KUMBA IRON ORE CIRCULAR PROOF 4 6 JUNE 2018

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1 THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION The definitions and interpretation commencing on page 5 of this Circular apply, mutatis mutandis, throughout this Circular including this cover page, except where the context indicates a contrary intention. If you are in any doubt as to the action that you should take, please consult your broker, CSDP, banker, legal adviser, accountant or other professional adviser immediately. If you have disposed of all of your Kumba Shares, then this Circular together with the accompanying notice convening the Special General Meeting and form of proxy (yellow) should be forwarded to the purchaser to whom, or the broker, agent or CSDP through whom you disposed of your Kumba Shares. Shareholders should note that while the entire Circular is important and should be read in its entirety, particular attention should be paid to the section entitled Action required by Kumba Shareholders commencing on page 2 of this Circular. Kumba accepts no responsibility and will not be held liable for any failure on the part of any CSDP or broker of a Dematerialised Shareholder to notify such Shareholder of the Special General Meeting or any business to be concluded thereat. KUMBA IRON ORE LIMITED A member of the Anglo American plc Group Incorporated in the Republic of South Africa Registration number: 2005/015852/06 Share code: KIO ISIN: ZAE ( Kumba or the Company ) CIRCULAR TO KUMBA SHAREHOLDERS regarding the establishment of an employee share ownership scheme by SIOC as contemplated in section 97 of the Companies Act and for the purpose of: promoting substantially and meaningfully expanding opportunities for historically disadvantaged persons to enter into and actively participate in the mineral and petroleum industries and to benefit from the exploitation of the nation s mineral and petroleum resources; incentivising Eligible Employees of SIOC; and aligning the interests of the employees of SIOC with the interests of its majority shareholder, Kumba; the passing of a special resolution in terms of sections 66(8) and 66(9) of the Companies Act to approve the proposed remuneration for the Lead Independent Director and incorporating a notice of the Special General Meeting; and a form of proxy (yellow) for use by Certificated Shareholders and own-name Dematerialised Shareholders only. Legal Adviser Sponsor Date of issue: Monday, 11 June 2018 Additional copies of this Circular, in its printed format, may be obtained from Kumba and the Transfer Secretaries at their respective addresses set out in the section of this Circular entitled Corporate Information and Advisers, during normal business hours from Monday, 11 June 2018 up to and including Tuesday, 10 July This Circular will also be available on the Kumba website ( from the commencement of normal business hours on Monday, 11 June Copies of this Circular are available in the English language only.

2 CORPORATE INFORMATION AND ADVISERS Registered office Centurion Gate Building 2B, 124 Akkerboom Road John Vorster Road, Centurion, 0157 (PO Box 9679, Centurion, 0046) Date and place of incorporation: 16 May 2005 at the Commissioner of Companies and Intellectual Property Commission at 77 Meintjies Street, Sunnyside, Pretoria, South Africa Company Secretary Celeste Dyale Appollis Centurion Gate Building 2B, 124 Akkerboom Road John Vorster Road, Centurion, 0157 (PO Box 9679, Centurion, 0046) Transfer Secretaries Computershare Investor Services Proprietary Limited Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 (PO Box 61051, Marshalltown 2107) Legal Adviser Webber Wentzel 90 Rivonia Road, Sandton Johannesburg, 2196 (PO Box 61771, Marshalltown, 2107) Sponsor RAND MERCHANT BANK (a division of FirstRand Bank Limited) (Registration number 1929/001225/06) 1 Merchant Place, Cnr Fredman Drive and Rivonia Road, Sandton, 2196 (PO Box , Sandton, 2146)

3 TABLE OF CONTENTS The definitions and interpretations commencing on page 5 of this Circular have been used in this section. CORPORATE INFORMATION AND ADVISERS Page IFC ACTION REQUIRED BY KUMBA SHAREHOLDERS 2 IMPORTANT DATES AND TIMES 4 DEFINITIONS AND INTERPRETATIONS 5 CIRCULAR TO KUMBA SHAREHOLDERS 8 1. INTRODUCTION 8 2. PURPOSE OF THIS CIRCULAR 9 3. RATIONALE FOR THE ESOP SCHEME (INCLUDING THE SALIENT TERMS OF THE ESOP TRUST DEED) 9 4. TERMS AND CONDITIONS OF THE ESOP SCHEME 9 5. ESTIMATED EXPENSES SALIENT INFORMATION ON KUMBA MAJOR SHAREHOLDERS LITIGATION AND LEGAL PROCEEDINGS RESPONSIBILITY STATEMENT CONSENTS SPECIAL GENERAL MEETING DOCUMENTS AVAILABLE FOR INSPECTION 12 ANNEXURE 1: SHARE PRICE HISTORY OF KUMBA 13 FORM OF PROXY (yellow) Attached 1

4 ACTION REQUIRED BY KUMBA SHAREHOLDERS If you have disposed of all your Kumba Shares, then this Circular, together with the accompanying notice convening the Special General Meeting and form of proxy (yellow), should be forwarded to the purchaser to whom, or the broker, agent, CSDP or banker through whom, you disposed of your Kumba Shares. Please take careful note of the following provisions regarding the action to be taken by Kumba Shareholders: A Special General Meeting of Kumba Shareholders will be held at 10:30 am (CAT) on Tuesday, 10 July 2018 at Kumba Corporate Office, Centurion Gate, Building 2B, 124 Akkerboom Road, Centurion for the purpose of considering and, if deemed fit, passing the resolutions required to enable SIOC to implement an employee share incentive scheme and to approve the proposed remuneration for the LID. A notice convening such Special General Meeting is attached to, and forms part of, this Circular. 1. DEMATERIALISED SHAREHOLDERS WHO ARE NOT OWN-NAME DEMATERIALISED SHAREHOLDERS 1.1 Attendance and voting at the Special General Meeting If you wish to attend the Special General Meeting, you should instruct your CSDP or broker to issue you with the necessary letter of representation to attend the Special General Meeting in person, in the manner stipulated in the custody agreement governing the relationship between you and your CSDP or broker. These instructions must be provided to the CSDP or broker by the cut-off time and date advised by the CSDP or broker for instructions of this nature If you do not wish to or are unable to attend the Special General Meeting, but wish to vote thereat, you should provide your CSDP or broker with your voting instructions in the manner stipulated in the custody agreement governing the relationship between you and your CSDP or broker. These instructions must be provided to the CSDP or broker by the cut-off time and date advised by the CSDP or broker for instructions of this nature. If your CSDP or broker does not obtain voting instructions from you, it will be obliged to vote in accordance with the instructions contained in the custody agreement concluded between you and your CSDP or broker You must not complete the attached form of proxy (yellow). 2. DEMATERIALISED SHAREHOLDERS WHO ARE OWN-NAME DEMATERIALISED SHAREHOLDERS 2.1 Attendance and voting at the Special General Meeting You may attend the Special General Meeting and vote thereat If you do not wish to or are unable to attend the Special General Meeting, but wish to be represented thereat, you must complete the attached form of proxy (yellow) in accordance with the instructions contained therein and return it to the Transfer Secretaries, Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 (PO Box 61051, Marshalltown 2107) to be received by them, for administrative purposes, by no later than 10:30 am (CAT) on Friday, 6 July Alternatively, the form of proxy (yellow) may be handed to the Chairperson of the Special General Meeting immediately prior to your proxy exercising any of your voting rights as a Shareholder at the Special General Meeting. 3. CERTIFICATED SHAREHOLDERS 3.1 Attendance and voting at the Special General Meeting You may attend the Special General Meeting and vote thereat If you do not wish to or are unable to attend the Special General Meeting, but wish to be represented thereat, you must complete the attached form of proxy (yellow) in accordance with the instructions contained therein and return it to the Transfer Secretaries, Computershare Investor Services Proprietary Limited, Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196 (PO Box 61051, Marshalltown 2107) to be received by them, for administrative purposes, by no later than 10:30 am (CAT) on Friday, 6 July Alternatively, the form of proxy (yellow) may be handed to the Chairperson of the Special General Meeting before the Special General Meeting immediately prior to your proxy exercising any of your voting rights as a Shareholder at the Special General Meeting. 2

5 4. GENERAL 4.1 Approvals required at the Special General Meeting The ESOP Scheme and the proposed remuneration for the LID must be approved by way of special resolutions, at the Special General Meeting at which at least three Kumba Shareholders are present and sufficient Kumba Shareholders are present to exercise, in aggregate, at least 25% of all the voting rights that are entitled to be exercised at the Special General Meeting. In order to be approved, the special resolutions must be supported by at least 75% of voting rights exercised thereon. 4.2 Electronic participation at the Special General Meeting Shareholders or their proxies may participate in (but not vote at) the Special General Meeting by way of a teleconference call and, if they wish to do so: must contact the Company Secretary (by at the address celeste.appollis@angloamerican.com) no later than 10:30 am (CAT) on Friday, 6 July 2018 in order to obtain a PIN and dial-in details for that conference call; will be required to provide reasonably satisfactory identification; and will be billed separately by their own telephone service providers for their telephone call to participate in the Special General Meeting, provided that Shareholders and their proxies will not be able to vote telephonically at the Special General Meeting and will still need to appoint a proxy to vote on their behalf at the Special General Meeting. 3

6 IMPORTANT DATES AND TIMES The definitions and interpretations commencing on page 5 of this circular apply, mutatis mutandis, to this section. Record date to determine which Kumba Shareholders are entitled to receive the Circular Circular posted to Kumba Shareholders and notice convening the Special General Meeting released on SENS on Notice convening the Special General Meeting published in the South African press on Last day to trade Kumba Shares in order to be recorded in the Register in order to vote at the Special General Meeting (see note 2 below) on Record date to be eligible to vote at the Special General Meeting, being the Record Date, by close of trade on Last day to lodge proxy forms in respect of the Special General Meeting with the Transfer Secretaries so as to be received, for administrative purposes by 10:30 am (CAT) on Alternatively the form of proxy (yellow) may be handed to the Chairperson of the Special General Meeting immediately prior to your proxy exercising any of your voting rights as a Shareholder at the Special General Meeting Special General Meeting to be held at 10:30 am (CAT) on Results of the Special General Meeting released on SENS on 2018 Friday, 1 June Monday, 11 June Tuesday, 12 June Tuesday, 26 June Friday, 29 June Friday, 6 July Tuesday, 10 July Wednesday, 11 July Notes: 1. All dates and times are subject to amendment. Any change in the dates and times will be released on SENS and published in the South African press. 2. Kumba Shareholders should note that, as transactions in Shares are settled in the electronic settlement system used by Strate, settlement of trades takes place three business days after such trade. Therefore, Kumba Shareholders who acquire Kumba Shares after close of trade on Tuesday, 26 June 2018 will not be eligible to vote at the Special General Meeting. 3. All times given in this Circular are local times in South Africa. 4. If the Special General Meeting is adjourned or postponed, forms of proxy (yellow) submitted for the Special General Meeting will remain valid in respect of any adjournment or postponement of the Special General Meeting. 4

7 DEFINITIONS AND INTERPRETATIONS In this Circular, the notice convening the Special General Meeting and the form of proxy (yellow) unless the context otherwise indicates, references to the singular include the plural and vice versa, words denoting one gender include the others, expressions denoting natural persons include juristic persons and associations of persons and vice versa, and the words in the first column hereunder have the meaning stated opposite them in the second column, as follows: Board or the Directors the board of directors of Kumba, as reflected on page 8; broker Certificated Shares Certificated Shareholders Circular Companies Act CSDP Dematerialise Dematerialised Shareholders Dematerialised Shares Eligible Employees ESOP Beneficiaries ESOP Distributions ESOP Scheme ESOP Scheme Rules ESOP Trust any person registered as a broking member (equities) in terms of the rules of the JSE made in accordance with the provisions of the Financial Markets Act; Kumba Shares, represented by a share certificate or other document(s) of title, which are not Dematerialised Shares; holders of Certificated Shares; this bound document, dated Monday, 11 June 2018, including the Annexure hereto and incorporating a notice convening the Special General Meeting and, where applicable, a form of proxy (yellow); the Companies Act 2008, 71 of 2008, as amended; a Central Securities Depository Participant, accepted as a participant in terms of the Financial Markets Act, with whom a Shareholder holds a Dematerialised share account; the process by which certificated ordinary shares are converted or held in electronic form as uncertificated ordinary shares and recorded in the sub-register of ordinary Shareholders maintained by a CSDP; holders of Dematerialised Shares; Kumba Shares that have been Dematerialised through a CSDP or broker and are held in a sub-register in electronic form; a person who is in the permanent employment of SIOC (excluding trainees, bursars and fixed-term employees, professionals in training, learners and apprentices) who falls within Band 6/11 and lower (all inclusive) of the Anglo American global grading framework, but excluding any employee who is a participant in another share incentive scheme of SIOC, or who is a director or principal executive officer (or associate thereof) of SIOC; in respect of the ESOP Trust Income and/or ESOP Trust Assets, those persons and/or category of persons referred to in the ESOP Trust Deed and who may from time to time become eligible to participate in the ESOP Scheme in terms of the ESOP Trust Deed; all and any amounts in cash or other property received by the ESOP Trust pursuant to the ESOP Trust being the holder of Kumba Shares, during that year; the Employee Share Ownership Scheme, established by SIOC in terms of the ESOP Trust Deed and the ESOP Scheme Rules; the rules of the ESOP Scheme, adopted by the directors of SIOC and amended from time to time by the directors of SIOC in accordance with clause 24 of the ESOP Trust Deed; the trust established and governed by the ESOP Trust Deed, being the SIOC Employee Benefit Trust (or such other name as may be approved by the Master of the High Court); 5

8 ESOP Trust Assets ESOP Trust Deed ESOP Trust Income ESOP Trust Interest ESOP Trustees Financial Markets Act First ESOP Trustees Group HDSA IAS IFRS JSE Kumba or the Company Kumba Shareholders or Shareholders Kumba Shares or ordinary shares all of the investments, funds, property, assets, monies, and unexpended or accumulated or undistributed income of the ESOP Trust acquired for the purpose of the ESOP Trust or of which the ESOP Trustees may from time to time stand possessed and which constitutes the trust estate from time to time; the deed of trust establishing the ESOP Trust, including all annexures attached thereto, as varied or amended from time to time; in any year, all and any amounts in cash or kind distributed to, received by, or accruing to the ESOP Trust (including the ESOP Distributions), during that year, together with interest received or accrued thereon; any right of an ESOP Beneficiary to participate in the ESOP Trust Income and ESOP Trust Assets; the trustees of the ESOP Trust for the time being and from time to time; the Financial Markets Act, 19 of 2012, as amended; the first trustees of the ESOP Trust as appointed by SIOC; Anglo American plc (registration number ), a Public Limited company incorporated in accordance with the laws of the United Kingdom, the ordinary shares of which is listed on the London Stock Exchange (primary listing), the JSE Limited, the SWX Swiss Exchange, the Botswana Stock Exchange and the Namibian Stock Exchange and its subsidiaries and associates; includes: (a) any person, category of persons or community, disadvantaged by unfair discrimination before the Constitution took effect; (b) any association, a majority of whose members are persons contemplated in paragraph (a); (c) a juristic person, other than an association, which: (i) is managed and controlled by a person contemplated in paragraph (a) and that the persons collectively or as a group own and control a majority of the issued share capital or members interest, and are able to control the majority of the members vote; or (ii) is a subsidiary, as defined in section 1(e) of the Companies Act, 1973, as a juristic person who is a historically disadvantaged person by virtue of the provisions of (c) (i); the International Accounting Standards; the International Financial Reporting Standards issued by the International Accounting Standards Board, as amended; JSE Limited (registration number 2005/022939/06), a public company incorporated in accordance with the laws of South Africa and licensed as an exchange under the Financial Markets Act; Kumba Iron Ore Limited, (registration number 2005/015852/06), a public company incorporated in accordance with the laws of South Africa, the ordinary shares of which are listed on the main board of the stock exchange operated by the JSE; all registered holders of Kumba issued ordinary shares; ordinary shares in the issued share capital of Kumba of no par value, listed on the main board of the stock exchange operated by the JSE; 6

9 last practicable date Lead Independent Director or LID Listings Requirements LRA MOI own-name Dematerialised Shareholders Record Date Register Special General Meeting SENS SIOC South Africa Strate subsidiary Transfer Secretaries or Computershare Uncertificated Securities Register Tuesday, 5 June 2018, being the last practicable date prior to the finalisation of this Circular; an Independent Non-Executive Director appointed by the Board of Directors to serve in a lead capacity to coordinate the activities of the other Independent Non-Executive Directors and to perform such other duties and responsibilities as the Board of Directors may determine. the Listings Requirements of the JSE; the Labour Relations Act, 66 of 1995, as amended or replaced from time to time; the Memorandum of Incorporation of Kumba; Dematerialised Shareholders who have elected to have own name registration; the record date established by the Board in terms of section 59 of the Companies Act, by which a Shareholder is required to be reflected as such in the Register in order to be able to attend, participate and vote at the Special General Meeting; Kumba s securities register, including all sub-registers; the meeting of Shareholders convened in terms of the Companies Act (including any adjournment or postponement thereof) to be held at 10:30 am (CAT) on Tuesday, 10 July 2018 at Kumba Corporate Office, Centurion Gate, Building 2B, 124 Akkerboom Road, Centurion, to consider and, if deemed fit, to pass, with or without modification, the resolutions necessary to implement the ESOP Scheme and to approve the proposed remuneration for the LID; the Stock Exchange News Service, the news service operated by the JSE; Sishen Iron Ore Company Proprietary Limited, registration number 2000/011085/07, a private company incorporated in accordance with the laws of the Republic of South Africa; the Republic of South Africa; Strate Proprietary Limited (registration number 1998/022242/07), a private company incorporated in accordance with the laws of South Africa, which is a registered central securities depository in terms of the Financial Markets Act, which manages the electronic clearing and settlement system for transactions that take place on the JSE and off-market trades; a subsidiary company, as defined in paragraph 3 of the Companies Act; Computershare Investor Services (Proprietary) Limited (Registration number 2004/003647/07), a private company incorporated in accordance with the laws of South Africa; and the record of Dematerialised Shares administered and maintained by a CSDP and which forms part of the Register. 7

10 Executive Themba Moyeni Mkhwanazi (Chief Executive Officer) Bothwell Anesu Mazarura (Chief Financial Officer) Non-executive Dolly Doreen Mokgatle* Buyelwa Patience Sonjica* Terence Philip Goodlace** Seamus Gerard French Stephen Thomas Pearce Sizwe Vulindlela Gantsho* (Chairperson) Nonkululeko Sylvia Dlamini Sango Siviwe Ntsaluba* Nomalizo Beryl Langa-Royds* Mary Sina Bomela* * Independent ** Lead Independent Director KUMBA IRON ORE LIMITED A member of the Anglo American plc group Incorporated in the Republic of South Africa Registration number: 2005/015852/06 Share code: KIO ISIN: ZAE ( Kumba or the Company ) CIRCULAR TO KUMBA SHAREHOLDERS 1. INTRODUCTION 1.1 ESOP Scheme SIOC intends to implement the ESOP Scheme as contemplated in section 97 of the Companies Act to, inter alia, incentivise Eligible Employees of SIOC and align the interests of the employees of SIOC with the interests of its majority shareholder, Kumba It is proposed that SIOC will contribute funds to the ESOP Trust from time to time, to enable the ESOP Trust to purchase Kumba Shares on the secondary market. The ESOP Trust will hold the Kumba Shares for the benefit of Eligible Employees who will be beneficiaries of the ESOP Trust The Kumba Shares acquired by the ESOP Trust will afford Eligible Employees of SIOC the opportunity to acquire an equity interest in Kumba The ESOP Trust will not be a related party or a non-public shareholder of Kumba as defined in the Listings Requirements. The ESOP Trust will not form part of the Kumba group subsequent to the establishment thereof. Pursuant to the meaning of control under IFRS 2 read with IAS 32:33, Kumba has control over the ESOP Trust and, thus, over the assets and liabilities of the ESOP Trust. As a result, the Kumba Shares that will be held by the ESOP Trust will be treated as treasury shares for accounting purposes. 1.2 LID remuneration In terms of sections 66(8) and 66(9) of the Companies Act, remuneration may only be paid to members of the Board for their services as directors in accordance with a special resolution approved by the Shareholders within the previous two years and if not prohibited in terms of the Company s MOI The typical market practice is for the LID fee structure to be all-inclusive, similar to that of the Chairman. The LID is usually paid a premium when compared to the average Non-Executive Director s fees and will also most often earn a fee which is at a discount of the Chairperson of the Board The proposed LID fee is based on a benchmarking exercise conducted against peer groups and other JSE listed companies. 8

11 2. PURPOSE OF THIS CIRCULAR The purpose of this Circular is to provide Kumba Shareholders with the relevant information regarding the ESOP Scheme and the proposed Lead Independent Director s remuneration, and to give notice convening the Special General Meeting in order to consider and, if deemed fit, to pass the resolutions necessary to approve and implement the ESOP Scheme and the proposed remuneration for the LID in accordance with the Companies Act. A notice convening the Special General Meeting is attached to, and forms part of, this Circular. 3. RATIONALE FOR THE ESOP SCHEME (INCLUDING THE SALIENT TERMS OF THE ESOP TRUST DEED) 3.1 SIOC is committed to transformation in South Africa and is establishing the ESOP Trust to enable HDSAs to participate in the capital growth of Kumba Shares. The purpose of the ESOP Trust is to create a self-sufficient, sustainable, finite scheme to incentivise Eligible Employees of SIOC by providing them with the ability to participate in the capital growth of Kumba Shares. 3.2 To give effect to these aims, SIOC is establishing the ESOP Trust on the terms and conditions of the ESOP Trust Deed in order for the ESOP Trust Income and ESOP Trust Assets to be applied for the benefit of the ESOP Beneficiaries. 4. TERMS AND CONDITIONS OF THE ESOP SCHEME 4.1 Object of the ESOP TRUST The objects of the ESOP Trust shall be to benefit the ESOP Beneficiaries by: serving as a tool to provide an incentive to employees of SIOC and thereby further align the interests of the employees who participate in the scheme with those of the Kumba Shareholders; giving ESOP Beneficiaries a sense of real ownership in Kumba; allowing employees of SIOC who do not currently participate in any other share incentive scheme of Kumba to become participants of the ESOP Scheme; affording ESOP Beneficiaries a vested right in the ESOP Trust Interest; distributing certain Kumba Shares which are notionally linked to units awarded to ESOP Beneficiaries, at certain future dates; utilising any ESOP Distributions received by the ESOP Trust in respect of the Kumba Shares to pay benefits to ESOP Beneficiaries in terms of the ESOP Scheme Rules; and paying the accumulated ESOP Trust Interest of the ESOP Trust to the ESOP Beneficiaries at the earlier of the date on which such ESOP Trust Interest vests in the participants or the winding-up of the ESOP Trust. 4.2 ESOP Trustees The First ESOP Trustees have agreed to accept the nomination and to undertake the obligations of the ESOP Trust according to the terms set out in the ESOP Trust Deed. There shall not be less than two and not more than 10 ESOP Trustees and at all times at least 50% of the ESOP Trustees shall be appointed by the ESOP Beneficiaries and the remaining ESOP Trustees shall be appointed by the board of directors of SIOC The ESOP Trustees shall elect a chairperson from among the ESOP Trustees who shall hold office as such for such period or periods as the ESOP Trustees may determine. 4.3 Exercise of voting rights The voting rights in the Kumba Shares to be held by the ESOP Trust will not be controlled or directed by SIOC or Kumba. The ESOP Trust shall, as registered holder of the Kumba Shares, be entitled to vote such Kumba Shares at all meetings of Shareholders of Kumba. The decision as to how to vote the Kumba Shares shall be made by a majority vote of the ESOP Trustees. 4.4 Termination of the ESOP Trust The ESOP Trust shall terminate on the date upon which the SIOC board of directors and the ESOP Trustees agree that the objects of the ESOP Trust have been achieved, provided that date shall not be later than the sixth anniversary of the first date on which units in the ESOP Trust are first allocated to ESOP Beneficiaries. Upon termination of the ESOP Trust, the ESOP Trustees will wind up the affairs of the ESOP Trust, including the disposal of ESOP Trust Assets and the repayment of any loans owing to SIOC and thereafter, apply the net proceeds of the realisation of the ESOP Trust Assets, after all of the liabilities of the ESOP Trust have been paid, for the benefit of the ESOP Beneficiaries and/or an entity with similar objectives as the ESOP Trust. 9

12 4.5 Benefits of the scheme to ESOP beneficiaries As a beneficiary of the ESOP Trust, each ESOP Beneficiary will have a personal right to all of the underlying assets (i.e. Kumba Shares) of the ESOP Trust (which are at all times held by the ESOP Trustees for the benefit of the ESOP Beneficiaries) upon the vesting of the units in the Beneficiary and/or dissolution or the winding up of the ESOP Trust For the sake of simplicity, the ESOP Trust Deed contains a concept of units. A unit in the ESOP Trust is a notional concept to facilitate and simplify, for ESOP Beneficiaries, an understanding of the transactions relating to their ESOP Trust Interest or parts of their ESOP Trust Interest and confer on the holder of the unit a personal right as set out in the ESOP Trust Deed. For the avoidance of doubt, units in the ESOP Trust do not constitute property of any nature and have no separate existence. Each ordinary share in the issued share capital of Kumba held by the ESOP Trust, is notionally linked to one unit. ESOP Beneficiaries will not pay anything for the units that are allocated to them. Upon acceptance of the allocation of units, that ESOP Beneficiary will obtain a vested right in respect of the Kumba Shares held by the ESOP Trust that have been notionally linked to the units so allocated to him/her % of the Distributions received by the ESOP Trust in respect of Kumba Shares that have been linked to allocated units will vest in the ESOP Beneficiaries to whom those units have been allocated % of the Distributions received by the ESOP Trust in respect of Kumba Shares that have not been linked to allocated units will be retained by the ESOP Trustees and utilised to cover the operating expenses of the ESOP Trust Following the third anniversary of the date on which a unit is awarded to an ESOP Beneficiary, the ESOP Beneficiary will be entitled to elect to (i) receive transfer of the underlying Kumba Share which is linked to that unit, or (ii) dispose of the underlying Kumba Share which is linked to that unit and to receive the proceeds of such sale, net of all taxes An ESOP Beneficiary, who leaves the employment of SIOC due to circumstances other than: retirement in compliance with SIOC or the relevant Group company s official retirement policies and procedures (including early retirement as approved in terms of such policies and procedures); retrenchment; permanent disability or incapacity (such that the Beneficiary becomes permanently incapacitated and thereby unable to perform the functions which he/she is required to perform in the ordinary course of his/her employment with SIOC or a Group company); death; 5. ESTIMATED EXPENSES employment is transferred from SIOC to any Group company; employment is transferred from SIOC to any third party pursuant to section 197 of the LRA; promotion such that the ESOP Beneficiary no longer falls within Band 6/11 and lower (all inclusive) of the Anglo American global grading framework; or any other reason which the board of directors of SIOC decides to be appropriate in the circumstances will forfeit all units in the ESOP Trust and will forfeit any further rights to participate in the ESOP Scheme. There have been no preliminary expenses relating to the proposed ESOP Scheme, incurred by Kumba in the three years immediately preceding the date of this Circular. 6. SALIENT INFORMATION ON KUMBA 6.1 Nature of Kumba s business Kumba is part of the iron ore business of the Anglo American plc group and a supplier of high-quality iron ore (64.1% average Fe) to the global steel industry, with mining operations in the Northern Cape, a head office in Centurion, Gauteng, and a port operation in Saldanha Bay, Western Cape. Kumba has a 76.3% interest in SIOC, the entity that owns the operating assets. Export ore is shipped to customers across the globe from the port operation in Saldanha Bay. SIOC also have a marketing office in Singapore, integrated with Anglo American marketing BU, and one in Luxembourg. In total, around 93% of SIOC s product is exported and around 7% comprises domestic sales. 10

13 6.1.2 Kumba was formed in November 2006 when the iron ore assets of Kumba Resources Limited (renamed Exxaro) were unbundled and listed separately on the main board of the JSE under the iron ore and steel sector. The Company was incorporated in South Africa on 16 May 2005; however, Kumba did not have any business transactions from the date of incorporation until the effective date of the unbundling, 1 November SIOC is a fully empowered company in terms of the 2014 equity ownership requirements set out in the South African Mining Charter. The remaining 23.7% interest in SIOC are held by black economic empowerment (BEE) partners, Exxaro Resources Limited, a leading BEE company listed on the JSE (20.6%), and the SIOC Community Development Trust, a trust that funds projects in local communities (3.1%). 6.2 Share price history The price history of the shares of Kumba on the JSE from 1 May 2018 until the last practicable date is set out in Annexure 1 to this Circular. 6.3 Directors There will be no variation in the appointed Directors as a consequence of the implementation of the ESOP Scheme. 6.4 Directors remuneration There will be no variation in the remuneration to be received by any of the Directors as a consequence of the implementation of the ESOP Scheme. 6.5 Directors interest in securities At the last practicable date, the Directors and their associates (as defined in terms of the Listings Requirements), including Directors who have resigned in the last 18 months, had the following direct and indirect beneficial interest in the share capital of Kumba: Ordinary Shares Number of Shares Percentage Shareholding % NB Mbazima TM Mkhwanazi BA Mazarura DD Mokgatle* Total * Interest held by spouse 6.6 Directors interest in transactions None of the Directors of Kumba, including Directors who have resigned in the 18 months prior to this Circular, have any material direct or indirect beneficial interest in any transaction that was effected by the Kumba group during the current, immediately preceding financial year or earlier financial year, which remains in any respect outstanding or unperformed. 6.7 Share capital The authorised and issued share capital as at the last practicable date are as follows: Total number of ordinary shares authorised Total number of ordinary shares in issue There are currently treasury shares held in the Kumba group. All treasury shares are held in respect of employee share schemes and are available for utilisation for the purposes of these schemes. 11

14 7. MAJOR SHAREHOLDERS Insofar as is known to the Directors of Kumba, on the last practicable date, the Shareholders other than Directors who are directly and/or indirectly beneficially interested in 2% or more of the issued share capital of Kumba are as set out in the table below: Number of Shares beneficially held Percentage Shareholding % Anglo South Africa Proprietary Limited Industrial Development Corporation of South Africa Limited Total LITIGATION AND LEGAL PROCEEDINGS 8.1 At the last practicable date there were no legal or arbitration proceedings (including proceedings which are pending or threatened) of which the Kumba Directors are aware, which may have or have had during the 12 months preceding the date of this Circular, a material effect on Kumba and the Kumba group s financial position, other than the matter below. 8.2 Kumba is currently engaged in litigation with Lithos Corporation of South Africa ( Lithos ) in Senegal, which has instituted proceedings against the Company. This follows an earlier action by Lithos against Kumba in South Africa on the same cause of action. In the earlier action in South Africa, the claim by Lithos was dismissed with costs, a finding upheld by the South African Supreme Court of Appeal. The Court in Senegal dismissed the action by Lithos, and Lithos has lodged an appeal against such finding. Kumba is of the view that the claim by Lithos has no merit. 9. RESPONSIBILITY STATEMENT The Directors, whose names are set out on the first page of this Circular: 9.1 have considered all statements of fact and opinion in this Circular; and 9.2 collectively and individually accept full responsibility for the accuracy of the information provided; 9.3 certify that, to the best of their knowledge and belief, there are no other facts that have been omitted which would make any statement false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this Circular contains all information required by law and the Listings Requirements. 10. CONSENTS The sponsor, legal adviser, and transfer secretaries to Kumba have given and have not, prior to the last practicable date, withdrawn their written consents to the inclusion of their names and, where applicable, their reports in the form and context in which they appear in this Circular. 11. SPECIAL GENERAL MEETING The Special General Meeting is scheduled to be held at Kumba Corporate Office, Centurion Gate, Building 2B, 124 Akkerboom Road, Centurion, at 10:30 am (CAT) on Tuesday, 10 July DOCUMENTS AVAILABLE FOR INSPECTION Copies of the following documents will be available for inspection at the registered offices of Kumba during normal business hours (excluding Saturdays, Sundays and public holidays) from the date of issue of this Circular up to and including Tuesday, 10 July 2018: 12.1 the MOI; 12.2 the ESOP Trust Deed (including Scheme Rules); 12.3 written consents of the sponsor, legal adviser and transfer secretaries to the inclusion of their names in this Circular in the context and form in which they appear; and 12.4 a signed copy of this Circular. By order of the Board KUMBA IRON ORE LIMITED CD Appollis Company Secretary 11 June 2018 Registered office Centurion Gate, Building 2B, 124 Akkerboom Road, Centurion,

15 ANNEXURE 1: SHARE PRICE HISTORY OF KUMBA Daily The highest lowest and closing price of Kumba Shares on the JSE for each trading day commencing from Tuesday 1 May 2018 to the last practicable date and the daily volume and value is as follows: Date Close High Low Value Volume 5 June June June May May May May May May May May May May May May May May May May May May May May May May Monthly The highest lowest and closing price of Kumba Shares on the JSE for each month commencing from Tuesday, 6 June 2017 to the last practicable date and the monthly volume and value is as follows: Date Close (Cents) High (Cents) Low (Cents) Value (Rand) Volume shares May April March February January December November October September August July June

16 KUMBA IRON ORE LIMITED A member of the Anglo American plc Group Incorporated in the Republic of South Africa Registration number: 2005/015852/06 Share code: KIO ISIN: ZAE ( Kumba or the Company ) NOTICE CONVENING THE SPECIAL GENERAL MEETING If you are in any doubt as to what action you should take in respect of the Special General Meeting and/or the following resolutions, please consult your CSDP, broker, banker, attorney, accountant or other professional adviser immediately. All terms used in this notice of Special General Meeting shall, unless the context otherwise requires or they are otherwise defined herein, have the meanings attributed to them in the Circular to which this notice of Special General Meeting is attached ( Notice ). Shareholders are reminded that: a Shareholder entitled to attend and vote at the Special General Meeting is entitled to appoint one or more proxies to attend, speak and vote in its stead at the Special General Meeting in the place of that Shareholder, and Shareholders are referred to the attached form of proxy in this regard; a proxy need not also be a Shareholder; and in terms of section 63(1) of the Companies Act, any person attending or participating in a meeting of Shareholders must present reasonably satisfactory identification to the Chairperson, and the Chairperson must be reasonably satisfied that the right of any person to participate in and vote (whether as Shareholder or as proxy for a Shareholder) has been reasonably verified. A. NOTICE Notice is hereby given that a meeting of Shareholders, as at the Record Date of Friday, 29 June 2018, will be held at 10:30 am (CAT) on Tuesday, 10 July 2018 at Kumba Corporate Office, Centurion Gate, Building 2B, 124 Akkerboom Road, Centurion for the purpose of considering, and, if deemed fit, passing, with or without modification, the resolutions set out hereafter. B. WHO MAY ATTEND AND VOTE? Record Date The Kumba Board determined that, in accordance with the requirements of section 62(3)(a), read with section 59 of the Companies Act, the Record Date, being the date on which Shareholders who are entitled to attend and vote at the Special General Meeting will be determined, will be Friday, 29 June Accordingly, the last day to trade Kumba Shares in order to be recorded in the Register to vote at the Special General Meeting will be Tuesday, 26 June Attending in person or by proxy If you hold Dematerialised Shares, which are registered in your own name or if you are the registered holder of Certificated Shares: you may attend the Special General Meeting in person; or alternatively, you may appoint a proxy to represent you at the Special General Meeting by completing the attached form of proxy (yellow) in accordance with the instructions contained therein and returning it to the Transfer Secretaries to be received by not later than 10:30 am (CAT) on Friday, 6 July 2018, for administrative purposes (or 48 hours before the resumption of an adjourned Special General Meeting which date, if necessary, will be released on SENS), being 48 hours, excluding Saturdays, Sundays and South African public holidays, before the time of the Special General Meeting. Alternatively, the form of proxy (yellow) may be handed to the Chairperson of the Special General Meeting before the Special General Meeting immediately prior to your proxy exercising any of your voting rights as a Shareholder at the Special General Meeting. The attached form of proxy (yellow) is only to be completed by those Shareholders who: hold Kumba Shares in Certificated form; or are recorded on the Uncertificated Securities Register in own-name Dematerialised form. 14

17 If you hold Dematerialised Shares which are not registered in your name: and wish to attend the Special General Meeting, you must obtain the necessary letter of representation from your CSDP or broker to attend the Special General Meeting in person or by proxy and vote; and do not wish to attend the Special General Meeting but would like your vote to be recorded at the meeting, you should contact your CSDP or broker and furnish them with your voting instructions in terms of the relevant custody agreement entered into between you and your CSDP or broker; and you must not complete the attached form of proxy (yellow). Electronic Participation Shareholders or their proxies may participate in (but not vote at) the Special General Meeting by way of a teleconference call and, if they wish to do so: must contact the Company Secretary (by at the address celeste.appollis@angloamerican.com), by no later than 10:30 am (CAT) on Friday, 6 July 2018 in order to obtain a PIN and dial-in details for that conference call; will be required to provide reasonably satisfactory identification; and will be billed separately by their own telephone service providers for their telephone call to participate in the Special General Meeting, provided that Shareholders and their proxies will not be able to vote telephonically at the Special General Meeting and will still need to appoint a proxy to vote on their behalf at the Special General Meeting. Identification In terms of section 63(1) of the Companies Act, any person attending or participating in a meeting of Shareholders must present reasonably satisfactory identification and the person presiding at the meeting must be reasonably satisfied that the right of any person to participate in and vote (whether as Shareholder or as proxy for a Shareholder) has been reasonably verified. Accordingly, all Shareholders will be required to provide reasonably satisfactory identification to the Chairperson of the Special General Meeting in order to participate in and vote at the Special General Meeting. Acceptable forms of identification include valid driver s licences, identity documents and passports. Voting On a show of hands, every Shareholder who is present in person, by proxy or represented at the Special General Meeting shall have one vote (irrespective of the number of Shares held) and on a poll, every Shareholder shall have that proportion of the total votes in Kumba which the aggregate amount of the nominal value of the Shares held by that Shareholder bears to the aggregate of the nominal value of all the Shares issued by Kumba. C. PURPOSE OF THE SPECIAL GENERAL MEETING The purpose of the Special General Meeting is to consider, and if deemed fit, pass, with or without modification, the (special and ordinary) resolutions set out below. SPECIAL RESOLUTIONS SPECIAL RESOLUTION NUMBER 1: APPROVAL OF THE ESOP SCHEME Resolved that the employee share ownership scheme proposed by SIOC (as more fully described in paragraph 4 of the Circular to which this Notice is attached), which, if implemented, will result in the ESOP Trust purchasing Kumba Shares on the secondary market, from time to time, to be held for the benefit of the ESOP Beneficiaries, be and is hereby approved as a special resolution. The quorum requirement for the special resolution to be adopted: at least three Shareholders present and sufficient persons being present to exercise, in aggregate, at least 25% of all voting rights that are entitled to be exercised on such special resolution. The percentage of voting rights required for the special resolution to be adopted: at least 75% of the voting rights that are entitled to be exercised on such special resolution. 15

18 SPECIAL RESOLUTION NUMBER 2: APPROVAL OF THE REMUNERATION FOR THE LEAD INDEPENDENT DIRECTOR ( LID ) RESOLVED that, in terms of sections 66(8) and 66(9) of the Companies Act and on recommendation of the Human Resources and Remuneration Committee, the Company be and is hereby authorised to remunerate its Lead Non-Executive Director for his/ her services as LID in the amount of R1.1 million (exclusive of value-added tax ( VAT ), provided that the aforementioned authority to remunerate the LID shall be valid until the fourteenth annual general meeting of the Company in The fee is based on a comprehensive benchmarking conducted by an independent remuneration consultant against other mining companies (our peer group, consisting of direct and indirect competitors), and other JSE listed companies. Reason and effect In terms of sections 66(8) and 66(9) of the Companies Act, remuneration may only be paid to members of the Board for their services as Directors in accordance with a special resolution approved by the Shareholders within the previous two years and if not prohibited in terms of the Company s MOI. Therefore, the reason for and effect of special resolution number 2 is for the Company to obtain the approval of Shareholders by way of a special resolution for the payment of remuneration to its Lead Independent Director for his/her services as Lead Independent Director of the Company until the fourteenth annual general meeting of the Company in 2020 in accordance with section 66 of the Companies Act. Shareholders are advised that should the need arise to increase the Lead Independent Director s fees in 2019, the Company will table a special resolution to this effect at the thirteenth annual general meeting of the Company in ORDINARY RESOLUTION 1: AUTHORITY GRANTED TO DIRECTORS RESOLVED that each Director of Kumba or the Company Secretary be and is hereby individually authorised to sign all such documents and do all such other things as may be necessary for or incidental to the implementation of the above special resolutions. The quorum requirement for the ordinary resolution to be adopted is at least three Shareholders present and sufficient persons being present to exercise, in aggregate, at least 25% of all voting rights that are entitled to be exercised on the ordinary resolution. The percentage of voting rights required for the ordinary resolution to be adopted: more than 50% of the voting rights that are entitled to be exercised on such ordinary resolution. By order of the Kumba Board CD Appollis Company Secretary Monday, 11 June