Alexkor Limited

1
Alexkor Limited Select Committee 8 March 2005
2
INDEX

• Location
• Corporate Structure
• Financial Review
• Challenges
• Mining
• Litigation
• Way Forward

3
LOCATION
4
Northern Cape Semi desert with limited
agricultural potential Small seasonal tourist
industry Local economy mineral driven
5
(No Transcript)
6
(No Transcript)
7
CORPORATE STRUCTURE
8
CORPORATE STRUCTURE
9
FIANCIAL REVIEW
10
Results

• Compared to FY03
• Earnings per share up 570 to 71.5 cents
• Return on shareholders funds of 89
• Operating expenses well contained up 0.2 to R238
  million
• US price per carat up 9
• Diamond production up 0.6 to 79,725 carats
• US exchange rate down 22
• Cash and cash equivalent at year end up 6 to
  R71.4 million
• Profit margin rose from 2.14 to 13,50
• The current ratio at 14.09
• Diamond production income decreased from R251.2
  million to R227.04 million.
• Net asset value per share improved from 27.2 cent
  to 90.36 cents.
• ABT reduced the operating loss by 98 to R82,276
  from R5.02 million
• Capex (Replace of property, plant and equipment)
  up 43 to R15.9 million
• Exploration spend up 497 to R13.5 million
• Net tangible value up to 358 cents/share from 316
  cents/share

11
NET PROFIT/(LOSS)
12
Diamond prices achieved
13
Net operating expenses(R millions)
14
Available Cash as at 30 June 2004
15
(No Transcript)
16
(No Transcript)
17
RevenueTotal Revenue R264 million
18
ABM operating profit
19
(No Transcript)
20
(No Transcript)
21
(No Transcript)
22
MINING
23
(No Transcript)
24
(No Transcript)
25
Marine Mining
26
5 Year Carat Plan
27
Revenue/Profit Plan
28
CHALLENGES
29
Major Challenges

• Massive replacement Capex
• Extensive exploration on land
• Land Claims case
• Litigation
• Long term liabilities

30
Timeline

• Timeline
• 18 Dec 2003, DPE Min, N.C Premier, Dep. Min Land
  Affairs RV community LRC
• 23 Dec 2003, RV Community submitted proposal to
  Government.
• 31 March 2004 Government responds to RV
  settlement proposal.
• LCC 1st 2 nd April 2004
• New DPE Minister _at_ Alexkor 15/07/2004
• Main Hearing 2005

31
RV Settlement Proposal

• 90 of Alexkor Shareholding
• 10 Transfer to NAMDA
• Restoration of the rights in the subject land
• Ownership of subject land
• The right to minerals in the subject land.
• Exclusive beneficial use occupation of land.
• Compensation for minerals extracted
• Repair of and compensation for environmental
  damage
• NB Undue burden on the governments LTD resources.

32
Rationale

• Controlling interest to an SEP
• Mitigate against over reliance on Government fund
• Viability of Mining Activities needs a capital
  injection of R500 million
• SEP Infuse technical strategic expertise to
  the company
• Government
• Oversight Role S T
• Exit Strategy L T
• Implementation Spec Period
• Alexkor to invest in other sustainable economic
  development models
• Government cannot provide seed funding
• Participation by RV _at_ BOD level in carving the
  final end state of Alexkor Ltd

33
Capital additions vs disposals
34
Exploration costs (R millions)
35
LITIGATION
36
NABERA / ALEXKOR
MANAGEMENT FEE AND CHARGEABLE COSTS
REMUNERATION FOR VALUE ADDED
Nabera claimed R3.1 million
Alexkor put R6.1 Million in trust
Snowden jointly appointed
¹/? of R357 million
Internal Auditors
Nabera owes R826,603
R119 million
Misapplication/Inconsistent application of
agreed Valuation Methodology
Mediation
Parties are prepared to talk
Technical/Legal advice
Will oppose claim
37
WAY FORWARD
38
Long term liabilities

• Provision for post medical retirement aid
  decreased by R5 million. Total liability is R86.5
  million.

2003 88 employees still on our books. Valuation was based on 2/3 contribution, whereas it should have been 100. Contribution increase In service employees 10.2 and pensioners 17.5
2004 As of 1 January 2004 Capping of medical aid Pensioners moved from Executive Option to Comprehensive Option.
39
Long term liabilities (continued)

• EMPR, Vol3,CSIR,1994 R17.58 million
• _at_ June 30, 2004 escalated R32.93 million
• _at_ June 30, 2004 Rehabilitation Trust Fund R8.8
  million
• _at_ October 2003, monthly contribution increased
  from R100 000 to R230 000
• Prescribed formula in the Aide-Memoire of DME
  (R201,518)
• Reg 5.16.3 of Mineral Act 50 of 1991
• SPC determining the quantum
• Completion towards end of first semester FY05