SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

ANNUAL REPORT PURSUANT TO SECTION 13 OF THE

SECURITIES EXCHANGE ACT OF 1934,

for the fiscal year ended June 30, 2003

Commission File Number: 001-31545

Republic of South Africa

(Jurisdiction of incorporation or organization)

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

American Depositary Shares (as evidenced by American Depositary Receipts),

each representing one ordinary share

Warrants, each to purchase one ordinary share

* Not for trading, but only in connection with the registration of American Depositary Shares,

pursuant to the requirements of the Securities and Exchange Commission.

184,854,115 ordinary shares, with nominal value of Rand 50 cents per share

Yes   X  

No  _

 

Item 17 _        Item 18      X 

			Share Purchase Scheme	157
	Item 7 Major Shareholders and Related Party Transactions			157
		MAJOR SHAREHOLDERS		157
		RELATED PARTY TRANSACTIONS		159
		INTERESTS OF EXPERTS AND COUNSEL		161
	Item 8 Financial Information			161
		CONSOLIDATED STATEMENTS		161
		OTHER FINANCIAL INFORMATION		161
			Export Sales	161
			Legal Proceedings	161
			Dividends and Dividend Policy	162
		SIGNIFICANT CHANGES		163
	Item 9 The Offer and Listing			165
		MARKETS		165
		OFFERING AND LISTING DETAILS		165
		THE JSE SECURITIES EXCHANGE SOUTH AFRICA		166
		PLAN OF DISTRIBUTION		168
		SELLING SHAREHOLDERS		168
		DILUTION		168
		EXPENSES OF THE ISSUE		168
	Item 10 Additional Information			169
		SHARE CAPITAL		169
		MEMORANDUM AND ARTICLES OF ASSOCIATION		169
			General	169
			Objects and Purposes	169
			Directors	170
			Share Capital	172
			Variation of Rights	177
			Changes in Capital or Objects and Powers of Harmony	177
			Meetings of Shareholders	178
			Title to Shares	179
			Non-South African Shareholders	180
			Disclosure of Interest in Shares	180
			Changes in Control	180
			Register of Members	180
			Annual Report and Accounts	181
		MATERIAL CONTRACTS		181
		EXCHANGE CONTROLS		181
		CERTAIN SOUTH AFRICAN TAX CONSIDERATIONS		183
		CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS		185
		DIVIDENDS AND PAYING AGENTS		187
		STATEMENTS BY EXPERTS		187
		DOCUMENTS ON DISPLAY		187
		SUBSIDIARY INFORMATION		188
	Item 11 Quantitative and Qualitative Disclosures About Market Risk			189
	Item 12 Description of Securities Other than Equity Securities			197
		GLOSSARY OF MINING TERMS		198
PART II				206
	Item 13 Defaults, Dividend Arrearages and Delinquencies			206
	Item 14 Material Modifications to the Rights of Securityholders and Use of Proceeds			206
		MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS		206

		USE OF PROCEEDS		207
	Item 15 Controls and Procedures			207
	Item 16 [Reserved]			207
	Item 16A Audit Committee Financial Expert			207
	Item 16B Code of Ethics			208
PART III				209
	Item 17 Financial Statements			209
	Item 18 Financial Statements			209
	Item 19 Exhibits			210
		SIGNATURES		213
		CERTIFICATIONS		214

Harmony Gold Mining Company Limited is a corporation organized under the

In this annual report, references to "R", "Rand",  and "c", "cents" are to the South

This annual report contains information concerning the gold reserves of Harmony.

This annual report contains descriptions of gold mining and the gold mining

This annual report contains forward-looking statements within the meaning of the

These forward-looking statements, including, among others, those relating to the

iv

• 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;

• decreases 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 environmental regulation;

• fluctuations in exchange rates, currency devaluations and other

macroeconomic monetary policies; and

• political instability in South Africa and regionally.

Harmony undertakes no obligation to update publicly or release any revisions to

Harmony is a South African company and the majority of its operations are

For the convenience of the reader, certain information in this annual report

presented in Rand, A$, C$ and has been translated into U.S. dollars. By including convenience

v

vi

Not applicable.

Not applicable.

SELECTED FINANCIAL DATA

The following selected historical consolidated financial data for the last five fiscal

1

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

..............................................................                      782,945                 696,840                  607,220                  490,651               381,412

Operating income ..................................................

182,046

206,375

88,424

72,971

  64,878

Equity income of joint venture ...............................

52,843

13,176

-

-

-

Equity income/(loss) of associate companies........

(1,233)

(473)

-

1,401

Income before taxes and minority interests ..........

97,515

103,659

29,804

73,489

30,199

Minority interests ...................................................

(468)

(1,575)

(349)

(2,910)

-

Income/ (loss) before cumulative effect of

change

in

accounting

principle.........................                       71,792                  87,716                    14,830                    57,030                27,908

Cumulative effect of change in accounting

principle, net of tax .........................................

14,770

-

(5,822)

-

-

Net

income

............................................................                          86,562                 87,716                      9,008                    57,030                27,908

Basic earnings per share ($) before cumulative

effect of change in accounting principle ..........

0.40

0.57

0.15

0.68

0.42

Basic earnings per share ($) .................................

0.49

0.57

0.09

0.68

0.42

Diluted earnings per share before cumulative

effect of change in accounting principle ..........

0.39

0.53

0.14

0.67

0.41

Diluted earnings per share ..................................

0.47

0.53

0.09

0.67

0.41

Weighted average number of shares used in

the computation of basic earnings per share ..

177,954,245

153,509,862

102,156,205

83,593,424

66,843,932

Weighted average number of shares used in the

computation of diluted earnings per share .......

182,721,629

165,217,088

105,504,328

85,590,876

68,070,172

Cash dividends per share ($).................................

0.57

0.07

0.16

0.19

0.18

Cash dividends per share (R) ...............................

5.50

0.75

1.20

1.20

1.10

...............................                               0.20                       0.41

-

-

-

Cash dividends per share (R)

............................                               1.50                       4.25

-

-

-

Cash cost per ounce of gold ($/oz)

.....................                                253                       196                         234                       245                      239

189,040

90,223

144,096

77,942

45,318

Short-term investments .........................................

-

-

-

-

10,744

Other current assets .............................................

146,709

109,397

136,794

59,582

32,071

Property, plant and equipment - net ......................

806,799

812,753

667,113

557,725

347,036

Intangible assets.....................................................

314,793

-

-

-

-

Restricted cash......................................................

-

-

-

7,310

-

Investments in associates .....................................

63,782

42,791

-

-

-

Investment in joint venture ....................................

272,754

102,578

-

-

-

Other long-term assets .........................................

89,183

137,399

81,822

69,629

9,244

Total assets ...........................................................

1,883,060

1,295,141

1,029,825

772,188

444,413

Current

liabilities.....................................................                      173,890                 138,677                 152,886                 150,148                   70,583

Provision for environmental rehabilitation .............

62,977

63,125

53,136

52,525

33,811

Deferred income and mining taxes .......................

209,628

99,789

47,050

48,686

28,442

Provision for post-retirement benefits ...................

1,017

737

1,002

3,709

5,793

Deferred financial liability ......................................

37,228

87,226

49,374

40,174

-

Long-term loans ....................................................

301,572

152,461

151,466

46,635

14,024

Preference shares..................................................

-

-

681

-

-

Minority interest......................................................

18,408

-

331

-

-

Shareholders' equity...............................................

1,078,340                 753,126                573,899                  430,311                 291,760

Total liabilities and shareholders' equity.................

1,883,060

1,295,141

1,029,825

772,188

444,413

2

Gold is generally sold throughout the world in U.S. dollars, but most of

The Rand appreciated significantly against the U.S. dollar during most of calendar

Substantially all of Harmony's revenues come from the sale of gold. Historically,

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

• international or regional political and economic trends;

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

• financial market expectations regarding the rate of inflation;

• interest rates;

• speculative activities;

4

Over the past several years, one of the most important factors influencing the gold

As a general rule Harmony sells its gold production at market prices. Recently,

6

The ore reserve estimates contained in this annual report are estimates of the mill

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

• past experience with mining properties; and

• the experience of the person making the reserve estimates.

The ore reserve estimates contained in this annual report are calculated based on

Since ore reserves are only estimations which Harmony makes based on the above

For example, following the acquisition of New Hampton, the Big Bell

In order to increase Harmony's gold production and to acquire additional reserves

7

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

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

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

As at June 30, 2003, Harmony's mining operations reported total proven and

Harmony's Australian operations have limited proven and probable reserves.

• locating orebodies;

• identifying the metallurgical properties of orebodies;

• estimating the economic feasibility of mining orebodies;

• developing appropriate metallurgical processes;

• obtaining necessary governmental permits; and

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

Harmony's exploration efforts might not result in the discovery of mineralization

To access additional reserves in South Africa, Harmony will need to successfully

8

• future gold and other metal prices;

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

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

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

Actual costs, production and economic returns may differ significantly from those

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

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

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

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

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

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

Accordingly, there is no assurance that any future development projects will

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

• difficulties in assimilating the operations of the acquired business;

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

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

9

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

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

The business of gold mining by its nature involves significant risks and hazards,

• rock bursts;

• seismic events;

• underground fires;

• cave-ins or falls of ground;

• discharges of gases and toxic chemicals;

• release of radioactive hazards;

• flooding;

• accidents; and

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

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

• flooding of the open pit;

• collapse of the open pit walls;

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

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

Hazards associated with waste rock mining include:

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

10

• production disruptions due to weather.

Harmony has third party liability coverage for most potential liabilities, including

Harmony is incorporated and owns significant operations in South Africa. As a

South Africa has been transformed into a democracy since 1994, with a successful

Over the past five years, the South African economy has grown at a relatively

Although the South African government has indicated on numerous occasions that

11

Further, there has been regional political and economic instability in countries

Harmony's operations have not in recent years been materially affected by

South Africa's exchange control regulations provide for restrictions on exporting

• is generally not permitted to export capital from South Africa or to hold

• is generally required to repatriate to South Africa profits of foreign

operations; and

• is limited in its ability to utilize profits of one foreign business to finance

operations of a different foreign business.

These restrictions could hinder Harmony's normal corporate functioning. While

Due to the number of its South African employees that belong to unions,

12

Harmony's production has been and continues to be affected by labor laws. Since

The incidence of HIV/AIDS in South Africa, which is forecast to increase over

Harmony and its subsidiaries operate in a highly regulated industry. The

13

In Australia, most mineral rights belong to the government, and mining

Harmony is subject to extensive environmental regulations.

As a gold mining company, Harmony is subject to extensive environmental

Currently, Harmony provides for environmental liabilities by contributing to

The South African government is currently reviewing requirements imposed upon

14

Harmony's Australian operations must comply with mining lease tenement

It is the current policy of Harmony's Board of Directors, or the Board, to declare

The principal trading market for Harmony's ordinary shares is the JSE Securities

As of June 30, 2003, Harmony had an aggregate of 250,000,000 ordinary shares

15

Harmony and its subsidiaries conduct underground and surface gold mining and

In fiscal 2003, Harmony processed approximately 31.128 million tons of ore and

The gold market is relatively deep and liquid, with the price of gold generally

Harmony's principal mining operations are located in South Africa and Australia.

Harmony conducts its mining operations through various subsidiaries. As of

In addition, Harmony also has made several strategic investments in mining

In November 2002, Harmony acquired ordinary shares representing

16

In South Africa, Harmony and its subsidiaries (excluding the Free Gold

and two production shaft units at

Harmony's Australian operations include three operations in Western Australia:

In fiscal 2003, the combined gold sales of Harmony (including Abelle, but

Ore from the shafts and surface material are treated at fourteen metallurgical

and four at the Free Gold Company) and at four

Harmony Gold Mining Company Limited was incorporated and registered as a

17

Commercial gold mining in South Africa evolved with the establishment of

Harmony was operated as a mining operation in this manner and the mining house

Harmony's operations have grown significantly since 1995. Since 1995,

In fiscal 2003, approximately 79% of Harmony's gold production took place in

Harmony acquired additional mineral rights in the Free State, Mpumulanga,

in 1999 and Randfontein in 2000.

On January 31, 2001, Harmony entered into an agreement with AngloGold to

18

On November 21, 2001, Harmony and ARMgold, a subsidiary of ARM, reached

In connection with the acquisition of the Free Gold assets, Harmony and

On May 24, 2002, Harmony, ARMgold and Gold Fields, through its subsidiary,

On May 2, 2003, Harmony and ARMgold announced details of their 50/50 joint

Harmony presently conducts Australian operations through three acquired

On December 19, 2000, Harmony announced that it had agreed to purchase

19

On December 11, 2001, Harmony commenced a conditional cash offer for all of

Harmony made its first investment in the Australian gold mining industry in

February 2000, by acquiring a stake in Goldfields (Australia), an independent gold production and exploration company. As of September 2001, Harmony's stake in Goldfields (Australia) was approximately 22.96%. Effective December 31, 2001, Delta Gold Limited, or Delta, completed a merger with Goldfields (Australia). In connection with the merger, holders of Delta shares received 187 Goldfields (Australia) shares in exchange for every 200 Delta shares held. Harmony's stake in Goldfields (Australia) following the merger was diluted to approximately 9.8%. In February 2002, Goldfields (Australia) changed its name to AurionGold Limited. On
May 25, 2002, Harmony and Placer Dome entered into an agreement under which Harmony accepted Placer Dome's offer to acquire all of Harmony's interest in AurionGold. As a result of this transaction, Harmony obtained a 1.9% interest in Placer Dome which was disposed of during fiscal 2003.

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

                             On February 26, 2003, Harmony announced that it would subscribe for new shares in Abelle Limited  ("Abelle") and the intention to make a public offer for ordinary shares and options in Abelle for  A$0.45 per ordinary share and A$0.30 per option. The offer closed on March 26, 2003, and as at June 30, 2003, Harmony owns 87% of Abelle's outstanding shares and 65% of the listed options  which were acquired for a total consideration of $105.4 million. Abelle is an Australian  company listed on the Australian Stock Exchange, with interests in mining and exploration  projects in Australia and Papua New Guinea. From May 1, 2003, Harmony reports the results of  Abelle, together with those of New Hampton and Hill 50 in the "Australian Operations"  segment. See "Item 4. Information on the Company--Business--History" and "Item 4.  Information on the Company--Business--Harmony's Mining Operations--Australian  Operations." 

20

underground mine. Harmony will decide whether to exercise the options mentioned above as soon as a proper evaluation has been carried out of the feasibility study prepared by the Bendigo board on the project. The preparation of the feasibility study and its evaluation is currently in progress, with final reserve estimates expected in late December. The exercise price of the options is currently significantly higher than the levels at which the share price has been trading recently. The board of Bendigo has indicated that they will pursue other funding options should Harmony not exercise its option. 
 

                            In 1998, Harmony acquired its first production facility outside South Africa by purchasing the mining assets in the Bissett area of Manitoba in Canada from the liquidators of the Rea Gold Corporation. Harmony has completed the capital expenditure and development programs required to establish a production unit capable of producing over 65,000 ounces per year on this property. In fiscal 2001, due to the mining operations being uneconomical at then-current gold prices, Harmony decided to suspend production at the Bissett mine, and placed the operations on a care and maintenance program during the quarter ended September 30, 2001. On December 2, 2003, Harmony signed a letter of intent regarding the sale of its interest in Bissett to San Gold Resources Corporation for C$7.5 million, subject to certain conditions. See "Item 4. Information on the Company--Business-- Mining Operations--Bissett Operations" and "Item 8.  Financial Information Significant Changes." 
 

                              Since the end of the fiscal year, Harmony has merged with ARMgold, a merger that was completed in September, 2003. For a description of the merger and other recent 
developments since the financial year ended, see below and "Item 8 Financial Information 
Significant Changes." 

                               On January 21, 2003, Randfontein Estates Limited ("Randfontein"), a wholly-owned subsidiary of Harmony, entered into an agreement with Africa Vanguard Resources 
(Proprietary) Limited ("Africa Vanguard"), pursuant to which Randfontein sold 26% of its 
mineral rights in respect of the Doornkop Mining Area to Africa Vanguard for a purchase price 
of R250 million plus VAT. Randfontein and Africa Vanguard also entered into a Joint Venture 
Agreement on the same day, pursuant to which they agreed to jointly conduct a mining operation 
in respect of the Doornkop Mining Area. The Agreements were subject to the fulfilment of 
certain conditions precedent, the last of which was fulfilled on August 12, 2003. The 
Agreements were implemented, and the initial purchase price of $19 million was paid on
August 15, 2003. For US GAAP purposes, Harmony will not account for this transaction as a sale, 
but will consolidate the results of Africa Vanguard and the Doornkop Joint Venture, as both these 
entities have been determined to be variable interest entities, with Harmony as the primary 
beneficiary of both variable interest enteties. 

                               On February 26, 2003, Harmony announced that it had agreed to subscribe for new shares in, and intended to make a public takeover offer for, Australian listed gold producer 
Abelle Limited. The offer closed on March 26, 2003 and Harmony acquired 87% of the shares 
and 65% of the listed options in Abelle. The total consideration payable was A$151 million or 
US$98 million. On June 30, 2003, at a share price of A$1.10 per share, our investment was 
valued at US$127 million. Due to some of the minority shareholders exercising their options, 
Harmony's interest was diluted to 84.57% of Abelle shares and 63.18% of Abelle options in the 
quarter ended September 30, 2003. 

 

21

                               On July 15, 2003, Harmony announced that it had entered into an agreement with Anglo South Africa (Pty) Limited ("Anglo SA") whereby it would acquire 77,540,830 ordinary shares in Avgold Limited ("Avgold") or 11.5% of Avgold's outstanding share capital from Anglo SA, in exchange for 6,960,964 new Harmony ordinary shares issued to Anglo SA. The agreement with Anglo provides that should the Company make an offer to acquire the other Avgold shareholders interest, the consideration payable to Anglo will be adjusted to reflect the amounts paid to the other Avgold shareholders. 

                                On May 31, 2002, Harmony acquired ordinary shares representing approximately 25% of the outstanding share capital of Highland Gold for a purchase price of $18.9 million. On June 28, 2002, Highland Gold issued 750,000 additional shares to Harmony for a purchase price of $11,925 which increased Harmony's aggregate interest to approximately 32.5% of Highland Gold's outstanding share capital. Highland Gold completed an initial public offering on the Alternative Investment Market of the London Stock Exchange during December 2002. As part of the initial public offering, Harmony subscribed for 2,511,947 Highland Gold ordinary shares for a total consideration of approximately $8 million. Following the completion of the initial public offering, Harmony's aggregate interest in Highland Gold's outstanding share capital was 31.7%. Highland Gold is a company organized under the laws of Jersey, Channel Islands which holds Russian gold mining assets and mineral rights, including an operating mine and development projects. Harmony disposed of its investment in Highland Gold on October 14, 2003, for approximately $119.0 million in cash, and realized a pre tax gain of approximately $92.0 million. 

                             On November 22, 2002, Harmony purchased approximately 21.0% of the outstanding share capital of High River for a total purchase price of $14.5 million. High River is a company organized under the laws of Ontario, Canada that is listed on the Toronto Stock  Exchange and holds gold mining assets in Russia, Canada and West Africa, including an interest  in two operating mines in Russia, an agreement to acquire ownership of a development project in  Russia, an ownership interest in an operating mine in Canada and an ownership interest in a development project in Burkina Faso. Harmony disposed of its investment in High River on October 17, 2003, for approximately $22.5 million in cash, and realized a pre tax gain of approximately $7.0 million.

                                On November 7, 2003, Harmony entered into an agreement to dispose of of its wholly-owned subsidiary, Kalgold to The Afrikander Lease Limited ("Aflease") for a total consideration of $39.0 million. The consideration comprised of a cash payment of $19.5 million and the issue by Aflease to Harmony of 25,700,935 ordinary shares in Aflease valued at $19.5 million.

                                 Also on November 7, 2003 Abelle announced that it has entered into negotiations with Legend Mining Limited, whereby Legend has offered to purchase the Gidgee gold project. Legend has made an offer to buy Abelle's 100% legal and beneficial interest in the project for a consideration of A$ 6.5 million (subject to certain adjustments) comprising approximately 600 square kilometers of mining and exploration tenements together with project infrastructure including the CIP gold treatment plant, haul roads and access infrastructure, underground mine and associated infrastructure as well as stockpiles, reserves and resources. The purchase price shall be subject to final adjustment in respect of stores, gold in circuit and environmental bonds. The transaction is conditional on the necessary governmental consents and approvals, including approval of the disposal of the assets by the shareholders of Abelle and Legend within 60 days of acceptance of the offer.

                                  On November 13, 2003, Harmony announced that it reached an agreement in principle with Avmin whereby it would enter into a number of transactions with Avmin. The first transaction involves Harmony acquiring Avmin's 286,305,263 ordinary shares in Avgold, or 42.2% of Avgold's outstanding share capital, in exchange for 28,630,526 new Harmony ordinary shares to be issued to Avmin. Should the acquisition of Avmin's interest in Avgold become unconditional, Harmony will be required to make a mandatory offer to the Avgold minority shareholders on the same terms as which it acquired Avmin's interest in Avgold.  

 

22

On December 2, 2003 Harmony announced its intention to sell Bissett to San

Harmony is an independent growth oriented company in the gold production

The international and South African gold mining industries have been in the

Since undergoing a change in management in 1995, Harmony has employed a

23

Although Harmony's primary focus has been on pursuing growth through the

Harmony is managed according to the philosophy that its shareholders have

The major components of Harmony's strategy include:

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

Harmony implements a simple set of management systems and philosophies,

• Empowered management teams. At each mining site Harmony has

• Active strategic management by the Board. Annual operational goals

24

• Increased productivity. Gold mining in South Africa is very labor

• A no-frills, low cost ethic. Harmony has an obsession about lowering its

• Systems. Harmony has implemented sophisticated cost accounting

Harmony has implemented the "Harmony Way" at its original mining operations

Harmony's acquisition strategy in South Africa has been, and will continue to be,

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

• to acquire mature assets with turnaround potential;

25

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

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

In South Africa, Harmony continues to explore a number of potential acquisitions.

Outside of South Africa, Harmony intends to leverage the broad gold mining

base.

Traditionally, like most other major South African gold producers, Harmony has

In addition, in light of the increase in the market price of gold in fiscal 2002 and

26

As a general rule Harmony sells its gold production at market prices. Harmony

Harmony does not trade in derivatives for its own account. In the past three

A significant proportion of the production at Randfontein was already hedged

In addition, a substantial proportion of the production of both New Hampton and

27

In December 2001, in response to significant depreciation in the Rand and to

Exploration activities are focused on the extension of existing orebodies and

The mining process can be divided into two main phases: (i) creating access to the

• Access to the orebody. In Harmony's underground mines, access to the

• 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

28

Harmony currently has fourteen metallurgical plants that treat ore to extract the

The gold plant circuit consists of the following:

• Comminution. Comminution is the process of breaking up the ore to

• Treatment. In most of Harmony's metallurgical plants, including the

29

Harmony produces its own branded products at its refinery, including various

The South African government has emphasized that the production of value-

30

Mining activities require extensive services, located both on the surface and

The Mining Charter described in "Item 4. Information on the Company--

As part of the "Harmony Way," Harmony structures its mining operations in a

Placing management power at the level of the actual production sites has resulted

31

In addition, on October 2, 2002, Harmony and the United Association of South

Harmony conducts exploration activities by itself or with joint venture partners.

Harmony spent approximately Rand 75 million, excluding contributions from

During the 2003 fiscal year, a joint venture agreement was signed with a private

Harmony's exploration activity in Asia, West Africa and East Africa was

Harmony's Australian operations conduct prospecting at various sites within their

32

In December 2001, Harmony acquired a 31.1% stake in Australian-listed Bendigo

Following the acquisition of Hill 50, Harmony is integrating Hill 50's exploration

Through the Hill 50 transaction, Harmony also acquired two development

33

On February 26, 2003 Harmony made an offer to subscribe for new shares as well

During 2003, Harmony continued to evaluate numerous projects in Peru. Two

With the exception of the Burnside Joint Venture, which Hill 50 and Northern

In South Africa, exploration has been focussed on gold and platinum group metal

During the course of gold prospecting in the Kraaipan greenstone belt in late

34

Harmony is considering various options regarding the platinum and palladium

Capital expenditures, including the non-cash portion, incurred for fiscal 2003

35

37

 

38

The major portion of Harmony's South African gold production is derived from

Conglomerate layers occur in distinctive depositional cycles or packages within

The differences in the morphology and gold distribution patterns within a single

Within the various goldfields of the Witwatersrand Basin there are major and

The majority of Harmony's South African gold production is derived from

Harmony's production from the Australian operations is sourced from Archaean

Harmony applies an ore reserve management system that emphasizes effective

Historically, South African gold mining companies have not been required to

39

In Australia, Harmony and its subsidiaries presently conduct mining at three sites

The following chart details the operating and production results from underground

operations in South Africa for the past three fiscal years:

Given the relative significance of surface production as a proportion of total

production at the Elandskraal operations, Harmony began to segment the Elandskraal operations

42

Tons milled from underground operations in South Africa decreased to

Cash costs for underground operations in South Africa were $250 per ounce of

The following chart details the operating and production results from Harmony's

_________

The amount of gold sold from surface operations in South Africa increased in

43

Underground Operations. Detailed below are the operating and production

results from underground operations at Randfontein for the past three fiscal years:

Fiscal year ended June 30,

2003

2002

2001

Production

Tons (`000) ...........................................................

3,162

3,606

4,397

Recovered grade (ounces/ton)...............................

0.144

0.147

  0.145

0.147

Gold sold (ounces)................................................

454,917

531,588

640,408

Results of operations ($)

Cash cost (`000)....................................................

96,190

93,324

139,781

Cash profit (`000) .................................................

53,166

57,781

31,822

Per ounce of gold ($) ............................................

211

176

218

Tons milled from Randfontein's underground operations were 3,162,000 in fiscal

2003, compared with 3,606,000 in fiscal 2002, and ounces sold were 454,917 in fiscal 2003,
compared with 531,588 in fiscal 2002. This decrease in tons milled and ounces sold was
primarily due to the result of completion of the shaft pillar at Cooke 1 shaft. Cash costs per
ounce of gold were $211 in fiscal 2003, compared with $176 in fiscal 2002. This increase was
attributable primarily to the appreciation of the Rand against the U.S. dollar, which caused a
significant increase when these costs were translated into U.S. dollars. See "Item 5. Operating
and Financial Review and Prospects--Exchange Rates." If expressed in Rand terms, costs per
ounce would have increased in fiscal 2003, due primarily to increases in the costs of labor and
supplies due to the implementation of collective bargaining agreements and the effect of inflation
on supply contracts.

The underground operations at Randfontein are comprised of the underground

sections of the Cooke shafts No. 1, 2, and 3, shaft 4 and the Doornkop shaft.

Set out below are the hoisting capacities of Randfontein's shafts:

Shaft

Hoisting Capacity

(tons/month)

Cooke 1

1

.............................................

194,450

Cooke 2 ................................................

Cooke 3 ................................................

Cooke 4 ................................................

291,700

2

164,200

Doornkop..............................................

54,700

_______________________

1

Currently operating at a rate of 50,000 tons per month in connection with the extraction of the shaft pillar.

2

The shaft was closed during April 2002. The future of the shaft is being considered.

On a simplistic basis (and assuming that no additional reserves are identified), at

the production level achieved in fiscal 2003, the June 30, 2003 reported proven and probable
underground ore reserves of 29.08 million tons will be sufficient for the Randfontein
underground operations to maintain production until approximately fiscal 2009. However,
because the Randfontein operations consist of several different mining sections that are at

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