SOUTH AFRICAN MINING CHARTER OPPORTUNITY OR THREAT

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SOUTH AFRICAN MINING CHARTEROPPORTUNITY OR
THREAT?

• Brenda Madumise

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REGULATORY MATTERS

• LEGISLATION
• October 2002 the President signed the new
  Minerals and Petroleum Resources Act
• ITO of this Act, the State assumes sovereign and
  custodianship of all mineral rights in SA, and
  grants prospecting rights and mining rights to
  applicants
• Provision in the Act in tended to develop a broad
  based socio economic empowerment charter for
  effecting the entry of historically disadvantaged
  South Africans.

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SA Mining Charter

• Scope of application
• The Charter applies to the South African Mining
  Industry

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Seven pillars of the Charter

• Human Resources Development
• Employment equity
• Affirmative Procurement
• Ownership and equity
• Improved housing conditions and reversing migrant
  labour
• Extreme poverty and improvement of infrastructure
• beneficiation

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Human Resource Development

• Scholarships and learning enhancement in terms of
  mathematics and science.Time frame is set for 5
  years
• Government has undertaken to secure training
  opportunities through its bi lateral relations
  with relevant countries
• Mining companies undertake to offer every
  employee the opportunity to become functionally
  literate and numerate by the year 2005

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Employment Equity

• 40 baseline in junior and senior management
  positions- Time frame set at 5 years
• Government will assist in allocation

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Affirmative Procurement

• Capital Goods, services and consumables will be
  considered
• Commitment to a progression of procurement from
  HDSA companies over a 3 to 5 year time frame

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Ownership and Equity

• Achieve 26 HDSA ownership of the mining industry
  assets in 10 years of which 15 is within 5 years
• Joint ventures or partnerships ( 25 plus 1 vote)
• Collective investment, through ESOPs and mining
  dedicated unit trusts
• Mining companies have agreed to raise 10 billion
  over the next 5 years for the purchase and
  transfer of company stock to HDSA

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Improved Housing Conditions and reversing migrant
labour

• Improve the standard of housing including the
  upgrading of hostels, conversion of hostels to
  family units and the promotion of home ownership
  options for employees
• Measures to improve nutrition of mine employees

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Beneficiation

• Meant for job creation
• Mining companies have agreed to identify their
  current level of beneficiation
• Indicate to what extent they can grow the
  baseline level of beneficiation
• Mining companies will be bale to offset the value
  of the beneficiation achieved by the company
  against its HDSA ownership commitments

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Scorecard

• A means by which the objectives of the Charter
  will be implemented and monitored
• Companies will be measured and monitored against
  the seven pillars set out above

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DIAMOND COMPANIES

• TRANS HEX
• NOV 2001
• Mvela increases its stake in Trans Hex to 24.5

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GOLD COMPANIES

• ANGLOGOLD
• MARCH 1998
• Sale of six of Vaal Reefs short life shafts to
  BEE Co ( ARM)
• Sale of Free gold shafts Nos 1,2,3.4,5,6 and 7
  and Welkom mine to ARM
• NOV 2001
• Sale of balance of Free gold assets ( 2832m) to
  Harmony/ARM joint venture

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GOLD COMPANIES

• DURBAN DEEP
• JULY 2002
• DRD sold 60 (R 105.5m) of its Crown Gold
  recoveries operation and a 3 stake to Khumo
  Bathong Holdings(KBH)
• OCT 2002
• Subsequently DRD acquired a 40 participation in
  CGRs acquisition of ERPM for R100m

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GOLD COMPANIES

• GOLDFIELDS
• MAY 2002
• Sale of St Helena gold mine to ARM/Harmony for
  R120m
• MARCH 2004
• Sale of 15 of Gold Fields SA operations ie.15
  of Dries, Kloof and Beatrix to Mvela for R4 100m

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GOLD COMPANIES

• RANDGOLD
• July 2003
• Re-establishes itself as an active mining
  business, focused on developing new resource
  opportunities in SA in partnership with an
  empowerment consortium Phikolosho Mining, which
  now holds a 17 interest in Rand gold. This stake
  will be increased to 26 over time
• Rand gold issued 8,8m new shares, valued at R268m
  to Phikolosho Mining which in return transferred
  its mining related assets to Rand gold. These
  comprised holdings in Anglo Plats, Harmony and
  Aflease, as well as a participation in Kabusha
  Mining and Finance which owns 23m Aflesae shares

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GOLD COMPANIES

• RANDGOLD
• July 2003
• Rand gold concluded a deal with Marothodi
  Resources now a member of Phikolosho consortium
  a 26 stake in its mineral rights management
  company Minrico. Rand gold holds the other 74 of
  Minrico

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GOLD COMPANIES

• HARMONY
• MARCH 2001
• Harmony sells a 10 stake participation in
  Elanskraal to Khumo Bathong for 100m. This stake
  was repurchased by Harmony for R210m.
• NOV 2001
• Acquisition of Free gold Joint Venture from Anglo
  gold (2832).
• FEB 2002
• Acquisition by Simane and the IDC of 10.9m
  (R452m) Harmony shares, representing 6,4 of
  Harmony
• JULY 2002
• Harmony concludes BEE supply initiative with
  Izingododo Holdings to supply 90 of Harmonys
  timber requirements

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GOLD COMPANIES

• HARMONY
• APRIL 2002
• HAR/ARM joint venture acquire 34.5 of Avmin
• AUG 2003
• Sold 26 of the Randfontein Doornkop South Reef
  project to BEE African Vanguard Resources (AVR)
  for R250m
• Harmony will fund the capital expenditure and the
  proceeds from the project will be shared 84
  Randfontein and 16 to AVR
• SEPT 2003
• Harmony and ARM gold merge

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PLATINUM COMPANIES

• ANGLO PLATINUM
• To date Anglo Platinum has facilitated BEE
  transactions on projects and operations with
  value exceeding R4000m.
• JULY 2001
• A 5050 JV with the Royal Bafokeng
• Resources
• AUGUST 2001
• A 5050 JV with a consortium led by ARM platinum
  iro Modikwa Platinum project
• AUGUST 2002
• Agreement reached with gov regarding substantial
  BEE participation on portions of the Eastern Limb
  expansion projects

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PLATINUM COMPANIES

• ANGLO PLATINUM
• As a consequence of the 2002 agreement with govn
  a 5050 JV with a BEE consortium, Khumama
  Platinum, now absorbed into Mvelpahanda, was
  established over the Booysendal and Buttonshope
  areas

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PLATINUM COMPANIES

• IMPALA PLATINUM
• MAY 2004
• Implats disposed off its entire 27.1
  shareholding in Lonplats for cash
• Implats sells 9 of this for US240.1m to a
  number of HDSA investors
• Implats and Lonmin to provide vendor financing
  package of US122m for HDSA investors
• Lonmin to on sell 9 of Lon plats to Incwala
  Resources for US240.1m in cash.
• HDSA investors to sell 9 of Lon plats acquired
  from Implats to Incwala Resources for US240.1m
  in cash to be partly invested in Inkwell
  Resources equity

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PLATINUM COMPANIES

• NORTHAM PLATINUM
• BEE company MVELA currently holds 22.3 of
  Northams issued share capital.
• FEB 2004
• Acquisition by MVELA of a 50 JV (R460.3m)
  interest in the Booysendal Platinum Project
• MARCH 2004
• Northam to acquire a 7.5 interest in the Pandora
  JV from Anglo Plats

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MINING HOUSES

• ANGLO
• Anglo had played a crucial role in the creation
  of three significant black owned empowerment
  groups namely ARM gold, Mvelaphanda in platinum
  and Eyesizwe coal

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MINING HOUSES

• ARM (formerly AVMIN)
• NOV 2001
• Avmin sells its 11.5 stake in ISCOR to BEE
  Stimela for R746m
• SEP 2003 Avmin established as a BEE company
• Harmony acquires Avmins shares in Avgold for
  Harmony shares
• Avmin acquires ARMs stake in Harmony and Modikwa
  Platinum in exchange for Avmin shares
• Avmin acquires Harmonys stake in Kalpalts in
  exchange for Avmin shares

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MINING HOUSES

• ARM (Formerly AVMIN)
• ARM acquires control over Harmonys stake in
  Avmin.
• Patrice Motsepe appointed chairman of Avmin.
• Deal created SAs largest diversified, empowered
  mineral resources company.
• 10 year Mining Charter compliance target
  exceeded.
• ARM holding in AVMIN 63.2
• Avmins (now new ARM) holding in Harmony22.2

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MINING HOUSES

• BHP BILLITON
• 2000
• BHP Billitons Ingwe Coal, together with Anglo
  Coal, established Eyesizwe Coal. In addition to
  the above, Ingwe has made significant reserves
  available to another BEE junior miner, Edulweni
  Resources.
• SEPT 2002
• BHP Billitons Ingwe Coal entered into a deal
  selling the Delmas Colliery to Kuyasa Mining a
  BEE coal company

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MINING HOUSES

• KUMBA
• NOV 2001
• Tiso Capital ( comprising Kagiso trust, Nozala
  and the Northern Cape Mining Partnership form a
  partnership with Kumba
• MAY 2003
• Kumba and eyesezwe Coal sign a 5050 JV agreement
  to jointly develop and operate the Klabasfontein
  project near Witbank

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• THANK YOU