29 September 2011 - Merafe Resources

1 29 September 201129 September 2011 SITE VISIT TO LION SMELTERSITE VISIT TO LION SMELTERThis presentation is published solely for informational purposes and does not constitute investment, legal, tax or other advice nor is it to be relied upon in making an investment decision. Information contained herein has been taken from sources considered by Merafe Resources to be reliable but no warranty is given that suchinformation is accurate or complete and it should not be relied upon as such. Views and opinions expressed inthis presentation reflect the judgment of Merafe Resources as of the date of this presentation and are subject to change. Merafe Resources will not be responsible for any liability for loss or damage of any kind which arises, directly or indirectly, and is caused by the use of any of the information provided.

2 The entire presentation is subject to copyright with all rights reserved. The information contained herein shall not be published, rewritten for broadcast or publication or redistributed in any medium without prior writtenconsent from Merafe investors should take appropriate investment advice and inform themselves as to applicable legal requirements, exchange control regulations and tax considerations in the countries of their citizenship, residence or domicile. The distribution of the information contained in this presentation in certain countries may be restricted by lawand persons who access it are required to inform themselves and to comply with any such restrictions. This information does not constitute an offer or solicitation in any jurisdiction in which such an offer or solicitation is not authorised or to any person to whom it is unlawful to make such an offer or performance is not a guarantee of future performance.

3 The price of shares can go down as well as up and may be affected by change in exchange rates, market conditions and risks associated with a mining venture. 2 Legal Notice / Disclaimer1. The Day2. Operational Overview3. Lion I Proven successes4. Lion II5. Sustainable Development3 Agenda1. The Day2. Operational Overview3. Lion I Proven successes4. Lion II5. Sustainable Development41. Presentation and Safety Video (9:45am)2. Lion Ferrochrome Plant Visit (10:30am)3. Lunch (1:00pm)4. Depart to Lanseria (2:30pm)5 The Day1. The Day2. Operational Overview3. Lion I Proven Successes4. Lion II5. Sustainable Development6 Geographical Distribution Provides Competitive Advantage 7 Lion ILydenburgHelena & MagarengThorncliffeHorizonBoshoekRustenb urgKroondalWaterval East & West WonderkopJohannesburg10 500 employeesWonderkopBoshoekNew Project Lion IIMototolo UG2 Impala UG2K1 & K2 UG2 Eland UG2 EPL UG2 Chrome ore- 9 mines, 245 million tonnes of mineral Resources , 6 UG2 plants and long term supply agreements with major SA platinum producersFerrochrome- 20 furnaces million tonnes installed ferrochrome capacity perannumRecipe for Producing 3.

4 1 0. 8 tElectricity 4. 2 MWhWater /t FeCrTransport (Internal)Fixed Costs (Primarily Salaries) 1. The Day2. Operational Overview3. Lion I Proven successes4. Lion II5. Sustainable Development910 Largest single phased ferrochrome expansion in the world Description : 360ktpa Greenfield ferrochrome production Rationale : Lowest cost (opex & capex) ferrochrome expansion Capex : R1,7billion including the Helena mine Technology : Premus Location : Steelpoort, Limpopo ProvinceRecap of Lion I ProjectLion I The Construction Phase 8,700 tonnes steel 60,000 cubic meters concrete 29 kilometers pipe work 2,800 contractors on site (peak) 6 million man hours LTIFR of One Project Management TeamLion I & II addresses the key challenges facing the SA Ferrochrome industryLagging logisticsIncreased fine oreEscalating energy costsSkills shortages Reductant shortages Proximity to Maputo Harbour750,000 tonnes pelletising capacityLowest specific energy consumption ca.

5 37% better than nearest rival In house training centre established Reduced reliance on coke consumption (20% vs. 60%)Carbon tax25% lower carbon footprintRising mining costsUse of UG2 Close to Competitive Advantage Key source of competitiveness Xstrata proprietary technology Difficult to emulate and/or retrofit High skill level required for operation13 Venture cost per tonneLion II uses significantly less electricity compared to other available smelting *OutotecConventionalDC Arc14(Proprietary)Specific Energy Consumption (MWh/T)(Conventional) (Pre pelletiser Tswelopele)(Outotec)(pelletiser)(Convent ional) (pelletiser Bokamoso)(Premus)(Premus)240ktpa553ktpa3 96ktpa720ktpaXstrata Merafe Venture anticipated the changes in the South African electricity tariffs and invested in / tonneVenture Average Electrical Energy Efficiencies Note.

6 Electrical efficiencies also a function of which and how many furnaces were operatingConventional Semi - Closed - 13 Furnaces PremusBokamoso Sinter Plant2007 ZAR 800 MillionTswelopele Sinter Plant2012 ZAR 900 MillionLion I Two Large Furnaces2007 ZAR 1,700 MillionLion II Two Large Furnaces2013 ZAR 4,905 MillionChrome RecoveryCoke Consumption6877908865707580859095 Convent ionalOut okumpuDC ArcPremus60%60%020%0%10%20%30%40%50%60%7 0%C onventional OutokumpuDC ArcPremusConsumption/tPremus delivers competitive chrome recovery and coke consumptionHotGasHotGasRAW MATERIALSBENTONITEANTHRACITEOREBATCHINGH OT GASDRYINGMILLINGSCREENINGMIXINGPELLETIZI NGCOALMILLINGSCREENINGGRANULATIONLUMPYSL AGCRUSHINGCHAR, COKE, ANTHRACITEFLUXESLUMPREDUCTANTSBATCHINGGA S SCRUBBINGUSABLE OFF GASPRE-HEATINGROASTINGThe processComplicated Hot loadingsystem171.

7 The Day2. Operational Overview3. Lion I Proven Successes4. Lion II5. Sustainable Development18 Merafe approved a participation in Project Lion Phase II 360,000 tonnes of ferrochrome capacityOverview Construction and commissioning of a 360 000 tonne per annum capacity ferrochrome smelter in Steelpoort, Limpopo Province The project will increase the Venture s total ferrochrome capacity to over million tonnes Capital costs budgeted at billion (includes R700 million for the concurrent development of the Venture s million ROM tonne per annum Magareng mine) Merafe s portion of is budgeted at R1 billionInvestment Rationale Long term fundamentals of ferrochrome remain strong stainless steel melt historically growing at a compound annual growth rate of 5% and forecasted to grow at approximately 6% per annumFinancing Will be sourced from a combination of:oMerafe s existing cash balancesoMerafe s share of future cash flows from the VentureoDebt19 Lion II Key considerations motivating the projectBenefits of Premus: Lowest production cost relative to other smelting technologies Lowest energy consumption Minimum reliance on expensive coke Superior chrome recovery Premium product quality (low silicon and sizing) 30% less solid waste (slag and slimes)Project implementation.

8 Same team members as Lion I Project First production of ferrochrome is expected in H1 2013 Availability of electricity The Venture has accepted an approved budget committing ESKOM to allocate electricity 2021 Job Creation The Lion complex will create 2,197 direct jobs, 6,880 indirect jobs and will impact some 36,000 people in the regionTotal Jobs CreatedDependentsTotal People AffectedLocal Steelpoort Area1,5984,7956,394 Other SA Employees63188250 Suppliers Other SA2,0526,1568,208 Total3,71311,13914,852 Total Including Lion I9,07727,23136,308 Direct Jobs Including Lion Phase I 2,197 Direct Jobs Lion Phase II 1,042 1 Figure includes direct jobs, indirect jobs estimated and estimated impact on rest of supply chainLion II construction phase is on track Artist s impression of Lion I and Lion II Activity4Q101Q112Q113Q114Q111Q122Q123Q12 4Q121Q132Q13 Key tendersDetail DesignExcavationPlace Long Lead Items OrdersCivil ConstructionSteel ConstructionInstallationCommissioning 1st lineCommissioning 2nd line22 Lion IILion I1.

9 The Day2. Operational Overview3. Lion I Proven Successes4. Lion II5. Sustainable Development2324 Sustainable development In addition to job creation, low energy consumption and less solid waste, there are benefits to the surrounding communitiesCommunity WellnessEnterprise DevelopmentSkills DevelopmentCommunity DevelopmentWellness Centre LydenburgHCT campaigns (HIV treatment campaigns)Craft & Needlework centreWelding CentreNkoleng Poultry FarmSteelpoort Business ParkLydenburg Smelter Open DayDistribution of stationery and backpacks at local schoolsSteelpoort training centre 120 graduates to dateExpanded to train 130 150 artisans a yearSome for The Venture s own needs, other find employment elsewhere within sectorSkills training: electricians, fitters, boiler makersWater SupplyMashishing Police Department RenovationTribal offices identified for upgradeR60 million supplier park for Eastern Bushveld operationsJVs with local SMMEs (minimum 25%BEE)1000 jobs by 2012 Assisted the local police department at Mashishing in renovating their offices in October 2010 Numerous projects in Limpopo area undertaken to ensure access to clean water14,116 employees participated in the Wellness Campaigns and 12,916 participated in voluntary counseling and testing during the wellness campaignsQuestions ?