Presentation of the Annual Financial Statement for the year ended 31 March 2012

1. Presentation of the Annual Financial Statement for the year ended 31 March 2012

2. Overview • Welcoming • Annual reports and disclosures • Financial statements

3. Chairman’s report • Key Objectives • Secondment of Alexkor’s employees to the Alexkor RMC JV • Separation of costs and reporting between Alexkor and the Alexkor RMC PSJV • Commence exploration processes for the land mining and deep water concessions • Financial Performance • Total combined revenue for Alexkor and the Alexkor RMC JV in line with previous year • Alexkor RMC JV expected to return losses for the next 3 years whilst in a phase of exploration. Exploration will restore profitability in due course

4. Chairman’s report (continued) • Going Concern • Alexkor submitted a MTEF application, an amount of R350 million has been approved by the National Treasury • Accordingly Alexkor has sufficient cash resources to March 2013 • Significant funding required thereafter • Reporting and Corporate Governance • Continuously implementing measures to improve compliance with PFMA ,Treasury Regulations as well as King 3 • Monitoring performance on an ongoing basis • Future Outlook • Pursuing and developing new ventures

5. CEO’s report – the year under review • PSJV became custodian of all operational activities, diamond revenue and related expenses present in Alexander Bay. • Alexkor remained with its corporate structure and obligation towards the environmental liability, the post-retirement medical aid liability and the obligations set out in the Deed of Settlement • First year in which Alexkor only incorporated 51% of profits of its historical operations in the Alexander Bay area (RMC has 49% interest), therefore Alexkor’s financial statements reflect material losses.

6. CEO’s report – the year under review (continued) • Alexkor made sound progress with the upgrade of the Alexander Bay town, more than R57 million in expenses were incurred during the year • Three of four phases completed and final completion of the township upgrade expected in December 2012. • Achieved 2000 fatality-free production shifts (FFPS) in July 2011 (Focused and committed to health and safety of the employees and contractors within its operations.)

7. CEO’s report - Land Rehabilitation • 129 kilometers of netting was installed on the south side of Boegoeberg during the year under review, as compared to 75 kilometers in the previous year. • Confident that our ever-improving efforts are having a positive impact in addressing the historical liability.

8. CEO’s report - Implementation of the PSJV • The PSJV is now operating and being managed independently from Alexkor. • The split of the accounting records was done successfully and therefore many of challenges encountered during entire implementation process have been satisfactorily resolved in line with the requirements of the Deed of Settlement.

9. CEO’s report – Financial losses Annual financial statements consisted of Alexkor’s own operations and 51% of the PSJV operations. All operational activities were transferred to the PSJV, therefore Alexkor had no other income generating streams but remained with its overhead costs which worsened Alexkor’s profit position Budgeted loss R20 million – actual loss R16.4 million. Material items contributing to loss: Pooling of mining assets into the PSJV – loss of R7.8 million (R3.9 million for consolidation purposes) Forfeiting 49% of the profit to PSJV - resultant loss R7.9 million Bad debts from Alexander Bay residents amounting to R2.2 million

10. CEO’S report - New business development • Only viable option to ensure profitability and sustainability into the future is to acquire other means of generating income. • Alexkor’s 51% investment in the PSJV will be relatively passive in the next three to five years due to the exploration activities planned on the land mining concessions. • Alexkor has in the past year been assessing new opportunities with its efforts predominantly focused on the Northern Cape and North West provinces. • Objectives are to expand diamond operations

11. CEO’S report - New business development • Benefits from new business opportunities: • creation of more job opportunities • social upliftment in the surrounding regions • training of employees and improving their skills • increased revenues and profits • distribution of dividends to the shareholder • Alexkor’s in final stages of negotiations with some of identified opportunities and is expected to submit its section 54 application to the Minister in near future. • These opportunities are greenfield operations and promise to provide attractive returns in future.

12. CEO’s report – Financial position and 2013 prospectus • Net asset value R20.4million (2011: R16.9 million) • R350 million was allocated through Alexkor’s MTEF application for the settlement of statutory obligations in terms of VAT, CGT and a rental lease as a result of Deed of Settlement requirements • The balance is to settle historical rehabilitation and post-retirement medical aid (PRMA) liabilities • Allocation will significantly improve Alexkor’s financial position and clean out all legacy issues i.t.o liabilities inherited from historical operations to ensure solvency going forward

13. CEO’s report – Financial position and 2013 prospectus (continued) • With all the liabilities settled and outstanding obligations addressed in terms of the DoS, Alexkor can focus on new opportunities. • At the same time it can positively contribute to the region and the shareholder’s objectives in terms of improving the economy and increasing employment in surrounding communities.

14. CEO’s report - Township upgrade • Upgrade consists of four phases, an amount of R115 million was received from government as part of this initiative in accordance with municipal standards. • Phase 1 (civil engineering services) was completed on 15 December 2011. • Phase 2 (electrical engineering services) was subsequently completed in July 2012 (95 %complete on 31 March 2012). • Phase 3 (mechanical and electrical pumping equipment) was completed in February 2012 • Phase 4 (waste water treatment works) experienced problems with the waste license which was not signed by Environmental Affairs in Pretoria. Completion is expected during December 2012.

15. Review of PSJV’s operations • Net profit R14.6 million (Budget - R1.7 million) • Average exchange rate R7.29/$1 – budget R7.20/$1 • Revenue R168.7 million – budget R172.8 million, reason for the lower than budgeted revenue figures related to lower $/carat diamond prices along with the decline in sea-days during the year • Achieved an operating profit of R9.5million in its first year of operations

16. Overview on operations (Alexkor and PSJV) Carats produced since the year 2000

17. Overview on operations (Alexkor and PSJV) Sea days since the year 2003

18. Human resources and social development • The selection committee prioritises the selection of historically disadvantaged South African (HDSA) candidates, ensuring compliance with the company targets in terms of the requirements of the empowerment charter for the South African mining industry. • The headcount as at 31 March 2012 was 104 permanent employees, 60 fixed-term contractor employees and a total of 611 outsourced contractors involved in diamond production. • Salaries paid to employees for the period under review amounted to R20.6 million. Payments to outsourced contractors amounted to R104.4 million

19. Human resources and social development (continued) • As at 31 March 2012 union representations stood at: • The relationship with these unions during the period under review was generally positive.

20. Human resources and social development (continued) • In April 2011 the company started wage negotiations with NUM and UASA. An agreement was reached on the following: • An annual total cost to company (TCTC) wage increase of 7.5%. • A bonus of 4.5% based on the gross operating profit of R11.3m achieved during the previous financial year shared equally among all employees of the company. • The unions pledged, in terms of the agreement, a commitment to increase production by 10% year-on-year

21. Human resources and social development (continued) • The table below depicts further training and development initiatives undertaken by the company: Academic learnerships

22. Human resources and social development (continued) • Community portable training: • Community portable training(continued)

23. Human resources and social development (continued) • The following table presents the company’s EE profile as at 31 March 2012:

24. Human resources and social development (continued) • An amount of R 3.4 million was expended on social interventions • Social and labour plans have been submitted in which certain objectives were set and specific commitments made: • Resurfacing and grading of dirt roads (could not commence due to the lack of funding.) • Alcohol, drug and HIV/Aids support services (Consultations are currently taking place) • Establishment of emergency services in partnership with the Richtersveld Municipality (will be attended to during the 2013 financial year due to lack of financial resources) • Exploiting natural resources in the area by establishing a tannery and leather business: (Due to the closure of Beauvallon ostrich and Dunvlei dairy farms this project had to be aborted.)

25. Human resources and social development (continued • Develop fuel stations where such outlets are considerable distances away: (This project is not feasible) • Promote agriculture and agro-processing through support for community co-operatives: (Lack of funding prohibited Alexkor RMC JV from commencing this project) • The upgrade of Alexander Bay Town • Hostel Revamp (As at 31 March 2012 more than R700 000 has been expended on the purchase of material to upgrade the single quarters hostel facility into family units) • Consultants will be engaged to assist with the preparation of a revised social and labour plan for submission to the Department of Mineral Resources (DMR)

26. Corporate Governance • The board comprised of five non-executive directors and the acting chief executive officer. • The board has established the following sub-committees: - Audit and Risk Committee (Chairman: Ms S Ngoma) - Tender Committee (Chairman: Mr C Towell - Remuneration Committee (Chairman: Dr V Makin) - Rehabilitation Committee (Chairman: Dr R Paul) - PSJV Board (Acting Chairman: R Muzariri)

27. Corporate Governance (continued) • The remuneration paid to directors and senior management was as follows:

28. Reporting on predetermined Objectives • The following objectives, targets and achievements were reported on in the 2012 financial year:

29. Reporting on predetermined Objectives (continued)

30. Reporting on predetermined Objectives (continued)

31. Reporting on predetermined Objectives (continued)

32. Reporting on predetermined Objectives

33. Statement from the Audit and Risk Committee • The Committee performed its functions in accordance with section 94 (7) of the Companies Act No 71 of 2008 and the provisions of the Public Finance Management Act. • The Committee has adopted appropriate formal terms of reference as its Charter and has regulated its affairs in compliance with this Charter. • Comprised of three independent non-executive directors who had the required knowledge and experience as set out in section 94(5) of the Companies Act and regulation 42 of the Companies Regulation, 2011.

34. Statement from the Audit and Risk Committee (continued) • In the opinion of the Committee, the internal controls of the company are considered appropriate to meet the business objectives of the company, ensure the company’s assets are safeguarded and ensure that transactions undertaken are in the company’s accounting records. • The committee has evaluated the annual financial statements for the year ended 31 March 2012 and considers that they comply, in all material respects with the requirements of the PFMA as amended, the Companies Act, and International Financial Reporting Standards

35. Statement from the Audit and Risk Committee (continued) • The Committee acknowledges that Alexkor has made significant progress in addressing the control weaknesses identified previously and looks forward to the future control environment, which will provide a sound basis for Alexkor to meet its obligations to its stakeholders. • The Audit and Risk Committee therefore recommended the adoption of the annual financial statements by the Board of Directors.

36. Auditor’s report • PricewaterhouseCoopers (PwC) presented an unqualified audit opinion for the 2011 financial year. • An emphasis of matter was reported with regards to Alexkor’s going concern principle as there is significant doubt on whether the company can continue in the longer term without the commencement of sustainable mining activities. • Non-compliance issues were also raised with regards to the PFMA and performance information

37. Directors’ report Background Farming operations transferred in 2008 PSJV established 7 April 2011 Board of Directors 5 non-executive CEO (contract expired 22 September 2012). CFO has since been acting in this capacity Board awaiting appointment of 3 additional directors before proceeding to appoint permanent CEO

38. Directors’ report (continued) Strategic Objectives Establishment and commencement of Alexkor RMC JV Commence with exploration in the onshore and offshore mining and prospecting areas New Business Opportunities Exploration expected to commence in 2013 Actively pursuing opportunities in Northern Cape and North West provinces Beneficiation study Litigation Statement Ruslyn Nabera Compensation Claim

39. Directors’ report (continued) Environmental Rehabilitation Liability R258.0 million Cash in trust R48.7 million Unfunded portion R209.9 million Unfunded portion guaranteed by DPE Going Concern Cash on hand R69.1m as at 31 March 2012 Post Retirement Medical Aid Liability Balance R46.95 million Expected outflow in 2012 R47 million PFMA, Predetermined Objectives Covered elsewhere

40. Directors’ report (continued) Company secretary Ms Mxunyelwa Non current assets Major changes due to pooling of assets into the Alexkor RMC JV Board evaluation progress Conducted independent assessment of its effectiveness Implemented various remedial interventions and intends conducting another follow up assessment Board continues to identify areas requiring on- going education for itself as part of board evaluation process and board development

41. Annual Financial Statements • The PSJV commenced on 7 April 2011 • Alexkor has a 51% stake in the operations of the PSJV • Alexkor remained with the following costs: • Head office (Corporate costs) • Township management (housing and town maintenance) • Rehabilitation (historical disturbances up to 6 April 2011) • Alexkor reported on its 51% share in the PSJV by proportionately consolidating the relevant items line by line • Alexkor therefore kept most of its costs and was only able to account for 51% of the profits in the PSJV, which inevitably resulted in a loss as it had no alternative income streams to cover the costs involved in Alexkor’s operations outside the PSJV.

42. Annual Financial Statements Statement of financial position on 31 March 2012: • Cash held in the Rehab Trust R48.1m (2011: R36.9m) • Non-current assets held for sale (R162.4m) will be transferred when the Township Upgrade is complete • NET ASSET VALUE is R20.4m (2011: R16.8m) • Rehabilitation liability is R258.0m (2011: R256.6m) • PRMAL is R46.9m (2011: R58.4m)

43. Statement of financial performance • Revenue down R113.4m (2011: R195.9m) – Loss of 49% of the operating profit. • If revenue was not divided between entities it would have been R196.1m (2011: R195.9m) • Gross loss R9.8m (2011: R24.9 profit) • Loss for the year R16.4m (2011: R84.2 profit), therefore movement of R100.6m. Main reasons for the movement were: • Movement in gross profit was R34.7m (better diamond price and production last year, Alexkor forfeited 49% of the profits this year due to the formation of the PSJV • Other income in the previous year included a prepaid income item of R41.3m • Movement in rehab and PRMAL accumulated to R21.1m

44. Statement of changes in equity • R20 million was recognised in equity (other comprehensive income) • This amount was transferred from the initial cost contribution (R200m) to assist the PSJV in its working capital requirements. • Total comprehensive income for the year R3.5m (2011: R84.2m)

45. Statement of cash flows Cash position on 31 March 2012: • Operational cash R69.1m • Cash in Legal Trust R10.5m • Government funds R261.5m • Cash in Rehab Trust R48.1m • TOTAL OF R389.3m

46. Notes to the financial statements PSJV’s results for March 2012:

47. Notes to the financial statements Trade and other receivables

48. Notes to the financial statements Government Funded Obligations

49. Notes to the financial statements Township upgrade at 31 March 2012 • The project consists of 4 phases: • Phase 1: The water network was completed in December 2011 • Phase 2: The electrical reticulation project was 95% completed on March, and completed in June 2012 • Phase 3: The mechanical and electrical pumping phase was completed in February 2012 • Phase 4: The waste water treatment works experienced problems with the waste license. Phase is expected to be completed in October 2012 It is estimated that the Township will be transferred to the Northern Cape Government in November 2012.

50. Notes to the financial statements Litigation matters disclosed: • Nabera Mining • Ruslyn Mining and Plant Hire • CCMA case of previous CEO No financial provisions were made for these matters during the financial year.