Petmin results for the period ending 31 December 2014

“Managing those issues we can control – and not merely accepting those that we can’t”

February 2015 Investor Roadshow

2 February 2015

Index

1. Performance for the 6 months ended 31 December 2014

a) Financial Highlights 3

b) Somkhele Operational Highlights 4

c) Somkhele Sales Highlights 5

d) NAIC Highlights 6

e) Some Strategic Considerations 7

f) Financial Performance Summary 8

g) Like-for-like Normalised Earnings 9

h) Petmin Group Balance Sheet 10 - 11

i) Somkhele production performance and cost per tonne 12

j) Forecasted sales to June 2015 and to December 2015 13

k) Pre-stripping Costs 14

2. NAIC - low cost producer of Merchant Pig Iron 16 - 17

3. Veremo update 19

4. Our Strategy – a reminder 21 - 22

Page No.

3 February 2015

Financial Highlights

Normalised Profit After Tax

Normalised earnings per share increased by 8% from 7,79cps (R45m) to 8.40cps (R47m) despite a 15% reduction in at-mine-gate export prices

Profit After Tax Profit after tax up 42% to R47m (2013:R33m)

Revenue Revenue up 95% from R356m to R694m

Ex-mine gate costs

Somkhele anthracite ex-mine gate cost per tonne decreased from R697/t to R650/t (7% improvement)

Headline Earnings

Headline earnings per share (HEPS) up 25% to 8.40cps (2013: 6.71cps)

4 February 2015

Somkhele Operational Highlights

Anthracite Production

Production of saleable anthracite increased by 27% from 534 523 to 678 002 tonnes

Yields Production yields up 3% to 44.52% (2013: 43.30%)

Energy

Coal Production of energy coal up 55% from 110 349 to 171 474 tonnes

Updated Competent Persons

Report

An updated SAMREC and SAMVAL-compliant Competent Persons Report published in February 2014 by SRK, valued Petmin’s anthracite mine at R1.64 billion (R2.84cps)

Safety Performance

Remarkable Lost Time Injury Frequency Rate of zero

5 February 2015

Somkhele Sales Highlights

Energy Coal

Sales of energy coal increased by 943% to 268 788 tonnes (2013: 25 777)

Domestic Anthracite

Market

Sales to inland metallurgical customers increased by 25% to 300 846 tonnes (2013: 240 861) as customers expansion projects were commissioned and ramped up to full production

Export Anthracite

MarketExport sales increased by 231% to 358 908 tonnes (2013: 108 553)

Anthracite Anthracite sales volumes increased by 89% to 659 754 tonnes (2013:349 414)

Energy Coal

Arbitration with Customer - outlook remains favourable

6 February 2015

NAIC Highlights

Unbundling Status

On track, unbundling of NAIC, via a distribution of a dividend in specie on track, to be concluded when the PFS is finalised

Project StatusFinal site selection trade off study and PFS underway by Hatch Engineering - Two preferred sites one in Ohio and one located in Quebec

7 February 2015

Some Strategic Considerations

Capital Allocation Share-buybacks remain a key option when allocating capital - particularly in the

current market

Long Term BEE at Somkhele

Investigating ways to establish a sustainable and meaningful long term benefit to our Community and our Employees as equity owners in Tendele (Somkhele Mine) while ensuring that any dilution is for value

Incentive Scheme

Comprehensive Scheme approved during the June 2013 AGM (for the 3 years from 1 July 2014 to 30 June 2017). To ensure improved alignment with Shareholders, we are reviewing the scheme, including period of scheme, period of pay-out of incentives, expensive cost of options and management’s desire to increase its equity holding in Petmin.

8 February 2015

Financial Performance Summary

Actual YTD

%

Actual Audited

31-Dec-14 31-Dec-13 30-Jun-14

Turnover (R’000) R 693 939 95% R 355 888 R 1 019 789

PAT (R’000) R 47 153 44% R 32 766 (R 119 425)

Headline Earnings (R’000) R 47 162 22% R 38 794 R 86 250

Weighted average shares in issue (000) 561 031 (3%) 576 908 576 908

Total share in issued at year end (000) 561 031 (3%) 576 908 576 908

EPS (c) 8.40 48% 5.68 (20.70)

HEPS (c) 8.40 25% 6.71 14.95

9 February 2015

Like for Like Normalised Earnings to December 2014

(R 000)

ActualH1 2015ended

31 Dec 2014

ActualH1 2014ended

31 Dec 2013

ActualYear ended

30 June 2014

Profit/(loss) for the year 47 153 32 766 (119 425)

Adjust for after-tax effect of:

- Loss on sale of PPE 9 5 999 5 999

- Mark to market of listed investments - 9 713 13 464

- Impairments - 1 158 200 834

- NRV impairment of inventory - 1 146 6 703

- Reversal of accrual - (5 855) (5 855)

- One-off deal expenses - - -

Normalised profit after tax 47 162 44 927 101 720

Adjusted profit per share (cents) 8.40 7.79 17.63

% increase 8%

Production and sales

Anthracite tonnes produced 678 002 534 523 1 125 089

Anthracite tonnes sold 659 754 349 414 1 026 250

Anthracite cost per tonne R 650 R697 R 708

10 February 2015

Petmin Group Balance Sheet

(R’000) Actual31 Dec 2014

Actual31 Dec 2013

Actual30 June 2014

Note

ASSETS Non-current assets 1 539 500 1 702 000 1 552 484 Property, plant and equipment 1 086 638 1 118 587 1 122 531

Investment in equity accounted investee 369 981 490 359 327 018 1

Investment/Loan -Joint Venture 57 881 64 303 77 935 2

Investments 25 000 28 751 25 000 Current assets 449 815 429 266 482 951 Inventories 216 761 296 518 264 532 3

Trade and other receivables 172 648 109 843 121 549 Current tax assets 10 350 2 772 2 095 4

Cash and cash equivalents 50 056 20 133 94 775 Total assets 1 989 315 2 131 266 2 035 435 EQUITY AND LIABILITIES

Ordinary share capital and reserves 1 199 163 1 306 043 1 169 305 5

Non-current liabilities 481 381 624 476 602 692

Interest bearing loans and borrowings 144 045 358 500 289 159 6

Deferred taxation liabilities 268 909 226 092 246 670

Environmental rehabilitation provision 68 427 39 884 66 863

Current liabilities 308 771 200 747 263 438 Trade and other payables 78 368 136 531 116 520

Current portion of non-current liabilities 190 571 21 340 75 042 6

Bank overdraft 39 832 42 876 71 876 Total equity and liabilities 1 989 315 2 131 266 2 035 435Net Gearing (interest bearing debt/equity) 27.05% 30.82% 29.19%

11 February 2015

Petmin Notes to the Group Balance Sheet

1. Final $6 million investment in NAIC (of total $25 million to obtain a 40% shareholding in NAIC) to be made in 2015 financial year. ($1m in 6 months paid in the six months to 31 Dec 2014 and $5m to be paid in H2 FY2015).

2. Somkhele Plant JV repaid R11 million of Tendele’s loan account during the period to 31 December 2014

3. Inventories are now reducing from the June 2014 levels as sales volumes have ramped up.

4. Current tax assets increase by R8 million as Tendele paid provisional tax in December 2014 as Tendele has utilised its unredeemed capital tax shield.

5. 11,565,606 treasury shares were acquired in the six months to 31 December 2014 at an average cost of R1.58 per share for a total consideration of R18 million. Petmin now holds 15,877,062 or 2,75% of its own shares.

6. During the six months ended 31 December 2014, third Party debt reduced by R30 million. The short-term portion of third-party debt increases at 31 December 2014 as capital repayments on the Standard Bank R225 million Term Loan commenced in December 2014 and the R100m Standard Bank RCF is due to be repaid in one lump sum in December 2015

12 February 2015

Somkhele production performance and cost per tonne to December 2014 

Cost Per TonneActual YTD

%Actual Audited

31-Dec-14 31-Dec-13 30-Jun-14

Average cost at mine gate per tonne (R) R 650 R697 R 708

Cost of run-of-mine coal R 379 (16%) R 449 R 443

Plant Processing and product handling R 117 (4%) R 122 R 128

Overhead/infrastructure costs R 80 19% R 67 R 73

State royalty R 16 700% R 2 R 2

Interest R 23 (18%) R 28 R 27

Depreciation R 35 13% R 31 R 35

Somkhele Production PerformanceActual YTD

%Actual Audited

31-Dec-14 31-Dec-13 30-Jun-14

Run of Mine (ROM) tonnes washed 1 523 051 23% 1 234 380 2 688 563

Yield 44.52% 3% 43.30% 41.85%

Anthracite saleable tonnes produced 678 002 27% 534 523 1 125 089

Anthracite tonnes sold 659 754 89% 349 414 1 026 250

Discard tonnes washed 669 292 26% 530 215 1 174 419

Yield 25.62% 23% 20.81% 20.80%

Energy coal saleable tonnes produced 171 474 55% 110 349 244 298

Energy coal sold 268 788 943% 25 777 174 556

13 February 2015

Forecast sales to June 2015 and to December 2015

Market/productConfirmed

(31/12)Confirmed

(30/06)Unconfirmed Total

Export 358 908 260 000 25 000 643 908

Inland 300 846 318 188 - 619 034

Total Anthracite 659 754 578 188 25 000 1 262 942

Energy Coal 268 788 215 000 - 483 788

Forecasted sales for the year to June 2015

Market/product Confirmed Unconfirmed Total

Export 250 000 80 000 330 000

Inland 330 000 - 330 000

Total Anthracite 580 000 80 000 660 000

Energy Coal 135 000 135 000

Forecasted sales for 6 months to December 2015

14 February 2015

Pre-stripping costs

Somkhele: Pre-strip costs December 2014 December 2013

Opening balance on balance sheet 305 328

Cash spend in the period 227 226

Mining – expensed on units of production basis (Depreciation)

(265) (232)

Closing balance on the balance sheet 267 322

Petmin incurred cash stripping costs amounting to R227 million during the current period (2013: R226 million). It is Petmin’s accounting policy to record the cash cost incurred on these stripping activities as additions to mine development cost under property plant and equipment (a non-current asset).

These capitalised cash costs are expensed (depreciated) as coal is extracted. This is done on a units-of-production basis over the life of the component of the ore body to which access is improved and amounts to R265 million during the current period (2013: R232 million). This resulted in a net decrease in the capital expenditure capitalised to pre-stripping activities of R38 million during the current period (2013: decrease of R6 million).

The depreciation is, in reality, the mining cost (stripping cost) that is expensed during the period when run-of-mine coal is removed from the pit.

NAIC – Low Cost Producer of Merchant Pig Iron (MPI)

16 February 2015

PIG IRON MANUFACTURER

17 February 2015

NAIC

PFS and final site selection trade-off analysis underway, to be concluded by June 2015

• Proven viability of NAIC’s project based on the PEA, yielding an unlevered after tax IRR of circa 20% (Plant 1 will produce circa 900,000mt of MPI per annum)

• A comprehensive site selection process for the location of its first MPI plant, the favoured locations are Quebec and Ohio. HATCH Engineering concluding a final trade-off analysis and PFS

The unbundling of NAIC shares to shareholders and the separate listing of NAIC remains on track, to

be implemented once PFS finalised

• Petmin to exchange its equity in NAIC at a circa ZAR 300m for equity in Muskrat Minerals Incorporated (“MMI”)

• MMI to list on a major US or Canadian Stock Exchange with a secondary listing on the JSE and Petmin to distribute the MMI shares to shareholders by way of a special dividend (estimated value approximately ZAR0,50 cents per Petmin share)

Petmin’s investment in NAIC to date is R269m

• Petmin currently owns 34.1% of NAIC and has the right to invest a further $5m into NAIC for a further 5.9%, and an option to acquire a further 9.9% at a market related price. Petmin will be issued a further 1% of NAIC by June 2015 and further 1.5% of NAIC upon completion of the Bankable Feasibility Study (BFS)

Petmin entitled to receive management consulting fees of $600 000 over 2 years from NAIC

Post unbundling Petmin management will remain actively involved in the development of NAIC and

secure long term value for Petmin’s shareholders in NAIC

Veremo Update

19 February 2015

Veremo status

Outstanding Claims of R 130 million as at 31 December 2014 (and R 195 million as at 28 February

2015)

• Discussions to resolve the dispute ongoing. Legal proceedings instituted

Project issues

• Mining Right obtained on 31 January 2014, to be executed in Limpopo Province

• Mintek signed off on smelt test (Pig Iron 95% and Titanium Slag, 62%)

• Project Team in the process of preparing 10MWA DC Arc furnace to do comprehensive smelt test and

process some 40 000 tons of Veremo Ore to produce some 18 000 tons of Pig Iron

• Once the Mining Right is executed, mine development can commence

• Water Licence remains outstanding

• Mine Site power outstanding

Strategy – A Reminder

21 February 2015

2014 – 2019Potentially through one

transaction or a series of transactions including

mergers and unbundling

Petmin vision: To develop into a geographically-diversified multi-commodity mining company delivering sustainable and superior returns to shareholders

• Organic and acquisitive growth • Focusing on a mix of quality cash-producing assets and projects that create “optionality”• Capitalise on the steel value chain focusing on commodities that support infrastructure development and urbanisation

Strategy

• “Leadership at the Corporate Centre” implements board-approved strategies and sets the tone for the business• The role of the Corporate Centre is to allocate capital and employ the best possible teams for projects and operations• The management system is decentralised and each management team is disciplined, innovative and entrepreneurial

Leadership

• To deliver sustained and superior risk-adjusted returns (capital growth, cash dividend and dividend in specie) to its stakeholders

Goal

Petmin 2014 Petmin “sum of the parts” 2019

• Market Cap ~ R 1.0 Billion • JSE Main Board• 100% of Tendele , Anthracite cash producing in SA• Minority % in Veremo, Pig Iron, SA • Up to 40% NAIC, Pig iron projects, North-America

• Market Cap > R 4 Billion (25% compound growth per annum )

• Infrastructure Based Commodities – mix of cash producing operations & projects

• South Africa Assets <50% of NAV

Commodities

Petmin is focused on infrastructure development and urbanisation commodities: • Copper• Iron Ore• Pig-iron• Metallurgical coals (coking & anthracite)• Manganese• Thermal Coal (Eskom and exports)• Other steel additives• Stainless Steel additives• Opportunistic cash producing assets

Investment Criteria

Petmin will invest in politically-stable countries with security of tenure:• Opportunities must have a long potential life ie. >15 years• The ore body must be of high quality and yield a return

(IRR) of at least 15% Operations must be at the bottom 50% of the cost curve

• Projects should be able to produce cash within 36 months• Dividend and gearing policies to be maintained

Type of deal

Commercially sound, deliver sustained and superior risk-adjusted returns.• Petmin has a phased approach to investment in projects• We ensure joint management control at project level • We set upfront, predetermined deliverables that determine

if the projects proceed or not• Our aim is to partner with reputable BEE entities and local

communities in SA and strong local partners internationally • Over time increase our stake at a predetermined price

based on clearly determined milestones

22 February 2015

Petmin strategy

Focus On steel value chain and commodities for urbanisation and infrastructure development

PerformanceDeliver superior returns (capital growth and dividends) through efficient operations and well-timed divestment

Growth Organic and acquisitive

Optionality Created by mix of quality cash-producing assets and high-potential projects

Diversify Geographically and by specific commodity

Execution Decentralised management empowered by executive team to deliver

23 February 2015

Disclaimer

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24 February 2015

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