Integrated Annual Report 2015

Transcription

1 Integrated Annual Report

2 Definitions Contents Page no. ABET Adult basic education training 1. Business activities ABSA ABSA Bank Limited Locations and operations 2 Afrimat B-BBEE Afrimat Limited, (Registration number 2006/022534/06), listed on the JSE Limited in the Construction & Building Materials sector Broad-Based Black Economic Empowerment 2. Strategic context Vision, goals and values 3 Strategy 4 Stakeholders 5 BEE Black Economic Empowerment Group operating structure 7 CAE CEO Chief Audit Executive of Afrimat, André Smith Chief Executive Officer of Afrimat Limited, Andries van Heerden Directorate 8 3. Business performance Chairman s review 10 DIFR Disabling Injury Frequency Rate Managing director s review 12 DMR Department of Mineral Resources Current operations 14 FD the group HDSA Infrasors or the company JSE King III Financial Director Infrasors Holdings Limited and its subsidiary companies Historically disadvantaged South African Infrasors Holdings Limited (Registration number 2007/002405/06) JSE Ltd incorporating the JSE Securities Exchange, the main board in South Africa King Report on Governance for South Africa Governance, sustainability and people Corporate governance report 15 Remuneration report 18 Social, Ethics and Sustainability report 20 Transformation Mineral resources and mineral reserves report Annual financial statements Directors responsibility statement 40 Declaration by company secretary 41 LED Local economic development Audit & Risk Committee report 42 LOM Life of mine Independent auditor s report 45 MD Managing Director Directors report 46 MOI Memorandum of Incorporation Statements of financial position 48 NEMA previous / prior year or FY SAMREC SENS National Environmental Management Act Statements of profit or loss and other comprehensive income 49 Statements of cash flows 50 Year ended 28 February Statements of changes in equity 51 The SAMREC Code, 2007 edition as amended July 2009 Stock Exchange News Service, the regulatory information dissemination platform for the JSE Notes to the annual financial statements 52 Analysis of shareholders Shareholder information Notice of annual general meeting 109 SHE Safety, Health and Environment Form of proxy 115 year / year under review or FY Financial definitions Year ended 28 February Shareholders diary IBC Contact details IBC IFRS HEPS NAV PAT PBIT ROI' International Financial Reporting Standards Headline earnings per share Net asset value Profit after tax Profit before interest and tax Return on investment

3 , ,229 14,764 31,208 28,853 26,577 15,125 20,148 39, , ,986 69, , , , , Performance highlights Revenue growth 3,0% Contribution from operations up 33,2% HEPS 10,0 cents up 66,7% NAV per share 92,1 cents up 10,6% Reduction of 3 rd party borrowings of 43,7% Net cash from operating activities up 95,4% Revenue (R'000) 3rd Party Borrowings (R'000) HEPS (cents) 350, , , , , ,000 50, , ,000 80,000 60,000 40,000 20, NAV (cents) Contribution/(loss) from operations (R'000) Net cash flow from operating activities (R'000) ,000 20,000 10, ,000-20,000 35,000 30,000 25,000 20,000 15,000 10,000 5, , Infrasors Integrated Annual Report

4 1. Business activities Locations and operations Dolomite and Limestone Lyttelton Centurion Mine Open pit mining and crushing of a dolomite ore-body. Products beneficiated: Metallurgical dolomite for iron and steel industry Construction dolomite, washed and super sand Stone powders for mining and agricultural industries Marble Hall Mine Open pit mining and crushing of a metamorphosed dolomite ore-body. Products beneficiated: Metallurgical metamorphosed dolomite for iron and steel industry Construction aggregate, washed and super sand Stone powders for mining and agricultural industries Alluvial Silica Delf Sand Mine Open pit mining, washing and drying of an alluvial silica sand ore-body. Products beneficiated: Metallurgical silica sand for the foundry industry Silica sand for the tile adhesive industry Silica sand for golf course and recreational markets Building sand Head Office Lyttelton Centurion 2 Infrasors Integrated Annual Report

5 2. Strategic context Vision Infrasors is committed to supplying industrial minerals and aggregates to the steel, foundry industries, agriculture, ceramic, mining, building and construction sectors, by maintaining a well-balanced portfolio of mining assets that offer sustainable growth and continuity of earnings. Goals To mine and beneficiate a spread of minerals and aggregates in line with our expertise. To build a well-balanced portfolio of mining assets that offer sustainable growth and continuity of earnings. To transform our workforce to meet the empowerment objectives of the Mining Charter. To entrench a sustainable Health, Safety and Environmental culture with all stakeholders in order to ensure ZERO HARM to all our employees. Values Trust Firm belief in the reliability and ability of people. Integrity Moral conduct, reflected in transparent honesty. Respect Admiration elicited by people s abilities, qualities or achievements. Accountability The obligation of people or an organisation to account for its activities, accept responsibility for them and to disclose the results in a transparent manner. Teamwork Working collaboratively in order to achieve a goal. Customer satisfaction Meeting or surpassing customer expectation. 3 Infrasors Integrated Annual Report

6 2. Strategic context (continued) Strategy Cost containment We are constantly improving operations and systems to optimise profits. Corporate responsibility We are committed to adhering to the Mining Charter and are accountable and responsible to our employees, stakeholders and the communities in which we live and work. Management rationale We strive to have a robust succession plan that will ensure the continuity of the group in the future. We believe that the development and training of a well-disciplined and shareholder-value driven management team will position the group to achieve its goals and aspirations. Markets Our aim is to be the leading provider in the markets in which we operate. Our intention is to achieve this by consistently delivering high quality products to our markets underpinned by the research and development of new product applications and enhancement of our mining and beneficiation processes. Product offerings We seek to grow our product offering organically by increasing the markets we service with the minerals forming part of our current operations. 4 Infrasors Integrated Annual Report

7 Stakeholders We recognise that developing and nurturing dialogue with our key stakeholders, and actively listening and responding to feedback, is a driver of business sustainability. The process of identifying and monitoring stakeholder relationships is reviewed annually by the board. Our open door policy and strong communication extends to all external stakeholders, and we pride ourselves on our timely, consistent and transparent communication and dialogue with our various stakeholders. A detailed account of Infrasors stakeholders and their key concerns are set out in the table below: Stakeholder What matters to them Tools of engagement Responsibility Our response Shareholders - Profitability - Cash generation - Corporate governance and compliance - Risk management - Growth prospects - Reputational issues Lenders/ providers of capital - Capital management - Sustainability - Profitability - Cash generation - Corporate governance and compliance - Risk management - Growth prospects - Reputational issues Employees - Job security - Sustainability - Personal growth and development - Skills development - Remuneration and incentives - Safety - Health and wellness Customers - Quality - Service - Value for money Trade unions - Wage negotiations - Bargaining council agreements - Conditions of employment - Engagement on safety issues - Engagement on health and wellness issues - Annual and interim results announcements - SENS announcements - Website publications - Annual general meeting - Media releases - Contractually required information flow - Annual and interim results announcements - Regular meetings - Annual culture climate survey - Training sessions - News updates - Employment equity forums - Regular reinforcement of Code of Conduct and policies/ procedures - Annual customer surveys conducted to determine service improvement opportunities - Contractual engagement - Personal interaction with main customers - Product brochures - Regular meetings at the relevant levels - MD assisted by the FD - FD assisted by group accountant and financial managers - Human Resource Manager assisted by all management - MD and sales teams - Human Resource Manager assisted by all management - Feedback meetings and announcements are relayed to and dealt with at board level - Feedback from meetings is relayed to and dealt with at board level - Investment in training and talent management - Dedicated skills development division - Skills Development and Employment Equity Consultative Committees established for each subsidiary - Ongoing health and safety programme - Bonuses and share incentive schemes - Commitment to quality products and service excellence - Ongoing focus on labour and employee relations - Consistency in industrial relations - Recognition agreements at industry level 5 Infrasors Integrated Annual Report

8 2. Strategic context (continued) Stakeholders (continued) Stakeholder What matters to them Tools of engagement Responsibility Our response Major contractors, suppliers and business partners Government, local authorities and regulatory bodies Local communities - Consistent off-take - Good payment record - Compliance with mining right and DMR requirements - Regulatory compliance - B-BBEE status and black shareholding - Environmental compliance - Skills development - Enterprise development - Job creation - Environmental issues dust, emission, water, traffic, noise, unsightly development - Economic upliftment - Job creation - Enterprise development - Preferential procurement - Contract and service agreements - Lobbying with government departments - Dialogue with local community interest groups - MD assisted by financial managers - MD assisted by corporate affairs and resources department - MD assisted by corporate affairs and resources department - Regular business updates to suppliers - Developing DMR required social and labour plans in conjunction with local municipalities - Raising awareness of LED needs, social and infrastructure conditions and gaining approval for government funded projects - Focus on procurement from suppliers with BEE shareholding - Supplementing labour force from surrounding communities - Practicing a limited automation policy - Prioritising environmental management of operations 6 Infrasors Integrated Annual Report

9 Group operating structure Lyttelton Centurion Mine Marble Hall Mine OPERATIONS 91,3% Delf Sand Mine PUBLIC SHAREHOLDING 8,7% Group Administration CORPORATE Sustainability and Resources 7 Infrasors Integrated Annual Report

10 2. Strategic context (continued) Directorate The Infrasors board currently consists of four non-executive directors, three of whom are independent and two executive directors. The board s skills are varied, offering complimentary collective experience and track records in the areas of mining, exploration, project development, legal, commercial and financial management in the listed company environment. Name, age and qualification Executive directors Louis R Loubser (35) B.Com, MBA (Cum Laude), Certificate in International Quarry Operations (Appointed 11 June 2013) Hendrik P Verreynne (58) B.Compt, Hons CA (SA) (Appointed 12 March 2013) Non-executive directors Mochele Noge (40) (Independent) CA (SA), H.Dip (Corp Law) (Appointed 24 April 2007) Andries J van Heerden (49) B.Eng (Mech), MBA, Government Certificate of Competence (Appointed 12 March 2013) Jacobus CP Bekker (63) (Independent) CA (SA) (Appointed 12 March 2013) Percy FC Ying (33) (Independent) CA (SA), CFA (Appointed 23 May 2012) Brief curriculum vitaes of the board of directors at the date of publication of this report are set out below: Mochele Noge Independent non-executive Chairman Mochele is a Chartered Accountant having completed his Accounting Traineeship Programme with the First Rand Banking Group. His experience is primarily in finance/banking having been exposed to retail, investment and corporate banking. He sits on the board of directors of numerous companies as a non-executive director. Louis R Loubser Managing director Louis holds a B.Com degree and MBA from the University of Stellenbosch and previously held the position as Head of Business Development at Afrimat Limited. Louis successfully negotiated the acquisition of Infrasors into the Afrimat stable and he has demonstrated remarkable traits and qualities required to come together, progress and succeed in turning Infrasors around. 8 Infrasors Integrated Annual Report

11 Andries J van Heerden Non-executive director Andries has extensive experience in operational management, strategic positioning, marketing and finance. During 2001 he joined Prima Klipbrekers group as a director and became managing director two years later. He left Prima in 2005 and formed a consortium which acquired the Lancaster Group, of which he became chief executive. He was instrumental in 2006 in the formation and listing of Afrimat Limited from the merger of Prima and Lancaster. Andries was a finalist in the 2008 Ernst & Young World Entrepreneur awards in the category "Emerging Entrepreneur". Andries is currently the CEO of Afrimat Limited. Hendrik P Verreynne Interim financial director Hendrik qualified as a Chartered Accountant in 1983 and has extensive experience in financial and information technology management, corporate governance and BEE. Previously he was a senior executive in finance for Woolworths and Borden Foods and FD of Sea Harvest Limited and of Oceana Brands Limited. Hendrik is currently the FD at Afrimat Limited and interim FD at Infrasors. Jacobus (Kobie) CP Bekker Independent non-executive director Kobie, who is a Chartered Accountant, has 34 years experience in the profession of which 28 years was spent as a partner at PricewaterhouseCoopers. He was partner in charge of Boland (since 2007 until retirement) and Worcester (since 1998 until retirement) and he was also the National Leader of PWC s Agri Industry Group. Kobie also lectured Accounting and Auditing at the University of Johannesburg. Percy FC Ying Independent non-executive director Percy is a Chartered Accountant and CFA charter holder, studied at the University of the Witwatersrand and specialises in investment management and financial reporting. Percy is furthermore a director at Nesa Capital Proprietary Limited and serves as independent nonexecutive director of other JSE listed companies. 9 Infrasors Integrated Annual Report

12 3. Business performance Chairman s review The primary focus during this financial year was a concerted effort to improve on the group s financial performance. The strategy was to increase our cash generating abilities by introducing the proven and industry tested mining, processing and marketing processes of our controlling shareholder, Afrimat. A considerable improvement in the financial results coupled with a significant reduction in net debt is evident. Economic and legislative environment The global economic crisis and at times tardy domestic regulatory constraints have created a challenging economic environment for the South African mining industry. Significant increases in electricity-linked production costs continue to affect a significant number of our customers, in particular those in the steel smelter and foundry industries. The production volumes of certain customers have been limited as furnaces faced shut downs to save electricity during winter peak periods. In order to reduce electricity demand in peak periods, Eskom buy-back agreements with smelter customers have also negatively affected final output of these customers. The economic climate remains challenging and has claimed its fair share of casualties amongst the larger customers which Infrasors services. One of our customers, a JSE listed steelmaker has filed for business rescue post our financial year end. Infrasors was able to minimise its exposure to significant bad debt write-offs and is optimistic that the remaining steel makers will be able to weather current market conditions. The well-publicised electricity crisis in South Africa, which has resulted in rolling load-shedding, has brought about some challenges in terms of production planning. Despite this, load shedding has not had a significant impact on operations. The South African legislative environment continues to be a challenging sea to navigate. Our industry has the burden of additional, more complex and onerous requirements. The time and costs involved in obtaining the appropriate government approvals for the mining industry has increased inordinately. The junior mining companies ordinarily have no guarantees on the requisite approval of their applications and have been the foremost recipients of the brunt of this harsher environment. Mining rights The long awaited approval of the full-scale mining right for Delf Cullinan has resulted in the Delf Cullinan mine being delayed. The time and opportunity cost in the approval of this much needed mining right has affected operations. Despite having received the environmental authorisation, bulk prospecting right approval and the general water usage authorisation, the final water license and full scale mining right approvals remain outstanding. People Infrasors acknowledges and continues to invest in its most important asset: its people. A new HR manager, Maureen Morapeli, was appointed during the year. She is well qualified and brings a wealth of HR expertise and experience to the group. People development and the development of our talent pool are receiving priority attention. Our staff is remunerated fairly and competitively. We have streamlined our wages structure and continued to build on a sound relationship with the union as stakeholder. The DIFR for the Group was 0,84 (: 1,21). Marble Hall maintained their excellent safety record of a DIFR of Nil. Infrasors executives and management continue to be relentlessly committed to maintaining this impeccable record. One injury is one too many and we continue to uphold the health, safety and well-being of our employees as our highest priority. 10 Infrasors Integrated Annual Report

13 B-BBEE Infrasors is committed to integrating genuine transformation that permeates the organisation, and understands this to be critical for the sustainability of its business in South Africa. A level 3 B-BBEE rating was acquired during the year. Infrasors is committed to the continual enhancement of all aspects of B-BBEE on an ongoing basis. Corporate governance In line with principles set out in the King III Report, Infrasors endeavors to maintain its position as a good corporate citizen through accountability, fairness, sound ethical values, and transparency. The group has made impressively solid progress in corporate governance and the intention is to continue on this path. Shareholding During the year, Afrimat increased its shareholding in the company and now holds 91,3% of the total issued ordinary shares (after cancellation of treasury shares). Board appointments Subsequent to the previous FD s (Marius Potgieter) resignation, Hendrik P Verreynne was appointed as interim FD on 1 August. Prospects The group expects to remain a key supplier of industrial minerals and aggregates to the local construction, metallurgical and mining markets. Infrasors key focus areas will remain expanding volumes, reducing costs, improving efficiencies, and developing the skill level of our employees. Appreciation My sincere appreciation goes out to all our employees for their effort and performance in the past financial year. The board would like to express our gratitude to our customers, suppliers, local communities and all our other stakeholders for their on-going support of and belief in the values, products and services that Infrasors has to offer. Mochele Noge Chairman 11 Infrasors Integrated Annual Report

14 3. Business performance (continued) Managing director s review Overview This financial year s objective was to continue with the momentum created when Afrimat acquired the majority shareholding in Infrasors during Key focus areas included profitability, compliance, operational efficiencies, debt reduction and to strengthen the company s corporate identity and culture based on Afrimat s values. The group strategy is to position Infrasors as a leading industrial minerals and aggregates supplier with a diversified product offering. A number of actions were implemented during the year to improve the long term profitability of the group, including addressing the process flows at the Marble Hall mine, transported raw material in order to supplement Delf Sand s declining silica resource and disinvesting from the Delf Silica Coastal business. Operational review Silica segment remained under pressure during FY, largely due to the declining high grade silica resource at the Delf Sand mine, the delay in obtaining the Delf Cullinan mining right and high energy cost. Delf Sand obtained the shortfall in raw materials by transporting the raw materials from the Delf Cullinan prospecting site which resulted in a sharp increase in transport costs. Cost pressures resulted in reduced sales of low margin products. The focus placed on the sales strategy since FY, together with the ongoing cost reduction initiatives resulted in improved performance and results in the Dolomite segment. Whilst the aggregates sales volumes increased, the demand for metallurgical products reduced substantially in the second half of FY due to a customer experiencing financial difficulties. Limestone sales volumes reduced substantially from FY, largely as a result of the strategy to focus on higher margin products. Sales tons of product groups and a comparison to are as follows: Silica Dolomite Limestone Total Tons Mineral reserves and mineral resources There has been no material change on the group s mineral reserves during the year. The Foundry market will continue to be supplied with high grade silica from the Delf Cullinan prospecting site. Financial review Revenue for the year increased by 3,0% to R337,3 million (: R327,5 million), with an improved contribution from operations of 33,2% to R20,1 million (: R15,1 million). The group reported a profit after tax of R15,4 million, which is a marked improvement from the prior year (: R4,9 million) and includes the cost of impairment to assets amounting to R1,6 million (: R5,3 million). Headline earnings of R16,4 million (: R9,6 million) was achieved resulting in HEPS of 10,0 cents (: 6,0 cents). The group s borrowings reduced significantly due to new medium term debt repayment terms negotiated and lower proportion of capital expenditures funded by banks. 12 Infrasors Integrated Annual Report

15 Capital expenditure Capital expenditure for the year was both replacement in nature as well as expansionary. Sustainability We are strongly committed to the principles of sustainability, in terms of environmental, socio-economic responsibilities and corporate governance. This is demonstrated in our sustainability report on page 20. Safety The safety and health of our employees and business partners remains a top priority. The DIFR recorded for the financial year was 0,84 (: 1,21). Skills development We provide employment for 172 people at our operations, consisting of directly employed staff. The development of skills across the Infrasors group is a primary focus both in terms of meeting the commitments made to the DMR and in terms of achieving B-BBEE skills development targets. We continue to appoint interns under mentorship programs and offer ABET skills training to the communities based close to our operations. Talent management matrixes have been developed and individuals have been identified for fast track mentoring and training to reach desired skill levels. Skills development will remain one of our key focuses in the future. Environment During the period under review the impact to the environment were minimised as part of our low-impact open pit mining techniques being implemented. Low-impact open pit mining entails the parallel rehabilitation of mined out areas, along with active mining areas. Legislative environmental obligations are being adhered to with strict monitoring controls in place. Black economic empowerment Our current B-BBEE rating, determined on the basis of our financial results and ownership structure, is level 3 and is valid until May Prospects The group expects to remain a leading industrial minerals and aggregates supplier to the local market, and anticipates further benefits from production efficiency improvement initiatives with key focus areas on expanding volumes, further cost reductions, continuous improvement and skills development. In closing I would like to extend my gratitude to the board and employees for their continued support, commitment and loyalty. Louis Loubser Managing director 13 Infrasors Integrated Annual Report

16 3. Business performance (continued) Current operations Lyttelton Centurion Mine Marble Hall Mine North Delf Sand Mine Minerals Dolomite Limestone Alluvial Silica Capacity (tons per annum) 1,75 million 0,6 million 0,5 million Mine method Open pit Open pit Open pit Key markets Metallurgical Metallurgical Foundries Mining/Agricultural Mining/Agricultural Tile Adhesive Construction Construction Construction 14 Infrasors Integrated Annual Report

17 4. Governance, sustainability and people Corporate governance report Corporate governance is the process by which companies are managed and controlled, and it is the responsibility of the directors of the company to ensure compliance. In line with King III, the directors have stated the extent of non-application and explained the reason why the board has deemed recommended practices not appropriate for the group. The group has applied the significant principles of King III throughout the year, with the exception of the following: Area of non-compliance Explanation of non-compliance The Chairman of the board should not be the chairman of or member of the Audit & Risk Committee Chairman of the board is presently a member. A JSE governance guidance letter allows the Chairman of the board to be a member of the Audit & Risk Committee. In line with this and to address the shortage of independent non-executive directors, the Chairman of the board is a member of the Audit & Risk Committee. Jacobus CP Bekker is the chairman of the committee. As per JSE guidance letter dated 30 September, if the company s independent non-executive Chairman of the board is a member of the Audit & Risk Committee, all other members of the Audit & Risk Committee must be independent non-executive directors, to which the group is currently adhering. Companies should consider establishing a compliance function presently no dedicated compliance officer. Due to the size of the group no dedicated compliance officer is considered necessary. The MD, interim FD and company secretary drive compliance, supported by the relevant functional leaders. The Risk Committee and the Audit Committee is combined as the Audit & Risk Committee and does not include any executive director. A Risk Committee in isolation should include executive directors as members. Due to the size of the group a separate Risk Committee is not considered necessary. The executive directors are invited to all Audit & Risk Committee meetings to add their inputs to deliberations. Our board The board acknowledges the responsibility to apply good corporate governance principles and is committed to this responsibility in accordance with King III. A formal board charter is in place and is reviewed annually to determine how authority is exercised and delegated. The responsibilities of independent non-executive directors and non-executive directors reflects a clear division of responsibility and no director is positioned to exercise unfettered decision-making to ensure that the interest of all stakeholders are taken into account. The composition of the board ensures that there are the necessary professional skills and experience to judge objectively matters relating to the strategic and business direction of the group. (A copy of the board charter is available from the company secretary on request.) 15 Infrasors Integrated Annual Report

18 4. Governance, sustainability and people (continued) Corporate governance report (continued) The Remuneration & Nominations Committee s role is to ensure that proper succession planning for the board is carried out. All appointments of directors are formal, transparent and subject to board approval. These appointments are ratified at the following annual general meeting and in a transparent manner as described in King III. At the annual general meeting of 27 October, at least one-third of the non-executive directors will retire by rotation. All these directors are available for re-election and their re-election to the board is supported by the company after considering their performance and attendance. No changes to the board were made during the year under review. Board committees Infrasors has an established Audit & Risk Committee, Remuneration & Nominations Committee and Social, Ethics & Sustainability Committee to assist the board in discharging its collective responsibility of corporate governance. All committees have fulfilled their responsibilities during the year in compliance with their formal charters. (All Infrasors committee charters are available from the company secretary on request.) Each board committee acts according to their written terms of reference approved by the board. They set out its purpose, membership requirements, duties and reporting procedures. There is full disclosure from board committees to the board. Committee chairpersons provide the board with a verbal report on recent committee activities at each board meeting, and the minutes of committee meetings are available to the directors in support thereof. In addition, the chairpersons or a nominated committee member attend the company s annual general meeting to answer any questions from stakeholders pertaining to the relevant matters handled by their respective committees. Committee effectiveness evaluations are conducted annually. Findings and recommendations are presented to the board, which tables an action list to address any areas marked for improvement. In addition, executive management meetings are held on a monthly basis in order to implement, execute, review and manage the activities of the subsidiary companies Governance structure Board members Board committee members Executive directors Louis R Loubser Hendrik P Verreynne Non-executive directors Andries J van Heerden Independent non-executive directors Mochele Noge (Chairman) Percy FC Ying Jacobus CP Bekker Audit & Risk Committee Jacobus CP Bekker (Chairman) Mochele Noge Percy FC Ying Remuneration & Nominations Committee Mochele Noge (Chairman) Andries J van Heerden Percy FC Ying Social, Ethics & Sustainability Committee Andries J van Heerden (Chairman) Mochele Noge Percy FC Ying Jacobus CP Bekker Louis R Loubser 16 Infrasors Integrated Annual Report

19 Board and board committee meetings Board Nonexecutive directors Audit & Risk Committee Remuneration & Nominations Committee Social, Ethics & Sustainability Committee Number of meetings held () Marius Potgieter 2/2 n/a *2/2 *2/2 *2/2 Mochele Noge 3/4 3/4 3/4 3/4 3/4 Percy FC Ying 4/4 4/4 4/4 4/4 4/4 Andries J van Heerden 4/4 4/4 *4/4 4/4 4/4 Hendrik P Verreynne (executive) 2/2 *2/2 *2/2 *2/2 *2/2 Hendrik P Verreynne (non-executive) 2/2 2/2 *2/2 *2/2 *2/2 Jacobus CP Bekker 4/4 4/4 4/4 *4/4 4/4 Louis R Loubser 4/4 n/a *4/4 *4/4 4/4 * Attendance by invitation Share dealings and conflicts of interest The board has adopted a share dealing code for dealing in securities of Infrasors Holdings Limited which is based on regulatory and best practice. The code sets out restrictions placed on directors, senior management and other key employees with regard to their share dealings to ensure they do not abuse their access to information about the Infrasors group, pending its public release and availability to shareholders and other interested parties. Independent advice Access to the advice and services to the company secretary and to company records, information, documents and property is unrestricted. Non-executive directors may also have access to external auditors and to management at all time. All directors are entitled, at Infrasors s expense, to seek independent professional advice on any matters concerning the affairs of the group. Induction and training The company secretary arranges an appropriate induction programme for new directors, if required. This includes an explanation of their fiduciary duties and responsibilities and arranging visits to operations and discussions with management to obtain an understanding of the company s affairs and operations. The board supports the development of all employees and also the development of directors, by availing them the opportunity to attend external courses and seminars. Company secretary The board of directors is assisted by a competent, suitably qualified and experienced company secretary. The board, through the Remuneration & Nominations Committee assesses this on an annual basis. The company secretary is Mariëtte Swart, a chartered accountant. The company secretary is not a director of Infrasors, reports to the Chairman of the board and is accountable to the board as a whole and accordingly maintains an arm s length relationship with the board of directors. 17 Infrasors Integrated Annual Report

20 4. Governance, sustainability and people (continued) Remuneration report The Infrasors Remuneration & Nominations Committee assists the board in ensuring that group remuneration and recruitment is aligned with the overall business strategy. The group s remuneration policy has been set with the objectives of attracting, motivating and retaining high caliber directors and senior management in a manner that is consistent with best practice and aligned with the interests of the group s stakeholders. The committee is an independent and objective body, consisting of persons who have no personal interest in the outcome of their decisions. This regulates and controls the application of the remuneration policies on a consistent and equitable basis across the group, and strengthens the creditability of the executive remuneration system. All executive directors have employee contracts and are remunerated by the company for services performed, except for the interim FD who is remunerated by Afrimat. The committee reviews the performance of the MD, executive and senior management and sets the scale, structure and basis of remuneration in terms of their service agreements. It also considers and makes recommendations to the board on remuneration packages and policies in this regard. Prescribed officers are defined as those who exercise general executive control over and management of the whole or significant portion of the business and activities of the group, or who regularly participates to a material degree in such exercise of general executive control and management. The executive directors are deemed to be the prescribed officers of the company. Their remunerations are disclosed in the integrated annual report on pages 98 and 99. The committee is further responsible for devising a general remuneration policy for the group, which is tabled and reviewed annually at the general annual meeting for a non-binding advisory vote by shareholders. Remuneration policy Packages are negotiated at market-related levels, taking into account an individual s position, the region/area and the person s qualification. As a general rule, above average remuneration will only be awarded to employees who demonstrate that they have above-average competency. The committee also takes into consideration business performance, salary practices prevailing to other employees in the group and, when setting individual salaries, the individual s performance and experience in the role. This is benchmarked against Deloitte s annual industry remunerations paper and the research of external consultants. The groups executives are remunerated in terms of a remuneration package and incentivised with a short-term incentive bonus and long-term share appreciation right scheme. The remuneration packages are structured on a cost to company basis and include contributions to health care and retirement benefits. Performance incentives are calculated in terms of defined profit targets and key performance indicators ( KPIs ), including risk management efficacy. Details of the share appreciation rights scheme for executive directors are disclosed on pages 83 and 84 of this report. (Infrasors full remuneration report is available from the company secretary on request.) 18 Infrasors Integrated Annual Report

21 The board and committee member remuneration structure consists of a fixed fee as set out in the table below: Proposed annual fee /16 Existing annual fee /15 Audit & Risk Committee Chairman 49,5 46,0 Members 25,0 23,0 Remuneration & Nominations Committee Chairman 22,5 21,0 Member 13,0 12,0 Social, Ethics & Sustainability Committee Chairman 22,5 21,0 Member 13,0 12,0 Board Chairman 217,5 203,0 Member 46,5 43,0 The composite fees are only payable to non-executive directors. Executive directors are excluded from the above remuneration. 19 Infrasors Integrated Annual Report

22 4. Governance, sustainability and people (continued) Social, Ethics and Sustainability report The Social, Ethics & Sustainability Committee s responsibilities encompass monitoring and regulating the impacts of the group on its material stakeholders and environments. Management is tasked with overseeing the day-to-day operational sustainability. The committee is chaired by non-executive director, Andries J van Heerden. The role of the committee includes specifically to monitor the following: - Social and economic development, including the group s standing in terms of the: - 10 principles set out in the United Nations Global Compact Principles; - Organisation for Economic Co-operation and Development recommendations regarding corruption; - Employment Equity Act; and - B-BBEE Act. - Good corporate citizenship, including the group s: - promotion of equality, prevention of unfair discrimination and reduction of corruption; - contribution to development of the communities in which our activities, products or services are predominantly conducted/marketed; and - record of sponsorship, donations and charitable giving. - Environment, health and public safety, including the impact of the group s activities and its services. - Consumer relationships, including the group s advertising, public relationship and consumer protection laws. - Labour and employment, including the group s: - standing in terms of the International Labour Organisation Protocol on decent work and working conditions; and - employment relationships, and our contribution towards the educational development of our employees. Health and safety Infrasors is committed to building and managing a well balanced portfolio of industrial mineral assets serving the South African market, with the aim of being recognised as a leading and respected mining company, complying with the statutory requirements of the country and honouring the group s ZERO HARM philosophy, which acknowledges our employees as a valuable resource. The group therefore will entrench a sustainable Safety, Health and Environmental culture with all stakeholders in order to ensure ZERO HARM to all our employees. The group will maintain its ZERO HARM philosophy through dedicated commitment from management, employees and stakeholders. To ensure sustainable commitment from all its employees Infrasors shall: - Inspire and train employees to accept, practice and live by the Occupational Health and Safety Act and the Mine Health and Safety Act; - Maintain a working environment that promotes employee Safety, Health and Environmental standards in order to achieve ZERO HARM; - Identify and evaluate hazards and the risks thereof and to be proactive in preventing incidents that could lead to injury of employees, sub-contractors, vendors or suppliers, as well as damage or loss of property, plant and equipment; - Mitigate and control the exposure of employees to harmful environmental factors or physical demand that could be detrimental to their health; and 20 Infrasors Integrated Annual Report

23 - Minimise the impact of the HIV / Aids epidemic on the group as per the HIV policy. Corporate social responsibility In Infrasors, we believe that there are business benefits from operating our business within sustainable communities. We are committed in helping to improve the social and economic environment in which we operate in order to be in a position to be able to create equal opportunities for all. The group is committed on taking practical steps to implement sustainable activities and strategies that will assist in understanding business priorities and community needs. Environment Each mine has an environmental management programme in place through which it adheres to the policies and guidelines contained therein. The programs are regularly reviewed and updated. Infrasors applies its relevant mining policies and procedures to ensure compliance with relevant legislation and regulations. - Water: - In terms of national focus on water conservation and driven by the group s economic imperatives, the group is in support of the objectives of the National Water Act 36 of Energy: - Energy is used in two forms within the group, firstly as electricity to power-fixed infrastructure and as fuel for mobile plant and equipment and back-up electricity generators. - The group s overall energy use is closely associated to the volume of material mined and processed each year and, as our operations expand, so it is expected that the energy use will increase. In an attempt to remain cognisant of the current energy shortage in South Africa, the group will endeavour to seek ways in which to reduce energy consumption without compromising production targets. - Air quality: - The quality of Air is of vital importance to a sustainable environment surrounding the mines. Infrasors have measures in place to monitor and comply with national and international emission standards, set and regulated by National Environmental Management: Air Pollution Act 39 of 2004, under the listed activities. - Land: - By the very nature of our business we have an impact on the local landscape, fauna and flora. Optimisation of our land is a key factor especially on conclusion of mining activities. We are committed in ensuring a healthier, cleaner and safe working environment through assistance of a highly skilled environmental specialist advising the group on the best environmental practices. Whistle blowing measures In accordance with the provisions of the Protected Disclosures Act Number 26 of 2000, management has ensured that no employee who has made a protected disclosure shall be subject to any occupational detriment. Such employees will be protected against any victimisation or other adverse treatment in terms of the aforementioned legislation. 21 Infrasors Integrated Annual Report

24 4. Governance, sustainability and people (continued) Transformation Infrasors is committed to the transformation of the South African economy driven by the Mining Charter and B-BBEE legislation which embraces BEE ownership, local economic development, human resource development and procurement of capital goods, as well as service and consumer goods. The group achieved a Level 3 B-BBEE rating level. The revised Codes of Good Practice will come into effect in May. The revised Codes will have a significant impact on the group s B-BBEE rating in the year ended 29 February 2016 due to more stringent criteria. The sustainability department has been tasked to develop strategies in order to ensure that the group s ratings do not decline. Management Control All subsidiaries have at least 50,0% black directors on their respective boards of directors. To enhance and accelerate development of management skill, suitable candidates are identified to undergo management development training and black candidates are prioritised wherever viable. Human Resource Development The development of our employees is an integral part of our business strategy and we are therefore committed to the transformation of our workforce to meet the empowerment objectives of the Mining Charter in order to develop HDSA s within all levels of the organisation. In the past year the group has focused on upgrading and ensuring all employees have undergone induction and refresher courses on the updated Codes of Good Practice. In addition competency training for operators and training of safety representatives were conducted. Workplace skills plans were submitted to the Mining Qualifications Authority. The group has developed policies that focuses on bursaries, learnership, portable skills and ABET training through implementing a career progression path and mentorship programs. Preferential Procurement The group is committed to facilitate and develop B-BBEE suppliers as foreseen in the Mining Charter. A formal procurement policy is in place which reflects the group s commitment to broadening its supplier base with empowered enterprises. The preference is to procure from suppliers with a minimum Level 4 B-BBEE rating and black shareholding greater than 25,0%. Socio Economic Development Infrasors has been proactive in developing good relationships with local councils and communities. Through Integrated Development Plans, the company together with local economic fora strives to identify resources needed to uphold the LED projects that contribute to the quality of life and well-being of our local communities. The group targets 1,0% of PAT for contribution to these beneficiaries. CSI expenditures during FY amounted to R0,3 million (: R0,9 million). 22 Infrasors Integrated Annual Report

25 5. Mineral resources and mineral reserves report 1. Scope of report The assessment and reporting criteria as outlined in the 2007 SAMREC Code (as amended July 2009) have been used in the preparation of the Competent Persons Report ( CPR ) for each operating mine, from which the numbers stated in this report have been drawn. The CPR principally comprises a technical review of the Mineral Resources and Mineral Reserves of the relevant mining operations. Reporting is also in accordance with Section 12 of the JSE Listing Requirements and takes cognisance of other relevant international codes where geographically applicable. The Competent Person, employed by Perold Earth Science Services CC, has sufficient experience relative to the type and style of mineral deposit under consideration. These estimates are part of an ongoing programme to determine, classify and upgrade all mineral assets belonging to Infrasors Holdings Limited. Changes to the Mineral Resource and Mineral Reserve Statements published in the Infrasors Holdings Limited, Annual Report, will be discussed in detail. The following notations have been used and are applicable to all figures declared: - tonnages are quoted in metric tons; - million tons is abbreviated as Mt; and - tonnage estimates were rounded to the nearest Dolomite resources and dolomite reserves Lyttelton Dolomite Proprietary Limited 2.1 Lyttelton Centurion Mine The effective date of this estimate is deemed to be the date of the latest aerial survey conducted, by Premier Mapping, on 28 February. Production reported is for the survey period 01 March to 28 February : Metallurgical Dolomite - Changes in Metallurgical Dolomite Resources and Reserves resulted from: 1. Mining production (-0,482 Mt) 2. Reclassification of metallurgical dolomite waste as metallurgical dolomite (+0,054 Mt) 3. Temporary sterilisation of mineable reserves with construction of input crushing plants (-2,496 Mt) Construction Dolomite - Changes in Construction Dolomite Resources resulted from: 1. Mining production (-0,922 Mt) 2. Reclassification of construction dolomite as waste (+0,102 Mt) - Changes in Construction Dolomite Reserves resulted from: 1. Mining production (-0,776 Mt) 2. Temporary sterilisation of mineable reserves with construction of input crushing plants (-18,412 Mt) 1 1 Due to the construction of additional in pit crushing and screening plant that resulted in the sterilisation of mineral reserves the author decided to reduce the declared mineral reserves with the affected tonnage as it is uncertain if the ore underlying these areas can be mined economically. Mineral resources declared for these areas are unaffected as a reasonable and realistic prospect for eventual economic extraction still exists. 2.2 Marble Hall North Operation The effective date of this estimate is deemed to be the date of the latest Lidar survey conducted, by EPA Survey, on 26 February. Production reported is for the survey period 18 January to 26 February : 23 Infrasors Integrated Annual Report

26 5. Mineral resources and mineral reserves report (continued) Metallurgical Metamorphosed Dolomite - Changes in Metallurgical Dolomite Resources resulted from: 1. upgrading of Construction to Metallurgical Dolomite (+0,77 Mt) 2. mining production (-0,189 Mt) - Changes in Metallurgical Dolomite Reserves resulted from: 1. mining production (-1,112 Mt) Construction Dolomite - Changes in Construction Dolomite Resources and Reserves resulted from: 1. re-modelling to include material mined outside approved pit boundaries (+0,036 Mt) 2. mining production (-0,094 Mt) 3. mined as waste material (-0,139 Mt) 4. remodelling as Metallurgical Dolomite -0,062 Mt) 2.3 Marble Hall South Operation The effective date of this estimate is deemed to be the date of the latest aerial survey conducted, by Premier Mapping, on 18 January. No production is reported for the survey period 18 January to 28 February Marble - Changes in Marble Resources resulted from: 1. modelling of historic data (+17,000 Mt) Metallurgical Dolomite - Changes in Metallurgical Dolomite Resources resulted from: 1. modelling of historic data (+6,000 Mt) Construction Dolomite - Changes in Construction Dolomite Resources resulted from: 1. modelling of historic data (+12,000 Mt) Mineral resources Resource Marble Metallurgical Construction Marble Metallurgical Construction Operation category Dolomite Dolomite Dolomite Dolomite Mt Mt Mt Mt Mt Mt Inferred , ,613 Centurion Indicated - 0,138 50,889-0,173 51,549 Mine Measured - 9,739 3,824-10,131 3,940 Subtotal - 9,877 67,283-10,304 68,102 Inferred Marble Hall Indicated - 8,015 7,959-8,127 8,218 North Mine Measured Subtotal - 8,015 7,959-8,127 8,218 Inferred 17,000 6,000 12, Marble Hall Indicated South Mine Measured Subtotal 17,000 6,000 12, Grand total 17,000 23,892 87,242-18,431 76,320 Mineral resources are inclusive of mineral reserves 24 Infrasors Integrated Annual Report

27 Operation Centurion Mine Reserve category Mineral reserves Metallurgical Construction Metallurgical Construction Dolomite Dolomite Dolomite Dolomite Mt Mt Mt Mt Probable 0,137 33,340 0,173 51,549 Proved 7,243 2,961 10,131 3,940 Subtotal 7,380 36,301 10,304 55,489 Marble Hall Mine Probable 8,015 7,959 8,127 8,218 Proved Subtotal 8,015 7,959 8,127 8,218 Grand total 15,395 44,260 18,431 63, Sand resources and sand reserves Delf Silica 3.1 Delf Sand Mine The effective date of this estimate is deemed to be the date of the latest Lidar survey conducted, by EPA Survey, on 18 March. Production reported is for the survey period 10 April to 18 March : Silica Sand - No changes transpired in Silica Sand Resources. - Changes in Silica Sand Reserves resulted from: 1. sterilisation of mineral reserves due to infrastructure development and groundwater conditions (-0,449 Mt) Construction Sand - Changes in Construction Sand Resources and Reserves resulted from: 1. mining production (-0,139 Mt). 2. re-modelling to include material mined outside approved resources areas (+0,139 Mt) 1 Due to the construction of surface infrastructure and wet underfoot conditions in certain areas that resulted in the sterilisation of mineral reserves the author decided to reduce the declared mineral reserves with the affected tonnage as it is uncertain if the ore underlying these areas can be mined economically. Mineral resources declared for these areas are unaffected as a reasonable and realistic prospect for eventual economic extraction still exists. 3.2 Delf Cullinan Mine The effective date of this estimate is deemed to be the date of the latest Lidar survey conducted, by EPA Survey, on 18 March. Production reported is for the survey period 1 June to 18 March : Silica Sand - Changes in Silica Sand Resources and Reserves resulted from: 1. mining production (-0,190 Mt) 25 Infrasors Integrated Annual Report

28 5. Mineral resources and mineral reserves report (continued) Construction Sand - No changes transpired in Construction Sand Resources and Reserves Mineral resources Operation Resources category Silica Sand Construction Sand Silica Sand Construction Sand Mt Mt Mt Mt Inferred 1,309 0,081 1,309 0,081 Delf Cullinan Mine Indicated 1,749 0,053 1,749 0,053 Measured 3,006 0,015 3,196 0,015 Subtotal 6,064 0,149 6,254 0,149 Inferred Delf Sand Mine Indicated 0,449 0,330 0,449 0,330 Measured Subtotal 0,449 0,330 0,449 0,330 Grand total 6,513 0,479 6,703 0, Centurion operation 26 Infrasors Integrated Annual Report Infrasors Holdings Limited holds a prospecting right for silica sand, crusher sand, etc. for Delf Cullinan mine. Infrasors applied for a new order mining right and is awaiting the approval of this right. 4.1 Geological setting and model A reddish brown unconsolidated sandy soil is present in pockets between dolomite pinnacles, underlain by dolomite residuum generally restricted to within the first bench of the mine (up to 6 m below surface). Dolomite of the Lyttelton Formation is dark grey in colour with large stromatolitic mounds and a relative absence of chert lenses and bands as opposed to the chert rich dolomite of the underlying Monte Christo Formation, Malmani Subgroup, Chunniespoort Group and Transvaal Supergroup with stromatolitic and oolitic plat formal dolomite. Rocks of the Lyttelton Formation underlie the mine site, striking north north-west with a dip of between 11o and 15o east northeast, while rocks of the Monte Christo and the Eccles formations outcrops to the west and east of the site respectively. (Diagram 1) Historic drill hole spacing (Diagram 2) comprises five lines approximately 300 meters apart with inter-hole spacing varying from 64 meters to 135 meters. Placing of the holes drilled during April 2009 was restricted by the edge of the operating mine to the east and the screening berm to the west. The first 5 holes were drilled 100 meters apart with a 200m spacing thereafter. An additional drill hole was drilled perpendicular to this line, 100 meters to the east. The layout of the 2009 drill holes adequately covers the planned extension area (Diagram 2). Geological sections were created from this data for the construction of a geological block model. In order to extent the geological model to outside the property boundaries, additional geological contact points were inferred from individual sections by the creation of new points using the gradient and bearing of the specific geological contact for a particular section. The geological section of boreholes L1 to L3 were also copied and inserted on 300 meter intervals to the north of this section, covering a distance of 900 meters. No mining is planned in this area as this part of the geological model underlies the processing plant and site offices. The geo-chemical domains will be referred to as: - UHGMD Upper high grade metallurgical dolomite - MGMD Medium grade metallurgical dolomite - LHGMD Lower high grade metallurgical dolomite - CRD Chert rich dolomite

29 Digital Terrain Models (DTM s) were created for the overburden/uhgmd, UHGMD/MGMD, MGDM/LHGMD and LHGMD/CRD contacts and constrained as domains in the geological block model. The elevation of the contact between the overburden and UHGMD were reduced by 6 meters to compensate for internal waste resulting from the dolomite pinnacles close the surface. This domain will be referred to as MDLW (metallurgical dolomite waste). Additionally the resource below the MDLW contact has been discounted by 0.1 percent due to the presence of soilfilled cavities intersected during the diamond drilling programs. Table 1. Summary of the extent of the created geological block model. North - South East - West Elevation User Block Size 25 m 25 m 1 m Min. Block Size 12,5 m 12,5 m 0,5 m Extent 2050 m 1050 m 190 m Available chemical analysis of the 2009 diamond drill holes clearly differentiate between the rocks of the Lyttelton and Monte Christo Formations based mainly on SiO2 concentrations. A clear reduction in dolomite concentration is also noticeable for the Monte Christo Formation. Diagram 1 27 Infrasors Integrated Annual Report

30 5. Mineral resources and mineral reserves report (continued) Diagram 2 The results also confirm the presence of a zone, with minor chert, in the Lyttelton Formation approximately 7 meters above the Monte Christo Formation, dividing the Lyttelton Formation into three distinct geo-chemical domains. Further geostatistical evaluation of the 2009 data set were undertaken to establish the dispersion and continuity of mineralisation of the Lyttelton Formation. Geostatistical evaluation of the available Monte Christo Formation data were omitted as drilling only intersected this formation by up to 20 meters and quality specification limits is not required for the production of construction dolomite. Variogram map functions in Surpac were used to model the anisotropy of the deposit and to identify variogram models for geostatistical estimation (Table 2). 28 Infrasors Integrated Annual Report

31 - The range for continuity if mineralisation is defined by: 1. Ƴ(h) = c + c1sph(r1) + c2sph(r2), where 0 < r1 < a1 and a1 < r2 < a2 2. Angle of rotation of the Major axis: i. Bearing 120 o ii. Dip Angle 6 o iii. Tilt Angle 15,00 o 3. Anisotropy factors: i. Semi-major axis 1,00 ii. Minor axis 3,43 Table 2. Variogram functions for CaO, MgO, SiO2 and RD. Ƴ(h) c c1 a1 c2 a2 CaO 0,198 0, , MgO 0,145 0, , SiO 0,510 0, , RD 0,0005 0, , Accuracy of the variogram functions was tested by estimating the 2009 analytical results with the variogram functions generated. The results of the estimations show confidence levels above 95%. The Competent Person ( CP ) is satisfied that the estimated block model values for CaO, MgO and SiO2 compares favourably with the analytical results of the samples submitted for chemical analysis. No consideration was given to alternative interpretations as the CP is satisfied that sufficient data has been gathered to accurately differentiate between metallurgical dolomite and construction dolomite based on their spatial orientation and geochemical character. 4.2 Legal Aspects and Tenure There are no outstanding rights and all governmental requirements were approved. Environmental Management Programme Reports ( EMPR ) have been submitted to the Department of Mineral Resources of the RSA ( DMR ) and were approved. The Department of Mineral Resources accepted a financial guarantee for the rehabilitation of land disturbed by mining on this property to the value of R5,6 million (refer to note 29). 4.3 Mineral Resource and Mineral Reserve Classification Criteria The following classification criteria were applied for declaring Mineral Resources and Mineral Reserves based on the results of the created geological and geo-chemical models constrained to a final LOM (life of mine) pit design: - A final slope angle of 47 o, two degree less than the slope angle on the western face of the current excavation. - Bench geometry: i. Bench Height 12 meters ii. Berm Width 4,6 meters iii. Bench Face angle 65 o - All new ramps were designed to a final width of 20 meters with a 1:10 gradient. - All dolomite present in the first bench will be discounted by 50%. - All dolomite below the first bench has been discounted by 0,1% to account for the presence of voids. - A plane defined by a DTM created from the end depths of all holes drilled were used to differentiate between measured and indicated mineral resource confidence categories. 29 Infrasors Integrated Annual Report

32 5. Mineral resources and mineral reserves report (continued) Dolomite from both the Monte Christo and Lyttelton formations are exposed in the mine faces resulting in a high degree of geological confidence regarding the continuity of these formations towards the West (approximately 25 meters) and downwards (approximately 37 meters) to the final floor. The results of the 2009 drilling program confirmed geological continuity towards the west and proved beyond doubt that rock of the Lyttelton Formation is suitable for the production of metallurgical dolomite. A high degree of confidence therefore exists that the SiO2 concentration would not vary considerably within the defined geochemical domains as confirmed by past mining and processing results. All modifying factors relating to current mining area is in place making it possible to classify the in-situ economic mineable ore contained in this pit outline as: - Measured Mineral Resources and Proved Mineral Reserves - Above the plane defined by the end depths of all holes drilled. - Indicated Mineral Resources and Probable Mineral Reserves - Below the plane defined by the end depths of all holes drilled and above the 1300 m average mean sea level (amsl) plane. - Inferred Mineral Resources - Below the 1300 m average mean sea level plane and above the final floor at a depth of 1246 m (amsl). The relative density (RD) or specific gravity (SG) of 213 samples taken for chemical analysis was determined by Set Point laboratories using a pycnometer. Statistics of the RD results shows a mean of 2,89, variance of 0,00 and a standard deviation of 0,03. It is apparent that the RD differs significantly between the rocks of the Lyttelton (2,90ton/m3) and Monty Christo Formations (2,86 ton/m3), while similar RD values were reported for the different lithological domains identified within the Lyttelton Formation. Statistical mean values calculated were used to estimate Mineral Resource and Mineral Reserve tonnages for the respective Lyttelton and Monte Christo Formations. Inferred mineral resources were not included in feasibility studies conducted during Risks Lyttelton Dolomite Centurion Mine is a well-managed, profitable operation and has displayed the ability to survive and excel in many different socio-economic climates since The implementation of deterrent, preventative, corrective and detective controls to ensure the reduction and removal of possible threats are critical management tools used by management to ensure the delivery of quality products to its customers. Risks identified that might influence the declared mineral resources and mineral reserves are: - Deviations from the final approved pit design will result in reduced mineral resources and mineral reserves. - Blasting incident affecting public safety must be avoided at all costs. The DMR is monitoring the implementation of changes in blast design and the mine must spare no effort to guarantee the safety of the general public. - Surface water - The southern watercourse, crossing the property via a culvert under the railway line, will be diverted to the south, within the 30 meter boundary pillar shown, to join the water course along the southern side of the property. This water course discharges into a concrete storm water drain between the mine and Botha Avenue. - Pretoria Dyke Offshoot The probability of the presence of an offshoot of the Pretoria Dyke, as indicated by studies undertaken by the Department of Water Affairs, crossing the south western corner of the property will be investigated utilising the latest geophysical methods and drilling if required. Lyttelton Dolomite Centurion Mine is aware of the risks associated with breaching such a dyke and will adjust the life of mine plan if the presence of the dyke is proven. - Electrical and sewage servitude - The southern expansion is planned up to 9 meters from this servitude. Care must be taken not to breach this pipeline. 30 Infrasors Integrated Annual Report

33 5. Marble Hall mine 5.1 Geological setting and model The Marble Hall Mine is physically divided into two areas, the south and north operations, by a provincial road linking the town of Marble Hall to Groblersdal. As the south operation also has not been in production since the early 1970 s while production of the north operation were continued uninterrupted. Emplacement of the Bushveld Complex (Lebowa Granite Suite, Rashoop Granophyre Suite,Rustenburg Layered Suite and Rooiberg Group) altered some of the Malmani dolomite to marble. This metamorphic process is known as de-dolomitisation. The dolomite outcrops as a north-south orientated belt, approximately 13 kilometres long, with a maximum width of approximately 3 kilometres (Diagram 3). Bluish-grey dolomite and chert predominates in this belt, except in the southern sector where intensely recrystallised calcitic carbonate rocks occurs in and elongated zone of approximately 5 kilometres by 0,8 kilometres. The core of the marble occurrence, which is the most intensely metamorphosed zone, is known as the Marble Belt. Dolomite has been transformed into a white marble while the chert has reacted with the dolomite to produce tremolite, diopside and fosterite which has since been altered to serpentine and talc. The tremolite, serpentine and talc constitute impurities which are omnipresent as irregular contorted bands and nodules, although pure calcitic marble does occur as lenses and layers of a few meters thick extending to depths in excess of 100 meters below the current surface of the area. Diagram 3 The dolomite underlying Marble Hall north strike north north-east with a dip of 35 o to the east. Dolomite with intercalated serpentine and chert is blue-grey in colour while the calcitic marble with intercalated serpentine is white. Data used for the geological and chemical modelling of the northern mining area comprise of the following: 31 Infrasors Integrated Annual Report

34 5. Mineral resources and mineral reserves report (continued) - Historic data from 92 diamond core drill holes, 3204,06 meters, with 2092 results from samples taken for chemical analysis. - Data from 21 diamond core holes drilled during 2013; 1471,41 meters, with 1156 results from samples taken for XRF analysis. Historic drill hole spacing varied from a minimum of 30 x 30 meters to 140 x160 meters and greater. The bulk of the historic drilling was concentrated around the quarries, in operation at the time. Table 3. Summary of the extent of the created geological block model. North - South East - West Elevation User Block Size 10 m 10 m 1 m Min. Block Size 5 m 5 m 0,5 m Extent 2800 m 1600 m 180 m The following geological domains were defined based on CaO, MgO and SiO2 concentrations: - Marble High grade metallurgical dolomite with [CaO] greater than 49%, [SiO2] below 3,0% and [MgO] below 5%. Visually identifiable as a fairly pure white marble. - Metallurgical dolomite Low grade marble with [CaO] greater than 41% but less than 49%, [SiO2] below 3%. Visually identifiable as a fairly pure white marble with some serpentine inclusions. - Construction dolomite Refers to either marble not conforming to the specifications referred to above or to unaltered dolomite or serpentine or other waste rock present. Geostatistical evaluation of the chemical data set were undertaken to establish the dispersion and continuity of CaO, MgO and SiO2 in the areas drilled. The data were composited to a support length of 1,0 meter. Outliers were changed for variogram modelling based on a 95% confidence interval of the mean ± (1,68 x standard deviation). Variogram map functions in Surpac 6.6 were used to model the anisotropy of the deposit and to identify variogram models for geostatistical estimation. Identified anisotropic factors and spherical variogram functions, showing the lowest variances, are summarized in Tables 4 and 5 respectively. Table 4. Anisotropy factors for CaO, MgO and SiO2. Anisotropy factors CaO MgO SiO2 Semi-major axis Minor axis Table 5. Variogram functions for CaO, MgO and SiO2. Ƴ(h) c C0 c1 a1 c2 a2 CaO 1,83 1,03 0, , MgO 0,05 0,75 0, , SiO 1,53 0,90 0, , Infrasors Integrated Annual Report

35 - The range for continuity of mineralisation is defined by: 1. Ƴ (h) = c + c1sph(r1) + c2sph(r2) where 0 < r1 < a1 and a1 < r2 < a2 2. Angle of rotation of the Major axis: i. Bearing 213 o ii. Dip Angle 68 o iii. Tilt Angle 0 o CaO, MgO and SiO2 values were estimated in the created block model using ordinary kriging and inverse square distance estimation methods. Grade estimation was constrained to the final depth and area of boreholes drilled. Reported raw data for individual elements compounds were used in all estimations. The relation of the individual block sizes, inclusive of sub blocking, in the chemical block models to the average sample spacing is sufficient to chemically model the contact grade variation that resulted from metamorphism to an indicated accuracy level. No consideration was given to alternative interpretations due to the spacing of the data as explained above. 5.2 Legal Aspects and Tenure There are no outstanding mining rights and all relevant government requirements have been approved. In terms of the EMPR, a rehabilitation programme is in operation and rehabilitation work is conducted as part of the mining operations. The Department of Mineral Resources accepted a financial guarantee for the rehabilitation of land disturbed by mining on this property to the value of R3,8 million (refer to note 29). The CP is not aware of any non-compliance reports issued by the DMR, with regards to the implementation of the existing approved EMPR, to Lyttelton Dolomite Marble Hall Mine. 5.3 Mineral Resource and Mineral Reserve Classification Criteria The following classification criteria were applied for declaring Mineral Resources and Mineral Reserves based on the results of the created geological and geo-chemical models constrained to a final LoM (life of mine) pit design: - A final slope angle of o, eight degrees less than the recommended (Big C Rock Engineering) slope angle of 70 o. - Bench geometry: i. Bench Height 12 meters ii. Berm Width 3 meters iii. Bench Face angle 75 o - All new ramps were designed to a final width of 20 meters with a 1:10 gradient. - All dolomite below the first bench has been discounted by 0.1% to account for the presence of voids. Due to the challenging spatial orientation of the orebody and the use of geochemical contacts to distinguish between the different ore types the spacing of data points is critical in determining the degree of geoscientific knowledge. Mineral Resource and Mineral Reserve categories are defined as follow: - Measured Mineral Resources and Proved Mineral Reserves Drill spacing less than 50 x 75 meters. - Indicated Mineral Resources and Probable Mineral Reserves Drill spacing of 50 x 100 meters - Inferred Mineral Resources Drill spacing greater than 50 x 100 meters 33 Infrasors Integrated Annual Report

36 5. Mineral resources and mineral reserves report (continued) A medium degree of confidence exists for the constructed geological and geochemical models of the area drilled during The relative density (RD) or specific gravity (SG) of 110 core drilled samples taken for chemical analysis was determined by placing a core sample into a water-filled graduated cylinder to read off the displacement after weighing the sample. Statistics of the RD results show a mean of 2,76 ton/m3, variance of 0,02 and a standard deviation of 0,14. It is also apparent that the RD differs significantly when the CaO concentrations is below 30,24%, most likely the effect of the presence of substantial concentrations of magnesium silicate minerals and chert. The following statistical mean values calculated, based on CaO concentrations, were used to estimate Mineral Resource and Mineral Reserve tonnages for the respective geological constrains based on the CaO concentrations within the metamorphosed dolomite orebody: - 2,74 ton/m3 for [CaO] 49,0-2,76 ton/m3 for 49,0 [CaO] 44, ,74 ton/m3 for 44,02 [CaO] 30, ,85 ton/m3 for [CaO] 30,24 Perold Earth is not aware of any feasibility study conducted on the Mineral Resources declared for the Marble Hall North Operation. 5.4 Risks Lyttelton Dolomite Marble Hall north operation is a well-managed, profitable mine and has displayed the ability to survive and excel in many different socio-economic climates since The implementation of deterrent, preventative, corrective and detective controls to ensure the reduction and removal of possible threats are critical management tools used by management to ensure the delivery of quality product to its customers. The only risks identified that might influence the declared mineral resources and mineral reserves are the limited drill spacing used to distinguish between metallurgical and construction dolomite. 34 Infrasors Integrated Annual Report

37 6. Delf sand mine operations 6.1 Geological setting and model The project area is underlain by Proterozoic rocks of the Magaliesberg and Rayton Formations (dipping between 13 o and 20 o to the north east). The rocks of the Magaliesberg and Rayton formations comprise predominantly of mud rocks alternating with quartzitic sandstones, all of which have been subjected to lowgrade metamorphism. (Diagram 4) A Post-Transvaal diabase intrusion (dyke) cuts through the centre of the project area in close proximity to the contact between the Magaliesberg and overlying Rayton Formations while the flatter central and eastern portions is covered with soil, sand and alluvium. Sixty four prospecting pits were excavated, 100 x 100 meter grid, during June/July and 38 diamond core holes were drilled during 2010 for the estimation of the alluvial sand resources underlying the Delf Sand Mine property and north eastern extension area. Diagram 4 35 Infrasors Integrated Annual Report

38 5. Mineral resources and mineral reserves report (continued) Logging of the exploration pits indicated that the soil cover in the area varies in thickness from between 0,05 to 0,5 meters. The soil is predominantly a sandy dark yellowish brown transported Hutton Soil. Alluvial sand intersected by drilling and exposed in the working faces of the sand operations is fine grained silica sand varying in colour from white (light grey) to various shades of orange, yellow and red. The majority of the sand is a transported weathered product of the Magaliesberg quartzite with a fairly even grain size distributions. Three different sand types were recorded during the logging of the prospecting pits: - Silica Sand (SSND) White, cream and light yellow alluvial sand. - Construction Sand(CSND): i. Plaster Sand (PSND) Yellow, dark yellow and orange alluvial sand. ii. Building Sand (BSND) Dark orange and red alluvial sand. The depth of the alluvial sand deposits were limited to the floor contact with the underlying rock or the depth of an exploration pit or drill hole if the floor contact were not intersected. The floor contacts of the deposits are gradational and are composed of the following: - Transported quartzite boulders mixed with sand - Clay (weathered diabase) into the geological block model. - Diabase boulders mixed with sand and clay. Geological data used for the construction of the geological model consisted of borehole and exploration pit logs contained within and in close proximity to the boundaries of the project areas. Digital Terrain Models (DTM s) were created for the overburden/alluvial sand and silica sand contacts and constrained as domains in the geological block model. (Table 10) Geological discounting were restricted to 5% for the possible presence of quartzite boulders contained in the sand deposit. No alternative interpretations were considered. Table 10. Summary of the extent of the Delf Alluvial Sand block model. North - South East - West Elevation User Block Size 10 m 10 m 0,250 m Min. Block Size 5 m 5 m 0,125 m Extent 2500 m 1900 m 110 m Samples were not taken for chemical analysis from the pitting program undertaken during The sand defined from the results of this program were strictly the result of physical observation and measurements. Geo-chemical evaluation of the 81 XRF analytical results were undertaken to establish the dispersion and continuity of mineralisation of the sand deposit. 36 Infrasors Integrated Annual Report

39 Due to the limited number of samples taken and the spatial distribution of the areas drilled isotropic conditions were assumed for grade estimation. Reported values were composited downhole to 0,25m to for geostatistical evaluation. Outliers were removed for variogram modelling based on a 95% confidence interval of the mean ± (1.68 x standard deviation). Al2O3, Fe2O3, K2O, SiO2 and yield values were estimated, washed and raw sample, in the created block model using ordinary kriging and inverse square distance estimation methods. Grade estimation was constrained to the final depth and area of boreholes drilled. Reported raw data for individual element compounds were used in all estimations. No consideration was given to alternative interpretations due to the spacing of the data as explained. 6.2 Legal Aspects and Tenure In terms of the EMPR, a rehabilitation programme is in operation and rehabilitation work is conducted as part of the mining operation. The Department of Minerals and Energy accepted a financial guarantee for the rehabilitation of land disturbed by mining on the remainder of portion 10 of the farm Pienaarspoort 339 JR from Delf Sand, Guarantee No: M-08/29687, to the value of R9,3 million (refer to note 29). The CP is not aware of any non-compliance reports issued by the DMR, with regards to the implementation of the existing approved EMPR, to Delf Sand with regards to the mineral property under discussion. 6.3 Mineral Resource and Mineral Reserve Classification Criteria The criteria and methods used as the basis for the classification of the Delf Alluvial Sand Mineral Resources and Mineral Reserves into varying ore types and confidence categories are based on results of the created geological and geo-chemical models constrained to a final LOM (life of mine) pit design: - The density distribution of the exploration pits excavated and core holes drilled. - Differentiation between silica sand and construction sand for exploration pit and core drilled areas: i. Visual differentiation for the exploration pit areas ii. Differentiation based on grade estimation for the core drilled areas The degree of confidence regarding the continuity of the explored portions of these deposits are moderate and as all modifying factors relating to the current mining areas are in place it is possible to classify the in-situ economic mineable ore contained in the LoM quarry outlines as: - Measured Mineral Resources and Proved Mineral Reserves Prospecting pit and core drill spacing of 50 x 50 meters. - Indicated Mineral Resources and Probable Mineral Reserves Prospecting pit and core drill spacing of 100 x 100 meters. Statistical mean relative density ( RD ) value of 2,67 ton/m3 were used to estimate Mineral Resource and Mineral Reserve tonnages for the Delf Silica mineral property. The RD or specific gravity ( SG ) of samples taken for chemical analysis was determined by Set Point Laboratories using a pycnometer. The feasibility study conducted during 2009 did not include any Inferred Mineral Resources. 6.4 Risks The relative limited resource base might result in contamination with construction sand during mining reducing metallurgical sand recovery during processing of the raw material. 37 Infrasors Integrated Annual Report

40 5. Mineral resources and mineral reserves report (continued) 7. Details of competent person Jacques Perold 5 Adrian Road Kempton Park Birchleigh 1619 PO Box 8045 Birchleigh 1621 The Competent Person/Valuator has over 30 years experience in the South African mining industry working as an exploration and mining geologist mainly in the fields of industrial minerals and base metals with some precious metals experience. His experience includes: - Exploration and mining geology; - Mineral resource modelling and evaluation; - Opencast mine design, optimisation, mine planning and valuation; and - Surface mining and rehabilitation management. He is registered as a Professional Natural Scientist with the South African Council for Natural Scientific Professions (SACNASP) number /05. He is also a Member of the Geological Society of South Africa and a Member of the Institute of Quarrying. The qualifications of Mr. Perold are listed below: - MSc (ESPM) (with distinction) Earth Science Practice and Management; - NDSURM National Diploma in Surface Mining; - Diploma in Datametrics (Cum Laude) Geostatistics and Applied Statistics; and - BSc Geology and Mathematics. Mr. Perold has been admitted, during, to the Master of Science in Engineering (Mining) programme at the University of the Witwatersrand to expand his knowledge base in the fields of Mineral Resource Management and Mineral Resource Evaluation. The Competent Person/Valuator has in no manner any direct or indirect financial or preferential business interest in Infrasors Holdings Limited or any of its subsidiaries or related parties. The consultant has a pure business relationship with the company and provides technical and scientific assistance when required. The consultant as an independent contractor has other significant clients. The competent person designated to take responsibility for Mineral and Resources and Reserves, J Perold, the undersigned has reviewed and endorsed the reported estimates. Jacques Perold MSc(ESPM), NDSURMA, DATA METRICS PrSciNat., MGSSA, MIQ 38 Infrasors Integrated Annual Report

41 Infrasors Holdings Limited annual financial statements for the year ended 28 February The integrated annual report and the annual financial statements have been prepared by the finance division under the supervision of the Interim Financial Director, Hendrik P. Verreynne B Compt (Hons), CA (SA). The annual financial statements have been audited in compliance with the Companies Act, No. 71 of 2008, as amended. Publication date: 29 July Company registration number: 2007/002405/06 39 Infrasors Integrated Annual Report

42 Directors responsibility statement The annual financial statements are set out on pages 46 to 107 are the responsibility of the directors. The directors are responsible for selecting and adopting sound accounting practices, for maintaining an adequate and effective system of accounting records, for safeguarding assets and for developing and maintaining systems of internal control that, among other things, will ensure the preparation of annual financial statements that achieve fair presentation and have been prepared in accordance with IFRS. They are based on appropriate accounting policies which have been consistently applied, unless otherwise indicated, and which are supported by reasonable and prudent judgements and estimates. The annual financial statements have been prepared on the going-concern basis since the directors have every reason to believe that the company and the group have adequate resources in place to continue operations for the foreseeable future. The external auditors have concurred with the directors statement on going concern. The external auditors are responsible for independently auditing and reporting on these annual financial statements in conformity with the International Standards on Auditing. The annual financial statements were approved by the board of directors and were signed on their behalf by: Mochele Noge Chairman of the board Louis R Loubser Managing director Pretoria 29 July 40 Infrasors Integrated Annual Report

43 Declaration by company secretary In terms of section 88(2)(e) of the Companies Act, No. 71 of 2008, as amended, I certify that to the best of my knowledge and belief the company has lodged with the Companies and Intellectual Property Commission all such returns and notices as are required of a public company in terms of the Companies Act of South Africa, in respect of the financial year ended 28 February and that all such returns and notices are true, correct and up-to-date. Mariëtte Swart Company secretary Cape Town 29 July 41 Infrasors Integrated Annual Report