Chairperson's report

I am pleased to report that Merafe again produced strong results in 2024, although they were significantly lower than in 2023.

This is manifested in our reported revenue, EBITDA, profit after tax and net cash on hand at the end of the reporting period. I am also pleased to report that the Venture's operations performed well with regard to production and its identified sustainability criteria, with the exception of one fatality at our operations, which I will discuss in more detail later in my report.

2024 was an important year politically for South Africa. The outcome of the national elections in May resulted in the 10-party Government for National Unity (GNU), representing about 70% of voters. Economically, this was the best outcome for the country and President Cyril Ramaphosa's re-election ensured policy continuity. The formation of the GNU certainly boosted international investor sentiment toward South Africa. The elections also coincided with the suspension of loadshedding, which continued for most of 2024 and into 2025, which improved local confidence. Hopefully, these developments will translate into the country achieving a higher growth rate and increasing job creation. Having said all this, the key challenges facing South Africa are corruption, crime, unemployment, the low-term growth rate and poverty. These factors continue to hinder our access to foreign and local investment.

The continued resilience of South Africans in dealing with the challenges they face will again be tested in 2025. Only sustained ethical leadership in business and society, led by an ethical government and corporate sector, can create a conducive environment for new investments.

Two major concerns are facing our business and industry at the moment. The first is the poor state of the port and rail freight infrastructure and the second is the rapid expansion of ferrochrome plants and production in China, displacing South African ferrochrome producers. Both these concerns are dealt with under the key challenges section of my report as well as in the strategic overview and material issues sections in this report.

Our Chief Executive Officer's strategic review mentions in her report the issues that impacted the Company's performance in 2024.

Despite an ever-changing world and business environment, we will continuously remain focused on making our business a success while providing a positive contribution to our stakeholders and the broader society.

Financial performance

The Company's financial performance has been negatively impacted by low-ferrochrome prices on one side but mitigated by strong chrome prices and strong operational performance. More detail is given in the Chief Executive Officer's report and the financial capital section of this report. The Chief Executive Officer has also provided commentary on the Company's future strategy and the benefit it has gained from focusing on ferrochrome (and ancillary businesses) and maximising cash flows from the Venture.

Safety

Safety remains the number one priority of Merafe and the Venture. It is thus with great sadness and regret that I have to report that there was one fatality at our Wonderkop operation in January 2024. Our condolences are extended to the family, friends and loved ones of the deceased.

This unfortunate event occurred despite the considerable efforts made by the Venture in 2024.

For further information, see the safety section of this report for further details and safety information, as well as the efforts made by the Venture concerning safety. Please also see the manufactured capital section on manufactured capital. The Venture is continuing to do all it can to maintain high standards of safety.

Key challenges

The industry's key challenges remain power supply and costs, the deterioration of infrastructure at the ports and railways, the growth of Chinese ferrochrome producers and increasing challenges around water.

Power supply and costs: The supply of power greatly improved in the year under review. Power costs, however, remain a concern for the Company and our industry. The approval of the Venture's Negotiated Pricing Agreement application by Eskom and the National Energy Regulator of South Africa is a welcome development and has helped the Venture with price certainty, but the costs are still high and impact global competitiveness.

The Venture has entered into its first green energy project, a 100MW plant, via a power purchase agreement with Pele Green Energy. For more information, please see the Chief Executive Officer's report and the manufactured capital section of this report.

Rail and port infrastructure: We can only repeat what we said in 2023. That is, the infrastructure of the railways and the ports has deteriorated even further and this continues to be a challenge to the South African ferrochrome industry. The inability of the railways to transport our product and inefficiencies at the ports has caused an excessive reliance on road transport, resulting in backlogs and delays at the harbours. This not only results in delays in shipping our product (and negatively impacts the reputation of South African producers) but also creates opportunities for corruption and theft. The Venture continues to engage proactively with the governmental departments to find solutions to these critical issues, however, frustrating and challenging they are. For more details on this challenge to our industry, please see the manufactured capital section, the Chief Executive Officer's report, and the material issues section of this report.

Chinese ferrochrome producers: Of specific importance is that the South African ferrochrome market share will continue to be lost to international (and especially Chinese) ferrochrome production because of the energy costs in South Africa and on the back of cheap global and South African unbeneficiated chrome ore exports. The government and industry need to continue working together to ensure local beneficiation of its resources and efficient use of its existing infrastructure.

Water: Water, a crucial input in our operations, is becoming a creeping problem in South Africa. Fortunately, the Venture has been proactive in mitigating/managing this risk by ensuring adequate supply and storage facilities are in place at the operations. For more details on this challenge to our industry, see the natural capital section.

Strategy

We continue to take a long-term view of our business. In terms of achieving our strategic objectives, our ferrochrome interests will continue to benefit from investments in low-cost production facilities and technology at its operations. This has improved the Venture’s sustainability by increasing the Venture’s cost-efficiency and production capacity. This also allows the Venture to take advantage of improving global conditions and demand as we saw last year.

We reported last year that we will continue to assess opportunities outside ferrochrome where this makes commercial sense. I am pleased to report that in 2022 and 2023, we participated and invested in PGM plants in our western and eastern operations with our Venture partners. I am happy to report that the new PGM plant in the eastern operations has been completed. The positive performance of our PGM business can be seen in the results. For further information, see the Chief Executive Officer's report.

I mentioned above that the Venture in 2024 entered into a long-term renewable energy supply project.

We remain committed to ensuring the long-term sustainability of Merafe and the Venture, complying with legislation and overcoming any challenges we may encounter.

Our approach to sustainability and assurance

The directors followed the materiality determination processes described in this report and applied the results of these processes to formulate the material issues in this report.

Merafe relies on Venture and Glencore to obtain quantitative data regarding sustainability indicators. For information on Merafe and Venture's review processes, refer to the sustainability review and summary.

As we indicated last year, on an annual basis, the Board does a gap analysis of how the Company performed in terms of King IV as well as the steps taken to address issues where the Company was non-compliant. We are pleased to report that, while acknowledging that this is a work in progress, the Company, in most material respects, is compliant with King IV. Where  we have fallen short, we have provided an explanation and the areas we will focus on in 2025. For more details on our reporting on King IV, I refer you to the governance section for the full report and compliance analysis.

During the year, the Board and the relevant committees took note and assessed the JSE's proactive financial statement monitoring report, the JSE's guidance papers on sustainability and climate change reporting and changes to the JSE Listings Requirements. The Company has also complied with the amendments to the Companies Act promulgated on 27 December 2024 and for the first time, we see shareholders voting on the appointment of members to the Social, Ethics and Transformation Committee.

We agree with King IV's assertion that good governance has its foundation in effective and ethical leadership and transparency and that integrated thinking and reporting on economic, social and environmental dimensions are key to this. Board decisions need to be made in an integrated manner, understanding the impact on these dimensions as well as the impact on value creation in the short, medium and longer term.

Stakeholder inclusivity and responsiveness are key to the process. We are pleased to note that we have been reporting in an integrated manner and in terms of the capitals – as recommended by King IV – for some years now, and the feedback from stakeholders has been positive.

The Board

As Chairperson of our unitary Board, I am responsible for the overall effectiveness of the Board and its committees and for ensuring that we provide Merafe with effective leadership, uphold ethical standards and are responsible, accountable, fair and transparent. I am also responsible for ensuring that we implement strategies to achieve our economic, social and environmental performance objectives.

Our Board Charter documents a clear separation between my responsibilities and those of the Chief Executive Officer. Our Chief Executive Officer is expected to focus on our business and ensure it is run effectively and in accordance with the Board's strategic decisions.

We interact with our stakeholders at our annual general meetings and at presentations made by our executive management team when our interim and annual results are released. This year, we again increased our focus on stakeholder relationships, particularly our relationships with our shareholders and our Venture partner. The Board has delegated the responsibility for engagement with our shareholders and potential investors to the Chief Executive Officer and the Financial Director.

I convey my thanks to our non-executive and executive directors for their valuable contributions to the Merafe Board deliberations and decision-making during 2024.

The Board is satisfied that it has discharged its responsibilities as set out in the Board Charter. I am enthusiastic about the members' contributions to the Board in the coming year.

Merafe team and Glencore

On behalf of the Board, I thank the Merafe management team and our Venture partner, Glencore, for their hard work in delivering another solid financial and operational performance in the year under review, which celebrated the 20th year of the Venture. We are now in the 21st year of the partnership, and through hard work and cooperation at all levels, the Venture has been a success in what has been a challenging local and global operating environment.

Future outlook

Our diversification into PGMs together with our Venture partner is promising, as are the other opportunities the Company is exploring. We are also confident that our strategy for cash preservation will assist the Company in coping with present challenges. I thank all stakeholders for their continued support.

STEVE PHIRI
Chairperson

7 March 2025