Annual Report 2012 - Sentula

Integrated Annual Report 2012

About SentulaSentula Mining Limited has been listed on the MainBoard of the JSE since 1993. The Company is activelyinvolved in opencast mining, exploration drilling andrehabilitation and is one of the major suppliers ofoutsourced mining services in the South African coalmining industry. Sentula has grown to become aleading mining services provider currently withoperations in 10 African countries. The Company’sfoothold in the coal and energy sector, coupled withits diversified service offering, client base, mineralexposure and geographical spread, have stood it ingood stead during recent challenging economicconditions.Sentula remains invested in six coal mining projects;three in South Africa, one in Botswana, one in Zambiaand one in Mozambique.Sentula has an interest in the Nkomati Anthracitecolliery, an operating mine close to Komatipoort ineastern Mpumalanga. Anthracite is produced as acoke blend for domestic and export consumption,from opencast and underground operations. Themine remains on care and maintenance, pending theapproval of its integrated water use licence.The Company has an interest in the coal joint venture,Asenjo Energy, based in Botswana which encompassesthree significant coal deposits, estimated to containapproximately 10 billion tonnes of in-situ coal. Sentulaalso has an interest in the Indongo mining projectbased in Zambia. These coal prospects have beenearmarked for energy and power generation acrossthe region and abroad.Integrated reportingThis integrated annual report has been compiled inaccordance with the integrated reporting principlescontained in the Code of Corporate Practices andConduct set out in the King Report on CorporateGovernance for South Africa 2009 (King Code). Werecognise, in line with the principles of King III, thatcompanies should not only report on financialperformance, but also on their sustainability, bydisclosing social, environmental and economic issues.This report provides stakeholders with relevantfinancial and non-financial information to enablethem to obtain a more balanced view of our business.Applications for mining licences have been lodgedfor Bankfontein and Schoongezicht in the Ermelo andDelmas regions respectively and it is estimated theyshould produce about 1,5 million tonnes per annum.Forward looking statementsThis report contains forward looking statements whichare not historical facts. Forward looking statementsinvolve inherent risks, uncertainties and assumptions,including, without limitation, risks related to thetiming or ultimate completion of any proposedtransactions; and the possibility that benefits may notmaterialise or such assumptions prove incorrect,actual results could differ materially from thoseexpressed or implied by such forward lookingstatements and assumptions. The forward lookingstatements in this report are made as of the date ofthis report and Sentula expressly disclaims anyobligations to update or correct the statements dueto events occurring after issuing this report.

Sentula Mining Limited Integrated Annual Report 2012Overview141,7% TIFRreduced to 4,25% Revenueincreased to R2,5 billion(2011: R2,4 billion)35% Headline EPSincreased to 21,7 cents(2011: 16,1 cents)CONTENTSOverview 1Five-year review 2Strategic update 3Capital expenditure 4Group at a glance 6Group operational structure 8Directorate – executive directors 9Sentula Board and Executive12CommitteeChairman’s report 14Chief Executive Officer’s report 18Governance reports 24Sustainability report 45Consolidated financial statements 63Company financial statements 122Shareholders’ information 144Shareholders’ diary 145JSE performance 145Notice of annual general meeting 146Form of proxy 153Administration 155Abbreviations 156Classified injury frequency rate*Five-year historyRevenueFive-year history (R million)Headline EPSFive-year history (cents)3,53,02,52,01,54 0003 0002 000150100501,00,50‘08 ‘09 ‘10 ‘11 ‘12*per million man hours worked1 0000‘08 ‘09 ‘10 ‘11 ‘12Revenue increase to R2,5 billion(2011: R2,4 billion)0-50‘08 ‘09 ‘10 ‘11 ‘12Headline EPS increased to 21,7 cents(2011: 16,1 cents)

Sentula Mining Limited Integrated Annual Report 2012Five-year review22012 2011 2010 2009Restated2008Revenue (R’000) 2 512 415 2 402 375 2 178 601 2 989 835 2 656 039Operating (loss)/profit*** (R’000) (420 071) 184 903 128 986 479 669 120 013Earnings before interest, tax depreciationand amortisation (EBITDA) (R’000) 382 879 544 514 427 655 803 069 669 846Cash generated from operations (R’000) 319 156 415 311 380 086 967 385 468 063Attributable (loss)/earnings*** (R’000) (516 703) 35 127 239 138 278 531 110 271(Loss)/earnings per share (cents) (88,9) 6,0 55,8* 121,1 54,7Headline earnings/(loss) per share (cents) 21,7 16,1 0,6 109,1 (26,5)Tax rate (%) (8,5) 57,9 16,0 17,7 23,9Dividend per share (cents) – – – – 21,0Dividend cover (times) – – – – 2,6Net asset value per share (cents) 418 505 502 984 859Total assets employed (R’000) 3 855 635 4 412 021 5 051 291 4 950 431 4 472 438Return on shareholders’ equity (%) (19,8) 1,2 9,5 13,7 8,2Gearing (%) 22 21 43 75 72Liquidity• Current ratio** 2,48 1,55 1,18 0,72 1,18• Current ratio** excluding current portionof long-term borrowings 4,03 2,02 2,18 1,48 2,31• Acid test ratio** 1,84 0,96 0,93 0,47 0,87• Safety• Classified Injury Frequency Rate 1,65 1,17 1,78 2,51 2,98* Weighted for December 2009 rights issue** Current assets include assets held-for-sale*** Post impairment of R591 171 (2011: R71 476)Cash generated from operating activitiesFive-year history (R million)Operating (loss)/profitFive-year history (R million)EBITDA*Five-year history (R million)1 2001 0008006004002000‘08 ‘09 ‘10 ‘11 ‘122008 restated6004002000-200-400-600‘08 ‘09 ‘10 ‘11 ‘129008007006005004003002001000‘08 ‘09 ‘10 ‘11 ‘12*2008 restated*Adjusted for provision for unaccounted funds,impairments, amortisation of intangible assets,share-based payments and profit on disposal ofsubsidiaries

Sentula Mining Limited Integrated Annual Report 2012Strategic update3Sentula, with its diversifiedoperations, strong balancesheet and improved Groupliquidity, remains well-positionedto take advantage of contractmining services opportunitiesacross southern Africa.➾Sustainable growth prospects are enhanced bythe Group’s ability to preserve its current miningservices business and grow from this platform,supported by:• its BBBEE credentials;• its ability and resources to deliver into newprojects;• leveraging off its diversified services offering; and• development of its own coal assets by means ofthe aforementioned.Through Geosearch, Sentula hasaccess to one of the largerexploration drilling companiesin Africa.➾Global demand for resources continues to driveinterest in Africa and its potential as a source ofnew supply, drives the demand for explorationdrilling expertise across the African continent. Thegrowing Geosearch footprint continues to provideinsights and opportunities for the whole Group.The value associated withSentula’s unproductive capitalbase is available to be unlocked.➾During the next 18 months the monetisation ofthese assets will be achieved through:• outright disposals;• redeployment across the Group; and• trade-ins on new equipment.Net asset value per shareFive-year history (cents)Basic EPSFive-year history (cents)1 2001 000800600400200150100500-500‘08 ‘09 ‘10 ‘11 ‘12-100‘08 ‘09 ‘10 ‘11 ‘12

Sentula Mining Limited Integrated Annual Report 2012Capital expenditure4R83 million netcapex investedduring the yearunder reviewMegacubeMegacube sold idleequipment resulting in acapex inflow of(R131,5 million).BeniconBenicon invested net capexto the value of R168 million,predominantly on thereplacement of newequipment comprising16 ADTs, a D11 dozerand four excavators.CCTInvestment in thereplacement of fourADTs and an excavator,amounting to netexpenditure of R6,3 million.JEF Drill and BlastJEF invested net capex tothe value of R19,1 millionfor the replacement ofthree drilling rigs and theacquisition of supportequipment.

Sentula Mining Limited Integrated Annual Report 20125GeosearchR14,1 million investedduring the year to increasedrilling capacity inMozambican growth.Ritchie Crane HireInvestment of R1,5 millionfor support vehicles for thecrane fleet.Coal miningR3,0 million spent forenhancing the securityat Nkomati.CorporateServicesR2,2 million, primarilyfor the purchase of officeequipment, warehousinginfrastructure and supportvehicles.Planned capexspend for 2013R264,6 million to beinvested during the year,comprising R204,7 millionnew and R59,9 millionrefurbishment capex.

Sentula Mining Limited Integrated Annual Report 2012Group at a glance6Business segments ➾ Our companies ➾ Acquired in ➾ Revenue ➾Operating resultsContinuingopencastminingBenicon Opencast Mining June 2006R855 millionR88 millionClassic Challenge Trading October 2007Discontinuingopencast miningMegacube R603 million (R668 million)Overburdendrilling andblastingJEF Drill and Blast June 2007 R336 million R80 millionExplorationdrillingGeosearch October 2006 R861 million R103 millionMobile crane hire Ritchie Crane Hire April 2007 R57 million R30 millionEquipment, sparesand engineeringBenicon SalesCastonJune 2006January 1999R63 million(R2 million)Existing producer:Benicon Coal – NkomatiMarch 2008 R13 million (R13 million)Coal mininginvestmentsDevelopment and Exploration:Sentula Exploration (SA)Benicon Mining (SA)Sentula Coal (SA)Exploration:Mabapa Mining (SA)Exploration:Jonah Coal/Aquila Resources(Botswana) – Asenjo EnergyExploration:Jonah Coal Indongo (Zambia)April 2008 – (R3 million)April 2007 – –September 2008 – –April 2008 – –

Sentula Mining Limited Integrated Annual Report 20127➾Operations and information➾Major clientsBenicon provides a full range of opencast mining operations, covering themovement and management of all aspects of overburden removal andcoal extraction to specified production budgets. This includes all drillingand blasting operations as well as the management of mine rehabilitationprogrammes to EMPR specifications.CCT is a hard rock opencast mining company with core competenciesin chrome mining and opencast operations for customers in theferrochrome industry.Anglo American Thermal Coal, Anglo AmericanPlatinum, Xstrata CoalSamancorThe company is in the process of being wound down.–JEF Drill and Blast was established as a standalone entity in support ofopencast mining contracts and to meet the shift towards outsourcing thisfunction. The company is a specialised drilling and blasting entity, whichuses 28 drilling rigs in the opencast mining sector, primarily in coal.Benicon, Exxaro, Concor, Optimum Coal, GeckoMiningGeosearch International is one of the largest African exploration drillingcompanies, owning 138 exploration drilling rigs. The company employsapproximately 1 200 permanent staff and contractors.Anglogold Ashanti, Anglo American Platinum,Billiton, Lonmin, Debswana, Randgold, ImpalaPlatinum, Vale, NewcrestRitchie Crane Hire utilises 20 medium to heavy duty mobile cranes withcapacities that range from 25 to 220 tonnes for the provision of craneageservices.Anglo American Thermal Coal, Eskom, XstrataCoal, Highveld Steel, Samancor FerrochromeBenicon Sales focuses on the global procurement of equipment andspares, for overhaul and deployment.Caston is an engine rebuild facility for the Group’s plant refurbishmentrequirements, recently relocated to the Benicon premises.– Anthracite resource base in excess of 80 million tonnes.– Robust market for anthracite from this region.– Mpumalanga Economic Growth Agency – 40% minority shareholder.– Near development properties and exploration: Schoongezicht and Bankfontein. Combined potential annual sales of1,5 million tonnes expected at full production.– Exploration properties. Currently holds prospecting licences over a total of four properties.– Investment in an equity stake of the development of a potential coking coal prospect in Limpopo province.– Currently a 15% stake which can be increased to a 75% stake for further development capital.– Combined resources estimated to be 50 million tonnes.– Potential for high demand and growth in coal generated power and energy opportunities in the region.– Exploration drilling has reached an advanced stage.– Target project area of approximately 5 000 ha in southern Zambia. The initial mining licence has been awarded.

➾➾➾➾➾➾➾Sentula Mining Limited Integrated Annual Report 2012Group operational structure8Sentula MiningLimited83% 17%Shanike Proprietary Ltd.100%CintacureProprietary Ltd.Anglo AmericanKhula Mining FundProprietary Ltd.33%➾Benicon OpencastMining Proprietary Ltd.Employees Trust33%➾JEF Drill and BlastProprietary Ltd.Community Trust33%➾Classic Challenge TradingProprietary Ltd.➾Ritchie Crane HireProprietary Ltd.100%➾Geosearch HoldingsProprietary Ltd.100%➾Sentula Mining ServicesProprietary Ltd.74%➾Buenti DrillingProprietary Ltd.26%O.M. Tsehla DrillingContractors Proprietary Ltd.100%➾Benicon SalesProprietary Ltd.100%➾Megacube MiningProprietary Ltd.100%➾Sentula MiningMauritius Limited100%➾➾Sentula Mining ServicesMauritius LimitedSentula Mining VenturesMauritius Limited15%➾Mapaba MiningProprietary Ltd.85%Local shareholders100%➾Benicon MiningProprietary Ltd.➾Benicon Coal100% 60%Proprietary Ltd.➾Nkomati AnthraciteProprietary Ltd.40%Mpumalanga EconomicGrowth Agency

Sentula Mining Limited Integrated Annual Report 2012Directorate – Executive directors93.2.1.1. Robin Berry (50)BSc (Mining) EngineeringExecutive director: Chief Executive OfficerAppointed: 2 January 2007Board committee membershipMember of the Social and Ethics Committee and attends variousBoard committee meetings ex officio.Skills, expertise and experienceRobin joined the Company as Chief Operating Officer in January2007, and was promoted to Chief Executive Officer with effectfrom 1 December 2007. Robin was formerly Chief ExecutiveOfficer of Operations at Anglo Coal SA, a division of AngloAmerican South Africa Limited. He has over 20 years’ experiencein the mining industry at both managerial and operational levels.2. Deon Louw (50)CA(SA) HDip Tax Law (Wits) AMCT (UK) CFA CharterholderExecutive director: Chief Financial Officer/Financial DirectorAppointed: 1 August 2007Board committee membershipAttends various Board committee meetings ex officio.Skills, expertise and experienceDeon is a chartered accountant and chartered financial analystwith specialised experience in mining finance. He joined Sentulain August 2007 from Shanduka Coal, where he fulfilled the roleof CFO. Prior to joining Shanduka Coal, he was an independentadviser to the mining sector and for a number of years headedthe mining finance team at Investec.3. Pat Modisane (51)BA (Hons)Executive director: Transformation and Human ResourcesAppointed: 1 October 2008Board committee membershipChairman of the Social and Ethics Committee and attendsvarious Board committee meetings ex officio.Skills, expertise and experiencePat was appointed as an executive director and Head ofTransformation and Human Resources with effect from 1 October2008 and Chairman of the Social and Ethics Committee effective8 March 2012.Prior to joining Sentula, he was regional manager EmployeeRelations and Transformation at Anglo Coal Proprietary Limited.From 2005, it was his core responsibility to effectively manageemployee relations, strategies, practices and stakeholdermanagement. Previously he was Human Resources manager atKleinkopje, Greenside and New Vaal Collieries.

Sentula Mining Limited Integrated Annual Report 2012Directorate – Non-executive directors101. Jonathan Best (64)ACIMA ACIS MBAIndependent non-executive ChairmanAppointed: 1 July 2007 (Director)/28 February 2010 (Chairman)Board committee membershipChairman of the Nomination Committee, Chairman of theInvestment Committee and member of the RemunerationCommittee.Skills, expertise and experienceJonathan has over 40 years’ experience with companiesassociated with the mining industry. He brings strong financialexpertise and experience from his previous role as ChiefFinancial Officer of AngloGold Ashanti Limited.He is currently a non-executive independent director andChairman of the Audit Committee of Polymetal InternationalPLC, a Russian-based mining company listed on the LondonStock Exchange, a non-executive independent director andmember of the Audit Committee of Metair Investments Limited,a director of Metair Management Services Proprietary Limited,non-executive Chairman of Bauba Platinum Limited, and adirector of Gulf Industrials Limited (Australia).2. Hugh Stoyell (68)PR Eng Bsc (Mining) Engineering MBL FSAIMMIndependent non-executive directorAppointed: 30 September 2005Board committee membershipChairman of the Remuneration Committee, member of theNomination Committee and member of the InvestmentCommittee.Skills, expertise and experienceHugh is a professional engineer with over50 years’ experience in the mining industry.Prior to retiring, he was Chairman andManaging Director of Duiker MiningProprietary Limited, formerly one of SouthAfrica’s major coal exporters listed on theJSE. He has held directorships for anumber of mining and related companiessince 1976, including companies listed onthe Johannesburg and London StockExchanges, and is currently non-executiveChairman of Katanga Mining, listed on the Toronto StockExchange, a non-executive director of KFL Limited (British VirginIslands) and a non-executive director of Global EnterprisesCorporate Limited (British Virgin Islands).3. Cor van Zyl (65)CA(SA)Independent non-executive directorAppointed: 1 July 2010Board committee membershipChairman of the Audit and Risk Committee and member of theInvestment Committee.Skills, expertise and experienceCor is a chartered accountant with 22 years’ experience in theauditing profession as a partner of Coopers & Lybrand, beforemoving into commerce for a further period of 14 years. Thisincluded five years as Financial Director of Afrox HealthcareLimited and six years as Financial Director of African OxygenLimited until his recent retirement.Currently Cor also serves as a non-executive director on theBoard and Audit Committee of various companies.4. Kholeka Mzondeki (45)BComm ACCA (UK) Diploma in Investment Management (RAU)Independent non-executive directorAppointed: 1 July 2010Board committee membershipMember of the Audit and Risk Committee.Skills, expertise and experienceKholeka is a Fellow of the Chartered Certified Accountants andCouncil member of ACCA, United Kingdom. She has a Bachelorof Commerce degree and a Diploma in Investment Management.Her experience includes being a risk manager at Eskom,Director and General Manager of Finance responsible for sub-Sahara Africa at 3M, CFO and General Manager of CorporateServices at Mintek and Financial Director at Masana PetroleumSolutions.1.5.

Sentula Mining Limited Integrated Annual Report 201211In summary, Kholeka has over 20 years’ experience in governanceand financial management, holding executive roles of FD andCFO in various organisations including a Fortune 500 company.She sits on the Board and Audit Committee of Reunert, listed onthe JSE, among her other directorships. In 2008 she had theprivilege of being a finalist in the Nedbank/BWA BusinessWomen of the Year.5. Rain Zihlangu (45)BSc (Mining) Engineering MBAIndependent non-executive directorAppointed: 1 July 2010Board committee membershipMember of the Audit and Risk Committee and member of theInvestment Committee.Skills, expertise and experienceRain obtained his first degree in Mining Engineering through theUniversity of the Witwatersrand in 1989 to become the secondblack mining engineer in South Africa. He joined the AngloAmerican Corporation graduate training programme at VaalReefs Exploration and Mining Company and obtained his minemanagers government certificate of competence.His professional membership includes South African Institute ofMining and Metallurgy (SAIMM), Engineering Council of SouthAfrica (ECSA) and Association of Mine Managers of South Africa(AMMSA).Along with completing his MBA at the Wits Business School,Rain has worked in both government and the private sector andis well known in the mining industry, having most recently servedas CEO of Alexkor. He has extensive mining experience and hasbeen involved in major transactions including a leading role inthe implementation of the Exxaro empowerment transaction. Heis also a Board and Committee member of Exxaro Limited andPetroSA.6. Ralph Patmore (60)BCom (Wits) MBL (SBL) Stanford Executive Programme (StanfordUniversity USA) Accredited Associate of the Institute forIndependent Business InternationalIndependent non-executive directorAppointed: 25 January 2012Board committee membershipMember of the Remuneration Committee and member of theSocial and Ethics Committee and member of the NominationCommittee.Skills, expertise and experienceRalph obtained his BCom and MBL from the University of theWitwatersrand and Unisa Graduate School of BusinessLeadership respectively, and was the co-founder of Iliad AfricaLimited, a listed company focused on building materials, wherehe served as Chief Executive Officer for 10 years. He has alsoserved as Managing Director to various companies and held theposition of director on the Board of Group Five Limited, a listedcompany operating in the integrated construction services andmaterials sector.Currently Ralph is also the lead independent non-executivedirector, member of the Audit Committee, chairman of theRemuneration Committee of Accentuate Limited, leadindependent non-executive director, member of the AuditCommittee, member of the Risk Committee, chairman of theRemuneration Committee of ARB Holdings Limited, chairman ofthe Audit and Risk Committee, chairman of the RemunerationCommittee of Mustek Limited, and lead independent nonexecutivedirector, member of the Audit Committee andchairman of the Remuneration Committee of Calgro M3 Limited.6.3.4.

Sentula Mining Limited Integrated Annual Report 2012Sentula Board and Executive Committee12Mike van der RietGerda LouwMichael MinnaarRobin BerryCor van ZylMacy SiduMarthinus de JagerElsa DevenishJohan PieterseDanie JacobsCatherine WolmaransMike Fitzgerald

Sentula Mining Limited Integrated Annual Report 201213Gideon van HeerdenNicola CillieDeon LouwAlan Lynn Ian Els Rain ZihlanguJonathan BestGrace ChemalyRalph PatmorePat ModisaneAllan HepburnKholeka Mzondeki

Sentula Mining Limited Integrated Annual Report 2012Chairman’s report14Dear Shareholders,In many respects 2012 has been a watershed year forSentula. In addition to recognising the value of beingin existence for some 40 years and a 25-yearcontracting relationship with Anglo Thermal Coal,through its subsidiary Benicon, the Group has alsoconcluded a BBBEE transaction, resulting in theempowerment of its South African services businesses.At the same juncture, the Board took the decision towind down the operations with respect to theMegacube business after the turnaround strategy didnot achieve sustained profitability. Closure of thissubsidiary should significantly improve the visibility ofthe Group’s future earnings.Group liquidity, enhanced by the finalisation of a newfunding facility and the sale of idle capacity, continuedto improve.The operational performance from the continuingmining services businesses was on par withexpectations and is expected to provide a base togrow sustainably.Macroeconomic environmentDespite continuing global uncertainty and its impacton the mining sector, Sentula’s exposure to coal hasprovided it with a degree of robustness, with respectto its mining services businesses. Notwithstandingthe declining US Dollar denominated price ofseaborne traded thermal coal, demand for thecommodity has continued, both domestically andinternationally, to enjoy moderate growth.The local coal industry continues to be buoyed byEskom demand and improved export logistics.Our primary objective isto utilise the base of thecontinuing mining servicesbusinesses to sustainablygrow the Group.Jonathan BestNon-executive Chairman

Sentula Mining Limited Integrated Annual Report 201215The platinum industry, however, is under severepressure, resulting in the recent cessation of theirexploration drilling programmes having an adverseeffect on Geosearch’s South African operations.During the fourth quarter of the 2012 financial year,the Rand/US Dollar exchange rate depreciatedsharply, providing support for South African coalproducers and earnings associated with Sentula’soffshore exploration drilling operations.Group performanceThe results for 2012 were mixed, with five of thebusinesses doing well but this was offset by the lossat Megacube. Revenue increased to R2 512 millionfrom R2 402 million, and there was an operating lossof R420 million from an operating profit of R185 million,primarily as a result of the impairment of assets inMegacube.Headline earnings per share rose from 16,06 cents to21,71 cents.The ongoing strategy to turn around the Megacubebusiness did not yield sufficient results during the firsthalf of the financial year and the decision was taken towind down its remaining operations during theremainder of the financial year. With the exception ofthe Keaton-Vanggatfontein contract, all sites wereclosed by the end of April 2012, the personnelassociated with these sites were retrenched and theassets parked and designated as being held-for-sale.The plan, over the next 12 months, is to monetisethese assets, through redeployment across the Group,or third party sales.Global economic conditions continue to affect mostof the services provided by Sentula, as the visibility ofnew mining projects is reduced by uncertainty andfundability. While conditions within the miningservices sector are expected to remain challengingfor the foreseeable future, opportunities, as a result ofincremental production demands and limited capitalfunding, will continue to favour the contractor model.Given the current visibility of market conditions, theBoard of Directors decided not to declare a dividendin respect of the year ended 31 March 2012.StrategySentula, through its diversified mining servicesprovision and the expertise and exposure gleanedfrom the experience gained through its Africanexploration business, remains committed to deliveringinto its continental growth strategy.The Board’s primary objective for the year underreview was to ensure that the underlying SouthAfrican subsidiaries were empowered to the requisitelevel, in order to ensure that current clients andcontracts in the mining industry are retained and thatnew tenders can be secured.We will continue to contain costs and strategicallyposition the Company for organic growth in themining services business while continuing to assessopportunities to unlock the value inherent in theGroup’s portfolio of proprietary coal assets.Board and corporate governanceRecent legislation changes such as the new CompaniesAct and the strengthening of the Competition Actindicate a higher level of vigilance than ever beforein South Africa.The Board operates under the terms as stipulated bythe Board Charter, which regulates the roles andresponsibilities of the directors.We as the Board will ensure compliance with bestpractice and the governance guidelines outlined inthe King III Report. We will ensure that the Companyremains transparent and adheres to high levels ofdisclosure. To this end, the independence andcomplementary skills of the Board were recentlystrengthened by several new appointments.At the commencement of the last financial year, theBoard comprised executives Robin Berry (CEO),Deon Louw (CFO), Pat Modisane, Head ofTransformation and HR, while non-executive directorscomprised Hugh Stoyell, Rain Zihlangu, Cor van Zyl,Kholeka Mzondeki and myself.With effect from 25 January 2012, Ralph Patmorejoined the Board as an independent non-executivedirector, bringing complementary financial andleadership skills to the Company.

Sentula Mining Limited Integrated Annual Report 2012Chairman’s report continued16The Board now comprises the following individuals:Director DesignationJonathan Best Independent non-executiveChairmanRobin Berry CEO executive directorDeon Louw CFO executive directorPatrick Modisane Executive directorRain Zihlangu Independent non-executive directorCor van Zyl Independent non-executive directorKholeka Mzondeki Independent non-executive directorHugh Stoyell Independent non-executive directorRalph Patmore Independent non-executive directorSustainabilityTransformationSentula remains committed to empowerment andtransformation as a strategic priority for the Group. Weachieved an improved independently audited level 5BBBEE rating in October 2011 and we are on track to bea level 4 contributor during the 2012 calendar year. Inaddition to meeting the Group’s transformation objectives,Sentula’s South African mining services subsidiaries nowhave an effective 25,04% BBBEE ownership.Corporate social investmentSentula views corporate social investment as a vitalresponse to the socio-economic development whichis imperative in South Africa. Our intention is toempower previously disadvantaged individuals anduplift the communities in which we operate.Safety, health, environmentHealth and safety remains a top priority for the Boardand Group as a whole. Despite continued efforts anda positive trend in the frequency of serious incidents,the death of an employee on a subsidiary managedsite remains a tragic event. Our collective viewcontinues to be that ‘one fatality is one too many’. Weare all committed to enforcing compliance with therequirements of the South African OccupationalHealth and Safety Act 1993 (Act 85 of 1993) and MinesHealth and Safety Act 1996 (Act 29 of 1996). Throughrenewed efforts management remains dedicated toidentifying potential hazards and reducing risks at allour operations.Our efforts in addressing environmental issues areconstantly developing and we are committed toprotecting the environment. Baselines for emissionsdata in process of being established across theGroup’s operations.OutlookLooking at the broader picture we see the southernAfrican and worldwide demand for energy and coalremaining intact for the foreseeable future. WithGeosearch having suffered a setback by the cessation ofexploration drilling in the platinum and other sectors,will have to rely on strengthening its establishedfootprint across the continent. New mining projects inAfrica will continue to present opportunities for Sentula’smining services businesses. Positive and sustainabledemand for SA thermal coal comes from the significantlocal demand underpinned by Eskom’s expansion plans.For the year ahead, given the base upon which tobuild, we believe that, despite tough trading conditions,the Group will deliver modest sustainable growth fromacross its five operating mining services subsidiaries.This will be achieved through improved efficienciesand margins in the year ahead. With moderately lowergearing and a stronger balance sheet, 2013 will be ayear of building on the established bases of thecontinuing mining services businesses. We anticipatesteady but modest growth, the rate of which will bedetermined by the recovery in the mining servicessector as a whole. We anticipate that the Rand/Dollarexchange rate will remain strong for as long as interestrates in the developed world remain at their currentlow levels, and economic concerns prevail in the USA,across Europe and the East.With regard to the parked up equipment we proposeto dispose of these in an optimal way. This markethas, however, become significantly weaker withsurplus equipment becoming available from manyparts of the world. At the same time avenues arebeing investigated for the sale of the coal assets.AppreciationI am grateful to the Board for their collective andindividual contributions and extend my thanks to allfor their hard work and continued commitment. I alsowish to thank our customers and suppliers for theirsupport and our advisers for their assistancethroughout the year.Our thanks go to the management team, led by CEO,Robin Berry and Financial Director, Deon Louw whotogether with Pat Modisane, have steered us throughthis year of consolidation.Finally, I wish to express sincere appreciation to ourshareholders and employees and to thank you foryour continued support through difficult times.Jonathan BestNon-executive Chairman14 September 2012

Sentula Mining Limited Integrated Annual Report 201217

Sentula Mining Limited Integrated Annual Report 2012Chief Executive Officer’s report18IntroductionDespite ongoing global economic volatility and itsimpact on local mining, Sentula, having dealtdecisively with its subsidiary, Megacube, should enjoysubstantially improved visibility of Group earningsgoing forward. The diverse nature of Sentula’searnings and its exposure to coal, a more defensivesector, should continue to support the underlyingfundamentals and ensure that the Group’s revenuebase remains intact. The recently announcedfinalisation of the BBBEE transaction, involvingSentula’s South African mining services businesses, isalready contributing to the preservation of contractand tender opportunities for the Group.Financial overview• Revenue increased by 4,5% to R2 512 million (2011:R2 402 million)• Headline EPS increased by 35% to 21,7 cents(2011: 16,1 cents)• Net asset value per share: 418 cents(March 2011: 505 cents)• Tangible net asset value per share: 343 cents (March2011: 430 cents)• Debt-to-equity gearing ratio remained relativelyconstant at 22% at March 2012 (2011: 21%)Notwithstanding the improved headline results forthe full year reporting period ended 31 March 2012,the Group’s earnings for the 12 month period wereimpacted by the following:• An interest rate hedge was entered into, on whicha fair value adjustment of R6,7 million was expensedduring the year under review;Sentula, having dealtdecisively with itssubsidiary, Megacube,should enjoy substantiallyimproved visibility of Groupearnings going forward.Robin BerryCEO, Sentula Mining

Sentula Mining Limited Integrated Annual Report 201219• a more favourable Rand/USD exchange rateimpacted positively on Geosearch’s foreignoperations and pre-tax foreign currency gainsof R18,6 million were recognised;• pre-tax expenses during the period, associatedwith the Shanduka transaction (R6,1 million), BBBEEtransaction costs (R4,7 million), legal and forensicsupport for civil actions associated with themisappropriated funds (R8,8 million) andretrenchments resulting from the closure ofMegacube (R16,7 million), amounted to R36,3 million;• Nkomati Anthracite Mine being placed on ‘careand maintenance’ in May 2011, due to regulatoryand environmental issues;• an impairment charge, predominantly onMegacube’s fleet of assets of R591,2 million, pretax,following an impairment assessment to thisequipment in terms of IAS 36;• the loss on the sale of assets associated with thedisposal of parked assets of R54,6 million; and• a write-off of obsolete inventory across the Groupof R30,5 million, on a pre-tax basis.Operational reviewSustainabilityThis Integrated Annual Report includes a review ofthe Company’s sustainable development performanceduring the reporting period. Building on the previousyear’s base, the Group has established targets andinitiatives to reduce key environmental impacts,thereby enhancing the longer-term sustainability ofits businesses.Safety track recordThe Group’s Classified Injury Frequency Rate of1,65 per million man hours worked is a 41,7%deterioration on the comparative prior period.Despite the ongoing drive to improve the injuryfrequency rates, the fatal incident which occurred atBenicon’s workshop facility in November 2011 is sadlyone death too many. The alignment of its core valueswith those of its clients allows Sentula to remainproactive in making investments in systems andstructures to support its efforts in the area of safety.Sentula acknowledges the right of its employees toreturn home without harm and that safety performancemust be regarded as a prerequisite and not acompetitive edge.TransformationDuring the period under review, Sentulawas independently re-verified as a level 5contributor, in terms of the DTI codes, measuringBBBEE. The recently finalised BBBEE transaction haselevated the status of its underlying mining servicesbusinesses to that of level 4 contributors, with effective25,04% empowered ownership.This has already enhanced the Group’scompetitiveness with respect to tendering andretaining contracts in the South African mining sector.EnvironmentDuring the year under review, the Group establisheda baseline carbon footprint for several of its activities.Targets and initiatives to reduce the quantum andimpact of emissions have been introduced acrossthe Group.Sentula Group companies continued to meet theirobjectives with respect to international certification oftheir safety, environmental and training systems forthe current financial year.Mining servicesThe provision of mining services remains the core ofSentula’s business, with the four operating divisionsand the five underlying continuing businesses tradingsatisfactorily, with an improved visibility of work beingexperienced in what continues to be a volatile sector.Continuing business unitsOpencast operationsThe period under review has been characterised bygrowing demand, but exacting trading conditions, asmargins remained under pressure across the opencastcontracting sector.Benicon managed to negotiate improved miningrates for the 2012 financial year, and has seensustained revenue growth, with improved overallmargins during this period.Despite a tough first six months, CCT recoveredduring the second half of the year and is positionedto benefit from the resurgence in opencast miningopportunities along the Eastern limb of the BushveldIgneous Complex, supported by demand for ferrochromeand platinum group metals.

Sentula Mining Limited Integrated Annual Report 2012Chief Executive Officer’s report continued20Overburden drilling and blastingJEF Drill and Blast grew its revenue and profit basesubstantially during the past year and this businessremains well-positioned to deliver sustainable realgrowth, at current margins, for the foreseeable future.Exploration drillingThe more favourable exchange rate during the periodunder review impacted positively on Geosearch’srevenue and margins. Political unrest in Côte d’Ivoire,which resulted in the suspension of operations in thatjurisdiction during the second half of the 2010calendar year abated, and exploration recommencedduring June 2011. The Company’s revenue split forthe 2012 financial year was more balanced betweendomestic and foreign contracts at approximately 35%and 65% respectively.The significant investment in the geographicaldiversification of the Company’s offshore businessescontinues to provide a sustainable platform for realgrowth and operational efficiencies during the currentfinancial year.Crane hireRitchie performed well, notwithstanding a reductionin demand for mobile craneage post the 2010 SoccerWorld Cup infrastructure development phase. TheCompany continued to maintain its level of profitabilityin the 2012 financial year supported by its mix ofcranes, strong competitive position in the eMalahleni/Middelburg geographical area, and diversity ofclientèle in coal mining, steel and power generationindustries.MegacubeMegacube, as a business, has ceased to be anoperating and contracting entity, with the cessation ofall remaining contracts. During the next 18 months, thebusiness expects to monetise the remaining assetsthrough outright disposals, redeployment across thebroader Group and as trade-in proceeds on new andreplacement Group equipment.Coal mining investmentsIn line with the strategy to crystallise the valueassociated with its diversified portfolio of coal assets,the Group has continued to assess opportunities toachieve this in the medium term. Sentula is currentlyinvested in five projects (three in South Africa, and onein each of Botswana and Zambia). The projects can bebroadly described as mining operations, comprisingan operating mine, near development properties(those projects which could be operational within 18 to24 months) and exploration areas.Mining operationsNkomati Anthracite was awarded a new order miningright during the previous financial year and the minecommenced opencast operations in September 2010with the Madadeni pit achieving full production inDecember 2010. Operations at the Madadeni pitwere, however, suspended in March 2011 due toregulatory and environmental issues. While theseissues are being resolved, the underground operationshave been placed on care and maintenance from theend of May 2011. Subsequent to the suspension ofthe opencast operation, the DMR approved theamended environmental management programme.Management continues to work with the DWA, todeal with the outstanding issues that are required tobe addressed in order to progress the award of themine’s integrated water use licence. Currentindications are that this process could be finalisedduring the first half of the 2013 financial year.Near development propertiesSentula, through its joint venture investments, hasbeen granted new order prospecting rights overportions of the farms Bankfontein and Schoongezicht,in Mpumalanga. Exploration has been completedand mining right applications have been submittedfor both of these properties.Exploration drilling has been completed at theMulungwa project in southern Zambia. The third andfinal phase of the feasibility programme, whichincluded resource estimation, completion of theenvironmental impact assessment, technical/mininginvestigations and financial modelling, has also beencompleted. Small-scale mining licences have beenawarded.Exploration areasThe Asenjo joint venture with Jonah Capital andAquilla Resources, located in Botswana, has continuedexploration activities on its tenements. The value ofthe large resource base is expected to be unlockedthrough the construction of rail infrastructure to portfacilities in Namibia or Mozambique, the provision ofwhich is enjoying renewed interest in the region. Thejoint venture partners agreed to dispose of the

Sentula Mining Limited Integrated Annual Report 201221Lechana prospect for the sum of USD1,0 millionduring the financial year.Exploration on the Mabapa coking coal projectremains in abeyance, pending the securing of anoption on a neighbouring property, which will enhancethe critical mass of the overall project.Strategic reviewOverviewThe Group’s strategic vision remains one of sustainablegrowth by being the mining services provider of choiceacross the African continent. Our strategy will bebrought to fruition through the exploitation ofopportunities identified in both mining services andproprietary mining investments in southern Africa, andfurther enhanced through the recently finalised BBBEEtransaction. The insights and experience gleaned fromGeosearch’s broad geographic footprint acrosssouthern, central and more recently west Africa,positions the Group to capitalise on the miningservices offerings stemming from the development ofnew mineral resources in these regions.In addition, through its access to the resources,expertise and experience base of the collectiveGroup, Sentula is well-positioned to unlock the valueinherent in its portfolio of coal investments.Sentula’s exposure to the coal and energy sector, as aservice provider and proprietary investor, coupledwith its diversified service offering, client base, mineralexposure and geographical spread will continue toprovide a solid platform for developing the businessinto the future.Bulk earthmovingSentula’s established foothold in the coal and energysector, as a significant provider of large-scale bulkearthmoving and rehabilitation services, sets it apartfrom its competitors, by being a leader in a commoditysector that endures less demand volatility through theeconomic cycle. As more mid-tier miners bring coalprojects into production, in South Africa, in the shortterm, and in neighbouring Mozambique, Zambia andBotswana, in the medium term, Sentula is wellpositionedto benefit from these opportunities. This,coupled with the Group’s growing exposure to miningin the non-coal sector, provides a degree of riskalleviation through its diversification of serviceoffering, client base, mineral exposure and potentialgeographical spread, which will continue to providea solid platform for developing the business intothe future.Sentula has already established a base in Mozambique,for the provision of bulk earthmoving services toprojects being established around Moatise in the Teteprovince. In addition, and on the back of thedevelopment of the Mulungwa project in southernZambia, the Group sees an opportunity to develop acontracting presence in this part of the world.Continental growthHaving invested in the requisite infrastructure,through Geosearch, to tap into opportunities utilisingits hubs in Botswana, Mozambique, north easternDemocratic Republic of the Congo and west Africa,growth opportunities now exist for the provision of abroader range of mining services in these jurisdictions,as exploration turns to mine development. Throughthe geographic reach created, Sentula has the abilityto assess contracting opportunities throughout theseregions of the continent, with the confidence ofGeosearch’s experience gained in these areas.The establishment of an earthmoving presence inMoatise was achieved on the back of the Aguaterrabusiness, Geosearch’s Mozambican subsidiary.Investment in proprietary coal assetsThrough its access to the resources, expertise andexperience base of the collective Group, Sentula iswell-positioned to unlock the value inherent in itsportfolio of coal investments. It will continue to followthe strategy of assessing opportunities for themonetisation of its coal properties while continuing toenhance the value of these assets, which may alsoprovide flexibility and leverage to its continuingmining services businesses, as they are developedand brought into production.ProspectsDespite continuing global uncertainty, the visibility ofongoing demand for the type of mining servicesprovided by Sentula remains intact. Having dealt withthe resultant drag associated with the performance ofthe Megacube business, it is envisaged that theremaining business units will continue to deliverresults, defined by their recent track records. Whilemargins in the sector remain under pressure, it isenvisaged that the requirement for new capacity,

Sentula Mining Limited Integrated Annual Report 2012Chief Executive Officer’s report continued22supported by the defensive nature of the energysector, will bring about an upward correction in themedium term. This, coupled with Sentula’s ability todeploy some of its parked excess capacity, shouldresult in improved asset utilisation, revenue, andhigher resultant returns.Aligned with the Group’s strategy, the vision ofdeveloping the mining services business of choice,across the African continent, with the prerequisite ofsustainable growth within the sector, remains core tothe Sentula business model.Building on the established baseline success of thecontinuing business units will remain the focus ofthe Group’s short-term strategy.ThanksI would like to thank our management and theirteams for their hard work, dedication and supportduring the year, resulting in the maintenance of theGroup’s performance-based objectives.My thanks are also extended to our clients andsuppliers for their ongoing and invaluable supportand service, respectively.Robin BerryChief Executive Officer, Sentula Mining14 September 2012

Sentula Mining Limited Integrated Annual Report 201223

Sentula Mining Limited Integrated Annual Report 2012Governance reports24The governance report section includes the following:• Corporate governance report – page 24• Risk management report – page 33• IT report – page 38• Remuneration report – page 38Corporate governance reportIntroductionThe Board of Directors of Sentula and seniormanagement are committed to the highest standardsof corporate governance and take pride in their highmoral and ethical business standards, accompaniedby sound and transparent business practices.As corporate governance is constantly evolving,Sentula continually focuses on seeking ways toimprove on its corporate governance standards.The Board is committed to and applies the principlescontained in King III as more fully disclosed on pages41 to 44, and in doing so, continuously strives toachieve corporate governance best practice.The Board, assisted by the Audit and Risk Committee,and the newly formed Social and Ethics Committee isresponsible for overall corporate governance andmonitors compliance with all applicable laws, rules,codes, standards and the Listings Requirements, andensures ongoing improvement in the Group’sadherence to the principles set out in King III. TheCompany Secretary is responsible for assisting theBoard in monitoring compliance and the day-to-daymanagement of corporate governance.Board of DirectorsStructure and role of the BoardThe Board has a unitary structure and comprises ninemembers, the majority of whom are independentnon-executive directors. The Board considers all ofthe non-executive directors to be independent.Determination of independence is guided by King III,the Companies Act, the Listings Requirements andcorporate best practice. The profiles of the membersof the Board are set out on pages 9 to 11 of thisIntegrated Annual Report.The roles of the non-executive Chairman and theChief Executive Officer are separated in accordancewith the Board’s policy of division of responsibilities.This ensures a balance of authority and precludes anyone director from exercising unfettered powers ofdecision-making. In addition, the Board complies withthe requirements of King III insofar as the compositionof its sub-committees is concerned.A Board Charter, which is reviewed annually, has beenadopted to guide the Board in governance issues andsets a framework within which the Board functions.The Board Charter sets out the Board’s duties andobligations, which include inter alia to:• act as the focal point for, and custodian of, corporategovernance by arranging its relationship withmanagement, shareholders and other stakeholdersof the Company along sound corporate governanceprinciples;• appreciate that strategy, risk, performance andsustainability are inseparable and to give effect tothis by:––contributing to and approving the strategy;––satisfying itself that the strategy and businessplans do not give rise to risks that have not beenthoroughly assessed by management;––identifying key performance and risk areas;––ensuring that the strategy will result in sustainableoutcomes; and––considering sustainability as a businessopportunity that guides strategy formulation;• provide effective leadership on an ethicalfoundation;• ensure that the Company is and is seen to be aresponsible corporate citizen by having regard notonly to the financial aspects of the business of theCompany but also to the impact that businessoperations have on the environment and the societywithin which it operates;• ensure that the Company’s ethics are managedeffectively;• ensure that the Company has an effective andindependent Audit and Risk Committee;• be responsible for the governance of risk;• be responsible for information technology (IT)governance;• ensure that the Company complies with applicablelaws and considers adherence to non-binding rulesand standards;• ensure that there is an effective risk-based internalaudit;• appreciate that stakeholders’ perceptions affect theCompany’s reputation;

Sentula Mining Limited Integrated Annual Report 201225• ensure the integrity of the Company’s IntegratedAnnual Report;• act in the best interests of the Company at all timesby ensuring that individual directors:––exercise their fiduciary duties with the necessarycare, skill and diligence;––adhere to legal standards of conduct;––practice objective judgement with regard to theaffairs of the Company independently frommanagement, but with sufficient information toenable a proper and objective assessment;––are permitted to take independent advice inconnection with their duties following an agreedprocedure;––immediately disclose real or perceived conflictsto the Board and deal with them accordingly; and––deal in securities only in accordance with thepolicy adopted by the Board;• commence business rescue proceedings as soon asthe Company is financially distressed;• elect a Chairman of the Board that is a nonexecutivedirector; and• appoint and evaluate the performance of the ChiefExecutive Officer.The Board Charter requires that non-executivedirectors have unfettered access to management atany time, and all directors are entitled, at theCompany’s expense, to seek independent professionaladvice on any matters pertaining to the Group wherethey deem this to be necessary, and are obliged toseek such advice in matters where they lack sufficientexpertise to make an informed decision. Whenseeking independent advice, the directors mustinform the Company Secretary and if it is relevant toSentula or its operations, the Company Secretary willdisclose the information to the Chief Executive Officerand the Board.Executive directors are appointed by the Board tooversee the day-to-day running of the Company.Executive directors are held accountable throughregular reporting to the Board, and their performanceis measured against predetermined criteria.Non-executive directors provide the Board withadvice and experience that is independent ofmanagement and the executive. The presence ofindependent non-executive directors on the Board,and the critical role they play as Board representativeson key committees, ensures that the Company’sinterests are served by impartial views that areseparate from those of management and shareholders.As required by King III, the following evaluations weredone in August 2012:• A self-evaluation by the Board and a self-evaluationby the Audit and Risk Committee, the results ofwhich were discussed by the Board;• An evaluation of individual director performance bythe Chairman; and• An evaluation of the Chairman by the rest of theBoard.Areas of improvement were noted and will beaddressed during the coming year.For the financial year ended 31 March 2012 and subsequent thereto, the Board composition and resignation ofdirectors are as follows:Director Appointed ResignationHugh Stoyell (Independent non-executive) 30/09/2005 n/aRobin Berry (Executive CEO) 02/01/2007 n/aJonathan Best (Independent non-executive Chairman) 01/07/2007 n/aDeon Louw (Executive CFO) 01/08/2007 n/aAndy Kawa (Independent non-executive) 11/09/2008 02/06/2011Pat Modisane (Executive Director Transformation and HR) 01/10/2008 n/aKholeka Mzondeki (Independent non-executive) 01/07/2010 n/aCor van Zyl (Independent non-executive and Chairmanof the Audit and Risk Committee) 01/07/2010 n/aRain Zihlangu (Independent non-executive) 01/07/2010 n/aRalph Patmore (Independent non-executive) 25/01/2012 n/a

Sentula Mining Limited Integrated Annual Report 2012Governance reports continued26Executive directors have contracts of employmentwith the Company. No contracts between theexecutive directors and the Company, or any of itssubsidiaries, are terminable at periods of noticeexceeding six months or require payment ofcompensation on termination.Non-executive directors have service contracts withthe Company, and retire annually by rotation inaccordance with the Company’s MoI.Details on the remuneration of executive and nonexecutivedirectors are provided on page 120 of theIntegrated Annual Report.Changes to the BoardAndy Kawa resigned as non-executive director of theBoard on 2 June 2011.Ralph Patmore was appointed as independent nonexecutivedirector to the Board with effect from25 January 2012.The details of the directors are set out on pages9 to 11 of the Integrated Annual Report.Director appointment and retirement policiesThe non-executive directors and Chairman are subjectto retirement by rotation and re-election in accordancewith the Company’s MoI. At each annual generalmeeting, one-third of the non-executive directors, orif their number is not a multiple of three, then thenumber nearest to, but not less than, one-third shallretire from office.New appointments to the Board are made through aformal process and the Nomination Committeeassists with the process of identifying suitablecandidates to be proposed to the Board and toshareholders.Board appointments are made with a view to ensuringan appropriate blend of skills and experience ismaintained. All Board appointments are ratified bySentula shareholders.Board meetingsThe Board meets at least four times a year withadditional meetings held when necessary.The attendance at Board meetings held during thisperiod is set out below:Number of Board meetings during the year – eightDirector AttendedHugh Stoyell 6Robin Berry 8Jonathan Best (Chairman) 8Deon Louw 7Andy Kawa (resigned 02/06/2011) 1Pat Modisane 8Kholeka Mzondeki 7Cor van Zyl 7Rain Zihlangu 8Ralph Patmore (appointed 25/01/2012) 2Board sub-committeesTo enable the Board to properly discharge its dutiesand responsibilities, the Board is assisted by an Auditand Risk Committee, a Remuneration Committee, anInvestment Committee, a Nomination Committeeand a Social and Ethics Committee.Directors play a critical role as Board representativeson the various Board committees and ensure that theCompany’s interests are served by impartial, objectiveand independent views that are separate from thoseof management and shareholders.Each committee has a charter/terms of reference toguide the members in performing their duties andthe members of the committees have access tomanagement, Group records and external professionaladvice if and when required. The Chairperson of eachcommittee, in line with the recommendations of KingIII, attends the annual general meeting.Audit and Risk CommitteeThe Audit and Risk Committee is constituted as astatutory committee of Sentula and the Group inrespect of its statutory duties in terms of section 94(7)of the Companies Act, and a committee of the Boardin respect of all other duties assigned to it by theBoard. The duties and responsibilities of thecommittee members are in addition to those dutiesand responsibilities that they have as members ofthe Board.The committee has an independent role withaccountability to both the Board and shareholders,however it does not assume the functions of

Sentula Mining Limited Integrated Annual Report 201227management, which remain the responsibility of theexecutive directors, prescribed officers and othermembers of senior management.The duties and responsibilities of the members of theAudit and Risk Committee are governed by a charter/terms of reference which is reviewed annually. Thecharter/terms of reference sets out the committee’sduties, which include inter alia:• Overseeing integrated reportingThe committee oversees integrated reporting,including also the integrity and content of theintegrated reporting process, and in particular thecommittee must:(i) have regard to all factors and risks that mayimpact on the integrity of the Integrated AnnualReport, including factors that may predisposemanagement to present a misleading picture,significant judgements and reporting decisionsmade, monitoring or enforcement actions by aregulatory body, any evidence that brings intoquestion previously published information,forward looking statements or other information;(ii) review the annual financial statements, interimreports, preliminary or provisional resultsannouncements, summarised integratedinformation, any other intended release ofprice-sensitive information and prospectuses,trading statements and similar documents;(iii) comment in the annual financial statements onthe accounting practices and the effectivenessof the internal financial controls;(iv) review the disclosure of sustainability issues inthe Integrated Annual Report to ensure that itis reliable and does not conflict with thefinancial information;(v) recommend to the Board whether or not toengage an external assurance provider onmaterial sustainability issues;(vi) recommend the Integrated Annual Report forapproval by the Board;(vii) consider the frequency for issuing interimresults;(viii) consider whether the external auditor shouldperform assurance procedures on the interimresults;(ix) review the content of the summarisedinformation as to whether it provides a balancedview; and(x) engage the external auditors to provideassurance on the summarised financialinformation.• Combined assurance modelThe committee must ensure that a combinedassurance model is applied to provide a coordinatedapproach to all assurance activities, and in particularthe committee should:(i) ensure that the combined assurance receivedis appropriate to address all the significant risksfacing the Company; and(ii) monitor the relationship between the externalassurance providers and the Company andtake the appropriate action where necessary.• Finance function and Financial DirectorThe committee reviews the expertise, resourcesand experience of the Company’s finance functionand discloses the results of the review in theIntegrated Annual Report. The committee alsoconsiders and satisfies itself of the suitability of theexpertise and experience of the Financial Directoron an annual basis.• Internal audit processesThe committee is responsible for overseeing ofinternal audit, and in particular the committeemust:(i) be responsible for the appointment,performance assessment and/or dismissal ofthe outsourced internal audit service provider;(ii) approve the internal audit plan and monitorperformance against this plan; and(iii) ensure that the internal audit function is subjectto an independent quality review, as and whenthe committee determines it appropriate.• Risk managementThe committee is an integral component of the riskmanagement process and specifically thecommittee must:(i) oversee the development and annual review ofa policy and plan for risk management torecommend for approval to the Board;(ii) monitor implementation of the policy and planfor risk management taking place by means ofrisk management systems and processes;(iii) monitor effectiveness of the Company’s internalcontrols and internal audit function;(iv) make recommendations to the Boardconcerning the levels of risk tolerance andmonitoring that risks are managed within thelevels of tolerance as approved by the Board;(v) ensure that the risk management plan is widelydisseminated throughout the Company andintegrated in the day-to-day activities of theCompany;

Sentula Mining Limited Integrated Annual Report 2012Governance reports continued28(vi) oversee the integrity and efficiency of the riskmanagement process through assurance of thesystem controls and policies in place;(vii) ensure that risk management assessments areperformed on a continuous basis;(viii) ensure that frameworks and methodologies areimplemented to increase the possibility ofanticipating unpredictable risks;(ix) ensure that management considers andimplements appropriate risk responses;(x) ensure that continuous risk monitoring bymanagement takes place;(xi) express the committee’s formal opinion to theBoard on the effectiveness of the system andprocess of risk management;(xii) review reporting concerning risk managementthat is to be included in the Integrated AnnualReport for it being timely, comprehensive andrelevant; and(xiii) focus on financial risks such as financialreporting risks, internal financial controls, fraudrisks as it relates to financial reporting and ITrisks as it relates to financial reporting.• External audit processesThe committee is responsible for recommendingthe appointment of the external auditor and tooversee the external audit process and in thisregard the committee must:(i) nominate the external auditor for appointmentby the shareholders;(ii) approve the scope and terms of engagement,including also the remuneration for the externalaudit engagement;(iii) monitor and report on the independence ofthe external auditor in the annual financialstatements;(iv) define a policy for non-audit services providedby the external auditor;(v) pre-approve the contracts for non-auditservices to be rendered by the external auditor;(vi) ensure that there is a process for the committeeto be informed of any reportable irregularities(as identified in the Auditing Profession Act,2005) identified and reported by the externalauditor;(vii) review the quality and effectiveness of theexternal audit process;(viii) evaluate the performance of the externalauditor;(ix) have oversight of the qualification andindependence of the external auditor; and(x) perform any other oversight functiondetermined by the Board.• ComplianceThe responsibility to facilitate compliancethroughout the Company and the Group has beendelegated by the Board to the Audit and RiskCommittee, and in this regard the committee must:(i) ensure that the Company and the Groupcomply with applicable laws and consideradherence to non-binding rules, codes andstandards;(ii) ensure that the Company and the Groupestablish and maintain a compliance frameworkand process that is appropriate taking intoaccount the laws, rules, codes and standardsthat are applicable in light of the compliancerisk profile of the Company;(iii) ensure that the Company and the Groupestablish and implement a legal compliancepolicy;(iv) ensure that the Company and the Groupestablish and implement a compliance manual;(v) identify, assess, advise on, monitor and reporton the regulatory compliance risk of theCompany and the Group, which will form partof the overall risk management framework ofthe Company;(vi) ensure that compliance monitoring andreporting be undertaken in a manner that isappropriate for the Company’s circumstances;and(vii) ensure that a compliance culture is encouragedthrough leadership, establishing theappropriate structures, education and training,communication and measurement of keyperformance indicators relevant to compliance.• Information technology (“IT”) governanceThe responsibility for IT governance throughout theCompany has been delegated by the Board via theAudit and Risk Committee, to an IT SteeringCommittee established for this purpose. The Auditand Risk Committee has oversight over the dutiesof the IT Steering Committee as more fully detailedin the approved Sentula IT Steering CommitteeCharter. The IT Steering Committee will via its ChiefInformation Officer submit minutes of all IT SteeringCommittee meetings to the Audit and RiskCommittee. The Chief Information Officer of the ITSteering Committee will report on any matters ofimportance to the Audit and Risk Committee, whoin turn will report on IT governance to the Board.

Sentula Mining Limited Integrated Annual Report 201229In terms of the charter/terms of reference, thecommittee comprises a minimum of threeindependent non-executive directors, and theChairman of the committee may not be the Chairmanof the Board.The Audit and Risk Committee is compliant with therequirements of King III, and the constitution of thecommittee is in accord with these guidelines.The committee is chaired by an independent nonexecutivedirector, Cor van Zyl.The composition of this committee is as follows:Cor van Zyl (Chairman of the committee), Andy Kawa(member – resigned 2 June 2011), Kholeka Mzondeki(member) and Rain Zihlangu (member).The Chairman of the Board, Chief Executive Officer,Chief Financial Officer, other executives and theexternal and internal auditors attend Audit and RiskCommittee meetings by invitation. The committeeannually considers and recommends the annualfinancial statements of the Company and the Groupfor approval by the Board. Additionally, the committeeapproves the audit fees and all fees for non-auditservices provided by the Group’s external auditors.The Audit and Risk Committee confirms that it issatisfied with the appropriateness of the skills andexpertise of Deon Louw, an executive director andChief Financial Officer, who fulfils the role of FinancialDirector of Sentula, and the independence of theexternal auditor.Audit and Risk Committee meetings held during theyear – fiveDirectorAttendedCor van Zyl (Chairman) 5Andy Kawa (resigned 02/06/2011) 0Kholeka Mzondeki 3Rain Zihlangu 5Remuneration CommitteeThe Remuneration Committee has adopted a charter/terms of reference which is reviewed annually, settingout its duties and obligations. The committee isresponsible for ensuring that the directors andexecutive management are appropriatelyremunerated. The committee is also responsible forthe formulation of proposals of the fees paid to thenon-executive directors for the Board’s considerationand shareholder approval.During the year under review, the committee waschaired by independent non-executive director, HughStoyell, and the committee entirely comprisedindependent non-executive directors, being AndyKawa (resigned 2 June 2011), Jonathan Best andRalph Patmore (appointed 25 January 2012).The Chief Executive Officer and Executive DirectorTransformation and HR attend meetings by invitation,and are obliged to recuse themselves from discussionswith regard to their own remuneration.Remuneration Committee meetings held during theyear – twoDirector AttendedHugh Stoyell (Chairman) 2Andy Kawa (resigned 02/06/2011) 1Jonathan Best 2Ralph Patmore (appointed 25/01/2012) –** No meetings held subsequent to the appointmentNomination CommitteeThe Nomination Committee was established during2009, and has adopted a charter which is reviewedannually, setting out its duties and obligations. Thecommittee was established to ensure a formal andtransparent procedure for appointments to the Board.Although the appointment of directors is a matter tobe deliberated upon by the Board as a whole, thecommittee assists the Board by identifying andrecommending suitable candidates for appointmentas well as establishing a succession plan for Boardmembers.The committee is chaired by Jonathan Best, andthe current members are Hugh Stoyell and RalphPatmore (appointed as a committee member on25 January 2012). Ralph Patmore replaced KholekaMzondeki as a result of the restructuring of thiscommittee.

Sentula Mining Limited Integrated Annual Report 2012Governance reports continued30An attendance table for Nomination Committeemeetings is set out below:Nomination Committee meetings held during theyear – oneDirectorAttendedJonathan Best (Chairman) 1Hugh Stoyell 1Kholeka Mzondeki (resigned 25/01/2012) 0Ralph Patmore (appointed 25/01/2012) –** No meetings held subsequent to the appointmentInvestment CommitteeThe Investment Committee was established during2007. The purpose of the Investment Committee is toconsider and oversee Sentula’s strategic investmentprocesses and to evaluate investment projectsrelating to the acquisition or disposal of Group assets.The committee is chaired by independent nonexecutiveChairman, Jonathan Best, and the currentcommittee members are Hugh Stoyell, Andy Kawa(resigned 2 June 2011), Cor van Zyl and Rain Zihlangu.During the year under review the following InvestmentCommittee meetings were held – oneDirectorAttendedJonathan Best (Chairman) 1Andy Kawa (resigned 02/06/2011) 0Hugh Stoyell 1Cor van Zyl 1Rain Zihlangu 0Social and Ethics CommitteeThe Social and Ethics Committee was established andconstituted as a statutory committee of Sentula andthe Group on 8 March 2012, in respect of its statutoryduties in terms of section 72(4)(a) of the CompaniesAct, 2008, and a committee of the Board in respect ofall other duties assigned to it by the Board.The committee had its first meeting on 8 May 2012during which meeting its charter/terms of referencewas formulated and subsequently approved by theBoard on 23 August 2012.The purpose of this committee is to recognise theresponsibility for the Company’s actions and theencouragement of a positive impact through itsactivities on the environment, consumers, employees,communities, stakeholders and all other members ofthe public. The ultimate objective of managingorganisational integrity is to build an ethical corporateculture.The committee’s members are appointed by theBoard and it consists of not less than three members,at least one of whom must be an independent nonexecutivedirector. Members could comprise nondirectorssuch as senior management or persons withthe relevant experience. The Board appoints theChairman from the members of the Committee anddetermines the period for which he/she shall holdoffice. In the absence of the Chairman of thecommittee, the remaining members present shallelect one of their numbers present to chair themeeting. The Board shall, from time to time, reviewand revise the composition of the committee, takinginto account the need for an adequate combinationof skills and knowledge.Board members may attend committee meetings byinvitation. Suitably qualified persons may be cooptedonto the committee when necessary to rendersuch specialist services as may be necessary to assistthe committee in its deliberations on any particularmatter, but shall have no voting rights.The committee has the following functions:(i) to provide guidance for the building andsustaining of an ethical corporate culture in theCompany;(ii) to monitor the Company’s activities, havingregard to any relevant legislation, other legalrequirements or prevailing codes of best practice,with regard to Board Charter matters relating tosocial and economic development, including theCompany’s standing in terms of goals andpurposes of the 10 principles set out in the UnitedNations Global Compact Principles, the OECD(Organisation for Economic Cooperation andDevelopment) recommendations regardingcorruption, the Employment Equity Act, theBroad Based Black Economic Empowerment Actand the Company’s legal compliance frameworkas applicable from time to time;

Sentula Mining Limited Integrated Annual Report 201231(iii) to promote good corporate citizenship, includingthe Company’s promotion of equality, preventionof unfair discrimination and reduction ofcorruption, contribution to development of thecommunities in which its activities arepredominantly conducted or within which itsproducts or services are predominantly marketedand record of sponsorship, donations andcharitable giving;(iv) to care for the environment, health and publicsafety, including the impact of the Company’sactivities and of its products or services;(v) to promote consumer relationships, includingthe Company’s advertising, public relations and(vi)compliance with consumer protection laws;to monitor labour and employment, including theCompany’s standing in terms of the InternationalLabour Organisation Protocol on decent workand working conditions and the Company’semployment relationship and its contributiontowards the educational development of itsemployees;(vii) to review any statements on ethical standardsor requirements for the Company and theprocedures or review system implemented topromote and enforce compliance;(viii) to review significant cases of employee conflictsof interest, misconduct or fraud, or any otherunethical activity by employees or the Company;(ix) where requested, make recommendations onany material potential conflict of interest orquestionable situations;(x) ensure that the code of conduct and ethicsrelatedpolicies are drafted and implemented;(xi) reporting on and disclosing the Company’sethics performance;(xii) to draw matters within its mandate to theattention of the Board as the occasion requires;and(xiii) to report, through one of its members, to theshareholders at the Company’s annual generalmeeting on the matters within its mandate.The committee is chaired by Pat Modisane (ExecutiveDirector Transformation and HR), and the appointedmembers are Robin Berry (Chief Executive Officer)and Ralph Patmore (Independent non-executivedirector). Senior members of Sentula managementattend meetings by invitation.CEOThe Board has delegated specific authorities to theCEO to ensure the effective day-to-day managementof the Group. The CEO has established an ExecutiveCommittee to assist in this task. He is accountable tothe Board for managing the Group and reports to theBoard of Directors.Executive CommitteeThe Executive Committee comprises the followingmembers:Robin BerryDeon LouwPat ModisaneGrace ChemalyCatherine WolmaransKhumo MphakeLauren FlindersGideon van HeerdenElsa DevenishIan ElsAllan HepburnJohan PieterseZander PotgieterAlan LynnMacy SiduMike FitzgeraldGerda LouwMike van der RietMarthinus de JagerNicola CillieMichael MinnaarDanie JacobsChief Executive Officer,committee ChairmanChief Financial OfficerTransformation and HumanResourcesGroup Legal Adviser andCompany SecretaryGroup TreasurerGroup Human ResourcesExecutiveGroup SustainabilityCoordinatorChief Executive Officer,Benicon Opencast MiningChief Financial Officer,Benicon Opencast MiningChief Executive Officer, CCTChief Financial Officer, CCTChief Executive Officer,JEF Drill and BlastChief Financial Officer,JEF Drill and BlastChief Executive Officer,Ritchie Crane HireChief Financial Officer,Ritchie Crane HireChief Executive Officer,GeosearchChief Financial Officer,GeosearchExecutive CommercialManager, GeosearchChief Financial Officer,Benicon Sales and SentulaMining ServicesChief Financial Officer,Megacube and CintacureChief Executive Officer,NkomatiChief Financial Officer,Nkomati, Benicon Mining,Benicon Coal and SentulaCoal

Sentula Mining Limited Integrated Annual Report 2012Governance reports continued32Reporting controlsThe Group has comprehensive monthly financialaccounting, cash flow reporting and safety reportingroutines for its subsidiaries. The Group manages cash,funding and banking relationships through acentralised Treasury function. Capital expenditure isapproved by the Board during the budget process.Formal monthly meetings are held with the executivesof each of the subsidiaries to review performance,health and safety, commercial and strategic issues.These are in addition to the monthly meetings heldbetween the subsidiary’s CEO and respectivebusiness management teams.Code of Business Conduct (”the Code“)Sentula is committed to a policy of fair dealing andintegrity in the conduct of its business. Thiscommitment, which is actively endorsed by the Board,is based on a fundamental belief that business shouldbe conducted honestly, fairly and legally. The Companyexpects all employees to share its commitment to highmoral, ethical and legal standards.The CEO and executive management are responsibleto the Board for the development and maintenanceof the ethical culture within the Group. Supervisorsand managers have a responsibility to support theCEO and executive management in upholding a highstandard of business conduct, and must take allreasonable steps to ensure that the people for whomthey are responsible are aware of and uphold thebehaviours outlined in the Code.This includes:• Consistently demonstrating exemplary behaviour.• Undertaking activities to foster a culture in whichemployees understand their responsibilities, feelcomfortable raising concerns without fear ofvictimisation, are encouraged to work according toacceptable standards and are rewarded for suchbehaviour.• Making certain that mandatory Company policies,standards and procedures are accessible andunderstood.• Embedding the requirements of the Code intoexisting systems, for example performancemanagement processes, employment and suppliercontracts, induction as well as industrial agreement.• Responding promptly and seriously to employees’legitimate concerns and questions about businessconduct issues and seeking further assistance ifrequired.• Establishing internal processes that address riskareas in relation to business conduct and ensuringthat actual or potential breaches are appropriatelyinvestigated and handled.• Ensuring all business conduct breaches are reportedto the relevant human resources representative forrecording in the breaches database.• Taking or recommending appropriate actions toaddress business conduct issues.The Company complies with the code of ethicsrequirements of King III in all material respects.Company SecretaryAll directors have unrestricted access to the adviceand services of the Company Secretary and toCompany records, information, documents andpremises. The Company Secretary minutes all Boardand sub-committee meetings and maintains theregisters required by statute. The Company Secretaryis also responsible for keeping directors abreastof regulatory or legislative changes which may affectthe Company.Share dealing and conflicts of interestDirectors and management with access to financialresults and/or price-sensitive information areprohibited from dealing in Sentula shares duringclosed or prohibited periods, and clearance andapproval procedures and processes are in placethroughout the Group. At the holding company level,directors are required to obtain prior approval fromthe Chairman and Chief Executive Officer and toreport any share dealing (including transactions interms of the Sentula Share Incentive Trust) to theCompany Secretary who, together with the ChiefExecutive Officer and sponsor, ensures the publicationof the information on SENS. At subsidiary level,dealings are cleared by the Chief Executive Officer.Directors are required to separate their personaltransactions from the Company’s transactions, andthey are prohibited from accepting or soliciting giftsor benefits of any kind by virtue of their position onthe Board. Annually, and thereafter at each Board

Sentula Mining Limited Integrated Annual Report 201233meeting, directors are required to disclose to theChairman any potential conflict of interest and anyother directorships held by them. Directors whodisclose a potential conflict of interest recusethemselves from discussion of the matter which maygive rise to the conflict of interest.SubsidiariesSentula’s major subsidiaries are listed on page 6 ofthis Integrated Annual Report.SponsorIn compliance with the Listings Requirements,Merchantec Proprietary Limited acts as sponsorto Sentula.Risk management reportResponsibility for risk managementSentula recognises that risk is an inherent andunavoidable aspect of contract mining and miningservices. The Company fosters a corporate culture ofrisk awareness in all decision-making, and iscommitted to mitigating and managing risk in aproactive and effective manner through a competentand thorough risk management framework.In support of this commitment, all material risks thatimpact the Group’s businesses are analysed by theAudit and Risk Committee and the Board, to appraisemanagement decisions. The Board is ultimatelyresponsible and accountable for ensuring thatadequate procedures and processes are in place toidentify, assess, manage and monitor key businessrisks. During the course of the past financial year, theAudit and Risk Committee and Board conducted areview of the Group’s risks to ensure that major risksare identified, rated and documented in theCompany’s risk register.The risk management process is conducted withinputs from both the Group’s internal and externalauditors. Although the Board, assisted by the Auditand Risk Committee, assesses Group risk and ensuresthat a culture of risk awareness is instilled throughoutthe Group, day-to-day responsibility for riskidentification, evaluation and management resideswith the subsidiary management and ExecutiveCommittee of the Group.These risks are reviewed on a monthly basis by theExecutive Committee to ensure that the requisiteresponsibility is allocated and mitigating mechanismsare implemented which are effective in reducing theidentified risk to an acceptable level. Financial risk isgoverned by a formal Financial Risk Managementpolicy which is approved by the Board and sets limitsfor the magnitude and nature of financial risk that maybe incurred by the Group.The Group’s internal audit plan is reviewed on anannual basis by the Audit and Risk Committee anddirected to ensure that the identified risk factors arebeing managed in a manner consistent with theguidelines determined by the Board.The Group’s assets are insured against material losswith credible insurers at predetermined values toensure that material asset losses are reduced to levelsapproved by the Board.Analysis of risks and controlsIn reviewing the Group’s risk profile, considerationis given to the following primary risk categories:Financial:• Credit/counterparty risk;• Market risk/price risk;• Interest rate;• Liquidity risk; and• Funding risk.Political:• Political risk; and• Risk of an inability to source or remit foreignexchange in foreign jurisdiction.Operational risk:• Human resources;• Systems (technology);• Process risk; and• External factor risk.Legal risk:• Compliance and regulatory risk;• Contractual risk; and• Litigation risk.

Sentula Mining Limited Integrated Annual Report 2012Governance reports continued34The risk management process is conducted in thecontext of a formalised system to identify and assessthe primary risks to which the Group is exposed.The approach to the management of the riskincorporates the following key steps:• Identify the risks that could have a material impacton the Group’s ability to achieve its strategicobjectives;• Analyse the risks and mitigating controls;• Ensure that the appropriate controls are put inplace to mitigate or reduce the residual risk to anacceptable level;• Monitor the effectiveness and implementedcontrols; and• Regularly report to the Audit and Risk Committeeand Board.Managing risk and risk factorsA summary of the major risks, in no order of priority, to which the Group is exposed and the mitigating strategiesthereto, is presented hereunder:Root cause Impact MitigationFinancialThe Group’s growth andsustainability is dependenton the support of anumber of financialinstitutions.This funding is utilised toinvest in the Group’songoing capital andworking capitalrequirements.Group capital structure andworking capital adequacy isunresponsive to changing marketand operating conditions whichmay result in a breach of thecovenants of the facilities.Should these facilities bewithdrawn or reduced the Group’ssustainability will be severelyimpacted.Occupational health and safety riskMining is a hazardous Failure to maintain high levels ofactivity and the Group safety can result in harm tooperates in a sector that is employees or communities nearsubject to numerous safety the Group’s operations.and health regulations.Failure to meet safety objectivesGiven the large fleets of may breach the Group’s values,plant and equipment impact its reputation and affectbeing operated by the the morale of employees, theGroup, exposure toachievement of productionmining accidents is the targets and the Group’s licencesingle most significant to operate.health risk facingthe Group.Severe safety incidences canresult in the Group’s reputationbeing damaged with adverseconsequences for its stakeholders.The Group’s financial risk is managed in termsof a Financial Risk Management policy whichendeavours to reduce financial risk toacceptable levels and ensure the Group’ssolvency and liquidity.The Group also fosters good relationships witha number of banks and monitors its liquidity andcovenants on an ongoing basis.To ensure that the Group’s working capital isadequate to bridge operational disruption,standby finance facilities have been secured.The Group places a very high priority on safetyand invests considerable resources in maintainingand improving safety standards at its operations.In this context the following initiatives have beenimplemented:• Programmes to comply with ISO 9000, 14000and OSHAS 18000;• Behaviour-based training and rigorousenforcement of standards;• A SHE forum established at senior management(EXCO) level;• Incentives linked to the meeting of objectives;• Monitor conditions from a safety andoperational perspective, with regard to hazardsidentified and solutions implemented;• Risk elimination programmes and the mitigationof assessed risk; and• Engineered solutions (FRCP and AFRS).

Sentula Mining Limited Integrated Annual Report 201235Root cause Impact MitigationWeather impactThe Group’s operationsare conducted in an openenvironment which isexposed to the naturalelements.Credit riskThe Group is exposed tosubstantial credit risk whenrendering services tocounterparties that do nothave the financial strengthof larger companies.Adverse weather conditions suchas excessive rain, heat, fog anddust adversely impact the Group’sability to meet its operational andfinancial targets.The inability of a counterparty tomeet its obligations to the Groupcan have a material severefinancial impact on the Group’sability to meet its financialobjectives.Skills retention and succession planningThe inability to recruit, Failure to retain skilled employeesdevelop and retainor to recruit appropriate new staffappropriate skills remains members may result in increasedan ongoing risk for the costs, interruptions to existingGroup’s operations.operations and lost opportunities.A high employee turnover couldalso result in the loss of criticalskills and ’corporate memory’.Initiatives to limit the impact of adverse weatherconditions include:• the design and maintenance of effectivedrainage and pumping systems on operations;• ensuring that haul roads and relatedinfrastructure are constructed to ensure gooddrainage and durability;• contracted flexibility in operational activities inconjunction with the scheduling of operationalactivities and flexible production targets; and• maintain high service delivery quality.To reduce this risk to an acceptable level, thefollowing initiatives are taken:• ongoing credit assessments of counterparties;• credit enhancements, where available, such aspayment guarantees, credit insurance andsecurity deposits;• contractual terms to enable the Company tolimit its exposure;• diversification of the client base; and• the strengthening of executive levelrelationships.The Group recognises that the mining industry isexperiencing a skills deficit and has implementeda number of strategies to attract, retain anddevelop its best talent.These include:• regularly benchmarked market-relatedremuneration and long-term incentive schemes;• comprehensive and in-house trainingprogrammes, job-based skills training andapprenticeships and learnerships;• growth opportunities and multiskilling foremployees;• succession planning programmes are in placewhich are reviewed bi-annually; and• ongoing market research on availability ofscarce category skills.

Sentula Mining Limited Integrated Annual Report 2012Governance reports continued36Root cause Impact MitigationMining inflation impacting on input costsThe Group is dependenton a number of input costswhich are largely outsideof its control.These costs typicallyinclude labour rates, steelprices, fuel and the cost ofcapital equipment.The Group is often unable to passthese cost increases through to itsclients, which may result in itsfinancial objectives not being metand consequently affecting thevalue of its assets, earnings, cashflows and prospects.A labour disruption could result inproduction and financial losses tothe Group.A number of strategies have been implemented tomitigate this risk, which include:• maintaining a database of price escalations onall major commodity items;• ensuring contractual provision to mitigate inputcost escalations;• developing and strengthening executive levelrelationships with key suppliers;• maintaining flexible business models withrespect to fleet configurations, terminationperiods and employment conditions;• implementing strong relationship buildingprocesses with organised labour through aprocess of constructive dialogue and aneffective working relationship; and• establishing long-term agreements on collectivebargaining.Regulatory, legal and politicalThe Group’s business maybe affected by regulatory,political or fiscaldevelopments in any ofthe jurisdictions in whichit operates.Mining operations aresubject to extensivelegislation and regulations.Adverse changes inlegislation or regulationscould affect the viability ofthe Group’s miningoperations or prospects.Adverse changes to legislation,regulations or standards couldimpact the Group’s licences andits ability to operate its miningassets.Failure to comply with existingregulations could result in therevocation of the Group’s licences,consents and other rightsrequired to conduct its business.Legal disputes may affect theGroup’s reputation, relationshipswith Government and keystakeholders as well as its futureearnings and cash flows.The Group monitors regulatory developments withthe assistance of an external service provider andensures that the applicable policies andprocedures are in place to ensure compliance.All appropriate actions are taken by managementto protect the Group, its employees andshareholders from legal actions.Mechanisms to ensure compliance include:• Legal compliance register being implemented;• Compliance checklists and project monitoringsoftware being implemented;• Independent reviews and legal opinions aresought on substantive regulatory matters; and• Ongoing monitoring of the Group’s BBBEEstatus.

Sentula Mining Limited Integrated Annual Report 201237Root cause Impact MitigationRegulatory, legal and political continuedThese changes can alsoresult in a delay of thecommencement ofcontract miningoperations.The political riskexperienced in foreigncountries can also impacton the mining servicesbusiness.Macroeconomic riskDemand for the Group’sservices are influenced byworld economic growth,particularly in the Asiancountries and the WesternEuropean sub-continent.Political volatility in the foreigncountries in which the Groupoperates can result in a delay inthe commencement of operationsor a cessation of operations.The ability to source and remitforeign exchange may alsoadversely impact the Group’sliquidity and its ability to meet itscontractual obligations.The manifestation of these riskscan result in an adverse impact onthe Group’s future earnings andcash flows.A reduction in economic growthcould have a negative impact oncommodity prices and aconcomitant impact on theGroup’s revenues, profitability, cashflows, and asset values.Should commodity pricesdeteriorate certain of theoperations on which the Grouprenders mining services maybecome uneconomical resultingin a cessation or curtailmentof operations.Political risk in foreign countries is managed by thefollowing initiatives:• Independent political risk assessments andmonitoring, where appropriate;• Contributing to the host country’s economy andculture with worthwhile public projects;• Cultivating connections with public officialsoutside the industry in which the companyoperates;• Ongoing discussions and engagement withrepresentatives of the national or localgovernment and being a good corporatecitizen;• Political risk insurance, where deemednecessary; and• Limiting the capital and currency exposure to asingle country or region to within acceptablelevels.The Group manages this risk through constantmonitoring of the markets in which it operates.The following strategies have also beenintroduced to further mitigate this risk:• Diversification of the Group’s earnings streams;• Maintaining debt levels which are stress testedto different levels of cash flow volatility; and• Maintaining a flexible business models withrespect to fleet configurations, employeetermination periods and employmentconditions.Major economic upheaval in Asiaor Europe may also exacerbate thefinancial crisis, resulting in capitalequipment finance becomingmore expensive and/or curtailed.

Sentula Mining Limited Integrated Annual Report 2012Governance reports continued38Information technology report (IT)The Board of Directors has, through delegatedauthority to the Audit and Risk Committee, identifiedthe functions within the business that are dependentupon IT solutions. The business risk associated withthese functions has been assessed by the Audit andRisk Committee and, taking cognisance of the natureof the Group’s current business offering and strategy,an IT governance framework has been establishedand policies formulated under the direction of theGroup IT Steering Committee.A charter for the IT Steering Committee was adoptedduring the year and the IT Steering Committee hasbeen mandated to guide the Group’s IT strategy inline with business imperatives.Given the nature of the Group’s current business mix,the physical safeguarding of IT assets, securing ofdata and disaster management and recovery, havebeen identified as the core of Sentula’s IT managementemphasis.As a standing item on the Group’s Audit and RiskCommittee agenda, the Group’s internal auditors andIT consultants have been appointed to provideassurance to the committee on the appropriateness,stability and sustainability of the Group’s IT function.Remuneration reportRemuneration CommitteeRole of the Remuneration Committee andterms of referenceIn particular, the Remuneration Committee isresponsible for:• the determination and periodic review of theremuneration packages for executive directors andother members of the Executive Committee of theCompany including, but not limited to, basic salary,performance-based short and long-term incentives,pensions, and other benefits;• the design, operation and administration of theCompany’s performance-based incentives andawards made under the share-based incentiveschemes;• the development of a succession plan that identifiessuitably experienced individuals, within in theorganisation, who can step into key roles, shouldthe need arise; and• assisting the Board with the determination of theremuneration to be paid to the non-executive directors.Membership of the committeeHugh Stoyell – ChairmanAndy Kawa – resigned 2 June 2011Jonathan BestRalph Patmore – appointed 25 January 2012Remuneration policy on executivedirector and senior executiveremunerationThe Company’s objective remains to be the preferredcontract mining and mining services company inAfrica. In order to achieve this, the Company mustbe in a position to attract the right talent available inthe industry and its remuneration package musttherefore be comparable to those of its competitors,in the various sectors in which it operates.The remuneration policy is to attract and retain highcalibre executives and to motivate them to developand implement the Company’s business strategy andthe optimisation of long-term shareholder value.The following principles are applied to give effect tothe remuneration policy and to determine executiveremuneration:• Executive remuneration is benchmarked against acomparator group of South African small and midcapJSE listed entities, mining services and juniormining companies. The most recent benchmarkingexercise conducted by PE Corporate Services as at4 May 2012 indicated that the total remuneration ofthe executive directors is above the median;• To ensure the appropriate balance between short,medium and long-term incentives, with salarycomprising about 35% to 45% of annualremuneration if the bonus and share-basedincentive targets are achieved in any given year;• To align the behaviour and performance ofexecutives with the Company’s strategic goals, allincentive plans align performance targets withshareholder interests. The quantum of the shorttermincentive and related bonus is determinedwith respect to performance in a given financialyear, while the vesting of the share-based incentiveawards is determined with respect to conditionsrelated to Company performance over the fiveyears following the date of grant.

Sentula Mining Limited Integrated Annual Report 201239At the annual general meeting of shareholders to beheld on 25 October 2012, shareholders will be askedto approve the policy as outlined in this report andthat the Board of Directors be authorised to do allsuch acts as may be necessary to implement theremuneration policy for 2013 as summarised herein.Elements of executive director andsenior executive remunerationRemuneration mixEach executive’s total remuneration consists of abasic salary and benefits, defined as the employmentcost to the Company, an annual performance-linkedbonus, and a combination of the following sharebaseddeferred bonus scheme, the share appreciationrights scheme and the long-term incentive plan. Anappropriate balance is maintained between fixed andperformance-related remuneration and elementslinked to short-term performance and those relatedto longer-term growth in shareholder value.The potential bonus achievable in a given year,expressed as a percentage of basic salary, is shown inthe table below, if 100% of all the budgeted annualtargets are met:Chief Executive Officer 56%Executive directors 48%Executive management 40%Other management 40%Basic salaryThis is the total guaranteed annual employment costto the Company associated with the employmentof an executive. It is structured, at the individual’selection, but in accordance with applicable legislation,to include a basic salary, a travelling allowance, amedical aid contribution and a pension fundcontribution. A cost of living increase in the basicsalary is considered by the Remuneration Committeeon an annual basis, and implemented from 1 July inthe applicable year. For the year under review,increases ranged from 0% to 7%, with a maximumincrease in an individual’s executive salary cost of 7%.Performance bonusThis is a short-term incentive plan under which awardlevels are determined with reference to the achievementof a set of stretched Company and individualperformance targets. For the 2012 financial year, 100%of the bonus would have been payable if 110% of alltargets were achieved. The criteria comprised a matrixbasedscorecard, comprising financial, safety,transformation and personal objectives.The weighted resultant percentage for the Groupobjectives, achieved for the 2012 financial year, was22,4%, as detailed in the table below:SHE BBBEE Financial Total9,0% 13,4% 0,0 22,4%This score, coupled with the achievement of personalobjectives, was applied to the applicable level ofbasic salary resulting in a performance bonus equal toa percentage of the individual’s basic salary. Thebonus is paid in cash at the end of the monthfollowing the month in which the presentation of theGroup’s annual financial results is made.The criteria and scorecard weighting for the financialyear ending 31 March 2013 have been established bythe Remuneration Committee, as follows:SHE%BBBEE%Financial%Personal%Chief ExecutiveOfficer 17,8 17,8 44,4 20,0Chief FinancialOfficer 15,6 15,6 38,3 30,0HR and TransformationDirector 15,6 15,6 38,3 30,0Other executives 13,3 13,3 33,4 40,0The weighted average percentage of targets achievedwill be applied to the following percentages of cost tocompany salary:Chief Executive Officer 70%Chief Financial Officer 60%Human Resources and Transformation Director 60%Other executives 50%Share-based incentivesDeferred bonus schemeSelected executives and employees of the Group will,in lieu of a discretionary bonus or a percentagethereof, be offered the right to receive a cash awardequal to the sum of the market value of a number ofnotional Sentula issued ordinary shares as at the

Sentula Mining Limited Integrated Annual Report 2012Governance reports continued40expiry of a specified employment period and amultiple thereof. The specified employment periodand the applicable multiple is determined by theBoard at the time of offer of the deferred bonusaward. The aggregate of all dividends paid perSentula ordinary shares over the employment periodand the number of bonus shares comprise thedeferred bonus award.Notional shares awarded under this scheme areoffered at a price determined by the 30 day Sentulavolume weighted average share price (the “30-dayVWAP”) on the day that the Remuneration Committeemakes the award (the ”offer date”). An award of122 422 nominal shares was made during August2010 to Mr RC Berry, with an employment period offive years and a multiple of 2.Share appreciation right schemeThis is a scheme whereby senior and middlemanagement (the “employees”) of Sentula areincentivised by means of the award of options, ofwhich the offer price is determined as the 30-dayVWAP on the offer date and the employees canexercise the said options in five equal tranchesannually from the first to the sixth anniversary of theoffer date, subject to them remaining in theemployment of Sentula. The award and allocation ofoptions under the scheme is governed by Sentula’sBoard. No new options were awarded during thefinancial year ended 31 March 2012.The basis of settlement of the share appreciationrights scheme and the deferred bonus scheme isdisclosed in note 6 of the consolidated financialstatements.Long-term incentive planSelected executives and employees of Sentula and itssubsidiaries receive a conditional right to receive acash award (the “LTIP”) equal to the market value ofa number of notional Sentula issued ordinary shareson the date the award becomes unconditional. TheLTIP award is to be applied towards the obligatorysubscription and/or purchase of Sentula ordinaryshares. This is a cash-settled scheme. During the 2012financial year 1 575 000 LTIP awards were made to newparticipants, being senior executives who joined theGroup, subsequent to the last measurement date inJuly 2011. As the conditionality for the second 2011tranche of the LTIP awards was met, 6 109 000 awardsvested during the financial period under review.

Sentula Mining Limited Integrated Annual Report 201241King III checklist1. Ethical leadership and corporate citizenship1.1 The Board should provide effective leadership based on an ethical foundation ✓1.2 The Board should ensure that the Company is and is seen to be a responsiblecorporate citizen1.3 The Board should ensure that the Company’s ethics are managed effectively ✓2. Board and directors2.1 The Board should act as the focal point for the custodian of corporategovernance ✓2.2 The Board should appreciate that strategy, risk, performance and sustainabilityare inseparable ✓2.3 The Board should provide effective leadership based on an ethical foundation ✓2.4 The Board should ensure that it is and is seen to be a responsible corporatecitizen ✓2.5 The Board should ensure that the Company’s ethics are managed effectively ✓2.6 The Board should ensure that the Company has an effective and independentAudit Committee ✓2.7 The Board should be responsible for the governance of risk ✓2.8 The Board should be responsible for information technology (IT) ✓2.9 The Board should ensure that the Company complies with applicable laws andconsiders adherence to non-binding rules, codes and standards2.10 The Board should ensure that there is an effective risk-based internal audit ✓2.11 The Board should appreciate that stakeholders’ perceptions affect the Company’sreputation ✓2.12 The Board should ensure the integrity of the Company’s integrated report ✓2.13 The Board should report on the effectiveness of the Company’s system ofinternal controls ✓2.14 The Board and its directors should act in the best interest of the Company ✓2.15 The Board should consider business rescue proceedings or other turnaroundmechanisms as soon as the Company is financially distressed as defined by theCompanies Act ✓2.16 The Board should elect a Chairman of the Board who is an independent nonexecutivedirector. The CEO should not fulfil this role ✓2.17 The Board should appoint the Chief Executive Officer and establish a frameworkfor the delegation of authority ✓2.18 The Board should comprise a balance of power, with a majority of non-executivedirectors. The majority of non-executive directors should be independent ✓2.19 Directors should be appointed through a formal process ✓2.20 The induction of and ongoing training and development of directors should beconducted through formal processes ✓2.21 The Board should be assisted by a competent, suitably qualified companysecretary ✓✓✓

Sentula Mining Limited Integrated Annual Report 2012Governance reports continued42King III checklist2. Board and directors continued2.22 The evaluation of the Board, its committees and the individual directors shouldbe performed every year ✓2.23 The Board should delegate certain functions to well-structured committees butwithout abdicating its own responsibilities ✓2.24 A governance framework, including strategic objectives of the policy, should beagreed between the Group and its subsidiary boards/companies ✓2.25 Companies should remunerate directors and executives fairly and responsibly ✓2.26 Companies should disclose remuneration of each individual director and certainsenior executives ✓2.27 Shareholders should approve the Company’s remuneration policy ✓3. Audit and Risk Committee3.1 The Board should ensure that the Company has an effective and independentAudit Committee comprising at least three members ✓3.2 Audit Committee members should be suitably skilled and experiencedindependent non-executive directors ✓3.3 The Audit Committee should be chaired by an independent non-executivedirector ✓3.4 The Audit Committee should oversee integrated reporting ✓3.5 The Audit Committee should ensure that a combined assurance model isapplied to provide a coordinated approach to all assurance activities ✓3.6 The Audit Committee should satisfy itself of the expertise, resources andexperience of the Company’s finance function3.7 The Audit Committee should be responsible for overseeing internal audit ✓3.8 The Audit Committee should be an integral component of the risk managementprocess ✓3.9 The Audit Committee is responsible for recommending the appointment of theexternal auditor and overseeing the external audit process ✓3.10 The Audit Committee should report to the Board and shareholders on how it hasdischarged its duties ✓4. The governance of risk4.1 The Board should be responsible for the governance of risk ✓4.2 The Board should determine the levels of risk tolerance ✓4.3 The Risk Committee or Audit Committee should assist the Board in carrying outits risk responsibilities ✓4.4 The Board should delegate to management the responsibility to design,implement and monitor the risk management plan ✓4.5 The Board should ensure that risk assessments are performed on a continualbasis ✓4.6 The Board should ensure that frameworks and methodologies are implementedto increase the probability of anticipating unpredicted risks ✓✓

Sentula Mining Limited Integrated Annual Report 201243King III checklist4. The governance of risk continued4.7 The Board should ensure that management considers and implementsappropriate risk responses ✓4.8 The Board should ensure continuous risk monitoring by management ✓4.9 The Board should receive assurance regarding the effectiveness of the riskmanagement process ✓4.10 The Board should ensure that there are processes in place enabling complete,timely, relevant, accurate and accessible risk disclosures to stakeholders ✓5. The governance of information technology5.1 The Board should be responsible for information technology (IT) ✓5.2 IT should be aligned with the performance and sustainability objectives of theCompany ✓5.3 The Board should delegate to management the responsibility for theimplementation of an IT governance framework ✓5.4 The Board should monitor and evaluate significant IT investments andexpenditure ✓5.5 IT should form an integral part of the Company’s risk management ✓5.6 The Board should ensure that information assets are managed effectively ✓5.7 A Risk Committee and Audit Committee should assist the Board in carrying outits IT responsibilities ✓6. Compliance with laws, rules, codes and standards6.1 The Board should ensure that the Company complies with applicable laws andconsiders adherence to non-binding rules, codes and standards ✓6.2 The Board and each individual director should have a working understanding ofthe effect of the applicable laws, rules, codes and standards on the Companyand its business ✓6.3 Compliance should form an integral part of the Company’s risk managementprocess ✓6.4 The Board should delegate to management the implementation of an effectivecompliance framework and processes ✓7. Internal audit7.1 The Board should ensure that there is an effective risk-based internal audit ✓7.2 Internal audit should follow a risk-based approach to its plan ✓7.3 Internal audit should provide a written assessment of the effectiveness of theCompany’s system of internal controls and risk management ✓7.4 The Audit Committee should be responsible for overseeing internal audit ✓7.5 Internal audit should be strategically positioned to achieve its objectives ✓8. Governing stakeholder relationships8.1 The Board should appreciate that stakeholders’ perceptions affect the Company’sreputation ✓

Sentula Mining Limited Integrated Annual Report 2012Governance reports continued44King III checklist8. Governing stakeholder relationships continued8.2 The Board should delegate to management to proactively deal with stakeholderrelationships ✓8.3 The Board should strive to achieve the appropriate balance between its variousstakeholders groupings, in the best interest of the Company ✓8.4 Transparent and effective communications with stakeholders is essential forbuilding and maintaining their trust and confidence ✓8.5 The Board should ensure that disputes are resolved as effectively, efficiently andexpeditiously as possible ✓9. Integrated reporting disclosure9.1 The Board should ensure the integrity of the Company’s Integrated AnnualReport ✓9.2 Sustainability reporting and disclosure should be integrated with the Company’sfinancial reporting9.3 Sustainability reporting and disclosure should be independently assured ✘ The Audit andRisk Committeereviews the needfor externalassurance annually✓The InternationalAccounting andAuditing StandardBoard’sinternationalstandard onassuranceengagements(SAE 3000) andAccountability’sAssuranceStandard(AA1000AS) aretaken into accountin deciding onwhere and whento use externalassuranceproviders

Sentula Mining Limited Integrated Annual Report 2012Sustainability report45OverviewTwo years ago, Sentula Mining embarked on the firstannual review of its performance in the field ofsustainable development. Now in our third year ofreporting, Sentula understands that fully integratedreporting is a journey, not a destination.This report covers Sentula’s 2012 financial year withthe aim of providing our stakeholders with a broadoverview of our current activities and performance inthe areas of sustainable development, transformation,health, safety, environment and our interaction withlocal communities.The review process is focused primarily on ouractivities in South Africa, where the majority of ouroperations are based, but does include limitedcoverage outside its borders. In addition to SouthAfrica, we operate in Botswana, the DemocraticRepublic of Congo, Ethiopia, Malawi, Mozambique,Liberia, Zambia, Côte d’Ivoire and Tanzania. Due tothe remoteness of many of the operations outsideSouth Africa reporting in these areas remains achallenge; however, in future we expect to providemore information on our sustainable developmentperformance in these areas.This review has been compiled using the principlesfor integrated sustainability reporting as outlined inKing III, the Integrated Reporting Committee’sdiscussion document of April 2011 and the GlobalReporting Initiative (“GRI”) G3.1 sustainabilityreporting guidelines.Key performance indicators (“KPIs”) have been usedto give a high-level overview of our sustainabledevelopment performance. The use of KPIs allows usto compare our performance in these areas to that ofprevious years and across our business. In the lastreview we set targets for selected KPIs and in thisreview we will report on our performance as well asset targets for the next reporting period.GovernanceSentula is committed to building a clean reputationand credibility as the preferred mining servicescompany on the African continent.As a company listed on the JSE and a responsiblebusiness entity, we embrace the King III Code ofGovernance Principles which advocates integrity in allaspects of business. This means that we need to beable to account for and demonstrate ethical, credibleand transparent business conduct in everything wedo and in our relationships with all our stakeholders.Sentula acknowledges its responsibility to goodbusiness practice and strives to be acknowledged asa service provider with integrity.At Sentula we strive to meet all our legal requirementsto ensure our credibility and sustainability. Ourmanagement team keeps a close eye on newlegislative developments in an effort to keep up todate with ever-evolving legal requirements. We willnot tolerate any form of bribery or unethical businessconduct, especially as we commence explorationand/or mining activities in new areas throughout thecontinent. The Group philosophy of zero tolerance ofany form of corruption, fraud, abuse or unethicalbusiness practice means that we do not hesitate totake disciplinary action against any employee believedto have transgressed these ethics.As a responsible business entity, we seek to promotethe observance of human rights in the countries inwhich we operate and support the principles set forthin the Universal Declaration of Human Rights. Sentulacomplies with the International Labour Organisation’sConventions and does not employ people belowthe age of 18. No political donations or in-kindcontributions are made.Nkomati Anthracite has experienced a number ofenvironmental legislative challenges in both this andthe previous reporting period. The mine has been inoperation since the 1980s and has changed hands anumber of times during this time. Both legacy andrecently arising challenges exist. However, Sentularemains committed to legal compliance and ethicalpractices. In demonstration of this commitment, inMay 2011 Nkomati Anthracite was placed on ‘careand maintenance’ pending the finalisation of theIWULA applications at the operation.

Sentula Mining Limited Integrated Annual Report 2012Sustainability report continued46Business ethicsSentula’s Code of Business Conduct is guided by ourvalues and sets out the standards that direct ourbusiness activities. Our ethics and conduct programmeincludes a formal code of conduct, written policiesand procedures, training, auditing and monitoring,correct oversight and delegation of responsibilitiesand consistency in enforcement of the code ofconduct. Management is committed to ensuringthese values and our Code of Business Conduct areproperly understood and observed. A BusinessConduct Quick Test is available to assist employees ifthey are in any doubt about what to do or when tospeak up.Whistle-blowingSentula makes use of a dedicated, independentwhistle-blowing facility that is available 24 hoursa day and 365 days a year to report workplacedishonesty and inappropriate behaviour acrossthe Group. This is available by email(sentula@tip-offs.com) or on freeCall (0800 21 31 33).All reported incidents are fully investigated andemployees or contractors implicated in irregularactivities are appropriately dealt with.Operating contextIssues and trendsSentula’s operational footprint extends throughoutAfrica with the majority of operations based in SouthAfrica. The Company has been listed on the JSE since1993 and, therefore, our business is deeply rooted inthe context of South Africa as a whole.Operating in South Africa means taking in thehistorical legacy of the apartheid system and thecurrent economic policy of BBBEE. BBBEE is notsimply an affirmative action policy but rather a strategythat aims to realise the country’s full economicpotential through the combined channels ofemployment equity, skills development, ownership,management, socio-economic development, andpreferential procurement. The primary aim of BBBEEis to bring the black majority of South Africa intothe economic mainstream. As such, Sentula useslegislation as a positive framework in which to facilitatetransformation, black economic empowerment,preferential procurement, community socialinvestment and enterprise development. We believethat transformation is not just a legal requirement buta strategic investment in South Africa.Issues around sustainability of resources and theenvironmental impact of mining are increasinglybeing highlighted. In particular, as the effects of acidmine drainage and the legacy issues of miningbecome more apparent in South Africa, there isincreasing pressure on mining companies andcontractors to ensure that the impacts of theiroperations are quantified and mitigated as far aspossible. Sentula remains committed to responsiblemining and we are constantly reviewing all ourenvironmental procedures to ensure we are not onlycompliant with legalisation but also up to date withbest environmental practice.“Sustainability is the primary moral and economicimperative of the 21st century. It is one of themost important sources of both opportunitiesand risks for businesses. Nature, society, andbusiness are interconnected in complex ways thatshould be understood by decision-makers. Mostimportantly, current incremental changes towardssustainability are not sufficient – we need afundamental shift in the way companies anddirectors act and organise themselves.”King III –King Code of Governance for South Africa 2009As the effects of climate change are starting tobecome ever more apparent, the need not onlyto quantify and report on carbon emissions but alsoto reduce emissions is now pressing. Although we arenot yet required by legislation to reduce our emissions,pressure in the form of tax, incentives such as theproposed South African general carbon tax maybecome a reality in the near future. In preparation forthese measures and as responsible corporate citizensSentula has begun to monitor the carbon emissionsof the entire organisation. Over the last two years abaseline carbon emission level has been establishedand a target-based strategy for reducing our overallemission is now being investigated.Although there is a shift towards a low-carboneconomy particularly in European markets, the SouthAfrican coal industry remains solid on the back oflocal and global demand for the resource. Locally,national power utility, Eskom, remains one of the chiefclients of the coal industry, with demand set toincrease as new power stations, such as Kusile andMedupi, come online.

Sentula Mining Limited Integrated Annual Report 201247Engaging with our stakeholdersOur relationships with our stakeholders define theway we conduct our business. Our stakeholders giveus our licence to operate and without them we wouldnot be able to build a sustainable future.At Sentula our primary stakeholder groups includelocal communities, customers and host mines,shareholders and investors, suppliers, trade unions ororganised labour, employees and contractors,business partners, local and national authorities, themedia, non-governmental organisations, industryassociations, our competitors and relevant miningand mineral authorities.We believe that open and transparent dialogueshould form the basis of our interaction with ourvarious stakeholder groups. From this solid basis wecontinue to involve them, where appropriate, in allmatters of our business, both at an everyday functionallevel and at a higher strategic level.Sentula realises that without constructive input fromour stakeholders and commitment from them touphold our business principles and values, we cannotbuild a sustainable business that can add valueto society.This is particularly true in all our coal mininginvestments, including our Nkomati Anthraciteoperation. Although there have been a number ofchallenges with regard to stakeholder engagement atthis operation, we remain committed to improvingrelationships with all stakeholders. To this endNkomati Anthracite has invested significant time andresources into engaging with the local communities,governmental departments, NGOs, the tribalauthorities and local municipal structures.As part of our commitment to open and transparentengagement with our stakeholders, Sentula took thedecision to make copies of all our environmentalauthorisations and applications available for downloadon our website. This decision was noted andcommended in the Centre for Environmental Rights2011 publication document on access to informationentitled Unlock the Doors: How greater transparencyby public and private bodies can improve therealisation of environmental rights.Relationships with governmentsSentula strives to establish good relationships withgovernments at national, regional and local levels inall the regions in which we operate. We are committedto meeting all the legal requirements of thesecountries to ensure the sustainability of our businessin these areas.All contracting subsidiaries experience goodrelationships with the DMR and comply with theMHSA. In addition, we adhere to the requisiteenvironmental permits and licences held byour clients.Nkomati Anthracite experienced a number oflegislative challenges during the previous reportingperiod, some of which carried over into the 2012reporting period, including pre-compliance noticesand directives from the DWA. We are committed toour legal obligations and will continue to seekcompliance through transparency and cooperationwith the relevant government departments. Indemonstration of our commitment to meeting ourlegal obligations, Nkomati Anthracite finalised andsubmitted all outstanding information requirementson the Integrated Water Use Licence applicationfor the operation. In addition, Nkomati Anthraciteapplied for a Section 24G NEMA rectification. Thisprocess allows the applicant to apply to the DEA torectify activities, under NEMA, commenced unlawfully,by admission of guilt and the payment of a fine.Working togetherWe engage in transparent and constructive consultationwith employees and their representatives. Ourrelationship with formalised trade unions is strongand regular meetings are held between unionrepresentatives and management to encouragemutually beneficial outcomes to labour relations issues.Our employees are represented by a range of unions,including the National Union of Mineworkers, theWorkers Equality Support Union of South Africa,the El Shadaai Workers Union of South Africa and theAssociation of Mineworkers and Construction Union.

Sentula Mining Limited Integrated Annual Report 2012Sustainability report continued48Communicating with our stakeholdersGood corporate governance promotes interactivecommunication processes to address the legitimateinterests and expectations of stakeholders. As such,Sentula remains committed to providing allstakeholders with relevant, transparent and timelycommunication through the most appropriatemedium and in the most appropriate manner.Communication channels include SENS, the press(local and national newspapers), corporate reportsand publications, formal meetings and forums,informal information sharing, marketing channels andthe internet. Our Group website (www.sentula.co.za)provides relevant news and information aboutSentula. Our formal business language is English but,where applicable, communication may be provided inother languages.Strategic objectivesOverviewSentula aspires to be recognised as a responsible,ethical organisation. Our sustainable developmentgoals are in line with this aspiration and through acontinuous process of review we aim to consistentlyimprove our performance in the areas of sustainabilityand responsible mining.During this reporting period, monthly sustainabilityreports from each subsidiary division were introducedin order to improve the quality of reportinginformation. Sentula also embarked on abenchmarking exercise, to compare our reporting tothat of our peer companies, in preparation forpossible assurance on selected sustainabilityinformation in future. The objective of the exercisewas to provide an analysis of the key performanceareas and assurance priorities of our peer group. Wealso examined the feedback provided from across theGroup, to understand our level of preparedness forsustainability assurance at divisional level as well asassess the relative ability of divisions to support theGroup reporting and assurance goals.Organisational competenciesIn order to manage our sustainable developmentgoals, Sentula employs a dedicated Groupsustainability coordinator. A range of consultants arealso used throughout the business to supplement theskills of Sentula employees. These consultants notonly assist with the more specialised aspects ofprojects, including specific environmental work, legalopinions, civil engineering and safety systems, butprovide us with an independent viewpoint.Last year we identified the following focus areasfor improvement going forward: stakeholderengagement, environmental licensing; and monitoringprocedures. This year we will continue to focus onthese areas but with added focus areas:• Safety––Complacency––Adherence to policies and procedures• Quality of sustainable development reporting dataand structures

Sentula Mining Limited Integrated Annual Report 201249Our performanceKey performance indicatorsTo monitor our progress in the field of sustainable development, key performance indicators (KPIs) are used tohighlight our annual performance. During the last review, targets were set for those KPIs identified and in thefollowing table we reflect our performance against these targets.Sustainable development – Key performance indicatorsKeyperformanceindicatorMeasureObtainedin 2011Target2012QuickmeasureObtainedin 2012Safety Classified injury frequency rate* 1,17 1,1 ✘ 1,65HealthTotal injury frequency rate* 7,2 8,0 ✓ 4,2Fatalities 1 Zero ✘ 1New cases of occupationaldisease 5 Zero ✘ 10Percentage of employeesundergoing HCT 23,8% 50% ✓ 76%Environment Total carbon emissions Not measured Baseline carbonemissionsBlack economicempowermentEmploymentTrainingStakeholdercomplaintsObtaining or retention ofISO 14001 certificationNumber of monetary fines orsanctions related to noncompliancewith environmentallegislationNumber of environmentalincidentsOnly Beniconand Geosearchcertified to dateRetention atBenicon andGeosearch,JEF andMegacube toobtainn/a 3 504,80tons✓Retention atBenicon andGeosearch,JEF andMegacubewereobtained1 Zero ✘ 2Zero Zero ± 9Total water use** 40 263,6 Kl 5% reduction ✓ 27 686 KlPercentage procurement spendwith South African Department ofTrade and Industry compliantsuppliersNumber of HDSAs inmanagementFemale participation inmanagementPercentage female employees inSentulaNumber of training hoursundergone by employees andcontractorsNumber of issues raised bystakeholders* Per one million man-hours worked✓ Achieved ✘ Not achieved ± In progress46,7% 50% ± 46,7%60% 62% ± 61%10% 12% ± 11%6% 8% ± 7%63 002 hours 70 000 hours ± 42 840 hours19 13 ✓ 6

Sentula Mining Limited Integrated Annual Report 2012Sustainability report continued50Safety firstThe safety of our people is non-negotiable and wehave implemented a range of systems and standardsto drive progress in this central aspect of our business.Last year Sentula achieved a classified injury frequencyrate (CIFR) of 1,17 and a total injury frequency rate(TIFR) target of 7,16 (per million man-hours worked).This year we achieved a CIFR of 1,65 and a TIFR of 4,2.Although the CIFR performance was slightly down onthe last year much of this can be attributed to betterquality control and an emphasis on reportingespecially in our CCT and Geosearch businesses.This much improved TIFR is demonstrative of a focuson reducing the minor incidents which will in turnresult in a reduction in classified injuries, goingforward.We firmly believe that our drive towards safety andultimately zero harm remains a goal. This canunfortunately not be accomplished in a single giantleap, but rather a succession of small steps, each onetaking us closer to our objective.We regret that one fatality occurred within ourorganisation during the period under review. Beniconemployee, Mr Jannie Koekemoer, was fatally injuredat the Benicon Workshop in eMalahleni. In addition toan internal investigation, an official inquiry wasconducted by the Department of Labour. Lessonslearned from this incident have been incorporatedinto our safety strategy and a number of improvementshave been introduced at the workshop.A fatal accident or severe injury in the workplace isa source of considerable distress, not only toemployees and their families, but to Sentula as aresponsible employer. Apart from the humanconsiderations, an unacceptable history of safetyrelatedincidents brings with it a destruction ofconfidence held by clients and regulatory authoritiesin a contract mining company’s ability to conduct itsoperations in a safe and professional manner. Safetyis quite literally our licence to operate.During the past year, an enormous amount of efforthas been invested in a drive to continuously upholdour safety standards and introduce new initiatives toimprove these standards on a continuous basis. Ourown set of best practices not only includes input fromour clients but also draws heavily on our ownoperational experience. These practices can only bedeveloped and supported through the maintenanceof a strict reporting discipline that records all incidentsand near misses and which communicates these in away that involves all levels of the Company. Througha process of dissemination and discussion, not just onthe incident itself but on how to eliminate the causesand implement the appropriate strategies, we havegained valuable learnings, which are shared toprevent repeats. In this year there has been a focusedmove to shared insights and knowledge across theGroup, with our divisional SHEQ managers assistingin training and auditing across divisions.Megacube and JEF both achieved OHSAS 18001certification in this reporting period, while Beniconand Geosearch were able to retain their certifications.The ISO certification process can be a lengthy oneand we continue to work towards obtainingcertification at each subsidiary.In demonstration of our drive with regard to safetyJEF received a letter of recognition from BHP Billitonfor its safety performance at the Khutala operation.Benicon achieved a classified injury free year at 11 outof the 13 sites and has been classified injury free atsix sites for two years running.Safety improvement initiativesSafety improvement initiatives require many steps toachieve zero harm. Most of our safety initiatives takeplace at divisional levels which, in many instances,relate directly to their own sphere of operations. Notonly are subsidiaries effective in encouraging andimproving safe working practices within their ownorganisations, but the cross-pollination gained fromtheir learnings can be added to the collective safetywisdom of our Group as a whole.

Sentula Mining Limited Integrated Annual Report 201251The focus of many of the initiatives involves training,both increasing the capacity of supervisors to managesafety through the use of risk assessments andstandard operating procedures and a focus onincreasing the awareness of staff to safety procedures.A great deal of attention is given to increasingoccupational skills that will have a direct benefiton safety outcomes. These include courses oncollision avoidance, working with hazardoussubstances, working at heights and buildingknowledge on mine standards and procedures.Last year, Benicon introduced fatal risk standardequipment to all its vehicles. This includes rolloverprotection, GPS systems, cameras, railings and lights.This year, Benicon was able to use and analyse thedata received and recovered from the GPS trackingsystems in all its vehicles to better understand thecauses of accidents and develop a risk aversionstrategy. In light of this success, both JEF and CCThave fitted the tracking systems to their vehicles. JEFhas also introduced a system of laser tracking on itsdrill equipment which assists with drill hazardidentification.Learning from where safety incidents have occurredis vital to reducing accidents in the workplace. AtMegacube, where serious accidents had taken place,models were built to demonstrate how the accidentoccurred and how it could have been prevented.These models were used in safety briefings fortraining purposes. Following the accident at Samancorlast year, in which a fatality occurred, CCT hasinstituted a traffic management plan within the miningpit which includes directional driving, necessary signsand priority for loaded trucks.16141210864201614121086420Benicon‘08 ‘09 ‘10 ‘11 ‘12CIFR TIFRMegacube‘09 ‘10 ‘11 ‘12CIFR TIFRThe safety of our people remains fundamental to ourbusiness, and we will continue to strive for improvementsand achieve our safety goals through collectiveresponsibility, commitment and continued focus.

Sentula Mining Limited Integrated Annual Report 2012Sustainability report continued52HealthThe health of our employees has a direct bearingon their ability to perform safely and productively inthe workplace.We maintain strict adherence to the provisions of theOccupational Health and Safety and Compensationfor Occupational Injuries and Diseases Acts. Theprevention and monitoring of occupational illnessesis accomplished through continuous assessment ofworkplace risks, strict adherence to the use of personalprotective equipment and regular medicalsurveillance.Risks within our groups include exposure to dust andnoise as well as diseases such as malaria and accessto clean drinking water at some of our more remoteexploration sites.Working in remote areasGeosearch drill crews operating away from home, inremote areas, are provided with proper camp facilitieswhich are well-planned and maintained by sufficientnumbers of support staff.Prevention of malaria infection in remote areas onthe continent remains a constant challenge andemployees receive training in the prevention ofmalaria. Campsites are routinely fogged andemployees are provided with mosquito repellents,medication and medical treatment where required.Drinking water is sourced and tested as part of thecamp establishment. Pre and post medical check-upsare conducted and inspections and audits areregularly undertaken to ensure camps and operatingsites comply with Group policies and procedures.WellnessWe acknowledge our responsibility to provide a safeand healthy working environment and to nurture thewellness of our employees. Where appropriate,employees undergo an annual medical exam, as wellas ‘entrance and exit’ medical checks. Apart fromensuring fitness for work, these medical assessmentsassist with the early identification and treatment ofchronic illnesses such as diabetes, hypertension andtuberculosis, and give employees an additionalopportunity to undergo HIV counselling and testing(HCT). During these examinations, advice on healthyeating, fitness and weight management is provided.Many of our employees’ occupational health problemsare legacy issues relating to previous employmentand poor historical health and safety practices atother operations. Regardless of the cause, anyoccupational diseases which are diagnosed in ouremployees are reported for workman’s compensationand these employees are assisted where possible.HIV/AIDSAs a group whose sphere of operations is entirelybased on the African continent, we cannot ignore theeffects of HIV/AIDS on our employees, clients andthe communities that surround our own and ourclients’ operations.Where it is practically possible, we aim to minimisethe social, economic and developmentalconsequences of the disease by taking consideredmeasures to prevent the spread of the virus througheducation, the provision of condoms and HCT forour employees.Education remains one of the primary measures inrestricting the spread of the disease and itsconsequences. The creation of awareness of how it istransmitted, the damage it can cause to thoseinfected and their families and, most importantly, thefact that it can be treated with a significant degree ofsuccess, form part of our HIV/AIDS education. Thisflow and interchange of information is supported withthe distribution of print material, including banners,posters, flyers and brochures not only to promoteHIV/AIDS awareness, but to encourage our employeesto embrace a healthy lifestyle.In the prior reporting period an HCT campaign waslaunched across the business with the aim of reachingall subsidiaries and sites. This campaign remains ongoingwith 76% of all employees having taken part inHCT to date. Testing has for the most part beenfacilitated and supported by local municipal medical

Sentula Mining Limited Integrated Annual Report 201253facilities. Uptake of HCT testing has varied across theGroup but in general the response has been positive.All HCT testing is confidential and carried out in astrategic partnership with either the Department ofHealth or NGOs that specialise in HCT programmes.Employees not only have access to HIV/AIDSprogrammes within the Group, but often are alsoexposed to programmes facilitated by our clients atthe host mines or through induction training.Last year Benicon rolled out its HIV/AIDS policy andthis year conducted an HIV awareness project, theKAP survey (Knowledge, Attitude, and Practice). Thefeedback from this survey will inform the HIV/AIDSpolicies and programmes going forward.Minimising our environmental footprintWe are committed to sound environmental practiceand aim to minimise our impact in the areas inwhich we operate.As part of our commitment to responsible mining weconstantly review all our environmental managementand monitoring procedures to ensure we not onlycomply with all applicable legalisation and bestpractice but also keep up to date on technicalinnovations or reduce our environmental footprint.It is our responsibility to comply with all environmentallegislation, to build a clean and credible reputation asthe mining services provider of choice and aresponsible miner. We therefore cooperate with andsupport local, regional and national authorities inachieving their own environmental goals. In addition,in our contracting businesses, we strictly adhere tothe environmental policies and standards which ourhost mines have in place as well as to our ownstringent environmental framework.ISO 14001 certification, as a voluntary measure ofenvironmental compliance and maintenance ofindustry standards for environmental management,remains a valuable tool within our business of ensuringcompliance to environmental best practice. In 2012,Benicon and Geosearch retained their ISO 14001certifications, while Megacube and JEF achievedcertification this year. In the near future we expect toachieve certification across the Group.We have a comprehensive SHE policy and regularaudits are conducted to ensure compliance to theenvironmental standards we have in place. Whereapplicable, our subsidiaries make use of the Red CardIncident Identification System in which employees areissued with a red card which they are encouragedto use to indicate situations contrary to properenvironmental practice. Site supervisors areresponsible for the recording of these occurrences.The control of hydrocarbons and the safe disposalthereof can be a challenge. Within South Africa,Sentula companies routinely recycle used oil andlubricants and dispose of all other hazardous wasteresponsibly through accredited waste disposal sites.Geosearch faces a unique challenge as it operates inremote areas far from rehabilitation sites. As a result,Geosearch makes use of chemicals which assist in thebiodegrading of hydrocarbon waste to assist in soilrehabilitation.Environmental incidents and sanctionsDespite being on care and maintenance pendingthe resolution of all environmental licences andapplications, Nkomati Anthracite was issued with adirective and a pre-compliance notice from the DWAin this reporting period. Nkomati Anthracite has beenin close communication with government departmentsand independent consultants regarding environmentallicensing at the operation. A number of applicationsare in progress. These include an Integrated WaterUse Licence Application, which has been finalisedand is awaiting formal decision and a Section 24Grectification for activities commenced around theopencast section.Awareness of reporting and the definition ofenvironmental incidents in our reporting policy haveresulted in an increase in reported environmentalincidents with nine significant spills recorded in thisreporting period. Although this represents a significantrise from the previous reporting period, the increase invigilance and recognition of environmental spills as

Sentula Mining Limited Integrated Annual Report 2012Sustainability report continued54serious incidents should translate into decreasedincidents going forward. None of the spills wererecorded in sensitive or wetland areas and allenvironmental incidents are managed and rehabilitatedto best environmental practice.Resource managementIt is an undeniable fact that we are operating in aresource-challenged era that is unlikely to change inthe foreseeable future. In recognition of this, we havecommitted ourselves to identifying new ways ofoptimising our resource consumption and reducingour greenhouse gas emissions. We further understandthat often it is a combination of small changes andsteps which result in large changes across a groupsuch as ours.We fully understand the importance of responsiblewater usage and are committed to protecting,managing and conserving water resources, both atour own mines and at our client sites. Last year, wewere able to report on our water usage from municipalsources across the Group. This year, we havecontinued to monitor our municipal water use.Although not all of our boreholes are currently beingmeasured, we aim to install flow meters wherepossible to facilitate reporting and resourceconservation efforts going forward. Our current waterusage stands at 27 686 kl, down 31% from last year,demonstrating a concerted effort on the KPI. In thecoming year we expect this number to rise as we startto monitor our borehole water use and NkomatiAnthracite resumes operations.Our carbon emissions are now being monitoredthrough the measurement of electricity and dieselconsumption. This financial year, we have measureda conservative baseline measure across the Groupagainst which we will measure emissionsgoing forward. Our baseline currently stands at3 504,80 tonnes. In some cases the emissions resultingfrom flights or diesel on wet contracts in remote siteswere not included. With increased reporting structuresand improved monitoring we hope to gain a moreaccurate baseline going forward.We see reducing our carbon footprint not only as aresponsible business imperative but also as a mannerin which to streamline the costs of our business.A common challenge across the Group is the theft ofdiesel from vehicles and storage tanks. This increasesthe number of litres of diesel used by the Group, notonly affecting our carbon emissions figures but alsothe bottom-line of our business. Increased internalcontrols have been instituted in problem areas in anattempt to curb the problem.Maintenance of vehicles is also a vital component ofreducing carbon emissions. All our subsidiaries havestrict vehicle maintenance programmes in place. JEFis piloting a strict plant rotation programme in whichmachines are maintained every 1 000 hours to ensureefficiency and extend the life of equipment.This year a total of 6 300 kg of paper and 178,6 klof oil and lubricants were recycled. In addition anumber of our offices, including our head office, haveinstituted office recycling programmes. Many of oursubsidiaries, including Benicon and Ritchie, haveinstalled energy efficient lighting in their offices.JEF has also instituted a ‘think green’ awarenessprogramme around printing and carbon emissionswhich encourages employees to unplug appliancesand switch off lights when leaving for the day.TransformationSentula recognises the importance of BBBEE, notonly for HDSA, but for the development of sustainablegrowth in all our countries and regions of operation.In South Africa, we fully support the principles oftransformation and use the DTI scorecard as the mainmechanism with which to measure our progress. Weare obligated to meet the various requirements of theMining Charter both in our own coal mininginvestments and through our clients; therefore westrive to uphold these standards in the way we runour business.

Sentula Mining Limited Integrated Annual Report 201255ontrolThrough the empowerment of our mining servicesdivision, which became effective shortly after thisreporting period closed, we aim not only to empowerour people, but also to maintain a competitiveadvantage in assisting our clients to achieve theirBBBEE procurement goals.As a level 5 BBBEE contributor, we aim to consistentlyimprove our performance in this arena. Ourtransformation planning is a continuous process andconsiderable energy is invested into this aspect of ourbusiness. In addition to the recent empowermentdeal, we continue to focus on all pillars oftransformation, embracing a balanced approach tothe DTI scorecard. We aim to reach level 4 in 2013 andare well on track to achieve this goal.Management controlthe Group; of which 46,7% was spent with BEEcompliant suppliers, 15% was procured from smalland medium suppliers and 5,5% with black-ownedand black women-owned suppliers.As the majority of the capital equipment andmachinery we use in the performance of our businessis not manufactured in South Africa, preferentialprocurement can present a challenge. Whereverpossible though, we make a determined effort tosource goods and services from accredited BBBEEsuppliers and service providers. At our operations,both in and outside South Africa, we make everyeffort to uplift local communities by supportingsurrounding businesses and hiring local people.Management control and employment equityFor us, employment equity is a strategic businessimperative and we believe that its implementation iscentral to good human resource management andexcellent customer service to a broad and diversestakeholder base.Non-HDSA inmanagementHDSA inmanagementSentula is an equal-opportunity employer and doesnot tolerate any form of discrimination. We seek toinstil a genuine culture of transformation within ourorganisation and are committed to increasing thenumber of HDSAs in management positions.Management control in the day-to-day running of theGroup is conducted by executive directors witha minimum of 30% black representation. Three of ournine Board members are HDSAs, one of whomis a woman.ProcurementIn accordance with Sentula’s preferential procurementpolicy and strategy, the Group has implemented apreferential approach with particular emphasis onsmall and medium-sized enterprises and we activelyseek out new black empowered businesses that canbe linked into our supply chain. In addition, weconsider enterprise development and job creationopportunities for qualifying small enterprises (QSE) inthe delivery of support services such as security, washbays, accommodation, transport and catering.In this reporting period, a total discretionaryprocurement in excess of R1,1 billion was spent acrossOur management structure 1 comprises 61,1% HDSAsin total and 11,2% women (up 1,1% and 1,2%respectively from last year). To sustain and supportthis trend, preference is given to women and HDSAcandidates in our recruitment process. Employmentequity committees meet regularly to discussemployment equity policy, vacancies, promotions,training and skills development. To better reflect thedemographics of the areas in which we operate, wemake every effort to promote black employees,particularly females, from junior to middle and seniormanagement positions. We have increased thenumber of learnerships and training opportunities forblack employees.1Excludes Geosearch International employees

Sentula Mining Limited Integrated Annual Report 2012Sustainability report continued56Skills development and trainingLearning and development forms an integral partof our employment strategy and to assist in thetransformation of our business.A total of 42 840 hours of training took place acrossthe Group during the review period, and emphasiswas placed on the training of HDSAs. As Megacubestarted the process of winding down existing contractsand handing over the Keaton site to Benicon duringthe last quarter of the 2012 reporting period, trainingwas also ramped down as there were fewer employeesto receive the training. As a result the total number ofhours is substantially less than in the 2011 reportingperiod. In order to account for this in our reportinggoing forward we will measure training as hoursper person.At Sentula, we retain the services of several trainingand skills development institutions and meet oursuccession planning objectives by facilitating theadvancement of employees within the organisationthrough formal training initiatives developed toprovide the feedstock for future management. Ouremployees also participate in Company-specificinduction training at our operational sites.The Benicon in-house training academy was launchedduring the last reporting period. A range of trainingprogrammes are offered to Benicon employeesincluding supervision, management, planning andorganisation, safety management, mentorship andemployment equity. Benicon employees are alsoincluded in some of the Anglo training programmessuch as the Medium Voltage Switching certificatesfor electricians and Safety leadership and riskmanagement programmes.JEF has engaged with the authorities to register as askills provider in order to take forward a project thatwas piloted during this financial year. The ‘Skills onWheels’ project is a training school based on thetransport provided to employees from theircommunities to the operations in which JEF works.This project combines the time used for transportwith that used for training, thus maximising the timecostbenefit.Enterprise and socio-economic developmentThe Sentula Transformation Trust (”the Trust”) wasset up to regulate and coordinate our approach tosocio-economic and enterprise development andto allocate funding for approved projects in theseareas. Investment is conducted in line with theDTI’s Codes of Good Practice. The Trust supportslocal development projects in close proximity to theGroup’s operations, preferably within communitieswhere Sentula employees and their families reside.The Trust aims to aid the development of projectsthat are complementary to existing institutionsor initiatives by government agencies, privateinvestors, community-based and non-governmentalorganisations. In line with good corporate governance,the Trust differentiates between community activitiesthat are largely philanthropic in nature and those thathave a more direct business benefit.During the 2012 reporting period, Sentula contributedR1,2 million towards enterprise development. Thisyear the major project was the Siyathuthuka Car Wash(see Case study) to the value of R380 000, as well ascontributions to small to medium enterprise trainingvalued at R628 000. The Trust also supported freetransport for employees from home to work, food andhealth support across the Group.In addition to the Trust’s activities, Benicon hasdeveloped a number of small enterprises around itsbusiness and continues to support those projectsstarted in previous years, including the Enthembenichildren’s home project in which a vending machinewas placed at the Benicon offices and is serviced bythe orphanage. All proceeds go directly to the home.In an ongoing paper recycling project in associationwith the Witbank Society for the Physically Disabled,shredded waste paper is donated to the organisationwhich benefits from the proceeds of recycling. A localenterprise which delivers parts to Benicon Salespremises has also been established. This venturemakes use of a Benicon vehicle, free of charge, andinvoices the Company for deliveries made.

Sentula Mining Limited Integrated Annual Report 201257Case studySiyathuthuka Car WashOur peopleSentula has an organisational culture that is built onthe foundations of diversity, equality and dignity forall its employees.Employee statisticsAs Benicon vehicles travel between the Beniconsites, head office and in and around town eachday, it is important to present clean vehicles tothe public eye for the maintenance of the Beniconbrand and image. As such it was decided that acar wash would be started not only for all theBenicon vehicles and employees but also for thepublic to utilise. Benicon offered people withsmall businesses and who wanted the opportunityto start a small business the opportunity tosubmit proposals. From these a candidate waschosen to hand the car wash over to.Building of the car wash started on 24 May 2011and the Siyathuthuka Car Wash opened on12 July 2011. The name Siyathuthuka was chosenbecause it means ‘Moving forward’ which ties inwell with the Benicon ‘We move the earth’ brand.Benicon supplied all the building material,equipment, water, electricity, PPE and onemonth’s supply of products for the car wash inorder to get started. Thereafter it was up to thebusiness owner to manage the car wash goingforward. Siyathuthuka has been runningsuccessfully for over a year and continues to lookat new possibilities.Total employees 3 321Contract employees 375Permanent employees 2 946Male employees 3 074Female employees 247HDSA employees 2 981Non-HDSA in management 282HDSA in management 443Females in management 81Our South African workforce is made up of 3 321people who work at our head office in Johannesburgand at our seven subsidiaries located primarily in theMpumalanga and Limpopo provinces of South Africa 2 .The total number of employees has been reducedfrom last year as a result of the winding down of theMegacube business, with a total of 149 permanentemployees retrenched and 86 limited durationcontracts terminated. This year the Buenti localemployees who were excluded from previouslyreported figures are included.Staff retentionTo maintain consistently high working and safetystandards, we aim to attract and retain the best in theindustry, and make every effort to employ peoplefrom the communities that surround our operations.Staff retention in our organisation remains a challenge,particularly in technical positions such as craneoperators, artisans and drill assistants, where skills arescarce. Large skills shortages in these areas have ledto intense competition in the industry. To ensure staffare retained, competitive, market-related salaries areoffered and some of our subsidiaries provide bonusesfor those employees in possession of scarce skills.Where possible, learnerships and training are focusedon scarce skill areas to develop people within ourorganisation for such types of roles.2Excludes employees of Geosearch International

Sentula Mining Limited Integrated Annual Report 2012Sustainability report continued58Our vision is to become an employer of choice andwe strive to achieve this by providing a creative,challenging and dynamic working environment.Training opportunities and study assistance areoffered to facilitate in the development of our people.Salaries are reviewed annually to ensure that theyremain competitive.Women in miningOur workforce currently comprises 7,4% femaleemployees (up 1,4% from 2011), and 11,2% ofmanagement positions are occupied by women(up 1,2% from 2011). By actively engaging women inour recruitment processes and setting targets for oursubsidiaries we hope to continuously improve onthese figures going forward. We also prioritise womenin our training initiatives and learnerships and ensurethat they gain the exposure they need to play anincreasingly important role in our business.To attract and retain female employees, it is ourresponsibility to provide a working culture thatensures women are treated with respect. We have apolicy in place to ensure that all our employees canwork together in an atmosphere free of all forms ofharassment and intimidation, including those of asexual nature. There is also no discrimination orunequal treatment in matters of remunerationand benefits.Our female employees also benefit from the Womenin Mining initiatives of our host mines and at ourown operations. We continue to make considerableprogress in the provision of a working environmentthat is suitable for women, such as mobile toilets inopencast mines and improved change house facilities.Learning and developmentLearning and development is seen as an integral partof our business. It not only increases the skills of ourworkforce and empowers employees; it allows us toplan for the future skills needs of our organisation.To create a diverse, safe and highly productiveworkforce, we enlist the services of several accreditedskills development and training providers. As part ofthe evening classes offered at Benicon, 33 employeesstarted the ABET education with 14 pupils now readyto sit the examinations across the level 1 and 2 literacyand numeracy courses.We provide a range of formal learnerships – withparticular emphasis on historically disadvantagedmen and women – to ensure that as an organisation,we present a true reflection of the diverse populationsof the countries in which we operate. This year weemployed 429 people in formal learnerships. Theselearnerships were predominantly in the scarce skillareas of artisans, as well as vehicle operators.Further education is encouraged at Sentula andto support employees, subsidies for further highereducation are made available. We encourageemployees to attend courses that will improvetheir competencies at work in the immediate andmid-term future.At Sentula, our focus is to develop our peopleinternally, and only to advertise posts externally ifwe do not have the necessary skills and expertisewithin our organisation. We encourage employees todevelop themselves and subsidise their attendanceof courses that will improve their competencies atwork in the immediate and medium term.Performance managementA performance management policy is in place todevelop a results-driven organisational culture, torecognise and reward good and excellent performanceand to establish a sound basis for identifyingemployees’ developmental needs. In line with thispolicy, we have developed and rolled out aperformance management system within the Group.In 2010, an organisational development interventionwas launched at two of our subsidiaries, JEF Drill andBlast and Ritchie Crane Hire. The aim of thisintervention was to investigate role profiling, jobevaluation and remuneration, a performancemanagement system and the talent managementframework. Ritchie Crane Hire concluded job profilingand implementation has been planned for the2013 financial year. JEF Drill and Blast is at theperformance management stage, with seniormanagement setting objectives with managers.Thus far, the effectiveness of the intervention hasbeen a success.

Sentula Mining Limited Integrated Annual Report 201259Employee relationsIn South Africa, our employees have the right tofreedom of association in terms of the South AfricanConstitution and the Labour Relations Act.Approximately 50% of our South African workforce isaffiliated to a trade union, with the majority belongingto the National Union of Mineworkers and smallernumbers belonging to other unions.Through continuous consultation, we enjoy a soundrelationship with these unions and in 2012, wesuccessfully concluded wage negotiations in most ofour businesses. In this reporting period we had onecase of industrial action. The strike was in our Beniconbusiness where the union sent wage demandsconsisting of 11 items. Nine of these items weresuccessfully bargained with only the salary increaseand the provident fund company contributionincrease as outstanding issues. The issues weresettled by negotiation and all employees returnedto work.This year, we regretfully retrenched 149 people andterminated 86 limited duration contracts at ourMegacube operations as part of the winding down ofthe business. Where possible, staff were redeployedelsewhere within the Group and all retrenchmentswere conducted in consultation with the unions.A further 16 people were retrenched at our NkomatiAnthracite operation when the operation was placedon care and maintenance.Case studyGeosearch – Local employmentIt is the nature of the Geosearch business tooperate in remote areas of the African continent,often far from skilled or semi-skilled labourmarkets. Skilled labour (supervisors, drill operatorsand mechanics) are usually sourced from SouthAfrica, Zambia and Tanzania. The remainder ofthe labour required for each drill crew, at a ratiobetween skilled labour and semi skilled labourof 1:4, consists of local employees. Localemployees are trained in the required skillsneeded for the job and are provided with a safework environment.Geosearch, through the recruitment and trainingof people in remote areas, often facilitates thefirst opportunity provided to local communitiesto engage with technology or learn specific skillsvaluable in facilitating future gainful employment.By employing local labour Geosearch assists theregion with addressing unemployment, assists inploughing skills back into the community andalleviating poverty in the area.The employees of Geosearch are usually housedand fed at drill site camps and in most cases areassisted with transport to their homes. Allemployees are assisted with medical insurance orassistance in gaining medical care, should theyrequire medical attention for any reason.HousingOur policy is to encourage sustainable accommodationand home ownership for all employees in the areas inwhich we operate. Hostel accommodation continuesto be phased out and replaced with a housingallowance.To facilitate this changeover, Benicon offers itsemployees an interest-free loan to facilitate thepurchase of building materials. This loan is paid backmonthly by way of a housing allowance allocatedto employees.

Sentula Mining Limited Integrated Annual Report 2012Sustainability report continued60CommunityBEE, enterprise development and the creation ofsustainable employment are the focus areas ofSentula’s community development programme, whichseeks to uplift the people who reside in all our areasof operation.Our social footprint in South Africa includes thecommunities of eMalahleni, Middelburg and Nkomaziin Mpumalanga as well as Steelpoort in the Limpopoprovince. In addition, through Geosearch, ourfootprint is extended across 10 countries on theAfrican continent.Corporate social investmentAt Sentula we believe responsible business entitieshave a responsibility to give back to the communitiesin which they operate. Many of the communities thatreside around our operations are faced with amultitude of socio-economic challenges, includingpoverty, unemployment and HIV/AIDS. Apart fromthe Sentula Transformation Trust’s contribution tosocio-economic development, the Group’s companiesinvest financial and human capital into variouscharitable causes as well as into awareness creationon HIV/AIDS.Benicon piloted a blanket project ahead of the coldwinter months aimed at donating blankets to thecommunities surrounding their operations ineMalahleni. Suppliers and employees wereencouraged to get involved in the project. A totalof 1 510 blankets were donated with 1 000 of thosegoing to child welfare and the remainder beingdistributed to various local charities.CCT donated time, expertise and machinery to thegrading and reconditioning of local roads and theupgrading of sports fields in the Steelpoort area. Inaddition, CCT supports local businesses wherepossible, including a local taxi company contractedfor transport of employees.In order to facilitate skills development within theindustry, Benicon donated diesel and engineequipment to the value of R60 000 to the Metal andMining Training Interventions in Middelburg for thepurpose of training and development of peopleattending the institution.

Sentula Mining Limited Integrated Annual Report 201261Ritchie Crane Hire has a policy of assisting localschools. In accordance with this policy, it has assistedGreendale School on a number of occasions, bothfinancially and by providing the school with coal.Ritchie also assists where possible on an ad hocbasis in the local community, including the golfdays in support of child welfare and supportinglocal school sports teams. JEF Drill and Blast donatesmonthly to the Middelburg Hospice and othercommunity projects.Community engagementOur investments in coal mining projects acrosssouthern Africa require that we actively engage withthe communities in the vicinity of our operations andproposed operations on a broad range of subjectsincluding access to land, the impacts of mining onlocal communities and farmers, employment andsocial issues.Community engagement is particularly important atour Nkomati Anthracite mine. Although currently oncare and maintenance, the operation is situated inclose proximity to the Kwa-Lungelane, Mawewe andMatsamu traditional authorities and when in operationwe employ almost exclusively from these communities.We also make a concerted effort to ensure that ouractivities do not negatively impact the people living inthis area.Nkomati Anthracite is in the process of applying forvarious environmental authorisations. As part of theapplication process, a number of meetings were heldwith the various communities in order to facilitateinformation sharing. The majority of meetings heldwere successful; however, gatherings in certain areascontinue to be a challenge.Environmental and social complaintsSentula takes any complaints received regarding itsoperations very seriously. A number of complaintsregarding our blasting activities, mining andoperational activities within South Africa werereceived during the period under review. Even whenthe source of the complaints occurs on our hostmine’s sites, we view them in a very serious light andappropriate action is taken to mitigate these effectsand engage with the complainants.Community relocationsNo grave or community relocations took place inthis review period. At Nkomati Anthracite the fencearound the opencast area was relocated to provideaccess to graves and a cattle dip identified as beingpreviously within the mining area.

Sentula Mining Limited Integrated Annual Report 2012Sustainability report continued62Looking forwardTo monitor our progress in the field of sustainable development going forward, additional key performanceindicators (KPIs) have been introduced including water and electricity usage, training hours and stakeholdercomplaints. For certain KPIs, where targets were not set in the previous review, a baseline measure was recorded.Sustainable development – Key performance indicatorsKey performance indicatorMeasureObtained in2012Target2013Safety Classified injury frequency rate* 1,65 1Total injury frequency rate* 4,2 5Fatalities 1 ZeroHealth New cases of occupational disease 10 ZeroPercentage of employees undergoing HCT 76% 80%Environment Obtaining or retention of ISO 14001certificationNumber of monetary fines or sanctionsrelated to non-compliance withenvironmental legislationBeniconand Geosearchretained.JEF and MegacubeobtainedRetention atBenicon, Geosearchand JEF. On trackfor certification atCCT and Nkomatiin 20142 ZeroNumber of environmental incidents 9 ZeroBlack economicempowermentPercentage procurement spend with SouthAfrican Department of Trade and Industrycompliant suppliers46,7% 50%Employment Number of HDSAs in management 61% 62%TrainingFemale participation in management 11% 13%Percentage female employees in Sentula 7% 8%Number of training hours undergone byemployees and contractors42 840 hours 50 000 hoursStakeholders’ complaints Number of issues raised by stakeholders 6 5* Per one million man-hours worked

Sentula Mining Limited Integrated Annual Report 2012Annual financial statementsfor the year ended 31 March 201263ContentsDirectors’ responsibility and64approvalDeclaration by the Company64SecretaryAudit and Risk Committee report 65Independent auditors’ report 67Directors’ report 68Consolidated statement of financial 72positionConsolidated income statement 73Consolidated statement of73comprehensive incomeConsolidated statement of cash 74flowsConsolidated statement of changes 75in equityOperational segment reporting 76Notes to the consolidated financialstatements79

Sentula Mining Limited Integrated Annual Report 2012Directors’ responsibility and approval64The directors are responsible for the maintenance ofproper accounting records and the preparation,integrity and fair presentation of the Group annualfinancial statements and annual financial statements ofSentula Mining Limited. These financial statementscomprise the statements of financial position at31 March 2012, the income statements, the statementsof comprehensive income, changes in equity and thecash flows for the year ended 31 March 2012, and thenotes to the financial statements, which include asummary of significant accounting policies and otherexplanatory notes and the directors’ report, inaccordance with International Financial ReportingStandards and in the manner required by the CompaniesAct of South Africa. These financial statements includeamounts based on judgements and estimates madeby management.The directors are also responsible for the Group’s systemof internal control. This responsibility includes designing,implementing and maintaining internal controls asthe directors determine is necessary to enable thepreparation and fair presentation of financial statementsthat are free from material misstatement, whether due tofraud or error.Sentula Mining Limited and its subsidiaries operate in awell-established control environment, which is welldocumentedand regularly reviewed. This incorporatesrisk management and internal control procedures, whichare designed to provide reasonable, but not absolute,assurance that assets are safeguarded and the risksfacing the business are being controlled.The Group’s outsourced internal audit function, whichoperates unimpeded and independently from operationalmanagement, and has unrestricted access to the GroupAudit and Risk Committee, assesses and, where necessary,recommends improvements in the system of internalcontrols and accounting practice based on audit plansthat take cognisance of the relative degrees of risk ofeach function or aspect of the business.The directors have made an assessment of the ability ofthe Company and its subsidiaries to continue as goingconcerns and have no reason to believe that thebusinesses will not be going concerns in the year ahead,based on forecasts, available cash resources andavailable banking facilities.The annual financial statements of the Group andCompany have been audited by the independentaccounting firm, PricewaterhouseCoopers Inc. Theexternal auditors were given unrestricted access to allfinancial records and related data, including minutes ofall meetings of shareholders, the Board of Directors andcommittees of the Board. The directors believe that allrepresentations made to the independent auditorsduring the audit are valid and appropriate.PricewaterhouseCoopers Inc.’s unmodified audit reportis presented on page 67.The financial statements were prepared under thesupervision of the Group Financial Director, GP LouwCA(SA), and approved by the Board of Directors on12 June 2012 and are signed on its behalf by:RC BerryChief Executive OfficerGP LouwChief Financial Officer/Finance Director12 June 2012Declaration by the Company SecretaryI certify that the company has lodged with the Companies and Intellectual Property Commission (previously theCompanies and Intellectual Property Registration Office), all returns required of a public company in terms of theCompanies Act, No 71 of 2008, in respect of the financial year ended 31 March 2012 and that all such returns are true,correct and up to date.Grace ChemalyCompany SecretaryJohannesburg14 September 2012

Sentula Mining Limited Integrated Annual Report 2012Audit and Risk Committee report65The Audit and Risk Committee is pleased to present thisreport as required by the Companies Act of South Africa(“the Companies Act”).The Audit and Risk Committee is a formal committee ofthe Board and functions within an approved charterand complies with all relevant legislation, regulation andgovernance codes.Role of the committeeThe Audit and Risk Committee has an independent rolewith accountability both to the Board and to shareholders.The committee’s responsibilities include the statutoryduties prescribed by the Companies Act, activitiesrecommended by King III and the responsibilitiesassigned by the Board.The committee’s main responsibilities are as follows:Integrated and financial reporting• Review the annual financial statements, interim report,preliminary results announcement and summarisedintegrated financial information and ensure compliancewith International Financial Reporting Standards andthe Companies Act;• Review and approve the appropriateness of accountingpolicies, disclosure policies and the effectiveness ofinternal financial controls;• Perform a review of the Group’s integrated reportingfunction and progress and consider factors and risksthat could impact on the integrity of the IntegratedAnnual Report;• Review the sustainability disclosure in the IntegratedAnnual Report and ensure that it is consistent withfinancial information reported; and• Recommend the Integrated Annual Report to theBoard for approval.Internal audit• Review and approve the internal audit charter andaudit plans;• Evaluate the independence, effectiveness andperformance of the internal audit function andcompliance with its mandate;• Review the Group’s systems of internal control,including financial controls, ensuring that managementis adhering to and continually improving thesecontrols;• Review significant issues raised by the internal auditprocess; and• Review policies and procedures for preventing anddetecting fraud.External audit• Act as a liaison between the external auditors andthe Board;• Nominate the external auditor for appointment byshareholders;• Determine annually the scope of audit and non-auditservices which the external auditors may provide tothe Group;• Approve the remuneration of the external auditors andassess their performance; and• Assess annually the independence of the externalauditors.Risk management• Ensure that management’s processes and proceduresare adequate to identify, assess, manage and monitorenterprise-wide risks; and• Review tax and technology risks, in particular how theyare managed.General• Receive and deal appropriately with any complaintrelating to the accounting practices and internal auditof the Group or to the content or auditing of itsfinancial statements, or to any related matter; and• Perform other functions as determined by the Board.Composition of the committeeThis committee is chaired by and comprises onlyindependent non-executive directors. In accordancewith the requirements of the Companies Act, membersof the committee are nominated annually by the Boardfor the ensuing financial year and in compliance withKing III are appointed by shareholders at the annualgeneral meeting.The executive directors attend all the Audit and RiskCommittee meetings by invitation. The external andinternal auditors are also invited to attend all Audit andRisk Committee meetings.The committee has a charter which is reviewed andapproved by the Board annually.

Sentula Mining Limited Integrated Annual Report 2012Audit and Risk Committee report continued66The composition of the committee and meeting attendance is as follows:Meetings held during the yearCommitteemember Appointed Resigned8 June201115 August201116 September201111 November20111 March2012CJPG van Zyl(Chairman) 1 July 2010 Present Present Present Present PresentD Zihlangu 1 July 2010 Present Present Present Present PresentKW Mzondeki 1 July 2010 Present Apology Apology Present PresentA Kawa 2 June 2011The committee discharges its Board responsibilities by:• meeting at least four times a year to review theGroup’s financial results, to receive and review reportsfrom both the internal and external auditors, and tomeet with management to review their progress onidentifying and addressing key risk areas within thebusiness;• reporting to the Board at the next meeting, which isalways held within a week of the respective committeemeeting; and• meeting separately with the internal and externalauditors to confirm they are receiving the fullcooperation of management.Independence of external auditorsAt the previous annual general meeting,PricewaterhouseCoopers Inc. was appointed as theindependent auditors of the Company and the Group,with Mr PC Hough as the designated auditor.The committee is satisfied as to the independence of theGroup’s external auditors, PricewaterhouseCoopers Inc.and its respective audit partners. The committeenominates PricewaterhouseCoopers Inc. as externalauditor for the appointment by shareholders at theannual general meeting.Expertise and experience of Chief FinanceOfficer and finance functionThe committee is satisfied that Mr Deon Louw has theappropriate expertise and experience for his position ofChief Finance Officer of the Group. In addition, thecommittee is also satisfied that the composition,experience and skills of the finance function meet theGroup’s requirements.Approval of the Audit and Risk CommitteereportThe committee confirms that it has functioned inaccordance with its charter for the 2012 financial yearand that its report to shareholders has been approved bythe Board.Cor van ZylChairman: Audit and Risk Committee12 June 2012

Sentula Mining Limited Integrated Annual Report 2012Independent auditors’ report67To the shareholders of Sentula Mining LimitedWe have audited the consolidated annual financialstatements and annual financial statements of SentulaMining Limited, which comprise the consolidated andseparate statements of financial position as at 31 March2012, and the consolidated and separate incomestatements, statements of comprehensive income,changes in equity and cash flows for the year thenended, and a summary of significant accounting policiesand other explanatory information, and the directors’report, as set out on pages 68 to 144.Directors’ responsibility for the financialstatementsThe Company’s directors are responsible for thepreparation and fair presentation of these financialstatements in accordance with International FinancialReporting Standards and the requirements of theCompanies Act of South Africa, and for such internalcontrol as the directors determine is necessary to enablethe preparation of financial statements that are free frommaterial misstatements, whether due to fraud or error.Auditor’s responsibilityOur responsibility is to express an opinion on thesefinancial statements based on our audit. We conductedour audit in accordance with International Standards onAuditing. Those standards require that we comply withethical requirements and plan and perform the audit toobtain reasonable assurance about whether the financialstatements are free from material misstatement.An audit involves performing procedures to obtain auditevidence about the amounts and disclosures in thefinancial statements. The procedures selected dependon the auditor’s judgement, including the assessment ofthe risks of material misstatement of the financialstatements, whether due to fraud or error. In makingthose risk assessments, the auditor considers internalcontrol relevant to the entity’s preparation and fairpresentation of the financial statements in order todesign audit procedures that are appropriate in thecircumstances, but not for the purpose of expressing anopinion on the effectiveness of the entity’s internalcontrol. An audit also includes evaluating theappropriateness of accounting policies used and thereasonableness of accounting estimates made bymanagement, as well as evaluating the overallpresentation of the financial statements.We believe that the audit evidence we have obtained issufficient and appropriate to provide a basis for ouraudit opinion.OpinionIn our opinion, the financial statements present fairly,in all material respects, the consolidated and separatefinancial position of Sentula Mining Limited as at31 March 2012, and its consolidated and separatefinancial performance and its consolidated and separatecash flows for the year then ended in accordance withInternational Financial Reporting Standards and therequirements of the Companies Act of South Africa.PricewaterhouseCoopers Inc.Director: PC HoughRegistered AuditorJohannesburg12 June 2012

Sentula Mining Limited Integrated Annual Report 2012Directors’ report68The directors have pleasure in submitting their report forthe 2012 financial year.Nature of businessThe Group derives its income from mining services,comprising: opencast contract mining, rehabilitation,earthworks, drilling and blasting services, explorationdrilling, crane hire and the mining of coal from itsinvestments in the Nkomati Anthracite mine. The CEO’sreport details the nature of each major subsidiary andthe Group’s coal investments. Sentula Mining Limited(“the Company”) is the Group holding company.Financial resultsTurnover increased by 5% from R2,4 billion to R2,5 billionbut profit from operations decreased from R185 million toa loss of R420 million following an impairment chargeof R591 million. The impairment charge arose on nonproductiveplant and equipment held by Megacube,following a decision to cease operations in this businessunit, whereafter the plant and equipment was revalued atits perceived market value.Finance charges reduced to R67 million (2011: R114 million)following the refinance and restructure of the Group’ssenior debt facilities. A net loss of R532 million wasrealised relative to a net profit of R31 million for thecorresponding period as a result of the Megacubeimpairment charge and losses realised on the disposal ofnon-productive equipment.The Group’s operations are vulnerable to volatility in thecommodity cycle and its capital structure is constitutedwith a combination of debt and equity and to ensure thatthe Group’s cash flows remain robust irrespective ofadverse cyclical movements. Whilst the Group’s seniordebt levels remained constant, the Group’s net debt-toequityratio increased marginally from 21% to 22% as aconsequence of the lower equity base and higher cashbalances at year-end.Although the Group’s cash generation from operatingactivities reduced marginally to R229 million (2011:R239 million), the increased proceeds from the disposalof property, plant and equipment of R157 million(2011: R56 million), supplemented the Group’s closingcash balance to R180 million (2011: R88 million). Seniordebt redemptions of R143 million were made relative todebt advances of R147 million, resulting in senior debt ofR709 million relative to R700 million at the end of theprior financial period.Furthermore, the Group invested R292 million(2011: R319 million) in new and refurbished plant andequipment and R2 million (2011: R7 million) in explorationas the Group continued to develop its portfolio ofcoal prospects.The Nkomati Anthracite mine’s operations are stillsuspended but good progress has been made in dealingwith the residual regulatory issues and the mine isexpected to recommence operations in the second halfof the 2013 financial year.Basic earnings per share for the 2012 financial yearwere negatively impacted by the large net loss anddecreased to a loss of 88,93 cents per share relative tothe basic earnings per share of 6,05 cents for the prioryear. Headline earnings per share, however increasedby 35% to 21,7 cents (2011: 16,06 cents) per share.Forensic investigation and litigationFollowing the grant of civil judgments againstScharrighuisen for R383 million and the sequestrationof his estate, legal actions are being pursued to recover aportion of the funds misappropriated from Megacube inthe 2008 financial year. A further R3 million is expected tobe recovered from Holland’s sequestrated estate.Going concernThe Group’s cash holdings have increased substantiallyrelative to the prior year and its general banking facilityof R140 million was not utilised during the reportingperiod. The Group has also fully complied with thefinancial covenants embodied in its senior debt facilitiesduring the past financial year.

Sentula Mining Limited Integrated Annual Report 201269The Board has reviewed the Group’s cash flow projectionsfor the next 12 months and is satisfied that its operationalcash generation, supported by its strengthened liquidityposition, is adequate to support the Group’s operationsfor the foreseeable future and accordingly havecontinued to adopt the going concern basis in preparingthe financial statements.Share capitalFull details of the authorised and issued share capital ofthe Company are set out in note 20 to the annualfinancial statements. No new shares were issued duringthe year under review. Unissued shares are not under thecontrol of the directors.Dividends to shareholdersIn light of the prevailing global economic conditions andthe Company’s cash requirements for generic growth,the directors have considered it prudent not to declareany dividends for the 2012 financial year.DirectorateThe following changes to the Board of Directors tookplace during the year under review:ResignationsA Kawa tendered her resignation effective 2 June 2011.AppointmentsRalph Patmore was appointed with effect from 25 January2012.Directors’ remuneration and shareholdingDetails of the directors’ remuneration are set out innote 36 to the annual financial statements and detailsof directors’ shareholdings are set out under shareholder’sinformation on page 144.Directors’ interests in contractsNo material contracts, in which directors have an interest,were entered into during the year, other than thetransactions detailed in note 32 on page 118.Company Secretary and registered officeMs GM Chemaly continued to fulfil the function as fulltimeCompany Secretary for the year under review. Atthe date of this report, she was still the CompanySecretary.The Company’s registered address is:Ground Floor – Block 14The Woodlands Office ParkWoodmead, GautengSouth Africa.The Company’s postal address is:PO Box 76, Woodmead, 2080, South Africa.AcquisitionsThere were no acquisitions during the 2012 financial year.The directors of the Company and abridged curriculumvitae for each director are set out on pages 9 to 11 ofthis report.

Sentula Mining Limited Integrated Annual Report 2012Directors’ report continuedfor the year ended 31 March 201270Employee share incentivesDetails of the Group’s share incentive schemes are detailed hereunder and in note 6 to the annual financial statements.The following changes took place during the year under review:Directors Staff TotalAwards/options at the beginning of the year 20 599 000 47 799 780 68 398 780Options granted during the year – – –LTIPS granted during the year – 1 575 000 1 575 000Lapsed options – (8 455 000) (8 455 000)Options exercised and delivered (1 018 000) (5 091 000) (6 109 000)Awards/options balance at the end of the year 19 581 000 35 828 780 55 409 780Historical information regarding directors’ unexercised options at 31 March 2012 is as follows:Share options at1 April 2011Share options grantedduring the yearShare options exercisedand taken delivery ofShare options at31 March 2012DirectorNumberStrikeprice(R)NumberStrikeprice(R)NumberStrikeprice(R)NumberStrikeprice(R)RC Berry 1 600 000 10,00 – – – – 1 600 000 10,003 200 000 2,23 – – – – 3 200 000 2,231 400 000 2,77 – – – – 1 400 000 2,77GP Louw 2 000 000 20,00 – – – – 2 000 000 20,004 000 000 2,23 – – – – 4 000 000 2,232 980 000 15,53 – – – – 2 980 000 15,53PP Modisane 300 000 14,28 – – – – 300 000 14,28600 000 2,23 – – – – 600 000 2,23447 000 12,23 – – – – 447 000 12,2316 527 000 16 527 000Historical information regarding directors’ unexercised LTIPs at 31 March 2012 is as follows:DirectorLTIPs at1 April2011LTIPsgrantedduringthe yearLTIPsexercisedLTIPslapsedLTIPs at31 March2012Number Number Number Number NumberRC Berry 1 788 000 – (447 000) – 1 341 000GP Louw 1 540 000 – (385 000) – 1 155 000PP Modisane 744 000 – (186 000) – 558 0004 072 000 (1 018 000) 3 054 000

Sentula Mining Limited Integrated Annual Report 201271Borrowing powersIn terms of clause 29 of the Memorandum of Incorporation,the Company has unlimited borrowing powers.The Group’s senior debt facilities comprise a R700 millionfacility from a Standard Bank-led consortium and aR100 million facility from WesBank. These facilities enablethe Group to finance the acquisition of new plant andequipment over the next three years for the Group’sgeneric growth.Funding of approximately R204,7 million and R59,9 millionis required in the 2013 financial year for new andrefurbishment capital, respectively. The new capital will befunded from the Group’s senior debt facilities andinternally generated cash flows. The Group’s full existinggeneral banking facility of R140 million is fully available tobridge any working capital deficits during the 2013financial year.The continued availability of the Standard Bank facility, ontheir current terms and conditions, is dependent upon theongoing compliance with, inter alia, a number of financialcovenants, which were fully complied with in the 2012financial year and are expected to be fully complied within the 2013 financial year.The future growth of the Group is dependent on thecontinued availability of capital funding for capitalacquisitions and the development of its coal assets. In thisregard, the Company maintains relationships with anumber of financial institutions to secure the requisitefunding for ongoing capital expenditure and thedevelopment of the Group’s coal portfolio. The terms andconditions of the Group’s indebtedness are detailed innote 21 to the annual financial statements.Subsequent eventsImplementation of Broad Based Black EconomicEmpowerment TransactionThe Group’s BBBEE Transaction, announced on the SENSof the JSE Limited on Friday, 2 March 2012 and publishedin the press on Monday, 5 March 2012, set out the fullterms of the proposed BBBEE Transaction. Shareholdersare advised that the conditions precedent to the BBBEETransaction were fulfilled on 9 May 2012 and accordinglythe BBBEE Transaction has been implemented inaccordance with its terms.Robin BerryChief Executive OfficerDeon LouwDirector12 June 2012

Sentula Mining Limited Integrated Annual Report 2012Consolidated statement of financial positionat 31 March 2012722012 2011Note R’000 R’000AssetsNon-current assets 2 440 186 3 463 573Property, plant and equipment 13 1 545 934 2 595 426Mineral rights 14 410 761 410 761Intangible assets 15 27 220 23 347Goodwill 15 412 709 408 338Restricted investment 23 8 693 8 693Deferred tax 26 34 869 17 008Current assets 1 026 134 910 669Inventories 16 364 521 361 827Trade and other receivables 17 468 870 446 446Cash and cash equivalents 18 180 236 88 380Current tax receivable 12 507 14 016Assets classified as held-for-sale 19 389 315 37 779TOTAL ASSETS 3 855 635 4 412 021EquityTotal equity attributable to equity holders of the Company 2 370 960 2 857 534Share capital 20 5 866 5 866Share premium 20 2 014 438 2 014 438Treasury shares 20 (25 898) (25 898)Reserves 11 166 (10 977)Retained earnings 365 388 874 105Non-controlling interest 59 815 75 301Total equity 2 430 775 2 932 835LiabilitiesNon-current liabilities 853 446 868 635Loans and borrowings 21 488 695 560 000Rehabilitation provision 23 66 899 65 004Deferred tax 26 297 852 243 631Current liabilities 571 414 610 551Trade and other payables 25 335 532 427 984Loans and borrowings 21 220 316 140 000Finance lease obligations 22 – 4 415Deferred revenue 24 1 100 –Other financial liabilities 27 7 506 7 506Bank overdraft 18 – 148Taxation payable 6 960 30 498Total liabilities 1 424 860 1 479 186TOTAL EQUITY AND LIABILITIES 3 855 635 4 412 021

Sentula Mining Limited Integrated Annual Report 2012Consolidated income statementfor the year ended 31 March 2012732012 2011Note R’000 R’000Revenue 4 2 512 415 2 402 375Cost of sales (2 092 662) (1 899 286)Gross profit 419 753 503 089Other income 104 334 27 684Impairment of property, plant and equipment 19 (591 171) (71 476)Administrative expenses (352 987) (274 394)Results from operating activities 5 (420 071) 184 903Finance expense 7 (66 853) (114 262)Finance income 7 3 032 3 211Fair value adjustment on interest rate cap 17 (6 677) –(Loss)/profit before taxation (490 569) 73 852Taxation 9 (41 625) (42 780)(Loss)/profit for the year (532 194) 31 072Attributable to:– Equity holders of the Company (516 703) 35 127– Non-controlling interest (15 491) (4 055)CentsBasic and diluted earnings per share 10 (88,93) 6,05CentsConsolidated statement of comprehensive incomefor the year ended 31 March 20122012 2011R’000 R’000(Loss)/profit for the year (532 194) 31 072Other comprehensive income/(loss)Foreign currency translation differences for foreign operations 28 000 (19 350)Other comprehensive income/(loss) for the year, net of income tax 28 000 (19 350)Total comprehensive (loss)/income for the year (504 194) 11 722Attributable to:– Equity holders of the Company (488 703) 15 777– Non-controlling interest (15 491) (4 055)

Sentula Mining Limited Integrated Annual Report 2012Consolidated statement of cash flowsfor the year ended 31 March 2012742012 2011Note R’000 R’000Cash flows from operating activities(Loss)/profit for the year (532 194) 31 072Non-cash flow itemsDepreciation 5 201 070 269 432Reversal of provision for third party liability 5 (78 766) –Amortisation of intangible assets 5 460 460Amortisation of mineral rights 5 – 1 422Impairment of property, plant and equipment 5 591 171 71 476Impairment of damaged assets 5 6 525 –Impairment of trade receivables 5 11 312 4 964Impairment of other receivables 5 7 859 –Loss on onerous contracts 5 7 606 –Scrapping of assets 5 1 430 2 369Unrealised foreign exchange (gain)/loss 5 (18 593) 14 404Finance income 7 (3 032) (3 211)Finance expense 7 66 853 114 262––Paid/Accrued 64 958 109 275––Unwinding 1 895 4 987Equity-settled share-based payment expense 5 2 134 5 117Cash-settled share-based payment expense 5 – 5 025Long-term incentive plan provision movement 8 115 6 679Reversal of scrapping of assets 5 – (4 174)Change in rehabilitation provision 5 – (9 512)Loss on disposal of property, plant and equipment 5 54 621 9 400Profit on disposal of property, plant and equipment 5 (2 464) (37)Gain/(loss) in foreign currency translation reserve 31 909 (12 219)Income tax expense 9 41 625 42 780Cash flows from operating activities before changes in working capitaland provisions 397 641 549 709Change in inventories (2 694) (88 010)Reallocation from inventory to property, plant and equipment (3 306) –Change in trade and other receivables (44 176) (46 555)Change in trade and other payables (29 409) 15 016Change in deferred revenue 1 100 (14 849)Cash generated from operating activities 319 156 415 311Income taxes paid 28 (27 294) (95 674)Interest paid 7 (62 377) (80 360)Net cash generated by operating activities 229 485 239 277Cash flows from investing activitiesInterest received 7 3 032 3 211Purchase of property, plant and equipment 13 (291 600) (318 618)Proceeds from disposal of property, plant and equipment 156 708 55 962Capitalised exploration expenditure 16 (2 212) (7 074)Additions to assets held-for-sale 19 (6 833) –Proceeds from sale of investment in equity-accounted associate – 670 000Increase in restricted investment 23 – (4 371)Net cash (utilised in)/generated by investing activities (140 905) 399 110Cash flows from financing activitiesRepurchase of own shares – (417)Loans repaid (142 739) (1 148 920)Loans raised 147 335 700 000Net cash generated by/(utilised in) financing activities 4 596 (449 337)Net increase in cash and cash equivalents 93 176 189 050Cash and cash equivalents at the beginning of the year 88 232 (103 573)Exchange (loss)/gain on cash and cash equivalents (1 172) 2 755Cash and cash equivalents at the end of the year 18 180 236 88 232

Sentula Mining Limited Integrated Annual Report 2012Consolidated statement of changes in equityfor the year ended 31 March 201275R’000SharecapitalSharepremiumEmployeeshareincentivereserveTreasurysharesForeigncurrencytranslationreserveRetainedearningsTotalNoncontrollinginterestTotalequityBalance at 31 March 2010 5 866 2 014 438 37 702 (25 481) (34 053) 836 786 2 835 258 79 356 2 914 614Profit for the year – – – – – 35 127 35 127 (4 055) 31 072Other comprehensive incomeForeign currency translationdifferences for foreignoperations – – – – (19 350) – (19 350) – (19 350)Total other comprehensive(loss) – – – – (19 350) – (19 350) – (19 350)Total comprehensiveincome/(loss) for the year – – – – (19 350) 35 127 15 777 (4 055) 11 722Transactions with owners,recorded directly in equityContributions by anddistributions to ownersOwn shares acquired – – – (417) – – (417) – (417)Share-based payments – – 5 117 – – 1 799 6 916 – 6 916Share options forfeited – – (393) – – 393 – – –Total contributions by anddistributions to owners – – 4 724 (417) – 2 192 6 499 – 6 499Balance at 31 March 2011 5 866 2 014 438 42 426 (25 898) (53 403) 874 105 2 857 534 75 301 2 932 835(Loss) for the year – – – – – (516 703) (516 703) (15 491) (532 194)Other comprehensive incomeForeign currency translationdifferences for foreignoperations – – – – 27 995 – 27 995 5 28 000Total other comprehensiveincome – – – – 27 995 – 27 995 5 28 000Total comprehensive(loss)/income for the year – – – – 27 995 (516 703) (488 708) (15 486) (504 194)Transactions with owners,recorded directly in equityContributions by anddistributions to ownersShare-based payments – – 2 134 – – – 2 134 – 2 134Share options forfeited – – (7 986) – – 7 986 – – –Total contributions by anddistributions to owners – – (5 852) – – 7 986 2 134 – 2 134Total transactions withowners – – (5 852) – – 7 986 2 134 – 2 134Balance at 31 March 2012 5 866 2 014 438 36 574 (25 898) (25 408) 365 388 2 370 960 59 815 2 430 775

Sentula Mining Limited Integrated Annual Report 2012Operational segment reportingfor the year ended 31 March 201276Operating segmentsThe Group has seven reportable segments, as described below, five of which constitute the Group’s strategic businessunits. The strategic business units offer different services within the mining industry and are managed separately due todifferent equipment, technology and skills requirements. The following summary describes the operations in each of theGroup’s reportable segments:Opencast mining and earthmovingIncludes the movement and management of all aspects of overburden removal and coal extraction and chrome miningto specified production budgets. Megacube, Benicon and CCT are included in this segment.Exploration drillingIncludes the exploration drilling operations across the African continent.Overburden drilling and blastingIncludes drilling and blasting operation which uses specialised drilling rigs in the opencast mining sector, primarily in thecoal industry.Crane hireIncludes the hiring out of 20 medium to heavy duty mobile cranes with capacities that range from 25 to 220 tonnes.Equipment trading and sparesIncludes the global procurement of used equipment and spares, for overhaul and deployment within the Groupand includes the engine rebuild facility relocated to Benicon’s premises. Benicon Sales and Caston are included inthis segment.Coal miningIncludes the mining operations within the Group of which the largest contributor is in the anthracite industry.Corporate and other servicesLargely relates to the head office operations.The accounting policies of the reportable segments are described in notes 2 and 3.Information regarding the results of each reportable segment is included below. Performance is measured based onthe segment results as included in the internal management reports that are reviewed by the Group’s CEO on a regularbasis. Segment results are used to measure performance as management believes that such information is the mostrelevant in evaluating the results of certain segments relative to other entities that operate within these industries. Intersegmentpricing is determined on an arm’s length basis.Revenues of R714 million (2011: R678 million) are derived from a single external client in the opencast mining segment.The other segments are diversified and not exposed to concentration risk.

Sentula Mining Limited Integrated Annual Report 201277Reportable segments2012 (R’000)Opencastminingand earthmovingExplorationdrillingOverburdendrillingandblastingCranehireEquipmenttradingandsparesCoalminingCorporateand otherservicesTotal segment revenue 1 457 470 861 311 336 497 57 418 63 288 13 383 – 2 789 367Inter-segment revenue (36 086) – (188 105) (1 267) (50 995) (499) – (276 952)External revenue 1 421 384 861 311 148 392 56 151 12 293 12 884 – 2 512 415Total segment results 10 800 102 805 80 377 30 335 (2 072) (15 498) (35 646) 171 101Impairment of property, plantand equipment (591 172) – – – – – – (591 172)Results from operating activities (580 372) 102 805 80 377 30 335 (2 072) (15 498) (35 646) (420 071)Total segment finance income 559 99 158 2 864 1 532 144 198 148 411Inter-segment finance income (497) – (157) (2 838) – – (141 887) (145 379)External finance income 62 99 1 26 1 532 2 311 3 032Total segment finance expense (38 339) (47 211) (14 415) (5 901) (5 507) (29 841) (71 018) (212 232)Inter-segment finance expense 37 588 46 835 14 402 5 882 5 494 27 936 7 242 145 379External finance expense (751) (376) (13) (19) (13) (1 905) (63 776) (66 853)Total segment assets 1 292 892 911 925 183 365 102 215 112 057 634 164 571 641 3 808 259Unallocated assets 47 376Total assets 3 855 635Total segment liabilities 154 481 101 387 44 229 5 227 14 024 68 060 732 640 1 120 048Unallocated liabilities 304 812Total liabilities 1 424 860Capital expenditure 242 945 18 076 21 931 3 377 215 3 098 1 958 291 600Depreciation 145 984 27 242 21 829 2 517 470 973 2 055 201 070Amortisation – – 460 – – – – 460Total

Sentula Mining Limited Integrated Annual Report 2012Operational segment reporting continuedfor the year ended 31 March 2012782011 (R’000)ExplorationdrillingOpencastminingand earthmovingOverburdendrillingandblastingCranehireEquipmenttradingandsparesCoalminingCorporateand otherservicesTotal segment revenue 1 501 489 678 269 262 397 53 352 69 867 107 298 – 2 672 672Inter-segment revenue (67 251) (932) (142 190) (256) (56 827) (2 841) – (270 297)External revenue 1 434 238 677 337 120 207 53 096 13 040 104 457 – 2 402 375Total segment results 138 462 71 600 42 745 28 970 8 793 11 439 (45 630) 256 379Impairment of property, plantand equipment (71 476) – – – – – – (71 476)Results from operating activities 66 986 71 600 42 745 28 970 8 793 11 439 (45 630) 184 903Total segment finance income 2 257 451 1 2 904 10 325 124 736 130 684Inter-segment finance income (1 459) (306) – (2 899) – – (122 809) (127 473)External finance income 798 145 1 5 10 325 1 927 3 211Total segment finance expense (78 952) (9 155) (8 505) (422) (2 293) (27 858) (114 550) (241 735)Inter-segment finance expense 76 889 8 460 8 483 405 2 270 22 859 8 107 127 473External finance expense (2 063) (695) (22) (17) (23) (4 999) (106 443) (114 262)Total segment assets 2 051 337 860 629 187 337 101 191 76 328 634 740 469 435 4 380 997Unallocated assets 31 024Total4 412 021Total segment liabilities 241 718 136 768 32 093 3 476 9 604 71 538 709 860 1 205 057Unallocated liabilities 274 129Total liabilities 1 479 186Capital expenditure 148 715 77 679 3 741 5 047 196 47 994 35 246 318 618Depreciation 203 808 28 849 20 683 2 170 482 10 830 2 610 269 432Amortisation – – 460 – – – – 460Geographical segmentsIn presenting information on the basis of geographical segments, segment revenue is based on the geographical locationof the customers. Segment assets are based on the geographical location of the assets.R’000SouthAfrica2012 2011Rest of ConsolidatedSouth Rest ofAfricaAfricaAfricaConsolidatedRevenue from external customers 1 862 796 649 619 2 512 415 1 870 321 532 054 2 402 375Non-current assets 2 308 581 96 736 2 405 317 3 351 958 94 607 3 446 565Current assets 986 164 416 778 1 402 942 604 859 329 573 934 432Capital expenditure 276 435 15 165 291 600 277 057 41 561 318 618

Sentula Mining Limited Integrated Annual Report 2012Notes to the consolidated financial statementsfor the year ended 31 March 2012791 Reporting entitySentula Mining Limited (“the Company”) is a company domiciled in the Republic of South Africa. The address ofthe Company’s registered office is Ground Floor, Building 14, Woodlands Office Park, Woodmead. Theconsolidated financial statements of the Company as at and for the year ended 31 March 2012 comprisethe Company and its subsidiaries (together referred to as the “Group” and individually as “Group entities”) andthe Group’s interest in associates and jointly controlled entities.2 Basis of preparation(a) Statement of complianceThe financial statements have been prepared in accordance with International Financial Reporting Standards(IFRS) and in a manner required by the Companies Act of South Africa, the JSE Listings Requirements and theAC 500 series.The Group and Company annual financial statements were authorised for issue by the Board of Directors on12 June 2012.(b) Basis of measurementThe Group’s financial statements are prepared on the historical cost basis except for the revaluation of certainfinancial instruments which are measured at fair value, as appropriate, and incorporate the following principalaccounting policies which have been consistently applied.(c) Functional and presentation currencyTransactions included in the financial statements of each of the Group’s entities are measured using thecurrency of the primary economic environment in which they operate (the functional currency). Theconsolidated financial statements are presented in South African Rand, which is the presentation currencyand functional currency of the majority of the operations within the Group.All amounts in the financial statements are stated to the nearest thousand (R’000) except whereotherwise indicated.(d) Use of estimates and judgementsThe preparation of financial statements in conformity with IFRS required management to make judgements,estimates and assumptions that affect the application of accounting policies and reported amounts of assetsand liabilities, income and expenses. The estimates and associated assumptions are based on historicalexperience and various other factors that are believed to be reasonable under the circumstances, the resultsof which form the basis of making the judgements about carrying values of assets and liabilities that are notreadily apparent from other sources. Actual results may differ from these estimates. The use of estimates andjudgements are further disclosed in 3.19.(e) Change in accounting policiesThere were no changes in accounting policies during the 2012 financial year.3 Significant accounting policiesThe accounting policies set out below have been consistently applied to all periods presented in these financialstatements and have been consistently applied by the Group.Where necessary, comparative figures have been reclassified to conform with current year presentation.

Sentula Mining Limited Integrated Annual Report 2012Notes to the consolidated financial statements continuedfor the year ended 31 March 2012803 Significant accounting policies (continued)3.1 Basis of consolidation3.1.1 SubsidiariesWhere the Group has the power, either directly or indirectly, to govern the financial and operating policies ofanother entity or business so as to obtain benefits from its activities, it is classified as a subsidiary. The consolidatedfinancial statements present the results of the Company and its subsidiaries (“the Group”) as if they formed asingle entity. The results and cash flows of subsidiaries are included from the date that control commences untilthe date that control ceases. Intergroup transactions and balances between Group companies are eliminated infull. The accounting policies of the subsidiaries have been changed where necessary to align them with thepolicies adopted by the Group.With the acquisition of a non-controlling interest the transactions are accounted for with the owners in theircapacity and therefore no goodwill is recognised as a result of such transactions. The adjustments to noncontrollinginterest are based on a proportionate amount of the net assets of the subsidiary.Losses applicable to the non-controlling interests in a subsidiary are allocated to the non-controlling interestseven if doing so causes the non-controlling interests to have a deficit balance.In the financial statements of the Company, investments in subsidiaries are measured at cost less accumulatedimpairment losses.3.1.2 Special purpose entitiesA special purpose entity is consolidated if, based on an evaluation of the substance of its relationship with theGroup and the entity’s risks and rewards, the Group concludes that it controls the special purpose entity. Specialpurpose entities controlled by the Group are established under terms that impose strict limitations on thedecision-making powers of the special purpose entity’s management and that result in the Group receiving themajority of the benefits relating to the special purpose entity’s operations and net assets, are exposed to riskincident to the special purpose entity’s activities, and retain the majority of the residual or ownership risks relatingto the special purpose entity or its assets.3.1.3 AssociatesWhere the Group has the power to participate in (but not control) the financial and operating policy decisions ofanother entity, it is classified as an associate. Associates are accounted for using the equity method and are initiallyrecognised in the consolidated statement of financial position at cost. The Company’s share of post-acquisitionprofits and losses is recognised in the consolidated income statement, from the date significant influencecommences until the date significant influence ceases, except that losses in excess of the Company’s investmentin the associate are not recognised unless there is an obligation to make good those losses. Significant influenceis presumed to exist when the Group holds between 20% and 50% of the voting power of another entity.Profits and losses arising on transactions between the Group and its associates are recognised only to the extentof unrelated investors’ interests in the associate. The investor’s share in the associate’s profits and losses resultingfrom these transactions is eliminated against the carrying value of the associate.Any premium paid for an associate above the fair value of the Group’s share of the identifiable assets, liabilitiesand contingent liabilities acquired is capitalised and included in the carrying amount of the associate. The carryingamount of the investment in associate is subject to impairment assessment at each reporting date.In the financial statements of the Company, the investment in associate is measured at cost, less accumulatedimpairment losses.

Sentula Mining Limited Integrated Annual Report 2012813 Significant accounting policies (continued)3.1 Basis of consolidation (continued)3.1.4 Jointly controlled operationsJoint ventures are contractual agreements whereby the Group and other parties undertake an economic activitythat is subject to joint control, that is when the strategic financial and operating policy decisions relating to theactivities require the unanimous consent of the parties sharing control. These joint ventures may take the form ofjointly controlled operations such as exploration and mining activities or companies.Joint ventures are accounted for by means of the proportionate consolidation method whereby the Group’s shareof the assets, liabilities, income, expenses and cash flows of joint ventures are included on a line by line basis inthe consolidated financial statements.The results of joint ventures are included for the period during which the Group exercises joint control over thejoint venture.If a joint venture uses accounting policies other than those adopted in these consolidated financial statements forlike transactions and events in similar circumstances, appropriate adjustments are made to its financial statementsin preparing the consolidated financial statements.Where the Group transacts with its jointly controlled operations, unrealised profits and losses are eliminated tothe extent of the Group interest in the joint venture, except where unrealised losses provide evidence of animpairment of the assets.3.1.5 Business combinationsBusiness combinations are accounted for using the acquisition method as at the acquisition date, which is the dateon which control is transferred to the Group. Control is the power to govern the financial and operating policiesof an entity so as to obtain benefits from its activities. In assessing control, the Group takes into considerationpotential voting rights that are currently exercisable.The Group measures goodwill at the acquisition date as:• the fair value of the consideration transferred; plus• the recognised amount of any non-controlling interests in the acquiree; plus• if the business combination is achieved in stages, the fair value of the existing equity interest in the acquiree;less• the net recognised amount of the identifiable assets acquired and liabilities assumed.When the excess is negative, a bargain purchase gain is recognised immediately in the income statement. Theconsideration transferred does not include amounts related to the settlement of pre-existing relationships. Suchamounts are generally recognised in the income statement.Costs related to the acquisition, other than those associated with the issue of debt or equity securities, that theGroup incurs in connection with a business combination are expensed as incurred.Any contingent consideration payable is recognised at fair value at the acquisition date. If the contingentconsideration is classified as equity, it is not remeasured and settlement is accounted for within equity. Otherwise,subsequent changes to the fair value of the contingent consideration are recognised in the income statement.

Sentula Mining Limited Integrated Annual Report 2012Notes to the consolidated financial statements continuedfor the year ended 31 March 2012823 Significant accounting policies (continued)3.1 Basis of consolidation (continued)3.1.5 Business combinations (continued)When share-based payment awards (replacement awards) are required to be exchanged for awards held by theacquiree’s employees (acquiree’s awards) and relate to past service, then all or a portion of the amount of theacquirer’s replacement awards is included in measuring the consideration transferred in the business combination.The determination is based on the market-based value of the replacement awards compared with the marketbasedvalue of the acquiree’s awards and the extent to which the replacement awards relate to past and/orfuture service.Accounting for acquisitions of non-controlling interestAcquisitions of non-controlling interests are accounted for as transactions with owners in their capacity andtherefore no goodwill is recognised as a result of such transactions. The adjustments to non-controlling interestsare based on a proportionate amount of the net assets of the subsidiary.Previously, goodwill was recognised on the acquisition of non-controlling interests in a subsidiary, which representsthe excess of the cost of the additional investment over the carrying amount of the interest in the net assetsacquired at the date of the transaction.3.2 Foreign currency3.2.1 Foreign currency transactionsForeign currency transactions are translated into the functional currency of the respective entity using theexchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreigncurrencies at the reporting date are retranslated to the functional currency at the exchange rate at that date.Foreign currency differences resulting from the settlement of such transactions and from the translation at yearendexchange rates of monetary assets and liabilities denominated in foreign currencies are recognised in profitor loss.Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value areretranslated to the functional currency at the exchange rate at the date that the fair value was determined. Nonmonetaryitems in the foreign currency that are measured in terms of historical costs are translated using theexchange rate at the transaction date. Foreign currency differences arising on retranslation of available-for-saleequity investments, a financial liability designated as a hedge of the net investment in a foreign currency operationthat is effective, or qualifying cash flow hedges, are recognised in other comprehensive income.3.2.2 Foreign operationsThe results and the financial position of all the Group entities that have a functional currency different from thepresentation currency are translated into the presentation currency as follows:• Assets and liabilities for each statement of financial position are translated at the closing rate at thereporting date;• Income and expenses for each income statement account are translated at exchange rates at the dates of thetransactions; and• All resulting exchange differences are recognised in other comprehensive income and presented as a separatecomponent of equity (in the foreign currency translation reserve).Foreign exchange gains and losses arising from a monetary item receivable from or payable to a foreignoperation, the settlement of which is neither planned nor likely in the foreseeable future, are considered to formpart of the net investment in a foreign operation and are recognised in other comprehensive income andpresented in the foreign currency translation reserve.

Sentula Mining Limited Integrated Annual Report 2012833 Significant accounting policies (continued)3.3 Intangible assets3.3.1 GoodwillGoodwill that arises upon the acquisition of subsidiaries is included in intangible assets.The measurement of the initial recognition of goodwill has been disclosed in note 3.1.5 under Businesscombinations.Subsequent measurementGoodwill is measured at cost less accumulated impairment losses.For the purpose of impairment testing, goodwill acquired in a business combination is allocated to each of thecash-generating or groups of cash-generating units that is expected to benefit from the synergies ofthe combination. Each unit or group of units to which the goodwill is allocated represents the lowest level withinthe entity at which the goodwill is monitored for internal management purposes. Goodwill is monitored at theoperating segment level. Goodwill impairment reviews are undertaken annually or more frequently if events orchanges in circumstances indicate a potential impairment. The carrying value of goodwill is compared to therecoverable amount, which is the higher of value in use and fair value less costs to sell. Any impairment isrecognised immediately as an expense and is not subsequently reversed.In respect of equity-accounted investees, the carrying amount of the goodwill is included in the carrying amountof the investment, and an impairment loss on such an investment is not allocated to any asset, including goodwill,that forms part of the carrying amount of the equity-accounted investee.3.3.2 Other intangible assetsOther intangible assets relate to customer contracts and relationships acquired in subsidiaries. The intangibleasset relating to these contracts and relationships is expected to be amortised over two to five years from the dateof acquisition. Other intangible assets are measured at cost less accumulated amortisation and accumulatedimpairment losses. Amortisation methods, useful lives and residual values are reviewed at each reporting date andadjusted if appropriate. The carrying amounts of other intangible assets with a definite useful life are reviewed ateach reporting date to determine whether there is any indication of impairment. If such indication exists, then therecoverable amount is estimated.3.3.3 Exploration for and the evaluation of mineral resourcesExploration assets include expenditure incurred after the award of the legal licence, to explore a specific area formineral resources, has been obtained. Pre-licence costs are recognised as an expense in profit or loss as incurred.Exploration and evaluation costs are capitalised as exploration assets on a project-by-project basis pendingdetermination of the technical feasibility and commercial viability of the project. Exploration assets include costsof acquisition of rights to explore, topographical, geological, geochemical and geophysical studies, exploratorydrilling, trenching, sampling and activities to evaluate the technical feasibility and commercial viability ofextracting a mineral resource.Administration and other general overhead costs, which are not directly attributable to the specific explorationassets, are expensed as incurred. When a licence is relinquished or a project is abandoned, the capitalisedexpenditure is recognised in profit or loss immediately.Exploration assets are measured at cost less impairment losses.

Sentula Mining Limited Integrated Annual Report 2012Notes to the consolidated financial statements continuedfor the year ended 31 March 2012843 Significant accounting policies (continued)3.4 Property, plant and equipment3.4.1 Recognition and measurementProperty, plant and equipment are measured at cost less accumulated depreciation and accumulated impairmentlosses. Cost includes expenditure that is directly attributable to the acquisition of the asset. The cost of selfconstructedassets includes the cost of materials and direct labour, and any costs directly attributable to bringingthe asset to a working condition for its intended use, and the costs of dismantling and removing the items andrestoring the site on which they are located.When parts of an item of property, plant and equipment have different useful lives, they are accounted for asseparate items of property, plant and equipment and depreciated separately.Gains and losses on disposal of an item of property, plant and equipment are determined by comparing theproceeds from disposal with the carrying amount of property, plant and equipment and are recognised net within“other income” in profit or loss.3.4.2 Subsequent costsThe cost of replacing part of an item of property, plant and equipment is recognised in the carrying amount of theitem if it is probable that future economic benefits within the part will flow to the Group and its cost can bemeasured reliably. The carrying amount of the replaced part is derecognised. The costs of day-to-day servicing ofthe property, plant and equipment are recognised in profit or loss as incurred.3.4.3 DepreciationAll mining assets are depreciated using the units-of-production method where the mine operating plan calls forproduction from well-defined mineral reserves over proved and probable reserves. The calculation of the units-ofproductionrate of depreciation could be impacted to the extent that actual production in the future is differentfrom current forecast production based on proved and probable mineral reserves. This would generally arise whenthere are significant changes in any of the assumptions used in estimating the mineral reserves.These factors could include changes in proved and probable mineral reserves and differences between actualcommodity prices and commodity price assumptions.Depreciation is recognised in profit or loss on a systematic basis over the estimated useful lives of each part of anitem of property, plant and equipment (except for mining assets), since this most clearly reflects the expectedpattern of consumption of the future economic benefits embodied in the asset. Leased assets are depreciatedover the shorter of the lease term and their useful lives, unless it is reasonably certain that the Group will obtainownership by the end of the lease term. Land is not depreciated.Residual value is the amount that the entity could recover for the asset at the reporting date if the asset wasalready of the age and in the condition that it will be in when the entity expects to dispose of it. The estimatedresidual value is based on similar assets that have reached the end of their useful lives at the date that the estimatehas been made. If the residual value of an asset increases to an amount equal to or in excess of the asset’s carryingvalue, then the asset’s depreciation charge will be zero. Depreciation will resume when the asset’s residual valuefalls below the asset’s carrying value.Where the unit-of-production methodology is used, the estimate of future production is reviewed and revised,if necessary, at each reporting date in accordance with the requirement to review the asset’s expected useful life.Units of production are determined by the metres drilled or hours utilised for the specific item of plantand equipment.A change in the useful life, in the unit of production method or in the residual value of an asset will result in achange in estimate.

Sentula Mining Limited Integrated Annual Report 2012853 Significant accounting policies (continued)3.4 Property, plant and equipment (continued)3.4.3 Depreciation (continued)The estimated useful lives for the current and comparative periods are as follows:• Buildings50 years• Mining assetsOver the anticipated life of mine• Plant and equipment5 to 10 years• Motor vehicles5 years• Furniture, fittings and equipment 10 yearsDepreciation methods, useful lives and residual values are reviewed annually and adjusted if appropriate.3.5 Impairment of non-financial assetsThe carrying amount of the Group’s assets, other than inventories and deferred tax assets, are reviewed at eachreporting date to determine whether there is an indication of impairment. If any such indication exists, the asset’srecoverable amount is estimated. An impairment loss is recognised whenever the carrying amount of an asset orits cash-generating unit exceeds its recoverable amount. Impairment losses are recognised in profit or loss.The recoverable amount of an asset or cash-generating unit is the greater of its value in use and its fair value lessthe cost to sell. In assessing value in use, the estimated future cash flows are discounted to their present valueusing a pre-tax discount rate that reflects current market assessments of the time value of money and the risksspecific to the asset. For an asset that does not generate largely independent cash inflows, the recoverableamount is determined for the cash-generating unit to which the asset belongs.Other non-financial assets are subject to impairment tests whenever events or changes in circumstancesindicate that their carrying amount may not be recoverable. When the carrying value of an asset exceeds itsrecoverable amount, the asset is written down accordingly. Where it is not possible to estimate the recoverableamount of an individual asset, the impairment test is carried out on the asset’s cash-generating unit.Impairment losses are recognised in profit or loss. Impairment losses recognised in respect of cash-generatingunits are allocated first to reduce the carrying amount of any goodwill allocated to the cash-generating unit, andthen to reduce the carrying amounts of the other assets in the cash-generating unit on a pro rata basis.An impairment loss in respect of goodwill is not reversed. In respect of other assets, impairment losses recognisedin prior periods are assessed at each reporting date for any indications that the loss has decreased or no longerexists. An impairment loss is reversed if there has been a change in the estimates used to determine therecoverable amount. An impairment loss is reversed only to the extent that the asset’s carrying amount does notexceed the carrying amount that would have been determined, net of depreciation or amortisation, if noimpairment had been recognised.Impairment charges are disclosed separately on the consolidated income statement, except to the extent thatthey reverse gains previously recognised in the consolidated statement of changes in equity.3.6 Non-current assets held-for-saleNon-current assets that are expected to be recovered primarily through sale or distribution rather than throughcontinuing use, are assets classified as held-for-sale or distribution. Immediately before classification as held-forsaleor distribution, the assets are remeasured in accordance with the Group’s accounting policies. Thereaftergenerally the assets are measured at the lower of their carrying amount and fair value less costs to sell. Impairmentlosses on initial classification as held-for-sale or distribution and subsequent gains and losses on remeasurementare recognised in profit or loss. Gains are not recognised in excess of any cumulative impairment loss.

Sentula Mining Limited Integrated Annual Report 2012Notes to the consolidated financial statements continuedfor the year ended 31 March 2012863 Significant accounting policies (continued)3.6 Non-current assets held-for-sale (continued)Intangible assets and property, plant and equipment once classified as held-for-sale or distribution are notamortised or depreciated.3.7 InventoriesInventories are consumables and spares held in the ordinary course of business consumed in the productionprocess or in the rendering of services in the mining operations. Finished goods are assets held-for-sale in the coaloperations. Inventories are measured at the lower of cost and net realisable value using the first-in-first-outmethod. Cost includes all costs of purchase, costs of conversion and other costs incurred in bringing theinventories to their present location and condition.Net realisable value is the estimated selling price in the ordinary course of business, less the estimated cost ofcompletion and costs necessary to make the sale.3.8 ProvisionsProvisions are recognised when the Group has a present obligation, whether legal or constructive for liabilities ofuncertain timing or amount that have arisen as a result of past events and are discounted at a pre-tax ratereflecting current market assessments of the time value of money and the risks specific to the liability. Inaccordance with the applicable legal requirements, a provision for rehabilitation of land and the related expenseis recognised when the damage occurs, it is probable that a restoration expense will be incurred and a reasonableestimate of the costs can be made. The increase in the provision due to passage of time is recognised as aninterest expense.3.9 Financial instrumentsFinancial assets and financial liabilities are recognised in the statement of financial position when the Group hasbecome a party to the contractual provisions of the instruments.Financial assets and financial liabilities are set off and the net amount presented in the statement of financialposition, when the Group has a legal right to set off the amounts and intends either to settle on a net basis or torealise the asset and settle the liability simultaneously.Financial assetsThe Group classifies its financial assets depending on the purpose for which the asset was acquired. The Grouphas not classified any of its financial assets as held to maturity or designated any instruments at fair value throughprofit or loss.The Group derecognises a financial asset when the contractual rights to the cash flows from the asset expire, orit transfers the rights to receive the contractual cash flows on the financial assets in a transaction in whichsubstantially all the risks and rewards of ownership of the financial asset are transferred. Any interest in transferredfinancial assets that is created or retained by the Group is recognised as a separate asset or liability.Loans and receivablesThese assets are non-derivative financial assets with fixed or determinable payments that are not quoted in anactive market. They arise principally through the provision of goods and services to customers (eg tradereceivables), but also incorporate other types of contractual monetary assets. They are initially recognised at fairvalue plus transaction costs that are directly attributable to the acquisition or issue of the instruments, and aresubsequently carried at amortised cost using the effective interest method, less impairment losses.

Sentula Mining Limited Integrated Annual Report 2012873 Significant accounting policies (continued)3.9 Financial instruments (continued)Impairment losses are recognised when there is objective evidence that the Group will be unable to collect all ofthe amounts due under the terms receivable, the amount of such a loss being the difference between the netcarrying amount and the present value of the future expected cash flows associated with the impaired receivablediscounted at the original effective interest rate. An impairment loss is reversed if the reversal can be relatedobjectively to an event occurring after the impairment loss was recognised. For trade receivables, which arereported net, such losses are recorded in a separate account with the loss being recognised within administrativeexpenses in the income statement. On confirmation that the trade receivable will not be collectible, the grosscarrying value of the asset is written off against the allowance account. From time to time, the Group elects torenegotiate the terms of trade receivables due from customers with which it has previously had a good tradinghistory. Such renegotiations will lead to changes in the timing of payments rather than changes to the amountsowed and, in consequence, the new expected cash flows are discounted at the original effective interest rate.Cash and cash equivalents form part of loans and receivables and include cash on hand, deposits held on call withbanks, other short-term highly liquid investments with original maturities immediately available, and bankoverdrafts. Bank overdrafts held at the same financial institution are set off against favourable bank balancesreflected in current assets. It is the Group’s policy not to allow overdraft facilities at subsidiary companies. Suchfacilities are provided to the subsidiaries by the central treasury.These balances are initially recognised at fair value plus transaction costs and subsequently measured atamortised cost.All short-term cash investments are invested with a major financial institution in order to manage credit risk.Financial liabilitiesFinancial liabilities are classified according to the substance of the contractual arrangement entered into and thepurpose for which the asset was acquired and include the following:Bank borrowings are initially recognised at fair value net of any transaction costs directly attributable to theissue of the instrument. Such interest-bearing liabilities are subsequently measured at amortised cost using theeffective interest method, which ensures that any interest expense over the period to repayment is at a constantrate on the balance of the liability carried in the statement of financial position. Interest expense in this contextincludes initial transaction costs and premiums payable on redemption, as well as any interest while the liabilityis outstanding.Trade payables and other short-term monetary financial liabilities are initially recognised at fair value andsubsequently measured at amortised cost using the effective interest method.The Group derecognises a financial liability when its contractual obligations are discharged, cancelled or expired.3.10 TaxationIncome tax comprises current and deferred tax. Current tax and deferred tax is recognised in profit or lossexcept to the extent that it relates to a business combination or items recognised directly in equity or othercomprehensive income.Current taxation is the expected tax payable on the taxable income for the year, using tax rates enacted orsubstantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.Deferred tax is recognised in respect of temporary differences between the carrying amounts of assets andliabilities for financial reporting purposes and the amounts used for taxation purposes.

Sentula Mining Limited Integrated Annual Report 2012Notes to the consolidated financial statements continuedfor the year ended 31 March 2012883 Significant accounting policies (continued)3.10 Taxation (continued)The following temporary differences are not provided for:• The initial recognition of goodwill;• The initial recognition of assets and liabilities that affect neither accounting nor taxable profit; and• Differences relating to investments in subsidiaries to the extent that it is probable that they will not reverse inthe foreseeable future.A deferred tax asset is recognised only to the extent that it is probable that taxable profits will be available againstwhich deductible temporary differences can be utilised. Deferred tax assets are reviewed at each reporting dateand are reduced to the extent that it is no longer probable that the related tax benefit will be realised.Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the temporarydifferences when they reverse based on the laws that have been enacted or substantively enacted by thereporting date.Deferred tax assets and liabilities are offset when the Group has a legally enforceable right to offset current taxassets and liabilities and the deferred tax assets and liabilities relate to taxes levied by the same tax authorityon either:• the same taxable entity; or• different Group entities which intend either to settle current tax assets and liabilities on a net basis; or• to realise the assets and settle the liabilities simultaneously, in each future period in which significant amountsof deferred tax assets or liabilities are expected to be settled or recovered.Additional income taxes that arise from the distribution of dividends are recognised at the same time that theliability to pay the related dividend is recognised.3.11 Share capitalThe Group’s ordinary shares are classified as equity. Incremental costs directly attributable to the issue of ordinaryshares and share options are recognised as a deduction from equity, net of tax effects.When share capital recognised as equity is repurchased, the amount of the consideration paid, which includesdirectly attributable costs, net of tax effects, is recognised as a deduction from total equity as a treasury sharereserve. When treasury shares are sold or reissued subsequently, the amount received is recognised as an increasein equity, the resulting surplus or deficit on the transaction is transferred to/from retained earnings.3.12 RevenueThe invoiced values of goods sold and services rendered excluding value added tax, discounts and other nonoperatingincome, in respect of manufacturing, trading and contracts are recognised at the date when thesignificant risks and rewards of ownership are transferred to the buyer. In the case of service revenue fromcontracts, revenue is recognised with reference to the stage of completion. The stage of completion is assessedto surveys of work performed.3.13 Finance income and finance expenseFinance income comprises interest income received on funds invested that are recognised in profit or loss. Interestincome is recognised as it accrues in profit or loss, using the effective interest method.Finance expenses comprise interest expense on borrowings that are recognised in profit or loss. Borrowing coststhat are not directly attributable to the acquisition, construction or production of a qualifying asset are recognisedin profit or loss using the effective interest method.

Sentula Mining Limited Integrated Annual Report 2012893 Significant accounting policies (continued)3.14 DividendsDividends to equity holders are only recognised as a liability when declared and are included in the statement ofchanges in equity. Secondary tax on companies in respect of dividends is recognised as a liability and is includedin the tax expense in profit or loss.3.15 Leased assetsWhere substantially all of the risks and rewards incidental to ownership of a leased asset have been transferred tothe Group (a “finance lease”), the asset is treated as if it had been purchased outright. The amount initiallyrecognised as an asset is the lower of the fair value of the leased asset and the present value of the minimum leasepayments payable over the term of the lease. The corresponding lease commitment is shown as a liability.Subsequent to initial recognition, the asset is accounted for in accordance with the accounting policy applicableto that asset. Lease payments are analysed between capital and interest.3.16 Segment reportingAn operating segment is a component of the Group that engages in business activities from which it may earnrevenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group’sother components. All operating segments’ operating results are reviewed regularly by the Group’s CEO to makedecisions about resources to be allocated to the segment and assess its performance, and for which discretefinancial information is available.Inter-segment pricing is determined on an arm’s length basis.Segment results, assets and liabilities include items directly attributable to a segment as well as those that can beallocated on a reasonable basis. Unallocated items comprise mainly current and deferred tax assets and liabilities.Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipmentand other intangible assets other than goodwill.3.17 Employee benefits3.17.1 Defined contribution plansProvision is made for retirement benefits for eligible employees by way of a provident fund. The fund is a definedcontribution plan under which amounts to be paid as retirement benefits are determined by contributions to thefund together with investment earnings thereon. Contributions are charged against income as incurred.Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in future paymentsare available.3.17.2 Short-term employee benefitsThe cost of all short-term employee benefits is recognised during the year in which the employee renders therelated service. The accruals for employee entitlements to remuneration and annual leave represent the amountwhich the Group has a present obligation to pay as a result of the employee’s services provided to the reportingdate. The accruals have been calculated at undiscounted amounts based on current remuneration rates.

Sentula Mining Limited Integrated Annual Report 2012Notes to the consolidated financial statements continuedfor the year ended 31 March 2012903 Significant accounting policies (continued)3.17 Employee benefits (continued)3.17.3 Share-based payment transactionsWhere equity-settled share options are awarded to employees, the fair value of the options at the date of grantis recognised in profit or loss over the vesting period. Non-market vesting conditions are taken into account byadjusting the number of equity instruments expected to vest at each reporting date so that, ultimately, thecumulative amount recognised over the vesting period is based on the number of options that eventually vest.Market vesting conditions are factored into the fair value of the options granted. As long as all other vestingconditions are satisfied, an expense is raised irrespective of whether the market vesting conditions are satisfied.The cumulative expense is not adjusted for failure to achieve a market vesting condition.Where the terms and conditions of options are modified before they vest, the increase in the fair value of theoptions, measured immediately before and after the modification, is also charged to profit or loss over theremaining vesting period. Share-based payment arrangements in which the Group receives goods or services asconsideration for its own equity instruments are accounted for as equity-settled share-based payment transactions,regardless of how the equity instruments are obtained by the Group.The fair value of the amount payable to employees in respect of the long-term incentive plans which are settledin cash, is recognised as an expense with an increase in liabilities over the period that the employees becomeunconditionally entitled to payment. The liability is remeasured at each reporting date and at settlement date. Anychanges in the fair value of the liability are recognised in profit or loss.3.18 Contingent assets and liabilitiesA contingent asset is a possible asset that arises from past events and whose existence will be confirmed only bythe occurrence or non-occurrence of one or more uncertain future events not wholly within the control of theGroup. Contingent assets are not recognised as assets.A contingent liability is a possible obligation that arises from past events and whose existence will be confirmedonly by the occurrence or non-occurrence of one or more uncertain future events not wholly within the control ofthe Group, or a present obligation that arises from past events but is not recognised because it is not probablethat an outflow of resources embodying economic benefits will be required to settle the obligation or the amountof the obligation cannot be measured with sufficient reliability. Contingent liabilities are not recognisedas liabilities.3.19 Critical accounting estimates and judgementsThe Group makes certain estimates and assumptions regarding the future. Estimates and judgements arecontinually evaluated based on historical experience and other factors, including expectations of future eventsthat are believed to be reasonable under the circumstances. In the future, actual experience may differ from theseestimates and assumptions. The estimates and assumptions that have a significant risk of causing a materialadjustment to the carrying amounts of assets and liabilities within the next financial year are discussed below.Useful lives of intangible assets and property, plant and equipmentAs described in 3.4 above, the estimated useful lives of property, plant and equipment are reassessed at theend of each annual reporting period. The Group depreciates/amortises its assets over their estimated usefullives, as more fully described in the accounting policies for property, plant and equipment and intangible assets.The actual lives of these assets can vary depending on a variety of factors, including technological innovationand maintenance programmes. Changes in estimates can result in significant variations in the carrying value andamounts charged to profit or loss in specific periods.

Sentula Mining Limited Integrated Annual Report 2012913 Significant accounting policies (continued)3.19 Critical accounting estimates and judgements (continued)Rehabilitation provisionLong-term environmental obligations are based on the Group’s environmental plans, in compliance withcurrent environmental and regulatory requirements.Full provision is made based on the net present value of the estimated cost of restoring the environmentaldisturbance that has occurred up to the reporting date. Increases due to additional environmental disturbancesare capitalised and amortised over the remaining lives of the mines. Annual increases in the provisions relatingto the change in the net present value of the provision and inflationary increases are included in administrationexpenses in the income statement.The estimated cost of rehabilitation is reviewed annually and adjusted as appropriate for changes inlegislation or technology. Cost estimates are not reduced by the potential proceeds from the sale of assets orfrom plant clean-up at closure, in view of the uncertainty of estimating the potential future proceeds.Estimated impairment of goodwillThe Group tests annually whether goodwill has suffered any impairment, in accordance with the accountingpolicy. The recoverable amounts of cash-generating units have been determined based on value-in-usecalculations. These calculations require an estimation of the future cash flows expected to arise from thecash-generating unit and a suitable discount rate in order to calculate present value.InventoriesThe Group reviews the net realisable value of, and demand for, its inventory on a quarterly basis to provideassurance that recorded inventory is stated at the lower of cost or net realisable value. Factors that could impactestimated demand and selling prices include the timing and success of future technological innovations,competitor actions, supplier prices and economic trends.Income taxesThe Group is subject to income tax in several jurisdictions and significant judgement is required indetermining the provision for income taxes. During the ordinary course of business, there are transactionsand calculations for which the ultimate tax determination is uncertain. As a result, the Group recognises taxliabilities based on estimates of whether additional taxes and interest will be due. The Group believes that itsaccruals for tax liabilities are adequate for all open audit years based on its assessment of many factors,including past experience and interpretations of tax law. This assessment relies on estimates and assumptionsand may involve a series of complex judgements about future events. To the extent that the final tax outcomeof these matters is different than the amounts recorded, such differences will impact the income tax expense inthe period in which such determination is made.Share-based paymentsThe fair value of share options and share appreciation rights is measured by using the binomial valuationmodels, on the date of grant based on certain assumptions. Measurement inputs include the share price on themeasurement date, the exercise price of the instrument, expected volatility, expected term of the instruments,expected dividends, and the risk-free interest rate. Service and non-market performance conditions attached tothe transactions are not taken into account in determining fair value.

Sentula Mining Limited Integrated Annual Report 2012Notes to the consolidated financial statements continuedfor the year ended 31 March 2012923 Significant accounting policies (continued)3.20 Adoption of new and revised statementsStandards, amendments and interpretations that are not effective and have not been early adopted bythe GroupThe following standards, amendments and interpretations have been published but are not effective and theCompany has not early adopted them:• Amendment to IAS 1: Presentation of financial statements – This amendment requires entities to separate itemspresented in other comprehensive income into two groups based on whether or not they may be recycled toprofit or loss in the future. The amendment is effective on 1 July 2012.• Amendment to IAS 12: Income Taxes – Deferred Tax: Recovery of underlying assets – The amendment providesa practical approach for measuring deferred tax liabilities and deferred tax assets when investment property ismeasured using the fair value model in IAS 40: Investment Property. Under IAS 12, the measurement of deferredtax liabilities and deferred tax assets depends on whether an entity expects to recover an asset by using it orselling it. However, it is often difficult and subjective to determine the expected manner of recovery when theinvestment property is measured using the fair value model in IAS 40. To provide a practical approach in suchcases, the amendments introduce a presumption that the investment property is recovered entirely throughsale. This presumption is rebutted if the investment property is held within a business model whose objectiveis to consume substantially all of the economic benefits embodied in the investment property over time, ratherthan through sale. The amendment is effective on 1 January 2012.• Amendment to IAS 19: Employee Benefits – The amendment eliminates the option to defer the recognition ofactuarial gains and losses, streamlines the presentation of changes in assets and liabilities arising from definedbenefit plans including the requirement that remeasurements be presented in other comprehensive income,and enhances the disclosure requirements for defined benefit plans to provide better information about thecharacteristics of defined benefit plans and the risks that entities are exposed to through participation in thoseplans. The amendment is effective on 1 January 2013.• Revised IAS 27: Separate Financial Statements – IFRS 27 contains accounting and disclosure requirements forinvestments in subsidiaries, joint ventures and associates when an entity elects or is required by local regulationsto present separate financial statements. The Standard requires an entity preparing separate financialstatements to account for those investments at cost or in accordance with IFRS 9: Financial Instruments. Thestandard is effective on 1 January 2013.• Revised IAS 28: Investments in Associates and Joint Ventures – The new IAS 28 prescribes the accounting forinvestments in associates and sets out the requirements for the application of the equity method whenaccounting for investments in associates and joint ventures. The statement is effective on 1 January 2013.• Amendment to IAS 32: Offsetting of Financial Assets and Financial Liabilities – The application guidance ofIAS 32 has been amended to clarify some of the requirements for offsetting financial assets and financialliabilities on the statement of financial position. The amendments do not change the current offsetting modelin IAS 32, but clarify that the right of set-off must be available today – that is, it is not contingent on a futureevent. It also must be legally enforceable for all counterparties in the normal course of business, as well as inthe event of default, insolvency or bankruptcy. The amendments also clarify that gross settlement mechanisms(such as through a clearing house) with features that both (i) eliminate credit and liquidity risk and (ii) processreceivables and payables in a single settlement process, are effectively equivalent to net settlement; they wouldtherefore satisfy the IAS 32 criterion in these instances. Master netting agreements where the legal right ofoffset is only enforceable on the occurrence of some future event, such as default of the counterparty, continuenot to meet the offsetting requirements. This statement is effective on 1 January 2014.• Amendment to IFRS 1: First-time Adoption of International Financial Reporting Standards – removal of fixeddates for first time adopters – The amendment replaces references to a fixed date of 1 January 2004 with ‘thedate of transition to IFRSs’, thus eliminating the need for companies adopting IFRSs for the first time to restatederecognition transactions that occurred before the date of transition to IFRSs. The amendment is effective on1 July 2011.

Sentula Mining Limited Integrated Annual Report 2012933 Significant accounting policies (continued)3.20 Adoption of new and revised statements (continued)• Amendment to IFRS 1: First-time adoption of International Financial Reporting Standards – guidance on severehyperinflation – The amendment provides guidance on how an entity should resume presenting financialstatements in accordance with IFRSs after a period when the entity was unable to comply with IFRSs becauseits functional currency was subject to severe hyperinflation. The amendment is effective on 1 July 2011.• Amendment to IFRS 1: First-time adoption of International Financial Reporting Standards – guidance onGovernment loans – The amendment provides guidance on how a first-time adopter would account for agovernment loan with a below-market rate of interest when transitioning to IFRS. The amendment is effectiveon 1 January 2013.• Amendment to IFRS 7: Financial Instruments: Disclosures – Transfer of financial assets – The amendment willallow users of financial statements to improve their understanding of transfer transactions of financial assets,including understanding the possible effects of any risks that may remain with the entity that transferred theassets. It will also require additional disclosures if a disproportionate amount of transfer transactions areundertaken around the end of the reporting period. The amendments will promote transparency in thereporting of transfer transactions and improve users’ understanding of the risk exposures relating to transfersof financial assets and the effect of those risks on an entity’s financial position, particularly those involvingsecuritisation of financial assets. The amendment is effective on 1 July 2011.• Amendment to IFRS 7: Financial Instruments: Disclosures – IFRS 9 Transitional disclosures – The amendmentrequires additional disclosure on the transition from IAS 39 to IFRS 9. This additional disclosure is only requiredwhen an entity adopts IFRS 9 for financial periods beginning on/after 1 January 2013. If an entity adopts IFRS 9for financial periods beginning on/after 1 January 2012 and before 1 January 2013, the entity can either providethe additional disclosure or restate prior periods. The additional disclosure highlights the changes inclassification of financial assets and financial liabilities upon the adoption of IFRS 9. The amendment is effectiveon 1 January 2015.• Amendment to IFRS 7: Financial Instruments: Disclosures – Offsetting of financial assets and financial liabilities– The amended disclosures will require more extensive disclosures than are currently required under IFRS.The disclosures focus on quantitative information about recognised financial instruments that are offset inthe statement of financial position, as well as those recognised financial instruments that are subject tomaster netting or similar arrangements irrespective of whether they are offset. The amendment is effectiveon 1 January 2013.• New IFRS 9 : Financial Instruments – This standard addresses classification and measurement of financial assets.It uses a single approach to determine whether a financial asset is measured at amortised cost or at fair value.The approach in IFRS 9 is based on how an entity manages its financial instruments (its business model) and thecontractual cash flow characteristics of the financial assets. The standard requires a single impairment methodto be used, replacing the numerous impairment methods in IAS 39 that arose from the different classificationcategories. The standard also removes the requirement to separate embedded derivatives from financial assethosts. The effective date of this statement has been delayed to 1 January 2015.• Amendment to IFRS 9: Financial Instruments – The accounting and presentation for financial liabilities and forderecognising financial instruments has been relocated from IAS 39: Financial instruments: Recognition andMeasurement, without change, except for financial liabilities that are designated at fair value through profit orloss. The amendment introduces new requirements that address the problem of volatility in profit or loss arisingfrom an issuer choosing to measure its own debt at fair value. With the new requirements, an entity choosingto measure a liability at fair value will present the portion of the change in its fair value due to changes in theentity’s own credit risk in the other comprehensive income section of the income statement, rather than withinprofit and loss. The effective date of this amendment has been delayed to 1 January 2015.

Sentula Mining Limited Integrated Annual Report 201294Notes to the consolidated financial statements continuedfor the year ended 31 March 20123 Significant accounting policies (continued)3.20 Adoption of new and revised statements (continued)• New – IFRS 10: Consolidated Financial Statements – Establishes principles for the presentation and preparationof consolidated financial statements when an entity controls one or more other entities and supersedes IAS 27:Consolidated and Separate Financial Statements. This standard changes the definition of control so that thesame criteria are applied to all entities to determine control. The revised definition of control focuses on theneed to have both power and variable returns before control is present. The standard provides additionalguidance to assist in determination of control where this is difficult to assess. The effective date of this standardis 1 January 2013.• New IFRS 11: Joint Arrangements – Establishes principles for financial reporting by parties to a joint arrangementand supersedes IAS 31: Interests in Joint Venture. This standard classifies joint arrangements into jointoperations and joint ventures. A joint operation is a joint arrangement whereby the parties that have jointcontrol of the arrangement have rights to the assets, and obligations for the liabilities, relating to thearrangement. A joint venture is a joint arrangement whereby the parties that have joint control of thearrangement have rights to the net assets of the arrangement. The standard requires a party to a jointarrangement to determine the type of joint arrangement in which it is involved by assessing its rights andobligations arising from the arrangement. The focus is no longer on the legal structure. The existing policychoice of proportionate consolidation for jointly controlled entities has been eliminated. Equity accounting ismandatory for participants in joint ventures. The effective date of this standard is 1 January 2013.• New IFRS 12: Disclosure of Interest in Other Entities – This is a comprehensive standard on disclosurerequirements for all forms of interest in other entities, including joint arrangements, associates, special purposevehicles and other off balance sheet vehicles. This new standard requires entities to disclose information thathelps financial statement readers to evaluate the nature, risk and financial effects associated with the entity’sinterest in subsidiaries, associates, joint arrangements and unconsolidated structured entities. The effectivedate of this standard is 1 January 2013.• New IFRS 13: Fair Value Measurement – This standard defines fair value, sets out in a single IFRS a frameworkfor measuring fair value, and sets out disclosure requirements on fair value measurements. The effective dateof this standard is 1 January 2013.• IFRIC 20: Stripping Costs in the Production Phase of a Surface Mine – The interpretation clarifies whenproduction stripping should lead to the recognition of an asset and how that asset should be measured, bothinitially and in subsequent periods. The effective date of this standard is 1 January 2013.The directors anticipate that all of the above interpretations to the extent relevant will be adopted in the Group’sconsolidated financial statements for the year in which they become effective and that the adoption of thoseinterpretations will have no material impact on the financial statements of the Company in the initial application.

Sentula Mining Limited Integrated Annual Report 2012952012R’0002011R’0004 Revenue 2 512 415 2 402 375Revenue is derived from opencast contract mining, rehabilitation, earthworks, mining services, exploration drilling,crane hire and sale of equipment and spares. Opencast contract mining revenue is based on the bulk volumeextracted or moved, whereas drilling and blasting revenue is based on volume of material blasted. Explorationdrilling revenue is based on metres drilled and crane hire revenue is derived from craneage services. The revenuefrom coal mining is derived from the selling of processed anthracite.2012R’0002011R’000Opencast mining and earthmoving 1 421 383 1 434 238Overburden drilling and blasting 148 392 120 207Coal mining 12 885 104 457Exploration drilling 861 311 677 337Crane hire 56 151 53 096Equipment trading and spares 12 293 13 0402 512 415 2 402 3755 Results from operating activitiesAfter allowing for the following:IncomeProfit on disposal of property, plant and equipment 2 464 37Reversal of provision for third party liability 78 766 –Realised foreign exchange gains – 798Unrealised foreign exchange gain 18 593 –Bad debt recovery 110 3ExpensesBad debts written off 855 856Auditors’ remuneration 10 863 11 874––Audit fees – current year 8 902 9 030––Forensic investigations 1 892 2 835––Other accounting services 69 9Unrealised foreign exchange losses – 14 404Realised foreign exchange loss 2 559 2 195SARS penalties 305 1 612Contribution to socio-economic and enterprise development 1 292 2 618Loss on disposal of property, plant and equipment 54 621 9 400Amortisation of intangible assets 460 460Amortisation of mineral rights – 1 422Current year rehabilitation movement – (9 512)Increase in provision for unaccounted funds 4 939 –Depreciation 201 070 269 432––mining assets 633 7 002––plant and equipment 166 765 225 494––motor vehicles 27 616 28 888––furniture, fittings and equipment 4 445 5 250––buildings 1 611 2 798Scrapping of assets 1 430 2 369Reversal of scrapping of assets – (4 174)Impairment of property, plant and equipment 591 171 71 476Impairment of damaged assets 6 525 –Impairment loss on trade debtors 11 312 –Impairment loss on other debtors 7 859 –Loss on onerous contracts 7 606 –

Sentula Mining Limited Integrated Annual Report 2012Notes to the consolidated financial statements continuedfor the year ended 31 March 2012962012R’0002011R’0005 Results from operating activities (continued)Personnel expenses––Salaries and wages 743 936 596 304––Provident fund 16 913 16 856––Equity-settled share-based payment expense 2 134 5 117––Cash-settled share-based payment expense – 5 025––Long-term incentive plan 12 982 6 6796 Share-based paymentsNumber of shares2012’000Equity-settled share appreciation rights scheme 7 500 9 025Cash-settled share appreciation rights scheme 29 597 32 757Long-term incentive plan 16 713 25 017Schamin Trust 1 600 1 6002011’00055 410 68 399Equity-settled share appreciation rights schemeThe Share Appreciation Rights Scheme (“SARS”) is a scheme whereby senior and middle management (the“employees”) of Sentula (the “Company”) are incentivised by means of the award of options, of which the offerprice is determined as the 30-day value weighted average price (“VWAP”) of Sentula’s share price on the date ofpresentation of Sentula’s annual results (the “offer date”) and the employees can exercise the said options in fiveequal tranches annually from the first to the sixth anniversary of the offer date, subject to employment. The awardand allocation of options under the scheme is governed by Sentula’s Board. There were no options awarded orexercised during the year ended 31 March 2012 (2011: Nil). This is an equity-settled scheme.Number of shares2012’000Outstanding at the beginning of the year 9 025 9 050Forfeited options (1 525) (25)Outstanding at the end of the year 7 500 9 025Exercisable at the end of the year 6 000 5 415Weighted average exercise price of outstanding options (cents) 1 814 1 882Weighted average exercise price of forfeited options (cents) 2 206 2 206Weighted average exercise price of exercisable options (cents) 1 816 1 882Average remaining life (months) 20 31Cash-settled share appreciation rights schemeThe Share Appreciation Rights Scheme (“SARS”) is a scheme whereby senior and middle management (the“employees”) of Sentula (the “Company”) are incentivised by means of the award of options, of which the offerpriceis determined as the 30-day VWAP of Sentula’s share price on the date of presentation of Sentula’s annualresults (the “offer date”) and the employees can exercise the said options in five equal tranches annually from thefirst to the sixth anniversary of the offer date, subject to employment. The award and allocation of options underthe scheme is governed by Sentula’s Board. There were no rights awarded or exercised during the year ended31 March 2012 (2011: 32 771 500 options awarded at an average price of 781 cents). This is a cash-settled scheme.2011’000

Sentula Mining Limited Integrated Annual Report 201297Number of shares6 Share-based payments (continued)Outstanding at the beginning of the year 32 757 –Granted number of options during the year – 32 772Forfeited options (3 160) (15)2012’000Outstanding at the end of the year 29 597 32 757Exercisable at the end of the year 12 350 7 784Weighted average exercise price of issued options (cents) 781 781Weighted average exercise price of outstanding options (cents) 780 780Weighted average exercise price of forfeited options (cents) 1 268 1 652Weighted average exercise price of exercisable options (cents) 1 597 1 597Fair value of options (R’000) 10 240 17 794Average remaining life (months) 38 50The fair value of such share programme was determined by using the binomial option valuation method.The following inputs were used:––Issued price ranging from 223 cents to 1 679 cents;––Expected volatility of 50%;––A staff turnover of 5,45% per annum;––A forecast dividend growth rate of 4%; and––A risk-free interest rate of 8,97%.Expected volatility was based on a filtered history of volatility of the Sentula Group from a period datingback to 2005; and has been adjusted to give recent history a higher weighting in determining the averageexpected volatility.Deferred bonus schemeSelected executives and employees of the Group will in lieu of a discretionary bonus or a percentage thereof, beoffered the right to receive a cash award equal to the sum of the market value of a number of notional Sentulaissued ordinary shares as at the expiry of a specified employment period and a multiple thereof to be determinedby the Board at the time of offer of the deferred bonus award and the aggregate of all dividends paid per Sentulaordinary share over the employment period and the number of bonus shares comprising the deferred bonusaward. The deferred bonus scheme is settled in cash.All shares are awarded at the 30-day VWAP of Sentula’s share price on the date of presentation of Sentula’s annualresults (the “offer date”) on the day of issue. No nominal Sentula shares were issued during the current year (2011:126 295 at an average price of 224 cents).2011’000

Sentula Mining Limited Integrated Annual Report 2012Notes to the consolidated financial statements continuedfor the year ended 31 March 2012986 Share-based payments (continued)Long-term incentive planSelected executives and employees of Sentula and its subsidiaries will receive a conditional right to receive a cashaward (“LTIP award”) equal to the market value of a number of notional Sentula issued ordinary shares on the datethat the award becomes unconditional. The LTIP award is to be applied towards the obligatory subscriptionand/or purchase of Sentula ordinary shares. This LTIP award is settled in cash.Number of shares2012’000Outstanding at the beginning of the year 25 017 9 450Granted during the year 1 575 17 957Lapsed – (1 890)Forfeited options (3 770) (500)Number of options exercised (6 109) –Outstanding at the end of the year 16 713 25 017Exercisable at the end of the year Nil NilDuring the March 2012 financial year, awards were made to new staff members qualifying for the scheme. On21 July 2010, 13 152 000 LTIPs were awarded to employees of Sentula Mining Limited, vesting over five years infive tranches. A further award was granted on 21 July 2010 of 4 805 250 shares to compensate for the dilutioneffect of the rights issue, effected in December 2009. LTIPs are settled at vesting date based on the market valueof the Company’s share price determined by reference to the 30-day VWAP. Conditions for vesting are establishedby the Board. In order for the July 2012 tranche to vest a 10% improvement in year-on-year economic value add(EVA) on the Group’s productive capital base needs to be achieved. Vesting conditions also require that therecipient is employed at the maturity of the respective tranche.2011’000Schamin TrustNo changes took place during the year under review:Number of shares2012’000Outstanding at the beginning of the year1 600 1 600Outstanding at the end of the year1 600 1 600Exercisable at the end of the year 1 600 1 200Weighted average price of outstanding options (cents) 1 000 1 000Weighted average price of exercisable options (cents) 1 000 1 000Average remaining life (months) 57 69The maximum number of shares that may be issued in terms of the scheme may not in aggregate exceed23 556 594 shares in Sentula’s issued capital. Shares vest in the option holder on the date the option was granted.Thereafter the option holder may exercise the options in individual tranches of 20% on each subsequentanniversary. The Schamin Trust scheme has been replaced by the three schemes mentioned above. This is anequity-settled scheme.2011’000

Sentula Mining Limited Integrated Annual Report 2012992012R’0002011R’0007 Finance chargesFinance income – received 3 032 3 211––Financial institutions 2 656 2 777––Debtors 45 228––South African Revenue Service 29 12––Other 302 194Finance expense – paid 62 377 80 360––Non-current borrowings 61 416 74 170––Bank overdraft 55 4 715––Suppliers 197 69––Interest on tax 509 956––Other 200 450Finance expense – non-cash 4 476 33 902––Facility fees recognised 2 581 28 915––Unwinding charge on rehabilitation liability 1 895 4 987Total finance expense 66 853 114 262Net finance expense 63 821 111 051No borrowing costs have been capitalised during the year (2011: Nil).8 Investment in significant joint ventureDuring October 2008, the Group entered into a joint venture agreement with Jonah Capital BVI which led tothe establishment of a joint venture company, incorporated in Mauritius and known as Jonah Coal BotswanaLimited. Sentula owns 50% of the share capital of Jonah Coal Botswana Limited. Jonah Coal Botswana Limited’sprincipal business activity is investing in coal exploration companies.The Group’s share of assets and liabilities consolidated on a line-by-line basis is as follows:R’000CurrentassetsNoncurrentassetsTotalassetsCurrentliabilitiesNoncurrentliabilitiesTotalliabilities2012Jonah CoalBotswana Limited 2 448 43 565 46 013 (2 279) (14) (2 293)Revenue Loss2012Jonah CoalBotswana LimitedR’000Currentassets– (5 729)NoncurrentassetsTotalassetsCurrentliabilitiesNoncurrentliabilitiesTotalliabilities2011Jonah CoalBotswana Limited 4 256 38 540 42 796 (1 524) (10) (1 534)Revenue Loss2011Jonah CoalBotswana Limited – (1 983)There are no fixed asset commitments or contingent liabilities relating to the joint venture.

Sentula Mining Limited Integrated Annual Report 2012100Notes to the consolidated financial statements continuedfor the year ended 31 March 20122012R’0002011R’0009 TaxationNormal taxation 5 169 19 921––Current year 3 999 2 089––Prior year (14 332) (3 052)––Foreign 15 502 20 884Deferred taxation 36 552 24 142––Current year 32 802 19 761––Prior year 3 750 4 381Effect of movement in foreign exchange rates (96) (1 283)Taxation 41 625 42 780Reconciliation of effective tax rate(Loss)/profit for the year before tax (490 569) 73 852Taxation (41 625) (42 780)(Loss)/profit for the year after tax (532 194) 31 072Income tax expense at statutory rate of 28% (137 359) 20 679––Non-deductible expenses 21 801 10 139––Non-taxable gains (409) (2 090)––Assessed loss utilised (10 627) (708)––Unredeemed capex utilised (5 503) –––Tax effect of non-taxable income (22 368) –––Prior year adjustment (10 582) 1 329––Foreign tax (1 474) 1 732––Foreign tax rate difference (5 080) –––Current year losses and temporary differences for which no deferred taxasset was recognised 214 435 11 738––Other (1 209) (39)Income tax expense recognised in profit or loss 41 625 42 780Effective tax rate (%) (8,5) 57,9The tax rate used for the 2012 reconciliation above is the corporate tax rate of 28% (2011: 28%) payable bycorporate entities in South Africa on taxable profits under tax law in that jurisdiction.10 Earnings per share2012 2011Basic and diluted (loss)/earnings per share (cents) (88,93) 6,05Headline and diluted earnings per share (cents) 21,71 16,06Weighted average number of shares (‘000) 581 005 581 005Diluted weighted average number of shares (‘000) 581 005 581 005Headline earningsHeadline earnings per share has been calculated in accordance with the SAICA Circular 3/2009 entitled ‘HeadlineEarnings’ which forms part of the Listings Requirements of the JSE Limited.

Sentula Mining Limited Integrated Annual Report 201210110 Earnings per share (continued)The adjustments made to arrive at headline earnings are as follows:2012R’0002011R’000Net (loss)/profit for the year attributable to equity holders of the parent (516 703) 35 127Adjusted for:Profit on disposal of plant and equipment (2 464) (37)Loss on disposal of plant and equipment 54 621 9 400Impairment of plant and equipment 591 171 71 476Tax effect of above adjustments (508) (22 635)Headline earnings attributable to ordinary shareholders 126 117 93 33111 DividendThe Board of Directors has not declared an interim or final dividend for the years ended 31 March 2012 or31 March 2011.12 Net asset value per share2012 2011Net asset value per share (cents) 418 505Tangible net asset value per share (cents) 343 430Shares in issue at the end of the year – excluding treasury shares (‘000) 581 005 581 005Shares in issue at the end of the year (‘000) 586 559 586 559The calculation of net asset value and tangible net asset value per share excludes the treasury shares.Tangible net asset value excludes goodwill and intangible assets.13 Property, plant and equipmentR’000Land andbuildingsMiningassetsPlant andequipmentMotorvehiclesFurniture,fittingsandequipment2012CostAt 31 March 2011 81 154 177 493 3 569 399 209 861 28 228 4 066 135Additions 2 760 2 596 258 302 25 705 2 237 291 600Transfer to/from inventory – – 1 298 – 50 1 348Reclassification to accumulateddepreciation 103 – 5 665 793 70 6 631Disposals (1 650) – (388 763) (37 181) (389) (427 983)Scrapping of assets – – (4 320) (1 330) (412) (6 062)Scrapping of damaged assets – – (3 400) – – (3 400)Reclassification – work in progress 211 – – – 1 747 1 958Foreign currency translation (230) – 592 274 – 636Transfer to held-for-sale assets (5 055) – (1 593 951) (33 251) (6 937) (1 639 194)At 31 March 2012 77 293 180 089 1 844 822 164 871 24 594 2 291 669Total

Sentula Mining Limited Integrated Annual Report 2012102Notes to the consolidated financial statements continuedfor the year ended 31 March 201213 Property, plant and equipment (continued)R’000Land andbuildingsMiningassetsPlantandequipmentMotorvehiclesFurniturefittingsandequipment2012Accumulated depreciation andimpairment lossesAt 31 March 2011 1 068 22 331 1 330 086 100 574 16 650 1 470 709Depreciation 1 611 633 166 765 27 616 4 445 201 070Reclassification from cost 103 – 5 665 793 70 6 631Transfer to held-for-sale assets (652) – (1 264 222) (23 774) (5 845) (1 294 493)Disposals – – (195 444) (23 352) (322) (219 118)Foreign currency translation (410) – (7 671) (637) (10) (8 728)Scrapping of assets – – (3 336) (888) (408) (4 632)Impairment of assets 350 – 588 393 2 428 – 591 171Impairment of damaged asset – – 3 125 – – 3 125At 31 March 2012 2 070 22 964 623 361 82 760 14 580 745 735Carrying value at 31 March 2012 75 223 157 125 1 221 461 82 111 10 014 1 545 9342011CostAt 31 March 2010 39 367 117 850 3 485 615 192 163 22 425 3 857 420Additions 44 222 46 406 200 102 21 958 5 930 318 618Transfer to/(from) inventory – – 30 497 (327) – 30 170Disposals (2 311) – (97 760) (1 675) (36) (101 782)Scrapping of assets – – (7 496) (1 375) (19) (8 890)Reversal of scrapping of assets – – 4 075 99 – 4 174Foreign currency translation (124) – (7 855) (982) (72) (9 033)Movement in rehabilitation asset – 13 237 – – – 13 237Transfer to held-for-sale assets – – (37 779) – – (37 779)At 31 March 2011 81 154 177 493 3 569 399 209 861 28 228 4 066 135Accumulated depreciation andimpairment lossesAt 31 March 2010 353 15 329 1 105 433 82 861 11 487 1 215 463Depreciation 2 798 7 002 225 494 28 888 5 250 269 432Transfer to/(from) inventory – – (24 280) – – (24 280)Disposals (2 082) – (40 260) (9 654) (20) (52 016)Foreign currency translation (1) – (2 294) (493) (57) (2 845)Scrapping of assets – – (5 483) (1 028) (10) (6 521)Impairment of assets – – 71 476 – – 71 476At 31 March 2011 1 068 22 331 1 330 086 100 574 16 650 1 470 709Carrying value at 31 March 2011 80 086 155 162 2 239 313 109 287 11 578 2 595 426Total

Sentula Mining Limited Integrated Annual Report 201210313 Property, plant and equipment (continued)Assets pledged as securityThe Group’s obligations under the merged term facility are secured by registered notarial bonds over plant andequipment and motor vehicles, which have a carrying amount of R1 467 million (2011: R2 278 million).The Group’s obligations under the WesBank instalment sale agreement were secured by the lessors’ title to thefinancial assets, which had a carrying amount of R69 million (2011: Nil).The Group’s obligations under the finance lease in favour of Babcock Equipment Proprietary Limited were securedby the Company’s title to the assets, which had a carrying value of R9,5 million in 2011.Impairment lossDuring the current year, plant and equipment to the value of R1 101 million was impaired by R591 million withinthe opencast mining sector, predominately within Megacube Mining Proprietary Limited. This impairment wasraised due to certain machines being operationally uneconomical. These machines were written down to adeemed open market value. The recoverable amounts of these assets were determined by using fair value lesscost to sell of each asset. These values were determined by a third party assessor and from recent related pricesand in some instances on the scrap value of the equipment.Megacube assets were impaired and transferred to assets held-for-sale as disclosed in note 19.Change in classificationDuring the previous year, the Group modified the income statement classification of the depreciation expense onone of its subsidiaries from administrative expenses to cost of sales to bring it in line with the rest of the Groupand to reflect more appropriately the way in which economic benefits are derived. Comparative amounts werereclassified for consistency, which resulted in R75,1 million being reclassified from administrative expenses to costof sales.A register containing the information required by the Companies Act 71 of 2008 is available for inspection at theregistered office of the Company.14 Mineral rights2012 2011R’000 R’000Carrying value at the beginning of the year 410 761 412 183Gross carrying value 419 635 419 635Accumulated amortisation (8 874) (7 452)Amortisation for the year – (1 422)Carrying value at the end of the year 410 761 410 761Gross carrying value 419 635 419 635Accumulated amortisation (8 874) (8 874)During 2009, the Group acquired the entire issued share capital of Benicon Mining which holds the prospectingrights on the remaining extent of Portion 7 (a Portion of Portion 1) of the farm Bankfontein 215 IS situated in themagisterial/administrative district of Ermelo and comprising 513,9190 hectares in extent. A prospecting rightrenewal, for a further three-year extension, was granted in June 2012 by the DMR. The new order mining rightapplication is still in process.During 2008, the Group acquired the issued share capital of the Benicon Coal Group which holds the mininglicence number 4198 in the magisterial district of Kamhlushwa in Mpumalanga consisting of the following farms:Grobler 479JU, Guillaume 480JU, Wildebeest 494JU, Rusplek 495JU, Sweet home 495JU, Bonnievale 497JU,Excelsior 498JU, Murray 502JU, Fig tree 503JU, Beginsel 504JU and a portion of unsurveyed state land. Thelicence entitles the Benicon Coal Group to mine until 19 October 2015.

Sentula Mining Limited Integrated Annual Report 2012104Notes to the consolidated financial statements continuedfor the year ended 31 March 201215 Intangible assets and goodwillIntangible assetsIntangible assets comprise exploration and evaluation assets and assembled workforce.R’000ExplorationcostsOtherTotalintangibleassetsGoodwillTotalintangibleassets andgoodwill2012CostAt 31 March 2011 22 810 19 599 42 409 408 338 450 747Exploration and evaluation 2 212 – 2 212 – 2 212Foreign currency translation 2 121 – 2 121 4 371 6 492At 31 March 2012 27 143 19 599 46 742 412 709 459 451Accumulated amortisation andimpairment lossesAt 31 March 2011 – 19 062 19 062 – 19 062Amortisation – 460 460 – 460At 31 March 2012 – 19 522 19 522 – 19 522Carrying value at 31 March 2012 27 143 77 27 220 412 709 439 9292011CostAt 31 March 2010 16 624 19 599 36 223 411 148 447 371Exploration and evaluation 7 074 – 7 074 – 7 074Foreign currency translation (888) – (888) (2 810) (3 698)At 31 March 2011 22 810 19 599 42 409 408 338 450 747Accumulated amortisation andimpairment lossesAt 31 March 2010 – 18 602 18 602 – 18 602Amortisation – 460 460 – 460At 31 March 2011 – 19 062 19 062 – 19 062Carrying value at 31 March 2011 22 810 537 23 347 408 338 431 685The exploration and evaluation asset relates to prospecting rights held by Benicon Mining, Asenjo Energy andIndongo Mining projects. The economic viability of these assets is still being assessed and until this has beenascertained, development will not commence. These assets are therefore not amortised.2012 2011R’000 R’000GoodwillCarrying value at the beginning of the year 408 338 411 148––Geosearch 300 127 300 127––Mauritius 35 646 38 456––CCT 35 138 35 138––JEF 19 687 19 687––Ritchie 17 740 17 740Foreign currency translation – Mauritius 4 371 (2 810)

Sentula Mining Limited Integrated Annual Report 201210515 Intangible assets and goodwill (continued)2012 2011R’000 R’000GoodwillCarrying value at the end of the year 412 709 408 338––Geosearch 300 127 300 127––Mauritius 40 017 35 646––CCT 35 138 35 138––JEF 19 687 19 687––Ritchie 17 740 17 740Goodwill arose from the business acquisitions during the 2007 and 2008 financial years.Goodwill is not amortised but subject to an annual impairment test.The recoverable amounts of the cash-generating units (CGUs) are determined from value-in-use calculations. Thekey assumptions for the value-in-use calculations are those regarding the discount rates, growth rates andexpected revenue and cost projections during the period. These calculations are based on financial budgetsapproved by management covering a five-year period. Management estimates discount rates using pre-tax ratesthat reflect current market assessments of the time value of money and the risks specific to the CGUs. The growthrates are based on growth prospects within the specific industry. Changes in revenue and cost projections arebased on long-term inflation expectations.Key assumptions used in the calculation of recoverable amounts are discount rates and growth rates. Theseassumptions are as follows:2012%Nominal pre-tax discount rate 17,08 20,74Growth rate 4,80 4,80A 1% increase in the nominal pre-tax discount rate or a 1% decrease in the growth rate would not result in therecoverable amount being less than the carrying value.2011%16 Inventories2012 2011R’000 R’000Finished goods 15 130 15 709Work-in-progress 9 831 11 511Consumables and spares 339 560 334 607364 521 361 827Inventories expensed during the year 403 336 297 457Inventory write-off 30 478 –

Sentula Mining Limited Integrated Annual Report 2012106Notes to the consolidated financial statements continuedfor the year ended 31 March 20122012 2011R’000 R’00017 Trade and other receivablesTrade receivables 408 245 372 685Other receivables* 39 119 55 896447 364 428 581Unaccounted funds 181 917 176 978Value added taxation 21 506 17 865650 787 623 424Provision for unaccounted funds (181 917) (176 978)468 870 446 446Impairment loss included in the above 24 517 5 346* Included in other receivables is the fair value of the interest rate hedge asdisclosed below:Purchase price of interest rate hedge 9 535 –Change in fair value recognised through profit and loss (6 677) –Amount included in other receivables 2 858 –The interest rate hedge facility was entered into on 1 April 2011 with Standard Bank, on the following termsand conditions:Notional amount:R350 millionTrade date: 1 April 2011Effective date: 1 April 2012Termination date: 31 March 2015Cap rate: 8,57%Floating rate option: ZAR – JIBAR SAFEXReset dates:Calendar quartersA cession is held over the trade receivables of Sentula in favour of the general short-term banking facility held atStandard Bank as disclosed in note 18.The Group’s exposure to credit and currency risks and impairment losses related to trade and other receivables isdisclosed in note 31.18 Cash and cash equivalents2012 2011R’000 R’000Bank balances 104 177 68 348Call deposits 74 713 18 958Cash on hand 1 346 1 074180 236 88 380Bank overdraft – (148)Cash and cash equivalents 180 236 88 232The Group’s exposure to interest rate risk and sensitivity analysis for financial assets and liabilities are disclosed innote 31.

Sentula Mining Limited Integrated Annual Report 20121072012 2011R’000 R’00019 Assets classified as held-for-saleDragline held-for-sale 44 612 37 779Plant and equipment held-for-sale – Megacube 342 447 –Plant and equipment held-for-sale – Cameroon 2 256 –389 315 37 779Dragline – Equipment, Trading and Spares segmentBenicon Sales Proprietary Limited entered into an option agreement to sell the Bucyrus-Erie 1260-W WalkingDragline, including all parts, components and spares constituting such 1260 Dragline. The option expiring on30 June 2011 was further extended to 30 September 2011 for an option fee of R2 million, and further extended to28 February 2012 for an option fee of R4 million, whereafter it expired. The Company is actively pursuingthe disposal of the dragline through a private sale agreement and by inviting online tenders in the near future.The dragline is measured at the lower of its carrying amount and fair value less cost to sell.Plant and equipment held-for-sale – Opencast Mining and Earthmoving segmentDuring the year, assets with a book value of R342 million were classified as assets held-for-sale. These assets wereimpaired by R591 million to their expected current market value before being classified as held-for-sale. As partof the winding down of Megacube Mining Proprietary Limited, it is management’s intention that these assets besold during the next 12 months.Plant and equipment held-for-sale – Exploration Drilling segmentSentula Mining Services Mauritius Limited concluded an agreement on 15 March 2012 to sell inventory and plantin their Cameroon operation.20 Share capital and premium2012 2011R’000 R’000Authorised share capital1 000 000 000 (2011: 1 000 000 000) ordinary shares of 1 cent each 10 000 10 000Issued share capital586 599 181 (2011: 586 559 181) ordinary shares of 1 cent eachBalance at the beginning of the year 5 866 5 866Balance at the end of the year 5 866 5 866Share premiumBalance at the beginning of the year 2 014 438 2 014 438Balance at the end of the year 2 014 438 2 014 438Treasury sharesBalance at the beginning of the year (25 898) (25 481)Shares acquired – (417)Balance at the end of the year (25 898) (25 898)Total share capital, premium and treasury shares 1 994 406 1 994 406The authorised but unissued share capital is under the control and authority of the directors subject to theCompanies Act and JSE Limited Listings Requirements, until the next annual general meeting. The directors havenot been granted the approval to issue ordinary shares, or sell treasury shares for cash, without the consent ofthe shareholders. Note 6 sets out the details in respect of the share option scheme.All shares issued by the Company were fully paid.

Sentula Mining Limited Integrated Annual Report 2012108Notes to the consolidated financial statements continuedfor the year ended 31 March 20122012R’0002011R’00021 Loans and borrowingsInterest-bearing borrowingsSecured at amortised costStandard Bank merged term facility 646 080 700 000WesBank instalment sale facility 62 931 –709 011 700 000Balance at the end of the year 709 011 700 000Current portion of loans and borrowings (220 316) (140 000)Non-current loans and borrowings 488 695 560 000Standard Bank merged term facility 646 080 700 000The effective average interest rate applicable to these liabilities is 8,645% (2011: 8,735%) and is based on a marginof 325 basis points above the three-month JIBAR rate and is reset quarterly.Aggregate repayments due are as follows: 2012 2011R’000 R’000Year ended 31 March––2012 – 140 000––2013 206 526 186 667––2014 223 274 373 333––2015 and later 216 280 –646 080 700 000Total facility 700 000 700 000Undrawn facility 53 920 –The Group’s obligations under the merged term facility are secured by registered notarial bonds over plant andequipment and motor vehicles, which have a carrying amount of R1 493 million (2011: R2 278 million). Sentulaprovided a cession and pledge of all the shares it holds in the Group subsidiaries, for the due and punctualfulfilment of all obligations by the Company. The subsidiaries have subordinated all claims which they mayrespectively have against one another to the claims which the lenders may have against Sentula and such othersubsidiaries of Sentula.2012 2011R’000 R’000WesBank instalment sale agreement 62 931 –Total facility 100 000 –Undrawn facility 37 069 –During the year ended 31 March 2012, Sentula entered into a R100 million instalment sale facility with WesBank,which became effective on 27 October 2011.The Group’s obligations under the WesBank instalment sale liabilities was secured by the lessors’ title of thefinancial assets, which had a carrying amount of R69,3 million (2011: Nil).The effective average interest rate applicable to these liabilities is 6,2% and is a prime linked facility.Aggregate repayments due are as follows: 2012PrincipalR’000InterestR’000TotalR’000Year ending 31 March––2013 13 790 4 046 17 836––2014 15 667 2 786 18 453––2015 16 771 1 682 18 453––2016 and later 16 703 521 17 22462 931 9 035 71 966The Company’s borrowing powers are unlimited in terms of the articles of association.The Company’s exposure to interest rate risk and sensitivity analysis for loans and borrowings is disclosed in note 31.

Sentula Mining Limited Integrated Annual Report 20121092012 2011R’000 R’00022 Finance lease obligationsMinimum lease payments due––within one year – 4 529––in second to fifth year inclusive – –– 4 529Less: Future finance charges – (114)Present value of minimum lease payments – 4 415Present value of minimum lease payments due––within one year – 4 415––in second to fifth year inclusive – –– 4 415Non-current liabilities – –Current liabilities – 4 415The lease was repaid on 31 July 2011 and the effective borrowing rate was prime plus 1%.– 4 415Interest rates are linked to the prime overdraft rate at the contract date. All leases have fixed repayment terms.The Group’s obligations under the finance leases in favour of Babcock Equipment were fully settled during thecurrent financial year. In the previous year the lease was secured by the Group’s title to the assets, which had acarrying amount of R9,5 million.The Group’s obligations under the finance leases in favour of Central Africa Machine Sales Proprietary Limited wassettled in October 2010.23 Rehabilitation provision2012 2011R’000 R’000Carrying value at the beginning of the year 65 004 56 292Unwinding charge to the income statement 1 895 4 987Current year provision – change in useful life – (9 512)Current year provision – adjusted to decommissioning asset – 13 237Carrying value at the end of the year 66 899 65 004The Group is exposed to environmental liabilities pertaining to its mining operations at Nkomati Anthracite.Estimates of the cost of environmental and other remedial work, such as reclamation costs, close down andrestoration and pollution control are made on an annual basis, by an independent environmental consultancy,based on the estimated useful life of the mine.2012 2011R’000 R’000Restricted investmentsFirst National Bank 8 693 8 693Restricted investments are 12-month deposits held by First National Bank and available to be utilised only todischarge the Group’s environmental rehabilitation obligations pertaining to the Nkomati Anthracite mine. Thisamount has been ceded to First National Bank for a guarantee issued in favour of the DMR.The gross value of the environmental rehabilitation obligation of the Group is R119 million (2011: R119 million).

Sentula Mining Limited Integrated Annual Report 2012110Notes to the consolidated financial statements continuedfor the year ended 31 March 20122012 2011R’000 R’00024 Deferred revenueIncome received in advance 1 100 –Non-current liabilities – –Current liabilities 1 100 –There was no deferred revenue for 2011.25 Trade and other payables1 100 –2012 2011R’000 R’000Trade payables 204 343 210 606Other payables 76 930 147 366281 273 357 972Accrual for leave pay and employee incentives 34 178 57 774Value added taxation 20 081 12 238335 532 427 984The Group’s exposure to interest rate risk and sensitivity analysis for financial liabilities are disclosed in note 31.26 Deferred tax2012 2011R’000 R’000Recognised deferred taxBalance at the beginning of the year 226 623 205 047Originating temporary differences 36 360 21 576Balance at the end of the year 262 983 226 623The balance comprises:Accelerated wear and tear for tax purposes on property, plant and equipment 158 761 135 668Fair value adjustment on business combinations and other 123 090 123 078Assessed losses utilised (3 520) (27 303)Lease liability – (1 236)Provisions (25 095) (8 201)Prepayments 175 590Foreign exchange effect 7 940 –Other 1 632 4 027Net deferred tax liabilities 262 983 226 623Deferred tax asset 34 869 17 008––Deferred tax asset to be recovered after more than 12 months 27 522 14 348––Deferred tax asset to be recovered within 12 months 7 347 2 660Deferred tax liability 297 852 243 631––Deferred tax liability to be recovered after more than 12 months 215 932 192 481––Deferred tax liability to be recovered within 12 months 81 920 51 150

Sentula Mining Limited Integrated Annual Report 2012111Openingbalance31 March2011R’000Recognisedin incomestatementR’000Closingbalance31 March2012R’00026 Deferred tax (continued)Movement in temporary differences during the yearAccelerated wear and tear 548 752 (167 821) 380 931Fair value on business combinations 123 078 12 123 090Lease liability (1 236) 1 236 –Provisions (8 201) (16 894) (25 095)Prepayments 590 (415) 175Unredeemed capital expenditure (413 084) 190 914 (222 170)Assessed losses utilised (27 303) 23 783 (3 520)Foreign exchange effect – 7 940 7 940Other 4 027 (2 395) 1 632226 623 36 360 262 983Openingbalance31 March2010R’000Recognisedin incomestatementR’000Closingbalance31 March2011R’000Accelerated wear and tear 571 380 (22 628) 548 752Fair value on business combinations 124 024 (946) 123 078Income received in advance (4 028) 4 028 –Lease liability (6 320) 5 084 (1 236)Provisions (9 650) 1 449 (8 201)Prepayments – 590 590Unredeemed capital expenditure (447 143) 34 059 (413 084)Assessed losses utilised (26 733) (570) (27 303)Lease receivable (49) 49 –Other 3 566 461 4 027205 047 21 576 226 623Unrecognised deferred taxDeferred tax assets have not been recognised in respect of tax losses amounting to R236 million (2011: R208 million)as it is not probable that future taxable profit will be available against which the Group can utilise the benefitstherefrom in the foreseeable future.

Sentula Mining Limited Integrated Annual Report 2012112Notes to the consolidated financial statements continuedfor the year ended 31 March 20122012 2011R’000 R’00027 Other financial liabilitiesBalance at the beginning of the year 7 506 7 506Fair value adjustment – –Balance at the end of the year 7 506 7 506These liabilities relate to amounts payable to the vendors resulting from the acquisition of businesses and arepayable based on production from the mines.Fair value is determined by discounting the future royalty liability at the time of acquisition. The royalty liabilityis the product of the royalty rate and the run-of-mine tonnes estimated to be produced or sold over the currentlife of mine which is derived from the resource base.Changes to the aforementioned valuation inputs will determine the range of the liability payable.The royalty will only become payable on mining recommencing at Nkomati Anthracite mine and miningcommencing at Bankfontein.28 Taxation paid2012R’0002011R’000Balance at the beginning of the year 16 482 90 952Amounts recognised in profit or loss 5 169 19 921Effect of movement in exchange rates 96 1 283Balance at the end of the year 5 547 (16 482)Taxation paid 27 294 95 67429 Capital commitments2012 2011R’000 R’000Capital expenditure contracted for in respect of plant and equipment 22 920 17 224Capital expenditure authorised by the directors not contracted for inrespect of property, plant and equipment– New replacement equipment 204 786 132 286– Refurbishments 59 900 82 781The capital expenditure will be financed through working capital anda vehicle asset finance facility.Operating lease chargesPremises– Contractual amount 4 888 4 886Motor vehicles and equipment– Contractual amount 3 679 3 328Property rental– Invoiced amount 1 282 2 297Future minimum lease payments– up to one year 2 952 4 251– one to five years 3 147 5 408The lease agreements are entered into on market-related terms and conditions and are subject to annual marketrelatedescalation in the lease rates. Property lease agreements are subject to a lease extension option.

Sentula Mining Limited Integrated Annual Report 201211330 Contingent liabilitiesDuring the 2009 financial year, Megacube Mining Proprietary Limited (“MM”) (previously ScharrighuisenOpencast Mining Proprietary Limited) instituted legal proceedings against Umcebo Mining Proprietary Limited forthe recovery of R29,8 million owing to MM for work performed on its Middelkraal operation.Subsequent to the above action, a counterclaim of R120,6 million was brought against MM in respect of an allegedbreach of contract and alleged sub-standard mining practices adopted by MM.The parties elected to settle the aforementioned matters and an amount of R13,5 million was received by MM on23 April 2012 in full and final settlement of these matters.To the best of our knowledge and belief there are no other contingent liabilities to third parties and/or contingentassets which are not disclosed in this report and which may materially affect the financial position of the Group.31 Financial instruments31.1 Risk management activitiesIn the normal course of its operations, the Group is exposed to currency, interest rate, liquidity and credit risk. Thisnote describes the Group’s objectives, policies and processes for managing those risks and methods used tomeasure them. In order to manage these risks, the Group has developed a comprehensive financial riskmanagement process and policy to facilitate control and monitoring. The Board has overall responsibility for thedetermination of the Group’s risk management objectives and policies and, whilst retaining ultimate responsibilityfor them, it has delegated the authority for designing and operating processes that ensure the effectiveimplementation of the objectives and policies to the Group’s finance function. The Group’s treasury functionprovides services to the subsidiaries, coordinates access to domestic financial markets and monitors and managesthe financial risks relating to the operations of the Group. Operational and business risks are reviewed andaddressed on a monthly basis. These risks include market risk (including currency risk, fair value interest rate riskand price risk), credit risk, liquidity risk and cash flow interest rate risk.The Group does not enter into or trade financial instruments, including derivative financial instruments, forspeculative purposes.31.2 Credit riskCredit risk is the risk of financial loss to the Group if a customer or a counterparty fails to meet its contractualobligations. The Group is mainly exposed to credit risk from credit sales and this risk is mitigated by dealing withcreditworthy counterparties and a few major clients. It is Group policy to assess the credit risk of new customersbefore entering into a contract and this is monitored on an ongoing basis.The Group procures financing from a consortium (comprising Standard Bank, HSBC and Sanlam) and WesBank.These institutions are deemed to be credible financial institutions, the financial stability of which does not pose athreat to the Group.The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure tocredit risk at the reporting date was:Carrying amount2012R’0002011R’000Trade receivables 408 245 372 685Other receivables 39 119 55 896Trade and other receivables 447 364 428 581Cash and cash equivalents 180 236 88 380Restricted investments 8 693 8 693636 293 525 654

Sentula Mining Limited Integrated Annual Report 2012114Notes to the consolidated financial statements continuedfor the year ended 31 March 201231 Financial instruments (continued)31.2 Credit risk (continued)The maximum exposure to credit risk for trade and other receivables at the reporting date by type of geographicregion was:Carrying amount2012R’0002011R’000South Africa 308 529 323 181Botswana 15 219 17 162Mozambique 42 477 35 536Tanzania 7 884 2 336Other African countries 73 255 50 366447 364 428 581The maximum exposure to credit risk for trade and other receivables at thereporting date by type of counterparty was:Mining houses 357 787 334 401Exploration companies 101 9 629Mining subcontractors 34 002 25 931Deferred fees 7 314 9 895Other 48 160 48 725447 364 428 581Net amount2012R’0002011R’000The ageing of trade receivables at the reporting date was:Not past due 269 075 241 296Past due 0 to 30 days 79 542 68 255Past due 31 to 120 days 20 205 28 353Past due 121 to 180 days 13 147 8 084Past due 181 days and over 26 275 26 697408 244 372 685Impairment losses 24 517 5 346The movement in the allowance for impairment in respect of tradereceivables during the year was as follows:Balance at 1 April (5 346) (10 310)Impairment loss recognised (19 171) 4 964(24 517) (5 346)At 31 March 2012, the impairment loss of R24,1 million (2011: R5,3 million) relates to customers that are not ableto settle their outstanding balances of their indebtedness. The Group believes that the unimpaired amounts thatare past due by more than 30 days are still collectible, based on historic payment behaviour and extensiveanalyses of the underlying customers’ credit rating.Based on historic default rates, the Group believes that, apart from the above, no impairment allowance isnecessary in respect of the trade receivables not past due or past due by up to 30 days.

Sentula Mining Limited Integrated Annual Report 201211531 Financial instruments (continued)31.3 Foreign exchange riskThe Group operates internationally and is exposed to foreign exchange risk arising from various currencyexposures, primarily with respect to the US Dollar. Foreign exchange risk arises from future commercialtransactions, recognised assets and liabilities and new investments in foreign operations.Foreign exchange risk also arises when individual Group entities enter into transactions denominated in a currencyother than the functional currency.The Group is exposed to currency risk on purchases made on plant and equipment globally. Purchases from thesesuppliers are made on a central basis and the risk is hedged using forward exchange contracts. The forwardexchange contracts entered into from time to time are economic hedges and therefore the Group does not applyhedge accounting.The Group has certain investments in foreign operations, whose net assets are exposed to foreign currencytranslation risk. Currency exposure arising from the net assets of the Group’s foreign operations is managedprimarily through these operations holding cash denominated in the relevant foreign currency.The Group’s exposure to foreign currency risk was as follows:R’000ZARequivalentof USDexposure 12012 2011ZARequivalentof BWPexposure 2ZARequivalentof USDexposure 1ZARequivalentof BWPexposure 2Trade receivables 113 635 15 049 86 945 17 162Cash and cash equivalents 87 199 9 285 41 031 1 598Trade payables (13 771) (6 541) (27 434) (6 611)Gross balance sheet recognised 187 063 17 793 100 542 12 1491.This column discloses the USD exposure of foreign operations translated to ZAR2.This column discloses the BWP exposure of foreign operations translated to ZARThe following significant exchange rates were applied during the year:ZARAveragerate2012 2011Reportingdatespot rateAveragerateReportingdatespot rateUSD 7,620 7,690 7,214 6,850BWP 1,070 1,070 1,087 1,060

Sentula Mining Limited Integrated Annual Report 2012116Notes to the consolidated financial statements continuedfor the year ended 31 March 201231 Financial instruments (continued)31.3 Foreign exchange risk (continued)Sensitivity analysisA 10% strengthening of the Rand against the following currencies at 31 March 2012 would have increased/(decreased) equity and profit or loss by the amounts shown below. This analysis assumes that all other variables,in particular interest rates, remain constant.The analysis is performed on the same basis for 2011.Equity‘000Profit orloss‘00031 March 2012USD (20 837) (5 802)BWP (6 562) (560)31 March 2011USD 10 054 9 669BWP 1 215 1 162A 10% weakening of the Rand against the above currencies at 31 March 2012 would have had the equalbut opposite effect on the above currencies to the amounts shown above, on the basis that all other variablesremain constant.31.4 Interest rate riskAt the reporting date the interest rate profile of the Company’s interest-bearing financial instruments was:2012R’0002011R’000Variable rate instruments– Financial assets 178 890 87 306– Financial liabilities (709 011) (700 148)(530 121) (612 842)The Group is exposed to interest rate risk from long-term borrowings at variable rates. Fluctuations in interestrates impact the value of the short-term investments and financing activities giving rise to interest rate risk. In theordinary course of business the entities within the Group receive cash proceeds from their operations andare required to fund working capital and capital expenditure requirements. All entities within the Group arenot permitted to borrow long term from external sources. The cash is managed to ensure that all surplus fundsheld within the Group are invested with the centralised treasury. The surplus funds are invested to maximisereturns whilst ensuring that the capital is safeguarded to the maximum extent possible by investing only with topfinancial institutions.Contractual arrangement for committed borrowing facilities are maintained with two banking counterparts tomeet the Company’s funding requirements.Cash flow sensitivity analysis for variable rate instrumentsA sensitivity analysis is performed by assuming that the amount of the assets and liabilities outstanding at thereporting date was outstanding for the whole year. A 200 basis point increase or decrease is used when reportinginterest rate risk internally to key management personnel and represents management’s assessment of areasonable and possible change in interest rates.If interest rates had been 200 basis points higher/lower and all the other variables were held constant, theGroup’s profit after tax for the year ended 31 March 2012 would decrease/increase by R13,4 million(2011: R15,5 million). This is attributable to the Group’s exposure to interest rates on its variable borrowings. Theanalysis is performed on the same basis for 2011.

Sentula Mining Limited Integrated Annual Report 201211731 Financial instruments (continued)31.5 Liquidity risk managementLiquidity risk arises from the Group’s management of working capital and the finance charges and principalrepayments on its debt instruments. It is the risk that the Group will encounter difficulty in meeting its financialobligations as they fall due. The Group’s policy is to ensure that it will always have sufficient cash to allow it tomeet its liabilities when they become due. The Group manages liquidity risk via a centralised treasury, bymaintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoringforecast and actual cash flows.The following tables detail the Group’s remaining contractual maturity for its non-derivative financial liabilities.These tables have been drawn up based on the undiscounted cash flows of financial liabilities based on theearliest date on which the Group can be required to pay.WeightedaverageeffectiveinterestrateLess than1 monthR’0001 – 3monthsR’0003 monthsto 1 yearR’0001 – 5yearsR’000TotalR’0002012Secured bank loans– Standard Bank merged term facility 8,86% – 50 084 156 441 439 555 646 080– WesBank instalment sale facility 6,20% 552 3 578 9 871 48 930 62 931Trade and other payables 0,00% 281 273 – – – 281 2732011Secured bank loans– Standard Bank merged term facility 8,75% – – 140 000 560 000 700 000Bank overdraft 9,00% 148 – – – 148Trade and other payables 0,00% 357 972 – – – 357 972Finance lease obligations 9,00% 539 3 876 – – 4 415It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or atsignificantly different amounts.31.6 Fair value of financial instrumentsThe fair value of financial assets and liabilities, together with the carrying amounts shown in the statement offinancial position, are as follows:2012 2011CarryingvalueR’000FairvalueR’000CarryingvalueR’000FairvalueR’000Assets measured at amortised costTrade and other receivables 447 364 447 364 428 581 428 581Cash and cash equivalents 180 236 180 236 88 380 88 380Restricted investments 8 693 8 693 8 693 8 693Liabilities measured at amortised costLoans and borrowings – non-current (488 695) (488 695) (560 000) (560 000)Trade and other payables (281 273) (281 273) (357 972) (357 972)Loans and borrowings – current (220 316) (220 316) (140 000) (140 000)Finance lease obligations – current – – (4 415) (4 415)Bank overdraft – – (148) (148)Liabilities measured at fair valueOther financial liabilities (7 506) (7 506) (7 506) (7 506)The fair value on the interest rate hedge is disclosed in note 17.

Sentula Mining Limited Integrated Annual Report 2012118Notes to the consolidated financial statements continuedfor the year ended 31 March 201231 Financial instruments (continued)31.6 Fair value of financial instruments (continued)Fair value hierarchyAll financial instruments measured at fair value by valuation method are measured at a level 3.The different levels have been defined as follows:• Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities• Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability,either directly or indirectly (ie derived from prices)• Level 3: inputs for the assets or liabilities that are not based on observable market dataThe only financial instrument measured at fair value by valuation method is disclosed in note 27.Fair value is determined by discounting the future liability, which is calculated by multiplying the royalty rate bythe run-of-mine tonnes estimated to be produced over the anticipated life of the mine.Although the Group believes that its estimate of fair value is appropriate, the use of different methodologies orassumptions could lead to different measurements of fair value.The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortisedcost in the financial statements approximate their fair values.31.7 Capital managementThe Group manages its capital structure to ensure that it will be able to continue as a going concern whilemaximising shareholders’ return through the optimisation of the debt and the equity capital.The capital structure of the Group consists of debt and equity, comprising issued share capital, reserves andretained earnings as disclosed.There are no external capital requirements imposed on the Group.In 2012, long-term borrowings pertain to the Standard Bank-led consortium and the WesBank facility for thefunding of subsidiary capital expenditure. In 2011, the long-term borrowings pertained to the merged term facilityfrom the Standard Bank-led consortium.32 Related partiesRelated party transactions and balancesTransactions between the Company and its subsidiaries, which are related parties of the Company, have beeneliminated on consolidation and are not disclosed in this note. Details of transactions between the Group andother related parties are disclosed below.Directors of the companies stated below were involved with the Group during the 2012 financial year:––C & K Boilermaking Proprietary Limited ––Mabapa Mining Limited––Jonah Coal Botswana Limited ––Martiq 406 CC––JPK Bits & Rods CC ––Merafe Coal Proprietary Limited––L&L Trust ––O.M. Tsehla Drilling Contractor Proprietary Limited––Laduma Metals CC ––Witbank Steel Agencies CC

Sentula Mining Limited Integrated Annual Report 201211932 Related parties (continued)During the year the Group and its related parties, in the ordinary course of business, entered into variousintergroup sale and purchase transactions.CapitalexpenditureR’000RevenueR’000ExpensesR’000Amountsowed byrelatedpartiesR’000Amountsowed torelatedpartiesR’0002012C & K Boilermaking Proprietary Limited – – 18 – –Jonah Coal Botswana Limited – – – 675 –JPK Bits & Rods CC – – 3 749 – 315L&L Trust – – 90 – –Laduma Metals CC – 19 54 – 8Mabapa Mining Limited – – – 2 861 –Martiq 406 CC – – 731 – –Merafe Coal Proprietary Limited – – – 3 298 –O.M. Tsehla Drilling Contractor Proprietary Limited – – 1 664 801 671Witbank Steel Agencies CC – – 14 2 –– 19 6 320 7 637 9942011C & K Boilermaking Proprietary Limited – – 287 – 23Jonah Coal Botswana Limited – – – 675 –JPK Bits & Rods CC – – 1 649 – –L&L Trust – – 90 – –Laduma Metals CC 40 11 146 7 9Mabapa Mining Limited – – – 2 861 –Martiq 406 CC – – 664 – 370Merafe Coal Proprietary Limited – – – 3 275 –O.M. Tsehla Drilling Contractor Proprietary Limited – – 3 160 – 179Witbank Steel Agencies CC 6 – 48 – 246 11 6 044 6 818 583All outstanding balances with these related parties are priced on an arm’s length basis and are to be settled incash within 12 months of the reporting date. None of the balances are secured.Key management personnel compensation2012R’0002011R’000Key management personnel compensation comprised:Short-term employee benefits 25 557 28 969Share-based payments 15 116 16 82140 673 45 79033 Sentula Mining Transformation TrustThe Company established The Sentula Mining Transformation Trust – IT542/09 (“Trust”) in 2009 as a broad-basedblack economic empowerment scorecard investment delivery vehicle in which the Company and its branchesexecute the two elements of the scorecard namely enterprise development and socio-economic development.The beneficiaries of the Trust are black South Africans, black-owned enterprises or black employees of the Company.The Trust is controlled by the Company and in accordance with the requirements of SIC-12, it constitutes a specialpurpose entity. In accordance with SIC-12, which requires the consolidation of special purposes entities undercertain conditions, the Trust has been included as a special purpose entity in the consolidated financial statements.

Sentula Mining Limited Integrated Annual Report 2012120Notes to the consolidated financial statements continuedfor the year ended 31 March 201234 Going concernThe annual financial statements have been prepared on the basis of accounting policies applicable to a goingconcern. This basis presumes that funds will be available to finance future operations and that the realisationof assets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary courseof business.35 Subsequent eventsThe directors are not aware of any subsequent events other than those disclosed below that occurred betweenthe date of authorisation of the annual financial statements and the year-end that require any adjustments oradditional disclosure to the annual financial statements.Broad Based Black Economic Empowerment transactionThe BBBEE transaction announced on 2 March 2012 became effective on 9 May 2012. In terms of the BBBEETransaction, the Sentula Mining Employee Trust, the Sentula Mining Empowerment Trust and the Anglo AmericanKhula Mining Fund Proprietary Limited acquired a 16,675% direct equity interest in Benicon, CCT, JEF and Ritchie.Following the implementation of the Proposed BBBEE Transaction, these businesses will have an effective blackownership of 25,04% as measured in terms of the dti Codes of Good Practice.36 Directors and prescribed officers’ remunerationR’000 Basic Bonus**Gains onshareLTIPs optionsvested** exercisedProvidentvehicleMotorfund # allowance2012Executive directorsRC Berry 3 284 1 573 1 182 – 279 240 6 558GP Louw 3 172 1 196 1 018 – – 120 5 506PP Modisane 1 205 605 492 – – 460 2 762Total7 661 3 374 2 692 – 279 820 14 826Prescribed Officer andCompany SecretaryGM Chemaly 1 062 375 331 – 90 – 1 858# Including company contribution** Paid 31 July 2011R’000Chairman’sfeesDirectors’feesAuditandRiskGovernance,RemunerationandNominationInvestmentTrustees’feesOtherservicesNon-executivedirectorsJG Best 83 251 – 52 26 – – 412EHJ Stoyell – 167 – 49 21 26 – 263D Zihlangu – 224 124 11 – – 26 385CJPG van Zyl – 193 155 – 21 – – 369KW Mzondeki – 193 99 11 – – – 303A Kawa* – 24 18 20 – – – 62RB Patmore** – 43 – – – – – 43* Resigned 2 June 2011** Appointed 25 January 2012Total83 1 095 396 143 68 26 26 1 837

Sentula Mining Limited Integrated Annual Report 201212136 Directors and prescribed officers’ remuneration (continued)R’000 Basic Bonus**MedicalaidGains onshareoptionsexercisedMotorvehicleallowance2011ExecutivedirectorsRC Berry 2 850 1 056 – – 428 240 4 574GP Louw 2 909 910 – – – 120 3 939PP Modisane 1 069 457 – – – 456 1 982# Including Company contribution** Paid 31 July 2010Total6 828 2 423 – – 428 816 10 495Prescribed Officer andCompany SecretaryGM Chemaly 912 100 – – 78 – 1 090R’000Providentfund #Chairman’sfeesDirectors’feesAuditandRiskGovernance,remunerationandnominationInvestmentNon-executive directorsJG Best 78 156 27 63 – 324EHJ Stoyell – 182 – 93 39 314A Kawa (resigned 2 June2011) – 141 86 59 49 335D Zihlangu (appointed 1 July 2010) – 117 53 – 20 190CJPG van Zyl (appointed 1 July 2010) – 102 81 – – 183KW Mzondeki (appointed 1 July 2010) – 102 64 – – 166Total78 800 311 215 108 1 512The remuneration of the executive directors is determined by the Remuneration Committee having regard to theperformance of individuals and market trends.Executive directors do not receive directors’ fees and all the directors have service contracts with the Company at31 March 2012.Executive directors are subject to the Company’s standard conditions of employment.

Sentula Mining Limited Integrated Annual Report 2012122Annual financial statementsfor the year ended 31 March 2012ContentsCompany statement of financial position 123Company income statement 124Company statement of comprehensive 124incomeCompany statement of changes in equity 125Company statement of cash flows 126Notes to the Company financialstatements127

Sentula Mining Limited Integrated Annual Report 2012Company statement of financial positionat 31 March 20121232012 2011Note R’000 R’000AssetsNon-current assets 2 100 085 2 961 488Property, plant and equipment 8 1 675 2 635Loans to subsidiaries 20 1 813 010 2 672 487Investment in subsidiaries 20 276 474 280 919Share incentive trust loan 7 6 129 4 159Deferred tax 14 2 797 1 288Current assets 279 452 179 357Trade and other receivables 9 31 484 15 357Loans to subsidiaries 20 165 434 135 396Cash and cash equivalents 10 74 831 20 953Other financial assets 16 6 834 6 811Taxation receivable 869 840TOTAL ASSETS 2 379 537 3 140 845EquityTotal equity attributable to equity holders of the Company 1 641 441 2 426 547Share capital 11 5 866 5 866Share premium 11 2 014 438 2 014 438Reserves 36 575 42 426Retained earnings (415 438) 363 817Total equity 1 641 441 2 426 547LiabilitiesNon-current liabilities 488 695 560 000Loans and borrowings 12 488 695 560 000Current liabilities 249 401 154 298Trade and other payables 13 29 085 14 298Loans and borrowings 12 220 316 140 000Total liabilities 738 096 714 298TOTAL EQUITY AND LIABILITIES 2 379 537 3 140 845

124Sentula Mining Limited Integrated Annual Report 2012Company income statementfor the year ended 31 March 20122012 2011Note R’000 R’000Other income 6 673 1Administrative expenses 2 (859 815) (47 847)Results from operating activities (853 142) (47 846)Finance expense 4 (67 761) (111 094)Finance income 4 144 196 123 740Fair value adjustment on interest rate cap 9 (6 677) –Loss before taxation (783 384) (35 200)Taxation 5 1 509 (793)Loss for the year (781 875) (35 993)Company statement of comprehensive incomefor the year ended 31 March 20122012 2011R’000 R’000Loss for the year (781 875) (35 993)Other comprehensive incomeNone – –Total comprehensive loss for the year (781 875) (35 993)

Sentula Mining Limited Integrated Annual Report 2012Company statement of changes in equityfor the year ended 31 March 2012125R’000SharecapitalSharepremiumEmployeeshareincentivereserveRetainedearningsTotal ordinaryshareholders’fundsBalance at 31 March 2010 5 866 2 014 438 37 702 401 177 2 459 183Loss for the year – – – (35 993) (35 993)Other comprehensive incomeNone – – – – –Total other comprehensive income – – – – –Total comprehensive loss for the year – – – (35 993) (35 993)Transactions with owners recordeddirectly in equityContributions by and distributions toownersShare-based payments – – 5 117 – 5 117Share options forfeited – – (393) (1 367) (1 760)Total contributions by anddistributions to owners – – 4 724 (1 367) 3 357Balance at 31 March 2011 5 866 2 014 438 42 426 363 817 2 426 547Loss for the year – – – (781 875) (781 875)Other comprehensive incomeNone – – – – –Total other comprehensive income – – – – –Total comprehensive loss for the year – – – (781 875) (781 875)Transactions with owners, recordeddirectly in equityContributions by and distributionsto ownersShare-based payments – – 2 134 – 2 134Share options forfeited – – (7 985) 2 620 (5 365)Total contributions by anddistributions to owners – – (5 851) 2 620 (3 231)Balance at 31 March 2012 5 866 2 014 438 36 575 (415 438) 1 641 441

126Sentula Mining Limited Integrated Annual Report 2012Company statement of cash flowsfor the year ended 31 March 20122012 2011Note R’000 R’000Cash flows from operating activitiesLoss for the year (781 875) (35 993)Adjustments for:Depreciation 2 1 045 713Impairment of intercompany loan 2 811 299 –Scrapping of assets 2 – 107Unrealised foreign exchange (gain)/loss 2 (8 723) 5 608Fair value on interest rate cap 9 6 677 –Finance income 4 (144 196) (123 740)Finance expense 4 67 761 111 094––Paid 65 180 82 179––Accrued 2 581 28 915Equity-settled share-based payment expense 2 1 212 2 683Cash-settled share-based payment expense – 2 577Long-term incentive plan 2 717 2 022Income tax expense (1 509) 793Cash flows from operating activities before changes in working capitaland provisions (45 592) (34 136)Change in trade and other receivables (25 408) 683 053Change in trade and other payables 12 072 (24 842)Cash (utilised in)/generated from operating activities (58 928) 624 075Income taxes paid – (31 351)Interest paid (65 180) (82 179)Net cash (utilised in)/generated from operating activities (124 108) 510 545Cash flows from investing activitiesInterest received 144 167 123 728Purchase of property, plant and equipment 8 (86) (1 983)Proceeds from disposal of property, plant and equipment 8 1 –Repayment from subsidiaries 24 893 10 103Net cash generated by investing activities 168 975 131 848Cash flows from financing activitiesLoans raised 147 335 700 000Loans repaid (138 324) (1 137 699)Net cash generated by/(utilised in) financing activities 9 011 (437 699)Net increase in cash and cash equivalents 53 878 204 694Cash and cash equivalents at the beginning of the year 20 953 (183 741)Cash and cash equivalents at the end of the year 10 74 831 20 953

Sentula Mining Limited Integrated Annual Report 2012Notes to the Company financial statementsfor the year ended 31 March 20121271 Accounting policiesThe accounting policies are the same as the Group’s accounting policies as set out on pages 79 to 94.2 Results from operating activities2012 2011R’000 R’000After allowing for the following:IncomeUnrealised foreign exchange gains 8 723 –Bad debt recovery – 1ExpensesUnrealised foreign exchange loss – 5 608Auditors’ remuneration 2 176 2 449––Audit fees – current year 2 107 2 449––Other accounting services 69 –SARS penalties – 825Impairment of intercompany loan 811 299 –Contribution to socio-economic and enterprise development 757 1 787Depreciation 1 045 713Scrapping of assets – 107Personnel expenses––Salaries and wages 24 291 14 900––Provident fund 943 799––Equity-settled share-based payment expense 1 212 2 683––Cash-settled share-based payment expense – 2 577––Long-term incentive plan 4 761 2 022Operating lease chargesPremises––Contractual amount 922 922Future minimum lease payments––up to one year 462 922––one to five years – 462The lease agreements are entered into on market-related terms and conditions and are subject to annual marketrelatedescalation in the lease rates. Property lease agreements are subject to a lease extension option.

Sentula Mining Limited Integrated Annual Report 2012128Notes to the Company financial statements continuedfor the year ended 31 March 2012Number of shares2012 2011‘000 ‘0003 Share-based paymentsEquity-settled share appreciation rights scheme 7 500 9 025Cash-settled share appreciation rights scheme 15 245 15 990Long-term incentive plan 5 538 7 980Schamin Trust 1 600 1 60029 883 34 595Equity-settled share appreciation rights schemeThe Share Appreciation Rights Scheme (“SARS”) is a scheme whereby senior and middle management (the“employees”) of Sentula (the “Company”) are incentivised by means of the award of options, of which the offerprice is determined as the 30-day VWAP of Sentula’s share price on the date of presentation of Sentula’s annualresults (the “offer date”) and the employees can exercise the said options in five equal tranches annually from thefirst to the sixth anniversary of the offer date, subject to employment. The award and allocation of options underthe scheme is governed by Sentula’s Board. There were no options awarded during the year ended 31 March 2012(2011: 0). This is an equity-settled scheme.Number of shares2012 2011‘000 ‘000Outstanding at the beginning of the year 9 025 9 050Forfeited options (1 525) (25)Outstanding at the end of the year 7 500 9 025Weighted average exercise price of outstanding options (cents) 1 816 1 882Weighted average exercise price of forfeited options (cents) 2 206 2 206Weighted average exercise price of exercisable options (cents) 1 816 1 882Average remaining life (months) 20 31Cash-settled share appreciation rights schemeThe Share Appreciation Rights Scheme (“SARS”) is a scheme whereby senior and middle management (the“employees”) of Sentula (the “Company”) are incentivised by means of the award of options, of which the offerprice is determined as the 30-day VWAP of Sentula’s share price on the date of presentation of Sentula’s annualresults (the “offer date”) and the employees can exercise the said options in five equal tranches annually from thefirst to the sixth anniversary of the offer date, subject to employment. The award and allocation of options underthe scheme is governed by Sentula’s Board. There were no options awarded during the year ended 31 March 2012.There were 15 989 500 options awarded during the year ended 31 March 2011 at an average price of 664 cents.The grant date for these options was 21 July 2010, except for one issue that was awarded on 8 January 2011. Thisis a cash-settled scheme.Number of shares2012 2011‘000 ‘000Outstanding at the beginning of the year 15 990 –Granted number of options during the year – 15 990Forfeited options (745) –Outstanding at the end of the year 15 245 15 990Number of exercisable options at year-end 5 686 2 935Weighted average exercise price of issued options (cents) 664 664Weighted average exercise price of outstanding options (cents) 616 664Weighted average exercise price of exercisable options (cents) 1 042 1 546Fair value of options granted 5 860 9 746Average remaining life (months) 42 54

Sentula Mining Limited Integrated Annual Report 20121293 Share-based payments continuedThe fair value of such share programme was determined by using the binomial option valuation method.The following inputs were used:––Issued price ranging from 223 cents to 1 679 cents––Expected volatility of 50%––A staff turnover of 5,45% per annum––A forecast dividend growth rate of 4%––A risk-free interest rate of 8,97%Expected volatility was based on a filtered history of volatility of the Sentula Group from a period datingback to 2005; and has been adjusted to give recent history a higher weighting in determining the averageexpected volatility.Deferred bonus schemeSelected executives and employees of the Group will in lieu of a discretionary bonus or a percentage thereof beoffered the right to receive a cash award equal to the sum of the market value of a number of notional Sentulaissued ordinary shares as at the expiry of a specified employment period and a multiple thereof to be determinedby the Board at the time of offer of the deferred bonus award and the aggregate of all dividends paid per Sentulaordinary share over the employment period and the number of bonus shares comprising the deferred bonusaward. The deferred bonus scheme is settled in cash.All shares are awarded at the 30-day VWAP of Sentula’s share price on the date of presentation of Sentula’s annualresults (the “offer date”) on the day of issue. No nominal Sentula shares were issued during the current year.(2011: 126 295 at an average price of 224 cents).Long-term incentive planSelected executives and employees of Sentula and its subsidiaries will receive a conditional right to receive a cashaward (“LTIP award”) equal to the market value of a number of notional Sentula issued ordinary shares on the datethat the award becomes unconditional. The LTIP award is to be applied towards the obligatory subscriptionand/or purchase of Sentula ordinary shares. This LTIP award is settled in cash.Number of shares2012 2011‘000 ‘000Outstanding at the beginning of the year 7 980 9 450Granted during the year 325 5 700Allocation to subsidiaries – (6 300)Lapsed – (630)Forfeited options (853) (240)Number of options exercised (1 914) –Outstanding at the end of the year 5 538 7 980Average remaining life (months) 27 39The award made during the 31 March 2012 financial year relates to a new staff member who qualifies under thisscheme. On 21 July 2010, 4 272 000 LTIPs were awarded to employees of Sentula Mining Limited, vesting overfive years in five equal tranches. A further award was granted on 21 July 2010 of 1 428 000 to compensate for thedilution effect of the rights issues effected in December 2009. LTIPs are settled at vesting date based onthe market value of the Company’s share price determined by reference to the 30-day VWAP. Conditions forvestings are established by the Board. In order for the July 2012 tranche to vest a 10% year-on-year EVA on theGroup’s productive capital base needs to be achieved. Vesting conditions also require employment at the maturityof the respective tranche.

Sentula Mining Limited Integrated Annual Report 2012130Notes to the Company financial statements continuedfor the year ended 31 March 20123 Share-based payments (continued)Schamin TrustNo changes took place during the year under review:Number of shares2012’000Outstanding at the beginning of the year 1 600 1 600Outstanding at the end of the year 1 600 1 600Exercisable at the end of the year 1 600 1 200Weighted average price of outstanding options (cents) 1 000 1 000Weighted average price of exercisable options (cents) 1 000 1 000Average remaining life (months) 57 69The maximum number of shares that may be issued in terms of the scheme may not in aggregate exceed23 556 594 shares in Sentula’s issued capital. Shares vest in the option holder on the date the option was granted.Thereafter the option holder may exercise the options in individual tranches of 20% on each subsequentanniversary. The Schamin Trust scheme has been replaced by the three schemes mentioned above. This is anequity-settled scheme.4 Finance charges2011’0002012 2011R’000 R’000Finance income – received 144 196 123 740––Financial institutions 2 005 897––South African Revenue Service 29 12––Intercompany transactions 141 887 122 809––Other 275 22Finance expense – paid 65 180 82 179––Non-current borrowings 61 147 72 748––Bank overdraft 42 4 437––Intercompany transactions 3 990 4 756––Suppliers 1 4––South African Revenue Service – 234Finance expense – non-cash 2 581 28 915Facility fees recognised 2 581 28 915Total finance expense 67 761 111 094Net finance expense 76 435 12 646

Sentula Mining Limited Integrated Annual Report 20121312012 2011R’000 R’0005 TaxationNormal taxation – 2 081––Prior year – 2 081Deferred taxation (1 509) (1 288)––Current year (1 286) (1 288)––Prior year (223) –Taxation (1 509) 793Reconciliation of effective tax rateLoss for the year (783 384) (35 200)Taxation 1 509 (793)Loss for the year after tax (781 875) (35 993)Income tax expense at statutory rate of 28% (219 348) (9 856)––Non-deductible expenses 3 427 1 593––Assessed loss utilised (12 027) –––Prior year adjustment 223 2 081––Current year losses for which no deferred tax asset was recognised – 6 975––Capital loss not recognised 227 164 –––Other (948) –Income tax expense recognised in profit (1 509) 793Effective tax rate (%) 0,2 (2,3)The tax rate used for the 2012 reconciliation above is the corporate tax rate of 28% (2011: 28%) payable bycorporate entities in South Africa on taxable profits under tax law in that jurisdiction.6 DividendThe Board of Directors has not declared an interim or final dividend for the years ended 31 March 2012 or31 March 2011.7 Share incentive trust loan2012 2011R’000 R’000An analysis of the Scharrig Share Incentive Trust Loan is as follows:Balance at the beginning of the year 4 159 2 498Expenses incurred during the year 1 970 1 661Balance at the end of the year 6 129 4 159The unallocated shares are under the control of the trustees of the Trust.The loan is interest-free and has no fixed repayment terms.

Sentula Mining Limited Integrated Annual Report 2012132Notes to the Company financial statements continuedfor the year ended 31 March 20128 Property, plant and equipmentFurniture,fittings andequipmentTotal2012 R’000 R’000CostAt 31 March 2011 3 436 3 436Additions 86 86Disposals (1) (1)At 31 March 2012 3 521 3 521Accumulated depreciation and impairment lossesAt 31 March 2011 801 801Depreciation 1 045 1 045At 31 March 2012 1 846 1 846Carrying value at 31 March 2012 1 675 1 6752011CostAt 31 March 2010 1 570 1 570Additions 1 885 1 885Disposals – –Scrapping of assets (19) (19)At 31 March 2011 3 436 3 436Accumulated depreciation and impairment lossesAt 31 March 2010 98 98Depreciation 713 713Scrapping of assets (10) (10)At 31 March 2011 801 801Carrying value at 31 March 2011 2 635 2 635A register containing the information required by paragraph 22(3) of Schedule 4 of the Companies Act is availablefor inspection at the registered office of the Company.

Sentula Mining Limited Integrated Annual Report 20121332012 2011R’000 R’0009 Trade and other receivablesIntercompany trade receivables 20 949 2 711Staff debtors 130 233Other receivables* 2 589 (169)Deposits 189 439Deferred fees paid 7 314 9 89531 171 13 109Value added taxation 313 2 248* Included in other receivables is the fair value of the interest rate hedge as disclosed below:31 484 15 357Purchase price of interest rate hedge 9 535 –Change in fair value recognised through profit and loss (6 677) –Amount included in other receivables 2 858 –The interest rate hedge facility was entered into on 1 April 2011 with Standard Bank, on the following terms andconditions:Notional amount:R350 millionTrade date: 1 April 2011Effective date: 1 April 2012Termination date: 31 March 2015Cap rate: 8,57%Floating rate option:ZAR – JIBAR SAFEXReset dates:Calendar quartersThe Company’s exposure to credit and currency risks and impairment losses related to trade and other receivablesis disclosed in note 15.10 Cash and cash equivalents2012 2011R’000 R’000Bank balances 119 1 995Call deposits 74 713 18 95874 832 20 953Bank overdraft (1) –Cash and cash equivalents 74 831 20 953The Company’s exposure to interest rate risk and sensitivity analysis for financial assets and liabilities are disclosedin note 15.

Sentula Mining Limited Integrated Annual Report 2012134Notes to the Company financial statements continuedfor the year ended 31 March 20122012R’0002011R’00011 Share capital and premiumAuthorised share capital1 000 000 000 (2011: 1 000 000 000) ordinary shares of 1 cent each 10 000 10 000Issued share capital586 559 181 (2011: 586 559 181) ordinary shares of 1 cent eachBalance at the beginning of the year 5 866 5 866Balance at the end of the year 5 866 5 866Share premiumBalance at the beginning of the year 2 014 438 2 014 438Balance at the end of the year 2 014 438 2 014 438Total share capital and share premium 2 020 304 2 020 304The authorised but unissued share capital is under the control and authority of the directors subject to theCompanies Act and JSE Limited Listings Requirements, until the next annual general meeting. The directors havenot been granted the approval to issue ordinary shares, or sell treasury shares for cash, without the consent of theshareholders. Note 3 sets out the details in respect of the share option scheme.All shares issued by the Company were fully paid.12 Loans and borrowings2012R’0002011R’000Interest-bearing borrowingsSecured at amortised costStandard Bank merged term facility 646 080 700 000WesBank instalment sale agreement 62 931 –709 011 700 000Balance at the end of the year 709 011 700 000Current portion of loans and borrowings (220 316) (140 000)Non-current portion of loans and borrowings 488 695 560 000Standard Bank merged term facility 646 080 700 000The effective average interest rate applicable to these liabilities is 8,645% (2011: 8,735%) and is based on a marginof 325 basis points above the three-month JIBAR rate and is reset quarterly.2012R’0002011R’000Aggregate repayments due as follows:Year ended 31 March– 2012 – 140 000– 2013 206 526 186 667– 2014 223 274 373 333– 2015 and later 216 280 –646 080 700 000Total facility 700 000 700 000Undrawn facility 53 920 –

Sentula Mining Limited Integrated Annual Report 201213512 Loans and borrowings (continued)Standard Bank merged term facility (continued)The Group’s obligations under the merged term facility are secured by registered notarial bonds over plant andequipment and motor vehicles, which have a carrying amount of R1 493 million (2011: R2 278 million). Sentulaprovided a cession and pledge of all the shares it holds in the Group subsidiaries, for the due and punctualfulfilment of all obligations by the Company. The subsidiaries have subordinated all claims which they mayrespectively have against one another to the claims which the lenders may have against Sentula and such othersubsidiaries of Sentula.2012R’0002011R’000WesBank instalment sale agreement 62 931 –Total facility 100 000 –Undrawn facility 37 069 –During the year ended 31 March 2012, Sentula entered into a R100 million instalment sale facility with WesBank,which became effective on 27 October 2011.The Group’s obligations under the WesBank instalment sale liabilities were secured by the lessors’ title of thefinancial assets, which had a carrying amount of R69,3 million (2011: Nil).The effective average interest rate applicable to these liabilities is 6,2% and is a prime linked facility.Aggregate repayments due as follows: 2012Principal Interest TotalR’000 R’000 R’000Year ended 31 March––2013 13 790 4 046 17 836––2014 15 667 2 786 18 453––2015 16 771 1 682 18 453––2016 and later 16 703 521 17 224The Company’s borrowing powers are unlimited in terms of the articles of association.62 931 9 035 71 966The Company’s exposure to interest rate risk and sensitivity analysis for loans and borrowings is disclosed innote 15.13 Trade and other payables2012R’0002011R’000Trade payables 6 662 580Intercompany trade payables 64 49Other payables 16 666 8 27223 392 8 901Accrual for leave pay and employee incentives 5 693 5 39729 085 14 298The Company’s exposure to interest rate risk and sensitivity analysis for financial liabilities is disclosed innote 15.

Sentula Mining Limited Integrated Annual Report 2012136Notes to the Company financial statements continuedfor the year ended 31 March 20122012R’0002011R’00014 Deferred taxBalance at the beginning of the year 1 288 –Originating temporary differences 1 509 1 288Balance at the end of the year 2 797 1 288The balance comprises:Fair value on interest rate cap 1 202 –Provisions 112 –Cash-settled share-based payments 722 722Long-term incentive plan 761 566Net tax assets 2 797 1 288Deferred tax asset 2 797 1 288––Deferred tax asset to be recovered after more than 12 months – –––Deferred tax asset to be recovered within 12 months 2 797 1 288Movement in temporary differences during the yearOpeningbalance31 March2011R’000Chargedto incomeR’000Closingbalance31 March2012R’000Cash-settled share-based payment expense 722 – 722Fair value on interest rate cap – 1 202 1 202Provision for long-term incentive plan 566 195 761Leave pay provision – 112 1121 288 1 509 2 797Openingbalance31 March2010R’000Chargedto incomeR’000Closingbalance31 March2011R’000Cash-settled share-based payment expense – 722 722Provision for long-term incentive plan – 566 566– 1 288 1 288Unrecognised tax losses are recognised when management considers it probable that future taxable profits willbe available against which they can be utilised.

Sentula Mining Limited Integrated Annual Report 201213715 Financial instruments15.1 Risk management activitiesIn the normal course of its operations, the Company is exposed to currency, interest rate, liquidity and credit risk.This note describes the Company’s objectives, policies and processes for managing those risks and methods usedto measure them. In order to manage these risks, the Group has developed a comprehensive risk managementprocess to facilitate control and monitoring. The Board has overall responsibility for the determination ofthe Company’s risk management objectives and policies and, whilst retaining ultimate responsibility for them, ithas delegated the authority for designing and operating processes that ensure the effective implementation ofthe objectives and policies to the Group’s finance function. The Group’s treasury function provides services to thesubsidiaries, coordinates access to domestic financial markets and monitors and manages the financial risksrelating to the operations of the Company. Operational and business risks are reviewed and addressed on amonthly basis. These risks include market risk (including currency risk, fair value interest rate risk and price risk),credit risk, liquidity risk and cash flow interest rate risk.The Company does not enter into or trade financial instruments, including derivative financial instruments, forspeculative purposes15.2 Credit riskThe Company does not have any credit risk as it has no debtors pertaining to the selling of goods and services.The Company is the holding company of the Group and fulfils a centralised Treasury function.The carrying amount of financial assets represents the maximum credit exposure. The maximum exposure tocredit risk at the reporting date was:Carrying amount2012R’0002011R’000Trade and other receivables 31 171 13 109Cash and cash equivalents 74 831 20 953The maximum exposure to credit risk for trade and other receivables at thereporting date by type of geographic region was:106 002 34 062South Africa 31 171 13 109The maximum exposure to credit risk for trade and other receivables at thereporting date by type of counterparty was:31 171 13 109Related party receivables 20 949 2 711Deferred fees 7 314 9 895Other 2 908 50331 171 13 109The ageing of trade receivables at the reporting date was: Gross amountNot past due 20 949 2 711There were no impairment losses recognised in other receivables.20 949 2 711

Sentula Mining Limited Integrated Annual Report 2012138Notes to the Company financial statements continuedfor the year ended 31 March 201215 Financial instruments (continued)15.3 Foreign exchange riskThe Company operates internationally and is exposed to foreign exchange risk arising from various currencyexposures, primarily with respect to the US Dollar. Foreign exchange risk arises from future commercialtransactions, recognised assets and liabilities and new investments in foreign operations.Foreign exchange risk also arises when individual company entities enter into transactions denominated in acurrency other than the functional currency.The Company is exposed to currency risk on purchases made on plant and equipment globally. Purchases fromthese suppliers are made on a central basis and the risk is hedged using forward exchange contracts. The forwardexchange contracts entered into from time to time are economic hedges and therefore the Company does notapply hedge accounting.15.4 Interest rate riskAt the reporting date the interest rate profile of the Company’s interest-bearing financial instruments was:2012R’0002011R’000Variable rate instruments– Financial assets 1 441 015 728 441– Financial liabilities (744 385) (765 524)696 630 (37 083)The Company is exposed to interest rate risk from long-term borrowings at variable rates. Fluctuations in interestrates impact on the value of the short-term investments and financing activities giving rise to interest rate risk.In the ordinary course of business the entities within the Group receive cash proceeds from their operations andare required to fund working capital and capital expenditure requirements. All entities within the Group are notpermitted to borrow long-term from external sources. The cash is managed to ensure that all surplus funds heldwithin the Group are invested with the centralised treasury. The surplus funds are invested to maximise returnswhilst ensuring that the capital is safeguarded to the maximum extent possible by investing only with topfinancial institutions.Contractual arrangement for committed borrowing facilities are maintained with two banking counterparts tomeet the company’s funding requirements.Cash flow sensitivity analysis for variable rate instrumentsA sensitivity analysis is performed by assuming that the amount of the assets and liabilities outstanding atthe reporting date was outstanding for the whole year. A 200 basis point increase or decrease is used whenreporting interest rate risk internally to key management personnel and represents management’s assessment of areasonable and possible change in interest rates.If interest rates had been 200 basis points higher/lower and all the other variables were held constant,the Company’s profit after tax for the year ended 31 March 2012 would decrease/increase by R13,6 million(2011: R9,3 million). This is attributable to the Company’s exposure to interest rates on its variable borrowings. Theanalysis is performed on the same basis for 2011.15.5 Liquidity risk managementLiquidity risk arises from the Company’s management of working capital and the finance charges and principalrepayments on its debt instruments. It is the risk that the Company will encounter difficulty in meeting its financialobligations as they fall due. The Company’s policy is to ensure that it will always have sufficient cash to allow it tomeet its liabilities when they become due. The Company manages liquidity risk via a centralised treasury, bymaintaining adequate reserves, banking facilities and reserve borrowing facilities by continuously monitoringforecast and actual cash flows.

Sentula Mining Limited Integrated Annual Report 201213915 Financial instruments (continued)15.5 Liquidity risk management (continued)The following tables detail the Company’s remaining contractual maturity for its non-derivative financialliabilities. These tables have been drawn up based on the undiscounted cash flows of financial liabilities basedon the earliest date on which the Company can be required to pay. The tables include both interest and principalcash flows.WeightedaverageeffectiveinterestrateLess than1 monthR’0001 – 3monthsR’0003 monthsto 1 yearR’0001 – 5yearsR’000TotalR’0002012Secured bank loans– Standard Bank merged termfacility 8,86% – 50 084 156 441 439 555 646 080– WesBank instalment sale facility 6,20% 552 3 578 9 871 48 930 62 931Trade and other payables 0% 29 085 – – – 29 0852011Secured bank loans– Standard Bank merged termfacility 8,75% – – 140 000 560 000 700 000Trade and other payables 0% 14 298 – – – 14 298It is not expected that the cash flows included in the maturity analysis could occur significantly earlier, or atsignificantly different amounts.15.6 Fair value of financial instrumentsThe fair value of financial assets and liabilities, together with the carrying amounts shown in the statement offinancial position, are as follows:2012 2011CarryingvalueFairvalueCarryingvalueFairvalueR’000 R’000 R’000 R’000Assets carried at amortised costTrade and other receivables 31 171 31 171 13 109 13 109Other financial assets 6 834 6 834 6 811 6 811Cash and cash equivalents 74 831 74 831 20 953 20 953Loans and borrowings – current 165 434 165 434 135 396 135 396Liabilities carried at amortised costLoans and borrowings (488 695) (488 695) (560 000) (560 000)Trade and other payables (21 579) (21 579) (6 792) (6 792)Short-term portion of loans and borrowings (220 316) (220 316) (140 000) (140 000)Liabilities carried at fair valueOther payables (7 506) (7 506) (7 506) (7 506)

Sentula Mining Limited Integrated Annual Report 2012140Notes to the Company financial statements continuedfor the year ended 31 March 201215 Financial instruments (continued)15.6 Fair value of financial instruments (continued)Fair value hierarchyAll financial instruments carried at fair value by valuation method are carried at a level 3.The different levels have been defined as follows:––Level 1: quoted prices (unadjusted) in active markets for identical assets and liabilities––Level 2: inputs other than quoted prices included within level 1 that are observable for the asset or liability,either directly or indirectly (ie derived from prices)––Level 3: inputs for the assets or liabilities that are not based on observable market dataFair value is determined by discounting the future liability, which is calculated by multiplying the royalty rate bythe run-of-mine tonnes estimated to be produced over the anticipated life of the mine.Although the Company believes that its estimate of fair value is appropriate, the use of different methodologiesor assumptions could lead to different measurements of fair value.The directors consider that the carrying amounts of financial assets and financial liabilities recorded at amortisedcost in the financial statements approximate their fair values.15.7 Capital managementThe Company manages its capital structure to ensure that it will be able to continue as a going concern whilemaximising the return to shareholders through the optimisation of the debt and the equity balance.The capital structure of the Company consists of debt, which includes loans to subsidiaries, cash and cashequivalents, liabilities and equity, comprising issued share capital, reserve and retained earnings as disclosed.In 2012, long-term borrowings pertain to the Standard Bank-led consortium and the WesBank facility for thefunding of subsidiary capital expenditure. In 2011, the long-term borrowings pertained to the merged term facilityfrom the Standard Bank-led consortium.

Sentula Mining Limited Integrated Annual Report 201214116 Related partiesRelated party transactions and balancesDuring the year the Company and its related parties, in the ordinary course of business, entered into various intergroupsale and purchase transactions.2012R’0002011R’000Jonah Coal Botswana Limited 675 675Mabapa Mining Limited 2 861 2 861Merafe Coal Proprietary Limited 3 298 3 2756 834 6 811All outstanding balances with these related parties are priced on an arm’s length basis and are to be settled incash within 12 months of the reporting date. None of the loans are interest-bearing or secured.17 Going concernThe annual financial statements have been prepared on the basis of accounting policies applicable to a goingconcern. This basis presumes that funds will be available to finance future operations and that the realisation ofassets and settlement of liabilities, contingent obligations and commitments will occur in the ordinary courseof business.18 Contingent liabilitiesTo the best of our knowledge and belief there are no other contingent liabilities to third parties and/or contingentassets not set out or referred to in this report which may materially affect the financial position of the Company.19 Subsequent eventsThe directors are not aware of any subsequent events other than those disclosed in the directors’ report thatoccurred between the date of authorisation of the annual financial statements and the year-end that require anyadjustments or additional disclosure to the annual financial statements.

Sentula Mining Limited Integrated Annual Report 2012142Notes to the Company financial statements continuedfor the year ended 31 March 201220 Information on subsidiary companiesIssuedsharecapitalPercentageheld by Sentula2012%Megacube Mining Proprietary Limited* 100 100 100Benicon Opencast Mining Proprietary Limited 120 100 100Benicon Sales Proprietary Limited 100 000 100 100Geosearch Holdings Proprietary Limited 100 100 100JEF Drill and Blast Proprietary Limited** 100 100 100Classic Challenge Trading Proprietary Limited 120 100 100Ritchie Crane Hire Proprietary Limited 100 100 100Benicon Coal Proprietary Limited 100 100 100Benicon Mining Proprietary Limited 100 100 100Caston Plant Sales Proprietary Limited 120 100 100Sentula Mining Mauritius Limited*** 100 100 100Sentula Mining Services Proprietary Limited 100 100 100Sentula Coal Proprietary Limited 100 100 100Total investment at costReflected as non-current assetsReflected as current assetsThe Company has subordinated its claims against the following subsidiaries in favour of all other creditors on thefollowing: Megacube Mining Proprietary Limited; Sentula Coal Proprietary Limited; JEF Drill and BlastProprietary Limited; Benicon Coal Proprietary Limited; Caston Plant Sales Proprietary Limited and Sentula MiningMauritius Limited.* During the March 2010 financial year Scharrighuisen Opencast Mining Proprietary Limited changed its name to MegacubeMining Proprietary Limited effective 26 May 2009.** During the March 2010 financial year Scharrighuisen Drilling and Blasting Proprietary Limited changed its name to JEF Drilland Blast Proprietary Limited effective 20 May 2009.*** The company is incorporated in Mauritius.Consistent with the Company’s accounting policies, investments in subsidiaries are carried at cost.2011%The loans to subsidiaries bear variable interest rates and the terms of the loans range from demand to 48 months.Main businessA – Opencast mining and mining servicesB – Exploration drillingC – Drilling and blastingD – Crane hireE – Equipment trading and sparesF – MiningG – Foreign operations

Sentula Mining Limited Integrated Annual Report 2012143Investmentat costNon-interest-bearingloans to subsidiariesInterest-bearing loansto/(from) subsidiariesShare options issued2012R’0002011R’0002012R’0002011R’0002012R’0002011R’0002012R’0002011R’000Mainbusiness21 005 21 005 459 041 420 748 27 447 968 066 4 767 7 973 A– – 8 000 60 519 370 947 276 395 6 083 6 284 A– – 35 517 45 617 86 492 49 975 – – E104 558 104 558 – 285 475 477 864 156 716 3 042 3 666 B– – – 100 444 87 424 65 551 807 902 C69 315 69 315 – 12 000 28 421 851 – 393 A– – – 54 905 (19 710) (47 464) 1 383 1 309 D45 252 45 252 8 410 8 410 276 515 234 103 – – F20 262 20 262 4 903 4 903 – – – – F– – 3 750 – 122 – – – E– – 79 860 71 137 – – – – G– – – – 34 600 34 740 – – A– – 8 840 4 792 – – – – F260 392 260 392 608 321 1 068 950 1 370 122 1 738 933 16 082 20 527260 392 260 392 572 804 1 034 964 1 240 205 1 637 523 16 082 20 527– – 35 517 33 986 129 917 101 410 – –

144Sentula Mining Limited Integrated Annual Report 2012Shareholders’ informationfor the year ended 31 March 2012Analysis of shareholdersNumber ofshareholders% ofshareholdersNumber ofshares% ofshareholdersRange1 – 1 000 613 20,43 277 738 0,051 001 – 5 000 971 32,36 2 795 074 0,485 001 – 10 000 383 12,76 2 928 284 0,5010 001 – 50 000 585 19,49 13 926 201 2,3750 001 – 100 000 95 3,17 7 071 840 1,20100 001 and more 354 11,79 559 560 044 95,40Total 3 001 100,00 586 559 181 100,00Major shareholders (directly owning 5% ormore of shares in issue)OMIGSA Garp Portfolio 44 123 491 7,52Old Mutual Life Assurance Co SA 31 926 159 5,44Shareholder spreadPublic 2 997 99,87 577 692 575 98,49Non-public 4 0,13 8 866 606 1,51Share scheme 1 0,03 2 117 828 0,36Associates 1 0,03 5 553 871 0,95Directors 2 0,07 1 194 907 0,20Total 3 001 100,00 586 559 181 100,00Directors’ shareholdings2012 Shares held % of totalDirector Direct Indirect Total shareholdingRC Berry 1 084 907 – 1 084 907 0,18GP Louw 110 000 – 110 000 0,021 194 907 – 1 194 907 0,202011DirectorRC Berry 984 907 – 984 907 0,17GP Louw 102 490 – 102 490 0,021 087 397 – 1 087 397 0,19Subsequent to 31 March 2012 and the date of this report, the following directors’ dealings took place:RC Berry 14 June 2012 120 000GP Louw 14 June 2012 20 000KW Mzondeki 21 June 2012 10 000

Sentula Mining Limited Integrated Annual Report 2012Shareholders’ diary145Financial year-end 31 March 2012Audited results announced 14 June 2012Reports and profit statementHalf-year interim report 16 November 2012No change statement and notice of annual general meeting announcement 28 September 2012Annual financial statements published 28 September 2012Annual general meeting 25 October 2012JSE performance2012 2011 2010 2009 2008Number of shares traded (‘000) 137 778 240 947 274 744 182 667 144 324% of total issued shares 23,49 41,08 46,84 77,54 61,27Value of shares trades (R’000) 322 220 629 074 871 125 1 813 004 3 093 980Prices quoted (cents per share)– highest 300 359 550 1 920 2 650– lowest 151 206 202 180 1 625– closing 220 275 294 282 1 770Market capitalisation at year-end (R’000) 1 290 430 1 613 038 1 724 484 664 296 4 169 517Price earnings ratio (2,47) 45,45 5,27 2,33 32,36Earnings yield (40,41) 2,22 18,98 42,94 3,09Dividend yield – – – – 1,19Number of shares traded(’000)Five-year history (R’000)Market capitalisation at year-end(’000)Five-year history (R’000)300250200150100505 0004 0003 0002 0001 0000‘08 ‘09 ‘10 ‘11 ‘120‘08 ‘09 ‘10 ‘11 ‘12

146Sentula Mining Limited Integrated Annual Report 2012Notice of annual general meetingfor the year ended 31 March 2012SENTULA MINING LIMITEDIncorporated in the Republic of South Africa(Registration number 1992/001973/06)Share code: SNU ISIN: ZAE000107223(“Sentula” or “the Company” or “the Group”)If you are in any doubt as to what action you shouldtake in respect of the following resolutions, pleaseconsult your Central Securities Depository Participant(“CSDP”), broker, banker, attorney, accountant orother professional adviser immediately.Notice is hereby given in terms of section 62(1) of theCompanies Act, that an annual general meeting (“annualgeneral meeting”) of shareholders of the Company willbe held at Ground Floor, Building 14, The WoodlandsOffice Park, Woodlands Drive, Woodmead at 10:00 onThursday, 25 October 2012, to consider and, if deemedfit, to approve the resolutions referred to below, with orwithout modification:meeting of shareholders must present reasonablysatisfactory identification and the person presiding atthe annual general meeting must be reasonablysatisfied that the right of any person to participate inand vote (whether as shareholder or as proxy for ashareholder) has been reasonably verified. A greenbar-coded identification document issued by theSouth African Department of Home Affairs, a driver’slicence or a valid passport will be accepted as sufficientidentification.1. Ordinary resolution number 1Approval of annual financial statementsResolved as an ordinary resolution that theconsolidated audited annual financial statements ofthe Company and the Group for the year ended31 March 2012, including the directors’ report,the report of the auditors and the report of theCompany’s Audit Committee, therein, be and arehereby received and adopted.The Board of Directors of the Company (“the Board”)determined that, in terms of section 62(3)(a), as read withsection 59 of the Companies Act, the record date forthe purposes of determining which shareholders of theCompany are entitled to participate in and vote at theannual general meeting is 19 October 2012. Accordingly,the last day to trade Sentula shares in order to berecorded in the register to be entitled to vote will be12 October 2012.GeneralShareholders are reminded that:• a shareholder entitled to attend and vote at the annualgeneral meeting is entitled to appoint a proxy (ormore than one proxy) to attend, participate in and voteat the annual general meeting in the place of theshareholder, and shareholders are referred to theproxy form attached to this notice in this regard;• a proxy need not also be a shareholder of theCompany; and• in terms of section 63(1) of the Companies Act, anyperson attending or participating in an annual generalThe minimum percentage of voting rights that isrequired for this ordinary resolution to be adoptedis more than 50% (fifty percent) of the voting rightsexercised on the resolution by shareholderspresent or represented by proxy at the annualgeneral meeting and further subject to theprovisions of the Companies Act, the MoI of theCompany and the Listings Requirements.2. Ordinary resolution number 2Reappointment of auditorsResolved as an ordinary resolution thatPricewaterhouseCoopers Inc. be and is hereby reappointedas independent auditors of the Companyand the Group, with Mr PC Hough being theindividual registered auditor who has undertakenthe audit of the Company and Group for theensuing financial year until conclusion of the nextannual general meeting, as nominated by theCompany’s Audit and Risk Committee, and theBoard be and is hereby being authorised todetermine the auditors’ remuneration.

Sentula Mining Limited Integrated Annual Report 2012147The minimum percentage of voting rights that isrequired for this ordinary resolution to be adoptedis more than 50% (fifty percent) of the voting rightsexercised on the resolution by shareholders presentor represented by proxy at the annual generalmeeting and further subject to the provisions of theCompanies Act, the MoI of the Company and theListings Requirements.The minimum percentage of voting rights that isrequired for this ordinary resolution to be adoptedis more than 50% (fifty percent) of the voting rightsexercised on the resolution by shareholders presentor represented by proxy at the annual generalmeeting and further subject to the provisions of theCompanies Act, the MoI of the Company and theListings Requirements.3. Ordinary resolution number 3Re-election of director retiring by rotationResolved as an ordinary resolution that KholekaMzondeki retires by rotation at this annual generalmeeting in accordance with the Company’s MoI,and being eligible, offers herself for re-election as adirector of the Company.5. Ordinary resolution number 5Ratification of appointment of independentnon-executive directorResolved as an ordinary resolution that theappointment of Ralph Bruce Patmore as independentnon-executive director of the Company, effective25 January 2012, be and is hereby ratified.An abbreviated curriculum vitae in respect ofKholeka Mzondeki appears on page 10 of theIntegrated Annual Report to which this notice isattached.The minimum percentage of voting rights that isrequired for this ordinary resolution to be adoptedis more than 50% (fifty percent) of the voting rightsexercised on the resolution by shareholders presentor represented by proxy at the annual generalmeeting and further subject to the provisions of theCompanies Act, the MoI of the Company and theListings Requirements.4. Ordinary resolution number 4Re-election of director retiring by rotationResolved as an ordinary resolution thatRain Zihlangu retires by rotation at this annualgeneral meeting in accordance with the Company’sMoI, and being eligible, offers himself for reelectionas a director of the Company.An abbreviated curriculum vitae in respect of RainZihlangu appears on page 11 of the IntegratedAnnual Report to which this notice is attached.An abbreviated curriculum vitae in respect of RalphPatmore appears on page 11 of the IntegratedAnnual Report to which this notice is attached.The minimum percentage of voting rights that isrequired for this ordinary resolution to be adoptedis more than 50% (fifty percent) of the voting rightsexercised on the resolution by shareholders presentor represented by proxy at the annual generalmeeting and further subject to the provisions of theCompanies Act, the MoI of the Company and theListings Requirements.6. Ordinary resolution number 6Re-election of Audit and Risk Committeemember for the year ending 31 March 2013Resolved as an ordinary resolution that Cor van Zylbe and is hereby re-elected as a member of theAudit and Risk Committee of the Company and theGroup for the year ending 31 March 2013, witheffect from the end of this meeting in terms ofsection 94(2) of the Companies Act.An abbreviated curriculum vitae in respect of Corvan Zyl appears on page 10 of the IntegratedAnnual Report to which this notice is attached.

Sentula Mining Limited Integrated Annual Report 2012148Notice of annual general meeting continuedfor the year ended 31 March 2012The minimum percentage of voting rights that isrequired for this ordinary resolution to be adoptedis more than 50% (fifty percent) of the voting rightsexercised on the resolution by shareholders presentor represented by proxy at the annual generalmeeting and further subject to the provisions of theCompanies Act, the MoI of the Company and theListings Requirements.of the Audit and Risk Committee of the Companyand the Group for the year ending 31 March 2013,with effect from the end of this meeting in terms ofsection 94(2) of the Companies Act.An abbreviated curriculum vitae in respect of RainZihlangu appears on page 11 of the IntegratedAnnual Report to which this notice is attached.7. Ordinary resolution number 7Re-election of Audit and Risk Committeemember for the year ending 31 March 2013Resolved as an ordinary resolution that, subject toher reappointment as a director as more fullydetailed in ordinary resolution 3 above, KholekaMzondeki be and is hereby re-elected as a memberof the Audit and Risk Committee of the Companyand the Group for the year ending 31 March 2013,with effect from the end of this meeting in terms ofsection 94(2) of the Companies Act.An abbreviated curriculum vitae in respect ofKholeka Mzondeki appears on page 10 of theIntegrated Annual Report to which this notice isattached.The minimum percentage of voting rights that isrequired for this ordinary resolution to be adoptedis more than 50% (fifty percent) of the voting rightsexercised on the resolution by shareholders presentor represented by proxy at the annual generalmeeting and further subject to the provisions of theCompanies Act, the MoI of the Company and theListings Requirements.8. Ordinary resolution number 8Re-election of Audit and Risk Committeemember for the year ending 31 March 2013Resolved as an ordinary resolution that RainZihlangu, subject to his re-appointment as adirector as more fully detailed in ordinary resolution4 above, be and is hereby re-elected as a memberThe minimum percentage of voting rights that isrequired for this ordinary resolution to be adoptedis more than 50% (fifty percent) of the voting rightsexercised on the resolution by shareholders presentor represented by proxy at the annual generalmeeting and further subject to the provisions of theCompanies Act, the MoI of the Company and theListings Requirements.9. Ordinary resolution number 9Endorsement of the Company remunerationpolicyResolved as an ordinary resolution that theremuneration policy as tabled by the Board, asmore fully detailed on page 120 of the IntegratedAnnual Report to which this notice is attached, beand is hereby approved by way of a non-bindingadvisory vote of shareholders of the Company, asrecommended in King III.For record purposes, the minimum percentage ofvoting rights that is required for this resolution tobe adopted as a non-binding advisory vote is morethan 50% (fifty percent) of the voting rightsexercised on the resolution by shareholders presentor represented by proxy at the annual generalmeeting.10. Special resolution number 1Non-executive directors’ remuneration for theyear ended 31 March 2013Resolved as a special resolution that, in terms ofsection 66(9) of the Companies Act, the Company

Sentula Mining Limited Integrated Annual Report 2012149be and is hereby authorised to pay remuneration tonon-executive directors for the year ending31 March 2013 in respect of their positions as Boardand Committee members as follows:FY2012 FY2013Retainer fees Annual AnnualBoard Chairman 84 369,60 135 000,00Board member 56 246,00 60 000,00Audit and Risk CommitteeChairman 52 731,00 56 400,00Audit and Risk Committeemember 42 184,80 45 100,00Meeting feesPermeetingPermeetingBoard fee – Chairman 25 310,88 27 000,00Board fee – member 16 873,00 18 000,00Board fee +5 – Chairman 42 184,80 54 000,00Board fee +5 – member 28 122,20 30 000,00PermeetingPermeetingAudit and Risk Committeefee – Chairman 15 819,30 21 150,00Audit and Risk Committeefee – member 12 655,44 16 925,00Audit and Risk Committeefee + 5 – Chairman 26 365,50 –Audit and Risk Committeefee + 5 – member 21 092,40 –Audit and Risk Committeefee + 4 – Chairman – 35 250,00Audit and Risk Committeefee + 4 – member – 28 200,00PermeetingPermeetingRemuneration Committeefee – Chairman 26 365,50 28 200,00Remuneration Committeefee – member 21 092,40 22 560,00Nomination Committeefee – Chairman 26 365,50 28 200,00Nomination Committeefee – member 21 092,40 22 560,00Investment Committeefee – Chairman 26 365,50 28 200,00Investment Committeefee – member 21 092,40 22 560,00Other fees – member 21 092,40 22 560,00Sentula Share IncentiveTrust – Chairman 26 365,50 28 200,00In terms of section 66(9) of the Companies Act, acompany is required to pre-approve the paymentof remuneration to directors for their services asdirectors by means of a special resolution passedby the shareholders of the Company within theprevious two years.The minimum percentage of voting rights that isrequired for this special resolution to be adopted isat least 75% (seventy-five percent) of the votesexercised on the resolutions by shareholderspresent or represented by proxy at the annualgeneral meeting, and further subject to theprovisions of the Companies Act, the MoI of theCompany and the Listings Requirements.11. Special resolution number 2General approval to reacquire sharesResolved as a special resolution that the Board ishereby authorised, by way of a general approval interms of the provisions of the Listings Requirementsand the Companies Act and as permitted in theCompany’s MoI, to approve the purchase of its ownordinary shares by the Company, and the purchaseof ordinary shares in the Company by any of itssubsidiaries, upon such terms and conditions and insuch amounts as the Board may from time to timedetermine, subject to the Companies Act, MoI ofthe Company and each of its subsidiaries and theListings Requirements, provided that:(i) the acquisition of the ordinary shares mustbe effected through the order book operatedby the JSE trading system and done withoutany prior understanding or arrangementbetween the Company and the counterparty;(ii) this general authority shall only be valid untilthe earlier of the Company’s next annualgeneral meeting or the expiry of a period of15 (fifteen) months from the date of passing ofthis special resolution;(iii) in determining the price at which the Company’sordinary shares are acquired in terms of this

Sentula Mining Limited Integrated Annual Report 2012150Notice of annual general meeting continuedfor the year ended 31 March 2012general authority, the maximum premium atwhich such ordinary shares may be acquiredwill be 10% (ten percent) of the weightedaverage of the market value at which suchordinary shares are traded on the JSE, asdetermined over the 5 (five) business daysimmediately preceding the date on which thetransaction is effected;(iv) the acquisitions of ordinary shares in theaggregate in any one financial year may notexceed 20% (twenty percent) of the Company’sissued ordinary share capital;(v) the Company may only effect the repurchaseonce a resolution has been passed by theBoard confirming that the Board has authorisedthe repurchase, that the Company has passedthe solvency and liquidity test (”test“) and thatsince this was done there have been no materialchanges to the financial position of the Group;(vi) the Company or its subsidiaries may notacquire ordinary shares during a prohibitedperiod as defined in paragraph 3.67 of theListings Requirements, unless a repurchaseprogramme is in place where dates andquantities of shares to be traded during theprohibited period are fixed and full details ofthe programme have been disclosed in anannouncement over SENS prior to thecommencement of the prohibited period;(vii) an announcement will be published once theCompany has cumulatively repurchased 3%(three percent) of the number of the ordinaryshares in issue at the time this general authorityis granted (“initial number”), and for each 3%(three percent) in aggregate of the initialnumber acquired thereafter; and(viii) at any point in time, the Company may onlyappoint one agent to effect any acquisition/son its behalf.The purpose of the special resolution is to grant theCompany’s Board a general authority, up to andincluding the date of the following annual generalmeeting of the Company, to approve the Company’spurchase of shares in itself, or to permit a subsidiaryof the Company to purchase shares in the Company.The minimum percentage of voting rights that isrequired for this special resolution to be adopted isat least 75% (seventy-five percent) of the votesexercised on the resolution by shareholders presentor represented by proxy at the annual generalmeeting and further subject to the provisions of theCompanies Act, the MoI of the Company and theListings Requirements.Other disclosure in terms of section 11.26 of theJSE Listings RequirementsFurther to special resolution number 2, the ListingsRequirements require the following disclosures,which are contained in the Integrated AnnualReport of which this notice forms part:(i) directors and management – page 9;(ii) major shareholders of Sentula – page 144;(iii) directors’ interests in securities – page 144;(iv) share capital of the Company – page 107; and(v) litigation statement – page 68.Material changeThere have been no material changes in the affairsor financial position of the Company and itssubsidiaries since the Company’s financial year-endand the date of this notice.Directors’ responsibility statementThe directors, whose names are given on page 9 ofthe Integrated Annual Report of which this noticeforms part, collectively and individually accept fullresponsibility for the accuracy of the information

Sentula Mining Limited Integrated Annual Report 2012151pertaining to special resolution number 2 andcertify that to the best of their knowledge andbelief there are no facts in relation to specialresolution number 2 that have been omitted whichwould make any statement in relation to specialresolution number 2 false or misleading, and that allreasonable enquiries to ascertain such facts havebeen made and that special resolution number 2together with this notice contains all informationrequired by law and the Listings Requirements inrelation to special resolution number 2.Adequacy of working capitalAt the time that the repurchase contemplated inspecial resolution number 2 is to take place, theBoard will ensure that, after considering the effectof the maximum repurchase and for a period of12 (twelve) months thereafter:• the Company and its subsidiaries will be able topay their debts as they become due in theordinary course of business;• the consolidated assets of the Company and itssubsidiaries, fairly valued in accordance withInternational Financial Reporting Standards, willbe in excess of the consolidated liabilities of theCompany and its subsidiaries;• the issued share capital and reserves of theCompany and its subsidiaries will be adequatefor the purpose of the ordinary business of theCompany and its subsidiaries; and• the working capital available to the Companyand its subsidiaries will be sufficient for theCompany and its subsidiaries’ requirements.The Company may not enter the market to proceedwith the repurchase until its sponsor, MerchantecProprietary Limited, has discharged all of itsresponsibilities in terms of the Listings Requirementsinsofar as they apply to working capital statementsfor the purposes of undertaking an acquisition of itsissued ordinary shares.12. Ordinary resolution number 10Directors’ authority to take all such actionsnecessary to implement the resolutionscontained in this noticeResolved as an ordinary resolution that any directorof the Company be and is hereby authorised to doall such things, sign all such documents and take allsuch actions as may be necessary for or incidentalto the implementation of the ordinary and specialresolutions approved in accordance with theprovisions of this notice of annual general meeting.The minimum percentage of voting rights that isrequired for this ordinary resolution to be adoptedis more than 50% (fifty percent) of the voting rightsexercised on the resolution by shareholders presentor represented by proxy at the annual generalmeeting and further subject to the provisions of theCompanies Act, the MoI of the Company and theListings Requirements.Other businessTo transact such other business as may be required atthis annual general meeting.Voting and proxiesA shareholder entitled to attend and vote at the annualgeneral meeting is entitled to appoint a proxy or proxiesto attend and act in his/her stead. A proxy need not bea member of the Company. For the convenience ofregistered members of the Company, a form of proxy isattached hereto.

Sentula Mining Limited Integrated Annual Report 2012152Notice of annual general meeting continuedfor the year ended 31 March 2012The attached form of proxy is only to be completed bythose ordinary shareholders who:(i) hold ordinary shares in certificated form; or(ii) are recorded on the sub-register in “own-name”dematerialised form.Ordinary shareholders who have dematerialised theirordinary shares through a CSDP or broker without “ownname”registration and who wish to attend the annualgeneral meeting, must instruct their CSDP or broker toprovide them with the relevant letter of representation toattend the annual general meeting in person or proxyand vote. If they do not wish to attend the annualgeneral meeting in person or by proxy and vote, theymust provide the CSDP or broker with their votinginstructions in terms of the relevant custody agreemententered into between them and the CSDP or broker.Proxy forms should be forwarded to reach the transfersecretaries, Computershare Investor Services ProprietaryLimited, at least 48 (forty-eight) hours excluding,Saturdays, Sundays and public holidays, before the timeof the annual general meeting.Forms of proxy may also be obtained from the Company’sregistered office.By order of the BoardGrace ChemalyCompany Secretary14 September 2012Johannesburg

Sentula Mining Limited Integrated Annual Report 2012Form of proxySentula Mining LimitedIncorporated in the Republic of South Africa(Registration number 1992/001973/06)Share code: SNU ISIN: ZAE000107223(“Sentula” or “the Company” or “the Group”)For use only by ordinary shareholders who:• hold ordinary shares in certificated form (“certificated ordinary shareholders”); or• have dematerialised their ordinary shares (“dematerialised ordinary shareholders”) and are registered with “own-name” registration, at theannual general meeting of ordinary shareholders of the Company to be held at Ground Floor, Building 14, The Woodlands Office Park,Woodlands Drive, Woodmead at 10:00 on Thursday, 25 October 2012 and any adjournment thereof.Dematerialised ordinary shareholders holding ordinary shares other than with “own-name” registration who wish to attend the annual generalmeeting must inform their Central Securities Depository Participant (“CSDP”) or broker of their intention to attend the annual general meetingand request their CSDP or broker to issue them with the relevant Letter of Representation to attend the annual general meeting in person orby proxy and vote. If they do not wish to attend the annual general meeting in person or by proxy, they must provide their CSDP or broker withtheir voting instructions in terms of the relevant custody agreement entered into between them and the CSDP or broker. These ordinaryshareholders must not use this form of proxy.I/We (BLOCK LETTERS please)of (address)Telephone workTelephone homebeing the holder/custodian ofordinary shares in the Company, hereby appoint (see note):1. or failing him/her,2. or failing him/her,3. the Chairperson of the meeting,as my/our proxy to attend and act for me/us on my/our behalf at the annual general meeting of the Company convened for the purpose ofconsidering and, if deemed fit, passing, with or without modification, the special and ordinary resolutions to be proposed thereat (“resolutions”)and at each postponement or adjournment thereof and to vote for and/or against such resolutions, and/or abstain from voting, in respect ofthe ordinary shares in the issued share capital of the Company registered in my/our name/s in accordance with the following instructions:Number of ordinary sharesFor Against Abstain1. Ordinary resolution number 1To receive, consider and adopt the annual financial statements of the Company and the Groupfor the financial year ended 31 March 20122. Ordinary resolution number 2To confirm the reappointment of PricewaterhouseCoopers Inc. as independent auditors of theCompany and the Group3. Ordinary resolution number 3To approve the re-election as director of Kholeka Mzondeki who retires by rotation and, beingeligible, offers herself for re-election4. Ordinary resolution number 4To approve the re-election as director of Rain Zihlangu who retires by rotation and, beingeligible, offers himself for re-election5 Ordinary resolution number 5To ratify the appointment of Ralph Patmore as independent non-executive director effective25 January 20126. Ordinary resolution number 6To approve the re-election of Cor van Zyl as member of the Audit and Risk Committee for theyear ending 31 March 20137. Ordinary resolution number 7To approve the re-election of Kholeka Mzondeki as member of the Audit and Risk Committee forthe year ending 31 March 2013 (subject to ordinary resolution number 3 being passed)8. Ordinary resolution number 8To approve the re-election of Rain Zihlangu as member of the Audit and Risk Committee for theyear ending 31 March 2013 (subject to ordinary resolution number 4 being passed)9. Ordinary resolution number 9To endorse the Company remuneration policy10. Special resolution number 1To approve the non-executive directors’ remuneration for the year ending 31 March 201311. Special resolution number 2General approval to re-acquire shares12. Ordinary resolution number 10Directors’ authorityPlease indicate instructions to proxy in the space provided above by the insertion therein of the relevant number of votes exercisable.A member entitled to attend and vote at the annual general meeting may appoint one or more proxies to attend and act in his/her stead.A proxy so appointed need not be a member of the Company.Signed at on 2012SignatureAssisted by (where applicable)Each ordinary shareholder is entitled to appoint one or more proxies (who need not be a shareholder of the Company) to attend, speak andvote in place of that shareholder at the annual general meeting.153

Sentula Mining Limited Integrated Annual Report 2012Form of proxy continued154Notes to proxy1. The form of proxy must only be used by shareholders whohold shares in certificated form or who are recorded on thesub-register in electronic form in “own name”.2. All other beneficial owners who have dematerialised theirshares through a CSDP or broker and wish to attend theannual general meeting must provide the CSDP or brokerwith their voting instructions in terms of the relevantagreement entered into between them and the CSDPor broker.3. A shareholder entitled to attend and vote at the annualgeneral meeting may insert the name of a proxy or the namesof two alternate proxies of the shareholder’s choice in thespace provided, with or without deleting “the Chairperson ofthe meeting”. The person whose name stands first on theform of proxy and who is present at the annual generalmeeting will be entitled to act as proxy to the exclusion ofsuch proxy(ies) whose names follow.4. A shareholder is entitled to one vote on a show of hands and,on a poll, one vote in respect of each ordinary share held. Ashareholder’s instructions to the proxy must be indicated bythe insertion of the relevant number of votes exercisable bythat shareholder in the appropriate space provided. If an “X”has been inserted in one of the blocks to a particularresolution, it will indicate the voting of all the shares held bythe shareholder concerned. Failure to comply with this will bedeemed to authorise the proxy to vote or to abstain fromvoting at the annual general meeting as he/she deems fit inrespect of all of the shareholder’s votes exercisable thereat.A shareholder or the proxy is not obliged to use all the votesexercisable by the shareholder or by the proxy, but the totalof the votes cast and in respect of which abstention isrecorded may not exceed the total of the votes exercisable bythe shareholder or the proxy.5. A vote given in terms of an instrument of proxy shall be validin relation to the annual general meeting notwithstanding thedeath, insanity or other legal disability of the person grantingit, or the revocation of the proxy, or the transfer of the sharesin respect of which the proxy is given, unless notice as to anyof the aforementioned matters shall have been received bythe transfer secretaries not less than 48 hours before thecommencement of the annual general meeting.6. If a shareholder does not indicate on this form that his/herproxy is to vote in favour of or against any resolution or toabstain from voting, or gives contradictory instructions, orshould any further resolution(s) or any amendment(s) whichmay properly be put before the annual general meeting beproposed, such proxy shall be entitled to vote as he/shethinks fit.7. The Chairperson of the annual general meeting may reject oraccept any form of proxy which is completed and/or receivedother than in compliance with these notes.8. A shareholder’s authorisation to the proxy including theChairperson of the annual general meeting, to vote on suchshareholder’s behalf, shall be deemed to include the authorityto vote on procedural matters at the annual general meeting.9. The completion and lodging of this form of proxy will notpreclude the relevant shareholder from attending the annualgeneral meeting and speaking and voting in person thereatto the exclusion of any proxy appointed in terms hereof.10. Documentary evidence establishing the authority of a personsigning the form of proxy in a representative capacity must beattached to this form of proxy, unless previously recorded bythe Company’s transfer secretaries or is waived by theChairperson of the annual general meeting.11. A minor or any other person under legal incapacity must beassisted by his/her parent or guardian, as applicable, unlessthe relevant documents establishing his/her capacity areproduced or have been registered by the transfer secretariesof the Company.12. Where there are joint holders of shares:• any one holder may sign the form of proxy;• the vote(s) of the senior shareholders (for that purposeseniority will be determined by the order in which thenames of shareholders appear in the Company’s register ofshareholders) who tenders a vote (whether in person or byproxy) will be accepted to the exclusion of the vote(s) ofthe other joint shareholder(s).13. Forms of proxy should be lodged with or mailed to transfersecretaries, Computershare Investor Services ProprietaryLimited, 70 Marshall Street, Johannesburg, 2001(PO Box 61051, Marshalltown, 2107), to be received by nolater than 09:00 (SA time) on 23 October 2012 (or 48 (fortyeight)hours before any adjournment of the annual generalmeeting which date, if necessary, will be notified on SENS).14. A deletion of any printed matter and the completion of anyblank space need not be signed or initialled. Any alteration orcorrection must be signed and not merely initialled.Summary of the rights of a shareholder to be represented byproxy, as set out in section 58 of the Companies Act:A proxy appointment must be in writing, dated and signed by theshareholder appointing a proxy and, subject to the rights of ashareholder to revoke such appointment (as set out below),remains valid only until the end of the relevant shareholders’meeting.A proxy may delegate the proxy’s authority to act on behalf of ashareholder to another person, subject to any restrictions set out inthe instrument appointing the proxy.The appointment of a proxy is suspended at any time and tothe extent that the shareholder who appointed such proxy choosesto act directly and in person in the exercise of any rights asa shareholder.The appointment of a proxy is revocable by the shareholder inquestion cancelling it in writing, or making a later inconsistentappointment of a proxy, and delivering a copy of the revocationinstrument to the proxy and to the Company. The revocation of aproxy appointment constitutes a complete and final cancellation ofthe proxy’s authority to act on behalf of the shareholder as of thelater of (a) the date stated in the revocation instrument, if any; and(b) the date on which the revocation instrument is delivered to theCompany as required in the first sentence of this paragraph.If the instrument appointing the proxy or proxies has beendelivered to the Company, as long as that appointment remains ineffect, any notice that is required by the Act or the Company’sMemorandum of Incorporation to be delivered by the Company tothe shareholder, must be delivered by the Company to (a) theshareholder, or (b) the proxy or proxies, if the shareholder has(i) directed the Company to do so in writing; and (ii) paid anyreasonable fee charged by the Company for doing so.Attention is also drawn to the “Notes to proxy”.The completion of a form of proxy does not preclude anyshareholder from attending the annual general meeting.

Sentula Mining Limited Integrated Annual Report 2012Administration155Sentula Mining Limited(Registration number 1992/001973/06)Registered officeGround Floor, Building 14, The Woodlands Office ParkWoodlands Drive, Woodmead, 2080(PO Box 76, Woodlands Office Park, Woodmead, 2080)Tel: 011 656 1303Company SecretaryGM ChemalyGround Floor, Building 14, The Woodlands Office ParkWoodlands Drive, Woodmead, 2080(PO Box 76, Woodlands Office Park, Woodmead, 2080)Tel: 011 656 1303Transfer secretariesComputershare Investor Services Proprietary Limited70 Marshall Street, Johannesburg, 2001(PO Box 61051, Marshalltown, 2107)Tel: 011 370 5757SponsorMerchantec Proprietary Limited2nd Floor, North Block, Hyde Park Office TowersCorner 6th Road and Jan Smuts AvenueHyde Park, 2196(PO Box 41480, Craighall, 2024)Tel: 011 325 6363AttorneysCliffe Dekker Hofmeyr6 Sandown Valley Crescent, Sandown, Sandton, 2196(Private Bag X40, Benmore, 2010)Tel: 011 286 1100Werksmans155 5th Street, Sandown, Sandton, 2196(Private Bag 10015, Sandton, 2146)Tel: 011 535 8000Corporate advisersStandard BankCorporate and Investment Banking3 Simmonds Street, Johannesburg, 2001(PO Box 61344, Marshalltown, 2107)Tel: 011 636 9155BankersStandard BankCorporate and Investment Banking3 Simmonds Street, Johannesburg, 2001(PO Box 61344, Marshalltown, 2107)Tel: 011 636 9155Sanlam Capital MarketsDebt Structuring Unit3A Summit Road, Dunkeld West, Johannesburg, 2196(PO Box 411420, Craighall, 2024)Tel: 011 778 6000The Hongkong and Shanghai Banking CorporationLimited2 Exchange Square, 85 Maude Street, Sandown, 2196(Private Bag X785434, Sandton, 2146)Tel: 011 676 4200WesBankHome of WesBankEnterprise Road, Fairlands, 2170(PO Box 1066, Fairlands, 2000)Tel: 011 632 6000AuditorsExternalPricewaterhouseCoopers Inc2 Eglin Road, Sunninghill, 2157(Private Bag X36, Sunninghill, 2157)Tel: 011 797 4000InternalOutsourced Risk and ComplianceAssessment Proprietary Limited – ORCA42 Wierda Road West, Wierda ValleySandton, 2196(Private Bag X10046, Sandton, 2146)Tel: 011 384 8189Accountant and tax adviserBDOBDO Place, 457 Rodericks Road, Lynnwood,Pretoria, 0081(PO Box 954367/8/9, Waterkloof, 0145)Tel: 012 348 2000Public relations/communicationsCollege HillFountain Grove, 5 Second RoadHyde Park, Sandton, 2196(PO Box 413187, Craighall, 2024)Tel: 011 447 3030)WebsiteThis report is available on our websitewww.sentula.co.za.

Sentula Mining Limited Integrated Annual Report 2012Abbreviations156Abbreviations“ABET”“ADT”“AIDS”“AMMSA”“BBBEE”“BEE”“Benicon”“Benicon Sales”“BWP”“Caston”“CCT”“CEO”“CIFR”“CIPC”“CFO”“Companies Act(2008)”“COMSOC”“CPR”“DEA”“DMR”“dti”“DWA”“ECSA”“ED”“EE”“EME”“EMPR”“EVA”“FRCP”“Geosearch”“ha”“HCT”“HDSA”“HIV”“IFRS”“ISO”“IWULA”“JEF”“JSE”Adult basic education and trainingArticulated dump truckAcquired immune deficiency syndromeAssociation of Mine Managers of South AfricaBroad based black economic empowermentBlack economic empowermentBenicon Opencast Mining Proprietary LimitedBenicon Sales Proprietary LimitedBotswana PulaCaston Plant Sales Proprietary LimitedClassic Challenge Trading Proprietary LimitedChief Executive OfficerClassified Injury Frequency Rate – per millionman-hours workedCompanies and Intellectual PropertyCommissionChief Financial OfficerCompanies Act 71 of 2008 (as amended)Chamber of Mines Safety OrganisationCertificateCompetent person reportDepartment of Environmental AffairsDepartment of Mineral ResourcesDepartment of Trade and IndustryDepartment of Water AffairsEngineering Council of South AfricaEnterprise developmentEmployment equityExempted micro enterpriseEnvironmental Management ProgrammeReportEconomic value addFatal Risk Compliance ProtocolGeosearch Holdings Proprietary LimitedhectaresHealth, counselling and testingHistorically disadvantaged South AfricansHuman Immunodeficiency VirusInternational Financial Reporting StandardsInternational Organisation for StandardisationIntegrated Water Use Licence ApplicationJEF Drill and Blast Proprietary Limited(previously Scharrighuisen Drilling andBlasting Proprietary Limited)JSE LimitedAbbreviations“King III” or “KingReports”King Report on Governance for South Africa– 2009 (the “Report”) and the King Code ofGovernance Principles – 2009 (the “Code”)“kl”Kilolitre“km”Kilometre“KPIs”Key performance indicators“kWh”Kilowatt-hour“Listings the Listings Requirements of the JSERequirements”“LTIP”Long-term incentive plan“MDEDET” Mpumalanga Department of EconomicDevelopment, Environment and Tourism“Megacube” Megacube Mining Proprietary Limited(previously Scharrighuisen Opencast MiningProprietary Limited)“MHSA” Mine Health and Safety Act 1996(Act 29 of 1996)“MoI”the Memorandum of Incorporation of theCompany“NEMA”National Environmental Management Act“Nkomati Nkomati Anthracite Proprietary LimitedAnthracite”“OHSA” Occupational Health and Safety Act 1993(Act 85 of 1993)“QSE”Qualifying small enterprise“Ritchie”Ritchie Crane Hire Proprietary Limited“SA”the Republic of South Africa“SAIMM” South African Institute of Mining andMetallurgy“SED”Socio-economic development“SENS”Securities Exchange News Service“SHE”Safety, Health and Environment“TIFR”Total Injury Frequency Rate“the Board” the Board of Directors of Sentula MiningLimited“the Company” Sentula Mining Limited“the current year” the financial year ended 31 March 2012“the Group” Sentula Mining Limited, its subsidiaries,associates and affiliates“the previous year” the financial year ended 31 March 2011or “the prior year”“the year” or “the the financial year ended 31 March 2012year under review”“USD”US Dollar“VWAP”Volume weighted average price“ZAR”South African RandSubsidiaries – 31 March 2012Registration numberBenicon Coal Proprietary Limited 1993/003007/07Benicon Mining Proprietary Limited 1982/009206/07Benicon Opencast Mining Proprietary Limited 1993/007616/07Benicon Sales Proprietary Limited 1970/005781/07Buenti Drilling Proprietary Limited 2007/001551/07Caston Plant Sales Proprietary Limited 1991/003355/07Cintacure Proprietary Limited 2009/023760/07Classic Challenge Trading Proprietary Limited 2001/025633/07Geosearch Holdings Proprietary Limited 2006/027773/07Geosearch International Proprietary Limited 1986/003933/07Geosearch South Africa Proprietary Limited 2005/042886/07JEF Drill and Blast Proprietary Limited 1996/017991/07Megacube Mining Proprietary Limited 1989/000748/07Nkomati Anthracite Proprietary Limited 1980/008581/07Ritchie Crane Hire Proprietary Limited 2007/006831/07Robust Opencast Resources Proprietary Limited 1994/004620/07Sentula Coal Proprietary Limited 2007/032919/07Sentula Exploration Proprietary Limited 2006/019584/07Sentula Mining Mauritius Limited77609 C1/GBLSentula Mining Services Mauritius Limited77730 C1/GBLSentula Mining Services Proprietary Limited 2007/023898/07Sentula Mining Ventures Mauritius Limited77898 C1/GBL

Sentula Mining Limited integrated annual report 2012Bastion Graphics