RE: FINANCIAL PROVISION FOR REHABILITATION AND MINE CLOSURE

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1 EXTERNAL PLATINUM ANGLO AMERICAN PLATINUM LIMITED To: Ms Davies By to CORPORATE OFFICE 55 Marshall Street Johannesburg 2001 South Africa 14 February 2018 RE: FINANCIAL PROVISION FOR REHABILITATION AND MINE CLOSURE Dear Ms Davies Your letter dated 7 December 2017 and entitled Anglo American Platinum s financial provision for rehabilitation and mine closure refers. Thank you for the opportunity to review the intellidex report and for us to provide additional information in response to the questions you posed to us in your letter. I noticed, in the intellidex report attached with your letter, that reference is made to Anglo American Platinum owning a number of the Rustenburg mines and Union mine. Given the Company s portfolio repositioning, we have not owned nor operated the Rustenburg operations since November 2016 and recently concluded the sale of Union mine on 1 February You therefore may wish to consider excluding these operations from your assessment of Anglo American Platinum Limited as these mines are now owned and operated by Sibanye Stillwater and Siyanda Resources respectively. By way of a brief background, I would like to provide an overview of how we go about assessing our environmental liability annually. Every year, rehabilitation and closure liability estimates for all our managed operations are determined by independent and suitably qualified experts, using a Standardized Reclamation Cost Estimator (SRCE). At present SRK Consulting is appointed to undertake these estimates. The SRCE utilizes standardized reclamation calculation methods, data and procedures to estimate the cost of reclaiming a mine site, as if a third-party contractor is performing the reclamation. It is a completely standardised auditable approach to determining the rehabilitation and closure liability. The cost files that are used to generate the various rates used by the SRCE model are produced in a way that allows the source of each rate to be audited. The estimated figures, generated using the SRCE model, are then reviewed by the Company s inhouse experts and the financial provision requirements for each operation is calculated in line with the Department of Mineral Resources (DMR s) prescribed escalation factors. Thereafter, the calculated shortfall and the top-up figures are submitted to the DMR for approval. Once approved, the proof of the required financial provision is submitted to the DMR. In the remainder of this letter I have included a specific response to the questions you raised in your letter and hope that this will provide you with the clarity you sought. A member of the Anglo American plc group Anglo American Platinum Limited Registered Address: 55 Marshall Street, Johannesburg, P O Box 62179, Marshalltown, 2107 South Africa. T +27 (0) F +27 (0) Incorporated in South Africa. Registration Number: 1946/022452/06 Directors: MV Moosa (Chairman) CI Griffith (Chief Executive Officer) I Botha M Cutifani RMW Dunne NP Mageza NT Moholi D Naidoo AM O Neill ST Pearce A Sangqu JM Vice Alternate Director: PG Whitcutt Company Secretary: E Viljoen

2 a. Amplats annual reports state that the expected total expenditure for the rehabilitation, management and remediation of negative environmental impacts of its mining operations at closure is estimated by management, with the assistance of independent experts: i. The assessment of the cost of rehabilitation and remediation of environmental damage caused by mining is a complex undertaking which requires the skills and expertise of a range of highly trained specialists. What is the relevant expertise of those members of Amplats management who undertake these assessments? As explained briefly earlier, the annual closure liability estimates are determined by independent and suitably qualified experts before it is considered by the Anglo American Plc in house experts. The Mine Closure Planning Team at Anglo American plc is the specialist team which is responsible for mine closure planning and financial provision aspects of, inter alia, the Anglo American Platinum operations. This team includes a dedicated closure coordinator for the Anglo American Platinum operations and consists of five suitably qualified specialists under the leadership of the Head of Mine Closure Planning, Dr. Carl Grant. Please refer to the organogram below to see the Mine Closure Planning Team structure. Does Amplats management make any adjustments to any estimates calculated by independent experts, and if so, what factors are considered in making such adjustments? Yes, as indicated above, the environmental rehabilitation and closure liability estimates received from the independent experts are escalated based on DMR recommended factors i.e. the DMR weighting factor, P&Gs (6%-12%), Contingencies (10%) and VAT (14%). The financial provision is provided against the grand total after considering and adding the relevant % to the initial liability estimate.

3 i How often does Amplats conduct assessments of the cost of rehabilitation and remediation of environmental damage, per operation? Annually. Regulation 26(h) of the Environmental Impact Assessment Regulations, 2014, requires environmental authorisations for mining granted under the National Environmental Management Act, 1998, to specify that the authorisation holder must disclose on its website any independent assessments of financial provision for rehabilitation and environmental liability. In light of this regulatory approach to new authorisations, would Amplats consider making its assessments publicly available? Anglo American Platinum will comply with all its regulatory obligations to disclose its independent assessments of financial provision for rehabilitation and environmental liability. We are currently reviewing our practices in this regard to ensure we are meeting the required obligations. b. How frequently do Amplats external financial auditors verify the company s assessments of financial provision using those auditors own independent experts? When was the last occasion on which this took place, and was the verification a global assessment, or one which considered each operation separately? The financial provision, calculated with the input of independent specialist, is also assessed as part of Anglo American Platinum s annual financial audits. This assessment is conducted in line with standard accounting practices by independent financial auditors, using their own experts. The 2016 financial audit is the most recently completed assessment, and the 2017 audits will be finalized shortly. The financial audit requires the auditors to assess each Anglo American Platinum operation independently. As part of the 2016 financial audit, a detailed assessment of the methods used for environmental and closure liability estimation was done for each operation, including joint ventures. The next such assessment will be done in c. Amplats provides one consolidated figure for rehabilitation provision for all of its operations: i. Why does Amplats not disclose information on its rehabilitation provision at the level of each operation, in its integrated annual reports? Would Amplats consider doing so in the future even if not compelled to do so by regulation? At present, we publish information at an integrated level to ensure public reports are not too voluminous. As indicated above, the Company will comply with all its regulatory obligations to publish independent specialist reports relating to its financial provision and rehabilitation assessments for each of its operations. The Company will also respond to any request for this information in line with the Promotion of Access to Information Act. Does Amplats consolidated figure for provision for rehabilitation include rehabilitation provision for the operations which are joint ventures with other companies? No, joint ventures are assessed separately.

4 i If so, how is the relative obligation for rehabilitation provision allocated between partners in the joint venture? The financial provision is provided by the joint venture s shareholders through a combination of trust funds and financial guarantees. A deed of trust is established for each of the joint ventures and trust contributions are made in line with each partner s shareholding in the joint venture. In respect of financial guarantees; these may be provided by the joint venture s partners as one consolidated financial instrument; or multiple financial guarantees may be provided by each partner in line with its shareholding in the joint venture agreement. Is the provision of each partner in each joint venture held separately, or is it consolidated per operation? Please refer to the answer at iii above. d. Amplats financial statements provide that the group funds its environmental obligations through a combination of contributions to the Platinum Producers Environmental Trust, and by providing guarantees to the Department of Mineral Resources: i. What methodology does Amplats use to determine the quantum of contributions to the Platinum Producers Environmental Trust each year? Historically, the trust fund contributions were calculated based on the life of mine closure liability. The trust fund contributions would grow at a rate that would ensure that the trust funds available at the end of the life of the operations, were equal to the rehabilitation and closure liabilities at that time. As you are no doubt aware, the new Financial Provision Regulations published under the National Environmental Management Act, 1998 may not allow this practice to continue, once it applies to all mining operations from How does Amplats determine the quantum of the guarantees provided to the DMR? Presently, we determine the quantum of the guarantees in line with the DMR s guidelines and practices. The DMR requires that the financial provision against the immediate closure of a mine, and the premature liability of any given Anglo American Platinum operation, is determined annually by adding DMR recommended factors to the day of assessment liability figure provided by an independent expert. The premature liability for each Anglo American Platinum operation is then compared against the existing financial provision (which includes the trust fund contributions and the existing guarantees). The shortfall amounts (if any) for each operation are then provided as top-up guarantees to the DMR. i How much of Amplats rehabilitation obligations do the guarantees cover? In 2017, it was 67% with the remainder of the liability fully funded.

5 Are Amplats rehabilitation funds adequate to cover its rehabilitation costs if the company were to cease operations now? The Company has sufficient financial provision and mechanisms in place to cover all its rehabilitation and closure liabilities, should an operation cease now. e. Amplats estimate of rehabilitation obligations for FY16 was significantly lower than estimates in FY15: i. What is/are the reason/s for the reduction in the estimated rehabilitation obligations? The reduction is attributed to Anglo American Platinum s divestment in the Rustenburg mines and concentrators, as part of the transaction involving Sibanye Stillwater in November Under the transaction, Anglo American Platinum transferred its environmental liability obligations for these operations to Sibanye. Please feel free to contact me should you need further clarity or have any questions pertaining to our rehabilitation obligations or associated financial provisions. Yours sincerely Chris Griffith Chief Executive Officer