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As filed with the Securities and Exchange Commission on December 17, 2003
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
 
Form 20-F
ANNUAL REPORT PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934,
for the fiscal year ended June 30, 2003
Commission File Number: 001-31545
Harmony Gold Mining Company Limited
(Exact name of registrant as specified in its charter)
Republic of South Africa
(Jurisdiction of incorporation or organization)
Suite No. 1
Private Bag X1
Melrose Arch, 2076
South Africa
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act: None
Securities registered or to be registered pursuant to Section 12(g) of the Act:
Ordinary shares, with nominal value Rand 50 cents per share*
(Title of Class)
American Depositary Shares (as evidenced by American Depositary Receipts),
each representing one ordinary share
(Title of Class)
Warrants, each to purchase one ordinary share
(Title of Class)
* Not for trading, but only in connection with the registration of American Depositary Shares,
pursuant to the requirements of the Securities and Exchange Commission.
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None
The number of outstanding shares of each of the issuer's classes of capital or common stock as of the close of
the last full fiscal year covered by this Annual Report was:
184,854,115 ordinary shares, with nominal value of Rand 50 cents per share
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file such reports) and (2) has been subject to such filing requirements for the
past 90 days:
Yes   X  
No  _
 
Indicate by check mark which financial statement item the registrant has elected to follow:
Item 17        Item 18      X 
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TABLE OF CONTENTS
PART I 1
Item 1 Identity of Directors, Senior Management and Advisers 1
Item 2 Offer Statistics and Expected Timetable 1
Item 3 Key Information 1
SELECTED FINANCIAL DATA 1
EXCHANGE RATES 3
CAPITALIZATION AND INDEBTEDNESS 3
REASONS FOR THE OFFER AND USE OF PROCEEDS 3
RISK FACTORS 3
Item 4 Information on the Company 16
BUSINESS 16
Introduction 16
History 17
Strategy 23
Hedge Policy 27
Description of Mining Business 28
Harmony's Management Structure 31
Exploration 32
Capital Expenditures 35
Description of Property 36
Geology 39
Reserves 39
Harmony's Mining Operations 41
REGULATION 96
Mineral Rights 96
Environmental Matters 99
Health and Safety Matters 101
Item 5 Operating and Financial Review and Prospects 103
OVERVIEW 103
CRITICAL ACCOUNTING POLICIES 105
RESULTS OF OPERATIONS 113
Years ended June 30, 2003 and 2002 113
Years ended June 30, 2002 and 2001 121
LIQUIDITY AND CAPITAL RESOURCES 128
Cash Resources 129
Sales of Equity Securities 133
Contractual Obligations and Commercial Commitments 133
Trend Information 136
Working Capital and Anticipated Financing Needs 137
OTHER FINANCIAL INFORMATION 137
Export Sales 137
Item 6 Directors, Senior Management and Employees 138
DIRECTORS AND SENIOR MANAGEMENT 138
BOARD PRACTICES 147
COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT 150
EMPLOYEES 153
General 153
Unionized Labor 154
Share Option Scheme 156
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Share Purchase Scheme 157
Item 7 Major Shareholders and Related Party Transactions 157
MAJOR SHAREHOLDERS 157
RELATED PARTY TRANSACTIONS 159
INTERESTS OF EXPERTS AND COUNSEL 161
Item 8 Financial Information 161
CONSOLIDATED STATEMENTS 161
OTHER FINANCIAL INFORMATION 161
Export Sales 161
Legal Proceedings 161
Dividends and Dividend Policy 162
SIGNIFICANT CHANGES 163
Item 9 The Offer and Listing 165
MARKETS 165
OFFERING AND LISTING DETAILS 165
THE JSE SECURITIES EXCHANGE SOUTH AFRICA 166
PLAN OF DISTRIBUTION 168
SELLING SHAREHOLDERS 168
DILUTION 168
EXPENSES OF THE ISSUE 168
Item 10 Additional Information 169
SHARE CAPITAL 169
MEMORANDUM AND ARTICLES OF ASSOCIATION 169
General 169
Objects and Purposes 169
Directors 170
Share Capital 172
Variation of Rights 177
Changes in Capital or Objects and Powers of Harmony 177
Meetings of Shareholders 178
Title to Shares 179
Non-South African Shareholders 180
Disclosure of Interest in Shares 180
Changes in Control 180
Register of Members 180
Annual Report and Accounts 181
MATERIAL CONTRACTS 181
EXCHANGE CONTROLS 181
CERTAIN SOUTH AFRICAN TAX CONSIDERATIONS 183
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS 185
DIVIDENDS AND PAYING AGENTS 187
STATEMENTS BY EXPERTS 187
DOCUMENTS ON DISPLAY 187
SUBSIDIARY INFORMATION 188
Item 11 Quantitative and Qualitative Disclosures About Market Risk 189
Item 12 Description of Securities Other than Equity Securities 197
GLOSSARY OF MINING TERMS 198
PART II 206
Item 13 Defaults, Dividend Arrearages and Delinquencies 206
Item 14 Material Modifications to the Rights of Securityholders and Use of Proceeds 206
MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS 206
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USE OF PROCEEDS 207
Item 15 Controls and Procedures 207
Item 16 [Reserved] 207
Item 16A Audit Committee Financial Expert 207
Item 16B Code of Ethics 208
PART III 209
Item 17 Financial Statements 209
Item 18 Financial Statements 209
Item 19 Exhibits 210
SIGNATURES 213
CERTIFICATIONS 214
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Defined terms
Harmony Gold Mining Company Limited is a corporation organized under the
laws of the Republic of South Africa. As used in this Annual Report on Form 20-F, or this
annual report, unless the context otherwise requires, the term "Harmony" refers to Harmony
Gold Mining Company Limited; the term "South Africa" refers to the Republic of South Africa;
the terms "we," "us" and "our" refer to Harmony and, as applicable, its direct and indirect
subsidiaries as a group; the terms "South African Government" and "Government" refer to the
government of South Africa and, where the context requires, include the South African state.
In this annual report, references to "R", "Rand",  and "c", "cents" are to the South
African Rand, the lawful currency of South Africa, "A$" refers to Australian dollars, "C$" refers
to Canadian dollars, "GBP" refers to British Pounds Sterling and references to "$" and "U.S.
dollars" are to United States dollars.
This annual report contains information concerning the gold reserves of Harmony.
While this annual report has been prepared in accordance with the definitions contained in
Securities and Exchange Commission Guide 7, it is based on assumptions which may prove to be
incorrect. See "Item 3. Key Information--Risk Factors--Harmony's gold reserve figures may
yield less gold under actual production conditions than Harmony currently estimates."
This annual report contains descriptions of gold mining and the gold mining
industry, including descriptions of geological formations and mining processes. We have
explained some of these terms in the glossary included in this annual report. This glossary may
assist you in understanding these terms.
Forward-looking statements
This annual report contains forward-looking statements within the meaning of the
United States Private Securities Litigation Reform Act of 1995 with respect to Harmony's
financial condition, results of operations, business strategies, operating efficiencies, competitive
positions, growth opportunities for existing services, plans and objectives of management,
markets for stock and other matters. In particular, among other statements, certain statements in
"Item 4. Information on the Company," "Item 5. Operating and Financial Review and
Prospects" and "Item 11. Quantitative and Qualitative Disclosures About Market Risk" are
forward-looking in nature. Statements in this annual report that are not historical facts are
"forward-looking statements" for the purpose of the safe harbor provided by Section 21E of the
Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as
amended.
These forward-looking statements, including, among others, those relating to the
future business prospects, revenues and income of Harmony, wherever they may occur in this
annual report and the exhibits to this annual report, are necessarily estimates reflecting the best
judgment of the senior management of Harmony and involve a number of risks and uncertainties
that could cause actual results to differ materially from those suggested by the forward-looking
statements. As a consequence, these forward-looking statements should be considered in light of
various important factors, including those set forth in this annual report. Important factors that
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could cause actual results to differ materially from estimates or projections contained in the
forward-looking statements include, without limitation:
  • overall economic and business conditions in South Africa and elsewhere;
  • the ability to achieve anticipated efficiencies and other cost savings in
connection with past and future acquisitions;
  • decreases in the market price of gold;
  • the occurrence of hazards associated with underground and surface gold
mining;
  • the occurrence of labor disruptions;
  • availability, terms and deployment of capital;
  • changes in government regulation, particularly environmental regulation;
  • fluctuations in exchange rates, currency devaluations and other
macroeconomic monetary policies; and
  • political instability in South Africa and regionally.
Harmony undertakes no obligation to update publicly or release any revisions to
these forward-looking statements to reflect events or circumstances after the date of this annual
report or to reflect the occurrence of unanticipated events.
Presentation of financial information
Harmony is a South African company and the majority of its operations are
located there. Accordingly, its books of account are maintained in South African Rand and its
annual and interim financial statements are prepared in accordance with South African
Statements of Generally Accepted Accounting Practice, or S.A. GAAP, as prescribed by law and
are based on International Financial Reporting Standards. Harmony also prepares annual
financial statements in accordance with generally accepted accounting principles in the United
States which are translated into U.S. dollars. The financial information included in this annual
report has been prepared in accordance with United States Generally Accepted Accounting
Principles, or U.S. GAAP, and is presented in U.S. dollars. Unless otherwise stated, balance
sheet item amounts are translated from Rand to U.S. dollars at the exchange rate prevailing on
the last business day of the period (Rand 7.51 per $1.00 as at June 30, 2003), except for specific
items included within shareholders' equity that are converted at the exchange rate prevailing on
the date the transaction was entered into, and income statement item amounts are translated from
Rand to U.S. dollars at the average exchange rate for the period (Rand 9.13 per $1.00 for fiscal
2003).
For the convenience of the reader, certain information in this annual report
presented in Rand, A$, C$ and has been translated into U.S. dollars. By including convenience
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currency translations in this annual report, we are not representing that the Rand, A$, C$ and
amounts actually represent the U.S. or Australian dollar amounts, as the case may be, shown or
that these amounts could be converted in U.S. or Australian dollars, as the case may be, at the
rates indicated. Unless otherwise stated, the conversion rate for translations from Rand amounts
into U.S. dollar amounts is Rand 6.52 per $1.00, which was the noon buying rate on December
10, 2003.
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PART I
Item 1. Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2. Offer Statistics and Expected Timetable
Not applicable.
Item 3. Key Information
SELECTED FINANCIAL DATA
The selected consolidated financial data below should be read in conjunction
with, and are qualified in their entirety by reference to, our consolidated financial statements
and the notes thereto included elsewhere in this annual report.
Selected Historical Consolidated Financial Data
The following selected historical consolidated financial data for the last five fiscal
years has been extracted from the more detailed information and financial statements, including
Harmony's audited consolidated financial statements for each of the years in the three years
ended June 30, 2003 and at June 30, 2002 and 2001 and the related notes, which appear
elsewhere in this annual report. The historical consolidated financial data at June 30, 1999, 2000
and 2001, and for each of the years in the two years ended June 30, 1999 and 2000, has been
extracted from Harmony's audited consolidated financial statements not included in this annual
report.
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The audited financial information included in this annual report has been prepared in accordance with U.S. GAAP.
Fiscal year ended June 30,
2003                     2002
2001
2000                    1999
(in $ thousands, except per share amounts)
Income statement data
Revenues
..............................................................                      782,945                 696,840                  607,220                  490,651               381,412
Operating income ..................................................
182,046
206,375
88,424
72,971
  64,878
Equity income of joint venture ...............................
52,843
13,176
-
-
-
Equity income/(loss) of associate companies........
(1,233)
(473)
-
1,401
Income before taxes and minority interests ..........
97,515
103,659
29,804
73,489
30,199
Minority interests ...................................................
(468)
(1,575)
(349)
(2,910)
-
Income/ (loss) before cumulative effect of
change
in
accounting
principle.........................                       71,792                  87,716                    14,830                    57,030                27,908
Cumulative effect of change in accounting
principle, net of tax .........................................
14,770
-
(5,822)
-
-
Net
income
............................................................                          86,562                 87,716                      9,008                    57,030                27,908
Basic earnings per share ($) before cumulative
effect of change in accounting principle ..........
0.40
0.57
0.15
0.68
0.42
Basic earnings per share ($) .................................
0.49
0.57
0.09
0.68
0.42
Diluted earnings per share before cumulative
effect of change in accounting principle ..........
0.39
0.53
0.14
0.67
0.41
Diluted earnings per share ..................................
0.47
0.53
0.09
0.67
0.41
Weighted average number of shares used in
the computation of basic earnings per share ..
177,954,245
153,509,862
102,156,205
83,593,424
66,843,932
Weighted average number of shares used in the
computation of diluted earnings per share .......
182,721,629
165,217,088
105,504,328
85,590,876
68,070,172
Cash dividends per share ($).................................
0.57
0.07
0.16
0.19
0.18
Cash dividends per share (R) ...............................
5.50
0.75
1.20
1.20
1.10
Other financial data
Cash dividends per share ($)
1
...............................                               0.20                       0.41
-
-
-
Cash dividends per share (R)
1
............................                               1.50                       4.25
-
-
-
Cash cost per ounce of gold ($/oz)
2
.....................                                253                       196                         234                       245                      239
1
Reflects dividends related to fiscal 2003 and 2002 that were declared on August 1, 2003 and August 2, 2002, respectively.
2
Harmony has calculated cash costs per ounce by dividing total cash costs, as determined using the Gold Institute industry standard, by gold ounces
sold for all periods presented. The Gold Institute is a non-profit international association of miners, refiners, bullion suppliers and manufacturers of
gold products that has developed a uniform format for reporting production costs on a per ounce basis. The standard was first adopted in 1996 and
was revised in November 1999. Cash costs, as defined in the Gold Institute standard, include mine production costs, transport and refinery costs,
general and administrative costs, costs associated with movements in production inventories and ore stockpiles, costs associated with transfers to
deferred stripping and costs associated with royalties. Cash costs have been calculated on a consistent basis for all periods presented. Changes in
cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and the U.S.
dollar. Cash costs per ounce is not a U.S. GAAP measure. Cash costs per ounce should not be considered by investors in isolation or as an
alternative to net income, income before tax, operating cash flows or any other measure of financial performance presented. While the Gold Institute
has provided a definition for the calculation of cash costs per ounce, the calculation of cash costs per ounce may vary from company to company
and may not be comparable to other similarly titled measures of other companies. However, Harmony believes that cash costs per ounce is a useful
indicator to investors and management of a mining company's performance as it provides (1) an indication of a company's profitability and efficiency,
(2) the trends in costs as the company's operations mature, (3) a measure of a company's gross margin per ounce, by comparison of cash costs per
ounce to the spot price of gold and (4) an internal benchmark of performance to allow for comparison against other companies.
At June 30,
2003                     2002                      2001                      2000                     1999
(in $ thousands)
Balance sheet data
Cash and cash equivalents....................................
189,040
90,223
144,096
77,942
45,318
Short-term investments .........................................
-
-
-
-
10,744
Other current assets .............................................
146,709
109,397
136,794
59,582
32,071
Property, plant and equipment - net ......................
806,799
812,753
667,113
557,725
347,036
Intangible assets.....................................................
314,793
-
-
-
-
Restricted cash......................................................
-
-
-
7,310
-
Investments in associates .....................................
63,782
42,791
-
-
-
Investment in joint venture ....................................
272,754
102,578
-
-
-
Other long-term assets .........................................
89,183
137,399
81,822
69,629
9,244
Total assets ...........................................................
1,883,060
1,295,141
1,029,825
772,188
444,413
Current
liabilities.....................................................                      173,890                 138,677                 152,886                 150,148                   70,583
Provision for environmental rehabilitation .............
62,977
63,125
53,136
52,525
33,811
Deferred income and mining taxes .......................
209,628
99,789
47,050
48,686
28,442
Provision for post-retirement benefits ...................
1,017
737
1,002
3,709
5,793
Deferred financial liability ......................................
37,228
87,226
49,374
40,174
-
Long-term loans ....................................................
301,572
152,461
151,466
46,635
14,024
Preference shares..................................................
-
-
681
-
-
Minority interest......................................................
18,408
-
331
-
-
Shareholders' equity...............................................
1,078,340                 753,126                573,899                  430,311                 291,760
Total liabilities and shareholders' equity.................
1,883,060
1,295,141
1,029,825
772,188
444,413
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EXCHANGE RATES
Unless otherwise stated, balance sheet item amounts are translated from Rand to
U.S. dollars at the exchange rate prevailing on the last business day of the period (Rand 7.51 per
$1.00 as at June 30, 2003), except for specific items included within shareholders' equity that are
converted at the exchange rate prevailing on the date the transaction was entered into, and
income statement item amounts are translated from Rand to U.S. dollars at the average exchange
rate for the period (Rand 9.13 per $1.00 for fiscal 2003).
As of December 10, 2003, the noon buying rate per $1.00 was Rand 6.52.
The following table sets forth, for the past five fiscal years, the average and period
end noon buying rates in New York City for cable transfers in Rand and, for the past six months,
the high and low noon buying rates in New York City for cable transfers in Rand, in each case,
as certified for customs purposes by the Federal Reserve Bank of New York for Rand expressed
in Rand per $1.00.
Fiscal year ended June 30,
Average
1
Period
End
1999 ............................................................................                                  06.04                                6.04
2000 ............................................................................                                    6.35                                6.79
2001 ............................................................................                                    7.61                                8.04
2002 ............................................................................
   10.20                              10.39
2003 ............................................................................                                    9.13                                7.51
Month of                                                                                                       High                              Low
July 2003 ....................................................................                                    7.80                               7.36
August 2003................................................................                                    7.51                               7.25
September 2003 ..........................................................                                   7.55                               6.92
October 2003 ..............................................................                                    7.20                               6.85
November 2003 ..........................................................                                     6.99                              6.37
December 2003 (through December 10, 2003) ..........
6.52                               6.26
_____________________
1
The average of the noon buying rates on the last day of each full month during the relevant period.
CAPITALIZATION AND INDEBTEDNESS
Not applicable.
REASONS FOR THE OFFER AND USE OF PROCEEDS
Not applicable.
RISK FACTORS
In addition to the other information included in this annual report and the exhibits to this
annual report, you should carefully consider the following factors related to an investment in Harmony's
ordinary shares, ADSs and warrants. There may be additional risks that Harmony does not currently
know of or that Harmony currently deems immaterial based on information available to it. Harmony's
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business, financial condition or results of operations could be materially adversely affected by any of
these risks, resulting in a decline in the trading price of Harmony's ordinary shares (or ADSs) and
Harmony's warrants.
Because most of Harmony's production costs are in Rand, while gold is generally sold in U.S.
dollars, Harmony's financial condition could be materially harmed by an appreciation in the
value of the Rand.
Gold is generally sold throughout the world in U.S. dollars, but most of
Harmony's operating costs are incurred in Rand. As a result, any significant and sustained
appreciation of the Rand against the U.S. dollar will serve materially to reduce Harmony's Rand
revenues and overall net income as a result of lower rand revenues.
The Rand appreciated significantly against the U.S. dollar during most of calendar
2003 following significant depreciation against the U.S. dollar since 1997. The Rand's
depreciation was particularly pronounced in calendar 2001 and during the first quarter of
calendar 2002. If the appreciation experienced during this recent period continues, it will have a
material adverse impact on Harmony's operating results. In December 2001, in response to
significant depreciation in the Rand and to protect itself against possible appreciation of the Rand
against the U.S. dollar, Harmony entered into Rand-U.S. dollar currency forward exchange
contracts intended to cover estimated revenues from the Free State operations' planned
production for calendar 2002. Harmony fixed the Rand-U.S. dollar exchange rate for a total of
$180 million at an average exchange rate of Rand 11.20 per U.S. dollar. These forward
exchange contracts expired on December 31, 2002 and were not renewed. Harmony has not
entered into any such forward exchange contracts since then. See "Item 11. Quantitative and
Qualitative Disclosures About Market Risk Foreign Currency Sensitivity."
The profitability of Harmony's operations, and the cash flows generated by those operations,
are affected by changes in the market price for gold, which in the past has fluctuated widely.
Substantially all of Harmony's revenues come from the sale of gold. Historically,
the market price for gold has fluctuated widely and has been affected by numerous factors over
which Harmony has no control, including:
  • the demand for gold for industrial uses and for use in jewelry;
  • international or regional political and economic trends;
  • the strength of the U.S. dollar (the currency in which gold prices generally
    are quoted) and of other currencies;
  • financial market expectations regarding the rate of inflation;
  • interest rates;
  • speculative activities;
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  • actual or expected purchases and sales of gold bullion holdings by central
    banks or other large gold bullion holders or dealers;
  • forward sales by gold producers; and
  • the production and cost levels for gold in major gold-producing nations,
    such as South Africa.
In addition, the current demand for and supply of gold affects the price of gold,
but not necessarily in the same manner as current demand and supply affect the prices of other
commodities. Historically, gold has tended to retain its value in relative terms against basic
goods in times of inflation and monetary crisis. As a result, central banks, financial institutions
and individuals hold large amounts of gold as a store of value and production in any given year
constitutes a very small portion of the total potential supply of gold. Since the potential supply
of gold is large relative to mine production in any given year, normal variations in current
production will not necessarily have a significant effect on the supply of gold or its price.
The volatility of gold prices is illustrated in the following table, which shows the
annual high, low and average of the afternoon London Bullion Market fixing price of gold in
U.S. dollars for the past ten years:
Price per Ounce
Year  
($)
Average
1993..................................................................
406
326
360
1994..................................................................
396
370
384
1995..................................................................
396
372
384
1996..................................................................
415
367
388
1997..................................................................
367
283
331
1998..................................................................
313
273
294
1999..................................................................
326
253
279
2000..................................................................
313
264
282
2001 .................................................................
293
256
271
2002 .................................................................
332
278
309
2003 ...............(through December 10, 2003)
412
322
361
High                                      Low
On June 30, 2003, the afternoon fixing price of gold on the London Bullion
Market was $346 per ounce. On December 10, 2003, the afternoon fixing price of gold on the
London Bullion Market was $410.00 per ounce.
While the aggregate effect of these factors is impossible for Harmony to predict,
if gold prices should fall below Harmony's cost of production and remain at such levels for any
sustained period, Harmony may experience losses and may be forced to curtail or suspend some
or all of its operations. In addition, Harmony would also have to assess the economic impact of
low gold prices on its ability to recover any losses it may incur during that period and on its
ability to maintain adequate reserves. Harmony's average cash cost of production per ounce of
gold sold was approximately $253 in fiscal 2003, $196 in fiscal 2002 and $234 in fiscal 2001.
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Actual or expected sales of gold by central banks have had a significant impact on the price of
gold.
Over the past several years, one of the most important factors influencing the gold
price has been actual or expected sales of gold reserves by central banks. Since 1997, a number
of central banks, including the central banks of Australia, Switzerland and the United Kingdom,
have announced plans to sell significant gold reserves, and, more recently, the International
Monetary Fund has discussed selling significant gold reserves to fund international debt relief.
The gold price has declined following each such announcement and sale, culminating in a drop
in the gold price to its lowest level in at least twenty years in July 1999, after the Bank of
England completed the first part of its announced sale of more than half of its gold reserves. In
September 1999, the central banks of fifteen European countries agreed to limit sales of gold
reserves for the next five years to sales announced at that time and to limit gold lending and
derivative operations for five years. The announcement of this agreement led to an immediate
increase in the price of gold, although the gold price was subsequently subject to downward
pressure around the time of the periodic auctions held by the Bank of England. The agreement
by the central banks is voluntary and there are a number of central banks with significant gold
reserves that are not subject to the agreement. Any future sales or publicly announced proposed
sales by central banks of their gold reserves are likely to result in a decrease in the price of gold.
Because Harmony does not use commodity or derivative instruments to protect against low
gold prices with respect to most of its production, Harmony is exposed to the impact of any
significant drop in the gold price.
As a general rule Harmony sells its gold production at market prices. Recently,
there have been two instances in which Harmony has made use of gold price hedges: Harmony's
forward sale of a portion of the production at Bissett at a set gold price and, more recently,
put options relating to 1 million ounces of Harmony's production at Elandskraal. Both of these
hedges were affected by Harmony in order to secure loan facilities and have since been closed
out. A significant proportion of the production at Randfontein was already hedged when
acquired by Harmony, and these hedges have since been closed out. In addition, a substantial
proportion of the production at each of New Hampton and Hill 50 was already hedged when
acquired by Harmony and remains hedged. During fiscal 2003 a significant portion of these
inherited hedge agreements were closed out, at a cost of US$ 8.6 million. The outstanding
agreements are now treated as speculative and the mark-to-market movement will be reflected in
the income statement. 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.
See "Item 4. Information on the Company--Business--Hedge Policy" and "Item 11.
Quantitative and Qualitative Disclosures About Market Risk--Commodity Price Sensitivity." In
general, hedging in this manner reduces the risk of exposure to volatility in the gold price.
Because Harmony's hedging does not generally establish a future price for hedged gold,
Harmony can realize the positive impact of any increase in the gold price. However, this also
means that Harmony is not protected against decreases in the gold price and if the gold price
decreases significantly Harmony runs the risk of reduced revenues in respect of gold production
that is not hedged.
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Harmony's gold reserve figures may yield less gold under actual production conditions than
Harmony currently estimates.
The ore reserve estimates contained in this annual report are estimates of the mill
delivered quantity and grade of gold in Harmony's deposits and stockpiles. They represent the
amount of gold that Harmony believes can be mined, processed and sold at prices sufficient to
recover Harmony's estimated future total costs of production, remaining investment and
anticipated additional capital expenditures. Harmony's ore reserves are estimated based upon
many factors, including:
  • the results of exploratory drilling and an ongoing sampling of the
    orebodies;
  • past experience with mining properties; and
  • the experience of the person making the reserve estimates.
The ore reserve estimates contained in this annual report are calculated based on
estimates of future production costs, future gold prices and, because Harmony's gold sales are
primarily in U.S. dollars and Harmony incurs most of its production costs in Rand, the exchange
rate between the Rand and the U.S. dollar and, in the case of Harmony's Australian operations,
the Australian dollar. As a result, the reserve estimates contained in this annual report should not
be interpreted as assurances of the economic life of Harmony's gold deposits or the profitability
of its future operations.
Since ore reserves are only estimations which Harmony makes based on the above
factors, in the future Harmony may need to revise its estimates. In particular, if Harmony's
production costs increase (whether in Rand terms, in Australian dollar terms, or in relative terms
due to appreciation of the Rand or the Australian dollar against the U.S. dollar) or if gold prices
decrease, a portion of Harmony's ore reserves may become uneconomical to recover. This will
force Harmony to lower its estimated reserves.
For example, following the acquisition of New Hampton, the Big Bell
underground mine yielded disappointing results, including lower than expected grade. As a
result, in the quarter ended June 30, 2002, Harmony reduced grade estimates for Big Bell's
future production, which has led to a substantial reduction in proven and probable reserves
attributable to the Big Bell mine. For the 2003 financial year, no reserves were declared for the
Big Bell mine as no economical ore was available, and the mine was in the last phases of closure.
See "Item 4. Information on the Company--Business--Harmony's Mining Operations--
Australian Operations."
Harmony's strategy depends on its ability to make additional acquisitions.
In order to increase Harmony's gold production and to acquire additional reserves
so that Harmony can maintain and grow its gold production beyond the life of its current ore
reserves, Harmony is exploring opportunities to expand by acquiring selected gold producers and
mining operations. However, Harmony cannot guarantee that:
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  • Harmony will be able to identify appropriate acquisition candidates or
    negotiate acquisitions on favorable terms;
  • Harmony will be able to obtain the financing necessary to complete future
    acquisitions; or
  • the issuance of Harmony's ordinary shares or other securities in
    connection with any future acquisition will not result in a substantial
    dilution in ownership interests of holders of Harmony's ordinary shares.
As at June 30, 2003, Harmony's mining operations reported total proven and
probable reserves of approximately 50.0 million ounces, which includes Abelle and ounces
attributable to Harmony's 50% interest in the Free Gold Company. If Harmony is unable to
acquire additional gold producers or generate additional proven and probable reserves at its
existing operations or through Harmony's exploration activities, Harmony cannot be certain that
it will be able to expand or replace its current production with new reserves in an amount
sufficient to sustain the life of its mining operations beyond the current life of its reserves.
To maintain gold production beyond the expected lives of Harmony's existing mines or to
increase production materially above projected levels, Harmony will need to access additional
reserves through development or discovery.
Harmony's Australian operations have limited proven and probable reserves.
Exploration and discovery will be necessary to maintain current gold production levels at these
operations in the future. Exploration for gold and other precious metals is speculative in nature,
is frequently unsuccessful and involves many risks, including risks related to:
  • locating orebodies;
  • identifying the metallurgical properties of orebodies;
  • estimating the economic feasibility of mining orebodies;
  • developing appropriate metallurgical processes;
  • obtaining necessary governmental permits; and
  • constructing mining and processing facilities at any site chosen for
    mining.
Harmony's exploration efforts might not result in the discovery of mineralization
and any mineralization discovered might not result in an increase in Harmony's proven and
probable reserves.
To access additional reserves in South Africa, Harmony will need to successfully
complete development projects, including extending existing mines and, possibly, developing
new mines. Harmony typically uses feasibility studies to determine whether or not to undertake
significant development projects. Feasibility studies include estimates of expected or anticipated
economic returns, which are based on assumptions about:
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  • future gold and other metal prices;
  • anticipated tonnage, grades and metallurgical characteristics of ore to be
    mined and processed;
  • anticipated recovery rates of gold and other metals from the ore; and
  • anticipated total costs of the project, including capital expenditure and
    cash operating costs.
Actual costs, production and economic returns may differ significantly from those
anticipated by Harmony's feasibility studies. Moreover, it can take a number of years from the
initial feasibility studies until development is completed. During that time, the economic
feasibility of production may change. In addition, there are a number of uncertainties inherent in
the development and construction of an extension to an existing mine or any new mine,
including:
  • the availability and timing of necessary environmental and other
    governmental permits;
  • the timing and cost necessary to construct mining and processing facilities,
    which can be considerable;
  • the availability and cost of skilled labor, power, water and other materials;
  • the accessibility of transportation and other infrastructure, particularly in
    remote locations;
  • the availability and cost of smelting and refining arrangements; and
  • the availability of funds to finance construction and development
    activities.
Accordingly, there is no assurance that any future development projects will
extend the life of Harmony's existing mining operations or result in any new commercial mining
operations.
Harmony may experience problems in managing new acquisitions and integrating them with
its existing operations.
Acquiring new gold mining operations involves a number of risks including:
  • difficulties in assimilating the operations of the acquired business;
  • difficulties in maintaining the financial and strategic focus of Harmony
    while integrating the acquired business;
  • problems in implementing uniform standards, controls, procedures and
    policies;
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  • increasing pressures on existing management to oversee a rapidly
    expanding company; and
  • to the extent Harmony acquires mining operations outside South Africa,
    encountering difficulties relating to operating in countries in which
    Harmony has not previously operated.
Any difficulties or time delays in achieving successful integration of new acquisitions could have
a material adverse effect on Harmony's business, operating results, financial condition and stock
price. For example, following the acquisition of New Hampton, Harmony has encountered
higher than expected costs and disappointing results from the Big Bell operations. See "Item 4.
Information on the Company--Business--Harmony's Mining Operations--Australian
Operations." Harmony may encounter similar difficulties or other problems in integrating other
acquisitions.
Due to the nature of mining and the type of gold mines it operates, Harmony faces a material
risk of liability, delays and increased production costs from environmental and industrial
accidents and pollution.
The business of gold mining by its nature involves significant risks and hazards,
including environmental hazards and industrial accidents. In particular, hazards associated with
underground mining include:
  • rock bursts;
  • seismic events;
  • underground fires;
  • cave-ins or falls of ground;
  • discharges of gases and toxic chemicals;
  • release of radioactive hazards;
  • flooding;
  • accidents; and
  • other conditions resulting from drilling, blasting and removing and
    processing material from a deep level mine.
Hazards associated with open cast mining (also known as open pit mining) include:
  • flooding of the open pit;
  • collapse of the open pit walls;
  • accidents associated with the operation of large open pit mining and rock
    transportation equipment; and
  • accidents associated with the preparation and ignition of large scale open
    pit blasting operations.
Hazards associated with waste rock mining include:
  • accidents associated with operating a waste dump and rock transportation;
    and
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  • production disruptions due to weather.

Harmony is at risk of experiencing any and all of these environmental or other
industrial hazards. The occurrence of any of these hazards could delay production, increase
production costs and result in liability to Harmony.
Harmony's insurance coverage may prove inadequate to satisfy future claims against it.
Harmony has third party liability coverage for most potential liabilities, including
environmental liabilities. While Harmony believes that its current insurance coverage for the
hazards described above is adequate and consistent with industry practice, Harmony may
become subject to liability for pollution or other hazards against which it has not insured or
cannot insure, including those in respect of past mining activities. Further, Harmony maintains
and intends to continue to maintain, property and liability insurance consistent with industry
practice, but such insurance contains exclusions and limitations on coverage. In addition, there
can be no assurance that insurance will continue to be available at economically acceptable
premiums. As a result, in the future Harmony's insurance coverage may not cover the extent of
claims against it for environmental or industrial accidents or pollution.
Political or economic instability in South Africa or regionally may have an adverse effect on
Harmony's operations and profits.
Harmony is incorporated and owns significant operations in South Africa. As a
result, there are important political and economic risks relating to South Africa which could
affect an investment in Harmony.
South Africa has been transformed into a democracy since 1994, with a successful
second round of democratic elections held during 1999. Harmony fully supports government
policies aimed at redressing the disadvantages suffered by the majority of citizens under previous
governments and recognize that in order to implement these policies, Harmony's operations and
profits may be impacted. In addition to political issues, South Africa faces many challenges in
overcoming substantial differences in levels of economic development among its people. While
South Africa features highly developed, sophisticated, first world business sectors and
infrastructure at the core of its economy, large parts of the population do not have access to
adequate education, health care, housing and other services, including water and electricity.
Over the past five years, the South African economy has grown at a relatively
slow rate, inflation and unemployment have been high by comparison with developed countries,
and foreign reserves have been relatively low. GDP growth was approximately 0.8% in 1998,
2.0% in 1999, 3.5% in 2000, 2.8% in 2001 and 3.0% in 2002. The depreciation of the Rand in
1997 and 1998 resulted in an increase in the South African bank prime lending rate, which
peaked at approximately 25.5% during 1998. Due to appreciation of the Rand against the U.S.
dollar during fiscal 2003, rates have decreased significantly and as of December 10, 2003, the
rate was approximately 12%.
Although the South African government has indicated on numerous occasions that
it is committed to creating a stable, democratic free market economy, including the phasing out
of exchange controls, it is difficult to predict the future political, social and economic direction
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of South Africa or how the government will try to address South Africa's problems. It is also
difficult to predict the effect on Harmony's business of these problems or of the government's
efforts to solve them.
Further, there has been regional political and economic instability in countries
north of South Africa. As discussed above, any resulting political or economic instability in
South Africa could have a negative impact on Harmony's ability to manage and operate its South
African mines.
The results of Harmony's South African operations may be negatively impacted by inflation.
Harmony's operations have not in recent years been materially affected by
inflation, however, Harmony's profits and financial condition could be affected adversely in the
absence of a concurrent devaluation of the Rand and an increase in the price of gold.
Harmony's financial flexibility could be materially constrained by South African currency
restrictions.
South Africa's exchange control regulations provide for restrictions on exporting
capital from South Africa. As a result, Harmony's ability to raise and deploy capital outside
South Africa is restricted. In particular, Harmony:
  • is generally not permitted to export capital from South Africa or to hold
foreign currency without the approval of the South African exchange
control authorities;
  • is generally required to repatriate to South Africa profits of foreign
operations; and
  • is limited in its ability to utilize profits of one foreign business to finance
operations of a different foreign business.
These restrictions could hinder Harmony's normal corporate functioning. While
exchange controls have been relaxed in recent years and are continuing to be so relaxed, it is
difficult to predict whether or how the South African government will further relax the exchange
control regulations in the future.
Since Harmony's South African labor force has substantial trade union participation,
Harmony faces the risk of disruption from labor disputes and new South African labor laws.
Due to the number of its South African employees that belong to unions,
Harmony is at risk of having its production stopped for indefinite periods due to strikes and other
labor disputes. Significant labor disruptions may have a material adverse effect on Harmony's
operations and financial condition. Harmony has experienced strikes in the past from time to
time, and it is not able to predict whether it will experience significant labor disputes in the
future.
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Harmony's production has been and continues to be affected by labor laws. Since
1995, South African laws relating to labor have changed significantly in ways that affect
Harmony's operations. In particular, laws enacted since then that regulate work time, provide
for mandatory compensation in the event of termination of employment for operational reasons
and impose large monetary penalties for non-compliance with administrative and reporting
requirements in respect of affirmative action policies could result in significant costs to
Harmony. In addition, future South African legislation and regulations relating to labor may
further increase Harmony's costs or alter Harmony's relationship with its employees. There may
continue to be significant changes in labor law in South Africa over the next several years. For
example, amendments to South African labor law were enacted in 2002, that require mandatory
consultation with labor in the event of retrenchments, transfers of businesses or insolvency. See
"Item 6. Directors, Senior Management and Employees Employees Unionized Labor."
HIV/AIDS poses risks to Harmony in terms of productivity and costs.
The incidence of HIV/AIDS in South Africa, which is forecast to increase over
the next decade, poses risks to Harmony in terms of potentially reduced productivity and
increased medical and other costs. Harmony currently estimates that the infection rate among
Harmony's South African workforce is approximately 28%, a figure which Harmony believes is
consistent with the overall infection rate in South Africa. Harmony expects that significant
increases in the incidence of HIV/AIDS infection and HIV/AIDS-related diseases among its
South African workforce over the next several years may adversely impact its operations and
financial condition. Currently, Harmony expects that the cost of addressing HIV/AIDS infection
and HIV/AIDS-related diseases among its South African workforce will grow to approximately
$4 per ounce of gold by 2007. Harmony currently spends $2 per ounce produced on HIV/AIDS-
related illnesses. This expectation, however, is based on assumptions about, among other things,
infection rates and treatment costs, which are subject to material risks and uncertainties beyond
Harmony's control, as a result of which actual results may differ from Harmony's current
expectation. Harmony is actively pursuing HIV/AIDS awareness campaigns with its South
African workforce and is also providing medical assistance and separation packages for
employees who decide to leave their place of work and return home for care. See "Item 4.
Information on the Company--Regulation--Health and Safety Matters."
Harmony's operations are subject to extensive government regulations.
Harmony and its subsidiaries operate in a highly regulated industry. The
legislation governing Harmony covers broad areas including health and safety, mineral rights
ownership and socioeconomic development, and the scope of the principal legislation continues
to change. In particular, in January, 1997 the South African government introduced the Mine
Health and Safety Act and in October, 2002, it introduced the Mineral and Petroleum Resources
Development Act. Compliance with these acts are of fundamental importance to the operation of
Harmony's business and the impact and potential costs for Harmony of changes in any of these
laws is uncertain. For example, the South African parliament has recently introduced a bill,
known as the Royalty Bill, which may require royalties to be paid to the government. This
proposed legislation may have an adverse impact on the profits generated by Harmony. See
"Item 4. Information of the Company - Regulation."
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In Australia, most mineral rights belong to the government, and mining
companies must pay royalties to the government based on production. There are, however,
limited areas where the government granted freehold estates without reserving mineral rights.
Harmony's subsidiary New Hampton has freehold ownership of its Jubilee mining areas, but the
other mineral rights in Harmony's Australian operations belong to the Australian government
and are subject to royalty payments. In addition, current Australian law generally requires native
title approval to be obtained before a mining license can be granted and mining operations can
commence. New Hampton and Hill 50 have approved mining leases for most of their reserves,
including all reserves that are currently being mined, and Bendigo has an approved mining
license for its current development area. If New Hampton, Hill 50 or Bendigo desired to expand
operations into additional areas under exploration, these operations would need to convert the
relevant exploration licenses prior to commencing mining, and that process could require native
title approval. There can be no assurance that any approval would be received.
Harmony is subject to extensive environmental regulations.
As a gold mining company, Harmony is subject to extensive environmental
regulation. Harmony has experienced and expects to continue to experience increased costs of
production arising from compliance with South African environmental laws and regulations.
The Minerals Act, the regulations promulgated under the Minerals Act, certain other
environmental legislation and the administrative policies of the South African government all
regulate the impact of Harmony's prospecting and mining operations on the environment.
Pursuant to these regulations, upon the suspension, cancellation, termination or lapsing of a
prospecting permit or mining authorization in South Africa, Harmony will remain liable for
compliance with the provisions of the Minerals Act, including any rehabilitation obligations.
This liability will continue until such time as the South African Department of Minerals and
Energy certifies that Harmony has complied with the provisions of the Minerals Act. See "Item
4. Information on the Company Regulation."
Currently, Harmony provides for environmental liabilities by contributing to
environmental trust funds. In the future, Harmony may incur significant costs associated with
complying with more stringent requirements imposed under new legislation and regulations.
This may include the need to increase and accelerate expenditure on environmental
rehabilitation, and alter provisions for this expenditure, which could have a material adverse
effect on Harmony's results and financial condition.
The South African government is currently reviewing requirements imposed upon
mining companies to ensure environmental restitution. For example, with the introduction of an
environmental rights clause in South Africa's constitution, a number of environmental legislative
reform processes have been initiated. Legislation passed as a result of these initiatives has
tended to be materially more onerous than laws previously applied in South Africa. Examples of
such legislation include the National Water Act 36 of 1998 and the National Environmental
Management Act 107 of 1998, both of which include stringent "polluter-pays" provisions. The
adoption of these or additional or more comprehensive and stringent requirements, in particular
with regard to the management of hazardous wastes, the pollution of ground and ground water
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systems and the duty to rehabilitate closed mines may result in additional costs and liabilities to
Harmony.
Harmony's Australian operations must comply with mining lease tenement
conditions set by the Department of Minerals and Energy, the Mining Act (1978), the
Department of Environmental Protection operating licenses, and water abstraction licenses
issued by the Water and Rivers commission for each of its sites. Harmony's Australian
operations must also comply with numerous environmental acts and bills. As a result, Harmony
must make provisions for mining rehabilitation whenever mining is commenced at a new site in
Australia. While Harmony believes that its current provision for compliance with such
requirements is reasonable, any future changes and development in Australian environmental
laws and regulations may adversely affect these Australian operations. See "Item 4. Information
on the Company Regulation."
Harmony may not pay cash dividends to its shareholders in the future.
It is the current policy of Harmony's Board of Directors, or the Board, to declare
and pay cash dividends if profits and funds are available for that purpose. Whether funds are
available depends on a variety of factors, including the amount of cash available and Harmony's
capital expenditures and other cash requirements existing at the time. Under South African law,
cash dividends may only be paid out of the profits of Harmony. No assurance can be given that
cash dividends will be paid in the future.
The principal trading market for Harmony's ordinary shares is the JSE Securities
Exchange South Africa, or the JSE. Historically, trading volumes and liquidity of shares listed on
the JSE have been low in comparison with other major markets. The ability of a holder to sell a
substantial number of Harmony's ordinary shares on the JSE in a timely manner, especially with
regard to a large block trade, may be restricted by the limited liquidity of shares listed on the JSE.
Because Harmony has a significant number of outstanding options, its ordinary shares are
subject to dilution.
Because the principal non-United States trading market for Harmony's ordinary shares is the
JSE Securities Exchange South Africa, U.S. investors face liquidity risk in the market for 
Harmony's ordinary shares.
As of June 30, 2003, Harmony had an aggregate of 250,000,000 ordinary shares
authorized to be issued, which was increased to 350,000,000 at a shareholders' meeting held on
September 1, 2003. On June 30, 2003 an aggregate of 184,854,115 ordinary shares were issued
and outstanding.  Harmony's employee share option plans permit the granting of options in an
amount up to an aggregate of 14% of the number of Harmony ordinary shares outstanding as of
the date of the grant. As of June 30, 2003, options to purchase a total of 7,682,900 ordinary
shares were outstanding. Additional options will be granted to employees and directors who
joined Harmony subsequent to the ARMgold merger. The exercise prices of the options currently
vary between Rand 11.70 and Rand 93.00. As a result, shareholders' equity interests in
Harmony are subject to dilution to the extent of future exercises of these options.
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Item 4. Information on the Company
BUSINESS
Introduction
Harmony and its subsidiaries conduct underground and surface gold mining and
related activities, including exploration, processing, smelting and refining. Harmony expects to
become the largest producer of gold in South Africa in fiscal year 2004, producing some 30% of
the country's gold, and the fifth largest gold producer in the world. As at June 30, 2003,
Harmony's mining operations reported total proven and probable reserves of approximately
50.0 million ounces, which includes ounces attributable to Abelle and Harmony's 50% interest in the Free
Gold Company.
In fiscal 2003, Harmony processed approximately 31.128 million tons of ore and
sold 2,943,830 ounces of gold, which includes Harmony's 50% interest in the sales by the Free
Gold Company.
The gold market is relatively deep and liquid, with the price of gold generally
quoted in U.S. dollars. The demand for gold is primarily for fabrication purposes and bullion
investment. The purchase and sale of gold takes place around the globe in all sizes and forms.
Harmony's principal mining operations are located in South Africa and Australia.
Harmony also has a gold mining operation in the Manitoba Province of Canada, production at
which was suspended in the quarter ended September 30, 2001 due to mining operations being
uneconomical at then-current gold prices.
Harmony conducts its mining operations through various subsidiaries. As of
June 30, 2003, Harmony's significant subsidiaries were Randfontein Estates Limited, Evander
Gold Mines Limited, and Harmony Gold (Australia) (Pty) Limited. Randfontein Estates
Limited and Evander Gold Mines Limited are wholly-owned direct subsidiaries incorporated in
South Africa. Hill 50 Limited is a wholly-owned indirect subsidiary of Harmony incorporated in
Australia.
In addition, Harmony also has made several strategic investments in mining
companies within and outside South Africa. In December 2001, Harmony acquired ordinary
shares representing approximately 31.8% of the outstanding share capital of Bendigo, a single
project Australian gold mining development company. In May and June 2002, Harmony
acquired ordinary shares representing approximately 32.5% of the outstanding share capital of
Highland Gold, a privately held company organized under the laws of Jersey, Channel Islands,
which holds Russian gold mining assets and mineral rights, including an operating mine and
development projects
*
In November 2002, Harmony acquired ordinary shares representing
approximately 21% of the outstanding share capital of High River, a company organized under
the laws of Ontario, Canada that is listed on the Toronto Stock Exchange and holds gold mining
assets in Russia, Canada and West Africa.
*
*
Harmony sold its interests in Highland Gold and High River after the 2003 fiscal year end for a combined pre-tax gain of
approximately R528.2 million. See "Item 8. Financial Information Significant Changes."
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In South Africa, Harmony and its subsidiaries (excluding the Free Gold
Company) have nine operating shafts in the Free State Province, five operating shafts at Evander
in the Mpumalanga Province, four operating shafts at Randfontein in the Gauteng Province, an
open cast mine at Kalgold   in the North West Province,
**
and two production shaft units at
Elandskraal in the North West and Gauteng provinces consisting of six shafts (two of which are
sub-vertical shafts). The Free Gold Company (in which Harmony had a 50% interest as of the
end of fiscal 2003 and which became a wholly-owned subsidiary of Harmony since the merger
with ARMgold was concluded) on September 22, 2003) has eleven operating shafts in the Free
State Province.
Harmony's Australian operations include three operations in Western Australia:
Big Bell (acquired in the New Hampton transaction), Mt. Magnet (acquired in the Hill 50
transaction) and South Kalgoorlie (including Jubilee, acquired in the New Hampton transaction,
and New Celebration, acquired in the Hill 50 acquisition). Underground and surface mining is
conducted at each of these Australian operations, with underground access through one decline at
Big Bell, two declines at Mt. Magnet and one decline at South Kalgoorlie and surface access
principally through open pits.
In fiscal 2003, the combined gold sales of Harmony (including Abelle, but
excluding the Free Gold Company) were 2,366,116 ounces. During Harmony's fiscal 2003,
sales from the Free Gold assets amounted to 1,155,428 ounces of gold, of which 577,714
was attributable to Harmony. Because Harmony equity accounts for its 50% interest in the 
Free Gold Company, sales from the Free Gold assets are not included in Harmony's sales 
figures in this annual report. For more information on Harmony's consolidation policy, see note 2(b) to the consolidated financial statements.
Ore from the shafts and surface material are treated at fourteen metallurgical
plants in South Africa (three at the Free State operations, two at Elandskraal, two at Evander,
two at Randfontein, one at Kalgold
**
and four at the Free Gold Company) and at four
metallurgical plants in Australia (one at Big Bell, one at Mt. Magnet and two at South
Kalgoorlie). Harmony received regulatory approval in 1997 to market its own gold, a function
that was previously the sole preserve of the SARB. A refinery was commissioned by Harmony
during fiscal 1997 in the Free State Province at South Africa. Harmony increased the capacity of
this refinery in fiscal 2002, as a result of which Harmony has the capacity to refine all of its gold
produced in South Africa.
History
Harmony Gold Mining Company Limited was incorporated and registered as a
public company in South Africa on August 25, 1950. Harmony's principal executive offices are
located at 4 The High Street, First Floor, Melrose Arch, Melrose North 2196, South Africa and
the telephone number at this location is +27-11-684-0140. Harmony operates under a variety of
statutes and regulations. To learn more about these statutes and regulations, see "Item 4.
Information on the Company--Regulation" and "Item 10. Additional Information--
Memorandum and Articles of Association."
**
Harmony entered into an agreement to dispose of its Kalgold operations after the end of the 2003 fiscal year for a
 consideration of R275 million. See
"Item 8. Financial Information - Significant Changes."
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Commercial gold mining in South Africa evolved with the establishment of
various mining houses at the beginning of the 1900s by individuals who bought and consolidated
blocks of claims until sufficient reserves could be accumulated to sustain underground mining.
The mines were then incorporated, but it was not the practice of the founding mining house to
retain a majority shareholding. Instead, the mining house would enter into a management
agreement with the mine pursuant to which the mining house would carry out certain managerial,
administrative and technical functions pursuant to long-term contracts. Fees were generally
charged based on revenues, working costs or capital expenditures, or a combination of all three,
without regard to the cost or the level of services provided.
Harmony was operated as a mining operation in this manner and the mining house
Randgold & Exploration Company Limited, or Randgold, retained the management agreement.
In late 1994, Randgold cancelled the management agreement and entered into a service
agreement with Harmony to supply executive and administrative services at market rates. In
1997, Harmony and Randgold terminated their service agreement and Harmony began operating
as a completely independent gold mining company.
Harmony's operations have grown significantly since 1995. Since 1995,
Harmony has expanded from a lease-bound mining operation into an independent, world-class
gold producer. Harmony increased its gold sales from 650,312 ounces of gold in fiscal 1995 to
2,943,830 ounces of gold in fiscal 2003. These figures reflect 50% of the sales by the Free Gold
Company during fiscal year 2003, which are not included in product sales for accounting purposes.
In fiscal 2003, approximately 79% of Harmony's gold production took place in
South Africa and 21% in Australia. In fiscal 2003, approximately 73% of Harmony's gold came
from underground mines and 27% came from its surface mines. For more detailed geographical
information about Harmony's activities, see "Item 4. Information on the Company--Business--
Harmony's Mining Operations" and "Geographical and Segment Information" in note 31 to the
consolidated financial statements.
South African Operations
Harmony acquired additional mineral rights in the Free State, Mpumulanga,
Gauteng and North West provinces in South Africa when it acquired Lydex in 1997, Evander in
1998, Kalgold
**
in 1999 and Randfontein in 2000.
On January 31, 2001, Harmony entered into an agreement with AngloGold to
purchase the assets and liabilities of the Elandskraal mines from AngloGold for approximately
Rand 1 billion. Harmony launched and priced an issue of senior unsecured fixed rate bonds in an
aggregate principal amount of R1.2 billion ($149.3 million), with a semi-annual interest payable
at a rate of 13% per annum. These bonds are repayable on June 14, 2006, subject to early
redemption at Harmony's option. The bonds are listed on the Bond Exchange of South Africa.
The bonds were issued to settle existing debt and to fund the purchase of Elandskraal and New
Hampton.
**
Harmony entered into an agreement to dispose of its Kalgold operations after the end of the 2003 fiscal year for a
 consideration of R275 million. See
"Item 8. Financial Information - Significant Changes."
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On November 21, 2001, Harmony and ARMgold, a subsidiary of ARM, reached
an agreement in principle with AngloGold to purchase the Free Gold assets, subject to specified
conditions. Pursuant to the subsequently executed definitive agreements, the Free Gold assets
were purchased by the Free Gold Company (in which Harmony and ARMgold each has a 50%
interest) for Rand 2.2 billion ($206.8 million at an exchange rate of R10.64 per $1.00), plus an
amount equal to any liability for taxes payable by AngloGold in connection with the sale. For
purposes of U.S. GAAP, Harmony equity accounted for its interest in the Free Gold Company
with effect from May 1, 2002 and the purchase price of the Free Gold assets was determined to
be Rand 2.264 billion. See "Item 5. Operating and Financial Review and Prospects--
Overview." In September, 2003, Harmony and ARMgold completed a merger. See "Item 8.
Financial Information -Significant Changes."
In connection with the acquisition of the Free Gold assets, Harmony and
ARMgold entered into a formal joint venture and shareholders' agreement relating to the Free
Gold Company. The agreement provides that Harmony and ARMgold are each responsible for
50% of the expenses associated with operating the Free Gold assets. The FreeGold operations are
now wholly-owned by Harmony following the merger with ARMgold which was completed on 
September 22, 2003. See "item 8. Financial Information - Significant Changes."
On May 24, 2002, Harmony, ARMgold and Gold Fields, through its subsidiary,
St. Helena Gold Mines Limited, announced that an agreement in principle had been reached
under which St. Helena Gold Mines Limited would sell the St. Helena gold mining assets to the
Free Gold Company for Rand 120 million ($13.7 million), plus a royalty equal to one percent of
revenue for a period of 48 months beginning on the effective date of the sale. The sale was
completed on October 30, 2002, and the Free Gold Company assumed management control on
that date.
On May 2, 2003, Harmony and ARMgold announced details of their 50/50 joint
acquisition of a 34.5% stake in Anglovaal Mining Limited ("Avmin"). Based on a value of
R43.50 per share, the transaction is valued at Rand 1.687 billion and was paid for in cash, which
was funded by a long term loan from Nedcor Bank, repayable by November, 2004. For a 
description of current restructuring involving Avmin following the Harmony merger with ARMgold,
 see " Item 8. Financial Information - Significant Changes."
Australian Operations
Harmony presently conducts Australian operations through three acquired
Australian gold mining companies: New Hampton, acquired with effect from April 1, 2001,
Hill 50, acquired with effect from April 1, 2002 and Abelle, acquired with effect from May 1,
2003.
On December 19, 2000, Harmony announced that it had agreed to purchase
19.99% of New Hampton ordinary shares from Normandy Mining and made an offer for all of
the outstanding ordinary shares of New Hampton. The total cash bid valued New Hampton at
approximately A$56.3 million (R228.2 million at an exchange rate of R4.05 per A$1.00, or
$28.5 million at an exchange rate of R8.00 per $1.00). This offer closed on July 12, 2001, at
which time Harmony had acquired 96.2% of New Hampton's shares and 95% of New
Hampton's warrants. Harmony subsequently completed a compulsory acquisition of the
remaining shares and warrants.
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On December 11, 2001, Harmony commenced a conditional cash offer for all of
the outstanding ordinary shares and listed options of Hill 50. The total cash bid valued Hill 50 at approximately A$233 million (R1.419 billion at an exchange rate of R6.09 per A$1.00, or $124.8 million at an exchange rate of R11.37 per $1.00). The offer closed on May 3, 2002, at which time shareholders holding 98.57% of Hill 50's shares and 98.76% of Hill 50's listed options had accepted Harmony's offer and this offer had become unconditional. Harmony subsequently completed a compulsory acquisition of the remaining shares and options under the rules of the Australian Stock Exchange. See "Item 4. Information on the Company--Business--Harmony's Mining Operations--Australian Operations." Harmony financed the Hill 50 offer from existing cash resources and borrowings, including a syndicated loan facility entered into on February 28, 2002, with Citibank, N.A., as lead arranger. See "Item 5. Operating and Financial Review and Prospects--Credit Facilities and Other Borrowings." In an effort to increase efficiency and reduce corporate expenditures, in the quarter ended June 30, 2002 Harmony integrated New Hampton's Jubilee operations with Hill 50's New Celebration operations to form the South Kalgoorlie operations and combined the corporate offices of New Hampton and Hill 50 in Perth. With effect from April 1, 2002, Harmony reports the New Hampton and Hill 50 operating results together within an "Australian Operations" segment.
Harmony made its first investment in the Australian gold mining industry in
February 2000, by acquiring a stake in Goldfields (Australia), an independent gold production and exploration company. As of September 2001, Harmony's stake in Goldfields (Australia) was approximately 22.96%. Effective December 31, 2001, Delta Gold Limited, or Delta, completed a merger with Goldfields (Australia). In connection with the merger, holders of Delta shares received 187 Goldfields (Australia) shares in exchange for every 200 Delta shares held. Harmony's stake in Goldfields (Australia) following the merger was diluted to approximately 9.8%. In February 2002, Goldfields (Australia) changed its name to AurionGold Limited. On
May 25, 2002, Harmony and Placer Dome entered into an agreement under which Harmony accepted Placer Dome's offer to acquire all of Harmony's interest in AurionGold. As a result of this transaction, Harmony obtained a 1.9% interest in Placer Dome which was disposed of during fiscal 2003.

                                On September 25, 2001, Harmony announced that it had reached an agreement in principle with Bendigo, to acquire 294 million shares of Bendigo for a total purchase price of  approximately A$50 million (R292 million at an exchange rate of R5.84 per A$1.00, or $22.8  million at an exchange rate of R12.80 per $1.00). On December 13, 2001, shareholders of  Bendigo approved this subscription and Harmony acquired ordinary shares representing  approximately 31.8% of the outstanding share capital of Bendigo. On that date, Harmony was  also granted options to acquire 360 million additional shares of Bendigo at any time before December 31, 2003, at a price of A$0.30 per share for a maximum consideration of A$108 million (R630.7 million at an exchange rate of R5.84 per A$1.00, or $72.2 million). If  Harmony exercises these options, Harmony would own approximately 50.1% of the diluted capital of Bendigo. Bendigo is a single project Australian gold mining development company that controls the New Bendigo Gold Project in the historic Bendigo goldfields. Bendigo controls all of the mining and exploration rights beneath and in the vicinity of the city of Bendigo in Victoria. Bendigo has reported that it is using the funds it received from Harmony's investment 
in a project with the goal of developing and bringing into production a high grade, mechanized 
   

                             On February 26, 2003, Harmony announced that it would subscribe for new shares in Abelle Limited  ("Abelle") and the intention to make a public offer for ordinary shares and options in Abelle for  A$0.45 per ordinary share and A$0.30 per option. The offer closed on March 26, 2003, and as at June 30, 2003, Harmony owns 87% of Abelle's outstanding shares and 65% of the listed options  which were acquired for a total consideration of $105.4 million. Abelle is an Australian  company listed on the Australian Stock Exchange, with interests in mining and exploration  projects in Australia and Papua New Guinea. From May 1, 2003, Harmony reports the results of  Abelle, together with those of New Hampton and Hill 50 in the "Australian Operations"  segment. See "Item 4. Information on the Company--Business--History" and "Item 4.  Information on the Company--Business--Harmony's Mining Operations--Australian  Operations." 
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underground mine. Harmony will decide whether to exercise the options mentioned above as soon as a proper evaluation has been carried out of the feasibility study prepared by the Bendigo board on the project. The preparation of the feasibility study and its evaluation is currently in progress, with final reserve estimates expected in late December. The exercise price of the options is currently significantly higher than the levels at which the share price has been trading recently. The board of Bendigo has indicated that they will pursue other funding options should Harmony not exercise its option. 
 

                            In 1998, Harmony acquired its first production facility outside South Africa by purchasing the mining assets in the Bissett area of Manitoba in Canada from the liquidators of the Rea Gold Corporation. Harmony has completed the capital expenditure and development programs required to establish a production unit capable of producing over 65,000 ounces per year on this property. In fiscal 2001, due to the mining operations being uneconomical at then-current gold prices, Harmony decided to suspend production at the Bissett mine, and placed the operations on a care and maintenance program during the quarter ended September 30, 2001. On December 2, 2003, Harmony signed a letter of intent regarding the sale of its interest in Bissett to San Gold Resources Corporation for C$7.5 million, subject to certain conditions. See "Item 4. Information on the Company--Business-- Mining Operations--Bissett Operations" and "Item 8.  Financial Information Significant Changes." 
 

                              Since the end of the fiscal year, Harmony has merged with ARMgold, a merger that was completed in September, 2003. For a description of the merger and other recent 
developments since the financial year ended, see below and "Item 8 Financial Information 
Significant Changes." 

                               On January 21, 2003, Randfontein Estates Limited ("Randfontein"), a wholly-owned subsidiary of Harmony, entered into an agreement with Africa Vanguard Resources 
(Proprietary) Limited ("Africa Vanguard"), pursuant to which Randfontein sold 26% of its 
mineral rights in respect of the Doornkop Mining Area to Africa Vanguard for a purchase price 
of R250 million plus VAT. Randfontein and Africa Vanguard also entered into a Joint Venture 
Agreement on the same day, pursuant to which they agreed to jointly conduct a mining operation 
in respect of the Doornkop Mining Area. The Agreements were subject to the fulfilment of 
certain conditions precedent, the last of which was fulfilled on August 12, 2003. The 
Agreements were implemented, and the initial purchase price of $19 million was paid on
August 15, 2003. For US GAAP purposes, Harmony will not account for this transaction as a sale, 
but will consolidate the results of Africa Vanguard and the Doornkop Joint Venture, as both these 
entities have been determined to be variable interest entities, with Harmony as the primary 
beneficiary of both variable interest enteties. 

                               On February 26, 2003, Harmony announced that it had agreed to subscribe for new shares in, and intended to make a public takeover offer for, Australian listed gold producer 
Abelle Limited. The offer closed on March 26, 2003 and Harmony acquired 87% of the shares 
and 65% of the listed options in Abelle. The total consideration payable was A$151 million or 
US$98 million. On June 30, 2003, at a share price of A$1.10 per share, our investment was 
valued at US$127 million. Due to some of the minority shareholders exercising their options, 
Harmony's interest was diluted to 84.57% of Abelle shares and 63.18% of Abelle options in the 
quarter ended September 30, 2003. 

Canadian Operations
 
Strategic Investments
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                               On July 15, 2003, Harmony announced that it had entered into an agreement with Anglo South Africa (Pty) Limited ("Anglo SA") whereby it would acquire 77,540,830 ordinary shares in Avgold Limited ("Avgold") or 11.5% of Avgold's outstanding share capital from Anglo SA, in exchange for 6,960,964 new Harmony ordinary shares issued to Anglo SA. The agreement with Anglo provides that should the Company make an offer to acquire the other Avgold shareholders interest, the consideration payable to Anglo will be adjusted to reflect the amounts paid to the other Avgold shareholders. 

                                On May 31, 2002, Harmony acquired ordinary shares representing approximately 25% of the outstanding share capital of Highland Gold for a purchase price of $18.9 million. On June 28, 2002, Highland Gold issued 750,000 additional shares to Harmony for a purchase price of $11,925 which increased Harmony's aggregate interest to approximately 32.5% of Highland Gold's outstanding share capital. Highland Gold completed an initial public offering on the Alternative Investment Market of the London Stock Exchange during December 2002. As part of the initial public offering, Harmony subscribed for 2,511,947 Highland Gold ordinary shares for a total consideration of approximately $8 million. Following the completion of the initial public offering, Harmony's aggregate interest in Highland Gold's outstanding share capital was 31.7%. Highland Gold is a company organized under the laws of Jersey, Channel Islands which holds Russian gold mining assets and mineral rights, including an operating mine and development projects. Harmony disposed of its investment in Highland Gold on October 14, 2003, for approximately $119.0 million in cash, and realized a pre tax gain of approximately $92.0 million. 

                             On November 22, 2002, Harmony purchased approximately 21.0% of the outstanding share capital of High River for a total purchase price of $14.5 million. High River is a company organized under the laws of Ontario, Canada that is listed on the Toronto Stock  Exchange and holds gold mining assets in Russia, Canada and West Africa, including an interest  in two operating mines in Russia, an agreement to acquire ownership of a development project in  Russia, an ownership interest in an operating mine in Canada and an ownership interest in a development project in Burkina Faso. Harmony disposed of its investment in High River on October 17, 2003, for approximately $22.5 million in cash, and realized a pre tax gain of approximately $7.0 million.

                                On November 7, 2003, Harmony entered into an agreement to dispose of of its wholly-owned subsidiary, Kalgold to The Afrikander Lease Limited ("Aflease") for a total consideration of $39.0 million. The consideration comprised of a cash payment of $19.5 million and the issue by Aflease to Harmony of 25,700,935 ordinary shares in Aflease valued at $19.5 million.

                                 Also on November 7, 2003 Abelle announced that it has entered into negotiations with Legend Mining Limited, whereby Legend has offered to purchase the Gidgee gold project. Legend has made an offer to buy Abelle's 100% legal and beneficial interest in the project for a consideration of A$ 6.5 million (subject to certain adjustments) comprising approximately 600 square kilometers of mining and exploration tenements together with project infrastructure including the CIP gold treatment plant, haul roads and access infrastructure, underground mine and associated infrastructure as well as stockpiles, reserves and resources. The purchase price shall be subject to final adjustment in respect of stores, gold in circuit and environmental bonds. The transaction is conditional on the necessary governmental consents and approvals, including approval of the disposal of the assets by the shareholders of Abelle and Legend within 60 days of acceptance of the offer.

                                  On November 13, 2003, Harmony announced that it reached an agreement in principle with Avmin whereby it would enter into a number of transactions with Avmin. The first transaction involves Harmony acquiring Avmin's 286,305,263 ordinary shares in Avgold, or 42.2% of Avgold's outstanding share capital, in exchange for 28,630,526 new Harmony ordinary shares to be issued to Avmin. Should the acquisition of Avmin's interest in Avgold become unconditional, Harmony will be required to make a mandatory offer to the Avgold minority shareholders on the same terms as which it acquired Avmin's interest in Avgold.  

 

 
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                           Harmony will also dispose of its Kalplats platinum project and associated mineral rights to Avmin, in exchange for 2 million new Avmin ordinary shares to be issued to Harmony. Should all of the above described transactions be consummated as expected, Avgold will become a wholly-owned subsidiary of Harmony. Harmony and Avmin will have cross shareholdings in each other whereby Harmony will own a 20.1% interest in Avmin, and Avmin will own a 22.2% interest in Harmony.
On December 2, 2003 Harmony announced its intention to sell Bissett to San
Gold Resources Corporation (San Gold) for C$7.5 million. The terms of a letter of intent stated
that there is a 90-day option and due diligence period. During this period, 3 payments of
$50,000 will be made at intervals of 2, 30 and 60 days, with the first payment having been
completed. At the end of the three month period, San Gold can complete the transaction by
paying the Company C$3.5 million in cash and C$4 million either in cash or by an issue of San
Gold shares.
Strategy
Harmony is an independent growth oriented company in the gold production
business and is distinguished by the focused operational and management philosophies that it
employs throughout the organization. Harmony's growth strategy is focused on building a
leading international gold mining company through acquisitions, organic growth and focused
exploration. Harmony is currently expanding in South Africa and Australia, building on
Harmony's position as a leading cost-effective South African gold company in order to enhance
Harmony's position as one of the world's premier international gold producers. During fiscal
2003, Harmony also invested funds in mining opportunities in Russia and Papua New Guinea.
The international and South African gold mining industries have been in the
recent past and continue to be affected by structural and investment trends moving toward the
consolidation of relatively smaller operations into larger, more efficient gold producers with
lower, more competitive cost structures. This consolidation enables gold producers to be more
competitive in pursuing new business opportunities and creates the critical mass (measured by
market capitalization) necessary to attract the attention of international gold investment
institutions. Harmony's current strategy is predominantly influenced by these investment trends,
which have already resulted in significant restructuring and rationalization in the South African,
Australian and North American gold mining industries. Harmony believes these trends will
continue to lead to significant realignments in the international gold production business.
Harmony intends to continue to participate in the South African and international restructuring
activity to continue to achieve its growth objectives.
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 Harmony believes are 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 in a relatively
short time frame to transform these mines into cost-effective production units. The execution of
Harmony's strategy between fiscal 1995 and fiscal 2003 has resulted in the growth of Harmony's
annual gold sales from approximately 650,000 ounces to approximately 2.4 million ounces. 
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This includes Abelle's sales for two months which excludes Harmony's 50% interest in the Free Gold Company. From June 30, 1995 to June 30, 2003, Harmony has reduced weighted average cash operating costs from approximately $341 per ounce to approximately $252 per ounce. See "Item 5. Operating and Financial Review and Prospects--Exchange Rates" and "Item 5. Operating and Financial Review and Prospects-- Results of Operations--Years ended June 30, 2003 and 2002--Costs." Harmony has also expanded its proven and probable ore reserve base and, as at June 30, 2003, Harmony's mining operations reported total proven and probable reserves of approximately 50.0 million ounces, which includes Abelle and ounces attributable to Harmony's 50% interest in the Free Gold Company.
Although Harmony's primary focus has been on pursuing growth through the
acquisition of producing mines, Harmony has also addressed growth through the recent
expansion of its exploration activities. Harmony currently maintains a range of focused
exploration programs mainly concentrating on areas not too distant from its operating mines.
Harmony has also embarked on several focused gold exploration initiatives in prospective
regions where it does not yet produce gold. In addition, in light of the increase in the market
price of gold in fiscal 2002 and 2003, it has become relatively more attractive for Harmony to
pursue organic growth in South Africa, including greenfield and brownfield developments.
Harmony is managed according to the philosophy that its shareholders have
invested in Harmony in order to own a growth stock which will also participate in movements in
the gold price. Accordingly, Harmony has consistently maintained a policy of generally not
hedging its future gold production. Harmony's policy is to eliminate any hedging positions
existing within the companies that it acquires as soon as opportunities can be created to do so in
sound, commercially advantageous transactions. There may, however, be instances where
certain hedge positions in acquired companies need to be kept in place for contractual or other
reasons.
The major components of Harmony's strategy include:
Continuing to implement Harmony's unique management structure and philosophy.
Harmony implements a simple set of management systems and philosophies,
which Harmony refers to as the "Harmony Way", and which it believes are unique to the South
African gold mining industry. This "Harmony Way" is underpinned by the following concepts:
  • Empowered management teams. At each mining site Harmony has
established small, multi-disciplinary, focused management teams
responsible for planning and implementing the mining operations at the
site. Each of these teams is accountable for the results at its particular site
and reports directly to Harmony's executive committee.
  • Active strategic management by the Board. Annual operational goals
and targets, including cost, volume and grade targets are established in
consultation with the Harmony's executive committee for each mining
site. Each management team develops an operational plan to implement
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the goals and targets for its mine site. Harmony's executive committee
reviews and measures the results at each mining site on a regular basis
throughout the year.
  • Increased productivity. Gold mining in South Africa is very labor
intensive with labor accounting for approximately 50% of Harmony's
costs. To control these costs, Harmony structures its operations to achieve
maximum productivity with the goal of having 60% of Harmony's
workforce directly engaged in stoping, or underground excavation, and
development rock breaking activities. In addition, Harmony has
implemented productivity-based bonuses designed to maximize
productivity.
  • A no-frills, low cost ethic. Harmony has an obsession about lowering its
cost base and to this end Harmony extensively benchmarks its costing
parameters both internally between operations within Harmony and
externally against other gold producers.
  • Systems. Harmony has implemented sophisticated cost accounting
systems and strict ore accounting and ore reserve management systems to
measure and track costs and ore reserve depletion accurately, so as to
enable it to be proactive in its decision making.
Harmony has implemented the "Harmony Way" at its original mining operations
and at each mining property Harmony has acquired since 1995, and is currently implementing
the "Harmony Way" at the Australian operations acquired through the acquisitions of New
Hampton and Hill 50. By implementing this process, Harmony generally has been able to reduce
costs significantly while increasing production and extending mine life. Harmony and ARMgold
share similar management philosophies, which Harmony took into consideration in deciding on
the merger with ARMgold, which was completed in September, 2003. The Free Gold Company
has begun implementing measures to reduce costs while increasing production and extending
mine life, in a manner that Harmony believes is consistent with the "Harmony Way."
Growing through acquisitions in South Africa and internationally.
Harmony's acquisition strategy in South Africa has been, and will continue to be,
mainly to pursue mature, under performing gold mining operations in which it believes it can
successfully introduce the "Harmony Way" to increase productivity, reduce costs and extend
mine life. The advantage to acquiring mature, under performing operations is that they tend to
be cheaper to acquire and, particularly for underground operations, much of the required capital
expenditure has already been made. Harmony's corporate strategy with respect to acquisition
targets is as follows:
  • to make acquisitions in addition to pursuing greenfield and brownfield
    developments when it is economical to do so;
  • to acquire mature assets with turnaround potential;
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  • to acquire assets that fit Harmony's management model; and
  • to acquire assets that enhance Harmony's overall resource base.
In South Africa, Harmony continues to explore a number of potential acquisitions.
The South African gold mining industry has undergone a significant restructuring since 1990
with the result that a number of gold mining companies owned principally by mining houses
have been sold to other gold operators. Harmony believes that this restructuring process has not
yet been completed and that there will continue to be opportunities for further acquisitions in
South Africa.
Outside of South Africa, Harmony intends to leverage the broad gold mining
experience it has gained through acquisitions and existing operations. Through Harmony's
existing operations, Harmony has gained extensive underground mining experience. Harmony
has also gained extensive experience in surface mining by open cast methods through its
acquisition of Kalgold and the open cast operations of Randfontein, New Hampton and Hill 50
and in mechanized mining of greenstone orebodies through Harmony's acquisitions of Bissett ,
New Hampton and Hill 50. These types of mining are more typical outside of South Africa.
Harmony believes that these skills should position it to be able to pursue a broad range of
acquisition opportunities. Harmony continues to explore new business opportunities both inside
and outside of South Africa. Harmony may in the future pursue additional suitable potential
acquisitions in South Africa or internationally.
Expanding Harmony's exploration and development activities to increase its reserve
base.
Traditionally, like most other major South African gold producers, Harmony has
not focused much of its efforts on greenfield exploration. With the acquisition of Kalgold,
Harmony acquired potentially valuable exploration rights and an active exploration capability in
South Africa. Harmony acquired further exploration rights and an active exploration program in
Australia through the acquisitions of New Hampton and Hill 50. Harmony intends to continue to
support and expand these activities as another important avenue for increasing the size of its
reserve base. Exploration projects involve material risks and uncertainties, however, and
Harmony cannot be sure these projects will be successful. See "Item 3. Key Information--Risk
Factors--To maintain gold production beyond the expected lives of Harmony's existing mines or
to increase production materially above projected levels, Harmony will need to access additional
reserves through development or discovery."
In addition, in light of the increase in the market price of gold in fiscal 2002 and
2003, it has become relatively more attractive for Harmony to pursue organic growth in South
Africa, including greenfield and brownfield developments. Harmony is engaging in, and
investigating possibilities for, organic growth through targeted development projects. Harmony
is pursuing substantial projects to deepen the Elandskraal operations and improve the Masimong
shaft system. See "Item 4. Information on the Company--Harmony's Mining Operations--
Elandskraal Operations," "Item 4. Information on the Company --Harmony's Mining
Operations--Randfontein Operations," "Item 4. Information on the Company --Harmony's
Mining Operations--Free State Operations" and "Item 4. Information on the Company --
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Harmony's Mining Operations--Evander Operations." Harmony is also currently conducting
feasibility studies for shallow and medium-depth capital projects in the vicinity of Harmony's
existing Randfontein and Evander operations and has commenced an advanced feasibility study
to evaluate the Kalplats platinum group metals project described in "Item 4. Information on the
Company--Business--Exploration." In evaluating and pursuing these projects, Harmony's goal
is to achieve organic growth in South Africa. Capital development projects of this type involve
material risks and uncertainties, however, and Harmony cannot be sure its development efforts
will be successful. See "Item 3. Key Information--Risk Factors--To maintain gold production
beyond the expected lives of Harmony's existing mines or to increase production materially
above projected levels, Harmony will need to access additional reserves through development or
discovery."
Hedge Policy
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. As a result of this policy,
Board approval is required when hedging arrangements are to be entered into to secure loan
facilities. Any change to this policy requires ratification by the Board. Currently, Harmony's
hedge book is managed by a risk and treasury management services company, which is a joint
venture between a major South African bank and a black economic empowerment company.
Harmony does not trade in derivatives for its own account. In the past three
years, there have been two instances in which Harmony has made use of gold price hedges:
Harmony's forward sale of a portion of the production at Bissett at a set gold price and, more
recently, put options relating to 1 million ounces of Harmony's production at Elandskraal. Both
of these hedges were entered into in order to secure loan facilities and have since been closed
out. See "Item 11. Quantitative and Qualitative Disclosure About Market Risk."
A significant proportion of the production at Randfontein was already hedged
when acquired by Harmony. On April 12, 2002, Harmony announced that it had completed the
process of closing out all of the Randfontein hedge positions, including closing forward sale
contracts and call options covering a total of 490,000 ounces and forward purchases covering a
total of 200,000 ounces. See "Item 11. Quantitative and Qualitative Disclosure About Market Risk."
In addition, a substantial proportion of the production of both New Hampton and
Hill 50 was already hedged when acquired by Harmony. These hedge agreements were
accounted for as speculative contracts. In fiscal 2002, in line with Harmony's strategy of being
generally unhedged, Harmony reduced New Hampton's hedge book by over 900,000 ounces. In
fiscal 2002, Harmony combined and restructured the overall hedge portfolio of Harmony's
Australian operations (including New Hampton and Hill 50) to normal purchase and sale
agreements, under which Harmony had to deliver a specified quantity of gold at a future date
subject to agreed-upon prices. During fiscal 2003, a significant portion of the inherited hedge
books of both New Hampton and Hill 50 were closed out at a cost of Rand 69 million (U.S.
dollar 8 million). Due to the close out of this significant portion of the hedge portfolio, the
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remaining hedge agreements were classified as speculative contracts for accounting purposes
and the marked-to-market movements in these contracts are reflected in the income statement. 
As of September 30, 2003, the resulting hedge portfolio covered 860,000 ounces over a 
seven-year period at an average strike price of A$517 per ounce ($351 at an exchange rate of 
A$0.68 per $1.00). Harmony has reduced the remaining hedge positions of the Australian
operations gradually by delivering gold pursuant to the relevant agreements as well as through 
the close out of these hedge agreements. See "Item 11. Quantitative and Qualitative Disclosure About Market Risk."
In December 2001, in response to significant depreciation in the Rand and to
protect itself against possible appreciation of the Rand against the U.S. dollar, Harmony entered
into Rand-U.S. dollar currency forward exchange contracts intended to cover estimated revenues
from the Free State operations' planned production for calendar 2002. Harmony fixed the Rand-
U.S. dollar exchange rate for a total of $180 million at an average exchange rate of Rand 11.20
per U.S. dollar. These forward exchange contracts expired on December 31, 2002, and were not
renewed. Harmony has not renewed or entered into any forward exchange contracts since then.
See "Item 5. Operating and Financial Review and Prospects--Market Risk--Foreign Currency
Sensitivity."
Description of Mining Business
Exploration
Exploration activities are focused on the extension of existing orebodies and
identification of new orebodies both at existing sites and at undeveloped sites. Once a potential
orebody has been discovered, exploration is extended and intensified in order to enable clearer
definition of the orebody and the potential portions to be mined. Geological techniques are
constantly refined to improve the economic viability of prospecting and mining activities.
Mining
The mining process can be divided into two main phases: (i) creating access to the
orebody and (ii) mining the orebody. This basic process applies to both underground and surface
operations.
  • Access to the orebody. In Harmony's underground mines, access to the
orebody is by means of shafts sunk from the surface to the lowest
economically and practically mineable level. Horizontal development at
various intervals of a shaft (known as levels) extends access to the horizon
of the reef to be mined. On-reef development then provides specific
mining access. In Harmony's open pit mines, access to the orebody is
provided by overburden stripping, which removes the covering layers of
topsoil or rock, through a combination of drilling, blasting, loading and
hauling, as required.
  • Mining the orebody. The process of ore removal starts with drilling and
blasting the accessible ore. The blasted faces are then cleaned and the ore
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is transferred to the transport system. In open pit mines, gold-bearing
material may require drilling and blasting and is usually collected by
bulldozers or shovels to transfer it to the ore transport system.

In Harmony's underground mines, once ore has been broken, train systems
collect ore from the faces and transfer it to a series of ore passes that
gravity feed the ore to hoisting levels at the bottom of the shaft. The ore is
then hoisted to the surface in dedicated conveyances and transported either
by conveyor belts directly or via surface railway systems or roads to the
treatment plants. In addition to ore, waste rock broken to access reef
horizons must similarly be hoisted and then placed on waste rock dumps.
In open pit mines, ore is transported to treatment facilities in large
capacity vehicles.
Processing
Harmony currently has fourteen metallurgical plants that treat ore to extract the
gold. The Elandskraal, New Hampton and Hill 50 acquisitions resulted in the acquisition of two
plants each. In addition, there are three metallurgical plants within the Free Gold assets. The
principal gold extraction processes used by Harmony are carbon in leach, or CIL, carbon in pulp,
or CIP, and carbon in solution, or CIS, although Harmony also has an old filter plant processing
low grade waste rock.
The gold plant circuit consists of the following:
  • Comminution. Comminution is the process of breaking up the ore to
expose and liberate the gold and make it available for treatment.
Conventionally, this process occurs in multi-stage crushing and milling
circuits, which include the use of jaw and gyratory crushers and rod and
tube and ball mills. Harmony's more modern milling circuits include semi
or fully autogenous milling where the ore itself is used as the grinding
medium. Typically, ore must be ground to a minimum size before
proceeding to the next stage of treatment.
  • Treatment. In most of Harmony's metallurgical plants, including the
plants within the Free Gold assets and at Hill 50, gold is extracted into a
leach solution from the host ore by leaching in agitated tanks. Gold is
then extracted onto activated carbon from the solution using the CIL, CIP
or CIS process. In addition, each of Harmony and the Free Gold
Company has one metallurgical plant that uses the zinc precipitation filter
process to recover gold in solution. Harmony's Saaiplaas plant also used
the zinc precipitation filter process prior to fiscal 2002, but it was
converted to the CIS process during fiscal 2002. During fiscal 2003,
however, the Saaiplaas plant was converted to the CIL process thereby
lowering costs and improving extraction efficiency. Harmony will
consider a similar conversion for the remaining Harmony zinc
precipitation plant depending on the properties of the materials to 
be processed.
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Gold in solution from the filter plants is recovered using zinc precipitation.
Recovery of the gold from the loaded carbon takes place by elution and
electro-winning. Because cathode sludge produced from electro-winning
is now sent directly to Harmony's refinery, most of the plants no longer
use smelting to produce rough gold bars (dor). Harmony's zinc
precipitation plant, however, and the zinc precipitation plant used by the
Free Gold Company continue to smelt precipitate to produce rough gold
bars. These bars are then transported to Harmony's refinery, which is
responsible for refining the bars to a minimum of good delivery status.

Harmony operates the only independent gold refinery in South Africa. In
fiscal 2003, approximately 85% of Harmony's South African gold
production was refined at Harmony's refinery and the remainder was
refined at the Rand Refinery, which is owned by a consortium of the major
gold producers in South Africa. In April 2002, Harmony sold its
ownership interest in the Rand Refinery back to the Rand Refinery.
Harmony received approximately Rand 6.4 million ($0.6 million at an
exchange rate of R10.66 per $1.00) from this sale.
Harmony produces its own branded products at its refinery, including various
sizes of gold bars. This has allowed Harmony to sell to markets such as India, the Middle East
and East Asia. Harmony's refinery supplies gold alloys and associated products to jewelry
manufacturers in South Africa and internationally. In fiscal 2001, Harmony expanded refining
capacity from 40 tons per year to 100 tons per year. In fiscal 2002, Harmony further increased
refinery capacity to 120 tons per year. Harmony spent approximately Rand 10.1 million ($1.1
million) on capital expenditures at its refinery in fiscal 2003. Harmony has budgeted Rand 1.3
million ($0.2 million) to complete refinery expansion and upgrades in fiscal 2004.
The South African government has emphasized that the production of value-
added fabricated gold products, such as jewelry, is an important means for creating employment
opportunities in South Africa and has made the promotion of these beneficiation activities a
requirement of the Mining Charter described in "Item 4. Information on the Company--
Regulation--Mineral Rights." Harmony's beneficiation initiatives have benefited from the
expansion and improvement of Harmony's refinery. Harmony supports jewelry ventures in
South Africa, including providing facilities for a jewelry school and, in fiscal 2002, Harmony
acquired rights to manufacture and distribute a range of jewelry based on the "Lord of the Rings"
trilogy in South Africa, the United States and Canada. On December 11, 2002, Harmony and
Mintek, a South African government research and development organization, signed a
memorandum of understanding to create Musuku Beneficiation Systems, or Musuku, an
integrated manufacturing and technology group focusing on the beneficiation of precious metals.
Musuku will provide management, operational and technical services to integrate value-added
processes into the gold mining industry. A black empowerment company has also been
approached to join Musuku and the parties involved are in the process of negotiating the
provisions of the shareholders' agreement.
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Services and Supplies
Mining activities require extensive services, located both on the surface and
underground. These services include mining-related services such as mining engineering
(optimizing mining layouts and safe mining practices), planning (developing short-term and
long-term mining plans), ore reserve management (to achieve optimal orebody extraction),
ventilation (sustaining operable mining conditions underground), provision of supplies and
materials, and other logistical support. In addition, engineering services are required to ensure
equipment operates effectively. Unlike many other South African gold producers, Harmony
generally provides only those services directly related to mining. In some cases, other services
are provided by outside contractors. Harmony provides medical services to employees at its Free
State, Evander and Randfontein hospitals. The Free Gold assets include a hospital facility, and
Harmony is considering options to achieve synergies between this facility and the existing Free
State facility.
The Mining Charter described in "Item 4. Information on the Company--
Regulation--Mineral Rights" establishes a policy of according preferred supplier status to
enterprises controlled by members of historically disadvantaged groups when those enterprises
are able to offer goods and services at competitive prices and quality levels. Harmony believes
that its procurement policy is consistent with this policy.
Harmony's Management Structure
As part of the "Harmony Way," Harmony structures its mining operations in a
way that it considers to be unique in the South African gold mining industry. Harmony's
operational structure is based on small empowered management teams at each production site,
which may include one or more underground mine shafts or open cast sites. These management
teams are fully responsible for planning and executing the mining at the production site and
report directly to Harmony's Executive Committee. Each management team consists of an ore
reserve manager, a mining manager, a financial manager, an engineering manager and a human
relations manager. Each member of the management team has an individual area of
responsibility: the mining manager is responsible for rock breaking and safety; the ore reserve
manager is responsible for geology and ore reserves; the financial manager is responsible for
financial management; the engineering manager is responsible for maintaining equipment; and
the human relations manager is responsible for manpower issues. One of the managers is
appointed as the team captain. Financial incentives are provided for the production team at each
site based on the production and efficiency at the site.
Placing management power at the level of the actual production sites has resulted
in greater flexibility, innovation and quicker decision-making than the more traditional
management structures at South African gold mines. It also means that Harmony operates
without multiple levels of management. This contributes to decreased overhead costs, which has
a positive impact on the payable portion of Harmony's mineral resources. In addition, the
reduced management structure is important in facilitating Harmony's goal of having 60% of its
work force being directly involved in actual mining as opposed to the industry standard of 40%.
Harmony believes that this initiative has resulted in increased productivity.
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In addition, on October 2, 2002, Harmony and the United Association of South
Africa signed an agreement to redefine the traditional role of shift boss, or supervisor, to that of a
coach. This initiative, which Harmony has implemented at its South African operations, re-
aligns features of Harmony's operational-level organization. The principal features of this
initiative are to allow coaches to focus on safety promotion by transferring line supervision
duties to the mine overseers (whose technical expertise will be available to blasting crews) and
changing the compensation structure so that coaches will not receive incentive compensation
based on production levels. In addition, coaches spend the entire eight-hour working shift
underground with the mining team, in contrast with the four hours shift bosses typically spent
with the mining team. Harmony believes that this initiative will promote a safe production
environment for the blasting crew and enhance career development for previously disadvantaged
individuals.
Exploration
Harmony conducts exploration activities by itself or with joint venture partners.
Harmony's prospecting interests in South Africa measure approximately 382,000 hectares.
Harmony's Australian operations also control prospecting interests, as described below. In
addition to ongoing mine site exploration, Harmony has a program of investment in regional
exploration. The exploration strategy on these greenstone belts uses geological, geophysical and
geochemical techniques to identify broad systems of anomalous gold and associated rock
alteration within which gold deposits typically occur as clusters.
Harmony spent approximately Rand 75 million, excluding contributions from
joint venture partners, on exploration in fiscal 2003. During 2003, the bulk of exploration
expenditure was allocated to activities in Australia, South Africa and Peru with subordinate
expenditure in Asia, East Africa, West Africa and Madagascar. In fiscal 2004, Harmony intends
to carry out exploration in South Africa, West Africa, East Africa, Australia, Peru and Papua
New Guinea.
During the 2003 fiscal year, a joint venture agreement was signed with a private
Malagasy company whereby Harmony would earn equity in five project areas in Madagascar
through phased exploration expenditure. Gold mineralization, as evidenced from intensive
artisinal mining operations, in extensive shear zone systems were sampled through a systematic
trenching program. Gold grade continuity and tenor was insufficient to meet Harmony's'
investment criteria and the joint venture was subsequently terminated.
Harmony's exploration activity in Asia, West Africa and East Africa was
restricted to project generation and reconnaissance sampling. Site visits and negotiations with
potential joint venture partners are ongoing.
Harmony's Australian operations conduct prospecting at various sites within their
exploration mineral right areas, which include various types of property rights recognized in
Australia covering a total area of approximately 298,355 hectares (737,250 acres). Harmony's
exploration strategy in Australia includes exploration on greenstone belts using aeromagnetics,
ground magnetics, geochemical, regolith and geotechnical techniques to identify broad systems
of anomalous gold and associated rock alteration within which gold mineralization typically
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occurs. Thereafter, promising targets are drilled to test geological structures and establish the
presence of gold mineralization. Should this process be successful in discovering ore, the
deposits are then drilled and sampled systematically to determine ore reserves and metallurgical
characteristics. Exploration of priority targets within Harmony's holdings, continued to be the
focus of regional exploration over the 2003 fiscal year.
In December 2001, Harmony acquired a 31.1% stake in Australian-listed Bendigo
Mining NL, an Australian listed company that controls a large tenement holding in the Bendigo
goldfield of Victoria (Australia). It has been estimated that 17 million ounces of gold have
historically been produced from numerous reefs in the Bendigo goldfield. Bendigo Mining
management consider that the goldfield has the potential to host a further 12 million ounce
resource below the historic mine workings. The coarse grain size and erratic distribution of the
gold in the Bendigo reefs ("nugget effect") precludes the use of drilling as a reliable reserve
definition tool. During 2003, a production size decline was sunk to access several reefs that had
previously been defined by drilling. The objective was to establish ore-body geometry and
grades as well as to gain further confidence in the proposed mining methods and process
metallurgy. Bendigo's management have announced that nine of the seventeen targeted reefs had
been evaluated by August 2003. The feasibility study is well advanced and it is envisaged that
the Bendigo board will soon consider its options with regard to mine development.
Following the acquisition of Hill 50, Harmony is integrating Hill 50's exploration
programs on the properties south of Kalgoorlie with New Hampton's programs in that area.
These programs involve exploration on a combination of freehold title and mineral leases
forming an east-west belt extending from Lake Roe to Coolgardie, south of Kalgoorlie. The
tenements span a number of geological domains including the Kalgoorlie-Kambalda Belt and the
Boulder-Lefroy structure, the Zuleika Shear, the Coolgardie Belt and the Yilgarn-Roe structures.
A comprehensive structural-geological and regolith-geochemical review was completed in
July 2001 for the Southeast Goldfields area. This review outlined priority targets within
Harmony's holdings, which were the focus of regional exploration over the 2002 fiscal year and
continued to be the focus of regional exploration during the 2003 fiscal year. Hill 50's
exploration has also continued to focus on brownfield and greenfield opportunities at Mt. Magnet
and on regional targets in the Yalgoo tenements, which comprise approximately 35,800 hectares
(88,464 acres) located approximately 70 kilometers southwest of Mt. Magnet.
Through the Hill 50 transaction, Harmony also acquired two development
projects in the Northern Territory of Australia: the Maud Creek project and the Brocks Creek
project. Maud Creek is an advanced greenfield project based on a recent discovery located close
to the historic Yeuralba gold field in the Pine Creek district. The Maud Creek project faces a
metallurgical risk associated with the extraction of gold from the ore. The Maud Creek orebody
is partially refractory in nature and specific (yet to be finalized) ore processing routes would be
required to liberate the gold. The contemplated processes are expected to result in higher capital
and operating costs, but are not expected to involve significant technical risk. Brocks Creek is an
effort to bring mines formerly operated by AngloGold back into production. The Brocks Creek
area includes shallow open pits located at Rising Tide, and rights to develop the underground
Zapopan and Cosmo Deeps sites. In fiscal 2004, Harmony expects to maintain the current
combined levels of exploration at New Hampton and Hill 50, at a total expenditure of
approximately Rand 70 million ($8 million).
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On February 26, 2003 Harmony made an offer to subscribe for new shares as well
as a public offer for the ordinary shares and options in Abelle Limited. Abelle owns 100% of the
Morobe and Wafi deposits in Papua New Guinea. The Morobe project has an estimated mineral
resource of 73.9 million tons at 2.2 grams per ton gold and 30 grams per ton silver for 5.2 million
ounces of gold and 71 million ounces of silver. A feasibility study completed by Lycopodium of
Australia in October 2002 envisaged a single open pit containing 2.8 million ounces of gold and
48 million ounces of silver. A new feasibility study is currently being completed and a decision
is expected in early 2004 once the results of the study have been considered. The Wafi project is
situated 60 kilometers from Morobe and is an advanced exploration project. Wafi consists of two
deposits situated 1 kilometer apart. The Golpu deposit is a porphyry copper-gold deposit. The
resource estimate for Golpu is 100 million tons at 1.3% copper and 0.6 grams per ton gold for
1.3 million tons of copper and 2.3 million ounces of gold. The second deposit (the Wafu gold
deposit) is a high sulphidation gold deposit that contains an inferred resource of 53.3 million tons
at 2.5 grams per ton for 4.3 million ounces gold. A 5,000m diamond drill program is currently
underway at the recently discovered, high grade "link zone" of the Wafi gold deposit.
During 2003, Harmony continued to evaluate numerous projects in Peru. Two
joint venture agreements were entered into with local partners, whereby Harmony could earn-in
to prospective projects by undertaking phased exploration expenditure. Both of the projects are
focused on areas with demonstrated potential to host epithermal gold mineralization. Analytical
results from the first of the projects suggested that it was unlikely to reach Harmony's
investment criteria and the joint venture was terminated. While drilling of the second project has
been completed, the analytical results have not yet been received. A decision regarding future
involvement in the project is expected to be made when those results have been considered. In
addition to these joint ventures, Harmony has undertaken a comprehensive target generation
program in Peru. New projects generated by this program, and currently under negotiation, shall
form the focus of an accelerated exploration program in 2004.
With the exception of the Burnside Joint Venture, which Hill 50 and Northern
Gold NL formed in March 2002 to develop the Brocks Creek project, Harmony's exploration
and development projects are wholly-owned.
In South Africa, exploration has been focussed on gold and platinum group metal
(PGM) mineralization within the Kraaipan greenstone belt of the Northwest Province.
Systematic aircore sampling of the largely sand covered Kraaipan greenstone belt has identified
numerous gold and platinum anomalies that remain to be drill-tested.
During the course of gold prospecting in the Kraaipan greenstone belt in late
2000, Harmony discovered promising deposits of open pittable platinum and palladium
mineralization and is currently conducting a detailed evaluation of the economic potential of this
discovery, known as the Kalplats platinum group metals project, or Kalplats. The mineralization
occurs in seven separate bodies with strike lengths ranging between 500 meters and 1,000 meters
and additional discoveries are likely. Exploration activities to date have revealed mineralized
widths that range from 15 meters to 45 meters with average grades of platinum plus palladium
running at between 1.3 and 2.5 grams per ton. Higher grade zones with approximate widths of 2
to 5 meters and with grades of up to 4 to 6 grams per ton occur within some of these mineralized
bodies. Harmony estimates the ratio of platinum to palladium is about 1 to 1. Drilling on two of
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the four deposits has been completed on sectioned lines spaced 50 meters apart with reef
intersection at depths ranging from 4 meters to 180 meters below surface. Wider drill spacing of
between 100 to 200 meters has been completed on the other two deposits. As of September,
2003, 456 reverse circulation percussion boreholes and 75 diamond core boreholes (representing
a combined total of 42,000 meters of drilling) had been completed. Metallurgical test work to
date has indicated poor flotation recoveries (6064%) for the lower grade (1.02.0 grams per
ton) mineralization, but higher recoveries (7580%) for the higher grade (2.55.0 grams per ton)
mineralization using a two-stage mill-float circuit in combination with magnetic separation. The
pre-feasibility study, which was completed in August 2002, concluded that the economic
viability of the project depends on selectively mining the higher grade reef zones (of 2 to 3
grams per ton of total precious metals) using open pit methods, sustained platinum and palladium
markets and platinum and palladium recoveries being higher than 70%. During the first quarter
of fiscal 2003, the Board approved Rand 25 million ($2.9 million) for further
exploration/evaluation drilling and metallurgical test work. This phase also included the
development of a box cut and the collection of a 550 ton bulk sample for pilot plant scale
metallurgical testing. The ore sample was collected at a depth of approximately 40 meters below
surface, with additional sampling of the various reefs under different weathering conditions as
the box cut advanced. Pilot plant test results confirmed earlier bench-scale metallurgical test
work in terms of concentrate grades and recoveries. Currently a more advanced feasibility study
is in progress that will be completed by by the end of the 2003 calendar year.
Harmony is considering various options regarding the platinum and palladium
deposits and numerous parties have expressed an interest in the project. Harmony estimates that
net expenditures of approximately Rand 300 million ($34.3 million) would be required to
develop Kalplats into an open pit mine producing platinum and palladium concentrate by
flotation. On a simplistic basis, Harmony estimates that the Kalplats mineralization may be
sufficient to conduct open pit mining over a period of approximately ten years, at a rate of
approximately 90,000 ounces of platinum group metals per year. However, these figures are
based on assumptions related to the current feasibility studies and testwork, and Harmony cannot
be sure that development at Kalplats would lead to a commercially viable mining operation. See
"Item 3. Key Information--Risk Factors--To maintain production beyond the expected lives of
Harmony's existing mines or to increase production materially above projected levels, Harmony
will need to access additional reserves through development or discovery." In addition,
Harmony believes that there may be opportunities to acquire South African platinum industry
assets within the next two to three years; however, no assurance can be made that Harmony will
find suitable acquisition targets, or successfully integrate them into Harmony's operations. See
"Item 3. Key Information--Risk Factors--Harmony's strategy depends on its ability to make
additional acquisitions" and "Item 3. Key Information--Risk Factors--Harmony may
experience problems in managing new acquisitions and integrating them with its existing
operations."
Capital Expenditures 
Capital expenditures, including the non-cash portion, incurred for fiscal 2003
totaled approximately $209 million, compared with $59.0 million for fiscal 2002 and $52.5
million for fiscal 2001. The focus of Harmony's capital expenditures in recent years has been
underground development and plant improvement, upgrades and acquisitions, and management
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currently expects this focus to continue in fiscal 2004. The increase in capital expenditures in
fiscal 2003 compared with fiscal 2002 was due to the acquisition of Abelle in March 2003 and
the developments of projects such as Tshepong and Bambanani.  The increase in capital
expenditures in fiscal 2002 compared with fiscal 2001 was largely due to the inclusion of
expenditures for the development of the shaft deepening project at Elandskraal for the full fiscal
year and increased capital expenditures at Harmony's Australian operations (primarily Big Bell
and the Jubilee portion of the South Kalgoorlie operations). This increase in capital expenditure
was partially off-set by reduced capital expenditure at the Free State and Randfontein and the
placement of Bissett on a care and maintenance program. Harmony has budgeted
approximately $117
million for capital expenditures in fiscal 2004. Details regarding the capital
 expenditures for each operation are found in the individual mine sections under 
"Business--Harmony's Mining Operations." Harmony currently expects that its planned capital
expenditures will be financed from operations and existing cash on hand. However, if Harmony
decides to expand major projects such as the Poplar Project and the Rolspruit Project at Evander
beyond its current plans, Harmony may consider alternative financing sources described below.
See "Item 4. Information on the Company--Business--Harmony's Mining Operations--
Evander Operations."
Description of Property
Harmony's operational mining areas in South Africa comprise the Free State
operations of 58,249 acres, the Evander area of 97,926 acres, the Randfontein area of 41,026
acres, the Kalgold area of 5,259 acres
1
, the Elandskraal areaof 22,864 acres and Harmony's
interest in the Free Gold Company's total area of 35,582 acres. Harmony's operational mining
areas (granted tenements) in Australia comprise the combined Mt. Magnet - Big Bell area of
252,114 acres, the South Kalgoorlie area of 222,647 acres, the Gidgee project area of 140,109
acres
2
and active holdings in the Northern Territory that total 288,083 acres. The Bissett area in
Canada totals 1,083 acres.
3
Harmony furthermore owns, controls or shares in mineral rights that
have not been brought to production.
In line with the rest of the South African mining industry, Harmony has been
rationalizing its mineral rights holdings in recent years. Accordingly, over the past three years,
Harmony disposed of its shares and its participation rights in areas in South Africa in which it
has not actively pursued mining. Harmony may continue to investigate further disposals.
The following pages contain maps of Harmony's South African and worldwide operations and interests.
1
Harmony entered into an agreement to dispose of its Kalgold operations after the end of the 2003 financial year for 
a consideration of R275 million. See
"Item 8. Financial Information Significant Changes."
2
On November 7, 2003, Abelle announced the sale of the Gidgee gold mine for a sum of A$6.5 million subject to
final adjustments.
3
On December 2, 2003, Harmony signed a letter of intent regarding the sale of its interest in Bissett to San Gold
Resources Corporation for C$7.5 million, subject to certain conditions.
36
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WORLDWIDE OPERATIONS
37
 
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38
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Geology
The major portion of Harmony's South African gold production is derived from
mines located in the Witwatersrand Basin in South Africa. The Witwatersrand Basin is an
elongate structure that extends approximately 300 kilometers in a northeast-southwest direction
and approximately 100 kilometers in a northwest-southeast direction. It is an Archean
sedimentary basin containing a 6 kilometers thick stratigraphic sequence consisting mainly of
quartzites and shales with minor volcanic units.
Conglomerate layers occur in distinctive depositional cycles or packages within
the upper, arenaceous portion of the sequence, known as the Central Rand Group. It is within
these predominately conglomeratic units that the gold-bearing alluvial placer deposits, termed
reefs, are located.
The differences in the morphology and gold distribution patterns within a single
reef, and from one reef to the next, are a reflection of the different sedimentary processes at work
at the time of placer deposition on erosional surfaces in fluvial and littoral environments.
Within the various goldfields of the Witwatersrand Basin there are major and
minor fault systems, and some of the normal faults have displaced basin-dipping placers upwards
in a progressive step-like manner, enabling mining to take place at accessible depths.
The majority of Harmony's South African gold production is derived from
auriferous placer reefs situated at different stratigraphic positions and at varying depths below
surface in three of the seven defined goldfields of the Witwatersrand Basin.
Harmony's production from the Australian operations is sourced from Archaean
greenstone gold deposits. These types of deposits are formed by the interaction of gold-bearing
hydrothermal fluids with chemically or rheologically suitable rock types. The hydrothermal
fluids are typically focused along conduits termed shear zones. The nature of the shear zone and
the host rock determines the style of the mineralization, which may be narrow veins with high
gold grades or wide disseminated mineralization with low-medium grades. Frequently the two
styles occur together.
Reserves
Harmony applies an ore reserve management system that emphasizes effective
geological control of the orebody. In addition, ongoing management of the ore reserves is
decentralized to each production site where management applies site-specific technical and
working cost parameters to determine the optimal cut-off grade. This cut-off grade is defined as
the grade at which the total profits from mining the orebody, under a specific set of mining
parameters, is maximized and, therefore, optimizes exploitation of the orebody. The use of a
cut-off grade attempts to account for all the ore tons that make a marginal contribution to the
profitability of the mine.
Historically, South African gold mining companies have not been required to
follow any particular standard for reporting ore reserves. Consequently, Harmony inherited a
number of different standards for reporting ore reserves as it acquired mining operations.
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The JSE requires that all gold mining companies listed on the JSE must report ore
reserves on the basis of the South African Mineral Resource Committee code of practice, or
SAMREC. In accordance with this ruling, Harmony has recalculated its ore reserves. As at
June 30, 2003, all of Harmony's ore reserves for South African operations are reported on the
basis of SAMREC. In addition, the ore reserve information for Harmony's Australian operations
is reported on the basis of the Australian Code for Reporting of Mineral Resources and Ore
Reserves, or JORC Code. The JORC Code is consistent with SAMREC, although the JORC
code focuses more specifically on open cast mining, which is more common in Australia. Only
the reserves which qualify as proven and probable reserves for purposes of the SEC's industry
guide number 7 at each of Harmony's mining operations are presented in this annual report. See
"Glossary of Mining Terms."
As at June 30, 2003, Harmony's mining operations reported total proven and
probable reserves of approximately 50.0 million ounces, which includes Abelle and ounces
attributable to Harmony's 50% interest in the Free Gold Company, as set forth in the following
table:
Ore reserve statement as at June 30, 2003
Operations
Proven Reserves
Probable Reserves
Total Reserves
Gold sales
in the fiscal
year ended
June 30, 2003
1
Tons
(million)
Grade
(oz/ton)
Gold oz
2
(million)
Tons
(million)
Grade
(oz/ton)
Gold oz
2
(million)
Tons
(million)
Grade
(oz/ton)
Gold oz
2
(million) (oz)
S.A.
Underground
Elandskraal
18.58           0.22                4.04             25.40               0.24               6.09            43.98
0.23                 10.13
347,276
Free
State
29.01           0.13                3.90             24.08                0.13               3.22           53.09
0.13                   7.12
538,990
Randfontein
18.87           0.14                2.71             10.21                0.15               1.48           29.08
0.14                   4.20
454,917
Evander
11.54           0.19                2.21             66.24                0.21             13.65           77.79
0.20                 15.86
360,184
Free Gold assets
3
13.27           0.23                3.05             32.09                0.20               6.53           45.36
0.21                   9.58
533,282
Total S.A.
Underground
91.27           0.17              15.91           158.03                0.20             30.97         249.30             0.19                 46.89          2,234,649
S.A.
Surface
Elandskraal
-
-
-
1.32                0.02              0.02             1.32
0.02                   0.02
19,323
Free
State
14.78            0.01              0.15
4.65               0.02               0.07           19.43
0.01                   0.22
24,209
Randfontein
35.45            0.02              0.53
-
-
-           35.45
0.02                   0.53
36,973
Kalgold
(open
cast)                8.34             0.06              0.50
0.13               0.04               0.01             8.47
0.07                   0.51
74,590
Free Gold assets
3
1.80            0.02              0.03               11.27               0.02               0.17           13.07
0.02                   0.20
44,432
Total
S.A.
Surface
60.37            0.02              1.22               17.37               0.02               0.27           77.74
0.02                   1.48
199,527
Australian Operations
4
Gidgee
0.13
0.12
0.02
0.25
0.22
0.05
0.38
0.18
0.07
11,534
Big Bell
0.85
0.09
0.07
1.13
0.05              0.05
1.98
0.07
0.12              132,579
Mt. Magnet
3.64
0.05
0.15
6.91
0.15              0.94
10.55
0.11
1.09              182,690
South Kalgoorlie
5
1.85              0.09
0.15                  1.87
0.10              0.17
3.72
0.10
0.32              182,851
Total Australian
Operations                                    6.47
0.06
0.39
10.16
0.12              1.21
16.63
0.10
1.60              509,654
TOTAL
158.11               0.11            17.52             185.56              0.17            32.45          343.67           0.15                49.97
2,943,830
1 Includes sales from Gidgee for 2 months from May 1, 2003 and sales attributable to Harmony's interest in the Free Gold assets.
2 "Gold oz" figures are fully inclusive of all mining dilutions and gold losses, and are reported as mill delivered tons and head grades.
Metallurgical recovery factors have not been applied to the reserve figures. Approximate metallurgical recovery factors are set forth below.
3 Includes 50% of the reserves from the Free Gold assets, representing Harmony's equity interest in the Free Gold Company.
4 Includes reserves from underground and surface mining at each of the Australian operations.
5 The South Kalgoorlie operations include Jubilee, acquired in the New Hampton transaction, and New Celebration, acquired in the Hill 50
transaction.
40
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The numbers shown in the table above are fully inclusive of all mining dilutions
and gold losses, and are reported as mill delivered tons and head grades. Metallurgical recovery
factors have not been applied to the reserve figures stated above. The approximate metallurgical
recovery factors for the table above are as follows: (a) Elandskraal 95.6%; (b) Free State 95%;
(c) Randfontein 96.5%; (d) Evander 96.7%; (e) Kalgold 85%; (f) the Free Gold assets 97%;
(g) Big Bell 86%; (h) Mt. Magnet 93%; (i) South Kalgoorlie 92%; and (j) Bissett 91%. A gold
price of Rand 93,000 per kilogram was applied in calculating the ore reserve figures. The gold
price on December 4, 2003 was approximately R
81,526
per kilogram. Harmony's standard for
sampling with respect to both proven and probable reserve calculations for underground mining
operations at Elandskraal, Free State, Evander, Randfontein and the Free Gold assets is applied
on a 6 meter by 6 meter grid. Average sample spacing on development ends is at 2 meter
intervals in development areas. Harmony's standard for sampling with respect to both proven
and probable reserves at its Australian underground operations include sampling development
drives and crosscuts at intervals of up to 4 meters, drilling fans of diamond drill boreholes with a
maximum spacing of 20 meters in any orientation within the ore bodies, and assaying core at 1
meter intervals. The Kalgold open cast operations are sampled on diamond drill and reverse
circulation drill spacing of no more than 25 meters on average. Surface mining at South African
operations other than Kalgold involves recovering gold from areas previously involved in mining
and processing, such as metallurgical plants, waste rock dumps and tailings dams (slimes and
sand) for which random sampling is used. Australian surface operations are sampled on
diamond drill and reverse circulation drill spacing of no more than 20 meters on average. Bissett
operations have not been included in the table above because given the recovery factor identified
above and cut-off grade calculated as described below, there were no proven and probable
reserves at Bissett as at June 30, 2003. Production at Bissett was suspended in the quarter ended
September 30, 2001 due to mining operations being uneconomical at then-current gold prices.
See "Item 4. Information on the Company--Business--Harmony's Mining Operations--Bissett
Operations."
In calculating proven and probable reserves, Harmony applies a cut-off grade.
The cut-off grade is determined for each shaft using Harmony's optimizer computer program,
which takes account of a number of factors, including grade distribution of the orebody, an
assumed gold price, planned production rates, planned working costs and mine recovery factors.
Harmony's optimizer computer program determines the total profits that can be made from
mining blocks of various grades. The point of maximum total profit is used to determine the cut-
off grade. Mining the blocks at and above the cut-off grade will be profitable if the assumptions
underlying the cut-off grade hold true. Blocks below the cut-off grade are not included in
Harmony's reserve estimates. Harmony generally aims to mine above the cut-off grade. This
can be contrasted with the so-called "pay limit" approach for determining reserve estimates,
which identifies the grade at which revenues and costs are equal and then determines the portion
below this break-even grade that can be mined together with portions above the break-even grade
to remain profitable. Harmony believes the cut-off grade methodology defines more precisely
which blocks should be mined for profitable operations.
Harmony's Mining Operations
In South Africa, Harmony and its subsidiaries (excluding the Free Gold
Company) conduct underground mining at four sites--Elandskraal, the Free State, Randfontein
41
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and Evander--and surface mining at five sites--Elandskraal, the Free State, Randfontein,
Evander and Kalgold. The Kalgold operations were sold in October 2003 for a consideration of
R275 million. The Free Gold Company conducts underground and surface mining at the Free
Gold assets. Surface mining conducted at the South African operations other than Kalgold
involves recovering gold from areas previously involved in mining and processing, such as
metallurgical plants, waste rock dumps and tailings dams (slimes and sand). Harmony has also
conducted open cast mining at Randfontein, but these open cast operations were downscaled and
discontinued in the six months ended December 31, 2001 because the open cast mine had
reached the end of its useful life.
In Australia, Harmony and its subsidiaries presently conduct mining at three sites
the Big Bell operations (which were acquired in the New Hampton transaction), the
Mt. Magnet operations (which were acquired in the Hill 50 transaction) and the South Kalgoorlie
operations (which include the Jubilee operations acquired in the New Hampton transaction and
the New Celebration operations acquired in the Hill 50 transaction). During fiscal 2003 the
Gidgee gold mine was an additional site acquired in the Abelle transaction, but Harmony
announced the sale of its Gidgee underground operations in November 2003. Underground and
surface mining is conducted at each of the remaining operations, with underground access
through one decline at Big Bell, two declines at Mt. Magnet and one decline at South Kalgoorlie
and surface access principally through open pits. Underground operations at Big Bell ceased in
July 2003 as mining there has become uneconomical due to low grade. It is anticipated that
milling and plant clean up will be completed by the end of 2003. Surface mining will, however,
continue in certain areas of the Big Bell tenements, with ore to be processed at the Mt. Magnet
plant.
South African Underground Operations
The following chart details the operating and production results from underground
operations in South Africa for the past three fiscal years:
Fiscal year ended June 30,
2003
1
2002
1
2001
2
Production
Tons (`000) ...........................................................
12,294
13,368
13,603
Recovered grade (ounces/ton)...............................
0.142
0.149
0.140
Gold sold (ounces)................................................
1,701,367
1,988,320
1,903,766
Results of operations ($)
Product sales (`000) ..............................................
578,764
567,006
521,523
Cash cost (`000)....................................................
425,323
384,434
441,400
Cash profit (`000) .................................................
139,775
182,607
80,123
Cash costs
Per ounce of gold ($) ............................................
250
193
232
________
1
Excludes Harmony's interest in gold sales by the Free Gold Company.
2
Includes Elandskraal's gold sales for three months from April 1, 2001.
Given the relative significance of surface production as a proportion of total
production at the Elandskraal operations, Harmony began to segment the Elandskraal operations
42
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into underground and surface production in the quarter ended December 31, 2001. The historic
figures presented above have been adjusted to reflect this segmentation in all prior periods.
Tons milled from underground operations in South Africa decreased to
12,294,000 in fiscal 2003, compared with 13,368,000 in fiscal 2002, due to lower production at
all the operations. See "--Randfontein Operations" and "--Free State Operations" below.
Recovered grade decreased 5% in fiscal 2003, compared with fiscal 2002, due primarily to lower
recovered grades at all operations.
Cash costs for underground operations in South Africa were $250 per ounce of
gold in fiscal 2003, compared with $193 per ounce of gold in fiscal 2002. This increase was
attributable primarily to the appreciation of the Rand against the U.S. dollar, which caused a
significant increase when these costs were translated into U.S. dollars. See "Item 5. Operating
and Financial Review and Prospects--Exchange Rates." If expressed in Rand terms, costs per
ounce would have increased in fiscal 2003, due primarily to the increases in the costs of labor
and supplies due to the implementation of collective bargaining agreements and the effect of
inflation on supply contracts.
South African Surface Operations
The following chart details the operating and production results from Harmony's
surface operations in South Africa for the past three fiscal years (with historic figures adjusted to
reflect the segmentation of the Elandskraal operations described above):
Fiscal year ended June 30,
2003
2002
1
2001
2
Production
Tons (`000) ...........................................................
5,799
4,198
3,732
Recovered grade (ounces/ton)...............................
Gold sold (ounces)................................................
0.027
0.033
0.037
138,882
136,319
155,095
Results of operations ($)
Product sales (`000) ..............................................
51,344
40,034
36,987
35,615
Cash cost (`000)....................................................
24,037
32,355
Cash profit (`000) .................................................
15,729
16,003
4,632
Cash costs
Per ounce of gold ($) ............................................
230
173
237
_________
1
Excludes Harmony's interest in gold sales by the Free Gold Company.
2
Includes Elandskraal's gold sales for three months from April 1, 2001.
The amount of gold sold from surface operations in South Africa increased in
fiscal 2003 due primarily to the increased production from the Free State and Randfontein. The
amount of gold sold from surface operations in South Africa increased in fiscal 2002, due
primarily to the inclusion of surface sources from Elandskraal for a full fiscal year, the improved
recovered grades from Kalgold's surface sources and the treatment of Free State surface sources
during the year. These factors more than offset decreased production from Randfontein surface
sources as a result of the closure of Randfontein's open pit.
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In light of the higher prevailing market price for gold in fiscal 2002, and in order
to maximize use of the Free State plants, Harmony began processing materials from secondary
surface sources, primarily waste rock dumps and tailings dams (slimes and sand), at the Free
State operations in the quarter ended March 31, 2002. This production is included in South
African surface operations for the March 31, 2002 quarter and all subsequent periods.
Tons milled from surface operations in South Africa were 5,799,000 in fiscal
2003, compared with 4,198,000 in fiscal 2002. This increase was primarily due to the increase in
tons at the Free State and Randfontein. Recovered grade from surface operations in South Africa
was 0.027 ounces per ton in fiscal 2003, compared with 0.033 ounces per ton in fiscal 2002, as a
result of lower grade surface sources being treated at the Free State and Randfontein.
Cash costs for surface operations in South Africa were $230 per ounce of gold in
fiscal 2003, compared with $173 per ounce of gold in fiscal 2002. This increase was attributable
primarily to the appreciation of the Rand against the U.S. dollar, which caused a significant
increase when these costs were translated into U.S. dollars. See "Item 5. Operating and
Financial Review and Prospects--Exchange Rates." If expressed in Rand terms, costs per ounce
would have increased in fiscal 2003, due primarily to the increases in the costs of labor and
supplies due to the implementation of collective bargaining agreements and the effect of inflation
on supply contracts.
Elandskraal Operations
Introduction. On January 31, 2001, Harmony entered into an agreement to
purchase the assets and liabilities of the Elandskraal mines in the North West and Gauteng
provinces of South Africa for approximately Rand 1 billion. Harmony and AngloGold jointly
managed the Elandskraal mines between February 1, 2001 and April 9, 2001 and Harmony
completed the purchase on April 9, 2001. In fiscal 2003, the Elandskraal operations accounted
for approximately 15% of Harmony's total gold sales. The assets and liabilities of the
Elandskraal mines include the mineral rights and mining title (excluding a portion of the Carbon
Leader Reef horizon, which AngloGold will continue to mine), mining equipment, metallurgical
facilities, underground and surface infrastructure necessary for the continuation of mining, ore
treatment and gold extraction at Elandskraal as a going concern, and contributions to a
rehabilitation trust fund equivalent to the current rehabilitation liability of this operation. The
addition of Elandskraal to Harmony's operations increased Harmony's reserves by
approximately 9.9 million ounces.
On April 24, 2001, Harmony entered into an agreement with Randfontein and
Open Solutions, pursuant to which the parties agreed to associate together in a joint venture
related to the business of the Elandskraal mines, or the Elandskraal Venture. Open Solutions, an
empowerment group, undertook to purchase a 10% participation interest in the Elandskraal
Venture for cash consideration equal to 10% of the historical acquisition costs (including all
transaction costs but excluding loan financing costs) of the Elandskraal mines, in an amount
estimated to be approximately Rand 100 million. Randfontein retained the remaining 90%
participation interest in the Elandskraal Venture, continued to own and operate the Elandskraal
mines, and had the sole discretion to manage the Elandskraal Venture (but was required to
consult with Open Solutions prior to effecting a sale or disposal of the material portion of the
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assets of the Elandskraal mines). Under the agreement, Randfontein also undertook to loan the
purchase price to Open Solutions at an interest rate equal to the prime rate less 1%, to be repaid
by Open Solutions from the benefits accruing to Open Solutions attributable to its 10%
participation interest. As security for the repayment of this loan, Open Solutions ceded and
assigned to Randfontein all its right, title and interest in and to its participation interest (other
than the right to appoint the representatives described below) until the loan was repaid in full.
Under the agreement, Randfontein agreed to accept liability, as to third parties,
for all obligations and liabilities of the Elandskraal Venture and Open Solutions agreed to
indemnify Randfontein in respect of a pro rata portion of these obligations and liabilities. Open
Solutions could not dispose of its participation interest without the prior written consent of
Randfontein, or encumber its participation interest other than as provided in the agreement.
Pursuant to the agreement, Open Solutions was granted the right, at any time prior to the
repayment in full of Randfontein's loan, to require Randfontein to acquire Open Solution's
participation interest at a price equal to the then-outstanding loan balance. With effect from
April 1, 2002, Randfontein reacquired this 10% participation interest in the Elandskraal Venture
from Open Solutions. The aggregate consideration paid by Randfontein to Open Solutions was
Rand 210 million ($18.5 million at an exchange rate of R11.35 per $1.00). This aggregate
consideration included the cancellation of the remaining Rand 91 million ($8.0 million at an
exchange rate of R11.35 per $1.00) due to Randfontein under its loan of April 24, 2001 to Open
Solutions.
History. Gold mining began at Elandskraal in 1978 following approval of the
project in 1974 by Elandsrand Gold Mining Company for the Elandsrand operations and by Gold
Fields of South Africa Ltd. for the Deelkraal operations. Two surface shafts and two adjoining
sub-vertical shafts were sunk at Elandsrand and Deelkraal. The sub-vertical shafts at Elandsrand
were completed in 1984, which accessed a deeper reef in the lease area. The sub shaft deepening
project, or SSDP, the deepening of the sub-vertical shafts to approximately 3,400 meters below
surface, is an on-going project to access and exploit a portion of the mine. Harmony believes
that the SSDP will enable Elandskraal to produce approximately 350,000 ounces per year over
the life of the mines. Sinking of a third surface shaft commenced at Deelkraal in 1988.
However, this shaft was not completed and is now flooded. In 1997, Gold Fields of South Africa
Ltd. sold Deelkraal to Elandsrand, which later was incorporated into AngloGold.
Geology. Elandskraal contains three identified main reef groupings, the
Ventersdorp Contact Reef, or VCR, the Carbon Leader Reef, or CLR and the Mondeor Reef.
Only the VCR is economic to mine and has been mined at depths below surface between 1,600
and 2,800 meters with future production to 3,300 meters below surface at the Elandsrand
operations and at depths below surface of 2,750 meters at the Deelkraal operations. The VCR
and CLR consist of narrow (20 centimeters to 2 meters) tabular orebodies of quartz pebble
conglomerates hosting gold, with extreme lateral continuity.
At the Elandsrand operations, the vertical separation between the VCR and CLR
increases east to west from 900 meters to 1,300 meters as a result of the relative angle of the
VCR unconformity surface to the regional stratigraphic strike and dip. The CLR strikes west-
southwest and dips to the south at 25 degrees. The VCR strikes east-northeast and has a regional dip of
45
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21 degrees  to the south-southeast. Local variations in dip are largely due to the terrace-and-slope
palaeotopography surface developed during VCR deposition.
The dip of the VCR at the Deelkraal operations is relatively consistent at 24,
although there is some postulation of a slight flattening of dip at depth. The VCR has a limit of
deposition running roughly north-south through the center of the lease area. The VCR is not
developed to the west of this line. Some stoping has occurred to the west of this limit, but this
was to exploit reefs from the Mondeor Conglomerates, stratigraphically underlying the VCR.
Mining Operations. The Elandskraal operations are engaged in both underground
and waste rock mining. These operations are subject to all of the underground and waste rock
mining risks detailed in the Risk Factors section. Due to the operating depths of the Elandskraal
underground operations, seismicity and pressure related problems are a risk. In December 2001,
a seismic event at the Deelkraal operations caused the deaths of six workers. Another seismic
event in July 2002 fatally injured two workers. Although these types of events are tragic in
nature and disrupting on production, it should not affect the longer term production
achievements. Harmony regularly revisits its mining strategy and management procedures at all
of its deeper mining operations in connection with its efforts to mitigate this risk. The primary
challenges facing the Elandskraal operations are the lowering of working costs, increasing
mining flexibility, controlling capital expenditure and the timely completion of the SSDP.
Harmony expects that the SSDP will be completed by the end of fiscal 2005.
Following the acquisition, Harmony has implemented the "Harmony Way" at
Elandskraal in an effort to cut costs and increase productivity. This has improved the overall
cost structure which has enabled Harmony to pursue capital development of the 35 level project
of the Deelkraal shaft. This is a one-level extension of the depth of mining operations and will
permit an additional 156,000 ounces of gold production over the life of the Deelkraal mine. The
results are dependent upon the timely and successful completion of this project. Harmony also
completed restructuring of the Elandskraal operations, which resulted in the retrenchment of
approximately 1,450 employees.
During the quarter ended September 30, 2003, the Elandskraal operations
experienced operational problems. Development was delayed by an accident caused by a
seismic event that resulted in one fatality. Although this had an impact on the development for
the period, it is not expected that it will impact on the longer term production plan. The first
raise line on a 102 level project has been holed and is currently being prepared for stoping, which
should commence in or around March, 2004. The development rates have picked up steadily
over the last two months and Harmony feels confident that planned production profiles will be
met.
During fiscal 2003, the safety record at the Elandskraal mines in terms of lost
time frequency rate (25.37) compared unfavorably with the group average of 22.35. The fatality
frequency rate (0.57) was also higher than the South African industry average as a result of the
seismic event described above. Significant work is being done to address this. Safety standards
for other Harmony operations are being applied at Elandskraal and receive constant and high-
level attention. Where problems are identified steps are being taken to address the situation. In
May 2002, Harmony appointed an executive officer to lead initiatives to improve workplace
46
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health and safety at Harmony's South African operations. See "Item 6. Directors and Senior
Management--Board Practices."
Underground Operations. Detailed below are the operating and production
results from underground operations at Elandskraal for fiscal 2003 and 2002, and for the
calendar year ended December 31, 2001:
Fiscal Year ended
June 30,
Calendar
Year ended
December 31,
2003
2002
2001
Production
Tons (`000) ..............................................
2,066
2,420
 2,427
Recovered grade (ounces/ton)..................
0.168
0.183
0.189
Gold sold (ounces)...................................
347,276
442,715
459,626
Results of operations ($)
Cash cost (`000).......................................
95,941
88,425
111,867
Cash profit (`000) ....................................
18,505
35,683
13,510
Cash costs
Per ounce of gold ($) ...............................
276
200
243
Following the completion of the Elandskraal acquisition, Harmony increased the
processing of secondary surface sources at Elandskraal. Given the significance of the surface
production as a proportion of Elandskraal's total production, Harmony began to segment
Elandskraal's production figures into underground and surface production in the quarter ended
December 31, 2001. The historic figures presented above have been adjusted to reflect this
segmentation in all prior periods.
Tons milled from Elandskraal's underground operations were 2,066,000 in fiscal
2003, compared with 2,420,000 in fiscal 2002, and ounces were 347,276 in fiscal 2003,
compared with 442,715 in fiscal 2002. This decrease in tons milled and ounces sold was due to
the problems experienced with the orepass system at the Elandsrand operation, which resulted in
waste rock diluting the recovery grade and reduced flexibility in the old mine area. Cash costs
were $276 per ounce of gold in fiscal 2003, compared with $200 per ounce of gold in fiscal
2002. This increase was attributable primarily to the appreciation of the Rand against the U.S.
dollar, which caused a significant increase when these costs were translated into U.S. dollars.
See "Item 5. Operating and Financial Review and Prospects--Exchange Rates." If expressed in
Rand terms, costs per ounce would have increased in fiscal 2003 due to increases in the costs of
labor and supplies due to the implementation of collective bargaining agreements and the effect
of inflation on supply contracts.
Elandskraal operates two production shaft units, comprised of four surface shafts
and two sub-vertical shafts. Set out below are the rock hoisting capacities of Elandskraal's
production shafts.
Shaft
Hoisting Capacity
(tons/month)
Elandsrand No. 2 shaft and sub-vertical shaft .................
Deelkraal No. 1 shaft and sub-vertical shaft ...................
206,000
365,000
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In the quarter ended June 30, 2001, the hoisting capacity at the Deelkraal No. 1
sub-vertical shaft was limited to approximately 50% of designed rating because of the corrosive
effects of mine water on the shaft steelwork. Harmony employed remedial action designed to
prevent further deterioration and to repair the infrastructure to maintain current production. As a
result of the remedial action, the Deelkraal No. 1 sub-vertical shaft is now operating at the design
capacity again.
On a simplistic basis (and assuming that no additional reserves are identified), at
the production level achieved in fiscal 2003, the June 30, 2003 reported proven and probable ore
reserves of 43.98 million tons will be sufficient for the Elandskraal operations to maintain
underground production until approximately calendar year 2020. However, because the
Elandskraal operations consist of several different mining sections that are at various stages of
maturity, it is expected that some sections will decrease production earlier than others. In
addition, any future changes to the assumptions upon which the ore reserves are based, as well as
any unforeseen events affecting production levels, could have a material effect on the expected
period of future operations. See "Item 3. Key Information--Risk Factors-- Harmony's gold
reserve figures may yield less gold under actual production conditions than Harmony currently
estimates."
Elandsrand New Mine Project. The project, initiated by AngloGold in 1991, was
intended to increase the life of mine by exploiting the southern portion of the lease area between
3,000 - 3,600 meters below surface. This was to be achieved by deepening the sub-vertical and
ventilation shafts. Developing to reef is under way on 102, 105, 109 and 113 levels to access the
higher grade payshoot which was mined on the shallower levels of the old mine and will come into production over the next twelve months.
Surface Operations. Following the completion of the Elandskraal acquisition,
Harmony increased the processing of ore from numerous secondary surface sources located in
close proximity to the Elandskraal shafts, including low grade rock dumps and tailings dams
(slimes and sand). Given the significance of the surface production as a proportion of
Elandskraal's total production, Harmony began to segment Elandskraal's production figures into
underground and surface production in the quarter ended December 31, 2001. It was also
decided to dedicate the Deelkraal metallurgical plant to only treat surface sources, that way
ensuring that it is treated as a stand alone business which could be measured as such. AngloGold,
the previous owner of the Elandskraal assets, had not focused on this type of production and
accordingly, had not reported such production from secondary sources at Elandskraal.
Detailed below are the operating and production results from surface operations at
Elandskraal for fiscal 2003, 2002 and 2001.
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Fiscal Year ended
June 30,
2003
2002
2001
1
Production
Tons (`000) ................................................
1,228
1,197
141
Recovered grade (ounces/ton) ...................
0.016
0.028
0.028
Gold sold (ounces).....................................
19,323
33,344
3,987
Results of operations ($)
Cash cost (`000).........................................
4,518
4,744
530
Cash profit (`000) ......................................
1,924
4,984
601
Cash costs
Per ounce of gold ($) .................................
233
142
133
____________
1
Includes gold sales from surface mining at Elandskraal mines for three months from April 1, 2001.
Tons milled from the Elandskraal surface operations were 1,228,000 in fiscal
2003, compared with 1,197,000 in fiscal 2002. This increase was attributable primarily to
increased processing of materials from rock dumps and tailings dams at the Deelkraal plant,
through plant optimization. It must also be noted that this plant is now dedicated to the
processing of such secondary surface sources only. All underground ore is being treated at the
Elandsrand metallurgical plant. Cash costs per ounce of gold were $233 per ounce in fiscal
2003, compared with $142 per ounce in fiscal 2002. This increase was attributable to lower
recovery grade and the stronger Rand, which caused a significant increase when these costs were
translated into U.S. dollars. The lower recovery grade was as a result of lower grade material
being treated from the rock dump. The treatment of the rock dump was completed during the
December quarter, 2003.
Plants. Commissioned in 1978, the Elandsrand Plant has milling in closed circuit
with primary and secondary hydrocyclones, secondary ball milling in closed circuit with
hydrocyclones, thickening and cyanide leaching in a CIP pump cell carousel circuit. The CIP
was commissioned after an upgrade of the facility in 1999. Following post-acquisition capital
improvements, loaded carbon milled at the Elandsrand Plant is transported by road to the Cooke
Plant at Randfontein for elution, electro-winning and smelting to produce dor. Residues from
the CIP are pumped either to a backfill plant or directly to the tailings facility. Ore from
Elandsrand and Deelkraal underground operations are delivered to the plant for treatment.
Commissioned in 1978, the Deelkraal plant has milling in closed circuit with
primary and secondary hydrocyclones, thickening, cyanide leaching, filtration, zinc precipitation
and smelting to produce dor. Residues from the re-pulped filtercake are pumped either directly
to a backfill preparation plant or directly to the tailings facilities. The current operating capacity
of 116,000 tons/month when processing waste differs from the design capacity of 149,000
tons/months as it is limited by the condition of the filter plant. The Deelkraal plant was used
primarily for the treatment of waste rock. During December, 2003, the plant was converted back
to treating Deelkraal underground ore. There are plans to commission a new pumpcell CIP plant
to process the Deelkraal underground ore from 2004.
The following table sets forth processing capacity and average tons milled during
fiscal 2003 for each of the plants:
49
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Plant
Processing
Capacity
Average milled
for fiscal year ended
June 30, 2003
(tons/month)
(tons/month)
Elandsrand Plant ......................
209,000
173,000
Deelkraal Plant.........................
149,000
102,000
In fiscal 2003, the Elandsrand Plant recovered approximately 96% of the gold
contained in the ore delivered for processing and the Deelkraal Plant recovered approximately
92% of the gold contained in the ore delivered for processing.
Capital Expenditure. Harmony incurred approximately Rand 136.8 million in
capital expenditures at the Elandskraal operations in fiscal 2003, principally for the SSDP.
Harmony has budgeted Rand 151.1 million ($23.2 million) for capital expenditures at the
Elandskraal operations in fiscal 2004, primarily for the SSDP and secondarily to develop level
35 of the Deelkraal shaft and improve underground conditions of the Elandsrand shaft.
Randfontein Operations
Introduction. The Randfontein gold mine is located in the Gauteng Province of
South Africa, approximately thirty kilometers west of Johannesburg. The Randfontein mine
currently operates under a mining authorization with a total area of 17,753 hectares. The
Randfontein mine has both underground and surface (waste rock) mining operations, and has two
metallurgical plants. Underground mining is conducted at Randfontein at depths ranging from
500 meters to 2,500 meters. Harmony has also historically conducted open cast mining at
Randfontein, however, these open cast operations were downscaled and discontinued in the six
months ended December 31, 2001, as the open cast mine had reached the end of its useful life.
In fiscal 2003, Harmony's Randfontein operations accounted for approximately 20% of
Harmony's total gold sales.
History. Gold mining began at the Randfontein mine in 1889. Since the
commencement of mining operations to June 30, 2003, Randfontein has sold approximately 54.4
million ounces of gold at an average recovered grade of 0.163 ounces per ton. Harmony
obtained management control of Randfontein in January, 2000 and by June 30, 2000 had
acquired 100% of Randfontein's outstanding ordinary share capital and 96.5% of the warrants to
purchase ordinary shares of Randfontein. See "Item 4. Information on the Company--
Business--History."
Since acquiring Randfontein, Harmony has implemented the "Harmony Way" at
Randfontein. Harmony has reduced the number of senior managers, has sold off non-core assets
and has implemented management teams.
Geology. The Randfontein mine is situated in the West Rand Goldfield of the
Witwatersrand Basin, the structure of which is dominated by the Witpoortjie and Panvlakte Horst
blocks, which are superimposed over broad folding associated with the southeast plunging West
50
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Rand Syncline. The structural geology in the north section of the Randfontein mine is dominated
by a series of northeast trending dextral wrench faults.
The Randfontein mine contains six identified main reef groupings: the Black
Reef; the Ventersdorp Contact Reef; the Elsburg Formations; the Kimberleys; the Livingstone
Reefs; and the South Reef. Within these, several economic reef horizons have been mined at
depths below surface between 600 and 1,260 meters.
The reefs comprise fine to coarse grained pyritic mineralization within well
developed thick quartz pebble conglomerates or narrow single pebble lags, which in certain
instances are replaced by narrow carbon seams.
Mining Operations. The Randfontein operations are engaged in both
underground and waste rock mining. These operations are subject to all of the underground and
waste rock mining risks detailed in the Risk Factors section, and have historically also been
subject to the open pit mining risks. The open cast operations were downscaled and discontinued
in the six months ended December 31, 2001, as the mine had reached the end of its useful life.
Due to the shallow to moderate depths of the operations, seismicity and pressure related
problems are infrequent. There is a risk of subterranean water and/or gas intersections in some
areas of the mine. However, this risk is mitigated by active and continuous management and
monitoring, which includes the drilling of boreholes in advance of faces. Where water and/or
gas is indicated in the drilling, appropriate preventative action is taken.
The primary challenge facing the Randfontein operations is the lowering of
working costs, and some progress in addressing this challenge has been made since Harmony's
acquisition of management control of Randfontein in January 2000. In particular, in early 2000
the shaft 4 section of the Randfontein operations was operating at a loss, raising the risk of
closure at that location. Although losses at this location were reduced during 2000, Harmony
believed that losses were still at unacceptable levels in the quarter ended March 31, 2001 and
closed the shaft (other than pumping installations) in the quarter ended June 30, 2001. The
closure resulted in the retrenchment of approximately 1,500 employees (not including
contractors), with the rest of the employees transferred to other shafts (including Doornkop),
displacing contractors. Following Harmony's closure of the shaft, contractors mined this shaft at
a reduced rate on a royalty basis.
As a result of an eleven day strike in May, 2002 by Randfontein's NUM
members, Randfontein's production for the quarter ended June 30, 2002 was reduced by
approximately 102,000 tons at a grade of 0.146 ounces per ton, or 14,892 ounces. See "Item 6.
Directors, Senior Management and Employees--Employees--Unionized Labor."
Production at the Cooke 1 shaft was focused on the extraction of the shaft pillar,
and tonnage and grade at this shaft began to decline in the quarter ended September 30, 2002
from the previous levels of approximately 70,000 tons per month to approximately 50,000 tons
per month at a grade of approximately 0.15 ounces per ton.
Operations at Cooke 1 were affected by seismicity following the removal of the
shaft pillar. Plans to mine out the abutments over the haulages, thereby eliminating the stress
51
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associated with the removal of the pillar, are underway and are expected to be completed in the
next six months, reducing the risk of future seismicity in this area substantially.
The Doornkop South Reef Project was announced on January 22, 2003. It is
estimated that the South Reef project has an in situ resource of 6.6 million ounces. For project
purposes, it is estimated that 129 tons or 3.75 million ounces of gold will be recovered from the
resource at a recovery grade of 0.186 ounces per ton.
Currently, the Kimberley Reef is mined on the upper levels of the Doornkop
Shaft. The South Reef on the lower levels is the target of the proposed shaft-deepening project.
The deepening of the main shaft is expected to be completed by mid-2005 with the development
program finishing in 2007. The production buildup from the South Reef will take place
beginning in 2006 and is expected to peak by 2012 at a projected 148,812 tons per month.
The main shaft is currently at a depth of 1,340 meters below surface and the sub-
vertical ventilation shaft at a final depth of 1,949 meters below surface. To access the South Reef
resource the main shaft will be deepened to a depth of 2,034 meters and the spillage incline shaft
extended to a depth of 2,082 meters below surface.
Randfontein entered into an agreement with African Vanguard Resources
(Doornkop) (Pty) Limited on January 21, 2003, pursuant to which Randfontein sold 26% of its
mineral rights in respect of the Doornkop Mining Area to Africa Vanguard for a consideration of
Rand 250 million. The consideration comprised cash of Rand 140 million and Rand 110 million
in call options on 290,000 ounces of gold, being equal to 16% of the gold produced at Doornkop
during the first 10 years of operation. Randfontein and Africa Vanguard also entered into a joint
venture agreement on the same day, pursuant to which they agreed to jointly conduct a mining
operation in respect of the Doornkop Mining Area. The profits will be shared 84% to
Randfontein and 16% to Africa Vanguard. The agreements were subject to the fulfillment of
certain conditions precedent, the last of which was fulfilled on August 12, 2003. The agreements
were implemented and the purchase price paid on August 15, 2003. For US GAAP purposes,
Harmony will not account for this transaction as a sale, but will consolidate the results of Africa 
Vanguard and the Doornkop Joint Venture, as both these entities have been determined to be
variable interest entities with Harmony as the primary beneficiary of both variable interest entities.
Mining at the South Reef at Doornkop was temporarily suspended during the
fourth calendar quarter of 2003 to allow for the upgrade of the ventilation with respect to
increasing both hoisting capacity and ventilation intake. This caused the overall recovery on
Doornkop to drop. This situation will continue until mining is commenced, expected in January
2004.
The safety record at the Randfontein operations during fiscal 2003 in terms of lost
time frequency rate (21.22) compared favorably with the group average while the fatality
frequency rate (0.51) compared unfavorably with the South African industry average.
Nevertheless, safety at the operations receives constant and high-level attention and where
problems are identified steps are taken to address the situation. In May 2002, Harmony
appointed an executive officer to lead initiatives to improve workplace health and safety at
Harmony's South African operations. See "Item 6. Directors, Senior Management and
Employees--Directors and Senior Management--Board Practices."
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Underground Operations. Detailed below are the operating and production
results from underground operations at Randfontein for the past three fiscal years:
Fiscal year ended June 30,
2003
2002
2001
Production
Tons (`000) ...........................................................
3,162
3,606
4,397
Recovered grade (ounces/ton)...............................
0.144
0.147
  0.145
0.147
Gold sold (ounces)................................................
454,917
531,588
640,408
Results of operations ($)
Cash cost (`000)....................................................
96,190
93,324
139,781
Cash profit (`000) .................................................
53,166
57,781
31,822
Per ounce of gold ($) ............................................
211
176
218
Tons milled from Randfontein's underground operations were 3,162,000 in fiscal
2003, compared with 3,606,000 in fiscal 2002, and ounces sold were 454,917 in fiscal 2003,
compared with 531,588 in fiscal 2002. This decrease in tons milled and ounces sold was
primarily due to the result of completion of the shaft pillar at Cooke 1 shaft. Cash costs per
ounce of gold were $211 in fiscal 2003, compared with $176 in fiscal 2002. This increase was
attributable primarily to the appreciation of the Rand against the U.S. dollar, which caused a
significant increase when these costs were translated into U.S. dollars. See "Item 5. Operating
and Financial Review and Prospects--Exchange Rates." If expressed in Rand terms, costs per
ounce would have increased in fiscal 2003, due primarily to increases in the costs of labor and
supplies due to the implementation of collective bargaining agreements and the effect of inflation
on supply contracts.
The underground operations at Randfontein are comprised of the underground
sections of the Cooke shafts No. 1, 2, and 3, shaft 4 and the Doornkop shaft.
Set out below are the hoisting capacities of Randfontein's shafts:

Shaft
Hoisting Capacity
(tons/month)
Cooke 1
1
.............................................
194,450
Cooke 2 ................................................

Cooke 3 ................................................


Cooke 4 ................................................

291,700
2
164,200
Doornkop..............................................
54,700
206,600
_______________________
1
Currently operating at a rate of 50,000 tons per month in connection with the extraction of the shaft pillar.
2
The shaft was closed during April 2002. The future of the shaft is being considered.
On a simplistic basis (and assuming that no additional reserves are identified), at
the production level achieved in fiscal 2003, the June 30, 2003 reported proven and probable
underground ore reserves of 29.08 million tons will be sufficient for the Randfontein
underground operations to maintain production until approximately fiscal 2009. However,
because the Randfontein operations consist of several different mining sections that are at
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various stages of maturity, it is expected that some sections will decrease production earlier than
others. In addition, any future changes to the assumptions upon which the reserves are based, as
well as any unforeseen events affecting production levels, could have a material effect on the
expected period of future operations. See "Item 3. Key Information--Risk Factors--
Harmony's gold reserve figures may yield less gold under actual production conditions than
Harmony currently estimates."
Surface Operations. Open cast operations at Randfontein, which exploited the
open pit operations of the Lindum mine, were downscaled and discontinued in the six months
ended December 31, 2001, as the mine had reached the end of its useful life. Currently,
Randfontein's surface operations are focused on the recovery of gold from areas previously
involved in processing, including waste rock dumps and tailings dams (slimes and sand).
Detailed below are the operating and production results from surface operations at Randfontein
for the past three fiscal years:
Fiscal year ended June 30,
2003
2002
1
2001
Production
Tons (`000) .......................................................
2,212
1,687
2,533

Recovered grade (ounces/ton) ..........................
0.017
0.018
0.032

Gold sold (ounces)............................................
36,973
30,050
83,013

Results of operations ($)
Cash cost (`000)................................................
7,995
5,952
19,203

Cash profit (`000) .............................................
4,304
2,568
3,557

Cash costs
Per ounce of gold ($) ........................................
216
198
231
_____________
1
Open cast operations were downscaled and discontinued in the six months ended December 31, 2001 and current surface
operations exploit waste rock dumps and tailings dams (slimes and sand).
Tons milled from Randfontein's surface operations were 2,212,000 in fiscal 2003,
compared with 1,687,000 in fiscal 2002, and ounces sold were 36,973 in fiscal 2003, compared
with 30,050 in fiscal 2002, recovered grade was 0.017 in fiscal 2003, compared with 0.018 in
fiscal 2002. The surface sources are run as a separate business with dedicated management staff.
The ore is fed to a separate metallurgical plant (Doornkop plant) and is not mixed with any
underground ore. The improved tonnage was as a result of this dedicated focus. Optimization in
terms of mining and the metallurgical process is ongoing. In fiscal 2003, cash operating costs
increased to $216 per ounce from $198 per ounce in fiscal 2002. This increase was attributable
primarily to the appreciation of the Rand against the U.S. dollar, which caused a significant
increase when these costs were translated into U.S. dollars. See "Item 5. Operating and
Financial Review and Prospects--Exchange Rates." If expressed in Rand terms, costs per ounce
would have increased in fiscal 2003, due primarily to the reduction of relatively lower-cost,
higher-grade production from the open cast operations.
On a simplistic basis (and assuming that no additional reserves are identified), at
the production level achieved in fiscal 2003, the June 30, 2003 reported proven and probable
surface reserves of 35.45 million tons would be sufficient for the Randfontein operations to
maintain surface production until approximately the end of fiscal 2004. Future changes to the
assumptions upon which the reserves are based, as well as any unforeseen events affecting
production levels, could have a material effect on the expected period of future operations. See
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"Item 3. Key Information--Risk Factors-- Harmony's gold reserve figures may yield less gold
under actual production conditions than Harmony currently estimates."
Plants. The processing facilities at the Randfontein mine presently comprise two
operating plants: the Cooke metallurgical plant and the Doornkop metallurgical plant, both of
which are serviced by a surface rail network. The Cooke metallurgical plant, commissioned in
1977, is a hybrid CIP/CIL plant, which processes the underground ore from the Randfontein
operations. The Doornkop metallurgical plant, commissioned in 1985, is a conventional CIP
plant, which is used to treat waste rock and other surface accumulations.
The following table sets forth processing capacity and average tons milled during
fiscal 2003 for the Cooke and Doornkop plants:

Plant
Processing Capacity
Average milled for the fiscal year ended
June 30, 2003
(tons/month)
(tons/month)
Cooke..............................................................
308,600
257,000
Doornkop........................................................
242,500
190,000
In fiscal 2003, the Cooke plant recovery has been in the range of 96% to 97%,
while Doornkop plant recovered approximately 90% of the gold contained in the ore delivered
for processing.
Capital Expenditure. Harmony incurred approximately Rand 36.8 million 
in capital expenditures at the Randfontein operations in fiscal 2003, principally to upgrade plants 
and equipment and develop shaft infrastructure. Harmony has budgeted Rand 195.8 million 
($30 million) for capital expenditures at the Randfontein operations in fiscal 2004, primarily for 
the development of the Doornkop shaft.
Free State Operations
Introduction. Harmony's Free State operations are comprised of the original
Harmony mines, the Unisel mine, Saaiplaas shaft 3, the Masimong shaft complex (comprised of
Masimong shafts 4 and 5), Brand shafts 2, 3 and 5, and the Vermeulenskraal North mineral
rights area. Mining is conducted at Harmony's Free State operations at depths ranging from 500
meters to 2,500 meters. In fiscal 2003, Harmony's Free State operations accounted for
approximately 25% of Harmony's total gold sales.
History. Harmony's Free State operations began with the Harmony mine, which
is an amalgamation of the Harmony, Virginia and Merriespruit mines. Beginning in 1996,
Harmony began purchasing neighboring mine shafts. The Unisel mine was purchased in
September 1996, the Saaiplaas mine shafts 2 and 3 were purchased in April 1997, the Brand
mine shafts 2, 3 and 5 were purchased in May 1998 and the Masimong complex (formerly
known as Saaiplaas shafts 4 and 5) was purchased in September 1998.
Geology. Harmony's Free State operations are located in the Free State goldfield
on the southwestern edge of the Witwatersrand Basin. Within this area, the operations are
55
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located on the southwestern and southeastern limb of a synclinal closure, with the Brand,
Saaiplaas and Masimong shafts occupying northerly extensions of the same structure. The reefs
dip inwardly from their sub-outcrop positions in the east and south of the mine to a position close
to the western boundary of the original Harmony mine, where the reefs abut against the De Bron
fault. To the west of the De Bron faulted zone, faulting is generally more intense, resulting in
structurally more complex mining conditions.
Mining Operations. The Free State operations are engaged in both underground
and waste rock mining. These operations are subject to all of the underground and waste rock
mining risks detailed in the Risk Factors section. Due to the shallow to moderate depths of the
underground operations, seismicity and pressure related problems are relatively infrequent with
the exception of the Brand shafts where these problems receive constant attention. Harmony
regularly revisits its mining strategy and management procedures in connection with its efforts to
mitigate risks of these problems. There is a risk of subterranean water and/or gas intersections in
some areas of the mine. However, this risk is mitigated by active and continuous management
and monitoring, which includes the drilling of boreholes in advance of faces. Where water
and/or gas is indicated in the drilling, appropriate preventative action is taken. The principal
challenges at the Free State operations of achieving optimal volumes and grades of ore
production are addressed by stringent ore reserve management. In 2002, Harmony began
implementing the Masimong Expansion Project, which includes developing the Basal and B-
Reef orebodies in the Masimong shaft area and equipping the shaft. As part of the Harmony
way, other activities during 2003 were the continued extraction of the Harmony No. 2 shaft pillar
and the optimization of all mining operations with the introduction of flatter supervisory
structures and the empowerment of the employees on the rock face.
The Virginia 2 shaft was closed at the end of 2001, and is currently used only as a
service shaft. Harmony also began closing the Harmony 4 shaft in the quarter ended June 30,
2002, following the partial extraction of the shaft pillar. Mining personnel from the Harmony 4
shaft have been transferred to other shafts. The Harmony 3 shaft is currently used only as a
service shaft for pumping, although some of its reserves are mined through the adjacent
Harmony 2 shaft. In conjunction with the development of the hoisting operations at Masimong 5
shaft, Harmony downscaled the Masimong 4 shaft to a service and small mining shaft in the
quarter ended June 30, 2001. In the quarter ended June 30, 2002, however, Harmony determined
that additional production at the Masimong 4 shaft had become economical under current market
conditions. Additional personnel are being redeployed as and when additional areas of the
Masimong 4 shaft are accessed to permit further production in the future. Under market
conditions prevailing in the quarter ended June 30, 2002, Harmony also decided to commence
extraction of the shaft pillar at Saaiplaas 3, which previously operated as a service shaft.
Harmony also decided to mine the Brand 2 shaft with contractors on a royalty basis. During the
quarter ended September, 2003, Harmony decided to put the Brand 5 shaft on care and
maintenance and to continue with exploration development only, which is being managed from
the Unisel shaft. Care and maintenance will remain in place until market conditions are more
favorable or more economical parts of the orebody are discovered. All labor has been transferred
to other Harmony operations, where they have augmented natural attrition positions or displaced
contractor labor.
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The safety record at the Free State operations during fiscal 2003 in terms of lost
time frequency rate (24.43) was higher than the group average while the fatality frequency rate
(0.07) compares favorably with the South African industry average. Safety at the operations
receives constant and high-level attention and where problems are identified steps are taken to
address the situation. In May 2002, Harmony appointed an executive officer to lead initiatives to
improve workplace health and safety at Harmony's South African operations. See "Item 6.
Directors, Senior Management and Employees--Directors and Senior Management--Board
Practices."
Underground Operations. Detailed below are the operating and production
results from the Free State underground operations for the past three fiscal years:
Fiscal year ended June 30,
2003
2002
2001
Production
Tons (`000) ...........................................................
4,721
4,748
5,831
Recovered grade (ounces/ton)...............................
0.124
0.126
0.118

Gold sold (ounces)................................................
538,990
598,635
686,223
Results of operations ($)
Cash cost (`000)....................................................
146,079
131,817
181,239

Cash profit (`000) .................................................
38,300
43,238
6,862
Cash costs
Per ounce of gold ($) ............................................
271
220
264
Tons milled from the Free State underground operations were 4,721,000 in fiscal
2003, compared with 4,748,000 in fiscal 2002, and ounces sold were 538,990 in fiscal 2003,
compared with 598,635 in fiscal 2002, primarily because production in fiscal 2003 included only
limited production from the Masimong 4, Virginia 2, Harmony 4 and Brand 2 shafts.
Recovered grade was 0.124 in fiscal 2003, compared with 0.126 in fiscal 2002,
mainly as a result of the shaft closures. Cash costs were $146,079,000 in fiscal 2003 compared
with $131,817,000 in fiscal 2002. This increase was attributable primarily to lower production
levels from the Masimong 4, Virginia 2, Harmony 4 and Brand 2 shafts, as described above.
Cash costs per ounce were $271 in fiscal 2003, compared with $220 in fiscal 2002. This
increase was attributable primarily to the appreciation of the Rand against the U.S. dollar, which
caused a significant increase when these costs were translated into U.S. dollars. See "Item 5.
Operating and Financial Review and Prospects--Exchange Rates." If expressed in Rand terms,
costs per ounce would have increased in fiscal 2003, due primarily to increases in the costs of
labor and supplies due to the implementation of collective bargaining agreements and the effect
of inflation on supply contracts.
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Harmony currently has nine operating shafts at its Free State operations and three
service shafts. The total shaft hoisting capacity is detailed below:
Shaft
Hoisting Capacity
(tons/month)
Harmony shaft 2 .............................................................
250,000
Harmony shaft 3
1
............................................................                                    99,200
Harmony shaft 4
2
............................................................                                  161,000
Merriespruit shaft 1 ........................................................                                      142,200
Merriespruit shaft 3 ........................................................                                      217,200
Virginia shaft 2
3
..............................................................                                  113,500
Unisel..............................................................................                                      151,000
Saaiplaas 3
4
.....................................................................
 194,000
Brand shaft 2
5
.................................................................                                   132,300
Brand shaft 3...................................................................
132,300
Brand shaft 5
7
.................................................................                                   166,400
Masimong shaft complex
6
..............................................                                164,200
______________________________
1
Integrated with Harmony shaft 2 during fiscal 2002 and currently operating as a service shaft.
2
Closed in the quarter ended June 30, 2002 and currently operating as a service shaft.
3
Closed in the quarter ended December 31, 2001 and currently operating as a service shaft.
4
Previously operated as a service shaft. Limited extraction of the shaft pillar commenced in the quarter ended
September 30, 2002 and mined as a production unit with Masimong 5.
5
Production suspended in the quarter ending March 31, 2002 pending consideration of this shaft's future.
6
Includes the Masimong 4 and 5 shafts.
7
Closed in the September, 2003 quarter. Limited development is taking place to explore some virgin areas on the
shaft
On a simplistic basis (and assuming that no additional reserves are identified), at
the production level achieved in fiscal 2003, the June 30, 2003 reported proven and probable ore
reserves of 53.09 million tons will be sufficient for the Free State operations to maintain
underground production until approximately fiscal 2009. However, because Harmony's Free
State operations consist of several different mining sections that are at various stages of maturity,
it is expected that some sections will decrease production earlier than others and it is currently
envisaged that a decrease of production in certain sections will commence in the near term. In
addition, any future changes to the assumptions upon which the reserves are based, as well as
any unforeseen events affecting production levels, could have a material effect on the expected
period of future operations. See "Item 3. Key Information--Risk Factors-- Harmony's gold
reserve figures may yield less gold under actual production conditions than Harmony currently
estimates."
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Surface operations. In light of the higher prevailing market price for gold in
fiscal 2002 and 2003, and in order to maximize use of the Free State plants, Harmony began
processing materials from secondary surface sources, primarily waste rock dumps and tailings
dams (slimes and sand), at the Free State operations in the quarter ended March 31, 2002.
Detailed below are the operating and production results from the Free State surface operations
for the fiscal year ended June 30, 2003 and the six months ended June 30, 2002, which is the first
period during which Harmony processed significant amounts of these secondary surface
materials at the Free State operations:
Fiscal year ended June 30,
2003
Six months ended
June 30, 2002
Production
Tons (`000) ...........................................................
1,164
255
0.021
0.052
Gold sold (ounces)................................................
24,209
13,309
Results of operations ($)
Cash cost (`000)....................................................
6,550
613
Cash profit (`000) .................................................
1,517
3,673
Cash costs
Per ounce of gold ($)
.
............................................
271
Recovered grade (ounces/ton)
46
1
______________________________
1
Includes 8,808 ounces of low-cost production from clean-up of the plant and refinery.
On a simplistic basis (and assuming that no additional reserves are identified),
at the production level achieved during the 2003 fiscal year, the June 30, 2003 reported proven and probable ore reserves of 19.43 million tons will be sufficient for the Free State operations to maintain surface production until approximately fiscal 2009. However, any future changes to the assumptions upon which the reserves are based, as well as any unforeseen events affecting production levels, could have a material effect on the expected period of future operations. See "Item 3. Key Information--Risk Factors-- Harmony's gold reserve figures may yield less gold
under actual production conditions than Harmony currently estimates."
Plants. There are three metallurgical plants at the Free State operations, namely
the Central, Virginia and the Saaiplaas plants. The Central and Virginia plants employ CIP/CIL
hybrid technology. The Saaiplaas plant has been converted from the zinc precipitation filter
process to the CIL.
The following table sets forth processing capacity and average tons milled during
fiscal 2003 for each of the plants:
Plant
Processing Capacity
Average milled for the fiscal year ended
June 30, 2003
(tons/month)
(tons/month)
Central ............................................................
264,600
191,000
Virginia........................................................... .
198,400
137,000
Saaiplaas .........................................................
242,500
160,000
__________
In fiscal 2003, Harmony's plants at its Free State operations recovered
approximately 95% of the gold contained in the ore delivered for processing. Harmony's
refinery is also located at its Free State operations.
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Capital Expenditure. Harmony incurred approximately Rand 126.5 million in
capital expenditures at the Free State operations in fiscal 2003, principally for shaft development
at Saaiplaas 3, Unisel and the Masimong shaft complex. Harmony has budgeted Rand 49.1
million ($7.5 million) for capital expenditures at the Free State operations in fiscal 2004, primarily
for development of the Masimong with smaller development projects at Unisel and Merriespruit
shafts and secondarily to upgrade plants.
Evander Operations
Introduction. Harmony's Evander operations are located in the province of
Mpumalanga in South Africa and are comprised of an amalgamation of the former Kinross,
Bracken, Leslie and Winkelhaak mines and 26,952 hectares of mineral rights adjacent to these
mines. Mining at Harmony's Evander operations is conducted at depths ranging from 300
meters to 2,100 meters. In fiscal 2003, Harmony's Evander operations accounted for
approximately 15% of Harmony's total gold sales.
History. Gold mining in the Evander Basin began in 1955. Eventually, four
mining operations were established at Evander. In 1996, as a result of depletion of ore reserves,
all four mining areas were merged to form Evander. In August 1998, Harmony acquired
Evander as a wholly-owned subsidiary. Since then, Harmony has implemented the "Harmony
Way" management process at Evander.
Geology. The area covered by Evander's mining authorization and mineral rights
is situated within the Evander basin, a geologically discrete easterly extension of the main
Witwatersrand Basin. Only one economic placer unit, the Kimberley Reef, is mined at Evander.
In addition to the faulting of the reef horizon, there are numerous dykes and sills that complicate
the mining layouts, the most significant of which is an extensively developed dolerite footwall
sill that occasionally intersects the Kimberley Reef, causing displacements within it.
Mining Operations. The Evander operations are primarily engaged in
underground mining. The Evander operations also process a limited amount of waste rock as
and when necessary to allow the plants to operate efficiently. These operations are subject to all
of the underground mining risks detailed in the Risk Factors section. Due to the shallow to
moderate depths of the Evander underground operations, seismicity and pressure related
problems are relatively infrequent. There is a risk of subterranean water and/or gas intersections
in some areas of the mine. However, this risk is mitigated by active and continuous management
and monitoring, which includes the drilling of boreholes in advance of faces. Where water
and/or gas is indicated in the drilling, appropriate preventative action is taken. Evander was
affected by two underground fires and the flooding of parts of the mine during fiscal 2000, both
of which had a negative impact on production during fiscal 2000. Such incidents are generally
infrequent and there were no significant incidents in fiscal 2003. On July 12, 2002, a seismic
event at the Evander 8 shaft caused injuries to four workers (but no fatalities), significant
infrastructure damage and an interruption in production for three weeks. The damage from this
incident adversely impacted on the performance of these operations over the 2003 fiscal year due
to the fact that 8 shaft is the highest grade operation at Evander, so production and overall
recovery grade was significantly affected. The operational performance has now returned to the
pre-seismic event levels since the quarter ended June 30, 2003.
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The safety record at the Evander operations in terms of lost time frequency rate
(33.64) and fatality frequency rate (0.23) during fiscal 2003 is higher than the group average and
the South African industry average, respectively, and significant work is being done to address
this. Safety at the operations receives constant and high-level attention and where problems are
identified steps are taken to address the situation. Underground falls of ground have historically
been the biggest cause of fatal injuries at Evander. Roofbolting has been implemented at
Evander in an effort to address this risk. In May 2002, Harmony appointed an executive officer
to lead initiatives to improve workplace health and safety at Harmony's South African
operations. See "Item 6. Directors, Senior Management and Employees--Directors and Senior
Management--Board Practices."
Detailed below are the operating and production results at Evander for the past
three fiscal years:
Fiscal year ended June 30,
2003
2002
2001
Production
Tons (`000) ...........................................................                                 2,345
2,594                         2,738
Recovered grade (ounces/ton)...............................                               0.154                              0.160                         0.167
Gold sold (ounces)................................................                             360,184
415,382                     458,212
Results of operations ($)
Cash cost (`000)....................................................                              87,113
70,867                      91,053
Cash profit (`000) .................................................                               29,804
45,905                       34,089
Cash costs
Per ounce of gold ($) ............................................                                   242
171
199
Tons milled from the Evander operations were 2,345,000 in fiscal 2003,
compared with 2,594,000 in fiscal 2002, and ounces sold were 360,184 in fiscal 2003, compared
with 415,382 in fiscal 2002. This decrease was due to the downscaling of the Evander 9 shaft
and Evander 8 Shaft moving out of the higher grade area on the current operational levels of the
decline area.. Recovered grade was 0.154 in fiscal 2003, compared with 0.160 in fiscal 2002.
This decrease was due primarily to a return to mining at the average grade of the orebody
following higher than expected grade in fiscal 2002.
Since it acquired Evander, Harmony has implemented the "Harmony Way" to cut
costs and increase productivity. Harmony has decreased the number of employees at Evander
and has reorganized Evander's operations by introducing its production site management
concept, its ore reserve management system and by selling off non-core assets. These changes
have contributed to a decrease in Evander's cash operating costs from $370 per ounce in the
fiscal year prior to Harmony's purchase to $242 per ounce in fiscal 2003. The increase in cash
costs from $171 per ounce in fiscal 2002 to $242 per ounce in fiscal 2003 was attributable
primarily to the appreciation of the Rand against the U.S. dollar, which caused a significant
reduction when these costs were translated into U.S. dollars. See "Item 5. Operating and
Financial Review and Prospects--Exchange Rates." If expressed in Rand terms, costs per ounce
would have increased in fiscal 2003, due primarily to a decline in grade and increases in the costs
of labor and supplies due to the implementation of collective bargaining agreements and the
effect of inflation on supply contracts.
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Harmony currently has five operating shafts and one service shaft at its Evander
operations. The total shaft hoisting capacities are detailed below:
Shaft
Hoisting Capacity
(tons/month)
Evander No. 2 shaft ........................................................
75,800

Evander No. 3 shaft
1
.......................................................
21,800
Evander No. 5 shaft ........................................................
103,300

Evander No. 7 shaft ........................................................
116,600

Evander No. 8 shaft ........................................................
161,600

Evander No. 9 shaft
2
.......................................................
91,200
______________________
1
Mining at this shaft has ceased.
2
Downscaled beginning in the quarter ended September 30, 2002 and currently only small scale mining is taking
place here.
On a simplistic basis (and assuming that no additional reserves are identified), at
the production level achieved in fiscal 2003, the June 30, 2003 reported proven and probable ore
reserves of 77.79 million tons will be sufficient for the Evander operations to maintain
production until approximately fiscal 2018. However, because Harmony's Evander operations
consist of several different mining sections that are at various stages of maturity, it is expected
that some sections will decrease production earlier than others. In particular, Harmony
downscaled shaft 9 in the quarter ended September 30, 2002, following the final extraction of the
shaft pillar in the quarter ended June 30, 2002. Small scale mining is continuing in this area and
Harmony will do further prospect work to ensure there are no more economical areas to extract.
Production at shaft 3 had also been halted when Harmony acquired the Evander operations, and
Harmony recommenced limited production from this shaft in the quarter ended December 31,
2001. Due to the current economic climate, mining operations at shaft 3 has been ceased during
the quarter ended December 31, 2003. Harmony currently expects that production at shafts 2, 5
and 7 will end between 2009 and 2010. Although production increases are planned at other
production shafts and total production is expected to remain generally constant in the foreseeable
future, some uncertainty about longer-term production exists because infrastructure for the
subsequent years has not been planned to the same degree of detail as in the years 2001 through
2010. In addition, any future changes to the assumptions upon which the reserves are based, as
well as any unforeseen events affecting production levels, could have a material effect on the
expected period of future operations. See "Item 3. Key Information--Risk Factors--
Harmony's gold reserve figures may yield less gold under actual production conditions than
Harmony currently estimates."
Plants. There are currently two operating metallurgical plants at Evander. The
bulk of the mine's ore production is treated at the Kinross plant, which is a CIP/CIL hybrid plant.
The Winkelhaak plant mills all of the ore from shafts 2 and 5, and pumps the slurry to the
Kinross plant for further processing.
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The following table sets forth processing capacity and average tons milled during
fiscal 2003 for each of the operating plants:

Plant
Processing Capacity
Average milled for the fiscal year ended
June 30, 2003
(tons/month)
(tons/month)
Kinross..........................................................
218,300
143,000
Winkelhaak...................................................
79,400
52,000
In fiscal 2003, Harmony's plants at its Evander operations recovered
approximately 96% of the gold contained in the ore delivered for processing.
Capital Expenditure. Harmony incurred approximately Rand 98.7 million 
 in capital expenditures at the Evander operations in fiscal 2003, principally for underground 
development at shafts 3, 5, 7 and 8. Harmony has budgeted Rand 104.7 million ($16 million) 
for capital expenditures at the Evander operations in fiscal 2004, primarily for development 
of the decline shaft at 7 and 8 shaft.
Harmony is currently evaluating two development projects in the vicinity of the
Evander operations, which, if undertaken, would involve significant capital expenditures. The
Poplar Project is a greenfield site located 20 kilometers from the existing Evander operations.
Harmony estimates that a twin shaft system extending approximately 1,200 meters below the
surface would be required to mine this site, and is evaluating whether such a project would be
economically feasible. The Rolspruit Project extends from the existing Evander 8 shaft to the
Poplar Project area. Harmony is evaluating two possibilities for developing this area. The first
possibility would involve sinking a twin sub-vertical shaft system to extend Evander 8 shaft from
a depths of 1,535 meters to a depths of 2,515 meters to exploit probable reserves of 6 million
ounces of gold. The second possibility would involve sinking a separate twin shaft from the
surface to a depth of approximately 2,600 meters to exploit probable reserves of 17 million
ounces of gold. Harmony completed these feasibility studies in the second half of fiscal 2003.
Both projects, which could grow and extend the life of the operations by approximately 15 years,
need higher gold prices to proceed. Should the gold price reach levels above Rand 100,000 per
kilogram, the viability of the two projects will be revisited.
Kalgold Operations
**
Introduction. Harmony conducts a surface mining operation at the Kalgold gold
mine near Mafikeng in the North West Province of South Africa. Through Kalgold, Harmony
also controls extensive mineral rights on the Kraaipan Greenstone Belt in the North West
Province of South Africa. Harmony purchased Kalgold on July 1, 1999. On November 7, 2003,
Harmony announced its intention to sell Kalgold to The Afrikander Lease Limited (Aflease) for
Rand 275 million. In terms of the agreement, Aflease will pay Harmony Rand 137.5 million in
cash. The remaining Rand 137.5 million will be funded by an issue of ordinary shares of Rand
5.35, which was based on the seven day volume weighted average Aflease share price. A total of
**
Harmony entered into an agreement to dispose of its Kalgold operations after the end of the 2003 fiscal year for a 
consideration of R275 million. See
"Item 8. Financial Information - Significant Changes."
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25,700,935 shares will be issued to Harmony. In fiscal 2003, the Kalgold operations accounted
for approximately 3% of Harmony's total gold sales.
History. Harmony acquired Kalgold on July 1, 1999 and fully incorporated
Kalgold into its operations in October 1999. Prior to Harmony's acquisition, the Kalgold mine
had operated for more than three years.
Geology. The Kalgold operations are situated on the Kraaipan granite-greenstone
belt, which is a typical gold-bearing greenstone formation. It has undergone intense structural
deformation that has led to its dislocation into separate units.
Within the mining lease area, six steeply dipping zones of mineralization have
been identified. Several additional zones of mineralization have been located within this area
and are being evaluated. The first zone to be exploited by open cast mining has been an area
known as the D-Zone. The D-Zone orebody has a strike length of 1,400 meters, varying in
width between 40 meters in the south and 15 meters in the north.
Gold mineralization is associated with pyrite and pyrrohotite, which was
developed as a replacement mineral within a banded ironstone formation and also within
extensional, cross-cutting quartz veins within the ironstone.
Mining Operations. The Kalgold operations are engaged in open pit mining.
This operation is subject to all of the open cast mining risks detailed in the Risk Factors section.
Small subterranean water intersections in the pit are common and are actively managed and
appropriate action is taken when necessary. The primary mining challenges at the Kalgold
operations of achieving optimal volumes and grades of ore production are addressed by stringent
ore reserve management.
Some mining operations at Kalgold are conducted by mining contractors, who are
responsible for provision of the equipment and personnel needed for production of the ore under
guidance of Harmony's management. As of June 30, 2003, Harmony had 229 employees at
Kalgold, while the contractors employed 282 people. While there is no reliable industry
benchmark for safety at South African surface mining operations, the Kalgold operations had a
lost time injury frequency rate of 3.74 per million hours worked in fiscal 2003, and recorded no
fatal accidents in fiscal 2003. During fiscal 2003, refurbishment activities at Kalgold's CIL plant
resulted in some safety related incidents, which contributed to the increased lost time injury
frequency rate. Harmony has, however, addressed these issues and does not expect them to have
a material impact on long-term production. Safety at the operations receives constant and high-
level attention and where problems are identified steps are taken to address the situation.
Kalgold achieved 1,000,000 fatal free shifts during the September 2003 quarter and no employee
has lost his life on the mine since the commissioning of this mine. In May 2002, Harmony
appointed an executive officer to lead initiatives to improve workplace health and safety at
Harmony's South African operations. See "Item 6. Directors, Senior Management and
Employees--Directors and Senior Management--Board Practices."
Detailed below are the operating and production results from open cast operations
at Kalgold for the past three fiscal years:
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Fiscal year ended June 30,
2003
2002
2001
Production
Tons (`000) ...........................................................
1,195
1,060
1,057
Recovered grade (ounces/ton)...............................
0.062
0.059
0.047

Gold sold (ounces)................................................
74,590
62,179
49,351
Results of operations ($)
Cash cost (`000)....................................................
16,552
12,727
12,834
Cash profit (`000) .................................................
7,984
4,778
673
Cash costs
Per ounce of gold ($) ............................................
222
205
260
Ounces sold were 74,590 in fiscal 2003, compared with 62,179 in fiscal 2002.
This increase was due to improved recovered grade. Recovered grade was 0.062 in fiscal 2003,
compared with 0.059 in fiscal 2002. The increase in recovered grade was due to higher grade
reserves becoming available from the pit.
Cash costs at Kalgold were $ 222 per ounce in fiscal 2003, compared with $205 in
fiscal 2002. This increase was attributable primarily to the appreciation of the Rand against the
U.S. dollar, which caused a significant increase when these costs were translated into U.S.
dollars. See "Item 5. Operating and Financial Review and Prospects--Exchange Rates." If
expressed in Rand terms, costs per ounce would have decreased slightly in fiscal 2003, due
primarily to the implementation of collective bargaining agreements and the effect of inflation on
supply contracts, which was offset by improved grade. On a simplistic basis (and assuming that
no additional reserves are identified), at the production level achieved in fiscal 2003, the
June 30, 2003 reported proven and probable ore reserves of 8.47 million tons will be sufficient
for the Kalgold operations to maintain production until approximately fiscal 2008. However,
any future changes to the assumptions upon which the reserves are based, as well as any
unforeseen events affecting production levels, could have a material effect on the expected
period of future operations. See "Item 3. Key Information--Risk Factors-- Harmony's gold
reserve figures may yield less gold under actual production conditions than Harmony currently
estimates."
Plants. During fiscal 2001, Kalgold had a CIL plant and a heap leach operation.
Harmony discontinued the active use of Kalgold's heap leach operation in July 2001 and no gold
was recovered through heap leaching in fiscal 2002. Over time, however, small amounts of gold
normally can be recovered from ore remaining on the leach pads. Harmony expects to apply
leaching solution occasionally in the future to recover any available gold. Ore is trucked from
the pit and stockpiled according to grade categories. Higher grade ore is processed in the CIL
plant. Lower grade ore is dumped on heap leach pads. Following the recent commissioning of
the pre-primary crusher, the ore now undergoes a five phase crushing process. An additional ball
mill and additional leach tanks have been commissioned, which will increase the capacity to
140,000 tons/month.
The following table sets forth processing capacity and average tons milled during
fiscal 2003 for each of the plants:
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Plant
Processing
Capacity
Average milled for the fiscal year ended
June 30, 2003
(tons/month)
(tons/month)
CIL..................................................................
109,300
88,000
Heap Leach .....................................................
72,900
*
__________________
*
Active use of heap leaching was discontinued in July 2001; however, Harmony expects to apply leaching solution occasionally
in the future to recover any available gold.
In fiscal 2003, Harmony's plants at its Kalgold operations recovered
approximately 81% of the gold contained in the ore delivered for processing.
Capital Expenditure. Harmony incurred approximately Rand 51.6 million in
capital expenditures at the Kalgold operations during fiscal 2003, principally for plant upgrade.
Harmony budgeted Rand 0.9 million ($0.14 million) for capital expenditures at the Kalgold
operations in fiscal 2004.
Free Gold Operations
*
Introduction. On November 21, 2001, Harmony and ARMgold reached an
agreement in principle with AngloGold to purchase the Free Gold assets, subject to specified
conditions. Pursuant to the subsequently executed definitive agreements, the Free Gold assets
were purchased by the Free Gold Company (in which Harmony and ARMgold each has a 50%
interest) for Rand 2.200 billion ($206.8 million at an exchange rate of R10.64 per $1.00), plus an
amount equal to any liability for taxes payable by AngloGold in connection with the sale. The
Free Gold Company assumed management control of the Free Gold assets from January 1, 2002,
and completed the acquisition on April 23, 2002. Rand 1.8 billion ($169.2 million at an
exchange rate of R10.64 per $1.00) of the purchase price, plus accrued interest, was paid by the
Free Gold Company in April 2002 following the fulfillment of all conditions precedent and
Rand 400 million ($37.5 million at an exchange rate of R10.64 per $1.00) is payable by the Free
Gold Company under an interest-free loan due January 1, 2005. The additional amount relating
to taxes was paid by the Free Gold Company when the tax liability became payable by
AngloGold. The amount of Rand 682 million ($90.8 million at an exchange rate of R7.51 per
$1.00) was paid in June 2003. The Free Gold Company expects that approximately 80% of this
amount will provide the Free Gold Company with a capital expense deduction against its taxable
income from the Free Gold assets. For purposes of U.S. GAAP, Harmony accounted for its
equity interest in the Free Gold Company with effect from May 1, 2002 and the purchase price of
the Free Gold assets was determined to be Rand 2.264 billion ($239.4 million). See "Item 5.
Operating and Financial Review and Prospects--Overview."
In connection with the acquisition of the Free Gold assets, on April 5, 2002
Harmony and ARMgold entered into a formal joint venture and shareholders' agreement relating
to the Free Gold Company. The agreement provides that Harmony and ARMgold are each
responsible for 50% of the expenses associated with operating the Free Gold assets. Pursuant to
*
The Free Gold Operations are now wholly-owned by Harmony following the merger with ARMgold on September
22, 2003. For a further description of the Free Gold and ARMgold merger, please see "Item 5. Operating and
Financial Review and Prospects Contractual Obligations and Commercial Commitments" and "Item 8. Financial
Information Significant Changes."
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the agreement, an interim executive committee composed of an equal number of representatives
appointed by Harmony and ARMgold managed the Free Gold Company until the acquisition was
completed. Following completion of the acquisition, management of the Free Gold Company is
vested in a board, which initially is composed of an equal number of Harmony and ARMgold
representatives. In the future, the number of representatives on the board will vary
proportionally with the number of shares of the Free Gold Company held by Harmony and
ARMgold. The Free Gold Company also employs mining, ore reserve, engineering and human
resource managers, who were previously employed by AngloGold, Harmony or ARMgold.
Shaft operations are supervised by teams of these managers.
The Free Gold assets consist of the Joel, Tshepong, Matjhabeng and Bambanani
mines, associated infrastructure and other mineral rights in the Free State Province of South
Africa. Production from the underground mines and adjacent surface sources is processed
through three processing facilities (the Free State 1, or FS1, Plant, the Free State 2, or FS2, Plant
and the Joel Plant). During Harmony's fiscal 2002, sales from the Free Gold assets amounted to
1,143,243 ounces of gold and Harmony's interest in two months of these sales (reflecting the
period from May 1, 2002 to June 30, 2002) totaled 104,005 attributable ounces. Because
Harmony equity accounts for its 50% interest in the Free Gold Company, sales from the Free
Gold assets are not included in Harmony's sales figures in this annual report. For more
information on Harmony's consolidation policy, see note 2(g) to the consolidated financial
statements.
On May 24, 2002, Harmony, ARMgold and Gold Fields, through its subsidiary
St. Helena Gold Mines Limited, announced that an agreement in principle had been reached
under which St. Helena Gold Mines Limited would sell the St. Helena gold mining assets to the
Free Gold Company for Rand 120 million ($13.7 million), plus a royalty equal to one percent of
revenue for a period of 48 months beginning on the effective date of the sale. St. Helena Gold
Mines Limited and the Free Gold Company concluded a final agreement of sale on July 1, 2002.
The sale was completed on October 30, 2002, and the Free Gold Company assumed management
control on that date. Under the terms of the agreement of sale the Free Gold Company agreed to
assume specified environmental liabilities relating to the operation of the St. Helena mine.
Harmony believes that the acquisition of the St. Helena mine will create operational efficiencies
and add approximately 60,000 attributable ounces of gold to Harmony's production base.
Although profitable by the end of the 2003 financial year, a higher gold price is required to fully
exploit the potential of this ore reserve.
History. Exploration, development and production history in the area of the Free
Gold assets dates from the early 1900's, leading to commercial production by 1932. Subsequent
consolidation and restructuring led to the formation of Free State Consolidated Gold Mine
(Operations) Limited, which became a wholly-owned subsidiary of AngloGold in June 1998.
AngloGold also owned the Joel mine, which, although it was not a part of this AngloGold
subsidiary, is now included within the Free Gold assets owned by the Free Gold Company. The
Free Gold Company also acquired the St. Helena gold mine in October 2002. St. Helena was the
first gold mine to be established in the Free State.
Geology. The Free Gold Company's mines are located in the Free State goldfield,
which is on the southwestern edge of the Witwatersrand basin. The Bambanani, Tshepong,
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Matjhabeng and St. Helena mines are located in and around Welkom, while the Joel mine is
approximately 30 kilometers south of Welkom. Mining at Bambanani, Tshepong and
Matjhabeng is primarily conducted in the Basal reef, with limited exploitation of secondary
reefs. Mining at Joel is primarily conducted in the Beatrix-VS5 Composite Reef. The reefs
generally dip towards the east or northeast while most of the major faults strike north-south, with
the most intense faulting in evidence at Matjhabeng.
Mining Operations. The Free Gold Company is engaged in both underground and
waste rock mining. These operations are subject to all of the underground and waste rock
mining risks detailed in the Risk Factors section. The Free Gold Company regularly revisits its
mining strategy and management procedures at the Free Gold operations in connection with its
effort to minimize risks. Mining depths range from shallow-intermediate at the Joel mine to
deep at the Bambanani mine. The primary mining challenges at the Free Gold operations are
seismic risks, ventilation and fire avoidance. Both the Bambanani mine and the Matjhabeng
mine are classified as seismically active operations with seismic monitoring systems installed to
do active seismic risk evaluation, generally located in the vicinity of remnant operations and/or
geological structures. Seismic systems are managed by external specialists. Current ventilation
and refrigeration systems were evaluated and improved at take-over which Harmony believes
will improve productivity and safety. Plans to this effect are being implemented by the Free
Gold Company. Refrigeration plants are installed at the Bambanani and Tshepong Mines.
Following underground fires during the second half of 1999 at the Bambanani mine, mine
management reviewed and modified working practices and the efficiency of the overall fire
management system.
Mining is conducted at depths ranging from 1,200 and 3,000 meters at
Bambanani, at an average depth of approximately 1,925 meters at Tshepong, at an average depth
of approximately 1,700 meters at Matjhabeng, at an average depth of approximately 1,000
meters at Joel and at an average depth of 1,489 meters at St. Helena. Production at Matjhabeng,
which is a mature mine nearing closure, is currently focused on the extraction of remnant pillars
and shaft pillars, specifically at the Eland Shaft. The Free Gold Company is conducting a
development program at the Bambanani shaft. Harmony expects this program to allow access to
additional mining areas, which would reduce overall grade but increase overall production and
life of mine. The Free Gold Company restarted operations at the Kudu, West and Sable shafts
and is in the process of restarting Nyala. The board of directors of the Free Gold Company has
also approved the construction of decline tunnels to access lower levels of the Tshepong North
shaft. This project will add two additional operating levels below the present level of the
Tshepong North Shaft. The Free Gold Company estimates the cost of the project to be Rand 260
million ($29.7 million). The Free Gold Company estimates that full production at the two
additional operating levels will commence by December 2005 and will add 150,000 ounces of
gold per year to current production.
The Phakisa Shaft Project was also approved. Phakisa shaft, a surface shaft, was
sunk to access the ore reserve to a depth of 2,241 meters below surface. It is estimated that the
area will yield 18 million tons, recovering 136 tons of gold over a project life of 20 years.
Project completion requires sinking (178 meters), equipping and commissioning of the shaft with
access development and stoping to maximum production build-up at a capital cost of Rand 550
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million ($85.8 million). The project is expected to, at full production in 2010, achieve rates of
280,000 ounces per annum.
Excess metallurgical plant capacity at the FS1 and FS2 plants is filled by
exploiting surface sources, including waste rock dumps, slimes dams, and general clean-up
material mined as part of the environmental rehabilitation process. These surface operations
include free digging of waste rock dumps and hydraulic mining of slimes dams, which are either
transported by the surface rail network or by dedicated pipelines to the individual plants. The
majority of surface sources at the Free Gold assets are currently treated at the FS2 Plant.
During Harmony's fiscal 2003, the safety record at the Free Gold assets compared
favorably with the South African industry average. The Free Gold Company applies safety
standards similar to safety standards for Harmony operations and safety standards receive
constant and high-level attention. Where problems are identified, the Free Gold Company takes
steps to address the situation.
The Free Gold Company has begun implementing measures to reduce costs while
increasing production and extending mine life, in a manner that Harmony believes is consistent
with the "Harmony Way."
Underground Operations. Detailed below are the operating and production
results from underground mining at the Free Gold assets for the calendar years ended
December 31, 2001, for the six months ended June 30, 2002 and the fiscal year ended June 30,
2003. The reporting periods differ as the year end was changed to bring it in line with
Harmony's reporting period.
Fiscal year ended
June 30,
Six months ended
June 30,
Calendar year
ended December
31,

2003
2001
Production
Tons (`000) ...........................................................
5,178
2,179
5,454
Recovered grade (ounces/ton)...............................
0.206
0.228
0.204
Gold sold (`000 ounces)........................................
1,066,564
497,080
1,110,000
Results of operations ($)
Cash cost (`000)....................................................
213,668
77,108
251,200
Cash profit (`000) .................................................
136,810
83,380
66,000
Cash costs
Per ounce of gold ($) ............................................
200
155
226
2002
The lower recovery grade was a result of the inclusion of the lower grade St
Helena operations, as well as Bambanani returning to its average mining grade.
On a simplistic basis (and assuming no additional reserves are identified) at the
production level achieved at the Free Gold assets, in the fiscal 2003, the June 30, 2003 reported
proven and probable ore reserves of 90.71 million tons will be sufficient for the Free Gold assets
to maintain underground production until approximately 2015. However, because the Free Gold
assets consist of several different mining sections that are at various stages of maturity, it is
69
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expected that some sections will decrease production earlier than others. In addition, any future
changes to the assumptions upon which the ore reserves are based, as well as any unforeseen
events affecting production levels, could have a material effect on the expected period of future
operations. See "Item 3. Key Information--Risk Factors-- Harmony's gold reserve figures
may yield less gold under actual production conditions than Harmony currently estimates."
The Free Gold Company has eleven operating shafts, the rock hoisting capacities
of which are set forth below.
Shaft
Hoisting Capacity
(tons/month)
Tshepong North shaft
1
.............................................
Bambanani East shaft.................................................... 
West shaft ....................................................................
88,200
385,800
77,200
132,300
308,600
82,700
88,200
88,200
110,200
165,300
181,800
215,000
 
Joel North and South shafts
2
.................................. 
Matjhabeng Eland shaft ............................................... 
Matjhabeng Sable and Kudu shafts.............................. 
Matjhabeng Nyala shaft ............................................... 
St. Helena No. 2 shaft
3
........................................
St. Helena No. 4 shaft
4
........................................ 
St. Helena No. 8 shaft
5
.......................................
St. Helena No. 10 shaft
6
......................................
Phakisa........................................................................ 
________________________________________
1
Currently operating at a rate of 136,000 tons per month while upgrades in the shaft to facilitate increased production
are in progress.
2
Currently operating at a rate of 40,000 tons per month, in line with the shaft's current mining plan.
3
Currently operations at a rate of 20,000 tons per month due to the reduction of mining operations by GoldFields
prior to the sale of St. Helena to the Free Gold Company.
4
Currently operating at a rate of 15,000 tons per month due to the reduction of mining operations by GoldFields prior
to the sale of St. Helena to the Free Gold Company.
5
Currently operating at a rate of 36,000 tons per month due to the reduction of mining operations by GoldFields prior
to the sale of St. Helena to the Free Gold Company.
6
Currently closed due to the reduction of mining operations by GoldFields prior to the sale of St. Helena to the Free
Gold Company.
Surface Operations. Detailed below are the operating and production results from
the Free Gold Company's surface operations for the calendar years ended December 31, 2001,
the six months ended June 30, 2002 and the fiscal year ended June 30, 2003. The reporting
periods differ as the year end was changed to bring it in line with Harmony's reporting period.
Fiscal year ended
June 30,
Six months ended
June 30,
Calendar year
ended December
31,
2003
2002
2001
Production
Tons (`000) ...........................................................
5,146
2,641
0.023
61,086
7,526
11,980
123
4,049
Recovered grade (ounces/ton).............................
0.017
0.022
Gold sold (ounces)................................................
88,864 
89,000
Results of operations ($)
Cash cost (`000)....................................................
19,108
11,000
Cash profit (`000) .................................................
9,816 
13,500
Cash costs
Per ounce of gold ($) ............................................
215
167
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The reduction in recovery grade was as a result of lower grade surface sources
available for treatment.
On a simplistic basis (and assuming no additional reserves are identified) at the
production level achieved at the Free Gold assets in the fiscal 2003 year, the June 30, 2003
reported proven and probable ore reserves of 26.14 million tons will be sufficient for the Free
Gold assets to maintain surface production until approximately 2015. However, because the
Free Gold assets consist of several different mining sections that are at various stages of
maturity, it is expected that some sections will decrease production earlier than others. In
addition, any future changes to the assumptions upon which the ore reserves are based, as well as
any unforeseen events affecting production levels, could have a material effect on the expected
period of future operations. See "Item 3. Key Information--Risk Factors-- Harmony's gold
reserve figures may yield less gold under actual production conditions than Harmony currently
estimates."
Plants. The Free Gold Company operates four plants: the FS1, FS2, Joel and
St. Helena plants. The FS1 plant, which processes underground ore, waste rock and various
surface accumulations, was commissioned in 1986 and is a conventional CIP plant processing
ore that has been milled by fully autogenous grinding. Gold is recovered from the eluate
solution using zinc precipitation and a precoat vacuum filter. The precipitate recovered from the
filter is calcined and smelted to bullion. The FS2 Plant is largely dedicated to the treatment of
surface sources. It was commissioned in the early 1950's and employs conventional crushing
and filtration technology. The Joel plant is a hybrid CIP/CIL plant and was commissioned in
1984. St. Helena operates a conventional zinc precipitation filter plant supported by two mills
that treat surface sources.
The following table sets forth processing capacity and average tons milled during
the fiscal year ended June 30, 2003 for each of the plants:
Plant
Processing Capacity
Average milled for the
fiscal year ended
June 30, 2003
(tons/month)
(tons/month)
FS 1..............................................
463,000 
FS 2..............................................
330,700 
Joel...............................................
165,300 
St. Helena
 
...................................
110,200
47,000
436,000
324,000
135,000
 
 
Harmony estimates that in the periods covered by the above chart, FS1 recovery
has been approximately 97% for reef ore and 88% for waste rock, FS2 recovery approximately
95%, Joel recovery has been approximately 95% and St. Helena recovery has ranged from 50%
to 90%. Overall recovery is a function of the mix of feed ore, as surface sources tend to have a
lower recovery than underground reef.
Capital Expenditure. The Free Gold Company's capital expenditures amounted
to approximately Rand 195.7 million in the fiscal year ended June 30, 2003, primarily for
underground development at Bambanani and Tshepong. The Free Gold Company budgeted
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Rand 380.4 million ($58.3 million) for capital expenditures in fiscal 2004, primarily for
developing the Tshepong Shaft, Bambanani and Phakisa.
Australian Operations
Introduction
Harmony conducts its Australian operations through three Australian gold mining
companies: New Hampton, acquired with effect from April 1, 2001, and Hill 50, acquired with
effect from April 1, 2002 and Abelle acquired with effect May 1, 2003. Through the New
Hampton transaction described below, Harmony acquired two operations in Western Australia
(Big Bell in the Murchison region and Jubilee in the Eastern Goldfields near Kalgoorlie), two
processing plants associated with these operations and related exploration rights. Through the
Hill 50 transaction described below, Harmony acquired the Mt. Magnet operations in the
Murchison region, the New Celebration operations in the Eastern Goldfields near Kalgoorlie,
two plants associated with these operations and related exploration rights. Through the Abelle
transaction described below, Harmony acquired the Gidgee operations in the Murchison region
of Western Australia with the plant associated with this operation as well as exploration projects
in Australia, Papua New Guinea and Indonesia. In November, 2003 Harmony announced that it
sold its Gidgee Operations. See "Item 8. Financial Information Significant Changes."
In an effort to increase efficiency and reduce corporate expenditures, in the
quarter ended June 30, 2002 Harmony integrated New Hampton's Jubilee operations with
Hill 50's New Celebration operations to form the South Kalgoorlie operations and combined the
corporate offices of New Hampton and Hill 50 in Perth. Each of Harmony's Australian
operations Big Bell, Mt. Magnet, and South Kalgoorlie conducts surface mining (principally
through open pit methods) and underground mining, with access through one decline at Big Bell,
two declines at Mt. Magnet and one decline at South Kalgoorlie. Mining at Harmony's
Australian operations involves more mechanized mining than at Harmony's South African
operations. Outside contractors conduct much of this mechanized mining. The contractors are
responsible for provision of the equipment and personnel needed for production of the ore under
guidance of Harmony's management. As of June 30, 2003, Harmony's Australian operations
had 603 employees, while the contractors employed 696 people.
Harmony commenced gold mining operations in Australia following the New
Hampton transaction. On December 19, 2000, Harmony announced that it had agreed to
purchase 19.99% of New Hampton ordinary shares from Normandy Mining, subject to certain
conditions. Harmony also made an offer for all of the outstanding ordinary shares of New
Hampton at a purchase price of A$0.265 per share. Harmony received SARB and Australian
Foreign Investment Review Board approval for the transaction in January 2001. On
March 22, 2001, Harmony increased its offer price to A$0.275 per share and announced that
Normandy Mining had accepted Harmony's offer for Normandy Mining's remaining 13.2%
shareholding in New Hampton, and that the New Hampton board of directors recommended that
New Hampton shareholders accept Harmony's offer and indicated their intention to accept
Harmony's offer for their individual holdings. The total cash bid valued New Hampton at
approximately A$56.3 million (R228.2 million at an exchange rate of R4.05 per A$1.00, or
$28.5 million at an exchange rate of R8.00 per $1.00). This offer closed on July 12, 2001, at
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which time Harmony had acquired 96.2% of New Hampton's shares and 95% of New
Hampton's options. Harmony subsequently completed a compulsory acquisition of the
remaining shares and options under the rules of the Australian Stock Exchange. In line with
Harmony's strategy to mine reserves only when it is economical to do so, following the New
Hampton transaction, Harmony reduced New Hampton's production to approximately 200,000
ounces per year.
Harmony expanded its Australian operations through the Hill 50 transaction. On
December 11, 2001, Harmony commenced a conditional cash offer for all of the outstanding
ordinary shares and listed options of Hill 50, at a purchase price of A$1.35 per share and A$0.65
per listed option. Harmony would also pay a price equal to the difference between the cash price
offered for the Hill 50 shares and the exercise price for each Hill 50 director and employee
option. On that date, Harmony also announced that Hill 50's largest shareholder had accepted
Harmony's offer for its 16.3% holding. Harmony increased the offer price to A$1.40 per share
and A$0.70 per listed option on February 21, 2002, and to A$1.45 per share and A$0.75 per
listed option on April 3, 2002, for a total price of approximately A$233 million (R1,419 million
at an exchange rate of R6.09 per A$1.00, or $124.8 million at an exchange rate of R11.37 per
$1.00). On February 21, 2002, Harmony also announced that Hill 50's directors had informed
Harmony that they intended to recommend Harmony's offer to Hill 50 shareholders, and to
accept Harmony's offer in respect of their own shareholdings. The offer closed on May 3, 2002,
at which time shareholders holding 98.57% of Hill 50's shares and 98.76% of Hill 50's listed
options had accepted Harmony's offer and this offer had become unconditional. Harmony
subsequently completed a compulsory acquisition of the remaining shares and options under the
rules of the Australian Stock Exchange.
On February 26, 2003 Harmony announced a conditional cash offer for all of the
outstanding ordinary shares and listed options of Abelle, at a purchase price of A$0.75 per share
and A$0.45 per listed option, for a total price of approximately A$151 million. On the date of the
offer announcement Harmony also announced that it has entered into an agreement with Abelle
whereby Abelle placed 35 million new shares in Abelle with Harmony, at a price of A$0.75 per
share, subject to certain conditions including Abelle shareholder approval. This placement was
approved by shareholders at a meeting of Abelle held on April 30, 2003 and the placement was
completed on May 8, 2003. This transaction represented approximately 18% of Abelle's
expanded issued share capital. On February 25, 2003 Harmony entered into a pre-bid acceptance
agreement for a nominal consideration of A$10, pursuant to which Silvara Pty Ltd, a subsidiary
of the Guiness Peat Group plc agreed to accept the share offer in respect of a total of 32,044,533
Abelle shares, representing 19.95 of the total issued share capital of Abelle at that date. The
original offer was extended from April 24, 2003 to April 30, 2003. Harmony closed its offers on
April 30, 2003 and advised at that date it had a relevant interest in 87% of Abelle shares and 65%
of Abelle options. Subsequently, on May 5, 2003, three Harmony representatives were appointed
to the board of Abelle.
New Hampton sold 191,521 ounces of gold in fiscal 2002, which were included in
Harmony's gold sales for fiscal 2002, and Hill 50 sold 275,185 ounces of gold in fiscal 2002,
three months of which, or 61,472 ounces, were included in Harmony's gold sales for fiscal 2002.
The addition of New Hampton and Hill 50 to Harmony's operations has increased Harmony's
reserves by approximately 2.34 million ounces. With effect from April 1, 2002, Harmony reports
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the New Hampton and Hill 50 operating and financial results together within an "Australian
Operations" segment, which was expanded on May 1, 2003 to include Abelle, which is further
segmented into the Big Bell operations, the Mt. Magnet operations, the South Kalgoorlie
operations (consisting of the Jubilee and New Celebration operations) and Gidgee operations. In
November, 2003, Big Bell was sold for approximately A$ 2.45 million. Abelle sold 11,534
ounces of gold which were included in Harmony's gold sales for 2003. In fiscal 2003, the
Australian operations accounted for approximately 21% of Harmony's total gold sales.
Harmony's Australian operations control exploration and mineral rights over a
total area of approximately 571,000 hectares (1,410,097 acres), of which the active mining areas
currently total approximately 327,957 hectares (810,399 acres). The exploration and mining titles
of Abelle Limited within Australia cover an additional area of approximately 95,179 hectares
(235,192 acres) of which active mining areas currently total approximately 56,700 hectares
(140,109 acres).
The following chart details the operating and production results from Harmony's
Australian operations for the past three fiscal years:
Fiscal year ended June 30,
2003
1
2002
2
2001
3
Production
Tons (`000) ......................................................
7,883
5,273
1,200
Recovered grade (ounces/ton)..........................
0.065 
0.048 
0.048 
Gold sold (ounces)...........................................
509,654
252,993
55,653
Results of operations
Product sales (`000) .........................................
165,351 
66,402 
18,057 
Cash cost (`000)...............................................
138,808
59,537
17,779
 
Cash profit (`000) ............................................
31,246 
6,865 
278 
Cash costs
Per ounce of gold ($) .......................................
272
235
319
_________________
1
Includes gold sales from Abelle's Gidgee Operations for 2 months from May 1, 2003.
2
Includes gold sales from Hill 50 (including Mt. Magnet and the New Celebration portion of the South Kalgoorlie operations) for
three months from April 1, 2002.
3
Includes gold sales from New Hampton (including Big Bell and the Jubilee portion of the South Kalgoorlie operations) for three
months from April 1, 2001.
Tons milled from Australian operations were 7,883,000 in fiscal 2003, compared
with 5,273,000 in fiscal 2002. This increase was primarily due to the inclusion of a full year of
results from Hill 50 and two months of results from Abelle's Gidgee operations, reflecting the
period during which the Abelle mine was operated for the account of Harmony, which was offset
by the reduction in tons milled from Big Bell due primarily to disappointing results from Big
Bell's underground mine. Recovered grade from Australian operations was 0.065 in fiscal 2003,
compared with 0.048 in fiscal 2002. Recovered grade increased due primarily to the inclusion of
the higher grade Hill 50 operations for the full year in fiscal 2003. Cash costs for Australian
operations were $272 per ounce of gold in fiscal 2003, compared with $235 per ounce of gold in
fiscal 2002. This increase was attributable primarily to the higher cost of underground
production from Hill 50 and Big Bell mines in the current year due to the issues set out in detail
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under the consolidated financial statements as well as the strengthening of the Australian dollar
against the U.S. dollar.
Big Bell Operations
History. Gold mining at Big Bell commenced in 1937. The Big Bell mine closed
in 1955 and reopened in early 1989. Normandy Mining acquired Big Bell in 1991 and New
Hampton acquired the mine from Normandy Mining in 1999. Since the commencement of
operations in 1937 to June 30, 2003, total gold sales from the Big Bell area exceed two million
ounces. In November 2003, the plant was sold for approximately A$ 2.45 million.
In fiscal 2003, the company put the Big Bell underground operations in harvest
mode, as continued low grades from underground has made the operation uneconomical.
Underground mining ceased at Big Bell during July, 2003 and it is anticipated that plant cleanup
will be completed by the end of the calendar year. Most of the other assets and surface
infrastructure have been allocated to Harmony's other mining operations in Australia or sold.
Prospective tenements to the south of Cue, which were previously included under
the Big Bell operations, have been allocated to the Mt. Magnet operations for possible open pit
mining and included in their reserves. It has been calculated that it will be economical to
transport ore from these sources to the Checker plant at Mt. Magnet, which is located
approximately 80 kilometers away from Big Bell.
Total rehabilitation costs of the site are estimated to be A$ 7 million. A detailed
rehabilitation program has been put in place to ensure that the mining areas are rehabilitated to
standards set by the Department of Industry and Resources in Australia.
Geology. The Big Bell operations, located in the Murchison region of Western
Australia, include a mature underground mine and nearby open pit operations at Cuddingwarra
and Cue. The Murchison region is a sub-province of the Archaean Shield in Western Australia.
The Big Bell lode is a steeply Southeast dipping (50 degrees to 70 degrees) sheet with a strike length of 1,000 meters. The distinctive gold-bearing horizon is 5 meters to 25 meters thick and is intersected by resource drilling down to 1,400 meters below surface. The Cuddingwarra and Cue deposits, approximately 17 kilometers and 27 kilometers from the Big Bell underground mine,
respectively, occur in a sequence of porphyry-intruded metamorphosed mafic and ultamafic
rocks of the Meekatharra-Widgee greenstone belt.
Mining Operations. The Big Bell operations were engaged in both underground
and open pit mining. These operations were subject to all of the underground and open pit
mining risks detailed in the Risk Factors section. Underground mining at depths of up to 600
meters was conducted by way of a decline and a longhole sub-level caving method was
employed. Contractors operated diesel powered mining equipment to transport ore up the
decline and delivered it to the crusher pad. At the Cuddingwarra and Cue open pit operations,
New Hampton employs outside contractors to extract ore with large earthmoving equipment.
The open pits are situated on small ore bodies, which results in short mine lives (generally less
than a year). As a result, Harmony had to continuously locate, evaluate, plan, develop and bring
into production a succession of open pits to access additional reserves. See "Item 3. Key
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Information--Risk Factors--To maintain gold production beyond the expected lives of
Harmony's existing mines or increase production materially above projected levels, Harmony
will need to access additional reserves through development or discovery."
The primary challenges facing the Big Bell operations were controlling costs in
the underground mine and finding replacement ore reserves (particularly for short-lived open
pits) through an aggressive exploration program. See "Item 4. Information on the Company--
Business--Exploration." The Big Bell underground mine was also affected by seismic events
and good geotechnical management was important to maintain safety and productivity. During
fiscal 2003, the safety record at Big Bell compared favorably with the Australian industry
average.
Mining at the lower levels of the Big Bell underground mine continued to yield
disappointing results as indicated in 2002, with lower than expected grade. This ultimately led to
the decision to close the operation. In November, 2003 the plant was sold for approximately
A$ 2.45 million.
Detailed below are the operating and production results from operations at Big
Bell for the last three fiscal years:
Year ended June 30,
2003
2002
2001
Production
Tons (`000) ........................................................... 
2,900
2,147
2,763
Recovered grade (ounces/ton)............................... 
Gold sold (ounces)................................................ 
132,389
132,579
132,315
Results of operations ($)
Cash cost (`000).................................................... 
38,288
44,491
62,106
Cash profit/(loss) (`000)........................................
(2,265)
(4,458)
22,033
Cash costs
Per ounce of gold ($) ............................................ 
289
335
256
Tons milled in fiscal 2003 were 2,147,000 compared with 2,900,000 in fiscal
2002, and ounces sold in fiscal 2003 were 132,579, compare with 132,389 in fiscal 2002. As a
result of being in harvest mode for most of fiscal 2003, tonnage at Big Bell decreased
significantly. However the decision to close the mine enabled the company to target the higher
grade remaining areas, which resulted in an increase in recovered grade. In the prior year mainly
surface sources were treated, while development was carried out at the Big Bell underground
mine, hence the lower grade. In fiscal 2003, cash operating costs at Big Bell increased to $335
per ounce from $289 per ounce in fiscal 2002. This increase was primarily attributable to lower
tonnages treated from surface sources, and more higher cost underground tons being processed.
Plant. The Big Bell operations include one metallurgical plant, which was
disposed of in November, 2003. Ore from the Big Bell underground and open pit operations was
processed through this CIL treatment plant located 28 kilometers from Cue in the Murchison
region. Ore extracted from the Big Bell underground mine was transported by diesel powered
mining equipment up the decline and to the crusher pad. Road trains delivered ore from the open
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pits. The plant underwent significant capital refurbishments during fiscal 2001 in an effort to
ensure that planned throughput was achieved, but due to the age and layout of this plant, unit
costs were higher than at other plants in Harmony's Australian operations.
The following table sets forth processing capacity and average tons milled during
fiscal 2003 for the Big Bell plant:
Plant
Processing
Capacity
Average milled for the fiscal year ended
June 30, 2003
(tons/month) (tons/month)
Big Bell ......................................... 
178,769
275,000
In fiscal 2003, the Big Bell operations recovered approximately 87% of the gold
contained in the ore delivered for processing.
Capital Expenditure. Harmony spent approximately A$1.9 million in capital
expenditures at the Big Bell operations during fiscal 2003, principally for site rehabilitation work
when the mine went into closure mode.
Mt. Magnet Operations
History. Mining at Mt. Magnet began after the discovery of gold in 1896. From
that time to June 30, 2003, the Mt. Magnet operations have produced approximately 5 million
ounces. The current Mt. Magnet operations, which Harmony acquired in the Hill 50 transaction,
are comprised of the Hill 50 and Star underground mines, production from which commenced in
the late 1980s, nearby open pits and the processing of low grade ore from previously
accumulated stockpiles.
Geology. The Mt. Magnet operations are located near the town of Mt. Magnet in
the Murchison region, 560 kilometers northeast of Perth. The geology consists of folded basaltic
and komatiitic greenstones with intercalated banded iron formations and volcaniclastic units. In
addition to having been intensely folded, the area has undergone substantial faulting and later
intrusion by felsic intrusives. Mineralization within the Murchison belt consists of sulfide
replacement style (characteristic of the Hill 50 mine) and quartz lode and shear hosted
hydrothermally emplaced bodies proximal to fault conduits. Smaller stockwork bodies within
felsic intrusives are also common. As is typical of the Archaean Shield, the deep weathering
profile at Mt. Magnet has resulted in supergene enrichment and hypogene dispersion of gold in
the oxidizing environments. These effects lend themselves well to the process of small scale
open pit mining. Underground mining of primary lodes is the largest contributor to Mt.
Magnet's gold production.
                              .
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                        Mining Operations. The Mt. Magnet operations are engaged in underground, open pit and waste rock mining. These operations are subject to all of the underground, open pit, and waste rock mining risks detailed in the Risk Factors section. Harmony intends to revisit its mining strategy and management procedures at these operations on a regular basis in connection with its effort to minimize mining risks

                          Underground operations at Mt. Magnet consist of the Hill 50 and Star mines, each

of which operates a decline. The Hill 50 mine, which is approaching 1,000 meters in depth, is
currently one of Australia's deepest underground mines. The Star mine is approximately 600
meters in depth. Underground mining is conducted by decline tunnel access. The principal
challenges facing the Hill 50 underground mine is its continuing depth and the geotechnical,
ventilation and cost impediments that increased depth imposes, including increased ground stress
and potential increased seismic activity. As a result, maintaining adequate grade remains a
critical component of this mine. The same issues affect the Star underground mine, but due to its
lower grade and variability of grade, it faces additional challenges. Its orebody is difficult to
define and unless significantly better grades are identified by exploration drilling, the current
grades and cost structure do not justify further investment in deepening the decline. If decline
development stops, it will result in the Star mine entering a harvest mode for an estimated period
of 12 months.
Surface operations at Mt. Magnet exploit several medium-sized open pits, as well
as numerous smaller open pits. Surface materials from areas previously involved in production,
including waste rock dumps and tailings dams, are also processed at Mt. Magnet. The principal
challenge facing the Mt. Magnet operations is that the open pits are situated on small ore bodies,
which results in short mine lives. As a result, Harmony must continuously locate, evaluate, plan,
develop and bring into production a succession of open pits to access additional reserves.
Maintaining grade and managing the increased geotechnical complexities of the Hill 50 and Star
underground also remains critical. See "Item 3. Key Information--Risk Factors--To maintain
gold production beyond the expected lives of Harmony's existing mines or increase productivity
materially above projected levels, Harmony will need to access additional reserves through
development or discovery."
As of June 30, 2003, the safety record at the Mt. Magnet operations compared
favorably with Australian industry averages. Safety standards for other Harmony operations
are being applied at the Mt. Magnet operations and will receive constant and high-level attention.
Where problems are identified, steps are taken to address the situation. Harmony is making a
concerted effort to train line management at newly acquired assets, including the Mt. Magnet
operations, in Harmony Australia's safety practices.
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Detailed below are the operating and production results from operations at
Mt. Magnet for the last three fiscal years:
Year ended June 30,
2003
2002
2001
Production
Tons (`000) ........................................................... 
3,022
2,922
3,132
Recovered grade (ounces/ton)............................... 
Gold sold (ounces)................................................ 
189,689
0.063
0.063
0.065
182,690
203,575
Results of operations ($)
Cash cost (`000).................................................... 
34,495
42,989
37,130
Cash profit/(loss) (`000)........................................
17,504
13,615
18,097
Cash costs
Per ounce of gold ($) ............................................ 
182
235
182
Tons milled in fiscal 2003 were 2,922,000 compared with 3,022,000 in fiscal
2002, and ounces sold in fiscal 2003 were 182,690, compared with 189,689 in fiscal 2002.
These decreases were primarily attributable to reduced production from the Hill 50 underground
mine. Production at Hill 50 underground mine was negatively affected by a series of rockfall
incidents starting in February 2003, which blocked the main ventilation, raises near the bottom of
the mine. These incidents not only affected all of the high grade production stopes but also
revealed the need for a redesign of the stope configurations and the positioning of the ventilation
system at the deeper levels of the mine. This adversely affected production levels and costs at
Hill 50. The new ventilation raises are expected to be completed at a cost of A$2.8 million by
Dec 2003. The Star underground mine and open pits took up a significant portion of the tonnage
shortfall but could not make up for the gold production shortfall from this high grade source.
On a simplistic basis (and assuming no additional reserves are identified) at the
production level achieved in fiscal 2003, the June 30, 2003 reported proven and probable ore
reserves of 10.55 million tons for Mt. Magnet would be sufficient to maintain production until
approximately fiscal 2008. However, because the Mt. Magnet operations consist of several
different mining sections that are at various stages of maturity, it is expected that some sections
will decrease production earlier than others. In addition, any future changes to the assumptions
upon which the ore reserves are based, as well as any unforeseen events affecting production
levels, could have a material effect on the expected period of future operations. See "Item 3.
Key Information--Risk Factors-- Harmony's gold reserve figures may yield less gold under
actual production conditions than Harmony currently estimates."
Plant. The Mt. Magnet operations include one metallurgical plant. This plant
was built in 1989 as a CIL plant and was upgraded in late 1999 to a CIP plant. Actual
throughputs of the Mt. Magnet plant varies based upon the blend of oxide and sulfide ores in
their feed. Processing capacity is an estimate of nominal throughput based on a 70% hard
(sulfide) and 30% oxide (soft) blend. The following table sets forth processing capacity and
average tons milled during fiscal 2003 for the Mt. Magnet plant:
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Plant
Processing Capacity
Average milled for
the fiscal year ended
June 30, 2003
(tons/month)
(tons/month)
Mt. Magnet ....................................................
220,000
243,300
In fiscal 2003, the Mt. Magnet plant recovered approximately 92% of the gold
contained in the ore delivered for processing.
Capital Expenditure. Harmony made approximately A$ 26.2 million
($ 15 million) in capital expenditures at the Mt. Magnet operations during fiscal 2003, primarily
for underground development, exploration and plants. Harmony has budgeted approximately
A$ 33 million ($27.5 million) for capital expenditures at the Mt. Magnet operations during fiscal
2004, principally for underground development and infrastructure.
South Kalgoorlie Operations
History. The South Kalgoorlie operations include several open pits at Jubilee and
New Celebration, as well at the Mt. Marion underground mine at New Celebration. In the
Jubilee area, two separate companies commenced gold mining by modern methods in 1987,
although some sporadic mining of gold took place in the area in the late nineteenth century. The
Jubilee operations were originally comprised of large Jubilee open pit, but in recent years have
also drawn on a number of smaller open pits. Harmony acquired the Jubilee operations in the
New Hampton transaction. The New Celebration operations were initially developed in 1987 by
a third company exploiting the same ore body that hosted the Jubilee Pit. Hill 50 acquired these
operations from Newcrest Mining Ltd. in June 2001. The Mt. Marion decline, which is the
largest underground development at New Celebration, was established in 1998. Harmony
acquired the New Celebration operations, including the Mt. Marion underground mine, in the
Hill 50 transaction.
Following the acquisitions of New Hampton and Hill 50, Harmony integrated the
Jubilee operations and New Celebration operations to form the South Kalgoorlie operations.
Since the commencement of operations to June 30, 2003, total gold production from Harmony's
mines in the South Kalgoorlie area exceeds two million ounces.
Geology. The South Kalgoorlie mines are located approximately 30 kilometers
south of Kalgoorlie in the Eastern Goldfields region of Western Australia. The South Kalgoorlie
ore bodies are located in a number of geological domains including the Kalgoorlie-Kambalda
belt, the Boulder-Lefroy Structure, the Zuleika Shear, the Coolgardie Belt and Yilgarn-Roe
Structures. At South Kalgoorlie, the mining tenure and geology straddles the three major fault
systems or crystal sutures considered to be the main ore body plumbing systems of the
Kalgoorlie goldfield. The geology consists of Archaean greenstone stratigraphy of basalts and
komatiites with intercalated sediments, tuffs, volcaniclastics and later felsic intrusives. Late
stage and large scale granitic (Proterozoic) intrusion has stoped out large sections of the
greenstone. Quartz filled lode and shear hosted bodies are the most dominant among many
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mineralization styles. Large scale stockwork bodies hosted in felsic volcanics are an important
contributor to bulk tonnage of relatively low grade deposits.
Mining Operations. The South Kalgoorlie operations are engaged in open pit,
underground and waste rock mining. These operations are subject to all of the underground,
open pit and waste rock mining risks detailed in the Risk Factors section. Harmony intends to
revisit its mining strategy and management procedures at these operations on a regular basis in
connection with its effort to minimize mining risks.
At Jubilee, during fiscal 2003 open cast mining was conducted mainly at the
Trojan and Triumph pits and a number of other smaller open pits. Harmony employs contractors
who use large earthmoving equipment to extract ore from these pits. Harmony expects that
mining of the Trojan Pit will resume in June, 2004. The surface operations at New Celebration
exploited a number of small short-life and shallow open-cast mines during fiscal 2003. At the
end of June, 2003, a decision was taken to use the New Celebration plant for toll treatment
purposes. A contract was signed for an initial period of 6 months up to February, 2004, with the
option to extend the period for another 6 months thereafter. The decision to toll treat ore at the
New Celebration plant will alleviate the continuous pressure on finding replacement ore for two
mills at SouthKal Mines, and enable these operations to focus on finding more quality ounces.
Harmony ore from both surface and underground sources will now be treated at the Jubilee plant.
The primary challenge facing the South Kalgoorlie operations is that most of the open pits are
situated on small ore bodies, which results in short mines lives. As a result, Harmony must
continuously locate, evaluate, plan, develop and bring into production a succession of open pits
to access additional reserves. See "Item 3. Key Information--Risk Factors--To maintain or
increase productivity materially above projected levels, Harmony will need to access additional
reserves through development or discovery."
SouthKal Mines also includes the Mt. Marion underground mine. This mine faces
challenges similar to those faced by the Mt. Magnet underground operations; however, depths at
Mt. Marion are much shallower (500 meter vertical depth versus 1,000 meter vertical depth at
Mt. Magnet). Mt. Marion is a decline mine that has switched to a longhole sub-level caving
methodology. The purpose of this change in mining method is to better manage the geotechnical
risks without diminishing returns from the mine. The Mt. Marion mine also is exposed to other
risks typical of mechanized mines, including geotechnical issues, mine dilution and
unpredictable remedial ground support after mine blasting.
During fiscal 2003, the safety record at SouthKal Mines in terms of lost time
frequency rate and fatality frequency rate compared unfavorably with the Australian industry
average, with 3 lost time injury incidents for the year. These lost time injuries occurred mainly as
a result of the large number of contractors used in the refurbishment of the processing plants
during the year. Safety standards for other Harmony operations are being applied throughout the
South Kalgoorlie operations and will receive constant and high-level attention. Where problems
are identified, steps are taken to address the situation. Harmony is making a concerted effort to
train line management at newly acquired assets, including the South Kalgoorlie operations, in
Harmony Australia's safety practices.
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Detailed below are the operating and production results from the South Kalgoorlie
operations, which were completed by combining historical figures from the Jubilee and New
Celebration operations, for the last three fiscal years:
Year ended June 30,
2003
2002
2001
Production
Tons (`000) ........................................................... 
1,973
2,749
2,038
Recovered grade (ounces/ton)............................... 
Gold sold (ounces)................................................ 
135,366 
182,851 
164,553 
Results of operations ($)
Cash cost (`000).................................................... 
31,604
49,319
38,572
Cash profit (`000) ................................................. 
5,881
5,007
2,932
Cash costs
Per ounce of gold ($) ............................................ 
233
270
234
0,067                             0,069                             0,081
Tons milled in fiscal 2003 were 2,749,000, compared with 1,973,000 in fiscal
2002, and ounces sold in fiscal 2003 were 182,851, compared with 135,000 in fiscal 2002.
These increases were primarily attributable to increased open pit throughput for the year. On a
simplistic basis (and assuming no additional reserves are identified) at the production level
achieved in fiscal 2003, the June 30, 2003 reported proven and probable ore reserves of 3,72
million tons for the South Kalgoorlie operations would be sufficient to maintain production until
approximately fiscal 2004. However, because the South Kalgoorlie operations consist of several
different mining sections that are at various stages of maturity, it is expected that some sections
will decrease production earlier than others. In addition, any future changes to the assumptions
upon which the ore reserves are based, as well as any unforeseen events affecting production
levels, could have a material effect on the expected period of future operations. See "Item 3.
Key Information--Risk Factors-- Harmony's gold reserve figures may yield less gold under
actual production conditions than Harmony currently estimates."
Following the New Hampton acquisition, Harmony began implementing the
"Harmony Way" at Jubilee and following the Hill 50 acquisition, Harmony has been integrating
the Jubilee and New Celebration operations to form the South Kalgoorlie operations, which was
completed at the beginning of fiscal 2003.
Plants. The South Kalgoorlie operations include two metallurgical plants, located
at Jubilee and New Celebration. The Jubilee CIL treatment plant has been well maintained and
is capable of achieving the planned production from the mining operations. Ore is hauled from
the open pits as well as the Mt. Marion underground mine to the treatment plant by conventional
road trains.
The New Celebration plant was commissioned in 1986 as a CIP plant and later
upgraded in 1988 by the addition of a larger parallel circuit. In 2003 a decision was taken to use
this plant for toll treatment purposes. Actual throughputs of the South Kalgoorlie plants vary
based upon the blend of oxide and sulfide ores in their feed. Processing capacity is an estimate
of nominal throughput based on a 70% hard (sulfide) and 30% soft (oxide) blend.
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The following table sets forth processing capacity and average tons milled during
fiscal 2003 for the South Kalgoorlie plants:
Plant
Processing Capacity
Average milled for the fiscal
year ended June 30, 2003
(tons/month) (tons/month)
Jubilee .......................................
110,000
104,570
124,422
New Celebration........................
138,000
In fiscal 2003, the Jubilee and New Celebration plants recovered approximately
92% and 93%%, respectively, of the gold contained in the ore delivered for processing.
Capital Expenditure. In fiscal 2003, Harmony made approximately A$ 11.2
million in capital expenditures at SouthKal Mines, primarily for underground and open pit mine
development and exploration. Harmony has budgeted approximately A$ 12.3 million ($10.6
million) for capital expenditures at the South Kalgoorlie operations during fiscal 2004,
principally for underground and open pit mine development.
Burnside Joint Venture - Northern Territory Operations
History. Since the discovery of gold in the Northern Territory of Australia in
1865 the state has produced a more than 11 million ounces of gold. This production has come
from three principal areas, the Tennant Creek field, the Granites-Tanami region and the Pine
Creek Orogen, the latter having produced about 30% of the total.
Harmony acquired gold mining interests in the Pine Creek Orogen (centered 150
kilometers South of Darwin) through the acquisition of Hill 50 Limited (Hill 50) in March, 2002.
Hill 50 had acquired 100% interest in the Maud Creek Gold Project, near Katherine NT and
100% interest in gold resources surrounding the Brocks Creek processing plant. In April 2002,
Hill 50 finalized a 50-50 joint venture agreement (Burnside Joint Venture) with Northern Gold
NL that merged the mining assets of both companies within a 30 kilometer radius of the Brocks
Creek 1,000 ton per year processing plant, which itself is an asset of the joint venture asset. In
mid-2003, key tenements at the Pine Creek gold mining center were also acquired by the joint
venture.
Burnside Joint Venture. The principal objective of the Burnside Joint Venture is
to explore, develop and treat gold ores within the jointly held tenement group. To this end,
exploration drilling and underground mine development have been undertaken by the parties.
The joint venture agreement is between Buffalo Creek Mines NL (a subsidiary of Hill 50) and
Territory Goldfields NL (a subsidiary of Northern Gold NL). The parties formed a management
company named Burnside Operations Pty Ltd to manage all mining and exploration matters of
the joint venture. The Maud Creek Project is not subject to the Burnside Joint Venture and is
still 100% controlled by Harmony.
The total area held by the Burnside Joint Venture under mining and exploration
tenure is approximately 244,000 acres, of which 234,000 acres have been granted. The Maud
Creek Project tenements comprise a total of approximately 150,000 acres, of which 54,000 acres
have been granted.
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Geology. The Burnside Joint Venture area contains numerous historic and
recently discovered gold occurrences, some of which have produced gold from open pit and
underground mining, and others that are at an advanced stage of exploration through resource
drilling. The deposits lie within Lower Proterozoic metasediments that were folded and faulted
during the Pine Creek Orogeny. Gold in the region typically occupies sulphide rich quartz veins
within the axial zones of anticlinal fold structures.
The most significant of these are the Cosmopolitan Howley mine that historically
has produced 475,000 ounces largely from open pit mining.
In fiscal 2003, two upper levels of the Zapopan Mine were developed by the joint
venture by decline access. Approximately 12,125 tons of development ore was toll treated at an
average grade of 0.21 ounces per ton Au, producing 2,600 ounces for the joint venture. The ore
was free milling with 99% recoveries. Development on the decline has stopped while further
exploratory drilling is in progress to extend the down plunge resource potential of the deposit.
Approximately A$13 million was spent on capital development costs by the joint venture for
fiscal 2003. Mining engineering studies are progressing in parallel to determine the optimum
mining method and cost structure for the operation. Firm, updated mining reserves will result
from these studies. It is anticipated that profits from the Zapopan operation will support initial
exploration and development costs at the larger Cosmopolitan Howley underground resource.
Exploratory drilling by both Hill 50 and Harmony established potential gold
deposits in the area. The fine grain size of the gold and its association with sulphide have
refractory characteristics that require alternative methods of treatment. Further metallurgical
work is required on the resource.
Forward Proposals. The Burnside Joint Venture plans to further investigate and
explore the Zapopan gold deposit using diamond core drilling programs in parallel with mining
engineering studies. The outcome of this study will determine the timing of rehabilitating the
Brocks Creek processing plant and exploratory diamond drilling of the deeper extensions to the
Cosmopolitan Howley mine. Other satellitic deposits within the Burnside Joint Venture will also
be further drilled and modeled to supplement the operation.
Abelle
Introduction. On February 26, 2003, Harmony announced a conditional cash offer
for all of the outstanding ordinary shares and listed options of Abelle, at a purchase price of
A$0.75 per share and A$0.45 per listed option, for a total price of approximately A$151 million.
On the date of the offer announcement, Harmony also announced that it has entered into an agreement with Abelle whereby Abelle placed 35 million new shares in Abelle with Harmony, at a price of A$0.75 per share, subject to certain conditions including Abelle shareholder approval. This placement was approved by shareholders at a meeting of Abelle held on April 30, 2003 and the placement was completed on May 8, 2003. This transaction represented approximately 18% of Abelle's expanded issued share capital. On February 25, 2003 Harmony entered into a pre-bid acceptance agreement for a nominal consideration of A$10, pursuant to which Silvara Pty Ltd, a subsidiary of the Guiness Peat Group plc has agreed to accept the share offer in respect of a total 
of 32 044 533 Abelle shares,
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representing 19.95 of the total issued share capital of Abelle at that date. The original offer was
extended from April 24, 2003 to April 30, 2003. Harmony closed its offers on April 30, 2003
and advised at that date it had a relevant interest in 84.57% of Abelle shares and 63.18% of
Abelle options. Subsequently, on May 5, 2003, three Harmony representatives were appointed to
the board of Abelle.
History. Abelle was listed on the Australian Stock Exchange (ASX) on April 24,
2002. In August 2002, a merger was proposed with Aurora Gold Ltd, also listed on the ASX.
The proposed merger through a scheme of arrangement was completed in January 2003. Abelle
has various exploration projects in Australia, Papua New Guinea and Indonesia. It also operates
the Gidgee Gold mine in the Murchison region of Western Australia.
Gidgee Gold Mine
History. The Gidgee Gold Project was acquired by Abelle in late 1999 from a
public tender following the appointment of a Receiver and Manager to Australian Resources Ltd.
On November 7, 2003 Abelle announced that it has entered into negotiations with
Legend Mining Limited, whereby Legend has offered to purchase the Gidgee gold project. For a
description of the terms and conditions, see "Item 8. Financial Information Significant
Changes."
Geology. The Gum Creek greenstone belt, which outcrops over an area 110
kilometers long and 25 kilometers wide is situated at the northern limit of the Southern Cross
Province of the Archaean Yilgarn Craton. It is elongate north-northwest and contains a southerly
plunging synform in which volcanic and sedimentary rocks are bounded on the east and west by
granitoids.
The Gum Creek greenstone belt comprises a lower sequence of mafic and
ultramafic extrusive and intrusive rocks interbedded with BIF, overlain by a sequence of felsic
volcanic and mafic volcanic rocks and sediments metamorphosed to lower greenschist-lower
amphibolite facies. Granitoid stocks and east - west striking Proterozoic dolerite dykes intrude
both sequences. Although the structure is synclinal, the mafic volcanic rocks in the center of the
belt are considered to be part of the lower sequence, having been brought to the surface by major
folding and faulting.
Operations Summary. The Gidgee Gold Project processed a blended ore feedstock
from the Swan Bitter underground mine, various open pits and low grade stocks.
Mining Reserves for the project as at June 30, 2003 are 344,000 tons at 4.8 grams
per ton Au for a contained 52,644 ounces. Identified Mineral Resource totals an 2,466,600 tons
at 6.5 grams per ton Au for 516,775 contained ounces. The mining reserves are sufficient to
maintain production for a life of a further 1 year at current levels of gold production.
The key component of gold production since Abelle acquired the Gidgee Gold
Project has been the Swan Bitter underground mine. This is supplemented by open pit mining
from the pits of South Reliance, Think Big, Shiraz, Snook, North Wahoo and Cobia.
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Open pit mining at the Gidgee Gold Mine ended midway through the year with a
poor performance from the last pit, South Snook, leaving only one production source, the Swan
Bitter Underground mine. The underground ore and low grade stocks are blended to aggregate a
mill feedstock.
The Swan Bitter underground mine also had a major setback during the year as
the main development focus, the southern extensions and Butcherbird decline failed to live up to
expectations. Despite significant development and ore driving, only a small portion of the ore
reserve was deemed to be economically viable to mine. The focus of the operation has since
shifted to the western and newly discovered Tunisia and Australia lodes, which reconciled
positively. The mine was back on track for the final quarter of the 2003 financial year with a
very solid performance. However, the impact of the failed southern areas and the poor
reconciliation from the South Snook pit severely impacted the annual results.
Gidgee's results were included in Harmony's results for 2 months from the
effective date of acquisition, May 1, 2003. In that period 64,528 tons of ore was treated at an
average grade of 0.179 ounces per ton for 11,534 ounces of gold.
Detailed below are the operating and production results from the Gidgee Gold
mine operations for the fiscal year ended June 30, 2003.
Fiscal year ended June 30,
2003
1
Production
Tons
64,528
Recovered grade (ounces/ton)........
0.179
Gold sold (ounces).....................
11,534
Results of operations ($)
Cash cost (`000)........................
2,410
Cash profit (`000)..............
1,236
Cash costs
Per ounce of gold ($)..................
209
1
Consists of 2 months of production included in Harmony Australia's results.
Mining operations. Abelle's key business focus is on the three exploration and
development properties of Hidden Valley (Morobe), Wafi Gold and the Golpu Copper-Gold in
Papua New Guinea as well as the Gidgee gold mine in Western Australia. Abelle also holds a
suite of exploration projects throughout Australia which it considers non-core and is looking to
farm-out exploration risk.
Papua New Guinea Operations
The Abelle interests in Papua New Guinea consist of exploration titles covering
some 1922 square kilometers of highly prospective gold and copper-gold geology structurally
related to the Wau Graben, arc-parallel and transfer faulting.
The titles are broken into two groups, the northern group being referred to as the
Wafi Project, which in turn incorporates the Wafi Gold and Golpu Copper-Gold projects. The
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southern block is referred to as the Hidden Valley Project (previously Morobe Gold Project) and
incorporates the Hidden Valley, Kaveroi, Hamata and Kerimenge gold and gold-silver deposits.
The Papua New Guinea operations are owned by two separate Papua New Guinea
incorporated companies - Morobe Consolidated Goldfields Ltd and Wafi Mining Limited.
Morobe Consolidated Goldfields Limited (100%)
Background. The Hidden Valley Project (formerly Morobe Project) is 100%
owned by Abelle Ltd through its wholly-owned subsidiary, Morobe Consolidated Goldfields Ltd.
Alluvial gold was first discovered at Hidden Valley in 1928. It was not until the early 1980's that
the area was investigated by CRA Exploration using modern exploration techniques that resulted
in the discovery of the Hidden Valley and Kaveroi gold deposits on EL 677.
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Abelle acquired the Hidden Valley project through its merger with Aurora Gold
Ltd in January 2003. Abelle moved quickly after the Aurora merger to consolidate ownership of
the project, buying out its partners in a deal completed in June 2003.
Abelle has distanced itself from the Aurora feasibility and is actively reviewing
development options for the project, including incorporating the Hamata deposit into a
development plan. This review and a revised feasibility study is due for completion at the end of
calendar year 2003.
Project Overview. Abelle has devised a development plan for the project that
incorporates the mining of both the Hamata and Hidden Valley/Kaveroi resources. The
resources will be mined in a sequence that sees the low silver Hamata ores mined first with plant
and infrastructure development for the project developed in close proximity to the Hamata
deposit. The next ore mined will be the Hidden Valley/Kaveroi oxide/transition ores (high
silver) followed by the Hidden Valley/Kaveroi primary ores.
A planned process rate of approximately 3.5 million tons per annum is envisaged
with the plant evolving in customization for each ore source. Hence, the process plant will
commence as a CIP plant for the low silver Hamata ores, revert to a Counter-Current
Decantation ("CCD") circuit with Merril Crowe zinc precipitation for the high silver
oxide/transition ores and then a flotation before fine grind, CCD and Merril Crowe zinc
precipitation for the high silver sulphide ores from Hidden Valley/Kaveroi. The definitive
feasibility study for this project was completed recently and is expected to enter a development
form in early 2004.
Location and access. The Hidden Valley Project comprises four exploration
licenses of 966 square kilometers in the Wau District of Morobe Province, Papua New Guinea.
The project is located 210 kilometers north-northwest of Port Moresby and 90 kilometers south
southwest of Lae, the two largest cities in Papua New Guinea. Access to the project is by sealed
road from the deep-water port of Lae to Bulolo, all-weather gravel road to Wau and then by
unsealed tracks. Abelle is currently in the process of performing Mining Reserve estimates
under the feasibility review of the Hidden Valley project.
 
Government royalty and other rights. The gold and silver production from the
Hidden Valley Project will be subject to a 2% royalty, payable on the net return from refined
production if refined in Papua New Guinea or 2% royalty on the realized price if refined out of
Papua New Guinea.
The independent State of Papua New Guinea ("the State") also has a statutory
right to acquire up to a 30% participatory interest in mining development projects, at sunk cost.
Once an interest is acquired by the State, it contributes to the further exploration and
development costs on a pro rata basis. The State's reservation arises by way of a condition
included in all exploration licenses.
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Third Party Royalties. Pursuant to the sale agreement of EL677 (the Hidden
Valley and Kaveroi deposits) by Rio Tinto to AGF, a royalty payment from refined gold
production is payable to Rio Tinto as per the following table:
Gold production
(oz)
Royalty
(%)
<200,000                                              0.0
200,001 1,000,000
2.0
1,000,001 5,000,000
3.5
>5,000,000                                           2.0
Project Approval Process. The first step in the process is to complete the
feasibility study review and revised development plan that is being undertaken by Abelle.
Contemporaneously with this Abelle is completing the environmental impact assessment for the
project including social impact assessment, landowner investigation reports; negotiating
compensation arrangements with local landowners and preparing and submitting applications to
the relevant statutory authorities for approval to proceed with the project.
Additional Prospects and Exploration Potential. The Hidden Valley Project
revised feasibility and development being developed by Abelle considers the mining and
development of the Hamata, Hidden Valley and Kaveroi deposits only. While these alone
provide for a robust project of 8 to10 years duration, there is considerable potential to extend the
project life from other advanced prospects and mineralization that are within a 10 kilometer
radius of any proposed plant site.
These include the advanced Kerimenge deposit (753,000 ounces), Andim,
Nosave, Purrawang, Apu Creek prospects that are immediate extensions to the known
mineralization systems at Hidden Valley, the more peripheral Waterfall, Bulldog, Bulldog North
and Daulo prospects as well as the Yafo and Yava prospects near Hamata.
Wafi Gold Project
Background. The Wafi prospect of Abelle is owned 100% through subsidiary
company, Wafi Mining Limited. The first exploration at Wafi dates back to the nationwide
porphyry copper search by CRA Exploration Ltd in the late 1960's. Abelle assumed control of
the Wafi project as a result of its merger with Aurora in February 2003. Abelle then assumed
control of the Wafi project and commenced drilling to define and extend high-grade Link Zone
mineralization.
Project Overview. The prospect has two separate ore systems/projects located
with close proximity of each other known as the Wafi Gold Project and the Golpu Copper-Gold
Project. The project is held under 4 contiguous exploration licenses totaling 996 square
kilometers. The Wafi gold mineralization is hosted by sedimentary/volcaniclastic rocks of the
Owen Stanley Formation as they surround the Wafi Diatreme. Gold mineralization occurs as
extensive high-sulphidation epithermal alteration overprinting porphyry mineralization and
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epithermal style vein-hosted and replacement gold mineralization with associated wall-rock
alteration.

Four main zones (Zone A, Zone B, The Link Zone (between Zone A & B) and to
a lesser extent, the Western Zone have been drill tested at Wafi revealing substantial gold
mineralization. The Link zone was discovered in the last phase of drilling at the prospect before
Abelle acquired the project. Abelle commenced a further diamond drilling program in late
February 2003 aimed at infilling and extending the higher grade link zone mineralization but
with an important objective of clearly defining the geometry of the higher grade link
mineralization with disciplined core orientation. The results from the first four holes in the
program were received by year end and returned a number of significant intercepts:
Hole No
Northing
Easting
RL
Dip/Az
Intercept
WR176
20105N
19639E
531
-60/270
4.9m @ 5.50 g/t Au from 213m
7m @ 1.74 g/t Au from 220m
10m @ 1,79 g/t Au from 241m
WR177
20103N
19877E
536
-60/270
159m @ 6.53 g/t Au from 275m
including
50m @ 10.25 g/t Au from 275m
23m @ 15.52 g/t Au from 410m
WR178
20107N
19940E
540
-65/277
71m @ 8.42 g/t Au from 316m
17m @ 5.25 g/t Au from 410m
15m @ 9.34 g/t Au from 454m
WR179
20104N
19743E
548
-60/270
174m @ 4.03 g/t Au from 192m
including
37m @ 9.03 g/t Au from 267m
28m @ 5.75 g/t Au from 319m
Importantly, the cores from these holes revealed that the deeper high grade ore is
associated with carbonate and minor base metal mineralization indicative of a low sulphidation
ore system and in places appears to over-print previous mineralization. The near surface epi-
/mesothermal ores from Zone A and Zone B are clearly part of a high sulphidation system.
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The following section shows the significance and magnitude of the Wafi gold
system. Of note is the width of the ore system of approximately 800 meters.
Golpu Copper-Gold Project. Golpu is located approximately 1 kilometer
northeast of the Wafi gold orebody. The Golpu Project is a porphyry (Diorite) copper-gold
deposit with an Identified Mineral Resource Estimate of 99.7 million tonne at 1.25% copper and
0.64 grams per ton Au. In addition the leached oxide cap to the porphyry copper contains a
copper poor inferred resource of 6.42 million tons at 1.3 grams per ton gold.
The Golpu host lithology is a diorite that exhibits a typical zoned porphyry copper
alteration halo grading from potassicphyllic advanced argillic upwards in the core. Outwards
from the core the alteration grades from the above to argillicpotassic to propylitic. The
mineralized body is a porphyry copper-gold `pipe' with approximately 200m by 200m plan
dimensions, slightly north plunge and still going strong at 1.2kilometers depth, the maximum
depth to which it has been drilled.
The surface expression is oxidized and leached to about 150m vertical depth
resulting in a residual gold only resource from which the copper has been leached. At the
oxidation interface a strong 20-30m thick zone of supergene copper enrichment is developed
which transitions at depth into a lower grade covellite-enargite ore. Beneath this is a zone of
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more covellite rich mineralization that contains lesser enargite and consequently arsenic. From
approximately 300 meters below surface the ore exists in a covellite rich (Arsenic poor) form
grading into a chalcopyrite-bornite rich zone from approximately 500m to its current known
depth of approximately 1.2kilometers. Abelle is currently reviewing all data relating to the
Golpu Project with the objective of performing a pre-feasibility into the development of the
project.
Geography. The Wafi prospect is located near Mt. Watut in Morobe Province,
Papua New Guinea, 60 kilometers southwest of Lae and 60 kilometers northwest of Wau. The
site is accessed by sealed road (Lae to Bulolo) which comes within 5 kilometers of the eastern
edge of the tenements.
The Wafi camp is located at an elevation of approximately 500 meters above sea
level. The terrain is mountainous and forested in most areas. Immediately west of the project
area, the Watut Valley makes for relatively simple road access to the project. The Wafi Gold
and Golpu prospects themselves lie a further 10 kilometers west and at this point are accessed
and serviced by helicopter. A bush track has been established to enable dozer access and
considerations to more permanent road access are underway.
Mining reserves. Abelle is not yet in a position to quote Mining Reserve estimates
for either the Wafi Gold or Golpu Copper-Gold projects. Evaluation studies including drilling
and pre-feasibility estimates are still underway.

Government royalty and other rights. The metal production from the Wafi Project
is subject to a 2% royalty payable on the net return from refined production if refined in Papua
New Guinea or 2% royalty on the realized price if refined out of Papua New Guinea.
Papua New Guinea also has a statutory right to acquire up to a 30% participatory
interest in mining development projects, at sunk cost. Once an interest is acquired by Papua New
Guinea, it contributes to the further exploration and development costs on a pro rata basis. Papua
New Guinea's reservation arises by way of a condition included in all exploration licenses.
Third Party Royalties. Pursuant to the sale agreement of Wafi Mining Ltd to
Abelle (via wholly-owned subsidiary companies) from Rio Tinto, a royalty of 2% on gold
production or a 2% NSR from copper-gold concentrates is payable to Rio Tinto as a deferred
acquisition cost.
Mt. Muro Project Indonesia
The Mt. Muro project is owned by PT Indo Muro Kencana, is subsidiary of
Aurora, ("PT IMK") and is located in central Kalimantan. The project was placed on care and
maintenance by Aurora Gold Ltd in mid 2002 after a number of successful years that saw total
gold and silver production reach 1.3 million ounces and 25.54 million ounces respectively.
In May 2002 Aurora granted an option to Archipelago Resources Ltd to purchase
all of its the shares in PT IMK and thereby, the rights to the Mt. Muro Contract of Work in
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exchange for the grant of a royalty over part of the area of the Mt. Muro Contract of Work. This
option expired on March 31, 2003 and Abelle regained control of the project. Abelle reached
agreement with Straits Resources Ltd to form a joint venture to explore and assess the re-
development of Mt. Muro and Straits assumed the role of manager and operator of the joint
venture from May 1, 2003. Under the agreement with Straits, Abelle retains a free carried 30%
interest to the recommencement of commercial gold production. Straits must also maintain the
plant, equipment and infrastructure in good standing and spend a minimum of US$1 million on
exploration per annum over and above holding costs. Straits is an Indonesian operator with
considerable experience and expertise in operating in the Indonesian environment. Abelle
directors regard the Mt. Muro project as highly prospective and having significant potential for
new discoveries and accordingly anticipate a re-start of the operations in due course. There is a
claim involving the Mt. Muro operations which is pending at present. See "Item 8. Financial
Information Legal Proceedings."
Australian Exploration
Abelle has a number of exploration projects throughout Australia, inherited from
the merger with Aurora. Abelle is seeking to outsource many of these to third parties to the
extent this is not already the case. These projects are briefly discussed below:
Credo JV (50%). This is a 50:50 joint venture with Yilgarn Mining Pty Ltd which
cover a group of tenements in the Mt. Pleasant district of the Eastern Goldfields of WA. The
tenements cover stratigraphy that is considered highly prospective for shear and lode style gold
deposits of the Mt. Pleasant district as well as paleo/supergene styles of mineralization. Drilling
commenced in the quarter ended June 2003 to follow-up significant intercepts of
paleo/supergene style mineralization. The results confirmed the mineralization and a further
program to define the limits of the system and to enable Identified Mineral Resource estimates to
be prepared is underway.
Roopena, Partridge range & Gibralter Rocks Projects in South Australia. This
early stage exploration project comprises 3 wholly-owned Exploration Licenses located on the
Gawler Craton in South Australia. The exploration target of each is structurally controlled iron
oxide copper gold deposits genetically related to the Mesoproterozoic Hiltaba Granite Suite.
Type examples of which are Olympic Dam, Moonta/Wallaroo and Prominent Hill. Discussions
with potential joint venture partners are continuing.
Ashburton Project. This exploration project comprises 7 wholly-owned
Exploration License applications located approximately 100 kilometers east of Onslow. The
exploration concept relies on recognition that the Minnie Creek Suite is a member of the
Palaeoproterozoic Cullen Association responsible for the gold mineralization at The Granites,
Tennant Creek, Pine Creek and Telfer.
Yarri Project. The Yarri project comprises 4 wholly-owned Exploration License
applications and 7 wholly-owned Prospecting License applications covering some 340 square
kilometers in the Yarri district approximately 150 kilometers Northeast of Kalgoorlie. The
project is considered to have geological and structural similarities to the Carosue Dam project.
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Brumby Well. This project is adjacent to Sunrise Dam and is managed by
Anglogold, which is earning a 70% royalty. There has been a diamond and RC drilling program
carried out during the last quarter of the 2003 financial year.
Mount Korong. The tenements are a joint venture between Aurora (80%) and
Golden State Resources (20%) with Placer having the right to earn 75% in roylaties.
Bandya North/Matt's Bore. Both these projects are joint ventures between Aurora
(71% and 51% respectively) and Placer (Delta) with Newmont (Johnson's Well) having the right
to earn 70%.
Dingo Range. This project is adjacent to the Twin Hills epithermal gold prospect
controlled by Base Metals of Australia Ltd ("BMA"). The project is managed by BMA who
reported no field activity during the period to June 30, 2003.
Bissett Operations
Introduction. Harmony's Bissett operations, production at which was suspended
in the quarter ended September 30, 2001 due to mining operations being uneconomical at then-
current gold prices, are located near Bissett in the province of Manitoba, Canada. Prior to the
suspension, mining at Harmony's Bissett operations was conducted at depths ranging from 1,200
meters to 1,500 meters. Full production of 1,000 tons of mill throughput per day was achieved
by June 2000 prior to the placing of Bissett's operations on the care and maintenance program
discussed in "--Mining Operations" below. The transition to the care and maintenance program
took place in the quarter ended September 30, 2001. On December 2, 2003, Harmony signed a
letter of intent regarding the sale of its interest in Bissett to San Gold Resources Corporation for
$7.5 million, subject to certain conditions. See "Item 8. Financial Information Significant
Changes."
History. Harmony purchased the Bissett Gold Mine out of liquidation in
June 1998. The first mining at Bissett occurred in 1932. Though the mine has not been in
continuous operation since that time, in total it has sold in excess of 1.3 million ounces of gold.
In 1995, the previous owners of the mine undertook to recommence mining at Bissett and
completed a pre-production underground exploration, development and construction program
that culminated in a feasibility study. Operations were due to recommence at a targeted 1,000
mill tons per day throughput in 1997, when the owners went into liquidation after expenditure of
C$85 million.
Geology. The orebodies at Bissett Gold Mine, located within the Red Lake
Archaen greenstone belt, comprise two major sets of shear-related quartz veins occurring within
a steeply-dipping, intrusive host. One set of veins consists of stockwork breccias and the other
narrower, fault-controlled veins cross-cutting the stockworks. Gold mineralization occurs in
both sets of veins but is enriched at the intersection of the two vein types.
Mining Operations. Harmony has conducted underground mining at Bissett.
Mining at Bissett has been more mechanized than mining at Harmony's South African
underground mines. Long hole and shrinkage mining techniques have been used to extract the
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near vertical orebodies. The Bissett operation is subject to all of the underground mining risks
detailed in the Risk Factors section.
Due to the moderate depths of the operation, pressure related problems have been
infrequent but actively managed. Due to the mining operations being uneconomical at then-
current gold prices, Harmony decided to suspend production at the Bissett mine in fiscal 2001,
and placed the operations on a care and maintenance program during the first quarter of fiscal
2002. The care and maintenance program involves suspending production but maintaining some
staff to keep the facilities in working order, so that production can be restarted without
significant capital outlays.
Detailed below are the operating and production results from underground
operations at Bissett for the past three fiscal years:
Fiscal year ended June 30,
2003
1
2002
2
2001
Production
Tons (`000) .........................................................
0
293 
40 
Recovered grade (ounces/ton).............................
0
0.151
0.207
Gold sold (ounces)..............................................
0
8,263
44,303
Results of operations ($)
Cash cost (`000)..................................................
0
905
14,636
Cash profit/(loss) (`000)......................................
0
899 
(391) 
Cash costs
Per ounce of gold ($) ..........................................
0
109
330
______________
1
There was no production during the fiscal year 2003.
2
Production from clean up of the plant during the transition to care and maintenance in the quarter ended September 30, 2001.
Plant. The mineralogy of the orebodies is simple and gold is easily extractable
using conventional gravity concentration, CIL and electro-winning processing techniques.
Capital Expenditure. In light of its decision to place Bissett on a care and
maintenance program Harmony did not make any significant capital expenditures at Bissett in
fiscal 2003 and did not budget for any significant capital expenditures at Bissett in fiscal 2004.
AurionGold and Placer Dome
Harmony made its first investment in the Australian gold mining industry in
February 4, 2000, when Harmony purchased 32,770,992 shares of Goldfields (Australia). On
October 5, 2000, Harmony concluded the purchase from Hanson plc of 10.58 million Goldfields
(Australia) shares at a price of A$1.425 per share for a total consideration of $8.8 million,
financed through the issue of 2.2 million Harmony ordinary shares at Rand 37.45 per share.
Harmony's stake in Goldfields (Australia) was approximately 22.96%. Effective
December 31, 2001, Delta was merged into Goldfields (Australia). In connection with the
merger, holders of Delta shares received 187 Goldfields (Australia) shares in exchange for every
200 Delta shares held. Harmony's stake in Goldfields (Australia) following the merger was
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diluted to approximately 9.8%. In February 2002, Goldfields (Australia) changed its name to
AurionGold Limited.
On October 23, 2001, Gold Fields granted Harmony an exclusive option to
negotiate the possible acquisition from Gold Fields of the St. Helena and Oryx mines in the Free
State Province. Harmony, in return, granted Gold Fields an exclusive option to negotiate the
acquisition of Harmony's stake in AurionGold. These agreements expired, without exercise, on
February 15, 2002. On May 25, 2002, Harmony and Placer Dome entered into an agreement
under which Harmony accepted Placer Dome's offer to acquire all of Harmony's interest in
AurionGold subject to specified conditions. Pursuant to the offer, Harmony would receive 17.5
newly-issued Placer Dome ordinary shares for every 100 AurionGold ordinary shares tendered.
On July 29, 2002, Harmony announced that Placer Dome had increased its offer by adding a cash
payment of A$0.35 per AurionGold ordinary share. Harmony accepted this revised offer, which
had become unconditional as of July 29, 2002. The transaction was completed on August 6,
2002. As a result, Harmony obtained a 1.9% interest in Placer Dome. Subsequently the shares
were sold for a profit of $59 million, determined with reference to the cost of the original investment in Gold Fields.
REGULATION
Mineral Rights
South African law provides for the separate ownership of surface and mineral
rights. It is therefore possible for one person to own the surface of a property, another to own
rights to precious metals and yet another to own rights to base minerals. Harmony controls
mineral rights by way of ownership, mining rights and mining authorizations.
Currently, approximately two-thirds of South Africa's mineral rights are in
private hands. The South African government investigated the structure of mineral ownership in
the country, with the view of making access to minerals easier for small and emerging mining
companies.
After the election of a democratic government in South Africa in 1994, the issue
of mineral rights was reviewed.
On October 3, 2002, the South African parliament passed the Mineral and
Petroleum Resources Development Act. The Act will come into force on a date to be fixed by
the President in the Government Gazette. The principal objectives set out in the Act are:
  • To recognize the internationally accepted right of the state of South Africa
to exercise full and permanent sovereignty over all the mineral and
petroleum resources within South Africa;
  • To give effect to the principle of the State's custodianship of the nation's
mineral and petroleum resources;
  • To promote equitable access to South Africa's mineral and petroleum
resources to all the people of South Africa and redress the impact of past
discrimination;
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  • To substantially and meaningfully expand opportunities for historically
disadvantaged persons, including women, to enter the mineral and
petroleum industry and to benefit from the exploitation of South Africa's
mineral and petroleum resources;
  • To promote economic growth and mineral and petroleum resources
development in South Africa;
  • To promote employment and advance the social and economic welfare of
all South Africans;
  • To provide security of tenure in respect of prospecting, exploration,
mining and production operations;
  • To give effect to Section 24 of the South African Constitution by ensuring
that South Africa's mineral and petroleum resources are developed in an
orderly and ecologically sustainable manner while promoting justifiable
social and economic development;
  • To follow the principle that mining companies keep and use their mineral
rights, with no expropriation and with guaranteed compensation for
mineral rights; and
  • To ensure that holders of mining and production rights contribute towards
socioeconomic development of the areas in which they are operating.
Under the Act, tenure over established operations will be secure for 30 years (and
renewable for 30 years thereafter), provided that mining companies obtain new licenses over
existing operations within five years of the date of enactment of the Act and fulfill requirements
specified in the Mining Charter.
The principles contained in the Mining Charter relate to the transfer, over a ten-
year period, of 26% of South Africa's mining assets to historically disadvantaged South
Africans, as defined in the Mining Charter. Under the Mining Charter, the South African mining
industry has committed to securing financing to fund participation of historically disadvantaged
South Africans in an amount of R100 billion within the first five years of the Mining Charter's
tenure. The Mining Charter provides for the review of the participation process after five years
to determine what further steps, if any, are needed to achieve the 26% target participation. The
Mining Charter requires programs for black economic empowerment and the promotion of
value-added production, such as jewelry-making and other gold fabrication, in South Africa.
The Mining Charter also sets out targets for broad-based black economic empowerment in the
areas of human resources, skill development, employment equality, procurement and
beneficiation. In addition, the Mining Charter addresses other socioeconomic issues are
addressed, such as migrant labor, housing and living conditions.
Harmony actively carries out mining and exploration activities in all of its
material mineral rights areas. Accordingly, Harmony does not believe that the Act will have a
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significant impact on these mining and exploration activities because Harmony will be eligible to
apply for new licenses over its existing operations, provided that it complies with the Mining
Charter. Harmony is currently in consultation with the National Department of Minerals and
Energy, in the process of developing a sophisticated approach to setting targets and measure
performance in black economic empowerment, or BEE, and transformation initiatives within
Harmony. We refer to this initiative as the "Harmony Transformation Scorecard" and the
methodology shall be described in more detail in the 2004 Annual Report. In essence, it will
provide clarity on the "measures" of empowerment and transformation contained in the Mining
Charter, but, at the same time, will enable Harmony to set targets, plan initiatives and measure
progress on an integrated strategy for transformation within the company over the next ten years.
Harmony has already achieved a high level of compliance with the provisions of the Mining
Charter and remains proactive in ensuring full compliance.
The Act also makes reference to royalties being payable to the state in terms of
the Royalty Bill, which was available for public comment until April 30, 2003, whereafter it was
referred back to Parliament. Harmony has made a submission to the treasury department and
currently await government's revised position. The introduction of the Royalty Bill as law may
have an adverse impact on the profits generated by Harmony's operations in South Africa.
Harmony is currently evaluating the impact that the proposed Royalty Bill may have with regard
to its operations and no assurance can be given as to whether or when the proposed Royalty Bill
will be published for comment or enacted.
The Act (i) limits ministerial discretion, (ii) introduces a first-come first-served
principle with respect to the consideration of applications, (iii) introduces a mining advisory
board, (iv) provides for compensation for currently held rights, and (v) ensures that current
mining right holders that are actively engaged in developing their rights will not have to reapply
for their rights. An aggrieved party will have the right of appeal to either the Director General or
the Minister and may only take matters to the courts once that party has exhausted his or her
remedies in terms of the appeal procedures that are to be set forth.
In Australia, most mineral rights belong to the government, and mining
companies must pay royalties to the government based on production. There are, however,
limited areas where the government granted freehold estates without reserving mineral rights.
New Hampton has freehold ownership of its Jubilee mining areas, but the other mineral rights in
Harmony's Australian operations belong to the Australian government and are subject to royalty
payments. In addition, current Australian law generally requires native title approval to be
obtained before a mining license can be granted and mining operations can commence. New
Hampton and Hill 50 have approved mining leases for most of their reserves, including all
reserves that are currently being mined, and Bendigo has an approved mining license for its
current development area. If New Hampton, Hill 50 or Bendigo desired to expand operations
into additional areas under exploration, these operations would need to convert the relevant
exploration licenses prior to commencing mining, and that process could require native title
approval. There can be no assurance that any approval would be received.
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Environmental Matters
Pursuant to South African law, mine properties must be rehabilitated upon
closure. Mining companies are required by law to submit Environmental Management Program
Reports, or EMPRs, to the Department of Minerals and Energy. EMPRs identify the
rehabilitation issues for a mine and must also be approved by other South African government
departments including, but not restricted to, the Department of Water Affairs and Forestry.
EMPRs have been prepared and submitted for all of Harmony's South African
operations (including the Free Gold Company, which is described below). With the exception of
the Kalgold EMPR, these EMPRs have been approved. The Kalgold EMPR is in the process of
being approved by the authorities. Harmony does not anticipate any difficulties in obtaining
approval for any of this EMPR. All of Harmony's South African mining operations, including
Kalgold (but excluding the Free Gold Company), have permanent mining authorizations. The
process of preparing and submitting EMPRs has improved the mutual co-operation and
information sharing between Harmony and the relevant government departments. Harmony has
met and intends to continue to meet on a regular basis with the relevant government departments
to continue the EMPR process and to ensure the environmental impact of Harmony's mining
operations are managed in accordance with applicable regulatory requirements and industry
standards.
The Free Gold assets are currently operating in accordance with AngloGold's
approved EMPRs. The Free Gold Company has completed the required revisions to these
EMPRs and has submitted them to the authorities for approval. Harmony does not anticipate any
difficulties in obtaining approval for these EMPRs. The Free Gold Company mining
authorizations are renewed on a six-month basis pending approval of these EMPRs.
In fiscal 2002 and 2003, water quality became and continued to become one of
the main focus areas of the South African mining industry. All water uses are now being
licensed, and Harmony has submitted water-use registrations required by the National Water Act
of 1998. Harmony has also developed water management plans for all of its South African
operations. In addition, in response to concerns that water from the Western Basin, located at
Harmony's Randfontein operations, might reach the Sterkfontein caves, Harmony has initiated a
study to evaluate the extent of this risk and has implemented measures to divert the water away
from Sterkfontein caves.
An environmental surveillance system has been implemented at slimes dams at
our operations to monitor dust generation and fall-out in residential and other areas. This will
assist in future dust suppression and the design and measurement of rehabilitation programs.
Bissett, which does not own mineral rights, operates pursuant to a mining lease
and an environmental license. While the license has no term, it may be revoked, temporarily or
permanently, should Harmony Canada fail to comply with the terms of the license, which include
maintaining the facility. The lease has a term of 21 years, commencing April 1, 1992. On
December 2, 2003, Harmony signed a letter of intent regarding the sale of its interest in Bissett to
San Gold Resources Corporation for $7.5 million, subject to certain conditions. See "Item 8.
Financial Information Significant Changes."
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Harmony's Australian operations must comply with mining lease tenement
conditions set by the Department of Minerals and Energy, the Mining Act (1978), the
Department of Environmental Protection operating licenses, and water abstraction licenses
issued by the Water and Rivers commission for each of its sites. Harmony's Australian
operations must also comply with numerous environmental acts and bills. As a result, Harmony
must make provisions for mining rehabilitation whenever mining is commenced at a new site in
Australia. While Harmony believes that its current provision for compliance with such
requirements is reasonable, any future changes and development in Australian environmental
laws and regulations may adversely affect these Australian operations.
In Western Australia under the Mining Act (1978), all tenements are covered by
environmental performance bonds that cannot be relinquished or completed without the approval
of the Australian Department of Mineral Resources. These are re-assessed on an annual basis
following the issuing of an annual environmental report and generally are audited by the regional
inspector. As areas are successfully rehabilitated and approval is obtained, the bond requirement
is reduced, and as greater areas are disturbed the bond requirement increases. Any new aspects
of the operation are also assessed and the bond is established prior to approval and subsequent
commencement of operations.
Audits are generally conducted on a bi-annual basis by the Australian Department
of Environmental Protection to determine compliance with the relevant operating license(s).
There are no outstanding major non-compliance issues against New Hampton's license or
Hill 50's license.
Bendigo operates tenements granted under the Victorian Mineral Resources
Development Act (1990), administered by the Department of Natural Resources and
Environment. Operations that involve a deliberate discharge to the environment are subject to
the Victorian Environment Protection Authority. Conditions attached to approvals include
requirements for environmental management, monitoring and protection. While Bendigo has
made allowances for the expected costs of complying with these conditions, any future changes
and development in Australian environmental laws and regulations may increase these costs.
Each of Harmony's mines has a person dedicated to environmental matters who,
in addition to organizing the implementation of the environmental management programs,
monitors the impact of the mine on the environment and responds to impacts that require specific
attention outside of the normal program of environmental activities.
The primary environmental focus at most of Harmony's operations is water
management and the administration of areas outside the operating plants and shafts. The major
objective is to ensure that water is of a quality fit for use by downstream users.
Based on current environmental and regulatory requirements, Harmony accrues
for the estimated rehabilitation expense in full when mining commences and then amortizes
these environmental rehabilitation costs over the operating life of a mine. It also makes annual
contributions to environmental trust funds created in accordance with South African statutory
requirements, to provide for the estimated cost of pollution control and rehabilitation during and
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at the end of the life of a mine. Estimates of the ultimate rehabilitation liability are subject to
change as a result of future changes in regulations or cost estimates.
While the ultimate amount of rehabilitation costs to be incurred in the future is
uncertain, Harmony has estimated that the total cost for Harmony in current monetary terms to
rehabilitate its mine properties will be approximately Rand 668.3 million. This figure includes 
estimates for rehabilitation costs at Elandskraal, New Hampton and Hill 50, as well as 
Harmony's proportionate interest of rehabilitation costs at the Free Gold assets. There
can be no assurance, however, that this estimate reflects or approximates actual costs to be
incurred.
Harmony intends to fund its ultimate rehabilitation costs from the money invested
in the environmental trust funds, as well as the proceeds from the sale of assets and gold from
plant clean-up at the time of mine closure. The requirements imposed upon mining companies to
ensure environmental restitution, however, are currently under review and it is possible that this
will result in additional costs and liabilities in particular with regard to the management of
hazardous wastes, the pollution of ground and ground water systems and the duty to rehabilitate
closed mines.
Health and Safety Matters
The Mine Health and Safety Act. For many years, the safety of people working in
South African mines and quarries was controlled by the Mines and Works Act of 1956 and
subsequently the Minerals Act of 1991. Several incidents in mines in recent years indicated that
this legislation needed to be updated and revised. The findings of the Leon Commission of
Inquiry into Health and Safety in the Mining Industry in April 1994 led to the drafting of new
legislation, which resulted in the Mine Health and Safety Act No. 29 of 1996, or the Mine Health
and Safety Act. The Mine Health and Safety Act was the result of intensive discussions and
consultations between government, employers and employee representatives over an extended
period of time, and came into force on January 15, 1997. The objectives of the Mine Health and
Safety Act are:
  • to protect the health and safety of persons at mines;
  • to require employers and employees to identify hazards and eliminate,
control and minimize the risks relating to health and safety at mines;
  • to give effect to the public international law obligations of South Africa
that concern health and safety at mines;
  • to provide for employee participation in matters of health and safety
through health and safety representatives and the health and safety
committees at mines;
  • to provide for effective monitoring of health and safety conditions at
mines;
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  • to provide for enforcement of health and safety measures at mines;
  • to provide for investigations and inquiries to improve health and safety at
mines; and
  • to promote
-
a culture of health and safety in the mining industry;
-
training in health and safety in the mining industry; and
-
co-operation and consultation on health and safety between the
State, employers, employees and their representatives.
The Mine Health and Safety Act prescribes general and specific duties for
employers and others, determines penalties and a system of administrative fines, and provides for
employee participation by requiring the appointment of health and safety representatives, and
through the establishment of health and safety committees. It also entrenches the right of
employees to refuse dangerous work. Finally, it describes the powers and functions of a mine
health and safety inspectorate and the process of enforcement.
It is anticipated that mining companies will incur additional expenditures in order
to comply with the legislation's requirements. Management anticipates that such additional
expenditures will not have a material adverse effect upon Harmony's results of operations or
financial condition, although there can be no assurance of this.
HIV/AIDS Policy. Harmony currently estimates that the HIV/AIDS infection rate
among Harmony's South African workforce is approximately 28%, a figure which Harmony
believes is consistent with the overall infection rate in South Africa. See "Item 3. Key
Information--Risk Factors--HIV/AIDS poses risks to Harmony in terms of productivity and
costs." Harmony is actively pursuing HIV/AIDS awareness campaigns with its South African
workforce and is also providing medical assistance, anti-retroviral treatment and separation
packages for employees who decide to leave their place of work and return home for care.
Harmony currently believes that the prevalence of HIV/AIDS-related diseases among its
Australian workforce is not material to its Australian operations.
On September 19, 2002, Harmony entered into an agreement with the NUM, the
South African Equity Workers Association and the United Association of South Africa in which
Harmony and these labor unions agreed to implement initiatives aimed at reducing the spread of
HIV infection among Harmony's South African workforce and the surrounding communities,
providing for the treatment and care of employees who are HIV-positive or suffering from
HIV/AIDS-related diseases, and ensuring that the rights of employees living with HIV/AIDS are
upheld in compliance with existing legislation. In connection with this agreement, Harmony is
implementing the "Harmony Declares War Against HIV/AIDS" initiative, a comprehensive
strategy to address HIV/AIDS at its South African operations and in surrounding communities.
This initiative will include education programs to promote healthy living and provide
information about HIV/AIDS, sexually transmitted infections and pulmonary tuberculosis.
Harmony expects to also provide voluntary testing, counseling, psychotherapy and other support,
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as well as health care for affected and infected employees, including wellness clinics and
treatment at company hospitals and medical stations. As has been its policy prior to the
agreement, Harmony will not perform pre-employment HIV/AIDS testing or require testing for
its employees, and will maintain the confidentiality of all employees' or prospective employees'
medical information.
Item 5. Operating and Financial Review and Prospects
You should read the following discussion and analysis together with the
consolidated financial statements, including the related notes, appearing elsewhere in this
annual report.
OVERVIEW
Harmony and its subsidiaries conduct underground and surface gold mining and
related activities, including exploration, extraction, processing, smelting and refining. Harmony
is currently the largest gold producer in South Africa and one of the largest gold producers in the
world.
Harmony's operations have grown significantly since 1995, largely through
acquisitions. Since 1995, Harmony has expanded from a lease-bound mining operation into an
independent world-class gold producer. Harmony's gold sales have increased from 650,312
ounces of gold in fiscal 1995 to approximately 2.4 million ounces of gold in fiscal 2003. These figures include sales from Abelle for two months (which was acquired in fiscal 2003), but exclude sales from the Free Gold Company (in which Harmony acquired a 50% interest in fiscal 2002).
On November 21, 2001, Harmony and ARMgold reached an agreement in
principle with AngloGold to purchase the Free Gold assets, subject to specified conditions.
Pursuant to the subsequently executed definitive agreements, the Free Gold assets were
purchased by the Free Gold Company (in which Harmony and ARMgold each has a 50%
interest) for a total purchase consideration of $297.5 million, which comprised a cash payment
$169.2 million by the Free Gold Company in April 2002 following the fulfillment of all
conditions precedent, a $37.5 million interest-free loan payable by the Free Gold Company on
January 1, 2005, and $90.8 million related to the reimbursement of the taxes paid by AngloGold
on disposal of the Free Gold assets to the Free Gold Company. The tax liability was reimbursed
to AngloGold in June 2003. The Free Gold Company had estimated that this tax liability would
be $59.4 million during fiscal 2002. The Free Gold Company assumed management control of
the Free Gold assets from January 1, 2002, and completed the acquisition on April 23, 2002 (the
date on which all conditions precedent to the transaction were fulfilled). See "Item 4.
Information on the Company--Business--History and "Item 4. Information on the Company--
Business--Harmony's Mining Operations." During Harmony's fiscal 2003, sales from the Free
Gold assets amounted to 1,155,428 ounces of gold which Harmony's interest was 577,714
ounces, compared with fiscal 2002, sales from the Free Gold assets amounted to
1,143,243 ounces of gold and Harmony's interest in two months of these sales (reflecting the
period from May 1, 2002 to June 30, 2002) totaled 104,005 attributable ounces. Because
Harmony equity accounts for its 50% interest in the Free Gold Company, sales from the Free
Gold assets are not included in Harmony's sales figures in this annual report. For more
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information on Harmony's consolidation policy, see note 2(b) to the consolidated financial
statements.
For purposes of U.S. GAAP, Harmony accounted for its equity interest in the Free
Gold Company with effect from May 1, 2002 and the purchase price of the Free Gold assets was
determined to be $239.4 million. This figure is the sum of the cash payment of $169.2 million,
the fair value of the interest-free loan of $25.4 million and the reimbursement of the taxes paid to
AngloGold on the sale of the Free Gold assets of $90.8 million, offset by the cash flows of $46.0
million generated by the Free Gold assets during the period from January 1, 2002 until the
completion of the acquisition on April 23, 2002 (the date on which all conditions precedent to
the transaction were fulfilled).
During fiscal 2003, Harmony and ARMgold formed a joint venture company,
Clidet 454 (Proprietary) Limited ("Clidet"). Both companies own 50% of Clidet's outstanding
share capital. Clidet acquired from Anglo American Plc ("Anglo") in May 2003, 34.5% of
Avmin Limited ("Avmin") outstanding share capital for a total cash consideration of $230.0
million. Avmin is a South African incorporated mining holding company with interests in gold,
platinum, manganese, chrome and nickel mining operations and various exploration projects. In
September 2003, Harmony completed its merger with ARMgold. (See Below).
Recent Developments
On July 15, 2003, Harmony announced that it had entered into an agreement with
Anglo South Africa (Pty) Limited ("Anglo SA") whereby it acquired 77,540,830 ordinary
shares in Avgold Limited ("Avgold") or 11.5% of Avgold's outstanding share capital from Anglo
SA, in exchange for 6,960,964 new Harmony ordinary shares issued to Anglo SA.The agreement 
with Anglo SA provides that should the Company make an offer to acquire the other Avgold 
shareholders' interest, the consideration payable to Anglo SA will be adjusted to reflect the 
amounts paid to the other Avgold shareholders.
On August 14, 2003, Randfontein, a wholly-owned subsidiary of the Company
received from Africa Vanguard Resources (Proprietary) Limited ("Africa Vanguard") $19
million as consideration for 26% of Randfontein's mineral rights in respect of the Doornkop
Mining Area. Randfontein and Africa Vanguard also entered a joint venture agreement in terms
of which they agreed to jointly conduct a mining operation in respect of the Doornkop Mining
Area by means of the Doornkop Joint Venture. For U.S. GAAP purposes, Harmony will not
account for this transaction as a sale, but will consolidate the results of Africa Vanguard and the
Doornkop Joint Venture, as both these entities have been determined to be variable interest
entities, with Harmony as the primary beneficiary of both variable interest entities.
On September 22, 2003, Harmony and ARMgold consummated a merger, the
terms of which were announced on May 2, 2003. Pursuant to the merger agreement, following
the respective company shareholder approvals, Harmony issued 2 ordinary shares for every 
3 ARMgold ordinary shares acquired. ARMgold also paid its shareholders a special dividend of
R6.00 per ordinary share ($0.84) prior to the consummation of the merger. Harmony issued
63,670,000 ordinary shares to ARMgold's shareholders which resulted in ARMgold becoming a
wholly-owned subsidiary of Harmony. For U.S. GAAP purposes, the merger will be accounted
for as a purchase by Harmony of ARMgold for a purchase consideration of approximately 
$708 million. The results of ARMgold will be included in those of Harmony from October 1, 2003.
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                          On November 7, 2003, Harmony entered into an agreement to dispose of of its wholly-owned subsidiary Kalgold to The Afrikander Lease Limited ("Aflease") for a total consideration of $39.0 million. The consideration will comprise of a cash payment of $19.5 million and the balance through the issue by Aflease of new ordinary shares valued at $19.5 million.
CRITICAL ACCOUNTING POLICIES
On November 13, 2003, Harmony announced that it reached an agreement in
principle with Avmin whereby it would enter into a number of transactions with Avmin. The first
transaction involves Harmony acquiring Avmin's 286,305,263 ordinary shares in Avgold, or
42.2% of Avgold's outstanding share capital, in exchange for 28,630,526 new Harmony ordinary
shares to be issued to Avmin. Should the acquisition of Avmin's interest in Avgold become
unconditional, Harmony will be required to make a mandatory offer to the Avgold minority
shareholders on the same terms as which it acquired Avmin's interest in Avgold. Harmony will
also dispose of its Kalplats platinum project and associated mineral rights to Avmin, in exchange
for 2 million new Avmin ordinary shares to be issued to Harmony. Should all of the above
described transaction be consummated as expected, Avgold will become a wholly-owned
subsidiary of Harmony. Harmony and Avmin will have cross shareholdings in each other
whereby Harmony will own a 20.1% interest in Avmin, and Avmin will own a 22.2% interest in
Harmony.
On December 2, 2003 Harmony announced its intention to sell Bissett to San
Gold Resources Corporation (San Gold) for C$7.5 million. The terms of a letter of intent stated
that there is a 90-day option and due diligence period. During this period, 3 payments of
$50,000 will be made at intervals of 2, 30 and 60 days, with the first payment having been
completed. At the end of the three month period, San Gold can complete the transaction by
paying the Company C$3.5 million in cash and C$4 million either in cash or by an issue of San
Gold shares.
 

                         Harmony's strategy for growth has generally been to acquire existing under performing
mines and turn them into more profitable business units by introducing low-cost mining methods. 
See "Item 4. Information on the Company--Business--Strategy." Harmony generally targets 
producing mines that offer turnaround opportunities, with the aim of improving the overall quality 
and volume of their production profiles. Harmony intends to continue expanding through acquisitions 
both in South Africa and internationally, in addition to pursuing organic growth by investing in greenfield 
and brownfield developments made relatively more attractive by the recent increase in gold prices. 
See "Item 4. Information on the Company--Business--Strategy."

Because Harmony has acquired a large number of significant gold mining operations since 1996, its 
financial results for each of the years since 1996 may not be directly comparable. 

 

In response to the Securities and Exchange Commission's, or the SEC's, Release No. 33-8040, 
"Cautionary Advice Regarding Disclosure About Critical Accounting Policies," Harmony has identified 
the most critical accounting policies upon which its financial status depends. Some of Harmony's 
accounting policies require the application of significant judgment by management in selecting the 
appropriate assumptions for calculating financial estimates. By their nature, these judgments are 
subject to an inherent degree of uncertainty and are based on Harmony's historical experience, 
terms of existing contracts, management's view on trends in the gold mining industry and information 
from outside sources.

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                           Harmony's significant accounting policies are described in more detail in note 2 to the consolidated financial statements and in relevant sections of this annual report. This discussion and analysis should be read in conjunction with the consolidated financial statements and related notes included elsewhere in this annual report. Harmony's management has identified the following as critical accounting policies because estimates used in applying these policies are subject to material risks and uncertainties. Harmony's management believes the following critical accounting policies, together with the other significant accounting policies discussed in the notes to the consolidated financial statements, affect its more significant judgments and estimates used in the preparation of the consolidated financial statements and could potentially impact Harmony's financial results and future financial performance.

                             Amortization of mining assets.
 
                            Amortization charges are calculated using the units of production method and are based on Harmony's current gold production as a percentage of total expected gold production over the lives of Harmony's mines. The lives of the mines are estimated by Harmony's geology department using interpretations of mineral reserves, as determined in accordance with the SEC's industry guide number 7. The estimate of the total expected future lives of Harmony's mines could be materially different from the actual amount of gold mined in the future and the actual lives of the mines due to changes in the factors used in determining Harmony's mineral reserves, such as the gold price, foreign currency exchange rates and working costs. Any change in management's estimate of the total expected future lives of Harmony's mines would impact the amortization charge recorded in the consolidated financial statements. See "Item 3. Key Information--Risk Factors-- Harmony's gold reserve figures may yield less gold under actual production conditions than Harmony currently estimates."

                              Amortization of intangible assets 

                             Intangible assets represent mineral use rights for parcels of land not owned by the Company. The Companys intangible assets include mineral use rights related to production, development or exploration stage properties and the value of such intangible assets is primarily driven by the nature and amount of mineral interests believed to be contained, or potentially contained, in such properties. The amount capitalized related to a mineral interest represents its fair value at the time it was acquired, either as an individual asset purchase or as a part of a business combination. The straight-line amortization of the Companys exploration stage mineral interests is calculated after deducting applicable residual values.
Residual values range from 60% to 100% of the gross carrying value of the respective exploration stage mineral interests. Significant judgment is involved in the determination of residual values, and no assurance can by given that actual values will not differ significantly from estimated residual values. Changes in residual values will impact the amortization charge recorded in the consolidated financial statements.

                         Valuation of long-lived assets.
 
                         Management regularly reviews the carrying value of Harmony's long-lived mining assets to determine whether their carrying values, as recorded in the consolidated financial statements, are appropriate. These reviews, which are carried out on an annual basis and whenever events or changes in circumstances indicate that the carrying values may not be recoverable, are based on projections of anticipated future cash flows to be generated by utilizing the long-lived assets. While management believes that these estimates of future cash flows are reasonable, different assumptions regarding projected gold prices, production costs and foreign currency exchange rates could materially affect the anticipated cash 

106
 
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flows to be generated by the long-lived assets, thereby affecting the evaluations of the carrying
values of the long-lived assets. For more information regarding the circumstances under which
Harmony records an impairment in the carrying value of long-lived assets, see "Item 5.
Operating and Financial Review and Prospects--Impairment of Assets."
Hedging and financial derivatives. Harmony accounts for its derivative financial
instruments in accordance with FAS 133. See "Item 11. Quantitative and Qualitative
Disclosures About Market Risk--General." The determination of the fair value of hedging
instruments and financial derivatives, when marked to market, takes into account estimates such
as projected commodity prices, interest rates and foreign currency exchange rates under
prevailing market conditions, depending on the nature of the hedging and financial derivatives.
These estimates may differ materially from actual commodity prices, interest rates and foreign
currency exchange rates prevailing at the maturity dates of the hedging and financial derivatives
and, therefore, may materially influence the values assigned to the hedging and financial
derivatives, which may result in a charge to or an increase in Harmony's earnings at the maturity
dates of the hedging and financial derivatives.
Environmental rehabilitation costs. Harmony makes provision for environmental
rehabilitation costs and related liabilities based on management's interpretations of current
environmental and regulatory requirements. In addition, final environmental rehabilitation
obligations are estimated based on these interpretations, with provisions made over the expected
lives of Harmony's mines. While management believes that the environmental rehabilitation
provisions made are adequate and that the interpretations applied are appropriate, the amounts
estimated for the future liabilities may differ materially from the costs that will actually be
incurred to rehabilitate Harmony's mine sites in the future. In particular, changes and
development in environmental regulation and regulatory requirements may increase the costs of
environmental rehabilitation. If management determines that an insufficient rehabilitation
provision has been created, earnings will be adjusted as appropriate in the period that the
determination is made. For more information regarding the environmental regulations applicable
to Harmony's operations, see "Item 3. Key Information--Risk Factors--Harmony's operations
are subject to extensive government regulations," "Item 3. Key Information--Risk Factors--
Harmony is subject to extensive environmental regulations" and "Item 3. Key Information--
Regulation--Environmental Matters."
Employee benefits. Management's determination of Harmony's obligation and
expense for pension and provident funds, as well as post retirement health care liabilities,
depends on the selection of certain assumptions used by actuaries to calculate the relevant
amounts. These assumptions are described in note 23 to the consolidated financial statements
and include, among others, the expected long-term rate of return of plan assets, the expected
South African mortality rates and no increase in employer contributions. Actual results that
differ from management's assumptions are accumulated and charged over future periods, which
will generally affect Harmony's recognized expense and recorded obligation in future periods.
While management believes that these assumptions are appropriate, significant changes in the
assumptions may materially affect Harmony's pension and other post retirement obligations as
well as future expenses, which will result in an impact on earnings in the periods that the changes
in the assumptions occur.
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Stock-based compensation. Effective July 1, 2001, Harmony adopted Statement
of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, or FAS
123, for all stock option grants subsequent to that date. FAS 123 requires that Harmony
determine the fair value of a stock option as of the date of the grant, which is then amortized as
stock-based compensation expense in the income statement over the vesting period of the option
grant. Harmony has determined the fair value of all its options grants subsequent to July 1, 2001,
using the binomial model, which requires that Harmony make assumptions regarding the
estimated term of the option, share price volatility and Harmony's expected dividend yield.
While Harmony's management believes that these assumptions are appropriate, the use of
different assumptions could have a material impact on the fair value of the option grant and the
related recognition of stock-based compensation expense in the consolidated income statement.
Revenues
Substantially all of Harmony's revenues are derived from the sale of gold. As a
result, Harmony's operating results are directly related to the price of gold. Historically, the
price of gold has fluctuated widely. The gold price is affected by numerous factors over which
Harmony does not have control. See "Item 3. Key Information--Risk Factors--The
profitability of Harmony's operations, and the cash flows generated by those operations, are
affected by changes in the market price for gold, which in the past has fluctuated widely."
As a general rule, Harmony sells the gold it produces at market prices to obtain
the maximum benefit from prevailing gold prices and does not enter into hedging arrangements
such as forward sales or derivatives that establish a price in advance for the sale of its future gold
production. As required by financing agreements which Harmony entered into in connection
with the financing of the acquisition of the Bissett mine in Canada, Harmony hedged a certain
amount of Bissett's production. These hedges were closed out or had expired by May 31, 2001.
In February 2001, as required by the commitment for financing of the syndicated loan facility
that Harmony entered into in connection with the acquisitions of New Hampton and the
Elandskraal mines, Harmony protected some of its production from downward movements in the
gold price by entering into put options relating to the delivery of 1 million ounces of Harmony's
2001 and 2002 production. The put options covered 83,333 ounces per month for 12 months,
commencing on March 29, 2001, at a price of Rand 64,000 per kilogram (Rand 1,990 per ounce).
Harmony paid Rand 29 million to secure these put options. Harmony closed out these put
options during July 2001 and received Rand 3 million. See "Item 11. Quantitative and
Qualitative Disclosures About Market Risk."
A significant proportion of the production at Randfontein was already hedged
when acquired by Harmony. On April 12, 2002, Harmony announced that it had completed the
process of closing out all of the Randfontein hedge contracts, including closing forward sales
contracts and call options covering a total of approximately 490,000 ounces and forward
purchases covering a total of 200,000 ounces.
In addition, a substantial proportion of the production at each of New Hampton
and Hill 50 was already hedged when acquired by Harmony and remains hedged. In fiscal 2002,
in line with Harmony's strategy of being generally unhedged, Harmony reduced New Hampton's
hedge book by over 900,000 ounces. In fiscal 2002, Harmony also combined and restructured
108
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the overall hedge portfolio of Harmony's Australian operations (which include New Hampton
and Hill 50), after which all of these hedge positions were normal purchase and sales
agreements, under which Harmony had to deliver a specified quantity of gold at a future date in
exchange for an agreed-upon price. During fiscal 2003, Harmony continued to reduce the hedge
book of the Australian operations by delivering into the contracts as required and by closing out
certain contracts prior to their delivery date. Forward sales contracts, call options sold and put
options purchased covering a total of approximately 330,000 ounces were closed out prior to
their delivery dates during fiscal 2003.
For accounting purposes, following the restructuring of the Australian operations
hedge book during fiscal 2002, these commodity sales agreements qualified for the normal
purchase, normal sales exception of FAS 133 and were accounted for as such. However,
following the early close of certain contracts during fiscal 2003, the remaining Australian
operations hedge book has been determined to be speculative, and as such does not qualify for
the normal purchase, normal sales exception of FAS 133, and is being accounted for at fair value
from that date, with changes in fair value reflected in the income statement.
Harmony intends to reduce the remaining hedge positions of the Australian
operations gradually by delivering gold pursuant to the relevant agreements.
The cost to Harmony of closing out certain Australian operations hedge positions
in fiscal 2003 and Randfontein's hedge positions in fiscal 2002 was approximately $8.6 million
and $22 million, before taxes, respectively. There was no cost to Harmony involved in closing
New Hampton hedge positions in fiscal 2002. There was also no cost to Harmony involved in
closing out Randfontein or New Hampton hedge positions in fiscal 2001.
In December 2001, in response to significant depreciation in the Rand and to
protect itself against possible appreciation of the Rand against the U.S. dollar, Harmony entered
into Rand-U.S. dollar currency forward exchange contracts intended to cover estimated revenues
from the Free State operations' planned production for calendar 2002. Harmony fixed the Rand-
U.S. dollar exchange rate for a total of $180 million at an average exchange rate of Rand 11.20
per U.S. dollar. This measure, however, did not fully protect Harmony from sustained fluctuations 
in the value of the Rand relative to the U.S. dollar as it only covered a limited amount, and expired on
December 31, 2002. Harmony does not expect to renew or repeat such foreign currency hedging.
See "Item 11. Quantitative and Qualitative Disclosures About Market Risk--Foreign Currency
Sensitivity."
Significant changes in the price of gold over a sustained period of time may lead
Harmony to increase or decrease its production in the near-term.
Harmony's realized gold price
The average gold price in U.S. dollars received by Harmony generally declined
from fiscal 1999 through the quarter ended December 31, 2001, but has generally increased since
then. In fiscal 2003, the average gold price in U.S. dollars received by Harmony was $330 per
ounce. The market price for gold (and, accordingly, the price received by Harmony) is affected
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by numerous factors over which Harmony has no control. See "Item 3. Key Information--Risk
Factors--The profitability of Harmony's operations, and the cash flows generated by those
operations, are affected by changes in the market price for gold, which in the past has fluctuated
widely."
The following table sets out the average, the high and the low London Bullion
Market price of gold and Harmony's average U.S. dollar sales price during the past three fiscal
years:
Fiscal year ended June 30,
2003
2002
2001
($/oz)
Average .............................................................
333 
289 
266 
High...................................................................
382
327
291
Low ...................................................................
302 
265 
256 
Harmony's average sales price
1
.........................
330
283
276
_______________
1
Harmony's average sales price differs from the average gold price due to the timing of its sales of gold within each year and
due to the effect of delivering under the commodity hedge contracts acquired in the New Hampton and Hill 50 transactions.
Costs
Harmony's cash costs and expenses typically make up over 80% of its total costs.
The remainder of Harmony's total costs consists primarily of exploration and new business costs,
employment termination costs, corporate and sundry expenditure, and depreciation and
amortization. Harmony's cash costs consist primarily of production costs. Production costs are
incurred on labor, stores and utilities. Labor costs are the largest component and typically
comprise approximately 50% of Harmony's production costs. Harmony reduced its overall cash
costs from approximately $305 per ounce in fiscal 1998 to approximately $196 in fiscal 2002 but
they increased to $253 per ounce in fiscal 2003, as a result of the strengthening of the land.
Harmony's costs are very sensitive to the Rand-U.S. dollar exchange rate. The
South African Rand appreciated significantly against the U.S. dollar in fiscal 2003. See "Item 5.
Operating and Financial Review and Prospects--Exchange Rates." Appreciation of the Rand
against the U.S. dollar increases working costs at Harmony's South African operations when
those costs are translated into U.S. dollars. See "Item 3. Key Information--Risk Factors--
Because most of Harmony's production costs are in Rand, while gold is generally sold in U.S.
dollars, Harmony's financial condition could be materially harmed by an appreciation in the
value of the Rand."
Harmony's total cash costs also reflect movement in deferred stripping ratios for
open pit mines. Harmony defers the cost of stripping when the actual stripping ratio exceeds the
expected average stripping ratio over the life of mine. The actual stripping ratio is calculated as
the ratio of overburden tons (tons that need to be removed to access ore) to tons of ore mined for
the period. Harmony charges the cost of stripping (as a production cost) when the actual
stripping ratio is equal to or less than the expected average stripping ratio over the life of the
mine. Expected average stripping ratios over the lives of mines are recalculated annually in light
of additional knowledge and changes in estimates, including changes to the expected lives of
mines. Each ratio is calculated as the ratio of (i) the total overburden tons deferred at the
calculation date and future anticipated overburden tons to (ii) the anticipated future ore to be
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mined. Changes in Harmony's ore reserve statement and mine plan, which will include changes
in future ore and overburden tons, will result in changes to the expected average stripping ratio
over the life of the mine, which will impact the amounts deferred or charged. See "Item 3. Key
Information--Risk Factors-- Harmony's gold reserve figures may yield less gold under actual
production conditions than Harmony currently estimates." If the expected average stripping ratio
over the life of a mine is revised upwards, relatively lower stripping costs will, in the future, be
deferred in each period, or a relatively higher amount will be charged. The opposite is true when
the expected average stripping ratio over the life of a mine is revised downwards. These changes
would impact on earnings accordingly.
Harmony intends that its deferred stripping calculation should achieve a match
between the cost of mining overburden tons to the tons of ore expected to be accessed by
removing overburden, by applying the expected average stripping ratio over the life of a mine.
Consequently, any changes made to the deferred stripping ratio will have an impact on total cash
costs.
While recognizing the importance of reducing cash costs, Harmony's chief focus
is on controlling and, where possible, reducing total costs, including overhead costs. Harmony
aims to control total unit costs per ounce produced by maintaining its low total cost structure at
its existing operations and implementing this low-cost structure at the new mining operations it
acquires. Harmony has been able to reduce total costs by implementing a management structure
and philosophy that is focused on reducing management and administrative costs, implementing
an ore reserve management system that allows for greater grade control and acquiring higher
grade reserves. See "Item 4. Information on the Company--Business--Strategy." Harmony
has reduced its costs by flattening the management structure at its operating units by removing
excess layers of management. Harmony's ore reserve management system relies on a detailed
geological understanding of the orebody backed up by closely-spaced sampling and an emphasis
on grade control. The acquisition of higher grade reserves and the effect of the implementation
of the ore reserve management system have increased the underground recovery grade from
Harmony's South African operations (excluding the Free Gold Company) from 0.123 ounces per
ton in fiscal 1998 to 0.155 ounces per ton in fiscal 2003.
Exchange Rates
Harmony's revenues and costs are very sensitive to the Rand-U.S. dollar
exchange rate. Currently, the majority of Harmony's earnings are generated in South Africa and,
as a result, most of its costs are incurred in Rand. Since gold is generally sold in U.S. dollars,
however, most of Harmony's revenues are received in U.S. dollars. The average gold price
received by Harmony during fiscal 2003 increased $47 per ounce to $330 per ounce from $283
per ounce during fiscal 2002.
Appreciation of the Rand against the U.S. dollar increases working costs at
Harmony's South African operations when those costs are translated into U.S. dollars, which
serves to reduce operating margins and net income from Harmony's South African operations.
Depreciation of the Rand against the U.S. dollar reduces these costs when they are translated into
U.S. dollars, which serves to increase operating margins and net income from Harmony's South
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African operations. Accordingly, weakness in the Rand generally results in improved Rand
earnings for Harmony.
The exchange rates obtained when converting U.S. dollars to Rand are set by
foreign exchange markets, over which Harmony has no control. The South African Rand
depreciated significantly against the U.S. dollar in calendar 2001 and during the first quarter of
calendar 2002. The Rand appreciated significantly against the U.S. dollar during the period from
April 1, 2002 through December 13, 2003. The conversion rate for balance sheet items as at
June 30, 2003 is Rand 7.51 per $1.00, except for specific items included within shareholders'
equity that are converted at the exchange rate prevailing on the date the transaction was entered
into. This compares with a conversion rate of Rand 10.39 per $1.00 for balance sheet items as at
June 30, 2002, reflecting a appreciation of 28% of the Rand against the U.S. dollar when
compared with June 30, 2002. Income statement items were converted at the average exchange
rate for the period (Rand 9.13 per $1.00), reflecting a appreciation of 10% of the Rand against
the U.S. dollar when compared with June 2002. This appreciation of the Rand against the U.S.
dollar caused a significant increase in Harmony's working costs translated into U.S. dollars,
which served to decrease operating margins and net income reflected in Harmony's consolidated
income statement for fiscal 2003. Depreciation of the Rand against the U.S. dollar would cause
a decrease in Harmony's costs in U.S. dollar terms. See "Item 3. Key Information--Risk
Factors--Because most of Harmony's production costs are in Rand, while gold is generally sold
in U.S. dollars, Harmony's financial condition could be materially harmed by an appreciation in
the value of the Rand."
Inflation
Harmony's operations have not been materially impacted by inflation in recent
years. However, it is possible that a period of significant inflation in South Africa could
adversely affect Harmony's results and financial condition. Because Harmony's costs are
primarily in Rand and Harmony generally sells its gold in U.S. dollars, movements in the Rand-
U.S. dollar exchange rate may influence the impact of inflation on Harmony's profits. To the
extent the Rand depreciates against the U.S. dollar, this depreciation may offset the impact of
inflation.
South African Economic and Political Environment
Harmony is a South African company and the majority of its operations are in
South Africa. As a result, Harmony is subject to various economic, fiscal, monetary and political
policies and factors that affect South African companies generally. See "Item 3. Key
Information--Risk Factors--Political or economic instability in South Africa or regionally may
have an adverse effect on Harmony's operations and profits."
South African companies are subject to significant exchange control limitations.
While exchange controls have been relaxed in recent years, South African companies remain
subject to significant restrictions on their ability to deploy capital outside of the Southern African
Common Monetary Area. As a result, Harmony has historically financed its offshore
acquisitions with offshore long-term debt. See "Item 10. Additional Information--Exchange
Controls."
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Impairment of Assets
Harmony's management reviews the recoverability of Harmony's long-lived
assets, including development costs, on an annual basis and whenever events or changes in
circumstances indicate that the carrying amount of those assets may not be recoverable. Testing
for impairment involves a two-step process in which the undiscounted future cash flows
expected to be generated from future use of a long-lived asset is first compared to the carrying
value of that asset. If the carrying value exceeds those undiscounted future cash flows, the asset
is determined to be impaired. The fair value of the asset is then determined by reference to the
discounted future cash flows using a discount rate that reflects the specific risk related to the
asset. Harmony then records, as an impairment charge, the difference between the carrying
value and fair value of the asset.
RESULTS OF OPERATIONS
Years ended June 30, 2003 and 2002
Revenues
Revenue increased $86.1 million, or 12.4%, from $696.8 million in fiscal 2002 to
$782.9 million in fiscal 2003. This increase was attributable primarily to the higher average
sales price of gold received by Harmony and the inclusion of Hill 50 for the full year.
Harmony's gold sales decreased 22,342 ounces, or 0.9% from 2,388,458 ounces
in fiscal 2002 to 2,366,116 ounces in fiscal 2003.  This decrease in sales was primarily due to
reduced sales from Randfontein (69,748 ounces) due to the lower underground tonnages milled
and achieved grades, reduced sales at Elandskraal (109,460 ounces) due to a lack of mining
flexibility and problems associated with the infrastructure at the old Elandskraal mine, reduced 
sales at Evander ( 55,198 ounces) due to a seismic event that occurred at Evander No. 8 shaft 
on July 12, 2002, the highest grade shaft at Evander, which adversely impacted this operations 
performance resulting in lower tonnages milled and grades achieved, reduced sales at the 
Free State (48,745 ounces) primarily due to closures of Harmony 4 shaft and Virginia 2 shaft 
during fiscal 2002 and no sales at the Bissett operation during fiscal 2003, compared with 
fiscal 2002 when this operation sold 8,263 ounces which were obtained during the plant 
clean-up process on transitioning these operations to care and maintenance. This decrease was
 partially offset by increased sales at the Australian operations (256,661 ounces) due to the 
inclusion of Abelle in the results for two months and Hill 50 for the entire fiscal 2003, compared 
with 3 months of Hill 50 production in fiscal 2002, and increased sales at Kalgold (12,411 ounces) 
due to higher tonnages milled and grades achieved in fiscal 2003. See "Item 4. Information on the
Company--Business--Harmony's Mining Operations--Randfontein Operations" and
"Business--Harmony's Mining Operations--Free State Operations." Harmony's average sales
price of gold per ounce was $330 in fiscal 2003, as compared with $283 in fiscal 2002, which
was due primarily to higher market prices for gold.
Interest and dividend income increased by $9.9 million, or 79.8%, from $12.4
million in fiscal 2002 to $22.3 million in fiscal 2003. In fiscal 2003, Harmony earned interest on
higher cash balances as a result of increased cash flow. Other income decreased by $30.3
million, from a positive $9.2 million in fiscal 2002 to a negative $21.1 million in fiscal 2003
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The decrease was primarily due to foreign exchange losses incurred on US Dollar denominated 
cash balances.
Costs
The following table sets out Harmony's total ounces sold and weighted average
cash costs per ounce for fiscal 2003 and fiscal 2002:
Year ended
June 30, 2003
1
Year ended
June 30, 2002
2
% increase in
cash costs
(oz)
($/oz)
(oz)
 ($/oz)
Elandskraal ...............
366,599
274
476,059
196
40
Randfontein ..............
491,890
212
561,638
177
20
Free State ..................
 
611,944
216
26
Evander.....................
415,382
360,184
242
171
42
Bissett
3
...................... 
-
8,263
--
109
-
Kalgold .....................
74,590
222
62,179
205
8
Australian operations
509,654
263
252,993
235
12
Total..........................
 
2,388,458
563,199
271
2,366,116
253
 
Weighted average .....
 
196
29
___________________
1
Includes two months of production from Abelle.
2
Includes
three months of production from Hill 50.
3
Represents production from clean-up of the plant and mill during the transition to care and maintenance.
During Harmony's fiscal 2003, sales from the Free Gold assets amounted to
1,155,428 ounces of gold at an average cost of $202 per ounce compared with 1,143,243 ounces
at an average cost of $175 per ounce. Harmony's interest in the two months of the 2002 fiscal
year's sales (reflecting the period from May 1, 2002 to June 30, 2002) totaled 104,005
attributable ounces at an average cash cost of $130 per ounce. Because Harmony equity
accounts for its 50% interest in the Free Gold Company, the Free Gold Company's sales are not
included in Harmony's sales figures in this annual report and the average cash cost of the Free
Gold Company's sales is not used in calculating Harmony's overall average cash costs in this
annual report.
Harmony's weighted average cash costs increased by $57 per ounce, or 29.1%
from $196 in fiscal 2002 to $253 per ounce in fiscal 2003. Cash costs per ounce vary with the
working costs per ton (which is, in turn, affected by the number of tons processed) and grade of
ore processed. Cash costs expressed in U.S. dollars per ounce also vary with fluctuations in the
Rand-U.S. dollar exchange rate, because most of Harmony's working costs are incurred in Rand.
The increase in cash costs expressed in U.S. dollars per ounce in fiscal 2003 was attributable
primarily to the appreciation of the Rand against the U.S. dollar, which caused a significant
increase when these costs were translated into U.S. dollars. See "Item 5. Operating and
Financial Review and Prospects--Exchange Rates." Cash costs per ounce in U.S. dollars were
also negatively impacted by lower tonnage at Randfontein, Evander and Elandskraal operations.
If expressed in Rand terms, cash costs per ounce would have increased in fiscal 2003 by 13.2%,
due primarily to lower production at Randfontein, Free State, Evander and Elandskraal
operations, the reduction of relatively lower-cost surface operations at Randfontein and increases
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in the costs of labor and supplies at Harmony's South African operations due to the
implementation of collective bargaining agreements and the effect of inflation on supply
contracts.
An improvement in recovered grade helped to control cash costs per ounce at
Kalgold during fiscal 2003. See "Item 8. Financial Information Significant Changes."
Harmony's cash costs consist primarily of production costs and include, among
other things, ongoing development costs, which are incurred to access ore to produce current
mined reserves and are expensed as incurred. Cash costs do not include capital development
costs, which are incurred to allow access to the ore body for future mining operations and are
capitalized and amortized when the relevant reserves are mined. Harmony's total cash costs also
reflect movements in deferred stripping ratios for open pit mines. Harmony charges the cost of
stripping (as a production cost) when the actual stripping ratio is below the expected average
stripping ratio over the life of the mine. See "Item 5. Operating and Financial Review and
Prospects--Costs."
Harmony
has
calculated
cash
costs per ounce by dividing total
cash costs, as
determined using the Gold Institute industry standard, by gold ounces sold for all periods
presented. The Gold Institute is a non-profit international association of miners, refiners, bullion
suppliers and manufacturers of gold products that has developed a uniform format for reporting
production costs on a per ounce basis. The standard was first adopted in 1996 and was revised in
November 1999. Cash costs, as defined in the Gold Institute standard, include mine production
costs, transport and refinery costs, general and administrative costs, costs associated with
movements in production inventories and ore stockpiles, costs associated with transfers to
deferred stripping and costs associated with royalties. Cash costs have been calculated on a
consistent basis for all periods presented. Changes in cash costs per ounce are affected by
operational performance, as well as changes in the currency exchange rate between the Rand and
the U.S. dollar and, in the case of the Australian operations, the Australian dollar. Cash costs per
ounce is not a U.S. GAAP measure. Cash costs per ounce should not be considered by investors
in isolation or as an alternative to net income, income before tax, operating cash flows or any
other measure of financial performance presented. While the Gold Institute has provided a
definition for the calculation of cash costs per ounce, the calculation of cash costs per ounce may
vary from company to company and may not be comparable to other similarly titled measures of
other companies. However, Harmony believes that cash costs per ounce is a useful indicator to
investors and management of a mining company's performance as it provides (1) an indication of
a company's profitability and efficiency, (2) the trends in costs as the company's operations
mature, (3) a measure of a company's gross margin per ounce, by comparison of cash costs per
ounce to the spot price of gold and (4) an internal benchmark of performance to allow for
comparison against other companies.
The following is a reconciliation of total cash costs to the nearest comparable
GAAP measure, production cost:
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2003
2002
2001
$000
502,210
(2,697)
504,907
$'000
$'000
Cash costs ...............................................
599,746
468,912
Less : Deferred stripping...............................
1,397
(486)
Production costs........................................
598,349
469,398
Depreciation and amortization
Depreciation and amortization charges increased $30.7 million, or 101.7%, from
$30.2 million in fiscal 2002 to $60.9 million in fiscal 2003. This increase was attributable
primarily to the the appreciation of the Rand against the U.S. dollar, which increased the
depreciation charges for the South African operations and the increased Australian operations
depreciation charges due to the inclusion of Hill 50 for the entire fiscal 2003, compared with 3
months in fiscal 2002, and Abelle operations from May 1, 2003.
Employment termination costs
Employment termination costs decreased $3.7 million, or 42%, from $8.8 million
in fiscal 2002 to $5.1 million in fiscal 2003. This decrease was due primarily to lower
restructuring costs being incurred at the Elandskraal, Randfontein and Australian operations
during fiscal 2003 compared with fiscal 2002, following the finalization of terminations at
Randfontein's shaft 4 following its closure in the quarter ended June 30, 2001 and the
combination of the New Hampton and Hill 50 corporate offices in Perth in fiscal 2002.
Provision/(reversal of provision) for rehabilitation costs
As from July 1, 2002, the company adopted FAS 143 for accounting for its
environmental rehabilitation costs. Under this method the rehabilitation charge for fiscal 2003
was a positive $ 0.4 million compared to a negative $15.2 million in fiscal 2002, which was under
the old standard. Full provision is made based on the net present value of the estimated cost of
restoring the environmental disturbance that has occurred up to the balance sheet date.
Previously, Harmony provided for its obligations over the life of mine for each operation using
principally the units-of-production method based on estimated proven and probable reserves
above infrastructure.
 
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Corporate expenditure, exploration expenditure and marketing and 
new business expenditure.
Corporate expenditure, exploration expenditure and marketing and new business
expenditure increased $ 3.3. million, or 14%, from $23.5 million in fiscal 2002 to $26.8 million
in fiscal 2003. This increase was due primarily to increased corporate expenditures following
Harmony's acquisition of Abelle, the merger with ARMgold, costs related to investigating and
pursuing new business opportunities and increased expenditures to investigate and develop
opportunities to produce value-added products, such as jewelry and other products made of
fabricated gold. In fiscal 2003, Harmony also increased exploration expenditure in connection
with the Kalplats feasibility study by $1.9 million and its exploration in Peru by approximately 
$1.5 million compared to fiscal 2002. See "Item 4. Information on the Company--Business--Exploration."
Gain on financial instruments
The gain on financial instruments in fiscal 2003 was $43.2 million, as compared
with a gain of $8.9 million in fiscal 2002. The gains in fiscal 2003 and 2002 related primarily to
the change in the mark-to-market of derivative instruments held by Hill 50 following its
acquisition in April 2002.
(Profit)/loss on sale of other assets and listed investments
Harmony recorded a profit of $59.2 million on the sale of other assets and listed
investments in fiscal 2003, as compared with a gain of $4.5 million on the sale of other assets
and listed investments in fiscal 2002. The profit in fiscal 2003 arose on disposal of Harmony's
Placer Dome investment in fiscal 2003. The profit was determined by reference to the difference 
between the proceeds and the cost of the initial investment in Goldfields Australia. Harmony 
acquired its shares in Place Dome following Aurion Gold being acquired by Place Dome. 
Harmony had acquired its shares in AurionGold following the merger of Goldfields Australia 
and Delta Gold, with the merged entity being renamed AurionGold. The profit in fiscal 2002 
was the result of the resale of the ARMgold shares that Harmony acquired in the initial public 
offering of ARMgold in May 2002.
Stock-based compensation
Harmony adopted FAS 123 on July 1, 2002. FAS 123 requires that all stock
options granted subsequent to that date be fair valued, and that the fair value be recognized as
stock-based compensation expense over the options vesting period.
Stock-based compensation expenses decreased by $ 7.6 million, or 80.9%, from
$9.4 million in fiscal 2002 to $ 1.8 million in fiscal 2003. The fiscal 2003 expense comprised of
$ 4 million related to the amortization of the fair value of the 2002 and 2003 option grants of the
Company and its subsidiary Abelle and a credit of $2.2 million for options granted in fiscal 2001. 
The options granted in fiscal 2001 were subject to variable accounting until the earlier of the date 
of their exercise, or March 27, 2003, since their exercise price was not known at the date of 
grant as they were exercisable with a recourse note. On March 27, 2003, Harmony cancelled the 
ability for employees to exercise options with a recourse note, and variable accounting for the 
2001 options outstanding at that date ceased, as their exercise price is now known.
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The fiscal 2002 expenses comprised of $2.0 million related to the amortization of
the fair value of the 2002 option grants and $7.4 million for options granted in fiscal 2001.
Equity loss of joint venture
Equity income of joint venture increased by $39.5 million, or 300%, from $13.2
million in fiscal 2002 to $ 52.8 million in fiscal 2003. The increase arose due to the inclusion for
a full year in fiscal 2003 of Harmony's interest in the Free Gold Company's results, as compared
with two months from May 1, 2002 for fiscal 2003 and the inclusion of Harmony's 17.25% share
of Avmin's results held through the Clidet joint venture, which was acquired in May 2003.
Equity loss of associate companies
Equity loss of associate companies was $1.2 million in fiscal 2003 and reflected
Harmony's proportionate share of Highland Gold's profits of $4 million for fiscal 2003 and its iproportionate share of costs incurred by Bendigo of $5.2 million. The costs were incurred to
develop the  infrastructure required to access ore below the town of Bendigo. Equity loss of
associate companies was $0.5 million in fiscal 2002. The loss of associate companies reflected
Harmony's proportionate share of the costs of $1.42 million that Bendigo incurred to develop
infrastructure required to access ore below the town of Bendigo. The equity loss associated with
these development costs was offset by profit of $0.94 million recorded by Hill 50 in the month of
March 2002, during which Harmony equity accounted for Hill 50.
Impairment of assets
In fiscal 2003, Harmony reduced its ore reserves estimates at its Australian
operations from 2.3 million ounces to 1.5 million ounces. 
This resulted in revised mine plans being designed for the Australian operations which did not
support the carrying value of the Australian operations assets and accordingly an impairment
charge of $117.6 million was recognized.
In fiscal 2002, Harmony reduced the grade estimates for future production at New
Hampton's Big Bell underground operations due to disappointing results from the lower levels of
this mine, as a result of lower than expected grade. The write-down in fiscal 2002 of $44.3
million reflected the impairment of the carrying value of these Big Bell assets.
Interest paid
Harmony paid $27.4 million in interest during fiscal 2003 compared to $19.1
million during fiscal 2002. This increase was due to the increased value of the loans outstanding
following the draw down of $117.6 million on the Rand denominated Nedbank loan to finance
the acquisition of the 17.25% interest in Avmin acquired during May 2003, whilst the
appreciation of the Rand during the period resulted in higher interest expense on Harmony's
Rand-denominated senior unsecured fixed rate bonds due June 14, 2006 and the BoE Bank
Limited loan in U.S. dollars when compared with fiscal 2002.
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Provision for former employees post-retirement benefits
Harmony provides for amounts due under its former employees post-retirement
benefits. In fiscal 2003, Harmony provided $0.5 million for these benefits compared with $0.04
million in fiscal 2002, based on updated actuarial valuations. The increase in fiscal 2003 is
primarily due to the appreciation of the Rand.
Income and mining taxes

                          South Africa.
Harmony pays taxes on mining income and non-mining income.
The amount of Harmony's South African mining income tax is calculated on the basis of a
formula that takes into account Harmony's total revenue and profits from, and capital
expenditures for, mining operations in South Africa. Five percent of total mining revenue is
exempt from taxation in South Africa. The amount of revenue subject to taxation is calculated
by subtracting capital expenditures from operating profit. The amount by which the adjusted
profit figure exceeds 5% of revenue constitutes taxable mining income. Harmony and its
subsidiaries each make their own calculation of taxable income.
The tax rate applicable to the mining and non-mining income of a gold mining
company depends on whether the company has elected to be exempt from the Secondary Tax on
Companies, or STC. The STC is a tax on dividends declared and, at present, the STC tax rate is
equal to 12.5%. In 1993, all existing South African gold mining companies had the option to
elect to be exempt from STC. If the election was made, a higher tax rate would apply for both
mining and non-mining income. In each of 2003 and 2002, the tax rates for companies that
elected the STC exemption were 46% for mining income and 38% for non-mining income,
compared with 37% for mining income and 30% for non-mining income if the STC exemption
election was not made. In 1993, Harmony elected to pay the STC tax. All of Harmony's South
African subsidiaries, however, elected the STC exemption. To the extent Harmony receives
dividends, such dividends received are offset against the amount of dividends paid for purposes
of calculating the amount subject to the 12.5% STC tax.
Australia. Generally, Australia imposes tax on the worldwide income (including
capital gains) of all of Harmony's Australian incorporated and tax resident entities. The current
income tax rate for companies is 30%. Exploration costs and the depreciation of capital
expenditure may be deducted from income. In addition, other expenditures, such as export
market development, mine closure costs and the defense of native title claims, may be deducted
from income. With effect from July 1, 1998, mining operations (other than operations on
freehold land) are also subject to a 2.5% gold royalty because the mineral rights are owned by
the state. All gold production from the Big Bell and Mt. Magnet operations is subject to this
royalty. Most of the production from the South Kalgoorlie operations is from freehold land and
is, accordingly, exempt from this royalty.
With effect from July 1, 2001, the Australian legislature introduced a Uniform
Capital Allowance, which allows tax deductions for depreciation attributable to assets and
certain other capital expenditures. In addition, under current Australian tax law, certain grouping
concessions are available to companies in the same ultimate control group. These concessions
include the ability to group losses and obtain capital gains tax roll-over relief from the transfer of
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assets among two or more entities if the entities are engaged in the same business or if the
entities are wholly-owned by the same entity. Harmony's subsidiaries in Australia accordingly
qualify to transfer losses from one entity to another in the event that a loss is made in one entity
and a profit is generated in another.
Withholding tax is payable on dividends, interest and royalties paid by Australian
residents to non-residents, which would include any dividends on the shares of Harmony's
Australian subsidiaries that are paid to Harmony. In the case of dividend payments to non-
residents, a 30% withholding tax applies. However, where the recipient of the dividend is a
resident of a country with which Australia has concluded a double taxation agreement, the rate of
withholding tax is generally limited to 15% (or 10% where the dividend is paid to a company's
parent company). Where dividends are fully taxable, an effective credit is allowed against any
withholding tax otherwise payable, regardless of whether a double taxation agreement is in place.
Effective tax rate. The table below indicates Harmony's effective tax rate, which
represents the current tax rate due pursuant to the statutory formula and the amount of deferred
tax, for fiscal 2003 and fiscal 2002. Harmony bases its estimate of effective tax rates on the
application of statutory tax formulas to historic operating results. Current tax due includes
mining and non-mining tax calculated by applying the statutory formula to the actual results of
operations for the relevant period. Deferred tax is provided at the estimated future effective
mining tax rate.
Fiscal year ended June 30,
Income and mining tax
2003
2002
Effective tax rate expense .....................................................................
25.9%
13.9%
The effective tax rate for fiscal 2003 was lower than the statutory tax rate of 46%
for Harmony and its subsidiaries as a whole. The lower effective tax rate is primarily due to the
exclusion of the equity income of the Free Gold Company which decreases the Company's 
effective tax rate expense and the five percent of total mining revenue excluded from the 
Company's taxable income.

The effective tax rate for fiscal 2002 was lower than the estimated statutory tax rate of 20.5% for Harmony and its subsidiaries as a whole. A primary factor in the lower tax effective rate was the fact that the equity income from the Free Gold Company is excluded from the calculation of Harmony's taxable income. In addition, the effective tax rate for fiscal 2002 was lowered by Harmony's release of valuation allowances against deferred tax assets at Kalgold, which, in light of the higher prevailing market price for gold and the resulting increase in profitability, are now deemed more likely than not to be recovered.

The increase in the effective tax rate expense of 12% to 25.9% in fiscal 2003 from 13.9% fiscal 2002, was due to the revision of Harmony and its subsidiaries estimated expected future mining tax rate which resulted in an increased deferred tax liability and the release of the valuation allowance against deferred tax assets at Kalgold, which in the light of the higher prevailing gold prices and the resulting increased in profitability, were deemed more likely than not to be recovered

Minority interests
Minority interests were $0.5 million in fiscal 2003, as compared with $1.6 million
in fiscal 2002. The minority interest in fiscal 2003 reflected the 13% minority shareholders
interests in the results of Abelle following the acquisition by Harmony of 87% interest in Abelle
in May 2003. The minority interests in fiscal 2002 reflected the 10% participation interest in the
Elandskraal Venture that Open Solutions acquired with effect from April 31, 2001. See "Item
4. Information on the Company--Business--Harmony's Mining Operations--Elandskraal
Operations."
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Income before cumulative effect of change in accounting principle
Income before cumulative effect of change in accounting principle was $71.8
million in fiscal 2003, as compared with $87.7 million in fiscal 2002. This decrease was
primarily attributable to the factors described above.
Cumulative effect of change in accounting principle (FAS 143), net of tax
With effect from July 1, 2002, the Company adopted Statement of Financial
Accounting Standard 143, accounting for Asset Retirement Obligations ("FAS143"). The
adoption of FAS143 resulted in Harmony recording a $14.8 million credit cumulative effect of a
change in accounting principle, net of tax.
Years ended June 30, 2002 and 2001
Revenues
Revenue increased $89.6 million, or 14.8%, from $607.2 million in fiscal 2001 to
$696.8 million in fiscal 2002. This increase was attributable primarily to the higher average
sales price of gold received by Harmony, the inclusion of Elandskraal and New Hampton for the
full fiscal year and the inclusion of Hill 50 for three months.
Harmony's gold sales increased 248,415 ounces, or 11.6%, from 2,140,043
ounces in fiscal 2001 to 2,388,458 ounces in fiscal 2002. This increase was attributable
primarily to the inclusion of Elandskraal (476,059 ounces in fiscal 2002, compared with 122,880
ounces in fiscal 2001) and New Hampton (191,521 ounces in fiscal 2002, compared with 55,653
ounces in fiscal 2001) in the results for the full fiscal year and the inclusion of Hill 50 (61,472
ounces) in the results for three months in fiscal 2002. This increase in sales was partially offset
by reduced sales from Randfontein due to the closure of shaft 4 and reduced sales from the Free
State operations due to the closure of Harmony 4 and Virginia 2 shafts and the suspension of
mining at the Brand 2 shaft. See "Item 4. Information on the Company--Business--Harmony's
Mining Operations--Randfontein Operations" and "Business--Harmony's Mining Operations--
Free State Operations." Harmony's average sales price of gold per ounce was $283 in fiscal
2002, as compared with $276 in fiscal 2001, which was due primarily to higher market prices for
gold.
Interest and dividend income increased by 6.5 million, or 110.2%, from $5.9
million in fiscal 2001 to $12.4 million in fiscal 2002. In fiscal 2002 Harmony earned interest on
higher cash balances as a result of increased cash flow and received $1.6 million in dividends
from AurionGold.
Other income decreased by $1.5 million, or 14.0%, from $10.7 million in fiscal
2001 to $9.2 million in fiscal 2002. The decrease was primarily due to decreased profits from
the sale of surplus assets such as vehicles, mining equipment, buildings and farmland at
Harmony's South African operations.
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Costs
The following table sets out Harmony's total ounces sold and weighted average
cash costs per ounce for fiscal 2001 and fiscal 2002:
Year ended
June 30, 2002
1
Year ended
June 30, 2001
2
% decrease in
cash costs
(oz)
($/oz)
(oz)
($/oz)
Elandskraal ...............
476,059 
196 
122,880 
209 
Randfontein ..............
561,638 
177 
220 
20 
723,421 
Free State ..................
611,944 
216 
264 
18 
686,223 
Evander.....................
458,212 
415,382 
171 
199 
14 
Bissett
3
...................... 
44,303 
8,263 
109 
330 
67 
Kalgold ..................... 
49,351 
62,179 
205 
260 
21 
New Hampton...........
191,521
242
319
24
55,653 
Hill 50.......................
61,472 
213 
-- 
-- 
-- 
Total..........................
2,388,458
2,140,043
Weighted average .....
196
234
16
___________________
1
Includes three months of production from Hill 50.
2
Includes
three months of production at Elandskraal and New Hampton.
3
Represents production from clean-up of the plant and mill during the transition to care and maintenance.
During Harmony's fiscal 2002, sales from the Free Gold assets amounted to
1,143,243 ounces of gold at an average cost of $175 per ounce. Harmony's interest in two
months of these sales (reflecting the period from May 1, 2002 to June 30, 2002) totaled 104,005
attributable ounces at an average cash cost of $130 per ounce. Because Harmony equity
accounts for its 50% interest in the Free Gold Company, the Free Gold Company's sales are not
included in Harmony's sales figures in this annual report and the average cash cost of the Free
Gold Company's sales is not used in calculating Harmony's overall average cash costs in this
annual report.
Harmony's weighted average cash costs decreased by $38 per ounce from $234 in
fiscal 2001 to $196 per ounce in fiscal 2002. Cash costs per ounce vary with the working costs
per ton (which is, in turn, affected by the number of tons processed) and grade of ore processed.
Cash costs expressed in U.S. dollars per ounce also vary with fluctuations in the Rand-U.S.
dollar exchange rate, because most of Harmony's working costs are incurred in Rand. The
decrease in cash costs expressed in U.S. dollars per ounce in fiscal 2002 was attributable
primarily to the depreciation of the Rand against the U.S. dollar, which caused a significant
reduction when these costs were translated into U.S. dollars. See "Item 5. Operating and
Financial Review and Prospects--Exchange Rates." If expressed in Rand terms, cash costs per
ounce would have increased in fiscal 2002, due primarily to the inclusion of relatively higher-
cost production from the Elandskraal and New Hampton operations, the reduction of relatively
lower-cost surface operations at Randfontein and increases in the costs of labor and supplies at
Harmony's South African operations due to the implementation of collective bargaining
agreements and the effect of inflation on supply contracts.
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The substantial decrease in cash costs at Bissett was due primarily to low cost
production resulting from clean-up of the plant and mill during the transition to the care and
maintenance program in the quarter ended September 30, 2001. An improvement in recovered
grade helped to control cash costs per ounce at Kalgold.
Harmony's cash costs consist primarily of production costs and include, among
other things, ongoing development costs, which are incurred to access ore to produce current
mined reserves and are expensed as incurred. Cash costs do not include capital development
costs, which are incurred to allow access to the ore body for future mining operations and are
capitalized and amortized when the relevant reserves are mined. Harmony's total cash costs also
reflect movements in deferred stripping ratios for open pit mines. Harmony charges the cost of
stripping (as a production cost) when the actual stripping ratio is below the expected average
stripping ratio over the life of the mine. See "Item 5. Operating and Financial Review and
Prospects--Costs."
Harmony
has
calculated
cash
costs per ounce by dividing total
cash costs, as
determined using the Gold Institute industry standard, by gold ounces sold for all periods
presented. The Gold Institute is a non-profit international association of miners, refiners, bullion
suppliers and manufacturers of gold products that has developed a uniform format for reporting
production costs on a per ounce basis. The standard was first adopted in 1996 and was revised in
November 1999. Cash costs, as defined in the Gold Institute standard, include mine production
costs, transport and refinery costs, general and administrative costs, costs associated with
movements in production inventories and ore stockpiles, costs associated with transfers to
deferred stripping and costs associated with royalties. Cash costs have been calculated on a
consistent basis for all periods presented. Changes in cash costs per ounce are affected by
operational performance, as well as changes in the currency exchange rate between the Rand and
the U.S. dollar and, in the case of the Australian operations, the Australian dollar. Cash costs per
ounce is not a U.S. GAAP measure. Cash costs per ounce should not be considered by investors
in isolation or as an alternative to net income, income before tax, operating cash flows or any
other measure of financial performance presented. While the Gold Institute has provided a
definition for the calculation of cash costs per ounce, the calculation of cash costs per ounce may
vary from company to company and may not be comparable to other similarly titled measures of
other companies. However, Harmony believes that cash costs per ounce is a useful indicator to
investors and management of a mining company's performance as it provides (1) an indication of
a company's profitability and efficiency, (2) the trends in costs as the company's operations
mature, (3) a measure of a company's gross margin per ounce, by comparison of cash costs per
ounce to the spot price of gold and (4) an internal benchmark of performance to allow for
comparison against other companies.
Depreciation and amortization
Depreciation and amortization charges decreased $1.3 million, or 3.8%, from
$31.4 million in fiscal 2001 to $30.2 million in fiscal 2002. This decrease was attributable to the
benefit of the depreciation of the Rand against the U.S. dollar, which more than offset
depreciation charges incurred at the recently-acquired Elandskraal, New Hampton and Hill 50
operations.
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Employment termination costs
Employment termination costs increased $4.1 million, or 87%, from $4.7 million
in fiscal 2001 to $8.8 million in fiscal 2002. This increase was due primarily to continued
restructuring at the Elandskraal operations, the closure of the Free State's Harmony 4 and
Virginia 2 shafts, the suspension of mining at the Free State's Brand 2 shaft, the finalization of
terminations at Randfontein's shaft 4 following its closure in the quarter ended June 30, 2001
and the combination of the New Hampton and Hill 50 corporate offices in Perth.
Provision/(reversal of provision) for rehabilitation costs
Harmony provided $15.2 million for rehabilitation costs in fiscal 2002. Harmony
reversed a total of $6.8 million in prior provisions for rehabilitation costs in fiscal 2001,
primarily due to a revision of the estimates associated with the rehabilitation of Harmony's
mines. The increased rehabilitation expense in fiscal 2002 was largely due to a reassessment of
the Big Bell life of mine, which was reduced significantly, and the inclusion of rehabilitation
expenditure from Hill 50. See "Item 4. Information on the Company--Business--Harmony's
Mining Operations--Big Bell Operations."
Corporate expenditure, exploration expenditure and marketing and new business
expenditure.
Corporate expenditure, exploration expenditure and marketing and new business
expenditure increased $12.4 million, or 111.7%, from $11.1 million in fiscal 2001 to $23.5
million in fiscal 2002. This increase was due primarily to increased corporate expenditures
following Harmony's acquisitions of New Hampton, Elandskraal and Hill 50 and the Free Gold
Company's acquisition of the Free Gold assets, costs related to investigating and pursuing new
business opportunities and increased expenditures to investigate and develop opportunities to
produce value-added products, such as jewelry and other products made of fabricated gold. In
fiscal 2002 Harmony also increased exploration expenditure in connection with the Kalplats
feasibility study and international exploration projects. See "Item 4. Information on the
Company--Business--Exploration."
Gain on financial instruments
The gain on financial instruments in fiscal 2002 was $8.9 million, as compared
with a gain of $7.6 million in fiscal 2001. The gain in fiscal 2002 related primarily to positive
movement in the mark-to-market of derivative instruments held by Hill 50, resulting from
downward movement in the gold price since the Hill 50 acquisition in March 2002. The gain in
fiscal 2001 related primarily to the change in the mark-to-market of derivative instruments held
by Randfontein and New Hampton.
(Profit)/loss on sale of other assets and listed investments
Harmony recorded a profit of $4.5 million on the sale of other assets and listed
investments in fiscal 2002, as compared with a loss of $1.4 million on the sale of other assets and
listed investments in fiscal 2001. The profit in fiscal 2002 was the result of the resale of the
ARMgold shares that Harmony acquired in the initial public offering of ARMgold in May 2002.
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The loss in fiscal 2001 related primarily to the sale of the Western Areas Limited shares held by
Harmony at June 30, 2000.
Stock-based compensation
Harmony adopted FAS 123 on July 1, 2002. FAS 123 requires that all stock
options granted subsequent to that date be fair valued, and that the fair value be recognized as
stock-based compensation expense over the options vesting period. Harmony recognized $9.4
million as stock-based compensation expense in fiscal 2002. The amount consisted of $2.0
million related to the amortization of the fair value of the 2002 option grants and $7.4 million for
options granted in fiscal 2001. The options granted in fiscal 2001 are subject to variable
accounting until their date of exercise since their exercise price is not known at the date of grant
because they are exercisable with a recourse note. Harmony recorded no stock-based
compensation in fiscal 2001.
Equity income of joint venture
Equity income of joint venture was $13.2 million in fiscal 2002, representing
Harmony's interest in the Free Gold Company's results with effect from May 1, 2002. Harmony
recorded no income or loss from joint ventures in fiscal 2001.
Equity loss of associate companies
Equity loss of associate companies was $0.5 million in fiscal 2002. The loss of
associate companies reflected Harmony's proportionate share of the costs of $1.42 million that
Bendigo incurred to develop infrastructure required to access ore below the town of Bendigo.
The equity loss associated with these development costs was offset by profit of $0.94 million
recorded by Hill 50 in the month of March 2002, during which Harmony equity accounted for
Hill 50. Harmony recorded no income or loss from associate companies in fiscal 2001.
Impairment of assets
In fiscal 2002, Harmony reduced the grade estimates for future production at New
Hampton's Big Bell underground operations due to disappointing results from the lower levels of
this mine, as a result of lower than expected grade. The write-down in fiscal 2002 of $44.3
reflected the impairment of the carrying value of these Big Bell assets. In fiscal 2001, Harmony
decided to place the Bissett mine on a care and maintenance program due to the mining
operations being uneconomical at current gold prices, and to close certain Randfontein, Evander
and Free State shafts. The write-down in fiscal 2001 of $28.6 million primarily reflected the
excess of the book value of Bissett's long-term and other assets over the estimated salvage value
of these assets of $19.6 million and the impairment of the carrying value of certain Free State
and Randfontein shafts of $5.6 million.
Interest paid
Harmony paid $19.1 million in interest during fiscal 2002 compared to $15
million during fiscal 2001. This increase was due primarily to an increased amount of interest-
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bearing debt outstanding for the period, in particular, Harmony's Rand-denominated senior
unsecured fixed rate bonds issued on June 24, 2001.
Provision/(reversal of provision) for former employees post-retirement benefits
Harmony provides for amounts due under its former employees post-retirement
benefits. In fiscal 2002, based on updated actuarial valuations, Harmony provided $0.04 million
for these benefits. In fiscal 2001, Harmony reversed a $2.2 million provision after reaching an
agreement with certain retirees under which these retirees were transferred to the Minemed
medical scheme and no subsidies would be payable by Harmony on behalf of these retirees.
Income and mining taxes

                          South
Africa.
Harmony pays taxes on mining income and non-mining income.
The amount of Harmony's South African mining income tax is calculated on the basis of a
formula that takes into account Harmony's total revenue and profits from, and capital
expenditures for, mining operations in South Africa. Five percent of total mining revenue is
exempt from taxation in South Africa. The amount of revenue subject to taxation is calculated
by subtracting capital expenditures from operating profit. The amount by which the adjusted
profit figure exceeds 5% of revenue constitutes taxable mining income. Harmony and its
subsidiaries each make their own calculation of taxable income.
The tax rate applicable to the mining and non-mining income of a gold mining
company depends on whether the company has elected to be exempt from the Secondary Tax on
Companies, or STC. The STC is a tax on dividends declared and, at present, the STC tax rate is
equal to 12.5%. In 1993, all existing South African gold mining companies had the option to
elect to be exempt from STC. If the election was made, a higher tax rate would apply for both
mining and non-mining income. In each of 2002 and 2001, the tax rates for companies that
elected the STC exemption were 46% for mining income and 38% for non-mining income,
compared with 37% for mining income and 30% for non-mining income if the STC exemption
election was not made. In 1993, Harmony elected to pay the STC tax. All of Harmony's South
African subsidiaries, however, elected the STC exemption. To the extent Harmony receives
dividends, such dividends received are offset against the amount of dividends paid for purposes
of calculating the amount subject to the 12.5% STC tax.
Australia. Generally, Australia imposes tax on the worldwide income (including
capital gains) of all of Harmony's Australian incorporated and tax resident entities. The current
income tax rate for companies is 30%. Exploration costs and the depreciation of capital
expenditure may be deducted from income. In addition, other expenditures, such as export
market development, mine closure costs and the defense of native title claims, may be deducted
from income. With effect from July 1, 1998, mining operations (other than operations on
freehold land) are also subject to a 2.5% gold royalty because the mineral rights are owned by
the state. All gold production from the Big Bell and Mt. Magnet operations is subject to this
royalty. Most of the production from the South Kalgoorlie operations is from freehold land and
is, accordingly, exempt from this royalty.
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With effect from July 1, 2001, the Australian legislature introduced a Uniform
Capital Allowance, which allows tax deductions for depreciation attributable to assets and
certain other capital expenditures. In addition, under current Australian tax law, certain grouping
concessions are available to companies in the same ultimate control group. These concessions
include the ability to group losses and obtain capital gains tax roll-over relief from the transfer of
assets among two or more entities if the entities are engaged in the same business or if the
entities are wholly-owned by the same entity. Harmony's subsidiaries in Australia accordingly
qualify to transfer losses from one entity to another in the event that a loss is made in one entity
and a profit is generated in another.
Withholding tax is payable on dividends, interest and royalties paid by Australian
residents to non-residents, which would include any dividends on the shares of Harmony's
Australian subsidiaries that are paid to Harmony. In the case of dividend payments to non-
residents, a 30% withholding tax applies. However, where the recipient of the dividend is a
resident of a country with which Australia has concluded a double taxation agreement, the rate of
withholding tax is generally limited to 15% (or 10% where the dividend is paid to a company's
parent company). Where dividends are fully taxable, an effective credit is allowed against any
withholding tax otherwise payable, regardless of whether a double taxation agreement is in
place.
Effective tax rate. The table below indicates Harmony's effective tax rate, which
represents the current tax rate due pursuant to the statutory formula and the amount of deferred
tax, for fiscal 2002 and fiscal 2001. Harmony bases its estimate of effective tax rates on the
application of statutory tax formulas to historic operating results. Current tax due includes
mining and non-mining tax calculated by applying the statutory formula to the actual results of
operations for the relevant period. Deferred tax is provided at the estimated future effective
mining tax rate.
Fiscal year ended June 30,
Income and mining tax
2002
2001
Effective tax rate expense .....................................................................
13.9%
49.1%
The effective tax rate for fiscal 2002 was lower than the statutory tax rate of
46% for Harmony and its subsidiaries as a whole. A primary factor in the lower tax effective
rate was the fact that the equity income from the Free Gold Company is excluded from the
calculation of Harmony's taxable income. In addition, the effective tax rate for fiscal 2002 was
lowered by Harmony's release of valuation allowances against deferred tax assets at Kalgold,
which, in light of the higher prevailing market price for gold and the resulting increase in
profitability, was deemed more likely than not to be recovered. The effective tax rate for
fiscal 2001 was higher then then-estimated statutory tax rate of 46% for Harmony and its
subsidiaries as a whole due to valuation allowances being raised against tax losses of Bissett and
New Hampton.
Minority interests
Minority interests were $1.6 million in fiscal 2002, as compared with $0.3 million
in fiscal 2001. The minority interests in fiscal 2002 and fiscal 2001 reflected the 10%
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participation interest in the Elandskraal Venture that Open Solutions acquired with effect from
April 31, 2001. With effect from April 1, 2002, Open Solutions sold this interest back to
Harmony. See "Item 4. Information on the Company--Business--Harmony's Mining
Operations--Elandskraal Operations."
Income before cumulative effect of change in accounting principle
As a result of the factors discussed above, income before cumulative effect of
change in accounting principle was $87.7 million in fiscal 2002, as compared with 14.8 million
in fiscal 2001. This increase was primarily attributable to higher market prices for gold, as a
result of which Harmony received a higher average price per ounce of gold (which increased
revenue), and the depreciation of the Rand against the U.S. dollar (which reduced costs when
translated into U.S. dollars). See "Item 5. Operating and Financial Review and Prospects--
Exchange Rates." The inclusion of Elandskraal and New Hampton for a full year, and Hill 50
for three months, as well as the equity income from Harmony's interest in the Free Gold
Company, also contributed to the increase in income before cumulative effect of change in
accounting principle.
Cumulative effect of change in accounting principle for derivatives and hedging
activities (FAS 133), net of tax
Statement of Financial Accounting Standard 133, Accounting for Derivative
Instruments and Hedging Activities, has been issued and was adopted by Harmony with effect
from July 1, 2000. This standard establishes accounting and reporting standards for derivative
instruments and for hedging activities.
Previously gains and losses on derivative instruments, which effectively
established minimum prices for designated future production, were recognized in revenue when
the planned production was delivered. Derivatives that were not designated for future production
were accounted for on a mark-to-market basis and the associated gains or losses were recognized
in the results.
With Harmony's adoption of FAS 133 with effect from July 1, 2000, none of
Harmony's derivatives at that date qualified for hedge accounting as they did not meet the new
hedging requirements of FAS 133 and were thus marked to market, resulting in a cumulative
effect of change in accounting principles write-off of $5.8 million, net of tax, in fiscal 2001. The
cumulative effect adjustment was required to record on the balance sheet the fair value of
derivative instruments that previously qualified for off-balance sheet hedge accounting. As at
June 30, 2001, none of the derivatives held by Harmony qualified for hedge accounting and have
thus been marked to market accordingly and the associated gains and losses were recognized in
results in fiscal 2001. No cumulative effect adjustment was recorded in fiscal 2002.
LIQUIDITY AND CAPITAL RESOURCES
Funding and treasury policies are managed centrally by Harmony. There are no
legal or economic restrictions on the ability of Harmony's subsidiaries to transfer funds to
Harmony. Harmony has generally funded its operations and its short-term and long-term
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liquidity requirements from (i) cash generated from operations, (ii) credit facilities and other
borrowings and (iii) sales of equity securities.
Cash Resources
Operations
Net cash provided by operations is primarily affected by the quantities of gold
sold, the gold price, the Rand-U.S. dollar exchange rate, cash costs per ounce and, in the case of
the Australian operations, the Australian dollar-U.S. dollar exchange rate. A significant adverse
change in one or more of these parameters could materially reduce cash provided by operations
as a source of liquidity. Net cash provided by operations was $155.4 million in fiscal 2003, as
compared with $161.9 million in fiscal 2002. This decrease was primarily attributable to higher
costs due to the appreciation of the Rand against the U.S. dollar (which increased costs when
translated into U.S. dollars), which more than offset increased gold sales from higher U.S. dollar
denominated gold price. See "Item 5. Operating and Financial Review and Prospects--
Exchange Rates." The decrease in cash provided by operations was also impacted by the $34.9
million increase in taxes paid and the $ 7.7 million increase in interest expense and a $23.9
million increase in working capital charges (which reflects changes in receivables, inventories
and accounts payable).
Net cash provided by operations was $162.4 million in fiscal 2002, as compared
with $49.0 million in fiscal 2001. This increase was due to higher market prices of
gold, as a result of which Harmony received a higher average price per ounce of gold (which
increased revenue), and the depreciation of the Rand against the U.S. dollar (which reduced costs
when translated into U.S. dollars). See "Item 5. Operating and Financial Review and
Prospects--Exchange Rates." Increased gold sales as a result of the inclusion of Elandskraal and
New Hampton for a full year, and Hill 50 for three months from April 1, 2002, also contributed
to the increased cash provided by operations. The increase in cash provided by operations was
partially offset by the $22.0 million cost of closing out the Randfontein hedges, the $4.1 million
increase in taxes paid, the $4.6 million increase in interest expense and a $4.2 million increase in
working capital charges (which reflects changes in receivables, inventories and accounts
payable).
Investing
Net cash utilized in investing activities was $ 232.8 million in fiscal 2003, as
compared with $312.7 million in fiscal 2002. This change was due to the costs of
acquiring subsidiaries, joint ventures, associates and other investments in fiscal 2003 being
$230.6 million versus $289.5 million in fiscal 2002, the increase of $ 73.5 million received as
proceeds on the disposal of listed investments and an increase in capital expenditure
of $42.9 million due principally to the development of new capital projects. Net cash utilized in
investing activities was $312.7 million in fiscal 2002, as compared with $189.3 million in fiscal
2001. This increase was primarily due to the cash paid for Hill 50 of $124.8 million, Harmony's
investment in and loans advanced to the Free Gold Company of $84.6 million, Harmony's
investment in Bendigo of $22.8 million, Harmony's investment in Highland Gold of $18.1
million, the repurchase by Harmony of Open Solutions' participation rights in the Elandskraal
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Venture for $18.5 million and an increase in capital expenditures of $9.2 million due principally
to the inclusion of Elandskraal and New Hampton for a full year and Hill 50 from April 1, 2002.
Financing
Net cash generated by in financing activities was $155.1 million in fiscal 2003, as
compared with net cash generated by financing activities of $166.5 million in fiscal 2002. This
decrease was due primarily to the lower number of ordinary shares issued in fiscal 2003 and the
resulting proceeds decreasing from $159.6 million in fiscal 2003 to $151.3 million in fiscal 2003,
the increase in the amount of net long-term financing from $29.5 million in fiscal 2002 to $102.5 
million in fiscal 2003 and the increase in dividends paid from $22.6 million in fiscal 2002 to 
$98.6 million in fiscal 2003.
Net cash generated by financing activities was $166.5 million in fiscal 2002, as
compared with $225 million in fiscal 2001. This decrease was due primarily to the lower
number of ordinary shares issued in fiscal 2002 and the resulting proceeds decreasing from
$178.5 million in fiscal 2001 to $159.6 million in fiscal 2002, the decrease in the amount of net
long-term financing from $61.5 million in fiscal 2001 to $29.5 million in fiscal 2002 and the
increase in dividends paid from $15.7 million in fiscal 2001 to $22.6 million in fiscal 2002.
Outstanding Credit Facilities and Other Borrowings
On March 2, 2001, Harmony entered into a U.S. dollar denominated term loan
facility of $9 million, all of which has been drawn down, with BAE Systems plc for the purpose
of financing the design, development and construction of a facility for the manufacture and sale
of value added gold products at the Free State operations. The loan is secured by a pledge of
certain gold proceeds and other assets from this facility (and limits Harmony's ability to use the
facility as security for other obligations) and is repayable in full on April 30, 2004. The loan
bears interest at LIBOR plus 2%, which is accrued daily from the drawdown date and is
repayable on a quarterly basis.
On June 14, 2001, Harmony issued Rand-denominated senior unsecured fixed rate
bonds in an aggregate principal amount of Rand 1,200 million ($149.3 million at an exchange
rate of R8.04 per $1.00), with semi-annual interest payable at a rate of 13% per annum. These
bonds are repayable on June 14, 2006, subject to early redemption at Harmony's option. The
bonds have been listed on the Bond Exchange of South Africa. Harmony used the proceeds from
the sale of the bonds to retire a portion of a syndicated loan facility and to partially fund the
Elandskraal acquisition. So long as the bonds are outstanding, Harmony may not permit
encumbrances on its present or future assets or revenues to secure indebtedness for borrowed
money, without securing the outstanding bonds equally and ratably with such indebtedness,
except for certain specified permitted encumbrances.
On April 18, 2002, Harmony entered into a Rand-denominated term loan facility
of Rand 500 million ($76.7 million), all of which has been drawn down, with BoE Bank Limited
for the purpose of partially funding (i) Harmony's acquisition of shares in the Free Gold
Company and (ii) loans made by Harmony to the Free Gold Company in connection with the
acquisition of the Free Gold assets. This facility is secured by a pledge of Harmony's shares in
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the Free Gold Company and is guaranteed by Randfontein, Evander, Kalgold and Lydex. The
loan is repayable in full on April 23, 2006, and eight equal semi-annual installments are due
beginning October 23, 2002. The loan bears interest at a rate equal to JIBAR plus 1.5% plus 
specified costs, which is accrued daily from the drawdown date and is payable quarterly in 
arrears commencing July 23, 2002. Pursuant to the terms of this facility, Harmony is required 
to maintain specified ratios of earnings to debt service and borrowings, as well as a specified 
level of consolidated tangible net worth. In addition, pursuant to this facility, Harmony is subject 
to specified limits on its ability to (i) permit encumbrances over pledged revenues or assets, 
(ii) make loans or incur specified types of indebtedness, (iii) dispose of more than 25% of its 
assets or (iv) make distributions to its shareholders if a default or event of default under this 
term loan facility has occurred and is continuing. If Harmony fails to meet these requirements, 
the loan may be accelerated and become due and payable in full. As of December 10, 2003, 
Harmony was in compliance in all material respects with the terms of this facility.
On May 8, 2003, Harmony entered into a Rand-denominated term loan facility of
Rand 850 million ($130.4 million), all of which has been drawn down, with Nedbank Limited for
the purpose of funding Harmony's acquisition of 17.25% of the outstanding share capital of
Avmin. This facility is guaranteed by Randfontein, Evander, Kalgold and Lydex. The loan is
repayable in full on November 8, 2004. The loan bears interest at a rate equal to 3 months'
JIBAR plus 1.5% plus specified costs, which is accrued daily from the drawdown date and is
payable quarterly in arrears. As of December 10, 2003, Harmony was in compliance in all
material respects with the terms of this facility.
Recently Retired Credit Facilities and Other Borrowings
In February 2000, Harmony entered into a Rand 450 million term loan facility
with ABSA for the purpose of financing the acquisition of the shares of Randfontein and
repaying a Rand 150 million bridge loan provided by ABSA in connection with the acquisition.
Harmony was able to draw down this facility until April 30, 2000. Harmony drew down
approximately Rand 400 million under this facility. The facility became repayable quarterly
beginning on April 30, 2000 and would have matured on April 30, 2002. The interest rate of the
facility was the three month bank bill rate quoted by the South Africa Futures Exchange plus
1.25% on amounts drawn down of less than Rand 250 million and 1.5% on amounts drawn down
in excess of Rand 250 million. This facility was repaid in full in April 2001 following the
closing of the syndicated loan facility.
On March 1, 2000, Harmony Australia entered into a $20 million loan facility
with Robert Fleming, now JPMorgan, in connection with the acquisition of Harmony's initial
interest in AurionGold. The loan bore interest at LIBOR plus 2.5%, and the original terms of the
loan required repayment by December 31, 2000. During December 2000 and March 2001,
Harmony and JPMorgan agreed to extend the maturity date to March 31, 2001 and April 5, 2001,
respectively. The amount was repaid in full in April 2001 following the closing of the
syndicated loan facility. See "Item 4. Information on the Company--Business--Description of
Mining Business--AurionGold and Placer Dome."
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On March 22, 2001, Harmony and Harmony Australia entered into a syndicated
loan facility of approximately $260 million with Citibank, N.A., J.P. Morgan plc and ANZ
Investment Bank, as dollar joint lead arrangers, ABSA and BoE Bank Limited, as Rand joint
lead arrangers, Chase Manhattan International Limited, as facilities agent, and ABSA, as local
facilities agent, for the purpose of partially funding the acquisitions of Elandskraal and New
Hampton, repaying all of Harmony's existing non-South African debt and the ABSA term loan
facility and providing working capital. This syndicated loan facility consisted of three specific
facilities of an aggregate of Rand 1,160 million and $115 million. As of May 31, 2001,
Harmony had drawn down approximately Rand 1,160 million and $113.4 million of these
facilities. Up to $100 million of the syndicated loan facility was required to be repaid following
the completion of any primary or secondary offering of Harmony's share capital, in the event of
specified disposals of assets and in the event of the acquisition of control of Harmony by any
third party or parties acting in concert (unless the lenders had given their prior written consent to
the change of control). Following the completion of the June 2001 global offering described
below, as well as the corporate bond issuance and the subscriptions by the IDC described in this
annual report, Harmony repaid this syndicated loan facility in full.
On November 9, 2001, New Hampton entered into a term loan facility of A$35
million with Australia and New Zealand Banking Group Limited, for the purpose of refinancing
New Hampton's existing debt and funding capital development at New Hampton. The facility,
all of which was drawn down, bore interest at the Bank Bill Rate quoted by Reuters or
determined by the lender, plus 1.25%. Harmony Australia guaranteed this facility and pledged its
shares in AurionGold as security. The facility was repaid in full on May 23, 2002.
On February 28, 2002, Harmony Australia entered into an $8 million bilateral
interim revolving loan facility with Citibank, N.A. for the purpose of partially funding the
acquisition of Hill 50. See "Item 4. Information on the Company--Business--History."
Harmony guaranteed this facility. This facility bore interest at a percentage rate per annum equal
to LIBOR plus 1.50% plus specified additional mandatory costs. Harmony was required to repay
this facility on the last date of the selected interest period, or within 5 business days of acquiring
50.1% of Hill 50's shares and listed options. Following its receipt of funds under the $80 million
syndicated loan facility described below, Harmony repaid this interim loan facility in full.
On February 28, 2002, Harmony Australia entered into a syndicated loan facility
of approximately $80 million with Citibank, N.A., as lead arranger, and Australia and New
Zealand Banking Group Limited, Citibank, N.A., Societe Generale, N.M. Rothschild & Sons
Limited, ABSA Asia Limited, RMB International (Dublin) Limited and Standard Finance (Isle
of Man) Limited, as lenders, and Citibank International plc, as agent and security trustee. This
facility was drawn down in full for the purpose of repaying in full the $8 million interim loan
facility described above, and partially funding the acquisition of Hill 50. See "Item 4.
Information on the Company--Business--History." The facility was secured by Harmony's
Australian assets and was guaranteed by Harmony and its subsidiaries, Randfontein, Evander,
Kalgold and Lydenburg Exploration Limited, or Lydex. The facility was repayable in full on
February 28, 2004 and bore interest at a percentage rate per annum determined according to a
contractual formula applied on the drawdown date (generally equal to LIBOR plus 1.50% or
1.60% depending on the circumstances of the drawdown), plus specified additional mandatory
costs. Pursuant to the terms of this facility, Harmony was required to maintain specified ratios of
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earnings to debt service and borrowings, as well as a specified level of consolidated tangible net
worth. Harmony repaid this facility in full on June 14, 2002, using the proceeds of its April 29,
2002 international private placement. See "--Sale of Equity Securities" below.
Sales of Equity Securities
Historically, sales of Harmony's equity securities have included subscriptions by
investors in Harmony's ordinary shares. On June 20, 2001, the IDC completed subscriptions for
Harmony's ordinary shares and preference shares that resulted in Simane acquiring 10,958,982
ordinary shares. Harmony received aggregate consideration for these subscriptions of
approximately $39.4 million, as described in this annual report, which was used to retire a
portion of the $260 million syndicated loan facility described above and for general corporate
purposes. See "Item 7. Major Shareholders and Related Party Transactions."
On June 29, 2001, Harmony completed a global offering of 27,082,500 ordinary
shares and ADSs and 9,027,500 warrants to purchase 9,027,500 ordinary shares, in each case in
the United States and elsewhere. The ordinary shares were offered at a price of $5.32 or R43.00
per ordinary share, or $5.32 per ADS. Investors received one warrant for every three ordinary
shares (or ADSs) they purchased. The net proceeds of the offering to Harmony were
approximately $137.6 million, after deducting underwriting discounts, commissions and offering
expenses. Harmony used these net proceeds to retire much of the syndicated loan facility entered
into on March 22, 2001, to make capital expenditures and to fund working capital.
Of the 9,027,500 warrants issued, 1,014,054 warrants were converted during
fiscal 2002, with some of the warrants being converted and the remaining warrants having expired 
during fiscal 2003. Harmony used the proceeds received from the conversion of the warrants 
to fund working capital.
On April 29, 2002, Harmony completed an international private placement of
8,500,000 new ordinary shares for a cash price of $12.92 per share, realizing proceeds of
approximately $109.9 million prior to the deduction of underwriting discounts, commissions and
offering expenses. Harmony used the net proceeds of this placement to retire the ANZ loan and
the $80 million syndicated loan facility with Citibank, N.A., as lead arranger.
On January 28, 2003, Harmony completed an international private placement of
8,000,000 new ordinary shares for a cash price of $15.50 per share, realizing proceeds of
approximately $124.2 million prior to the deduction of underwriting discounts, commissions and
offering expenses. Harmony plans to use the net proceeds of this placement to fund various
growth projects.
Contractual Obligations and Commercial Commitments
Harmony's contractual obligations and commercial commitments consist
primarily of credit facilities, as described above, and guarantees for environmental rehabilitation
expenses, principally environmental performance bonds required for Harmony's Australian
operations, as described in "Item 4. Information on the Company--Regulation--Environmental
Matters."

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Contractual Obligations on the Balance Sheet

The following table summarizes Harmony's contractual obligations as of June 30, 2003:

Payments Due by Period

Dollars in thousands

Total
Less than 12
months
July 1, 2003 to
June 30, 2004
12-36 Months
July 1, 2004
To
June 30, 2006
36-60 Months
July 1, 2006
To
June 30, 2008
After 60 Months
Subesequent
To
June 30, 2008
Senior unsecured fixed-rate bonds
1
....... 
--
155,100
155,100
--
--
BoE Bank Limited loan facility
1
........... 
16,644
49,933
33,289
--
--
BAE Systems plc loan facility
1
............. 
9,001 
9,001 
-- 
-- 
-- 
Post retirement health care
2
................... 
138 
1,017 
276 
276 
327 
Environmental obligations
3
................... 
7,049
62,977
4,990
3,992
46,966
Total contractual obligations ............
278,048
32,832
193,655
47,293
4,268 
________________________
1
See "Item 5. Operating and Financial Review and Prospects--Liquidity and Capital Resources--Credit Facilities and Other
Borrowings--Outstanding Credit Facilities and Other Borrowings."
2
This liability relates to post-retirement medical benefits of former employees who retired prior to December 31, 1996 and is
based on actuarial valuations conducted during fiscal 2002.
3
Harmony makes provision for environmental rehabilitation costs and related liabilities based on management's interpretations
of current environmental and regulatory requirements. See "Item 5. Operating and Financial Review and Prospects--Critical
Accounting Policies."
Contractual Obligations off the Balance Sheet
During fiscal 2002, Harmony and ARMgold formed the Free Gold Company to
acquire the Free Gold assets from AngloGold. See "Item 5. Operating and Financial Review
and Prospects--Overview" and "Business--Harmony's Mining Operations--Free Gold
Operations." Harmony accounts for its interest in the Free Gold Company using the equity
method, under which Harmony's share of the net assets of the Free Gold Company is recorded as
a single line item, "Investment in joint venture," on Harmony's consolidated balance sheet.
Accordingly, Harmony's consolidated balance sheet does not reflect any obligations that the Free
Gold Company has to third parties. Harmony expects that the Free Gold Company will generate
sufficient cash flows from operations to meet these obligations. In the event that the Free Gold
Company is unable to meet these obligations from its internal resources, Harmony expects that
the additional funding required will be provided by Harmony (as Harmony has merged with
ARMgold following the end of the 2003 fiscal year enabling the Free Gold Company to
fund its contractual obligations.
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The following table summarizes the Free Gold Company's obligations to third
parties as of June 30, 2003:
Payments Due by Period

Dollars in thousands
Total
Less than 12
months
July 1, 2003 to
June 30, 2004
12-36
Months
July 1, 2004
to
June 30,
2006
36-60 Months
July 1, 2006
to
June 30, 2008
After 60
Months
Subsequent
to
June 30, 2008
AngloGold loan
1
.............................
42,915
--
42,915
--
--
Gold Fields
2
1,093                     278
556                      259                              --
Post retirement health care
3
33                                27                        27                            157
244
 
Environmental obligation
4
42,604                    4,768                         3,376            
  2,701                       31,759
Total contractual obligations ..............
86,856                    5,079                       46,874                   2,987
    
    
31,916
________________________
1
Reflects the fair value of the Rand 400 million interest-free loan which is payable to AngloGold by the Free Gold Company on
January 1, 2005, as part of the consideration for the Free Gold assets. See "Item 4. Information on the Company--
Business--Overview."
2
Reflects the amount accrued as payable to Gold Fields as a royalty based on the sales of St Helena for 48 months following the
acquisition of St Helena by the Free Gold Company.
3
This liability relates to post-retirement medical benefits of former employees and  is based on actuarial valuations conducted during fiscal 2002 .
 
4
Free Gold makes provision for environmental rehabilitation costs and related liabilities based on managements' interpretations
of current environmental and regulatory requirements.

During fiscal 2003, Harmony and ARMgold formed an incorporated joint venture
company, Clidet to acquire a 34.5% interest in the outstanding share capital of Avmin. See
"Item 5. Operating and Financial Review and Prospects--Overview". Clidet's only asset is its
investment in Avmin. Harmony accounts for its interest in Clidet using the equity method, under
which Harmony's share of the net assets of Clidet is recorded as a single line item, "Investment
in joint venture," on Harmony's consolidated balance sheet. Accordingly, Harmony's
consolidated balance sheet does not reflect any obligations that Avmin has to third parties.
Clidet expects that Avmin will generate sufficient cash flows from operations to meet these
obligations. In the event that Avmin is unable to meet these obligations from its internal
resources, Clidet has not provided any guarantee to Avmin that it will provide the additional
funding required in proportion to their respective shareholdings in Avmin, enabling Avmin to
fund its contractual obligations.
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The following table summarizes Avmin's obligations to third parties as of
June 30, 2003:
Payments Due by Period

Dollars in thousands
Total
Less than 12
months
July 1, 2003 to
June 30, 2004
12-36
Months
July 1, 2004
to
June 30,
2006
36-60 Months
July 1, 2006
to
June 30, 2008
After 60
Months
Subsequent
to
June 30, 2008
-
Deferred financial liability1 .............
22,769
-
-
-
12,045
22,769
-
Post retirement health care2 ..............
8,788
1,192
2,385
2,385
2,826
-
-
-
11,585
14,411
23,961
2,385
2,385
Environmental obligations3 ..............
11,585
Total contractual obligations ............
43,142
________________________
-
1
NOTE: These liabilities are in terms of Avmin's financial statements and the accounting policies may differ from Harmony's policies.
This liability relates to the negative fair value of Avmin's financial instruments as at June 30, 2003.
2
This liability relates to post-retirement medical benefits of former employees and is based on actuarial
valuations conducted during fiscal 2001.
3
Avmin makes provision for environmental rehabilitation costs and related liabilities based on management's interpretations of
current environmental and regulatory requirements
Commercial Commitments
The following table provides details regarding Harmony's commercial
commitments as of June 30, 2003:
Amount of Commitments Expiring by Period

Dollars in thousands
Total
Less than 12
months
July 1, 2003 to
June 30, 2004
12-36 Months
July 1, 2004
to
June 30, 2006
36-60 Months
July 1, 2006
to
June 30, 2008
After 60 Months
Subsequent
to
June 30, 2008
Guarantees
1
...................................................
Capital commitments
2
..................................
3,732 
3,732 
-
-
-
-
-
-
Total commitments expiring by period .......
15,777
12,045
3,732
-
-
12,045
________________________
1
Reflects guarantees for environmental rehabilitation expenses, principally environmental performance bonds required for
Harmony's Australian operations. See "Item 4. Information on the Company--Regulation--Environmental Matters."
2
Capital commitments consist only of amounts committed to external suppliers, although a total of $235.0 million has been
approved by the Board for capital expenditures.
Trend Information
Information on recent trends in Harmony's operations is discussed in "Item 4.
Information on the Company--Business--Strategy" and "--Results of Operations" above.
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Working Capital and Anticipated Financing Needs
The Board believes that Harmony's working capital resources, by way of cash
generated from operations and existing cash on hand, are sufficient to meet Harmony's present
working capital needs. Harmony expects that its business requirements through June 30, 2004
will be financed from internal resources and existing borrowings. For more information on
Harmony's planned capital expenditures, see "--Capital Expenditures" above and "Item 4.
Information on the Company--Business--Harmony's Mining Operations." Harmony may, in
the future, explore debt and/or equity financing in connection with its acquisition strategy and/or
major capital projects. See "Item 3. Key Information--Risk Factors--Harmony's strategy
depends on its ability to make additional acquisitions." Harmony's Board believes that Harmony
will have access to adequate financing on reasonable terms given Harmony's cash-based
operations and modest leverage. Harmony's ability to generate cash from operations could,
however, be materially adversely affected by increases in cash costs, decreases in production,
decreases in the price of gold and appreciation of the Rand against the U.S. dollar. In addition,
Harmony's ability to obtain additional financing could be limited by covenants in the term loan
facility of April 18, 2002 between Harmony and BoE Bank Limited, which imposes debt to
earnings ratios and minimum net worth requirements and prevents Harmony from pledging,
selling or creating encumbrances over pledged assets including Harmony's shares of the Free
Gold Company. Access to financing could also be limited by provisions of Harmony's corporate
bonds, under which Harmony may not permit encumbrances on its present or future assets or
revenues to secure indebtedness for borrowed money, without securing the outstanding bonds
equally and ratably with such indebtedness, except for certain specified permitted encumbrances.
See "Item 5. Operating and Financial Review and Prospects--Liquidity and Capital
Resources--Credit Facilities and Other Borrowings--Outstanding Credit Facilities and Other
Borrowings." Future financing arrangements would also be subject to the limits on the Board's
borrowing powers described in "Item 10. Description of Ordinary Shares--Memorandum and
Articles of Association--Directors--Borrowing Powers." In addition, South African companies
are subject to significant exchange control limitations, which may impair Harmony's ability to
fund overseas operations or guarantee credit facilities entered into by overseas subsidiaries. See
"Item 10. Additional Information--Exchange Controls and Other Limitations Affecting Security
Holders."
OTHER FINANCIAL INFORMATION
Export Sales
In fiscal 2002, approximately 65% of Harmony's gold produced in South Africa
was refined by Harmony and exported, and approximately 76% of Harmony's gold produced in
Australia was exported. In fiscal 2003, approximately 85% of Harmony's gold produced in
South Africa was refined by Harmony and exported, and the remainder was refined at the Rand
Refinery, which is owned by a consortium of the major gold producers in South Africa.
Approximately 100% of Harmony's gold produced in Australia was exported.
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Item 6. Directors, Senior Management and Employees
               
                                                 DIRECTORS AND SENIOR MANAGEMENT

                        The members of the Board, their principal past affiliations, information on their

business experiences and principal outside activities and selected other information are set forth
below:
Executive Directors
Bernard Swanepoel (42), BSc (Mining Engineering), B Com (Hons), Chief Executive Officer
and an Executive Director. Bernard has over 20 years' experience in the gold mining industry.
He started his career in gold mining at Grootvlei in 1983. As part of his training he spent time on
various Gengold operations including Kinross (Evander) and Barberton. He then moved into
senior management with the Gengold group, culminating in his appointment as general manager
and a director of Beatrix Mines in 1993. He joined Randgold in 1995 as Managing Director of
Harmony and has been the driving force in making the company the fifth largest independent
gold producer in the world and the largest in South Africa.

Frank Abbott (48), BCom, CA (SA), MBL, Chief Financial Officer and an Executive Director.
Frank joined the Rand Mines/Barlow Rand Group in 1981, where he obtained broad financial
management experience at operational level. He was appointed as financial controller to the
newly formed Randgold in 1992 and was promoted to financial director of that group in October
1994. Until 1997, he was also a director of the gold mining companies Blyvooruitzicht,
Buffelsfontein, Durban Roodepoort Deep and East Rand Proprietary Mines and a non-executive
director of Harmony, which culminated in his appointment as financial director of Harmony in
the same year.

Ferdi Dippenaar (42), BCom, BProc, MBA, Marketing Director and an Executive Director.
Ferdi started his career at the Buffelsfontein gold mine in 1983 and completed his degrees
through part-time studies while employed in various financial and administrative capacities at the
Gengold mines. In 1996, he became managing director of Grootvlei and of East Rand
Proprietary Mines. Following Harmony's acquisition of Grootvlei and Cons Modder, he was
appointed Marketing Director of Harmony in 1997. He oversees Harmony's refinery and direct
marketing activities, as well as the company's investor relations program.

Ted Grobicki (54), BSc (Hons) (Geology) MSc (Minerals Exploration) PrSciNat, FIMM,
Executive Officer for Harmony's Australian operations and an Executive Director. After
fulfilling various roles within mining and exploration companies in South Africa, Namibia and
Zimbabwe, Ted was appointed chief executive of Texas Gulf Inc South Africa in 1979. He has
since served at a senior executive level in a wide range of public and private companies in the
mining sector, and was appointed as non-executive director of Harmony in 1994. With
Harmony's merger with Kalgold and West Rand Cons. in 1999, he was appointed as executive
director focusing on new business. Ted has 30 years' experience in all aspects of the mining
industry, including exploration, evaluation, development, mine management and financial and
corporate management.

Mangisi Gule (51), BA (Hons) and an Executive Director. Mangisi has 23 years' experience in
training and human resources and is a member of the Association of Mine Human Resource
Practitioners. Mangisi joined the Company on September 23, 2003, following the ARMgold
merger. He oversees the company's human resources and communication activities.
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Dan Simelane (41) BA, LLB, LLM and an Executive Director. Dan Simelane has seven years'
legal experience and acted as legal advisor to Avmin Limited and the Swaziland Electricity
Board. He has extensive tax experience and was a senior tax consultant with Arthur Andersen.
Dan joined Harmony on September 23, 2003, following the ARMgold merger.

Pieter Taljaard (56) BCom, B Iur, CMA and an Executive Director. Pieter has 33 years' experience in commerce, 25 of which have been in the mining industry. His mining career commenced in 1977 with Gencor Limited ("Gencor"), where he worked in the finance department of Gengold Limited, a subsidiary of Gencor. He was subsequently appointed as a senior manager and director/alternate director to a number of companies controlled by Gencor. These included, amongst others, Buffelsfontein Gold Mining Company Limited ("Buffelsfontein"), Stilfontein Gold Mining Company Limited; Beatrix Gold Mines Limited ("Beatrix") and Barberton Mines Limited. He assisted in creating the tax structure between Buffelsfontein and Beatrix and formed part of a team that investigated and recommended future management information systems at Gengold Limited. Pieter then chaired the committee responsible for implementing these systems at Gengold. He joined ARMgold in 1997 as financial director. Pieter joined Harmony on September 23, 2003, following the ARMgold merger.

Andre Wilkens (55), Mine Overseer's Certificate of Competency, Mine Manager's Certificate of Competency, Chamber of Mines Loss Control Diploma, Risk Management Certificate (Insurance), MDP and an Executive Director. Andre has 33 years' mining experience. He commenced his career in 1969 as a trainee miner. He was then promoted to mine manager at the Vaal Reefs West mine in 1994 and was appointed mine manager of the Vaal Reefs South mine in 1996. Before joining ARMgold in 1998, he served as manager of North Operations (Vaal Reefs) and the managing director of Naledi Mining Services, then a wholly-owned subsidiary of Vaal Reefs. Andre has a successful mining and management track record of turning around marginal  mines into profitable ones. He also played a leading role in determining new operating methods for South African mines. Andre was appointed chief executive officer of African Rainbow Minerals  Gold in 1998, a position he held until the merger with Harmony. Andre joined Harmony on September 23, 2003, following the ARMgold merger.

Non-Executive Directors
Patrice Motsepe (41) BA (Legal), LLB and Non-Executive Director. Founder and former Executive Chairman of ARMgold which merged with Harmony in 2003. Patrice is now Harmony's Non-Executive Chairman. In 2002 he was voted South Africa's Entrepreneur of the year. In the same year, he was voted by the CEO's of the top 100 companies in South Africa as South Africa's Business Leader of the year. Patrice has significant entrepreneurial expertise and knowledge of the new business environment in South Africa and will be central in helping to steer Harmony to grow and be competitive. Patrice was a partner specializing in mining and business law at Bowman Gilfillan Inc, a leading South African law firm. He was employed for approximately 4 years by McGuire Woods LLP, a law firm in Richmond, Virginia, USA. He was initially based in Richmond and thereafter moved to South Africa where he was their legal consultant for their Southern African legal practice. In 1994, he founded Future Mining (Proprietary) Limited which grew rapidly to become a competitive contract mining company. In 1998 he founded African Rainbow Minerals (Proprietary) Limited which in 2002 became ARMgold which was successfully listed on the JSE Securities Exchange in 2002. In 2001, he founded African Rainbow Minerals Platinum (Proprietary) Limited and ARM Mining Consortium Limited which entered into a 50/50 joint venture with Anglo American Platinum Corporation Limited for the establishment of a new platinum mine. He was Senior Vice President of the Chamber of Mines and is a "Global Leader of Tomorrow" of the World Economic Forum (WEF). He is a member of National Economic Development and Labour Council (NEDLAC), which is South Africa's primary institution for social dialogue between organised business, government, labour and community on issues of social and economic policy. He is currently the President of the first non-racial, united and recognised business organisation in South Africa, namely Business Unity South Africa (BUSA), which is the "voice of business" in South Africa as well as President of the first non-racial, united and recognised organisation representing the various chambers of commerce and industry in South Africa namely Chambers of Commerce and Industry South Africa (CHAMSA).
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Dr. Manana Bakane-Tuoane (55) PhD, BA, MA and an independent Non-Executive Director.
Dr. Bakane-Tuoane has extensive experience in the economic disciplines as lecturer and
professor at the University of Fort Hare, Eastern Cape. She has held various senior management
positions in the public service and currently holds the post of Director General in the North-West
Provincial Government. Dr. Bakane-Tuoane was appointed to the Advisory Board of the African
Economic Research Consortium, Nairobi, Kenya, in 2000. Dr. Bakane-Tuoane was appointed a
Non-Executive Director of the Company on September 23, 2003, following the ARMgold
merger.

Nolitha Fakude
(39), BA Hons (Psychology, Education and English) and an independent Non-
Executive Director. Nolitha has been a Director of Harmony since September 2002. Nolitha
Fakude is the Managing Director of the Black Management Forum (BMF). Her role involves
stakeholder management, policy formulation and advocacy work on issues of Black Economic
Empowerment and organizational transformation. Nolitha was a Group Human Resources
Manager for Retail at Woolworths, as well as head of Corporate Affairs, which included,
amongst others, Communication and Community Affairs. She serves on various boards
including, BMF Investment Company, The People's Bank, Business Partners as well as Wheat
Trust. Nolitha was recently appointed by the Gauteng MEC for Economic Affairs as one of the
Rainmakers for the Blue IQ project.

Adam Richard Fleming
(55), Non-executive Chairman of the Board and an independent Non-
Executive Director until September 22, 2003, on which date he resigned as chairman and director
of the Company. Adam had been a Director and the Chairman of Harmony since
October 14, 1999. Adam was the non-executive chairman of West Rand Consolidated Mines
Limited and of Kalgold before the acquisition of these companies by Harmony.
Michael Wallis King (66) CA (SA), FCA and an independent Non-Executive Director. Michael
began his career as a Chartered Accountant (SA) with Deloitte, Plender, Griffiths, Annan & Co.
(now Deloitte & Touche) and qualified as a Chartered Accountant (SA). He later became a
Fellow of the Institute of Chartered Accountants in England and Wales (FCA). In 1961, he
joined the Merchant Bank, Union Acceptances Limited, (now Nedcor Investment Bank Limited),
where he was involved in corporate finance, including corporate fund raising, mergers, takeovers
and company floations. He was appointed secretary in 1964, Assistant General Manager in
1968, General Manager in 1970 and Deputy Managing Director until 1974. Michael then joined
Anglo American Corporation of South Africa as a Manager in the Finance division. In 1979, he
became Director of Anglo American Corporation and in 1980, an Executive Director and Head
of its Finance Division. In 1997, he was appointed Executive Deputy Chairman of Anglo
American Corporation. Michael was the Executive Vice Chairman of Anglo American plc, the
company created when Minorco and Anglo American Corporation were combined in May 1999,
until his retirement in May 2001. Michael was appointed a Non-Executive Director of the
Company on September 23, 2003, following the ARMgold merger.

Simo Lushaba (37) BSc (Advanced Biochemistry), MBA, Non-Executive Director and an
independent Non-Executive Director. Simo has been a Director of Harmony since October 2002.
Simo started his career at the University of Zululand in 1988 as a research technician. In 1990,
he joined South African Breweries and 2 years later National Sorghum Breweries where he
served as Divisional Executive of the Khangela Division and nine coastal depots. In 1995, Simo
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was appointed by Spoornet, where he worked for 7 years in various managerial positions and
ultimately as the General Manager for Rail and Terminal Services. In April 2002, Simo was
brought into Rand Water to drive both business and social transformation in the organization
which included internal restructuring, focusing on creating a customer driven organization, as
well as new business opportunities both in South Africa and internationally. Simo also serves as
Non-Executive Chairman of PIKITUP Johannesburg (Pty) Ltd and as a Non-Executive Director
of Trans-Caledon Tunnel Agency (TCTA). He is currently the Chief Executive of Rand Water.

Mike Pleming
(68), Pr Eng, FIMM, and an independent Non-Executive Director. Mr. Pleming
has been a Director of Harmony since September 1998. Mike started his career in mining
engineering on the Zambian Copperbelt. He joined Trans Natal (now Ingwe) in 1975 as general
manager, Optimum Collieries and was later appointed project manager and consulting engineer.
He joined Liberty Asset Management in 1982 where he was responsible for mining investment
research. He retired in 1995 and has since undertaken a series of mining investment related
assignments. Following Harmony's acquisition of Evander in 1998, he joined the company as a
non-executive director. He is also a director of Impala Platinum Holdings Limited. Mike also
serves as a non-executive director of Highland Gold Limited. Mike has approximately 31 years
mining and approximately 15 years' mining investment experience.

Audrey Mokhobo (46), MA (Political Science), Non-executive Director. She was appointed as a
Director of Harmony in January 2002, and is also a director of Simane, Capital Alliance
Holdings, Barnard Jacobs Mellet, Women's Development Bank, Investment Holdings, Rotek
Industries, M-Net Phuthuma Trust and Khoetsa Technologies and is a general manager at Eskom
(Pty) Ltd. Prior to her appointment, she held various senior positions, including at the
Development Bank of South Africa, and as special adviser to the Ministry for Public Enterprises.
Audrey resigned as a director in July 2003.
Lord Renwick of Clifton KCMG (66), an independent Non-Executive Director. Lord Renwick
has been a Director of Harmony since December 1999. Having formerly served as British
Ambassador to South Africa and the United States, Lord Renwick is Vice Chairman, Investment
Banking of JPMorgan plc. He is also Chairman of Fluor Ltd and serves on the boards of a
number of other public companies including British Airways, SABMiller plc and Richemont.
Cedric Savage (64) BSc Eng, MBA, ISMP, an independent Non-Executive Director. Cedric
commenced his career in the United Kingdom in 1960 as a graduate engineer with Fairey
Aviation and in 1963 returned to South Africa where he worked in the oil (Mobil), textile (Felt &
Textiles) and the chicken (Rainbow Chickens Limited) industries. In 1993/1994, he was
appointed President of the South African Chamber of Business. He has also served as Chairman
of the Board of Governors on the Natal University Development Foundation and as a member of
Council of the University of Natal. He joined the Tongaat-Hulett Group in 1977 as Managing
Director of Tongaat Foods and thereafter progressed to Executive Chairman of the Building
Materials Division, Chief Executive Officer of The Tongaat-Hulett Group Limited in 1991 and
in May 2000, he assumed the dual roles of Chief Executive Officer and Executive Chairman.
Cedric was appointed a Non-Executive Director of Harmony on September 23, 2003, following
the ARMgold merger.
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Dr. Sibusiso Sibisi (48) BSc (Hons), PhD, an independent Non-Executive Director. Dr. Sibisi's
working career commenced in 1983 in the software development industry with MEDC Limited,
Cambridge, UK. His career developed to that of Systems Engineer at IBM (SA); Lecturer and
senior lecturer (Wits) and Deputy Vice Chancellor for Research (University of Cape Town). He
spent 1988 as a Fulbright Fellow at the California Institute of Technology where he collaborated
with eminent researchers in computational chemistry and the development of associated medical
diagnosis tools. In 1989, he took up a research position at Cambridge where he consolidated his
academic research in mathematical modeling and computational simulations to environmental,
geophysical and biomedical problems to develop solutions. This evolved to the formation of a
start-up company dedicated to providing consulting services to Glaxo, Welcome, Fisons, Shell
and Mobil. He entered the corporate world in 1997 as Executive Director of Plessey (SA), with
the responsibility of managing and directing research and development in telecommunication
technologies. As chairperson of the National Advisory Council on Innovations, he is involved in
making recommendations on research and innovation policy to the government. Dr Sibisi was
appointed a Non-Executive Director of the Company on September 23, 2003, following the
ARMgold merger.

Dr. Rejoice Simelane (51) BCom, MCom, PhD, an an independent Non-Executive Director.
Dr. Simelane's career commenced as a lecturer at the University of Swaziland where she
lectured from 1978 to 1997 on Development Economics, Microeconomic and Macroeconomic
Theory, Research Methods, Mathematical Economics, Econometrics, Economic Planning and
Economic Integration. She then joined the Department of Trade and Industry as a
macroeconomist and later joined the National Treasury as a microeconomist (public utility
regulation and pricing) before joining the Premiers Office in the Mpumalanga Province as an
Economic Advisor. Dr Simelane was appointed a Non-Executive Director of the Company on
September 23, 2003, following the ARMgold merger.

Max Sisulu (58) MPA, MSc, and an independent Non-Executive Director. Max was appointed
as Director of Harmony in August 2003. Max is currently the General Manager at Sasol and
prior to that held the position of deputy chief executive officer at Denel, a post he held since
November 1998. From 2001 to 2003 he was the Chairperson of the South African Aerospace,
Maritime and Defence Industries. He is also a council member of the Human Sciences Research
Council and a member of the Premier of the Free State's Economic Advisory Council. From
1977 to 1981 Max served as the ANC representative in Hungary and was South Africa's
representative in the "World Federation of Democratic Youth". In January 1995 he was elected
to the National Executive Committee and National Working Committee of the ANC. From 1986,
he helped establish the ANC economics department and was instrumental in developing the
ANC's economic policy. In 1990 he spearheaded the drafting of the ANC's first policy statement
on the environment. From 1992 to 1993 Sisulu completed a Masters degree in Public
Administration at the Kennedy School of Government at Harvard University in the U.S. He
returned to South Africa in September 1993 and took up the post of Director of the National
Institute of Economic Policy until he became a member of parliament in 1994.

John Smithies (58), BSc (Mining Engineering), (Chemistry), an independent Non-Executive
Director. John has been a Director of Harmony since April 2002 until September 22, 2003, on
which date he resigned as non-executive director of the Company. John has approximately 29
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years of experience in the mining industry. From 1973-1976 he worked in the gold division of
Union Corporation. 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.

Secretary
Fred Baker (39) served as Secretary of Harmony since 1997 and resigned from his position on
November 20, 2002.
Avrol le Roux (47) was appointed as acting Company Secretary from November 21, 2002 to
January 31, 2003, following the resignation of Fred Baker. Avrol has vast experience in
company secretarial work and commenced her career at Randgold as Assistant to the Company
Secretary. She then joined Durban Roodepoort Deep as Assistant to the Company Secretary,
after which she was approached by Harmony to accept the managerial position as Company
Administrator. Avrol has been with Harmony since May 2000.
Marian van der Walt (30) BCom (Law), LLB, Higher Diploma in Tax, Diploma in Insolvency
Law and the Company Secretary of Harmony. Marian has eight years of legal experience and
was appointed as Secretary on February 3, 2003. She completed her Articles at Routledges
Modise Attorneys and was admitted as an attorney and conveyancer in 1998. She then joined
Deloitte and Touche as Insolvency Practitioner/Administrator. Prior to joining Harmony, she
held the positions of Legal Advisor, Credit Manager and Structured Finance Consultant at The
Standard Bank of South Africa Limited in the Commercial Properties Division.
Senior Management
Harmony's Senior Management has grown significantly since its merger with
ARMgold in September, 2003. The members of Harmony's senior management, their principal
past affiliations, information on their business experiences and principal outside activities and
selected other information are set forth below:
Dr Vaughan Armstrong (50), BSc (Hons), PhD. Vaughan has served on the executive
committee, responsible for Harmony's worldwide exploration activities, since October 1999.
Vaughan is a geologist with 23 years' experience in all aspects of exploration, evaluation and the
development of mineral projects. He started his career with Rio Tinto South Africa and was
appointed exploration manager in 1985. In 1988 he formed a junior exploration company, which
was incorporated into West Rand Consolidated Mines four years later. He was the explorations
director of West Rand Consolidated Mines and Kalgold prior to their merger with Harmony.

Bob Atkinson (51), NHD (Metalliferous Mining). Bob is the Chief Operating Officer at
Harmony Gold Australia. He has more than 30 years' experience in the mining industry. He
joined Harmony as production manager in 1986 and served as Operations Manager on the
executive committee from June 2001 to May 2003.

Graham Briggs (49), BSc (Hons) (Geology). Graham has approximately 30 years' experience in
the mining industry. Graham joined Harmony as New Business Manager in 1995 and is
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currently the executive in charge of Organic Growth. Graham started his geological career as a
field assistant in 1972 and had exposure to various exploration projects. Before attending
university, Graham spent most of his time on gold exploration in the Free State. At Gengold he
spent time on various mines including Buffelsfontein, West Rand Consolidated, Grootvlei and
ended his career with Gengold as an Ore Reserve Manager at Beatrix. Graham has occupied a
varied career in Harmony including a 20 month period in Canada, but as a core focus area has
concentrated on matters related to ore reserve management.


John Sembie Danana (46), B. Journalism, B.A. (Hons), MBA. Sembie has served on the
executive committee, responsible for health and safety transformation since May 2002. Prior to
joining Harmony he served in various positions at LTA Construction, including General
Manager: Investments, General Manager: Fastfloor Systems, General Manager: New Business
Development and Commercial Manager for the N3 Toll Concession. He is the Chairman of
Pretoria Technikon Council and a Divisional Board Member of Petronet.

Lewies Fourie (55) NHD, Mine Managers Certificate, MDP. Lewies is a member of Harmony's
executive committee and is responsible for Business Engineering. Lewies joined Harmony in
October 2003 following the merger with ARMgold. Prior to joining Harmony he was an
Executive Director of ARMgold responsible for Business Engineering. Lewies has 34 years'
experience in the mining industry, with his career commencing at Anglo American's Gold and
Uranium Division. He was selected as a group study exchange student, rotary, to Hawaii and the
USA. Thereafter, he served as managing director of Fraser, Alexander Mining Services
(Proprietary) Limited and joined Shaft Sinkers in 1991 before joining ARMgold in 1998. His
expertise includes project management, backfill, high speed treble shift development, contract
management and marketing.
Yusuf Jardien (40), ICSA, PMD (UCT). Yusuf has served on the executive committee,
responsible for Business Process and Information Technology, since August 2002. He has more
than 20 years of information technology experience and has served as an executive at 3M South
Africa and Unibank, responsible for information technology and logistics.
Tracey Jonkheid (33), B.A. Communication (Hons) (cum laude), MBA. Tracey has served as
Harmony's internal strategist on a full-time basis since May 2002, in which capacity she advises
the executive committee on implementing and integrating initiatives for internal change. She
fulfilled this role as an external consultant on a part-time basis for 18 months prior to May 2002.
Her background is in the advertising industry where she has worked as a strategist at four of
South Africa's largest advertising agencies.

Philip Kotze (43), GDE, NHD (Metalliferous Mining). Philip currently serves on the executive
committee as Business Coach. Philip started his career with Anglovaal in 1981 as a learner
official. In 1985 he joined Anglogold and was involved in a number of projects. He progressed
to the level of mine manager and was instrumental in improving productivity and reducing costs
during these periods. He joined Kalgold in 1996, where he served as director and was
responsible for operations. In 1999, Philip joined Harmony, following Harmony's acquisition of
Kalgold.
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Mohamed Madhi (38), BSc (Electrical and Electronic Engineering), MSc (Engineering),MBA.
Mohamed has served as Harmony's corporate strategist since August 2001. He has been a
director and Operational Board member of the CSIR, head of Eskom's Capital Investment
Programme, head of South Africa's Presidential Year 2000 Task Team, Chief Executive of Cell
Point Systems and has served as an adviser to several large corporations and governments of
developing countries. Mohamed was formerly the African Commissioner on the Global
Information Infrastructure where he advised on telecommunications and information technology
policy. Aside from his executive leadership experience he has qualifications and expertise in
Strategic Decision Simulation, Complex Systems Theory, Economic Development Modeling and
Innovation Management.

Jackie Mathebula (34), B.Admin (Hons), MBA. Jackie joined Harmony in September 2002 as
an employee relations and industrial relations executive. Prior to joining Harmony he was a
general human resources manager for Gensec Bank, a human resources manager for the Gold
Fields Limited Group and occupied various positions within the then Iscor Group. He also
worked for the South African government in the Gazankulu Public Service Commission.

Andrew Matube (58), BA, LLB. Andrew joined Harmony in October 2003 following the merger
with ARMgold. Prior to joining Harmony he was Executive Director (Legal) of ARMgold.
Andrew is an admitted attorney and Human Resource Consultant. He has extensive experience
in the public and private sectors, specializing in corporate and commercial law.

Amanda Matthee (44) BCompt, BCom (Hons), CA (SA), AEP. Amanda joined Harmony in
October 2003 following the merger with ARMgold. She is a member of the Executive
Committee and is responsible for the supply chain and payroll.

Khetiwe McClain (39), BA (Fine Arts). Khetiwe joined Harmony in 2002 and is responsible for
social plans and beneficiation strategies required by the Mining Charter. Prior to joining
Harmony, Khetiwe served as a liaison for transformation of the mining industry and a manager
of the beneficiation project at the South African Ministry of Minerals and Energy. She has also
worked as a market research analyst in the trade and political sections of the South
African Embassy in Rome. Khetiwe obtained her BA, Fine Arts in Italy.
Peter McKenna (52), BSc (Hons), PrSciNat. Peter is currently responsible for Harmony's
international new business activities. Peter joined Harmony in 1999 from West Rand
Consolidated Mines Limited ("West Rand Cons"), where he was the new business director.
Peter worked in the JCI Group of companies for 25 years from 1973, initially in the fields of
exploration, mine and evaluation and for the last 10 years in corporate finance and new business
development. His roles included Chief Geologist Western Areas Gold Mine, Senior Manager
Mineral Economics and General Manager Business Development. He served on the boards of
various JCI group companies including Free State Development Corporation (Managing
Director) and Barnato Exploration Limited. Peter joined West Rand Cons in 1998.

Dawie Mostert (34), PDM, PCM, MDP, Diploma in Labor Relations (DPLR) (Advanced Labor
Law). Dawie joined Harmony in 1997 following the acquisition of Grootvlei, where he was the
human resources manager. He has approximately 16 years' experience in the mining industry
and is responsible for training and human resource development.
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Khosi Ndlovu (44), BA, Social Development, Diploma in Supply Chain Management. Khosi
joined Harmony in 2002 and is responsible for social development programs and corporate
affairs (government). Khosi's career commenced as Researcher in areas of Social Development
for the University of New York in 1989. After returning to South Africa she joined The National
Peace Secretariat as Communication Consultant, and later joined the Independent Electoral
Commission as National Head of Transport & Logistics. She has held various senior positions in
the areas of Marketing and Communication and was an Executive at Telkom in the Procurement
Services as a custodian of Black Economic Empowerment. Khosi has vast experience in
community development, government relations, and economic empowerment programs and she
is an advisory board member at Monash University and InterConnect System.

Pine Pienaar (39), BCom, BCompt (Hons), CA (SA). Pine joined Harmony in 1997 following
the acquisition of Grootvlei, where he was the financial director. Pine has approximately 14
years' experience in the financial and mining industries and is responsible for Harmony's South
African new business activities.
Fleur Plimmer (34), BA (Hons). Fleur joined Harmony in September 2002, and is responsible
for the business transformation portfolio. Prior to joining Harmony, Fleur was the Health and
Safety Coordinator for the NUM. At the NUM, Fleur was involved in drafting the Mine Health
and Safety Act. Following her service at the NUM, Fleur joined Ingwe Coal Corporation, where
she was the manager responsible for health and safety and, thereafter, corporate communication
programs. She moved into the field of executive search and was involved with the placement of
a number of senior black executives in a range of local and international businesses.

Peter Steenkamp (43), BSc (Eng), Mine Managers Certificate. Peter currently serves on the
executive committee as Business Coach. Peter joined Harmony in October 2003 following the
merger with ARMgold. Prior to joining Harmony, he was an Executive Director of ARMgold in
charge of Gold Operations. Peter has 21 years' experience in the mining industry. His career
commenced as trainee miner with the Chamber of Mines Training College and after graduating
he worked for Gold Fields Limited as a shift boss. Between 1989 and 1997, he was employed at
Vaal Reefs in various positions, including shift boss, mine overseer, technical assistant, section
manager and business unit manager. In 1998 he joined ARMgold as a business unit leader.

Frank Sullivan (47), MCom, BPL (Hons). Frank has approximately 22 years' experience in
human resources management in the gold mining industry. He joined Harmony in 1996 as
human resources manager and is in charge of HIV/AIDS and Health.
Boetie Swanepoel (43), BCompt (Hons), CA(SA). Boetie joined Harmony in 1995 as financial
manager from Beatrix Mines. Boetie has more than 20 years' financial services experience,
mostly in the mining industry. He was appointed to the executive committee in November 2000
and is responsible for the development of Harmony's shaft financial managers and the financial
control environment.
Abre van Vuuren (43) BCom, MDP, DPLR. Abre joined Harmony in 1997 from Grootvlei,
where he was human resources manager. He was appointed to the executive committee in
November 2000 and is responsible for human resource processes and systems and remuneration.
He has approximately 20 years' experience in the mining industry.
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BOARD PRACTICES
The Articles of Association of Harmony provide that the Board must consist of no
less than four and no more than twenty directors at any time. The Board currently consists of
nineteen directors.
The Articles of Association of Harmony 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 are re-elected at the annual general
meeting on which they retire. Members of senior management of Harmony who are also
directors retire as directors in terms of the Articles of Association, but their service as officers is
regulated by standard industry employment agreements.
According to the Articles of Association, the Board meets not less than quarterly.
Details of directors' service contracts are described under "--Compensation of
Directors and Senior Management" and "--Directors' Terms of Employment," below.
In order to ensure good corporate governance, the Board has formed an Executive
Committee, an Audit Committee, a Remuneration Committee and an Executive Health and
Safety Committee. The Audit and Remuneration Committees are comprised of a majority of
non-executive directors.
Harmony's Executive Committee comprises the executive directors and selected
senior officers of Harmony, each with his own area of responsibility. The Executive Committee
meets at least monthly to discuss and make decisions on the day-to-day operations of Harmony.
The composition of the Executive Committee (with areas of responsibility indicated) post the
ARMgold merger is as follows:
Bernard Swanepoel .......................................
Benefication and the Social Plan
Finance
Exploration
Chief Executive
Employee Relations
Legal
Frank Abbott ................................................. 
Vaughan Armstrong...................................... 
Bob Atkinson ................................................
Business Coaching (Australia)
Graham Briggs..............................................
Organic Growth
Sembie Danana .............................................
Safety Transformation
Ferdi Dippenaar ............................................
Marketing and Investor Relations
Lewies Fourie................................................
Business Engineering
Ted Grobicki .................................................
Australia
Mangisi Gule.................................................
External Liaison
Yusuf Jardien ................................................
Information Technology
Tracey Jonkheid ............................................
Internal Strategy
Philip Kotze ..................................................
Business Coaching (South Africa)
Mohamed Madhi...........................................
Corporate Strategy
Jackie Mathebula .......................................... 
 
Andrew Matube ............................................ 
Amanda Matthee...........................................
Supply Chain and Payroll
Khetiwe McClain .......................................... 
Peter McKenna..............................................
International New Business
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Dawie Mostert...............................................
Human Resources
Khosi Ndlovu................................................
Corporate Affairs - Government
Pine Pienaar ..................................................
New business (South Africa)
Fleur Plimmer ...............................................
Transformation Management
Dan Simelane................................................
Business Development
Peter Steenkamp............................................
Business Coaching
Frank Sullivan...............................................
HIV/AIDS and Health
Boetie Swanepoel..........................................
Operational Finance
Pieter Taljaard...............................................
Executive Director: Finance
Abre van Vuuren...........................................
Human resources processes
Andre Wilkens ..............................................
Chief Operating Officer
Following the ARMgold merger on September, 22, 2003, Harmony added the
following members to its executive committee, in order to better align its management
capabilities with current issues facing Harmony and the South African mining industry. These
new executive committee members include:
  • Mr. Lewies Fourie, who is in charge of Business Engineering at
Harmony's South African operations;
  • Mr. Mangisi Gule, who is responsible for external liaison on behalf of
Harmony;
  • Mr. Andrew Matube, who will attend to all legal related issues within
Harmony, South Africa;
  • Ms. Amanda Matthee who is the executive in charge of the supply chain
and payroll.
  • Mr. Mathebula, who is in charge of Harmony's employee relations;
  • Mr. Dan Simelane, who ensures compliance with recent legislation
relating to the Mining Industry;
  • Mr. Peter Steenkamp, who is in charge of business coaching at each of the
shafts at Harmony's business operations;
  • Mr. Pieter Taljaard, who is also the Executive Director of Finance and
who is in charge of Operational Finance; and
  • Mr. Andre Wilkens, who is the Chief Operating Officer and an Executive
Director.
The Audit Committee monitors Harmony's control systems. The Audit
Committee meets at least four times per year with Harmony's external and independent internal
auditors and Harmony's executive management, to review accounting, auditing and financial
reporting matters to ensure that an effective control environment is maintained, and to review
interim results, the audited preliminary announcement of the annual results and the annual
148
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financial statements prior to their approval by the Board. The committee also monitors proposed
changes in accounting policy, reviews the internal audit function and discusses the accounting
implications of major transactions. The members of the Audit Committee are the following
independent non-executive directors:
The members of the Audit Committee from July 1, 2002 to January 25, 2003
were:
Adam Fleming (chairman)*
Mike Pleming
John Smithies
The members of the committee as from January 26, 2003 to June 30, 2003 were:
Mike Pleming (Chairman)
Simo Lushaba
John Smithies

John Smithies resigned as director on September 22, 2003 and a new member will
be elected early in January, 2004.
The Remuneration Committee reviews the remuneration of directors and
members of senior management. The Remuneration Committee is responsible for approving
Harmony's remuneration policy and the terms and conditions of employment, including salaries
and bonuses, for Harmony's executive directors and officers. In addition, the Remuneration
Committee determines the remuneration policy pertaining to all employees. The Remuneration
Committee, consisting of two non-executive directors and one executive director, meets two to
three times per year. The members of the Remuneration Committee are the following
independent directors:
Adam Fleming (chairman),
Mike Pleming
John Smithies
Mr Adam Fleming and Mr John Smithies resigned as directors on September 22,
2003 and new members will be elected early in January, 2004.
The Health, Safety and Environmental Audit Committee reviews occupational
health, safety and environmental policies, practices and standards of Harmony and reports to the
Board on a quarterly basis. The committee monitors health, safety and environmental
performance and makes recommendations to the Board when it deems particular attention is
required. The members of the Health, Safety and Environmental Audit Committee are the
following independent directors:
The members from July 1, 2002 to January 24, 2003 were:
Mike Pleming (Chairman)
149
It was decided that Mr Adam Fleming, in his capacity as chairman of Harmony, was
effectively on all the committees of the Board and that he should not hold a formal seat on
any of the committees. Mr Adam Fleming resigned from the Audit Committee on January 25,
2003 and Simo Lushaba accepted membership of the committee.
background image
Adam Fleming
John Smithies

It was decided that Mr Adam Fleming, in his capacity as chairman of Harmony,
was effectively on all the committees of the Board and that he should not hold a formal seat on
any of the committees. Mr Adam Fleming resigned from the HSE Committee on January 25,
2003 and Ms Nolitha Fakude accepted membership of the committee.
The members from January 26, 2003 to June 30, 2003 were:
John Smithies (Chairman)
Mike Pleming
Nolitha Fakude

Mr John Smithies resigned as director on September 22, 2003 and a new member
will be elected early in January, 2004.
COMPENSATION OF DIRECTORS AND SENIOR MANAGEMENT
During fiscal 2003, the aggregate compensation paid or payable to the directors
and members of senior management of Harmony as a group was approximately Rand 23.2
million ($3.0 million) in base salary and Rand 22.3 million ($2.9 million) in profit sharing. The
compensation amount is higher than fiscal 2002 due to the number of newly appointed executive
managers who joined Harmony late last year. The new appointments were necessary to ensure
that Harmony's executive team is representative of the demographics in South Africa. Harmony
paid salary in fiscal 2003 to Mr. Swanepoel, Mr. Abbott, Mr. Dippenaar and Mr. Grobicki of
approximately Rand 1.8 million ($233,000), Rand 1.1 ($142,000), Rand 1.0 ($129,000) and
Rand 1.7 ($220,000), respectively. Harmony paid bonuses in fiscal 2003 to Mr. Swanepoel, 
Mr. Abbott, Mr. Dippenaar and Mr. Grobicki, of approximately Rand 3.0 million ($0.3 million),
Rand 2.0 million ($0.2 million), Rand 2.0 million ($0.2 million) and Rand 2.0 million ($0.2
million), respectively. These bonusses represent the second yearly installment of the bonusses awarded to each of these directors during 2003. The aggregate compensation paid or payable during fiscal 2003 to the non-executive directors of Harmony as a group was approximately Rand 0.55 million ($71,000) in directors' fees.
Directors Terms of Employment
No Harmony director has a service contract with Harmony or any of its
subsidiaries with a notice or contract period of one year or more or with provisions for pre-
determining compensation on termination of an amount which equals or exceeds one year's
salary and benefits in kind.
The terms of employment by Harmony of the executive directors continue until
terminated by reaching the mandatory retirement age of 63 or on service of 30 days' notice by
either the employee or Harmony. Each of our executive directors participates in the Harmony
share option scheme and a discretionary executive profit share scheme, the latter provided that
certain profit targets, set by the Remuneration Committee, are achieved. They have all waived
their rights to directors' fees.
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The executive directors also benefit from pension contributions, life insurance and
medical aid, the value of which is included in the salary details listed above. The total amount
currently set aside or accrued by Harmony and its subsidiaries for the payment of these pension,
life insurance, medical aid and retirement benefits is approximately Rand 546,000 ($59,801).
The non-executive directors are entitled to fees as agreed at Harmony's annual general meeting
from time to time, reimbursement of out-of-pocket expenses incurred on Harmony's behalf and
remuneration for other services, such as serving on committees. Currently, each non-executive
director is entitled to Rand 25,000 per quarter.
The terms of employment of the directors are not set out in any written
agreements.
Share options exercised by those executive directors who were with Harmony
during fiscal 2003 are detailed in the table below:


Name
Number of
options
exercised
Average
option exercise
price (Rand)
Bernard Swanepoel ............................................ 
121,150 
86,600 
66,600 
181,600 
101.46
100,77
94,09
102,72
Frank Abbott ...................................................... 
Ferdi Dippenaar.................................................. 
Ted Grobicki ...................................................... 

During fiscal 2003, Harmony's directors and senior management were granted
390,000 share options.
1
Share options outstanding at June 30, 2003 and held by directors and
senior management were as follows:
Name
Options to
purchase
ordinary shares
Average exercise
price per share
(Rand)

Expiration dates
B. Swanepoel ..........................................
141,850
73,400
93,400
73,400
72,000
53,400
51,100
73,400
48.27
Between 31/01/2010 and 20/11/2011
F. Abbott................................................. 
49.60
20/11/2011
F. Dippenaar ........................................... 
46.56
Between 31/01/2010 and 20/11/2011
T.Grobicki...............................................
107,400
44.63
49.60
49.60
49.60
49.60
49.60
Between 31/01/2010 and 20/11/2011
B. Atkinson............................................. 
20/11/2011
V. Armstrong ........................................
20/11/2011
P. McKenna ............................................ 
20/11/2011
G. Briggs.................................................
62,200 
20/11/2011
P. Pienaar................................................
82,200
46.15
Between 31/01/2010 and 20/11/2011
P. Kotze ..................................................
120,100
47.23
Between 31/01/2010 and 20/11/2011
F. Sullivan...............................................
73,400 
20/11/2003
M. Swanepoel ......................................... 
40.83
Between 02/05/2011 and 20/11/2011
A. van Vuuren......................................... 
37.39
A. Mokhobo............................................
--
--
--
J. Smithies...............................................
--
--
--
1
The Company is in the process of authorizing the grant and allocation of additional share options to the
new directors and executive management in light of its merger with ARMgold which was completed
September 22, 2003.
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Name
Options to
purchase
ordinary shares
Average exercise
price per share
(Rand)

Expiration dates
N. Fakude................................................
--
--
--
S. Lushaba ..............................................                --
--
--
S. Danana................................................
45,000                                     91.60
27/03/2013
Y. Jardien................................................
45,000                                     91.60
27/03/2013
T. Jonkheid .............................................                 45,000                                     91.60
27/03/2013
M. Madhi ................................................                  90,000
91.60
27/03/2013
J. Mathebula............................................                 45,000
91.60
27/03/2013
K. McClain .............................................
30,000                                     91.60
27/03/2013
D. Mostert...............................................
24,000                                      49.60                                  20/11/2011
K. Ndlovu ...............................................                 45,000                                      91.60
27/03/2013
F. Plimmer ..............................................
45,000                                      91.60
27/03/2013
TOTAL
1,485,100
44.95
SHARE OWNERSHIP
The following sets forth, as at June 30, 2003 and at December 4, 2003, the total
amount of ordinary shares and warrants directly or indirectly owned by the directors and senior
management of Harmony. The directors and senior management of Harmony do not own any
preference shares.
Holder                                                                                 Ordinary
Number
Ordinary
Number
Shares as at
June 30, 2003
Percentage (%)
Shares as at
December 4, 2003
Percentage (%)
Directors
Non-executive
A. Fleming .....................................................
4,685,747
2.5%
4,685,747
1.8%
P. Motsepe .....................................................
35,002,396 1
--
13.6%
 
M. Bakane-Tuoane.........................................
--
--
--
--
N. Fakude.......................................................
--
--
--
--
M. King..........................................................
--
--
33.333
*
S. Lushaba......................................................
--
--
--
--
--
--
--
--
A. Mokhobo...................................................
M. Pleming ....................................................
--
--
--
--
Lord Renwick of Clifton................................
5,105
*
5,105
*
C. Savage .......................................................
--
--
--
--
Dr. S. Sibisi....................................................
--
--
--
--
Dr. R. Simelane..............................................
--
--
--
--
M. Sisulu........................................................
--
--
--
--
J. Smithies......................................................
--
--
--
--
Executive
B. Swanepoel .................................................
--
--
--
--
F. Abbott........................................................
--
--
--
--
F. Dippenaar ..................................................
--
1 Shares benefically owned by Mr Motsepe are owned through African Rainbow Minerals and Exploration Investment (Pty) Limited
--
--
--
.
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T. Grobicki.....................................................
Holder              Ordinary
Number
Ordinary
Number
Shares as at
June 30, 2003
Percentage (%)
Shares as at
December 4, 2003
Percentage (%)
29,388
*
30,000
*
M. Gule..........................................................
--
--
--
--
D. Simelane....................................................
--
--
--
--
P. Taljaard......................................................
--
--
590,701
--
A. Wilkens .....................................................
--
--
984,301
--
Total Directors (19 persons) .................................
4,720,240
2.5
41,331,583
16.02%

Senior Management
N. V. Armstrong ............................................
--
--
1,000
--
B. Atkinson ....................................................
--
--
--
--
G. Briggs........................................................
--
--
--
--
S. Danana.......................................................
--
--
--
--
L. Fourie ........................................................
Y. Jardien.......................................................
--
--
--
--
T. Jonkheid ....................................................
--
--
--
--
P. Kotze .........................................................
--
--
--
--
M. Madhi .......................................................
J. Mathebula...................................................
--
--
--
--
A. Matthe .......................................................
--
--
--
--
A. Matube ......................................................
--
--
--
--
K. McClain ....................................................
--
--
--
--
P. McKenna ...................................................
--
100
*
D. Mostert ......................................................
--
--
--
--
K. Ndlovu ......................................................
--
--
--
--
P. Pienaar .......................................................
--
--
--
--
F. Plimmer ......