As filed with the Securities and Exchange Commission on October 29, 2008

 

 

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

o		REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934

þ		ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended June 30, 2008

o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

o		SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from            to

HARMONY GOLD MINING COMPANY LIMITED

Khanya Maluleke, Company Secretary

tel: +27 11 411 2019, khanya.maluleke@harmony.co.za, fax: +27 11 411 2070,

Randfontein Office Park, CNR Ward Avenue and Main Reef Road, Randfontein, South Africa, 1760
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Securities registered or to be registered pursuant to Section 12(b) 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)

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)

*

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:

403,253,756 ordinary shares, with nominal value of Rand 50 cents per share

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.

YES þ NO o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.

YES o NO þ

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 þ NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer þ		Accelerated filer o		Non-accelerated filer o

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP o		International financial Report Standards as issued		Other o
		by the International Accounting Standards Board þ

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 o Item 18 þ

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES o NO þ

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

YES þ NO o

 

 

TABLE OF CONTENTS

Part I		5
Item 1. Identity of Directors, Senior Management and Advisers		5
Item 2. Offer Statistics and Expected Timetable		5
Item 3. Key Information		5
Item 4. Information on the Company		21
Item 4A. Unresolved Staff Comments		89
Item 5. Operating and Financial Review and Prospects		90
Item 6. Directors, Senior Management and Employees		114
Item 7. Major Shareholders and Related Party Transactions		130
Item 8. Financial Information		132
Item 9. The Offer and Listing		134
Item 10. Additional Information		137
Item 11. Quantitative and Qualitative Disclosures About Market Risk		149
Item 12. Description of Securities Other than Equity Securities		151
Part II		156
Item 13. Defaults, Dividend Arrearages and Delinquencies		156
Item 14. Material Modifications to the Rights of Security and Use of Proceeds		157
Item 15. Disclosure Controls and Procedures		158
Item 16. [Reserved]
Item 16A. Audit Committee Financial Expert		161
Item 16B. Code of Ethics		161
Item 16C. Principal Accountant Fees and Services		162
Item 16D. Exemptions from Listing Standards for Audit Committees		163
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers		164
Part III		165
Item 17. Financial Statements		165
Item 18. Financial Statements		166
Item 19. Exhibits		167
SIGNATURE		170
INDEX TO FINANCIAL STATEMENTS		F-1
Exhibit 4.22
Exhibit 4.23
Exhibit 4.24
Exhibit 4.25
Exhibit 4.26
EX-4.27
Exhibit 12.1
Exhibit 12.2
Exhibit 13.1
Exhibit 13.2

USE OF TERMS AND CONVENTIONS IN THIS ANNUAL REPORT

     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$” refers to Australian dollars, “Kina” or “K” refers to Papua New Guinean Kina and references to “$”, “U.S.$” and “U.S. dollars” are to United States dollars.

     This annual report contains information concerning our gold reserves. While this annual report has been prepared in accordance with the regulations 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 are estimated based on a number of assumptions, including assumptions as to mining and recovery factors, future cash costs or production and the price of gold and may yield less gold under actual production conditions than currently estimated.”

     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 of Mining Terms included at the end of this annual report. This glossary may assist you in understanding these terms.

PRESENTATION OF FINANCIAL INFORMATION

     We are a South African company and the majority of our operations are located in our home country. Accordingly, our books of account are maintained in South African Rand and our annual and interim financial statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Prior to fiscal year ended June 30, 2008, our annual financial statements (translated into U.S. dollars) were prepared and filed with the U.S. Securities and Exchange Commission (“SEC”) in accordance with generally accepted accounting principles in the United States (“U.S. GAAP”). On December 21, 2007, the SEC adopted rules allowing foreign private issuers that file Annual Reports on Form 20-F to file financial statements with the SEC in accordance with IFRS as issued by the IASB without reconciliation to U.S. GAAP. As per these new rules, we changed our basis of presentation and included in this annual report our consolidated financial statements prepared in accordance with IFRS as issued by the IASB, translated into U.S. dollars. All financial information, except as otherwise noted, are stated in accordance with IFRS as issued by the IASB.

     In this annual report, we also present “total cash costs” and “total cash costs per ounce”, which have been determined using industry standards promulgated by the Gold Institute and are non-GAAP measures. The Gold Institute was a non-profit international industry association of miners, refiners, bullion suppliers and manufacturers of gold products that ceased operation in 2002, which developed a uniform format for reporting production costs on a per ounce basis. The Gold Institute has now been incorporated into the National Mining Association. The guidance was first adopted in 1996 and subsequently revised in November 1999. An investor should not consider these items in isolation or as alternatives to production costs, cost of sales or any other measure of financial performance presented in accordance with IFRS as issued by the IASB. While the Gold Institute has provided definitions for the calculation of total cash costs, the calculation of total cash costs and total cash costs per ounce may vary significantly among gold mining companies and, by themselves, do not necessarily provide a basis for comparison with other gold mining companies. For further information, see Item 5. “Operating and Financial Review and Prospects — Costs — Reconciliation of Non-GAAP Measures”.

     We have included the U.S. dollar equivalent amounts of certain information and transactions in Rand, Kina and A$. Unless otherwise stated, we have translated (i) balance sheet items at the noon buying rate of the Federal Reserve Bank of New York on the last business day of the period (R7.80 per U.S.$1.00 as at June 30, 2008 and R7.04 per U.S.$1.00 as at June 30, 2007), (ii) acquisitions, disposals and specific items included within equity at the rate prevailing at the date the transaction was entered into and (iii) income statement items at the average rate for the year (R7.26 per U.S.$1.00 for fiscal 2008, R7.20 per U.S.$1.00 for fiscal 2007, and R6.36 per U.S.$1.00 for fiscal 2006). Capital expenditures for fiscal 2009 have been translated at the rates used for balance sheet items. By including these U.S. dollar equivalents in this annual report, we are not representing that the Rand, Kina and A$ amounts actually represent the U.S. dollar amounts, as the case may be, or that these amounts could be converted at the rates indicated.

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 our 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 (the “Exchange Act”), and Section 27A of the Securities Act of 1933, as amended.

     These forward-looking statements, including, among others, those relating to our future business prospects, revenues and income, wherever they may occur in this annual report and the exhibits to this annual report, are necessarily estimates reflecting the best judgment of our senior management 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 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;
	•		fluctuations in the market price of gold;
	•		the occurrence of hazards associated with underground and surface gold mining;
	•		the occurrence of labor disruptions;
	•		availability, terms and deployment of capital;
	•		changes in government regulation, particularly mining rights and environmental regulation;
	•		fluctuations in exchange rates;
	•		currency devaluations/appreciations and other macroeconomic monetary policies; and
	•		socio-economic instability in South Africa and other countries in which we operate.

     We undertake 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.

PART I

Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

     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 and with Item 5. “Operating and Financial Review and Prospects”, both included elsewhere in this annual report. Historical results are not necessarily indicative of results to be expected for any future period.

SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

     We are a South African company and the majority of our operations are located in our home country. Accordingly, our books of account are maintained in South African Rand and our annual and interim financial statements are prepared in accordance with IFRS as issued by the IASB. Prior to fiscal year ended June 30, 2008, our annual financial statements (translated into U.S. dollars) were prepared and filed with the SEC in accordance with U.S. GAAP. On December 21, 2007, the SEC, adopted rules allowing foreign private issuers that file Annual Reports on Form 20-F to file financial statements with the SEC in accordance with IFRS as issued by the IASB without reconciliation to U.S. GAAP. As per these new rules, we changed our basis of presentation and have included in this annual report our consolidated financial statements prepared in accordance with IFRS as issued by the IASB, translated into U.S. dollars.

     The selected historical consolidated financial data for the last five fiscal years are, unless otherwise noted, stated in accordance with IFRS as issued by the IASB, and has been extracted from the more detailed information and financial statements prepared in accordance with IFRS as issued by the IASB, including our audited consolidated financial statements as of June 30, 2008 and 2007 and for each of the years in the three years ended June 30, 2008 and the related notes, which appear elsewhere in this annual report. The historical consolidated financial data at June 30, 2006, 2005 and 2004, and for each of the years in the two years ended June 30, 2005, has been extracted from our audited consolidated financial statements not included in this annual report as adjusted for discontinued operations and the accounting changes described below.

     During fiscal 2008, we early adopted IAS 23 (Revised) — Borrowing Costs. In accordance with the Revised Standard’s transitional provisions, we designated July 1, 2000 (the earliest commencement date of current qualifying projects) as the effective date and applied the requirements of the Revised Standard to all qualifying projects for which the commencement date of capitalization was on or after that date.

     During fiscal 2008, we classified the assets and liabilities of the Cooke operation as held for sale and also classified the results of this operation as discontinued operations for all periods presented below in the selected historical financial data. Discontinued operations also include the results of the Orkney and Australian operations that were classified as held for sale and discontinued operations during fiscal 2007. These reclassifications were done in terms of IFRS 5 — Non-Current Assets held for sale and Discontinued Operations. See note 14 of the consolidated financial statements and Item 4. “Information of the Company — Business — International Operations”, “Information of the Company — Business — Orkney Operations” and Item 4. “Information of the Company — Business — Cooke Operations”.

		Fiscal year ended June 30,
		2008				2007				2006				2005				2004
						($ in millions, except per share amounts)
Income Statement Data
Revenue			1,269				1,116				937				953				955
Operating profit/(loss)			73				154				(104	)			(322	)			(73	)
Loss from associates			(11	)			(3	)			(17	)			—				—
(Loss)/profit from continuing operations before taxation			(39	)			156				(91	)			(517	)			(3	)
Taxation			(65	)			(39	)			(22	)			87				1
(Loss)/profit from continuing operations			(104	)			117				(113	)			(430	)			(2	)
Profit/(loss) from discontinued operations			74				(66	)			22				(70	)			(35	)
Net (loss)/profit			(30	)			51				(91	)			(500	)			(37	)

		Fiscal year ended June 30,
		2008				2007				2006				2005				2004
						($ in millions, except per share amounts)
Basic (loss)/earnings per share from continuing operations ($)			(0.26	)			0.29				(0.29	)			(1.19	)			(0.01	)
Diluted (loss)/earnings per share from continuing operations ($)			(0.26	)			0.29				(0.29	)			(1.19	)			(0.01	)
Basic (loss)/earnings per share ($)			(0.08	)			0.12				(0.23	)			(1.38	)			(0.15	)
Diluted (loss)/earnings per share ($)			(0.08	)			0.12				(0.23	)			(1.38	)			(0.15	)
Weighted average number of shares used in the computation of basic (loss)/earnings per share			400,750,167				397,910,797				393,727,012				361,816,512				253,558,000
Weighted average number of shares used in the computation of diluted (loss)/earnings per share			402,894,248				402,382,011				393,727,012				361,817,512				254,888,334
Dividends per share			—				—				—				0.05				0.10
Other Financial Data
Cash cost per ounce of gold from continuing operations ($/oz) (1)			591				479				440				383				339
Total cash cost per ounce of gold ($/oz) (1)			589				486				436				379				333

		June 30,
		2008				2007				2006				2005				2004
		($ in millions)
Balance Sheet Data
Assets
Property, plant and equipment			3,531				3,484				3,263				3,385				3,731
Non-current assets classified as held for sale			197				182				—				—				—
Other assets			982				1,494				1,432				1,433				1,256
Total assets			4,710				5,160				4,695				4,818				4,987
Equity and liabilities
Total equity			3,172				3,366				3,249				3,489				3,464
Borrowings (current and non-current)			525				653				500				563				461
Other liabilities			1,013				1,141				946				766				1,062
Total equity and liabilities			4,710				5,160				4,695				4,818				4,987

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 (R7.80 per U.S.$1.00 as at June 30, 2008), except for acquisitions, disposals and specific items included within equity that are converted at the exchange rate prevailing on the date the transaction was entered into, and income statement item amounts that are translated from Rand to U.S. dollars at the average exchange rate for the period (R7.26 per U.S.$1.00 for fiscal 2008).

     As of October 21, 2008, the noon buying rate of the Federal Reserve Bank of New York per U.S.$1.00 was R10.67.

     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 U.S.$1.00.

Fiscal Year Ended
June 30,		Average(1)				Period End
2004			6.89				6.23
2005			6.18				6.67
2006			6.36				7.17
2007			7.20				7.04
2008			7.26				7.80

Month of		High				Low
May 2008			7.76				7.47
June 2008			8.12				7.70
July 2008			7.92				7.31
August 2008			7.90				7.24
September 2008			8.28				7.77
October 2008 (through October 21, 2008)			10.67				8.27

     Fluctuations in the exchange rate between Rand and the U.S. dollar will affect the dollar equivalent of the price of ordinary shares on the Johannesburg Stock Exchange, which may affect the market price of the ADSs on the New York Stock Exchange. These fluctuations will also affect the dollar amounts received by owners of ADSs on the conversion of any dividends paid in Rand on ordinary shares.

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, you should also carefully consider the following factors related to our ordinary shares and ADSs. There may be additional risks that we do not currently know of or that we currently deem immaterial based on information currently available to us. Any of these risks could have a materially adverse effect on our business, financial condition or results of operations, leading to a decline in the trading price of our ordinary shares or our ADSs. The risks described below may, in retrospect, turn out to be incomplete and therefore may not be the only risks to which we are exposed. Additional risks and uncertainties not presently known to us or that we now believe are immaterial, could also adversely affect our businesses, results of operations or financial condition. The order of presentation of the risk factors below does not indicate the likelihood of their occurrence or the magnitude or the significance of the individual risks. The risks described below could occur individually or cumulatively and intensify in case of a cumulative occurrence.

Risks Relating to Our Business and the Gold Mining Industry

The profitability of our operations, and the cash flows generated by those operations, are affected by changes in the Rand price of gold, such that a fall in the price of gold below our cash cost of production for any sustained period may lead us to experience losses and to curtail or suspend certain operations.

     Substantially all of our 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 we have no control, including:

	•		the demand for gold for industrial uses and for use in jewelry;
	•		international or regional political and economic trends;
	•		the strength or weakness of the U.S. dollar (the currency in which gold prices generally are quoted) and of other currencies;
	•		financial market expectations regarding the rate of inflation;
	•		interest rates;
	•		speculative activities;
	•		actual or expected purchases and sales of gold bullion held by central banks or other large gold bullion holders or dealers;
	•		forward sales by other gold producers; and
	•		the production and cost levels for gold in major gold-producing nations, such as South Africa, China, the United States and Australia.

     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 retained 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 calendar years:

						Price per ounce
		High				Low				Average
Calendar Year		($)				($)				($)
1998			313				273				294
1999			326				253				279
2000			313				264				282
2001			293				256				271
2002			332				278				309
2003			412				322				361
2004			427				343				389
2005			476				411				434
2006			725				525				604
2007			841				608				695
2008 (through October 21, 2008)			1,011				741				775

     On October 21, 2008, the afternoon fixing price of gold on the London Bullion Market was U.S.$772.00 per ounce.

     While the aggregate effect of these factors is impossible for us to predict, if gold prices should fall below our cash cost of production and remain at such levels for any sustained period, we may experience losses and may be forced to curtail or suspend some or all of our operations. In addition, we would also have to assess the economic impact of low gold prices on our ability to recover any losses we may incur during that period and on our ability to maintain adequate reserves. Our cash cost per ounce of gold sold from continuing operations was U.S.$591 in fiscal 2008, U.S.$479 in fiscal 2007 and U.S.$440 in fiscal 2006.

As the majority of our production costs are incurred in Rand and other non-U.S. currencies, and gold is sold in U.S. dollars, our financial condition could be materially harmed by an appreciation in the value of the Rand and other non-U.S. currencies against the U.S. dollar.

     Gold is sold throughout the world in U.S. dollars, but most of our operating costs are incurred in Rand and other non-U.S. currencies. As a result, any significant and sustained appreciation of the South African Rand or other non-U.S. currencies against the dollar will serve materially to reduce our revenues and overall net income.

Estimations of our gold reserves are based on a number of assumptions, including assumptions as to mining and recovery factors, future cash costs of production and the price of gold and may yield less gold under actual production conditions than currently estimated.

     The ore reserve estimates contained in this annual report are estimates of the mill delivered quantity and grade of gold in our deposits and stockpiles. They represent the amount of gold which we believe can be mined, processed and sold at prices sufficient to recover our estimated future cash costs of production, remaining investment and anticipated additional capital expenditures. Our ore reserves are estimated based upon a number of factors, which have been stated in accordance with SEC Industry Guide 7. Our ore reserve estimates are calculated based on estimates of:

	•		future cash costs (which in some cases are assumed to decrease significantly);
	•		future gold prices; and
	•		future currency exchange rates.

     These factors, which are beyond our control, significantly impact these ore reserve estimates. As a result, the reserve estimates contained in this annual report should not be interpreted as assurances of the economic life of our gold and other precious metal deposits or the future profitability of operations.

     Since these ore reserves are estimates based on assumptions related to the factors detailed above, should there be changes to these, we may in the future need to revise these estimates. In particular, if our cash operating and production costs increase or do not decrease as assumed (whether in dollar, Rand, or other non-U.S. currencies terms, or in relative terms due to appreciation of the Rand and other non-U.S. currencies against the U.S. dollar) or the gold price decreases, the recovery of a portion of our ore reserves may become uneconomical. This will, in turn, will lead us to reduce our estimated reserves.

In order to maintain gold production beyond the expected lives of our existing mines or to increase production materially above projected levels, we will need to access additional reserves through exploration or discovery.

     Our operations have limited proven and probable reserves and exploration and discovery is necessary to maintain current gold production levels at these operations. Exploration for gold and other precious metals is speculative in nature, is frequently unsuccessful and involves many risks, including those 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.

     Our exploration efforts might not result in the discovery of mineralization, and any mineralization discovered might not result in an increase in our proven and probable reserves. To access additional reserves, we will need to successfully complete development projects, including extensions to existing mines and, possibly, that of new mines. Development projects would also be necessary to access any new mineralization discovered through our exploration activities around the world. We typically use 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:

	•		future gold and other metal prices;
	•		anticipated tonnage, grades and metallurgical characteristics of ore to be mined and processed;
	•		anticipated recovery rates of gold and other metals from the ore, and
	•		anticipated total costs of the project, including capital expenditure and cash costs.

Actual cash costs of production, production and economic returns may differ significantly from those anticipated by our feasibility studies for new development projects.

     It can take a number of years from the initial feasibility study until development is completed and, 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 governmental permits;
	•		the timing and cost of constructing mining and processing facilities, which can be considerable;
	•		the availability and cost of skilled labor, power, water and other materials;
	•		the accessibility of transportation and other infrastructure, particularly in remote locations;
	•		the availability and cost of smelting and refining arrangements; and
	•		the availability of funds to finance construction and development activities.

     We currently maintain a range of focused exploration programs, concentrating on areas not too distant from our operational mines, as well as a number of prospective known gold mineralized regions around the world. During fiscal years 2008 and 2007, the bulk of exploration expenditure was allocated to activities in South Africa, Papua New Guinea (“PNG”) and Australia. However, there is no assurance that any future development projects will extend the life of our existing mining operations or result in any new commercial mining operations.

The costs associated with the pumping of water inflows from closed mines adjacent to our operations could adversely affect our results of operations.

     Certain of our mining operations are located adjacent to the mining operations of other mining companies. A mine closure may have an adverse impact on the continued operations at an adjacent mine if appropriate preventative steps are not taken. In particular, this impact can include the ingress of underground water where pumping operations at the closed mine are suspended. Such ingress could result in damage to property, operational disruptions and additional pumping costs, which would adversely affect any one of our adjacent mining operations.

The supply of electricity and increases in the cost of power may adversely affect our results of operations and our financial condition.

     Each of our mining operations is dependent on a sufficient supply of electricity. The electricity supply was interrupted by the South African governmental entity, ESKOM, during fiscal 2008 thereby halting production at certain of our mines. This led to management restructuring operating processes to control and reduce our consumption of electricity at all our operations. Nevertheless, an insufficient supply of electricity may adversely affect our results of operations and financial condition.

     As a result of ESKOM’s planned capital expansion program to deal with the current power constraints, an increase in rates charged to consumers costs has been approved by the National Energy Regulator South Africa (NERSA). More increases are anticipated in the future, which will also be driven by increases in input costs, primarily coal. These increases will have a negative impact on our results of operations going forward.

As we currently do not enter into forward sales, commodity, derivatives or hedging arrangements with respect to our future gold production, we are exposed to the impact of any significant decrease in the gold price.

     As a general rule, we sell our gold at the prevailing market price. Currently, we generally do not enter into forward sales, commodity, derivative or hedging arrangements to establish a price in advance for the sale of future gold production, although we may do so in the future. As a result, we may realize the benefit of any short-term increase in the gold price, but are not protected against decreases in the gold price, and if the gold price decreases significantly, our revenues may be materially adversely affected.

We may experience problems in identifying, financing and managing new acquisitions and integrating them with our existing operations.

     Acquiring new gold mining operations involves a number of risks including:

	•		our ability to identify appropriate assets for acquisition and/or to negotiate acquisitions on favorable terms;
	•		obtaining the financing necessary to complete future acquisitions;
	•		difficulties in assimilating the operations of the acquired business;
	•		difficulties in maintaining our financial and strategic focus while integrating the acquired business;
	•		problems in implementing uniform standards, controls, procedures and policies;
	•		increasing pressures on existing management to oversee a rapidly expanding company; and
	•		to the extent we acquire mining operations outside South Africa or Australasia, encountering difficulties relating to operating in countries in which we have not previously operated.

     Our ability to make successful acquisitions and any difficulties or time delays in achieving successful integration of any of such acquisitions could have a material adverse effect on our business, operating results, financial condition and share price.

Certain factors may affect our ability to support the carrying value of our property, plant and equipment, goodwill and other assets on our balance sheet.

     We review and test the carrying value of our assets on an annual basis when events or changes in circumstances suggest that the carrying amount may not be recoverable.

     If there are indications that impairment may have occurred, we prepare estimates of expected future cash flows for each group of assets. These estimates of future cash flows are prepared at the lowest level for which identifiable cash flows are identified as being independent of the cash flows of other mining assets and liabilities. Expected future cash flows are inherently uncertain, and could materially change over time. Such cash flows are significantly affected by reserve and production estimates, together with economic factors such as spot and forward gold prices, discount rates, currency exchange rates, estimates of costs to produce reserves and future capital expenditures.

     As of June 30, 2008, we have substantial amounts of property, plant and equipment, goodwill and other assets on our consolidated balance sheets. We have recorded impairment charges relating to these assets and, if any one or a combination of the uncertainties described above occur, management may be required to recognize further impairment charges, which could adversely affect our financial results and condition.

Given the nature of mining and the type of gold mines we operate, we face a material risk of liability, delays and increased cash costs of production 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;
	•		pillar mining
	•		accidents; and
	•		other conditions resulting from drilling, blasting and the removal and processing of 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-pits 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;
	•		pillar mining; and
	•		production disruptions caused by weather.

     We are at risk of experiencing any or all of these environmental or other industrial hazards. The occurrence of any of these hazards could delay production, increase cash costs and result in our financial liability.

The nature of our mining operations presents safety risks.

     The environmental and industrial risks identified above also present safety risks for our operations and our employees and can lead to the suspension and potential closure of operations for indeterminate periods. For example, in October 2007, an incident occurred at the Elandsrand operation involving a compressed pipe column which broke off below the shaft surface bank and fell to the bottom of the men-and-material shaft, causing extensive damage to the shaft steel work and electrical cables. The incident resulted in 3,000 workers being underground for more than 30 hours. Mining operations were temporarily suspended for 42 days to allow for repairs to be undertaken at the shaft. These and other safety risks, even in situations where no injuries occur, can have a material adverse effect on our operations and production.

Our insurance coverage may prove inadequate to satisfy future claims against us.

     We have third-party liability coverage for most potential liabilities, including environmental liabilities. While we believe that our current insurance coverage for the hazards described above is adequate and consistent with industry practice, we may be subject to liability for pollution (excluding sudden and accidental pollution) or other hazards against which we have not insured or cannot insure, including those in respect of past mining

activities. Further, we maintain and intend 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, our insurance coverage may not cover the extent of claims against us for environmental or industrial accidents or pollution.

Our operations may be negatively impacted by inflation.

     Our operations have been materially affected by inflation in recent years. At June 30, 2008, inflation in South Africa was 11.6%, a high level in recent years and may rise further. In addition, working costs and wages especially, have increased considerably over the past three years resulting in significant cost pressures for the mining industry. Our profits and financial condition could also be affected adversely in the absence of a concurrent devaluation of the Rand and an increase in the price of gold.

The socio-economic framework in the regions in which we operate may have an adverse effect on our operations and profits.

     We have operations in South Africa and PNG. As a result, changes or instability to the economic or political environment in any of these countries or in neighboring countries could affect an investment in us. It is difficult to predict the future political, social and economic direction in these countries, or any other country in which we operate, and the impact government decisions may have on our business.

Actual and potential shortages of production inputs may have an adverse effect on our operations and profits.

     Our results of operations may be affected by the availability and pricing of raw materials and other essential production inputs. The price of raw materials may be substantially affected by changes in global supply and demand, along with weather conditions, governmental controls and other factors. A sustained interruption to the supply of any of these materials would require us to find acceptable substitute suppliers and could require us to pay higher prices for such materials. Any significant increase in the prices of these materials would increase our operating costs and affect production considerations.

Our financial flexibility could be materially constrained by exchange control regulations as imposed by the South African Reserve Bank (“SARB”).

     In terms of South Africa’s exchange control regulations, the export of capital from South Africa is restricted. As a result, our ability to raise and deploy capital outside South Africa is limited. In particular, we are:

	•		generally not permitted to export capital from South Africa, to hold foreign currency or incur indebtedness denominated in foreign currencies without the approval of the South African exchange control authorities;
	•		generally not permitted to acquire an interest in a foreign venture without the approval of the South African exchange control authorities and first having complied with the investment criteria of the South African exchange control authorities;
	•		generally required to repatriate to South Africa profits of foreign operations; and
	•		limited in our ability to utilize profits of one foreign business to finance operations of a different foreign business.

     These restrictions could hinder our normal corporate functioning, including our ability to make foreign investments and procure foreign currency denominated financings in the future.

     Since 1995, certain exchange controls in South Africa have been relaxed. The extent to which the South African government may further relax such exchange controls cannot be predicted with certainty, although the government has committed itself to a gradual approach to the relaxation of exchange control. Because South Africa has a fully floating exchange rate and a flexible interest rate policy, this could result in a rapid depreciation of the Rand exchange rate relative to world’s currencies which could serve to stem this withdrawal and could also result in an increase in interest rates due to the depreciation of the Rand.

We compete with mining and other companies for key human resources.

     We compete with mining and other companies on a global basis to attract and retain key human resources at all levels with the appropriate technical skills and operating and managerial experience necessary to continue to operate our business. The global shortage of key mining industry human resource skills, including geologists, mining engineers, metallurgists and skilled artisans has been exacerbated in the current environment of increased mining activity across the globe. There can be no assurance that we will attract and retain skilled and

experienced employees and, should we lose any of our key personnel, our business may be harmed and our results of operations and financial condition could be adversely affected.

Since our South African labor force has substantial trade union participation, we face the risk of disruption from labor disputes and new South African labor laws.

     Despite a history of positive and constructive engagement with labor unions, there are periods during which the various stakeholders are unable to agree on dispute resolution processes. Disruptive activities on the part of labor, which normally differ in intensity, then become unavoidable. Due to the high level of union membership among our employees, we are at risk of having, and have experienced in recent years, production stoppages for indefinite periods due to strikes and other disputes. Significant labor disruptions have affected our operations and financial condition before and we are not able to predict whether or not we will experience significant labor disputes in the future.

     South African employment law sets out minimum terms and conditions of employment for employees. Though these minimum terms and conditions may be improved by agreements between us and the trade unions, the prescribed minimum terms and conditions forms the benchmark for all employment contracts.

     We are required to submit a report in terms of South African employment law detailing the progress made towards achieving employment equity in the workplace. In the event this report is not submitted, we could incur substantial penalties.

     Developments in South African employment law may increase our cash costs of production or alter our relationship with our employees and trade unions, which may have an adverse effect on our business, operating results and financial condition.

We may suffer adverse consequences as a result of our reliance on outside contractors to conduct our operations.

     A portion of our operations are currently conducted by outside contractors. As a result, our operations are subject to a number of risks, including:

	•		negotiating agreements with contractors on acceptable terms;
	•		the inability to replace a contractor and its operating equipment in the event that either party terminates the agreement;
	•		reduced control over those aspects of operations which are the responsibility of the contractor;
	•		failure by a contractor to perform in terms of its agreement with us;
	•		interruption of operations in the event that a contractor ceases to operate due to insolvency or other unforeseen events;
	•		failure of a contractor to comply with applicable legal and regulatory requirements, to the extent it is responsible for such compliance; and
	•		contractor’s problems regarding management of its workforce, labor unrest or other employment issues.

     In addition, we may incur liability to third parties as a result of the actions of its contractors. The occurrence of one or more of these risks could have a material adverse effect on our business, operational results and financial condition. See “Directors, Senior Management and Employees—Employees.”

HIV & AIDS poses risks to us in terms of productivity and costs.

     The incidence of HIV & AIDS in South Africa and PNG, which is forecast to increase over the next decade, poses risks to us in terms of potentially reduced productivity, and increased medical and other costs. If a significant increase in the incidence of HIV & AIDS infection and HIV & AIDS-related diseases among the workforce over the next several years occurs, this may have an adverse impact on our operations, projects and financial status.

The cost of occupational healthcare services may increase in the future.

     Our operations in South Africa are subject to health and safety regulations which could impose significant costs and burdens. The present Mine Health and Safety Act 29 of 1996 (“Mine Health and Safety Act”) imposes various duties on us at our mines, and grants the authorities broad powers to, among other things, close unsafe mines and order corrective action relating to health and safety matters.

     The Occupational Diseases in Mines and Works Act 78 of 1973, or the Occupational Diseases Act, governs the payment of compensation and medical costs related to certain illnesses contracted by persons employed in mines or at sites where activities ancillary to mining are conducted. Occupational healthcare services are available to our employees from our existing healthcare facilities in South Africa. There is a risk that the cost of providing such services could increase in future depending on changes in the nature of underlying legislation and the profile of our employees. This increased cost, should it transpire, is currently indeterminate. We have embarked on a number of initiatives focused on improving the quality of life of our workforce, although there can be no guarantee that such initiatives will not be adversely affected by increased costs.

Laws governing mineral rights affect our business.

     We are governed by the South African Mineral and Petroleum Resources Development Act 2002 (“MPRDA”). See “Regulation—Health and Safety Matters—South Africa” for a description of the principal objectives set out in the MPRDA.

     Under the MPRDA, tenure over established mining operations is secured for up to 30 years (and renewable for periods not exceeding 30 years each thereafter), provided that mining companies apply for new order mining rights over existing operations within five years of May 1, 2004 or before the existing right expires, whichever is the earlier date and fulfill requirements specified in the MPRDA and the Broad-Based Socio-Economic Empowerment Charter for the South African mining industry (“Mining Charter”).

     The Mining Charter was signed by government and stakeholders in October 2002, and contains principles relating to the transfer, over a 10-year period, of 26% of South Africa’s mining assets (as equity or attributable units of production) to Historically Disadvantaged South Africans (“HDSAs”), as defined in the Mining Charter. An interim target of 15% HDSA participation over five years has also been set and to this end, the South African mining industry has committed to securing financing to fund participation by HDSAs in an amount of R100.0 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 target participation of 26%. In order to measure progress in meeting the requirements of the Mining Charter, companies are required to complete a Scorecard, in which the levels of compliance with the objectives of the Mining Charter can be “ticked off” after five and ten years, respectively. The Mining Charter and Scorecard require programs for black economic empowerment and the promotion of value-added production, such as jewelry-making and other gold fabrication, in South Africa. In particular, targets are set out for broad-based black economic empowerment in the areas of human resources and skills development; employment equity; procurement and beneficiation. In addition, the Mining Charter addresses socio-economic issues, such as migrant labor, mine community and rural development and housing and living conditions.

     We actively carry out mining and exploration activities in all of our material mineral rights areas. All of our South African operations have been granted their mining licenses. We will be eligible to apply for new licenses over existing operations, provided that we comply with the Mining Charter. We have taken steps to comply with the expected provisions of the Mining Charter, such as promoting value-added production, exploring black empowerment initiatives and increasing worker participation. Failure to comply with the conditions of the mining licenses could have a material adverse effect on our operations and financial condition.

     The MPRDA also makes reference to royalties payable to the South African state in terms of the envisaged Mineral and Petroleum Resources Royalty Bill which has not yet been enacted. The fourth draft of the Mineral and Petroleum Resources Royalty Bill was tabled in the South African government on August 21, 2008 and provides for the payment of a royalty according to a formula based on earnings before interest, tax and depreciation, after the deduction of capital expenditure. This rate is then applied to revenue to calculate the royalty amount due, with a minimum of 0.5% and a maximum of 5% for gold. It is estimated that the formula could translate to a royalty rate of more than 2% of gross sales in terms of current pricing assumptions. The latest proposal results in a large increase from the 1.5% rate proposed in the second draft in 2006. The royalty is to become effective on May 1, 2009, if the Bill is passed by the South African government in its current form. The introduction of the Mining and Petroleum Royalty Act will have an adverse impact on the profits generated by our operations in South Africa.

     In PNG, the mining license for Hidden Valley was approved in March 2005. Once production in PNG is commenced, our PNG mining operations will be subject to royalty payments to the government of PNG. Should we desire to expand any of our initiatives in PNG operations into additional areas under exploration, these operations would need to convert the existing exploration licenses prior to the start of mining, and that process could require landowner title approval. There can be no assurance that any approval would be received. Please also see “Regulation” for further information.

We are subject to extensive environmental regulations.

     As a gold mining company, we are subject to extensive environmental regulation. We have experienced and expect to continue to experience increased cash costs of production arising from compliance with South African and PNG environmental laws and regulations. The MPRDA, certain other environmental legislation and the administrative policies of the South African government regulate the impact of our 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, we will remain liable for compliance with the provisions of the MPRDA, including any rehabilitation obligations. This liability will continue until such time as the South African Department of Minerals and Energy (“DME”) certifies that we have complied with such provisions.

     In the future, we may incur significant costs associated with complying with the increasingly stringent requirements being imposed under new legislation and regulations. This may include the need to increase and accelerate expenditure on environmental rehabilitation and to alter provisions for this expenditure, which could have a material adverse effect on our results and financial condition. We may also face increased environmental costs should other mines in the vicinity of our mines fail to meet their obligations with regard to the pumping or treatment of water.

     The South African government has reviewed requirements imposed upon mining companies to ensure environmental restitution. For example, following 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 MPRDA, the South African National Nuclear Regulator Act 1999, the South African National Water Act of 1998 and the South African National Environmental Management Act 1998, 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 waste, the pollution of ground and ground-water systems and the duty to rehabilitate closed mines, may result in additional costs and liabilities.

     Our PNG operations are also subject to various laws and regulations relating to the protection of the environment, which are similar in scope to those of South Africa.

Investors in the United States may have difficulty bringing actions, and enforcing judgments, against us, our directors and our executive officers based on the civil liabilities provisions of the federal securities laws or other laws of the United States or any state thereof.

     We are incorporated in South Africa. Each of our directors and executive officers (and our independent registered public accounting firm) reside outside of the United States. Substantially all of the assets of these persons and substantially all of our assets are located outside the United States. As a result, it may not be possible for investors to enforce a judgment against these persons or ourselves obtained in a court of the United States predicated upon the civil liability provisions of the federal securities or other laws of the United States or any state thereof. A foreign judgment is not directly enforceable in South Africa, but constitutes a cause of action which will be enforced by South African courts provided that:

	•		the court that pronounced the judgment had jurisdiction to entertain the case according to the principles recognized by South African law with reference to the jurisdiction of foreign courts;
	•		the judgment is final and conclusive;
	•		the judgment has not lapsed;
	•		the recognition and enforcement of the judgment by South African courts would not be contrary to public policy, including observance of the rules of natural justice which require that the documents initiating the United States proceeding were properly served on the defendant and that the defendant was given the right to be heard and represented by counsel in a free and fair trial before an impartial tribunal;
	•		the judgment does not involve the enforcement of a penal or revenue law; and
	•		the enforcement of the judgment is not otherwise precluded by the provisions of the Protection of Business Act 99 of 1978, as amended, of the Republic of South Africa.

Compliance with new and changing corporate governance and public disclosure requirements adds uncertainty to our compliance policies and increases our costs of compliance.

     Laws, regulations and standards relating to accounting, corporate governance and public disclosure, new SEC regulations and other listing regulations applicable to us are subject to change and can create uncertainty for companies like us. New or changed laws, regulations and standards could lack specificity or be subject to varying interpretations. Their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs of compliance as a result of ongoing revisions to such governance standards.

     Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, we are required to furnish a report by our management on our internal control over financial reporting. The report in this annual report contains, among other matters, an assessment of the effectiveness of our internal control over financial reporting as of the end of the fiscal year, including a statement as to whether or not our internal controls over financial reporting are effective. We are required to have our independent registered public accounting firm publicly disclose their conclusions regarding the evaluation.

     During fiscal 2007, we identified certain material weaknesses in our internal controls over financial reporting, in particular relating to the information technology control environment and the financial reporting closing process which led to material adjustments being required in our financial statements and which also negatively impacted the report issued by our independent registered public accounting firm regarding our internal controls over financial reporting. We made improvements to our internal control over financial reporting during fiscal 2008 to mediate these material weaknesses, and concluded that the controls related to the remediation of the material weaknesses previously disclosed in the 2007 Annual Report on Form 20-F were designed, in place and operating effectively for a sufficient period of time for management to determine that each of the material weaknesses was remediated as of June 30, 2008. See Item 15. “Disclosure Controls and Procedures”.

     We are committed to maintaining high standards of corporate governance and public disclosure, and our efforts to comply with evolving laws, regulations and standards in this regard have resulted in, and are likely to continue to result in, increased general and administrative expenses.

Investors may face liquidity risk in trading our ordinary shares on the JSE Limited.

     The primary listing of our ordinary shares is on the JSE Limited. Historically, the trading volumes and liquidity of shares listed on the JSE have been low relative to other major markets. The ability of a holder to sell a substantial number of our ordinary shares on the JSE in a timely manner, especially in a large block trade, may be restricted by this limited liquidity. See “The Offer and Listing—The Securities Exchange in South Africa.”

Because we have a significant number of outstanding share options and convertible debt instruments, our ordinary shares are subject to dilution.

     We have employee share option schemes as well as other share schemes. The employee share option schemes came into effect in 1994, 2001 and 2003 respectively, and a new share scheme was introduced in 2006. Our Board has authorized up to 14% of the issued share capital to be used for these plans. Additionally, we have convertible uncollaterized fixed rate bonds in the amount of U.S.$208 million which are due on May 21, 2009. These bonds may be converted into equity at the option of the bondholder at any time after July 1, 2004 and up to and including May 15, 2009 at a specific conversion price based on the outstanding principal amount divided by the conversion price in effect on that date. As a result, shareholders’ equity interests in us are subject to dilution to the extent of the future exercises of the options, through share schemes and convertible debt instruments.

Item 4. INFORMATION ON THE COMPANY

BUSINESS

History and Development

     We conduct underground and surface gold mining and related activities, including exploration, processing and smelting. We are currently the third largest producer of gold in South Africa, producing approximately 23.4% of the country’s annual gold output, and we ranked among the top 10 gold producers in the world, with operations and projects in South Africa and PNG. Our gold sales have increased from 650,312 ounces of gold in fiscal 1995 to approximately 1.9 million ounces of gold in fiscal 2008. As at June 30, 2008, our mining operations reported total proven and probable reserves of 50.5 million ounces, primarily from South African sources. In fiscal 2008, we processed approximately 25.4 million tons of ore.

     In fiscal 2008, approximately 95% of our total gold production took place in South Africa, and approximately 5% in Australasia. In fiscal 2008, approximately 93% of our South African gold came from underground mines, and approximately 7% came from our surface operations (which include Kalgold opencast operation and Phoenix operation). For more detailed information about our activities, see Item 4. “Information on the Company — Business — Harmony’s Mining Operations — Overview” and the notes to the consolidated financial statements included in this annual report. Mining is a highly regulated industry, and we operate under a variety of statutes and regulations. For more detailed information about these statutes and regulations, see Item 4. “Information on the Company — Regulation” and Item 10. “Additional Information — Memorandum and Articles of Association”.

     The majority of our exploration and evaluation done during fiscal 2008 has been focused on PNG. Our PNG exploration and evaluation opportunities are handled through the international office in Brisbane, Australia.

     We were incorporated and registered as a public company in South Africa on August 25, 1950 (under registration number 1950/038232/06). We poured our first gold on September 11, 1954. In the early 1970’s, we merged with the Anglovaal mines, Merriespruit and Virginia, forming Harmony Gold Mining Company Limited. In 1995, we were rejuvenated. We expanded from a single lease-bound mining operation into an independent, world-class gold producer. We acquired additional mineral rights in the Free State, Mpumalanga, Gauteng and North West provinces in South Africa when we acquired Lydex in 1997, Evander in 1998, Kalgold in 1999, Randfontein in 2000, ARMgold in 2003 and Avgold in 2004. In building our Australian portfolio, we acquired Hill 50 and New Hampton in Western Australia in 2001 and 2002, respectively, and started our exploration portfolio in PNG with projects in the Morobe province originally through our acquisition of Abelle in 2003. During fiscal 2008, we disposed of several operations in South Africa and Australia. See Item 4. “Disposals”.

     Our principal executive offices are located at Randfontein Office Park, Corner of Main Reef Road and Ward Avenue, Randfontein, 1760, South Africa and the telephone number at this location is +27-11-411-2000.

South African Operations

     In South Africa, we operate a total of 11 underground operations, one open cast mine, and nine processing plants which are located in all of the currently known goldfields in the Witwatersrand basin of South Africa as well as the Green Stone belt. These operations produced 1.8 million ounces in fiscal 2008, and South Africa represented approximately 94% (or 47.5 million ounces) of our total proven and probable reserves. The deep level gold are located in four provinces in this basin, being the Free State province, Mpumalanga, the West Rand Goldfields in Gauteng province and the North West province. Surface operations are located in all these provinces as well.

     Ore from the shafts and surface material are treated at nine metallurgical plants in South Africa, located near the operations (four in the Free State province, two in the North West province, one in Mpumalanga and two in Gauteng). There are two plants on care and maintenance which can be restarted if additional processing capacity is required (Joel and St. Helena plants in the Free State province).

     As part of our “Back to Basics” strategy, management reassessed and restructured the manner in which operations are managed and evaluated. Each operation, consisting anywhere from a single shaft to a group of shafts, is managed by a team headed up by a general manager. See Item 4. “Operational Strategy: Back to Basics” and “Harmony’s Management Structure”.

     As a result of this reorganization, operations are classified as “Underground” or “Surface”, as opposed to the previous classification of “Growth”, “Quality”, “Leveraged” or “Surface”. The reportable segments in South Africa are as follows:

	•		Tshepong, Phakisa, Bambanani, Doornkop, Elandsrand, Target, Evander operations, Masimong, Virginia operations and Cooke operations (classified as discontinued operations); and
	•		all other shafts and surface operations, including those that treat historic sand dumps, rock dumps and tailings dams, are grouped together under “Other — Underground” or “Other — Surface”.

International Operations

     Our interests internationally are currently mainly located in PNG and represent 6% (or 3.0 million ounces) of our total proven and probable reserves.

     Our interests in Australia now consist solely of one site located at Mt. Magnet in Western Australia. This site has been closed down and the plant has been put on care and maintenance since December 2007. The South Kalgoorlie operational assets and tenements, which we previously owned and which was also located in Western Australia, were sold to Dioro Exploration NL (“Dioro”) on November 30, 2007.

     The Mt. Magnet operations produced 77,097 ounces in fiscal 2008, compared to 136,428 ounces in fiscal 2007. The decrease was due to the mine being placed on care and maintenance in December 2007. The South Kalgoorlie operations produced 27,778 ounces in fiscal 2008, compared to 88,371 ounces in fiscal 2007. The results for 2008 are for the five months up to the sale to Dioro. Ore from the underground and surface material were treated at the two metallurgical plants in Australia (one at Mt. Magnet and, prior to it being sold, at South Kalgoorlie). We classified the Western Australia operations as held for sale in April 2007. These operations also met the criteria to be classified as discontinued operations.

     In July 2007, we entered into an agreement with Dioro pursuant to which Dioro acquired our South Kalgoorlie assets. The total purchase price was A$45 million (U.S.$39.8 million), consisting of both a cash and share component. The share component entailed the issuance of 11.4 million Dioro shares valued at A$20 million (U.S.$17.7 million), and a cash component of A$25 million (U.S.$22.1 million). The transaction was subject to various conditions precedent, including a minimum capital raising by Dioro of A$35 million (U.S.$30.9 million) by the completion date. On November 30, 2007, all conditions precedent were satisfied, and the transaction was completed and accounted for on that date.

     During fiscal 2008, we entered into an agreement with Monarch Gold Mining Company (“Monarch Gold”) for the sale of our Mount Magnet operations. The Mount Magnet operations include Hill 50, Great Fingall, St George, Star and Big Bell mines, and comprises a resource inventory of 2.7 million ounces of gold, tenements covering approximately 62,000 hectares, 166 exploration license blocks and a 2.7 million ton a year capacity plant. However, subsequent to year-end, we were advised that Monarch had placed itself in voluntary administration and, on August 1, 2008, the Administrator indicated that Monarch will not proceed with the proposed purchase and consequently the purchase agreement has been terminated. We have since resumed management of the Mt. Magnet operation which is still classified as held for sale. See “Recent Developments”

     In PNG, we, through our wholly-owned PNG-based subsidiaries, Morobe Consolidated Goldfields Limited (“Morobe”) and Wafi Mining Limited (“Wafi”), own development and exploration prospects in the Morobe Province. Following the end of fiscal 2008, Newcrest Mining Limited (“Newcrest”) acquired a 30.01% interest in our PNG assets and tenements (See “Recent Developments”). We, in a joint venture with Newcrest, are in the process of building the Hidden Valley mine, with project completion expected by the middle of calendar 2009.

     In addition, we completed a number of stand alone pre-feasibility studies (“PFS”) in Golpu during the June 2007 quarter and in Wafi during the December 2007 quarter, which included the Wafi gold resources and examined the development of three production scenarios:

	•		Golpu stand alone (an update of the Golpu PFS scenario);
	•		Golpu + Link Zone (high grade lenses within Zone B); and
	•		Golpu + Link Zone + Non-Refractory gold ore (“NRG1”);

     The June 2007 PFS reports were subject to Harmony Gate Reviews (“Gate Reviews”) and a Competent Persons Report (“CPR”). Neither the Gate Reviews nor the CPR identified any fatal flaws in the PFS reports. However, a number of outstanding issues were identified and the December 2007 PFS report are still subject to the Gate Review process. The returns projected by the June 2007 studies did not meet the

requirements, and it was decided then not to immediately proceed to the feasibility stage. Further studies are planned for fiscal 2009 to address outstanding issues and to investigate alternative production scenarios which may improve projected returns. PNG represents approximately 6% (or 2.99 million ounces) of our proven and probable reserves.

Strategy

     During fiscal year 2008, we endeavoured to focus on three key aspects all of which we have delivered on during the year under review.

	•		First, we undertook to review our operational performance and maintain a clear operational focus. This entailed developing an understanding of what our operations were capable of delivering, devising and putting in place the plans to ensure delivery, and holding management responsible for that delivery.
	•		Second, we assessed our assets, to focus our attention on those operations that were core to the business and had the ability to be profitable. At the same time, we identified and initiated joint ventures we believed where these assets could better cater for the medium- and longer-term health of the company and bring about greater value.
	•		Finally, we undertook to improve the financial viability of the business and to substantially overhaul the balance sheet. In so doing, we focused on improving operational performance, combined with the sale of non-core assets and partnering in joint ventures. We undertook to identify opportunities to sustain and grow production. While our exploration work in PNG continues, we are also about to begin with some organic exploration work at Evander in South Africa. This element of our strategy is at an early stage and will be an area of increased attention during the year ahead.

     We believe that the following strengths provide us with a competitive advantage:

Leading market position in the attractive gold industry

	•		We believe that our size and leading market position enables us to undertake exploration and simultaneously develop multiple projects around the world, as well as secure capital on competitive terms.
	•		The global gold industry offers a number of attractive industry fundamentals from which we benefit. This includes the absence of available substitutes, relatively high barriers to entry, and increasing gold producer concentration.
	•		We are developing new mines at a planned lower cost per ounce than our current operations, which we believe will help make them robust enough to survive any margin squeeze and to withstand any reversal in the gold price. We expect the gold price to continue its upward trend in the medium term

Significant reserves with long mine lives

	•		Our ore reserves as of June 30, 2008 amounted to 50.5 million ounces of gold spread across our assets in South Africa and PNG. This ore reserve base is sufficient to support our existing production profile in excess of 10 years at current production levels. Year-on-year depletion accounted for a decrease of 1.9 million ounces in the reserves. Corporate activity, the exclusion of operations held for sale, restructuring of certain shafts and geological related changes accounts for a further decrease of 5.7 million ounces of reserves. On the positive side there is a net addition of 4.4 million ounces of reserves from surface stockpiles.
	•		Of our 50.5 million ounces of reserves, 38.3 million ounces are classified as above infrastructure and 12.2 million ounces are classified as below infrastructure (reserves for which capital expenditure has still to be approved).

Highly attractive project pipeline

•

We have a diverse portfolio of gold development projects spread across South Africa and PNG. These projects include Elandsrand, Doornkop, Tshepong and Phakisa in South Africa, and Hidden Valley in PNG, which, when developed, could deliver up to 1.4 million ounces of additional production by 2012.

	•		We believe the relatively higher grade of these South African deposits and/or lower cost base will result in these ounces being produced at highly competitive cash costs. This in turn may result in a reduction in our overall cash cost position as these new projects are commissioned.
	•		In addition to these projects, we have a number of additional development prospects that are being considered and progressed, including the processing of sand dumps and tailings dams in our Mega Dumps projects, the processing of rock dumps, and developing the Wafi/Golpu copper/gold deposit in PNG, which, when all developed, could increase production by 1.0 million ounces per annum.
	•		We have also expanded our exploration skill base, evidenced by our progress in PNG.
	•		We formed Rand Uranium (Proprietary) Limited (“Rand Uranium”), to which we will transfer our Cooke assets to optimize the value of our uranium deposits.

Positive gold market outlook

	•		In the midst of volatile tumultuous global investment markets, the gold market has demonstrated great resilience and a positive upside. The price performance throughout fiscal 2008 supports our positive outlook for gold and, given our operational imperatives, we will seek to contain costs, increase output and optimize our margins.
	•		The gold price hit a high of U.S.$1,030 per ounce on March 17, 2008 and, while it was a more subdued U.S.$772 per ounce as of October 21, 2008, this is 3% higher than it was for the same time the previous year.
	•		We believe the fundamental drivers behind increased demand and decreased new supply of gold will remain in the future, which will in turn support a higher gold price over this period. As an unhedged gold producer, we will benefit from a rising gold price environment.

Increased focus on earnings margins and cost

	•		Our aim remains to return to profitability. At an operational level we have put in place an intensive process of business planning, with benchmarks and targets we believe to be realistic.
	•		We are committed to lower our cost base and extensively benchmark our costing parameters both internally among our operations, and externally against other gold producers. Stringent cost cutting and cost control programs have been implemented.
	•		We are confident that the benefits of our restructuring process and ongoing cost focus will be sustained in the long term, and as a result, our ability to withstand any future adverse market conditions has been significantly enhanced.

Conservative balance sheet and low gearing

	•		We maintain a conservative gearing policy and seek to fund ongoing capital expenditure (excluding growth projects) through cash generated from existing operations.
	•		Our low level of gearing should provide us with the ability to utilize debt to fund capital and development expenditure requirements for our new projects.

Experienced management team with significant industry expertise

	•		Our senior management team consists of experienced mining executives with extensive industry backgrounds combined with geological and metallurgical expertise.
	•		Our senior management team has a proven track record in developing and managing the operations under its control, and has demonstrated an ability to optimize underperforming assets as well as developing new projects around the world.

     Leading Black Economic Empowerment strategy

	•		We are proud to be a South African company and fully embraces the country’s transformation initiatives. We are 16% owned by African Rainbow Minerals Limited (“ARM Limited”), a black empowerment company in which our chairman, Patrice Motsepe, owns an interest.
	•		We believe that we have gone beyond the requirements of the Mining Charter by ensuring that our HDSA partners are truly empowered, that we are largely managed by a HDSA Board, and that we continue to engage with black shareholders and/or partners to find more opportunities to invest in BEE transactions and involve HDSA partners.
	•		We will continue to embrace empowerment as part of our growth strategy and we acknowledge that empowerment forms a fundamental part of our business into the future.

Strategy of organic growth

     Our organic growth strategy is focused on the extraction of high-quality ounces and developing and operating our long-life mines. Through our back to basics approach of disciplined mining, we aim to reduce costs and increase productivity. Our dedicated and participative management team endeavours to meet production targets, reduce costs and optimize the orebodies for the benefit of all our stakeholders.

Organic growth focused on high quality ounces

	•		Our extensive experience and established track record of successfully identifying, exploring and developing our own projects is a core component of our value creation strategy.
	•		Our ongoing exploration program is focused on both on-mine exploration, which targets resources within the economic radius of existing mines, and new mine exploration, which targets promising early to advanced stage projects around the world.
	•		We are currently expanding our production base in South Africa and PNG, with a focus on developing new mines at competitive cash costs and upgrading the overall quality of our portfolio.
	•		We currently have a diverse project pipeline, comprising five projects that are well advanced and, if all developed, could deliver up to 1.4 million ounces of low-cost production by 2012. These projects include Elandsrand New Mine, Doornkop South Reef, Tshepong Sub 66 and Sub 71 Declines and Phakisa in South Africa, and Hidden Valley in PNG, which, if all developed, would contribute to a reduction in our overall cash costs per ounce when they come on-stream.
	•		In addition to these projects, we have a number of additional development prospects that are being progressed, including surface sand dumps, rock dumps and tailings dams, reviewing the potential of our uranium deposits, and developing the Wafi/Golpu copper/gold deposit in PNG, which, when an investment decision is taken by the board to develop them once feasibility studies are complete, could increase production by up to 1.0 million ounces.
	•		We have also expanded our exploration skill base, evidenced by our progress in PNG.

Operational Strategy: “Back to Basics”:

     Our operational strategy is underpinned by the “back to basics” strategy of disciplined mining, cost control, ore reserve management and efficiency.

Safety

     We have dedicated a significant amount of attention to our safety initiatives during the year, and have seen improvements. These initiatives have been a key part of our restructuring and refocusing initiative, and also part of the broader transformation of the workplace.

     The commitment to zero fatalities starts at the top of the company and has filtered to every level through a conscious and programmatic

effort. The second round of a comprehensive safety auditing program was completed in June 2008 including physical workplace audits, fall of ground regulations audits, shaft audits and metallurgical audits. Key non-negotiable principles that have been agreed upon include:

	•		management to lead by example;
	•		continuous verbal communication with all team members;
	•		visible creation of awareness of safety-related issues;
	•		award and recognize safety achievements; and
	•		the involvement of all stakeholders.

     While the workforce is motivated to become involved in taking responsibility for their own safety and that of their colleagues, a key management focus has been to improve underground conditions. In this respect, emphasis has been placed on those areas that are deemed to be of the highest potential risk, namely, shaft infrastructure and physical conditions in the workplace. Again, in respect of the latter, the focus is on compliance with standards, the monitoring and management of ground conditions and logistics to and from the workplace.

Empowered management teams

•

At each mining site, we have established small, multi-disciplinary, focused management teams responsible for planning and implementing the mining operations at the site. Each of these teams is accountable for the results at its particular site and reports directly to the Board.

Active involvement and management

•

Annual operational goals and targets, including cost, volume and grade targets are established in consultation with our executive committee for each mining site. Each management team develops an operational plan to implement the goals and targets for its mine site. Members of our executive committee review and measure the results at each mining site on a regular basis throughout the year.

Focus on increased productivity

•

Gold mining in South Africa is labor intensive, accounting for about 50% of our South African operating costs. To control these costs, we structures our operations to achieve maximum productivity with the goal of having 60% of our workforce directly engaged in stoping, or underground excavation, and development rock breaking activities.

Commitment to cost control

•

We are committed to reducing our cost base and, to this end, we benchmark our costing parameters both internally among our operations and externally against other gold producers.

Proactive maintenance practices

•

We apply a principle of “appropriate maintenance” which allows us to spend capital commensurate with the life of a specified operation. This principle ensures safe operation and reduces capital that may be used ineffectively on mines that have a limited life.

Implementation of new systems

•

We have implemented cost accounting systems and strict ore accounting and ore reserve management systems to measure and track costs and ore reserve depletion accurately, so as to enable us to be proactive in our decision-making.

Increasing consistency at our operations

•

We are committed to increasing the consistency of our operations, in terms of both gold ore grades and production levels, in order to extract optimal value from our orebodies. To achieve this, we are continuing with our intensive program to significantly improve the mining flexibility of our operations by increasing our development expenditure and focusing on comprehensive ore

			reserve management. We have made significant progress on this objective, as evidenced by our development rates.
	•		We are currently reviewing potential opportunities in respect of certain deposits and assets which we may develop independently of our core gold business, and in particular, our uranium assets, of which the underground resources are not currently reflected on our balance sheet or reserve statement.

Selected acquisitions that diversify our operations and complement our competitive strengths

	•		We have a long track-record of acquisitions, having completed over 25 transactions and successfully integrating each of these operations into the Company.
	•		We possess broad and extensive gold mining experience gained through the development and operation of both surface, opencast mines and mechanized, underground mines. This breadth of expertise provides us with a competitive advantage when evaluation acquisition opportunities.

Targeted disposals that will upgrade our overall portfolio quality

	•		We have accumulated a diverse portfolio of assets, a number of which are nearing the end of their productive lives for us and are considered non-core to our business. However, these assets may be of higher value to smaller producers who are less concerned about short mine lives, and can still profitably operate these assets for a number of years.
	•		As a result, we believe our disposal strategy will create value through the targeted sale of these assets, which for us have relatively higher cost bases and/or shorter mine lives. See “Disposals” below.

Initiatives that target specific opportunities

•

We acknowledge significant capital expenditure and a commitment to a long time horizon are required to develop our projects into new mines. However, we firmly believe that this is the foundation of our future, and to this end, have made substantial investments in our major projects both in South Africa and PNG.

Principal Investments

     We have concluded several other strategic transactions within and outside South Africa in the last three fiscal years, which are summarized below.

     On February 27, 2008, the Group acquired a 32.4% interest in Pamodzi Gold Limited (“Pamodzi”) after disposing of its Orkney assets. See Item 4. “Disposals”.

     In March 2007, we concluded negotiations with Rio Tinto plc (“Rio Tinto”) in which we purchased Rio Tinto’s rights to the royalty agreement entered into prior to our acquisition of the Hidden Valley and Kerimenge deposits in PNG. The remaining condition precedent, which was to obtain approval of the relevant PNG minister on the recommendation of the Mining Advisory Council that the royalty rights may be transferred to us, was met in March 2008. Our cost of U.S.$22.5 million was met through the issue of shares and a cash payment of U.S.$2.5 million. The effect of the transaction will be to reduce the cost of gold produced at Hidden Valley and all further extensions to the project, mine life and reserves will be free of this royalty.

     On December 8, 2006 we exchanged our Western Areas Limited (“Western Areas”) shares in exchange for Gold Fields Limited (“Gold Fields”) ordinary shares. See Item 4. “Disposals”. We received 15.7 million Gold Fields shares, issued at R135.02 (U.S.$19.15) per share, for our 44.9 million Western Areas shares. During the fiscal years 2008 and 2007, we disposed of our interest in Gold Fields. See Item 4. “Disposals”.

     On June 21, 2006, we announced that we acquired 37.8% of the issued share capital of Village Main Reef Gold Mining Company Limited (“Village”) for an amount of R458,775 (U.S.$0.1 million). The equity stake was purchased from ARM Limited at a price of SA 20 cents per share. Due to the fact that the acquisition surpasses the 35% mark, we were obliged under the securities Regulation Code on Takeovers and Mergers to extend an offer to the remaining shareholders of Village to acquire all of their shares at the same price at which it acquired the

37.8% stake. On August 14, 2006, we announced that minority shareholders holding 3,163 shares in Village (being 0.08% of the shares in respect of which the offer was made) had accepted its offer. At June 30, 2008, we held 2,295,663 shares, representing 37.83% of the issued share capital of Village. See Item 7. “Related Party Transactions”.

     On March 9, 2006, we announced that we acquired a total of 44.9 million shares in Western Areas for R2 billion (U.S.$321 million), representing a 29.2% stake. This was done by acquiring 37.37 million shares from Allan Gray and buying a total of 7.62 million shares on the open market. To finance this acquisition, we entered into a term loan facility of R1.0 billion (U.S.$280.8 million) with Rand Merchant Bank (“RMB”), for the purpose of partially funding the acquisition of the 29.2% stake in Western Areas. See Item 7. “Related Party Transactions”.

Disposals

     See Item 8. “Recent Developments” for post year-end disposals.

     On February 27, 2008, we disposed of our Orkney operations to Pamodzi in exchange for 30 million listed ordinary shares, the market value of which was R345 million (U.S.$46.5 million).

     On November 30, 2007 the South Kalgoorlie operations were sold to Dioro in exchange for 11.6 million listed ordinary shares, the market value of which was U.S.$17.5 million (A$20 million), as well as a cash of U.S.$18.7 million (A$21 million). A loss of U.S.$8.76 million (A$9.8 million), net of tax, was realized.

     On August 24, 2007, the Group disposed of the remaining 13,095,079 ordinary Gold Fields shares. The proceeds amounted to R1,310 million (U.S.$182.9 million), resulting in a loss of R459 million (U.S.$63.2 million).

     In April 2007, the surface assets and metallurgical plant at Deelkraal was sold to Ogoerion Construction CC for R98 million (U.S.$13.7 million). It was agreed that the purchase price be paid in installments over a 24-month period.

     In a range of transactions between January 22, 2007 and February 12, 2007, we disposed of 1,150,000 Gold Fields shares for U.S.$19.7 million. The total cost of these shares was U.S.$21.4 million, resulting in a loss of U.S.$1.7 million. During May and June 2007, a further 1.5 million shares with a cost of U.S.$28.3 million were disposed of for U.S.$25.1 million, resulting in a loss of U.S.$3.2 million.

     On December 8, 2006, we disposed of our interest in Western Areas in exchange for ordinary shares in Gold Fields. This was in terms of an offer by Gold Fields whereby every 100 Western Areas Shares were exchanged for 35 Gold Fields shares.

     On October 19, 2006, Randfontein 4 Shaft was sold to Simmer & Jack Limited for an amount of R60 million (U.S.$8.5 million).

     On March 31, 2006, we disposed of the entire share capital of Buffalo Creek Mines (Pty) Ltd for A$24 million (U.S.$17.2 million). According to the agreement the A$24 million (U.S.$17.2 million) was to be settled as follows: (i) A$4.3 million (U.S.$3.1 million) to be paid in cash; (ii) 1,907,892 shares in GBS Gold International, valued at A$5 million (U.S.$3.6 million); (iii) A$5 million (U.S.$3.6 million) to be paid in cash in September 2006; (iv) Shares in GBS Gold International, equal in value to A$4.4 million (U.S.$3.1 million), to be issued in September 2006; and (v) A$5.4 million (U.S.$3.8 million) to be paid in cash in September 2007. The net asset value of Buffalo Creek Mines (Pty) Ltd was A$20.1 million (U.S.$14.2 million), resulting in a profit of A$3.1 million (U.S.$3 million). Final settlement was received as per contract in September 2007.

     On January 18, 2006, we disposed of our investment in Atlas Gold Limited for A$0.2 million (U.S.$0.15 million). The investment of 500,000 shares was carried at a total cost of A$0.1 million (U.S.$0.07 million), resulting in a profit of A$0.1 million (U.S.$0.07 million).

     On December 29, 2005, we disposed of our investment in San Gold Corporation for R19 million (U.S.$3.1 million). The investment was carried at a total cost of R20 million (U.S.$3.2 million), resulting in a loss of R1 million (U.S.$0.1 million).

     On November 16, 2005, we disposed of the remaining portion of the Gold Fields investment purchased in fiscal 2005 for R2.4 billion (U.S.$361.8 million). The process was concluded through market disposals which began on November 10, 2005 and an open market offering on November 15 and 16, 2005. The investment was acquired at a cost of R2.1 billion (U.S.$316.4 million), resulting in a profit of R307 million (U.S.$45.4 million).

Hedging Policy

     We have consistently maintained a policy of not entering into forward sales, commodity, derivatives or hedging arrangements to establish a

price in advance for the sale of our future gold production, although we may do so in the future. As a result of this policy, Board approval is required when hedging arrangements are to be entered into.

     Where any such gold hedging position is acquired, our policy is to eliminate any such positions existing within acquired companies as soon as this can be achieved through 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. In line with this policy, we have historically closed out hedging arrangements inherited through our acquisitions. Our revenues are sensitive to the exchange rate of the Rand and other non-U.S. currencies to the U.S. dollar, as all the revenues are generated by gold sales denominated in U.S. dollars. We do not enter into forward sales, commodity, derivatives or other hedging arrangements to establish a Rand to U.S. dollar exchange rate in advance for the sales of our future gold production, although we may do so in the future.

     In May 2007, we closed out the remainder of our Australian hedge book, which we inherited with the acquisition of the Hill 50 mine. In these transactions, some 220,000 ounces were closed out at an average spot rate of A$809/ounce, for a total cost of A$72.8 million (U.S.$60.0 million). As a result, we are completely unhedged.

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.

     Our gold-focused exploration program has two components:

	•		on-mine exploration, which looks for resources within the economic radius of existing mines, and
	•		new mine exploration, which is the global search for early to advanced stage projects.

     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.

     We conduct exploration activities on our own or with joint venture partners. As at June 30, 2008, our prospecting interest in South Africa measured 28,039 hectares (69,286 acres), 220,600 hectares (545,114 acres) in PNG and 97,491 hectares (240,906 acres) in Australia. We spent U.S.$28 million on exploration in fiscal 2008 and the bulk of exploration expenditure was allocated to activities in PNG and South Africa. In fiscal 2009, we intend to carry out exploration in PNG and South Africa.

Mining

     The mining process can be divided into two main phases: (i) accessing the orebody and (ii) mining the orebody. This basic process applies to both underground and surface operations.

	•		Accessing the orebody.
			In our South African underground mines, access to the orebody is by means of shafts sunk from the surface to the lowest economically and practically mineable level. Horizontal development at various intervals of a shaft (known as levels) extends access to the horizon of the reef to be mined. On-reef development then provides specific mining access. Horizontal development at various intervals of the decline extends access to the horizon of the ore to be mined. The declines are advanced on a continuous basis to keep ahead of the mining taking place on the levels above. In our open-pit mines, access to the orebody is provided by overburden stripping, which removes the covering layers of topsoil or rock, through a combination of drilling, blasting, loading and hauling, as required.
	•		Mining the orebody.
			The process of ore removal starts with drilling and blasting the accessible ore. The blasted faces are then cleaned, and the ore is transferred to the transport system. In open-pit mines, gold-bearing material may require drilling and blasting, and is usually collected by bulldozers or shovels to transfer it onto trucks, which transport it to the mill.

     In our South African 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.

Processing

     We currently have nine operational metallurgical plants and two metallurgical plants on care and maintenance in South Africa. We also have a metallurgical plant at the Hidden Valley project in PNG. The principal gold extraction processes we use are carbon in leach, or CIL, and carbon in pulp, or CIP.

     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. Our more modern milling circuits include semi- or fully-autogenous milling where the ore itself is used as the grinding medium. Typically, ore must be ground to a minimum size before proceeding to the next stage of treatment.
	•		Treatment.
			In most of our metallurgical plants, gold is extracted into a leach solution from the host ore by leaching in agitated tanks. Gold is then extracted onto activated carbon from the solution using the CIL or CIP processes.

     Gold in solution, at one of our plants, is recovered using zinc precipitation. Recovery of the gold from the loaded carbon takes place by elution and electro-winning. Cathode sludge or dore bars produced from electro- winning is now currently sent directly to Rand Refinery. Most of the South African plants no longer use smelting to produce rough gold bars (dore). Our South African zinc precipitation plants continue to smelt precipitate to produce rough gold bars. These bars are then transported to the Rand Refinery which is responsible for refining the bars to a minimum of good delivery status.

     In fiscal 2006, we operated the only independent gold refinery and fabrication plant in South Africa. In fiscal 2006, approximately 84% of our South African gold production was refined at our refinery and the remainder was refined at the Rand Refinery, which is owned by a consortium of the major gold producers in South Africa. Since July 2006, all of our gold produced in South Africa has been sent to the Rand Refinery, as a decision was made to close the Harmony Refinery for economic reasons. The Australian gold production for fiscal years 2006 to 2008 was refined in Australia at an independent refiner, AGR Matthey.

     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”. We support jewelry ventures in South Africa.

Harmony’s Management Structure

     We have a de-centralized management structure that is based on small, empowered management teams led by General Managers at each of our operations. In South Africa, the General Managers report to Alwyn Pretorius and Tom Smith, the Chief Operations Officers, and are responsible for business optimization, ore reserve optimization, and for developing a business culture at the operations. They also focus on long-term viability and growth of the operations. The General Managers are supported by an Ore Reserve Manager, a Business Analyst and a Human Resources Leader in ensuring the growth and long-term sustainability of the operations, and additional expertise and skill is obtained from the Mining Managers, Engineers and Human Resource Managers who also report to the respective General Managers.

Capital Expenditures

     Capital expenditures for continuing operations incurred for fiscal 2008 totalled U.S.$500 million, compared with U.S.$320 million for fiscal 2007 and U.S.$205 million for fiscal 2006. The increase in capital expenditure in fiscal 2008 compared with 2007 was primarily related to the development of the PNG assets, which accounted for 66% of the project capital expended. Capital was also expended on the Doornkop South Reef Project, Tshepong Sub 66 and 71 Declines, Phakisa and the Elandsrand New Mine. During fiscal 2007, the increased development in PNG accounted for 45% of the project capital expended in the year. This was also the primary reason for the increase in capital expenditure in fiscal 2007 compared with fiscal 2006. Expenditure was also incurred at Doornkop South Reef Project, Phakisa, Tshepong Sub 66 Decline and Elandsrand New Mine.

     The focus of our capital expenditures in recent years has been underground development and plant improvement and upgrades. Several of these projects will be completed during fiscal 2009. The remainder of the projects will still require a great deal of capital expenditure over the next two to three years until they are substantially completed. During fiscal 2008, various funding options were investigated. These included entering into a partnering deal for the PNG assets. The transaction was concluded after year end. See Item 4. “Recent Developments”.

          Capital expenditure for discontinued operations, including the non-cash portion, incurred for fiscal 2008 totaled U.S.$42 million, compared with U.S.$61 million for fiscal 2007 and U.S.$60 million for fiscal 2006.

     We have budgeted approximately U.S.$379 million for capital expenditures in fiscal 2009. Details regarding the capital expenditures for each operation are found in the individual mine sections under “Business — Harmony’s Mining Operations”. We currently expect that our planned operating capital expenditures will be financed from operations and new borrowings as needed. However, if we decide to expand major projects such as the Poplar Project and the Rolspruit Project at Evander beyond our current plans, we may consider alternative financing sources. See Item 4.“Information on the Company — Business — Harmony’s Mining Operations — Evander Operations”.

Reserves

     As at June 30, 2008, we have declared proven and probable reserves of 50.5 million ounces, broken down as follows: 47.5 million ounces in South Africa and 3.0 million ounces in PNG. Of our 50.5 million ounces of ore reserves, 12.2 million ounces are classified as below infrastructure (that is, reserves for which capital expenditure has yet to be approved). There has been a 3.2 million ounces year-on-year negative variance in ore reserves due to the following reasons:

	•		normal depletion of 1.9 million ounces;
	•		corporate activity, the exclusion of operations held for sale, restructuring of certain shafts and geological-related changes resulting in a decrease of 5.7 million ounces; and
	•		a net addition of 4.4 million ounces of ore reserves from surface stockpiles.

     We use the South African Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves (“SAMREC Code”), which sets out the internationally recognized procedures and standards for reporting of mineral resources and ore reserves. We use the term “ore reserves’’ herein, which has the same meaning as “mineral reserves”, as defined in the SAMREC code. Our reporting of its PNG Ore Reserves complies with the Australian Code for the Reporting of Mineral Resources and Ore Reserves (“JORC”) of the Australian Institute of Mining and Metallurgy. This code is materially the same as “SAMREC”. In reporting of reserves, we have complied with Industry Guide 7 of the U.S. Securities and Exchange Commission.

     For the reporting of Ore Reserves at our South African and PNG operations, we use a gold price of U.S.$750 per ounce. An exchange rate of R7.46 per U.S. dollar is used for South Africa and for PNG an exchange rate of U.S.$0.80 per Australian dollar is used giving a gold price of R180,000 per kilogram and AU$850 per ounce, respectively. These gold prices have also been used in mine planning.

     In order to define that portion of a measured and indicated mineral resource that can be converted to a proven and probable ore reserve at our underground operations, we apply the concept of a cut-off grade. This is done by defining the optimal cut-off as the lowest grade at which an orebody can be mined such that the total profits, under a specified set of mining parameters, are maximized. The cut-off grade is determined using our Optimizer computer program which requires the following as input:

	•		the database of measured and indicated resource blocks (per shaft section);
	•		an assumed gold price which, for this ore reserve statement, was taken as R180,000 per kilogram;
	•		planned production rates;
	•		the mine recovery factor (MRF) which is equivalent to the mine call factor (“MCF”) multiplied by the plant recovery factor; and
	•		planned cash costs (cost per tonne).

     Rand per tonne cash costs of the mines are historically based, but take into account distinct changes in the cost environment, such as the future production profile, restructuring, right-sizing, and other cost reduction initiatives which we expect in the aggregate to lead to lower unit costs, and for below-infrastructure ounces, an estimate of capital expenditure.

     The block cave reserve at Golpu (PNG) used the PCBC computer program to define the optimal mine plan and sequencing.

     The open pit reserve at Hidden Valley (PNG) is constrained by the capacity of the tailings storage facility with Whittle optimisation program guiding the most efficient mine design given this constraint.

     The ore reserves represent that portion of the measured and indicated resources above cut-off in the life-of-mine plan and have been estimated after consideration of the factors affecting extraction, including mining, metallurgical, economic, marketing, legal, environmental, social, and governmental factors. A range of disciplines which includes geology, survey, planning, mining engineering, rock engineering, metallurgy, financial management, human resources management, and environmental management have been involved at each mine in the life-of-mine planning process and the conversion of resources into reserves. The ore flow-related modifying factors used to convert the mineral resources to ore reserves through the life-of-mine planning process are stated for each individual shaft. For these factors, historical information is used, except if there is a valid reason to do otherwise. Because of depth and rock engineering requirements, some shafts design stope support pillars into their mining layouts which accounts for approximately 7% to 10% discounting. Further discounting relates to the life-of-mine extraction to provide for unpay and geological losses.

     Our standard for narrow reef sampling with respect to both proven and probable reserve calculations for underground mining operations in South Africa is applied on a 6 meter by 6 meter grid. Average sample spacing on development ends is at 2 meter intervals in development areas. For the massive mining at the Target operations, our standard for sampling with respect to both proven and probable reserves are fan drilling with “B” sized diamond drill holes (43mm core) sited at 50 meter spaced sections along twin access drives. 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 tailing dams (slimes and sand) for which random sampling is used.

     The PNG resources are hosted in large porphyry or related mesothermal geological systems. Data is gained through diamond drilling using PQ down to NQ sized core. The core is cut in half, one half sampled at a maximum of 2 meter intervals and the other half stored in designated core storage facilities. Drill spacing is typically on less than 20 meter centres for Measured category, 20 to 40 meter centres for the Indicated category and greater than 40m for Inferred category material. Assaying for gold is by fire assay and various methods are used for copper and other elements. All assays informing the resource calculation are analysed at a NATA accredited commercial laboratory. Some sample preparation is done at the mine site laboratory. Extensive QA/QC work is undertaken and data is stored in electronic database.

Our mining operations’ reported total proven and probable reserves as of June 30, 2008 are set out below:

Ore reserve statement (Imperial) as at June 30, 2008⁽²⁾

Gold

		PROVEN												PROBABLE												TOTAL
		Tons				Grade				Gold(1)				Tons				Grade				Gold(1)				Tons				Grade				Gold(1)
Operations		(million)				(oz/ton)				(Moz)				(million				(oz/ton)				(Moz)				(millions)				(oz/ton)				(Moz)
South Africa Underground
Tshepong			6.64				0.177				1.18				19.32				0.176				3.39				25.96				0.176				4.57
Phakisa			0.09				0.217				0.02				21.87				0.243				5.30				21.96				0.242				5.32
Bambanani			3.15				0.283				0.89				1.09				0.268				0.29				4.24				0.279				1.18
Doornkop			0.37				0.118				0.04				1.11				0.124				0.14				1.48				0.123				0.18
Elandskraal			4.83				0.186				0.90				39.56				0.195				7.73				44.39				0.194				8.63
Masimong			4.01				0.147				0.59				1.09				0.155				0.17				5.1				0.148				0.76
Virginia operations			5.92				0.127				0.75				2.63				0.144				0.38				8.55				0.132				1.13
Evander			3.08				0.202				0.62				8.12				0.163				1.32				11.20				0.173				1.94
Evander(below infrastructure)			—				—				—				57.24				0.213				12.21				57.24				0.213				12.21
Target			9.22				0.214				1.97				12.72				0.179				2.28				21.94				0.194				4.25
Other — underground			0.90				0.144				0.13				2.14				0.149				0.32				3.04				0.145				0.45
Total S.A. Underground			38.21				0.185				7.09				166.89				0.201				33.53				205.10				0.198				40.62
South Africa surface
Kalgold			12.46				0.026				0.33				1.79				0.037				0.07				14.25				0.028				0.39
Free Gold			803.16				0.007				5.68				77.39				0.010				0.80				880.55				0.007				6.47
Total S.A. Surface			815.62				0.007				6.01				79.18				0.011				0.87				894.80				0.008				6.88
PNG
Hidden Valley and Kaveroi			3.64				0.067				0.24				24.46				0.059				1.46				28.10				0.060				1.70
Hamata			—				—				—				4.33				0.074				0.32				4.33				0.074				0.32
Golpu			—				—				—				54.63				0.018				0.97				54.63				0.018				0.97
Total PNG			3.64				0.067				0.24				83.42				0.033				2.75				87.06				0.034				2.99
Grand total			857.47				0.016				13.34				329.49				0.113				37.15				1,186.96				0.043				50.49

     In addition to the gold reserves, we also report our equity reserves for silver, copper and molybdenum from our PNG operations. Metal prices are assumed at U.S.$12/oz for silver, U.S.$2.40/lb for copper and U.S.$20/lb for molybdenum.

SILVER

Proven

Probable

Total

Reserves

Reserves

Reserves

Tons

Grade

Silver oz

Tons

Grade

Silver oz

Tons

Grade

Silver oz

PNG

(millions)

(oz/ton)

(millions)

(millions)

(oz/ton)

(millions)

(millions)

(oz/ton)

(millions)

Hidden Valley and Kaveroi

3.64

1.197

4.36

24.46

1.077

26.35

28.10

1.093

30.71

GRAND TOTAL

3.64

1.197

4.36

24.46

1.077

26.35

28.10

1.093

30.71

COPPER
						Proven												Probable												Total
						Reserves												Reserves												Reserves
		Tons				Grade				Cu lbs				Tons				Grade				Cu lbs				Tons				Grade				Cu lbs
PNG		(millions)				(%)				(millions)				(millions)				(%)				(millions)				(millions)				(%)				(millions)
Golpu			—				—				—				54.63				1.025				1,234.0				54.63				1.025				1,234.0
GRAND TOTAL			—				—				—				54.63				1.025				1,234.0				54.63				1.025				1,234.0

MOLYBDENUM

Proven

Probable

Total

Reserves

Reserves

Reserves

Tons

Grade

Mo lbs

Tons

Grade

Mo lbs

Tons

Grade

Mo lbs

PNG

(millions)

(lbs/ton)

(millions)

(millions)

(lbs/ton)

(millions)

(millions)

(lbs/ton)

(millions)

Golpu

—

—

—

54.63

0.238

13.00

54.63

0.238

13.00

GRAND TOTAL

—

—

—

54.63

0.238

13.00

54.63

0.238

13.00

     Our methodology for determining our reserves is subject to change and is based upon estimates and assumptions made by management regarding a number of factors as noted above in this section.

Worldwide Operations

Description of Property

     The following is a map of our worldwide operations:

     Our operational mining areas in South Africa are set forth below:

		Hectares				Acres
Doornkop			2,941				7,267
Elandsrand			5,113				12,634
Free State (includes Masimong and Virginia operations)			22,583				55,802
Tshepong and Phakisa			10,799				26,683
Bambanani			2,356				5,821
Joel			2,162				5,342
St Helena			5,856				14,471
Kalgold			615				1,520
Evander			36,898				91,174
Target (includes Loraine)			7,952				19,649
Total			97,275				240,363

Our discontinued operational mining areas are set forth below:

		Hectares				Acres
Mt. Magnet			97,491				240,906
Cooke (Randfontein)			7,875				19,460
Lindum (Randfontein)			3,231				7,983
Total			108,597				268,349

     In PNG, we hold granted tenements as set forth below:

		Hectares				Acres
PNG			220,600				545,114
Total Worldwide Operations			426,472				1,053,826

     In line with the rest of the South African mining industry, and in an effort to reduce costs, we have been rationalizing our mineral rights holdings in recent years. Accordingly, over the past three years, we have disposed of our shares and participation rights in areas within and outside of South Africa in which we have not actively pursued mining. However, in some cases we have retained certain participation rights and option clauses in disposed of properties and mining rights. We may continue to investigate further disposals.

Geology

     The major portion of our South African gold production is derived from mines located in the Witwatersrand Basin in South Africa. The Witwatersrand Basin is an elongated 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 six kilometer thick stratigraphic sequence consisting mainly of quartzites and shales with minor volcanic units. The majority of production is derived from auriferous placer reefs situated at different stratigraphic positions and at varying depths below the surface in three of the seven defined goldfields of the Witwatersrand Basin.

     Our Hidden Valley project comprises low sulphidation carbonate-base metal-gold epithermal deposits within the Morobe Goldfield, in the Morobe Province of PNG. In the Hidden Valley project area, a batholith of Morobe Granodiorite (locally a coarse grained monzogranite) is flanked by fine metasediments of the Owen Stanley Metamorphics. Both are cut by dykes of Pliocene porphyry ranging from hornblende-biotite to feldspar-quartz porphyries. A number of commonly argillic altered and gold anomalous breccias are known, including both hydrothermal and over printing structural breccias. The Hidden Valley deposit area is dominated by a series of post Miocene faults controlling the gold mineralization, including an early north trending set and the main northwest faulting.

     Our Wafi project comprises the sedimentary/volcaniclastic rocks of the Owen Stanley Formation that surround the Wafi Diatreme and host the gold mineralization. Gold mineralization occurs as extensive high-sulphidation epithermal alteration overprinting porphyry mineralization and epithermal style vein-hosted and replacement gold mineralization with associated wall-rock alteration. The Golpu Copper-Gold project is located about one kilometer northeast of the Wafi gold orebody. It is a porphyry (diorite) copper-gold deposit. The host lithology is a diorite that exhibits a typical zoned porphyry copper alteration halo and the mineralized body can be described as a porphyry copper-gold “pipe”.

Harmony’s Mining Operations — Overview

     Previously, we discussed our South African operations per legal entity, which by design were geographically grouped. These were Free State (owned by Harmony Company), Freegold, Elandsrand (originally known as the Elandskraal operations), Randfontein, Evander, Avgold, ARMgold and Kalgold. The shafts were then further divided into categories of “Quality”, “Leveraged”, “Growth” and “Surface”.

     As discussed under Item 4. “South African Operations”, we have changed the way in which we manage our operations. In line with this change, we have amended the manner in which we discuss our operations.

     In South Africa, we conduct underground mining at 11 operations:

	•		Tshepong (formerly part of Freegold)
	•		Phakisa (formerly part of Freegold)
	•		Bambanani (formerly part of Freegold)
	•		Doornkop (formerly part of Randfontein)
	•		Cooke operations (consists of Cooke 1, 2 and 3 shafts, formerly part of Randfontein)
	•		Elandsrand
	•		Masimong (formerly part of the Free State region)
	•		Virginia operations (consists of Harmony 2, Merriespruit 1 & 3, Unisel and Brand 3 & 5, all formerly part of the Free State region)
	•		Target (forms part of Avgold’s operations)
	•		Evander (consists of Evander 5, 7 and 8)
	•		Joel (formerly part of Freegold, now included under “Other — Underground”)

     We conduct surface mining at five sites (all included in “Other — Surface”):

	•		Free State (also known as Phoenix)
	•		Randfontein (Cooke plant has been classified as discontinued operations along with the Cooke operations)
	•		Freegold
	•		Kalgold
	•		Target

     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).

     Internationally, our mining was previously conducted at the following two sites in Australia:

	•		Mt. Magnet — The site has put on care and maintenance as at the end of December 2007. On August 1, 2008, the Monarch Gold’s administrator indicated that Monarch Gold would not proceed with the proposed purchase, and consequently the agreement was terminated. We have since resumed management of the of the Mt. Magnet operations and recommenced the sales process — See “International Operations” above.
	•		South Kalgoorlie — we finalized the sale of this operation with Dioro on November 30, 2007 — See “Disposals” above.

     Underground and surface mining was conducted at each of these operations, with underground access through two declines at Mt. Magnet and one decline at South Kalgoorlie and surface access principally through open-pits. Surface mining at South Kalgoorlie ceased in fiscal 2006 with treatment consisting of Mt. Marion ore and low grade stockpiles. Open-pit mining recommenced at South Kalgoorlie mines during fiscal 2007. The Mt. Marion underground operation at South Kalgoorlie Mines ceased in June 2007, with only open-pit operations continuing on that site until the date of sale to Dioro.

     The following discussion is a two-part presentation of our operations:

	•		an overview of our South African mining operations with a discussion and production analysis of each of our operating segments; and
	•		an overview of our International (Australian and PNG) operations.

     Where we have translated the Rand amount budgeted for capital expenditures in 2009 into U.S. dollars, we have used the closing rate at the balance sheet date.

South African Mining Operations

Unless indicated otherwise, the discussions below are for continuing operations.

Underground

Tshepong, Phakisa and Bambanani

Introduction: We acquired Tshepong, Phakisa and Bambanani when we, in January 2002, acquired the Freegold operations from AngloGold through a 50 % joint venture with ARMgold. In September 2003, we acquired 100% of these operations when ARMgold became a wholly owned subsidiary. These operations are located in the Free State province. Production from the operations is processed through two processing facilities (the Free State 1 (“FS 1 Plant”) and Central plant, the latter forms part of our Virginia operations).

History: Exploration, development and production history in the area of the Freegold 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.

Geology: The operations are located in the Free State Goldfield, which is on the southwestern edge of the Witwatersrand basin. The Bambanani, Tshepong and Phakisa mines are located to the north and west of Welkom. Mining is primarily conducted in the Basal reef, with limited exploitation of the B Reef at Tshepong. The reefs generally dip towards the east or northeast while most of the major faults strike north-south. B Reef is being mined at Tshepong with potential of being exploited elsewhere.

Mining Operations: These operations are subject to the underground mining risks detailed in the Risk Factors section. The management teams regularly revisit their mining strategy and management procedures in order to minimize risks.

     Mining is conducted at depths ranging from 1,911 and 3,129 meters at Bambanani and between depths of 1,671 and 2,245 meters at Tshepong. The primary mining challenges at these operations are seismic risks, ventilation and fire avoidance. Bambanani is classified as a seismically active operation with seismic activity monitoring systems installed to do active seismic risk evaluation. Seismic activity monitoring systems are upgraded on a continuous basis to ensure that it is kept abreast of emerging technology. Current ventilation and refrigeration systems were evaluated and improved with refrigeration plants installed at the Bambanani and Tshepong Mines. We believe this will improve productivity and safety after operations at Tshepong were hampered by a number of fires and seismic events that significantly affected production in the first half of fiscal 2008.

     The Tshepong Decline project, which started in April 2003, has accessed an additional two levels (69 and 71) of the Tshepong North Shaft. The Sub 66 project neared completion at the end of June 2008 with a total capital expenditure of R289 million (U.S.$39.8 million). The balance of the final estimated capital of R291million (U.S.$40 million) will be spent during the first quarter of fiscal 2009. Production commenced at Sub 66 Decline during the year, with the build-up to continue over the next two years. Emphasis is now being placed on significantly increasing mineable reserves. Poor ground conditions caused some delays to the project, with the final mining component being completed in June 2008, and all project work scheduled for completion by December 2008. Good progress was made at the Sub 71Decline project during fiscal 2008, with a total of 1,089 metres being developed by year-end. The escalation of input costs, combined with skills shortages (design and engineering draughting personnel) had a negative impact on the project. First production is expected in August 2012, with full production anticipated in July 2017. The total estimated value of this project is R132 million (U.S.$18 million).

     The development at Phakisa, a surface shaft, sunk to 75 level elevations and a planned decline shaft to 85 levels will access the ore reserves to a depth of 2,662 meters below surface. It is estimated that the area will yield 22.0 million tons, recovering 182.5 tons of gold over a project life of 22 years. Project completion requires sinking of a decline shaft, equipping and commissioning of the shaft with access development and stoping to maximum production build-up at a capital cost of R1,348 million (U.S.$185.5 million). To date, R866 million (U.S.$119.2 million) has already been spent. Good progress was achieved during fiscal 2008, with the reef ore passes, reef hoisting facility and Rail-veyor reef and waste handling on 55 level completed. The second train on the Rail-veyor is planned for October 2008. Installation of the permanent water handling systems (i.e., Settlers, Main Pump Station on 77 Level, Mud press and underground dams) has progressed and expected completion is October 2008. The cooling systems of Phakisa Shaft will include a first phase 10MW Ice Plant on surface. This will be a first in the gold

mining industry. Phakisa started the first production during September 2007 and will be opening up ore reserves for the next two years. The project is expected to be in full production in June 2011 at 83,000 tons per month. The average production rate per annum over the peak period of life of mine is 253,360 ounces.

     Bambanani was restructured during the third quarter of fiscal 2008 due to the power shortages in the country. This resulted in the tonnages being reduced by 50%. There was also a significant reduction in the labor complement, with 2,086 people leaving through transfers and voluntary retrenchments. Bambanani now operates as a low tonnage high grade mine (8.0g/t recovered grade).

     Conops was introduced at the operations during the quarter ended December 31, 2003. Conops were stopped at Bambanani during April 2005. Conops was officially stopped at Tshepong during January 2008 after a due diligence study conducted during fiscal 2007 indicated that Conops was not delivering at the planned levels. For a detailed discussion on Conops and the evaluation process that was followed, see Item 5. “Operating and Financial Review and Prospects — Conops”.

     During fiscal 2008, Tshepong accounted for 14% (14% in 2006 and 2007) of our total gold sales, with Phakisa accounting for 0.2% (nil in 2006 and 2007) and Bambanani 8% (8% in 2006 and 2007).

Safety: During fiscal 2008, the safety statistics for the operations compared to the Group average for lost time frequency rate (“LTFR”) of 12.83 per million hours worked and fatality frequency rate (“FFR”) of 0.18 are as follows:

				LTFR					FFR
	Tshepong			18.52					0.17
	Phakisa			4.83					0.37
	Bambanani			11.18					0.40

Safety standards receive constant and high-level attention at all the operations.

Plants: The ore from theses operations are sent to FS 1 Plant for processing. This 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 semi-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 following table sets forth processing capacity and average tons milled during the fiscal 2008 for the FS 1 Plant:

						Average Milled for
		Processing				the Fiscal Year
Plant		Capacity				Ended June 30, 2008
		(tons/month)				(tons/month)
FS 1			420,000				416,447

     In fiscal 2008, FS 1 Plant recovered approximately 97% of the gold contained in the ore delivered for processing.

Production analysis:

		Fiscal Year Ended June 30,
Tshepong		2008				2007				2006
Production
Tons (‘000)			1,649				1,824				1,786
Recovered grade (ounces/ton)			0.166				0.175				0.188
Gold sold (ounces)			273,119				318,887				335,289

		Fiscal Year Ended June 30,
Tshepong		2008				2007				2006
Results of operations (millions) ($)
Product sales			223				203				180
Cash cost			125				112				111
Cash profit			98				91				69
Cash costs
Per ounce of gold ($)			457				351				332
Capex (millions) ($)			27				26				21

     Tons milled from the Tshepong shaft increased to 1,824,000 in fiscal 2007, compared with 1,786,000 in fiscal 2006. Ounces sold were 318,887 in fiscal 2007, compared with 335,289 in fiscal 2006. This decrease was attributable to the decrease in recovery grade to 0.175 in fiscal 2007, compared with 0.188 in fiscal 2006. The decrease in recovery grade was primarily due to decreases in the shaft call factor, plant call factor and the average mining grade which was 1365 cmg/t in fiscal 2007, compared to 1440 cmg/t in fiscal 2006, in line with the Life of Mine (LOM) profile. Industry standard practice in South Africa is to report drill results and cut-off grades for resource estimates in gold as thickness-grade values (cmg/t).

     Cash costs for the Tshepong shaft were U.S.$112 million in fiscal 2007, compared with U.S.$111 million in fiscal 2006. Cash costs per ounce were U.S.$351 in fiscal 2007, compared with U.S.$332 in fiscal 2006. This increase in unit cost was attributable primarily due to decrease in the number of ounces of gold produced.

     Tons milled declined by 10% from 1,824, 000 tons in fiscal 2007 to 1,649,000 in fiscal 2008, with gold production decreasing by 14% from 318,887 ounces in fiscal 2007 to 273,119 ounces in fiscal 2008. The decrease was attributable to the decrease in the recovery grade to 0.166 in fiscal 2008, compared with 0.175 in fiscal 2007. The decrease in recovery grade was primarily due to the decrease in the shaft call factor and the average mining grade which was 1275 cmg/t in fiscal 2008, compared to 1365 cmg/t in fiscal 2007. The drop in the average mining grade is in line with the Life of Mine profile. During fiscal 2007 the mining in the east south block was in the main high grade pay shoot and as we continued mining south during fiscal 2008 we where mining closer to the edge of this high grade channel. The continuation of this channel will be mined once the sub66 and sub 71 decline is completed. Tshepong was hampered by a number of fires and seismic events that significantly affected production in the first half of fiscal 2008. The cessation of Conops also resulted in lower production.

     Cash costs for the Tshepong shaft were U.S.$125 million in fiscal 2008, compared with U.S.$112 million in fiscal 2007. Cash costs per ounce were U.S.$457 in fiscal 2008, compared with U.S.$351 in fiscal 2007. This increase in unit cost is attributable primarily to decrease in the number of ounces of gold produced. Cash costs have increased by 11% in fiscal 2008, primarily due to increases in the costs of labor and supplies and the effect of inflation on supply contracts.

     On a simplistic basis, assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven and probable ore reserves of 26.0 million tons (4.6 million ounces) will be sufficient for Tshepong to maintain underground production until approximately 2024. 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.

     Capital Expenditure: We incurred approximately R195 million (U.S.$26.8 million) in capital expenditures at the Tshepong shaft in the fiscal 2008, primarily for the decline project and ongoing development. We have budgeted R74.7 million (U.S.$10.3 million) for project capital expenditures in fiscal 2009. This capital includes R60.6 million (U.S.$8 million) for the additional two levels 73 and 75 and B Reef exploration project of R10.8 million (U.S.$1.5 million).

		Fiscal Year Ended June 30,
Phakisa		2008				2007				2006
Production
Tons (‘000)			34				—				—
Recovered grade (ounces/ton)			0.123				—				—
Gold sold (ounces)			4,212				—				—

		Fiscal Year Ended June 30,
Phakisa		2008				2007				2006
Results of operations (millions) ($)
Product sales			4				—				—
Cash cost			2				—				—
Cash profit			2				—				—
Cash costs
Per ounce of gold ($)			556				—				—
Capex (millions) ($)			40				32				23

     The expected capacity of the Phakisa shaft will be 131,175 tons per month. Phakisa has no rock hoisting facilities and all rock will be transported via a Rail system on 55 level to the Nyala shaft for hoisting to surface. First production took place during October 2007, with a build up to full production expected in the next two to three years.

     On a simplistic basis reported proven and probable underground ore reserves of 21.9 million tons (5.3 million ounces) will be sufficient for the Phakisa shaft to, once production commence, maintain production until approximately fiscal 2030. 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.

     Capital Expenditure: We incurred approximately R293 million (U.S.$40 million) in capital expenditures at the Phakisa operations in the fiscal year ended June 30, 2008. We have budgeted Rand 330 million (U.S.$45 million) for capital expenditures in fiscal 2009, primarily for the establishing and development of the shaft.

		Fiscal Year Ended June 30,
Bambanani		2008				2007				2006
Production
Tons (‘000)			912				1,283				1,402
Recovered grade (ounces/ton)			0.174				0.154				0.143
Gold sold (ounces)			158,985				197,060				200,739
Results of operations (millions) ($)
Product sales			128				126				106
Cash cost			102				115				101
Cash profit			26				11				5
Cash costs
Per ounce of gold ($)			641				586				502
Capex (millions) ($)			15				17				14

     Tons milled from the Bambanani shaft decreased to 1,283,000 in 2007 compared with 1,402,000 in fiscal 2006. An underground fire in March 2007 resulted in production loss of 4,180 ounces in fiscal 2007. Ounces sold were 197,060 in fiscal 2007, compared with 200,739 in fiscal 2006. The decrease in volumes was offset by an increase in the recovered grade, which increased from 0.143 in fiscal 2006 to 0.154 in fiscal 2007.

     Cash costs for Bambanani were U.S.$586 in fiscal 2007, compared with U.S.$502 in fiscal 2006. The costs per ounce increased by 17% in fiscal 2007, due primarily to increases in the costs of labor and supplies and the effect of inflation on supply contracts.

     Tons milled from the Bambanani shaft decreased to 912,000 in 2008 compared with 1,283,000 in fiscal 2007. Ounces sold were 158,985 in fiscal 2008, compared with 197,060 in fiscal 2007. This decrease was due to the restructuring of the shaft due to power constraints but was offset by a better recovered grade, which increased from 0.154 in fiscal 2007 to 0.174 in fiscal 2008.

     Cash costs for Bambanani were U.S.$641 in fiscal 2008, compared with U.S.$586 in fiscal 2007. The costs per ounce increased by 9% in fiscal 2008, due to the slow start up after the collapsing of the old ore pass system and increases in the costs of labor and supplies and the effect of inflation on supply contracts

     The rock hoisting capacity at Bambanani is 116,000 tons per month. The average tons milled in fiscal 2008 was 76,000 tons per month due to the restructuring during the latter half of the fiscal year. 46,000 tons per month are planned for fiscal 2009, offset by an increased recovered grade.

     On a simplistic basis, assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven

and probable ore reserves of 4.2 million tons (1.2 million ounces) will be sufficient for Bambanani to maintain underground production until approximately 2020. 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.

Capital Expenditure: We incurred approximately R107 million (U.S.$14.7 million) in capital expenditures at Bambanani in the fiscal 2008, primarily for ongoing development. We have budgeted R25.3 million (U.S.$3.5 million) for capital expenditures in fiscal 2009 for access development for the shaft pillar extraction and R26.3 million (U.S.$3.6 million) for ongoing development.

Doornkop

Introduction: Doornkop is located in the Gauteng Province of South Africa, approximately thirty kilometers west of Johannesburg. The operation is owned by Randfontein Estates Limited (“Randfontein”). Doornkop currently operates under its own mining authorization of 2,941 hectares. Production is treated at the Doornkop plant.

History: We acquired this operation when Randfontein became a wholly-owned subsidiary during calendar year 2008.

Geology: These operations are 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 Rand Syncline.

     During the 2008 year the gathering of additional geological information from on-reef development and exploration drilling on the South Reef has increased our knowledge about the sedimentology and grade characteristics of this ore body. This new knowledge has been incorporated into a process whereby the geological depositional model has been extensively reviewed. This led to a change in the model from an original more channelized deposit to what we now see as being a more sheet-like deposit that was formed in a lower energy environment where the grade is distributed more evenly across the ore body. This change resulted in an overall drop in the grade estimate of the South Reef. In practice, less selective mining would be taking place as a result and that would enable higher percentage extractions of the total ore body.

     There are six identified main reef groupings in the area: 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: These operations are subject to the underground mining risks detailed in the Risk Factors section. 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 mines. 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 are indicated in the drilling, appropriate preventative action is taken.

     Currently, the Kimberley Reef is mined on the upper levels of the Doornkop Shaft between 900 and 1,100 meters below surface. Most of this mining is taking place on channel edges, which results in sporadic high, but mostly low recovered grades. Mining from conventional sections of this reef ceased during fiscal 2008 while the trackless section will continue for two years during the build-up phase of production from the South Reef. During fiscal 2008, production was suspended for 18 days due to equipping relating to the Doornkop South Reef project. These overlapped with the Eskom power shortages to some degree, and both had an impact on the production.

     The Doornkop South Reef Project was announced on January 22, 2003. The project involved the deepening of the Doornkop main shaft to 1,973 meters to the South Reef, which lies between 1,650 and 2,000 meters below surface, and includes development towards these mining areas. The estimated final capital cost is R1.634 million (U.S.$224.8 million), with R956 million (U.S.$131.6 million) spent as of June 30, 2008.

     The most significant achievement for fiscal 2008 was the completion of the sinking operations and equipping of winding plant compartments. The rock winder on surface was commissioned during March 2008. The Rock winder compartments in the shaft will be equipped by January 2009. Milestones for fiscal 2008 included the completion of station development and water and rock storage facilities

which will facilitate the first years of production build-up to full production. Remaining work includes development of two additional silos, development to reef on 192, 197 and 202 levels and pump station commissioning in October 2008. Full production is expected in July 2012.

     During fiscal 2008, Doornkop accounted for 2% (2% in 2006 and 2007) of our total gold sales.

Safety: The safety record at these operations during fiscal 2008 was as follows: in terms of LTFR of 8.55 per million hours worked achieved at Doornkop compared favourably with the group average of 12.83. The FFR (0.19) compared unfavorably with the group average of 0.18.

     Safety at the operations receives constant and high-level attention and where problems are identified, steps are taken to address the situation.

Plants: The processing facilities presently comprises of one operating plant, the Doornkop metallurgical plant, which is serviced by a surface rail network. The Doornkop metallurgical plant, commissioned in 1985, is a conventional CIP plant, which was used to treat waste rock and other surface accumulations. It is now treating all ore from underground mining at the Doornkop and Cooke operations.

The following table sets forth processing capacity and average tons milled during fiscal 2008 for the Doornkop plant:

						Average Milled for the
		Processing				Fiscal Year Ended
Plant		Capacity				June 30, 2008
		(tons/month)				(tons/month)
Doornkop			220,000				144,537

     In fiscal 2008, the Doornkop plant recovered approximately 95% of the gold contained in the ore delivered for processing. During fiscal 2006, the Doornkop plant was upgraded and all underground tons were moved from Cooke to Doornkop plant.

Production analysis:

		Fiscal Year Ended June 30,
Doornkop		2008				2007				2006
Production
Tons (‘000)			494				597				515
Recovered grade (ounces/ton)			0.089				0.096				0.085
Gold sold (ounces)			44,413				57,364				43,593
Results of operations (millions) ($)
Product sales			35				37				23
Cash cost			31				25				24
Cash profit			4				12				(1	)
Cash costs
Per ounce of gold ($)			703				439				558
Capex (millions) ($)			48				38				26

     Tons milled from Doornkop shaft were 597,000 in fiscal 2007, compared with 515,000 in fiscal 2006. Mining continues in the old, upper areas of the mine on the Kimberley reef, while the South Reef project is developed. Volumes increased, mainly as a result of flexibility created during the year by increasing development of the orebody. Ounces sold were 57,364 in fiscal 2007, compared with 43,593 in fiscal 2006. This increase in ounces sold was primarily due to the increase in recovered grade and additional tons milled. The recovered grade improved to 0.096 in fiscal 2007, compared with 0.085 in fiscal 2006.

     Cash costs per ounce of gold were U.S.$439 in fiscal 2007, compared with U.S.$558 in fiscal 2006. This decrease was attributable primarily to the higher production volumes and the higher recovered grade.

     Tons milled from Doornkop shaft were 494,000 in fiscal 2008, compared with 597,000 in fiscal 2007. Volumes were negatively affected mainly as a result of an 18 day planned production stoppage to facilitate required shaft work and a reduction in volume at the conventional Kimberley mining section due to low grades. The shaft work was related to the South Reef project sinking program. In addition three days were lost to the industry through the Eskom power management process. Ounces sold were 44,143 in fiscal 2008, compared 57,364 in fiscal 2007.

The decrease in ounces sold was primarily due to the lower recovery grade and decrease in tons milled. The recovered grade deteriorated to 0.089 in fiscal 2008, compared with 0.096 in fiscal 2007, due to the depletion of higher grade reserves in the Kimberley reef section of the mine. The conventional mining sections of this reef mined in the channel edge areas and production was stopped during June 2008. Production from trackless areas will continue during the build-up phase of mining from the project South Reef areas

     Cash costs per ounce of gold were U.S.$703 in fiscal 2008, compared with U.S.$439 in fiscal 2007. This increase was attributable primarily to the lower production volumes and industry wide cost increases. It was also adversely influenced by the movement out of Capital areas into production areas which resulted in costs previously incurred as capital expenditure, now being spent as operational costs.

     The hoisting capacity of the Doornkop shaft is 185,000 tons per month. The average tons milled in fiscal 2008 were 41,166 tons per month.

     On a simplistic basis, assuming no additional reserves are identified, at expected production levels, it is foreseen that the reported proven and probable ore reserves of 1.5 million tons (0.2 million ounces) will be sufficient for the Doornkop shaft to maintain production until approximately fiscal 2019. 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.

Capital Expenditure: We incurred approximately R349 million (U.S.$48.0 million) in capital expenditures in fiscal 2008 at Doornkop, primarily for the shaft completion & equipping, supporting infrastructure and development. We have budgeted R271.2 million (U.S.$37.3 million) for capital expenditures at the Doornkop South Reef project in fiscal 2009.

Elandsrand

Introduction: Elandsrand is located near Carletonville in the North West province of South Africa. The assets and associated liabilities were purchased during fiscal 2001 for approximately R1 billion (U.S.$128.4 million) from Anglogold. Production from the operation is treated at the Elandskraal plant.

History: Gold mining began at Elandsrand in 1978 following approval of the project in 1974 by Elandsrand Gold Mining Company. Two surface shafts and two adjoining sub-vertical shafts were sunk at Elandsrand. The sub-vertical shafts at Elandsrand, which accessed the deeper part of the VCR reef in the lease area, were completed in 1984. The deepening of the sub-vertical shafts to approximately 3,600 meters below surface, has been completed. Activities are currently focused on accessing and opening up areas of the new mine and on the development and construction of support infrastructure.

Geology: Elandsrand 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 take place up to 3,600 meters below surface at the Elandsrand 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 operation, 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 21 degrees to the south-southeast. Local variations in dip are largely due to the terrace-and-slope palaeotopography surface developed during VCR deposition.

     Mining Operations: The Elandsrand mine is subject to the underground mining risks detailed in the Risk Factors section.

     The Elandsrand mine, a mature mine with a declining production profile, has the challenge of a new mine being developed underneath the old mine. The implementation of Conops between August 2004 and February 2005 improved production. However, after an assessment done during fiscal 2008, Conops was stopped during February 2008. The operation is still hampered by the lack of flexibility, an issue that will be addressed by the full commissioning of the new mine. Due to the operating depths of the Elandsrand underground operations, seismicity and high rock stress are significant risks at the mine. We regularly review our mining strategy and management procedures at all of mining operations in our efforts to mitigate these risks. The primary challenges facing the Elandsrand operations are the lowering of working costs, increasing mining flexibility, controlling capital expenditure and the timely completion of the Elandsrand New Mine by fiscal 2010.

     Capital development on three levels of the New Mine has been completed and these levels are producing 54% of the total ounces from the Mine. Ongoing development is taking place in both easterly and westerly directions on these levels. Access development delays on two other levels resulted from slow progress of the access haulages through the Cobra Dyke.

During 2008, further progress was made with the project, notably:

	•		22 kv system to 100 level was completed and commissioned.
	•		The turbine dam between 92 and 95 level was completed during the year.
	•		The development of the refrigeration chambers on 98 and 100 level was completed.
	•		The centre hole of the No.3 Backfill shaft was drilled during the year and the preparation for the sinking of the sub-bank was started in June 2008.
	•		The end of capital position was reached on 113 level RAW East.
	•		The centralized blasting system was installed and commissioned on 102, 105, 109 and 113 levels.
	•		All piping associated with the pumping on 115 level was installed during the year including all electrical panels associated with the pumping.
	•		The chilled water feed and return shaft columns were installed in No.2 Backfill shaft from 95 to 105 level.

     The project is expected to be completed by fiscal 2010 and is expected to have a life of mine of 20 years. From the inception of the project through the end of fiscal 2008, R776 million (U.S.$106.8 million) has been expended. A further R228 million (U.S.$31.4 million) has been budgeted to complete the project.

     In October 2, 2007, an incident occurred at the Elandsrand operation involving a compressed pipe column which broke off below the shaft surface bank and fell to the bottom of the men — and - material shaft, causing extensive damage to the shaft steel work and electrical cables. The incident resulted in 3,000 workers being stranded underground for more than 30 hours. Mining operations were temporarily suspended for 42 days to allow for repairs to be conducted in the shaft. On November 16, 2007, we announced that a tripartite team, consisting of management, unions and the Department of Minerals and Energy had found the shaft to be in good working condition. Elandsrand mine was brought back into operation on November 19, 2007 after it followed precautionary safety procedures during the start up of underground workings. Management presented its findings of the investigation to the DME relating to the pipe failure, emergency power, water and evacuation services and procedures, as well as the impact of Conops on maintenance. While the emergency services were found to be acceptable, we have revised our emergency procedures and are in the process of completing a new Code of Practice relating to emergency preparedness. Conditions in the working places, following a 42 day period during which no production took place, were found to be better than expected. Production at Elandsrand has resumed, and the shaft was back in full production in December 2007.

     In fiscal 2008, our Elandsrand operations accounted for approximately 8% (8% in fiscal years 2007 and 2006) of our total gold sales.

Safety: During fiscal 2008, the safety record at the Elandsrand mine in terms of lost time frequency rate 18.49 per million hours worked compared unfavourably with the group average of 12.83. Significant work was done to address the seismic risk described above and the fatality frequency rate (0.08) returned to a more consistent ratio with the group average of 0.18 for underground operations. Safety standards from our other operations are being applied at Elandsrand and receive constant and high-level attention.

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. Loaded carbon from the Elandsrand Plant is transported by road to the Central Plant at Virginia for elution, electro-winning and smelting to produce gold. Residues from the CIP are pumped either to a backfill plant or directly to the tailings facility. Ore from Elandsrand underground operations are delivered to the plant for treatment via conveyor belt after being hoisted from underground. Due to a high percentage of freegold, a gravity concentration circuit is used to extract a large percentage of the gold. The sludge from this concentrator is then transported by air to the Target Plant for extraction and smelting.

     The following table sets forth processing capacity and average tons milled during fiscal 2008 for the plant:

						Average Milled for the
		Processing				Fiscal Year
Plant		Capacity				June 30, 2008
		(tons/month)				(tons/month)
Elandsrand Plant			185,000	(1)			81,713

     In fiscal 2008, the Elandsrand Plant recovered approximately 96.31% of the gold contained in the ore delivered for processing.

Production analysis:

		Fiscal Year Ended June 30,
Elandsrand		2008				2007				2006
Production
Tons (‘000)			981				1,117				987
Recovered grade (ounces/ton)			0.162				0.174				0.173
Gold sold (ounces)			158,631				194,710				170,867
Results of operations (millions) ($)
Product sales			133				124				90
Cash cost			103				103				89
Cash profit			30				21				1
Cash costs
Per ounce of gold ($)			652				527				523
Capex (millions) ($)			44				33				31