Edgar Filing: HARMONY GOLD MINING CO LTD

Page 1

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 6-K

REPORT OF FOREIGN PRIVATE ISSUER PURSUANT TO

RULE 13a-16 OR 15d-16 UNDER THE SECURITIES

EXCHANGE ACT OF 1934

For August 19, 2003

Harmony Gold Mining Company

Limited

Suite No. 1

Private Bag X1

Melrose Arch, 2076

South Africa

(Address of principal executive offices)

(Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-

F or Form 40-F.)

Form 20-F   X     Form 40-F

(Indicate by check mark whether the registrant by

furnishing the information contained in this form

is also thereby furnishing the information to the

Commission pursuant to Rule 12g3-2(b) under the

Securities Exchange Act of 1934.)

  Yes          No   X

"This Report on Form 6-K is incorporated by reference into the registration statement on Form F-3

(file no. 333-13516) for Harmony Gold Mining Company Limited, filed on December 23, 2002, and into the prospectus that forms a part of that registration statement."

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

Action required

1.   If you are in any doubt as to the action that you should take, please consult your stockbroker, banker, accountant, legal adviser or other professional adviser

immediately.

2.   If you have sold or otherwise disposed of all your shares in Harmony Gold Mining Company Limited ("Harmony"), this circular, together with the attached

form of proxy (blue), should be handed to the purchaser of such shares, or to the stockbroker, banker or agent through whom the disposal was effected.

3.   Certificated shareholders and shareholders who hold dematerialised shares and have elected "own name" registration in the sub-register through a Central

Securities Depository Participant ("CSDP") who are unable to attend the general meeting of shareholders of Harmony, to be held at 09:00 on 1 September
2003 at the corporate office of Harmony, Randfontein Office Park, Corner Main Reef Road and Ward Avenue, Randfontein, but wish to be represented
thereat, should complete and return the attached form of proxy (blue) in accordance with the instructions contained therein to the transfer secretaries of
Harmony, Ultra Registrars (Pty) Limited, 11 Diagonal Street, Johannesburg, 2001 (PO Box 4844, Johannesburg, 2000) or Capita Registrars, The Registry, 34
Beckenham Road, Beckenham, Kent BR3 4TU, England, so as to be received by not later than 09:00 on 28 August 2003.

4.   Shareholders who hold dematerialised shares through a CSDP or broker, other than those who have elected "own name" registration, and who wish to attend

the general meeting must request their CSDP or broker to provide them with a Letter of Representation or should advise their CSDP or broker as to what
action they wish to take. This must be done in terms of the agreement entered into between them and the CSDP or broker. Shareholders who have
dematerialised their shares, other than those who have elected "own name" registration, must not complete and return the attached form of proxy.

Harmony Gold Mining Company Limited

(Incorporated in the Republic of South Africa)
(Registration number 1950/038232/06)
Share code: HAR    ISIN: ZAE000015228

("Harmony" or the "company")

CIRCULAR TO SHAREHOLDERS

relating to an authority for

-    the increase of Harmony's authorised ordinary share capital from 250 000 000 ordinary shares with a par value of

50 cents each to 350 000 000 ordinary shares with a par value of 50 cents each ("Harmony shares");

-    the approval of the merger between Harmony and African Rainbow Minerals Gold Limited ("ARMgold"), the

consideration for which will be discharged by the issue of up to 64 000 000 Harmony shares to ARMgold, in the ratio of
2 Harmony shares for every 3 ARMgold shares, to be implemented by way of a scheme arrangement proposed by Harmony
between ARMgold and its shareholders, in terms of section 311 of the Companies Act, 1973 (Act 61 of 1973), as amended,

and incorporating

-    information relating to Harmony as required for inclusion in a pre-listing statement in compliance with the Listings

Requirements of the JSE Securities Exchange South Africa;

-    a notice of a general meeting of shareholders; and

-    a form of proxy for certificated and own name dematerialised shareholders.

TM

Financial adviser

Sponsor

Reporting accountants

Technical adviser

Attorneys

Date of issue of this circular: 7 August 2003

This circular contains "forward-looking statements" within them eaning of Section 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 934, as amended, that are intended to be covered by the safe harbor created by such sections. All statements other than those of historical facts included in this presentation are forward-looking statements, including , without limitation, (i) estimates of future earnings, and the sensitivity of earnings to the gold and other metals prices; (ii) estimates of future gold and other metals production and sales, (iii) estimates of future cash costs; (iv) estimates of future cash flows, and the sensitivity of cash flows to the gold and other metals prices; (v) statements regarding future debt repayments; (vi) estimates of future capital expenditures; (vii) estimates of reserves, and statements regarding future exploration results and the replacement of reserves; and (viii) statements regarding modifications to the Company's hedge position. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward-looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward-looking statements. Such risks include, but are not limited to, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, as well as political and operational risks in the countries in which we operate and governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company's Annual Report on Form 20-F for the year ended June 30, 2002, which is on file with the Securities and Exchange Commission, as well as the Company's other SEC filings. The Company does not undertake any obligation to release publicly any revisions to any "forward-looking statement" to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws.

Contents

Page

Corporate information

Inside front cover

Important dates and times

Definitions

Circular to shareholders

1.    Introduction

2.    Increase in authorised ordinary share capital

3.    Background and rationale for the merger

4.    Background and information on ARMgold

4.1

Introduction

4.2

Nature of business

4.3

Strategy and prospects

4.4

Litigation statement

4.5

Financial information on ARMgold

4.6

Details of any significant contracts

4.7

Material changes

5.    The merger consideration and salient terms

6.    Financial effects of the merger on Harmony and ARMgold

7.    Conditions precedent

8.    General meeting and shareholder approval

8.1

General meeting

8.2

Shareholder approvals

9.    Exchange Control Regulations

10.    Information on Harmony

10.1    Introduction

10.2    Nature of business

10.3    Strategy and prospects

11.    Directorate

11.1    Directors

11.2    Appointment and remuneration of directors

11.3    Directors' interests in capital of Harmony

11.3.1    Details of Harmony shares held by directors

11.3.2    Details of share options held by directors

11.4    Directors' responsibility statement

Page

12.    Share capital

12.1    Capitalisation

12.2    Voting rights and rights to dividends

12.3    Share issues, consolidation and sub-division of shares

12.4    Preferential rights over Harmony shares

12.5    Major shareholders

13.    Financial information of Harmony

13.1    Information relating to Harmony

13.2    Working capital

13.3    Borrowings and material loans

13.4    Material inter-company finance

13.5    Contingent liabilities and capital commitments

13.6    Details of materials loans by Harmony Group

14.    General

14.1    Litigation statement

14.2    Expenses

14.3    Experts consent

14.4    Corporate governance

14.5    Significant contracts

14.6    Acquisitions and disposals of property

15.    Documents available for inspection

Annexure 1

Extracts from the Memorandum and Articles relating to the directors of Harmony

Annexure 2

Report of the independent reporting accountants on the pro forma financial
effects of the merger to the shareholders of Harmony

Annexure 3

Pro forma financial information of Harmony

Annexure 4

Historical financial information of Harmony

Annexure 5

Historical information of ARMgold

Annexure 6

Significant contracts of ARMgold

Annexure 7

Trading history of Harmony shares

Annexure 8

Competent Person's Report on Harmony

Annexure 9

Acquisitions and disposals of companies, businesses and properties

Annexure 10       Schedule of material loans to Harmony Group

Annexure 11       Schedule of material loans by Harmony Group

Annexure 12       Contingent liabilities and capital commitments

Annexure 13       Subsidiary operating companies incorporated in South Africa

Annexure 14       Details regarding inter-company finance

Annexure 15       Schedule of pending legal proceedings

Notice of general meeting

Form of proxy (blue)

Attached

Important dates and times

Last day to lodge forms of proxy for the general meeting to be received by 09:00 on

   28 August 2003

Forms of proxy for the scheme meeting to be received by

   29 August 2003

General meeting to be held at Harmony's corporate office, Randfontein Office Park,
Corner of Main Reef Road and Ward Avenue, Randfontein, P.O. Box 2, Randfontein, 1760,
South Africa, at 09:00 on

   1 September 2003

Announcement regarding results of general meeting of shareholders released on SENS and
other relevant exchanges on

   1 September 2003

Scheme meeting to be held at 10:00 on

   1 September 2003

Announcement regarding results of scheme meeting and declaration of ARMgold dividend
released on SENS and other relevant exchanges on

   1 September 2003

Announcement regarding results of general meeting published in the South African press on

   2 September 2003

Court hearing to sanction the scheme on

   9 September 2003

Expected announcement regarding results of scheme released on SENS and other
relevant exchanges on

   9 September 2003

Expected announcement regarding results of scheme published in the South African
press on

   10 September 2003

Last day to trade for ARMgold shareholders wishing to receive the consideration shares and
the ARMgold dividend on

   12 September 2003

Suspension of listing of ARMgold shares at commencement of trading on

   15 September 2003

Consideration record date, being the date on which shareholders must be recorded in the
register of ARMgold by 17:00 to receive the consideration shares on

   19 September 2003

Operative date of the scheme at commencement of trading on

   22 September 2003

Termination of listing of the ARMgold shares on the JSE at commencement of trading on

   23 September 2003

Notes:

1.

The definitions set out on pages 4 to 6 apply to the information on this page.

2.

All times shown in this circular are South African local times.

3.

Any change to the above dates and times will be advised by notification in the South African press and released on SENS and other relevant exchanges.

4.

Copies of this circular may be obtained from:

-   Harmony;

-   Ultra Registrars (Pty) Limited; and

-   St James's Corporate Services Limited,

at the addresses set out on the inside front cover.

Definitions

In this circular and its annexures, unless otherwise indicated:

-    the words in the first column have the meanings stated opposite them in the second column, words in the singular

include the plural and vice versa, words signifying one gender include the other genders, and references to a person
include references to juristic persons and associations of persons and vice versa;

-    all monetary values are in South African rands and cents unless otherwise stated; and

-    all times indicated are South African local times.

"Act"

the Companies Act, 1973 (Act 61 of 1973), as amended;

"ADRs"

American Depository Receipts;

"ARMgold"

African Rainbow Minerals Gold Limited (registration number 1997/015869/06),
incorporated in South Africa and listed on the JSE;

"ARMI"

African Rainbow Minerals and Exploration Investment (Proprietary) Limited
(registration number 1997/020158/07), incorporated in South Africa;

"ARMgold shares"

ordinary shares having a par value of 0.1 cents each in the issued share capital of
ARMgold;

"ARMgold shareholders"

holders of ARMgold shares;

"Articles"

the articles of association of Harmony;

"Avmin"

Anglovaal Mining Limited (registration number 1933/004580/06), incorporated
in South Africa and listed on the JSE;

"board of directors" or "directors"

the board of directors of Harmony;

or "board"

"business day"

any day, excluding Saturday and Sunday, on which banking institutions are
generally open for normal banking business in Johannesburg;

"certificated shares"

Harmony shares which have not yet been dematerialised in terms of STRATE, title
to which is represented by a share certificate or other document of title;

"certificated shareholders"

holders of certificated shares;

"circular"

this bound document, dated 7 August 2003, including the annexures, the attached
notice of general meeting and form of proxy;

"completion date"

the date upon which the merger becomes effective;

"conditions"

the conditions precedent to which the merger is subject as reflected in
paragraph 7;

"consideration shares"

up to 64 000 000 new Harmony shares, to be issued in the ratio of 2 Harmony shares for every 3 ARMgold shares as consideration for the merger, it being recorded that as at the last practicable date, based on the current number of ARMgold shares in issue and the agreed ratio, consideration shares shall mean 63 666 667 Harmony shares;

"CSDP"

a Central Securities Depository Participant as defined in section 91A of the Act;

"dematerialised shares"

Harmony shares which have been dematerialised through a CSDP or broker;

"dematerialised shareholders"

holders of dematerialised shares;

"Employee Share Schemes"

collectively, The Harmony (1994) Share Option Scheme, as amended, and The Harmony (2001) Share Purchase Scheme;

"Free Gold"

ARMgold/Harmony Freegold Joint Venture Company (Proprietary) Limited, the 50/50 incorporated joint venture with ARMgold, which has acquired the Tshepong, Matjhabeng, Bambanani, Joel and St. Helena mines as well as certain other surface operations;

"general meeting"

the general meeting of shareholders to be held at 09:00 on 1 September 2003 at Harmony's corporate office, Randfontein Office Park, Corner of Main Reef Road and Ward Avenue, Randfontein, PO Box 2, Randfontein, 1760;

"Harmony"

Harmony Gold Mining Company Limited (registration number 1950/038232/06), incorporated in South Africa and listed on the JSE, the LSE, Euronext Paris, Euronext Brussels, in the form of International Depository Receipts, and the NYSE in the form of ADRs;

"Harmony Group"

Harmony and its subsidiaries;

"Harmony shares"

ordinary shares with a par value of 50 cents each in the issued ordinary share capital of Harmony;

"Harmony shareholders" or

holders of Harmony shares from time to time;

"shareholders"

"IDC"

Industrial Development Corporation of South Africa Limited;

"JSE"

the JSE Securities Exchange South Africa;

"Kalgold"

Kalahari Goldridge Mining Company Limited (registration number 1982/002818/07), incorporated in South Africa;

"last practicable date"

the last practicable date prior to finalisation of this circular, being 1 August 2003;

"LSE"

the London Stock Exchange plc;

"merger"

the acquisition by Harmony of the entire issued share capital of ARMgold, the consideration for which will be discharged by the issue of the consideration shares, which is to be implemented by means of the scheme or the substitute offer;

"merger agreement'

the agreement dated 22 July 2003 entered into between Harmony, ARMgold and ARMI in relation to the merger;

"NYSE"

the New York Stock Exchange;

"scheme"

the scheme of arrangement proposed by Harmony between ARMgold and the ARMgold shareholders in terms of section 311 of the Act;

"scheme meeting"

the scheme meeting convened by order of the High Court for purposes of considering and voting on the scheme which is expected to be held on 1 September 2003;

"SENS"

the Securities Exchange News Service;

"Simane"

Simane Security Investments (Pty) Limited;

"South Africa"

the Republic of South Africa;

"SRK"

Steffen, Robertson and Kirsten (South Africa) (Pty) Limited (registration number 1995/012890/07), incorporated in South Africa;

"SRP"

the Securities Regulation Panel;

"St. Helena"

the St. Helena Mine located in the south-western rim of the Witswatersrand Basin;

"STRATE"

STRATE Limited (registration number 1998/022248/06), incorporated in South Africa, and is the electronic clearing and share settlement system used by the JSE;

"substitute offer"

the implementation of the merger by means of an offer to ARMgold shareholders, which will be deemed to be made if the scheme fails as a result of the non- fulfilment of the conditions which specifically relate to the scheme; and

"transfer secretaries"

Ultra Registrars (Pty) Limited (registration number 2000/007239/07) in South Africa and Capita Registrars in England.

Harmony Gold Mining Company Limited

(Incorporated in the Republic of South Africa)
(Registration number 1950/038232/06)

Directors

Adam Fleming*#
Bernard Swanepoel
Ferdi Dippenaar
Frank Abbott
Ted Grobicki
John Smithies*#
Mike Pleming*#
Nolitha Fakude*#
Lord Renwick of Clifton KCMG*#
Simo Lushaba*#

* Independent
# Non-executive

Circular to shareholders

PART I

1.

INTRODUCTION

On Friday, 2 May 2003, Harmony and ARMgold announced that they had reached agreement, in terms of a memorandum of understanding, regarding their proposed merger. It is intended that the merger will be implemented by means of a scheme of arrangement to be proposed by Harmony between ARMgold and ARMgold shareholders, in terms of section 311 of the Act, which will be subject to the fulfilment of the conditions.

Harmony will issue up to 64 000 000 new Harmony shares in consideration for the merger in the ratio of 2 Harmony shares for every 3 ARMgold shares held.

This circular sets out the details of the special resolution and ordinary resolutions that are required to be approved by Harmony shareholders to enable the merger to be implemented, including an increase in the authorised share capital of Harmony.

2.

INCREASE IN AUTHORISED ORDINARY SHARE CAPITAL

In order to ensure that a sufficient number of Harmony shares are available for issue for the purposes of implementation of the merger and future share issuances, the board of directors propose that the authorised ordinary share capital of Harmony be increased to 350 000 000 Harmony shares from the current authorised ordinary share capital of 250 000 000 Harmony shares. The special resolution providing for such increase is contained in the attached notice of general meeting. The effect of the special resolution is to increase the authorised ordinary share capital of Harmony from R125 million to R175 million.

TM

PART II

3.

BACKGROUND AND RATIONALE FOR THE MERGER

In November 2001, Harmony and ARMgold formed a 50/50 joint venture, Free Gold, that acquired certain gold mines and related surface operations and assets from Anglogold Limited, with effect from 1 January 2002. At the same time, Harmony and ARMgold entered into a co-operation agreement for a period of twelve months, to jointly explore opportunities for the acquisition and establishment of gold mining and related businesses and the acquisition and exploitation of mineral rights within South Africa.

Since that time, Harmony and ARMgold have worked together pursuing various opportunities, including the acquisition of the St Helena mine, through Free Gold, and the acquisition of 34,5% of the issued shares in Avmin through a newly formed joint venture company. The investment in Avmin was primarily to obtain a foothold in Avgold Limited, a company with significant growth opportunities.

The two companies have similar management structures with reduced management and decision-making levels. Both the companies have proven skills and expertise to turn loss-making and marginal mines into highly profitable operations.

The two large joint ventures the companies have entered into, coupled with their similar management styles and their proven ability to work together, as evidenced by the successes achieved in Free Gold, contributed to the decision to merge the two companies.

It is intended that the merged company will trade under the name Harmony, with conspicuous and distinctive emphasis on the letters "ARM" to include ARMgold's identity in the merged company. Following the merger, the enlarged Harmony will become the fifth largest gold producer in the world and the largest unhedged South African gold producer. It will also be truly representative of the new South Africa with historically disadvantaged South Africans holding in excess of 19% of its issued share capital and participating in excess of 26% of the operations.

The new Harmony will own operating mines in all the major gold producing regions of South Africa. It is also expected to realise synergies in the Free State in the short term, by consolidating the region into one operating unit, thereby optimising the use of infrastructure and exploitation of the ore bodies, which should deliver enhanced return for shareholders.

The merger will result in the best practices developed by both companies being incorporated in the current operations, and will create exciting opportunities for growth that will be to the benefit of the shareholders of both Harmony and ARMgold.

To date the proposed merger has been well received by the market and institutional shareholders of both companies and the merged company should be in an even better position to raise funds and to explore and exploit further growth opportunities in the industry.

4.

BACKGROUND INFORMATION ON ARMGOLD

4.1

Introduction

ARMgold was incorporated in 1997 and was listed on the JSE in May 2002. Its registered address is ARM House, 29 Impala Road, Chislehurston, Johannesburg, 2196.

4.2

Nature of business

ARMgold has become South Africa's fourth largest gold producer and the tenth largest gold producer worldwide. ARMgold has achieved its stated objective of producing in excess of one million attributable ounces of gold in 2003.

ARMgold has been involved in a successful joint venture, Free Gold, with Harmony since January 2002. In addition to Free Gold, ARMgold operates mines in the Orkney and Welkom areas.

4.3

Strategy and prospects

ARMgold has developed a "We Do It Better" philosophy that has enabled ARMgold to establish a successful track record of turning around previously loss-making and under-performing shafts, making them profitable and competitive.

Since its successful listing on the JSE in May 2002, ARMgold has been a model company for black economic empowerment in the mining sector.

4.4

Litigation statement

There are no legal or arbitration proceedings (including any such proceeding that are pending or threatened of which ARMgold is aware) that may have or have had in the recent past (being the 12 month period immediately prior to the date of this circular) a material effect on the financial position of ARMgold or any of its subsidiaries.

4.5

Financial information on ARMgold

All financial information on ARMgold is set out in Annexure 5.

4.6

Details of any significant contracts

ARMgold's significant contracts are reflected in Annexure 6.

4.7

Material changes

Apart from the acquisition, jointly with Harmony, of a 34,5% interest in Avmin, there have been no material changes in the financial or trading position of ARMgold and its subsidiaries since the last annual financial statements were published.

5.

THE MERGER CONSIDERATION AND SALIENT TERMS

The merger consideration

As consideration for the merger, Harmony will issue the consideration shares to ARMgold shareholders.

The merger ratio is 2 Harmony shares for every 3 ordinary ARMgold shares held. The ratio of Harmony shares to ARMgold shares was calculated with reference to the 30-day volume weighted average traded ordinary share prices of Harmony and ARMgold prior to the final negotiation of the terms of the merger.

In addition:

-    prior to the completion date, ARMgold has the right to declare and pay a cash dividend of 500 cents per ARMgold

share to ARMgold shareholders recorded as such on a date prior to the completion date, provided that it shall be
entitled to increase the amount of such dividend if the circumstances envisaged below arise;

-    Harmony shall be entitled, at any time prior to the date which is not less than 7 days prior to the date of the

scheme meeting, to declare and pay any cash dividend to Harmony shareholders recorded as such on any day prior
to the completion date, provided that, upon declaration of such dividend, ARMgold shall be entitled to increase
the amount of the dividend it is obliged to declare and pay as aforesaid by an amount equal to two-thirds of the
dividend declared per Harmony share or 100 cents per ARMgold share, whichever is the greater.

Harmony has undertaken in favour of ARMgold as follows:

-    it will not declare and pay any dividend during the period reckoned from 7 days prior to the scheme meeting and

the completion date; and

-    insofar as it is lawfully able, its next dividend following the completion date will be:

-    not less than 150 cents per Harmony share, so as to ensure that each ARMgold shareholder who receives

consideration shares pursuant to the merger will, together with the dividend which ARMgold is obliged to
declare, receive a minimum dividend of 600 cents per ARMgold share acquired from him;

-    declared and paid as soon as possible after the completion date.

The aggregate number of Harmony shares to be issued in terms of the merger is expected to represent approximately 35% of the issued ordinary share capital of Harmony. The Harmony consideration shares will rank pari passu in all respects with the existing issued Harmony shares.

The resolution in terms of which this authority will be granted (ORDINARY RESOLUTION NUMBER 1) is contained in the attached notice of general meeting.

Salient terms

Harmony and ARMgold have further agreed that, following implementation of the merger, it is their intention to give effect to the following regarding Harmony's board and executive management:

-    ARMgold and Harmony intend to integrate their respective boards and executive teams in an effective manner so

as to retain their respective strengths and attributes, particularly ARMgold's strong empowerment credentials and
Harmony's international profile and global reach;

-    with that objective in mind, ARMgold and Harmony intend to reorganise the board of directors so that on or as

soon as possible after the completion date the board will conform with the following requirements:

-    it will consist of not more than 19 (nineteen) directors, of whom not more than 8 (eight) will be executive

directors;

-    it will include 10 (ten) directors who will be nominated by ARMgold, of whom not more than 4 (four) will be

executive directors;

-    any  resignations from the present board which are necessary to permit the appointment of ARMgold's

nominees will be obtained; and

-    Mr Patrice Motsepe will be appointed non-executive chairman of the board for a period of at least 3 (three)

years from the completion date.

-    In order to retain in Harmony the significant empowerment credentials present in and identified with ARMgold

following the completion date, Mr Patrice Motsepe's functions and responsibilities as the non-executive chairman
of Harmony will be broader and more extensive than those normally allocated to a non-executive chairman.

The identities of the directors nominated to the board of directors by ARMgold are as follows:

Executive directors

A J Wilkens
P Taljaard
W M Gule
D V Simelane

Non-executive directors

P T Motsepe
Dr M M M M Bakane-Tuoane
M W King
C M L Savage
Dr R V Simelane
Dr S P Sibisi

Subject to Harmony having procured the appointment of ARMgold's nominees to the board of directors as aforesaid, ARMI has undertaken to exercise the votes attaching to its ARMgold shares in favour of the scheme at the scheme meeting or to accept the substitute offer as the case may be.

ARMI has undertaken to Harmony that it will not dispose of any of the consideration shares received by it pursuant to the implementation of the merger for a period of 6 months reckoned from the completion date.

6.

FINANCIAL EFFECTS OF THE MERGER ON HARMONY AND ARMGOLD

The table below sets out the illustrative financial effects of the merger based on the unaudited financial information of Harmony for the nine months ended 31 March 2003. The effect of the Avmin acquisition or the acquisition of 11,5% of the issued share capital of Avgold Limited is not included in the table below. These financial effects are for illustrative purposes only and may not give a true picture of Harmony's financial position and future results.

Harmony before

Harmony after                          %

merger

merger

Change

Basic earnings per share (cents)²

1,6

Headline earnings per share (cents)²

5,6

Net asset value per share (cents)³

4 850

5 858

20,8

Net tangible asset value per share (cents)³

4 850

5 274

8,7

Weighted average number of shares in issue

175 850 256

239 516 923

Number of shares in issue

184 163 265

247 829 932

Notes:

1.    The Harmony before merger financial information was extracted from Harmony's published quarterly reports for the nine-month period

ended 31 March 2003.

2.    The basic and headline earnings per share effects are based on the assumption that the merger was effective 1 July 2002.

3.    The net asset and net tangible asset value per share effects are based on the assumption that the merger was effective 31 March 2003.

4.     Earnings and headline earnings per share after the merger are after the following adjustments:

(a)     the consolidation of ARMgold's earnings and headline earnings for the nine months ended 31 March 2003, after adjusting for the after

tax effect of the lower interest earned during the period as the result of the payment of a special dividend of 500 cents per ARMgold share,
assumed to have been paid at the beginning of the period;

(b)     the fair value adjustment, arising on the merger, is amortised over the lives of the mines, resulting in a charge of R105,9 million for the

nine months period (after tax);

(c)     goodwill, arising from the merger, is amortised over a period of 17 years and results in a charge of R65,1 million for the nine month

period; and

(d)     amortisation of the goodwill arising on the merger is reversed for determination of headline earnings.

5.     Net asset and tangible asset values per share after the merger are after the following adjustments:

(a)     the consolidation of ARMgold's assets and liabilities, at fair value, as at 31 March 2003, after adjusting for the payment of a special

dividend of 500 cents per ARMgold share;

(b)     the issue of 63 666 667 shares at R87,75 per share as consideration.

7.

CONDITIONS PRECEDENT

7.1

The implementation of the scheme is conditional, inter alia, upon:

the passing of the special resolution and ordinary resolutions set out in the notice of general meeting
attached to this circular by the Harmony shareholders at the general meeting, to enable Harmony to
propose and implement the scheme;

the approval of the scheme by ARMgold shareholders at the scheme meeting;

the sanctioning of the scheme by the High Court of South Africa in accordance with the requirements of
the Act;

the registration of the High Court's Order sanctioning the scheme by the Registrar of Companies in
accordance with the requirements of the Act;

the obtaining of all rulings and approvals required from any regulatory authorities and from the JSE and
the SRP;

the JSE approving the listing of the consideration shares on the JSE; and

-    the completion date occurring by no later than 31 December 2003

7.2

The implementation of the substitute offer, which will be deemed to be made if the scheme fails as a result of
the non-fulfilment of the conditions which specifically relate to the scheme, is conditional upon:

the passing of the special resolution and ordinary resolutions set out in the notice of general meeting
attached to this circular by the Harmony shareholders at the general meeting, to enable Harmony to
propose and implement the substitute offer;

offerees holding at least 90% (or such lesser percentage as Harmony may determine) of the ARMgold shares
accepting the substitute offer;

the registration of the Harmony shares comprising the substitute offer consideration in the United States of
America if and to the extent required by the Securities Exchange Commission; and

the substitute offer becoming unconditional by 31 December 2003.

The condition that the completion date of the scheme occurs by no later than 31 December 2003, or the substitute offer becomes unconditional by no later than 31 December 2003, as the case may be, is capable of waiver or extension by agreement between Harmony and ARMgold.

8.

GENERAL MEETING AND SHAREHOLDER APPROVAL

8.1

General meeting

Attached to this circular is a notice of a general meeting of Harmony shareholders to be held at Harmony's corporate office, Randfontein Office Park, Corner Main Reef Road and Ward Avenue, Randfontein, at 09:00 on 1 September 2003. The general meeting will be held for the purposes of considering the special resolution required to increase Harmony's authorised share capital and the ordinary resolutions required to approve the merger. Certificated shareholders and dematerialised shareholders who have "own name" registration and who are unable to attend the general meeting and who wish to be represented thereat are requested to complete and return the attached form of proxy (blue) to the transfer secretaries, by not later than 09:00 on 28 August 2003.

Dematerialised shareholders who do not have "own name" registrations and who wish to attend the general meeting must request their CSDP or broker to provide them with a Letter of Representation or must instruct their CSDP or broker to vote by proxy on their behalf in terms of the agreement entered into between the shareholder and their CSDP or broker.

8.2

Shareholder approvals

In accordance with the JSE Listings Requirements, the merger is subject to approval by ordinary resolution passed by a majority of Harmony shareholders present or represented by proxy and entitled to vote at the general meeting.

The increase in authorised ordinary share capital is subject to approval by special resolution passed by at least 75% of Harmony shareholders, present or represented by proxy and entitled to vote at the general meeting of which not less than 21 clear days' notice will be given and at which not less than 25% of the total votes of all Harmony shareholders entitled to attend and vote are present or represented.

9.

EXCHANGE CONTROL REGULATIONS

In terms of the Exchange Control Regulations of the Republic of South Africa:

-    the share certificates of non-resident shareholders issued by the transfer secretaries in South Africa will be

endorsed "Non-Resident";

-    new share certificates, dividend and residual cash payments based on emigrants' shares controlled in terms of the

Exchange Control Regulations will be forwarded to the Authorised Dealer in foreign exchange controlling their
blocked assets. The election by emigrants for the above purpose must be made through the Authorised Dealer in
foreign exchange controlling their blocked assets; and

-    dividend and residual cash payments due to non-residents are freely transferable from South Africa.

PART III

10.    INFORMATION ON HARMONY

10.1    Introduction

Harmony was incorporated in South Africa on 25 August 1950. The names, dates and places of incorporation of Harmony's operating subsidiaries are reflected in Annexure 13. Brief particulars of alterations of Harmony's capital over the last 3 years are reflected in paragraph 12.3. The primary listing of Harmony's shares is on the JSE. The Harmony shares are also listed on the LSE and Euronext Paris and are quoted on Euronext Brussels in the form of International Depository Receipts and on the NYSE in the form of ADRs.

10.2    Nature of business

Harmony is a gold miner and producer with an international diversified portfolio of gold mining projects in South Africa, Canada, Australia, and Russia. Harmony adopts focused operational and management philosophies throughout the organisation. Its growth strategy is focused on building a leading international gold mining company through acquisitions, organic growth, and focused exploration. The bulk of its assets are located in the Witswatersrand basin of South Africa. The deep level gold mines located in this basin include

the Free State operations and the operations of Free Gold in the Free State Province, the Evander gold mine in Mpumalanga Province and the Randfontein and Elandskraal mines on the West Rand goldfields in Gauteng Province. In addition, Harmony and ARMgold have recently jointly acquired a 34,5% shareholding in Avmin and Harmony has acquired an 11,5% shareholding in Avgold Limited.

Harmony's international operations are held under Harmony Gold (Australia) (Pty) Ltd and comprise the wholly-owned New Hampton Goldfields Limited and Hill 50 Limited, a 31,8% shareholding in the Bendigo Mining NL operation, a 32,5% interest in Highland Gold Mining Limited, a 21% interest in High River Gold Mines Limited, as well as an 87% interest in Abelle Limited.

10.3    Strategy and prospects

Harmony is a growth oriented company in the gold production business and is distinguished by the focused operational and management philosophies which it employs throughout the organisation. Its growth strategy is focused on building a leading international gold mining company through acquisitions, organic growth, and focused exploration.

Since undergoing a change in management in 1995, Harmony has employed a successful strategy of growth through a series of acquisitions and through the evolution and implementation of a simple set of management systems and philosophies, which Harmony refers to as the "Harmony Way", and which it believes is unique in the South African gold mining industry. A significant component of the success of Harmony's strategy to date has been its ability to acquire under performing mining assets, mainly in South Africa, and within a relatively short time frame, to transform these mines into cost-effective production units.

Harmony is managed according to the philosophy that Harmony shareholders have invested in Harmony in order to hold a growth stock that will also participate in movements in the gold price. Accordingly, Harmony has consistently maintained a policy of not hedging its future gold production.

11.    DIRECTORATE

11.1    Directors

The current functions, nationalities and addresses of the directors of Harmony are set out below:

Name

Function

Address

A R Fleming

Non-executive Chairman

Harmony Corporate Office, Randfontein Office Park,

(British)

Corner of Main Reef Road and Ward Avenue,
Randfontein, PO. Box 2, Randfontein, 1760,
South Africa

Z B Swanepoel

Chief Executive

Harmony Corporate Office, Randfontein Office Park,

(South African)

Corner of Main Reef Road and Ward Avenue,
Randfontein, PO Box 2, Randfontein, 1760,
South Africa

F Abbott

Financial Director

Harmony Corporate Office, Randfontein Office Park,

(South African)

Corner of Main Reef Road and Ward Avenue,
Randfontein, PO Box 2, Randfontein, 1760,
South Africa

T S A Grobicki

Executive Director

Harmony Corporate Office, Level 1, 10 Ord Street,

(South African)

West Perth, WA, 6005

F Dippenaar

Marketing Director

Harmony Corporate Office, Randfontein Office Park,

(South African)

Corner of Main Reef Road and Ward Avenue,
Randfontein, PO Box 2, Randfontein, 1760,
South Africa

V N Fakude

Non-executive Director

1st Floor Block C, Sandhurst Office Park,

(South African)

Corner Katherine Street and Rivonia Road, Sandton,
PO Box 781220, Sandton, 2146

Lord Renwick of Clifton

Non-executive Director

JPMorgan plc., 125 London Wall, London EC2Y 6A J,

KCMG

United Kingdom

(British)

Name

Function

Address

D S Lushaba

Non-executive Director

522 Impala Road, Glenvista, 2058, PO Box 1127,

(South African)

Johannesburg, 2000

M F Pleming

Non-executive Director

30 Hydewoods, Townshend Road, Hyde Park, 2196

(South African)

J G Smithies

Non-executive Director

Point House, Eastford, Knysna 6570, PO Box 930,

(South African)

Knysna, 6570

Further details on the executive directors of Harmony are as follows:

Zacharias Bernardus Swanepoel (42), BSc (Mining Engineering), B Com(Hons), Chief Executive and a director. Mr. Swanepoel has been a director of Harmony and its Chief Executive since February 1995. Mr. Swanepoel has approximately 20 years of experience in the mining industry. Prior to joining Harmony he was General Manager of the Beatrix Mine within the Gengold Group Limited.

Frank Abbott (48), BCom, CA (SA), MBL, Chief Financial Officer and a director. Mr. Abbott has been a director of Harmony since 1994 and Chief Financial Officer since October 1997. He retired by rotation and was duly re-elected at the annual general shareholders' meeting held on 16 November 2002. Mr. Abbott has approximately 22 years' experience in financial management. Prior to joining Harmony he was Financial Director of Randgold & Exploration Company Limited from 1994 to 1997.

Ferdinand Dippenaar (42), BCom, BProc, MBA, Marketing Director. Mr. Dippenaar has been a director of Harmony since June 1997. He retired by rotation and was duly re-elected at the annual general shareholders' meeting held on 16 November 2002. Mr. Dippenaar has approximately 16 years' commercial and financial experience. He was Managing Director of The Grootvlei Proprietary Mines Limited and East Rand Proprietary Mines Limited from 1996 to 1997. Prior to 1996, Mr. Dippenaar served as Project Leader for the East Rand companies of Randgold & Exploration Company Limited in 1995 and Financial Manager of Beatrix Gold Mines Limited in 1994.

Thaddeus Steven Anthony Grobicki (53), BSc (Hons) (Geology), MSc (Minerals Exploration), Executive Officer for offshore operations and a director. Mr. Grobicki has been a director of Harmony since 1994 and an Executive Director since October 1999. Mr. Grobicki has approximately 25 years' experience in the mining industry. He was a Chief Executive Officer of West Rand Consolidated Mines Limited and Kalgold until July 1999. In March 2002, he was appointed Chairman of the Board of Directors of Hill 50 Limited.

Further details on the non-executive directors of Harmony are set out below:

Adam Richard Fleming (54), Non-executive Chairman of the Board and an independent director. Mr. Fleming has been a director and the Chairman of Harmony since 14 October 1999. His current term will expire at Harmony's next annual general shareholders' meeting, currently scheduled for 14 November 2003, at which time he will be eligible for re-election. Mr. Fleming was the Non-executive Chairman of West Rand Consolidated Mines Limited and of Kalgold before the acquisition of these companies by Harmony.

Victoria Nolitha Fakude (39) BA (Hons) (Psychology, Education and English), Non-executive Director and an independent director. Ms. Fakude has been a director of Harmony since September 2002. She has completed executive training programs at the Harvard Business School and Carl Duisberg Gesellschaft, and been the Managing Director of the Black Management Forum, or BMF, since 2001. Her role as Managing Director of the BMF involves stakeholder and relationship management with BMF members, corporate members, government and other organisations.

Lord Robin William Renwick of Clifton (64), KCMG, Non-executive Director and an independent director. Lord Renwick has been a director of Harmony since October 1999. He retired by rotation and was duly re-elected at the annual general shareholders' meeting held on 16 November 2002. Lord Renwick was in the diplomatic service, inter alia as British ambassador to Pretoria and Washington, until his retirement in 1997. He is currently chairman of Fluor Limited and is a director of several public companies, including British Airways Plc., Compagnie Financire Richemont AG, BHP Billiton Plc, Fluor Corporation, SABMiller Plc and Fleming Family and Partners.

Dugmore Simosezwes Lushaba (37) BSc (Advanced Biochemistry), MBA, Non-Executive Director and an independent director. Mr. Lushaba has been a director of Harmony since October 2002. He is Chief Executive Officer of Rand Water Limited and has completed courses in industrial marketing, strategic capability, executive development and corporate governance.

Michael Frank Pleming (66), Pr Eng, FIMM, Non-executive Director and an independent director. Mr. Pleming has been a director of Harmony since September 1998. He retired by rotation and was duly re-elected at the annual general shareholders' meeting held on 16 November 2001. Mr. Pleming has approximately 30 years mining and approximately 14 years' mining investment experience. He is also a director of Impala Platinum Holdings Limited.

John Gabriel Smithies (57), BSc (Mining Engineering) (Chemistry), Non-executive Director and an independent director. Mr. Smithies has been a Director of Harmony since April 2002. Mr. Smithies has approximately 29 years experience in the mining industry. From 1973-1976 he worked in the gold division of Union Corporation Limited. From 1976-2001, he held various positions at Impala Platinum Holdings Limited, including consulting engineer from 1996-1999, Operations Director from 1999-2000, and Chief Executive Officer from 2000-2001.

11.2    Appointment and remuneration of directors

The Articles provide that the board of directors must consist of not less than four nor more than 20 directors at any time. The board of directors currently consists of ten directors.

The Articles provide that the longest serving one-third of directors retire from office at each annual general meeting of Harmony. Retiring directors normally make themselves available for re-election and can be re-elected at the annual general meeting at which they retire. Officers of Harmony, who are also directors, retire as directors in terms of the Articles, but their service as officers is regulated by standard industry employment agreements.

The directors, under the chairmanship of Adam Fleming, meet on a quarterly basis. They are mandated to effect key decisions that ensure that they retain proper direction and full control of Harmony and monitor executive management.

Extracts from the Memorandum of Association and the Articles concerning the directors are set out in Annexure 1.

The remuneration of directors for the year ended 30 June 2002 was as follows:

Directors'

Salaries

Retirement

Bonuses paid

fees

and benefits

Contributions

during the year

Total

R'000

R'000

R'000

R'000

R'000

Executives:

F Abbott

2 000

3 058

F Dippenaar

2 000

2 998

T S A Grobicki

1 279

2 000

3 394

Z B Swanepoel

1 597

3 000

4 747

Total executive                                              _

4 776

9 000

14 197

Non-executives:

A R Fleming

A M Edwards

M F Pleming

R W Renwick

G S Sibiya

J G Smithies

Total non-executive

Total

4 776

9 000

14 697

Remuneration is not expected to change as a result of the transaction.

All the directors have confirmed in terms of Schedule 21 of the Listings Requirements of the JSE that they have not been:

-   disqualified by any court from acting as a director of a company or from acting in the management or

conduct of the affairs of any company or been the subject of any public criticisms by statutory or regulatory
authorities (including recognised professional bodies);

-   convicted of an offence resulting from dishonesty, fraud or embezzlement or convicted in any jurisdiction

of any criminal offence or any offence under legislation relating to the Act;

- adjudged bankrupt or entered into any voluntary creditors' liquidation or been sequestrated in any

jurisdiction or been a director of any company at the time or within the 12 months preceding any of the
following events taking place: receiverships, compulsory liquidations, creditors voluntary liquidations,
administrations, company voluntary arrangements or any composition or arrangement with creditors
generally or any class of creditors; or

    barred from entry into any profession or occupation.

11.3 Directors' interests in capital of Harmony

11.3.1    Details of Harmony shares held by directors at 31 March 2003 are set out below:

31 March 2003

Beneficial

Non beneficial

Share                                          Held                                           Held

schemes

directly

indirectly

F Abbott

F Dippenaar

T S A Grobicki

10 000

0,003

30 000

0,01

Z B Swanepoel

A R Fleming

4 600 000

1,84

A M Edwards

M F Pleming

V N Fakude

D S Lushaba

J G Smithies

11.3.2    Details of share options held by directors at 31 March 2003 are set out below:

% of total

Number of

option in

Issue price

options

issue

Issue date

(Rands)

Expiry date

F Abbott

73 400

0,57

20/11/2001

49,60

20/11/2011

F Dippenaar

20 000

0,16

31/01/2001

35,40

31/01/2010

73 400

0.57

20/11/2001

49,60

20/11/2011

T S A Grobicki

98 000

0,76

21/09/1999

22,90

21/09/2009

40 000

0,31

31/01/2000

35,40

31/01/2010

131 000

1,02

20/11/2001

49,60

20/11/2011

Z B Swanepoel

13 350

0,10

31/01/2000

35,40

31/01/2010

128 800

1,00

20/09/2001

49,60

20/09/2011

A R Fleming

A M Edwards

M F Pleming

J G Smithies

V N Fakude

D S Lushaba

None of the directors or, to the knowledge of Harmony, their families, had any interest, direct or indirect, in any transaction during the last financial year or in any proposed transaction with any company in the Harmony Group that has affected or will materially affect Harmony or its investment interests or subsidiaries.

None of the directors or any associate of such director is currently or has been at any time during the past fiscal year indebted to Harmony.

11.4    Directors' responsibility statement

The directors, whose names appear in paragraph 11.1 of this circular, collectively and individually, accept full responsibility for the accuracy of the information given, insofar as it relates to Harmony, and certify that to the best of their knowledge and belief there are no other facts the omission of which would make any statement in this circular false or misleading, and that they have made all reasonable enquiries to ascertain such facts.

12.   SHARE CAPITAL

12.1   Capitalisation

All the Harmony shares in issue rank pari passu with each other and are fully paid. Any variation of rights attaching to such shares will require a special resolution of shareholders in general meeting in accordance with the Articles.

Details of Harmony's shareholders' equity before and after giving effect to the issue of consideration shares are detailed as follows:

At 31 March 2003

Actual

Pro forma

Authorised ordinary share capital

Ordinary shares

(millions)

R millions

Issued ordinary share capital

Ordinary shares

(millions)

R millions

Share premium (additional paid-in capital)

R millions

6 760

12 314

Retained earnings

R millions

2 480

2 480

Other

R millions

(400)

(400)

Total shareholders' equity

R millions

8 932

14 518

The authorised, but unissued Harmony shares have been placed under the control of the directors of Harmony until the next annual general meeting of shareholders, subject to the provision of section 221 of the Act. The new authorised but unissued Harmony shares will be placed under the control of the directors.

12.2    Voting rights and rights to dividends

At a general meeting of Harmony, subject to any restrictions as to voting to which any Harmony shareholder or Harmony share may be subject, every Harmony shareholder who is present in person or in a representative capacity shall, on a show of hands, have one vote, irrespective of the number of Harmony shares the shareholder holds or represents. On a poll, every Harmony shareholder shall have one vote for every Harmony share held.

Harmony in general meeting or the board of directors may from time to time declare a dividend to be paid in proportion to the number of Harmony shares held. No dividend shall be declared except out of the profits of Harmony. Dividends are declared payable to Harmony shareholders recorded in the register as such at a date subsequent to the date of the declaration of the dividend or the date of confirmation of the dividend, whichever is the later, as determined by the board of directors. Any dividend declared may be paid and satisfied, either in whole or in part, by the distribution of specific assets as the board of directors may at the time of declaring the dividends determine and direct.

All unclaimed dividends may be retained by Harmony and may be invested or otherwise utilised by the board of directors for the benefit of the Company until claimed. Any dividend unclaimed after a period of twelve years may be declared forfeited to Harmony.

12.3    Share issues, consolidation, and sub-division of shares

On 31 April 2000, Harmony had 106 708 609 ordinary shares in issue. Since that date, the following changes have occurred in Harmony's issued share capital:

12.3.1

between 17 March 2000 and 30 June 2000, 14 909 631 Harmony shares were issued to the holders of ordinary shares, Share Warrants to Bearer and options in respect of ordinary shares issued by Randfontein Estates Limited, or Randfontein, at an imputed issue price of R37,77 per Harmony share, in accordance with the offer made to Randfontein shareholders;

12.3.2

1 000 000 Harmony shares were placed with certain institutional shareholders at a market-related cash subscription price of R38,00 per Harmony share on 16 August 2000 under a general authority to issue shares for cash;

12.3.3

1 189 700 Harmony shares were placed with certain institutional shareholders at a market-related cash subscription price of R37,00 per Harmony share on 4 September 2000 under a general authority to issue shares for cash;

12.3.4

1 012 000 Harmony shares were placed with certain institutional shareholders at a market-related cash subscription price of R35,31 per Harmony share on 8 February 2001 under a general authority to issue shares for cash;

12.3.5

500 000 Harmony shares were placed with certain institutional shareholders on 5 April 2001 at a market-related subscription price of R40,03 under a general authority to issue shares for cash;

12.3.6

800 000 Harmony shares were placed with certain institutional shareholders on 26 April 2001 and a further 200 000 Harmony shares were placed with certain institutional shareholders on 30 April 2001 at market-related subscription prices of R38,19 and R38,06 per share, respectively, both under a general authority to issue shares for cash;

12.3.7

8 500 000 Harmony shares were issued to international investors on 30 April 2002 for a subscription (including premium) of R139,65 (US$13,20) per Harmony share;

12.3.8

Harmony entered into an agreement with Simane and the IDC on behalf of Simane, pursuant to which Simane and the IDC subscribed for, respectively, 222 222 Harmony shares and 10 736 682 Harmony shares at R36,00 per Harmony share.

12.3.9

10 958 904 Harmony shares were issued on 4 February 2002, pursuant to the conversion of 10 958 904 convertible redeemable preference shares, at a conversion price of R41,50 per preference share, held by the IDC on behalf of Simane;

12.3.10 8 000 000 Harmony shares were issued on 29 January 2003 for a subscription price (including premium) of
R136,00 per Harmony share, in terms of a general authority to issue shares for cash; and

12.3.11 6 960 964 Harmony shares were issued on 21 January 2003 for a subscription price of R92,75 per Harmony share,
in exchange for a 11,5% stake in Avgold Limited

The issues in 12.3.1 to 12.3.11 were all made at a price above the par value of 50 cents per Harmony share. The premium in all cases was allocated to additional paid-in capital account of the shareholders' equity of Harmony.

12.4    Preferential rights over Harmony shares

12.4.1    Employee Share Schemes

Harmony has a share option scheme for its employees that, as at 31 March 2003, had a total of 4 887 700 (1994) and 8 000 000 (2001) Harmony shares reserved for issuance thereunder. The maximum number of share options that may be outstanding at any time under the employee share option scheme is equal to 10% of the outstanding Harmony shares then in issue. The exercise price of

each option granted under the scheme is set at the closing market price of Harmony's ordinary shares on the JSE on the day prior to the date of grant. Each option remains open for acceptance for 10 years after the date of grant, subject to the terms of the employee share option scheme.

12.4.2    Listed warrants in respect of Harmony shares

All of the warrants previously issued by Harmony have been exercised. The warrants entitled the holder to purchase, on any business day on or before 29 June 2003, one ordinary share at the rand public offering price per ordinary share or the U.S. dollar equivalent. The price paid for the warrant was R43,00 per warrant.

12.5    Major shareholders

At the date of issue of this circular, the following shareholders beneficially held more than 5% of the issued ordinary share capital of Harmony.

Number of shares

Percentage

Name of shareholder

(million)

shareholding

Bank of New York

78,4

42,6

JP Morgan Chase Bank

11,3

6,13

JP Morgan (Pty) Limited

10,9

5,97

Simane Security Investments (Pty) Limited

10,9

5,95

Harmony has no controlling shareholder, as the shares held by Bank of New York are held on behalf of shareholders who participate in Harmony's ADR program.

13. FINANCIAL INFORMATION ON HARMONY

13.1 Information relating to Harmony

13.1.1    Financial information relating to Harmony is set out in Annexure 4.

13.1.2    Annexure 2 contains the accountant's report on Harmony

13.1.3    Annexure 7 sets out the trading history of Harmony shares on the JSE since 1 June 2000.

13.1.4    There have been no material changes with regards to the financial or trading position of Harmony since

the quarter ended 31 March 2003.

13.1.5    Pro forma financial effects are set out in Annexure 3.

13.1.6    A competent person's report on the mining assets of Harmony is reflected in Annexure 8.

13.2 Working capital

The directors are of the opinion that the working capital available to the Harmony Group, including ARMgold, is sufficient for its present requirements, that is for the next 12 months from date of issue of this circular.

13.3 Borrowings and material loans

The board of directors may raise, borrow or secure the payment of any sums of money for the purposes of Harmony as they see fit. However, the aggregate principal amount outstanding in respect of monies raised, borrowed or secured by Harmony and any of its subsidiaries may not exceed R40 million or the aggregate from time to time of the issued and paid-up capital of Harmony, together with the aggregate of the amount standing to the credit of all distributable and non-distributable reserves, the share premium account and the share premium accounts of Harmony's subsidiaries, whichever is the greater, except with the consent of the Harmony shareholders in general meeting.

The borrowing powers of Harmony have never been exceeded. The details of material loans to Harmony are reflected in Annexure 10.

No loan capital is outstanding.

13.4    Material inter-company finance

All details regarding inter-company finance are set out in Annexure 14.

13.5    Contingent liabilities and capital commitments

Details of contingent liabilities and capital commitments are reflected in Annexure 12.

13.6    Details of material loans by Harmony Group

Details of material loans made by Harmony Group are reflected in Annexure 11.

PART V

14.    GENERAL

14.1    Litigation statement

Save as indicated in Annexure 15, the Harmony Group is not a party to any legal or arbitration proceedings (including any pending or threatened proceedings of which Harmony is aware) that may have or have had in the recent past, a material effect on the Harmony Group's financial position.

14.2    Expenses

The costs and expenses of the merger payable by Harmony are currently estimated at approximately R20 million.

14.3    Experts consent

PricewaterhouseCoopers Inc. and SRK Consulting have given, and have not withdrawn, their consent to the inclusion of their names and reports in this circular in the form and context in which they appear.

14.4    Corporate Governance

Harmony is committed to effective corporate governance and endorses the Code of Corporate Practices and Conduct contained in the King II Report on Corporate Governance. All the key principles underlying the King recommendations have been reflected in Harmony's corporate governance structures. These are reviewed from time to time to take into account corporate changes and international developments with regard to corporate governance. Harmony fully subscribes to the principles of fairness, integrity, accountability and transparency. Harmony is committed to an open governance process, through which its employees, shareholders and stakeholders can be assured that the organisation is managed ethically, according to sound and effective risk management and in compliance with best international practices. The underpinning principles of Harmony's corporate governance practices rest upon the three cornerstones of an effective and efficient organisation, namely: day-to-day management processes, a long-term strategic planning process and effective transformation processes.

Board of directors and board committees

Harmony has a unitary board structure. The board comprises 10 directors, of whom six are independent directors, one of whom is the chairman, and four are executive directors. The non-executive and independent directors are of sufficient calibre and number for their views to carry significant weight in the board's decisions. In addition, the roles of chairman and chief executive are not vested in the same person. The board of directors meets on a quarterly basis and has a fiduciary duty to act in good faith with due diligence and care, in the best interests of Harmony and all its stakeholders. It is responsible for guiding and reviewing corporate strategy, monitoring performance, and determining policies and procedures to ensure the integrity of the company's risk management and internal controls.

All directors have access to the advice and services of the company secretary. They are also entitled to seek independent professional advice regarding the affairs of Harmony at the company's expense. The company secretary is responsible to the board for ensuring that procedures and applicable statutes and regulations are complied with. The board has established a number of committees in which non-executives play an active role and which operate within defined terms of reference laid down by the board.

The board of directors exercises control over the operations of the Company through a structured approach via the following:

Audit Committee

The Audit Committee comprises three independent non-executive directors, being M F Pleming (Chairman), J G Smithies and D S Lushaba. The Audit Committee meets periodically with Harmony's external and independent internal auditors and executive management to review accounting, auditing and financial reporting matters so as to ensure that an effective control environment in Harmony is maintained. The committee also monitors proposed changes in accounting policy, reviews the internal audit function and discusses the accounting implications of major transactions. The committee operates in accordance with written terms of reference confirmed by the board.

Health Safety and Environmental Audit Committee

The Health Safety and Environmental ("HSE") Committee comprises three independent non-executive directors, namely J G Smithies (Chairman), M F Pleming and V N Fakude. This committee meets periodically with executive management to review Harmony's policies, practices and standards. The committee monitors HSE performance and makes recommendation to the board where particular attention is required. The committee operates in accordance with specific terms of reference confirmed by the board.

Remuneration Committee

The Remuneration Committee comprises three independent non-executive directors, namely A R Fleming (Chairman), M F Pleming, and J G Smithies. The committee, in consultation with management where necessary, meets at least once a year and ensures that Harmony's directors and senior executives are fairly rewarded for their individual contributions to Harmony's overall performance, as well as determining the remuneration policy pertaining to all employees.

Insider trading

Employees and directors are prohibited from dealing in Harmony shares during price sensitive periods. In line with regulatory and governance requirements, they must furthermore disclose their own and the dealings of their concert parties in Harmony shares to the company secretary.

Risk management and internal control

Harmony's operations are subject to the provisions of numerous South African Acts of law and the regulations promulgated thereunder, the principal acts being the Minerals Act and the Mine Health and Safety Act. The provisions of these Acts and regulations ensure that extensive and well-managed risk control initiatives are an integral part of Harmony's operations. The Harmony board, through its Audit Committee, retains risk management control through the final review of key risk matters affecting Harmony, and is responsible for facilitating risk assessments to determine the material risks to which the company may be exposed and for evaluating the strategy for managing those risks.

The focus of risk management is on identifying, assessing, managing and monitoring all known forms of risk. Harmony endeavours to minimise operating risk by ensuring that the appropriate infrastructure, control systems and people are in place throughout its business units. Key policies and procedures employed in managing operating risk involve segregation of duties, transaction authorisation, monitoring and financial and managerial reporting. Financial risks are managed within predetermined procedures and constraints. Compliance is measured through regular reporting against these standards, internal audit checks and external audit verification. Risk control with regard to numerous potential loss exposures, such as the health and safety of Harmony's workers and third parties, the protection of assets, the prevention of business interruption losses, the safeguarding of the environment, and the minimisation of exposure to civil and criminal litigation, are integral aspects of Harmony's operations.

Internal controls comprise methods and procedures adopted by management to assist in achieving the objectives of safeguarding assets, preventing and detecting errors and fraud, ensuring the accuracy and completeness of accounting records and preparing reliable financial statements. The internal audit function

has been outsourced to an independent accounting firm and serves the board and management by performing independent evaluations of the adequacy and effectiveness of the company's controls, financial reporting mechanisms and records, information systems and operations.

The board of directors, operating through its Audit Committee, oversees the financial reporting process and is satisfied that the controls systems are adequate for this purpose.

Integrated sustainability

The role of the stakeholders in the sustainability of Harmony is recognised. In this regard, programmes and involvement in projects have been initiated addressing areas in which meaningful contributions can be made. Stakeholder relationships are strengthened through adherence to a formal code of ethics.

14.5    Significant contracts

Save for the merger agreement and agreements relating to the acquisitions and disposals of companies, businesses and properties set out in Annexure 9, Harmony has not entered into any contract, other than in the ordinary course of business, within the period of two years immediately preceding the date of this circular which is or may be material to Harmony. In addition, Harmony has not entered into any contract which contains provisions, in terms of which there are any obligations or entitlements, which are material to Harmony.

14.6    Acquisitions and disposals of property

Details of the acquisitions and disposals of companies, businesses and properties by Harmony over the past 3 years are reflected in Annexure 9.

15.    DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents will be available for inspection during normal business hours at the registered office of Harmony and at the office of St James's Corporate Services Limited:

-    a signed copy of this circular;

-    the Memorandum of Association and the Articles;

-    the merger agreement;

-    the significant contracts relating to ARMgold referred to in paragraph 4.6;

-    the written consents of advisers to Harmony to the publication of their names in this circular in the form and

 context in which they appear;

-    copies of service agreements with directors;

-    the Competent Person's Report;

-    the audited annual reports of Harmony for the three financial years ended 30 June 2002; and

-    report of PricewaterhouseCoopers Inc. on the pro forma financial information of Harmony.

Signed by Frank Abbott and Ferdi Dippenaar on 5 August 2003 on behalf of the directors.

Harmony Gold Mining Company Limited

Annexure 1

Extracts from the Memorandum and Articles relating to the directors of Harmony

APPOINTMENT, QUALIFICATION, REMUNERATION OF DIRECTORS AND BORROWING POWERS OF THE COMPANY AS THEY MAY BE EXERCISED BY THE DIRECTORS

Extracts from the Articles of Association of Harmony:

1.

Qualification of directors

"80. Directors shall not be required to hold any shares in the Company to qualify them for appointment as

directors."

2.

Remuneration of directors

"85.    The directors shall be entitled to such remuneration as may be determined from time to time by the Company

in general meeting or by a quorum of disinterested directors. In addition, the directors shall be entitled to all
reasonable expenses in travelling to and from meetings of the directors."

"86.     If any director be called upon to perform extra services or to make any special exertions in going or residing

abroad, or otherwise, for any of the purposes of the Company, the Company in general meeting or a quorum
of disinterested directors may determine the remuneration to be paid to any such director for such extra
services or special exertions. Such remuneration may be so determined either by way of a salary or a fixed sum
or a percentage of profits or otherwise and such remuneration may be either in addition to, or in substitution
for any other remuneration determined under article 85. The Company may also refund to such director all
reasonable expenses incurred by him while acting in the course of the business of the Company."

3.

Disclosure of interests

"88.(a)      Save as set out in sub-paragraph (d), a director shall not vote in respect of any contract or arrangement in

which he is interested (and if he shall do so his vote shall not be counted) nor shall he be counted for the
purpose of any resolution regarding the same, in the quorum present at the meeting, but this shall not apply
to any of the following matters:

(i)

Any arrangement for giving to him any security or indemnity in respect of money lent by him or
obligation undertaken by him for the benefit of the Company.

(ii)      Any arrangement for the giving by the Company of any security to a third party in respect of a debt

or obligation of the Company for which he himself has assumed responsibility in whole or in part
under a guarantee or indemnity or by the deposit of a security.

(iii)     Any contract by him to subscribe for or underwrite shares or debentures of the Company.

(iv)     Any contract or arrangement with any other company in which he is interested in shares representing

no more than one per cent of either any class of the equity share capital, or the voting rights of that
company.

(v)      Any such scheme or fund as is referred to in Article 146, which relates both to 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.

(vi)     Any contracts, transactions or dealings of any nature whatsoever between the Company and any other

company:

(a)    which is its subsidiary, where the director's interest in the contract, transaction or dealing is only

by virtue of the other company being a subsidiary of the Company; or

(b)    in which it is a shareholder or is otherwise interested, where the director's interest in the contract,

transaction or dealing is only by virtue of the Company being a shareholder of or otherwise
interested in the other company; or

(c)    which is its holding company, where the director's interest in the contract, transaction or dealing

is only by virtue of the other company being the Company's holding company; or

(d)    which is a subsidiary of its holding company, where the director's interest in the contract,

transaction or dealing is only by virtue of the other company being a subsidiary of the Company's
holding company; or

(e)     in which its holding company is a shareholder or is otherwise interested, where the director's

interest in the contract, transaction or dealing is only by virtue of the Company's holding
company being a shareholder or otherwise interested in the other company."

"88.(b)     The provisions of this Article may by the Company in general meeting at any time be suspended or relaxed

to any extent and either generally or in respect of any particular contract, arrangement or transaction and
any particular contract, arrangement or transaction carried out in contravention of this Article may be
ratified by the Company in general meeting. Notwithstanding the provisions of article 58, any decision by
the Company in general meeting in terms of this article 88(b) shall be decided by a 75% (seventy five
percent) majority of votes."

"88.(c)     A director, notwithstanding his interest may be counted in the quorum present at any meeting whereat he

or any other director is appointed to hold any office or place of profit under the Company or whereat the
directors resolve to exercise any of the rights of the Company (whether by the exercise of voting rights or
otherwise) to appoint or concur in the appointment of a director to hold any office or place of profit under
any other company or whereat the terms of any such appointment as hereinbefore mentioned are
considered or varied, and he may vote on any such matter other than in respect of his own appointment or
the arrangement or variation of the terms thereof."

4.

Borrowing powers

"124.     Subject to articles 125 and 127 the directors may from time to time at their discretion raise or borrow or

secure the payment of any sum or sums of money for the purposes of the Company as they see fit, and in
particular may pass mortgage bonds or issue debentures or debenture stock of the Company whether
unsecured or secured by all or any part of the property of the Company, whether present or future."

"125.     Where the Company is a listed company and is not a subsidiary of a listed company, the directors shall so

restrict the borrowing of the Company and exercise all voting and other rights or powers of control
exercisable by the Company in relation to its subsidiary companies (as regards subsidiary companies in so far
as by such exercise they can procure) and that the aggregate principal amount outstanding in respect of
monies so raised, borrowed or secured by the Company and any of its subsidiary companies for the time
being (hereinafter referred to as "the Group"), as the case may be, exclusive of inter-company borrowings,
shall not except with the consent of the Company in general meeting, exceed R40 000 000 (forty million
Rand) or the aggregate from time to time of the issued and paid-up capital of the Company, together with
the aggregate of the amounts standing to the credit of all distributable and non-distributable reserves
(including minority interests in subsidiary companies and provision for deferred taxation), any share
premium accounts of the Company and its subsidiaries certified by the Company's auditors and as attached
to or forming part of the last annual financial statements of the Company or of the Group, as the case may
be, which shall have been drawn up to be laid before the Company in general meeting at the relevant time,
whichever is the greater; provided that no such sanction shall be required to the borrowing of any monies
intended to be applied and actually applied within 90 (ninety) days in the repayment (with or without any
premium) of any monies then already borrowed and outstanding and notwithstanding that such new
borrowing may result in the abovementioned limit being exceeded."

"126.     For the purposes of article 125 "borrowings" shall:

(a)    without limitation, include monetary guarantees executed by the Company or by any controlled

company or subsidiary of the Company other than:

(i)    guarantees in respect of the borrowing of moneys, where the amount of such borrowing is already

included in the aggregate referred to in article 125;

(ii)    guarantees of the obligations of any subsidiary where such obligations arise from acts which, if they

had been performed by the Company as principal, would not constitute borrowings within the
meaning of this Article;

provided that where the guarantees have been executed to secure bank overdraft or other facilities, of a
variable nature, such guarantees shall only be deemed to be borrowings to the extent to which such
overdraft or other facilities are used from time to time;

(b)    not include any borrowing by the Company from any of its subsidiaries or by any of its subsidiaries from

the Company or from any other of its subsidiaries."

"127.     In the event that the Company is a subsidiary of a listed holding company, the total amount owing by the

Company in respect of monies so raised, borrowed or secured shall not exceed the amount authorised by its
listed holding company."

"128.     No lender or person dealing with the Company shall be obliged to see or enquire whether the restrictions

imposed by articles 125 and 127 are observed."

"129.     Debentures, debenture stock, bonds and other instruments of debt may be issued at par or at a discount or

at a premium, and with any special privileges as to redemption, surrender and drawings, provided that no
special privileges as to allotment of shares or stock, attending and voting at general meetings, appointment
of directors or otherwise shall be given save with the sanction of the Company in general meeting."

5.

Appointment of directors and managing directors

"79.

The directors shall have power at any time to appoint any eligible person as a director, either to fill a casual
vacancy, or as an addition to the Board, but the total number of the directors shall not at any time exceed the
maximum number fixed. Any director so appointed shall hold office only until the next following annual
general meeting of the Company and then shall be eligible for election."

"110.     The directors may from time to time appoint one or more of their body to any executive office in the

Company, and may from time to time remove or dismiss the person or persons so appointed and appoint
another person or persons in his or their place or places. Every such appointment shall be made by a quorum
of disinterested directors. No director shall be appointed to any such office for a period in excess of 5 (five)
years at any one time."

"111.     If a director is appointed to any executive office in the Company the contract under which he is appointed

may provide that he shall not for a period of 5 (five) years or for the period during which he continues to
hold that office, whichever period is the shorter, be subject to retirement by rotation. In such case he shall not
be taken into account in determining the retirement of directors by rotation. Notwithstanding the foregoing,
where the Company is a listed company the number of directors who may be appointed to an executive office
on the condition that they shall not be subject to retirement by rotation shall not equal or exceed one-half of
the total number of the directors at the time of such appointment."

"112.     The remuneration of executive directors appointed in terms of article 110 shall from time to time be fixed by

a quorum of disinterested directors or by the Company in general meeting."

"113.     The directors may from time to time entrust to and confer upon a managing director or other executive

director for the time being such of the powers exercisable under these Articles by the directors as they may
deem fit, and may confer such powers either collaterally with or to the exclusion of and in substitution for all
or any of the powers of the directors in that behalf, and may from time to time revoke, withdraw, alter or vary
all or any of such powers."

"114.     A person appointed to an executive office in terms of article 110 shall be subject to the like provisions relating

to vacation of office as the other directors of the Company, and if he ceases to hold the office of director from
any cause he shall ipso facto cease to hold such executive office."

Annexure 2

Report of the independent reporting accountants on the pro forma financial effects of the merger to the shareholders of Harmony

"The Directors
Harmony Gold Mining Company Limited
PO Box 2
Randfontein
1760

25 July 2003

Report of the independent reporting accountants on the unaudited pro forma financial information relating to the proposed merger with ARMgold

INTRODUCTION

Harmony Gold Mining Company Limited ("Harmony") has reached agreement for a merger with African Rainbow Minerals Gold Limited ("ARMgold"). It is intended that the merger will be implemented by means of a scheme of arrangement to be proposed by Harmony between ARMgold and its shareholders in terms of section 311 of the Companies Act.

We report on the unaudited pro forma financial effects and balance sheet ("the pro forma financial information") set out in paragraph 6 and Annexure 3, respectively, of the circular to Harmony shareholders to be dated on or about 7 August 2003 ("the Circular").

The unaudited pro forma financial information has been prepared for illustrative purposes only to provide information on how the merger would have impacted on the financial position and results of Harmony. Because of their nature, the unaudited pro forma financial information may not give a fair reflection of Harmony's financial position after the merger, nor the effect on future earnings.

At your request, and for purposes of the merger, we present our report on the unaudited pro forma financial information of Harmony in compliance with the Listings Requirements of the JSE Securities Exchange South Africa ("JSE").

RESPONSIBILITIES

The directors of Harmony are solely responsible for the preparation of the unaudited pro forma financial information to which this independent reporting accountants' report relates, and for the financial statements and financial information from which it has been prepared.

It is our responsibility to form an opinion on the unaudited pro forma financial information and to report our opinion to you. We do not accept any responsibility for any reports previously given by us on any financial information used in the compilation of the unaudited pro forma financial information, beyond that owed to those to whom those reports were addressed at their dates of issue.

BASIS OF OPINION

Our work, which did not involve any independent examination of any of the underlying financial information, consisted primarily of agreeing the unadjusted financial information to the published quarterly results of Harmony for the three quarters ended 31 March 2003, considering the evidence supporting the adjustments to the unaudited pro forma financial information, recalculating the amounts based on the information obtained and discussing the unaudited pro forma financial information with the directors of Harmony.

Because the above procedures do not constitute either an audit or a review made in accordance with statements of South African Auditing Standards, we do not express any assurance on the fair presentation of the unaudited pro forma financial information.

Had we performed additional procedures or had we performed an audit or review of the financial statements in accordance with statements of South African Auditing Standards, other matters might have come to our attention that would have been reported to you.

OPINION

In our opinion:

-    the unaudited pro forma financial information has been properly compiled on the basis stated;

-    such basis is consistent with the accounting policies of Harmony; and

-    the adjustments are appropriate for the purposes of the unaudited pro forma financial information in terms of

 section 8.29 of the JSE Listings Requirements.

Yours faithfully

PricewaterhouseCoopers Inc.
Chartered Accountants (SA)
Registered Accountants and Auditors

Sunninghill"

Annexure 3

Pro forma financial information of Harmony

The unaudited pro forma balance sheet of Harmony has been prepared for illustrative purposes only to provide information on how the merger would have impacted on the financial position of Harmony. Because of its nature, the unaudited pro forma balance sheet may not give a fair reflection of Harmony's financial position after the merger

The report thereon of PricewaterhouseCoopers Inc. is set out in Annexure 2 of this circular.

Specific issue

Harmony

ARMgold

of shares in

before

before              Dividend       consideration

Harmony

merger

merger

adjustment

of merger

after merger

R'million

R'million

R'million

R'million

R'million

Note 1

Note 2

Note 3

Note 4

BALANCE SHEET

ASSETS

Non-current assets

10 361

1 571

4 819

16 751

Tangible assets

8 986

1 571

3 371

13 928

Intangible assets

-                             -

Investments

1 375

1 375

Current assets

3 899

2 575

(471)

6 003

Inventories

Trade and other receivables

Cash and cash equivalents

3 128

2 397

(471)

5 054

Total assets

14 260

4 146

(471)

4 819

22 754

EQUITY AND LIABILITIES

Ordinary shareholders' interest

8 932

2 249

(471)

3 808

14 518

Outside shareholders' interest

Total shareholders' interest

8 932

2 249

(471)

3 808

14 518

Long-term borrowings

2 015

2 544

Deferred taxation

1 011

1 862

Deferred financial liabilities

491                                                                                                                 491

Long-term provisions

686                       248

Current liabilities

1 285

1 120

2 405

Trade and other payables

1 008

1 120

2 128

Taxation

Shareholders for dividends

Total equity and liabilities

14 260

4 146

(471)

4 819

22 754

Shares in issue (`000)

184 163

247 830

Net asset value per shares (cents)

4 850

5 858

Net tangible asset value per share (cents)

4 850

5 274

Notes:

1. Extracted from Harmony's published quarterly report for the period ended 31 March 2003.

2. Extracted from ARMgold's published quarterly report for the period ended 31 March 2003.

3.   The net asset value per share has been adjusted to take account of a special dividend of 500 cents per ARMgold share before the  merger. This

dividend is a condition of the merger and will be paid prior to the completion date.

4.   The purchase price was calculated as 95 500 000 ARMgold shares at R58,50 per share on the date of the transaction (based on a Harmony share

price of R87,75 at close of business on 22 July 2003, being the most recent share price). The difference between the purchase price  of
R5 587 million and the net asset value at 31 March 2003 of R2 249 million, as well as the decrease in the net asset value due to the special dividend
payment, is R3 808 million. After the deferred tax gross up of R1 011 million the total fair value adjustment of R4 819 million was allocated as
follows:

-    R3 371 million to tangible assets; and

-    R1 448 million to intangible assets.

Annexure 4

Historical financial information of Harmony

The following information was extracted from the audited company financial statements for the years to 30 June 2002, 30 June 2001, 30 June 2000 and the unaudited quarterly for 9 months to March 2003.

Harmony income statement

Unaudited

Audited

Audited

Audited

9 months

Year

Year

Year

ended

ended

ended

ended

31 March

30 June

30 June

30 June

R'million

Revenue

7 152

7 806

4 495

2 996

Cash operating costs

(4 962)

(5 215)

(3 822)

(2 535)

Cash operating profit

2 190

2 591

Income from associates

Interest and dividends

Other income - net

Employment termination and restructuring costs

(35)

(83)

(36)

(1)

Corporate, administration and other expenses

(90)

(78)

(19)

(12)

Exploration expenditure

(80)

(61)

(27)

(16)

Marketing and benefication development

(89)

(38)

(12)

Profit/(Loss) of sale of listed investments

(11)

Interest paid

(182)

(230)

(114)

(20)

Cash profit

2 437

2 328

Depreciation and amortisation

(403)

(308)

(237)

(136)

(Provision)/Reversal of provision for
rehabilitation costs

(34)

(20)

Gain/(Loss) on financial instruments

Gain on listed investments

(523)

(9)

Foreign exchange losses

(49)

Impairment of assets

(362)

(215)

(Provision)/Reversal of provision for former
employees' post-retirement benefits

(2)

Profit before tax

1 638

2 279

Tax (520)

(583)

(111)

(86)

Net profit before minority interests

1 118

1 696

Minority interests

(16)

(3)

(19)

Net profit

1 118

1 680

Basic earnings per share (cents)

1 094

Fully diluted earnings per share (cents)

1 017

Basic headline earnings per share (cents)

1 316

Fully diluted headline earnings per share (cents)

1 223

Interim dividends per share (cents)

Proposed final/final dividends per share (cents)

Total dividends per share (cents)

Harmony balance sheet

Unaudited at

Audited at

Audited at

Audited at

31 March

30 June

30 June

30 June

R'million

R'million

R'million

R'million

ASSETS

Non-current assets

10 361

11 502

5 996

4 259

Property, plant and equipment

8 986

9 433

5 424

3 738

Investments

1 375

1 778

Investment in associate

Investments in subsidiaries

Other assets

Restricted cash

Current assets

3 128

2 574

2 258

Inventories

Receivables

Cash and cash equivalents

3 128

1 441

1 159

Total assets

13 489

14 076

8 254

5 191

EQUITY AND LIABILITIES

Ordinary shareholders' interest

8 932

7 963

4 594

2 875

Share capital

Share premium

5 462

3 727

2 021

Options issued

Non-distributable reserves

(16)

Retained earnings

2 328

Non-current liabilities

4 043

4 232

2 420

1 299

Long-term borrowings

1 771

1 212

Preference shares

Deferred taxation

Deferred financial liability

Provision for environmental rehabilitation

Provision for post-retirement benefits

Minority interests

Current liabilities

1 881

1 240

1 017

Accounts payable and accrued liabilities

1 648

1 083

Income and mining taxes

Shareholders for dividends

Total equity and liabilities

13 489

14 076

8 254

5 191

Harmony cash flow statement

Unaudited                       Audited

Audited

Audited

9 months

year

year

year

ended

ended

ended

ended

31 March

30 June

30 June

30 June

R'million

Cash flow from operations

Cash generated from operations

2 436

Interest and dividends received

Interest paid

(230)

(114)

(20)

Income and mining tax paid

(88)

(30)

(8)

Net cash inflow from operating activities

1 687

2 256

Cash flows from investing activities

Net increase in amounts invested
in environmental trusts

(61)

(6)

(5)

Decrease in short-term investments

Cash cost to close Randfontein Hedges

(250)

Restricted cash

(50)

Cash held by subsidiaries on acquisition

Cash paid for Randfontein

(349)

Cash paid for West Rand Cons and Kalgold

Cash paid for New Hampton mines

(229)

(6)

Cash paid for Elandskraal mines

(210)

(1 053)

Cash paid for Free Gold Mines

(900)

Cash paid for Hill 50 mines

(1 419)

Investment in associate acquired

(292)

Investment in Highland Gold acquired

(188)

Loan repaid by Khumo Bathong

Proceeds on disposal of listed investments

Increase in other non-current investments

(156)

(64)

Proceeds on disposal of mining assets

Additions to property plant and equipment

(733)

(422)

(158)

Foreign currency translation adjustments

Net cash utilised in investing activities

(228)

(3 668)

(1 532)

(345)

Cash flow from financing activities

Long term borrowings raised - net

Preference shares issued

Ordinary shares issued net of expenses

1 580

1 435

Dividends paid

(221)

(120)

(81)

Net cash generated by financing activities

1 694

1 789

Net increase in cash and cash equivalents

1 687

Cash and equivalents at beginning of period

1 441

1 159

Cash and equivalents at end of period

3 128

1 441

1 159

Harmony statement of changes in equity

Number of

Harmony

ordinary

Number of

listed

Non-

shares

options

Share

Share

options

Retained

distributable

issued

issued

capital

premium

issued

earnings

reserves

Total

R'million

R'million

R'million

R'million

R'million

R'million

Harmony
Balance - 30 June 2000

97 310 435

7 579 900

2 021

(16)

2 875

Net income

Change in accounting policy

(43)

(43)

Dividends declared

(152)

(152)

Issue of shares

- Public offerings

31 784 200

1 324

1 340

- IDC/Simane offering

10 736 682

- Private offering

568 774

- Share trust

2 000 000

Exercise of employee share
options

2 153 200

Share issue expenses

(108)

(108)

Issue of warrants

9 027 500

Reversal of marked-to-market
Due to sale of Western Areas
Limited shares

Foreign exchange translation reserve

(20)

(20)

Mark-to-market of listed and other
investments

Mark-to-market of hedging
instruments

(18)

(18)

Balance - 30 June 2001

144 553 291

16 607 400

3 727

4 594

Net income

1  680

1  680

Dividends declared

(119)

(119)

Issue of shares
- Public offerings

222 300

- International private placement

8 500 000

1 139

1 143

Exercise of employee share options

3 998 800

Conversion of preference shares

10 958 904

Share issue expenses

(42)

(42)

Conversion of warrants

1 014 054

(1 014 054)

Listed options expired

(7 579 900)

(69)

(26)

Foreign exchange translation reserve

Mark-to-market of listed and other
investments

(87)

(87)

Mark-to-market of hedging
instruments

Balance - 30 June 2002

169 247 349

8 013 446

5 462

2 328

7 963

Currency translation reserve

(489)

Net earnings

1 118

Issue of share capital

1 305

Dividend paid

(965)

Balance - 30 March 2003

8 932

1.

Accounting policies

Basis of preparation

The annual financial statements are prepared on the historical cost basis except for certain financial instruments, which are carried at fair value. The Group's accounting policies as set out below have been consistently applied, and comply with the accounting standards issued by the International Accounting Standards Board, South African Statements of Generally Accepted Accounting Practice and the South African Companies Act.

Use of estimates

The preparation of the financial statements in conformity with South African Statements of Generally Accepted Accounting Practice and International Accounting Standards requires Harmony's management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Significant estimates used by management include the valuation and amortisation of long lived assets as well as estimates of exposure and liabilities with regard to rehabilitation costs, employee benefit liabilities, taxation and hedging and financial derivatives. Actual results could differ from those estimates.

Consolidation

Consolidated entities

The consolidated financial information includes the financial statements of Harmony, its subsidiaries, its proportionate interest in joint ventures and its interests in associates. A company in which Harmony has, directly or indirectly, through subsidiary undertakings, a controlling interest is classified as a subsidiary undertaking. The results of any subsidiary or joint venture acquired or disposed of during the year are consolidated from the date power of control was acquired and up to the date power of control ceased. Any excess or deficit of the purchase price, when compared to the net book value of the subsidiary acquired, is attributed to mineral property interests and amortised in terms of Harmony's accounting policies unless a permanent diminution in the value of the assets occurs, in which case it is written-off. Inter-company profits, transactions and balances have been eliminated.

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 Harmony 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 or unaudited interim financial statements. Equity accounting involves recognising in the income statement the Harmony's share of the associates' profit or loss for the period. Harmony's interest in the associate is carried in the balance sheet at an amount that reflects the cost of the investment, the 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.

Investments in joint ventures

A joint venture is an entity in which the Group holds a long-term interest and which is jointly controlled by Harmony and one or more ventures under a contractual arrangement. The Group's interest in jointly controlled entities is accounted for by proportionate consolidation. Under this method the Group includes its share of the joint venture's individual income and expenses, assets and liabilities in the relevant components of the financial statements on a line-by- line basis.

Foreign currencies

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 recognised in the income statement as part of the gain or loss on sale.

Goodwill and fair value adjustments arising on the acquisition of foreign entities are treated as assets and liabilities of the foreign entity and translated at the closing rate.

Foreign currency transactions

The South African Rand is the functional currency of Harmony. 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 net income.

Financial instruments

Financial instruments are initially measured at cost. 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.

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, based on the relevant exchange rates at balance sheet date.

Investments

Listed investments

Investments in listed companies, other than investments in subsidiaries, joint ventures and associates, 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. Changes in the carrying amount of strategic investments are credited to revaluation and other reserves in shareholders' equity. 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. On disposal of strategic investments, amounts in the revaluation and other reserves relating to that investment, are transferred to retained earnings.

Unlisted investments

Unlisted investments are reflected at fair value, or cost, where fair value cannot reliably be measured. If the directors are of the opinion that there has been a permanent diminution in the value of these investments they are written- down and recognised as an expense in the period in which the diminution is recognised.

Inventories

Inventories which include gold in process and supplies, are stated at the lower of cost or net realisable value after appropriate allowances for redundant and slow-moving items. Stores and materials consist of consumable stores and are valued at average cost. Bullion on hand and gold in process represents production on hand after the smelting process in the case of deep level mines and in the case of open pit operations placement on heap leach pads. It is valued using the weighted average cost method. Costs included are average production costs at the relevant stage of production and relevant administration costs. Net realisable value is the estimated selling price in the ordinary course of business.

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 realisable value. Bad debts are written- off during the period in which they are identified.

Accounts payable

Accounts payable are stated at cost, adjusted for payments made to reflect the value of the anticipated economic outflow of resources.

Hedging

Derivatives are recognised on the balance sheet at their fair value, unless they meet the criteria for normal purchase, normal sales exemption. On the date a derivative contract is entered into, Harmony designates it for accounting purposes as either:

a hedge of the fair value of a recognised asset or liability (fair value hedge);

a hedge of a forecasted transaction (cash flow hedge);

a  hedge of a net investment in a foreign entity; or

a derivative to be marked-to-market.

Certain derivative transactions, however, while providing effective economic hedges under Harmony's risk management policies, do not qualify for hedge accounting.

Changes in the fair value of a derivative that is highly effective, and that is designated and qualifies as a fair value hedge, are recorded in the income statement, along with the change in fair value of the hedged asset or liability that is attributable to the hedged risk.

Changes in the fair value of a derivative that is highly effective, and that is designated and qualifies as a cash flow hedge, are recorded directly in equity. Amounts deferred in equity are included in the income statement in the same periods during which the hedged firm commitment of forecasted transaction affects net profit or loss.

Hedges of net investments in foreign entities are accounted for similarly to cash flow hedges. Recognition of derivatives which meet the criteria for the normal purchases, normal sales exemption under the International Accounting Standards are deferred until settlement, under these contracts Harmony must physically deliver a specified quantity of gold at a future date at a specified price and to the contracted counter party. Changes in the fair value of derivatives which are not designated as hedges or do not qualify for hedge accounting are recognised in the income statement.

Harmony formally documents all relationships between hedging instruments and hedged items, as well as its risk management objectives and strategy for undertaking various hedge transactions. This process includes linking derivatives as hedges to specific assets and liabilities or to specific firm commitments or forecasted transactions. Harmony also formally assesses, both at the hedge inception and on an ongoing basis, whether the derivatives that are used in hedging transactions are highly effective in offsetting changes in fair values or cash flows of hedged items.

Borrowings

Borrowings are recognised at amortised cost, comprising original debt less principal payments and amortisations.

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 capitalised. Costs related to property acquisitions and mineral and surface rights are capitalised. 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.

Property, plant and equipment

Mining assets

Mining assets, including mine development costs and mine plant facilities, are recorded at cost. 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 capitalised until commercial levels of production are achieved. Development costs incurred to evaluate and develop new orebodies, to define mineralisation 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 capitalised until the orebody achieves commercial levels of production at which time the costs are amortised as set out below.

Stripping costs incurred during the production phase to remove waste ore are deferred and charged to operating costs on the basis of the average life of mine stripping ratio. The average stripping ratio is calculated as the number of tonnes waste material removed per tonne of ore mined. The average life of mine ratio is revised annually in the light of additional knowledge and change in estimates. The cost of "excess stripping" is capitalised as mine development costs when the actual stripping ratio exceeds the average life of mine stripping ratio.

Mining operations placed on care and maintenance

The net assets of operations placed on care and maintenance are written-down to net realisable value. Expenditure on the care and maintenance of these operations is charged against income, as incurred.

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.

Depreciation and amortisation

Depreciation and amortisation of mineral property interests, mineral and surface rights, mine development costs and mine plant facilities are computed principally by the units of production method based on estimated proved and probable reserves. Proved and probable ore reserves reflect estimated quantities of economically recoverable reserves which can be recovered in future from known mineral deposits. Amortisation is first charged on mining ventures from the date on which the mining ventures reach commercial production quantities. Other non-mining fixed assets are depreciated by straight-line over estimated useful lives of two to five years.

Impairment

The recoverability of the carrying value of the long-term assets of Harmony, which include development costs are annually compared to the net book value of the assets, or whenever events or changes 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 Harmony's weighted average cost of capital as determined by the capital asset pricing model. An impairment is recognised 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 amortised in line with Harmony's accounting policies.

A previously recognised 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 recognised in the income statement and is limited to the carrying amount that would have been determined, net of amortisation, had no impairment loss been recognised in prior years.

The estimates of future discounted cash flows are subject to risks 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.

Environmental obligations

Estimated long-term environmental obligations, comprising pollution control, rehabilitation and mine closure, are based on Harmony's environmental management plans in compliance with current technological, environmental and regulatory requirements. The net present value of future rehabilitation cost estimates are recognised 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 capitalised to mining assets against an increase in the rehabilitation provision. The rehabilitation asset is amortised as noted in Harmony's accounting policy. 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.

Environmental trust funds

Annual contributions are made to Harmony'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 Harmony'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 trusts plus growth in the trust funds are included under investments on the balance sheet.

Provisions

Provisions are recognised when Harmony 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.

Deferred taxation

Harmony follows the comprehensive liability method of accounting for deferred tax using the balance sheet approach. Under this method deferred income and mining taxes are recognised 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 recognised directly in equity, or a business combination that is an acquisition. The effect on deferred tax of any changes in tax rates is recognised 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 amortisation 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 recognised to the extent that it is probable that future taxable profit will be available against which the unused tax losses can be utilised.

Pension plans and other employee benefits

Pension plans

Pension plans are funded through annual contributions. Harmony's contributions to the defined contribution pension plans are charged to the income statement in the year to which they relate. Harmony's liability is limited to its annually determined contributions.

Medical plans

Harmony provides medical cover to current employees and certain retirees through one fund.

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. No contributions are made for employees retiring after 30 June 1996. A liability for retirees and their dependents prior to this date is accrued in full based on regular actuarial valuations.

Equity compensation benefits

Harmony grants share options to certain employees under an employee share plan. Costs incurred in administering the scheme are expensed as incurred. No compensation cost is recognised in these financial statements for options or shares granted to employees from employee share plans.

Revenue recognition

Revenue

Revenue represents gold sales and is recognised 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 hedging transactions to the extent that they relate to that metal and have been matched at the date of the financial statements.

Interest income

Interest is recognised 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 Harmony.

Dividend income

Dividend income is recognised when the shareholder's right to receive payment is established, recognised at the last date of registration.

Dividends declared

Dividends paid are recognised when declared by the board of directors. Dividends are payable in South African Rands. Dividends declared which are payable to foreign shareholders are subject to approval by the South African Reserve Bank in terms of South African foreign exchange control regulations. In practice, dividends are freely transferable to foreign shareholders.

Comparatives

Where necessary comparative figures have been adjusted to conform with changes in presentation in the current year.

2.

CASH OPERATING COSTS

R'million

Cash operating 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. These costs, analysed by nature, consist of the
following:

Labour costs, including contractors

2 458

2 388

Stores and materials

1 101

Water and electricity

Changes in inventory

(23)

(68)

Other

1 204

5 215

3 822

3.

INCOME BEFORE TAX

R'million

The following have been included in income before tax:

Professional fees

Auditors' remuneration

Fees  current year

Fees  other services

4.

OTHER INCOME  NET

R'million

Profit on sale of property, plant and equipment

Foreign exchange gains

Other (expenditure)/income - net

(26)

(8)

5.

EMPLOYMENT TERMINATION AND RESTRUCTURING COSTS

R'million

Free State

Randfontein and Elandskraal

Evander

Kalgold

Australian operations

Bissett mine

(3)

The closure of Virginia 2 shaft and Harmony 4 in the Free State resulted in certain excess labour, which could not be accommodated on the other shafts, becoming surplus and made redundant. Elandskraal continued the process of restructuring, which was started in the previous year, which lead to certain positions becoming redundant. The acquisition of Hill 50 in Australia resulted in the merger of the New Hampton and Hill 50 operations, which lead to certain restructuring and employment termination costs being incurred. The Bissett mine was placed on care and maintenance at 30 June 2001, due to the mining operations being uneconomic at gold prices at the time. As restructuring has been completed, over-provision on restructuring have been reversed.

During the year ended 30 June 2001, due to the closure of No. 4 shaft at Randfontein and the restructuring of Elandskraal certain restructuring costs were incurred which included the termination of service of certain production employees.

6.

PROFIT/(LOSS) ON SALE OF LISTED INVESTMENTS

R'million

Profit/(Loss) on sale of listed investments

(11)

As part of the initial public offering of ArmGold, Harmony subscribed to 2 860 000 shares at R38,67 per share. These shares were subsequently disposed of.

With the acquisition of Randfontein Estates Limited, Harmony acquired 4 944 948 shares in Western Areas Limited. These shares were disposed of at a loss of R11 million in the 2001 financial year.

7.

GAIN ON LISTED INVESTMENTS

R'million

Gain on mark-to-market of listed investments

The gain on the mark-to-market of listed investments is due to the reclassification of Harmony's investment in Aurion Gold to a trading security from a strategic security. This reflected a change in the Group's intentions regarding the Aurion Gold investment from a strategic, long term investment to a non-core investment. As a result of the reclassification, Harmony recorded a gain in the mark-to-market of listed investments of R595 million. These shares, which were purchased at Australian $1.29 per share, were revalued at Australian $3.93 per share at year end. Subsequent to year-end these shares were disposed of.

8.

IMPAIRMENT/(REVERSAL OF IMPAIRMENT) OF ASSETS

R'million

Free State operations

(43)

Randfontein operations

(12)

Evander operations

(11)

Bissett operations

(149)

New Hampton operations

(437)

(362)

(215)

The current higher Rand gold price has resulted in significantly more economically mineable reserves being available at some of the older shafts, which has extended the life of several shafts and made them more profitable. Therefore some of the impairments of prior years have been reversed.

Harmony completed the redevelopment programme at New Hampton's Big Bell underground mine during the year. Production have indicated however that the grade is significantly less than expected. Therefore it has been deemed prudent to reduce the grade estimates for future production, which gave rise to a severe cut in the underground reserves at this mine. This has resulted in a significant impairment to the carrying value of this asset in Harmony's balance sheet.

Due to the depletion of economically mineable reserves, certain shafts at Randfontein, Evander and Free State were closed and the remaining net book value written -off during the prior financial year.

The Bissett mine was placed on care and maintenance at 30 June 2001 due to the mining operations being uneconomic at gold prices at that time.The write-down reflected the excess of book value of long-term and other assets over the estimated salvage values of those assets.

The recoverable amount for the impairment calculation was determined at the cash-generated unit level (the shaft) and represents the value in use. Discount rates of 11,5% for the South African operations and 10% for the Australian operations were used in the calculations of the recoverable amount.

9.

TAXATION

R'million

Current income and mining taxes

(265)

(63)

Deferred income and mining taxes

(318)

(48)

Total income and mining taxation (expense)/benefit

(583)

(111)

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. Tax on mining and non-mining income of Australian operations are taxed at a standard tax rate. Deferred tax is provided at the estimated expected future mining tax rate for temporary differences. Major items causing the Company's income tax provision to differ from the estimated effective mining rate of 29%^{^} (2001: 20.5%) were:

R'million

Tax on net income at estimated mining statutory rate

(659)

(26)

Valuation allowance raised against deferred tax assets

(75)

Non-taxable income/additional deductions

(4)

Difference between non-mining tax rate and estimated

mining statutory rate on non-mining income

(17)

(6)

Income and mining tax (expense)/benefit

(583)

(111)

Deferred income and mining tax liabilities and assets on the balance sheet as of 30 June 2002 and 30 June 2001, relate to the following:

Deferred income and mining tax liabilities

Depreciation and amortisation

1 257

Product inventory not taxed

Other

Gross deferred income and mining tax liability

1 488

Net deferred income and mining tax assets

(718)

(350)

Deferred financial liability

(238)

(55)

Unredeemed capital expenditure

(416)

(250)

Provisions, including rehabilitation accruals

(34)

(98)

Tax losses

(30)

(15)

Valuation allowance

The Group's net deferrred tax liability is made up as follows:

Deferred tax assets

(243)

Deferred tax liabilities

1 013

As at 30 June 2002 the Group has unredeemed capital expenditure of R1 573 million (2001: R1 046 million) and tax losses carried forward of R93 million (2001: R53 million) available for deduction against future mining income. These future deductions are utilisable against mining income generated only from the Group's current mining operations and does not expire unless the Group ceases to trade for a period longer than one year.

10. MINORITY INTERESTS

With effect from 1 April 2002, Harmony re-acquired the 10% participation interest in the Elandskraal mine that it had sold to a subsidiary of Khuma Bathong, a Black Economic Empowerment Company (BEE).

This has allowed Khuma Bathong to realise its investment and pursue other opportunities in the South African mining industry. The aggregate consideration paid by Harmony to Khuma Bathong was R210 million. This was netted off against the remaining R91 million due to Harmony under its original loan of April 24, 2001 to Khuma Bathong. This 10% participation interest in Elandskraal had been disposed of in the prior year, and minority interest had subsequently been separately accounted for.

11. EARNINGS PER SHARE

R'million

R'million

Basic earnings per share

Basic earnings per share is calculated by dividing the net income
attributable to shareholders by the weighted number of ordinary
shares in issue during the year

Net income attributable to shareholders

1 680

Weighted average number of ordinary shares in issue

153 509 862

102 997 239

Basic earnings per share (cents)

1 094

Fully diluted earnings per share

For the diluted earnings per share, the weighted average number of
ordinary shares in issue is adjusted to assume conversion of all share
options granted and warrants in issue. The average number of
options used in the calculation of diluted earnings per share is
calculated by taking the average number of ordinary options
allocated in terms of the share option scheme multiplied by the
weighted average option price divided by the average price of the
ordinary shares on the JSE.

Weighted average number of ordinary shares in issue

153 509 862

102 997 239

Adjustments for share options

7 346 070

3 348 123

Adjustments for warrants in issue

4 361 156

Weighted average number of ordinary shares for diluted
earnings per share

165 217 088

106 345 362

Fully diluted earnings per share (cents)

1 017

Headline earnings per share

The calculation of headline earnings per share is based on the basic
earnings per share calculation adjusted for the following items:

Net income attributable to shareholders

1 680

Profit on sale of property, plant and equipment

(21)

(80)

Net impairment of assets

Other

   -                                         11

Headline earnings

2 021

Basic headline earnings per share (cents)

1 316

Fully diluted headline earnings per share (cents)

1 223

12.   DIVIDENDS DECLARED

R'million

R'million

As a result of adopting IAS 10 (revised), dividends now relate to those declared in the current financial year. The final dividend proposed for this financial year was only approved after the balance sheet date.

Dividends declared

Interim dividend no. 74 of 75 cents per share (2001: 50 cents)

Final dividend (2001: 70 cents per share)

119                                    152

Under the previous accounting policy, the dividends proposed
would have been as follows:

Dividends proposed

Final dividend no. 75 proposed of 425 cents per share (2001: Nil)

Dividend cover based on total declared and proposed (times)

Based on attributable income

2,0

0,8

Based on headline earnings

2,4

1,7

The final dividend in respect of the 2002 financial year was approved on 2 August 2002. These financial statements does not reflect the final dividend proposed. It will be accounted for in the 2003 financial year.

13.   PROPERTY, PLANT, AND EQUIPMENT

R'million

R'million

Mining properties, mine development costs and mine plant facilities

9 285

5 273

Other non-mining assets

9 433

5 424

Mining properties, mine development costs and mine plant facilities

R'million

R'million

Cost at beginning of year

8 771

6 614

Acquired through the purchase of subsidiaries

3 843

1 751

Additions

735                                     411

Disposals

(22)

(5)

Foreign currency translation adjustments

1 060

14 387

8 771

Accumulated depreciation and amortisation at beginning of year

3 498

2 972

Acquired through the purchase of subsidiaries

Impairment of fixed assets

Disposals

(8)

(2)

Foreign currency translation adjustments

447                                         -

Charge

295                                    233

5 102

3 498

Net book value

9 285

5 273

Other non-mining assets

R'million

R'million

Cost at beginning of year

Additions

6                                    12

Disposals

(3)

Foreign currency translation adjustments

193                                    189

Accumulated depreciation and amortisation at beginning of year

Disposals

(3)

Foreign currency translation adjustments

Charge for the year

Net book value

Total net book value

9 433

5 424

Other non-mining assets consist of mineral subscription and participation rights, freehold land, computer
equipment and motor vehicles.

14.   NON-CURRENT INVESTMENTS

R'million

R'million

Listed investments

Investments in listed shares (a)

Other investments

Investment in Highland Gold Limited (b)

Unlisted investments and loans (c)

Amounts contributed to environmental trust funds (d)

Loan to Harmony Share Trust (e)

790                                    252

Total non-current investments

1 778

(a)    Listed investments consist of 43 350 992 shares in Aurion Gold Limited (previously Goldfields Australia Limited)

valued at R22,78 per share. The shares are listed on the Australian Stock Exchange. The market value of these
shares at the close of business on 30 June 2002 by reference to stock exchange quoted prices and closing exchange
rates was R988 million (2001: R320 million). Subsequent to year end this investment was disposed of to Placer
Dome (refer to note 34). Dividends received during the year from Aurion Gold amounted to R11 million.

(b)    The company has acquired a strategic 32,5% shareholding in Highland Gold Limited on 31 May 2002 for

US$18 million. Highland Gold Limited is a Jersey-based company which holds Russian gold assets, comprising
of a producing gold mine together with projects and potential projects at various stages of development.

(c)    Unlisted investments comprise of various industry related investments and loans, which have been valued at

book value by the directors. 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.
Dividends received from these investments amounted to R2 million in the financial year.

(d)    The environmental trust funds are irrevocable trusts under the Group's control. The monies in the trusts are

invested primarily in interest bearing short-term and other investments and opproximate their fair value.

(e)    A loan of R89 million was made to the Harmony Share Trust to acquire 2 716 600 shares for employees

participating in the Harmony Share Option Scheme. Refer to note 29 for details on the share option scheme.

15.   INVESTMENT IN ASSOCIATE AND SUBSIDIARIES

R'million

R'million

Listed investment in associate

Shares, at cost

Share of results before tax

(14)

Costs capitalised

Net share of results of associate

Exchange differences

(1)

Closing carrying amount

Valued by the directors at book value.

As at 30 June 2002 the Group held 294 222 437 shares in Bendigo Mining NL, a company incorporated in Australia. The investment represent a 31,8% interest in a single project gold company, listed on the Australian Stock Exchange. The company is developing into virgin underground orebodies which have been proved to exist beneath old workings which made up this gold field which closed in the early 1950's after 100 years of continuous production. All pre-production costs are capitalised. The market value of this investment as determined by closing prices on the Australian Stock Exchange at the close of business and closing exchange rates amounted to R503 million. Harmony has also been granted options to acquire 360 million shares in Bendigo any time before 31 December 2003 at Australian $0,30 per share.

The Group's interest of 31,8% in the summarised balance sheet of the associate is as follows:

R'million

R'million

Capital and reserves

Non-current liabilities

Fixed assets

Net current assets

16.   INTEREST IN JOINT VENTURE

The Group has a 50% interest in a joint venture with ARMgold Limited, the ARMgold/Harmony Freegold Joint Venture Company (Pty) Limited, which operates as a gold mining company in the Welkom area of the Free State goldfields. The joint venture company purchased the Free Gold and Joel assets from Anglogold limited for approximately R2 831 million and took operational control of these assets on 3 January 2002. The following amounts represent the Group's share of the assets and liabilities and revenue and expenses of the joint venture and are included in the consolidated balance sheet and income statement:

R'million

R'million

Property, plant and equipment

1 079

Investments

229                                         -

Current assets

1 879

Non-current interest-bearing borrowings

Non-current intergroup borrowings

Deferred income and mining taxes

(213)

Provision for environmental rehabilitation

Provision for post-retirement benefits

Current liabilities

1 593

Net assets

286                                         -

Profit before taxation

Taxation

(136)

Profit after taxation

286                                         -

Operating cash flows

Investing cash flows

(922)

Financing cash flows

Total cash flows

503                                         -

Proportionate interest in joint venture commitments

There are no contingencies relating to the Group's interest in the joint venture. The number of employees in the joint venture was 13 734 at year-end.

Freegold has announced that it has reached an agreement in principal with Goldfields Limited to acquire the assets of St Helena gold mine for a gross sale consideration of R120 million. In addition the joint venture company will pay a royalty of 1% of revenue to Goldfields from the effective date for a period of 48 months. The agreement is subject to the fulfilment of certain conditions precedent. Thereafter implementation of the agreement will be subject to the obtaining of all necessary regulatory consents and approvals by 31 October 2002. It is expected that this deal will be concluded after year-end.

17.   INVENTORIES

R'million

R'million

Gold in-process

Stores and materials at average cost

448                                   300

18.   RECEIVABLES

R'million

R'million

Value-added tax

Trade receivables

Amount owing relating to share issue

Interest and other

685                                    799

19.   SHARE CAPITAL AND SHARE PREMIUM

R'million

R'million

Share capital

Authorised

250 000 000 (2001: 250 000 000) ordinary shares of 50 cents each

10 958 904 (2001: 10 958 904) redeemable convertible preference
shares of 50 cents each

Issued

169 247 349 (2001: 144 553 291) ordinary shares of 50 cents each

Ordinary shares of 50 cents each at 1 July 2001

Issued in terms of the share option scheme

Issued for cash to repay debt

Conversion of preference shares

Warrants converted

Balance at 30 June 2002

Share premium

5 462

3 727

The unissued shares are under the control of the directors until the forthcoming Annual General Meeting. The directors report and note 29 set out details in respect of the share option scheme.

The Company has a general authority to purchase its shares up to a maximum of 20% of the issued share capital in any one financial year. This is in terms of the annual general meeting of shareholders on 16 November 2001. The general authority is subject to the Listings Requirements of the JSE and the Companies Act of South Africa, as amended.

20.   HARMONY LISTED OPTIONS AND WARRANTS

R'million

R'million

For the acquisition of Vermeulenskraal Noord, 1 125 000 warrants
were issued at a fair value of South African Rand 10 per warrant
on 3 December 1996

For the acquisition of Lydex, 6 418 855 warrants were issued at a fair
value of South African R8,89 per warrant during the period January
through March 1997

For obtaining the credit facility from NM Rothschild 36 045 warrants
were issued at fair value of South African R5,70 per warrant on 6 June 1998

-                                     69

The options were exercisable at a price of South African R60,00, at which time they could have been converted into ordinary shares of the Company, on or before July 31, 2001. None of the options were exercised and they lapsed.

In terms of a transaction dated 29 June 2001, 27 082 500 ordinary shares and 9 027 500 options to purchase 9 027 500 additional ordinary shares were issued. Ordinary shares were purchased in integral multiples of three and investors received one option for every three shares purchased. Each option will entitle its holder to purchase, on any business day on or before 28 June 2003, one ordinary share at South African R43,00. As at 30 June 2002, 1 013 554 options were exercised, leaving a balance of 8 013 946 options still to be exercised. These warrants are traded on the JSE.

21.   NON-DISTRIBUTABLE RESERVES

R'million

R'million

Foreign exchange translation reserve

(19)

Mark-to-market of listed investments

Mark-to-market of financial instruments

(18)

Other

(23)

88                                      54

The balance of the foreign exchange translation reserve represents the cumulative translation effect of the Company's off-shore operations.

The mark to market of listed investments consisted of listed shares in AurionGold held by the Company as a strategic interest. Subsequently this investment was reclassified as a trading security, from an strategic investment, to reflect a change in the Company's intentions regarding this investment from a strategic long-term investment to a non-core investment. This resulted in movements in the share price being reflected against earnings instead of equity. Subsequent to year-end this interest was sold as described in note 34.

The mark-to-market of financial instruments relate to the currency hedge taken out in Harmony and to the movement in the derivative instruments of Randfontein which qualified for hedge accounting, in the prior year. Refer to note 30 for detail on financial instruments.

22.   BORROWINGS

Long-term borrowings

R'million

R'million

Unsecured

Senior unsecured fixed rate bonds (a)

1 200

1 200

Fair value adjustment

(21)

Less: Amortised discount and bond issue costs

(20)

(25)

Total unsecured long-term borrowings

1 159

1 184

Secured

BAE Systems Plc (b)

BOE loan (c)

Less: Short term portion

(125)

375                                        -

Anglo Gold (d)

Less: Short-term portion

(316)

200                                        -

Total secured long-term borrowings

612                                     28

Total long-term borrowings

1 771

1 212

(a)    On 16 June 2001, Harmony launched and priced an issue of senior unsecured fixed rate bonds in an aggregate

principal amount of Rand 1 200 million, with semi-annual interest payable at a rate of 13% per annum.
These bonds will be repayable on 14 June 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 indebtness for borrowed money, without
securing the outstanding bonds equally and ratably with such indebtedness, except for certain specified
permitted encumbrances. Including in the amortisation charge as per the income statement is R5 million for
amortisation of the bond issue costs.

(b)    The loan from BAE Systems Plc is a US dollar denominated term loan of R36 million ($3,5 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 is secured by a notarial covering bond over certain gold
proceeds and other assets and is repayable in full on 30 April 2004. The loan bears interest at Libor plus 2% which
is accrued daily from the drawdown date and interest is repayable on a quarterly basis.

(c)    On 18 April 2002 Harmony entered into a term loan facility of R500 million with BOE Bank Limited for the

purpose of partially funding loans made by Harmony to the Free Gold in connection with the acquisition of
mining assets. The facility is collateralised by a pledge of Harmony's shares in the Free Gold Joint Venture
Company and is guaranteed by Randfontein, Evander, Kalgold and Lydex. The loan is repayable in full on
23 April 2006 by way of eight semi-annual capital installments which are due beginning 23 October 2002.
The loan bears interest at a rate equal to the JIBAR rate for deposits in Rand plus 1,5% plus specified costs, which
is accrued daily from the drawdown date and is payable quarterly in arrears commencing 23 July 2002.
The following restrictive covenants apply:

(i)  a consolidated net worth must be more than R4 600 million;

(ii)    the total debt to EBITDA ratio not to exceed 1,5; and

(iii)   EBITDA to total debt service ratio should not be less than 3,5.

(d)    On 24 December 2001 Free Gold entered into a agreement with Anglogold Limited to purchase its Free Gold

assets for R2 832 million. R1 800 million was payable on 1 January 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 is payable on
1 January 2005 at no interest charge. The balance of the consideration is payable five business days before
Anglogold is obliged to pay recoupment tax, capital gains tax and any other income tax on the disposal of the
assets at no interest charge. Harmony's 50% portion of the outstanding loan balance at 30 June 2002 was
R516 million, which was proportionately consolidated.

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 30 June 2002, the Company will have unrestricted access to loan financing for its reasonably foreseeable requirements. At year end, total borrowings amounted to R2 212 million.

23.   PREFERENCE SHARES

Harmony entered into an agreement with Simane Security Investments (Pty) Limited ("Simane"), a South African empowerment group, and the Industrial Development Corporation of South Africa Limited ("IDC") on behalf of Simane, pursuant to which, subject to the fulfilment of certain specified conditions, Simane and the IDC subscribed for, respectively, 222 222 Harmony ordinary shares and 10 736 682 Harmony ordinary shares at R36,00 per share.

Under the agreement, the IDC also subscribed for 10 958 904 redeemable convertible preference shares at a price equal to their par value of Rand 0,50 each. The preference shares could be converted into ordinary Harmony shares for a period of 5 years from their issue at the payment of an additional R41,50 per preference share. During January and February 2002, all of the preference shares were converted into ordinary shares, leaving Simane with a stake of 6,4% in the Company.

24.   DEFERRED FINANCIAL LIABILITY/(ASSET)

R'million

R'million

Mark-to-market of speculative financial instruments at year-end

Amount owing on close out of derivatives

Mark-to-market of hedging financial instruments at year-end

(15)

971                                    397

The Randfontein hedge book was closed during the year at a net cost of R135 million after tax. The balance currently provided relates to the Hill 50 hedge book, acquired with the acquisition of Hill 50, as well as the remaining portion of the New Hampton hedge book. These hedge books have been restructured as normal sales. The financial liability will be reflected in the income statement as gold is delivered into the contracts. Refer to note 30 for more detail on the financial instruments outstanding.

25.   PROVISION FOR ENVIRONMENTAL REHABILITATION

R'million

R'million

Provision raised for future rehabilitation

Opening balance

Acquisition of subsidiaries

Charge to income statement

(52)

Closing balance

While the ultimate amount of rehabilitation costs to be incurred in the future is uncertain, the Group has estimated that based on current environmental and regulatory requirements, the total cost for the mines, in current monetary terms, will be R1 085 million (2001: R655 million).

The movements in the investments in the Group Environmental Trust Funds, were as follows:

R'million

R'million

Opening balance

Transferred from other trust funds

Interest accrued

Contributions made

Reimbursement of costs incurred

(1)

(2)

Closing balance

Future net obligations

The Group intends to finance the ultimate rehabilitation costs 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.

26.   PROVISION FOR POST-RETIREMENT BENEFITS

The provision for former employees' post-retirement benefits comprise medical benefits for former employees who retired. The amounts were based on an actuarial valuation conducted during the current year.

R'million

R'million

The amounts recognised in the balance sheet are as follows:

Present value of unfunded obligation

The amounts recognised in the income statement are as follows:

Interest cost

Additional liability raised  Elandskraal

Benefits paid

Net actuarial gains

(5)

(20)

1                                    (17)

The movement in the liability recognised in the balance sheet is as follows:

At beginning of year

Total expenses as above

(17)

At end of year

The principal actuarial assumptions used for accounting purposes were:

Discount rate

12%

Assumed medical subsidy inflation

0% - 7%

27.   ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

R'million

R'million

Trade payables

Short-term portion of long-term borrowings

Short-term borrowings

Payroll and leave liabilities

Other (including accrued liabilities)

1 648

1 083

Leave liability

Employee entitlements to annual leave are recognised 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.

28.   EMPLOYEE BENEFITS

R'million

R'million

Number of permanent employees:

Harmony Free State

12 644

14 671

Evander

7 384

6 909

Kalgold

222                                   229

Randfontein

7 455

9 700

Elandskraal

7 559

7 200

Australian operations

Bissett

6                                   208

Exploration

20                                     13

35 599

39 099

Free Gold Joint venture (50%)

6 867

Total

42 466

39 099

Aggregate earnings:

The aggregate earnings of employees including directors were:
Salaries and wages and other benefits

1 780

1 667

Retirement benefit costs

Medical aid contributions

2 011

1 821

29.   EMPLOYEE BENEFIT PLANS

PENSION AND PROVIDENT FUNDS: The Group contributes to several 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 8% of gross salary and wages for the 2002 year.

Substantially all the Group's employees are covered by the above mentioned retirement benefit plans. Funds contributed by the Group for fiscal 2002 amounted to R191 million (2001: R123 million).

POST-RETIREMENT BENEFITS OTHER THAN PENSIONS: Skilled workers in South Africa participate in the Minemed medical scheme, as well as other medical schemes. The Group contributes to these schemes on behalf of current employees and retired employees who retired prior to 31 December 1996 (Minemed scheme). The Group's contributions to these schemes on behalf of retired and current employees amounted to R40 million and R31 million for 2002 and 2001, respectively.

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 current 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 0% to 7%.

Randfontein had a liability to certain retirees and their dependants who retired prior to 30 September 1991 in terms of the JCI medical scheme. During the June 2001 year an agreement was reached with these retirees whereby they were transferred to the Minemed medical scheme and the provision was therefore reversed in June 2001.

SHARE OPTION SCHEME: The Company has an Employee Share Option Scheme (``Harmony Share Option Scheme'') hereunder referred to as the HSOS scheme under which certain qualifying employees may be granted options to purchase shares in the Company's authorised but unissued ordinary shares. Of the total of 8 000 000 ordinary shares under the specific authority of the directors in terms of the Harmony (2001) Share Option Scheme, 5 968 200 shares have been offered to participants leaving a balance of 2 031 800. In addition a total of 3 108 800 shares were still outstanding under the Harmony (1994) Share Option Scheme. In terms of the rules of the HSOS scheme, the exercise price of the options granted is equal to fair market value of the shares at the date of the grant.

Options currently expire no later than 10 years from the grant date and annually from the grant date, a third of the total options granted are exercisable. Proceeds received by the Company from the exercise are credited to share capital and share premium.

Share option activity was as follows:

Number of

Average

share

exercise

options

price per

granted

share

Rand

Balance at 30 June 2000

6 899 000

Share options granted during year

1 728 400

Share options exercised during year

(2 835 700)

20,89

Balance at 30 June 2001

5 791 700

Share options granted during year

5 968 200

Share options exercised during year

(2 682 900)

26,88

Balance at 30 June 2002

9 077 000

The number of shares held by the Harmony Share Trust at year end amounted to 2 185 200 (2001: 1 158 800).
The following table summarises the status of share options outstanding at 30 June 2002:

Grant

Number  of

Option

date

options                                  price

Rand

2 December 1997

18 500

11,70

31 August 1998

5 000

19,50

21 September 1999

1 268 800

22,90

23 February 1999

18 000

25,75

15 November 2000

584 500

27,20

31 January 2000

752 600

35,40

24 April 2001

461 500

36,50

20 November 2001

5 968 100

49,60

9 077 000

30,00

30.   DERIVATIVE FINANCIAL INSTRUMENTS AND FAIR VALUE AND CREDIT RISK OF FINANCIAL

INSTRUMENTS

Harmony 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. Following periodic evaluation of these exposures, Harmony may enter into derivative financial instruments to manage these exposures. Harmony does not hold or issue derivative financial instruments for trading or speculative purposes.

Commodity price sensitivity

As a general rule, Harmony sells its gold production at market prices. Harmony, 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. In order to secure loan facilities, there have been instances where Harmony has made use of commodity contracts (all of which have subsequently expired). In addition, a significant proportion of Randfontein Estate's, New Hampton and Hill 50's production was already hedged when acquired by Harmony. The inherited Randfontein hedge which had previously been treated as speculative was closed out during the year at a cost of R250 million (US$22 million). The Group's remaining commodity contracts relate to a portion of both New Hampton's and Hill 50`s production. These contracts were restructured towards the end of the year to normal purchase, normal sale agreements where we will physically deliver a specified quantity of gold at a future date, subject to the pricing arrangements described below.

The Harmony Group's commodity contracts by type as at 30 June 2002

Maturity scheduled for delivery in

Total

Normal sales
contracts

Forward Sales
Agreements

Ounces

*1

425 792

229 000

205 000

187 500

125 000

100 000

100 000        1 372 292

A$/ounce

Variable price
sales contracts
(with "caps")

Ounces

*2

62 425

175 500

130 000

40 000

407 925

A$/ounce

Variable price
sales contracts
(with "floors")

Ounces

*3

33 000

33  000

A$/ounce

521 217

404 500

335 000

227 500

125 000

100 000

100 000        1 813 217

*1     The Group must deliver into these agreements at the prices indicated.

*2     The Group must deliver its production into these agreements subject to the capped price indicated in the table above.

*3     The Group must deliver its production into these agreements subject to the floor price indicated in the table above.

The contracts are treated as normal purchase, normal sales contracts. The mark-to-market of these contracts was a negative R913 million (US$88 million) as at 30 June 2002 based on independent valuations provided by Standard Risk and Treasury Management Services (Pty) Ltd (SRTMS). The value was based on a gold price of US$316 (A$557) per ounce, exchange rates of R/US$10.39 and US$/A$0.57 and prevailing market interest rates and volatilities at the time.

Foreign currency sensitivity

In the ordinary course of business, Harmony enters into transactions denominated in foreign currency (primary US dollars). In addition, the Group has investments and liabilities in Canadian, Australian and US dollars. As a result Harmony is subject to transaction and translation exposure from fluctuations in foreign currency exchange rates. Harmony does not generally hedge its exposure to foreign currency exchange rates, however during the year, it entered into monthly forward sales agreements totalling US$90 million, at an average of R/US$11.76 maturing over the period July to December 2002. These contracts were entered into to preserve the revenue streams for the Free State operations.

These contracts are accounted for as cash flow hedges and are recorded in each period in reserves and subsequently reclassified to revenue on the contract expiry date.

The mark-to-market value of the transactions making up the positions was a positive R47 million (US$5 million) as at 30 June 2002, the valuation was based on an exchange rates of R/$10.42 and the prevailing interest rates and volatilities at the time.

Concentration of credit risk

Financial instruments, which subject the Company to significant concentrations of credit risk, consist principally of cash and equivalents, short-term investments and various derivative financial instruments. The Group's financial instruments do not represent a concentration of credit risk because the Group deals and maintains cash and cash equivalents, short-term investments and derivative financial instruments with a variety of well established financial institutions of high quality and credit standing. The credit exposure to any one counter party is managed by setting exposure limits, which are reviewed regularly. The Group's debtors and loans are regularly monitored and assessed, and an adequate level of provision is maintained.

Interest rates and liquidity risk

Fluctuations in interest rates and gold lease rates impact on the value of short-term cash and financing activities. Harmony generally does not undertake any specific actions to cover its exposure to gold lease rates in respect of its lease rate swaps. Through its acquisitions of New Hampton and Hill 50, Harmony holds certain gold lease rate swaps, which are listed below:

Ounces

1 906 500        1 879 000       1170 000       1 170 000

900 000

675 000

675 000

Lease rate received

1,0%

1,0%

1,2%

1,2%

1,0%

1,1%

1,1%

The above instruments are all treated as speculative. The mark-to-market of the above contracts was a negative R84 million (US$8 million) as at 30 June 2002, based on valuations provided by independent treasury and risk management experts.

The Group has interest rate swap agreements to change R600 million of its R1,2 billion fixed rate bond to variable rate debt. The interest rate swap runs over the term of the loan and comprises two separate tranches: (a) R400 million: receive interest at a fixed rate of 13% and pay floating at JIBAR (reset quarterly) plus a spread of 1,8%.

(b) R200 million: receive interest at a fixed rate of 13% and pay floating at JIBAR (reset quarterly) plus a spread of 2,2%. These transactions which mature in June 2006 are designated as fair value hedges. The marked-to-market value of the transactions was a negative R21 million (US$2 million) as at 30 June 2002.

In the ordinary course of business, the Group receives cash from its operations and is required to fund its working capital and capital expenditure requirements. The cash is managed to ensure that surplus funds are invested to provide sufficient liquidity at the minimum risk.

Fair value
The fair value of the financial instrument is defined as the amount at which the instrument could be exchanged in a current transaction between willing parties. The carrying amount of the receivables, all accounts payable and cash and equivalents are a reasonable estimate of the fair values because of short-term maturity of such instrument. The investments in the environmental trust funds approximates fair values as the funds are invested in short-term maturity investments. Listed investments (including those in the environmental trust fund) are carried at market value. Long-term loans, other that the bonds, approximates fair value as they are subject to market-based rates. The carrying value of the bond approximates their market value at 30 June 2002.

31.   CASH GENERATED FROM/(UTILISED IN) OPERATIONS

R'million

R'million

Reconciliation of profit before taxation to cash generated from operations:

Income before taxation

2 279

Adjustments for:

Interest and dividends received

(138)

(45)

Interest paid

Loss/(Profit) on sale of other assets and listed investments

(46)

Profit on sale of mining assets

(21)

(80)

Depreciation and amortisation

Impairment of assets

Gain on financial instruments

(46)

(140)

Mark-to-market of listed investments

(595)

Net (decrease)/increase in provision for environmental rehabilitation

(52)

Net decrease/(increase) in provision for former employees' post-retirement benefits

(17)

Other non cash transactions

(4)

(2)

Effect of changes in operating working capital items:

Receivables

127                                   (274)

Inventories (93)

(82)

Accounts payable and accrued liabilities

Cash generated by operations

2 436

32.   ADDITIONAL CASH FLOW INFORMATION

The income and mining taxes paid in the statement of cash flow represents actual cash paid.

(a)    Non cash-items

Excluded from the statements of consolidated cash flows are the following for the years ended 30 June 2002 and
30 June 2001:

The minorities' share in the profits of Elandskraal.

(b)    Acquisitions of subsidiaries/businesses

(i)    For the year ended 30 June 2002

(a)    With effect from 3 January 2002, the Company had acquired a 50% shareholding in the ArmGold/Harmony

Free Gold Joint Venture Company (Proprietary) Limited. The aggregate fair value of the assets acquired and
the liabilities assumed were as follows:

R'million

Environmental Trust Fund

Property, plant and equipment

1 090

Accounts payable and accrued liabilities

(53)

Long-term liabilities

(190)

Deferred tax

Total purchase price

1 416

Paid for by way of borrowings

(516)

Paid for by cash

(900)

Cash and cash equivalents at acquisition

(b)    With effect from 1 April 2002, Harmony acquired the remaining 10% interest in Elandskraal from Khuma

Bathong. The fair value of assets acquired were as follows:

R'million

Property, plant and equipment

Net minority interest in Elandskraal

Total purchase price

Paid for by cash

(210)

(c)    With effect from 1 April 2002, Harmony acquired the entire share capital of Hill 50 Gold NL and its

subsidiaries. The aggregate fair value of the assets acquired and the liabilities assumed were as follows:

R'million

Inventories

Accounts receivable

Property, plant and equipment

2 754

Accounts payable and accrued liabilities

(134)

Long-term liabilities

(52)

Deferred financial liability

(944)

Deferred tax

(442)

Total purchase price

1 265

Paid for by cash

(1 419)

Cash and cash equivalents at acquisition

(154)

(ii)    For the year ended 30 June 2001

(a)    With effect from 9 April 2001, the Company acquired Elandskraal (Elandsrand and Deelkraal mines) from

Anglogold. The aggregate fair value of the assets required and liabilities assumed were as follows:

R'million

Property, plant and equipment

1 053

Investments

Long-term liabilities

(55)

Total purchase price

1 053

Paid for by cash

(1 053)

(b)    With effect from 1 April 2001, the Company had acquired a majority shareholding in New Hampton and

during the period to 30 June 2001 increased its shareholding such that as at 30 June 2001, the Company had
acquired 100% of the issued share capital of New Hampton. The aggregate fair value of the assets acquired
and liabilities assumed were:

R'million

Inventories

Accounts receivable

Investments

Property, plant and equipment

Accounts payable and accrued liabilities

(149)

Long-term liabilities

(320)

Total purchase price

Paid for by cash

(229)

(c)    Disposal of subsidiaries/businesses

(i)     For the year ended 30 June 2001

(a)    With effect from 24 April 2001, Harmony disposed of a 10% interest in Elandskraal to Khuma Bothong. The

book value of assets and liabilities disposed of were:

R'million

Property, plant and equipment

Stores

Total sales price

Paid for by way of receivables

(114)

33.   COMMITMENTS AND CONTINGENCIES

R'million

R'million

Capital expenditure commitments

Contracts for capital expenditure

Authorised by the directors but not contracted for

300                                    322

This expenditure will be financed from existing cash resources.

Contingent liabilities

Guarantees and suretyships

Environmental guarantees

34.   SUBSEQUENT EVENTS AFTER BALANCE SHEET DATE

(a)    On 27 May 2002, Harmony announced that it had entered into a pre-acceptance agreement with Placer Dome,

whereby it agreed to accept Placer Dome's offer for its 9,8% holding in AurionGold. The Company has
subsequently accepted Placer Dome's increased, final and unconditional offer on 29 July 2002, which included
an Australian $0,35 cash payment per AurionGold share held. Harmony held 43 350 992 shares in AurionGold
which were converted into 7 586 422 shares in Placer Dome.

(b)    Refer to note 16 for the proposed acquisition of the St Helena assets by Free Gold.

35.    GEOGRAPHICAL AND SEGMENT INFORMATION

The primary reporting format of the Company is by business segment. As there is only one business segment, being mining, extraction and production of gold, the relevant disclosures have been given in the financial statements. The secondary reporting format is by geographical analysis by origin. The accounting policies of the segments are the same as those described in the accounting policy notes.

The results of the Free Gold joint venture have been included from 3 January 2002 and Hill 50 from 1 April 2002.

Segmental information includes the results of operations of Elandskraal and New Hampton from date of acquisition with effect from 1 March 2000 and 1 April 2001 respectively. Gold operations are internally reported based on the following geographic areas: Free State, Evander, Kalgold, Randfontein, Elandskraal, New Hampton, Hill 50 and Free Gold. The Free State, Randfontein, Kalgold, Evander and Elandskraal are specific gold producing regions within South Africa. The Bissett mine is located in Canada and the New Hampton and Hill 50 mines are located primarily in Western Australia. The Company also has exploration interests in Southern Africa and Australia which are included in Other. Selling, administrative, general charges and corporate costs are allocated between segments based on the size of activities based on production results.

The segmental split on a geographical basis is:

Year ended 30 June 2002

FreeGold

New

Free State

Evander

Kalgold

Randfontein

Elandskraal

Joint  Venture

Hampton

Hill 50

(*)

(South Africa)

(South Africa)

(South Africa)

(South Africa)

(South Africa)

(South Africa)

(Australia)

(Australia)

Other

Total

R'million

R'million

R'million

R'million

R'million

R'million

R'million

R'million

R'million

R'million

Profit and loss

Revenue

1 829

1 191

365                                       918                                       493                                       185                                         18

Production costs

(1 351)

(723)

(130)

(1 013)

(950)

(431)

(474)

(134)

(9)

(5 215)

Cash

operating

profit

468                                        49                                        615                                      415                                       487                                          19                                         51                                          9

Non-cash items:

 Depreciation  and amortisation

(82)

(26)

(11)

(51)

(36)

(30)

(25)

(44)

(3)

(308)

 Impairment

(437)

(362)

 Mark

to

market

of listed

investment

 Financial

instruments

(121)

113                                                                                      48

Operating

profit

before

tax

441                                         36                                      355                                       291                                       422                                       380                                        126                                      475

Taxation expense

(75)

(150)

(140)

(15)

(136)

(5)

(105)

(583)

Net profit/(loss) for the year
before

minority

interest

291                                         79                                       215                                       276                                      286                                       (380)                                      121                                       370

Kilograms gold (**)

19 034

12 920

1 934

17 469

14 807

8 681

5 957

1 912

82 971

Tonnes milled (**) ('000)

4 536

2 352

4 799

3 279

2 186

3 833

22 934

Capital expenditure

98                                        25                                          15                                       247                                         32                                        233                                                                                    (10)

Total assets

5 801

1 222

2 233

1 488

1 496

14 076

Total liabilities

372                                        (23)

504                                       133                                       608                                       656

373                                         47

(*)

The Bissett mine in Canada was placed on care and maintenance at the end of the previous financial year, and clean-up results amounting to R18 million revenue (257kg) and R9 million production costs were reflected under "other" for 2002.

(**)

Production statistics are unaudited.

Year ended 30 June 2001

Free State

Evander

Kalgold

Randfontein

Elandskraal

New Hampton

Bissett

(South Africa)

(South Africa)

(South Africa)

(South Africa)

(South Africa)

(Australia)

(Canada)

Other

Total

R'million

R'million

R'million

R'million

R'million

R'million

R'million

R'million

R'million

Profit and loss
Revenue

1 431                                       952                                       103

479                                       283                                       137                                      108                                            2

Production costs

(1 385)

(693)

(98)

(1 205)

(195)

(135)

(111)

(3 822)

Cash operating profit

(3)

Non-cash items:

 Depreciation and amortisation

(90)

(15)

(17)

(53)

(26)

(10)

(25)

(1)

(237)

 Impairment

(43)

(11)

  (12)

 (149)

 (215)

 Financial

instruments

   43                                                                                       15                                                                                                                                  58

Operating profit/(loss) before tax

(135)

(12)

(1)

(187)

Taxation

expense

8                                        (76)

 (31)

(16)

    4                                       (111)

Net profit/(loss) for year
before minority interest

(127)

(12)

(1)

(187)

Kilograms gold (**)

21 346

14 251

1 535

22 500

3 822

1 731

1 378

66 563

Tonnes milled (**) ('000)

5 289

2 481

6 285

1 088

17 074

Capital expenditure

120                                         69                                         33                                         53                                         62                                         18                                         49                                         20                                       424

Total assets

2 234

2 175

1 216

1 033

8 254

Total liabilities

035                                       286                                         30                                       697                                       159                                       248                                         23                                       182

(**)

Production statistics are unaudited.

Annexure 5

Historical information of ARMgold

ARMgold income statement

Unaudited

Audited

Audited

Audited

3 months

12 months

12 months

12 months

ended

ended

ended

ended

31 March

31 December

31 December

31 December

R'000

Revenue

718 480

3 537 791

1 181 947

1 090 791

Cost of sales

560 069

2 052 703

(911 119)

(937 542)

Profit from metals mined

158 411

1 485 088

270 828

153 249

Corporate, administration and
other expenditure

14 145

(37 965)

(26 455)

(21 704)

Tribute expenditure

(53 653)

(124 828)

Profit from operations

144 266

1 447 123

190 720

6 717

Net non-mining income

6 652

31 258

6 000

Net finance income

49 560

69 790

19 325

10 333

Profit before tax

200 478

1 548 171

216 045

17 050

Tax

74 924

(565 588)

(83 574)

(3 225)

Net profit attributable to
ordinary shareholders

125 554

982 583

132 471

13 825

Profit on sale of mining assets

(5 466)

(8 351)

Profit on redemption of long-term debt

(21 000)

Headline earnings

120 088

974 232

111 471

13 825

Earnings per share (cents)

131,47

1 222,43

264,94

27,65

Headline earnings per share (cents)

125,75

1 212,05

222,94

27,65

Diluted earnings per share (cents)

131,47

1 222,43

264,94

27,65

Dividends per share (cents)

3,60

40 000

ARMgold balance sheet

Unaudited

Audited

Audited

Audited

31 March

31 December

31 December

31 December

R'000

Assets

Non-current assets

1 868 659

1 855 116

101 172

101 935

Property, plant and equipment

1 095 700

1 103 286

77 219

81 767

Investments and loans

362 423

354 185

18 268

7 280

Deferred taxation

112 500

143 917

Restricted cash

298 036

253 728

5 685

5 685

Long-term receivables

7 203

Current assets

2 277 524

2 049 232

200 945

205 718

Inventories

34 749

26 502

10 833

6 895

Accounts receivable

143 378

135 687

78 217

54 009

Cash and cash equivalents

2 099 397

1 884 185

111 895

144 814

Short-term portion of deferred tax

2 858

Total assets

4 146 183

3 904 348

302 117

307 653

Equity and liabilities

Capital

Ordinary share capital

Share premium

1 132 454

1 132 454

Retained income

1 116 732

991 178

8 613

76 142

Ordinary shareholders' interest

2 249 282

2 123 728

8 663

76 192

Non-current liabilities

777 671

745 826

51 079

97 366

Long-term borrowings

529 305

503 963

51 786

Deferred taxation

9 539

Rehabilitation and closure cost obligations

247 253

240 750

41 540

45 185

Provision for post-retirement liability

1 113

1 113

Current liabilities

1 119 230

1 034 794

242 375

134 095

Accounts payable

334 519

282 089

144 971

124 296

Short-term portion of borrowings

452 288

450 695

30 786

Current tax liability

332 423

302 010

66 618

9 799

Total equity and liabilities

4 146 183

3 904 348

302 117

307 653

Weighed number of shares in issue ('000)

95 500

80 379

50 000

50 000

Net asset value per share (cents)

2 355,27

2 642,14

17,33

152,38

Net tangible asset value per share (cents)

2 355,27

2 642,14

17,33

152,38

ARMgold cash flow statement

Cash flow statements

Unaudited

Audited

Audited

Audited

3 months

12 months

12 months

12 months

ended

ended

ended

ended

31 March

31 December

31 December

31 December

R'000

Notes

Cash generated from
operating activities

Cash receipts

710 789

3 525 656

1 157 739

1 081 500

Cash paid to suppliers
and employees

(490 961)

(1 898 820)

(964 849)

(1 013 566)

Cash generated by operations

219 828

1 626 836

192 890

67 934

Net finance income

45 811

81 158

17 859

10 333

Normal taxation paid

(5 921)

(81 031)

(17 611)

(6 991)

Dividends paid

(12 196)

(187 822)

Net cash inflow from
operating activities

259 718

1 614 767

5 316

71 276

Cash flows from
investing activities

Acquisition of businesses

(960 000)

Mining and other fixed
assets acquired

(23 805)

(115 201)

(39 716)

(14 795)

Proceeds on disposal of
mining assets

11 469

3 800

Costs of acquisitions capitalised

(1 881)

Movement in investments

(8 232)

(75 149)

(2)

Movement in long-term receivables

1 097

Net increase in investment in

Rehabilitation Trust Fund

(6 503)

(21 583)

(9 522)

(2 858)

Net cash outflow from
investing activities

(25 540)

(1 162 345)

(38 235)

(16 504)

Cash flow from financing activities

Proceeds from shares issued -
net of expenses

1 132 454

Movement in long-term borrowings

25 342

435 457

Net cash inflow from
financing activities

25 342

1 567 911

Net movement in cash and
cash equivalents

259 520

2 020 333

(32 919)

54 772

Cash and cash equivalents at
beginning of period

2 137 913

117 580

150 499

95 727

Cash and cash equivalents at the
end of period

2 397 433

2 137 913

117 580

150 499

Notes to cash flow statements:

Unaudited

Audited

Audited

Audited

3 months

12 months

12 months

12 months

ended

ended

ended

ended

31 March

31 December

31 December

31 December

R'000

1.

CASH GENERATED FROM OPERATIONS

Profit before taxation

200 478

1 548 171

216 045

17 050

Adjusted for non-cash items:

-  Amortisation and depreciation

31 391

121 171

40 464

37 850

-  Profit on sale of mining assets

(5 466)

(8 351)

-  Proceeds on loan waived

(21 000)

-  Provision for irrevocable loans and debtors

15 000

-  Movement in gold inventory

(1 564)

(7 216)

-  Bad  debts

-  Movement in provision for

post-retirement benefits

1 113

(3 645)

2 151

-  Movement in environmental

rehabilitation obligation

6 502

14 101

Adjustment for:

Net finance income

(49 569)

(69 790)

(19 325)

(10 333)

Operating profit before working
capital changes

181 772

1 599 474

227 539

46 718

Working capital changes

-  Movement in accounts receivable

(7 691)

(56 672)

(39 208)

(9 291)

-  Movement in inventories

(6 683)

(8 453)

(3 938)

2 571

-  Movement in accounts payable

52 430

92 487

8 497

27 936

Cash generated from operations

219 828

1 626 836

192 890

67 934

2.

TAXATION PAID

Charge as per the income statement

(74 924)

(565 588)

(83 574)

(3 225)

Liability - previous period

(302 010)

(66 618)

(9 799)

Liability - current period

332 423

302 010

66 618

9 799

Movement in deferred tax liability

38 590

249 165

9 144

(14 016)

Taxation paid

(5 921)

(81 031)

(17 611)

(6 991)

3.

DIVIDENDS PAID

Charge as per the statement of
changes in equity

(200 000)

Capitalisation issue of 18 000 000
ordinary shares of R0,001 each

(18)

Shareholders for dividends at beginning
of period

(12 178)

Shareholders for dividends at end
of period

12 178

Dividends paid

(12 196)

(187 822)

Audited

Audited

Audited

12 months

12 months

12 months

ended

ended

ended

31 December

31 December

31 December

R'000

4.

ACQUISITION OF BUSINESSES

With effect from 1 January 2002, Free Gold
purchased the Free Gold assets and liabilities
from Anglogold for R2 741 million of which
R1 370,5 million relates to ARMgold's 50%
portion. The aggregate fair value of the assets
acquired and liabilities assumed were as follows:

Environmental trust fund

221 936

Property, plant and equipment

978 359

Accounts payable and accrued liabilities

(58 633)

Long-term borrowings

(158 590)

Deferred tax

387 457

Total purchase price

1 370 529

Paid for by way of borrowings

(470 529)

Paid for by cash

(900 000)

Cash and cash equivalents at acquisition

With effect from 30 October 2002, Free Gold
purchased the St Helena assets and liabilities
from Gold Fields for R120 million of which
R60 million relates to ARMgold's 50% portion.
The aggregate fair value of the assets acquired
and liabilities assumed were as follows:

Environmental trust fund

17 250

Property, plant and equipment

54 879

Accounts payable and accrued liabilities

1 073

Long-term borrowings

(23 772)

Deferred tax

18 022

Total purchase price

67 452

Paid for by way of borrowings

(7 452)

Paid for by cash

(60 000)

Cash and cash equivalents at acquisition

ARMgold statement of changes in equity

Retained

R'000

Share capital

Share premium

income

Total

Audited movements

Balance at 31 December 1999

62 317

62 367

Net income for the year

13 825

13 825

Balance at 31 December 2000

76 142

76 192

Net income for the year

132 471

132 471

Dividends paid

(200 000)

(200 000)

Balance at 31 December 2001

8 613

8 663

Net income for the year

982 583

982 583

Dividends paid

(18)

(18)

Share premium raised
during the period

1 209 973

1 209 973

Expenditure written-off against
share premium

(77 519)

(77 519)

Shares issued during the period

Balance at 31 December 2002

1 132 454

991 178

2 123 728

Unaudited movements

Net income for the period

125 554

125 554

Balance at 31 March 2003

1 132 454

1 116 732

2 249 282

Accounting policies

Basis of preparation

The financial statements are prepared according to the historical cost accounting convention. The Group's accounting policies set out below are consistent in all material respects with those applied in the previous years, except for the adoption of South African Standard AC 133: Financial Instruments: Recognition and Measurement.

Use of estimates

The preparation of the financial statements in conformity with South African Statements of Generally Accepted Accounting Practice requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Consolidation

The Group financial statements incorporate the financial statements of the company and its proportionate interest in joint ventures.

The financial statements for joint ventures are prepared for the same reporting period as the holding company, using the same accounting policies.

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 other ventures under a contractual arrangement. The Group's interest in a jointly controlled entity is accounted for by proportionate consolidation from the date on which joint effective control is transferred to the Group and is no longer consolidated from the date on which joint control is ceased. Under this method, the Group includes its share of the joint venture's income and expenditure, assets and liabilities and cash flows on the relevant components of the financial statements.

All inter-company transactions, balances and unrealised surpluses and deficits on transactions between Group companies have been eliminated.

Goodwill

Where an investment in a subsidiary or joint venture is made, any excess of the purchase price over the fair value of the attributable mineral reserves and the net assets is recognised as goodwill. Goodwill that represents resources is amortised on a systematic basis, which recognises the depletion of resources over the lesser of the life of the mine or 20 years. Goodwill in respect of subsidiaries and proportionately consolidated joint ventures is disclosed as an intangible asset in the balance sheet.

The carrying amount of goodwill is reviewed on a regular basis and written-down for impairment where the recoverable amount exceeds the carrying amount.

Foreign currencies

Foreign currency transactions are accounted for at the rates of exchange ruling at the date of the transaction. Monetary assets and liabilities are translated at year-end exchange rates unless hedged by forward exchange contracts, in which case the rates specified in such forward contracts are used. Gains and losses arising on settlement of such transactions, and from the translation of foreign currency monetary assets and liabilities arising from such transactions, are recognised in the income statement, except when deferred in equity as qualifying cash flow hedges.

Revenue recognition

Revenue is recognised to the extent that it is probable that the economic benefits will flow to ARMgold and the revenue can be reliably measured. The following criteria must also be present:

 -    Revenue from the sale of gold and silver is recognised when the risks and rewards of ownership and title passes to the

buyer of the products.

 -    Interest income is recognised as it accrues (taking into account the effective yield on the asset), unless collectability is

in doubt.

 -    Dividend income is accrued when ARMgold's right to receive payment, is established.

Exploration expenditure

Exploration expenditure is expensed as incurred. When a decision is taken that a mining venture is capable of commercial production, all further pre-production expenditure is capitalised. Expenditure incurred to evaluate and develop new ore bodies, to define mineralisation in existing ore bodies, to establish or expand productive capacity and, expenditure designed to maintain productive capacities, are capitalised until commercial levels of production are achieved.

Property, plant and equipment

Mining assets

Mining assets, including mineral and surface rights, ore reserves, mine development costs and mine plant facilities, are recorded at cost less accumulated amortisation and impairments.

Mine development costs

Mine development costs include expenditure incurred to develop new ore bodies, to define further mineralisation in existing ore bodies and to expand the capacity of the mine.

Mine development and pre-production costs are capitalised until the ore body is brought into production. Mine development costs relating to major programmes to expand production capacities at existing mines, are capitalised. Mine development costs in the ordinary course to maintain production, are expensed as incurred.

Undeveloped properties

Undeveloped properties, upon which the Group has not performed sufficient exploration work to determine whether significant mineralisation exists, are carried at original cost. Where the directors consider that there is little likelihood of the properties being exploited, or the value of the exploitable right has diminished below cost, a write-down is affected against exploration expenditure.

Borrowing costs

Interest costs on borrowings to finance the construction of mining assets, property, plant and equipment, requiring a substantial period of time to prepare for their intended future use, are capitalised during the period that is required to prepare the asset for its intended use and until the asset achieve commercial levels of production. All other borrowing costs are expensed.

Non-mining assets

Land is recorded at cost and is not depreciated as it is deemed to have an unlimited life. Buildings and non-mining assets are shown at cost less accumulated depreciation and any impairment losses.

Amortisation and depreciation

Mining assets

Mining assets (includes mineral property, mineral and surface rights, ore reserves, exploration costs, mine development costs, capitalised interest and mine plant facilities) are amortised using the units-of-production method based on estimated economically recoverable 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. Amortisation begins on new mining ventures from the date on which the mine produces commercial quantities.

Non-mining assets

Non-mining assets are depreciated on the straight-line method to write-off the cost of each asset to their residual values over their estimated useful lives, as follows:

Office equipment

Vehicle

5 years

Computer equipment

3 years

Impairment property, plant and equipment

Management, on a continuous basis, reviews the recoverability of the carrying amounts of mining and non-mining assets of ARMgold. When the carrying amount of an asset is greater than its recoverable amount, an allowance is made for impairment.

Investments

During the period under review, ARMgold adopted AC 133 and classified its investments into the following categories: trading, held-to-maturity and available-for-sale. Investments that are acquired principally for the purpose of generating a profit from short-term fluctuations in price are classified as trading investments and included in current assets. Investments with fixed maturity, that the management has the intent and ability to hold to maturity, are classified as held-to-maturity and are included in non-current assets. Investments intended to be held for an indefinite period of time, which may be sold in response to needs for liquidity or changes in interest rates, are classified as available-for-sale and are included in non-current assets, unless management has the express intention of holding the investment for less than 12 months from the balance sheet date, or unless they will need to be sold to raise operating capital, in which case they are included in current assets. Management determines the appropriate classification of its investments at the time of the purchase and re-evaluates such designation on a regular basis.

All purchases and sales of investments are recognised on the trade date, which is the date that ARMgold commits to purchase or sell the asset. Cost of purchase includes transaction costs. Trading and available-for-sale investments are subsequently carried at fair value, whilst held-to-maturity investments are carried at amortised cost using the effective yield method. Realised and unrealised gains and losses arising from changes in the fair value of trading investments and of available-for-sale investments, are included in the income statement in the period in which they arise.

Listed investments, other than investments in subsidiaries and joint ventures, are subsequently measured at fair value, which is calculated by reference to the quoted selling price at the close of business on the balance sheet date.

Unlisted investments are classified as available for sale financial assets and are measured at fair value.

Changes in the fair values of the investments are recognised in the income statement.

On disposal of an investment, the difference between the net disposal proceeds and the carrying value is charged or credited to the income statement.

At each reporting date, the Group reviews its investments for declines that are other than temporary. Unrealised losses that are other than temporary would be realised in the income statement.

Investment in rehabilitation trust fund

Annual contributions are made to the ARM Environmental Rehabilitation Trust Fund, created in accordance with South African statutory requirements, to fund the estimated cost of rehabilitation during and at the end of the life of the Group's mines. Interest earned on funds paid to the environmental trust fund is accrued and credited to the income statement on an annual basis. The funds that have been paid into the trust fund, plus the growth in the trust fund, are shown as an asset on the balance sheet.

Short-term investments

Short-term investments consist of similar investments to cash and cash equivalents, but mature in periods greater than three months but less than twelve months and are classified as available-for-sale financial instruments.

Short-term investments are measured at fair value and the changes in fair value are recognised in the income statement.

Inventories

In-process metal on hand is stated at the lower of cost and net realisable value. The cost is based on the weighted average production costs. Production costs includes raw materials used, direct labour, other direct costs and related production overheads, which includes amortisation, but excludes interest expenses.

Stores and material are valued at the lower of cost and net realisable value on a first-in, first-out basis. The cost is based on the supplier's cost and includes delivery charges. Obsolete, redundant and slow-moving stock is identified and written- down to economic or realisable values.

Net realisable value is the estimate of the selling price, in the ordinary course of business, less the cost of completion and selling expenses.

Trade and other receivables

Trade and other receivables are carried at net realisable value. Estimates are made for doubtful debts based on a review of all outstanding amounts at year-end. Irrecoverable amounts are written-off during the year in which they are identified.

Cash and cash equivalents

Cash and cash equivalents are defined as cash in hand, demand deposits, and short-term, highly liquid, investments, with a maturity of less than three months at the date of purchase, readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

Environmental expenditure

ARMgold provides for future rehabilitation cost on the full liability method, which is based on ARMgold's environmental management plans, in compliance with the current environmental and regulatory requirements. Under this method the estimated future cost of repairing past damage and other related shut down costs are provided for in full as soon as the commitment is incurred. The estimates are reviewed annually to take the effect of inflation and other changes into account and are discounted using rates that reflect the time value of money. Annual increases in the provision are charged to income and relate to increases in costs due to the change in the present value of the provision, inflationary increases and changes in estimates. The present value of additional environmental disturbances created is capitalised to mining asset with a corresponding increase in the rehabilitation provision.

The rehabilitation asset is amortised in terms of ARMgold's accounting policy for mining assets (refer accounting policy on "Property, plant and equipment").

Based on current environmental regulations and known rehabilitation requirements, management has included its best estimate of these obligations in its rehabilitation requirements. It is however possible that this estimate could change as a result of changes in regulations or cost estimates. Ongoing rehabilitation and environmental costs are charged to the income statement in the period in which it is incurred. Rehabilitation projects undertaken, included in the estimates, are charged to the provision as incurred. Gains from the expected disposal of assets are not taken into account when determining the provision for environmental rehabilitation.

Deferred taxation

Deferred taxation is provided in full, using the liability method, on all temporary differences at the balance sheet date between the tax bases of assets and liabilities and their carrying values in the financial statements.

Under this method, ARMgold is required to make provision for deferred income taxes by applying an estimated future tax rate to the difference between the tax values and carrying amounts of assets and liabilities at the balance sheet date. The estimated tax rate is the rate at which the directors estimate any deferred tax liabilities and assets will be realised, and is based on current legislation. Tax losses are only recognised to the extent that they are considered to be recoverable.

Deferred tax assets are only recognised to the extent that it is probable that the temporary differences will reverse in the foreseeable future and future taxable profit will be available against which the temporary differences can be utilised.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient future taxable profit will be available to allow all or part of the deferred tax asset to be utilised.

Pension obligations

Independent defined benefit and defined contribution funds provide pension and other benefits to all ARMgold's permanent employees.

The expected costs of defined post-retirement benefits are assessed in accordance with the advice of qualified actuaries. Contributions to the relevant funds, including cost of improved benefits or experience adjustments, are charged to income over the service lives of employees entitled to those benefits. Contributions to defined contributions funds are charged against income, as incurred.

Other post-retirement obligations

Except for those mentioned above, ARMgold does not supply any other employee benefits that will result in post-retirement obligations.

Financial liabilities

Financial liabilities, other than trading financial liabilities and derivatives, are measured at amortised cost, being the original obligation less principal payments and amortisations. Trading financial liabilities and derivatives are measured at fair value.

Provisions

Provisions are recognised when ARMgold has a present legal or constructive obligation as a result of past events, 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.

Employee annual leave and holiday leave allowances

Employee entitlements to annual leave and holiday leave allowances are recognised when they accrue to employees. A provision is made for the estimated liability for unused annual leave and holiday leave allowances as a result of services rendered by employees up to the balance sheet date.

Leases

Leases where a significant portion of the risks and rewards of ownership are retained by the lessor, are classified as operating leases. Payments made under operating leases are charged to the income statement on a straight-line basis over the period of the operating lease

Financial instruments

Financial instruments recognised on the balance sheet include trade and other receivables, loans, cash and bank balances, investments, trade and other payables, and borrowings. Financial instruments are initially measured at cost, including transaction costs, when ARMgold becomes a party to their contractual arrangements. The subsequent measurement of financial instruments is dealt with in the accounting policies of trade and other receivables, cash and cash equivalents, investments, financial liabilities and derivative instruments.

Derivative instruments

AC 133 requires that derivative instruments be treated as follows:

 -    Commodity based ("normal purchase or normal sale") contracts that meet the requirements of AC 133 are recognised

in earnings when they are settled by physical delivery.

 -    Where the conditions in AC 133 for special hedge accounting are met the derivative is recognised on the balance sheet

as either a financial asset or financial liability, and recorded at fair value. When ARMgold enters into cash flow hedges,
the effective portion of fair value gains or losses are recognised in equity until the underlying transaction occurs, then
the gains or losses are recognised in earnings or included in the initial measurement of the asset or liability.
The ineffective portion of fair value gains and losses is recorded in earnings in the period to which they relate.

 -    All other derivative instruments are subsequently measured at their estimated fair value, with the changes in estimated

fair value at each reporting date being reported in earnings in the period to which they relate.

 -    The estimated fair values of derivative instruments are determined at discrete points in time based on the relevant

market information. These estimates are calculated with reference to the market rates using industry standard
valuation techniques.

Business segments

Based on risks and returns, the directors consider that the primary reporting format is by business segment. The directors consider that there is only one business segment, being mining, relating to the extraction and production of gold. Therefore the disclosures for the primary segment have already been given in these financial statements.

Annexure 6

Significant contracts of ARMgold

1.

On 15 January 1998, ARMgold concluded a Sale of Assets Agreement with Anglogold Limited ("Anglogold") in terms of which ARMgold, with effect from 27 January 1998, acquired Shafts Numbers 1 and Numbers 3 to 7 as well as certain associated assets, mining leases, mineral rights and certain movable assets and surface rights permits in respect of the Vaal River Operations in Orkney, North West Province. The purchase price for the Vaal Reefs Sale Assets was R38,2 million, which ARMgold has since paid in full.

2.

On 27 July 2001, ARMgold concluded a Sale of Assets Agreement with Anglogold in terms of which ARMgold acquired Shaft No. 2 of the Vaal River Operations, in Orkney, North West Province. This agreement replaced the Tributing Agreement under which ARMgold had been mining Shaft No. 2 on a tribute basis.

3.

On 5 February 1999, ARMgold and Anglogold concluded an agreement in respect of the supply of services, which agreement is deemed to have commenced on 27 January 1998. This agreement continues indefinitely for so long as ARMgold conducts mining operations at Shafts Numbers 1 to 7 at Vaal Reefs, Orkney, North West Province.

4.

On 5 February 1999, ARMgold concluded a Toll Ore Processing Agreement with Anglogold, which agreement is deemed to have commenced on 27 January 1998. Anglogold for cannot terminate this agreement for so long as ARMgold conducts mining operations at any of the Orkney operations, unless ARMgold breaches the agreement and fails to remedy the breach.

5.

On 18 March 1999, ARMgold concluded a Transport of Bullion Agreement with Anglogold, which agreement is deemed to have commenced on 27 January 1998. The agreement continues indefinitely subject to either party having the right to cancel the agreement on 60 days' notice. The agreement also terminates when Anglogold ceases to produce bullion for ARMgold in terms of the Toll Ore Processing Agreement referred to above. In terms of the agreement, Anglogold transports by helicopter or other means, the bullion produced pursuant to the Toll Ore Processing agreement to Rand Refinery for a fee of R18 000 per month.

6.

On 17 September 1998, ARMgold concluded a Sale of Assets Agreement with Anglogold in terms of which ARMgold acquired portions of the mining lease area, surface rights permits, movable assets, excluding the major rotating equipment, and all other assets relating to the mining and associated operations of Free State Consolidated Mines Limited at the Western Holdings Mine Shafts Numbers 1 to 4 and Numbers 6 and 7.

7.

A Memorandum of Co-operation Agreement was concluded between ARMgold and Harmony on 13 October 2001 and endured for a period of 12 months from such date. In terms of the agreement, ARMgold and Harmony agreed to negotiate the Joint Venture Agreement in respect of their relationship as regards Free Gold and to refer to each other all gold mining opportunities that each wished to pursue in South Africa. Such gold mining opportunities exclude the exploitation or expansion of the parties' existing gold mining and related assets.

8.

On 24 December 2001, ARMgold concluded a Sale of Business Agreement with Anglogold, Free Gold and Harmony, which agreement was implemented with an effective date of 1 January 2002. In terms of the agreement, certain gold mines and related assets and surface operations in the Free State were acquired by Free Gold.

The purchase price is payable by Free Gold (50% of which is the responsibility of ARMgold) is as follows:

-     R1,8 billion plus interest of R54,9 million that was paid on 23 April 2002;

-     R400 million is payable on 1 January 2005; and

-     tax payable by Anglogold resulting from the sale of the Free Gold Assets is payable five business days before

Anglogold is obliged to make any such tax payments. This amount has now been paid.

9.

On 24 December 2001, Free Gold and Anglogold concluded a Sale of Property Agreement. The assets purchased in terms of this agreement are the immovable properties used in connection with the businesses purchased in terms of the Free Gold Sale of Business Agreement referred to above. The purchase price in respect of these immovable properties is included in the purchase price as set out in the Free Gold Sale of Business Agreement.

10.

On 5 April 2002, ARMgold and Harmony (collectively, the "shareholders") and Free Gold entered into a Joint Venture Agreement governing the relationship of the shareholders as shareholders of Free Gold.

11.

In terms of an agreement reached on 22 April 2003, ARMgold and Harmony jointly acquired a 34,5% shareholding in Avmin for a consideration of R1,7 million.

Annexure 7

Trading history of Harmony shares

The high, low and closing prices of Harmony shares on the JSE, and the volumes traded, since 31 July 2000, were as follows:

High

Low

Close

Volume

(cents)

(cents)

(cents)

Quarter ended
31 August 2000

3 900

3 300

3 670

8 610 069

30 November 2000

3 700

2 600

3 525

12 946 300

28 February 2001

4 700

3 080

3 860

12 254 756

31 May 2001

5 100

3 615

4 690

20 690 449

31 August 2001

4 920

3 850

4 900

22 217 718

30 November 2001

9 9700

4 800

7 850

38 280 991

28 February 2002

13 360

7 000

12 740

59 093 052

31 May 2002

18 730

11 000

14 200

86 643 890

31 August 2002

18 150

10 350

16 700

78 034 135

30 November 2002

16 520

11 550

14 700

61 230 817

28 February 2003

15 620

8 650

9 760

68 846 490

31 May 2003

11 750

7 100

9 850

102 654 014

Month ended
30 June 2002

17 400

12 000

14 200

30 361 439

31 July 2002

17 100

10 350

11 810

32 404 342

31 August 2002

15 200

10 400

14 850

15 174 230

30 September 2002

18 150

14 400

16 700

30 455 563

31 October 2002

16 520

11 910

13 500

20 341 047

30 November 2002

15 600

11 550

11 799

15 492 925

31 December 2002

15 800

11 560

14 700

25 396 845

31 January 2003

15 620

13 100

13 100

24 945 829

28 February 2003

13 600

10 540

11 050

23 470 805

31 March 2003

11 390

8 650

9 760

20 429 856

30 April 2003

9 850

7 100

7 700

19 952 328

31 May 2003

11 070

7 900

10 539

62 449 097

30 June 2003

11 750

9 600

9 850

20 252 589

Trading day

1 July 2003

10 280

9 950

10 250

1 642 970

2 July 2003

10 480

10 150

10 350

1 010 884

3 July 2003

10 470

10 150

10 350

782 947

4 July 2003

10 255

10 000

10 165

679 761

7 July 2003

10 050

9 620

9 688

1 759 006

8 July 2003

10 000

9 600

9 900

1 343 626

9 July 2003

9 950

9 700

9 700

664 135

10 July 2003

9 675

9 330

9 400

1 421 818

11 July 2003

9 575

9 360

9 456

856 481

14 July 2003

9 800

9 400

9 551

1 206 263

15 July 2003

9 900

9 275

9 275

1 234 498

16 July 2003

8 990

8 400

8 400

6 975 720

17 July 2003

8 690

8 475

8 580

4 410 245

18 July 2003

8 600

8 370

8 420

1 806 711

21 July 2003

8 699

8 381

8 699

2 390 159

22 July 2003

8 850

8 640

8 775

1 777 358

23 July 2003

8 900

8 650

8 900

2 146 532

24 July 2003

9 060

8 850

9 060

2 440 559

25 July 2003

9 400

9 070

9 270

1 053 470

Annexure 8

Competent person's report on Harmony and ARMgold

AN INDEPENDENT COMPETENT PERSON'S REPORT ON CERTAIN MINING ASSETS OF

HARMONY GOLD MINING COMPANY LIMITED

AND

AFRICAN RAINBOW MINERALS GOLD LIMITED

Prepared for:

HARMONY GOLD MINING COMPANY LIMITED AND AFRICAN RAINBOW MINERALS

GOLD LIMITED

Prepared by:

Steffen, Robertson and Kirsten

(South Africa) (Proprietary) Limited

SRK House, 265 Oxford Road

Illovo, Johannesburg

Gauteng Province

Republic of South Africa

Tel: +27-(0)11-441 1111

Fax: +27-(0)11-441 1139

July 2003

Contents

Section

Description

Page

1.

INTRODUCTION

1.1

Background

1.2

Requirement for the CPR

1.3

CPR Structure

1.4

Limitations and Reliance on Information

1.4.1

Disclaimers and Cautionary Statements for US Investors

1.5

Basis of Valuation of the Mining Assets

1.5.1

Technical-Economic Appraisal

1.5.2

Technical-Economic Models

1.5.3

LoM Plans

1.6

Qualifications of Consultant

2.

MINING ASSETS

2.1

Introduction

2.2

Companies and Operating Structures

2.2.1

Harmony

2.2.2

ARMgold

2.3

Overview of the Mining Assets

2.3.1

Free Gold Operations

2.3.2

Harmony Free State Operations

2.3.3

ARMgold Welkom Operations

2.3.4

West Wits Operations

2.3.5

Evander Operations

2.3.6

ARMgold Orkney Operations

2.3.7

Kalgold Operation

2.3.8

International Operations - Harmony Australian Operations

2.3.9

International Operations - Harmony Canadian Operations

2.4

Significant Exploration Properties

2.4.1

Harmony

2.5

Mining Authorisations and Mining Leases

2.5.1

South African Law: Current Status

2.5.2

South African Law: The Minerals and Petroleum Resources Development Act

2.5.3

South African Law: Prospecting Permits

2.5.4

South African Law: Mining Authorisations

2.5.5

Australian Law

2.5.6

Harmony: Current Status

2.5.7

ARMgold: Current Status

Section

Description

Page

3.

GEOLOGY

3.1

Introduction

3.2

Witwatersrand Basin Geology

3.2.1

Free State Goldfield

3.2.2

West Rand Goldfield

3.2.3

Far West Rand Goldfield

3.2.4

Evander Goldfield

3.2.5

Klerksdorp Goldfield

3.3

Deposit Geology

3.3.1

Free Gold Operations

3.3.2

Harmony Free State Operations

3.3.3

ARMgold Welkom Operations

3.3.4

West Wits Operations

3.3.5

Evander Operations

3.3.6

ARMgold Orkney Operations

3.3.7

Kalgold Operations

3.3.8

Harmony Australian Operations

3.3.9

Harmony Canadian Operations

3.3.10       Exploration Potential

4.

MINERAL RESOURCES AND MINERAL RESERVES

4.1

Introduction

4.2

SRK Review Procedures

4.3

Mineral Resource and Mineral Reserve Estimation Methodology

4.3.1

Quality and Quantity of Data

4.3.2

Block Definition

4.3.3

Grade and Tonnage Estimation

4.3.4

Classification

4.3.5

Selective Mining Units

4.3.6

Grade Control and Reconciliation

4.3.7

Reserve Estimation

4.4

International Operations

4.4.1

Mineral Resource and Mineral Reserve Estimation Methodology

4.4.2

Quality and Quantity of Data

4.4.3

Block Definition

4.4.4

Grade and Tonnage Estimation

4.4.5

Grade Control and Reconciliation

4.4.6

Reserve Estimation

4.5

SRK Mineral Resource and Mineral Reserve Statements

4.5.1

Free Gold Operations

4.5.2

Harmony Free State Operations

Section

Description

Page

4.5.3

ARMgold Welkom Operations

4.5.4

West Wits Operations

4.5.5

Evander Operations

4.5.6

ARMgold Orkney Operations

4.5.7

Kalgold Operation

4.5.8

Harmony Australia Operations

4.5.9

Harmony Canadian Operations

4.5.10      Harmony

4.5.11      ARMgold

4.6

Mineral Resource and Mineral Reserve Potential

5.

MINING

5.1

Introduction

5.2

Mine Planning

5.3

Overview of Mining Operations

5.3.1

Free Gold Operations

5.3.2

Harmony Free State Operations

5.3.3

ARMgold Welkom Operations

5.3.4

West Wits Operations

5.3.5

Evander Operations

5.3.6

ARMgold Orkney Operations

5.3.7

Kalgold Operation

5.3.8

Harmony Australian Operations

5.3.9

Harmony Canadian Operations

5.4

Contribution to LoM Production

6.

METALLURGY

6.1

Introduction

6.2

Processing Facilities

6.2.1

Free Gold Operations

6.2.2

Harmony Free State Operations

6.2.3

West Wits Operations

6.2.4

Evander Operations

6.2.5

Kalgold Operations

6.2.6

Harmony Australian Operations

6.3

Sampling, Analysis, Gold Accounting and Security

6.4

Plant Clean-Up

7.

TAILINGS

7.1

Introduction

7.2

Free Gold Operations

7.3

Harmony Free State Operations

Section

Description

Page

7.4

West Wits Operations

7.5

Evander Operations

7.6

Kalgold Operation

7.7

Harmony Australian Operations

7.8

Mining Assets - LoM Tailings Deposition Assessment

8.

ENGINEERING INFRASTRUCTURE AND CAPITAL PROJECTS

8.1

Introduction

8.2

Engineering Infrastructure of the Mining Assets

8.3

LoM Capital Expenditure Programmes

9.

HUMAN RESOURCES

9.1

Introduction

9.2

Legislation

9.3

Organisational Structures and Operational Management

9.4

Recruitment, Training, Productivity Initiatives and Remuneration Policies

9.5

Industrial Relations

9.6

Productivity Assumptions

9.7

Separation Liability

10.

HEALTH AND SAFETY

10.1

Introduction

10.2

Legislation

10.3

Statistics

10.4

Health and Safety Management

10.5

Future Considerations

11.

ENVIRONMENTAL

11.1

Introduction

11.2

South African Legislation and Compliance

11.2.1       Legislation and Environment

11.2.2       Compliance

11.3

Australian Legislation and Compliance

11.3.1       Harmony Australian Operations

11.3.2       Harmony Canadian Operations

11.4

Environmental Policy and Management

11.4.1       Harmony

11.4.2       ARMgold

11.5

Environmental Issues

11.5.1       Free Gold Operations

11.5.2       Harmony Free State Operations

11.5.3       ARMgold Welkom Operations

11.5.4       West Wits Operations

Section

Description

Page

11.5.5       Evander Operations

11.5.6       ARMgold Orkney Operations

11.5.7       Kalgold Operation

11.5.8       Harmony Australian Operations

11.5.9       Harmony Canadian Operations

11.6

Liabilities and Risks

12.

TECHNICAL-ECONOMIC INPUT PARAMETERS

12.1

Introduction

12.2

Basis of Valuation and Technical-Economic Parameters

12.3

Technical-Economic Parameters

12.3.1       Harmony

12.3.2       ARMgold

12.4

Special Factors

12.4.1       General Risks and Opportunities

12.4.2       Operational Specific Risks and Opportunities

13.

MINING ASSETS VALUATION

13.1

Introduction

13.2

Basis of Valuation of the Mining Assets

13.3

Limitations and Reliance on Information

13.4

Valuation Methodology

13.5

Post-Tax Pre-Finance Cash Flows

13.6

Net Present Values and Sensitivities

13.6.1       Free Gold Tax Entity

13.6.2       Joel Tax Entity

13.6.3       Harmony Free State Operations

13.6.4       ARMgold Welkom Operations

13.6.5       Randfontein Tax Entity

13.6.6       Evander Tax Entity

13.6.7       ARMgold Orkney Tax Entity

13.6.8       Kalgold Tax Entity

13.6.9       Mt. Magnet and Cue Tax Entity

13.6.10       South Kalgoorlie Tax Entity

13.6.11       Harmony

13.6.12       ARMgold

14.

SUMMARY EQUITY VALUATION AND CONCLUDING REMARKS

14.1

Summary Equity Valuation

14.2

Concluding Remarks

GLOSSARY, ABBREVIATIONS AND UNITS

APPENDIX 1 -  Other investments

Table of tables

Table No.

Description

Page

Table 1.1

Base Case Macro-Economic Parameters

Table 2.1

Harmony: company development

Table 2.2

Harmony: salient historical and forecast operating statistics

Table 2.3

ARMgold: company development

Table 2.4

ARMgold: salient historical and forecast operating statistics

Table 2.5

Free Gold operations: salient operating statistics

Table 2.6

Free Gold Operations: salient historical and forecast operating statistics

Table 2.7

Harmony Free State Operations: salient operating statistics

Table 2.8

Harmony Free State Operations: salient historical and forecast operating statistics

Table 2.9

ARMgold Welkom Operations: salient operating statistics

Table 2.10

ARMgold Welkom Operations: salient historical and forecast operating statistics

Table 2.11

West Wits Operations: salient operating statistics

Table 2.12

West Wits Operations: salient historical and forecast operating statistics

Table 2.13

Evander Operations: salient operating statistics

Table 2.14

Evander Operations: salient historical and forecast operating statistics

Table 2.15

ARMgold Orkney: salient operating statistics

Table 2.16

ARMgold Orkney: salient historical and forecast operating statistics

Table 2.17

Kalgold Operation: salient operating statistics

Table 2.18

Kalgold Operation: salient historical and forecast operating statistics

Table 2.19

Harmony Australian Operation: salient operating statistics

Table 2.20

Harmony Australian Operation: salient historical and forecast operating statistics

Table 2.21

Harmony Canadian Operation: salient historical and forecast operating statistics

Table 2.22

Harmony  South African Operations land holdings

Table 2.23

Harmony  Australian Operations

Table 4.1

Free Gold Operations: assumed modifying factors

Table 4.2

Harmony Free State Operations: assumed modifying factors

Table 4.3

ARMgold Welkom Operations: assumed modifying factors

Table 4.4

West Wits Operations: assumed modifying factors

Table 4.5

Evander Operations: assumed modifying factors

Table 4.6

ARMgold Orkney Operations: historical and assumed modifying factors

Table 4.7

Free Gold Operations: Mineral Resource and Mineral Reserve statement

Table 4.8

Free Gold Operations: Mineral Resource, Mineral Reserve and LoM plan sensitivity

Table 4.9

Harmony Free State Operations: Mineral Resource and Mineral Reserve statement

Table 4.10

Harmony Free State Operations: Mineral Resource, Mineral Reserve and LoM plan sensitivity

Table 4.11

ARMgold Welkom Operations: Mineral Resource and Mineral Reserve statement

Table 4.12

ARMgold Welkom Operations: Mineral Resource, Mineral Reserve and LoM plan sensitivity

Table 4.13

West Wits Operations: Mineral Resource and Mineral Reserve statement

Table 4.14

West Wits Operations: Mineral Resource, Mineral Reserve and LoM plan sensitivity

Table 4.15

Evander Operations: Mineral Resource and Mineral Reserve statement

Table No.

Description

Page

Table 4.16

Evander Operations: Mineral Resource, Mineral Reserve and LoM plan sensitivity

Table 4.17

ARMgold Orkney Operations: Mineral Resource and Mineral Reserve statement

Table 4.18

ARMgold Orkney Operations: Mineral Resource, Mineral Reserve and LoM plan sensitivity

Table 4.19

Kalgold Operations: Mineral Resource and Mineral Reserve statement

Table 4.20

Harmony Australia Operations - Mt. Magnet & Cue: Mineral Resource and Mineral Reserve
statement

Table 4.21

Harmony Australia Operations - South Kalgoorlie: Mineral Resource and Mineral Reserve
statement

Table 4.22

Harmony Canadian Operations: Mineral Resource and Mineral Reserve statement

Table 4.23

Harmony: Mineral Resource and Mineral Reserve statement

Table 4.24

ARMgold: Mineral Resource and Mineral Reserve statement

Table 5.1

Mining Assets: contribution to LoM plan production

Table 6.1

Mining Assets: clean-up gold estimates

Table 7.1

Mining Assets: LoM Tailings Storage Facility Assessments

Table 8.1

Mining Assets: estimated capital expenditures

Table 9.1

Mining Assets: historical and 2004 forecast

Table 9.2

Productivity: Historical and assumed productivity initiatives

Table 9.3

Mining Assets: separation costs