SA rand | US dollar | ||||||
---|---|---|---|---|---|---|---|
2009 | 2010 | Figures in million | 2010 | 2009 | |||
5 | Cost of sales | ||||||
7 657 | 8 358 | Production costs (a) | 1 103 | 850 | |||
1 176 | 1 326 | Amortisation and depreciation of mining properties, mine development costs and mine plant facilities | 175 | 130 | |||
77 | 49 | Amortisation and depreciation of assets other than mining and mining related assets (b) | 6 | 9 | |||
5 | 29 | Rehabilitation expenditure (c) | 4 | 1 | |||
44 | 57 | Care and maintenance cost of restructured shafts | 8 | 5 | |||
39 | 205 | Employment termination and restructuring costs (d) | 27 | 4 | |||
113 | 148 | Share-based payments (e) | 20 | 13 | |||
546 | 331 | Impairment of assets (f) | 43 | 71 | |||
2 | (19) | Provision for post retirement benefits (g) | (3) | | |||
9 659 | 10 484 | Total cost of sales | 1 383 | 1 083 | |||
(a) | Production costs include mine production, transport and refinery costs, applicable general and administrative costs, movement in inventories and ore stockpiles and ongoing environmental rehabilitation costs as well as transfers to and from deferred stripping. Ongoing employee termination costs are included, however employee termination costs associated with major restructuring and shaft closures are excluded. Production costs, analysed by nature, consist of the following: | ||||||
4 857 | 5 776 | Labour costs, including contractors | 762 | 540 | |||
1 937 | 2 284 | Stores and materials | 302 | 215 | |||
840 | 1 212 | Water and electricity | 160 | 93 | |||
222 | 178 | Insurance | 24 | 25 | |||
136 | 140 | Transportation | 19 | 15 | |||
(14) | (20) | Changes in inventory | (3) | (2) | |||
(953) | (1 187) | Capitalisation of mine development costs | (157) | (106) | |||
| 6 | Deferred mining | 1 | | |||
(25) | (35) | By-products sales | (5) | (3) | |||
| 33 | Royalty expense | 4 | | |||
657 | (29) | Other | (4) | 73 | |||
7 657 | 8 358 | Total production cost | 1 103 | 850 | |||
(b) | Amortisation and depreciation of assets other than mining and mining related assets | ||||||
8 | 16 | Other non-mining assets | 2 | 1 | |||
24 | 30 | Intangible assets | 4 | 3 | |||
45 | 3 | Amortisation of issue costs | | 5 | |||
77 | 49 | Total amortisation and depreciation | 6 | 9 | |||
(c) | For the assumptions used to calculate the rehabilitation costs, refer to note 3.4. | ||||||
This expense includes the change in estimate for the rehabilitation provision as well as ongoing rehabilitation cost. | |||||||
(d) | Employment termination and restructuring costs consist of the following: | ||||||
Harmony Gold Mining Company Limited | |||||||
10 | 72 | (Harmony) | 9 | 1 | |||
9 | 4 | Randfontein Estates Limited (Randfontein) | 1 | 1 | |||
8 | 116 | Evander Gold Mines Limited (Evander) | 15 | 1 | |||
ARMGold/Harmony Freegold Joint Venture | |||||||
12 | 12 | Company (Proprietary) Limited (Freegold) | 2 | 1 | |||
| 1 | Avgold Limited (Avgold) | | | |||
39 | 205 | Total employment termination and restructuring cost | 27 | 4 | |||
During the 2010 financial year, certain shafts in Harmony and Evander were closed and placed on care and maintenance. These closures were due to mining no longer being economically viable as a result of the current economic situation. The group also engaged in a voluntary retrenchment process during the year, resulting in retrenchment costs for various operations. | |||||||
(e) | Refer to note 34 for details on the share-based payment schemes operated by the group. | ||||||
(f) | Impairment consists of the following: | ||||||
52 | 249 | Virginia(1) | 33 | 7 | |||
236 | 11 | Target(1) | 1 | 31 | |||
258 | 70 | Evander(1) | 9 | 33 | |||
| 1 | Australia | | | |||
546 | 331 | Total impairment of assets | 43 | 71 | |||
(1) | During the 2010 financial year impairments to the value of R300 million (US$40 million) were recognised mainly as a result of the shaft closures discussed under note 5(d) above. The remaining balance in 2010 and the impairment in 2009 resulted from revised business (life-of-mine) plans, which are completed in June of each year, and included increases in electricity and labour costs. Included in 2009 for Evander and Target was additional capital expenditure that was needed to access reserve ounces in areas where geological anomolies have been discovered. | ||||||
These adjustments impacted negatively on the recoverable amount of property, plant and equipment and contributed to the recognition of the impairments at the shafts. Impairment tests were performed as required by IAS 36, Impairment of Assets, and as a result these impairments were recorded. For assumptions used to calculate the recoverable amount, refer to note 3.1. | |||||||
(g) | The net credit of R19 million (US$2.5 million) is a result of curtailments in 124 members post employment subsidies due to renegotiation of employment contracts. These members were transferred from Freegold employment conditions to Harmony employment conditions. |