Merafe Resources Limited
INTEGRATED ANNUAL REPORT
2025
Delivering today. Investing in tomorrow.
3/3
The release of the King V Report on Corporate Governance at the end of 2025 marks an important evolution in South Africa’s governance landscape. King V reinforces the central role of ethical leadership, accountability and sustainable value creation in a rapidly changing business environment. As a listed company, we welcome the continued emphasis on outcomesbased governance and the integration of strategy, risk, performance and sustainability, which aligns closely with our own approach to long-term value creation.
Strong governance remains fundamental to the confidence of our stakeholders and the resilience of our business. The Board is committed to applying the principles of King V in a manner that is both proportionate and meaningful, ensuring that governance is not a compliance exercise, but a practical enabler of responsible decision-making, transparency and sustainable performance for the benefit of all our stakeholders.
Merafe was again profitable, albeit lower, in 2025 and remains in a strong financial position, with our credit facilities at Absa being unutilised. However, and notwithstanding significant increases in revenue from our chrome ore and PGMs operations, financial performance was down from 2024 (mainly due to ferrochrome revenue being down 61%).
This is manifested in our reported revenue, EBITDA, profit after tax and net cash on hand at the end of the reporting period.
2025 marked a critical year of consolidation for South Africa following the political realignment that emerged from the 2024 elections. The Government of National Unity (GNU) spent much of the year stabilising its internal processes, aligning policy priorities, and demonstrating its ability to govern effectively in a coalition environment. While political tensions within the GNU occasionally surfaced, the commitment to macroeconomic stability and reform largely remained intact, reinforcing investor confidence. The continued absence of severe loadshedding for much of the year supported economic activity, easing pressure on businesses and households and contributing to a gradual improvement in sentiment. South Africa also came off the grey list and 2025 also saw a stronger rand/dollar exchange rate. These factors provided a platform for modest economic recovery and positivity, although growth remained constrained by structural weaknesses.
Despite these positive developments, South Africa's long‑standing challenges persisted in 2025. High unemployment, especially among the youth, crime, infrastructure backlogs, and persistent inequality continued to weigh on economic performance and social cohesion. Progress in addressing corruption and improving governance was a big concern. In a country that seriously needs a significant economic growth and sustainability, we can ill afford the despicable state of our police force that has become newsworthy for all the wrong reasons. This highlights the need for stronger implementation rather than policy intent alone. It behoves meaningful action, not commissions and inquiries. On the positive side, as in previous years, the resilience of South Africans was evident, but sustained progress will depend on decisive, ethical leadership and meaningful reform. Only through consistent policy execution, improved service delivery, and a credible commitment to inclusive growth can South Africa unlock higher investment levels and place the economy on a more sustainable long-term growth path.
Two major concerns facing our business and industry remain. 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 CEO outlines the issues that impacted the Company's performance in 2025 in the Chief Executive Officer's strategic review of her report.
Despite an ever-changing world and business environment, we will remain focused on making our business a success while providing a positive contribution to our stakeholders and the broader society.
The Company's financial performance has been negatively impacted by its ferrochrome revenue. The main factors that impacted this were a decrease in sales during the year (58%) and a stronger rand. As mentioned earlier, this was mitigated by strong chrome prices and strong operational performance from the mines and PGMs. More detail is given in the Chief Executive Officer's Report in Chief Executive Officer's strategic review and the financial capital section of this report. The CEO has also provided commentary on the Company's future strategy.
As safety remains the number one priority of Merafe and the Venture, I am pleased to report that there were no fatalities at the operations in 2025 and there were also improvements in other areas of safety. Safety and creating a safety culture in its operations are the highest priority of the Venture. For further information, see the Safety section in human capital 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 in manufactured capital. The Venture is continuing to do all it can to maintain high standards of safety.
While the challenges in 2025 remained the same as in 2024, the consequences of these challenges had a significant impact on the smelting operations of our business and its employees. This resulted in the suspension of all of the operating Venture's smelters in the year under review and necessitated the commencement of consultation processes under section 189 of the Labour Relations Act No. 66 of 1995 (s189). This is covered more fully in the review of our CEO and in the financial and manufactured capital sections.
The industry's key challenges in 2025 remained power supply and costs, the deterioration and poor infrastructure at the ports and railways and the growth of Chinese ferrochrome producers.
| i) |
Power supply and costs: The supply of power greatly improved in the year under review. Power costs, however, remain a concern for the Venture and our industry. The approval of the Venture's NPA application with 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 (PPA) with Pele Green Energy. Due to uncertainty surrounding our smelting operations, the Venture initiated discussions with Discovery Green to have the PPA with Pele Green Energy ceded to them. These discussions are ongoing. For more information, please see the Chief Executive Officer's Report and the manufactured capital section of this report. |
| ii) |
Rail and port infrastructure: I can only repeat what I said in 2024. Infrastructure is the centre pillar of any country's economic growth and sustainability. We can only grow and become competitive if we build and maintain our infrastructure. Even though we have seen some improvements, the state of the infrastructure of the railways and the ports 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 have 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. |
| iii) |
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 un-beneficiated 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. |
Another emerging key challenge is that of water. This is a crucial input in our operations, and 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 the challenges to our industry, please see the report of our CEO and the financial, manufactured and natural capital sections of this report.
We continue to take a long-term view of our business. In terms of achieving our strategic objectives, our ferrochrome interests will hopefully benefit from our investments in low-cost production facilities and technology at its operations when market conditions improve for ferrochrome. Our efficient mining operations and PGMs should continue to perform during this difficult time for ferrochrome.
We reported last year that we will continue to assess opportunities outside ferrochrome where this makes commercial sense. I am happy to report that our investment in the PGM business in previous years can be seen in the results. For further information, see the report of the CEO of this report.
We remain committed to ensuring the long-term sustainability of Merafe and the Venture, complying with legislation and overcoming any challenges we may encounter.
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 the Venture and Glencore to obtain quantitative data regarding sustainability indicators. For information on Merafe's and the Venture's review processes, refer to the sustainability review and summary of this report.
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 2026. I commented in the opening paragraphs of my report on King V and the Board's commitment to comply.
For more details on our reporting on King IV in 2025, I refer you to the governance section on pages 53 to 55 of this report for the full report and compliance analysis.
During the year, the Board and the relevant committees again took note and assessed the JSE's proactive financial statement monitoring report and the JSE's guidance papers on sustainability and climate change reporting. The Company has also complied with the amendments to the Companies Act and changes to the JSE Listings Requirements.
We agree with King'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 long 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 (and now King V), for some years now, and the feedback from stakeholders has been positive.
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 CEO. Our CEO 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. We also 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 CEO and the FD.
I convey my thanks to our non-executive and executive directors for their valuable contributions to the Merafe Board deliberations and decision-making during 2025.
The Board is satisfied that it has discharged its responsibilities as set out in the Board Charter and I look forward to members' contributions to the Board in the coming year.
On behalf of the Board, I thank the Merafe management team and our Venture partner, Glencore, for their hard work in in the year under review. We are now in the 22nd year of the partnership, and through hard work and cooperation at all levels, the Venture has been a success in what has often been a challenging local and global operating environment.
The excellent performance of the mining and PGMs operations is promising while we wait to see an improvement in ferrochrome demand and prices.
We do, however, anticipate market volatility due to geopolitical tensions, protectionist policies that are being threatened, ongoing regional wars, and potential slowdowns in Chinese industrial production. Also, while demand for stainless steel is expected to remain strong, Chinese ferrochrome production capacity will continue to pose a challenge to South African ferrochrome producers, putting pressure on pricing. As mentioned in the reports of the Chief Executive and the FD, the Company will continue to monitor its smelting operations, leverage technology for optimisation and cost reduction, and focus on environmental sustainability and ESG principles to navigate these challenges.
We remain 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
6 March 2026
