HARMONY GOLD MINING COMPANY LIMITED
PRESS RELEASE
HARMONY - THE PREFERRED BIDDER FOR PAMODZI GOLD'S FREE STATE ASSETS
Johannesburg, 26 June 2009. Harmony Gold Mining Company Limited ("Harmony") is
pleased to announce that the provisional liquidators of Pamodzi Gold Free State
(Proprietary) Limited (in liquidation) ("Pamodzi Free State") have chosen
Harmony as the preferred bidder of Pamodzi Free State's assets ("Pamodzi Free
State Assets"). The Pamodzi Free State Assets consist of President Steyn 1 and
2 shafts, Loraine 3 shaft, Freddies 7 shaft and Freddies 9 shaft, a
metallurgical gold plant and a dormant tailings storage facility. The Pamodzi
Free State Assets will be purchased free from all liabilities, save for all
rehabilitation and environmental liabilities associated with the Pamodzi Free
State Assets. Harmony's acquisition strategy has been focused on acquiring
long-life assets that offer higher grades and have potential synergies with its
own assets.
A due diligence investigation has been completed. The outcome of the due
diligence investigation indicates that the Pamodzi Free State Assets are a good
fit with Harmony's Free State assets for the following reasons:
* the Pamodzi Free State Assets have the potential to generate recovered
grades of approximately 5g/t in the medium term. This will enhance
Harmony's recovered grade in the Free State;
* the Pamodzi Free State Assets have the potential, in the longer term, to
add 150,000 higher quality ounces per year to Harmony's production;
* Loraine 3 shaft and Freddies 9 shaft respectively have an estimated life of
mine in excess of 10 years;
* Loraine 3 shaft (including Loraine 1 shaft) has similar geology to that of
Harmony's Target mine ("Target");
* Loraine 3 shaft and Target can be managed as one unit due to geological
similarities and geographical proximity;
* synergies exist between Freddies 7 shaft and Freddies 9 shaft and Harmony's
Tshepong Mine from an ore body and mining perspective;
* Harmony's Target metallurgical gold plant is 10 kilometers from the Loraine
3 shaft which will have cost benefits;
* the President Steyn 2 shaft pillar can only be optimally extracted from
Harmony's West Mine shaft (currently on care and maintenance) and part of
Bambanani mine;
* Harmony's management is very familiar with Pamodzi Free State's ore bodies;
* Pamodzi Free State's dormant tailings storage facility can be cost
effectively processed through Harmony's Phoenix plant or through Harmony's
St Helena plant (when completed).
* cash flow can be generated at an early stage from the President Steyn 2
shaft pillar, as well as from the demolition of Pamodzi Free State's
metallurgical gold plant
* Harmony is familiar with the infrastructure challenges of the Pamodzi Free
State Assets and will implement the same standards as those implemented in
respect of its own assets to ensure the safety of its employees. Some
capital expenditure will therefore be required to make the operations safe
for employees and to optimize the ability to operate the Pamodzi Free State
Assets;
* by purchasing the Pamodzi Free State Assets, Harmony will be able to better
control potential issues which may affect its own mines, such as fires,
flooding and restricting illegal miners gaining access to Harmony's shafts.
The acceptance of Harmony's offer by the provisional liquidators is subject to
the approval of the Industrial Development Corporation of South Africa and the
relevant trade unions and the conclusion of definitive written sale agreements.
One of the essential conditions precedent to the transaction would be the
conversion of Pamodzi Free State's mining rights and the consent to the
transfer thereof by the Minister of Minerals and Energy. Harmony, together with
the provisional liquidators, has agreed to give this condition precedent their
urgent attention.
"Strategically this transaction is a good fit for Harmony's Free State assets.
Harmony has excellent synergies that could be leveraged in respect of tailings
disposal, plant processing and management and it would allow us to control
potential issues that could influence our own mines", Chief Executive Officer,
Graham Briggs said.
This acquisition falls below the JSE categorisation thresholds and is for
information purposes only.
end.
26 June 2009
For more details contact:
Graham Briggs
Chief Executive Officer
on +27(0)83 265 0274
or
Marian van der Walt
Executive: Corporate and Investor Relations
on +27(0)82 888 1242
Corporate Office:
Randfontein Office Park
P O Box 2
Randfontein
South Africa 1760
T +27 (11) 411 2000
www.harmony.co.za
JSE: HAR
NYSE: HMY
NASDAQ: HMY
ISIN No.: ZAE000015228
Sponsor
JP Morgan Equities Limited
Financial adviser to Harmony
Deutsche Securities SA (Pty) Limited
Legal adviser to Harmony
Cliffe Dekker Hofmeyr Inc
END
