more than mining


around the supply of electricity, the risks involved in mining and smelting operations ...... 2017. 2018. 2019. 2020. US EPA. Light duty vehicles. Tier 2. California LEV III. Tier 3 ...... mine inspectorate issuing four ...... Shareholders' diary. Financial ...

MORE THAN MINING

ROYAL BAFOKENG PLATINUM INTEGRATED REPORT 2014

www.bafokengplatinum.co.za

Integrated Report 2014

CONTENTS ABOUT THIS REPORT OUR BUSINESS

02

An overview of our business Performance Our investment case Operating context Issues material to our business Our approach to risk management Board of directors Executive Committee Chairman’s letter to stakeholders Chief Executive Officer’s strategic review

2 10 14 16 24 40 52 54 55 56

OUR PERFORMANCE AGAINST THE CAPITALS

60

Financial capital Manufactured capital Human capital Human resources Training and development Safety, health and wellness Social and relationship capital Natural capital Summary of mineral resources and reserves Environment Intellectual capital

60 74 92 94 104 110 122 138 140 144 158

TRANSPARENCY AND ACCOUNTABILITY

164

Chairman’s corporate governance review Corporate governance Social and Ethics Committee report Ethics RBPlat’s approach to remuneration Independent assurance report Glossary

166 168 180 181 182 187 189

ANNUAL FINANCIAL STATEMENTS

With respect to comparability, all significant items are reported on a like-for-like basis with no major restatements.

Our integrated report conforms to the requirements of local and international reporting frameworks, including those of

SHAREHOLDER INFORMATION Shareholder statistics Notice of annual general meeting Proxy form

This integrated report, which is our primary report to stakeholders, covers the period 1 January 2014 to 31 December 2014. Its scope includes RBPlat’s mining operations, projects and the key functions over which we exercise control. None of these have undergone any significant change to their size, structure or ownership during the year under review. We would refer you to page 5 for details of our structure.

Reporting frameworks

193 252

We choose to report in an integrated manner because we believe that doing so can help our stakeholders make better informed decisions about our business.

252 253 261

the South African Companies Act 71 of 2008 and the JSE Listings Requirements. We have used the International Integrated Reporting Framework to guide us in structuring our report to show the connectivity between material information on our strategy, governance, performance and prospects and how our strategy affects and is affected by environmental, social and financial issues. We have also applied King III and the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC Code) and have been guided by the Global Reporting Initiative’s (GRI) G4 guidelines and its Mining and Metals sector supplement. Independent third party assurance has been provided by Gilden Assurance over sustainability information that we have identified as material to the sustainability of our business. Details of the assurance of information provided in this report can be found on page 187 of the Transparency and accountability section of this report.

This report also serves as RBPlat’s Communication on Progress (COP) to the United Nations Global Compact. Our annual financial statements (pages 202 to 250), which comply with International Financial Reporting Standards, were audited by PricewaterhouseCoopers Inc. (PwC) whose unqualified audit report can be found on page 201. Our 2013 integrated report gained first place in the 2014 EY Excellence in Integrated Reporting Awards and in the Mid Cap section of the Annual Report Awards hosted by the Chartered Secretaries of Southern Africa in partnership with JSE Limited. RBPlat was included in the JSE Social Responsibility Index for the third year running and was recognised as a Best Performer in 2014.

COMPANY INFORMATION

260 Forward looking statement Certain statements in this report constitute forward looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance, objectives or achievements of Royal Bafokeng Platinum Limited (RBPlat) and its subsidiary companies, as well as the industry in which it operates, to be materially different from future results, performance, objectives or achievements expressed or implied by these forward looking statements. The performance of the RBPlat Group is subject to the effect of changes in commodity prices, currency fluctuations, uncertainty around the supply of electricity, the risks involved in mining and smelting operations and the operating procedures and performance of the Group. The Company undertakes no obligation to update publicly or to release any revisions to these forward looking statements to reflect events or circumstances after the date of publication of these pages or to reflect the occurrence of unanticipated events.

i

Royal Bafokeng Platinum Integrated Report 2014

Board approval The RBPlat Board acknowledges its responsibility for ensuring the integrity of this integrated report. The Board confirms that it has collectively reviewed the report’s contents and to the best of its knowledge and belief it addresses RBPlat’s material issues and presents fairly the integrated performance of the organisation and its impact on the environment and its stakeholders. The Board has approved RBPlat’s integrated report for 2014.

Kgomotso Moroka Chairman

Steve Phiri Chief Executive Officer

Navigation icons This icon refers to more detailed information in this report.

This icon refers to information on our website.

Give us your feedback We would welcome your feedback on our reporting for 2014 and any suggestions you have in terms of what you would like to see incorporated in our report for 2015. To do so please contact Lindiwe Montshiwagae at [email protected]

www.bafokengplatinum.co.za

Royal Bafokeng Platinum Integrated Report 2014

1

AN OVERVIEW OF OUR BUSINESS OUR BUSINESS MODEL The four pillars of our strategy are underpinned by our aspiration to deliver More than mining by creating economic value for all our stakeholders. We measure our progress against these pillars by continually monitoring our performance against our key performance indicators. The elements that influence our strategy and how we go about achieving our strategic objectives are also centred round our aspiration to deliver More than mining. They begin with our commitment to keeping our people safe and healthy, providing them with a safe working environment, investing in their development, respecting and protecting their human rights and providing them with equal opportunities. Our financial position, which includes a strong cash flow from our operations and an ungeared balance sheet,

makes it possible for us to grow organically, continue to invest in the stay-in-business and replacement capital that will allow us to achieve our strategic goal of operational excellence and pursue value enhancing opportunities. Enterprise risk management, by providing us with an integrated approach to the management of our business risks within a complex and ever-changing environment, underpins the four pillars of our strategy. Our belief that good governance and responsible leadership is an essential element of sustainability has a major influence on how we run our business. Finally, our business is all about our stakeholders: the value we can offer the investment community and add to the country by paying taxes and royalties; our ability to create jobs and develop our people, and the opportunities we offer community members,

4

PURSUE VALUE ENHANCING OPPORTUNITIES

TOWARDS OPERATIONAL EXCELLENCE

More than mining

People > > > >

Safety of our people and communities Effective leadership Technical strength and depth Investment in training and development

BUILD FLEXIBILITY

What influences our strategy

Having introduced you to our strategy and what influences the way we operate, our business model describes how we operate, by setting out, in terms of the six capitals, our inputs, activities, outputs and outcomes.

HOW WE OPERATE Inputs

Activities

Outputs

Outcomes

FINANCIAL CAPITAL

> Cash flow generated by our operations > Equity funding > Debt funding > Efficient systems, controls and processes

> Appropriate and responsible allocation of financial capital > Sale of concentrate > Financial accounting > Management accounting > Cost management and treasury system > Supply chain management

> Cash flow generated by our operations > EBITDA > Headline earnings per share

> Strong balance sheet > Able to fund our business and grow organically > Shareholder returns > Financial stability > Business sustainability

MANUFACTURED CAPITAL

> Mineral resources and reserves > Mining infrastructure above and below ground > Concentrator plant > Tailings and storm water dams > Mining equipment and consumables > Utilities > Mining and mineral rights > Appropriate skills

> Converting resources into reserves > Mineral resource management > Mining Merensky and UG2 reefs > Process the ore in our concentrator plant > Engineering > Safety, health, environment and risk (SHER) management > Developing Styldrift I > Conducting feasibility studies for Styldrift II

> Merensky and UG2 ore > PGM concentrate > Refined PGMs and base metals from concentrate supplied to refiners > Efficient water and energy use > Greenhouse gas emissions > Waste material > Mine water

> Saleable product that generates our revenue > Fully operating mines > Increased production through organic growth > Depletion of resources > Beneficiation of PGMs

HUMAN CAPITAL

> > > >

> > > > >

Recruitment and placement Training and development Talent management Performance management Ongoing engagement with employees and organised labour > Employee relations > Remuneration > Safety and health management

> > > >

> > > > >

SOCIAL AND RELATIONSHIP CAPITAL

> Doorstep and extended communities > Employees > Ethics and human rights

> Implementation of social and labour plan (SLP) > Engaging with communities and other relevant stakeholders > Social impact assessments

> Poverty alleviation > Infrastructure development > Enhanced community skills > Enterprise development > Better working relations > Improved maths and science marks > Jobs

> More sustainable communities > Sustainable small businesses > Improve community relations > An ethical business that respects the rights of its employees and the communities in which it operates

NATURAL CAPITAL

> Natural resources – mineral resources – water – land – air – biodiversity > Water use licence

> Environmental management planning > Securing mineral rights > Exploration > Adaptation and impact studies > Environmental impact assessments > Emissions measured and monitored > Accurate assessment of resources and reserves

> Geological resource model and reserves > Resources and reserves statement > Carbon footprint per unit reduced > Rehabilitated and restored any disturbed land > Waste material and mine water

> Increased sustainability through the availability of additional resources and reserves > The impact of our mining activities is minimised > Rehabilitation > Treated and recycled

INTELLECTUAL CAPITAL

> > > > > >

> Industry benchmarking and research > Enterprise risk management > Developing and implementing governance systems and processes > Manage costs > Research and develop new solutions > Continuous reassessment of effectiveness of operational systems and processes

> Risks and opportunities identified and responded to > Accurate information and cost efficiencies > Effective systems and processes > Projects delivered on time, within budget and meeting required quality specifications

> A well managed ethical business with access to accurate information > Innovative ways of working > Improved productivity and efficiencies > Effective decision-making

1

What supports our strategy > 4E resources of 71.4Moz (58.7Moz, measured and indicated)* > Merensky bias > Shallow depth > ±60 years life of mine > Prime location on Western Limb of Bushveld Complex > Low cost operations

which include developing skills they can apply in the workplace, education support and enterprise development opportunities. Our responsible approach to environmental management involves ensuring that our operations do not have a detrimental impact on the environment in which we operate and in which our doorstep communities live.

People Skills Ability Knowledge

2

GROW ORGANICALLY

3

Financial position > Strong cash flow generation > Ungeared balance sheet Enterprise risk management > Enterprise risk management framework across our business Governance > Complying with and exceeding the requirements of the Mining Charter > Complying with JSE Listings Requirements > Applying principles of King III > Complying with all other relevant legislation Stakeholders > Engaging with and responding to all our stakeholders * This represents 100% of the BRPM JV

2

Royal Bafokeng Platinum Integrated Report 2014

S t a ke h o l d e r s G over na n ce s e ris k m a n a g e i r p me te r E n i n a n c i a l p o s i t i o n nt F Pe o ple

More than mining

Stakeholder management Risk management Reputation and brand Governance structures Geological model Cost management systems > Research and development > Project management systems > SHE management

Effective leaders Skilled employees Engaged contract workers Stable relationship with organised labour

Effective leadership Increased productivity Safe working environment Labour stability Employees’ sustainable wealth creation > Workforce aligned with business objectives > Low turnover of skilled workforce

Royal Bafokeng Platinum Integrated Report 2014

3

AN OVERVIEW OF OUR BUSINESS CONTINUED

RBPlat Group structure OUR VISION AND MISSION

OUR PURPOSE

> To seek and deliver the good from mining > To leave a lasting legacy of sustainable benefits for our stakeholders

> To create economic value for all our stakeholders

Project development

52.53%

11.61%

SUSTAINABLE VALUE CREATION Exploration

Royal Bafokeng Holdings (RBH)

Rustenburg Platinum Mines

35.86%

33%

People

Suppliers

Mining

Concentrate production 100%

Royal Bafokeng Resources Refiners of our PGM concentrate and marketers of our end product

Free float

Purchasers of PGMs in the form of the automotive, jewellery, electronic, chemical, dental and medical industries and exchange traded funds (ETFs)

67%

100%

Bafokeng Rasimone Platinum Mine Unincorporated Joint Venture

Bafokeng Rasimone Platinum Mine

A long and proud history

Bafokeng Rasimone Management Services

100%

Royal Bafokeng Platinum Management Services

100%

Royal Bafokeng Resources Properties

Styldrift

RBPlat is a black owned and controlled mid-tier PGMs producer, originating from a joint venture between Anglo American Platinum (Amplats) and Royal Bafokeng Holdings (RBH) known as the Bafokeng Rasimone Platinum Mine (BRPM) Joint Venture, which produced its first platinum concentrate in December 1999. We sell the concentrate we produce to Amplats for beneficiation in its refineries.

50:50 JV with Amplats – BRPM JV

2009

BRPM JV restructuring: RBPlat obtains 67% interest

1997

Discussions between RBN and Amplats to form JV

Site establishment

2010

RBPlat assumed operational control of the BRPM JV (67:33)

NOV

2002

Platinum discovered in the Bushveld Complex, world’s largest PGM deposit

1990s

JAN

Royal Bafokeng Nation (RBN) purchases land

1925

DEC

1860s

2010

RBPlat was the first community owned business to list on JSE

1998 Start of Merensky opencast mining

2011-2014 Strong operational performance with continued improvement in safety and consistent ounce output, characterised by stable labour relations, good operational flexibility and cost containment

OUR EMPLOYEE VALUE PROPOSITION Is underpinned by our values: Safety and people first Mining is a high-risk business and we cannot succeed without total trust, respect, teamwork and an uncompromising commitment to safety and people first. Promises delivered We do what we say we will do. Mutual interests and mutual rewards We have mutual goals and interests and we depend on each other to realise our vision and mission. We operate in good faith, openly and transparently.

To meet our value commitments we continually strive to improve our engagement with and responsiveness to our people. We invest in their training and development and the development of effective leaders. We also invest in technology that helps keep our people safe.

Labour relations

Health

We work together to achieve our production goals. Cost containment has become part of our everyday culture. To ensure our employees work efficiently and safely our incentive bonuses include a safety performance element.

A healthy workforce is an advantage to our business. We aim to eliminate occupational diseases by providing a workplace free from health and hygiene hazards and ensuring all our employees are members of an effective healthcare programme.

We negotiate in good faith to achieve mutually beneficial wage agreements and together we strive to honour our responsibilities and commitments contained in these agreements, including building homes for our employees.

See page 115 for road to safety resilience programme diagram. Refer to our human resources material issues tables on pages 94 to 95 and pages 104 to 105 and pages 110 to 113. See pages 102 to 103 and 108 to 109 for details of how we have met our commitments to our employees.

4

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

5

AN OVERVIEW OF OUR BUSINESS CONTINUED

OUR ORGANIC GROWTH BRPM Joint Venture

STYLDRIFT I PROJECT – A LOW COST MECHANISED MINE

The BRPM Joint Venture consists of the Bafokeng Rasimone Platinum Mine (BRPM), which has been in operation since 1998, a concentrator and the Styldrift I project currently under construction.

BAFOKENG RASIMONE PLATINUM MINE – A STEADY HIGH-MARGIN CASH GENERATIVE OPERATION MINING

PROCESSING

Two x decline shaft complex, conventional mining, 500m average mining depth

Conventional mill/float concentrator − MF2 configuration

LOM

MERENSKY IN LOM

35 years − including UG2

74% (up to 2028), 30% LOM

KEY PRODUCTION STATISTICS

MINING

PROCESSING

SIB CAPITAL

Twin vertical shaft system, mechanised mining, 750m below surface

Expansion of current BRPM facility to 350ktpm

10 − 12% of operating costs

LOM

MERENSKY IN LOM

+50 years

100% first 30 years

RESOURCES/RESERVES RESOURCES

RESERVES*

MERENSKY

> 72.90Mt @ 6.94g/t (4E) = 16.25Moz

> 45.27Mt @ 4.38g/t (4E) = 6.38Moz

UG2

> 60.95Mt @ 5.07g/t (4E) = 9.94Moz

> Still to be converted to reserves

> 133.85Mt @ 6.09g/t (4E) = 26.19Moz

> 45.27Mt @ 4.38g/t (4E) = 6.38Moz

STAY-IN-BUSINESS (SIB) CAPITAL

Annual 4E production (koz)

6 – 8% of operating costs

2014: 294 LOM: 280 till 2017 207 remaining LOM

TOTAL

Concentrator (Mt/annum)

* Excludes Frischgewaagd Note: Inclusive resources and reserves figures – 100% of the BRPM JV, excluding Styldrift II

2014: 2.4 LOM: 2.4 till 2018 1.9 remaining LOM

Recovery (%) 2014: 87 LOM: Merensky – 87.9% UG2 – 81.9%

RESOURCES/RESERVES

MERENSKY

The headgears of Styldrift’s Main and Service shafts

KEY PRODUCTION STATISTICS

First production First quarter of 2016

RESOURCES

RESERVES

> 28.30Mt @ 7.64g/t (4E) = 6.95Moz

> 19.01Mt @ 4.41g/t (4E) = 2.70Moz

UG2

> 71.32Mt @ 5.17g/t (4E) = 11.85Moz

> 55.44Mt @ 3.83g/t (4E) = 6.83Moz

TOTAL

> 99.62Mt @ 5.87g/t (4E) = 18.81Moz

> 74.45Mt @ 3.98g/t (4E) = 9.53Moz

Mill grade (g/t) (4E)

Recovery of 89% Annual 4E total cash cost

2014: 4.29 LOM: 4.16

Steady state First quarter of 2019

at 2019 steady state R6 580 4E oz (2014 real)

Annual 4E total cash cost (4E oz) (ZAR)

Mill grade (g/t) (4E)

Total expansion capital

LOM: 4.22 LOM: Merensky – 4.3 UG2 – 3.7

R11.014 billion

2014: 8 040 LOM: 9 051 (2014 real)

Cost/t milled (ZAR) 2014: 957 LOM: 1 036 (2014 real)

See the manufactured material issues on pages 76 to 79 and the Manufactured capital section on pages 75 to 91 for more information.

Note: Inclusive resources and reserves figures – 100% of the BRPM JV

6

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

7

AN OVERVIEW OF OUR BUSINESS CONTINUED Charora high school grade 11 physical science class in the new laboratory provided by RBPlat

Meeting and exceeding our community development commitments

Our approach to our environmental responsibilities and climate change

We invested

We adopt a precautionary approach to our environmental responsibilities, which is based on international best practice and legal compliance. We continually review our environmental risks and opportunities. Management plans are in place to address our significant environmental risks.

R413.4 million* in community development projects between 2010 and 2014, which exceeded our social and labour plan commitments

Investment (2010 – 2014) We focused on:

Climate change remains a longer-term risk to our business and we have conducted a detailed climate change vulnerability risk assessment of our operations. The information gained from this assessment is included in our risk management model.

R25.8 million Basic infrastructure

R22.8 million Health support

R32.3 million Education support

R31.3 million Job creation and poverty alleviation

R2.5 million Enterprise development

R280.2 million Human resource development

R12.8 million Community skills development * Including discretionary spend

8

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

9

PERFORMANCE Our performance over the past five years

Five-year financial and operational summary

0.6

0.533

0.8

0.676

rate (/200 000 hours)

RBPlat remains profitable in a challenging environment with an EBITDA margin of 31.6% and R1.4 billion cash generated by operations (2013: R907.8 million)

0.614

1.0

0.897

1.001

Lost time injury frequency rate

0.4

0.2

0.0

Cash operating costs

150

2012

2013

2014

31.0

31.6

34.8

38.7

957

782

35 30 25

600

15

100

10

200

50

0

5

2010

2011

2012

2013

2014

0 2010

2011

2012 2013

2014

Mining production Stoping square metres Total tonnes delivered Merensky delivered UG2 delivered Total development Stoping to development replacement rate IMS panel ratio Concentrator production Total tonnes milled Tonnes milled at BRPM Tonnes milled at Waterval Built-up head grade (4E) Merensky built-up head grade (4E) UG2 built-up head grade (4E) Total recovery 4E metals in concentrate Pt metal in concentrate

20

400

Capital expenditure Expansion capital Stay-in-business (SIB) capital SIB % of operating costs Replacement capital Safety Fatal injuries LTIFR SIFR Safety stoppage losses Section 54 stoppages

22.1

koz

200

40

%

R/tonne milled

800

707

250

2011

EBITDA margin

920

1 000

864

294

280

269

282

300

288

4E ounce production

2010

Financial statistics Revenue Cash operating cost EBITDA* Profit attributable to owners of the company Headline earnings Headline earnings per share Normalised headline earnings** Normalised headline earnings per share** Weighted average number of ordinary shares in issue for earnings per share Average basket price*** Gross profit margin EBITDA margin* Number of shares issued outside the Group at year end Net cash generated by operating activities Net asset value (NAV) per share

0 2010

2011

2012

2013

2014

Labour Working cost labour Capital labour Stoping crew efficiencies Tonnes milled per total employee Operating costs Cash operating costs Cash operating cost per tonne milled Cash operating cost per 4E ounce Cash operating cost per platinum ounce

Unit

2014

2013

2012

2011

2010

(million) (million) (million) (million) (million) cents R (million) cents

3 767.5 2 361 1 189.4 440.9 440.9 239 506.9 274

3 251.1 2 093 1 008.0 284.2 283.9 173 348.4 212

2 865.3 2 051 633.8 170.3 170.3 104 233.2 142

2 974.9 1 802 1 035.5 273.4 273.7 167 350.2 214

2 106.8 1 700 8 15.3 3 164.8 290.2 191 399.3 283

R R R R R

184 797 002 164 319 791 163 960 709 163 677 799 141 132 832 19 842 17 927 16 404 16 282 15 555 23 18.5 11.9 19.0 23.7 31.6 31.0 22.1 34.8 38.7 189 897 794 164 459 662 164 150 804 163 677 799 163 677 799 1 420.1 907.8 732.6 1 025.1 785.3 cents 72.8 72.2 70.2 68.9 66.9

R/Pt oz % %

R (million) R (million) % R (million)

1 365 154.4 7 204.1

737.0 137.8 7 184.0

646.0 238.3 12 307.7

635.7 146.1 6 376.0

487.9 97.0 6 363.4

No /200 000 hours /200 000 hours kt No

2 0.533 0.289 79 10

2 0.614 0.265 89 11

1 0.676 0.421 117 12

0 0.897 0.467 92 12

3 1.001 0.531 68 7

000m2 kt kt kt km 2 m /m ratio

527 2 471 1 908 563 39.4 28.7 1.70

505 2 310 1 895 415 36.5 32.4 1.52

479 2 384 1 959 425 39.4 27.1 1.48

471 2 284 2 026 258 30.2 32.2 1.01

539 2 366 2 288 78 33.4 35.0 1.12

kt kt kt g/t g/t g/t % koz koz

2 479 2 112 367 4.29 4.45 3.74 86.05 294 190

2 301 2 010 291 4.38 4.51 3.76 86.37 280 181

2 375 2 214 160 4.07 4.22 3.36 86.71 269 174

2 305 2 162 142 4.35 4.44 3.60 87.47 282 183

2 407 2 380 27 4.31 4.32 3.83 86.43 288 187

No No m2/crew t/emp

6 272 2 601 336 33.1

6 180 1727 320 31.6

6 057 1 686 307 29.8

6 553++ 1389 308 29.3

6 793++ 877 343 29.5

R (million) R/t R/4E oz R/Pt oz

2 361 957 8 040 12 463

2 093 920 7 519 11 592

2 051 864 7 616 11 775

1 802 782 6 399 9 863

1 700 707 5 902 9 076

*

The Company utilises certain non-IFRS performance measures and ratios (ie EBITDA) in managing the business and may provide users of the financial information with additional meaningful comparisons between current results and results in the prior periods. Non-IFRS financial measures should be viewed in addition to and not as an alternative for the reported operating results or cash flow from operations or any other measure of performance prepared in accordance with IFRS. In addition, the presentation of these measures may not be comparable to similarly titled measures used by other companies ** Normalised headline earnings are based on headline earnings adjusted for fair value depreciation, amortisation and tax thereon *** Net proceeds from total concentrate sales including revaluation of pipeline divided by total platinum ounces produced ++ 2011 and 2010 numbers are averaged for the year, thereafter year-end numbers are provided

10

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

11

PERFORMANCE CONTINUED

Delivering against the four pillars of our strategy in 2014

Towards operational excellence > > > >

Safety improvements Increased productivity Contained costs Effective employee engagement leading to labour stability

Flotation tanks inside the concentrator

Solid results achieved despite challenging environment

ACHIEVEMENTS > > > > >

> > > > > >

Labour stability 7% increase in tonnes delivered 8% increase in tonnes milled 5% increase in 4E ounce production Unit cost increases capped below mining inflation: – 4% increase in cost per tonne milled – 7% increase in cost per 4E ounce R1.43 billion in net cash generated by operations R1.50 billion equity raising Cash on hand at year end of R1.86 billion R413.4 million invested in completing mining charter social and labour plan commitments for period 2010 – 2014 Over 96% our of employees are historically disadvantaged South Africans (HDSAs) 422 employee houses completed and 295 sales agreements signed by 31 December 2014

Build flexibility > Maintain ore reserve and IMS targets to ensure sustainable production > Supplement Merensky production with UG2

IMPROVEMENTS > > > >

13% improvement in lost time injury frequency rate (LTIFR) 5% improvement in stoping crew efficiencies 5% improvement in tonnes milled per employee 68% of discretionary procurement from HDSAs

Organic growth > Construction of Styldrift I > Styldrift II exploration

Pursue value enhancing opportunities > Royalty agreements with Impala Platinum

CHALLENGES > 11% increase in serious injury frequency rate (SIFR) > PGM market conditions > Tax dispute relating to 2008 and 2009 assessments

DISAPPOINTMENTS > Two fatal accidents at our operations in 2014 > US$ metal price performance > Six-month delay in planned production ramp-up at Styldrift I

12

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

13

OUR INVESTMENT CASE LONG LIFE QUALITY ASSETS

BLACK EMPOWERMENT STATUS We are black owned and controlled. Because the Royal Bafokeng Nation through its investment arm Royal Bafokeng Holdings (RBH) has a 52.53% investment in RBPlat we not only comply with black economic empowerment requirements but exceed them. RBH followed its rights when it supported our capital raising programme in 2014 and it has stated that it views RBPlat as its quality growth investment vehicle in platinum.

Prime location

Long-term shallow

on the Western Limb of the Bushveld complex

depth mining (>60-year life of mine)

Existing asset – BRPM > Access to 6.95Moz (4E) Merensky resource at 7.64g/t (4E) and 11.85Moz (4E) UG2 resource at 5.17g/t > Set to remain Merensky biased in the long term with UG2 production contributing approximately 10%

High quality organic growth – Styldrift I

LABOUR AND TRADE UNION STABILITY > Long-term wage agreement in place (concludes >

STRENGTH AND DEPTH OF MANAGEMENT SKILLS AND EXPERIENCE

JSE Socially Responsible Investment (SRI) Index in the 2014 Integrated Reporting Awards and winner of the Mid Cap category of the Chartered Secretaries Southern Africa JSE Integrated Reporting Awards 2014

> Foresight in 2010 to introduce business flexibility through early co-extraction and create additional immediately stopable reserves > Flexibility allows us to adapt environment: –

quickly to the constantly changing

2012 – reacted rapidly to a reduction in PGM prices by deferring capex that would not adversely impact the business in the short to medium term



resource at 6.94g/t (4E) and 9.94Moz (4E) UG2 resource at 5.07g/t

>

2013 – changed proposed processing solution for Styldrift I after a thorough investigation of options including possible collaboration with neighbouring mines. Decision was based on both cost implications and providing the best long-term Merensky driven solution

Project management skills – BRPM Phase III replacement time and within budget

project on

expansion project. Feasibility studies to be completed in 2016

Best Performer status on

Winner of the EY Excellence

350kt per month by 2019 Access to 16.25Moz (4E) Merensky

> Styldrift II, represents 40% of our total resource with the option to be brought forward as an

in 2019)

No industrial action in 2014

> Styldrift I will increase production to

>

AWARD WINNING BUSINESS

>

Additional technical resources assigned to the Styldrift I project to ensure delivery to the revised schedule which has been delayed by six months over a 10-year project life

>

Ability to contain costs

in a challenging environment

STRONG FINANCIAL POSITION >

Operating free cash flow positive in 2014

>

Competitive position on the industry cost curve

>

COMMITMENT TO TRANSPARENCY AND ACCOUNTABILITY >

> Cash balance of

Open, honest and timeous communication to the investor community when challenges arise

No gearing R1.86 billion

A SOCIALLY RESPONSIBLE COMPANY >

A Best Performer

on the JSE Socially Responsible Investment

(SRI) Index

BRPM’s South shaft

14

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

15

OPERATING CONTEXT THE GLOBAL PGM ENVIRONMENT KEY INFLUENCES:

Western Europe

> Prices > Rand/US$ exchange rate > Global emissions legislation > World economic growth > Supply and demand > Recycling

Russia

North America

The significant roles of PGMs

Japan China

Zimbabwe South Africa

Platinum primary supply by region

> Automotive (their catalytic properties, thermal durability and resistance to poisoning make these metals key to achieving cleaner emissions from combustion engines. PGMs are also used in transport system fuel cells, the use of which, while still very small, is growing) > Jewellery (because of its high resistance to wear and tarnishing platinum is very suitable for use in fine jewellery) > Industrial – the chemical, petroleum, electrical, glass, medical and biomedical industries (PGMs are resistant to chemical attack, have excellent high temperature characteristics

and have stable electrical properties. PGMs are also used in industrial fuel cell systems) > Investment (bars, coins, ETFs, exchange stocks) Platinum has the widest range of end uses. Demand for palladium is mainly for use in light-duty gasoline autocatalysts and diesel autocatalysts, while rhodium is mostly used in autocatalysts.

Platinum net demand by region

PLATINUM

16

Royal Bafokeng Platinum Integrated Report 2014

%

6 000

5 000

11

3%

8% 41%

5 000

2% 2% 2%

4 000 37%

4 000

koz

koz

7%

3 000

3 000

38% 34%

2 000

Investment

Chemical

Investment

Petroleum

Other

Petroleum

Other

Electrical

Electrical

0

0

2009 2010 2011 2012 2013 2014

Refined production

Chemical

1 000

1 000

Other

Medical and biomedical

Russia

Glass

Jewellery

North America

Automotive

Medical and biomedical

Zimbabwe

Glass

Jewellery

2 000

South Africa

Automotive

Strikes help to absorb excess market stocks The platinum market and prices are suffering from a build-up of inventories since the financial crisis in 2008/9. However, the five month strike that hit the South African platinum industry and consequent destocking by mining companies aided a reduction of excess stocks from 3.5Moz in 2013 to 2.6Moz at the end of 2014. This stock excludes working inventories for demand applications and ETF holdings.

2013

2014

1%

Total platinum mining supply by region (primary supply for 2014 amounted to 4.7Moz)

Platinum liquid stock position

2%

As the graph opposite shows, automotive platinum requirements as a share of total demand rose 145koz to 41% or 3.3Moz in 2014, with most of the growth coming from Western Europe where Euro 6 emission legislation was imposed from September 2014. Jewellery’s share remained stable at 38% of demand, which is well up from less than 25% in 2007. Investment growth contracted with its share of demand falling from 11% to 2% in 2014. This is owing to the exceptional year in 2013 with the launch of the Absa NewPlat ETF product in South Africa which added >900koz of platinum.

Share of gross demand for platinum by industry (gross demand amounted to 7.6Moz)

2% 2% 3%

Autocatalyst and jewellery demand for platinum stable

Share of gross demand for platinum by industry (gross demand amounted to 7.8Moz)

3% 2%

Strike-related deficit draws excess market stock down to 2.6Moz

Source: SFA (Oxford)

Source: SFA (Oxford)

Royal Bafokeng Platinum Integrated Report 2014

17

OPERATING CONTEXT CONTINUED

PALLADIUM

RHODIUM

Structural market deficit forecast to persist

Share of gross demand for palladium by industry (gross demand amounted to 10Moz) 1%

1%1%

2014

2013

5%

8%

3%

70%

73%

Automotive

Dental

Automotive

Dental

Jewellery

Investment

Jewellery

Investment

Chemical

Other

Chemical

Other

Electrical

Rhodium temporarily returns to deficit but not enough to destock the market

Electrical

2014

0.5% 1% 1% 4%

2013 5%

1%

4%

8%

Automotive demand is recovering steadily assisted by Euro 6 emissions legislation requiring some rhodium-rich lean NOx traps. However, as with platinum the ongoing growth in recycling is serving to offset much of the demand upside.

4%

Share of gross demand for rhodium by industry (gross demand amounted to 980koz)

3%

5%

Share of gross demand for rhodium by industry (gross demand amounted to 1.0Moz)

9%

%

10%

5%

Removal of excess stocks required to lift prices The market was in deficit in 2014 for the first time in five years

11

4%

The market fundamentals for palladium remain firm A key feature of the palladium market in 2014 was the launch of two ETF products in South Africa, which accumulated >1Moz. Investment as a share of total demand increased from just 1% from 2013 to 8% in 2014. Automotive demand continues to dominate with a 70% share and grew year-on-year by 6% to 7.5Moz in 2014. Growing sales of palladium-rich gasoline vehicles in North America and China remain strong drivers of demand going forward.

Share of gross demand for palladium by industry (gross demand amounted to 9.7Moz)

80% 84%

Automotive

Glass

Automotive

Glass

Chemical

Investment

Chemical

Investment

Electrical

Other

Electrical

Other

Source: SFA (Oxford)

The impact of the five month strike in the platinum sector and steadily recovering automotive demand is estimated to leave the market with a 190koz deficit in 2014. However, the market has been in surplus since 2009 so there is still excess stock in the market to absorb before a meaningful increase in the price occurs.

Source: SFA (Oxford)

The palladium market deficit widens 2014 saw a deficit of 1.5Moz, excluding producer stock sales and allocation of metals to ETFs and other investments. Above ground stocks are still freely available with more than 6Moz of immediately available stocks at the end of 2014, excluding ETF allocations and industry working inventories.

Source: SFA (Oxford)

Source: SFA (Oxford)

Total palladium mining supply by region (primary supply for 2014 amounted to 6.2Moz) 8 000

6 000

6 243

500

5 000

3 000 316

100

Refined production

Other

2009 2010 2011 2012 2013 2014

Russia

0

0

North America

Refined production

Other

Russia

North America

Zimbabwe

South Africa

0

100

Zimbabwe

1 000

2009 2010 2011 2012 2013 2014

300 200

2 000

0

400

200 1 762

2 000

300

1 025

4 000

4 000

600

koz

6 000

700

400

koz

koz

koz

2 690

7 000

8 000

800

500 450

10 000

Total rhodium mining supply by region (primary supply for 2014 amounted to 560koz)

Rhodium liquid stock position

South Africa

Palladium liquid stock position

Source: SFA (Oxford) Source: SFA (Oxford)

18

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

19

OPERATING CONTEXT CONTINUED

The role of emissions legislation in PGM demand Tailpipe emissions legislation is vital to ensure good air quality in urban areas, indeed, wherever gasoline and diesel vehicles drive. Established markets such as the United States, Western Europe and Japan have been at the forefront of introducing emissions legislation and continue to tighten this legislation every few years. Emerging markets such as China, India, Brazil and South East Asia are experiencing some of the highest and fastest growth in automotive sales and are fast catching up with the latest legislation. The availability of clean (low sulphur) fuel works remains key to implementing tighter emissions legislation and to autocatalyst deployment.

Euro 6 The main change that has taken place recently has been the imposition of Euro 6 for new light vehicle models in September 2014 and for all models from September 2015. This cuts permitted NOx emissions from diesel engines by more than half. This means some form of NOx emissions control technology is required on most new diesel cars sold in

Europe. In Euro 5, the main step change was to lower particulate matter emissions, while in Euro 4 it was to cut CO2 emissions. Diesel particulate filters (DPF) and diesel oxidation catalysts, which are both relatively highly platinum-loaded, are also found in most vehicles under Euro 6.

THE SOUTH AFRICAN PGM ENVIRONMENT

Current market conditions favour the extraction of Merensky reef in the Western Limb of the Bushveld Complex, due to its more favourable PGM prill split and natural PGM hedge (attributable to its higher base metal contribution) when compared to the UG2 reef.

China In China, rapidly growing concern at all levels over air quality is leading to action on vehicle emissions, but fuel quality is slowing the introduction of legislation. The government announced China 5 (similar to Euro 5) light duty tailpipe regulations effective from January 2018. Major regions and cities have an even more aggressive schedule, requiring fuels with 10 parts of sulphur per million parts of fuel by 2015. Sulphur binds very strongly and irreversibly to the surface of PGMs. Beijing continues to lead and already has 10 ppm sulphur fuel for both gasoline and diesel. Only China V (Euro V) trucks and buses with DPFs (PGM-loaded) can be sold in Beijing after 1 January 2015. Beijing is considering a move to California or US EPA standards for light duty vehicles in 2016, instead of the Euro 6 requirements, as Euro 6 does not tighten gasoline gaseous emissions enough from Euro 5 levels.

PGM INDUSTRY DYNAMICS

>

Rising costs − In 2013 the South African metals

2012

2013

Tier 2 US 2010 Thrifting Tier 4 – big equipment Japan 2009

2014

Royal Bafokeng Platinum Integrated Report 2014

2016

California LEV III

2017 Tier 3

2018

2019

Thrifting Tier 4

Euro 5 – DPF for diesel Euro 5 Euro 6 Tier 3b

Euro 6

Euro 5 – DPF for diesel

Euro 6

2020

70% of industry now mining UG2 reef

Tier 5? Japan 2016 (diesel, NOx) Proposed

2.3:1 High base metal revenue contribution Built-up head grade consistently around 4.3g/t (4E) and forecast to be 4.2g/t (4E)

– Platinum: palladium ratio of –

head grade reduced by approximately 27% for 2000 – 2014

>

long-term

Source: SFA (Oxford)

production per employee reduced by approximately 38%

> Approximately 33% of is from mechanised mining

>

Platinum production per employee of 30.4koz

production

> By 2019 low cost mechanised mining at Styldrift I will make up 50% of the BRPM JV’s production

Euro 7?

Industry average 4E reserve revenue per tonne – R1 554 based on a basket price of R12 721/oz

Tier 4

7.16%

BRPM JV 4E reserve revenue per tonne – R1 882 based on a basket price of R13 301/oz

3.25 %

3.38 5.83% %

BS V? BS IV Phase in (2015 – 2017)?

BS V? 53.54%

Euro 3 Euro 3

Euro 4 – boosts Pt loadings Euro 4

PL-5 P P7

PL-6 (no DPF)

Euro 4 China 4 China 3

Merensky-biased in the long term with UG2 production contributing about 10%

(Source: Chamber of Mines – 21 January 2013 RSA PGM Mining Sector Briefing Note)

Our in situ reserve revenue is 19% higher than the industry (excluding Russia and North America)

Gasoline PN – Pt filter Phase in – DOC + DPF Tier 4 – SCR/DOC/DPF

BS IV BS III

> Superior reserve value – BRPM JV will remain

(Source: Chamber of Mines 2013 annual report)

Pd impact

Phase in

Euro 5??? Euro 5???

27.43%

36.05% 63.36%

PP7? PP8?

Euro 5

Euro 6?

China 5

US EPA – United States Environmental Protection Agency BS – India’s Bharat Stage PL – Brazil’s Porconve level for light duty PP – Proconve P for heavy duty (Most emerging market legislation is based fairly closely on established US or EU legislation)

20

2015

Cost increases contained at below mining inflation in nominal terms

(Source: IRAS)

> Merensky reef depleted –

> Platinum Emissions standards US EPA Light duty vehicles Heavy-duty vehicles Non-road Japan LDV and HDV Non-road European Union (53% diesel car market) Light-duty vehicles Heavy-duty vehicles Non-road South Korea (22% diesel car market) LDV and HDV Non-road India (40% diesel car market) LDV and HDV cities LDV and HDV national Thailand (12% diesel car market) Light-duty vehicles Heavy-duty vehicles Brazil Light-duty vehicles Heavy-duty vehicles Russia LDV and HDV China LDV/HDV (Beijing) LDV/HDV (National)

>

and mining sector made the largest revenue contribution to South Africa (> R678 billion) but as a sector it made the smallest profit

> Industry weighted average

Global emissions legislation continues to underpin PGM demand The table below shows when particular emissions legislation is due to be introduced and this also indicates where and when there should be an increase in PGM demand for autocatalysts because the introduction of new legislation usually leads to an increase in loadings to ensure compliance with legislation. The question marks in the table indicate uncertainty as to whether the legislation will be introduced on their date – the more question marks the greater the uncertainty.

RBPLAT’S POSITION

China 4 (delayed) Source: SFA (Oxford)

Pt Pd Rh Au

Pt Pd Rh Au

Source: SFA (Oxford) and RBPlat

Royal Bafokeng Platinum Integrated Report 2014

21

OPERATING CONTEXT CONTINUED

PGM INDUSTRY DYNAMICS >

Deepening mines – most new shafts at

PGM INDUSTRY DYNAMICS

RBPLAT’S POSITION

> Section 54 safety stoppages in terms of the Mine Health and Safety Act usually result in production

> RBPlat’s high grade Merensky resources and reserves are at shallow depths (BRPM at 500 metres and Styldrift I at 758 metres)

an average depth of 1 500 metres

>

losses

> RBPlat had 10 Section 54 stoppages at its operations during 2014 resulting in a loss of 79kt, which is a 11% decrease year-on-year.

Challenges

>

with meeting black economic empowerment requirements of the Mining Charter Scorecard in terms of leadership and employment equity

R3.4 billion on corporate social investment (CSI/socio-economic development) –

RBPlat exceeds

all the Mining Charter Scorecard requirements in terms of black economic empowerment and employment equity

> We have fulfilled and exceeded our SLP commitments for the period 2010 – 2014, RBPlat spent R413.4 million on basic infrastructure, health, education, poverty alleviation, job creation and community skills development

> Government expects increased contribution from the mining sector in meeting socio-economic needs. In 2013 the South African mining industry spent

17# Impala Tumela

16# Impala

Karee K4 Kusaleka

Thembalani

20# Impala

Wesizwe

RBPlat Styldrift I

RBPlat North shaft RBPlat South shaft

Industry platinum mine shaft depth

0

RBPLAT’S POSITION

Complying with social and labour plan (SLP) targets

mining licences being suspended or cancelled remains a

which could lead to 500

challenge –

Metres

1 000

1 500 Operating to 2020 and beyond 2 000

contributed 46.4% of the reported CSI spend by JSE listed companies. These companies also contributed 93.1% of the investment JSE listed companies made Metals and mining sector companies

in infrastructure development.

Closed by 2020 (average depth ~ 730mbs)

See page 128 of this report for details of our social and labour plan performance.

(Source: IRAS)

New shafts (average depth ~ 1 500mbs) 2 500

RBPlat shafts

RBPlat in competitive position on the industry cost curve

Source: SFA (Oxford)

J.P. Morgan Platinum industry break-even analyser 3 000

> >

Lengthy strike in the platinum sector in 2014 Reduction in capital expenditure

RBPLAT’S POSITION > >

Labour stability with no industrial action in 2014 Continued investment in replacement and expansion projects

>

Escalating labour costs

>

New long-term wage agreements providing cost certainty

20%

10%

0%

30%

40%

50%

60%

70%

80%

90%

100%

2 500

2 000

Platinum price ($/oz)

PGM INDUSTRY DYNAMICS

1 500

Platinum price

1 000

Average break even price

500

Amplats

Lonmin

Northam

Aquarius

Union

Impala Lease Area

Tumela

Siphumelele

Modikwa

Marikana (Lonmin)

Marula Bokoni (Lebowa)

Dishaba

Thembelani

Kroondal

Northam (Zondereinde)

Mimosa

Impala Platinum

Bathopele

Others

Two Rivers

BRPM

Mototolo

Zimplats

Booysendal

Mogalakwena (PPRust)

0

Others

Source: J.P. Morgan Cazenove as at 6 February 2015

22

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

23

ISSUES MATERIAL TO OUR BUSINESS OUR APPROACH When we first started reporting on the material issues that could potentially impact our ability to deliver on our core objectives/strategy we designed a process for identifying and prioritising our material issues. We review the process every year and make changes we believe will improve our understanding of our material issues. We assess each issue in terms of the: > possible economic impact on our business > degree to which it affects our stakeholders and ourselves > extent to which it is likely to grow in significance and impact our business in the future > business opportunities it presents > level of risk it presents. In 2014 our internal process of identifying our material issues began with workshops we held throughout our operations to get input at operational level. These workshops helped us identify the issues material to our stakeholders, including the unions and our employees. RBPlat’s external stakeholders also helped us identify the issues material to government, regulators and industry bodies at operational level. We interviewed management and the members of our executive committee to get their input into what is material to our business. Our Board reviewed the issues we had identified when they were presented to our Audit and Risk and Social and Ethics committees and they finally reviewed them and agreed to them at a Board meeting.

24

Royal Bafokeng Platinum Integrated Report 2014

Externally, we used the feedback obtained from community members at the Joint BRPM and Styldrift I Community Committee meetings, and our interaction with community members during the implementation of our social and labour plans, to identify what the communities in which we operate regarded as their material issues.

The equipping skeleton, which is being used to equip the Main shaft at Styldrift I

We identified the issues that our investors indicated were material to them during our Annual General Meeting, investor presentations, face to face meetings, emails and telephone calls. In interactions with our providers of debt our financial team were able to establish what issues were material to them in terms of RBPlat. Members of our Executive also engage with government, regulators and industry bodies and from these engagements we establish these stakeholders’ material issues in terms of RBPlat. Because we carry out our risk assessments in the context of our material issues, we have included the related risk rankings in the table that follows. The order of the issues in the table that follows is not in accordance with the risk ranking, but in accordance with the ranking of our material issues.

RoyalRoyal Bafokeng Bafokeng Platinum Platinum Integrated Integrated ReportReport 2014 2014

25

ISSUES MATERIAL TO OUR BUSINESS CONTINUED

Material issue in 2014

Why it is important to RBPlat

Inherent risk ranking

Our focus in 2014

What we achieved in 2014

Key performance indicators against which we measured our performance

> Agreement on a long-term wage agreement with our enrolled (full time) employees that will allow RBPlat not only to contain costs but also to have a long-term view on its wage costs > Aligning our volume contractor wage negotiation timeline in line with those of our enrolled employees > Closing the wage gap between contractors and enrolled employees > Getting all contractors on a medical aid

> No days lost to industrial action > Long-term wage agreement signed with our enrolled employees > Agreement achieved with trade union to align negotiation timelines for enrolled and volume contractor employees > Most volume contractors on a medical aid

> Number of production days lost to industrial action*

> Completing building Phase I of employee home ownership scheme and offering home ownership to our employees > Implementing employee home ownership scheme > Securing funding for Phase II of the scheme

> All 422 houses built, 295 employees have signed sales agreements and 289 employees are living with their families in their new homes > Secured funding

> No fatalities > Reduce our injury frequency rates > Effective leadership at all levels

> One million fatality-free shifts by 15 August 2014 > Sadly, there were two fatal accidents in October 2014 > 79kt (11% lower than in 2013) of production lost to safety stoppages

Our stakeholders and their expectations

Towards operational excellence

LABOUR AND TRADE UNION STABILITY

Strikes have a negative impact on business in many ways, which include financial losses and unhealthy employee-employer relationships

1

We are able to influence the impact of this risk

EMPLOYEE HOME OWNERSHIP

SAFETY PERFORMANCE

Our stated purpose is to create economic value for all our stakeholders. Providing our employees with the opportunity to own their homes creates economic value for them and their families. It also helps us meet our Mining Charter and wage agreement commitments, which is to establish family units for our employees Poor safety performance affects employee morale, increases our costs, reduces productivity and damages our reputation

8

We are able to influence the impact of this risk

3

We are able to influence the impact of this risk

OUR FOCUS FOR 2015 > Labour and trade union stability > Implement new wage agreements > Negotiate long-term wage agrement with the volume contractor employees > Development of new employee share ownership programme (ESOP) > Signed sales agreements* > Completed houses are occupied OUR FOCUS FOR 2015 > Start work on Phase II of our employee home ownership scheme

> > > > >

Fatal injury frequency rate* Lost time injury frequency rate* Serious injury frequency rate Injury-free days* Tonnes of production lost to safety stoppages > Maturity level OUR FOCUS FOR 2015 > Road to resilience > Zero harm > Improving our understanding of the role human behaviour plays in our safety performance

Trade unions and employees:

> > > >

Remuneration and incentives Threat to bargaining process Workers’ rights Employment equity

Investor community:

> Labour relations > Impact on costs of new wage agreement > Remuneration Providers of debt:

> Ability to repay borrowings

Trade unions and employees:

> Housing benefits > Meeting previous wage agreement commitments Investor community:

> Mining Charter and wage agreement commitments

Trade unions and employees:

> Health and safety Investor community:

> Good safety record Government, regulators and industry bodies (DMR):

> Compliance with Mine Health and Safety Act and any relevant regulations Communities:

> Safety of family members employed by RBPlat

* These key performance indicators have been assured (See the assurance statement on page 187) See our safety material issues on pages 110 to 111 and the health and wellness issues on pages 112 to 113 of this report for further details.

26

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

27

ISSUES MATERIAL TO OUR BUSINESS CONTINUED

Material issue in 2014

Why it is important to RBPlat

Inherent risk ranking

Our focus in 2014

What we achieved in 2014

Key performance indicators against which we measured our performance

Our stakeholders and their expectations

> All contract workers on a medical aid > No new cases of any occupational illness or diseases > No deterioration in hearing greater than 10% among occupationally exposed employees as a result of exposure at RBPlat operations > Introduce wellness peer educators > Intensive education, motivation and support of employees to decrease the HIV incident rate (new infections) > Achieve early detection using innovative TB detector methods

> The majority of our volume contract workers are members of a medical aid > Two cases of occupational illness > 24 new cases of noise-induced hearing loss (NIHL) > We trained 185 peer educators > HIV incidence rate of 4.6 > TB incidence rate of 805/100 000 > Introduced immediate gene export TB test (Refer to page 120 in safety, health and wellness for details)

> All contract workers on a medical aid > No new cases of any occupational illness or diseases > No new NIHL cases, greater than 10% loss of hearing* > Wellness peer educators working in operations > HIV incidence rate > TB incidence rate* > Absenteeism rate for enrolled employees*

Trade unions and employees:

Towards operational excellence

HEALTH AND WELLNESS OF OUR EMPLOYEES

A healthy workforce is important to our business because it means that our employees are fit to work at their full potential and absences due to sickness are reduced

3

> Employee health and wellness Investor community:

> Healthy productive workforce with low absenteeism rate Government, regulators and industry bodies (DMR):

> Compliance with Mine Health and Safety Act

OUR FOCUS FOR 2015 > All contractors to be on a preferred medical aid scheme > More wellness campaigns to assist our enrolled employees and contract workers > No new cases of occupational illness or diseases > Increase number of wellness peer educators > Further reduce HIV incidence rate > Reduce TB incidence rate

We are able to have some influence on the impact of this risk

OPERATING COSTS

Essential to contain costs as they affect the profitability of the business

4

We are able to influence the impact of this risk

> Enhance operational efficiency and manage costs in all areas over which we have control > Utilise the increased immediately stopable reserves (IMS) to leverage increased productivity > Optimal labour force to achieve production targets

> R957 per tonne milled (4% increase) > R8 040 per 4E ounce (7% increase) > R12 463 per platinum ounce (8% increase)

> Rand per tonne milled (operational efficiency) > Rand per 4E ounce (extracted efficiency) > Rand per platinum ounce OUR FOCUS FOR 2015 > Continue to enhance operational and extracted efficiency and manage costs over which we have control > Maintain optimal labour force > Harness innovation and technology to constantly improve the way in which our mines are developed and operated

Investor community:

> Sustainability > Potential for future returns Suppliers and customers:

> HDSA procurement requirements > Payment terms > Contract terms Business and joint venture partners:

> Financial returns > Sustainability

* These key performance indicators have been assured (See the assurance statement on page 187) See our safety, health and wellness material issues on pages 110 to 111 and the Health and wellness issues on pages 112 to 113 of this report for further details.

28

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

29

ISSUES MATERIAL TO OUR BUSINESS CONTINUED

Material issue in 2014

Why it is important to RBPlat

Inherent risk ranking

Our focus in 2014

What we achieved in 2014

Key performance indicators against which we measured our performance

Our stakeholders and their expectations

> Reserves available to support planned production rate

> Achieved key targets of IMA of 22.5 months > IMS for 8.5 months > DOR for 14 months

> IMA > IMS > DOR

Government, regulators and industry bodies (DMR):

Towards operational excellence

MINEABLE RESERVES AVAILABLE ON A SUSTAINABLE BASIS

LIFE OF MINE STRATEGY

We need the flexibility available to us in our BRPM operations that allows us to adapt to changes in the economic environment, i.e. we need to be able to quickly change our mining approach to suit the economic climate. The ability to do so will allow us to achieve the revenue from BRPM that we need to fund our organic growth through the development of Styldrift I and the progressing of Styldrift II through the necessary study phases We need to maximise the commercial strength of our operations to ensure their long-term profitability

12

OUR FOCUS FOR 2015

We are able to influence the impact of this risk

5

We are able to influence the impact of this risk

30

Royal Bafokeng Platinum Integrated Report 2014

> Maximise ounce production by maintaining current grade and optimising mill throughput > Implement new concentrator strategy and optimise long-term extraction strategy > BRPM South shaft UG2 trial mining remains a vital part of the equation

> Achieved a sustained UG2 face grade of 4.6g/t (4E) and a delivered grade of between 3.6 and 3.8g/t > Merensky production increased by 1% year-on-year

> Mining rights > Compliance with SAMREC Code

> Continue to ensure we have reserves available to support our planned rates of production

Investor community:

> Face and delivered grade > Establish sustainable UG2 ore reserves to match the depletion of Merensky

Investor community:

OUR FOCUS FOR 2015 > Continue to maximise ounce production > Implement long-term extraction strategy > Continue with UG2 trial mining at South shaft

> Possible impact on production which in turn could affect revenue

> Potential for future returns > Sustainability > Risk management Business and joint venture partners:

> Financial returns > Sustainability Employees and unions:

> Communication around changes in strategy that could impact employees Government, regulators and industry bodies:

> Taxes and state royalties > Possible safety and environmental impacts

Royal Bafokeng Platinum Integrated Report 2014

31

ISSUES MATERIAL TO OUR BUSINESS CONTINUED

Material issue in 2014

Why it is important to RBPlat

Towards operational excellence

STAKEHOLDER ENGAGEMENT AND RESPONSIVENESS

Build flexibility

Inherent risk ranking

Grow organically

Our ability to build up a stock of relationship capital depends on how effectively we can engage and respond to our stakeholders. It can affect every aspect of our business from our social licence to operate, employee relations, trade union relations, shareholder support, funding and our ability to achieve long-term sustainability through organic growth and value enhancing opportunities

Our focus in 2014

What we achieved in 2014

Key performance indicators against which we measured our performance

Our stakeholders and their expectations

> We believe that our ability to effectively engage with our employees and the union facilitated the successful conclusion of our new long-term wage agreement, without any labour unrest > We also believe that if we had not communicated effectively with our shareholders we would not have achieved the strong support they gave our capital raising efforts this year > The process of implementing our stakeholder engagement framework started this year with a number of additions to the work already being completed and will continue in the coming years > We have addressed our communication challenges, successes and disappointments in each capital section of this report

> Long-term wage agreement in place > Successful capital raising for Styldrift I project completion > Stakeholder engagement framework rolled out

Our engagement with our stakeholders and the issues they wish us to engage with them on are set out on pages 136 to 137 of the Social and relationship capital section

> We completed and exceeded our commitments in terms of our SLPs covering the period 2010 – 2014 > Our SLPs for the period 2015 − 2020 have been submitted to the Department: Mineral Resources (DMR) and we await its approval of these plans

> Total SLP expenditure* > % of discretionary procurement spend on HDSA suppliers in accordance with the Mining Charter targets* > Total number of employees, contractors and community members that received part time ABET* > Women at mining* > Employment – 40% of HDSA managers in core and support functions* > Number of employees trained in terms of SLP commitments*

Pursue value enhancing opportunities

1

> Engaging with employees > Engaging with the union to conclude a new wage agreement > Engaging and responding to the investor community > Implementation of stakeholder engagement framework > Establishing a corporate affairs office > Local community engagement, impact assessments and development programmes

OUR FOCUS FOR 2015 Continue to strengthen our relationships with employees, unions and communities to reduce the likelihood of operational disruptions through our ongoing employee communication programme and our regular interaction with the unions and the communities Leadership conflict in our doorstep communities made it difficult for us to engage with them during 2014. We plan to offer a training programme to strengthen leadership skills in these communities

We are able to influence the impact of this risk

Towards operational excellence

IMPLEMENTATION OF OUR SOCIAL AND LABOUR PLANS (SLPs)

We believe it is our purpose to create economic value for all our stakeholders, including the communities in which we operate. Implementing our SLPs and going beyond our SLP commitments allows us to create economic value and stability for our communities

7

Implementing our SLPs is also important in terms of complying with the requirement of the Mining Charter and ensuring we retain our social licence to operate

We are able to influence the impact of this risk

> Finalising our existing SLPs and preparing SLPs for BRPM and Styldrift I for the next five years

OUR FOCUS FOR 2015

Communities:

> > > > > > > >

Local procurement Portable skills development Employment opportunities Infrastructure development Enterprise development Education support Poverty alleviation Stakeholder responsiveness

Investor community:

> Good governance > Social licence to operate Government, regulators and industry bodies (DMR):

> Compliance with Mining Charter

> Rolling out our new SLPs

* These key performance indicators have been assured (See the assurance statement on page 187)

32

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

33

ISSUES MATERIAL TO OUR BUSINESS CONTINUED

Material issue in 2014

Why it is important to RBPlat

Inherent risk ranking

Our focus in 2014

What we achieved in 2014

Key performance indicators against which we measured our performance

Our stakeholders and their expectations

> Optimise our long-term business strategy/profitability > Cost containment

> Profitable in a challenging environment > Costs contained below mining inflation

> Manage our cash flow to ensure we are able to fund our business and achieve our strategic objectives

Investor community:

Towards operational excellence

GLOBAL ECONOMIC AND MARKET CONDITIONS

ESTABLISHING SUITABLE REMUNERATION AND REWARD STRUCTURES LINKED TO PERFORMANCE THAT ARE ACCEPTABLE TO OUR EMPLOYEES AND OUR INVESTORS

We cannot influence the global economic and market conditions in which we operate, however, they can positively or negatively impact our earnings in terms of global demand for the PGMs and base metals we produce. Currency fluctuations also impact our earnings positively and negatively. Our ability to predict possible global economic and market conditions in the short, medium and long term helps us manage our business accordingly and take action to reduce any possible negative impact To retain skilled employees we need to ensure they are suitably rewarded. To encourage excellence we also need to ensure our employee rewards are linked to clearly defined performance measures. The disclosure of the remuneration of executives and in particular disclosure of how they have been rewarded against their performance is an important issue for investors. In the past some investors have not been satisfied with our levels of disclosure and we aim to rectify this

Towards operational excellence

ABILITY TO DELIVER PROJECTS ON TIME AND WITHIN BUDGET

6

OUR FOCUS FOR 2015 > Continue to take action to reduce any possible negative impacts > Use ability to predict economic and market conditions to help us manage our business

We are able to have some influence on the impact of this risk

10

> Implement management incentive programme agreed in 2013 > Conclude new wage agreement with productivity incentives

> See page 186 of the Remuneration section of this report for details of the impact of the incentive programme we implemented

> Suitable remuneration and reward structures linked to performance OUR FOCUS FOR 2015 > Continue to monitor the effectiveness of our incentive programmes

> Market outlook Business and joint venture partners:

> Financial returns > Sustainability

Trade unions and employees:

> Remuneration, incentives and benefits > Career opportunities Investor community:

> > > > >

Talent retention Potential for future returns Sustainability Risk management Remuneration and reward structures

We are able to influence the impact of this risk

Organic growth

If we are unable to complete a project on time it will have a negative impact on our reputation, costs, future revenues and our ability to achieve operational excellence and organic growth. It could also impact on our ability to fund projects in the future

2

We are able to influence the impact of this risk

> > > >

Styldrift I project execution BRPM Phase I concentrator upgrade Styldrift II project studies BRPM capital projects

> Six months behind schedule > BRPM Phase I concentrator upgrade on track > Styldrift II project studies on track > On time and within budget

> Capital spend > Measuring ourselves against our project schedule > Earned value**

Investor community:

> Project progress and funding Providers of debt:

> Ability to repay borrowings > Risk management

OUR FOCUS FOR 2015

Communities:

> Styldrift I project execution > BRPM Phase I concentrator upgrade > Styldrift II project pre-feasiblity study completion > BRPM capital projects, Phase III in particular

> > > > > >

Employment opportunities Infrastructure development Enterprise development Education support Poverty alleviation Skills development

** Earned value is the cost for actual work performed minus the budgeted cost for the work performed See pages 88 to 90 of Manufactured capital for more details.

34

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

35

ISSUES MATERIAL TO OUR BUSINESS CONTINUED

Material issue in 2014

Why it is important to RBPlat

Inherent risk ranking

Our focus in 2014

What we achieved in 2014

Key performance indicators against which we measured our performance

Our stakeholders and their expectations

> Implement our employee development training > Continue with the upskilling of our workforce and community members > Retention strategy for artisans > Skills audit to assess potential of BRPM employees for upskilling to mechanised mining > Development of mechanised mining skills among local community members to meet Styldrift I requirements

> Employee development training implemented > See page 108 of the Training and development section for information on the upskilling we achieved during 2014 > Total voluntary turnover of 2.88% > 98 community members received year-on-year mechanised mining training

> Skilled employee turnover by category* > Total employee training spend as a percentage of payroll*

Unions and employees:

> We have secured an adequate power supply for the construction phase of the Styldrift I project > Contingencies in place to manage the impact of power failures > Water treatment plant under construction and due for commissioning in first quarter 2015

> Energy consumption* > Scope1 and 2 emissions* > Total water consumed*

Towards operational excellence

AVAILABILITY OF ADEQUATE AND APPROPRIATE SKILLS

Without the appropriate skills we need we will not be able to achieve our production targets

10

We are able to influence the impact of this risk

Towards operational excellence

AVAILABILITY OF UTILITIES

Build flexibility

Grow organically

Without water and electricity, the two key utilities we rely on, we would not be able to operate

> Career opportunities > Employment equity > Skills development Communities:

OUR FOCUS FOR 2015 > Increase proactive training initiatives using team behaviour analysis to anticipate where training is required

> Employment opportunities > Portable skills development

Pursue value enhancing opportunities

9

We are able to have some influence on the impact of this risk

> Ensure we have access to sufficient electricity > Continue to implement energy efficiency projects > Ensure we have access to the water we require to operate > Implement measures to make our water use more efficient > Construction of water treatment plant which will reduce our reliance on Magalies Water

Suppliers:

> Contract terms (Eskom and Magalies Water) Investor community:

OUR FOCUS FOR 2015 > Define power supply requirements for Styldrift I > Seek out new opportunities to increase our energy efficiency > Reduce use of Magalies Water at BRPM by using water processed by treatment plant in BRPM concentrator > Complete Phase I of water treatment plant

> Uncertainty around power supply for Styldrift I ramp-up

* These key performance indicators have been assured (See the assurance statement on page 187) See the Natural capital section of this report on pages 151 to 152 for more information on our contingency plans for electricty.

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Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

37

ISSUES MATERIAL TO OUR BUSINESS CONTINUED

Material issue in 2014

Why it is important to RBPlat

Inherent risk ranking

Our focus in 2014

What we achieved in 2014

Key performance indicators against which we measured our performance

Our stakeholders and their expectations

> Meeting our Mining Charter HDSA procurement targets while containing costs > Finalisation of contract for contract mining for Styldrift I > Lead time items for expansion of concentrator plant > Equipping of Styldrift I and delivery of its fleet > Enterprise development for small, medium and micro enterprises (SMMEs) and in particular HDSA SMME suppliers

> Achieved and exceeded as per the Mining Charter targets > In principle agreement in place for contract mining > Lead time items on track > Delivery of fleet on track in accordance with the revised schedule > Appointment of Enterprise Development Manager to drive HDSA SMME development

> Discretionary procurement spend on HDSA suppliers* > Inventory management > Minimisation of absolute stock > Optimisation of cash flow

> Discretionary procurement from HDSA suppliers > Contract terms > Payment terms

> Reduce our carbon intensity per 4E ounces in concentrate > Comply with relevant environmental legislation > Implement environmental strategy > Retain ISO 14001 certification

> Refer to Natural capital section on page 150 for our performance in this regard > We complied with all environmental legislation in 2014 and addressed three environmental contraventions following a DMR inspection > A Section 93 notice in terms of the MPRDA was issued by DMR for Styldrift I > We submitted amendments to our water use licences (both Styldrift I and BRPM) to Department: Water Affairs and Sanitation, and await approvals > Continued implementing the environmental strategy which is part of our SHE strategy > Retained ISO 14001 certification for BRPM > Best Performer on the JSE SRI Index in 2014

> No instructions from authorities to rectify environmental and legal non-compliance > Reduction in intensity of our Scope 1 and 2 emissions

Towards operational excellence

MANAGING THE IMPACTS OF OUR SUPPLY CHAIN

The efficient and effective management of our supply chain can have a considerable impact on reducing costs and increasing our operational efficiency

4

We are able to influence the impact of this risk

ENVIRONMENTAL AND CLIMATE CHANGE MANAGEMENT

It is important that we manage the significant environmental impacts of our operations to ensure we continually improve our environmental performance and comply with all relevant environmental legislation. It is also important that we assess the possible impacts of climate change on our organisation including its financial implications, which include the possible impact of a carbon tax

11

We are able to influence the impact of this risk

Suppliers:

Investor community:

OUR FOCUS FOR 2015

> Ability to contain costs

> Meeting Mining Charter HDSA procurement targets > Inventory management to optimise cash flow and minimise stock on hand > Increased focus on enterprise development for SMMEs and in particular HDSA suppliers

OUR FOCUS FOR 2015 > Investigate target setting in line with business strategy > Comply with environmental legislation > Obtain ISO 14001 certification for Styldrift and maintain certification for BRPM > Obtain environmental authorisations for environmental impact assessments, water use licences and environmental management programme amendments submitted to the authorities

Government, regulators and industry bodies (DMR, DEA, DWA):

> > > >

Regulatory compliance Water use licences Environmental authorisations Climate change

Communities:

> Environmental pollution > Public participation Investor community:

> Responsible mining > Company qualifies as a constituent of the JSE SRI Index

* These key performance indicators have been assured (See the assurance statement on page 187)

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Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

39

OUR APPROACH TO RISK MANAGEMENT RBPlat views risk not only as a threat or uncertainty, but also as an opportunity to grow and develop the business within the context of our strategy and risk appetite.

The underlying premise of the RBPlat risk management philosophy is a thorough understanding of its risk exposures in order to ensure that management and the Board are appropriately informed to take strategic decisions in the interests of shareholders and other stakeholders. The risk management system, policies and processes are being embedded within the organisational culture and are consistent with our long-term strategy. RBPlat’s risk management vision outcomes:

RBPlat adopted an enterprise risk management (ERM) maturity model to track its progress from the basic risk management process in 2010 when the company started, to an optimised risk management process which will drive its business strategy. While this is a long-term process and substantial effort is required to move between each ERM maturity stage, RBPlat is committed to achieve a state of “Optimised” by the end of 2015, which will not only ensure improved ERM practices but it will also bring RBPlat in line with best practice. The achievement of this level of ERM maturity will ensure that all risk categories at RBPlat reach the same level of maturity, including the SHE risk management process, and fully align risk management across the Company. ERM is a dynamic concept and our ERM framework will require constant revisiting and updating to meet RBPlat’s strategic objectives, the needs of industry and regulation. Our ERM framework will certainly evolve as RBPlat’s management of risk matures. The maturity model is displayed below.

Enterprise risk management (ERM) framework Our ERM strategy, framework and policy are closely aligned with RBPlat’s business strategy and business plan. The aim of the ERM framework is to: > provide a structure within which management can operate to enforce the proactive ERM process > inculcate a risk management culture throughout RBPlat and its mining operations > further ensure that the risk management efforts of RBPlat are optimised. The aim of the framework is also to embed the culture and practice of risk management in our day-to-day business activities by aligning strategy, processes, people, technology and knowledge with the purpose of evaluating and managing the uncertainties RBPlat faces in creating stakeholder value.

Setting strategy

1st line of defence Chief Executive Officer, Exco and mine managers, heads of departments –accountable for ensuring RBPlat has and maintains an effective, efficient and transparent risk management process

Group business strategy

Risk strategy

Mastery Optimised

Emerging Basic

2013

2014

2015 Risk appetite

2nd line of defence Executive: Risk and Assurance, Head: Risk and Compliance, Company Secretary, SHER Manager, Risk and Governance Committee, Corporate and mine risk forums, functional area and mine risk champions, are responsible for developing a culture of compliance and facilitating compliance throughout the Company

3rd line of defence Internal audit outsourced to KPMG over which Board and Audit and Risk Committee have an oversight role to determine appropriate risk and assurance processes. RBPlat Board is accountable for effective governance of an insurer and is accountable for the total risk management process and forming an idea of its effectiveness

BUSINESS DEPENDENCY MODEL

External

Regulatory

Risk management review and reporting structure*

Internal

Competitors

External stakeholders

Markets

Industry trends

Partners

Business plan (Objectives)

Information and information flows

Products (PGMs)

Key assets and capabilities

Closure and post closure

Strategic processes across the value chain

Exploration drilling

Mine Underground development mining & construction

One transported to surface

Crushing and milling

Flotation and drying

Smelting and refining

ENTERPRISE RISK MANAGEMENT FRAMEWORK

Identifying the risks to which RBPlat is exposed pre and post risk response

Assessing and ranking the identified risks in terms of RBPlat’s agreed risk tolerance and appetite

Responding to risks above RBPlat’s agreed appetite and tolerance levels

Monitoring and oversight of risks by risk and assurance unit including internal audit

Risk management information systems in place to manage risk events across the ERM process including a risk dashboard to track changes in risk levels and notify management of shifts in established patterns

External stakeholders

RBPlat’s risk management maturity journey

Progressive

RISK GOVERNANCE USING THREE LINES OF DEFENCE

Internal stakeholders

> Governance of risk is driven from the top, risk management, however, is driven bottom up > We have a comprehensive understanding of the risks we face as a business > We are confident in our selection of which risks to adopt and how to manage them > Our risk management strategy aims to meet all internal and external stakeholder requirements > We consistently apply risk management techniques to generate value > Effective risk management is an intrinsic part of our day-to-day activities. It enhances the quality of our strategic, capital allocation and day-to-day business decisions > Remuneration and incentives take into account the extent to which risk exposures are linked with performance and whether these risk exposures comply with the agreed risk appetite.

RBPlat’s risk management maturity journey

Incentivise the right behaviours and embed policies through communication

* See detailed diagram on page 44

2010

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Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

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OUR APPROACH TO RISK MANAGEMENT CONTINUED

An integrated approach

The ERM process

The RBPlat ERM framework allows for risk-based decision making and provides a streamlined process for evaluating risks and opportunities within the business. Across our business, value is managed on an enterprise-wide and integrated basis. The risks arising from the business activities that create this value are also managed in an integrated manner across the Company.

The nature of mining is uncertainty, which presents both risk and opportunity, with the potential to erode or enhance value. The challenge for RBPlat executive management is to determine how much risk to accept in the achievement of our business objectives.

Royal Bafokeng Platinum Integrated Report 2014

The risks we identify through our various risk assessment processes form part of our stakeholder material issue identification process and they are also related to RBPlat’s business strategy. In turn, the outcome of the stakeholder material issue identification process feeds into the risk process to ensure that risks related to stakeholder material issues are integrated with the risk management process.

Risk appetite statement design

Risk Profile

Risk appetite statement

> > > >

> Risk appetite > Propensity to take risk > Develop Company- wide risk appetite > Risk tolerances > Propensity to exercise control > Identify risks to manage > Allocate tolerances to set risk appetites > Measurement > Risk limits > Define limits and/or targets for each risk > Monitoring

> Measure current risk profile for each risk > Aggregate individual risks to produce overall risk profile > Profile vs Appetite > Compare aggregate appetite and profile > Adjust risk profile and/ or appetite to ensure alignment

> Obtain Board approval > Roll out and implement > Monitor and report

> > > >

Mandate from Board Risk appetite framework Business environment Understand corporate strategy and risk profile Identify stakeholders and their expectations Develop risk appetite governance Accountability and reporting Risk appetite filters

Implement, monitor and report

42

Control owners are allocated to ensure that control effectiveness is enhanced, or new controls or risk responses are implemented.

Develop risk mandate

Reconcile risk profile and appetite

We developed a business dependency model, which highlights RBPlat’s dependencies, critical parts of our business value chain and our vulnerabilities and provides the context for our assessment of risk. Establishing the context also defines the basic parameters for managing risk and sets the scope and criteria for the rest of the risk process. We arrive at the model by first establishing what externally or internally may influence the setting or achievement of our objectives and how it impacts our stakeholders The external context is anything outside RBPlat which may influence the setting or achievement of our objectives. It is based on a Company-wide view and includes regulatory, political, legal, financial and economic aspects and also considers competition, stakeholders’ expectations, industry trends, business partners and strategic alliances. The internal context is anything within RBPlat that may influence the way in which we will manage risk. It includes RBPlat’s business objectives and plans, information flows, key assets and capabilities, product mix, skills and other strategic and operational processes across the business.

expectations and regulatory/rating agency expectations when developing the risk appetite statement.

Our approach to constructing RBPlat’s risk appetite considers RBPlat’s business drivers (risk profile), shareholders’

Define appetite, tolerances and limits

Strategy context setting (business dependencies)

This is in addition to the operational risk assessments that are carried out within the safety, health and environment (SHE) portfolio. Risk assessment workshops and interviews are conducted with multi-disciplinary teams, including the relevant executive or departmental head, line management, technical and functional specialists and support functions. Risks are owned by the various executives and/or departmental heads and are actively managed through the normal management processes, rather than as a separate risk process.

The RBPlat Board’s ultimate responsibility for risk management includes the development of RBPlat’s risk appetite and setting and monitoring of risk tolerance.

The strategic and business risk profiles developed from the above processes are reported to the Executive Committee and the Audit and Risk Committee every quarter.

Risk appetite

A detailed three-year risk management plan, which is reviewed annually but reported on quarterly to the Board, forms the basis of our risk management and assurance activities and focus. It allows us to actively manage risk and ensure it becomes an integral part of RBPlat’s business culture. At the same time it reviews our risks at strategic and operational level and focuses specifically on the implementation of our risk response plans.

The key driver of our risk process is active management of risks within the span of control for decision making at both operational and strategic level. Risk assessments are performed annually at Group (RBPlat), operational (mines and concentrator), departmental (operational and functional) and project level. We also review and track risk responses on a quarterly and monthly basis.

Our approach to risk appetite and risk tolerances

unit helps departments actively manage their risks by tracking their implementation of risk response plans, the findings of internal audit and the facilitating of risk assessments.

Risk appetite statement design Our risk appetite statement is designed to ensure the RBPlat Group includes risk factors in any major strategic or tactical decision and to ask the question: “Is this course of action compatible with our risk appetite?” The business plan, budgets (operational and capital) and the authority limits manual are used as a base to determine appetite and tolerance levels.

1

> Propensity to take risk in line with ERM profile

2

> Risk appetite statement for each risk type

3

> Risk measurement approach for each risk type

4

> Propensity to exercise control (level of management control deemed appropriate)

5

> Risk tolerance levels by risk type levels deemed acceptable, tolerable, unacceptable

Monthly mine business review meetings are used to gain feedback from mine managers and departmental heads on the risk profiles and registers and to ensure that they are aligned with the mine’s operational and financial performance. The risk and assurance

Royal Bafokeng Platinum Integrated Report 2014

43

OUR APPROACH TO RISK MANAGEMENT CONTINUED

The froth produced as part of the flotation process in the RBPlat concentrator

Our risk management review process and reporting structure Risks are reported to various governance structures including the: > Board (annually and Audit and Risk Committee quarterly feedback to the Board) > Board Audit and Risk Committee (quarterly) > Executive Committee (quarterly and ad hoc when required) > Business performance review meetings (monthly) > All other stakeholders through our Integrated report. Operational risks are reviewed by the relevant responsible person and are reported to various forums/committees as per our ERM framework. Functional risk and project risks are also reported to the specific governance structures responsible for its performance. The Executive: Risk and Assurance, supported by the Head: Risk and Compliance, is responsible for the ongoing reporting on risks and the risk management process to the various stakeholders. Risk escalation processes are in place to ensure risks are reported and communicated within normal reporting cycles and on an ad hoc basis to address matters of particular urgency.

Our risk management review process and reporting structure COMMUNICATION AND REPORTING

44

Board

Executive Committee

Business review forum

> Audit and Risk Committee

> Functional and operational executives > Executive: Risk and Assurance

> Mine managers > Mine heads of departments

Strategic/corporate risk profile > Approve ERM framework > Confirm strategic risk profile > Set risk appetite > Determine risk tolerance > Monitor progress on risk > Track performance against risk tolerances > Review effectiveness of risk assessment process > Assess insurance portfolio for adequacy > Provide oversight for the combined assurance plan

Corporate risk profile

Mine specific risk profiles > Determine mine specific risk registers and profiles > Departmental/sectional and functional risk assessments > Monitoring of risk response plans > Set and measure risk limits at mine level > Operate within approved risk tolerance > SHE risk reporting > Compliance monitoring > Detailed risk assessments (issue based/change, etc) > General risk awareness

Royal Bafokeng Platinum Integrated Report 2014

> Develop risk management plans and methodologies > Determine and review corporate risk profile > Consolidate mine specific and functional risk profiles > Monitor risk tolerance level adherence and set appropriate risk limits > Monitor progress on risk management plant and response plans > Stakeholder risk reporting and monitoring

Royal Bafokeng Platinum Integrated Report 2014

45

RBPLAT’S TOP RISKS

OUR APPROACH TO RISK MANAGEMENT CONTINUED

Three lines of defence model

Strategic risk profile

Bafokeng Rasimone Platinum Mine’s top five inherent risks

Risks related to the business strategy and material issues

Three lines of defence Third

S e co

nctions provide adeq uat ce fu es nan eco ent of risks within ve r ge m nd go the an a lev sp m an e t iv of c a

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Inherent risk ranking

The ERM approach we have adopted at RBPlat provides us with an integrated approach to the management of our business risks within a complex and ever-changing environment. The following risk profile provides detail of the key strategic risks and responses related to our business strategy and plan, as well as its relation to our stakeholders’ material issues. It also provides a summary of the key business risks affecting our main operations.

lin e of d efe nce

Day-to-day management of risks

RBPlat’s strategic risk profile

on

Production losses related to Section 54s and other safety-related stoppages due to incidents and intensified investigations and MHSA enforcement by the DMR could negatively impact our revenue

2

Failure to attract and retain adequate and appropriate skills due to unsuitable remuneration and reward structures could negatively impact on BRPM achieving its business plan

3

Potential industrial action could negatively impact on BRPM’s operations and it ability to achieve its business plan

4

Inadequate South shaft UG2 profitability could negatively impact on BRPM achieving its business plan

5

Regulatory change to enforce wage and benefits parity between contactors and enrolled employees could negatively impact on profitability and/or life of mine plan

ove

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8

3

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2

3 7

11

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4

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3

5

4

Control effectiveness

nc

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RBPlat’s concentrator top five inherent risks Inherent risk ranking Risk description 1

Insufficient Merensky ore for processing resulting in plant stoppages, elevated levels of wear and tear, instability to existing maintenance strategies and an increase in unit cost

2

Project construction schedule interface with normal concentrator plant operations could cause project delays and/or production stoppages

3

Insufficient Styldrift I material could have major impact on RBPlat profitability

4

Failure of the Larox filter could lead to production stoppages and resultant negative impact on revenue

11 1

Combined assurance RBPlat adopted the combined assurance plan approach to ensure that adequate assurance is provided across the Group and to prevent gaps or duplication in assurance efforts. The Risk and Assurance unit is responsible for drafting the combined assurance plan in consultation with functional and operational management and the outsourced internal audit service provider. The outcomes of all assurance activities are compiled in an audit tracking tool and progress on the recommendations is tracked monthly and reported to the Audit and Risk Committee every quarter.

Independent assurance providers Work done > External audit (PwC) > Annual audit

Review of internal > Internal audit controls and risk (KPMG) management Internal financial > Internal audit controls (KPMG) Mineral resources > and reserves

Safety, health and > environment > > > > >

Sustainability (integrated report)

46

>

2

3

4

> Internal audit provides assurance > Internal audit on RBPlat’s ERM opinion

> Assurance on the effectiveness of our organisational control environment MinCorp > Audit of procedures applied to the estimation of mineral resources and reserves and confidence in the estimation > Annual certification DQS > BRPM safety audit (Section 54 LWTR Consulting stoppages and self-imposed Green Giant stoppages) Consulting > Environmental legal audit Routledge Modise > Safety and health legal audit Inc Middindi Consulting > Mine design major excavations and rock engineering audits Open House Management Services > Opinion on selected Gilden Assurance sustainability key performance (Pty) Ltd indicators (Independent third > AA1000 Accountability party assurance Principles application provider)

Royal Bafokeng Platinum Integrated Report 2014

1

Outcome > External audit opinion

> Internal audit opinion > Audit opinion

> BRPM recertified

> BRPM recertified > Certification for both BRPM and Styldrift I > Assurance statement

Framework/standard > IFRS > Companies Act > International Standards on Auditing (ISA) > IFC review

Frequency > Annual

> Annual

> ISO 31000 standards relating > Annual to risk management > King III > SAMREC code (2009) > Biennial

> ISO 14001 standards relating > Annual to environment and quality > Biennial > ISO 9001 standards relating > Biennial to quality management > OHSAS 18001 Occupational health and safety assessment certification

5

Likelihood

Residual risk ranking

Inherent Risk risk ranking description*

Assurance matrix Area assured Annual financial statements

1

Potential breakdown in stakeholder engagement and responsiveness

2 1

2

Inability to deliver on time and fund projects within, budget especially the Styldrift I project

3

Inadequate safety performance

4

4

Potential for operating costs to escalate

3

5

Operational exposures due to poor performance against life of mine strategy

5

6

Global economic and market conditions

7

7

Failure to implement our social and labour plans (SLPs)

5

Failure to secure the required labour (with the required skills) for the 100ktpm concentrator could impact efficiencies

Styldrift I’s top five inherent risks Inherent risk ranking Risk description 1

Inability to deliver on the specific milestones in line with the project schedule leading to further project delays

2

Contractors’ adverse financial position could negatively impact funding model and cash flow

8

8

Inability to provide employee home ownership

9

Lack of availability of utilities

10

Failure to have available adequate and appropriate skills

9

3

Potential cost overruns on the project could negatively impact funding model and cash flow

11

Our environmental and climate change management could result in non-compliance with key legislation

12

4

Inability to process ore as a result of the concentrator and/or overland conveyor not being ready on time would negatively impact cash flow and life of mine

12

Insufficient mineable reserves available on a sustainable basis

11

5

Insufficient power available for ramping up to steady state production

Legend

Inherent risk

6

Risk description

1

Combined assurance plan ensures adequate assurance provided across the Group

T hir d

In line with global best practice our three lines of defence model is also incorporated into our risk management processes. It plays an important part in ensuring our risk management is effective and that we maintain a high standard of risk governance. The heart of the RBPlat risk management philosophy and activity, as well as responsibility for internal controls, is entrusted to the first line of defence, which primarily includes line management and certain functional management areas. The second line of defence includes the risk and assurance unit, complemented by the operational risk management function residing in the SHER Department at mine level, as well as other shared services and head office functions like supply chain management, finance, etc. The third level of defence is primarily the Board, Audit and Risk Committee and other Board sub-committees, external audit and the outsourced internal audit function.

10

Residual risk

* Detail on pages 48 to 51

> AA1000AS

> Annual

Royal Bafokeng Platinum Integrated Report 2014

47

RBPLAT’S TOP RISKS CONTINUED

Residual risk Stock of capitals and the pillars of our strategy that could be affected

Increase/decrease in inherent risk ranking

Risk description, root cause and potential impact

Response to risk

Inability to deliver on time and fund projects within budget, especially the Styldrift I project, could negatively impact on future revenue, costs and reputation

Effective project management capability has been developed and adequate governance and financial management structures are in place Continue developing Styldrift I operational readiness. Capacitate site management with appropriate resources, systems and strategic partnerships > Engage ramp-up contractor to commence with technical scope alignment > Customisation of human resource, supply chain, mineral resource management, IT, engineering and security systems

Inherent risk

2014

2014

2013

2012

1

2

6

8

2

1

1

1

3

4

3

5

4

3

4

4

5

5

5

7

Towards operational excellence

Put measures in place to mitigate the risk around the non-performance of key contractors Grow organically

=

Potential breakdown in stakeholder engagement and responsiveness could lead to breakdown in stakeholder relationships and in particular a breakdown in labour and union stability that could lead to unprotected industrial action which could negatively impact on RBPlat’s ability to meet its production and financial targets

Our stakeholder engagement framework was updated to ensure proactive management of stakeholder-related risks. An effective employee engagement model has been agreed with employee representative bodies and continuous engagement takes place. Current measures account for a long-term wage agreement which will regulate our enrolled labour issues until June 2020 Engagement with representative bodies regarding our contract workforce to align wage negotiation period with those of our enrolled employees over time are also intended to reduce the risk of industrial action RBPlat participates in industry initiatives to enhance relationships with all stakeholders. The Executive: Corporate Affairs manages stakeholder-related risk at strategic level in support of initiatives at our operations

Potential for operating costs to escalate to higher than planned levels (due to safety stoppages, higher staff costs, suppliers costs, etc) could impact on the Group’s ability to fund projects from operational cash flows

We have focused on improving productivity and reducing costs across our operations and corporate office. Following a successful cost saving project in 2013 we focused on achieving further sustainable cost savings in 2014. The review of our supply chain management processes, and the changes we implemented to support cost saving initiatives in 2013 have been effective. We continued optimising our supply chain in 2014. Our implementation of activity-based accounting at shaft level has also assisted with the management of cost

Inadequate safety and health performance resulting in injuries and/or work stoppages due to Section 54s may impact on RBPlat’s ability to meet production and financial targets. Poor health in our employees would result in our employees not being fit to work at their full potential and being absent due to sickness. This would impact on our productivity and profitability

We have adopted a zero harm philosophy and we are working to increase our maturity level on the road to resilience. We conducted extreme audits/internal shaft audits and have a safety strategy in place. We have introduced continuous evaluation teams to assess leadership and team safety performance and conduct immediate safety retraining where required. Improving understanding of the role that human error plays in injuries, accidents and incidents. All our employees (enrolled and contractors) have to undergo a medical examination before they can work on our mines. All employees returning from leave have to undergo a medical before returning to work. All our enrolled employees are on the Platinum Health medical aid and are able to access a wellness programme. Almost all our volume contractors were able to join a medical aid during 2014. We hope to arrange for all our volume contractors to become members of Platinum Health, which will allow us to monitor their wellness

Operational exposures due to poor performance against life of mine strategy which could impact unit costs and operating profit

Maximising the commercial strength of our operations to ensure their long-term profitability through effective mine planning, production monitoring and reviewing processes. In addition, various processes are in place to manage operational risks, including safety, fire, environment and plant processes

Towards operational excellence

=

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RBPLAT’S TOP RISKS CONTINUED

Residual risk Stock of capitals and the pillars of our strategy that could be affected

Increase/decrease in inherent risk ranking

Risk description, root cause and potential impact

Response to risk

Inability to provide employee home ownership in line with the wage agreement commitments could lead to business interruptions due to strike action

A housing collective agreement formed part of the wage agreement which ended on 30 June 2014. Phase I of the employee home ownership scheme delivered 422 houses at Waterkloof Hill in 2014 and additional land has been secured for the construction of additional homes. RBPlat is negotiating affordable finance for home owners. To date 295 sales agreements have been signed by employees and 289 employees are now resident in the new three-bedroomed homes. We continue to consult with neighbouring mining companies regarding the potential for cooperating on specific housing projects to speed up delivery of housing to our employees Focus has been on achieving cost reductions and maintaining a low cost base, by increasing operational efficiencies and production enhancements

Inherent risk

2014

2014

2013

2012

6

8

9

-

7

6

10

3

8

7

2

2

9

10

13

10

10

9

11

12

11

12

14

9

12

11

12

6

Towards operational excellence

Global economic and market conditions could result in financial exposure due to a significant drop in PGM prices and/or strengthening of the rand Failure to implement our social and labour plans (SLPs) could lead to a negative impact on our mining licence and also community unrest as a result of unemployment and other socioeconomic issues which could also negatively impact RBPlat’s reputation and affect us financially

Failure to have available adequate and appropriate skills could lead to a drop in the quality of skills, which will negatively impact on achieving operational efficiencies and our SLP and failure to establish suitable remuneration and reward structures could lead to loss of key employees Lack of availability of utilities could result in the failure of the power supply, or an inadequate power supply could lead to business interruptions and delays in expansion projects, negatively impacting our financial and operational performance

The stakeholder engagement model we adopted as part of our sustainable development framework and policy is intended to assist with engagement around delivery of our SLP projects We have fulfilled and exceeded our commitments in terms of our SLPs covering the five-year period 2010 – 2014. This included submitting Section 102 applications because it was necessary to do so where projects had been changed for various reasons. We have now submitted our SLPs covering the next five-year period to the DMR and will commence work on these in 2015. We conducted a review of our SLP compliance and established a monitoring process to proactively manage our exposure in regard to both SLP compliance and other Mining Charter commitments. Both the delivery of our SLP projects and the development of our operations have provided employment and skills development opportunities for community members We have regular engagement sessions with the communities and a recruitment strategy and development programme that favours local community members Maintain momentum on current human resource development strategy to meet SLP and operational requirements. Enhance the talent management and succession planning process to ensure key individuals and functions are retained and monitor effectiveness of remuneration and reward structures and benchmark them to ensure they are competitive

We have a supply agreement with Eskom in place and the power supply for Styldrift l has been secured. The existing main sub-station is adequate for BRPM requirements for the foreseeable future RBPlat’s emergency preparedness plan includes 12MVa of diesel power generating capacity which is adequate for the safe exit of our employees from Styldrift I and BRPM in the event of a total power failure. This also provides sufficient generating capacity to protect our key infrastructure in the event of a prolonged outage

Build flexibility

Insufficient mineable reserves available on a sustainable basis could lead to inability to support planned production rate Our environmental and climate change management could result in non-compliance with key legislation, which may lead to the withdrawal of mining-related licences (mineral rights/water, etc) negatively impacting mining operations and costs Potential tax liability stemming from shareholder loan treatment/mining rights transfer matter. Senior counsel has been engaged to advise on the issue. Various engagements with SARS and Royal Bafokeng Holdings resulted in SARS assessing and rejecting our appeal. RBPlat has made a submission for deferment of payment pending litigation. This risk was ranked 5 on an inherent risk basis for 2014.

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Approved mining production planning programme and supervisory structure is in place

We have ongoing monitoring of licence requirements in place and address deviations if and when they are identified. Regulatory compliance and business sustainability frameworks and policies are in place and are actively implemented and monitored

We have lodged an objection against these tax assessments and an application to suspend payment in terms of Section 164 (2) of the Tax Administration Act. The South African Revenue Service (SARS) has disallowed Royal Bafokeng Resources’ (RBR’s) objection and RBR lodged a notice of appeal in November 2014. Based on independent advice and consultation to date, RBR remains confident that it has a reasonable prospect of successfully defending the matter. This risk has now materialised and is part of a litigation process.

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BOARD OF DIRECTORS NON-EXECUTIVE DIRECTORS

NON-EXECUTIVE DIRECTORS ADVOCATE KGOMOTSO MOROKA SC (60) Chairman (Independent) BProc, LLB Kgomotso joined our Board as Chairman and independent non-executive director on 1 June 2010. A practising senior advocate, she is Chairman of the Nomination Committee, a member of the combined Remuneration and Nomination Committee and a permanent invitee to all other committee meetings. She is a director of the Standard Bank Group, South African Breweries, Multichoice South Africa and Netcare. Kgomotso is a trustee of the Nelson Mandela Children’s Fund, Project Literacy and the Apartheid Museum.

LOUISA STEPHENS (38) (Independent) CA(SA), BBusSc (Finance) Louisa joined the RBPlat Board on 29 September 2014. She is currently an independent financial trader at Prime Select Holdings having previously gained extensive experience in mergers and acquisitions, structuring and arranging debt funding and implementing leveraged debt transactions as the Chief Investment Officer of Circle Capital Ventures (Pty) Ltd and General Manager: Investments and Finance at Nozala Investments (Pty) Ltd. Prior to joining Circle Capital Ventures she was a fund manager at the National Empowerment Fund’s Corporate Fund (uMnotho Fund) after gaining experience in acquisition and leverage finance in Rand Merchant Bank’s Investment Banking Division. She is a non-executive director of South Ocean Holdings Limited and Greymatter and Finch (Pty) Ltd. Louisa is a member of the Audit and Risk Committee.

PROFESSOR LINDA DE BEER (45) (Independent Chairman of the Audit and Risk Committee) Chartered Director (SA) CA(SA), MCom (Tax) Linda joined the RBPlat Board as an independent non-executive director on 1 June 2010. An independent reporting and governance advisor and visiting professor at the University of the Witwatersrand, she is involved in local and international accounting and audit standard setting. She is also a member of the King Committee and chairs the Financial Reporting Investigations Panel of the JSE.

LUCAS NDALA (40) CA(SA), PGDM (UCT) Lucas was appointed to our Board as a non-executive director on 28 May 2013. He is currently the Chief Executive Officer of Mining Oil and Gas Services (MOGS), having previously held the position of Chief Financial Officer of Royal Bafokeng Holdings (Pty) Ltd since 2008. Lucas became a member of the Remuneration and Nomination Committee on 19 November 2014.

ROBIN MILLS (68) (Independent) BSc (Eng) (Rand) Mining, CEng, FIMMM, FSAIMM Robin, who is a partner in a private mining equity fund: Appian Capital Advisory LLP, joined our Board as an independent non-executive director on 20 September 2010, following an international career as a mining engineer with the Anglo American/De Beers Group. He is a member of the Audit and Risk and the Social and Ethics committees.

MARK MOFFETT (55) (Independent) CA(SA) Mark, who was appointed to our Board on 22 September 2014, currently operates an independent consultancy in South Africa. He has extensive experience in mining finance, having spent over 25 years in senior financial positions in Anglo American plc and the De Beers Group, as Chief Financial Officer of Xstrata Alloys South Africa and most recently as Group Controller for Xstrata plc. He is a member of the Audit and Risk Committee.

THOKO MOKGOSI-MWANTEMBE (52) (Independent) MSc Thoko, who was appointed to the RBPlat Board in November 2014, is currently the Chief Executive of the Kutana Investments Group. She previously held executive positions at Telkom Limited, Lucent Technologies, Siemens Telecommunications, Alcatel SA and Hewlett Packard SA, where she was the Chief Executive Officer. In 2005 she won the ICT achiever of the year award and ICT personality of the year. In 2007 she received the BWA businesswoman of the year award in the corporate category. She is a non-executive director of Vodacom Limited, Absa Bank Limited and Aveng Limited. She became a member of the Remuneration and Nomination and Social and Ethics committees on 19 November 2014. MIKE ROGERS (70) (Independent) BSc (Eng) (Rand) Mining, PrEng, FSAIMM Mike, who was appointed to the Board as a non-executive director on 7 December 2009, is Chairman of the Social and Ethics Committee and he will also chair the Remuneration and Nomination Committee until 1 May 2015, at which time Thoko Mokgosi-Mwantembe will become Chairman of this committee. In his former role as Executive Head of Joint Ventures at Anglo American Platinum Mike gained an in-depth understanding of RBPlat’s operations. He became an independent non-executive director in February 2014.

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DAVID WILSON (44) CA(SA) David was appointed to our Board as a non-executive director on 29 May 2014. He is currently Investment Manager: Strategic Investments at Royal Bafokeng Holdings (Pty) Ltd (RBH). Prior to joining RBH, he was a director and Head of Mergers and Acquisitions for sub-Saharan Africa at Deutsche Bank, South Africa. Before joining Deutsche Bank in 2004 he was an Associate Director, Corporate Finance at HSBC South Africa and Vice President, Corporate Finance at ING Barings, South Africa. He is a member of the Social and Ethics Committee. 

EXECUTIVE DIRECTORS And members of the Executive Committee

STEVE PHIRI (58) Chief Executive Officer BJuris, LLB, LLM, Dip Corp Law Steve was appointed to the Board as Chief Executive Officer (CEO) on 1 April 2010. He chairs the Executive Committee and the BRPM Joint Venture Management Committee and attends all committee meetings as an invitee. Steve was CEO of Merafe Resources, a company listed on the JSE, for six years before joining RBPlat.

MARTIN PRINSLOO (46) Chief Financial Officer CA(SA) Martin was appointed Chief Financial Officer (CFO) and an executive director on 1 March 2009. He attends all Audit and Risk Committee meetings as a permanent invitee and is a member of the Executive Committee and the BRPM Joint Venture Management Committee. Before joining RBPlat Martin acted as CFO at Anglo American Platinum and was a member of the Executive Committee.

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EXECUTIVE COMMITTEE

NEIL CARR (55) Executive Head: Operations BSc (Mechanical Engineering), EDP (INSEAD) Neil, who has over 30 years’ experience in the platinum mining industry, joined RBPlat as Head of Projects and Engineering in 2010 and was promoted to Executive: Head of Operations in 2014. Prior to joining RBPlat he held senior management and leadership positions in Lonmin for 20 years and Implats for nine years.

GLENN HARRIS (53) Head of Operations for the BRPM Joint Venture NHD (Metals), BTech, MDP, MMCC In his current role Glenn heads up operations for the BRPM and the Styldrift I project, collectively known as the BRPM Joint Venture. Before assuming this role he had been General Manager of BRPM since 2006. He has 30 years’ experience in mining, 19 of which have been in platinum mining.

REGINALD HAMAN (40) Executive: Risk and Assurance MBA, PGDBA, Graduate diploma in Company Direction, NHD, ND Reg has 19 years’ experience in risk and governance, gained in senior executive positions in various sectors including mining and financial services. He is the past President of the Institute of Risk Management of South Africa and served on the King III risk management working group.

MPUELENG POOE (55) Executive: Corporate Affairs BProc, MDP, Certificate in Advanced Corporate and Securities Law Before joining RBPlat in 2013 Mpueleng was the Public Affairs Executive at RBH. Having begun his career as a lawyer with Bell, Dewar and Hall (now merged with Faskens Martineau), where he later became a director, he joined AngloGold Limited as legal counsel in 1999.

VICKY TLHABANELO (54) Executive: Human Resources MM (Masters in Management), BCom (Hons), Dip (Management and Accounting) Vicky, who joined RBPlat in 2010, has held leadership positions for more than 15 years. Her experience includes over 23 years in human resources in various areas including banking, retail research, agriculture, academic institutions, as well as mining and development.

CHAIRMAN’S LETTER TO STAKEHOLDERS It is my pleasure to introduce you to our integrated report for the financial year ended 31 December 2014. A highlight for me, as Chairman of RBPlat, was the launch of the first phase of our new employee home ownership scheme in September 2014, which not only provides our employees with the opportunity to have their families living with them in a very pleasant and safe environment, but also gives them the opportunity to own an asset that should appreciate over time. The biggest event in the South African platinum industry during 2014 was the devastating five-month strike in the first half of the year. While we were very fortunate not to experience any strike action, inevitably the impact the strike had on our neighbours also affected RBPlat and its employees. I would like to recognise the efforts of management, employees and union representatives that made it possible for RBPlat to enjoy another year of labour stability. This spirit of cooperation also allowed us to achieve a five-year wage agreement and to start delivering on the commitment we made in our previous wage agreement to build homes for our employees. We were grateful that our shareholders, despite the current outlook for the platinum industry, supported our capital raising programme in the first quarter of 2014. We were able to reward their confidence in RBPlat by producing a very pleasing set of results for 2014. We advised the market when RBPlat released its half year results for 2014, that we had identified that the Services shaft hoisting capacity at Styldrift I was a key constraint in terms of underground construction activities. The project schedule has been revised to take this into account and Styldrift I will now start ramping up in the first quarter of 2016 instead of in the third quarter of 2015, as previously scheduled.

Sadly, we did not meet one of our key strategic objectives of zero harm in our operations. On Saturday, 4 October 2014, Mr Xadreque Chihungo, who was employed as a stage hand by Shaft Sinkers, was fatally injured in a shaftrelated incident at Styldrift I. This was the first fatal accident at Styldrift I for over three-and-a-half years. On Friday, 10 October 2014, Mr Refumane Petrose Kanono, who was employed as a loco operator by JIC, was fatally injured in an underground accident at BRPM’s South shaft, when he was trapped by a ventilation door. On Thursday, 8 January 2015, Mr Amelio Paquette, who was employed as a winch operator by JIC, was fatally injured when he was trapped during a fall of ground in a stope panel at BRPM’s North shaft. The Board extends its condolences to their families, friends and colleagues for their loss. Today population growth, urbanisation, social and economic development and the demand for a green low-carbon economy, all contribute to an increased demand for minerals and metals, with platinum group metals (PGMs) making a major contribution to a green lowcarbon economy. We recognise that meeting these demands and achieving the benefits society seeks comes at a cost to people and the environment. This is the reality that lies at the heart of sustainable development, which has as its central idea the principle that any human activity and the products that activity delivers should make a net positive long-term contribution to the wellbeing of humanity and the ecosystem. This approach puts the focus not on how our mining can be sustainable but on how our mining and the minerals and metals we produce can contribute to sustainable development. It is therefore important when we assess the net contribution of our mining activities to sustainable development

For information on our wage agreement and our employee home ownership scheme, see pages 102 and 103 of the Human resources section of this report. Details of RBPlat’s performance against our SLP are to be found on pages 126 to 131. Our directors’ CVs can be found on pages 52 to 53.

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Royal Bafokeng Platinum Integrated Report 2014

Adv Kgomotso Moroka SC Chairman

that we take into consideration the unique long-term nature of mining, the benefits it generates, as well as the costs and risks involved over its life cycle and that of its mineral product. This was the final year of our five-year social and labour plan (SLP), which is central to our performance in terms of the Mining Charter Scorecard. I would refer you to the Social and relationship capital section of this report on pages 126 to 131, which provides a detailed report on what we have achieved over the five years of our SLP and also sets out our SLP for the next five years. It is pleasing that we have been able, through our SLP investment, to deliver against our declared purpose of creating economic value for all our stakeholders. Our efforts towards sustainability were recognised when we became a Best Performer on the JSE Socially Responsible Investment (SRI) Index for 2013. The Board and Executive management reviewed the relevance of our strategic objectives as we do every year, and while some of the issues that we need to address to achieve these objectives may have changed over the years, or become more or less important, we concluded that our objectives remain relevant. I would refer you to my Corporate governance review on pages 166 to 167 and the Governance section of this report on pages 168 to 179 for information on how the Board carried out its responsibilities during 2014. On behalf of the Board my thanks and congratulations go to everyone who contributed to a stable and productive year at our operations.

Adv Kgomotso Moroka SC

Chairman

Royal Bafokeng Platinum Integrated Report 2014

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CHIEF EXECUTIVE OFFICER’S STRATEGIC REVIEW I am very proud that RBPlat’s performance since 2010, and the confidence our shareholders have in our ability to deliver against our organic growth strategy, resulted in both the bookbuild and rights offer that made up our capital raising programme for Styldrift I being significantly oversubscribed. Through their ongoing support our investors also endorse our declared commitment to seek and deliver the good from mining and to leave a lasting legacy of sustainable benefits for all our stakeholders. While we have found that integrated reporting has many advantages, in particular having an integrated view of our business throughout the year and helping to eliminate repetition in our reporting, this year there is one message that is repeated throughout this report: the importance of the role that labour stability played in our performance in 2014. This stability didn’t just happen. All the parties involved: RBPlat’s management, the union representatives and our workforce, have invested and continue to invest time and effort in building a partnership based on trust, mutual respect, transparency and fairness. We believe that the willingness of all parties to engage with and respond to each other has established a partnership that played a key role in both our labour stability and our pleasing production performance in 2014. This partnership also resulted in the completion of the first phase of our employee home ownership scheme, of which we are all justifiably proud.

Our performance against our strategy

Steve Phiri Chief Executive Officer

As our Chairman mentioned, these strategic objectives still remain relevant today. We were so hopeful that we would have a fatality-free year, but as our Chairman has already mentioned, we had two fatal accidents in October 2014, one at BRPM and one at Styldrift I. We have made progress towards improving the safety performance in our core mining areas at BRPM, where there were no fatalities during 2014. Sadly, we started 2015 with a fatal accident at BRPM as a result of a fall of ground. We will be increasing our focus on the service areas of the mine and continue to strengthen our efforts to keep people safe throughout our operations. We made changes to our management structure this year following the departure of our Chief Operating Officer. It was pleasing to realise that, despite our talent management and succession programme being in its early stages, the depth of talent at RBPlat meant it was a manageable process to reorganise the team. There was no need to seek new talent outside RBPlat.

My thanks to our management team, our workforce and the union for your contribution to our performance in 2014 and I encourage you to continue working together to ensure we maintain this critically important partnership.

Details of our employee engagement can be found on page 103 of the Human resources section of the report and information on industrial action at RBPlat can be found on page 100. See pages 114 to 116 for more information on our safety statistics and efforts to improve our safety performance. For further detail refer to the Manufactured capital section of this report.

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Royal Bafokeng Platinum Integrated Annual Report 2014

When we took over the management of the BRPM Joint Venture (JV) in 2010 we identified four strategic objectives and the issues we needed to address to achieve these objectives: > Towards operational excellence at BRPM (achieving a safe operating environment, labour stability, optimising volumes and reducing costs) > Building flexibility in the business through co-extraction and increasing immediate stopable reserves (IMS) > Growing organically through Styldrift I and II > Pursuing value enhancing opportunities, including acquisitions and synergies.

Towards operational excellence at BRPM While we were disappointed by our safety performance this year, our lost time injury frequency rate (LTIFR) has shown a steady improvement over the past five years. We continue to work towards improving our safety maturity level. As I’ve already mentioned, we have been fortunate that labour stability has been a key feature of our performance, particularly in the past two years. It has made an important contribution to optimising volumes and containing costs at BRPM. These are both areas where we performed very well in 2014, as you will see from the Manufactured and Financial capital sections of this report. The decision we took in 2013 to focus on our more profitable core business, which is mining and processing the Merensky reef, also worked well in 2014. To build flexibility we need: > Well-developed Merensky ore reserves > To be able to supplement current Merensky production with UG2. One of our most important structural achievements over the past three years has been the increase in the IMS panels to stoping team ratio we have achieved through a sustained increase in the rate of development, redevelopment, ledging and equipping over the past three years. This increase has contributed to a number of important performance improvements at BRPM. Our initiation of mining the UG2 reef at BRPM in 2010 has also contributed to our operational flexibility by providing access to a secondary reef horizon.

Organic growth > Complete construction and ramp-up of Styldrift I > Develop Styldrift II and bring forward as an expansion project > Further develop UG2 − depending on market conditions

See page 88 for information on Styldrift I and page 90 for information on Styldrift II.

Our Styldrift I project, which fell behind schedule by six months this year mainly due to constraints regarding the Services shaft, will now start ramping up to full production in the first quarter of 2016. When it achieves steady state in the first quarter of 2019 it will increase our production to approximately 470koz (4E) per annum. The Styldrift II resource represents 40% of the BRPM JV’s overall resource. We have completed the pre-feasibility study and are proceeding with the feasibility study. Our aim is to bring the project forward as an expansion project much earlier than we originally anticipated. We are very excited about what we have seen of the results of the studies so far. Because of the work we have done to provide access to the UG2 reef horizon at BRPM we are in a position to increase our mining of UG2 as and when market conditions make this a profitable option.

Silo at BRPM’s South shaft

Pursue value enhancing opportunities > Regional consolidation and royalty agreements > Mergers and acquisitions Our royalty agreements with Impala Platinum (Implats) remain in place, however, our income from these agreements was negatively affected by the impact on Implats’ production of the five-month strike in the platinum industry. While we have not as yet made progress with this leg of our strategy, we continue to consider possible mergers and acquisitions and to seek out synergies and ways of cooperating with our neighbours.

Market review > Platinum market saw a deficit in 2014 > Five-month strike in platinum sector contributed to South African refined mine supply falling by 1.37Moz or by 886koz including stock utilisation > Gross demand excluding investment was up by 3.3% for the year > Recycling growth up just 2.3% to 2.0Moz > However, platinum prices declined to levels not seen since 2009 > The South African rand depreciated by 10% against the US dollar Royal Bafokeng Platinum Integrated Annual Report 2014

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CHIEF EXECUTIVE OFFICER’S STRATEGIC REVIEW continued

These factors should have contributed to higher platinum prices in 2014, but this was not to be the case. Macroeconomic influences were negative for commodities at the end of 2014. This was due to a two-speed global economy with growth in the US, a stronger US dollar and the prospect of higher US interest rates, while Europe, Japan and China showed signs of slowing. In platinum’s case, there were excess stocks available to the market, which have built up since the financial crisis, and these served to offset supply disruption from South Africa. Platinum The platinum price declined by 6% year-on-year to average US$1 384/oz in 2014. The price started the year in the mid-US$1 300s, and increased to trade largely between US$1 400/oz and US$1 490/oz for the duration of the strikes in the platinum sector. Platinum peaked at US$1 511/oz in early July, before weakening to end the year below US$1 200/oz, which despite a depreciating rand is less than the breakeven price for a number of South African operations. Market liquidity Stocks immediately available to market that have mainly built up since the financial crisis are estimated at 2.6Moz at the end of 2014. These stocks exclude the working inventories for demand applications and ETF holdings and are thus considered as a minimum of what the market needs to absorb to motivate higher prices. Market outlook Global platinum demand excluding investment is forecast to rise by just over 4% in 2015 to 8.2Moz, with automotive demand projected to increase by 130koz to 3.3Moz (excluding non-road). The majority of automotive growth comes from Europe, as tighter emissions legislation and higher platinum loadings largely offset lower demand from Japan. Platinum recycling is forecast to grow by over 8%, and this may dampen net demand growth, particularly as more highly loaded platinum diesel catalysts are scrapped in Europe. A weaker macroeconomic environment and a stronger dollar point to platinum prices remaining relatively flat throughout 2015, at less than US$1 300/oz, and if the rand continues to weaken against the US dollar, dollar denominated prices could be even lower. The long-term outlook indicates that the current recycling wave will peak in a

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couple of years, demand will continue to grow steadily and the lack of expenditure generally in primary supply will limit supply growth. Palladium The deficit in the palladium market is estimated to have widened to 1.75Moz in 2014, excluding producer stock sales and the allocation of metals to ETFs. Global ETFs absorbed a net 940koz of additional metal in 2014. Prices peaked at US$910/oz in September but along with a commodity-wide sell-off and dollar strengthening, prices fell to US$804/oz by year end. This reflects the availability of stocks to meet market requirements for now. Market outlook A structural market deficit is forecast to persist, which should lead to synchronously higher prices as stocks deplete. However, as said, the market is currently well stocked and macroeconomic headwinds in 2015 could lead to a dip in prices in the near term. Automotive palladium requirements are forecast to rise to around 80%, as a percentage of total demand, with China expected to show the highest demand growth. This should lift prices towards US$1 000/oz in the medium term, unless there is a technological shift in end-use and further substitution. Rhodium The average rhodium price increased by almost 10% to US$1 173/oz in 2014, partly attributable to a drop in primary supply. Gross demand excluding investment increased by 3.8% year-onyear, to breach 1Moz for the first time since 2008. Industrial demand, net of recycling, decreased by 4.5% year-onyear to 150koz, although demand for autocatalysts has improved by 5.5% year-on-year, net of recycling. With a substantial drop in supply, this means fundamentals switching to a deficit in 2014, but the industry remains well stocked for now and price pressure is limited in the near term.

Outlook In the short to medium term our focus will remain on achieving operational excellence in our core business of mining BRPM, improving safety, maintaining productivity and containing costs. The expansion of the Joint Venture concentrator, which will process the ore from both BRPM and Styldrift I, will be completed in the first half of 2017 and it is expected to start processing ore from Styldrift I in the third quarter of 2015. Our biggest challenge in the short term, in terms of organic growth, is achieving the milestones we have set ourselves for the Styldrift I project in order to start ramping up production in the first quarter of 2016 and achieving steady state by the first quarter of 2019. The results of the Styldrift II pre-feasibility, which was presented to the Board in February 2015, indicated a very good business case for proceeding with the feasibility study, which the Board has approved. Developing new opportunities for platinum During 2014 the platinum industry joined forces to find new ways to develop a global market for platinum investment. The result of these discussions was the launch of the World Platinum Investment Council (WPIC) in November 2014. RBPlat is one of six

platinum producers funding the Council, which include Anglo American Platinum, Aquarius Platinum, Impala Platinum Holdings, Lonmin and Northam Platinum. WPIC’s mission is to to help investors make better informed decisions regarding physical platinum. WPIC believes that presenting the platinum investment proposition to a wider range of investors will in future result in platinum being considered favourably as an investment. It is not, for instance, well known that platinum has performed well as an investment asset over the past 20 years.

Outstanding issues of concern to our industry While our industry has long been concerned with the environmental and social impacts of its activities society is now calling for its members to go further than this to ensure that their activities deliver a net positive contribution in the long term. This approach will involve considering how all the implications of mining touch both people and the environment over both the short and long term. It is a tougher challenge than simply considering environmental and social impacts and their mitigation, however, it is a fairer approach as it will take into account the full range of benefits, costs and risks resulting from mining and metals production over time.

Currently, a key issue of concern to our industry is the uncertainty regarding water and electricity supplies for our operations. The need to reconfirm who has a constitutional obligation for communities and who has a secondary and supporting responsibility for them, and to re-establish the partnership between government and the private sector, remains an outstanding issue that has still not been addressed. Last year I spoke about the uncertainty regarding the regulatory environment for South African mining companies. This uncertainty, which is unfortunately still with us, remains a deterrent to investment in our industry. Hopefully, a win-win solution will be found during 2015, regarding the sections of the Mineral and Petroleum Resources Development Act (MPRDA) in dispute.

In conclusion I have already thanked RBPlat’s management, our employees and the union representatives for their contribution to our achievements this year. I look forward to working with them to achieve even more in 2015. My thanks go to our communities for working in partnership with us to ensure the stability of our operations. I would also like to thank our Joint Venture partners for their support.

Three Board members resigned this year. First of all, I would like to recognise the contribution of Nico Muller, who was Chief Operating Officer of RBPlat from March 2009 to September 2014, made to our journey towards operational excellence. In particular I would like to recognise his foresight in building flexibility in RBPlat’s operational performance. I would also like to thank David Noko and Francis Petersen, who served as nonexecutives on our Board from its inception in 2010, for their valuable contribution to our deliberations.

Steve Phiri

Chief Executive Officer

Styldrift I, which is currently under construction

Market outlook Medium-term production growth for rhodium is more constrained than for platinum and palladium as a significant proportion of rhodium-rich UG2 capacity has been closed out since 2008. Depletion of existing assets will see global output start to decline from 2018, and combined with a slow rate of net demand growth, this should keep the rhodium market in a narrow deficit for the next five years. The rhodium market for 2015 is expected to remain close to balance. Royal Bafokeng Platinum Integrated Annual Report 2014

59

OUR PERFORMANCE AGAINST THE CAPITALS

FINANCIAL CAPITAL CONTINUED

RBPlat’s concentrator plant

OUR PERFORMANCE AGAINST THE CAPITALS

FINANCIAL CAPITAL

PERFORMANCE

ACHIEVEMENTS Significant

cash generated

OVERVIEW

64

FINANCIAL SUMMARY AND STATISTICS

67

OUTLOOK

71

by operations Successful

R1.5 billion equity raising Successful

implementation of Phase I of the employee home ownership scheme

IMPROVEMENTS Cost management reporting

CHALLENGES PGM market conditions Tax dispute relating to 2008 and 2009 assessments

DISAPPOINTMENTS US dollar

metal price performance

60

Royal Bafokeng Platinum Integrated Report 2014

R1.4 billion in cash generated by our operations

Royal Bafokeng Platinum Integrated Report 2014

61

OUR PERFORMANCE AGAINST THE CAPITALS

FINANCIAL CAPITAL CONTINUED

Key financial capital material issues Key material issues in 2014

Key performance indicators that were our focus for 2014

What we achieved in 2014

Focus for 2015

> The confidence our shareholders have in RBPlat was demonstrated through their support for our capital

> Raise equity as part of the funding strategy for the Styldrift I project

> Successfully raised R1.5 billion of equity as part of our funding plan for Styldrift I project

> Start negotiations around term debt to complete funding strategy for Styldrift I project

> Viable proposals from six financial institutions for R3 billion term debt facility

> Finalisation of R3 to R4 billion debt facilities for Styldrift I project

> Actual percentage increase in the wage bill

> Successfully finalised new wage agreement consisting of two phases over five years

> Implementation of wage agreement and continuing to foster a mutually beneficial relationship with our workforce

> Effective stakeholder engagement measured by response of investors

> Periodic communication with investor community including annual and interim results presentations, quarterly updates, road shows and one-on-one meetings

> Ongoing stakeholder engagement, particularly investor relations

> Production lost to safety stoppages

> 79kt lost due to safety stoppages

> Continue with our efforts to improve our safety performance

> Project team to finalise operational cost implications in respect of new ramp-up profile for Styldrift I in light of the challenge experienced relating to the constraints of the Services shaft

> Impact assessed and communicated to market in third quarter 2014 (refer to page 88 of Manufactured capital for details of the results of the assessment)

> Continue to build flexibility in the funding model – term debt now only required in 2016. Will finalise solution during 2015

> Embedding cost containment as part of the way we work

> Contained costs below mining inflation

> Improving our reporting systems so that we can make informed business decisions as quickly as possible

> The implementation of the SAP business planning and control (BPC) software system, which will allow us to monitor and manage our cost performance on a daily basis, is almost complete. Currently running in parallel with existing Ess-base management accounting system to test accuracy

> Reporting including new management accounting system, (business planning and control (BPC)) and integrated report

raising programme

>

Improved funding flexibility to ensure availability of the capital required to fund the Stydrift I project and related processing solution

> Impact of

>

new wage agreement on costs

Transparent and accountable communication with the investor community

> Impact of

safety stoppages on revenue

> Impact of delay in ramp-up cash flow and repayment of debt

>

of Styldrift I on

Containing our costs and implementing SAP business planning consolidation (BPC) cost management system to improve business planning processes and management reporting

> Further increase our control of budgets in order to drive cost efficiencies

> Stabilise and optimise the SAP BPC system to further improve our cost management systems and controls > Maintain a strong cost containment focus

>

Global

economic and PGM market

conditions

> Operate in a sustainable manner which will help us maintain healthy margins, provide returns to our shareholders and allow us to repay our future borrowings

> Excellent cash generation

> Cash and liquidity management of the business (treasury management system)

> A number of possible mergers and acquisitions have been investigated but none have as yet been concluded

> Implemented treasury management system which allows us to better manage our cash

> Continue to take action to reduce any possible negative impacts > Use ability to predict economic and PGM market conditions to help us manage our business in a challenging environment

> Continue to evaluate mergers and acquisitions opportunities Supply chain issues: > Meeting our Mining Charter

targets

>

HDSA procurement

Hedging strategy for acquisition of Styldrift fleet equipment

> Focus on increasing our preferential spend with historically disadvantaged South Africans (HDSAs) and local suppliers using our enterprise development programme

> 68.13% of discretionary procurement was from HDSAs*

> Through the foreign exchange risk management system, we will receive US$ instead of ZAR for the BRPM Joint Venture concentrate sales to Rustenburg Platinum Mines (RPM) which will allow us to hedge the purchase of equipment for Styldrift I payable in euro. The intention is to hedge the euro against the US$ which is more cost effective than hedging the euro against the ZAR due to less volatility between the US$ and euro

> Opened a customer foreign currency (CFC) account to receive US$ and acquired necessary approvals and facilities for the hedging arrangements

> Meet and exceed our Mining Charter HDSA procurement targets > Continue with our efforts to build capacity in local HDSA businesses > Hedging of US$ against euro for euro purchases of equipment for Styldrift I once delivery schedules have been finalised by project team

* These key performance indicators have been assured (See page 187 for the assurance statement)

62

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

63

OUR PERFORMANCE AGAINST THE CAPITALS

FINANCIAL CAPITAL CONTINUED

Exchange rate (ZAR)

Share price performance

150

12.0 10.5%

11.5

130

11.0

110 9.5%

10.5

90 10.0 30.6%

70 9.5

Platinum index

RBPlat share price performance

December 2014

November 2014

October 2014

September 2014

August 2014

50 July 2014

We embarked on a request for proposal process with financial institutions during 2014. Viable proposals were received from six financial institutions to fund R3 billion in term debt, with funding/ underwriting commitments ranging between R1 billion and R3 billion each. Due to the delay in the ramp-up of Styldrift I production and the

June 2014

SOUTH AFRICAN REVENUE SERVICES

Price (Rebased to 100)

May 2014

PROVIDERS OF DEBT

The third party recognition we received for our integrated reporting when our report was placed first in the EY Integrated Reporting Awards for 2014 and won the Mid Cap section of the Chartered Secretaries and JSE integrated reporting awards confirmed to us that we are doing the right things in terms of our efforts to operate our business in an integrated manner.

RBPlat’s share price outperformed the platinum index despite having lost 9.5% compared to the 30.6% erosion in the performance of the platinum index. At the same time the rand depreciated 10.5% against the US$.

April 2014

JOINT VENTURE PARTNERS

Our raising of R1.5 billion equity capital for the Styldrift I project included an accelerated bookbuild offering to qualifying investors and a rights offer to qualifying RBPlat shareholders. The bookbuild was significantly oversubscribed and in light of very strong demand, it was upsized to R700 million. In all, 11 290 323 new ordinary shares were placed with qualifying institutional investors at a price of R62 per bookbuild share. Following the bookbuild 99.7% of the rights offer shares offered to qualifying RBPlat shareholders were subscribed for and excess applications resulted in the rights offer being 4.47 times oversubscribed, resulting in the full R800 million being successfully raised.

RBPlat’s financial results for 2014 reflect the benefits of the stability we achieved in the sea of turmoil created by the five-month strike in the platinum industry during 2014.

RBPlat’s share price performance compared with that of the platinum sector

March 2014

INVESTOR COMMUNITY

Following the equity capital raise, which resulted in our free float increasing to 35.9%, we have seen an increase in the liquidity of trade in our shares.

February 2014

Our shareholders’ support for our capital raising programme in March/April 2014 was a clear indication of their confidence in RBPlat and its ability to deliver against its organic growth strategy. It was particularly pleasing in view of the tough times the platinum industry experienced during the five-month strike in 2014.

January 2014

Overview

9.0

Exchange rate

1 864.2 1 478.5

1 280.6

Royal Bafokeng Platinum Integrated Report 2014

6.6 Issue of ordinary shares (Net of costs)

Increase in housing facility

Costs relating to rights followed on treasury shares

Concentrator upgrade

Expansion capex

Replacement capex

SIB capex

concomitant delay in capital expenditure, we estimate that we will now only require term debt funding in 2016. We have therefore temporarily suspended our term debt raising process until the second half of 2015.

by providing us with an integrated view of our bank accounts and investments, has enhanced the effectiveness of our cash management.

Our cash flow generation once again exceeded all our expectations, funding R1 426.5 million (85.1%) of our total Group capital expenditure for the year of R1 675.6 million, including the R1 280.0 million invested in the Styldrift I and II projects. This left the Group with a cash or near cash balance of R1 864.2 million at year end.

While we were able to achieve substantial cost reductions in 2013, we knew that it was unlikely that we would be able to maintain the same level of cost reduction in 2014. Despite an 11.8% increase in our fixed costs we were, however, able to keep our unit cost increases below mining inflation. I would refer you to the industry cost curve on page 23, which provides a benchmark for RBPlat’s cost performance in terms of our industry.

During 2014 we introduced a new treasury management system which,

Geographical spread of free float of our shareholders as at 31 December 2014

10.7%

Containing costs 7.9%

11.6%

69.8%

South Africa United Kingdom North America Others

Cash and cash equivalents including near cash investments – 31 Dec 2014

411.4

RBPlat

64

138.2 6.4

577.9

36.5 For details of the governance RBPlat has put in place regarding the funds shareholders have entrusted to us see page 166 of the Governance section of this report.

195.0

0

Cash and cash equivalents including near cash investments – 1 Jan 2014 Cash generated by operating activities

500

Employee housing assets

1 000

772.9

R (million)

1 500

1 452.8

1 426.5

2 000

204.1

154.4

Cash flow analysis

BRPM JV

Royal Bafokeng Platinum Integrated Report 2014

65

OUR PERFORMANCE AGAINST THE CAPITALS

FINANCIAL CAPITAL CONTINUED

Financial summary and statistics

Our supply chain value model Respond to the business needs

Define business needs

RBPlat business strategy

Procure supplies

Inbound logistics

Material handling

Service delivery

On time + In the right quantities + In the right place Facilitated by:

Supplier relationships management + Cross functional cooperation + Communication Underpinned by

> > > >

Supply chain competence Service level agreements Customer/supplier orientation Benchmarking

Our effective management of costs and our solid operational performance, combined with the assistance of a weak rand, resulted in a significant improvement in RBPlat’s financial performance in 2014.

Delivering against our social and labour plans (SLPs) During 2014 we honoured our social licence to operate by successfully completing and exceeding our commitments in terms of our SLPs for the period 2010 – 2014. We have exceeded our targets for discretionary procurement from HDSA businesses, which is an important part of our Mining Charter commitments, since 2011.

2014 R (million)

2013 R (million)

2012 R (million)

3 767.5 (2 902.2)

3 251.1 (2 650.1)

2 865.3 (2 525.5)

15.9 (9.5)

Gross profit Other income Administrative expenses Net finance income

865.3 25.2 (137.3) 91.3

601.0 77.5 (105.0) 39.0

339.8 66.9 (101.7) 56.3

44.0 (67.5) (30.8) 134.1

Profit before tax Taxation Non-controlling interest

844.5 (245.7) (157.9)

612.5 (164.7) (163.6)

361.3 (85.6) (105.4)

37.9 (49.2) 3.5

440.9 440.9 239 506.9

284.2 283.9 173 348.4

170.3 170.3 104 233.2

55.1 55.3 38.2 45.5

274

212

142

29.3

164 319 791 1 008.0

163 960 709 633.8

12.5 18.0

9.65 10.47 17 927 18.5 31.0

8.21 8.47 16 404 11.9 22.1

12.4 10.5 10.7 24.3 1.9

Revenue Cost of sales

Source supplies

> Information systems and technology

> Facilities and equipment

Supply chain management Supply chain management plays an important role in containing our costs. Having stabilised our supply chain in 2013, our focus for 2014 was on making our procurement processes as efficient as possible. This involved analysing our existing procurement processes to find areas where we could improve these processes and contain costs. RBPlat’s strategic sourcing function managed to realise significant cost savings by successfully renegotiating contract pricing and implementing our total cost of ownership supply chain strategy. By implementing a labour control system using SAP, which allows us to check the accuracy of invoicing by

volume contractors, we now have much better control of a major cost area for RBPlat. A major task the supply chain team undertook this year was the codifying of all the items we stock to eliminate duplication and ensure efficient buying that also helps us to categorise spend and improve reporting and decision-making. Our supply chain team demonstrated great flexibility and agility when called upon to take over all key supply contracts from the main contractor at Styldrift I as a matter of urgency. This exercise, involved registering new suppliers on our system, signing contracts with them, verifying their information, which included checking that they comply with our policies on labour practices and environmental management. In total we have taken over 197 supplier contracts from the main contractor.

Headline earnings 2014 vs 2013 % change

Profit attributable to owners of the Company Headline earnings Headline earnings per share (cents) Normalised headline earnings* Normalised headline earnings per share (cents)*

Weighted average number of ordinary shares in issue for earnings per share 184 797 002 EBITDA** 1 189.4 Average annual R:US$ exchange rate 10.85 Closing R:US$ 11.57 Average basket price (R/Pt oz)*** 19 842 Gross profit margin (%) 23.0 EBITDA margin (%)** 31.6 Statement of cash flows Cash generated by operating activities Capital expenditure (100% BRPM) Cash, net of debt (including preference share investment) RBPlat share performance on the JSE Ordinary shares (cents/share) – High – Low – Year end Volume of shares traded Number of shares issued outside the Group at year end

1 426.5 1 723.5

907.8 1 058.8

732.6 1 192.3

57.1 62.8

1 864.2

772.9

910.5

141.2

The Group’s headline earnings increased by R157 million from R283.9 million in 2013 to R440.9 million in 2014. This increase reflects the improvement in our PGM rand basket price and cost saving initiatives implemented in 2014. Our headline earnings per share for 2014 of 239 cents are 38.2% higher than the 173 cents per share reported in 2013.

Revenue Our revenue of R3 767.5 million for 2014 was 15.9% higher than the R3 251.1 million for 2013. The increase is due to a 9.7% increase in our rand basket price and a 5.2% increase in 4E production volumes. The base metal content of the Merensky reef makes a valuable contribution to our rand basket price. Revenue from production through the BRPM concentrator increased by 13.4% from R2 944.7 million to R3 339.6 million. The 2014 revenue number included R5.6 million (2013: R11.9 million) generated from the on-reef development from Styldrift I project. Revenue from toll concentrating of UG2 increased by 39.7% from R306.4 million in 2013 to R427.9 million in 2014 due to a 26.3% increase in toll production volumes and an increase in the rand basket price.

Gross profit 7 690 4 740 5 271 45 595 706

6 499 4 201 5 900 37 834 520

6 749 4 374 5 750 24 529 533

18.3 12.8 11.3 20.5

189 897 794

164 459 662

164 150 804

15.5

*

Normalised headline earnings are based on headline earnings adjusted for fair value depreciation, amortisation and tax thereon

**

The Company utilises certain non-IFRS performance measures and ratios (ie EBITDA) in managing the business and that may provide users of the financial information with additional meaningful comparisons between current results and results in the prior periods. Non-IFRS financial measures should be viewed in addition to, and not as an alternative for, the reported operating results or cash flow from operations or any other measure of performance prepared in accordance with IFRS. In addition, the presentation of these measures may not be comparable to similarly titled measures used by other companies

*** Net proceeds from total concentrate sales including revaluation of pipeline divided by total platinum ounces produced

Our gross profit margin improved significantly from 18.5% in 2013 to 23.0% in 2014. This was due to a 15.9% increase in revenue which was offset by a 5% increase in cost of sales. This limited increase in the cost of sales was as a result of our continued focus on cost management in 2014.

Cash operating costs BRPM’s average cash unit cost per tonne milled increased by 4.0% from R920 per tonne milled in 2013 to R957 per tonne milled in 2014. The cash unit cost per platinum ounce increased by 8% from R11 592 to R12 463 per platinum ounce produced. The BRPM JV remains at the lower end of the industry cost curve.

Please refer to pages 126 to 131 for details of our SLP delivery and page 134 for details of our discretionary procurement.

66

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

67

OUR PERFORMANCE AGAINST THE CAPITALS

FINANCIAL CAPITAL CONTINUED

Summarised statement of financial position

Headline earnings variance analysis 900

+144.6 controllable

+12.4 uncontrollable

1.6

202.2

5.7

81.0

173.0

577.9

2012 R (million)

Non-current assets

19 960.5

18 558.4

17 947.0

7.6

Property, plant and equipment Mineral rights Goodwill Environmental trust deposit Deferred tax asset Employee housing

10 889.5 6 518.4 2 275.1 113.6 27.6 136.3

9 567.9 6 583.7 2 275.1 106.8 24.9 –

8 899.2 6 645.0 2 275.1 103.1 24.6 –

13.8 (100) – 6.4 10.8 100.0

3 543.4

2 259.1

2 154.4

56.9

1 679.2

1 486.2

1 243.9

13.0 141.2

Current assets

400

300

2013 R (million)

Accounts receivable, inventories and other Cash and cash equivalents (including preference share investment)

52.2

147.7

3.8

500

95.7

32.4

600

R (million)

52.0

386.0

700

43.1

85.6

800

1 864.2

772.9

910.5

Total assets

23 503.9

20 817.5

20 101.4

12.9

Total equity Non-current liabilities

18 196.3 4 574.9

15 986.3 4 331.6

15 480.6 4 175.1

13.8 5.6

4 486.7 88.2

4 262.0 69.6

4 112.6 62.5

5.3 26.7

Deferred tax liability Long-term provisions

440.9

Current liabilities Total equity and liabilities

732.7

499.6

445.7

46.7

23 503.9

20 817.5

20 101.4

12.9

The base metal content of the Merensky reef makes a valuable contribution to our rand basket price

Sales volumes

200 283.9

Sales volumes 2014 2013

Headline earnings – 2014

Non-controlling interest

Net increase in tax expenses

Costs – mining inflation

Increase in depreciation

Other income

Revenue – revaluation of pipeline

Revenue – metal prices

Revenue – exchange rate

Costs – increase due to increase in tonnes milled

Increase in finance income

Increase in admin expenses

Cost saving initiative benefits

Movement in inventory

Revenue – sales volume

Headline earnings – 2013

195.0

275.6

100

0

2014 vs 2013 % change

2014 R (million)

Platinum Palladium Gold Rhodium Iridium Ruthenium Nickel Copper

Pt oz 189 710 Pd oz 78 555 Au oz 8 841 Rh oz 16 974 Ir oz 5 605 Ru oz 28 882 Ni t 1 854 Cu t 1 180

181 351 74 009 8 771 15 431 5 062 26 232 1 822 1 171

2012

174 665 72 007 8 761 14 488 4 813 24 858 1 875 1 175

US$ average price achieved* 2014 2013 2012 1 346/oz 832/oz 1 259/oz 1 207/oz 556/oz 61/oz 7.65/lb 3.11/lb

1 418/oz 719/oz 1 309/oz 977/oz 642/oz 64/oz 6.47/lb 3.21/lb

1 552/oz 649/oz 1 672/oz 1 143/oz 1 037/oz 92/oz 7.68/lb 3.50/lb

* Grossed up to 100% from amount received in terms of the disposal of concentrate agreement, excludes pipeline revaluation

The thickener and conveyor belt at RBPlat’s concentrator, which is currently being upgraded to meet the requirements of the Company’s organic growth

68

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

69

OUR PERFORMANCE AGAINST THE CAPITALS

FINANCIAL CAPITAL CONTINUED

Contribution to revenue per metal in 2014

Contribution to revenue per metal in 2013 0.3%

0.4%

%

%

6.9%

8.1%

4.0

5.1

2.2%

0.4% 0.8%

2.0%

0.4% 0.8%

3.0

%

2.8

%

14.2% 16.4%

64.0% 68.2%

Pt Pd Au

Rh Ir Ru

Ni Cu Co

Social and labour plan (SLP) expenditure Total SLP expenditure for 2014 amounted to R133.0 million of which R110.3 million was expensed and R22.7 million was capitalised to the Styldrift I project. This is 26.4% higher than the 2013 SLP spend of R105.2 million.

Pt Pd Au

Rh Ir Ru

Ni Cu Co

Earnings before interest, tax, depreciation and amortisation (EBITDA) EBITDA as a percentage of revenue increased from 31% in 2013 to 31.6% in 2014 as a result of increased revenue and our continued focus on cost management performance.

Finance income Other income Other income decreased by 67.5% from R77.5 million in 2013 to R25.2 million in 2014. The decrease is mainly due to the reduction in the royalty income from Implats as a result of industrial action at Implats during the first five months of 2014.

Administrative costs Administration costs increased by 30.8% from R105.0 million in 2013 to R137.3 million in 2014. The increase was mainly due to: > R14.0 million relating to the RBPlat employee home ownership scheme > R1.6 million relating to legal fees in respect of the RBR tax contingency (refer Note 20.5 in the financial statements for further detail) > R4.3 million more gross bonuses paid in 2014 compared to 2013 as a result of improved profitability.

70

Royal Bafokeng Platinum Integrated Report 2014

Finance income increased by 125.8% from R42.7 million in 2013 to R96.4 million in 2014 due to the increased cash on hand as a result of the bookbuild and rights offer completed in April 2014.

Finance costs Finance costs increased from R3.7 million in 2013 to R5.1 million in 2014 mainly due to R1.1 million interest paid on the RBPlat housing facility.

Taxation Current income tax increased by 51.9% from R15.6 million in 2013 to R23.7 million in 2014 mainly due to the increase in taxable income as a result of increased interest income. Deferred tax increased by 48.9% from R149.1 million in 2013 to R222.0 million in 2014 due to increased BRPM JV profits. In our 2013 integrated report we advised that we had received a revised tax assessment from SARS for Royal Bafokeng Resources (RBR) for the years 2008, 2009 and 2010, amounting to R437.5 million, made up of income tax,

penalties and interest. Senior counsel has been engaged to advise on this issue. We have lodged an objection against these assessments and an application to suspend payment in terms of Section 164(2) of the Tax Administration Act. After SARS disallowed RBR’s objection, RBR lodged a Notice of Appeal in November 2014. Based upon independent advice and consultation to date, RBR remains confident that it has a reasonable prospect of successfully defending the matter.

employees paying a preferential interest rate of CPI + 1%, the fair value may differ from the transaction price. The Group therefore determined a market related rate for the financial asset based on an average credit profile per band of employees to determine the effective interest rate for this receivable. The Group recognises the difference between the fair value at initial recognition and the transaction price as a short-term employee benefit.

Accounting treatment of housing assets for the RBPlat Group

The financial asset receivable from the employee is accounted for at amortised cost (recognised at fair value on initial recognition and transaction cost) using the appropriate effective interest rate as determined above.

An aligned and stable workforce is key to achieving business stability. We believe that facilitating long-term wealth creation for our employees is integral to achieving this alignment and stability. The 422 three-bedroomed employee housing development that we completed during 2014 represents a significant step towards our objective of creating long-term wealth for our employees. Because the development of large-scale employee housing brings a new dimension to our business this year we have detailed the accounting treatment of this part of our business in the section that follows. Employee housing assets Employee housing assets are recognised at cost which consists of the cost of the land and the cost to construct the houses, and are classified as current assets as these houses are held primarily for purpose of trading. No depreciation is recognised on the employee houses as the intention is to sell the houses within a short period of time after their construction. When the employee housing assets are sold to employees, the carrying amount of the house is derecognised. The difference between the proceeds received and the carrying amount of the house is recognised in profit and loss as a gain or loss on disposal of employee housing. Financial asset – receivable from employees for housing assets Initial recognition When the employee housing assets are sold to employees, the Group will recognise a financial asset receivable from the employee at fair value. The best evidence of the receivable’s fair value on initial recognition is the transaction price. However, due to the

Subsequent measurement

For the financial asset receivable from the employee, the portion to be realised within 12 months from the reporting period is presented as part of current assets. The balance of the amount is presented as a non-current asset in the statement of financial position. Short-term employee benefit The recognition of the initial difference is amortised over the shorter of the service period of the employee or the loan period. If the employee’s service period differs from the initial expectation on occupation date, the change in expectation is recognised as a profit or loss in the statement of comprehensive income. The portion of the short term employee benefit to be realised within 12 months from the reporting period is presented as part of current assets, the balance of the amount is presented as a non-current asset in the statement of financial position. Income recognition Interest income is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period of maturity, when it is probable that such income will accrue to the Group. The effective interest rate for this receivable from employees for housing assets is based on a market related interest rate based on an average credit profile per band of employees. Levy income is recognised on an accrual basis as it is invoiced every month and is classified as other income for the Group.

Cash position During the year the Group increased its cash and cash equivalents by

R1 091.3 million. This increase is mainly due to R1 478.5 million (net of costs) raised by the bookbuild and rights offer completed during the first half of 2014. Cash generated by operations increased from R482.7 million in 2013 to R1 358.5 million in 2014. At 31 December 2014 the RBPlat Group had cash and near cash investments of R1 864.2 million (2013: R772.9 million).

Dividend policy As previously indicated, we are likely to pay our first dividend when Styldrift I achieves steady state production.

Outlook During 2015 our operational focus will remain on cost management, containment and control. Capital expenditure on Styldrift I will continue to increase as we complete and commission the Main and Services shafts and develop and equip the mine. In this regard, we will be developing a hedging strategy to manage the cost of imported equipment for Styldrift I that we will be purchasing in euros in 2015. Our average basket price for 2014 was R19 842 with a low of R18 091 and a high of R21 224 compared with an average for 2013 of R17 927. Current spot ranges between R18 300 and R19 000 per platinum ounce. We anticipate that the rand revenue basket for 2015 will be relatively flat. We expect the rand to remain at similar weak levels to those we experienced in 2014 and we also expect metal prices to remain relatively flat. This combination is likely to result in our average revenue basket for 2015 being fairly similar to what we achieved in 2014. Once Styldrift I reaches steady state early in 2019 RBPlat will be able to generate very strong cash flows from both BRPM, which has a life span of more than 20 years, and Styldrift I with a life span of around 50 years. We are therefore comfortable that should the Board in future take the decision to go ahead with Styldrift II, we would be in a position to pay dividends and fund a substantial portion of the Styldrift II project from internal cash flow. RBPlat is steadily progressing through the normal business life cycle from initial set up, through the formative years to the sustaining, optimising and improvement phase. The challenge for us as a business during this next phase is not to lose our nimbleness, drive towards simplicity and the ability to act decisively and pragmatically. Royal Bafokeng Platinum Integrated Report 2014

71

OUR PERFORMANCE AGAINST THE CAPITALS

FINANCIAL CAPITAL CONTINUED

Wealth creation

Suppliers of materials Suppliers of services Suppliers of corporate office services and goods Employee housing assets Capital expenditure Employee housing assets Broader community Social Social Social Other

labour plan – HRD expenditure expensed labour plan – CED expenditure expensed labour plan – CED expenditure capitalised (sponsorships and administration)

Total value distributed Retained by Group Depreciation and amortisation Deferred tax Profit on remeasurement of previously held interest in BRPM retained by the Group Utilisation of shareholder funds for capital investment

72

Royal Bafokeng Platinum Integrated Report 2014

2.9%

3.4%

.2%

29.2%

1 181.7

1 145.7

5.1%

541.9 883.8 21.8 – (157.2) (10.0) (8.9)

489.0 773.3 35.8 21.2 (121.9) (7.9) (7.8)

478.4 753.1 43.6

4.5%

(114.6) (7.8) (7.0)

68.0

60.5

61.9

70.4 19.5 (21.3) (0.1) (0.5)

61.3 18.1 (18.2) (0.1) (0.6)

55.5 24.1 (16.9) (0.1) (0.7)

208.4

179.4

171.1

16.5 191.9

15.1 164.3

14.6 156.5

234.3

183.1

174.1

23.7 – 12.6 178.5 10.1 9.4

15.6 – 10.9 140.2 8.0 8.4

17.4 – 9.6 131.5 7.9 7.7

157.9

163.6

105.0

157.9 – –

163.6 – –

105.0 – –

450.3 248.7 45.1 138.2 1 675.6 138.2 133.1

365.2 254.6 24.6

407.6 203.7 22.1

1 036.6 – 105.2

1 173.9 – 126.9

86.3 24.0 22.8 –

76.0 15.0 14.2 –

81.6 45.3

4 631.1 (753.8)

3 554.5 (188.2)

3 592.0 (606.2)

436.2 222.0 – (1 412.0)

434.5 149.1 – (771.8)

327.6 69.1 – (1 003.0)

5.2%

5.0%

% 3.0

34.8%

28.8%

Capital expenditure Employees and contractors Utilities

Utilities Government Suppliers Capital providers Broader community

Net asset value per share

12 000

9 082

70.0

Market capitalisation

10 593

80.0

Government Suppliers Capital providers Broader community

10 000 60.0 50.0 40.0

2012

2013

10 947

Capital expenditure Employees and contractors Employee housing assets

9 799

Non-controlling interest Dividends Finance cost

1 271.4

18

36.2%

9 519

Providers of capital

2 985.8

R (million)

Mining and non-mining income tax (excludes deferred tax) STC Royalties Pay-as-you-earn deducted from employees UIF SDL

3 366.3

72.8

Government

3 877.3

72.2

Magalies Water Eskom

64.2 56.3

68.9

Water and electricity providers

76.2 39.0

66.9

Salaries and wages including retirement benefit funds and health-care funds Share-based payment expense Pay-as-you-earn deducted UIF SDL

18.5 91.3

Wealth creation – 2013

Wealth creation – 2014

R/share

Corporate office employees and non-executive directors

2 865.3 2 865.3 4.6%

Contractor payments Salaries and wages including retirement benefit funds and health-care funds Share-based payment expense Retrenchment payments Pay-as-you-earn deducted UIF SDL

3 251.1 3 251.1

.1%

Total value added Value distributed Employees and contractors of BRPM

3 767.5 3 767.5

16

Add: Other income Add: Net finance income

2012 R (million)

3.0%

Revenue Value added by operations

2013 R (million)

70.2

2014 R (million)

8 000

6 000

30.0 4 000 20.0 2 000

10.0 0.0

2010

2011

2012

2013

2014

0

2010

2011

2014



Royal Bafokeng Platinum Integrated Report 2014

73

OUR PERFORMANCE AGAINST THE CAPITALS

MANUFACTURED CAPITAL CONTINUED

OUR PERFORMANCE AGAINST THE CAPITALS

MANUFACTURED CAPITAL

OUR KEY MANUFACTURED CAPITAL STAKEHOLDERS

80

OVERVIEW

81

OPERATING RESULTS

82

PROJECTS

87

OUTLOOK

91

PERFORMANCE Strong operating performance as a result of stable operations

ACHIEVEMENTS > > > >

7% increase in tonnes delivered 8% increase in tonnes milled 5% increase in 4E and Pt metals in concentrate produced Unit cost increases kept below mining inflation – 4% increase in cost per tonne milled – 7% increase in cost per 4E ounce

IMPROVEMENTS > 13% improvement in lost time injury frequency rate (LTIFR) > Labour efficiencies: – 5% increase in stoping crew efficiencies – 5% increase in tonnes milled per employee

CHALLENGES Surface construction work at Styldrift I

> 9% increase in serious injury frequency rate (SIFR)

DISAPPOINTMENTS > Two fatal accidents at our operations > Six-month delay in planned stoping ramp-up at Styldrift

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Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

75

OUR PERFORMANCE AGAINST THE CAPITALS

MANUFACTURED CAPITAL CONTINUED

Key manufactured capital material issues Key material issues in 2014

Key performance indicators that were our focus for 2014

What we achieved in 2014

Focus for 2015

Towards operational excellence

>

Labour and trade union stability

> No industrial action in 2014 > Conclude new wage agreements > Delivery of Phase I of the employee home ownership scheme

> No production losses due to industrial action > Concluded new wage agreements with both enrolled and contractor employees > Successful completion of construction of the first phase of housing project in September 2014

> Maintain and enhance relationships between management, labour and union representatives > Work with organised labour to identify additional areas for collaboration > Initiate Phase II of housing project

>

Operating costs

> Keep year-on-year unit operating cost increases to below on-mine mining inflation (10.5%) by offsetting above inflation increases in labour, utilities and mining-related commodities through: – optimal alignment of labour complement with operational requirements – improving operational efficiencies (rand per tonne milled) – increasing ounce production (4E ounces produced) – further enhancing cost management systems – filling critical vacancies identified through operational needs analysis – square metres mined per stoping crew – tonnes milled per total operating employee (TEC)

> Additional supervisory labour (miner level) > Sweeping related labour signed on to address areas where shortfalls were identified > Square metres mined per stoping crew improved by 5% > Milled tonnes/TEC improved by 5% > 4E ounce production increased by 5% > Rand per tonne milled increased by 4% > Rand per 4E ounce increased by 7%

> Continue developing and refining: – Supply and procurement contracts – Cost responsibility and accountability – Cost management and reporting systems – Incentive reward schemes, which drive both safety as well as productivity improvements

>

Optimise long-term business strategy/ profitability

> Increase ounce production by maximising available mill capacity at both BRPM and Waterval toll concentrators > Maximise Merensky throughput at BRPM and supplement spare capacity with UG2 by increasing BRPM milled tonnes by 2% and increasing toll treatment milled tonnes by 2% > Increase concentrator 4E ounce production by 2% > Begin work on 250ktpm concentrator upgrade project in accordance with plan > Begin work on Styldrift overland conveyor construction as per plan > Continue with UG2 trial mining at South shaft with the intention of: – Identifying the most suitable mining method – Proving that a sustainable UG2 delivered grade can be achieved – Conducting trial mining on conventional, up-dip and pre-developed mining layouts – Achieving a sustained UG2 face grade of 4.6g/t (4E)

> BRPM milled tonnes increased by 5% > Toll concentrating tonnes increased by 26% > Upgrade of BRPM concentrator and construction of Styldrift overland belt commenced on schedule > Conventional breast and up-dip identified as the most suitable layouts > Trial mining face grades have consistently met the target of 4.6g/t 4E > 4E ounce production increased by 5%

> Continue work related to the revised 350ktpm concentrator strategy: – Complete 250ktpm upgrade at BRPM – Complete Styldrift overland conveyor – Complete feasibility studies for 100ktpm Merensky module

Market conditions are likely to remain depressed in the short to medium term negatively impacting on the profitability of companies, especially the UG2-only operations of the Bushveld Igneous Complex. RBPlat believes that the key to maximising its returns in this environment is to leverage its Merenskybiased resource while not compromising on flexibility. This will allow us to increase our UG2 production when market conditions are conducive to us doing so

> Continue with South shaft UG2 trial mining, while increasing the number of stoping crews to more closely simulate steady state operating conditions and test sustainability of the delivered grade > Complete 80ktpm UG2 concentrator feasibility study to ensure operational flexibility should market conditions improve

For details of our efforts to improve engagement with our employees see page 103 of the Human capital section.

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Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

77

OUR PERFORMANCE AGAINST THE CAPITALS

MANUFACTURED CAPITAL CONTINUED

Key material issues in 2014

Key performance indicators

What we achieved in 2014

Focus for 2015

> BRPM to have:

> > > >

> BRPM to have:

Build flexibility

>

Reserves available to support planned production rates

– immediately available ore reserves (IMA) of 22 months – immediately stopable reserves (IMS) of 6 months – developed ore reserves (DOR) of 16 months > BRPM current reserves: – Ensure working cost development rates are matched to stoping depletion rates > BRPM future reserves:

IMA = 22.5 months IMS = 8.5 months DOR = 14 months North shaft Phase III project ahead of schedule

– Ensure working cost development rates are matched to >

– North shaft Phase III Merensky replacement project is delivered on schedule –

>

IMS panel ratio to mitigate impact of geology and depletion to ensure sustainable production from both the Merensky and UG2 mining platforms

– IMA of 22 months – IMS of 6 months – DOR of 16 months > BRPM current reserves: stoping depletion rates BRPM future reserves:

– North shaft Phase III Merensky replacement project is

South shaft UG2 access and development will support a fast ramp-up should market conditions permit



> Maintain a combined IMS to stoping panel ratio of 1.5 or greater for the BRPM JV: – 1.5 for Merensky at North and South shafts – 1.5 for UG2 at North shaft – 2.0 for UG2 at South shaft

> Combined IMS ratio = 1.70

> Maintain capital discipline through regular review of all capital expenditure: – Capital spend in line with budget – Positive earned value

> Capital discipline: – Capital expenditure project to date (PTD) at R3.8 billion in line with budget – Earned value project to date = +R283 million > Project schedule performance (revised baseline): – Key milestones remain on target

– North shaft Merensky = 1.63 – –

South shaft Merensky = 1.48 North shaft UG2 = 2.40



South shaft UG2 = 2.08

delivered on schedule South shaft UG2 access and development will support a fast ramp-up should market conditions permit

> Maintain Merensky IMS ≥ 1.50 > Maintain UG2 IMS: – South shaft ≥ 2.0 – North shaft ≥ 1.5

Organic growth

>

Styldrift I project execution

> Execution of Styldrift I project to schedule and cost with particular focus on shaft sinking, equipping, lateral development and underground bulk infrastructure. Project schedule performance (revised baseline): – Meet key milestone targets – No slippage on critical path > Continue developing Styldrift operational readiness. Capacitate site management with appropriate resources, systems and strategic partnerships: – Engage ramp-up contractor to commence with technical scope alignment – Customisation of human resources, supply chain, mineral resource management, IT, engineering and security systems – Permanent office and warehousing facilities to be established > Reduce risk of sinking contractors business distress impacting on project progress by securing key: – construction and equipping assets – supply chain related contracts

>

78

Styldrift II

Royal Bafokeng Platinum Integrated Report 2014

> Continue with the pre-feasibility phase of this project with the aim of completing the pre-feasibility study by the end of the first quarter of 2015



Critical path = 0 day slippage

> Operational readiness: – Ramp-up contractor technical alignment well advanced –

Customisation in progress – all SAP-related systems fully integrated and functional



Permanent offices and warehousing facilities constructed and operational

> Risk reduction: – All key construction and equipping assets purchased June 2014 – RBPlat has taken control of all related supply chain contractors (197 in total) > Current study programme on track

> Maintain capital discipline through review of all related capital projects

> Execute as per revised Styldrift I project baseline schedule with particular focus on Main and Service shaft commissioning, lateral development and underground bulk infrastructure construction to support ramp-up and 250ktpm concentrator upgrade > Continue developing Styldrift operational readiness. Capacitate site with required resources (men, material and equipment), operational infrastructure (training centre, change houses, etc) and optimise systems

> Conclude agreements for contract mining

> Complete pre-feasibility study by end first quarter 2015

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OUR PERFORMANCE AGAINST THE CAPITALS

MANUFACTURED CAPITAL CONTINUED

Our key Manufactured capital stakeholders

DEPARTMENT: MINERAL RESOURCES

EMPLOYEES AND CONTRACT WORKERS

INVESTMENT COMMUNITY

JOINT VENTURE PARTNERS

PROVIDERS OF DEBT

TRADE UNIONS

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Royal Bafokeng Platinum Integrated Report 2014

> > > > > > >

Employees Contractors Communities Unions Department: Mineral Resources Joint Venture partners Investor community

We continually strive to improve our stakeholder engagement. Most material to our operations are our enrolled employees and volume contractors. Our engagement with them takes place daily through both formal and informal channels. Our engagement, and endeavours to improve the effectiveness of our engagements, are further described in the sections of this report covering Human and Social and relationship capital. Management uses a number of structures to engage with employees and the unions on operational issues. The Chief Executive Officer, Company executives and mine management regularly brief the workforce and union leaders on RBPlat, its business plan, safety initiatives, the platinum industry, the global economy, company performance and operational excellence. This is also complemented by regular briefing sessions by the Head of

operations to the workforce and union leaders. The communities in which we operate are also key stakeholders in terms of the positive or negative impact our operations may have on their prosperity, health, living conditions and general wellbeing. The performance of RBPlat depends on the ability of the operations to optimally extract its PGM reserves to maximise financial returns through the effective utilisation of its manufactured capital. Performance in this regard impacts directly on our shareholders, the views potential investors have on RBPlat as an investment opportunity, our joint venture partners and providers of debt. The Department: Mineral Resources (DMR) is a key stakeholder of RBPlat. Our engagement with the DMR is mainly in connection with its application of the Mine Health and Safety Act. The inspectorate regularly inspects our operations and if poor health and safety issues are encountered may stop or advise remedial action to rectify the situation. The management teams of our operations and union representatives work closely with the DMR to conduct these investigations and find acceptable solutions.

Pre-shift construction crew briefing session at Styldrift I

Overview Key to the strong production performance at BRPM during 2014 was our labour stability and the commitment of our workforce to meeting production targets, underpinned by the existing flexibility in our operating platform. Combined with our ongoing cost management initiatives, this performance made it possible for us to keep our year-on-year unit cost increases below mining inflation. This was a particularly rewarding achievement in light of the devastating five-month strike that affected so many of our peers in the platinum industry and the challenging start we experienced during the first quarter, due to an unusually high number of safety incidents. We believe that the operational stability, continuity and flexibility which have been a hallmark of our business are a consequence of the commitment to driving business performance and strategy demonstrated by our leadership, employees and organised labour.

Our efforts during 2014 were aimed at consolidating these key aspects by: > further developing our relationships with our key internal stakeholders > ensuring that all operational functions are optimally resourced > maintaining operating flexibility. One of the key focus areas at RBPlat’s operations during 2014 was the further strengthening of its existing teamorientated operating environment. This was achieved by ensuring that our people have a clear understanding of RBPlat’s business and its requirements. The health and safety of our employees is a key material issue for RBPlat. The long-term health and safety strategy we introduced in 2012 will assist to achieve the goal of our safety vision, which is that every person working at RBPlat goes home unharmed every day.

For more information on our engagement with our employees and the union see page 103 of the Human capital section of this report and for information on remuneration and reward in RBPlat see our Remuneration section on pages 182 to 186 of this report.

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OUR PERFORMANCE AGAINST THE CAPITALS

MANUFACTURED CAPITAL CONTINUED

Mining The year-on-year increase in total BRPM JV development in 2014 of 8% from 36.5km to 39.4km is mainly attributable to an increase in the working cost development required to maintain our

36.5 30.9 5.5 32.4 505 434 71 1.52 2 310 1 895 415 4.38 4.51 3.76

39.4 34.3 5.1 27.1 479 415 64 1.48 2 384 1 959 425 4.07 4.22 3.36

8.0

6.6

39.4 35.0 4.4 28.7 527 427 100 1.70 2 471 1 908 563 4.29 4.45 3.74

7.0 6.0

6.0

8 13 (20) 11 4 (2) 41 12 7 1 36 (2) (1) (1)

5.7

km km km m2/m 000 m² 000 m² 000 m² ratio kt kt kt g/t g/t g/t

5.0

km

2012

4.0 3.0 2.0 1.0 0.0 2012

Working cost development

2013

2014

Stoping square metres

5.7

25.0

500

527

505 6.0

1.70 1.5

479

600

2.0

30.0

1.52

35.0

IMS panel ratio

400 20.0

000 m2

Trial mining of the general facies UG2 at South shaft, which as communicated previously is characterised by a narrower reef horizon and more complex geology than at North shaft, continued as planned.

2013

Please note that any differences between the variance percentages in this table and those in the text of this section are due to rounding

Grades achieved The overall built-up head grade decreased marginally year-on-year by 2%, from 4.38g/t (4E) to 4.29g/t (4E). This reduction, which was due to the increased contribution of on-reef development from the Phase III project and UG2 trial mining to our overall run of mine (ROM) volumes, was in line with expectations.

2014

1.48

UG2 production accounted for 23% of total tonnes delivered, with mining of the central high facies UG2 at North shaft, which continues to make a significant financial contribution to the business, contributing 65% of the total UG2 production.

Var %

ratio

UG2

Total development Working cost development Capital development Development replacement ratio Total stoping square metres Merensky UG2 IMS panel ratio Total tonnes delivered Merensky UG2 Built-up head grade (4E) Merensky (4E) UG2 (4E)

Unit

35.0

Our delivered tonnes increased by 7% year-on-year to 2 471kt, with Merensky delivered tonnes increasing by 1% to 1 908kt and UG2 delivered tonnes by 36% to 563kt.

Trial mining at South shaft will continue during 2015, with the key focus being to evaluate if the improvement achieved in face grade can be extended to the delivered grade, in an environment more representative of steady state conditions. As such, the number of stoping crews will be increased while the number of development crews will be reduced.

IMS ore reserve – face length

Description

30.9

Our ongoing focus to safeguard our operational flexibility by ensuring that immediately stopable reserves are maintained at optimal levels, with the extraction of the UG2 reef horizon as a supplemental source of ore to our Merensky production, continues to pay dividends. It resulted in year-on-year improvements in most key production matrices with increases in tonnes delivered, tonnes milled, metals in concentrate and operating efficiencies. This, combined with effective cost management initiatives, has yielded year-on-year unit operating cost increases below mining inflation.

Stoping output increased by 4%, with a total of 527 000m2 being mined, compared to 505 000m2 in 2013.

Mining production

34.3

Operating results

BRPM’s overall IMS panel ratio per stoping crew ended at 1.7 for the financial year, which is 13% higher than our target of 1.5 and a 12% improvement year-on-year. This increase was a direct result of optimisation related to improving the distribution of IMS on a level-by-level basis and ensuring development rates and equipping requirements remain aligned with depletion rates.

with respect to stope width and consequent face grade, with stope widths of below 95cm being sustained and face grades consistently meeting the target of 4.6g/t (4E) during the course of the year. A commensurate improvement in the delivered grade was however not realised. We attribute this to the high levels of dilution from lower grade on-reef development required to establish the face lengths to sustain UG2 production in the longer term. Furthermore, trial mining has established that the mining layouts best suited for dealing with the undulating nature of the South shaft ore body are conventional breast (max 20m panel length) and up-dip mining.

91

The implementation of the Styldrift I project has, however, proved to be more challenging, especially in view of the Services shaft hoisting constraint, which became apparent once the Main shaft was decommissioned for equipping during the third quarter of this year. This has resulted in the planned stoping ramp-up being delayed by six months. The project baseline schedule has subsequently been revised to incorporate this delay. Performance against this revised schedule remains on track.

ore reserve and IMS targets and ensure sustainable production. Our IMS face length improved by 10% to 6.6km.

km

From a project perspective we are pleased with the continued progress we have achieved on our BRPM Phase III Merensky replacement project, which remains ahead of schedule.

1.0

300

15.0

We are encouraged by the improvements the trial mining campaign has yielded

200

10.0 0.5

100

5.0 0.0 2012

2013

2014

0.0

0 2012

2013

2014

2012

2013

2014

A view of the concentrator flotation and cleaner circuits

82

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

83

OUR PERFORMANCE AGAINST THE CAPITALS

MANUFACTURED CAPITAL CONTINUED

2013

2014

2012

2013

86.37

86.05

20

6.0

5.7

0.0 2012

86.71

4.29

4.38 6.0

4.07 5.7

0

25

60

15

10

40

10

5

20

5

0

0

g/t 1.0

% recovery

2 479 527

2 301 505 6.0

2 375 479

500

2014

0 2012

— UG2 contribution

Total labour Working cost labour Capital labour Stoping efficiency – total Milled tonnes/TEC

2014

2013

2012

8 1 36 28

2 479 1 914 565 23

2 301 1 887 414 18

2 375 1 958 417 18

Total BRPM concentrator tonnes milled Merensky UG2 UG2% milled

kt kt kt %

5 1 61 50

2 112 1 914 198 9

2 010 1 887 123 6

2 214 1 958 257 12

Tonnes milled – UG2 toll

kt

26

367

291

160

g/t g/t g/t

(2) (1) (1)

4.29 4.45 3.74

4.38 4.51 3.76

4.07 4.22 3.36

7 000

%

(0)

86.05

86.37

86.71

5 000

%

(0)

86.77

87.05

87.21

koz koz

5 5

294 190

280 181

269 174

By year-end our working cost labour complement at BRPM had increased by 1% or 92 employees to 6 272 compared with 6 180 in 2013. The increase in working cost labour is mainly due to the introduction of additional mining supervisory and vamping employees.

80

2.0

Var %

2013

2014

— UG2 contribution

Var % (12) (1) (51) 5 5

2014

2013

2012

8 873* 6 272 2 601 336 33.1

7 907* 6 180 1 727 320 31.6

7 743* 6 057 1 686 307 29.8

* Excludes corporate staff

29.8

30.0

33.1

31.6

336

35.0

2013

2014

25.0

200

t/TEC

4 000

Tonnes milled per total employee costed

6 272

307

m2

Number

. 250

6 057

6 272

6 180

6 057

300

6 000.

6 180

350

8 000

320

m2 per stoping crew

Total working cost labour

6 272

Capital labour increased by 874 to 2 601, in line with the increase in construction-related activities at the Styldrift I project.

Unit number number number m2/crew t/TEC

6 180

Total labour increased by 12% or 993 people to 8 873 compared to 7 907 in 2013.

20

1 000

Description

Labour costs

100

Labour

Please note that any differences between the variance percentages in this table and those in the text of this section are due to rounding

Royal Bafokeng Platinum Integrated Report 2014

4.0

25

15

kt kt kt %

4E metals in concentrate Pt metal in concentrate

5.0

BRPM JV recovery (4E)

3.0

Unit

Recovery – 4E (Total concentrating) Recovery – 4E BRPM concentrator

Built-up head grade (4E)

1 500

Total tonnes milled Merensky UG2 UG2% milled

Total built-up head grade (4E) Merensky UG2

84

2 000

Work on the first phase of our concentrator upgrade to 250kt began in August 2014 as planned and is ongoing. The upgrade has had no impact on the overall plant performance. This is being achieved by scheduling project work during normal planned maintenance downtime. This project is currently on schedule and within budget.

Concentrator production Description

2 500

5.7

The overall and BRPM concentrator recoveries, which ended marginally lower at 86.05% and 86.77%, respectively, are in line with expectations. Toll concentrating recoveries were within expected contractual limits. This, combined with the 2% lower built-up head grade and 8% increase in mill volumes, yielded a 5% increase in both 4E and Pt metals in concentrate year-on-year, with 294koz and 190koz being produced, respectively.

Total tonnes milled

UG2%

Our total milled tonnes increased by 8% to 2 479kt from 2 301kt in 2013, with 2 112kt and 367kt being milled at the BRPM and Anglo American Platinum (Amplats) Waterval concentrators, respectively. The improved milling throughput was as a result of increased mining volumes. Merensky and UG2 mill volumes increased by 27kt and 151kt to 1 914kt and 565kt, respectively,

compared to the same period in 2013. UG2 contributed 23% of the total tonnes milled.

UG2%

Since 2010, the concentrator team has embarked on several projects focused on improving overall concentrator availability and operational efficiency as part of its journey to become a world class concentrator. These included: > upskilling of personnel > developing a revised site-specific asset care strategy > improved operational and cost management systems > revised operating methodologies to reduce water and power consumption.

kt

Processing

20.0

150

15.0

100

10.0

50

5.0

3 000 2 000 1 000 0

0 2012

2013

2014

0.0 2012

2013

2014

2012

Stoping crew efficiencies at BRPM improved by 5% year-on-year from 320m2/crew to 336m2/crew, while our overall labour efficiency on a tonne per working cost employee increased by 5% from 31.6t/employee to 33.1t/employee.

Royal Bafokeng Platinum Integrated Report 2014

85

OUR PERFORMANCE AGAINST THE CAPITALS

MANUFACTURED CAPITAL CONTINUED

Cash operating costs Our cash operating costs at BRPM increased by 13% year-on-year to R2 361 million. Increased production volumes and our continued focus on costs management contained cash unit cost increases to below mining inflation, with the unit cost increases per tonne milled and per 4E ounce amounting to 4% and 7%, respectively.

2 000

2 000 1 723

12

4 500

238

0

0

0 2012

2013

2014

2012

2013

2014

Breakdown of total capital expenditure of BRPM JV

Projects

Unit

Var %

2014

2013

2012

Stay-in-business (SIB) capital SIB % of operating cost Replacement capital

R’m % R’m

(12) 1 (11)

154 7 204

138 7 184

238 12 308

Phase II Phase III Expansion capital

R’m R’m R’m

100 (17) (85)

– 204 1 365

9 175 737

116 192 646

Styldrift I Styldrift exploration drilling Styldrift II

R’m R’m R’m

(82) (13) (43)

1 307 31 27

691 27 19

628 9 9

Total capital expenditure

R’m

(63)

1 724

1 059

1 201

Please note that any difference between the variance percentages in this table and those in the text of this section is due to rounding

400

4 000

200

2 000

North shaft chairlift project

Phase III North shaft replacement project

The North shaft chairlift project, which will provide employees with a safer method of transportation into the mine than the previous belt riding option, included the development and installation of a chairlift from surface to level 5. Work on the project, which

This project, which extends the life of Merensky at BRPM’s North shaft by extending the North shaft Merensky decline system and associated infrastructure from 10 level to the mine boundary at 15 level, is scheduled to be completed in 2017. As previously

mentioned, the project is already making an on-reef development contribution to BRPM’s production. The overall project is ahead of schedule and is 73% complete against a planned completion of 67% with 8 301 metres of development having been completed to date. The project remains below budget, with cumulative expenditure for the project to date amounting to R789.4 million. The project is expected to be completed with an estimated saving of R114 million against an approved project budget of R1 409 billion.

8 040

Styldrift I surface silos and feed conveyor

0 2012

Royal Bafokeng Platinum Integrated Report 2014

2013

The two key capital projects at BRPM in 2014 were the North shaft chairlift project and the Phase III North shaft Merensky replacement project.

began in June 2011, was completed in October 2014 and the chairlift was commissioned in November 2014. Capital expenditure on the project ended within the approved project budget at completion.

6 000

0

86

2012

BRPM capital projects

R/oz

600

7 519

8 000

7 616

957

10 000

6 272

800

R/tonne

920 6 180

864

1 000

Cash on-mine cost/4E oz M&C

2013 2014

Expansion Replacement SIB

Our expansion capital expenditure increased by 85% from R628 million to R1 365 million. This increased expenditure is mainly related to the increase in construction activities at our Styldrift I project.

Cash on-mine cost R/tonne milled

2012

154 204

308

500 2

During 2014 the replacement capital expenditure on the BRPM Phase III project was, as forecast, R204 million. We expect the annual cost of this project to be between R180 million and R200 million per annum until it is completed in 2017.

Description

1 000

737

1 000

1 365

6

Capital expenditure Stay-in-business (SIB) capital costs ended the year at R154 million which was R16 million or 12% up from 2013. This increased expenditure can mainly be attributed to the construction of a new water treatment facility at BRPM and the upgrading of locomotive controllers. SIB capital during 2014 at 7% of operating costs, remained well within our target range of between 6% and 8%.

1 500

1 500

8

138 184

10

646

2 051 864 7 616 11 775

R (million)

2012

2 093 920 7 519 11 592

7

2013

2 361 957 8 040 12 463

1 059

2014

(13) (4) (7) (8)

1 192

Var %

R’m R/t R/oz R/oz

R (million)

Unit

7

cost cost/t cost/4E oz cost/Pt oz

7

operating operating operating operating

%

Description

7 616

Operating expenditure Cash Cash Cash Cash

BRPM JV capital breakdown

Total BRPM JV capital

12

SIB % of opex

2013

2014

2014

Royal Bafokeng Platinum Integrated Report 2014

87

OUR PERFORMANCE AGAINST THE CAPITALS

MANUFACTURED CAPITAL CONTINUED

Styldrift I project As we advised in August 2014, when we announced our interim results and again in October when we released our third quarter results, the hoisting capacity of the Services shaft at Styldrift I has been identified as a key constraint. The Services shaft provides all logistical support for underground development and construction work on 600, 642 and 708 levels, including rock hoisting, transportation of men and material and all services during the period the Main shaft is being equipped. Technical analysis highlighted that this constraint will effectively limit the rate at which key infrastructure required for the commissioning of the Main shaft and the start of production ramp-up can be developed, constructed and equipped. A detailed technical review of the overall underground mining and construction schedule and key constraints was subsequently conducted in order to identify ways of mitigating the impact of the constraint on the schedule. It resulted in the following revisions: > All construction activities were placed on full calendar operations > A double kibble was introduced to reduce shift change delays

> Services shaft schedule was revised > Additional “slick-lines” were installed in the Services shaft to improve concrete and shot-crete delivery to underground construction sections > Construction of water settlers 1 and 2 was deferred > Construction of the UG2 and spare reef silos (3 and 4) was deferred > Lateral development on 642 and 600 levels was rescheduled and rates revised. The net result of this review is a threemonth delay in the Main shaft commissioning, a six-month delay in the start of production ramp-up with a commensurate delay in reaching steady state. The Main shaft commissioning, previously scheduled for the first quarter of 2015, will now take place in the second quarter of 2015. The start of ramp-up, previously scheduled for the third quarter of 2015, is now scheduled for the first quarter of 2016, with steady state being achieved in the first quarter of 2019. The project baseline schedule has subsequently been revised to incorporate the constraints we identified and reflect the changes in execution methodology. The project remains on schedule against

the revised baseline, and no slippage on the critical path by year-end. The impact of the delay in production ramp-up on the overall BRPM JV output will be partially mitigated by securing additional production from BRPM’s South shaft during 2018. Total capital expenditure on the project for the 2014 financial year was R1.307 billion (including the concentrator project, contingency and escalation). By year-end R3.818 billion of the total capital commitment of R4.552 billion for the project to date had been expended. The capital cost of the project remains R11.014 billion, as the impact of the delayed Main shaft commissioning and start of ramp-up will be absorbed by savings and contingencies. The capital cash flow has been aligned to the revised baseline project schedule, resulting in lower expenditure in 2015 and higher expenditure in 2016 and 2017, mainly due to the fact that concentrator related construction activities have been delayed to align with the revised ramp-up requirements.

Styldrift I project high level schedule 2015 Q1

Q2

Q3

2016 Q4

Q1

Q2

2017

Q3

Q4

Q1

Q2

Q3

2018 Q4

Q1

Q2

Q3

2019 Q4

Q1

Main shaft hoisting system equipping and commissioning Ventilation shaft No. 1 Services shaft equipping and commissioning Access development to start of ramp-up Shaft infrastructure development, construction and equipping Ramp-up Steady state 250ktpm upgrade Overland conveyor belt to concentrator complex 100ktpm upgrade

Styldrift I project key infrastructure Vent shaft No. 2

Vent shaft No. 1

Main shaft

Services shaft

Vent shaft No. 3

Declines north

Mitigating the days lost at Styldrift I project End H1 2014

End August 2014 > Prioritising Main shaft to alleviate hoisting constraint of Services shaft

> Services shaft constraints identified

Prioritising Main shaft to alleviate hoisting constraints of Services shaft

> > > >

88

Shaft schedule Kibble fill factor Double kibble Full calender operations (24/7) arrangements

Royal Bafokeng Platinum Integrated Report 2014

Schedule analysis: Commission Main shaft

> > > > >

Vent shaft 1 priority Shaft bottom decline priority Settlers 1 and 2 deferred Silos 3 and 4 deferred Lateral development rescheduled and rates revised

End 2014 > Incorporate revised project strategy into schedule > Services shaft capacity > Essential infrastructure development

Declines east Settlers

Legend Impact on schedule

> Main shaft commissioning Q2 2015 > Start of ramp-up Q1 2016 > Steady state Q1 2019

completed 2015 2016 2017 2018

Silos

Declines south

Shaft bottom ramp

Royal Bafokeng Platinum Integrated Report 2014

89

OUR PERFORMANCE AGAINST THE CAPITALS

MANUFACTURED CAPITAL CONTINUED

Outlook

2 689

Styldrift I project capital expenditure

2 358

862

232

4 000 251

688

6 000

R (millions)

1 396

1 187

1 557 666

666

613

564

564

476

10 000

169

32

32

500

169

476

1 000

613

1 500

12 000

8 000 1 308

2 000

2 131

2 500

R (million)

11 014

2 347

3 000

2 000 0

0 2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2014 capital forecast Revised capex Revised cumulative capex

BRPM JV forecast capital expenditure

Styldrift II, which lies within the BRPM JV resource boundary and to the east of the current Styldrift I expansion project, makes up approximately 36% (129Mt) of the total BRPM JV resource. The resource currently comprises 58Mt Merensky at an average grade of 7.81g/t 4E over a resource width of 104cm and 71Mt UG2 at an average grade of 5.39g/t 4E over a resource width of 120cm. The resource depth varies between 820m and 1 500m with a consistent north-west strike and dipping at an average of 90.

3 000

2 500

2 000

R (million)

Styldrift II

1 500

1 000

500

0 2015

2016

2017

Expansion Replacement SIB

2018

2019

Unique to the Styldrift II resource area is that it is almost exclusively underlain by the Swartklip facies, resulting in less variability in mineralised envelope width, improved lateral continuity and a lower incidence of potholing and faulting when compared to the predominant Rustenburg facies found on Styldrift I and BRPM. The size, grade, relative shallow depth and unique resource characteristics of the Styldrift II ore body therefore represent a significant investment opportunity for RBPlat and its shareholders.

To date we have completed a total of 98 primary exploration holes equating to 125 000m of drilling (including deflections), yielding 350 Merensky intersections and 307 UG2 intersections. A good correlation between actual intersections and geological modelling has been observed. Resource optimisation during 2015 will include the updating of the 3D seismic model as well as additional surface drill holes to improve the resolution on certain key geological features within the Styldrift II mining area. To this end RBPlat embarked on a detailed study and exploration drilling programme in 2010. This was followed by concept and pre-feasibility studies. The results of the pre-feasibility study indicated a positve business case and was presented to the RBPlat Board in February 2015. The Board approved the pre-feasibility study, and to proceed with a feasibility study.

The safety, health and wellness of our employees plays an important role in achieving sustained operational continuity and as such will continue to be a major focus during 2015. We remain confident that our road to resilience safety programme supported by our strategy of strengthening the barriers that prevent injuries and focussing on the health and wellness of our employees will enable us to achieve our safety, health and wellness targets and objectives. Using new technology and approaches to keep our people safe is an important part of our efforts to improve on safety performance. Maintaining the sound labour and community relations we have developed over the past few years will be paramount in ensuring ongoing operational and project continuity. As such, our key focus during 2015 will be to: > expand communication and feedback forums used to engage with labour and union representatives to further enhance the mutual trust and understanding of the business that has been established to date > meet our social and labour plan commitments through the ongoing development of skills and infrastructure as part of our contribution to local economic development in the communities in which we operate. Our key operational challenges will be to maximise BRPM volumes and grades with a strong emphasis on operating cost control in order to minimise the impact of the delay in the Styldrift I ramp-up on the overall business between 2015 and 2018. A detailed review of the overall BRPM operational and extraction strategies has been conducted in order to optimally leverage its Merensky and UG2 resources during this period. The net outcome of this exercise resulted in the impact of the Styldrift I delay on the BRPM JV production being reduced from approximately 250koz to 120koz over the period by extending the life of South shaft into 2018. We will continue exploring various options to further reduce the impact. In addition, protecting the Styldrift I revised baseline schedule will be of paramount importance to ensure that the revised ramp-up and steady state milestones are met. To this end we have

90

Royal Bafokeng Platinum Integrated Report 2014

equipped the project with additional technical resources to assist with the construction, equipping, planning, management and control activities related to the Main and Services shaft construction programmes.

Styldrift I Main shaft loading box construction

We are confident that production from BRPM will be between 2.4 to 2.5mt for 2015, given our good stakeholder relations and strong operating platform, with the head grade being maintained at between 4.15g/t (4E) and 4.20g/t (4E). Our Merensky ore will be preferentially treated at the BRPM concentrator facility and excess UG2 will be toll treated at Waterval. UG2 production is set to contribute approximately 20% of BRPM’s total production in 2015. RBPlat production is now forecast to increase in line with the revised Styldrift I ramp-up schedule, with the 250ktpm processing capacity coming on line in the third quarter of 2015 and increasing to 350ktpm in the first half of 2017 as opposed to the third quarter of 2016, which is what was previously communicated in the 2013 integrated report. The Joint Venture head grade is forecast to increase to between 4.25g/t (4E) and 4.30 g/t (4E) from the first quarter of 2017 as the head grade benefits from the Merensky stoping ramp-up at Styldrift I. UG2 production contribution reduces commensurate with the Styldrift ramp-up, decreasing to 10% by the first quarter of 2019. Total capital expenditure (including escalation and contingencies) is forecast to increase and peak at around R2.9 billion in 2015, the key driver being the Styldrift capital construction programme. Capital expenditure will decrease marginally to R2.8 billion in 2016, reducing to R1.8 billion in 2017 as construction activities on the Styldrift I project wind down. Replacement capital attributable to the North shaft Merensky Phase III replacement project will account for approximately R200 million per annum over the next two years, reducing to R100 million on completion of the project in 2017. SIB capital expenditure is forecast at around 8% of total operating expenditure. We will continue to stay abreast of industry developments regarding innovation and new technologies; this will allow us to extract incremental benefits throughout our value chain and contribute to upskilling of our employees. See Intellectual capital page 160 for more information on how we are using technology to make our operations safe.

Royal Bafokeng Platinum Integrated Report 2014

91

OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

In memory of our colleagues who lost their lives in 2014

Mr Xadreque Chihungo, who died on 4 October 2014 in a work-related accident at Styldrift I and Mr Refumane Petrose Kanono, who died in a workrelated accident at BRPM South shaft on 10 October 2014 Our deepest sympathies go to their families, friends and colleagues

OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL

OUR KEY STAKEHOLDERS

96

HUMAN RESOURCES

98

TRAINING AND DEVELOPMENT

104

SAFETY, HEALTH AND WELLNESS

110

PERFORMANCE ACHIEVEMENTS

422

employee houses completed and 295 sales agreements signed by 31 December 2014

IN SUPPORT OF UNITED NATIONS (UN) GLOBAL COMPACT PRINCIPLES 1, 2, 3, 4, and 5 As a signatory of the UN Global Compact (UNGC), RBPlat is committed to:

Human rights

IMPROVEMENTS > 13% reduction in lost time injury frequency rate (LTIFR) year-on-year > 97.17% of our enrolled employees and contractors are historically disadvantaged South Africans

> Women now make up 12.3% of our enrolled employees (1.4% increase year-on-year)

DISAPPOINTMENTS > Two fatal accidents in our operations and a further fatal accident on 12 January 2015 > 9% increase in serious injury frequency rate (SIFR)

Principle 1: Support and respect the protection of internationally proclaimed human rights within their sphere of influence Principle 2: Make sure that they are not complicit in human rights abuses

Labour Principle 3: Uphold the freedom of association and the effective recognition of the right to collective bargaining Principle 4: Uphold the elimination of all forms of forced and compulsory labour Principle 5: Uphold the effective abolition of child labour

CHALLENGES > The safety maturity level of our employees remains a challenge on our road to resilience programme

92

Employees’ families enjoy their new homes in RBPlat’s employee home ownership development

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

93

OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

HUMAN RESOURCES Key human resources material issues Key material issues in 2014

Key performance indicators that were our focus in 2014

What we achieved in 2014

Focus for 2015

> Wage negotiations > No strike action, production and safety targets met > Increase efforts to improve our employee engagement and responsiveness > Improving communication skills of operational leaders

> Successfully concluded a new long-term wage agreement with our enrolled employees, which continues to include incentives for productivity > See page 103 for details on our engagement and response to our employees > See page 107 of Training and development section for training undertaken in this regard

> Continuous engagement with labour and employees to maintain a culture of sharing business information and innovation > Improve employees’ access to information through the development of an employee portal > Continue with leadership communication skills training programme

> Number of production days lost to labour action > Concluding a new long-term wage agreement with our enrolled employees by 30 June 2014 > Closing the wage gap between contractors and enrolled employees > Enrol the majority of volume contractors on a medical aid

> Wage agreement signed without any labour instability > Agreed the process for bringing contractor wage negotiations and wages in line with those of our enrolled employees > Majority of volume contractors on a medical aid

> Implementing new wage agreement > Reviewing our remuneration policy for levels D1 and below > Benchmarking our remuneration structures > Monitoring other wage negotiations in our industry > Facilitating the enrolment of the remaining volume contractors on a medical aid

> Establishing suitable remuneration and reward structures linked to performance that are acceptable to our employees and our investors and drive performance

> See page 186 of the Remuneration section of this report for details of the new incentive programme we have implemented

> Development of new employee share ownership programme (ESOP)

Towards operational excellence

engagement and responsiveness

> Employee

> Labour and trade

>

union stability

Suitable remuneration and reward structures linked to performance that are acceptable to our employees and investors

>

Employee home ownership scheme

> Completing Phase I of employee home ownership scheme (422 three-bedroom houses) > Number of employee sales agreements signed > Securing funding for Phase II of the scheme > Signing home ownership sales agreements with employees

> First phase of employee home ownership scheme delivered > 295 sales agreements* signed and 289 families resident in their homes by year-end

> Finalising an independent structure for the management of the housing estate > Planning and starting work on Phase II of home ownership scheme and preparation for Styldrift I employee housing

>

Talent management and succession planning

> Put scorecard in place to predict talent supply and relevant interventions required > Performance management to become part of daily life > Defining roles at Styldrift I

> A scorecard is in place to predict talent supply and relevant intervention required (See page 101 of this report for details of the effectiveness of our succession planning) > Psychometric testing was conducted and a self-mastery management process was undertaken (See page 102 for details of the work carried out to date) > Key Styldrift I roles reviewed and defined

> Use of scorecard ongoing > Career conversations in place > Defining of new roles ongoing

* These indicators have been assured (See page 187 for the assurance statement) See page 100 for detail of our skilled employee turnover by category. There is more information on the percentage of HDSA managers in core and support functions on page 101 of this report. Refer to page 101 for number of woman at mining.

94

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

95

OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

HUMAN RESOURCES continued The conveyor belt, which forms part of the BRPM Phase III project, under construction

Our key human resources and training and development stakeholders The impact of escalating wages on RBPlat’s operating costs is of major concern to investors as is our ability to maintain labour and union stability. We were able to negotiate a long-term wage agreement without any industrial disruption.

COMMUNITIES

DEPARTMENT: LABOUR

DEPARTMENT: MINERAL RESOURCES

EMPLOYEES AND CONTRACT WORKERS

GOVERNMENT

Our employees are key stakeholders of RBPlat. We are responsible for ensuring their human rights are respected and protected in the workplace and that our workers enjoy freedom of association and the right to collective bargaining. We must ensure that we comply with the South African Basic Conditions of Employment Act No 75 of 1997 and the Labour Relations Act No 66 of 1995. Talent management and succession planning is also part of our responsibility to management, as is employment equity within RBPlat. We are also responsible for ensuring our employees are paid and receive the benefits they are entitled to.

Engaging with our employees, obtaining feedback from them and, where necessary, acting on this feedback is key to a successful productive working relationship. We would refer you to page 103 for information on our engagement with and response to our employees. It is our responsibility to provide our communities with skills development and education in terms of our SLP commitments. We engage with specialist service providers who assist us with the provision of training and various other specialist skills. Both the Department: Mineral Resources and the Department: Labour are key stakeholders with whom we engage and to whom we are required to report. During 2014 we established an Employment Equity Forum facilitated and supported by the Department: Labour.

See pages 101 and 102 for information on our talent management and succession planning, HDSAs in skilled positions and remuneration and benefits. See pages 106 to 108 of this report for details of our delivery against our skills development commitments and page 131 for information on our SLP education achievements.

INVESTOR COMMUNITY

RBPLAT LEADERSHIP

UNIONS

96

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

97

OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

HUMAN RESOURCES continued Our approach to human resources management Our approach to human resources management is based on international best practice, upholding the UN’s Universal Declaration of Human Rights and the International Labour Organisation’s Declaration on Fundamental Principles and Rights at Work, which form part of our commitments as a signatory to the UNGC. The development of our human resources strategy and its alignment with our corporate strategy and our employment policies and procedures are the responsibility of the Executive: Human Resources, who reports to our Chief Executive Officer. Human resources strategy, policies and procedures The human resources teams at our operations are responsible for implementing our human resources strategy and policies. They are also responsible for strategic workforce planning and employee training and development. In 2014 we reviewed and implemented all key human resources policies. Our employment policies and procedures ensure that we: > have a sound employee relations recognition agreement (ERRA) > uphold the right of our employees to freedom of association and collective bargaining

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Royal Bafokeng Platinum Integrated Report 2014

> provide equal opportunities to all our potential and existing employees > achieve a diversified workforce that reflects the demographics of our country > provide a workplace based on: – mutual respect – fairness – integrity – non-discrimination – equal opportunity at all levels – open and two-way engagement with our employees and their representatives > consult extensively with all the affected parties including management, employees and the trade unions if and when it becomes necessary to reduce our workforce. The objective of the transformation element of our human resources strategy is to achieve diversity at all levels of the organisation by: > developing the miners of tomorrow through youth development, graduate and bursary programmes and learnerships > upgrading the skills of the people currently mining our operations > developing the historically disadvantaged South African (HDSA) leaders of tomorrow through leadership development programmes,

internal promotion and succession planning > increasing the number of women working at mining in our workplace through retention, external recruitment and diversity training > facilitating the home ownership we are committed to in terms of the Mining Charter and our long-term wage agreement. In 2015 we will be reviewing and optimising our human resource systems. Investing in our people We believe in making an appropriate investment in the development of our people. If our business is to be sustainable and we are to achieve our strategic goal of operational excellence we need employees with the appropriate skills and experience. It is our aim to provide our permanent employees and contractors with opportunities to acquire competencies that will allow them to develop and progress. We also offer our employees well-structured employment contracts that offer fair and competitive remuneration.

Evaluating the effectiveness of our approach Our total workforce as at 31 December 2014 We need to have the optimal workforce to achieve our production targets. This requires the right number of people with the right skills. The increase in our employee and contractor numbers is due to increased activity in connection with the Styldrift I project, which includes Shared services and Corporate office. 2014

2013

2012

% change year-on-year

3 586 2 666

3 688 2 573

4 167 3 072

(2.8) 3.6

74 186

80 176

89 166

(7.5) 5.7

Styldrift I project Contractors Enrolled employees

2 098 84

1 221 30

666 21

71.8 180.0

Shared services Contractors Enrolled employees

15 164

8 131

− −

87.5 25.2

BRPM mine Contractors Enrolled employees BRPM concentrator Contractors Enrolled employees

Corporate office Total number of employees*

27

22

24

22.7

8 900

7 929

8 205

12.3

* These numbers exclude trainees who were part of our social and labour plan commitment

Workforce changes > Our total workforce increased by 12.3% year-on-year > Enrolled employees (Corporate office included in this number) increased by 6.7% year-on-year > Contractors increased by 15.5% year-on-year

Please refer to pages 76 to 79 of Manufactured material issues to see our achievements against our production targets.

The primary and secondary mills at the BRPM concentrator

Royal Bafokeng Platinum Integrated Report 2014

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OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

HUMAN RESOURCES continued

Voluntary turnover of enrolled employees Number of employees

Percentage of total enrolled employees

2014

2013

2012

2014

2013

2012

% change year-on-year

Senior management Middle management Junior management Core skills

1 7 30 57

– 6 22 42

– 14 40 65

0.03 0.21 0.92 1.74

– 0.19 0.68 1.30

– 0.42 1.20 1.96

0.01 0.27 0.93 1.67

Total voluntary turnover

95

70

119

2.90

2.17

3.58

2.88

Level

While we have had an increase in our core skills turnover, which is where we consistently have the highest voluntary turnover, at 1.74% this turnover is still very low. Total voluntary turnover of enrolled employees increased by 2.88% year-on-year. Union representation

Union membership

Employment equity (enrolled and contractors) We recruit from our local communities whenever possible. At Styldrift I the recruitment of employees with key operational skills is ongoing. Members of the local community who were trained as mechanised machine operators are already working underground at Styldrift I, gaining practical exposure to a production environment. Providing equal opportunities > 381 women were working at mining in RBPlat at 31 December 2014 (this figure excludes contractor employees and women recruited for our development programme)

18

19

60

0.01

0.024

20 20

0 2012

2013

2014

0 2012

2013

2014

Labour relations > 96% of our employees were unionised in 2014 (this excludes approximately 127 (4%) middle and senior managers). In terms of our employee relations recognition agreement (ERRA) the threshold for a union to exercise organisational rights is 40% on any bargaining unit. We currently recognise two unions, NUM and UASA. Although UASA is below the 40% stipulated it remains recognised. At year-end NUM remained the majority union with: > 72% representation in the operators unit > 75% representation in the supervisory unit.

100

Royal Bafokeng Platinum Integrated Report 2014

Board level Senior management Middle management Junior management Core skills

6 5 107 841 5 291

54.55 62.50 68.59 88.99 99.59

40 40 40 40 40

14.55 22.50 28.59 48.99 59.59

Total

6 250

97.17

40

57.17

73 73

71 71

71

40

71

40

% by which Charter we exceeded target (%) the target

Actual % for 2014

9

10

96

60

%

%

0.533

80

Our employment of HDSAs in skilled positions > Since its inception RBPlat has considerably exceeded the Mining Charter scorecard targets for HDSAs at every level in our organisation > This year we exceeded the targets for skilled employees by an average of 57.17%.

2014 No of HDSAs

Level of skill

0.61

80

20

91

100

93

9

100

> In 2014 women made up 12.3% (10.9% in 2013) of our enrolled employees > At 31 December 2014, of the people employed by RBPlat 97.17% were HDSAs.

Non-aligned UASA NUM

In accordance with our ERRA we signed a long-term wage agreement with NUM, the majority union, for implementation on 1 July 2014. Industrial action 2014

No days lost to industrial action

2013

No days lost to industrial action

2012

A three-day strike (21 − 23 August) and 10-day strike from 12 − 21 September, both related to rock drill operator demands*

Talent management and succession planning The depth of our talent at RBPlat proved itself this year. When the General Manager of Styldrift I and our Chief Operating Officer resigned we had the talent and experience available in our operational team to allow us to immediately make appointments to take on these responsibilities from within RBPlat and to promote members of our operational team up one position to fill the gap left by these appointments.

In order to maintain this depth of talent it is critical that we invest in talent management and succession planning. We achieved our focus for 2014, which was to have a talent management framework in place that will allow us to predict talent supply and the interventions necessary to ensure we have the talent available when it is required. In 2015 we plan to have talent conversations embedded as a practice and have conducted a full talent bench strength and supply review.

See the Employee benefits and remuneration section on page 102 for information on the steps we are taking to improve the remuneration and benefits of our volume contractors. For information on how we build talent please see the diagram on page 107 of Training and development.

* RBPlat’s negotiations with the unions following these strikes resulted in agreement on the introduction of a performance-based incentive bonus, which has proved most effective in achieving our production targets

Royal Bafokeng Platinum Integrated Report 2014

101

OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

HUMAN RESOURCES continued

Talent management framework

Our annual people calendar

Business and human resources strategy

January Organisational design and staffing models

Workforce planning

Strategic sourcing and recruitment

Remuneration

Job context

Career architecture

Succession planning

Package based on job level

Performance management

Learning and development

Potential assessment

Performance-related pay

During 2014 we: > provided ongoing line manager coaching and support > conducted talent management workshops in all business areas > completed 80% of line management assessments (360o feedback, psychometric and performance data) > completed 60% of leadership competence training > continually provided competence training. In 2015 we will: > complete assessments by end March 2015 > continue with the talent management process. One of our talent management challenges is the retention of artisans. To address this challenge we ensure we pay market-related salaries. Performance management Performance management plays a key role in the development of talent. Our senior and middle managers and our mining teams at our operations have performance reviews twice a year and are measured against key performance management indicators, which include career development discussions. Team performance reviews are done monthly with an emphasis on safety, productivity and cost. These performance reviews have a direct impact on a team’s monthly incentives. Royal Bafokeng Platinum Integrated Report 2014

Salary increases D2 and above

June

Manager once removed conversations

Mid-year performance conversations

October

Operational/ functional talent review

Our progress

102

May

September Annual salary increase

February

Salary increases D2 and above

Employee benefits and remuneration Our enrolled employees are provided with a retirement fund and medical scheme benefits, as well as group life assurance cover with a benefit of up to seven times their annual salary in the event of their death. These benefits are provided over and above the legally mandated benefits. They are also entitled to disability benefits, which include the payment of the full medical aid benefit for the duration of the disability period, death benefits and funeral cover. Should an employee pass away while in our employ their children’s education will be paid for until they complete their tertiary education. As previously mentioned we are currently engaging with the union regarding contract worker wages, with the aim of closing the wage gap between our enrolled employees and contractors over time. Our negotiation of medical aid membership for contractors has improved the employment benefits of most of our volume contractors and given them access to treatment for chronic diseases. We aim to have all volume contractors on the Platinum Health medical aid by the end of 2015.

Our employee home ownership scheme We are pleased that we have been able to offer 422 homes to our enrolled employees in the Waterkloof Hills Estate near the Waterfall Mall in Rustenburg. These homes were built as the first phase of the scheme. By year-end 295 employees had signed sales agreements for their three-bedroomed homes, which have a mortgage repayment period of about 18 years. The estate is near Rustenburg, which is in accordance with the Mining Charter stipulation that mining companies will provide decent housing close to a functional town. Enrolled employees are allocated houses according to the qualifying criteria agreed by the Housing Committee, whose membership consisted of NUM members and RBPlat management. These homes provide our enrolled employees with the opportunity to own an asset that is expected to appreciate over time. The home or living out allowance employees previously received from RBPlat will be replaced with a housing allowance which will be used to pay off their home loans. Construction of Phase II, which will consist of a further 3 100 houses, is planned to start in 2015. The first homes to be built are 80m2 three-bedroomed homes. These will be

Business talent review

March Bonus payments to all employees

July Salary increases bargaining unit 

November Implement talent actions

followed by homes that will vary from 140m2 to 360m2 in size for the next level of employees.

Engaging with and responding to our employees While we recognise that engaging with and responding to our employees will always be a challenge, we believe that the labour and trade union stability we have achieved can be attributed to the relationships we have managed to establish with our enrolled employees, contractors and their union representatives. We keep our employees updated on business issues through a range of communication tools, including our Lebone newsletter, the Chief Executive Officer’s monthly email message, our annual report to employees, partnership forums, the monthly feedback sessions held by the Head of Operations and the mine managers, and cellphone text messages. We also plan to establish an employee portal in 2015. To improve work group communication the leadership training we provide includes training in communication skills. Our most significant human resources engagement in 2014 was the successful renegotiation of our wage agreement with NUM, which represents the majority of our employees, and the allocation of houses to enrolled employees.

April Career conversations

August Salary increases bargaining unit

December Setting next year’s KPIs and year-end performance conversations

Chief Executive Officer employee engagement Our Chief Executive Officer continues to have regular meetings with employees and each year he meets with the trade union leadership. He responds to any issues raised during these meetings and shares his vision for the business. He thanked the trade union leaders for the maturity they demonstrate in their relationship with RBPlat. He also addressed the mining supervisory team this year and engaged with miners and team leaders. The value of these interactions is shown by the outcome of his engagement with a mining team that had not been performing well. His discussions with them revealed that there was a very good reason for their unsatisfactory performance. The situation that was preventing them from achieving their production targets was quickly resolved and the team’s performance immediately improved.

For details of the home ownership scheme see pages 219 to 220.

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HUMAN CAPITAL CONTINUED

TRAINING AND DEVELOPMENT Key training and development material issues Key performance indicators that were our focus in 2014

What we achieved in 2014

Focus for 2015

adequate and appropriate skills

> Number of our employees receiving development training > Continuing with the upskilling of our workforce and community members through skills development training > Improve our artisan retention > Assess the potential of BRPM employees for upskilling to mechanised mining

> Employee development training implemented (see pages 106 to 109 of this section for details) > Apprentice training was improved as part of overcoming artisan retention issue. First quarter of 2015 will see 10 of the 15 learners go up for final board examination > See page 108 of the Training and development section for information on the upskilling we achieved during 2014

> Increase proactive training initiatives using team behaviour analysis to anticipate where training is required > Continue with the upskilling of our workforce and community members

Leadership training interventions to reduce repeat

> Rock strata training for team leaders, miners and shift supervisors with the aim of improving our FIFR > Implement hazard identification training to reduce LTIFR

> Rock strata training for team leaders, miners and shift supervisors implemented and ongoing: – with the aim of improving our FIFR* – to reduce our LTIFR* > Hazard identification training also implemented and ongoing > Coaching process ongoing

> Monitoring and evaluation of the impact of training on performance

safety incidents

Styldrift I operational readiness in terms of training and development

> Continue to train and develop community members to work in a mechanised mine (load haul dump (LHD) operators, drill rig operators, etc)

> 98 learners have been equipped with 168 skills that equip them to work in a mechanised mine. Seventeen of these learners are now working at Styldrift I gaining practical exposure in a production environment

> Continuing to draw on our doorstep communities for additional trainees

> Complete our SLP commitments in terms of the 2010 – 2014 Mining Charter requirements on time within budget > Total number of employees, contractors and community members that received part time ABET and percentage of workforce trained in terms of SLP commitments

> SLP commitments for 2010 – 2014 completed > SLP human resource development targets were achieved and exceeded over the past five years in terms of part-time ABET* and SLP commitments* (See page 106 of this section of the report for our total employees training spend as a percentage of payroll*)

> Implement the new SLP commitments and set a tone for the next five years. This will be achieved by building on the momentum established during 2010 and 2014

Key material issues in 2014

> Availability of

>

>

> Achieve our Mining Charter targets in terms of our SLP skills

development and education commitments

* These indicators have been assured (See page 187 for the assurance statement)

See page 107 for our achievements against our SLP human resources development targets.

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Royal Bafokeng Platinum Integrated Report 2014

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OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

Our approach RBPlat is committed to providing the members of its workforce with the training they require to do their jobs and to work safely. In addition to the mandatory and legal training we provide we are researching the role human error plays in safety incidents and how best we can provide coaching and training to reduce safety incidents.

> A total of 286 people participated in our ABET programme in 2014 of which 169 were employees and contractors, and 117 community members

RBPlat’s commitment to education and development extends from the first years at school through to tertiary education and continuous development for those employed at RBPlat and the communities in which we operate. We want to: > provide our employees with the opportunity to continually grow and develop during their employment at RBPlat

> A total of 76 employees and contractors have been trained in terms of our SLP human resource development for 2014

% by which we exceeded the target 2010 – 2014

1 703 812 34

1 510 604 134

(11.3) (25.6) 294.1

46 72

103 65

123.9 (9.7)

2 667

2 416

(9.4)

313 953 224 94

336 4 364 185 73

7.3 357.9 (17.4) (22.3)

Total technical skills training

1 584

4 958

213.0

Total SLP training for employees

4 251

7 374

73.5

SLP area

Basic supervision Supervisory programme

Technical skills training Engineering Mining Engineering learnerships Mining learnerships

114.4 28.1

99.1 23.1

14.0 95.6

80

86.3

2010

76.0

0

81.6

20

23.5

40

13.1 36.6

60

11.0 15.8 26.8

R (million)

100

2011

2012

2013

2014

Legal, mandatory and other training SLP human resource development

For more information on the achievement of our education support see pages 130 to 131.

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RBPlat spent 15% (in addition to the mandatory skills development levy) of its total annual payroll (enrolled, full time contractors and labour hire employees) on human resources development, which exceeded the mandatory 5% of payroll required in terms of the Mining Charter scorecard by 10% in 2014.

2010 – 2014 actual enrolled employees trained

Total

120

Our investment in training and development over the period of our current social and labour plan (SLP)

2010 – 2014 target enrolled employees to be trained

Employees ABET Portable skills Management and leadership training

Total training costs including SLP

> offer adults from our communities adult basic education and training (ABET) that will help them also reach their full potential and equip them to find suitable employment > provide the children from our communities with the education they need to reach their full potential.

While we did not manage to achieve our targets in all of the SLP training areas, overall we exceeded our SLP training commitments for our employees by 73.5% over the past five years. In 2012 and 2013 we focused on management and leadership training, which resulted in us exceeding our SLP commitments in this area by 294.1%. When the Engineering Training Centre changed its training programme from three terms to two terms there was a period of six months when we were unable to register learners and this resulted in RBPlat not achieving its engineering learnership target. We also did not achieve our mining learnership target. The intake on this programme depends on the amount of attrition in our operations and the need for learner

Our community skills development achieved in terms of our SLP commitments 2010 – 2014 target community 2010 – 2014 actual community members to be trained members trained

SLP area

% by which we exceeded the target 2010 – 2014

Community ABET Portable skills Internships Graduates Bursaries Internal bursaries and short courses

1 007 253 45 68 68 487

663 515 88 82 73 978

(34.2) 103.6 95.6 20.6 7.4 100.8

Total

1 928

2 399

24.4

Technical skills training Engineering academy Mining academy Process academy

30 110 30

30 168 30

– 52.7 –

Total technical skills training

170

228

34.1

2 627

25.2

Total training for community members

A significant number of community members are building careers out of our portable skills training programme. Basic plumbing and electrical have attracted great interest from the community and this resulted in more uptake to the programme. These alternative skills reduce unemployment and improve lives in our doorstep communities.

2 098

Our bursary scheme continues to attract great interest from the community and gives us an opportunity to select talented individuals to participate in the bursary scheme. Most of our bursars move on to participate in RBPlat’s talent pipeline. We currently employ senior managers in the Company that originally came through our bursary scheme.

The Mining Academy continues to serve as a gateway to formal employment in our operations for community members. Community members are taken though rigorous and stimulating on-the-job training. Once they are qualified, candidates are absorbed into different roles on the mine from where they have the opportunity to progress their careers.

How we build talent through training and development Leadership

Functional (core) competence

miners based on our life of mine plan. Because our employee turnover was low during this period our requirement for mining learnerships was reduced. After an analysis revealed that many incidents and accidents result from poor supervisory skills, we invested in this area of training with the aim of improving our safety performance. Our basic supervisory training focuses on discipline in the workplace and the basic principles of planning, organising, leadership and control (POLC). Since mining is our core business and the Competent A and B qualifications were classified as legal requirements after the originally approved SLP, we have exceeded our commitments in this area of the SLP by 357.9%.

Behaviour

TRAINING AND DEVELOPMENT continued

> Mining − rock drill operator academy, learner miner programme, learner official programme > Engineering – cadets, stope serviceman programme, artisan programme, engineering official > Process – cadets, supervisory development, shift leader development > Services skills development > Graduate development programme

Design

Functional (leadership) competence

Behavioural competence

> Supervisory development programme > Foundational management programme > Management development programme > Senior leadership programme > Executive development programme

Legitimate leadership means: Tshiamo personal mastery programme

> Ability > Accountability = Improved performance

Systems

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OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

TRAINING AND DEVELOPMENT continued

Evaluating the effectiveness of our approach The impact of our skills development programmes Over the period of our SLP, 663 community members decided to enrol for the ABET training we offered. Community members who attended ABET or portable skills training are recorded on a database with the aim of providing unemployed youth with an opportunity to find work in the mining industry. From this group we were able to train 168 as rock drill and winch operators. We were able to track the progress of four of the women we trained as they obtained employment as rock drill operators and winch operators with our volume contractor. (See the Cadet programme below for more information). We also offered ABET training to our enrolled employees and contractors. In all, 1 373 studied in their own time after work and 137 employees received full time ABET training. ABET training opens the door to further career opportunities for previously disadvantaged employees. Our portable skills training is also available to enrolled employees, contractors and community members. These basic courses included: bricklaying, business, electrical, plumbing, painting, computer, boiler making, tiling, plastering, carpentry and bead manufacturing. The enrolment for these courses over the period of our SLP was 604 employees and 515 community members. We have been able to track the progress of a young man who attended the bead manufacturing course we offered the community. He initially managed to make a living selling his products at a flea market. Today he has a full time job with the company that presents the bead making training, working as a senior facilitator. Our cadet programme The purpose of this programme is to create a pool of skilled community members from which we can recruit. The programme extends over 18 months during which the cadet programme includes work exposure, an individual development programme and work readiness preparation. The rationale behind an 18-month programme is that after this period of time the cadets

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would be competent and capable of being absorbed into the Company. In addition they would have been exposed to the culture and discipline we expect from our employees. The fact that JIC, our volume contractor, employed all 65 of the rock drill operators from our first group of cadets to work at BRPM is an indication of the success of the programme. The retention rate of these cadets was approximately 90%. We also trained 71 community members as pipe, track and ventilation (PTV) assistants and they were also employed by JIC. The group of 49 cadets who completed their training in July 2014 were employed by BRPM and our volume contractors. Developing the skills of our employees This year we focused on developing leadership skills. During DMR safety performance discussions the importance of instilling a leadership culture that contributes positively towards achieving improved safety performance was highlighted. Team leaders, miners and shift supervisors completed rock strata training and hazards identification training and we continued to coach and use the information gained from data collected from observing teams at work to further train teams. Team leaders were trained to have the correct conversations regarding performance. While our safety performance overall was disappointing, safety performance in the core mining areas, where we had focused our training, improved (see the Safety section on page 114 for more information).

> 82 candidates participated in RBPlat’s graduate development programme between 2010 and 2014 of which 40 candidates were still on the programme in 2014, 27 completed their programmes in 2014 and 13 candidates joined the programme in 2014. The impact of the Bokamoso youth development programme RBPlat launched a gap year programme aimed at assisting post matriculants with low pass marks to achieve university entrance maths and science marks. We enrolled 18 students from the MACHARORA village in the programme in 2012. Seven of the gap year learners successfully passed grade 12 in 2012 and earned themselves bursaries from RBPlat for their tertiary education. Our bursary programme RBPlat has awarded 85 bursaries over the past three years. Sixteen of our bursars achieved an average of 75% and above in 2012 and 24 students achieved a 75% and above average in 2013. These bursaries are for the bursars to study mining engineering, metallurgy, geology, electrical and mechanical engineering, mine surveying, chemical engineering, finance and accounting.

Stars of the RBPlat gap year programme Lefina Tebang lost her parents early on and has taken care of her siblings ever since. When she enrolled on the gap year programme her neighbours took care of the children she is raising and she used the stipend she received to improve the lives of her three siblings. She improved her maths mark from 52% to 63% and her science mark from 59% to 68% during the year she was on the programme. She was accepted by the Vaal University of Technology to study metallurgical engineering and RBPlat provided her with a bursary for her tertiary education. In her first year (2013) she achieved two distinctions and just missed obtaining distinctions in three subjects. She has continued to do well this year. Piet Molati, who was also enrolled on the gap year programme in 2012, improved his maths mark from 69% to an outstanding 90% and his science mark from 60% to 83%, gaining distinctions in both subjects. He was accepted at the University of Johannesburg to study metallurgical extraction and was also provided with a bursary by RBPlat. In his first year he obtained 10 distinctions, having achieved 90% and above in seven subjects and 80% and above for the remaining three. He received a R5 000 prize from the university for achieving an 80% average in his first year. In 2014 he received awards for being the eighth best student overall at the university and number one in the field of metallurgy.

A training session in progress at BRPM’s North shaft training centre

The skills development training we provided for employees at BRPM included supplementary skills development training and training people for a change in occupation: > 2 384 RBPlat employees received skills development training during 2014 > RBPlat employees received an average of 84 hours training each in 2014. During the period of our current SLP we have provided mentorship programmes to 936 people. These included: > 256 mining and engineering learnerships > 213 professional specialists (mineral resource management, human resources, finance and safety) > 206 women in development programmes

Royal Bafokeng Platinum Integrated Report 2014

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OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

SAFETY Key safety material issues Key performance indicators that were our focus in 2014

What we achieved in 2014

Application of safety strategy: > Road to resilience > Four barriers to injury (leadership, design, systems, behaviour) > High risk areas (FOG machinery, equipment, achieve a reduction in machine-related injuries) > Regulatory compliance > Fatal injury frequency rate > Number of days without injury > Lost time injury frequency rate > Improve our safety maturity level of 10% to move from compliant level to proactive level > Continue to grow our understanding of the role of human error in safety incidents

> Despite two fatal accidents, fewer Section 54 notices were issued to us in 2014 and as a result fewer 4E ounces were lost due to stoppages > 9% reduction in Section 54 notices > 19% reduction in 4E ounces lost > LTI-free month at RBPlat in March 2014 > RBPlat had 233 injury-free days* > Pre-start warning devices installed on all centre line winches and gully winches where the driver cannot see the return snatch block > Supervisors and safety representatives trained in root cause analysis technique (RCAT) > Over 8% of workforce completed the MQA skill training programme for safety representatives > RBPlat LTIFR* improved by 13% year-on-year

In > > >

> Safe execution and completion of the underground and surface infrastructure at Styldrift I > Serious injury frequency rate

> One serious injury at Styldrift I in 2014 compared with seven reported in 2013

> Continue to safely mine and equip the underground areas of Styldrift I on time without any serious injuries or loss of life by aligning safety plans with RBPlat’s safety strategy and road to resilience programme

> Comply with key legislation and certify management systems in terms of international standards including achieving OHSAS 18001:2007 certification at Styldrift I Mine > Integrated auditing process for certification for BRPM’s environmental management system (ISO 14001), quality management system (ISO 9001) for our training centre and occupational health and safety management system (OHSAS 18001)

> Styldrift I 18001:2007 certification achieved in March 2014 > BRPM recertification achieved in October 2014

> Maintain OHSAS 18001, ISO 14001 and ISO 9001 certification at BRPM > Maintain OHSAS 18001 certification at Styldrift

> Effective

> Continually interact with relevant stakeholders, including supervisor safety representatives and organised labour, to reduce safety incidents > Improve communication to minimise tramming-related incidents

> Various safety communication methods were established including mobile phone SMS lines, mass meetings, safety campaigns, safety suggestion boxes and safety newsletters > Investigated and tested different types of communication systems between locomotive and guard vans at BRPM

> Continuous interaction with the relevant stakeholders to ensure effective safety communication reaches everyone working at RBPlat > Adoption of the preferred communication system between locomotive and guard vans and its systematic implementation

> Effective leadership at all

> Improve leadership understanding of the role human error plays in safety incidents in order to reduce these incidents

> Conducted leadership training to improve knowledge of hazard identification and supervisory skills > Plan, organise, lead and control (POLC) training for supervisors aimed at increasing safety awareness

> Improved supervisory training provided by human resource development centre > Place additional focus on supervisory teams in sections that do not perform as expected > Monthly safe production review sessions with mine overseers and engineers

Key material issues in 2014

Focus for 2015

Towards operational excellence

> Continue to focus on our journey to

zero harm

communication

levels

> > >

> > >

order to improve our safety maturity level we will focus on: Achieving zero harm 20% improvement in LTIFR and SIFR Strengthen our road to resilience strategy through the inclusion of continuous application of the rule (CAR) programme going forward Implement new loco driver to loco guard communication system All trackless underground machines equipped with proximity detection systems Address new safety challenges presented by mechanised mining at North shaft Phase III, Styldrift I and the subsequent mining of hybrid areas No production lost due to external safety stoppages Focus on continuous application of the rule Employees’ duties for health and safety and their right to leave a dangerous workplace in accordance with the Mine Health and Safety Act (MHSA)

* These indicators have been assured. (See page 187 for the assurance statement)

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Royal Bafokeng Platinum Integrated Report 2014

111

OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

SAFETY continued Key health and wellness material issues Key material issues in 2014

Key performance indicators that were our focus in 2014

What we achieved in 2014

> The health

> All contract workers employed by our major contractors on RBPlat’s preferred medical aid (Platinum Health)

> Majority of volume contractors on Platinum Health

> All major contractors who are on site for more than three months to be on a preferred medical aid scheme

> Training of peer educators

> 185 wellness peer educators trained. Previously they were only trained as HIV/Aids peer educators

> More awareness campaigns to assist our enrolled employees and contractors with understanding how to improve their wellness

> No new cases of noise-induced hearing loss (NIHL) in line with the 2013 Safety and Health Milestone requirements > No deterioration in hearing greater than 10% among occupationally exposed employees as a result of exposure to RBPlat operations

> 24 new cases of NIHL*

> No new cases of occupational illness or diseases > No deterioration in hearing greater than 10% among occupationally exposed employees as a result of exposure to noise at RBPlat operations > No new cases of NIHL in line with the 2025 industry Safety and Health Milestone requirements

> 95% exposure measurement for respirable crystalline silica (RCS) to be less than an occupational exposure limit of 0.1mg/m3 as per the requirements in the 2012 Safety Milestone document. RCS is known to cause silicosis, a deadly lung disease > No new cases of occupational illness or disease

> No cases of silicosis > Improved the quality of our sampling and analysis techniques to detect even lower levels of crystalline silica > Not achieved: two cases of skin dermatitis

> No cases of silicosis > Continue to improve the quality of our dust sampling to detect even minute levels of dust

> Measure the number of employees and contractors counselled and tested for HIV and the number on antiretroviral treatment (ART). We also record the number of ART default cases > Conduct intensive education, motivation and support of our workforce to decrease the HIV incident rate (new infections)

> Ongoing intensive awareness programme > Because our testing percentage increased we have lowered the percentage of “not known” cases > 11 518 employees and contractors were counselled and tested for HIV* > 42 ART cases defaulted from their treatment in 2014* > 452 employees on ART in 2014*

> Intensive education, motivation and support to decrease the HIV incident rate (new infections) > All employees and contractors on Platinum Health medical aid which allows those who require ART to receive it

> Achieve early detection using innovative TB detection methods > Measure the number of enrolled employees and contractors who tested positive for TB and were treated for TB > Measure TB incidence rate

> 67 of the 464 employees who were tested for TB* in 2014 were found to be infected with TB*. This is an increase of 20% year-on-year > The TB incidence rate* for RBPlat in 2014 was 805/100 000 compared with an incidence rate of 713/100 000 for RBPlat in 2013 > Introduced immediate gene expert TB test

> Achieve early detection using innovative TB detection methods

and wellness of our employees

Focus for 2015

* These indicators have been assured. (See page 187 for the assurance statement) On page 106 of the Training and development section of the report you will find more information on the training intended to increase leaders’ understanding of the role human error plays in injuries, accidents and incidents and how this training can help leaders prevent injuries, accidents and incidents. There is more information on how we have improved the quality of our inspections, investigations and our understanding of why even if people are trained and correctly equipped they are still injured on page 114 of this report. Find out more about how Styldrift achieved its goal of improving its safety record, despite the build-up of personnel and activities on site in 2014 on page 115. For information on what RBPlat is doing to improve the safety, health and wellness of our doorstep communities see the Social and relationship capital section on pages 114. For more information on our efforts to improve the healthcare available in our doorstep communities refer to pages 128 to 132 of the Social and relationship capital section of this report.

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Royal Bafokeng Platinum Integrated Report 2014

113

OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

SAFETY continued The road to resilience RBPlat’s safety, health and wellness key stakeholders

COMMUNITIES

DEPARTMENT: HEALTH

DEPARTMENT: MINERAL RESOURCES

EMPLOYEES AND CONTRACT WORKERS

HEALTH AND WELLNESS SERVICE PROVIDERS

TRAINING PROVIDERS

UNIONS

There are two key issues that our workforce and our doorstep communities have indicated as material to them. These are that their family members working in our operations are provided with a safe and healthy work environment and that our operations do not adversely affect the health of the communities in which we operate and our workforce lives. We rely on our health and wellness service providers, Platmed, for occupational-related medical surveillance and emergency care and Platinum Health for wellness and non work-related medical conditions for our employees and contract workers. The clinics in our doorstep communities also provide our employees and doorstep communities with medical services and wellness education. We are very pleased that we were able to arrange for most of our volume contract workers to become members of a medical aid. The Department: Mineral Resources (DMR), which administers the Mine Health and Safety Act, 1996 (Act No. 29 of 1996) as amended, is responsible for measuring compliance with the Act. The department’s inspectors, who regularly visit our operations, have the power to stop work in our operations until such time as they are satisfied with the working conditions. As a result they can have a major impact on our production if they observe any non-compliance with the Act. At the regular meetings we have with the inspectorate we share information on our efforts to reduce injuries in our operations and to better understand the inspectorate’s objectives and concerns. The Department: Health is responsible for the public healthcare delivery system upon which the communities in which we operate depend for their healthcare. We assist the department in this regard, where required.

See page 128 of the Social and relationship capital section for information on our contribution to community health.

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Our internal and external trainers provide training that helps our

supervisors, managers and employees develop an understanding of how to keep themselves and their fellow workers safe and healthy.

Safety Our safety vision: zero harm > Every person working at RBPlat must return home unharmed every day > No rock will fall uncontrolled > No sub-standard winch will be operated > All loads will be properly supported > Kibble movement will be controlled and announced > No machinery is operated without authorisation > All machinery must comply with the original equipment manufacturers’ (OEM) specifications and be effectively guarded for safe operation.

RBPlat’s current maturity level

BASIC Little formal interest, exposed, regressive, vulnerable, starters

Our approach to managing safety in our operations Mining and its related activities expose our employees to hazards. Keeping them safe is therefore a key material issue for RBPlat. Key aspects of the management of safety in our operations include: > A safety strategy model, which we continue to improve and monitor, guides how we approach safety and health and how we investigate the causes of unwanted events in our operations. It also guides how we design and develop new projects. It helps us design our mines and operate them in a manner that makes them as safe as possible. The foundation of this strategy model is our: Safety code of conduct, Safety discipline and Safe teamwork. Its application also helps us build the resilience we need to enhance our ability to respond, monitor, anticipate and learn on our journey to zero harm > Codes of practice, standards and procedures that ensure operational safety are the direct responsibility of senior management. They are also responsible for providing visible felt leadership, appropriate

>

> >

>

REACTIVE Responsive, awareness

operational designs, workable systems and corrective behaviour with the aim of preventing unwanted events and eliminating fatalities. Our structure also clearly indicates the ultimate responsibility for safety of our Board and its sub-committees, and each individual enrolled employee and contractor working at our operations Risk assessments in accordance with the MHSA. We use this process to reduce the risks Ongoing research into what causes unsafe behaviour Ongoing safety coaching, training and development for both supervisors and their teams Our Senior Safety, Health, Environment and Risk (SHER) Manager is a member of the Chamber of Mines’ Occupational Health and Safety Policy Committee, chairs the Tripartite meeting for the North West province Rustenburg region and also represents employers on the Mine Health and Safety Council Board.

COMPLIANT

PROACTIVE

RESILIENT

Preventative, compliance, understanding

Competent

Resilient, generative, creative, excellence

Evaluating the effectiveness of our approach When it comes to safety in our operations we measure the effectiveness of our management approach against the safety results we have achieved and we continue to focus on improving the safety maturity level of our operations. This year we had successes and disappointments. The successes include RBPlat’s one million fatality-free shifts in June 2014, BRPM’s one million fatalityfree shifts by August 2014 and the fact that Styldrift I, during a difficult period when there were a number of contractors on site, was fatality-free for three and a half years before the fatal accident in October 2014. A further success has been that we have drastically reduced the number of fall of ground-related incidents at both BRPM shafts. We have also introduced advance strike gulley (ASG) netting to prevent fall of ground incidents in this area. Our disappointments have been the tragic loss of two lives, one at Styldrift I and the other at BRPM in October 2014, six days apart.

See our governance structure on page 172 of this report. See the safety, health and environment policy on our website at www.bafokengplatinum.co.za.

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HUMAN CAPITAL CONTINUED

SAFETY continued

0.300

0.500

0.015

0.010

0.421 0.400

0.300

0.289

0.020

Rate (/200 000 hours)

0.400

Our approach to the health and wellness of our workforce

0.011

0.500

Rate (/200 000 hours)

0.533

0.676

0.614

Rate (/200 000 hours)

0.600

RBPlat serious injury frequency (SIFR)

0.022

0.025

0.800 0.700

0.024

RBPlat fatal injury frequency rate (FIFR)

0.265

RBPlat lost time injury frequency rate (LTIFR)

We aim to eliminate occupational diseases by providing a workplace free from health hazards. By providing an effective health care programme to keep our workforce healthy, not only do we avoid the cost of expensive treatment, we also prevent human suffering.

0.200

0.01

0.01

0.100

0.024

0.005

0.000

0.000 2012

2013

2014

0.000 2012

2013

2014

Taking action to improve our safety performance against our road to resilience programme The inclusion of a counselling psychologist in the investigative process allows us to gather more information on what other factors contributed to the basic cause of an incident/accident. An unusually high frequency of accidents at BRPM in January 2014 resulted in the mine inspectorate issuing four Section 54s and 19 production shifts being affected. Using our investigative process and our continuous evaluation teams to coach and retrain the teams involved in these safety incidents we achieved a significant improvement in BRPM’s safety performance in March, April and May of 2014. RBPlat had 3% fewer injury-free days.

Steps we take to keep our people safe include ensuring footwear is in good condition, keeping travelling ways dry and minimising tripping hazards to avoid slipping and falling. Our minor treatment injuries increased by 23%. We completed the installation of the pre-start warning system on all advance strike gully (ASG) and centre gully winches at BRPM, to avoid start-up winch related injuries. Our highest number of injuries is as a result of handling of materials followed by slip, trip and fall injuries. See page 106 of the Training and development section of this report.

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Royal Bafokeng Platinum Integrated Report 2014

0.024

0.200 0.100

2012

2013

A healthy workforce is an advantage to our business because it means that our employees are fit to work at their full potential and absences due to sickness are reduced. If members of our workforce suffer from poor health it affects their families and the communities in which they live.

2014

Platinum Health operates the main BRPM clinic and satellite clinics at BRPM’s North and South shafts as well as Styldrift I.

All the clinics are equipped with the required medical staff and infrastructure. They deliver quality, first response treatment and cost-effective healthcare services across the healthcare spectrum to our employees. RBPlat complies with the requirements of the Mine Health and Safety Act in terms of medical surveillance reporting as well as injuries and occupational diseases. We also have a health and wellness strategy in place, together with the relevant policies, processes and procedures. Occupational health and hygiene policies, standards, monitoring and auditing are the responsibility of our Safety, Health, Environment and Risk (SHER) department. Line management is responsible for the implementation of occupational health and hygiene standards in the workplace.

The chairlift at BRPM’s North shaft was installed to provide employees with safer and faster transportation into the mine.

The role of training in safety Having previously identified a need to develop the leadership skills of our supervisors, team leaders and miners, we have focused on training in this area during 2014. This training included root cause analysis to help them understand the role human error plays in accidents and incidents. This training has been focused in our core mining areas where we have seen an improvement in our safety performance. Our focus in 2015 will be on addressing our service areas, as our injury rates have increased in these areas.

BRPM central Health and Safety Committee (meets quarterly, attended by area representatives)

Operational Health and Safety* committees (meet monthly) BRPM North shaft

BRPM South shaft

In 2015 management of change will be addressed, as past experience has shown us that all fatal accidents are connected to some type of people change.

Our occupational health vision To achieve our vision of zero occupation-related harm we: > recognise that all occupationrelated illnesses are preventable > make a consistent and sustained effort to ensure that there are no repeat occurrences of occupational diseases > apply simple, consistent and non-negotiable health and safety standards across our organisation to prevent occupation-related illnesses.

BRPM concentrator

^ As Styldrift I is in a project phase, contractor representatives attend the monthly Health and Safety Committee meetings

Central services

Styldrift I^

* The membership of each operational health and safety committee consists of: > A minimum of four employee representatives > Management representatives equal in number to or fewer than the number of employee representatives

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OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

HEALTH AND WELLNESS

Central services health and safety committee members are elected from members of operational committees by fellow members. Styldrift I currently has a separate health and safety committee. We have identified the main health issues affecting our workforce and we address these specific health needs. We also establish if there are any activities taking place at our mines that could affect the health of neighbouring communities. Should such a situation arise we would immediately take action to address any possible impact on the communities. To support Platinum Health’s wellness programme we have trained 185 workforce members who volunteered as peer educators. They received in-depth training during February and March 2014 on healthy living, chronic illnesses, lifestyle diseases, managing stress and personal finances, substance abuse (particularly alcohol and dagga), HIV/Aids and TB. Not only are the peer educators able to inform their fellow workers on a wide variety of health issues, their training also equips them to encourage changes in behaviour, attitudes and perceptions. They are an important first line of defence in our wellness communication with our workforce. The health risk assessment we conducted following the introduction of the peer educator programme indicated that our workforce are well informed about life style diseases and HIV/Aids. Evaluating the effectiveness of our approach to occupational hygiene Noise-induced hearing loss (NIHL) – the most common occupational health issue at RBPlat According to the World Health Organisation noise-induced hearing loss

(NIHL) is the most common permanent and preventable occupational illness in the world. It is one of the four non-fatal conditions listed among the leading causes of the global burden of diseases. It is certainly the most common occupational health issue in our operations. One of the challenges in identifying hearing loss is that it has a long latency period. The burden of HIV/ Aids, how the disease manifests and the impact of the treatment of the disease, also causes hearing loss.

This year we submitted 24 cases to Rand Mutual, of which two are pending. One did not qualify for compensation and two will be resubmitted at the request of Rand Mutual.

Our industry has committed itself that no shift in hearing loss caused by exposure to noise at work will exceed 10%. We are also committed to ensuring that the noise in our workplace does not exceed 110dBa (A-weighted decibels). The Mine Health and Safety Act accepts 85 decibels as the acceptable safe noise level for exposure during an eight-hour work day without hearing protection. All rock drills used at RBPlat do not exceed noise levels of 105 decibels. It is essential that we have a very good hearing conservation programme in place to ensure our employees are not affected by the noise they are exposed to in their working environment.

The only other occupation-related illness we experienced at RBPlat in 2014 was skin sensitivity to anti-bacterial powder. The skin of two employees reacted to the anti-bacterial powder used in PVC gloves.

If employees’ NIHL is due to exposure to noise at work they qualify for compensation. Those whose hearing loss is due to a medical condition, medication or age do not qualify for compensation for NIHL. Other occupation-related illnesses

We then provided them with gloves without anti-bacterial powder. A follow up showed no re-occurrence. Silicosis Miners working in platinum mines in the North West province of South Africa are at low risk of contracting silicosis. We do, however, identify people who have previously worked in other sectors of the mining industry and that have contracted silicosis. This happens during X-rays taken during routine medical surveillance examinations at our medical centre. The results of people who are identified as being affected by silicosis are submitted to the Medical Bureau of Occupational Diseases (MBOD). Following an investigation by the MBOD they receive compensation, which varies

depending on the level of their silicosis. Fifteen cases were submitted to the MBOD in 2014. We still await the Bureau numbers and follow ups from them.

Wellness programmes TB, which remains one of the highest killer diseases in South Africa, is a concern, both among our workforce and in the communities. Working in a mining environment where ventilation air is reused can increase a person’s susceptibility to TB as it is an airtransmittable disease.

Employees wearing the type of noise prevention equipment required in an environment where the noise level is above 85 decibels

Our induction training emphasises to our employees the importance of wearing suitable hearing protection devices. Advances in methods of reducing the noise made by equipment, plus the hearing protection devices we provide employees, are all helping us to achieve this goal. RBPlat already addresses hearing loss at a 2.5% move in hearing from the base line established when the employee first started work at RBPlat. It is, however, difficult to identify all causes of hearing loss, which can also be caused by activities outside the workplace.

Our NIHL statistics

Employees with NIHL of more than 10% that qualify for compensation Employees with NIHL of more than 10% that do not qualify for compensation

2014

2013

2012*

12

13

11

7

14

20

* In 2012 we hired a number of new enrolled employees and contractors who were found to have NIHL prior to being employed at BRPM

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Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

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OUR PERFORMANCE AGAINST THE CAPITALS

HUMAN CAPITAL CONTINUED

HEALTH AND WELLNESS continued

TB education and awareness campaign

Results of testing for TB among our employees

Thirteen of our peer educators represented RBPlat at the commemoration of World TB Day in March 2014. They returned better equipped for their role as peer educators, having increased their knowledge and understanding of the burden that TB imposes on South Africa and its neighbours, and the role the mines can play in minimising the burden through proper management of those diagnosed with TB. We can also prevent new cases through health education and early identification of employees at risk of contracting the disease.

> 464 employees were tested for TB in 2014. The X-rays taken at the routine medicals indicated the possibility of TB (391 were tested in 2013 and 424 in 2012) > 67 of those tested were found to be infected with TB in 2014 (56 in 2013 and 27 in 2012) and are on treatment. This shows a 20% change year-on-year in the number of our employees found to be infected with TB.

Community outreach As part of our wellness programme initiatives and our community outreach commitment, we embarked on a TB door to door campaign in the communities living in our four doorstep villages: Mafenya, Chaneng, Robega and Rasimone (collectively known as MACHARORA). This type of programme helps alleviate the workload of the local clinic, which because of a shortage of staff is unable to visit every household to screen people for TB. We partnered with staff members from the Rustenburg branch of the Aurum Institute, which focuses on HIV and TB prevention, treatment and care. We also worked with the community health care workers from the Tapologo Hospice in Robega. Through this initiative we were able to identify four people who were not aware that they had TB. We immediately enrolled them on a TB treatment programme and all the other members of their households were screened for TB. The outreach team educated members of the community on the signs and symptoms of TB and also gave them information on HIV and Aids. They were also given information on preventative measures, such as holding hands over the mouth while coughing and reporting to the clinic immediately on noticing any of the signs and symptoms of TB. TB remains a major public health problem in South Africa. Attempts to control, contain and eliminate TB within the confines of the mining operations have proved to be a failure. The idea of integrating the mine TB services with national and NGO initiatives, coupled with innovative technology and health information systems, is under serious consideration and may prove to be the most successful of all endeavours to achieve the WHO target of zero TB.

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ART defaulters remain a challenge for a number of reasons, which include stigma and denial. However, the number of people defaulting on ART is not significantly greater than defaulters being treated for other chronic medical conditions.

HIV education and awareness campaign To intensify our HIV awareness campaign, and continue to educate our workforce on HIV and Aids we held a candlelight memorial service to remember those who have lost their battle with Aids and to encourage and support all those living with HIV to continue taking their ART. One of the purposes of the service was to encourage people not to judge, discriminate against or stigmatise people living with HIV/Aids.

A woman who has been living with HIV for nine years encouraged and advised those who are HIV positive to follow the treatment prescribed for them and to eat healthily. Heads of departments from various sections of BRPM and Styldrift I also addressed the gathering and encouraged people to take care of themselves, and avoid spreading HIV.

TB incidence rate at RBPlat The TB incidence rate at RBPlat in 2014 was 805/100 000 (2013: 713/100 000). (The TB incidence number is expressed per 100 000 and not as a percentage.) These numbers reflect the employees diagnosed and treated at the BRPM clinic. They do not include employees diagnosed and treated at an external clinic.

Safety briefing at Styldrift I

HIV counselling and testing and antiretroviral treatment (ART) > This year 11 518 employees and contractors were counselled and tested for HIV as part of the initial and periodic medical fitness examinations compared to 9 998 in 2013 > 489 new employees and contractors tested positive for HIV in 2014. The known HIV positive employees and contractors were 2 279, bringing the total number of employees known to have HIV to 2 768. This shows an increase on previous years (2 349 in 2013 and 2 458 in 2012) > The HIV incidence rate in our employees was 4.6% in 2014 and in 2013 it was 3.4% > This shows a 1.2% increase in the new HIV incidence rate which requires that we intensify our HIV awareness campaigns and interventions > As part of alternative campaigns and interventions, circumcision will be promoted and rolled out > 452 employees were on ART in 2014 as at 31 December 2014, of which 312 are using our clinic service on site and 140 are using external service providers (412 in 2013, 430 in 2012) > 42 ART cases defaulted from their treatment in 2014. These numbers only reflect the employees registered at the BRPM and Platinum Health clinics.

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OUR PERFORMANCE AGAINST THE CAPITALS

SOCIAL AND RELATIONSHIP CAPITAL CONTINUED The Grade R class at Chaneng Primary School enjoys playing on the equipment provided by RBPlat before school starts. Their play area is fenced off to keep them safe

OUR PERFORMANCE AGAINST THE CAPITALS

SOCIAL AND RELATIONSHIP CAPITAL

OUR KEY STAKEHOLDERS OF SOCIAL CAPITAL

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OUR SOCIOECONOMIC IMPACT

126

INFRASTRUCTURE DEVELOPMENT

128

HEALTH SUPPORT

128

EDUCATION SUPPORT AND COMMUNITY SKILLS DEVELOPMENT

130

JOB CREATION AND POVERTY ALLEVIATION

130

OUR PLANS FOR THE NEXT FIVE YEARS

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OUR RELATIONSHIPS

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PERFORMANCE

ACHIEVEMENTS > > > >

RBPlat met its SLP commitments for 2010 – 2014 R413.4 million invested in our SLPs over the past five years Mining Charter HDSA preferential procurement targets exceeded Our investment in community skills development exceeded our target by 25%

IMPROVEMENTS > Major improvement in maths and physical science performance at Charora High School following our education support initiative at the school (see page 130 for details) > 30 families in our doorstep communities have new replacement homes that we built for them > The commercial community garden we helped establish in Chaneng village is doing well and is providing a sustainable source of income for the community members involved in this project > Five schools now have world class low maintenance sports facilities (see page 130 for details)

CHALLENGES > > >

Obtaining external authorisation to proceed with projects Sustainability of projects Projects delayed by legislative processes

DISAPPOINTMENTS > Leadership issues in the community made engagement with communities very challenging in 2014 > Some of the vegetable tunnels and accompanying infrastructure, which we provided to homes in Chaneng village, are not being used to provide these families with food and a source of income

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Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

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OUR PERFORMANCE AGAINST THE CAPITALS

SOCIAL AND RELATIONSHIP CAPITAL CONTINUED

Key social and relationship material issues Key material issues in 2014

Key performance indicators that were our focus in 2014

What we achieved in 2014

Focus for 2015

> Completing our social and labour plan (SLP) commitments in terms of the Mining Charter by the end of 2014 in time within budget

> All SLP commitments completed (See page 129 of this section of the report for our total social and labour plan expenditure)

> Develop close out report on 2010 – 2014 SLP projects

Towards operational excellence

Social capital

social and labour plan (SLP) commitments in terms of

> Meeting our

> Develop 2015 – 2019 databook > Delivering on our 2015 – 2019 SLP commitments

infrastructure development, health support, poverty alleviation and job creation, education support and community skills development > Meeting our Mining Charter

historically disadvantaged South Africans (HDSAs)

> Meeting and exceeding SLP discretionary procurement spend with HDSA suppliers (See page 134 of this section of the report for details)

> Achieved (See page 134 of this section of the report for details)

> Achieve zero harm. We did not achieve this focus (See the Safety, health and wellness section on pages 110 to 112 for detailed information)

> Not achieved (See the Safety, health and wellness section on pages 110 to 112 for detailed information)

> Zero harm

> Continue with CEO and Head of Operations engagements with production teams

> See page 103 of the Human capital section of this report for details of our performance in this regard

> Enhance operational efficiency and manage costs in all areas over which we have control and continue to fund socio-economic projects

> > > >

> Ongoing implementation of stakeholder engagement framework > 36 issues of Head of Operations’ newsletter published > Two issues of Lebone, our employees’ newsletter, published > Introduced monthly CEO email newsletter > Site map for employee portal developed through workshop sessions, design and development work in progress

> Ongoing implementation of stakeholder engagement framework > Extend CEO communication engagements to include those not involved in production > Effective recording of engagement and feedback > Completion of employee portal

> Despite lack of progress with community leadership, the efforts we put into engaging, establishing relationships and delivering on our commitments to the community have allowed us to maintain our relationships with the MACHARORA communities through scheduled monthly consultative forums. At the first meeting terms of reference and a governance policy were circulated for input and consideration > Improved communication through community newsletters

> Adoption of terms of reference for MACHARORA consultative forum > Offer leadership training to community leaders as a lack of training in this area has been identified as contributing to collapse of leadership structures > Assist with resolution of community leadership difficulties > Strengthen relationships with media and neighbouring mines

> 68.13% of our discretionary procurement was from HDSA* businesses

> Continuing to meet our discretionary procurement HDSA targets > Continue with our enterprise development efforts in the local communities

procurement targets while containing costs

> >

Impact on families of injuries in the workplace Impact on profitability of increased operating costs resulting in reduced ability to fund socio-economic projects

Relationship capital

good relations with unions and line management

> Support

Stakeholder engagement framework Head of Operations’ newsletters Employee newsletters Improve employee accessibility to information through development of employee portal

> Ongoing improvement of

stakeholder engagement processes > Lack of progress with

community engagement meetings due to breakdown of community leadership structures

> Ongoing engagement with communities regarding key issues they have raised as material to them > Community newsletters > Resolving status of community liaison officers (CLO)

communication with communities

> Ongoing

> CLOs met separately with Kgosana from RBN and a Rustenburg Local Municipality councillor and it was decided that the CLO contracts should be terminated

>

Ongoing improvements of stakeholder engagement processes

> Engaging with new Department: Mineral Resources (DMR) > Continue to engage and cooperate with local authorities > Engaging with government at national and provincial level and municipalities and community structures

> Contact made with Minister and other DMR officials > Local relationships working well in terms of SLPs, safety, the environment and working in partnership to support delivery of integrated development plans and RBN Master plan

> Policy development to better guide our stakeholder engagement > Continue to engage and cooperate with local authorities > Develop and implement a more structured relationshipbuilding exercise at national government level and with the DMR, in particular

* These key performance indicators have been assured (See page 187 for the assurance statement)

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Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

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OUR PERFORMANCE AGAINST THE CAPITALS

SOCIAL AND RELATIONSHIP CAPITAL CONTINUED

Our key stakeholders of Social capital Key stakeholders in terms of social capital are the communities in which we operate, the Department: Mineral Resources (DMR), and the Rustenburg Local Municipality. The key material issue for these stakeholders is RBPlat’s delivery against its SLP commitments, which is described in this section of our integrated report.

COMMUNITIES

DEPARTMENT: MINERAL RESOURCES

INVESTOR COMMUNITY

JOINT VENTURE PARTNERS

ROYAL BAFOKENG NATION AND STRUCTURES

RUSTENBURG LOCAL MUNICIPALITY

Engagement plays a key role in the successful implementation of our SLP and the establishment of successful relationships with these stakeholders. Issues within the community leadership structures have made engagement challenging this year and we have not been able to hold our monthly community meetings. Fortunately, the regular engagement we established over the past four years has stood us in good stead and relationships with our doorstep communities remained stable this year. We also continued to have regular contact with the community on an informal basis. These communities live in four villages: Mafenya, Chaneng, Robega and Rasimone. Together they are informally known as MACHARORA. The Robega village is on state owned land and the other three villages are on RBN land. Our community engagement team identified that the community leaders would benefit from development of their leadership skills and we plan to offer leadership skills training to community leaders in 2015.

Royal Bafokeng Platinum Integrated Report 2014

In terms of the Mineral and Petroleum Resource Development Act and the Mining Charter requirements, our SLP projects need to focus on five key areas: > Basic infrastructure > Health support > Education > Poverty alleviation and job creation > Community skills development

RBPlat’s doorstep communities

STYLDRIFT II

MAFENYA VILLAGE

BRPM NORTH SHAFT

Our SLPs, which are an important part of our Mining Charter Scorecard commitments and a pre-requisite for retaining our mining rights, drive the major part of our community investment.

In addition, 172 RBPlat employees contributed another 13 349 working days to the construction of these projects, the cost for which has not been included in our SLP budgets.

ROBEGA VILLAGE RASIMONE VILLAGE

CONCENTRATOR

We completed all the projects we committed to in our 2010 – 2014 SLP ahead of time and, in consultation with the communities, included some additional projects over and above our original commitments.

Our socioeconomic impact

CHANENG VILLAGE

STYLDRIFT I

During the period covered by this SLP changes were made to the RBN Master plan which meant it was not possible to carry out some of our projects. We consulted with the communities and the RBN on suitable replacement projects and submitted Section 102 applications to obtain DMR approval for these changes.

Approximately 350 local community members were employed on our projects during this period. Collectively, they were employed for over 35 000 days.

The Mining Charter requires that we conduct a needs analysis by means of a community consultative and collaborative process. Our needs analysis not only included consulting with our local communities but also included consultation with the Royal Bafokeng Nation (RBN), the local government and the Rustenburg Municipality to ensure our projects either complemented or integrated with their plans. The RBN has a 30-year Master Plan aimed at creating an environment in which people can live with

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dignity and have access to health, education and recreation facilities and employment opportunities that will allow them to maximise their abilities and talents. Local governments and municipalities have integrated development plans, which provide an overall framework for development aimed at improving the quality of life for all the people living in an area. Following this process we drew up our SLPs for the five-year period 2010 – 2014, which focus on the MACHARORA communities.

BRPM SOUTH SHAFT

A maths class in progress at Charora High School in the new maths classroom provided by RBPlat

For more information on the RBN Master plan see http://www.bafokeng.com/future/masterplan.

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OUR PERFORMANCE AGAINST THE CAPITALS

SOCIAL AND RELATIONSHIP CAPITAL CONTINUED

Six percent of our SLP investment is in community skills development. Details of what we have invested in and what we have achieved with this programme can be found on page 129 and in the Training and development section of this report on pages 106 to 108. The programme includes: > ABET training for both community members and our own employees > gap year learners needing to improve their maths and science marks in order to earn a place at a tertiary institution > providing bursaries for tertiary education > learnerships > skills training, which includes training women rock drill operators.

Infrastructure development Our investment in infrastructure includes establishing temporary Kgotla offices in the Rasimone and Chaneng villages, while we await approval of the plans by the RBN for more permanent structures. These offices play an important role in village communication and communication between the mine and the communities. We upgraded the police stations in Phokeng and Robega and also provided community centre facilities at the Robega police station. In 2010 BRPM was approached by members of the community who claimed that some of their houses were cracking due to mine activity. We established that the houses were not cracking because of mining activity, but because they had poor foundations and had been badly constructed. In keeping with our More than mining philosophy, we decided to provide the affected community members with safe homes. The MACHARORA Kgotla submitted a list of the affected houses and every year we build some houses to replace these unsafe homes. So far we have

built 25 new houses in Rasimone village and five in Chaneng. We have built roads in both the Chaneng and Robega villages, including an access road to the Association for the Blind’s vegetable garden in Chaneng. We also built a walkway so that the children in Mafenya village could walk home safely. The Pathology centre in Phokeng had originally been designed as a mortuary facility to store fewer than 20 bodies, which is now totally inadequate for the area’s needs. RBPlat was asked to assist with upgrading and extending the building so that it would meet requirements for some time in the future. We upgraded the technical facilities, renovated the existing building and extended it.

Health support The population growth in MACHARORA has meant that the clinic in Chaneng which provides primary healthcare to the villages was not coping with the number of people visiting it. To assist, we are paying the salaries of two additional professional nurses. We also donated a fully equipped ambulance, medical equipment, wheelchairs and furniture to the clinic in 2012. In addition, as part of RBPlat’s community outreach commitment, on 25 to 28 March 2014 we embarked on a TB door-to-door campaign in the MACHARORA communities. We partnered with staff members from the Aurum Institute from Rustenburg for this campaign. The Aurum Institute is an organisation which focuses on HIV and TB prevention, treatment and care. We also worked with the Community Health Care Workers from Tapologo Hospice in Robega on this programme.

A review of our delivery against our 2010 − 2014 SLP

The walkway we built in Mafenya village means the children are safer because they don’t have to walk in the road on their way to and from school

We invested

R413.4 million*

R133.0 million

between 2010 and 2014 on basic infrastructure, health, education, poverty alleviation, job creation and community skills development

total SLP expenditure for 2014 (R105.2 million in 2013)

We spent

R25.8 million

R2.5 million

on infrastructure development

on community enterprise development

R22.8 million

R280.2 million

on health support

on SLP human resource development

R32.3 million on education support

R31.3 million

R12.8 million on community skills development

on job creation and poverty alleviation * Including discretionary spend

SLP delivery 2010 – 2014

3% 1%

6% 6% 8%

8%

68%

SLP HRD Poverty alleviation and job creation Community infrastructure Community skills development Education support Health support Discretionary funds

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Royal Bafokeng Platinum Integrated Report 2014

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OUR PERFORMANCE AGAINST THE CAPITALS

SOCIAL AND RELATIONSHIP CAPITAL CONTINUED

Education support and community skills development

In support of the value of physical exercise and sporting skills

RBPlat is particularly committed to its education projects and skills development of community members and its own employees. This is because by providing them with education and development opportunities we are giving them better opportunities in life. We particularly want to help local children receive the maths and science education they need to be able to have a career in the fields of engineering, science or finance.

The RBN, through Royal Bafokeng Sports (RBS), focuses on using the positive influence of sport on society. We received an appeal from the Principal of Chaneng Primary School for assistance with the upgrading of their sports facilities. We consulted with the schools in our communities regarding their requirements and provided the five schools in MACHARORA with world class sports facilities. Each school has a FIFA approved artificial turf football field, a FIBA approved netball/basketball court, male and female change rooms, two pavilions, two boreholes and, where appropriate, we fenced them. We also provided transport for their sports teams and RBS undertook to support a school football league.

It is important that children receive the best possible teaching from the outset. The Chaneng Primary School had no classroom space for a Grade R class, so we constructed a classroom for them and also provided playground equipment. The children can now start their schooling in an environment conducive to learning. At Charora High School the facilities in the maths and science classrooms urgently needed attention. Both were upgraded and the school now has a state-of-the-art science laboratory. To go with the upgraded classrooms RBPlat, working with the Royal Bafokeng Institute, which is responsible for education in RBN schools, sought out the best maths and science teachers they could find.

Artificial surfaces were used for both the football fields and the netball courts to reduce upkeep.

Job creation and poverty alleviation Our job creation and poverty alleviation has focused on agriculture. Research has shown that the agricultural sector is able to create long-term jobs in small, medium and micro enterprises (SMMEs). The Rustenburg Municipality has prioritised SMME support in this sector.

We are delighted that since the upgrading of their classrooms and the introduction of two very skilled teachers there have been improvements in maths and science results. The Grade 11 learners, who have been taught by the new teachers for two years, have shown the greatest improvement in both maths and science.

Promoting food security and poverty alleviation

We have upgraded the Rasimone Intermediate School. We also support Thuto Thebe (Education is a shield), the education fund established by the Queen Mother of the RBN. Its purpose is to assist learners in and beyond the borders of the Bafokeng Nation and ensure that young South Africans are well armed with education, so they may go forward to spearhead a self-sufficient South African nation in the future.

We identified 75 households in the villages to participate in a project that supplied each household with a tunnel for growing vegetables, a roof tank with gutters to collect rain water, two 5 000 litre buried storage tanks with a silt trap to filter the rain water, and channels to collect surface water run-off and a hand pump. Each villager was provided with training on how to use all the equipment.

We have helped community members grow vegetables that they can use to feed their families and sell to earn an income, turned a start-up vegetable growing project into a commercial enterprise and are helping subsistence farmers become commercial farmers.

Agricultural enterprise development In 2011 BRPM, supported by an agricultural company, helped start a commercial vegetable garden using vegetable tunnels for the Association of the Blind. Today the garden, which is in Chaneng village, has a permanent workforce of eight community members who plant seedlings and monitor the irrigation and condition of the vegetables. When the vegetables are ready for harvesting the garden hires an additional four workers from the local community to assist. The garden supplies beetroot, spring onions, spinach, chillies, red, green and yellow peppers to a restaurant at Sun City, Fruit and Veg City in Rustenburg, Rasimone Primary School and the Johannesburg Market. RBPlat was asked by the communities to help the local livestock farmers to find sustainable solutions to the challenges they face, which include not having sufficient grazing available for the number of animals they own. We assisted by developing a database of the livestock, installing a spray race system and spraying, tagging and treating the animals. We also repaired the existing dam, built a new dam and installed a windmill and a borehole. The biggest challenge is that there are far too many cattle for the available grazing. In 2014 we introduced a livestock feeding programme in line with commercial farming methodologies. We were also asked by the Department: Agriculture and Rural Development to assist with an agricultural project in Taung in the North West province. We cleared 40 hectares of land and prepared it for planting, installed a pump and a pipeline and fenced the area.

Mathematics

27.15% improvement in the overall pass rate in Grade 10

34.85% increase in the overall pass rate in Grade 11

It will have facilities for light industrial manufacturing and will produce its own vegetables and poultry for hands-on learning by trainees who will be able to keep the profit from the sale of their produce. The RED Door (Real Economic Development) initiative will provide support in the centre. The centre’s facilities were completed by the end of 2014 and will start operating in 2015.

Physical Science

17% improvement

14% improvement

in Grade 10 marks

in Grade 12 overall pass rate

67% improvement in the overall pass rate in Grade 11

15% improvement in the average pass rate

The school told us that the foundation laid by the new teachers in 2013 is beginning to achieve a notable shift in the learners’ performance and hopefully, if this trend continues, they can expect some good results at the end of 2015 when the Grade 11 learners write matric exams

The start of the day in the Grade R classroom at Chaneng Primary School constructed and equipped by RBPlat

In support of the Rustenburg Local Municipality’s prioritisation of SMME support, we have developed a light industry centre with the aim of providing an incubation facility for SMMEs. The centre will provide infrastructure and offer support and training to agriculturally active households in the MACHARORA communities.

For more information on our community skills development programmes see pages 106 to 108 of the Training and development section of this report.

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Royal Bafokeng Platinum Integrated Report 2014

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OUR PERFORMANCE AGAINST THE CAPITALS

SOCIAL AND RELATIONSHIP CAPITAL CONTINUED

SLP commitments 2015 – 2019

We planned and received approval of our SLPs for 2015 – 2019 through consultative engagement with community leadership, the Royal Bafokeng Administrators (RBA) in terms of supporting and integrating with the Nation’s Master plan and the Rustenburg Local Municipality regarding supporting and integrating with its integrated development plan.

2% 5% 5% 8%

8%

11%

Our plans for the next five years

61%

We await approval of these plans from the DMR. Basic infrastructure

SLP HRD Poverty alleviation and job creation Community infrastructure Community skills development Education support Health support Discretionary funds

We will: > continue replacing the unsafe homes of villagers in MACHARORA with safe homes and repairing homes > build paved roads and a pedestrian walkway > upgrade the Rasimone/Mafenya cemetery. Health We will: > complete the forensic pathology facility in Phokeng > continue to support the Chaneng clinic with additional nursing staff > conduct a feasibility study into the construction of a health centre for the communities, which will be followed by the construction of the centre for which we will also provide support. We will be partnering with the Department: Health and neighbouring mines for the health centre project. Education We will: > continue with our school support programme to help local children receive the maths and science education they need to be able to have a career in the fields of engineering and science and to encourage more children to take maths and science for matric > invest in upgrading school infrastructure in our communities > continue to support Thuto Thebe > upgrade various schools by providing infrastructure and converting classrooms.

> continue with the MACHARORA livestock support programme > complete the Taung farming project.

The football field we installed at Charora High School is also used during lifestyle lessons

Charora High School Grade 11 pupils enjoy a game of football during the break

RBPlat has also budgeted for poverty alleviation and job creation projects in our labour sending areas. These are still to be finalised. Community skills development Our aim is to: > provide leadership development training to community leaders > continue with our training of community members as operators of the mechanised equipment used in Styldrift I > invest further in our apprenticeship programme.

Procuring from local community businesses Procuring from local black-empowered businesses helps alleviate poverty and can create employment in the region in which we operate. Over the past five years we have been able to meet, and where possible exceed, our preferential procurement targets in terms of the Mining Charter Scorecard and procure as much as possible from black-empowered businesses, but in particular local black-owned businesses. Procuring from local suppliers does, however, often come at a price premium because as small businesses they do not have the purchasing power or resources that would make them more competitively priced. To assist local enterprises RBPlat works with Royal Bafokeng Enterprise Development (RBED), which acts as a liaison between RBPlat and local small businesses. We appointed a Black Empowerment and Enterprise Development Manager in 2014, whose role is to assist these enterprises with their development and help local black-empowered businesses manage tender processes, contract negotiations and pricing.

Teacher Maggy Motshegoa, whose salary is funded by RBPlat, teaching the Grade 10 physical science class at Charora High School in the new science lab provided by RBPlat. Despite the size of the class (around 50 children) Maggy has achieved a 67% improvement in the overall pass rate of this class since she started teaching at Charora High School

Poverty alleviation and job creation We will: > complete and open the facilities of the light industry hub described previously

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OUR PERFORMANCE AGAINST THE CAPITALS

SOCIAL AND RELATIONSHIP CAPITAL CONTINUED

Our relationships

1 000

1 970

We spent

0.533

Discretionary procurement from HDSAs

704

on discretionary procurement from HDSA businesses over the past four years 2011

2013

R1.3 billion

R1.4 billion

2012

2014

Every aspect of our business interacts with stakeholders who are relevant to that particular part of our business, on issues that apply specifically to it.

We have identified and discussed these relationships in the relevant sections of this report. To assist you we have directed you to the specific sections of the report where you can find more information on our relationships with specific stakeholders in terms of the capitals, our Chief Executive Officer’s review, Transparency and accountability and the Group material issues.

R1.3 billion

R1.9 billion

The girls at Charora High School enjoy a game of netball

294

0.01

612

970

500

0

R5.9 billion

All our stakeholder relationships impact directly and indirectly on our business and its reputation. Because of the importance of stakeholder engagement and responsiveness to RBPlat it has the highest risk ranking.

546

R (million)

225

1 500

1 384

2 000

294

Discretionary procurement from HDSAs

2013

2014 Capital goods

Services Consumables

> RBPlat has exceeded Mining Charter targets for discretionary procurement from HDSAs since 2011 > 64.67% of discretionary procurement was from HDSA businesses in 2013

> 68.13% of our discretionary procurement was from HDSA businesses (R1.9 billion) in 2014

The purpose of our enterprise development programme is to identify opportunities to assist emerging and established local entrepreneurs with making their business more sustainable by increasing their capabilities and competitiveness. RBPlat’s supply chain management hosted an open day for suppliers in 2014. Its purpose was to update suppliers on our procedures and the process they need to follow in order to access HDSA procurement opportunities. RBED also attended the open day. Capital goods In 2014 RBPlat acquired 63.36% of its capital goods from HDSA suppliers, which amounted to R970 million. (The Mining Charter targets for capital goods

started out at 5% of discretionary procurement in 2010, increasing to 40% by 2014.) Services In 2014 we acquired 71.22% of our services from HDSA suppliers, which exceeded the Mining Charter target by 1.22%. (The Mining Charter targets for services started out at 30% of discretionary procurement in 2010, increasing to 70% by 2014.) Consumables In 2014 we acquired 79.68% of our consumables from HDSA suppliers, which exceeded the Mining Charter target by 29.68%. (The Mining Charter targets for consumables started out at 10% of discretionary procurement in 2010, increasing to 50% by 2014.)

A detailed table of our discretionary procurement spend can be found in our website at www.bafokengplatinum.co.za.

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OUR PERFORMANCE AGAINST THE CAPITALS

SOCIAL AND RELATIONSHIP CAPITAL CONTINUED

Our stakeholder relationships

Stakeholders

Investor community

Providers of debt

Employees and unions

Government and regulators

> Royal Bafokeng Holdings (RBH), Anglo American Platinum, institutional investors, retail investors and sell-side analysts

> South African banks

Employees:

> Departments: Environmental Affairs, Human Settlements, Labour, Mineral Resources, Water and Sanitation

> BRPM and Styldrift I enrolled employees, BRPM contractors and Styldrift contractors

> Royal Bafokeng Administration (RBA) > Rustenburg Local Municipality

Communities

Suppliers

Customers

Associated stakeholders

Business and joint venture partners

> Royal Bafokeng Nation (RBN), the Robega, Chaneng, Rasimone and Mafenya villages

> Major suppliers, such as Eskom and Magalies Water and mining and plant-related suppliers, SMME suppliers and sub-contractors

> Anglo American Platinum Limited

International and industry bodies:

> Anglo American Platinum, including Rustenburg Platinum Mine, Impala Platinum Limited and neighbouring mines

> JSE Limited

> International Platinum Group Metals Association (IPA) Local industry bodies: > Chamber of Mines of South Africa, South African Institute of Mining and Metallurgy

Unions: > National Union of Mineworkers (NUM)

> CEO’s Forum > The media > NGOs

Most material issues in 2014

> The most material issues this year were the capital raising programme and progress on the Styldrift I project

> Business profitability > Risk management > Progress of Styldrift I

> New wage agreement for enrolled employees

> Employee home ownership scheme

> Employee home ownership scheme

> Safety issues – fatalities and Section 54s

> Aligning contractor wage agreement with enrolled employees and all volume contractors on medical aids

> Labour relations

> Amendments to the Minerals and Petroleum Resources Development Act (MPRDA) > Water use licences

> Delivery of social and labour plan projects > Breakdown of formal community engagement as a result of leadership issues in the community

> Compliance with SLPs – completion and handover of projects > Royal Bafokeng Institute’s (RBI) relationship with Department: Education regarding upgrading maths and science teaching in community schools

> Continuity of supply of water and electricity

> Meeting terms of agreement

> Keeping abreast of market and industry developments

> Meeting and exceeding Mining Charter HDSA preferential procurement targets

> Reputation management

> Enterprise development in local communities

> Input into platinum industry labour relations stability

> Input into submissions regarding amendments to the MPRDA

> Success of capital raising programme > Implats royalty agreements > Partnering with neighbours on community projects

> Contract terms and pricing

> RBA’s relationships with Department: Traditional Affairs and Cooperative Governance > RBA’s impact on our ability to deliver our SLP projects > Alignment with Integrated Development Programme (IDP), employee home ownership scheme, rates, taxes and municipal services exemption > Compliance with JSE Listings Requirements

For information See pages 64 and 88

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Royal Bafokeng Platinum Integrated Report 2014

See pages 40 and 80

See pages 94 and 95

See pages 124 to 125 See pages 94 to 95, 110 to 111, 124 to 125 and 144 to 145

See pages 62 to 64, 134 and 151 to 152

CEO’s review

CEO’s review,

See pages 57 and 58

See pages 56 to 57

Royal Bafokeng Platinum Integrated Report 2014

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OUR PERFORMANCE AGAINST THE CAPITALS

NATURAL CAPITAL CONTINUED To manage the diversity on our sites RBPlat has developed a long-term biodiversity monitoring programme which includes an alien plant control programme, a fire management plan, the promotion of the sustainable use of natural resources in the area and improving our understanding of the biodiversity of the area

OUR PERFORMANCE AGAINST THE CAPITALS

NATURAL CAPITAL

SUMMARY OF MINERAL RESOURCES AND RESERVES

140

OUR KEY NATURAL CAPITAL STAKEHOLDERS

146

OUR APPROACH TO ENVIRONMENTAL MANAGEMENT

148

EVALUATING THE EFFECTIVENESS OF OUR APPROACH

149

PERFORMANCE ACHIEVEMENTS > Construction of water treatment plant on track > Maintained our ISO 14001 certification of BRPM > Obtained three environmental authorisations

DISAPPOINTMENTS > Our paper recycling project did not materialise as the service provider was only appointed in the last quarter of 2014 > An MPRDA Section 93 notice was issued by DMR to Styldrift I to address three minor environmental contraventions

CHALLENGES

IN SUPPORT OF UN GLOBAL COMPACT PRINCIPLES 7, 8 and 9 Environment As a signatory of the UN Global Compact (UNGC), RBPlat is committed to Principle 7: Businesses should support a precautionary approach to environmental challenges (See page 146) Principle 8: Undertake initiatives to promote greater environmental responsibility (See page 148) Principle 9: Encourage the development and diffusion of environmentally friendly technologies (See page 156 regarding product stewardship)

> Ongoing challenge of achieving a mutual understanding between communities/interested and affected parties and mining companies of the purpose of holding public participation meetings > Reducing our carbon and water intensities

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Royal Bafokeng Platinum Integrated Report 2014

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SUMMARY OF MINERAL RESOURCES AND RESERVES

The mineral resources and mineral reserves of RBPlat are classified, verified and reported according to the prescribed South African Code for Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC). The resources and reserves are stated as RBPlat’s attributable interest (67%) of Royal Bafokeng Platinum and include those of Boschkoppie 104 JQ, Styldrift 90 JQ and portions 10, 14 and 17 of Frischgewaagd 96 JQ. They have been prepared under the guidance of competent persons from RBPlat, in accordance with the principles and guidelines of the South African Code of Mineral Resources and Mineral Reserves (SAMREC Code, 2007, amended in July 2009). The remnant in situ mineral portfolio is summarised below.

RBPlat’s detailed resources and reserves statement can be found at www.bafokengplatinum.co.za

Legend

!(

Tonnage 4E grade Contained 4E ounces

MR subcrop UG2 subcrop RBPlat lease boundary Rustenburg Platinum Mines Impala Platinum Lonmin

Inclusive mineral resources, 67% interest of total resource and reserve classification Mineral resources

RSA major towns

Maseve

2014

2013

% change

Mt g/t Moz

243.12 6.12 47.83

243.01 6.17 48.20

0.04 (0.81) 0.77

Mt g/t Moz

80.21 4.13 10.66

80.54 4.11 10.65

(0.4) 0.5 0.1

Wesizwe Rustenburg layered suite Lebowa granite suite

Mineral reserves Tonnage 4E grade Contained 4E ounces

Royal Bafokeng Platinum

Mineral resource classification in accordance with the SAMREC coding Mineral resources Merensky

UG2

SAMREC measure

2014 %

2013 %

% change

Measured Indicated Inferred

50 30 20

45 35 20

11 (14) –

Measured Indicated Inferred

47 37 15

38 40 22

24 (8) (32)

!(

Rustenburg

Geological setting RBPlat mining operations and projects are positioned immediately south of the Pilanesberg Alkaline Complex within the Rustenburg Layered Suite (RLS) of the Western Limb in the Bushveld Igneous Complex (BIC). The BIC comprises four major zones and subsequent layered sub-zones and horizons, each with its own chemistry and characteristics. Multiple economic commodities are mined within the complex along the layering, including the platinum group metals (PGMs), chrome (Cr), vanadium and base metal by-products. RBPlat mines the economic layers of the RLS Critical Zone namely the Merensky reef and the second Upper Group Chrome seam (UG2 reef) for PGMs.

¹ 0

Location of RBPlat operations and projects

Inclusive mineral resources, 67% attributable to RBPlat, 31 December 2014

Resource classification

Royal Bafokeng Platinum Integrated Report 2014

25 000

Metres

Tonnes Mt

140

12 500

4E grade g/t

Contained 4E Moz

2014

2013

2014

2013

2014

2013

Merensky

Measured Indicated Inferred

53.73 34.12 20.44

47.65 39.28 20.83

7.50 6.97 7.76

7.51 6.98 7.80

12.96 7.64 5.10

11.50 8.82 5.23

Total

108.29

107.75

7.38

7.37

25.70

25.55

UG2

Measured Indicated Inferred

62.30 51.47 21.06

49.82 55.32 30.12

5.22 5.00 5.03

5.32 5.11 5.21

10.45 8.27 3.41

8.52 9.09 5.05

Total

134.83

135.26

5.11

5.21

22.13

22.65

Total

Measured Indicated Inferred

116.03 85.59 41.50

97.47 94.59 50.95

6.28 5.78 6.38

6.39 5.89 6.27

23.41 15.91 8.51

20.02 17.91 10.27

Total

243.12

243.01

6.12

6.17

47.83

48.20

Royal Bafokeng Platinum Integrated Report 2014

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SUMMARY OF MINERAL RESOURCES AND RESERVES CONTINUED

Keynotes The Merensky reef resources inclusive of mineral reserves increased by 0.54Mt and 0.15Moz due to the following factors, each of which contributed less than 0.5% change to the 4E metal content compared to 2013: > Increase in resource cut from 1.13m to 1.15m > Increase in 4E grade of 0.11%. The UG2 reef resources inclusive of mineral reserves decreased by 0.43Mt and 0.52Moz due to the following factors, each of which contributed less than 2% change to the 4E metal content compared to 2013: > Depletion > Decrease in 4E grade of 2% > Increase in geological loss of 0.69%. Exclusive mineral resources, 67% attributable to RBPlat, 31 December 2014 Tonnes Mt Resource classification

4E grade g/t

2014

2013

Merensky

Measured Indicated Inferred

26.21 22.19 20.44

20.94 25.90 20.83

2014

Total

68.84

67.68

UG2

Measured Indicated Inferred

35.60 43.51 21.06

23.33 47.52 30.12

Total

100.17

100.97

Total

Measured Indicated Inferred

61.81 65.70 41.50

44.28 73.43 50.95

Total

169.01

168.65

6.07

7.91 7.00 7.76

Contained 4E Moz 2013

2014

2013

8.06 7.10 7.80

6.67 4.99 5.10

5.43 5.91 5.23

7.57

7.62

16.76

16.57

5.08 4.99 5.03

5.20 5.15 5.21

5.81 6.98 3.41

3.90 7.87 5.05

5.03

5.18

16.20

16.82

6.28 5.67 6.38

6.55 5.84 6.27

12.48 11.97 8.51

9.33 13.79 10.27

6.16

32.96

33.39

RBPlat exploration department conducting down hole geophysics in the Styldrift II project area

Keynotes The Merensky reef resource exclusive of mineral reserves increased by 1.16Mt and 0.19Moz due to the following: > Increase in resource cut from 1.09m to 1.11m. The UG2 reef resource exclusive of mineral reserves decreased by 0.80Mt and 0,61Moz due to the following: > An increase of 2.9% in geological losses > Decrease in the 4E grade from the updated resource estimate. Mineral reserves, 67% attributable to RBPlat, 31 December 2014 Tonnes Mt Reserve classification

2014

2013

29.30 13.77

27.39 15.13

4.48 4.21

43.07

42.52

29.50 7.65

29.46 8.56

37.14 58.80 21.41

80.54

Merensky

Proven Probable Total

UG2

Proven Probable Total

Total

Proven Probable Total

80.21

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Royal Bafokeng Platinum Integrated Report 2014

4E grade g/t 2014

Contained 4E Moz 2013

2014

2013

4.46 4.19

4.22 1.86

3.93 2.04

4.39

4.37

6.08

5.97

3.87 3.71

3.88 3.65

3.67 0.91

3.67 1.00

38.03

3.83

3.83

4.58

4.68

56.85 23.69

4.17 4.03

4.16 4.00

7.89 2.77

7.60 3.04

4.13

4.11

10.66

10.65

Royal Bafokeng Platinum Integrated Report 2014

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OUR PERFORMANCE AGAINST THE CAPITALS

NATURAL CAPITAL CONTINUED

Key environmental material issues Key material issues

Key performance indicators that were our focus in 2014

What we achieved in 2014

Focus for 2015

> BRPM – commence with construction of the first phase of the water treatment plant and continue to measure total water usage > Styldrift I and BRPM to obtain approval of the amendments to the water use licences (WUL) > Amendments to the BRPM integrated water and waste management plan (IWWMP)

> First phase of the water treatment plant we are constructing will be commissioned in the first quarter of 2015 > RBPlat total water usage* increased by 6% year-on-year > The Styldrift I WUL amendment applications were resubmitted to Department: Water and Sanitation (DWS). We maintain ongoing engagements with them. We still await approval > The BRPM WUL amendment was also submitted to the DWS. We await approval > The BRPM IWWMP is not finalised

> Commissioning of first phase of water treatment plant in first quarter of 2015, which will reduce our dependence on Magalies Water > Continue to engage with DWS for the WUL amendments > Finalise the BRPM IWWMP and submit to DWS

> Styldrift I and BRPM to measure total energy consumption

> Decline in kWh/tonne delivered > Steady performance in kWh/tonne treated > Total energy consumption* increased by 8% year-on-year

> Reviewing energy saving initiatives already implemented with the aim of further optimisation and also implementing new projects identified

tonne of concentrate produced

> Achieving a reduction in our carbon intensity and measuring our greenhouse gas emissions (GHG) (Scope 1 and 2) and total energy consumption

> Slight decline in CO2e tonnes/ROM tonne delivered to the concentrator > GHG emissions (Scope 1 and 2*) increased by 14% and 12% respectively

> Reducing our carbon intensity per tonne of concentrate produced and per tonne ore delivered

Impact of additional concentrating capacity and the further

> Assessing the impact of establishing additional concentrator capacity and achieve environmental authorisations for the second phase of the plant upgrade

> Environmental authorisation was not required to upgrade the existing BRPM concentrator as the upgrade was already included in the approved Styldrift I environmental management programme issued by the DMR in 2008. The plant upgrade is in progress

> Assess the environmental impact of additional 100ktpm standalone UG2 plant. Initiate the environmental impact assessment (EIA) application process

> Finalise outstanding applications and environmental management programme (EMPR) amendments and roll out the stakeholder engagement framework

> Three EIA and EMPR amendment approvals were received > A public participation meeting was held with interested and affected parties on 9 April 2014 to share information on proposed new projects

> Obtain outstanding approvals for EIA applications and EMPR amendments and communicate with communities and interested and affected parties in this regard

Towards operational excellence

>

Water use management (this relates to the Group key material issue of availability of utilities)

>

Management of energy use (electricity and fuel)

>

>

Reducing our carbon intensity per

development of Styldrift I

>

Consultation with interested and affected parties regarding environmental impact assessments and management programmes

* These key performance indicators have been assured (See page 187 of the assurance statement)

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OUR PERFORMANCE AGAINST THE CAPITALS

NATURAL CAPITAL CONTINUED The Fraser Alexander team measuring the levels of the return water dam at BRPM

Key stakeholders of natural capital in relation to environmental management

COMMUNITIES

DEPARTMENT: ENVIRONMENTAL AFFAIRS

DEPARTMENT: WATER AND SANITATION

DEPARTMENT: MINERAL RESOURCES

EMPLOYEES

ESKOM

The communities in which we operate and our workforce are key stakeholders of RBPlat in terms of its approach to environmental management. Our social licence to operate depends on our relationship with the communities in which we operate. We are committed to preventing environmental pollution and ensuring that our operations do not negatively impact on the environment in which our workforce and the communities live and work. In terms of our environmental management our engagement with the community includes public participation meetings regarding environmental impact assessments and environmental management programmes. We also address environmental issues through our regular community meetings. One public participation meeting was held this year to provide interested and affected parties with information on our proposed new projects. Please refer to page 149 for details of these projects. Through the regular community meetings we were informed that our concentrator crusher plant was causing noise and vibration in Rasimone village. In conjunction with the Centre for Asset Integrity Management of the University of Pretoria, a technical solution was implemented to address the problem.

The Centre will establish the effectiveness of the solution and regularly monitor its continued effectiveness. We regularly engage with the Departments: Water and Sanitation (DWS), Mineral Resources (DMR) and Environmental Affairs (DEA) in connection with the environmental management of our operations. This allows us to ensure compliance with legislation, share our environmental plans and programmes with them and to better understand their requirements and any concerns they may have. RBPlat keeps its shareholders, potential investors and providers of debt informed on its environmental performance through its integrated report and presentations that its management makes to these stakeholders. We engage with our employees through meetings, induction training, awareness training, newsletters and environmental talk topics. Our aim is to ensure that they understand the importance of protecting the environment, the people living in it and the fact that the natural resources available to us and in particular water, are limited. We also ensure they understand our commitments in terms of our environmental management programme reports (EMPR), compliance with environmental legislation and our ISO 14001 environmental management system.

INVESTOR COMMUNITY

JOINT VENTURE PARTNERS

MAGALIES WATER

NORTH WEST DEPARTMENT OF RURAL ENVIRONMENT AND AGRICULTURAL DEPARTMENT

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Royal Bafokeng Platinum Integrated Report 2014

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OUR PERFORMANCE AGAINST THE CAPITALS

NATURAL CAPITAL CONTINUED

An integrated approach to our environmental responsibilities Project planning

Project construction

> Feasibility studies and environmental impact assessment (EIA), and social impact assessments (SIA)

> Management of environmental impacts: air quality, water quality and quantity, waste management, biodiversity management and hazardous substance management

Operation

Closure

Post closure

> Management of environmental impacts: air quality, water quality and quantity management, waste management, biodiversity management, hazardous substance management and concurrent rehabilitation

> Rehabilitation and land reclamation

> Ongoing environmental monitoring

Our approach to environmental management The environmental activities and areas of focus throughout our mining lifecycle Our approach to environmental management is based on international best practice, legal compliance and maintaining our environmental and social licence to operate. Key aspects of our environmental management include: > Governance

See page 172 of the governance report for a diagram showing RBPlat’s governance framework.

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Management accountability is central to our integrated approach. Our Board of directors and our Chief Executive Officer, assisted by the Board’s Social and Ethics Committee, are accountable for RBPlat’s environmental management and our impact on climate change. The Social and Ethics Committee, which is supported by our Sustainability Committee, also provides overall direction on our sustainability.

External independent environment audits are also conducted regularly to ensure compliance with the environmental procedures, standards, policies, environmental management programme reports (EMPR) commitments, permit conditions and legal and other requirements to which we subscribe. Line management is accountable for the effective implementation of the environmental management system (EMS). We review our environmental risks and opportunities annually and when the need arises. Management plans are in place for all our significant environmental risks. We measure and monitor our water usage (potable and industrial water, including our recycled water), energy consumption, surface and ground water quality, dust fall out levels, ambient dust and noise levels, particulate matter (pm10), as well as ground vibration. We submit our monitoring results to the relevant authorities as per our permit condition requirements.

The Senior Safety, Health, Environment and Risk (SHER) Manager reports on environmental matters at the Social and Ethics Committee. The Head: Corporate Sustainability reports to the Sustainability Committee and Social and Ethics Committee on corporate sustainability matters. The RBPlat Environmental Manager, who reports to the Senior SHER Manager, is responsible for environmental management at both BRPM and Styldrift I. > Compliance and control Our environmental team is responsible for ensuring that RBPlat’s environmental policies and procedures are aligned with all legal and regulatory requirements. The team is also responsible for the auditing of the implementation of environmental policies, standards and procedures in our operations.

> Strategy Our Group-wide environmental strategy was revised in 2014. This strategy is an integral part of the safety, health and environmental (SHE) management system we use to manage our environmental risks, aspects and impacts. > Management systems At BRPM our ISO 14001 EMS is audited for re-certification every year by independent external parties as part of our business strategy. Once stoping production begins at Styldrift I we will apply for ISO 14001 certification for the mine. We are currently developing the EMS for Styldrift I.

Evaluating the effectiveness of our approach We retained our ISO 14001 EMS certification for BRPM. We were disappointed that during a DMR inspection at Styldrift I on 19 June 2014 a Section 93 notice was issued in terms of the MPRDA. The inspectors identified three minor contraventions: the bund wall at one of the hydrocarbon storage

areas was too small; oil filters were incorrectly disposed of on bare ground next to a waste rock dump and in one area the inspectors found that we were not effectively minimising the effects of liberated dust, which led to air pollution. All three of these issues have since been rectified. The following EIAs and EMPRs were submitted and approved by the relevant authorities: > Addendum to Styldrift I original EMP for the placement of three ventilation shaft fans on surface > The transportation of ore via an overland conveyor belt from the Styldrift Mine Complex to the BRPM concentrator > Construction of the BRPM light industrial hub. We held a public participation meeting with interested and affected parties on 9 April 2014 to introduce them to the following projects: > Incorporation of Frischgewaagd Prospecting Rights into the existing Styldrift Mining Right. This project only requires a Section 102 application in terms of the MPRDA > Construction of a tailings storage facility (TSF) next to the existing BRPM TSF. This project requires authorisations in terms of the National Environmental Management Act (NEMA), the National Water Act, and MPRDA Section 102 > Relocation of an existing power line to accommodate the TSF. This project requires authorisation in terms of NEMA > Construction of a conveyor belt between the Styldrift Mine Complex and the BRPM concentrator. This project only required approval in terms of the NEMA as it was already approved in terms of MPRDA > Construction of storage facilities for fuels and other chemicals which are considered dangerous goods and the rehabilitation of the Styldrift I access road river crossing. These projects require approval in terms of the NEMA.

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OUR PERFORMANCE AGAINST THE CAPITALS

NATURAL CAPITAL CONTINUED

Our focus areas

Managing our emissions

Scope 2

Scope 3

There was a 12.7% increase in RBPlat’s total CO2e tonnes.

> 12% increase in Scope 2 emissions (produced during the production of the electricity we purchase from Eskom). The grid emissions factor for electricity has increased during the reporting period from 0.98kgCO2e/ kWh to 1.01kgCO2e/kWh

> 83% increase in Scope 3 emissions. The increase in Scope 3 emissions at BRPM is due to ongoing reclamation activities and is also attributable to a restating of the 2013 waste data due to both data collection challenges and the method for calculating GHG emissions associated with waste generation.

Scope 1 Air quality

Greenhouse gases (GHGs)

Water efficiency

> 14% increase in Scope 1 emissions (emissions from the consumption of petrol and diesel fuel). This was expected, as activity at Styldrift I increased so did the consumption of diesel by heavy off-road vehicles working on the project’s development.

322 640

289 279

350 000

316 681

Energy efficiency

293 577

Waste

298 650

Biodiversity

302 713

RBPlat GHG emissions per scope (2009 to 2014)

300 000 250 000

Climate change risks are complex as they include operational risks such as business continuity, employee health and safety, environmental aspects, regulatory aspects, community needs and their perceptions of the impact of the mining industry on their environment. The highest risks to our operations were identified as flooding and extreme storms which could cause business interruptions. Our operations are located in an arid water-scarce area where prolonged drought conditions could limit production growth or prevent us from operating. A reduction in the availability of potable water from Magalies Water could also interrupt our business, have health impacts and create tension between RBPlat and the communities in which we operate. We have taken steps to reduce our dependence on Magalies Water by building a water treatment plant at BRPM. See the water management section on page 152 for details.

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Our carbon footprint has been assessed by an external party every year for the past five years. We have used this information to help us improve our carbon intensity, however, the information is assessed at the end of each financial year. In order to better manage our carbon intensity we need to have more current information available to us. This will allow us to have the information we need to take immediate action to reduce our carbon footprint. To achieve this we are acquiring the necessary systems and equipment to measure our carbon footprint throughout the year. To reduce our carbon intensity we need to improve our efficiency in terms of the amount of fuel and electricity we use to produce a tonne of concentrate. Of course, we also have a social responsibility to make every effort to reduce our carbon intensity.

150 000

0

2009

2010

Scope 1

2011

2012

Scope 2

8 941

3 966

4 899

3 494

17 692

3 336

4 011

6 819

50 000

7 328

100 000

1 790

> 12.7% increase in our carbon intensity in 2014 > 7.8% decrease in carbon intensity per employee year-on-year > 1.5% increase year-on-year in emissions intensity in relation to the ROM tonnes delivered to the concentrator > 6.3% decrease in the revenue metric (carbon intensity per rand of revenue).

6 941

Climate change remains an important longer-term risk for our business. RBPlat has used the information gained from a climate change vulnerability risk assessment of our operation conducted by KPMG in its risk management model to ensure we reduce our exposure to these risks.

200 000

1 860

Understanding our carbon footprint

tCO2e

Our approach to climate change

2013*

2014

Scope 3

* The restatement of numbers for 2013 is as a result of improvements in our calculation methodology

Energy consumption Type of energy

2014

GJ

GJ

2012

GJ

285 288

1 027 037

271 184

976 262

285 362

1 027 303

5

Electricity consumption (MWh) Styldrift

32 668

117 605

22 590

81 324

19 377

69 757

45

Total electricity consumption (MWh) RBPlat

Electricity consumption (MWh) BRPM

2013*

% change

317 956

1 144 642

293 774

1 057 586

304 739

1 097 060

8

Diesel (kl) RBPlat

937

36

771

29.9

405

16

21

Petrol (kl) RBPlat

44

2

82

2.8

22

1

(46)

1 097 077

8

Total energy use in GJ

1 144 679

1 057 619

* The restatement of numbers for 2013 is as a result of improvements in our calculation methodology

Managing our limited resources Energy management BRPM’s electricity consumption increased by 5% year-on-year. The concentrator’s electricity consumption in 2013 was considerably reduced by a plant shutdown. Styldrift’s electricity consumption increased by 45% in line with the increase in project activities.

During 2014: > We completed the second phase of installing automatic control on the main ventilation fans vanes at both BRPM shafts > We shut down ventilation fans over weekends to reduce electricity usage

> Maintenance of our main compressed air system to reduce leakage is ongoing > We continued with the extension of our underground compressed air control system to lower levels > We automated the auxiliary pumps and cooling tower fans for the compressor projects.

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NATURAL CAPITAL CONTINUED

RBPlats carbon intensity1

Unit Metric

Quantity in unit 2013

Carbon intensity/ unit in 2013

Quantity in unit 2014

Carbon intensity/ unit in 2014

Relative % change (2013 to 2014)

Tonnes milled

tCO2e/’000 tonnes

2 010

0.134

2 112

0.138

3.3

ROM tonnes delivered to concentrator

tCO2e/’000 tonnes

2 310

0.116

2 471

0.118

1.5

4E ounces in concentrate

tCO2e/’000 oz

251

1.071

258

1.131

5.6

Platinum in concentrate (oz)

tCO2e/’000 oz

164

1.639

168

1.737

6.0

tCO2e/’000 ZAR

3 251

0.083

3 768

0.077

(6.3)

tCO2e/FTE

7 539

35.65

8 873

32.88

(7.8)

tCO2e/yr

292 773



326 606





Revenue (‘000) Number of employees Scope 1 and 2 emissions 1.

BRPM’s water consumption increase of 5% is in line with the increase in tonnes milled. Styldrift I water consumption increased by 39.8% due to the increase in mine activities. Water recycled by RBPlat increased by 10.3%. Phase I of water treatment plant which will treat excess water on the site for use in the BRPM concentrator to be commissioned in first quarter of 2015. Since we automated and expanded our potable water metering and management system we have a much better understanding of how and where we use water and are in a much better position to control our water usage.

The figures in this table only include those associated with mining operations at the BRPM JV site

Potential environmental impacts We will be reviewing all our energy saving initiatives in 2015, in partnership with energy specialists with a view to further optimising what we have already achieved by taking advantage of new technology that has since become available and introducing any new initiatives we identify. In 2015 we will be building intercept dams to catch fissure water at 2 level of BRPM’s North shaft, from where we only have to pump this water approximately 100 metres to the surface, instead of having to use additional electricity to pump water approximately 500 metres, if it is allowed to drop down to the lower levels of the mine. We have included energy management awareness as part of the mine induction and refresher programme when employees return from leave, for both our enrolled employees and contractors. Water management Our operations are in a water-scarce region where the increasing demand for fresh water has led to a shortage of water in some parts of the North West province. Our management of water resources includes: > reducing our potable water consumption by improving water use efficiencies and water recycling > preventing the contamination of ground and surface water resources > securing the availability of sufficient water for our current and future mining operations.

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No water sources, except Magalies Water, are significantly affected by withdrawal of water for RBPlat’s operations. RBPlat has secured an adequate water allocation for our current and future mining requirements at BRPM and Styldrift I. The first phase of the water treatment plant we are constructing at BRPM will be commissioned in the first quarter of 2015. Phase I will provide us with four megalitres of treated industrial water for use in the concentrator. Preventing contamination Work previously done on our clean and dirty water infrastructure at BRPM has ensured that we divert clean rainwater away from our operations and contain dirty water. The infrastructure in place at Styldrift I also ensures that rainwater is effectively diverted away from the operation.

We operate a closed loop system at BRPM.We use recycled water from the return water dams in our concentrator and the underground mine shaft areas reuse water from the Eriksson dams. We have also established a closed loop system at Styldrift I.

RBPlat identifies and mitigates the negative environmental impacts of its activities by conducting an annual impact assessment with objectives and targets set and implemented to address significant environmental impacts.

The explosives we use during our mining activities have the potential to deposit nitrates in the water if incorrectly managed. We monitor the levels of nitrates in our industrial water. Our explosives team is implementing stringent management measures for the handling and use of our explosives. We report the quality of our process water to the DWS as per our water use licence requirements. Water use licence audits are conducted by external independent parties and these audit reports are sent to the DWS.

Dust fall out is monitored on a monthly basis using the 22 dust buckets located within the RBPlat mining area as well as

Air quality

the surrounding communities. The dust buckets are collected by the Environmental department and analysed by appointed service providers who compare the results with SANS 1929:2005 dust fall-out standards. None of the dust fall-out buckets outside the mine exceeded the standard limit. A PM10 monitoring station is located at BRPM’s central offices. Although the frequency of the monitoring did not meet the standard, the results were below the prescribed limit. Ambient noise is also monitored and analysed by external independent parties and is within the prescribed limits. Biodiversity impacts Biodiversity assessments conducted in 2003/2004 and 2009 identified eight distinct biodiversity management units at BRPM and delineated biodiversity management plans. Baseline biodiversity and landscape function studies were conducted as part of the environmental impact assessment for Styldrift I.

Phase I of the water treatment plant at BRPM under construction

Water efficiency Year Potable water – BRPM (Ml) Potable water – Styldrift (Ml) Potable water – RBPlat (Ml) Recycled water (Ml) BRPM tonnes milled (kt)

2012

2013

2 090.6 74.3 2 164.9 1 706 2 214

2 026.1 63.0 2 089.1 1 194.53 2 010

0.944 0.978 0.770

% change 2014 year-on-year 2 126.7 88.05 2 214.75 1 317.84 2 112

5.0 39.8 6.0 10.3 5.0

1.008

1.007

(0.1)

1.039

1.049

1.0

0.594

0.624

5.1

Efficiency Potable water – BRPM (kl/tonnes milled) Potable water – RBPlat (kl/tonnes milled) Recycled water (kl/tonnes milled)

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NATURAL CAPITAL CONTINUED

The aim of our biodiversity management plans is to protect and enhance the local ecology. We are committed to rehabilitating and restoring the land both during the life of our mines, as well as after mining activities have ceased.

waste, which must be correctly disposed of to prevent any negative impacts on the environment. Our environmental strategy and policies set stringent standards for the management of waste and mine residues (tailings and waste rock).

To manage the diversity on our sites we have developed a long-term biodiversity monitoring programme which includes: > an alien plant control programme > a fire management plan > the promotion of the sustainable use of natural resources within the area > improving our understanding of the biodiversity in the area.

The tailings from our concentrator operations are disposed of at the BRPM tailings dam and waste rock is dumped at the waste rock dumps situated at BRPM’s North shaft, South shaft and at Styldrift I shaft.

We maintain firebreaks to reduce the loss of biodiversity during fires. We plant indigenous trees on our property and in schools in our local communities during Arbour Month. The primary human activities which could adversely impact the biodiversity at our mine and projects include: digging quarries in sensitive/intact areas, infrastructure construction, the disturbance caused by the presence of humans, altered or inappropriate fire regimes, the destruction of slow-moving fauna by vehicles, noise, dust, airborne and gaseous emissions, the fragmentation of habitats by roads, habitat loss, the disturbance of vegetation, invasion of a site by alien vegetation and a deterioration in water quality. These activities are continually monitored to avoid adverse impacts on the biodiversity. Closure liability assessments are conducted annually by independent external parties for both BRPM and Styldrift I and financial provisioning is made for the environmental rehabilitation. An environmental trust fund document has been compiled and submitted to the DMR, in accordance with the DMR’s requirements. BRPM has an interim closure plan in place. The final closure plans will be prepared five years prior to closure of the mine. As the Styldrift I project is not yet operational no closure plan has as yet been prepared. Effluents and waste Effluent Our operations are zero-effluent discharge operations. In terms of our licence conditions no discharges are permitted. As mentioned previously, we operate a closed loop system. Our mining and metallurgical operations generate hazardous and non-hazardous

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We prioritise the maintenance of the integrity of our tailings dam, which is designed to handle a 100-year flood. We have processes in place to ensure we continually check the structural capacity of these dams. Some of the waste rock dump is reclaimed for further beneficiation and is used in the civil construction sector in and around the area. General/domestic waste > 106% increase in amount of waste sent to licensed landfill by BRPM as a result of improved sorting of waste at our salvage yards. This was also as a result of increased clean up activities in our operations > Overall waste production and disposal increased by 56.6% due to the increase in Styldrift’s waste production and reclaiming activities at BRPM. The aim of our waste management plan is to actively manage the amount of waste we produce by reusing and recycling whenever possible. We dispose responsibly of the waste we generate and minimise the amount of waste we send to the landfill. The waste from Styldrift I project will increase over the next few years as activity increases. Already the increased activity in 2014 has resulted in the volume of waste produced by Styldrift I increasing 73.8% year-on-year.

medical waste incinerator and we have been issued with certificates of safe disposal. Industrial waste We sort most of our industrial waste on site and reuse where possible. We recycle our industrial waste responsibly, which includes scrap metal, by using accredited service providers to transport our recyclable waste to recycling companies.

Explosives waste

Hazardous waste

Our Explosives Coordinator is responsible for the use and management of explosives on site. As required by the Explosives Act (Act No 26 of 1956) our explosives waste (empty boxes, cartons and packaging which has previously contained blasting material) is destroyed daily by controlled burning in the demarcated destruction bay on site.

Our hazardous waste produced at both BRPM and Styldrift I is collected, transported and disposed of by appointed service providers at Holfontein, an approved hazardous waste site, which issues us with safe disposal certificates. RBPlat does not import, export or treat waste deemed hazardous under the Basel Convention Annexures I, II, III and VII.

Waste production and disposal Type of waste BRPM Landfill waste Incinerated medical waste Recycled industrial waste Hazardous waste Total BRPM waste

2014 Tonnes

2013 Tonnes

2012 Tonnes

4 306 2.0 1 750 212

2 090* 1.2 1 735.4 209.0

5 645.0 2.4 2 130.0 146.0

106.0 66.7 0.8 1.4

6 270.0

4 035.6

7 923.4

55.4

273 216 14.9

171.0 94.9 24

65.0 17.3 –

59.6 127.6 (37.9)

Styldrift I project Landfill waste Recycled waste Hazardous waste Total Styldrift I waste Total RBPlat waste

% change year-on-year

503.9

289.9

82.3

73.8

6 773.9

4 325.5

8 005.7

56.6

* This number has been restated as the December 2013 figures were previously omitted

Materials used by RBPlat for the past two years RBPlat Material

Units

Acetylene

kg

Explosives

kg

Fire extinguishers

kg

Refrigerants

2013

% change year-on-year

5 609

4 988

12

5 273 075

5 011 900

5

918

107

2014

1 900*

kg

12





Company-owned vehicles – Petrol

litres

44 186

82 128

(46)

Company-owned vehicles – Diesel

litres

936 766

772 410

21

* The increased use of fire extinguishers was as a result of three industrial fires

Our supply chain management identified and appointed a black-owned recycling company as part of RBPlat’s enterprise development programme to start providing our operations with paper recycling services in 2015 and this should decrease the amount of waste landfilled. Medical waste Appointed contractors are responsible for collecting and transporting the medical waste to the approved site. Medical waste from our BRPM clinic is incinerated at the approved Roodepoort

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NATURAL CAPITAL CONTINUED

Product responsibility RBPlat’s mining lifecycle includes exploration, project development, mine construction, operation and concentrate production. Our final product is a concentrate which is sold to a single customer, Rustenburg Platinum Mines Limited (RPM), a wholly owned subsidiary of Anglo American Platinum (Amplats), through a concentrate offtake agreement. The concentrate must meet certain specifications in terms of the offtake agreement in relation to the PGM moisture and chrome content for each tonne of concentrate. These product specifications are assessed through specific and proven procedures agreed to by RBPlat and RPM. Our metals The platinum group metals (PGMs) – platinum, palladium, rhodium, osmium ruthenium and iridium – occur together in nature alongside gold, nickel, copper, cobalt and chrome. Many of the unique properties of PGMs make them indispensable to modern technology and industry and their markets are many and varied, from the automotive industry to the medical field. The markets for our products are the same as those for all platinum producers (see our Operating context section on page 16). Product uses As a vital component in autocatalytic converters, PGMs play a significant role in reducing air pollution by limiting the discharge of carbon monoxide, hydrocarbons, nitrous oxides and particulates. Approximately 56% of global PGM production is used in autocatalytic converters. The South African government is interested in exploring the use of stationary fuel cells to produce electricity in remote rural areas where the use of this technology could be more costeffective than installing the infrastructure necessary to bring Eskom power to these areas. This type of electrification would bring with it positive socioeconomic benefits for communities. Fuel cell minigrid electrification technology is an attractive cost effective alternative to grid electrification in remote areas. Fuel cells offer a more efficient low carbon option than using diesel generators to supply rural communities.

Amplats, in partnership with Ballard Power Systems, is conducting a field trial using methanol fuel cell technology, which is the first of its kind in the world, to supply primary power to 34 households in the Naledi Trust community. The system consists of three platinum based 5Kw fuel cells, each with a methanol reformer integrated into a power generator system that includes inverters, controls, a battery bank and a methanol tank. Establishing a fuel cell industry offers South Africa the opportunity to develop a new high-tech manufacturing sector that could create thousands of new jobs. It would also contribute to the local beneficiation of platinum and the production of a range of fuel cell products that could be exported to Africa and elsewhere. Amplats is also developing a fuel cell powered locomotive, dozer and loader. In addition it is supporting the London Hydrogen Network Expansion Project and will be taking delivery of a fuel cell powered motor car in London early next year.

The refiners and marketers of our PGMs recognise the responsibility they have as suppliers of PGMs to build value chains that minimise the negative and enhance the positive impacts of PGMs over their lifecycles. The metals produced from our concentrate are sold into the global marketplace by Anglo American Platinum, which meets its product stewardship commitments in collaboration with key stakeholders including government, industry associations, the scientific community and civil society organisations. There have been no incidents of non-compliance with regulations and voluntary codes concerning our products and we have not received any fines for non-compliance with laws and regulations concerning the provision and use of our products and services.

The flotation process in the RBPlat concentrator

Product stewardship We systematically address the safety, health and environmental issues relating to our products at all stages of the product lifecycle. The refiners and marketers of our PGMs have specific measures in place to protect the health and safety of those using or delivering our products. Mineral safety development sheets are provided with all mining products and directed at industrial users. Our products are not delivered directly to customers. We are committed to minimising the dispersion of metals back into the biosphere and reducing the environmental and health risks associated with this. We aim to ensure the health, safety and environmental risks associated with the use, recovery, recycling and disposal of our products are properly understood by customers and mitigated. Since our metals are sold into a global marketplace, we believe that meeting our product stewardship commitment is best done in collaboration with key stakeholders. Much of our engagement on product stewardship is done via our membership of the International Platinum Group Metals Association (IPA).

http://www.angloplatinum.com/business/ products/what_is_platinum.asp

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157

OUR PERFORMANCE AGAINST THE CAPITALS

INTELLECTUAL CAPITAL

The key elements of our intellectual capital are: > our ability to establish successful relationships with our stakeholders > using technology and innovation to achieve long-term sustainability > the skills and experience of our production team > our investment in our people and the communities in which we operate > our ability to adapt to a changing business environment, achieve cost efficiencies and the courage to make tough decisions > the strategies, policies, procedures and codes that govern how we do business > robust and fit for purpose computer systems > our ability to deliver on projects

Night view of BRPM

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159

OUR PERFORMANCE AGAINST THE CAPITALS

INTELLECTUAL CAPITAL CONTINUED

We recognise that intellectual capital is a real business asset, however, measuring it can be difficult. We see it as stemming from three sources: > Products and intellectual property > Human capital > The knowledge and expertise that resides in the way things are done in a business, which includes systems, procedures and protocols. We have chosen to focus on the knowledge and expertise behind the way we do things in RBPlat in this section of our report.

Stakeholder relationships The ability to establish and maintain successful relationships is a key business asset, which is difficult to measure. Relationships, both internal and external, play a key part in a company’s ability to succeed. The value we place on relationships with our stakeholders is highlighted in each section of this report. Stakeholder engagement has been an important part of what we do since RBPlat started operating. To formalise these processes and identify gaps and weaknesses we developed a stakeholder engagement framework in 2013, which was approved by our

For more information on employee engagement see page 103 of the Human capital section of this report.

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Board. We began implementing the framework in 2014. Face-to-face communication is a key part of communication in a mining environment and to strengthen this we have invested, and will continue to invest, in developing the communication skills of our team leaders. It is a challenge to engage with a large workforce that has limited access to technology. We constantly research new solutions and in 2015, as part of our implementation of an employee portal, we will be experimenting with sending information to our employees’ smartphones.

Using technology and innovation to achieve longterm sustainability The challenge for RBPlat is to harness innovation and technology to constantly improve the way in which our mines are developed and operated for long-term sustainability. Several RBPlat objectives will drive future innovation and technology change, including: > lowering production costs > enhancing the productivity of workers and equipment

Load haul dump operations at work in Styldrift I, a mechanised mine

> opening up new reserves and extending the life of the existing ore bodies > continuing to meet regulatory and stakeholder requirements in areas such as health and safety, environmental impacts and land use. Some of the technology and innovation projects presently underway at RBPlat: > Mechanisation of the mining process: The large scale adoption of mechanised mining techniques at Styldrift is a key aspect of what sets the mine apart from other large underground platinum mine operations. The relatively confined spaces in which underground mobile machinery operates in this environment ensure that the human-machine interface remains a high risk aspect on mines where such operations are carried out. To this end, the industry is striving towards the development and implementation of effective collision avoidance systems. Such systems have the potential to reduce and even eliminate collisions between personnel and machines (which inevitably cause serious injuries) and between the vehicles themselves.

The desire for safe, efficient production is leading the industry towards the integration of the power and drivetrain controls of the original equipment manufacturers (OEM’s) machine and sensor systems which third party companies have developed to implement proximity detection protocols. When combined with high speed underground data network infrastructure such as that currently being installed at Styldrift, this integration also enables the convergence of these technologies with software based maintenance and fleet management systems. These systems have previously been focused on large open-cast or underground block caving operations and have not yet been successfully implemented in underground low profile mines such as Styldrift. This places Styldrift at the forefront of the journey towards a safe and productive mining environment and will ensure its resilience into the future. The system will focus on the integration of machine health monitoring with the planned maintenance system and the monitoring of productivity parameters.

Software packages running simple algorithms will analyse the data produced and advise management of events which are reducing production efficiency and consequently, where opportunities exist to improve performance. > Automation: The number of decision making events that are required on a daily basis in such a large operation as Styldrift means that the probability of an incorrect option being chosen somewhere in the production process is relatively high. Whilst standard operating procedures and training in them are vital to minimising this probability, so too is the embedding of operational best practice within the operating systems of the machinery in use on the mine. All electrically driven fixed machinery installations at Styldrift are operated by localised programmable logic controller-based software and will be connected to an integrated monitoring system via the high speed underground data network. The primary systems that will be operated and monitored in this fashion are: – man, material and ore hoisting – ore conveying – utility supply systems (water, power, ventilation and the pumping of return water).

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OUR PERFORMANCE AGAINST THE CAPITALS

INTELLECTUAL CAPITAL CONTINUED

The skills and experience of our production team We depend on the skills and experience of our production team to mine safely, achieve our production targets and contain costs. The team has been particularly successful in achieving both production targets and cost containment in 2014. Our focus this year has been on developing leadership skills, with a particular emphasis on communication skills. We trained leaders to have the correct conversations regarding performance and keeping safe. The depth of skills and experience in our production team was also demonstrated on the departure of the General Manager at Styldrift I and our Chief Operating Officer, when we were able to fill their roles from within.

Our investment in our people and the communities in which we operate We need to be able to plan the size, the workforce we require and the type of skills we require. Our production achievements in 2014 reflect the abilities of our team to ensure our workforce is suitably resourced in terms of both numbers and skills. We are committed to drawing our human resource requirements from our local communities and, of course, the Mining Charter also requires us to invest in the development of skills in these communities. We want to avoid making an investment that achieves very little in terms of effectively upskilling these communities, so we make every effort to ensure that our investment in community skills development is effective. A review of our achievements so far in this regard is very encouraging. We have learnt a great deal over the past five years and, hopefully, putting these learnings into practice over the next five years (the period covered by our next social and labour plan) will allow us to accelerate our progress in this regard. Information on what we have achieved so far can be found on pages 128 to 132 of Social and relationship capital.

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Our ability to adapt to a changing business environment, achieve cost efficiencies and have the courage to make tough decisions 2014 has been a tough year for the platinum mining industry. Without the ability to adapt to a changing business environment during this period we would not have achieved what we did in terms of labour stability, production and cost efficiencies. Our decision to invest in our people by building houses, which allows them to purchase homes in a suburban setting for the first time in their lives and to own an asset that will give them capital growth, was a tough one in these times, but we believe it was a wise one. A stroll through Waterfall Hills Estate where the families of our employees are living in a safe environment, and our labour stability, is proof of the wisdom of making this tough decision. Refer to page 103 of Human capital for details of this project. Cost management has been embedded in our business and while we could not achieve the large scale cost savings of 2013, we managed to operate below mining inflation in 2014. We have improved our performance systems to include cost drivers alongside production and safety performance targets.

The installation of the new Outotec Larox® filter, which is part of the expansion of the RBPlat concentrator, in progress

The strategies, policies, procedures and codes that govern how we do business Strategy The strategic objectives we developed when we first took over the management of the BRPM JV have stood the test of time and they still continue to work for our business. The time and intellectual thinking that we invested in their development has paid off. To ensure they remain valid we constantly review them to ensure they are the right strategies for our business in a constantly changing environment. See the CEO’s Strategic review on pages 56 to 57 for a review of our performance against these strategies. Policies and procedures As we explained in 2013, over the past four years we have developed our own policies and procedures, migrated and optimised our information communication and technology (ICT) infrastructure and the mine technical system and set up our own supply chain capability and implemented a shared services function within the business. During 2014 we revised and updated a number of our policies and frameworks including our: > sustainability framework > environmental policy > fraud and corruption prevention policy. We focused on incorporating all our supply chain processes under one functional area to ensure that processes and policies are in place to integrate all procurement into the supply chain function.

We also reviewed and revised our ICT framework and controls, after reviews by our external and internal auditors identified that while overall, good governance and control are being practised with regard to RBPlat’s ICT systems it has not been formally recorded and some gaps existed in terms of governance and control. Creating a more formalised ICT governance framework will form part of bringing our governance framework to its next level of maturity in 2015. Risk management The ability of a business to identify and manage its risks is key to its sustainability. RBPlat has adopted an enterprise risk management approach (ERM) which provides us with an integrated approach to the management of our business risks within a complex and ever-changing environment. Our ERM strategy, framework and policy area is closely aligned with our business strategies. This year we introduced a risk appetite policy to our risk management policy suite, which includes a SHE policy, a sustainability policy, a fraud and corruption prevention policy and a Code of Ethics. For details of our approach to risk management see pages 40 to 51 of this report.

Robust and fit for purpose computer systems We continued with our journey to further optimise our ICT systems during 2014, which is an important part of providing our business with integrated information. We also need to make sure our data is accurate and credible. This year we began implementing improved business planning and

consolidation (BPC) software which will make it possible for us to access business information and help us to monitor and manage our performance on a daily basis. It will also allow us to spend more time on analysis, planning and decision-making rather than the time-consuming effort of consolidating business information from various sources. The BPC implementation project forms part of RBPlat’s ICT strategy and systems development plan. It also supports the cost containment strategy adopted in 2013. We will continue to build on and improve our reporting systems with the aim of further integrating information so that we can make informed business decisions as quickly as possible.

Our ability to deliver on projects The future sustainability of RBPlat depends on our ability to achieve our organic growth plans. The right level of owner involvement is the key to project success. In order to be able to deliver our key projects on time, within budget and according to plan we are investing in improving our management, technical and supervisory skills. This year we had the disappointment of the Styldrift I project falling behind schedule. We have used this as an opportunity to learn and improve our project performance in future.

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Styldrift I project

TRANSPARENCY AND ACCOUNTABILITY

CHAIRMAN’S CORPORATE GOVERNANCE REVIEW

166

CORPORATE GOVERNANCE

168

SOCIAL AND ETHICS COMMITTEE REPORT

180

ETHICS

181

RBPLAT’S APPROACH TO REMUNERATION

182

INDEPENDENT ASSURANCE REPORT

187

In support of United Nations Global Compact Principle 10 Anti-corruption

Globally, corruption is recognised as a major hindrance to sustainable development. It impedes economic growth, distorts competition and represents serious legal and reputational risks. It has a major impact on poor communities and corrodes the very fabric of society. As a signatory of the UN Global Compact (UNGC), RBPlat is committed to incorporating the UNGC principles in our Board’s decision-making processes. In terms of corporate governance and risk management we are working to ensure that we apply Principle 10, which states that businesses should work against corruption in all its forms, including extortion and bribery. The prevention of fraud and corruption is good business practice. We have taken a number of steps to mitigate fraud and corruption risks in our business and our operating environment and continually review their effectiveness. For more information refer to Ethics section on page 181.

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165

CHAIRMAN’S CORPORATE GOVERNANCE REVIEW Our CEO Steve Phiri chats with residents of our new employee home ownership scheme

As Chairman of RBPlat I am responsible for the leadership of the Board and for fostering a culture of openness and constructive debate that allows for all views to be heard. It is also my responsibility to ensure there is sufficient time available for discussion of all the items on our agenda and that the Board hears from an appropriate range of senior management.

Following our successful capital raising programme in March/April 2014, which raised the R1.5 billion equity capital we require for the completion of the Styldrift I project, the Board needed to ensure that we had a strategy in place that would ensure our investors’ funds are appropriately invested until such time as we start drawing down on these funds. A list of criteria for rating financial institutions was used to ensure that the funds were only invested with appropriate reputable financial institutions. The Board also agreed that the funds raised would be placed in low risk and interest bearing investments. Our limits of authority policy is also part of the governance structures we have in place to protect RBPlat against any misuse of funds. By continuing with the embedding of its enterprise risk management (ERM) framework, RBPlat made significant progress on its ERM maturity curve. The three lines of defence model adopted by RBPlat was further enhanced by the approval of its first combined assurance plan. This year we reviewed and revised frameworks, policies and controls already in place and developed and implemented new ones where necessary. The aim of this exercise was to optimise the standards of corporate governance in RBPlat. One such case was the governance and control of our information and communications technology (ICT). Having taken over the management of our ICT systems in 2012 and begun the process of optimising them in 2013, the next step was to review the robustness of our ICT governance framework and controls. Reviews conducted by our external and internal auditors identified that while, overall, good governance and control is being practised with regard to RBPlat’s ICT systems it has not been formally recorded and some gaps existed in terms of governance and control. An ICT security policy was approved by the Audit and Risk Committee and the Board in 2014. An updated ICT strategy, governance framework and policy have been tabled at the Audit and Risk Committee and once the

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committee is satisfied that the framework and policy will provide the necessary structure and controls, it will be presented to the Board for approval and implementation. In terms of Board governance we continue to conduct internal evaluations of the performance of both the Board and its committees and of the directors standing for re-election. During 2014 we conducted rigorous evaluations through probing questionnaires. We last enlisted the services of an independent external consultant to assess both the overall performance of the Board and that of individual directors in 2012. As new directors joined the Board late in 2014 we decided to postpone an independent review until 2016 in order to give them time to settle into their roles.

mining experience, to our deliberations. They will no doubt be invaluable to our future decision-making and our ability to respond rapidly to changes in the environment that will ensure the sustainability of our business. I am committed to ensuring not only that RBPlat complies with all the relevant codes and regulations, but that our entire management team is committed to achieving the best possible results for our stakeholders in the most responsible way.

Adv Kgomotso Moroka SC

Independent Chairman

By appointing strong, independent directors to its Board and separating and clearly defining the roles and responsibilities of the Chairman and the Chief Executive Officer, RBPlat believes it has equipped its Board to make the right decisions in the right way. We said farewell to three Board members during 2014. They were Nico Muller, who was appointed Chief Operating Officer and joined the Board as an executive director in March 2009, and David Noko and Francis Petersen, who both joined the Board as independent non-executive directors in June 2010. I would like to thank Nico for the valuable contribution he made towards our achieving operational excellence during his time with us. I would also like to thank David and Francis for their valuable and incisive contribution to our debates and decisions during their membership of the Board. We welcomed four new members to the Board in 2014, David Wilson, who joined us as a non-executive director in April, Mark Moffett and Louisa Stephens, who joined us as independent non-executive directors in September and Thoko Mokgosi-Mwantembe, who joined us as an independent nonexecutive director in November 2014. Our new directors bring a range of skills and experience including corporate finance, mergers and acquisitions, information and communications technology (ICT) skills, and additional

For details of the rights offer see page 64 of the Financial capital section. For details of the management and optimisation of our ICT management systems see page 163 of the Intellectual capital section of this report.

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Board focus

CORPORATE GOVERNANCE KEY MATERIAL ISSUES

Human capital – See page 95 for information on our plans to improve employee access to information

Relationship – See pages 136 to 137 for information on the Board’s delegation of some stakeholder relationship work

Governance – See page 179 for information on our application of King III

ICT/Intellectual capital – See page 163 for information on ICT governance review

Social and relationship capital – See pages 128 to 132 for information on our SLPs

Risk – See Risk management on pages 40 to 51 for more information on risk tolerance levels and fraud

Financial capital – See page 71 for information on the accounting treatment of housing asset

Remuneration and Nomination Committee focus Social and Ethics Committee focus Audit and Risk Committee focus

Corporate governance material issues Strategy

Towards operational excellence

Key material issues in 2014

Stakeholder relations with all our stakeholders but with a particular focus on the stakeholders identified on the following page in terms of the economic, environmental and social aspects of our business

Key focus areas in 2014

Manage and monitor stakeholder relationships and the Board’s reporting on the economic, environmental and social aspects of our business

Progress in 2014

Board members attended the release of RBPlat’s year-end and interim results and our Annual General Meeting. Our senior executives and Investor Relations Manager conduct roadshows to engage with investors and potential investors both in South Africa and internationally Both our Chief Executive Officer and Executive: Corporate Affairs engaged with relevant members of government RBPlat’s reporting to its stakeholders through its integrated report achieved recognition for the quality and transparency of its reporting when it was placed first in the EY Excellence in Integrated Reporting Awards 2014 and first in the Mid Cap Section of the Chartered Secretaries of Southern Africa and JSE Limited Awards

Focus for 2015

Continue to engage with the investor community both locally and internationally to ensure we keep them informed on RBPlat and obtain feedback from investors Continue to forge a mutual understanding of the challenges the industry and government face Maintain and improve on the quality of our integrated reporting Complete the employee web portal and continue work on installing information centres in the mine for those who do not have access to communication technology

To make Company information and policies and procedures more readily available to our employees we are establishing an employee web portal and increasing the flow of information through a range of communication channels Leadership role of the Board in taking responsibility for the good governance of the Group

Uphold the highest standards of ethics, transparency, risk management, corporate citizenship and good governance throughout the Group

Adopt a combined assurance plan in 2014

Streamlining and improving governance

Continue to review and enhance governance structures, policies, processes and procedures

ICT governance framework and policy tabled and is being reworked

Finalise, approve and implement ICT governance framework and policy

Further embed risk management in the organisation

New fraud and corruption prevention policy approved by Board

Combined assurance plan implementation

Employee home ownership scheme risk management

Ethics and fraud awareness campaign

Risk tolerance levels to be established

Maturity of fraud and corruption risk prevention and detection mechanisms

Legal compliance policy approved by the Board Risk appetite and tolerance policy and framework approve

Supply chain governance Ensure the Group complies with all relevant laws, regulations and codes of best practice

Create value in the short, medium and long term by overseeing, approving, monitoring and reviewing corporate strategy, major plans of action, Group policies and systems, annual budgets and business plans Competencies and performance evaluation of the Board and its members

Regulatory and legal requirements in terms of governance and management of employee home ownership scheme as well as safety, health and environment

The necessary structures in terms of the regulatory requirements have been designed and implementation is under way

Recommend structures to the Board for approval that will allow for effective management of the employee home ownership scheme in line with regulatory and investor requirements

Investment approach for funds resulting from our capital raising programme in March 2014

Strategy in place to ensure our investors’ funds are appropriately invested until such time as we start drawing down on these funds

Ensure investment approach is appropriate for the management of rights offer funds until such time as draw down commences

Review and optimise the composition of the Board and its committees and review the Board Charter as well as the committees’ terms of reference

Newly appointed directors have added important corporate finance ICT skills to the composition of the Board

Annual review of Board Charter and committees’ terms of reference Comprehensive Board and committee evaluation process and possible evaluation by external specialists

Comprehensive Board and committee evaluation process Process for determining remuneration

Implementation of new long-term incentive scheme

Implementation of new long-term incentive scheme as approved by shareholders

Year one of new five-year rolling performance incentive scheme, for which vesting begins in the third year

Agree the overall housing strategy for the organisation and the impact on the business

Agreed and implemented the overall housing strategy

Continue to implement employee housing strategy

Implementation of sustainability framework

Workshops conducted throughout operations to introduce and start implementation of sustainability framework

Aligning performance criteria with incentive plans both short-and long-term Ensuring all possible economic, environmental and social impacts are considered during decision making at all levels in the organisation

Three-year risk management plan

Embedding of sustainability framework

Continued to implement the risk management plan Ensuring the Group’s integrated report addresses all material issues and fairly presents the integrated performance of the organisation and its impacts

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Review reporting structures and processes to improve reporting on all aspects of sustainable development

Improved existing process with identification of material issues being driven from bottom up in the organisation

Continue to evolve and refine our material issue identification process

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CORPORATE GOVERNANCE CONTINUED

The role of stakeholder consultation in the Board’s identification and management of social impacts, risks and opportunities

COMMUNITIES

EMPLOYEES

GOVERNMENT

INDUSTRY SPECIALISTS

The stakeholder consultation that takes place both internally and externally throughout our organisation, whether it be from community forums at operational level, interaction with government at many different levels, engaging with specialists to benefit from their expertise in understanding market conditions that could affect our business, two-way communication with our employees, which provides important insights into employees’ views, or interaction with stakeholders and providers of debt, all provides us with information and an understanding that plays a critical role in the Board’s identification and management of both our impact or possible impact on our stakeholders and vice versa. The Board’s responsibility to ensure our investors and potential investors are kept well informed and their requests for information are responded to promptly and honestly is supported by the efforts of the CEO, the CFO and the Investor Relations Manager to whom the Board has delegated this responsibility.

The conveyor system at the BRPM concentrator

The Executive: Corporate Affairs is responsible for the Board’s relationship with government and regulators and he has been entrusted with the Company’s formal communication channels with its employees. The Board relies on the information it receives from market and industry specialists to assist it in making business decisions. The Board has delegated responsibility for RBPlat’s engagement with its providers of debt to our CFO. He and his team regularly engage with the service providers to keep them updated on RBPlat and our industry. Communication with our joint venture partners takes place through our representation on the Joint Venture management committee and additional meetings and interactions which are held as necessary during the course of the year.

INVESTOR COMMUNITY

JOINT VENTURE PARTNERS

PROVIDERS OF DEBT

REGULATORS

SHAREHOLDERS

TRADE UNIONS

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CORPORATE GOVERNANCE CONTINUED

Our approach to governance To ensure we consistently practise effective corporate governance throughout the Group, our Board applies the principles of King III. In terms of the King III principles the Board must consider the concerns and priorities of

Visit www.bafokengplatinum.co.za for a copy of our Board Charter.

its wider stakeholder environment in its strategic guidance and decision-making processes. As we have already mentioned we also incorporate the principles of the UN Global Compact in our Board’s decision-making processes.

RBPlat’s efforts towards sustainable and transparent business practices are reflected in our inclusion as a constituent of the JSE Socially Responsible Investment (SRI) Index for the past three years.

Read more about our application of King III on page 179.

Leadership and effectiveness Our Board performs its duties within a framework of policies and controls which provide for effective risk assessment and management of our economic, environmental and social performance. The RBPlat Board Charter, which is closely aligned with the recommendations of King III, details the responsibilities of the Board. Our Memorandum of Incorporation also addresses certain of the directors’ responsibilities and powers. The Board plays an important role in setting ethical standards of conduct.

Our governance framework Board governance structure

Shareholders and other stakeholders

Company Secretary

Board of directors

Board committees Adhoc Technical Committee

Remuneration and Nomination Committee

Audit and Risk Committee

Management governance structure

Executive Committee

Sustainability Committee

Operational governance structure

Operational management structure

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Social and Ethics Committee

Each of the Group’s subsidiary companies has a separate board of directors, however, the main Board and its committees oversee all significant aspects and transactions of the subsidiaries. The subsidiaries are also governed by the limits of authority set by the Board, which are set out in our authority policy. All the Board committees operate under Board-approved mandates and terms of reference, which are reviewed annually to keep them aligned with current best practice. All our Board committees are chaired by independent non-executive directors who attend our annual general meeting to respond to any shareholder queries. The mandates, charter and terms of reference governing the Board and its committees are available from the RBPlat Secretariat or the Company website. The Audit and Risk and the Social and Ethics committees are statutory committees in terms of the Companies Act and operate as recommended by King III. Shareholders are required to elect the members of the Audit and Risk Committee at the Company’s annual general meeting. While the Social and Ethics Committee is a statutory

ICT Steering Committee

Joint Venture Management Committee

Technical Committee

Commercial Committee

Joint Evaluation Committee

BRPM monthly performance review

Styldrift I monthly performance review

Joint Health and Safety Committee

Operational area health and safety committees

Joint BRPM and Styldrift I monthly Community Committee

Housing Committee

committee its members are appointed every year by the Board at its first meeting following the annual general meeting. Delegated authorities The Board has a formal schedule of matters reserved for its consideration and decision which include, among others approving: > strategy > business plans and budgets > significant acquisition and disposal of assets > executive directors’ appointment and remuneration > review and approval of significant Group-wide policies and frameworks > dividend policy > the integrated annual report > capital expenditure for investment > granting of varying authority levels. Its delegation of certain matters to its committees is described in the terms of reference of these committees. The roles and responsibilities of the Board’s committees, which include the Audit and Risk, Social and Ethics and Remuneration and Nomination committees are set out in the Governance section of our website. In addition, the Board has appointed an Executive: Risk and Assurance to whom it has delegated responsibility for risk management and sustainability. In turn the Head: Corporate Sustainability and the Head: Risk Management and Compliance report to the Executive: Risk and Assurance on these matters. The Board has delegated some of its responsibilities in terms of stakeholder engagement to the Executive: Corporate Affairs who is responsible for stakeholder engagement and the implementation of our stakeholder engagement framework.

The RBPlat’s concentator, which is being upgraded to 350ktpm

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CORPORATE GOVERNANCE CONTINUED

Our Board and its committees Our Board met seven times this year. The Audit and Risk, Remuneration and Nomination and Social and Ethics committees met four times this year.

Delegation of authority in RBPlat Board Memorandum of Incorporation sets out shareholders’ delegation of authority to Board

Name of director

Status

Date appointed

Length of Board service attendance

Audit and Risk Committee attendance

Remuneration and Nomination Committee attendance

Social and Ethics Committee attendance

Directors to be elected or re-elected

Chairman of Board – Non-executive Independent

1.6.2010

4 years 7 months

7/7

Steve Phiri (CEO)

Executive

1.4.2010

4 years 9 months

7/7

Re-elected

Martin Prinsloo (CFO)

Executive

2.3.2009

5 years 9 months

7/7

Re-elected

Nico Muller (COO)(2) Executive

2.3. 2009

5 years 6/ 7 10 months

Kgomotso Moroka(1)

4/4

Executive directors

Executive committee Through the delegation of authority policy the Board delegates authority to the Executive Committee

Board sub-committees and subsidiary boards Board delegates authority to its sub-committees and subsidiary companies

Non-executive directors

Heads of department Executive committee delegates authority to Heads of department who in turn delegate authority to members of their leadership team

Linda de Beer3

Independent

1.6.2010

4 years 7 months

7/7

4/4

Robin Mills

Independent

20.9.2010

4 years 3 months

7/7

4/4 1/1

7

Mark Moffett

Independent

Lucas Ndala

22.9.2014

3 months

2/2

28.5.2013

1 year 7 months

5/7

Independent

5.11.2014

2 months

1/1

David Noko5

Independent

1.6.2010

4 years 3 months

4/5

2/3

Francis Petersen5

Independent

1.6.2010

4 years 3 months

4/5

3/3

Mike Rogers6

Independent

7.12.2009

5 years 1 month

7/7

Louisa Stephens7

Independent

22.9.2014

3 months

2/2

24.4.2014

7 months

4/4

David Wilson8

Re-elected Elected

4/4

Thoko MokgosiMwantembe4 The roles and responsibilities of the Board and its committees can be found on our website at www.bafokengplatinum.co.za

4/4

Elected 3/3 3/3 4/4

4/4

1/1

Elected Elected

1. Chairman of the Nomination Committee and a member of the Remuneration Committee 2. Resigned 1 September 2014 3. Chairman of Audit and Risk Committee and appointed to the Remuneration and Nomination Committee on 19 November 2014 4. Chairman elect of Remuneration Committee with effect from 1 May 2015 and appointed to the Social and Ethics Committee on 19 November 2014 5. Resigned 15 September 2014 6. Chairman of Social and Ethics Committee and Interim Chairman of Remuneration Committee 7. Appointed to the Board on 22 September 2014 and to the Audit and Risk Committee on 10 November 2014 8 Appointed to the Social and Ethics Committee on 19 November 2014

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CORPORATE GOVERNANCE CONTINUED

When we appoint new directors they receive informal and formal induction related to the Group and their duties as directors of RBPlat. We also provide our directors with ongoing support and resources that allow them to develop and refresh their skills and knowledge regarding their roles as directors of RBPlat, which include any changes to legislation or regulations and briefings on market developments. The directors have unrestricted access to executive and general management in order to acquire any knowledge or information relevant to the discharge of their duties.

Directors’ conflicts of interest In terms of the Companies Act, JSE Listings Requirements, King III and the Board Charter, a director of a company must avoid a situation in which he/she has, or can have, a direct or indirect interest that conflicts, or possibly may conflict with the interests of the Group. The Board has established procedures to enable the directors and prescribed officers of RBPlat to notify the Company of any actual or potential conflict situations and to declare any significant interest in the Company or its contractors.

Rotation of directors In terms of the Company’s Memorandum of Incorporation, one third of our directors are required to retire from office at every annual general meeting. We select the retiring directors based on their tenure since they were previously elected or re-elected to the Board.

Management committees Executive Committee The membership of our Executive Committee, which meets at least once a month, and a description of their individual profiles can be found on page 54.

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The committee assists the Chief Executive Officer in the performance of his duties by: > developing strategy, operational plans, policies, procedures and budgets for consideration by the Board > overseeing implementation of key strategies and Board decisions > taking responsibility for the operational activities of the Group > assessing and controlling risk > prioritising and allocating resources. The Bafokeng Rasimone Platinum Mine (BRPM) Joint Venture Management Committee (Manco) Members

Steve Phiri (Chairman)* Martin Prinsloo* Neil Carr* Vicky Tlhabanelo* Gary Humphries+ Vinogaren Pillay+ Franscelene Naidoo+ * represents Royal Bafokeng Resources (RBR) +

represents Rustenburg Platinum Mines (RPM)

The BRPM Joint Venture (JV) Management Committee is responsible for the management of the BRPM JV. The committee has wide-ranging powers in terms of the JV, including the power to acquire and dispose of BRPM JV assets, borrow money, establish pension funds and other employee benefit schemes and institute legal proceedings, subject to the Board’s approval. Royal Bafokeng Resources (RBR) (a wholly owned subsidiary of RBPlat) is allowed five of the eight appointments to this committee. Some committee decisions require unanimous approval depending on the transactions to be undertaken.

In addition to the business addressed by the Remuneration and Nomination Committee that formed part of the Board’s agendas, the Remuneration Committee’s agendas included: > Review proposed non-executive directors’ fees, based on benchmarking exercise > Consider the impact of the rights offer on employee share scheme > Consider amendment to share schemes for Board and shareholder approval > 2014 performance assessments and remuneration reviews > 2014 performance incentives in light of short- and long-term incentives > Consider and approve share option awards to new and promoted employees > Consider the Remuneration Philosophy of the organisation > Review relevant sections of disclosures in the integrated report > Review approach to 2014 wage negotiations and approve mandate > Consider approach to 2014 Board evaluation > Talent management programme > The Nomination Committee’s agendas included: – Review directors up for re-election – Any director vacancies and appointments – Review committee membership and Board composition – Evaluation programme and results – Induction and training of new and existing directors.

Company Secretary The RBPlat Company Secretary is responsible for administering the proceedings and affairs of the directorate, the Company and, where appropriate, owners of securities in the Company, in accordance with the relevant laws. The Company Secretary is available to assist all our directors with advice on their responsibilities, their professional development and any other relevant assistance they may require. Lester Jooste is the duly appointed Company Secretary of RBPlat. He is not a director of RBPlat or any of its subsidiaries and on that basis the Board is comfortable that he maintains an arm’s length relationship with the executive team, the Board and the individual directors in terms of Section 3.84(j) of the JSE Listings Requirements. There is no interference by the Board with regard to his performance pertaining to corporate governance.

Lester Jooste has worked in the company secretariat environment for 14 years, which includes 11 years with listed entities, and is an associate of the Institute of Chartered Secretaries. He has never been censured by the JSE or penalised or fined for any misconduct. The Board, having assessed his abilities based on his qualifications, experience and the level of competence he has demonstrated as RBPlat’s Company Secretary over the past four years, as required in terms of Section 3.84(i) of the JSE Listings Requirements, agreed that Lester Jooste is sufficiently qualified, competent and experienced to act as RBPlat’s Company Secretary. The Board endorsed and confirmed his appointment as Company Secretary at its meeting held in February 2014 and will again consider his suitability as Company Secretary in 2015.

The thickener tanks at RBPlat’s concentrator

The Audit and Risk Committee report on pages 195 to 196 and the Social and Ethics Committee report on page 180 provide feedback on the activities of these committees during 2014.

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Reporting in terms of Section 3.84 of the JSE Listings Requirements on Board governance processes There must be a policy detailing the procedures for the appointment to the board. Appointments must be formal and transparent and a matter for the board as a whole, assisted where appropriate by a nomination committee. If a nomination committee is appointed, such committee must only constitute non-executive directors and the majority must be independent. The committee must be chaired by the chairman of the board.

RBPlat’s directors are appointed by means of a transparent and formal procedure, governed by the mandate and terms of reference of our Remuneration and Nomination Committee and the Board Charter. As of February 2014 the majority of the members of our Nomination Committee are independent non-executive directors and the Chairman of the Board chairs the committee. We comply with the definitions of non-executive director and independent director in terms of paragraph 3.84(f)(ii).

3.84(b)

There must be a policy evidencing a clear balance of power and authority at board level to ensure that no one director has unfettered powers.

Our Board Charter demonstrates that there is a clear balance of power and authority at Board level and that no one director has unfettered powers. Decisions, if not unanimous, are taken by a simple majority with one vote per director. The Chairman does not have a casting vote.

3.84(c)

Issuers must have a CEO and a chairman and these positions must not be held by the same person. The chairman must either be an independent director or the issuer must appoint a lead independent director as defined in the King Code.

The CEO and Chairman positions in RBPlat are held by different people and RBPlat’s Chairman is an independent non-executive director.

Issuers must appoint an audit committee in compliance with the Companies Act and as recommended by the King Code. Issuers must appoint a remuneration committee in compliance with the JSE Listings Requirements and as recommended by the King Code. Where appropriate, issuers must appoint a risk and nomination committee. The composition of such committees, a brief description of their mandates, the number of meetings held and any other relevant information must be disclosed in the annual report.

RBPlat has a combined Audit and Risk Committee, which currently has four members all of whom are independent non-executive directors. As previously indicated RBPlat has appointed a combined Remuneration and Nomination Committee. The committee has three members, all of whom, as at the end of February 2014, were independent non-executive directors. The Chairman of the Board is a member of the combined committees and Chairman of the Nomination Committee. Brief descriptions of the mandates of these committees and the number of meetings held during the year are available on page 175 of this report.

3.84(e)

Brief CV of each director standing for election or re-election must accompany relevant notice of meeting.

Brief curricula vitae of our directors are to be found on pages 52 and 53 of this report which also contains the Notice of our Annual General Meeting.

3.84(f)

Capacity of directors in relation to executive, non-executive and independent must be categorised and disclosed in the relevant documentation.

The curricula vitae mentioned at 3.84(e) also contain information as to whether a director is independent, non-executive or executive. The composition of our committees is in accordance with the requirements of the Companies Act and the King Code.

3.84(g)

Issuers must have a full time executive financial director.

RBPlat has a fulI time Chief Financial Officer who is an executive director of the Company. He does not hold any other position nor does he have any other commitments that could be considered as full or part time employment.

3.84(h)

The audit committee must consider on an annual basis, and satisfy itself of the appropriateness of the expertise and experience of the financial director and report thereon in the annual report.

Our Audit and Risk Committee annually considers and satisfies itself of the appropriateness of the expertise and experience of the Chief Financial Officer and the finance function and has reported on its findings in its Audit and Risk Committee report on pages 195 to 196 of our annual financial statements.

3.84(i)

The provision deals with the competence, qualifications and experience of the company secretary and the board of directors’ responsibility in relation thereto.

We refer you to page 177 of this report where the Company Secretary’s competence, qualifications and experience are set out as is the Board’s assessment of his abilities to carry out his responsibilities.

The provision deals with the arm’s length relationship between the board of directors and the company secretary and the board of directors’ responsibility in relation thereto.

We also refer you to page 177 of this report where it is stated that the Board is comfortable that the Company Secretary maintains an arm’s length relationship with the executive team, the Board and the individual directors.

3.84(a)

3.84(d)

3.84(j)

Our progress since 2012 with the application of King III RBPlat strives to fully adopt the King III principles and as such every year we consider the 75 corporate principles set out in King III. We have provided an update below of our actions in terms of the principles we listed in 2012 as not yet fully applied by RBPlat. (This list deals only with outstanding matters.) A comprehensive assessment of all of the 75 principles can be found on our website at www.bafokengplatinum.co.za. King III principle Ethics framework

Succession planning

See pages 40 to 45of the Risk management section for details of internal controls and enterprise risk management The membership of the Board committees is set out on page 175 of this report. The Board Charter and the terms of reference of all our committees are available in full on our website at www.bafokengplatinum.co.za

Risk management framework and implementation plan

ICT governance

Legal compliance framework

Governing stakeholder relationships and corporate citizenship

Past, current and future actions 2012 Revised ethics policy approved by Board An ethics framework and the measurement thereof to be established in 2013 as part of the risk management process 2013 An ethics framework and a monitoring and measurement system are now in place (see the Ethics section on page 181) 2014 Implemented our framework and monitoring and measuring system and revised our fraud and corruption prevention policy. KPMG conducted an ethics climate survey in RBPlat. We ran fraud risk workshops in all operational and functional areas and conducted proactive fraud risk reviews during which we identified any issues that needed addressing. We also ran a fraud awareness campaign 2015 We will broaden the application of RBPlat’s fraud and corruption policy and framework to all stakeholders including our external stakeholders (e.g. suppliers). We will also be using our systems to achieve real-time application of our policy and framework 2012 Succession plan for senior management agreed and its implementation was considered. 2013 A succession plan for senior management has been agreed and a talent management plan which identifies talent for succession planning up to the CEO will be implemented in 2014 2014 A talent management plan which identifies talent for succession planning up to the CEO was implemented in 2014 2015 Board succession 2012 A comprehensive enterprise risk management policy and framework and risk management strategy and implementation plan was approved by the Board in 2012. We also appointed an Executive: Risk and Assurance to lead the risk management and assurance development and implementation in conjunction with the CEO and the Audit and Risk Committee 2013 A risk management policy, framework and risk management strategy and implementation plan have been adopted and are being implemented and risk management programmes are being embedded in the organisation 2014 We cascaded our risk management policy, framework and risk management strategy, further down into our business and closed the gap between strategic risk and operational risk Changed the approach of internal audit to a risk-based one and integrated the internal audit processes with the reporting processes of our external auditors and specialist independent assurance to achieve combined assurance providers We reviewed the insurance risk of the business and aligned it with the risk profile of the business. Our risk and sustainability functions were realigned. This included appointing a Head: Risk and Compliance and Head: Corporate Sustainability 2015 Develop the Company’s risk appetite, determine its risk tolerance at business unit level and risk limits at key performance indicator level and set the targets for 2016 Review three-year risk management framework, policy and process 2012 RBPlat’s ICT strategy and governance framework were developed and adopted by the Board in November 2012 and implementation commenced 2013 An ICT strategy and governance framework have been developed and adopted and implementation has begun, including the appointment of a Chief Information Officer 2014 Internal and external auditors conducted reviews of our ICT systems governance and identified some gaps in terms of governance and control. An updated ICT strategy, governance framework and policy were approved for implementation in 2015 2015 Updated ICT strategy, governance framework and policy to be considered, approved and implemented 2012 The Executive: Risk and Assurance revised the framework and policy, to be tabled in early 2013 for the Board to consider. A legal compliance policy and framework is in place 2013 Our legal compliance framework and policy have been adopted and will be implemented in 2014. They form part of our risk management process 2014 Legal compliance policy and framework implemented 2015 Ongoing review and assessment 2012 RBPlat’s stakeholder engagement framework has been adopted by the Board. Reporting into the Board still needs to be enhanced 2013 Our revised stakeholder engagement framework has been adopted and a Sustainability Committee has been formed at operational level to oversee the implementation of all sustainability matters, including stakeholder engagement 2014 Implementation of the framework is ongoing 2015 Review, assessment and the adapting of our stakeholder framework where required is ongoing

See Risk management on pages 40 to 47 for more information on our risk management activities during 2014. See Intellectual capital section on page 163 for more information on ICT.

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179

SOCIAL AND ETHICS COMMITTEE REPORT

ETHICS

My responsibility as Chairman of RBPlat’s Social and Ethics Committee is to report on the matters within this committee’s mandate for the period ended 31 December 2014, in accordance with the requirements of the Companies Act (71 of 2008, as amended).

We believe in ethical business conduct and have a zero tolerance approach to corrupt behaviour.

In summary the committee’s duties include: > monitoring the social, economic, employment and environmental activities of the Group > assisting the Board in assessing certain aspects of governance applicable to the committees function or mandate > bringing matters relating to these activities to the attention of the Board when appropriate > ensuring RBPlat is and remains a socially committed corporate citizen > reporting annually to stakeholders. The committee met four times during the year. At each meeting we reviewed the quarterly reporting presented to us on: > safety and occupational hygiene > occupational health and wellness > environmental stewardship and climate change > human resource development, employment equity and transformation > social development > stakeholder engagement > Mining Charter and legislative compliance > asset protection and security > ethics and ethics hotline cases > enterprise risk management: risk profiles. As part of our duties we reviewed the Group’s environmental liability assessment. We considered the Group’s standing with regard to the international labour protocol on decent work and working conditions. The committee also reviewed RBPlat’s

employee relations and its contribution to the education and development of its employees and the communities in which it operates. We also considered the risks and opportunities associated with both. In February 2014 we reviewed the findings and recommendations of the sustainable development assurance of the Group’s Integrated Report. We also reviewed the sustainable development disclosures in this report and recommended it for approval by the Board. The many aspects relating to the employee home ownership scheme were an important subject of our deliberations during the year. We reviewed and approved changes to the environmental and climate change policy and also reviewed the health and safety policy during 2014. During our July meeting we were updated on the impact the Global Reporting Initiative’s (GRI) new reporting guidelines, G4, would have on our reporting in 2014 and the progress RBPlat had already made with its materiality identification process. We were also updated on the roll-out of the Sustainability and Stakeholder Engagement Framework at operational level. The Social and Ethics Committee and the Audit and Risk Committee have joint sessions twice a year. The following topics are addressed: > Enterprise risk management > Group and mine risk profiles and registers > Risk management related policies and framework

> Sustainability-related policies and framework > Integrated assurance process, scope and findings > Ethics status report and policies > Fraud risk profile > Group insurance programme.

Conclusion RBPlat continues to meet its environmental, social and governance responsibilities, which is recognised by it qualifying as a constituent of the JSE Socially Responsible Investment (SRI) Index for the third year running. The Group also has suitable policies and frameworks in place to sustain its commitment to social and economic development, fair labour practices, environmental responsibility and good corporate citizenship. There has been no material noncompliance with legislation or regulations or non-adherence with codes of best practice in terms of the areas within the committee’s mandate during 2014. This committee is accountable to the Board and reports, through its Chairman, to shareholders at the Company’s annual general meeting on matters within its mandate.

Mike Rogers

Chairman

RBPlat requires all its representatives to act in good faith and in a manner that promotes our aspiration to be a good corporate citizen. The issue of corporate ethics receives attention from the highest level of management within RBPlat, with our Chief Executive Officer being ultimately responsible for implementing our Code of Ethics. We also require all our suppliers to acknowledge and confirm in all supply contracts that they have read and understood our Code of Ethics and agree to be guided by it in terms of their actions and behaviour. The Board, Audit and Risk and Social and Ethics committees monitor compliance with our Code of Ethics through quarterly report they receive from the Executive: Risk and Assurance, which includes feedback from our whistle-blower hotline and our internal audit department. We identified potential gaps in ethical behaviour through an ethics climate survey in 2014, which we needed to address. The programme we began implementing in 2014 to address these gaps will continue in 2015. The aim of the programme is to develop an increased understanding and awareness of potential unethical behaviour among our employees and to encourage the use of the confidential whistle-blowing hotline available to our employees, suppliers and other stakeholders should they believe they have witnessed unethical behaviour. The Board approved new fraud and corruption prevention plans which includes aspects of training and awareness. We have also established a process to monitor and report on ethics in RBPlat and there has been a significant improvement in understanding and prevention. Fraud and corruption risks are included in our risk assessment process, which includes all our business units. During 2014 we provided our heads of department with awareness training on our fraud and corruption prevention policy and procedures and we conducted a fraud awareness campaign which addressed everyone working in our operations.

depending on the incident’s severity. Where control weaknesses are identified we implement control enhancement measures. Where an investigation proves that our fraud and corruption policy has been transgressed we follow a formal disciplinary process, which could lead to dismissal and/or criminal charges being instituted. Our fraud and corruption prevention policy was updated during 2014 following incidents where the policy was unclear. This policy has been distributed to all heads of department and our first level of management is aware of its provisions and is responsible for cascading it down their management line. Related issues are discussed at Exco meetings as and when they arise. All members of management are required to declare their interests, irrespective of whether or not there is an existing conflict of interest. This information forms the foundation of future fraud prevention activities. RBPlat has grievance and corrective action procedures in place to ensure that any corrupt behaviour that we become aware of is dealt with accordingly. No requests for information were made to RBPlat during 2014 in terms of the Promotion of Access to Information Act. During the year under review RBPlat was not subject to any penalties, fines or criminal prosecutions. RBPlat does not support any political parties or politicians with either financial or in-kind contributions.

Our Code of Ethics Our Code of Ethics, which was revised in 2014 to bring it in line with international best practice and the new fraud and corruption prevention policy, explains that we do not tolerate acts of bribery or fraud by our employees, contractors, suppliers, joint venture partners and other business partners. We take immediate action (which may include dismissal and legal action) against any organisation or person committing bribery or fraud and have systems in place to prevent these misdemeanours. We are also committed to fair trade and purchasing in an ethical manner.

Incidents of fraud and corruption that are reported or detected through management controls are formally investigated by the Executive: Risk and Assurance and/or our Security Manager, For more information on the mandate and terms of reference of the committee and its membership see our website at www.bafokengplatinum.co.za

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RBPLAT’S APPROACH TO REMUNERATION Our philosophy RBPlat’s remuneration philosophy is aimed at delivering a competitive, differentiated and flexible pay structure that will attract, reward and retain high quality individuals. We believe that remuneration should match performance and are committed to ensuring that our pay levels remain competitive, while managing employment costs. RBPlat compares its pay levels with the general market and the mining sector through surveys every second year.

The performance of our executives against agreed financial performance measures and scorecards determines the rewards they receive. In this context we are committed to: > maintaining pay levels on a total cost to employer basis that reflect an individual’s worth to RBPlat > a performance management system that allows us to differentiate between individual and/or team performance > incentives that recognise and reward, where appropriate, both operational performance and strategic achievements.

Our remuneration structure Our remuneration structure has four segments: executives, management, mining support and mining operations

Details of our remuneration structure Executives (Exco) Total guaranteed package (TGP) > Based on mining industry and peer group benchmarks (market median) > Reviewed annually against market and individual performance > Area of responsibility > Benchmarking to select peer group Annual performance bonus > Percentage of TGP based on performance > Company (50%): Includes safety, production, costs, sustainability, project performance, and governance > Individual targets (50%): Includes leadership direction and team work Bonus share plan scheme > Percentage of annual performance bonus > Vest on third anniversary > Vesting condition: continuous employment

Our remuneration structure

Forfeitable share scheme > Up to three times TGP > Sliding vesting scale based on future performance vs peers and total shareholder return > Vest on third, fourth and fifth anniversary

Executives Executive Committee and key senior operational management staff

Management (D2 and above) Total guaranteed package (TGP) > Based on mining industry benchmarks > Reviewed annually against market and individual performance > Area of responsibility > Consideration for retention purposes

Annual performance bonus > % of TGP based on performance > Company and/or operational targets include: safety, production, costs, project performance, sustainability and governance > Individual targets

Bonus share plan scheme > Percentage of annual performance bonus > Vest on third anniversary > Vesting condition: continuous employment

Mining operations (D1 and below)

Mining support (D1 and below)

Wages and benefits

Wages and benefits

> Wage agreement (bargaining unit) > Various benefits including housing, medical aid, etc

> Wage agreement (bargaining unit) > Various benefits including housing, medical aid, etc

Monthly performance bonus

Performance bonus

> Monthly production bonus based on safety performance and production volumes

> Six monthly bonus based on production, safety and individual performance > Bonus entry level performance of 93% of business plan, then sliding scale

Mahube ESOP > Units allocated annually > Pre-determined dividend paid as per trust deed > A third of the units vest annually > Final vesting in 2015 (five-year scheme)

Mahube ESOP > Units allocated annually > Pre-determined dividend paid as per trust deed > A third of the units vest annually > Final vesting in 2015 (five-year scheme)

Share options > Upon joining Company, promotion or discretionary RemCo award > 0.5 to 2.5 times annual TGP (dependent on level and responsibility)

Share options scheme > Upon joining Company, promotion or discretionary RemCo award > Four to six times annual TGP (dependent on level and responsibility)

Management Central Services Operations (BRPM and Styldrift I)

Mining operations Shafts – stoping and development Concentrator plant

Corporate office

Mining support Engineering Central Services

Details of our remuneration structure The structure of our remuneration ensures that the achievement of both the Group’s short-term operational and long-term strategic objectives are incentivised. Basic salary and guaranteed packages (basic salary plus benefits) Details of the basic salary and guaranteed packages (basic salary plus benefits) paid to each of the executive directors and prescribed officers and directors of major subsidiaries during the 2014 financial year are set out in Note 30 on page 232 of the consolidated annual financial statements. The remuneration of our top three earners who are not directors, as recommended by King III and which has substantially been incorporated into the Companies Act with the required prescribed officers’ disclosure has been included in Note 30 on page 232. A general increase was applied to executive guaranteed packages with effect 1 January 2014, except where there were changes in responsibility and span of control.

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Pay mix In line with our belief that remuneration should match performance, our pay mix policy supports the philosophy that the performance-based pay of senior executives should form a greater portion of their expected total compensation as opposed to guaranteed salary. In addition, the orientation of the performance-based pay of the most senior executives should

The proportions of the pay mix of executive directors and executives is set out below. It should be noted that the target reward used in these diagrams is defined as the present value of the future reward outcome of an offer, given the targeted future performance of the individual and the company and/or its share price.

be weighted more towards rewarding long-term sustainable performance through long-term and/or share-based incentives than towards rewarding operational performance through annual cash incentives. Our pay mix of fixed and variable pay is designed to meet RBPlat’s operational needs and strategic objectives, based on stretched targets that are verifiable and relevant.

Long-term share-based incentives

Executive director

Share options 11.9%

16.7% 47.6%

Measurement of executive performance

23.8%

At RBPlat executive performance is assessed on company performance (50%) and individual performance (50%). This assessment forms the basis of all short-term and long-term executive incentives including increases, bonuses and long term incentives. 2014 performance is reflected in the table below. Total guaranteed package Annual performance bonus Forfeitable share plan Bonus share plan

Executive performance vs remuneration – 2014 Operations (BRPM)

Safety

Styldrift I project

The Remuneration Committee can make discretionary grants as and when required.

Governance/ sustainability

Finance

Bonus share plan

Company performance

In terms of the bonus share plan (BSP), there is a 50% matching of executive bonuses with restricted shares, provided he/she received a cash bonus based on performance for the particular year under review. The shares vest three years after their grant, as long as the executive is still employed by the Company.

Executives

Fatalities

Production (4E koz)

Progress

JV EBITDA margin

SLP delivery

SIFR

Operating costs (4E R/oz)

Critical path

Cash reserves

Risk and assurance maturity

Capital projects (excluding Styldrift)

Cost performance index

Equity capital raising

Labour productivity (t/TEC)

Total capex

HEPS

12.2%

LTIFR

50%

14.6% 48.8%

24.4%

Total guaranteed package Annual performance bonus Forfeitable share plan Bonus share plan

Executives’ individual performance*

Leadership

Management

Team orientation

Technical competence and innovation

In terms of the Royal Bafokeng Platinum Limited Share Option Plan executives and senior management are granted share options when they join the Company. The characteristics of this scheme are: > A once-off grant made at the date of joining the Company > Option price based on the weighted average trading price on the day prior to the grant date > Vesting in equal thirds on the third, fourth and fifth anniversaries of the grant date, with an exercise horizon of 10 years from grant date.

50%

Although a bonus (and the matching restricted shares) is earned through the combination of individual, team and Company operational performance, the matching restricted shares do not offer any reward or motivation for the longer-term sustainable performance of the Company. They are a form of deferred bonus for previous performance and not necessarily aligned to long-term shareholder value performance. Grants of restricted shares made under the BSP to executive directors and prescribed officers during the 2014 financial year, details of vesting/exercise, and a summary of holdings are disclosed in Note 30 on pages 232 to 235 of the consolidated annual financial statements.

Forfeitable share plan The purpose of the forfeitable share plan is to attract, retain, motivate and reward executives and senior managers who are able to influence the performance of RBPlat and its subsidiaries on a basis that aligns their interests with those of the Company’s stakeholders. Executives and selected managers of the Company and its subsidiaries are offered a number of forfeitable shares annually. These offers are governed by RBPlat’s reward strategy (pay mix) in which the target reward of long-term incentivisation is set. The weighted implementation of the bonus share plan and the forfeitable share plan allows RBPlat to remain competitive in terms of long-term incentives, reward long-term sustainable Company performance, serve as a retention tool, and ensure that executives and management share a significant level of personal risk/reward with the Company’s shareholders. Annual conditional awards of forfeitable shares were made in April 2014 for the first time. They will vest in year three, four and five, to the extent that the Company has met specified performance criteria over the intervening period. The exact percentage vesting is determined by the Remuneration Committee. Essentially, the value per share that vests is the full value of the share (there is no strike price). However, the number of shares that will vest will depend on whether the Company’s performance over the intervening three-year period has been on target, or an over or under performance against the target/s set at the award date. The Remuneration Committee will determine the performance criteria for each award. However, for the first award and until further notice for subsequent awards, the methodology of vesting will target the Company’s comparative (market capitalisation weighted) total shareholder return (TSR) in relation to the other constituent companies in the JSE Platinum Index.

Performance ratings * Determined by CEO/Board

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1- Not met 3- Met

2- Partially met 4- Exceeded some targets

5- Exceeded all targets

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Executive Committee members’ service contracts

Employee share ownership plan (ESOP)

None of the executive directors have extended employment contracts or special termination benefits. There are restraints of trade in place for all executives.

RBPlat employees have the opportunity to participate in the Company’s performance through the Royal Bafokeng Platinum Mahube Trust. Now in its fourth year, the Trust was originally established to ensure that employees who had previously participated in the Anglo American Platinum Limited Kotula employee share participation scheme received equivalent benefits. It was set up differently from most employee share participation schemes, the most important differences being that it has manufactured guaranteed dividends and the management of RBPlat committed to providing funds for the administration of the Trust. This has reduced the financial burden on the Trust and ensured that maximum benefits are delivered to the beneficiaries.

Service contracts of executive directors and members of the Executive Committee are subject to a three months’ notice period. Non-executive directors’ compensation Non-executive directors’ terms of appointment Non-executive directors’ remuneration is reviewed every two years and is determined after a benchmarking exercise undertaken by the Chief Executive Officer and the approval by the shareholders at the annual general meeting of the proposed compensation. In arriving at the proposed compensation, we consider market norms and practices, as well as the additional responsibilities placed on Board members by new legislation and corporate governance principles. Non-executive directors receive an appointment letter from the Chairman outlining their duties and responsibilities. The Company does not grant options or shares to non-executive directors. Non-executive directors receive an annual fee for their contribution. This annual fee comprises a base retainer fee and, where applicable, a committee membership fee. Hourly fees are also paid to non-executive directors for any ad hoc work that may be required of them. We have provided the details of the emoluments paid to non-executive directors in 2014 in Note 29 on page 231 in the consolidated annual financial statements.

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The Trust paid a total dividend of R858 414 to the beneficiaries in 2014 and a further R1 378 007 was contributed to the administration of the Trust. Allocation of units Units are allocated to the beneficiaries of the Mahube Trust annually, as a measure of their participation interest in the Trust’s assets. To qualify for the allocation an individual needs to be an employee of RBPlat on 31 March of the year in question and should not be eligible to participate in any other RBPlat share scheme(s). At the Trust’s inception in November 2010, when the value of the Bafokeng Rasimone Management Services (BRMS) employees’ participation in Kotula was transferred to the Mahube Trust in the form of 5 656 171 units, 1 656 171 of these units were allocated to the beneficiaries. In 2011, 2012, 2013 and 2014 the Trust allocated equally to all eligible beneficiaries 1 000 000 units annually.

In addition to the 1 000 000 units allocated each year, the units forfeited by bad leavers are also allocated to the remaining beneficiaries.

INDEPENDENT ASSURANCE REPORT TO THE MANAGEMENT AND STAKEHOLDERS OF ROYAL BAFOKENG PLATINUM LIMITED

Capital distribution (vesting) The Mahube Trust holds 375 942 RBPlat ordinary shares and 563 914 RBPlat “A” ordinary shares. In 2014 the second tranche of shares vested. The proceeds of the vesting were paid to the beneficiaries in 2014. Additional information regarding the schemes can also be found in the consolidated annual financial statements on pages 202 to 250.

Introduction

Assurance objectives

Gilden Assurance was commissioned by Royal Bafokeng Platinum Limited (RBPlat) to conduct an independent third party assurance engagement in relation to the sustainability information in its Integrated Report (the report) for the financial year that ended in December 2014.

The objective of the assurance process was to provide the management of RBPlat and RBPlat’s stakeholders with an independent moderate level assurance opinion on whether the report meets the following objectives: > Adherence to the AA1000APS (2008) AccountAbility principles of inclusivity, materiality and responsiveness > Fair reporting on a selection of operational key performance indicators (KPIs) as indicated in the material issues tables of the report.

Gilden Assurance is an independent and licensed provider of sustainability assurance services. The assurance team was led by Petrus Gildenhuys with support from a team of associates. Petrus is a Lead Certified Sustainability Assurance Practitioner (LCSAP) with 17 years’ experience in sustainability performance measurement involving both advisory and assurance work.

Assurance standard applied This assurance engagement was performed in accordance with AccountAbility’s AA1000AS (2008) assurance standard and was conducted to meet the AA1000AS Type II moderate level requirements.

Respective responsibilities and Gilden Assurance’s Independence RBPlat is responsible for preparing the report and for the collection and presentation of sustainability information within the report. Gilden Assurance’s responsibility is to the management of RBPlat alone and in accordance with the terms of reference agreed with RBPlat. Gilden Assurance applies a strict independence policy and confirms its impartiality to RBPlat in delivering the assurance engagement. This assurance engagement is the second consecutive assurance engagement conducted for RBPlat, the previous one being for the 2013 Integrated Report.

Human capital – Fatal injury frequency rate (FIFR) – Lost time injury frequency rate (LTIFR) – Number of days without an injury – HDSA percentage discretionary procurement spend – Total social and labour plan expenditure – Total employees training spend as a percentage of payroll – Number of production days lost due to labour action – Skilled employee turnover by category – Total number of employees, contractors and community members who received part time ABET – Percentage of HDSA managers in core and support functions – Number and percentage of people trained in terms of SLP commitments – Number of woman at mining – Number of new noise-induced hearing loss (NIHL) cases, greater than 10% PLH – Number of employees and contractors undergoing HCT – Number of employees enrolled into the RBPlat ART programme – Number of ART default cases – Number of employees and contractors who are on TB treatment at BRPM clinic – TB incidence rate – Number of sales agreements signed under RBPlat’s employee home ownership scheme

Natural capital – Total water used – Total energy consumption – Greenhouse gas emissions: Scope 1 and 2 (CO2e)

Work performed by Gilden Assurance Gilden Assurance performed the assurance engagement in accordance with the AccountAbility AA1000AS (2008) Type II requirements. The following suitable assessment criteria was used in undertaking the work: > AA1000APS (2008) (AccountAbility Principles Standard) published criteria for inclusivity, materiality and responsiveness respectively > RBPlat’s operational Sustainability Data Reporting Procedure that specifies definitions, reporting processes, controls and responsibilities. Our assurance methodology included: > Interviews with relevant functional managers at head office and operations to understand and test the processes in place for adherence to the AA1000APS stakeholder engagement principles and disclosure of the selected KPIs in the assurance scope > Site visits to both its BRPM and Styldrift operations, which involved testing, on a sample basis, the measurement, collection, aggregation and reporting processes in place > Inspection and corroboration of evidence in support of satisfying the assurance criteria at the operations as well as at RBPlat’s head office > Reporting the assurance observations to management as they arose to provide an opportunity for corrective action prior to completion of the assurance process > Assessing the presentation of information relevant to the scope of work in the report to ensure consistency with the assurance observations.

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INDEPENDENT ASSURANCE REPORT TO THE MANAGEMENT AND STAKEHOLDERS OF ROYAL BAFOKENG PLATINUM LIMITED

GLOSSARY OF TERMS AND ACRONYMS

CONTINUED

Engagement limitations

In relation to the inclusivity principle

Gilden Assurance planned and performed the work to obtain all the information and explanations believed necessary to provide a basis for the assurance conclusions for a moderate assurance level in accordance with AA1000AS (2008).

RBPlat has a formal sustainability framework in place that was applied during the reporting period. This framework was approved by the Board with a three year implementation plan. Progress on the implementation plans was tracked on a quarterly basis. Documentation observed indicated that the planned 2014 implementation plans have been largely completed with some activities still ongoing, such as the training of stakeholder facilitators and the process of setting sustainability targets. Responsibilities have been assigned for stakeholder groups. Evidence observed pointed to inclusive stakeholder engagement and collective decision-making performed, the results of which were reported by way of monthly performance reviews (MPR) to the Executive Committee, and quarterly to the Social and Ethics Committee and the Board. Continued training of facilitators and engagement with stakeholders is recommended.

The evidence gathering procedures for moderate assurance are more restricted than for high assurance and therefore less assurance is obtained with moderate assurance than for high assurance as per AA1000AS (2008). Conversion factors used to derive emissions and energy used from fuel and electricity consumed, are based upon information and factors derived by independent third parties. The assurance work has not included examination of the derivation of those factors and other third party information. ART data sampling was limited to the data recorded by the BRPM clinic, which is the largest source of this data. Data obtained by RBPlat of employees and contractors that used clinic facilities outside of RBPlat’s control, such as the Platinum Health Service Provider clinic and other private medical facilities, were not included in the data testing procedures.

Assurance conclusion In our opinion, based on the work undertaken for moderate assurance as described, we conclude that the subject matters in the scope of this assurance engagement have been prepared in accordance with the defined reporting criteria and are free from material misstatement in respect of: > RBPlat’s adherence to the AA1000APS principles of inclusivity, materiality and responsiveness > the selected KPIs as identified under assurance objectives above and as presented in the Report.

Key observations and recommendations Based on the work set out above, and without affecting the assurance conclusions, the key observations and recommendations for improvement are as follows:

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also found to be functional and RBPlat’s formal close out of recorded issues as observed, proved to be effective. Continued implementation of the stakeholder engagement framework is recommended. In relation to the selected KPIs A new development in RBPlat during 2014 was the compilation of an operational sustainability data reporting procedure that covers the KPIs reported in terms of definitions applied, reporting processes and controls, and responsibilities. The new procedure improved data consistency and reliability for the 2014 reporting period, however, some minor refinements to the procedure are recommended.

In relation to the responsiveness principle RBPlat’s responses to stakeholder issues observed across different stakeholder groups and case studies indicate a high level of maturity and accountability to issues raised. Responses to stakeholders observed were found to be directly related to the stakeholder concerns and were conducted in a timely, fair and appropriate manner without prejudice to any one stakeholder group. The external anonymous ethics hotline tested was

ABET

Petrus Gildenhuys Director, Gilden Assurance (Pty) Ltd

Four platinum group elements, namely platinum, palladium, rhodium and gold

EPS

Acquired immune deficiency syndrome

Amplats

Anglo American Platinum Limited

ART

Antiretroviral treatment

Au

Gold

Base metal

A common metal that is not considered precious, such as copper, nickel, tin or zinc

BRMS

Bafokeng Rasimone Management Services Proprietary Limited

Concentrate

The product of the process of separating milled ore into a waste stream (tailings) and a valuable mineral stream (concentrate) by flotation. The valuable minerals in the concentrate contain almost all the base metal and precious metal minerals, these minerals are treated further by smelting and refining to obtain the pure metals (PGMs, Au, Ni and Cu)

CSI

Corporate social investment

Cu

Copper

DEA

Department: Environmental Affairs

Debt:equity ratio

Interest-bearing borrowings, including the short-term portion payable, as a ratio of shareholders’ equity

Death resulting from an accident

FIFR

Fatal injury frequency rate. The number of fatalities that have occurred in every 200 000 hours worked

GHG

Greenhouse gases (GHGs) are the gases present in the earth’s atmosphere which reduce the loss of heat into space and contribute to global temperatures through the greenhouse gas effect. On earth, the most important abundant greenhouse gases are, in order of relative abundance: water vapour, carbon dioxide, methane, nitrous oxide, ozone and chlorofluorocarbons

GJ

Gigajoules (109 joules)

Greenfield project

A project situated on a previously undeveloped mineral resource

Greenhouse gas As per the Greenhouse Gas Protocol (GHG emissions Scope Protocol) jointly convened in 1998 by the World 1 and 2 Business Council for Sustainable Development (WBCSD) and the World Resources Institute (WRI) protocol: Scope 1 – LPG, acetylene gas consumption, the combustion of lubrication oil, explosives, generators (petrol and diesel), company-owned vehicles (petrol and diesel); Scope 2 – electricity GRI

Global Reporting Initiative, established in 1997 with the aim of designing globally applicable guidelines for the preparation of enterpriselevel, sustainable development reports

g/t

Grams per tonne, the unit of measurement of grade

HDSA

Historically disadvantaged South African

HEPS

Headline earnings per share

HCT

HIV counselling and testing

Johannesburg, 27 February 2015 Decibel A

The assurance statement provides no assurance on the maintenance and integrity of sustainability information on the website, including controls used to maintain this. These matters are the responsibility of RBPlat. RBPlat’s response to the assurance statement: Following the recommendations contained in this assurance statement and management report received, RBPlat has already begun refining its data reporting procedure and is in the process of setting targets for the specific sustainability key performance indicators. We will continue to implement the approved sustainability and stakeholder engagement framework and plan.

Earnings per share

Fatality Adult basic education and training

AIDS

A comprehensive management report detailing specific findings and recommendations for continued sustainability reporting improvement has been submitted to RBPlat management for consideration.

In relation to the materiality principle Evidence observed confirmed that RBPlat has applied due process in mapping and disclosing its material stakeholder issues in a transparent and balanced manner. The materiality determination has been applied and integrated with the internal risk management process. Material issues have been revised, considered at Board level and linked to the reported sustainability themes that are relevant to the strategic objectives of the business. The materiality section of the report was also revised to reflect the shifting of material issues as determined during 2014.

4E

A-weighted decibels, abbreviated dBA, or dBa, or dB(a), are an expression of the relative loudness of sounds in air as perceived by the human ear. In the A-weighted system, the decibel values of sounds at low frequencies are reduced, compared with unweighted decibels, in which no correction is made for audio frequency. This correction is made because the human ear is less sensitive at low audio frequencies, especially below 1 000 Hz, than at high audio frequencies

Decline

A generic term used to describe a shaft at an inclination below the horizontal and usually at the same angle as the dip of the reef

DMR

Department: Mineral Resources

DWAS

Department: Water Affairs and Sanitation

Earned value

Cost for actual work performed minus the budgeted cost for the work performed

EBITDA

Earnings before interest, tax, depreciation and amortisation

Employment equity

Percentage of historically disadvantaged South African managers in core and support functions in terms of the Mining Charter targets

Enrolled employee

An enrolled employee is a member of our permanent workforce

HIV

Human immunodeficiency virus

IMA

Immediately available ore reserves, which is ground available for mining without any further development

IMS

Immediately stopable faces, which are fully equipped and spare mining faces that can be mined immediately

Indicated An ‘Indicated Mineral Resource’ is that part of mineral resource a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a reasonable level of confidence. It is based on information from exploration, sampling and testing of material gathered from locations such as outcrops, trenches, pits, workings and drill holes. The locations are too widely or inappropriately spaced to confirm geological or grade continuity but are spaced closely enough for continuity to be assumed.” (SAMREC 2007)

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GLOSSARY OF TERMS AND ACRONYMS CONTINUED

Inferred mineral resource

In situ

“An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which volume or tonnage, grade and mineral content can be estimated with only a low level of confidence. It is inferred from geological evidence and sampling and assumed but not verified geologically or through analysis of grade continuity. It is based on information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drill holes that may be limited in scope or of uncertain quality and reliability.” (SAMREC 2007) The original, natural state of the ore body before mining or processing of the ore takes place

ISO 14001

The International Standards Organisation’s standard for environmental management systems

ISO 9001

The International Standards Organisation’s standard for quality management systems

koz

Thousand ounces

kt

Thousand tonnes

ktpm

Thousand tonnes per month

LTI

Lost time injury. A lost time injury is an occupational injury or illness that results in at least one day away from work on any rostered shift subsequent to the day on which the injury occurred. A fatality is also recorded as an LTI

Mineral reserve

“A ‘Mineral Reserve’ is the economically mineable material derived from a Measured or Indicated Mineral Resource or both. It includes diluting and contaminating materials and allows for losses that are expected to occur when the material is mined. Appropriate assessments to a minimum of a Pre-Feasibility Study for a project and a Life of Mine Plan for an operation must have been completed, including consideration of, and modification by, realistically assumed mining, metallurgical, economic, marketing, legal, environmental, social and governmental factors (the modifying factors). Such modifying factors must be disclosed.” (SAMREC 2007)

Mineral resource “A ‘Mineral Resource’ is a concentration or occurrence of material of economic interest in or on the earth’s crust in such form, quality and quantity that there are reasonable and realistic prospects for eventual economic extraction. The location, quantity, grade, continuity and other geological characteristics of a Mineral Resource are known, or estimated from specific geological evidence, sampling and knowledge interpreted from an appropriately constrained and portrayed geological model. Mineral Resources are subdivided, and must be so reported, in order of increasing confidence in respect of geoscientific evidence, into Inferred, Indicated or Measured categories.” (SAMREC 2007)

Number of employees currently on antiretroviral treatment (ART)

The number of employees that have been identified to be HIV positive as indicated by the HIV test results and where the CD4 count is 350 or below

TARP

Trigger action response plan. Major accidents are usually preceded by indications of trouble (triggers). A TARP identifies these preceding indicators and specifies appropriate action to be taken when they occur

Number of fatalities

Any death resulting from an unexpected and unplanned occurrence, including acts of violence on the premises of the Company. Deaths arising out of or in connection with work, irrespective of the time between the injury and the occurrence of the death

Tramming

A wagon, running on tracks, used to move material in a mine

UN

United Nations

UNGC

United Nations Global Compact

OEM

Original equipment manufacturer

Workforce

Workforce includes both enrolled employees and volume contract workers

OHSAS 18001

OHSAS 18001 is an Occupational Health and Safety Assessment series for health and safety management systems. It is intended to help organisations control occupational health and safety risks. It was developed in response to widespread demand for a recognised standard against which businesses can be certified and assessed

PAYE

Pay-as-you-earn

Pd

Palladium

PGE

Platinum group elements

PGM

Platinum group metals, six elemental metals of the platinum group nearly always found in association with each other. Some texts refer to PGE. These metals are platinum, palladium, rhodium, ruthenium, iridium and osmium

Mt

Million tonnes

Net asset value

Total assets less all liabilities, including deferred taxation, which equates to shareholders’ equity

pM10

Shareholders’ equity expressed as a percentage of market capitalisation

Particulate matter less than 10 micrometers in diameter

Pt

Platinum

Made up of the four villages of Mafenya, Chaneng, Robega and Rasimone, surrounding our operations

Net asset value as a percentage of market capitalisation

Section 54 stoppage

Mahube Trust

Royal Bafokeng Platinum Mahube Trust

Ni

Nickel

Merensky reef

The Merensky reef is a layer in the Bushveld Complex (BC) containing one of the world’s largest concentrations of platinum group metals (PGMs)

NIHL

Noise-induced hearing loss

NOx

Oxides of nitrogen (nitric oxide and nitrogen dioxide) which are produced from the reaction of nitrogen and oxygen gas during combustion, especially at high temperatures

In terms of section 54 of the Mine Health and Safety Act No 29 of 1996, if an inspector of mines believes that an occurrence, practice or condition at a mine endangers or may endanger the health or safety of people at the mine, the inspector may give any instruction necessary to protect the health or safety of people at the mine, including instructing that operations at the mine or a part of the mine be halted

NUM

National Union of Mineworkers

SIFR

Serious injury frequency rate. The number of serious injuries that have occurred in every 200 000 hours worked

Social and labour plans (SLPs)

The Mineral and Petroleum Resources Development Act, 2002 (Act No 28 of 2002) (MPRDA) requires the submission of the social and labour plan as a pre-requisite for the granting of mining or production rights to develop and implement comprehensive human resources development programmes, including employment equity plans, local economic development programmes and processes to save jobs and manage downscaling and/or closure

LTIFR

Lost time injury frequency rate. The number of lost time injuries per 200 000 hours worked (LTI/hrs worked x 200 000)

MACHARORA

Milling

A process to reduce broken ore to a size at which concentrating can be undertaken

Moz

Million ounces

“A ‘Measured Mineral Resource’ is that part of Measured mineral resource a Mineral Resource for which tonnage, densities, shape, physical characteristics, grade and mineral content can be estimated with a high level of confidence. It is based on detailed and reliable information from exploration, sampling and testing of material from locations such as outcrops, trenches, pits, workings and drill holes. The locations are spaced closely enough to confirm geological and grade continuity.” (SAMREC 2007)

190

Royal Bafokeng Platinum Integrated Report 2014

Number of days The number of calendar days on which no without injury injury was reported or recorded at the BRPM during the year Clinic. This can be for a specific area or the total mine depending on the area being reported on in the reporting period Number of employees counselled

The number of employees that received HIV counselling before deciding if they will accept the HIV test (HIV counselling is compulsory for all employees during initial and periodic medical surveillance examination)

Royal Bafokeng Platinum Integrated Report 2014

191

CONTENTS

ANNUAL FINANCIAL STATEMENTS

Statement of responsibility by the Board of Directors

194

Certificate of the Company Secretary

194

Audit and Risk Committee report

195

Directors’ report for Group and Company

197

Independent Auditor’s report to the members of Royal Bafokeng Platinum Limited

201

Consolidated statement of financial position

202

Consolidated statement of comprehensive income

203

Consolidated statement of changes in equity

204

Consolidated statement of cash flows

205

Summary of the significant accounting policies

206

Notes to the consolidated annual financial statements

220

Company statement of financial position

244

Company statement of comprehensive income

245

Company statement of changes in equity

246

Company statement of cash flows

247

Notes to the Company annual financial statements

248

Non-IFRS measures

251

Shareholder statistics

252

Notice of annual general meeting

253

Company administration

260

Form of proxy (loose)

192

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

193

STATEMENT OF RESPONSIBILITY OF THE BOARD OF DIRECTORS for the year ended 31 December 2014

AUDIT AND RISK COMMITTEE REPORT for the year ended 31 December 2014

The directors are responsible for the preparation, integrity and fair presentation of the annual financial statements of the Royal Bafokeng Platinum Group. The financial statements presented on pages 202 to 250 have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB) and IFRIC interpretations (collectively IFRS), the SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee, financial pronouncements as issued by the Financial Reporting Standards Council as issued by the International Accounting Standards Board (IASB) and IFRIC interpretations (collectively IFRS), the SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee, Financial pronouncements as issued by the Financial Reporting Standards Council (FRSC) and the requirements of the Companies Act 71 of 2008 of South Africa and include amounts based on judgements and estimates made by management.

I am pleased to present the report for the financial year ended 31 December 2014 of RBPlat’s independent Audit and Risk Committee. The Committee’s duties and objectives, as mandated by the Board, allow it to discharge its statutory and other Board-delegated duties in accordance with its terms of reference, which are available on the Company’s website at www.bafokengplatinum.co.za.

The directors consider that in preparing the financial statements they have used the most appropriate accounting policies, consistently applied and supported by reasonable and prudent judgements and estimates, and IFRS that they consider to be applicable have been followed. The directors are satisfied that the information contained in the financial statements fairly presents the results of operations for the year and the financial position of the Group at year end. The directors have responsibility for ensuring that proper accounting records are kept. The accounting records should disclose with reasonable accuracy the financial position of the Group to enable the directors to ensure that the financial statements comply with relevant legislation. The going concern basis has been adopted in preparing the financial statements. The directors have no reason to believe that the Company or any entity within the Group will not be a going concern in the foreseeable future. These financial statements support the viability of the Company and of the Group.

Board approval of financial statements The annual financial statements for the year ended 31 December 2014 are set out on pages 202 to 250. The preparation thereof was supervised by the Chief Financial Officer, Martin Prinsloo who is a qualified Chartered Accountant CA(SA) and approved by the Board of directors on 27 February 2015 and are signed on its behalf by:

Composition, meetings and assessment The Committee’s membership, as at 31 December 2014, consisted of four independent non-executive directors. Following the resignation of Mr David Noko and Prof Francis Petersen from the Board on 15 September 2014, and their consequent withdrawal as committee members, Mr Mark Moffett and Ms Louisa Stephens were appointed to the Committee on 10 November 2014. Mr Robin Mills remains a member of the Committee, which I chair. The Committee held four meetings in 2014 and also holds closed sessions with key relevant parties and, from time to time, we hold members only in-camera sessions to allow us to conduct confidential assessments and discussions. The Committee’s terms of reference prescribe that the effectiveness of the Committee, its Chairman and members should be assessed annually. The outcome of the 2014 evaluation was positive.

Role and responsibilities The Committee has executed its responsibilities in keeping with the recommendations of King III, the JSE Listings Requirements and the Companies Act 71 of 2008 (the Companies Act), as well as the additional responsibilities prescribed by our terms of reference, as endorsed by the Board of directors. Our key areas of responsibilities are to: > perform our statutory duties as prescribed by the Companies Act > oversee the integrated reporting process and assess the disclosures made to all stakeholders in conjunction with the Social and Ethics Committee, which includes the Annual Financial Statements for the year under review > oversee and assess the governance implementation process, as well as the resources allocated to the management of these processes > oversee and assess risk and compliance management processes and the assurance thereof > consider the effectiveness of internal controls > oversee the appointment and functions of internal and external audit and the non-audit services rendered during the year > assess independence and performance of both the external and internal audit process and providers. The Committee has also fulfilled its duty to the Board and has assisted the Board in carrying out certain areas of its duties to all its stakeholders.

KD Moroka SC Chairman

SD Phiri Chief Executive Officer

Financial statements and accounting policies The Committee assessed the Group’s accounting policies and consolidated annual financial statements for the year ended 31 December 2014. In 2014 the Committee assessed new accounting policies relating to the RBPlat home ownership scheme, which have been implemented in the 2014 consolidated annual financial statements. The Committee recommended the audited consolidated annual financial statements to the Board for approval. These will be tabled for shareholders’ approval at the next Annual General Meeting of the Company.

CERTIFICATE OF THE COMPANY SECRETARY for the year ended 31 December 2014 I, the undersigned, certify that to the best of my knowledge and in my capacity as the Company Secretary, the Company has lodged all such returns with the Companies Intellectual and Property Commission in compliance with the Companies Act 71 of 2008.

External auditor appointment and independence The Committee satisfied itself that the Group’s external auditor is independent, which included the extent of other work undertaken by the auditor for the Group, and compliance with criteria relating to independence or conflicts of interest, as prescribed by the Independent Regulatory Board for Auditors. The requisite assurance was sought and provided by the auditor that internal governance processes within the audit firm support and demonstrate its claim to independence. A formal policy governs the process whereby the auditor is considered for non-audit services. The Committee, in consultation with executive management, agreed to the engagement letter, terms, audit plan and budgeted audit fees for the year under review. The Committee has nominated PricewaterhouseCoopers Inc. for election at the Annual General Meeting as RBPlat’s external auditor for the 2015 financial year. The Committee satisfied itself that the audit firm and designated auditor are accredited in terms of the JSE list of auditors and their advisors.

LC Jooste Company Secretary 27 February 2015

194

Royal Bafokeng Platinum Integrated Report 2014

Integrated reporting and combined assurance The Committee, together with the Social and Ethics Committee, perform an oversight role with regard to the Group’s integrated report, the reporting process and the information disclosed in the report, to ensure the reasonable accuracy and consistency of its content. The information in the integrated report is reviewed and ultimately interrogated by the Board at an annual workshop held in January of every year to ensure that the Board is satisfied with its integrity. The Committee recommended the integrated report to the Board for approval. A combined assurance plan for 2015 has been approved by the Committee.

Royal Bafokeng Platinum Integrated Report 2014

195

AUDIT AND RISK COMMITTEE REPORT (continued) for the year ended 31 December 2014

DIRECTORS’ REPORT FOR GROUP AND COMPANY for the year ended 31 December 2014

Governance of risk

Principal activities and profile

The Committee is responsible for overseeing the governance of the risk management function, including operational, financial reporting, fraud, internal control, ICT governance, and compliance risks, among others. The Risk Management Framework and Policy, as adopted by the Board, is implemented with oversight by the Committee. To this end the Committee obtained assurance from KPMG as internal audit that nothing has come to their attention, or our attention as a committee, that gave us reason to believe that the internal controls, including the internal financial controls, were not effective in 2014.

Royal Bafokeng Platinum Limited (RBPlat) was incorporated in July 2008 by Royal Bafokeng Holdings (RBH), the investment arm of the Royal Bafokeng Nation (RBN).

The Committee approved Risk Appetite and Tolerance Policy levels and Framework, in addition to the previously approved ERM policy and framework, as part of its drive to enhance the risk management process and move up the risk maturity curve to an optimised level. The Risk Appetite Statement and Risk Tolerance levels will be concluded in 2015 and will form the basis of the risk monitoring activities.

When the Bafokeng Rasimone Platinum Mine (BRPM) Joint Venture between Royal Bafokeng Holdings and Anglo American Platinum Limited was restructured in 2009, control of the mining operations of the joint venture vested in RBPlat, which is a platinum mining vehicle for the RBN. RBPlat operates BRPM and is developing the Styldrift I project. RBPlat’s significant reserves and resources can sustain operations for at least the next 60 years.

Results and dividend

The Committee is mandated to ensure that the internal audit function is independent, properly resourced and effective. The function is outsourced to KPMG who operates within the scope of an internal audit charter and annual audit plan, which is approved by the Committee.

The Group’s and Company’s financial results are set out on pages 202 to 250. These annual financial statements have been prepared using appropriate accounting policies, in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (IASB) and IFRIC interpretations (collectively IFRS), the SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee, financial pronouncements as issued by the Financial Reporting Standards Council (FRSC), in terms of the Companies Act 71 of 2008, the JSE Listings Requirements and supported by reasonable and prudent judgements where required.

As with our external audit function, a non-audit services policy governs the provision of services by internal audit that fall outside the internal audit scope and plan.

In terms of the current dividend policy the directors do not intend declaring a dividend until the development of the Styldrift I project is complete and production at that operation is at a steady state. Thereafter, a market-related dividend cover ratio is anticipated.

Evaluation of the expertise and experience of the Chief Financial Officer and the finance function

The dividend policy will be reviewed by the directors from time to time, in light of the prevailing business circumstances, investment decisions to be taken, working capital requirements and the available cash of the Group.

Internal audit

The Committee satisfied itself that the expertise and resources within the finance function are appropriate, as is the experience of the senior members engaged to perform the financial responsibilities within the Group.

Going concern Based on the results and the Committee’s assessment and the going concern, the Committee was comfortable in recommending to the Board and believes that no material uncertainties existed to negatively impact the going concern of the Company and all entities in the Group will be a going concern for the next financial period and that the going concern basis of accounting was appropriately applied.

Review of the business, future developments and post-statement of financial position events The Operating context on page 16 provides details of the Group’s operating environment. The Group’s operational performance for 2014 is discussed on pages 10 to 13 and information on our future outlook can be found throughout the report. The Financial capital section on page 61 to 73 and the annual financial statements (pages 202 to 250) provide a full description of our financial performance for the year. During 2014 we met our commitment in terms of our three-year wage agreement to deliver homes for enrolled employees. For post year-end events please see Note 35 of the annual financial statements on page 243.

Going concern The directors believe that the Group has sufficient resources to continue as a going concern for the next financial year.

Financial assistance Prof L de Beer Chairperson of the Audit and Risk Committee

Shareholders approved the granting of financial assistance, subject to the provisions of sections 44 and 45 of the Companies Act, directly or indirectly, to present and future subsidiaries, related or interrelated parties for a period of two years commencing from the date of the resolution passed on 16 April 2014. A solvency and liquidity test is performed by the Board six monthly.

27 February 2015

Corporate governance A report on our corporate governance and the application of the principles of King III is included on pages 168 to 179 and on our website www.bafokengplatinum.co.za.

Health, safety, environment and community Information on our health, safety and environmental performance and community participation is provided under Natural, Human and Social capital on pages 93 to 157.

Employee policies and involvement The Group’s policies and performance regarding employee involvement, disabled employees, labour relations and employee share schemes are provided under Remuneration on pages 182 to 186 and Human capital on pages 93 to 121.

Repurchase of shares The Company has not exercised the general authority granted to it by shareholders to buy back issued ordinary shares. Shareholders will be requested to renew this authority at the next annual general meeting. 281 957 “A2” ordinary shares were repurchased in 2014 at par value of 0.01 cents in terms of the Memorandum of Incorporation and the scheme rules regulating the RBPlat Mahube Share Trust.

Material borrowings For material borrowings please refer to Note 15 of the consolidated annual financial statements on page 223.

196

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

197

DIRECTORS’ REPORT FOR GROUP AND COMPANY (continued) for the year ended 31 December 2014

Directorate

Rights offer and accelated book build

The directors for the year under review were:

The Board of directors approved the allotment of 11 290 323 ordinary shares at R62 per share in the Company under the Accelerated Book Build Programme and further allotted an additional 14 545 455 ordinary shares at R55 per share under the rights offer in April 2014, raising a total of R1.5 billion in cash.

First appointed

Standing for Elected or re-election re-elected at and election the last AGM

Independent non-executive director

1 June 2010

Yes

Robin Mills

Independent non-executive director

20 September 2010

Kgomotso Moroka

Chairman and independent non-executive director

1 June 2010

Steve Phiri

Chief Executive Officer, executive director

1 April 2010

Yes

Major shareholders

Martin Prinsloo

Chief Financial Officer, executive director

2 March 2009

Yes

Mark Moffett*

Independent non-executive director

22 September 2014

Yes

The following shareholders were the registered beneficial holders of 5% or more of the issued ordinary shares in the Company at 31 December 2014:

Thoko MokgosiMwantembe*

Independent non-executive director

5 November 2014

Yes

Director

Position

Linda de Beer

Yes Yes

Lucas Ndala

Non-executive director

28 May 2013

Yes

Mike Rogers

Independent non-executive director

7 December 2009

Yes

Louisa Stephens*

Independent non-executive director

22 September 2014

Yes

David Wilson*

Non-executive director

29 May 2014

Yes

Nico Muller

Chief Operational Officer (resigned 1 September 2014)

David Noko

Independent non-executive director (resigned 15 September 2014)

1 June 2010

Francis Petersen

Independent non-executive director (resigned 15 September 2014)

1 June 2010

2 March 2009

Share capital Full details of the authorised and issued share capital of the Company are set out in Note 16 to the consolidated annual financial statements. As at 31 December 2014, there were 192 893 289 ordinary shares in issue at a par value of R0.01 each as well as 281 957 “A3” ordinary shares also issued at R0.01 each. Treasury shares held by the Company are outlined in the notes to the annual financial statements on page 224.

Directors’ and officers’ disclosure of interests in contracts During the period under review and at the time of signing off the integrated report, no contracts were entered into in which directors and officers of the Company had an interest and which would affect the business of the Group.

52.53 11.61 5.40

101 333 105 22 404 550 10 418 573

Royal Bafokeng Platinum Holdings Proprietary Limited Rustenburg Platinum Mines Limited Public Investment Corporation (PIC) A table detailing an analysis of the Company’s shareholding can be viewed on page 252 of the report.

Directors’ interest in Royal Bafokeng Platinum Limited

2014 beneficial Indirect

Direct

Indirect

Nico Muller** Steve Phiri* Martin Prinsloo*

3 613 160 513 63 163

– 170 730 119 562

38 459 148 348 122 548

99 507 126 328 99 906

Total

227 289

290 292

309 355

325 741

* Executive directors ** Resigned 1 September 2014

Share disposals

The Company has not entered into any contracts other than the normal employment service contracts with executive directors and other prescribed officers.

During the year under review the following directors disposed of shares on the market as follows:

Special resolutions Details of the ordinary and special resolutions to be approved by shareholders at the next Annual General Meeting are outlined in the Notice of Annual General Meeting (pages 253 to 259). Furthermore, shareholders authorised that the Board of directors, by way of an ordinary resolution, would control all unissued ordinary shares and could allot and issue up to 5% of such shares subject to the limitations specified in the Memorandum of Incorporation (MOI) and the JSE Listings Requirements. This authority will be tabled for renewal of the next AGM. RBPlat subsidiary companies passed special resolutions in 2014 authorising financial assistance to related or inter-related parties in alignment with the authority granted by shareholders at the last Annual General Meeting and in compliance with the Companies Act.

Shares

Share price

Date

33 898 38 000 224 544

R65.03 R74.57 R65.17

17 March 2014 18-19 August 2014 16-26 September 2014

Martin Prinsloo

34 475 70 000

R65.03 R74.70

17 March 2014 11 August 2014

Steve Phiri

44 830

R65.03

17 March 2014

Shares

Share price

Date

27 439

R65.03

17 March 2014

Nico Muller Exercised 224 544 share options at a strike price of R40.08

Share disposals by prescribed officers

Power of the directors Subject to RBPlat’s MOI, South African legislation and to any directions given by special resolution, the business of the Group is managed by the Board which may exercise all the powers of the Group. The MOI contains specific provisions concerning the power of RBPlat to borrow money and also the power to purchase its own shares. The Board have been authorised to allot and issue ordinary shares up to a maximum of 5% of the issued share capital of the Company and a further 10% of the issued share capital in return for cash. These powers are exercised in terms of its MOI and resolution passed at the AGM held on 16 April 2014 and will be renewed at the AGM, to be held on 14 April 2015.

Directors’ emoluments and compensation Details of directors’ emoluments and related payments can be found in Note 30 of the notes to the consolidated annual financial statements on page 232.

2013 beneficial

Direct

Service contracts of directors and prescribed officers

Royal Bafokeng Platinum Integrated Report 2014

Number of shares

Number of shares

* The newly appointed director will stand for election at the next Annual General Meeting of the Company

198

% holding

Vicky Tlhabanelo (Executive: Human Resources)

Directors’ liabilities Directors and officers of the Group are covered by directors’ and officers’ liability insurance.

RBPlat subsidiary companies The following companies are wholly owned subsidiaries of Royal Bafokeng Platinum Limited: > Royal Bafokeng Resources Proprietary Limited (RBR) > Royal Bafokeng Platinum Management Services Proprietary Limited (RBP MS) > Bafokeng Rasimone Management Services Proprietary Limited (100% held indirectly via Royal Bafokeng Resources Proprietary Limited) (BRMS) > Friedshelf (RF) 1408 Proprietary Limited (Royal Bafokeng Resources Property Proprietary Limited) (100% held indirectly via Royal Bafokeng Resources Proprietary Limited).

Royal Bafokeng Platinum Integrated Report 2014

199

DIRECTORS’ REPORT FOR GROUP AND COMPANY (continued) for the year ended 31 December 2014

INDEPENDENT AUDITORS’ REPORT TO THE MEMBERS OF ROYAL BAFOKENG PLATINUM LIMITED for the year ended 31 December 2014

Significant agreements

We have audited the consolidated and separate financial statements of Royal Bafokeng Platinum Limited set out on pages 202 to 250, which comprise the statements of financial position as at 31 December 2014, and the statements of comprehensive income, statements of changes in equity and statements of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Amended BRPM Joint Venture Agreement The BRPM Joint Venture Agreement was entered into on 12 August 2009 by the Royal Bafokeng Nation, Royal Bafokeng Resources (RBR) and Rustenburg Platinum Mines (RPM). It replaced the previous joint venture agreement concluded in August 2002. It sets out the terms and conditions on which the BRPM Joint Venture (JV) will operate and deals with matters such as establishment, duration and dissolution of the joint venture, the participating interests of the joint venture parties and their contributions to the joint venture, including mining infrastructure and mineral rights, management and control of the joint venture, minority protection for RPM, operational concerns such as the appointment of the operator, tailings, insurance, mine health and safety, environmental issues, how RPM’s share of concentrate is dealt with, funding of the joint venture, the distribution policy, accounting and financial concerns, warranties, restrictions on disposals of participation interests and mining rights, dispute resolution and general or miscellaneous concerns. RBR has a 67% participation interest in the BRPM JV and RPM has the remaining 33% participation interest in the BRPM JV. The BRPM JV is an unincorporated joint venture and is consolidated into the group.

Services agreement As part of the BRPM JV restructuring a services agreement was entered into between RBP MS, RBR and RPM on 9 September 2009 in terms of which RBP MS was appointed as operator of BRPM JV in place of Anglo Platinum Management Services Proprietary Limited (AMS) with effect from 4 January 2010. In terms of this agreement RBP MS was appointed to provide mining services as an independent contractor and as an agent of the joint venture parties.

Disposal of Concentrate Agreement The Disposal of Concentrate Agreement regulates the terms on which RBR disposes of its share of the concentrate produced by the BRPM JV to RPM. The agreement provides for RBR’s share of the concentrate produced by the BRPM JV to be sold to, and processed by RPM. RBR is responsible for delivery of the concentrate to RPM’s smelting and refining facility situated at Rustenburg, the costs of which are borne by the BRPM JV. Risk and ownership passes to RPM once the concentrate leaves the gates of the concentrator plant. RBR is obliged to sell and RPM is obliged to purchase 50% of the concentrate of the BRPM JV up until 11 August 2017, the optional termination date in terms of the Disposal of Concentrate Agreement. Thereafter, while RBR retains the right to sell 50% of the BRPM JV concentrate to RPM for the life of BRPM it is also entitled to terminate the relationship on 11 August 2017 by giving written notice by no later than 11 August 2015. Subsequent to this date it is also entitled to terminate the relationship by providing written notice two years prior to each fifth anniversary of 11 August 2017. In respect of 17% of RBR’s 67% share of the concentrate, RPM is entitled to terminate the relationship after 11 August 2012 on the occurrence of certain events. None of these events have occurred or are expected to occur in the near term.

Directors’ responsibility for the financial statements The Company’s directors are responsible for the preparation and fair presentation of these consolidated and separate financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa, and for such internal control as the directors determine is necessary to enable the preparation of consolidated and separate financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s responsibility Our responsibility is to express an opinion on these consolidated and separate financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated and separate 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. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

Opinion In our opinion, the consolidated and separate financial statements present fairly, in all material respects, the consolidated and separate financial position of Royal Bafokeng Platinum Limited as at 31 December 2014, and its consolidated and separate financial performance and its consolidated and separate cash flows for the year then ended in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa.

Impala Platinum royalty agreements

Other reports required by the Companies Act

These agreements regulate the terms on which RBR and RPM dispose of their share of the UG2 ore mined by Impala Platinum from their 6 and 8 shafts and the UG2 and Merensky ore mined from their 20 shaft. A royalty equivalent to 17.5% of gross PGM, gold, nickel and copper revenue will be paid for the UG2 and Merensky ore mined from the 20 shaft area. The 6 and 8 shaft royalty agreement was renegotiated in 2013 and is linked to market conditions and therefore the profitability of the Impala Rustenburg operations. In terms of the amended royalty agreement for 6 and 8 shafts, Impala will pay the BRPM JV a royalty that is based upon a factor that is linked to the Impala Rustenburg operations’ gross margin with minimum of 5% and a maximum of 25% of gross PGM, gold, nickel and copper revenue.

As part of our audit of the consolidated and separate financial statements for the year ended 31 December 2014, we have read the Directors’ report, the Audit and Risk Committee’s report and the Company Secretary’s certificate for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated and separate financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated and separate financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

We anticipate earning royalties from the 6 and 8 shafts agreement for approximately four years and from the 20 shaft agreement for approximately 30 years.

Property, plant and equipment There were no changes in the nature of property, plant and equipment or in the policy regarding their use during the year under review. Property, plant and equipment was fair valued in November 2010 at time of listing as part of the business combination. No impairment of property, plant and equipment has been recognised after considering the recoverable amount calculations.

PricewaterhouseCoopers Inc. Director: HP Odendaal Registered Auditor 2 Eglin Road Sunninghill 2157 27 February 2015

200

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

201

CONSOLIDATED STATEMENT OF FINANCIAL POSITION as at 31 December 2014

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2014

Group Notes

Group

2014 R (million)

2013 R (million)

19 960.5

18 558.4

10 889.5 6 518.4 2 275.1 113.6 99.4 36.9 27.6

9 567.9 6 583.7 2 275.1 106.8 – – 24.9

3 543.4

2 259.1

Net profit for the year

9.4 54.8 3.0 51.7 1 558.0 2.3 1 864.2

– 46.5 – 35.5 1 404.2 – 772.9

Other comprehensive income

23 503.9

20 817.5

Assets Non-current assets Property, plant and equipment Mineral rights Goodwill Environmental trust deposits Employee housing receivable Employee housing benefit Deferred tax asset

5 6 7 8 9 10 19

Current assets Employee housing receivable Employee housing assets Employee housing benefit Inventories Trade and other receivables Current tax receivable Cash and cash equivalents

9 11 10 12 13 14 15

Total assets

Equity and liabilities Total equity Share capital Share premium Retained earnings Share-based payment reserve Non-distributable reserve Non-controlling interest

16 16 17 18

Non-current liabilities Deferred tax liability Long-term provisions

19 20

Current liabilities Trade and other payables Employee housing facility Current tax payable

22 15 14

Total liabilities Total equity and liabilities

18 196.3

15 986.3

1.9 9 329.2 4 330.7 176.6 71.8 4 286.1

1.7 7 808.9 3 889.8 157.7 – 4 128.2

4 574.9

4 331.6

4 486.7 88.2

4 262.0 69.6

732.7

499.6

726.1 6.6 –

499.4 – 0.2

5 307.6

4 831.2

23 503.9

20 817.5

Notes

2014 R (million)

2013 R (million)

Revenue Cost of sales

23 26

3 767.5 (2 902.2)

3 251.1 (2 650.1)

Gross profit Other income Administrative expenses Finance income Finance cost

24 26 25 25

865.3 25.2 (137.3) 96.4 (5.1)

601.0 77.5 (105.0) 42.7 (3.7)

Profit before tax Income tax expense

26 27

844.5 (245.7)

612.5 (164.7)

598.8

447.8





Total comprehensive income

598.8

447.8

Total comprehensive income attributable to: Owners of the Company Non-controlling interest

440.9 157.9

284.2 163.6

598.8

447.8

Basic earnings (cents per share)

34

239

173

Diluted earnings (cents per share)

34

238

173

The notes on pages 206 to 243 form an integral part of these consolidated annual financial statements.

The notes on pages 206 to 243 form an integral part of these consolidated annual financial statements.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2014

CONSOLIDATED STATEMENT OF CASH FLOWS for the year ended 31 December 2014

Group

Number Ordinary Share of shares shares* premium issued* R (million) R (million) Balance at 31 December 2013

164 459 662

Share-based payment charge – Mahube ordinary shares vested in March 2014 187 971 2011 BSP shares vested in March and April 2014 263 029 Issue of shares – bookbuild 11 290 323 Issue of shares – rights offer 14 545 455 Costs relating to issue of shares capitalised – Costs relating to rights followed on treasury shares – Share options exercised 384 217 RPM capital contribution to housing fund – Total comprehensive income – Balance at 31 December 2014

191 130 657

Balance at 31 December 2012 164 150 804 Share-based payment charge – Mahube ordinary shares vested in March 2013 187 971 2013 retrenchments (BSP early vesting)** 43 044 2010 BSP shares vested in December 2013 77 843 Total comprehensive income – Balance at 31 December 2013

164 459 662

Sharebased Nonpayment distributable reserve reserves R (million) R (million)

Attributable to owners NonRetained of the controlling earnings Company interest Total R (million) R (million) R (million) R (million)

1.7

7 808.9

157.7



3 889.8

11 858.1

4 128.2

15 986.3





48.2





48.2



48.2



12.2

(12.2)













17.1

(17.1)











0.1

699.9







700.0



700.0

0.1

799.9







800.0



800.0



(21.5)







(21.5)



(21.5)



(6.4)







(6.4)



(6.4)



19.1







19.1



19.1







71.8



71.8



71.8









440.9

440.9

157.9

598.8

1.9

9 329.2

176.6

71.8

4 330.7

13 910.2

4 286.1

18 196.3

1.7

7 789.0

119.7



3 605.6

11 516.0

3 964.6

15 480.6





57.9





57.9



57.9



12.2

(12.2)













2.6

(2.6)













5.1

(5.1)



















284.2

284.2

163.6

447.8

1.7

7 808.9

157.7



3 889.8

11 858.1

4 128.2

15 986.3

Notes Net cash flow generated by operating activities

2014 R (million)

2013 R (million)

1 426.5

907.8

1 358.5 80.3 (1.1) 14.2 – (25.4)

875.8 31.1 – 18.3 1.1 (18.5)

Net cash flow utilised by investing activities

(1 813.9)

(784.8)

Proceeds from disposal of property, plant and equipment Acquisitions of property, plant and equipment Acquisition of employee housing assets Increase in environmental trust deposits Decrease in held-to-maturity investments

– (1 675.6) (138.2) (0.1) –

0.3 (1 036.6) – (2.4) 253.9

Cash generated by operations Interest received Interest paid Dividends received Tax received Tax paid

28

14 14

5 11 8

Net cash flow generated by financing activities

1 478.7

Issue of ordinary shares – bookbuild Issue of ordinary shares – rights offer Costs relating to issue of shares capitalised Costs relating to rights followed on treasury shares Increase in employee housing facility Net increase in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year



700.0 800.0 (21.5) (6.4) 6.6

15

– – – – –

1 091.3 772.9

123.0 649.9

1 864.2

772.9

The notes on pages 206 to 243 form an integral part of these consolidated annual financial statements.

* The number of shares is net of 1 762 632 (2013:1 622 781) treasury shares relating to the Company’s management share incentive scheme and the Mahube Employee Share Trust as shares held by these special purpose vehicles are eliminated on consolidation ** 18 D1 and below, and 17 D2 and above employees were retrenched in 2013. All retrenchment costs have been fully paid out

The notes on pages 206 to 243 form an integral part of these consolidated annual financial statements.

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SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES for the year ended 31 December 2014

1.

General information

IFRS 15: Revenue from Contracts with Customers (effective for financial periods beginning on/after 1 January 2017)

The financial statements have been prepared in accordance with International Financial Reporting Standards (IFRS).

Early application is permitted. The core principle of the new revenue recognition standard is that revenue must be recognised when the goods or services are transferred to the customer, at the transaction price. The most significant changes that flow from that principle are: > Any bundled goods or services that are distinct must be separately recognised, and any discounts or rebates on the contract price must generally be allocated to the separate elements > Revenue may be recognised earlier than under current standards if the consideration varies for any reasons (such as for incentives, rebates, performance fees, royalties, success of an outcome etc.) – minimum amounts must be recognised if they are not at significant risk of reversal > The point at which revenue is able to be recognised may shift: some revenue which is currently recognised at a point in time at the end of a contract may now be recognised over the contract term and vice versa.

The principal accounting policies adopted in the preparation of the financial statements are set out in Note 2 below. Group in the financial statements refers to the Company, its subsidiaries and controlled special purpose entities.

Summary of significant accounting policies The principal accounting policies adopted in the preparation of these consolidated financial statements are set out below. The policies have been consistently applied to the previous year presented, unless otherwise stated.

Basis of preparation The consolidated financial statements have been prepared in accordance with IFRS as issued by the International Accounting Standards Board (IASB), including IFRIC interpretations (collectively IFRS), the SAICA Financial Reporting Guidelines as issued by the Accounting Practices Committee, financial pronouncements as issued by the Financial Reporting Standards Council (FRSC) and the requirements of the Companies Act 71 of 2008 of South Africa. The consolidated financial statements have been prepared under the historical cost convention except for certain financial assets, which are measured at fair value. The preparation of financial statements in conformity with IFRS requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period based on management and the Board’s best knowledge of current events and actions. Actual results may ultimately differ from these estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in Note 3.

Functional and presentation currency These consolidated financial statements are presented in South African Rand, which is the Company’s functional currency. All financial information is presented in Rand million, unless otherwise stated.

Standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group The following standards or amendments to standards are not expected to have an impact on the results of the Group but will affect the disclosure in the financial statements: Amendment to IAS 16 and IAS 38: Amendments to Property, Plant and Equipment and Intangible Assets, clarification of acceptable methods of depreciation and amortisation (effective for financial periods beginning on/after 1 January 2016). The following standards, amendments to standards and interpretations to existing standards may possibly have an impact on the group:

IFRS 9: Financial Instruments (effective for financial periods beginning on/after 1 January 2018) > In November 2009 the IASB issued IFRS 9 (2009), the first milestone in the project to replace IAS 39. This standard required the classification and measurement of financial assets into only two categories: amortised cost, and fair value through profit or loss (FVPL) > In October 2010 the IASB published the updated IFRS 9 (2010), Financial Instruments, to include guidance on financial liabilities and derecognition of financial instruments, and in particular the requirement to present changes in own credit risk on liabilities at fair value in other comprehensive income (OCI) > In March 2013, the IASB issued an exposure draft (ED) on limited amendments to IFRS 9 (2010), to address specific application questions raised by interested parties as well as to try and reduce differences with the FASB > In November 2013, the IASB published the final hedging requirements excluding macro hedging > In July 2014, the IASB published the new and complete version of IFRS 9 (hereafter IFRS 9 or the new standard), which includes the new hedge accounting, impairment and classification and measurement requirements. The impact of the standard has not yet been assessed by management.

The impact of the standard has not yet been assessed by management.

Amendment to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations (effective for financial periods beginning on/after 1 January 2016) Early application is permitted. IFRS 11 addresses the accounting for interests in joint ventures and joint operations. The amendment adds new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments specify the appropriate accounting treatment for such acquisitions. The impact of the standard is expected to be immaterial.

Amendment to IAS 27: Equity Method in Separate Financial Statements (effective retrospectively for financial periods beginning on/after 1 January 2016) Early application is permitted. The IASB has amended IAS 27, Separate Financial Statements, to restore the option to use the equity method to account for investments in subsidiaries, joint ventures and associates in an entity’s separate financial statements. An entity can now account for investments in subsidiaries, joint ventures and associates in its separate financial statements: a) at cost; or b) in accordance with IFRS 9; or c) using the equity method as described in IAS 28. The impact of the standards is expected to be immaterial.

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (effective prospectively for financial periods beginning on/after 1 January 2016) The amendments resolve a current inconsistency between IFRS 10 and IAS 28. The accounting treatment depends on whether the non-monetary assets sold or contributed to an associate or joint venture constitute a ‘business’. Full gain or loss will be recognised by the investor where the non-monetary assets constitute a ‘business’. If the assets do not meet the definition of a business, the gain or loss is recognised by the investor to the extent of the other investors’ interests. The amendments will only apply when an investor sells or contributes assets to its associate or joint venture. They are not intended to address accounting for the sale or contribution of assets by an investor in a joint operation. The impact of the standard has not yet been assessed by management.

Amendment to IAS 1: Disclosure Initiative (the amendments are effective for annual periods beginning on or after 1 January 2016) The transition provisions state that the disclosures in paragraphs 28-30 of IAS 8, that is, those regarding adoption of a new standard/policy, are not required. Early application is permitted. This amendment aims to clarify guidance in IAS 1 on materiality and aggregation, the presentation of subtotals, the structure of financial statements and the disclosure of accounting policies. The amendments form a part of the IASB’s Disclosure Initiative, which explores how financial statement disclosures can be improved. The impact of the standard has not yet been assessed by management.

Annual improvements to IFRS 2010 to 2012 cycle effective for financial periods beginning on/after 1 July 2014 Each of the amendments is summarised below:

IFRS 2: Share-based Payment The amendment clarifies the definition of a ‘vesting condition’ and separately defines ‘performance condition’ and ‘service condition’. The amendment is effective for share-based payment transactions for which the grant date is on or after 1 July 2014.

IFRS 3: Business Combinations The standard is amended to clarify that an obligation to pay contingent consideration which meets the definition of a financial instrument is classified as a financial liability or as equity, on the basis of the definitions in IAS 32, Financial Instruments: Presentation. The standard is further amended to clarify that all non-equity contingent considerations, both financial and nonfinancial, are measured at fair value at each reporting date, with changes in fair value recognised in profit and loss. Consequential changes are also made to IFRS 9, IAS 37 and IAS 39. The amendment is effective for business combinations where the acquisition date is on or after 1 July 2014.

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SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES (continued) for the year ended 31 December 2014

1.

General information (continued)

IAS 19: Employee Benefits

New standards, amendments and interpretations to existing standards that are not yet effective and have not been early adopted by the Group (continued) Annual improvements to IFRS 2010 to 2012 cycle effective for financial periods beginning on/after 1 July 2014) (continued)

The amendment clarifies that, when determining the discount rate for post-employment benefit obligations, it is the currency in which the liabilities are denominated that is important, and not the country where they arise. The assessment of whether there is a deep market in high-quality corporate bonds is based on corporate bonds in that currency, not corporate bonds in a particular country. Similarly, where there is no deep market in high-quality corporate bonds in that currency, government bonds in the relevant currency should be used. The amendment is retrospective but limited to the beginning of the earliest period presented.

IFRS 8: Operating Segments

IAS 34: Interim Financial Reporting

The standard is amended to require disclosure of the judgements made by management in aggregating operating segments. This includes a description of the segments which have been aggregated and the economic indicators which have been assessed in determining that the aggregated segments share similar economic characteristics. The standard is further amended to require a reconciliation of segment assets to the entity’s assets when segment assets are reported. An entity shall apply this amendment for annual period beginning on/after 1 July 2014.

IFRS 13: Fair Value Measurement When IFRS 13 was published, paragraphs B5.4.12 of IFRS 9 and AG79 of IAS 39 were deleted as consequential amendments. This led to a concern that entities no longer had the ability to measure short-term receivables and payables at invoice amounts where the impact of not discounting is immaterial. The IASB has amended the basis for conclusions of IFRS 13 to clarify that it did not intend to remove the ability to measure short-term receivables and payables at invoice amounts in such cases.

IAS 16: Property, Plant and Equipment, and IAS 38, Intangible Assets Both standards are amended to clarify how the gross carrying amount and the accumulated depreciation are treated where an entity uses the revaluation model. The carrying amount of the asset is restated to the revalued amount. The split between gross carrying amount and accumulated depreciation is treated in one of the following ways: > Either the gross carrying amount is restated in a manner consistent with the revaluation of the carrying amount, and the accumulated depreciation is adjusted to equal the difference between the gross carrying amount and the carrying amount after taking into account accumulated impairment losses; or > The accumulated depreciation is eliminated against the gross carrying amount of the asset. An entity shall apply this amendment for annual period beginning on/after 1 July 2014.

IAS 24: Related Party Disclosures The standard is amended to include, as a related party, an entity that provides key management personnel services to the reporting entity or to the parent of the reporting entity (the management entity). The reporting entity is not required to disclose the compensation paid by the management entity to the management entity’s employees or directors, but it is required to disclose the amounts charged to the reporting entity by the management entity for services provided. An entity shall apply this amendment for annual periods beginning on/after 1 July 2014. The impact of the standard has not yet been assessed by management.

Annual improvements for IFRS 2012 to 2014 cycle effective for financial periods beginning on/after 1 July 2016) Each of the amendments summarised below:

IFRS 5: Non-current Assets Held-for-sale and Discontinued Operations The amendment clarifies that, when an asset (or disposal group) is reclassified from ‘held for sale’ to ‘held for distribution’, or vice versa, this does not constitute a change to a plan of sale or distribution, and does not have to be accounted for as such. This means that the asset (or disposal group) does not need to be reinstated in the financial statements as if it had never been classified as ‘held for sale’ or ‘held for distribution’ simply because the manner of disposal has changed. The amendment also rectifies an omission in the standard by explaining that the guidance on changes in a plan of sale should be applied to an asset (or disposal group) which ceases to be held for distribution but is not reclassified as ‘held for sale’.

IFRS 7: Financial Instruments: Disclosures There are two amendments to IFRS 7.

1. Servicing contracts If an entity transfers a financial asset to a third party under conditions which allow the transferor to derecognise the asset, IFRS 7 requires disclosure of all types of continuing involvement that the entity might still have in the transferred assets. IFRS 7 provides guidance on what is meant by continuing involvement in this context. The amendment adds specific guidance to help management determine whether the terms of an arrangement to service a financial asset which has been transferred constitute continuing involvement. The amendment is prospective with an option to apply retrospectively. A consequential amendment to IFRS 1 is included to give the same relief to first-time adopters.

2. Interim financial statements The amendment clarifies that the additional disclosure required by the amendments to IFRS 7: Disclosure – Offsetting Financial Assets and Financial Liabilities is not specifically required for all interim periods, unless required by IAS 34. The amendment is retrospective.

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The amendment clarifies what is meant by the reference in the standard to ‘information disclosed elsewhere in the interim financial report’. The amendment further amends IAS 34 to require a cross-reference from the interim financial statements to the location of that information. The amendment is retrospective. The impact of the standards has not yet been assessed by management.

2.

Group accounting policies Group and Company financial statements These consolidated financial statements incorporate the Company and its subsidiaries and controlled special purpose entities using uniform accounting policies.

2.1

Subsidiaries Subsidiaries are all entities (including structured entities) over which the Group has control. The Group controls an entity when the Group is exposed to, or has rights to variable returns from its involvement with the entity and has the ability to affect these returns through its power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group. They are deconsolidated from the date that control ceases. The Group uses the acquisition method of accounting to account for business combinations. The consideration transferred for the acquisition of a subsidiary is the fair value of the assets transferred, the liabilities incurred and the equity interests issued by the Group. The consideration transferred includes the fair value of any asset or liability resulting from a contingent consideration arrangement. Acquisition-related costs are expensed as incurred. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date. On an acquisition-by-acquisition basis, the Group recognises any non-controlling interest in the acquiree either at fair value or at the non-controlling interest’s proportionate share of the acquiree’s net assets. The excess of the consideration transferred, the amount of any non-controlling interest in the acquiree and the acquisitiondate fair value of any previous equity interest in the acquiree over the fair value of the identifiable net assets acquired is recorded as goodwill. If this is less than the fair value of the net assets of the subsidiary acquired in the case of a bargain purchase, the difference is recognised directly in the statement of comprehensive income. Goodwill is tested annually for impairment or whenever there is an impairment indicator. Goodwill is carried at cost less accumulated impairment loss. Gains and losses on the disposal of an entity include the carrying amount of goodwill relating to the entity sold. Intercompany transactions, balances and unrealised gains on transactions between Group companies are eliminated. Unrealised losses are also eliminated. Accounting policies of subsidiaries have been changed where necessary to ensure consistency with the policies adopted by the Group. The Group consolidates the BRPM Joint Venture.

Changes in ownership interests in subsidiaries without change of control Transactions with non-controlling interests that do not result in loss of control are accounted for as equity transactions – that is, as transactions with the owners in their capacity as owners. The Group treats transactions with non-controlling interests as transactions with equity owners of the Group. For purchases from non-controlling interests, the difference between any consideration paid and the relevant share acquired of the carrying amount of net assets of the subsidiary is recorded in equity. Gains or losses on disposals to non-controlling interests are also recorded in equity. In the Company financial statements, investments in subsidiaries are accounted for at cost less impairment. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes directly attributable costs of investment.

Disposal of subsidiaries When the Group ceases to have control any retained interest in the entity is remeasured to its fair value at the date when control is lost, with the change in carrying amount recognised in profit or loss. The fair value is the initial carrying amount for the purposes of subsequently accounting for the retained interest as an associate, joint venture or financial asset. In addition, any amounts previously recognised in other comprehensive income in respect of that entity are accounted for as if the Group had directly disposed of the related assets or liabilities. This may mean that amounts previously recognised in other comprehensive income are reclassified to profit or loss.

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SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES (continued) for the year ended 31 December 2014

2.

Group accounting policies (continued) 2.2

2.4

Items of property, plant and equipment are measured at cost less accumulated depreciation and impairment. Cost includes expenditure that is directly attributable to the acquisition of the asset. Pre-production expenditure, incurred to establish or expand productive capacity or to support and maintain that productive capacity incurred on mines, is capitalised to property, plant and equipment. The recognition of costs in the carrying amount of an asset ceases when the item is in the location and condition necessary to operate as intended by management. Any net income earned while the item is not yet capable of operating as intended, reduces the capitalised amount. Interest on borrowings, specifically to finance the establishment of mining assets, is capitalised during the construction phase.

2.5

The present value of decommissioning cost, which is the dismantling and removal of the asset included in the environmental rehabilitation obligation, is included in the cost of the related assets and changes in the liability resulting from changes in the estimates are accounted for as follows: > Any decrease in the liability reduces the cost of the asset. The decrease in the asset is limited to its carrying amount and any excess is accounted for in profit or loss > Any increase in the liability increases the carrying amount of the asset. An increase to the cost of an asset is tested for impairment when there is an indication of impairment > These assets are depreciated over their useful lives and are expensed in profit and loss as a cost of production.

2.6

5 – 30 years (straight-line) 5 – 30 years (straight-line) 6 years (straight-line) 3 – 5 years (straight-line) 4 – 10 years (straight-line) Units of production Units of production

2.3

2.7

When the employee housing assets are sold to employees, the carrying amount of the house is derecognised. The difference between the proceeds received and the carrying amount of the house is recognised in profit and loss as a gain or loss on disposal of employee housing.

2.4

Exploration and evaluation assets Exploration and evaluation assets acquired are initially recognised at cost. Once commercial reserves are found, exploration and evaluation assets are transferred to assets under construction. No amortisation is charged during the exploration and evaluation phase. For purposes of assessing impairment, the exploration and evaluation assets subject to testing are grouped with the existing cash-generating units of operating mines that are located in the same geographical region. Where the assets are not associated with a specific cash-generating unit, the recoverable amount is assessed using fair value less cost to sell for the specific exploration area. All exploration and evaluation costs incurred as part of normal operations are expensed until the Board concludes that a future economic benefit is more likely than not to be realised, i.e. probable. While the criteria for concluding that expenditure should be capitalised are always the “probability” of future benefits, the information that the Board uses to make that determination depends on the level of exploration. > Exploration and evaluation expenditure on greenfields sites, being those where the Group does not have any mineral deposits which are already being mined or developed, is expensed as incurred until a final feasibility study has been completed, after which the expenditure is capitalised within development costs, if the final feasibility study demonstrates that future economic benefits are probable > Exploration and evaluation expenditure on brownfields sites, being those adjacent to mineral deposits which are already being mined or developed, is expensed as incurred until the Board is able to demonstrate that future economic benefits are probable through the completion of a pre-feasibility study, after which the expenditure is capitalised as a mine development cost. A pre-feasibility study consists of a comprehensive study of the viability of a mineral project that has advanced to a stage where the mining method, in the case of underground mining, or the pit configuration, in the case of an open pit, has been established, and which, if an effective method of mineral processing has been determined, includes a financial analysis based on reasonable assumptions of technical, engineering, operating economic factors and the evaluation of other relevant factors. The pre-feasibility study, when combined with existing knowledge of the mineral property that is adjacent to mineral deposits that are already being mined or developed, allows the Board to conclude that it is more likely than not that the Group will obtain future economic benefits from the expenditures

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Cash and cash equivalents Cash and cash equivalents are carried in the statement of financial position at cost. For the purposes of the cash flow statement, cash and cash equivalents comprise cash on hand, deposits held at call with banks, bank overdraft and other short-term highly liquid investments with original maturities of three months or less. Bank overdrafts are shown within borrowings in current liabilities on the statement of financial position.

2.8

Stores and materials Stores and materials are valued at the lower of cost or net realisable value, on a weighted average basis. Obsolete, redundant and slow-moving stores are identified and written down to net realisable values. Net realisable value is the estimated selling price in the ordinary course of business, less selling expenses.

Employee housing assets Employee housing assets are recognised at cost which consists of the cost of the land and the cost to construct the houses and are classified as current assets as these houses are held primarily for purpose of trading. No depreciation is recognised on the employee houses as the intention is to sell the houses within a short period of time after their construction.

Employee housing receivable The employee housing receivable is recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision made for impairment of the employee housing receivable is established when there is objective evidence, e.g. when instalments are overdue for a significant period of time, that the Group will not be able to collect all amounts due according to the original terms of the sale agreement. The amount of the provision is the difference between the asset’s carrying amount and the recoverable amount, being the present value of expected cash flow, discounted at the original effective interest rates. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of comprehensive income as an administrative expense.

Depreciation rates are reassessed annually. Where the carrying amount of an asset is greater than its estimated recoverable amount, it is written down immediately to its recoverable amount. Gains and losses on disposal of property, plant and equipment are determined by comparing proceeds on disposal with carrying amounts and are included in operating profit.

Trade receivables Trade receivables are recognised initially at fair value and subsequently measured at amortised cost using the effective interest method, less provision for impairment. A provision made for impairment of trade receivables is established when there is objective evidence, e.g. when amounts are overdue for a significant period of time, that the Group will not be able to collect all amounts due according to the original terms of the receivables. The amount of the provision is the difference between the asset’s carrying amount and the recoverable amount, being the present value of expected cash flow, discounted at the original effective interest rates. The carrying amount of the asset is reduced through the use of an allowance account, and the amount of the loss is recognised in the statement of comprehensive income as an administrative expense.

Depreciation is calculated to write off the cost of each asset to its residual value over its estimated useful life and residual value as reassessed on an annual basis and approximates the following: Buildings Plant and machinery Vehicles and equipment Computer equipment and software Furniture and fittings Mining assets (shaft and development) Mineral rights

Exploration and evaluation assets (continued) > Exploration and evaluation expenditure relating to extensions of mineral deposits which are already being mined or developed, including expenditure on the definition of mineralisation of such mineral deposits, is capitalised as a mine development cost following the completion of an economic evaluation equivalent to a pre-feasibility study. This economic evaluation is distinguished from a pre-feasibility study in that some of the information that would normally be determined in a pre-feasibility study is instead obtained from the existing mine or development. This information when combined with existing knowledge of the mineral property already being mined or developed allows the Board to conclude that more likely than not the Group will obtain future economic benefits from the expenditures.

Property, plant and equipment and mineral rights

2.9

Product inventory Product inventory consists of stockpiles of ore mined for processing at a later stage. Stockpiles are stated at the lower of cost or net realisable value. Cost is determined using the weighted average cost method. The cost of stockpiles comprises directly attributable mining costs including depreciation. It excludes borrowing costs. Net realisable value is the estimated selling price in the ordinary course of business, less the costs of processing to concentrate as the final product and selling expenses.

2.10 Impairment of assets 2.10.1 Non-financial assets Assets that are subject to depreciation are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. Assets are considered to be impaired when the higher of the asset’s fair value less cost to sell and its value-in-use is less than the carrying amount. An impairment loss is recognised for the amount by which the asset’s carrying amount exceeds the recoverable amount. The recoverability of the long-term mining assets is based on estimates of future discounted cash flows. These estimates are subject to risks and uncertainties including future metal prices and exchange rates. It is therefore possible that changes can occur which may affect the recoverability of the mining assets. The recoverable amounts of non-mining assets are generally determined by reference to market values. Where the recoverable amount is less than the carrying amount, the impairment is charged against income to reduce the carrying amount to the recoverable amount of the asset. The revised carrying amounts are depreciated over the remaining lives of such affected assets. For the purpose of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows (cash-generating units). An impairment previously recognised will be reversed when changes in circumstances, that have an impact on estimates, occur after the impairment was recognised. The reversal of an impairment will be limited to the lower of the newly calculated recoverable amount or the carrying amount that would have existed if the impairment had not been recognised. The reversal of an impairment is recognised in the statement of comprehensive income.

2.10.2 Goodwill Goodwill is tested annually for impairment. Goodwill is allocated to cash-generating units for the purpose of impairment testing. The recoverable amount of the cash-generating unit to which goodwill has been allocated is based on the higher of fair value less cost-to-sell or value-in-use derived from reserve and resource ounce valuation. Impairment write-downs on goodwill may not be reversed.

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SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES (continued) for the year ended 31 December 2014

2.

Group accounting policies (continued) 2.11 Revenue recognition Income is recognised on an accrual basis when it is probable that both the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably. Revenue from sale of products is brought to account when the risks and rewards of ownership transfer and it is probable that both the economic benefits associated with the transaction will flow to the Group and the amount of the revenue can be measured reliably, net of value added tax (VAT) and discounts. In terms of the Group’s concentrate offtake agreement revenue is therefore recognised on the delivery of concentrate to RPM. Where material is concentrated through a tolling agreement, revenue is also recognised once that concentrate is delivered to RPM. In terms of the agreement, the commodity prices and R:US$ exchange rates used in the calculation of the concentrate payment are based on the average daily rates for the third month following the month of delivery. Payment is due on the last day of the fourth month following delivery. The adjustment to trade debtors to reflect the actual amount to be received for concentrate sold is recognised through revenue. Interest income is recognised on a time proportion basis, taking account of the principal outstanding and the effective rate over the period of maturity, when it is probable that such income will accrue to the Group. The effective interest rate for the receivable from employees for housing assets is based on a market related interest rate based on average credit profile per band of employees. Levy income is recognised on an accrual basis as it is invoiced every month and is classified as other income for the Group. Dividend income is brought to account as at the last day of registration in respect of listed shares and when declared in respect of unlisted shares.

2.13.2 Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in current assets except for maturities greater than 12 months after the statement of financial position date. These are classified as non-current assets. Loans and receivables comprise trade and other receivables in the statement of financial position excluding prepaid tax, prepaid expenses and VAT refund (refer Note 13). Environmental trust deposit held in the Standard Bank account (refer Note 8) form part of loans and receivables, and are treated at amortised cost. Loans and receivables are initially recognised at cost.

Subsequent measurement Loans and receivables are carried at amortised cost using the effective interest method.

2.13.3 Receivable from employees for housing assets Initial recognition When the employee housing assets are sold to employees, the Group recognises a financial asset receivable from the employee at fair value. The best evidence of the receivable’s fair value on initial recognition is the transaction price. However, due to the employees paying a preferential interest rate of CPI plus 1%, the fair value may differ from the transaction price. The Group therefore determined a market-related rate for the financial asset based on an average credit profile per band of employees to determine the effective interest rate for this receivable. The Group recognises the difference between the fair value at initial recognition and the transaction price as an employee benefit.

Subsequent measurement The financial asset receivable from the employee is accounted for at amortised cost (recognised at fair value on initial recognition and transaction cost) using the appropriate effective interest rate as determined above. For the financial asset receivable from the employee, the portion to be realised within 12 months from the reporting period is presented as part of current assets, the balance of the amount is presented as a non-current asset in the statement of financial position.

2.13.4 Borrowings (liabilities at amortised cost)

2.12 Leases Determining whether an arrangement is, or contains, a lease is based on the substance of the arrangement, and requires an assessment of whether fulfilment of the arrangement is dependent on the use of a specific asset or assets and whether the arrangement conveys the right to control the asset. Leases of assets under which substantially all the benefits and risks of ownership are effectively retained by the lessor are classified as operating leases. Payments made under operating leases are expensed to profit or loss on the straight-line basis over the life of the lease. When an operating lease is terminated before the lease period has expired, any payment required to be made to the lessor by way of penalty is recognised as an expense in the period in which termination takes place.

2.13 Financial instruments Financial assets comprise environmental trust deposit, trade and other receivables (excluding prepaid expenses and VAT refunds), cash and cash equivalents and the employee housing receivable. The Group classifies its financial assets in the following categories: at fair value through profit or loss and loans and receivables. The classification depends on the purpose for which the financial assets were acquired. Management determines the classification of its financial assets at initial recognition. Financial liabilities comprise borrowings, shareholder loan, trade and other payables and bank overdraft. The Group classifies its financial liabilities as liabilities at amortised cost.

2.13.1 Financial assets at fair value through profit or loss Initial recognition Financial assets at fair value through profit or loss are financial assets and liabilities held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term. Derivatives are classified as held for trading unless they are designated as hedges. Assets in this category are classified as current assets other than the environmental trust deposit which is classified as a non-current asset. Financial assets at fair value through profit or loss are initially recognised at fair value. Nedbank equity-linked deposits (refer Note 8) are treated at fair value through profit or loss.

Gains or losses Gains or losses arising from changes in the fair value of the ‘financial assets at fair value through profit or loss’ category are presented in the statement of comprehensive income within other income, in the period in which they arise. Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income as part of other income when the Group’s right to receive payment is established.

Borrowings are recognised initially at fair value, net of transaction costs incurred. In subsequent periods, borrowings are stated at amortised cost using the effective interest rate method: any difference between proceeds (net of transaction costs) and the redemption value is recognised in the statement of comprehensive income over the period of the borrowing. The effective interest method is a method of calculating the amortised cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or financial liability. When calculating the effective interest rate, the Group shall estimate cash flows considering all contractual terms of the financial instrument but shall not consider future credit losses. The calculation includes all fees and points paid or received between parties to the contract that are an integral part of the effective interest rate, transaction costs, and all other premiums or discounts. There is a presumption that the cash flows and the expected life of a group of similar financial instruments can be estimated reliably. However, in those rare cases when it is not possible to estimate reliably the cash flows or the expected life of a financial instrument (or group of financial instruments), the Group shall use the contractual cash flows over the full contractual term of the financial instrument (or group of financial instruments). When borrowings are utilised to fund qualifying capital expenditure, such borrowing costs that are directly attributable to the capital expenditure are capitalised from the point at which the capital expenditure and related borrowing cost are incurred until completion of construction. All other borrowing costs are charged to finance costs. The revolving credit and working capital facilities commitment fees as well as administration fees on guarantees are recognised in profit or loss.

2.13.5 Trade and other payables Trade payables are recognised initially at fair value and subsequently measured at amortised cost. Metal purchase commitments are entered into as part of a financing arrangement; these commitments are accounted for, initially at fair value, and subsequently at amortised cost.

Subsequent measurement Financial assets at fair value through profit and loss are subsequently measured at the quoted current bid prices. If the market for a financial asset is not active (and for unlisted securities), the Group establishes fair value by using valuation techniques. These include the use of recent arm’s length transactions, reference to other instruments that are substantially the same, discounted cash flow analysis and option pricing models, making maximum use of market inputs and relying as little as possible on entity-specific inputs.

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Royal Bafokeng Platinum Integrated Report 2014

213

SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES (continued) for the year ended 31 December 2014

2.

Group accounting policies (continued) 2.14 Taxation 2.14.1 Current taxation Current tax comprises tax payable calculated on the basis of the expected taxable income for the year, using the tax rates enacted at the statement of financial position date, and any adjustment of tax payable for previous years.

2.14.2 Deferred taxation Deferred tax assets and liabilities are determined, using the asset and liability method, for all temporary differences arising between the tax base of assets and liabilities and their carrying amounts for financial reporting purposes. Deferred tax is determined using tax rates that have been enacted or substantively enacted before the statement of financial position date and are expected to apply when the related deferred tax asset is realised or the deferred tax liability is settled. Deferred tax assets are recognised to the extent that it is probable that future taxable profits will be available, against which the temporary differences can be utilised.

2.15 Fair value estimation The fair value of financial instruments traded in active markets is based on quoted market prices at the reporting date. The nominal value less estimated credit adjustments of trade receivables and payables is assumed to approximate their fair values. The fair value of financial liabilities for disclosure purposes is estimated by discounting the future contractual cash flows at the current market interest rate that is available to the Group for similar financial instruments. The carrying amounts of current financial assets and current liabilities approximate their fair values.

2.16 Offset Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position only when the Group has a legally enforceable right to set off the recognised amounts, and intends either to settle on a net basis, or to realise the asset and settle the liability simultaneously.

2.17 Share capital Ordinary shares are classified as equity. Incremental costs directly attributable to the issue of new ordinary shares or options are shown in equity as a deduction, net of tax, from the proceeds. Where any Group company purchases the Company’s equity share capital, including the share incentive trust (treasury shares), the consideration paid, including any directly attributable incremental costs (net of income taxes) is deducted from equity attributable to the Company’s equity holders until the shares are cancelled or reissued. Where such ordinary shares are subsequently reissued, any consideration received, net of any directly attributable incremental transaction costs and the related income tax effects, is included in equity attributable to the Company’s equity holders.

2.18 Provisions

Contributions are made to this trust fund, created in accordance with statutory requirements to provide for the estimated cost of rehabilitation during and at the end of the life of BRPM. Environmental trust deposits held in the Nedbank equity-linked deposits are carried in the statement of financial position at fair value and deposits held in the Standard Bank account are carried at amortised cost. Contributions are based on the estimated environmental obligations over the life of a mine. Interest earned on monies paid to the trust is accounted for as finance income and income earned linked to the performance of the equity-linked component of the investment is included in other income. The Group has control over the trust and the special purpose entity is consolidated in the Group.

2.21 Employee benefits Short-term employee benefits Remuneration to employees is charged to profit or loss on an ongoing basis. Provision is made for accumulated leave, incentive bonuses and other short-term employee benefits.

Defined contribution retirement plans Employee benefit schemes are funded through payments to trustee-administered funds, determined by periodic actuarial calculations. A defined contribution plan is a retirement scheme under which the Group pays fixed contributions into a separate entity. The Group has no legal or constructive obligation 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. The Group operates or participates in defined contribution retirement plans for its employees. The pension plans are funded by payments from the employees and by the relevant Group companies’ trustee-administered funds, and contributions to these funds are expensed as incurred. The assets of the different plans are held by independently managed trust funds. These funds are governed by the South African Pension Fund Act, 1956.

Post-employment medical obligations The Group provides post-retirement healthcare benefits to qualifying employees and retirees. The expected costs of these benefits are accrued over the period of employment. Valuations of these obligations are carried out annually by independent qualified actuaries. Actuarial gains or losses as a result of these valuations are recognised in other comprehensive income in the period in which they arise.

Termination benefits Termination benefits are payable when employment is terminated by the Group before the normal retirement date, or whenever an employee accepts voluntary redundancy in exchange for these benefits. The Group recognises termination benefits at the earlier of the following dates: (a) when the Group can no longer withdraw the offer of those benefits; and (b) when the entity recognises costs for a restructuring that is within the scope of IAS 37 and involves the payment of termination benefits. In the case of an offer made to encourage voluntary redundancy, the termination benefits are measured based on the number of employees expected to accept the offer. Benefits falling due more than 12 months after the end of the reporting period are discounted to their present value.

Bonus plans

Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, when it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and when a reliable estimate of the amount of the obligation can be made.

The Group recognises a liability and an expense for bonuses based on a formula that takes into consideration production and safety performance. The Group recognises a provision when contractually obliged or where there is a past practice that has created a constructive obligation.

Provisions are measured using the best estimate of the expenditure required to settle the obligation i.e. the amount the Group would rationally pay to settle the obligation or transfer to a third party.

Share-based payments

Where the effect of discounting is material, provisions are discounted to reflect the present value. The discount rate used is a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the obligation. Provisions are not recognised for future operation losses.

2.19 Environmental rehabilitation obligations These long-term obligations result from environmental disturbances associated with the Group’s mining operations. Estimates are determined by independent environmental specialists in accordance with environmental regulations.

Decommissioning costs This cost will arise from rectifying damage caused before production commences. The net present value of future decommissioning cost estimates as at year end is recognised and provided for in full in the financial statements. The estimates are reviewed annually to take into account the effects of changes in the estimates. Estimated cash flows have been adjusted to reflect risks and timing specific to the rehabilitation liability. Discount rates that reflect the time value of money are utilised in calculating the present value. Changes in the measurement of the liability, apart from unwinding the discount, which is recognised in profit or loss as a finance cost, are capitalised to the environmental rehabilitation asset. Changes in the rehabilitation provision relating to the open pit mine are recognised in the statement of comprehensive income as part of cost of sales.

Ongoing rehabilitation cost The cost of the ongoing current programmes to prevent and control pollution is charged against income as incurred.

214

2.20 BRPM Environmental Rehabilitation Trust

Royal Bafokeng Platinum Integrated Report 2014

The Group operates a number of equity-settled, share-based compensation plans, under which the entity receives services from employees as consideration for equity instruments (options) of the Group. The fair value of the employee services received in exchange for the grant of the options is recognised as an expense. The total amount to be expensed is determined by reference to the fair value of the options granted: > Including any market performance conditions (for example, an entity’s share price) > Excluding the impact of any service and non-market performance vesting conditions (for example, profitability, production targets and remaining an employee of the entity over a specified time period) > Including the impact of any non-vesting conditions (for example, the requirement for employees to save). Non-market vesting conditions are included in assumptions about the number of options that are expected to vest. The total expense is recognised over the vesting period, which is the period over which all the specified vesting conditions are to be satisfied. At the end of each reporting period, the entity revises its estimates of the number of options that are expected to vest based on the non-market vesting conditions. It recognises the impact of the revision to original estimates, if any, in the statement of comprehensive income, with a corresponding adjustment to equity. When the options are exercised, the Company issues new shares or issues shares from the share incentive trust. Shares held in the share incentive trust, which is consolidated as a special purpose entity, are treated as treasury shares. The proceeds received net of any directly attributable transaction costs are credited to share capital (nominal value) and share premium when the options are exercised. For individual Company accounts, the grant by the Company of options over its equity instruments to the employees of subsidiary undertakings in the Group is treated as a capital contribution. The fair value of employee services received, measured by reference to the grant date fair value, is recognised over the vesting period as an increase to investment in subsidiary undertakings, with a corresponding credit to equity. Royal Bafokeng Platinum Integrated Report 2014

215

SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES (continued) for the year ended 31 December 2014

2.

Group accounting policies (continued) 2.21 Employee benefits (continued) Employee housing benefit The Group recognises the difference between the fair value of the employee housing receivable at initial recognition and the transaction price as an employee benefit. The recognition of the initial difference is amortised over the shorter of the service period of the employee or the loan period. If the employee’s service period differs from the initial expectation on occupation date, the change in expectation is recognised as a profit or loss in the statement of comprehensive income. The portion of the short-term employee benefit to be realised within 12 months from the reporting period is presented as part of current assets, the balance of the amount is presented as a non-current asset in the statement of financial position.

2.22 Foreign exchange transactions Foreign currency transactions are translated into the functional currency using the exchange rates prevailing at the dates of the transactions or valuation where items are remeasured. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies, are recognised in income under other income.

2.23 Segment reporting Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating decisionmaker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Executive Committee that makes strategic decisions.

3.

Critical accounting estimates and assumptions The Group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are addressed below:

Goodwill (Note 7) Goodwill was calculated as the difference between the purchase consideration for the 67% interest in the BRPM Joint Venture and the Group’s share of net assets acquired when the Group assumed control over BRPM upon listing on 8 November 2010. No goodwill was attributed to non-controlling shareholders’ interest. Goodwill is allocated to BRPM. The recoverability of goodwill was assessed using the fair value less costs to sell methodology based on the in-situ value for 4E resource ounces outside the life of mine plan and the net present value of the current life of mine plan using the following assumptions: For mineral rights included in life of mine plan and mining assets the following key real long-term life of mine prices were used: > Platinum US$1 777 per ounce (2013: US$1 905 per ounce) > Palladium US$945 per ounce (2013: US$920 per ounce) > A long-term real rand/US dollar exchange rate of R11.00/US$1 (2013: R9.64/US$1) > A real discount rate of 7.5% (2013: 7.5%) > Life of mine of 30 years (2013: 30 years). If all assumptions remain unchanged then a decrease of 2.4% (2013: 2.0%) in the sales prices will result in a break-even position. Alternatively if all assumptions remain unchanged, a 1.3% (2013: 2.3%) increase in the discount rate from 7.5% to 8.8% will result in a break-even position. As can be expected the margin is small as the assets were fair valued in 2010.

Mineral rights outside the life of mine plan

The decision when to stop capitalising development costs and start expensing costs at the Styldrift l project requires judgement. The accounting is dependent on where the project is in terms of on reef development, stoping and production.

On reef development All on reef development costs are capitalised to the Styldrift l project and are disclosed in Note 5 under capital work in progress. Income generated from the treatment of stockpiles generated from the on reef development tonnes is treated as revenue. The cost of sales associated with this revenue excludes any extractions costs (which form part of development capital expenditure) and includes only the marginal rehandling and processing costs.

Stoping As part of the ramp-up phase of Styldrift l project stoping will commence whilst other parts of the mine are still being developed. The costs incurred during stoping, i.e. the tonnes mined when Styldrift enters the stoping phase, will be capitalised to inventories. These tonnes and their associated costs will not form part of the capital project cost but will be shown as current assets under inventories (stockpiles). As these stockpiles are treated, the costs thereof will be expensed to cost of sales and the associated revenue will be reflected in revenue in the statement of comprehensive income. Development costs during the ramp-up phase will continue to be capitalised as part of the project.

Production Once Styldrift l project commences with its production phase, all operating costs will be expensed as cost of sales with the associated revenue shown in the statement of comprehensive income. Ongoing development costs, e.g. the equipping of new levels, will be capitalised. At the production stage, the project will be commissioned and the asset will move from capital work in progress to mining assets and will be depreciated over the life of the Styldrift l project shaft on a unit of production basis.

Environmental rehabilitation obligations (Note 20) The Group’s mining and exploration activities are subject to various laws and regulations governing the protection of the environment. The Group recognises management’s best estimate for asset retirement obligations in the period in which they are incurred. Actual costs incurred and actual timing thereof in future periods can differ materially from the estimates. Additionally, future changes to environmental laws and regulations, life of mine estimates and discount rates can affect the carrying amount of this provision. Estimated long-term environmental provisions, comprising pollution control, rehabilitation and mine closure, are based on the Group’s environmental policy taking into account current technological, environmental and regulatory requirements. Provisions for future rehabilitation costs have been determined, based on calculations which require the use of estimates. Key assumptions used were:

Current cost estimate R (million) Real pre-tax risk free discount rate (%)

2014

2013

206.1 4

179.5 4

Share-based payments The Group has various share-based payment plans in place. All share-based payment schemes are treated as equity-settled and therefore measured on grant date.

Bonus share plan The Company has established a bonus share plan (BSP) for its executive directors and senior managers, which is linked to the employee’s annual cash bonus. The Remuneration Committee of the Company is responsible for operating the BSP.

The recoverable amount of goodwill is based on fair value less costs to sell.

Following the announcement of the Company’s audited annual results, employees participating in the BSP are awarded a number of bonus shares, which constitute a specified percentage of the employee’s annual cash bonus (dependent on job category). Such bonus shares are held on the employee’s behalf by an escrow agent for a period of three years after their award. The employee has to stay in the employ of the Company for the full period of three years to qualify for the bonus shares. On vesting date, the employee receives shares.

Mineral reserves

Shares issued in terms of this scheme are accounted for as equity-settled share-based payments.

The estimation of reserves impacts the depreciation of property, plant and equipment, the recoverable amount of property, plant and equipment and the timing of rehabilitation expenditure.

Forfeitable share plan

For in-situ 4E resource ounces a value of US$10 per 4E ounce (2013: US$10 per 4E ounce) was used. This was based on independent experts’ views of the value of these resources at the time of the listing of the Company. Subsequent improvement in the quality of resources would have improved this value.

Factors impacting the determination of proved and probable reserves are: > The grade of mineral reserves may vary significantly from time to time (i.e. differences between actual grades mined and resource model grades) > Differences between actual commodity prices and commodity price assumptions > Unforeseen operational issues at mine sites > Changes in capital, operating, mining, processing and reclamation costs, discount rates and foreign exchange rates.

Carrying amount of property, plant and equipment (Note 5) The estimated useful lives of property, plant and equipment are based on the historical performance as well as expectations about the future use and therefore require a significant degree of judgement to be applied by management. The depreciation rates represent management’s current best estimates of the useful lives of the assets. Residual values of the property, plant and equipment are reviewed at least annually. Adjustment will affect the depreciation charge for the reporting period.

216

Accounting treatment of Styldrift l project expenditure (Note 5)

Royal Bafokeng Platinum Integrated Report 2014

The Company has established a forfeitable share plan (FSP) for its executive directors and senior managers. The FSP is linked to future performance of the Company as compared to its peers, utilising the total shareholder return (TSR) as a measure of performance. The Remuneration Committee is responsible for operating the FSP. Employees participating in the FSP are awarded a number of forfeitable shares, based on their level and responsibility. The Remuneration Committee decides the award policy, which in 2014 was a multiple of total group package (TGP). The shares are held in escrow until they vest. The shares vest in equal tranches on the third, fourth and fifth anniversary of award. The proportion of shares that vest is based on the Company performance on the third anniversary. The employee has to stay in the employ of the Company for the period and the performance criteria have to be met for the shares to vest. On the vesting date, the employee receives shares. Shares issued in terms of this scheme are accounted for as equity-settled share-based payments.

Royal Bafokeng Platinum Integrated Report 2014

217

SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES (continued) for the year ended 31 December 2014

3.

Critical accounting estimates and assumptions (continued)

3.

Share-based payments (continued) 2010 share option plan Certain directors and senior managers of the Company (including all the current executive directors of the Company) have been granted options to acquire shares. The options were granted at an initial price which was linked to the J153 Platinum Index when hired. The strike price of the options was adjusted on listing in accordance with a specified formula and was linked to the Company’s share price. Grants in subsequent years are issued at the weighted average trading price on the day prior to the grant date. The fair value of options granted is determined using the binomial model. The volatility was measured based on an analysis of daily share prices over the last four years. The share options vest from year three to five from when they were granted in three equal tranches.

Mahube Employee Share Scheme The Royal Bafokeng Platinum Mahube Trust (Mahube Trust) has been implemented to replace the value forfeited by qualifying BRMS employees as a result of no longer qualifying as beneficiaries of the Anglo Platinum Group Employee Share Participation Scheme (Kotula). Refer Note 16 where Mahube shares are disclosed. Permanent employees of the BRPM are employed by BRMS. Prior to the listing, BRMS was a wholly owned subsidiary of RPM and qualifying BRMS employees were beneficiaries of Kotula. In terms of the rules of Kotula and as a result of the listing, qualifying BRMS employees forfeited all their benefits under Kotula once ownership of BRMS was transferred from RPM to RBR since BRMS was no longer a member of the Anglo American Platinum group of companies. The Group created the Mahube Trust, an employee share ownership scheme for the benefit of qualifying BRMS employees to replicate the terms and structure, to the extent possible, of Kotula. Permanent employees who do not benefit from any other share schemes qualify for Mahube Trust Share Scheme. The beneficiary has to be in the employ of the Company on each distribution date. On distribution date, a third of Mahube’s interest in the Company vests and is distributed to the beneficiaries. The first distribution took place on 31 March 2013. The final capital distribution will take place on or about 31 March 2015. Refer Note 30 for details of distribution.

Initial public offering bonus shares The Company invited each of the executive directors and certain other employees of the Company to participate in the share offer on listing, on the basis that for each share that they subscribe for, the Company will issue them with an additional share free of charge (with the Company paying for the par value of such shares). The additional shares issued by the Company vested 18 months after the listing. The maximum number of shares for which each director and employee could subscribe to benefit from this scheme was limited based on the specific job grade. The value of the various share-based payment schemes was calculated using the following inputs: Bonus share plan

Weighted average share price on grant date (rand) Vesting years

2014

2013

2012

2011

2010

64.90 2017

58.50 2016

57.99 2015

64.12 2014

65.20 2013

2014

2013

2012

2011

2010

71.90 2017 – 2019

– –

– –

– –

– –

2014

2013

2012

2011

2010

55.00 2017

55.00 2016

55.00 2015

– –

– –

Forfeitable share plan

Weighted average share price on grant date (rand) Vesting years

Rights offer

Weighted average share price on grant date (rand) Vesting years

2010 share option plan 2014 Weighted average option value on grant date (rand) Weighted average share price on grant date (rand) Weigted average exercise price (rand) Volatility (%) Dividend yield Risk-free interest rate (%) Vesting years

Critical accounting estimates and assumptions (continued) Share-based payments (continued) Initial public offering bonus shares (continued)

2013

2012

2011

2010

37.10 37.41 66.83 57.61 66.83 57.61 26.22 to 26.73 47.2 to 57.61 – – 7.11 to 8.31 6.08 to 8.51 2017 – 2019 2016 – 2018

29.07 57.47 57.47 49.5 to 47.8 – 7.18 to 8.01 2015 – 2017

– – – – – – 2014 – 2016

32.27 60.25 60.25 40.3 to 48.2 – 7.59 to 8.46 2013 – 2015

Weighted average option value on grant date (rand) Weighted average share price on grant date (rand) Volatility (%) Dividend yield Risk-free interest rate (%) Vesting years

Mahube Trust share scheme

Initial public offering bonus shares

44.67 65.12 39.8 to 47.8 – 7.75 to 7.83 2013 – 2015

64.90 64.90 47.9 – 7.52 8 May 2012

Refer Note 30 for outstanding shares.

Activity on awards outstanding Forfeitable share plan

Forfeitable number of options

2010 share option plan

Share plan Weighted weighted average average option option Number price price of options R R

Bonus share plan

Mahube Trust share scheme

Weighted average award Number price of shares R

Weighted average award Number price of shares R

For the year ended 31 December 2014 At 1 January 2014 Granted Forfeited Exercised Expired

– 235 195 (50 222) – –

– 3 816 185 71.91 898 332 71.91 (314 542) – (403 554) – –

55.69 65.83 59.01 47.73 –

1 186 735 355 656 (129 858) (254 948) –

59.74 64.90 59.40 65.14 –

939 857 – – – (469 928)

46.08 – – – 65.25

At 31 December 2014

184 973

71.91 3 996 421

58.74

1 157 585

60.17

469 929

46.08

For the year ended 31 December 2013 At 1 January 2014 Granted Forfeited Exercised Expired

– – – – –

– – – – –

3 358 564 691 213 (135 128) (98 464) –

55.08 57.61 57.08 46.67 –

866 337 534 376 (85 924) (128 054) –

61.17 58.50 61.58 64.13 –

1 409 785 – – – (469 928)

44.67 – – – 41.86

At 31 December 2013





3 816 185

55.69

1 186 735

59.74

939 857

46.08

Income taxes and mining royalties Significant judgement is required in determining the provision for income taxes and mining royalties. There are many transactions and calculations for which the ultimate tax determination is uncertain during the ordinary course of business. Where the final tax outcome is different from the amounts that were initially recorded, such differences will impact the income tax and deferred tax provisions in the period in which such determinations are made. Refer to Note 21.5 for the tax contingency note.

Employee home ownership scheme The employee home ownership scheme arrangement was concluded in May 2014 and involves the construction of 3 500 houses for eligible employees over a five-year period. At 31 December 2014, 422 houses were built, 295 of which were sold to employees.

Employee housing receivable The fair value of the employee housing receivable is determined using a discounted cash flow model. The following key assumptions were used in determining the fair value of the housing employee receivable: > Instalment – Initial starting instalment of R2 543 – Instalment increases on 1 July of each year and is fixed for a period of 12 months. > Interest accruals – Interest rate is charged at 7.6% based on the May CPI rate of the current period plus 1% with a floor rate of 7% (CPI as at May of the current period is 6.7%) – Interest rates are adjusted annually effective from 1 July of each calendar year and remain fixed for a period of 12 months – The default interest rate for any employee who fails to make a monthly repayment of the instalment is set at the prime interest rate plus 2%

218

Royal Bafokeng Platinum Integrated Report 2014

Royal Bafokeng Platinum Integrated Report 2014

219

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2014

3.

Critical accounting estimates and assumptions (continued)

Group

Employee home ownership scheme (continued) Employee housing receivable (continued) > Interest accruals (continued) – The prime lending rate (defined as the “benchmark rate at which private banks lend out to the public”) will be used as the base discount rate with an adjustment for counterparty credit risk (relative to the prime lending rate). This adjustment will be varied by risk grades (ie average credit profile per band).

6.

> Payment period – The initial repayment period for the loans is 209 months – The repayment period however is adjusted based on interest rate movements.

4.

Employee home ownership scheme During 2013, RBPlat embarked on an initial pilot housing project which will ultimately involve the construction of approximately 3 500 houses for eligible enrolled employees over a five-year period. In December 2013, RBPlat took ownership of the first batch of houses which were recognised as property, plant and equipment. At that stage it was uncertain when the houses would be sold. As the intention is to sell the houses to employees within a 12-month period, the employee housing assets were subsequently reclassified as current assets. At 31 December 2014, 422 houses were built, 295 of which were sold to employees. Friedshelf (RF) 1408 Proprietary Limited (Friedshelf), a wholly owned subsidiary within the RBPlat group, is a property company which was created in 2013 for the purpose of the housing scheme. All unsold houses are classified as inventory in the books of Friedshelf and on sale of the houses, revenue is recognised. On Group level however, unsold houses are classified as current assets (refer Note 11). On sale of the houses, an employee housing receivable is recognised (refer Note 9). This reclassification occurs because RBPlat is a mining company and is not in the business of buying and selling houses. All houses are sold to employees at cost.

Buildings R (million)

5.

Additions Change in estimates of decommissioning asset Depreciation Transfers

Total R (million)

At 31 December 2014

94.1

5 060.8

3 255.6

1 078.8

7.9

9 567.9

0.4

0.4



1 681.7





1 682.5

– (34.3) 15.3

10.0 (188.2) 238.2

– – (356.2)

– (144.1) 87.4

– (0.5) 1.5 8.9

10.0 (370.9) –

81.1

75.5

5 120.8

4 581.1

1 022.1

100.2 (19.1)

160.8 (85.3)

6 024.5 (903.7)

4 581.1 –

1 571.9 (549.8)

At 31 December 2014

81.1

75.5

5 120.8

4 581.1

1 022.1

8.9

10 889.5

Cost Accumlated depreciation

80.7 (9.8)

84.1 (29.3)

5 553.9 (544.0)

2 593.6 –

1 394.8 (238.6)

28.4 (14.6)

9 735.5 (836.3)

At 1 January 2013

70.9

54.8

5 009.9

2 593.6

1 156.2

13.8

8 899.2

Additions Change in estimates of decommissioning asset Depreciation Transfers



0.2



1 040.4





1 040.6

– (5.5) 5.3

– (21.7) 60.8

1.3 (171.5) 221.1

– – (378.4)

– (167.1) 89.7

– (7.4) 1.5

1.3 (373.2) –

Cost Accumulated depreciation

6 583.7 (65.3)

6 645.0 (61.3)

Closing balance at 31 December

6 518.4

6 583.7

Cost Accumulated amortisation

6 767.0 (248.6)

6 767.0 (183.3)

Closing balance at 31 December

6 518.4

6 583.7

Group 2014 R (million)

7.

2013 R (million)

Goodwill Goodwill at cost less impairment

2 275.1

2 275.1

The goodwill originated from the deferred tax provided on the fair value of the assets over carrying amount on the obtaining of control of BRPM on date of listing of the Company (8 November 2010). Goodwill was allocated entirely to the Group’s mining operation. Refer Note 3 for the assumptions and sensitivity thereof used in assessing the recoverable amount of goodwill. Group

70.7

– (3.8) 13.8

Opening balance at 1 January Amortisation (included in cost of sales)

Mineral rights

There was no impairment of goodwill in the current financial year. Capital Vehicles work in Plant and and progress machinery equipment R (million) R (million) R (million)

Property, plant and equipment At 1 January 2014

2013 R (million)

In terms of the joint venture agreement between RPM and RBR, RPM contributed its Boschkoppie mining right and the Frischgewaagd prospecting right whilst RBR contributed its Styldrift mining right to the BRPM JV for the full BRPM life of mine. Royal Bafokeng Resources therefore has an undivided 67% participation interest in these rights whilst RPM has an undivided 33% participation interest in these rights.

The employee housing receivable is recognised at fair value using a discounted cash flow model. Refer to Note 3 where the fair value assumptions have been disclosed. The difference that arises between the loan amount outstanding and the fair value of the employee housing receivable is recognised as an employee housing benefit (refer Note 10). A Nedbank housing facility was drawn to fund a portion of the purchase of the employee houses, which is recognised as a liability (refer Note 15). Mining assets Furniture and (including fittings and decomcomputer missioning ware asset) R (million) R (million)

2014 R (million)

31.4 (22.5)

10 889.5 12 469.9 (1 580.4)

At 31 December 2013

70.7

94.1

5 060.8

3 255.6

1 078.8

7.9

9 567.9

Cost Accumulated depreciation

86.0 (15.3)

145.1 (51.0)

5 776.3 (715.5)

3 255.6 –

1 484.5 (405.7)

29.9 (22.0)

10 777.4 (1 209.5)

At 31 December 2013

70.7

94.1

5 060.8

3 255.6

1 078.8

7.9

9 567.9

The Company has the life of mine right to use, but not ownership of assets with carrying amount of R1 076 944 883 (2013: R1 157 302 195) which is included in balances above. Exploration and evaluation costs relating to Styldrift II incurred in the current year and included in capital WIP additions were R32.4 million (2013: R45.9 million).

2014 R (million)

8.

2013 R (million)

Environmental trust deposits Environmental trust deposit held in Standard Bank account Opening balance at 1 January Interest earned on environmental trust deposit (refer Note 25) Increase in cash deposit during the year

4.6 0.1 –

2.2 0.1 2.3

Closing balance at 31 December

4.7

4.6

Environmental trust deposit held in Nedbank equity-linked deposit account Opening balance at 1 January Fair value adjustment of the Nedbank equity-linked deposits (refer Note 24)

102.2 6.7

100.9 1.3

Fair value at 31 December

108.9

102.2

Total

113.6

106.8

The Group contributes to the BRPM Environmental Rehabilitation Trust annually. The trust was created to fund the estimated cost of pollution control, rehabilitation and mine closure at the end of the life of the mine. Contributions are determined on the basis of the estimated environmental obligation over the life of a mine. Contributions made are reflected as an environmental trust deposit. Refer Note 20 for the environmental rehabilitation provision created. According to the terms of the Nedbank equity-linked deposit, the deposit amount is guaranteed and will earn a guaranteed 3% per annum (naca) interest. In addition, there is a variable return component of which R55.9 million (2013: R58.8 million) of the R100.4 million (2013: R98.0 million) deposit is linked to the Bettabeta CIS BGreen portfolio exchange traded fund performance and the remaining R44.5 million (2013: R39.2 million) is linked to the FTSE/JSE Shareholder Weighted Top 40 Index performance. The variable return is capped based on a participation interest percentage of the growth in the relevant index to maturity. The Nedbank equity-linked deposits have been invested for a one-/two-/three-/four-/five-year period to ensure flexibility for when the cash will be required for rehabilitation. The Nedbank equity-linked deposits are fair valued every month and the fair value adjustment is taken through the statement of comprehensive income as an adjustment to other income.

Included in the 2014 additions is a non-cash amount of R6.9 million (2013: R4.0 million) which relates to Styldrift l project sharebased payment charges capitalised (refer Note 17).

220

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221

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014 13 Trade and other receivables (continued)

Group

9.

2014 R (million)

2013 R (million)

Opening balance Houses sold to employees during the year (inclusive of VAT) Interest capitalised Employee housing benefit reallocation*

– 148.0 1.8 (41.0)

– – – –

Closing balance at 31 December

108.8



RBR entered into a disposal of concentrate agreement with RPM during 2002 in terms of which RBR’s share of the concentrate of the PGMs produced by BRPM JV will be treated by RPM. In terms of the disposal of concentrate agreement, the commodity prices and R:US$ exchange rates used in the calculation of the concentrate payment are based on the average daily rates for the third month following the month of delivery. Payment is due on the last day of the fourth month following delivery (refer Note 32.1 for sensitivity analysis).

Employee housing receivable

Concentrate debtors are remeasured every month following delivery of the concentrate until the price is fixed at the end of the third month following delivery. The remeasurement is taken through the statement of comprehensive income as an adjustment to revenue. Group 2014 R (million)

2013 R (million)

0.2 23.7 (0.8) (25.4)

2.0 15.6 1.1 (18.5)

Closing balance at 31 December

(2.3)

0.2

Current tax (receivable)/payable comprises: Current tax receivable Current tax payable

(2.3) –

– 0.2

Closing balance at 31 December

(2.3)

0.2

Split between: Non-current portion of employee housing receivable Current portion of employee housing receivable

99.4 9.4

– –

14.

* Fair value adjustment (refer Note 10)

Group 2014 R (million)

10.

Current tax (receivable)/payable The movement in the balance can be explained as follows: Opening balance at 1 January Income tax charge Refund to SARS for incorrect receipt Payment made

There was no impairment of employee housing receivable in the current financial year.

2013 R (million)

Employee housing benefit Opening balance Additions for the year (reallocations from employee housing receivable) (Refer Note 3) Amortisation charge for the year

– 41.0 (1.1)

– – –

Closing balance at 31 December

39.9



36.9 3.0

– –

Group 2014 R (million)

Split between: Non-current portion of employee housing benefit Current portion of employee housing benefit

Group

11.

2014 R (million)

2013 R (million)

46.5 138.2 (129.9)

– 46.5 –

54.8

46.5

Employee housing assets Opening balance Additions for the year Houses sold to employees during the year (exclusive of VAT) Closing balance at 31 December

Group 2014 R (million)

12.

2013 R (million)

Inventories Consumables Stockpiles

23.0 28.7

17.2 18.3

Closing balance at 31 December

51.7

35.5

All inventories are carried at cost. There is no inventory write down to net realisable value.

13.

Cash and cash equivalents Cash at bank and on hand Short-term bank deposits

431.0 1 433.2

252.1 520.8

Closing balance at 31 December

1 864.2

772.9

The cash and cash equivalents above are split as follows: Cash and cash equivalents – 100% BRPM JV Cash and cash equivalents – RBPlat corporate office

411.4 1 452.8

195.0 577.9

Closing balance at 31 December

1 864.2

772.9

Facilities Royal Bafokeng Resources (RBR) cancelled its R1 billion revolving credit facility (RCF) with Nedbank Capital during July 2014. The RCF incurred commitment fees of 0.625% of the unutilised portion of the facility up to 29 June 2014 and 0.725% from 30 June 2014 until cancellation occurred. The RCF will be superseded with term debt to be raised for the completion of the Styldrift I project. In addition, RBR has a R450 million, RBPlat a R3 million and RBPlat MS a R5 million working capital facility with Nedbank Capital. R200 million of the R450 million was allocated for the RBPlat housing facility. The closing balance of the reducing guarantee at year end is R3.5 million (refer Note 21.1). Interest on the working capital facilities is based on a three-month JIBAR plus a margin of 2.45% nominal annual interest compounded monthly in arrears and it is repayable by 31 December 2015. There are commitment fees payable on these facilities of 0.625% of the unutilised portion of the facilities. At year end RBR utilised R156.9 million (2013: R353.4 million) of its working capital facility for guarantees and R6.6 million in respect of the employee housing facility. RBP MS utilised R0.4 million (2013: R0.4 million) for guarantees. Refer Note 21.1 for further details. The Group’s facilities are shown in the table below:

Group 2014 R (million)

15.

2013 R (million)

2013 R (million)

Trade and other receivables Trade receivables (RPM concentrate debtors – Refer Note 29) Impala royalty receivable (refer Note 29) VAT receivable RPM capital contribution to housing costs (refer Note 18) Other receivables

1 344.6 10.8 31.1 71.8 99.7

1 313.2 10.9 26.5 – 53.6

Closing balance at 31 December

1 558.0

1 404.2

Facility amount Utilised amount 2014 committed facilities R (million) Nedbank RCF* Nedbank working capital facilities

– 458.0

Total

Available funds

Repayment date

– 163.9

– 294.1

31 December 2015 31 December 2015

458.0

163.9

294.1

2013 committed facilities R (million) Nedbank RCF Nedbank working capital facilities

1 000.0 458.0

– 353.8

1 000.0 104.2

Total

1 458.0

353.8

1 104.2

31 December 2015 31 December 2015

* Facility cancelled during July 2014.

222

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223

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014 Group 2014 R

16.

Group

17.

Share capital and share premium Authorised share capital 250 000 000 (2013: 250 000 000) ordinary shares with a par value of R0.01 each 1 500 000 (2013: 1 500 000) “A1” ordinary shares with a par value of R0.01 each 1 500 000 (2013: 1 500 000) “A2” ordinary shares with a par value of R0.01 each 1 500 000 (2013: 1 500 000) “A3” ordinary shares with a par value of R0.01 each

2 500 15 15 15

Total authorised share capital

2 545 000 2 545 000

Issued ordinary share capital The movement in the issued share capital of the Company is as follows: Opening balance 164 459 662 (2013: 164 150 804) ordinary shares with a par value of R0.01 11 290 323 ordinary shares issued in terms of the bookbuild 14 545 455 ordinary shares issued in terms of the rights offer 590 851 (2013: 534 376) ordinary shares issued as part of management share incentive scheme 187 971 (2013: 187 971) Mahube ordinary shares vested in March 263 029 BSP shares vested in February and April 2014 384 217 ordinary shares issued as a result of share options exercised 43 044 BSP shares early vested with 2013 retrenchments 77 843 BSP shares vested in December 2013 Less: Treasury shares 590 851 (2013: 534 376) ordinary shares issued as part of the management share incentive scheme

1 644 596 112 903 145 455 5 909 1 880 2 630 3 842 – –

Total 191 130 657 (2013: 164 459 662) ordinary shares

1 911 306

1 644 596

8 459

8 459

(2 819) (2 819)

(2 819) –

2 821

5 640

(2 821)

(5 640)

Issued “A1”, “A2”, “A3” ordinary share capital Opening balance 563 941 (2013: 845 871) “A” ordinary shares issued to Mahube Trust “A1” and “A2” and “A3” ordinary shares issued on equal parts of 281 957 each 281 957 “A1” ordinary shares repurchased and cancelled in 2013 281 957 “A2” ordinary shares repurchased and cancelled in 2014 Closing balance 281 957 (2013: 563 914) “A3” ordinary shares issued to Mahube Trust Less: Treasury shares 281 957 “A” ordinary shares issued to Mahube Trust

000 2 500 000 000 15 000 000 15 000 000 15 000

(5 909)

Total 281 957 (2013: 563 914) “A” ordinary shares



As at 31 December 2014, the treasury shares outstanding amounted to 1 762 632 shares (2013: 1 622 781 shares). Share premium R (million) Opening balance 7 808.9 11 290 323 ordinary shares issued in terms of the bookbuild 699.9 14 545 455 ordinary shares issued in terms of the rights offer 799.9 Costs relating to issue of shares capitalised (21.5) Costs relating to rights followed on treasury shares (6.4) 263 029 BSP shares vested in March and April 2014 17.1 384 217 ordinary shares issued as a result of share options exercised 19.1 590 851 (2013: 534 376) ordinary shares issued as part of the Company’s management share incentive scheme 42.5 Mahube ordinary shares vested in March 12.2 BSP early vested with 2013 retrenchments – BSP shares vested in December 2013 – Less: Treasury shares 590 851 (2013: 534 376) ordinary shares issued as part of the management share incentive scheme (42.5) Total share premium

9 329.2

2014 R (million)

2013 R (million)

The movement can be attributed to the following: Opening balance at 1 January Share-based payment charge to statement of comprehensive income Share-based payment charge capitalised to the Styldrift I project (refer Note 5) Mahube ordinary shares vested in March 2014 BSP shares vested in March and April 2014 BSP shares early vested – 2013 retrenchments BSP shares vested in December 2013

157.7 41.3 6.9 (12.2) (17.1) – –

119.7 53.9 4.0 (12.2) – (2.6) (5.1)

Closing balance at 31 December

176.6

157.7

2013 R

1 641 508 – – 5 344 1 880 – – 430 778

Share-based payment reserve

Refer Note 3 for critical accounting estimates and assumptions used for the RBPlat share schemes. Group 2014 R (million)

18.

Non-distributable reserve Capital contribution from RPM relating to the housing project

71.8



Closing balance at 31 December

71.8



(5 344)



R (million) 7 789.0 – – – – – –

2013 R (million)

Group

19.

2014 R (million)

2013 R (million)

Deferred income tax is calculated in full on the temporary differences under the liability method using the principal tax rate of 28%. Deferred income tax assets and liabilities are offset when there is a legally enforceable right to set off tax assets against the tax liabilities and when the deferred income taxes relate to the same fiscal authority. Deferred tax comprises: Deferred tax asset Deferred tax liability

(27.6) 4 486.7

(24.9) 4 262.0

Closing balance at 31 December

4 459.1

4 237.1

Deferred tax

Property, Mineral plant and rights equipment R (million) R (million) 2014 At 1 January 2014 Charged to statement of comprehensive income

1 843.4 (18.3)

Provisions R (million)

Other R (million)

Total R (million)

2 407.9

(22.5)

8.3

185.6

(6.5)

61.2

4 237.1 222.0

At 31 December 2014

1 825.1

2 593.5

(29.0)

69.5

4 459.1

31.2 12.2 2.6 5.1

2013 At 1 January 2013

1 860.6

2 240.6

(31.0)

17.8

4 088.0

(17.2)

167.3

8.5

(9.5)

149.1

1 843.4

2 407.9

(22.5)

8.3

4 237.1

(31.2)

Tax losses included in RBP MS which are not recognised as deferred tax assets, amount to R98.2 million (2013: R73.4 million). Of the deferred tax liability, approximately R4 020 million (2013: R3 829 million) will realise after 12 months.

7 808.9

Charged to statement of comprehensive income At 31 December 2013

The “A” ordinary shares were issued to the Mahube Trust as part of the Company’s employee share ownership plan and these “A” ordinary shares are not listed. The “A” ordinary shares are treated as treasury shares as the Mahube Trust is consolidated as a special purpose vehicle. During the year 590 851 (2013: 534 376) ordinary shares were issued as part of the Company’s management staff incentive scheme.

224

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225

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014 21. Contingencies and commitments (continued)

Group 2014 R (million)

20.

21.4

2013 R (million)

Operating commitments (continued) The future aggregate lease payments under these operating leases are as follows: Group

Long-term provisions Restoration and rehabilitation opening balance at 1 January Unwinding of discount Change in estimate of provision taken to statement of comprehensive income Change in estimate of provision taken to decommissioning asset

68.7 4.0 5.5 10.0

61.6 3.7 2.1 1.3

Restoration and rehabilitation closing balance at 31 December Other provisions

88.2 –

68.7 0.9

Closing balance at 31 December

88.2

69.6

2014 R (million)

Group 2013 R (million)

21. Contingencies and commitments

Total guarantees issued at 31 December

Total

2.9

4.5

Group 2014 R (million) 17.1 17.5 40.0

17.1 17.5 40.0

77.5

77.5

1.3 3.5

1.3 200.0

0.3 0.1

0.3 0.1

157.3

353.8

22.

2013 R (million)

Trade and other payables Trade payables Payroll accruals Other accruals Amounts owing to RPM per contribution to BRPM JV (refer Note 29) VAT payable

132.7 41.4 148.7 403.3 –

46.8 32.8 206.3 213.4 0.1

Total

726.1

499.4

Group

* The housing guarantee of R200 million reduces as the funds are drawn from the Nedbank working capital facilities or funded from cash resources.

21.3

1.5 3.0

Guarantees issued Royal Bafokeng Resources Proprietary Limited, a wholly owned subsidiary of RBPlat, granted the following guarantees: Eskom to secure power supply for Styldrift project development (performance guarantee 30823102) Eskom early termination guarantee for Styldrift (performance guarantee 31160603) Eskom connection charges guarantee for Styldrift (performance guarantee 31173918) Anglo American Platinum for the rehabilitation of land disturbed by mining activities at BRPM (financial guarantee 31247601) DMR for the rehabilitation of land disturbed by prospecting/mining (financial guarantee 32388608) Housing guarantee (financial guarantee 32237804)* Royal Bafokeng Platinum Management Services Proprietary Limited, a wholly owned subsidiary of RBPlat, granted the following guarantees: Tsogo Sun guarantee arising from lease agreement (financial guarantee 31101003) Tsogo Sun guarantee arising from lease agreement (financial guarantee 31100309)

21.2

1.6 1.3

On 31 January 2013 Royal Bafokeng Resources Proprietary Limited (RBR) received notice from the South African Revenue Services (SARS) that they have completed an audit of RBR’s 2008 to 2010 tax assessments and that they intend reopening these assessments to effect certain proposed adjustments. These proposed adjustments primarily relate to SARS intending to disallow interest on shareholder’s loans amounting to R586 million previously deducted by RBR and allowed by SARS in the 2008 and 2009 income tax assessments. On 19 February 2014, RBR received revised assessments from SARS for the 2008, 2009 and 2010 years amounting to R437.5 million comprising income tax of R106 million, penalties of R246.4 million and interest of R85.1 million, payable within seven days. RBR lodged an objection against these assessments and an application to suspend payment of taxes in terms of section 164(2) of the Tax Administration Act. SARS disallowed RBR’s objection and RBR lodged a notice of appeal in November 2014. Based on independent advice and consultation to date, RBR remains confident that it has a reasonable prospect of successfully defending this matter.

Refer Note 8 for the environmental trust deposits made to fund this estimate and Note 21.1 for guarantees issued to fund the remainder.

21.1

No later than one year Later than one year and no later than five years

21.5 Tax contingency

Refer Note 3 for critical accounting estimates and assumptions used in the environmental rehabilitation obligation calculation.

2014 R (million)

2013 R (million)

Guarantees received from Anglo American Platinum For Anglo American Platinum’s 33% of the Eskom guarantee to secure power supply for Styldrift project development (performance guarantee M523084) For Anglo American Platinum’s 33% of Eskom early termination guarantee for Styldrift (performance guarantee M529349) For Anglo American Platinum’s 33% of the Eskom connection charges guarantee for Styldrift (performance guarantee M529350)

(5.8)

(5.8)

(13.2)

(13.2)

Total guarantees received at 31 December

(24.6)

(24.6)

(5.6)

2014 R (million)

23.

2013 R (million)

Revenue Revenue from concentrate sales – production from BRPM concentrator Revenue from UG2 toll concentrate

3 339.6 427.9

2 944.7 306.4

Total

3 767.5

3 251.1

(5.6)

Capital commitment in respect of property, plant and equipment Commitments contracted for Approved expenditure not yet contracted for

887.4 5 008.7

918.3 6 432.7

Total

5 896.1

7 351.0

Revenue and concentrate debtors are fair valued every month following the month of delivery of concentrate to Rustenburg Platinum Mines Limited (RPM) until the price is fixed in the third month following delivery. The fair value adjustment is recognised in revenue. This means that revenue reflected for the financial years above includes the revaluation of the October, November and December concentrate deliveries of the previous year and the current year’s October, November and December concentrate deliveries are remeasured at year end at the average prices for December. The realised prices for a specific financial year will only be finalised in January, February and March of the following financial year as the prices for deliveries for the last three months of the financial year are then fixed. Included in the 2014 revenue from concentrate sales produced from the BPRM concentrator is revenue of R5.6 million (2013: R11.9 million) generated from the on reef development from the Styldrift l project.

The commitments reflect 100% of the BRPM JV project commitments. Effectively RBR must fund 67% thereof and RPM the remaining 33%. Should either party elect not to fund their share, the participation interest in BRPM JV will be diluted according to the terms reflected in the BRPM JV agreement.

21.4

Operating commitments The Group leases offices for its corporate office in Johannesburg and for BRPM’s finance function in Rustenburg under operating lease agreements. The corporate office lease term is five years and it is renewable at the end of the lease period at market rates. The finance office lease in Rustenburg was renewable year-on-year at market rates. The finance office in Rustenburg was purchased subsequent to year end.

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227

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014 Group 2014 R (million)

Group 2013 R (million)

24. Other income

26.

Impala royalty (Group resources mined by Impala Platinum Limited) Fair value adjustment of the Nedbank equity-linked deposit (refer Note 8) Levy and other income from housing assets Other income

18.2 6.7 0.3 –

75.2 1.3 – 1.0

Total

25.2

77.5

The Impala royalty consists of royalties received from Impala for mining from their 6 and 8 shafts and 20 shaft area. Up to 30 September 2013 Impala paid a 15% of revenue royalty to BRPM JV for 6 and 8 shaft area. During 2013 the parties renegotiated the royalties receivable for 6 and 8 shafts with effect from 1 October 2013 from a 15% of revenue basis to a percentage of revenue calculated by applying a factor that is linked to the Impala Rustenburg operations’ gross profit margin with a minimum of 5% and a maximum of 25% of revenue. Impala pays a 17.5% of revenue royalty to BRPM JV for the 20 shaft area. During the year R16.6 million (2013: R72.8 million) royalties were received for the 6 and 8 shaft area and R1.6 million (2013: R2.4 million) for the 20 shaft area. Group 2014 R (million)

25.

2013 R (million)

Net finance income

2014 R (million)

2013 R (million)

On-mine costs: – Labour – Utilities – Contractor costs – Movement in inventories – Materials and other mining costs

883.8 208.5 541.9 (10.4) 692.5

773.3 179.4 489.0 (6.6) 615.8

– Materials and other mining costs – BRPM JV – Elimination of intergroup management fee

729.7 (37.2)

651.0 (35.2)

State royalties Depreciation – Property, plant and equipment Amortisation – Mineral rights Share-based payment expense Social and labour plan expenditure Retrenchments* Styldrift incidental expenses Other

12.6 369.8 65.3 21.8 110.3 – 3.8 2.3

10.9 372.2 61.3 35.8 91.0 21.2 4.8 2.0

2 902.2

2 650.1

7.7 3.7 70.4 1.5 1.1 2.7 2.5 19.5 2.0 2.2 14.0 1.1 8.9

6.5 4.7 61.3 1.3 1.0 3.8 3.7 18.1 1.4 1.9 – – 1.3

137.3

105.0

1.6 0.8

2.0 0.4

2.4

2.4

1.6

1.1

Profit before tax Included in the profit before tax are the following items:

Total cost of sales

The net finance income consists of the following: Interest received on environment trust deposit (refer Note 8) Interest received on investments Interest received on employee housing receivable Dividend income

0.1 82.0 4.0 10.3

0.1 31.0 – 11.6

Total finance income

96.4

42.7

Interest expense Unwinding of discount on decommissioning and restoration provision

(1.1) (4.0)

– (3.7)

Total finance cost

(5.1)

(3.7)

Net finance income

91.3

39.0

Administrative expenses consist of the following corporate office expenses: Advisory fees Legal fees Employee costs (including directors’ emoluments) Mahube Trust expenditure Depreciation of RBP MS non-current assets Nedbank revolving credit facility commitment fee Fees for guarantees Share-based payment expense Industry membership contributions Rent for corporate office Administration cost relating to housing Amortisation of employee housing benefit Other Total administrative expenses External and internal audit fees for the Group

External and internal audit fees included in profit before tax External audit fees – Fees for audit – Other fees

Internal audit fees * 18 D1 and below, and 17 D2 and above employees were retrenched in 2013. All retrenchment costs have been fully paid out.

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NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014 29. Related party transactions

Group

27.

2014 R (million)

2013 R (million)

(23.7)

(15.6)

Income tax expense Income tax Deferred tax – Current tax

(222.0)

(149.1)

Total

(245.7)

(164.7)

Tax rate reconciliation: Profit before tax Tax calculated at a tax rate of 28% Non-taxable income Tax losses not recognised

844.5 (236.5) 4.7 (13.9)

612.5 (171.5) 10.4 (3.6)

(245.7)

(164.7)

Effective tax rate (%)

29.1

26.9

An unredeemed capital allowance of R1 001.6 million (2013: R697.3 million) is carried over to 2015. Group 2014 R (million)

28.

2013 R (million)

Cash generated by operations Cash generated by operations is calculated as follows: Profit before tax

844.5

612.5

370.9 1.1 65.3 41.3 5.5 (0.9) 5.1 (96.4) (6.7) –

373.2 – 61.3 53.9 2.1 – 3.7 (42.7) (1.3) (0.3)

Adjustment for: Depreciation of property, plant and equipment Amortisation of employee housing benefit Amortisation of mineral rights Share-based payment expense Change in estimate of provision taken to the statement of comprehensive income Write off of post retirement medical aid provision no longer required Finance cost Finance income Equity-linked return on BRPM Environmental Trust Profit on disposal of property, plant and equipment

1 229.7

1 062.4

Changes in working capital

128.8

(186.6)

(Increase)/decrease in inventories Increase in trade and other receivables (excludes RPM receivable capital contribution to housing costs) Increase in trade and other payables (excludes accrual for SBP expense capitalised)

(16.2)

5.6

(81.7) 226.7

(195.3) 3.1

Cash generated by operations

1 358.5

875.8

> The Group is controlled by Royal Bafokeng Platinum Holdings Proprietary Limited (incorporated in South Africa), which owns 52.53% of RBPlat’s shares > Rustenburg Platinum Mines Limited (RPM) owns 11.61% of RBPlat’s shares > The remaining 35.86% of the shares are widely held > RPM also holds the remaining 33% participation interest in the BRPM JV > The Group’s ultimate parent is Royal Bafokeng Holdings Proprietary Limited (incorporated in South Africa) (RBH) > RBH is an investment holding company with a large number of subsidiaries > At present, RBR sells its 67% share of the concentrate produced by BRPM JV to RPM for further processing by RPM. Refer to the Directors’ report for further details of significant contracts with RPM Investments in subsidiaries and the BRPM Joint Venture and the degree of control exercised by the Company are: Issued capital amount

Interest in capital

2014 R

2013 R

2014 %

2013 %

Direct investment Royal Bafokeng Platinum Management Services Proprietary Limited Royal Bafokeng Resources Proprietary Limited

1 000 320

1 000 320

100 100

100 100

Indirect investment via Royal Bafokeng Resources Proprietary Limited Bafokeng Rasimone Management Services Proprietary Limited BRPM JV – participation interest Friedshelf (RF) 1408 Proprietary Limited

1 000 – 100

1 000 – 100

100 67 100

100 67 100

Name

Transactions between the Company, its subsidiaries and joint venture are eliminated on consolidation. Refer Notes 21.1 and 21.2 for related party guarantees. The following transactions were carried out with related parties: Group 2014 R (million)

2013 R (million)

BRPM Joint Venture balances at 31 December: Amount owing by RPM for concentrate sales (refer Note 13) Amount owing to RPM for contribution to BRPM JV (working capital nature) (refer Note 22) Amount owing by RPM for housing project costs

1 344.6 403.3 71.8

1 313.2 213.4 –

BRPM Joint Venture transactions: Concentrate sales to RPM (refer Note 23 and Directors’ report)

3 767.5

3 251.1

10.8

10.9

7.2

10.7

18.2

75.2

17.0 1.6 1.6 5.1 2.7 0.9

23.2 0.8 2.4 – – 0.7

Associate of holding company balances: Amount owing by Impala Platinum Limited for the fourth quarter royalty (refer Note 13) Fellow subsidiaries and associates of holding company transactions: Transactions with Fraser Alexander for rental of mining equipment, maintenance of tailings dam and operation of sewage plant (a subsidiary of RBH) Impala Platinum Limited for royalty income (an associate of RBH) (refer Note 24 and Directors’ report) Geoserve Exploration Drilling Company for exploration drilling on Boschkoppie and Styldrift (a subsidiary of RBH) Trident South Africa Proprietary Limited for steel supplies (a subsidiary of RBH) Tarsus Technologies for electronic equipment purchases (a subsidiary of RBH) Royal Bafokeng Administration – bulk water supply (a subsidiary of RBH) MTech Industrial – supply and install heat pumps (a subsidiary of RBH) Royal Marang Hotel for accommodation and conferences (a subsidiary of RBH)

Details relating to key management emoluments (prescribed officers), share options and shareholdings in the Company are disclosed in Note 30.

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231

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014 30. Emoluments and compensation

30. Emoluments and compensation (continued)

30.1 Directors and senior management emoluments

30.1 Directors and senior management emoluments (continued)

Directors’ emoluments and related payments for 2014

Date Resignation appointed date 2014 Executive directors Steve Phiri Martin Prinsloo Nico Muller Non-executive directors* Kgomotso Moroka Linda de Beer Robin Mills David Noko** Francis Petersen Mike Rogers Mark Moffett Lucas Ndala** Louisa Stephens** Thoko MokgosiMwantembe David Wilson**

1 Apr ‘10 2 Mar ‘09 2 Mar ‘09

1 Jun 1 Jun 20 Sep 1 Jun 1 Jun 7 Dec 22 Sep 28 May 22 Sep

‘10 ‘10 ‘10 ‘10 ‘10 ‘09 ‘14 ‘13 ‘14

Directors’ fee R

01 Sep ‘14

15 Sep ‘14 15 Sep ‘14

1 317 460 507 451 477 528 94 289 94

5 Nov ‘14 29 Apr ‘14

Total

Directors’ emoluments and related payments for 2013 Discretionary Basic Retirement Other performance salary benefits benefits bonuses R R R R

– – –

3 368 974 2 671 356 1 914 842

766 710 243 624 272 698

123 816 130 322 637 527

3 388 604 2 471 425 2 424 787

345 957 107 884 107 001 859 117 859

– – – – – – – – –

– – – – – – – – –

– – – – – – – – –

– – – – – – – – –

Total R

7 648 104 5 516 727 5 249 854

1 317 460 507 451 477 528 94 289 94

345 957 107 884 107 001 859 117 859

67 074 263 909

– –

– –

– –

– –

67 074 263 909

4 552 219

7 955 172

1 283 032

891 665

8 284 816

22 966 904

2013 Executive directors Steve Phiri Martin Prinsloo Nico Muller Non-executive directors* Kgomotso Moroka Linda de Beer Robin Mills David Noko Francis Petersen Mike Rogers Matsotso Vuso** Lucas Ndala

Date appointed 2014 Senior management Glenn Harris Mpueleng Pooe Neil Carr Reginald Haman Velile Nhlapo** Vicky Tlhabanelo Total

4 Jan 1 Oct 1 Dec 1 Oct 1 Feb 1 Apr

‘10 ‘13 ‘10 ‘12 ‘12 ‘10

Discretionary Underground Other performance market benefits bonuses* premium R R R

Basic salary R

Retirement benefits R

2 301 610 1 845 986 2 093 469 2 112 800 1 222 600 1 904 574

302 613 168 008 450 882 239 036 92 024 425 194

39 150 86 106 107 893 104 016 559 351 32 422

1 983 348 – 1 924 808 1 907 322 2 041 947 1 778 784

136 239 – – – 67 956 –

4 762 960 2 100 100 4 577 052 4 363 174 3 983 878 4 140 974

11 481 039

1 677 757

928 938

9 636 209

204 195

23 928 138

Total R

Date appointed

1 Apr ‘10 2 Mar ‘09 2 Mar ‘09

– – –

3 196 499 2 458 934 2 356 930

714 343 224 335 335 828

113 628 105 675 120 920

2 242 988 1 767 380 1 922 478

730 671 620 660 620 375 648 784

– – – – – – – –

– – – – – – – –

– – – – – – – –

– – – – – – – –

8 012 363 1 274 506

340 223

1 Jun 1 Jun 20 Sep 1 Jun 1 Jun 7 Dec 11 Apr 23 May

‘10 ‘10 ‘10 ‘10 ‘10 ‘09 ‘11 ‘13

1 269 440 447 575 447 476 239 190

Total

4 088 108

Basic Retirement salary benefits R R

Total R

6 267 458 4 556 324 4 736 156 1 269 440 447 575 447 476 239 190

730 671 620 660 620 375 648 784

5 932 846 19 648 046

* Non-executive director fees are paid on a quarterly basis ** Resigned 27 April 2013

Senior management emoluments and related payments for 2013

* Non-executive director fees are paid on a quarterly basis and their fees accrued for the year were approved at the Annual General Meeting held on 16 April 2013 ** Fees paid to Cela Corp Proprietary Limited (David Noko), MOGS Proprietary Limited (Lucas Ndala), Prime Select Holdings (Louisa Stephens) and Royal Bafokeng Holdings (David Wilson)

Senior management emoluments and related payments for 2014

Discretionary Other performance benefits bonuses R R

Directors’ fee R

Basic salary R

Date appointed 2013 Senior management Glenn Harris Mpueleng Pooe Mzila Mthenjane** Neil Carr Reginald Haman Velile Nhlapo Vicky Tlhabanelo

4 Jan 1 Oct 1 Apr 1 Dec 1 Oct 1 Feb 1 Apr

Total

‘10 ‘13 ‘09 ‘10 ‘12 ‘12 ‘10

2 050 462 658 1 813 1 877 2 162 1 805

798 922 157 601 832 521 872

10 831 703

Retirement benefits R

262 42 52 398 187 173 396

262 002 076 075 696 888 153

1 512 152

Discretionary Other performance benefits bonuses* R R

35 20 33 29 84 155 29

Retention bonus R

765 101 716 782 440 028 824

1 403 448 – 1 296 826 1 292 649 – 1 406 632 1 382 366

121 044 – – – – 128 410 –

388 656

6 781 921

249 454

Total R

3 873 525 040 534 149 026 614

2 3 2 4 3

317 025 775 107 968 479 215

19 763 886

* Discretionary performance bonuses were considered when the 2012 financial results were finalised in February 2013 ** Resigned 1 April 2013

Interest in RBPlat share schemes for directors, officers and senior executives Share options awarded* Award date

* Discretionary performance bonuses were considered when the 2013 financial results were finalised in February 2014 ** Resigned 30 April 2014

As of 31 December 2014 Executive and non-executive directors Steve Phiri Martin Prinsloo Senior management Vicky Tlhabanelo Glenn Harris Neil Carr Reginald Haman Mpueleng Pooe Lester Jooste (Company Secretary)

297 521 241 047

1 Apr ‘10 2 Mar ‘09

60.50 36.30

121 87 116 163 136 40

1 Apr 4 Jan 1 Dec 1 Oct 1 Oct 1 Jul

60.50 60.50 65.50 48.90 61.42 55.21

288 789 030 599 770 756

‘10 ‘10 ‘10 ‘12 ‘13 ‘10

Vesting dates

% vested to date

18 000 021 1 Apr ‘13, ‘14, ‘15 8 750 006 1 Mar ‘12, ‘13, ‘14

66 100

Strike price Award value R R

7 337 924 1 Apr ‘13, ‘14, 5 311 235 4 Jan ‘13, ‘14, 7 599 965 1 Dec ‘13, ‘14, 7 999 991 1 Oct ‘15, ‘16, 8 400 413 1 Oct ‘16, ‘17, 2 250 139 1 Jul ‘13, ‘14,

‘15 ‘15 ‘15 ‘17 ‘18 ‘15

66 66 66 – – 66

* Share options are issued to eligible employees at the date of joining the Company at the applicable market valuation or market share price

232

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233

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014 30. Emoluments and compensation (continued)

30. Emoluments and compensation (continued) 30.1 Directors and senior management emoluments (continued)

30.1 Directors and senior management emoluments (continued) Forfeitable share plan As of 31 December 2014 Executive and non-executive directors Steve Phiri

Martin Prinsloo

Senior management Vicky Tlhabanelo

Glenn Harris

Neil Carr

Reginald Haman Lester Jooste (Company Secretary)

* 33.3% over a period of three years

Bonus scheme shares

Rights offer shares

Award date

Issue price R

Award value R

Vesting dates

IPO scheme shares matched by the Company

Vesting % As of 31 December 2014 Executive directors Steve Phiri Martin Prinsloo

– – – – – 56 443 – – – – – 29 725

– – 43 156 38 342 26 106 – – – 35 219 30 212 19 040 –

3 539 3 144 – – – – 2 888 2 478 – – – –

14 14 1 1 1 1 14 14 1 1 1 1

Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr Apr

‘14 ‘14 ‘12 ‘13 ‘14 ‘14 ‘14 ‘14 ‘12 ‘13 ‘14 ‘14

55.00 55.00 57.99 58.50 71.91 71.91 55.00 55.00 57.99 58.50 71.91 71.91

2 1 1 2

194 172 502 243 877 058 158 136 042 767 369 137

645 933 616 007 282 816 847 264 350 402 166 525

1 Apr ‘15 1 Apr’16 1 Apr ‘15 1 Apr ‘16 1 Apr ‘17 1 Apr ‘17, 18, 19 1 Apr ‘15 1 Apr’16 1 Apr ‘15 1 Apr ‘16 1 Apr ‘17 1 Apr ‘17, 18, 19

100 100 100 100 100 33.3* 100 100 100 100 100 33.3*

– – – – – 19 655 – – – – – 20 620 – – – – –

– – 823 630 704 – – – 556 991 820 – – – 849 097 829

2 200 1 938 – – – – 1 850 1 967 – – – – 1 874 1 812 – – –

14 Apr 14 Apr 1 Apr 1 Apr 1 Apr 1 Apr 14 Apr 14 Apr 1 Apr 1 April 1 Apr 1 Apr 14 Apr 14 Apr 1 Apr 1 Apr 1 Apr

‘14 ‘14 ‘12 ‘13 ‘14 ‘14 ‘14 ‘14 ‘12 ‘13 ‘14 ‘14 ‘14 ‘14 ‘12 ‘13 ‘14

55.00 55.00 57.99 58.50 71.91 71.91 55.00 55.00 57.99 58.50 71.91 71.91 55.00 55.00 57.99 58.50 64.90

120 106 1 555 1 382 985 1 413 101 108 1 308 1 403 1 137 1 482 103 99 1 325 1 292 1 066

979 578 465 355 455 391 734 206 022 474 616 856 055 664 014 674 353

1 Apr ‘15 1 Apr’16 1 Apr ‘15 1 Apr ‘16 1 Apr ‘17 1 Apr ‘17, 18, 19 1 Apr’16 1 Apr’17 1 Apr ‘15 1 Apr ‘16 1 Apr ‘17 1 Apr ‘17, 18, 19 1 Apr ‘15 1 Apr’16 1 Apr ‘15 1 Apr ‘16 1 Apr ‘17

100 100 100 100 100 33.3* 100 100 100 100 100 33.3* 100 100 100 100 100

20 621 14 694

– –

– –

1 482 856 1 056 646

1 Apr ‘17, 18, 19 1 Apr ‘17, 18, 19

33.3* 33.3*

2013 allocations – BSP 2014 allocations – BSP

– – – – –

– – 11 548 11 132 10 164

947 913 – – –

100 100 100 100 100

2014 allocations – FSP 2014 share issues^

26 23 13

22 23 15

22 22 14

1 Apr ‘14 71.91 1 Apr ‘14 71.91 14 14 1 1 1

Apr Apr Apr Apr Apr

‘14 ‘14 ‘12 ‘13 ‘14

55.00 55.00 57.99 58.50 71.91

2 2 1 4

52 50 669 651 730

085 208 669 222 893

1 Apr ‘15 1 Apr’16 1 Apr ‘15 1 Apr ‘16 1 Apr ‘17

Senior management Vicky Tlhabanelo Glenn Harris Lester Jooste (Company Secretary)

Award Deemed date issue price R

Rights offer shares R

Issue price R

Award values R

Value of Shares Shares sold sold Balance balance 2013 2014 of shares of shares R R R R

99 174 8 Nov 2010 76 272 8 Nov 2010

60.50 12 165 55.00 6 669 102 25 000 – 60.50 10 615 55.00 5 198 281 10 000 13 724

86 339 5 156 602 63 163 3 762 979

27 273 8 Nov 2010 31 405 8 Nov 2010

60.50 60.50

3 546 –

55.00 1 845 047 11 300 – 1 900 003 31 405

– –

19 519 1 161 397 – –

11 901 8 Nov 2010

60.50

1 841

55.00



12 392

821 266

1 350

739 591

30.2 Group incentive share scheme Total Group share incentive scheme shares issued to date

IPO scheme shares

Share options issued to date Bonus scheme shares 2009 allocations 2010 allocations – BSP 2011 allocations – BSP

2012 allocations – BSP

Mahube share incentive scheme shares

Opening balance

Cumulative closing balance

Total number “A3” ordinary shares

417 416

417 416



3 816 185

4 473 589



– 55 589

55 589 133 432

– –

133 432

463 953



Deemed strike price R 60.50

Vested/ exercised and Issue forfeited dates (cumulative)

Vesting Vesting dates %

8 Nov ‘10

417 416

8 May ‘12

*

*

(60 692)

*

100 33.3 over three years

57.48 65.00

3 Dec ‘09 1 Dec ‘10

55 589 77 843

3 Dec ‘12 1 Dec ‘13

100 100



18 Feb 2014 and 1 April ‘14 1 Apr ‘15

100

330 521 49 604

888 938



66.92 18 Feb ‘11 and 66.92 1 Apr ‘11 57.99 1 Apr ‘12

888 958

1 423 314



58.50

1 Apr ‘13

91 879

1 Apr ‘16

100

1 423 314

1 778 970



71.91

1 Apr ‘14

18 681

1 Apr ‘17

100

1 778 970

2 014 165



71.91

1 Apr ‘14

50 222 1 Apr ‘17, 18, 19

2 014 165

2 398 382





463 953

563 914

563 914

281 957

#

65.12 27 Jan ‘10

100 100





375 942

33.3 over three years

31 Mar ‘13 31 Mar ‘14 31 Mar ‘15

* Share options are issued to eligible employees at the date of joining the Company at the applicable market valuation (historically) or market share price and therefore range from R36.30 to R74.39 from January 2009 to December 2014. The options vest at a rate of one third after the third, fourth and fifth anniversary dates # 281 957 “A1” ordinary shares were repurchased and cancelled in 2013 and 281 957 “A2”ordinary shares were repurchased and cancelled in 2014 ^ Share options exercised

At the AGM on 17 April 2013, shareholders approved ordinary resolution 16, which authorises the Company to utilise up to 9 932 884 ordinary shares in respect of all employee share incentive schemes. With a total of 7 195 879 securities already being utilised, 2 736 987 shares remain available to the RBPlat employee share schemes.

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235

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014 31. Dividends

32. Financial risk management (continued)

No dividends have been declared or proposed in the current year (2013: nil).

32.1 Financial risk factors (continued) 32.1.1 Market risk (continued)

32. Financial risk management

Statement of financial position

32.1 Financial risk factors The Group’s activities expose it to a variety of financial risks: market risk (including currency risk, fair value interest rate risk, cash flow interest rate risk and price risk), credit risk and liquidity risk. The Group’s overall risk management programme focuses on the unpredictability of the financial markets and seeks to minimise potential adverse effects on the Group’s financial performance. Risk management is carried out in terms of policies approved by the Audit and Risk Committee and the Board of directors, which set guidelines to identify, evaluate and hedge financial risks in close cooperation with the Group’s operating unit. The Audit and Risk Committee and the Board provide written principles for overall risk management, as well as written policies covering specific areas, such as foreign exchange risk, interest rate risk and credit risk, use of derivative financial instruments and non-derivative instruments, and investment of excess liquidity.

Categories of financial instruments and fair value The following table represents the Group’s assets and liabilities at fair value (all financial instruments are carried at amortised cost except for the Nedbank equity-linked deposit in the environmental trust deposit which is carried at fair value): Carrying amount Notes Financial assets Financial assets at fair value through profit or loss Environmental trust deposits Loans and receivables Environmental trust deposits Employee housing receivable Trade and other receivables (excluding VAT) Cash and cash equivalents

Total financial liabilities

2013 R (million)

Fair values 2014 R (million)

2013 R (million)

8

108.9

102.2

108.9

102.2

8 9 13 15

4.7 149.8 1 526.9 1 864.2

4.6 – 1 377.7 772.9

4.7 108.8 1 526.9 1 864.2

4.6 – 1 377.7 772.9

3 654.5

2 257.4

3 613.5

2 257.4

Total financial assets Financial liabilities Financial liabilities at amortised cost Trade and other payables (excluding VAT and payroll accruals)

2014 R (million)

Notes Financial assets Trade and other receivables still subject to price fluctuations Trade and other receivables not subject to price fluctuations Total

959.8

13

684.7

466.5

684.7

466.5

684.7

466.5

684.7

466.5

32.1.1 Market risk Foreign exchange risk The Group is exposed to foreign exchange risk arising from various currency exposures, primarily with respect to the US dollar as the BRPM JV concentrate revenue is impacted by the R:US$ exchange rate. Foreign exchange risk arises when future commercial transactions or recognised assets or liabilities are denominated in a currency that is not the entity’s functional currency. It is anticipated that foreign currency purchases of mining equipment for the Styldrift project will increase significantly in 2015. Royal Bafokeng Resources entered into a disposal of concentrate agreement with RPM during 2002 in terms of which RBR’s 67% share of the concentrate of the PGMs produced by the BRPM JV will be treated by RPM.

2013 R (million)

±95.9

±94.5

384.8

368.7





1 344.6

1 313.2

±95.9

±94.5

In terms of the disposal of concentrate agreement between RBR and RPM the commodity prices and R:US$ exchange rates used in the calculation of the concentrate payment are based on the average daily rates applicable for the third month following the month of delivery, leaving the Group exposed to the commodity price and exchange rate fluctuations until the price is fixed in the third month following the delivery month. Payment is due on the last day of the fourth month following the delivery month. Revenue and concentrate debtors are remeasured every month following the delivery month until prices are fixed in the third month. The remeasurement is recognised in revenue.

Sensitivity analysis Commodity price risk sensitivity analysis presents the effect of a 10% change in the year end commodity price on financial instruments in the statement of financial position, statement of comprehensive income and therefore equity. Statement of financial position

Financial assets Trade and other receivables still subject to price fluctuations Trade and other receivables not subject to price fluctuations Total

13

2014 R (million)

2013 R (million)

Statement of comprehensive income 2014 R (million)

2013 R (million)

959.8

944.5

±95.9

384.8

368.7



±94.5 –

1 344.6

1 313.2

±95.9

±94.5

Equity price risk The Group is exposed to equity price risk in respect of the environmental trust deposits invested in the Nedbank equity-linked deposits. Refer Note 8.

Sensitivity analysis Equity price risk sensitivity analysis presents the effect of a 5% change in the Bettabeta CIS BGreen portfolio exchange traded fund and FTSE/JSE shareholder weighted Top 40 Index performance for the year. Statement of financial position

Revenue and concentrate debtors are remeasured every month following the month of delivery until the price is fixed in the third month. The remeasurement is recognised in revenue. Foreign exchange risk sensitivity analysis presents the effect of a 10% change in the year end exchange rate on financial instruments in the statement of financial position, statement of comprehensive income and therefore equity.

944.5

2014 R (million)

Commodity price risk refers to the risk of changes in fair value or cash flows of financial instruments as a result of the changes in commodity prices. It is specifically applicable to the concentrate debtor (RPM).

In terms of the agreement, the commodity prices and R:US$ exchange rates used in the calculation of the concentrate payment are based on the average daily rates for the third month following the month of delivery. Payment is due on the last day of the fourth month following the month of delivery.

Sensitivity analysis

2013 R (million)

Commodity price risk

Note 22

2014 R (million)

Statement of comprehensive income

Note Financial assets Environmental trust deposits

8

2014 R (million) 108.9

2013 R (million) 102.2

Statement of comprehensive income 2014 R (million)

2013 R (million)

±5.5

±5.1

Cash flow and fair value interest rate risk The Group is exposed to cash flow interest rate risk in respect of its floating rate financial assets and liabilities. The Group monitors its exposure to fluctuating interest rates. Cash and cash equivalents are primarily invested with short-term maturity dates, which expose the Group to cash flow interest rate risk. The Group does not have any fixed rate financial instruments which could expose it to fair value interest rate risk.

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NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014 32. Financial risk management (continued)

32. Financial risk management (continued)

32.1 Financial risk factors (continued) 32.1.1 Market risk (continued) Sensitivity analysis

32.1 Financial risk factors (continued) 32.1.3 Liquidity risk (continued)

Interest rate risk sensitivity analysis presents the effect of 100 basis points up and down in the interest rate in financial instruments in the statement of comprehensive income. Statement of financial position Note Financial assets Environmental trust deposits Employee housing receivable Cash and cash equivalents

8 9 15

2014 R (million) 4.7 108.8 1 864.2

2013 R (million) 4.6 – 772.9

Statement of comprehensive income 2014 R (million)

2013 R (million)

– ±0.8 ±13.4

– – ±5.1

32.1.2 Credit risk Credit risk arises from the risk that the financial asset counterparty may default or not meet its obligations timeously. The maximum exposure to the credit risk is represented by the carrying amount of all the financial assets. The potential concentration of credit risk could arise in cash and cash equivalents, trade receivables, the employee housing receivable, and other financial assets and financial guarantees. Refer Note 21.1 for financial guarantees. The Group’s trade debtor credit risk is limited to one customer as all metals in concentrate are sold to Rustenburg Platinum Mines Limited (RPM). RPM has never defaulted on meeting its obligation. The value of the receivable at year end was R1 344.6 million (2013: R1 313.2 million). The credit risk relates to overall risk of the Anglo American Platinum Group, the world’s largest platinum producer. With regard to the cash resources, the Group is exposed to the credit risk of reputable financial institutions with a credit rating of at least AA- (zaf). With regard to the employee housing receivable, the Group is exposed to the credit risk of employees as houses are sold to employees on credit. The value of the receivable at year end is R108.8 million (2013: nil). Default for reporting purposes is measured as payments outstanding for more than four months. Interest is charged at prime rate on late payments. Default for the employee housing receivable is measured as payments outstanding for more than one month. Where employees have missed one or more instalments, interest is charged at prime rate plus 2%. At year end, none of the employees have defaulted on meeting their obligation. No financial assets were past due for the current or the comparative periods under review. No terms relating to financial assets have been renegotiated resulting in assets not being past due.

32.1.3 Liquidity risk Prudent liquidity risk management implies maintaining sufficient cash and cash equivalents, the availability of funding through an adequate amount of committed credit facilities and the ability to close out market positions. Due to the dynamic nature of the underlying businesses, the Board aims to maintain flexibility in funding by keeping committed and uncommitted credit lines available. Management monitors rolling forecasts of the Group’s liquidity reserve (comprising undrawn borrowing facilities and cash and cash investments) (Note 15) on the basis of expected cash flow. The table below analyses the Group’s financial liabilities into the relevant maturity groupings based on the remaining period at the reporting date to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within one year equal their carrying amount as the impact of discounting is insignificant.

Notes 2014 Trade and other payables Financial guarantees Employee housing facility 2013 Trade and other payables Financial guarantees Employee housing facility

Less than one year R (million)

Between one and two years R (million)

Between two and five years R (million)

Over five years R (million)

22 21.1 15

684.7 3.5 6.6

– – –

– 0.4 –

– 78.8 –

22 21.1 15

466.6 147.0 –

– – –

– 0.4 –

– 78.8 –

32.1.4 Capital risk management The Group defines total capital as ‘equity’ in the statement of financial position plus debt. The Group’s objectives when managing capital are to safeguard its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders and to maintain an optimal capital structure to reduce cost of managing capital.

32.1.5 Fair value determination The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows: > Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1) > Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2) > Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3). The following table presents the environmental trust deposit that is measured at fair value and the employee housing receivable that is measured at amortised cost but for which fair value disclosure is provided at 31 December: Notes 2014 Financial assets at fair value through profit or loss Environmental trust deposits1 Financial assets at amortised cost Employee housing receivable2 2013 Financial assets at fair value through profit or loss Environmental trust deposits1 Financial assets at amortised cost Employee housing receivable2

Level 1 Level 2 Level 3 R (million) R (million) R (million)

8



108.9



9





108.8

8



102.2



9







1. This was valued using the level 2 fair values which are directly derived from the Shareholders Weighted Top 40 Index (SWIX 40) on the JSE and the Bettabeta CIS BGreen portfolio exchange traded fund 2. The fair value was determined using a discounted cash flow model. Refer Note 3 for the inputs used to determine the fair value measurement

33. Segmental reporting The Group is currently operating one mine with two decline shafts and the Styldrift I project. These operations are located in the North West province of South Africa, 120 kilometres from Johannesburg, 30 kilometres from Rustenburg and 17 kilometres from Phokeng. With the increase in the capital spend and progress on the Styldrift 1 project, it was decided to show BRPM and Styldrift I as separate segments from 2014 onwards. In addition, due to the different nature and significance of the employee home ownership scheme, it was also decided to show housing as a separate segment. The Executive Committee of the Company is regarded as the chief operating decision-maker.

238

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Royal Bafokeng Platinum Integrated Report 2014

239

240 Royal Bafokeng Platinum Integrated Report 2014

– (13.3) – –

– 0.7

(21.8) (318.4) – –

– 7.2 836.8

Profit before tax per segment and total 834.4

– 7.9





(21.8) (331.7)

– (258.8) 10.4 24.8

3 767.5 – (2 363.9)

BRPM JV mining segment R (million)

(21.8)

– (7.1)

(1.1)

(14.0)

– –

(129.9) – – 0.4

– 129.9 –

31.9

(176.3) 90.4



(115.2)

(19.5) 215.3

129.9 – – –

– (129.9) 37.2

Corporate RBPlat office and housing consolidation segment adjustment R (million) R (million)

389.3

1 771.7

1 327.3

12.7





9 897.1

1 716.6

1 784.4





88.2 1 696.2

1 784.4

10 308.5

– 411.4





8 644.3 1 252.8

0.4

270.6





– 270.6

270.6

248.6

– 2.9





139.8 105.9

245.7

(41.4)

3 252.7

4 486.7

(972.2)

6.6 (268.4)

(261.8)

12 946.8

2 275.1 1 449.9

301.2

8 920.6

– –



Corporate RBPlat office and housing consolidation segment adjustment R (million) R (million)

* The comparative information has not been split between the BRPM and Styldrift mining segments as these two segments form the BRPM JV

Group capital expenditure per cash flow statement

Total liabilities per the statement of financial position



10.4 2.3

12.7

4 392.3



77.8 1 693.9

Segment non-current liabilities Segment current liabilities Current liabilities and consolidation adjustments Unallocated liabilities (tax and deferred tax)

1 771.7

– –

– 411.4 5 916.2





Segment total liabilities





Total assets per the statement of financial position

PPA adjustment to carrying amount of PPE (includes mineral rights) Corporate assets and consolidation adjustments Goodwill Cash and cash equivalents

4 286.6 1 218.2

4 357.7 34.6

4 392.3

5 504.8

Segment total assets Segment non-current assets Segment current assets

BRPM JV mining segment R (million)

1 675.6

5 307.7

4 486.7

(972.2)

94.8 1 698.4

1 793.2

23 503.9

2 275.1 1 864.2

301.2

8 920.6

8 784.1 1 358.7

10 142.8

Total 2014 R (million)

1 054.8

928.8





68.6 860.2

928.8

8 618.8

– 195.0





7 166.7 1 257.1

8 423.8

BRPM JV mining segment* R (million)



53.1





– 53.1

53.1

53.0

– –





53.0 –

53.0

(18.2)

3 849.3

4 262.2

(412.9)

– –



12 145.7

2 275.1 577.9

195.8

9 096.9

– –



Corporate RBPlat office and housing consolidation segment adjustment R (million) R (million)

1 036.6

4831.2

4 262.2

(412.9)

68.6 913.3

981.9

20 817.5

2 275.1 772.9

195.8

9 096.9

7 219.7 1 257.1

8 476.8

2013 R (million)

283.9

33.1 Segmental statement of comprehensive income

Styldrift mining segment R (million)

284.2

612.5

(170.8) 39.0



(115.9)

(35.8) (119.0)

– (262.7) 6.6 76.8

3 251.1 – (2 056.8)

440.9

(217.6)

(170.8) 33.1



(115.9)

– –

– – – –

– – 36.0

440.9

(0.1)

– (0.1)





– –

– – – –

– – –

2013 R (million)

(164.7) (163.6)

830.2

– 6.0





(35.8) (119.0)

– (262.7) 6.6 76.8

3 251.1 – (2 092.8)

Corporate RBPlat office and housing consolidation segment adjustment R (million) R (million)

(245.7) (157.9)

844.5

(176.3) 91.2

(1.1)

(129.2)

(41.3) (116.4)

– (258.8) 10.4 25.2

3 767.5 – (2 326.7)

Total 2014 R (million)

BRPM JV mining segment* R (million)

33. Segmental reporting (continued)

BRPM mining segment R (million)

* The comparative information has not been split between the BRPM and Styldrift mining segments as these two segments form the BRPM JV

(2.4)

– – – 4.6

– (258.8) 10.4 20.2

Taxation Non-controlling interest Contribution to basic earnings per share Contribution to headline earnings per share

5.6 – –

3 761.9 – (2 363.9)

Styldrift mining segment R (million)

Concentrate sales Houses sold to employees Cash cost of sales Cost of housing assets for employees Depreciation Movement in inventories Other operating income Share-based payment expenses (non-cash) Other operating expenditure Administration expenditure and royalties Amortisation of employee housing benefit Additional depreciation and amortisation on purchase price allocation Net finance income

BRPM mining segment R (million)

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014 33. Segmental reporting (continued) 33.2 Segmental statement of financial position

Royal Bafokeng Platinum Integrated Report 2014

241

NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014 33. Segmental reporting (continued)

34. Earnings per share The weighted average number of ordinary shares in issue outside the Group for the purposes of basic earnings per share and the weighted average number of ordinary shares for diluted earnings per share are calculated as follows: 772.9

Group 2014

– 411.4

411.4

2.9

1 449.9

1 864.2

195.0



577.9

Number of shares issued Mahube Trust Management incentive scheme

* The comparative information has not been split between the BRPM and Styldrift mining segments as these two segments form the BRPM JV

649.9 338.8 – 772.9 – 195.0

195.0



577.9

311.1

123.0 239.1 – (116.1) 1 091.3 872.0 2.9 216.4 – 216.4 Net increase/(decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period Cash and cash equivalents end of the year

– – – – – – – – – (6.4) 6.6 – – – – – – –

– – –

– – 215.3

(6.4) 6.6 (215.3)

– – –

– – – – – 1 478.5 563.3 – 1 325.6 – (762.3) –

563.3 1 325.6 (762.3)

– –

(563.3) 1 478.5

(17.3) –

17.3 –

– – 1 478.7

Cash investments by/(distributions to) BRPM JV shareholders Issue of ordinary shares net of cost Costs relating to rights followed on treasury shares Increase in housing facility Increase in intercompany loans

215.3

700.1

(17.3)

17.3

(2.4) – – (0.1)

(0.1)



(0.1)

(2.4)

Net cash flow generated by financing activities



– – – – (1 675.6) (138.2) – (1 327.3) – – (389.3) –

– (1 716.6) –

– (0.4) (138.2)

– 41.4 –

– (1 054.8) –



253.9 (1 036.6) – 253.9 18.2 –

0.3

(784.8) 272.1







(1 056.9) (1 813.9)





(1 716.7)

– –

(1 327.3)



(389.4) Net cash flow utilised by investing activities

Royal Bafokeng Platinum Integrated Report 2014

Proceeds from disposal of PPE Decrease in held-to-maturity investments Acquisition of PPE Acquisition of housing assets Increase in environmental trust deposits

(138.6)

41.4

0.3

791.2 18.3 31.1 – (17.4) 84.6

907.8

(72.6) 18.3 21.4 0.1 (17.4) –

(50.2)

– – – (0.1) – –

(0.1)

66.0 14.2 65.7 10.0 (25.4) –

958.1 1 426.5

1 340.0 14.2 80.3 (1.1) (25.4) 18.5

130.5 (73.8)

(65.4) – 2.7 (11.1) – – 1 339.4 – 11.9 – – 18.5

1 369.8 1.7

1 337.7 – 11.9 – – 18.5

1.7 – – – – –

1 368.1

Cash generated by operations Dividends received Interest received Interest paid Tax paid Royalty income received

Segment cash flow statement

Net cash flow generated by operating activities

Total 2014 R(million)

BRPM JV mining segment* R (million) Corporate RBPlat office and housing consolidation segment adjustments R (million) R (million) BRPM JV mining segment R (million) Styldrift mining segment R (million) BRPM mining segment R (million)

242

863.8 – 9.7 – – 84.6

2013 R(million) Corporate RBPlat office and housing consolidation segment adjustments R (million) R (million)

33.3 Segmental statement of cash flows

2013

167 737 114 (281 957) (2 995 495)

166 082 443 (563 914) (1 367 725)

Number of shares issued outside the Group Adjusted for weighted shares issued during the year

164 459 662 20 337 340

164 150 804 168 987

Weighted average number of ordinary shares in issue for earnings per share Management incentive scheme

184 797 002 476 576

164 319 791 149 113

Weighted average number of ordinary shares in issue for diluted earnings per share Profit attributable to owners of the Company R (million) Basic earnings per share (cents/share) Basic earnings per share is calculated by dividing the profit attributable to owners of the Company for the year by the weighted average number of ordinary shares in issue for earnings per share Diluted earnings per share (cents/share) Diluted earnings per share is calculated by adjusting the weighted number of ordinary shares outstanding to assume conversion of all diluted potential ordinary shares Headline earnings Profit attributable to owners of the Company is adjusted as follows: Profit attributable to owners of the Company R (million) Adjustment net of tax: Profit on disposal of property, plant and equipment R (million)

185 273 578 440.9 239

164 468 904 284.2 173

238

173

440.9

284.2

Headline earnings R (million) Basic headline earnings (cents per share) Diluted headline earnings (cents per share)



(0.3)

440.9 239 238

283.9 173 173

35. Subsequent events On 14 January 2015, RBPlat announced that it has served formal notice to terminate its contract with Shaft Sinkers as its principal shaft sinking and development contractor on 14 January 2015, for all work related to the sinking, lining, equipping and commissioning of the Main and Services shafts and all related station and off-station development for the Styldrift I Project. As part of the company’s ongoing risk mitigation strategy for the business, RBPlat commenced with a process in 2014 to contract directly, where appropriate, with all project related suppliers and have available all critical equipment required to continue with the shaft equipping and construction. Furthermore, RBPlat is engaging with all interested parties including Shaft Sinkers, their employees, union representatives and Aveng Mining Shafts and Underground, a division of Aveng Africa Limited which was appointed in September 2013 as mining contractor for the ramp-up of the Styldrift I Project, to identify and implement mechanisms required to secure the continued services of the employees on site and minimise the impact on the project.

Royal Bafokeng Platinum Integrated Report 2014

243

COMPANY STATEMENT OF FINANCIAL POSITION as at 31 December 2014

COMPANY STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2014

Company 2014 R (million)

2013 R (million)

10.3 66.8 – (10.9)

11.6 17.6 0.7 (8.1)

66.2 (15.7)

21.8 (2.7)

Profit for the year Other comprehensive income

50.5 –

19.1 –

Total comprehensive income

50.5

19.1

Notes

Company Notes

2014 R (million)

2013 R (million)

Assets Non-current assets Investment in subsidiaries Intercompany loans Current assets Other receivables Current tax receivable Cash and cash equivalents

2 3

4

Total assets

8 101.5

7 411.2

6 819.2 1 282.3

6 819.2 592.0

1 442.9

572.2

7.1 0.3 1 435.5

5.7 – 566.5

9 544.4

7 983.4

9 544.3

7 983.1

1.9 9 364.7 48.6 129.1

1.7 7 856.6 46.2 78.6

Dividend income Finance income Other income Administrative expenses Profit before tax Income tax expense

7

The notes on pages 248 to 250 form an integral part of these annual financial statements.

Equity and liabilities Total equity Share capital Share premium Share-based payment reserve Retained earnings Current liabilities Accruals Current tax payable Total equity and liabilities

5 5 6

4

0.1

0.3

0.1 –

0.2 0.1

9 544.4

7 983.4

The notes on pages 248 to 250 form an integral part of these annual financial statements.

244

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245

COMPANY STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2014

Number of shares issued

Ordinary shares R (million)

Share premium R (million)

COMPANY STATEMENT OF CASH FLOWS for the year ended 31 December 2014

Share-based payment reserve R (million)

Company Retained earnings R (million)

Total R (million)

Balance at 31 December 2013 Share-based payment expense 2011 BSP vested in March and April 2014 Issue of shares – bookbuild Issue of shares – rights offer Costs relating to issue of shares capitalised “A2” ordinary shares repurchased and cancelled Share options exercised Rights followed on treasury shares Total comprehensive income

165 399 519 –

1.7 –

7 856.6 –

46.2 19.5

78.6 –

7 983.1 19.5

263 029 11 290 323 14 545 455

– 0.1 0.1

17.1 699.9 799.9

(17.1) – –

– – –

– 700.0 800.0





(21.5)





(21.5)

(281 957) 384 217 – –

– – – –

– 19.1 (6.4) –

– – – –

– – – 50.5

– 19.1 (6.4) 50.5

Balance at 31 December 2014

191 600 586

1.9

9 364.7

48.6

129.1

9 544.3

Balance at 31 December 2012 Share-based payment expense 2010 BSP vested in December 2013 2013 retrenchments (BSP early vesting) “A1” ordinary shares repurchased and cancelled Total comprehensive income

165 560 589 – 77 843

1.7 – –

7 848.9 – 5.1

35.8 18.1 (5.1)

59.5 – –

7 945.9 18.1 –

43 044



2.6

(2.6)





(281 957) –

– –

– –

– –

– 19.1

– 19.1

Balance at 31 December 2013

165 399 519

1.7

7 856.6

46.2

78.6

7 983.1

Notes Net cash flow generated by operating activities Cash generated by operations Finance income Dividends received Income tax paid

8

2014 R (million)

2013 R (million)

52.5

23.8

(12.4) 66.8 14.2 (16.1)

(9.8) 17.6 18.3 (2.3)

Net cash flow generated by investing activities



253.9

Decrease in held-to-maturity investments



253.9

816.5

(36.0)

Net cash flow utilised by financing activities Related party loans granted* Proceeds on related party loans* Issue of ordinary shares – bookbuild Issue of ordinary shares – rights offer Costs relating to issue of shares capitalised Costs relating to rights followed on treasury shares Proceeds from share option vested and exercised Net increase/(decrease) in cash and cash equivalents Cash and cash equivalents at beginning of year Cash and cash equivalents at end of year

(1 083.5) 412.7 700.0 800.0 (21.5) (6.4) 15.2

(36.0) – – – – – –

869.0 566.5

241.7 324.8

1 435.5

566.5

The notes on pages 248 to 250 form an integral part of these annual financial statements. * Adjusted for non-cash items

The notes on pages 248 to 250 form an integral part of these annual financial statements.

246

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247

NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTS for the year ended 31 December 2014

1.

General information, basis of preparation and accounting policies

Company

The general information, basis of preparation and accounting policies are disclosed on pages 206 to 220.

2014 R (million)

Company 2014 R (million)

2.

2013 R (million)

Investment in subsidiaries Investment in subsidiaries is accounted for at cost less any impairment provision in the Company’s financial statements. Investments in unlisted companies at cost: Direct investment in subsidiaries consists of: > 1 000 ordinary shares with a par value of R1 each in Royal Bafokeng Platinum Management Services Proprietary Limited (100% interest) > 320 ordinary shares with a par value of R1 each in Royal Bafokeng Resources Proprietary Limited (100% interest)





6 819.2

6 819.2

Closing balance at 31 December

6 819.2

6 819.2

Indirect investment in subsidiaries consists of: > Bafokeng Rasimone Management Services Proprietary Limited (100%) > Friedshelf 1408 (RF) Proprietary Limited (100%) All subsidiaries are incorporated in South Africa. The 67% participation interest in the BRPM Joint Venture is held by Royal Bafokeng Resources Proprietary Limited. Company 2014 R (million)

3.

2013 R (million)

Intercompany loans Royal Bafokeng Platinum Management Royal Bafokeng Resources Proprietary Limited

152.0 1 130.3

114.9 477.1

1 282.3

592.0

Company 2014 R (million)

4.

2013 R (million)

5.

Share capital and share premium The authorised and issued share capital of the Company is as follows: Authorised share capital 250 000 000 (2013: 250 000 000) ordinary shares with a par value of R0.01 each 1 500 000 (2013: 1 500 000) “A1” ordinary shares with a par value of R0.01 each 1 500 000 (2013: 1 500 000) “A2” ordinary shares with a par value of R0.01 each 1 500 000 (2013: 1 500 000) “A3” ordinary shares with a par value of R0.01 each

2 500 15 15 15

Total authorised share capital

2 545 000

2 545 000

R

R

355 903 455 630

1 647 147 – –

5 909 3 842 – –

5 344

Issued ordinary share capital Opening balance 164 835 605 (2013: 164 714 718) ordinary shares with a par value of R0.01 each 11 290 323 ordinary shares issued in terms of the bookbuild 14 545 455 ordinary shares issued in terms of the rights offer 263 029 BSP shares vested in February and April 2014 590 851 (2013: 534 376) ordinary shares issued as part of the management share incentive scheme Share options exercised 43 044 BSP shares early vested with 2013 retrenchments 77 843 BSP shares vested in December 2013 Less: Treasury shares 590 851 (2013: 534 376) ordinary shares issued as part of the management share incentive scheme Total 191 318 629 (2013: 164 835 605) ordinary shares

1 648 112 145 2

000 000 000 000

(5 909) 1 913 185

2 821

5 640

7 856.6

Total

9 364.7

0.1

(5 344) 1 648 355

Total 281 957 (2012: 563 914) “A3” ordinary shares

Opening balance 590 851 (2013: 534 376) ordinary shares issued as part of the management share incentive scheme 11 290 323 ordinary shares issued in terms of the bookbuild 14 545 455 ordinary shares issued in terms of the rights offer Costs relating to issue of shares capitalised Rights followed on treasury shares 263 029 BSP shares vested in December 2013 BSP shares early vested with 2013 retrenchments BSP shares vested in December 2013 Share options exercised Less: Treasury shares 590 851 (2013: 534 376) ordinary shares issued as part of the management share incentive scheme

(0.3)

430 778

8 459 (2 819) –

Share premium

Closing balance at 31 December

000 000 000 000

5 640 – (2 819)

The movement in the balance can be explained as follows: Opening balance at 1 January Income tax charge Tax refund received Payment made

(0.3) 2.7 0.2 (2.5)

2 500 15 15 15

Issued “A1”, “A2”, “A3” ordinary shares Opening balance 563 914 (2013: 845 871) “A2”, “A3” ordinary shares with a par value of R0.01 each 281 957“A1” ordinary shares repurchased and cancelled 281 957“A2” ordinary shares repurchased and cancelled

Current tax payable/(receivable) 0.1 15.7 – (16.1)

2013 R (million)

R (million)

R (million) 7 848.9

42.5 699.9 799.9 (21.5) (6.4) 17.1 – – 19.1

(42.5)

31.2 – – – – – 2.6 5.1 –

(31.2) 7 856.6

The “A” ordinary shares were issued to the Mahube Trust as part of the employee share ownership plan and these “A” ordinary shares are not listed. The “A1” and “A2” ordinary shares were repurchased and cancelled in 2013 and 2014 respectively. 590 851 ordinary shares were issued on 1 April 2014 (2013: 534 376) as part of the Company’s management incentive scheme.

248

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249

NOTES TO THE COMPANY ANNUAL FINANCIAL STATEMENTS (continued) for the year ended 31 December 2014

Company 2014 R (million)

2013 R (million)

46.2 19.5 (17.1)

35.8 18.1 (7.7)

48.6

46.2

6. Share-based payment reserve Opening balance Share-based payment expense BSPs vested Closing balance

Company 2014 R (million)

2013 R (million)

7. Income tax expense Income tax Tax rate reconciliation Profit before tax Tax calculated at a tax rate of 28% Non-taxable income

Effective tax rate (%)

15.7

2.7

66.2 (18.5) 2.8

21.8 (6.1) 3.4

(15.7)

(2.7)

23.7

12.4

Company 2014 R (million)

2013 R (million)

66.2 (77.1) (1.5)

21.8 (29.2) (2.4)

(0.1) (1.4)

0.2 (2.6)

(12.4)

(9.8)

NON-IFRS MEASURES for the year ended 31 December 2014

The Company utilises certain non-IFRS performance measures and ratios in managing the business and may provide users of the financial information with additional meaningful comparisons between current results and results in the prior period. Non-IFRS financial measures should be viewed in addition to and not as an alternative for the reported operating results or cash flow from operations or any other measure of performance prepared in accordance with IFRS. In addition, these measures may not be comparable to similarly titled measures used by other companies.

Normalised headline earnings and normalised HEPS Normalised headline earnings and normalised HEPS are non-IFRS measures used by the Group in evaluating the Group’s performance against its competitors. This supplements the IFRS measures as normalised headline earnings and normalised HEPS are calculated by adjusting basic earnings and EPS for the year with: > profit or loss on disposal of property, plant and equipment > the fair value depreciation of property, plant and equipment that arose as a consequence of the purchase price allocations completed in terms of IFRS 3: Business Combinations > the fair value amortisation of mineral rights that arose as a consequence of the purchase price allocations completed in terms of IFRS 3: Business Combinations and > tax implications of above adjustments. The reconciliation of basic earnings to normalised headline earnings is shown below: 2014

2013

Basic earnings R (million) Fair value depreciation and amortisation Tax impact of above adjustments

440.9 91.7 (25.7)

284.2 89.6 (25.1)

Normalised basic earnings R (million) Profit on disposal of property, plant and equipment

506.9 –

348.7 (0.3)

Normalised headline earnings R (million)

506.9

348.4

2014

2013

The reconciliation of normalised EPS to the relevant IFRS EPS is shown below:

8. Cash generated by operations Profit before tax Finance income Changes in working capital (Decrease)/increase in accruals Increase in other receivables Cash generated by operations

EPS (cents per share) Profit on disposal of property, plant and equipment HEPS (cents per share) Fair value depreciation and amortisation Tax impact of above adjustments

239 – 239 49 (14)

173 – 173 55 (16)

Normalised HEPS (cents per share)

274

212

EBITDA Earnings before interest, tax, depreciation and amortisation (EBITDA). The EBITDA gives an indication of the current operational profitability of the business. The reconciliation of EBITDA to the relevant IFRS profit before tax is shown below:

Profit before tax Less: Finance income Plus: Finance cost Plus: Depreciation Plus: Amortisation EBITDA

250

Royal Bafokeng Platinum Integrated Report 2014

2014 R (million)

2013 R (million)

844.5 (96.4) 5.1 370.9 65.3

612.5 (42.7) 3.7 373.2 61.3

1 189.4

1 008.0

Royal Bafokeng Platinum Integrated Report 2014

251

SHAREHOLDER STATISTICS for the year ended 31 December 2014

NOTICE OF ANNUAL GENERAL MEETING for the year ended 31 December 2014

Royal Bafokeng Platinum Limited: shareholder analysis

Royal Bafokeng Platinum Limited

Register date: 24 December 2014 Ordinary issued share capital: 192 893 289 shares Number of shareholders

%

Number of shares

%

Shareholder spread 1 – 1 000 shares 1 001 – 10 000 shares 10 001 – 100 000 shares 100 001 – 1 000 000 shares 1 000 001 shares and over

1 266 495 280 99 16

58.72 22.96 12.99 4.59 0.74

366 151 1 574 573 10 064 670 30 648 532 150 239 363

0.19 0.82 5.22 15.89 77.89

Total

2 156

100

192 893 289

100

Distribution of shareholders Banks Brokers Closed corporations Endowment funds Individuals Insurance companies Investment companies Medical aid schemes Mutual funds Nominees and trusts Other corporations Own holdings Pension funds Private companies Public companies Sovereign wealth funds

54 14 18 22 1 319 23 4 11 192 184 33 5 214 53 9 1

2.50 0.65 0.83 1.02 61.18 1.07 0.19 0.51 8.91 8.53 1.53 0.23 9.93 2.46 0.42 0.05

10 396 877 2 363 725 85 535 185 469 1 286 901 2 532 088 21 403 140 380 24 231 525 571 225 166 141 95 472 274 21 746 701 9 435 828 22 549 222 1 707 995

5.39 1.23 0.04 0.10 0.67 1.31 0.01 0.07 12.56 0.30 0.09 49.49 11.27 4.89 11.69 0.89

Total

2 156

100

192 893 289

100

12

0.56

124 039 128

64.30

2 4 5 1

0.09 0.19 0.23 0.05

223 676 77 797 101 333 105 22 404 550

0.12 0.04 52.53 11.61

Public shareholders

2 144

99.44

68 854 161

35.70

Total

2 156

100

192 893 289

100

101 333 105 22 404 550 10 418 573

52.53 11.61 5.40

Public/non-public shareholders Non-public shareholders Directors Associates and management Own holdings Strategic holdings (more than 10%)*

Beneficial shareholders holding 5% or more Royal Bafokeng Platinum Holdings Proprietary Limited Rustenburg Platinum Mines Limited Public Investment Corporation (PIC) * Royal Bafokeng Platinum Holdings Proprietary Limited is accounted under “Own holdings”

Incorporated in the Republic of South Africa Registration number: 2008/015696/06 JSE share code: RBP and ISIN: ZAE000149936 Date of incorporation: 1 July 2008 (RBPlat or the Company)

This document is important and requires your immediate attention. If you are in any doubt as to what action to take, please consult your stockbroker, Central Securities Depository Participant (CSDP), banker, attorney, accountant or other professional advisor. If you have disposed of all your shares in the Company please forward this document, together with the enclosed form of proxy, to the purchaser of such shares or the broker, banker or other agent through whom you disposed of these shares. Notice is hereby given that the sixth Annual General Meeting (AGM) of the Company will be held on Tuesday, 14 April 2015 at 10:00, subject to any cancellation, postponement or adjournment, in the Castello room at the Palazzo Hotel, Monte Casino Boulevard, Fourways. Shareholders’ attention is drawn to the notes at the end of this notice, which contain important information with regard to shareholders’ participation in the AGM, as well as certain explanatory notes regarding the resolutions to be proposed at the AGM. Kindly note that in terms of section 63(1) of the Companies Act 71 of 2008 (the Act), meeting participants (including proxies) will be required to provide reasonably satisfactory identification before being entitled to participate in or vote at the AGM. Forms of identification that will be accepted include original and valid identity documents, a driver’s licence or a passport.

Record date, proxies and voting The Board of directors of the Company (the Board) has determined, in accordance with section 59(1) (a) and (b) of the Act, that in order to be able to receive notice, attend, participate and vote at the AGM the record date for holders to be recorded as shareholders in the securities register maintained by the transfer secretaries of the Wednesday, 8 April 2015. The last date that holders can trade in the Company’s shares and still be able to receive notice, attend, participate and vote at the AGM is Wednesday, 1 April 2015.

Electronic participation The Company, if required, will offer shareholders reasonable access to participate at the AGM through electronic conference call facilities, in accordance with section 63(2) of the Act. Participants wishing to use these facilities are required to deliver written notice to the Company at The Pivot, No 1 Monte Casino Boulevard, Block C, Floor 4, Fourways, 2021 (marked for the attention of Lester Jooste, Company Secretary) by no later than 10:00 on Wednesday, 8 April 2015 advising that they wish to participate in the AGM via electronic medium. The valid written notice must be accompanied by a certified copy of the shareholder’s or proxy’s identity document, driver’s licence or passport, in respect of an individual and if not an individual, a certified copy of a resolution by the relevant entity and a certified copy of the identity documents, driver’s licence or passports of the people who adopted the resolution will be required. The Company reserves the right to elect not to provide electronic participation at the AGM, in the event that it determines that it is not practical to do so. Voting on shares will not be possible via electronic medium and, accordingly, shareholders wishing to cast their vote at the AGM will need to be represented in person or by proxy at the meeting. The purpose of the AGM is to conduct such business as may be lawfully dealt with at the meeting and, in particular, if deemed fit, to pass the resolutions contained herein, with or without modification, in a manner required by the Act and the Listings Requirements of the JSE Limited (JSE Listings Requirements) on which the Company’s ordinary shares are listed:

Presentation of annual financial statements The consolidated audited annual financial statements of the Company and its subsidiaries, incorporating the reports of the auditors, the Audit Committee and directors for the year ended 31 December 2014, as approved by the Board on 27 February 2015, are hereby presented to shareholders as required in terms of section 30(3)(d) read with section 61(8)(a) of the Act.

Ordinary resolutions 1.

Ordinary resolution number 1 Election of director “Resolved that Mr MJ Moffett, who was appointed to the Board on 22 September 2014 and who retires by rotation in terms of the Memorandum of Incorporation (MOI) of the Company, being eligible is hereby elected as an independent non-executive director of the Company.”

2.

Ordinary resolution number 2 Election of director “Resolved that Mr D Wilson, who was appointed to the Board on 24 April 2014 and who retires by rotation in terms of the MOI of the Company, being eligible is hereby elected as a non-executive director of the Company.”

3.

Ordinary resolution number 3 Election of director “Resolved that Ms L Stephens, who was appointed to the Board on 22 September 2014 and who retires by rotation in terms of the MOI of the Company, being eligible is hereby elected as an independent non-executive director of the Company.”

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NOTICE OF ANNUAL GENERAL MEETING (continued) for the year ended 31 December 2014

4.

Ordinary resolution number 4 Election of director “Resolved that Ms T Mokgosi-Mwantembe, who was appointed to the Board on 5 November 2014 and who retires by rotation in terms of the MOI of the Company, being eligible is hereby elected as an independent non-executive director of the Company.”

5.

Ordinary resolution number 5 Re-election of director “Resolved that Mr RG Mills, who was appointed to the Board on 20 September 2010 and who retires by rotation in terms of the MOI of the Company, being eligible is hereby re-elected as an independent non-executive director of the Company.”

6.

Ordinary resolution number 6 Re-election of director “Resolved that Mr SD Phiri, who was appointed as a director on 1 April 2010 and who retires by rotation in terms of the MOI of the Company, being eligible is hereby re-elected as an executive director of the Company.”

7.

Ordinary resolution number 7 Re-election of director “Resolved that Mr MJL Prinsloo, who was appointed as a director on 2 March 2009 and who retires by rotation in terms of the MOI of the Company, being eligible is hereby re-elected as an executive director of the Company.”

8.

Ordinary resolution number 8 Reappointment of auditors “Resolved that, upon the recommendation of the Audit and Risk Committee of the Board, PricewaterhouseCoopers Inc. (PwC) be and is hereby reappointed as the independent external auditor of the Company until the next AGM and that Mr Hendrik Odendaal of PwC be and is hereby appointed as the designated auditor to hold office for the ensuing year and to remain in office until the next AGM.”

9.

Ordinary resolution number 9 Election of Audit and Risk Committee member “Resolved that, upon the recommendation of the Remuneration and Nomination Committee of the Board, Prof L de Beer, an independent non-executive director, be and is hereby re-elected as a member and the Chairman of the Audit and Risk Committee, in terms of section 94(2) of the Act, to hold office until the conclusion of the next AGM.”

10. Ordinary resolution number 10 Election of Audit and Risk Committee member “Resolved that, upon the recommendation of the Remuneration and Nomination Committee of the Board and subject to ordinary resolution number 4 being adopted, Mr RG Mills, an independent non-executive director, be and is hereby re-elected as a member of the Audit and Risk Committee, in terms of section 94(2) of the Act, to hold office until the conclusion of the next AGM.”

11. Ordinary resolution number 11 Election of Audit and Risk Committee member “Resolved that, upon the recommendation of the Remuneration and Nomination Committee of the Board and subject to ordinary resolution number 1 being adopted, Mr MJ Moffett, an independent non-executive director, be and is hereby elected as a member of the Audit and Risk Committee, in terms of section 94(2) of the Act, to hold office until the conclusion of the next AGM.”

12 . Ordinary resolution number 12 Election of Audit and Risk Committee member “Resolved that, upon the recommendation of the Remuneration and Nomination Committee of the Board and subject to ordinary resolution number 3 being adopted, Ms L Stephens, an independent non-executive director, be and is hereby elected as a member of the Audit and Risk Committee, in terms of section 94(2) of the Act, to hold office until the conclusion of the next AGM.”

13. Ordinary resolution number 13 General authority for directors to allot and issue ordinary shares “Resolved that directors of the Company be and are hereby authorised, in addition to the authority granted under ordinary resolution 14, and any authority they may have under the MOI or the Act or in terms of the Company’s existing employee share/option schemes, until the earlier of the date of the next AGM of the Company or the date 15 (fifteen) months from the date of this AGM, to allot and issue ordinary shares (including options and securities convertible into shares) on a non pro-rata basis representing not more than 5% (five percent) of the number of ordinary shares in issue as at the date of this AGM being 9 644 664 (nine million six hundred and forty four thousand six hundred and sixty four) ordinary shares of the Company, on such terms and conditions as the Board may, at its discretion determine, subject to the limitations and provisions of the MOI, the Act and the JSE Listings Requirements, as applicable from time to time.”

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14. Ordinary resolution number 14 General authority to issue shares for cash “Resolved, as a separate and additional authority from that referred to in ordinary resolution number 13, that the directors of the Company be and are hereby authorised, until the earlier of the date of the next AGM of the Company or the date 15 (fifteen) months from the date of this meeting (the Valid Period), to allot and issue ordinary shares (including options and securities convertible into ordinary shares) (equity securities) representing not more than 10% (ten percent) of the number of ordinary shares in issue as at the date of this AGM (being 19 289 329 (nineteen million two hundred and eighty nine thousand three hundred and twenty nine) ordinary shares) from the authorised but unissued shares in the capital of the Company for cash on a non pro-rata basis, subject to the MOI, the Act, and the JSE Listings Requirements, as applicable from time to time. It is recorded that the JSE Listings Requirements currently require, inter alia, that: (a) any issue by a listed company of equity securities for cash may not exceed 15% of the Company’s listed securities as at the date of the notice of the AGM (which, for the purposes of this ordinary resolution number 14 shall be limited to 10% (ten percent) (b) the calculation of the Company’s listed equity securities must be a factual assessment of the Company’s listed equity securities as at the date of the notice of the AGM, excluding treasury shares (c) any equity securities issued under the authority during the Valid Period must be deducted from such number in (b) above (d) in the event of a subdivision or consolidation of issued equity securities during the Valid Period, the existing authority must be adjusted accordingly to represent the same allocation ratio (e) the equity securities will be issued to public shareholders, as defined in paragraph 4.25 to 4.27 and not to related parties (f) the maximum discount at which equity securities will be issued is 10% of the weighted average traded price over the 30 business days prior to the date that the price of the issue is agreed (g) In terms of the JSE Listings Requirements, the percentage of voting rights required for resolution number 14 to be adopted, is 75% majority of the votes

15. Ordinary resolution number 15 Approval of remuneration policy “Resolved that the remuneration policy of the Company be and is hereby approved through a non-binding advisory vote (excluding the remuneration of non-executive directors which is to be approved separately) as set out in the integrated annual report on pages 182 to 186.”

Special resolutions 16. Special resolution number 1 General authority to repurchase shares “Resolved that the directors of the Company be and are hereby authorised, until the earlier of the date of the next AGM of the Company or the date 15 (fifteen) months from the date of this AGM, by way of a general authority to repurchase issued shares in the share capital of the Company or to authorise and/or procure that a subsidiary company purchase such shares in the Company, at such price and on such terms as the directors may from time to time determine subject to the MOI, the Act and the JSE Listings Requirements, as applicable from time to time, and subject further to the restriction that the repurchase or purchase, as the case may be, by the Company and/or any of its subsidiaries of shares in the Company of any class under this authority shall not, in aggregate, in any financial year, exceed 5% (five percent) of the shares in issue in such class as at the date of the AGM.” It is recorded that the JSE Listings Requirements and the Act currently require, inter alia, that a company or any of its subsidiaries may only make a general repurchase of the ordinary shares in that company if: i. any such acquisition of ordinary shares is effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement with the counterparty (reported trades are prohibited); ii. it is authorised in the company’s MOI; iii. this general authority shall be valid until the Company’s next AGM or for 15 (fifteen) months from the date of passing of this special resolution number 1; iv. an announcement must be published as soon as the Company or any of its subsidiaries have repurchased or acquired the relevant ordinary shares constituting, on a cumulative basis, 3% (three percent) of the number of ordinary shares of that class of shares in issue and for each 3% (three percent) in aggregate of the initial number acquired thereafter, in compliance with paragraph 11.27 of the JSE Listings Requirements; v. acquisitions of shares by the Company or a subsidiary of the Company in aggregate in any one financial year may not exceed 20% of the Company’s ordinary issued share capital of that class; and that the number of shares purchased and held by a subsidiary/ies of the Company shall not exceed 10% (ten percent) in the aggregate of the number of issued shares of any class of shares of the Company at the relevant times; vi. ordinary shares may not be acquired at a price greater than 10% (ten percent) above the weighted average of the market value at which such ordinary shares are traded on the JSE as determined over the 5 (five) business days immediately preceding the date of repurchase of such ordinary shares; vii. at any point in time the Company and/or its subsidiaries may only appoint one agent to effect any repurchase;

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NOTICE OF ANNUAL GENERAL MEETING (continued) for the year ended 31 December 2014

Special resolutions (continued)

Voting and proxies

16. Special resolution number 1 (continued) General authority to repurchase shares (continued)

Ordinary shareholders are entitled to vote on all the resolutions set out above. On a show of hands, every ordinary shareholder who is present in person or by proxy at the AGM will have one vote (irrespective of the number of ordinary shares held in the Company), and on a poll, every ordinary shareholder will have one vote for every ordinary share held or represented. All ordinary resolutions will, in terms of the Act, require the support of more than 50% of the voting rights of shareholders exercised thereon to be approved.

ix. a company and/or its subsidiaries may not repurchase any securities during a prohibited period, unless they have in place a repurchase programme where the dates and quantities of securities to be traded during the relevant period are fixed and has been submitted to the JSE in writing prior to the commencement of the prohibited period.

In order for ordinary resolution number 14 to be approved, at least 75% of the votes cast by all equity securities holders present or represented by proxy at the AGM is required in terms of the JSE Listings Requirements.

Statement by the Board of directors of the Company

All special resolutions will, in terms of the Act, require the support of at least 75% of the total voting rights of shareholders exercised thereon at the AGM to be approved.

The Board, pursuant to the JSE Listings Requirements, hereby states that: (a) they have no specific intention at present for the Company or its subsidiaries to repurchase any of the shares of the Company as contemplated in this special resolution number 1 but consider that such a general authority should be put in place should an opportunity present itself to do so during the year, which is in the best interests of the Company and its shareholders

Ordinary shareholders are entitled to attend, speak and vote at the AGM, or they may appoint a proxy to attend, speak and vote in their stead. Shareholders holding dematerialised shares not in their own name must furnish their CSDP or broker with their instructions for voting at the AGM should they wish to vote. If your CSDP or broker does not obtain instructions from you, it will be obliged to act in terms of the mandate signed or the completed proxy form attached.

(b) having considered the effect of the maximum repurchas possible under this resolution, if approved, they are of the opinion that for a period of 12 (twelve) months after the date of this notice: > the Company and/or its subsidiaries (the Group) will be able, in the ordinary course of business, to pay their debts > the assets of the Company and the Group, fairly valued in accordance with International Financial Reporting Standards, will exceed the liabilities of the Company and the Group > the Company and the Group’s ordinary share capital, reserves and working capital will be adequate for ordinary business purposes > the working capital of the Company and the Group will be adequate for the ordinary business

Unless you advise your CSDP or broker before the expiry date of your intention to attend the AGM or to appoint a proxy to do so the CSDP or broker will assume that you or your proxy will not be attending the AGM. If you wish to attend the AGM or to appoint a proxy to do so you must obtain a letter of representation signed by your CSDP or broker prior to the AGM. Shareholders with dematerialised shares in their own name, or who hold shares that are not dematerialised, and who are not able to attend the AGM and wish to have representation at the meeting must complete and submit to the transfer secretaries, the form of proxy attached, in accordance with the instructions contained therein, by no later than 10:00 on Friday 10 April 2015. The completion of the form will not preclude the shareholder from subsequently attending the AGM.

(c) a resolution has been passed by the Board of directors authorising the repurchase, that the Company and its subsidiaries passed the solvency and liquidity test and that since the test was performed there have been no material changes to the financial position of the Company and/or its subsidiaries.

Questions The Board encourages shareholders to attend and to ask questions at the AGM. In order to facilitate the answering of questions at the meeting, shareholders who ask questions in advance are encouraged to submit their questions in writing to the Company Secretary by 12:00 on Monday, 13 April 2015.

The directors will also ensure that this is the case at the time of repurchase of the shares.

JSE Listings Requirements disclosures The directors, whose names are set out on pages 52 to 53 of the integrated annual report, collectively and individually accept full responsibility for the accuracy of the information pertaining to this special resolution number 1 and certify that to the best of their knowledge and belief there are no other facts, the omission of which would make any statement false or misleading, and that they have made all reasonable enquiries in this regard, and that this resolution contains all information required by law and the JSE Listings Requirements. The following additional information, some of which may appear elsewhere in the integrated annual report of which this notice forms part, is provided in terms of section 11.26 of the JSE Listings Requirements for purposes of the general authority contemplated above: > Major beneficial shareholders – page 199 > Directors’ interests in shares – page 199 > Share capital of the Company – page 224. Other than the facts and developments reported on in the integrated annual report, there have been no material changes to the financial or trading position of the Company and its subsidiaries since 31 December 2014 and the issuing of this notice to shareholders. This authority includes an authority, by special resolution, to repurchase shares from a director or prescribed officer of the Company through the JSE order book, as required under section 48(8)(a) of the Act.

17. Special resolution number 2 Non-executive directors’ fees “Resolved as a special resolution in terms of section 66(9) of the Act, that the level of non-executive directors’ annual fees be and is hereby approved on the basis set out as follows:

Per annum Board Chairman (all inclusive fee) Board member Audit and Risk Committee Chairman Audit and Risk Committee member Remuneration and Nomination Committee Chairman Remuneration and Nomination Committee member Social and Ethics Committee Chairman Social and Ethics Committee member

2015 R

2014 R

1 333 217 268 297 199 422 111 138 134 442 100 832 136 080 102 060

1 333 217 268 297 199 422 111 138 134 442 100 832 136 080 102 060

By order of the Board of directors LC Jooste Company Secretary Registered office The Pivot, No 1 Monte Casino Boulevard Block C, 4th Floor, Fourways, Johannesburg, 2021 PO Box 2283 Fourways, 2055

Transfer secretaries Computershare Investor Services Proprietary Limited 70 Marshall Street, Johannesburg, South Africa, 2001 PO Box 61051 Marshalltown, 2017

Explanatory notes 1.

Presentation of the annual financial statements At the AGM, the directors must, in terms of the MOI, the Act and the JSE Listings Requirements, present to shareholders the annual financial statements for the year ended 31 December 2014.

2.

Election and re-election of directors (ordinary resolution numbers 1 to 7) In accordance with the MOI, and the JSE Listings Requirements, one-third of the non-executive directors (being those longest in office at the date of the AGM) must retire by rotation and directors appointed by the Board during the year must at each AGM offer themselves for re-election and election, respectively. Ordinary resolutions 1 to 7 are proposed to re-elect the directors who retire as non-executive directors of the Company by rotation in accordance with the MOI and who, being eligible for re-election, offer themselves for re-election. A brief biography of the directors offering themselves for re-election is contained on pages 82 and 83 of the integrated annual report and the Company’s website www.bafokengplatinum.co.za. The Board with the assistance of the Remuneration and Nomination Committee has reviewed the composition and performance of the Board in accordance with corporate governance guidelines and transformation requirements and has recommended the re-election of the directors offering themselves for re-election.

The R15 000 ad hoc meeting fee will, however, increase to R16 000, subject to shareholders approval.

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NOTICE OF ANNUAL GENERAL MEETING (continued) for the year ended 31 December 2014

Explanatory notes (continued) 3.

8.

PricewaterhouseCoopers Inc. (PwC) have agreed to continue in office and as such the reappointment of PwC has been endorsed and is recommended by the Board in terms of the Company’s MOI and the Act. The Audit and Risk Committee of the Company has assessed the performance and independence of the external auditors and is satisfied that no governance guidelines have been breached and that they have complied with the provisions of the Act. A non-audit service policy is in place to ensure the independence of the external auditor is maintained. Ordinary resolution number 8 is therefore proposed to approve the reappointment of PwC as the external auditors of the Company and to appoint Mr Hendrik Odendaal of PwC as the designated auditor of the Company.

4.

Election of Audit and Risk Committee members (ordinary resolution numbers 9 to 12) In terms of the Act, shareholders of a public company must elect the members of an audit committee at each AGM. The Nomination Committee has, in accordance with the recommendations and provisions of the King Code and Report on Governance for South Africa (King III), satisfied itself that the independent non-executive directors offering themselves for election as members of the Company’s Audit and Risk Committee: > are independent non-executive directors as contemplated in King III, the Act and the JSE Listings Requirements > are suitably qualified and experienced > have an understanding of integrated annual reporting (including financial reporting), internal financial controls, external and internal audit processes, risk management, sustainability issues and the governance processes (including information technology governance) within the Company > collectively possess skills which are appropriate to the Company’s size and circumstances, as well as its industry > have an understanding of International Financial Reporting Standards, South African Statements of Generally Accepted Accounting Practice and other financial and sustainability reporting standards, regulations and guidelines applicable to the Company > adequately keep up to date with key developments affecting their required skills set.

General authority to repurchase shares (special resolution number 1) The effect of special resolution number 1 and the reason for this resolution is to grant the Company or any of its subsidiaries a general approval in terms of the MOI, the Act and the JSE Listings Requirements, to acquire the Company’s shares, which general approval shall be valid until the earlier of such next AGM of the Company or its variation or revocation of such general authority by special resolution at any subsequent general meeting of the Company, provided that the general authority shall not extend beyond 15 (fifteen) months from the date of this AGM.

Reappointment of the independent auditor (ordinary resolution number 8)

The directors are of the opinion that it would be in the best interests of the Company to approve this general authority and thereby allow the Company or any of its subsidiaries to be in a position to repurchase the securities issued by the Company through the order book of the JSE, should the market conditions, tax dispensation and price justify such an action.

9.

Non-executive directors’ fees (special resolution number 2) In terms of King Code III and the Act, the shareholders of the Company are required to approve by special resolution the fees to be paid to non-executive directors. The Board believes that the proposed fees payable to non-executive directors are competitive and will enable the Company to retain and attract people of the calibre required to make a meaningful contribution to the Company, having regard to the appropriate capability, skills and experience required. The Board, on the recommendation of the Remuneration and Nomination Committee, recommends to shareholders that these fees, which remain unchanged, be approved. The ad hoc meeting fee has, however, increased from R15 000 to R16 000.

Statutory disclosure Proxies In terms of section 58 of the Act, a shareholder entitled to attend and vote at the AGM is entitled to appoint a proxy or two or more proxies to attend, participate in and vote at the meeting in place of the shareholder. The proxy need not be a shareholder of the Company. (A proxy form together with a summary of section 58 of the Act pertaining to a shareholder’s right to be represented by proxy is attached hereto as Annexure A.) Proxy forms must be delivered to the Company at The Pivot, No 1 Monte Casino Boulevard, Block C, 4th floor, Fourways, Johannesburg, marked for the attention of Lester Jooste, by no later than 10:00 on Friday, 10 April 2015.

Ordinary resolutions numbers 9 to 12 are therefore proposed to re-elect Audit and Risk Committee members in terms of section 94(2) of the Act and the King Code. For further details regarding the Audit and Risk Committee, please refer to page 195 of this integrated report.

5.

General authority for directors to allot and issue ordinary shares (ordinary resolution number 13) In terms of the MOI, the Company is authorised to issue the shares specified in Schedule 1 of the MOI, provided that, if required by the Act or the JSE Listings Requirements, the Company may only issue unissued shares to shareholders of a particular class of shares, pro rata to the shareholders’ existing shareholding, unless any such shares were issued for an acquisition of assets. Ordinary resolution number 13 is proposed, to the extent required by the Act or the JSE Listings Requirements, to grant the Board the general authority to issue up to 5% (five percent) of its shares on a non-pro rata basis (in addition to its authority to issue shares in terms of ordinary resolution number 13 for cash and its existing authorities to issue shares under its employee share/option schemes or to issue shares on a non-pro rata basis for an acquisition of assets. The authority will be subject to the Act and the JSE Listings Requirements.

6.

Issue of shares for cash (ordinary resolution number 14) In terms of the JSE Listings Requirements, a general authority for the directors to issue shares for cash requires shareholder approval. The directors also require approval in terms of the MOI to issue shares for cash on a non-pro rata basis. The existing authority granted by the shareholders at the previous AGM held on 16 April 2014 expires at the AGM to be held on Tuesday, 14 April 2015, unless renewed. The Board has decided to seek renewal of this authority in accordance with best practice. The authority will be subject to the Act and the JSE Listings Requirements.

7.

Approval of remuneration policy (ordinary resolution number 15) In terms of the King Code III recommendations, shareholders should annually, through a non-binding advisory vote, endorse the Company’s remuneration policy at the AGM allowing shareholders to express their views on the remuneration policies adopted and the implementation thereof. Ordinary resolution number 15 is proposed to consider and approve, by way of a non-binding advisory vote, the remuneration policy of the Company, as set out in the Remuneration report on pages 182 to 186 of the integrated report as recommended by King Code III.

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ADMINISTRATION

Shareholders’ diary Financial year end: 31 December of each year

Interim period end: 30 June of each year

FORM OF PROXY

Public Officer Reginald Haman Email: [email protected] Telephone: +27 10 590 4533 Telefax: +27 086 219 5131

Independent external auditors

Royal Bafokeng Platinum Limited (RBPlat or the Company) (Incorporated in the Republic of South Africa) (Registration number: 2008/015696/06) (Share Code: RBP) (ISIN: ZAE000149936)

PricewaterhouseCoopers Inc. 2 Eglin Road Sunninghill Johannesburg 2157 South Africa

Form of proxy for the sixth Annual General Meeting to be held on Tuesday, 14 April 2015 at 10:00. For use by certificated ordinary shareholders and dematerialised ordinary shareholders with “own name” registration only.

Transfer secretaries

I/We,

Computershare Investor Services Proprietary Limited 70 Marshall Street Johannesburg

of (address)

The Pivot No 1 Monte Casino Boulevard Block C 4th Floor Fourways Johannesburg 2021

PO Box 61051 Marshalltown 2107 South Africa Telephone: +27 11 370 5000 Telefax: +27 11 688 5200

1.

or failing him/her

2.

or failing him/her

PO Box 2283 Fourways 2055 South Africa

Merrill Lynch South Africa Proprietary Limited 138 West Street Sandton Johannesburg 2196 South Africa

Integrated annual report and financial statements (mailed to shareholders): 5 March 2015

Administration Company registered office Royal Bafokeng Platinum Limited Registration number: 2008/015696/06 Share code: RBP ISIN: ZAE000149936

Company Secretary Lester Jooste (ACIS) Email: [email protected]kengplatinum.co.za Telephone: +27 10 590 4519 Telefax: +27 086 572 8047

Investor relations Lindiwe Montshiwagae Email: [email protected] Telephone: +27 10 590 4510 Telefax: +27 086 219 5131

Holders of dematerialised ordinary shares other than “own name” registration must inform their CSDP or broker of their intention to attend the AGM and request their CSDP to issue them with the necessary authorisation to attend the AGM in person or provide their CSDP or broker with their voting instructions should they not wish to attend the AGM in person but wish to be represented thereat.

being registered holder(s) of

ordinary shares in the issued share capital of the Company hereby appoint:

the chairman of the AGM as my/our proxy to vote on my/our behalf at the AGM of the Company to be held on Tuesday, 14 April 2015 at 10:00 for the purpose of considering and, if deemed appropriate, to pass with or without modification the resolutions to be proposed at the meeting or at any adjournment thereof in respect of the shares registered in my/our name(s), in accordance with the following instructions:

Sponsor Number of ordinary shares In favour 1.

First item of business: Annual financial statements

To receive and adopt the annual financial statements for the financial year ended 31 December 2014

2.

Ordinary resolution number 1

To elect Mr MJ Moffett as a director of the Company

3.

Ordinary resolution number 2

To elect Mr D Wilson as a director of the Company

4.

Ordinary resolution number 3

To elect Ms L Stephens as a director of the Company

5.

Ordinary resolution number 4

To elect Ms T Mokgosi-Mwantembe as a director of the Company

6.

Ordinary resolution number 5

To re-elect Mr RG Mills as a director of the Company

7.

Ordinary resolution number 6

To re-elect Mr SD Phiri as a director of the Company

8.

Ordinary resolution number 7

To re-elect Mr MJL Prinsloo as a director of the Company

9.

Ordinary resolution number 8

To reappoint PricewaterhouseCoopers as the independent external auditors and Mr H Odendaal as the designated auditor for the ensuing year

10.

Ordinary resolution number 9

To elect Prof L de Beer as the Chairman and member of the Audit and Risk Committee

11.

Ordinary resolution number 10

To elect Mr RG Mills as a member of the Audit and Risk Committee

12.

Ordinary resolution number 11

To elect Mr MJ Moffett as a member of the Audit and Risk Committee

13.

Ordinary resolution number 12

To elect Ms L Stephens as a member of the Audit and Risk Committee

14.

Ordinary resolution number 13

To grant a general authority for directors to allot and issue up to 5% of the unissued share capital of the Company for cash

15.

Ordinary resolution number 14

To grant directors a general authority to issue up to 10% of the unissued share capital of the Company for cash

16.

Ordinary resolution number 15

To approve via a non-binding vote the remuneration policy of the Company

17.

Special resolution number 1

To grant the directors a general authority to authorise the Company or any subsidiary/ies to repurchase its issues shares

18.

Special resolution number 2

To approve the non-executive directors’ fees

Against

Abstain

Please indicate with an “X” in the spaces provided above how you wish to vote. If no indication is given the proxy will vote at his/her discretion or abstain from voting. Any member of the Company entitled to attend and vote at the meeting may appoint a proxy or proxies to attend, speak and vote in his/ her stead. A proxy need not be a member of the Company. Every person present and entitled to vote shall, on a show of hands have one vote only, but on a poll, every share shall have one vote. Voting will be conducted by poll.

260

Royal Bafokeng Platinum Integrated Report 2014

Signed at

on

Signature

or assisted by

2015 (where applicable)

Royal Bafokeng Platinum Integrated Report 2014

261

NOTES TO THE FORM OF PROXY

1. Any alterations must be signed, not initialled. 2. Documentary evidence establishing the authority of a person signing this form of proxy in a representative capacity must be attached to this form of proxy unless previously recorded by the Company or waived by the chairman of the meeting. 3. A minor must be assisted by his/her parent or guardian unless the relevant documents establishing his/her legal capacity are produced or have been registered by the Company. 4. The chairman of the meeting shall be entitled to decline to accept the authority of a signatory: a. under a power of attorney; or b. on behalf of a company unless the power of attorney or authority is deposited with the Company, marked for the attention of Lester Jooste, Company Secretary, at The Pivot, No 1 Monte Casino Boulevard, Block C, Floor 4, Fourways, 2021, by not later than 10:00 on Friday, 10 April 2015. 5. The signatory may insert the name of any person(s) whom the signatory wishes to appoint as his/her proxy in the blank space(s) provided for that purpose. 6. The completion and lodging of this form of proxy will not preclude the signatory from attending the Annual General Meeting and speaking and voting in person thereat should such person wish to do so, to the exclusion of any proxy appointed in terms hereof. 7. If, in the appropriate place on the face of the proxy, there is no indication of how to vote in respect of any resolution, the proxy shall be entitled to vote as he/she deems fit in respect of that resolution. 8. The chairman of the general meeting may reject or accept any form of proxy which is completed other than in accordance with these instructions, provided in the event of acceptance, he/she is satisfied as to the manner in which a shareholder wishes to vote. 9. If the shareholding is not indicated on the form of proxy, the proxy will be deemed to be authorised to vote the total shareholding registered in the shareholder’s name. 10. Please insert an “X” in the relevant space according to how you wish your votes to be cast. However, if you wish to cast your votes in respect of a lesser number of shares than you own in the Company, insert the number of shares held in respect of which you wish to vote. Failure to comply with the above will be deemed to authorise the proxy to vote or abstain from voting at the meeting as he/she deems fit in respect of all the shareholders’ votes exercisable at the meeting. A shareholder or his/her proxy is not obligated to use all the votes exercisable by the shareholder or by his/her proxy, but the total of the votes cast and/or in respect of which abstention is recorded may not exceed the total number of votes exercisable by the shareholder or by his/her proxy. 11. When there are joint holders of shares and if more than one such joint holder be present or represented, then the person whose name appears first in the securities register in respect of such shares or his/her proxy, as the case may be, shall alone be entitled to vote in respect thereof.

Summary in terms of section 58(8)(b))(i) of the Act Please note that in terms of section 58 of the Act:

Royal Bafokeng Platinum Integrated Report 2014

> a proxy appointment must be in writing, dated and signed by the shareholder appointing the proxy > an individual may be appointed as a proxy, including an individual who is not a shareholder of the Company, to, among other things, participate in and speak and vote on a shareholder’s behalf and more than one proxy may be appointed to exercise voting rights attached to different securities held by a shareholder > a proxy may delegate his/her authority to act on a shareholder’s behalf, subject to any restriction set out in the proxy appointment > a proxy appointment must be delivered to the Company before the proxy exercises any shareholder rights at the meeting > the appointment of a proxy or proxies will be suspended at any time and to the extent that a shareholder chooses to act directly and in person in the exercise of any of its rights as a shareholder at the meeting > the appointment of the proxy is revocable unless a shareholder expressly states otherwise in the proxy appointment > as the appointment of the proxy is revocable, the proxy appointment may be revoked by (i) cancelling it in writing, or making a later inconsistent appointment of a proxy and (ii) delivering a copy of the revocation instrument to the proxy, and to the Company. The revocation of a proxy appointment constitutes a complete and final cancellation of a proxy’s authority to act on a shareholder’s behalf as of the later of the date stated in the revocation instrument, if any, or the date on which the revocation instrument was delivered to the Company and the proxy as aforesaid > If a proxy appointment has been delivered to the Company, as long as that appointment remains in effect, any notice that is required by the Act or the Company’s Memorandum of Incorporation to be delivered by the Company to the relevant shareholder will be delivered by the Company to the shareholder or its proxy or proxies, if the shareholder has directed the Company to do so, in writing, and paid any reasonable fee charged by the Company for doing so > A proxy is entitled to exercise, or abstain from exercising, any voting right of a shareholder at the meeting, but only as directed on the proxy appointment > The appointment of a proxy remains valid only until the end of the meeting or any adjournment or postponement thereof or for a period of one year, whichever is shorter, unless it is revoked by the shareholder before then on the basis set out above.

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