BISICHI MINING PLC ANNUAL REPORT 2017

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16 Bisichi Mining PLC Black Wattle has concluded extensive work on various Agricultural projects as part of its Social and Labour plan
STRATEGIC REPORT PRINCIPAL RISKS & UNCERTAINTIES PRINCIPAL RISK PERFORMANCE AND MANAGEMENT OF THE RISK ENVIRONMENTAL RISK The group’s South African mining operations are required to adhere to local environmental regulations. Any failure to adhere to local environmental regulations, could adversely affect the mine’s ability to mine under its mining right in South Africa. In line with all South African mining companies, the management of this risk is based on compliance with the Environment Management Plan. In order to ensure compliance, the group strives to provide adequate resources to this area including the employment of personnel and the utilisation of third party consultants competent in regulatory compliance related to environmental management. To date, Black Wattle is fully compliant with the regulatory requirements of the Department of Water Affairs and Forestry and has an approved water use licence. Further details of the group’s Environment Management Programme are disclosed in the Sustainable development report on page 9. HEALTH & SAFETY RISK Attached to mining there are inherent health and safety risks. Any such safety incidents disrupt operations, and can slow or even stop production. In addition, the group’s South African mining operations are required to adhere to local Health and Safety regulations. LABOUR RISK The group’s mining operations and coal washing plant facility are labour intensive and unionised. Any labour disputes, strikes or wage negotiations may disrupt production and impact earnings. CASHFLOW RISK Commodity price risk, currency volatility and the uncertainties inherent in mining may result in favourable or unfavourable cashflows. PROPERTY VALUATION RISK Fluctuations in property values, which are reflected in the Consolidated Income Statement and Balance Sheet, are dependent on an annual valuation of commercial properties. A fall in UK commercial property can have a marked effect on the profitability and the net asset value of the group as well as impact on covenants and other loan agreement obligations. The economic performance of the United Kingdom, including the potential impact of the United Kingdom leaving the European Union (“Brexit”), may impact the level of rental income, yields and associated property valuations of the group’s UK property assets. The group has a comprehensive Health and Safety programme in place to mitigate this risk. Management strive to create an environment where Health and safety of our employees is of the utmost importance. Our Health & Safety programme provides clear guidance on the standards our mining operation is expected to achieve. In addition, management receive regular updates on how our mining operations are performing. Further details of the group’s Health and Safety Programme are disclosed in the Sustainable development report on page 8. In order to mitigate this risk, the group strives to ensure open and transparent dialogue with employees across all levels. In addition, appropriate channels of communication are provided to all employment unions at Black Wattle to ensure effective and early engagement on employment matters, in particular wage negotiations and disputes. Refer to the ‘Employment’ section on page 12 for further details. In order to mitigate this, we seek to balance the high risk of our mining operations with a dependable cash flow from our UK property investment operations which are actively managed by London & Associated Properties PLC. Due to the long term nature of the leases, the effect on cash flows from property investment activities are expected to remain stable as long as tenants remain in operation. Refer to page 22 for details of the property portfolio performance. The group utilises the services of London & Associated Properties PLC whose responsibility is to actively manage the portfolio to improve rental income and thus enhance the value of the portfolio over time. In addition, management regularly monitor banking covenants and other loan agreement obligations as well as the performance of our property assets in relation to the overall market over time. Management continue to monitor and evaluate the impact of Brexit on the future performance of the Group’s existing UK portfolio. In addition, the group assesses on an ongoing basis the impact of Brexit on the group’s banking covenants, loan obligations and future investment decisions. Refer to page 22 for details of the property portfolio performance. Bisichi Mining PLC 17
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Page 3 and 4: Strategic report The directors
Page 5 and 6: We are committed to providing oppor
Page 7 and 8: STRATEGIC REPORT Principal activity
Page 9 and 10: STRATEGIC REPORT MINING REVIEW I
Page 11 and 12: STRATEGIC REPORT SUSTAINABLE DEV
Page 13 and 14: The infrastructure improvements com
Page 15 and 16: Black Wattle Colliery has exceeded
Page 17: STRATEGIC REPORT PRINCIPAL RISKS
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BISICHI MINING PLC ANNUAL REPORT 2017

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