THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION.

THIS DOCUMENT SHOULD BE READ IN CONJUNCTION WITH PETMIN’S INTEGRATED REPORT, ANNUAL FINANCIAL STATEMENTS, PRELIMINARY 2015 RESULTS AND THE DETAILED COMPETENT PERSONS REPORT WHICH ARE ALL

AVAILABLE ON THE COMPANY’S WEBSITE AT www.petmin.co.za

If you are in any doubt as to the action you should take in relation to this circular, please consult your CSDP, stockbroker, banker, accountant, attorney or other professional advisor immediately.

Action required

• If you have disposed of all your ordinary shares in Petmin, then this circular and all annexures hereto, together with the attached notice of general meeting and form of proxy should be handed to the purchaser of such ordinary shares or to the stockbroker, CSDP, banker or other agent through whom the disposal was effected.

• Ordinary shareholders holding certificated shares and own name dematerialised shareholders, registered in their own name, who are unable to attend the general meeting to be held at 10:00 on Monday, 9 November 2015 at 37 Peter Place, Bryanston, Johannesburg, should complete the attached form of proxy in accordance with the instructions contained therein and lodge it with the transfer secretaries, Computershare, at 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107) so as to be received by not later than 10:00 on Friday, 6 November 2015.

• Shareholders holding dematerialised shares, other than own name dematerialised shareholders, who wish to attend the general meeting or to vote by way of proxy, must contact their CSDP or stockbroker who will furnish them with the requisite authority(Letter of Representation) to attend the general meeting or to be represented thereat by proxy. This must be done in terms of the relevant custody agreement.

• Petmin does not accept any responsibility and will not be held liable for any failure on the part of any CSDP or broker of a dematerialised shareholder to notify such shareholder of the general meeting or any business to be concluded thereat.

PETMIN LIMITEDIncorporated in the Republic of South Africa

Registration number 1972/001062/06Share code JSE: PET ISIN: ZAE000076014

(“Petmin” or “the Company”)

CIRCULAR TO SHAREHOLDERS OF PETMINregarding• the approval of the BEE Transaction; and• the sanctioning of any financial assistance to be provided by the Company in relation to the BEE

Transaction;

and incorporating• a notice convening a general meeting of Petmin shareholders; and• a form of proxy – for use by certificated shareholders and own name dematerialised shareholders’

registration only.

Date: 6 October 2015

This circular is available in English only. Copies may be obtained from the registered office of Petmin and from the transfer secretaries, whose addresses are set out in the “Corporate Information” section of this circular.

Sponsor and Corporate Advisor

Attorney and Legal Adviser

Reporting Accountants

Advisers to the Transaction

Competent Person

Financiers and Transaction Funder

Siyakhula Sonke Empowerment Corp (Pty) Ltd

Simukai Consulting CC

RIVERGROUP

srk consulting

CORPORATE INFORMATION

Registered addressFirst Floor37 Peter PlaceBryanston2021Johannesburg(PO Box 6070, Rivonia, 2128)

Sponsor and corporate advisorRiver GroupNo. 1, Kloof Trio211 Kloof StreetWaterkloof0181(PO Box 2579, Brooklyn Square, 0075)

Transfer secretariesComputershare Investor Services (Proprietary) Limited70 Marshall StreetJohannesburg2001(PO Box 61051, Marshalltown, 2107)

Company secretaryMondial Consultants (Proprietary) LimitedBlock D, Midridge Office EstateInternational Business GatewayCorner New Road and 6th StreetMidrand1686Johannesburg

Independent expertSRK Consulting265 Oxford RoadIllovo2196Johannesburg(PO Box 55291, Northlands, 2116)

Reporting accountants and auditorsKPMG IncKPMG Crescent,85 Empire RoadParktown2193(Private Bag 9, Parkview, 2122)

Legal advisorsCliffe Dekker Hofmeyr Inc1 Protea PlaceSandown2196 SandtonJohannesburg(Private Bag X40, Benmore, 2010)

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TABLE OF CONTENTS

Page

CORPORATE INFORMATION Inside front cover

INTERPRETATION AND DEFINITIONS 2

IMPORTANT DATES AND TIMES 6

EXECUTIVE SUMMARY 7

CIRCULAR TO SHAREHOLDERS

Introduction 11

Prospects of the business 11

THE TRANSACTION

Introduction and rationale 12

The Transaction 12

Pro forma effects of the Transaction 20

GENERAL

General meeting of shareholders 23

Share capital 23

Directors 24

Costs 25

King Code 25

Advisors and experts consents 26

Litigation statement 26

Material changes 26

Working capital statement 26

Material contracts 26

Documents available for inspection 27

Documents incorporated by reference 27

Annexure A: Petmin Limited Preliminary Results for the year ended 30 June 2015 28

Annexure B: Historical Financial Information of Tendele Coal Mining (Proprietary) Limited 38

Annexure C: Reporting Accountants’ Report on the Historical Information of Tendele Coal Mining (Proprietary) Limited 61

Annexure D: Independent Reporting Accountants’ Assurance Report on the compilation of Pro forma Financial Information on Petmin 64

Notice of general meeting 66

Form of proxy Attached

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INTERPRETATION AND DEFINITIONS

In this circular and the annexures hereto, unless inconsistent with the context:• the singular includes the plural and vice versa;

• the masculine gender includes the other genders;

• a reference to a person includes a body corporate or unincorporated and vice versa; and

• the following words and terms in the first column shall have the meanings assigned to them in the second column

“”A” Preference Shares” 54 (fifty four) cumulative redeemable “A” preference shares of BEE SPV to be designated as “A Preference Shares” and issued by BEE SPV to Depfin pursuant to the terms of the “A” Preference Share Subscription Agreement;

“” A” Preference Share Subscription Agreement”

the agreement headed “Preference Share Subscription Agreement” dated 24  July  2015, entered into between BEE SPV, Depfin and Nedbank, in terms of which Depfin will subscribe for the “A” Preference Shares in order to fund a portion of the BEE Transaction;

“B-BBEE Act” the Broad-Based Black Economic Empowerment Act, No.53 of 2003;

“BEE” black economic empowerment as contemplated in the BBBEE Act and the BEE Codes;

“BEE Codes” the Codes of Good Practice on BEE published on 11 October 2013 in terms of section 9 of the BBBEE Act;

“BEE SPV” Business Venture Investments No 1770 (RF) Proprietary Limited, registration number 2013/145357/07, a limited liability private company duly incorporated in South Africa – which will be the 20% shareholder of Tendele after the approval of this transaction and will be owned by the Share Trust (20%) and the Community Trust (80%);

“BEE SPV MOI” the memorandum of incorporation of BEE SPV adopted on or about 24 July 2015 and filed with the CIPC;

“ BEE SPV Subscription Agreement”

the agreement headed “Subscription Agreement” entered into on 24 July 2015 between the Share Trust, the Community Trust and BEE SPV in terms of which, inter alia, the Share Trust and the Community Trust will subscribe for ordinary shares in BEE SPV;

“BEE Subscription Shares” 40 (forty) Tendele Shares which will constitute, after their issue, 20% (twenty percent) of all of the issued shares in Tendele;

“BEE Transaction” or “transaction”

the BEE transaction which is the subject of this circular as set out in the Transaction Agreements in terms of which, inter alia, BEE SPV will acquire 20% (twenty percent) of all of the issued shares in Tendele with the effect from the Effective Date;

“”B” Preference Shares” 80 (eighty) cumulative redeemable “B” preference shares of BEE SPV to be designated as “B Preference Shares” and issued pursuant to the terms of the “B” Preference Share Subscription Agreement;

“” B” Preference Share Subscription Agreement”

the agreement headed ““B” Preference Share Subscription Agreement” entered into on 24 July 2015 between Petmin and BEE SPV in terms of which Petmin will subscribe for the “B” Preference Shares in order to fund a portion of the BEE Transaction;

“Board of Directors” or “directors” or “Board”

the board of directors of Petmin as at the last practicable date;

“business day” any day other than Saturday, Sunday or an official public holiday in South Africa;

“certificated shareholder” a holder of certificated shares;

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“certificated shares” shares which are not dematerialised, title to which is represented by physical documents of title;

“CIPC” Companies and Intellectual Property Commission;

“circular” this circular dated 5 October 2015, including the annexures and attachments thereto, as well as the notice of general meeting and form of proxy;

“Community” means any natural person or persons who are Black People up to and including the age of 25 (twenty five) years forming part of the Community and who was born and/or is ordinarily residing in the Community, designated as such by the Trustees from time to time in their sole discretion;

“Community Trust” the trustees for the time being of the Mpukunyoni Youth Development Trust, Master’s reference number 235/2015 (G), a trust established in accordance with the laws of South Africa and of which at least 50% of the trustees must be independent;

“Companies Act” the Companies Act, No 71 of 2008, as amended;

“Computershare” Computershare Investor Services (Proprietary) Limited, registration number 2004/003647/07, a private company incorporated in South Africa;

“”C” Preference Shares” a maximum of 400 (four hundred) cumulative redeemable “C” preference shares of BEE SPV to be designated as “C Preference Shares” and issued pursuant to the terms of the “C” Preference Share Subscription Agreement;

“” C” Preference Share Subscription Agreement”

the agreement headed ““C” Preference Share Subscription Agreement” entered into or to be entered into between Petmin, BEE SPV and Depfin, on 24 July 2015, in terms of which Depfin will have the right to require Petmin to subscribe for a certain number of “C” Preference Shares if and to the extent that BEE SPV does not have sufficient available funds to pay preference dividends and/or redemption amounts that are scheduled to be paid on account of the “A” Preference Shares;

“CSDP” a Central Securities Depository Participant, accepted as a participant in terms of the Financial Markets Act, appointed by an individual shareholder for the purposes of, and in regard to dematerialisation;

“custody agreement” the custody mandate agreement between a dematerialised shareholder and a CSDP or broker governing their relationship in respect of dematerialised shares held by the CSDP or broker;

“dematerialised” the process whereby share certificates, certified transfer deeds, balance receipts and any other documents of title to shares in a tangible form are replaced with electronic records of ownership for purposes of incorporation into Strate;

“dematerialised shareholder” holder of dematerialised shares;

“dematerialised shares” shares which have been dematerialised and incorporated into Strate and which are no longer evidenced by share certificates or other physical documents of title, but the evidence of ownership of which is determined electronically and recorded in the sub-register maintained by a CSDP;

“Depfin” Depfin Investments Proprietary Limited, registration number 1982/006127/07, a limited liability private company duly incorporated in South Africa and a subsidiary of Nedbank;

“Effective Date” the 5th (fifth) business day after the date on which the last of the suspensive conditions to the Transaction Agreements is fulfilled or waived, as the case may be;

“Facility” a revolving credit facility provided by Nedbank to Tendele in a maximum principal amount of R230 000 000 (two hundred and thirty million Rand);

“Financial Markets Act” Financial Markets Act, 2012 (Act 19 of 2012), as amended;

“general meeting” the general meeting of Shareholders to be held in the boardroom, 37 Peter Place, Bryanston, Johannesburg on Monday, 9 November 2015, or any adjournment thereof;

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“the Group” or “the Petmin Group”

the Company and any of its direct or indirect subsidiaries;

“JIBAR” in relation to any interest period, the rate for the period which most closely approximates such interest period which appears on the Reuters Screen SAFEY Page as at 11:00 South African standard time on the 1st (first) day of such interest period;

“JSE” JSE Limited, registration number 2005/022939/06, a public company incorporated in South Africa being registered as an exchange under the Financial Markets Act;

“Listings Requirements” the listings requirements of the JSE as amended from time to time;

“last practicable date” 5 October 2015, being the last practicable date prior to the finalisation of this circular;

“ Management and Marketing Agreement”

the agreement headed “Management and Marketing Agreement” dated 24 July 2015 entered into between Tendele and Petmin, in terms of which Petmin will provide certain management and marketing services to Tendele;

“MMC” Mpukunyoni Mining Proprietary Limited, registration number 2005/034981/07, a limited liability private company duly incorporated in South Africa – Petmin’s contract miner;

“ Mpukunyoni Community” means the local Mpukunyoni traditional community in the Hlabisa Local Municipality in the Province of KwaZulu-Natal, South Africa, recognised as such in terms of Traditional Law, provided that such community constitutes a sector of the general public at large and is not a small and exclusive group;

“Mining Charter” the Broad-Based Socio-Economic Empowerment charter for the South African Mining and Minerals Industry;

“Nedbank” Nedbank Limited (acting through its Nedbank Capital division), registration number 1951/000009/06, a registered bank and public company duly incorporated according to the banking and company Laws of South Africa;

“ own name dematerialised shareholders”

shareholders that have dematerialised their shares through their CSDP and have instructed their CSDP to register their shares in their own name on the sub-register (the list of shareholders maintained by the CSDP and forming part of Petmins’ share register);

“Petmin” or “the Company” Petmin Limited, registration number 1972/001062/06, a limited liability public company duly incorporated in South Africa;

“ Preference Share Subscription Agreements”

the “A” Preference Share Subscription Agreement, “B” Preference Share Subscription Agreement and “C” Preference Share Subscription Agreement;

“Rand” or “R” the currency of South Africa;

“Restricted Period” the period commencing on the issue date of the “A” Preference Shares and ending on the day falling three years and one day after such issue date;

“RCF Agreement” the agreement headed “ZAR230 000 000 revolving credit facility agreement” dated 24  July  2015, entered into between Tendele and Nedbank in terms of which, Nedbank will make the Facility available to Tendele;

“Relationship Agreement” the agreement headed “Relationship Agreement” dated 24  July  2015, entered into or to be entered into between Petmin, Tendele, the trustees for the time being of the Community Trust, the trustees for the time being of the Share Trust and BEE SPV governing, inter alia, the BEE considerations pertaining to the relationships between Tendele, Petmin and BEE SPV;

“registered shareholder” a shareholder of shares registered as such in the share register of Petmin;

“SENS” the Stock Exchange News Service of the JSE;

“shares” ordinary shares of 25 cents each in the issued share capital of Petmin;

“shareholders” the registered holders of ordinary shares in Petmin;

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“Share Trust” or “EBS” the trustees for the time being of the Tendele Economic Benefits Sharing Scheme Trust, Master’s reference number 234/2015 (G), a trust established in accordance with the laws of South Africa and of which Tendele may only appoint two of the six trustees the other four have to be appointed by the employees and the unions;

“Somkhele” or “mine” Somkhele anthracite mine owned and operated by Tendele, situated approximately 85 (eighty five) kilometres North of Richards Bay, in KwaZulu-Natal, South Africa;

“South Africa” the Republic of South Africa;

“Strate” Strate (Proprietary) Limited, registration number 1998/022242/07, a private company duly incorporated in accordance with the laws of South Africa and which company operates the settlement and clearing system used by the JSE;

“Subordination Agreement” the agreement headed “Subordination Agreement” dated 24  July  2015 entered into between Petmin, BEE SPV, Tendele, Depfin and Nedbank in terms of which Petmin will subordinate its claims against Tendele and BEE SPV in favour of Depfin and Nedbank;

“Tendele” Tendele Coal Mining Proprietary Limited, registration number: 1997/021507/07, a limited liability private company duly incorporated in South Africa and wholly owned subsidiary of Petmin;

“Tendele MOI” the memorandum of incorporation of Tendele as at the Effective Date;

“ Tendele Shareholders Agreement”

the agreement headed “Shareholders Agreement” entered into on 24  July  2015 between Petmin, BEE SPV and Tendele governing the relationships between the shareholders of Tendele inter se and between Tendele and its shareholders;

“Tendele Shares” ordinary shares of R1.00 (one Rand) each in Tendele;

“ Tendele Subscription Agreement”

the agreement headed “Subscription Agreement” dated 24  July  2015 entered into between BEE SPV and Tendele in terms of which BEE SPV will subscribe for the BEE Subscription Shares;

“Traditional Law” the Traditional Leadership and Governance Framework Act, No.4 of 2003, the KwaZulu-Natal Traditional Leadership and Governance Act, No. 5 of 2005 and any other law applicable to the governance of the Mpukunyoni Community;

“Transaction Agreements” shall have the meaning ascribed to “Transaction Documents” in the “A” Preference Share Subscription Agreement, being the agreements in relation to the BEE Transaction including, but not limited to, the trust deed of the Community Trust, the trust deed of the Share Trust, the Relationship Agreement, the Preference Share Subscription Agreements, the BEE SPV MOI, the BEE SPV Subscription Agreement, the Tendele MOI, the Tendele Subscription Agreement, Tendele Shareholders Agreement, the Management and Marketing Agreement, the RCF Agreement and the Subordination Agreement;

“a subsidiary” a subsidiary company as defined in the Companies Act; and

“transfer secretaries” the transfer secretaries of Petmin, namely Computershare.

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IMPORTANT DATES AND TIMES

The dates and times below relate to the transaction

2015

Record date in order to determine which shareholders are entitled to receive the circular

Friday, 25 September

Last day to trade in order to be eligible to vote at the general meeting on Friday, 23 October

Record date in order to be eligible to vote at the general meeting on Friday, 30 October

Last day for receipt of forms of proxy for the general meeting by the Transfer secretaries, by 10:00 on

Friday, 6 November

General meeting to be held at 10:00 at 37 Peter Place, Bryanston, Johannesburg on

Monday, 9 November

Results of general meeting announced on SENS on Tuesday, 10 November

Notes:

1. The above dates and South African times are subject to change. Any changes will be released on SENS.

2. The general meeting will be held to consider and, if deemed fit, to pass, with or without modification, the resolutions necessary to approve the BEE Transaction.

3. Shareholders who hold certificated shares or hold own name dematerialised shares, who are unable to attend the general meeting but wish to be represented thereat must complete and return the attached form of proxy (white) in accordance with the instructions contained therein to the transfer secretaries, to be received by no later than 10:00 on Friday, 6 November 2015.

4. Beneficial shareholders who have dematerialised their shares through a CSDP or stockbroker, other than those in own name, must provide the CSDP or stockbroker with their voting instruction in the manner and time stipulated in the relevant custody agreement. Alternatively, they must request the CSDP or stockbroker to provide them with a letter of representation should they wish to attend the meeting in person in terms of the custody agreement entered into between the beneficial shareholder and the CSDP or stockbroker.

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EXECUTIVE SUMMARY

1. INTRODUCTION

From inception, it has been Petmin’s strategic intention to embrace the spirit of BEE for the mining industry, as determined in the Mining Charter and the Mineral and Petroleum Resources Development Act (MPRDA).

Petmin believes that to ensure long term sustainable empowerment at all its operations, it is imperative that, in addition to B-BBEE shareholding in Petmin, local communities and employees become owners so that they can participate and share in the rewards of its operations.

As part of this commitment to transformation and the imperative for B-BBEE at operational level, Petmin wishes to advise shareholders that it has entered into a comprehensive BEE Transaction.

On conclusion of the BEE Transaction, Petmin’s shareholding in Tendele, the company that owns Petmin’s flagship Somkhele anthracite mine, will be reduced from 100% to 80%.

The remaining 20% shareholding in Tendele will be held directly by BEE SPV, which in turn will be held 80% by the Community Trust and 20% held by EBS.Additionally, Tendele will contribute to the Community Trust:• a “founder’s contribution” of ZAR2.4 million;• an annual guaranteed payment of ZAR1 million and;• an additional annual payment of ZAR166 670 for every 50 000 tonnes of anthracite produced at the

mine in excess of 900 000 tonnes, capped at ZAR1 million.

Furthermore, Tendele will pay to the EBS:• an annual guaranteed payment of ZAR1 000 per employee; and• an additional annual payment of ZAR1 000 per employee during any financial year in which annual

production at the mine exceeds 900 000 tonnes of anthracite.

2. THE BEE TRANSACTION

BEE SPV will subscribe for 20% of all of the ordinary shares in Tendele for a subscription consideration of R350 million based on Tendele’s Somkhele project valuation of R1,56 billion as set out in the CPR available on the Petmin website at http://www.overend.co.za/download/tendele-cpr-2015-final.pdf to this circular.

BEE SPV will be capitalised through the issue of “A” redeemable preference shares to Depfin, a wholly owned subsidiary of Nedbank Limited, for ZAR270 million and “B” redeemable preference shares to Petmin for ZAR80 million, comprising of an aggregate subscription consideration of ZAR350 million.

The subscription proceeds will be solely used by the BEE SPV to subscribe for new shares to be issued by Tendele, resulting in the BEE SPV directly owning 20% shareholding in Tendele.

The Community Trust will acquire 80% (eighty percent) of the ordinary shares in the BEE SPV and will be entitled to nominate two directors to the board of the BEE SPV. The Community Trust will be entitled to nominate one director to the Tendele Board.

The beneficiaries of the Community Trust are the youth of the Mpukunyoni community and all benefits flowing from the equity holding will be used for their development.

In addition, Tendele will contribute to the Community Trust (for the sole purpose of supporting projects benefiting the beneficiaries), the following:

• a “founder’s contribution”, in aggregate, not exceeding an amount of ZAR2.4 million;

• an annual guaranteed payment of ZAR1 million; and

• an additional annual payment of ZAR166 670 for every 50 000 tonnes of anthracite produced at the mine in excess of 900 000 tonnes, capped at ZAR1 million.

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A member of the Traditional Council of the Mpukunyoni Community, established in terms of Traditional Law, will be a permanent trustee and at least 50% of the trustees will be independent. No trustee fees will be paid for serving as such.

EBS will acquire 20% (twenty percent) of the ordinary shares in BEE SPV and will be entitled to nominate two directors to the board of the BEE SPV. The EBS Trust will be entitled to nominate one director to the Tendele Board.

Furthermore, Tendele will pay to the EBS:

• an annual guaranteed payment of ZAR1 000 per employee; and• an additional annual payment of ZAR1 000 per employee during any financial year in which annual

production at the mine exceeds 900 000 tonnes of anthracite.Those eligible to be beneficiaries of the EBS are employees of Tendele, employees of any company in which Tendele holds at least 35% of the total issued shares, and employees of any company which has a current service agreement with a duration of longer than 1 (one) year with Tendele or Mpukunyoni Mining (Pty) Ltd, where such service is directly related to mining and or processing of waste or run-of-mine material. A maximum of three out of a maximum of six trustees per union will be appointed by the unions that have a recognition agreement with Tendele, resulting in a minimum of 50% of the trustees being independent.

As soon as reasonably possible after the BEE SPV has discharged all of its obligations under the Preference Share Subscription Agreements BEE SPV will be required to distribute its 20% equity in Tendele as a “dividend in specie” to the Community Trust and EBS. EBS has a further option to acquire an additional 4% of Tendele Equity at fair value at the time all preference shares of the BEE SPV are redeemed.

The Community Trust and EBS will not be entitled to dispose of their equity in Tendele, other than as permitted or expressly implied in the Transaction Agreements.

3. FINANCING TERMS OF THE TRANSACTION

The transaction will be financed by a series of redeemable preference shares to be issued by the BEE SPV as follows:

• Depfin will subscribe for “A” redeemable Preference Shares at an aggregate subscription price of ZAR270 000 000 (two hundred and seventy million Rand);

• Petmin will subscribe for 80 (eighty) “B” redeemable Preference Shares at an aggregate subscription price of ZAR80 000 000 (eighty million Rand); and

• Petmin may be obliged to subscribe for “C” Preference Shares if, and to the extent that the BEE SPV defaults in respect of its payment obligations under the “A” Preference Shares, effectively guaranteeing the obligations of the BEE SPV to ensure its sustainability.

The “A” redeemable Preference Shares will be redeemed from dividends to be received from Tendele, and the “B” redeemable Preference Shares will rank behind the “A” redeemable Preference Shares.

4. CONDITIONS PRECEDENT

The transaction is subject to the approval by the various regulatory and statutory authorities and fulfilment of all of the conditions precedent which inter alia require that the shareholders of Petmin have provided any and all approvals required for the implementation of the B-BBEE Transaction, including any approvals required in terms of the Companies Act and the Listings Requirements of the JSE Limited.

Each of the parties to the BEE Transaction will, to the extent it is within their control, use their reasonable commercial endeavours to procure fulfilment of the aforementioned conditions precedent as soon as reasonably possible.

5. FINANCIAL EFFECTS

The table below sets out the pro forma financial effects of the above transaction, based on Petmin’s reviewed preliminary results for the year ended 30 June 2015. The financial effects are presented for illustrative purposes only and because of their nature may not provide a fair reflection of the Group`s results, financial position, changes in equity after the transaction, results of operations or cash flows.

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It has been assumed for the purposes of the pro forma financial effects that the above transaction took place as at 30 June 2015 for the statement of financial position and for the period 1 July 2014 to 30 June 2015 for the income statement. The directors of Petmin are responsible for the preparation of the financial effects. These pro forma financial effects should be read in conjunction with the pro forma financial information as set out in paragraph 2.3 of the circular to shareholders and the Independent Reasonable Reporting Accountants’ report on the pro forma financial effects as set out in Annexure C.

It has been assumed that Tendele will, on closing, receive ZAR350 million in cash and will utilise this cash to reduce its debt (including a repayment to Petmin of a portion of Petmin’s existing loan claim against Tendele in an amount equal to the difference between the Cash held by Tendele and ZAR150 000 000) and hence will in future benefit from a reduced interest cost.

Before the transaction(1) Adjustments(2)

Pro forma after

the transaction

Percentage changeReviewed 30 June 2015

Weighted average number of shares (000’s shares) 544 100 – 544 100 0

Shares for net asset value calculation (000’s shares) 544 100 – 544 100 0

Basic earnings per share (cents) 22.98 (1.67) 21.31 (7.27)

Basic headline earnings per share (cents) 24.28 (1.67) 22.61 (6.88)

Net asset value per share (cents) 236 – 236 (0.00)

Tangible net asset value per share (cents) 236 – 236 (0.00)

Notes and assumptions:

1. the “before” financial information has been extracted, without adjustment, from the published preliminary group results of Petmin for the year ended 30 June 2015 reviewed by KPMG Inc.

2. the “adjustments” column reflects the effects of the transaction contemplated above and includes the impact of the ZAR2.4 million founder’s contribution to the Community Trust.

The assumptions used above are:

• historical earnings remain constant;

• the cash received of R500 million has been utilised to settle debt of R236 million, transactions costs of R16 million and with surplus cash used to settle R230 million of the new debt facility;

• an interest saving of R5 million has been accounted for the year;

• the profits and cash flow of Tendele will finance the financing structure; and

• transaction costs of R16 million will be capitalised to cost of debt.

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3. BEFORE AND AFTER STRUCTURE

The current structure of Tendele before the conclusion of the BEE Transaction:

Petmin

100%

Tendele

The new structure of Tendele after the conclusion of the BEE Transaction:

Mpukunyoni Youth Development Trust

Tendele Economic Benefits Sharing Scheme Trust

Petmin

80% 20% 80%

BEE SPV 20% Tendele

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PETMIN LIMITEDIncorporated in the Republic of South Africa

Registration number 1972/001062/06Share code JSE: PET ISIN: ZAE000076014

(“Petmin” or “the Company”)

DirectorsExecutive:ALK Mogotsi (Executive Deputy Chairman)JC Du Preez (Chief Executive Officer)BP Tanner (Financial Director)BB Doig (Business Development Director)

Non-executive:I Cockerill (Non-executive Chairman)E GreylingM ArnoldK KalyanTD Petersen

1. CIRCULAR TO SHAREHOLDERS

1.1 Introduction

Petmin is a high growth multi-commodity mining company, geographically diversified with mining operations in South Africa, and a development project in Canada and North America. The Company is focused on commodities that support the steel value chain and are required for urbanisation and infrastructure growth. It is South Africa’s leading producer of metallurgical anthracite, and is developing a high-potential iron sands to pig iron project in Canada.

The purpose of this circular and the accompanying notice of general meeting and form of proxy is to provide shareholders with the relevant information relating to the BEE Transaction, to give notice of the general meeting to shareholders and to enable shareholders to make an informed decision as to whether or not they should vote in favour of the resolutions proposed and set out in the notice of the general meeting.

Details of Petmin subsidiaries including name, date, registrations number and share capital details are available in Petmin’s Annual Financial Statements 2014 on pages 40 – 45 at http://www.petmin.co.za/pdf/integrated-report/afs-2014.pdf.

1.2 Prospects of the business

Petmin’s management teams have a track record of delivering value to shareholders through operational efficiency combined with well-timed acquisitions and disposals. Petmin’s vision is to develop into a geographically diversified multi-commodity mining company that delivers sustained and superior returns to shareholders through capital growth and payment of dividends. The Company’s strategy is to grow through expansion of its cash-producing assets, and acquisition and development of high-potential projects into profitable operations, while retaining the option to dispose of assets at the maximum point of return. Petmin is currently focusing on projects that are either in production and/or “near cash”.

Petmin is focused on the steel value chain and commodities required for urbanisation and infrastructure. The Company continues to diversify geographically and by commodity. A mix of quality cash-producing assets and phased investment in high-potential projects enables Petmin to reduce its risk and retain a high degree of optionality.

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2. THE TRANSACTION

2.1 Introduction and rationale

Further to its commitment to transformation in South Africa and the imperative for broad-based BEE (“B-BBEE”), Petmin has taken the strategic decision to implement the BEE Transaction.

Somkhele is South Africa’s largest producer of metallurgical-grade anthracite and is operated by Petmin’s wholly-owned subsidiary Tendele. Somkhele has significantly enhanced the lives of thousands of people in the Community, which Community provides more than 80% of the people employed by the mine. Petmin has created more than 900 permanent jobs at Somkhele since the mine was commissioned from a greenfield site in 2007. One of the long-term objectives of Somkhele is to enhance the lives of people in the Mpukunyoni Community over the life of the mine and beyond.

It is Petmin’s strategic intention to embrace the spirit of BEE and, while Petmin has adhered to the requirements as determined by the Mining Charter and the Mineral and Petroleum Resources Development Act, No. 28 of 2002, Petmin believes that to ensure long term sustainable empowerment at all its operations, it is imperative that the local community and employees become owners and share in the risk and rewards of a business.

The Board has therefore decided to align the interests of the employees of the mine and the Community with that of Petmin’s shareholders by offering an ownership interest in shares in Tendele to members of the Community and employees at the mine by way of an issue of shares for cash to BEE SPV for R350 000 000 based on Tendele’s Somkhele project valuation of R1,56 billion as set out in the CPR available on the Petmin website at http://www.overend.co.za/download/tendele-cpr-2015-final.pdf .

This issue of shares for cash in Tendele is classified under the Listings Requirements as a Category 1 disposal which requires shareholder approval and is therefore the subject of this circular.

2.2 The Transaction

Petmin will enter into the Transaction Agreements to which it is a party in terms of which, inter alia, the BEE SPV will subscribe for the BEE Subscription Shares, representing 20% (twenty percent) of the post-transaction issued share capital of Tendele, at an aggregate subscription price of R350 000 000 (three hundred and fifty million Rand), subject to the fulfilment or waiver, as the case may be, of certain conditions precedent.

2.2.1 Acquisition and funding steps

As part of the BEE Transaction:

2.2.1.1 Step 1: the Community Trust and the EBS will become ordinary shareholders of BEE SPV. In terms of the BEE SPV Subscription Agreement:

2.2.1.1.1 the Community Trust will subscribe for 800 (eight hundred) ordinary no par value shares in BEE SPV at an aggregate nominal subscription price of R1.00 (one Rand), pursuant to which the Community Trust will hold 80% (eighty percent) of all of the issued shares in BEE SPV; and

2.2.1.1.2 the Share Trust will subscribe for and acquire 200 (two hundred) ordinary no par value shares in BEE SPV at an aggregate nominal price of R2.00 (two Rand), pursuant to which the Share Trust will hold 20% (twenty percent) of all of the issued shares in BEE SPV.

2.2.1.2 Step 2: Depfin will subscribe for, and BEE SPV will issue to Depfin, the “A” Preference Shares at an aggregate subscription price of R270 000 000.00 (two hundred and seventy million Rand), in terms of the “A” Preference Share Subscription Agreement;

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2.2.1.3 Step 3: Petmin will subscribe for, and BEE SPV will issue to Petmin, the “B” Preference Shares at an aggregate subscription price of R80 000 000.00 (eighty million Rand), in terms of the “B” Preference Share Subscription Agreement;

2.2.1.4 Step 4: BEE SPV will utilise the aggregate subscription proceeds on account of the “A” Preference Shares and the “B” Preference Shares to subscribe for the BEE Subscription Shares at an aggregate subscription price of R350 000 000.00 (three hundred and fifty million Rand) in terms of the Tendele Subscription Agreement.

2.2.2 The BEE Transaction is therefore intended, with effect from the Effective Date, to put in place the following structures which will allow the Community (and, indirectly, the larger Mpukunyoni community) to benefit from the mining operations carried on by Tendele -

2.2.2.1 the Community Trust will be entitled to receive 80% (eighty percent) of any distributions made to the holders of ordinary shares in BEE SPV from time to time. The Community Trust is a discretionary trust and will have the Community as beneficiaries;

2.2.2.2 the EBS will be entitled to receive 20% (twenty percent) of any distributions made to the holders of ordinary shares in BEE SPV from time to time. The beneficiaries of the EBS will, inter alia, be all employees of Tendele and employees of MMC who have been permanently employed by such entities for a continuous period for at least 1 (one) year.

All of the components of the BEE Transaction are conditional upon one another and form one composite transaction.

2.2.3 Proposed Financing under the BEE Transaction

2.2.3.1 “A” Preference Shares

Depfin will provide the funding for a portion of the subscription price of the BEE Subscription Shares, being R270 000 000 (two hundred and seventy million Rand) in terms of the “A” Preference Share Subscription Agreement, the salient features thereof being:

2.2.3.1.1 Depfin will subscribe for the 54 (fifty four) “A” Preference Shares at an amount of R5 000 000 (five million Rand) per “A” Preference Share, being an aggregate amount of R270 000 000 (two hundred and seventy million Rand);

2.2.3.1.2 the issue date of the “A” Preference Shares will be the Effective Date, provided that payment has been received in full from Depfin;

2.2.3.1.3 the “A” Preference Shares are cumulative redeemable preference shares and governed by the terms of the “A” Preference Shares forming part of the BEE SPV MOI;

2.2.3.1.4 each “A” Preference Share will confer on the holder thereof (being Depfin as at the Effective Date) the right to receive distributions of BEE SPV in priority to holders of any other shares in BEE SPV, including any holders of “B” Preference Shares or “C” Preference Shares, whether upon final liquidation or otherwise;

2.2.3.1.5 BEE SPV will be obliged to declare and pay semi-annual cumulative preferential cash dividends in arrears on each “A” Preference Share every 6 (six) months (commencing on the 6th (sixth) month following the Effective Date);

2.2.3.1.6 each “A” Preference Share will confer on the holder thereof (being Depfin as at the Effective Date) the right to receive ongoing cumulative preferential cash dividends at a rate of 90% of the prime rate, nominal annual compound monthly;

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2.2.3.1.7 arrear dividends or late redemptions by BEE SPV accrue additional dividends at the rate referred to in paragraph 2.2.3.1.5 above plus 2% (two percent);

BEE SPV will redeem the “A” Preference Shares in semi-annual redemptions as follows:

Scheduled Redemption

Number of “A”

Preference Shares to be

redeemedRedemption

AmountThe first Business Day following the expiry of the Restricted Period (“First Redemption Date”) 11 R55 000 000The date falling six months after the First Redemption Date 11 R55 000 000The date falling 12 months after the First Redemption Date 11 R55 000 000The date falling 18 months after the First Redemption Date 11 R55 000 000Final Redemption Date (being the 5th (fifth) anniversary of the issue date) 10 R50 000 000

2.2.3.1.8 BEE SPV shall be obliged to redeem all “A” Preference Shares by not later than the 5th (fifth) anniversary of the issue date thereof (namely the 5th (fifth) anniversary of the Effective Date);

2.2.3.1.9 if an event occurs that has the effect that Depfin would be in a worse position, in terms of net after tax return, than it would have been in had that event not occurred, Depfin shall be entitled to give written notice thereof to BEE SPV, requiring that BEE SPV declares an additional dividend or decrease the dividend by such an amount or margin as to place Depfin in the same position as if that event had not taken place; and

2.2.3.1.10 if certain trigger events occur (being default events) the holders of the “A” Preference Shares shall be entitled to require BEE SPV to redeem the “A” Preference Shares prior to their scheduled redemption dates (which will require additional dividends to be paid on account of the holders of the “A” Preference Shares incurring tax liabilities pursuant to such early redemption).

2.2.3.2 “B” Preference Shares

Petmin will provide the funding for a portion of the subscription price of the BEE Subscription Shares, being R80 000 000 (eighty million Rand) in terms of the “B” Preference Share Subscription Agreement, the salient features thereof being:

2.2.3.2.1 Petmin will subscribe for the “B” Preference Shares at an amount of R1 000 000 (one million Rand) per “B” Preference Share, being an aggregate amount of R80 000 000 (eighty million Rand), from available funds;

2.2.3.2.2 the issue date of the “B” Preference Shares will be the first business day after the conditions precedent set out in the “B” Preference Share Subscription Agreement become unconditional, provided that payment has been received in full from Petmin;

2.2.3.2.3 the “B” Preference Shares are cumulative redeemable preference shares and governed by the terms of the “B” Preference Shares forming part of the BEE SPV MOI;

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2.2.3.2.4 each “B” Preference Share will confer on the holder thereof (being Petmin as at the Effective Date) the right to receive distributions of BEE SPV in priority to the payment of dividends in respect of any other classes of shares in the Company, save for:

2.2.3.2.4.1 the “A” Preference Shares, which shall rank ahead of the “B” Preference Shares in all respects; and

2.2.3.2.4.2 the “C” Preference Shares, which shall rank ahead of the “B” Preference Shares in all respects;

2.2.3.2.5 each “B” Preference Share will confer on the holder thereof (being Petmin as at the Effective Date) the right to receive ongoing cumulative preferential cash dividends at a rate of 90% of the prime rate, nominal annual compound monthly, provided that the cash flow waterfall referred to in paragraph 2.2.4 is complied with for as long as there are any “A” Preference Shares or “C” Preference Shares in issue;

2.2.3.2.6 BEE SPV will be obliged to declare and pay semi-annual cumulative preferential cash dividends in arrears on each “B” Preference Share every 6 (six) months, provided that all payments required to be made in terms of the “A” Preference Shares and/or the “C” Preference Shares have been made;

2.2.3.2.7 arrear dividends payable by BEE SPV accrue additional dividends at the rate referred to in paragraph 2.2.3.2.5 above plus 2% (two percent);

2.2.3.2.8 BEE SPV shall be obliged to redeem all “B” Preference Shares by not later than the 7th (seventh) anniversary of the issue date thereof;

2.2.3.2.9 if an event occurs that has the effect that Petmin would be in a worse position, in terms of net after tax return, than it would have been in had that event not occurred, Petmin shall be entitled to give written notice thereof to BEE SPV, requiring that BEE SPV declares an additional dividend or decrease the dividend by such an amount or margin as to place Petmin in the same position as if that event had not taken place; and

2.2.3.2.10 if certain trigger events occur (being default events) the holders of the “B” Preference Shares shall be entitled to require BEE SPV to redeem the “B” Preference Shares prior to their scheduled redemption dates (which will require additional dividends to be paid on account of the holders of the “B” Preference Shares incurring tax liabilities pursuant to such early redemption).

2.2.3.3 “C” Preference Shares

Once the BEE Transaction has been implemented, Petmin may become obliged to subscribe for “C” Preference Shares in terms of the “C” Preference Share Subscription Agreement if and to the extent that BEE SPV is unable to discharge its payment obligations under the “A” Preference Share Subscription Agreement or the terms of the “A” Preference Shares as a result of not having sufficient available funds (“”A” Preference Share Shortfall”), the salient features thereof being:

2.2.3.3.1 should an “A” Preference Share Shortfall arise at any time, Depfin will be entitled, by way of written notice to Petmin, to require Petmin to subscribe for such number of “C” Preference Shares as is equal to the “A” Preference Share Shortfall divided by the subscription price per “C” Preference Share (being R1 000 000 (one million Rand) per “C” Preference Share), and upon receipt of such written notice, Petmin shall subscribe for such “C” Preference Shares;

2.2.3.3.2 the whole of the subscription price of any and all “C” Preference Shares will only be utilised by BEE SPV to discharge the “A” Preference Share Shortfall;

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2.2.3.3.3 the “C” Preference Shares are cumulative redeemable preference shares and governed by the terms of the “C” Preference Shares forming part of the BEE SPV MOI;

2.2.3.3.4 each “C” Preference Share will confer on the holder thereof (being Petmin in terms of the “C” Preference Share Subscription Agreement) the right to receive distributions of BEE SPV in priority to the payment of dividends in respect of any other classes of shares in the Company, save for the “A” Preference Shares, which shall rank ahead of the “C” Preference Shares in all respects;

2.2.3.3.5 each “C” Preference Share will confer on the holder thereof (being Petmin in terms of the “C” Preference Share Subscription Agreement) the right to receive ongoing cumulative preferential cash dividends at a rate of 90% of the prime rate, nominal annual compound monthly, provided that the cash flow waterfall referred to in paragraph 2.2.4 is complied with for as long as there are any “A” Preference Shares or “C” Preference Shares in issue;

2.2.3.3.6 BEE SPV will be obliged to declare and pay cumulative preferential cash dividends in arrears 2 (two) business days after BEE SPV receives payment of any distributions (less any taxes and costs);

2.2.3.3.7 arrear dividends are payable by BEE SPV at the rate referred to in paragraph 2.2.3.3.5 above plus 2% (two percent);

2.2.3.3.8 BEE SPV shall be obliged to redeem all “C” Preference Shares by not later than the 7th (seventh) anniversary of the issue date thereof;

2.2.3.3.9 if an event occurs that has the effect that the holder of “C” Preference Shares (which will be Petmin) would be in a worse position, in terms of net after tax return, than it would have been in had that event not occurred, such holder of “C” Preference Shares shall be entitled to give written notice thereof to BEE SPV, requiring that BEE SPV declares an additional dividend or decrease the dividend by such an amount or margin as to place such holder of “C” Preference Shares in the same position as if that event had not taken place; and

2.2.3.3.10 if certain trigger events occur (being default events) the holders of the “C” Preference Shares shall be entitled to require BEE SPV to redeem the “C” Preference Shares prior to their scheduled redemption dates (which will require additional dividends to be paid on account of the holders of the “C” Preference Shares incurring tax liabilities pursuant to such early redemption).

2.2.4 Cash flow waterfall

2.2.4.1 Unless otherwise agreed in writing by the majority holders of the “A” Preference Shares, all monies received by BEE SPV from time to time from whatever source (including, but not limited to, dividends, other income and Special Distributions) (Proceeds) may only be used to make payment of the following amounts and, to the extent of any shortfall, in the following order of priority:

2.2.4.1.1 first, towards payment of any applicable taxes;

2.2.4.1.2 second, towards payment of evidenced administrative costs and disbursements incurred by BEE SPV in respect of the Funding Documents (as such term is defined in the “A” Preference Share Subscription Agreement) and its day-to-day administration, in an aggregate amount not exceeding ZAR150 000 per annum;

2.2.4.1.3 third, towards the payment of “A” Preference Share dividends that ought to have been paid but have not been paid;

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2.2.4.1.4 fourth, towards the payment of “A” Preference Share dividends which have accrued but not been paid;

2.2.4.1.5 fifth, prior to the expiry of the Restricted Period, towards (and in the following order of priority):

2.2.4.1.5.1 the payment of dividends accrued in respect of the “C” Preference Shares (to the extent applicable); and

2.2.4.1.5.2 any voluntary redemption of the “A” Preference Shares;

2.2.4.1.6 sixth, but only after the expiry of the Restricted Period, towards (and in the following order of priority):

2.2.4.1.6.1 redemption of unredeemed “A” Preference Shares on their scheduled redemption dates;

2.2.4.1.6.2 the payment of dividends accrued in respect of the “C” Preference Shares (to the extent applicable);

2.2.4.1.6.3 any voluntary redemption of the “C” Preference Shares (to the extent applicable), provided that the ratio that the redemption amount of the “C” Preference Shares bears to the aggregate issue price of the unredeemed “C”  Preference Shares on such date (prior to the redemption) does not exceed the ratio that the redemption amount of the “A” Preference Shares payable in terms of the “A” Preference Share Subscription Agreement bears to the issue price of the unredeemed “A” Preference Shares on that date (prior to the redemption); and

2.2.4.1.6.4 any voluntary redemption of the “A” Preference Shares;

2.2.4.1.7 seventh, provided that no trigger event under the “A” Preference Share Subscription Agreement has occurred and is continuing, towards payment by BEE SPV (at the discretion of BEE SPV) of dividends accrued in respect of the “B” Preference Shares in accordance with their terms; and

2.2.4.1.8 eight, provided that no trigger event under the “A” Preference Share Subscription Agreement has occurred and is continuing, towards payment by BEE SPV (at the discretion of BEE SPV) in the ordinary course of business to the holders of ordinary shares in BEE SPV, provided always that, subject to the provisions of the above cash flow waterfall having been met, BEE SPV may, in its discretion, apply any surplus proceeds not applied in accordance with paragraphs 2.2.4.1 to 2.2.4.1.6.4 above towards an investment which is permitted in terms of the “A” Preference Share Subscription Agreement.

2.2.5 RCF Agreement

As part of the BEE Transaction, Nedbank will make the Facility available to Tendele in terms of the RCF Agreement, the salient features thereof being:

2.2.5.1 Nedbank will make a revolving credit facility in a maximum amount of R230 000 000 (two hundred and thirty million Rand) available to Tendele in replacement of the current Standard Bank facility for normal working capital requirements;

2.2.5.2 the Facility is available to Tendele for a period of 5 (five) years from the date on which Nedbank confirms in writing to Tendele that all of the conditions precedent set out in the RCF Agreement have been fulfilled or waived, as the case may be (“Financial Close”);

2.2.5.3 Tendele will be entitled to utilise the Facility by requesting Nedbank in writing to make an amount available for draw-down, provided that the amount in each request is at least R15 000 000 (fifteen million Rand) unless the available Facility is less than such amount;

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2.2.5.4 Tendele may select an interest period of 1 (one), 3 (three) or 6 (six) months for any particular loan under the Facility;

2.2.5.5 Interest will accrue on the loans under the Facility at a rate of JIBAR plus 2.85%, calculated as follows:

Interest period Calculation of interest1 month nominal annual compounded Monthly in arrears3 months nominal annual compounded quarterly in arrears6 months nominal annual compounded semi-annually in arrears

2.2.5.6 Tendele will be required to repay all loans outstanding under the Facility, including all interest accrued thereon, within a period of 5 (five) years from the Financial Close;

2.2.5.7 Tendele may not, without the prior written consent of Nedbank, be entitled to cancel all or that part of the unutilised portion of the Facility prior to the redemption in full of the “A” Preference Shares in accordance with the “A” Preference Share Subscription Agreement (Redemption) such that the aggregate amount outstanding under the Facility and the amount available under Facility at any time shall, following such cancellation, be less than R30 000 000 (thirty million Rand).

2.2.5.8 Default interest shall accrue on all unpaid sums under the Facility at a rate of the applicable interest rate plus 2% (two percent);

2.2.5.9 Tendele shall ensure that, in respect of any period of 12 months ending on the last day of June and December in each calendar year:

2.2.5.9.1 the interest cover ratio (being the EBITDA of Tendele divided by the total interest payable by Tendele on account of its interest-bearing financial indebtedness during such period) shall not be less than four times;

2.2.5.9.2 the ratio of its total net debt to EBITDA shall not be greater than two times; and

2.2.5.9.3 the ratio of its total net debt to equity shall not be greater than 0,75 times.

2.2.6 Subordination agreement

Petmin will subordinate all of its claims against Tendele and BEE SPV in favour of Nedbank and Depfin on account of the claims of Nedbank and Depfin under the Finance Documents (as defined in the Subordination Agreement), including the “A” Preference Share Subscription Agreement and the RCF Agreement.

2.2.7 Pledge and Cession in securitatem debiti

The Community Trust and the Share Trust will guarantee BEE SPV’s performance of its obligations to Depfin and Nedbank under the Funding Documents (as such term is defined in the “A” Preference Share Subscription Agreement) including the “A” Preference Share Subscription Agreement and the RCF Agreement, and as security for the obligations under such guarantee, each of the Community Trust and the Share Trust will pledge and cede in securitatem debiti to Depfin and Nedbank all of its shares in and claims against BEE SPV.

2.2.8 Conditions precedent

The implementation of the BEE Transaction is subject to the fulfilment of all of the conditions precedent contained in the Transaction Agreements, which inter alia require that, by not later than [31 October 2015]:

2.2.8.1 the board of directors of BEE SPV approves and ratifies the entering into of each Transaction Agreement to which it is a party;

2.2.8.2 the board of directors of Petmin approves and ratifies the entering into of each Transaction Agreement to which it is a party;

2.2.8.3 the board of directors of Tendele:

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2.2.8.3.1 approves and ratifies the entering into of each Transaction Agreement to which it is a party;

2.2.8.3.2 resolves to issue the BEE Subscription Shares in accordance with the provisions of the Tendele Subscription Agreement and acknowledges that the “Subscription Price” as defined in the Tendele Subscription Agreement constitutes adequate consideration for the purposes of section 40(1)(a) of the Companies Act;

2.2.8.3.3 the Tendele Board has resolved to distribute ZAR325 000 000 (three hundred and twenty five million) (“Distribution Amount”) to Petmin, which distribution will be completed by the creation of a loan account in the Distribution Amount in the books of Tendele in favour of Petmin, and has reasonably concluded that Tendele will satisfy the solvency and liquidity test in terms of the Companies Act immediately after completing such distribution;

2.2.8.4 Petmin, the sole shareholder of Tendele, authorises the board of directors of Tendele to issue the BEE Subscription Shares in accordance with the provisions of the Tendele Subscription Agreement;

2.2.8.5 the Transaction Agreements have been entered into and have become unconditional in accordance with their respective terms, save for any condition requiring that this Agreement becomes unconditional;

2.2.8.6 the shareholders of Petmin have given any and all approvals required for the implementation of the BEE Transaction, including any approvals required in terms of the Companies Act and the Listings Requirements of the JSE Limited.

2.2.9 Financial Assistance, Solvency and Liquidity Statement

2.2.9.1 In terms of section 44(3)(a)(ii) of the Companies Act, a special resolution authorising Petmin to provide financial assistance to BEE SPV to acquire the BEE Subscription Shares is required. In terms of section 45(3)(a)(ii) of the Companies Act, a special resolution authorising Petmin to provide direct or indirect financial assistance in terms of the Transaction Agreements to BEE SPV and Tendele is required. These special resolutions will be proposed at the general meeting to the extent that they have not already been previously passed.

2.2.9.2 After considering the terms of the BEE Transaction, the Board is satisfied that subsequent to providing the financial assistance described above:

2.2.9.2.1 Petmin and the Group will be able to pay their debts as they become due in the ordinary course of business; and

2.2.9.2.2 the assets of Petmin and the Group, as fairly valued, will be equal or in excess of the liabilities of Petmin and the Group, as fairly valued. For this purpose, the assets and liabilities have been recognised and measured in accordance with the accounting policies used in the Group’s latest audited consolidated annual financial statements. Furthermore, for this purpose, contingent liabilities have been accounted for as required in terms of section 4(2)(b)(i) of the Companies Act,

provided that the Board will not authorise Petmin to provide such financial assistance in terms of sections 44 and/or 45 of the Companies Act until the special resolutions of the shareholders of Petmin contemplated in paragraph 2.2.9.1 have been adopted.

2.3 Pro forma effects of the Transaction

The pro forma financial effects set out below have been prepared for illustrative purposes only and because of their nature may not give a fair reflection of the financial position of the Company. The preparation of the financial effects is the responsibility of the directors of Petmin.

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The table below sets out the pro forma financial effects of the BEE Transaction on Petmin, based on Petmin’s reviewed preliminary results for the year ended 30 June 2015. The financial effects are presented for illustrative purposes only and because of their nature may not give a fair reflection of the Group’s results, financial position and changes in equity after the implementation of the BEE Transaction. It has been assumed for purposes of the pro forma financial effects that the BEE Transaction took place as at 30 June 2015 for the Statement of Financial Position and for the Income Statement with effect from 1 July 2014. The directors of Petmin are responsible for the preparation of the financial effects. The pro forma financial effects are presented in a manner consistent with the basis on which historical financial information of Petmin has been prepared and in terms of Petmin’s accounting policies.

2.3.1 Pro forma consolidated preliminary statement of financial position

Before(#1)

Reviewed30 June 2015 Adjustments

After Pro-forma

after transaction R’000 R’000 R’000

AssetsNon-current assets 1 569 463 1 569 463 Property, plant and equipment 1 062 878 1062 878 Investment in equity accounted investee 420 452 420 452 Loan due from joint venture 61 133 61 133 Investments 25 000 25 000 Current assets 621 395 643 804 Inventory 250 118 250 118 Trade and other receivables 110 249 110 249 Taxation receivable 3 681 3 681 Cash and cash equivalents 257 347 22 409 (#2) 279 756

Total assets 2 190 858 2 213 267

Equity and liabilitiesOrdinary share capital and reserves 1 284 849 1 284 849 Share capital 136 026 136 026 Share premium 292 438 292 438 Share option reserve 20 297 20 297 Foreign currency translation reserve 14 425 14 425 Retained earnings 821 663 821 663 Non-current liabilities 451 362 604 638 Long-term borrowings 108 405 148 796 (#3) 257 201 Environmental rehabilitation provision 258 632 4 480 (#4) 263 112 Deferred taxation 84 325 84 325 Current liabilities 454 647 323 780 Trade and other payables 136 864 136 864 Revenue in advance 147 562 147 562 Current portion of interest bearing loans and borrowings 143 671 12 804 Hedge liability 4 628 (130 867) (#3) 4 628 Shareholders for dividend 1 513 1 513 Bank overdraft 20 409 20 409

Total equity and liabilities 2 190 858 2 213 267 Net asset value per share 2.36 2.36 Tangible net asset value per share 2.36 2.36 (#1) The “before” column has been extracted, without adjustment, from the reviewed results for the year ended

30 June 2015.

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(#2) Cash and cash on hand has been adjusted for the following:

R million NotesCash inflow– R270 million A Pref 270 As detailed in paragraph 2.2.3.1– R230 million Nedbank RCF 230 As detailed in paragraph 2.2.5.1

500Cash outflow– R100 million Standard Bank Term Loan repaid 41 – R208 million Standard Bank RCF repaid 195 – Transaction costs (after tax) 12 – Surplus cash used to repay Nedbank RCF 230

478

(#3) Interest bearing loans and liabilities has been adjusted as follows:

BeforeProforma

AfterR million R million

Standard Bank Term loan 41 0Standard Bank RCF 195 0IDC 16 16Revenue in advance 148 148Nedbank A preference share – 270Nedbank RCF – – Representing the residual

amount of the Nedbank RCFDeferred arrangement fees – (16)Total interest-bearing loans and borrowings 400 418Less short term 292 164Long term portion 108 254

(#4) The adjustment to deferred tax represents the tax effect of the R16 million deferred arrangement fees and expenses for the financing deal.

Other than disclosed on pages 52 and 53 of the Annual Financial Statements for the year ended 30 June 2014, details of which are available at http://www.petmin.co.za/pdf/integrated-report/afs-2014.pdf and note 13 of the Condensed Consolidated Preliminary Financial Statements for the year ended 30 June 2015 included as Annexure A to this circular and the financial arrangements which are the subject of this circular, the Company has no other loans.

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2.3.2 Pro forma consolidated preliminary income statement

Notes

Before(#1)Reviewed

30 June 2015 Adjustments Notes

After Pro-forma

after transaction

R’000 R’000 R’000

Revenue 1 274 165 – 1 274 165 Cost of sales (1 020 531) – (1020 531)

Gross profit 253 634 – 253 634 Other (loss)/income (19 861) (8 976) (#2) (28 837)Administrative expenses (16 605) – (16 605)

Profit from operating activities 15 217 168 (8 976) 208 192 Net finance expense (32 521) 5 291 (27 230)

– Finance income 7 317 – 7 317 – Finance expenses (39 838) 5 291 (#3) (34 547)

Separately disclosed items: –Impairment of investments in equity accounted investees, net of tax (3 317) – (3 317)Impairment of property, plant and equipment (3 747) – (3 747)Share of (loss)/profit of equity accounted investees, net of tax 16 2 397 – 2 397

Profit/(Loss) before income tax 179 980 (3 685) 176 295 Income tax expense 17 (54 937) (5 432) (#4) (60 369)

Profit/(Loss) for the period 125 043 (9 117) 115 926

Earnings per share Basic earnings per ordinary share (cents) 22.98 (1.67) 21.31 Headline earnings per ordinary share (cents) 24.28 (1.67) 22.61

(#1) The “before” column has been extracted, without adjustment, from the reviewed results for the year ended 30 June 2015.

(#2) Cash and cash on hand has been adjusted for the following:

(#3) Interest bearing loans and liabilities has been adjusted as follows:

(#4) The adjustment to deferred tax represents the tax effect of the R16 million deferred arrangement fees and expenses for the financing deal.

All adjustments are expected to have a continuing impact on Petmin, with the exception of the transaction cost and the founder’s contribution to the Community Trust.

2.4 Opinion and recommendation

The Directors of Petmin recommend that shareholders vote in favour of the resolutions proposed to implement the transaction and have indicated that they intend voting in favour thereof.

To this end, shareholders are requested to consider, and if deemed appropriate, pass the resolutions in the accompanying notice of general meeting, which is included in and forms an integral part of this circular.

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3. GENERAL

3.1 General meeting of shareholders

A general meeting of shareholders of Petmin will be held at 37 Peter Place, Bryanston, at 10:00 on Monday, 9 November 2015, to consider the resolutions required to give effect to the BEE Transaction set out in this circular.

Certificated shareholders or own name dematerialised shares who are unable to attend the general meeting are requested to complete the attached form of proxy and return it in accordance with the instructions and notes contained therein to the transfer secretaries to be received, by not later than 10:00 on Friday, 6 November 2015.

Shareholders holding dematerialised shares other than in own name who wish to attend the general meeting or to vote by way of proxy, must contact their CSDP of stockbroker who will furnish them with the requisite Letter of Representation authority to attend the general meeting or to be represented thereat by proxy. Such authorisation must be obtained in terms of the custody agreement between the relevant shareholder and his CSDP or stockbroker.

3.2 Share capital

3.2.1 Authorised and issued share capital

The authorised and issued share capital of Petmin as at 30 June 2015 is as follows:

R’000Authorised share capital1 000 000 000 ordinary shares of 25 cents eachTotal authorised share capital 250 000Issued share capital*576 908 188 ordinary shares of 25 cents eachTotal issued share capital 144 228Share premium 338 416Total share capital and premium 482 644

* Including 32 808 234 treasury shares held by Petmin Management Company (Proprietary) Limited.

3.2.2 Alterations to share capital

There were no shares issued during the year ended 30 June 2015.

At the last practicable date, Petmin Management Company (Proprietary) Limited, a wholly owned subsidiary of Petmin, held 32 808 234 treasury shares at an average price of 165 cents per share.

3.2.3 Major shareholders

As at the last practicable date the major shareholders of the Company were as follows:

Shareholder Direct/IndirectNumber of

shares held% holding of shares

Dark Capital International Ltd** Indirect 73 060 576 13.43Afena Capital* Indirect 56 398 779 10.37Investec* Indirect 49 714 615 9.14Regarding Capital Management* Indirect 36 038 130 6.62JC du Preez Direct and Indirect 38 764 735 7.12FirstRand Indirect 30 000 000 5.51Total 283 926 835 52.19

*Includes funds managed on behalf of third parties.

** The ultimate beneficial shareholder of Dark Capital International Ltd is Mr RM Martin.

The directors are not aware of any controlling shareholders.

24

3.3 Directors

There has been no change in the directors or management of Petmin or their remuneration since the last Annual General Meeting to date. As announced on 8 September 2015, Mrs Mogotsi will assume the role of non-executive Deputy Chairman with effect from the Company’s next Annual General Meeting to be convened later this year.

The remuneration received by the individual directors will not vary as a consequence of any of the actions contemplated in this circular and there will be no change in the directors of the Company as a result of the transaction.

3.3.1 Directors’ interest

The table below sets out the direct and indirect interests of directors in the issued ordinary shares of Petmin as at the last practicable date, and no change has occurred since 30 June 2015 and the date of this circular:

Current shareholding Shareholding as at 30 June 2015

Director Direct Indirect

Indirect/Non–

beneficial Direct Indirect

Indirect/Non–

beneficialI Cockerill – – 5 783 333 – – 5 783 333L Mogotsi 3 298 494 – 6 425 105 3 425 105 – 6 425 105J du Preez 6 696 374 – 32 068 361 6 696 374 – 32 068 361B Doig 670 319 651 902 1 500 000 670 319 651 902 1 500 000B Tanner 1 712 985 – – 1 712 985 – –E de V Greyling 4 270 000 – – 4 270 000 – –M Arnold – – – – – –K Kalyan – – – – – –TD Petersen – – – – – –Total 16 648 172 651 902 45 776 799 16 648 172 651 902 45 776 799

The directors held the following share options (with an exercise price of 250 cents per share) at 30 June 2015:

Name

*ManagementOptions as at30 June 2015

I Cockerill 1 500 000J du Preez 1 500 000L Mogotsi 750 000B Doig 1 250 000B Tanner 750 000Sub-total 5 750 000

* These options were awarded during the year ended 30 June 2014 and expire on 30 June 2016.

At the AGM held on 22 May 2015, it was resolved that the previously approved share option scheme is not implemented and that all outstanding option schemes be cancelled and replaced by a new long-term incentive scheme. The proposed new scheme will be brought before shareholders for approval once concluded. No share options were exercised during the year ended 30 June 2015 and, as a result of the resolution taken at the AGM held on 22 May 2015, the directors currently do not hold any share options.

3.3.2 Other than as disclosed above no other director of any of the subsidiaries holds any securities in the company.

3.3.3 Directors’ interest in transactions

The directors and directors who have resigned during the last 18 months, have certified that they held no material beneficial interest, whether direct or indirect, in any transactions,

25

which significantly affected the business of the Company or any of its subsidiaries during the current or immediately preceding financial year, or during an earlier financial year and remain in any respect outstanding or unperformed.

Accordingly, no conflict of interest with regards to directors’ interests in contracts exists. There have been no changes to the above since 30 June 2015 and up to the date of this circular.

3.3.4 Directors’ responsibility

The directors as disclosed in paragraph 3.3 of this circular, collectively and individually accept full responsibility for the accuracy of the information given and certify that to the best of their knowledge and belief there are no facts that have been omitted which would make any statement herein false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that the circular contains all information required by law and the JSE Listings Requirements.

3.4 Costs

The cash expenses of the transaction are estimated to be R16 million and relate, inter alia, to:

R’000Printing, publication and distribution cost of this circular 150Fees payable to professional advisers:River GroupKPMGSRKLegal advisors

375175564

7 000Nedbank arrangement fee 6 250Security transaction costs 1 000Corporate action fees to Strate and Computershare 100JSE documentation fee 100Other incidentals 286Total 16 000

Petmin has not incurred any other, preliminary or otherwise, expenses within the three years preceding the date of the circular regarding the transaction or any of the actions contemplated in this circular.

3.5 King code

The Board of Directors endorses the Code of Good Corporate Practices and Conduct as detailed in the King III Report and uses the corporate governance requirements as a basis for the governance structure through which the Group is directed, controlled and managed. Notwithstanding the governance structure set in place the Board of Directors believes and, in fact, places great emphasis on ensuring compliance with the substance of corporate governance.

The Board of Directors accepts that it is ultimately responsible for ensuring the effectiveness of corporate governance in Petmin.

3.5.1 Board of Directors

The Company has a unitary Board of Directors with the roles of the Chairman and Chief Executive Officer separated and their responsibilities clearly defined. The Board is comprised of five non-executive directors and four executive directors. The recommendation in King III that the Board comprise of a majority of non-executive directors has been applied. As the non-executive Chairman is a former executive, the Board has elected a Lead Independent director as required by King III.

The Board has adopted a policy detailing procedures for the appointments to the Board. All appointments are formal and transparent, and a matter for the Board as a whole. There exists a clear division of responsibilities at Board level that ensures a balance of power and authority, such that no one individual has unfettered powers of decision-making.

26

3.5.2 Board Committees

The Board has appointed a number of committees to assist it in the performance of its duties. These committees include:

3.5.2.1 Audit and Risk Committee

The Committee’s roles and responsibilities include its statutory duties as per the Companies Act and responsibilities assigned to it by the Board including an oversight role regarding the Company’s integrated annual report and the reporting process, including the system of internal control. The Committee annually conducts objective evaluations in respect of its performance regarding its role and functioning.

The Committee comprises of the following non-executive directors:

3.5.2.1.1 E de V Greyling

3.5.2.1.2 K Kalyan

3.5.2.1.3 TD Petersen (Chairman)

The Audit and Risk Committee meets quarterly.

3.5.2.2 Remuneration Committee

This Committee is responsible for reviewing and recommending the remuneration of executive and non-executive directors.

The Committee is chaired by an independent non-executive director and comprises another two non-executive directors:

E de V Greyling (Chairman)

K Kalyan

TD Petersen

The Committee meets at least once a year.

3.6 Advisors’ and experts’ consents

The sponsor, reporting accountants, attorneys, Company Secretary, SRK and transfer secretaries have all provided their written consents to act in the capacity stated and to their names being used in this circular and have not withdrawn their consents prior to the publication of this circular.

3.7 Litigation statement

As at the last practicable date, and other than as disclosed in the Annual Financial Statements for the year ended 30 June 2014 and as disclosed in the Condensed Consolidated Preliminary Financial Statements for the year ended 30 June 2015, the directors of the Company are satisfied that Petmin and its subsidiaries are not involved in any material legal or arbitration proceedings or legal actions, nor are the directors aware of any proceedings that are pending or threatened, that may have, or have had in the 12-month period preceding the last practicable date, a material effect on the Company’s financial position.

3.8 Material changes

There have been no material changes in the financial or trading position of Petmin and its subsidiaries since the publication of Petmins’ annual results for the period ended 30 June 2014 and preliminary results for the year ended 30 June 2015.

3.9 Working capital statement

It is the opinion of the directors that the working capital available to Petmin and its subsidiaries is sufficient for the group’s present requirements, that is, for at least the next 12 months from the date of issue of the circular.

3.10 Material contracts

Other than the contracts relating to this circular, Petmin and the Group have not entered into any material contracts in the last two years, either verbally or in writing, being restrictive funding

27

arrangements and/or other contracts that may contain obligations or settlements that are material, other than in the ordinary course of business.

3.11 Documents available for inspection

Copies of the following documents will be available for inspection at the registered office of Petmin during normal business hours on any business day up to the close of business on 5 November 2015:

3.11.1 Memorandum of Incorporation or Memorandum and articles of association of Petmin and subsidiaries;

3.11.2 agreements affecting the governance of Petmin and the interests of shareholders;

3.11.3 copies of the Transaction Agreements;

3.11.4 the latest Competent Person’s Report;

3.11.5 copies of service agreements with directors and managers;

3.11.6 all reports, letters, financial statements and statements by experts;

3.11.7 audited annual financial statements of Petmin for the three preceding financial years;

3.11.8 preliminary financial statements for the year ended 30 June 2015;

3.11.9 agreements entered into the past three years other than in the normal course of business; and

3.11.10 written consents of the appointed professional advisors.

3.12 Documents included by reference

Document Reference

Competent Person’s Report on the Material Assets of Tendele Coal Mining (Pty) Ltd

http://www.overend.co.za/download/tendele-cpr-2015-final.pdf

2014 Integrated Report and Annual financial statements

http://www.petmin.co.za/pdf/integrated-report/afs-2014.pdf

By order of the Board

Company Secretary

Johannesburg5 October 2015

Registered office Transfer secretariesFirst Floor, 37 Peter Place Computershare Investor Services (Proprietary) LimitedBryanston 70 Marshall StreetJohannesburg, 2021 Johannesburg, 2001(PO Box 6070, Rivonia, 2128) (PO Box 61051, Marshalltown, 2107)

28

ANNEXURE A

PETMIN LIMITED PRELIMINARY RESULTS FOR THE YEAR ENDED 30 JUNE 2015

Salient features :

• Normalised e arnings increase by 30% to

R132. 1 million (2014: R101 . 7 million)

• R 901   m illion net cash flow from operating

activities up 35% (201 4 : R 668 million)

• Shareholding in North Atlantic Iron

Corporation ( N AIC ) increased to 3 5 %

(2014: 33%). Site selected for first plant and

detailed engineering designs underway.

• Agreement reached with local community

and Nedbank   for a R350 million finance

package for broad-based BEE transaction

granting the local community and employees

a 20% stake in the Somkhele anthracite

mine .   The transaction remains s ubject to

shareholder approval.  

Preparation The se condensed consolidated preliminary financial statements for the year ended 30 June 201 5   have been prepared under the supervision of Petmin’s financial director, Mr BP Tanner CA(SA) (refer to Note 2 of these financial statements) .

Review of results These condensed consolidated preliminary financial statements for the year ended 30 June 201 5 have been reviewed by the Group’s auditors, KPMG Inc., ( refer to Note 6 of these financial statements ) .

“Committed to growth, dedicated to value”

Condensed Consolidated Preliminary Financial Statements       for the year   ended 3 0   June 20 1 5  

Headline earnings

per share (HEPS)

24.28 cents, up 62%

(2014: 14.95   cents)

as disciplined

management and cost

controls pay off.

PETMIN LIMITED   (Incorporated in the Republic of South Africa)

(Registration N umber 1972/001062/06) JSE code: PET     ISIN: ZAE000076014

(“Petmin” or “the Group”)

29

Condensed Consolidated Preliminary Income Statement for the year ended 30 June 2015

    Reviewed Audited    Year ended Year ended    30 June 30 June    2015 2014  Note R’000 R’000

Revenue   1 274 165 1 019 789 Cost of sales   (1 020 531) (824 760)

Gross profit   253 634 195 029 Operating expenses   (19 861) (14 527)

Administration expenses   (16 605) (20 597)

Profit from operating activities   217 168 159 905 – Fair value adjustments on listed securities   –  (13 464)

Net finance expense   (32 521) (32 546)

– Finance income   7 317 6 537

– Finance expenses   (39 838) (39 083)

Separately disclosed items:      

Impairment of investments in equity accounted investees, net of tax   (3 317) (199 676)

Impairment loss on property, plant and equipment   (3 747) – 

Share of profit of equity accounted investees, net of tax   2 397 7 813

Profit/(Loss) before income tax   179 980 (77 968)Income tax expense   (54 937) (41 457)

Profit/(Loss) for the year   125 043 (119 425)Earnings per share      

Basic earnings/(loss) per ordinary share (cents) 7 22.98 (20.70)

Diluted earnings/(loss) per ordinary share (cents) 7 22.98 (20.70)

Condensed Consolidated Preliminary Statement of Comprehensive Income for the year ended 30 June 2015

  Reviewed Audited  Year ended Year ended  30 June 30 June  2015 2014  R’000 R’000

Profit/(Loss) for the year 125 043 (119 425)Other comprehensive income (after tax)    

Items that may be reclasssified to profit or loss    

Foreign currency translation (losses)/gains on equity accounted investees (3 437) 6 862

Share of fair value gain in equity accounted investee 54 583 16 251

Cash flow hedges reclassified to profit or loss –  2 619

Other comprehensive income for the year, net of income tax 51 146 25 732

Total comprehensive income/(loss) for the year 176 189 (93 693)

Condensed Consolidated Preliminary Statement of Financial Position as at 30 June 2015

    Reviewed Audited    30 June 30 June    2015 2014  Note R’000 R’000

ASSETS      

Non-current assets   1 569 463 1 552 484 Property, plant and equipment   1 062 878 1 122 531

Investment in equity accounted investee 9 420 452 337 572

Loan due from joint venture   61 133 67 381

Investments   25 000 25 000        Current assets   621 395 482 951 Inventories 12 250 118 264 532

Trade and other receivables   110 249 121 549

Current tax assets   3 681 2 095

Cash and cash equivalents   257 347 94 775        

Total assets   2 190 858 2 035 435

EQUITY AND LIABILITIES      

Ordinary share capital and reserves   1 284 849 1 169 304 Share capital   136 026 143 150

Share premium   292 438 328 927

Share option reserve   20 297 20 297

Foreign currency translation reserve   14 425 17 862

Retained earnings   821 663 659 068        Non-current liabilities   451 362 602 692 Interest bearing loans and borrowings   108 405 289 159

Deferred taxation liabilities   258 632 246 670

Environmental rehabilitation provision   84 325 66 863        Current liabilities   454 647 263 439 Trade and other payables   136 864 115 182

Revenue in advance 13 147 562 – 

Current portion of interest bearing loans and borrowings   143 671 75 042

Hedge liability   4 628 – 

Shareholders for dividend   1 513 1 339

Bank overdraft   20 409 71 876        

Total equity and liabilities   2 190 858 2 035 435

30

Condensed Consolidated Preliminary Statement of Cash Flows for the year ended 30 June 2015

    Reviewed Audited     Year ended Year ended    30 June 30 June    2015 2014    R’000 R’000

Profit from operating activities before finance (expense)/income   217 168 159 905 Adjustments for :      

– depreciation   559 692 567 215

– notional interest   3 064 2 250

– Loss on disposal of property, plant and equipment   12 8 332

– long-term rehabilitation expenditure incurred   –  (429)

– Impairment of receivable on sale of subsidiary   –  1 158

– reversal of accrual   –  (8 132)

– write down to net realisable value of inventory   27 590  1 591

– share options granted   –  10 857

Operating cash flows before changes in working capital   807 526  742 747

Decrease in trade and other receivables   11 300 76 338

Increase in inventories   (13 175)  (105 087)

Increase/(Decrease) in trade and other payables   21 466 (11 440)

Increase in revenue received in advance   147 562 – 

Increase in hedging liability   4 628 – 

Cash generated by operations   979 307 702 558 Income tax paid   (46 133) (1 542)

Interest received   7 317 6 537

Interest paid   (39 838) (39 083)

Net cash flow from operating activities   900 653 668 470

Cash flows from investing activities      

Acquistion of subsidiary (net of cash acquired) 8 (11 974) – 

Investment in equity accounted investees 9 (32 115) (67 459)

Decrease/(Increase) in loans to equity accounted investees   5 709 (6 434)

Acquisition of property, plant and equipment   (475 639) (542 580)

– to expand operations   (11 276) (25 326)

– to expand operations – capitalised pre-strip 10 (447 745) (497 773)

– to maintain operations   (16 618) (19 481)

Proceeds from sale of property, plant and equipment   –  1 000

Net cash flows used in investing activities   (514 019) (615 473)

Cash flows from financing activities      

Treasury shares acquired 7 (43 613) (4 152)

Repayment of borrowings   (112 125) (19 562)

Increase in borrowings   –  40 081

Dividends paid   (16 857) (17 245)

Net cash flows from financing activities   (172 595) (878)

Net increase in cash and cash equivalents   214 039 52 119 Cash and cash equivalents at beginning of year   22 899 (29 220)

Cash and cash equivalents at end of year   236 938 22 899

31

Condensed Consolidated Preliminary Statement of Changes in Equityfor the year ended 30 June 2015

        Cash Foreign          Share flow currency      Share Share option hedging translation Retained    capital premium reserve reserve reserve earnings TotalGROUP R’000 R’000 R’000 R’000 R’000 R’000 R’000

Balance at 30 June 2013 143 575 332 654 9 440 (2 619) 11 000 779 471 1 273 521

Total comprehensive income for the year, net of income tax –  –  –  2 619 6 862 (103 174) (93 693)

Loss for the year –  –  –  –  –  (119 425) (119 425)

Share of fair value gain in equity accounted investee –  –  –  –  –  16 251 16 251

Effective portion of changes in fair value of cash flow hedges  –    –    –  2 619 –  –  2 619

Foreign currency translation differences  –    –    –    –   6 862  –  6 862

Transactions with owners, recorded directly in equity   (425)   (3 727)   10 857    –   (17 229) (10 524)             

                   

Treasury shares acquired during the year  (425)   (3 727)  –   –   –   –  (4 152)

Share options granted  –   –   10 857  –   –   –  10 857

Dividends paid  –   –   –   –   –   (17 229) (17 229)

               

Balance at 30 June 2014 143 150 328 927   20 297  –   17 862  659 068 1 169 304

Total comprehensive income for the year, net of income tax –  –  –  –  (3 437) 179 626 176 189

Profit for the year –   –   –   –   –    125 043 125 043

Share of fair value gain in equity accounted investee  –   –   –   –   –    54 583 54 583

Foreign currency translation differences  –   –   –   –    (3 437)  –  (3 437)

Transactions with owners, recorded directly in equity  (7 124)  (36 489)  –     –   (17 031) (60 644)

Treasury shares acquired during the year (7 124) (36 489) –  –  –  –  (43 613) 

Dividends paid –  –  –  –  –  (17 031) (17 031)

               

Balance at 30 June 2015 136 026 292 438 20 297 –  14 425 821 663 1 284 849

32

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33

Notes to the Condensed Consolidated Preliminary Financial Statements for the year ended 30 June 2015

1. Reporting entityPetmin is a company domiciled in South Africa. The condensed consolidated preliminary financial statements of the Group for the year ended 30 June 2015 comprise the Company and its subsidiaries and the Group’s interests in associates and joint arrangements (together referred to as the “Group”).

The condensed consolidated preliminary financial statements were authorised for issue by the directors on 8 September 2015.

2. Basis of preparationThe condensed consolidated preliminary financial statements are prepared in accordance with the requirements of the JSE Limited Listings Requirements for preliminary reports and the requirements of the Companies Act of South Africa. The Listings Requirements require preliminary reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the condensed consolidated preliminary financial statements are in terms of IFRS and are consistent with those applied in the previous consolidated annual financial statements.

3. Accounting policiesThe accounting policies have been applied consistently by the Group to all periods presented in these condensed consolidated preliminary financial statements and are consistent to those applied by the Group in its consolidated financial statements for the year ended 30 June 2014.

4. Functional and presentation currencyThe condensed consolidated preliminary financial statements are presented in South African Rands (“Rands”), which is the Company’s functional currency. All financial information presented in Rands has been rounded to the nearest thousand.

5. Estimates and judgementsThe preparation of the condensed consolidated preliminary financial statements, in conformity with IAS 34 – Interim Financial Reporting, requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

The significant judgements made by management in applying the Group’s accounting policies and the key sources of estimation uncertainty were the same as those applied to the consolidated annual financial statements as at and for the year ended 30 June 2014.

6. Review of resultsThese condensed consolidated preliminary financial statements for the year ended 30 June 2015 have been reviewed by the Group’s auditors, KPMG Inc., who expressed an unmodified review conclusion. The auditor’s review report does not necessarily report on all of the information contained in these financial results. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor’s review engagement they should obtain a copy of the auditor’s review report from the Company’s registered office at 37 Peter Place, Bryanston, 2021, Johannesburg or at www.petmin.co.za, together with the preliminary financial statements identified in the auditor’s report.

7. Earnings and diluted earnings per shareEarnings per share (“EPS”) are based on the Group’s profit for the period, divided by the weighted average number of shares in issue during the period. 

    Reviewed     Audited      Year ended     Year ended      30 June     30 June      2015     2014    Profit for Number of   Profit for Number of    the year shares in Per share the year shares in Per share  R’000 thousands in cents R’000 thousands in cents

Basic earnings per share 125 043 544 100 22.98 (119 425) 576 908 (20.70)Share options and contingent consideration* –  –  –  – –  

Diluted EPS 125 043 544 100 22.98 (119 425) 576 908 (20.70)

Headline earnings per share            Headline earnings per share is based on the Group's headline earnings divided by the weighted average number of shares in issue during the period.            Reconciliation between earnings and headline earnings per share            Basic EPS 125 043 544 100 22.98 (119 425) 576 908 (20.70)Adjustments:            – Loss on sale of property, plant and equipment 9 – 0.00 5 999 –  1.04 – Impairment of property, plant and equipment 3 747 –  0.69 –  –  – – Impairment of equity accounted investees 3 317 –  0.61 199 676 –  34.61

Headline EPS 132 116 544 100 24.28 86 250 576 908 14.95 Share options and contingent consideration* –  –  – –  –  – 

Diluted headline EPS 132 116 544 100 24.28 86 250 576 908 14.95

(*) At the reporting dates, the ruling share price of Petmin's shares was below the strike price of the options. As the exercise of the options would be anti-dilutive, they have been ingored for the dilution calculations.

During the year ended 30 June 2015, the Group acquired 28 496 778 of its own shares at an average acquisition price of R1.53 per share. At 30 June 2015, the Group held 32 808 234 of its own shares in treasury stock, representing 5.69% of the total issued shares.

34

8. Acquisition of subsidiaryAs previously disclosed in the Interim results for the six months ended 31 December 2014, on 1 December 2014, Petmin acquired 100% of the shares and loans of West Road Property 1 Proprietary Limited (WRP) for a total purchase consideration of R12.5 million. WRP owns the premises occupied by the Petmin corporate team. The acquisition has been treated as an asset acquisition.

The acquisition had the following effect on the Group’s assets and liabilities at acquisition on 1 December 2015.

 Recognised

values

Deferred tax (1 512)

Fixed assets 13 750

Bank and cash 526

Creditors (264)

  12 500

Paid in cash (12 500)

Cash acquired 526

Net cash outflow (11 974)

9. Investments

9.1 Investment in NAICDuring the year ended 30 June 2015 Petmin invested an additional R29 million (2014: R68 million) in North Atlantic Iron Corporation (NAIC). Petmin’s shareholding in NAIC is now 35% (30 June 2013: 33%).

9.2 Investment in CPF – Companhia Portuguesa Do Ferro, S.A. (CPF)During the year ended 30 June 2015, Petmin invested R3 million in the Moncorvo iron-ore to pig-iron project held by CPF. Petmin’s deal with CPF was structured as stepped investments to assist funding of the project feasibility studies in three phases, ultimately taking Petmin’s shareholding to 40%. The first tranche investment resulted in Petmin acquiring a 10% shareholding in CPF and was used to fund metallurgical test work. After receipt of initial metallurgical test results that did not meet Petmin’s investment criteria, Petmin has decided to fully impair its investment in CPF. Petmin remains a shareholder in the project and will reassess its strategy for the project going forward.

10. Pre-stripping cost

  Year ended Year ended  30 June 2015 30 June 2014  R’million R million

Opening balance in statement of financial position 305 328 Cash spend for the year 448 498 Mining – expensed on a units-of-production basis (depreciation) (505) (521)

Closing balance in statement of financial position 248 305

Petmin incurred cash stripping costs amounting to R448 million during the year ended 30 June 2015 (2014: R498 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 amounted to R505 million during the year ended 30 June 2015 (2014: R521 million). This resulted in a net decrease in the expenditure capitalised to pre-stripping activities of R57 million during the current year (2014: R23 million).

The depreciation is, in reality, the mining cost (stripping cost) that is expensed during the year when anthracite is produced (removed from the pit). 

11. Liquidity and going concernThe Group remains strongly cash generative and the directors believe that there is sufficient liquidity and funding available to finance the Group’s operations for the foreseeable future and that the going concern assumption is appropriate.

12. InventoryR20.8 million (2014: R40.6 million) of inventory is plant feed that will only be processed in greater than 12 months.

Inventory is recorded net of net realisable value provisions amounting to R27.6 million (2014: R3.4 million) after taking into account the depressed state of the market.

13. Revenue in advanceDuring the year ended 30 June 2015, Petmin received prepayments for certain export sales, the prepayment recorded at 30 June 2015 is dollar denominated and interest is accrued on the outstanding balance at a rate of 3.5% per annum.

14. Contingent liabilityAs announced on 21 May 2015, Petmin’s subsidiary Tendele Coal Mining (Pty) Limited, has withdrawn from the arbitration with its customer, as described in Note 13 of Petmin's December 2014 Interim Financial Statements published on SENS on Tuesday 24 February 2015 and will now seek declaratory relief from the High Court that the contract concerned is void. This course of action has been taken due to information recently coming to Tendele's and Petmin's attention during the course of the arbitration proceedings which is being considered and dealt with by Petmin.

Tendele and its legal advisors believe that the claims that were subject to the arbitration are unlikely to be successful hence no liability has been recognised at 30 June 2015.

15. Broad-based BEE transaction for Tendele Coal Mining (Pty) Ltd (Tendele)On 10 June 2015, Petmin announced a R350 million Broad-Based Black Economic Empowerment deal with the community around its mine (the beneficiaries being the children of the community) and with its employees for a 20% stake in Somkhele anthracite mine

The transaction is subject to the approval of Petmin shareholders at a general meeting. The transaction circular is expected to be distributed to shareholders during September 2015, with the General Meeting expected to be held before the end of October 2015. 

35

16. Related partiesThe Group entered into various transactions with related parties which occurred under terms that are no more favourable than those arranged with independent third parties (None of these related parties include management or directors of Petmin.).

17. Subsequent events  

17.1  Declaration of dividendOn 8 September 2015, the Company announced that it had declared a dividend of 5 cents per share which is in line with the approved dividend policy. The record date for payment of the cash dividend is 16 October 2015. Please refer to the separate notice of the declaration of dividend dated 8 September 2015.

17.2  Customer entered into business rescueOn 26 August 2015, Tendele was informed that one of its local customers, International Ferro Metals (SA) (Pty) Limited (IFMSA) has entered into Business Rescue. All amounts due by IFMSA to Tendele that were included in accounts receivable at 30 June 2015 have been paid. Accounts receivable for deliveries made after 30 June 2015 to IFMSA amount to approximately R10 million and are subject to the Business Rescue Process.

17.3 Change in role of directorOn 8 September 2015, the Company announced that Mrs Lebo Mogotsi, the current executive Deputy Chairperson of Petmin, will assume the role of non-executive Deputy Chairperson with effect from the Company’s annual general meeting (AGM) to be convened later this year.

Mrs Mogotsi will remain on the Board and will be available on a consulting basis to Petmin, and will continue to be an integral part of the strategy, development and growth of the Company.

17.4 Wage agreementAs announced on 6 August 2015, Tendele concluded a two-year wage agreement with NUM and AMCU, effective from 1 July 2015, comprising a Total Cost to Company (TCTC) increase of 8.6% for 2015/2016 and 6.5% for 2016/2017. In addition, a three-year wage agreement was signed with Solidarity comprising a TCTC increase of 6% for 2015/2016, 6.5% for 2016/2017 and 7% for 2017/2018. A TCTC increase of less than 6% for 2015/2016 was agreed with mine management. 

17.5  Other subsequent eventsThere have been no other events that have occurred subsequent to 30 June 2015 and before the condensed preliminary consolidated financial statements are authorised for issue which require adjustment of, or disclosure in the financial statements or notes thereto in accordance with IAS 10 – Events After the Reporting Period.  

36

Management commentaryfor the year ended 30 June 2015 

This management commentary has been prepared by management and has not been reviewed by the Group’s auditors.

i. General overview of performanceDuring the year under review, Tendele continued with its excellent safety record. Tendele’s management and all its employees are commended for their efforts regarding safety, efficiencies, productivity and cost control.

Following another strong operational performance at Somkhele, Petmin’s headline earnings increased by 62% to 24.28 cents per share (2014: 14.95 cents). Normalised earnings (see table below) have shown steady growth over the past two years and were up 30% to R132.1 million (2014: R101.7 million; 2013: R82.3 million).

Basic earnings per share was 22.98 cents per share, compared to the loss of 20.70 per share for 2014. The loss for the year ended 30 June 2014 was as a result of the impairment of the investment in Veremo of R181 million and the impairment of Iron Bird of R19 million.

  Year ended Year ended Year ended

Normalised earnings 30 June 2015 30 June 2014 30 June 2013       

Profit/(loss) for the year 125 043 (119 425) (112 032)Adjust for after-tax effect of:      – Loss on sale of property plant and equipment 9 5 999 –– Mark to market of listed investments – 13 464 (5 683)– Impairments 7 064 200 834 200 000– NRV impairment of inventory – 6 703 –– Reversal of accrual – (5 855) –Normalised profit after tax for the year 132 116 101 720 82 285

Normalised profit per share 24.28 17.63 14.26

% annual increase in profit per share 38 24  

Group capital expenditure, excluding pre-stripping, reduced by R17 million to R28 million (2014: R45 million) as capital expenditure at Somkhele was R26 million, down R13 million from the R39 million spent in 2014.

Additionally, Petmin made the following investments in subsidiaries and equity accounted investees:

Petmin acquired 100% of the shares and loans in WRP, whose only asset is the office building which houses the Petmin corporate team, for a total purchase consideration of R12.5 million.

Petmin invested an additional R29 million (2014: R68 million) in NAIC, taking its shareholding in NAIC to 35% (2014: 33%).

Petmin invested R3 million for a 10% shareholding in CPF which was subsequently impaired following test results which did not meet Petmin’s investment criteria.

Petmin’s interest bearing debt to equity ratio (net of cash on hand) decreased to 12.56% at 30 June 2015 from the 29.19% recorded at 30 June 2014. During the year ended 30 June 2015, Petmin received prepayments for certain export sales, the prepayment recorded at 30 June 2015 is dollar denominated and interest is accrued on the outstanding balance at a rate of 3.5% per annum.

Dividends and share buy-backsDuring the year ended 30 June 2015, Petmin paid a dividend of 3 cents per share and also acquired 28 496 778 of its own shares at an average acquisition price of R1.53 per share for a total investment of R44 million. Management believes that Petmin’s current share price significantly undervalues the Group’s assets and Petmin will continue with a share buy-back programme when the opportunity arises.

Anthracite DivisionSomkhele anthracite mine

 

  Year   Year  ended   ended  30 June Percentage 30 JuneSomkhele production performance 2015 Change 2014

Run of Mine (ROM) tonnes washed 3 025 567 13% 2 688 563

Yield 44.13% 5% 41.85%

Anthracite saleable tonnes produced 1 335 233 19% 1 125 089

Anthracite tonnes sold 1 222 150 19% 1 026 250

Discard tonnes washed 1 374 716 17% 1 174 419

Yield 26.80% 29% 20.80%

Energy coal saleable tonnes produced 368 413 51% 244 298

Energy coal sold 352 255 102% 174 556

Production of saleable anthracite increased by 19% in the year ended 30 June 2015 with improved volumes and yields. 

The average prices achieved for inland sales were unchanged from those achieved in 2014. The average prices achieved on the export market reduced by 2% in 2015. 71% of Somkhele’s export sales were dollar denominated with the remaining 29% denominated in Rands. The average dollar price of export sales reduced by 4%, but this was offset by a 9% weakening of the average exchange rate to 11.29 Rand/$ from 10.36 Rand/$ in 2014.

Production of saleable re-washed discard (“energy coal”) increased by 51% in the year ended 30 June 2015 with improved volumes and yields being achieved as management continues to make design improvements to the discard processing plant.

The average at-mine-gate selling price of energy coal increased by 9% in 2015 with continued strong demand for this product.

37

Expansion projects divisionPetmin focus remains on the development of the NAIC pig-iron project in North America.

North Atlantic Iron Corporation (“NAIC”)Following an extensive independent trade-off analysis of the various proposed sites during the year, NAIC has selected a site at the Port of Saguenay in Quebec as the location for the first pig iron plant. Detailed engineering design and costing is now underway for the Saguenay site. The site selection process encompassed a study of 13 locations over 2 years. It is anticipated that the first plant based in Saguenay, Quebec will have a significant cost advantage over material currently delivered to the U.S. In particular, it will avoid the significant costs of material movement from New Orleans to the Midwest.

4 production scenarios were evaluated and reviewed by Tenova and NAIC:

2 production levels – 425ktpa and 850ktpa

2 smelting furnaces – electric arc furnace (“EAF”) and submerged arc furnace (“SAF”)

All cases include pre-reduction in a rotary hearth furnace (“RHF”)

NAIC has made the decision to proceed with a production scenario of 425ktpa using an EAF smelter In each case it is assumed the 425ktpa of production will be for foundry grade Merchant Pig Iron (MPI) which trades at significant premium to standard MPI. While the economics of each case presented similar IRRs, the qualitative aspects as well as the mitigation of certain risk parameters, ultimately lead to the decision to proceed on this basis.

Iron-ore – South Africa (Veremo project)Veremo still awaits the execution of the mining right for which notification of its award was received in January 2014. During the year ended 30 June 2015 additional metallurgical test work was conducted and a commercial scale campaign will be undertaken at Mogale Alloys on their 10 MW DC Arc Furnace. The Veremo ore will be smelted in their single electrode DC arc furnace to produce high purity Pig Iron and a titanium rich slag. The furnace will be modified and the engineering design for the modifications has been completed by GLPS Project Management Engineering Services.  The arbitration proceedings against Framework Investments Limited and Kermas Limited for the payment of the three R65 million distributions payable from the Veremo project to Petmin will continue once dates have been scheduled for the arbitration hearings. 

ii. Prospects Anthracite divisionTendele remains focussed on safety, efficiencies, productivity and cost control.

Current anthracite production levels are expected to be maintained in the year ahead, with sales volumes expected to increase slightly as inventory levels are reduced.

Local customers remain under pressure in the current market with demand looking slightly weaker. However, as a large proportion of local sales are contracted, prices are expected to remain at current levels.

We expect the dollar prices to remain under pressure for our exports, with Rand receipts aided by the weakening of the Rand.

Energy coal sales are expected to increase to approximately 450 000 tonnes per annum with average at-mine-gate prices received in Rands expected to increase by approximately 15% due to improved pricing received from revised product blends and due to expected weakening of the Rand.

Capital expenditure to June 2016 is expected to be approximately R83 million with approximately half of this on planned development and relocation expenditure to open up new mining areas. There is no additional capital pre-stripping forecast in the year ending June 2016.

Tendele is expanding its efforts to build even stronger relationships with all stakeholders, including its employees and their families and with the community within which its operates (including the Tribal Authority, all traditional structures, schools, the youth, the business community and other parties in the community). We do not believe that the provision of basic services (water, electricity, health care and education) is our primary responsibility, however, we do believe that we are making a material difference in the community and we can work together with the authorities and the community to ensure a better future.

Expansion projects divisionPetmin intends to invest the final US$4 million to take its shareholding in NAIC to 40% as the economics of the first plant in Saguenay remain favourable, notwithstanding the current market conditions.

Tenova will conclude the detailed site specific engineering design work at Saguenay within 6 months which work will form the basis of the feasibility required to raise the capital for the construction of NAIC’s first plant at Saguenay.  During this period the environmental permitting process will also commence, which is expected to take 12 months.

The total capex required for plant 1 including an overrun facility is currently estimated by Tenova at US$313m and discussions continue with the Government of Quebec and various Canadian federal development agencies regarding the funding options available to NAIC. Once this funding base is established and site specific feasibility is concluded the capital markets will be approached by NAIC for the balance of the capital required.

In the current market environment and due to the volatility in the equity markets, our project partners, Grand River Inc. and Petmin believe it will be prudent to continue to develop the project jointly in its current structure rather than to attempt to list NAIC separately and overlay the project with the additional costs of a separate listing. For these reasons the proposed unbundling has been delayed indefinitely.

Due to the current state of the commodities market, cash preservation is critical and, despite a solid balance sheet, Petmin will not investigate any opportunities that are not cash producing and not in the bottom quartile of the cost curve.

Additional details on Petmin, including a detailed presentation on the results (which will be available from 9 September 2015) can be found on our website www.petmin.co.za

By order of the Board   

ID Cockerill JC du Preez

Chairman Chief Executive Officer

   

Johannesburg

8 September 2015

38

ANNEXURE B

HISTORICAL FINANCIAL INFORMATION OF TENDELE COAL MINING (PROPRIETARY) LIMITED

Basis of preparation

The definitions and interpretations commencing on page 2 of this circular have been used in this Annexure B.

The statements of financial position at 30 June 2014, 30 June 2013 and 30 June 2012 and the statements of comprehensive income, changes in equity and cash flows and the accounting policies and notes for the years then ended (“Historical Financial Information”) have been extracted from the audited consolidated financial statements of Tendele for the three years ended 30 June 2014, 30 June 2013 and 30 June 2012 (“Financial Statements”). Adjustments have been made to the presentation of the Historical Financial Information in order to comply with the JSE Listings Requirements. The historical financial information is presented in Rand.

The Financial Statements were audited by KPMG Inc. in accordance with International Standards on Auditing, and an unqualified audit opinion on the Financial Statements was issued.

As Tendele is a 100% held subsidiary of Petmin Limited, it is not Tendele’s policy to prepare preliminary financial statements for the year ended 30 June 2015. The statement of financial position at 30 June 2015 and the Income Statement for the year ended 30 June 2015 have been reviewed by KPMG Inc.

KPMG Inc. has issued the Reporting Accountants’ report on this report of Historical Financial Information included as Annexure C to this circular.

The Directors of Tendele are responsible for the preparation of the report on Historical Financial Information contained in this Annexure B.

COMMENTARY

Nature of business

The company carries on business in anthracite coal mining and related activities.

Holding company

The company’s holding company is Petmin Limited incorporated in South Africa.

Dividends

No dividend was declared for the financial year end 30 June 2014 and 30 June 2013. On 19 September 2012, Tendele declared a cash dividend of R28 845 409.

Events after the reporting date

No significant events have occurred after 30 June 2014 other than as disclosed in note 23.

Consolidated financial statements

No consolidated financial statements have been prepared as the Company is a wholly owned subsidiary of Petmin Limited, a company incorporated in South Africa.

Directors and directors’ remuneration

The directors of Tendele are Mr JC du Preez and Mrs ALK Mogotsi. The directors’ remuneration is disclosed in paragraph 3.3.1 of this circular.

39

Statement of financial position

Notes

ReviewedYear ended

30 June 2015

AuditedYear ended

30 June 2014

AuditedYear ended

30 June 2013

AuditedYear ended

30 June 2012R R R R

Assets

Non-current assets 1 053 864 833 1 127 324 571 1 130 711 661 868 897 993Property, plant and equipment 2 994 492 584 1 060 796 907 1 069 757 104 868 897 993Investment in Joint Venture shares 3 100 100 100 –Loan due from Joint Venture 4 59 372 149 66 527 564 60 954 457 –

Current assets 609 086 922 479 143 567 359 300 045 197 654 703

Inventory 5 250 117 917 264 532 467 161 036 485 100 311 965Trade and other receivables 6 102 838 298 117 998 470   195 802 116 94 897 719Taxation receivable 18.2 2 095 011 2 095 011 2 095 011 2 095 011Cash and cash equivalents 7 254 035 696 94 517 619 366 433 350 008

Total assets 1 662 951 755 1 606 468 038 1 490 011 706 1 066 552 696

Equity and liabilities

Ordinary share capital and reserves 722 679 099 590 096 054 483 420 367 420 631 739

Share capital 8 100 100 100 100Hedging reserve 9 – – -2 618 640 –Retained earnings 722 678 999 590 095 954 486 038 907 420 631 639

Non-current liabilities 440 303 576 591 805 796 555 828 307 248 933 883

Long-term borrowings 11 108 405 401 289 159 038 322 341 681 68 076 047Environmental rehabilitation provision 12 84 324 933 66 863 470 39 188 327 22 194 996Deferred taxation 13 247 573 242 235 783 288 194 298 299 158 662 840

Current liabilities 499 969 080 424 566 188 450 763 032 396 987 074

Inter-company loan 14 59 843 801 127 624 215 222 729 917 202 967 625Hedge liability 9 4 628 499 – 3 637 000 –Trade and other payables 10 144 267 139 221 900 347 196 228 478 138 326 723Revenue in advance 147 562 414 – – –Bank overdraft 7 – – 6 827 437 19 833 735Current portion of long-term borrowings 11 143 667 227 75 041 626 21 340 200 35 858 991

Total equity and liabilities 1 662 951 755 1 606 468 038 1 490 011 706 1 066 552 696

40

Income statement

Notes

ReviewedYear ended

30 June 2015

AuditedYear ended

30 June 2014

AuditedYear ended

30 June 2013

AuditedYear ended

30 June 2012R R R R

Revenue 1 274 164 947 1 019 788 825 833 224 020 516 303 435Cost of sales (1 014 158 930) (800 690 551) (660 791 737) (350 826 628)

Gross profit 260 006 017 219 098 274 172 432 283 165 476 807 Other (loss)/income (257 186) (8 074 588) 458 220 190 749 Administrative expenses (46 704 143) (36 692 803) (23 217 020) (17 734 709)

Operating profit before net finance cost 15 213 044 688 174 330 883 149 673 483 147 932 847 Net finance costs 16 (28 901 567) (29 807 209,00) (18 766 987) (7 200 731)

Net profit before taxation 184 143 121 144 523 674 130 906 496 140 732 116 Income tax 17 (51 560 074) (40 466 629,00) (36 653 819) (39 404 993)

Net profit for the year 132 583 047 104 057 045 94 252 677 101 327 123

Statement of comprehensive income

NoteReviewed

2015Audited

2014Audited

2013Audited

2012R R R R

Net profit for the year 132 583 047 104 057 045 94 252 677 101 327 123Other comprehensive income (after tax) 2 618 640 (2 618 640)Items that may be reclassified to profit and lossEffective portion of changes in fair value of cash flow hedges 9 – 2 618 640 (2 618 640) –

Total comprehensive income for the year 132 583 047 106 675 685 91 634 037 101 327 123

41

Statement of changes in equity

Sharecapital

Retainedearnings

Hedgingreserve Total

R R R R

Balance at 30 June 2011Total comprehensive income for the year 100 319 304 516 – 319 304 616

Net profit for the year – 101 327 123 – 101 327 123Effective potion of change in fair value of cash flow hedges – – – –

Transactions with owners, recorded directly in equity – – – –

Dividends paid – – – –

Balance at 30 June 2012 100 420 631 639 – 420 631 739Total comprehensive income for the year – 94 252 677 -2 618 640 91 634 037

Net profit for the year – 94 252 677 – 94 252 677Effective potion of change in fair value of cash flow hedges – -2 618 640 (2 618 640)

Transactions with owners, recorded directly in equity (28 845 409) (28 845 409)

Dividends paid – (28 845 409) – (28 845 409)

Balance at 30 June 2013 100 486 038 907 (2 618 640) 483 420 367

Total comprehensive income for the year – 104 057 045 2 618 640 106 675 685

Net profit for the year – 104 057 045 – 104 057 045Effective potion of change in fair value of cash flow hedges – – 2 618 640 2 618 640

Transactions with owners, recorded directly in equity – – – –

Dividends paid – – – –

Balance at 30 June 2014 100 590 095 952 – 590 096 052

42

Statement of cash flows

Notes 2014 2013 2012R R R

Cash flows from operating activities 18.1 744 632 125 502 008 217 394 834 638 Interest received 195 247 2 372 579 227 044 Interest paid (33 244 829) (18 889 566) (4 957 102) Income tax due/(paid) 18.2 – – 2 560 639

Net cash flows from operating activities 711 582 543 485 491 230 392 665 219

Cash flows from investing activitiesAcquisition of property, plant and equipment (536 936 369) (623 107 828) (616 644 338) Proceeds on disposal of property, plant and equipment 1 000 000 6 974 693 – Investment acquired in Joint Venture Shares 3 – (100) – Loan granted to Joint Venture 4 – (70 146 252) – Loan repaid by Joint Venture 4 – 11 517 967 –

Net cash flows from investing activities (535 936 369) (674 761 520) (616 644 338)

Cash flows from financing activities(Decrease)/Increase in inter-company loans (95 105 702) (8 608 421) 123 439 161 Increase in long-term borrowings 40 000 000 285 000 000 (16 205 206) Repayment of long-term borrowings (19 561 849) (45 253 157) – Dividends paid – (28 845 409) –

Net cash flows from financing activities (74 667 551) 202 293 013 107 233 955

Net movement in cash and cash equivalents 100 978 623 13 022 273 (116 745 164) Cash and cash equivalents beginning of the year 7 (6 461 004) (19 483 727) 97 261 437

Cash and cash equivalents end of the year 7 94 517 619 6 461 004 (19 483 727)

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1. SIGNIFICANT ACCOUNTING POLICIES

Tendele Coal Mining Proprietary Limited (the “Company”) is a company incorporated and domiciled in South Africa.

1.1 Basis of preparation

Statement of compliance

The financial statements of the Company has been prepared in accordance with International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, as well as the requirements of the South African Companies Act.

The financial statements were authorised for issue by the directors on 19 December 2014.

The financial statements are prepared on the historical cost basis, except for certain financial instruments which are measured at fair value in terms of IAS 39 – Financial instruments: Recognition and measurement

The directors have no reason to believe that the Company will not be a going concern in the foreseeable future, based on forecast and available cash resources.

Use of estimates and judgements

The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect the application of policies and reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgements about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

In particular, information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amount recognised in the financial statements are described in the following notes:

• Note 9 Hedge reserve• Note 12 Environmental rehabilitation provisionThe accounting policies set out below have been applied consistently to all periods presented in these company financial statements.

1.2 Foreign currency

Foreign currency transactions

Transactions in foreign currencies are translated to the respective functional currencies at the foreign exchange rate ruling at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies at the reporting date are translated to rands at the foreign exchange ruling at that date. Foreign exchange differences arising on translation are recognised in the statement of comprehensive income. Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction. Non-monetary assets and liabilities denominated in foreign currencies that are stated at fair value are translated to rands at foreign exchange rates ruling at the dates the fair value was determined.

1.3 Property, plant and equipment

Owned assets

Items of property, plant and equipment are stated at cost less accumulated depreciation (see below) and impairment losses (see accounting policy 1.6). The cost of self-constructed assets includes the cost of materials, direct labour and the costs directly attributable to bringing the asset to a working condition for its intended use, the initial estimate, where relevant, of the costs of dismantling and

44

removing the items and restoring the site on which they are located, and an appropriate proportion of production overheads.

Borrowing costs directly attributable to the acquisition or construction of qualifying assets are capitalised to the cost of those assets, until such time as the assets are substantially ready for their intended use.

Subsequent costs

The Company recognises, in the carrying amount of an item of property, plant and equipment, the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the Company and the cost of the item can be measured reliably. All other costs are recognised in the statement of comprehensive income as an expense is incurred.

Depreciation

Depreciation is charged to the Statement of comprehensive income on a straight line or units-of-production basis over the estimated useful lives of items of, plant and equipment. Property and water rights are not depreciated. The estimated useful lives are as follows:

Useful life Method of depreciationLand – –Buildings foundations and civils 10 – 30 years Units of productionMineral assets and mine development costs 10 – 30 years Units of productionProperty, plant and mining equipment 5 – 30 years Units of productionOffice machines, computers and furniture and fittings 3 – 6 years Straight lineVehicles 5 years Straight lineCapital work in progress – –

Depreciation methods, useful lives and residual values are reassessed at the reporting date.

No depreciation is charged on assets under construction.

1.4 Mineral development costs and exploration expenditure (mineral assets)

The costs of acquiring mineral reserves and resources are capitalised on the statement of financial position as incurred. Capitalised costs (development expenditure) include expenditure incurred to expand the capacity of a mine and to maintain production. Qualifying, directly attributable exploration expenditure is capitalised when incurred. Capitalised development expenditure and capitalised exploration expenditure (mineral assets) is stated at cost less accumulated amortisation and impairment losses. Capitalised development expenditure and exploration expenditure (mineral assets) is amortised over its useful life on a units-of-production basis.

1.5 Impairment

Non-financial assets

The carrying amounts of the Company’s non-financial assets, other than inventories (see note 1.8) and deferred tax assets (see note 1.14), are reviewed at each reporting to determine whether there is any indication of impairment. If there is any indication that an asset may be impaired, its recoverable amount is estimated.

An impairment loss is recognised whenever the carrying amount of an asset or its cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss.

The recoverable amount of assets or cash generating units is the greater of their fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For an asset that does not generate largely independent cash inflows, the recoverable amount is determined for the cash-generating unit to which the assets belong.

45

An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been determined, net

of depreciation or amortisation, if no impairment loss had been recognised. An impairment loss in respect of goodwill is not reversed.

Financial assets

A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of that asset.

An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount, and the present value of the estimated future cash flows discounted at the original effective interest rate.

Individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics.

All impairment losses are recognised in profit or loss. An impairment loss is reversed if the reversal can be related objectively to an event occurring after the impairment loss was recognised. For financial assets measured at amortised cost, the reversal is recognised in profit or loss. Interest is still recognised on any impaired financial assets.

1.6 Non-derivative financial assets

The Company initially recognises loans and receivables on the date that they are originated. All other financial assets (including assets designated as at fair value through profit or loss) are recognised initially on the trade date, which is the date that the Company becomes a party to the contractual provisions of the instrument.

The Company derecognises a financial asset when the contractual rights to the cash flows from the asset expire, or it transfers the rights to receive the contractual cash flows in a transaction in which substantially all the risks and rewards of ownership of the financial asset are transferred.

Any interest in such transferred financial assets that is created or retained by the Company is recognised as a separate asset or liability.

Financial assets and liabilities are offset and the net amount presented in the statement of financial position when, and only when, the Company has a legal right to offset the amounts and intends either to settle them on a net basis or to realise the asset and settle the liability simultaneously.

The Company’s classifies non-derivative financial assets into the following categories: financial assets at fair value through profit or loss, held-to-maturity financial assets, loans and receivables and available-for-sale financial assets.

1.7 Inventories

Inventory of finished products is stated at the lower of its production cost and net realisable value. Production costs include mining, processing and materials handling costs as well as an appropriate share of overheads based on normal operating capacity. Net realisable value is the estimated selling price in the ordinary course of business, less the estimated costs of completion and selling expenses.

The cost of inventory is based on a monthly moving average and includes expenditure incurred in acquiring the inventories and bringing them to their existing location and condition.

In-progress inventory consists of stock-in-pit and run-of-mine (ROM) inventory. Stock-in-pit inventory is valued at the cost of mining (drilling and blasting costs). ROM inventory is valued at the cost of mining (drilling and blasting costs) and loading and hauling costs ex mine.

Consumable stores are valued at actual cost calculated at the weighted moving average price. Allowances are made for slow moving or redundant items.

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1.8 Trade and other receivables

Trade and other receivables are recognised initially at fair value and are subsequently measured at amortised cost using the effective interest rate method less impairment losses (see accounting policy 1.6).

1.9 Cash and cash equivalents

Cash and cash equivalents comprise cash balances and call deposits. Bank overdrafts that are repayable and form part of the Company’s cash management are included as a component of cash and cash equivalents for the purpose of the statements of cash flows.

1.10 Share capital

Ordinary shares

Ordinary share capital is classified as equity. Incremental costs directly attributable to the issue of new shares or options are shown in equity as a deduction, net of tax, from the proceeds.

Dividends

Dividends are recognised as a liability in the period in which they are declared.

1.11 Hedging reserve

The hedging reserve comprises the effective portion of the cumulative net change in the fair value of hedging instruments used in cash flow hedges pending subsequent recognition of the hedged cash flows.

1.12 Interest-bearing borrowings

Interest-bearing borrowings are recognised initially at fair value less attributable transaction costs. Subsequent to initial recognition, interest-bearing borrowings are stated at amortised cost with any difference between cost and redemption value being recognised in the income statement over the period of the borrowings on an effective interest basis.

1.13 Income tax

Income tax on the profit and loss for the year comprises current and deferred tax. Income tax is recognised in the statement of comprehensive income except to the extent that it relates to items recognised directly in equity, in which case it is recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustments to the tax payable in respect of previous years.

Deferred tax is provided using the balance sheet liability method, providing for temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for taxation purposes. The amount of deferred tax provided is based on the expected manner of realisation or settlement of the carrying amount of assets and liabilities using tax rates enacted or substantively enacted at the reporting date.

A deferred tax asset is recognised only to the extent that it is probable that future taxable profits will be available against which the asset can be utilised. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benefit will be realised.

Additional income taxes that arise from the distribution of dividends (secondary tax on companies) are recognised at the same time as the liability to pay the related dividend.

1.14 Revenue

Goods sold

Revenue is measured at the fair value of the consideration received or receivable, net of returns, trade discounts and volume rebates. Revenue from the sale of goods is recognised in profit or loss when the significant risks and rewards of ownership have been transferred to the buyer. No revenue is recognised if there are uncertainties regarding recovery of the consideration due, associated costs or the possible return of goods, or continuing management involvement with the goods.

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1.15 Finance income and expenses

Finance expense

Net finance costs comprise interest payable on borrowings calculated using the effective interest rate method and the unwinding of the discount of the rehabilitation provision (refer to significant accounting policy 1.18).

Finance income

Net finance income comprises of interest receivable on funds invested and interest receivable on loan due from joint venture.

Interest income is recognised in the income statement as it accrues, using the effective interest method. Dividend income is recognised in the income statement on the date the entity’s right to receive payments is established which, in the case of quoted securities, is usually the ex-dividend date.

1.16 Derivative financial instruments

The Company uses derivative financial instruments to hedge its exposure to foreign exchange and interest rate risks arising from operational, financing and investment activities. In accordance with its treasury policy, the Company does not hold or issue derivative financial instruments for trading purposes. However, derivatives that do not qualify for hedge accounting are accounted for as trading instruments. When a derivative is designated as the hedging instrument in a hedge of the variability in cash flows attributable to a particular risk associated with a recognised asset or liability or a highly probable forecast transaction that could affect profit or loss, the effective portion of changes in the fair value of the derivative is recognised in other comprehensive income and presented in the hedging reserve in equity.

Derivative financial instruments are recognised initially at fair value. Subsequent to initial recognition, derivative financial instruments are measured at fair value. The gain or loss on remeasurement to fair value is recognised immediately in the income statement. However, where derivatives qualify for hedge accounting, recognition of any resultant gain or loss depends on the nature of the item being hedged

Cash flow hedges

Where a derivative financial instrument is designated as a hedge of the variability in cash flows of a recognised asset or liability, or a highly probable forecasted transaction, the effective part of any gain or loss on the derivative financial instrument is recognised directly in equity. When the forecasted transaction subsequently results in the recognition of a non-financial asset or non-financial liability, or the forecast transaction for a non-financial asset or non-financial liability the associated cumulative gain or loss is removed from equity and included in the initial cost or other carrying amount of the non-financial asset or liability. If a hedge of a forecasted transaction subsequently results in the recognition of a financial asset or financial liability, the associated gains and losses that were recognised directly in equity are reclassified into profit or loss in the same period or periods during which the asset acquired or liability assumed affects profit or loss (i.e. when interest income or expense is recognised). For cash flow hedges, other than those covered by the preceding two policy statements, the associated cumulative gain or loss is removed from equity and recognised in the income statement in the same period or periods during which the hedged forecast transaction affects profit or loss. The ineffective part of any gain or loss is recognised immediately in the income statement.

When a hedging instrument expires or is sold, terminated or exercised, or the entity revokes designation of the hedge relationship but the hedged forecast transaction is still expected to occur, the cumulative gain or loss at that point remains in equity and is recognised in accordance with above policy when the transaction occurs. If the hedged transaction is no longer expected to take place, the cumulative unrealised gain or loss recognised in equity is recognised immediately in the income statement.

1.17 Provisions

A provision is recognised in the statement of financial position when the Company has a present legal or constructive obligation as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation. If the effect is material, provisions are determined by

48

discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money and, where appropriate, the risks specific to the liability.

Environment rehabilitation

Estimated rehabilitation costs, which are based on the Company’s interpretation of current environmental and regulatory requirements, represent the present value of the expected future costs to rehabilitate the mine properties at termination of mining operations. The estimated costs of rehabilitation are reviewed annually and adjusted as appropriate for changes in legislation, technology or other circumstances.

Provision is made for the Company’s legal and constructive obligation to dismantle, remove and restore items of property, plant and equipment and remediation of disturbed areas in the financial period when the related environmental disturbance occurs, based on the estimated future costs using information available at the reporting date. The provision is discounted using the current market-bases pre-tax discount rate and the unwinding of the discount is included in interest expense. At the time of establishing the provision, a corresponding asset is capitalised where it gives rise to a future benefit, and depreciated over its useful life on a units-of-production basis.

If the related asset is measured using the cost model:

(a) subject to (b), changes in the liability shall be added to, or deducted from, the cost of the related asset in the current period.

(b) the amount deducted from the cost of the asset shall not exceed its carrying amount. If a decrease in the liability exceeds the carrying amount of the asset, the excess shall be recognised immediately in profit or loss.

(c) if the adjustment results in an addition to the cost of an asset, the entity shall consider whether this is an indication that the new carrying amount of the asset may not be fully recoverable. If it is such an indication, the entity shall test the asset for impairment by estimating its recoverable amount, and shall account for any impairment loss, in accordance with IAS 36.

Based on current environmental regulations and known rehabilitation requirements, management has included its best estimate of these obligations in its rehabilitation provision.

However, it is reasonably possible that the Company’s estimated of its ultimate rehabilitation liabilities could change as a result of changes in regulations or cost estimates.

1.18 New standards and interpretations not yet adopted

A number of new standards, amendments to standards and interpretations have been issued but are not yet effective for the year ended 30 June 2014. These new standards and interpretations have not been early adopted by the company.

The adoption of these standards are not expected to have a significant impact on the financial statements of the entity.

Standard/interpretation

Effective, annual periods commencing on/after

IAS 16 andIAS 38amendments

Property, plant and equipment andIntangible assets 1 January 2016

IFRS 9 Financial instruments 1 January 2018

IFRS 11 amendment Joint arrangements 1 January 2016

IFRS 15 Revenue from contracts with customers 1 January 2017

1.19 Comparative figures

Where applicable, comparative figures have been adjusted to disclose them on the same basis as current period figures to achieve fairer presentation.

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2. PROPERTY, PLANT AND EQUIPMENT

CostAccumulated depreciation

Net book value

30 June 2014 R R R

Mineral assets and mine development costs 239 612 461 (31 203 510) 208 408 951Plant and mining equipment 565 930 679 (100 848 122) 465 082 557Assets under construction – – –Capital spares 4 565 615 (860 343) 3 705 272Capitalised pre-stripping 1 813 761 248 (1 509 254 779) 304 506 469Buildings 18 887 584 (2 583 239) 16 304 345Furniture and fittings 1 721 999 (1 061 812) 660 187Office equipment, computer and other equipment 9 658 817 (4 595 368) 5 063 449Motor vehicles 5 361 091 (3 858 471) 1 502 620Decommissioning asset/Rehab asset 59 991 232 (4 844 276) 55 146 956Acquisition of water rights 416 101 – 416 101

2 719 906 827 (1 659 109 920) 1 060 796 907

CostAccumulated depreciation

Net book value

30 June 2013 R R RMineral assets and mine development costs 213 050 650 (21 395 523) 191 655 127Plant and mining equipment 568 742 249 (74 426 922) 494 315 327Assets under constructionCapital spares

–3 911 785

–(665 504)

–3 246 281

Capitalised pre-stripping 1 315 988 400 (988 267 911) 327 720 489Buildings 17 497 134 (2 027 091) 15 470 043Furniture and fittings 1 630 251 (824 479) 805 772Office equipment, computer and other equipment 6 759 169 (2 983 264) 3 775 905Motor vehicles 4 302 084 (2 952 701) 1 349 383Decommissioning asset 34 137 067 (3 134 391) 31 002 676Acquisition of water rights 416 101 – 416 101

2 166 434 890 (1 096 677 786) 1 069 757 104

CostAccumulated depreciation

Net book value

30 June 2012 R R RMineral assets and mine development costs 173 118 892 (15 890 132) 157 228 760Plant and mining equipment 483 892 995 (52 865 504) 431 027 491Assets under constructionCapital spares

15 811 4863 911 785

–(511 389)

15 811 4863 400 396

Capitalised pre-stripping 796 287 151 (588 828 150) 227 459 001Buildings 14 473 493 (1 384 056) 13 089 437Furniture and fittings 1 585 739 (575 364) 1 010 375Office equipment, computer and other equipment 3 994 250 (1 743 015) 2 251 235Motor vehicles 4 302 082 (2 040 496) 2 261 586Decommissioning asset 17 399 654 (2 457 529) 14 942 125Acquisition of water rights 416 101 – 416 101

1 505 193 628 (636 295 635) 868 899 993

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Net bookvalue

1 July 2013Cost/

AdditionsTransfers/Disposals

Depreciation/Amortisation

Net bookvalue

30 June 2014June 2014 R R R R RMineral assets and mine development costs 191 655 127 26 561 811 – (9 807 987) 208 408 951Plant and equipment 494 315 327 6 507 027 (9 318 597) (26 421 200) 465 082 557Assets under construction – – – –Capital spares 3 246 281 653 830 – (194 839) 3 705 272Capitalised pre-stripping 327 720 489 497 772 848 – (520 986 868) 304 506 469Buildings 15 470 043 1 390 450 – (556 148) 16 304 345Furniture and fittings 805 772 91 748 – (237 333) 660 187Office equipment, computer and other equipment 3 775 905 2 899 648 – (1 612 104) 5 063 449Motor vehicles 1 349 383 1 059 007 – (905 770) 1 502 620Decommissioning asset 31 002 676 25 854 165 – (1 709 885) 51 146 956Acquisition of water rights 416 101 – – – 416 101

1 069 757 104 562 790 534 (9 318 597) (562 432 134) 1 060 796 907

Net bookvalue

1 July 2012Cost/

AdditionsTransfers/Disposals

Depreciation/Amortisation

Net bookvalue

30 June 2013June 2013 R R R R RMineral assets and mine development costs 157 228 760 39 931 758 – (5 505 391) 191 655 127Plant and equipment 431 027 491 29 718 056 55 460 812 (21 891 033) 494 315 327Assets under construction 15 811 486 46 294 406 (62 105 891) – –Capital spares 3 400 396 – (154 115) 3 246 281Capitalised pre-stripping 227 459 001 529 701 247 – (429 439 759) 327 720 489Buildings 13 089 437 3 023 640 – (643 034) 15 470 043Furniture and fittings 1 010 375 44 511 – (249 114) 805 772Office equipment, computer and other equipment 2 251 235 2 764 923 – (1 240 253) 3 775 905Motor vehicles 2 261 586 – (912 203) 1 349 383Decommissioning asset 14 942 125 16 705 536 – (644 985) 31 002 676Acquisition of water rights 416 101 – – – 416 101

868 897 993 668 184 077 (6 645 079) (460 679 887) 1 069 757 104

Net bookvalue

1 July 2011Cost/

AdditionsTransfers/Disposals

Depreciation/Amortisation

Net bookvalue

30 June 2012June 2012 R R R R RMineral assets and mine development costs 114 664 438 48 782 758 – (6 218 436) 157 228 760Plant and equipment 270 161 871 17 230 658 162 146 084 (18 511 122) 431 027 491Assets under construction 43 152 292 134 805 278 (162 146 084) – –Capital spares 3 161 316 404 192 – (165 112) 3 400 396Capitalised pre-stripping 41 253 583 405 029 010 – (218 823 592) 227 459 001Buildings 7 425 262 6 272 973 – (608 798) 13 089 437Furniture and fittings 907 042 335 222 – (231 889) 1 010 375Office equipment, computer and other equipment 1 085 943 1 699 529 – (534 237) 2 251 235Motor vehicles 1 753 344 1 555 977 – (1 047 735) 2 261 586Decommissioning asset 15 147 802 528 741 – (734 418) 14 942 125Acquisition of water rights 416 101 – – – 416 101

499 128 994 616 644 338 – (246 875 339) 868 897 993

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The second coal processing plant with a carrying amount of R145.9 million (2013 : R152.0 million: 2012: R0) commissioned early 2013 has been supplied as guarantee to the IDC (refer to note 11).

As security for new loan facilities taken out during the year ended 30 June 2013 (refer to notes 11.1 and 11.1), Tendele Coal Mining Proprietary Limited have provided General Notarial Bonds over its movable assets other than Tendele’s investment in the mining joint venture referred to in notes 4 and 5 below In addition, Tendele has provided a Special Notarial Bond over its moveable property (other than the second plant which is bonded under a pre-existing finance agreement). The carrying value of these assets amount to R334.5 million (2013: R351.9 million: 2012: R0).

2014 2013 2012R R R

3. INVESTMENT IN JOINT VENTURE SHARESInvestment in Joint Venture Shares 100 100 –Tendele Coal Mining (Proprietary) Limited acquired 50% of Somkhele Plant (Proprietary) Limited ordinary shares during the year ended 30 June 2013.

4. LOAN DUE FROM JOINT VENTUREOpening balance 60 954 457 – –Loan granted – 70 146 252 –Loan repaid – (11 517 967) –Interest accrued 5 573 107 2 326 172 –Loan due from joint Venture 66 527 564 60 954 457 –

On 27 February, 2013, Tendele Coal Mining (Proprietary) Ltd, subscribed for 100 shares in Somkhele Plant (Proprietary) Limited for R100 which, after the issuance of the shares, grants Tendele a 50% shareholding in the issued ordinary share capital of the Somkhele Plant (Proprietary) Limited with the remaining 50% held by Sandton plant Hire (Pty) Ltd (“SPH”). SPH has been the mining contractor at the Somkhele Anthracite Mine since inception of the mine. Somkhele Plant (Proprietary) Limited is jointly controlled by Tendele and SPH

Tendele acquired 50% of the shareholder loan in Somkhele Plant (Proprietary) Limited for a total cost of R70 million (R62 million cash plus plant and equipment of R8 million). The loans are unsecured and bear interest at bank prime lending rates. For the year ended 30 June 2013, the Somkhele Plant (Proprietary) Limited repaid R11.5 million of the loan to Tendele. The shareholders loans in the Mining JV have been ceded in favour of ABSA Bank as security for instalment credit facilities to the value of R97 628 625 (2013: R150 932 598) in the Mining JV.

2014 2013 2012R R R

5. INVENTORYConsumable stores 14 950 990 6 399 343 7 786 371Work-in-progress 84 357 344 78 196 467 41 286 145Finished coal product 165 224 133 76 440 675 51 239 449

264 532 467 161 036 485 100 311 965

Inventory held by Tendele Coal Mining Proprietary Limited with a carrying value of R264.5 million (2013: R161 million: 2012: R0) is secured by a general notarial bond in favour of Standard Bank of South Africa Limited (see note 12).

Inventory is recorded net of net realisable value provisions amounting to R12 734 988 (2013: R0 : 2012: R0)

2014 2013 2012R R R

6. TRADE AND OTHER RECEIVABLESTrade receivables 96 032 141 172 875 170 71 724 853Other 21 966 329 22 926 946 23 172 866

117 998 470 195 802 116 94 897 719

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The Company’s exposure to credit and currency risks and impairment losses related to trade and other receivable are disclosed in note 20.3.

The book debts of Tendele Coal Mining Proprietary Limited with a value of R96.0 million (2013: R172.8 million: 2012: R0) have been ceded to Standard Bank of South Africa Limited as security for overdraft facilities of R50 million (2013: R50 million: 2012: R0).

Other receivables of Tendele Coal Mining Proprietary Limited with a carrying value of R21.9 million (2013: R22.9 million: 2012: R0) are secured by a general notarial bond in favour of Standard Bank of South Africa Limited (see note 12).

2014 2013 2012R R R

7. CASH AND CASH EQUIVALENTSCurrent accounts 5 305 54 697 65 369Call accounts 94 513 317 305 262 268 219Cash on hand (1 003) 6 474 16 420Cash and cash equivalents 94 517 619 366 433 350 008

Bank overdraft – (6 827 437) (19 833 735)94 517 619 (6 461 004) (19 483 727)

At the reporting date, the Company has banking facilities of R50 million at its disposal. The overdraft bear interest at bank prime lending rates.

The bank accounts of Tendele Coal Mining Proprietary Limited with a carrying value of R94 517 619 million (2013: R366 433:2012: R0) have been ceded as security for banking facilities provided by Standard Bank of South Africa Limited (refer to note 12).

2014 2013 2012

R R R8. SHARE CAPITAL

Authorised4 000 ordinary shares of R1 each 4 000 4 000 4 000Issued100 Ordinary shares of R1 each 100 100 100

9. HEDGING RESERVEOpening balance 3 637 000 – –Effective portion of changes in fair value of cash flow hedges (3 637 000) 3 637 000 –Hedge (liability) at year end – 3 637 000 –

Deferred tax on effective portion of changes in fair value of cash flow hedges 1 018 360 (1 018 360) –Charge through other comprehensive income and hedging reserve closing balance (2 618 640) 2 618 640 –At 30 June 2013, Tendele Coal Mining held zero-cost collar and cap option contracts with delivery dates ranging from July 2013 to September 2013 to sell US Dollars for $12 000 000 (2012: $36 000 000) with collars of R8.00 and caps ranging from R9.6670 (2012: R8.8430) to R9.8245. At 30 June 2013, Tendele held a forward exchange contract for delivery during July 2013 to sell US Dollars for $2 000 000 (2012: nil) with a price of 9.7010. Tendele has entered into cash flow hedges to manage the volatility of the Rand/UD Dollar exchange rate and the Directors will deal with any future exposure of the foreign currency risk on an ad hoc basis.

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2014 2013 2012R R R

10. TRADE AND OTHER PAYABLESTrade and other payables 28 248 883 23 757 074 138 326 723Royalty accruals 1 958 473 9 784 167 –Other accruals 2 356 631 8 347 875 –Payroll liabilities 7 782 187 5 893 536 –Related party 181 559 173 148 445 826 –

221 900 347 196 228 478 138 326 723

11. BORROWINGS11.1 Standard Bank of South Africa Limited –

Term Loan (Secured) 100 023 767 100 000 000 –Less: Current portion (23 767) – –Non-current portion 100 000 000 100 000 000 –This loan is a revolving credit facility. The loan bears interest at the Johannesburg Interbank Agreed Rate (“JIBAR”) plus 2.85% and is payable quarterly. The loan is repayable in one capital instalment on maturity in December 2015. The facility is subject to cash sweep calculations that apply surplus funds to the earlier settlement of this debt. As security, Tendele Coal Mining (Pty) Limited and Petmin Limited have ceded their bank accounts to Standard Bank and have provided General Notarial Bonds over their movable assets other than Tendele’s investment in the mining joint venture referred to in note 4 above. In addition, Tendele has provided a Special Notarial Bond over its moveable property (other than the second plant which is bonded under a pre-existing finance agreement).

11.2 Standard Bank of South Africa Limited – Term Loan (Secured) 225 056 866 185 000 000 –Less: Current portion 51 899 309 – –Non-current portion 173 157 557 185 000 000 –This loan is part of a medium-term debt facility of R225 million. The loan bears interest at the Johannesburg Interbank Agreed Rate (“JIBAR”) plus 3.4% and is payable quarterly. The loan is repayable in quarterly capital instalments commencing in December 2014 and ending in December 2017. The loan facility is subject to cash sweep calculations that apply surplus funds to the earlier settlement of this debt. As security, Tendele Coal Mining (Pty) Limited and Petmin Limited have ceded their bank accounts to Standard Bank and have provided General Notarial Bonds over their movable assets other than Tendele’s investment in the mining joint venture referred to in note 4 above. In addition, Tendele has provided a Special Notarial Bond over its moveable property (other than the second plant which is bonded under a pre-existing finance agreement).

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2014 2013 2012R R R

11.3 IDC (secured)39 120 031 58 681 881 81 800 430

Less: Current portion (23 118 450) (21 340 450) (16 659 758)16 001 481 37 341 431 65 140 672

The loan is secured by a special notarial bond over the second coal crushing, screening and washing plant with a carrying value of R145.9 million (2012: R157.3 million). The loan bears interest at 6.3% per annum until 31 March 2015, where after the rate will be prime less 0.7%. The loan is repayable in 47 equal capital instalments of R1 778 350 each and one final instalment of R1 777 550 with the first payment commencing on 7 July 2012.

11.4 Standard Bank of South Africa Limited – instalment sale agreement (secured) – – 22 134 608Less: Current portion – – (19 199 233)

– – 2 935 375The Standard Bank instalment sale agreement is secured by a limited omnibus surety ship for R48 million by Petmin Limited.

The instalment sale agreement is for the Somkhele Anthracite Project’s coal processing plant (see note 2). The instalments are repaid over a period of 72 months commencing 31 October 2006, at an interest rate of prime less 1%.Total 364 200 664 343 681 881 103 935 038Less: Current portion (75 041 626) (21 340 200) (35 858 991)

289 159 038 322 341 681 68 076 047

12. ENVIRONMENTAL REHABILITATION PROVISIONEnvironmental rehabilitation provision at beginning of the year 39 188 327 22 194 997 19 724 323Charged to income statement during the year – notional interest 2 250 000 2 250 000 2 470 674Expenses paid from Bank (429 022) – –Adjusted to decommissioning assets during the year – change in estimate/new mining areas 25 854 165 14 743 330 –Provision at end of year 66 863 470 39 188 327 22 194 997The environmental provisions are based on management’s best estimates of all known obligations. It is, however, reasonable to expect changes in the ultimate rehabilitation costs as a result of changes in regulations or cost estimates. Cost estimates are not reduced by potential proceeds from the sale of assets and from future clean up in view of the uncertainty in estimating those proceeds. Other environmental liabilities not directly relating to rehabilitation are expensed as incurred. The liability is secured by bank guarantees of R59.6 million (2013: R32.9 million: 2012: R22.6 million) (see note 22).Annual inflation rate used 7% 7% 7%Pre-tax risk-free rate for discounting 9.50% 9.50% 9.5%

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2014 2013 2012R R R

13. DEFERRED TAXBalance at beginning of the period (194 298 299) (158 662 840) (119 257 847)Current– temporary differences(income statement) (40 466 629) (36 653 819) (39 404 993)– temporary differences(hedging reserve) (1 018 360) 1 018 360 –

(235 783 288) (194 298 299) (158 662 840)Comprising:Tax loss carried forward – (12 733 493) 9 880 106Unredeemed capital 38 569 365 99 318 477 64 225 275Property, plant and equipment (294 357 024) (294 533 890) (240 625 329)Environmental rehabilitation provision 18 721 772 10 972 731 6 214 599Hedging reserve – 1 018 360Provisions 1 942 456 3 341 912 2 159 438Prepayments (659 857) (1 682 396) (516 929)

(235 783 288) (194 298 299) (158 662 840)

14. INTER-COMPANY LOANSPetmin Limited 127 624 215 222 729 917 202 967 625The amount owing is interest free and unsecured with no fixed terms of repayment.

15. OPERATING PROFIT BEFORE NET FINANCE COSTOperating profit before finance income have been arrived at after taking the following into account:Auditor’s remuneration– Audit fees 749 965 517 824 518 926– Tax (amount paid to KPMG Tax) – – 156 313Depreciation of property, plant and equipment 41 445 266 31 272 006 28 051 747Amortisation of Eskom connection 161 656 145 158 119 192Employee costs – Salaries and wages 65 492 857 57 799 578 43 519 599Foreign exchange gain (4 752 463) (7 545 607) (10 436 228)MPRDA royalty expense 2 284 787 1 863 614 1 120 092Loss/(Profit) on disposal of property, plant and equipment 8 318 597 (329 613) –

16. NET FINANCE COSTSInterest income 5 768 254 2 372 579 227 044Interest expense – external financial liabilities (33 325 463) (18 889 566) (4 957 102)Interest expense – notional interest (2 250 000) (2 250 000) (2 470 673)

(29 807 209) (18 766 987) (7 200 731)

17. INCOME TAXDeferred tax – current year 40 466 629 36 653 819 39 404 993

40 466 629 36 653 819 39 404 993Reconciliation of tax rate % % %Tax charge as a percentage of net profit before taxation 28.00 28.00 28.00Standard tax rate 28.00 28.00 28.00

56

2014 2013 2012R R R

18. CASH FLOWS FROM OPERATING ACTIVITIES18.1 Operating profit before finance income 174 330 883 149 673 483 147 932 847

Adjusted for– depreciation/amortisation 41 445 266 31 240 128 28 051 747– pre-stripping amortisation 520 986 868 429 439 759 218 823 592– loss/(profit) on disposal of property, plant and equipment 8 318 597 (329 613) –– rehabilitation expenditure (429 022) (1 962 206) –Cash flow from operations before working capital changes 744 652 592 608 061 551 394 808 186(Increase)/Decrease in inventory (103 495 982) (60 724 520) (78 177 865)Decrease/(Increase) in trade and other receivable 77 803 646 (103 230 569) 6 783 404Increase/(Decrease) in trade and other payables 25 671 869 57 901 755 71 420 913

744 632 125 502 008 217 394 834 638

18.2 Amount (prepaid)/due at beginning of year 2 095 011 2 095 011 (4 655 650)Amount prepaid/(due) at year end 2 095 011 2 095 011 2 095 011Taxation (due)/paid – – 2 560 639

19. RELATED PARTIES19.1 Related parties of Tendele Coal Mining (Proprietary) Limited are identified as follows:

The holding company of Tendele Coal Mining (Proprietary) Limited is Petmin Limited, incorporated in South Africa.

Petmin Management Company (Proprietary) Ltd is a fellow subsidiary in which Petmin Limited held 100% of the company’s ordinary shares during the year ended 30 June 2014.

Somkhele Plant (Proprietary) Limited – Refer Note 4.

Mpukonyoni Mining (Proprietary) Limited is 100% held by Somkhele Plant (Proprietary) Limited.

2014 2013 2012R R R

19.2 Material related party transactionsManagement fee paid to Petmin Limited 10 528 030 12 840 000 12 000 000Marketing fee paid to Petmin Limited 16 066 303 14 545 166 13 165 392Cost incurred by Petmin Ltd and transferred to Tendele Coal Mining (Pty) Ltd’s property, plant and equipment – 28 370 713 –Mining and Plant Hire cost Paid to Mpukonyoni (Pty) Ltd 423 178 238 424 206 140 –Dividend paid to Petmin Ltd – 28 845 409 –Proceeds on the disposal of asset to Somkhele Plant (Pty) Ltd – 6 974 693 –Loan made to Somkhele Plant (Pty) Ltd Note 5 Note 5 –Interest received from Somkhele Plant (Pty) Ltd. on loan Note 5 Note 5 –Handling fee paid to Petmin Logistics (Pty) Ltd – – 12 367 212Trade and other payable to Petmin Ltd 118 367 438 84 570 982 22 743 831Trade and other payable to Mpukonyoni Mining (Pty) Ltd 63 186 735 63 874 844 –

The directors are of the opinion that all of the related party transactions were concluded and executed on normal commercial terms as applicable to independent third parties. The directors are listed in the directors’ report

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20. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT

This note presents information about the Company’s exposure to risk emanating from the use of financial instruments. Further quantitative disclosures are included throughout these financial statements.

The Board of Directors has overall responsibility for the establishment and oversight of the Company’s risk management framework. The Executive Committee is responsible for developing and monitoring the Company’s risk management policies. The Executive Committee reports regularly to the Board of Directors on its activities.

The Company’s risk management policies are established to identify and to analyse the risks faced by the Company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company’s activities. The Company, through its training and management standards and procedures, aims to develop a disciplined and constructive control environment in which all employees understand their roles and obligations.

The Group Audit Committee overseas how management monitors compliance with the Company’s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company.

20.1 Foreign currency risk managementForeign currency risk for the Company represents the risk of adverse changes in foreign currency exchange rates of mainly the US Dollar and the South African Rand which will affect the value of the Company’s assets, liabilities and forecast transactions. The directors are responsible for setting the foreign currency risk management strategies, and managing the foreign currency risk of the Company within the set parameters.

At 30 June 2014, the Company held the following US Dollar denominated assets and liabilities denominated in foreign currencies

2014 2013 2012R R R

US Dollar denominated financial assetsTrade receivables – 10 040 817 36 209 397Cash 34 163 8 839 2 094

34 163 10 049 656 36 211 491The effect on profit and equity of the Company due to 10% change in the South African Rand to the US Dollar is as follows:R/$ plus 10% 3 416 1 004 966 3 621 149R/$ less 10% (3 416) (1 004 966) (3 621 149)

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20.2 Interest rate risk management

Interest rate risk for the Company represents the risk of changes in earnings due to variability of interest rates. The directors are responsible for setting the interest rate risk management strategies and the managing director is responsible for managing the interest rate risk of the Company within the set parameters. The Company has cash, with interest rates set for periods of between one day and one month. At this reporting date, the Company had no material exposure to interest rate risk other than as disclosed in note 10 and has no interest rate derivate contracts. The sensitivity analysis below is based on average annual values and not year-end values.

At reporting date the Company had the following mix of financial assets and liabilities exposed to variable interest rate risk:

2014 2013 2012R R R

Financial assetsCash and cash equivalents 94 518 622 359 958 350 008Loan to Somkhele Plant (Pty) Ltd 60 954 457 60 954 457 –Financial liabilitiesBank Overdraft – 6 827 437 19 833 735Borrowings 364 200 664 343 681 881 103 935 038Interest rate plus 0.5% (1 821 003) (1 750 747) (227 635)Interest rate less 0.5% 1 821 003 1 750 747 227 635

20.3 Credit risk management

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations, and arises principally from the Company’s receivable from customers and investment securities.

Trade and other receivables

The Company’s exposure to credit risk is influenced by the individual characteristics of each customer. The Company has established a credit policy under which each new customer is analysed individually for creditworthiness before the Company offers credit facilities to them. Trade receivable for the top three customers represent 91% (2012: 73%) of total trade receivables. Long-term relationships are built with these customers, who have a history of reliable debt settlement.The aging of trade and other receivable at the reporting date was:Current 109 470 484 173 800 471 79 978 314Past due 0–30 days 2 208 379 14 255 786 4 920 596Past due 30–60 days 1 582 274 2 640 198 5 997 814Past due 90–120 days 16 926 1 831 369 1 730 668Older 4 720 407 3 274 292 2 270 327

117 998 470 195 802 116 94 897 719

Based on historic default rates, the Company believes that no impairment allowance is necessary in respect of trade receivables not past due or past due by up to 30 days; 100% of the balance which includes the amount owed by the Company’s most significant customers (see above), relates to customers that have good payment record with the Company.

The Company’s cash, cash equivalents and derivative financial instruments are held with any one of the major South African financial institutions only.

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At the reporting date the Company had the following mix of financial assets exposed to credit risk:2014 2013 2012

R R RCash and cash equivalents 94 517 619 359 958 350 008Trade and other receivables 117 998 470 198 128 288 94 897 727

212 516 089 198 488 246 95 247 727

20.4 Liquidity risk and capital management

The Company’s cash is managed in such a way that surplus funds achieve maximum returns, while minimising risks, but also take into account the liquidity requirements of the Company’s growth strategy. Budgets and forecasts are prepared regularly and monitored by management to ensure sufficient funds are available to support ongoing operations.

Refer to note 12 for repayment terms of borrowings.

20.5 Commodity price risk

The Company’s major commodity price exposure is to the price of anthracite. The Company has not hedged against the movement in commodity prices.

Profit after tax for the Company would increase/decrease by approximately R40 899 695 (2012: R23 330 273) with a 10% increase/decrease in the anthracite price.

20.6 Fair values

The fair values of all financial instruments held by the Group approximate the carrying amounts reflected in the statement of financial position.

2014 2013 2012R R R

21. GUARANTEESGuarantees for environmental rehabilitation made to the Department of Minerals and Resources by the Standard Bank of South Africa. 59 670 337 32 758 337 22 661553Guarantees for EMPR made to the Department of Minerals and Resources by the Standard Bank of South Africa. 138 000 138 000 138 000Guarantees for bulk sample made to the Department of Minerals and Resources by the Standard Bank of South Africa. 85 000 85 000 85 000Guarantees for minimum payments on electricity supply agreements made by Eskom Holdings Limited by Standard Bank of South Africa. 1 046 700 1 046 700 1 046 700Guarantees for credit facilities with South Africa Port Authorities. 175 000 175 000 175 000

61 115 037 34 203 037 24 106253

22. COMMITMENTSCapital commitments – authorised 0 0 15 055000– contracted for– not contracted for 90 000 000 97 000 000 115 619708

90 000 000 97 000 000 130 674708

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23. CONTINGENT LIABILITIES

The dispute with one of Tendele’s customers over the interpretation of the contracted qualities of Tendele’s energy product (as disclosed in the reviewed results for the six months ended 31 December 2013 and in note 29 of the audited annual financial statements for the year ended 30 June 2013) has been rescheduled for arbitration hearings in May 2015, as there was insufficient time to complete the process during the hearings held in December 2014. The claimant has revised their position and has now instituted two claims totalling R60 million (previously R30 million) and a third claim that is contingent should Petmin not be ordered to perform its contractual obligations under the disputed contract. Tendele and its legal advisors believe that all the claims are unlikely to be successful hence no liability has been recognised at 30 June 2014

24. SURETY

During the year ended 30 June 2014, Tendele Coal Mining Proprietary Limited has stood surety for its pro rata share of the instalment sale liabilities of Somkhele Plant Proprietary Limited. This surety is limited to a maximum amount of R100 million.

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ANNEXURE C

REPORTING ACCOUNTANTS’ REPORT ON THE HISTORICAL INFORMATION OF TENDELE COAL MINING (PROPRIETARY) LIMITED

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63

64

ANNEXURE D

INDEPENDENT REPORTING ACCOUNTANTS’ ASSURANCE REPORT ON THE COMPILATION OF PRO FORMA FINANCIAL INFORMATION ON PETMIN

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PETMIN LIMITEDIncorporated in the Republic of South Africa

Registration Number 1972/001062/06Share Code JSE: PET ISIN: ZAE000076014

(“Petmin” or “the Company”)

NOTICE OF GENERAL MEETING

Shareholders are reminded to take note of the following dates; the Last day to trade in order to be eligible to vote at the general meeting will be Friday, 23 October 2015; and the Record date in order to be eligible to vote at the general meeting will be Friday, 30 October 2015.

If you are in any doubt as to what action you should take in respect of the following resolutions, please consult your CSDP, broker, banker, attorney, accountant or other professional adviser immediately.

NOTICE IS HEREBY GIVEN that a general meeting of shareholders of Petmin will be held in the Boardroom, 37 Peter Place, Bryanston, Johannesburg on Monday, 9 November 2015 at 10h00 (the “General Meeting”), for the purpose of considering, and if deemed fit, passing, with or without modification, the special resolutions set out below.

Capitalised terms used in this notice of General Meeting and the resolutions but not otherwise defined will have the meanings given to them in the circular to which this notice of General Meeting is attached.

ORDINARY RESOLUTION 1: APPROVAL OF THE BEE TRANSACTION

“IT IS RESOLVED THAT the BEE Transaction, be and is hereby approved.

The percentage of voting rights required for this ordinary resolution Number 1 to be adopted is more than 50% (fifty percent) of the voting rights exercised on the resolution.

The reason for, and effect of, this ordinary resolution Number 1 is that in terms of Section 9 of the Listings Requirements, the transaction is classified as a Category 1 disposal and requires that shareholders consider and if deemed fit approve the transaction by ordinary resolution.

SPECIAL RESOLUTION NUMBER 1: APPROVAL OF FINANCIAL ASSISTANCE IN CONNECTION WITH THE TRANSACTION AGREEMENTS

“IT IS RESOLVED THAT the Company be and is hereby authorised to provide any direct or indirect financial assistance to any person as contemplated in the Transaction Agreements, including, but not limited to, any direct or indirect financial assistance as contemplated in sections 44 and 45 of the Companies Act.”

The reason for, and effect of, this Special Resolution Number 1, is to permit the Company to provide authority for the provision of financial assistance as contemplated in the Transaction Agreements.

The percentage of voting rights required for this special resolution number 1 to be adopted is at least 75% (seventy five percent) of the voting rights exercised on the resolution.

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In terms of section 62(3)(e) of the Companies Act:

• shareholders are entitled to attend, participate and vote at the general meeting;• forms of proxy (which form may be found enclosed) must be dated and signed by the shareholder appointing

a proxy and should be forwarded to reach the Company prior to the commencement of the meeting. Before a proxy exercises any rights of a shareholder at the general meeting, such form of proxy must be so delivered;

• a shareholder who is entitled to attend, participate in and vote at the General Meeting is entitled to appoint a proxy or two or more proxies to attend and participate in and vote at the General Meeting in the place of the shareholder, by completing the form of proxy attached to this notice of General Meeting as Appendix A in accordance with the instructions set out therein;

• a proxy need not be a shareholder of the Company; and• Petmin shareholders recorded in the register of the Company on the voting record date (including

shareholders and their proxies) are required in terms of section 63(1) of the Companies Act to provide reasonably satisfactory identification before being entitled to attend or participate in the General Meeting, in this regard, all Petmin shareholders and/or proxies recorded in the register of the Company on the voting record date will be required to provide identification satisfactory to the chairman of the General Meeting. Forms of identification include valid identity documents, driver’s licences and passports.

Action required

Voting and proxies• Ordinary Resolution 1 is subject to the approval of more than 50% of the shareholders present or represented

by proxy. • Special resolution number 1 is subject to the approval of 75% or more of the shareholders present or

represented by proxy.• Three shareholders present in person and shareholders representing in the aggregate 25% of the Company’s

issued share capital are required to constitute a quorum for a meeting at which a special resolution is to be passed.

A shareholder entitled to attend, participate and vote at the general meeting is entitled to appoint a proxy (who need not be a shareholder of Petmin Limited), to attend, participate, and vote in his stead.

Shareholders who are companies or other corporate bodies may by resolution of its directors or other governing body, authorise any person to act as its representative at the general meeting. Shareholders who have not dematerialised their shares and own name dematerialised shareholders who are unable to attend the general meeting and wish to be represented thereat, must complete and return the attached form of proxy in accordance with the instructions contained therein and return it to the transfer secretaries to be received by no later than 10h00 on Friday, 6 November 2015.

Shareholders who have dematerialised their shares, other than own name registrations, with a CSDP or stockbroker, should advise their CSDP or stockbroker as to the action they wish to take. This must be done in terms of the agreement entered into between them and their CSDP or stockbroker. Shareholders who have dematerialised their shares must not return the attached form of proxy to the transfer secretaries. Their instructions must be sent to their CSDP or stockbroker for action. Should such shareholders wish to attend the general meeting, they must first obtain the requisite letter of representation from their CSDP or stockbroker and return it to the transfer secretaries to be received by no later than 10h00 on Friday, 6 November 2015.

By order of the Board

J van der WaltCompany Secretary

Johannesburg5 October 2015

Registered officeFirst Floor37 Peter PlaceBryanstonJohannesburg2021(PO Box 6070, Rivonia, 2128)

Transfer secretariesComputershare Investor Services (Proprietary) Ltd70 Marshall StreetJohannesburg2001(PO Box 61051, Marshalltown, 2107)

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APPENDIX A

PETMIN LIMITEDIncorporated in the Republic of South Africa

Registration Number 1972/001062/06Share Code JSE: PET ISIN: ZAE000076014

(“Petmin” or “the Company”)

FORM OF PROXY

For use of shareholders who

• are registered as such on the record date, Friday, 30 October 2015, and who have not dematerialised their shares; or

• hold dematerialised shares in their own name,

at the general meeting of shareholders of the Company to be held in the Boardroom, 37 Peter Place, Bryanston, Johannesburg, at 10h00 on Monday, 9 November 2015.

Beneficial owners who have dematerialised their shares through a CSDP or stockbroker, other than those in own name must provide the CSDP or stockbroker with their voting instructions. Alternatively, they must request the CSDP or stockbroker to provide them with a letter of representation should they wish to attend the meeting in person in terms of the custody agreement entered into between the beneficial owner and the CSDP or stockbroker.

I/We (FULL NAME IN BLOCK LETTERS please)

of (address)

Telephone work Telephone home

Cell phone number e-mail address

Being the holder/custodian of ordinary shares in the Company, hereby appoint

1. of or, failing him/her,

2. of or, failing him/her,

3. the Chairman of the meeting,

as my/our proxy to attend and vote on my/our behalf at the general meeting of shareholders of the Company held for purposes of considering and, if deemed fit, passing with or without modification, the resolutions to be proposed thereat and at each adjournment or postponement thereof, and to vote for and/or against the resolutions and/or abstain from voting in respect of the ordinary shares registered in my/our name/s in accordance with the following instructions (see notes on the reverse of this page):

Number of shares

In favour of Against Abstain

Ordinary Resolution 1: Approval of the BEE transaction

Special Resolution Number 1: Financial Assistance in connection with the Transaction Agreements

(Indicate with an “X” or the relevant number of shares, in the applicable space, how you wish your votes to cast).Unless otherwise directed the proxy will vote as he/she thinks fit.

Signed at on this day of 2015

Signature(s)

Assisted by (where applicable) (state capacity and full name)

Completed forms of proxy must be lodged with the transfer secretaries by no later than 10h00 on Friday, 6 November 2015.

Please read the notes accompanying this proxy form.

SUMMARY OF RIGHTS CONTAINED IN SECTION 58 OF THE COMPANIES ACT

1. a shareholder of a company may, at any time and in accordance with the provisions of section 58 of the Companies Act, appoint any individual (including an individual who is not a shareholder) as a proxy to participate in, and speak and vote at, a shareholders’ meeting on behalf of such shareholder;

2. A proxy appointment must be in writing, dated and signed by the shareholder appointing a proxy and, subject to the rights of a shareholder to revoke such appointment (as set out below), remains valid only until the end of the general meeting.

3. a proxy may delegate her or his authority to act on behalf of a shareholder to another person, subject to any restriction set out in the instrument appointing such proxy (see note 9 of the notes to the form of proxy);

4. irrespective of the form of instrument used to appoint a proxy, the appointment of a proxy is suspended at any time and to the extent that the relevant shareholder chooses to act directly and in person in the exercise of any of such shareholder’s rights as a shareholder (see note 8 of the notes to the form of proxy);

5. any appointment by a shareholder of a proxy is revocable, unless the form of instrument used to appoint such proxy states otherwise;

6. if an appointment of a proxy is revocable, a shareholder may revoke the proxy appointment 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 relevant company; and

7. a proxy appointed by a shareholder is entitled to exercise, or abstain from exercising, any voting right of such shareholder without direction, except to the extent that the relevant company’s memorandum of incorporation, or the instrument appointing the proxy, provides otherwise (see note 2).

NOTES TO THE FORM OF PROXY

1. A shareholder may insert the name of a proxy or the names of two alternative proxies of the shareholder’s choice in the space(s) provided, with or without deleting “the Chairman of the general meeting”, but any such deletion must be signed in full by the shareholder. The person whose name appears first on the form of proxy and who is present at the general meeting will be entitled to act as proxy to the exclusion of those whose names follow.

2. 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. A shareholder’s instructions to the proxy must be indicated by the insertion of the relevant number of ordinary shares to be voted on behalf of that member in the appropriate box provided. Failure to comply with the above will be deemed to authorise the Chairman of the general meeting, if he is the authorised proxy, to vote in favour of the resolutions at the general meeting, or any other proxy to vote or to abstain from voting at the general meeting as he deems fit, in respect of all the ordinary shares concerned. A shareholder or his proxy is not obliged to use all the votes exercisable by the shareholder or his proxy, but the total of the votes cast and in respect whereof abstentions are recorded may not exceed the total of the votes exercisable by the shareholder or his proxy.

3. When there are joint registered holders of any shares, any one of such persons may vote at the meeting in respect of such shares as if he is solely entitled thereto, but, if more than one of such joint holders be present or represented at any meeting, that one of the said persons whose stands first in the register in respect of such shares or his proxy, as the case may be, shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member, in whose name any shares stand, shall be deemed joint shareholder thereof.

4. Every shareholder present in person or by proxy shall, on a poll, have one vote for every ordinary share held, whereas on a show of hands, shareholders present in person, by proxy or by authorised representative shall have one vote each.

5. Forms of proxy must be completed and returned to be received by the transfer secretaries of the Company, Computershare Investor Services (Proprietary) Ltd, Ground Floor, 70 Marshall Street, Johannesburg, 2001 (PO Box 61051, Marshalltown, 2107), by not later than 10H00 on Friday, 6 November 2015.

6. Any alteration or correction made to this form of proxy must be signed in full by the signatory/ies and not initialed.7. 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 or its transfer secretaries.8. 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’s transfer secretaries or waived by the Chairman of the general meeting.

9. The completion and lodging of this form of proxy will not preclude the relevant shareholder from attending the general meeting and speaking and voting in person thereat to the exclusion of any proxy appointed in terms hereof, should such shareholder wish to do so.

10. Any proxy appointed pursuant to this Form of Proxy may not delegate his/her authority to act on behalf of the relevant Shareholder.

Beneficial owners who have dematerialised their shares through a Central Securities Depository Participant (“CSDP”) or stockbroker, other than those in own name must provide the CSDP or stockbroker with their voting instruction. Alternatively, they must request the CSDP or stockbroker to provide them with a letter of representation should they wish to attend the meeting in person in terms of the custody agreement entered into between the beneficial owner and the CSDP or stockbroker.

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