed on care and maintenance are written down to net realizable value. Expenditure on the care and maintenance of these operations is charged against income, as incurred. | ||
(iii) | Non mining fixed assets: Land is shown at cost and not depreciated. Other non-mining fixed assets are shown at cost less accumulated depreciation. | ||
(iv) | Mineral and surface use rightsrepresent mineral and surface use rights for parcels of land both owned and not owned by the Company. Mineral and surface rights include acquired mineral use rights in production, development and exploration stage properties. The amount capitalized related to a mineral and surface rights represents its fair value at the time it was acquired, either as an individual asset purchase or as part of a business combination and are recorded at cost of acquisition. |
F-14
Notes to the Consolidated Financial Statements
For the years ended June 30
(v) | Depreciation and amortization of mineral property interests, mine development costs and mine plant facilitiesare computed principally by the units of production method based on estimated total 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 related to development projects is first recognized from the date on which the development project reaches commercial production quantities. Other non-mining fixed assets are depreciated by straight line over estimated useful lives of two to five years. | ||
(vi) | Amortization of mineral and surface use rights:Mineral rights associated withproduction stage mineral interests are amortized over the life of mine using the units-of-production method in order to match the amortization with the expected underlying future cash flows. Mineral interests associated withdevelopment andexploration stage mineral interests are not amortized until such time as the underlying property is converted to the production stage. |
F-15
Notes to the Consolidated Financial Statements
For the years ended June 30
(vii) | Impairment: The Company reviews and evaluates its long-lived assets for impairment when events or changes in circumstances indicate that the related carrying amounts may not be recoverable. An impairment is considered to exist if the total estimated future cash flows on an undiscounted basis are less than the carrying amount of the assets, including goodwill, if any. An impairment loss is measured and recorded based on discounted estimated future cash flows. Future cash flows are estimated based on quantities of recoverable minerals, expected gold prices (considering current and historical prices, price trends and related factors), production levels and cash costs of production and capital, all based on life-of-mine plans. |
(n) | DEFERRED STRIPPING COSTS: The costs of waste stripping in excess of the expected pit life average stripping ratio are deferred and charged to production when the actual ratio is below the expected average ratio. The expected pit life average stripping ratio is calculated as the ratio of future anticipated waste tonnes to be mined, to anticipated future ore tons to be mined. This ratio is recalculated annually in light of additional knowledge and changes in estimates. The expected pit life ratio is then compared to waste associated with ore mined during the period so as to calculate the deferred stripping costs to be deferred or released for the period. | |
(o) | ENVIRONMENTAL OBLIGATIONS: SFAS No. 143, Accounting for Asset Retirement Obligations (“SFAS No. 143”) was adopted by the Company with effect from July 1, 2002. |
F-16
Notes to the Consolidated Financial Statements
For the years ended June 30
(p) | ENVIRONMENTAL TRUST FUNDS: Contributions are made to the Group’s trust funds, created in accordance with statutory requirements, to fund the estimated cost of pollution control, rehabilitation and mine closure at the end of the life of the Group’s South African mines. Contributions are determined on the basis of the estimated environmental obligation over the life of the mine. Income earned on monies paid to environmental trust funds is accounted for as investment income. The funds contributed to the trusts plus growth in the trust funds are included under investments on the balance sheet. | |
(q) | PROVISIONSare recognized when information is available prior to the issuance of financial statements which indicates that it is probable that an asset has been impaired or a liability has been incurred as at the date of the financial statements and can be reasonably estimated. | |
(r) | DEFERRED TAXATION:The Group follows the comprehensive liability method of accounting for deferred tax using the balance sheet approach. Under this method deferred income and mining taxes are recognized for the tax consequences of temporary differences by applying expected future mining tax rates to the differences between the tax base of certain assets or liabilities and their balance sheet carrying amount. The effect on deferred tax of any changes in tax rates is recognized in the income statement during the period in which the change in tax rate occurs. |
(s) | PENSION PLANS AND OTHER EMPLOYEE BENEFITS: |
(i) | Pension plansare funded through annual contributions. The Group’s contributions to the defined contribution pension 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. |
F-17
Notes to the Consolidated Financial Statements
For the years ended June 30
(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 recognised in the income statement at re-valuation date. A liability for retirees and their dependents is accrued in full based on actuarial valuations every year. | ||
(iii) | Share-based compensation:Effective July 1, 2001, the Company adopted SFAS No. 123, Accounting for Stock-Based Compensation (“SFAS No. 123”) for all share option grants subsequent to that date. Accordingly, the Company fair values all share options granted subsequent to July 1, 2001, at the date of the option grant. The total fair value of the options granted is recorded as deferred share-based compensation as a seperate component of shareholders’ equity with a corresponding amount recorded as additional paid-in capital. The deferred share-based compensation is amortized as share-based compensation expense in the income statement over the vesting period of the respective option grant. Prior to July 1, 2001, the Company applied Accounting Principles Board Opinion No. 25, Accounting for Stock Issued to Employees (“APB 25”) and its related interpretations in accounting for its employee stock option plan. |
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
(Loss)/income before cumulative effect of change in accounting principle as reported | (616,467 | ) | (31,403 | ) | 71,792 | |||||||
Plus: Share-based compensation expense recognized | 14,331 | 7,135 | 1,761 | |||||||||
Less: Pro forma share-based compensation expense based on fair value of all awards granted | (15,618 | ) | (9,446 | ) | (4,821 | ) | ||||||
Pro forma (loss)/income before cumulative effect of change in accounting principle as reported | (617,754 | ) | (33,714 | ) | 68,732 | |||||||
Pro forma basic (loss)/earnings per share before cumulative effect of change in accounting principle - $ | (1.70 | ) | (0.13 | ) | 0.39 | |||||||
Pro forma fully diluted (loss)/earnings per share before cumulative effect of change in accounting principle - $ | (1.70 | ) | (0.13 | ) | 0.38 | |||||||
Net (loss)/income as reported | (616,467 | ) | (31,403 | ) | 86,562 | |||||||
Plus: Share-based compensation expense recognized | 14,331 | 7,135 | 1,761 | |||||||||
Less: Pro forma share-based compensation expense | (15,618 | ) | (9,446 | ) | (4,821 | ) | ||||||
Pro forma net (loss)/income | (617,754 | ) | (33,714 | ) | 83,502 | |||||||
Pro forma basic (loss)/earnings per share - $ | (1.70 | ) | (0.13 | ) | 0.47 | |||||||
Pro forma fully diluted (loss)/earnings per share - $ | (1.70 | ) | (0.13 | ) | 0.46 |
F-18
Notes to the Consolidated Financial Statements
For the years ended June 30
2001 | ||||
Expected life (in years) | 6.0 | |||
Risk free interest rate | 11.19 | % | ||
Volatility | 53.81 | % | ||
Dividend yield | 3.33 | % |
(t) | REVENUE RECOGNITION: Product sales arising from gold sales is recognized when the risks and rewards of ownership and title have passed to the buyer under the terms of the applicable agreement and the pricing is determinable. Sales revenue excludes value-added tax but includes the net profit and losses arising from hedging transactions from matched gold sales contracts, which are designated as normal sales contracts. Revenues from silver and other by-products sales are credited to production costs as a by-product credit. | |
(u) | INTEREST INCOME: Interest is recognized on a time proportion basis, taking into account the principal outstanding and the effective rate over the period to maturity, when it is determined that such income will accrue to the Group. | |
(v) | DIVIDEND INCOMEis recognized when the shareholders’ right to receive payment is established, recognized at the last date of registration. | |
(w) | DIVIDENDS DECLARED: Dividends proposed and the related transactions thereon are recognized when declared by the the Board of directors. Dividends paid therefore relate to those declared in the current fiscal year. Dividends are payable in South African Rands. |
(x) | EARNINGS PER SHARE: Earnings per share is based on net income divided by the weighted average number of ordinary shares in issue during the year. Diluted earnings per share is presented when the inclusion of potential ordinary shares has a dilutive effect on earnings per share. | |
(y) | COMPARATIVES: The Company changed the presentation of its income statement in the current year primarily to reflect only “Product sales” as a component of “Revenue”, and to reflect “Interest received”, Dividends received” and “Other (expenses)/income” as components of “Other (Expenses)/Income”. Therefore, where necessary, comparative figures have been reclassified to conform with changes in presentation in the current fiscal year. |
F-19
Notes to the Consolidated Financial Statements
For the years ended June 30
(z) | RECENT ACCOUNTING PRONOUNCEMENTS: |
F-20
Notes to the Consolidated Financial Statements
For the years ended June 30
3 | ACQUISITION AND DISPOSAL OF BUSINESSES AND INVESTMENTS |
F-21
Notes to the Consolidated Financial Statements
For the years ended June 30
2004 | 2003 | |||||||
$’000 | $’000 | |||||||
Total purchase price | 85,168 | 105,433 | ||||||
Plus: Fair value of liabilities assumed by Harmony | ||||||||
Accounts payable and accrued liabilities | — | 2,320 | ||||||
Deferred financial liability | — | 19 | ||||||
Provision for environmental rehabilitation | — | 1,335 | ||||||
Deferred tax | 24,034 | 43,308 | ||||||
Less: Fair value of assets acquired by Harmony | ||||||||
Cash and cash equivalents at acquisition | — | (10,770 | ) | |||||
Inventories | — | (1,224 | ) | |||||
Accounts receivable | — | (534 | ) | |||||
Investments | — | (632 | ) | |||||
Property, plant and equipment | (80,115 | ) | (154,153 | ) | ||||
Minority interest | (29,087 | ) | — | |||||
Minority interest in assets acquired and liabilities assumed | — | 14,898 | ||||||
Residual purchase price allocated to goodwill | — | — | ||||||
F-22
Notes to the Consolidated Financial Statements
For the years ended June 30
F-23
Notes to the Consolidated Financial Statements
For the years ended June 30
2004 | ||||
$’000 | ||||
Shares issued | 977,515 | |||
Direct costs of acquisition | 257 | |||
Total purchase price | 977,772 | |||
Plus: Fair value of liabilities assumed by Harmony | ||||
Accounts payable and accrued liabilities | 13,536 | |||
Income and mining taxes | 7,003 | |||
Deferred financial liability | 35,777 | |||
Provision for environmental rehabilitation | 1,299 | |||
Minority interest | 2,621 | |||
Less: Fair value of assets acquired by Harmony | ||||
Cash and cash equivalents at acquisition | (183 | ) | ||
Inventories | (6,036 | ) | ||
Accounts receivable | (5,510 | ) | ||
Investments | (5,793 | ) | ||
Property, plant and equipment | (1,020,486 | ) | ||
Residual purchase price allocated to goodwill | — | |||
F-24
Notes to the Consolidated Financial Statements
For the years ended June 30
2004 | ||||
$’000 | ||||
Shares issued | 696,775 | |||
Direct costs of acquisition | 195 | |||
Total purchase price | 696,970 | |||
Plus: Fair value of liabilities assumed by Harmony | ||||
Accounts payable and accrued liabilities | 57,837 | |||
Income and mining taxes | 50,517 | |||
Long-term loans | 66,092 | |||
Deferred tax | 206,951 | |||
Provision for environmental rehabilitation | 30,236 | |||
Provision for post retirement benefits | 154 | |||
Less: Fair value of assets acquired by Harmony | ||||
Cash and cash equivalents at acquisition | (100,689 | ) | ||
Inventories | (4,106 | ) | ||
Accounts receivable | (31,266 | ) | ||
Investments | (171,588 | ) | ||
Property, plant and equipment | (754,795 | ) | ||
Residual purchase price allocated to goodwill | 46,313 | |||
F-25
Notes to the Consolidated Financial Statements
For the years ended June 30
F-26
Notes to the Consolidated Financial Statements
For the years ended June 30
2004 | ||||
$’000 | ||||
Unaudited | ||||
Revenues | 1,479,265 | |||
(Loss)/income before cumulative effect of change in accounting principles | (46,454 | ) | ||
Net (loss)/income | (46,454 | ) | ||
Basic (loss)/earnings per share before cumulative effect of change in accounting principles - $ | (0.18 | ) | ||
Fully diluted (loss)/earnings per share before cumulative effect of change in accounting principles - $ | (0.18 | ) | ||
Basic (loss)/earnings per share - $ | (0.18 | ) | ||
Fully diluted (loss)/earnings per share - $ | (0.18 | ) | ||
Average shares used in the computation of basic (loss)/earnings | 254,240,500 | |||
Average shares used in the computation of fully diluted (loss)/earnings | 254,240,500 |
F-27
Notes to the Consolidated Financial Statements
For the years ended June 30
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Profit on sale of property, plant and equipment | 12,542 | 22,303 | 2,129 | |||||||||
Foreign exchange gains/(losses) | 452 | (4,279 | ) | (21,078 | ) | |||||||
Non-mining bad debts | (6,079 | ) | — | — | ||||||||
Other (expenditure)/income — net | (10,576 | ) | (3,869 | ) | (2,163 | ) | ||||||
(3,661 | ) | 14,155 | (21,112 | ) | ||||||||
F-28
Notes to the Consolidated Financial Statements
For the years ended June 30
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Production costs include mine production, transport and refinery costs, general and administrative costs, movement in inventories and ore stockpiles as well as transfers to and from deferred stripping. Ongoing employee termination cost is included, however employee termination costs associated with major restructuring and shaft closures are excluded. These costs, analyzed by nature, consist of the following: | ||||||||||||
Labor costs, including contractors | 768,053 | 673,483 | 314,277 | |||||||||
Stores and materials | 254,124 | 255,121 | 145,434 | |||||||||
Water and electricity | 139,974 | 124,038 | 69,634 | |||||||||
Hospital costs | 23,838 | 16,960 | 7,153 | |||||||||
Changes in inventory | (4,003 | ) | 17,656 | (13,265 | ) | |||||||
Other | 35,576 | 85,225 | 77,910 | |||||||||
1,217,562 | 1,172,483 | 601,143 | ||||||||||
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
South African operations: | ||||||||||||
Free State operations | 42,018 | — | — | |||||||||
Evander operations | 15,324 | — | — | |||||||||
Kalgold operations | 12,441 | — | — | |||||||||
Freegold operations | 52,557 | — | — | |||||||||
ARMgold operations | 479 | — | — | |||||||||
Australian operations | 120,305 | 3,145 | 117,594 | |||||||||
243,124 | 3,145 | 117,594 | ||||||||||
F-29
For the years ended June 30
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Free State | 20,909 | 9,083 | 1,574 | |||||||||
Evander | 4,005 | 3,841 | 1,212 | |||||||||
Kalgold | 143 | — | — | |||||||||
Randfontein and Elandskraal | 16,721 | 8,245 | 1,716 | |||||||||
Australian operations | — | — | 596 | |||||||||
Freegold | 28,076 | 6,756 | — | |||||||||
ARMgold (Welkom and Orkney) | 1,872 | 3,743 | — | |||||||||
Avgold | 1,489 | — | — | |||||||||
73,215 | 31,668 | 5,098 | ||||||||||
F-30
Notes to the Consolidated Financial Statements
For the years ended June 30
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Balance at July 1, 2004 and 2003 | 26,368 | — | ||||||
Employment termination costs paid | (57,244 | ) | — | |||||
Provision for employment termination costs | 66,174 | 23,847 | ||||||
Foreign currency translation adjustment | (2,388 | ) | 2,521 | |||||
Balance at June 30, 2005 and 2004 | 32,910 | 26,368 | ||||||
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Profit on sale of investment in Gindalbie Gold NL | 9 | — | — | |||||||||
Loss on sale of investment in ARM Limited | (38,242 | ) | — | — | ||||||||
Profit on sale of investment in Bendigo NL | 4,931 | — | — | |||||||||
Loss on sale of investment in Gold Fields Limited | (60,168 | ) | — | — | ||||||||
Profit on sale of investment in Legend Mining Limited | — | 1,755 | — | |||||||||
Profit on sale of investment in Midas Resources Limited | — | 12 | — | |||||||||
Profit on sale of investment in High River Gold Mines Limited | — | 3,143 | — | |||||||||
Profit on sale of investment in Placer Dome Pacific Limited | — | — | 59,243 | |||||||||
(93,470 | ) | 4,910 | 59,243 | |||||||||
F-31
Notes to the Consolidated Financial Statements
For the years ended June 30
10 | IMPAIRMENT OF LISTED INVESTMENT |
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Impairment of shares in listed companies | (63,234 | ) | — | — | ||||||||
11 | PROFIT ON SALE AND LOSS ON DILUTION OF INVESTMENT IN ASSOCIATES — NET |
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Profit on sale of investment in Highland Gold Limited | — | 77,596 | — | |||||||||
Loss on dilution of investment in African Rainbow Minerals Limited | — | (12,499 | ) | — | ||||||||
— | 65,097 | — | ||||||||||
12 | (LOSS)/PROFIT ON SALE OF SUBSIDIARIES |
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Profit on sale of investment in NACS | 128 | — | — | |||||||||
Loss on sale of investment in Future | (1,367 | ) | — | — | ||||||||
Profit on sale of investment in Ubuntu | 1,125 | — | — | |||||||||
Profit on sale of investment in Bissett | — | 115 | — | |||||||||
(114 | ) | 115 | — | |||||||||
F-32
Notes to the Consolidated Financial Statements
For the years ended June 30
13 | TAXATION |
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Current income and mining taxes | (12,255 | ) | (5,820 | ) | (29,797 | ) | ||||||
Deferred income and mining taxes | 112,948 | 47,704 | 4,542 | |||||||||
Total income and mining taxation benefit/(expense) | 100,693 | 41,884 | (25,255 | ) | ||||||||
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
South Africa | (614,592 | ) | (38,159 | ) | 138,259 | |||||||
Foreign | (102,568 | ) | (36,409 | ) | (40,744 | ) | ||||||
Total | (717,160 | ) | (74,568 | ) | 97,515 | |||||||
F-33
Notes to the Consolidated Financial Statements
For the years ended June 30
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Income and mining tax benefit/(expense) on (loss)/income before tax, minority interests and cumulative effect of changes in accounting principles at the maximum statutory mining tax rate | 315,417 | 33,712 | (36,807 | ) | ||||||||
Valuation allowance raised against deferred tax assets | — | — | 1,736 | |||||||||
Non-taxable income / additional deductions | (41,167 | ) | 18,063 | 15,548 | ||||||||
Difference between estimated effective mining tax rate and maximum mining statutory rate on timing differences | 18,602 | (2,467 | ) | (13,870 | ) | |||||||
Difference between South African mining formula tax rate and maximum mining statutory rate on mining income | (108,338 | ) | 9,861 | 10,306 | ||||||||
Difference between non-mining tax rate and maximum mining statutory rate on non-mining income | (12,552 | ) | 262 | 6,590 | ||||||||
Change in estimated effective mining tax rate on deferred tax | (71,269 | ) | (17,547 | ) | (8,758 | ) | ||||||
Income and mining tax benefit/(expense) | 100,693 | 41,884 | (25,255 | ) | ||||||||
Effective income and mining tax rate | 14 | % | 56 | % | 26 | % | ||||||
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Deferred income and mining tax assets: | ||||||||
Deferred financial liability | 11,346 | 12,834 | ||||||
Unredeemed capital expenditure | 90,482 | 60,227 | ||||||
Provisions, including rehabilitation accruals | 19,515 | 17,956 | ||||||
Tax losses | 52,707 | 16,389 | ||||||
Other | 173 | — | ||||||
174,223 | 107,406 | |||||||
Valuation allowance for deferred tax assets | — | — | ||||||
Total deferred income and mining tax assets | 174,223 | 107,406 | ||||||
Deferred income and mining tax liabilities: | ||||||||
Mining assets | (543,679 | ) | (588,675 | ) | ||||
Product inventory not taxed | (2,323 | ) | (5,794 | ) | ||||
Other | — | (617 | ) | |||||
Total deferred income and mining tax liabilities | (546,002 | ) | (595,086 | ) | ||||
Net deferred income and mining tax liabilities | (371,779 | ) | (487,680 | ) | ||||
Net deferred income and mining tax liabilities comprise of: | ||||||||
Current deferred income and mining tax assets | 138,519 | 71,132 | ||||||
Non-current deferred income and mining tax liabilities | (510,298 | ) | (558,812 | ) | ||||
Net deferred income and mining tax liabilities | (371,779 | ) | (487,680 | ) | ||||
F-34
Notes to the Consolidated Financial Statements
For the years ended June 30
14 | EARNINGS PER SHARE |
For the year ended June 30, 2005 | ||||||||||||
Loss | Shares | Per-share | ||||||||||
(Numerator) | (Denominator) | amount | ||||||||||
$’000 | ($) | |||||||||||
Basic loss per share | ||||||||||||
Shares outstanding July 1, 2004 | — | 321,424,077 | — | |||||||||
Weighted average number of ordinary shares issued during the year | — | 41,074,935 | — | |||||||||
Loss available to common shareholders | (616,467 | ) | 362,499,012 | (1.70 | ) | |||||||
Effect of dilutive securities | ||||||||||||
Share options issued to employees | — | — | — | |||||||||
Diluted loss per share | (616,467 | ) | 362,499,012 | (1.70 | ) | |||||||
For the year ended June 30, 2004 | ||||||||||||
Loss | Shares | Per-share | ||||||||||
(Numerator) | (Denominator) | amount | ||||||||||
$’000 | ($) | |||||||||||
Basic loss per share | ||||||||||||
Shares outstanding July 1, 2003 | — | 185,536,615 | — | |||||||||
Weighted average number of ordinary shares issued during the year | — | 68,703,885 | — | |||||||||
Loss available to common shareholders | (31,403 | ) | 254,240,500 | (0.12 | ) | |||||||
Effect of dilutive securities | ||||||||||||
Share options issued to employees | — | — | — | |||||||||
Diluted loss per share | (31,403 | ) | 254,240,500 | (0.12 | ) | |||||||
For the year ended June 30, 2003 | ||||||||||||
Income | Shares | Per-share | ||||||||||
(Numerator) | (Denominator) | amount | ||||||||||
$’000 | ($) | |||||||||||
Basic earnings per share before cumulative effect of change in accounting policy | ||||||||||||
Shares outstanding July 1, 2002 | — | 169,929,849 | — | |||||||||
Weighted average number of ordinary shares issued during the year | — | 8,024,396 | — | |||||||||
Income available to common shareholders | 71,792 | 177,954,245 | 0.40 | |||||||||
Effect of dilutive securities | ||||||||||||
Share options issued to employees | — | 3,197,170 | — | |||||||||
Warrants issued | — | 1,570,214 | — | |||||||||
Diluted earnings per share before cumulative effect of change in accounting policy | 71,792 | 182,721,629 | 0.39 | |||||||||
F-35
Notes to the Consolidated Financial Statements
For the years ended June 30
For the year ended June 30, 2003 | ||||||||||||
Income | Shares | Per-share | ||||||||||
(Numerator) | (Denominator) | amount | ||||||||||
$’000 | ($) | |||||||||||
Basic earnings per share | ||||||||||||
Shares outstanding July 1, 2002 | — | 169,929,849 | — | |||||||||
Weighted average number of ordinary shares issued during the year | — | 8,024,396 | — | |||||||||
Income available to common shareholders | 86,562 | 177,954,245 | 0.49 | |||||||||
Effect of dilutive securities | ||||||||||||
Share options issued to employees | — | 3,197,170 | — | |||||||||
Warrants issued | — | 1,570,214 | — | |||||||||
Diluted earnings per share | 86,562 | 182,721,629 | 0.47 | |||||||||
15 | RECEIVABLES |
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Value added tax | 15,009 | 19,596 | ||||||
Trade receivables — net of allowance for doubtful accounts of $1.1 million and $2.9 million in 2005 and 2004, respectively | 9,779 | 25,108 | ||||||
Gold receivables | 43,133 | 68,835 | ||||||
Prepayments | 3,688 | 4,779 | ||||||
Interest and other | 23,121 | 19,800 | ||||||
94,730 | 138,118 | |||||||
16 | INVENTORIES |
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Gold in-process | 49,937 | 53,244 | ||||||
Consumable stores | 36,184 | 31,415 | ||||||
86,121 | 84,659 | |||||||
17 | PROPERTY, PLANT AND EQUIPMENT |
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Mining properties, mine development costs and mine plant facilities — cost | 4,641,871 | 4,764,512 | ||||||
Other non-mining assets — cost | 53,321 | 53,356 | ||||||
Accumulated depreciation and amortization | (1,424,173 | ) | (1,181,095 | ) | ||||
3,271,019 | 3,636,773 | |||||||
F-36
Notes to the Consolidated Financial Statements
For the years ended June 30
18 | OTHER ASSETS |
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Mineral subscriptions, participation rights and slimes dams | 7,084 | 7,584 | ||||||
Deferred stripping | 1,511 | 16,157 | ||||||
Bond issue costs, net of amortization | 5,733 | 8,097 | ||||||
14,328 | 31,838 | |||||||
Deferred stripping costs are made up as follows: | ||||||||
Opening balance | 16,157 | 9,622 | ||||||
(Transfers from)/additions to assets during the period | (4,149 | ) | 4,119 | |||||
Impairment of assets during the period | (11,213 | ) | — | |||||
Foreign currency translation differences | 716 | 2,416 | ||||||
Closing balance | 1,511 | 16,157 | ||||||
19 | GOODWILL |
20 | RESTRICTED CASH |
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Bissett proceeds held in trust | 143 | 1,679 | ||||||
Australian dissentient shareholders funds | 1,334 | 5,192 | ||||||
Security deposits | 6,321 | 3,051 | ||||||
7,798 | 9,922 | |||||||
F-37
Notes to the Consolidated Financial Statements
For the years ended June 30
21 | INVESTMENTS |
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Listed investments | ||||||||
Investments in listed shares (a) | 453,712 | 234,991 | ||||||
Other investments | ||||||||
Unlisted investments and loans (b) | 13,109 | 11,013 | ||||||
Amounts contributed to environmental trust funds (c) | 175,695 | 173,374 | ||||||
188,804 | 184,387 | |||||||
Total non-current investments | 642,516 | 419,378 | ||||||
F-38
Notes to the Consolidated Financial Statements
For the years ended June 30
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Environmental trust funds | 13 | 1,031 | ||||||
ARM | — | (58,804 | ) | |||||
San Gold | 153 | (900 | ) | |||||
Gold City | (649 | ) | (610 | ) | ||||
Gold Fields | (20,748 | ) | — | |||||
(21,231 | ) | (59,283 | ) | |||||
(b) | Unlisted investments comprise of various industry related investments and loans, which have been recorded at cost. The directors of the Company perform independent valuations of the investments on an annual basis to ensure that no permanent diminution in the value of the investments has occurred. No dividends were received from these investments in the 2005, 2004 and 2003 fiscal years. | ||
(c) | The environmental trust funds are irrevocable trusts under the Group’s control. The cash in the trusts are invested primarily in interest bearing short-term and other investments and approximate their fair value. |
Market value | Market value | |||||||||||||||||||
Investment | Description of business | Ownership % | 2005 | 2004 | ||||||||||||||||
2005 | 2004 | $’000 | $’000 | |||||||||||||||||
Bendigo Mining NL | Gold exploration | — | 31.6 | % | — | 19,908 |
F-39
Notes to the Consolidated Financial Statements
For the years ended June 30
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Opening carrying amount | 19,908 | 63,782 | ||||||
Shares at cost | — | 84,491 | ||||||
Net share of results of associates | — | 2,020 | ||||||
Dividend received | — | 338 | ||||||
Disposal of associate | — | (42,955 | ) | |||||
Associate now consolidated | — | (95,137 | ) | |||||
Impairment of investment | — | (1,956 | ) | |||||
Associate becoming a listed investment on dilution | (20,303 | ) | — | |||||
Foreign currency translation differences | 395 | 9,325 | ||||||
Closing carrying amount | — | 19,908 | ||||||
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Trade payables | 49,664 | 70,121 | ||||||
Short term portion of long term loans | 200,451 | 93,029 | ||||||
Short term borrowings | 2,726 | 12,870 | ||||||
Payroll and leave liabilities | 62,814 | 106,001 | ||||||
Employment termination costs | 32,910 | 26,368 | ||||||
Accrued liabilities | 45,056 | 64,442 | ||||||
Other liabilities | 33,923 | 10,027 | ||||||
427,544 | 382,858 | |||||||
Notes to the Consolidated Financial Statements
For the years ended June 30
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
—— | ||||||||
Uncollateralized | ||||||||
Senior uncollaterized fixed rate bonds (a) | 179,991 | 192,694 | ||||||
Fair value adjustment of cash flow hedge | (3,577 | ) | (2,768 | ) | ||||
Less : amortized discount | (245 | ) | (524 | ) | ||||
176,169 | 189,402 | |||||||
Less : short term portion | (176,169 | ) | — | |||||
— | 189,402 | |||||||
Convertible uncollaterized fixed rate bonds (b) | 254,987 | 272,983 | ||||||
Africa Vanguard Resources (Proprietary) Limited (c) | 4,800 | 2,149 | ||||||
Total uncollateralized long term loans | 259,787 | 464,534 | ||||||
Collateralized | ||||||||
BAE Systems Plc (d) | — | 9,001 | ||||||
Less : short term portion | — | (9,001 | ) | |||||
— | — | |||||||
Nedbank Limited (e) | 20,970 | 20,585 | ||||||
AngloGold Limited (f) | — | 59,769 | ||||||
Less: short term portion | — | (59,769 | ) | |||||
— | — | |||||||
Gold Fields Limited (g) | 822 | 1,011 | ||||||
Less : short term portion | (308 | ) | (443 | ) | ||||
514 | 568 | |||||||
BOE Bank Limited (h) | 23,864 | 47,325 | ||||||
Less : short term portion | (23,864 | ) | (23,817 | ) | ||||
— | 23,508 | |||||||
Nedbank Limited (i) | 54,542 | — | ||||||
Nedbank Limited (j) | 73,494 | — | ||||||
Auriel Alloys (k) | 248 | — | ||||||
Less : short term portion | (69 | ) | — | |||||
179 | — | |||||||
Total collateralized long term loans | 149,699 | 44,661 | ||||||
Total long term loans | 409,486 | 509,195 | ||||||
F-41
Notes to the Consolidated Financial Statements
For the years ended June 30
(a) | On June 16, 2001, Harmony launched and priced an issue of South African Rand denominated senior uncollateralized fixed rate bonds in an aggregate principal amount of R1,200 million ($115.5 million), with semi-annual interest payable at a rate of 13% per annum. These bonds will be repayable on June 14, 2006, subject to early redemption at Harmony’s option. The bonds are listed on the Bond Exchange of South Africa. The bonds were issued to settle existing debt and fund the purchase of Elandskraal and New Hampton. As long as the bonds are outstanding, Harmony will not permit encumbrances on its present or future assets or revenues to secure indebtedness for borrowed money, without collateralized the outstanding bonds equally and ratably with such indebtedness, except for certain specified permitted encumbrances. Issuance costs of $1.9 million were incurred and capitalized and are being amortized over the life of the bonds. Included in the amortization charge in the income statement is $0.6 million (2004: $0.7 million) (2003: $0.5 million) for amortization of the bond issue costs. On July 6, 2005 a total of $45.0 million of the bond’s notional value was repurchased at a cost of some $47.1 million. This represents 23.5% of the total issue due for redemption in June 2006. See note 35(a). | |
(b) | On May 21, 2004, Harmony issued an international unsecured fixed rate convertible bond in an aggregate principal amount of R1,700 million ($252 million). Interest at a rate of 4.875% per annum is payable semi-annually in arrears on May 21 and November 21 of each year, commencing November 21, 2004. The bonds mature 5 years from the issue date at their nominal value of R1,700 million unless converted into the company’s ordinary shares. The bonds are convertible at the option of the bondholders at any time on or after July 1, 2004 and up to and including May 15, 2009, unless previously redeemed, converted or purchased and cancelled, into fully paid ordinary shares, at nominal value Rand 0.50 per share. The number of ordinary shares to be issued at such a conversion shall be determined by dividing the principal amount of each bond by the conversion price in effect on the elevant conversion date. The bonds are listed on the London Stock Exchange for Bonds. The terms and conditions of the bonds prohibit Harmony and its material subsidiaries from creating any encumbrance or security interest over any of its assets to secure any relevant debt (or any guarantee or indemnity in respect of any relevant debt) without according the same security to the bondholders or without obtaining the prior approval of the bondholders. Included in the amortisation charge as per the income statement is $1.4 million (2004: $0.1 million) (2003: $nil million) for amortization of the bond issue costs. | |
(c) | During the year Africa Vanguard borrowed an additional R18 million ($2.8 million) (2004: R14 million ($2.0 million)) from its holding company Africa Vanguard Resources to service working capital commitments. The loan is uncollateralized and interest free, with no fixed terms of repayment. | |
(d) | The loan from BAE Systems Plc was a US dollar denominated term loan of $9.0 million for financing the design, development and construction of a facility for the manufacture and sale of value added gold products at Harmony’s premises in the Free State. The loan was collateralized by a notarial covering bond over certain gold proceeds and other assets and was repaid in full on April 2, 2005. The loan accrued interest at LIBOR plus 2% and interest was repayable on a quarterly basis. | |
(e) | On July 30, 2003, Africa Vanguard Resources (Doornkop) (Proprietary) Limited (AVR) entered into a term loan facility of R116 million ($16 million) with Nedbank Limited for the purpose of partially funding AVR’s purchase of an undivided 26% share of the Mining titles, to be contributed to the Doornkop joint venture with Randfontein. Interest at a fixed rate equal to JIBAR plus the applicable margin plus stamp duties and holding costs shall be repayable to the extent that the borrower received profit participation interest for the interest periods. Unpaid interest shall be accrued and repaid with the loan amount. The loan amount and any interest accrued is repayable on July 30, 2008. Interest capitalized during the year ended June 30, 2005 amounted to $1.9 million (2004: $1.7 million and 2003: $nil). |
F-42
Notes to the Consolidated Financial Statements
For the years ended June 30
(f) | On December 24, 2001 FreeGold entered into an agreement with AngloGold Limited to purchase its FreeGold assets for R2,881 million ($298 million). R1,800 million ($169 million) was payable on January 1, 2002 at the call rate from this date until the 10th business day after the date of fulfilment of the last of the conditions precedent. R400 million ($38 million) was fully repaid on December 30, 2004 at no interest charge. The balance of the consideration was paid on June 23, 2003, five business days before AngloGold was obliged to pay recoupment tax, capital gains tax and any other income tax on the disposal of the assets, at no interest charge. | |
(g) | On July 1, 2002 Freegold entered into an agreement with St Helena Gold Mines Limited, a fully owned subsidiary of Gold Fields Limited, to purchase its St Helena assets for R129 million ($12.8 million). R120 million ($11.9 million) was payable on October 29, 2002, being the effective date after the fulfilment of all the conditions precedent. The balance of R9 million ($0.9 million) is payable by way of a 1 % royalty on turnover, monthly in arrears, for a period of 48 months, commencing on the 10th of the month following the effective date. | |
(h) | On April 5, 2002, ARMgold entered into a term loan facility of R500 million ($45.3 million) with BOE Bank Limited for the purpose of partially funding ARMgold’s acquisition of shares in Freegold and loans made by ARMgold to Freegold in connection with the acquisition of mining assets from AngloGold Limited. The facility is collateralized by a pledge of the following: |
(i) | On April 15, 2005 the ARM Trust entered into a term loan facility of R356 million ($56.7 million) with Nedbank Limited for the purpose of funding the ARM Trust’s partial acquisition of the shares, the Company held in ARM (Refer note 4). The loan bears interest, compounded monthly, at a fixed rate of 10.02%. Interest accrued during the year ended June 30, 2005 amounted to $1.3 million. The loan is repayable on the 5th anniversary of the advance date. | |
(j) | On April 15, 2005 the ARM Trust entered into a second term loan facility of R474 million ($75.4 million) with Nedbank Limited for the purpose of funding the balance of the ARM Trust’s acquisition of the shares, the Company held in ARM (Refer note 4). The loan bears interest, compounded monthly, at a fixed rate of 9.52%. Interest and additional charges accrued during the year ended June 30, 2005 amounted to $1.4 million and $1.1 million, respectively. The loan is repayable on the 5th anniversary of the advance date. | |
(k) | During December 2003 Musuku Beneficiation Systems (Proprietary) Limited, a wholly owned subsidiary of the Company, entered into a long term loan facility of R2 million ($0.3 million) with Auriel Alloys for the purpose of financing the acquisition of Dental Alloy equipment. The loan bears interest at 11% and is payable by way of 60 instalments of R50,000 each. |
F-43
Notes to the Consolidated Financial Statements
For the years ended June 30
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Current | 200,451 | 97,940 | ||||||
Between 1 to 2 years | 693 | 208,397 | ||||||
Between 2 to 5 years | 403,993 | 293,640 | ||||||
Over 5 years | 4,800 | 2,247 | ||||||
Total borrowings | 609,937 | 602,224 | ||||||
25 | DEFERRED FINANCIAL LIABILITY |
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Mark-to-market of financial instruments at year end | 57,863 | 91,513 | ||||||
ARM Empowerment Trust | 18,857 | — | ||||||
76,720 | 91,513 | |||||||
During the fiscal year ended June 30, 2005 Harmony closed out the remaining gold lease rate swaps which were inherited through the acquisition of New Hampton Gold and Hill 50. During the previous fiscal year, Harmony closed out 500,000oz of the New Hampton and Hill 50 hedge books at a cost of R105 million (US$15 million). These close outs are in accordance with Harmony’s strategy of being unhedged. | ||
All forward-pricing commitments and forward exchange contracts do not meet the criteria to qualify for hedge accounting and the mark-to-market movements are reflected in the income statement. | ||
The liability of $18.9 million represents the fair value of the net increase in the ARM Empowerment Trust. See note 3(d). Changes in the fair value of this derivative financial liability have been accounted for in the consolidated income statements. | ||
Refer to note 32 for more detail on the outstanding financial instruments. | ||
26 | PROVISION FOR ENVIRONMENTAL REHABILITATION | |
The Company’s mining and exploration activities are subject to extensive environmental laws and regulations. These laws and regulations are continually changing and are generally becoming more restrictive. The Company has made, and expects to make in the future, expenditures to comply with such laws and regulations, but cannot predict the full amount of such future expenditures. Estimated future reclamation costs are based principally on legal and regulatory requirements. The following is a reconciliation of the total liability for environmental rehabilitation: |
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Balance as at July 1, 2004 and 2003 | 125,917 | 62,977 | ||||||
Additions to liabilities due to acquisitions | — | 66,013 | ||||||
Change in estimates due to revisions in timing or amount of cash flows | (3,891 | ) | (13,417 | ) | ||||
Accretion expenses | 4,053 | 8,670 | ||||||
Foreign currency translation adjustment | (5,629 | ) | 1,674 | |||||
Balance as at June 30, 2005 and 2004 | 120,450 | 125,917 | ||||||
The Company intends to finance the ultimate rehabilitation costs of the South African operations from the money invested with the environmental trust funds, ongoing contributions, as well as the proceeds on sale of assets and gold from plant clean-up at the time of mine closure. The Company will finance the ultimate rehabilitation costs of the non-South African operations from funds to be set aside for that purpose. |
F-44
Notes to the Consolidated Financial Statements
For the years ended June 30
27 | PROVISION FOR SOCIAL PLAN |
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Opening balance | 1,958 | — | ||||||
Recognition of present value of future liability | — | 1,772 | ||||||
Charge to income statement | 299 | — | ||||||
Foreign currency translation adjustment | (148 | ) | 186 | |||||
Closing balance | 2,109 | 1,958 | ||||||
The company has undertaken to donate R50 million ($8.0 million) over a period of 10 years to The Harmony Gold Mining Company Social Plan Trust in terms of an agreement signed on November 3, 2003. R18.5 million ($2.7 million) was donated during the 2004 fiscal year and the balance will be donated in instalments of R3.5 million ($0.6 million) annually over the next 9 years. The purpose of the trust is to fund the social plan to reduce the negative effects of retructuring on the company’s workforce, to put measures in place to ensure that the technical and life skills of the company’s workforce are developed and to develop the company’s workforce in such a manner to avoid or minimize job losses and a decline in employment through turnaround or redeployment strategies. | ||
28 | PROVISION FOR POST-RETIREMENT BENEFITS | |
Most of the supervisory and managerial workers in South Africa participate in the Minemed defined contribution medical scheme, as well as other medical schemes. The Group contributes to these schemes on behalf of current employees and retired employees who retired prior to December 31, 1996 (the “Minemed scheme”). The Group’s contributions to these schemes on behalf of retired and current employees amounted to $10.0 million, $6.6 million and $4.4 million for 2005, 2004 and 2003 respectively. | ||
With the exception of some Freegold employees, included from date of acquisition, no post-retirement benefits are available to other workers. No liability exists for employees who were members of these schemes who retired after the date noted above. The medical schemes pay certain medical expenses for both current and retired employees and their dependents. Current and retired employees pay an annual fixed contribution to these schemes. | ||
An updated actuarial valuation was carried out during the 2005 fiscal year on the Minemed medical scheme following the last actuarial valuation in the 2002 fiscal year. | ||
Assumptions used to determine the liability relating to the Minemed medical scheme included, a discount rate of 9%, no increases in employer subsidies (in terms of the agreement) and mortality rates according to the SA ‘‘a mf’’ tables, which are generally used in South Africa to represent the mortality of CAWMs, and a medical inflation rate of 6.34%. | ||
The company operates a post retirement medical aid benefit scheme. The amounts were based on an actuarial valuation conducted during the year ended 30 June 2005 and the liability was valued using the projected unit credit method. The next actuarial valuation will be performed on 30 June 2006. | ||
The movements in the present value of the unfunded obligations of the accrued post-retirement health care costs recognised in the balance sheet are as follows: |
F-45
Notes to the Consolidated Financial Statements
For the years ended June 30
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Opening balance as previously stated | 1,584 | 1,017 | ||||||
Acquired through the purchase of subsidiary | — | 154 | ||||||
Additional provision for the current employees | 6,470 | — | ||||||
Contributions paid | (971 | ) | — | |||||
Other expenses included in staff costs | ||||||||
Current service cost | 971 | — | ||||||
Interest cost | 3,235 | — | ||||||
Net actuarial gains recognised during the year | 3,074 | — | ||||||
Foreign currency translation adjustments | (1,087 | ) | 413 | |||||
Balance at the end of the year | 13,276 | 1,584 | ||||||
Discount rate | 9 | % | 4%-12 | % | ||||
Healthcare inflation rate | 6.34 | % | 0%-7 | % | ||||
Normal retirement age | 60 | 60 |
29 | COMMITMENTS AND CONTINGENCIES |
2005 | 2004 | |||||||
$’000 | $’000 | |||||||
Capital expenditure commitments | ||||||||
Contracts for capital expenditure | 4,226 | 12,442 | ||||||
Authorized by the directors but not contracted for | 274,318 | 670,878 | ||||||
278,544 | 683,320 | |||||||
Contingent liabilities | �� | |||||||
Guarantees and suretyships | 2,666 | 3,089 | ||||||
Environmental guarantees | 20,107 | 15,800 | ||||||
22,773 | 18,889 | |||||||
F-46
Notes to the Consolidated Financial Statements
For the years ended June 30
Occupational healthcare services are made available by Harmony to employees from its existing facilities. There is a risk that the cost of providing such services could increase in the future depending upon changes in the nature of underlying legislation and the profile of employees. This increased cost, should it transpire, is currently indeterminate. The group is monitoring developments in this regard. | ||
Action was instituted by 10 Plaintiffs employed at Elandsrand Mine in December 2004. The First Defendant in these matters is Anglo American Corporation of South Africa Limited (Anglo American), with Harmony cited as the Second Defendant. These 10 claims constitute test cases in relation to claims for damages for silicosis allegedly contracted by the Plaintiffs over their period of employment with Anglo American and Harmony at Elandsrand. The Board of directors do not believe that the present 10 test cases present a significant risk and the probabilities vastly favour a dismissal of the actions. At this stage, any potential liability can not be reasonably quantified. | ||
30 | DISCLOSURES REGARDING FAIR VALUE OF FINANCIAL INSTRUMENTS | |
Cash and equivalents The carrying amount approximates fair value as a result of the short-term maturity of these instruments. | ||
Investments It is not practical to determine the fair value of unlisted equity investments. These investments are carried at their original cost in the balance sheet. The fair value of listed equity investments is determined with reference to their market value at the end of each reporting period. | ||
Receivables, acounts payable and accrued liabilities The carrying amount of receivables, accounts payable and accrued liabilities approximates fair value as a result of the short-term maturity of these items. | ||
Long-term and short-term debt The fair value of long-term debt is estimated based on the effective interest rate and expected future cash flows. The fair value of short-term debt approximates the carrying value as a result of the short-term maturity periods. | ||
Interest rate swaps The fair value of interest rate swaps is determined by reference to quoted market prices for similar instruments. | ||
The fair values of financial instruments were as follows: |
2005 | ||||||||
Carrying value | Fair Value | |||||||
$’000 | $’000 | |||||||
Cash and cash equivalents | 266,746 | 266,746 | ||||||
Receivables | 94,730 | 94,730 | ||||||
Investments in listed securities | 453,712 | 453,712 | ||||||
Investments in unlisted securities | 13,109 | 13,109 | ||||||
Accounts payable and accrued liabilities | 427,544 | 427,544 | ||||||
Long and short-term debt | 609,937 | 609,937 | ||||||
Interest rate swaps | 3,577 | 3,577 |
F-47
Notes to the Consolidated Financial Statements
For the years ended June 30
2004 | ||||||||
Carrying value | Fair Value | |||||||
$’000 | $’000 | |||||||
Cash and cash equivalents | 217,022 | 217,022 | ||||||
Receivables | 138,118 | 138,118 | ||||||
Investments in listed securities | 234,991 | 234,991 | ||||||
Investments in unlisted securities | 11,014 | 11,014 | ||||||
Accounts payable and accrued liabilities | 382,858 | 382,858 | ||||||
Long and short-term debt | 602,224 | 602,224 | ||||||
Interest rate swaps | 2,768 | 2,768 |
31 | EMPLOYEE BENEFIT PLANS | |
(a) | PENSION AND PROVIDENT FUNDS:The Group contributes to several defined contribution pension and provident funds governed by the Pension Funds Act, 1946 for the employees of its South African subsidiaries. The pension funds are multi-employer industry plans. The Group’s liability is limited to its annually determined contributions. | |
The provident funds are funded on the ‘‘money accumulative basis’’ with the member’s and employer’s contributions having been fixed in the constitution of the funds. | ||
The Australian group companies make contributions to each employee’s Superannuation (pension) funds in accordance with the Superannuation Guarantee Scheme (SGS). The SGS is a Federal Government initiative enforced by law which compels employers to make regular payments to regulated funds providing for each employee on their retirement. The Superannuation Guarantee Contributions were set at a minimum of 9% of gross salary and wages for the 2005 fiscal year (2004: 9% and 2003: 9%). | ||
Substantially all the Group’s employees are covered by the above mentioned retirement benefit plans. Funds contributed by the Group for fiscal 2005 amounted to $56.0 million (2004 : $43.4 million and 2003: $20.5 million). |
F-48
Notes to the Consolidated Financial Statements
For the years ended June 30
(b) | SHARE OPTION SCHEMES | |
(i) | HARMONY SHARE OPTION SCHEMES:The Company currently has three employee share option schemes, being the Harmony (1994) Share Option Scheme (“HSOS 1994 Scheme”), the Harmony (2001) Share Option Scheme (“HSOS 2001 Scheme”) and the Harmony (2003) Share Option Scheme (“HSOS 2003 Scheme”). Pursuant to the rules of the HSOS 1994 Scheme, the HSOS 2001 Scheme and the HSOS 2003 Scheme certain qualifying employees may be granted options to purchase shares in the Company’s authorized but unissued ordinary shares. The HSOS 2001 Scheme was established following approval by the Company’s shareholders during fiscal 2002. The HSOS 2001 Scheme came into effect on November 16, 2001 and the HSOS 2003 Scheme came into effect on November 12, 2003, however, options previously issued under the HSOS 1994 Scheme remain in force. The terms of the HSOS 2001 Scheme and the HSOS 2003 Scheme are substantially equivalent to the terms of the HSOS 1994 Scheme, except that the maximum number of share options that may be granted under the HSOS | |
2001Scheme is a fixed amount (8,000,000), rather than a percentage of share capital. Options granted under the HSOS 1994 Scheme are not counted against this maximum. Of the 8,000,000 ordinary shares under the specific authority of the directors in terms of the HSOS 2001 Scheme, 7,572,500 shares have been offered to participants leaving a balance of 427,500 to be offered to eligible employees. Upon the date of adoption of the HSOS 2001 Scheme, 1,065,400 shares were still outstanding under the HSOS 1994 Scheme. Following the adoption of the HSOS 2001 Scheme, no further option grants have been made under the HSOS 1994 Scheme. On June 30, 2005 13,532,997 shares of the 23,204,960 ordinary shares have been offered to participants in terms of the HSOS 2003 Scheme, leaving a balance of 9,671,963. In terms of the rules of the HSOS 1994 Scheme, the HSOS 2001 Scheme and the HSOS 2003 Scheme, the exercise price of the options granted is equal to fair market value of the shares at the date of the grant. | ||
On November 29, 1999, the Company adopted a share purchase scheme (the “Share Purchase Scheme”), in which eligible employees may participate. The Share Purchase Scheme provides for a share purchase trust controlled by the Company. The share purchase trust provides recourse loans to enable employees to acquire shares or exercise their options under the HSOS 1994 Scheme. To date, the Share Purchase Scheme has only been used for the purpose of making recourse loans to employees to enable them to exercise their options under the HSOS 1994 Scheme. The shares acquired by an employee pursuant to the exercise of the option are then pledged by that employee to the share purchase trust to secure repayment of the recourse loan granted by the share purchase trust, plus any interest thereon. The share purchase trust is funded by a loan from the Company, which it repays once it receives repayment of the loans granted to employees. Three non-executive directors of the Company serve as trustees of the share purchase trust. The trustees are not eligible to receive loans from the trust. The Company cancelled the share purchase scheme on March 21, 2003. | ||
Options currently expire no later than 10 years from the grant date. Pursuant to the HSOS 1994 Scheme rules, annually upon anniversary of the grant date, a third of the total options granted are exercisable. Pursuant to the HSOS 2001 Scheme rules, annually upon anniversary of the grant date, a third or a fifth of the total options granted are exercisable, depending on the vesting terms of the respective grant. Pursuant to the HSOS 2003 Scheme rules, annually upon anniversary of the grant date, a fifth of the total options granted are exercisable. Proceeds received by the Company from the exercise are credited to share capital and additional paid in capital. | ||
Details of the activity in the HSOS 1994 Scheme, the HSOS 2001 Scheme and the HSOS 2003 Scheme were as follows (For convenience of the reader, the Rand amounts have been converted to US$ at the balance sheet date for the respective fiscal years): |
F-49
Notes to the Consolidated Financial Statements
For the years ended June 30
Average | Average | |||||||||||||||
Number of | exercise price | exercise price | ||||||||||||||
Available for | share options | per share | per share | |||||||||||||
grant | granted | SA Rand | US Dollar | |||||||||||||
Balance as at June 30, 2002 | 4,978,700 | 8,987,868 | — | — | ||||||||||||
Share options granted during the year | (1,149,100 | ) | 1,149,100 | — | — | |||||||||||
Share options exercised during the year | — | (2,243,300 | ) | 37.04 | 4.93 | |||||||||||
Share options forfeited during the year | 461,800 | (461,800 | ) | — | — | |||||||||||
Balance as at June 30, 2003 | 4,291,400 | 7,431,868 | — | — | ||||||||||||
Share options exercised during the year | — | (703,800 | ) | 41.82 | 6.07 | |||||||||||
Share options forfeited during the year | 683,934 | (683,934 | ) | — | — | |||||||||||
Balance as at June 30, 2004 | 4,975,334 | 6,044,134 | — | — | ||||||||||||
Share options reserved during the year | 23,204,960 | — | — | — | ||||||||||||
Share options granted during the year | (13,532,997 | ) | 13,532,997 | — | — | |||||||||||
Share options exercised during the year | — | (426,352 | ) | 45.69 | 7.39 | |||||||||||
Share options forfeited during the year | 937,695 | (937,695 | ) | — | — | |||||||||||
Balance as at June 30, 2005 | 15,584,992 | 18,213,084 | — | — | ||||||||||||
Outstanding options weighted average | ||||||||||||||||||||||||
Exercise | Exercise | |||||||||||||||||||||||
Number of | Contractual | price | price | |||||||||||||||||||||
SA Rand | Range of prices | US$ | shares | life (in years) | SA Rand | US$ | ||||||||||||||||||
22.90 - 27.20 | 3.43 - 4.08 | 161,450 | 4.85 | 25.39 | 3.81 | |||||||||||||||||||
35.40 - 49.60 | 5.31 - 7.44 | 12,905,548 | 8.93 | 41.43 | 6.21 | |||||||||||||||||||
66.00 - 66.15 | 9.90 - 9.92 | 4,120,686 | 9.03 | 66.14 | 9.92 | |||||||||||||||||||
91.60 - 93.00 | 13.74 - 13.95 | 1,025,400 | 7.71 | 91.64 | 13.75 | |||||||||||||||||||
Total | 18,213,084 | 8.85 | 49.70 | 7.46 | ||||||||||||||||||||
Exercisable options | ||||||||||||||||||||
Weighted | Weighted | |||||||||||||||||||
average | average | |||||||||||||||||||
exercise price | exercise price | |||||||||||||||||||
SA Rand | Range of prices | US$ | Number of shares | Rand | US$ | |||||||||||||||
22.90 - 27.20 | 3.43 - 4.08 | 161,450 | 25.39 | 3.81 | ||||||||||||||||
35.40 - 49.60 | 5.31 - 7.44 | 1,900,700 | 47.70 | 7.15 | ||||||||||||||||
66.00 - 66.15 | 9.90 - 9.92 | 117,900 | 66.00 | 9.90 | ||||||||||||||||
91.60 - 93.00 | 13.74 - 13.95 | 416,200 | 91.66 | 13.75 | ||||||||||||||||
Total | 2,596,250 | 54.19 | 8.13 | |||||||||||||||||
F-50
Notes to the Consolidated Financial Statements
For the years ended June 30
In connection with the share purchase scheme described above, the Company follows the provisions of EITF 00-23 “Issues Related to the Accounting for Stock Compensation under APB 25 and FASB Interpretation No. 44” for all options granted subsequent to January 18, 2001 and prior to the adoption of FAS 123 on July 1, 2001, due to the share purchase scheme described above. Pursuant to the guidance in EITF 00-23, the Company applied variable accounting for the 700,000 options granted on April 24, 2001, until the earlier of such date upon which such options were exercised, or the share purchase scheme was cancelled. The Company recognized a share-based compensation credit of $2.2 million related to this option grant during fiscal 2003. | ||
On July 1, 2001, the Company changed its accounting policy and adopted FAS 123. FAS 123 requires that all share options granted following the date of adoption, be fair valued and that the fair value be recognized as share-based compensation expense over the options vesting period. Accordingly the Company fair valued the 6,130,100 options granted on November 20, 2001 and recorded deferred share-based compensation of $8.7 million based on a fair value of R9.23 per option granted during the 2002 fiscal year. $1.7 million, $2.6 million and $3.1 million were recognized as share compensation expense during the 2005, 2004 and 2003 fiscal years, respectively, related to the November 20, 2001, option grant. The Company also fair valued the 1,311,000 options granted on March 27, 2003 and recorded deferred share-based compensation of $7.1 million based on a fair value of R42.78 per option granted during the 2003 fiscal year. $2.1 million, $3.3 million and $0.7 million was recognized as share compensation expense during the 2005, 2004 and 2003 fiscal years, respectively, related to the March 27, 2003, option grant. The Company also fair valued the 3,924,149 options granted on August 10, 2004 and recorded deferred share-based compensation of $21.3 million based on a fair value of R33.36 per option granted during the 2005 fiscal year. $8.5 million was recognized as share compensation expense during the 2005 fiscal year, related to the August 10, 2004, option grant. The Company also fair valued the 9,608,848 options granted on April 26, 2005 and recorded deferred share-based compensation of $27.7 million based on a fair value of R17.57 per option granted during the 2005 fiscal year. $2.1 million was recognized as share compensation expense during the 2005 fiscal year, related to the April 26, 2005, option grant. The Company used the following assumptions in valuing the option grants: |
April 26, | August 10, | March 27 , | November | |||||||||||||
2005 option | 2004 option | 2003 option | 20, 2001 | |||||||||||||
grant | grant | grant | option grant | |||||||||||||
Expected life (in years) | 5.0 | 5.0 | 5.0 | 3.5 | ||||||||||||
Risk free interest rate | 8.37 | % | 9.94 | % | 11.63 | % | 11.50 | % | ||||||||
Volatility | 35.00 | % | 40.00 | % | 45.00 | % | 40.00 | % | ||||||||
Dividend yield | 0.00 | % | 0.00 | % | 1.52 | % | 4.00 | % |
The Company used the binomial method in determining the fair value of the options granted. | ||
Pro forma financial information required by SFAS No. 123 “Accounting for Stock-Based Compensation” regarding net income and earnings per share for the fiscal years 2005, 2004 and 2003 as if the Company had accounted for its employee share options, granted subsequent prior to July 1, 2001, under the fair value method of that statement is presented in note 2(s)(iii) to these financial statements. | ||
(ii) | ABELLE SHARE OPTION SCHEME:Prior to the Company’s acquisition of the entire outstanding shareholdings in Abelle, Abelle also had a share option scheme (the “Abelle Scheme”). Abelle established the Abelle Scheme to incentivize and to assist in the recruitment, reward and retention of employees of Abelle. All employees may have been granted options to purchase shares in Abelle’s authorized but unissued ordinary shares pursuant to the Abelle Scheme rules. The Abelle Scheme was established following approval by Abelle’s shareholders during fiscal 2002. The Abelle Scheme came into effect on April 29, 2002. The maximum number of share options that may have been granted under the Abelle Scheme were not to exceed 5% of the total number of Abelle shares in issue. In terms of the rules of the Abelle Scheme, the exercise price of the options granted must be equal to at least 112% of the fair market value of the shares at the date the participant is invited to apply for an option. |
F-51
Notes to the Consolidated Financial Statements
For the years ended June 30
Average | Average | |||||||||||||||
Number of | exercise price | exercise price | ||||||||||||||
Available for | share options | per share | per share | |||||||||||||
grant | granted | AUS$ | US$ | |||||||||||||
Balance as at April 30, 2003 | 7,260,382 | 2,662,500 | — | — | ||||||||||||
Share options granted during the year | (1,800,000 | ) | 1,800,000 | — | — | |||||||||||
Share options exercised during the year | — | (22,500 | ) | (0.94 | ) | (0.71 | ) | |||||||||
Balance as at June 30, 2003 | 5,460,382 | 4,440,000 | — | — | ||||||||||||
Acquisition of outstanding options by Harmony | (5,460,382 | ) | (4,440,000 | ) | — | — | ||||||||||
Balance as at June 30, 2004 | — | — | — | — | ||||||||||||
2004 | ||||
Expected life (in years) | 3.0 | |||
Risk free interest rate | 4.64 | % | ||
Volatility | 53.00 | % | ||
Dividend yield | 0.00 | % |
F-52
For the years ended June 30
32 | DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE AND CREDIT RISK OF FINANCIAL INSTRUMENTS | |
Harmony is exposed to various market risks, including commodity price risk, foreign currency risk, interest rate risk, liquidity risk and credit risk associated with the underlying assets and liabilities of the company as well as with anticipated transactions. Harmony does not issue derivative financial instruments for trading or speculative purposes. However, following periodic evaluation of these exposures, Harmony may enter into derivative financial instruments to manage these exposures. | ||
Commodity price sensitivity | ||
As a general rule, the Company sells its gold production at market prices. The Company, generally, does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of its future gold production. A significant proportion of New Hampton and Hill 50’s production was already hedged when acquired by the Company. During the previous fiscal year, in accordance with Harmony’s strategy, a significant portion of the inherited hedge books of both New Hampton and Hill 50, were closed out at a cost of US$15 million. | ||
It is Harmony’s strategy to continuously evaluate the hedge agreements as well as market conditions in order to close these contracts out at the most beneficial time. | ||
The group had the following net forward-pricing commitments against future production at June 30, 2005. | ||
Summary of the group’s gold hedge position at June 30, 2005 |
Mark-to- | ||||||||||||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | market | ||||||||||||||||||||||||||||
Year | 2006 | 2007 | 2008 | 2009 | Total | $’000 | ||||||||||||||||||||||||||
AUSTRALIAN DOLLAR GOLD | ||||||||||||||||||||||||||||||||
Forward contracts | Kilograms | 3,359 | 4,572 | 3,110 | 3,110 | 14,151 | ||||||||||||||||||||||||||
Ounces | 108,000 | 147,000 | 100,000 | 100,000 | 455,000 | (36,828 | ) | |||||||||||||||||||||||||
A$ per oz | 510 | 515 | 518 | 518 | 515 | |||||||||||||||||||||||||||
Call options sold | Kilograms | 933 | 311 | — | — | 1,244 | ||||||||||||||||||||||||||
Ounces | 30,000 | 10,000 | — | — | 40,000 | (994 | ) | |||||||||||||||||||||||||
A$ per oz | 552 | 562 | — | — | 554 | |||||||||||||||||||||||||||
Total commodity | Kilograms | 4,292 | 4,883 | 3,110 | 3,110 | 15,395 | ||||||||||||||||||||||||||
contracts | Ounces | 138,000 | 157,000 | 100,000 | 100,000 | 495,000 | (37,822 | ) | ||||||||||||||||||||||||
Mark-to- | ||||||||||||||||||||||||||||||
June 30, | June 30, | June 30, | June 30, | June 30, | market | |||||||||||||||||||||||||
Year | 2005 | 2006 | 2007 | 2008 | 2009 | Total | $’000 | |||||||||||||||||||||||
AUSTRALIAN DOLLAR GOLD | ||||||||||||||||||||||||||||||
Forward contracts | Kilograms | 5,443 | 3,359 | 4,572 | 3,110 | 3,110 | 19,594 | |||||||||||||||||||||||
Ounces | 175,000 | 108,000 | 147,000 | 100,000 | 100,000 | 630,000 | (39,969 | ) | ||||||||||||||||||||||
A$ per oz | 513 | 510 | 515 | 518 | 518 | 372 | ||||||||||||||||||||||||
Call options sold | Kilograms | 4,043 | 933 | 311 | — | — | 5,287 | |||||||||||||||||||||||
Ounces | 130,000 | 30,000 | 10,000 | — | — | 170,000 | (1,849 | ) | ||||||||||||||||||||||
A$ per oz | 512 | 552 | 562 | — | — | 130 | ||||||||||||||||||||||||
Total commodity | Kilograms | 9,486 | 4,292 | 4,883 | 3,110 | 3,110 | 24,881 | |||||||||||||||||||||||
contracts | Ounces | 305,000 | 138,000 | 157,000 | 100,000 | 100,000 | 800,000 | (41,818 | ) | |||||||||||||||||||||
F-53
For the years ended June 30
Mark-to- | ||||||||||||||
June 30, | market | |||||||||||||
Year | 2006 | Total | $’000 | |||||||||||
Forward exchange contracts | US$ million | 39 | 39 | (16,467 | ) | |||||||||
(Buy US$, sell ZAR at the agreed exchange rate) | Average strike ZAR/US$ | 9.54 | 9.54 | |||||||||||
Forward exchange call contracts sold | US$ million | 39 | 39 | — | ||||||||||
(Sell US$, buy ZAR at the agreed exchange rate) | Average strike ZAR/US$ | 9.54 | 9.54 | |||||||||||
(16,467 | ) | |||||||||||||
Mark-to- | ||||||||||||||||||
June 30, | June 30, | market | ||||||||||||||||
Year | 2005 | 2006 | Total | $’000 | ||||||||||||||
Forward exchange contracts | US$ million | 79 | 40 | 119 | (48,128 | ) | ||||||||||||
(Buy US$, sell ZAR at the agreed exchange rate) | Average strike ZAR/US$ | 9.07 | 9.54 | 9.23 | ||||||||||||||
Forward exchange call contracts sold | US$ million | 79 | 40 | 119 | (358 | ) | ||||||||||||
(Sell US$, buy ZAR at the agreed exchange rate) | Average strike ZAR/US$ | 9.07 | 9.54 | 9.23 | ||||||||||||||
(48,486 | ) | |||||||||||||||||
F-54
For the years ended June 30
2005 | 2006 | 2007 | 2008 | 2009 | ||||||||||||||||
Ounces | 585,000 | 400,000 | 225,000 | 125,000 | 25,000 | |||||||||||||||
Lease rate received | 1.04 | % | 1.04 | % | 1.05 | % | 1.05 | % | 1.05 | % |
F-55
For the years ended June 30
2005 | 2004 | 2003 | ||||||||||
$’000 | $’000 | $’000 | ||||||||||
Reconciliation of profit before taxation to cash generated from operations: | ||||||||||||
(Loss)/income before taxation | (717,159 | ) | (74,568 | ) | 97,515 | |||||||
Adjustments for: | ||||||||||||
Loss/(profit) on sale of listed investments | 93,470 | (4,910 | ) | (59,243 | ) | |||||||
Profit on sale and loss on dilution of investment in associates — net | — | (65,097 | ) | — | ||||||||
Loss/(profit) on sale of subsidiaries | 114 | (115 | ) | — | ||||||||
Profit on sale of property, plant and equipment | (12,542 | ) | (22,303 | ) | (2,129 | ) | ||||||
Depreciation and amortization | 117,469 | 104,045 | 60,931 | |||||||||
Impairment of assets | 243,124 | 3,145 | 117,594 | |||||||||
(Gain)/loss on financial instruments | 17,672 | 32,385 | (43,154 | ) | ||||||||
Equity income of joint venture | — | (7,918 | ) | — | ||||||||
Equity profit of associated companies | — | (2,020 | ) | — | ||||||||
Impairment of investment in associate | — | 1,956 | — | |||||||||
Impairment of listed investment | 63,234 | — | — | |||||||||
Net decrease in provision for environmental rehabilitation | (2,828 | ) | (19,461 | ) | (5,224 | ) | ||||||
Provision for post retirement benefits | 9,137 | — | 3 | |||||||||
Other non cash transactions | 13,255 | 5,564 | 8,700 | |||||||||
Income and mining taxes paid | (8,952 | ) | (83,881 | ) | (43,514 | ) | ||||||
Cash cost to close out hedges | (34,248 | ) | (19,349 | ) | (8,637 | ) | ||||||
Share-based compensation | 14,331 | 7,135 | 1,761 | |||||||||
Decrease/(increase) in deferred stripping assets | 15,362 | (4,119 | ) | (1,397 | ) | |||||||
Effect of changes in operating working capital items: | ||||||||||||
Receivables | 38,092 | 25,400 | 18,346 | |||||||||
Inventories | (7,357 | ) | (700 | ) | (13,126 | ) | ||||||
Accounts payable and accrued liabilities | (53,247 | ) | 33,929 | 24,205 | ||||||||
Cash (utilized)/generated by operations | (211,073 | ) | (90,882 | ) | 152,631 | |||||||
F-56
For the years ended June 30
(a) | On June 30, 2005 Harmony announced that it would approach the market to purchase up to 25% of the outstanding notional amount (the Repurchase) of its 13% HAR1 bond listed on the Bond Exchange of South Africa due June 14, 2006 (the Bonds). All holders of the Bonds were given an equal opportunity to participate in the Repurchase. On July 6, 2005 the partial re-purchase of Harmony’s HAR1 corporate bond was completed. A total of $45.0 million of the bond’s notional value was repurchased at a cost of some $47.1 million.This represents 23.5% of the total issue due for redemption in June 2006, compared to an allocated maximum amount for the repurchase of 25% of the total issue. The re-purchase was done at a spread of 195 bps above the benchmark government issue (R152). The bond has a semi-annual coupon of 13% and was launched in 2001. | |
(b) | On September 23, 2005 Harmony announced that it had reached agreement with Northern Gold NL on the divestment of its 50% stake in the Burnside Joint Venture for a consideration of A$24 million or $18.3 million. In terms of the agreement Northern Gold will purchase Harmony’s sole purpose subsidiary which holds Harmony’s interest in the Burnside JV and the management entity thereof. The purchase consideration of A$24 million (plus replacement of a A$1 million performance bond) is payable in tranches comprising: |
— | A non-refundable deposit of A$0.25 million; | ||
— | A cash payment of A$4.0 million and an issue of A$5.0 million of shares (20 million Northern Gold shares) on completion (within six months) and the replacement of a A$1.0 million performance bond; | ||
— | A cash payment of A$5.0 million and the issue of A$4.4 million shares (at an issue price equal to the higher of A$0.25/share and the prevailing 30 day volume weighted average market price) six months after completion; and | ||
— | A cash payment of A$5.35 million payable 18 months after the completion date. |
The transaction is subject to normal regulatory approvals that accompany such transactions. |
F-57
Notes to the Consolidated Financial Statements
For the years ended June 30
36 | GEOGRAPHICAL AND SEGMENT INFORMATION |
¢ | quality shafts, which are typically those with a larger reserve base and longer life, which form the core of the group’s production; | ||
¢ | leveraged shafts, which are those that supplement production and provide the upside in the event of a positive swing in the Rand gold price; | ||
¢ | growth shafts, which comprise the expansion projects established through existing infrastructure, as well as the three new mines the Group is building in South Africa; and | ||
¢ | surface operations, which comprise the Kalgold opencast mine, all previously mined rock, whether waste or reef and any clean-up operations as well as plant and other infrastructure. |
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | Operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||||||||||||||||||||||
Free State operations | Information not allocated at shaft level | |||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Masimong | 68,342 | 72,282 | (3,940 | ) | 29,930 | — | 29,930 | Information not allocated at shaft level | 3,736 | 159,981 | 1,046 | |||||||||||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||||||||||||||||||||||
Harmony 2 | 29,295 | 33,576 | (4,281 | ) | 806 | — | 806 | Information not allocated at shaft level | — | 68,547 | 559 | |||||||||||||||||||||||||||||
Merriespruit 1 | 19,428 | 24,552 | (5,124 | ) | — | — | — | — | 45,559 | 414 | ||||||||||||||||||||||||||||||
Merriespruit 3 | 23,325 | 25,447 | (2,122 | ) | 1,373 | — | 1,373 | 628 | 54,690 | 548 | ||||||||||||||||||||||||||||||
Unisel | 27,798 | 35,202 | (7,404 | ) | 10,631 | — | 10,631 | — | 65,011 | 494 | ||||||||||||||||||||||||||||||
Brand 3 | 19,807 | 24,150 | (4,343 | ) | 1,500 | — | 1,500 | Information not allocated at shaft level | — | 46,299 | 448 | |||||||||||||||||||||||||||||
Brand 5 | 8 | 2,120 | (2,112 | ) | — | — | — | — | 33 | — | ||||||||||||||||||||||||||||||
Saaiplaas 3 | 1,026 | 4,831 | (3,805 | ) | 475 | — | 475 | 4 | 2,541 | 30 |
F-58
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | Operating | Mining | Unallocated | Total | Capital | Ounces gold | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced(*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Surface | 3,720 | 3,318 | 402 | 37,481 | — | 37,481 | 1,589 | 9,542 | 467 | |||||||||||||||||||||||||||||||
Other | — | — | — | 66,795 | 593,781 | 660,576 | 30 | — | — | |||||||||||||||||||||||||||||||
Total Free State | 192,749 | 225,478 | (32,729 | ) | 148,991 | 593,781 | 742,772 | 526,506 | 5,987 | 452,203 | 4,006 | |||||||||||||||||||||||||||||
Evander operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Evander 2 | 20,695 | 30,967 | (10,272 | ) | 3,815 | — | 3,815 | Information not allocated at shaft level | 15 | 48,764 | 357 | |||||||||||||||||||||||||||||
Evander 5 | 20,078 | 19,353 | 725 | 3,684 | — | 3,684 | 2 | 47,093 | 245 | |||||||||||||||||||||||||||||||
Evander 7 | 55,502 | 36,872 | 18,630 | 35,750 | — | 35,750 | 3,871 | 130,009 | 541 | |||||||||||||||||||||||||||||||
Evander 8 | 64,912 | 46,245 | 18,667 | 31,482 | — | 31,482 | 3,472 | 151,936 | 734 | |||||||||||||||||||||||||||||||
Leveraged ounces | Information not allocated at shaft level | |||||||||||||||||||||||||||||||||||||||
Evander 9 | 1,078 | 3,005 | (1,927 | ) | — | — | — | — | 2,573 | 31 | ||||||||||||||||||||||||||||||
Surface | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Other | — | — | — | 40,101 | 24,027 | 64,128 | — | — | — | |||||||||||||||||||||||||||||||
Total Evander | 162,265 | 136,442 | 25,823 | 114,832 | 24,027 | 138,859 | 32,672 | 7,360 | 380,375 | 1,908 | ||||||||||||||||||||||||||||||
Randfontein operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Cooke 1 | 33,888 | 33,660 | 228 | 9,946 | — | 9,946 | Information not allocated at shaft level | 266 | 79,101 | 520 | ||||||||||||||||||||||||||||||
Cooke 2 | 23,274 | 26,560 | (3,286 | ) | 10,021 | — | 10,021 | 122 | 54,441 | 403 | ||||||||||||||||||||||||||||||
Cooke 3 | 49,478 | 50,565 | (1,087 | ) | 8,163 | — | 8,163 | — | 116,300 | 740 | ||||||||||||||||||||||||||||||
Growth projects | Information not allocated at shaft level | |||||||||||||||||||||||||||||||||||||||
Doornkop | 22,478 | 26,971 | (4,493 | ) | 189,448 | — | 189,448 | 25,223 | 52,695 | 526 | ||||||||||||||||||||||||||||||
Surface | 14,185 | 14,117 | 68 | 2,676 | — | 2,676 | 6,120 | 33,397 | 2,757 | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 69,082 | 69,082 | — | — | — | |||||||||||||||||||||||||||||||
Total Randfontein | 143,303 | 151,873 | (8,570 | ) | 220,254 | 69,082 | 289,336 | 59,469 | 31,731 | 335,934 | 4,946 | |||||||||||||||||||||||||||||
Elandsrand operations | ||||||||||||||||||||||||||||||||||||||||
Growth projects | ||||||||||||||||||||||||||||||||||||||||
Elandsrand | 88,577 | 99,150 | (10,573 | ) | 228,343 | — | 228,343 | Information not allocated at shaft level | 15,530 | 207,371 | 1,019 | |||||||||||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||||||||||||||||||||||
Deelkraal | 958 | 714 | 244 | 2,514 | — | 2,514 | — | 2,284 | 1 | |||||||||||||||||||||||||||||||
Surface | — | — | — | 334 | — | 334 | 7 | — | — | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 13,495 | 13,495 | — | — | — | |||||||||||||||||||||||||||||||
Total Elandsrand | 89,535 | 99,864 | (10,329 | ) | 231,191 | 13,495 | 244,686 | 5,657 | 15,537 | 209,655 | 1,020 | |||||||||||||||||||||||||||||
F-59
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | Operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Freegold operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Tshepong | 162,958 | 117,592 | 45,366 | 606,626 | — | 606,626 | Information not allocated at shaft level | 6,845 | 380,695 | 1,700 | ||||||||||||||||||||||||||||||
Growth projects | ||||||||||||||||||||||||||||||||||||||||
Phakisa | — | — | — | 258,424 | — | 258,424 | 18,756 | — | — | |||||||||||||||||||||||||||||||
Leveraged ounces | Information not allocated at shaft level | |||||||||||||||||||||||||||||||||||||||
Bambanani | 84,165 | 91,573 | (7,408 | ) | 82,322 | — | 82,322 | 3,893 | 197,535 | 1,090 | ||||||||||||||||||||||||||||||
Joel | 27,282 | 31,408 | (4,126 | ) | 4,206 | — | 4,206 | 165 | 64,464 | 498 | ||||||||||||||||||||||||||||||
Eland | 11,436 | 13,404 | (1,968 | ) | — | — | — | — | 26,782 | 175 | ||||||||||||||||||||||||||||||
Kudu/Sable | 10,764 | 18,885 | (8,121 | ) | — | — | — | — | 25,175 | 194 | ||||||||||||||||||||||||||||||
West Shaft | 12,049 | 13,014 | (965 | ) | 9,640 | — | 9,640 | Information not allocated at shaft level | — | 28,165 | 176 | |||||||||||||||||||||||||||||
Nyala | 9,897 | 17,587 | (7,690 | ) | — | — | — | 1,440 | 23,503 | 198 | ||||||||||||||||||||||||||||||
St Helena | 12,660 | 25,092 | (12,432 | ) | — | — | — | — | 29,965 | 245 | ||||||||||||||||||||||||||||||
Surface | 15,407 | 15,436 | (29 | ) | 3,376 | — | 3,376 | 314 | 36,420 | 1,361 | ||||||||||||||||||||||||||||||
Other | — | — | — | — | 488,840 | 488,840 | — | — | — | |||||||||||||||||||||||||||||||
Total Freegold | 346,618 | 343,991 | 2,627 | 964,594 | 488,840 | 1,453,434 | 328,115 | 31,413 | 812,704 | 5,637 | ||||||||||||||||||||||||||||||
ARMgold operations | ||||||||||||||||||||||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||||||||||||||||||||||
Orkney 2 | 33,279 | 32,938 | 341 | 7,429 | — | 7,429 | Information not allocated at shaft level | — | 78,449 | 413 | ||||||||||||||||||||||||||||||
Orkney 4 | 32,720 | 30,517 | 2,203 | 9,148 | — | 9,148 | 14 | 76,971 | 455 | |||||||||||||||||||||||||||||||
Welkom 1 | 1,164 | 1,604 | (440 | ) | — | — | — | — | 2,734 | 21 | ||||||||||||||||||||||||||||||
Surface | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 13,887 | 13,887 | 394 | — | — | |||||||||||||||||||||||||||||||
Total ARMgold | 67,163 | 65,059 | 2,104 | 16,577 | 13,887 | 30,464 | 40,604 | 408 | 158,154 | 889 | ||||||||||||||||||||||||||||||
Avgold operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Target | 89,233 | 57,273 | 31,960 | 302,103 | — | 302,103 | Information not allocated at shaft level | 8,699 | 209,847 | 1,178 | ||||||||||||||||||||||||||||||
Surface | 579 | 467 | 112 | 942 | — | 942 | 1,790 | 1,350 | 88 | |||||||||||||||||||||||||||||||
Other | — | — | — | 770,753 | 9,357 | 780,110 | — | — | — | |||||||||||||||||||||||||||||||
Total Avgold | 89,812 | 57,740 | 32,072 | 1,073,798 | 9,357 | 1,083,155 | 23,789 | 10,489 | 211,197 | 1,266 | ||||||||||||||||||||||||||||||
Kalgold operations | ||||||||||||||||||||||||||||||||||||||||
Surface | 46,331 | 51,554 | (5,223 | ) | 20,442 | — | 20,442 | Information not allocated at shaft level | (4,145 | ) | 108,195 | 1,855 | ||||||||||||||||||||||||||||
Other | — | — | — | 1,217 | 7,403 | 8,620 | — | — | — | |||||||||||||||||||||||||||||||
Total Kalgold | 46,331 | 51,554 | (5,223 | ) | 21,659 | 7,403 | 29,062 | 4,621 | (4,145 | ) | 108,195 | 1,855 | ||||||||||||||||||||||||||||
Other entities | 1,755 | — | 1,755 | 900 | 178,296 | 179,196 | 128,734 | 2,035 | — | — | ||||||||||||||||||||||||||||||
TOTAL SOUTH AFRICA | 1,139,531 | 1,132,001 | 7,530 | 2,792,796 | 1,398,168 | 4,190,964 | 1,150,167 | 100,815 | 2,668,417 | 21,527 | ||||||||||||||||||||||||||||||
F-60
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | Operating | Mining | Unallocated | Total | Capital | Ounces | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
AUSTRALASIA | ||||||||||||||||||||||||||||||||||||||||
Mt Magnet | 77,242 | 60,914 | 16,328 | 78,172 | — | 78,172 | 52,733 | 15,652 | 181,233 | 2,743 | ||||||||||||||||||||||||||||||
South Kal | 48,427 | 39,262 | 9,165 | 55,289 | — | 55,289 | 36,802 | 10,161 | 115,615 | 1,396 | ||||||||||||||||||||||||||||||
Papua New Guinea | — | — | — | 200,749 | — | 200,749 | 1,892 | 12,051 | — | — | ||||||||||||||||||||||||||||||
Other | — | — | — | 24,265 | 50,145 | 74,410 | 36,391 | 2,178 | — | — | ||||||||||||||||||||||||||||||
TOTAL AUSTRALASIA | 125,669 | 100,176 | 25,493 | 358,475 | 50,145 | 408,620 | 127,818 | 40,042 | 296,848 | 4,139 | ||||||||||||||||||||||||||||||
TOTAL HARMONY | 1,265,200 | 1,232,177 | 33,023 | 3,151,271 | 1,448,313 | 4,599,584 | 1,277,985 | 140,857 | 2,965,265 | 25,666 | ||||||||||||||||||||||||||||||
Reconciliation of segment data to consolidated financial statements | — | 746 | (746 | ) | 105,897 | (148,804 | ) | (42,907 | ) | 283,108 | — | — | ||||||||||||||||||||||||||||
1,265,200 | 1,232,923 | 32,277 | 3,257,168 | 1,299,509 | 4,556,677 | 1,561,093 | 140,857 | 2,965,265 | 25,666 | |||||||||||||||||||||||||||||||
(*) Production statistics are unaudited |
F-61
Notes to the Consolidated Financial Statements
For the years ended June 30
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | Operating | Mining | Unallocated | Total | Capital | Ounces gold | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||||||||||||||||||||||
Free State operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Masimong | 84,119 | 70,224 | 13,895 | 43,132 | — | 43,132 | Information not allocated at shaft level | 4,120 | 218,325 | 1,378 | ||||||||||||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||||||||||||||||||||||
Harmony 2 | 31,213 | 29,888 | 1,325 | 1,324 | — | 1,324 | — | 81,317 | 643 | |||||||||||||||||||||||||||||||
Merriespruit 1 | 20,980 | 22,534 | (1,554 | ) | 3,448 | — | 3,448 | 315 | 54,565 | 477 | ||||||||||||||||||||||||||||||
Merriespruit 3 | 27,376 | 30,313 | (2,937 | ) | 1,088 | — | 1,088 | Information not allocated at shaft level | — | 71,156 | 743 | |||||||||||||||||||||||||||||
Unisel | 32,475 | 34,566 | (2,091 | ) | 20,382 | — | 20,382 | 1,329 | 84,308 | 677 | ||||||||||||||||||||||||||||||
Brand 3 | 21,412 | 22,442 | (1,030 | ) | 6,127 | — | 6,127 | — | 55,400 | 531 | ||||||||||||||||||||||||||||||
Brand 5 | 5,702 | 11,591 | (5,889 | ) | 3,022 | — | 3,022 | Information not allocated at shaft level | — | 14,662 | 153 | |||||||||||||||||||||||||||||
Saaiplaas 3 | 10,331 | 13,485 | (3,154 | ) | 5,291 | — | 5,291 | 200 | 26,783 | 254 | ||||||||||||||||||||||||||||||
Surface | 10,215 | 9,288 | 927 | 55,246 | — | 55,246 | 2,501 | 26,732 | 2,368 | |||||||||||||||||||||||||||||||
Other | — | — | — | 71,834 | 215,497 | 287,331 | 1,717 | — | — | |||||||||||||||||||||||||||||||
Total Free State | 243,823 | 244,331 | (508 | ) | 210,894 | 215,497 | 426,391 | 590,638 | 10,182 | 633,248 | 7,224 | |||||||||||||||||||||||||||||
Evander operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Evander 2 | 33,216 | 32,428 | 788 | 13,564 | — | 13,564 | Information not available at segmential shaft level | 619 | 86,172 | 491 | ||||||||||||||||||||||||||||||
Evander 5 | 18,559 | 16,095 | 2,464 | 9,793 | — | 9,793 | 498 | 48,103 | 223 | |||||||||||||||||||||||||||||||
Evander 7 | 35,566 | 32,968 | 2,598 | 37,358 | — | 37,358 | 5,034 | 92,505 | 577 | |||||||||||||||||||||||||||||||
Evander 8 | 41,945 | 39,708 | 2,237 | 31,480 | — | 31,480 | 5,091 | 109,513 | 692 | |||||||||||||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||||||||||||||||||||||
Evander 9 | 9,079 | 9,042 | 37 | — | — | — | Information not allocated at shaft level | — | 23,440 | 202 | ||||||||||||||||||||||||||||||
Surface | 756 | 496 | 260 | — | — | — | 2,367 | 1,961 | 101 | |||||||||||||||||||||||||||||||
Other | — | — | — | 42,881 | 24,613 | 67,494 | — | — | — | |||||||||||||||||||||||||||||||
Total Evander | 139,121 | 130,737 | 8,384 | 135,076 | 24,613 | 159,689 | 35,197 | 13,609 | 361,694 | 2,286 | ||||||||||||||||||||||||||||||
F-62
Notes to the Consolidated Financial Statements
For the years ended June 30
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | Operating | Mining | Unallocated | Total | Capital | Ounces gold | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Randfontein operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Cooke 1 | 39,891 | 31,632 | 8,259 | 14,902 | — | 14,902 | Information not allocated at shaft level | 825 | 104,168 | 605 | ||||||||||||||||||||||||||||||
Cooke 2 | 34,748 | 34,237 | 511 | 12,287 | — | 12,287 | 789 | 90,761 | 749 | |||||||||||||||||||||||||||||||
Cooke 3 | 51,283 | 50,066 | 1,217 | 9,774 | — | 9,774 | 54 | 134,003 | 999 | |||||||||||||||||||||||||||||||
Growth projects | Information not allocated at shaft level | |||||||||||||||||||||||||||||||||||||||
Doornkop | 24,913 | 23,049 | 1,864 | 181,018 | — | 181,018 | 14,316 | 65,234 | 567 | |||||||||||||||||||||||||||||||
Surface | 7,264 | 6,590 | 674 | 5,542 | — | 5,542 | 4,511 | 18,872 | 2,428 | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 62,252 | 62,252 | — | — | — | |||||||||||||||||||||||||||||||
Total Randfontein | 158,099 | 145,574 | 12,525 | 223,523 | 62,252 | 285,775 | 93,053 | 20,495 | 413,038 | 5,348 | ||||||||||||||||||||||||||||||
Elandsrand operations | ||||||||||||||||||||||||||||||||||||||||
Growth projects | �� | |||||||||||||||||||||||||||||||||||||||
Elandsrand | 96,831 | 100,657 | (3,826 | ) | 186,201 | — | 186,201 | Information not allocated at shaft level | 16,057 | 250,581 | 1,437 | |||||||||||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||||||||||||||||||||||
Deelkraal | 26,206 | 37,796 | (11,590 | ) | 50,630 | — | 50,630 | 1,305 | 68,127 | 522 | ||||||||||||||||||||||||||||||
Surface | 2,047 | 2,640 | (593 | ) | 891 | — | 891 | 294 | 5,301 | 451 | ||||||||||||||||||||||||||||||
Other | — | — | — | — | 17,777 | 17,777 | — | — | — | |||||||||||||||||||||||||||||||
Total Elandsrand | 125,084 | 141,093 | (16,009 | ) | 237,722 | 17,777 | 255,499 | 23,376 | 17,656 | 324,009 | 2,410 | |||||||||||||||||||||||||||||
Freegold operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Tshepong | 130,491 | 87,629 | 42,862 | 660,790 | — | 660,790 | 8,731 | 339,259 | 1,584 | |||||||||||||||||||||||||||||||
Growth projects | ||||||||||||||||||||||||||||||||||||||||
Phakisa | — | — | — | 258,043 | — | 258,043 | 16,845 | — | — |
F-63
Notes to the Consolidated Financial Statements
For the years ended June 30
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | Operating | Mining | Unallocated | Total | Capital | Ounces gold | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Leveraged ounces | Information not allocated at shaft level | |||||||||||||||||||||||||||||||||||||||
Bambanani | 96,943 | 91,049 | 5,894 | 102,781 | — | 102,781 | 7,500 | 251,970 | 1,403 | |||||||||||||||||||||||||||||||
Joel | 22,906 | 23,403 | (497 | ) | 7,254 | — | 7,254 | — | 59,642 | 494 | ||||||||||||||||||||||||||||||
Eland | 16,952 | 22,465 | (5,513 | ) | — | — | — | 274 | 44,017 | 303 | ||||||||||||||||||||||||||||||
Kudu/Sable | 13,331 | 14,473 | (1,142 | ) | 14,341 | — | 14,341 | — | 34,597 | 240 | ||||||||||||||||||||||||||||||
West Shaft | 12,061 | 10,167 | 1,894 | 11,106 | — | 11,106 | Information not allocated at shaft level | 1 | 31,318 | 175 | ||||||||||||||||||||||||||||||
Nyala | 4,033 | 3,578 | 455 | 15,663 | — | 15,663 | 7,276 | 10,482 | 98 | |||||||||||||||||||||||||||||||
St Helena | 23,643 | 28,550 | (4,907 | ) | 19,938 | — | 19,938 | — | 61,668 | 443 | ||||||||||||||||||||||||||||||
Surface | 23,850 | 20,427 | 3,423 | 3,368 | — | 3,368 | 21 | 61,192 | 3,538 | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 520,795 | 520,795 | 228,305 | — | — | |||||||||||||||||||||||||||||||
Total Freegold | 344,210 | 301,741 | 42,469 | 1,093,284 | 520,795 | 1,614,079 | 438,523 | 268,953 | 894,145 | 8,278 | ||||||||||||||||||||||||||||||
ARMgold operations | ||||||||||||||||||||||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||||||||||||||||||||||
Orkney 1 | 123 | 194 | (71 | ) | — | — | — | Information not allocated at shaft level | — | 322 | 3 | |||||||||||||||||||||||||||||
Orkney 2 | 31,435 | 26,892 | 4,543 | 10,090 | — | 10,090 | — | 81,434 | 387 | |||||||||||||||||||||||||||||||
Orkney 3 | 4,425 | 6,440 | (2,015 | ) | 427 | — | 427 | 464 | 11,413 | 137 | ||||||||||||||||||||||||||||||
Orkney 4 | 26,269 | 20,243 | 6,026 | 11,719 | — | 11,719 | Information not allocated at shaft level | 160 | 67,931 | 401 | ||||||||||||||||||||||||||||||
Orkney 6 | 4,304 | 5,378 | (1,074 | ) | — | — | — | — | 11,060 | 157 | ||||||||||||||||||||||||||||||
Orkney 7 | 1,760 | 1,970 | (210 | ) | 19 | — | 19 | — | 4,533 | 28 | ||||||||||||||||||||||||||||||
Welkom 1 | 7,415 | 9,939 | (2,524 | ) | — | — | — | — | 19,226 | 159 | ||||||||||||||||||||||||||||||
Welkom 2 | 525 | 547 | (22 | ) | — | — | — | — | 1,350 | 12 | ||||||||||||||||||||||||||||||
Welkom 3 | 592 | 581 | 11 | — | — | — | — | 1,511 | 15 | |||||||||||||||||||||||||||||||
Welkom 4 | 1,531 | 1,496 | 35 | — | — | — | — | 3,922 | 13 | |||||||||||||||||||||||||||||||
Welkom 6 | 935 | 894 | 41 | — | — | — | Information not allocated at shaft level | — | 2,411 | 24 | ||||||||||||||||||||||||||||||
Welkom 7 | 3,890 | 3,566 | 324 | — | — | — | — | 9,902 | 88 | |||||||||||||||||||||||||||||||
Surface | — | — | — | — | — | — | — | — | — | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 20,097 | 20,097 | 614,962 | — | — | |||||||||||||||||||||||||||||||
Total ARMgold | 83,204 | 78,140 | 5,064 | 22,255 | 20,097 | 42,352 | 73,068 | 615,586 | 215,015 | 1,424 | ||||||||||||||||||||||||||||||
F-64
Notes to the Consolidated Financial Statements
For the years ended June 30
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | Operating | Mining | Unallocated | Total | Capital | Ounces gold | Tons milled | |||||||||||||||||||||||||||||||||
Revenue | costs | profit/(loss) | assets | assets | Total assets | liabilities | expenditure | produced (*) | (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Avgold operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Target | 19,772 | 11,514 | 8,258 | 384,862 | — | 384,862 | Information not allocated at shaft level | 1,175 | 53,434 | 228 | ||||||||||||||||||||||||||||||
Other | — | — | — | 772,158 | 22,766 | 794,924 | 1,106,736 | — | — | |||||||||||||||||||||||||||||||
Total Avgold | 19,772 | 11,514 | 8,258 | 1,157,020 | 22,766 | 1,179,786 | 75,671 | 1,107,911 | 53,434 | 228 | ||||||||||||||||||||||||||||||
Kalgold operations | ||||||||||||||||||||||||||||||||||||||||
Surface | 31,532 | 28,511 | 3,021 | 38,066 | — | 38,066 | Information not allocated at shaft level | 4,405 | 82,756 | 1,530 | ||||||||||||||||||||||||||||||
Other | — | — | — | — | 17,509 | 17,509 | — | — | — | |||||||||||||||||||||||||||||||
Total Kalgold | 31,532 | 28,511 | 3,021 | 38,066 | 17,509 | 55,575 | 3,293 | 4,405 | 82,756 | 1,530 | ||||||||||||||||||||||||||||||
Other entities | — | — | — | — | 278,676 | 278,676 | 2,617 | 1,278 | — | — | ||||||||||||||||||||||||||||||
TOTAL SOUTH AFRICA | 1,144,845 | 1,081,641 | 63,204 | 3,117,840 | 1,179,982 | 4,297,822 | 1,335,436 | 2,060,075 | 2,977,339 | 28,728 | ||||||||||||||||||||||||||||||
AUSTRALASIA | ||||||||||||||||||||||||||||||||||||||||
Mt Magnet | 67,714 | 58,202 | 9,512 | 122,297 | — | 122,297 | 50,794 | 13,596 | 173,228 | 3,058 | ||||||||||||||||||||||||||||||
South Kal | 46,651 | 38,848 | 7,803 | 81,053 | — | 81,053 | 28,052 | 5,435 | 120,532 | 1,843 | ||||||||||||||||||||||||||||||
Papua New Guinea | — | — | — | 211,671 | — | 211,671 | 1,222 | 1,857 | — | — | ||||||||||||||||||||||||||||||
Other entities | 17,103 | 13,458 | 3,645 | 12,332 | 100,353 | 112,685 | 73,026 | 9,614 | 44,528 | 326 | ||||||||||||||||||||||||||||||
TOTAL AUSTRALASIA | 131,468 | 110,508 | 20,960 | 427,353 | 100,353 | 527,706 | 153,094 | 30,502 | 338,288 | 5,227 | ||||||||||||||||||||||||||||||
TOTAL HARMONY | 1,276,313 | 1,192,149 | 84,164 | 3,545,193 | 1,280,335 | 4,825,528 | 1,488,530 | 2,090,577 | 3,315,627 | 33,955 | ||||||||||||||||||||||||||||||
Reconciliation of segment data to consolidated financial statements | (35,974 | ) | (23,785 | ) | (12,189 | ) | 70,261 | (235,781 | ) | (163,705 | ) | 194,213 | (1,964,093 | ) | (90,440 | ) | — | |||||||||||||||||||||||
1,240,339 | 1,168,364 | 71,975 | 3,615,454 | 1,044,554 | 4,661,823 | 1,682,743 | 126,484 | 3,225,187 | 33,955 | |||||||||||||||||||||||||||||||
(*) | Production statistics are unaudited |
F-65
Notes to the Consolidated Financial Statements
For the years ended June 30
Cash | Ounces | |||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | gold | Tone | |||||||||||||||||||||||||||||||||
Revenue | costs | Profit/(loss) | assets | assets | Total assets | liabilities | expenditure | producer (*) | milled (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
SOUTH AFRICA | ||||||||||||||||||||||||||||||||||||||||
Free State operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Masimong | 65,416 | 48,458 | 16,958 | 40,138 | — | 40,138 | Information not allocated at shaft level | 7,169 | 195,607 | 1,266 | ||||||||||||||||||||||||||||||
�� | ||||||||||||||||||||||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||||||||||||||||||||||
Harmony 2 | 25,572 | 17,521 | 8,051 | 1,573 | — | 1,573 | 46 | 75,331 | 586 | |||||||||||||||||||||||||||||||
Harmony 4 | 105 | 496 | (391 | ) | — | — | — | — | 290 | 3 | ||||||||||||||||||||||||||||||
Merriespruit 1 | 18,474 | 13,623 | 4,851 | 3,007 | — | 3,007 | 221 | 55,044 | 438 | |||||||||||||||||||||||||||||||
Merriespruit 3 | 23,982 | 20,351 | 3,631 | 745 | — | 745 | — | 70,991 | 718 | |||||||||||||||||||||||||||||||
Unisel | 28,018 | 23,277 | 4,741 | 17,023 | — | 17,023 | Information not allocated at shaft level | 1,825 | 82,147 | 778 | ||||||||||||||||||||||||||||||
Brand 3 | 17,230 | 15,195 | 2,035 | 5,992 | — | 5,992 | — | 50,896 | 422 | |||||||||||||||||||||||||||||||
Brand 5 | 19,144 | 20,573 | (1,429 | ) | 2,611 | — | 2,611 | 39 | 56,298 | 507 | ||||||||||||||||||||||||||||||
Virginia | 104 | 251 | (147 | ) | — | — | — | — | 290 | 3 | ||||||||||||||||||||||||||||||
Surface | 8,067 | 6,550 | 1,517 | 51,017 | — | 51,017 | 4,364 | 24,209 | 1,164 | |||||||||||||||||||||||||||||||
Other | — | — | — | 59,896 | 293,009 | 352,905 | 195 | — | — | |||||||||||||||||||||||||||||||
Total Free State | 206,112 | 166,295 | 39,817 | 182,002 | 293,009 | 475,011 | 443,863 | 13,859 | 611,103 | 5,885 | ||||||||||||||||||||||||||||||
Evander operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Evander 2 | 28,881 | 20,373 | 8,508 | 10,286 | — | 10,286 | 459 | 88,575 | 522 | |||||||||||||||||||||||||||||||
Evander 5 | 16,293 | 11,356 | 4,937 | 9,933 | — | 9,933 | 259 | 49,769 | 227 | |||||||||||||||||||||||||||||||
Evander 7 | 34,644 | 22,518 | 12,126 | 28,649 | — | 28,649 | 4,044 | 106,419 | 566 | |||||||||||||||||||||||||||||||
Evander 8 | 30,123 | 27,293 | 2,830 | 22,377 | — | 22,377 | Information not allocated at shaft level | 3,977 | 94,008 | 676 | ||||||||||||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||||||||||||||||||||||
Evander 9 | 5,698 | 4,660 | 1,038 | 154 | — | 154 | Information not allocated at shaft level | — | 17,297 | 153 | ||||||||||||||||||||||||||||||
Surface | 1,278 | 913 | 365 | 391 | — | 391 | 1,181 | 4,116 | 201 | |||||||||||||||||||||||||||||||
Other | — | — | — | 40,007 | 13,173 | 53,180 | 887 | — | — | |||||||||||||||||||||||||||||||
Total Evander | 116,917 | 87,113 | 29,804 | 111,797 | 13,173 | 124,970 | 38,993 | 10,807 | 360,184 | 2,345 | ||||||||||||||||||||||||||||||
F-66
Notes to the Consolidated Financial Statements
For the years ended June 30
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | gold | Tone | |||||||||||||||||||||||||||||||||
Revenue | costs | Profit/(loss) | assets | assets | Total assets | liabilities | expenditure | producer (*) | milled (*) | |||||||||||||||||||||||||||||||
$’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | $’000 | oz | ’000 | |||||||||||||||||||||||||||||||
Randfontein operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Cooke 1 | 39,722 | 23,017 | 16,705 | 12,738 | — | 12,738 | — | 20,819 | 741 | |||||||||||||||||||||||||||||||
Cooke 2 | 38,255 | 22,281 | 15,974 | 10,326 | — | 10,326 | — | 116,639 | 790 | |||||||||||||||||||||||||||||||
Cooke 3 | 49,829 | 35,766 | 14,063 | 10,257 | — | 10,257 | Information not allocated at shaft level | 232 | 151,553 | 1,108 | ||||||||||||||||||||||||||||||
Growth projects | ||||||||||||||||||||||||||||||||||||||||
Doornkop | 21,550 | 15,126 | 6,424 | 5,836 | — | 5,836 | Information not allocated at shaft level | 1,635 | 65,906 | 523 | ||||||||||||||||||||||||||||||
Surface | 12,299 | 7,995 | 4,304 | — | — | — | 1,695 | 36,973 | 2,212 | |||||||||||||||||||||||||||||||
Other | — | — | — | 132,788 | 52,413 | 185,201 | 468 | — | — | |||||||||||||||||||||||||||||||
Total Randfontein | 161,655 | 104,185 | 57,470 | 171,945 | 52,413 | 224,358 | 74,129 | 4,030 | 491,890 | 5,374 | ||||||||||||||||||||||||||||||
Elandsrand operations | ||||||||||||||||||||||||||||||||||||||||
Growth projects | ||||||||||||||||||||||||||||||||||||||||
Elandsrand | 86,926 | 69,864 | 17,062 | 124,182 | — | 124,182 | 12,757 | 264,525 | 1,468 | |||||||||||||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||||||||||||||||||||||
Deelkraal | 27,520 | 26,077 | 1,443 | 1,367 | — | 1,367 | Information not allocated at shaft level | 2,070 | 82,751 | 598 | ||||||||||||||||||||||||||||||
Surface | 6,442 | 4,518 | 1,924 | 189 | — | 189 | 161 | 19,323 | 1,228 | |||||||||||||||||||||||||||||||
Other | — | — | — | — | 74,063 | 74,063 | 472 | — | — | |||||||||||||||||||||||||||||||
Total Elandsrand | 120,888 | 100,459 | 20,429 | 125,738 | 74,063 | 199,801 | 24,962 | 15,460 | 366,599 | 3,294 | ||||||||||||||||||||||||||||||
Freegold operations | ||||||||||||||||||||||||||||||||||||||||
Quality ounces | ||||||||||||||||||||||||||||||||||||||||
Tshepong | 69,776 | 33,983 | 35,793 | 143,919 | — | 143,919 | Information not allocated at shaft level | 2,228 | 212,383 | 917 | ||||||||||||||||||||||||||||||
Leveraged ounces | ||||||||||||||||||||||||||||||||||||||||
Bambanani | 61,681 | 36,969 | 24,712 | 52,859 | — | 52,859 | 2,660 | 186,629 | 826 | |||||||||||||||||||||||||||||||
Joel | 10,074 | 8,792 | 1,282 | 650 | — | 650 | — | 30,827 | 260 | |||||||||||||||||||||||||||||||
Eland | 15,832 | 9,508 | 6,324 | — | — | — | 164 | 47,835 | 201 | |||||||||||||||||||||||||||||||
Nyala | — | — | — | 2,550 | — | 2,550 | Information not allocated at shaft level | — | ||||||||||||||||||||||||||||||||
Kudu/Sable | 5,513 | 4,456 | 1,057 | — | — | — | 194 | 16,907 | 105 | |||||||||||||||||||||||||||||||
West Shaft | 4,313 | 3,056 | 1,257 | 449 | — | 449 | 205 | 13,017 | 77 | |||||||||||||||||||||||||||||||
St Helena | 8,050 | 10,070 | (2,020 | ) | 16,976 | — | 16,976 | Information not allocated at shaft level | 8,240 | 25,685 | 203 | |||||||||||||||||||||||||||||
Surface | 14,462 | 9,554 | 4,908 | 1,441 | — | 1,441 | 25 | 44,432 | 2,573 | |||||||||||||||||||||||||||||||
Other | — | — | — | 7,372 | 53,418 | 60,790 | 23,624 | — | — | |||||||||||||||||||||||||||||||
Total Freegold | 189,701 | 116,388 | 73,313 | 226,216 | 53,418 | 279,634 | 104,130 | 37,340 | 577,714 | 5,162 | ||||||||||||||||||||||||||||||
F-67
Notes to the Consolidated Financial Statements
For the years ended June 30
Cash | ||||||||||||||||||||||||||||||||||||||||
Production | operating | Mining | Unallocated | Total | Capital | gold | Tone | |||||||||||||||||||||||||||||||||
Revenue | costs | Profit/(loss) | assets | assets | Total assets | liabilities | expenditure | producer(*) | milled (*) | |||||||||||||||||||||||||||||||
$'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | $'000 | oz | '000 | |||||||||||||||||||||||||||||||
Kalgold operations | ||||||||||||||||||||||||||||||||||||||||
Surface | 24,536 | 16,552 | 7,984 | 20,933 | — | 20,933 | Information not allocated at shaft level | 4,265 | 74,590 | 1,195 | ||||||||||||||||||||||||||||||
Other | — | — | — | 1,453 | 25,704 | 27,157 | 3,355 | — | — | |||||||||||||||||||||||||||||||
Total Kalgold | 24,536 | 16,552 | 7,984 | 22,386 | 25,704 | 48,090 | 2,829 | 7,620 | 74,590 | 1,195 | ||||||||||||||||||||||||||||||
Other entities | — | — | — | — | 165,793 | 165,793 | 1,941 | 267 | — | — | ||||||||||||||||||||||||||||||
TOTAL SOUTH AFRICA | 819,809 | 590,992 | 228,817 | 840,084 | 677,573 | 1,517,657 | 690,847 | 89,383 | 2,482,080 | 23,255 | ||||||||||||||||||||||||||||||
AUSTRALASIA | ||||||||||||||||||||||||||||||||||||||||
Big Bell | 42,922 | 43,600 | (678 | ) | 18,720 | 4,489 | 23,209 | 26,513 | 1,080 | 132,579 | 2,147 | |||||||||||||||||||||||||||||
Mt Magnet | 61,676 | 40,908 | 20,768 | 124,044 | 4,728 | 128,772 | 100,740 | 14,870 | 182,690 | 2,922 | ||||||||||||||||||||||||||||||
South Kal | 57,372 | 47,451 | 9,921 | 73,444 | 7,053 | 80,497 | 85,227 | 6,299 | 182,851 | 2,749 | ||||||||||||||||||||||||||||||
Abelle | 3,381 | 2,145 | 1,236 | 157,510 | (88,263 | ) | 69,247 | 50,411 | 123,575 | 11,534 | 65 | |||||||||||||||||||||||||||||
Other entities | — | — | — | 46,733 | 150,774 | 197,507 | (97,231 | ) | 11,276 | — | — | |||||||||||||||||||||||||||||
TOTAL AUSTRALASIA | 165,351 | 134,104 | 31,247 | 420,451 | 78,781 | 499,232 | 165,660 | 157,100 | 509,654 | 7,883 | ||||||||||||||||||||||||||||||
TOTAL HARMONY | 985,160 | 725,096 | 260,064 | 1,260,535 | 756,354 | 2,016,889 | 856,507 | 246,483 | 2,991,734 | 31,138 | ||||||||||||||||||||||||||||||
Reconciliation of segment data to consolidated financial statements | (203,368 | ) | (125,350 | ) | (78,018 | ) | (277,553 | ) | 159,502 | (118,051 | ) | (54,417 | ) | (37,341 | ) | (625,618 | ) | (5,162 | ) | |||||||||||||||||||||
781,792 | 599,746 | 182,046 | 982,982 | 915,856 | 1,898,838 | 802,090 | 209,142 | 2,366,116 | 25,976 | |||||||||||||||||||||||||||||||
(*) | Production statistics are unaudited |
F-68
Notes to the reconciliation of segment data to the consolidated financial statements
F-69
F-70
REPORT OF THE INDEPENDENT AUDITORS
TO THE MEMBERS OF ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
We have audited the accompanying balance sheets of the ARMGold/Harmony Freegold Joint Venture (Pty) Limited and its subsidiaries (the “Company”) as of June 30, 2003 and 2002, and the related consolidated statements of income, cash flows and of changes in shareholders’ equity for year ended June 30, 2003 and the six-month period ended 30 June, 2002. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures included in the annual financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statements presentation. We believe that our audits provides a reasonable basis for our opinion.
In our opinion, the financial statements, referred to above, present fairly, in all material respects, the financial position of the Company as at June 30, 2003 and 2002, and the results of their operations and their cash flows for the year ended June 30, 2003 and the six-month period ended June 30, 2002, in conformity with South African Standards of Generally Accepted Accounting Practice, and in the manner required by the Companies Act in South Africa.
South African Standards of Generally Accepted Accounting Practice vary in certain significant respects from accounting principles generally accepted in the United States of America. The application of the latter would have affected the determination of the consolidated net income for the year ended June 30, 2003 and the six-month period ended June 30, 2002 and the determination of the shareholders’ equity at June 30, 2003 and 2002 to the extent summarized in Note 29 to the financial statements.
/S/PRICEWATERHOUSECOOPERS INC.Registered Accountants and Auditors |
Chartered Accountants (SA) |
Johannesburg, Republic of South Africa |
December 12, 2003 |
F–73
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
INCOME STATEMENT
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2003, YEAR ENDED JUNE 30, 2003 AND THE SIX MONTH PERIOD ENDED JUNE 30, 2002
3 months to | ||||||||||||||||
30 September 2003 | 12 months | 6 months | ||||||||||||||
(unaudited) | 30 June 2003 | 30 June 2002 | ||||||||||||||
Notes | R’000 | R’000 | R’000 | |||||||||||||
Revenue | 745,007 | 3,464,045 | 1,835,945 | |||||||||||||
Cash operating costs | 4 | (579,534 | ) | (2,125,466 | ) | ( 863,262 | ) | |||||||||
Cash operating income | 165,473 | 1,338,579 | 972,683 | |||||||||||||
Interest received | 5 | 37,638 | 217,792 | 37,512 | ||||||||||||
Profit on sale of property | 5,731 | 39,965 | 2,256 | |||||||||||||
Interest paid | 6 | (45,917 | ) | ( 205,842 | ) | (105,002 | ) | |||||||||
Other expenses | 38 | — | — | |||||||||||||
Cash income | 162,887 | 1,390,494 | 907,449 | |||||||||||||
Depreciation and amortization | (32,949 | ) | (139,186 | ) | ( 60,426 | ) | ||||||||||
Ongoing rehabilitation expenses | (6,723 | ) | (16,932 | ) | ( 20,000 | ) | ||||||||||
Restructuring and employment termination costs | (12,157 | ) | — | — | ||||||||||||
Reversal of provision for rehabilitation | — | 5,495 | — | |||||||||||||
Provision for post retirement benefits | — | — | ( 2,226 | ) | ||||||||||||
Income before tax | 7 | 111,058 | 1,239,871 | 824,797 | ||||||||||||
Taxation | 8 | (31,021 | ) | ( 328,369 | ) | ( 271,680 | ) | |||||||||
Net income for the period | 80,037 | 911,502 | 553,117 | |||||||||||||
F–74
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
BALANCE SHEET
AS AT JUNE 30, 2003 AND 2002
2003 | 2002 | |||||||||||
Notes | R’000 | R’000 | ||||||||||
ASSETS | ||||||||||||
Non-current assets | ||||||||||||
Property, plant and equipment | 9 | 2,829,594 | 2,698,021 | |||||||||
Investments | 10 | 554,720 | 458,647 | |||||||||
Investments in subsidiaries and group companies | 11 | 2 | — | |||||||||
Restricted cash | 14 | 89,435 | — | |||||||||
Total non-current assets | 3,473,751 | 3,156,668 | ||||||||||
Current assets | ||||||||||||
Inventories | 12 | 19,765 | 15,744 | |||||||||
Receivables | 13 | 214,962 | 118,957 | |||||||||
Cash and cash equivalents | 14 | 445,810 | 1,006,529 | |||||||||
Total current assets | 680,537 | 1,141,230 | ||||||||||
Total assets | 4,154,288 | 4,297,898 | ||||||||||
EQUITY AND LIABILITIES | ||||||||||||
Shareholders’ equity | ||||||||||||
Share capital issued | 15 | 20 | 20 | |||||||||
Retained earnings | 1,164,619 | 553,117 | ||||||||||
Total shareholders’ equity | 1,164,639 | 553,137 | ||||||||||
Non-current liabilities | ||||||||||||
Long term loans | 16 | 1,765,699 | 2,112,338 | |||||||||
Provision for environmental rehabilitation | 17 | 319,959 | 267,277 | |||||||||
Provision for post-retirement benefits | 18 | 2,226 | 2,226 | |||||||||
Deferred tax liability | 8 | 614,216 | 333,662 | |||||||||
Total non-current liabilities | 2,702,100 | 2,715,503 | ||||||||||
Current liabilities | ||||||||||||
Accounts payable and accrued liabilities | 19 | 244,080 | 1,020,627 | |||||||||
Income and mining tax payable | 8 | 43,469 | 8,631 | |||||||||
Total current liabilities | 287,549 | 1,029,258 | ||||||||||
Total equity and liabilities | 4,154,288 | 4,297,898 | ||||||||||
F–75
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
STATEMENT OF SHAREHOLDERS’ EQUITY
FOR THE YEAR ENDED JUNE 30, 2003 AND THE SIX MONTH PERIOD ENDED JUNE 30, 2002
Retained | ||||||||||||||||
Number of | Capital | Earnings | Total | |||||||||||||
shares | R’000 | R’000 | R’000 | |||||||||||||
Balance at January 1, 2002 | — | — | — | — | ||||||||||||
Shares issued | 20,000 | 20 | — | 20 | ||||||||||||
Net income for the period | — | — | 553,117 | 553,117 | ||||||||||||
Balance at June 30, 2002 | 20,000 | 20 | 553,117 | 553,137 | ||||||||||||
Net income for the period | — | — | 911,502 | 911,502 | ||||||||||||
Dividends paid | — | — | (300,000 | ) | (300,000 | ) | ||||||||||
Balance at June 30, 2003 | 20,000 | 20 | 1,164,619 | 1,164,639 | ||||||||||||
F–76
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30, 2003, YEAR ENDED JUNE 30, 2003 AND THE SIX MONTH PERIOD ENDED JUNE 30, 2002
3 months | 12 months | 6 months | ||||||||||||||
30 September 2003 | 30 June 2003 | 30 June 2002 | ||||||||||||||
Notes | R’000 | R’000 | R’000 | |||||||||||||
(Unaudited) | ||||||||||||||||
Cash flow from operations | ||||||||||||||||
Cash received from customers | 738,433 | 3,462,307 | 1,822,898 | |||||||||||||
Less: payments made to suppliers and employees | 541,424 | 2,339,185 | 753,340 | |||||||||||||
Cash generated from operations | 23 | 197,009 | 1,123,122 | 1,069,558 | ||||||||||||
Interest received | 37,638 | 156,290 | 37,512 | |||||||||||||
Interest paid | (33,438 | ) | (157,123 | ) | (56,535 | ) | ||||||||||
Taxation paid | — | (8,631 | ) | — | ||||||||||||
Net cash provided by operations | 201,209 | 1,113,658 | 1,050,535 | |||||||||||||
Cash flow from investing activities | ||||||||||||||||
Acquisition of business | 24 | — | (120,000 | ) | (1,800,000 | ) | ||||||||||
Proceed on disposal of mining assets | 9,315 | 55,259 | 2,507 | |||||||||||||
Additions to property, plant and equipment | (61,034 | ) | (141,948 | ) | (31,724 | ) | ||||||||||
Cost of acquisitions capitalized | — | — | (32 | ) | ||||||||||||
Loans to subsidiaries | — | (2 | ) | — | ||||||||||||
Unlisted investments acquired | (1,599 | ) | ||||||||||||||
Amounts invested in environmental trusts | — | (71 | ) | (14,777 | ) | |||||||||||
Net cash utilized in investing activities | (53,318 | ) | (206,762 | ) | (1,844,026 | ) | ||||||||||
Cash flow from financing activities | ||||||||||||||||
(Decrease)/Increase in amounts due to holding companies | 32,739 | (391,303 | ) | 1,800,000 | ||||||||||||
Decrease in other borrowings | (481 | ) | (686,877 | ) | — | |||||||||||
Ordinary shares issued-net of expenses | — | — | 20 | |||||||||||||
Dividends paid | — | (300,000 | ) | — | ||||||||||||
Net cash generated by financing activities | 32,258 | (1,378,180 | ) | 1,800,020 | ||||||||||||
Net increase in cash and cash equivalents | 180,149 | (471,284 | ) | 1,006,529 | ||||||||||||
Cash and cash equivalents - beginning of period | 535,245 | 1,006,529 | — | |||||||||||||
Cash and cash equivalents - end of period | 14 | 715,394 | 535,245 | 1,006,529 | ||||||||||||
F–77
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
1. | NATURE OF OPERATIONS |
The ARMgold/Harmony Freegold Joint Venture (Pty) Limited (“Free Gold”) operates in the gold mining industry in South Africa. Gold bullion, the Company’s principal product, is produced at its operations and sold in South Africa and internationally.
2. | FUNCTIONAL CURRENCY |
The functional currency of the Company is the South African Rand.
3. | SIGNIFICANT ACCOUNTING POLICIES | |||
3.1 | BASIS OF PREPARATION |
The financial statements are prepared on the historical cost basis except for certain financial instruments, which are carried at fair value. The accounting policies as set out below have been consistently applied, and comply with South African Statements of Generally Accepted Accounting Practice (“SA GAAP”) and the South African Companies Act.
3.2 | USE OF ESTIMATES |
The preparation of the financial statements in conformity with SA GAAP requires the Company’s management to make estimates and assumptions that effect 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. Significant estimates used by management include the valuation and amortization of long lived assets as well as estimates of exposure and liabilities with regard to rehabilitation costs, employee benefit liabilities and taxation. Actual results could differ from those estimates.
3.3 | FINANCIAL INSTRUMENTS |
Financial instruments are initially measured at cost including transaction costs. Subsequent to initial recognition, these instruments are measured as set out below. Financial instruments carried on the balance sheet include cash and bank balances, money market instruments, investments, receivables, trade creditors and borrowings.
3.4 | 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 insignificant interest rate risk and original maturities of three months or less. Cash and cash equivalents are measured at fair value.
3.5 | INVESTMENTS |
Listed investments
Investments in listed companies are carried at market value. Market value is calculated by reference to stock exchange quoted selling prices at the close of business on the balance sheet date. Movement in the carrying amount of trading securities are charged to the income statement. On disposal of an investment, the difference between the net disposal proceeds and the carrying amount is charged to the income statement.
Unlisted investments
Unlisted investments are reflected at fair value, or cost, where fair value cannot reliably be measured. Fair value is based on directors’ valuation. If the directors are of the opinion that there has been a permanent impairment in the value of any of these investments, they are written down and recognized as an expense in the period in which the diminution is determined to have taken place.
F–78
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
3.6 | INVENTORIES |
Inventories, which include gold in process and supplies, are stated at lower of cost or net realizable value after appropriate allowances for redundant and slow-moving items.
Stores and materials consist of consumable stores and are valued at average cost after appropriate provision for redundant and slow moving items.
Bullion on hand and gold in process represents production on hand after the smelting process. It is valued using the weighted average cost method. Costs include production, amortization and related administration costs.
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 make the sale.
3.7 | RECEIVABLES |
Accounts receivable are stated at the gross invoice value, adjusted for payments received and an allowance for doubtful debts, where appropriate, to reflect the fair value of the anticipated realizable value. Bad debts are written off during the period in which they are identified.
3.8 | ACCOUNTS PAYABLE |
Accounts payable are stated at cost, adjusted for payments made to reflect the value of the anticipated economic outflow of resources.
3.9 | BORROWINGS |
Borrowings are recognized at amortized cost, comprising original debt less principal payments and amortizations.
Interest-free loans are shown at cost, as no fair value can be determined due to the fact that no interest is charged and there are no fixed terms for repayment.
3.10 | EXPLORATION COSTS |
Exploration costs are expensed as incurred. When a decision is taken that a mining property is capable of commercial production, all further pre-production expenditure is capitalized. Costs related to property acquisitions and mineral and surface rights are capitalized. Where the directors consider that there is little likelihood of the properties or rights being exploited or the value of the exploration rights have diminished below cost, a write down is effected against exploration expenditure.
3.11 | PROPERTY, PLANT AND EQUIPMENT | |||
(a) | Mining assets |
Mining assets, including mine development costs and mine plant facilities are initially recorded at cost, whereafter it is recorded at cost less accumulated amortization and impairment. Costs include pre-production expenditure incurred in the development of the mine and the present value of future decommissioning costs. Interest on borrowings to specifically finance the establishment of mining assets is capitalized until commercial levels of production are achieved. Development costs incurred to evaluate and develop new orebodies, to define mineralization in existing orebodies to establish or expand productive capacity are capitalised. Mine development costs in the ordinary course to maintain production are expensed as incurred. Initial development and pre-production costs relating to a new orebody are capitalized until the orebody achieves commercial levels of production at which time the costs are amortized as set out below.
F–79
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
3.11 | PROPERTY, PLANT AND EQUIPMENT (Continued) |
(b) Non-mining fixed assets
Land is shown at cost and not depreciated. Buildings and other non-mining fixed assets are shown at cost less accumulated depreciation.
(c) Depreciation and amortization
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 the estimated proven and probable ore reserves. Proven and probable ore reserves reflect estimated quantities of economically recoverable reserves which can be recovered in the future from known mineral deposits.
Amortization is first charged on mining ventures from the date on which the mining ventures reaches commercial production quantities.
(d) Impairment
The recoverability of the carrying value of the long term assets of the Company, which include development costs, are annually compared to the net book value of the assets, or whenever events or change in circumstances indicate that the net book value may not be recoverable. The recoverable amount is the higher of value in use and net selling price. In assessing the value in use, the expected future cash flows from the asset is determined by applying a discount rate to the anticipated pre-tax future cash flows. The discount rate used is the Company’s weighted average cost of capital as determined by the Capital Asset Pricing Model. An impairment is recognized in the income statement whenever the carrying amount of the asset exceeds its recoverable amount, to the extent that the carrying amount exceeds the assets’ recoverable amount. The revised carrying amounts are amortized in line with the Company’s accounting policies.
A previously recognized impairment loss is reversed if the recoverable amount increases as a result of a change in the estimates used to determine the recoverable amount. This reversal is recognized in the income statement and is limited to the carrying amount that would have been determined, net of amortization, had no impairment loss been recognized in prior years.
The estimates of future discounted cash flows are subject to risk and uncertainties including the future gold price and exchange rates. It is therefore reasonably possible that changes could occur which may affect the recoverability of mining assets.
3.12 | ENVIRONMENTAL OBLIGATIONS |
Estimated long-term environmental obligations, comprising pollution control, rehabilitation and mine closure, are based on the Company’s environmental management plans in compliance with current technological, environmental and regulatory requirements.
The net present value of future rehabilitation cost estimates are recognized and provided for in full in the financial statements. The estimates are reviewed annually and are discounted using rates that reflect the time value of money.
Annual changes in the provision consist of finance cost 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. The rehabilitation asset is amortized as noted in the Company’s accounting policy.
F–80
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
3.12 | ENVIRONMENTAL OBLIGATIONS (Continued) |
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.
3.13 | ENVIRONMENTAL TRUST FUNDS |
Annual contributions are made to the Company’s trust funds, created in accordance with statutory requirements, to fund the estimated cost of pollution control, rehabilitation and mine closure at the end of the life of the company’s mines. Contributions are determined on the basis of the estimated environmental obligation over the life of the mine. Income earned on monies paid to environmental trust funds is accounted for as investment income. The funds contributed to the trust plus growth in the trust funds are included under investments on the balance sheet.
3.14 | PROVISIONS |
Provision are recognized when the Company 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.
3.15 | DEFERRED TAXATION |
The Company follows the comprehensive liability method of accounting for deferred tax using the balance sheet approach. Under this method, deferred income and mining taxes are recognized for the tax consequences of temporary differences by applying expected tax rates to the differences between the tax base of certain assets or liabilities and its balance sheet carrying amount. Deferred tax is charged to the income statement except to the extent that it relates to a transaction that is recognized directly in equity, or a business combination that is an acquisition. The effect on deferred tax of any change 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 and tax losses carried forward. Deferred tax assets relating to the carry forward of unused tax losses are recognized to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilized.
3.16 | PENSION PLANS AND OTHER EMPLOYEE BENEFITS |
(a) Pension plans
Pension plans are funded through annual contributions. The Company’s contributions to the defined contribution pension plans are charged to the income statement in the period to which they relate. The Company’s liability is limited to its annually determined contributions.
(b) Medical plans
The Company provides medical cover to current employees through several fundss. 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.
F–81
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
3.17 | FOREIGN CURRENCY TRANSACTIONS |
Transactions in foreign currencies are converted at the rates of exchange ruling at the date of these transactions. Monetary assets and liabilities denominated in foreign currencies are translated at rates of exchange ruling at balance sheet date. Gains and losses and costs associated with foreign currency transactions are recognised in the income statement in the period to which they relate. These transactions are included in the determination of other income — net.
3.18 | REVENUE RECOGNITION |
(a) Revenue
Revenue represents gold sales and is recognized when the risks and rewards of ownership has passed to the buyer with delivery from the refinery. Sales revenue excludes value-added tax but includes the net profit and losses arising from financial derivatives that meet the definition of a normal sale to the extent that they relate to that metal and have been matched at the date of the financial statements.
(b) 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 Company.
3.19 | DIVIDENDS DECLARED |
Dividends paid are recognized when declared by the Board of directors.
3.20 | COMPARATIVES |
Comparative figures are for the 6 months ended June 30, 2002, as the Company was operating from effective January 1, 2002. Where necessary the comparative figures have been adjusted to conform with changes in presentation in the current year.
Unaudited income statement information has been provided for the period from July 1, 2003 through September 30, 2003, the effective date in which the remaining 50% interest in the Company was acquired by Harmony Goldmining Company Limited.
4. | CASH OPERATING COSTS |
3 months to | ||||||||||||||
30 September 2003 | 12 months | 6 months | ||||||||||||
(unaudited) | 30 June 2003 | 30 June 2002 | ||||||||||||
R’000 | R’000 | R’000 | ||||||||||||
Cash operating costs include mine production, transport and refinery costs, movement in inventories and ore stockpiles. These costs, analyzed by nature, consist of the following: | ||||||||||||||
Labour costs, including contractors | 371,008 | 1,279,957 | 266,108 | |||||||||||
Stores and materials | 143,477 | 538,651 | 103,179 | |||||||||||
Water and electricity | 83,355 | 255,088 | 57,698 | |||||||||||
Changes in inventory | (1,786 | ) | (4,138 | ) | (11,818 | ) | ||||||||
Other | (16,520 | ) | 55,908 | 448,095 | ||||||||||
579,534 | 2,125,466 | 863,262 | ||||||||||||
5. INTEREST RECEIVED | ||||||||||||||
Bank and call accounts | 17,302 | 156,033 | 17,650 | |||||||||||
AngloGold | — | 204 | 4,929 | |||||||||||
Rehabilitation funds | 20,246 | 61,502 | 14,777 | |||||||||||
Other | 90 | 53 | 156 | |||||||||||
37,638 | 217,792 | 37,512 | ||||||||||||
F–82
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
6. INTEREST PAID
3 months to | 12 months | 6 months | ||||||||||
30 September 2003 | 30 June 2003 | 30 June 2002 | ||||||||||
(unaudited) | ||||||||||||
R’000 | R’000 | R’000 | ||||||||||
Loans - shareholders | 32,738 | 157,019 | 29,080 | |||||||||
Loan - Anglo | 12,479 | 43,224 | 75,922 | |||||||||
Interest portion of rehabilitation provision accretion | — | 5,495 | — | |||||||||
Other | 700 | 104 | — | |||||||||
45,917 | 205,842 | 105,002 | ||||||||||
7. INCOME BEFORE TAX | ||||||||||||
The following have been included in income before tax: | ||||||||||||
Auditors’ remuneration | — | 1,116 | 650 | |||||||||
Fees - current year | — | 1,116 | 650 | |||||||||
8. TAXATION | ||||||||||||
Current income and mining taxes | 2,099 | 43,469 | 8,631 | |||||||||
Deferred income and mining taxes | 28,922 | 284,900 | 263,049 | |||||||||
Total income and mining taxes expense | 31,021 | 328,369 | 271,680 | |||||||||
Mining tax on mining income is determined on a formula basis which takes into account the profit and revenue from mining operations during the year. Non-mining income is taxed at a standard rate. Deferred tax is provided at the estimated effective mining tax rate for temporary differences. Major items causing the Company’s income tax to differ from the estimated effective mining rate of 30% | ||||||||||||
(2002: 30%) were: | ||||||||||||
Income before tax at estimated mining statutory rate | 51,087 | 570,341 | 379,407 | |||||||||
Non-taxable income/additional deductions | (2,144 | ) | (117,986 | ) | 25,264 | |||||||
Rate adjustment to reflect estimated effective mining tax rate | (17,040 | ) | (114,833 | ) | (131,172 | ) | ||||||
Difference between non-mining tax rate and estimated mining statutory rate on non-mining income | (881 | ) | (9,153 | ) | (1,819 | ) | ||||||
Income and mining tax expense | 31,021 | 328,369 | 271,680 | |||||||||
Deferred income and mining tax liabilities and assets on the balance sheet on 30 June 2003, relate to the following: | ||||||||||||
Deferred income and mining tax liabilities | ||||||||||||
Depreciation and amortization | 820,688 | 812,072 | 768,152 | |||||||||
Product inventory not taxed | 4,787 | 4,787 | 3,546 | |||||||||
Gross deferred income and mining tax liability | 825,475 | 816,859 | 771,698 |
F-83
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
8. TAXATION (Continued)
3 months to | ||||||||||||
30 September 2003 (unaudited) | 12 months to 30 June 2003 | 6 months to 30 June 2002 | ||||||||||
R’000 | R’000 | R’000 | ||||||||||
Net deferred income and mining tax assets | (181,117 | ) | (193,058 | ) | (443,670 | ) | ||||||
Unredeemed capital expenditure | (210,000 | ) | (225,563 | ) | (446,868 | ) | ||||||
Provisions, including rehabilitation accruals | 28,883 | 32,505 | 3,198 | |||||||||
Net deferred income and mining tax liabilities/(assets) | 644,358 | 623,801 | 327,988 | |||||||||
Short-term portion included | 11,377 | 9,585 | (5,674 | ) | ||||||||
632,981 | 614,216 | 333,662 | ||||||||||
Reconciliation of the movement for the period: | ||||||||||||
Opening balance | 623,801 | 327,988 | — | |||||||||
Property, plant and equipment | 8,616 | 43,920 | 768,152 | |||||||||
Inventory | — | 1,241 | 3,546 | |||||||||
Unredeemed capital expenditure | 15,563 | 221,305 | (446,868 | ) | ||||||||
Provisions | (3,622 | ) | 29,347 | 3,158 | ||||||||
Closing balance | 644,358 | 623,801 | 327,988 | |||||||||
As at June 30, 2003, the Company has unredeemed capital expenditure of R752 million (2002 - R 1,489 million) available for deduction against future mining income. These future deductions are utilizable against mining income generated only from the Company’s current mining operations and does not expire unless the Company ceases to trade for a period longer than one year. | ||||||||||||
Current mining and non-mining tax liability | ||||||||||||
Current year | 45,567 | 43,469 | 8,631 | |||||||||
Due to South African Revenue Services | 45,567 | 43,469 | 8,631 | |||||||||
9. PROPERTY, PLANT AND EQUIPMENT | ||||||||||||
Mining properties, mine development costs and mine plant facilities | ||||||||||||
Cost at beginning of the year | 2,758,447 | — | ||||||||||
Acquired through the purchase of businesses | 145,189 | 2,726,974 | ||||||||||
Additions | 132,348 | 31,724 | ||||||||||
Disposals | (6,778 | ) | (251 | ) | ||||||||
3,029,206 | 2,758,447 | |||||||||||
Accumulated depreciation and amortization at beginning of period | 60,426 | — | ||||||||||
Charge for the period | 139,186 | 60,426 | ||||||||||
199,612 | 60,426 | |||||||||||
Net book value | 2,829,594 | 2,698,021 | ||||||||||
F-84
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
9. PROPERTY, PLANT AND EQUIPMENT (Continued)
2003 | 2002 | |||||||||||
R’000 | R’000 | |||||||||||
Mining properties, mine development costs and mine plant facilities | ||||||||||||
An amount of R 1 billion has been guaranteed to BoE Merchant Bank and Harmony Gold Mining Company Ltd in equal portion. This is collateralized by certain of the assets, including all moveable assets. See note 26 below. | ||||||||||||
10. NON-CURRENT INVESTMENTS | ||||||||||||
Amounts contributed to environmental trust funds | 554,720 | 458,647 | ||||||||||
The environmental trust funds are irrevocable trusts under the Company’s control. The monies in the trusts are invested in interest bearing short-term investments and listed investments and approximate their fair value. | ||||||||||||
11. INVESTMENTS IN SUBSIDIARIES AND GROUP COMPANIES | ||||||||||||
Interest | ||||||||||||
Shares | % | �� | ||||||||||
Jeanette Gold Mines Ltd | 100 | — | — | |||||||||
(Amount smaller than R 1,000) | ||||||||||||
Loans | ||||||||||||
Jeanette Gold Mines Ltd | 2 | — | ||||||||||
12. INVENTORIES | ||||||||||||
Gold in-process | 15,956 | 11,816 | ||||||||||
Stores and material at average cost | 3,809 | 3,928 | ||||||||||
19,765 | 15,744 | |||||||||||
13. RECEIVABLES | ||||||||||||
Value added tax | 12,460 | 41,163 | ||||||||||
Trade receivables | 16,959 | 14,558 | ||||||||||
Metals on consignment | 52,320 | 40,239 | ||||||||||
Prepayments | 95 | 4,324 | ||||||||||
Interest | 7,771 | 4,708 | ||||||||||
Payroll debtors | 11,953 | 3,054 | ||||||||||
Anglo Gold – current account | 71,217 | 2,027 | ||||||||||
Other | 42,187 | 8,884 | ||||||||||
214,962 | 118,957 | |||||||||||
F-85
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
14. CASH AND CASH EQUIVALENTS
2003 | 2002 | |||||||
R’000 | R’000 | |||||||
Cash and cash equivalents | 445,810 | 1,006,529 | ||||||
A balance of R 377 million (June 2002 - R 254 million) has been pledged to BoE Merchant Bank in terms of debt guarantee agreements between the Company and BoE Merchant Bank. | ||||||||
Restricted cash balance | 89,435 | — | ||||||
Under agreement with BoE Merchant Bank, certain of the Company’s cash resources are restricted for specific use. This restriction will apply until the date that Freegold obtains full title to all mining and lease rights and obtains the permanent mining authorization. | ||||||||
R 48,4 million of the restricted cash is pledged to the Department of Minerals and Energy. | ||||||||
Total cash and cash equivalents | 535,245 | 1,006,529 | ||||||
15. SHARE CAPITAL | ||||||||
Share capital | ||||||||
Authorized | ||||||||
100,000 ordinary shares of R 1.00 each | 100 | 100 | ||||||
Issued | ||||||||
20,000 ordinary shares of R1.00 each | ||||||||
Balance at beginning of period | 20 | — | ||||||
Issued during the period | — | 20 | ||||||
Balance at end of period | 20 | 20 | ||||||
16. BORROWINGS | ||||||||
Long-term borrowings | ||||||||
Uncollateralized | ||||||||
Loans from shareholders | ||||||||
ARMGold Limited | 718,889 | 914,540 | ||||||
Harmony Gold Mining Company Limited | 718,888 | 914,540 | ||||||
1,437,777 | 1,829,080 | |||||||
One billion rand of the loans bear interest at a rate of 15,48845%. No interest is charged on the balance. There is no schedule for repayments on the loans. | ||||||||
Other loans | ||||||||
Gold Fields Limited | 8,206 | — | ||||||
Less: Short-term portion | (2,578 | ) | — | |||||
5,628 | — | |||||||
F-86
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
16. BORROWINGS (Continued)
2003 | 2002 | |||||||
R’000 | R’000 | |||||||
Long-term borrowings (Continued) | ||||||||
Uncollateralized (Continued) | ||||||||
Other loans (Continued) | ||||||||
On July 1, 2002, Free Gold entered into an agreement with Goldfields to purchase its St Helena operations as a going concern for R 129 million. R 120 million was payable on October 29, 2002 and Free Gold acquired the St Helena operations assets and liabilities effective October 30, 2002. The balance of the consideration is the Net Smelter Revenue, which is 1% of the revenue received from the sale of gold produced by the St Helena operations for 48 months after the effective date. The payments are to be made monthly in arrears within 10 days after the end of each calendar month. | ||||||||
Total uncollateralized long-term borrowings | 1,443,405 | 1,829,080 | ||||||
Collateralized | ||||||||
AngloGold | 322,294 | 964,707 | ||||||
Less: short-term portion | — | ( 681,449 | ) | |||||
Total collateralized long-term borrowings | 322,294 | 283,258 | ||||||
Total long-term borrowings | 1,765,699 | 2,112,338 | ||||||
On December 24, 2001, Free Gold entered into an agreement with AngloGold Limited to purchase its Free Gold assets for R 2,741 million which comprised of a cash payment of 1,800 million, R259 million being the fair value of the R400 million interest free loan received from AngloGold of R259 million and R682 million being the reimbursement to AngloGold of the taxes payable on the sale of the Free Gold assets. R1,800 million was paid during April 2002 at the call rate from this date until the 10th business day after the date of fulfillment of the last of the conditions precedent. R400 million is payable on January 1, 2005 at no interest charge. The balance of the consideration became payable on June 23, 2003, five business days before AngloGold was obliged to pay recoupment tax, capital gains tax and any other income tax on the disposal of the assets. No interest was charged on this amount.
Other borrowings
The level of the Company’s borrowing powers, as determined by its articles of association, is such that, taking into account the obligations as at June 30, 2003, the Company will have unrestricted access to loan financing for its reasonable foreseeable requirements. As at June 30, 2003, total borrowings amounted to R 1,768 million (2002: R 2,861 million)
F–87
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
17. PROVISION FOR ENVIRONMENTAL REHABILITATION
2003 | 2002 | |||||||
R’000 | R’000 | |||||||
Provision raised for future rehabilitation | ||||||||
Opening balance | 267,277 | — | ||||||
Acquisition of assets and liabilities from businesses | 40,390 | 247,277 | ||||||
Change in estimate and inflation | 6,797 | 20,000 | ||||||
Interest cost | 5,495 | — | ||||||
Closing balance | 319,959 | 267,277 | ||||||
While the ultimate amount of rehabilitation cost to be incurred in the future is uncertain, the Company has estimated that based on current environmental and regulatory requirements, the total costs for the mines, in current monetary terms, will be R 601 million (June 2002 - R 538 million). | ||||||||
The movement in the investments in the Environmental Trust Funds, were as follows: | ||||||||
Opening balance | 458,647 | — | ||||||
Transferred from other trust funds | 34,500 | 443,870 | ||||||
Contributions made | 71 | — | ||||||
Interest accrued | 61,502 | 14,777 | ||||||
Closing balance | 554,720 | 458,647 | ||||||
Ultimate estimated rehabilitation cost | 600,542 | 538,376 | ||||||
Amounts invested in Environmental Trust Funds | 554,720 | 458,647 | ||||||
Future net obligation | 45,822 | 79,729 | ||||||
The Company intends to finance the ultimate rehabilitation costs from the monies invested with the environmental trust funds as well as the proceeds on sale of assets and gold from plant clean-up at the time of mine closure.
18. PROVISION FOR POST-RETIREMENT BENEFITS | ||||||||
The provision for former employees’ post-retirement benefits comprise medical benefits for former employees who have retired. The amounts were based on an actuarial valuation conducted during the current year. | ||||||||
The amounts recognized in the balance sheet are as follows: | ||||||||
Present value of unfunded obligation | 2,226 | 2,226 | ||||||
The amount recognized in the income statement are as follows: | ||||||||
Provision for liability | — | 2,226 | ||||||
The movement in the liability recognized in the balance sheet is as follows: | ||||||||
At the beginning of the period | 2,226 | — | ||||||
Total expense as above | — | 2,226 | ||||||
At the end of the period | 2,226 | 2,226 | ||||||
F–88
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
18. PROVISION FOR POST-RETIREMENT BENEFITS (Continued)
2003 | 2002 | |||||||
R’000 | R’000 | |||||||
The principal actuarial assumptions used for accounting purposes were: | ||||||||
Discount rate | 12 | % | 12 | % | ||||
Assumed medical subsidy inflation | 7 | % | 7 | % | ||||
19. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES | ||||||||
Short-term portion of long-term borrowings | 2,578 | 681,449 | ||||||
Payroll and leave liabilities | 145,915 | 133,726 | ||||||
Short-term portion of deferred tax | 9,585 | (5,674 | ) | |||||
Harmony Gold Mining Company Ltd | — | 140,849 | ||||||
Other (including accrued liabilities) | 86,002 | 70,277 | ||||||
244,080 | 1,020,627 | |||||||
Leave liability
Employee entitlements to annual leave are recognized on an ongoing basis. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the balance sheet date.
20. EMPLOYEE BENEFITS | ||||||||
Number of permanent employees | 16,860 | 13,734 | ||||||
Aggregate earnings: | ||||||||
The aggregate earnings of employees including directors were: | ||||||||
Salaries and wages and other benefits | 1,011,765 | 183,575 | ||||||
Retirement benefit costs | 63,738 | 36,732 | ||||||
Medical aid contributions | 19,660 | 19,200 | ||||||
1,095,163 | 239,507 | |||||||
21. | EMPLOYEE BENEFIT PLANS | |||
Pension and Provident Funds: The Company contributes to several pension and provident funds governed by the Pension Fund Act, 1946. The pension funds are multi-employer industry plans. The Company’s liability is limited to its annually determined contributions. | ||||
The provident funds are funded on the “money accumulative basis” with the members’ and employer’s contributions having been fixed in the constitution of funds. | ||||
Substantially, all the Company’s employees are covered by the above mentioned retirement benefit plans. Funds contributed by the Company for the year ended June 30, 2003 amounted to R 63.7 million (June, 30 2002-R 36.7 million.) | ||||
Post Retirement Benefits other than Pensions: Skilled workers participate in the Minemed medical scheme, as well as other medical schemes. As regards the Company, contributions are limited to current employees only. The Company’s contribution to the schemes on behalf of the current employees amounted to R 19.6 million (June 2002 -R 19.2 million) for the year. |
F–89
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
21. | EMPLOYEE BENEFIT PLANS (Continued) | |||
POST RETIREMENT BENEFITS OTHER THAN PENSIONS (Continued) | ||||
No other post-retirement benefits are available to other workers. The medical schemes pay certain medical expenses for current employees and their dependants. Employees pay an annual contribution to these schemes. | ||||
An updated actuarial valuation was carried out during the 2002 fiscal year on the Minemed medical scheme following the last actuarial valuation in fiscal 2000. | ||||
Assumptions used to determine the liability relating to the Minemed medical scheme included, investment returns of 12%, no increases in employer subsidies (in terms of the agreement) and mortality rates according to the SA “a mf” tables and a medical inflation rate of 7%. | ||||
22. | DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE AND CREDIT OF FINANCIAL INSTRUMENTS | |||
Free Gold is exposed to market risks including credit risk, foreign currency, commodity price, interest rate and liquidity risk associated with underlying assets, liabilities and anticipated transactions. Based on periodic evaluation of these exposures, Free Gold may enter into derivative financial instruments to manage these exposures. Free Gold does not hold or issue derivative financial instruments for trading or speculative purposes. | ||||
Commodity price sensitivity | ||||
As a general rule, Free Gold sells its gold production at market prices and normally does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of its future gold production. | ||||
Foreign currency sensitivity | ||||
In the ordinary course of business, Free Gold enters into transaction denominated in foreign currency (primarily US Dollars). As a result, Free Gold is subject to transaction and translation exposure from fluctuations in foreign currency exchange rates. Free Gold does not generally hedge its exposure to foreign currency exchange rates. | ||||
Concentration of credit risk | ||||
Financial instruments, which potentially subject the Company to significant concentrations of credit risk , consists principally of cash and cash equivalents, short-term investments and various derivatives financial instruments. The Company’s financial instruments do not represent a concentration of credit risk because the Company deals and maintains cash and cash equivalents and derivatives financial instruments with a variety of well-established financial institutions of high quality and credit standing. The Company’s debtors and loans are regularly monitored and assessed. An adequate level of provision is maintained. | ||||
Interest rates and liquidity risk | ||||
Fluctuations in interest rates impacts on the value of the short-term cash investments and financing activities, giving rise to interest rate risk. Free Gold generally does not undertake any specific actions to cover its exposure to interest rate risk. | ||||
In the ordinary course of business, the Company receives cash from its operations and it is required to fund working capital and capital expenditure requirements. The cash is managed to ensure surplus funds are invested to provide sufficient liquidity at minimum risk. |
F–90
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
22. | DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE AND CREDIT OF FINANCIAL INSTRUMENTS (Continued) | |||
Fair value | ||||
The fair value of financial instruments is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amount of receivables, accounts payables and cash and cash equivalents are a reasonable estimates of their fair values because of the short-term maturity investments. The investments in the environmental trust funds approximates fair values as the funds are invested in short-term maturity investments. The investments are carried at market value. Long-term loans approximate fair value as they are subject to market-based rates. | ||||
23. | CASH GENERATED FROM OPERATIONS |
3 months to 30 September 2003 | 12 months | 6 months | ||||||||||
(unaudited) | 30 June 2003 | 30 June 2002 | ||||||||||
R’000 | R’000 | R’000 | ||||||||||
Reconciliation of profit before taxation to cash generated from operations: | ||||||||||||
Income before taxation | 111,058 | 1,239,871 | 824,797 | |||||||||
Adjustments for: | ||||||||||||
Interest received | (37,638 | ) | (217,792 | ) | (37,512 | ) | ||||||
Interest paid | 45,917 | 200,347 | 105,002 | |||||||||
Profit on sale of mining assets | (5,731 | ) | (39,965 | ) | (2,256 | ) | ||||||
Depreciation and amortization | 32,949 | 139,186 | 60,426 | |||||||||
Net change in provision for environmental rehabilitation | 6,407 | 12,292 | 20,000 | |||||||||
Net increase in provision for post-retirement benefits | — | — | 2,226 | |||||||||
Movement in gold inventory | (1,786 | ) | (4,138 | ) | (11,818 | ) | ||||||
Bad debts | 200 | 800 | 170 | |||||||||
Other non-cash transactions | (20,245 | ) | ||||||||||
Effect of changes in operating working capital items: | ||||||||||||
Receivables | (37,217 | ) | (96,805 | ) | (119,127 | ) | ||||||
Inventories | 161 | 2,262 | (3,928 | ) | ||||||||
Accounts payable and accrued liabilities | (28,500 | ) | (112,936 | ) | 231,578 | |||||||
Cash generated by operations | 197,009 | 1,123,122 | 1,069,558 | |||||||||
24. ACQUISITION OF BUSINESSES | ||||||||||||
With effect from January 1, 2002, the Company purchased the Free Gold assets and liabilities from AngloGold for R 2,741 million. The aggregate fair value of the assets acquired and liabilities assumed were as follows:
R’000 | ||||||||
Environmental trust fund | 443,871 | |||||||
Property, plant and equipment | 2,726,974 | |||||||
Accounts payable and accrued liabilities | (117,496 | ) | ||||||
Long-term liabilities | (247,277 | ) | ||||||
Deferred tax | (64,940 | ) | ||||||
Total purchase price carried forward | 2,741,132 |
F–91
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
24. ACQUISITION OF BUSINESSES (Continued)
R’000 | ||||||||
Total purchase price carried down | 2,741,132 | |||||||
Paid for by way of borrowings | ( 941,132 | ) | ||||||
Paid for by cash | (1,800,000 | ) | ||||||
Cash and cash equivalents at acquisition | — | |||||||
With effect from October 30, 2002, the Company purchased the St Helena assets and liabilities from Gold Fields for R 129 million. The aggregate fair value of the assets acquired and liabilities assumed were as follows: | ||||||||
Environmental trust fund | 34,500 | |||||||
Property, plant and equipment | 144,109 | |||||||
Inventory | 2,145 | |||||||
Provision for environmental rehabilitation | ( 40,390 | ) | ||||||
Deferred tax | ( 10,912 | ) | ||||||
Total purchase price | 129,452 | |||||||
Paid for by way of royalties | ( 9,452 | ) | ||||||
Paid for by cash | ( 120,000 | ) | ||||||
Cash and cash equivalents at acquisition | — | |||||||
25. COMMITMENTS AND CONTINGENCIES
2003 | 2002 | |||||||
R’000 | R’000 | |||||||
Capital expenditure commitments | ||||||||
Contracts for capital expenditure | 11,193 | 2,222 | ||||||
Authorized by the directors but not contracted for | 840,400 | 25,072 | ||||||
851,593 | 27,294 | |||||||
26. GUARANTEES | ||||||||
BoE Merchant Bank | 500,000 | 500,000 | ||||||
Harmony Gold Mining Company Ltd | 500,000 | 500,000 | ||||||
1,000,000 | 1,000,000 | |||||||
An amount of R 1 billion has been guaranteed to BoE Merchant Bank and Harmony Gold Mining Company Ltd in equal portions. This is linked to the ARMGold loan from BoE and will be triggered if ARMGold fails to meet its obligation to BoE. The BoE loan is collateralized by certain assets including all moveable assets. Refer to notes 9 and 14 |
F–92
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
27. | RELATED PARTY TRANSACTIONS | |||
Harmony Gold Mining Company and ARMGold have joint control over Freegold and are therefore related parties. | ||||
The following related party transactions took place during the year under review: |
Amount | ||||||||
Party | Transaction | R’000 | Basis | |||||
Harmony Gold | Intergroup loan-credit balance | 718,888 | ||||||
Harmony Gold | Interest paid | 78,510 | 15.5% interest on R 500 million | |||||
Harmony Gold | Consumables purchased | 421,600 | Cost | |||||
Harmony Gold | Service charge | 10,791 | Cost | |||||
Harmony Gold | Assay costs charged | 8,812 | Cost | |||||
ARMGold | Intergroup loan-credit balance | 718,889 | ||||||
ARMGold | Interest paid | 78,509 | 15.5% interest on R 500 million | |||||
ARMGold | Assay costs charged | 21,639 | Cost | |||||
ARMGold | Transport costs charged | 74 | Cost |
All of the above transactions took place on normal arm’s length basis. | ||||
28. | GEOGRAPHICAL AND SEGMENTAL ANALYSIS | |||
The Company is a one product mine (gold), mining and operating in the Free State Province in the Republic of South Africa. | ||||
29. | US GAAP INFORMATION | |||
The financial statements have been prepared in accordance with South African Standards of Generally Accepted Accounting Practice (“SA GAAP”) which differs in certain respects from Generally Accepted Accounting Principles in the United States (“US GAAP”). The effect of applying US GAAP principles to net income and shareholders’ equity is set out below along with an explanation of applicable differences between SA GAAP and US GAAP: |
2003 | 2002 | |||||||
R’000 | R’000 | |||||||
Net income as reported in accordance with SA GAAP | 911,502 | 553,117 | ||||||
Items increasing/(decreasing) net income: | ||||||||
Business combinations-acquisition date (i) | — | (312,313 | ) | |||||
Business combinations-purchase price (ii) | 21,473 | 15,076 | ||||||
Environmental rehabilitation (iii) | (165 | ) | 4,165 | |||||
Tax effects of the above described adjustments (iv) | (6,392 | ) | 8,746 | |||||
Income before cumulative effect of change in accounting principle | 926,418 | 268,791 | ||||||
Cumulative effect of change in accounting principle, net of tax | (474 | ) | — | |||||
Net profit in accordance with US GAAP | 925,944 | 268,791 | ||||||
F–93
ARMGOLD/HARMONY FREEGOLD JOINT VENTURE (PTY) LIMITED
NOTES TO THE FINANCIAL STATEMENTS
29. US GAAP INFORMATION (Continued)
2003 | 2002 | |||||||
R’000 | R’000 | |||||||
Shareholders’ equity as reported in accordance with SA GAAP | 1,164,639 | 553,137 | ||||||
Items increasing/(decreasing) shareholders’ equity: | ||||||||
Business combinations - acquisition date (i) | (312,313 | ) | (312,313 | ) | ||||
Business combinations - purchase price (ii) | 36,549 | 15,076 | ||||||
Environmental rehabilitation (iii) | 3,526 | 4,165 | ||||||
Tax effects of the above described adjustments (iv) | 2,354 | 8,746 | ||||||
Shareholders’ equity in accordance with US GAAP | 894,755 | 268,811 | ||||||
(i) | Business combinations-acquisition date | |||
Under SA GAAP, the Company accounted for the acquisition of the Free Gold assets from the date upon which the Company assumed joint operational control of the assets together with the seller. Under US GAAP, the Company accounted for the acquisition from May 1, 2002, the first day of the month after which all the conditions precedent to the transaction had been fulfilled and the transaction completed. | ||||
(ii) | Business combinations-purchase price | |||
Under SA GAAP, the Company determined the final purchase price of the Free Gold assets to be R 2,741, being the sum of a cash payment of R 1,800, the taxes payable by the seller on the transaction of R 682 million (this had been estimated to be R 632 million as at June 30, 2002) and the fair value of a R 400 million interest-free loan being R 259 million. Under US GAAP, the Company determined the purchase price to be R 2,264 million, being the sum of a cash payment of R 1,800 million, the taxes payable by the seller on the transaction of R 682 million and the fair value of the R 400 million interest-free loan being R 270 million, offset by the cash flows of R 488 million generated by the Free Gold assets during the period January 1, 2002 (the date upon which the Company assumed joint operational control) and April 23, 2002 (the date upon which all the conditions precedent to the transactio were fulfilled and the transaction completed). | ||||
(iii) | Provision for rehabilitation | |||
(a) Method of recognition | ||||
Under both SA GAAP and US GAAP, environmental rehabilitation costs are provided for, based upon the net present value of the expected future obligation and a corresponding asset raised. Under US GAAP, prior to fiscal 2003, environmental rehabilitation costs were provided for, based on the units of production method based on the expected ultimate rehabilitation amount. | ||||
(b) Amortization of the rehabilitation asset | ||||
The rehabilitation assets carrying value under SA GAAP is different to that under US GAAP, which results in a differing amortization charge. | ||||
(iv) | Tax effects of the above described adjustments | |||
Reflects the tax effects of the above described US GAAP adjustments. |
F–94