JOHANNESBURG - Harmony Gold has now confirmed most of the miners at its Elandsrand gold mine, trapped underground because of damage to the main hoisting shaft, are now on surface with the remainder due out within the next hour.  This effectively brings to a temporary end the news story that generated so much misinformation worldwide.  At no point were the trapped miners in any danger and, as Mineweb pointed out late last night, the only problem was likely to be some discomfort, hunger, rank conditions and boredom as the large number of workers queued to be brought to surface via the lower capacity ventilation shaft.

At one point, Harmony Gold's acting chief executive officer Graham Briggs and Elandsrand gold mine's chief operating officer Alwyn Pretorius, went down the mine themselves to boost morale of those waiting to be brought to surface.  Harmony spokeswoman, Amelia Soares also said a paramedics team was sent to assist workers who also had access to water.  The South African Minerals and Energy Minister, Buyelwa Sonjica and the Harmony Chairman, Patrice Motsepe, were also on site at the mine to see the miners to surface.

Soares conceded that the pipe which fell down and severed an electric cable in the shaft, effectively bringing hoisting operations in the main man hoisting shaft to a halt, was a compressed air pipe which could have broken off due to fatigue.  She said the company spent R1.2bn in capital expenditure this year on maintaining its shafts and R114m on Elandsrand alone. 

Elandsrand production in the last quarter was 1.649 tonnes of gold.

Harmony is in the process of expanding Elandsrand with a second mine below the first, extending mine working depth from 2,200m to 3.6 km underground.  The new mine section contributed half of the annual production and will produce 847,000 tonnes per month of ore when it reaches full production in 2010.

When the extended mine reaches full capacity Elandsrand is projected to produce some 3.5 tonnes of gold a quarter.

Soares said the impact of the incident on production would be significant as the mine was expected to be shut for several days while repairs and an investigation into the accident are carried out.  

According to Soares the incident will not hamper Harmony Acting CEO Briggs' effort to turn Harmony Gold around. She said he has received good support from company directors and management and the incident was just another obstacle to overcome.

But, Minerals and Energy Minister, Sonjica, has said the mine will be shut down for three to six weeks while an enquiry takes place into the accident and safety systems which will put a further dent in Harmony's final quarter earnings.

JP Morgan told Associated Press that damage to the Elandsrand shaft came at a particularly bad time for the group and would dent its December financial results severely.

JP Morgan's Alan Cooke said the incident was bad news for Briggs who wanted to report a solid quarter at the end of his six-month acting tenure.  Briggs was appointed as acting CEO in August after former CEO Bernard Swanepoel resigned.

Cooke said mines were usually insured for repairs, but warned that an insurer may decide to argue negligence as weekly shaft examinations should detect weaknesses such as occurred in this instance.

"We continue to rate the stock ‘Overweight', though it has to be said, the Elandsrand shaft incident represents a setback."