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Alexkor Limited Parliamentary Portfolio Committee- DPE 20 October 2004

Alexkor Limited Parliamentary Portfolio Committee- DPE 20 October 2004. INDEX. Location Corporate Structure Financial Review Challenges Mining Litigation Way Forward. LOCATION. Northern Cape Semi desert with limited agricultural potential Small seasonal tourist industry

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Alexkor Limited Parliamentary Portfolio Committee- DPE 20 October 2004

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  1. Alexkor Limited Parliamentary Portfolio Committee- DPE 20 October 2004

  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. CORPORATE STRUCTURE

  6. Alexkor Limited Alexander Bay Mining (ABM) Social Infrastructure Alexander Bay Trading (ABT) North Mine Hospital Dairy Farm South Mine Schools Oyster Farm River Mine Recreation Citrus Farm Shallow Marine 437 Houses Ostritch Farm Deep Marine Guest Houses Airport CORPORATE STRUCTURE

  7. FIANCIAL REVIEW

  8. Results Compared to FY’03 • 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 1:4.96 • Diamond production income decreased from R265.2 million to R219.79 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

  9. NET PROFIT/(LOSS)

  10. Diamond prices achieved

  11. Net operating expenses(R millions)

  12. Available Cash as at 30 June 2004

  13. RevenueTotal Revenue R264 million

  14. ABM operating profit

  15. MINING

  16. Marine Mining

  17. 5 Year Carat Plan

  18. Revenue/Profit Plan

  19. CHALLENGES

  20. Major Challenges • Massive replacement Capex • Extensive exploration on land • Land Claims case • Litigation • Long term liabilities

  21. 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 @ Alexkor 15/07/2004 • Main Hearing 2005

  22. 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.

  23. Government Settlement Proposals • View to attain sustainable settlement of his matter. • Government seeks to honour and comply with the letter and spirit of the Constitutional Court Decision. • End-State Indicated Shareholding • Government 20% • RV 65% (51% allocated to cap injection through SEP) • Employees 5% • GNC/NAMDA 10% 100%

  24. Richtersveld Community 100% ESOPS NAMDA/ GNC RC Company (Land and Mineral Rights Ownership) Government 5% 10% 65% 20% Alexkor Company Retains management & skills Retains mining (land and marine) activities

  25. 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 @ BOD level in carving the final end state of Alexkor Ltd

  26. Capital additions vs disposals

  27. Exploration costs (R millions)

  28. LITIGATION

  29. NABERA / ALEXKOR MANAGEMENT FEE AND CHARGEABLE COSTS REMUNERATION FOR VALUE ADDED Alexkor put R6.1 Million in trust Nabera claimed R3.1 million Snowden jointly appointed ¹/з 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

  30. WAY FORWARD

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

  32. Long term liabilities (continued…) • EMPR, Vol3,CSIR,1994: R17.58 million • @ June 30, 2004 escalated R32.93 million • @ June 30, 2004 Rehabilitation Trust Fund: R8.8 million • @ 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 FY’05

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