Edgar Filing: HARMONY GOLD MINING CO LTD

posam

As filed with the Securities and Exchange Commission on December 23, 2002

Registration No. 333-13516

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

________________

FORM F-3
POST-EFFECTIVE AMENDMENT NO. 2 TO
REGISTRATION STATEMENT UNDER
THE SECURITIES ACT OF 1933

________________

HARMONY GOLD MINING COMPANY LIMITED
(Exact name of Registrant as specified in its charter)

N/A
(Translation of the Registrant’s name in English)


South Africa	1041	N/A
(State or other jurisdiction of	(Primary Standard Industrial	(I.R.S. Employer
incorporation or organization)	Classification Code Number)	Identification No.)

Suite No. 1
Private Bag X1
Melrose Arch, 2076
South Africa
011-27-11-684-0140

(Address and telephone number of Registrant’s principal executive offices)

________________

CT Corporation System
111 Eighth Avenue
New York, New York 10011
(212) 894-8940
(Name, address and telephone number of agent for service)

________________

Copies to:

Linda J. Soldo, Esq.
Cleary, Gottlieb, Steen &
Hamilton
2000 Pennsylvania Avenue, N.W.
Washington, D.C. 20006

________________

Approximate date of commencement of proposed sale to public: June 21, 2001.

If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ]

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, as amended (the “Securities Act”), check the following box. [x]

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]

If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

PROSPECTUS

9,027,500 Ordinary Shares
in the form of Ordinary Shares or American Depositary Shares

Harmony Gold Mining Company Limited
(organized under the laws of South Africa)

A total of 9,027,500 ordinary shares of Harmony Gold Mining Company Limited are being offered to holders of Harmony warrants. Each warrant entitles its holder to purchase, on any business day on or before June 29, 2003, one ordinary share at an exercise price of R43.00 per ordinary share or the U.S. dollar equivalent determined as described in this prospectus, in each case subject to adjustment from time to time as described in this prospectus. As of December 13, 2002, Harmony had issued 4,807,858 of the offered ordinary shares upon exercise of warrants. The warrants were offered and sold by Harmony pursuant to a prospectus dated June 22, 2001 as part of a global offering of 27,082,500 ordinary shares and all 9,027,500 of the warrants.

The ordinary shares may be delivered in the form of ordinary shares or American Depositary Shares. Each ADS currently represents the right to receive one ordinary share. The ADSs are eligible for clearance and settlement through the facilities of The Depository Trust Company.

The ordinary shares are listed on the JSE Securities Exchange South Africa, the principal market for the ordinary shares, under the symbol “HAR.” Harmony’s ADSs are listed on the New York Stock Exchange under the symbol “HMY.” Harmony’s ordinary shares are also listed on the Official List of the UK Listing Authority and traded on the London Stock Exchange and are listed on the Premier Marché of Euronext Paris. Harmony’s International Depositary Shares, each representing the right to receive one ordinary share, are listed on Euronext Brussels.

On December 13, 2002, the closing price for the ordinary shares on the JSE Securities Exchange South Africa was R146.80 per share and the closing price for the ADSs on the New York Stock Exchange was $16.81 per ADS.

Investing in the ordinary shares and ADSs involves risks. See “Risk Factors” beginning on page 9.

Harmony will receive all proceeds from the exercise of warrants, less any expenses and fees retained by the transfer secretaries, the registrars or the U.S. warrant agent and other expenses as described in “Plan of Distribution.” The amount of net proceeds that Harmony ultimately receives upon exercise of the warrants will depend on the number of warrants that are exercised, the adjusted exercise price at the time of exercise and the amount of these expenses and fees.

The Securities and Exchange Commission and State securities regulators have not approved or disapproved of these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

Harmony expects to deliver the ordinary shares and ADSs issuable upon exercise of the warrants from time to time after the exercise and payment of the exercise price, in accordance with the procedures described in this prospectus.

December 23, 2002

No dealer, salesperson or other person is authorized to give any information or to represent anything not contained in this prospectus. You must not rely on any unauthorized information or representations. This prospectus is an offer to sell only the ordinary shares and ADSs offered hereby, but only under circumstances and in jurisdictions where it is lawful to do so. The information contained in this prospectus is current only as of its date.

This prospectus is part of a registration statement on Form F-3 that Harmony filed with the Securities and Exchange Commission using a “shelf” registration process. Under this process, ordinary shares or ADSs may be delivered from time to time subject to the exercise of the warrants by the holders thereof.

TABLE OF CONTENTS


Presentation of Financial Information			1
Certain Defined Terms			1
Prospectus Summary			2
Risk Factors			9
Use of Proceeds			23
Dividends and Dividend Policy			24
Exchange Rates			25
Capitalization and Indebtedness			26
Trading Markets and Price Information			27
Selected Historical and Pro Forma Financial Data			31
Operating and Financial Review and Prospects			37
Business			81
Glossary of Mining Terms			146
Major Shareholders			153
Directors and Senior Management			157
Certain Relationships and Related Party Transactions			167
Description of Harmony Ordinary Shares			168
Description of Harmony Warrants			179
Description of American Depositary Receipts			184
Exchange Controls and Other Limitations Affecting Security Holders			192
Taxation			194
Plan of Distribution			197
Experts			201
Validity of Securities			201
Where You Can Find More Information			201
Incorporation of Certain Information by Reference			202
Forward-Looking Statements			203
Enforceability of Civil Liabilities			204
Index to Financial Statements			205
Report of the Independent Accountants			F-1

Notice to U.K. Investors

This prospectus is only being distributed to and is only directed at (i) persons who are outside the United Kingdom or (ii) to investment professionals falling within Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2001, or the Order, or (iii) high net worth entities, and other persons to whom it may lawfully be communicated, falling within Article 49(2) of the Order or (iv) persons falling within Article 43(2) of the Order (all such persons together being referred to as relevant persons). The ordinary shares and ADSs are only available to, and any invitation, offer or agreement to subscribe, purchase or otherwise acquire such ordinary shares or ADSs will be engaged in only with, relevant persons. Any person who is not a relevant person should not act or rely on this document or any of its contents.

Notice to Australian Investors

The offer of ordinary shares and ADSs under this document is only being made in Australia to those persons who fall within the exceptions contained in Section 708 of the Australian Corporations Law. If you are an Australian investor and you do not fall within one of the exceptions contained in Section 708 of the Australian Corporations Law, you must return this document to Harmony immediately.

This document is not required to be lodged with the Australian Securities and Investments Commission under Section 718 of the Australian Corporations Law. It does not contain all of the information which would normally be contained in an Australian prospectus.

By applying for ordinary shares or ADSs under this document Australian investors are representing and warranting to Harmony that:

	•		the offer of ordinary shares and ADSs to them falls within the exceptions contained in Section 708 of the Australian Corporations Law; and

	•		they will comply with the onsale restrictions set out in “Plan of Distribution—Selling Restrictions—Australia.”

Notice to Canadian Investors

This document constitutes an offer of the ordinary shares and ADSs only in the provinces of Ontario and Quebec and only to investors in such provinces to whom such an offer may lawfully be made. All offers of the ordinary shares and ADSs in Canada must be done through a person permitted to sell securities such as the ordinary shares and ADSs in Canada. This document is not, and under no circumstances is it to be construed as, an advertisement or a public offering of the ordinary shares or ADSs in Canada. No securities commission or similar regulatory authority in Canada has reviewed or in any way passed upon this document or the merits of the ordinary shares or ADSs described herein and any representation to the contrary is an offense. Canadian purchasers should refer to the sections “Use of Proceeds,” “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit facilities and Other Borrowings” and “Plan of Distribution” contained in this document for a discussion of payments and repayments for which Harmony may use the proceeds of this offering.

Each Canadian investor who purchases ordinary shares or ADSs will be deemed to have represented to Harmony that: (i) the offer and sale of the ordinary shares or ADSs was not made through an advertisement in any printed media of general or regularly-paid circulation, radio, television or any other form of advertising; (ii) they have reviewed the paragraph below relating to resale restrictions; (iii) where required by law, they are purchasing as principal and not as agent; (iv) they are entitled under applicable Canadian securities laws to purchase such ordinary shares or ADSs without the benefit of a prospectus qualified under local Canadian securities laws; (v) if the investor is located in Ontario, they are a person to which a dealer registered as an international dealer in Ontario may sell ordinary shares or ADSs, and (vi) if the investor is located in Québec, they are a “sophisticated purchaser” within the meaning of the Securities Act (Québec).

Canadian purchasers of ordinary shares or ADSs should consult their own legal and tax advisers with respect to the tax consequences of an investment in the ordinary shares or ADSs in their particular circumstances and with respect to the eligibility of the ordinary shares or ADSs for investment by the purchaser under relevant Canadian legislation.

Harmony is a non-Canadian issuer and thus Ontario investors in the ordinary shares and ADSs will not receive the contractual right of action prescribed by Part 4 of Ontario Securities Commission Rule 45-501. As a result, Ontario investors must rely on other remedies that may be available, including statutory rights of action under Ontario law as well as common law rights of action for damages or rescission or rights of action under the civil liability provisions of U.S. federal securities law. Harmony is organized under the laws of South Africa. All or substantially all of Harmony’s directors and officers, as well as the experts named herein, are located outside of Canada and, as a result, may not be subject to service of process within Canada. All or a substantial portion of Harmony’s assets and the assets of other persons referred to the preceding sentence may be located outside of Canada and, as a result, it may not be possible to satisfy a judgement against Harmony or such other persons in Canada or to enforce a judgement obtained in Canadian courts against Harmony or such other persons outside of Canada.

Canadian investors hereby acknowledge that they have expressly requested that all documents evidencing or relating in any way to the sale of the securities described herein (including for greater certainty any purchase confirmation or any notice) be drawn up in the English language only. Les investisseurs Canadiens reconnaissent par les présentes avoir expressément exigé que tous les documents faisant foi ou se rapportant de quelque manière que ce soit à la vente des valeurs mobilières décrites aux présentes (incluant, pour plus de certitude, toute confirmation d’achat ou tout avis) soient rédigés en anglais seulement.

The distribution of the securities in Canada is being made on a private placement basis only and is exempt from the requirement that Harmony prepare and file a prospectus with the relevant Canadian regulatory authorities. Accordingly, any resale of the securities must be made in accordance with applicable Canadian securities laws, which will vary depending on the relevant Canadian jurisdiction, and which may require resales to be made in accordance with exemptions from Canadian registration and prospectus requirements. Canadian investors are advised to seek legal advice prior to any resale of the securities.

iii

Bisset Gold Mine Gold Mines LEGEND New Hampton Free State Operations Evander Randfontein Elandskraal Kalgold FreeGold Company (50% interest) Highland Gold (32.5% interest) Hill 50 Bendigo (31.8% interest) THE WORLDWIDE LOCATION OF HARMONY'S MINES

FREESTATE GOLDFIELD KLERKSDORP CARLETONVILLE JOHANNESBURG SPRINGS KLERKSDORP GOLDFIELD CARLETONVILLE GOLDFIELD WEST RAND GOLDFIELD CENTRAL RAND GOLDFIELD EAST RAND GOLDFIELD EVANDER GOLDFIELD KINROSS WELKOM VIRGINIA Randfontein Elandskraal Free State Operations FreeGold Company (50% interest) Evander SCALE: 0 30 km LEGEND Witatersrand Basin defined by the distribution of rock types belonging to the West Rand & Central Rand Groups Gold Mining Areas Harmony Gold Mines Kraaipan Greenstone Belt VRYBURG MAFIKENG BOTSWANA SCHWEIZER-RENEKE KRAAIPAN GREENSTONE BELT Kalgold Durban Port Elizabeth Cape Town Pretoria Johannesburg Welkom SOUTH AFRICA 15 THE LOCATION OF HARMONY'S SOUTH AFRICAN MINES

PRESENTATION OF FINANCIAL INFORMATION

Harmony is a South African company and the majority of its operations are located there. Accordingly, its books of account are maintained in South African Rand and its annual and interim financial statements are prepared in accordance with South African Statements of Generally Accepted Accounting Practice, or S.A. GAAP, as prescribed by law and are based on International Accounting Standards. Harmony also prepares annual financial statements in accordance with generally accepted accounting principles in the United States which are translated into U.S. dollars. The financial information included in this prospectus has been prepared in accordance with United States Generally Accepted Accounting Principles, or U.S. GAAP, and is presented in U.S. dollars. Unless otherwise stated, balance sheet item amounts are translated from Rand to U.S. dollars at the exchange rate prevailing on the last business day of the period (Rand 10.39 per $1.00 as at June 28, 2002), except for specific items included within shareholders’ equity that are converted at the exchange rate prevailing on the date the transaction was entered into, and income statement item amounts are translated from Rand to U.S. dollars at the average exchange rate for the period (Rand 10.20 per $1.00 for fiscal 2002).

CERTAIN DEFINED TERMS

All references to “South Africa” in this prospectus mean the Republic of South Africa.

This prospectus contains descriptions of gold mining and the gold mining industry, including descriptions of geological formations and mining processes. In order to facilitate a better understanding of these descriptions, this prospectus contains a glossary defining a number of technical and geological terms. See “Glossary of Mining Terms.”

In this prospectus, references to “R,” “Rand,” “¢” and “cents” are to the South African Rand, the lawful currency of South Africa, “A$” refers to Australian dollars, “C$” refers to Canadian dollars, “£” refers to British Pounds Sterling and references to “$” and “U.S. dollars” are to United States dollars.

For the convenience of the reader, certain information in this prospectus presented in Rand, A$, C$ and £ has been translated into U.S. dollars. By including convenience currency translations in this prospectus, we are not representing that the Rand, A$, C$ and £ amounts actually represent the U.S. or Australian dollar amounts, as the case may be, shown or that these amounts could be converted into U.S. or Australian dollars, as the case may be, at the rates indicated. Unless otherwise stated, the conversion rate for translations from Rand amounts into U.S. dollar amounts is Rand 8.74 per $1.00, which was the noon buying rate on December 13, 2002.

PROSPECTUS SUMMARY

This summary highlights information contained elsewhere in this prospectus or incorporated by reference herein. It does not contain all of the information that is important to you. You should read carefully the entire prospectus and the additional documents referred to in this prospectus to understand fully the offer.

Harmony

Harmony and its subsidiaries conduct underground and surface gold mining and related activities, including exploration, extraction, processing, smelting and refining. Harmony is the third largest gold producer in South Africa and one of the largest gold producers in the world. Harmony’s principal mining operations are located in South Africa and Australia. Harmony also has a gold mining operation in Canada, production at which was suspended in the quarter ended September 30, 2001 due to mining operations being uneconomical at then-current gold prices.

In South Africa, Harmony and its subsidiaries (excluding Harmony’s recently acquired interest in the Free Gold Company, as defined below) have 9 operating shafts in the Free State Province, 5 operating shafts at Evander in the Mpumalanga Province, 4 operating shafts at Randfontein in the Gauteng Province, an open cast mine at Kalgold in the North West Province and 2 production shaft units at Elandskraal in the North West and Gauteng provinces consisting of 6 shafts (2 of which are sub-vertical shafts). The Free Gold Company (in which Harmony has a 50% interest) has 11 operating shafts in the Free State Province.

Harmony conducts its Australian operations through two recently acquired Australian gold mining companies: New Hampton Goldfields Limited, or New Hampton, and Hill 50 Limited, or Hill 50. Harmony’s Australian operations include three operations in Western Australia: the Big Bell operations (which were acquired in the New Hampton transaction), the Mt. Magnet operations (which were acquired in the Hill 50 transaction) and the South Kalgoorlie operations (which include the Jubilee operations acquired in the New Hampton transaction and the New Celebration operations acquired in the Hill 50 transaction). Each of these operations conducts surface mining (principally through open pit methods) and underground mining, with access through one decline at Big Bell, two declines at Mt. Magnet and one decline at South Kalgoorlie.

Harmony is an independent growth oriented company in the gold production business and is distinguished by the focused operational and management philosophies that it employs throughout the organization. Harmony’s growth strategy is focused on building a leading international gold mining company through acquisitions, organic growth and focused exploration. Harmony is currently expanding in South Africa and Australia, building on Harmony’s position as a leading cost-effective South African gold company in order to enhance Harmony’s position as one of the world’s premier international gold producers.

Harmony’s current strategy is predominantly influenced by investment trends that have already resulted in significant restructuring and rationalization in the South African and international gold mining industries. Harmony believes these trends will continue to lead to significant realignments in the international gold production business. Harmony intends to continue to participate in the South African and international restructuring activity to continue to achieve its growth objectives.

The major components of Harmony’s strategy include:

	•		continuing to implement Harmony’s unique management structure and philosophy;

	•		growing through acquisitions in South Africa and internationally; and

	•		expanding Harmony’s exploration activities and development to increase its reserve base.

In fiscal 2000, Harmony acquired 100% of the outstanding ordinary share capital and 96.5% of the warrants to purchase ordinary shares of Randfontein Estates Limited, or Randfontein, a South African gold producer. Randfontein sold 561,638 ounces of gold in fiscal 2002, which were included in Harmony’s gold sales for fiscal 2002.

On April 9, 2001, Harmony completed the purchase of the assets and liabilities of the Elandskraal mines from AngloGold Limited, a South African gold mining company, or AngloGold. The Elandskraal operations sold 476,059 ounces of gold in fiscal 2002, which were included in Harmony’s gold sales for fiscal 2002.

On April 23, 2002, the ARMGold/Harmony Freegold Joint Venture Company (Pty) Limited, or the Free Gold Company, completed the acquisition of the Joel, Tshepong, Matjhabeng and Bambanani mines, associated infrastructure and other mineral rights in the Free State Province of South Africa, or the Free Gold assets, from AngloGold. The shares of the Free Gold Company are owned equally by Harmony and ARMGold. During Harmony’s fiscal 2002, sales from the Free Gold assets amounted to 1,143,243 ounces of gold and Harmony’s interest in two months of these sales (reflecting the period from May 1, 2002 to June 30, 2002) totaled 104,005 ounces (referred to as “attributable ounces”). Because Harmony equity accounts for its 50% interest in the Free Gold Company, sales from the Free Gold assets are not included in Harmony’s sales figures in this prospectus. For more information on Harmony’s consolidation policy, see note 2(b) to the consolidated financial statements.

As described above, in Australia, Harmony acquired New Hampton with effect from April 1, 2001, and Hill 50 with effect from April 1, 2002. Harmony closed its offer for all of the outstanding shares of New Hampton on July 12, 2001, and subsequently completed a compulsory acquisition of the remaining shares and options under the rules of the Australian Stock Exchange. Harmony closed its offer for all of the outstanding shares and listed options of Hill 50 on May 3, 2002 and subsequently completed a compulsory acquisition of the remaining shares and options under the rules of the Australian Stock Exchange. In an effort to increase efficiency and reduce corporate expenditures, in the quarter ended June 30, 2002 Harmony integrated New Hampton’s Jubilee operations with Hill 50’s New Celebration operations to form the South Kalgoorlie operations and combined the corporate offices

of New Hampton and Hill 50 in Perth. With effect from April 1, 2002, Harmony reports the New Hampton and Hill 50 operating results together within an “Australian Operations” segment, which is further segmented into the Big Bell operations, the Mt. Magnet operations and the South Kalgoorlie operations (consisting of the Jubilee and New Celebration operations). New Hampton sold 191,521 ounces of gold in fiscal 2002, which were included in Harmony’s gold sales for fiscal 2002, and Hill 50 sold 275,185 ounces of gold in fiscal 2002, three months of which, or 61,472 ounces, were included in Harmony’s gold sales for fiscal 2002.

Harmony has also recently acquired equity interests in Bendigo Mining NL, a single project Australian gold mining development company, or Bendigo, Highland Gold Limited, or Highland Gold, a privately held company organized under the laws of Jersey, Channel Islands that holds Russian gold mining assets and mineral rights and High River Gold Mines Limited, or High River, a company organized under the laws of Ontario, Canada that is listed on the Toronto Stock Exchange and holds gold mining assets in Russia, Canada and West Africa. Harmony acquired ordinary shares representing approximately 31.8% of the outstanding share capital of Bendigo in December 2001, ordinary shares representing approximately 32.5% of the outstanding share capital of Highland Gold in May and June 2002 and ordinary shares representing approximately 21.0% of the outstanding share capital of High River in November 2002.

In fiscal 2002, Harmony processed approximately 22.811 million tons of ore and sold 2,388,458 ounces of gold, which included sales from New Hampton, Elandskraal and three months of sales from Hill 50 (reflecting the period during which Hill 50 was operated for the account of Harmony), but excluded sales from the Free Gold assets. On a pro forma basis, the combined gold sales of Harmony (including Elandskraal, New Hampton and Hill 50, but excluding the Free Gold assets) would have been 2,602,171 ounces for fiscal 2002.

The Offering


The offering		9,027,500 shares, in the form of ordinary shares and ADSs, upon exercise of the Harmony’s warrants and payment of the exercise price, in the United States and elsewhere. As December 13, 2002, Harmony had issued 4,807,858 of the ordinary shares upon exercise of Harmony’s warrants.
		Each warrant entitles its holder to purchase, on any business day on or before June 29, 2003, one ordinary share, in the form of an ordinary share, at Rand 43.00 per ordinary share or the U.S. dollar equivalent, subject to adjustment from time to time as described in this prospectus, or in the form of an ADS at the U.S. dollar exercise price, subject to adjustment from time to time as described in this prospectus. Holders exercising their warrants through the U.S. warrant agent must pay the U.S. dollar exercise price. Holders electing to receive ADSs on exercise of their warrants must exercise through The Bank of New York, as U.S. warrant agent. The U.S. dollar exercise price of these ordinary shares and ADSs will be determined as described in this prospectus. For more information on the terms and conditions of the warrants, including a discussion of possible adjustments to the exercise price, you should read “Description of Harmony Warrants.”
Securities outstanding after the offering¹		178,779,845 ordinary shares.

Offering price		R43.00 or the U.S. dollar equivalent determined as described in this prospectus per ordinary share, or the U.S. dollar equivalent per ADS, in each case subject to adjustment as described in this prospectus.
The ADSs		Each American Depositary Share, or ADS, currently represents the right to receive one ordinary share. The ADSs are evidenced by American Depositary Receipts, or ADRs, executed and delivered by The Bank of New York, as depositary.
Use of proceeds		Harmony has used and intends to use the net proceeds of this offering for general corporate purposes, including making capital expenditures and funding working capital. See “Use of Proceeds.”
Listing and trading		Harmony’s ordinary shares are listed on the JSE Securities Exchange South Africa, are listed on the Official List of the UK Listing Authority and traded on the London Stock Exchange and are listed on the Premier Marché of Euronext Paris. Harmony’s International Depositary Shares are listed on Euronext Brussels.
		Harmony’s ADSs are listed on the New York Stock Exchange.


		The ADSs are eligible for clearance and settlement through the facilities of The Depository Trust Company.
Symbol of the ordinary shares on the JSE Securities Exchange South Africa		HAR

Symbol of the ADSs on the New York Stock Exchange		HMY

Risk factors		For a discussion of certain factors that you should carefully consider in connection with an investment in the ordinary shares or ADSs, see “Risk Factors.”

This assumes the exercise of all 9,027,500 of the warrants. As of December 13, 2002, 4,807,858 of the warrants have been exercised.

Summary Consolidated Financial and Operating Data

The following summary consolidated financial data for the last three fiscal years has been extracted from the more detailed information and financial statements, including Harmony’s audited consolidated financial statements for each of the years in the three years ended June 30, 2002 and at June 30, 2001 and 2002 and the related notes, which appear elsewhere in this prospectus. The historical consolidated financial data at June 30, 2000 has been extracted from Harmony’s consolidated financial statements not included in this prospectus. The financial data has been prepared in accordance with U.S. GAAP.


	Year ended June 30,

	2002¹		2001²		2000³

Dollars in thousands, except per share data
Income Statement Data
Revenues		696,840		607,220		490,651
Equity income of joint venture		13,176⁴		—		—
Equity loss of associate companies		473⁵		—		1,401⁶
Income before taxes and minority interest		103,659		29,804		73,489
Income before cumulative effect of change in accounting principle⁷		87,716		14,830		57,030
Net income		87,716		9,008		57,030
Basic earnings per share before cumulative effect of change in accounting principle ($)⁸		0.57		0.15		0.68
Basic earnings per share ($)⁹		0.57		0.09		0.68
Cash dividends per share ($)		0.07		0.16		0.19
Other Financial and Operating Data
Cash dividends per share ($)¹⁰		0.41		—		—
Gold sold (oz)		2,388,458		2,140,043		1,625,925
Cash cost per ounce of gold ($/oz)¹¹		196		234		245


	At June 30,

	2002¹²		2001¹³		2000¹⁴

Balance Sheet Data
Cash and cash equivalents		90,223		144,096		77,942
Short-term investments		—		—		—
Other current assets		109,397		136,794		59,582
Property, plant and equipment—net		812,753		667,113		557,725
Restricted cash		—		—		7,310
Investments in associates¹⁵		42,791		—		—
Investment in joint venture¹⁶		102,578		—		—
Other long-term assets¹⁷		137,399		81,822		69,629
Total assets		1,295,141		1,029,825		772,188

Current liabilities		138,677		152,886		150,148
Provision for environmental rehabilitation		63,125		53,136		52,525
Deferred income and mining taxes		99,789		47,050		48,686
Deferred financial liability		87,226		49,374		40,174
Provision for post-retirement benefits		737		1,002		3,709
Long-term loans		152,461		151,466		46,635
Preference shares		—		681		—
Minority interest		—		331		—
Shareholders’ equity		753,126		573,899		430,311

Total liabilities and shareholders’ equity		1,295,141		1,029,825		772,188

¹		Hill 50’s financial results have been equity accounted for the month of March 2002 and consolidated thereafter. The Free Gold Company’s financial results have been equity accounted from May 1, 2002 and are, accordingly, reflected as a single line item “Equity income from joint venture”.

²		The financial results of the Elandskraal mines and New Hampton have been consolidated from April 1, 2001.

³		Randfontein’s financial results have been equity accounted from January 14, 2000 to February 29, 2000 and consolidated thereafter. The financial results of Kalahari Goldridge Mining Company, or Kalgold, have been consolidated from October 1, 1999.

⁴		Reflects Harmony’s equity accounted interest in the Free Gold Company’s results from May 1, 2002.

⁵		Reflects Harmony’s equity accounted interest in Bendigo’s results with effect from January 1, 2002 and Hill 50’s results during the month of March 2002.

⁶		Reflects Harmony’s equity-accounted interest in Randfontein’s results during the period from January 14 to February 29, 2000.

⁷		Harmony adopted SFAS 133 “Accounting for Derivative Instruments and Hedging Activities,” or FAS 133, on July 1, 2000. As Harmony’s derivative instruments held at that date did not meet the FAS 133 criteria for hedge accounting, these derivatives were fair valued and recorded on the balance sheet, resulting in a cumulative effect of change in accounting principle adjustment of approximately $5.8 million.

⁸		Calculated by dividing income before cumulative effect of change in accounting principle by the weighted average number of shares used in the computation of basic earnings per share.

⁹		Calculated by dividing net income by the weighted average number of shares used in the computation of basic earnings per share.

¹⁰		Reflects dividends related to fiscal 2002 that were declared on August 2, 2002.

¹¹		Harmony has calculated cash costs per ounce by dividing total cash costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. The Gold Institute is a non-profit international association of miners, refiners, bullion suppliers and manufacturers of gold products that has developed a uniform format for reporting production costs on a per ounce basis. The standard was first adopted in 1996 and was revised in November 1999. Cash costs, as defined in the Gold Institute standard, include mine production costs, transport and refinery costs, general and administrative costs, costs associated with movements in production inventories and ore stockpiles, costs associated with transfers to deferred stripping and costs associated with royalties. Cash costs have been calculated on a consistent basis for all periods presented. Changes in cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and the U.S. dollar. Cash costs per ounce is not a U.S. GAAP measure. Cash costs per ounce should not be considered by investors in isolation or as an alternative to net income, income before tax, operating cash flows or any other measure of financial performance presented. While the Gold Institute has provided a definition for the calculation of cash costs per ounce, the calculation of cash costs per ounce may vary from company to company and may not be comparable to other similarly titled measures of other companies. However, Harmony believes that cash costs per ounce is a useful indicator to investors and management of a mining company’s performance as it provides (1) an indication of a company’s profitability and efficiency, (2) the trends in costs as the company’s operations mature, (3) a measure of a company’s gross margin per ounce, by comparison of cash costs per ounce to the spot price of gold and (4) an internal benchmark of performance to allow for comparison against other companies.

¹²		Includes the financial position of Hill 50 acquired during the year.

¹³		Includes the financial position of Elandskraal and New Hampton acquired during the year.

¹⁴		Includes the financial position of Randfontein and Kalgold acquired during the year.

¹⁵		Reflects Harmony’s equity-accounted share of the net assets of Bendigo and Highland Gold as at June 30, 2002.

¹⁶		Reflects Harmony’s equity-accounted share of the net assets of the Free Gold Company as at June 30, 2002.

¹⁷		Includes mineral subscriptions and participation rights relating to Harmony’s exploration activities and slimes dams and bond issue costs, which are included in Other Assets in note 12 to the consolidated financial statements.

RISK FACTORS

In addition to the other information included and incorporated by reference in this prospectus, you should carefully consider the following factors related to the offer before deciding to invest in Harmony’s ordinary shares (or ADSs). There may be additional risks that Harmony does not currently know of or that Harmony currently deems immaterial based on information available to it. Harmony’s business, financial condition or results of operations could be materially adversely affected by any of these risks, resulting in a decline in the trading price of Harmony’s ordinary shares (or ADSs).

The profitability of Harmony’s operations, and the cash flows generated by those operations, are affected by changes in the market price for gold, which in the past has fluctuated widely.

Substantially all of Harmony’s revenues come from the sale of gold. Historically, the market price for gold has fluctuated widely and has been affected by numerous factors over which Harmony has no control, including:

	•		the demand for gold for industrial uses and for use in jewelry;

	•		international or regional political and economic trends;

	•		the strength of the U.S. dollar (the currency in which gold prices generally are quoted) and of other currencies;

	•		financial market expectations regarding the rate of inflation;

	•		interest rates;

	•		speculative activities;

	•		actual or expected purchases and sales of gold bullion holdings by central banks or other large gold bullion holders or dealers;

	•		forward sales by gold producers; and

	•		the production and cost levels for gold in major gold-producing nations, such as South Africa.

In addition, the current demand for and supply of gold affects the price of gold, but not necessarily in the same manner as current demand and supply affect the prices of other commodities. Historically, gold has tended to retain its value in relative terms against basic goods in times of inflation and monetary crisis. As a result, central banks, financial institutions and individuals hold large amounts of gold as a store of value and production in any given year constitutes a very small portion of the total potential supply of gold. Since the potential supply of gold is large relative to mine production in any given year, normal variations in current production will not necessarily have a significant effect on the supply of gold or its price.

The volatility of gold prices is illustrated in the following table, which shows the annual high, low and average of the afternoon London Bullion Market fixing price of gold in U.S. dollars for the past ten years:


	Price per Ounce

Year	High		Low		Average

			($)
1992		360		330		344
1993		406		326		360
1994		396		370		384
1995		396		372		384
1996		415		367		388
1997		367		283		331
1998		313		273		294
1999		326		253		279
2000		313		264		282
2001		293		256		271
2002 (through December 13, 2002)		332		278		309

Source: Bloomberg

On June 28, 2002, the afternoon fixing price of gold on the London Bullion Market was $318.50 per ounce. On December 13, 2002, the afternoon fixing price of gold on the London Bullion Market was $332.20 per ounce.

While the aggregate effect of these factors is impossible for Harmony to predict, if gold prices should fall below Harmony’s cost of production and remain at such levels for any sustained period, Harmony may experience losses and may be forced to curtail or suspend some or all of its operations. In addition, Harmony would also have to assess the economic impact of low gold prices on its ability to recover any losses it may incur during that period and on its ability to maintain adequate reserves. Harmony’s average cash cost of production per ounce of gold sold was approximately $196 in fiscal 2002, $234 in fiscal 2001 and $245 in fiscal 2000.

Actual or expected sales of gold by central banks have had a significant impact on the price of gold.

Over the past several years, one of the most important factors influencing the gold price has been actual or expected sales of gold reserves by central banks. Since 1997, a number of central banks, including the central banks of Australia, Switzerland and the United Kingdom, have announced plans to sell significant gold reserves, and, more recently, the International Monetary Fund has discussed selling significant gold reserves to fund international debt relief. The gold price has declined following each such announcement and sale, culminating in a drop in the gold price to its lowest level in at least twenty years in July 1999, after the Bank of England completed the first part of its announced sale of more than half of its gold reserves. In September 1999, the central banks of fifteen European countries agreed to limit sales of gold reserves for the next five years to sales announced at that time and to limit gold lending and derivative operations for five years. The announcement of this agreement led to an immediate increase in the price of gold, although the gold price was subsequently subject to downward pressure around the time of the periodic auctions held by the Bank of England. The agreement by the central banks is voluntary and there are a number of central banks with significant gold reserves that are not subject to the agreement. Any future sales or publicly announced proposed sales by central banks of their gold reserves are likely to result in a decrease in the price of gold.

Because Harmony does not use commodity or derivative instruments to protect against low gold prices with respect to most of its production, Harmony is exposed to the impact of any significant drop in the gold price.

As a general rule Harmony sells its gold production at market prices. Recently, there have been two instances in which Harmony has made use of gold price hedges: Harmony’s forward sale of a portion of the production at Bissett at a set gold price and, in February 2001, put options relating to 1 million ounces of Harmony’s production at Elandskraal. Both of these hedges were effected by Harmony in order to secure loan facilities and have since been closed out. A significant proportion of the production at Randfontein was already hedged when acquired by Harmony, and these hedges have since been closed out. In addition, a substantial proportion of the production at each of New Hampton and Hill 50 was already hedged when acquired by Harmony and remains hedged. Harmony generally does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of its future gold production. See “Operating and Financial Review and Prospects—Market Risk” and “Business—Hedge Policy.” In general, hedging in this manner reduces the risk of exposure to volatility in the gold price. Such hedging also enables a gold producer to fix a future price for hedged gold that generally is higher than the then current spot price. Because Harmony’s hedging does not generally establish a future price for hedged gold, Harmony can realize the positive impact of any increase in the gold price. However, this also means that Harmony is not fully protected against decreases in the gold price and if the gold price decreases significantly Harmony runs the risk of reduced revenues in respect of gold production that is not hedged.

Harmony’s gold reserve figures are estimates based on a number of assumptions, including assumptions as to mining and recovery factors, future production costs and the price of gold, and may yield less gold under actual production conditions than Harmony currently estimates.

The ore reserve estimates contained in this prospectus are estimates of the mill delivered quantity and grade of gold in Harmony’s deposits and stockpiles. They represent the amount of gold that Harmony believes can be mined, processed and sold at prices sufficient to recover Harmony’s estimated future total costs of production, remaining investment and anticipated additional capital expenditures. Harmony’s ore reserves are estimated based upon many factors, including:

	•		the results of exploratory drilling and an ongoing sampling of the orebodies;

	•		past experience with mining properties; and

	•		the experience of the person making the reserve estimates.

The ore reserve estimates contained in this prospectus are calculated based on estimates of future production costs, future gold prices and, because Harmony’s gold sales are primarily in U.S. dollars and Harmony incurs most of its production costs in Rand, the exchange rate between the Rand and the U.S. dollar and, in the case of Harmony’s Australian operations, the Australian dollar. As a result, the reserve estimates contained in this prospectus should not be interpreted as assurances of the economic life of Harmony’s gold deposits or the profitability of its future operations.

Since ore reserves are only estimations which Harmony makes based on the above factors, in the future Harmony may need to revise its estimates. In particular, if Harmony’s production costs increase (whether in Rand terms, in Australian dollar terms, or in relative terms due to appreciation of the Rand or the Australian dollar against the U.S. dollar) or if gold prices decrease, a portion of Harmony’s ore reserves may become uneconomical to recover. This will force Harmony to lower its estimated reserves.

For example, following the acquisition of New Hampton, the Big Bell underground mine yielded disappointing results, including lower than expected grade. As a result, in the quarter ended June 30, 2002, Harmony reduced grade estimates for Big Bell’s future production, which has led to a substantial reduction in proven and probable reserves attributable to the Big Bell mine. See “Business—Harmony’s Mining Operations—Australian Operations.”

Harmony’s strategy depends on its ability to make additional acquisitions.

In order to increase Harmony’s gold production and to acquire additional reserves so that Harmony can maintain and grow its gold production beyond the life of its current ore reserves, Harmony is exploring opportunities to expand by acquiring selected gold producers and mining operations. However, Harmony cannot guarantee that:

	•		Harmony will be able to identify appropriate acquisition candidates or negotiate acquisitions on favorable terms;

	•		Harmony will be able to obtain the financing necessary to complete future acquisitions; or

	•		the issuance of Harmony’s ordinary shares or other securities in connection with any future acquisition will not result in a substantial dilution in ownership interests of holders of Harmony’s ordinary shares.

As at June 30, 2002, Harmony’s mining operations reported total proven and probable reserves of approximately 49.08 million ounces, which includes Elandskraal, New Hampton, Hill 50 and ounces attributable to Harmony’s 50% interest in the Free Gold Company. If Harmony is unable to acquire additional gold producers or generate additional proven and probable reserves at its existing operations or through Harmony’s exploration activities, Harmony cannot be certain that it will be able to expand or replace its current production with new reserves in an amount sufficient to sustain the life of its mining operations beyond the current life of its reserves.

Harmony may experience problems in managing new acquisitions and integrating them with its existing operations.

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

	•		difficulties in assimilating the operations of the acquired business;

	•		difficulties in maintaining the financial and strategic focus of Harmony while integrating the acquired business;

	•		problems in implementing uniform standards, controls, procedures and policies;

	•		increasing pressures on existing management to oversee a rapidly expanding company; and

	•		to the extent Harmony acquires mining operations outside South Africa, encountering difficulties relating to operating in countries in which Harmony has not previously operated.

Any difficulties or time delays in achieving successful integration of new acquisitions could have a material adverse effect on Harmony’s business, operating results, financial condition and stock price. For example, following the acquisition of New Hampton, Harmony has encountered higher than expected costs and disappointing results from the Big Bell operations. See “Business—Harmony’s Mining

Operations—Australian Operations.” Harmony may encounter similar difficulties or other problems in integrating other acquisitions.

To maintain gold production beyond the expected lives of Harmony’s existing mines or to increase production materially above projected levels, Harmony will need to access additional reserves through development or discovery.

Harmony’s Australian operations have limited proven and probable reserves. Exploration and discovery will be necessary to maintain current gold production levels at these operations in the future. Exploration for gold and other precious metals is speculative in nature, is frequently unsuccessful and involves many risks, including risks related to:

	•		locating orebodies;

	•		identifying the metallurgical properties of orebodies;

	•		estimating the economic feasibility of mining orebodies;

	•		developing appropriate metallurgical processes;

	•		obtaining necessary governmental permits; and

	•		constructing mining and processing facilities at any site chosen for mining.

Harmony’s exploration efforts might not result in the discovery of mineralization and any mineralization discovered might not result in an increase in Harmony’s proven and probable reserves.

To access additional reserves in South Africa, Harmony will need to successfully complete development projects, including extending existing mines and, possibly, developing new mines. Development projects would also be necessary to access the platinum and palladium mineralization identified at the Kalplats platinum group metals project described in “Business—Exploration” and any mineralization discovered through exploration in Australia or elsewhere.

Harmony typically uses feasibility studies to determine whether or not to undertake significant development projects. Feasibility studies include estimates of expected or anticipated economic returns, which are based on assumptions about:

	•		future gold and other metal prices;

	•		anticipated tonnage, grades and metallurgical characteristics of ore to be mined and processed;

	•		anticipated recovery rates of gold and other metals from the ore; and

	•		anticipated total costs of the project, including capital expenditure and cash operating costs.

Actual costs, production and economic returns may differ significantly from those anticipated by Harmony’s feasibility studies. Moreover, it can take a number of years from the initial feasibility studies until development is completed. During that time, the economic feasibility of production may change. In addition, there are a number of uncertainties inherent in the development and construction of an extension to an existing mine or any new mine, including:

•

the availability and timing of necessary environmental and other governmental permits;

	•		the timing and cost necessary to construct mining and processing facilities, which can be considerable;

	•		the availability and cost of skilled labor, power, water and other materials;

	•		the accessibility of transportation and other infrastructure, particularly in remote locations;

	•		the availability and cost of smelting and refining arrangements; and

	•		the availability of funds to finance construction and development activities.

Accordingly, there is no assurance that any future development projects will extend the life of Harmony’s existing mining operations or result in any new commercial mining operations.

Due to the nature of mining and the type of gold mines it operates, Harmony faces a material risk of liability, delays and increased production costs from environmental and industrial accidents and pollution.

The business of gold mining by its nature involves significant risks and hazards, including environmental hazards and industrial accidents. In particular, hazards associated with underground mining include:

	•		rock bursts;

	•		seismic events;

	•		underground fires;

	•		cave-ins or falls of ground;

	•		discharges of gases and toxic chemicals;

	•		release of radioactive hazards;

	•		flooding;

	•		accidents; and

	•		other conditions resulting from drilling, blasting and removing and processing material from a deep level mine.

Hazards associated with open cast mining (also known as open pit mining) include:

	•		flooding of the open pit;

	•		collapse of the open pit walls;

	•		accidents associated with the operation of large open pit mining and rock transportation equipment; and

	•		accidents associated with the preparation and ignition of large scale open pit blasting operations.

Hazards associated with waste rock mining include:

	•		accidents associated with operating a waste dump and rock transportation; and

	•		production disruptions due to weather.

Harmony is at risk of experiencing any and all of these environmental or other industrial hazards. The occurrence of any of these hazards could delay production, increase production costs and result in liability to Harmony.

Harmony’s insurance coverage may prove inadequate to satisfy future claims against it.

Harmony has third party liability coverage for most potential liabilities, including environmental liabilities. While Harmony believes that its current insurance coverage for the hazards described above is adequate and consistent with industry practice, Harmony may become subject to liability for pollution or other hazards against which it has not insured or cannot insure, including those in respect of past mining activities. Further, Harmony maintains and intends to continue to maintain, property and liability insurance consistent with industry practice, but such insurance contains exclusions and limitations on coverage. In addition, there can be no assurance that insurance will continue to be available at economically acceptable premiums. As a result, in the future Harmony’s insurance coverage may not cover the extent of claims against it for environmental or industrial accidents or pollution.

Because most of Harmony’s production costs are in Rand, while gold is generally sold in U.S. dollars, Harmony’s financial condition could be materially harmed by an appreciation in the value of the Rand.

Gold is generally sold throughout the world in U.S. dollars, but most of Harmony’s operating costs are incurred in Rand. As a result, any significant and sustained appreciation of the Rand against the U.S. dollar will serve materially to reduce Harmony’s Rand revenues and overall net income as a result of higher working costs in U.S. dollar terms.

The Rand has experienced significant depreciation against the U.S. dollar since 1997. The Rand’s depreciation was particularly pronounced in calendar 2001 and during the first quarter of calendar 2002. There can be no assurance that the general depreciation trend of the Rand will continue. The Rand appreciated significantly against the U.S. dollar during the period from April 1, 2002 through December 13, 2002. If the appreciation experienced during this more recent period continues, it may have a material adverse impact on Harmony’s operating results. In December 2001, in response to significant depreciation in the Rand and to protect itself against possible appreciation of the Rand against the U.S. dollar, Harmony entered into Rand-U.S. dollar currency forward exchange contracts intended to cover estimated revenues from the Free State operations’ planned production for calendar 2002. Harmony fixed the Rand-U.S. dollar exchange rate for a total of $192 million at an average exchange rate of Rand 11.20 per U.S. dollar. As of December 13, 2002, $15 million was remaining under these contracts at an average exchange rate of Rand 11.31 per U.S. dollar. See “Operating and Financial Review and Prospects—Market Risk—Foreign Currency Sensitivity.” This measure, however, is not expected to fully protect Harmony from sustained fluctuations in the value of the Rand relative to the U.S. dollar since it covers only a limited amount, it expires on December 31, 2002 and Harmony does not expect to renew or repeat it.

Political or economic instability in South Africa or regionally may have an adverse effect on Harmony’s operations and profits.

Harmony is incorporated and owns significant operations in South Africa. As a result, there are important political and economic risks relating to South Africa which could affect an investment in Harmony.

South Africa has been transformed into a democracy since 1994, with a successful second round of democratic elections held during 1999. While Harmony believes that the South African

government is stable, government policies aimed at redressing the disadvantages suffered by the majority of citizens under previous governments may impact on Harmony’s operations and profits.

In addition to political issues, South Africa faces many challenges in overcoming substantial differences in levels of economic development among its people. While South Africa features highly developed, sophisticated “first world” business sectors and infrastructure at the core of its economy, large parts of the population do not have access to adequate education, health care, housing and other services, including water and electricity. Furthermore, in recent years, South Africa has experienced high levels of crime and unemployment. These problems have been among the factors that impeded fixed inward investment into South Africa and prompted emigration of skilled workers.

Over the past five years, the South African economy has grown at a relatively slow rate, inflation and unemployment have been high by comparison with developed countries, and foreign reserves have been relatively low. GDP growth was approximately 2.5% in 1997, 0.6% in 1998, 1.2% in 1999, 3.1% in 2000 and 2.2% in 2001. The depreciation of the Rand in 1997 and 1998 resulted in an increase in the South African bank prime lending rate, which peaked at approximately 25.5% during 1998, although rates have since decreased and as of December 13, 2002, the rate was 17.0%.

Although the South African government has indicated on numerous occasions that it is committed to creating a stable, democratic free market economy, including the phasing out of exchange controls, it is difficult to predict the future political, social and economic direction of South Africa or how the government will try to address South Africa’s problems. It is also difficult to predict the effect on Harmony’s business of these problems or of the government’s efforts to solve them.

Further, there has been regional political and economic instability in countries north of South Africa. As discussed above, any resulting political or economic instability in South Africa could have a negative impact on Harmony’s ability to manage and operate its South African mines.

The results of Harmony’s South African operations may be negatively impacted by inflation.

In the late 1980s and early 1990s, inflation in South Africa reached record highs. This increase in inflation resulted in considerable year over year increases in operational costs. By calendar 2001, the inflation rate had decreased to single-digit figures; however, the recent depreciation of the Rand has created inflationary pressure.

While Harmony’s operations have not in recent years been materially affected by inflation, a period of significant inflation in South Africa, without a concurrent devaluation of the Rand or an increase in the price of gold, could have a material adverse effect on Harmony’s profits and financial condition.

Harmony’s financial flexibility could be materially constrained by South African currency restrictions.

South Africa’s exchange control regulations provide for restrictions on exporting capital from South Africa, the Republic of Namibia, and the Kingdoms of Lesotho and Swaziland, known collectively as the Common Monetary Area. Transactions between South African residents (including corporations) and non-residents of the Common Monetary Area are subject to these exchange control regulations which are enforced by the South African Reserve Bank, or the SARB. As a result, Harmony’s ability to raise and deploy capital outside the Common Monetary Area is restricted. In particular, Harmony:

	•		is generally not permitted to export capital from South Africa or to hold foreign currency without the approval of the South African exchange control authorities;

	•		is generally required to repatriate to South Africa profits of foreign operations; and

	•		is limited in its ability to utilize profits of one foreign business to finance operations of a different foreign business.

These restrictions could hinder Harmony’s normal corporate functioning. While exchange controls have been relaxed in recent years and are continuing to be so relaxed, it is difficult to predict whether or how the South African government will further relax the exchange control regulations in the future.

Since Harmony’s South African labor force has substantial trade union participation, Harmony faces the risk of disruption from labor disputes and new South African labor laws.

Due to the number of its South African employees that belong to unions, Harmony is at risk of having its production stopped for indefinite periods due to strikes and other labor disputes. Significant labor disruptions may have a material adverse effect on Harmony’s operations and financial condition. Harmony is not able to predict whether it will experience significant labor disputes in the future.

Harmony’s production may also be materially affected by labor laws. Since 1995, South African laws relating to labor have changed significantly in ways that affect Harmony’s operations. In particular, laws enacted since then that regulate work time, provide for mandatory compensation in the event of termination of employment for operational reasons and impose large monetary penalties for non-compliance with administrative and reporting requirements in respect of affirmative action policies could result in significant costs to Harmony. In addition, future South African legislation and regulations relating to labor may further increase Harmony’s costs or alter Harmony’s relationship with its employees. There may continue to be significant changes in labor law in South Africa over the next several years. For example, amendments to South African labor law have recently been proposed that would, with effect from August 1, 2002, require mandatory consultation with labor in the event of retrenchments, transfers of businesses or insolvency.

AIDS poses risks to Harmony in terms of productivity and costs.

The incidence of AIDS in South Africa, which is forecast to increase over the next decade, poses risks to Harmony in terms of potentially reduced productivity and increased medical and other costs. Harmony currently estimates that the infection rate among Harmony’s South African workforce is approximately 28%, a figure which Harmony believes is consistent with the overall infection rate in South Africa. Harmony expects that significant increases in the incidence of AIDS infection and

AIDS-related diseases among its South African workforce over the next several years may adversely impact its operations and financial condition. Currently, Harmony expects that the cost of addressing AIDS infection and AIDS-related diseases among its South African workforce will grow to approximately $4.00 per ounce of gold by 2007. This expectation, however, is based on assumptions about, among other things, infection rates and treatment costs, which are subject to material risks and uncertainties beyond Harmony’s control, as a result of which actual results may differ from Harmony’s current expectation. Harmony is actively pursuing AIDS awareness campaigns with its South African workforce workforce and is also providing medical assistance and separation packages for employees who decide to leave their place of work and return home for care. See “Business—Regulatory and Environmental Matters—Health and Safety Matters.”

Harmony’s operations are subject to extensive government regulations.

The Mine Health and Safety Act.

In January 1997, the South African government introduced The Mine Health and Safety Act. This act is intended to encourage greater interaction between government regulators, labor representatives and mining companies with regard to health and safety matters. The act leaves room for self-regulation but also provides for strict control by the government. As part of Harmony’s compliance with this act, Harmony has made progress in establishing risk management and medical surveillance systems at its South African operations to improve the safety performance of Harmony’s workers. Harmony has also established the health and safety committees required by the act and has arranged for the elections of workplace representatives. To date, the cost of complying with these regulations has not been material. There can be no assurance, however, that any additional expenditure required for compliance with this act will not be material.

Mineral rights ownership.

On June 26, 2002, the South African parliament passed the Mineral and Petroleum Resources Development Act, or the Act. The Act will come into force on a date to be fixed by the President by proclamation in the Government Gazette. The principal objectives set out in the Act are:

	•		To recognize the internationally accepted right of the state of South Africa to exercise full and permanent sovereignty over all the mineral and petroleum resources within South Africa;

	•		To give effect to the principle of the State’s custodianship of the nation’s mineral and petroleum resources;

	•		To promote equitable access to South Africa’s mineral and petroleum resources to all the people of South Africa and redress the impact of past discrimination;

	•		To substantially and meaningfully expand opportunities for historically disadvantaged persons, including women, to enter the mineral and petroleum industry and to benefit from the exploitation of South Africa’s mineral and petroleum resources;

	•		To promote economic growth and mineral and petroleum resources development in South Africa;

	•		To promote employment and advance the social and economic welfare of all South Africans;

	•		To provide security of tenure in respect of prospecting, exploration, mining and production operations;

	•		To give effect to Section 24 of the South African Constitution by ensuring that South Africa’s mineral and petroleum resources are developed in an orderly and ecologically sustainable manner while promoting justifiable social and economic development;

	•		To follow the principle that mining companies keep and use their mineral rights, with no expropriation and with guaranteed compensation for mineral rights; and

	•		To ensure that holders of mining and production rights contribute towards socioeconomic development of the areas in which they are operating.

Under the Act, tenure over established operations will be secure for 30 years (and renewable for 30 years thereafter), provided that mining companies obtain new licenses over existing operations within five years of the date of enactment of the Act and fulfill requirements specified in a broad-based socioeconomic empowerment charter for the South African mining industry, or the Mining Charter.

The latest draft of the Mining Charter was released on October 11, 2002. The principles contained in the Mining Charter relate to the transfer, over a ten-year period, of 26% of South Africa’s mining assets to historically disadvantaged South Africans, as defined in the Mining Charter. Under the Mining Charter, the South African mining industry has committed to securing financing to fund participation of historically disadvantaged South Africans in an amount of R100 billion within the first five years of the Mining Charter’s tenure. The Mining Charter provides for the review of the participation process after five years to determine what further steps, if any, are needed to achieve the 26% target participation. The Mining Charter requires programs for black economic empowerment and the promotion of value-added production, such as jewelry-making and other gold fabrication, in South Africa. The Mining Charter also sets out targets for broad-based black economic empowerment in the areas of human resources, skill development, employment equality, procurement and beneficiation. In addition, the Mining Charter addresses other socioeconomic issues, such as migrant labor, housing and living conditions.

Harmony actively carries out mining and exploration activities in all of its material mineral rights areas. Accordingly, Harmony will be eligible to apply for new licenses over its existing operations, provided that it complies with the Mining Charter. Harmony has begun taking 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. Harmony is currently evaluating the impact that the Mining Charter may have with regard to its operations and no assurance can be given as to when the Mining Charter will be finalized or what the final form of the Mining Charter will contain. Harmony expects that there will be costs involved in complying with the Mining Charter, which may have an adverse impact on the profits generated by Harmony’s operations in South Africa.

The Act also makes reference to royalties being payable to the state in terms of an Act of Parliament, known as the Money Bill, which is currently being drafted and is expected to be available for public comment in early 2003. The introduction of the Money Bill as law may have an adverse impact on the profits generated by Harmony’s operations in South Africa. Harmony is currently evaluating the impact that the proposed Money Bill may have with regard to its operations and no assurance can be given as to whether or when the proposed Money Bill will be published for comment or enacted. For more information regarding the Act and the Money Bill, see “Business—Regulatory and Environmental Matters—Mineral Rights.”

In Australia, most mineral rights belong to the government, and mining companies must pay royalties to the government based on production. There are, however, limited areas where the government granted freehold estates without reserving mineral rights. Harmony’s subsidiary New Hampton has freehold ownership of its Jubilee mining areas, but the other mineral rights in Harmony’s Australian operations belong to the Australian government and are subject to royalty payments. In addition, current Australian law generally requires native title approval to be obtained before a mining license can be granted and mining operations can commence. New Hampton and Hill 50 have approved mining leases for most of their reserves, including all reserves that are currently being mined, and Bendigo has an approved mining license for its current development area. If New Hampton, Hill 50 or Bendigo desired to expand operations into additional areas under exploration, these operations would need to convert the relevant exploration licenses prior to commencing mining, and that process could require native title approval. There can be no assurance that any approval would be received.

Harmony is subject to extensive environmental regulations.

As a gold mining company, Harmony is subject to extensive environmental regulation. Harmony has experienced and expects to continue to experience increased costs of production arising from compliance with South African environmental laws and regulations. The Minerals Act, the regulations promulgated under the Minerals Act, certain other environmental legislation and the administrative policies of the South African government all regulate the impact of Harmony’s prospecting and mining operations on the environment. Pursuant to these regulations, upon the suspension, cancellation, termination or lapsing of a prospecting permit or mining authorization in South Africa, Harmony will remain liable for compliance with the provisions of the Minerals Act, including any rehabilitation obligations. This liability will continue until such time as the South African Department of Minerals and Energy certifies that Harmony has complied with the provisions of the Minerals Act.

Currently, Harmony provides for environmental liabilities by contributing to environmental trust funds. While Harmony believes that its current provision for compliance with South African environmental laws and regulations is reasonable, any future changes and development in environmental regulation may adversely affect its operations. In the future, Harmony may incur significant costs associated with complying with more stringent requirements imposed under new legislation and regulations. This may include the need to increase and accelerate expenditure on environmental rehabilitation, and alter provisions for this expenditure, which could have a material adverse effect on Harmony’s results and financial condition.

The South African government is currently reviewing requirements imposed upon mining companies to ensure environmental restitution. For example, with the introduction of an environmental rights clause in South Africa’s constitution, a number of environmental legislative reform processes have been initiated. Legislation passed as a result of these initiatives has tended to be materially more onerous than laws previously applied in South Africa. Examples of such legislation include the National Water Act 36 of 1998 and the National Environmental Management Act 107 of 1998, both of which include stringent “polluter-pays” provisions. The adoption of these or additional or more comprehensive and stringent requirements, in particular with regard to the management of hazardous wastes, the pollution of ground and ground water systems and the duty to rehabilitate closed mines may result in additional costs and liabilities to Harmony.

Harmony’s Australian operations must comply with mining lease tenement conditions set by the Department of Minerals and Energy, the Mining Act (1978), the Department of Environmental Protection operating licenses, and water abstraction licenses issued by the Water and Rivers commission for each of its sites. Harmony’s Australian operations must also comply with numerous environmental acts and bills. As a result, Harmony must make provisions for mining rehabilitation whenever mining is

commenced at a new site in Australia. While Harmony believes that its current provision for compliance with such requirements is reasonable, any future changes and development in Australian environmental laws and regulations may adversely affect these Australian operations.

Bendigo operates tenements granted under the Victorian Mineral Resources Development Act (1990), administered by the Department of Natural Resources and Environment. Operations that involve a deliberate discharge to the environment are subject to the Victorian Environment Protection Authority. Conditions attached to approvals include requirements for environmental management, monitoring and protection. While Bendigo has made allowances for the expected costs of complying with these conditions, any future changes and development in Australian environmental laws and regulations may increase these costs.

Harmony’s subscription agreement with Simane Investments (Proprietary) Limited, or Simane, has resulted in Simane acquiring a significant number of Harmony’s shares and related influence.

Simane, a South African empowerment group, acquired 10,958,982 ordinary shares, representing approximately 6.2% of Harmony’s voting share capital, under subscription agreements described in “Major Shareholders.” South African companies commonly have a shareholder who owns a position in their stock of more than 20%. As the largest shareholder of Harmony, Simane could influence the outcome of matters requiring shareholder approval, including the election of Harmony’s directors and the approval of significant corporate transactions, including business combinations.

The sale of a significant position in a company’s shares may affect the market price of its shares. As a consequence, Harmony’s agreement with Simane provides that, except as provided in the agreement, Simane will not have the right to dispose of or transfer any of the ordinary shares acquired under the agreement for a period of 18 months from the September 7, 2001 effective date of the agreement, and provides that Simane will not enter into any arrangement or transaction that may have the same or similar effect. See “Major Shareholders.”

Because the principal non-United States trading market for Harmony’s ordinary shares is the JSE Securities Exchange South Africa, investors face liquidity risk in the market for Harmony’s ordinary shares.

The principal non-United States trading market for Harmony’s ordinary shares is the JSE Securities Exchange South Africa, or the JSE. Historically, trading volumes and liquidity of shares listed on the JSE have been low in comparison with other major markets. The ability of a holder to sell a substantial number of Harmony’s ordinary shares on the JSE in a timely manner, especially with regard to a large block trade, may be restricted by the limited liquidity of shares listed on the JSE.

Harmony may not pay cash dividends to its shareholders in the future.

It is the current policy of Harmony’s Board of Directors, or the Board, to declare and pay cash dividends if profits and funds are available for that purpose. Whether funds are available depends on a variety of factors, including the amount of cash available and Harmony’s capital expenditures and other cash requirements existing at the time. Under South African law, cash dividends may only be paid out of the profits of Harmony. No assurance can be given that cash dividends will be paid in the future.

Harmony’s non-South African shareholders face additional investment risk from currency exchange rate fluctuations since any dividends will be paid in Rand.

Dividends or distributions with respect to Harmony’s ordinary shares have historically been paid in Rand. The U.S. dollar equivalent of any dividends or distributions with respect to Harmony’s ordinary shares will be adversely affected by potential future reductions in the value of the Rand against the U.S. dollar. In fiscal 2002, the value of the Rand relative to the U.S. dollar decreased by an average of 34%.

Because Harmony has a significant number of outstanding options and warrants, its ordinary shares are subject to dilution.

As of December 13, 2002, Harmony had an aggregate of 250,000,000 ordinary shares authorized to be issued and at that date an aggregate of 174,560,203 ordinary shares were issued and outstanding. In addition, as of December 13, 2002, warrants to purchase a total of 4,219,642 ordinary shares in this offering at an exercise price of Rand 43.00 per share or the U.S. dollar equivalent, subject to adjustment as described in this prospectus, on or before June 29, 2003 were outstanding.

Harmony also has an employee share option plan. The employee share option plan in effect prior to November 16, 2001 permitted the granting of options in an amount up to an aggregate of 10% of the number of Harmony ordinary shares outstanding as of the date of the grant. With effect from November 16, 2001, this plan was replaced by a plan authorizing the granting of options to purchase up to an aggregate of 8,000,000 ordinary shares (in addition to any previously granted options that remain outstanding under the previous plan). As of December 13, 2002, options to purchase a total of 7,329,200 ordinary shares were outstanding, 5,613,300 of which were granted under the current plan and 1,715,900 of which were granted under the previous plan. The exercise prices of these options vary between Rand 11.70 and Rand 49.60.

As a result, shareholders’ equity interests in Harmony are subject to dilution to the extent of future exercises of these warrants and options.

USE OF PROCEEDS

The net proceeds to Harmony from the sale of its ordinary shares and ADSs issuable upon the exercise of warrants are estimated to be approximately Rand 369.6 million ($42.3 million), assuming the exercise of all 9,027,500 of the warrants (without adjustment). As of December 13, 2002, 4,807,858 of the warrants had been exercised, generating net proceeds of approximately R197.0 million ($22.5 million). The net proceeds to Harmony upon the exercise of the remaining warrants are estimated to be approximately Rand 172.6 million ($19.8 million), assuming the exercise of all 4,219,642 of the remaining warrants (without adjustment).

Harmony has used and intends to use the proceeds of these sales for general corporate purposes, including making capital expenditures and funding working capital. Harmony intends to invest the net proceeds of this offering in short-term, money market instruments until it uses them. The use of proceeds for purposes outside of South Africa would require a separate application to and approval by the SARB. See “Exchange Controls and Other Limitations Affecting Security Holders.”

The warrants were offered and sold by Harmony pursuant to a prospectus dated June 22, 2001 as part of a global offering of 27,082,500 ordinary shares and all 9,027,500 of the warrants.

DIVIDENDS AND DIVIDEND POLICY

Harmony has paid interim and final dividends on its ordinary shares in 2000, 2001 and 2002. In each of the last three fiscal years, an interim dividend was declared by the Board for the first six months of the fiscal year and paid during the third quarter of the fiscal year. In fiscal 2000 and 2001, a final dividend was declared by the Board at the end of the fiscal year to which it related, and paid during the first quarter of the next succeeding fiscal year. The final dividend for fiscal 2002 was declared on August 2, 2002 and, accordingly, will be recorded in Harmony’s financial statements for fiscal 2003. The holders of Harmony’s redeemable convertible preference shares, or the preference shares (none of which are currently outstanding), were not entitled to receive dividends out of Harmony’s profits or to participate in any other distribution to the shareholders of Harmony. For information on Harmony’s accounting policy relating to dividends, see note 2(s) to the consolidated financial statements.

The following table sets forth the dividends announced and paid in respect of Harmony ordinary shares for the periods indicated.



	Fiscal year ended June 30,

	2003¹				2002				2001				2000

	($)		(R)		($)		(R)		($)		(R)		($)		(R)
Interim dividend		—		—		0.08		0.75		0.07		0.50		0.08		0.50
Current year final dividend		—		—		—		—		0.09		0.70		0.11		0.70
Prior year final dividend		0.41		4.25		—		—		—		—		—		—

Total dividend		0.41		4.25		0.08		0.75		0.16		1.20		0.19		1.20

As of December 13, 2002.

South African law was recently relaxed to permit the distribution of a company’s equity as a dividend, provided that the necessary shareholder approval is obtained and, after the distribution of the dividend, the company remains solvent and liquid. Cash dividends, however, may only be paid out of profits. Previously under South African law, a company’s equity could not be distributed as a dividend. Cash dividends paid by Harmony will not bear any interest payable by Harmony. The amount of dividends, if any, paid in the future will depend on Harmony’s results of operations, financial condition, cash requirements and other factors deemed relevant by the Board.

EXCHANGE RATES

The following table sets forth, for the past five fiscal years, the average and period end noon buying rates in New York City for cable transfers in Rand and, for the past six months, the high and low noon buying rates in New York City for cable transfers in Rand, in each case, as certified for customs purposes by the Federal Reserve Bank of New York for Rand expressed in Rand per $1.00.


			Period
Fiscal year ended June 30,	Average¹		End

1998		4.96		5.92
1999		6.04		6.04
2000		6.35		6.79
2001		7.61		8.04
2002		10.20		10.39


Month of	High		Low

June 2002		10.62		9.70
July 2002		10.35		9.95
August 2002		10.90		10.24
September 2002		10.74		10.48
October 2002		10.53		10.00
November 2002		9.98		9.25
December 2002 (through December 13, 2002)		9.28		8.74

The average of the noon buying rates on the last day of each full month during the relevant period.

CAPITALIZATION AND INDEBTEDNESS

The following table sets forth the actual cash position and capitalization of Harmony on a consolidated basis at June 30, 2002, and as adjusted to give effect to the drawdown of the remaining $5.5 million of the BAE Systems plc term loan facility, the repayment of the first semi-annual installment on the BoE Bank Limited term loan facility and this offering and the application of the proceeds of this offering as described in “Use of Proceeds.” See “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit Facilities and Other Borrowings—Outstanding Credit Facilities and Other Borrowings.” The following table should be read in conjunction with “Operating and Financial Review and Prospects,” the consolidated financial statements, including the related notes, appearing elsewhere in this prospectus, and the pro forma condensed income statement, including the related notes, appearing elsewhere in this prospectus.



		At June 30, 2002

		Actual			As adjusted¹

Dollars in thousands
Cash and cash equivalents			90,223			122,771
Short-term debt (guaranteed and secured)			12,031			5,916

Long-term loans			152,461			157,960

	Guaranteed, secured		39,593			45,092
	Guaranteed, unsecured		112,868			112,868
Preference shares			—			—
Shareholders’ equity
	Share capital		14,852			15,238
	Additional paid-in capital		814,491			847,270
	Warrants issued		—			—
	Retained earnings		206,544			206,544
	Deferred stock-based compensation		(6,652	)		(6,652	)
	Accumulated other comprehensive loss		(276,109	)		(276,109	)

Total shareholders’ equity			753,126			786,291

Total capitalization (shareholders’ equity plus debt)			917,618			950,167

As adjusted (a) to give effect to the drawdown of the remaining $5.5 million of the BAE Systems plc term loan facility subsequent to the end of fiscal 2002, and the repayment of the first semi-annual installment of Rand 62.5 million ($6.1 million at an exchange rate of R10.22 per $1.00) on the BoE Bank Limited term loan facility on October 23, 2002; and (b) to give effect to this offering and the application of the net proceeds of this offering as described in “Use of Proceeds,” assuming exercise of all remaining warrants without adjustment.

TRADING MARKETS AND PRICE INFORMATION

Markets

The principal non-United States trading market for the ordinary shares of Harmony is the JSE, on which the Harmony ordinary shares trade under the symbol “HAR.” The ordinary shares of Harmony are also listed on the Official List of the UK Listing Authority and traded on the London Stock Exchange and are listed on the Premier Marché of Euronext Paris. Harmony’s International Depositary Shares are listed on Euronext Brussels.

From October 1996 to November 26, 2002, Harmony’s ADSs traded in the United States on The Nasdaq Stock Market under the trading symbol “HGMCY.” Since November 27, 2002, Harmony’s ADSs have traded on the New York Stock Exchange under the trading symbol “HMY.” The ADRs representing the ADSs are issued by the depositary.

Each ADR represents one ADS. Each ADS represents one ordinary share. At December 13, 2002, record holders of Harmony’s ordinary shares holding an aggregate of 78,879,680 ordinary shares (45.2%) and record holders of Harmony warrants holding an aggregate of 1,168,879 warrants (27.7%) were listed as having addresses in the United States.

Offering and Listing Details

The high and low sales prices in Rand for Harmony’s ordinary shares and warrants on the JSE for the periods indicated were as follows:


	Harmony ordinary shares				Harmony warrants

	(Rand per ordinary share)				(Rand per warrant)
	High		Low		High		Low

Fiscal year ended June 30, 1998		25.40		23.40		—		—
Fiscal year ended June 30, 1999		28.50		28.40		—		—
Fiscal year ended June 30, 2000		46.10		21.00		—		—
Fiscal year ended June 30, 2001
First Quarter		39.00		33.00		—		—
Second Quarter		37.00		26.00		—		—
Third Quarter		47.00		30.80		—		—
Fourth Quarter		51.00		36.15		14.75		12.00
Full Year		51.00		26.00		14.75		12.00
Fiscal year ended June 30, 2002
First Quarter		49.00		38.70		14.75		11.00
Second Quarter		97.00		48.80		49.00		13.30
Third Quarter		129.00		72.00		89.00		29.90
Fourth Quarter		187.30		110.00		140.00		73.00
Full Year		187.30		38.70		140.00		11.00
Month of
June 2002		174.00		120.00		130.00		78.80
July 2002		171.00		103.50		115.00		85.00
August 2002		152.00		104.00		108.00		68.10
September 2002		181.50		144.00		135.00		108.00
October 2002		165.20		119.10		124.00		111.00
November 2002		156.00		115.50		111.00		80.00
December 2002 (through December 13, 2002)		149.50		115.60		100.00		76.00

The high and low sales prices in U.S. dollars for Harmony’s ADRs and warrants for the periods indicated, as reported by The Nasdaq Stock Market through November 26, 2002 and by the New York Stock Exchange since that date, were as follows:


	Harmony ADRs				Harmony warrants

	($ per ADR)				($ per warrant)
	High		Low		High		Low

Fiscal year ended June 30, 1998		6.88		1.81		—		—
Fiscal year ended June 30, 1999		6.25		3.00		—		—
Fiscal year ended June 30, 2000		7.50		3.69		—		—
Fiscal year ended June 30, 2001
First Quarter		5.69		4.50		—		—
Second Quarter		5.16		3.47		—		—
Third Quarter		5.66		3.88		—		—
Fourth Quarter		6.50		4.50		1.90		1.65
Full Year		6.50		3.47		1.90		1.65
Fiscal year ended June 30, 2002
First Quarter		5.54		4.50		1.91		1.36
Second Quarter		6.92		5.01		3.10		1.33
Third Quarter		11.85		6.31		8.25		3.02
Fourth Quarter		19.00		10.18		14.53		6.20
Full Year		19.00		4.50		14.53		1.33
Month of
June 2002		17.33		12.15		13.99		7.61
July 2002		26.99		21.90		12.48		5.49
August 2002		28.50		23.04		9.87		6.36
September 2002		27.05		23.72		13.40		9.44
October 2002		15.63		11.62		10.85		7.60
November 2002¹		16.13		12.00		11.65		8.15
December 2002 (through December 13, 2002)		17.20		12.43		12.40		8.55

As reported by The Nasdaq Stock Market through November 26, 2002 and by the New York Stock Exchange since that date.

On December 13, 2002, the closing price for the Harmony ordinary shares on the JSE was Rand 146.80 and the closing price for the Harmony ADSs on the New York Stock Exchange was $16.81.

The JSE Securities Exchange South Africa

The JSE was formed in 1887. The JSE provides facilities for the buying and selling of a wide range of securities, including equity and corporate debt securities and warrants in respect of securities, as well as Krugerrands.

The JSE is a self-regulated organization operating under the ultimate supervision of the Ministry of Finance, through the Financial Services Board and its representative, the Registrar of Stock Exchanges. Following the introduction of the Stock Exchanges Control Amendment Act No. 54 of 1995, which provides the statutory framework for the deregulation of the JSE, the JSE’s rules were amended with effect from November 8, 1995. These amendments removed the restrictions on corporate membership and allowed stockbrokers to form limited liability corporate entities. Members were, for the first time, also required to keep client funds in trust accounts separate from members’ own funds. Further rules to complete the deregulation of the JSE, as envisaged by the Stock Exchanges Control Amendment Act No. 54 of 1995, were promulgated during 1996 to permit members of the JSE to trade either as agents

or as principals in any transaction in equities and to allow members to negotiate freely the brokerage commissions payable on agency transactions in equities. With effect from June 7, 1996, screen trading commenced on the JSE.

The market capitalization of South African equity securities was approximately Rand 1.63 trillion as of November 30, 2002. The actual float available for public trading is significantly smaller than the aggregate market capitalization because of the large number of long-term holdings by listed holding companies in listed subsidiaries and associates, the existence of listed pyramid companies and cross holdings between listed companies. Liquidity on the JSE (measured by reference to the total market value of securities traded as a percentage of the total market capitalization) as of June 30, 2002 was 43.5% on an annualized basis. Trading is concentrated in a relatively small number of companies. As of December 9, 2002, there were 474 listed companies on the JSE.

South Africa was included in the Morgan Stanley Capital International Emerging Markets Free Index, or MSCI Emerging Markets Free Index, and the International Finance Corporation Investable Index, or IFCI Index, in March and April 1995, respectively. South Africa has a significant representation in these emerging market indices, with weightings of 12.8% in the MSCI Emerging Market Free Index as of December 9, 2002 and 10.4% in the S&P/IFCI Investable Index (formerly known as the IFCI Index) as of December 9, 2002.

The main indices charting the performance of the JSE as a whole and of composite sectors include the FTSE/JSE All Share Index, the FTSE/JSE Financial Index, the FTSE/JSE Industrial Index and the FTSE/JSE Resources Index. As of December 9, 2002, the All Share Index accounted for 100%, the Financial Index accounted for approximately 25%, the Basic Industrial and Consumer Goods Index accounted for approximately 30% and the Resources Index accounted for approximately 45%, respectively, of the JSE’s total market capitalization.

The JSE settles securities trades through a computerized clearing system of the clearing house that the JSE operates. All trades are downloaded from the “JET” automated trading system to the Equity Clearing House system and each week’s trades are netted by brokers and settled on a daily basis from Tuesday to Friday, commencing on Tuesday of the following week.

Purchasers of securities must pay their stockbroker for the securities on offer of delivery by the broker or, if delivery is not tendered, within seven business days after the trade date, unless the purchaser has net assets in excess of Rand 10 million or settles through a bank, in which case they are only required to pay on offer of delivery by the broker. Securities are allocated to the account of the purchaser once they have been received by the broker and they have been fully paid for.

Sellers of securities must deliver their shares to their stockbroker within seven business days after the trade date and receive the proceeds of the sale on delivery, but not before the Tuesday of the following settlement week.

The JSE has undertaken an initiative to dematerialize share certificates in a Central Security Depositary operated by STRATE Limited (Share Transactions Totally Electronic), and has introduced contractual, rolling settlement in order to increase the speed, certainty and efficiency of the settlement mechanism and to fall into line with international practices. The STRATE System was fully implemented as of December 2001, and settlement on the JSE is currently made five days after each trade (T+5). The JSE has also stated that it intends eventually to move to a system in which the five-day settlement period is reduced further to T+3 and possibly T+1. Harmony’s ordinary shares can, accordingly, only be traded on the JSE electronically in paperless, dematerialized form through the

STRATE System. Harmony’s shares may be issued initially in certificated form, but must be dematerialized before they can be traded.

Holders of dematerialized securities may withdraw their securities from the STRATE system in exchange for registered certificates. Transfers of securities eligible for inclusion in the STRATE system must be effected through the STRATE system by a deposit or redeposit of the securities to be transferred prior to the transfer.

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

Selected Historical Consolidated Financial Data

The following selected historical consolidated financial data for the last five fiscal years has been extracted from the more detailed information and financial statements, including Harmony’s audited consolidated financial statements for each of the years in the three years ended June 30, 2002 and at June 30, 2001 and 2002 and the related notes, which appear elsewhere in this prospectus. The historical consolidated financial data at June 30, 1998, 1999 and 2000, and for each of the years in the two years ended June 30, 1998 and 1999, has been extracted from Harmony’s audited consolidated financial statements not included in this prospectus.

The audited financial information included in this prospectus has been prepared in accordance with U.S. GAAP.



				Fiscal year ended June 30,

	2002¹			2001²			2000³			1999⁴		1998

				(in $ thousands, except per share amounts)
Income statement data
Revenues		696,840			607,220			490,651			381,412		249,536
Operating income		206,375			88,424			72,971			64,878		3,640
Equity income of joint venture		13,176⁵			—						—		—
Equity loss of associate companies		473⁶			—			1,401⁷
Income before taxes and minority interests		103,659			29,804			73,489			30,199		(7,149	)
Minority interests		(1,575	)		(349	)		(2,910	)		—		—
Income/ (loss) before cumulative effect of change in accounting principle		87,716			14,830			57,030			27,908		(7,004	)
Cumulative effect of change in accounting principle, net of tax⁸		—			(5,822	)		—			—		—
Net income/(loss)		87,716			9,008			57,030			27,908		(7,004	)

Basic earnings per share ($) before cumulative effect of change in accounting principle⁹		0.57			0.15			0.68			0.42		(0.14	)
Basic earnings/(loss) per share ($)¹⁰		0.57			0.09			0.68			0.42		(0.14	)
Diluted earnings per share before cumulative effect of change in accounting principle¹¹		0.53			0.14			0.67			0.41		—
Diluted earnings per share ¹¹		0.53			0.09			0.67			0.41		—
Weighted average number of shares used in the computation of basic earnings per share		153,509,862			102,156,205			83,593,424			66,843,932		49,043,746
Weighted average number of shares used in the computation of diluted earnings per share		165,217,088			105,504,328			85,590,876			68,070,172		—
Cash dividends per share ($)		0.07			0.16			0.19			0.18		—
Cash dividends per share (R)		0.75			1.20			1.20			1.10		—
Other financial data
Cash dividends per share ($)¹²		0.41			—			—			—		—
Cash dividends per share (R)¹²		4.25			—			—			—		—
Cash cost per ounce of gold ($/oz)¹³		196			234			245			239		305

¹		Hill 50’s financial results have been equity accounted for the month of March 2002 and consolidated thereafter. The Free Gold Company’s financial results have been equity accounted from May 1, 2002 and are, accordingly, reflected as a single line item “Equity income of joint venture.”

²		The financial results of the Elandskraal mines and New Hampton have been consolidated from April 1, 2001.

³		Randfontein’s financial results have been equity accounted from January 14, 2000 to February 29, 2000 and consolidated thereafter. The financial results of Kalgold have been consolidated from October 1, 1999.

⁴		The financial results of Evander have been consolidated from July 1, 1998.

⁵		Reflects Harmony’s equity accounted interest in the Free Gold Company’s results from May 1, 2002.

⁶		Reflects Harmony’s equity accounted interest in Bendigo’s results with effect from January 1, 2002 and in Hill 50’s results for the month of March 2002.

⁷		Reflects Harmony’s equity accounted interest in Randfontein’s results during the period from January 14 to February 29, 2000.

⁸		Harmony adopted FAS 133 on July 1, 2000. As Harmony’s derivative instruments held on that date did not meet the FAS 133 criteria for hedge accounting, these derivatives were fair valued and recorded on the balance sheet, resulting in a cumulative effect of change in accounting principle adjustment of approximately $5.8 million.

⁹		Calculated by dividing income/(loss) before cumulative effect of change in accounting principle by the weighted average number of shares used in the computation of basic earnings per share.

¹⁰		Calculated by dividing net income/(loss) by the weighted average number of basic shares used in the computation of basic earnings per share.

¹¹		Presented where there is a dilutive effect when including potential ordinary shares in the calculations in 9 and 10 above.

¹²		Reflects dividends related to fiscal 2002 that were declared on August 2, 2002.

¹³		Harmony has calculated cash costs per ounce by dividing total cash costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. The Gold Institute is a non-profit international association of miners, refiners, bullion suppliers and manufacturers of gold products that has developed a uniform format for reporting production costs on a per ounce basis. The standard was first adopted in 1996 and was revised in November 1999. Cash costs, as defined in the Gold Institute standard, include mine production costs, transport and refinery costs, general and administrative costs, costs associated with movements in production inventories and ore stockpiles, costs associated with transfers to deferred stripping and costs associated with royalties. Cash costs have been calculated on a consistent basis for all periods presented. Changes in cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and the U.S. dollar. Cash costs per ounce is not a U.S. GAAP measure. Cash costs per ounce should not be considered by investors in isolation or as an alternative to net income, income before tax, operating cash flows or any other measure of financial performance presented. While the Gold Institute has provided a definition for the calculation of cash costs per ounce, the calculation of cash costs per ounce may vary from company to company and may not be comparable to other similarly titled measures of other companies. However, Harmony believes that cash costs per ounce is a useful indicator to investors and management of a mining company’s performance as it provides (1) an indication of a company’s profitability and efficiency, (2) the trends in costs as the company’s operations mature, (3) a measure of a company’s gross margin per ounce, by comparison of cash costs per ounce to the spot price of gold and (4) an internal benchmark of performance to allow for comparison against other companies.



			At June 30,

	2002¹		2001²		2000³		1999⁴		1998

			(in $ thousands)
Balance sheet data
Cash and cash equivalents		90,223		144,096		77,942		45,318		8,518
Short-term investments		—		—		—		10,744		15,618
Other current assets		109,397		136,794		59,582		32,071		21,252
Property, plant and equipment — net		812,753		667,113		557,725		347,036		251,461
Restricted cash		—		—		7,310		—		—
Investments in associates⁵		42,791		—		—		—		—
Investment in joint venture⁶		102,578		—		—		—		—
Other long-term assets⁷		137,399		81,822		69,629		9,244		4,995

Total assets		1,295,141		1,029,825		772,188		444,413		301,844

Current liabilities		138,677		152,886		150,148		70,583		43,055
Provision for environmental rehabilitation		63,125		53,136		52,525		33,811		21,779
Deferred income and mining taxes		99,789		47,050		48,686		28,442		22,445
Provision for post-retirement benefits		737		1,002		3,709		5,793		3,756
Deferred financial liability		87,226		49,374		40,174		—		—
Long-term loans		152,461		151,466		46,635		14,024		8,546
Preference shares		—		681		—		—		—
Minority interest		—		331		—		—		—
Shareholders’ equity		753,126		573,899		430,311		291,760		202,263

Total liabilities and shareholders’ equity		1,295,141		1,029,825		772,188		444,413		301,844

¹		Includes the financial position of Hill 50 acquired during the year.

²		Includes the financial position of Elandskraal and New Hampton acquired during the year.

³		Includes the financial position of Randfontein and Kalgold acquired during the year.

⁴		Includes the financial position of Evander acquired during the year.

⁵		Reflects Harmony’s equity-accounted share of the net assets of Bendigo and Highland Gold as at June 30, 2002.

⁶		Reflects Harmony’s equity-accounted share of the net assets of the Free Gold Company as at June 30, 2002.

⁷		Includes mineral subscription and participation rights relating to Harmony’s exploration activities and slimes dams and bond issue costs, which are included in Other Assets in note 12 to the consolidated financial statements.

Unaudited Pro Forma Condensed Income Statement

On November 21, 2001, Harmony and ARMGold reached an agreement in principle with AngloGold to purchase the Free Gold assets, subject to specified conditions. Pursuant to the subsequently executed definitive agreements, the Free Gold assets were purchased by the Free Gold Company for Rand 2,200 million, plus an amount equal to any liability for taxes payable by AngloGold in connection with the sale. Rand 1,800 million of the purchase price, plus accrued interest, was paid by the Free Gold Company in April 2002 following the fulfillment of all conditions precedent and Rand 400 million is payable by the Free Gold Company under an interest-free loan on January 1, 2005. The additional amount relating to taxes is payable by the Free Gold Company as and when the tax liability becomes payable by AngloGold. Harmony has estimated that this tax liability will be approximately Rand 632 million and will be payable in March 2003. The Free Gold Company assumed management control of the Free Gold assets from January 1, 2002, and completed the acquisition on April 23, 2002 (the date on which all conditions precedent to the transaction were fulfilled), with the profits and cash flows generated by the Free Gold assets up to that date being for the account of the Free Gold Company. See “Business—History” and “Business—Harmony’s Mining Operations.”

For purposes of U.S. GAAP, Harmony equity accounted for its interest in the Free Gold Company with effect from May 1, 2002 and the purchase price of the Free Gold assets was determined to be Rand 2,213 million ($208.0 million at an exchange rate of R10.64 per $1.00). This figure is the sum of the cash payment of Rand 1,800 million ($169.2 million at an exchange rate of R10.64 per $1.00), the fair value of the interest-free loan of Rand 270 million ($25.4 million at an exchange rate of R10.64 per $1.00) and the estimated tax payable to AngloGold of Rand 632 million ($59.4 million at an exchange rate of R10.64 per $1.00), offset by the cash flows of Rand 489 million ($46.0 million at an exchange rate of R10.64 per $1.00) generated by the Free Gold assets during the period from January 1, 2002 until the completion of the acquisition on April 23, 2002.

On April 18, 2002, Harmony entered into a term loan facility of Rand 500 million, all of which has been drawn down, with BoE Bank Limited for the purpose of partially funding (i) Harmony’s acquisition of shares in the Free Gold Company and (ii) loans made by Harmony to the Free Gold Company in connection with the acquisition of the Free Gold assets. This facility is collateralized by a pledge of Harmony’s shares in the Free Gold Company and is guaranteed by Randfontein, Evander, Kalgold and Lydex. The loan is repayable in full on April 23, 2006, and eight equal semi-annual installments are due beginning October 23, 2002. The loan bears interest at a rate equal to the Johannesburg Interbank Agreed Rate for deposits in Rand, or JIBAR, plus 1.5% plus specified costs, which is accrued daily from the drawdown date and is payable quarterly in arrears commencing July 23, 2002.

Harmony closed its offer for all of the outstanding shares and listed options of Hill 50 on May 3, 2002 and subsequently completed a compulsory acquisition of the remaining shares and options under the rules of the Australian Stock Exchange. The total cash bid valued Hill 50 at approximately A$233 million (R1,419 million at an exchange rate of R6.09 per A$1.00, or $124.8 million at an exchange rate of R11.37 per $1.00). In an effort to increase efficiency and reduce corporate expenditures, in the quarter ended June 30, 2002 Harmony integrated New Hampton’s Jubilee operations with Hill 50’s New Celebration operations to form the South Kalgoorlie operations and combined the corporate offices associated with these operations.

The following unaudited pro forma condensed income statement of Harmony has been prepared to illustrate the estimated effect of the acquisition of Hill 50 and Harmony’s interest in the Free Gold assets during fiscal 2002 as if such acquisitions had taken place on July 1, 2001. This unaudited pro forma condensed income statement has been derived by the application of pro forma adjustments to the

historical consolidated financial information of Harmony and the historical financial information of the Free Gold assets and Hill 50. The historical consolidated financial statements of Harmony for the years ended June 30, 2002, 2001 and 2000, the historical financial statements of the Free Gold assets for the calendar year ended December 31, 2001 and the historical financial statements of Hill 50 for the fiscal year ended June 30, 2001 have been included elsewhere in this prospectus. The historical consolidated financial statements of Harmony and the Free Gold assets have been prepared in accordance with U.S. GAAP. The historical financial statements of Hill 50 have been prepared in accordance with Australian GAAP and reconciled to U.S. GAAP. The allocation of the consideration for the Free Gold assets and Hill 50 acquisitions to the fair values of the assets acquired and the liabilities assumed in the acquisitions remains subject to final determination and, accordingly, the amounts reflected herein may differ from the amounts that would have been determined if the final fair value allocations were known.

The unaudited pro forma condensed income statement should not be considered indicative of results that would have been achieved had the acquisitions been consummated on the dates or during the periods indicated and does not purport to indicate results of operations as of any future date or any future period. The unaudited pro forma condensed income statement should be read in conjunction with the historical consolidated financial statements of Harmony, Hill 50 and the Free Gold Company and related notes thereto included elsewhere in this prospectus.

The unaudited pro forma condensed income statement excludes the effects of the following transactions:

	•		the issuance of 8,500,000 ordinary shares by means of a international private placement on April 29, 2002;

	•		the purchase of a 31.8% equity interest in Bendigo during December 2001;

	•		the purchase of a 32.5% equity interest in Highland Gold during May and June 2002; and

	•		the repurchase of the 10% participation rights in the Elandskraal Venture with effect from April 1, 2002.

For the purposes of the following unaudited pro forma condensed income statement, the exchange rates of Rand 10.20 per $1.00 and Rand 4.96 per A$1.00 were used unless otherwise indicated.



							Free Gold assets
	Harmony for the			Hill 50 for the			for the ten months
	fiscal year ended			nine months ended			ended
Dollars in thousands, except per share data	June 30, 2002			March 31, 2002			April 30, 2002			Adjustments					Pro forma

REVENUES
Product sales		675,287			52,051			131,205			(131,205	)	(a	)		727,338
Interest and dividends		12,403			—			—			—					12,403
Other income – net		9,150			(1,151	)		(317	)		317		(a	)		7,999

		696,840			50,900			130,888			(130,888	)				747,740

COSTS AND EXPENSES
Production costs		469,398			41,415			97,196			(97,196	)	(a	)		510,813
Deferred stripping costs		(486	)		—			—			—					(486	)
Depreciation and amortization		30,183			—			14,189			(14,189	)	(a	)		43,241
											13,058		(d	)
Employment termination costs		8,775			—			1,324			(1,324	)	(a	)		8,775
Provision for rehabilitation cost		15,192			—			—			—					15,192
Corporate expenditure		7,641			1,263			1			(1	)	(a	)		8,904
Exploration expenditure		7,065			2,126			—			—					9,191
Marketing and new business expenditure		8,741			—			—			—					8,741
(Gain)/loss on financial instruments		(8,939	)		19,984			(8,956	)		8,956		(a	)		11,045
Stock-based compensation		9,434			—			—			—					9,434
Profit on sale of other assets and listed investments		(4,524	)		—			—			—					(4,524	)
Equity income of joint venture		(13,176	)		—			—			(16,025	)	(a	)		(25,261	)
											3,940		(b	)
Loss from associate companies		473			—			—			942		(e	)		1,415
Impairment of assets		44,284			—			—			—					44,284
Interest paid		19,077			221			2,760			(2,760	)	(a	)		23,605
											4,307		(c	)
Provision for former employees’ post retirement benefits		43			—			—			—					43

		593,181			65,009			106,514			(100,292	)				664,412

INCOME/(LOSS) BEFORE TAX		103,659			(14,109	)		24,374			(30,596	)				83,328
INCOME AND MINING TAX (EXPENSE)/BENEFIT		(14,368	)		4,220			(9,226	)		9,226		(a	)		(4,960	)
											3,917		(f	)
											1,271		(g	)

NET INCOME/(LOSS) BEFORE MINORITY INTERESTS		89,291			(9,889	)		15,148			(16,182	)				78,368
MINORITY INTERESTS		(1,575	)		—			—			—					(1,575	)

NET INCOME/(LOSS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE		87,716			(9,889	)		15,148			(16,182	)				76,793
BASIC EARNINGS PER SHARE (CENTS) BEFORE CUMULATIVE EFFECT OF CHANGE IN ACCOUNTING PRINCIPLE		57.1			—			—			—					50.0
WEIGHTED AVERAGE NUMBER OF SHARES USED IN THE COMPUTATION OF BASIC EARNINGS/(LOSS) PER SHARE		153,509,862			—			—			—					153,509,862

See notes to the unaudited pro forma condensed income statement.

Notes to Unaudited Pro Forma Condensed Income Statement

Adjustments

For the fiscal year ended June 30, 2002, the adjustments column on the unaudited pro forma condensed income statement relates to:

a.		Reflects the elimination of the results of operations of the Free Gold assets acquired and liabilities assumed, which are accounted for as a single line item, “equity income of joint venture.”

b.		The adjustment of “equity income of joint venture” to reflect the depreciation and amortization expense of the Free Gold assets (net of tax) to reflect the excess arising on acquisition allocated to property, plant and equipment.

c.		Interest expense of $4.3 million on the term loan facility draw down of $45 million (Rand 500 million at an exchange rate of R11.10 per $1.00). A one-eighth increase/decrease in the applicable interest rate would increase/decrease interest expense by $0.6 million, respectively.

d.		Reflects the adjustment of depreciation and amortization expense of Hill 50 to reflect the excess arising on acquisition allocated to property, plant and equipment.

e.		Reversal of Harmony’s equity interest in the profit of Hill 50 for the month of March 2002.

f.		Reflects the tax effects of the Hill 50 adjustments at an effective Australian corporate tax rate of 30%.

g.		Reflects the tax effects of the term loan facility interest adjustment at an effective South African tax rate of 29.5%.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read the following discussion and analysis together with the consolidated financial statements, including the related notes, and the unaudited pro forma condensed income statement, including the related notes, appearing elsewhere in this prospectus. Certain information contained in the discussion and analysis set forth below and elsewhere in this prospectus includes forward-looking statements that involve risk and uncertainties. See “Forward-Looking Statements” and “Risk Factors” for a discussion of important factors that could cause actual results to differ materially from the results described in or implied by the forward-looking statements contained in this prospectus.

Overview

Harmony’s operations have grown significantly since 1995, largely through acquisitions. Since 1995, Harmony has expanded from a lease-bound mining operation into an independent world-class gold producer. Harmony’s gold sales have increased from 650,312 ounces of gold in fiscal 1995 to 2,388,458 ounces of gold in fiscal 2002. These figures include sales from Elandskraal and New Hampton (each of which was acquired in fiscal 2001) and three months of sales from Hill 50 (which was acquired in fiscal 2002), but exclude sales from the Free Gold Company (in which Harmony acquired a 50% interest in fiscal 2002).

On January 31, 2001, Harmony entered into an agreement to purchase the assets and liabilities of the Elandskraal mines from AngloGold for approximately Rand 1 billion. Harmony and AngloGold jointly managed the Elandskraal mines between February 1, 2001 and April 9, 2001 and Harmony completed the purchase on April 9, 2001. The operating results of the Elandskraal mines for the months of February and March 2001, which amounted to a loss of $1.4 million, were treated as pre-acquisition costs. Elandskraal sold 476,059 ounces of gold in fiscal 2002, which were included in Harmony’s gold sales for fiscal 2002. See “Business—Harmony’s Mining Operations—Elandskraal Operations.”

On November 21, 2001, Harmony and ARMGold reached an agreement in principle with AngloGold to purchase the Free Gold assets, subject to specified conditions. Pursuant to the subsequently executed definitive agreements, the Free Gold assets were purchased by the Free Gold Company (in which Harmony and ARMGold each has a 50% interest) for Rand 2,200 million ($206.8 million at an exchange rate of R10.64 per $1.00), plus an amount equal to any liability for taxes payable by AngloGold in connection with the sale. Rand 1,800 million ($169.2 million at an exchange rate of R10.64 per $1.00) of the purchase price, plus accrued interest, was paid by the Free Gold Company in April 2002 following the fulfillment of all conditions precedent and Rand 400 million ($37.5 million at an exchange rate of R10.64 per $1.00) is payable by the Free Gold Company under an interest-free loan on January 1, 2005. The additional amount relating to taxes is payable by the Free Gold Company as and when the tax liability becomes payable by AngloGold. The Free Gold Company has estimated that this tax liability will be approximately Rand 632 million ($59.4 million at an exchange rate of R10.64 per $1.00) and will be payable in March 2003. The Free Gold Company assumed management control of the Free Gold assets from January 1, 2002, and completed the acquisition on April 23, 2002 (the date on which all conditions precedent to the transaction were fulfilled). See “Business—History and “Business—Harmony’s Mining Operations.” During Harmony’s fiscal 2002, sales from the Free Gold assets amounted to 1,143,243 ounces of gold and Harmony’s interest in two months of these sales (reflecting the period from May 1, 2002 to June 30, 2002) totaled 104,005 attributable ounces. Because Harmony equity

accounts for its 50% interest in the Free Gold Company, sales from the Free Gold assets are not included in Harmony’s sales figures in this prospectus. For more information on Harmony’s consolidation policy, see note 2(b) to the consolidated financial statements.

For purposes of U.S. GAAP, Harmony equity accounted for its interest in the Free Gold Company with effect from May 1, 2002 and the purchase price of the Free Gold assets was determined to be Rand 2,213 million ($208.0 million at an exchange rate of R10.64 per $1.00). This figure is the sum of the cash payment of Rand 1,800 million ($169.2 million at an exchange rate of R10.64 per $1.00), the fair value of the interest-free loan of Rand 270 million ($25.4 million at an exchange rate of R10.64 per $1.00) and the estimated tax payable to AngloGold of Rand 632 ($59.4 million at an exchange rate of R10.64 per $1.00), offset by the cash flows of Rand 489 million ($46.0 million at an exchange rate of R10.64 per $1.00) generated by the Free Gold assets during the period from January 1, 2002 until the completion of the acquisition on April 23, 2002 (the date on which all conditions precedent to the transaction were fulfilled).

Harmony conducts Australian operations through two recently acquired Australian gold mining companies: New Hampton, acquired with effect from April 1, 2001, and Hill 50, acquired with effect from April 1, 2002. Harmony closed its offer for all of the outstanding shares of New Hampton on July 12, 2001, and subsequently completed a compulsory acquisition of the remaining shares and options under the rules of the Australian Stock Exchange. The total cash bid valued New Hampton at approximately A$56.3 million (R228.2 million at an exchange rate of R4.05 per A$1.00, or $28.5 million at an exchange rate of R8.00 per $1.00). Harmony closed its offer for all of the outstanding shares and listed options of Hill 50 on May 3, 2002 and subsequently completed a compulsory acquisition of the remaining shares and options under the rules of the Australian Stock Exchange. The total cash bid valued Hill 50 at approximately A$233 million (R1,419 million at an exchange rate of R6.09 per A$1.00, or $124.8 million at an exchange rate of R11.37 per $1.00). In an effort to increase efficiency and reduce corporate expenditures, in the quarter ended June 30, 2002 Harmony integrated New Hampton’s Jubilee operations with Hill 50’s New Celebration operations to form the South Kalgoorlie operations and combined the corporate offices of New Hampton and Hill 50 in Perth. With effect from April 1, 2002, Harmony reports the New Hampton and Hill 50 operating results together within an “Australian Operations” segment. See “Business—History” and “Business—Harmony’s Mining Operations—Australian Operations.” New Hampton sold 191,521 ounces of gold in fiscal 2002, which were included in Harmony’s gold sales for fiscal 2002, and Hill 50 sold 275,185 ounces of gold in fiscal 2002, three months of which, or 61,472 ounces, were included in Harmony’s gold sales for fiscal 2002. On a pro forma basis, the combined gold sales of Harmony (including Elandskraal, New Hampton and Hill 50, but excluding the Free Gold Company) would have been 2,602,171 ounces for fiscal 2002.

On December 14, 2001, Harmony acquired 294 million ordinary shares of Bendigo, a single project Australian gold mining development company, for a total purchase price of approximately A$50 million (R292 million at an exchange rate of R5.84 per A$1.00, or $22.8 million at an exchange rate of R12.80 per $1.00). As of June 30, 2002, Harmony held a stake of approximately 31.8% in Bendigo.

On May 31, 2002, Harmony acquired ordinary shares representing approximately 25% of the outstanding share capital of Highland Gold for a purchase price of $18.9 million. On June 28, 2002, Highland Gold issued 750,000 additional shares to Harmony for a purchase price of £7,500 ($11,925 at an exchange rate of $1.59 per £1.00), which increased Harmony’s aggregate interest to approximately 32.5% of Highland Gold’s outstanding share capital. Highland Gold is a privately held company organized under the laws of Jersey, Channel Islands. Highland Gold holds Russian gold mining assets and mineral rights, including an operating mine and development projects.

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

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

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

Critical Accounting Policies

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

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

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

production costs and the price of gold, and may yield less gold under actual production conditions than Harmony currently estimates.”

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

Hedging and financial derivatives. Harmony accounts for its derivative financial instruments in accordance with FAS 133. See “—Market Risk—General.” The determination of the fair value of hedging instruments and financial derivatives, when marked to market, takes into account estimates such as projected commodity prices, interest rates and foreign currency exchange rates under prevailing market conditions, depending on the nature of the hedging and financial derivatives. These estimates may differ materially from actual commodity prices, interest rates and foreign currency exchange rates prevailing at the maturity dates of the hedging and financial derivatives and, therefore, may materially influence the values assigned to the hedging and financial derivatives, which may result in a charge to or an increase in Harmony’s earnings at the maturity dates of the hedging and financial derivatives.

Environmental rehabilitation costs. Harmony makes provision for environmental rehabilitation costs and related liabilities based on management’s interpretations of current environmental and regulatory requirements. In addition, final environmental rehabilitation obligations are estimated based on these interpretations, with provisions made over the expected lives of Harmony’s mines. While management believes that the environmental rehabilitation provisions made are adequate and that the interpretations applied are appropriate, the amounts estimated for the future liabilities may differ materially from the costs that will actually be incurred to rehabilitate Harmony’s mine sites in the future. In particular, changes and development in environmental regulation and regulatory requirements may increase the costs of environmental rehabilitation. If management determines that an insufficient rehabilitation provision has been created, earnings will be adjusted as appropriate in the period that the determination is made. For more information regarding the environmental regulations applicable to Harmony’s operations, see “Risk Factors—Harmony’s operations are subject to extensive government regulations—Harmony is subject to extensive environmental regulations” and “Business—Regulatory and Environmental Matters—Environmental Matters.”

Employee benefits. Management’s determination of Harmony’s obligation and expense for pension and provident funds, as well as post retirement health care liabilities, depends on the selection of certain assumptions used by actuaries to calculate the relevant amounts. These assumptions are described in note 23 to the consolidated financial statements and include, among others, the expected long-term rate of return of plan assets, the expected South African mortality rates and no increase in employer contributions. Actual results that differ from management’s assumptions are accumulated and charged over future periods, which will generally affect Harmony’s recognized expense and recorded obligation in future periods. While management believes that these assumptions are appropriate, significant changes in the assumptions may materially affect Harmony’s pension and other post

retirement obligations as well as future expenses, which will result in an impact on earnings in the periods that the changes in the assumptions occur.

Stock-based compensation. Effective July 1, 2001 Harmony adopted Statement of Financial Accounting Standards No. 123, Accounting for Stock-Based Compensation, or FAS 123, for all stock option grants subsequent to that date. FAS 123 requires that Harmony determine the fair value of a stock option as of the date of the grant, which is then amortized as stock-based compensation expense in the income statement over the vesting period of the option grant. Harmony has determined the fair value of its fiscal 2002 option grants using the binomial model, which requires that Harmony make assumptions regarding the estimated life of the option, share price volatility and Harmony’s expected dividend yield. While Harmony’s management believes that these assumptions are appropriate, the use of different assumptions could have a material impact on the fair value of the option grant and the related recognition of stock-based compensation expense in the consolidated income statement.

Revenues

Substantially all of Harmony’s revenues are derived from the sale of gold. As a result, Harmony’s operating results are directly related to the price of gold. Historically, the price of gold has fluctuated widely. The gold price is affected by numerous factors over which Harmony does not have control. See “Risk Factors—The profitability of Harmony’s operations, and the cash flows generated by those operations, are affected by changes in the market price for gold, which in the past has fluctuated widely.”

As a general rule, Harmony sells the gold it produces at market prices to obtain the maximum benefit from prevailing gold prices and does not enter into hedging arrangements such as forward sales or derivatives that establish a price in advance for the sale of its future gold production. As required by financing agreements which Harmony entered into in connection with the financing of the acquisition of the Bissett mine in Canada, Harmony hedged a certain amount of Bissett’s production. These hedges were closed out or had expired by May 31, 2001. In February 2001, as required by the commitment for financing of the syndicated loan facility that Harmony entered into in connection with the acquisitions of New Hampton and the Elandskraal mines, Harmony protected some of its production from downward movements in the gold price by entering into put options relating to the delivery of 1 million ounces of Harmony’s 2001 and 2002 production. The put options covered 83,333 ounces per month for 12 months, commencing on March 29, 2001, at a price of Rand 64,000 per kilogram (Rand 1,990 per ounce). Harmony paid Rand 29 million to secure these put options. Harmony closed out these put options during July 2001 and received Rand 3 million. See “Operating and Financial Review and Prospects—Market Risk.”

A significant proportion of the production at Randfontein was already hedged when acquired by Harmony. On April 12, 2002, Harmony announced that it had completed the process of closing out all of the Randfontein hedge contracts, including closing forward sales contracts and call options covering a total of approximately 490,000 ounces and forward purchases covering a total of 200,000 ounces.

sales agreements qualify for the normal purchase, normal sales exception, which exempts them from the provisions of FAS 133. These commodity sales agreements covered, as of September 30, 2002, approximately 1,689,705 ounces over a seven-year period at an average strike price of A$532 per ounce ($287 at an exchange rate of $0.54 per A$1.00). Harmony intends to reduce the remaining hedge positions of the Australian operations gradually by delivering gold pursuant to the relevant agreements.

The cost to Harmony of closing out Randfontein hedge positions in fiscal 2002 was approximately $22 million (before taxes). There was no cost to Harmony involved in closing New Hampton hedge positions in fiscal 2002. There was also no cost to Harmony involved in closing out Randfontein or New Hampton hedge positions in fiscal 2001. In fiscal 2000, the cost of closing out Randfontein hedge positions was approximately $10 million.

In December 2001, in response to significant depreciation in the Rand and to protect itself against possible appreciation of the Rand against the U.S. dollar, Harmony entered into Rand-U.S. dollar currency forward exchange contracts intended to cover estimated revenues from the Free State operations’ planned production for calendar 2002. Harmony fixed the Rand-U.S. dollar exchange rate for a total of $192 million at an average exchange rate of Rand 11.20 per U.S. dollar. As of December 13, 2002, $15 million was remaining under these contracts at an average exchange rate of Rand 11.31 per U.S. dollar. This measure, however, is not expected to fully protect Harmony from sustained fluctuations in the value of the Rand relative to the U.S. dollar since it covers only a limited amount, it expires on December 31, 2002 and Harmony does not expect to renew or repeat it. See “Operating and Financial Review and Prospects—Market Risk—Foreign Currency Sensitivity.”

Significant changes in the price of gold over a sustained period of time may lead Harmony to increase or decrease its production in the near-term.

Harmony’s realized gold price

The average gold price in U.S. dollars received by Harmony generally declined from fiscal 1999 through the quarter ended December 31, 2001, but increased during the six months ended June 30, 2002. In fiscal 2002, the average gold price in U.S. dollars received by Harmony was $283 per ounce. The market price for gold (and, accordingly, the price received by Harmony) is affected by numerous factors over which Harmony has no control. See “Risk Factors—The profitability of Harmony’s operations, and the cash flows generated by those operations, are affected by changes in the market price for gold, which in the past has fluctuated widely.”

The following table sets out the average, the high and the low London Bullion Market price of gold and Harmony’s average U.S. dollar sales price during the past three fiscal years:



	Fiscal year ended June 30,

	2002		2001		2000

			($/oz)
Average		289		266		280
High		327		291		319
Low		265		256		269
Harmony’s average sales price¹		283		276		290

Harmony’s average sales price differs from the average gold price due to the timing of its sales of gold within each year and due to the effect of delivering under the commodity hedge contracts acquired in the New Hampton and Hill 50 transactions.

Costs

Harmony’s cash costs and expenses typically make up over 80% of its total costs. The remainder of Harmony’s total costs consists primarily of exploration and new business costs, employment termination costs, corporate and sundry expenditure, and depreciation and amortization. Harmony’s cash costs consist primarily of production costs. Production costs are incurred on labor, stores and utilities. Labor costs are the largest component and typically comprise approximately 50% of Harmony’s production costs. Harmony has reduced its overall cash costs from approximately $305 per ounce in fiscal 1998 to approximately $196 per ounce in fiscal 2002.

Harmony’s costs are very sensitive to the Rand-U.S. dollar exchange rate. The South African Rand depreciated significantly against the U.S. dollar in fiscal 2002. See “Operating and Financial Review and Prospects—Exchange Rates.” Depreciation of the Rand against the U.S. dollar decreases working costs at Harmony’s South African operations when those costs are translated into U.S. dollars. See “Risk Factors—Because most of Harmony’s production costs are in Rand, while gold is generally sold in U.S. dollars, Harmony’s financial condition could be materially harmed by an appreciation in the value of the Rand.”

Harmony’s total cash costs also reflect movement in deferred stripping ratios for open pit mines. Harmony defers the cost of stripping when the actual stripping ratio exceeds the expected average stripping ratio over the life of mine. The actual stripping ratio is calculated as the ratio of overburden tons (tons that need to be removed to access ore) to tons of ore mined for the period. Harmony charges the cost of stripping (as a production cost) when the actual stripping ratio is equal to or less than the expected average stripping ratio over the life of the mine. Expected average stripping ratios over the lives of mines are recalculated annually in light of additional knowledge and changes in estimates, including changes to the expected lives of mines. Each ratio is calculated as the ratio of (i) the total overburden tons deferred at the calculation date and future anticipated overburden tons to (ii) the anticipated future ore to be mined. Changes in Harmony’s ore reserve statement and mine plan, which will include changes in future ore and overburden tons, will result in changes to the expected average stripping ratio over the life of the mine, which will impact the amounts deferred or charged. See “—Risk Factors—Harmony’s gold reserve figures are estimates based on a number of assumptions, including assumptions as to mining and recovery factors, future production costs and the price of gold, and may yield less gold under actual production conditions than Harmony currently estimates.” If the expected average stripping ratio over the life of a mine is revised upwards, relatively lower stripping costs will, in the future, be deferred in each period, or a relatively higher amount will be charged. The opposite is true when the expected average stripping ratio over the life of a mine is revised downwards. These changes would impact on earnings accordingly.

Harmony intends that its deferred stripping calculation should achieve a match between the cost of mining overburden tons to the tons of ore expected to be accessed by removing overburden, by applying the expected average stripping ratio over the life of a mine. Consequently, any changes made to the deferred stripping ratio will have an impact on total cash costs.

While recognizing the importance of reducing cash costs, Harmony’s chief focus is on controlling and, where possible, reducing total costs, including overhead costs. Harmony aims to control total unit costs per ounce produced by maintaining its low total cost structure at its existing operations and implementing this low-cost structure at the new mining operations it acquires. Harmony has been able to reduce total costs by implementing a management structure and philosophy that is focused on reducing management and administrative costs, implementing an ore reserve management system that allows for greater grade control and acquiring higher grade reserves. See “Business—Strategy.” Harmony has reduced its costs by flattening the management structure at its operating units by removing excess layers of management. Harmony’s ore reserve management system relies on a detailed geological

understanding of the orebody backed up by closely-spaced sampling and an emphasis on grade control. The acquisition of higher grade reserves and the effect of the implementation of the ore reserve management system have increased the underground recovery grade from Harmony’s South African operations (excluding the Free Gold Company) from 0.123 ounces per ton in fiscal 1998 to 0.187 ounces per ton in fiscal 2002.

Exchange Rates

Harmony’s revenues and costs are very sensitive to the Rand-U.S. dollar exchange rate. Currently, the majority of Harmony’s earnings are generated in South Africa and, as a result, most of its costs are incurred in Rand. Since gold is generally sold in U.S. dollars, however, most of Harmony’s revenues are received in U.S. dollars. The average gold price received by Harmony during fiscal 2002 increased $7 per ounce to $283 per ounce from $276 per ounce during fiscal 2001.

Appreciation of the Rand against the U.S. dollar increases working costs at Harmony’s South African operations when those costs are translated into U.S. dollars, which serves to reduce operating margins and net income from Harmony’s South African operations. Depreciation of the Rand against the U.S. dollar reduces these costs when they are translated into U.S. dollars, which serves to increase operating margins and net income from Harmony’s South African operations. Accordingly, weakness in the Rand generally results in improved Rand earnings for Harmony.

The exchange rates obtained when converting U.S. dollars to Rand are set by foreign exchange markets, over which Harmony has no control. The South African Rand depreciated significantly against the U.S. dollar in calendar 2001 and during the first quarter of calendar 2002. The Rand appreciated significantly against the U.S. dollar during the period from April 1, 2002 through December 13, 2002. The conversion rate for balance sheet items as at June 30, 2002 is Rand 10.39 per $1.00, except for specific items included within shareholders’ equity that are converted at the exchange rate prevailing on the date the transaction was entered into. This compares with a conversion rate of Rand 8.04 per $1.00 for balance sheet items as at June 30, 2001, reflecting a depreciation of 29% of the Rand against the U.S. dollar when compared with June 30, 2001. Income statement items were converted at the average exchange rate for the period (Rand 10.20 per $1.00), reflecting a depreciation of 34% of the Rand against the U.S. dollar when compared with June 2001. This depreciation of the Rand against the U.S. dollar caused a significant reduction in Harmony’s working costs translated into U.S. dollars, which served to increase operating margins and net income reflected in Harmony’s consolidated income statement for fiscal 2002. Appreciation of the Rand against the U.S. dollar would cause an increase in Harmony’s costs in U.S. dollar terms. See “Risk Factors—Because most of Harmony’s production costs are in Rand, while gold is generally sold in U.S. dollars, Harmony’s financial condition could be materially harmed by an appreciation in the value of the Rand.”

Inflation

Harmony’s operations have not been materially impacted by inflation in recent years. However, it is possible that a period of significant inflation in South Africa could adversely affect Harmony’s results and financial condition. Because Harmony’s costs are primarily in Rand and Harmony generally sells its gold in U.S. dollars, movements in the Rand-U.S. dollar exchange rate may influence the impact of inflation on Harmony’s profits. To the extent the Rand depreciates against the U.S. dollar, this depreciation may offset the impact of inflation.

South African Economic and Political Environment

Harmony is a South African company and the majority of its operations are in South Africa. As a result, Harmony is subject to various economic, fiscal, monetary and political policies and factors that affect South African companies generally. See “Risk Factors—Political or economic instability in South Africa or regionally may have an adverse effect on Harmony’s operations and profits.”

South African companies are subject to significant exchange control limitations. While exchange controls have been relaxed in recent years, South African companies remain subject to significant restrictions on their ability to deploy capital outside of the Southern African Common Monetary Area. As a result, Harmony has historically financed its offshore acquisitions with offshore long-term debt. See “Exchange Controls and Other Limitations Affecting Security Holders.”

Impairment of Assets

Harmony’s management reviews the recoverability of Harmony’s long-lived assets, including development costs, on an annual basis and whenever events or changes in circumstances indicate that the carrying amount of those assets may not be recoverable. Testing for impairment involves a two-step process in which the undiscounted future cash flows expected to be generated from future use of a long-lived asset is first compared to the carrying value of that asset. If the carrying value exceeds those undiscounted future cash flows, the asset is determined to be impaired. The fair value of the asset is then determined by reference to the discounted future cash flows using a discount rate that reflects the specific risk related to the asset. Harmony then records, as an impairment charge, the difference between the carrying value and fair value of the asset.

Results of Operations

Years ended June 30, 2002 and 2001

Revenues

Revenue increased $89.6 million, or 14.8%, from $607.2 million in fiscal 2001 to $696.8 million in fiscal 2002. This increase was attributable primarily to the higher average sales price of gold received by Harmony, the inclusion of Elandskraal and New Hampton for the full fiscal year and the inclusion of Hill 50 for three months.

Harmony’s gold sales increased 248,415 ounces, or 11.6%, from 2,140,043 ounces in fiscal 2001 to 2,388,458 ounces in fiscal 2002. This increase was attributable primarily to the inclusion of Elandskraal (476,059 ounces in fiscal 2002, compared with 122,880 ounces in fiscal 2001) and New Hampton (191,521 ounces in fiscal 2002, compared with 55,653 ounces in fiscal 2001) in the results for the full fiscal year and the inclusion of Hill 50 (61,472 ounces) in the results for three months in fiscal 2002. This increase in sales was partially offset by reduced sales from Randfontein due to the closure of shaft 4 and reduced sales from the Free State operations due to the closure of Harmony 4 and Virginia 2 shafts and the suspension of mining at the Brand 2 shaft. See “Business—Harmony’s Mining Operations—Randfontein Operations” and “Business—Harmony’s Mining Operations—Free State Operations.” Harmony’s average sales price of gold per ounce was $283 in fiscal 2002, as compared with $276 in fiscal 2001, which was due primarily to higher market prices for gold.

Interest and dividend income increased by 6.5 million, or 110.2%, from $5.9 million in fiscal 2001 to $12.4 million in fiscal 2002. In fiscal 2002 Harmony earned interest on higher cash balances as a result of increased cash flow and received $1.6 million in dividends from AurionGold.

Other income decreased by $1.5 million, or 14.0%, from $10.7 million in fiscal 2001 to $9.2 million in fiscal 2002. The decrease was primarily due to decreased profits from the sale of surplus assets such as vehicles, mining equipment, buildings and farmland at Harmony’s South African operations.

Costs

The following table sets out Harmony’s total ounces sold and weighted average cash costs per ounce for fiscal 2001 and fiscal 2002:



	Year ended				Year ended				% decrease in
	June 30, 2002¹				June 30, 2001²				cash costs

	(oz)		($/oz)		(oz)		($/oz)
Elandskraal		476,059		196		122,880		209		6
Randfontein		561,638		177		723,421		220		20
Free State		611,944		216		686,223		264		18
Evander		415,382		171		458,212		199		14
Bissett3		8,263		109		44,303		330		67
Kalgold		62,179		205		49,351		260		21
New Hampton		191,521		242		55,653		319		24
Hill 50		61,472		213		—		—		—

Total		2,388,458				2,140,043

Weighted average				196				234		16

¹		Includes three months of production from Hill 50. 2 Includes three months of production at Elandskraal and New Hampton. 3 Represents production from clean-up of the plant and mill during the transition to care and maintenance.
²		Includes three months of production at Elandskraal and New Hampton.
³		Represents production from clean-up of the plant and mill during the transition to care and maintenance.

During Harmony’s fiscal 2002, sales from the Free Gold assets amounted to 1,143,243 ounces of gold at an average cost of $175 per ounce. Harmony’s interest in two months of these sales (reflecting the period from May 1, 2002 to June 30, 2002) totaled 104,005 attributable ounces at an average cash cost of $130 per ounce. Because Harmony equity accounts for its 50% interest in the Free Gold Company, the Free Gold Company’s sales are not included in Harmony’s sales figures in this prospectus and the average cash cost of the Free Gold Company’s sales is not used in calculating Harmony’s overall average cash costs in this prospectus.

Harmony’s weighted average cash costs decreased by $38 per ounce from $234 in fiscal 2001 to $196 per ounce in fiscal 2002. Cash costs per ounce vary with the working costs per ton (which is, in turn, affected by the number of tons processed) and grade of ore processed. Cash costs expressed in U.S. dollars per ounce also vary with fluctuations in the Rand-U.S. dollar exchange rate, because most of Harmony’s working costs are incurred in Rand. The decrease in cash costs expressed in U.S. dollars per ounce in fiscal 2002 was attributable primarily to the depreciation of the Rand against the U.S. dollar, which caused a significant reduction when these costs were translated into U.S. dollars. See “Operating and Financial Review and Prospects—Exchange Rates.” If expressed in Rand terms, cash costs per ounce would have increased in fiscal 2002, due primarily to the inclusion of relatively higher-cost production from the Elandskraal and New Hampton operations, the reduction of relatively lower-cost surface operations at Randfontein and increases in the costs of labor and supplies at Harmony’s South African operations due to the implementation of collective bargaining agreements and the effect of inflation on supply contracts.

The substantial decrease in cash costs at Bissett was due primarily to low cost production resulting from clean-up of the plant and mill during the transition to the care and maintenance program in the quarter ended September 30, 2001. An improvement in recovered grade helped to control cash costs per ounce at Kalgold.

Harmony’s cash costs consist primarily of production costs and include, among other things, ongoing development costs, which are incurred to access ore to produce current mined reserves and are expensed as incurred. Cash costs do not include capital development costs, which are incurred to allow access to the ore body for future mining operations and are capitalized and amortized when the relevant reserves are mined. Harmony’s total cash costs also reflect movements in deferred stripping ratios for open pit mines. Harmony charges the cost of stripping (as a production cost) when the actual stripping ratio is below the expected average stripping ratio over the life of the mine. See “Operating and Financial Review and Prospects—Costs.”

Harmony has calculated cash costs per ounce by dividing total cash costs, as determined using the Gold Institute industry standard, by gold ounces sold for all periods presented. The Gold Institute is a non-profit international association of miners, refiners, bullion suppliers and manufacturers of gold products that has developed a uniform format for reporting production costs on a per ounce basis. The standard was first adopted in 1996 and was revised in November 1999. Cash costs, as defined in the Gold Institute standard, include mine production costs, transport and refinery costs, general and administrative costs, costs associated with movements in production inventories and ore stockpiles, costs associated with transfers to deferred stripping and costs associated with royalties. Cash costs have been calculated on a consistent basis for all periods presented. Changes in cash costs per ounce are affected by operational performance, as well as changes in the currency exchange rate between the Rand and the U.S. dollar and, in the case of the Australian operations, the Australian dollar. Cash costs per ounce is not a U.S. GAAP measure. Cash costs per ounce should not be considered by investors in isolation or as an alternative to net income, income before tax, operating cash flows or any other measure of financial performance presented. While the Gold Institute has provided a definition for the calculation of cash costs per ounce, the calculation of cash costs per ounce may vary from company to company and may not be comparable to other similarly titled measures of other companies. However, Harmony believes that cash costs per ounce is a useful indicator to investors and management of a mining company’s performance as it provides (1) an indication of a company’s profitability and efficiency, (2) the trends in costs as the company’s operations mature, (3) a measure of a company’s gross margin per ounce, by comparison of cash costs per ounce to the spot price of gold and (4) an internal benchmark of performance to allow for comparison against other companies.

Depreciation and amortization

Depreciation and amortization charges decreased $1.3 million, or 3.8%, from $31.4 million in fiscal 2001 to $30.2 million in fiscal 2002. This decrease was attributable to the benefit of the depreciation of the Rand against the U.S. dollar, which more than offset depreciation charges incurred at the recently-acquired Elandskraal, New Hampton and Hill 50 operations.

Employment termination costs

Employment termination costs increased $4.1 million, or 87%, from $4.7 million in fiscal 2001 to $8.8 million in fiscal 2002. This increase was due primarily to continued restructuring at the Elandskraal operations, the closure of the Free State’s Harmony 4 and Virginia 2 shafts, the suspension of mining at the Free State’s Brand 2 shaft, the finalization of terminations at Randfontein’s shaft 4 following its closure in the quarter ended June 30, 2001 and the combination of the New Hampton and Hill 50 corporate offices in Perth.

Provision/(reversal of provision) for rehabilitation costs

Harmony provided $15.2 million for rehabilitation costs in fiscal 2002. Harmony reversed a total of $6.8 million in prior provisions for rehabilitation costs in fiscal 2001, primarily due to a revision of the estimates associated with the rehabilitation of Harmony’s mines. The increased rehabilitation expense in fiscal 2002 was largely due to a reassessment of the Big Bell life of mine, which was reduced significantly, and the inclusion of rehabilitation expenditure from Hill 50. See “Business—Harmony’s Mining Operations—Big Bell Operations.”

Corporate expenditure, exploration expenditure and marketing and new business expenditure.

Corporate expenditure, exploration expenditure and marketing and new business expenditure increased $12.4 million, or 111.7%, from $11.1 million in fiscal 2001 to $23.5 million in fiscal 2002. This increase was due primarily to increased corporate expenditures following Harmony’s acquisitions of New Hampton, Elandskraal and Hill 50 and the Free Gold Company’s acquisition of the Free Gold assets, costs related to investigating and pursuing new business opportunities and increased expenditures to investigate and develop opportunities to produce value-added products, such as jewelry and other products made of fabricated gold. In fiscal 2002 Harmony also increased exploration expenditure in connection with the Kalplats feasibility study and international exploration projects. See “Business—Exploration.”

Gain on financial instruments

The gain on financial instruments in fiscal 2002 was $8.9 million, as compared with a gain of $7.6 million in fiscal 2001. The gain in fiscal 2002 related primarily to positive movement in the mark-to-market of derivative instruments held by Hill 50, resulting from downward movement in the gold price since the Hill 50 acquisition in March 2002. The gain in fiscal 2001 related primarily to the change in the mark-to-market of derivative instruments held by Randfontein and New Hampton.

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

Harmony recorded a profit of $4.5 million on the sale of other assets and listed investments in fiscal 2002, as compared with a loss of $1.4 million on the sale of other assets and listed investments in fiscal 2001. The profit in fiscal 2002 was the result of the resale of the ARMGold shares that Harmony acquired in the initial public offering of ARMGold in May 2002. The loss in fiscal 2001 related primarily to the sale of the Western Areas Limited shares held by Harmony at June 30, 2000.

Stock-based compensation.

Harmony adopted FAS 123 on July 1, 2002. FAS 123 requires that all stock options granted subsequent to that date be fair valued, and that the fair value be recognized as stock-based compensation expense over the options vesting period. Harmony recognized $9.4 million as stock-based compensation expense in fiscal 2002. The amount consisted of $2.0 million related to the amortization of the fair value of the 2002 option grants and $7.4 million for options granted in fiscal 2001. The options granted in fiscal 2001 are subject to variable accounting until their date of exercise since their exercise price is not known at the date of grant because they are exercisable with a recourse note. Harmony recorded no stock-based compensation in fiscal 2001.

Equity income of joint venture

Equity income of joint venture was $13.2 million in fiscal 2002, representing Harmony’s interest in the Free Gold Company’s results with effect from May 1, 2002. Harmony recorded no income or loss from joint ventures in fiscal 2001.

Equity loss of associate companies

Equity loss of associate companies was $0.5 million in fiscal 2002. The loss of associate companies reflected Harmony’s proportionate share of the costs of $1.42 million that Bendigo incurred to develop infrastructure required to access ore below the town of Bendigo. The equity loss associated with these development costs was offset by profit of $0.94 million recorded by Hill 50 in the month of March 2002, during which Harmony equity accounted for Hill 50. Harmony recorded no income or loss from associate companies in fiscal 2001.

Impairment of assets

In fiscal 2002, Harmony reduced the grade estimates for future production at New Hampton’s Big Bell underground operations due to disappointing results from the lower levels of this mine, as a result of lower than expected grade. The write-down in fiscal 2002 of $44.3 reflected the impairment of the carrying value of these Big Bell assets. In fiscal 2001, Harmony decided to place the Bissett mine on a care and maintenance program due to the mining operations being uneconomical at current gold prices, and to close certain Randfontein, Evander and Free State shafts. The write-down in fiscal 2001 of $28.6 million primarily reflected the excess of the book value of Bissett’s long-term and other assets over the estimated salvage value of these assets of $19.6 million and the impairment of the carrying value of certain Free State and Randfontein shafts of $5.6 million.

Interest paid

Harmony paid $19.1 million in interest during fiscal 2002 compared to $15 million during fiscal 2001. This increase was due primarily to an increased amount of interest-bearing debt outstanding for the period, in particular, Harmony’s Rand-denominated senior unsecured fixed rate bonds issued on June 24, 2001.

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

Harmony provides for amounts due under its former employees post-retirement benefits. In fiscal 2002, based on updated actuarial valuations, Harmony provided $0.04 million for these benefits. In fiscal 2001, Harmony reversed a $2.2 million provision after reaching an agreement with certain retirees under which these retirees were transferred to the Minemed medical scheme and no subsidies would be payable by Harmony on behalf of these retirees.

Income and mining taxes

South Africa. Harmony pays taxes on mining income and non-mining income. The amount of Harmony’s South African mining income tax is calculated on the basis of a formula that takes into account Harmony’s total revenue and profits from, and capital expenditures for, mining operations in South Africa. Five percent of total mining revenue is exempt from taxation in South Africa. The amount of revenue subject to taxation is calculated by subtracting capital expenditures from operating profit. The amount by which the adjusted profit figure exceeds 5% of revenue constitutes taxable mining income. Harmony and its subsidiaries each make their own calculation of taxable income.

The tax rate applicable to the mining and non-mining income of a gold mining company depends on whether the company has elected to be exempt from the Secondary Tax on Companies, or STC. The STC is a tax on dividends declared and, at present, the STC tax rate is equal to 12.5%. In 1993, all existing South African gold mining companies had the option to elect to be exempt from STC. If the election was made, a higher tax rate would apply for both mining and non-mining income. In each of 2002 and 2001, the tax rates for companies that elected the STC exemption were 46% for mining income and 38% for non-mining income, compared with 37% for mining income and 30% for non-mining income if the STC exemption election was not made. In 1993, Harmony elected to pay the STC tax. All of Harmony’s South African subsidiaries, however, elected the STC exemption. To the extent Harmony receives dividends, such dividends received are offset against the amount of dividends paid for purposes of calculating the amount subject to the 12.5% STC tax.

Australia. Generally, Australia imposes tax on the worldwide income (including capital gains) of all of Harmony’s Australian incorporated and tax resident entities. The current income tax rate for companies is 30%. Exploration costs and the depreciation of capital expenditure may be deducted from income. In addition, other expenditures, such as export market development, mine closure costs and the defense of native title claims, may be deducted from income. With effect from July 1, 1998, mining operations (other than operations on freehold land) are also subject to a 2.5% gold royalty because the mineral rights are owned by the state. All gold production from the Big Bell and Mt. Magnet operations is subject to this royalty. Most of the production from the South Kalgoorlie operations is from freehold land and is, accordingly, exempt from this royalty.

With effect from July 1, 2001, the Australian legislature introduced a Uniform Capital Allowance, which allows tax deductions for depreciation attributable to assets and certain other capital expenditures. In addition, under current Australian tax law, certain grouping concessions are available to companies in the same ultimate control group. These concessions include the ability to group losses and obtain capital gains tax roll-over relief from the transfer of assets among two or more entities if the entities are engaged in the same business or if the entities are wholly-owned by the same entity. Harmony’s subsidiaries in Australia accordingly qualify to transfer losses from one entity to another in the event that a loss is made in one entity and a profit is generated in another.

Withholding tax is payable on dividends, interest and royalties paid by Australian residents to non-residents, which would include any dividends on the shares of Harmony’s Australian subsidiaries that are paid to Harmony. In the case of dividend payments to non-residents, a 30% withholding tax applies. However, where the recipient of the dividend is a resident of a country with which Australia has concluded a double taxation agreement, the rate of withholding tax is generally limited to 15% (or 10% where the dividend is paid to a company’s parent company). Where dividends are fully taxable, an effective credit is allowed against any withholding tax otherwise payable, regardless of whether a double taxation agreement is in place.

Effective tax rate. The table below indicates Harmony’s effective tax rate, which represents the current tax rate due pursuant to the statutory formula and the amount of deferred tax, for fiscal 2002 and fiscal 2001. Harmony bases its estimate of effective tax rates on the application of statutory tax formulas to historic operating results. Current tax due includes mining and non-mining tax calculated by applying the statutory formula to the actual results of operations for the relevant period. Deferred tax is provided at the estimated future effective mining tax rate.



	Fiscal year ended June 30,

Income and mining tax		2002		2001

Effective tax rate expense		13.9	%	49.1	%

The effective tax rate for fiscal 2002 was lower than the estimated statutory tax rate of 20.5% for Harmony and its subsidiaries as a whole. A primary factor in the lower tax effective rate was the fact that the equity income from the Free Gold Company is excluded from the calculation of Harmony’s taxable income. In addition, the effective tax rate for fiscal 2002 was lowered by Harmony’s release of valuation allowances against deferred tax assets at Kalgold, which, in light of the higher prevailing market price for gold and the resulting increase in profitability, are now deemed more likely than not to be recovered. The effective tax rate for fiscal 2001 was higher then then-estimated statutory tax rate of 20.5% for Harmony and its subsidiaries as a whole due to valuation allowances being raised against tax losses of Bissett and New Hampton.

Minority interests

Minority interests were $1.6 million in fiscal 2002, as compared with $0.3 million in fiscal 2001. The minority interests in fiscal 2002 and fiscal 2001 reflected the 10% participation interest in the Elandskraal Venture that Open Solutions acquired with effect from April 31, 2001. With effect from April 1, 2002, Open Solutions sold this interest back to Harmony. See “Business—Harmony’s Mining Operations—Elandskraal Operations.”

Income before cumulative effect of change in accounting principle

As a result of the factors discussed above, income before cumulative effect of change in accounting principle was $87.7 million in fiscal 2002, as compared with 14.8 million in fiscal 2001. This increase was primarily attributable to higher market prices for gold, as a result of which Harmony received a higher average price per ounce of gold (which increased revenue), and the depreciation of the Rand against the U.S. dollar (which reduced costs when translated into U.S. dollars). See “Operating and Financial Review and Prospects—Exchange Rates.” The inclusion of Elandskraal and New Hampton for a full year, and Hill 50 for three months, as well as the equity income from Harmony’s interest in the Free Gold Company, also contributed to the increase in income before cumulative effect of change in accounting principle.

Cumulative effect of change in accounting principle for derivatives and hedging activities (FAS 133), net of tax

Statement of Financial Accounting Standard 133, Accounting for Derivative Instruments and Hedging Activities, has been issued and was adopted by Harmony with effect from July 1, 2000. This standard establishes accounting and reporting standards for derivative instruments and for hedging activities.

Previously gains and losses on derivative instruments, which effectively established minimum prices for designated future production, were recognized in revenue when the planned production was delivered. Derivatives that were not designated for future production were accounted for on a mark-to-market basis and the associated gains or losses were recognized in the results.

With Harmony’s adoption of FAS 133 with effect from July 1, 2000, none of Harmony’s derivatives at that date qualified for hedge accounting as they did not meet the new hedging requirements of FAS 133 and were thus marked to market, resulting in a cumulative effect of change in accounting principles write-off of $5.8 million, net of tax, in fiscal 2001. The cumulative effect adjustment was required to record on the balance sheet the fair value of derivative instruments that previously qualified for off-balance sheet hedge accounting. As at June 30, 2001, none of the derivatives held by Harmony qualified for hedge accounting and have thus been marked to market accordingly and the associated gains and losses were recognized in results in fiscal 2001. No cumulative effect adjustment was recorded in fiscal 2002.

Years ended June 30, 2001 and 2000

Revenues

From fiscal 2000 to fiscal 2001, revenue increased $116.5 million, or 23.7%, from $490.7 million to $607.2 million. The increase in Harmony’s revenue was attributable to the inclusion of Elandskraal and New Hampton in the results for three months in fiscal 2001 and the inclusion of Kalgold and Randfontein for a full year in fiscal 2001. Harmony’s gold sales increased 514,118 ounces, or 31.6%, from 1,625,925 ounces in fiscal 2000 to 2,140,043 ounces in fiscal 2001. Harmony’s average sales price of gold per ounce was $276 in fiscal 2001, as compared with $290 in fiscal 2000, which was due primarily to the declining market price for gold.

Interest and dividend income decreased by 41.1% from $10 million in fiscal 2000 to $5.9 million in fiscal 2001. The decrease was due to the one-time dividend Harmony received from its interest in Western Areas Limited of $5.4 million in fiscal 2000.

Other income increased by $2.2 million from $8.5 million in fiscal 2000 to $10.7 million in fiscal 2001. The increase was primarily due to an increase in profit from the sale of houses in Evander.

Costs

The following table sets out Harmony’s total ounces sold and weighted average cash costs per ounce for fiscal 2000 and fiscal 2001:



									% (decrease)
	Year ended				Year ended				increase in cash
	June 30, 2001¹				June 30, 2000²				costs

	(oz)		($/oz)		(oz)		($/oz)
Elandskraal		122,880		209		—		—		—
Randfontein		723,421		220		300,448		229		(0.4	%)
Free State		686,223		264		856,816		250		5.6	%
Evander		458,212		199		393,235		239		(16.7	%)
Bissett		44,303		330		26,943		356		(7.3	%)
Kalgold		49,351		260		48,483		270		(3.7	%)
New Hampton		55,653		319		—		—		—

Total		2,140,043				1,625,925

Weighted average				234				245		(4.5	%)

¹		Includes three months of production at Elandskraal and New Hampton.
²		Includes nine months of production at Kalgold and Bissett and four months of production at Randfontein.

Harmony’s weighted average cash costs decreased by $11 per ounce from $245 in fiscal 2000 to $234 per ounce in fiscal 2001. Cash costs per ounce vary with the working costs per ton (which is, in turn, affected by the number of tons processed) and grade of ore processed. Cash costs expressed in U.S. dollars per ounce also vary with fluctuations in the Rand-U.S. dollar exchange rate, because most of Harmony’s working costs are incurred in Rand. A significant improvement in Evander’s weighted average cash costs together with the benefit of the depreciation of the Rand against the U.S. dollar was offset by an increase in weighted average cash costs at the Free State operations.

The improved weighted average cash costs at Evander were consistent with the plan to increase tons mined without sacrificing grade. The higher weighted average cash costs at the Free State operations were due to a decrease in the grades achieved, described below.

The Free State operation’s grades decreased in the year ended June 30, 2001 compared to the year ended June 30, 2000 due to the depletion of Basal Reef (Harmony 2 shaft pillar and Virginia 1 shaft pillar), under performance in some areas (Brand 3 and 5 shafts and Merriespruit 3 shaft) and higher development tonnage at certain shafts (Unisel and Masimong 4 and 5). For a discussion of the steps Harmony took to improve grade in fiscal 2002, see “Business—Harmony’s Mining Operations—Free State Operations—Mining Operations.”

Depreciation and amortization

Depreciation and amortization charges increased $9.6 million, or 44%, from $21.8 million in fiscal 2000 to $31.4 million in fiscal 2001. The increase in depreciation and amortization charges in fiscal 2001 was due primarily to the inclusion of Randfontein for a full year and the inclusion of Elandskraal and New Hampton in the results for fiscal 2001.

Employment termination costs

Employment termination costs increased $4.5 million from $0.2 million in fiscal 2000 to $4.7 million in fiscal 2001. This increase in fiscal 2001 was due primarily to the closure of certain Randfontein shafts and the resulting termination of certain production employees.

Provision/(reversal of provision) for rehabilitation costs

Prior provisions for rehabilitation costs were reversed $6.8 million in fiscal 2001, primarily due to a revision of the estimates associated with the rehabilitation of Harmony’s mines.

Corporate expenditure, exploration expenditure and marketing and new business expenditure

These expenditures increased $4.8 million, or 76.2%, from $6.3 million in fiscal 2000 to $11.1 million in fiscal 2001. This increase was due primarily to increased exploration expenditure following Harmony’s acquisition of the management of Kalgold and costs related to investigating and pursuing new business opportunities in fiscal 2001.

Gain on financial instruments

The gain on financial instruments in fiscal 2001 was $7.6 million, as compared with a gain of $8.6 million in fiscal 2000. The gain in fiscal 2001 related primarily to the change in the mark-to-market of derivative instruments held by Randfontein and New Hampton. The gain in fiscal 2000 was due primarily to the change in mark-to-market of derivative instruments held by Randfontein.

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

Harmony had a loss of $1.4 million on the sale of other assets and listed investments in fiscal 2001, as compared with a profit of $2.5 million on the sale of other assets and listed investments in fiscal 2000. The loss in fiscal 2001 related primarily to the sale of the Western Areas Limited shares held by Harmony at June 30, 2000. The profit in fiscal 2000 related primarily to the sale of certain mineral rights.

Equity loss of associate companies

Harmony recorded an equity loss of associate companies of $1.4 million in fiscal 2000. No equity income or loss of associate companies was recorded in fiscal 2001. The equity loss in fiscal 2000 reflected Harmony’s share of Randfontein’s net loss in the period from January 14, 2000 to February 29, 2000. Randfontein incurred a net loss in this period primarily due to employment termination costs as a result of the retrenchment of management of Randfontein following Harmony’s acquisition of management control of Randfontein and losses incurred at Randfontein Cooke 4 shaft.

Impairment of assets

In fiscal 2001, Harmony decided to place the Bissett mine on a care and maintenance program due to the mining operations being uneconomical at current gold prices, and to close certain Randfontein, Evander and Free State shafts. The write-down in fiscal 2001 of $28.6 million primarily reflected the excess of the book value of Bissett’s long-term and other assets over the estimated salvage value of these assets of $19.6 million and the impairment of the carrying value of certain Free State and Randfontein shafts of $5.6 million. No write-off occurred during fiscal 2000.

Interest paid

Harmony paid $15 million in interest for fiscal 2001, as compared with $3.2 million for fiscal 2000. This increase was due primarily to interest paid on the $59 million ABSA term loan facility

and the $20 million JP Morgan loan, both of which were entered into in fiscal 2000, and the temporary syndicated loan facility entered into in fiscal 2001 and the senior unsecured bonds issued in fiscal 2001.

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

Harmony provides for amounts due under its former employees post-retirement benefit plans for medical aid. In fiscal 2000, Harmony released $3.9 million from the provision as a result of an updated actuarial valuation. In fiscal 2001, Harmony reversed a $2.2 million provision after reaching an agreement with certain retirees under which these retirees were transferred to the Minemed medical scheme and no subsidies would be payable by Harmony on behalf of these retirees.

Income and mining tax expense

The table below indicates the effective tax rate, which represents the current tax rate due pursuant to the statutory formula and the amount of deferred tax, for fiscal 2001 and fiscal 2000:



	Fiscal year ended June 30,

Income and mining tax		2001		2000

Effective tax rate expense		49.1	%	18.4	%

In each of 2000 and 1999, the tax rates for taxable mining and non-mining income for companies that elected the STC exemption were 46% for mining income and 38% for non-mining income, compared with 37% for mining income and 30% for non-mining income if the STC exemption election was not made. In 1993, Harmony elected to pay the STC tax. All of Harmony’s subsidiaries, however, elected the STC exemption. To the extent Harmony receives dividends, such received dividends are offset against the amount of dividends paid for purposes of calculating the amount subject to the 12.5% STC tax.

The effective tax rate for fiscal 2001 was higher than the estimated statutory tax rate of 20.5% for Harmony and its subsidiaries as a whole due to valuation allowances being raised against tax losses in Bissett and New Hampton. The effective tax rate for fiscal 2000 differs from the estimated statutory tax rate for Harmony and its subsidiaries as a whole of 20.5% primarily due to non-taxable dividend income and the lower actual formula rate on mining income.

Minority interests

Minority interests were $0.3 million in fiscal 2001, as compared with $2.9 million in fiscal 2000. The minority interests in fiscal 2001 reflected the 10% minority interest in Elandskraal disposed of with effect from April 21, 2001. The minority interests in fiscal 2000 reflected the Randfontein minority shareholders’ share of Randfontein’s net loss in the period from March 1, 2000 to June 30, 2000.

Income before cumulative effect of change in accounting principle

As a result of the factors discussed above, net income before cumulative effect of change in accounting principle was $14.8 million in fiscal 2001, as compared with net income before cumulative effect of change in accounting principle of $57 million in fiscal 2000.

Cumulative effect of change in accounting principle for derivatives and hedging activities (FAS 133), net of tax

Liquidity and Capital Resources

Funding and treasury policies are managed centrally by Harmony. There are no legal or economic restrictions on the ability of Harmony’s subsidiaries to transfer funds to Harmony. Harmony has generally funded its operations and its short-term and long-term liquidity requirements from (i) cash generated from operations, (ii) credit facilities and other borrowings and (iii) sales of equity securities.

Cash Resources

Operations

Net cash provided by operations is primarily affected by the quantities of gold sold, the gold price, the Rand-U.S. dollar exchange rate, cash costs per ounce and, in the case of the Australian operations, the Australian dollar-U.S. dollar exchange rate. A significant adverse change in one or more of these parameters could materially reduce cash provided by operations as a source of liquidity. Net cash provided by operations was $162.4 million in fiscal 2002, as compared with $49 million in fiscal 2001. This increase was primarily attributable to higher market prices for gold, as a result of which Harmony received a higher average price per ounce of gold (which increased revenue), and the depreciation of the Rand against the U.S. dollar (which reduced costs when translated into U.S. dollars). See “Operating and Financial Review and Prospects—Exchange Rates.” Increased gold sales as a result of the inclusion of Elandskraal and New Hampton for a full year, and Hill 50 for three months from April 1, 2002, also contributed to the increased cash provided by operations. The increase in cash provided by operations was partially offset by the $22.0 million cost of closing out the Randfontein hedges, the $4.1 million increase in taxes paid, the $4.6 million increase in interest expense and a $4.2 million increase in working capital charges (which reflects changes in receivables, inventories and accounts payable).

Net cash provided by operations was $49 million in fiscal 2001, as compared with $38.5 million in fiscal 2000. This increase was due primarily to increased gold sales as a result of the inclusion of Randfontein for a full year and Elandskraal and New Hampton for three months from April 1, 2001.

Investing

Net cash utilized in investing activities was $312.7 million in fiscal 2002, as compared with $189.3 million in fiscal 2001. This increase was primarily due to the cash paid for Hill 50 of $124.8 million, Harmony’s investment in and loans advanced to the Free Gold Company of $84.6 million, Harmony’s investment in Bendigo of $22.8 million, Harmony’s investment in Highland Gold of $18.1 million, the repurchase by Harmony of Open Solutions’ participation rights in the Elandskraal Venture for $18.5 million and an increase in capital expenditures of $9.2 million due principally to the inclusion of Elandskraal and New Hampton for a full year and Hill 50 from April 1, 2002.

Net cash utilized in investing activities was $189.3 million in fiscal 2001, as compared with $51.3 million in fiscal 2000. This increase was due primarily to the cash paid for Elandskraal of $130.9 million and for New Hampton of $28.5 million, and an increase in capital expenditures of $26.1 million due to the inclusion of Randfontein for a full year and Elandskraal and New Hampton from April 1, 2001.

Financing

Net cash generated by financing activities was $166.5 million in fiscal 2002, as compared with $225 million in fiscal 2001. This decrease was due primarily to the lower number of ordinary shares issued in fiscal 2002 and the resulting proceeds decreasing from $178.5 million in fiscal 2001 to $159.6 million in fiscal 2002, the decrease in the amount of net long-term financing from $61.5 million in fiscal 2001 to $29.5 million in fiscal 2002 and the increase in dividends paid from $15.7 million in fiscal 2001 to $22.6 million in fiscal 2002.

Net cash generated by financing activities was $225 million in fiscal 2001, as compared with $55.7 million in fiscal 2000, due primarily to the ordinary share issuances of $179 million (mainly the June 2001 global offering and the shares issued to the IDC), as well as the net of the $148 million raised through the corporate bond issuance and the settlement of $98.6 million of the loans outstanding in the prior year.

Credit Facilities and Other Borrowings

Outstanding Credit Facilities and Other Borrowings

On March 2, 2001, Harmony entered into a U.S. dollar denominated term loan facility of $9 million, all of which has been drawn down, with BAE Systems plc for the purpose of financing the design, development and construction of a facility for the manufacture and sale of value added gold products at the Free State operations. The loan is secured by a pledge of certain gold proceeds and other assets from this facility (and limits Harmony’s ability to use the facility as security for other obligations) and is repayable in full on April 30, 2004. The loan bears interest at LIBOR plus 2%, which is accrued daily from the drawdown date and is repayable on a quarterly basis.

On June 14, 2001, Harmony issued Rand-denominated senior unsecured fixed rate bonds in an aggregate principal amount of Rand 1,200 million ($149.3 million at an exchange rate of R8.04 per $1.00), with semi-annual interest payable at a rate of 13% per annum. These bonds are repayable on June 14, 2006, subject to early redemption at Harmony’s option. The bonds have been listed on the Bond Exchange of South Africa. Harmony used the proceeds from the sale of the bonds to retire a portion of a syndicated loan facility and to partially fund the Elandskraal acquisition. So long as the bonds are outstanding, Harmony may not permit encumbrances on its present or future assets or revenues to secure indebtedness for borrowed money, without securing the outstanding bonds equally and ratably with such indebtedness, except for certain specified permitted encumbrances.

On April 18, 2002, Harmony entered into a Rand-denominated term loan facility of Rand 500 million ($57.2 million), all of which has been drawn down, with BoE Bank Limited for the purpose of partially funding (i) Harmony’s acquisition of shares in the Free Gold Company and (ii) loans made by Harmony to the Free Gold Company in connection with the acquisition of the Free Gold assets. This facility is secured by a pledge of Harmony’s shares in the Free Gold Company and is guaranteed by Randfontein, Evander, Kalgold and Lydex. The loan is repayable in full on April 23, 2006, and eight equal semi-annual installments are due beginning October 23, 2002. Harmony repaid the first semi-annual installment of Rand 62.5 million ($6.1 million at an exchange rate of R10.22 per $1.00) on

October 23, 2002. The loan bears interest at a rate equal to JIBAR plus 1.5% plus specified costs, which is accrued daily from the drawdown date and is payable quarterly in arrears commencing July 23, 2002. Pursuant to the terms of this facility, Harmony is required to maintain specified ratios of earnings to debt service and borrowings, as well as a specified level of consolidated tangible net worth. In addition, pursuant to this facility, Harmony is subject to specified limits on its ability to (i) permit encumbrances over pledged revenues or assets, (ii) make loans or incur specified types of indebtedness, (iii) dispose of more than 25% of its assets or (iv) make distributions to its shareholders if a default or event of default under this term loan facility has occurred and is continuing. If Harmony fails to meet these requirements, the loan may be accelerated and become due and payable in full. As of December 13, 2002, Harmony was in compliance in all material respects with the terms of this facility.

Recently Retired Credit Facilities and Other Borrowings

On June 10, 1998, Harmony Canada entered into a C$7.5 million loan agreement with NM Rothschild & Sons Limited in connection with the acquisition of Bissett. The loan bore interest at LIBOR plus 1.75% and was renegotiated during fiscal 2000 to be repayable in three equal annual installments commencing in June 2002. Harmony guaranteed the loan and pledged its shares in Harmony Canada Inc., or Harmony Canada, as security for the guarantee. In connection with the loan agreement, Harmony issued 36,000 warrants, each to purchase one ordinary share at an exercise price of Rand 60 per share on or before July 31, 2001, to NM Rothschild & Sons Limited. In March 1999, Harmony obtained supplemental financing from NM Rothschild & Sons Limited of an additional C$5.0 million on the same terms and with the same repayment schedule as the initial amount. This facility was repaid in full in April 2001 following the closing of the syndicated loan facility described below.

On June 10, 1998, Harmony Canada obtained a revolving credit facility from NM Rothschild & Sons Limited of C$11.0 million. The loan bore interest at LIBOR plus 2.5% repayable in quarterly payments based on the amount outstanding and Harmony Canada’s surplus cash resources with the full amount repayable on or before June 2002. Harmony Canada pledged fixed and moveable assets as well as rights to mining production as security and collateral for the loan. This facility was repaid in full in April 2001 following the closing of the syndicated loan facility.

In order to provide for the operating capital requirements of Bissett, Harmony arranged a $6.8 million loan facility from ABSA Bank Limited, or ABSA, to Bissett in July 1999. As Harmony Canada drew down under this loan, Harmony was required to post an amount in Rand equal to the drawn down amount plus 30% as collateral. The loan, which was repayable on July 31, 2001, bore interest at LIBOR plus 1.75%. This facility was repaid in full in April 2001 following the closing of the syndicated loan facility.

In February 2000, Harmony entered into a Rand 450 million term loan facility with ABSA for the purpose of financing the acquisition of the shares of Randfontein and repaying a Rand 150 million bridge loan provided by ABSA in connection with the acquisition. Harmony was able to draw down this facility until April 30, 2000. Harmony drew down approximately Rand 400 million under this facility. The facility became repayable quarterly beginning on April 30, 2000 and would have matured on April 30, 2002. The interest rate of the facility was the three month bank bill rate quoted by the South Africa Futures Exchange plus 1.25% on amounts drawn down of less than Rand 250 million and 1.5% on amounts drawn down in excess of Rand 250 million. This facility was repaid in full in April 2001 following the closing of the syndicated loan facility.

On March 1, 2000, Harmony Australia entered into a $20 million loan facility with Robert Fleming, now JPMorgan, in connection with the acquisition of Harmony’s initial interest in AurionGold. The loan bore interest at LIBOR plus 2.5%, and the original terms of the loan required

repayment by December 31, 2000. During December 2000 and March 2001, Harmony and JPMorgan agreed to extend the maturity date to March 31, 2001 and April 5, 2001, respectively. The amount was repaid in full in April 2001 following the closing of the syndicated loan facility. See “Business—Description of Mining Business—AurionGold and Placer Dome.”

On March 22, 2001, Harmony and Harmony Australia entered into a syndicated loan facility of approximately $260 million with Citibank, N.A., J.P. Morgan plc and ANZ Investment Bank, as dollar joint lead arrangers, ABSA and BoE Bank Limited, as Rand joint lead arrangers, Chase Manhattan International Limited, as facilities agent, and ABSA, as local facilities agent, for the purpose of partially funding the acquisitions of Elandskraal and New Hampton, repaying all of Harmony’s existing non-South African debt and the ABSA term loan facility and providing working capital. This syndicated loan facility consisted of three specific facilities of an aggregate of Rand 1,160 million and $115 million. As of May 31, 2001, Harmony had drawn down approximately Rand 1,160 million and $113.4 million of these facilities. Up to $100 million of the syndicated loan facility was required to be repaid following the completion of any primary or secondary offering of Harmony’s share capital, in the event of specified disposals of assets and in the event of the acquisition of control of Harmony by any third party or parties acting in concert (unless the lenders had given their prior written consent to the change of control). Following the completion of the June 2001 global offering described below, as well as the corporate bond issuance and the subscriptions by the IDC described in this prospectus, Harmony repaid this syndicated loan facility in full.

On November 9, 2001, New Hampton entered into a term loan facility of A$35 million with Australia and New Zealand Banking Group Limited, for the purpose of refinancing New Hampton’s existing debt and funding capital development at New Hampton. The facility, all of which was drawn down, bore interest at the Bank Bill Rate quoted by Reuters or determined by the lender, plus 1.25%. Harmony Australia guaranteed this facility and pledged its shares in AurionGold as security. The facility was repaid in full on May 23, 2002.

On February 28, 2002, Harmony Australia entered into an $8 million bilateral interim revolving loan facility with Citibank, N.A. for the purpose of partially funding the acquisition of Hill 50. See “Business—History.” Harmony guaranteed this facility. This facility bore interest at a percentage rate per annum equal to LIBOR plus 1.50% plus specified additional mandatory costs. Harmony was required to repay this facility on the last date of the selected interest period, or within 5 business days of acquiring 50.1% of Hill 50’s shares and listed options. Following its receipt of funds under the $80 million syndicated loan facility described below, Harmony repaid this interim loan facility in full.

On February 28, 2002, Harmony Australia entered into a syndicated loan facility of approximately $80 million with Citibank, N.A., as lead arranger, and Australia and New Zealand Banking Group Limited, Citibank, N.A., Societe Generale, N.M. Rothschild & Sons Limited, ABSA Asia Limited, RMB International (Dublin) Limited and Standard Finance (Isle of Man) Limited, as lenders, and Citibank International plc, as agent and security trustee. This facility was drawn down in full for the purpose of repaying in full the $8 million interim loan facility described above, and partially funding the acquisition of Hill 50. See “Business—History.” The facility was secured by Harmony’s Australian assets and was guaranteed by Harmony and its subsidiaries, Randfontein, Evander, Kalgold and Lydenburg Exploration Limited, or Lydex. The facility was repayable in full on February 28, 2004 and bore interest at a percentage rate per annum determined according to a contractual formula applied on the drawdown date (generally equal to LIBOR plus 1.50% or 1.60% depending on the circumstances of the drawdown), plus specified additional mandatory costs. Pursuant to the terms of this facility, Harmony was required to maintain specified ratios of earnings to debt service and borrowings, as well as a specified level of consolidated tangible net worth. Harmony repaid this facility in full on June 14, 2002, using the proceeds of its April 29, 2002 international private placement. See “—Sale of Equity Securities.”

Sale of Equity Securities

Historically, sales of Harmony’s equity securities have included subscriptions by investors in Harmony’s ordinary shares. On June 20, 2001, the IDC completed subscriptions for Harmony’s ordinary shares and preference shares that resulted in Simane acquiring 10,958,982 ordinary shares. Harmony received aggregate consideration for these subscriptions of approximately Rand 400 million, as described in this prospectus, which was used to retire a portion of the $260 million syndicated loan facility described above and for general corporate purposes. See “Major Shareholders.”

On June 29, 2001, Harmony completed a global offering of 27,082,500 ordinary shares and ADSs and 9,027,500 warrants to purchase 9,027,500 ordinary shares, in each case in the United States and elsewhere. The ordinary shares were offered at a price of $5.32 or R43.00 per ordinary share, or $5.32 per ADS. Investors received one warrant for every three ordinary shares (or ADSs) they purchased. The net proceeds of the offering to Harmony were approximately $137.6 million, after deducting underwriting discounts, commissions and offering expenses. Harmony used these net proceeds to retire much of the syndicated loan facility entered into on March 22, 2001, to make capital expenditures and to fund working capital.

On April 29, 2002, Harmony completed an international private placement of 8,500,000 new ordinary shares for a cash price of Rand 134.44 per share, or approximately Rand 1,143 million ($109.9 million at an exchange rate of R10.40 per $1.00). Harmony used the net proceeds of this placement to retire the ANZ loan and the $80 million syndicated loan facility with Citibank, N.A., as lead arranger.

Contractual Obligations and Commercial Commitments

Harmony’s contractual obligations and commercial commitments consist primarily of credit facilities, as described above, and guarantees for environmental rehabilitation expenses, principally environmental performance bonds required for Harmony’s Australian operations, as described in “Business—Regulatory and Environmental Matters—Environmental Matters.”

Contractual Obligations on the Balance Sheet

The following table summarizes Harmony’s contractual obligations as of June 30, 2002:


			Payments Due by Period

			Less than 12 months		12-36 Months		36-60 Months		After 60 Months
			July 1, 2002		July 1, 2003		July 1, 2005		Subsequent
			to		to		to		to
Dollars in thousands	Total		June 30, 2003		June 30, 2005		June 30, 2007		June 30, 2007

Senior unsecured fixed-rate bonds¹		115,496		—		—		115,496		—
BoE Bank Limited loan facility¹		48,123		12,031		24,061		12,031		—
BAE Systems plc loan facility¹		3,501		—		3,501		—		—
Post retirement health care²		737		100		200		200		237
Environmental obligations³		63,125		7,063		5,000		4,000		47,062

Total contractual obligations		230,982		19,194		32,762		131,727		47,299

¹		See “—Liquidity and Capital Resources—Credit Facilities and Other Borrowings—Outstanding Credit Facilities and Other Borrowings.”

²		This liability relates to post-retirement medical benefits of former employees who retired prior to December 31, 1996 and is based on actuarial valuations conducted during fiscal 2002.

³		Harmony makes provision for environmental rehabilitation costs and related liabilities based on management’s interpretations of current environmental and regulatory requirements. See “—Critical Accounting Policies.”

Contractual Obligations off the Balance Sheet

During fiscal 2002, Harmony and ARMGold formed the Free Gold Company to acquire the Free Gold assets from AngloGold. See “Operating and Financial Review and Prospects—Overview” and “Business—Harmony’s Mining Operations—Free Gold Operations.” Harmony accounts for its interest in the Free Gold Company using the equity method, under which Harmony’s share of the net assets of the Free Gold Company is recorded as a single line item, “Investment in joint venture,” on Harmony’s consolidated balance sheet. Accordingly, Harmony’s consolidated balance sheet does not reflect any obligations that the Free Gold Company has to third parties. Harmony and ARMGold expect that the Free Gold Company will generate sufficient cash flows from operations to meet these obligations. In the event that the Free Gold Company is unable to meet these obligations from its internal resources, Harmony expects that the additional funding required will be provided by Harmony and ARMGold in proportion to their respective shareholdings in Free Gold, enabling the Free Gold Company to fund its contractual obligations.

The following table summarizes the Free Gold Company’s obligations to third parties as of June 30, 2002:


					Payments Due by Period

			Less than 12 months		12-36 Months		36-60 Months		After 60 Months
			July 1, 2002		July 1, 2003		July 1, 2005		Subesequent
			to		to		to		to
Dollars in thousands	Total		June 30, 2003		June 30, 2005		June 30, 2007		June 30, 2007

AngloGold – taxes payable¹		60,827		60, 827		—		—		—
AngloGold – loan²		26,599		—		26,599		—		—

Total contractual obligations		87,426		60,827		26,599		—		—

¹		Reflects the estimated taxes payable by AngloGold during March 2003 on the sale of the Free Gold assets, for which the Free Gold Company has agreed to reimburse AngloGold. See “Business—Overview.”

²		Reflects the fair value of the Rand 400 million interest-free loan which is payable to AngloGold by the Free Gold Company on January 1, 2005, as part of the consideration for the Free Gold assets. See “Business—Overview.”

Commercial Commitments on the Balance Sheet

The following table provides details regarding Harmony’s commercial commitments as of June 30, 2002:


			Amount of Commitments Expiring by Period

			Less than 12 months		12-36 Months		36-60 Months		After 60 Months
			July 1, 2002		July 1, 2003		July 1, 2005		Subesequent
			to		to		to		to
Dollars in thousands	Total		June 30, 2003		June 30, 2005		June 30, 2007		June 30, 2007

Guarantees¹		7,892		—		—		—		7,892
Capital commitments²		3,055		3,055		—		—		—
Total commitments expiring by period		10,947		3,055		—		—		7,892

¹		Reflects guarantees for environmental rehabilitation expenses, principally environmental performance bonds required for Harmony’s Australian operations. See “Business—Regulatory and Environmental Matters—Environmental Matters.”

²		Capital commitments consist only of amounts committed to external suppliers, although a total of $29 million has been approved by the Board for capital expenditures.

Share Capital

The authorized capital of Harmony was increased from Rand 37.5 million divided into 75 million ordinary shares of Rand 0.50 each to Rand 60 million divided into 120 million ordinary shares of Rand 0.50 each in fiscal 1998 and, after the close of fiscal 1999, to Rand 90 million divided into 180 million ordinary shares of Rand 0.50 each. At a general meeting held on November 16, 2001, Harmony’s shareholders approved a resolution authorizing the Board to allot and issue all or any of Harmony’s authorized but unissued ordinary shares for cash to such persons and on such terms as the Board may, without restriction, from time to time, deem fit as and when suitable opportunities arise, but subject to the requirements of the JSE. At a general meeting held November 16, 2002, Harmony’s shareholders approved a resolution renewing this authorization. At a general meeting held on November 15, 2002, Harmony’s shareholders approved a resolution authorizing Harmony to acquire from time to time such a number of its issued ordinary shares at such price or prices and on such terms and conditions as the Board may determine, but subject to the requirements of the JSE and the requirements of the other exchanges

upon which Harmony’s ordinary shares may be quoted or listed. At a general meeting held on May 18, 2001, Harmony’s shareholders approved resolutions (i) increasing Harmony’s authorized share capital to a total of Rand 95,479,452 million divided into 180 million ordinary shares of Rand 0.50 each and 10,958,904 redeemable convertible preference shares of Rand 0.50 each, (ii) amending the Articles of Association to set out the conditions applicable to these preference shares and (iii) authorizing the Board to allot and issue 222,222 ordinary shares to Komanani Mining (Proprietary) Limited, or Komanani, at Rand 36.00 per share, 10,736,682 ordinary shares to the IDC at Rand 36.00 per share and 10,958,904 preference shares to the IDC at their par value of Rand 0.50 per share, in accordance with the requirements of the JSE. As described in “Major Shareholders,” the 222,222 ordinary shares originally allocated for issuance to Komanani were instead issued to Simane, together with an additional 78 ordinary shares issued pursuant to the Board’s general authority to issue authorized shares for cash. At a general meeting held on June 8, 2001 in connection with the June 2001 global offering described in this prospectus, Harmony’s shareholders approved resolutions (i) increasing Harmony’s authorized share capital to a total of Rand 130,479,452, divided into 250 million ordinary shares of Rand 0.50 each and 10,958,904 redeemable convertible preference shares of Rand 0.50 each and (ii) authorizing the Board to allot and issue for cash a maximum of 30 million ordinary shares and 10 million warrants to subscribe for 10 million additional ordinary shares, in accordance with the requirements of the JSE. See “Description of Harmony Ordinary Shares.” During January and February 2002, all of the preference shares were converted into ordinary shares and, accordingly, no preference shares are currently issued or outstanding. As a result of the conversion of the preference shares into ordinary shares, Harmony’s authorized share capital of Rand 130,479,452 is divided into 260,958,904 ordinary shares and no preference shares are authorized.

At a general meeting held on October 3, 2001, Harmony’s shareholders approved resolutions authorizing the Board to effect an odd-lot offer to Harmony’s shareholders outside of the United States that held fewer than 100 ordinary shares at the close of business on October 19, 2001, or odd-lot holders. Odd-lot holders were required to elect to (i) retain their odd-lot holdings, (ii) purchase additional shares at the offer price of Rand 44.08 per ordinary share to increase their holdings to 100 ordinary shares or (iii) sell their odd-lot holdings at that offer price. Any ordinary shares elected to be sold in connection with the offering and ordinary shares of odd-lot holders that failed to make an election were purchased by odd-lot holders that elected to acquire additional ordinary shares. Ordinary shares sold that exceeded the number transferred to purchasing odd-lot holders were acquired by Lydex, a Harmony subsidiary, at the offer price.

Capital Expenditures

Capital expenditures, including the non-cash portion, incurred for fiscal 2002 totaled approximately $59.0 million, compared with $52.5 million for fiscal 2001 and $30 million in fiscal 2000. The focus of Harmony’s capital expenditures in recent years has been underground development and plant improvement and upgrades, and management currently expects this focus to continue in fiscal 2003. The increase in capital expenditures in fiscal 2002 compared with fiscal 2001 was primarily due to the inclusion of expenditures for the development of the shaft deepening project at Elandskraal for the full fiscal year and increased capital expenditures at Harmony’s Australian operations (primarily Big Bell and the Jubilee portion of the South Kalgoorlie operations). This increase in capital expenditures was partially offset by reduced capital expenditures at Free State and Randfontein and the placement of Bissett on a care and maintenance program. The increase in capital expenditures in fiscal 2001 compared with fiscal 2000 was largely due to the inclusion of Randfontein for a full fiscal year and the inclusion of Elandskraal and New Hampton with effect from April 1, 2001. Harmony has budgeted approximately $84 million for capital expenditures in fiscal 2003. Details regarding the capital expenditures for each operation are found in the individual mine sections under “Business—Harmony’s Mining Operations.” Harmony currently expects that its planned capital expenditures will be financed from operations and

existing cash on hand. However, if Harmony decides to expand major projects such as the Doornkop South Reef Project at Randfontein or the Poplar Project and the Rolspruit Project at Evander beyond its current plans, Harmony may consider alternative financing sources described below. See “Business—Harmony’s Mining Operations—Elandskraal Operations” and “Business—Harmony’s Mining Operations—Evander Operations.”

Working Capital and Anticipated Financing Needs

The Board believes that Harmony’s working capital resources, by way of cash generated from operations and existing cash on hand, are sufficient to meet Harmony’s present working capital needs. Harmony expects that its business requirements through June 30, 2003 will be financed from internal resources and existing borrowings. For more information on Harmony’s planned capital expenditures, see “—Capital Expenditures” above and “Business—Harmony’s Mining Operations.” Harmony may, in the future, explore debt and/or equity financing in connection with its acquisition strategy and/or major capital projects. See “Risk Factors—Harmony’s strategy depends on its ability to make additional acquisitions.” Harmony’s Board believes that Harmony will have access to adequate financing on reasonable terms given Harmony’s cash-based operations and modest leverage. Harmony’s ability to generate cash from operations could, however, be materially adversely effected by increases in cash costs, decreases in production, decreases in the price of gold and appreciation of the Rand against the U.S. dollar. In addition, Harmony’s ability to obtain additional financing could be limited by covenants in the term loan facility of April 18, 2002 between Harmony and BoE Bank Limited, which imposes debt to earnings ratios and minimum net worth requirements and prevents Harmony from pledging, selling or creating encumbrances over pledged assets including Harmony’s shares of the Free Gold Company. Access to financing could also be limited by provisions of Harmony’s corporate bonds, under which Harmony may not permit encumbrances on its present or future assets or revenues to secure indebtedness for borrowed money, without securing the outstanding bonds equally and ratably with such indebtedness, except for certain specified permitted encumbrances. See “Liquidity and Capital Resources—Credit Facilities and Other Borrowings—Outstanding Credit Facilities and Other Borrowings.” Future financing arrangements would also be subject to the limits on the Board’s borrowing powers described in “Description of Harmony Ordinary Shares—Memorandum and Articles of Association—Directors—Borrowing Powers.” In addition, South African companies are subject to significant exchange control limitations, which may impair Harmony’s ability to fund overseas operations or guarantee credit facilities entered into by overseas subsidiaries. See “Exchange Controls and Other Limitations Affecting Security Holders.”

Trend Information

Information on recent trends in Harmony’s operations is discussed in “Business—Strategy” and “—Results of Operations” above.

Recent Developments

On October 21, 2002, Harmony announced that its net income (unaudited), prepared in accordance with S.A. GAAP, as prescribed by law and based on International Accounting Standards, was $41 million in the three months ended September 30, 2002. Other selected (unaudited) income statement data for the three month periods ended September 30, 2002 and 2001 presented below have been prepared in accordance with S.A. GAAP as prescribed by law and have been based on International Accounting Standards.



	Three months ended
	September 30
	(unaudited)

	2002			2001

Dollars in thousands, except per share data
Revenues		254,000			169,000
Production costs		(162,000	)		(144,000	)

Cash operating profit		92,000			25,000
Depreciation and amortization		(14,000	)		(6,000	)
Provision for rehabilitation costs		(1,000	)		—
Employment termination costs		(1,000	)		(2,000	)
Corporate, exploration, marketing and new business expenditure		(6,000	)		(3,000	)
Interest paid		(6,000	)		(5,000	)
Mark-to-market of financial instruments		6,000			(18,000	)
Profit on sale of AurionGold shares		45,000			—
Reversal of mark-to-market of AurionGold shares		(59,000	)		19,000
Other income – net		5,000			3,000
Income before tax and minority interests		61,000			13,000

Income and mining tax expense		(20,000	)		(3,000	)

Net income before minority interest		41,000			10,000
Minority interest		—			—
Net income		41,000			10,000
Basic earnings per share (cents)		23.8			8.0

Revenue increased by $85 million, or 50.3%, from $169 million for the three months ended September 30, 2001 to $254 million for the three months ended September 30, 2002. This increase was primarily attributable to the inclusion of Hill 50 and Harmony’s interest in the Free Gold Company for the three-month period ended September 30, 2002 and the higher average sales price of gold received by Harmony, as described below. These factors more than offset the effect of decreased gold sales from Elandskraal due to operational problems, as described below, and from Evander due to seismic events. See “Business—Harmony’s Mining Operations—Evander Operations.”

An increase in Harmony’s average sale price for gold, due to a general increase in the market price for gold, contributed to the increase in revenue. Harmony’s average sales price of gold was $319 per ounce for the three months ended September 30, 2002, compared with Harmony’s average sales price of $274 per ounce for the three months ended September 30, 2001.

Cash operating profit increased $67 million, or 268%, from $25.0 million for the three months ended September 30, 2001 to $92 million for the three months ended September 30, 2002. This increase was primarily attributable a higher average price per ounce of gold (which increased revenue) and the depreciation of the Rand against the U.S. dollar (which reduced costs when translated into U.S. dollars). See “Operating and Financial Review and Prospects—Exchange Rates.” These factors more than offset increased costs per ounce at Harmony’s South African surface operations, as described below.

The following table sets out Harmony’s total ounces sold and weighted average cash costs per ounce for the three-month periods ended September 30, 2002 and 2001:



	Three months ended September 30

	2002				2001
	(oz)		($/oz)		(oz)		($/oz)

S. A. Underground
Elandskraal		96,387		225		117,961		236
Randfontein		128,924		176		142,138		211
Free State		156,638		229		156,477		272
Evander		88,896		206		106,322		206
Free Gold (50%)		132,235		155		—		—
Total South African Underground		620,923		—		538,683		—

Weighted Average South African Underground		—		193		—		233

S. A. Surface
Elandskraal		5,787		172		7,105		161
Randfontein		11,478		200		10,417		194
Free State		7,459		203		—		—
Kalgold		18,679		188		18,036		204
Free Gold (50%)		9,034		214		—		—
Total South African Surface		34,594		—		19,773		—

Weighted Average South African Surface		—		173		—		171

Australian Operations
Total Australian Operations		140,980		—		49,319		—

Weighted Average Australian Operations		—		234		—		254

Bissett		—		—		8,263²		109¹
Total		796,497		204		616,038		233

Represents production from clean-up of the plant and mill during the transition to the care and maintenance program in the quarter ended September 30, 2001.

Harmony’s average cash cost decreased $29 per ounce, or 12.4%, from $233 per ounce for the three months ended September 30, 2001 to $233 per ounce for the three months ended September 30, 2002. Cash costs per ounce vary with the working costs per ton (which is, in turn, affected by the number of tons processed) and grade of ore processed. Cash costs expressed in U.S. dollars per ounce also vary with fluctuations in the Rand – U.S. dollar exchange rate, as most of Harmony’s working costs are incurred in Rand. The decrease in cash costs expressed in U.S. dollars for the three months ended September 30, 2002 was attributable primarily to the depreciation of the Rand against the U.S. dollar, which caused a significant reduction when these costs were translated into U.S. dollars. The overall effect of depreciation more than offset increased costs (in Rand terms and U.S. dollar terms) at Harmony’s South African surface operations and (in U.S. dollar terms) at Harmony’s Australian operations. At Harmony’s South African surface operations, increased costs (in Rand terms and U.S. dollar terms) were due to mining of higher-cost, lower-grade areas in light of the increased gold price, as well as higher toll treatment charges at Free State and costs incurred in the demolition and clean-up of the number 4 plant at Randfontein. At Harmony’s Australian operations, increased costs were primarily due to costs of increased stripping ratios in high grade open pits and underground development required to allow for more flexibility in the mining operations, the rise of Australian dollar against the U.S. dollar and continued disappointing results from the Big Bell underground operations, which are in the process of being discontinued. If expressed in Rand terms, costs per ounce at Harmony’s South African

underground operations would have also increased in the three months ended September 30, 2002, compared with the three months ended September 20, 2001, due primarily to wage increases pursuant to collective bargaining agreements and increases in supply costs as a result of inflation and secondarily to operational problems at Elandskraal and a seismic event at Evander. See “Business—Harmony’s Mining Operations—Elandskraal Operations” and “Business—Harmony’s Mining Operations—Evander Operations.”

Depreciation and amortization charges increased $8 million, or 133%, from $6 million for the three months ended September 30, 2001 to $14 million for the three months ended September 30, 2002. This increase was primarily attributable to depreciation charges for Hill 50 and Harmony’s interest in the Free Gold Company.

Corporate expenditure, exploration expenditure and marketing and new business expenditure increased $3 million, or 100%, from $3 million for the three months ended September 30, 2001 to $6 million for the three months ended September 30, 2002. This increase was primarily attributable to increased corporate expenditure following Harmony’s acquisition of Hill 50 and the Free Gold Company’s acquisition of the Free Gold assets, costs related to investigating and pursuing new business opportunities and increased expenditures to investigate and develop opportunities to produce and market value-added products, such as jewelry and other products made of fabricated gold.

Income and mining tax expense increased $18 million, or 600%, from $3 million for the three months ended September 30, 2001 to $20 million for the three months ended September 30, 2002. The increase reflects the application of the statutory tax formula to the higher income generated by operations during this period. For more information on the application of the statutory tax formula, see “—Results of Operations—Years ended June 30, 2002 and 2001—Income and Mining Taxes.”

Principal Differences between S.A. GAAP and U.S. GAAP

Harmony’s annual financial statements included in this prospectus have been prepared in accordance with U.S. GAAP. Pursuant to the requirements of the JSE Securities Exchange South Africa and the South African Companies Act, Harmony also prepares annual and quarterly financial reports in accordance with S.A. GAAP, as prescribed by law and based on International Accounting Standards. In fiscal 2002, due primarily to differences in the accounting treatment of transactions completed during the fiscal year, there are more pronounced differences between the financial statements included in this prospectus and prepared in accordance with U.S. GAAP, on the one hand, and the annual and quarterly reports Harmony prepares in accordance with S.A. GAAP, on the other hand.

In order for a reader to obtain an understanding of the differences between S.A. GAAP and U.S. GAAP as applicable to Harmony, set forth below is a reconciliation from U.S. GAAP of Harmony’s income for the year ended June 30, 2002 and shareholders’ equity as of June 30, 2002, along with a description of the principal differences between S.A. GAAP and U.S. GAAP.


*Dollars in thousands except per share figures*				2002

			Reconciliation of net income
Net income under U.S. GAAP					87,716
S.A. GAAP Adjustments
	Business combination – Traded equity securities issued as consideration				197
	Business combination – Free Gold acquisition date				28,064
	Business combination – Free Gold acquisition purchase price				(12,972	)
	Business combination – Hill 50 equity accounting				(942	)
	Accounting for Bendigo options				(4,444	)
	Exploration costs				2,521
	Provision for environmental rehabilitation				14,425
	Impairment of assets				9,464
	Investments				58,369
	Stock-based compensation				9,434
	Effects of adjustments on taxation				(26,713	)

Net income under S.A. GAAP					165,119

Weighted average number of ordinary shares in issue					153,509,862
Diluted weighted average number of ordinary shares					165,217,088
Basic earnings per share					107.56
Fully diluted earnings per share					99.9
		Reconciliation of shareholders’ equity
Shareholders equity under U.S. GAAP					753,126
S.A. GAAP Adjustments
	Business combination – Traded equity securities issued as consideration				(3,094	)
	Business combination – Free Gold acquisition date				27,551
	Business combination – Free Gold acquisition purchase price				(12,735	)
	Business combination – Hill 50 equity accounting				(925	)
	Accounting for Bendigo options				(4,362	)
	Exploration costs				2,474
	Provision for environmental rehabilitation				14,161
	Impairment of assets				9,291
	Loan to share purchase trust				7,561
	Effects of adjustments on taxation				(26,225	)

Shareholders’ equity under S.A .GAAP					766,823

The following is a summary of differences between U.S. GAAP and S.A. GAAP as applicable to Harmony.

Business combination – Traded equity securities issued as consideration. When traded equity securities are exchanged as consideration, U.S. GAAP requires that the fair value of such consideration be determined a few days before and after the transaction is announced. S.A. GAAP requires the fair value of such consideration to be determined as of the date the transaction is consummated. The difference gives rise to an additional fair value adjustment of $6.6 million relating to the net assets of Evander acquired, which has been capitalized and is being amortized over the estimated useful life of the Evander operations. This adjustment gave rise to increased amortization charges under U.S. GAAP, which increased net income under S.A. GAAP by $0.2 million and decreased shareholders’ equity under S.A. GAAP by $3.1 million.

Free Gold Company – Acquisition date. Under U.S. GAAP, Harmony accounted for its interest in the Free Gold Company from May 1, 2002, the first date of the month after which all the conditions precedent to the transaction had been completed. Under S.A. GAAP, Harmony accounted for its interest in the Free Gold Company from January 3, 2002, the date on which the Free Gold Company assumed operational control of the Free Gold assets. This adjustment increased net income under S.A. GAAP by $28.1 million and increased shareholders’ equity under S.A. GAAP by $27.6 million.

Free Gold Company – Purchase price. The agreed-upon purchase price for the Free Gold assets comprised a cash payment of Rand 1,800 million ($169.2 million at an exchange rate of R10.64 per $1.00), an interest-free loan payable on January 1, 2005 of Rand 400 million ($37.6 million at an exchange rate of R10.64 per $1.00), and the taxes payable by AngloGold estimated to be approximately Rand 632 million ($59.4 million at an exchange rate of R10.64 per $1.00), which in total amounted to Rand 2,832 million ($266.2 million at an exchange rate of R10.64 per $1.00), which was determined to be the purchase price under S.A. GAAP. Under U.S. GAAP, the purchase price was determined as the sum of:

	•		The cash payment of Rand 1,800 million ($169.2 million);

	•		The fair value of the Rand 400 million interest-free loan being Rand 270 million ($25.3 million); and

	•		The taxes payable by the seller of Rand 632 million ($59.4 million);

	•		Offset by the cash flows of Rand 489 million ($46.0 million at an exchange rate of R10.64 per $1.00) generated by the Free Gold Company during the period from January 1, 2002 (when the Free Gold Company assumed operational control) to April 23, 2002 (when all conditions precedent were fulfilled and the transaction was completed).

This adjustment decreased net income under S.A. GAAP by $13.0 million and decreased shareholders’ equity under S.A. GAAP by $12.7 million.

Accounting for interest in the Free Gold Company. Under U.S. GAAP, Harmony’s interest in Free Gold Company is accounted for under the equity method. Under S.A. GAAP, Harmony accounts for its investment in the Free Gold Company using the proportionate consolidation method. Although this presentation under U.S. GAAP results in a significantly different balance sheet and income statement presentation to that presented under S.A. GAAP, it has no impact on the net income or net asset value of Harmony, except for any U.S. GAAP/S.A. GAAP differences applicable to the Free Gold Company.

Business combination – Hill 50 equity accounting. Under U.S. GAAP, Harmony equity accounted for its interest in Hill 50 for the period from March 1, 2002 to March 31, 2002 and consolidated thereafter. Under S.A. GAAP, Harmony accounted for its interest in Hill 50 from April 1, 2002. The difference gives rise to a fair value adjustment of $0.9 million, which is allocated to the net assets relating to the acquisition of Hill 50 under U.S. GAAP. This adjustment decreased net income under S.A. GAAP by $0.9 million and decreased shareholders’ equity under S.A. GAAP by $0.9 million.

Accounting for the Bendigo options. Under U.S. GAAP, Harmony has fair valued its option to acquire 360 million additional shares in Bendigo before December 31, 2003 and included the change in fair value of this option in income. Under S.A. GAAP, the change in fair value of the option has been ignored for accounting purposes. This adjustment decreased net income under S.A. GAAP by $4.4 million and decreased shareholders’ equity under S.A. GAAP by $4.4 million.

Exploration costs. Under U.S. GAAP, exploration costs are capitalized from the date Harmony completes a bankable feasibility study that confirms proven and probable reserves. For purposes of S.A. GAAP, when Harmony decides that a mining property is commercially viable, all further pre-production expenditure is capitalized. This adjustment increased net income under S.A. GAAP by $2.5 million and increased shareholders’ equity under S.A. GAAP by $2.5 million.

Provision for environmental rehabilitation. Under US GAAP, provision for the ultimate rehabilitation amount is raised over the life of each mine on the units of production basis. Under S.A. GAAP full provision is made for rehabilitation based on the net present value of the future expected obligation. For U.S. GAAP purposes, Harmony adopted FAS 143 effective July 1, 2002, which will eliminate this difference between S.A. GAAP and U.S. GAAP prospectively. This adjustment increased net income under S.A. GAAP by $14.4 million and increased shareholders’ equity under S.A. GAAP by $14.2 million.

Impairment of assets. Under U.S. GAAP, the reversal of previously recognized impairment charges is not permitted. Under S.A. GAAP, previously recognized impairment charges are reversed if the recoverable amount of the asset increases as a result of the change in the estimates used to determine the recoverable amount. This reversal is limited to the carrying amount that would have been determined, had no impairment been recognized in prior years. This adjustment increased net income under S.A. GAAP by $9.5 million and increased shareholders’ equity under S.A. GAAP by $9.3 million.

Investments. Under U.S. GAAP, the reclassification of investments between various categories is rare and accordingly Harmony continues to classify its investment in AurionGold as an available-for-sale security, and reflects changes in its fair value in comprehensive income as a separate component of shareholders’ equity. Under S.A. GAAP, Harmony reclassified its investment in AurionGold from an available-for-sale investment to a trading investment, and accordingly recognizes changes in fair value of the investment in income. This adjustment increased net income under S.A. GAAP by $58.4 million and increased shareholders’ equity under S.A. GAAP by $0 million.

Stock-based compensation. Under U.S. GAAP, Harmony recognizes stock-based compensation expense for all options granted subsequent to January 18, 2001. Under S.A. GAAP, there is currently no requirement to recognize stock-based compensation expense. This adjustment increased net income under S.A. GAAP by $ 9.4 million.

Loans to share purchase trust. Under U.S. GAAP, loans made by a company to a trust to purchase its own shares are recorded as a reduction of share capital. Under S.A. GAAP, such loans are recorded as an investment. This adjustment increased shareholders’ equity under S.A. GAAP by $7.6 million.

Market Risk

General

Harmony is exposed to market risks, including credit risk, foreign currency, commodity price and interest rate risk associated with underlying assets, liabilities and anticipated transactions. Following periodic evaluation of these exposures, Harmony may enter into derivative financial instruments to manage these exposures. Harmony has policies in areas such as counterparty exposure and hedging practices, which have been approved by Harmony’s senior management. Harmony does not hold or issue derivative financial instruments for trading or speculative purposes.

In accordance with FAS 133, Harmony accounts for its derivative financial instruments as hedging transactions if the following criteria are met:

	•		both the hedged item and the hedging instrument are specifically identified and documented;

	•		management documents the nature of the hedging risk and identifies how the effectiveness of the hedge will be assessed;

	•		the effectiveness of the hedge is tested regularly throughout the life of the hedge, and a hedging instrument is identified as highly effective if it is able to offset changes in the fair value of cash flows from the hedged item by between 80% and 125% of the price at which it was fixed;

	•		any ineffectiveness of hedged instruments is recognized immediately in the income statement; and

	•		in the case of a hedge of an anticipated future transaction, there is a high probability that the transaction will occur.

Foreign Currency Sensitivity

In the ordinary course of business, Harmony enters into transactions denominated in foreign currencies (primarily U.S. and Australian dollars). In addition, Harmony has investments and liabilities in U.S. dollars, Canadian dollars and Australian dollars. As a result, Harmony is subject to transaction and translation exposure from fluctuations in foreign currency exchange rates. Harmony does not generally hedge its exposure to foreign currency exchange rates. In December 2001, however, in response to significant depreciation in the Rand and to protect itself against possible appreciation of the Rand against the U.S. dollar, Harmony entered into Rand-U.S. dollar currency forward exchange contracts intended to cover estimated revenues from the Free State operations’ planned production for calendar 2002. Harmony fixed the Rand-U.S. dollar exchange rate for a total of $192 million at an average exchange rate of Rand 11.20 per U.S. dollar. As of December 13, 2002, $15 million was remaining under these contracts at an average exchange rate of Rand 11.31 per U.S. dollar. Harmony’s objective in this hedging activity is to protect these revenues against the risk of the Rand strengthening against the U.S. dollar, as the gold price is U.S. dollar denominated and the costs of the Free State operations are generally Rand-denominated. This measure, however, is not expected to fully protect Harmony from sustained fluctuations in the value of the Rand relative to the U.S. dollar since it covers only a limited amount, it expires on December 31, 2002 and Harmony does not expect to renew or repeat it.

Harmony’s currency hedge contracts as of June 30, 2002 and November 30, 2002 are set forth below.



	Fiscal Year of
	Expiration
	2003		Total		Fair Value

					($ millions)
*Forward Contracts*
Volume ($ millions) as of June 30, 2002		90		90		4,458
R/$1.00 exchange rate at June 30, 2002		11.21		11.21
Volume ($ millions) as of November 30, 2002		15		15		2,604
R/$1.00 exchange rate at November 30, 2002		11.31		11.31

The fair values of Harmony’s currency hedge contracts were determined at specific points in time by comparing the contract price to the then current market price for the maturity date discounted to present value. These values are estimates that involve uncertainties and cannot be determined with precision.

A sensitivity analysis of the mark-to-market valuations of Harmony’s foreign currency hedges as of June 30, 2002 and November 30, 2002 is set forth below.



							R/$
							exchange rates at
							June 30, 2002

Sensitivity to R/$ exchange rates as of June 30, 2002	R1.5		R1.0		R0.5		$	1.00=R10.42	(R0.5	)	(R1.0	)	(R1.5	)
Mark-to-market ($ millions)	(11.3	)	(6.5	)	(1.3	)		4.5	10.8		17.9		25.9



				R/$
				exchange rates at
				November 30, 2002

Sensitivity to R/$ exchange rates as of November 30, 2002	R1.5	R1.0	R0.5	$	1.00=R9.30	(R0.5	)	(R1.0	)	(R1.5	)
Mark-to-market ($ millions)	0.5	1.1	1.8		2.6	3.5		4.5		5.6

Harmony’s liability subject to risk of foreign currency exchange rate fluctuations amounted to $3.5 million at June 30, 2002 and $9 million at November 30, 2002. This amount reflects Harmony’s only foreign-currency denominated borrowing, which is U.S. dollar denominated debt from BAE Systems plc. See “Credit Facilities and Other Borrowings—Outstanding Credit Facilities and Other Borrowings.” Based on an exchange rate of Rand 10.20 per $1.00 (which was the average exchange rate for the fiscal year ended June 30, 2002), a hypothetical 10% appreciation of the Rand against the U.S. dollar would have had an estimated $0.10 million positive impact on Harmony’s annual income before tax and a hypothetical 10% devaluation of the Rand against the U.S. dollar would have had an estimated $0.10 million negative impact on Harmony’s annual income before tax. Harmony’s revenues and costs are very sensitive to the Rand-U.S. dollar exchange rate because gold is generally sold throughout the world in U.S. dollars, but most of Harmony’s operating costs are incurred in Rand. Appreciation of the Rand against the U.S. dollar increases working costs at Harmony’s South African operations when those costs are translated into U.S. dollars, which serves to reduce operating margins and net income from Harmony’s South African operations. Depreciation of the Rand against the U.S. dollar reduces these costs when they are translated into U.S. dollars, which serves to increase operating margins and net income from Harmony’s South African operations. See “—Exchange Rates” and “Risk Factors—Because most of Harmony’s production costs are in Rand, while gold is generally sold in U.S. dollars, Harmony’s financial condition could be materially harmed by an appreciation in the value of the Rand.”

Commodity Price Sensitivity

General

The market price of gold has a significant effect on the results of operations of Harmony, the ability of Harmony to pay dividends and undertake capital expenditures, and the market prices of Harmony’s ordinary shares and warrants.

Gold prices have historically fluctuated widely and are affected by numerous industry factors over which Harmony does not have any control. See “Risk Factors—The profitability of Harmony’s operations, and the cash flows generated by those operations, are affected by changes in the market price for gold, which in the past has fluctuated widely.” The aggregate effect of these factors, all of which are beyond the control of Harmony, is impossible for Harmony to predict.

Harmony’s Hedge Policy

As a general rule Harmony sells its gold production at market prices. Harmony generally does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of its future gold production. For more detailed information on Harmony’s hedge policy, see “Business—Hedge Policy.”

Recently there have been two instances in which Harmony has made use of gold price hedges: Harmony’s forward sale of a portion of the production at Bissett at a set gold price and, more recently, put options relating to 1 million ounces of Harmony’s production at Elandskraal. Both of these hedges were entered into in order to secure loan facilities and have since been closed out. A significant proportion of the production at Randfontein was hedged when acquired by Harmony. On April 12, 2002, Harmony announced that it had completed the process of closing out all of the Randfontein hedge contracts, including closing forward sales contracts and call options covering a total of approximately 490,000 ounces and forward purchases covering a total of 200,000 ounces.

In addition, a substantial proportion of the production at each of New Hampton and Hill 50 was already hedged when acquired by Harmony and remains hedged. In fiscal 2002, in line with Harmony’s strategy of being generally unhedged, Harmony reduced New Hampton’s hedge book by over 900,000 ounces. In fiscal 2002, Harmony also combined and restructured the overall hedge portfolio of Harmony’s Australian operations (including New Hampton and Hill 50). All of these hedge positions are now commodity sales agreements, under which Harmony must deliver a specified quantity of gold at a future date subject to the agreed-upon prices. For accounting purposes, these commodity sales agreements qualify for the normal purchase, normal sales exception. These commodity sales agreements covered, as of September 30, 2002, approximately 1,689,705 ounces over a seven-year period at an average strike price of A$532 per ounce ($287 at an exchange rate of $0.54 per A$1.00). Harmony intends to reduce the remaining hedge positions of the Australian operations gradually by delivering gold pursuant to the relevant agreements.

Commodity Sales Agreements

Harmony’s commodity sales agreements by type of agreement as of June 30, 2002 are set forth below.



				Maturity - Scheduled for Delivery in Fiscal Year

		2003		2004		2005		2006		2007		2008		2009		Total		Mark-to-market

																		$ 000
Forward sales agreements¹
	Ounces		425,792		229,000		205,000		187,500		125,000		100,000		100,000		1,372,292		(69,667	)
	A$/ounce		514		522		524		523		514		518		518		519
Variable price sales agreementss with caps ²
	Ounces		62,425		175,500		130,000		40,000		—		—		—		407,925		(18,247	)
	A$/ounce		545		544		512		552		—		—		—		535
Variable price sales agreements with floors³
	Ounces		33,000		—		—		—		—		—		—		33,000		53
	A$/ounce		500		—		—		—		—		—		—		500
Total			521,217		404,500		335,000		227,500		125,000		100,000		100,000		1,813,217		(87,861	)

¹		Harmony must deliver ounces of gold at the prices indicated.

²		Harmony must deliver ounces of gold subject to the maximum price indicated.

³		Harmony must deliver ounces of gold subject to the minimum price indicated.

Harmony’s commodity sales agreements by type of agreement as of November 30, 2002 are set forth below.



				Maturity - Scheduled for Delivery In Fiscal Year

		2003		2004		2005		2006		2007		2008		2009		Total		Mark-to- market

																		$ 000
Forward sales agreements¹
	Ounces		265,619		229,000		225,000		145,500		147,000		100,000		100,000		1,212,119		(62,921	)
	A$/ounce		517		522		523		525		515		518		518		520
Variable price sales agreements with caps ²
	Ounces		69,386		175,500		130,000		40,000		—		—		—		414,886		(17,072	)
	A$/ounce		566		544		512		552		—		—		—		538
Variable price sales agreements with floors³
	Ounces		22,000		—		—		—		—		—		—		22,000		11
	A$/ounce		500		—		—		—		—		—		—		500

Total			357,005		404,500		355,000		185,500		147,000		100,000		100,000		1,649,005		(79,982	)

¹		Harmony must deliver ounces of gold at the prices indicated.

²		Harmony must deliver ounces of gold subject to the maximum price indicated.

³		Harmony must deliver ounces of gold subject to the minimum price indicated

For accounting purposes, Harmony’s commodity sales agreements are treated as normal purchase, normal sales contracts. The mark-to-market values of these agreements were determined at specific points in time based on independent valuations, using present value methods or standard option value methods with assumptions about commodity prices based on those observed in the gold market. For the determination as of June 30, 2002, a gold price of $316.00 (A$557.42) per ounce was used, together with exchange rates of R10.42 per $1.00 and $0.57 per A$1.00 and prevailing market interest rates and volatilities. For the determination as of November 30, 2002, a gold price of $318.00 (A$567) per ounce was used, together with exchanges rate of R9.29 per U.S. dollar and $0.56 per Australian dollar and prevailing market interest rates and volatilities. These values are estimates that involve uncertainties and cannot be determined with precision.

Sensitivity Analysis

A sensitivity analysis of the mark-to-market valuations of Harmony’s commodity sales agreements as of June 30, 2002 is set forth below.



							Gold spot price at
							June 30, 2002
Sensitivity to $ gold spot price	$30		$20		$10			316	($10	)	($20	)	($30	)
Mark-to-market ($ millions)	(164	)	(122	)	(105	)		(88)	(71	)	(55	)	(39	)
							Weighted average
							interest rate at
							June 30, 2002
Sensitivity to U.S. dollar and Australian dollar interest rates	1.5	%	1.0	%	0.5	%		6.15	(0.5	%)	(1.0	%)	(1.5	%)
Mark-to-market ($ millions)	(102	)	(97	)	(93	)		(88)	(83	)	(78	)	(73	)
								$/A$
							exchange rates at
							June 30, 2002
Sensitivity to $/A$ exchange rates	A$0.15		A$0.10		A$0.05		$	1.00=A$1.75	(A$0.05	)	(A$0.10	)	(A$0.15	)
Mark-to-market ($ millions)	(152	)	(129	)	(108	)		(88)	(70	)	(53	)	(38	)

A sensitivity analysis of the mark-to-market valuations of Harmony’s commodity sales agreements as of November 30, 2002 is set forth below.



							Gold spot price at
							November 30, 2002
Sensitivity to $ gold spot price	$30		$20		$10			318	($10	)	($20	)	($30	)
Mark-to-market ($ millions)	(125	)	(110	)	(95	)		(80)	(65	)	(51	)	(37	)
							Weighted average
							interest rate at
							November 30, 2002
Sensitivity to U.S. dollar and Australian dollar interest rates	1.5	%	1.0	%	0.5	%		4.07	(0.5	%)	(1.0	%)	(1.5	%)
Mark-to-market ($ millions)	(92	)	(88	)	(84	)		(80)	(76	)	(72	)	(68	)
								$/A$
							exchange rates at
							November 30, 2002
Sensitivity to $/A$ exchange rates	A$0.15		A$0.10		A$0.05		$	1.00=A$1.78	(A$0.05		(A$0.10	)	(A$0.15	)
Mark-to-market ($ millions)	(137	)	(116	)	(97	)		(80)	(64	)	(50	)	(83	)

Commodity Hedging Experience

During fiscal 2000, Harmony recorded a gain on financial instruments of $8.6 million. This gain related primarily to the change in the mark-to-market of the speculative financial instruments held by Randfontein from March 1, 2000 to June 30, 2000, offset by the cost of closing out a portion of the speculative financial instruments during that period.

During fiscal 2001, Harmony acquired New Hampton, which had a hedge book of approximately 1.5 million ounces. In February 2001, as a condition of the commitment for financing of the syndicated loan facility that Harmony entered into with the acquisitions of the New Hampton and Elandskraal mines, Harmony protected some of its production from downward movements in the gold price by entering into put options relating to the delivery of 1 million ounces of Harmony’s 2001 and 2002 production. The put options covered 83,333 ounces per month for 12 months, commencing on March 29, 2001, at a price of Rand 64,000 per kilogram (Rand 1,990 per ounce). Harmony paid Rand 29 million to secure these put options. These put options permitted Harmony to take advantage of increased gold spot prices by allowing the put options to expire without exercise, and merely provided Harmony with downside protection. Harmony closed out these put options during July 2001 and received

Rand 3 million ($0.3 million). The gain on financial instruments of $7.6 million in fiscal 2001 related primarily to the change in mark-to-market of derivative financial instruments held by Randfontein between July 1, 2000 and June 30, 2001 and New Hampton between April 1, 2001 and June 30, 2001.

During fiscal 2002, Harmony acquired Hill 50, which had a hedge book of approximately 1,354,000 million ounces as of March 31, 2002. A condition of Harmony’s offer for Hill 50 was that each counterparty to hedge contracts with Hill 50 or any of its subsidiaries agree not to terminate, suspend or rescind these contracts. This condition of the offer was satisfied. In fiscal 2002, in line with Harmony’s strategy of being generally unhedged, Harmony reduced New Hampton’s hedge book by over 900,000 ounces. In fiscal 2002, Harmony also combined and restructured the overall hedge portfolio of Harmony’s Australian operations (including New Hampton and Hill 50). All of these hedge positions are now commodity sales agreements, under which Harmony must deliver a specified quantity of gold at a future date subject to the agreed-upon prices.

The percentage of Harmony’s total production that was hedged in fiscal 2000 was 1.8%, and the average price for production sold under the relevant hedging contracts was $317 per ounce of gold. The percentage of Harmony’s total production that was hedged in fiscal 2001 was 1.9%, and the average price for production sold under the relevant hedging contracts was $317 per ounce of gold. The percentage of Harmony’s total production (excluding production from the Free Gold assets) that was hedged in fiscal 2002 was 1%, and the average price for production sold under the relevant hedging contracts was $286 per ounce of gold.

Realization of Harmony’s commodity sales agreements is dependant upon the counterparties performing in accordance with the terms of the relevant contracts. Harmony selects well-established financial institutions as counterparties and has used ten different counterparties for its hedging arrangements that have been converted into commodity sales agreements. These counterparties consist of local and international banks, none of which have previously failed to perform as required under Harmony’s hedging arrangements. Although Harmony does not anticipate that any of the counterparties will in the future fail to perform as required under Harmony’s commodity sales agreements, Harmony’s agreements with the counterparties generally do not require the counterparties to provide collateral or other security to support financial instruments subject to credit risk, but do entitle Harmony to monitor the counterparties’ credit health in order to protect itself against exposure to the potential credit loss of the counterparties. The commodity sales agreements cover approximately 9% of Harmony’s production, individually and aggregated, over the seven years for which Harmony’s the commodity sales agreements exist. None of the counterparties are affiliates or related parties of Harmony.

In fiscal 2001, Harmony sold 2,140,043 ounces of gold at an average price of $276 per ounce. At a gold price of $250 per ounce, product sales would have amounted to approximately $535 million for fiscal 2001, a reduction of approximately $55 million in product sales. In fiscal 2002, Harmony sold 2,388,458 ounces of gold at average price of $283 per ounce. At a gold price of $250 per ounce, product sales would have amounted to approximately $597 million for fiscal 2002, a reduction of approximately $77 million in product sales. These figures exclude sales by the Free Gold Company.

The gold spot price on December 13, 2002 was $332 per ounce. During fiscal 2002, the gold spot price generally traded in a range from $265 to $327 per ounce.

With respect to the remaining forward sales agreements as at November 30, 2002, as long as the gold spot price is below a price range of A$515 to A$525 per ounce ($289 to $294 per ounce at an exchange rate of $0.56 to A$1.00) during the period that Harmony is required to deliver the quantities specified in the forward sales agreements, Harmony will benefit from the increased revenue received for

the quantities sold under the forward sales agreements. Should the gold spot price increase above this price range, Harmony would not benefit from the higher gold spot price with respect to the quantities under the forward sales agreements.

With respect to the remaining variable price sales contracts with caps sold as at November 30, 2002, these options require Harmony to deliver the amounts of gold specified annually at the maximum price specified should the counterparty exercise its option. This will only occur should the gold spot price exceed the option price range of A$512 to A$566 per ounce ($287 to $317 per ounce at an exchange rate of $0.56 to A$1.00), and, as such, Harmony would not benefit from a gold spot price in excess of this option exercise price range for these quantities.

With respect to the remaining variable price sales contracts with floors purchased as at November 30, 2002, these options require the counterparty to accept Harmony’s delivery of the amounts of gold specified annually should Harmony exercise its option. This will only occur should the option price exceed a spot price of A$500 per ounce ($280 per ounce at an exchange rate of $0.56 to A$1.00), and, as such, Harmony has capped the lowest price that could be achieved on the relevant ounces.

Interest rate sensitivity

Harmony generally does not undertake any specific actions to cover its exposure to interest rate risk. However, through its acquisitions of New Hampton and Hill 50, Harmony holds certain gold lease rate swaps. In addition, during June 2001 Harmony entered into an interest rate swap on a portion of its Rand-denominated senior unsecured fixed rate bonds.

Gold lease rate swaps. Harmony acquired gold lease rate swaps through the New Hampton and Hill 50 acquisitions. The following table sets forth the gold lease rate swaps held by Harmony as of June 30, 2002 that, by their terms, would have been outstanding as of the dates indicated. The gold lease rates receivable indicated in the following table are the weighted average gold lease rates receivable for all gold lease rate swaps outstanding at each date indicated.



						Gold Lease Rate Swaps Outstanding as of June 30,																		Mark-to-Market
																								as of
	2002			2003			2004			2005			2006			2007			2008			2009		June 30, 2002

																								$'000
Gold lease rates (receive interest at fixed rate indicated and pay at floating rate)
Ounces		1,906,500			1,879,000			1,170,000			1,170,000			900,000			675,000			675,000			—		(8.1	)
Lease rate receivable		1.0	%		1.0	%		1.2	%		1.2	%		1.0	%		1.1	%		1.1	%		—

In the period from June 30, 2002 to November 30, 2002, Harmony reduced its exposure to gold lease rate swaps by meeting the requirements under gold lease rate swap agreements, and took advantage of favorable changes in spot gold lease rates to close out certain gold lease rate swap positions at no cost to Harmony. As a result, as of November 30, 2002, Harmony held gold lease rate swaps of 1,424,000 ounces at a weighted average lease rate of 0.9%. The following table sets forth the gold lease rate swaps held by Harmony as of November 30, 2002 that, by their terms, will be outstanding as of the dates indicated. The gold lease rates receivable indicated in the following table are the weighted average gold lease rates receivable for all gold lease rate swaps outstanding on each date indicated.



																					Mark-to-Market as of
				Gold Lease Rate Swaps Outstanding as of November 30,																	November 30, 2002

	2003			2004			2005			2006			2007			2008			2009		$'000

Gold lease rates (receive interest at fixed rate indicated and pay at floating rate)
Ounces		1,424,000			940,000			940,000			825,000			625,000			625,000			—		(3.9	)
Lease rate receivable		0.9	%		1.0	%		1.0	%		1.0	%		1.1	%		1.1	%		—

A sensitivity analysis of the mark-to-market valuations of Harmony’s gold lease rate swaps as of each of June 30, 2002 and November 30, 2002 is set forth below.



							Gold interest rate at
							June 30, 2002
Sensitivity to the gold interest rate as of June 30, 2002¹	1.5	%	1.0	%	0.5	%			(0.5	%)	(1.0	%)	(1.5	%)
Mark-to-market ($ millions)	(26.9	)	(20.8	)	(14.5	)		(8.1)	(1.5	)	5.3		12.2
							Gold interest rate at
							November 30, 2002
Sensitivity to the gold interest rate as of November 30, 2002	1.5	%	1.0	%	0.5	%			(0.5	%)	(1.0	%)	(1.5	%)
Mark-to-market ($ millions)	(17.9	)	(13.3	)	(8.7	)		(3.9)	1.0		6.1		11.3

Gold interest rate is the interest cost of borrowing gold from a central bank, payable in ounces of gold in arrears.

Interest rate swaps. On June 14, 2001, Harmony issued Rand-denominated senior unsecured fixed rate bonds in an aggregate principal amount of Rand 1,200 million ($149.3 million at an exchange rate of R8.04 per $1.00), with semi-annual interest payable at a rate of 13% per annum. These bonds are repayable on June 14, 2006, subject to early redemption at Harmony’s option. In connection with these bonds, Harmony entered into an interest rate swap on Rand 600 million ($74.7 million at an exchange rate of R8.04 per $1.00). The interest rate swap consists of two tranches: (i) a Rand 400 million ($49.8 million at an exchange rate of R8.04 per $1.00) tranche which receives a fixed rate of 13% and pays a floating rate of JIBAR (reset quarterly) plus 1.8% and (ii) a Rand 200 million ($24.9 million at an exchange rate if R8.04 per $1.00) tranche which receives a fixed rate of 13% and pays a floating rate at JIBAR (reset quarterly) plus 2.2%.

A sensitivity analysis of the mark-to-market valuations of Harmony’s interest rate swaps as of each of June 30, 2002 and November 30, 2002 is set forth below.



							Weighted average
							SAR interest rate
							at June 30, 2002
Sensitivity to South African Rand Interest Rates	3.0	%	2.0	%	1.0	%	SAR = 12.40		(1.0	%)	(2.0	%)	(3.0	%)
Mark-to-market ($ millions)	(6.2	)	(4.9	)	(3.4	)		(1.9)	(0.4	)	1.3		3.0
							Weighted average
							SAR interest rate
							at
							November 30, 2002
Sensitivity to South African Rand Interest Rates	3.0	%	2.0	%	1.0	%	SAR = 11.19		(1.0	%)	(2.0	%)	(3.0	%)
Mark-to-market ($ millions)	(4.0	)	(2.4	)	(0.8	)		0.9	2.7		4.5		6.4

The fair values of Harmony’s interest rate derivatives were determined at specific points in time by comparing the fixed and floating interest rates based on the current forecast of rates, or the market yield curve, discounted to present value. These values are estimates that involve uncertainties and cannot be determined with precision.

At June 30, 2002, Harmony’s assets and liabilities included certain short-term variable rate instruments. The fair value of these instruments would not change significantly as a result of changes in interest rates due to their short-term nature and variable interest rate features.

At June 30, 2002, the fair value of Harmony’s U.S. dollar-denominated long-term liabilities, including the short-term portion of such liabilities, was estimated at $3.5 million. At December 13, 2002, the fair value of Harmony’s U.S. dollar-denominated long-term liabilities, including the short-term portion of such liabilities, was estimated at $9 million. Long-term loans approximate fair value as they are subject to market bond floating rates. This analysis represents the hypothetical loss in earnings for debt instruments that are sensitive to changes in interest rates and were held by Harmony as at June 30, 2002. The aggregate hypothetical loss in earnings on an annual basis from a hypothetical increase of 10% of LIBOR is estimated to be $0.4 million. Because Harmony’s net earnings exposure with respect to debt instruments was tied to the LIBOR rate, this hypothetical loss was modeled by calculating the 10% adverse change in the LIBOR rate, multiplied by the fair value of the respective debt instruments.

Recently Issued U.S. Accounting Standards

Goodwill and Other Intangible Assets. In July 2001, the Financial Accounting Standards Board, or the FASB, issued Statements of Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, or FAS 142. Under FAS 142, goodwill and intangible assets with indefinite lives are no longer amortized but are reviewed annually (or more frequently if impairment indicators arise) for impairment. Separable intangible assets that are not deemed to have indefinite lives will continue to be amortized over their useful lives (but with no maximum life).

The provisions of FAS 142 apply to goodwill and intangible assets acquired after June 30, 2001. For all other goodwill and intangible assets, Harmony adopted FAS 142 effective July 1, 2002. Harmony has evaluated the effect that the adoption of the provisions of FAS 142 will have on its results of operations and financial position. Harmony has determined that the adoption of FAS 142 will not have a material impact on its results of operations and financial position.

Obligations Associated with the Retirement of Long-Lived Assets. In August 2001, the FASB issued Statement of Financial Accounting Standards No. 143, Accounting for Obligations Associated with the Retirement of Long-Lived Assets, or FAS 143. FAS 143 established accounting

standards for recognition and measurement of a liability for an asset retirement obligation and the associated asset retirement cost. Harmony adopted FAS 143 effective July 1, 2002. Harmony has determined that the adoption of FAS 143 will result in a negative cumulative effect of change in accounting principle adjustment of $14.2 in its income statement on July 1, 2002.

Impairment or Disposal of Long-Lived Assets. In October 2001, the FASB issued Statement of Financial Accounting Standards No. 144, Accounting for the Impairment or Disposal of Long-Lived Assets, or FAS 144. FAS 144 addresses financial accounting and reporting for the impairment of long-lived assets and for long-lived assets to be disposed of. FAS 144 supersedes FASB Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, or FAS 121. However, FAS 144 retains the fundamental provisions of FAS 121 for (a) recognition and measurement of the impairment of long-lived assets to be held and used and (b) measurement of long-lived assets to be disposed of by sale. Harmony adopted FAS 144 effective July 1, 2002. Harmony has determined that the adoption of FAS 144 will not have a material impact on its results of operations and financial position.

Extinguishment of Debt. In April 2002, the FASB issued Statement of Accounting Standards No. 145, Rescission of FAS Nos. 4, 44, and 64, Amendment of FAS 13, and Technical Corrections as of April 2002, or FAS 145. FAS 145 rescinds FAS No. 4, Reporting Gains and Losses from Extinguishment of Debt, FAS No. 44, Accounting for Intangible Assets of Motor Carriers, and FAS 64, Extinguishments of Debt Made to Satisfy Sinking-Fund Requirements. As a result, gains and losses from extinguishment of debt will no longer be classified as extraordinary items unless they meet the criteria of unusual or infrequent as described in Accounting Principles Boards Opinion 30, Reporting the Results of Operations – Reporting the Effects of Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring Events and Transactions. In addition, FAS 145 amends FAS 13, Accounting for Leases, to eliminate an inconsistency between the required accounting for sale-leaseback transactions and the required accounting for certain lease modifications that have economic effects that are similar to sale-leaseback transactions. FAS 145 also amends other existing authoritative pronouncements to make various technical corrections, clarify meanings, or describe their applicability under changed conditions. FAS 145 is effective for fiscal years beginning after May 15, 2002. Harmony is currently evaluating the impact that the adoption of FAS 145 will have on its results of operations and financial position. However, Harmony does not believe that the adoption of FAS 145 will have a material impact on its results of operations and financial position.

Costs Associated with Exit or Disposal Activities. In June 2002, the FASB issued Statement of Accounting Standards No. 146, Accounting for Costs Associated with Exit or Disposal Activities. This statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Issues Task Force Issue No. 94-3, Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring, or EITF 94-3. FAS 146 eliminates the definition and requirements for recognition of exit costs in EITF 94-3. FAS 146 requires that a liability for a cost associated with an exit or disposal activity be recognized when the liability is incurred. Under EITF 94-3, a liability for an exit cost as defined in EITF 94-3 was recognized at the date of an entity’s commitment to an exit plan. FAS 146 also concluded that an entity’s commitment to a plan, by itself, does not create a present obligation to others that meets the definition of a liability. FAS 146 also establishes that fair value is the objective for initial measurement of the liability. Harmony is currently evaluating the impact that the adoption of FAS 146 will have on its results of operations and financial position. However, Harmony does not believe that the adoption of FAS 146 will have a material impact on its results of operations and financial position.

BUSINESS

Introduction

Harmony and its subsidiaries conduct underground and surface gold mining and related activities, including exploration, processing, smelting and refining. Harmony is the third largest gold producer in South Africa and one of the largest gold producers in the world. As at June 30, 2002, Harmony’s mining operations reported total proven and probable reserves of approximately 49.08 million ounces, which includes Elandskraal, New Hampton, Hill 50 and ounces attributable to Harmony’s 50% interest in the Free Gold Company.

In fiscal 2002, Harmony processed approximately 22.811 million tons of ore and sold 2,388,458 ounces of gold, which includes sales from Elandskraal and New Hampton and three months of sales from Hill 50, but excludes sales by the Free Gold Company.

The gold market is relatively deep and liquid with the price of gold generally quoted in U.S. dollars. The demand for gold is primarily for fabrication purposes and bullion investment. The purchase and sale of gold takes place around the globe in all sizes and forms.

Harmony’s principal mining operations are located in South Africa and Australia. Harmony conducts its Australian operations through two recently acquired Australian gold mining companies: New Hampton and Hill 50. Harmony also has a gold mining operation in the Manitoba Province of Canada, production at which was suspended in the quarter ended September 30, 2001 due to mining operations being uneconomical at then-current gold prices. In addition, in December 2001, Harmony acquired ordinary shares representing approximately 31.8% of the outstanding share capital of Bendigo, a single project Australian gold mining development company. In May and June 2002, Harmony acquired ordinary shares representing approximately 32.5% of the outstanding share capital of Highland Gold, a privately held company organized under the laws of Jersey, Channel Islands. Highland Gold holds Russian gold mining assets and mineral rights, including an operating mine and development projects. In November 2002, Harmony acquired ordinary shares representing approximately 21% of the outstanding share capital of High River, a company organized under the laws of Ontario, Canada that is listed on the Toronto Stock Exchange and holds gold mining assets in Russia, Canada and West Africa.

Harmony conducts its mining operations through various subsidiaries. As of June 30, 2002, Harmony’s significant subsidiaries were Randfontein Estates Limited, Evander Gold Mines Limited and Hill 50 Limited. Randfontein Estates Limited and Evander Gold Mines Limited are wholly-owned direct subsidiaries incorporated in South Africa. Hill 50 Limited is a wholly-owned indirect subsidiary of Harmony incorporated in Australia.

In South Africa, Harmony and its subsidiaries (excluding the Free Gold Company) have nine operating shafts in the Free State Province, five operating shafts at Evander in the Mpumalanga Province, four operating shafts at Randfontein in the Gauteng Province, an open cast mine at Kalgold in the North West Province, and two production shaft units at Elandskraal in the North West and Gauteng provinces consisting of six shafts (two of which are sub-vertical shafts). The Free Gold Company (in which Harmony has a 50% interest) has eleven operating shafts in the Free State Province. Harmony’s Australian operations include three operations in Western Australia: Big Bell (acquired in the New Hampton transaction), Mt. Magnet (acquired in the Hill 50 transaction) and South Kalgoorlie (including Jubilee, acquired in the New Hampton transaction, and New Celebration, acquired in the Hill 50 acquisition). Underground and surface mining is conducted at each of these Australian operations, with underground access through one decline at Big Bell, two declines at Mt. Magnet and one decline at South Kalgoorlie and surface access principally through open pits.

In fiscal 2002, Hill 50 sold 217,185 ounces of gold, three months of which, or 61,472 ounces, were included in Harmony’s gold sales for fiscal 2002. On a pro forma basis, the combined gold sales of Harmony (including Elandskraal, New Hampton and Hill 50, but excluding the Free Gold Company) would have been 2,602,171 ounces for fiscal 2002. During Harmony’s fiscal 2002, sales from the Free Gold assets amounted to 1,143,243 ounces of gold and Harmony’s interest in two months of these sales (reflecting the period from May 1, 2002 to June 30, 2002) totaled 104,005 attributable ounces. Because Harmony equity accounts for its 50% interest in the Free Gold Company, sales from the Free Gold assets are not included in Harmony’s sales figures in this prospectus. For more information on Harmony’s consolidation policy, see note 2(b) to the consolidated financial statements.

Ore from the shafts and surface material are treated at fourteen metallurgical plants in South Africa (three at the Free State operations, two at Elandskraal, two at Evander, two at Randfontein, one at Kalgold and four at the Free Gold Company) and at four metallurgical plants in Australia (one at Big Bell, one at Mt. Magnet and two at South Kalgoorlie). Harmony received regulatory approval in 1997 to market its own gold, a function that was previously the sole preserve of the SARB. A refinery was commissioned by Harmony during fiscal 1997 in the Free State Province at South Africa. Harmony increased the capacity of this refinery in fiscal 2002, as a result of which Harmony has the capacity to refine all of its gold produced in South Africa.

History

Harmony Gold Mining Company Limited was incorporated and registered as a public company in South Africa on August 25, 1950. Harmony’s principal executive offices are located at 4 The High Street, First Floor, Melrose Arch, Melrose North 2196, South Africa and the telephone number at this location is 011-27-11-684-0140. Harmony operates under a variety of statutes and regulations. To learn more about these statutes and regulations, see “Business—Regulatory and Environmental Matters” and “Description of Harmony Ordinary Shares.”

Commercial gold mining in South Africa evolved with the establishment of various mining houses at the beginning of the 1900s by individuals who bought and consolidated blocks of claims until sufficient reserves could be accumulated to sustain underground mining. The mines were then incorporated, but it was not the practice of the founding mining house to retain a majority shareholding. Instead, the mining house would enter into a management agreement with the mine pursuant to which the mining house would carry out certain managerial, administrative and technical functions pursuant to long-term contracts. Fees were generally charged based on revenues, working costs or capital expenditures, or a combination of all three, without regard to the cost or the level of services provided.

Harmony was operated as a mining operation in this manner and the mining house Randgold & Exploration Company Limited, or Randgold, retained the management agreement. In late 1994, Randgold cancelled the management agreement and entered into a service agreement with Harmony to supply executive and administrative services at market rates. In 1997, Harmony and Randgold terminated their service agreement and Harmony began operating as a completely independent gold mining company.

Harmony’s operations have grown significantly since 1995. Since 1995, Harmony has expanded from a lease-bound mining operation into an independent, world-class gold producer. Harmony increased its gold sales from 650,312 ounces of gold in fiscal 1995 to 2,388,458 ounces of gold in fiscal 2002. These figures include sales from Elandskraal and New Hampton (each of which was acquired in fiscal 2001) and three months of sales from Hill 50 (which was acquired in fiscal 2002), but exclude sales from the Free Gold Company (in which Harmony acquired a 50% interest in fiscal 2002).

In fiscal 2002, approximately 89.0% of Harmony’s gold production took place in South Africa, with 10.7% taking place in Australia and the remaining 0.3% taking place in Canada. In fiscal 2002, approximately 86.2% of Harmony’s gold came from underground mines and 13.8% came from its surface mines. For more detailed geographical information about Harmony’s activities, see “Geographical and Segment Information” in note 31 to the consolidated financial statements.

Harmony acquired additional mineral rights in the Free State, Gauteng and North West provinces in South Africa when it acquired Lydex in 1997, in the North West Province when it acquired Kalgold in 1999 and in the Gauteng Province when it acquired Randfontein in 2000.

In 1998, Harmony acquired its first production facility outside South Africa by purchasing the mining assets in the Bissett area of Manitoba in Canada from the liquidators of the Rea Gold Corporation. Harmony has completed the capital expenditure and development programs required to establish a production unit capable of producing over 65,000 ounces per year on this property. In fiscal 2001, due to the mining operations being uneconomical at then-current gold prices, Harmony decided to suspend production at the Bissett mine, and placed the operations on a care and maintenance program during the quarter ended September 30, 2001. See “Business—Mining Operations—Bissett Operations.”

On January 11, 2000, Harmony announced its offer to purchase all of the outstanding ordinary share capital of Randfontein at a purchase price of either 31 Harmony shares for every 100 Randfontein shares or Rand 11.00 per Randfontein share, or a combination of shares and cash. Also at that time, Harmony offered to purchase all of the outstanding warrants of Randfontein at a purchase price of either 7 Harmony ordinary shares for every 100 Randfontein warrants held or Rand 2.48 per warrant, or a combination of cash and ordinary shares. Harmony increased the offer price on January 14, 2000 to either 34 Harmony shares for every 100 Randfontein shares or Rand 12.25 per Randfontein share, or a combination of shares and cash. In addition, Harmony increased the offer price for all the outstanding warrants of Randfontein to a purchase price of either 8 Harmony ordinary shares for every 100 Randfontein warrants held or Rand 2.76 per warrant, or a combination of cash and ordinary shares. Harmony obtained management control of Randfontein in January 2000 and by June 30, 2000 had acquired 100% of Randfontein’s outstanding ordinary share capital and 96.5% of the warrants to purchase ordinary shares of Randfontein. See “Business—Harmony’s Mining Operations—Randfontein Operations.”

On January 31, 2001, Harmony entered into an agreement with AngloGold to purchase the assets and liabilities of the Elandskraal mines from AngloGold for approximately Rand 1 billion. On March 22, 2001, Harmony entered into a syndicated loan facility of approximately $260 million to, among other things, fulfill its obligations to AngloGold. See “Operating and Financial Review and Prospects—Liquidity and Capital Resources—Credit Facilities and Other Borrowings—Recently Retired Credit Facilities and Other Borrowings.” As a condition to the loan facility, in February 2001 Harmony protected some of its production from downward movements in the gold price by entering into put options relating to the delivery of 1 million ounces of Harmony’s 2001 and 2002 production. The put options covered 83,333 ounces per month for 12 months, commencing on March 29, 2001, at a price of Rand 64,000 per kilogram (Rand 1,990 per ounce). Harmony paid Rand 29 million to secure these put options. These purchased put options permitted Harmony to take advantage of increased gold spot prices by allowing the put options to expire without exercise, and merely provided Harmony with downside protection. Harmony closed out these put options during July 2001 and received Rand 3 million. Harmony and AngloGold jointly managed the Elandskraal mines between February 1, 2001 and April 9, 2001 and Harmony completed the purchase on April 9, 2001. Harmony and Randfontein agreed to indemnify AngloGold against any loss AngloGold may suffer or incur as a consequence of Harmony’s management during the interim period.

On November 21, 2001, Harmony and ARMGold, a subsidiary of ARM, reached an agreement in principle with AngloGold to purchase the Free Gold assets, subject to specified conditions. Pursuant to the subsequently executed definitive agreements, the Free Gold assets were purchased by the Free Gold Company (in which Harmony and ARMGold each has a 50% interest) for Rand 2,200 million ($206.8 million at an exchange rate of R10.64 per $1.00), plus an amount equal to any liability for taxes payable by AngloGold in connection with the sale. Rand 1,800 million ($169.2 million at an exchange rate of R10.64 per $1.00) of the purchase price, plus accrued interest, was paid by the Free Gold Company in April 2002 following the fulfillment of all conditions precedent and Rand 400 million ($37.5 million at an exchange rate of R10.64 per $1.00) is payable by the Free Gold Company under an interest-free loan on January 1, 2005. The additional amount relating to taxes is payable by the Free Gold Company as and when the tax liability becomes payable by AngloGold. The Free Gold Company has estimated that this tax liability will be approximately Rand 632 million ($59.4 million at an exchange rate of R10.64 per $1.00) and will be payable in March 2003. The Free Gold Company expects that approximately 80% of this amount will provide the Free Gold Company with a capital expense deduction against its taxable income from the Free Gold assets. The Free Gold Company assumed management control of the Free Gold assets from January 1, 2002, and completed the acquisition on April 23, 2002 (the date on which all conditions precedent to the transaction were fulfilled). For purposes of U.S. GAAP, Harmony equity accounted for its interest in the Free Gold Company with effect from May 1, 2002 and the purchase price of the Free Gold assets was determined to be Rand 2,213 million ($208.2 million at an exchange rate of 10.64 per $1.00). See “Operating and Financial Review and Prospects—Overview.”

In connection with the acquisition of the Free Gold assets, on April 5, 2002 Harmony and ARMGold entered into a formal joint venture and shareholders’ agreement relating to the Free Gold Company. The agreement provides that Harmony and ARMGold are each responsible for 50% of the expenses associated with operating the Free Gold assets. Pursuant to the agreement, an interim executive committee composed of an equal number of representatives appointed by Harmony and ARMGold managed the Free Gold assets until the acquisition was completed. Following completion of the acquisition, management of the Free Gold Company is vested in a board, which initially is composed of an equal number of Harmony representatives and ARMGold representatives. In the future, the number of representatives on the board will vary proportionally with the number of shares of the Free Gold Company held by Harmony and ARMGold.

On October 23, 2001, Gold Fields Limited, or Gold Fields, granted Harmony an exclusive option to negotiate the possible acquisition from Gold Fields of the St. Helena and Oryx mines in the Free State Province. Harmony, in return, granted Gold Fields an exclusive option to negotiate the acquisition of Harmony’s stake in AurionGold. These agreements expired, without exercise, on February 15, 2002.

On May 24, 2002, Harmony, ARMGold and Gold Fields, through its subsidiary, St. Helena Gold Mines Limited, announced that an agreement in principle had been reached under which St. Helena Gold Mines Limited would sell the St. Helena gold mining assets to the Free Gold Company for Rand 120 million ($13.7 million), plus a royalty equal to one percent of revenue for a period of 48 months beginning on the effective date of the sale. St. Helena Gold Mines Limited and the Free Gold Company concluded a formal agreement of sale on July 1, 2002. The sale was completed on October 30, 2002, and the Free Gold Company assumed management control on that date.

Harmony conducts Australian operations through two recently acquired Australian gold mining companies: New Hampton, acquired with effect from April 1, 2001, and Hill 50, acquired with effect from April 1, 2002. On December 19, 2000, Harmony announced that it had agreed to purchase 19.99% of New Hampton ordinary shares from Normandy Mining and made an offer for all of the

outstanding ordinary shares of New Hampton. The total cash bid valued New Hampton at approximately A$56.3 million (R228.2 million at an exchange rate of R4.05 per A$1.00, or $28.5 million at an exchange rate of R8.00 per $1.00). This offer closed on July 12, 2001, at which time Harmony had acquired 96.2% of New Hampton’s shares and 95% of New Hampton’s warrants. Harmony subsequently completed a compulsory acquisition of the remaining shares and warrants. On December 11, 2001, Harmony commenced a conditional cash offer for all of the outstanding ordinary shares and listed options of Hill 50. The total cash bid valued Hill 50 at approximately A$233 million (R1,419 million at an exchange rate of R6.09 per A$1.00, or $124.8 million at an exchange rate of R11.37 per $1.00). The offer closed on May 3, 2002, at which time shareholders holding 98.57% of Hill 50’s shares and 98.76% of Hill 50’s listed options had accepted Harmony’s offer and this offer had become unconditional. Harmony subsequently completed a compulsory acquisition of the remaining shares and options under the rules of the Australian Stock Exchange. See “Business—Harmony’s Mining Operations—Australian Operations.” Harmony financed the Hill 50 offer from existing cash resources and borrowings, including a syndicated loan facility entered into on February 28, 2002, with Citibank, N.A., as lead arranger. See “Credit Facilities and Other Borrowings.” In an effort to increase efficiency and reduce corporate expenditures, in the quarter ended June 30, 2002 Harmony integrated New Hampton’s Jubilee operations with Hill 50’s New Celebration operations to form the South Kalgoorlie operations and combined the corporate offices of New Hampton and Hill 50 in Perth. With effect from April 1, 2002, Harmony reports the New Hampton and Hill 50 operating results together within an “Australian Operations” segment.

Harmony made its first investment in the Australian gold mining industry in February 2000, by acquiring a stake in Goldfields (Australia), an independent gold production and exploration company. As of September 2001, Harmony’s stake in Goldfields (Australia) was approximately 22.96%. Effective December 31, 2001, Delta Gold Limited, or Delta, completed a merger with Goldfields (Australia). In connection with the merger, holders of Delta shares received 187 Goldfields (Australia) shares in exchange for every 200 Delta shares held. Harmony’s stake in Goldfields (Australia) following the merger was diluted to approximately 9.8%. In February 2002, Goldfields (Australia) changed its name to AurionGold Limited. On May 25, 2002, Harmony and Placer Dome entered into an agreement under which Harmony accepted Placer Dome’s offer to acquire all of Harmony’s interest in AurionGold, subject to specified conditions. Pursuant to the offer, Harmony would receive 17.5 newly-issued Placer Dome ordinary shares for every 100 AurionGold ordinary shares tendered. On July 29, 2002, Harmony announced that Placer Dome had increased its offer by adding a cash payment of A$0.35 per AurionGold ordinary share. Harmony accepted this revised offer, which had become unconditional as of July 29, 2002. The transaction was completed on August 6, 2002. As a result, Harmony obtained a 1.9% interest in Placer Dome.

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

On November 22, 2002, Harmony purchased approximately 21.0% of the outstanding share capital of High River for a purchase price of $14.5 million. High River is a company organized under the laws of Ontario, Canada that is listed on the Toronto Stock Exchange and holds gold mining assets in Russia, Canada and West Africa. Harmony may, subject to market conditions, consider additional investments in High River in the future. The principle assets of High River are:

	•		a 53% fully-diluted equity interest in OJSC Buryatzoloto, the fifth largest gold producer in Russia, which has two operating mines and has reported total production of approximately 150,000 ounces of gold per year;

	•		an agreement to acquire 100% ownership of a project to exploit the Berezitovoye deposit in Siberia, which is reported to be amenable to open pit mining;

	•		an 50% ownership interest in the New Britannia gold mine in Manitoba, Canada, which has reported total production of approximately 110,000 ounces of gold per year; and

	•		an ownership interest in the Taparko gold development project in Burkina Faso.

Strategy

The international and South African gold mining industries have been in the recent past and continue to be affected by structural and investment trends moving toward the consolidation of relatively smaller operations into larger, more efficient gold producers with lower, more competitive cost structures. This consolidation enables gold producers to be more competitive in pursuing new business opportunities and creates the critical mass (measured by market capitalization) necessary to attract the attention of international gold investment institutions. Harmony’s current strategy is predominantly influenced by these investment trends, which have already resulted in significant restructuring and rationalization in the South African, Australian and North American gold mining industries. Harmony believes these trends will continue to lead to significant realignments in the international gold production business. Harmony intends to continue to participate in the South African and international restructuring activity to continue to achieve its growth objectives.

Since undergoing a change in management in 1995, Harmony has employed a successful strategy of growth through a series of acquisitions and through the evolution and implementation of a simple set of management systems and philosophies, which Harmony refers to as the “Harmony Way,” and which it believes are unique in the South African gold mining industry. A significant component of the success of Harmony’s strategy to date has been its ability to acquire underperforming mining assets, mainly in South Africa, and in a relatively short time frame to transform these mines into cost-effective production units. The initial phase of Harmony’s strategy between fiscal 1995 and fiscal 2002 has resulted in the growth of Harmony’s annual gold sales from approximately 650,000 ounces to over 2.4 million ounces. With the acquisitions of Elandskraal, New Hampton and Hill 50, Harmony has increased its annualized sales to approximately 2.6 million ounces, excluding Harmony’s 50% interest in the Free Gold Company. From June 30, 1995 to June 30, 2002, Harmony has reduced weighted average cash operating costs from approximately $341 per ounce to approximately $196 per ounce. See “Operating and Financial Review and Prospects—Exchange Rates” and “Operating and Financial Review and Prospects—Results of Operations—Years ended June 30, 2002 and 2001—Costs.” Harmony has also expanded its proven and probable ore reserve base and, as at June 30, 2002, Harmony’s mining operations reported total proven and probable reserves of approximately 49.08 million ounces, which includes Elandskraal, New Hampton, Hill 50 and ounces attributable to Harmony’s 50% interest in the Free Gold Company.

Although Harmony’s primary focus has been on pursuing growth through the acquisition of producing mines, Harmony has also addressed growth through the recent expansion of its exploration activities. Harmony currently maintains a range of focused exploration programs mainly concentrating on areas not too distant from its operating mines. Harmony has also embarked on several focused gold exploration initiatives in prospective regions where it does not yet produce gold. In addition, in light of the increase in the market price of gold in fiscal 2002, it has become relatively more attractive for Harmony to pursue organic growth in South Africa, including greenfield and brownfield developments.

Harmony is managed according to the philosophy that its shareholders have invested in Harmony in order to own a growth stock which will also participate in movements in the gold price. Accordingly, Harmony has consistently maintained a policy of generally not hedging its future gold production. Harmony’s policy is to eliminate any hedging positions existing within the companies that it acquires as soon as opportunities can be created to do so in sound, commercially advantageous transactions. There may, however, be instances where certain hedge positions in acquired companies need to be kept in place for contractual or other reasons.

In addition, Harmony is considering involvement in platinum mining and related activities in South Africa. Harmony believes that there may be opportunities to acquire South African platinum industry assets within the next two to three years. Harmony believes that that the “Harmony Way” might be usefully applied to mature platinum mines with turnaround potential in South Africa; however, no assurance can be made that Harmony will find suitable acquisition targets or successfully integrate them into Harmony’s operations. See “Risk Factors—Harmony’s strategy depends on its ability to make additional acquisitions” and “Risk Factors—Harmony may experience problems in managing new acquisitions and integrating them with its existing operations.”

The major components of Harmony’s strategy include:

Continuing to implement Harmony’s unique management structure and philosophy.

Harmony implements a simple set of management systems and philosophies, which Harmony refers to as the “Harmony Way,” and which it believes are unique to the South African gold mining industry. This “Harmony Way” is underpinned by the following concepts:

	•		Empowered management teams. At each mining site Harmony has established small, multi-disciplinary, focused management teams responsible for planning and implementing the mining operations at the site. Each of these teams is accountable for the results at its particular site and reports directly to Harmony’s executive committee.

	•		Active strategic management by the Board. Annual operational goals and targets, including cost, volume and grade targets are established in consultation with the Harmony’s executive committee for each mining site. Each management team develops an operational plan to implement the goals and targets for its mine site. Harmony’s executive committee reviews and measures the results at each mining site on a regular basis throughout the year.

	•		Increased productivity. Gold mining in South Africa is very labor intensive with labor accounting for approximately 50% of Harmony’s costs. To control these costs, Harmony structures its operations to achieve maximum productivity with the goal of having 60% of Harmony’s workforce directly engaged in stoping, or underground excavation, and development rock breaking activities. In addition, Harmony has implemented productivity-based bonuses designed to maximize productivity.

	•		A no-frills, low cost ethic. Harmony has an obsession about lowering its cost base and to this end Harmony extensively benchmarks its costing parameters both internally between operations within Harmony and externally against other gold producers.

	•		Systems. Harmony has implemented sophisticated cost accounting systems and strict ore accounting and ore reserve management systems to measure and track costs and ore reserve depletion accurately, so as to enable it to be proactive in its decision making.

Harmony has implemented the “Harmony Way” at its original mining operations and at each mining property Harmony has acquired since 1995, and is currently implementing the “Harmony Way” at the Australian operations acquired through the acquisitions of New Hampton and Hill 50. By implementing this process, Harmony generally has been able to reduce costs significantly while increasing production and extending mine life. Harmony and ARMGold, shareholders of the Free Gold Company, share similar management philosophies. The Free Gold Company has begun implementing measures to reduce costs while increasing production and extending mine life, in a manner that Harmony believes is consistent with the “Harmony Way.”

Growing through acquisitions in South Africa and internationally.

Harmony’s acquisition strategy in South Africa has been, and will continue to be, mainly to pursue mature, underperforming gold mining operations in which it believes it can successfully introduce the “Harmony Way” to increase productivity, reduce costs and extend mine life. The advantage to acquiring mature, underperforming operations is that they tend to be cheaper to acquire and, particularly for underground operations, much of the required capital expenditure has already been made. Harmony’s corporate strategy with respect to acquisition targets is as follows:

	•		to make acquisitions in addition to pursuing greenfield and brownfield developments when it is economical to do so;

	•		to acquire mature assets with turnaround potential;

	•		to acquire assets that fit Harmony’s management model; and

	•		to acquire assets that enhance Harmony’s overall resource base.

In South Africa, Harmony continues to explore a number of potential acquisitions. The South African gold mining industry has undergone a significant restructuring since 1990 with the result that a number of gold mining companies owned principally by mining houses have been sold to other gold operators. Harmony believes that this restructuring process has not yet been completed and that there will continue to be opportunities for further acquisitions in South Africa.

Outside of South Africa, Harmony intends to leverage the broad gold mining experience it has gained through acquisitions and existing operations. Through Harmony’s existing operations, Harmony has gained extensive underground mining experience. Harmony has also gained extensive experience in surface mining by open cast methods through its acquisition of Kalgold and the open cast operations of Randfontein and New Hampton, and in mechanized mining of greenstone orebodies through Harmony’s acquisitions of Bissett and New Hampton. These types of mining are more typical outside of South Africa. Harmony believes that these skills should position it to be able to pursue a broad range of acquisition opportunities. Harmony continues to explore new business opportunities both inside and outside of South Africa, particularly in Australia and Russia. Harmony may in the future pursue additional suitable potential acquisitions in South Africa or internationally.

Expanding Harmony’s exploration and development activities to increase its reserve base.

Traditionally, like most other major South African gold producers, Harmony has not focused much of its efforts on greenfield exploration. With the acquisition of Kalgold, Harmony acquired potentially valuable exploration rights and an active exploration capability in South Africa. Harmony acquired further exploration rights and an active exploration program in Australia through the acquisitions of New Hampton and Hill 50. Harmony intends to continue to support and expand these activities as another important avenue for increasing the size of its reserve base. Exploration projects involve material risks and uncertainties, however, and Harmony cannot be sure these projects will be successful. See “Risk Factors—To maintain gold production beyond the expected lives of Harmony’s existing mines or to increase production materially above projected levels, Harmony will need to access additional reserves through development or discovery.”

In addition, in light of the increase in the market price of gold in fiscal 2002, it has become relatively more attractive for Harmony to pursue organic growth in South Africa, including greenfield and brownfield developments. Harmony is engaging in, and investigating possibilities for, organic growth through targeted development projects. Harmony is pursuing substantial projects to deepen the Elandskraal operations and improve the Masimong shaft system. See “—Harmony’s Mining Operations—Elandskraal Operations,” “—Harmony’s Mining Operations—Randfontein Operations,” “—Harmony’s Mining Operations—Free State Operations” and “—Harmony’s Mining Operations—Evander Operations.” Harmony is also currently conducting feasibility studies for shallow and medium-depth capital projects in the vicinity of Harmony’s existing Randfontein and Evander operations and has commenced an advanced feasibility study to evaluate the Kalplats platinum group metals project described in “Business—Exploration.” In evaluating and pursuing these projects, Harmony’s goal is to achieve organic growth in South Africa. Capital development projects of this type involve material risks and uncertainties; however, and Harmony cannot be sure its development efforts will be successful. See “Risk Factors—To maintain gold production beyond the expected lives of Harmony’s existing mines or to increase production materially above projected levels, Harmony will need to access additional reserves through development or discovery.

Hedge Policy

As a general rule Harmony sells its gold production at market prices. Harmony generally does not enter into forward sales, derivatives or other hedging arrangements to establish a price in advance for the sale of its future gold production. As a result of this policy, Board approval is required when hedging arrangements are to be entered into to secure loan facilities. Any change to this policy requires ratification by the Board. Currently, Harmony’s hedge book is managed by a risk and treasury management services company, that is a wholly-owned subsidiary of a major South African bank. Hedge activity is monitored weekly and all hedge transactions must be approved by the Harmony Chief Financial Officer after consultation with the Board.

Harmony does not trade in derivatives for its own account. Recently there have been two instances in which Harmony has made use of gold price hedges: Harmony’s forward sale of a portion of the production at Bissett at a set gold price and, more recently, put options relating to 1 million ounces of Harmony’s production at Elandskraal. Both of these hedges were entered into in order to secure loan facilities and have since been closed out. See “Operating and Financial Review and Prospects—Market Risk.”

A significant proportion of the production at Randfontein was already hedged when acquired by Harmony. On April 12, 2002, Harmony announced that it had completed the process of closing out all of the Randfontein hedge positions, including closing forward sale contracts and call options covering a total of 490,000 ounces and forward purchases covering a total of 200,000 ounces. See “Operating and Financial Review and Prospects—Market Risk.”

In addition, a substantial proportion of the production at each of New Hampton and Hill 50 was already hedged when acquired by Harmony and remains hedged. In fiscal 2002, in line with Harmony’s strategy of being generally unhedged, Harmony reduced New Hampton’s hedge book by over 900,000 ounces. In fiscal 2002, Harmony also combined and restructured the overall hedge portfolio of Harmony’s Australian operations (including New Hampton and Hill 50). All of these hedge positions are now normal purchase and sale agreements, under which Harmony must deliver a specified quantity of gold at a future date subject to the agreed-upon prices. The resulting hedge portfolio covered, as of September 30, 2002, approximately 1,689,705 ounces over a seven-year period at an average strike price of A$532 per ounce ($287 at an exchange rate of A$0.54 per $1.00). Harmony intends to reduce the remaining hedge positions of the Australian operations gradually by delivering gold pursuant to the relevant agreements. See “Operating and Financial Review and Prospects—Market Risk.”

In December 2001, in response to significant depreciation in the Rand and to protect itself against possible appreciation of the Rand against the U.S. dollar, Harmony entered into Rand-U.S. dollar currency forward exchange contracts intended to cover estimated revenues from the Free State operations’ planned production for calendar 2002. Harmony fixed the Rand-U.S. dollar exchange rate for a total of $192 million at an average exchange rate of Rand 11.20 per U.S. dollar. As of December 13, 2002, $15 million was remaining under these contracts at an average exchange rate of Rand 11.31 per U.S. dollar.” This measure, however, is not expected to fully protect Harmony from sustained fluctuations in the value of the Rand relative to the U.S. dollar since it covers only a limited amount, it expires on December 31, 2002 and Harmony does not expect to renew or repeat it. See “Operating and Financial Review and Prospects—Market Risk—Foreign Currency Sensitivity.”

Geology

The major portion of Harmony’s South African gold production is derived from mines located in the Witwatersrand Basin in South Africa. In contrast to the greenstone hosted gold deposits at Kalgold, Harmony’s Australian operations and Bissett, the Witwatersrand gold deposits are a unique gold

bearing succession of sedimentary rocks that show great continuity through the Witwatersrand area. As a consequence, resource estimates can often be made with a higher degree of confidence, even when the exploration data is limited.

The Witwatersrand Basin is an elongate structure that extends approximately 300 kilometers in a northeast-southwest direction and approximately 100 kilometers in a northwest-southeast direction. It is an Archean sedimentary basin containing a 6 km deep stratigraphic sequence consisting mainly of quartzites and shales with minor intermittent volcanic units.

Conglomerate layers occur in distinctive depositional cycles or packages within the upper, arenaceous portion of the sequence, known as the Central Rand Group. The conglomerate packages are thicker and tend to display greater basin edge proximality in terms of sedimentary characteristics from the base of the Central Rand Group to the top. The thickest units are multiple stacks of lenticular conglomerate layers, separated by erosional surfaces. It is within these predominately conglomeratic units that the gold-bearing alluvial placer deposits, termed reefs, are located.

The differences in the morphology and gold distribution patterns within a single reef, and from one reef to the next, are a reflection of the different sedimentary processes at work at the time of placer deposition on erosional surfaces in fluvial and littoral environments.

Within the various goldfields of the Witwatersrand Basin there are major and minor fault systems, and some of the normal faults have displaced basin-dipping placers upwards in a progressive step-like manner, enabling mining to take place at accessible depths. Folding is most prominent along the previously active tectonic margins of the basin, and syndepositional interference warping appears to have played a role in some placer formation and gold accumulation.

Harmony’s South African gold production is derived from auriferous placer reefs situated at different stratigraphic positions and at varying depths below surface in three of the seven defined goldfields of the Witwatersrand Basin.

Harmony’s Australian production is obtained from open pit and underground mines operating on gold lodes, which are typical of gold bearing greenstone belts found in Canada and Australia.

Reserves

Harmony applies an ore reserve management system that emphasizes effective geological control of the orebody. In addition, ongoing management of the ore reserves is decentralized to each production site where management applies site-specific technical and working cost parameters to determine the optimal cut-off grade. This cut-off grade is defined as the grade at which the total profits from mining the orebody, under a specific set of mining parameters, is maximized and, therefore, optimizes exploitation of the orebody. The use of a cut-off grade attempts to account for all the ore tons that make a marginal contribution to the profitability of the mine.

Historically, South African gold mining companies have not been required to follow any particular standard for reporting ore reserves. Consequently, Harmony inherited a number of different standards for reporting ore reserves as it acquired mining operations.

In March 2000, the JSE announced that all gold mining companies listed on the JSE must report ore reserves on the basis of the South African Mineral Resource Committee code of practice, or SAMREC. In accordance with this ruling, Harmony has recalculated its ore reserves. As at June 30, 2002 all of Harmony’s ore reserves for South African operations are reported on the basis of SAMREC. In addition, the ore reserve information for Harmony’s Australian operations is reported on

the basis of the Australian Code for Reporting of Mineral Resources and Ore Reserves, or JORC Code. The JORC Code is consistent with SAMREC, although the JORC code focuses more specifically on open cast mining, which is more common in Australia. Only the reserves which qualify as proven and probable reserves for purposes of the SEC’s industry guide number 7 at each of Harmony’s mining operations are presented in this prospectus. See “Glossary of Mining Terms.”


		Ore reserve statement as at June 30, 2002

																				Gold sales
																				in the fiscal
																				year ended
Operations		Proven Reserves						Probable Reserves						Total Reserves						June 30, 2002¹

		Tons		Grade		Gold oz²		Tons		Grade		Gold oz²		Tons		Grade		Gold oz²
		(million)		(oz/ton)		(million)		(million)		(oz/ton)		(million)		(million)		(oz/ton)		(million)		(oz)
S.A. Underground Elandskraal			23.18		0.205		4.75		36.60		0.204		7.47		59.78		0.204		12.22		442,715
	Free State		35.04		0.136		4.75		20.06		0.128		2.56		55.10		0.133		7.32		598,635
	Randfontein		19.02		0.163		3.10		9.01		0.167		1.51		28.03		0.164		4.61		531,588
	Evander		10.75		0.183		1.97		58.07		0.223		12.92		68.82		0.216		14.89		415,382
	Free Gold Assets³		10.78		0.204		2.20		19.47		0.222		4.33		30.26		0.216		6.53		90,487

Total S.A.
Underground			98.77		0.178		16.77		143.22		0.189		28.80		241.99		0.187		45.57		2,078,807

S.A. Surface Elandskraal			—		—		—		2.43		0.018		0.04		2.43		0.018		0.04		33,344
	Free State		5.21		0.026		0.13		4.33		0.018		0.08		9.54		0.022		0.21		13,309
	Randfontein		1.69		0.023		0.04		2.03		0.034		0.07		3.72		0.029		0.11		30,050

	Kalgold (open cast)		7.72		0.061		0.47		2.10		0.061		0.13		9.82		0.061		0.60		62,179
	Free Gold Assets³		9.72		0.022		0.21		—		—		—		9.72		0.022		0.21		13,518

Total S.A. Surface			24.33		0.026		0.86		10.89		0.026		0.32		35.23		0.030		1.17		152,400

Australian
Operations⁴
	Big Bell		1.86		0.090		0.17		2.90		0.081		0.24		4.77		0.085		0.40		132,389
	Mt. Magnet		3.77		0.055		0.21		7.18		0.160		1.15		10.95		0.124		1.36		44,255⁵
	South Kalgoorlie⁶		3.96		0.053		0.21		4.36		0.085		0.37		8.32		0.070		0.58		76,348⁷

Total Australian Operations			9.59		0.066		0.58		14.45		0.109		1.76		24.04		0.093		2.34		252,992

TOTAL			132.69		0.137		18.21		168.56		0.183		30.87		301.25		0.163		49.08		2,484,239

¹		Includes sales from Hill 50 for three months from April 1, 2002 and sales attributable to Harmony’s interest in the Free Gold assets for two months from May 1, 2002. Excludes sales at Bissett in fiscal 2002.

²		“Gold oz” figures are fully inclusive of all mining dilutions and gold losses, and are reported as mill delivered tons and head grades. Metallurgical recovery factors have not been applied to the reserve figures. Approximate metallurgical recovery factors are set forth below.

³		Includes 50% of the reserves from the Free Gold assets, representing Harmony’s equity interest in the Free Gold Company.

⁴		Includes reserves from underground and surface mining at each of the Australian operations.

⁵		Includes sales from the Mt. Magnet operations for the period from March 1, 2002, during which the Mt. Magnet operations were operated for the account of Harmony.

⁶		The South Kalgoorlie operations include Jubilee, acquired in the New Hampton transaction, and New Celebration, acquired in the Hill 50 transaction.

⁷		Includes sales from Jubilee for all of fiscal 2002 and sales from New Celebration for the period from March 1, 2002, during which New Celebration was operated for the account of Harmony.

The numbers shown in the table above are fully inclusive of all mining dilutions and gold losses, and are reported as mill delivered tons and head grades. Metallurgical recovery factors have not

been applied to the reserve figures stated above. The approximate metallurgical recovery factors for the table above are as follows: (a) Elandskraal 97%; (b) Free State 95%; (c) Randfontein 96%; (d) Evander 96%; (e) Kalgold 82%; (f) the Free Gold assets 97%; (g) Big Bell 86%; (h) Mt. Magnet 93%; (i) South Kalgoorlie 92%; and (j) Bissett 91%. A gold price of Rand 95,000 (A$16,879 at an exchange rate of R5.63 per A$1.00) per kilogram was applied in calculating the ore reserve figures. The gold price on December 13, 2002 was approximately Rand 93,454 per kilogram. Harmony’s standard for sampling with respect to both proven and probable reserve calculations for underground mining operations at Elandskraal, Free State, Evander, Randfontein and the Free Gold assets is applied on a 6 meter by 6 meter grid. Average sample spacing on development ends is at 2 meter intervals in development areas. Harmony’s standard for sampling with respect to both proven and probable reserves at its Australian underground operations include sampling development drives and crosscuts at intervals of up to 4 meters, drilling fans of diamond drill boreholes with a maximum spacing of 20 meters in any orientation within the ore bodies, and assaying core at 1 meter intervals. The Kalgold open cast operations are sampled on diamond drill and reverse circulation drill spacing of no more than 25 meters on average. Surface mining at South African operations other than Kalgold involves recovering gold from areas previously involved in mining and processing, such as metallurgical plants, waste rock dumps and tailings dams (slimes and sand) for which random sampling is used. Australian surface operations are sampled on diamond drill and reverse circulation drill spacing of no more than 20 meters on average. Bissett operations have not been included in the table above because given the recovery factor identified above and cut-off grade calculated as described below, there were no proven and probable reserves at Bissett as at June 30, 2002. Production at Bissett was suspended in the quarter ended September 30, 2001 due to mining operations being uneconomical at then-current gold prices. See “Business—Harmony’s Mining Operations—Bissett Operations.”

In calculating proven and probable reserves, Harmony applies a cut-off grade. The cut-off grade is determined for each shaft using Harmony’s optimizer computer program, which takes account of a number of factors, including grade distribution of the orebody, an assumed gold price, planned production rates, planned working costs and mine recovery factors. Harmony’s optimizer computer program determines the total profits that can be made from mining blocks of various grades. The point of maximum total profit is used to determine the cut-off grade. Mining the blocks at and above the cut-off grade will be profitable if the assumptions underlying the cut-off grade hold true. Blocks below the cut-off grade are not included in Harmony’s reserve estimates. Harmony generally aims to mine above the cut-off grade. This can be contrasted with the so-called “pay limit” approach for determining reserve estimates, which identifies the grade at which revenues and costs are equal and then determines the portion below this break-even grade that can be mined together with portions above the break-even grade to remain profitable. Harmony believes the cut-off grade methodology defines more precisely which blocks should be mined for profitable operations.

Description of Mining Business

Exploration

Exploration activities are focused on the extension of existing orebodies and identification of new orebodies both at existing sites and at undeveloped sites. Once a potential orebody has been discovered, exploration is extended and intensified in order to enable clearer definition of the orebody and the potential portions to be mined. Geological techniques are constantly refined to improve the economic viability of prospecting and mining activities.

Mining

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

	•		Access to the orebody. In Harmony’s underground mines, access to the orebody is by means of shafts sunk from the surface to the lowest economically and practically mineable level. Horizontal development at various intervals of a shaft (known as levels) extends access to the horizon of the reef to be mined. On-reef development then provides specific mining access.

			In Harmony’s open pit mines, access to the orebody is provided by overburden stripping, which removes the covering layers of topsoil or rock, through a combination of drilling, blasting, loading and hauling, as required.

	•		Mining the orebody. The process of ore removal starts with drilling and blasting the accessible ore. The blasted faces are then cleaned and the ore is transferred to the transport system. In open pit mines, gold-bearing material may require drilling and blasting and is usually collected by bulldozers or shovels to transfer it to the ore transport system.

			In Harmony’s underground mines, once ore has been broken, train systems collect ore from the faces and transfer it to a series of ore passes that gravity feed the ore to hoisting levels at the bottom of the shaft. The ore is then hoisted to the surface in dedicated conveyances and transported either by conveyor belts directly or via surface railway systems or roads to the treatment plants. In addition to ore, waste rock broken to access reef horizons must similarly be hoisted and then placed on waste rock dumps. In open pit mines, ore is transported to treatment facilities in large capacity vehicles.

Processing

Harmony currently has fourteen metallurgical plants that treat ore to extract the gold. The Elandskraal, New Hampton and Hill 50 acquisitions resulted in the acquisition of two plants each, which are included in this figure. In addition, there are three metallurgical plants within the Free Gold assets, which are not included in this figure. The principal gold extraction processes used by Harmony are carbon in leach, or CIL, carbon in pulp, or CIP, and carbon in solution, or CIS, although Harmony also has an old filter plant processing low grade waste rock. Harmony has discontinued the active use of its heap leach operation, as described below.

The gold plant circuit consists of the following:

•

Comminution. Comminution is the process of breaking up the ore to expose and liberate the gold and make it available for treatment. Conventionally, this process occurs in multi-stage crushing and milling circuits, which include the use of jaw and gyratory crushers and rod and tube and ball mills. Harmony’s more modern milling circuits include semi or fully autogenous milling where the ore itself is used as the grinding medium. Typically, ore must be ground to a minimum size before proceeding to the next stage of treatment.

	•		Treatment. In most of Harmony’s metallurgical plants, including the plants within the Free Gold assets and at Hill 50, gold is extracted into a leach solution from the host ore by leaching in agitated tanks. Gold is then extracted onto activated carbon from the solution using the CIL, CIP or CIS process. In addition, each of Harmony and the Free Gold Company has one metallurgical plant that uses the zinc precipitation filter process to recover gold in solution. Harmony’s Saaiplaas plant also used the zinc precipitation filter process prior to fiscal 2002, but it was converted to the CIS process during fiscal 2002. Harmony expects to convert the Saaiplaas plant to the CIL process in the quarter ending June 30, 2003, in an effort to lower cost and improve extraction efficiency. Harmony will consider a similar conversion for the remaining Harmony zinc precipitation plant depending on the properties of the materials to be processed.

			Gold in solution from the filter plants is recovered using zinc precipitation. Recovery of the gold from the loaded carbon takes place by elution and electro-winning. Because cathode sludge produced from electro-winning is now sent directly to Harmony’s refinery, most of the plants no longer use smelting to produce rough gold bars (doré). Harmony’s zinc precipitation plant, however, and the zinc precipitation plant used by the Free Gold Company continue to smelt precipitate to produce rough gold bars. These bars are then transported to Harmony’s refinery, which is responsible for refining the bars to a minimum of good delivery status.

			Harmony also had one heap leach operation, active use of which was discontinued in July 2001. In the heap leach process, ore is stacked on impervious leach pads and a leaching solution is sprayed on the pile, which dissolves the gold from the host ore. Gold is then extracted from the leach solution using the CIS process. Although Harmony has discontinued the active use of its heap leach operation, over time small amounts of gold normally can be recovered from ore remaining on the leach pads. Harmony expects to apply leaching solution occasionally in the future to recover any available gold.

Harmony operates the only independent gold refinery in South Africa. In fiscal 2002, approximately 63% of Harmony’s South African gold production was refined at Harmony’s refinery and the remainder was refined at the Rand Refinery, which is owned by a consortium of the major gold producers in South Africa. In April 2002, Harmony sold its ownership interest in the Rand Refinery back to the Rand Refinery. Harmony received approximately Rand 6.4 million ($0.6 million at an exchange rate of R10.66 per $1.00) from this sale.

Harmony produces its own branded products at its refinery, including various sizes of gold bars. This has allowed Harmony to sell to markets such as India, the Middle East and East Asia. Harmony’s refinery supplies gold alloys and associated products to jewelry manufacturers in South Africa and internationally. In fiscal 2001, Harmony expanded refining capacity from 40 tons per year to 100 tons per year. In fiscal 2002, Harmony further increased refinery capacity to 120 tons per year. Harmony spent approximately Rand 22.6 million on capital expenditures at its refinery in fiscal 2002. Harmony has budgeted Rand 10.6 million ($1.2 million) to complete refinery expansion and upgrades in fiscal 2003.

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 “Business—Regulatory and Environmental Matters—Mineral Rights.” Harmony’s

beneficiation initiatives have benefited from the expansion and improvement of Harmony’s refinery. Harmony supports jewelry ventures in South Africa, including providing facilities for a jewelry school and, in fiscal 2002, Harmony acquired rights to manufacture and distribute a range of jewelry based on the “Lord of the Rings” trilogy in South Africa, the United States and Canada. On December 11, 2002, Harmony and Mintek, a South African government research and development organization, signed a memorandum of understanding to create Musuku Beneficiation Systems, or Musuku, an integrated manufacturing and technology group focusing on the beneficiation of precious metals. Musuku will provide management, operational and technical services to integrate value-added processes into the gold mining industry.

Services and Supplies

Mining activities require extensive services, located both on the surface and underground. These services include mining-related services such as mining engineering (optimizing mining layouts and safe mining practices), planning (developing short-term and long-term mining plans), ore reserve management (to achieve optimal orebody extraction), ventilation (sustaining operable mining conditions underground), provision of supplies and materials, and other logistical support. In addition, engineering services are required to ensure equipment operates effectively. Unlike many other South African gold producers, Harmony generally provides only those services directly related to mining. In some cases, other services are provided by outside contractors. Harmony provides medical services to employees at its Free State, Evander and Randfontein hospitals. The Free Gold assets include a hospital facility, and Harmony is considering options to achieve synergies between this facility and the existing Free State facility.

The Mining Charter described in “—Regulatory Matters—Mineral Rights” establishes a policy of according preferred supplier status to enterprises controlled by members of historically disadvantaged groups when those enterprises are able to offer goods and services at competitive prices and quality levels. Harmony believes that its procurement policy is consistent with this policy.

In June 2002, Izingodo Holdings, a black empowerment consortium, acquired a 30% stake in Timrite (Pty) Ltd. Timrite is currently Harmony’s major supplier of timber, supplying approximately 90% of Harmony’s timber requirements.

Management Structure

As part of the “Harmony Way,” Harmony structures its mining operations in a way that it considers to be unique in the South African gold mining industry. Harmony’s operational structure is based on small empowered management teams at each production site, which may include one or more underground mine shafts or open cast sites. These management teams are fully responsible for planning and executing the mining at the production site and report directly to Harmony’s Executive Committee. Each management team consists of an ore reserve manager, a mining manager, a financial manager, an engineering manager and a human relations manager. Each member of the management team has an individual area of responsibility: the mining manager is responsible for rock breaking and safety; the ore reserve manager is responsible for geology and ore reserves; the financial manager is responsible for financial management; the engineering manager is responsible for maintaining equipment; and the human relations manager is responsible for manpower issues. One of the managers is appointed as the team captain. Financial incentives are provided for the production team at each site based on the production and efficiency at the site.

Placing management power at the level of the actual production sites has resulted in greater flexibility, innovation and quicker decision-making than the more traditional management

structures at South African gold mines. It also means that Harmony operates without multiple levels of management. This contributes to decreased overhead costs, which has a positive impact on the payable portion of Harmony’s mineral resources. In addition, the reduced management structure is important in facilitating Harmony’s goal of having 60% of its work force being directly involved in actual mining as opposed to the industry standard of 40%. Harmony believes that this initiative has resulted in increased productivity.

In addition, on October 2, 2002, Harmony and the United Association of South Africa signed an agreement to redefine the traditional role of shift boss, or supervisor, to that of a coach. This initiative, which Harmony has implemented at its South African operations, re-aligns features of Harmony’s operational-level organization. The principal features of this initiative are to allow coaches to focus on safety promotion by transferring line supervision duties to the mine overseers (whose technical expertise will be available to blasting crews) and changing the compensation structure so that coaches will not receive incentive compensation based on production levels. In addition, coaches spend the entire eight-hour working shift underground with the mining team, in contrast with the four hours shift bosses typically spent with the mining team. Harmony believes that this initiative will promote a safe production environment for the blasting crew and enhance career development for previously disadvantaged individuals; however, because this is a new initiative, no assurance can be given that it will succeed in meeting these goals.

Harmony’s Mining Operations

In South Africa, Harmony and its subsidiaries (excluding the Free Gold Company) conduct underground mining at four sites—Elandskraal, the Free State, Randfontein and Evander—and surface mining at five sites—Elandskraal, the Free State, Randfontein, Evander and Kalgold. The Free Gold Company (in which Harmony has a 50% interest) conducts underground and surface mining at the Free Gold assets. Harmony conducts surface mining through open cast methods at Kalgold. Surface mining conducted at the South African operations other than Kalgold involves recovering gold from areas previously involved in mining and processing, such as metallurgical plants, waste rock dumps and tailings dams (slimes and sand). Harmony has also conducted open cast mining at Randfontein, but these open cast operations were downscaled and discontinued in the six months ended December 31, 2001 because the open cast mine had reached the end of its useful life.

In Australia, Harmony and its subsidiaries conduct underground and surface mining at three sites – the Big Bell operations (which were acquired in the New Hampton transaction), the Mt. Magnet operations (which were acquired in the Hill 50 transaction) and the South Kalgoorlie operations (which include the Jubilee operations acquired in the New Hampton transaction and the New Celebration operations acquired in the Hill 50 transaction). Underground and surface mining is conducted at each of these operations, with underground access through one decline at Big Bell, two declines at Mt. Magnet and one decline at South Kalgoorlie and surface access principally through open pits.

South African Underground Operations

The following chart details the operating and production results from underground operations in South Africa for the past three fiscal years:



	Fiscal year ended June 30,

	2002¹		2001²		2000³

Production
Tons (‘000)		13,368		13,603		10,324
Recovered grade (ounces/ton)		0.149		0.140		0.148
Gold sold (ounces)		1,988,320		1,903,766		1,530,180
Results of operations ($)
Product sales (‘000)		567,006		521,523		444,418
Cash cost (‘000)		384,434		441,400		377,047
Cash profit (‘000)		182,607		80,123		67,371
Cash costs
Per ounce of gold ($)		193		232		246

¹		Excludes Harmony’s interest in gold sales by the Free Gold Company.
²		Includes Elandskraal’s gold sales for three months from April 1, 2001.
³		Includes Randfontein’s gold sales for four months from March 1, 2000.

Given the relative significance of surface production as a proportion of total production at the Elandskraal operations, Harmony began to segment the Elandskraal operations into underground and surface production in the quarter ended December 31, 2001. The historic figures presented above have been adjusted to reflect this segmentation in all prior periods.

Tons milled from underground operations in South Africa decreased to 13,368,000 in fiscal 2002, compared with 13,603,000 in fiscal 2001, due to lower production at the Randfontein and Free State operations following the closure of Randfontein’s shaft 4, the closure of the Free State’s Harmony 4 and Virginia 2 shafts and the suspension of mining at the Free State’s Brand 2 shaft. See “—Randfontein Operations” and “—Free State Operations” below. This decrease was partially offset by inclusion of Elandskraal underground operations for the full fiscal year. Recovered grade increased 6.4% in fiscal 2002, compared with fiscal 2001, due primarily to improved recovered grades at the underground operations of Free State and Randfontein, and inclusion of the higher-grade Elandskraal underground operations for a full year.

Cash costs for underground operations in South Africa were $193 per ounce of gold in fiscal 2002, compared with $232 in fiscal 2001. This decrease was attributable primarily to the depreciation of the Rand against the U.S. dollar, which caused a significant reduction when these costs were translated into U.S. dollars. See “Operating and Financial Review and Prospects—Exchange Rates.” If expressed in Rand terms, costs per ounce would have increased in fiscal 2002, due primarily to the inclusion of relatively higher-cost production from the Elandskraal operations and increases in the costs of labor and supplies due to the implementation of collective bargaining agreements and the effect of inflation on supply contracts.

South African Surface Operations

The following chart details the operating and production results from Harmony’s surface operations in South Africa for the past three fiscal years (with historic figures adjusted to reflect the segmentation of the Elandskraal operations described above):



	Fiscal year ended June 30,

	2002¹		2001²		2000³

Production
Tons (‘000)		4,198		3,732		2,773
Recovered grade (ounces/ton)		0.033		0.037		0.035
Gold sold (ounces)		138,882		136,319		95,745
Results of operations ($)
Product sales (‘000)		40,034		36,987		27,700
Cash cost (‘000)		24,037		32,355		22,100
Cash profit (‘000)		16,003		4,632		5,600
Cash costs
Per ounce of gold ($)		173		237		231

¹		Excludes Harmony’s interest in gold sales by the Free Gold Company.
²		Includes Elandskraal’s gold sales for three months from April 1, 2001.
³		Includes Randfontein’s gold sales for four months from March 1, 2000 and Kalgold’s gold sales for nine months from October 1, 1999.

The amount of gold sold from surface operations in South Africa increased in fiscal 2002, due primarily to the inclusion of surface results from Elandskraal for a full fiscal year, the improved recovered grades from Kalgold’s surface sources and the treatment of Free State surface sources during the year. These factors more than offset decreased production from Randfontein surface sources as a result of the closure of Randfontein’s open pit. The amount of gold sold from surface operations increased in fiscal 2001, due primarily to the inclusion of Randfontein’s results for a full fiscal year. During fiscal 2000, Harmony produced additional ounces of surface gold as a result of the acquisition of Kalgold and Randfontein.

In addition, in light of the higher prevailing market price for gold in fiscal 2002, and in order to maximize use of the Free State plants, Harmony began processing materials from secondary surface sources, primarily waste rock dumps and tailings dams (slimes and sand), at the Free State operations in the quarter ended March 31, 2002. This production is included in South African surface operations for the March 31, 2002 quarter and all subsequent periods.

Tons milled from surface operations in South Africa were 4,198,000 in fiscal 2002, compared with 3,732,000 in fiscal 2001. This increase was primarily due to the inclusion of surface operations at Elandskraal and increased production at Kalgold, which more than offset a decrease in tons milled and ounces sold from Randfontein’s surface operations in connection with the closure of Randfontein’s open cast mine. Recovered grade from surface operations in South Africa was 0.033 in fiscal 2002, compared with 0.037 in fiscal 2001 as a result of lower grade surface sources being treated at Randfontein and the closure of the Randfontein open pit.

Cash costs for surface operations in South Africa were $173 per ounce of gold in fiscal 2002, compared with $237 in fiscal 2001. This decrease was attributable primarily to the depreciation of the Rand against the U.S. dollar, which caused a significant reduction when these costs were translated into U.S. dollars. See “Operating and Financial Review and Prospects—Exchange Rates.” If expressed in Rand terms, costs per ounce would have increased in fiscal 2002, due primarily to the inclusion of relatively higher-cost production from the Elandskraal operations, the reduction of relatively lower-cost

surface operations at Randfontein and increases in the costs of labor and supplies due to the implementation of collective bargaining agreements and the effect of inflation on supply contracts.

Australian Operations

Harmony conducts its Australian operations through two recently acquired Australian gold mining companies: New Hampton, acquired with effect from April 1, 2001, and Hill 50, acquired with effect from April 1, 2002. The following chart details the operating and production results from Harmony’s Australian operations for the past two fiscal years:



	Fiscal year ended June 30,

	2002¹		2001²

Production
Tons (‘000)		5,273		1,200
Recovered grade (ounces/ton)		0.048		0.048
Gold sold (ounces)		252,993		55,653