##### Table of Contents

**As filed with the Securities and Exchange Commission on October 24, 2011**

 

 

 

**UNITED STATES SECURITIES ANDEXCHANGE COMMISSION**

**WASHINGTON, D.C. 20549**

**FORM 20-F**

(Mark One) 

 

**OR**

 

**For the fiscal year ended June 30, 2011**

**OR**

 

**OR**

 

**Date of event requiring this shell company report**

**For the transition period from          to             **

**Commission file number: 001 — 31545**

**HARMONY GOLD MINING COMPANY LIMITED**

*(Exact name of registrant asspecified in its charter)*

**REPUBLIC OF SOUTH AFRICA**

*(Jurisdiction of incorporation or organization)*

**RANDFONTEIN OFFICE PARK, CNR WARD AVENUE AND MAIN REEF ROAD,**

**RANDFONTEIN, SOUTH AFRICA, 1760**

*(Address of principal executive offices)*

Marian van der Walt, Executive:Corporate and Investor Relations 

tel: +27 11 411 2037, marian@harmony.co.za, fax: +27 866 140 999, 

Randfontein Office Park, CNR Ward Avenue and Main Reef Road, Randfontein, South Africa, 1760 

*(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person*) 

Securities registered or to be registered pursuant to Section 12(b) of the Act: 

Ordinary shares, with nominal value Rand 50 cents per share* 

*(Title of Class)*

American Depositary Shares (as evidenced by AmericanDepositary Receipts), 

each representing one ordinary share 

*(Title of Class)*

Securities registered or to be registered pursuant to Section 12(g) of the Act: 

Securitiesfor which there is a reporting obligation pursuant to Section 15(d) of the Act: None 

The number of outstanding shares of each of theissuer’s classes of capital or common stock as of the close of the last full fiscal year covered by this Annual Report was: 

430,084,628 ordinary shares, with nominal value of Rand 50 cents per share 

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

YES  þ    NO   ̈

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or15(d) of the Securities Exchange Act of 1934. 

YES   ̈    NO  þ

Indicate by check mark whether the registrant (1) has filed all reports required to befiled by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements forthe past 90 days: 

YES   þ    NO   ̈

Indicate by check mark whether the registrant has submitted electronically and posted on itscorporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post suchfiles). 

YES   ̈    NO   ̈

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

 

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

 

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

Item 17   ̈    Item 18  þ

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

YES   ̈    NO  þ

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

YES  þ    NO   ̈

 

 

 

 

 

Table of Contents
**TABLE OF CONTENTS**

 

**Part I**
  3  **Item 1**. Identity of Directors, Senior Management and Advisors   3  **Item 2**. Offer Statistics and Expected Timetable   3  **Item 3**. Key Information   4  **Item 4**. Information on the Company   20  **Item 4A**. Unresolved Staff Comments   88  **Item 5**. Operating and Financial Review and Prospects   89  **Item 6**. Directors, Senior Management and Employees   111  **Item 7**. Major Shareholders and Related Party Transactions   119  **Item 8**. Financial Information   121  **Item 9**. The Offer and Listing   122  **Item 10**. Additional Information   124  **Item 11**. Quantitative and Qualitative Disclosures About Market Risk   140  **Item 12**. Description of Securities Other than Equity Securities   142  **Part II**  148  **Item 13.**Defaults, Dividend Arrearages and Delinquencies   148  **Item 14**. Material Modifications to the Rights of Security and Use of Proceeds   148  **Item 15**. Disclosure Controls and Procedures   149  **Item 16A**. Audit Committee Financial Expert   150  **Item 16B**. Code of Ethics   150  **Item 16C**. Principal Accountant Fees and Services   150  **Item 16D**. Exemptions from Listing Standards for Audit Committees   151  **Item 16E**. Purchases of Equity Securities by the Issuer and Affiliated Purchasers   151  **Item 16F**. Change in Registrant’s Certifying Accountant   151  **Item 16G**. Corporate Governance   151  **Part III**  152  **Item 17**. Financial Statements   152  **Item 18**. Financial Statements   152  **Item 19**. Exhibits   152  **SIGNATURE** **INDEX TO FINANCIAL STATEMENTS**  F-1  
 
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**USE OF TERMS AND CONVENTIONS IN THIS ANNUAL REPORT**

Harmony Gold Mining Company Limited is a corporation organized under the laws of the Republic of South Africa. As used in this AnnualReport on Form 20-F, or this annual report, unless the context otherwise requires, the term “**Harmony**” refers to Harmony Gold Mining Company Limited; the term “**South Africa**” refers to the Republic of South Africa;the terms “**we**”, “**us**” and “**our**” refer to Harmony and, as applicable, its direct and indirect subsidiaries as a “**Group**”. 

In this annual report, references to “**R**”, “**Rand**” and “**c**”, “**cents**” areto the South African Rand, the lawful currency of South Africa, “**A$**” refers to Australian dollars, “**K**” or “**Kina**” refers to Papua New Guinean Kina and references to “**$**”,“**US$**” and “**U.S. dollars**” are to United States dollars. 

This annual report containsinformation concerning our gold reserves. While this annual report has been prepared in accordance with the regulations contained in Securities and Exchange Commission Guide 7, it is based on assumptions which may prove to be incorrect. See*Item 3. “Key Information — Risk Factors — Estimations of Harmony’s gold reserve figures are based on a number of assumptions, including mining and recovery factors, future cash costs or production and the price of gold.As a result, quantities of gold produced may differ from current estimates.”*

This annual report contains descriptionsof gold mining and the gold mining industry, including descriptions of geological formations and mining processes. We have explained some of these terms in the Glossary of Mining Terms included at the end of this annual report. This glossary mayassist you in understanding these terms. 

**PRESENTATION OF FINANCIAL INFORMATION**

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

In this annual report, we also present “cash operating costs”and “cash operating costs per ounce”, which are non-GAAP measures. An investor should not consider these items in isolation or as alternatives to production costs, cost of sales or any other measure of financial performance presented inaccordance with IFRS. The calculation of cash operating costs, and cash operating costs per ounce may vary significantly among gold mining companies and, by themselves, do not necessarily provide a basis for comparison with other gold miningcompanies. For further information, see *Item 5*. “*Operating and Financial Review and Prospects — Costs — Reconciliation of Non-GAAP Measures*”. 

We have included the U.S. dollar equivalent amounts of certain information and transactions in Rand, Kina and A$. Unless otherwise stated,we have translated (i) balance sheet items at the closing rate as reported by Reuters on the last business day of the period (R6.78 per US$1.00 as at June 30, 2011 and R7.63 per US$1.00 as at June 30, 2010), (ii) acquisitions,disposals and specific items included within equity at the rate prevailing at the date the transaction was entered into and (iii) income statement items at the average rate for the year (R6.99 per US$1.00 as at June 30, 2011, R7.58 perUS$1.00 as at June 30, 2010 and R9.00 per US$1.00 for fiscal 2009). Capital expenditures for fiscal 2012 have been translated at the rates used for balance sheet items at June 30, 2011. By including these U.S. dollar equivalents in thisannual report, we are not representing that the Rand, Kina and A$ amounts actually represent the U.S. dollar amounts, as the case may be, or that these amounts could be converted at the rates indicated. For further information, see *Item 3.“Key Information — Exchange Rates”*. 

 
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**FORWARD-LOOKING STATEMENTS**

This annual report contains forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 with respect to our financial condition, results ofoperations, business strategies, operating efficiencies, competitive positions, growth opportunities for existing services, plans and objectives of management, markets for stock and other matters. These include all statements other than statementsof historical fact, including, without limitation, any statements preceded by, followed by, or that include the words “targets”, “believes”, “expects”, “aims” “intends” “will”,“may”, “anticipates”, “would”, “could” or similar expressions or the negative thereof. In particular, among other statements, certain statements in *Item 4. “Information on the Company,”Item 5. “Operating and Financial Review and Prospects”*and *Item 11. “Quantitative and Qualitative Disclosures About Market Risk”*are forward-looking in nature. Statements in this annual report that are nothistorical facts are “forward-looking statements” for the purpose of the safe harbor provided by Section 21E of the Securities Exchange Act of 1934, as amended (the “**Exchange Act**”), and Section 27A of theSecurities Act of 1933, as amended. 

These forward-looking statements, including, among others, those relating to our futurebusiness prospects, revenues and income, wherever they may occur in this annual report and the exhibits to this annual report, are necessarily estimates reflecting the best judgment of our senior management and involve a number of risks anduncertainties that could cause actual results to differ materially from those suggested by the forward-looking statements. As a consequence, these forward-looking statements should be considered in light of various important factors, including thoseset forth in this annual report. Important factors that could cause actual results to differ materially from estimates or projections contained in the forward-looking statements include, without limitation: 

 
 • 
****overall economic and business conditions in South Africa and elsewhere; 

 
 • 
****the ability to achieve anticipated efficiencies and other cost savings in connection with past and future acquisitions;

 
 • 
****fluctuations in the market price of gold; 

 
 • 
****the occurrence of hazards associated with underground and surface gold mining; 

 
 • 
****the occurrence of labor disruptions; 

 
 • 
****availability, terms and deployment of capital; 

 
 • 
****changes in government regulation, particularly mining rights and environmental regulation; 

 
 • 
****fluctuations in exchange rates; 

 
 • 
****currency devaluations/appreciations and other macroeconomic monetary policies; and 

 
 • 
****socio-economic instability in South Africa and other countries in which we operate. 

We undertake no obligation to update publicly or release any revisions to these forward-looking statements to reflect events orcircumstances after the date of this annual report or to reflect the occurrence of unanticipated events. 

**PART I**

**Item 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS**

Not applicable. 

**Item 2. OFFER STATISTICS AND EXPECTED TIMETABLE**

Not applicable. 

 
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**Item 3. KEY INFORMATION**

**SELECTED FINANCIAL DATA**

*The selected consolidated financial data below should be read in conjunction with, and are qualified in their entirety by reference to,our consolidated financial statements and the notes thereto and with Item 3. “Key Information — Risk Factors”, Item 5. “Operating and Financial Review and Prospects”, all included elsewhere in this annual report.Historical results are not necessarily indicative of results to be expected for any future period.*

**SELECTED HISTORICAL CONSOLIDATEDFINANCIAL DATA**

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

The selected historical consolidated income statement and balance sheet data for the last five fiscal years are, unless otherwise noted,stated in accordance with IFRS, and has been extracted from the more detailed information and financial statements prepared in accordance with IFRS, including our audited consolidated financial statements as of June 30, 2011 and 2010 and foreach of the years in the three years ended June 30, 2011 and the related notes, which appear elsewhere in this annual report. The historical consolidated financial data at June 30, 2009, 2008 and 2007, and for each of the years in the twoyears ended June 30, 2008, has been extracted from our audited consolidated financial statements not included in this annual report as adjusted for discontinued operations and the accounting changes described below. 

During fiscal 2008, we early adopted IAS 23 (Revised) — Borrowing Costs. In accordance with the Revised Standard’s transitionalprovisions, we designated July 1, 2000 as the effective date and applied the requirements of the Revised Standard to all qualifying projects for which the commencement date of capitalization was on or after that date. The effect of this changeon the 2007 year has been included in the selected consolidated information below. 

Discontinued operations for the periodsbelow include our Cooke and Orkney operations in South Africa, as well as our South Kalgoorlie and Mount Magnet operations in Australia, up to the date of their disposal. The assets and liabilities of the Cooke operation were first classified asheld for sale in fiscal 2008 and the results of this operation presented as discontinued operations until the time of its disposal to Rand Uranium (Proprietary) Limited (“**Rand Uranium**”) in November 2008. The assets and liabilitiesof the Orkney and Australia’s South Kalgoorlie operations were first classified as held for sale in fiscal 2007, and the results of these operations reflected as discontinued operations in anticipation of their disposal in fiscal 2008. Infiscal 2010, Australia’s Mount Magnet operations were classified as held for sale and the results of the Mount Magnet operation presented as discontinued operations when an agreement for its disposal to Ramelius Resources Limited(“**Ramelius**”) was concluded. The reclassifications in respect of discontinued operations were done in terms of IFRS 5 — Non-Current Assets Held for Sale and Discontinued Operations. See note 16 of the consolidated financialstatements and *Item 4*. “*Information on the Company — Business — Mount Magnet Operations*”, *Item 4*. “*Information on the Company — Business — Cooke Operations*”. 

 
4 

Table of Contents  **Fiscal year ended June 30,**   **2011**  **2010**  **2009**  **2008**  **2007**   **($ in millions, except per share amounts and cash operating costs per ounce)** 
**Income Statement Data**
     
Revenue
  1,781    1,489    1,277    1,269    1,116  
Operating profit
  4    22    236    73    154  
(Loss)/profit from associates
  (7)   7    1    (11)   (3) 
Profit from continuing operations before taxation
  14    24    238    (39)   156  
Taxation
  69    (44)   (22)   (65)   (39) 
Profit/(loss) from continuing operations
  83    (20)   216    (104)   117  
Profit/(loss) from discontinued operations
  3    (4)   95    74    (66) 
Net profit/(loss)
  86    (24)   311    (30)   51  
Basic earnings/(loss) per share from continuing operations ($)
  0.19    (0.05)   0.52    (0.26)   0.29  
Diluted earnings/(loss) per share from continuing operations ($)
  0.19    (0.05)   0.51    (0.26)   0.29  
Basic earnings/(loss) per share ($)
  0.20    (0.06)   0.75    (0.08)   0.12  
Diluted earnings/(loss) per share ($)
  0.20    (0.06)   0.74    (0.08)   0.12  
Weighted average number of shares used in the computation of basic earnings/(loss) per share
  429,310,123    426,381,581    414,120,732    400,750,167    397,910,797  
Weighted average number of shares used in the computation of diluted earnings/(loss) per share
  430,420,068    427,846,547    415,962,899    402,894,248    402,382,011  
Dividends per share ($)(1)
  0.07    0.06    —    —    —  
Dividends per share (R)(1)
  0.50    0.50    —    —    —  
**Other Financial Data**
     
Cash operating cost per ounce of gold from continuing operations ($/oz)(2)
  1,009    801    583    600    484  
Total cash operating cost per ounce of gold ($/oz) (2)
  1,009    801    586    602    489  
**Balance Sheet Data**
     
*Assets*
     
Property, plant and equipment
  4,607    3,874    3,614    3,531    3,484  
Assets of disposal groups classified as held for sale
  40    32    —    197    182  
Total assets
  5,880    5,141    4,925    4,710    5,160  
Net assets
  4,450    3,828    3,824    3,172    3,366  
*Equity and liabilities*
     
Share capital
  4,033    4,027    4,004    3,787    3,752  
Total equity
  4,450    3,828    3,824    3,172    3,366  
Borrowings (current and non-current)
  230    156    47    525    653  
Liabilities of disposal groups held for sale
  2    18    —    64    77  
Other liabilities
  1,198    1,139    1,054    949    1,064  
Total equity and liabilities
  5,880    5,141    4,925    4,710    5,160  
 

 
(1) 
Dividends per share relates to the dividends recorded and paid during the fiscal year. 

 
(2) 
Cash operating costs is a non-GAAP measure. We calculate cash operating costs per ounce by dividing total cash operating costs by gold produced whichtherefore excludes the effect of the movement in the gold inventory from the cash operating cost amount. Cash operating costs, include mine production costs, transport and refinery costs, applicable general and administrative costs, ongoingenvironmental rehabilitation costs as well as transfers to and from deferred stripping and costs associated with royalties. Ongoing employee termination costs are included; however, employee termination costs associated with major restructuring andshaft closures are excluded. Cash operating costs have been calculated on a consistent basis for all periods presented. Changes in cash operating costs per ounce are affected by operational performance, as well as changes in the currency exchangerate between the Rand and the U.S. dollar. Because cash operating costs is a non-GAAP measure, it should therefore not be considered by investors in isolation or as an alternative to production costs, cost of sales, or any other measure of financialperformance calculated in accordance with IFRS. The calculation of cash operating costs and cash operating cost per ounce may vary from company to company and may not be comparable to other similarly titled measures of other companies. However, webelieve that cash operating costs per ounce is a useful indicator to investors and management of a mining company’s performance as it provides (1) an indication of the cash generating capacities of the mining operations, (2) thetrends in cash operating costs as the company’s operations mature, (3) a measure of a company’s performance, by comparison of cash operating costs per ounce to the spot price of gold and (4) an internal benchmark of performanceto allow for comparison against other companies. For further information, see *Item 5. “Operating and Financial Review and Prospects — Costs — Reconciliation of non-GAAP measures”.*

**EXCHANGE RATES**

Unless otherwise stated, balance sheet item amounts are translated from Rand to U.S. dollars at the exchange rate prevailing on the last business day of the period (R6.78 per US$1.00 as at June 30,2011), except for acquisitions, disposals and specific items included within equity that are converted at the exchange rate prevailing on the date the transaction was entered into, and income statement

 
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item amounts that are translated from Rand to U.S. dollars at the average exchange rate for the period (R6.99 per US$1.00 for fiscal 2011). During the year, the Rand/dollar closing exchange rateranged between R6.57 and R7.75 per US$1.00. 

As of October 17, 2011, the exchange rate per US$1.00 wasR7.99. **(1)**

The following table sets forth, for the past five fiscal years, theaverage and period end rates for Rand expressed in Rand per US$1.00. For periods prior to December 31, 2008, the following tables express the exchange rates in terms of the noon buying rate in New York City for cable transfers in Rand ascertified for customs purposes by the Federal Reserve Bank of New York. As of December 31, 2008, the Federal Reserve Bank ceased publication of the noon buying rate and, as such, the exchange rates for fiscal 2009, 2010 and 2011 are sourcedfrom Reuters, being the closing rate at period end. 

 

**Fiscal Year Ended**

**June 30,**
 **    Average(1)    ** **    Period End    **
2007
 7.20(2) 7.04
2008
 7.26(2) 7.80
2009
 9.00(3) 7.72
2010
 7.58(3) 7.63
2011
 6.99(3) 6.78
**Month of**
 **High** **Low**
May 2011
 7.03 6.59
June 2011
 6.88 6.69
July 2011
 6.99 6.63
August 2011
 7.26 6.68
September 2011
 6.98 8.27
October 2011 (through October 17, 2011)
 8.28 7.83
 

 
(1)Based on the interbank rate as reported by Reuters. 
 
(2)The average of the noon buying rates on the last day of each full month during the relevant period as certified for customs purposes by the Federal Reserve Bank of NewYork. 
 
(3)The daily average of the closing rate during the relevant period as reported by Reuters. 
Fluctuations in the exchange rate between Rand and the U.S. dollar will affect the dollar equivalent of the price of ordinary shares onthe Johannesburg Stock Exchange, which may affect the market price of the American Depositary Shares (“**ADSs**”) on the New York Stock Exchange. These fluctuations will also affect the dollar amounts received by owners of ADSs on theconversion of any dividends on ordinary shares paid in Rand. 

 
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**CAPITALIZATION AND INDEBTEDNESS**

Not applicable. 

**REASONS FOR THE OFFER AND USE OF PROCEEDS**

Not applicable. 

**RISK FACTORS**

*In addition to the other information included in this annual report and the exhibits, you should also carefully consider the followingfactors related to our ordinary shares and ADSs. There may be additional risks that we do not currently know of or that we currently deem immaterial based on information currently available to us. Although Harmony has a formal risk policy frameworkin place, the maintenance and development of which is undertaken on an ongoing basis so as to help management address systematic categories of risk associated with its business operations, any of these risks could have a material adverse effect onour business, financial condition or results of operations, leading to a decline in the trading price of our ordinary shares or our ADSs. The risks described below may, in retrospect, turn out to be incomplete and therefore may not be the only risksto which we are exposed. Additional risks and uncertainties not presently known to us or that we now believe are immaterial (and have therefore not been included), could also adversely affect our businesses, results of operations or financialcondition. The order of presentation of the risk factors below does not indicate the likelihood of their occurrence or the magnitude or the significance of the individual risks. The risks described below could occur individually or cumulatively andintensify in case of a cumulative occurrence.*

**Risks Relating to Our Business and the Gold Mining Industry**

***The profitability of our operations, and cash flows generated by those operations, are affected by changes in the price of gold. Afall in the gold price below our cash cost of production for any sustained period may lead to losses and require Harmony to curtail or suspend certain operations.***

Substantially all Harmony’s revenues come from the sale of gold. Although the gold price has increased over the last decade, historically, the market price for gold has fluctuated widely and beenaffected by numerous factors over which Harmony has no control, including: 

 
 • 
demand for gold for industrial uses, jewellery and investment; 

 
 • 
international or regional political and economic trends; 

 
 • 
strength or weakness of the US dollar (the currency in which gold prices generally are quoted) and of other currencies; 

 
 • 
financial market expectations on the rate of inflation; 

 
 • 
interest rates; 

 
 • 
speculative activities; 

 
 • 
forward sales by gold producers; 

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

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

In addition, current demand and supply affects the price of gold, but not necessarily in the same manner ascurrent demand and supply affect the prices of other commodities. Historically, gold has retained its value in relative terms against basic goods in times of inflation and monetary crisis. As a result, central banks, financial institutions andindividuals 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 givenyear, normal variations in current production will not necessarily have a significant effect on the supply of gold or its price. 

 
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The volatility of gold prices is illustrated in the table, which shows the annual high, lowand average of the afternoon London bullion market fixing price of gold in US dollars for the past ten years: 

**Annual gold price: 2001–2011**

 
   **Price per ounce (US$)** **Calendar year**  **High**   **Low**   **Average** 
2001
   293     256     271  
2002
   332     278     309  
2003
   412     322     361  
2004
   427     343     389  
2005
   476     411     434  
2006
   725     525     604  
2007
   841     608     695  
2008
   1,011     713     872  
2009
   1,212     810     972  
2010
   1,421     1,058     1,225  
2011 (year to October 17, 2011)
   1,990     1,314     1,541  
On October 17, 2011, the afternoon fixing price of gold on the London bullion market was US$1,682/oz.

While the aggregate effect of these factors is impossible to predict, if gold prices should fall below Harmony’s cashcost of production and capital expenditure required to sustain production and remain at these levels for any sustained period, Harmony may record losses and be forced to curtail or suspend some or all of its operations. In addition, Harmony wouldalso have to assess the economic impact of low gold prices on its ability to recover any losses that may be incurred during that period and on its ability to maintain adequate reserves. 

Harmony’s average cash cost per ounce of gold produced from continuing operations was US$1,009 in fiscal 2011, US$801 in fiscal 2010and US$583 in fiscal 2009. 

***Foreign exchange fluctuations could have a material adverse effect on Harmony’s operational results andfinancial condition.***

Gold is priced throughout the world in US dollars and, as a result, Harmony’s revenue isrealized in US dollars, but most of our operating costs are incurred in Rand and other non-US currencies, including the Australian dollar and Kina. Any significant and sustained appreciation of the Rand and other non-US currencies against the dollarwill materially reduce Harmony’s Rand revenues and overall net income. 

***As Harmony currently does not enter into forward sales,commodity derivatives or hedging arrangements on future gold production, it is exposed to the impact of any significant decreases in the gold price.***

As a rule, Harmony sells its gold at the prevailing market price. Currently, the company does not enter into forward sales, commodity derivative or hedging arrangements to establish a price in advance forthe sale of future gold production, although Harmony may do so in future. As a result, Harmony may realize the benefit of any short-term increase in the gold price, but is not protected against decreases; if the gold price should decreasesignificantly, Harmony’s revenues may be materially adversely affected. 

***Global economic conditions could adversely affect theprofitability of Harmony’s operations.***

Harmony’s operations and performance depend on global economicconditions. A global economic downturn may have follow-on effects on our business. These could include: 

 
 • 
key suppliers could become insolvent, resulting in a break-down in the supply chain; or 

 
 • 
the availability of credit may be reduced — this may make it more difficult for Harmony to obtain financing for its operations and capitalexpenditure or make financing more expensive. 

In addition, uncertainty on global economic conditions mayalso increase volatility or negatively impact the market value of Harmony’s securities. 

 
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***Estimations of Harmony’s gold reserves are based on a number of assumptions, including mining andrecovery factors, future cash costs of production and the price of gold. As a result, quantities of gold produced may differ from current estimates.***

The mineral reserve estimates in this annual report are estimates of the mill-delivered quantity and grade of gold in Harmony’s deposits and stockpiles. They represent the amount of gold that Harmonybelieves can be mined, processed and sold at prices sufficient to recover its estimated future cash costs of production, remaining investment and anticipated additional capital expenditures. Harmony’s mineral reserves are estimated based on anumber of factors, which have been stated in accordance with the SAMREC and JORC codes, SEC Industry Guide 7 and Sarbanes-Oxley. Calculations of Harmony’s mineral reserves are based on estimates of: 

 
 • 
future cash costs; 

 
 • 
future gold prices; and 

 
 • 
future currency exchange rates. 

These factors, which significantly impact mineral reserve estimates, are beyond Harmony’s control. As a result, reserve estimates in this annual report should not be interpreted as assurances of theeconomic life of Harmony’s gold and other precious metal deposits or the future profitability of operations. 

Since thesemineral reserves are estimates based on assumptions related to factors detailed above, should there be changes to these, we may in future need to revise these estimates. In particular, if Harmony’s cash operating and production costs increaseor the gold price decreases, recovering a portion of Harmony’s mineral reserves may become uneconomical. This will lead, in turn, to a reduction in estimated reserves. 

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

Harmony’s operations have limited proved and probable reserves, and explorationand discovery are necessary to maintain current gold production levels at these operations. Exploration for gold and other precious metals is speculative in nature, may be unsuccessful and involves many risks, including those related to: 

 
 • 
locating orebodies; 

 
 • 
geological nature of the 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 resultin an increase in proved and probable reserves. To access additional reserves, Harmony will need to successfully complete development projects, including extensions to existing mines and, possibly, new mines. Development projects would also berequired to access any new mineralization discovered by exploration activities around the world. Harmony typically uses feasibility studies to determine whether to undertake significant development projects. Feasibility studies include estimates ofexpected or anticipated economic returns, which are based on assumptions about: 

 
 • 
future gold and other metal prices; 

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

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

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

 
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***Actual cash costs, capital expenditure, production and economic returns may differ significantly fromthose anticipated by feasibility studies for new development projects.***

It can take a number of years from the initialfeasibility study until development is completed and, during that time, the economic feasibility of production may change. In addition, there are a number of inherent uncertainties in developing and constructing an extension to an existing mine orany new mine, including: 

 
 • 
availability and timing of necessary environmental and governmental permits; 

 
 • 
timing and cost of constructing mining and processing facilities, which can be considerable; 

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

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

 
 • 
availability and cost of smelting and refining arrangements; 

 
 • 
availability of funds to finance construction and development activities; and 

 
 • 
spot and expected future commodity prices of metals including gold, silver, copper, uranium and molybdenum. 

Harmony currently maintains a range of focused exploration programs, concentrating on areas not too distant from its operational mines, aswell as a number of prospective known gold mineralized regions around the world. During fiscal 2010 and fiscal 2011, the bulk of exploration expenditure was allocated to activities in Papua New Guinea (“**PNG**”) and South Africa.However, there is no assurance that any future development projects will extend the life of our existing mining operations or result in any new commercial mining operations. 

***Costs associated with pumping water inflows from closed mines adjacent to our operations could adversely affect Harmony’s operational results.***

Certain of our mining operations are adjacent to the mining operations of other companies. A mine closure can affect continued operationsat an adjacent mine if appropriate preventative steps are not taken. In particular, this could include the ingress of underground water when pumping operations at the closed mine are suspended. This can result in damage to property, operationaldisruptions and additional pumping costs, which would adversely affect any one of our adjacent mining operations. 

***Fluctuations in inputproduction prices linked to commodities may adversely affect Harmony’s operational results and financial condition.***

Fuel, energy and consumables, including diesel, heavy fuel oil, chemical reagent, explosives, tyres, steel and mining equipment consumedin mining operations form a relatively large part of the operating costs and capital expenditure of a mining company. Harmony has no control over the costs of these consumables, many of which are linked to some degree to the price of oil and steel.

Fluctuations in oil and steel prices have a significant impact on operating cost and capital expenditure estimates and, in theabsence of other economic fluctuations, could result in significant changes in the total expenditure estimates for new mining projects or render certain projects non-viable. 

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

In South Africa, each of our mining operations depends on electrical power generated by the state utility, Eskom, which holds a monopolyon the South African market. As a result of increased demand exceeding available generating capacity, South Africa has been subject to disruptions in electrical power supply. In fiscal 2008, electricity supply was interrupted by Eskom, haltingproduction at certain of our mines. This led to management restructuring operating processes to control and reduce our consumption of electricity at all our operations. There have been no further disruptions and we have been able to continueproduction at a reduced electricity allocation as required by the energy conservation scheme (“**ECS**”) and interim rules imposed by Eskom. However, an insufficient supply of electricity may affect our operational results and financialcondition. 

As a result of Eskom’s planned capital expansion program to deal with power constraints, an average annualtariff increase of 25% for the three-year multi-year price determination period has been approved by the National Energy Regulator South Africa (“**NERSA**”). The first increase was implemented on 1 April 2010. These increases willhave a negative impact on our results of operations going forward. 

 
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PNG has limited power generation and distribution capacity. This capacity is increasing but,currently, Harmony mines and projects still rely heavily on own power generation using diesel. The cost of this power will fluctuate with changes in the oil price. 

Also, see *Item 5. “Electricity in South Africa.”*

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

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

 
 • 
****our ability to identify appropriate assets for acquisition and/or to negotiate acquisitions on favorable terms; 

 
 • 
****obtaining the financing necessary to complete future acquisitions; 

 
 • 
****difficulties in assimilating the operations of the acquired business; 

 
 • 
****difficulties in maintaining our financial and strategic focus while integrating the acquired business; 

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

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

 
 • 
****to the extent we acquire mining operations outside South Africa or Australasia, encountering difficulties relating to operating in countries inwhich we have not previously operated. 

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

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

Harmony reviews and tests the carrying value of its assets when events or changes in circumstances suggest that this amount may not berecoverable. 

At least on an annual basis for goodwill, and when there are indications that impairment of property, plant andequipment and other assets may have occurred, estimates of expected future cash flows for each group of assets are prepared. These estimates are prepared at the lowest level at which identifiable cash flows are considered as being independent of thecash flows of other mining assets and liabilities. Expected future cash flows are inherently uncertain, and could materially change over time. Such cash flows are significantly affected by reserve and production estimates, together with economicfactors such as spot and forward gold prices, discount rates, currency exchange rates, estimates of costs to produce reserves and future capital expenditures. 

As at 30 June 2011, Harmony had substantial amounts of property, plant and equipment, goodwill and other assets on its consolidated balance sheets. Impairment charges relating to these assets wererecorded and if any one or a combination of these uncertainties should occur, management may be required to recognize further impairment charges, which could affect Harmony’s financial results and condition. 

***Given the nature of mining and the type of gold mines we operate, we face a material risk of liability, delays and increased cash costs ofproduction from environmental and industrial accidents and pollution.***

The business of gold mining involves significantrisks and hazards, including environmental hazards and industrial accidents. In particular, hazards associated with underground mining include: 

 
 • 
****rock bursts; 

 
 • 
****seismic events; 

 
 • 
****underground fires; 

 
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****cave-ins or falls of ground; 

 
 • 
****discharges of gases and toxic chemicals; 

 
 • 
****release of radioactive hazards; 

 
 • 
****flooding; 

 
 • 
****pillar mining; 

 
 • 
****accidents; and 

 
 • 
****other conditions resulting from drilling, blasting and the removal and processing of material from a deep-level mine.

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

 
 • 
****flooding of the open-pit; 

 
 • 
****collapse of open-pit walls; 

 
 • 
****accidents associated with operating large open-pit and rock transportation equipment; and 

 
 • 
****accidents associated with preparing and igniting 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 caused by weather. 

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

***The nature of our mining operations presents safety risks.***

The environmental and industrial risks identified above also present safety risks for Harmony’s operations and its employees andcould lead to the suspension and potential closure of operations for indeterminate periods. Safety risks, even in situations where no injuries occur, can have a material adverse effect on Harmony’s operations and production. 

See *Item 4.* “*Regulation — Health and Safety Matters*”. 

***Illegal mining, or criminal mining, at our operations could pose a threat to the safety of employees and result in damage to property.***

Security issues related to criminal mining came to the fore in fiscal 2009, when criminal mining activities resultedin the deaths of criminal miners. The threat of fire caused by these activities poses a risk to the safety of our employees and could also result in property damage, which in turn could have an adverse impact on production. 

See *Item 4.* “*Regulation — Health and Safety Matters*”. 

***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 we believe that ourcurrent insurance coverage for the hazards described above is adequate and consistent with industry practice, we may be subject to liability for pollution (excluding sudden and accidental pollution) or other hazards against which we have not insuredor cannot insure, 

 
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including those for past mining activities. Harmony also maintains property and liability insurance consistent with industry practice, but this insurance contains exclusions and limitations oncoverage. In addition, there can be no assurance that insurance will be available at economically acceptable premiums. As a result, in future, Harmony’s insurance coverage may not cover the claims against it for environmental or industrialaccidents or pollution. 

***Harmony’s operations may be negatively impacted by inflation.***

Harmony’s operations have been materially affected by inflation. Inflation in South Africa has fluctuated widely in recent years,reaching 11.6% at the end of fiscal 2008 before decreasing to 6.9% at the end of fiscal 2009 and to 4.2% by the end of fiscal 2010. Levels were flat during fiscal 2011, with the inflation rate increasing slightly to 4.6% at the end of fiscal 2011.However, working costs and wages, especially, have increased in recent years, resulting in significant cost pressures for the mining industry. In addition, electricity prices rose by 25% in fiscal 2010 and fiscal 2011 and are expected to increase bya further 25% in fiscal 2012. 

The inflation rate in PNG has been relatively flat in recent years at around 7%, ending fiscal2011 at 9.6%. Rising fuel and food prices contributed to the result as did the historically low level of the PGK/A$ cross rate which led to imported inflation. While the PNG central bank has implemented measures aimed at addressing inflationarypressure, higher fuel prices, ongoing government spending and rising domestic demand, along with the construction of the LNG plant, are still present and will continue to keep upward pressure on inflation. 

Harmony’s profits and financial condition could be adversely affected when cost inflation is not offset by devaluation in operatingcurrencies or an increase in the price of gold. 

***The socio-economic framework in the regions in which Harmony operates may have anadverse effect on its operations and profits.***

Harmony has operations in South Africa and PNG. As a result, changes orinstability to the economic or political environment in any of these countries or in neighboring countries could affect an investment in Harmony. It is difficult to predict the future political, social and economic direction in these countries, orany other country in which Harmony operates, and the impact government decisions may have on its business. 

***Actual and potentialshortages of production inputs may affect Harmony’s operations and profits.***

Harmony’s operational resultsmay be affected by the availability and pricing of consumables such as fuel, chemical reagents, explosives, steel and other essential production inputs. Issues with regards to availability of consumables may result from shortages as well as longlead times to deliver, which could result in production delays and production shortfalls. These shortages and delayed deliveries may be experienced where industrial action affects Harmony’s suppliers. These issues could also affect the pricingof the consumables, especially if shortages are experienced. The price of consumables may be substantially affected by changes in global supply and demand, along with weather conditions, governmental controls and other factors. A sustainedinterruption to the supply of any of these consumables would require Harmony to find acceptable substitute suppliers and could require it to pay higher prices for such materials. Any significant increase in the prices of these consumables wouldincrease operating costs and affect production considerations. 

***We compete with mining and other companies for key humanresources***. 

Harmony competes with mining and other companies globally to attract and retain key human resources at alllevels with the appropriate technical skills and operating and managerial experience necessary to continue operating its business. The need to recruit, develop and retain skilled employees is particularly critical with historically disadvantagedSouth Africans (“**HDSAs**”), women in mining in South Africa, and recruiting and training local landowners in PNG. The global shortage of key mining skills, including geologists, mining engineers, metallurgists and skilled artisans hasbeen exacerbated by increased mining activity across the globe. Despite various initiatives, there can be no assurance that we will attract and retain skilled and experienced employees. Should Harmony lose any of its key personnel, its business maybe harmed and its operational results and financial condition could be affected. See *Item 6.*“*Employees*”. 

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

Despite a history of constructive engagement with labor unions, there are periods when variousstakeholders are unable to agree on dispute resolution processes. Disruptive activities on the part of labor, which normally differ in intensity, then become unavoidable. Due to the high level of union membership among our employees, we are at riskof production stoppages for indefinite periods due to 

 
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strikes and other disputes. Significant labor disruptions have affected our operations and financial condition before and we are not able to predict whether we will experience significant labordisputes in future. 

South African employment law sets out minimum terms and conditions of employment for employees. Althoughthese may be improved by agreements between us and the trade unions, prescribed minimum terms and conditions form the benchmark for all employment contracts. See *Item 6.*“*Employees*”. 

We are required to submit a report under South African employment law detailing the progress made towards achieving employment equity inthe workplace. If this report is not submitted, we could incur substantial penalties. 

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

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

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

See *Item 4.*“*Regulation — Health & Safety Matters*”. 

***The cost of occupational healthcare services and the potential liabilities related to occupational health diseases may increase in future.***

Harmony’s operations in South Africa are subject to health and safety regulations which could impose significantcosts and burdens. The present Mine Health and Safety Act 29 of 1996 imposes various duties on mines and grants the authorities broad powers to, among others, close unsafe mines and order corrective action on health and safety matters. Operations inPNG are subject to the following laws and regulations: PNG Mining Act 1992, PNG Mining Safety Act 1997, PNG Mining Safety Regulation 1935 (updated 2006) and PNG Environment Act 2000. 

There is a risk that the cost of providing health services and implementing various programs could increase in future, depending onchanges to underlying legislation and the profile of its employees. This increased cost, should it transpire, is currently indeterminate. 

The Occupational Diseases in Mines and Works Act 78 of 1973 (“**ODIMWA**”) governs the payment of compensation and medical costs for certain illnesses contracted by people employed in minesor at sites where activities ancillary to mining are conducted. The principles of compensation under ODIMWA are currently being tested in the Mr. Thembekekile Mankayi v AngloGold Ashanti court case. Please see *Item 8.*“*Financial Information — Legal Proceedings*” for further information. Should anyone bring similar claims against Harmony in future, those claimants would need to provide evidence proving that silicosis was contracted whilein the employment of the Company and that it was contracted due to negligence on the Company’s part. The link between the cause (negligence by the Company while in its employ) and the effect (the silicosis) will be an essential part of anycase. It is therefore uncertain as to whether the Company will incur any costs related to silicosis claims in the future and due to the limited information available on any claims and potential claims and the uncertainty of the outcome of theseclaims, no estimation can be made for the possible obligation. Should Harmony be unsuccessful in defending any claims that may be lodged, it would have an adverse impact on the Company’s financial condition. 

***Laws governing mineral rights affect our business.***

Our operations in South Africa and PNG are subject to legislation regulating mineral rights and mining those rights. In South Africa, we are governed by the South African Mineral and Petroleum ResourcesDevelopment Act 2002 (“**MPRDA**”) and in PNG by the Mining Act of 1992 (PNG). See *Item 4. “Regulation — South Africa”*for a description of the principal objectives set out in the MPRDA. 

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

 
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The licenses for all of our South African operations have been granted. We will be eligible to apply for new licenses over existing operations, provided we comply with the MPRDA. Failure tocomply with the conditions of the mining licenses could have a material adverse effect on our operations and financial condition. 

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

Following a review ofprogress made by the mining industry after five years of implementing the provisions of the Mining Charter, the Department of Mineral Resources (“**DMR**”) released the Revised Mining Charter on September 13, 2010. The requirementunder the Mining Charter for mining entities to achieve a 26% HDSA ownership of mining assets by 2014 has been retained. Amendments in the Revised Mining Charter include, inter alia, the requirement by mining companies to: 

 
(i)facilitate local beneficiation of mineral commodities; 
 
(ii)procure a minimum of 40% of capital goods, 70% of services and 50% of consumer goods from HDSA suppliers (i.e. suppliers of which a minimum of 25% + 1 vote of theirshare capital must be owned by HDSAs) by 2014. These targets will exclude non-discretionary procurement expenditure; 
 
(iii)achieve a minimum of 40% HDSA demographic representation by 2014 at executive management (board) level, senior management (executive committee) level, core and criticalskills, middle management level and junior management level; 
 
(iv)invest up to 5% of annual payroll in essential skills development activities; and 
 
(v)implement measures to improve the standards of housing and living conditions for mineworkers by converting or upgrading mineworkers’ hostels into family units,attaining an occupancy rate of one person per room and facilitating home ownership options for all mineworkers in consultation with organized labor. 
All these targets must be achieved by 2014. 

In addition, mining companies arerequired to monitor and evaluate their compliance to the Revised Mining Charter, and must submit annual compliance reports to the DMR. The revised scorecard makes provision for a phased-in approach for compliance with the above targets over the fiveyear period ending in 2014. For measurement purposes, the Scorecard allocates various weightings to the different elements of the Revised Mining Charter. Failure to comply with the provisions of the Revised Mining Charter will amount to a breach ofthe MPRDA and may result in the cancellation or suspension of a mining company’s existing mining rights. Harmony obtained all of its licenses three years ago and has no reason to believe that our mining licenses will be cancelled or suspended.Harmony will incur costs in meeting its obligations under the Revised Mining Charter and Scorecard. 

The MPRDA also makesreference to royalties payable to the South African state in terms of the Mineral and Petroleum Resources Royalty Act (Act 28 of 2008). The Act provides for the payment of a royalty according to a formula based on earnings before interest, tax anddepreciation, after the deduction of capital expenditure. This rate is then applied to revenue to calculate the royalty amount due, with a minimum of 0.5% and a maximum of 5% for gold mining companies. For fiscal 2011, the average royalty rate forour South African operations was 0.63% of gross sales. 

The Mining Act of 1992 (PNG) is based on Australian legislation.Accordingly, mineral rights in PNG also belong to the government of PNG which has a statutory right to obtain a participating interest of up to 30% in mining development projects. The 

 
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government then issues and administers mining tenements under the relevant mining legislation, and mining companies must pay royalties to the government based on production. The types oftenements issued include: exploration license; mining lease; special mining lease; alluvial mining lease; lease for mining purpose; and mining easement. 

Harmony’s PNG mining operation is subject to a 2% royalty payment to the government of PNG. If we want to expand any of our initiatives in PNG into additional areas under exploration, theseoperations would need to convert the existing exploration licenses prior to the start of mining and that process could require landowner title approval. There can be no assurance that any approval would be received. 

Please also see *Item 4.*“*Regulation*” for further information. 

***We are subject to extensive environmental regulations.***

As a gold mining company, Harmony is subject to extensive environmental regulation. We expect the trend of rising production costs due to compliance with South African and PNG environmental laws andregulations to continue. 

The MPRDA, certain other environmental legislation and the administrative policies of the SouthAfrican government regulate the impact of the Company’s prospecting and mining operations on the environment. On the suspension, cancellation, termination or lapsing of a prospecting permit or mining authorization, Harmony will remain liablefor compliance with the provisions of various relevant regulations, including any rehabilitation obligations. This liability will continue until the appropriate authorities have certified that the Company has complied with such provisions.

Estimates of ultimate closure and rehabilitation costs are significant and based principally on current legal and regulatoryrequirements that may change materially. Environmental provisions are accrued when they become known, probable and can be reasonably estimated. In future, Harmony may incur significant costs for compliance with increasingly stringent requirementsbeing imposed under new legislation. This may include the need to increase and accelerate expenditure on environmental rehabilitation and to alter environmental provisions, which could have a material effect on its results and financial condition.Harmony may also face increased environmental costs should other mines in the vicinity fail to meet their obligations on pumping or treatment of water. Also impacting on the financial condition of the Company is the requirement by the DMR for cashcollateral or guarantees for Harmony’s environmental obligations. 

The South African government has reviewed requirementsimposed on mining companies to ensure environmental restitution. For example, following the introduction of an environmental rights clause in South Africa’s constitution, a number of environmental legislative reform processes have beeninitiated. Legislation passed as a result of these initiatives has tended to be materially more onerous than previous laws in South Africa. Examples of such legislation include the MPRDA, the National Nuclear Regulator Act 1999, the National WaterAct of 1998 and the National Environmental Management Act 1998, which include stringent ‘polluter pays’ provisions. The adoption of these or additional or more comprehensive and stringent requirements, particularly for the management ofhazardous waste, pollution of ground and groundwater systems and duty to rehabilitate closed mines, may result in additional costs and liabilities. 

Harmony’s PNG operations are also subject to various laws and regulations relating to protection of the environment, which are similar in scope to those of South Africa. The Environment Act 2000governs the environmental permitting and regulatory aspects of mining projects. An environmental impact statement is required when projects are likely to have an adverse impact on the environment. This statement must be lodged with the Department ofEnvironmental Conservation where, for large projects, it may be forwarded to Environment Council for review. Public consultation is an integral part of this review. 

See *Item 4.*“*Regulation — Environmental Matters*” for further discussion on the applicable legislation and our policies on environmental matters. 

***Mining companies are increasingly required to consider and ensure the sustainable development of, and provide benefits to, the communities andcountries in which they operate.***

As a result of public concern about the perceived ill effects of economicglobalization, businesses in general and large international companies such as Harmony, in particular, face increasing public scrutiny of their activities. 

These businesses are under pressure to demonstrate that while they seek a satisfactory return on investment for shareholders, other stakeholders including employees, communities surrounding operations andthe countries in which they operate, also benefit from their commercial activities. Such pressures tend to be particularly focused on companies whose activities are perceived to have a high 

 
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impact on their social and physical environment. The potential consequences of these pressures include reputational damage, legal suits and social spending obligations. 

Existing and proposed mining operations are often located at or near existing towns and villages, natural water courses and otherinfrastructure. Mining operations must therefore be designed to mitigate and/or manage their impact on such communities and the environment. Specifically at our PNG operations, cognizance of landowner rights may require measures that could includeagreed levels of compensation for any adverse impact the mining operation may continue to have on the community. The cost of these measures could increase capital expenditure and operating costs and therefore impact Harmony’s operationalresults and financial condition. 

***Compliance with emerging climate change regulations could result in significant costs for Harmony, andclimate change may present physical risks to our operations.***

Greenhouse gases (“**GHGs**”) are emitteddirectly by Harmony’s operations and indirectly as a result of consuming electricity generated by external utilities. Emissions from electricity consumption are indirectly attributable to Harmony’s operations. There are currently a numberof international and national measures to address or limit GHG emissions, including the Kyoto Protocol and the Copenhagen Accord, in various phases of discussion or implementation. Both South Africa and PNG are non-Annex I countries and therefore donot have emission reduction targets under the Kyoto Protocol in the first commitment period, ending 2012. 

After the climatesummit in Copenhagen in December 2009, South Africa committed to 30% clean energy by 2025 with the vision that South Africa’s GHG emissions would peak by 2020-2025 at the latest, plateau for a decade and then decline by 40% by 2050. The SouthAfrica government published a climate change response green paper in November 2010 and a carbon tax discussion paper in December 2010. The policy process, culminating in the publication of a climate change response white paper, is expected later in2011, with GHG legislation likely to be enacted after that. An emissions trading discussion paper is expected during 2011. It is possible that legislation to cap national emissions, introduce a trading scheme for GHG emission allowances and/orextend the current carbon tax will be enacted, though timing of this is uncertain. 

The largest portion of GHG emissions ispredominantly electricity related, with electricity expenditure amounting to 15% of Harmony’s operational costs in South Africa. While cost management is clearly a strategic issue for Harmony, of even greater importance is that energy supply beconstant and reliable, given the implications of loss of energy on both production and health and safety. GHG emissions regulations, which would increase the price of energy, within reason, will not affect Harmony as significantly as regulation thatstipulates emission thresholds, or sets technology standards that may result in insecure energy supply. Already certain compliance costs from power suppliers are being passed on to the Group in the form of price increases. For instance, in SouthAfrica since 2009, Harmony has paid a levy of R0.02 per kilowatt hour for electricity generated by fossil fuels. These levies may increase over time and additional levies may be introduced in future in South Africa or PNG, which could result in asignificant increase in our costs. 

The South African government is exploring implementing a carbon tax to offset carbonemissions in the country. A discussion paper on carbon taxation was published by the South African government in December 2010. This discussion paper mentions a potential carbon tax of R75 – R200 per tonne of CO2 emitted. 

The aim is to reduce emissions in terms of South Africa’s commitment made at the Copenhagen conference. The proposed tax follows theundertaking by government to reduce South Africa’s carbon footprint by an ambitious 34% by 2020. 

The South AfricanNational Treasury has established a working group comprising a number of different industries to evaluate the impact of this proposed tax on the different sectors of industry. Harmony is participating in this initiative, as is the Chamber of Mines.

As our current mines have a life expectancy of up to 25 years, we are undertaking capital projects to sustain and increaseproduction at Phakisa, Doornkop, Kusasalethu, Tshepong and Hidden Valley operations. These expansions will extend our mining operations by ten years or more, by which time GHG regulations are expected to be a permanent feature of the global economy.Future climate change regulation will therefore need to be considered for all Harmony’s extensions and acquisitions. All new greenfields and brownfields projects are required by company policy to consider the impact of climate change in theirdesign and planning. 

Harmony is also likely to be exposed to GHG emission regulation thresholds, specifically leakage fromrefrigerant gas use. Harmony will therefore be required to manage CFC-free refrigerant gas, and will consider using absorption chillers. This could have cost implications for the Company. 

In addition, Harmony’s operations could be exposed to a number of physical risks from climate change, such as increased rainfall,reduced water availability, higher temperatures and extreme weather events. Events or conditions such as flooding or inadequate water supplies could disrupt Harmony’s operations and rehabilitation efforts, and could increase health and safetyrisks at operations. In 

 
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addition, such events or conditions could have adverse effects, such as increased disease prevalence, on Harmony’s workforce and communities close by. 

See *Item 4. “Environmental Matters”*for disclosure regarding our GHG emissions. 

***Our operations in South Africa are subject to water use licenses, which could impose significant costs.***

Under South African law, Harmony’s local operations are subject to water use licenses that govern each operation’s water use.These licenses require, among other issues, that mining operations achieve and maintain certain water quality limits for all water discharges, where these apply. The majority of our South African operations are lawful users with existing waterpermits in terms of the Water Act of 1954. Nevertheless, the South African operations have applied to the relevant regional directors for water use licenses in terms of the National Water Act, 1998. Submissions were made as early as 2003 and Harmonyhas been working closely with the regional directors in the review process; a number of our operations have been issued with licenses or draft licenses. 

We anticipate that the conditions of the licenses may require Harmony to consider and implement alternate water management measures that may have a significant cost implication for our business. Anyfailure on Harmony’s part to achieve or maintain compliance with the requirements of these licenses for any of its operations may result in Harmony being subject to penalties, fees and expenses or business interruption due to revoked waterlicenses. Any of these could have a material effect on our business, operating results and financial condition. 

See*Item 4.*“*Regulation — Environmental Matters*” for disclosure regarding our water usage and management. 

***We may have exposure to rehabilitate potential groundwater pollution, which may include salination, and radiation contamination that may exist wherewe have operated or continue to operate.***

Due to the interconnected nature of mining operations, any proposed solutionfor potential flooding and decant risk posed by deep groundwater needs to be a combined one supported by all mines located in the goldfields and government in the event of legacy issues. As a result, the DMR and affected mining companies areinvolved in developing a regional mine closure strategy. In view of limited current information, no reliable estimate can be made for this possible obligation, which could be material and have an adverse impact on Harmony’s financial condition.

Harmony has initiated analytical assessments to identify, quantify and mitigate impacts, should they arise. Numerousscientific, technical and legal studies are under way to assist in determining the magnitude of possible contamination of groundwater and to find sustainable remediation solutions. Harmony has instituted processes to reduce possible future potentialseepage and it has been demonstrated that monitored natural attenuation by the existing environment will contribute to improvement in some instance. The ultimate outcome of the matter cannot presently be determined and no provision for any potentialliability has been made in the financial statements. Should these costs be significant, this could have a material impact on Harmony’s operational results and financial condition. 

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

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

 
 • 
****the court that pronounced the judgment had jurisdiction to entertain the case according to the principles recognized by South African law withreference to the jurisdiction of foreign courts; 

 
 • 
****the judgment is final and conclusive; 

 
 • 
****the judgment has not lapsed; 

 
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****the recognition and enforcement of the judgment by South African courts would not be contrary to public policy, including observance of therules of natural justice which require that the documents initiating the United States proceeding were properly served on the defendant and that the defendant was given the right to be heard and represented by counsel in a free and fair trial beforean impartial tribunal; 

 
 • 
****the judgment does not involve the enforcement of a penal or revenue law; and 

 
 • 
****the enforcement of the judgment is not otherwise precluded by the provisions of the Protection of Business Act 99 of 1978, as amended, of theRepublic of South Africa. 

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

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

In terms ofSection 404 of the Sarbanes-Oxley Act of 2002, we are required to furnish a report by our management on our internal control over financial reporting. The report in this annual report contains, among other matters, an assessment of theeffectiveness of our internal control over financial reporting as of the end of the fiscal year, including a statement as to whether or not our internal controls over financial reporting are effective. If we fail to maintain the adequacy of ourinternal controls, we may not be able to ensure that we can conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with the Sarbanes-Oxley Act. The requirement to evaluate and report on ourinternal controls also applies to companies that we may acquire and therefore, this assessment may be complicated by any future acquisitions. While we continue to dedicate resources and management time to ensuring that we have effective controlsover financial reporting, failure to achieve and maintain an effective internal control environment could have a material adverse effect on the market’s perception of our business and our stock price. See *Item 15*.“*Disclosure Controls and Procedures*” for management assessment as of June 30, 2011. In addition to management’s assessment of internal controls over financial reporting, we are required to have our independent registeredpublic accounting firm publicly disclose their conclusions regarding the effectiveness of Harmony’s internal controls over financial reporting. 

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

***Sales of large quantities of our ordinary shares andADSs, or the perception that these sales may occur, could adversely affect the prevailing market price of such securities.***

The market price of our ordinary shares or ADSs could fall if large quantities of ordinary shares or ADSs are sold in the public market, or there is a perception in the marketplace that such sales couldoccur. Subject to applicable securities laws, holders of our ordinary shares or ADSs may decide to sell them at any time. The market price of our ordinary shares or ADSs could also fall as a result of any future offerings it makes of ordinaryshares, ADSs or securities exchangeable or exercisable for its ordinary shares or ADSs, or the perception in the marketplace that these sales might occur. We may make such offerings of additional ADS rights, letters of allocation or similarsecurities at any time or from time to time in the future. 

***Because we have a significant number of outstanding share options, ourordinary shares are subject to dilution.***

We have employee share option schemes as well as other share schemes. Theemployee share option schemes came into effect in 2001, 2003 and 2006. Our board has authorized up to 14% of the issued share capital to be used for these plans. As a result, shareholders’ equity interests in us are subject to dilution to theextent of the potential future exercises of the options through share schemes. 

 
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***We may not pay dividends or make similar payments to our shareholders in the future.***

Harmony’s dividend policy is to pay cash dividends only if funds are available for that purpose. Whether fundsare available depends on a variety of factors, including the amount of cash available, our capital expenditures and other cash requirements existing at the time. Under South African law, we are only entitled to pay a dividend or similar payment toshareholders if we meet the solvency and liquidity tests set out in the Companies Act 71 of 2008 (as amended) including its Regulations (the “**Companies Act**”) and our Articles of Association. Cash dividends or other similar paymentsmay not be paid in the future. 

In February 2007, the South African Government announced a proposal to replace Secondary Taxon Companies with a 10% withholding tax on dividends and other distributions payable to shareholders. The amendments will be implemented in phases and are expected to become effective in the near future. Although this may reduce the tax payable onour South African operations, thereby increasing distributable earnings, the withholding tax will generally reduce the amount of dividends or other distributions received by shareholders. 

**Item 4. INFORMATION ON THE COMPANY**

**BUSINESS**

**History and Development**

We conduct underground and surface gold mining and related activities, including exploration, processing and smelting. We are currently the third largest producer of gold in South Africa, producingapproximately one-fifth of the country’s annual gold output, and we ranked among the largest gold producers in the world, with operations and projects in South Africa and PNG. Our gold sales were approximately 1.3 million ounces of gold infiscal 2011. As at June 30, 2011, our mining operations reported total proven and probable reserves of 41.6 million ounces, primarily from South African sources. In fiscal 2011, we processed approximately 21.3 million tons of ore.

In fiscal 2011, 92% of our total gold production took place in South Africa. In fiscal 2011, approximately 90% of our SouthAfrican gold came from underground mines, and approximately 10% came from our surface operations (which include the Kalgold opencast operation and the Phoenix operation). For more detailed information about our activities, see *Item 4.“Information on the Company — Business — Harmony’s Mining Operations — Overview”*and the notes to the consolidated financial statements included in this annual report. Mining is a highly regulated industry, and weoperate under a variety of statutes and regulations. For more detailed information about these statutes and regulations, see *Item 4. “Information on the Company — Regulation”*and *Item 10. “AdditionalInformation*— *Memorandum and Articles of Association”*. 

The majority of our exploration and evaluationdone during fiscal 2011 has been focused on PNG. Our PNG exploration and evaluation opportunities are handled through the international office in Brisbane, Australia. Exploration in South Africa focused on Joel North and Poplar (north-west ofEvander 8). 

We were incorporated and registered as a public company in South Africa on August 25, 1950 (underregistration number 1950/038232/06). We have expanded from a single lease-bound mining operation into an independent, world-class gold producer. From 1997 to 2004, we acquired additional mineral rights in the Free State, Mpumalanga, Gauteng andNorth West provinces in South Africa through various mergers and acquisitions. In our most recent transaction in fiscal 2010, we acquired the President Steyn 1 and 2 shafts, Loraine 3 shaft, Freddies 7 and 9 shafts as well as the President Steyngold plant, collectively known as the Pamodzi Free State assets, from Pamodzi Gold Free State (Proprietary) Limited (In Liquidation) (“**Pamodzi FS**”). See *Item 4. “Principal Investments”*. These shafts have beenincluded in the Bambanani and Target operations. In building our international portfolio, we acquired Hill 50 and New Hampton in Western Australia in 2001 and 2002, respectively, and started our exploration portfolio in PNG with projects in theMorobe province originally through our acquisition of Abelle in 2003. In the past three years, we disposed of several operations in South Africa and Australia, as well as 50% of our interests in gold and copper assets in PNG. See *Item 4.*“*Disposals*”. 

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

 
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**Business overview**

***South African Operations***

In South Africa, we operate a total of tenunderground operations, several surface operations including an opencast mine, and nine processing plants which are located in all of the currently known goldfields in the Witwatersrand basin of South Africa as well as the Kraaipan Greenstone Belt.These operations produced approximately 1.2 million ounces in fiscal 2011, and South Africa represented approximately 94% (or 39.1 million ounces) of our total proven and probable reserves. The deep level gold mines are located in fourprovinces in this basin, being the Free State province, Mpumalanga, the West Rand Goldfields in Gauteng province and the North West province. Surface operations are located in all these provinces. 

Ore from the shafts and surface material are treated at nine metallurgical plants in South Africa, located near the operations (five inthe Free State province, two in the North West province, one in Mpumalanga and one in Gauteng). We are currently demolishing three plants in the Free State — the Virginia plant’s demolishment is almost completed, while the process forSteyn plant will continue until fiscal 2012; the demolishment of St Helena Plant has started and will continue until the beginning of fiscal 2014. In addition, Winkelhaak plant at the Evander operations was placed on care and maintenance duringfiscal 2010, and the demolishment of the plant is in progress and will be completed in the first half of 2012. 

Each operation,consisting anywhere from a single shaft to a group of shafts, is managed by a team headed up by a general manager. See “— *Harmony’s Management Structure”* below. 

Operations are classified as “Underground” or “Surface” with the reportable segments in South Africa being as follows:

 
 • 
****Bambanani (includes Steyn 1 and 2 shafts), Doornkop, Evander, Joel, Kusasalethu, Masimong, Phakisa, Target (includes Loraine 3, now known asTarget 3), Tshepong and the Virginia operations (the Cooke operations have been disclosed under discontinued operations until the time of its disposal in November 2008); and 

 
 • 
****all other shafts and surface operations, including those that treat historic sand dumps, rock dumps and tailings dams, are grouped togetherunder “Other — Underground” and “Other — Surface”. 

***International Operations***

Our interests internationally are currently located in PNG and represent 6% (or 2.5 million ounces) of our totalproven and probable reserves. 

***PNG operations***

In PNG, through our wholly-owned PNG-based subsidiaries, Morobe Consolidated Goldfields Limited (“**Morobe ConsolidatedGoldfields**”), Wafi Mining Limited (“**Wafi**”), Morobe Exploration Limited (“**MEL**”) and Harmony Gold (PNG) Exploration Limited **(**“**HGEL**”) we own development and exploration prospects.

In August 2008, Newcrest Mining Limited (“**Newcrest**”) acquired a 30.01% interest in our assets and tenementsin the Morobe Province through the Morobe Mining Joint Venture (“**MMJV**”). By the end of fiscal 2009, Newcrest had earned an additional 19.99% in terms of the farm-in agreement, resulting in Newcrest and us each owning a 50% interestin MMJV. Through MMJV, we continued with the process of building the Hidden Valley mine, with partial commissioning of the plant completed by the end of fiscal 2009. The plant was fully commissioned during the June 2010 quarter. The pre-feasibilitystudy at Wafi Golpu commenced during fiscal 2011 and is expected to be completed by June 2012. We are also continuing with exploration at three key project sites which are 100% owned, being Mt Hagen, Amanab and Tari. 

***Australian operations***

During fiscal 2011 we disposed of our interests in Australia, which consisted solely of one site located at Mount Magnet in Western Australia. This site was closed down and the plant placed on care andmaintenance in December 2007. During fiscal 2009, we started an intensive drilling program at Mount Magnet and carried out feasibility studies in order to support our decision to either resume mining operations or sell it. A decision was taken bymanagement during May 2010 to sell Mount Magnet, and at June 30, 2010, Mount Magnet was disclosed as held for sale and discontinued operation. We entered into a Share Sales Agreement with Ramelius for a total consideration of A$35.3 million(US$31.6 million) in cash plus replacement environmental bonds of A$4.7 million (US$4.2 million) totaling A$40.0 million (US$35.8 million) consideration. Final settlement of the transaction took place in July 2010. 

 
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**Strategy**

Our strategy is to deliver long-term value by creating a sustainable company, capable of generating earnings that fund dividends and growth — a company with free cash flow. This strategy has as itsoverall goal the production of 1.8 to 2 million safe and profitable ounces of gold by 2015 (excluding any future acquisitions or disposals). 

We have invested significant capital in developing and commissioning gold mining assets in South Africa. Harmony has undertaken a number of strategic initiatives in recent years with the aim of achievingrobust and sustainable financial results, with better controlled cash costs and improved grade. 

Three key objectives underpinour strategy, namely: 

 
 • 
growth in quality, through our growth assets and geographic diversification; 

 
 • 
growth through partnerships and exploration; and 

 
 • 
optimizing our asset portfolio by improving cash costs and productivity. 

Our emphasis is on safe, profitable ounces and important steps have been taken to ensure that these goals are and will be met. To ensurethis we have: 

 
 • 
closed high-cost mines to give us a better mix of assets; 

 
 • 
commissioned gold mines in South Africa and in PNG; 

 
 • 
tailored each mine’s business plan to its individual requirements; 

 
 • 
aimed to address ongoing industry challenges. Please see *Item 3. “Risk Factors”* for further information;

 
 • 
aimed to improve production and productivity; and 

 
 • 
increased our exploration exposure. 

**Principal Investments**

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

During fiscal 2010, we acquiredthe President Steyn 1 and 2 shafts, Loraine 3 and the Freddies 7 and 9 shafts, along with the President Steyn gold plant, collectively known as the Pamodzi Free State assets, for R405 million (US$53 million). The assets were acquired from PamodziFS, a subsidiary of Pamodzi Gold Limited (“**Pamodzi**”), which is an associate of Harmony and has been placed in liquidation. 

During fiscal 2009, we reached an agreement with Africa Vanguard Resources (Doornkop) (Proprietary) Limited (“**AVRD**”) to re-acquire AVRD’s 26% interest in the Doornkop mining right.In March 2010, the condition precedent to the agreement became effective. As a result the 26% interest in the Doornkop mining right was transferred from AVRD to Harmony in exchange for our repayment of the Nedbank loan of R244 million (US$33.4million) and the issue of 2,162,359 Harmony ordinary shares. Under the terms of the agreement, 975,419 of these shares are to remain in escrow until May 2014. 

In August 2009, we acquired 100% interest in two new exploration tenements, the Mount Hagen and Amanab Projects, in PNG. 

On April 17, 2009, we exchanged our interest in Dioro for shares in Avoca Resources Limited (“**Avoca**”). See *Item 4.”Disposals”*. In terms of the offer by Avoca,we received one Avoca share for every three Dioro shares held. The market value of the Avoca shares on the date was US$4.2 million (A$1.50 per share). 

On December 1, 2008, we issued 3,364,675 shares to Rio Tinto plc (“**Rio Tinto**”) for the purchase of Rio Tinto’s rights to the royalty agreement entered into prior to ouracquisition of the Wafi deposits in PNG. The shares were valued at US$23 million on the transaction date. An additional US$10 million in cash will be payable when the decision to mine is made. Of this amount, Harmony is responsible for paying thefirst US$6 million, with the balance of US$4 million being borne equally by the joint venture partners. The effect of the transaction will be to reduce the cost of any gold produced at Wafi. 

 
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On November 21, 2008, we transferred our Cooke operations to Rand Uranium in exchangefor cash of US$209 million and a 40% interest in Rand Uranium. See *Item 4. “Disposals”*. 

**Disposals**

During September 2010, Harmony concluded an agreement with Witwatersrand Consolidated Gold Resources Limited (“**WitsGold**”) for the cancellation of the Freegold farm-in option in exchange for Wits Gold shares. The conditions precedent were fulfilled on November 5, 2010 and Harmony received 4,376,194 shares in Wits Gold valued at R275 million (US$41million). 

On July 20, 2010, the conditions precedent for the sale of the Mount Magnet operation were fulfilled. A totalconsideration of A$35.3 million (US$31.6 million) was received from Ramelius in exchange for 100% of the issued share capital in Mount Magnet. 

In June 2010, the group sold the Jeanette prospecting rights to Taung Gold Limited (“**Taung**”) for a total consideration and profit of R75 million (US$10 million). 

On January 18, 2010, we disposed of our investment in our Australian subsidiary, Big Bell Operations (Proprietary) Limited to FulcrumResources (Proprietary) Limited (“**Fulcrum**”) for A$3.5 million (US$3.2 million) in cash and replacement environmental bonds of A$3.2 million (US$3.0 million), resulting in total consideration of A$6.7 million (US$6.2 million).

During September and October 2009, we sold our interest in Avoca into the market for a total consideration of R42 million(US$5.8 million). 

On April 17, 2009, we disposed of our Dioro shares in exchange for shares in Avoca. On that date, themarket value of the Dioro shares was A$0.50 per share, or US$4.2 million. 

On November 21, 2008, we transferred our Cookeassets to our wholly-owned, newly formed subsidiary, Rand Uranium, for the consideration of US$328 million, settled with Rand Uranium shares. In a related transaction on the same date, 60% of these shares were sold to Pamodzi Resources Fund 1 LLP(“**PRF**”) for US$197 million. US$40 million was paid on the effective date and the balance of US$157 million, together with interest at 5% per annum, was paid on April 20, 2009. The conditions precedent for the second partof the Rand Uranium transaction, relating to the sale of the Old Randfontein assets, were fulfilled on April 22, 2009. Additional shares were issued in settlement and 60% of these shares were sold to PRF. PRF paid its portion of the purchaseprice, amounting to US$12 million, in cash on April 20, 2009. We recognized a gain of US$171 million on these transactions. 

During fiscal 2009, we disposed of 50% of our interest in our PNG assets in three tranches to Newcrest. The first tranche of 30.01% wasdisposed of on July 31, 2008 in exchange for US$229 million in cash, which was received on August 7, 2008. On February 28, 2009, the second tranche of 10% was disposed of in terms of the farm-in agreement. Newcrest earned in a further9.99% interest by contributing to the capital expenditure at Hidden Valley as well as with a cash payment of US$6 million on June 30, 2009. A net profit of US$112 million was realized for the total disposal. 

**Description of Mining Business**

***Exploration***

Exploration activities are focused on the extension of existing orebodies and identification of new orebodies, both at existing sites andat undeveloped sites. 

Our gold-focused exploration program has two components: 

 
 • 
****on-mine exploration, which looks for resources within the economic radius of existing mines; and 

 
 • 
****new mine exploration, which is the global search for early to advanced stage projects. 

Once a potential orebody has been discovered, exploration is extended and intensified in order to enable clearer definition of the orebodyand the potential portions to be mined. Geological techniques are constantly refined to improve the economic viability of prospecting and mining activities. 

 
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We conduct exploration activities on our own or with joint venture partners. As atJune 30, 2011, our prospecting interest in South Africa measured 69,942 hectares (172,824 acres) and 1,198,400 hectares (2,961,311 acres) in PNG. We spent US$57 million on exploration in PNG and South Africa in fiscal 2011. In fiscal 2012, weintend to carry out exploration in PNG and at Masimong in South Africa. 

***Mining***

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

 
 • 
*****Accessing the orebody.*

In our South African underground mines, access to the orebody is by means of shafts sunk from the surface to the lowest economically and practically mineable level. Horizontal development at variousintervals of a shaft (known as levels) extends access to the horizon of the reef to be mined. On-reef development then provides specific mining access. Horizontal development at various intervals of the decline extends access to the horizon of themineral to be mined. The declines are advanced on a continuous basis to keep ahead of the mining taking place on the levels above. In our open-pit mines, access to the orebody is provided by overburden stripping, which removes the covering layers oftopsoil 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-bearingmaterial may require drilling and blasting, and is usually collected by bulldozers or shovels to transfer it onto trucks, which transport it to the mill. 

In our South African underground mines, once ore has been broken, train systems collect ore from the faces and transfer it to a series of ore passes that gravity feed the ore to hoisting levels at thebottom 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 accessreef horizons must similarly be hoisted and then placed on waste rock dumps. 

***Processing***

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

The gold plantcircuit consists of the following: 

 
 • 
*****Comminution.*

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

 
 • 
*****Treatment.*

In most of our metallurgical plants, gold is extracted into a leach solution from the host ore by leaching in agitated tanks. Gold is then extracted onto activated carbon from the solution using the CILor CIP processes. Gold in solution at one of our plants is recovered using zinc precipitation. Recovery of the gold from the loaded carbon takes place by elution and electro-winning. Cathode sludge or dore bars produced from electro-winning arecurrently sent directly to the Rand Refinery. Most of the South African plants no longer use smelting to produce rough gold bars (dore). Our South African zinc precipitation 

 
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plants continue to smelt precipitate to produce rough gold bars. These bars are then transported to the Rand Refinery, which is responsible for refining the bars to a minimum of good deliverystatus. 

All the production from our South African operations is sent to the Rand Refinery, which is owned by a consortium ofthe major gold producers in South Africa. The Australian and PNG gold production for fiscal years 2009 to 2011 was refined in Australia at an independent refiner, The Perth Mint Australia. 

**Harmony’s Management Structure**

We have a de-centralized managementstructure that is based on small, empowered management teams led by General Managers at each of our operations. In South Africa, the General Managers report to the Chief Operations Officers, and are responsible for business optimization, mineralreserve optimization, and for developing a business culture at the operations. They also focus on long-term viability and growth of the operations. The General Managers are supported by a Mineral Reserve Manager, a Financial Manager, a HumanResources Manager and a Technical Manager in ensuring the growth and long-term sustainability of the operations 

Morobe MiningJoint Venture consists of three unincorporated joint ventures (Hidden Valley Mine Joint Venture (“**HVJVM**”), Wafi-Golpu Mine Joint Venture (“**WGMJV**”) and Morobe Exploration Joint Venture (“**MEJV**”) whichare owned 50/50 by respective Harmony and Newcrest 100% owned subsidiaries (“**owners**”). 

The Joint Ventures aremanaged by a Joint Venture Committee (“**JVC**”) appointed by the respective owners. The JVC is responsible for the supervision of each of the three Joint Ventures, and implementation of the owners’ policy and strategy. The membersact as owner representatives within the unincorporated joint ventures. 

Three legal operator entities (“**operatorco.**”), Hidden Valley Services Proprietary Limited, Wafi Golpu Services Limited and Morobe Exploration Services Limited have been established and appointed as operator of / agent for the respective unincorporated joint ventures (HVMJV, WGMJVand MEJV). Shareholding is held equally by the owners who appoint a board of directors (“**board**”) for each operator co. 

The respective operator co**.**boards appoint Operational Steering Committees and General Managers who are responsible for implementation of the operating plan as approved by the JVC as well as makingrecommendation to the JVC for growth and sustainability. The General Managers report to the Operational Steering Committees. The General Managers are supported by functional managers. 

**Capital Expenditures**

Capital expenditures for continuing operationsincurred for fiscal 2011 amounted to US$444 million compared with US$442 million in fiscal 2010 and US$487 million for fiscal 2009. During fiscal 2011, capital expenditure at Kusasalethu and Phakisa each accounted for 12% of the total, withexpenditure at PNG and Target accounting for 11% and 14% respectively. For fiscal 2010, the capital development at PNG accounted for 16% of the total, with development at Phakisa and Kusasalethu accounting for 14% and 13%, respectively. Capitaldevelopment also took place at the Doornkop South Reef Project and Tshepong Sub 71 Declines, as well as at the newly acquired President Steyn and Loraine shafts. The capital expenditure, including the non-cash portion, in fiscal 2009 was primarilyrelated to the development of the PNG assets, which accounted for 41% of the project capital expended. The majority of this development was funded by Newcrest in terms of the farm-in agreement. Capital was also expended on the Doornkop South ReefProject, Tshepong Sub 71 Decline, as well as Phakisa and the Kusasalethu New Mine. 

The focus of our capital expenditures inrecent years has been underground development and plant improvement and upgrades. Construction at these projects has been completed in certain areas, and production, if not yet at full capacity, has started from these areas at all our current growthprojects. Capital will still be expended at these projects in the next two to three years to complete construction. During fiscal 2011, the capital expenditure was funded from the Company’s cash reserves, as well as by the loan facility fromNedbank. 

Capital expenditure for discontinued operations, incurred for fiscal 2011 and 2010 totaled US$nil, compared withUS$10 million for fiscal 2009. 

 
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We have budgeted approximately US$537 million for capital expenditures in fiscal 2012.Details regarding the capital expenditures for each operation are found in the individual mine sections under Item 4. “*Information on the Company — Business — Harmony’s Mining Operations*”. We currently expectthat our planned operating capital expenditures will be financed from operations and new borrowings as needed. 

**Reserves**

As at June 30, 2011, we have declared proven and probable reserves of 41.6 million ounces, broken down as follows:39.1 million ounces in South Africa and 2.5 million ounces in PNG. Of our 41.6 million ounces of mineral reserves, 6.8 million ounces are classified as below infrastructure (that is, reserves for which capital expenditure has yetto be approved). There has been a 6.5 million ounces year-on-year negative variance in mineral reserves due to the following reasons: 

 
 • 
****normal depletion of 1.5 million ounces; 

 
 • 
****mine closures and the exclusion of projects previously included in reserves (Poplar and Libra) resulted in a decrease of 4.7 millionounces; 

 
 • 
****geology and scope changes resulted in an increase of 0.9 million ounces; and 

 
 • 
****a decrease of 1.2 million ounces of mineral reserves from the exclusion of Rand Uranium (attributable interest of 40%) which has beenclassified as held for sale. 

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

For the reporting of Mineral Reserves at our South African and PNG operations, we use a gold price of US$1,150 per ounce. An exchange rateof R7.57 per U.S. dollar is used for South Africa and for PNG an exchange rate of US$0.75 per Australian dollar is used giving a gold price of R280,000 per kilogram and A$1,133 per ounce, respectively. These gold prices have also been used in mineplanning. 

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

 
 • 
****the database of measured and indicated resource blocks (per operation); 

 
 • 
****an assumed gold price which, for this mineral reserve statement, was taken as R280,000 per kilogram; 

 
 • 
****planned production rates; 

 
 • 
****the mine recovery factor which is equivalent to the mine call factor (“**MCF**”) multiplied by the plant recovery factor; and

 
 • 
****planned cash costs (cost per tonne). 

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

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

 
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The open pit reserve at Hidden Valley (PNG) is defined by a pit design based on the Whittleopen pit optimization program guiding the most efficient mine design given this constraint. 

See the table below in thissection for the cut-off grades and cost per tonne for each operation. 

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

Our standard for narrow reef sampling with respect to both proven and probable reserve calculations for underground mining operations in South Africa is applied on a 6 meter by 6 meter grid. Averagesample spacing on development ends is at 2 meter intervals in development areas. For the massive mining at the Target operations, our standard for sampling with respect to both proven and probable reserves are fan drilling with “B” sizeddiamond drill holes (43mm core) sited at 50 meter spaced sections along twin access drives. The Kalgold opencast operations are sampled on diamond drill and reverse circulation drill spacing of no more than 25 meters on average. Surface mining atSouth African operations other than Kalgold involves recovering gold from areas previously involved in mining and processing, such as metallurgical plants, waste rock dumps and tailing dams (slimes and sand) for which random sampling is used.

The PNG resources are hosted in large porphyry or related mesothermal geological systems. Data is gained through diamonddrilling using PQ down to NQ sized core. The core is cut in half, one half sampled at a maximum of 2 meter intervals and the other half stored in designated core storage facilities. Drill spacing is typically on less than 20 meter centers forMeasured category, 20 to 40 meter centers for the Indicated category and greater than 40 meters for Inferred category material. Assaying for gold is by fire assay and various methods are used for copper and other elements. All assays informing theresource calculation are analyzed at a National Association of Testing Authorities accredited commercial laboratory. Some sample preparation is done at the mine site laboratory. Extensive Quality Assurance/Quality Control work is undertaken and datais stored in an electronic database. 

Our mining operations’ reported total proven and probable reserves as of June 30, 2011 are setout below: 

 
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**Mineral Reserves statement (Imperial) as at June 30, 2011**

 
**OPERATIONS**  **PROVEN RESERVES**   **PROBABLE RESERVES**   **TOTAL RESERVES** 
**GOLD**
  **Tons**   **Grade**   **Gold oz(1)**   **Tons**   **Grade**   **Gold oz(1)**   **Tons**   **Grade**   **Gold oz(1)**    **(million)**   **(oz/ton)**   **(000)**   **(million)**   **(oz/ton)**   **(000)**   **(million)**   **(oz/ton)**   **(000)** 
**South Africa Underground**
                  
Bambanani
   3.6     0.333     1,195     0.1     0.212     12     3.7     0.331     1,207  
Joel
   1.5     0.182     268     1.8     0.146     262     3.3     0.163     530  
Masimong
   5.7     0.159     905     1.5     0.158     245     7.2     0.159     1,150  
Phakisa
   1.9     0.221     421     19.1     0.248     4,743     21.0     0.246     5,164  
Target
   7.8     0.159     1,243     9.2     0.162     1,492     17.0     0.161     2,735  
Tshepong
   15.1     0.153     2,302     9.0     0.153     1,377     24.1     0.153     3,679  
Virginia (Unisel)
   2.0     0.139     285     1.2     0.130     149     3.2     0.136     434  
Doornkop
   3.1     0.099     315     6.4     0.098     627     9.5     0.099     942  
Kusasalethu
   13.8     0.202     2,790     23.4     0.187     4,383     37.2     0.193     7,173  
Evander
   2.6     0.219     571     1.1     0.226     252     3.7     0.221     823  
Evander (below infrastructure)
   —     —     —     28.8     0.236     6,790     28.8     0.236     6,790  
**Total South Africa Underground**
  ** ****57.1****  **  ** ****0.180****  **  ** ****10,295****  **  ** ****101.6****  **  ** ****0.200****  **  ** ****20,332****  **  ** ****158.7****  **  ** ****0.193****  **  ** ****30,627****  **
**South Africa Surface**
                  
Kalgold
   20.5     0.024     492     7.8     0.025     193     28.3     0.024     685  
Free State Surface
   405.6     0.008     3,111     637.0     0.007     4,307     1,042.6     0.007     7,418  
Evander Surface
   —     —     —     43.7     0.009     409     43.7     0.009     409  
**Total South Africa Surface**
  ** ****426.1****  **  ** ****0.008****  **  ** ****3,603****  **  ** ****688.5****  **  ** ****0.007****  **  ** ****4,909****  **  ** ****1,114.6****  **  ** ****0.008****  **  ** ****8,512****  **
**Total South Africa**
  ** ****483.2****  **    ** ****13,898****  **  ** ****790.1****  **    ** ****25,241****  **  ** ****1,273.3****  **    ** ****39,139****  **
**Papua New Guinea**(2)
                  
Hidden Valley
   4.0     0.052     211     29.5     0.048     1,405     33.5     0.048     1,616  
Hamata
   —     —     —     2.7     0.061     166     2.7     0.061     166  
Golpu
   —     —     —     39.0     0.018     694     39.0     0.018     694  
**Total Papua New Guinea**
  ** ****4.0****  **  ** ****0.052****  **  ** ****211****  **  ** ****71.2****  **  ** ****0.032****  **  ** ****2,265****  **  ** ****75.2****  **  ** ****0.033****  **  ** ****2,476****  **
**GRAND TOTAL**
  ** ****487.2****  **    ** ****14,109****  **  ** ****861.3****  **    ** ****27,506****  **  ** ****1,348.5****  **    ** ****41,615****  **
In addition to the gold reserves, we also report our attributable reserves for silver, copper and molybdenum from our PNGoperations. Metal prices are assumed at US$24/oz for silver, US$4.45/lb for copper and US$24/lb for molybdenum. 

 

**SILVER**
  **Tons**   **Grade**   **Silver oz (1)**   **Tons**   **Grade**   **Silver oz (1)**   **Tons**   **Grade**   **Silver oz (1)**    **(million)**   **(oz/ton)**   **(000)**   **(million)**   **(oz/ton)**   **(000)**   **(million)**   **(oz/ton)**   **(000)** 
**Papua New Guinea (2)**
                  
Hidden Valley
   4.0     0.853     3,447     29.5     1.032     30,457     33.5     1.010     33,904  
**COPPER**
  **Tons**   **Grade**   **Cu lb (1)**   **Tons**   **Grade**   **Cu lb (1)**   **Tons**   **Grade**   **Cu lb (1)**    **(million)**   **(%)**   **(million)**   **(million)**   **(%)**   **(million)**   **(million)**   **(%)**   **(million)** 
**Papua New Guinea (2)**
                  
Golpu
   —     —     —     39.0     0.998     858     39.0     0.998     858  
**MOLYBDENUM**
  **Tons**   **Grade**   **Mo lb (1)**   **Tons**   **Grade**   **Mo lb (1)**   **Tons**   **Grade**   **Mo lb (1)**    **(million)**   **(lb/ton)**   **(million)**   **(million)**   **(lb/ton)**   **(million)**   **(million)**   **(lb/ton)**   **(million)** 
**Papua New Guinea (2)**
                  
Golpu
   —     —     —     39.0     0.231     9     39.0     0.231     9  
**URANIUM**
  **Tons**   **Grade**   **U3O8 lb (1)**   **Tons**   **Grade**   **U3O8 lb (1)**   **Tons**   **Grade**   **U3O8 lb (1)**    **(million)**   **(lb/ton)**   **(million)**   **(million)**   **(lb/ton)**   **(million)**   **(million)**   **(lb/ton)**   **(million)** 
Masimong
   2.9     0.376     1     3.7     0.355     1     6.6     0.364     2  
Phakisa
   2.7     0.320     1     18.4     0.269     5     21.1     0.276     6  
Tshepong
   7.2     0.189     1     14.8     0.217     3     22.0     0.208     4  
Grand total
  ** ****12.8****  **  ** ****0.259****  **  ** ****3****  **  ** ****36.9****  **  ** ****0.257****  **  ** ****9****  **  ** ****49.7****  **  ** ****0.257****  **  ** ****12****  **
 

 
(1) 
Metal figures are fully inclusive of all mining dilutions and gold losses, and are reported as mill delivered tons and head grades. Metallurgicalrecovery factors have not been applied to the reserve figures. 

 
(2) 
Represents Harmony’s attributable interest of 50% 

Note: 1 ton = 907 kg = 2,000 lbs 

 
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Our methodology for determining our reserves is subject to change and is based uponestimates and assumptions made by management regarding a number of factors as noted above in this section. Cost per tonne and cut-off grade per operation is as follows. 

 
**OPERATIONS**  **UNDERGROUND**