6. CUT-OFF GRADES

6.1 Reserve cut-off grade
In order to define that portion of a measured and indicated mineral resource that can be classified as a proved and probable mineral reserve, Harmony applies the concept of a cutoff grade. The cut-off grade is determined using the company’s 'Optimiser' computer programme which requires the following as inputs:

	the database of measured and indicated resource blocks (per shaft section);
	an assumed gold price which, for this ore reserve statement, was taken as R67 500 per kilogram (US$ 262/oz and R/$ = 8.00);
	planned production rates;
	planned working costs (Rands per tonne); and
	the mine recovery factor (MRF) which is equivalent to the mine call factor multiplied by the plant recovery factor.

6.2 Resource cut-off grade
In order to meet SAMREC’s requirements that the material reported as a mineral resource should have "reasonable and realistic prospects for eventual economic extraction", we have determined an appropriate cut-off grade which has been applied to the quantified mineralised body, according to a process incorporating the following parameters:

	a ten year view; and
	the gold forward price (in Rand per kilogram) for ten years.

Applying this process as input into Harmony’s Optimiser programme to determine the cut-off grades, the average value of 250 cmg/t (approximately 2g/t) is used to determine that portion of the mineralised body that is reported as a mineral resource.