Contents of the Annual Financial Statements and Notes

Contents of the Annual Financial Statements and Notes for the year ended 31 March 2010 56 Audit Committee Report 57 Directors Report 59 Report of the Auditor-General 61 Statements of Financial Position 62 Statements of comprehensive income 63 Statements of Cash Flows 64 Statements of Changes in Net Assets 65 Notes to the Annual Financial Statements Annual Financial Statements and Notes mintek annual report 2010 55

Audit Committee Report The Audit Committee has adopted formal terms of reference, which have been confirmed by the Mintek Board, and has performed its responsibilities as set out in the terms of reference. In understanding its responsibilities, the Audit Committee has reviewed the following: The effectiveness of the internal control system; The effectiveness of the internal audit function; The risk areas of the entity to be covered in the internal and external audits; The adequacy, reliability and accuracy of the financial information provided to management and other users of such information; The accounting or auditing concerns identified as a result of the external and internal audits; Compliance with legal and regulatory provisions; The activities of the internal audit function; The independence and objectivity of the external auditors; and, The scope and results of the external audit function. The Audit Committee is also responsible for: Reporting to the Mintek Board and the Auditor-General where the report implicates any members of the accounting authority in fraud, corruption or gross negligence; Communicating any concerns it deems necessary to the Mintek Board; Confirming the internal auditor s charter and audit plan; Encouraging communication between members of the Mintek Board, senior executive management, the internal auditors and external auditors; Conducting investigations within the terms of reference; Concurring with the appointment of the in-house internal audit function; Approving the internal audit work plan; and, Setting the principles for recommending the use of the external auditor for non-audit services. The Audit Committee is satisfied that internal controls and systems have been put in place during the year under review and that controls have functioned effectively during the period. The Audit Committee considers Mintek internal controls and systems to be appropriate in all material respects to: Reduce the entity s risk to an acceptable level; Meet the business objectives of the entity; Ensure the entity s assets are adequately safeguarded; and, Ensure that the transactions undertaken are recorded in the entity s records. The Audit Committee has evaluated the group and the company financial statements for the year ended 31 March 2010 and concluded that they fully comply, in all material aspects, with the requirements of the Public Finance Management Act (PFMA) No.1 of 1999, as amended, and South African Statements of Generally Accepted Accounting Practice (SA Statements of GAAP). The Audit Committee has requested management to review and evaluate Mintek s internal controls to identify areas that can be improved upon. The Audit Committee agrees that the adoption of the going concern premise is appropriate in preparing the annual financial statements. The Committee acknowledges that Mintek has made significant progress in addressing the control weakness identified previously and looks forward to the future control environment, which will provide a sound basis for Mintek to meet its obligation to its stakeholders. Mohau Mphomela Chairperson of the Audit Committee 31 March 2010 Audit Committee Members: Mr M Mphomela Dr J Bredell Ms L Mhlabeni Ms N Lila Mr B Mbewu 56 mintek annual report 2010 Annual Financial Statements and Notes

Directors Report The directors of Mintek take pleasure in submitting their 2009/2010 report together with the Annual financial statements as at 31 March 2010. PROFILE Mintek was established by the Mineral Technology Act 30 of 1989, incorporated as a public company in South Africa in terms of the Companies Act, 1973, as amended, and is listed as a national government business enterprise in schedule 3B of the Public Finance Management Act (PFMA), 1999, as amended. FINANCIAL RESULTS The financial statements represent the financial result of Mintek and the consolidated results of its subsidiary, Mindev (Pty) Ltd, for the year ending 31 March 2010. REPORTING STANDARDS The Mintek Group s Annual Financial Statements comply with South African Statements of Generally Accepted Accounting Practice (GAAP) and the PFMA. ORGANISATIONAL STRUCTURE Mintek s organisational structure is shown on page 9 of the annual report. PRINCIPAL ACTIVITIES Mintek, South Africa s national mineral research organisation, is a state-owned enterprise established to ensure the sustainability and growth of the minerals industry through technology development and transfer. In terms of its mandate under the Mineral Technology Act 30 of 1989, Mintek s main objectives are to promote mineral technology and to foster the establishment and expansion of industries in the field of minerals and products derived therefrom through research. Specific aims include to: Develop efficient mineral processing technologies and sustainable value added products; Play a significant role in second economy interventions by developing technologies appropriate to the local jewellery, artisanal and smallscale mining (ASSM) industries; Support government regional and continental initiatives; Develop human and organisational skills whilst transforming its internal and external business processes and the workforce; and, Uphold good governance practices. FINANCIAL AFFAIRS Review of operations In the 2009/10 financial year Mintek experienced the effect of the economic recession more than anticipated. There was significantly lower demand for research and commercially driven projects forcing Mintek to implement stringent cost control measures to ensure profitability. It was a difficult year exacerbated by the cancellation of large projects and difficulties on other projects such as the smelting of high-chromium platinum concentrates (ConRoast). Mintek has also been affected by the high increase in electricity costs as well as the volatility of our local currency. Mintek has taken the view that these difficulties are short-term and therefore no decision was taken to minimise fixed costs. This view was validated judging by the current strong sales pipeline. An insurance claim was lodged with the insurers in respect of an accident that occurred at Bay 2 on 27 March 2009. The claim was fully met for damages incurred in this unfortunate event. Investment property amounting to R12,5m was reclassified in the current financial year as property, plant and equipment after the tenant terminated their lease agreement. Revenue Revenue has shown a steady increase in the last three years ending 2008/09. 2009/10 saw a decrease of R42,6m which is largely attributable to difficulties Mintek had with the ConRoast project and fewer pilot plants being executed than anticipated. The government grant, fully ring-fenced on research projects, remained fairly consistent in absolute terms in the last few years not increasing in line with inflation. Interest income almost doubled compared to 2007 (R12m) establishing this as a significant revenue stream for Mintek. Annual Financial Statements and Notes mintek annual report 2010 57

A strong commercial revenue pipeline was the driver to high, but erratic, profits in previous years. Notwithstanding the difficult year, gross margin on commercial projects was maintained at an average of 25%. Mintek still achieved a profit of R1.7m in this financial year, aided by strict expenditure management. Staff costs have increased by only 6% compared to 2009. Measures taken to contain staff costs in this year were the freezing of some vacancies and granting of lower annual increments. Despite a 54% increase in number of staff from 2007, salary costs only increased by 27%. CASH FLOW ANALYSIS The cash flow indicates that there have been challenges in making ends meet during the year with the reduced revenue, coupled with slower collections. Normal operations generated an investment of only R2,8m in the current year significantly lower than the R113m invested in the previous financial year. This was mainly as a result of lower working capital being available in the current year. ASSETS Capital expenditure Mintek has seen a major injection into property, plant and equipment (PPE), and specifically equipment funded through state grant and other government agency funding. There has been a reclassification of the investment property as PPE in 2010 due to the termination of the lease from BHP Billiton. Mintek expanded its asset base by R25,1m (2009: R38,6 m) in the 2010 financial year. R14,9m was funded by the State grant received. This grant was specifically allocated to fund capex requirements. Assets with a net book value of R40 000 were written off in the current year. JUDICIAL PROCEEDINGS The directors are not aware of any significant judicial proceedings against Mintek, except those as disclosed in note 24 of the Annual Financial Statements. POST-BALANCE SHEET EVENTS There were no material post-balance sheet events that the directors are aware of. SUBSIDIARIES The information relating to the entity s financial interest in its subsidiary is disclosed in note 14 of the Annual Financial Statements. THE DIRECTORS OF MINTEK AS AT 31 MARCH 2010 Executive Director Non-executive Directors Mr MA Mngomezulu Mr M Mphomela Chairperson Mrs N Qunta Mr P Streng Adv D Block Mr P White Ms S Sekgobela Ms S Maja Ms J Ndlovu Mr M Mabuza Mr T Nell The board secretary of Mintek is Ms S Bopape, and the business and postal addresses are as follows: 200 Malibongwe Drive Private Bag X3015 Randburg Randburg 2194 2125 Mr MA Mngomezulu 58 mintek annual report 2010 Annual Financial Statements and Notes

Report of the Auditor-General REPORT OF THE AUDITOR-GENERAL TO Parliament ON THE Group FINANCIAL STATEMENTS and performance information OF the Council for Mineral Technology (Mintek) FOR THE YEAR ENDED 31 MARCH 2010 REPORT ON THE Consolidated FINANCIAL STATEMENTS Introduction I have audited the accompanying consolidated and separate financial statements of Mintek, which comprise the consolidated and separate statement of financial position as at 31 March 2010, and the consolidated and separate statements of comprehensive income, statements of changes in net assets and cash flow statements for the year then ended, and a summary of significant accounting policies and other explanatory information, and the accounting authority s report as set out on pages 61 to 85. Accounting Authority s responsibility for the financial statements The accounting authority is responsible for the preparation and fair presentation of these financial statements in accordance with South African Statements of Generally Accepted Accounting Practice (SA Statements of GAAP) and in the manner required by the Public Finance Management Act of South Africa, 1999 (Act No.1 of 1999)(PFMA) and the Minerals Technology Act, 1989 (Act 30 of 1989). This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditor-General s responsibility As required by section 188 of the Constitution of South Africa and section 4 of the Public Audit Act of South Africa, 2004 (Act No. 5 of 2004)(PAA), my responsibility is to express an opinion on these financial statements based on my audit. I conducted my audit in accordance with International Standards on Auditing and General Notice 1570 of 2009 issued in the Government Gazette 32758 of 27 November 2009. Those standards require that I comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. I believe that the audit evidence I have obtained is sufficient and appropriate to provide a basis for my audit opinion. Opinion In my opinion, these financial statements present fairly, in all material respects, the consolidated and separate financial position of MINTEK as at 31 March 2010, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with the SA Statements of GAAP and in the manner required by the PFMA and the Mineral Technology Act. REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS In terms of the PAA of South Africa and General Notice 1570 of 2009, issued in the Government Gazette No. 32758 of 27 November 2009, Annual Financial Statements and Notes mintek annual report 2010 59

I include below my findings on the report on predetermined objectives and compliance with the PFMA, Mineral Technology Act and financial management (internal control). Findings Pre-determined objectives. No matters to report. Compliance with laws and regulations Income Tax Act, 1962 (Act No. 58 of 1962) Non-adherence to legislation Contrary to the requirements of the Income Tax Act, 1962 (Act No. 58 of 1962) Fourth Schedule, paragrah 23, the entity has not lodged the Mindev (Pty) Ltd. income tax return with South African Revenue Services for the year under review. INTERNAL CONTROL I considered internal control relevant to my audit of the financial statements and the report on predetermined objectives and compliance with the PFMA and the Mineral Technology Act, but not for the purposes of expressing an opinion on the effectiveness of internal control. The matters reported are limited to the deficiencies identified during the audit. No matters to report. Pretoria 31 July 2010 60 mintek annual report 2010 Annual Financial Statements and Notes

Financial Statements 2010 STATEMENTS OF FINANCIAL POSITION AT 31 MARCH 2010 GROUP MINTEK 2010 2009 2010 2009 Notes R r R r Assets Non-current assets Property, plant and equipment 11 191,850,928 187,732,163 191,850,928 187,732,163 Intangible assets 12 3,457,152 4,135,480 3,457,152 4,135,480 Investment property 13-12,458,808-12,458,808 Investment in subsidiary 14 - - 100 100 Long-term loans and advances 15 4,636 85,690 4,636 85,690 Total non-current assets 195,312,716 204,412,141 195,312,816 204,412,241 Current assets Inventory 16 6,538,871 5,088,576 6,538,871 5,088,576 Trade and other receivables 17 60,242,726 82,422,822 60,242,726 78,977,747 Short-term investments 18 222,888,020 136,206,148 222,888,020 136,206,148 Cash and cash equivalents 3,760,522 79,617,943 3,760,522 79,617,943 Total Current assets 293,430,139 303,335,489 293,430,139 299,890,414 Total assets 488,742,855 507,747,630 488,742,955 504,302,655 Equity Revaluation surplus 109,358,306 110,256,095 109,358,306 110,256,095 Retained earnings 232,698,050 230,107,153 193,386,058 191,055,357 Total equity 342,056,356 340,363,248 302,744,364 301,311,452 Liabilities Non-current liabilities Long-term retirement benefit obligation 22 30,545,000 32,585,000 30,545,000 32,585,000 Financial lease obligation 23 422,532 667,380 422,532 667,380 30,967,532 33,252,380 30,967,532 33,252,380 Current liabilities Loans and advances from subsidiary 14 - - 39,472,396 35,665,938 Trade and other payables 19 38,980,835 54,773,871 38,820,531 54,714,754 Deferred income 20 76,373,594 78,510,292 76,373,594 78,510,292 Provisions 21 364,538 847,839 364,538 847,839 Current liabilities 115,718,967 134,132,002 155,031,059 169,738,823 Total equity and liabilities 488,742,855 507,747,630 488,742,955 504,302,655 A Mngomezulu CEO, Mintek Randburg, 30 July 2010 Sakhi Simelane GM: Finance, Mintek Annual Financial Statements and Notes mintek annual report 2010 61

Financial Statements 2010 STATEMENTS OF comprehensive income FOR THE YEAR ENDED 31 MARCH 2010 GROUP MINTEK Notes 2010 R 2009 R 2010 R 2009 R Continuing operations Revenue 2 346,795,197 389,413,133 346,795,197 389,413,133 Other operating income 3 6,049,878 8,130,036 6,049,878 8,130,036 Foreign currency (loss)/gain (3,718,463) 3,466,892 (3,718,463) 3,466,892 Investment income 4 21,895,534 25,270,245 21,532,951 24,088,317 Staff costs (228,709,077) (216,432,816) (228,709,077) (216,432,816) Other operating expenses 5 (82,975,150) (118,018,857) (82,973,950) (118,018,857) Finance expenses 6 (3,328,921) (8,545,590) (3,328,921) (8,545,590) Audit fees 7 (2,556,579) (1,500,734) (2,556,579) (1,500,734) Fees for services 8 (37,909,467) (30,157,188) (37,909,467) (30,157,188) Depreciation 9 (14,163,772) (15,500,025) (14,163,772) (15,500,025) Loss on disposal of property, plant and equipment (81,404) (302,908) (81,404) (302,908) Post-retirement benefit obligation 10 496,520 4,126,351 496,520 4,126,351 Profit before taxation 1,794,295 39,948,539 1,432,912 38,766,611 Taxation 25 (101,187) (330,940) - - Profit for the year 1,693,108 39,617,599 1,432,912 38,766,611 62 mintek annual report 2010 Annual Financial Statements and Notes

Financial Statements 2010 STATEMENTS of CASH FLOWs FOR YEAR ENDED 31 MARCH 2010 GROUP MINTEK Notes 2010 R 2009 R 2010 R 2009 R Cash flows from operating activities Cash receipts from customers 210,448,632 338,533,156 207,003,557 315,218,771 Government grant received 165,840,000 135,834,000 165,840,000 135,834,000 Cash paid to suppliers and employees (373,422,451) (361,127,826) (373,421,251) (361,127,826) Cash generated from operations 29 2,866,181 113,239,330 (577,694) 89,924,945 Interest received 19,283,636 20,135,737 18,921,053 18,953,809 Finance costs (93,668) (191,324) (93,668) (191,324) Provisions utilised 21 (1,616,568) (1,759,040) (1,616,568) (1,759,040) Net cash inflow from operating activities 20,439,581 131,424,703 16,633,123 106,928,390 Cash flows from investing activities Additions to property, plant and equipment 11.1 (25,120,946) (38,586,851) (25,120,946) (38,586,851) Additions to intangible assets 12 (533,633) (940,319) (533,633) (940,319) Funding received towards purchasing of property, plant and equipment 11.1 20,381,777 28,425,147 20,381,777 28,425,147 Funding received towards purchasing of intangible assets 12 46,000 179,515 46,000 179,515 Increase in investment deposits (86,681,872) (39,584,714) (86,681,872) (39,584,714) Net cash outflow from investing activities (91,908,674) (50,507,222) (91,908,674) (50,507,222) Cash flows from financing activities Receipts for subsidiary - - 3,806,458 24,496,313 Long-term creditor payments (244,848) (322,923) (244,848) (322,923) Post-retirement health care - contributions 22 (72,503) (3,860,467) (72,503) (3,860,467) Post-retirement health care - settlements 22 (4,070,977) (46,147,137) (4,070,977) (46,147,137) Net cash outflow from financing activities (4,388,328) (50,330,527) (581,870) (25,834,214) Net (decrease)/increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year (75,857,421) 30,586,954 (75,857,421) 30,586,954 79,617,943 49,030,989 79,617,943 49,030,989 3,760,522 79,617,943 3,760,522 79,617,943 Annual Financial Statements and Notes mintek annual report 2010 63

Financial Statements 2010 STATEMENTS OF CHANGES IN NET ASSETS FOR THE YEAR ENDED 31 MARCH 2010 Retained Earnings Revaluation Surplus Total Note R R R group Balance as at 31 March 2008 189,591,765 111,153,884 300,745,649 Depreciation on revaluation of buildings 897,789 (897,789) - Net profit for the year 39,617,599-39,617,599 Balance as at 31 March 2009 230,107,153 110,256,095 340,363,248 Depreciation on revaluation of buildings 897,789 (897,789) - Net profit for the year 1,693,108-1,693,108 Balance as at 31 March 2010 232,698,050 109,358,306 342,056,356 MINTEK Balance as at 31 March 2008 151,390,957 111,153,884 262,544,841 Depreciation on revaluation of buildings 897,789 (897,789) - Net profit for the year 38,766,611-38,766,611 Balance as at 31 March 2009 191,055,357 110,256,095 301,311,452 Depreciation on revaluation of buildings 897,789 (897,789) - Net profit for the year 1,432,912-1,432,912 Balance as at 31 March 2010 193,386,058 109,358,306 302,744,364 64 mintek annual report 2010 Annual Financial Statements and Notes

General Information The Group consists of Mintek, a schedule 3B public entity and Mindev (Pty) Ltd, a wholly-owned subsidiary incorporated in South Africa. The principal activities of Mintek and its subsidiary (the Group ) are to undertake research, development and transfer or commercialisation of mineral technology. 1. Significant accounting policies and basis of preparation The principal accounting policies applied in the preparation of these consolidated financial statements are materially consistent with those of the previous year, unless otherwise stated. The consolidated financial statements have been prepared on the historical cost basis except for certain properties and financial instruments, which are measured at revalued amounts and fair values respectively, as explained in the accounting policies set out below. The financial statements have been prepared in accordance with the South African Statements of Generally Accepted Accounting Practice (SAGAAP), and in the manner required by the Public Finance Management Act (PFMA) and Treasury Guidelines. The Annual Financial Statements are expressed in its functional currency, South African Rands (R). The financial statements are prepared in conformity with SAGAAP which requires the use of certain critical accounting estimates. There are no areas that would have involved a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements. 1.1 Basis of consolidation The consolidated financial statements incorporate the financial statements of Mintek and Mindev. All intragroup transactions, balances, income and expenses are eliminated on consolidation. 1.2 Foreign currency transactions and balances At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are translated into South African Rand at exchange rates prevailing at the balance sheet date. Exchange differences arising on the settlement of monetary items, and on the translation of monetary items, are recognised in profit or loss in the period in which they arise. 1.3 Investment in Mindev Subsidiary companies are enterprises in which the company holds a long-term equity interest and over which it has the power to control the financial and operating activities of the entities so as to obtain benefits from its activities. Mindev has over the past year been dormant except for the last payment received on a technology loan. All investments in Mindev are initially recognised at cost less impairment losses. The carrying amount of such investment is reduced to recognise any decline, other than a temporary decline, in the value of the investment. Any carrying value adjustments are charged to the statement of comprehensive income in the period in which they are incurred. 1.4 Investment in associates The results and assets and liabilities of associates are incorporated in these consolidated financial statements using the equity method of accounting. An associate is an entity in which the group has significant influence and that is neither a subsidiary nor an interest in a joint venture, through participation in the financial and operating policy decisions of the investee, but not control over those policies. 1.5 Intangible assets Intangible assets acquired separately and with finite useful lives are carried at costs less accumulated amortisation and any accumulated impairment losses. Amortisation for intangible assets with finite useful lives is provided on a straight-line basis over their estimated useful lives. Annual Financial Statements and Notes mintek annual report 2010 65

Gains or losses arising from derecognition of an intangible asset are measured as the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in the statement of comprehensive income when the asset is derecognised. The estimated useful lives of the major categories of intangible assets are: Computer Software: 3-5 years 1.6 Research and Development costs Expenditure on research activities is recognised as an expense in the period in which it is incurred. An internally-generated intangible asset arising from the Group s research and development is recognised only if all of the following conditions are met: An asset is created that can be identified (such as software and new processes); It is probable that the asset created will generate future economic benefits; The development cost of the asset can be measured reliably; It is technically feasible to complete the intangible asset so that it will be available for use or sale; The ability to use or sell the intangible asset; and, It is the intention to complete the intangible asset so that it will be available for use or sale. Where no internally-generated intangible asset can be recognised, development expenditure is recognised as an expense in the period in which it is incurred. Subsequent to initial recognition, internally-generated intangible assets are reported at cost less accumulated amortisation and accumulated impairment losses, on a straight-line basis over their useful lives. 1.7 Impairment At each balance sheet date, the Group assesses the carrying amounts of its tangible and intangible assets to determine whether there is any indication that those assets have suffered an impairment loss. If the recoverable amount of an asset is estimated to be less than its carrying amount, the carrying amount of the asset is reduced to its recoverable amount. An impairment loss is recognised as an expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as revaluation decrease. Where it is not possible to estimate the recoverable amount for an individual asset, the recoverable amount is determined for the cashgenerating unit to which the asset belongs. In addition, intangible assets with indefinite useful lives, intangible assets not yet available for use and goodwill acquired in a business combination are tested for impairment annually, and whenever there is an indication that they may be impaired. The recoverable amount is determined as the higher of fair value less costs to sell and value in use. Value in use represents the present value of the future cash flows expected to be derived from an asset (cash-generating unit). The expected future cash flows are discounted to their present value using an appropriate discount rate that reflects current market assessments of the time value of money and the risk specific to the asset for which the future cash flow estimates have not been adjusted. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase. 1.8 Leases Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards associated with ownership of an asset to the lessee. All other leases are classified as operating leases. The group as a lessor Rental income from operating leases is recognised in the statement of comprehensive income on a straight-line basis over the term of the relevant lease. 66 mintek annual report 2010 Annual Financial Statements and Notes

The group as a lessee Assets held under finance leases are recognised as assets of the Group at their fair value at the inception of the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the consolidated balance sheet as a finance lease obligation. Lease payments are apportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate of interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss, unless they are directly attributable to qualifying assets, in which case they are capitalised. Rentals payable under operating leases are charged to profit or loss on a straight line basis over the term of the relevant lease. Benefits received and receivable as an incentive to enter into an operating lease are recognised as a reduction of rental expense over the lease term on a straight-line basis. 1.9 Property, plant and equipment Property, plant and equipment, other than land and buildings, are stated at cost less any accumulated depreciation, any earmarked grant funding and any accumulated impairment losses. Costs include all directly attributable expenditure incurred in the acquisition, construction and installation of such assets so as to bring them to the location and condition necessary for them to be capable of operating in the manner intended by management. Land and buildings held for use in the production or supply of goods and services or for administrative purposes are stated in the balance sheet at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent impairment losses. Land is not depreciated. Properties were initially valued at historical cost. Revaluations are performed every three years by an independent professional valuator, such that the carrying amount does not differ materially from that which would be determined using fair values at the balance sheet date. (Refer Note 11) Depreciation is provided to write-off the cost or fair value of property, plant and equipment other than land less their estimated residual values on a straight-line basis, over the estimated useful lives. Useful lives and residual values are reviewed and adjusted if appropriate at each balance sheet date. The carrying values of property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. If any such indication exists and when the carrying values exceed the estimated recoverable amount, the assets or cash generating units are written down to their recoverable amount. Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets or, where shorter, the term of the relevant lease. An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in the statement of comprehensive income in the year in which the item is derecognised. Any revaluation increase arising on revaluation of land and buildings is credited to the non-distributable reserves, except to the extent that it reverses a revaluation decrease of the same asset previously recognised as an expense, in which case the increase is credited to the statement of comprehensive income to the extent of the decrease previously charged. A decrease that offsets previous revaluation increases of the same asset is charged against the non-distributable reserve. A decrease in net carrying amount arising on revaluation of an asset is dealt with as an expense to the extent that it exceeds the balance, if any, on the non-distributable reserve relating to a previous revaluation of that asset. On the subsequent sale or retirement of a revalued asset, the attributable revaluation surplus balance is transferred to retained profits. At balance sheet date, the difference between depreciation based on the revalued carrying-amount of the asset (the depreciation charged to the statement of comprehensive income) and the depreciation based on the asset s original cost is transferred from nondistributable reserves to retained earnings. Annual Financial Statements and Notes mintek annual report 2010 67

The estimated useful lives of the major categories of property, plant, equipment are: Buildings Plant Equipment Vehicles Furniture and fittings 50 years 10 years 3-10 years 5 years 5 years The gains and losses arising on the disposal or retirement of an item of property, plant, equipment and vehicles are determined as the difference between the sales proceeds and the carrying amount of the assets disposed and is recognised in profit and loss. 1.10 Investment Properties Investment properties are measured at their fair values using the fair value model. Gains or losses arising from changes in the fair value of investment property are included in profit or loss for the period in which they arise. An investment property is derecognised upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from its disposals. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income in the year in which the item is derecognised. The fair value is determined at balance sheet date by an independent professional valuator based on market evidence of the most recent prices achieved in arms length transactions of similar properties in the same area. (Refer Note 13) 1.11 Employee benefits The Group operates a number of retirement benefit plans for its employees. These plans include a defined contribution plan and other retirement benefits such as medical aid benefit plans. A defined contribution plan is a scheme under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligations to pay further contributions if the fund does not hold sufficient assets to pay all employees the benefits relating to employee service in the current and prior periods. A defined benefit plan is a scheme that is not a defined contribution plan. Typically defined benefit plans define an amount of benefits that an employee will receive on retirement, usually dependent on one or more factors such as age, years of service and compensation. 1.11.1 Post-retirement pension obligations The liability recognised in the statement of financial position in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. Actuarial gains and losses arising from experience adjustments and changes in actuarial assumptions are charged or credited to equity in the statement of comprehensive income in the period in which they arise. Past-service costs are recognised immediately in income, unless the changes to the pension plan are conditional on the employees remaining in service for a specified period of time (the vesting period). In this case, the past-service costs are amortised on a straight-line basis over the vesting period. For defined contribution plans, the Group pays contributions to publicly or privately administered pension insurance plans on a mandatory, contractual or voluntary basis. The Group has no further payment obligations once the contributions have been paid. The contributions are recognised as employee benefit expense when they are due. The liability recognised in the balance sheet in respect of defined benefit pension plans is the present value of the defined benefit obligation at the balance sheet date less the fair value of plan assets, together with adjustments for unrecognised past-service costs. The defined benefit obligation is calculated annually by independent actuaries using the projected unit credit method. 68 Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments is available. mintek annual report 2010 Annual Financial Statements and Notes

1.11.2 Post-retirement health care costs This Group has an obligation to fund the medical aid benefits of all its past employees and dependants of past employees who retired or were in the employment of the Group prior to 31 December 1999. The plan liability is unfunded and fully provided for in the financial statements. The Group uses the projected unit credit actuarial method to determine the present value of its past service cost. Actuarial gains and losses are recognised in full in the reporting period it relates to and is the excess over the greater of the present value of the past service obligation at the end of the reporting period before deducting the present value of assumed assets at the same date. Valuations of these obligations are carried out annually by independent, qualified actuaries using appropriate mortality tables, long-term estimates of increases in medical costs and appropriate discount rates. General increases to medical aid contributions were estimated taking into account the projected future changes in the cost of medical services resulting from both inflation and specific changes to medical costs. The obligation calculated assumes that the cross-subsidy of pensioner s benefits by the active members will continue as at present. If this cross subsidy were to be removed, it would result in an increased estimated liability. 1.12 Inventories Inventories are stated at the lower of cost or net realisable value. Costs comprise direct materials and, where applicable, direct labour costs and those overheads that have been incurred in bringing the inventories to their present location and condition. Cost is calculated using the weighted average method. Net realisable value represents the estimated selling price in the ordinary course of business less any costs of completion and costs to be incurred in marketing, selling and distribution. 1.13 Provisions Provisions are recognised when the Group has a present obligation as a result of a past event and it is probable that this will result in an outflow of economic benefits and the amount can be reasonably determined. The Group recognises its obligation for guaranteeing its products and services for periods as stipulated in its contracts with the Group s customers. (Refer Note 21) 1.14 Financial instruments Financial instruments recognised on the balance sheet include derivative instruments, investments, investments in debt securities, accounts receivable, cash and cash equivalents, accounts payable and interest-bearing debt. Financial instruments are initially measured at cost including transaction costs when the Group becomes a party to their contractual arrangements. The subsequent measurement of financial instruments is dealt with in the subsequent notes. When the Group can legally do so and the Group intends to settle on a net basis, or simultaneously related positive and negative values of financial instruments are offset within the balance sheet amounts. 1.14.1 Derivative instruments The Group does not use derivative financial instruments including forward rate agreements and forward exchange contracts to hedge its exposure to interest rate and foreign fluctuations. It is the Group s policy not to hedge its exposure from foreign currency fluctuations, as it does not consider the impact to be significant. It is the policy of the Group not to trade in derivative financial instruments for speculative purposes. 1.14.2 Investments Investments consist of short to long-term money market instruments initially recorded at cost, which is the fair value of the cash placed with the institution. These investments are held-to-maturity financial assets. Interest is accrued using the effective interest rate method and included in the statement of comprehensive income on an accrual basis. 1.14.3 Trade and other receivables Trade and other receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision for impairment of trade receivables is established when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of the receivables. Significant financial difficulties of the debtor, probability that the debtor will enter bankruptcy or financial reorganisation, and default or delinquency in payments (more than 30 days overdue) are considered indicators that the trade receivable is impaired. The amount of the provision is the difference between the asset s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate. The carrying amount of the asset is reduced through the use of a provision account, and Annual Financial Statements and Notes mintek annual report 2010 69

the amount of the loss is recognised in the statement of comprehensive income. When a trade receivable is uncollectible, it is written off in the year in which it is identified. Subsequent recoveries of amounts previously written off are credited in the statement of comprehensive income. 1.14.4 Cash and cash equivalents Cash and cash equivalents comprise cash on hand and cash at the bank. The carrying amount of cash is measured at its fair value. 1.14.5 Financial liabilities Financial liabilities are amortised at their original debt value less principal payments and amortisation. Derivatives are subsequently measured at fair value and gains and losses are included in the statement of comprehensive income for the period. 1.15 Government grants Grants from Government are recognised at their fair value where there is a reasonable assurance that the grant will be received and the Group will comply with all attached conditions. Government grants, which are intended to give immediate financial support to the entity, are recognised as income in the period in which they are received. Government grants relating to costs are deferred and recognised in the statement of comprehensive income over the period necessary to match them with the costs that they are intended to compensate. Government grants earmarked for specific fixed asset acquisitions are netted-off against the cost value of the fixed asset to the extent of the funds received. 1.16 Revenue recognition Revenue is recognised when the sale transactions giving rise to such revenue is concluded and risks and rewards of ownership and title pass to the buyer under the terms of the applicable contract and the pricing is fixed and determinable. Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods sold and services provided in the normal course of business, net of discounts and sales related taxes. Revenue from the sale of goods is recognised when the goods are delivered and title has passed. Revenue arising from the rendering of services is recognised when services are provided. Where the outcome of a commercial work contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the commercial work contract at the balance sheet date, as measured by the proportion that costs incurred for work performed to date bear to the estimated total contract costs, except where this would not be representative of the stage of completion. Where the outcome of a commercial work contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. Advance income arising as result of contracts undertaken in terms of commercial work in respect of invoices raised and paid for in advance but for which no substantial work has been made to justify the recognition of any revenue, is deferred until the income is earned based on the percentage of work completed. Interest income from a financial asset is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset s net carrying amount. Revenue arising from licence fees is recognised on an accrual basis in accordance with the terms of the applicable contracts. Rental income is derived from rental of fixed property and is recognised on an accrual basis in accordance with the substance of the relevant agreements. 70 1.17 Contracts in progress Where the outcome of a contract can be estimated reliably, revenue and costs are recognised by reference to the stage of completion of the contract activity at the balance sheet date. The stage of completion is determined by the proportion of contract costs incurred to date in relation to the estimated total contract costs except where this would not be representative of the stage of completion. mintek annual report 2010 Annual Financial Statements and Notes

Variations in contract work, claims and incentive payments are included to the extent that they have been agreed to by the customer. Where the outcome of the contract cannot be estimated reliably, contract revenue is recognised to the extent of contract costs incurred that it is probable will be recoverable. Contract costs are recognised as expenses in the period in which they are incurred. When it is probable that total contract costs will exceed total contract revenue, the expected loss is immediately recognised as an expense to the statement of comprehensive income. Where contract costs incurred to date plus recognised profits less recognised losses exceed progress billings, the surplus is shown as amounts due from customers for contract work. For contracts where progress billings exceed contract costs incurred to date plus recognised profits less recognised losses, the surplus is shown as amounts due to customers for contract work. Amounts received before the related work is performed are included in the consolidated balance sheet, as a liability, as deferred income. Amounts billed for work performed but not yet paid by the customer are included in the consolidated balance sheet under trade and other receivables. 1.18 Taxation Mintek is exempt from paying Income Tax in terms of section 10(1)cA(i) of the Income Tax Act no 58 of 1962 but registered for VAT. Mindev is registered for Income Tax purposes and is a legal tax paying entity. The tax currently payable is based on taxable profit for the financial year. Taxable profit differs from profit as reported in the statement of comprehensive income because it excludes items of income or Mindev's liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date. (Refer Note 25) 1.19 Irregular, fruitless and wasteful expenditure Irregular expenditure means expenditure incurred in contravention of, or not in accordance with, a requirement of any applicable legislation, including: The PFMA; or, Any provincial legislation providing for procurement procedures in that state-owned entity. Fruitless and wasteful expenditure means expenditure that was made in vain and could have been avoided had reasonable care been exercised. All irregular, fruitless and wasteful expenditure is charged against income in the period in which it is incurred. 1.20 Financing costs Financing costs are recognised in the statement of comprehensive income in the period in which they are incurred. 1.21 Changes in accounting policies and disclosures 1.21.1 New amendments adopted by the entity IAS 1 (AC101): Presentation of financial statements - effective 1 March 2009. The entity has presented a statement of comprehensive income. Comparative information has been re-presented so that it is also in conformity with this revised standard. Other new standards, amendments to standards and interpretations that has been issued by the standards board and are effective to the entity for the period beginning 1 March 2009 are currently not relevant to the current operations of the entity. 1.21.2 Standards, amendments and interpretations to existing standards that are not yet effective The following standards and amendments to existing standards have been published and are mandatory for accounting periods beginning on or after 1 January 2010, or later periods, and have not been early adopted by Mintek: IAS 17 (AC105): Leases - effective 1 January 2010 Deletion of specific guidance regarding classification of leases of land, so as to eliminate inconsistency with the general guidance on lease classification. As a result, leases of land should be classified as either finance or operating, using the general principles of IAS 17. IAS 24 (AC126): Related party disclosures - effective 1 January 2011 Simplification of the disclosure requirements for government-related entities; clarification of the definition of a related party. A number of other new standards, amendments to standards and interpretations that are not yet effective for the year ended 31 March 2010 that have not been dealt with in the financial statements as they are not relevant to the entity's current operations. Annual Financial Statements and Notes mintek annual report 2010 71