THE VALUE PROPOSITION IN MERGING HARMONY AND GOLD FIELDS “IT JUST MAKES SENSE” March 2005
SOUTH AFRICAN GOLD PRODUCTION AS A PERCENTAGE OF TOTAL WORLD PRODUCTION 600 30 Harmony/Gold Fields merger Randgold Independent Harmony 25 Gold Fields/Gengold 500 20 AngloGold /Minorco
450 AngloGold Ashanti 15 400 10 350 5 300 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Tonnes % of Int. Production % of International Production Annual Production (t) 550 THE GOLD INDUSTRY – A DIFFICULT ENVIRONMENT 400000 This industry has consistently lost jobs over the last 10 years 350000 300000 250000 200000 150000 100000 50000 0 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 Average number of employees in service on Chamber member gold mines Harmony employment numbers
THE PROPOSED MERGER BETWEEN HARMONY AND GOLD FIELDS OUR OFFER • share for share offer for 100% of Gold Fields • 1,275 Harmony share for every Gold Fields share • represents a 29% premium to the volume weighted average market price of Gold Fields and 30 days prior to the announcement KEY REMAINING CONDITIONS • approval from the South African Competition authorities ­ 40 business days from filing date – received on 11 February 2005 • Competition Tribunal pre­hearing on 25 February 2005 – anticipated date of hearing – 3 May 2005
WHAT HAVE WE ACHIEVED TO DATE ? • within a period of approximately 4 months:­ – we received a strong mandate from our shareholders – we took ownership of 11,5% of Gold Fields – IAMGold transaction was rejected by Gold Fields shareholders, leaving the company without any strategic direction and/or alternatives • no conditions precedent except Competition Authorities • Norilsk’s irrevocable undertaking remains intact WE REMAIN EN ROUTE TO TAKE CONTROL OF GOLD FIELDS
A MERGED HARMONY AND GOLD FIELDS • both companies have a combination of diverse assets: – quality, low cash cost ounces – orebody optionality from high cash cost ounces • merging the two companies creates the world’s largest international gold producer with a low cash cost profile • we plan to increase the margin on the GFI ounces by 15% • we retain the higher cash cost ounces for exposure to future currency weakness • we have the proven ability to extract value during the various cycles
NEW HARMONY – IMPRESSIVE COST EFFICIENCIES Total production cost in Rand per kg, real terms 75,000 Harmony 70,000 66,917 Gold Fields 65,987 New Harmony 67,017 New Harmony incl savings 66,988 66,023 65,000 60,000 55,000 2006 2007 2008 2009 2010 Underground SA production cost in Rand per ton, real terms 600 Harmony 500 441 Gold Fields 440 New Harmony 449 New Harmony incl savings 450 450
400 300 200 100 0 2006 2007 2008 2009 2010 NEW HARMONY – PRODUCTION PROFILE New Harmony production profile Production, '000z (LHS) Growth gap
9,500 9,000 8,500 8,000 7,500 7,000 6,500 6,000 5,500 5,000 Grade (RHS) 5.0 4.0 3.0 2.0 1.0 0.0 2006 2007 2008 2009 Gold Fields production profile Harmony production profile 4,500 5.2 5.1 5.0 4.9 4.8 4.7 4.6 4.5 4.4 4.3 4,000 3,500 3,000 2,500 2,000 2006 2007 2008 Production, '000z (LHS) 2009 2010 2010 Grade (RHS) 4,500 4.0 3.5 4,000 3.0 2.5 3,500 2.0 3,000 1.5 1.0 2,500 0.5 2,000 0.0 2006 2007 2008 Production, '000z (LHS) 2009 2010 Grade (RHS) NEW HARMONY – PRODUCTION SUPPORTED BY LARGE RESERVE BASE Reserve Attributable production New Harmony New Harmony Newmont Barrick Anglo Gold Newmont Barrick Anglo Gold Placer Dome (‘000 oz) 0 2,000 4,000 6,000 8,000 (m oz) Placer Dome 0 50 Large producer with significant life of mine reserves
Source: Company’s Annual Report 100 150 IMPACT OF HARMONY WAY (CONT’D) Impact of Harmony Way and gold price on Driefontein extension projects Breakeven Driefontein gold price under Projects GF management Breakeven gold price under HAR management 9# R97 382 R82 775 11.1 5# R85 057 R72 298 Total Project reserves M oz Potential reserves M oz (@R115/g) 8.3 19.4 40.9 Impact of Harmony Way and gold price on Kloof extension projects Kloof Projects Breakeven gold price under GF management Breakeven gold price under HAR management KEA R89 056 R75 698 3.4 EBA R86 198 R73 268 10.9 Total Project reserves M oz 14.3 Potential reserves M oz (@R115/g)
69.3 A COMPELLING EQUITY STORY Harmony: #17 Gold Fields: # 10 # 1 Anglo American 2 BHP Billiton 3 Richemont 4 SABMiller 5 Sasol 6 New Harmony 7 Standard Bank 8 MTN Group FTSE/JSE Africa Top 40 Index # 6 Gold Fields: # 506 Harmony: #616 NYSE Composite Index # 348 HSBC Global Gold Index Harmony: #6 Gold Fields: # 5
#2 Company # Company 345 United Microelectronics 346 AmSouth Bancorp 347 Swisscom AG 348 New Harmony 349 Edison International 350 Clorox Co 351 Stora Enso Oyj # Company 1 2 3 4 5 6 7 8 9 10 Newmont Mining Group New Harmony Barrick Gold Corp AngloGold Ashanti Placer Dome Newcrest Mining Minas Buenaventura Goldcorp Glamis Gold Kinross Gold FF Market Weighting Cap (ZARm) (%) 220,837 166,649 93,856 89,485 86,568 71,697 66,933 52,174 FF Market cap (US$m) 8,705 8,642 8,636 8,630 8,520 8,516 8,515 15.40 11.62 6.54 6.24 6.04 5.00 4.67 3.64 Weighting (%) 0.059 0.059 0.059 0.059 0.058 0.058 0.058 Market Cap Weighting (US$m) (%) 17,920 21.13 10,998 12.97 10,854 12.80 9,577 11.29 8,095 9.54 3,622 4.27 2,996 3.53 2,502 2.95 2,405 2.84 2,264 2.67 • access to a greater investor universe • increased index weighting • increased liquidity • global scale and relevance • Higher quality oz • Low cost producer THERE IS NO VALUE DESTRUCTION Pro Forma Market Cap Analysis (1) $ MM Launch of Offer: 18 October 14,000 12,000 10,000 8,000 take­over speculation
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4 6,000 Harmony/Gold Fields AngloGold Ashanti Source: FactSet • an analysis of the market cap of the two entities shows no anomaly our offer of 1,275 Harmony shares per Gold Fields share is a full and fair offer, and includes an upfront premium for control DISPOSAL OF OUR SHAREHOLDING IN ARM • Nedbank brought us a fully underwritten offer for our 20% stake in ARM which is to be injected into an empowerment vehicle • there is an in principle agreement that ARMI will lead Newco • details of the consortium are being finalised • if implemented today it would release in excess of R1,1 bn to Harmony • this deal will be concluded in the next few weeks
ON TRACK WITH OUR DELIVERY ON WORKING COSTS QUARTER TARGET ACHIEVED • June 2004 R83 173/kg • Sept 2004 R80 000/kg R77 881/kg • Dec 2004 R77 500/kg R77 415/kg • June 2005 R75 000/kg (on target) For the Financial Year June 2004, our cash costs were R79 599/kg. For the year to date our costs have decreased by 3%
TARGET COST PERFORMANCE 60000 600 Harmony assumed management control in June 2004 6,5g/t 8,0 g/t 8,1 g/t 500 50000 R/kg R/tonne
6,7 g/t 10,8 g/t 11,8 g/t 40000 400 30000 300 Sept '03 Dec '03 Mar '04 R/kg Jun '04 R/tonne Sept '04 Dec '04 ELANDSRAND 102 LEVEL March ‘04 Development Reef metres Waste metes Stoping m² Stoping width Tonnes Cmg/t Kg's broken MCF % Kg's recovered Recovered grade g/t June ‘04 Sept ‘04 Dec ‘04 135 447 87 493 90 335 200 201 1052 108 3134 2028 59 78 46 14,6 1854 118 6017 1831 93 84 78 13,0 3086 115 12065 2238 234 66 155 12,8 4435 121 14806 1470 179 80 143 9,6 Results confirm that we are building a high grade (7,5 – 8,0 g/t) and low cost mine for the next 20 years
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
This presentation contains "forward­looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and 21E of the Securities Exchange Act of 1934, as amended, that are intended to be covered by the safe harbour created by such sections. All statements other than those of historical facts included in this presentation are forward­looking statements including, without limitation, (i) estimates of future earnings, and the sensitivity of earnings to the gold and other metals prices; (ii) estimates of future gold and other metals production and sales, (iii) estimates of future cash costs; (iv) estimates of future cash flows, and the sensitivity of cash flows to the gold and other metals prices; (v) statements regarding future debt repayments; (vi) estimates of future capital expenditures; (vii) estimates of reserves, and statements regarding future exploration results and the replacement of reserves; and (viii) statements regarding modifications to the Company's hedge position. Where the Company expresses or implies an expectation or belief as to future events or results, such expectation or belief is expressed in good faith and believed to have a reasonable basis. However, forward­ looking statements are subject to risks, uncertainties and other factors, which could cause actual results to differ materially from future results expressed, projected or implied by such forward­ looking statements. Such risks include, but are not limited to, gold and other metals price volatility, currency fluctuations, increased production costs and variances in ore grade or recovery rates from those assumed in mining plans, as well as political and operational risks in the countries in which we operate and governmental regulation and judicial outcomes. For a more detailed discussion of such risks and other factors, see the Company's Annual Report on Form 20­F for the year ended June 30, 2004, which is on file with the Securities and Exchange Commission, as well as the Company's other SEC filings. The Company does not undertake any obligation to release publicly any revisions to any "forward­looking statement" to reflect events or circumstances after the date of this presentation, or to reflect the occurrence of unanticipated events, except as may be required under applicable securities laws. Questions Website www.harmony.co.za