The December 2012 quarter results for Kusasalethu indicate a cash operating loss of R150 million* and a negative
cash flow of R252 million*. This dramatic negative turn in the December 2012 quarter is due to the mine achieving
only 22%* of its planned gold production in terms of its business plan. This loss in production is primarily the result of
the unlawful events mentioned above. Should the current poor performance continue, then the situation at
Kusasalethu is dire for the rest of the 2013 financial year and into the future.
Management is of the view that the status quo concerning production and labour strife will remain, as it has exhausted
all possible avenues to achieve normal production and cannot find a solution to the current state of lawlessness
prevailing. The current situation causes considerable operating risk especially in light of significant future financial
losses and a further deterioration of the health and safety situation at the operations.
The section 189 process addresses a genuine operational problem which is preventing Kusasalethu from managing
its business effectively and is aimed at stemming further financial losses and to a deterioration of the health and
safety environment at its operations. The reason for this process is thus ultimately to ensure the future viability of the
enterprise.
Several conditions to re-open the mine have been sent to relevant stakeholders and all responses will be considered
and reviewed when received. The discussion/consultation with the various stakeholders will take 60 working days
from the day that the section 189 notice has been served; Harmony will pursue alternatives which may emanate from
this process.
The aim of the discussion/consultation will be to seek a long term solution by which normal production levels can
again be achieved and which would normalise the security, safety and health climate at the mine. Should the
aforesaid goal not be achieved by means of a consultation and discussion process then the company will have no
alternative but to continue and conclude the section 189 process which might lead to the indefinite closure of
Kusasalethu and possible retrenchments. Stakeholders have been advised that such possible closure of the mine
could affect approximately 5200 employees.
Graham Briggs, chief executive officer of Harmony commented: “We wish to engage with all stakeholders in order to
reach an agreement that will bind all employees of the mine and that will provide management with sufficient
assurances that there will be a return to normal, safe operations and production at the Kusasalethu operations. We
wish to seek a sustainable and lasting solution that would ensure that the security, safety and health situation at the
mine is normalised and compliant with all applicable laws and the policies and procedure of the mine.
We also wish to gain assurances from all stakeholders that the mine will be operated in a manner which would allow it
to become viable and reach its projected profitability which would in turn ensure the future viability of the mine. It is
important for investors to note that as a result of our decision for the time being to keep Kusasalethu non-operational
after the Christmas break mainly for security and safety reasons; we have excluded its production for the balance of
the financial year and anticipate that Harmony as a group will only produce 1.2 million ounces, rather than the 1.3
million ounces guided before.”
Briggs added, "Kusasalethu has achieved substantial successes in terms of production growth, strong cash flows and
excellent safety results, before the December 2012 quarter. We do trust that we will be able to rescue this mine in the
next couple of months, provided it can be run safely and return to being cash flow positive.”
*Figures used are still a forecast. Final figures will be provided on 4 February 2013.
The Company will have a formal presentation at the Sandton Hilton Hotel, Ballroom 3 at 10:00 today, Monday, the 7
th
of January 2013, to address any questions that investors or the media may have regarding this press release. The
event will simultaneously be transmitted via webcast (link: http://www.corpcam.com/Harmony07012013) and via
conference call. A presentation in support of the press release and the conference call, have been posted to the
Company’s website (
www.harmony.co.za
). An international call will be held at 15:00 today to allow our international
investors an opportunity to discuss this matter.