SOUTH AFRICAN CHROME INDUSTRY OVERVIEW

by MICHAEL LILLJA, ISTANBUL JULY 8th, 2017

Basis of preparation and disclaimer

This presentation contains forward-looking statements. Often, but not always, forward-looking statements can be identified by the use

of forward-looking terminology, including the terms “believes”, “expects”, “intends”, “may”, “will” or “should” or, in each case, their

negative or other variations or comparable terminology. By their nature, forward-looking statements involve uncertainty because they

depend on future circumstances, and relate to events, not all of which are within Afarak Group Plc’s (the “Company”) control or can be

predicted by the Company.

Although the Company believes that the expectations reflected in such forward-looking statements are reasonable, no assurance can

be given that such expectations will prove to have been correct. Actual results could differ materially from those set out in the forward-

looking statements. Save as required by law (including the Finnish Securities Markets Acts (746/2012), as amended, or by the Listing

Rules or the Disclosure and Transparency Rules of the UK Financial Services Authority), the Company undertakes no obligation to

update any forward-looking statements in this report that may occur due to any changes in the Directors' expectations or to reflectevents or circumstances after the date of this report

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Market Analysis

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CHROMITE RESERVES VS. CHROMITE OUTPUT 2016

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CHROME ORE PRODUCTION PER GRADE 2015-2017

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UG 2

• UG2 conc. Is considered as low-cost mineral to replace a share of conventional chrome ore by FeCr smelters.

• UG2 tailings are easily upgraded at CRP’s from a chromite content of 10-20% up to 40-42%

• UG2 has though a disadvantage in chemical- and physical composition than LG and MG grades, such as Cr:Fe ratio and TiO2

• Overall use of UG2 ore by South African FeCr producers is low despite sufficient capacity

• Cost of platinum production increasing

• Chinese FeCr producers benefit from lower production costs, electricity and coke, and low freight/shipping costs

• Chinese also use cost effective feedstock such as UG2, which is a by-product from platinum industry platinum, at Merensky reef

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UG2 PRODUCERS

Producer Location No of UG2OPERARTIONS

CAPACITYMT/ YEAR

ANGLO PLATINUM WESTERN - AND EASTERN LIMB 3 + 5 1,450.000

LONMIN WESTERN - AND EASTERN LIMB 3 + 1 1,400.000

AQUARIUS PLATINUM WESTERN - AND EASTERN LIMB 2 + 2 580.000

IMPALA PLATINUM WESTERN – AND EASTERN LIMB 3 + 2 600.000

TWO RIVERS (AFRICAN MINERALS JV. IMPALA

EASTERN LIMB 1 260.000

ROYAL BEFOKENG, JV ANGLO PLATINUM

WESTERN LIMB 2 1,000.000

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Typical South African, UG2, MG2 and LG6 chromite ore compositions

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UG2 PRICES (2103-2017, CIF-US$/DMT)

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INTERNATIONAL CHROME ORE AND CONCENTRATE MARKET PRICE 2013-2017 Q2

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12AFARAK Group Oyj

2010 2011 2012 2013 2014 2015 2016 Jan'17 Feb'17 Mar'17 Apr'17 May'17 2017

From MT MT MT MT MT MT MT MT MT MT MT MT MT

India 389,336 438,514 309,886 146,912 62,314 22,832 205,506 0 16,547 0 8,805 25,352

S Africa 3,100,223 4,675,158 4,490,317 6,736,426 5,748,430 7,578,736 7,747,385 1,075,386 872,172 712,198 470,815 3,130,571

Turkey 1,932,859 1,612,325 1,840,274 1,998,420 1,280,206 1,037,076 824,632 134,079 134,274 68,663 64,763 401,779

0

Albania 363,007 357,113 304,988 677,206 554,517 485,600 493,339 72,167 55,115 40,211 24,348 191,841

Australia 200,516 208,407 500,839 406,775 26,362 0 0 0 0 0 0 0

Brazil 76,521 60,270 28,714 0 9,957 0 0 15,754 27,058 36,277 0 79,089

Iran 349,828 330,016 447,816 427,531 494,292 391,618 419,860 34,725 63,439 36,818 29,330 164,312

Kazakh 242,752 93,930 89,239 167,311 76,705 8,031 38,309 26,359 14,438 4,719 8,263 53,779

Madagascar 113,334 20,505 9,419 9,992 15,402 55,318

Mozambique 30,922 4,729 4,776 778 0 10,283

Oman 901,757 644,586 425,609 686,931 489,083 337,043 258,447 56,600 32,158 36,338 36,823 161,919

Pakistan 511,507 439,717 472,342 482,403 339,087 302,325 281,351 57,762 33,320 30,650 34,983 156,715

Philippines 150,263 137,181 179,936 126,391 66,574 31,167 54,959 48 4,002 2,953 7,211 14,214

Vietnam 58,675 25,236 1,930 24,990 3,400 0 0 749 0 0 0 749

Zimbabwe 84,569 29,961 25,463 27,840 16,379 99,643

Other 378,797 421,879 207,502 180,773 232,251 207,539 23,682 1,772 297 3,363 7,290 12,722

Total 8,666,042 9,444,332 9,299,392 12,062,069 9,383,178 10,401,967 10,578,600 1,530,596 1,292,478 1,010,800 724,412 4,558,286

Import of Chrome Ore into China

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FERRO CHROME OVER VIEW 2017

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FERRO CHROME USAGE PER DIFFERENT GRADES

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European and USA HCFeCr prices 2015-2017

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HCFeCr/ChCr IMPORTS BY COUNTRY OF ORIGIN 2016

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MC-/LCFeCr IMPORTS BY COUNTRY OF ORIGIN 2016

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Chinese IMPORTED Charge Chrome price development basis 50% Cr, index US$/lb Cr

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Chinese DOMESTIC HCFeCr/ChCr spot price development-RMB/MT

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2010 2011 2012 2013 2014 2015 2016 Jan'17 Feb'17 Mar'17 Apr'17 May'17 2017

From MT MT MT MT MT MT MT MT MT MT MT MT MT

Kazakhstan 489,792 395,979 439,878 436,506 318,587 400,524 673,411 23,346 44,639 36,361 54,943 159,289

South Africa 967,346 1,141,380 829,774 861,476 1,384,044 1,968,299 1,830,985 125,975 97,881 103,253 107,732 434,841

India 259,676 192,423 195,035 234,185 160,853 122,607 146,835 36,915 32,576 36,575 39,914 145,980

0

Zimbabwe 42,988 25,612 34,581 37,853 105,337 71,481 61,419 9,688 5,965 13,134 3,563 32,350

Russia 18,466 9,068 13,634 4,162 5,304 6,533 9,673 3,121 28,033 5,480 808 37,442

Mozambique 16,562 540 1,080 540 540 2,700

Oman 32,369 5,871 6,146 3,051 3,208 18,276

Turkey 7,060 18,421 7,115 178 32,774

Vietnam 1,365 0 910 0 2,275

Other 42,338 42,341 16,834 50,716 86,031 58,005 13,444 948 2,765 2,163 2,630 8,506

Total 1,820,606 1,806,803 1,529,736 1,624,898 2,060,156 2,627,449 2,782,842 214,829 237,506 208,582 213,516 874,433

Import of HC / Charge Cr FeCr into China

HS Code: Cr Ore 26100000; Charge Cr: 72024100

EXPECTATION, CHINA FeCr INDUSTRY SLIDING IN TO RECESSION

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CHINA FeCr PRODUCTION

• Mine closure in South Africa and Turkey, shortage of investments

• FeCr producers are currently consuming Chrome ore at high value

• Loosing currently more than RMB 1000/ton

• Environmental protection in China will lower domestic FeCr production

• FeCr supply in China is expected to decline as per table on previous slide

• Increase in stainless steel production will not be able to compensate for increased scrap usage

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SOUTH AFRICAN FERRO CHROME CUT BACK IN PRODUCTION

• Tata Richards Bay (135.000 tpa), now Traxys abt. 40.000 tpa

• Assmang Mashadodorp (285.000 tpa), closed

• Middleburg Techno Chrome (LCFeCr 48.000 tpa), closed

• Ferro Metals IC3 (60.000 tpa), closed

• IFM (255.000 tpa), now Samancor Cr on less than 50% capacity

• ASA (400.000 tpa), now Samancor Cr jv. Sinosteel, closed end 2017?

• FCF (MCFeCr 15.000 tpa), closed

• M2M (LCFeCr 5.0000 tpa), closed

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Michael W. LilljaSALES & MARKETING

DIRECTOR

Afarak Group/ Trading

+358 40 8388888

michael@afarak.com

www.afarak.com

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