Annual Report We do it better

Transcription

1 Annual Report 2009 We do it better

2 CONTENTS The Board and management of ARM appreiate the importane of ommuniating learly and transparently to all our stakeholders. Our Annual Report for F2009 reflets this ommitment and features several new and expanded setions ontaining pertinent information on ARM, its operations and ativities. New setions are indiated below with an asterisk (*). 2 SALIENT FEATURES This setion provides an overview of notable highlights and hallenges, based on finanial, operational and sustainability information, for the year ended 30 June ARM OPERATIONAL OVERVIEW* The overview provides ontext to ARM s business, inluding partners, geographi reah, finanial highlights per division, volumes per ommodity, apital expenditure and number of employees. 6 EXECUTIVE CHAIRMAN S LETTER TO SHAREHOLDERS 26 OPERATIONAL SUMMARY* A summary table, showing key operational performane indiators, serves to introdue the divisional reviews. 27 DIVISIONAL REVIEWS Inluded here are operational volume and finanial performane summaries, and detailed operational information with histori figures, for eah division. ARM Platinum ARM Ferrous Alongside the Exeutive Chairman s report on performane against strategy for the year, a projet pipeline and operations diagram shows that most of ARM s strategi investments are in steady-state prodution and the key growth projets and projet pipeline are strong. 10 CHIEF EXECUTIVE OFFICER S REVIEW ARM Coal ARM Exploration Gold: Harmony The CEO reports on the rapid and effetive olletive response to the warning signs of the eonomi downturn and the far-reahing deisions taken by individual operations in this regard. In his evaluation of performane, it is evident that ARM s diversifiation has held it in good stead. 14 KEY PERFORMANCE INDICATORS* This setion provides a snapshot of ARM s key finanial and non-finanial performane in the year under review, with histori omparisons. 16 FINANCIAL REVIEW The Finanial Diretor presents a omprehensive analysis of ARM s finanial results for the period under review. 22 SIX-YEAR REVIEW The review provides performane trends for ARM s key finanial indiators, sine the merger transation in A Rand/US Dollar summary onversion table is inluded for the reader s onveniene. 24 PRINCIPAL RISKS AND UNCERTAINTIES* This table shows the major risks, unertainties and trends that may impat on ARM s operations and strategy into the future, and the mitigating ations being taken in eah ase. Additional risk management information is inluded in the orporate governane report. 69 MINERAL RESERVES AND RESOURCES * An abridged statement of Mineral Reserves and Resoures is provided. Please note that the full report is available on our website, 87 GOVERNANCE (A full ontents list for this setion an be found on page 88) The Governane setion demonstrates an expanded fous on sustainable development. In addition, a soreard showing ARM s ompliane with the Mining Charter* is inluded in this setion for the first time. The reommendations of the King Report on Corporate Governane for South Afria 2002 (King II) and the G3 reporting guidelines of the Global Reporting Initiative (GRI) have been used in preparing the Corporate Governane and Sustainable Development report respetively. Please note that the full Sustainable Development report is available on our website, ANNUAL FINANCIAL STATEMENTS (A full ontents list for this setion an be found on page 135) The Annual Finanial Statements have been prepared in aordane with International Finanial Reporting Standards (IFRS), the requirements of the South Afrian Companies At and the regulations of the JSE Limited (JSE). For important information on forward looking statements please refer to inside bak over.

3 CORPORATE SUMMARY Afrian Rainbow Minerals is a leading South Afrian diversified mining and minerals ompany with exellent long-life, low-ost assets in key ommodities. An integral part of ARM s business is the forging of partnerships with major players in the resoure setor. ARM in its urrent form was reated in May 2004 to operate, develop, explore and hold signifiant interests in the South Afrian and Afrian mining industry. Despite the market hallenges, ARM ontinues to be profitable and grow its assets, while maintaining a strong balane sheet. 100 % (1) (2) 100 % 51 % 100 % 15 % Platinum Ferrous Coal Exploration Gold Harmony (6) PGMs 50% Modikwa (3) 55% Two Rivers Nikel, PGMs & Chrome 50% Nkomati PGM Exploration 90% Kalplats (4) Iron Ore Manganese Ore Manganese Alloys Chrome Ore Charge Chrome 20% Xstrata Coal South Afria 50% Khumani 50% Beeshoek 10 % Copper 50% Nhwaning 50% Gloria 50% Cato Ridge (CR) 25% CR Alloys 50% Dwarsrivier 50% Mahadodorp 51% Goedgevonden Other Afrian exploration 50% Konkola North (5) 50% Mwambashi 50% Lusaka & Kabwe 35% Exploration areas 2&4 30% Kalumines Gold 46% Otjikoto (1) Assets held through a 50% shareholding in Assmang Limited. (2) Assets held through ARM s 50% interest in the Vale/ARM JV. (3) Assets held through the ARM Mining Consortium s effetive interest of 41.5%, the balane held by loal ommunities. (4) Platinum Australia, whih will earn in up to 49% of ARM Platinum s shareholding on ompletion of a bankable feasibility study, also owns 50% of the Kalplats Extended Area. In the event that the JV aquires Anglo Amerian s 10%, Platinum Australia has the right to aquire 49% of the aquired 10%. (5) Konkola North is subjet to a buy-in right up to 20% (5% arried interest) by state-owned ZCCM Investment Holdings pl. (6) Primary listing on JSE. Share information ARM reently won the Investment Analyst Soiety of South Afria Award for Setion II: Resoures Mining Finane & Other Mineral, Extrators & Mines as one of the top mining ompanies in terms of long-term reporting. Issued share apital as at 30 June shares Market apitalisation as at 30 June 2009 R28 billion Share prie as at 30 June 2009 R Daily average volume traded shares Primary listing JSE Limited Tiker symbol ARI ARM Annual Report

4 SALIENT FEATURES ARM is finanially robust and ontinues to invest signifiant funds to grow the Company despite the massive global eonomi risis. Patrie Motsepe, ARM Exeutive Chairman Finanial Headline earnings derease by 42% from R4.0 billion to R2.3 billion, impated by the global eonomi reession. Headline earnings per share of (F2008: 1 906) ents. Ferrous Division raises ontribution to basi earnings by 14% to R3 160 million, paying ARM dividends of R2 151 million. Profit from operations before exeptional items derease 44% from R6.7 billion to R3.7 billion. Capital expenditure (apex) of R3.3 billion ARM foreast apex to be more than R8 billion over the next three years. TEAL s shareholding restrutured as ARM forms 50:50 joint venture with Vale. ARM orporate loan of R967 million refinaned; new faility inreased to R1.75 billion and extended for three years. The delaration of a dividend of 175 ps (F2008: 400 ps). Operational All operations remain ash flow positive despite the global reession. Reord sales for PGMs and iron ore. Prodution volumes derease for other ommodities due to fall in demand. Khumani 10 mtpa mine ompleted on time and within budget; a further 6 mtpa expansion approved. Goedgevonden and Nkomati expansion projets start ommissioning. Restruturing at all operations ompleted, stokpiles rebuilt and retrenhments minimised. Sustainability Modikwa ahieves 5 million fatality-free shifts (seond South Afrian mining industry operation to have reahed this ahievement). Improvement in overall safety performane; LTIFR dereases from 6.08 in F2008 to 3.68 in F2009. Steady progress made in employment equity and gender diversity, with Mining Charter targets exeeded. Loal Eonomi Development spend inreases signifiantly to R28 million. Good progress in implementation of HIV & AIDS and TB management poliy. ARM joins the International Counil of Mining and Metals. For more information see ARM Operational Overview p4, KPIs on p14, Finanial Review p16, and Sustainable Development Report p89 2 ARM Annual Report 2009

5 Loaded train wagons destined for Saldanha Bay

6 ARM OPERATIONAL OVERVIEW ARM s We do it better management style brings entrepreneurial flair to the businesses it manages and is invested in. ARM s partners provide aess to markets, skills and valuegenerating growth opportunities. ARM Total F2009 Cash generated from operating ativities % F2009 F2008 hange Headline earnings Rm (42) EBITDA margin % EBITDA Rm (38) Total apex: R3.3bn Total labour* * Exludes ARM Coal. ARM Platinum ARM Ferrous ARM Partners Anglo Platinum Norilsk Nikel Impala Platinum ARM Partner Assore Limited % F2009 F2008 hange Headline earnings ontribution Rm (319) (124) EBITDA margin % (8) 61 EBITDA Rm (180) (106) % F2009 F2008 hange Headline earnings ontribution Rm EBITDA margin % EBITDA Rm Attributable apital expenditure: R1.4bn Key investments during the year: Nkomati Two Rivers Total labour in F Attributable apital expenditure: R1.3bn Key investments during the year: Khumani Iron Ore Nhwaning Plant Total labour in F ARM Annual Report 2009

7 * Xstrata Coal South Afria exluding Goedgevonden. ARM Coal ARM Partner Xstrata Coal South Afria % F2009 F2008 hange Headline earnings ontribution Rm (23) EBITDA margin % EBITDA Rm (43) ARM Partner Vale ARM Exploration Attributable apital expenditure: R0.6bn Key investments during the year: Goedgevonden Total labour in F TEAL listed to raise funding to further Afrian exploration ARM reates TEAL to develop Afrian prospeting rights. ARM dilutes ownership to 65% to failitate TSX listing and fund raising TEAL invests US$130 million to further exploration in Afria and moves assets up the value urve; debt funding supported by ARM. De 2008 Feb 2009 ARM announes proposed JV with Vale 15 Deember 2008: TEAL minorities offered a 123% premium based on 120-day volume-weighted average prie. 13 Feb 2009: TEAL shareholders vote in favour of transation TEAL delisted. ARM effetively sells 15% to Vale. Future funding shared by 50% JV partner, Vale. 1 Marh 2009 urrent Transation onluded ARM reeives R137 million for 15% sale. Debt repaid by partners of US$85 million. Konkola North projet is JV s near-term fous. ARM Annual Report

8 EXECUTIVE CHAIRMAN S LETTER TO SHAREHOLDERS Patrie Motsepe Exeutive Chairman Growing during hallenging times During the past finanial year ARM displayed exeptional resiliene despite the prevailing global eonomi risis. Our world lass management teams and long-life quality assets, as well as the proven skills and expertise of our partners were the primary ontributors to our satisfatory performane in F2009. While the global eonomi risis had a negative impat on demand and profitability, the swift and effetive measures that were taken by our management to; preserve ash; ut osts; and redue or reshedule some of our apital expenditure without ompromising our ommitment to our growth projets enabled us to ontinue to be profitable and well positioned for long-term growth. ARM strategy: firing on all ylinders Operational effiienies Organi growth 2 x 2010 Aquisitions Afria 6 ARM Annual Report 2009

9 We have reassessed and reonfirmed our ommitment to our 2 x 2010 growth strategy whih was initiated in In terms of this strategy we undertook to double our prodution by We are not only on trak to fulfil this objetive but have signifiantly surpassed the target set in 2005 in respet of ertain key ommodities. The major ontributor to ARM s results for F2009 was the Ferrous Division where the ontribution inreased relative to other divisions. This was the only division to reflet an inrease in earnings ompared to F2008. The results in F2009 were driven by a strong ontribution from iron ore while manganese ore performed well up to Otober However the inreased osts that were inurred at ARM Exploration and the negative ontribution from ARM Platinum redued our headline earnings. In 2008, ARM delared a reord dividend of 400 ents per share. We are pleased to delare a dividend in respet of F2009, albeit a more modest one, of 175 ents. This was made possible by the overall satisfatory performane of ARM and the strength of our balane sheet, whih we enhaned despite the diffiulties of the past year. Injury Frequeny Rate delined from 6.08 per million man hours worked in the previous year to 3.68 in F2009. In partiular, the management and staff at Modikwa made us proud by ahieving 5 million fatality free shifts in Marh 2009 being the seond South Afrian mining industry operation to have ahieved this reognition. The team at Two Rivers also passed the 1 million mark in fatality free shifts in the same month. ARM beame a member of the International Counil on Mining and Metals (ICMM) during F2009. This will further expose and enhane our adherene to global best praties. ARM has made signifiant progress on our sustainable development initiatives. This is refleted in our abridged Sustainable Development Report on pages 89 to 114. Commitment to transformation and upliftment Our broad-based blak eonomi empowerment (BBBEE) and employment equity initiatives, demonstrates our ommitment to ontribute to the transformation and inlusivity of the mining industry. We are working with many of our stakeholders to make the mining industry truly refletive of all South Afrians and to give all our people a stake in the ountry s mineral wealth. Many of the geographi areas in whih ARM operates are rural and historially poor regions. Apart from job reation, we are ommitted to improving the living onditions of the ommunities neighbouring our mines. During F2009, in exess of R90 million was spent (on a 100% basis) under ARM s Soial and Labour Plans and Loal Eonomi Development and Corporate Soial Investment Strategies. The above amount inludes the R24.5 million whih we paid in dividends to our various provinial upliftment trusts, ommunities, hurh groups, trade union ompanies, women s group and other benefiiaries of the ARM BBEE Trust. These funds are being used to build shools, linis and to assist with the provision of water and to fund other ommunity upliftment projets. A safer workplae The safety of our employees and those who work at our mines is a ruial priority for ARM. As suh, it is with profound regret that we report five fatalities during the year under review. I extend my deepest ondolenes to the families, friends and olleagues of the deeased. These tragi deaths undermined a safety performane that was, in other respets, most enouraging. Sine F2006, the number of full-time ARM employees inreased by some 60%, and this ontinued to rise over the year with the addition of 896 people in F2009. Even with the inreased headount, the Lost Time As we ontinue to weather the urrent global eonomi risis we are ommitted to ensuring that ARM is well positioned to exploit the expeted upturn in demand. It is also ritial that we ontinue to retain and develop the skills of our workfore. We are also proud of our reord of reating jobs in South Afria as ARM has reated two full time jobs every day sine Ahieving and surpassing our targets In 2005 we set out to: double our prodution volumes in key ommodities by 2010; fous on ost ontrol; grow the Company through targeted aquisitions and partnerships; and expand into Afria. ARM Annual Report

10 EXECUTIVE CHAIRMAN S LETTER TO SHAREHOLDERS ontinued We are well on trak to suessfully deliver on these objetives despite deferring some 30% of our total planned apital expenditure in ertain businesses beause of the global eonomi rises. Most of these growth projets are approahing a steady state of prodution. A hart showing the various stages of development of our respetive investments, and details of our key growth projets and projet pipeline, is provided on page 9. Our ontinuing investment in ARM s strategi growth projets is disussed further in the Chief Exeutive Offier s report. ARM has been able to fund organi growth from internal funding although external funding has also been employed. It is important to note that ARM has avoided paying exorbitant pries or inflated premiums for aquisitions and takeovers. Partnering with the best We remain ommitted to being a partner of hoie for mining in Afria. A highlight of F2009 was the reation of the Vale/ARM joint venture, whih has enabled us to redue the negative impat on earnings and ash flow of our signifiant and strategi investments into Afria. The new joint venture brings with it speialised mining skills and a finanially strong partner that will mitigate our risk exposure on these greenfields opper projets. Other orporate highlights for the year inluded the renegotiation of the Modikwa off-take ontrat whih entails higher margins for our Platinum Group Metals (PGMs), as well as returning R132 million to ARM for ommunity funding support whih we previously provided. At Two Rivers, we have entered into an agreement with our partner, Impala Platinum to inorporate adjaent prospeting properties that will extend the life-of-mine by six years. ARM s management ontrol of Two Rivers will be maintained while its shareholding will redue to 51% at the losing of this transation. Board and management hanges The ARM Board reflets the diversity of our Company and our ountry. Further detail on the omposition and funtioning of the Board is available in the Corporate Governane Report on page 115. I am pleased to welome Mihael Arnold to the Board; he replaes Frank Abbott as Finanial Diretor. Frank will stay on as a Non-exeutive Diretor of ARM. He has served ARM with great distintion for five years. During the last two years he was under seondment to Harmony where he suessfully assisted with building a strong balane sheet. I thank him for his dediation to ARM and Harmony and wish him well in his future endeavours. I would also like to thank Max Sisulu who resigned from the Board in August 2009 after he was appointed, Speaker of the South Afrian Parliament. Rik Menell retired in November 2008 and we are grateful for the dediation and ommitment whih he and his family displayed to ARM and its predeessor (Anglovaal) over many years. I am also pleased to welome Anton Botha who will serve as an Independent Non-exeutive Diretor on our Board. Alyson D Oyley has joined us as our new Company Seretary. Dan Simelane has been appointed as Chief Exeutive of ARM Exploration and assumes responsibility for driving our Afrian growth strategy, inluding the Vale/ARM JV growth projets. Looking ahead The year under review, as envisaged, has proven to be extremely hallenging and F2010 promises to be equally demanding. While there are early indiations of an eonomi reovery, ARM will retain its ritial fous on ash preservation and utting ost while ontinuing with our growth projets. We will also ontinue to develop our unique management and entrepreneurial ulture whih has stood us in great stead sine ARM s ineption. The diversified nature of our portfolio has ushioned and assisted us to weather the global downturn. Our interest in Harmony seems poised to grow as Harmony is now debt-free, and has paid its first dividend in five years. ARM Exploration s joint venture with Vale is important to our long term growth strategy in Afria. During the next finanial year we expet the joint venture to make positive progress, espeially at Konkola North in Zambia. We have learned from the hallenges of F2009 and are better prepared to deal with the hallenges of the new finanial year. Faing the future with optimism My sinere thanks go to my fellow Board members, the management and employees of ARM for the ommitment and enterprise with whih they have all addressed the hallenges of the past year. It is thanks to their sarifies and diligene that we an state with onfidene that while we have endured exeptionally testing times, we have preserved shareholder value and positioned ARM favourably to grow and ontinue to be profitable. Patrie Motsepe Exeutive Chairman 7 Otober ARM Annual Report 2009

11 Key growth projets Khumani Iron Ore (10 16 mtpa) Goedgevonden Thermal Coal Nkomati Nikel Large Sale Expansion Steady state 10 mtpa (+6 mtpa) 3.5 mt loal; 3.2 mt export t nikel Capex ommitted 95% (20%) 90% 75% Stage Ramp-up (building) Commissioning tpm plant ommissioning Position on ost urve 40 th perentile 25 th perentile 40 th perentile Commissioning (alendar year) 2008 (2012) Full prodution (finanial year) 2010 (2013) Comment More effiient, low Dragline openast C1 ash ost net of unit ost operation by-produts of US$3.50/lb Projet pipeline and operations A balaned, growing portfolio ARM Annual Report

12 CHIEF EXECUTIVE S REPORT André Wilkens Chief Exeutive Offier Our world-lass team proves its mettle We will all look bak on this past year with a sense of great ahievement. Before the start of F2009 there were lear signs that this would be an extremely hallenging year; demand for ommodities was sharply weaker, resulting in severe delines in pries realised, and it was inevitable that our year s earnings would be negatively affeted. It is however pleasing to report that ARM has met the hallenges head-on. None of our businesses generated a negative ash flow from operating ativities, whih I believe is testimony to the extent to whih our team has embraed the entrepreneurial redo of We do it better management style. Our olletive response to the eonomi warning signs was effetive with individual operations making far-reahing deisions appropriate to their partiular irumstanes. We ahieved reord sales volumes for iron ore and PGMs, manganese ontinued to be a mainstay ontributor, and our ash balane for the year inreased by nearly R1 billion to R3.5 billion. However, the volatility that we had to navigate during the year is illustrated by the variane in the ontribution to headline earnings of our business setors for F2009 versus F2008: The Ferrous Division s ontribution rose from R2 775 million in F2008 to R3 150 million in F2009; Our platinum operations made an attributable loss of R348 million, against a R915 million profit ontribution the previous year. However, we had a positive ash flow of R820 million for the finanial year; Nkomati Nikel s attributable earnings fell from R432 million to R29 million and the mine is growing to a large sale, high volume operation; and Coal delined from an earnings ontribution of R175 million to R135 million due to lower volumes. 10 ARM Annual Report 2009

13 These flutuations ourred while some operations ahieved exellent prodution levels. The Ferrous Division dominated earnings, with iron ore ahieving reord sales volumes. The Platinum Division ahieved pleasing PGM sales, but reported a negative ontribution to EBIT as a result of a signifiant fall in PGM pries during the year. ARM s joint venture agreement with Vale was one of the year s highlights. Together with our new partner we are expeting further progress in proving the feasibility of several high-quality Afrian resoures, partiularly the Konkola North Copper Projet in Zambia, urrently the subjet of a feasibility study. The addition of opper to our portfolio represents an exiting value ontribution to ARM. implementing prodution volume dereases one optimal stokpile levels were reahed, driven by the respetive ommodity demand fators; ontaining osts at all operations, inluding the redution of ARM s employees and ontrators by some 30%; ontinuing apital expenditure on key development projets while delaying around 30% of apital expenditure over the next three years; and enhaning ash preservation at all operations. We onsulted extensively with employees through their representatives and kept job losses to a minimum by moving most of our employees to growing operations. We also suessfully realloated shifts at Modikwa to an 11-day fortnightly yle from ontinuous mining operations. This restruturing at all our operations is ompleted. As a growth ompany with a diverse portfolio, ARM is able to ontinue delivering ost benefits and a satisfatory return on assets, oupled with ontinuous quality improvements. ARM is inreasingly moving towards owner-operator from ontrator management as seen at the Dwarsrivier Chrome Mine. This trend will result in greater operational effiienies. Seondly, some of our projets are ramping up to steady-state prodution whih will improve our prodution and effiieny. Deisive response to eonomi slowdown While ARM s various prodution growth initiatives are ontinuing, supplemented by low-ost projets either reently ompleted or lose to ompletion, we responded positively to weaker demand by: In F2009 ARM spent some R57 million on the training and development of human resoures. Exellent progress was made this year in implementing and o-ordinating HIV & AIDS and TB programmes at all operations. A renewed drive to minimise waste at a number of operations, notably those at Mahadodorp, Nkomati and Blak Rok, is starting to deliver the desired results. ARM Annual Report

14 CHIEF EXECUTIVE S REPORT ontinued Coal washing and proessing plant at Goedgevonden Coal Mine under onstrution Growth investment ontinues Expenditure on some of our long-term projets and pre-stripping operations has been delayed or redued. The redution at the pre-stripping operations was due mainly to the deline in the hrome market. Our strong net ash position allows us to ontinue with key growth projets: Our Goedgevonden Coal Expansion Projet, started ommissioning in Q1 of F2010; The ompletion of the Khumani Iron Ore Mine on time and within budget, and urrently ramping up to 10 mtpa; The ontinuation of the 6 mtpa Khumani Iron Ore expansion; and The ommissioning of Phase 2a involving a tpm onentrator at Nkomati Nikel mine and ramping up to tonnes nikel per annum over the next two years. ARM s volume growth in key ommodities, oupled with the strength of our balane sheet, plaes the Company in an advantageous and ompetitive position. We are also fortunate in that this inremental growth has been in markets where it is unlikely to negatively affet the global demand/supply balane. As a growth ompany with a diverse portfolio, ARM is able to ontinue delivering ost benefits and a satisfatory return on assets, oupled with ontinuous quality improvements. Maintaining strong margins In F2009, EBITDA dereased by R2.7 billion to R4.5 billion. The average EBITDA margin, although lower at 44% ompared to 57% the previous year, is satisfatory and was ahieved as a result of a firm fous on ost ontainment. It is gratifying that all of our operations are expeted to be in the bottom half of the global ost urves for the ommodities produed, by ARM is expeted to reah this target beause: We have large, high-grade ore deposits; Our operations are relatively shallow or open-pit; Muh of our infrastruture is modern with new tehnology; We are an integrated alloy produer; Large sale operations allow for eonomies of sale; and Experiened management employed at all divisions. Managing inflationary pressures While the outlook for the global eonomy and ommodity sales is unertain, pressure on osts suh as wage expetations and eletriity inreases remain high. ARM s proportion of labour and eletriity osts is relatively low due to the high level of mehanisation and low ost mining methods. ARM remains well positioned to benefit from any reovery in the global ommodity demand. Where stokpiles have previously 12 ARM Annual Report 2009

15 been redued these have been rebuilt. Maintenane has improved on major equipment in an effort to redue operating osts, and the benefits of the sometimes painful restruturing proess will beome apparent in F2010. We have long-life quality assets, with a typial life of mine of some 25 years, and our investment deisions are made aordingly. China remains a strong driver of resoure demand, benefitting partiularly our ferrous business, while the ontinuing growth in this and other emerging markets suh as India ontinues to underpin the thermal oal market. As eonomi reovery materialises further there is bound to be an even greater fous on environmental legislation in the more established eonomies, whih will inrease PGM demand. Working with enthusiasm, dediation and skill The restruturing initiatives implemented in F2009 will be of tremendous benefit to the Company in the new finanial year, whih promises to be every bit as hallenging as the last. With the ommitment of the people of ARM, our superb partners, our resilient mix of resoures and assets, and a strong balane sheet, we ertainly look to 2010 with good onfidene. André Wilkens Chief Exeutive Offier 7 Otober 2009 ARM Annual Report

16 KEY PERFORMANCE INDICATORS Overview of ARM s Key Performane Indiators, overing finanial and sustainability performane for F2009 with omparable indiators for preeding years. Definitions of indiators are inluded where appropriate. Finanial Headline earnings per share (HEPS) In F2009, HEPS delined to ents from ents a year earlier as international demand for ommodities, and their pries, fell sharply. The performane was also affeted by inreased osts at TEAL and losses in the platinum segment. Headline earnings omprise earnings adjusted for items of a apital nature. This is then divided by the weighted average number of shares in issue to arrive at headline EPS. EBITDA margin The EBITDA margin delined from 57% in the previous year to 44% in F2009 as world ommodity demand and pries fell. The EBITDA margin is earnings before interest, taxation, depreiation and amortisation, exluding exeptional items and inome from ARM s assoiates, divided by sales. Return on operational assets Return on operational assets was 20.4% in the year from 39.6% a year earlier. Return on operational assets is the profit from operations divided by tangible assets, exluding apital work in progress. Capital expenditure (apex) Capex attributable to ARM inreased to R3.3 billion in F2009 from R2.8 billion in F2008. The largest expenditure was at ARM Ferrous, where ARM s share was R1.3 billion. As a result of the fous on ash onservation and debt redution, a strong balane sheet with low gearing ensures that ARM an proeed with funding key growth projets. Net debt to equity ARM s net debt to equity ratio dereased to 1% from 8% in 2008 as operations foused on preserving ash, partiularly in the latter half of the year. The net debt to equity ratio is total debt, less ash and ash equivalents, divided by total equity. 14 ARM Annual Report 2009

17 Non-finanial Lost Time Injury Frequeny Rate (LTIFR) While ARM deeply regrets five fatalities in the year under review, reportables and lost time injuries (LTIs) redued and the LTIFR dereased from 6.08 in F2008 to 3.68 in F2009. Employment Equity (EE) Steady progress has been made in terms of employment equity inluding gender diversity. EE in management has inreased to 43% in F2009. With a total number of female employees at 12%, ARM has exeeded the Mining Charter s targets of 10% female representation by Community upliftment and soial investment During F2009, approximately R60 million was spent (on a 100% basis) in terms of our strategies under ARM s Soial and Labour Plans (SLPs), Loal Eonomi Development (LED) and Corporate Soial Investment (CSI). Voluntary ounselling and testing for HIV & AIDS ARM has used the HIV & AIDS Resoure Doument ompiled by the GRI in 2002 as a framework for establishing poliy and proess, and to monitor progress aording to 16 GRI performane indiators. Eah operation is expeted to exeed a minimum standard relating to these performane indiators. Prevalene studies indiate an overall HIV & AIDS prevalene rate within ARM to be 18.2%, ompared with statistis published by the Department of Health in 2007 whih indiate a national average of 22.4%. Energy effiieny All operations are signatories to the National Energy Effiieny Campaign whih reognises that improvements in energy effiieny are fundamental to South Afria s sustained eonomi growth and development, and international ompetitiveness. Operations are fousing on the use of alternative soures of energy and o-generation opportunities are being explored, inluding the utilisation of surplus arbon dioxide (CO2). Total water use* At the smelting operations, water is soured from muniipalities while at the mining operations, it is soured from rivers and boreholes in line with integrated water use lienes (WUL) obtained through the lead authority, the Department of Water and Environmental Affairs (DWEA). Of the total water used, 61% is reyled. CO2 emission intensity Emissions inventories, whih inlude emission quantifiation and a point soure inventory for the smelting operations, are ompiled annually in keeping with legislation. * Total water withdrawn in F2009 amounted to ubi metres, total water reyled amounted to ubi metres (these figures exlude Nkomati onsumption at Nkomati was ubi metres, but reyling rates are not measured. The mine is in the proess of installing flow meters on water pipelines). ARM Annual Report

18 FINANCIAL REVIEW Mike Arnold Finanial Diretor Overview ARM ahieved headline earnings of R2 317 million (headline earnings per share of ents) in a most hallenging year, whih inluded a massive global rash in ommodity pries and demand, as ompared to the R4 013 million reorded for the year ended 30 June 2008 (headline earnings per share of ents). The year s results were, in addition, negatively impated by signifiantly inreased osts at TEAL and a negative ontribution from the platinum segment. Notwithstanding the deline, the umulative annual growth rate in headline earnings sine June 2004 was 118%. The average Rand/US Dollar exhange rate at R9.03/US$ for the year to June 2009 reflets a 24% weakening over the 2008 average of R7.30/US$, whih has to some extent ompensated for lower US Dollar ommodity pries. Basi earnings for the year were R2 868 million (basi earnings per share of ents); R551 million more than headline earnings, largely as a result of a R557 million exeptional gain aounted for on the sell down of ARM s stake in TEAL to 50% and the introdution of Vale as a 50:50 partner. The basi earnings for the year to June 2008 were R4 487 million (2 131 ents per share). The major ontributor to ARM s headline earnings for F2009 was the Ferrous Division where the ontribution inreased by 14% to R3 150 million (F2008: R2 775 million). This was the only division to reflet an inrease, whih was mainly driven by a strong result from iron ore while manganese ore performed very well until Otober The Platinum Division s ontribution (inlusive of Nkomati) to headline earnings refleted a derease of R1.6 billion from the F2008 profit of R1.3 billion to a F2009 loss of R0.3 billion. Average PGM basket pries fell by more than 32% during the year. The Nkomati Nikel Mine s ontribution fell to R29 million as ompared to R432 million for F2008, mainly due to hrome sales virtually easing for the period Otober 2008 to April Average US Dollar nikel pries fell by 53% for the year. Inluded in the loss for the year was a R547 million realised loss on the 30 June 2008 debtors as the provisional pries used to value debtors, at 30 June 2008 realised at signifiantly lower pries in the first half of F ARM Annual Report 2009

19 The ontribution from Coal dereased to R135 million (F2008: R175 million) as a result of lower pries and a number of operational issues whih affeted results in the seond half of the finanial year. ARM orporate and other ontributed R40 million (F2008: loss R73 million). The onsolidated loss for the ARM Exploration division (TEAL) inreased to R689 million from a loss of R211 million in F2008, largely due to the following inreases in expenses and restruturing osts: stok write downs: R103 million; anellation of mining ontrats at Kalumines in the Demorati Republi of Congo (DRC): R87 million; flutuation of the Rand/US Dollar exhange rate, TEAL s funtional urreny being US Dollars: R87 million; interest paid: R30 million; and inreased mining losses at Kalumines: R112 million. The benefit of needing to aount for only 50% of TEAL, after the losing of the transation with Vale, in terms of aounting onventions, only ommened in Marh The unaudited profit variane analysis below learly indiates how ARM s results were impated by various fators during the year. Cash and borrowings ARM responded promptly to the global eonomi downturn by fousing on onserving ash and reduing debt at all operations. This was ahieved by the immediate deferment of ertain non-essential apital expenditure at all operations, operational ost redution initiatives, signifiant prodution uts at the ferromanganese and ferrohrome units and the appliation of surplus ash to eliminate bank debt at ARM Mining Consortium (Modikwa) and reduing the balane outstanding on the ARM orporate loan. In addition, at a Company level, ARM reeived dividend payments of R2.1 billion from ARM Ferrous (this division refleted an attributable ash balane at year end of R1.6 billion). There was an improvement of R1.1 billion in the ARM net debt position at 30 June 2009 to R231 million from the position at 30 June 2008 of R1 318 million. This signifiant improvement Contribution to headline earnings by segment Commodity group 12 months ended 30 June % R million F2009 F2008 hange Platinum Group Metals (348) 915 >(100) Nkomati nikel and hrome (93) Ferrous metals Coal (23) Sub-total (31) Exploration: TEAL (689) (211) >(100) Corporate and other 40 (73) >100 ARM headline earnings (42) ARM Annual Report

20 FINANCIAL REVIEW ontinued Summarised inome statement 12 months ended 30 June % R million F2009 F2008 hange Sales (20) Profit from operations (before exeptional items) (44) Inome from investments Finane osts (385) (438) 12 Inome from assoiate* (68) Exeptional items Taxation (1 727) (2 084) 17 Minority interest 198 (460) 143 Profit after tax and minorities (36) Headline earnings (42) Headline earnings per share (ents) (43) Dividends per share delared after year end (56) EBITDA (38) * Exeptional profit of R317 million inluded in F2008; F2009 inludes R27 million. Summarised balane sheet At 30 June R million F2009 F2008 Non-urrent assets Property, plant, equipment and other Investments Current assets Other Cash and equivalents Total assets Shareholders interest Non-urrent liabilities: Long-term borrowings Other Current liabilities: Short-term borrowings Other Total shareholders interest and liabilities was ahieved while still ontinuing with expansion apital expenditure at the Nkomati Nikel Mine, Goedgevonden Coal Projet, ARM Ferrous and at Two Rivers. The debt on the balane sheet inludes an amount of R1.8 billion advaned by our partners (Implats: R539 million; Angloplats: R132 million; Xstrata: R1 135 million). Sine the year end the ARM orporate loan of R967 million has been refinaned and the new faility inreased to R1.75 billion with a maturity in August ARM and its partner at Nkomati, Norilsk Nikel, have deided to fund the ompletion of the Phase 2 expansion projet utilising their respetive orporate balane sheets, given the urrent restritive lending environment. Consolidated inome statement Sales revenue dereased by R2.5 billion to R10.1 billion (a derease of 20% over F2008). The deline in sales was primarily in the Platinum Division where PGM and nikel pries fell substantially during the year, while the Ferrous Division s sales atually refleted an inrease of 3% to an attributable R7.7 billion from the R7.4 billion reorded in F2008. Sales volumes were lower in all ommodities other than iron ore and PGMs. Cost of sales inreased by 10% in absolute terms. The main fators behind this inrease were: Cost rationalisation programmes only made a positive ontribution to osts from Q4; Amortisation inreased by 45% or R246 million largely as a result of prodution ramp-ups at Khumani and Two Rivers; Various osts inreased well ahead of CPIX during the year. These inluded eletriity, fuel, onsumables suh as oke, as well as steel; Prodution inreases at Khumani; and Mining ost inflation, albeit down from F2008, is still urrently between 10% and 15% as a result of these ost inreases. With the fall in sales revenue and ost inreases during the year, the average gross profit margin dereased to 40%, ompared to 56% in the previous year. Other operating inome inreased to R916 million from R460 million in F2008. This inrease was mainly due to the inlusion of R100 million from proeeds on the partial settlement of the Cato Ridge insurane laim as well as inreased foreign exhange gains following the weakening of the Rand against the US Dollar during the year. Other expenses mainly omprised non-operational osts at ARM Company, Assmang and TEAL. Other operating expenses inreased by R399 million to R1 255 million, largely due to muh higher osts at TEAL and inreased shortworkings osts in ARM Ferrous resulting from smelter shutdowns. 18 ARM Annual Report 2009

21 Due mainly to the deline in sales and the inrease in osts attributable to TEAL, profit from operations before exeptional items dereased 44% to R3.7 billion in F2009 from R6.7 billion in F2008. Investment inome, whih omprises interest reeived on favourable bank and ash balanes, inreased by R246 million in the year to R414 million, whih resulted from inreased ash and bank balanes prinipally at ARM and ARM Ferrous. This was ahieved notwithstanding the approximately 4% fall in interest rates during the year. Total ash and bank balanes inreased by R853 million during the year to R3.5 billion. Finane osts dereased slightly, by R53 million, largely due to the fall in interest rates during the year. Gross borrowings remained flat at between R3.8 billion and R4.0 billion for the year. The effetive taxation harge for the year inreased to 39.2% from 29.6% for F2008. The inrease was largely attributable to (i) inreased seondary tax on ompanies arising from the dividends paid by ARM Ferrous during the year, and (ii) signifiantly inreased ARM Exploration osts whih were nondedutible. This harge is redued by the non-taxable exeptional items inluded in the results. In addition, assoiate inome whih is shown net of tax influenes the tax harge. A full tax harge reoniliation is provided under note 28 to the finanial statements. Earnings before interest, tax, depreiation and amortisation, exluding exeptional items and inome from assoiate (EBITDA) dereased by R2.7 billion to R4.5 billion in F2009. The EBITDA margin for F2009 was lower at 44%, ompared to 57% in F2008. Projet investment ontinues as ARM s balane sheet remains strong with low gearing, even after R3.3 billion apital expenditure in F2009. The orporate ation undertaken during the year has further enhaned the value of ARM s operations. Consolidated balane sheet The ARM balane sheet remained robust despite the fall in ommodity demand as operations foused on preserving ash during the seond half of the finanial year. The net debt to equity ratio dereased to 1% (at 30 June 2008: 8%). Inluded in borrowings are loans from partners amounting to R1.8 billion whih, if disregarded, would result in ARM having a net ash position of R1.6 billion at 30 June 2009, as ompared to a net ash position on the same basis at 30 June 2008 of R174 million. Additional key features of the balane sheet inlude: Property, plant and equipment inreased by R2.5 billion, mainly due to attributable apital expenditure of R3.3 billion with the largest expenditure being at ARM Ferrous where ARM s share was R1.3 billion. This expenditure mainly related to the ompletion of the plant at the Khumani Mine. Expansion apital was also expended at Two Rivers on plant upgrades, at Nkomati on the Phase 2 expansion projet and on the ompletion of the Goedgevonden Coal Mine. Other investments mainly omprised ARM s 14.9% stake in Harmony. This investment was marked-to-market at R80 per share on the balane sheet at 30 June Changes in the value of the investment are aounted for net of deferred apital gains tax through the statement of hanges in equity. At 25 September 2009, the appliable share prie was R78.01 per share. Current assets exluding ash and ash equivalents dereased by R2.0 billion largely owing to the dereased level of aounts reeivable at the year end. A signifiant realised adjustment to the platinum and nikel divisional debtors at 30 June 2008 of R547 million was made in F2009 as a result of the realised value being less than the provisionally reognised value at 30 June Gross interest-bearing borrowings dereased marginally to R3.8 billion at 30 June The major hanges during the year were (i) the inreased attributable borrowings at ARM Coal to fund the development of the Goedgevonden Coal Projet, (ii) the ARM Mining Consortium bank loan whih was repaid in Deember 2008, and (iii) TEAL borrowings whih are now proportionately onsolidated whereas previously these were inluded at 100% when TEAL was a subsidiary of ARM. Trade and other payables inreased by R120 million to R1.6 billion. Cash flow statement Cash flow from operating ativities dereased marginally by R119 million to R4.1 billion for the year as ompared to R4.2 billion for F2008. This represents a derease of 3% over F2008. There has been a redution of approximately R2 billion in working apital offset by higher tax and dividend payments. Cash flow related to investing ativities remained high, with apital expenditure being the main omponent. Capital expenditure to maintain operational prodution amounted to R0.9 billion while expansion apital was R2.3 billion. There was no material hange to the ashflow from finaning ativities as the overall level of borrowings was maintained during the year. Sine the year end the bank debt in TEAL was repaid by the partners. The losing ash position of R3.5 billion (at 30 June 2008: R2.7 billion) was held primarily at ARM Ferrous (R1.6 billion, at 30 June 2008: R1.4 billion) and at ARM Company (R1.2 billion, at 30 June 2008: R0.3 billion). Segmental analysis The graphs and harts on pages 148 to 149 indiate ertain key elements of the segmental ontributions to the ARM results. In addition, detailed segmental results are provided on pages 162 to 168 of the finanial statements. ARM Annual Report

22 FINANCIAL REVIEW ontinued Capital expenditure ARM ontinued to invest in apital projets in the year and has spent an attributable R3.3 billion in F2009 as ompared to R2.8 billion in F2008. Looking forward, ARM is foreasting to spend more than R8 billion over the next three years on three main projets: Khumani Iron Ore Mine expansion to 16 mtpa; with attributable apital expenditure of R3.3 billion. The projet will be finaned out of internally generated ash flows and existing ash and borrowing failities in ARM Ferrous. Completion of the Nkomati Phase 2 expansion. The required funding is to be provided by the partners. Completion of the Goedgevonden Coal Mine. Funding for this mine is being provided by Xstrata. The development of opper assets at Konkola North in Zambia in the Vale/ARM joint venture is under onsideration. Aounting poliies ARM presents its finanial information in ompliane with International Finanial Reporting Standards (IFRS). The finanial information for the year ended 30 June 2009 has been prepared adopting the same aounting poliies used in the most reent Annual Finanial Statements, exept for the adoption of various new and revised IFRS standards where appliable. Finanial risks In the ourse of its business operations ARM is exposed to urreny, ommodity prie, interest, ounterparty, redit and aquisition risk. A detailed analysis of ARM s approah to these risks is provided on pages 189 to 194 of the finanial statements. A sensitivity analysis is provided on pages 191 to 192 of the Annual Finanial Statements. Signifiant aounting matters A portion of the insurane laim relating to the furnae explosion at the Cato Ridge Works, laimable against the overseas reinsurers, was settled during the year. This represents 60% of the laim. ARM Ferrous reeived a payment of R240 million in April 2008 and aounted for this amount as follows: R200 million related to business interruption over was aounted for in other inome and the balane was treated as an exeptional reovery on the refurbishment of the furnae. In February 2009, the toll treatment agreement for Modikwa was renegotiated with an effetive date of 1 Deember The new agreement improves reoveries for Modikwa and is inluded in its results from that time. At the same time an 20 ARM Annual Report 2009

23 agreement was reahed whereby Anglo Platinum ontributes to the funding whih was required of the ommunities in the development of the mine. This funding has previously been provided by ARM. Anglo Platinum has aordingly lent R132 million to ARM Mining Consortium, enabling it to repay a portion of the loan owing to ARM. The ARM transation with Vale has resulted in TEAL beoming a proportionately onsolidated inorporated joint venture. Dividend Dividends are delared after onsideration of the solveny and liquidity of the Company and with due regard to the urrent funding status of the Company, future funding requirements and attributable ash flows. The ontinued growth in ARM s net ash position, exluding partner loans, has been ahieved by prudent ash management despite the eonomi downturn. The reovery of market demand and pries is expeted to be gradual and as a result the urrent ash position provides a solid base going forward. ARM had minimal gearing at 30 June 2009 and has suffiient ash and borrowing resoures to fund ontinuing apital expenditure for both the maintenane and expansion of operations. Despite early signs of improvement in markets it is not yet lear as to the exat pae of reovery going forward. As suh, ARM will ontinue to review Company plans and foreasts every quarter. Aordingly, the Board of Diretors delared its third dividend of 175 ents per share on 31 August, payable on 28 September The amount paid was approximately R371 million. This delaration of a dividend reflets the strength of the ARM ash position while the Board maintains its prudent approah in the urrent eonomi environment. Mike Arnold Finanial Diretor 7 Otober 2009 ARM Annual Report

24 FINANCIAL SUMMARY AND STATISTICS For the year ended 30 June Compound R million annual (unless otherwise stated) growth rate % F2009 F2008 F2007 F2006 F2005 F2004 Inome statement Sales Headline earnings Basi earnings per share (ents) Headline earnings per share (ents) Dividend delared after year end per share (ents) n/a n/a n/a Balane sheet Total assets Cash and ash equivalents Total interest bearing borrowings Shareholders' equity Cash flow Cash generated from operations Net ash outflow from investing ativities Net ash (outflow)/inflow from finaning ativities (9) (171) (175) (549) 280 Number of employees Exhange rates Average rate US$1 = R Closing rate US$1 = R JSE Limited performane Ordinary shares (Rands) high low year end Volume of shares traded (thousands) Number of ordinary shares in issue (thousands) Definition Finanial statistis number Liquidity ratios (x) Current ratio Quik ratio Cash ratio Profitability (%) Return on operational assets Return on apital employed Return on equity Gross margin Operating margin Debt leverage Interest over (x) Debt to equity ratio (%) Net debt to equity ratio (%) Other Net asset value per share (R/share) Market apitalisation Dividend over (x) n/a n/a n/a EBITDA EBITDA margin (%) Effetive average tax rate The finanial information above is in aordane with International Finanial Reporting Standards. The omparison above is given from 2004 whih is when the urrent ARM was formed. Various orporate transations were entered into during the past six years therefore diret omparison is not always meaningful. 22 ARM Annual Report 2009

25 Definitions 1 Current ratio (times) Current assets divided by urrent liabilities. 2 Quik ratio (times) Current assets less inventories divided by urrent liabilities. 3 Cash ratio (times) Cash and ash equivalents divided by urrent liabilities less overdrafts. 4 Return on operational assets (%) Profit from operations divided by tangible assets exluding apital work in progress. 5 Return on apital employed (%) Profit before exeptional items and finane osts, divided by average apital employed. Capital employed omprises non-urrent and urrent assets less trade and other payables and provisions. 6 Return on equity (%) Headline earnings divided by ordinary shareholders interest in apital and reserves. Finanial summary (US Dollar) For the year ended 30 June 7 Gross margin (%) Gross profit divided by sales. 8 Operating margin (%) Profit from operations before exeptional items divided by sales. 9 Interest over (times) Profit before exeptional items and finane osts divided by finane osts. 10 Debt to equity ratio Total debt divided by total equity. Total debt omprises long-term borrowings, overdrafts and short-term borrowings.total equity omprises total shareholders' interest. 11 Net debt to equity ratio Total debt less ash and ash equivalents divided by total equity. Total debt omprises long-term borrowings, overdrafts and shortterm borrowings. Total equity omprises total shareholders' interest. Note: All ratios exept return on apital employed use year end balanes. Return on apital employed is a two-year average. 12 Net asset value per share (Rands) Ordinary shareholders' interest in apital and reserves divided by number of shares in issue. 13 Market apitalisation (R million) Number of ordinary shares in issue multiplied by market value of shares at 30 June. 14 Dividend over (times) Headline earnings per share divided by dividend per share. 15 EBITDA (R million) Earnings before interest, taxation, depreiation, amortisation, inome from assoiate and exeptional items. 16 EBITDA margin (%) EBITDA divided by sales. 17 Effetive average tax rate Taxation in the inome statement divided by profit before tax. US$ million F2009 F2008 F2007 F2006 F2005 F2004 Inome statement Sales Headline earnings Basi earnings per share (ents) Headline earnings per share (ents) Dividend delared after year end per share (ents) n/a n/a n/a Balane sheet Total assets Cash and ash equivalents Total interest bearing borrowings Shareholders equity Cash flow Cash generated from operations Net ash outflow from investing ativities Net ash (outflow)/inflow from finaning ativities (19) (24) (88) 41 JSE Limited performane Ordinary shares (ents) high low year end ARM Annual Report

26 PRINCIPAL RISKS AND UNCERTAINTIES The risks (and opportunities) set out below represent seleted unertainties and trends that may impat on ARM s exeution of its strategy in the future. For a detailed analysis of finanial instruments and risk management issues refer note 34 to the finanial statements, and for risk management proedures and proesses refer page 123 of the orporate governane setion. Risk Mitigation Commodity prie volatility ARM s revenue, earnings and ash flows are dependent on the prevailing ommodity pries whih are determined by the supply of and demand for raw materials, and are linked to global eonomi onditions. The reent dramati and rapid deterioration in the global eonomy, resulting in pries of the majority of ommodities trading at dramatially lower levels, has highlighted the signifiane of this risk fator (Refer to the profit variane analysis in the Finanial Review, page 17). ARM manages the risk of ommodity prie flutuations through maintaining a diversified portfolio of ommodities. The general poliy is not to engage in ommodity prie hedging. ARM, in lose assoiation with its partners, onstantly monitors the ommodity markets and mathes prodution with market demand and ommodity pries. Fous and emphasis on ontaining and reduing operating expenses also assists in mitigating this risk. The target of having ARM operations in the lower half of the appliable ost urves provides a signifiant ompetitive advantage to ARM given the lower level of ommodity pries. Flutuations in urreny exhange rates ARM s produts are mostly sold in US Dollars. Flutuations in the exhange rate of the South Afrian Rand against the US Dollar an have a material impat on ARM s finanial results. (Refer note 34 in the Finanial Statements.) ARM s foreign exhange hedging is limited to speifi items of apital expenditure on major projets only. Movement in the Rand provides both an opportunity and a risk, and ARM s philosophy is thus to onsider urreny hedges only on speifi purhase transations but the general poliy is that ARM does not hedge. This exposure is to some extent offset by the inverse relationship whih exists between the Rand/US Dollar exhange rate and most US Dollar ommodity pries. Event risks ARM s operations are potentially subjet to events, many of whih are outside management s ontrol. These operating risks inlude: unusual or unexpeted geologial features, ground onditions or seismi ativity, limati onditions (inluding those resulting from limate hange) suh as flooding and drought, ongestion at ports, industrial ation or disputes, environmental hazards, tehnial failures, fires, explosions and other inidents at mines, smelters, et. ARM has an effetive and well developed risk management proess whih has been in plae for a number of years. Commitment to omprehensive and effetive risk management is an imperative at all levels within ARM. ARM has introdued an integrated approah to risk management, whih inludes an Enterprise Risk Management proess and a Balaned Soreard approah. This integrated approah to risk management not only helps to ensure appropriate orporate governane ompliane, but also provides a pratial and effetive tool for the management of risk within ARM. Inflation/inreased ost As ARM is unable to diretly set the pries it reeives for the ommodities it produes its ability to ontain osts in an inflationary environment and maintain low-ost effiient operations an have a signifiant impat on its profitability. ARM s ability to ontain or redue osts and ahieve operational effiieny is a measure of the quality of its operational management and stewardship of its assets. Cost effiieny and ost redution remain important ongoing performane measurements within ARM. Operational effiieny is identified as one of its four key strategies. ARM ensures that investment is made in high quality and low ost assets. Volume growth whih allows for eonomies of sale, ensures appropriate ost ontrol. Reserves and resoures ARM s mineral resoures and ore reserves, as set out later in this report, are based on numerous tehnial and eonomi assumptions whih are subjet to hange. Mine reserves deline as ommodities are extrated and thus suessful ongoing exploration and development ativities are important. Various governmental permits are required to utilise these reserves. Annual updates and revisions are undertaken in the ontext of hanging markets and strategi objetives. ARM ontinues to invest in exploration and development/maintenane apital to ensure optimal long-term extration of ore reserves. ARM losely monitors regulatory ompliane in terms of new order mining rights in South Afria. 24 ARM Annual Report 2009

27 Risk Mitigation Safety, health and environment (SHE) Although not extensively exposed to deep-level mining operations, mining remains a hazardous industry and is subjet to extensive and inreasingly more stringent SHE regulations and legislation. Risks whih ould potentially harm ARM s finanial position and reputation inlude: Lost time due to impat of illness e.g HIV & AIDS; Aidents whih our, despite extensive training and safety proedures; Inreased rehabilitation osts due to hanging variables; and Costs assoiated with hanging ompliane requirements. Ensuring the safety, health and wellbeing of all employees at work is of paramount importane to ARM. This, together with are for the environment in whih ARM operates, are fundamental to ARM s sustainable development strategy and initiatives. To ensure ongoing improvement, risk preparedness and ompliane, ARM s offiials onstantly monitor and review proedures, initiate awareness ampaigns and regularly engage with government and regulators, and monitor legislative requirements. External independent speialist audits of the SHE performane of all operations are undertaken to determine urrent status of legal ompliane, ompile risk profiles of eah operation as well as identify opportunities for improvement. Ation plans to address findings, risk improvement reommendations and gaps identified during the audits are ompiled and addressed by eah operation and are presented at a Group SHE Forum. The Group SHE Manager, reporting diretly to the Chief Exeutive Offier and oversight by the Sustainable Development Committee, ensures oversight over the proess and provides impetus and guidane to operations in the ahievement of orporate goals. Off-mine infrastruture ARM does not ontrol major logistis infrastruture related to bulk export materials, where a signifiant portion of revenue is soured. Eletriity and water supply is also supplied and ontrolled by governmental institutions. ARM has long-term ontrats in plae, negotiated at eonomially viable tariffs. Senior management task teams meet regularly with relevant authorities to ensure minimal risk. Projet development A mining ompany needs a signifiant pipeline of growth projets to ensure its sustainability into the future. Ineffetive management of projets an result in ost overruns and ostly delays in going into prodution that ould prevent it from benefiting from favourable market developments. ARM urrently has three major projets in progress: Nkomati Nikel Mine expansion; Khumani Iron Ore Mine expansion; and Goedgevonden Thermal Coal Projet. The development of the Vale/ARM joint venture s opper assets is under onsideration. ARM has a proven trak reord of projet delivery on time and within or below budget. ARM engages in rigorous feasibility studies before initiating apital investments in projets and ensures best praties are adopted aross the various divisional operations. Prodution urtailment The urrent global reession has resulted in a dramati redution in demand for ommodities, whih negatively impated on ommodity pries. As a result many mining ompanies have urtailed prodution. While this urtailment allows mining ompanies to remain ash positive, redue average operating osts and avoid over supply of markets or inventory build-up, it may also result in them inurring osts in the form of redundany payments, the ost of resuming prodution, indiret osts in the form of foregone revenue, the deterioration of assets or inreased unit osts. Closure of operations an impat negatively on employees and the loal ommunities. The Mahadodorp Works has been operating at minimal levels due to the global reession, while Cato Ridge Works has onsiderably redued prodution and shut down ertain of its furnaes. The mines feeding these smelters have ommensurately ut bak prodution. A thorough review of the likely impats and risks is undertaken prior to suspending operations and mitigating ations implemented to redue assoiated osts and offset the soio-eonomi impat of losures, where possible. Suspended operations are maintained under are and maintenane programmes to ensure a rapid restart and preserve asset quality and operational integrity. Restoking at all operations has ourred to ensure a rapid response to any market opportunities. Most operations have ommened inreasing prodution. ARM Annual Report

28 OPERATIONAL SUMMARY F2009 F2008 % hange ARM Platinum Modikwa (100% basis) PGMs in onentrate (6E) Ounes Cash ost R/kg EBITDA margin % (18) 56 Two Rivers (100% basis) PGMs in onentrate Ounes Cash ost R/kg EBITDA margin % (10) 56 Nkomati (100% basis) Contained nikel Tonnes (12) Chrome ore sold 000t (42) C1 ash ost net of by-produts US$/lb 2.48 (4.45) (156) EBITDA margin % ARM Ferrous Iron Ore (100% basis) Sales tonnes Mt Change in osts ompared to previous year % (7) 65 EBITDA margin % Manganese Ore (100% basis) Sales tonnes (exluding intra-group sales) Mt (42) Change in osts ompared to previous year % EBITDA margin % Manganese Alloys (100% basis) Sales tonnes (exluding intra-group sales) Mt (53) Change in osts ompared to previous year % EBITDA margin % Charge Chrome (100% basis) Sales tonnes Mt (48) Change in osts ompared to previous year % EBITDA margin % ARM Coal Thermal Coal (Attributable) Total sales Mt (23) On-mine saleable ost R/tonne Operating margin % ARM Annual Report 2009

29 Despite a good operational performane, ARM Platinum s results were signifiantly affeted by the derease in PGM pries and a slowing world eonomy. ARM Annual Report

30 ARM Platinum Divisional struture ARM MINING CONSORTIUM 50% MODIKWA** 50% Anglo Platinum 83% 17% Modikwa Communities 55% TWO RIVERS 45% Impala Platinum 50% NKOMATI 50% Norilsk Nikel 90% KALPLATS* 10% Anglo Amerian ** Platinum Australia will earn in up to 49% of ARM Platinum s shareholding on ompletion of a bankable feasibility study, and owns 50% of the Kalplats Extended Area. In the event that the JV aquires Anglo Amerian s 10%, Platinum Australia has the right to aquire 49% of the aquired 10%. ** Assets held through the ARM Mining Consortium, effetive interest at 41.5%, the balane held by Modikwa loal ommunities. 28 ARM Annual Report 2009

31 Steve Mashalane Chief Exeutive: ARM Platinum Soreard F2009 objetives F2009 performane F2010 objetives Modikwa Ahieve full year of steady-state Ahieved E PGM oz Ahieve E PGM oz prodution at E PGM oz (6E: ) after 10% utbak due to (4E: oz). Fous on moving (6E: ). market onditions. down on the global PGM ost urve. Convert oneptual study to pre-feasibility Advaned study on a number of senarios Initiate pre-feasibility study on study for the modular and inremental ontinuing. appropriate senario. inrease of prodution. Two Rivers Ahieve full year of steady-state Ahieved E PGM oz. Improve onentrator plant reoveries, prodution at E PGM oz. inrease 6E PGM prodution to oz. Fous on moving down on the global PGM ost urve. Nkomati Ahieve targeted prodution from Mill throughput exeeded tpm Improve reoveries on the tpm tpm plant. design apaity. plant. Commission the tpm MMZ Plant ommissioned on time in Operate at steady state by end of plant in Q September F2010. Evaluate alternative smelting and A new off-take agreement has been Complete full off-take agreement. refining arrangements. negotiated with both Xstrata and Norilsk Nikel. Sell more than 1 million tonnes of hrome Ahieved sales tonnes due to Sales of tonnes of hrome ore for F2009. sudden downturn in market, with a fines for F2010 (inludes tonnes stokpile of 2.3 million tonnes. of onentrate) depending on grade and volume requirement from market. Kalplats Complete a feasibility study by the end of Feasibility study on trak for ompletion Assessment of feasibility study. the 2009 alendar year. by the end of the 2009 alendar year. Operational overview attributable to ARM Operational F09/08 target F2009 F2008 % hange F2010 Modikwa PGM prodution* Ounes 6E Two Rivers PGM prodution Ounes 6E Nkomati Nikel Mine Nikel Tonnes (12) PGMs Ounes (35) Copper Tonnes (13) Chrome tonnes sold 000t (42) ARM Platinum PGM prodution (inl. Nkomati) Ounes ARM Platinum ash operating margin % (5) 61 Headline (loss)/earnings ontribution to ARM R million (319) * Modikwa prodution figures have been onverted to 6E due to the new off-take agreement in plae sine 1 Deember ARM Annual Report

32 ARM PLATINUM ontinued Review of the year In spite of a good operational performane, ARM Platinum s results were signifiantly affeted by the derease in global platinum demand and a slowing world eonomy. Cash operating losses were reorded by both Modikwa and Two Rivers, while Nkomati generated a ash operating profit. ARM Platinum s attributable PGM prodution (inluding Nkomati) for F2009 inreased by 6% to ounes (F2008: ounes) of PGMs in onentrate, resulting from grade improve - ments, inreased prodution and enhaned effiienies. Nkomati hrome ore sales dereased by 42% due to a sudden downturn in the hrome market. ARM Platinum s attributable headline loss amounted to R319 million. The earnings of Two Rivers were negatively affeted by interest harged on the shareholders loans from ARM and Impala Platinum. Interest is harged on the shareholders loans to Two Rivers at a rate of 11.5% per annum as at 30 June 2009 (F2008:12.0%). The PGM basket prie for both Modikwa and Two Rivers redued by about 32% when ompared to the previous finanial year. Weaker average metal pries for the year under review, ombined with R547 million of realised losses on the 30 June 2008 debtors balanes, resulted in the reorded losses for this period. Modikwa Platinum Mine Modikwa s tonnes milled remained onstant at F2008 levels, despite stopping mining at the Merensky Reef. An improvement in grade resulted in a 2% inrease in PGM ounes in onentrate. Even though average unit osts for the year inreased by 32% to R708 per tonne, ost-ontainment strategies redued monthly unit ost in the latter part of F2009, losing at R570 per tonne milled for June As part of its ost-ontainment initiative, Modikwa hanged from ontinuous operations (onops) to 11-day fortnightly working shifts in April 2009 and the new strike mining layout is being implemented. On 31 Deember 2008, ARM Mining Consortium s projet debt for the development of Modikwa was settled in full, 18 months ahead of shedule. ARM Mining Consortium negotiated a revised off-take agreement with Anglo Platinum, effetive from 1 Deember 2008, resulting in Modikwa now earning revenue on ontained metals for all six PGMs, inluding ruthenium and iridium. In line with the agreement, all reported prodution figures have been onverted to 6E. Two Rivers Platinum Mine Two Rivers ompleted its first finanial year at full prodution apaity. Tonnes milled inreased by 11%. This, together with a head grade improvement, resulted in a 19% inrease in PGM ounes in onentrate. At year-end the surfae ore stokpile was tonnes. As part of the plant optimisation, the seondary rusher and additional leaning iruit were ommissioned during August Cost-ontainment initiatives and the postponement of apital expansion projets were implemented as part of a ash-preservation strategy. The Impala Platinum and ARM Boards have approved a transation in terms of whih Impala Platinum will exhange portions 4, 5 and 6 of Kalkfontein, as well as all Tweefontein prospeting rights, for an additional 4% shareholding in Two Rivers, thereby inreasing its stake to 49%. The transation will beome effetive pending Setion 11 approval from the DMR. Nkomati Mine At Nkomati the average US Dollar nikel prie for the year dropped by 53%, negatively impating profits. As the onversion to a lowgrade, high-volume mine ontinues, milled tonnes inreased by 18% and ontained nikel delined by 12% to tonnes. Reovery improvements on the tpm plant is an ongoing proess. During the last few months of F2009, hrome ore and onentrate sales volumes showed a steady improvement. Mining rights status The new order mining right appliation for Two Rivers was submitted to the Department of Mineral Resoures (DMR) on 2 July Two Rivers has sine interated with the DMR on its proposed soial and labour plan, whih it is now implementing. The new order mining right appliation for Nkomati has been approved. Nkomati is in the proess of finalising the douments required for the exeution of the mining right. The Modikwa new order mining right appliation was submitted to the DMR on 31 Marh 2009, after the revision of ARM s offtake agreement with Anglo Platinum. Safety ARM Platinum s ommitment to a safe working environment resulted in good safety ahievements at all its operations. 30 ARM Annual Report 2009

33 On 10 Marh 2009, Modikwa Platinum Mine joined the ranks of a selet few mines in South Afria when it ahieved five million fatality free shifts. This marks a period of nearly three years without a fatal aident ourring on the mine. Modikwa reported a lost time injury frequeny rate (LTIFR) of 5.3 per million man hours worked, 33% lower than the 8.1 reported in F2008. ARM Platinum volumes from 2005 to 2012 Two Rivers Platinum Mine ompleted 1 million fatality free working shifts on 5 Marh Two Rivers reported a LTIFR of 2.8, an 11% improvement on F2008. Nkomati reported an exellent LTIFR of 0.95 (F2008: 5.8). Regrettably, on 23 September 2008, a ontrat employee, Mr Wessel Borotho, was fatally injured when a stokpile ollapsed on his vehile (a two-tonne diesel refuelling truk). Capital expenditure Total apital expenditure for the division amounted to R2.47 billion (R1.4 billion attributable), of whih 71% was spent on the Nkomati expansion projet. Modikwa s planned apital expendi ture was redued as a result of the deision to postpone work to deepen the delines and other expansionary apital projets. Two Rivers spent R159 million on the plant optimisation programme and R42 million on the replaement of the underground mining fleet. Other than the Nkomati expansion projet, all expansionary apital programmes were put on hold for the next 12 months, and the situation will be assessed ontinually. Ongoing apital spending, to maintain prodution, will ontinue. Prospets In F2010 Modikwa will maintain prodution at F2009 levels, while at Two Rivers reovered PGMs in onentrate will inrease as a result of plant optimisation. Nikel prodution at Nkomati will rise steadily as the tpm plant ramps up to full prodution in Marh 2010 and as reoveries are improved on the tpm plant. Any improvement in the global eonomi situation will have a positive effet on ARM Platinum s performane. ARM Annual Report

34 ARM PLATINUM ontinued Market review Platinum Demand for platinum in F2009 dropped in response to the eonomi slowdown and resulted in volatile platinum pries. The redution in demand was aused mainly by the slowdown in global vehile sales, as well as the derease in demand for industrial, hemial and eletrial appliations. ARM Platinum ahieved an average platinum prie in F2009 of US$1 148/oz (F2008: US$1 661/oz), with the lowest prie ouring in November 2008 at US$841/oz. It is antiipated that the automotive setor will remain depressed during F2010 and demand for platinum will remain onstant. Palladium Palladium demand flutuated in F2009 due to delining vehile prodution, rising demand from the eletroni and dental setors, as well as an improvement in off-take from jewellery manufaturing. In spite of the inrease in demand from ertain setors, the frail world eonomy fored the prie down to US$175/oz in Deember New emissions legislation will provide some support for demand in the European automotive setor. Worldwide palladium auto atalyst demand is likely to derease, exept in China, where a rise is antiipated. The average palladium prie ahieved by ARM Platinum for F2009 was US$239/oz (F2008: US$399/oz). Rhodium The high prie of rhodium has prompted extensive development ativity by ar manufaturers and auto atalyst produers to redue onsumption of this metal. In F2009, demand from the automotive market and the glass setor delined. South Afrian output of rhodium is set to grow, resulting in a surplus for F2010. ARM Platinum sold its rhodium at an average prie of US$2 620/oz in F2009 (F2008: US$7 389/oz). Nikel Nikel demand was severely impated by the global ommodity slump. During F2009, the average nikel prie ahieved by ARM Platinum dereased by 53% to US$13 312/t (F2008: US$28 507/t). The year was haraterised by slowing demand for and output of stainless steel, oupled with stok building in China. Market ommentators indiate a reovery to be imminent, albeit at a slow pae, with lower stok levels ourring. The outlook for nikel is losely tied to the state of the global eonomy and will follow its reovery. Priing trends for F ARM Annual Report 2009

35 ARM Platinum Operational Statistis Modikwa Platinum Mine Management Reserves and Resoures (100% basis) The mine is jointly managed, via a joint management ommittee, by ARM Platinum and Anglo Platinum. Measured and Indiated Resoures Proved and Probable Reserves PGM+Au PGM+Au Mt (4E) g/t Moz Mt (4E) g/t Moz UG Merensky E = Platinum + Palladium + Rhodium + Gold Refining Total labour All metal produed is smelted and refined by Anglo Platinum (inluding 835 ontrators) The approximate onversion fator at Modikwa mine from 4E to 6E in onentrate is 20%. Refer to pages 165 and 166 for Modikwa segmental information. 100% basis F2006 F2007 F2008 F2009 F09/08 % hange Conentrate prodution Platinum Ounes Palladium Ounes Rhodium Ounes Gold Ounes (1) Ruthenium Ounes Iridium Ounes PGMs* Ounes 6E Nikel Tonnes (2) Copper Tonnes (4) Operational statistis Tonnes milled Mt Head grade* g/t 6E Average number of own employees Number (7) Average number of ontrators Number (63) Finanial indiators Cash ost R/tonne Cash ost R/Pt oz Cash ost* R/PGM oz 6E Cash ost* R/kg 6E Basket prie* R/kg 6E (33) Net sales revenue R million (54) Cash operating ost R million Cash operating (loss)/profit R million (286) (116) Cash operating margin % (20) Capital expenditure R million (3) * All prodution figures have been onverted to 6E due to the new off-take agreement in plae sine 1 Deember ARM Annual Report

36 ARM PLATINUM ontinued Two Rivers Platinum Mine Management Reserves and Resoures (100% basis)* * Exludes Kalkfontein resoure of 3.01 Moz of inferred resoures. The mine is managed by ARM. Measured and Indiated Resoures Proved and Probable Reserves PGM+Au PGM+Au Mt (6E) g/t Moz Mt (6E) g/t Moz UG Merensky E = Platinum + Palladium + Rhodium + Ruthenium + Iridium + Gold Refining Total labour All metal produed is smelted and refined by Implats subsidiary Impala Refining Servies Limited (IRS) (inluding ontrators) Refer to pages 165 and 166 for Two Rivers segmental information. 100% basis F2006 F2007 F2008 F2009 F09/08 % hange Conentrate prodution Platinum Ounes Palladium Ounes Rhodium Ounes Gold Ounes Ruthenium Ounes Iridium Ounes PGMs Ounes 6E Nikel Tonnes Copper Tonnes Operational statistis Tonnes milled Mt Head grade g/t 6E Average number of own employees Number Average number of ontrators Number Finanial indiators Cash ost R/tonne Cash ost R/Pt oz Cash ost R/PGM oz 6E Cash ost R/kg 6E Basket prie R/kg 6E (32) Net sales revenue R million (57) Cash operating ost R million Cash operating (loss)/profit R million (83) (106) Cash operating margin % (8) Capital expenditure R million (3) 34 ARM Annual Report 2009

37 Nkomati Mine Management Reserves and Resoures (100% basis) Refining Total labour The mine is managed as a 50:50 uninorporated joint venture with Norilsk Nikel Afria (Pty) Ltd. Measured and Indiated Resoures Proved and Probable Reserves Mt Ni% Mt Ni% Nikel Mt Cr % Mt Cr % Chrome Mt PGM+Au (4E) Mt PGM+Au (4E) Moz PGMs E = Platinum + Palladium + Rhodium + Gold Refining takes plae through various tolling ontrats (inluding ontrators) Refer to pages 163 and 164 for Nkomati (nikel) segmental information. 100% basis F2006 F2007 F2008 F2009 F09/08 % hange Conentrate/ore prodution Nikel Tonnes (12) PGMs Ounes (35) Copper Tonnes (13) Cobalt Tonnes (12) Chrome ore produed 000t (55) Chrome ore sold 000t (42) Operational statistis Tonnes milled Thousand Head grade % nikel (22) Average number of own employees Number Average number of ontrators Number Finanial indiators Nikel on-mine ash ost per tonne treated R/tonne Cash ost net of by-produts US$/lb (0.36) (1.10) (4.45) 2.48 (156) Net sales revenue R million (46) Cash operating ost R million Cash operating (loss)/profit total R million (85) Cash operating (loss)/profit Nikel mine R million (253) (149) Cash operating (loss)/profit Chrome mine R million (36) Cash operating margin % Average nikel prie US$/t (53) Capital expenditure R million ARM Annual Report

38 ARM PLATINUM ontinued Nkomati Nikel Large Sale Projet update To date, all projet milestones have been met, resulting in the overall projet progress being on shedule and within budget. Total funds ommitted on this projet amount to R2.5 billion or 75% of the R3.34 billion approved apital budget as at 30 June The Phase 2a projet ( tpm plant and assoiated infrastruture) is on shedule to be ommissioned during September The Phase 2b projet (upgrade of the urrent tpm plant to tpm PCMZ plant) was released for implementation and onstrution, whih started during August The hrome onentrator plant, treating hrome hips and fines, was ommissioned on shedule during September The plant ramp-up was delayed by the lak of demand for hrome onentrates from Otober 2008, and urrently the plant rampup to full prodution is in line to math market demand. Eskom power supply is on shedule to provide the required eletriity for the Phase 2a projet. The upgrade of the 132 kv overhead distribution lines has to be ompleted to provide suffiient power for the Phase 2b projet by November Total nikel in onentrate: tpa Average grade: 0.35% Ni; total plant apaity: tpm PCMZ nikel in onentrate: tpa Average grade: 0.25% Ni PCMZ plant: tpm MMZ nikel in onentrate: tpa Average grade 0.45% Ni MMZ plant: tpm Chrome: a signifiant value ontributor ± tpa hrome (market dependent) Other by-produts inlude: ounes of PGM (Pt:Pd 1:2.7) tpa opper 250 tpa obalt Projet released September 2007 Open ast mine expeted to produe at a steady state C1 ash ost of.$3.50/lb Ramp-up: 2009 Full prodution: 2011 Capital ost of R3.2 billion (in 2007 terms) 75% ommitted, shareholders to ontribute balane of funding requirement Kalplats Kalplats PGM Exploration Projet Definition drilling by Platinum Australia (PLA) on the Kalplats Projet was ompleted in November A total of m was drilled during the year, bringing PLA s total to m. The geologial modelling and resoure estimation by Coffey Mining have been finalised on four of Kalplats seven main deposits. Results to date have signifiantly inreased the mineral resoure at Kalplats and have upgraded some of the resoure to a measured ategory. PLA is preparing a definitive feasibility study on an open-pit mining operation. Management Reserves and Resoures (100% basis) Both projets are urrently managed by PLA. Measured and Indiated Resoures Mt 3E UG E = Platinum + Palladium + Gold PLA is also arrying out a soil geohemial survey on the Kalplats Extended Area Projet. An initial drilling programme has been ompleted and target grade mineralisation has been interseted over a strike length of approximately 2 km. 36 ARM Annual Report 2009

39 The Ferrous Division performed well in the year, despite extremely volatile market onditions. Higher pries in the first half were followed by an unpreedented redution in manganese and hrome volumes sold in the seond half. ARM Annual Report

40 ARM Ferrous Divisional struture IRON ORE Khumani Mine Beeshoek Mine 100% 50% ASSMANG MANGANESE 100% Nhwaning Mine Gloria Mine Cato Ridge Works ASSORE 50% 50% Cato Ridge Alloys (Pty) Limited 10% Sumitomo Group 40% MZK CHROME Dwarsrivier Mine Mahadodorp Works 38 ARM Annual Report 2009

41 Jan Steenkamp Chief Exeutive: ARM Ferrous Soreard F2009 objetives F2009 performane F2010 objetives Iron ore Complete ommissioning of the seond phase of the 10 mtpa Khumani Mine. Complete feasibility study for Khumani Mine expansion, to 16 mtpa. Finalise additional 4 mtpa iron ore export ontrat with Transnet. Finalise life-of-mine plan for Beeshoek Iron Ore Mine, for loal ontrat sales. Manganese Finalise manganese export ontrat beyond 2009 with Transnet. Complete Nhwaning Plant feasibility study (+ 1.5 mtpa). Cato Ridge Works to ommene environmental impat assessment proess for the onstrution of an additional furnae (No 7). Chrome Commene proess of onverting Dwarsrivier Chrome Mine from ontrator-operator to owneroperator. The 10 mtpa Khumani Mine was ommissioned on time, within budget. Feasibility study ompleted and projet approval reeived from all boards. 4 mtpa export ontrat with Transnet not finalised; hanges to type of loomotives neessitated a review of parameters. Life-of-mine plan not finalised due to unertainty of loal market requirements. Manganese export ontrat not finalised. Transnet ommened a new proess of alloating apaity via Port Elizabeth harbour. Feasibility study ompleted. Board approval reeived and onstrution ommened. Environmental impat assessment proess delayed due to reassess - ment of eonomi viability of furnae and an aident at the operations. Conversion suessfully ompleted. Ahieve 10 mtpa prodution on an ongoing basis. Continue expanding Khumani Mine, ensuring projet remains on time and within budget. Finalise the Transnet ontrat for the additional 4 mtpa export alloation. Explore options for Beeshoek Mine in terms of loal market opportunities. Finalise manganese export ontrat with Transnet to ommene in November Complete onstrution of new proessing plant to take total manganese ore prodution apaity to 5 mtpa. Re-evaluation of eonomi viability of additional furnae (No 7), and finalisation of EIA proess. Establish ARM/Assmang ulture with new workfore and improve operational effiienies. ARM Annual Report

42 ARM FERROUS ontinued Operational overview attributable to ARM Operational target Sales volumes F2009 F2008 % hange F2010 Manganese ore 000t (42) Nhwaning* 000t (52) Gloria* 000t Ferromanganese* 000t (52) Iron ore 000t Khumani 000t Beeshoek 000t (71) Chrome Dwarsrivier hrome ore* 000t (16) Mahadodorp harge hrome 000t (48) ARM Ferrous operating margin % ARM Ferrous ash operating margin % Headline earnings attributable to ARM R million * Exludes intra-ompany sales. Review of the year The Ferrous Division performed well in the year, inreasing headline earnings attributable to ARM by 14% to R3 150 million, despite extremely volatile market onditions. In the first six months of the year, a ommodity bull run supported pries of the division s produts, with an unpreedented redution in volumes sold during the seond six-month period. Under these very diffiult onditions, the Ferrous Division sueeded in widening ash operating margins from 61% to 68%. With the exeption of iron ore, volumes sold in all the division s ommodities dereased ompared to the previous finanial year. However, revenue rose to R15.26 billion from R14.83 billion for F2008 beause of higher US Dollar pries and a weaker Rand. Iron ore sales inreased from 6.58 mtpa to 7.41 mtpa mainly due to an inrease in iron ore volumes sold from the new Khumani Mine. The operating osts of all operations, exept iron ore, inreased at rates in exess of inflation as a result of the rapid downturn in the eonomy whih led to a signifiant redution in sales volumes. The osts of the iron ore business dereased by 7%, due mostly to an inrease in volumes sold. The onstrution and ommissioning of the 10 mtpa Khumani Mine was ompleted in February 2009, 7% below budget and ahead of shedule. Assmang ost and EBITDA margin performane Commodity group F2009 ost inreases R/tonne F2009 EBITDA margin (%) Iron ore (7) 70 Manganese ore Manganese alloys Charge hrome ARM Annual Report 2009

43 ARM Ferrous sales volumes from 2005 to 2012 (100% basis) * Exluding intra-group sales. Iron ore The iron ore division ahieved ontratual sales of 7.41 mpta due mainly to robust Chinese demand. The Khumani Mine has ommened the ramp-up to prodution of 10 mtpa by July 2011, whih is aligned with the Transnet apaity expansion programme. The Beeshoek Iron Ore Mine redued prodution in line with total ontrated sales and export apaity alloation. Most of the workfore employed at the Beeshoek operation has been suessfully trained and redeployed to the Khumani Iron Ore Mine. Most mining ativities at Beeshoek Mine eased and prodution was ahieved from previous stokpiles and dumps established during the mining life of Beeshoek. Manganese In line with demand, sales of manganese ore dereased from 3.7 mtpa in F2008 to 2.2 mtpa in F2009. Prodution volumes were largely steady at 3.13 mtpa (F2009) from the previous year s 3.15 mtpa. The strategy to maintain prodution was to restok, due to the high volumes sold during F2008. After ahieving ritial stokpile levels, prodution was ut bak in line with demand in the last quarter of F2009. Management of the manganese mines engaged with the workfore to ommene a proess of redeploying employees to the iron ore division whih required additional people for the inreased prodution as part of the ramp-up of the Khumani Mine. ARM Annual Report

44 ARM FERROUS ontinued Khumani plant at night Operating osts at the manganese mines inreased by 19% year-on-year. This was due to higher eletriity pries and an inrease in prodution tonnage from the more expensive Nhwaning 2 mine to ensure availability of high quality produt for an over-supplied market. Exessive labour osts also ontributed to the inreased osts due to the reruitment of additional labour for the introdution of ontinuous operations whih was halted when the demand slowed. Profit margins in the steel industry ame under pressure in the year, prompting a shift towards lower-grade, less ostly manganese. As a result, sales tonnes from the low-grade Gloria Manganese Mine inreased by 31%, with a similar inrease in prodution volumes. This failitated below inflation ost inreases at Gloria. At the Cato Ridge Works prodution volumes were redued in line with the signifiant drop in demand and some furnaes were shut down, equating to approximately 40% of apaity shut down sine Otober Tonnages sold dereased by 52% from in F2008 to in F2009. However, the ost of pro dution inreased by 38% due to sharp eletriity ost inreases and the redution in volumes produed. A deision was made to aelerate apital expenditure related to improving furnae effiienies and environmental legislation ompliane while some furnaes were shut down. As part of the group-wide ost-optimisation exerise, management at Cato Ridge Works have identified a number of areas where operating osts ould be redued, suh as reduing the number of full-time employees and ontrating labour as well as improving the effiienies of the furnaes. Chrome The performane of the hrome division was materially affeted by the derease in demand for hrome ore and harge hrome, whih are used in the prodution of stainless steel. Dwarsrivier Chrome Mine was suessfully onverted from a ontrator-operated to an owner-operated mine. During the last quarter of the finanial year both the Mahadodorp Works and the Dwarsrivier Mine engaged with the workfore in a proess to redue the total number of employees as part of a major ostredution exerise in an attempt, in the short-term, to minimise operating losses. At Mahadodorp Works prodution apaity was redued in line with lower demand for harge hrome. This resulted in furnaes being shut down, whih also led to a redution in prodution levels at the Dwarsrivier Chrome Mine. Mining rights status The 10 mtpa Khumani Iron Ore Mine, operating under a new order mining liene, is in the proess of updating its liene to operate a 16 mtpa mine. All onversion appliations for the Ferrous Division s operating mines Dwarsrivier Chrome Mine, Nhwaning Manganese Mine, Gloria Manganese Mine and Beeshoek Mine were submitted prior to the 1 May 2009 deadline. Safety and health The Ferrous Division ahieved its safety targets at most of its operations during F2009. These inluded ahieving 1.3 million 42 ARM Annual Report 2009

45 fatality free shifts at Mahadodorp Works and 2.8 million fatality free prodution shifts at Blak Rok Mine. The division ahieved an overall lost time injury frequeny rate (LTIFR) of 3.29 in F2009 ompared to 4.9 in F2008. Beeshoek Iron Ore Mine and Mahadodorp Works had an exellent year in terms of safety, with the last fatalities at these operations in Marh 2003 and January 2004 respetively. Both ahieved in exess of one million fatality free shifts. Beeshoek Iron Ore Mine and Mahadodorp Works were plaed seond and third respetively in the Exellene in Safety ompetition in the ARM Group. Cato Ridge Works safety reord improved signifiantly in the year and was plaed seond in the ompetition. Regrettably, four fatalities ourred during the year: two at Khumani Mine, one at Blak Rok Mine and one at Dwarsrivier Mine. A ontrat seurity guard at Khumani died from smoke inhalation from a fire he made in a mobile guard room. A driver was fataly injured when his dump truk ollided with a similar vehile on the Brue haulroad at Khumani Mine. Two employees were fataly injured in separate fall of ground inidents at Blak Rok and Dwarsrivier Mines. All operations ondut medial surveillane of employees in aordane with the requirements of relevant legislation. An inquiry into possible auses of manganism has been ompleted and a report from the hairman of the inquiry is expeted in the near future. Logistis The ontratual agreement with Transnet to inrease iron ore exports to 14 mtpa through the port of Saldanha Bay is being finalised. Along with other produers and Transnet, ARM Ferrous is investigating the possible expansion of the iron ore orridor to handle in exess of 60 mtpa. ARM Ferrous is also partiipating with Transnet in a apaity alloation proess to finalise future manganese export tonnages. It is antiipated that the short-term alloation proess will be ompleted towards the end of the 2009 alendar year, while the long-term alloation proess will be finalised during Capital expenditure Assmang s total apital expenditure was R2.8 billion of whih R1.4 billion was attributable to ARM (F2008: R2.9 billion). The main expenditure items inlude the ompletion of the new Khumani Mine (R924 million) and onstrution of the Nhwaning benefiation plant (R161 million), whih is expeted to be ommissioned in Marh At Cato Ridge, R296 million was spent on rebuilding furnaes and on ontrol of fume emissions at the Cato Ridge and Mahadodorp Works, R383 million on mining fleet enhanements, R191 million on housing and R165 million on various apital replaement items. Prospets The downturn in the world eonomy, with the resultant redution in demand for steel, has had a signifiant impat on the earnings generated by the Ferrous Division. This is likely to ontinue to be the ase. However, there are early signs of inreased demand and prodution will be ramped up aordingly. Iron ore sales volumes for the new finanial year are expeted to reah 9.8 million tonnes, with all export volumes oming from Khumani and loal sales being soured from Beeshoek. The Ferrous Division will ontinue with its growth strategy, albeit at lower margins in the short-term, helped by steps taken in the past seven years to make the business more effiient. These inlude apital spent on more ost-effetive infrastruture development (suh as Nhwaning 3, Dwarsrivier Mine, Khumani Mine, and the upgrade of furnaes) as well as prudent investment in human resoures and equipment. These apital investments have signifiantly improved operating effiienies, resulting in the operations being well benhmarked on the ost urve for omparable global produers. The Ferrous Division is also working to beome an employer of hoie over the next two years. To ahieve this, a number of riteria need to be further enhaned through defined ations whih over areas suh as ommunity investment and involvement, remuneration and housing. A key objetive remains the further expansion of the Khumani Iron Ore Mine to 16 mtpa, within budget and on shedule. The future earnings of the manganese division are dependent on the export apaity alloation it reeives from Transnet and the short-term alloation ( ) will only be deided towards the end of the 2009 alendar year. Demand from potential new manganese produers is unlear and so it is unertain how muh apaity will be alloated to the Ferrous Division through Port Elizabeth. Assmang, Transnet and other produers are urrently evaluating various options to inrease manganese export apaity from South Afria. ARM Annual Report

46 ARM FERROUS ontinued Market review The past finanial year was a tale of two halves. Until Otober 2008, when the extent of the global finanial and eonomi risis first beame apparent, sales volumes were strong and pries for our ommodities were at high levels. Thereafter, prodution of both arbon and stainless steel dropped sharply, affeting demand for the produts from all three divisions. Two of our main markets, the USA and Europe, have reently started to show signs of stabilisation after months of deline. China after several months of redued prodution suessfully stimulated its eonomy and by June 2009 prodution of steel was again running at reord levels. Iron ore Spot pries for iron ore in China fell dramatially after the start of the finanial risis whih meant that muh high-ost domesti Chinese iron ore apaity ould no longer ompete and was mothballed. This then pushed up demand for imported ore. Priing in the iron ore market is in a state of transition. The traditional annual benhmark priing system is under threat, partiularly in China. Settlements over the last two years have inluded quarterly and index priing in addition to spot sales. Major iron ore produers are split on their views as to whether an indexing priing method should replae the benhmark. For the last quarter of the year under review, provisional pries were agreed at levels 45% and 33% lower than the previous year for lump and fines respetively. Although negotiations are still ontinuing we expet that these levels espeially in China will prevail for ontratual tonnages for the first three quarters of the new finanial year. Ferrous priing trends for F ARM Annual Report 2009

47 Stokpiling of iron ore prior to railing at Khumani Iron Ore Mine Drill-rig and rew at Khumani Iron Ore Mine Manganese The hange in the fortunes of the manganese division was dramati. Requirements for ore and alloy virtually disappeared for a period while our ustomers redued their prodution levels as demand evaporated. There was also a period of de-stoking when apparent demand was even lower than atual demand and our ustomers tried to redue their stoks of high-ost raw materials. Demand for manganese ore then piked up in the last quarter of the finanial year, with substantial exports into China and the rest of Asia. This trend appears sustainable as purhasers in the rest of the world are now also indiating that they need to replenish stoks. During the year, manganese ore pries plunged to less than 25% of the reord levels that were reahed in mid However, reently there have been signs of a slow prie reovery as high-ost, marginal produers have exited the market. Manganese alloys were also badly affeted by the redit risis, and prodution and sales volumes, as well as pries, fell steeply. The alloy industry responded quikly and deisively as produers losed or ut prodution. Towards the end of the final quarter we saw inreased demand and some minor prie reovery. The outlook for our manganese alloys in the new year is dependent on both a reovery of steel prodution outside China and ontinued prodution restraint from major Western alloy produers. However, the low pries have meant that China has sharply redued alloy exports to the West. Ferrohrome Like manganese, the hrome division was badly affeted. Stainless steel prodution for the seond half of alendar 2008 was down over 26% and was even lower in the first half of alendar Prodution now seems to have bottomed out, but only China and some of the other Asian eonomies are produing strongly. This signifiant redution in stainless steel prodution had a atastrophi effet on the ferrohrome market, with demand by late 2008/early 2009 dropping to almost zero for a period, and pries falling by well over 60%. As a result, ferrohrome prodution partiularly in South Afria was slashed to balane the market. The earlier-than-expeted upturn in the stainless steel market, partiularly in China, then oinided with the South Afrian winter eletriity tariff inrease. This has meant that a signifiant number of furnaes were out of operation for maintenane and the ferrohrome market has tightened, with stoks low. However, there are onerns that an expeted rapid ramp-up of prodution after the winter period may oinide with Chinese stainless steel prodution being moderated to reflet real onsumption. ARM Annual Report

48 ARM FERROUS ontinued ARM Ferrous Operational Statistis Iron Ore Division Beeshoek and Khumani Iron Ore Mines Management Reserves and Resoures Measured and Indiated Reserves and Resoures Proved and Probable Total labour Jointly managed by ARM and Assore, through Assmang. ARM provides management, administration and tehnial servies, while Assore performs the sales and marketing funtion as well as tehnial onsulting servies. Beeshoek Khumani million tonnes at 63.71% iron million tonnes at 64.56% iron Beeshoek 45.2 million tonnes at 64.95% iron Khumani million tonnes at 64.49% iron (inluding ontrators) Refer to page 167 for Iron Ore segmental information. F2006 F2007 F2008 F2009 F09/08 % hange Attributable headline earnings R million Operating margin % Total iron ore sales 000t Beeshoek Iron Ore Mine Iron ore produed 000t (41) Iron ore sold 000t (71) Sales revenue R million (44) Total osts R million (70) Operating profit R million (13) Capex R million Khumani Iron Ore Mine Iron ore produed 000t Iron ore sold 000t Sales revenue R million Total osts R million Operating profit R million (6) Capex R million (36) Khumani expansion projet 16 mtpa iron ore export apaity 10.0 mtpa onstrution omplete +6.0 mtpa expansion approved Projet approved 2006 Ramp-up: 2009 (10 mtpa) Full prodution: 2010 Board approval August 2009 for 6 mtpa expansion Construt and ommission 16 mtpa: 2009 to 2012 Capital ost for 10 mtpa of R4 billion within budget Capital ost for +6 mtpa of R6.7 billion funded from internal funding resoures 46 ARM Annual Report 2009

49 Manganese Division Nhwaning and Gloria Manganese Mines and Cato Ridge Ferromanganese Works Management Reserves and Resoures Measured and Indiated Reserves and Resoures Proved and Probable Total labour Jointly managed by ARM and Assore, through Assmang. ARM provides management, administration and tehnial servies, while Assore performs the sales and marketing funtion as well as tehnial onsutling servies. Tonnes Mn% Fe% Tonnes Mn% Fe% Nhwaning Gloria Seam % 9.04% Seam % 5.5% Seam % 15.50% Seam % 10.1% Nhwaning % 9.04% Gloria % 5.50% (inluding 834 ontrators) Refer to page 167 for Manganese segmental information. F2006 F2007 F2008 F2009 F09/08 % hange Attributable ontribution to headline earnings R million (3) Operating profit margin % Manganese ore Manganese ore produed 000t (1) Manganese ore sales* 000t (42) Revenues* R million (7) Total osts R million (34) Operating profit R million Capex R million Manganese alloys Manganese alloys produed 000t (17) Manganese alloys sold 000t (53) Sales revenues R million (23) Total osts R million (34) Operating profit R million (13) Capex R million (2) * Exluding intra-group sales. Khumani Iron Ore Mine ARM Annual Report

50 ARM FERROUS ontinued Chrome Division Dwarsrivier Chrome Mine and Mahadodorp Ferrohrome Works Management Reserves and Resoures Measured and Indiated Reserves and Resoures Proved and Probable Total labour Jointly managed by ARM and Assore, through Assmang. ARM provides management, administration and tehnial servies, while Assore performs the sales and marketing funtion as well as tehnial onsutling servies million tonnes at 39.56% Cr2O3% 39.6 million tonnes at 39.5% Cr203% (inluding 269 ontrators) Refer to page 167 for Chrome segmental information. F2006 F2007 F2008 F2009 F09/08 % hange Attributable headline earnings R million (32) (69) Operating profit margin % (3) Dwarsrivier hrome ore Chrome ore produed 000t (19) Chrome ore sold* 000t (16) Sales revenues* R million Operating profit R million (6) (12) (3) Capex R million Mahadodorp harge hrome Charge hrome produed 000t (37) Charge hrome sold 000t (48) Sales revenues R million (37) Total osts R million (10) Operating profit R million (23) (76) Capex R million * Exluding intra-group sales. 48 ARM Annual Report 2009

51 ARM Coal experiened a hallenging year, with the weak priing environment ompounded by operational issues and a marked redution in demand and pries in the seond half. ARM Annual Report

52 ARM Coal Divisional struture Xstrata 100% XSA 49% 49% 51% Goedgevonden (GGV) 70% 51% * 20% XSA s Coal operations (PCB)** 10% ** ARM Coal holds the following: ** aess to Xstrata s 20.9% interest and entitlement in the Rihards Bay Coal Terminal (RBCT); ** an export entitlement of 3.2 mtpa in the Phase V expansion at the RBCT whih is expeted to be ommissioned during the seond half of the 2009 alendar year. ** Partiipating Coal Business (PCB) refers to Xstrata Coal South Afria s existing oal operations. 50 ARM Annual Report 2009

53 Mangisi Gule Chief Exeutive: ARM Coal Soreard F2009 objetives F2009 performane F2010 objetives Partiipating Coal Business (PCB) Maintain export sales volumes. Export volumes dereased by 18% due to lower demand and transport logistis problems. Continue with the transition from high-ost underground mining to low-ost open ast mining. Maintain domesti sales but at inreased pries per energy unit of sales. Inrease underground prodution at Southstok 5 Seam. Domesti sales volumes dereased by 30% due to lower demand but pries inreased by 33%. Prodution at Southstok 5 Seam on target. Improve domesti sales and pries reeived through Eskom ontrat. Improve train loading time. Synergy with plant, mahinery and infrastruture (DTJV with BECSA). Goedgevonden (GGV) Conlude prie negotiations for Eskom volume off-take ontrat. ATCOM East projet delayed due to problems experiened with pit formation. Coal buy-in arrangement extended. Long-term oal supply agreement onluded in F2009. Inrease export sales. Export sales inreased by 11%. Maintain domesti sales but at inreased pries per energy unit of oal sales inrease. Start Coal handling proessing plant and ramp-up in seond half of Ensure GGV projet remains on shedule and within budget. Operational overview attributable to ARM Long-term oal supply agreement with favorable pries onluded in F2009. Commissioning of plant delayed to seond half of C2009 as a result of poor weather onditions and problems with steel onstrution. Start implementation of ATCOM/ATCOM East onsolidation. Implementation of oal supply agreement. Suessfully ramp-up prodution at GGV to ahieve full prodution by F2009 F2008 % hange Attributable sales PCB Mt (22) Export Mt (18) Domesti Mt (27) GGV Mt (28) Export Mt Domesti Mt (33) ARM total Mt (17) Export Mt (18) Domesti Mt (28) ARM Coal operating margin % Headline earnings attributable to ARM R million (23) Operational target F ARM Annual Report

54 ARM COAL ontinued ARM Coal operational statistis PCB & GGV ombined 100% basis F2009 F2008 % hange Total prodution sales (PCB & GGV) Saleable prodution Mt (12) Export thermal oal sales Mt (18) Domesti thermal oal sales Mt (30) Average reeived oal prie Export (FOB) US$/t Domesti (FOR) R/t On-mine saleable ost* R/t (35) * The F2008 on-mine saleable ost reported was R148/t, whih inluded 1.8 mt of stokpile oal sold to Eskom. Loading of oal at Goedgevonden Coal Mine Review of the year ARM Coal experiened a hallenging six months to June 2009, with the weak priing environment being ompounded by a range of operational hallenges. Attributable ash operating profit in the urrent year inreased by 18% ompared to the previous finanial year but attributable headline earnings delined by 23%. There was a substantial inrease in the normal depreiation mainly due to depreiation of the apitalised value of the Douglas Tavistok JV off-take agreement. Saleable prodution for the year was 12% lower than the previous finanial year, mainly due to a fire at the Tweefontein plant in November 2008, and abnormally high rainfall in the first quarter of the 2009 alendar year. This derease was to some extent offset by an inrease in saleable prodution from 1.6 mtpa to 2.5 mtpa at the Goedgevonden (GGV) open ast mine during the urrent finanial year. Total on-mine osts per tonne inreased by 35% in F2009, mainly as a result of an inrease in ontrator and onsumable osts and the redution of 12% in saleable prodution. Commissioning of the GGV plant has been delayed from the first quarter to the third quarter of alendar This was mostly attributable to the abnormally high rainfall referred to above, as well as re-work on steel fabriated for use in the oal proessing plant. From January 2009 there was a marked redution in demand for inland- and Eskom-quality oal. Although average pries ahieved during the finanial year were higher than the previous finanial year, the last six months of F2009 experiened a deline of 30% for Eskom sale pries ompared to the first six months of F ARM Annual Report 2009

55 The benefit that GGV enjoyed in the previous finanial year, of a signifiant inrease in sales volumes to Eskom, did not ontinue during F2009. Eskom s purhases of oal on shortterm ontrats dereased as the shortage of oal experiened by the utility was largely resolved in the seond half of the 2008 alendar year. A long-term oal supply agreement with a oneyear ramp-up and a six-year supply was onluded with Eskom. Export volumes were lower during F2009 due to a delay in the ommissioning of the RBCT oal proessing plant and logistial problems experiened with transporting oal to the port. At GGV ash osts per sales tonne inreased by 11% year-onyear to R89.66 as the long-term ost per saleable tonne (whih is used to determine the amount of working osts to be apitalised) was realulated. This first-time apitalisation of working osts was oasioned by large volumes of in-pit inventory being exposed during the development stage, whih will benefit the operation in the future. Reoniliation of headline earnings to operating profit Earnings from the Coal Division attributable to ARM were negatively impated by a number of aounting issues: The IFRS aounting requirement related to imputed interest on the Xstrata debt failitation; and Additional amortisation at the ARM level provided as a result of the IFRS purhase prie alloation rules. F2009 F2008 ARM attibutable headline earnings reported Add: Additional amortisation Imputed interest on Xstrata R4 billion debt failiation Less: Taxation (13) (14) ARM attributable headline earnings exluding IFRS adjustment Add: Normal interest Normal amortisation Taxation ARM s attributable operating profit ARM Annual Report

56 ARM COAL ontinued Constrution of oal valve at staker at Goedgevonden Logistis RBCT will ommission the Phase V expansion projet in the fourth quarter of Transnet Freight Rail (TFR) is urrently unable to supply RBCT its existing oal export apaity of 76 mtpa and it appears that, as a result of a mismath between TFR rail apaity and the RBCT terminal apaity, the additional apaity (15 mtpa) that was to be reated by the Phase V expansion will not be utilised for some time. ARM Coal is optimisti, however, that a solution will be found to satisfy all shareholders. The proposed ramp-up profile for GGV export oal over the next three years is expeted to be ahieved as GGV will be a very low-ost produer and has a modern rapid load-out terminal. Mining rights status The doumentation supporting the appliation for the onversion of old order mining rights to new order rights has been submitted for all of XCSA s mining properties, and efforts ontinue to expedite approval. There are 20 prospeting rights that have been granted. Of these, XCSA has applied for mining rights for some, and will be applying for the renewal of the remaining prospeting rights. During F2008, the old order mining right over the GGV property was onverted and notarially exeuted. The new order mining right in respet of the Zaaiwater property was also granted and notarially exeuted during this period. ARM Coal and XCSA will apply for a Setion 11 transfer to inorporate both these lienes into one liene in their respetive names as partners in the GGV joint venture. Capital expenditure Capital expenditure during the year inreased by 81% ompared to the previous year, reahing R5.8 billion. Capital expenditure at GGV is progressing to plan for the ommissioning of the Coal handling proessing plant (CHPP) in the third quarter of At year end over 91% of the apital ost to build and equip the mine had been ommitted. Abnormally high rainfall during January and February 2009 resulted in a delay in the ompletion of the projet. Current indiations are that the projet will be ompleted during the seond half of the 2009 alendar year. The main apex items were: GGV: R1.96 billion. PCB: Southstok Phase 2 underground development R43 million; Butterfly projet R117 million; 54 ARM Annual Report 2009

57 Soure: Xstrata Coal South Afria presentation 13 August ATCOM East Projet R48 million; ATCOM East-mineral rights R1 831 million; CHPP projet at Tweefontein R12 million; and Two Seam Projet at Tweefontein R49 million. Prospets The GGV long-term supply agreement onluded with Eskom during the year will improve the stability of ash flows from ARM Coal amid the urrent market volatility. In the export market, oal s ompetitiveness relative to alternative fuels will ontinue to underpin its position as a base load fuel for power generation as eonomi growth reovers. China s net import position, the ommissioning of further generating units and higher demand from power generators in Korea, as well as India s growing requirement for imported oal to meet its domesti eletriity needs, ontribute to a positive outlook for seaborne thermal oal demand in the Paifi market. Despite high stoks in both the Paifi and Atlanti markets, the thermal oal market remains in ontango, suggesting stronger priing in GGV is expeted to be a lower-quartile ost produer on the global thermal oal ost urve. This will improve the overall struture of ARM Coal s mining from more expensive under - ground mining to ost ompetitive open ast mining. We are ontinually evaluating our prospeting rights in the Witbank area for future opportunities. However, the future development of potential mining operations will be onstrained by rail and road infrastruture. ARM Annual Report

58 ARM COAL ontinued Market review Export market Lower oal demand from most traditional importers, in response to the eonomi downturn, has been offset to some extent by a surge in demand from China and India, along with slower supply growth from exporters inluding Indonesia and Colombia. For the year to date, the market remains broadly balaned. Xstrata Coal South Afria (XCSA) has seured ontrat prie settlements with Japanese power utilities for the year ommening 1 April 2009, in the range of US$70 to US$72 per tonne FOB basis GAR, and US$75 per tonne for the year ommening 1 July These settlements are generally used as benhmark pries for ontrats with other ustomers in the Paifi markets, whereas term and annual ontrats represented 65% of XCSA s thermal oal sales in the first half of Approximately 60% of export sales from South Afria for the first half of 2009 were pried on a spot or indexed basis, with the balane pried under term or annual ontrats. FOB pries, as indiated by the API4 index, have delined from US$80 per tonne in January to trade within a range of approximately US$55 to US$65 per tonne from Marh. Under an off-take agreement with Glenore, oal from Prodeo operations is sold at US$75 per tonne basis Btu/Ib. 5 Seam oal floor at GGV Domesti (Eskom) market The Coal Supply Agreement (CSA) with Eskom for the 3.5 mtpa thermal loal prodution has been agreed, on favourable dynami priing terms with ompensation for superior quality. Salient details of the ontrat inluding the following: The CSA has a term of 17 years (one year ramp-up and four periods of four years eah). Pries are determined based on a number of fators: base prie is linked to a base oal value of 21.5 MJ/kg on an air dried basis over the life of the CSA; a penalty/reward sheme is set up around the base prie; the base prie is adjusted aording to an agreed annual esalation lause; and eah tranhe has a different base prie from the effetive date. The CSA has two tranhes. Tranhe 1: based on a fixed Rand prie per tonne of saleable produt; total sales volumes of 48 mt over the 17-year term; one-year ramp-up sales volume range of 2.4 mt to 3.2 mt; four periods of four years eah sales volumes of 2.6 mtpa; and the base prie is reviewed three months before expiration of eah four-year period. Tranhe 2: initial base prie fixed, but at a higher level than Tranhe 1; based on variable volumes over the 17-year term; total sales volumes of 3.3 mt or 0.7 mtpa for the first four years from June 2010 to June 2014; and renegotiable before the ommenement of the following four-year period. 56 ARM Annual Report 2009

59 ARM Coal Operational Statistis Partiipating Coal Business (PCB) ARM s eonomi interest 20.2 % Management Total labour Life-of-mine Governed by a supervisory ommittee with five Xstrata representatives and three ARM representatives. Eonomi life-of-mines range from six to 26 years. PCB Refer to pages 163 and 164 for ARM Coal segmental information. F09/08 F2009 F2008 % hange Cash operating profits Rm Cash operating margin % Capex Rm Average prie reeived Export FOB US$/t Inland FOR R/t Cash ost per saleable tonne R/t (18) Total saleable prodution Mt (11) Impunzi Mt (19) Mpumalanga Mt (11) South Stok Mt (11) Tweefontein Mt (11) DTJV* Mt (9) Total sales Mt (23) Export 27.3 MJ/kg Mt (19) Domesti MJ/kg Mt (29) * Inluded in saleable prodution for omparison purposes. ARM Annual Report

60 ARM COAL ontinued Goedgevonden (GGV) ARM s eonomi interest 26.01% Management Reserves and Resoures (total) Reserves and Resoures (attributable) Total labour 263 Life-of-mine Governed by a management ommittee, ontrolled by ARM Coal, with four ARM representatives and three Xstrata representatives mt (Saleable Reserves) 99 mt (Saleable Reserves) 32 years GGV Refer to pages 163 and 164 for ARM Coal segmental information. F2009 F2008 F09/08 % hange Cash operating profits Rm Cash operating margin % Average prie reeived R/t Export FOB US$/t Eskom FOR R/t Cash ost per saleable tonne R/t (11) Capex* Rm Total saleable prodution Mt Total sales (25) Export 27.3 MJ/kg Mt Domesti MJ/kg Mt (33) * Exludes apitalised interest. Goedgevonden projet update Goedgevonden Coal Projet (GGV) is 51% owned by ARM Coal and 49% owned by Xstrata 6.7 mtpa saleable thermal oal 3.2 mtpa export sales (27 MJ/kg) ARM Coal has seured 3.2 mtpa additional apaity at Rihard s Bay Coal Terminal (RBCT) 3.5 mtpa domesti sales (21.5 MJ/kg) Eskom off-take negotiations finalised Close proximity to four power stations Supplying a premium produt (washed and sized) Projet released 2007 Open ast mine expeted to produe in lower quartile of global ost urve Ramp-up: 2009 Full prodution: 2011 Capital ost of R3.5 billion, 90% ommitted, funded by Xstrata Coal 58 ARM Annual Report 2009

61 The Vale/ARM joint venture s primary projets are foused on opper in Zambia (the Konkola North Copper Projet) and opper-obalt on the Kalumines property in the Demorati Republi of Congo. The JV s steering ommittee and Board have been onstituted, and a dediated management team is being put in plae to implement our strategy of growing the opper operations. ARM Annual Report

62 ARM Exploration Divisional struture Konkola North* Zambia 100% Other Afrian Exploration 100% Mwambashi Copper Zambia 60% Kalumines DRC Géamines 40% 50% Vale/ARM JV 50% 70% Exploration areas 2 and 4 Zambia Antofagasta 30% Vale 92% Otjikoto and Otavi Namibia EVI Mining 8% * ZCCM Investment Holdings pl has a 20% option on Konkola North, 5% of whih is a free arry. 100% Kabwe West/South Lusaka North Lusaka West Zambia 60 ARM Annual Report 2009

63 Dan Simelane Chief Exeutive: ARM Exploration Soreard F2009 objetives F2009 performane F2010 objetives Zambia Complete metres drilling The drilling programme was suessfully Complete the geologial evaluation programme in the Konkola North Area A ompleted over a total of metres. and plan a further resoure delineation to assess the best way forward to A geologial evaluation of Area A is and infill drilling programme. further verify and upgrade this mineral in progress. With a urrent Inferred resoure base. Resoure of 219 mt, grading 2.64%, it was determined that a further infill drilling programme was required. Complete the feasibility study to an A 2.5 mtpa feasibility study for the South Complete a metre resoure aeptable level of auray for the and East Limb ore bodies was ompleted onversion drilling programme, Board to make a deision on the and is urrently being revised. undertake geotehnial and development of a new mine. hydrologial studies, improve the osting auray and omplete a final feasibility study. DRC Complete the urrent exploration The drilling programme was suessfully Undertake additional drilling to further programme and independently verify ompleted and an Indiated Resoure delineate the omplete resoure a Final Resoure, whih will be used in of 15.1 mt at 2.32% grade has been estimations and advane various a feasibility study for a new opper independently estimated. metallurgial studies. mining operation. Namibia Exploration drilling, speifially targeting Numerous studies were ompleted Gold is not a ore business and the JV high-grade setions of the orebody, ulminating in a mining soping study ommened with a proess to possibly to inrease and upgrade the gold and finanial evaluation of the projet. divest its interest in the Otjikoto resoure further. 612 boreholes over a total of Gold Projet through a seleted meters define the resoures of the tender proess. Otjikoto Gold Projet. MVA AC ARC Furnae, DRC Pouring blister opper, DRC ARM Annual Report

64 ARM EXPLORATION ontinued Review of the year The Vale/ARM joint venture s primary projets are foused on opper in Zambia (the Konkola North Copper Projet) and opper-obalt on the Kalumines property in the Demorati Republi of Congo (DRC). A onservative, modular and phased approah will be adopted in the development of the ore bodies in Zambia, whih at this stage is expeted to be followed by the develop ment of the DRC ore bodies. The JV s steering ommittee and Board have been onstituted, and a dediated management team is being put in plae to implement our strategy of growing the opper operations. The earnings loss attributable to ARM inreased from R211 million in F2008 to R689 million in F2009, due mainly to inreased stok write-down osts and restruturing osts arising from the anellation of mining operations. The small-sale mine at Kalumines in the DRC was mining at a loss when the Company deided to ease all mining ativities with immediate effet. This resulted in penalty payments (R87 million) due to the ontrat being stopped 20 months early. Furthermore, the mining liene was under review and required further modifiations to the agreement (R25 million). The ore on stokpile of 1.1 mt at 4.5% Cu inurred a write-down of R103 million and is urrently valued at US$34 million. The JV has restrutured and retrenhed 150 people in the DRC and will fous on exploration targets over the 77 square kilometres under liene. The weaker Rand/US Dollar exhange rate also impated on the reported results as the funtional reporting urreny for ARM Exploration is in US Dollar. Zambia The Konkola North Copper Projet is loated within the Greater Konkola Area of the Zambian Copperbelt and onsists of a large-sale mining liene overing an area of approximately 44 square kilometres. The Vale/ARM joint venture intends to fous initially on the development of the northern portion of the deposit, known as the South and East Limb areas, and the re-equipping of the existing infrastruture at the South Limb, whih inludes a 423 metre vertial shaft, two ventilation shafts and three ore haulage levels. At the East Limb, the Company is onsidering the sinking of a deline shaft to aess the mineralisation. A feasibility study for the Konkola North East/South Limb ore bodies has been ompleted. The study envisages a mine prodution rate of 2.5 mtpa whih equates to about 45,000 tonnes per year of opper. Additional work is required to fulfil the JV partners requirements for a bankable feasibility study and thereby inrease the onfidene limits for the projet. Additional work inludes further resoure onversion drilling, geotehnial and hydrologial studies, a review of operating and apital osts and the finalisation of off-take agreements and power supply agreements. It is envisaged that a final study will be presented to the respetive shareholder boards in the fourth quarter of F2010. Konkola North s Area A hosts a potentially world-lass resoure, with approximately 219 mt of ore at grades of 2.64% opper. The Company has ompleted a first phase of definition drilling in Area A. Following the geologial data proessing and interpretation, another drilling programme will be planned to further define the opper resoures in this area. It is antiipated that drilling will ommene in the next finanial year. Numerous disussions have been held with ZCCM-IH and the Minister of Mines and we antiipate an extension of time for the development of this projet. Demorati Republi of Congo Situated in the DRC lose to Lubumbashi, the Kalumines Copper-Cobalt Projet, a joint venture with La Générale des Carrières et des Mines (Géamines), overs an area of around 77 square kilometres. The mining liene area hosts numerous deposits, inluding the Lupoto, Kasonta, Kasonta South, Niamumenda and Karavia prospets. Exploration drilling ommened in Marh At Lupoto a small-sale mining operation was ommissioned in 2008 and a total of 2.25 mt of opper ore with an average grade of 4.5% opper was mined and upgraded through a sreening and sorting plant. A total of 1,663 tonnes of lumpy ore, at a grade of 22.46% opper, and 15,931 tonnes of fine ore material, at a grade of 12.69% opper, was produed this finanial year and sold to third parties. The remainder of the ore omprises a stokpile of 1.1 mt with an average grade of 4.5% opper. All mining and proessing related work has now stopped, and the opper furnae previously ommissioned is on are and maintenane. The Company will fous on exploration and resoure definition work. In February 2008, written notifiation was reeived from the Minister of Mines in the DRC informing the Company of the outome of the DRC Mining Contrats Review Commission. Numerous meetings were held with the DRC authorities and an agreement was reahed in Deember In Marh 2009, however, a further amended requirement was tabled by the DRC authorities and the Company proeeded with further disussions. It is antiipated that a final agreement will be reahed by the end of alendar Namibia The Otjikoto Gold Projet is situated within the Company s 92%- owned Otavi Exploration Area, whih totals square kilometres in north-entral Namibia. An environmental impat assessment study is at an advaned stage and a mine tehnial study and finanial evaluation has been ompleted. The JV has deided to refous its priorities on the development of its opper assets and will possibly divest of its interest in the Otjikoto Gold Projet through a seleted tender proess. 62 ARM Annual Report 2009

65 Konkola North No. 2 shaft head gear and operations yard, Zambia Prospets The JV believes that a onservative, modular and phased approah to the development of the Konkola North ore bodies in Zambia is appropriate, whih at this stage is expeted to be followed by the development of the ore bodies presently being defined on the Kalumines property in the DRC. In the DRC, the JV will ontinue to explore identified shallow deposits with the objetive of defining a total of 100 mt of opperbearing ore at grades higher than 2% opper. In addition, we will be doing metallurgial test work on the Kasonta orebodies. ARM Exploration ontinues to develop relationships in sub- Saharan Afrian ountries and is simultaneously assessing opportunities in PGMs, base and ferrous metals, and oal. ARM Annual Report

66 ARM EXPLORATION ontinued Mineral resoures summary as at 30 June 2009 Mineral Total Contained Gold Contained Ownership resoures opper opper grade gold Mineral projet (%) ategory Mt (%) (Mt) g/t (Moz) Konkola North Copper Projet (1) 100 South Limb (2) Measured Indiated Inferred East Limb (2) Measured Indiated Inferred Area A Inferred Kalumines Property (3,4) Lupoto Indiated Lupoto Inferred Kasonta Inferred Kasonta South Inferred Niamumenda Inferred Stokpile Mwambashi Copper Projet (5) 100 Indiated Inferred Otjikoto Gold Projet (6) 92 Indiated Inferred Notes: (1) ZCCM-IH has buy-in rights for up to 20% (5% arried interest). (2) The mineralised zones were modelled on a 1% total opper ut-off. (3) The resoures defined for the Kalumines Property are unoffiial resoure estimates. (4) The mineralised zones were modelled on a 1% total opper ut-off. (5) The mineralised zones were modelled on a 0.5% total opper ut-off. (6) The mineralised zones were modelled on a 0.4 g/t gold ut-off. Joint venture with Vale on Afria assets Understands Afria and has a good reputation Exellent relationships in Afria Capital Assets World-lass opper expertise Capital Base metals mining experiene 64 ARM Annual Report 2009

67 Gold: Harmony Harmony s ash operating profit rose to R3.8 billion in F2009 from R2.6 billion in F2008. The result for Harmony was a massive improvement in net profit to R2.9 billion in F2009 from a loss of R245 million in the previous year, and Harmony s balane sheet has improved. ARM Annual Report

68 Gold: Harmony 66 ARM Annual Report 2009

69 Soreard F2009 objetives F2009 performane F1010 objetives To ontinue reating an outstanding ompany: Safety first; Unhedged; Foused management; and Responsible orporate itizen. Assess effetiveness of operating plans. Generate sustainable earnings and strengthen balane sheet. Create the neessary platform to grow organially. Behaviour-based safety programmes introdued. Safety improved. Stakeholder buy-in. Exeutive management strengthened: Management team now better empowered; Triple bottom line delivery has beome a line management responsibility. Non-profitable operations plaed on are and maintenane. Monitoring of all shafts performane. Operational improvements evident. Debt has been leared. Two suessful ash-generating transations ompleted. Two suessful apital raisings onluded. Several due diligenes onduted. Four growth projets underway and four projets under onsideration. Newrest earns-in 50% of Hidden Valley. Rand Uranium transation onluded. Post year-end Pamodzi Free State Assets aquisition approved by the High Court. Continue initiatives in F2010 that were advaned or ahieved in F2009. Aiming to ahieve an inrease in throughput, grade and gold ounes. Continue to generate sustainable earnings. Continue assessments of several new projets and growth opportunities. Operational performane F2009 F2008 Gold produed Kg oz Operating ost R/kg US$/oz Finanial performane Revenue R million Prodution osts R million Cash operating profit R million Net profit/(loss) for the year R million (245) Total headline earnings per share SA ents Total apital expenditure R million Market performane Average gold prie reeived R/kg US$/oz R/US$ exhange rate (average for period) R/US$ exhange rate at end of the period Market apitalisation at period end R billion US$ billion ARM Annual Report

70 GOLD: HARMONY ontinued The Hidden Valley projet remains on shedule with onstrution 87% omplete and essentially all apital ommitted. A major projet milestone was ahieved when the first gold pour was ompleted late in June Site onstrution ativities foused on the proess plant, rushers and power station failities. The mill, gravity onentrators and tailing system were all ompleted and ommissioned to enable the first ore to be proessed. Full ommissioning is still expeted during F2010. Harmony s balane sheet is now in exellent health. At F2009 year end the balane sheet refleted net ash of over R1.6 billion, ompared to a net debt position in exess of R3.6 billion in F2008, representing an improvement of R5 billion. The Nedbank loan and onvertible bond were repaid during the year and Harmony is now in the advantageous position to pursue aquisition opportunities and invest in organi growth projets. Harmony also delared its first dividend in five years, paying 50 ents a share; paid on 21 September ARM s dividend reeipt from Harmony will be R32 million and this will be aounted for in the F2010 finanial statements. First gold pour at Hidden Valley, Papua New Guinea Harmony Gold Mining Company Limited Harmony operates primarily in South Afria with 10 underground operations, two surfae operations and one open pit mine. Harmony has a 50% interest in the Morobe Mining joint venture (Newrest Mining Limited is the other 50% partner) in Papua New Guinea, whih inludes Hidden Valley, an open ast gold and silver projet that started prodution in June 2009, as well as the Wafi Golpu projet and exploration tenements. Exploration ativity has also resumed in South Afria and inludes the Evander South Projet where a pre-feasibility study has already been ompleted and a two-phase drilling programme is underway. Harmony s total gold prodution dereased to ounes in F2009, from ounes in F2008, while total gold sales were ounes lower at ounes. Despite the lower prodution, total ash osts were well ontained at US$583 per oune in F2009 ompared to US$598 per oune in F2008. Together with the higher average gold prie reeived during the year, Harmony s ash operating profit rose to R3.8 billion in F2009 from R2.6 billion in F2008. The result for Harmony was a massive improvement in net profit to R2.9 billion in F2009 from a loss of R245 million in the previous year. This equated to headline earnings of 262 ents a share, signifiantly higher than last year s 126 ents a share. Harmony has refleted on its previous ahievements and disappointments and, taking into aount the needs of all its shareholders and stakeholders, has implemented a number of initiatives to ensure that the Company is sustainable into the future. Harmony s plans for F2010 is detailed, omprehensive and importantly based on what the Company believes is ahievable in the urrent gold environment. Harmony is well-positioned to take advantage of a higher gold prie and, at a prie of R /kg, the Company s plans support strong ash flows, overing both ongoing and growth apital. The ARM balane sheet at 30 June 2009 reflets a marked-tomarket investment in Harmony of R5.1 billion, whih is based on a Harmony share prie of R80. Changes in the value of the investment in Harmony are aounted for by ARM through the statement of hanges in equity net of deferred apital gains tax. Dividends are reognised in ARM s inome statement. The investment refleted at market value in the balane sheet represents approximately 18% of ARM s market apitalisation of R28 billion at 30 June 2009, whih ompares to 10% at 30 June Harmony's full results for the finanial year ended 30 June 2009 an be viewed on their website at 68 ARM Annual Report 2009

71 MINERAL RESERVES AND RESOURCES ARM s method of reporting Mineral Reserves and Mineral Resoures onforms to the South Afrian Code for Reporting Mineral Resoures and Mineral Reserves (SAMREC Code) and the Australian Institute of Mining and Metallurgy Joint Ore Reserves Committee Code (JORC Code). ARM Annual Report

72 CONTENTS 71 Salient features F F2009 Mineral Resoure/Reserves Summary 73 General Statement 73 Competene 74 ARM FERROUS Manganese Mines Iron Ore Mines Chrome Mine 79 ARM PLATINUM Nkomati Nikel/Copper/Cobalt/PGM/Chrome Mine Two Rivers Platinum Mine Modikwa Platinum Mine Kalplats Platinum Projets 84 ARM COAL Goedgevonden Coal Projet 85 ARM EXPLORATION Otjikoto Gold Projet Konkola North Copper Projet Mwambashi Copper/Cobalt Projet Kalumines Copper Projet 86 Definitions Please note that detailed desriptions to substantiate the Resoures/Reserves statements are published on the ARM website, 70 ARM Annual Report 2009

73 COMPETENT PERSON S REPORT ON ORE RESERVES AND MINERAL RESOURCES This report is issued as the annual update of Resoures and Reserves to inform shareholders and potential investors of the mineral assets held by Afrian Rainbow Minerals Limited (ARM). Salient features F2009 Khumani Prodution through the plant started in mid-2008, ramp-up to full prodution in progress. Reserves inreased due to redesign of open pits at higher iron ore pries. Feasibility study to inrease annual prodution from 10 mt to 16 mt. Beeshoek Reserves inreased due to the inlusion of the Village pit. Feasibility study on Village pit in progress. Nhwaning Development into Graben area expedited, whih will inrease knowledge of geologial struture. Gloria Drilling in progress to inrease geologial knowledge to the west. Dwarsrivier Geologial model rebuild using Datamine proess, SURFIP, resulting in an inrease in Resoures and Reserves. Nkomati Current Resoure/Reserve statement reflets the annual depletion. Re-evaluation and pit optimisation in progress. Two Rivers 15 additional boreholes drilled awaiting assay results for re-evaluation. Kalplats Extensive exploration drilling inreased Mineral Resoures at Kalplats by 60 mt. Goedgevonden Prodution inreased by 56% as the mine ramps-up to full prodution. ARM Annual Report

74 F2009 Mineral Resoure/Reserves Summary Platinum (Measured and Indiated) Mineral Resoures (Proved and Probable) Mineral Reserves Mt PGM+Au Mt PGM+Au Moz Two Rivers UG (6E) (6E) 4.78 (6E) Merensky (6E) Modikwa UG (4E) (4E) 8.49 (4E) Merensky (4E) Nkomati (4E) (4E) 4.26 (4E) Kalplats (3E) 6E = Pt + Pd + Rh + Ru + Ir + Au; 4E = Pt + Pd + Rh + Au; 3E = Pt + Pd + Au Nikel (Measured and Indiated) Mineral Resoures (Proved and Probable) Mineral Reserves Mt Ni% Mt Ni% Nkomati Total MMZ+PCMZ Manganese ore (Measured and Indiated) Mineral Resoures (Proved and Probable) Mineral Reserves Mt Mn% Fe% Mt Mn% Fe% Blak Rok No 1 Seam No 2 Seam Gloria No 1 Seam No 2 Seam Iron ore (Measured and Indiated) Mineral Resoures (Proved and Probable) Mineral Reserves Mt Fe% Mt Fe% Beeshoek Khumani Brue King Chromite (Measured and Indiated) Mineral Resoures (Proved and Probable) Mineral Reserves Mt Cr2O3% Mt Cr2O3% Dwarsrivier Nkomati Coal (Measured and Indiated) (Proved and Probable) Mineral Resoures Mineral Reserves Saleable Mt Mt Mt Goedgevonden ARM Annual Report 2009

75 General Statement ARM s method of reporting Mineral Resoures and Mineral Reserves onforms to the South Afrian Code for Reporting Mineral Resoures and Mineral Reserves (SAMREC Code) and the Australian Institute of Mining and Metallurgy Joint Ore Reserves Committee Code (JORC Code). The onvention adopted in this report is that Mineral Resoures are reported inlusive of that portion of the total Mineral Resoure onverted to a Mineral Reserve. Resoures and reserves are quoted as at 30 June Rounding of figures may result in omputational disrepanies. Competene The ompetent person with overall responsibility for the ompilation of the Mineral Reserves and Resoures Report is Paul van der Merwe, PrSiNat, an ARM employee. He onsents to the inlusion in this report of the matters based on this information in the form and ontext in whih it appears. Paul van der Merwe graduated with a BS (Hons) in Geology from Free State University. He spent four years as an exploration geologist for FOSKOR. He then joined the Uranium Resoure Evaluation Group of the then Atomi Energy Corporation of South Afria for 12 years. While employed there he studied geostatistis and spent some time at the University of Montreal, Canada. In 1991, he joined Anglovaal Mining (now ARM) in the Geostatistis Department and evaluated numerous mineral deposit types for this group in Afria. In 2001, he was appointed as Mineral Resoures Manager for the Group. He is registered with the South Afrian Counil for Natural Sientifi Professions as a Professional Natural Sientist in the field of pratie of geologial Siene, Registration Number /83, and as suh is onsidered to be a Competent Person. All ompetent persons at the operations have suffiient relevant experiene in the type of deposit and in the ativity for whih they have taken responsibility. Details of the ARM s ompetent persons are available from the Company Seretary on written request. The following ompetent persons were involved in the alulation of Mineral Resoures and Reserves. They are employed by ARM or its subsidiaries and joint venture (JV) partners: M Burger, PrSiNat / S v Niekerk, PrSiNat Iron J Woolfe, PrSiNat Nikel/Platinum B Rusive, PrSiNat Manganese R van Rhyn, PrSiNat Platinum A Pretorius*, PrSiNat Chrome C Shlegel, PrSiNat Gold/Copper M Davidson, PrSiNat Nikel S Kadzviti, PrSiNat Nikel * External onsultant. P J van der Merwe 7 Otober 2009 ARM Annual Report

76 ARM Ferrous Assmang Limited Operations ARM s attributable benefiial interest in Assmang s operations is 50%. The other 50% is held by Assore Limited. Manganese Mines Nhwaning Mine: 1 Body Manganese Resoures and Reserves Mineral Resoures Mineral Reserves Mt Mt Mn% Fe% Measured 42.7 Proved Indiated 87.9 Probable Total Resoures 1 Body Total Reserves 1 Body Total Resoures 1 Body Total Reserves 1 Body Nhwaning Mine: 2 Body Manganese Resoures Mineral Resoures Mt Mn% Fe% Measured Indiated Total Resoures 2 Body Total Resoures 2 Body Measured Resoures are based on two-thirds of the semivariogram sill range rule. Areas outside this distane are lassified as Indiated. Proved Reserves = Measured Resoures used in LoM sheduling by Snowden. Probable Reserves = Indiated Resoures used in LoM sheduled by Snowden. Nhwaning borehole loality map showing the Mineral Resoure lassifiation 74 ARM Annual Report 2009

77 Gloria Mine: 1 Body Manganese Resoures and Reserves Mineral Resoures Mineral Reserves Mt Mt Mn% Fe% Measured 11.8 Proved Indiated 41.5 Probable Total Resoures 1 Body Total Reserves 1 Body Total Resoures 1 Body Total Reserves 1 Body Inferred Inferred Gloria Mine: 2 Body Manganese Resoures Mt Mn% Fe% Measured Indiated Total Resoures 2 Body Total Resoures 2 Body Inferred Inferred Measured Resoures = immediately available tonnes up to 50 metres in front of mining faes. Indiated Resoures are as per dense drilling area (see map). Proved Reserves = Measured Resoures less 23% pillar loss. Probable Reserves = Indiated Resoures less 23% pillar loss. Gloria borehole loality map showing the Mineral Resoure lassifiation ARM Annual Report

78 MINERAL RESERVES AND RESOURCES / ARM FERROUS ontinued Iron Ore Mines Beeshoek Iron Ore Mine: Resoures and Reserves Measured Indiated Inferred Total Resoure no Inferred Proved Reserve Probable Reserve Total Reserve Pit/Area Mt Fe% Mt Fe% Mt Fe% Mt Fe% Mt Fe% Mt Fe% Mt Fe% BN HF/HB BF East Pit Village GF HH Ext HL West Pit Detrital Total Total Khumani Iron Ore Mine: Resoures and Reserves Measured Indiated Inferred Total Measured and Indiated Proved Reserve Probable Reserve Total Reserve Area Mt Fe% Mt Fe% Mt Fe% Mt Fe% Mt Fe% Mt Fe% Mt Fe% Brue A Brue B Brue C King/Mokaning Khumani Detrital Total Total ARM Annual Report 2009

79 Beeshoek open pit loality plan Khumani open pit loality map Khumani Iron Ore Mine ARM Annual Report

80 MINERAL RESERVES AND RESOURCES / ARM FERROUS ontinued Chromite Mine Dwarsrivier Chrome Mine: Chrome Resoures and Reserves Resoures Reserves Tonnes Mt Cr2O3% FeO% Mt Cr2O3% FeO% Measured Proved Indiated Probable Total Measured and Indiated Total Reserves Total Measured and Indiated Total Reserves Inferred Dwarsrivier Mineral Reserves and Resoures loality Nhwaning Manganese Mine 78 ARM Annual Report 2009

81 ARM Platinum Nkomati Nikel-Copper-Cobalt-PGM-Chromite Mine ARM s attributable benefiial interest in Nkomati s operations is 50%. The other 50% is held by Norilsk Nikel. Mineral Resoures Measured Mineral Resoures Indiated Mineral Resoures Mt Cut-off (Ni%) Tonnes Ni% Cu% Co% 4E g/t Cut-off (Ni%) Tonnes Ni% Cu% Co% 4E g/t Tonnes BMZ (underground) MMZ (underground) MMZ (open pit) Pits 2 & PCMZ (underground) PCMZ (open pit) Pits 2 & Total 2009 Mineral Resoure Total 2008 Mineral Resoure Oxidised Massive Chromitite Resoure Indiated Mineral Resoure Inferred Resoures Tonnes Cr 20 3 % Tonnes Cr 20 3 % Chromitite (at 30% Cr 20 3 ut-off) Mineral Reserves, Nkomati Mine Proved Mineral Reserve Probable Mineral Reserve Cut-off (Ni%) Tonnes Ni% Cu% Co% 4E g/t Cut-off (Ni%) Tonnes Ni% Cu% Co% 4E g/t Tonnes MMZ (underground) MMZ (open pit) Pits 2 & PCMZ (open pit) Pits 2 & Total 2009 Mineral Reserve Total 2008 Mineral Reserve E = platinum + palladium + rhodium + gold Oxidised Massive Chromitite Reserve Probable Mineral Reserve (Rm) Tonnes Cr 20 3% Chromitite (at 30% Cr 20 3 ut-off) ARM Annual Report

82 MINERAL RESERVES AND RESOURCES / ARM PLATINUM ontinued Nkomati Mine Mineral Reserves and Resoures loality Two Rivers Platinum Mine ARM s attributable benefiial interest in Two River s operations is 50%. The other 50% is held by Impala Platinum. Mineral Resoures UG2 (UG2 + Internal Pyroxenite) Grade Mt Pt g/t Pd g/t Rh g/t Au g/t (3PGE+Au) g/t (5PGE+Au) g/t Pt M oz 6E Moz Measured Indiated Total Total Inferred PGE = Pt + Pd + Rh; 5PGE = Pt + Pd + Rh + Ir + Ru; 6E = 5PGE + Au Mineral Resoures Merensky Reef Top zone Mt (3PGE+Au) g/t 6E g/t Pt g/t Pt Moz 6E Moz Measured Indiated Inferred ARM Annual Report 2009

83 Mineral Reserves UG2 (UG2 + Internal Pyroxenite) Grade Mt Pt g/t Pd g/t Rh g/t Au g/t (3PGE+Au) g/t (5PGE+Au) g/t Pt Moz 6E Moz Stokpile Proved Probable Total Total Two Rivers Platinum (Pty) Ltd Dwarsrivier 372 KT UG2 Mineral Resoures Classifiation Two Rivers Platinum Mine ARM Annual Report

84 MINERAL RESERVES AND RESOURCES / ARM PLATINUM ontinued Modikwa Platinum Mine ARM s attributable benefiial interest in Modikwa s operations is 50%. The other 50% is held by Anglo Platinum. Mineral Resoures and Reserves UG2 Resoures Reserves Mt 3PGE+Au g/t M oz Mt 3PGE+Au g/t Moz Measured Proved Indiated Probable Total Measured and Indiated Total Total Measured and Indiated Inferred PGE = Pt + Pd + Rh Mineral Resoures Merensky Reef Mt 3PGE+Au g/t Moz Measured Indiated Total Measured and Indiated Inferred Modikwa Resoures lassifiation and borehole loality plan 82 ARM Annual Report 2009

85 Kalplats Platinum Projets ARM s attributable benefiial interest in Kalplats operations is 90%. Mineral Resoures Deposit Measured Mt 2PGM+ Au g/t Indiated Mt 2PGM+ Au g/t Measured + indiated Mt 2PGM+ Au g/t Moz Inferred Mt 2PGM+ Au g/t Orion Crux Crater Vela Measured + Indiated Sirius Serpens N Serpens S PGM = Pt + Pd Kalplats Platinum Projets Mineral Reserves and Resoures loality Nkomati Mine ARM Annual Report

86 ARM Coal Goedgevonden Coal Projet ARM s attributable benefiial interest in Goedgevonden s operations is 50%. The other 50% is held by Xstrata. Resoures and Reserves Seam No Measured Indiated Inferred Proved Probable Saleable Resoures within Mine Plan Total Resoures outside of Mine Plan Total Overall Setion showing Goedgevonden Coal Seams 84 ARM Annual Report 2009

87 ARM Exploration ARM s attributable benefiial interest in exploration ventures is 50%. The other 50% is held by Vale. The Otjikoto Gold Projet is an evaluation and exploration projet situated in the Otavi region in Namibia. Mineral Resoures at a 0.4 G/T Au ut-off grade Mt g/t Au Moz Measured Indiated Inferred The Konkola North Copper Projet is situated on the Zambian Copperbelt. Mineral Resoures at a 1% total opper ut-off grade Mt % TotCu Mt Con - tained Cu Measured South Limb Indiated South Limb Total South Limb Inferred South Limb Measured East Limb Indiated East Limb Total East Limb Inferred East Limb Total Measured and Indiated Inferred (mainly area A) The Mwambashi Copper Projet lies in the Zambian Copperbelt on the western edge of the Chambishi Basin. Mineral Resoures at 0.5% total opper ut-off grade Mt %TCu Mt Con - tained Cu Measured Indiated Total Measured and Indiated Inferred Kalumines Properties (DRC) Mineral Resoures Mt %TCu Mt Con - tained Cu Lupoto Measures Indiated Inferred Kasonta Inferred Kasonta south Inferred Niamumenda Inferred Stokpile Gold: Harmony ARM holds a 14.8% stake in Harmony Gold. Harmony, South Afria s third largest gold produer, is separately run by its own management team. Resoures and Reserves of the Harmony mines are the responsibility of the Harmony team and are published in Harmony s Annual Report whih may be aessed on ARM Annual Report

88 Definitions The definitions of Resoures and Reserves, quoted from the SAMREC Code, are as follows: A Mineral Resoure is a onentration (or ourrene) of material of eonomi interest in or on the earth s rust in suh form, quality or quantity that there are reasonable prospets for eventual eonomi extration. The loation, quantity, grade, ontinuity and other geologial harateristis of a mineral resoure are known, estimated from speifi geologial evidene and knowledge, or interpreted from a well onstrained and portrayed geologial model. Mineral Resoures are subdivided, in order of inreasing onfidene in respet of geosientifi evidene, into Inferred, Indiated and Measured ategories. An Inferred Mineral Resoure is that part of a mineral resoure for whih tonnage, grade and mineral ontent an be estimated with a low level of onfidene. It is inferred from geologial evidene and assumed but not verified geologial and/or grade ontinuity. It is based on information gathered through appropriate tehniques from loations suh as outrops, trenhes, pits, workings and drill holes that may be limited or of unertain quality and reliability. An Indiated Mineral Resoure is that part of a mineral resoure for whih tonnage, densities, shape, physial harateristis, grade and mineral ontent an be estimated with a reasonable level of onfidene. It is based on exploration, sampling and testing information gathered through appropriate tehniques from loations suh as outrops, trenhes, pits, workings and drill holes. The loations are too widely or inappropriately spaed to onfirm geologial and/or grade ontinuity but are spaed losely enough for ontinuity to be assumed. A Measured Mineral Resoure is that part of a mineral resoure for whih tonnage, densities, shape, physial harateristis, grade and mineral ontent an be estimated with a high level of onfidene. It is based on detailed and reliable exploration, sampling and testing information gathered through appropriate tehniques from loations suh as outrops, trenhes, pits, workings and drill holes. The loations are spaed losely enough to onfirm geologial and grade ontinuity. A Mineral Reserve is the eonomially mineable material derived from a measured and/or indiated mineral resoure. It is inlusive of diluting materials and allows for losses that may our when the material is mined. Appropriate assessments, whih may inlude feasibility studies, have been arried out, inluding onsideration of, and modifiation by, realistially assumed mining, metallurgial, eonomi, marketing, legal, environmental, soial and governmental fators. These assessments demonstrate at the time of reporting that extration is reasonably justified. Mineral Reserves are sub-divided in order of inreasing onfidene into Probable Mineral Reserves and Proved Mineral Reserves. A Probable Mineral Reserve is the eonomially mineable material derived from a measured and/or indiated mineral resoure. It is estimated with a lower level of onfidene than a Proved Mineral Resoure. It is inlusive of diluting materials and allows for losses that may our when the material is mined. Appropriate assessments, whih may inlude feasibility studies, have been arried out, inluding onsideration of, and modifiation by, realistially assumed mining, metallurgial, eonomi, marketing, legal, environmental, soial and governmental fators. These assessments demonstrate at the time of reporting that extration is reasonably justified. A Proved Mineral Reserve is the eonomially mineable material derived from a measured mineral resoure. It is estimated with a high level of onfidene. It is inlusive of diluting materials and allows for losses that may our when the material is mined. Appropriate assessments, whih may inlude feasibility studies, have been arried out, inluding onsideration of, and modifiation by, realistially assumed mining, metallurgial, eonomi, marketing, legal, environmental, soial and governmental fators. These assessments demonstrate at the time of reporting that extration is reasonably justified. 86 ARM Annual Report 2009

89 GOVERNANCE Balaning the eonomi, soial and environmental aspets of the business within a transparent, ethial orporate governane framework underpins ARM s approah to sustainable development. ARM Annual Report

90 CONTENTS 89 Sustainable Development Report 89 ARM s approah to sustainable development 90 About this report 91 Maintaining sound sustainable governane 91 Adding value to the eonomy 92 Empowering people 94 Striving to improve safety performane 96 Working towards improved oupational health 97 Transforming the workplae blak eonomi empowerment 100 ARM s progress in terms of the Mining Charter 105 Mitigating environmental impat 110 Combating HIV & AIDS 112 Corporate Soial Investment and Loal Eonomi Development 112 ARM s CSI strategy 115 Corporate Governane 126 Remuneration Report 130 Board of Diretors 134 Steering Committee An expanded version of this report an be found at 88 ARM Annual Report 2009

91 SUSTAINABLE DEVELOPMENT REPORT ARM s approah to sustainable development ARM aims to reate long-term value for all stakeholders shareholders and the investment ommunity; joint venture partners; providers of apital; ustomers; employees; suppliers; ommunities; trade unions; government; and business partners by disovering, developing and benefiiating natural resoures. Balaning the eonomi, soial and environmental aspets of the business within a transparent, ethial orporate governane framework underpins ARM s approah to sustainable development, whih is foused on the six pillars represented below. ARM believes these pillars are fundamental to its sustainability as a ompany and that of the industry. THE SIX PILLARS OF SUSTAINABLE DEVELOPMENT AT ARM Safety HIV & AIDS Employment equity & BEE Oupational health Environment Soial investment & loal eonomi development The mining industry is a high impat industry, not just in terms of the environment, but also beause mines have a limited lifespan and this has soial impliations. ARM reognises that the nature of its operations brings with it a partiular responsibility not only to pratie responsible environmental management but also to promote apaity building; enhane employment opportunities, skills development and housing provision; and to drive transformation so that all South Afrians have a stake in and aess to the ountry s abundant mineral resoures. The ICMM s vision is that of a respeted mining and metals industry whih is widely reognised as essential for soiety, and as a key ontributor to sustainable development. ARM s membership of the ICCM was ratified after the lose of the finanial year. ICMM orporate members ommit to implement and measure their performane against ten sustainable development priniples. Further information an be found on the ICMM website: The ARM sustainable development strategy was strengthened this year when the Company was approahed to join the International Counil on Mining and Metals (ICMM). The ICMM provides an international platform for industry and other key stakeholders to share hallenges and develop solutions based on siene and the priniples of sustainable development. Sustainable development presents both opportunities and hallenges. The following pages set out ways in whih ARM is leveraging opportunities to improve overall operational performane and develop solutions to various hallenges inherent in eah of the six pillars. ARM Annual Report

92 SUSTAINABLE DEVELOPMENT REPORT ontinued About this report This report has been prepared in aordane, in as far as possible, with the Global Reporting Initiative (GRI) G3 guidelines. ARM has taken are to uphold the priniples of balane, materiality and omparability, a task made diffiult by the fat that ARM operates aording to a deentralised management framework. F2009 was the first year during whih the proess of gathering omprehensive information on environmental performane ommened and, as a result, suffiient historial data to show trends over a period of a number of years is not available. Similarly, F2009 is only the seond year during whih the GRIbased HIV & AIDS Soreard has been applied to assess the manner in whih HIV & AIDS at ARM s operations has been managed. However, trends related to safety and blak eonomi empowerment over three and four years respetively have been inluded, and where possible, positive and negative trends have been presented on all key issues. This report is aimed at a broad range of stakeholders and aims to present issues material to these stakeholders. The report overs operations in ARM Platinum (with the exeption of Kalplats, a Platinum Group Metals exploration ompany) and ARM Ferrous. ARM Coal is not inluded. All statistis in this setion are represented on a 100% basis. Inputs, impats and outputs Land Land owned: Land disturbed: ha ha Water Water withdrawn: m 3 Energy Utilisation Eletriity: kwh Oil: litres Diesel: litres Emissions CO 2 emissions* SOx: Partiulates: Waste Domesti waste: Industrial waste: Run of mine (ROM) ore: tonnes (smelters only) In the proess of quantifying In the proess of quantifying tonnes tonnes tonnes Prodution volumes Platinum Group Metals ounes Nikel onentrate tonnes Iron ore tonnes Manganese ore tonnes Ferromanganese tonnes Charge hrome tonnes Chrome ore tonnes INPUTS IMPACTS OUTPUTS Water reyled: ubi metres** Land rehabilitated: ha * CO 2 kg figure for all mines not available (mines urrently in the proess of establishing emissions inventories). ** No statistis for water reyled at Khumani (flow meters urrently being installed at Nkomati). 90 ARM Annual Report 2009

93 Maintaining sound sustainable governane Assessing SHE performane External audits of the safety, health and environmental (SHE) performane of all ARM operations were undertaken in the first quarter of F2009 by a team omprising two health and safety legal speialists, two environmental legal and management speialists, an oupational medial speialist and an oupational nurse. ARM s sustainable development poliy is underpinned by the Company s Code of Ethis whih reinfores the priniples of integrity, transpareny and aountability. (Refer page 123 for further details.) A whistleblowing faility allows employees to report breahes of the Code of Ethis to Whistle Blowers, an independent third party, in full onfidentiality. Adding value to the eonomy F2009 Key features at a glane The purpose of the audits was to determine the urrent status of legal ompliane, to ompile SHE risk profiles of eah operation and to identify opportunities for improvement. Ation plans to address the outstanding findings and gaps identified during the audits were ompiled by eah operation and presented at a Group SHE forum held in April A orporate ation plan has been developed in response. R1 399 million paid to employees R1 727 million paid to the state as taxes R4 201 million paid to providers of produts and servies R million in sales R2 808 million reinvested ARM reognises that there is a diret link between strong and aountable governane and a ompany s ability to manage risk and ensure optimal performane. Group value-added statement Group The Sustainable Development Committee (inorporating the Empowerment Committee), a formal Board ommittee, omprises three Non-exeutive Diretors. The Committee assists the Board by reviewing and overseeing safety, health, environmental, HIV & AIDS, employment equity, blak eonomi empowerment and ommunity development poliies, monitoring and evaluating suh poliies and reommending orretive ation where neessary. The Committee ensures that ARM is, and remains, a ommitted soially responsible orporate itizen. Its primary task is to supplement, support, advise and guide management s efforts in respet of sustainable development. In 2009, the Sustainable Development Committee met four times. ARM s CEO, the Chief Exeutives of all operations, the Group Manager: Safety, Health and Environment, the Exeutive: Tehnial Support, the Exeutive: Human Resoures, the Corporate Soial Investment Manager and the Group Risk Manager are invited to attend all Sustainable Development Committee meetings. In terms of ARM s deentralised management approah, all ARM operations and joint ventures are required to develop and maintain their own business-speifi sustainable development poliies, strategies and programmes to meet their unique irumstanes, as well as to give effet to ARM s ommitment to sustainable development. While these poliies have been developed in aordane with the operations speifi requirements, they are required to remain onsistent with the priniples of the Company s poliies. ARM views sustainable development as an integral part of its operations and the issues that are reported on are managed as suh Rm 2008 Rm Sales Net ost of produts and servies Value added by operations Inome from assoiates Exeptional items Inome from investments Applied as follows to: Employees as salaries, wages and fringe benefits The state as taxes Providers of apital Equity dividend Minority interest (198) 460 Outside finane ost Total value distributed Re-invested in the Group Amortisation Reserves retained As a key player in the mining industry, ARM has reated substantial value for investors and has played a signifiant role in transformation and blak eonomi empowerment. The Company also plays an important role in soial development ARM Annual Report

94 SUSTAINABLE DEVELOPMENT REPORT ontinued Empowering people F2009 Key features at a glane Voluntary employee turnover onstant at 4.5% Growth in employment reation of 896 new permanent jobs amounting to 2.4 jobs per day Redution in industrial ation derease in lost man-days from in 2008 to 115 in 2009, a redution of 97.3% Training spend of R57 million amounting to 6% of payroll (F2008: 7.5%) 283 bursaries awarded (F2008: 281) ARM s human apital strategy is to establish the Company as an employer of hoie; aggressively benhmark remuneration with peers; retain, train and develop the talent pool and establish a leadership benh. This is in line with the objetives of the Mining Charter in terms of employment equity and skills development. Apiesdoring Vegetable Projet, Steelpoort through investment in loal ommunities, employment and training opportunities, infrastruture provision, loal business development and payment of taxes. ARM s aim of adding value to all stakeholders is supported by a high level of operational effiieny, demonstrated by the EBITDA margin in F2009 of 44% (F2008: 57%), a strong ash position and low net debt, ongoing investment to ensure quality assets are grown and maximum value realised, and the fat that its high-grade, long-life assets are benhmarked to be at the bottom 50 th perentile of the global unit ost urve by ARM s long-term viability and profitability is based on agility the ability to adapt to prevailing market onditions. Aordingly, in view of unertain market onditions, the Company shut down three high arbon ferromanganese furnaes at the Cato Ridge Works in Deember 2008 and two ferrohrome furnaes at the Mahadodorp Works were also shut down pending a reovery in demand. ARM s approah is to grow through partnerships with key players in various setors to ensure that the Company is at the forefront of tehnologial development and global praties, and has aess to key markets and value-generating growth opportunities. ARM s organi growth projets with partners remain on shedule and within budget. For further details, please refer to the projet pipeline and operations diagram in the Exeutive Chairman s letter to shareholders on page 6. The suess of the strategy is highlighted by the fat that the voluntary average labour turnover in the year under review remained onstant at 4.5%, ompared with a national industry average of around 10%. The Company s aim is to reate a diverse workplae in terms of ulture, gender and generation where employees an ontribute to their best ability and be empowered to develop rewarding areers. ARM employees an expet to be treated with fairness, dignity and respet intimidation and harassment will not be ondoned. Praties and poliies ARM is ommitted to fair labour praties and freedom of assoiation, and poliies are in plae to eliminate unfair disrimination and promote equality. These poliies are in alignment with the South Afrian Constitution, the Labour Relations At, the Employment Equity At and take ognisane of the Universal Delaration on Human Rights and of the Fundamental Human Rights Conventions of the International Labour Organisation (ILO). ARM does not make use of hild labour and does not tolerate inhumane treatment of employees in any form. Comprehensive disiplinary and grievane proedures meet all requirements in terms of fairness and legislation. All these proedures were negotiated with, and signed off by organised labour. ARM subsribes to the priniples of promoting workplae equality and seeks to eliminate all forms of disrimination. No offiial omplaints of disrimination were reeived in F ARM Annual Report 2009

95 Employee profile In 2009, 896 new permanent jobs were reated 2.4 jobs per day. As the graph top right indiates, over a four-year period ARM reated new permanent jobs, whih translates into 1.8 jobs per day. This indiates the tremendous organi growth in ARM s business in terms of reently ompleted projets and apital projets being onstruted, and is aligned with ARM s 2 x 2010 strategy and beyond. The bulk of growth in employee numbers took plae at Khumani, Nkomati and Dwarsrivier. Growth in employee numbers at the latter operation was due to several ontrator employees beoming full-time employees. Contrator numbers are driven by three large apital projets Blak Rok (new plant), Khumani (seond phase) and Nkomati (expansion projet). Unfortunately, due to inreasingly tight margins, retrenhments in the year under review were inevitable. During the year, some 25% of the workfore, inluding ontrators, had to be retrenhed. Union representatives were onsulted extensively and retrenhments were kept to a minimum by alloating resoures to growing operations and by realloating shifts at Modikwa to an 11- day fortnightly yle from ontinuous mining operations (onops). Managing labour A total of 77% (2008: 76%) of the workfore is unionised and ARM has reognition agreements with four major unions: NUM (The National Union of Mineworkers), NUMSA (National Union of Metal Workers of South Afria) (smelter industry), Solidarity and UASA (United Assoiation of South Afria). Wages and onditions of employment are negotiated at operational level. At five operations, the last instalments of two- and three-year wage agreements were implemented without the need for negotiation subsequent to the original agreements. In 2010 these will have to be negotiated again. Wage negotiations at Dwarsrivier are in progress, and Two Rivers and Nkomati have settled for the 2009/2010 finanial year. Suess in building sound relationships with employees and the representative trade unions is indiated by the fat that work stoppage inidents dereased from 11 in 2008 to 3 in 2009, and lost man-days in 2009 amounted to 115 ompared with in Managing talent Career paths in terms of business proess and disipline, together with minimum requirements and skills matrixes are a fous area throughout ARM. The Company s aim is to help all employees reah their full potential, ahieve job satisfation and maximise their ontribution. ARM is in the proess of developing an integrated management system whih inludes areer management proesses. The intention is to trak progress entrally. ARM Annual Report

96 SUSTAINABLE DEVELOPMENT REPORT ontinued ARM s suession needs and talent profiles are reviewed annually, gaps are identified and individual development plans updated during the performane review yles aross all operations. A three-tiered approah is being followed to ensure apaity building aross ARM, namely: Identifiation, mentoring and fast-traking of talented employees urrently employed; Mentoring and development of new graduates (15 in F2009, 12 members of the F2008 group of 22 were absorbed by the operations); and Bursary shemes and study assistane. In 2009, ARM spent R57 million on training, amounting to 6% of pensionable payroll. The redution of 1.5% as a perentage of payroll from 2008, when spend amounted to R58 million, was due to prevailing eonomi onditions. However, the amount spent in 2009 still represents a signifiant inrease on 2007, when spend of R27 million amounted to 3.4% of payroll. Striving to improve safety performane F2009 Key features at a glane Five fatalities Redution in reportables, LTIs and fatalities LTIFR dereases from 6.08 in 2008 to 3.68 in 2009 Two Rivers passes the 1 million fatality free shift mark Modikwa ahieves 5 million fatality free shifts and wins the ARM Exellene in Safety award South Afrian mining establishments are in the main labour intensive when ompared with similar operations in other ountries, whih means that a greater number of workers are exposed to health and safety risks. This is ause for extreme aution. ARM believes that safety is not just a moral imperative, but that poor safety standards an have a diret impat on morale, produtivity and ultimately, operational sustainability. Similarly, learnerships, whih inreased from 257 in 2007 to 286 in 2008, dereased to 204 beause of the eonomi downturn. This was ountered by an inrease in bursaries and study assistane, from 49 in 2007 to 281 in 2008 and to 283 in the year under review. The ARM graduate programme plays an important role in growing the Company s talent pool. The programme started in 2007 when 22 graduates were employed with the aim of training them in the required ompetenies to allow them to be appointed in management positions as metallurgists, setion managers and prodution engineers in the first half of The programme, whih started in 2006, has proved to be extremely suessful. Of the total of 27 historially disadvantaged South Afrian (HDSA) graduates on the programme to date, 17 are male and 10 are female. Further details of training and development are ontained in the table on pages 100 to 104. Corporate struture and reporting lines ARM Board Exeutive Chairman CEO ARM ARM JV Exo JV Steering Committee Group Manager Safety, Health & Environment JV partner JV partner Stakeholder engagement at a glane Earning the trust of the ommunities in whih the Company s operations are situated is a vital aspet in gaining aess to resoures and liene to operate. This is ahieved through extensive stakeholder engagement in the ommunities where ARM s mining operations are situated. Eah ARM operation engages with stakeholders in a unique manner appropriate to speifi needs and onerns. Mining Operations Smelters The nature of engagement, key issues and follow up ations an be found in the Sustainable Development report on the ARM website, Mine Health and Safety At (last amended 2008) Oupational Health and Safety At 94 ARM Annual Report 2009

97 Key safety issues in the past year inluded falls of ground (FOG); self-propelled moving mahinery; fires, gases and explosions; as well as exposure to noise. ARM s target is to eliminate all fatal aidents and to ahieve an improvement yearon-year in the key safety indiators aligned with the Department of Minerals and Resoures milestones for improving health and safety in the mining industry. In addition, as a member of the Chamber of Mines and ICMM, ARM partiipates in industry forums in whih health and safety best praties are shared with a view to improve performane in this area. Eah operation has a poliy whih enapsulates ARM s ommitment to provide safe working onditions and appropriate training, as well as mutual o-operation in implementing the poliy and improving performane. Leaders throughout ARM onstantly highlight the fat that safety-based standards and proedures are non-negotiable, and emphasise the fat that avoiding fatal aidents starts with reduing the number of inidents and lost time injuries. Regretfully, ARM suffered five fatalities in the year under review. The first fatality was at Khumani, where a ontrated seurity guard, Mr Simon Nvelele, made a fire in a drum in the guardroom and subsequently died of arbon monoxide poisoning. The seond inident ourred at Nkomati, when a ontrator driver, Mr Wessel Borotho was buried by ore when a stokpile base failed, ausing a rokslide. A ontrator rok drill operator, Mr Mawanda Ntobovi, was killed by a FOG at Dwarsrivier. Mr Modisaotsile Elliot Morwe was killed when two dump truks ollided on the road near Khumani Mine and a miner, Mr Ruan Feast, was killed by a FOG at Blak Rok s Nhwaning mine. The ARM management team expresses its deepest ondolenes to the families, friends and olleagues of the people who lost their lives. Exellent ommuniation and a good understanding of risk and how to eliminate or mitigate the risk, has led to an improvement in safety performane as indiated in the graphs above. Injuries are analysed to determine any training or proedural gaps in the proess and appropriate interventions are implemented. Two internal safety ompetitions help to entrenh a ulture of safety and reognise good safety performane. These are the Santa Barbara Award, a floating trophy awarded to any operation that ompletes one million (or a multiple thereof) fatality free shifts, while the winners of the Exellene in Safety ompetition are seleted annually based on a weighted average of differential LTIFR data over the previous three finanial years. Modikwa Platinum Mine emerged as the winner of the Exellene in Safety award in Reipients and runners-up of the Santa Barbara trophy are detailed in the Sustainable Development report on ARM Annual Report

98 SUSTAINABLE DEVELOPMENT REPORT ontinued All ARM operations perform medial surveillane in ompliane with legislation Working towards improved oupational health F2009 Key features at a glane Management of noise-indued hearing loss (NIHL) a priority oupational health fous audiometri tests onduted, with 133 people (0.3% of those tested) referred for further testing and 36 ases (0.085%) referred for ompensation Inrease in bakahe and hypertension ases, mostly primary health related ARM s mining operations vary in respet of the ore body and mining method applied (open ast and underground), the degree of mehanisation and limati onditions, all of whih impat the level and type of potential hazards in eah workplae. While the diverse operations present different hazards in respet of oupational health and hygiene, and while ARM s management model is deentralised, a ommon denominator is the understanding that reduing and managing health risks are ritial funtions at all operations. All operations perform medial surveillane in ompliane with legislation. Baseline medial examinations are onduted on entry, at exit and on an annual basis during the period of employment. Prevention of noise-indued hearing loss is the priority risk for most divisions. Other oupational health risks inlude heat stress, tuberulosis (TB), dust, gas and fume exposure, as well as hand/arm vibration syndrome. In the year under review, mahinery and hand tools aounted for the highest number of injuries throughout the Group. This is learly an area that will need to be addressed going forward. Wellness programmes to reate awareness of hroni disease (inluding TB, sexually transmitted diseases and other HIVrelated opportunisti infetions) are run by eah operation. A orporate wellness model is being developed, starting with preparation of a database for more aurate information integration between the various operational oupational health servie providers, medial aids and hroni disease management servie providers. In the year under review: From a total of audiometri tests onduted, 133 ases (0.3%) were referred for further audiometri testing during the year, of whih only 36 (0.085%) of these ases were submitted for NIHL ompensation The most ommon illnesses diagnosed (inluding hroni and primary health related diseases) during the year were upper respiratory trat infetions (9 427) and bak/musular/skeletal ahe (5 240 ases). While upper respiratory trat infetion follows a seasonal trend, bakahe and hypertension ases, whih are generally related to primary health are and are hroni, rather than oupational diseases are steadily inreasing During the year, 138 new TB ases were identified. These ases are individually traked and managed by operations and reeive treatment for six months, after whih they are removed from the list if delared fit, thereby dereasing the total of existing TB ases at the end of June 2009 to ARM Annual Report 2009

99 The management of safety, HIV & AIDS and oupational health are interlinked. All employees are trained on oupational health and safety during indution, with ongoing training taking plae throughout the year. Health and safety training and the funtions of health and safety representatives and ommittees are established in onsultation with trade unions. All ARM Ferrous operations have ahieved ISO 9001, ISO and OHSAS ertifiation. In terms of ARM Platinum, Nkomati expets to ahieve ISO 9001, ISO and OHSAS ertifiation by November Two Rivers aim is to ahieve OHSAS and ISO ertifiation by Deember 2010 and September 2012 respetively, and Modikwa expets to be re-ertified to ISO and OHSAS standards in 2011 (ertifiates were allowed to lapse due to finanial onstraints). The table in the orresponding setion of the Sustainable Development report on presents a onsolidated overview of eah mine s level of safety, health and environmental ertifiation, safety ahievements and inidents, and also sets out eah operation s speifi approah to managing oupational health and safety in the workplae. Transforming the workplae blak eonomi empowerment (BEE) F2009 Key features at a glane 55% blak ownership 43% HDSAs in management 12% of total workfore is female Inrease in ABET students Suess of Women in Mining intervention Khumani Mine wins the Housing Projet of the Year award from the South Afrian Housing Foundation ARM is promoting the inlusion of women in the workplae through initiatives suh as Women in Mining ultimate responsibility for driving BEE throughout ARM. Steady progress has been made. ARM has exeeded the Charter s targets of 40% HDSAs in management and 10% female employees by 2009 by 3% and 2% respetively, and blak ownership of ARM urrently stands at 55%. A ase study detailing this award is available in the Sustainable Development report on the ARM website, % BEE prourement ahieved improvement of 11.3% year-on-year ARM is ommitted to omplying with the spirit and the letter of the Mining Charter. This ommitment involves ontributing to broadening the base of the South Afrian eonomy and promoting partiipation in the eonomy by all itizens without this partiipation, ARM believes neither the Company nor the eonomy are sustainable. In keeping with this approah, the Board approved the merging of the Empowerment and Sustainable Development Committees in The resulting Sustainable Development Committee has Mining has traditionally been a male-dominated industry. ARM is promoting the inlusion of women in the workplae through initiatives suh as Women in Mining. Due to the physially demanding nature of the mining industry, the operations fae hallenges in as far as employing disabled persons. However, there are ongoing endeavours to plae disabled employees in suitable positions. Earlier this year South Afria s new Minster of Mining, Susan Shabangu said: I must emphasise that the ommitments of the Charter are not intended for ompliane purposes only. They do not have a shelf life ending in 2014, but are intended to permanently transform the industry to be truly refletive of South Afria. ARM wholeheartedly endorses the Minister s sentiments and the Company s progress in employment equity, prourement and the Charter targets are set out on the following pages. ARM Annual Report

100 SUSTAINABLE DEVELOPMENT REPORT ontinued Employment equity statistis F2009 F2008 F2007 F2006 Board presentation Blak Diretors on the Board 53% 50% 50% 53% Women on the Board 13% 13% 13% 12% Senior Management Top Management who are blak 44% 50% 50% 50% Top Management who are women Nil Nil Nil Nil Senior Management who are blak 32% 30% 19% 19% Senior Management who are women 13% 12% 11% 10% Steering Committee members who are blak* 45% 43% 40% 43% Steering Committee members who are women* 20% 24% 20% 14% Skilled employees Professionally qualified employees who are blak 47% 34% 34% 30% Professionally qualified employees who are women 18% 14% 15% 12% Tehnially qualified employees who are blak 56% 54% 49% 43% Tehnially qualified employees who are women 10% 9.5% 8% 7% All employees Total employees who are blak 85% 84% 84% 83% Total employees who are women 12% 10.6% 9% 7% * Comprises members from Top and Senior Management. Promoting BEE prourement Approah ARM is ommitted to bringing HDSAs into the mainstream of the eonomy by identifying, developing, failitating and availing business opportunities to Broad-Based Blak Eonomi Empowerment (BBBEE) suppliers at all its operations. ARM s prourement transformation ahievements should be read in onjuntion with the ARM and Group Operations Corporate Soial Investment (CSI), Loal Eonomi Development (LED), Soial and Labor Plan (SLP), and Small to Medium Enterprise (SME) initiatives (detailed in the full Sustainable Development report on as well as with ARM s signifiant ontribution to its BEE Trusts (refer to page 7 of this report). ARM s BEE prourement poliy is ommerially driven and informed by appropriate qualifying riteria. In many instanes, the ARM Group and its operations may be onsidered as both a produer and as a supplier. Consequently, ARM reports in terms of both the Department of Minerals and Resoures (DMR, formerly DME) (BEE) and the Department of Trade and Industry (dti) (BBBEE) formats. The DMR issued new requirements in regard to its BEE reporting requirements in April ARM is partiipating in ongoing industry-wide onsultation with the DMR in order to understand the full impat of the new reporting requirements. ARM s preferential prourement objetives an be found in the Sustainable Development report on The two biggest BBBEE hallenges urrently faed by ARM s operations are: The ontinued all for valid verified BBBEE areditation ertifiates from all suppliers in finanial 2009/10 (urrently, more than 50% of ARM s supplier base falls outside the BBBEE net. If 25% of these vendors were aredited, the ARM BBBEE prourement statisti ould very well inrease to above 60%). To ontinue to enourage suppliers to maintain their BBBEE status by means of annual areditation through dti-approved verifiation agenies (in this regard any ontrat renewals should be onditional on maintaining and improving the suppliers BBBEE status). Note: Unless otherwise stated, prourement data exlude statistis from Modikwa (this data is separately managed by Anglo Platinum), ARM Coal (this data is managed by Xstrata Coal) and Vale/ARM joint venture (as this is a new business entity, there are no statistis available). Performane BEE prourement F2009 Total prourement R Total disretionary spend (Total prourement less exluded vendors) R Total aredited prourement R ARM Annual Report 2009

101 Inluding FY2009 expenditures at Modikwa (around R1 billion) and Goedgevonden (around R2 billion), ARM s total prourement during the past year on a 100% basis, was approximately R15 billion. During FY2009, the quarterly BBBEE prourement levels (as a perentage of total disretionary prourement) flutuated at between 35.3% and 42.9%, aggregating at 37.3% for the year. This means that BBBEE prourement has progressively inreased from 21.6% (FY2006) to urrent levels. In terms of the dti s preferential prourement soreard, ARM sored out of a possible total of 20. ARM s BEE performane at 40.8% in the fourth quarter of FY2009 ompares favorably with the mining industry s self-imposed target of 40% for alendar 2010, while the benhmarking table below indiates that ARM s BEE prourement is positioned well above the average for other ompanies measured by the DECTI rating ageny. Benhmarking the ARM Group with other mining houses and ompanies measured by DECTI DECTI Average ARM F2009 Average Narrow-based (sample of +6 mining houses) 32% 37.3% Broad-based dti sore (sample of +40 ompanies) 12 points points DECTI and funded by the individual operations. DECTI s urrent sope inludes: Interventions with the operations prourement management teams to drive BBBEE targets and with key suppliers to drive ARM s operational BBBEE targets; Maximising BBBEE performane by targeting key suppliers for areditation; The identifiation of alternate qualifying suppliers; and Independent third party verifiation of ARM s BBBEE statistis on a quarterly and on an annual basis (based on monthly operational BBBEE reporting). The inadequate flow of verified aredited BBBEE ertifiates from a number of the operations understated the BBBEE performane for the first three quarters of F2009. This was orreted by fousing on the top suppliers at eah of ARM s operations to ensure, firstly, the availability and, seondly, the validity of BBBEE ertifiates. The outome of these endeavours by DECTI and the operations is generally refleted in the inrease in the BBBEE performane through the year under review. For purposes of onsisteny all business units are enouraged to inlude the BBBEE ertifiate as issued by DECTI, in their monthly management reports. The DECTI ertifiates learly identify: Verified aredited BBBEE data (in aordane with dti reporting requirements); Narrow-based BEE data (in aordane with the narrowbased DME Mining Charter requirements, inluding expired ratings); and dti BBBEE soreard status. Going forward ARM s aim is to proure at least 40% of its apital goods, servies and onsumables from BBBEE suppliers in alendar In F2010, DECTI will again assist ARM in reviewing the requirements of the new DMR reporting requirements and hosting a number of regional supplier prourement workshops. DECTI will ondut ongoing operational visits targeting those business units most in need of orreting their BBBEE sores. Centralised BBBEE buyer training workshops will also be hosted at ARM to inlude all of the Group operations. Further graphs detailing BEE & BBBEE performane an be found in the Sustainable Development report on Centralising the development of BBBEE initiatives In 2005, ARM appointed DECTI, an independent rating ageny, to provide a entralised servie to assist in the development of its BBBEE initiatives, in addition to servies already provided by With the exeption of ARM s BBBEE statistis, as holistially and independently reviewed by DECTI, ARM s dti GRI soreard analysis in F2010 will take ognisane of all of the other metris gathered via the ARM Human Resoure (HR) funtions. ARM and its operations will strive to ensure that suppliers omply with the Mining Charter soreard requirements and also to the dti s reporting requirements through F2010. ARM Annual Report

102 SUSTAINABLE DEVELOPMENT REPORT ontinued ARM s progress in terms of the Mining Charter The Charter targets ARM s progress to date The way forward Human resoures development Has the Company offered every employee the opportunity to be funtionally literate and numerate by the year 2005 and are employees being trained? Has the Company implemented areer paths for HDSA employees inluding skills development plans? Has the Company developed systems through whih empowerment groups an be mentored? Literay Overall, ARM operations literay is urrently reported at 84.37%, with Mahadodorp the highest at 100% and Blak Rok the lowest at 63%. Aess to nationally aligned ABET is available at all of the operations. Most of the operations have rolled out e-learning ABET delivery whih is very popular with the students, and the pass rate has inreased signifiantly sine learning is self-paed and not failitator dependant. Members of the ommunity also attend ABET workshops, whih have shown a steady inrease in attendane, from 245 students in F2007, 312 students in F2008 and 573 students in F2009 (inluding 180 ommunity members). Internal training Four operational training entres (Beeshoek, Blak Rok, Modikwa and Nkomati) are aredited with the Mining Qualifiations Authority (MQA), a Setor Eduation Training Authority (SETA) for the Mining and Minerals Setor. External training ARM human resoures development professionals are ontributing signifiantly to the setoral transformation proess through their diret involvement with various ommittees and bodies at Chamber of Mines (COM) and MQA level. Workplae skills plans overing all HDSA employees were submitted individually by eah operation to the MQA. Career paths are available for eah disipline/department at all operations. HDSA employees earmarked for suession have individual development plans. Coahing by an employee s diret supervisors forms part of the supervisors key performane indiators (KPIs). The manager one level up is expeted to engage with eah team member on a quarterly basis. During these sessions, organisational progress and the individual s progress and needs are foused on. Prodution supervisors have been trained to oah and assess on-the-job performane and doument progress. All training/human resoures staff are trained in terms of the Eduation, training and development praties (ETDP) national skills programmes inluding failitation of learning, assessment and moderation proesses. There were 204 learnerships in 2009 and 283 bursaries awarded (251 to internal andidates and 32 to external andidates). ARM is ommitted to bringing HDSAs into the mainstream of the eonomy by identifying, developing, failitating and availing business opportunities to BBBEE suppliers at all its operations. ARM s prourement transformation ahievement should be read in onjuntion with the ARM and Group Operational CSI, LED, SLPs and SME in the full sustainable development report on as well as ARM s signifiant ontribution to its BBEE Trusts (refer to page 7 of this report). ABET will ontinue to be a fous until we have ahieved 100% literay throughout ARM and the surrounding ommunities. Dwarsrivier and Two Rivers are expeted to ahieve areditation in the forthoming finanial year. ARM is in the proess of developing an integrated management system whih inludes areer management proesses. The intent is to trak progress entrally. In keeping with ARM s transformation and skills development agenda, this will ontinue to be a key fous going forward. 100 ARM Annual Report 2009

103 The Charter targets ARM s progress to date The way forward Employment equity plan Has the Company published its employment equity plan and reported on its annual progress in meeting that plan? Has the Company established a plan to ahieve a target for HDSAs? Has the Company identified a talent pool and is it fasttraking it? Has the Company established a plan to ahieve the target for women partiipating in mining, of 10% within the five years, and is it implementing the plan? Migrant labour Has the Company subsribed to government and industry agreements to ensure nondisrimination against foreign migrant labour? All ARM operations submit their equity plans to the Department of Labour after thorough analyses and onsultation with management and unions. Current HDSA representation in management is 43% aross ARM and in top and senior management, 33%. A full ARM manpower plan is used to establish and manage targets. In addition to the initiatives outlined below, ARM has a graduate programme with 15 graduates urrently on the programme. In addition, ARM is using parallel appointments to fast-trak HDSA employees. ARM has initiated a Women in Mining development programme, and five andidates have been earmarked for fast-traking and 12 for mentorship. These 17 individuals were identified by the Human Resoures Department as having the potential to be aelerated into senior management and exeutive leadership roles. In addition, six andidates are being developed from lower levels. For a ase study detailing further initiatives, refer to the full Sustainable Development report on The Company s omplement of foreign migrant labour is 3% of the total workfore. All foreign labour employed at operations, are legal immigrants with valid work permits. All operations within ARM subsribe to the priniples of promoting workplae equity and seek to eliminate all forms of disrimination. The terms of employment for foreign labour are the same as for loal labour. No offiial omplaints of disrimination were reeived in the year under review. The employment equity plan will ontinue to be revised and updated to ensure it is in line with existing legislation. ARM aims to ahieve 45% HDSA representation aross its operations by The KPIs and inentive bonuses of senior management are linked to meeting targets. By the end of F2010, the aim is to have identified eah andidate s personal development objetives in terms of strategi leadership, and to have addressed any developmental gaps by mentoring and oahing interventions. This will ontinue to be ARM s approah going forward. ARM Annual Report

104 SUSTAINABLE DEVELOPMENT REPORT ontinued The Charter targets ARM s progress to date The way forward Mine ommunity and rural development Has the Company o-operated in the formulation of integrated development plans and is the Company o-operating with government in the implementation of these plans for ommunities where mining takes plae and for major sending areas? Has there been effort on the side of the Company to engage the loal mine ommunity and major labour sending area ommunities? Companies will be required to ite a pattern of onsultation, indiate money expenditures and show a plan. Housing and living onditions For ompany-provided housing has the mine, in onsultation with stakeholders, established measures for improving the standard of housing, inluding the upgrading of hostels, onversion of hostels to family units and promoted home ownership options for mine employees? The Company will be required to indiate what they have done to improve housing and show a plan to progress the issue over time and is implementing the plan. Khumani s SLP has been approved and audited by the DMR. It ontains 57 ore ommitments of whih approximately 42 have been implemented suessfully. The operation was audited in June 2009 and the DMR s response is pending. All other mines* have all submitted SLPs and are awaiting the DMR s response. LED forms part of the SLPs. Various stakeholders are onsulted and engaged to deliver the LED and ommunity upliftment goals. These goals were derived through onsultation with the benefiiaries as well as the muniipal leaders. Benefiiaries of the LEDs reside in and around eah of the operations labour sending areas. At the operations, progress is traked via a soioeonomi/transformation ommittee omprising management, unions and ommunity representatives. All operations are resoured with ompetent transformation leadership and staff to ensure delivery of the SLP targets and sound stakeholder relations. Liaison/ommuniation strutures are established and operational in all the operations. LED projets suessfully delivered in the year inluded support for ommerial farming, provision of water sanitation and eletriity, roads and ommunity entres. LED spend in F2009 was R28.5 million (2008: R13 million). In total, ARM spent R60 million on ommunity upliftment and soial investment in F2009. The key elements of ARM s housing poliy inlude the promotion of home ownership and the failitation of housing governane strutures to provide for effetive onsultation with relevant stakeholders. By paying our employees within the 75 th perentile of the market our remuneration strategy is geared towards ensuring affordability of housing. Only Dwarsrivier and Blak Rok still have traditional hostels in whih a small perentage of the workfore is housed. Both operations are urrently embarking on housing strategies to lose these hostels over the medium-term. A delivery model implemented for Khumani reeived the Housing Projet of the Year award from the South Afrian Housing Foundation in the ategory of over R per unit. We will ontinue to promote ommunity and rural development. ARM s long-term strategy is to implement this delivery model at all existing and future operations. * Beeshoek, Blak Rok, Dwarsrivier, Modikwa, Nkomati and Two Rivers. 102 ARM Annual Report 2009

105 The Charter targets ARM s progress to date The way forward Housing and living onditions ontinued For ompany-provided nutrition has the mine established measures for improving the nutrition of mine employees? Companies will be required to indiate what they have done to improve nutrition and show a plan to progress the issue over time and implement the plan. Hostel residents pay for their food and there is ongoing onsultation regarding the menus. Menus are upgraded on a regular basis with advie from dietiians. On an operational basis, fatigue has been identified as a safety risk. Aordingly, some operations provide prodution employees with a meal supplement per shift. ARM will ontinue to provide meal supplements to help ombat fatigue, where required. Prourement Has the mining ompany given HDSAs preferred supplier status? Has the Company identified the urrent level of prourement from HDSA ompanies in terms of apital goods, onsumables and servies? Has the Company indiated a ommitment to a progression of prourement from HDSA ompanies over a three- to fiveyear time frame ito goods, onsumables and servies and to what extent has the ommitment been implemented? ARM is ommitted to bringing previously disadvantaged South Afrians into the mainstream of the eonomy by identifying, developing, failitating and availing business opportunities to BBBEE suppliers at all its operations. In addition, LED projets omprise a apaity building and mentoring phase for new small, medium and miro enterprises (SMME) entrants as well as relevant portable skills development (on-the-job training). BEE-preferred suppliers are supported and mentored to ontribute to transformation. BBBEE prourement (as a perentage of total disretionary prourement) was 37.3% in F2009 (F2008: 26%)*. ARM s BEE prourement has inreased steadily over the past few years. The Company s level of BEE prourement is hindered by the fat that many of its vendors have not ahieved formal areditation status. ARM plans to drive formal areditation at all its operations. ARM plans to inrease BEE prourement to 40% by 2010 and 42.5% by Ownership and joint ventures Has the Company ahieved HDSA partiipation in terms of ownership for equity or attributable units of prodution of 15% in HDSA hands within five years and 26% in 10 years? ARM has a 55% blak ownership base. Afrian Rainbow Minerals & Exploration Investments (Pty) Ltd (ARMI) holds approximately 41%. The sole shareholder of ARMI is a ompany whih is owned by trusts established for the benefit of Mr Patrie Motsepe and his immediate family. The remaining 14% is held by the ARM BBBEE Trust, omprising hurh groups, union representatives, broad-based provinial and women upliftment trusts as well as ommunity, business and traditional leaders. At an operational level, ommunities surrounding the Modikwa operation own a 17% stake in ARM Mining Consortium Ltd whih in turn holds a 50% stake in Modikwa. * Disretionary prourement: total prourement less prourement from publi setor vendors (rates and taxes, utility servie providers, aademi institutions and sponsorships). ARM Annual Report

106 SUSTAINABLE DEVELOPMENT REPORT ontinued The Charter targets ARM s progress to date The way forward Benefiiation Has the Company identified its urrent level of benefiiation? Has the Company established its baseline level of benefiiation and indiated the extent that this will have to be grown? Reporting Has the Company reported on an annual basis its progress towards ahieving its ommitments in its annual report? * See table below: In identifying its levels of benefiiation, ARM has not taken into aount the first two stages of value-addition (i.e. mining and onentrating), and has only alulated benefiiation levels in the proessing and refining stages of the benefiiation proess. Through its partiipation in Assmang Limited, ARM has a 50% interest in two smelting operations, namely Cato Ridge Works (whih benefiiates manganese ore), and Mahadodorp Works (whih benefiiates hrome ore). Prodution dropped in F2008 due to the explosion of furnae number 6 at Cato Ridge Works in February 2008, whih resulted in prodution at all furnaes being stopped for a period of time. Simultaneous eletriity supply shortages also affeted prodution. During F2009, the global eonomi slowdown resulted in a signifiant fall in global demand for these ommodities and prodution was redued aordingly. The baseline of benefiiation has been established at F2004 prodution levels.* There are urrently no established riteria to offset the value of benefiiation levels against HDSA ownership ommitments as envisaged in the Mining Charter. However, ARM has met and exeeded all of the HDSA ownership levels presribed by the Mining Charter. ARM reports on progress in the Sustainable Development report whih forms part of the Annual Report in terms of the Mining Charter requirements, and is building on the proess of reporting in terms of the Global Reporting Initiative (GRI) G3 guidelines. Unertainty of power supply is hindering planned benefiiation projets. ARM will ontinue to use external benhmarks to monitor progress. Prodution volumes (tonnes) F2004 F2005 F2006 F2007 F2008 F2009 Manganese Alloys HCFeMn SiMn Metal Reovery Plant Refined FeMn Chrome Alloys Chrome (furnaes) Refined FeMn ARM Annual Report 2009

107 Mitigating environmental impat F2009 Key features at a glane National Energy Effiieny Campaign drives ARM s energy initiatives Co-generation opportunities urrently being investigated Emissions inventories ompiled for the smelters Water management prioritised: at Dwarsrivier, 100% of dewatered water is reyled; at Blak Rok, 60% of water is reyled; at Two Rivers, 50% of tailings water and water dewatered underground is reyled Integrated waste management plans at eah site Inreasing fous on biodiversity management The granting of prospeting and mining rights and the subsequent environmental management at mines fall within the domain of the Minerals and Petroleum Resoures Development At (MPRDA). This provides the legal framework for radle-to-grave environmental management at mines through the environmental management programme authorisation (EMPR). The requirements of the MPRDA are appliable in parallel to the requirements of the Environmental Conservation At (1989), the regulations of the National Environmental Management At (1998) and its amendments (At no 62 of 2008), as well as the National Heritage Resoures At (1999). All operations omply with this legislation. ARM s membership of the International Counil on Mining and Metals (ICMM) was onfirmed in August ARM shares the ICMM s ommitment to seek ontinual improvement of environmental performane, ontribute to onservation of biodiversity and integrated approahes to land-use planning as well as to failitate and enourage responsible produt design, use, re-use, reyling and disposal of produts. ARM reognises that mining is a high-impat ativity in terms of the environment and onsequently aims to mitigate its impat as far as possible through the implementation of environmental management systems suh as ISO The Company works losely with regulatory authorities in applying sustainable mining methods. Details of ISO ertifiation are ontained in the Sustainable Development report on The environmental hallenges faing ARM inlude limate hange; resoure management, in partiular water and energy; biodiversity onservation and land management; emissions and dust; air quality; waste and tailings management; as well as rehabilitation and losure planning. Energy and emissions Energy has a signifiant impat on operational and finanial effiieny. In addition, uninterrupted power supply is ritial for ARM reognises that mining is a high-impat ativity in terms of the environment and onsequently aims to mitigate its impat safety in underground mines. This makes the business ase for intensive management of energy use ompelling, partiularly as inreased energy effiieny also ontributes to a redution in greenhouse gases (GHGs). All operations are signatories to the National Energy Effiieny Campaign whih reognises that improvements in energy effiieny are fundamental to South Afria s sustained eonomi growth and development, and international ompetitiveness. Commitments in terms of the initiative inlude atively monitoring usage to failitate redutions over time; onduting awareness ampaigns; appointing an aountable member of staff to take responsibility for energy effiieny; and o-operating with government and other stakeholders to develop and review interventions to assess national energy hallenges. At ertain sites, generators have been installed to address short-term energy shortages and various initiatives have been explored. These range from fitting solar panels for geysers in new buildings to installing more energy effiient motors and moving shifts and servie times away from peak times. Other measures inlude introduing new ventilation start-up proedures and reviewing ventilation requirements, optimisation of ompressed air usage, as well as optimisation of onveyor belts, running and sequening. Consideration is being given to using alternative soures of energy and o-generation opportunities urrently being investigated inlude utilisation of surplus arbon dioxide (CO 2 ) gas. In planning new projets and expansions, energy effiieny is a priority fous. ARM Annual Report

108 SUSTAINABLE DEVELOPMENT REPORT ontinued Outline of the environmental management system at ARM ARM BOARD Audit Committee Risk Committee Annual management review attended by the heads of all business units fouses on improving urrent praties. Traking: audits (internal annually and external bi-annually) and regular inspetion. These result in raising of non-onformanes thereby failitating orretive and preventative ations. Sustainable Development Committee Consultants are ommissioned when neessary to assist in implementing reommended tools (through legislative requirements and new international best praties). Communiation of environmental plans to all stakeholders. Evironmental poliy (integrated with safety, health and quality) sets out ommitments in respet of good environmental praties, inluding pollution prevention and legal ompliane. Environmental planning: Impat assessment for all newly planned ativities. Environmental manual, proedures, instrutions and douments inluding ISO mandatory proedures, operational proedures suh as waste and spill management as well as legal and aspet registers. Environmental Impat Assessment (EIA) and regulations Environmental Management Programme Report Environmental Conservation At National Environmental Management At National Heritage Resoures At National Water At National Environmental Management Air Quality At International Counil on Mining and Metals 106 ARM Annual Report 2009

109 Emissions inventories whih inlude emission quantifiation and a point soure inventory for the smelting operations are ompiled annually in keeping with legislation. Pollutants speified inlude nitrogen dioxide, arbon monoxide, hydroarbons, sulphur dioxides and GHGs. The auray of this inventory is assessed using a methodology whih inludes modelling, monitoring and alulating by means of mass balanes. The emissions are then monitored and the model used for emission inventories is heked and re-alibrated if neessary. The six primary GHGs are CO 2, methane (CH4), nitrous oxide (N 2 0), hydrofluoroarbons (HFCs), perfluoroabons (PFCs) and sulphur hexafluorides (SF6). Exept for CO 2, none of these are produed by any of ARM s operations, although naturally ourring methane may be exposed by mining operations. This is an explosion hazard in the mining industry and monitoring for methane ourrene underground takes plae on a ontinuous basis. In terms of Sope 1 (diret CO 2 emissions), CO 2 is generated by both smelter operations as a result of arbonaeous redutants in the smelting proess. As the Company purhases signifiant amounts of energy whih is generated by oal, levels of Sope 2 (indiret emissions from purhased energy) emissions are high. Sope 2 emissions are also generated by transporting ores at the mines. Sope 3 emissions arise from fuel-driven vehile emissions as a result of ARM s employees, ontrators and servie providers, who undertake traveling diretly or indiretly related to the business of the Company. Sope 3 emissions also relate to emissions indiretly related to the selling of ores and related produts inluding fumes and dust from alloy smelters whih use ferrohrome and ferromanganese in prodution of alloys; as well as smelters and refineries whih proess the ore from our mines. Other emissions potentially aused by ARM s operations inlude: Smelters: Sulphur dioxides, nitrous oxides and total partiulate matter (whih inludes dust) emissions aused by smelting of ore and redution proesses in the ar furnaes and assoiated pelletising plants; and Mines: total partiulate matter emissions as a result of blasting, rushing, transport, onveying, sreening and handling of ore as well as H 2 0 emissions as a result of ventilation. The redution of dust levels is a priority for ARM. At Cato Ridge Works, for example, there has been onsiderable expenditure on a dust redution, suppression and aptivating system on the rushing and sreening plant. Some operations have established emissions redution targets. ARM Annual Report

110 SUSTAINABLE DEVELOPMENT REPORT ontinued Surfae water sampling as part of operational water management in aordane with WUL Water The Company uses water in mining, smelting and refining. Water availability, onsumption and ontamination are key risks throughout the Group. At the smelting operations, water is soured from muniipalities while at the mining operations, it is soured from rivers and boreholes in line with integrated water use lienes (WUL) obtained through the lead authority, the Department of Water and Environmental Affairs (DWEA, formerly alled DWAF). These WULs are regulated by DWEA and a formal proess and speifiation is presribed by DWEA for ompilation of a WUL. This entails onsultation with loal irrigation boards, water users assoiations and athment management agenies on a loal level, and with DWEA on a provinial and national level. Water balanes are prepared for all operations. Aquifer level monitoring, groundwater and surfae water sampling, hemial analyses and biomonitoring form part of operational water management plans.where neessary, legitimate water trading with downstream users is initiated. * Inludes water supply to town and ommunity. 108 ARM Annual Report 2009

111 Most mines run losed iruit water reyling systems so that there is no disharge into the environment. Any inidents of non-ompliane are reported to the authorities in aordane with legislation. Due to the differing nature of the proesses and operations, water reyling rates vary throughout the Group. At Dwarsrivier, 100% of dewatered water is reyled. At Blak Rok, 60% of water is reyled, while at Two Rivers, 50% of tailings water and water dewatered underground is reyled. At Cato Ridge Works, 15% of water used is reyled and reused for gas leaning purposes (Venturi srubber water) at the gas plants of the furnaes. Mahadodorp and Modikwa also reyle signifiant perentages of water. Nkomati does not urrently measure the total rate of reyled water, sine the mine is rapidly expanding. It is however planning to install flow meters on pipelines to be able to do so. Water from the paste faility at Khumani is reyled, while Beeshoek s objetive in the forthoming year is to return 80% of water from the slimes dam. Biodiversity management ARM is striving to prioritise biodiversity management. Issues related to biodiversity and land management are addressed in eah operation s management plan. Some operations have Biodiversity Ation Plans and monitoring programmes. Waste Eah site operates in terms of an integrated waste management plan. Waste generally omprises industrial waste suh as slag, waste rok and tailings, as well as domesti waste and hazardous waste. Domesti waste is disposed of in muniipal landfill sites while hazardous waste is disposed of by speialist ontrators in approved failities. Examples of initiatives to minimise waste inlude: At Mahadodorp, the slag dump (0,5ha) has been shaped, apped and vegetated aording to approved design; Also at Mahadodorp, baghouse dust is added to hrome onentrate to form sintered pellets whih are then fed to furnaes; At Nkomati, litres of hydrauli gearbox oil (24% of the total amount of gearbox oil used) was reyled; At Beeshoek, 850 tonnes of srap metal is reyled annually; and At Blak Rok, litres of oil (total use litres) is sold to a ontrator for reyling. Closure planning and provision Comprehensive losure planning and rehabilitation assessments are performed annually at all operations. The proess is done by means of external estimation of losure and rehabilitation requirements and provisions raised in the various trust funds. Closure plans are developed in aordane with the requirements of eah EMPR and osting is done aording to the methodology and standards speified in the EMPR. Operation Estimated losure ost as at 30 June 09 F2009 ontribution Trust Fund Estimated fund balane as at 30 June 09 Contributions Guarantees Cash provisions Total, inluding guarantees Current shortfall, exluding guarantees Beeshoek Khumani Gloria Nhwaning Blak Rok Dwarsrivier Two Rivers Nkomati Modikwa * Annual ontributions are made to Trust Funds based on the losure ost estimates and the remaining life-of-mine. In addition guarantees are provided and revised as appliable. ARM Annual Report

112 SUSTAINABLE DEVELOPMENT REPORT ontinued Combating HIV & AIDS F2009 Key features at a glane HIV & AIDS prevalene rate within ARM approximately 18.2% All employees belong to a medial aid, whih are presribed to provide treatment benefits The integrated management of Voluntary Counselling and Testing (VCT) and HIV & AIDS treatment at Modikwa is exemplary Continued appliation of GRI-based internally developed soreard helps to monitor and manage effetiveness of intervention programmes Index and eah operation is expeted to exeed this rate. As eah ARM operation manages HIV & AIDS differently, this index establishes some form of ommonality. Applying the Sustainable Standard gives eah operation a lear gap analysis and failitates the development of an ation plan. The graph below gives an indiation of performane over the last year. Monitoring and evaluation has shown a marked improvement, but depth/ quality and sustainability has dropped. Eah operations performane is presented in the HIV & AIDS setion of the Sustainable Development report on During the ourse of F2009, eah of the four key areas was implemented during a quarter of the annual reporting yle. The operations were required to submit quarterly progress to the ARM HIV & AIDS oordinator. During July and early August, all the operations, inluding the various on-site linis, were audited. ARM has used the HIV & AIDS Resoure Doument ompiled by the GRI in 2002 as a framework for establishing its poliy and proess and to monitor implementation progress. The 16 GRI performane indiators are ategorised into the following four areas: Good governane: poliy formulation, strategi planning, effetive risk management, stakeholder involvement; Measurement, monitoring and evaluation: prevalene and inidene of HIV & AIDS, atual and estimated osts and losses; Workplae onditions and HIV & AIDS management; Depth/ quality/ sustainability of HIV & AIDS management. An internal minimum standard is applied to all the questions relating to the 16 GRI performane indiators to determine a omparative benhmark. This is alled the Sustainable Standard/ ARM Annual Report 2009

113 The inferred prevalene rate within ARM is 18.2%. This an be seen against the bakground of the 2006 national antenatal survey, published by the Department of Health in 2007 whih was onduted in all nine provines to estimate the prevalene of HIV infetion. Based on these provinial results the ARM workfore would approximate a 22.4% prevalene of HIV. The emphasis is on eah employee knowing their HIV status and applying this knowledge by pratiing prevention and entering wellness treatment programmes. Going forward, ARM s aim is to get all operations above the internally defined Sustainable Standard level. Modikwa s integrated prevention and treatment programmes for sexually transmitted infetions (STIs), voluntary ounselling and testing (VCT) and anti-retroviral treatment (ART) are onsidered best pratie in the Group. Targets for F2010 are to: Establish poliies at all operations agreed to by all stakeholders Establish a basi urrent and future ost analysis for eah site whih will involve determining prevalene rates Gearing up and integrating VCT and enouraging HIV-positive employees to register for disease management programmes Integrate ommunity outreah programmes with SLPs Manage tuberulosis even more aggressively in onjuntion with the Department of Health Work with the Department of Health to manage ontrator programmes Strengthen hannels for eduation, peer eduators, and ondom distribution Enhane governane to be more formal and onsistent Left and entre: At ARM Corporate National HIV & AIDS Day elebrations Right: André Wilkens (CEO) setting the example by taking part in the VCT ampaign at ARM Corporate during Deember 2009 ARM Annual Report

114 SUSTAINABLE DEVELOPMENT REPORT ontinued Corporate Soial Investment and Loal Eonomi Development F2009 Key features at a glane Overall ommunity upliftment and soial investment amounts to R60 million Corporate Soial Investment (CSI) spend amounts to R19.3 million Spend on Soial and Labour Plans amounts to around R22 million Ongoing Loal Eonomi Development (LED) ARM s Corporate Soial Investment (CSI) and Loal Eonomi Development (LED) programmes are foused on atively ontributing to the upliftment of historially disadvantaged ommunities surrounding the Company s mines and operations and those ommunities from whih ARM soures labour. ARM s approah is to build apaity and wealth, rather than alleviate poverty. This approah is founded on the Company s ore values of transpareny, integrity and honesty, as well as respet for the ommunities whih ARM serves. ARM s CSI strategy funtions at three levels: at orporate level through the ARM CSI Trust and Chairman s Fund; at an operational level, through operations-based partiipation in and funding of projets; and thirdly, through the ommitments to LED that are undertaken as part of the Company s Soial and Labour Plans (SLPs). Speialist orporate soial investment personnel are employed at eah operation to identify projets, manage the Company s ontribution to those, and to ensure alignment between loal projets and the orporate vision. These orporate soial investment personnel are guided and supported by a CSI manager based at the orporate offie. To ensure that its CSI projets are both meaningful and sustainable, ARM fouses on those initiatives whih enjoy broad-based stakeholders support, while avoiding handouts whih are unsustainable. Communities and benefiiaries of ARM s programmes and projets are atively onsulted in the proess of projet seletion, implementation and evaluation. The roles and responsibilities of stakeholders and projets/ programme benefiiaries are learly defined in advane, with speifi emphasis plaed on finanial ontrols and orporate governane ompliane. Individuals are not funded the funding must benefit a wider ommunity or groups with ommon objetives and purpose. Projets that are funded must have a developmental approah, that is, they must build apaity in ommunities and should eradiate dependeny. In respet of speifi projet guidelines, ARM ensures that projets take an affirmative ation approah, with women, the disabled, youth and the soially destitute being prioritised. ARM ensures aountability and impat by maintainng diret, regular ontat with projet benefiiaries and monitoring and evaluating adherene to stated objetives on an ongoing basis. In addition, annual audits of projets are onduted. ARM s CSI strategy is based on the following priority areas: Eduation, training and skills development: ARM makes finanial ontributions towards shools for the building of infrastruture, and apaity for those involved in teahing and learning. Health are promotion, with an emphasis on HIV & AIDS programmes: ARM is ommitted to the health of employees and ommunities in areas where the Company operates. ARM partners with ommunity strutures and organisations to fight HIV & AIDS and sponsors organisations who promote HIV & AIDS awareness; those whih provide home are for HIV & AIDS patients and those whih provide aommodation for HIV & AIDS infeted people as well as AIDS orphans. 112 ARM Annual Report 2009

115 Job reation with a fous on youth and women: Projets identified must be self-sustainable and as part of this vision, ARM helps develop projet management skills. Projets are monitored and evaluated so that appropriate assistane an be provided where needed. Infrastruture development: ARM partners with host ommunities to build shools, houses, linis, rereational and ultural failities. To ensure sustainability of these servies, the Company helps with resouring, upgrading and building human resoure apaity. Cultural events to unite ommunities: ARM reognises and respets the importane of the ulture and the heritage of the ommunities where we operate. Aordingly, ultural programmes whih eduate ommunities about their identity and ulture are prioritised. CSI funds are also alloated towards the building and development of sports failities. Sporting events that brand ARM: Apart from branding ARM, funding in this regard aims to build the onfidene of youth and give them a purpose in life. (In addition to supporting speifi sporting events, ARM develops and builds sports failities.) ARM Annual Report

116 SUSTAINABLE DEVELOPMENT REPORT ontinued Capaity-building programmes aimed at enabling ommunities to partiipate atively in soio-eonomi proesses and projets: ARM fouses on partiipating atively in soio-eonomi proesses and projets. This is ahieved by helping projet stakeholders develop skills through training and development. In F2009, despite the eonomi hallenges, ARM spent a total of R60 million on ommunity upliftment and soial investment. In line with the Company s SLPs, all operations have engaged with loal governments and ommunities in order to establish their needs and developmental requirements, and projets are integrated within the integrated development plans (IDPs) of the various distrit and loal muniipalities. Spend related to SLPs amounted to approximately R22 million. In F2009, operations within the Group spent R28 million on LED initiatives. In the year under review, the Group spent R19.3 million on CSI projets (2008: R21 million). This derease was due to the onstrained eonomy, whih meant many projets suh a shool re-build projet budgeted for R11 million by Cato Ridge Works, had to be put on hold. This projet will be re-assessed in the next months. CSI initiatives in the year under review inluded: The installation of paraffin hot water geysers; The building of a four lassroom blok at Ratau Primary for the Mpuru ommunity; The upgrading of the Badplaas skills entre; Sponsorship of a projet in terms of whih blind people produe fening wire; Upgrading of failities for the HIV & AIDS Door of Hope Care Centre; Shelter and meals provided for hildren at Lerato Day Care Centre; A areers expo whih helped high shool hildren hoose areers; and Sponsorship of a group of matri pupils to attend a winter shool in Lydenburg where they were tutored in Mathematis, Siene, Aounting and English. Examples of ARM s LED initiatives an be found in the Sustainable Development report on ARM s website ARM Annual Report 2009

117 CORPORATE GOVERNANCE REPORT The ARM Board of Diretors (the Board) onfirms its ommitment to the highest standards of orporate governane. Corporate governane enompasses the onept of sound business pratie, whih is inextriably linked to the management systems, strutures and poliies of the Company. ARM, a publi ompany, is listed on the JSE Limited (JSE). The Company omplies with the JSE Listings Requirements, appliable statutes, regulatory requirements and other authori ta - tive diretives regulating its ondut, as well as the priniples set out in the King Report on Corporate Governane for South Afria 2002 (King II) with the exeptions noted in this report. The King Report on Corporate Governane in South Afria 2009 (King III), published in final form on 1 September 2009, will be effetive from 1 Marh Board omposition ARM has a unitary Board omprising 16 Diretors, of whom seven are Independent Non-exeutives, two are Non-exeutive Diretors and seven are Exeutive Diretors. Curriula vitae for the Board members are provided on pages 132 to 133. The Diretors of the Company at the date of this report are as follows: All Diretors and employees are required to maintain high standards of integrity and ethial behaviour to ensure that the Company s business praties are onduted in a reasonable manner, in good faith and in the interests of the Company and all its stakeholders. The Board is the foundation of ARM s orporate governane systems and is aountable and responsible for the Company s performane. The Board retains effetive ontrol through a lear governane struture and has established ommittees to assist it, reognising that delegating authority does not redue the responsibility of Diretors to disharge their duties. To ensure onsistent standards of governane and internal ontrols, the Company s subsidiaries and joint ventures have established boards and ommittees, as the ase may be. The Chief Exeutives of eah division regularly report to the Board regarding the ativities of the divisions and joint ventures. Diretor P T Motsepe (Exeutive Chairman) A J Wilkens (Chief Exeutive Offier) F Abbott* M Arnold** Dr M M M Bakane-Tuoane A D Botha*** J A Chissano W M Gule M W King A K Maditsi K S Mashalane J R MAlpine L A Shiels Dr R V Simelane J C Steenkamp Z B Swanepoel Exeutive (E) Non-exeutive (N) Independent (I) E E N E I I I E I I E I E I E N Changes during 2008/9: * Former Finanial Diretor; beame a Non-exeutive Diretor on 1 August ** Appointed Finanial Diretor on 1 August *** Appointed on 1 August ARM Annual Report

118 CORPORATE GOVERNANCE REPORT ontinued The Board believes that the Independent Non-exeutive Diretors appointed are of the appropriate alibre, diversity and number for their views to arry signifiant weight in the Board s deliberations and deisions. The Independent and Non-exeutive Diretors are highly experiened and have the skills, bakground and knowledge to fulfil their responsibilities. The lassifiation of Independent and Non-exeutive Diretors is determined by the Board in aordane with the guidelines set out in King II. In determining the independene of the Independent Non-exeutive Diretors, harater and judgement are onsidered together with any of their relationships or irumstanes whih are likely to affet, or ould appear to affet, their judgement. Non-exeutive Diretors are not onsidered independent if they were exeutives of the Company or a subsidiary within the preeding three finanial years. Exeutive Chairman and Chief Exeutive Offier The roles of Exeutive Chairman and Chief Exeutive Offier are separate and distint. ARM s Exeutive Chairman, Mr Patrie Motsepe, ontrary to the reommendations of King II, is an exeutive representing the Company s largest shareholder, whih held 41.38% of the Company s share apital at 30 June ARM is satisfied that the Chairman having an exeutive role is adequately addressed by the omposition of the Board and the appointment of a lead Independent Non-exeutive Diretor, Dr Manana Bakane-Tuoane. In addition to the general requirements for the re-eletion of Diretors set out in ARM s Artiles of Assoiation (the Artiles), and disussed below, the Chairman is required to be eleted by the Board annually. Mr Motsepe was re-eleted as Exeutive Chairman for the period of one year ommening 1 January The Chief Exeutive Offier is appointed by the Board. Board Charter The Board Charter, whih was amended in May 2009, provides guidelines to Diretors in respet of, inter alia, the Board s responsibilities, authority, omposition, meetings and the need for self-assessment. praties and systems to ensure the integrity of risk management and internal ontrols to protet ARM s assets and reputation. Identifying and monitoring key performane indiators of the business and the systems used to determine that performane. Ensuring ompliane with odes of best business pratie, orporate governane regulations and all relevant laws. Communiation with shareholders and relevant stake - holders (both internal and external), promptly and openly. Defining levels of materiality, thereby reserving ertain powers for itself and delegating other matters to management. Monitoring operational performane inluding finanial and non-finanial aspets relevant to ARM. Ensuring that the tehnology and systems employed are adequate and effiient. Maintaining full and effetive ontrol and monitoring the implementation by management of Board plans and strategies. Establishing a ommuniation poliy, in addition to its statutory and regulatory reporting requirements, whih ontains aepted priniples of good reporting inluding being open, transparent, honest, understandable, lear and onsistent in its messages to the media. Establishing poliies for the seletion of new Diretors and Diretor orientation programmes. Ensuring that a suession plan for the Exeutive Diretors and senior management is implemented. Ensuring that annual finanial statements are prepared and presented to a duly onvened Annual General Meeting of shareholders. Eletion, indution, suession and assessment Eletion The Artiles all for one-third of eleted Diretors, who have been in offie longest sine their last eletion, to retire by rotation at eah Annual General Meeting. Being eligible, these Diretors may seek re-eletion should they so wish. The roles and responsibilities set out in the Board Charter are as follows: Providing strategi diretion and leadership whih onforms with ARM s value system, by assessing and authorising budgets, plans and strategies submitted by senior management. Adopting and implementing strategi plans, inluding mergers, aquisitions and disposals and the apital funding of suh plans. Determining, implementing and monitoring poliy, proedures, 116 ARM Annual Report 2009

119 The table below sets out the Diretors who, being eligible, make themselves available for eletion or re-eletion at the Annual General Meeting to be held in November Diretors: eletion and re-eletion November 2009 Exeutive Diretors P T Motsepe (Exeutive Chairman) A J Wilkens (Chief Exeutive Offier) M Arnold* Non-exeutive Diretors A D Botha* J A Chissano J R MAlpine Dr R V Simelane * Appointed to the Board on 1 August Eletion Re-eletion Messrs Motsepe, Wilkens, Chissano and MAlpine and Dr Simelane are required to retire by rotation and make themselves available for re-eletion. The re-eletion of all of the abovementioned Diretors is supported by the Board. Diretors appointed by the Board between Annual General Meetings, either to fill a asual vaany or as an addition to the existing Board, hold offie only until the next Annual General Meeting and are eligible for eletion (but are not inluded in determining the number of Diretors who are to retire by rotation). When appointing Diretors upon the reommendation of the Nomination Committee, the Board onsiders, inter alia, whether the andidates have the neessary skills and experiene. Messrs Arnold and Botha, who were appointed on 1 August 2009, have made themselves available for eletion. The eletion of Messrs Arnold and Botha is supported by the Board. The Diretors urriula vitae may be found on pages 132 to 133. Indution and ontinuing eduation All newly appointed Diretors reeive a omprehensive indution pak, inluding the Artiles, the Board Charter, terms of referene and harters of the ommittees of the Board, Board poliies and other douments relating to the Company; key legislation and regulations; as well as orporate governane, finanial and reporting douments, inluding minutes and douments of an administrative nature. Diretors are enouraged to attend ourses providing eduation and training relating to their duties, responsibilities, powers and potential liabilities. The Company holds an annual budget planning workshop with senior management to inform the Diretors about the Company s business. Site visits are also onduted. Suession The Company has a suession plan for Exeutive Diretors and senior management to provide for the sustainability of the business. ARM ontinuously strives to improve its talent pool through a omprehensive and foused plan of management and areer development and reruitment. The Company adopts an integrated approah to suession planning. For example, the Sustainable Development Committee regularly reviews reports on leadership and employment equity programmes, and reports on developments in these areas to the Board. The Remuneration Committee has developed a remuneration framework, whih inludes inentives to attrat and retain management. As a result, the Board is satisfied that the ongoing efforts to strengthen leadership provide short- and long-term management depth. In 2008, an ad ho ommittee, onsisting of Drs Bakane-Tuoane and Simelane and Mr King, was formed to onsider a suessor to replae Mr Wilkens, the Chief Exeutive Offier, who would have been due to retire in November At the onlusion of the review, Mr Wilkens was invited to delay his retirement for a period of three years and a plan to find a suitable suessor is being implemented. Assessment The Board is ommitted to transpareny in assessing the performane of the Board and individual Diretors, as well as the governane proesses that support Board ativities. The effetiveness of the Board and its ommittees is assessed regularly and, ommening in 2008, on an annual basis. The most reent assessment was onduted with the assistane of independent external advisors in Otober/ November 2008 and a further assessment will be performed by independent external advisors in F2010. Independent external advisors are engaged to assist in the assessment proesses as neessary, and the Board is of the ARM Annual Report

120 CORPORATE GOVERNANCE REPORT ontinued view that the involvement of an independent ompany assists to ensure a rigorous and impartial evaluation proess. Matters onsidered in the 2008 assessment foused on the effetiveness of the Board, inluding: Board performane against strategy; Board values; Board and management evaluation; and Composition of the Board and eah ommittee. In the evaluation proess onsideration was given to the question as to whether or not the Board s diversity, size and demographis make it effetive. The findings of the 2008 assessment were onsidered by the Board in 2009 and ertain reommendations have been implemented, suh as the designation of a lead independent Non-exeutive Diretor who hairs meetings of the Nonexeutive Diretors. In the 2008 Board assessment, full evaluations of individual Diretors were ompleted, with the exeption of evaluations of the Exeutive Chairman and the Chief Exeutive Offier. Separate Board evaluations of these exeutives will be onduted by an independent external advisor in 2009; however, performane assessments of the Exeutive Chairman and the Chief Exeutive Offier are ompleted annually and form the basis of their remuneration, as disussed in the Remuneration report starting on page 126. Board Meetings The Board meets at least four times a year to onsider the business and strategy of the Company. The Board reviews reports of the Chief Exeutive Offier, the Finanial Diretor, divisional hief exeutives and other senior exeutives, hairmen of the ommittees and independent advisors. During the finanial year ended 30 June 2009, four Board meetings were held. A meeting attendane shedule is set out below. The quorum for Board meetings is the majority of Diretors. The Company holds an annual budget planning workshop in July. Members of the Board and senior exeutives of the Company onsider the budget and determine the Company strategy, for implementation by the Board. In August 2009, the Board held its inaugural annual Bosberaad for Diretors and management, to examine the strategy in detail. Agendas for Board meetings are prepared by the Company Seretary in onsultation with the Chief Exeutive Offier and the Finanial Diretor. Information provided to the Board is ompiled from external soures, suh as independent thirdparty reports, and internally from minutes and plans as well as reports relating to, for example, safety, health, sustainable development, risk, finanial, governane and legal matters likely to affet ARM. Meeting materials are delivered to every Diretor prior to eah meeting. Board of Diretors: Meetings* Aug-08 Nov-08 Feb-09 May-09 P T Motsepe (Exeutive Chairman) A J Wilkens (Chief Exeutive Offier) F Abbott** Dr MMM Bakane-Tuoane a J A Chissano W M Gule a M W King A K Maditsi a K S Mashalane R P Menell*** n/a n/a J R MAlpine L A Shiels Dr R V Simelane M V Sisulu**** a a J C Steenkamp Z B Swanepoel a = apologies * Messrs Arnold and Botha were appointed on 1 August 2009, subsequent to the year-end. ** Mr Abbott is the former Finanial Diretor; he beame a Non-exeutive Diretor on 1 August *** Retired on 28 November **** Resigned on 7 August ARM Annual Report 2009

121 Advie and Information No restrition is plaed on a Diretor s aess to Company information, reords, douments and property. Non-exeutive Diretors have aess to management and regular interation is enouraged. All Diretors are entitled to seek independent professional advie onerning the affairs of the Company at its expense. Company Seretary All Diretors have aess to the servies and advie of the Company Seretary, Ms Alyson N D Oyley, who was appointed on 10 July Mrs Patriia F Smit was Company Seretary until her retirement on 9 February Mrs Marilyn F Taylor was ating Company Seretary following Mrs Smit s retirement until Ms D Oyley s appointment. The Board appoints the Company Seretary in aordane with the requirements of the Companies At. The Company Seretary is responsible for developing and maintaining the proedures and proesses required for the proper administration of Board proeedings, and supports the Board as a whole and Diretors individually with guidane as to how to fulfil their responsibilities in the best interests of the Company. The Company Seretary also guides and advises the Board, and is a resoure within the Company, on inter alia governane and ethis matters and hanges in legislation. To ahieve these objetives, independent advisory servies are retained by the Company Seretary at the request of the Board or its ommittees. The Company Seretary oversees the indution of new Diretors, as well as the ongoing training of Diretors. Board Committees The Board has established ommittees to assist it with fulfilling its responsibilities. Nonetheless, the Board aknowledges that the granting of authority to its ommittees does not detrat from the Board s responsibility to disharge its duties to the Company s shareholders. The ommittees have Terms of Referene, whih are reviewed annually. They set out the ommittees roles and responsibilities, funtions, sope of authority and omposition. The annual review takes into aount amendments to appliable legislation and developments in international best praties. Committees report to the Board at eah Board meeting and make reommen - dations in aordane with their Terms of Referene. The membership of the Board ommittees onsists solely of Non-exeutive Diretors with one exeption: ontrary to King II, ARM s Exeutive Chairman is urrently a member of the Nomination Committee and prior to August 2009, the Nomination Committee Chairman. Eah ommittee is haired by an Independent Non-exeutive Diretor. Attendane shedules for ommittee meetings held in F2009 are inluded in eah ommittee report. The Board has established the following permanent ommittees: Audit Committee, Investment Committee, Nomination Committee, Remuneration Committee, and Sustainable Development Committee. Audit Committee Members: M W King (Chairman) Dr M M M Bakane-Tuoane A K Maditsi J R MAlpine Dr R V Simelane The Audit Committee omprises five Independent Non-exeutive Diretors, eah of whom has extensive finanial experiene. In aordane with the guidelines in King II, the Chief Exeutive Offier attends Audit Committee meetings at the Committee s request. The Finanial Diretor is also an invitee at eah meeting. The Audit Committee Terms of Referene was revised in 2008 to meet the requirements of the Corporate Laws Amendment At. Based on the Terms of Referene, a omprehensive framework is prepared to ensure that all tasks assigned to the Committee are onsidered at least one a year. Sheduling of the Audit Committee s non-routine work is therefore neessary and tasks have been assigned to the Audit Committee, the external and internal auditors, and management. The Audit Committee performs its review funtion over all ARM operations. To assist the Committee with its reviews, all operational subsidiaries and joint ventures have audit ommittees, with the exeption of the new Vale/ARM joint venture, whih intends to establish an audit ommittee in November The hairmen of the audit ommittees of the subsidiaries and joint ventures report into the Audit Committee, highlighting areas of onern and remedial ations taken by management. In addition, the minutes of Committee meetings as well as internal and external audit reports of all operations are submitted to the Audit Committee. The primary objetive of the Audit Committee is to assist the Board in disharging its duties relating to the safeguarding of assets; the operation of adequate systems, internal ontrols and ontrol proesses; and the preparation of aurate finanial reports and statements in ompliane with all appliable legal requirements, orporate governane and aounting standards; as well as enhaning the reliability, integrity, objetivity and fair presentation of the affairs of the Company. It also oversees finanial and other risks in onjuntion with the Sustainable Development Committee. In fulfilling its oversight responsibilities, the Audit Committee reviews and disusses the audited finanial statements with management and the external and internal auditors. ARM Annual Report

122 CORPORATE GOVERNANCE REPORT ontinued Audit Committee: Meetings Aug-08 Sep-08 Feb-09 Mar-09 May-09 M W King (Chairman) Dr M M M Bakane-Tuoane a A K Maditsi J R MAlpine Dr R V Simelane a = apologies The Audit Committee has oversight of the Company s finanial reporting proess on behalf of the Board. Management has primary responsibility for the finanial statements, for maintaining effetive internal ontrol over finanial reporting, and for assessing the effetiveness of internal ontrol of suh reporting. The Audit Committee, after due onsideration, is of the view that the independent registered audit firm, whih is responsible for expressing an opinion on the onformity of the audited finanial statements with International Finanial Reporting Standards (IFRS), is independent from management and the Company. The Audit Committee has reommended the re-appointment of Ernst & Young Inorporated (E&Y). At the Annual General Meeting, shareholders will be requested to re-appoint E&Y as external auditors of the Company and to onfirm the appoint - ment of Mr Mihiel C Herbst as the designated individual auditor. E&Y and Mr Herbst are registered with the JSE in aordane with the JSE Listings Requirements. The Audit Committee meets with the internal and external auditors on a regular basis to disuss the results of their examinations, their evaluation of the Company s internal ontrol and the overall quality of the Company s finanial reporting. The Committee also disusses the overall sope and plans for the respetive audits of the Company s internal and external auditors. A formal poliy on non-audit servies was adopted on 20 August In aordane with the JSE Listings Requirements, the Company has a Finanial Diretor, Mr Mihael (Mike) Arnold, who was appointed to the Board with effet from 1 August 2009 to replae Mr Frank Abbott who has retired as Finanial Diretor, but remains a Non-exeutive Diretor of the Company. The Audit Committee is satisfied that the Finanial Diretor and finane funtion are adequately resoured and that Mr Arnold has the neessary experiene to disharge his responsibilities. The Audit Committee ats as a forum for ommuniation between the Board, management and the external and internal auditors. It is required to meet at least three times a year. Five meetings were held during the 2009 finanial year. Investment Committee Members: Z B Swanepoel (appointed Committee Chairman in August 2009) A K Maditsi (retired as Committee Chairman in August 2009) A D Botha (appointed to the Committee in August 2009) M W King The Investment Committee s purpose is to onsider investments proposed by management, inluding projets, aquisitions and disposals of assets, and to make suh reommendations to the Board as it onsiders appropriate. The Investment Committee also reviews the results attained on ompletion of eah projet. During the year under review, the Investment Committee s performane and effetiveness were evaluated with the assistane of an independent external advisor. As a result of that evaluation, the Board determined that the Investment Committee s performane would be enhaned by the appointment of an additional ommittee member, whih the Board implemented in August The Investment Committee meets when onsidered neessary. Four meetings were held during the 2009 finanial year. The Management Risk Committee reports to the Audit Committee and its report is inluded on page 122 of the Corporate Governane report. During the year under review, the Audit Committee s performane and effetiveness were evaluated with the assistane of an independent external advisor. As a result of that evaluation, the Board is satisfied that the Audit Committee has omplied with its Terms of Referene. 120 ARM Annual Report 2009

123 Investment Committee: Meetings Aug-08 Ot-08 Nov-08 May-09 A K Maditsi (Chairman)* M W King R P Menell** n/a n/a n/a Z B Swanepoel*** a a = apologies * Retired as Committee Chairman in August ** Retired on 28 November *** Appointed as Committee Chairman in August Nomination Committee Members: A K Maditsi (appointed as Committee Chairman in August 2009) P T Motsepe (retired as Committee Chairman in August 2009) Dr R V Simelane The Nomination Committee reviews the struture, omposition and size of the Board and reommends appointments to the Board and its ommittees. The Terms of Referene provide for the Committee to monitor suession planning for the Chairman and the Chief Exeutive Offier as well as the overall personnel needs of ARM s business. The Nomination Committee is responsible for developing the riteria used to selet Diretors. The Nomination Committee is also responsible for designing the orientation programme for newly appointed Diretors on their role and responsibilities. Meetings are onvened as and when neessary. Although no Nomination Committee meetings were held during the 2009 finanial year, the nominations of Messrs Arnold and Botha on 1 August 2009 and the ommittee hairmanship and membership nominations made in August 2009 were onsidered by Nomination Committee members and approved by round-robin resolutions for reommendation to the Board. During the year under review, the Nomination Committee s performane and effetiveness were evaluated, with the assistane of an independent external advisor. As a result of that evaluation, the Board determined that the Nomination Committee s performane would be enhaned by appointing an Independent Non-exeutive Diretor as the Nomination Committee Chairman, whih the Board implemented in August Remuneration Committee Members: Dr M M M Bakane-Tuoane (Chairman) A D Botha (appointed to the Committee in August 2009) J R MAlpine Z B Swanepoel The Remuneration Committee s purpose is, inter alia, to determine speifi remuneration pakages for eah of the Exeutive Diretors within the remuneration framework approved by the Board and to determine any riteria neessary to measure the performane of Exeutive Diretors in performing their roles and disharging their responsibilities. The Remuneration Committee also onsiders and reommends to the Board the fees to be paid to Non-exeutive Diretors. The fees proposed, as onfirmed by the Board, are submitted to shareholders at the Annual General Meeting for approval prior to implementation. During the year under review, the Remuneration Committee s performane and effetiveness were evaluated, with the assistane of an independent external adviser. As a result of that evaluation, the Board determined that the Remuneration Committee s performane would be enhaned by the appointment of an additional ommittee member, and therefore the Board appointed another Independent Non-exeutive Diretor to the Remuneration Committee in August Three meetings were held during the 2009 finanial year. The Remuneration report may be found on pages 126 to 129. Remuneration Committee: Meetings Jul-08 Aug-08 Nov-08 Dr M M M Bakane-Tuoane (Chairman) J R MAlpine Z B Swanepoel ARM Annual Report

124 CORPORATE GOVERNANCE REPORT ontinued Sustainable Development Committee: Meetings Aug-08 Nov-08 Feb-09 May-09 Dr R V Simelane (Chairman) Dr M M M Bakane-Tuoane a M V Sisulu* a a a a Z B Swanepoel a a = apologies * Resigned on 7 August Sustainable Development Committee Members: Dr R V Simelane (Chairman) Dr M M M Bakane-Tuoane Z B Swanepoel The Sustainable Development Committee s objetives, whih are set out in its Terms of Referene, revised in May 2008, are to ahieve and maintain world-lass performane standards in safety, health (oupational), the environment, HIV & AIDS and soial investment, as well as to enable historially dis ad - vantaged South Afrians (HDSAs) to enter the mining industry as presribed by the Minerals and Petroleum Resoures Development At and to ensure ompliane with the Soreard issued by Government. The attainment of these objetives requires the Sustainable Development Committee to advise the Board on poliy issues, the effiay of ARM s management systems for its sustainable development programmes and progress towards set goals and ompliane with statutory, regulatory and harter requirements. The Sustainable Development Committee Terms of Referene provide that the ommittee must have four members. Currently, the ommittee has three members and the appointment of an additional ommittee member is under onsideration by the Board. Four meetings were held during the 2009 finanial year. The Sustainable Development report may be found on page 88 of the Annual Report. Meetings of Non-exeutive Diretors Following Board meetings, the Non-exeutive Diretors meet without management. Issues of importane to the Company are onsidered. The meetings are haired by the lead Independent Non-exeutive Diretor, Dr MMM Bakane-Tuoane. Ad Ho Committees The Board has the right to appoint and authorise speial ad ho ommittees, omprising the appropriate Board members, to perform speifi tasks as required. Management ommittees Management Risk Committee Members: A J Wilkens (Chairman) M Arnold C Blakey-Milner N Botes-Shoeman J M Bräsler W M Gule K S Mashalane M P Shmidt D V Simelane J C Steenkamp The Management Risk Committee, a management sub-ommittee of the Audit Committee, assists the Audit Committee in disharging its duties relating to risk matters by implementing, o-ordinating and monitoring a risk management programme to ensure that broader strategi and signifiant business risks are identified and quantified with attendant ontrols and management assurane. The Management Risk Committee is haired by the Chief Exeutive Offier and its membership inludes the Finanial Diretor, the hief exeutives of the operations, the Leader: Risk Manager and the Group Manager: Safety, Health and Environment. The hair of the Management Risk Committee and the Leader: Risk Manager attend Audit Committee meetings and report on the ativities of the subommittee. The Chief Exeutive Offier and the Chairman of the Audit Committee report on risk matters to the Board. The Leader: Risk Management attends Board meetings to respond to any matters raised by the Diretors. The Management Risk Committee met four times in the 2009 finanial year. 122 ARM Annual Report 2009

125 A table of ARM s prinipal risks and unertainties is set out on pages 24 to 25 of the Annual Report, and additional information on ARM s risk management programme is provided below. Steering Committee The Steering Committee is harged with implementation of approved orporate strategy and other operational matters. The Steering Committee is haired by the Chief Exeutive Offier and its membership inludes Exeutive Diretors and senior management. It meets quarterly, or more often as irumstanes warrant. The Steering Committee members are listed on page 134. Treasury Committee The Treasury Committee meets monthly, and if required more frequently, under the hairmanship of the Finanial Diretor. The ommittee membership inludes the ARM Finane Exeutive: Operations and the ARM Finane Exeutive: Corporate. Representatives of Andisa Treasury Solutions (Proprietary) Limited (Andisa), to whom the treasury funtion is outsoured, attend meetings by invitation. The Treasury Committee reviews operational ash flows, urreny and interest rate exposures as well as funding issues within the Company. While not performing an exeutive or deisive role in the deliberations, Andisa implements deisions taken when required. Advie is also sought from other advisors on an ongoing basis. Ethis The Company is ommitted to high moral, ethial and legal standards in dealing with all of its stakeholders. All Diretors and employees are required to maintain high standards to ensure that the Company s business is onduted honestly, fairly and legally and in a reasonable manner, in good faith and in the best interests of the Company. These priniples are set out in ARM s Code of Ethis (the Code), whih was amended in The Code may be found on ARM s orporate website Whistleblowers faility An independent servie provider operates ARM s whistleblowers faility to enable employees and other stakeholders to report onfidentially and anonymously any unethial or risky behaviour. Information about the faility is inluded in the Code and ontat information is posted in eah Company offie. In April 2008, the Company implemented an initiative to heighten awareness of the whistleblowers faility. Formal proedures in plae result in eah whistleblowing report being investigated, and poliy and proedures revised where appliable with feedbak reports being provided to the operators of the ARM whistleblowers faility. No material non-ompliane inidents were reported during the year under review. Conflits of Interest The Code inludes a poliy prohibiting the aeptane of any gift whih may be onstrued as an attempt to influene an employee, regardless of value. The aeptane of any gift is subjet to the approval of a member of the exeutive. Dislosure The Code inludes a poliy regarding ommuniations, whih enourages omplete, aurate and timely ommuniations with the publi. The Chief Exeutive Offier, the Finanial Diretor, the Head of Investor Relations and the Company Seretary oversee ompliane with the dislosure requirements ontained, inter alia, in the JSE Listings Requirements. Internal Control and Internal Audit The Board, with the assistane of the Audit Committee, the Management Risk Committee and the internal auditors (outsoured to KPMG Servies (Proprietary) Limited), reviews the Company s risk profile annually. In terms of the risk-based internal audit programme approved annually by the Audit Committee, the internal auditors perform a number of reviews to assess the adequay and effetiveness of systems of internal ontrol and risk management. The results of these reviews, together with updates on the orretive ation taken by management to improve ontrol systems, are reported to the Audit Committee and the Board. Going onern On the reommendation of the Audit Committee, the Board annually onsiders the going onern basis in the preparation of the year-end finanial statements. Risk Management Programme ARM has a well-developed and effetive risk management proess whih has been in plae for a number of years. A firm ommitment to risk management is an imperative at all levels within ARM. The Company is ognisant that integrating risk management philosophy and pratie into the ulture of an organisation is an ongoing hallenge whih, to be effetive, must be a ontinuous, dynami and developing proess. The Board tasks the Audit Committee with oversight for risk management. In view of the importane of this funtion, the Audit Committee has established a management sub-ommittee, the Management Risk Committee (MRC), to assist it to manage and report on risk management proesses and proedures. The MRC is haired by the Chief Exeutive Offier. ARM s integrated approah to risk management inludes an Enterprise Risk Management (ERM) proess and Balaned Soreard approah. This integrated approah not only helps to ensure appropriate orporate governane ompliane, but also provides a pratial and effetive tool for the management of risk within ARM. The risk management proess enompasses four main funtions, whih are overseen and reported on by the MRC. These are explained below. ARM Annual Report

126 CORPORATE GOVERNANCE REPORT ontinued Risk register Ensures that a robust system of identifying, quantifying, monitoring, managing and reporting risks and opportunities is applied onsistently throughout the Company. The ERM Framework and the Internal Control Poliy govern the ERM proess and, inter alia, ensure that the external on - sultants, to whom the internal audit funtion is outsoured, assist in the failitation of the following ativities at least annually: Identifying and reording risks and opportunities; Establishing the likelihood of them ourring; Ensuring the appropriate ontrols are in plae; Assessing the effetiveness of ontrols; Taking appropriate ation to redue the likelihood of loss; and Taking appropriate ation to mitigate against the possible extent of loss. The internal auditors also periodially review the ERM Framework and Poliy to ensure these remain urrent. The internal auditors use the risk registers to ensure the annual Audit Plan overs the high-risk areas identified. The risk register is regularly updated throughout the Company. Physial risk management Ensures physial risk grading, risk improvement and other risk ontrols are appropriate, and maintain and enhane performane against agreed international risk standards. While operational management remains aountable for risk management, external onsultants assist with identifying risk, rating and benhmarking risk performane, and providing reommendations to improve risk preparedness and to address any potential loss-produing events. This is done by measuring the performane of eah operation against ARM s Balaned Soreard. The Balaned Soreard measures the quality of risk management at individual operations, expressed in rating perentages, and provides a risk profile for eah operation. ARM s objetive is that all its operations ahieve an 80% overall performane rating against the international risk management standards ontained in the Balaned Soreard. The majority of ARM s operations are rated in the top quartile of worldwide operations rated by International Mining Industry Underwriters (IMIU), whih indiates that this target has been largely ahieved. Risk finaning and insurane Ensures ARM s risk finaning and insurane programmes are omprehensive and adequately protet the Company against atastrophi risk. Continuing improvement in ARM s risk profile as a result of foused risk ontrol initiatives ensure that ost-effetive risk finaning and insurane programmes are in plae to avoid or redue adverse effets on finanial results and Company performane. Monitoring new developments Ensures that the risks arising from new developments in ARM s operating environment are onsidered on an ongoing basis. ARM s risk management department onstantly monitors risk issues that stem from new developments, suh as nonompliane with hanges in orporate governane requirements or odes of pratie, to ensure that risk management within ARM remains relevant. Legal ompliane Internal and external audits are regularly onduted at all operations and any instanes of non-ompliane with regulatory requirements are reported to management for orretive ation. The Company did not reeive any fines nor has it been proseuted for any anti-ompetitive praties or non-ompliane with any governane or legislative obligations. Mining Charter ARM is ommitted to the spirit of the Broad-Based Soio- Eonomi Empowerment Charter for the South Afrian Mining Industry (Mining Charter), whih is to bring about a globally ompetitive mining industry that draws on the human and finanial resoures of all South Afria s people and offers real benefits to all South Afrians. The Mining Charter was developed through a onsultative proess between Government and the mining industry, and was ratified in Otober Measures for assessing the ontribution of mining ompanies to the soio-eonomi goals of the Mining Charter were developed. These inlude the mining soreard and fous on nine key elements: human resoures development; employment equity; migrant labour; mine ommunity and rural development; housing and living onditions; prourement; ownership and joint ventures; benefiiation and reporting. A table setting out the progress ARM has made against the requirements of the Mining Charter is provided in the Sustainable Development report on pages 100 to ARM Annual Report 2009

127 Dealings in seurities and insider trading poliy ARM enfores losed periods prior to the publiation of interim and provisional finanial results, in Deember and June, respetively. During these times, Diretors, offiers and designated persons are preluded from dealing in ARM seurities. All Diretors and employees are provided with relevant extrats from the Seurity Servies At, and the Company s proedures in this regard. Diretors and employees are reminded of their obligations in terms of insider trading and the penalties for ontravening the regulations. The poliy was reviewed and updated in the 2008 finanial year. Annual General Meeting The Notie of the Annual General Meeting may be found on pages 216 and 217. Sponsor Deutshe Seurities (SA) (Proprietary) Limited is the Company s sponsor, in ompliane with the JSE Listings Requirements. The omplete poliy governing dealing in Company seurities and insider trading may be found on ARM s orporate website Donations to politial parties ARM supports South Afria s demorati proesses and makes ontributions to politial parties. A poliy relating to making donations to politial parties has been adopted by the Company. In the year under review, donations were made to politial parties in aordane with the poliy and the budget approved by the Board. Investor relations and ommuniation with stakeholders ARM is ommitted to transparent, omprehensive and objetive ommuniations with its stakeholders. The Company maintains a website, whih provides information regarding the Company s operations, finanial performane and other information. Shareholders are enouraged to attend the Annual General Meeting and to use this opportunity to engage with the Board and senior management. Summaries of the results of deisions taken at shareholders meetings are dislosed on the Company s website following the meetings. ARM s investor relations department is responsible for ommu - ni ation with institutional shareholders, the investment ommunity and the media. The Company has developed a omprehensive investor relations programme to ommuniate with domesti and international institutional shareholders, fund managers and investment analysts. Engagements inlude partiipation by ARM senior exeutives in one-on-one meetings with institutional investors in South Afria, the United Kingdom, North Ameria and Europe, as well as investor roadshows and onferenes. ARM Annual Report

128 REMUNERATION REPORT Role of the Remuneration Committee and Terms of Referene The Remuneration Committee is a ommittee of the Board. Its purpose is to reommend appropriate levels of fees to be paid to Non-exeutive Diretors; to design remuneration pakages for Exeutive Diretors; to determine the overall poliy for the remuneration of the Company s employees, whih inludes basi salaries, performane-based short- and long-term inentives, pensions and other benefits; and to oversee the design and management of the Company s long-term sharebased inentives. Remuneration: Exeutive Diretors Base salaries Benefits Long-term inentives Annual ash inentives The Afrian Rainbow Minerals Limited 2008 Share Plan The Afrian Rainbow Minerals Share Inentive Sheme (1998) Performane shares Bonus shares Share options Composition of the Remuneration Committee Members: Dr M M M Bakane-Tuoane (Chairman) A D Botha (appointed to the Committee on 28 August 2009) J R MAlpine Z B Swanepoel The Remuneration Committee met three times during the 2009 finanial year with full attendane at eah meeting. In aordane with King II, the Remuneration Committee onsists entirely of Independent Non-exeutive Diretors. The Board onsiders the omposition of the Committee to be appropriate in terms of the neessary blend of knowledge, skills and experiene. The Chief Exeutive Offier attends Committee meetings by invitation and assists the Committee in its deliberations, exept when issues relating to his own remuneration are disussed. No Diretor was involved in deiding his or her own remuneration. In F2009, the Remuneration Committee was advised by the Company s finane and human resoures departments, as well as by Deloitte, whih provided, inter alia: market benhmarking information and advised on and assisted with the design, implementation and verifiation of alulations pertaining to alloations, grants and awards pursuant to short- and long-term inentive plans. The Chairman of the Remuneration Committee attends Annual General Meetings to answer any questions from shareholders. Remuneration Philosophy and Poliy: Exeutive remuneration Priniples of exeutive remuneration ARM s exeutive remuneration philosophy aims to attrat and retain high-alibre exeutives, and to motivate and reward them for developing and implementing the Company s strategy to deliver onsistent and sustainable shareholder value. The remuneration poliy onforms to best international pratie and is based on the following priniples: Total rewards are ompetitive with those offered in the mining and resoures setor. Inentive-based rewards are earned through the ahieve - ment of performane targets onsistent with shareholder expetations over the short- and long-term. Annual ash inentives, together with performane measures and targets, are strutured to reward effetive operational performane. 126 ARM Annual Report 2009

129 Long-term (share-based) inentives are used to align the long-term interests of management with shareholders and are responsibly implemented, so as not to expose shareholders to unreason able or unexpeted finanial impat. Elements of exeutive remuneration Base salaries Benefits Annual ash inentives Long-term (share-based) inentives The Remuneration Committee seeks to ensure an appropriate balane between the fixed- and performane-related elements of exeutive remuneration, and between those aspets of the pakage linked to short-term finanial performane, and those linked to longer-term shareholder value reation. The Committee onsiders eah element of remuneration relative to the market and takes into aount the performane of the Company and the individual exeutive in determining both quantum and design. The poliy relating to the four omponents of exeutive remuneration is summarised below. Base salaries The base salaries of exeutives, on a total ost-to-ompany basis, are subjet to annual review. ARM s poliy is to be ompetitive at the median level, with referene to market pratie in ompanies omparable in size, setor, business omplexity and international sope. Base salaries of ertain key individuals and inumbents in key roles, however, are aligned with salaries in the upper quartile of the market. Company performane, individual performane and hanges in responsibilities are also onsidered when determining inreases to base salaries. Benefits Benefits for exeutives inlude membership in a retirement fund and in a medial aid plan, to whih ontributions are made by the exeutives. The retirement fund is managed by eight trustees: 50% appointed by ARM and 50% eleted by employees. The fund is administrated by Alexander Forbes. Exeutives partiipate in any independently managed medial aid plan of their hoie. Annual ash inentives The annual ash inentive programme appliable to exeutives is the Out Performane Bonus (OPB) sheme in whih sustained performane against omparative and absolute targets is rewarded. On-target bonus perentages are established by the Remuneration Committee in terms of ARM s overall reward strategy; however, the OPB payable at year end depends upon atual Company performane against a weighting of the following two measures of performane: Targeted profit from operations in eah of the operational lusters; and Targeted unit ost of sales in eah of the mineral lusters. The weighting of the above metris is applied to eah member of the exeutive in relation to his or her sphere of influene. The Remuneration Committee establishes thresholds and targets for eah metri that inentivise Company and individual performanes. The Committee reviews the measures annually to ensure that they are appropriate given the eonomi limate and the performane expetations for the Company. A performane managed inentive sheme based on profit applies to non-exeutive employees. Non-exeutive Diretors are not so inentivised. Long-term (share-based) inentives ARM s long-term (share-based) inentives onsist of: Performane shares Bonus shares Share options Performane shares are awarded and bonus shares are granted pursuant to The Afrian Rainbow Minerals Limited 2008 Share Plan (the Share Plan). Share options are granted under The Afrian Rainbow Minerals Share Inentive Sheme (the Sheme). Prior to the adoption of the Share Plan by shareholders at the 2008 Annual General Meeting, ARM s only form of long-term inentive was a longstanding vanilla share option sheme inherited from Anglovaal Mining Limited (Avmin). Following reent developments in the tax, aounting and regulatory treatments of share-based inentives, oupled with evolving loal and international best pratie, various adjustments were made to the manner of its implementation, within the parameters of original JSE and shareholder approval, to bring it in line with these developments. The hybrid long-term, share-based inentive offerings align ARM with best international pratie; provide for the inlusion of a number of performane onditions, designed to align the interests of exeutives with those of the Company s shareholders; at as a retention tool; and reward exeutives for Company performane above that of the performane of the eonomy or the mining and resoures setor. All ARM orporate employees at managerial levels are eligible partiipants in the Share Plan. ARM s long-term inentives are summarised below. Performane share method In terms of the ARM Share Plan, annually sine 2008, onditional awards of full value shares are made to exeutives. The shares vest after a three-year period subjet to the Company s ahievement of a weighted ombination of performane measures over this period, seleted from: ARM Annual Report

130 REMUNERATION REPORT ontinued Comparative total shareholder return, in relation to a peer group; Return on apital employed against a presribed target; and Growth in headline earnings per share in relation to an inflation index. month s notie period by either party. None of the employment ontrats is a fixed-term ontrat. The remuneration paid pursuant to the exeutive employment agreements with the Exeutive Diretors is set out in detail on page 140 of the Diretors Report. These performane measures have been seleted on the basis that, individually or in aggregate, they learly foster the reation of shareholder value. The performane share method aligns the interests of shareholders and exeutives by rewarding superior shareholder return and finanial performane in the future, and by enouraging exeutives to build a shareholding in ARM. In aordane with the requirements of the Share Plan, the number of performane shares awarded to partiipants and additional information about the performane share method is summarised in the annual finanial statements on page142. Bonus share method In terms of the ARM Share Plan, annually sine 2008, exeutives reeive a grant of full value ARM shares that math, aording to a speified ratio, a portion of the annual ash inentive aruing to them. Bonus shares are settled to partiipants after three years, onditional on ontinued employment. The bonus share method is an additional share-based inentive for those exeutives who, through their performane on an annual basis, have demonstrated their value to the Company, and by further enouraging exeutives to build a shareholding in ARM. In aordane with the requirements of the Share Plan, the number of bonus shares granted to partiipants and additional information about the bonus share method is summarised in the annual finanial statements on page 142. Share option sheme Annual alloations of share options in terms of the Sheme are made to exeutives, but at a redued sale following the adoption of the Share Plan. Share options vest in total on the third anniversary of their alloation. Exeutives may elet to defer exerising any share option up until the eighth anniversary of its alloation. On the exerise of share options and as at the exerise date, settlement will be effeted by transferring to the exeutive shares of equivalent value to the inremental growth in value of the underlying shares sine the alloation date. Servie ontrats: Exeutive Diretors Employment agreements have been entered into between the Company and the Exeutive Diretors, namely Messrs Motsepe (Exeutive Chairman), Wilkens (Chief Exeutive Offier), Arnold (Finanial Diretor), Gule (Chief Exeutive: ARM Coal), Mashalane (Chief Exeutive: ARM Platinum), Shiels (Exeutive Diretor: New Business Development) and Steenkamp (Chief Exeutive: ARM Ferrous). These ontrats are subjet to a one alendar The Company has not onluded any agreements with its Exeutive Diretors to pay a fixed sum of money on termination of employment. There are no other servie ontrats between the Company and its Exeutive Diretors. Remuneration poliy: Non-exeutive Diretors remuneration Non-exeutive Diretors fees The Board appoints high-alibre Non-exeutive Diretors who provide a material ontribution to the Company s strategi diretion. On the advie of the Remuneration Committee, whih engages independent third-party advisors to assist with the benhmarking of Diretors fees to omparable ompanies, the Board onsiders and makes reommendations to shareholders regarding Diretors fees payable. In its determination, onside - ration is given, inter alia, to the importane of attrating and retaining experiened Non-exeutive Diretors, market dynamis and the inreasingly demanding responsibilities of Diretors as well as the ontributions of eah Diretor and their partiipation in the ativities of the Board and its ommittees. Board and ommittee retainers and attendane fees are paid quarterly and in arrears. The Company reimburses reasonable travel, subsistene and aommodation expenses to attend meetings; however, offie osts, inluding teleommuniation osts, are deemed to be inluded in the Board retainers. Full details regarding the fees paid to Non-exeutive Diretors are provided in the Diretors report on page 141. Board retainers and per meeting fees On the advie of the Remuneration Committee, the Board reommends for approval by shareholders an annual retainer and per meeting fees for attendane at Board meetings payable to Non-exeutive Diretors. The fees payable to Non-exeutive Diretors for the period ommening on 1 July 2008 were approved by shareholders at the 28 November 2008 Annual General Meeting. The proposed 8% per annum inrease in fees to be paid to Non-exeutive Diretors will be submitted to shareholders at the Annual General Meeting sheduled to be held on 27 November Please refer to the Notie of Annual General Meeting on page 216. Exeutive Diretors do not reeive Diretors fees; however, Mr Abbott reeived suh fees during his seondment from ARM to Harmony. 128 ARM Annual Report 2009

131 Annual Board retainers and meeting attendane fees are as follows for the following periods: 2009 (Rand)* 2008 (Rand)** Annual Per meeting Annual Per meeting Independent Non-exeutive Diretor Non-exeutive Diretor ** Effetive 1 July 2009, should the inrease be approved by shareholders at the Annual General Meeting. ** Effetive 1 July Committee attendane fees On the advie of the Remuneration Committee, the Board approves the ommittee meeting attendane fees payable. The level of suh fees reflets the impat, influene and risk omponent of a ommittee s role in ahieving the Company s objetives as well as the experiene of ommittee members. The fees provide ompensation for preparation for and attendane at meetings. Committee meeting attendane fees are as follows for the following periods: Committee meeting attendane fees are as follows for the following periods: 2009 (Rand)* 2008 (Rand)* Audit Committee Chairman Member Investment, Nomination, Remuneration and Sustainable Development Committees Chairman Member * Effetive 1 July. Servie ontrats: Non-exeutive Diretors In addition to Diretors fees, Non-exeutive Diretors may reeive onsulting fees pursuant to onsultany agreements, or other servie ontrats, onluded at market rates, for defined and pre-approved servies. A onsultany agreement has been entered into between the Company and Mr Chissano to undertake work on behalf of the Company. The renewable ontrat is subjet to one month s notie by either party. There are no other servie ontrats between the Company and its Non-exeutive Diretors. No agreements to pay a fixed sum of money on termination of ontrat have been onluded between the Company and any of its Non-exeutive Diretors. ARM Annual Report

132 BOARD OF DIRECTORS Patrie Motsepe [47] Exeutive Chairman BA (Legal), LLB 2 André Wilkens [60] Chief Exeutive Offier Mine Managers Certifiate of 3 Competeny, MDPA (Unisa), RMIIA Mike Arnold [52] Finanial Diretor BS Eng (Mining Geology), BCompt (Hons), CA(SA) Appointed 1 August Mangisi Gule [57] Chief Exeutive: ARM Coal BA (Hons) Wits, P & DM (Wits Business Shool) 5 Stompie Shiels 6 Jan Steenkamp 7 [53] Exeutive Diretor: [55] Chief Exeutive: Business Development ARM Ferrous BS (Min Eng), MBL, Mine National Met Diploma, Mine Managers Certifiate Managers Certifiate, MDP, Cert. Eng Steve Mashalane [46] Chief Exeutive: ARM Platinum BCom (Hons), PMD (Harvard Business Shool) 8 Dr Manana Bakane-Tuoane [61] Independent Non-exeutive Diretor BA, MA, PhD (Eonomis) 130 ARM Annual Report 2009

133 Frank Abbott 10 Joaquim Chissano 11 [54] Non-exeutive Diretor [69] Independent BCom, CA(SA), MBL Non-exeutive Diretor Finanial Diretor to BA, MA, PhD 31 July 2009 thereafter Non-exeutive Diretor 13 Roy MAlpine 14 Dr Rejoie Simelane 15 [67] Independent [57] Independent Non-exeutive Diretor Non-exeutive Diretor BS, CA BA (Eon and A), MA, PhD (Eon) Mike King [72] Independent Non-exeutive Diretor CA(SA), FCA Bernard Swanepoel [48] Non-exeutive Diretor BS (Min Eng), BCom (Hons) 12 Alex Maditsi [47] Independent Non-exeutive Diretor BPro, LLB, LLM 16 Anton Botha [56] Independent Non-exeutive Diretor BCom (Marketing), BPro, BCom (Hons), SEP (Stanford) Appointed 1 August 2009 ARM Annual Report

134 BOARD OF DIRECTORS ontinued Patrie Motsepe Appointed to the Board in Patrie Motsepe beame Exeutive Chairman during Patrie was a partner in one of the largest law firms in South Afria, Bowman Gilfillan In. He was a visiting attorney in the USA with the law firm, MGuire Woods Battle and Boothe. In 1994 he founded Future Mining, whih grew rapidly to beome a suessful ontrat mining ompany. He then formed ARMgold in 1997, whih listed on the JSE in ARMgold merged with Harmony in 2003 and this ultimately led to the take over of Anglovaal Mining (Avmin). In 2002 he was voted South Afria s Business Leader of the Year by the CEOs of the top 100 ompanies in South Afria. In the same year, he was the winner of the Ernst & Young Best Entrepreneur of the Year Award. He is also the Non-exeutive Chairman of Harmony and the Deputy Chairman of Sanlam. His various business responsibilities inluded being President of Business Unity South Afria (BUSA) from January 2004 to May 2008, BUSA is the representative voie of organised business in South Afria. He is also President of Mamelodi Sundowns Football Club. André Wilkens Appointed to the Board in André Wilkens was formerly the Chief Exeutive of ARM Platinum, a division of ARM. Prior to this, he was Chief Operating Offier of Harmony following the merger of that ompany with ARMgold in He served as Chief Exeutive Offier of ARMgold after joining the Company in The balane of his 34 years mining experiene was gained with Anglo Amerian Corporation of South Afria, where he ommened his areer in 1969 and ulminated in his appointment as Mine Manager of Vaal Reefs South Mine in Mike Arnold Appointed to the Board in Mike Arnold s working areer started in the mining industry in 1980 when he was employed as a geologist at Anglo Amerian Corporation. He qualified as a Chartered Aountant (SA) in 1987 and ompleted his artiles at a large South Afrian auditing firm. Mike joined ARM in 1999 as the Group Finanial Manager of Avgold Limited and in 2003 was appointed as its Finanial Diretor. Most reently, he was the Chief Finanial Offier of ARM. Mangisi Gule Appointed to the Board in Mangisi Gule was appointed Chief Exeutive of ARM Platinum on 27 February 2005 and in May 2007 he was appointed Chief Exeutive of ARM Coal. He has extensive experiene in the field of management, training, human resoures, ommuniations, orporate affairs and business development. Apart from his qualifiations in business management from Wits Business Shool, Mangisi has proven experiene in leadership and mentorship. He has been a leturer, as well as hairman of various professional bodies and a member of various exeutive ommittees and assoiations. He has also been an exeutive diretor and board member for ARMgold as well as an exeutive diretor and board member of Harmony. He is urrently diretor of ARM Coal, ARM Mining Consortium Limited and Modikwa Mining Personnel Servies (Pty) Ltd. Stompie Shiels Appointed to the Board in Stompie Shiels joined ARM in May 2005 after 14 years with Lonmin Platinum where he was the Operations Diretor for the mines. Prior to that he was employed by Rand Mines in the Gold and Platinum Division. After graduating he worked at E.R.P.M. from miner to manager. He then ommissioned the T.G.M.E mine and plant before going to Croodile River Mine after Rand Mines aquired it. He started his mining areer as a learner surveyor at Delmas Collieries prior to attending university to study mining. Jan Steenkamp Appointed to the Board in Jan Steenkamp started his areer with the Anglovaal Group in 1973.Trained as a mining engineer, he has worked at and managed group mining operations within the gold, opper, manganese, iron ore and hrome setions. He was appointed as Managing Diretor of Avgold Limited in September 2002 and also serves on the board of Assmang Limited. In May 2003, Jan was appointed to the Avmin board and was appointed Chief Exeutive Offier of Avmin on 1 July 2003 after serving as Chief Operating Offier. Jan urrently holds the position of Chief Exeutive of ARM Ferrous. Steve Mashalane Appointed to the Board in Steve Mashalane had been the Head of Department of Eonomi Affairs and Tourism in Limpopo for ten years prior to joining ARM. He has extensive experiene in management, researh and business development. He is a member of the Eonomi Researh Counil and is affiliated with various professional bodies. Steve joined ARM in 2005 and was appointed as the Company s Senior Exeutive for Business Development. Following the formation of ARM Coal in February 2006, Steve was appointed as the Chief Exeutive of that division in July 2006 and was appointed Chief Exeutive of ARM Platinum in May Dr Manana Bakane-Tuoane Appointed to the Board in Dr Manana Bakane-Tuoane has extensive experiene in the eonomis field. Her 20 year areer in the aademi field inluded leturing at various institutions inluding the University of Botswana, Lesotho and Swaziland (UBLS), National University of Lesotho (NUL), University of Saskathewan (Setional Leturer) and the University of Fort Hare as Head of Department and Assoiate Professor. During this part of her areer she was seonded to work in the publi servie, where she has held various senior management positions sine Conurrent with the above, Manana has been a member and offie bearer of several international organisations inluding, Winrok International and the Afrian Eonomi Researh Consortium (AERC). 132 ARM Annual Report 2009

135 Frank Abbott Appointed to the Board in Frank Abbott joined the Rand Mines/Barlow Rand Group in 1981, where he obtained broad finanial management experiene at an operational level. He was appointed finanial ontroller to the newly formed Randgold in 1992 and was promoted to finanial diretor of that group in Otober Until 1997, he was a diretor of the gold mining ompanies Blyvooruitziht, Buffelsfontein, Durban Roodepoort Deep and East Rand Proprietary Mines. Initially a non-exeutive diretor of Harmony, he was appointed as finanial diretor of the ompany in Frank was appointed finanial diretor of ARM in 2004 while remaining on Harmony s board as a non-exeutive diretor. In August 2007, Frank was seonded to Harmony as interim finanial diretor and in August 2009 Frank retired as ARM s finanial diretor. He is now a Non-Exeutive Diretor of ARM. Joaquim Chissano Appointed to the Board in Joaquim Chissano is a former President of Mozambique who has served that ountry in many apaities, initially as a founding member of the Frelimo movement during that ountry s struggle for independene. Subsequent to independene in 1975 he was appointed foreign minister and on the death of Samora Mahel in 1986 assumed the offie of President. Frelimo ontested and won the multi-party eletions in 1994 and 1999, returning Joaquim to the presideny on both oasions. He delined to stand for a further term of offie in His presideny ommened during a devastating ivil war and ended with the eonomy in the proess of being reonstruted. He served a term as hairman of the Afrian Union from 2003 to Joaquim is also a non-exeutive diretor on Harmony s board. In 2006, Joaquim was awarded the annual Chatham House Prize, whih is awarded for signifiant ontributions to the improvement of international relations. He was the reipient of the inaugural Mo Ibrahim Prize for Ahievement in Afrian Leadership in Mike King Appointed to the Board in Mike King served his artiles with Deloitte, Plender, Griffiths, Annan & Co. (now Deloitte) and qualified as a hartered aountant (SA). He later beame a Fellow of The Institute of Chartered Aountants in England and Wales (FCA). After 13 years with merhant bank Union Aeptanes Limited, he joined Anglo Amerian Corporation of South Afria Limited in 1973 as a manager in the finane division and in 1979 was appointed Finane Diretor. In 1997, he was appointed Exeutive Deputy Chairman of Anglo Amerian Corporation. He was the Exeutive Vie-hairman of Anglo Amerian pl from its formation in May 1999 until his retirement in May Mike is a non-exeutive diretor of a number of ompanies. Alex Maditsi Appointed to the Board in Alex Maditsi is employed by The Coa-Cola Company. Previously, he was the Senior Diretor Operations Planning and a legal diretor for Coa-Cola Southern & East Afria. Prior to his joining Coa-Cola, Alex was the legal diretor for Global Business Connetions in Detroit, Mihigan. He also spent time at The Ford Motor Company and Shering-Plough in the USA, pratising as an attorney. Alex was a Fulbright Sholar and a member of the Harvard LLM Assoiation. Roy MAlpine Appointed to the Board in Roy MAlpine joined Liberty Life in 1969 and retired as an exeutive diretor in 1998 in order to diversify his interests. He is a former Chairman of the Assoiation of Unit Trusts of South Afria and urrently serves on the boards of a number of listed ompanies. Dr Rejoie Simelane Appointed to the Board in An eonomist by training, Rejoie Simelane ommened her areer at the University of Swaziland, as a leturer in eonomis. Sine then she has worked at the National Department of Trade and Industry, in the Maroeonomi Poliy Unit and at the National Treasury where she headed the Publi Utility Priing and Regulation sub-diretorate of the Maroeonomi Poliy Chief Diretorate. She later served in the apaity of Speial Adviser, Eonomis, to the Premier of Mpumalanga until mid-2004, when she assumed the position of Chief Exeutive of Ubuntu-Botho Investments. Rejoie s board diretorships inlude ARM, Sanlam, Mamelodi Sundowns Football Club and the Counil of Medial Shemes. A reipient of the CIDA Sholarship and a Fulbright Fellow, she is also a member of the Advisory Board of the Bureau for Eonomi Poliy Analysis (BEPA) of the University of Pretoria and the Presidential Eonomi Advisory Panel (PEAP). Bernard Swanepoel Appointed to the Board in Bernard Swanepoel started his areer with Gengold in 1983, ulminating in his appointment as General Manager of Beatrix Mines in He joined Randgold in 1995 as Managing Diretor of the Harmony mine. He was appointed Chief Exeutive Offier of Harmony in In August 2007 he left Harmony to start To-the-Point Growth Speialists. Bernard is a Non-exeutive board member of Sanlam Limited. 16 Anton Botha Appointed to the Board in Anton Botha is a diretor and o-owner of Imalivest, a private investment group that manages proprietary apital provided by its owners, the Imalivest Flexible Funds and a private hedge fund. He also serves as a non-exeutive diretor on the boards of the JSE Limited, the University of Pretoria, Vukile Property Fund Limited (Chairman), Sanlam Limited and ertain Sanlam subsidiaries. He is a past president of the AHI (Afrikaanse Handelsinstituut). Anton spent most of his areer as Chief Exeutive Offier of Gense, building it into a leading South Afrian investment banking group that beame a wholly-owned subsidiary of Sanlam Limited in ARM Annual Report

136 STEERING COMMITTEE André Wilkens Chief Exeutive Offier Mike Arnold Finanial Diretor Steve Mashalane Chief Exeutive: ARM Platinum Mangisi Gule Chief Exeutive: ARM Coal Jan Steenkamp Chief Exeutive: ARM Ferrous Stompie Shiels Exeutive Diretor: Business Development Dan Simelane Chief Exeutive: ARM Exploration Monique Swartz Corporate Development and Head of Investor Relations Mike Shmidt Exeutive: Platinum Operations Diretor Matlala Leader: Transformation Chris Blakey-Milner Leader: Risk Management Graham Butler Exeutive: ARM Ferrous Deon Pieterse Exeutive: Human Resoures Busi Mashiane Leader: Human Resoures Nerine Botes-Shoeman Group Manager: Safety, Health and Environment Sandile Langa Exeutive: ARM Ferrous Mark Bräsler Exeutive: Tehnial Support Alyson D Oyley Company Seretary Claus Shlegel Exeutive: Exploration Afria André Joubert Exeutive: ARM Ferrous Operations Freddy Greaver Manager: Corporate Affairs Peter Steenkamp Exeutive: Coal Operations 134 ARM Annual Report 2009

137 ANNUAL FINANCIAL STATEMENTS CONTENTS 136 Diretors Responsibility 136 Certifiate of the Company Seretary 137 Report of the Independent Auditors 138 Diretors Report 146 Balane sheets 147 Inome statements 150 Statements of hanges in equity 152 Cash flow statements 153 Notes to the finanial statements 202 Report on subsidiary ompanies 203 Prinipal assoiate ompanies, joint ventures and other investments 204 Prinipal subsidiary ompanies 205 Conveniene translation to US Dollar 206 US Dollar balane sheet 207 US Dollar inome statement 208 Statement of hanges in equity 209 US Dollar ash flow statement 210 Finanial summary and statistis 211 Investor relations 214 Glossary of terms and aronyms 216 Notie of Annual General Meeting 219 Form of proxy 220 Notes to the proxy IBC Contat details and administration IBC Forward looking statements ARM Annual Report

138 DIRECTORS RESPONSIBILITY Diretors responsibility for annual finanial statements The Company s Diretors are responsible for the overall oordination of the preparation and fair presentation to shareholders of these finanial statements in aordane with International Finanial Reporting Standards (IFRS) and in the manner required by the Companies At of South Afria. This responsibility inludes: designing, implementing and maintaining internal ontrol relevant to the preparation and fair presentation of finanial statements that are free from material misstatement, whether due to fraud or error; seleting and applying appropriate aounting poliies; and making aounting estimates that are reasonable in the irumstanes. The Audit Committee has onfirmed that effetive systems of internal ontrol and risk management are being maintained. There were no breakdowns in the funtioning of the internal finanial ontrol systems during the year, whih had a material impat on the Company and Group annual finanial statements. A desription of the Audit Committee s funtions is inluded in the Corporate Governane Report on pages 115 to 125 of the Annual Report. The Board onsiders that in preparing the finanial statements the most appropriate aounting poliies have been onsistently applied and supported by reasonable and prudent judgments and estimates in aordane with IFRS. The Diretors are satisfied that the finanial statements fairly present the results of operations and the finanial position for the Group at year end and that the additional information inluded in the Annual Report is aurate and onsistent with the finanial statements. The responsibility of the external auditors, Ernst & Young Inorporated, is to express an independent opinion on the fair presentation of the annual finanial statements based on their audit of the Company and Group. The Audit Committee has satisfied itself that the external auditors were independent of the Company during the period under review. The annual finanial statements and Group annual finanial statements on pages 136 to 210, were approved by the Board and are signed on its behalf by: Patrie Motsepe Exeutive Chairman Johannesburg 7 Otober 2009 André Wilkens Chief Exeutive Offier CERTIFICATE OF THE COMPANY SECRETARY In my apaity as Company Seretary, I hereby onfirm that, in terms of the Companies At, for the year ended 30 June 2009, the Company has lodged with the Registrar of Companies all suh returns as are required of a publi ompany in terms of this At, and that all suh returns are, to the best of my knowledge and belief, true, orret and up to date. Alyson D Oyley Company Seretary Johannesburg 7 Otober ARM Annual Report 2009

139 REPORT OF THE INDEPENDENT AUDITORS TO THE MEMBERS OF AFRICAN RAINBOW MINERALS LIMITED Report on the finanial statements We have audited the annual finanial statements and Group annual finanial statements of Afrian Rainbow Minerals Limited, whih omprises the Diretors report, the balane sheets as at 30 June 2009, the inome statements, the statements of hanges in equity and ash flow statements for the year then ended, a summary of signifiant aounting poliies and other explanatory notes, as set out on pages 138 to 204. Diretors responsibility for the finanial statements The Company s Diretors are responsible for the preparation and fair presentation of these finanial statements in aordane with International Finanial Reporting Standards and in the manner required by the Companies At of South Afria. This responsibility inludes: designing, implementing and maintaining internal ontrol relevant to the preparation and fair presentation of finanial statements that are free from material misstatement, whether due to fraud or error; seleting and applying appropriate aounting poliies; and making aounting estimates that are reasonable in the irumstanes. Auditors responsibility Our responsibility is to express an opinion on these finanial statements based on our audit. We onduted our audit in aordane with International Standards on Auditing. Those standards require that we omply with ethial requirements and plan and perform the audit to obtain reasonable assurane whether the finanial statements are free from material misstatement. In making those risk assessments, the auditors onsider internal ontrol relevant to the entity s preparation and fair presentation of the finanial statements in order to design audit proedures that are appropriate in the irumstanes, but not for the purpose of expressing an opinion on the effetiveness of the entity s internal ontrol. An audit also inludes evaluating the appropriateness of aounting poliies used and the reasonableness of aounting estimates made by the diretors, as well as evaluating the overall presentation of the finanial statements. We believe that the audit evidene we have obtained is suffiient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the finanial statements present fairly, in all material respets, the finanial position of the Company and of the Group as of 30 June 2009, and of their finanial performane and their ash flows for the year then ended in aordane with International Finanial Reporting Standards and in the manner required by the Companies At of South Afria. Registered Auditor Johannesburg 7 Otober 2009 An audit involves performing proedures to obtain audit evidene about the amounts and dislosures in the finanial statements. The proedures seleted depend on the auditors judgement, inluding the assessment of the risks of material misstatement of the finanial statements, whether due to fraud or error. ARM Annual Report

140 DIRECTORS REPORT The Diretors have pleasure in presenting their report on the annual finanial statements of Afrian Rainbow Minerals Limited ( ARM or the Company ) for the year ended 30 June Nature of business Afrian Rainbow Minerals Limited (ARM) is a nihe, diversified South Afrian mining ompany with exellent long-life, low-ost operating assets in key ommodities. ARM, its subsidiaries, joint ventures and assoiates explore, develop, operate and hold interests in the mining and minerals industry. The urrent operational fous is on preious metals, ferrous metals and alloys, whih inlude platinum group metals, nikel, iron ore, manganese ore, hrome ore, ferromanganese and ferrohrome alloys. ARM s partners at the various South Afrian operations are Anglo Platinum, Assore, Impala Platinum, Norilsk Nikel and Xstrata Coal, South Afria. ARM s assets in the rest of Afria are held in a 50:50 joint venture with Vale, whih agreement was onluded in Marh 2009, and onsist of development projets and exploration areas, inluding a opper-obalt projet in the Demorati Republi of Congo (DRC), opper projets in Zambia and a gold projet in Namibia. Holding ompany The Company s largest shareholder is Afrian Rainbow Minerals & Exploration Investments (Proprietary) Limited (ARMI), holding 41.38% of the issued ordinary share apital as at 30 June The sole shareholder of ARMI is a ompany whih is owned by trusts established for the benefit of Mr Patrie Motsepe and that of his immediate family. ARM is one of the largest blak-ontrolled mineral resoures ompanies in South Afria. ARM is ommitted to the spirit and objetives of the Mineral and Petroleum Resoures Development At, and the Broad-Based Soio-Eonomi Charter for the South Afrian Mining Industry (the Mining Charter). To this end and for the benefit of historially disadvantaged South Afrians (HDSAs), the Company has reated the ARM Broad-Based Eonomi Empowerment Trust (BBEE Trust). A rigorous proess of alloating 20.4 million shares equivalent to approximately 10% of ARM s issued share apital to various trust benefiiaries, whih inludes several South Afrian ommunities and leaders, hurh groups, union representatives, a women s upliftment trust and seven regional upliftment trusts, has been ompleted. The BBEE Trust has been able to distribute R24.5 million to benefiiaries during the year arising from ARM s Dividend No 2. Review of operations The reader is referred to reviews by the Exeutive Chairman, the Chief Exeutive Offier, the Finanial Diretor and the review of operations, whih report on the Group s ativities and results for the year ended 30 June 2009, on pages 6 to 68. Corporate governane The Board is ommitted to high standards of orporate gover - nane. These standards are evident throughout the Company in systems of internal ontrols, praties, poliies and proedures. They provide the framework for innovation while ensuring the sustain ability of the business. The Board ontinuously reviews governane matters and ontrol systems to ensure that these are in line with international best praties. The Board onsiders that for the year under review, the Company omplied with King II, with the exeptions noted in the Corporate Governane report on pages 115 to 125. Finanial results The Company s annual finanial statements and aounting poliies appear on pages 136 to 210 of this report. The results for the year ended 30 June 2009 have been prepared in aordane with International Finanial Reporting Standards (IFRS) as issued by the International Aounting Standards Board, in the manner required by the Companies At, as amended, and the JSE Listings Requirements. The onsolidated finanial statements fairly present the state of affairs of the Company and adequate aounting reords have been maintained. Borrowings and ash Total interest-bearing borrowings at 30 June 2009 amounted to R3.7 billion, whih are at similar levels to F2008 (R3.98 billion). Cash and ash equivalents inreased by R0.9 billion to R3.5 billion at 30 June As a result, net gearing was redued to 1.4% (F2008: 8.4%). ARM s borrowing powers are in aordane with its Artiles of Assoiation and are unlimited subjet to any regulation that may be made by the Company in general meetings. There are at present no suh regulations. Going onern To make a determination as to whether the Company will onsider as a going onern, the Diretors have onsidered fats and assumptions, inluding the Company s ash flow foreasts for the period to the end of June The Board believes that the Company has adequate resoures to ontinue business in the foreseeable future. For this reason the Company ontinues to adopt the going onern basis in preparing its finanial statements. Taxation The latest tax assessment for the Company relates to the year ended June All tax submissions up to and inluding June 2008 have been submitted. The assessments for 2001 to 2008 have not yet been issued by the South Afrian Revenue Servies (SARS). The tax return for June 2009 will be submitted during F ARM Annual Report 2009

141 The Company is in dispute with SARS over the dedutibility of a loss laimed in the Company s 1999 tax submission. The Speial Tax Court trial held in August 2007 ruled in favour of SARS and an appeal against the deision was lodged with the Supreme Court of Appeal, whih hearing was held in August 2009 and thus by the finanial year-end, no finality had been reahed. The Company results inlude full provision for this estimated liability. SARS has agreed to grant the Company a deferral of payment of this amount until the matter is finally resolved. Subsidiaries, assoiates and investments The Company s diret and indiret interests in its prinipal subsidiaries, assoiates and investments are refleted in separate shedules presented on pages 202 to 204. Dividend The Board onsiders dividends on an annual basis. Given the strength of ARM s ash position, the Board deemed it advisable to delare a dividend while maintaining its prudent approah in the urrent eonomi environment. Aordingly, on 31 August 2009 a dividend of 175 ents per share was delared, whih amounts to a distribution of R371 million. The dividend was paid to shareholders on 28 September The Board determined that the apital remaining after the payment of the dividend is suffiient to support urrent operations and sustain the business. Capital expenditure Capital expenditure for F2009 amounted to R3.3 billion (F2008: R2.8 billion). Full details are set out in the Finanial Diretor s report on pages 16 to 21 and in the Operational Reviews on pages 27 to 68. Post-balane sheet events As referred to above, in the dispute with SARS, the Supreme Court of Appeal ruled in favour of the Company, whih judgement was handed down on 22 September Share apital The share apital of the Company, both authorised and issued, is set out in note 13 to the annual finanial statements. No share repurhases took plae during the year under review. Shareholder analysis A omprehensive analysis of shareholders together with a list of shareholders benefiially holding, diretly or indiretly, in exess of 5% of the ordinary shares of the Company at 30 June 2009, is set out in the Investor Relations report on pages 211 to 213. Diretorate The omposition of the Board is set out on pages 115 to 116. Curriula vitae may be found at pages 132 to 133. Mr Rik P Menell retired as a Non-exeutive Diretor on 28 November 2008 and Mr Max V Sisulu resigned as an Independent Non-exeutive Diretor on 7 August On 1 August 2009, Mr Mike Arnold was appointed Finanial Diretor and Mr Anton D Botha was appointed as an Independent Nonexeutive Diretor. The Artiles of Assoiation provide for one-third of the previously eleted Diretors to retire by rotation. The Diretors affeted by this requirement are Messrs Motsepe, Wilkens, Chissano and MAlpine and Dr Simelane eah of whom is available for reeletion. In addition, shareholders approval must be sought for Diretors appointed by the Board during the year. Messrs Arnold and Botha are both affeted by this requirement and make themselves available for eletion. The results to 30 June 2009 have not been adjusted as the impat is not onsidered material. Interests of Diretors The diret and indiret benefiial and non-benefiial interests of the Diretors of the Company in the issued share apital of the Company at 30 June 2009 were as follows: PT Motsepe LA Shiels Benefiial 30 June June 2008 Diret Indiret Diret Indiret Benefiial Benefiial Benefiial Nonbenefiial Nonbenefiial Nonbenefiial Nonbenefiial Total Between 30 June 2009 and the date of this report, Mr Botha aquired an indiret, benefiial interest of shares in the Company. The Diretors of the Company delare their interest in any transations with the Company. No material ontrats involving Diretors interests were entered into during the year under review. ARM Annual Report

142 DIRECTORS REPORT ontinued Diretors remuneration Exeutive Diretors The remuneration of Exeutive Diretors onsists of base salaries, benefits, annual ash inentives, and long-term (share-based) inentives. With the exeption of Mr Frank Abbott, who reeived Diretors fees during his seondment to Harmony, Exeutive Diretors do not reeive Diretors fees. Additional information regarding the fixed and variable omponents of Exeutive Diretors remuneration pakages are detailed in the Remuneration report found at pages 126 to 129. The table below sets out the emoluments paid to Exeutive Diretors during the year ended 30 June Emoluments paid to Exeutive Diretors All figures in R000 Board and ommittee fees Salary Arued bonus Pension sheme ontributions Allowanes Total F2009 Total F2008 Exeutive Diretors* P T Motsepe A J Wilkens F Abbott** W M Gule K S Mashalane P C Rörih*** L A Shiels**** J C Steenkamp Total * Mr Arnold was appointed to the Board on 1 August 2009, subsequent to the finanial year end. ** Mr Abbott reeived Diretors' fees during his seondment to Harmony. His full salary and bonus are reovered from Harmony. He beame a Non-exeutive Diretor of ARM on 1 August *** Mr Rörih eased to be a Diretor in February **** Mr Shiels was appointed as a Diretor in February The arued bonuses indiated for F2009 are based upon performane in F2009. The Company enters into employment agreements with Exeutive Diretors on a total ost-to-ompany basis. Exeutive Diretors struture their total salary pakages to allow for pension ontributions, medial aid ontributions, travel allowanes and other benefits in aordane with their individual requirements. 140 ARM Annual Report 2009

143 Non-exeutive Diretors The remuneration of Non-exeutive Diretors onsists of Diretors fees. Board and ommittee retainers and attendane fees are paid quarterly and in arrears. The Board and ommittee fees may be found on pages 128 and 129. The Board has agreed to reommend an inrease in Non-exeutive Diretors fees, effetive from 1 July 2009, to ensure that Non-exeutive Diretors fees remain ompetitive. At the Annual General Meeting, shareholders will be requested to approve the inrease in fees, as set out in the Notie of Annual General Meeting. The table below sets out the emoluments paid to Non-exeutive Diretors during the year ended 30 June Emoluments paid to Non-exeutive Diretors All figures in R000 Board Share and appreiation ommittee rights fees payments ` Consultany fees Out of offie payments Total F2009 Total F2008 Non-exeutive Diretors* Dr M M M Bakane-Tuoane J A Chissano M W King A K Maditsi J R MAlpine R P Menell** Dr R V Simelane M V Sisulu*** Z B Swanepoel Total All figures in US$000s Paid by subsidiary**** J A Chissano R P Menell** M W King Total Payments for the reimbursement of out-of-poket expenses have been exluded. * Mr Botha was appointed on 1 August 2009 subsequent to the year-end. ** Mr Menell retired on 28 November *** Mr Sisulu resigned on 7 August **** Fees payable by the subsidiary to Messrs Motsepe, Wilkens and Abbott, ARM Exeutive Diretors, were paid to ARM. ARM Annual Report

144 DIRECTORS REPORT ontinued Performane shares Conditional awards of full value ARM shares are made to Exeutive Diretors pursuant to The Afrian Rainbow Minerals 2008 Share Plan (the Share Plan). The shares vest after a three-year period subjet to the Company's ahievement of a weighted ombination of performane measures over this period. The total number of performane shares awarded in Deember 2008 was During the year under review 865 performane shares, held by employees who either retired or were retrenhed during the year, vested and performane shares were forfeited. The total number of performane shares as at 30 June 2009 was Between 30 June 2009 and the date of this report, 465 performane shares were forfeited. Therefore, the total number of performane shares outstanding at the date of this report is The number of performane shares awarded to Exeutive Diretors is summarised below. Performane shares Exeutive Diretors P T Motsepe F Abbott** W M Gule K S Mashalane L A Shiels J C Steenkamp A J Wilkens Bonus shares Number of shares Opening balane as at 1 July 2008 Performane shares awarded 2 Deember 2008* Closing balane as at 30 June * Vesting date 3 Deember 2011 (onditional on performane measures). ** Mr Abbott beame a Non-exeutive Diretor on 1 August Pursuant to the Share Plan, exeutives reeive a grant of full value ARM shares that math, aording to a speified ratio, a portion of the annual ash inentive aruing to them. Bonus shares are settled to partiipants after three years, onditional on ontinued employment. The total number of bonus shares granted in Deember 2008 was During the year under review bonus shares, held by employees who either retired or were retrenhed during the year, vested and 798 bonus shares were forfeited. The total number of bonus shares as at 30 June 2009 was Between 30 June 2009 and the date of this report, 697 bonus shares were forfeited. Therefore, the total number of bonus shares outstanding at the date of this report is The number of bonus shares granted to Exeutive Diretors is summarised below. Bonus shares Exeutive Diretors P T Motsepe F Abbott** W M Gule K S Mashalane L A Shiels J C Steenkamp A J Wilkens Number of shares Opening balane as at 1 July 2008 Bonus shares granted 2 Deember 2008* Closing balane as at 30 June * Vesting date 3 Deember ** Mr Abbott beame a Non-exeutive Diretor on 1 August ARM Annual Report 2009

145 Share option sheme Annual alloations of share options in terms of The Afrian Rainbow Minerals Share Inentive Sheme (the Sheme) are made to Exeutive Diretors, but at a muh redued sale following the adoption of the Share Plan. A shedule of share option entitlements aruing to Exeutive Diretors and the transations that ourred during the year to 30 June 2009 is set out below: Shedule of share option entitlements Exeutive Diretors P T Motsepe F Abbott* W M Gule No of options Avg prie R No of options Avg prie R No of options Avg prie R Opening balane as at 1 July Options granted Options exerised Average issue prie per option Gross sale prie per option Options forfeited and lapsed Closing balane as at 30 June 2009** Grant date of options 15 Deember June Otober November Otober Deember Exeutive Diretors K S Mashalane L A Shiels J C Steenkamp A J Wilkens No of options Avg prie R No of options Avg prie R No of options Avg prie R No of options Avg prie R Opening balane as at 1 July Options granted Options exerised Average issue prie per option Gross sale prie per option Options forfeited and lapsed Closing balane as at 30 June 2009** Grant date of options 15 Deember June Otober November Otober Deember Mr R P Menell, who retired on 28 November 2008, exerised his remaining options in F2007. * Mr Abbott retired as Finanial Diretor on 1 August 2009 and remains as a Non-exeutive Diretor. ** The latest expiry date is 5 Deember ARM Annual Report

146 DIRECTORS REPORT ontinued Option vesting dates A shedule of option vesting dates may be found below. Options granted before 1 Deember 2008: No options may be exerised prior to the first anniversary of the issue date relative to suh options. Up to a third of suh options may be exerised eah year until the third anniversary of the issue date. Options granted after 1 Deember 2008: No options may be exerised prior to the third anniversary of the issue date relative to suh options. Options may not be exerised later than the eighth anniversary of the issue date, after whih suh options lapse. Shedule of option vesting dates Number of options Average issue prie per option Options outstanding at 30 June R73.74 Vested 3 May R Deember R Otober R Deember R June R Otober R November R Deember R June R June R Otober R Otober R November R April R May R June R Vesting on 17 Otober R November R April R May R June R Otober R November R April R May R June R November R Deember R Marh R June R ARM Annual Report 2009

147 Share option movements Total share options outstanding under the Sheme shall not exeed 10 perent of the total issued share apital of the Company. A shedule of share option movements is set out below: Shedule of movements Ordinary shares in issue The Sheme F2009 Shares F2008 Shares F2009 Options F2008 Options Range of strike pries From Ordinary shares in issue at 1 July Options previously granted at 1 July * R27.00 R Shares allotted: Share options exerised ( ) ( )* R27.00 R Share options: Granted to partiipants** * R96.20 R Forfeited (28 217) ( ) R73.99 R Balane at 30 June R27.00 R Movement subsequent to year-end Shares allotted: Share options exerised (41 278) R27.00 R73.99 Share options: Granted to partiipants nil Forfeited (11 414) R96.20 R Balane at 15 September Balane available to be issued in terms of the Sheme Maximum number of options permitted by the Sheme * F2008 options inlusive of options granted to urrent and former Exeutive Diretors in F2008. ** Refer to the shedule of option vesting dates. To External auditors Ernst & Young Inorporated (E&Y) ontinued in offie as external auditors for the Company. At the Annual General Meeting, shareholder approval will be sought for the reappointment of E&Y as ARM s external auditors for the 2010 finanial year and to onfirm Mr M C Herbst as the individual registered auditor. Seretary Ms Alyson D Oyley is Company Seretary of ARM. Her business and postal addresses appear on the inside bak over of the report. Changes to the offie of the Company Seretary during the year are set out on page 119. Speial resolutions No speial resolutions were passed by ARM and its subsidiaries during the period 1 July 2008 to the date of this report. Listings Additional information regarding Diretors remuneration may be found in the Remuneration report on pages 126 to 129. The Company s shares are listed on the JSE Limited (JSE) under General Mining. The Company voluntarily de-listed from The London Stok Exhange, in An unsponsored Level 1 Amerian Depositary Reeipt programme with JP Morgan Chase Bank is also available to investors for over the ounter or private transations. STRATE (Share Transations Totally Eletroni) The Company s shares were dematerialised on 5 November Should shareholders wish to trade ertifiated ARM (previously Avmin) shares on the JSE they are urged to deposit them with a CSDP (Central Seurities Depository Partiipant) or qualifying stokbroker, as soon as possible. Trading in the Company s shares on the JSE is only possible if they exist in eletroni format in the STRATE environment. If members have any queries, they should ontat the Company s transfer seretaries, Computershare Investor Servies (Pty) Limited, whose details are refleted on the inside bak over of this report. Conveniene translation into United States Dollars To assist users of this report, translations of onveniene into United States Dollars are provided for in the Company s finanial statements. These translations are based upon average rates of exhange for inome statement and ash flow statement items and at those rates prevailing at year end for balane sheet items. These statements are inluded on pages 205 to 210 and do not form part of the audited finanial statements. ARM Annual Report

148 BALANCE SHEETS at 30 June Group Company R million Notes F2009 F2008 F2009 F2008 Assets Non-urrent assets Property, plant and equipment Investment property Intangible assets Deferred tax assets Loans and long-term reeivables Finanial assets 7 78 Inventories Investment in assoiate Other investments Current assets Inventories Trade and other reeivables Taxation Cash and ash equivalents Held for sale assets Total assets Equity and liabilities Capital and reserves Ordinary share apital Share premium Other reserves Retained earnings Equity attributable to equity holders of ARM Minority interest Total equity Non-urrent liabilities Long-term borrowings Deferred tax liabilities Long-term provisions Current liabilities Trade and other payables Short-term provisions Taxation Overdrafts and short-term borrowings interest-bearing non-interest-bearing Total equity and liabilities ARM Annual Report 2009

149 INCOME STATEMENTS For the year ended 30 June Group Company R million Notes F2009 F2008 F2009 F2008 Revenue Sales Cost of sales 23 (6 048) (5 516) (493) (425) Gross profit Other operating inome Other operating expenses (1 255) (856) (335) (280) Profit from operations before exeptional items Inome from investments Finane osts 26 (385) (438) (176) (175) Inome from assoiate* Profit before taxation and exeptional items Exeptional items (54) 128 Profit before taxation Taxation 28 (1 727) (2 084) (72) (225) Profit for the year Attributable to: Minority interest (198) 460 Equity holders of ARM Additional information Headline earnings (R million) Headline earnings per share (ents) Basi earnings per share (ents) Diluted headline earnings per share (ents) Diluted basi earnings per share (ents) Number of shares in issue at end of year (thousands) Weighted average number of shares in issue (thousands) Weighted average number of shares used in alulating diluted earnings per share (thousands) Net asset value per share (ents) EBITDA (R million) Dividend delared after year end (ents per share) * Exeptional items inluded in inome from assoiate (R million) ARM Annual Report

150 148 ARM Annual Report 2009

151 ARM Annual Report

152 STATEMENTS OF CHANGES IN EQUITY For the year ended 30 June Group R million Notes Share apital and premium Revaluation of listed investment Other* Retained earnings Total shareholders of ARM Total minority interest Balane at 30 June Revaluation of listed investment 8 (335) (335) (335) Deferred tax on revaluation of listed investment Net impat of revaluation of listed investment (277) (277) (277) Profit for the year Share-based payments Share options exerised Realignment of urreny (6) (6) (6) Minorities bought out in Copperbelt venture (29) (29) (29) Dividend paid (315) (315) (315) Other (3) (3) (3) Balane at 30 June Revaluation of listed investment 8 (954) (954) (954) Deferred tax on revaluation of listed investment Net impat of revaluation of listed investment (820) (820) (820) Profit for the year (198) Share-based payments Share options paid in ash (25) (25) (25) Share options exerised Realignment of urreny (43) (43) (43) Dilution of interest in TEAL Share appreiation rights: TEAL minority share Premium paid on purhase in minorities FCTR realised Dividend paid (847) (847) (847) Other 10 (8) 2 2 Balane at 30 June Total R million F2009 F2008 F2007 * Other reserves onsist of the following: General reserve Insurane ontingeny Share-based payments Foreign urreny translation reserve (FCTR) (26) (2) 4 Premium paid on purhase of minorities (14) (29) Total ARM Annual Report 2009

153 For the year ended 30 June Company R million Notes Share apital and premium Revaluation of listed investment Other* Retained earnings Total Balane at 30 June Revaluation of listed investment 8 (335) (335) Deferred tax on revaluation of listed investment Net impat of revaluation of listed investment (277) (277) Profit for the year Dividend paid (315) (315) Share-based payments Share options exerised Other (2) (2) Balane at 30 June Revaluation of listed investment 8 (954) (954) Deferred tax on revaluation of listed investment Net impat of revaluation of listed investment (820) (820) Profit for the year Dividend paid (847) (847) Share-based payments Share options paid in ash (1) (1) Share options exerised Other 2 2 Balane at 30 June R million F2009 F2008 F2007 * Other reserves onsist of the following: General reserve Share-based payments Total ARM Annual Report

154 CASH FLOW STATEMENTS For the year ended 30 June Group Company R million Notes F2009 F2008 F2009 F2008 Cash flow from operating ativities Cash reeipts from ustomers Cash paid to suppliers and employees (6 754) (5 701) (637) (630) Cash generated from operations Interest reeived Interest paid (328) (412) (177) (132) Dividends reeived Dividend paid (847) (315) (847) (315) Taxation paid 32 (1 977) (466) (88) (172) Net ash inflow from operating ativities Cash flow from investing ativities Additions to property, plant and equipment to maintain operations (927) (1 194) (5) (6) Additions to property, plant and equipment to expand operations (2 337) (1 465) (863) (287) Proeeds on disposal of property, plant and equipment 9 28 Proeeds/(ost) on disposal of 15% in TEAL (53) Proeeds on disposal of 50% of Nkomati final tranhe payment Proeeds on sale of interest in Otjikoto 32 Proeeds on sale of interest in Zambian properties 37 Inrease in investment loans and reeivables 164 (3) Net ash outflow from investing ativities (3 135) (2 427) (757) (161) Cash flow from finaning ativities Proeeds on exerise of share options Share options settled in ash (25) (1) Long-term borrowings raised Long-term borrowings repaid (312) (804) (300) (35) (Derease)/inrease in short-term borrowings (120) Net ash (outflow)/inflow from finaning ativities (171) (175) (125) 31 Net inrease in ash and ash equivalents Cash and ash equivalents at beginning of year Foreign urreny translation on ash balane (13) (12) Cash and ash equivalents at end of year Cash generated from operations per share (ents) ARM Annual Report 2009

155 NOTES TO THE FINANCIAL STATEMENTS 1 Aounting poliies Statement of ompliane The onsolidated Group and Company annual finanial statements are prepared in aordane with and omply with International Finanial Reporting Standards (IFRS) and Interpretations of those standards, as adopted by the International Aounting Standards Board (IASB) and appliable legislation. Impat of new standards During the urrent finanial year the following new and revised aounting standards were adopted by ARM: IAS 18: Determining whether an entity is ating as a prinipal or as an agent IAS 39 & IFRS 7 Amendments to IAS 39 and IFRS 7 Relassifiation of finanial assets IFRIC 12 Servie onession arrangements IFRIC 13 Customer loyalty programmes IFRIC 14 IAS 19: The Limit on Defined Benefit Asset, Minimum Funding Requirements and their Interation None of the standards or interpretations adopted had any impat on the finanial statements. Basis of preparation The prinipal aounting poliies as set out below are onsistent in all material aspets with those applied in the previous years exept for the above-mentioned new and revised standards. The onsolidated Group and Company finanial statements have been prepared on an historial ost basis exept for the revaluation of available-for-sale finanial assets, adjusted diretly through equity and finanial assets and finanial liabilities (inluding derivative instruments) at fair value through profit or loss. The finanial statements are presented in South Afrian Rand and all values are rounded to the nearest million (Rm) unless otherwise indiated. Basis of onsolidation The onsolidated finanial statements omprise the finanial statements of Afrian Rainbow Minerals Limited and its subsidiaries, joint ventures and assoiates at 30 June eah year. Subsidiary ompanies Subsidiary ompanies are investments in entities in whih the Company has ontrol over the finanial and operating deisions of the entity. Subsidiaries are onsolidated in full from the date of aquisition, being the date on whih the Group obtains ontrol and ontinue to be onsolidated until the date suh ontrol eases. Minority interest represents the portion of profit or loss and equity not held by the Group and are presented in the profit or loss and within equity in the onsolidated balane sheet, separately from parent shareholders equity. The Group aounts for 100% of the losses for those subsidiaries whose equity is in defiit. The Group will then aount for 100% of the profits until the defiit has been removed. Investments in subsidiaries in the Company finanial statements are aounted for at ost less impairment. Joint ventures Joint ventures are ontratual agreements whereby the Group has joint ontrol over the finanial and operating poliy deisions of the enterprise. The Group attributable share of the assets, liabilities, inome and expenses and ash flows of suh jointly ontrolled entities are proportio - nately onsolidated on a line-by-line basis in the Group finanial statements. Uninorporated joint ventures are onsolidated in the Company finanial statements on the same basis as above. Jointly ontrolled entities are aounted for in the Company finanial statements at ost less impairment (refer note 20). Investment in an assoiate An assoiate is an investment in an entity in whih the Group has signifiant influene and is neither a subsidiary nor a joint venture of the Group. At Group level investments in assoiates are aounted for using the equity method of aounting. Investments in the assoiates are arried in the balane sheet at ost plus post-aquisition hanges in the Group s share of net assets of the assoiates, less any impairment in value. The profit or loss reflets the Group s share of the post-aquisition profit after tax of the assoiate. After appliation of the equity method, the Group determines whether it is neessary to reognise any additional impairment losses. Investments in assoiates in the Company finanial statements are aounted for at ost less impairment. Business ombinations The purhase method of aounting is used to aount for the aquisition of subsidiaries, joint ventures and assoiates by the Group. The ost of an aquisition is measured as the fair value of the assets given up, equity instruments issued and liabilities inurred or assumed at the date of exhange, plus osts diretly attributable to the aquisition. Identifiable assets aquired and liabilities and ontingent liabilities assumed in a business ombination are measured initially at their fair values at the aquisition date, irrespetive of the extent of any minority interest. The exess of the ost of aquisition over the fair value of the Group s share of the identifiable net assets aquired is reorded as goodwill. If the ost of aquisition is less than the fair value of the net assets of the subsidiary aquired, the differene is reognised diretly in the profit or loss. Inter-Company transations and balanes Consolidation priniples relating to the elimination of inter- Company transations and balanes and adjustments ARM Annual Report

156 NOTES TO THE FINANCIAL STATEMENTS ontinued for unrealised inter-company profits are applied in all intra-group dealings, for all transations with subsidiaries, assoiated ompanies or joint ventures. Current taxation The harge for urrent tax is based on the results for the year as adjusted for inome that is exempt and expenses that are not dedutible using tax rates that have been enated or substantially enated at balane sheet date that are appliable to the taxable inome. Taxation is reognised in the profit or loss exept to the extent that it relates to items reognised diretly in equity, in whih ase the tax amounts are reognised diretly in equity. Deferred taxation A deferred tax asset is the amount of inome taxes reoverable in future periods in respet of dedutible temporary differenes, the arry forward of unused tax losses and the arry forward of unused tax redits. A deferred tax liability is the amount of inome taxes payable in future periods in respet of taxable temporary differenes. Temporary differenes are differenes between the arrying amount of an asset or liability and its tax base. The tax base of an asset is the amount that is dedutible for tax purposes if the eonomi benefits from the asset are taxable or the arrying amount of the asset if the eonomi benefits are not taxable. The tax base of a liability is the arrying amount of the liability less the amount dedutible in respet of that liability in future periods. The tax base of revenue reeived in advane is the arrying amount less any amount of the revenue that will not be taxed in future periods. Deferred tax is reognised for all temporary differenes, unless speifially exempt, at the tax rates that have been enated or substantively enated at the balane sheet date and is not disounted. A deferred tax asset is only reognised to the extent that it is probable that taxable profits will be available against whih dedutible temporary differenes an be utilised. Deferred tax arising on investments in subsidiaries, assoiates and joint ventures is reognised exept where the Group is able to ontrol the reversal of the temporary differene and it is probable that the temporary differene will not reverse in the foreseeable future. The arrying amount of deferred inome tax assets is reviewed at eah balane sheet date and redued to the extent that it is no longer probable that suffiient taxable profit will be available to allow all or part of the deferred inome tax asset to be utilised. Unreognised deferred inome tax assets are reassessed at eah balane sheet date and are reognised to the extent that it has beome probable that future taxable profit will allow the deferred tax asset to be reovered. Deferred inome tax assets and deferred inome tax liabilities are offset if a legally enforeable right exists to set off urrent tax assets against urrent tax liabilities and the deferred inome taxes relate to the same taxable entity and the same taxation authority. Seondary taxation on ompanies Seondary tax on ompanies (STC) is reognised on the delaration date of all dividends and is inluded in the taxation expense in the profit or loss in the related period. Unutilised STC redits are raised as deferred tax assets to the extent that a dividend is expeted to be paid in the foreseeable future. Provisions Provisions are reognised when the following onditions have been met: A present legal or onstrutive obligation to transfer eonomi benefits as a result of past events exists; and A reasonable estimate of the obligation an be made. A present obligation is onsidered to exist when there is no realisti alternative but to make the transfer of eonomi benefits. The amount reognised as a provision is the best estimate at the balane sheet date of the expenditure required to settle the obligation. Only expenditure related to the purpose for whih the provision is raised is harged against the provision. If the effet of the time value of money is material, provisions are determined by disounting the expeted future ash flows at a pre-tax rate that reflets urrent market assessments of the time value of money and, where appropriate, the risks speifi to the liability. Insurane provisions Claims (net of antiipated reoveries under reinsurane arrangements when the right to set off exists) notified but not settled at year end, and inurred at year end but not reported, have been provided for using the best information available at the time. The estimates inlude provision for inflation and other ontingenies arising in the settlement of laims. Environmental rehabilitation obligation The estimated ost of rehabilitation, omprising liabilities for deommissioning and restoration, is based on urrent legal requirements and existing tehnology and is reassessed annually. Cost estimates are not redued by the potential proeeds from the sale of assets. Deommissioning The present value of estimated deommissioning obligations, being the ost to dismantle all strutures and rehabilitate the land on whih it is loated that arose through establishing the mine, is inluded in long-term provisions. The unwinding of the obligation is inluded in the profit or loss under finane ost. The initial related deommissioning asset is reognised in property plant and equipment. The estimated future osts of deommissioning are reviewed annually and adjusted as appropriate. Changes in the estimated future osts or in the disount rate applied are added to or deduted from the ost of the asset. Restoration The present value of the estimated ost of restoration, being the ost to orret damage aused by ongoing mining operations, is inluded in long-term provisions. This estimate 154 ARM Annual Report 2009

157 is revised annually and any movement is harged against profit or loss. Expenditure on ongoing rehabilitation is harged to the profit or loss under ost of sales as inurred. Environmental rehabilitation trust funds Annual payments are made to rehabilitation trust funds in aordane with statutory requirements. The investment in the trust funds are arried at ost in the Company. These funds are onsolidated as ARM Group ompanies are the sole ontributors to the funds and exerise full ontrol through the respetive boards of trustees. The balanes are inluded under restrited ash. Finanial instruments Finanial instruments reognised on the balane sheet inlude ash and ash equivalents, investments, trade and other reeivables, trade and other payables and long- and short-term borrowings. The reognition methods adopted are dislosed in the individual poliy statements assoiated with eah item. The Group does not apply hedge aounting. Finanial assets Finanial assets are initially measured at fair value plus transation osts. Finanial assets at fair value through profit and loss are measured at fair value with gains and losses being reognised in profit and loss. Held-to-maturity investments are measured at amortised ost less any impairment losses reognised to reflet irreoverable amounts. Loans and reeivables are measured at amortised ost less impairment losses or reversals whih are reognised in profit and loss. Available-for-sale finanial assets are measured at fair value with gains and losses being reognised diretly in equity. Impairment losses are reognised in profit or loss. Any impairment reversals on debt instruments lassified as available-for-sale are reognised in profit and loss. Impairment losses on equity investments are not reversed through the profit and loss, inreases in their fair value after impairment are reognised diretly in equity. Impairment of finanial assets The Group assesses at eah balane sheet date whether there is any objetive evidene as a result of one or more events that has ourred after the initial reognition, that a finanial asset or a group of finanial assets is impaired. Assets arried at amortised ost If there is an indiation that an impairment exists, the amount of the loss is measured as the differene between the asset s arrying amount and the present value of the estimated future ash flows disounted at the finanial asset s original effetive interest rate. The arrying amount of the asset is redued through use of an allowane aount. Available-for-sale assets In the ase of equity seurities, if there is a ontinuous drop in the fair value of the seurity below its ost, the seurity is impaired. The umulative loss, measured as the differene between the aquisition ost and the urrent fair value less any impairment loss previously reognised on the seurity, is then reognised in the profit or loss. Finanial liabilities Finanial liabilities at fair value through profit and loss are measured at fair value with gains and losses being reognised in profit and loss. Finanial liabilities at amortised ost are measured at fair value and subsequently at amortised ost using the effetive interest method. Finanial guarantees Finanial Guarantee Contrats, that are not onsidered to be insurane ontrats, are initially reognised at fair value and subsequently remeasured at the higher of the amount determined in aordane with IAS 37 Provisions, Contingent Liabilities and Contingent Assets and the amount initially reognised, less when appropriate, umulative amortisation reognised in aordane with IAS 18 Revenue. Derivative instruments Derivatives, inluding embedded derivatives, are initially and subsequently measured at fair value. Fair value adjustments are reognised in the profit or loss. Forward exhange ontrats are valued at the balane sheet date using the forward rate available at the balane sheet date for the remaining maturity period of the forward ontrat. Any gain or loss from valuing the ontrat against the ontrated rate is reognised in the profit or loss. A orresponding forward exhange asset or liability is reognised. On settlement of a forward exhange ontrat, any gain or loss is reognised in the profit or loss. Cash and ash equivalents Cash and ash equivalents are measured at amortised ost. Cash that is subjet to legal or ontratual restritions on use is inluded in ash but indiated as restrited. Investments Investments, other than investments in subsidiaries, assoiates and joint ventures, are onsidered to be available-for-sale finanial assets and are subsequently arried at fair value. Inreases and dereases in fair values of available-for-sale investments are refleted in the revaluation reserve. On disposal of an investment, the balane in the revaluation reserve is reognised in the profit or loss. Where ative markets exist, fair values are determined with referene to the stok exhange quoted selling pries at the lose of business on the balane sheet date. Where there are no ative markets, fair value is determined using valuation tehniques like reent similar transations, referene to similar transations, disounted ash flow and option priing models. Where a reliable fair ARM Annual Report

158 NOTES TO THE FINANCIAL STATEMENTS ontinued value annot be determined, investments are arried at ost. All regular purhases and sales of finanial assets are reognised on the trade date, ie the date the Group ommits to purhasing the asset. Reeivables Trade reeivables, whih generally have day terms, are initially reognised at fair value and subsequently at amortised ost. Reeivables are finanial assets lassified as loans and reeivables. Some reeivables are lassified at fair value through profit and loss. These are reeivables where the amount that will be reeived in the future is dependent on the ommodities or onentrate ontent, and/or the prie at the date of settlement. An impairment is reognised when there is evidene that an entity will not be able to ollet all amounts due aording to the original terms of the reeivables. The impairment is the differene between the asset s arrying amount and the present value of estimated future ash flows, disounted at the original effetive interest rates. The amount of the impairment is harged to the profit or loss. Payables Trade and other payables are not interest bearing and are initially reorded at fair value and subsequently at amortised ost and lassified as finanial liabilities at amortised ost. Interest-bearing loans and borrowings All loans and borrowings are initially reognised at the fair value of the onsideration reeived net of issue osts assoiated with the borrowing. After initial reognition, interest-bearing loans and borrowings are subsequently measured at amortised ost using the effetive interest method and lassified as finanial liabilities at amortised ost. Amortised ost is alulated by taking into aount any issue ost and any disount or premium on settlement. Gains and losses are reognised in the profit or loss when the liabilities are dereognised, as well as through the amortisation proess. Dereognition of finanial assets A finanial asset (or, where appliable a part of a finanial asset or part of a group of similar finanial assets) is dereognised where: the rights to reeive ash flows from the asset have expired; the Group retains the right to reeive ash flows from the asset, but has assumed an obligation to pay them in full without material delay to a third party under a pass-through arrangement; or the Group has transferred its rights to reeive ash flows from the asset and either (a) has transferred substantially all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred ontrol of the asset. Where the Group has transferred its right to reeive ash flows from an asset and has neither transferred nor retained substantially all the risks and rewards of the asset nor transferred ontrol of the asset, the asset is reognised to the extent of the Group s ontinuing involvement in the asset. Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the original arrying amount of the asset and the maximum amount of onsideration that the Group ould be required to repay. Dereognition of finanial liabilities A finanial liability is dereognised when the obligation under the liability is disharged, anelled or expired. Where an existing finanial liability is replaed by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, suh an exhange or modifiation is treated as a dereognition of the original liability and the reognition of a new liability, and the differene in the respetive arrying amount is reognised in the profit or loss. Set-off If a legally enforeable right exists to set-off reognised amounts of finanial assets and liabilities and the Group intends to settle on a net basis or to realise the asset and settle the liability simultaneously, all related finanial effets are netted. Intangible assets Intangible assets aquired are refleted at ost. Following initial reognition, intangible assets are arried at ost less any aumulated amortisation and any aumulated impairment losses. Intangible assets with finite lives are amortised over their useful eonomi life and assessed for impairment where there is an indiation that the intangible asset may be impaired. The amortisation period and the amortisation method for an intangible asset with finite useful life are reviewed at least at eah finanial year end. Amortisation is based on units of prodution. The amortisation expense on intangible assets with finite lives is reognised in the profit or loss in the expense ategory onsistent with the funtion of the intangible asset. Internally generated intangible assets are not apitalised and expenditure is refleted in the profit or loss in the year in whih the expenditure is inurred. Gains or losses arising from dereognition of an intangible asset are measured as the differene between the net disposal proeeds and the arrying amount of the asset and are reognised in profit or loss when the asset is dereognised. There are no indefinite life intangible assets. Investment property Investment properties are arried at ost and depreiated on a straight-line basis over their estimated useful lives to an estimated residual value. Where the residual value exeeds the arrying amount, amortisation is ontinued at a zero harge until its residual value subsequently dereases to an amount below the arrying amount. Where the building has hanged from owner oupied to investment property in order to earn rentals and for apital appreiation, the ost deemed is the arrying amount if appliable. An impairment is taken in the profit or loss when the reoverable amount is less than the arrying amount. 156 ARM Annual Report 2009

159 Property, plant and equipment Property, plant and equipment other than land and buildings, are stated at ost less aumulated depreiation and aumulated impairment losses. Land and buildings Land and buildings are arried at ost. Land is only depreiated where the form is hanged so that it affets its value. Land is then depreiated on a straight-line method over the mining ativity to a maximum of 25 years to its estimated residual value. Buildings are depreiated on a straight-line basis over their estimated useful lives to an estimated residual value, if suh value is signifiant. The annual depreiation rates used vary between 2% and 5%. New aquisitions and additions to existing land and buildings are refleted at ost. Mine development and deommissioning Costs to develop new ore bodies, to define further mineralisation in existing ore bodies and to expand the apaity of a mine or its urrent prodution, as well as the deommissioning thereof, are apitalised. Development osts to maintain prodution are expensed as inurred. Mine development and deommissioning assets are amortised using the units-of-prodution method based on estimated proven and probable ore reserves. Proven and probable ore reserves reflet estimated quantities of eonomially reoverable reserves whih an be reovered in future from known mineral deposits. These reserves are reassessed annually. The maximum period of amortisation using this method is 25 years. Mineral rights Mineral rights that are being depleted are amortised over their estimated useful lives using the units-of-prodution method based on proven and probable ore reserves. The maximum rate of depletion of any mineral right is 25 years. Plant and mahinery Mining plant and mahinery is amortised on the units-ofprodution method over the lesser of its estimated useful life based on estimated proven and probable ore reserves. Non-mining plant and mahinery is depreiated over its useful life. The maximum life of any single item as used in an amortisation alulation is 25 years. When plant and equipment omprises major omponents with different useful lives, these omponents are aounted for as separate items. Expenditure inurred to replae or modify a signifiant omponent of plant is apitalised and any remaining book value of the omponent replaed is written off in the profit or loss. Other Mine properties (inluding houses, shools and admin is - tration bloks), motor vehiles and furniture and equipment are depreiated on the straight-line basis over their expeted useful lives, to estimated residual values. The residual value is the amount urrently expeted to be obtained for the asset after deduting estimated osts of the disposal, if the asset was already at the end of its useful life. Depreiation rates Depreiation rates that are based on units-of-prodution require management estimates and judgements utilised in business models, whih take into aount metal pries, exhange rates, proven and probable ore reserves and mineral resoures. The atual lives of the assets and residual values are assessed annually and may vary depending on a number of fators. In assessing asset lives, fators suh as tehnologial innovation, asset life yles and maintenane programmes are taken into aount. Residual value assessments onsider issues suh as future market onditions, the remaining life of the asset and projeted disposal value. The annual depreiation rates generally used in the Group are: furniture and equipment 10% to 33%; mine properties 4% to 7%; motor vehiles 20%; mine development plant and mahinery, and mineral rights and land 10 to 25 years; investment properties 2%; and intangible assets over life of mine to a maximum of 25 years. Exploration expenditure All exploration expenditures are expensed until they result in projets that are evaluated as being tehnially and ommerially feasible and a future eonomi benefit is highly probable. In evaluating if expenditures meet these riteria to be apitalised the Company utilises several different soures of information and also differentiates projets by levels of risks, inluding: Degree of ertainty over the mineralisation of the ore body. Commerial risks, inluding but not limited to ountry risk. Prior exploration knowledge available about the target ore body. Exploration expenditure on greenfields sites, being those where the Group does not have any mineral deposits whih are already being mined or developed, is expensed as inurred until a bankable feasibility study has been ompleted, after whih the expenditure is apitalised. Exploration expenditure on brownfields sites, being those adjaent to any mineral deposits whih are already being mined or developed, is only expensed as inurred until the Company has obtained suffiient information from all available soures to ameliorate the projet risk areas identified above and whih indiates by means of a prefeasibility study that the future eonomi benefits are highly probable. Exploration expenditure relating to extensions of mineral deposits whih are already being mined or developed, inluding expenditure on the definition of mineralisation of suh mineral deposits, is apitalised. Ativities in relation to evaluating the tehnial feasibility and ommerial viability of mineral resoures are treated as forming part of exploration expenditures. ARM Annual Report

160 NOTES TO THE FINANCIAL STATEMENTS ontinued Costs related to property aquisitions and mineral and surfae rights are apitalised. Impairment Non-urrent assets held for sale Non-urrent assets and disposal groups are lassified as held for sale (under urrent assets) if the arrying amount of these assets will be reovered prinipally through a sale transation rather than through ontinued use. This ondition will only be regarded as met if the sale transation is highly probable and the asset (or disposal group) is available for sale in its present ondition. For the sale to be highly probable management must be ommitted to the plan to sell the asset and the transation should be expeted to qualify for reognition as a omplete sale within 12 months of the date of lassifiation. Non-urrent assets held for sale are measured at the lower of their previous arrying amounts and their fair value less ost to sell and are not depreiated. Impairment of non-finanial assets The arrying value of assets is reviewed at eah balane sheet date to assess whether there is any indiation of impairment. If any suh indiation exists, the reoverable amount of the asset or ash generating unit is estimated. The reoverable amount is the higher of fair value less ost to sell or value in use. Value in use is determined by an estimated future ash flow disounted at a pre-tax disount rate. Where the arrying value exeeds the estimated reoverable amount, suh assets are written down to their reoverable amount and the differene is reognised in the profit or loss. If the irumstanes leading to the impairment no longer exist, the appropriate portion of the impairment loss previously reognised is written bak. Intangible assets with an indefinite life are tested annually for impairment. Borrowing osts Borrowing osts that are diretly attributable to the aquisition, onstrution or development of a qualifying asset that requires a substantial period of time to be prepared for its intended use are apitalised. Capitalisation of borrowing osts as part of the ost of a qualifying asset ommenes when: expenditures for the asset are being inurred; borrowing osts are being inurred; and ativities that are neessary to prepare the asset for its intended use or sale are in proess. Capitalisation is suspended when the ative development is interrupted and eases when the ativities neessary to prepare the asset for its use are omplete. Other borrowing osts are harged to finane osts in the profit or loss as inurred. Inventories Inventories are valued at the lower of ost and net realisable value with due allowanes being made for obsolete and slow-moving items. Net realisable value is the estimated selling prie in the ordinary ourse of business, less estimated osts of ompletion and the estimated osts neessary to make the sale. Cost is determined using the following basis: Consumables and maintenane spares are valued at average ost. Finished produts are valued at weighted average ost, inluding an appropriate portion of diret overhead osts. Work-in-proess is valued at weighted average ost, inluding an appropriate portion of diret overhead osts. Raw materials are valued at weighted average ost. By-produts are valued at weighted average ost, the weighting being the ratio of its sales value to the total sales value of all the produts per tonne of ore. Inventories are lassified as urrent when it is reasonable to expet them to be sold within their normal yle whih ould be the next finanial year. If not, they are lassified as non-urrent. Foreign urreny translations The Group and Company finanial statements are presented in South Afrian Rand, whih is the Company s funtional and presentation urreny. Foreign entities Finanial statements of all entities that have a funtional urreny different from the presentation urreny of their parent entity, are translated into the presentation urreny using the exhange rates appliable at the reporting date, as follows: Assets and liabilities at rates of exhange ruling at the balane sheet date. Inome and expenditure at the average rate of exhange for the year, exept where the date of inome or expense for signifiant transations an be identified, in whih ase the inome or expense is translated at the rate of exhange ruling at the date of the flow. Cash flow items at the average rate of exhange for the year, exept where the date of ash flow for signifiant transations an be identified, in whih ase the ash flows are translated at the rate of exhange ruling at the date of the ash flow. Fair value adjustments of the foreign entity are translated at the losing rate. Goodwill is onsidered to relate to the reporting entity and is translated at the losing rate. Differenes arising on translation are lassified as equity until the investment is disposed of when it is reognised in the profit or loss. Foreign urreny transations and balanes Transations in foreign urrenies are onverted to the funtional urreny at the rate of exhange ruling at the date that the transation is reorded. Foreign denominated monetary assets and liabilities (inluding those linked to a forward exhange ontrat) are stated in the funtional urreny using the exhange rate ruling at the balane sheet date, with the resulting exhange differenes being reognised in the profit or loss. 158 ARM Annual Report 2009

161 Leases The determination of whether an arrangement is, or ontains, a lease is based on the substane of the arrangement at ineption date of whether the fulfilment of the arrangement is dependent on the use of a speifi asset or assets or the arrangement onveys a right to ontrol the asset. Finane leases, whih transfer to the Group substantially all the risks and benefits inidental to ownership of the leased item, are apitalised at the ineption of the lease at the fair value of the leased property or, if lower, at the present value of the minimum lease payments. Lease payments are apportioned between the finane harges and redution of the lease liability so as to ahieve a onstant rate of interest on the remaining balane of the liability. Finane harges are harged diretly against profit or loss. Capitalised lease assets are depreiated over the shorter of the estimated useful life of the asset or the lease term. Leases where the lessor retains substantially all the risks and benefits of ownership of the asset are lassified as operating leases. Operating lease payments are reognised as an expense in the profit or loss on a straight-line basis over the lease term. Employee benefits The Group operates two defined ontribution pension shemes, both of whih require ontributions to be made to separately administered funds. The Group has also agreed to provide ertain additional post-employment healthare benefits to senior employees. These benefits are unfunded. The ost of providing benefits under the plans is determined separately for eah plan using the projeted unit redit atuarial valuation method. Atuarial gains and losses are reognised as inome or expense when inurred. Other long-term benefits The Group provides ertain long-term inentive shemes to attrat, retain, motivate and reward eligible senior employees. The ost of providing these inentives is determined by atuaries using the projeted unit redit method. Atuarial gains and losses are reognised as inome or expense when inurred. The past servie osts are reognised as an expense on a straight-line basis over the period until the benefits vest. Share-based payments The Company issues equity-settled share-based instruments to ertain employees. Equity-settled share-based payments are measured at the fair value of the instruments at the date of the grant. The fair value determined at the grant date of the equity-settled share-based payments is expensed over the vesting period on a straight-line basis, based on management s estimate of shares that are expeted to eventually vest. Fair value is measured using the Blak Sholes option priing model. The fair values used in the model have been adjusted, based on management s best estimate, for the effets of non-transferability, exerise restritions and behavioural onsiderations. One of the subsidiaries issues ash or equity-settled options whih are measured at the grant date using the Blak Sholes option priing model, taking into aount the terms and onditions upon whih the instruments were granted. When the Company settles rights in ash, the grants are remeasured at eah reporting date. For equitysettled options the servies reeived and a liability to pay for those servies are reognised over the expeted vesting period. Blak eonomi empowerment (BEE) transations When entering into BEE share-based transations any exess of the fair value of the shares over the onsideration reeived is reognised as an expense in that period. Revenue reognition Revenue whih inludes by-produts, is reognised when the risks and rewards of ownership have been transferred and when it is probable that the eonomi benefits assoiated with a transation flow to the Group and the amount of revenue an be measured reliably. Revenue is not disounted when extended payments are given. Revenue is measured at the fair value of the amount reeived or reeivable net of VAT, ash disounts and rebates. Dividends Dividends are aounted for on the last day of registration for listed investments and when delared in respet of unlisted investments. Mining produts Revenue from the sale of mining and related produts is reognised when the signifiant risks and rewards of ownership of the goods have passed to the buyer. In some ases, where the terms of the exeuted sales agreement allow for an adjustment to the sale prie based on a survey of the goods by the ustomer, reognition of the sales revenue is based on the most reently determined estimate of produt speifiation. Sales on FOB (free on board) are reognised on the date of loading and CIF (ost in freight) is reognised when it arrives at its destination. In the ase of ertain ommodities the final sale prie is determined a number of months after the onentrate is delivered. Revenue is measured at the best estimate of future pries and adjusted subsequently in revenue. Rental inome Rental inome on investment properties is aounted for on a straight-line basis over the term of the lease. Interest Interest is reognised on a time proportion basis that takes aount of the effetive yield on the asset and an appropriate arual is made at eah aounting referene date. ARM Annual Report

162 NOTES TO THE FINANCIAL STATEMENTS ontinued Cost of sales All osts diretly related to the produing of produts are inluded in ost of sales. Costs that annot be diretly linked are inluded separately or under other operating expenses. When inventories are sold, the arrying amount is reognised in ost of sales. Any write-down, losses or reversals of previous write-down or losses are reognised in ost of sales. Early settlement disounts and rebates These are deduted from revenue and ost of inventories when appliable. Segment reporting A business segment is a group of assets and operations engaged in providing produts or servies that are subjet to risks and returns that are different from other business segments. A geographial segment is a group of produts and servies within a partiular eonomi environment that is subjet to risks and returns that are different from segments operating in other eonomi environments. Contingent liabilities A ontingent liability is a possible obligation that arises from past events and whih will be onfirmed only by the ourrene or non-ourrene of one or more unertain future events not wholly within the ontrol of the Company, or a present obligation that arises from past events but is not reognised beause it is not probable the obligation will be required to be settled, or the amount of the obligation annot be measured with suffiient reliability. Contingent liabilities are not reognised as liabilities. Signifiant aounting judgements and estimates The preparation of the finanial statements requires management to make ertain estimates. The priniples used are the same as in previous years. When estimates are ompared to atual and varianes our, the estimates are adjusted aordingly. Adjustments to estimates are a normal ourrene in light of the signifiant judgements and estimates involved. Fators influening hanges in the above inlude, amongst others, revisions to estimated reserves, resoures and life of operations, developments in tehnology, regulator requirements and environmental management strategies, hanges in estimated osts of antiipated ativities, inflation rates, foreign exhange rates and movements in interest rates affeting the disount rate applied. For assumptions on ertain speifi estimates used refer to individual notes. In partiular, information about signifiant areas of estimation unertainty onsidered by management in preparing the onsolidated finanial statements are desribed below. Mine rehabilitation provision (refer note 16) Mine rehabilitation provisions are assessed annually. Signifiant estimates and assumptions are made in determining the provision for mine rehabilitation as there are numerous fators that will affet the ultimate liability payable. These fators inlude estimates of the extent and osts of rehabilitation ativities, tehnologial hanges, regulatory hanges, ost inreases, and hanges in disount rates. Those unertainties may result in future atual expenditure differing from the amounts urrently provided. The provision at balane sheet date represents management s best estimate of the present value of the future rehabilitation osts required. Changes to estimated future osts are reognised in the balane sheet by adjusting the rehabilitation asset and liability. If, for mature mines, the revised mine assets net of rehabilitation provisions exeeds the arrying value, that portion of the inrease is harged diretly to expense. For losed sites, hanges to estimated osts are reognised immediately in the inome statement. Ore reserve and resoure estimates (refer minerals reserves and resoure setion) Ore reserves are estimates of the amount of ore that an be eonomially and legally extrated from the mining properties. Ore reserves and mineral resoure estimates are based on information ompiled by appropriately qualified persons relating to the geologial data on the size, depth and shape of the ore body, and requires omplex geologial judgements to interpret the data. The estimation of reoverable reserves is based upon fators suh as estimates of foreign exhange rates, ommodity pries, future apital requirements, and prodution osts along with geologial assumptions and judgements made in estimating the size and grade of the ore body. Changes in the reserve or resoure estimates may impat upon the arrying value of exploration and evaluation assets, mine properties, property, plant and equipment, goodwill, provision for rehabilitation, reognition of deferred tax assets, and depreiation and amortisation harges. Units of prodution depreiation Estimated reoverable reserves are used in determining the depreiation and/or amortisation of mine speifi assets. This results in a depreiation/amortisation harge proportional to the depletion of the antiipated remaining life of mine prodution. Eah item s life, whih is assessed annually, has regard to both its physial life limitations and to present assessments of eonomially reoverable reserves of the mine property at whih the asset is loated. These alulations require the use of estimates and assumptions, inluding the amount of reoverable reserves and estimates of future apital expenditure. Numerous units of prodution depreiation methodologies are available to hoose from; the Group adopts a Run of the Mine tonnes of ore produed methodology for mining osts and an ounes/pounds of metal produed methodology for postmining osts. Changes are aounted for prospetively. Impairment of assets (refer note 24) Eah ash generating unit is assessed annually to determine whether any indiation of impairment exists. Where an indiator of impairment exists, a formal estimate of the reoverable amount is made, whih is onsidered to be the higher of the fair value less osts to sell and value in use. These assessments require the use of estimates and assumptions suh as long-term ommodity pries, disount rates, future apital requirements, exploration potential and operating performane. Fair value is determined as 160 ARM Annual Report 2009

163 the amount that would be obtained from the sale of the asset in an arm s length transation between knowledgeable and willing parties. Fair value for mineral assets is generally determined as the present value of estimated future ash flows arising from the ontinued use of the asset, whih inludes estimates suh as the ost of future approved expansion plans and eventual disposal, using assumptions that an independent market partiipant may take into aount. Cash flows are disounted by an appropriate disount rate, taking into aount fators inluding weighted average ost of apital and appliable risk fators, to determine the net present value. The key pries used in the impairment alulations performed are as follows: For platinum a prie of between and US dollars per oune up to 2014 and thereafter an inrease of 2% per annum; For nikel a prie of between and US dollars per tonne up to 2014 and thereafter an inrease of 2% per annum; and For hrome urrent market pries. Deferred taxation asset (refer note 15) Three year business plans, the first year of whih is approved by the Board and the ontent of the next two years being noted, are used to determine whether deferred tax assets will be utilised from taxable inome in the future. These plans use many assumptions and estimates and will be adjusted every year as more information beomes available. Asset life and residual values These are assessed annually and may differ from previous years as many estimates and assumptions are used to determine the values. Estimates and assumptions are updated to improve the judgements made. Share-based payments (refer note 39) Estimation of the fair value of share-based payments requires determining the most appropriate model, inputs suh as the expeted life of the option, volatility and dividend yields. Definitions Cash and ash equivalents Cash and ash equivalents inlude ash on hand and all deposits, as well as short-term, highly liquid investments that are readily onvertible to known amounts of ash and are subjet to an insignifiant risk of hange in value. For ash flow purposes overdrafts are deduted from ash and ash equivalents that is on the balane sheet. Cash restrited for use Cash whih is subjet to restritions on its use is stated separately at the arrying value in the notes. Ative markets This is normally a stok exhange where the publi an purhase and sell shares on a regular basis and pries are determined by the market onditions. Basi earnings per share Earnings divided by the weighted average number of shares in issue. Headline earnings per share Headline earnings omprise earnings for the year, adjusted for profits/losses as a remeasurement in aordane with the requirements of Cirular 8 of 2007 issued by the South Afrian Institute of Chartered Aountants. Adjustments against earnings take aount of attributable taxation and minority interests. The adjusted earnings figure is divided by the weighted average number of shares in issue to arrive at headline earnings per share. Amortised ost This is alulated using the effetive interest method less any allowane for impairment. The alulation takes into aount any premium or disount on aquisition and inludes transation osts and fees that are an integral part of the effetive interest rate. Fair value Where an ative market is available it is used to represent fair value. Where there is no ative market, fair value is determined using valuation tehniques. Suh tehniques inlude using reent arm s length market transations with referene to the urrent market value of another instrument whih is substantially the same; disounted ash flow analysis or other valuation models. Effetive interest method This method determines the rate that disounts the estimated future ash flows payments or reeipts through the expeted life of the finanial liability or finanial asset to the net arrying amount of the finanial liability or asset. Diluted earnings per share Diluted earnings per share is arrived at by dividing earnings (as used in alulating basi earnings per share) by the weighted average number of ordinary shares, adjusted for any finanial instruments or other ontrats that may entitle the holder thereof to ordinary shares. Fully diluted headline earnings per share are alulated on the same basis as fully diluted earnings per share. Cash generated from operations per share Cash generated from operations divided by the weighted average number of shares in issue during the year. Exeptional items These are items that are of a apital nature and not part of operating ativities and that qualify for adjustment to the alulation of headline earnings. EBITDA before exeptional items and inome from assoiates This omprises basi earnings, to whih is added bak taxation, exeptional items, inome from assoiates, finane ost, inome from investments and amortisation and depreiation. ARM Annual Report

164 NOTES TO THE FINANCIAL STATEMENTS ontinued New standards The following new standards have been issued but are only effetive for future periods: Standard or interpretation Effetive date Date issued IAS 1 Presentation of Finanial Statements 1 January 2009 September 2007 IAS 23 Borrowing Costs 1 January 2009 Marh 2007 IAS 27 Amendments to Consolidated and Separate 1 July 2009 May 2008 Finanial Statements IAS 32 Amendments to IAS 32 Finanial Instruments: 1 January 2009 February 2008 Presentation IAS 39 Amendment to IAS 39 Finanial Instruments: 1 July 2009 July 2008 Reognition and Measurement Eligible hedged items IFRS 1 Amendments to IFRS 1 First-time adoption 1 January 2009 November 2008 of International Finanial Reporting Standards Cost of an investment in a subsidiary, jointly ontrolled entity or assoiate IFRS 2 Amendment to IFRS 2 Share-based Payment 1 January 2009 January 2008 Vesting onditions and anellations IFRS 3 Business Combinations 1 July 2009 January 2008 IFRS 8 Operating Segments 1 January 2009 November 2006 IFRIC 15 Agreements for the onstrution of real estate 1 January 2009 July 2008 IFRIC 16 Hedges of a net investment in a foreign operation 1 Otober 2008 July 2008 IFRIC 17 Distribution of non-ash assets 1 July 2009 Deember 2008 IFRIC 18 Transfer of assets from investments 1 July 2009 January 2009 Impat of the above IAS 1 This statement requires additional dislosure and will have an impat on presentation. IFRS 8 Other This statement requires the amount reported for eah segment to be the measure reported to the hief operating deision-maker for the purpose of alloating resoures to that segment and assessing their performane. The Group assessed the impat of IFRS 8 and onluded that some additional information that is not ritial to the business may have to be dislosed in a single segment report. Most of the information is already dislosed in the Annual Report. None of the other standards or interpretations are expeted to have a signifiant effet on the results of operation or the finanial position of the Group. 2 Segmental information Primary segmental information Business segments For management purposes, the Group is organised into four major operating divisions. The operating divisions are ARM Platinum (whih inludes platinum and nikel), ARM Ferrous, ARM Coal and ARM Exploration. ARM has a strategi holding in Harmony (gold). Platinum omprises Two Rivers Platinum Mine as a 55% subsidiary and ARM Mining Consortium Limited through whih ARM holds an effetive 41.5% interest in the Modikwa Platinum Mine. Nikel omprises Nkomati Mine as a 50% joint venture for both its nikel and hrome operations. In the orporate struture Nikel is inluded under ARM Platinum. ARM Ferrous omprises Assmang as a 50% joint venture. Assmang omprises iron ore, manganese and hrome operations. ARM Coal, a 51% joint venture for aounting purposes, onsists of a 10.2% partiipating investment in the existing oal operations of XCSA and a 26% joint venture interest in the Goedgevonden Mine. In addition, ARM has a diret 10% partiipating investment in the existing oal operations of XCSA. ARM Exploration omprises TEAL as a 64.9% held subsidiary up to February 2009 and thereafter as a 50% joint venture. In addition, this new division is involved in identifying and assessing exploration and mineral business opportunities in sub- Saharan Afria. The ommodity groupings predominantly reflet the risks and rewards of trading and the operating divisions are therefore identified as the primary reporting segments. 162 ARM Annual Report 2009

165 For the year ended 30 June ARM Platinum R million Platinum Nikel ARM Ferrous ARM Coal ARM Exploration Corporate* and other Gold Total 2 Segmental information (ontinued) 2.1 Year to 30 June 2009 Total sales Inter-Group sales to ARM Ferrous 2 2 Sales Cost of sales (2 317) (491) (3 007) (84) (177) 28 (6 048) Other operating inome Other operating expenses 2 (48) (462) (1) (515) (231) (1 255) Segment result (557) (642) Inome from investments Finane ost (60) (1) (36) (15) (49) (68) (229) Finane ost Implats: Shareholders loan Two Rivers (70) (70) Finane ost ARM: Shareholders loan Two Rivers (86) (86) Inome from assoiate Exeptional items 1 (1) 567 (53) 514 Taxation 152 (4) (1 802) (7) (4) (62) (1 727) Minority interest 204 (6) 198 Contribution to basi earnings (347) (122) (13) Contribution to headline earnings (348) (689) Other information Segment assets, inluding investment in assoiate Investment in assoiate Segment liabilities Unalloated liabilities (tax and deferred tax) Consolidated total liabilities Cash inflow/(outflow) from operating ativities (554) (851) Cash (outflow)/inflow from investing ativities (475) (866) (1 388) (498) 147 (55) (3 135) Cash (outflow)/inflow from finaning ativities (270) 149 (263) (274) (171) Capital expenditure Amortisation and depreiation Impairment EBITDA (234) (622) * Corporate, other ompanies and onsolidation adjustments. ARM Annual Report

166 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June ARM Platinum R million Platinum Nikel ARM Ferrous ARM Coal ARM Exploration Corporate* and other Gold Total 2 Segmental information (ontinued) 2.1 Year to 30 June 2008 (ontinued) Total sales Inter-Group sales to ARM Ferrous Sales Cost of sales (1 785) (419) (3 193) (51) (72) 4 (5 516) Other operating inome per inome statement Other operating expenses per inome statement (31) (11) (350) (271) (193) (856) Segment result (196) Inome from investments Finane ost (148) (1) (14) (13) (15) (84) (275) Finane ost Implats: Shareholders loan Two Rivers (73) (73) Finane ost ARM: Shareholders loan Two Rivers (90) (90) Inome from assoiate Exeptional items (7) Taxation (540) (173) (1 346) (1) (2) (22) (2 084) Minority interest (460) (460) Contribution to basi earnings (177) Contribution to headline earnings (211) (73) Other information Segment assets, inluding investment in assoiate Investment in assoiate Segment liabilities Unalloated liabilities (tax and deferred tax) Consolidated total liabilities Cash inflow/(outflow) from operating ativities (344) (482) Cash (outflow)/inflow from investing ativities (508) (292) (1 360) (361) (41) 135 (2 427) Cash (outflow)/inflow from finaning ativities (776) (51) (175) Capital expenditure Amortisation and depreiation Impairment EBITDA (186) * Corporate, other ompanies and onsolidation adjustments. 164 ARM Annual Report 2009

167 For the year ended 30 June ARM Platinum R million Two Rivers Modikwa Total 2 Segmental information (ontinued) The ARM platinum segment is analysed further into Two Rivers Platinum Mine and ARM Mining Consortium (whih inludes Modikwa). 2.2 Year to 30 June 2009 Sales External sales Cost of sales (1 373) (944) (2 317) Other operating inome Other operating expenses (7) 9 2 Segment result (351) (206) (557) Inome from investments Finane ost (39) (21) (60) Finane ost Implats: Shareholders loan Two Rivers (70) (70) Finane ost ARM: Shareholders loan Two Rivers (86) (86) Exeptional items 1 1 Taxation Minority interest Contribution to basi earnings (218) (129) (347) Contribution to headline earnings (219) (129) (348) Other information Segment and onsolidated assets Segment liabilities Unalloated liabilities (tax and deferred tax) 638 Consolidated total liabilities Cash inflow from operating ativities Cash outflow from investing ativities (294) (181) (475) Cash outflow from finaning ativities (168) (102) (270) Capital expenditure Amortisation and depreiation EBITDA (100) (134) (234) ARM Annual Report

168 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June ARM Platinum R million Two Rivers Modikwa Total 2 Segmental information (ontinued) 2.2 Year to 30 June 2008 (ontinued) Sales External sales Cost of sales (1 031) (754) (1 785) Other operating inome 6 6 Other operating expenses (6) (25) (31) Segment result Inome from investments Finane ost (105) (43) (148) Finane ost Implats: Shareholders loan Two Rivers (73) (73) Finane ost ARM: Shareholders loan Two Rivers (90) (90) Taxation (332) (208) (540) Minority interest (361) (99) (460) Contribution to basi earnings Contribution to headline earnings Other information Segment and onsolidated assets Segment liabilities Unalloated liabilities (tax and deferred tax) 831 Consolidated total liabilities Cash inflow from operating ativities Cash outflow from investing ativities (355) (153) (508) Cash outflow from finaning ativities (677) (99) (776) Capital expenditure Amortisation and depreiation EBITDA ARM Annual Report 2009

169 For the year ended 30 June R million 2 Segmental information (ontinued) Additional information Iron ore Division Manganese Division Chrome Division Total Attributable to ARM 2.3 Pro forma analysis of the Ferrous segment 100% 50% Year to 30 June 2009 Sales Other operating inome Other operating expense Operating profit Contribution to earnings Contribution to headline earnings Other information Consolidated total assets Consolidated total liabilities Capital expenditure Amortisation and depreiation Cash inflow from operating ativities Cash outflow from investing ativities (1 541) (840) (395) (2 776) (1 388) Cash outflow from finaning ativities (492) (34) (526) (263) EBITDA Year to 30 June 2008 Sales Other operating inome Other operating expense Operating profit Contribution to earnings Contribution to headline earnings Other information Consolidated total assets Consolidated total liabilities Capital expenditure Amortisation and depreiation Cash inflow from operating ativities Cash outflow from investing ativities (2 080) (488) (151) (2 719) (1 360) Cash inflow/(outflow) from finaning ativities 281 (384) (103) (51) EBITDA ARM Annual Report

170 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group R million F2009 F Segmental information (ontinued) 2.4 Geographial segments The Group operates prinipally in South Afria, however, Vale/ARM joint venture operates in Zambia, the DRC, Namibia and other ountries. Assets by geographial area in whih the assets are loated are as follows: South Afria Europe Amerias Far and Middle East Other Sales by geographial area South Afria Europe Far and Middle East Amerias Other Capital expenditure South Afria Rest of Afria ARM Annual Report 2009

171 3 Property, plant and equipment, investment property and intangible assets For the year ended 30 June Group R million Mine development and de om - missioning assets Plant and mahinery Land and buildings Mineral rights Other Total property, plant and equipment Total investment property Total intangible assets Cost Balane at 30 June Additions Relassifiations of held for sale assets in TEAL (49) (21) (2) (72) Disposals (1) (39) (4) (46) (90) Realignment of urrenies Balane at 30 June Additions Relassifiations 8 (129) 121 Change in holding in TEAL (24) (35) (6) (15) (80) Disposals (45) (51) (96) Realignment of urrenies Balane at 30 June Aumulated amortisation, depreiation and impairment Balane at 30 June Charge for the year Impairments Relassifiation (4) 4 Relassifiations of held for sale assets in TEAL (34) (15) (2) (51) Disposals (1) (34) (1) (16) (52) Realignment of urrenies 3 3 Balane at 30 June Charge for the year Impairments 12 (1) 1 12 Disposals (35) (48) (83) Change in holding in TEAL (2) (6) (1) (5) (14) Realignment of urrenies (3) 1 (2) Balane at 30 June Carrying value at 30 June Carrying value at 30 June a. Borrowing osts Borrowing osts inurred at prime overdraft and overnight all rates appliable during the year, amounting to R77 million, were apitalised in respet of mine development and deommissioning assets and plant and mahinery for the year to 30 June 2009 (2008: R89 million). b. Capital work-in-progress Inluded in mine development and deommissioning assets and plant and mahinery above are R2 274 million (2008: R226 million) of assets relating to projets in progress. Inluded in this amount are: i) R550 million in respet of the Khumani iron ore plant whih was ommissioned in August 2009; ii) R993 million in respet of MMZ development and the 375 kt per month plant at Nkomati ommissioned in September 2009; and iii) R312 million in respet of GGV whih is to be ommissioned in the third quarter of alendar ARM Annual Report

172 NOTES TO THE FINANCIAL STATEMENTS ontinued 3 Property, plant and equipment, investment property and intangible assets (ontinued). Other assets Inluded in other assets are vehiles and equipment held under finane lease of R69 million (2008: R86 million) (refer notes 14 and 36), mine properties of R496 million (2008: R393 million), furniture, equipment and vehiles of R769 million (2008: R437 million). d. Pledged assets The arrying value of assets pledged as seurity for loans amounts to R1.7 billion (2008: R3 billion). Refer to note 14 for seurity granted in respet of loans to Two Rivers and ARM Coal. e. Investment properties There is a single property held under this lassifiation. The property is subjet to operating leases (refer note 4). The depreiation is less than R1 million per year. f. Intangible assets Finite life intangible assets whih are amortised omprise of: (i) the RBCT entitlement held by the Goedgevonden joint venture of R211 million (2008: R213 million) and (ii) R2 million (2008: R2 million) patents and trademarks. The remaining amortisation period of the RBCT entitlement is limited to 25 years. There are no indefinite life intangible assets. g. Exploration and evaluation assets These are inluded under mine development and deommissioning assets and amount to R22 million (2008: R209 million). For the year ended 30 June Company R million Mine development and de om - missioning assets Plant and mahinery Land and buildings Mineral rights Other Total property, plant and equipment Cost Balane at 30 June Additions Relassifiations (6) (1) (7) Balane at 30 June Additions Dereognition (1) (1) Balane at 30 June Aumulated amortisation, depreiation and impairment Balane at 30 June Charge for the year Balane at 30 June Charge for the year Balane at 30 June Carrying value at 30 June Carrying value at 30 June a. Borrowing osts Borrowing osts inurred at prime overdraft and overnight all rates appliable during the year, amounting to R9 million were apitalised in respet of mine development and deommissioning assets and plant and mahinery for the year to 30 June 2009 (2008: Rnil). b. Capital work-in-progress Inluded in mine development and deommissioning assets and plant and mahinery above are R993 million (2008: R77 million) of assets relating to the 375 kt per month plant at Nkomati ommissioned in September 2009 and the MMZ development.. Other assets Other assets are furniture, equipment and vehiles of R32 million (2008: R36 million). A register ontaining details of mineral and mining rights and land and buildings is available for inspetion during business hours at the registered address of the Company by members or their duly authorised agents. 170 ARM Annual Report 2009

173 For the year ended 30 June Group Company R million F2009 F2008 F2009 F Investment property The investment property is situated at 56 Main Street, Johannesburg, South Afria. Management s estimated fair value of the building ranges between R20 million and R30 million as at 30 June The value was arrived at after reviewing the market onditions in the area. Current lease ontrats terminate between 2009 and Annual rental esalations are between 8% and 10% (refer note 3). Refer note 24 for rental inome derived from this property. 5 Investment in assoiate Through ARM s 51% investment in ARM Coal, the Group holds an effetive 10.2% investment in the existing oal operations of XCSA. Opening balane Original investment (10.2%) Additional investment (Atom and ATC ollieries)* (refer note 6) 9 9 Inome from assoiate Inome from assoiate urrent year ARM invested diretly in 10% of the existing oal operations of XCSA on 1 September Opening balane Original investment Additional investment (Atom and ATC ollieries) Inome from assoiate Inome from assoiate urrent year Less: dividend reeived prior years 20 Less: dividend reeived urrent year Total investment Total investment as above Less: assoiate inome Net ash paid Group s interest in sales of assoiate Group s interest in assoiate balane sheet Non-urrent assets Current assets Total assets Less liabilities Non-urrent liabilities Current liabilities Net assets * Treated as a long-term loan and reeivable in ARM Company whih eliminates on onsolidation. ARM Annual Report

174 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group Company R million F2009 F2008 F2009 F Loans and long-term reeivables Long-term loans Total Long-term loans onsist of Vale/ARM joint venture 114 ARM Platinum (Modikwa) 20 ARM Coal (refer note 5) 9 9 The Vale/ARM joint venture loan represents the portion ARM funded in exess of its shareholding proportion and will redue as Vale funds the joint venture to math ARM s ontribution. ARM Platinum (Modikwa) is a loan due by the ommunities (minority interest) around the Modikwa mine and will be repaid as and when a dividend is delared from ARM Mining Consortium Finanial asset Strutured investment 78 The investment is a strutured produt, invested with Absa Bank, over a fixed term made with the strategi intention to attrat, retain, motivate and reward eligible senior employees. The investment apital growth is linked to the higher of the JSE Top 40 index growth, or CPI. The investment maturity dates are 29 November 2011 and 29 November Other investments Listed subsidiary ompanies* At ost 153 Listed other investments** Opening balane Unrealised revaluation loss for the year (954) (335) (954) (335) Total listed investments (available-for-sale) Market value of listed investments (Determined by referene to market share prie) Investment in joint venture*** Loans**** (refer page 203) 303 Preferene shares Unlisted subsidiary ompanies Cost of investments Loans**** (refer page 204) Total unlisted Total arrying amount of other investments Investments in unquoted equity instruments are measured at ost as their fair value annot be measured reliably due to the signifiant unertainties whih exist in estimating parameters suh as exhange rates, ommodity pries and general market onditions. Investments valued at ost amount to R481 million as refleted above in the Company olumn. Certain listed and unlisted shares have been pledged as seurity for the ARM orporate loan whih at balane sheet was R967 million (2008: R1 217 million) (refer note 14), at 30 June The book value of the pledged shares amounts to R2 472 million (2008: R2 926 million). A report on investments appears on pages 202 to 204. * TEAL in 2008, as an unlisted joint venture in ** Harmony shares at R80.00 per share (2008: R95.00). *** ARM Coal (Pty) Limited, Assmang and Vale/ARM joint venture. **** These loans are interest free with no fixed terms of repayment exept for (i) the loan to Two Rivers Platinum Mine whih bears interest at 12% (2008: 12%) pa, (ii) the loan to Venture Building Trust whih bears interest at 2% below the prime bank overdraft rate, and (iii) Vale/ARM joint venture loan inluded under joint ventures whih bears interest at prime. 172 ARM Annual Report 2009

175 For the year ended 30 June Group Company R million F2009 F2008 F2009 F Inventories Inventories (non-urrent) Raw materials and stokpile Inventory onsists of opper fines and lumpy material, high and low grade (whih are stokpiled) and hrome as well as work-in-progress material, not expeted to be turned to aount within a year Inventories urrent Consumable stores Raw material and stokpiles Work-in-progress Finished goods Stokpile quantities are determined using assumptions suh as densities and grades whih are based on studies, historial data and industry norms. Value of inventory arried at net realisable value is R657 million (2008: R60 million). Refer to note 24 for the expense of inventory written down or up. Inventories to the value of R39 million (2008: R76 million) have been pledged as seurity for loans in ARM Coal (Pty) Limited (2008: ARM Coal (Pty) Limited and Modikwa) (refer note 14). 10 Trade and other reeivables Trade reeivables Related parties Other reeivables Trade and other reeivables are non-interest-bearing and are generally on day payment terms Payment terms whih vary from the norm are: PGMs whih are paid approximately four months after delivery. 20% of nikel delivered whih is paid approximately five months after delivery. Debtors outstanding longer than their terms and that are not provided for Outstanding on terms normal yle Outstanding longer than 30 days outside normal yle 28 Outstanding longer than 60 days outside normal yle 23 5 Outstanding longer than 90 days outside normal yle 10 Outstanding longer than +120 days outside normal yle 36 Total A provision of R11 million has been raised in F2009 on debtors outstanding longer than 120 days (F2008: Rnil), while the balane is onsidered reoverable. ARM Annual Report

176 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group Company R million F2009 F2008 F2009 F Cash and ash equivalents Cash at bank and on deposit Rehabilitation trust funds restrited ash (refer note 21) Other: Restrited ash* 8 49 Cash and ash equivalents per balane sheet Less: overdrafts (refer note 19) (188) (66) (36) (28) Cash and ash equivalents per ash flow statement Cash at bank and on deposit earns interest at floating rates based on daily bank deposit rates. * Funds have been pledged as seurity for loans granted to ARM Mining Consortium Limited amounting to Rnil (2008: R11 million) and guarantees to the Department of Minerals and Energy to the amount of Rnil (2008: R30 million), in respet of ARM Mining Consortium. Guarantees to the Department of Minerals and Energy and Eskom for Two Rivers amounting to R8 million (2008: R8 million). 12 Held for sale asset A deision was made in 2008 to dispose of TEAL Metals s.p.r.l, whih operated a opper furnae in Lubumbashi in the DRC. As a result, all the onditions for an asset held for sale were met during that year. The asset was deemed to be non-ore. 21 The sale of the business as a standalone entity was being negotiated for a net selling prie of R21 million. This required an asset impairment of R44 million whih was inluded in exeptional items (refer note 27). This sale never ourred and the asset was therefore further impaired this year (refer note 27). 50% of this asset and impairment amount was disposed of with the TEAL dilution. Balane sheet Land and buildings 3 6 Plant and mahinery: Cost Aumulated depreiation (23) (3) Impairment of property, plant and equipment (11) (44) Deposits 1 2 Net selling prie Share apital and premium Share apital Authorised (2008: ) ordinary shares of 5 ents eah Issued Opening balane shares issued for ash (2008: ) (2008: ) ordinary shares of 5 ents eah Share premium Balane at beginning of the year Premium on shares issued Total issued share apital and share premium ARM Annual Report 2009

177 For the year ended 30 June Group Company R million F2009 F2008 F2009 F Long-term borrowings Seured loans Loan faility 1 (ARM Mining Consortium Limited) 163 This loan arried interest at a fixed rate of 15.99% ompounded on a monthly basis. Repayments were made in bi-annual instalments, whih ommened on 30 June This loan was settled in full on 31 Deember Loan faility 2 (ARM Mining Consortium Limited) 50 This loan arried interest at a fixed rate of 16.99% plus a profit share of 0.3% of the net operating ash flow after apital expenditure. The interest was ompounded on a monthly basis. Repayments were made in bi-annual instalments, whih ommened on 30 June This loan was settled in full on 31 Deember Loan faility 3 (ARM Mining Consortium Limited) 31 This loan arried interest at variable rates, plus a profit share of 0.75% of the net operating ash flow after apital expenditure. In F2008, R2 million arried interest at 16.74% nominal annual rate ompounded on a monthly basis and the remaining R15 million arried interest at a 14.61% nominal annual rate ompounded on a monthly basis. Interest payments were made in bi-annual instalments whih ommened on 30 June 2003 and apital repayments ommened on 31 Deember This loan was settled in full on 31 Deember The profit share whih loan failities 2 and 3 were subjet to gave rise to an embedded derivative that was not losely related to the host ontrat and had therefore been separately valued at R18 million in F2008 (R4 million to loan faility 2 and R14 million to loan faility 3). These amounts were inluded in the arrying amounts of the loan. The embedded derivative was valued through disounting the expeted profits per the business plan for Modikwa over the term of the loans at a disount rate of 16.3%. Due to the fat that the loan failities were settled on 31 Deember 2008, the embedded derivative was written bak to the inome statement on settlement date. As seurity for the ARM Mining Consortium Limited loan, bonds, pledges and harges over mineral rights, mining titles and movable and immovable assets were registered in favour of the lenders. The 50% stake in the Modikwa joint venture was also inluded in the seurity given. Loan faility (Two Rivers mine housing projet) This loan is repayable in bi-annual instalments over a sheduled eight-year period, whih ommened on 31 Marh The interest rate was linked to the prime overdraft rate until ompletion of the projet, and is now linked to JIBAR. At year end the rate was 12.08% (2008: 13.6%). The loan is seured by a mortgage bond over the property and a ession of insuranes. ARM Annual Report

178 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group Company R million F2009 F2008 F2009 F Long-term borrowings (ontinued) Loan faility (ARM Corporate) This loan was repayable on 9 August The interest rate was linked to JIBAR. At year end the rate was 9.692% (2008: %). This loan has been seured by a pledge of shares. The interest rate on this loan inreases by approximately 0.71% per annum should the Company net debt to market apitalisation ratio exeed 45%. At year end the ratio was less than 1%. The over ratio of the market value of the pledge shares or alternative seurity to loan indebtedness must exeed 2.5 times over. After the year end this loan was refinaned for an amount of R1.75 billion repayable in August Leases (Two Rivers) Finane leases over property plant and equipment with a book value of R53 million (2008: R63 million) bears interest at 2.65% (2008: 2.65%) below the prime overdraft rate and are payable in varying monthly instalments over a maximum period of 60 months whih ommened on 30 November 2005 (refer note 36). Leases (Assmang) Finane leases over property, plant and equipment with a book value of R11 million (2008: R18 million) bears interest at 1.28% (2008: 1.5%) below the prime overdraft rate and are payable in varying monthly instalments over 60 months whih ommened on 31 Otober 2004 (refer note 36). Leases (ARM Mining Consortium Limited) 3 1 Finane leases over plant and equipment with a book value of R4 million (2008: R5 million) bears interest at 9.75% (2008: 9.75%) whih ommened in January 2008 for a period of five years (refer note 36). Loan faility ARM Coal (partner loan) The loan is with Xstrata SA (XSA) and onsists of an aquisition faility of R583 million (2008: R507 million), on whih repayment ommenes in 2010 and a projet faility of R543 million (2008: R315 million) on whih repayment is expeted to ommene in 2016 and both loans bear interest at the prime bank overdraft rate. These are seured by: a ession in favour of XSA reating a first ranking seurity interest over ARM Coal s partiipating interest in the Goedgevonden joint venture: a ession in favour of XSA reating a first ranking seurity interest over all the preferene shares in XSA held by ARM Coal; a ession in favour of XSA reating a first ranking seurity interest over ARM Coal s right, title and interest in and to the joint venture aount; mortgage bonds to be registered by ARM Coal in favour of XSA over all immovable property of ARM Coal; and notarial bonds to be registered by ARM Coal in favour of XSA over all movable assets owned by ARM Coal. Unseured Loan faility Assmang (Khumani Iron Ore Mine) 251 A term loan of R1.4 billion was entered into on 14 Deember The loan was advaned for the purpose of funding apital expenditure for the development of its Khumani Iron Ore Mine. The term loan was subjet to a drawdown shedule with an availability period ending in Deember ARM Annual Report 2009

179 For the year ended 30 June Group Company R million F2009 F2008 F2009 F Long-term borrowings (ontinued) The repayment was over a period of 13 quarters starting in Deember Interest was apitalised. The total drawn to 30 June 2008 was R500 million. The interest rate was linked to JIBAR for the duration of the loan. The rate was 14.17% as at 30 June An irrevoable notie of repayment of the full amounts drawn plus interest was issued by Assmang after the year end. The repayment ourred on 1 Otober This repayment has effetively redued the term loan faility to R900 million. Loan ARM Coal (partner loan) 4 5 This loan is with XSA Shweiz (AG) and is interest free and no repayment terms have been speified. Loan ARM Coal (partner loan) 5 20 This loan is with XSA and is interest free and no repayment terms have been speified. Loan faility (Modikwa) 132 This loan is from our partner Anglo Platinum and does not arry any interest and has no fixed repayment terms. Loan (Vale/ARM joint venture) 328 The loan is from Standard Chartered Bank and amounts to $42.5 million. The loan arries interest at LIBOR linked interest rate plus 1.25%. The loan has been translated at the year end losing R/US Dollar exhange rate. The loan is seured via a guarantee of support from ARM and was repayable on 31 August Loan (Vale/ARM joint venture) 60 This loan is from Vale International SA and arries interest at Wall Street Journal Prime (3.25% at year end) plus 2% (total 5.25%) and is repayable on 1 April Loan (Vale/ARM joint venture) 7 28 In April 2008, the Company aquired Korea Zin Company Limited s 30% interest in the five mining liene areas in Zambia at no interest. This loan has been disounted to fair value at the average borrowing rate of 4.6%. Total borrowings Less: repayable within one year inluded in short-term borrowings Total SA Rand long-term borrowings Held as follows: Afrian Rainbow Minerals Limited Assmang Limited 6 14 ARM Mining Consortium Limited 3 1 ARM Coal (Pty) Limited Two Rivers Platinum (Pty) Limited Vale/ARM joint venture ARM Annual Report

180 NOTES TO THE FINANCIAL STATEMENTS ontinued 14 Long-term borrowings (ontinued) Repayments shedule undisounted ash flows, exluding aounting adjustments For the year ended 30 June Total borrowings Group Repayable during the year ending 30 June R million onwards Seured loans Loan faility (Two Rivers) (mine housing projet) Loan faility ARM Coal (partner loan) Loan faility (ARM Corporate) Unseured loans Loan ARM Coal (partner loan) 9 9 Anglo Platinum Vale/ARM joint venture Vale/ARM joint venture Vale/ARM joint venture 7 7 Finane leases Assmang ARM Mining Consortium Two Rivers Total borrowings ARM Annual Report 2009

181 For the year ended 30 June Group Company R million F2009 F2008 F2009 F Deferred taxation Deferred tax asset STC Deferred tax asset Deferred tax liability Property, plant and equipment Intangible assets Provisions (128) (82) (24) 4 Capital gains tax on revaluation of listed investment Inventories (16) (5) Assessed losses (106) (16) Post-retirement healthare provisions (21) (22) (20) (22) Deferred tax liability Reoniliation of opening and losing balane Opening deferred tax liability Opening deferred tax asset (20) (20) Net deferred tax liability opening balane Redution due to hange in rate of taxation (48) (15) Temporary differenes from: (156) 18 Property plant and equipment Intangible assets 8 Assessed loss (90) (11) Provisions (46) (57) (28) 4 Revaluation of investments diretly in equity (133) (47) (133) (47) Post-retirement healthare provisions 1 2 Inventories (11) (3) STC (12) (20) (12) (20) Deferred tax liability Deferred tax asset (32) (20) (32) (20) Net deferred tax liability losing balane Deferred tax liability balanes are shown net of deferred tax assets where a legal right of offset exists at settlement. Deferred tax assets are raised only when they an be utilised against future taxable profits. Future taxable profits are estimated based on approved business plans whih inlude estimates and assumptions regarding eonomi growth, interest, inflation, metal pries, exhange rates, taxation rates and ompetitive fores. ARM Annual Report

182 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group Company R million F2009 F2008 F2009 F Long-term provisions Environmental rehabilitation obligation Provision for deommissioning Balane at beginning of year Provision for the year TEAL hanged from subsidiary to joint venture (7) Unwinding disount rate 12 1 Realloation (13) 3 (9) Balane at end of year Provision for restoration Balane at beginning of year Realloation 13 (3) 9 Unwinding of disount rate 3 Provision for the year (1) Balane at end of year Total environmental rehabilitation obligation The net present value of urrent rehabilitation liabilities is based on disount rates of between 8% and 9% (2008: 8% 13%), inflation rates of between 3% and 9% (2008: 6% 9%) and life of mines of between three and 25 years (2008: three and 25 years). Refer to note 21 for amounts held in trust funds. These provisions are based upon estimates of ash flows whih are expeted to our at the end of life of mines. These assumptions have inherent unertainties as they are derived from future estimates of mining and finanial parameters suh as ommodity pries, exhange rates and inflation. Post-retirement healthare benefits Balane at beginning of year Benefits paid (9) (9) (9) (9) Servie ost 1 1 Interest ost Balane at end of the year (refer note 38) Other long-term provisions Balane at beginning of year Change in estimate variable purhase prie for mine properties (10) 30 Payments (3) Provision for the year Balane at end of the year Total long-term provisions at end of the year Other provisions inlude: Long-term inentive shemes aimed at attrating, retaining and rewarding eligible senior employees. Compensation for potential loss of future inome payable by Two Rivers to Assmang due to Two Rivers having a tailings dam on part of the mining area of Assmang. 180 ARM Annual Report 2009

183 For the year ended 30 June Group Company R million F2009 F2008 F2009 F Trade and other payables Trade Finanial liability through profit and loss (refer note 34) Other Total trade and other payables Trade and other payables are generally non-interest-bearing and are typially on day payment terms. 18 Short-term provisions Bonus provision Balane at beginning of year Provision for the period Payments made during the year (66) (59) (57) (50) Balane at end of the year Leave pay provision Balane at beginning of year Provision for the period Payments made during the year (6) (1) (2) Balane at end of the year Other provisions Balane at beginning of year 55 Provision for the period Balane at end of the year Total short-term provisions The bonus provision is based on the poliy as approved by eah operation. The leave pay provision is alulated based on a ombination of total and pensionable salary pakages multiplied by the leave days due at year end. Other provisions environmental rehabilitation and retrenhment provisions. ARM Annual Report

184 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group Company R million F2009 F2008 F2009 F Overdrafts and short-term borrowings Overdrafts Short-term borrowings Current portion of long-term borrowings (refer note 14) Overdrafts and short-term borrowings are held as follows: Afrian Rainbow Minerals Limited Assmang Limited ARM Mining Consortium Limited ARM Coal (Pty) Limited 10 Nkomati 149 Vale/ARM joint venture Two Rivers Platinum (Pty) Limited Bank loans Two Rivers Platinum (Pty) Limited Impala Platinum Loans from subsidiaries Unutilised borrowings and overdraft failities Afrian Rainbow Minerals Limited Assmang Limited 50% ARM Mining Consortium Limited Total Joint ventures The proportionate share of the following joint ventures have been inorporated into the Group results: 50% share in the Nkomati Nikel and Chrome Mine. 50% share in Assmang whih inludes Cato Ridge Alloys at 25%. 51% share in ARM Coal (Pty) Limited whih inludes the ARM Coal 51% interest in the Goedgevonden joint venture. 50% share in Modikwa joint venture whih is held as a 83% subsidiary through ARM Mining Consortium is onsolidated as a subsidiary. 50% share in Vale/ARM joint venture sine 1 Marh The Company results inlude the proportionate share of the following uninorporated joint venture only on: 50% share in the Nkomati Nikel and Chrome Mine. 182 ARM Annual Report 2009

185 For the year ended 30 June Group Company R million F2009 F2008 F2009 F Joint ventures (ontinued) The aggregate amounts of joint ventures proportionately onsolidated in the finanial statements are: Inome statements Sales Cost of sales (4 525) (4 424) (493) (425) Other operating inome Other operating expenses (638) (386) (48) (11) Inome from investments Finane osts (90) (72) (1) (1) Inome from assoiate Exeptional items (11) Profit before tax Taxation (1 792) (1 728) (4) (173) Profit for the year after taxation Balane sheets Non-urrent assets Current assets Non-urrent liabilities (interest-bearing) Non-urrent liabilities (non-interest-bearing) Current liabilities (non-interest-bearing) Current liabilities (interest-bearing) Cash flow statements Net ash inflow from operating ativities Net ash outflow from investing ativities (2 786) (2 165) (866) (292) Net ash inflow from finaning ativities Environmental rehabilitation trust funds Balane at beginning of year Contributions Interest earned Total (inluded in ash and ash equivalents) (refer note 11) Total environmental rehabilitation obligations (refer note 16) Less: amounts in trust funds (see above) (92) (66) (42) (28) Unfunded portion of liability (3) (8) Part of the unfunded portion of the liability is seured by guarantees in favour of the Department of Minerals and Energy as required (refer note 35). ARM Annual Report

186 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group Company R million F2009 F2008 F2009 F Sales Sales mining and related produts Made up as follows: Loal sales Export sales Sales by foreign subsidiary Revenue Sales mining and related produts Interest reeived Dividends reeived Fees reeived Property rental inome Cost of sales Amortisation and depreiation Staff osts Consultants and ontrators Inventory written down/(up) 238 (47) Raw materials, onsumables used and hange in inventories Railage and transportation Provisions Distribution osts Other osts Profit from operations Profit from operations inludes: Foreign exhange gains/(losses) (29) 38 Surplus on disposal of property, plant and equipment 4 10 Amortisation and depreiation (refer note 3) buildings intangible assets 2 2 mine development, exploration and deommissioning assets mineral rights plant and mahinery other Auditors remuneration audit fees other servies 1 Exploration expenditure Impairment of plant and equipment (refer note 3) Inventory write down 238 Inventory write up 47 Movement in provisions long-term (1) short-term Operating lease payments Net loss on finanial liability through profit and loss Rental inome from investment property 5 4 Diret operating expenses of investment property 4 4 Share transfer, seretarial and finanial servies Staff osts salaries and wages share-based payments pension defined ontribution plans medial aid ARM Annual Report 2009

187 For the year ended 30 June Group Company R million F2009 F2008 F2009 F Inome from investments Dividend inome unlisted Interest reeived subsidiary ompanies environmental trust funds (refer note 21) short-term bank deposits The interest reeived is from finanial assets ategorised as loans and reeivables (refer note 34). 26 Finane ost Interest on finane leases Gross interest paid long and short-term borrowings and overdrafts Unwinding of disount rate 30 1 Less: apitalised (refer note 3) (77) (89) (9) The interest paid is on finanial liabilities ategorised as other finanial liabilities at amortised ost (refer note 34). 27 Exeptional items Surplus on dilution in TEAL to 50% 557 (53) Surplus on disposal of 50% of Nkomati; final tranhe payment Profit on sale of interest in Otjikoto 32 Profit on sale of interest in Zambian properties 46 Impairments of property, plant and equipment (43) (51) (1) (7) Exeptional items per inome statement (54) 128 Taxation 5 (2) Profit on asset swap in the DTJV ARM Coal Capital portion of insurane laim at Cato Ridge 14 Loss on disposal of property, plant and equipment (4) (10) Total amount adjusted for headline earnings (54) 126 ARM Annual Report

188 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group Company R million F2009 F2008 F2009 F Taxation South Afrian normal taxation urrent year mining non-mining prior year 50 State s share of profits Deferred taxation urrent year (22) 65 tax rate adjustment (36) (3) STC Dealt with as follows: Attributable to profit before exeptional items Attributable to exeptional items (refer note 27) (5) 2 South Afrian mining tax is alulated based on taxable inome less apital expenditure. Where there is insuffiient taxable inome to offset apital expenditure the balane of apital expenditure is arried forward as unredeemed apital expenditure Reoniliation of rate of taxation: % % % % Standard rate of Company taxation Adjusted for: Disallowed expenditure Exempt inome (5) (4) (27) (11) Effets of mining taxes State s share of profits 4 2 STC 5 1 Estimated assessed losses not raised as deferred tax assets 5 1 Other 1 (1) Effetive rate of taxation Estimated assessed losses available for redution of future taxable inome No deferred tax asset has been raised on the Vale/ARM joint venture estimated assessed loss of R596 million. Unredeemed apital expenditure available for redution of future mining inome* * Deferred tax has been raised on these estimated tax benefits. The Company had unutilised redits in respet of STC of R1 620 million at 30 June 2009 (2008: R198 million). A deferred tax asset has been raised on a portion of these redits amounting to R32 million (2008: R20 million). The post year end dividend delared will bear STC at 10% (2008: 10%). No STC will be payable on the dividend as the existing STC redits together with STC redits arising from the post year end dividend reeipt from Assmang will exeed any STC payable. The latest tax assessment for the Company relates to the year ended June All returns up to and inluding June 2008 have been submitted. 186 ARM Annual Report 2009

189 For the year ended 30 June Group Company R million F2009 F2008 F2009 F Calulations per share The alulation of basi earnings per share is based on basi earnings of R2 868 million (2008: R4 487 million) and a weighted average of thousand (2008: thousand) shares in issue during the year. The alulation of headline earnings per share is based on headline earnings of R2 317 million (2008: R4 013 million) and a weighted average of thousand (2008: thousand) shares in issue during the year. The alulation of diluted basi earnings per share is based on basi earnings of R2 868 million (2008: R4 487 million), with no reoniling items to derive at diluted earnings, and a weighted average of thousand (2008: thousand) shares, alulated as follows: Weighted average number of shares used in alulating basi earnings per share (thousands) Potential ordinary shares due to share options granted (thousands) Weighted average number of shares used in alulating diluted earnings per share (thousands) The alulation of diluted headline earnings per share is based on headline earnings of R2 317 million (2008: R4 013 million) and a weighted average of thousand (2008: thousand) shares. The alulation of net asset value per share is based on net assets of R million (2008: R million) and the number of shares at year end of thousand (2008: thousand) shares. The alulation of ash generated from operations per share (ents) is based on ash generated from operations of R6 678 million (2008: R5 175 million) and the weighted average number of shares in issue of thousand (2008: thousand). Dividend per share After the year end a dividend of 175 ents per share (2008: 400 ents per share) was delared whih approximates R371 million (2008: R846 million). This dividend was delared before approval of the finanial statements but was not reognised as a distribution to owners during the period to June Headline earnings Basi earnings per inome statement Surplus on dilution in TEAL to 50% (557) Surplus on disposal of 50% of Nkomati; final tranhe payment (135) Impairments of property, plant and equipment Capital portion of insurane laim at Cato Ridge (14) Profit on sale of interest in Zambian properties (46) Profit on sale of interest in Otjikoto (32) Loss on disposal of property, plant and equipment 4 10 Profit on asset swap in the DTJV ARM Coal (27) (317) Taxation (5) Headline earnings ARM Annual Report

190 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group Company R million F2009 F2008 F2009 F Reoniliation of net profit before tax to ash generated from operations Profit from operations before exeptional items Inome from assoiate Exeptional items (54) 128 Profit from operations after exeptional items Adjusted for: Amortisation and depreiation of property, plant and equipment Bad debts provided for 11 7 Long and short-term provisions Impairment of property, plant and equipment Impairment of investment Profit on disposal of property, plant and equipment 4 10 Surplus on disposal of investments (558) (213) 53 (135) Unrealised foreign exhange (gain)/losses 149 (19) 7 Assoiate inome (147) (461) Inventory written off/(up) 238 (47) Share options Other non-ash flow items Cash from operations before working apital hanges (Inrease)/derease in inventories (922) (469) 17 (31) Derease/(inrease) in reeivables (2 252) (3) (123) Inrease/(derease) in payables and provisions (15) Cash generated from operations Taxation paid Balane at beginning of year Current taxation as per inome statement Normal tax State s share of profits STC TEAL hanged from subsidiary to joint venture (5) Balane at end of year (530) (1 033) (116) (110) Tax payable (531) (1 047) (116) (110) Tax reeivable 1 14 Taxation paid ARM Annual Report 2009

191 For the year ended 30 June Group R million F2009 F Sale of interest in TEAL Fixed assets 66 Long-term borrowings (137) Stok 132 Debtors 37 Cash and ash equivalents 17 Creditors (89) Taxation (5) Short-term borrowings and overdrafts (441) Net assets sold (420) Profit with disposal 610 Proeeds 190 Less: ash and ash equivalents (17) Transation osts Company (53) Net ash effet Finanial instruments and risk management The Group is exposed to ertain finanial risks in the normal ourse of its operations. To manage these risks, a treasury risk management ommittee monitors transations involving finanial instruments. The Group does not aquire, hold or issue derivative instruments for trading purposes. The following risks are managed through the poliies adopted below: a. Curreny risk The ommodity market is predominantly pried in US Dollars whih exposes the Group s ash flows to foreign exhange urreny risks. In addition, there is urreny risk on long lead-time apital items whih may be denominated in US Dollars or Euros or other urrenies. Derivative instruments whih may be onsidered to hedge the position of the Group against these risks inlude forward sale and purhase ontrats as well as forward exhange ontrats. The use of these derivative instruments is onsidered on a month-by-month basis when appropriate. Foreign urreny amount Year end exhange Finanial assets Foreign urreny denominated items inluded in reeivables: 30 June 2009 US$ 118 million June 2008 US$ 442 million June 2008 EURO 7 million Foreign urreny denominated items inluded in ash and ash equivalents: 30 June 2009 US$ 20 million June 2008 US$ 2 million 7.83 Finanial liabilities Foreign urreny denominated items inluded in payables: Foreign urreny denominated items inluded in overdrafts and short term borrowings: 30 June 2009 US$ 12 million June 2008 US$ 20 million June 2009 US$ 43 million June 2008 US$ 55 million 7.83 Foreign urreny ontrat A forward exhange ontrat was taken out in May 2009 to over US$42.5 million at a rate of R8.1720/US$, payable on 31 August At year end there was an unrealised loss on this ontrat inluded in payables (note 17) of R16 million and reognised in the inome statement. ARM Annual Report

192 NOTES TO THE FINANCIAL STATEMENTS ontinued 34 Finanial instruments and risk management (ontinued) b. Liquidity risk management The Group s exeutive meets regularly to review long and mid-term plans as well as short-term foreasts of ash flow. Funding requirements are met by arranging banking failities and/or struturing finane as appliable. All funding and related strutures are approved by the Board of Diretors. The table below summarises the maturity profile of the Group s finanial liabilities at 30 June based on undisounted ash flows. Within one year Group F years Over 5 years Total Long-term borrowings (refer note 14) Trade and other payables (refer note 17) Overdrafts and short-term borrowings (refer note 19) Total Within one year Group F years Over 5 years Total Long-term borrowings (refer note 14) Trade and other payables (refer note 17) Overdrafts and short-term borrowings (refer note 19) Total Credit risk Credit risk arises from possible defaults on payments by business partners or bank ounterparties. The Group minimises redit risk by evaluating ounterparties before onluding transations in order to ensure the reditworthiness of suh ounterparties. The maximum exposure is the arrying amounts dislosed in note 10. Major trade reeivables inlude Impala Platinum R363 million (2008: R1 billion) and Rustenburg Platinum Mines R264 million (2008: R630 million). Cash is only deposited with institutions whih have exeptional redit ratings with the amounts distributed appropriately among these institutions to minimise redit risk through diversifiation. The maximum exposure is the arrying values as per note 11. The available-for-sale assets (whih is mostly the Harmony investment) exposure is the arrying value of the assets as per note 8. d. Treasury risk management The treasury funtion is outsoured to Andisa Capital (Pty) Limited (Andisa), speialists in the management of third party treasury operations. Together with ARM exeutives, Andisa oordinates the short-term ash requirements in the South Afrian domesti money market. A treasury ommittee, onsisting of senior managers in the Company and representatives from Andisa meet on a regular basis to analyse urreny and interest rate exposures as well as future funding requirements within the Group. The ommittee reviews the treasury operation s dealings to ensure ompliane with Group poliies and ounterparty exposure limits. 190 ARM Annual Report 2009

193 34 Finanial instruments and risk management (ontinued) e. Commodity prie risk Commodity prie risk arises from the possible adverse effet of flutuations in ommodity pries on urrent and future earnings. Most of these pries are US Dollar and EURO based and are internationally determined in the open market. From these base pries ontrats are negotiated. ARM does not atively hedge future ommodity revenues of the ommodities that it produes against prie flutuations. The Nkomati, Two Rivers and Modikwa operations reognise revenue at the month end during whih delivery of onentrate has ourred, at the losing spot prie for the ontained metal. There is a risk that the spot prie does not realise when the metal prie fixes on out turn at the refinery. Management is of the opinion that this method of revenue reognition is the most appropriate as opposed to using forward pries as an estimate. The risk is that where there are signifiant hanges in metal pries after a reporting period end that the next reporting period is impated. The value of aounts reeivable for these three entities inluded in trade and other reeivables (refer note 10) is R764 million (2008: R1 790 million). Refer to the sensitivity alulations whih follow note (j) below. f. Interest rate risk The Group s exposure to market risk for hanges in interest rates relates primarily to the Group s long-term debt obligations. The Group manages its interest ost using a mix of fixed and variable rates. Flutuations in interest rates give rise to interest rate risks through the impat these flutuations have on the value of short-term ash investments and finaning ativities. Fixed interest rate loans arry a fair value interest rate risk. Cash is managed to ensure that surplus funds are invested in a manner to ahieve maximum returns while minimising risks. g. Fair value risk Exept for interest free loans given by the Company to its subsidiaries, the arrying amounts of trade reeivables, ash and ash equivalents and trade and other payables approximate fair value beause of the short-term duration of these instruments. h. Aquisition risk Aquisition risk is the risk that aquisitions do not realise expeted returns. This risk is mitigated by ensuring that all major investments are reviewed by the ARM Investment Committee after being proposed by management. i. Capital risk management The management and maintenane of apital in ARM is a entral fous of the Board and senior management espeially as ARM has a delared poliy of growth. The ability to ontinue as a going onern and to safeguard assets while optimally funding expansion is ontinually monitored. Capital is mainly monitored on the basis of the net gearing ratio while giving due onsideration to life of mine plans and business plans. Capital struture is maintained and improved by ensuring an appropriate level of borrowings, adjusting dividends and reviewing returns from operations. ARM does not have a fixed poliy on gearing but targets a net gearing threshold of 30% for external funding. Total apital is defined as total equity on the balane sheet plus debt. j. Sensitivity The sensitivity alulations are performed on the varianes in pries, exhange rates and interest rate hanges. The assumptions are alulated individually while keeping all other variables onstant. The effet is alulated only on the finanial instruments as at year end. It is relevant to note that the aounts reeivable balane in (e) above of R764 million (2008: R1 790 million) was valued using the following parameters: (i) Rand/US Dollar exhange rate of R7.72 (2008: R7.91), (ii) platinum prie of $1 186/oz (2008: $2 039/oz), (iii) palladium prie of $249/oz (2008: $449/oz), rhodium of $1 350/oz (2008: $9 535/oz) and a nikel prie of $16 010/tonne (2008: $22 539/tonne). After the 2008 year end the pries of these ommodities had redued by more than 50% while the Rand had weakened by more than 15%. As a result signifiant negative mark-to-market adjustments have been harged against inome in the H1 in F2009 as the aounts reeivable balane realised at amounts lower than the balane sheet date value. The sensitivity was applied to profit or loss before taxation and minority interest. ARM Annual Report

194 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group R million F2009 F Finanial instruments and risk management (ontinued) The inrease in profit before tax if: The Rand/US Dollar exhange rate weakens by R The Rand/EURO exhange rate weakens by R1 7 The prie of nikel inreases by 10% The prie of PGMs inreases by 10% The interest rate inreases by 1% 9 12 The interest hange impat is alulated on the net finanial instruments at balane sheet date and does not take into aount any repayments of long or short-term borrowings. The pries of all other ommodities are ontratually fixed and are thus not impated by prie flutuations after the balane sheet date. Finanial instruments by ategories Group F2009 Category At fair value through profit and loss Loans and reeivables Availableforsale assets Other liabilities at amortised ost Total book value Total fair value Investments listed Loans and long-term reeivables Finanial assets strutured investment Foreign exhange ontrat (16) (16) (16) Trade and other reeivables Trade and other payables (1 621) (1 621) (1 621) Cash and ash equivalents Long-term borrowings (1 364) (1 364) (1 364) Short-term borrowings (2 192) (2 192) (2 192) Overdrafts (188) (188) (188) Finanial instruments by ategories Group F2008 Category At fair value through profit and loss Loans and reeivables Availableforsale assets Other liabilities at amortised ost Total book value Total fair value Investments listed Trade and other reeivables Trade and other payables (1 515) (1 515) (1 515) Cash and ash equivalents Long-term borrowings (18) (2 236) (2 254) (2 254) Short-term borrowings (1 658) (1 658) (1 658) Overdrafts (66) (66) (66) 192 ARM Annual Report 2009

195 For the year ended 30 June Finanial assets 34 Finanial instruments and risk management (ontinued) Book value at year end R million Repriing date Maturity date Effetive interest rate The table quantifies the interest rate risk Year ended 30 June 2009 overnight Cash finanial institutions US$20 million 157 all deposit 0 1% finanial institutions % fixed 909 July % Year ended 30 June 2008 overnight Cash finanial institutions US$2 million 15 all deposit % finanial institutions % fixed 185 July % Finanial liabilities Year ended 30 June 2009 Year end rate Long-term borrowings Leases to 2.65% below prime Loan faility (Two Rivers mine housing projet) % Loan faility (Vale/ARM joint venture) % Loan faility (Vale/ARM joint venture) LIBOR plus 1.25% Loan faility (Vale/ARM joint venture) % Loan faility (ARM Corporate) % Loan faility (ARM Coal partner loan) 9 No terms or interest appliable Loan faility (Modikwa) Rustenburg Platinum Mines No terms or interest Limited (partner loan) 132 appliable Loan faility (ARM Coal partner loan) Prime Less: transferred to short-term (1 511) Total Summary variable and fixed rates Transfer to short-term Variable rates Fixed rates Total ARM Annual Report

196 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Finanial assets 34 Finanial instruments and risk management (ontinued) Book value at year end R million Repriing date Maturity date Effetive interest rate Year ended 30 June 2008 Long-term borrowings Loan faility 1 (ARM Mining Consortium Limited) % Loan faility 2 (ARM Mining Consortium Limited) % Loan faility 3 (ARM Mining Consortium Limited) 31 Variable rate Leases % to 2.65% below prime Loan faility (Two Rivers mine housing projet) % Loan faility TEAL % Loan faility Assmang Variable rate Loan faility (ARM Corporate) % Loan faility (ARM Coal partner loan) 20 No terms of interest appliable 5 No terms of interest appliable Loan faility (ARM Coal partner loan) Prime Less: transferred to short-term (577) Total Summary variable and fixed rates Transfer to short-term Variable rates Fixed rates Total Repriing date Maturity date Year ended 30 June 2009 Short-term finanial liabilities Finanial institutions /06/ /06/2009 Variable rate between 9% and 15% Finanial institutions US$ /06/ /06/2009 LIBOR plus.06% on first 20 million US$ LIBOR plus 1% on next 30 million US$ Anglo Platinum (partner loan) /06/ /06/2009 No interest Implats (partner loan) 539 Variable rate at year end 11% Total Year ended 30 June 2008 Short-term finanial liabilities Finanial institutions /06/ /06/2008 Variable rate between 11% and 16% Finanial institutions US$ /06/ /06/2008 LIBOR plus.06% on first 20 million US$ LIBOR plus 1% on next 30 million US$ Finanial institutions /06/ /06/2008 Fixed rates between 15.99% and 16.99% Implats (partner loan) 635 Variable rate at year end 12% Total ARM Annual Report 2009

197 For the year ended 30 June Group Company R million F2009 F2008 F2009 F Commitments and ontingent liabilities Commitments Commitments in respet of apital expenditure: Approved by diretors ontrated for not ontrated for Total ommitments It is antiipated that this expenditure, whih mainly relates to mine development and plant and equipment, will be inurred over an estimated two-year period and will be finaned from operating ash flows and by utilising available ash and borrowing resoures. Contingent liabilities Taxation The Company has a ontingent liability arising from its dispute with the South Afrian Revenue Servies (SARS) over the dedutibility of a loan stok redemption premium laimed in the Company s 1998 tax submission. The matter is urrently under appeal and no trial date has been set by SARS. The outome of this dispute is not lear and as suh the diretors of the Company are of the opinion that no provision should be raised in these results. The potential liability for tax is R107 million, exluding interest. The interest thereon is estimated at R142 million to June 2009 (2008: R127 million). Guarantees A bak-to-bak guarantee to Assore Limited (Assore) in respet of guarantees issued to bankers by Assore (for Assmang) to seure a short-term export finane agreement faility of R180 million (2008: R180 million). Short-term export finane loans negotiated in terms of the above faility in the ordinary ourse of business at 30 June 2009 were Rnil (2008: Rnil). ARM has provided an irrevoable and unonditional guarantee to Copperbelt Energy Corporation pl (CEC) and the Development Bank of Southern Afria Limited (DBSA) for the due and puntual payment by Chambishi Metals pl (Chambishi) of the apital harge omponent of the power supply assets installed and owned by CEC for whih finaning was obtained by CEC from DBSA. The total outstanding apital harge obligation started in 2002 at US Dollar 10 million and will redue over 10 years ending June 2012 as apital harge payments are made by Chambishi. ARM has a ontratual right to have this guarantee replaed by the urrent owners of Chambishi. ARM has previously provided a US Dollar 85 million guarantee to a finanial institution in order to assist its subsidiary TEAL obtain bank failities. At year end ARM s exposure is only US Dollar 42.5 million on this guarantee after the transation with Vale and is equivalent to R328 million. Guarantees to the Department of Minerals and Energy for rehabilitation provision amounting to R72 million (2008: R72 million). Guarantees to Eskom amounting to R4 million (2008: R4 million). Litigations Claims by ommunity (ARM Mining Consortium Limited Modikwa joint venture) The litigation ommened in 2003 when orrespondene was forwarded to Modikwa by Ntuli Noble and Spoor In, purporting to at on behalf of the Banareng Tribal Authority. Various allegations were made regarding the Bapedi Shaft (Maandagshoek Winze) and its alleged impat on the residents of the Sehlako Village. This ase was dismissed with osts in A seond appliation was made during 2004 in the High Court of South Afria for ertain laims to be heard. The appliation was brought by the ommunity and the respondents are ited as Rustenburg Platinum Mine Limited, ARM Mining Consortium Limited, the Minister of Minerals and Energy, The Minister of Land Affairs and the Government of the Republi of South Afria. An internal task team has also been appointed to resolve these allegations in an amiable manner. This ation is still under negotiation. It is urrently not possible to quantify the exposure. ARM Annual Report

198 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group F2009 Group F Leases Minimum payments Present value of payments Minimum payments Present value of payments Finane leases (refer note 3) Within one year After one year but not more than five years Total minimum lease payments Less: amounts representing finane harges (16) (17) Present value of minimum lease payments Operating leases Group as lessee This is in respet of offie building rentals paid Within one year 5 4 After one year but not more than five years 4 5 Total minimum lease payments 9 9 Operating leases Group as lessor This is in respet of offie building rentals reeived (refer note 4) Within one year 5 6 After one year but not more than five years 2 7 Total minimum lease payments Retirement plans The Group failitates pension plans and provident funds substantially overing all employees. These are omposed of defined ontribution pension plans, whih are governed by the Pension Funds At, 1956, and defined ontribution provident funds administered by employee organisations within the industries in whih members are employed. The benefits provided by the defined ontribution plans are determined by aumulated ontributions and returns on investment. Members ontribute between 5.0% and 7.5% and employers between 6.2% and 18.12% of pensionable salaries to the funds. Members ontribution for the urrent year amounts to R72 million (2008: R59 million). 38 Post-retirement healthare benefits The Group has obligations to fund a portion of ertain pensioners and retiring employees medial aid ontributions based on the ost of benefits. The antiipated liabilities arising from these obligations have been atuarially determined using the projeted unit redit method and a orresponding liability has been raised. The liability is assessed periodially by an independent atuary. This assessment uses the following prinipal atuarial assumptions: A net disount rate of between 1% and 2% per annum. An inrease in healthare osts at a rate of between 7% and 8% per annum. A 1% hange in the net disount rate used is estimated to have an impat of 9.68% (2008: 9.68%) on the liability. The average expeted working lifetime of eligible members was 11 (2008: 11) years at the date of the valuation in The provisions raised in respet of post-retirement healthare benefits amounted to R83 million (2008: R83 million) at the end of the year. Of this amount, Rnil (2008: R1 million) was harged against inome in the urrent year (refer note 16). The liabilities raised based on present values of the post-retirement benefit, have been reognised in full. An atuarial valuation is arried out in respet of this liability at three yearly intervals. No new employees get this benefit and the liability is relatively stable. The last atuarial valuation was arried out in 2007 and the next one will be in At retirement members are given the hoie to have an atuarially determined amount paid into their pension fund to over the expeted ost of the post-retirement health over. Alternatively the Group will ontinue to fund a portion of the retiring employee s medial aid ontributions. F2009 F2008 F2007 F2006 F2005 Balane at 30 June (R million) ARM Annual Report 2009

199 For the year ended 30 June 39 Share-based payment plans Equity-settled plan The Company uses three plans to attrat, retain, motivate and reward eligible employees who are able to influene the performane of ARM on a basis whih aligns their interest with those of the Company s shareholders. Share options The Company grants share options to ertain employees under a share inentive sheme. The exerise prie of the options is equal to the market prie of the shares on the date of the grant. The options start to vest one year after the grant date in three equal tranhes over three years. The ontrat life of eah option is eight years from the grant date. Share options F2009 Share options F2008 Average prie ents F2009 F2009 Bonus shares Average prie ents F2008 Outstanding at the beginning of the period Granted during the period Forfeited during the period (28 217) ( ) Exerised during the period ( ) ( ) Outstanding at the end of the period Exerisable at the end of the period Range of strike pries of options exerised (ents) to to Range of strike pries of outstanding options (ents) to to Bonus shares method Annually, eligible employees reeive a grant of full value ARM shares that math, aording to a speified ratio, a portion of the annual ash inentive aruing to them. Bonus shares will be settled to partiipants after three years, onditional on ontinued employment. The bonus share method of the plan provides an additional element of share-based retention to exeutives and senior management who, through their performane, on an annual basis, have demonstrated their value to the Company, and by further enouraging exeutives and senior management to build up a shareholding in ARM. F2008 Bonus shares Outstanding at the beginning of the period Granted during the period (2 Deember 2008) Forfeited during the period (798) Shares vested* (8 827) Outstanding at the end of the period * This represents shares that vested during the period as a result of no fault termination. ARM Annual Report

200 NOTES TO THE FINANCIAL STATEMENTS ontinued 39 Share-based payment plans (ontinued) Performane shares method Annual onditional awards of full value shares are made to eligible employees. Performane shares vest after a three-year period subjet to the Company s ahievement against a weighted ombination of hallenging performane measures over this period, seleted from: omparative total shareholder return in relation to a peer group; return on apital employed against a presribed target; and growth in headline earnings per share in relation to an inflation index. The seletion of performane metris has been made on the basis that, individually or in ombination, they learly foster the reation of shareholder value. The performane share method losely aligns the interest of shareholders, exeutives and senior management by rewarding superior shareholder and finanial performane in the future, and by enouraging exeutives and senior management to build up a shareholding in ARM. Group F2009 Performane shares F2008 Performane shares Outstanding at the beginning of the period Granted during the period (2 Deember 2008) Forfeited during the period (7 820) Shares vested* (865) Outstanding at the end of the period * This represents shares that vested during the period as a result of no fault termination. The fair value of shares granted in these plans is estimated as at the date of the grant using the Blak Sholes model, taking into aount the terms and onditions upon whih the options were granted. The following table lists the range of inputs to the model used on the grant date for the years ended 30 June 2009 and 30 June Group F2009 F2008 Dividend yield % Expeted volatility % Historial volatility % Risk-free interest rate % Expeted life of options (years) Weighted average share prie (ents) Fair value of options issued during the year (R million) Fair value of options per option issued during the year (ents) The expeted life of the options is based on historial data and is not neessarily indiative of exerise patterns that may our. The expeted volatility reflets the assumption that the historial volatility is indiative of future trends whih may also not be the atual outome. No other features of options granted were inorporated into the measurement of fair value. The effet on the inome statement for Group and Company was a harge of (R million) ARM Annual Report 2009

201 39 Share-based payment plans (ontinued) Share appreiation rights plan TEAL, a subsidiary of ARM, has established a share appreiation rights plan in order to provide inentive ompensation to diretors, senior management, employees and onsultants of TEAL. The exerise prie annot be lower than the average list prie on 15 November 2005 on the Toronto Stok Exhange (TSX). The exerise period is within eight years. The vesting is: 40% on the seond anniversary, 30% on the third and 30% on the fourth anniversary of the date of the grant. A holder who exerises share appreiation rights is entitled to reeive an amount equal to the weighted average trading prie of the Common Shares on the (TSX) for the five trading days prior to the exerise date, less the exerise prie and any appliable taxes, suh amount to be paid by TEAL, at the option of TEAL, either in ash or ommon shares. As a result of the plan of arrangement that ame into effet on 1 Marh 2009 and the related transations, all share options were deemed to be vested and an offer of CAD 3.00 (R19) per share was made to all appreiation right holders. Group F2009 F2008 Outstanding at the beginning of the period Granted during the period Forfeited during the period ( ) ( ) Exerised during the period ( ) (48 000) Outstanding at the end of the period Exerisable at the end of the period The fair value of ash-settled share options granted was estimated as at the date of the grant using the Blak Sholes model, taking into aount the terms and onditions upon whih the options were granted. The following table lists the inputs to the model used on the grant date for the years ended 30 June 2009 and 30 June Dividend yield % Nil Nil Expeted volatility % 77% 77% Historial volatility % na na Risk-free interest rate % Expeted life of options (years) 4 Range of options granted and outstanding strike prie (ents) Weighted average share prie (ents) Fair value of options issued during the year (R million) 8 Fair value of options per option issued during the year (ents) The expeted life of the options was based on industry norm and was not neessarily indiative of exerise patterns that may our. The expeted volatility reflets the assumption that the historial volatility was indiative of future trends whih may also not neessarily be the atual outome. No other features of options granted were inorporated into the measurement of fair value. The effet on the inome statement for the Group was a harge of (R million) ARM Annual Report

202 NOTES TO THE FINANCIAL STATEMENTS ontinued For the year ended 30 June Group Company R million F2009 F2008 F2009 F Related party transations The Company in the ordinary ourse of business enters into various sale, purhase, servie and lease transations with subsidiaries, the holding ompany, assoiated ompanies and joint ventures. A report on investments in subsidiaries, assoiated ompanies and joint ventures, that indiates the relationship and degree of ontrol exerised by the Company, appears on pages 203 to 204. Transations between related parties are onluded at arm s length and under terms and onditions that are no less favourable than those arranged with third parties. Transations between the holding ompany, its subsidiaries, assoiated ompanies and joint ventures relate to fees, dividends, rents and interest and are regarded as intra-group transations and eliminated on onsolidation. Assmang Provision of servies Dividends reeived ARM Coal (Pty) Limited dividends reeived Venture Building Trust (Pty) Limited interest reeived 1 1 Two Rivers Platinum (Pty) Limited Interest reeived Provision of servies 2 2 Vale/ARM joint venture-provision of servies 8 4 Between subsidiaries and joint ventures Venture Building Trust (Pty) Limited, rent reeived from Vale/ARM joint venture 1 1 Nkomati, hrome sales to Assmang 2 12 Nkomati, reeivable iro Assmang 2 6 Amounts outstanding at year end owing to ARM on urrent aount Assmang Vale/ARM joint venture 1 4 Venture Building Trust 3 4 Key management personnel Key management personnel are those persons having authority and responsibility for planning, direting and ontrolling the ativities of the entity and omprise members of the board of diretors and senior management. Key management personnel: Senior management ompensation salary 18 8 Arued bonuses 3 6 Pension sheme ontributions 2 1 Reimbursive allowanes 3 4 Total ARM Annual Report 2009

203 For the year ended 30 June Group R million 40 Related party transations (ontinued) Number of options Average prie Average gross selling prie Share options Held on 1 July R62.58 Granted during the year R Exerised during the year R38.55 R Share options Held on 1 July R94.34 Granted during the year R96.20 Staff movements R79.45 Exerised during the year R50.29 R Held on 30 June R Number of bonus shares Number of performane shares Bonus and performane shares Held at 1 July 2008 Granted/awarded during the year Vested during the year* Forfeited during the year* Held on 30 June * This represents shares that vested during the period as a result of no fault termination. Details relating to diretors emoluments, share options and shareholdings in the Company are dislosed in the Diretors report. Shareholders The prinipal shareholders of the Company are detailed in the Shareholder Analysis report. Our Exeutive Chairman Patrie Motsepe is involved through shareholding and/or diretorship in various other ompanies and trusts. The Company rents offie spae from one of these entities as dislosed below. Mr Motsepe s diretor s emoluments, share options and shareholding in the Company are dislosed in the Diretors report. Group Company R million F2009 F2008 F2009 F2008 Rental paid for offies at 29 Impala Road, Chislehurston, Sandton This rental is similar to rentals paid to third parties in the same area for similar buildings. ARM Annual Report

204 REPORT ON SUBSIDIARY COMPANIES For the year ended 30 June Company R million F2009 F2008 Investments Listed: market value R5 091 million Harmony (2008: R7 270 million Harmony and TEAL) Unlisted Amounts owing by subsidiaries (refer note 8) Amounts owing to subsidiaries (refer note 19) (291) (291) Inome from subsidiaries Fees management advisory servies 10 2 Members aggregate interest in profits and losses after taxation of subsidiaries 10 2 Profits 435 Losses ARM Annual Report 2009

205 PRINCIPAL ASSOCIATE COMPANIES, JOINT VENTURES AND OTHER INVESTMENTS For the year ended 30 June Group Number of shares held Company Number of shares held Group Effetive perentage holding Name of ompany F2009 F2008 F2009 F2008 F2009 F2008 Assoiated ompanies Unlisted Luas Blok Minerals Limited (1936) Ordinary shares of 200 ents per share Xstrata South Afria (Pty) Limited* non-onvertible partiipating preferene shares of 100 ents per share Investment in other ompanies Listed Harmony Gold Mining Company Limited Ordinary shares of 50 ents per share Unlisted Business Partners Limited Joint ventures and partnerships ARM Coal (Pty) Limited Cato Ridge Alloys (Pty) Limited Modikwa joint venture* Nkomati joint venture Assmang Limited Vale/ARM joint venture** * Deember year end, audited June figures are onsolidated. ** In 2008 it was TEAL Exploration & Mining In. as a subsidiary. ARM Annual Report

206 PRINCIPAL SUBSIDIARY COMPANIES For the year ended 30 June Book value of Company s interests Issued apital amount R million Diret interest in apital % Shares R million Indebtedness by/(to) R million Name Class F2009 F2008 F2009 F2008 F2009 F2008 F2009 F2008 Afrian Rainbow Minerals Platinum Ord (Pty) Limited platinum mining Ord Anglovaal Air (Pty) Limited air harter operator Ord (212) (212) Atsot (Pty) Limited investment ompany Ord (23) (23) Avmin Limited mining investment Ord (17) (17) Biton s Investments (Pty) Limited investment ompany Ord (2) (2) Jesdene Limited share dealer Ord Kingfisher Insurane Co Limited insurane Ord Lavino (Pty) Limited investment ompany Ord (9) (9) Letaba Copper & Zin Corp Limited prospeting ompany Ord Mannequin Insurane PCC Limited (Cell AVL18)* insurane Ord Prieska Copper Mines Limited investment ompany Ord Sheffield Minerals (Pty) Limited investment ompany Ord (4) (4) South Afrian Base Minerals Limited investment ompany Ord Tasrose Investments (Pty) Limited mining investment Pref (24) (24) Two Rivers Platinum (Pty) Limited platinum mining Ord Vallum Investments (Pty) Limited investment ompany Ord Venture Building Trust (Pty) Limited property investment Ord Notes Ord Ordinary shares Pref Preferene shares Unless otherwise stated, all ompanies are inorporated and arry on their prinipal operations in South Afria. Interests are shown to the extent that this information is onsidered material. A shedule with details of all other subsidiaries is available from the registered offie. * Inorporated in Guernsey Deember year end. Audited June figures are onsolidated. 204 ARM Annual Report 2009

207 CONVENIENCE TRANSLATION INTO US DOLLARS For the benefit of international investors, the balane sheet, inome statement and statement of hanges in equity and the ash flow statement of the Group, presented in rands and set out on pages 146 to 152, have been translated into United States Dollars and are presented on this page and pages 206 to 209. This information is only supplementary and is not required by any aounting standard and does not represent US GAAP. The balane sheets are translated at the rate of exhange ruling at the lose of business at 30 June eah year and the inome statements and ash flows are translated at the average exhange rates for the years reported exept for the opening and losing ash balanes of ash flows whih are translated at the rate ruling at the lose of business at 30 June eah year. The statement of hanges in equity is translated at the rate ruling at the lose of business at 30 June eah year. The following exhange rates were used: R/US$ F2009 F2008 Balane sheet R7.72 R7.83 Inome statement and ash flow statement R9.03 R7.30 The US Dollar denominated balane sheets, inome statements, statements of hanges in equity and ash flow statements should be read in onjuntion with the aounting poliies of the Group as set out on pages 153 to 162 and with the notes to the finanial statements on pages 162 to 201. ARM Annual Report

208 US DOLLAR BALANCE SHEET Conveniene translation as at 30 June Group US$ million Notes F2009 F2008 ASSETS Non-urrent assets Property, plant and equipment Investment property Intangible assets Deferred tax assets Loans and long-term reeivables 6 17 Finanial assets 7 10 Inventories Investment in assoiate Other investments Current assets Inventories Trade and other reeivables Taxation 32 2 Cash and ash equivalents Held for sale assets 12 3 Total assets EQUITY AND LIABILITIES Capital and reserves Ordinary share apital Share premium Other reserves Retained earnings Equity attributable to equity holders of ARM Minority interest Total equity Non-urrent liabilities Long-term borrowings Deferred tax liabilities Long-term provisions Current liabilities Trade and other payables Short-term provisions Taxation Overdrafts and short-term borrowings interest-bearing Total equity and liabilities ARM Annual Report 2009

209 US DOLLAR INCOME STATEMENT Conveniene translation For the year ended 30 June Group US$ million Notes F2009 F2008 Revenue Sales Cost of sales 23 (670) (756) Gross profit Other operating inome Other operating expenses (139) (117) Profit from operations before exeptional items Inome from investments Finane osts 26 (43) (60) Inome from assoiate Profit before taxation and exeptional items Exeptional items Profit before taxation Taxation 28 (191) (285) Profit for the year Attributable to: Minority interest (22) 63 Equity holders of ARM Additional information Headline earnings Headline earnings per share (ents) Basi earnings per share (ents) Diluted headline earnings per share (ents) Diluted basi earnings per share (ents) ARM Annual Report

210 STATEMENT OF CHANGES IN EQUITY Conveniene translation For the year ended 30 June Group US$ million Notes Share apital and premium Revaluation of listed investment Other Retained profit Shareholders of ARM Minority interest Balane at 30 June Translation adjustments (51) (17) (2) (117) (187) (9) (196) Revaluation of listed investment 8 (46) (46) (46) Deferred tax on revaluation of listed investment Net impat of revaluation of listed investment (38) (38) (38) Profit for the year Share-based payments Share options exerised Realignment of urreny (1) (1) `(1) Minorities bought out in opperbelt venture (4) (4) (4) Dividend paid (43) (43) (43) Balane at 30 June Translations adjustments 7 (13) (2) 52 Revaluation of listed investment 8 (106) (106) (106) Deferred tax on revaluation of listed investment Net impat of revaluation of listed investment (91) (91) (91) Profit for the year (22) 295 Share-based payments Share options paid in ash (3) (3) (3) Share options exerised Realignment of urreny (5) (5) (5) Dilution of interest in TEAL Share appreiation rights: TEAL minority share Premium paid on purhase in minorities FCTR realised Dividend paid (94) (94) (94) Other 1 (1) Balane at 30 June Total 208 ARM Annual Report 2009

211 US DOLLAR CASH FLOW STATEMENT Conveniene translation For the year ended 30 June Group US$ million Notes F2009 F2008 Cash flow from operating ativities Cash reeipts from ustomers Cash paid to suppliers and employees (748) (781) Cash generated from operations Translation adjustment 18 (29) Interest reeived Interest paid (36) (56) Dividends reeived 13 3 Dividends paid (94) (43) Taxation paid 32 (219) (64) Net ash inflow from investing ativities Cash flow from investing ativities Additions to property, plant and equipment to maintain operations (103) (164) Additions to property, plant and equipment to expand operations (259) (201) Proeeds on disposal of property, plant and equipment 1 4 Proeeds/(ost) on disposal of 15% in TEAL Proeeds on disposal of 50% of Nkomati final tranhe payment 18 Proeeds on sale of interest in Otjikoto 4 Proeeds on sale of interest in Zambian properties 5 Net ash outflow from investing ativities (348) (334) Cash flow from finaning ativities Proeeds on exerise of share options 3 9 Share options settled in ash (3) Long-term borrowings raised Long-term borrowings repaid (35) (110) (Derease)/inrease in short-term borrowings (13) 1 Net ash outflow from finaning ativities (19) (24) Net inrease in ash and ash equivalents Cash and ash equivalents at beginning of year Cash and ash equivalents at end of year ARM Annual Report

212 FINANCIAL SUMMARY AND STATISTICS Conveniene translation For the year ended 30 June Group US$ million F2009 F2008 F2007 F2006 F2005 F2004 Inome statement Sales Headline earnings Basi earnings per share (ents) Headline earnings per share (ents) Dividend delared after year-end per share (ents) na na na na Balane sheet Total assets Cash and ash equivalent Shareholders equity Cash flow Cash generated from operations Net ash outflow from investing ativities Net ash (outflow)/inflow from finaning ativities (19) (24) (88) 41 JSE Limited performane Ordinary shares (ents) high low year end ARM Annual Report 2009

213 INVESTOR RELATIONS Shareholder information The Company s shares are listed through a primary listing on the JSE Limited under General Mining. ARM also has an unsponsored Level 1 Amerian Depositary Reeipt (ADR) programme with JPMorgan Chase Bank whih is available to investors for over the ounter or private transations. Share odes JSE Limited Reuters Setor Nature of business ARI ARIJ.J General Mining Mining of PGMs, nikel, ferrous metals and thermal oal Number of shares in issue as at 30 June Market apitalisation as at 30 June 2009 R28 billion Share prie as at 30 June 2009 R Daily average volume traded Shareholders diary Annual General Meeting Friday, 27 November 2009 To be held at 14:00 Sandton Sun Hotel Magnolia Room nr Fifth and Alie Streets Sandton Tel: Interim results release February 2010 Finanial year end June 2010 Provisional results release August 2010 Annual Report release Otober 2010 ARM Annual Report

214 INVESTOR RELATIONS ontinued Shareholder analysis Register date 30 June 2009 Issued share apital Shareholder spread Number of shareholdings % Number of shares % shares shares shares shares shares and over Total Distribution of shareholders Number of shareholdings % Number of shares % Afrian Rainbow Minerals & Exploration Investments (Pty) Limited Banks Close Corporations Empowerment Endowment funds Individuals Insurane ompanies Investment ompanies Medial shemes Mutual funds Nominees and trusts Other orporations Private ompanies Publi ompanies Retirement funds Total Publi/non-publi shareholders Number of shareholdings % Number of shares % Non-publi shareholders Publi shareholders Total Strategi holdings (more than 10%) ARM Annual Report 2009

215 * Inludes ategories above 2% only. Top 10 shareholders as at 30 June 2009 Benefiial shareholders and fund managers holding more than 0.75% Shareholder 30 June 1 Afrian Rainbow Minerals & Exploration Investments (Pty) Limited ARM Broad-Based Eonomi Empowerment Trust Allan Gray Blak Rok In Publi Investment Corporation RMB Asset Management Fidelity Investments Investe Asset Management STANLIB Asset Management Dimensional Fund Advisors 1.04 Share liquidity Number of shares traded on the JSE Limited during F2009 Month Volume July August September Otober November Deember January February Marh April May June Total ARM Annual Report

216 GLOSSARY OF TERMS AND ACRONYMS 4E 6E Anglo Platinum ARM ARM BBEE Trust ARMI Assmang Assore BEE BBBEE Btu lb C1 ost CO 2 COM CPI CPIX CSA CSI DEAT DME DMR DoL DRC DTJV DWAF DWEA Platinum, palladium, rhodium and gold Platinum, palladium, rhodium, gold, ruthenium and iridium Anglo Platinum Limited Afrian Rainbow Minerals Limited ARM Broad-Based Eonomi Empowerment Trust Afrian Rainbow Minerals & Exploration Investments (Pty) Limited Assmang Limited Assore Limited Blak Eonomi Empowerment Broad-Based Blak Eonomi Empowerment British Thermal Unit per pound Cash ost net of revenue from by-produts Carbon dioxide Chamber of Mines Consumer Prie Index Consumer Prie Index, exluding interest Coal Supply Agreement Corporate Soial Investment Department of Environmental Affairs and Tourism Department of Minerals and Energy Department of Mineral Resoures Department of Labour Demorati Republi of the Congo Douglas Tavistok joint venture Department of Water Affairs and Forestry Department of Water and Environmental Affairs EBIT Earnings before interest and tax EBITDA Earnings before interest, tax, depreiation, amortisation, exluding exeptional items and inome from assoiates EIA Environmental Impat Assessment EMPR Environmental Management Programme Report F2010 Finanial year starting 1 July 2009 ending 30 June 2010 F2009 Finanial year starting 1 July 2008 ending 30 June 2009 F2008 Finanial year starting 1 July 2007 ending 30 June 2008 FOB Free on board FOG Fall of ground FOR Free on rail FTSE Finanial Times and London Stok Exhange GAR Gross as reeived GHG Greenhouse gas Goedgevonden/GGV Goedgevonden Thermal Coal Projet H1 First six months of finanial year H2 Seond six months of finanial year Harmony Gold Harmony Gold Mining Company Limited HDSA Historially Disadvantaged South Afrian HIV Human immuno-defiieny virus IAS International Aounting Standards ICMM International Counil on Mining and Metals 214 ARM Annual Report 2009

217 IDP IFRS Implats IRS JORC Code JSE JV Kalplats AOI Integrated Development Plan International Finanial Reporting Standards Impala Platinum Holdings Limited Impala Refining Servies Limited Australian Institute of Mining and Metallurgy Joint Ore Reserves Committee Code JSE Limited Johannesburg Stok Exhange Joint venture Kalplats Area Of Influene King II King Report on Corporate Governane in South Afria 2002 King III LED LoM LTIFR MHSA Mining Charter MMZ MPRDA MSB NPI NUM NUMSA OHSA PCB PCMZ onentrator PCR PGMs PLA RBCT RIFR SAMREC Code SHE SME SMME STC UASA UG2 Vale VCT XCSA XSA ZCCM-IH King Report on Governane for South Afria 2009 and the King Code of Governane Priniples Loal Eonomi Development Life of mine Lost Time Injury Frequeny Rate A rate expressed per million man hours for a work-related injury that results in the employee being unable to attend work at his/her plae of work, performing his/her assigned duties on the next alendar day (whether a sheduled work day or not) after the day of injury. If the appointed medial professional advises that the injured person is unable to attend work on the next alendar day after the injury, regardless of the injured person s next rostered shift, a lost time injury is deemed to have ourred. Mine Health and Safety At Broad-based Soio-eonomi Empowerment Charter Main Mineralised Zone Minerals and Petroleum Resoures Development At Massive Sulphide Body Nikel Pig Iron National Union of Mineworkers National Union of Metal Workers Oupational Health and Safety At Partiipating Coal Business: Xstrata Coal South Afria existing operations, exluding Goedgevonden Chromotiti Peridotite Mineralised Zone onentrator Chromotiti Peridotite Platinum Group Metals Platinum Australia Rihards Bay Coal Terminal Reportable Injury Frequeny Rate South Afrian Code for Reporting Mineral Resoures and Mineral Reserves Safety, Health and Environment Department Small and Medium-sized Enterprise Small, Medium and Miro Enterprise Seondary Tax on Companies United Assoiation of South Afria Upper group 2 seond level of three hrometite layers Companhia Vale do Rio Doe Voluntary ounselling and testing Xstrata Coal South Afria Xstrata South Afria ZCCM Investment Holdings Pl Note: A detailed Glossary of Terms and Aronyms an be aessed on ARM Annual Report

218 NOTICE OF ANNUAL GENERAL MEETING AFRICAN RAINBOW MINERALS LIMITED (Inorporated in the Republi of South Afria) (Registration number 1933/004580/06) JSE share ode: ARI ISIN: ZAE ( ARM or the Company ) Notie is hereby given that the 76 th Annual General Meeting of members of Afrian Rainbow Minerals Limited will be held in the Magnolia Room, Sandton Sun Hotel, orner Fifth and Alie Streets, Sandton, on Friday, 27 November 2009 at 14:00, South Afrian time, for onsidering and, if deemed fit, passing, with or without modifiation, the resolutions set out below: Ordinary business Adoption of finanial statements Ordinary resolution number 1 is proposed to reeive and adopt the onsolidated annual finanial statements for the Company and the Group for the most reent finanial year. The finanial statements are inluded in the Annual Report. Ordinary resolution number 1 1. Resolved that the onsolidated annual finanial statements for the year ended 30 June 2009 and the Diretors and auditors reports thereon be and are hereby reeived and adopted. Re-eletion of Diretors Ordinary resolutions numbers 2 6 are proposed to re-elet Diretors who retire by rotation in aordane with the provisions of the Company s Artiles of Assoiation, and who, being eligible, offer themselves for re-eletion. The Diretors urriula vitae appear in the Annual Report on pages 132 and 133. The ARM Board of Diretors (the Board ) reommends the re-eletion of these Diretors. Ordinary resolution number 2 Re-eletion of Mr P T Motsepe 2. Resolved that Mr P T Motsepe, who retires in terms of the Company s Artiles of Assoiation and who is eligible and available for re-eletion, be and is hereby re-eleted as a Diretor of the Company. Ordinary resolution number 3 Re-eletion of Mr A J Wilkens 3. Resolved that Mr A J Wilkens, who retires in terms of the Company s Artiles of Assoiation and who is eligible and available for re-eletion, be and is hereby re-eleted as a Diretor of the Company. Ordinary resolution number 4 Re-eletion of Mr J A Chissano 4. Resolved that Mr J A Chissano, who retires in terms of the Company s Artiles of Assoiation and who is eligible and available for re-eletion, be and is hereby re-eleted as a Diretor of the Company. Ordinary resolution number 5 Re-eletion of Mr J R MAlpine 5. Resolved that Mr J R MAlpine, who retires in terms of the Company s Artiles of Assoiation and who is eligible and available for re-eletion, be and is hereby re-eleted as a Diretor of the Company. Ordinary resolution number 6 Re-eletion of Dr R V Simelane 6. Resolved that Dr R V Simelane, who retires in terms of the Company s Artiles of Assoiation and who is eligible and available for re-eletion, be and is hereby re-eleted as a Diretor of the Company. Eletion of Diretors Ordinary resolutions numbers 7 and 8 are proposed to elet Diretors who were appointed Diretors sine the previous Annual General Meeting and whose offie terminates in aordane with the Company s Artiles of Assoiation at this Annual General Meeting. The Board reommends the eletion of Messrs Arnold and Botha. Ordinary resolution number 7 Eletion of Mr M Arnold 7. Resolved that Mr M Arnold, whose period of offie as a Diretor terminates in aordane with the Company s Artiles of Assoiation on the date of this Annual General Meeting and who being eligible and having made himself available for eletion, be and is hereby eleted as a Diretor of the Company. Ordinary resolution number 8 Eletion of Mr A D Botha 8. Resolved that Mr A D Botha, whose period of offie as a Diretor terminates in aordane with the Company s Artiles of Assoiation on the date of this Annual General Meeting and who being eligible and having made himself available for eletion, be and is hereby eleted as a Diretor of the Company. Re-appointment of external auditors and onfirmation of designated auditor Ordinary resolution number 9 is proposed to approve the reappointment of Ernst & Young Inorporated as the external auditors of the Company and to onfirm Mr M C Herbst as the person designated to at on behalf of the external auditors. Ordinary resolution number 9 Re-appointment of auditors 9. Resolved that the re-appointment of Ernst & Young Inorporated as the external auditors of the Company be and is hereby approved and that Mr M C Herbst be and is hereby onfirmed as the designated auditor. Remuneration of Diretors Ordinary resolutions numbers 10 and 11 are proposed to ensure that Diretors remuneration attrats and retains Diretors. Ordinary resolution number 10 Inrease to annual retainer fees 10. Resolved that with effet from 1 July 2009, the annual retainer fees of Diretors be inreased by 8% per annum from R to R per annum for Independent Nonexeutive Diretors and from R to R per annum for Non-exeutive Diretors. Ordinary resolution number 11 Inrease in the Board meeting attendane fees 11. Resolved that with effet from 1 July 2009, the per Board meeting attendane fees of Diretors be inreased by 8% per annum from R to R per meeting. 216 ARM Annual Report 2009

219 Control of the authorised but unissued shares ARM Share Plan Ordinary resolution number 12 is proposed to allow Diretors to fulfil the Company s obligations in terms of The Afrian Rainbow Minerals Limited 2008 Share Plan (the ARM Share Plan ), whih was approved by shareholders in November 2008, and to omply with setions 221(2) and 222 of the Companies At. Ordinary resolution number Resolved that the authorised but unissued ordinary shares in the share apital of the Company, be and are hereby plaed under the ontrol of the Diretors of the Company as a speifi authority in terms of setions 221(2) and 222 of the Companies At for allotment and issue by them in aordane with the terms and onditions of the ARM Share Plan. In terms of the JSE Listings Requirements, votes in terms of the shares held by the ARM Share Plan will not be taken into aount at the Annual General Meeting in respet of this resolution. Control of the authorised but unissued shares ARM Share Inentive Sheme Ordinary resolution number 13 is proposed to allow Diretors to fulfil the Company s obligations in terms of the Afrian Rainbow Minerals Limited Share Inentive Sheme (the ARM Share Inentive Sheme ), whih was approved by shareholders in 1998, and to omply with setions 221(2) and 222 of the Companies At as the authority granted to Diretors at that time to issue shares has reahed its limit. Ordinary resolution number Resolved that the authorised but unissued ordinary shares in the share apital of the Company, be and are hereby plaed under the ontrol of the Diretors of the Company as a speifi authority in terms of setions 221(2) and 222 of the Companies At for allotment and issue by them in aordane with the terms and onditions of the ARM Share Inentive Sheme. In terms of the JSE Listings Requirements, votes in terms of the shares held by the ARM Share Inentive Sheme will not be taken into aount at the Annual General Meeting in respet of this resolution. Voting and proxies Eah shareholder of the Company who is registered as suh and who, being an individual, is present in person or by proxy or whih, being a Company, is represented, at the Annual General Meeting is entitled to one vote on a show of hands. On a poll, eah shareholder present in person or by proxy or represented shall have one vote for every share held by suh shareholder. Certifiated shareholders/dematerialised shareholder with own name registrations Shareholders who have not yet dematerialised their shares with own name registrations ( Entitled Shareholders ) may appoint one or more proxies to attend, speak and vote or abstain from voting in suh shareholders stead. The person so appointed need not be a member of the Company. A form of proxy is attahed for the use of those Entitled Shareholders who wish to be represented. Suh Entitled Shareholders should omplete the attahed form of proxy in aordane with the instrutions ontained therein and deposit it at the transfer seretaries. Computershare Investor Servies (Pty) Limited, 7th Floor, 70 Marshall Street, Johannesburg 2001, South Afria (or posted to PO Box 61051, Marshalltown 2107, South Afria) (or faxed to the Proxy Department Fax ). Dematerialised shareholders Shareholders who have dematerialised their shares (other than those with own name registrations) should provide their Central Seurities Depository Partiipant ( CSDP ) or broker with their voting instrutions in terms of the ustody agreement entered into with the relevant CSDP or broker. Should suh shareholders wish to attend the Annual General Meeting or send a proxy to represent them at the Annual General Meeting, they should inform their CSDP or broker timeously and request their CSDP or broker to issue them with the neessary letter of representation to attend. By order of the Board A N D Oyley (Ms) Company Seretary 7 Otober 2009 Authorisation of Diretors Ordinary resolution number 14 is proposed to allow Exeutive Diretors to implement the resolutions approved by shareholders. Ordinary resolution number Resolved that subjet to the passing of the above resolutions, any one Exeutive Diretor of the Company be and is hereby authorised to do, or ause to be done, all suh things and sign, or ause to be signed, all suh douments and take all suh ation as onsidered neessary to implement the resolutions set out in this Notie of Annual General Meeting. ARM Annual Report

220 NOTES 218 ARM Annual Report 2009

221 FORM OF PROXY Afrian Rainbow Minerals Limited (Inorporated in the Republi of South Afria) (Registration number 1933/004580/06) JSE share ode: ARI ISIN: ZAE ( ARM or the Company ) A shareholder is entitled to appoint one or more proxies (none of whom need to be a shareholder of ARM) to attend, speak and vote or abstain from voting in the plae of that shareholder at the Annual General Meeting. Shareholders who have dematerialised their shares (other than those with own name registrations) should provide their Central Seurities Depository Partiipant ( CSDP ) or broker with their voting instrutions in terms of the ustody agreement entered into with their relevant CSDP or broker. Should suh shareholders wish to attend the Annual General Meeting of the Company, they should inform their CSDP or broker timeously and request their CSDP or broker to issue them with the neessary letter of representation to attend and vote their ARM shares. For ompletion by shareholders who have not yet dematerialised their shares or who have dematerialised their shares with own name registration. Shareholders who have not yet dematerialised their shares or who have dematerialised their shares with own name registration ( Entitled Shareholders ) may appoint one or more proxies to attend, speak and vote or to abstain from voting in suh shareholder s stead. The person so appointed need not be a member of the Company. This form of proxy is for the use of those Entitled Shareholders who wish to be so represented. Suh Entitled Shareholders should omplete this form of proxy in aordane with the instrutions ontained herein and return it to the transfer seretaries, to be reeived by the time and date stipulated herein. If you are unable to attend the 76 th Annual General Meeting of shareholders of Afrian Rainbow Minerals Limited onvened for Friday, 27 November 2009 at 14:00, South Afrian time, but wish to be represented thereat you should omplete and return this form of proxy as soon as possible, but in any event to be reeived by not later than 14:00, South Afrian time, on Wednesday, 25 November I/We of being the holder of the Company, do hereby appoint (name in blok letters) (address) shares in the issued share apital of or failing him/her or failing him/her, the Chairman of the Board of Diretors, or failing him/her the Chairman of the meeting, as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at 14:00, South Afrian time, on Friday, 27 November 2009 and at any adjournment thereof and in partiular in respet of the following resolutions: Indiate with an X in the spaes below how votes are to be ast. Ordinary Resolutions For Against Abstain 1. To adopt the onsolidated annual finanial statements for the year ended 30 June 2009 and the Diretors and auditors reports thereon. 2. To re-elet Mr P T Motsepe as a Diretor 3. To re-elet Mr A J Wilkens as a Diretor 4. To re-elet Mr J A Chissano as a Diretor 5. To re-elet Mr J R MAlpine as a Diretor 6. To re-elet Dr R V Simelane as a Diretor 7. To elet Mr M Arnold as a Diretor 8. To elet Mr A D Botha as a Diretor 9. To re-appoint Ernst & Young Inorporated as external auditors and to onfirm Mr MC Herbst as the person designated to at on behalf of the external auditors 10. With effet from 1 July 2009, the annual retainer fees of Diretors be inreased by 8% per annum 11. With effet from 1 July 2009 the per Board meeting attendane fees of Diretors be inreased by 8% per annum 12. That the authorised but unissued ordinary shares in the share apital of the Company, be and are hereby plaed under the ontrol of the Diretors of the Company as a speifi authority in terms of setions 221(2) and 222 of the Companies At, 1973, as amended, for allotment and issue by them in aordane with the terms and onditions of the ARM Share Plan. 13. That the authorised but unissued ordinary shares in the share apital of the Company, be and are hereby plaed under the ontrol of the Diretors of the Company as a speifi authority in terms of setions 221(2) and 222 of the Companies At, 1973, as amended, for allotment and issue by them in aordane with the terms and onditions of the ARM Share Inentive Sheme. 14. That subjet to the passing of the above resolutions, any one Exeutive Diretor of the Company be and is hereby authorised to do, or ause to be done, all suh things and sign, or ause to be signed, all suh douments and take all suh ation as onsidered neessary to implement the resolutions set out in this Notie of Annual General Meeting. Number of shares Unless this setion is ompleted for a lesser number, the Company is authorised to insert in the said setion the total number of shares registered in my/our name(s) one business day before the meeting. Signed at on 2009 Signature Assisted by me (where appliable) Please see notes overleaf ARM Annual Report

222 NOTES TO THE PROXY Instrutions on signing and lodging the form of proxy Please read the notes below: 1. The ompletion and lodging of this form of proxy will not prelude the Entitled Shareholder who grants this proxy from attending the meeting and speaking and voting in person thereat to the exlusion of any proxy appointed in terms hereof should he or she wish to do so. 2. Every member present in person or represented by proxy and entitled to vote shall, on a show of hands, have only one vote and upon a poll every member shall have a vote for every ordinary share held. 3. You may insert the name of any person(s) whom you wish to appoint as your proxy in the blank spae(s) provided for that purpose. The person whose name appears first on the form of proxy and who is present at this meeting will be entitled to at as a proxy to the exlusion of those whose names follow. 4. When there are joint holders of shares, the vote of the senior who tenders a vote, whether in person or by proxy, will be aepted to the exlusion of the votes of the other joint holders for whih purpose seniority will be determined by the order in whih the names stand in the register of members in respet of the joint holding. Only that holder whose name appears first in the register need sign this form of proxy. 5. If the form of proxy is signed under the authority of a power of attorney or on behalf of a ompany or any other juristi person, then it must be aompanied by suh power of attorney or a ertified opy of the relevant enabling resolution or other authority of suh ompany or other juristi person, unless proof of suh authority has been reorded by the Company. 6. If the Entitled Shareholder does not indiate in the appropriate plae on the fae hereof how he or she wishes to vote in respet of a resolution, his or her proxy shall be entitled to vote as he or she deems fit in respet of that resolution. 7. A deletion of any printed matter and the ompletion of any blank spaes need not be signed or initialled. Any alteration must be signed, not initialled. 8. The Chairman of the meeting may, in his or her absolute disretion, rejet any form of proxy whih is ompleted other than in aordane with these instrutions. 9. Forms of proxy, powers of attorney or any other authority appointing a proxy shall be deposited at the transfer seretaries, Computershare Investor Servies (Pty) Limited, 70 Marshall Street, Johannesburg 2001 (or posted to PO Box 61051, Marshalltown, 2107) (or faxed to the Proxy Department ) so as to be reeived not later than 14:00, South Afrian time, on Wednesday, 25 November 2009 (in respet of the meeting) or 48 hours, exluding Saturdays, Sundays and publi holidays, before the time appointed for holding of any adjourned meeting. 10. No form of proxy shall be valid after the expiration of six months from the date when it was signed exept at an adjourned meeting in ases where the meeting was originally held within six months from the aforesaid date. 220 ARM Annual Report 2009

223 CONTACT DETAILS AND ADMINISTRATION Afrian Rainbow Minerals Limited Inorporated in the Republi of South Afria Registration number: 1933/004580/06 Share ode: ARI ISIN ode: ZAE Registered and orporate offie ARM House, 29 Impala Road Chislehurston, Sandton, 2196 PO Box , Sandton, 2146 Tel: Fax: Web: Company seretary Alyson D Oyley Tel: alyson.doyley@arm.o.za New business development Stompie Shiels Exeutive Diretor: Business Development Tel: stompie.shiels@arm.o.za Auditors External auditors: Ernst & Young Inorporated Internal auditors: KPMG Sponsors Deutshe Seurities (SA) (Proprietary) Limited Investor relations Monique Swartz Corporate Development and Head of Investor Relations Tel: monique.swartz@arm.o.za Corné Dippenaar Corporate Development Tel: orne.dippenaar@arm.o.za Ursula Anyamene Corporate Development & Investor Relations Assistant Tel: ursula.anyamene@arm.o.za Bankers ABSA Bank Limited FirstRand Bank Limited Nedbank Limited The Standard Bank of South Afria Limited Transfer seretaries Computershare Investor Servies (Pty) Limited Ground Floor, 70 Marshall Street Johannesburg 2001 PO Box 61051, Marshalltown, 2107 Tel: Fax: web.queries@omputershare.o.za Web: Diretors P T Motsepe Exeutive Chairman A J Wilkens Chief Exeutive Offier M Arnold Finanial Diretor F Abbott* Dr M M M Bakane-Tuoane** A D Botha** J A Chissano (Mozambian)** W M Gule M W King** A K Maditsi** K S Mashalane J R MAlpine** L A Shiels Dr R V Simelane** J C Steenkamp Z B Swanepoel* * Non-exeutive ** Independent Non-exeutive FORWARD LOOKING STATEMENTS Certain statements in this report onstitute forward looking statements that are neither reported finanial results nor other historial information. They inlude but are not limited to statements that are preditions of or indiate future earnings, savings, synergies, events, trends, plans or objetives. Suh forward looking statements may or may not take into aount and may or may not be affeted by known and unknown risks, unertainties and other important fators that ould ause the atual results, performane or ahievements of the Company to be materially different from the future results, performane or ahievements expressed or implied by suh forward looking statements. Suh risks, unertainties and other important fators inlude among others: eonomi, business and politial onditions in South Afria; dereases in the market prie of ommodities; hazards assoiated with underground and surfae mining; labour disruptions; hanges in government regulations, partiularly environmental regulations; hanges in exhange rates; urreny devaluations; inflation and other maro-eonomi fators; and the impat of the AIDS risis in South Afria. These forward looking statements speak only as of the date of publiation of these pages. The Company undertakes no obligation to update publily or release any revisions to these forward looking statements to reflet events or irumstanes after the date of publiation of these pages or to reflet the ourrene of unantiipated events.

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