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What is the BEE impact of the Harmony takeover of Goldfield? The two mining giants

have concluded BEE deals of note in the last year that has resulted in getting black

participation within both companies.

The Gold Fields deal with Mvelaphanda Resources resulted in the creation of GFI

Mining South Africa (GFI-SA), which will house Goldfields South African assetscomprising Beatrix Mining Ventures Limited, Driefontein Consolidated (Pty) Ltd and

Kloof Gold Mining Company. In terms of the deal Mvela Gold, a wholly-owned

subsidiary of Mvela Resources, will advance a R4,139 billion loan to GFI-SA which willbe repaid at the end of five years. Interest of approximately 10.23% p.a. will be paid to

Mvela Gold. At the end of five years Mvela Gold will acquire a 15 percent beneficial

interest in GFI-SA for R4,139 billion. Mvela Gold financed the loan through a

combination of third party financing and Mvela Resources equity issue.

The deal enables Mvela Gold to appoint two nominees out of maximum seven to the

GFI-SA board of directors and two members to the GFI-SAs Operations Committee and

Transformation Committee. Mvela Gold may not exercise any shareholder voting rightsuntil the 15 percent equity is issued but will have influence on the GFI-SAs Board and

also the Gold Fields board through its two representatives there.

Furthermore the deals allows either Mvela Gold or Gold Fields to have the Mvela Golds

15% interest in GFI-SA be converted to Gold Fields shares based on an exchange ratio of15% of the value of GFI-SA divided by the value of Gold Fields, with the values of both

GFI-SA and Gold Fields being calculated on an adjusted discounted cash flow basis. This

may occur at the end of the five year loan period.

Harmony has gone through various deals which resulted with ARM (which is majority-

owned by Patrice Motsepe) having 19.8% of Harmony total issued shares. One of thetransaction involved Harmony acquiring ARMs shares in Avgold, equivalent to 42.2%of Avgolds issued share capital, in exchange for Harmony shares to ARM. At that stage

Harmony already owned 11.5% of Avgolds share capital. The acquisition of ARMs

42.2% interest in Avgold became unconditional in April 2004, when Harmony wasrequired to make a mandatory offer to the Avgold minority shareholders on the same

terms on which it acquired ARMs interest in Avgold. In terms of a share exchange

agreement, ARM received 1 Harmony share for every 10 Avgold shares held. Harmony

also disposed of its Kalplats platinum project and associated mineral rights to ARM, inexchange for 2 million new ARM ordinary shares to be issued to Harmony. All of the

above mentioned transactions were consummated during May 2004, which resulted in

Avgold becoming a wholly-owned subsidiary of Harmony.

Therefore what are the BEE implications of the proposed takeover for Gold Fields and

Harmony? In terms of the proposed takeover Harmony will have to increase itsauthorized share capital to enable it to pay for the Gold Fields shares. The extent of the

dilution depends on the acceptance rate of the Gold Field shareholders, if there is 50%

acceptance rate the ARM legal shareholding will be diluted down to 10.1% and with a

full acceptance rate the percentage owned would be 6.7% of total issued shares.

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According to the Harmony calculation as at 30 June 2004, it has 31% BEE credits, which

are in excess of mining charter target of 26%. These BEE credits may be diluted to 15.8%

with a 50% acceptance rate and to 10.5% with a 100% acceptance rate from Gold Fieldsshareholders.

If the takeover bid is successful GFI-SA would be a wholly owned subsidiary ofHarmony meaning that Harmony may assume the rights and obligations of Gold Fields.

Mvela Gold and/or the mezzanine financiers have the option of exchanging the GFI-SA

shares for the Harmony shares in accordance with the agreed upon valuation basis at theafter the five year loan period. The exercising of the Mvela Gold option at the end of the

loan period of five years may assist in increasing the Harmonys black legal

shareholding.

The overall impact of the takeover bid on Harmonys black ownership is that it may be

significantly diluted to a range of 6.7% - 10.1% at the worst-case scenario. The other

option for Harmony is to sell more shares to black people to be within the required level

required by the Mining Charter.