Directors' report

Merafe was incorporated in South Africa with interests in the ferrochrome and chrome industry. The activities of the Group are undertaken through the Company and its principal subsidiary and joint arrangements. The Group operates in South Africa.

Merafe holds 100% of the issued share capital in Merafe Ferrochrome and Mining Proprietary Limited (Merafe Ferrochrome) which through a pooling and sharing venture with Glencore Operations South Africa Proprietary Limited (GOSA), participates in chrome mining and the beneficiation of chrome ore into ferrochrome. The Glencore-Merafe Chrome Pooling and Sharing Venture (Venture) operates five ferrochrome smelters (including pelletising and sintering plants), 22 ferrochrome furnaces,

Platinum Group Metals (PGMs) processing plants in the Western and Eastern limbs of the Bushveld Complex, five chrome ore mines and three UG2 plants, situated in the North West, Limpopo and Mpumalanga provinces of South Africa.

The Venture is one of the largest ferrochrome producers in the world, with an installed capacity of 2.3 million tonnes per annum. Merafe Ferrochrome's share of the earnings before interest, taxation, depreciation and amortisation (EBITDA) is 20.5%. Merafe Ferrochrome shares in the revenue, expenses and liabilities at 20.5%. The Venture comprises assets that both GOSA and Merafe Ferrochrome have granted the right of use but own in different proportions. Merafe Ferrochrome, through the Venture agreement, has a 20.5% interest in Unicorn Chrome Proprietary Limited (Unicorn Chrome).

Listed below are the operations to which Merafe Ferrochrome has granted the right of use to the Venture:

The financial statements set out the financial results of the Group and Company and have been prepared using appropriate accounting policies, conforming to IFRS Accounting Standards as issued by the International Accounting Standards Board and the requirements of the Companies Act, supported by reasonable and prudent judgements where required.

Revenue reduced to R5 835 million (2024: R8 443 million) and was supported by resilient prices and higher sales volumes of chrome ore. Ferrochrome prices and volumes were lower than the previous year and the average ZAR:USD exchange rate was stronger in 2025. Merafe's attributable share of the Venture's EBITDA was R580 million (2024: R1 766* million), inclusive of R633 million in standing charges (2024: R287 million) and a R165 million foreign exchange loss (2024: R29 million). A R4 million inventory write-down was recorded (2024: R79 million) in addition to the smelters' retrenchments costs of R198 million (2024: R67 million) and rehabilitation costs of R136 million (2024: R14 million).

Although there was no impairment adjustment processed against the cash-generating unit (CGU), specific asset adjustments were processed against the Bokamoso and the Tswelopele pelletising plants, as well as the Wonderkop smelter. The full carrying values of these plants were impaired, resulting in an impairment loss of R222 million (2024: R575 million) over the reporting period.

After deducting corporate costs of R69 million (2024: R85 million), which include R1 million in cash-settled share-based credit (2024: R15 million expense), R4 million in corporate social investment (2024: R3 million), and R9 million in bonus provisions (2024: R13 million), Merafe achieved EBITDA of R533 million (2024: R1 698* million).

Cost management remained a key focus. A higher fixed costs allocation rate arising from the supension of smelting units, increased production costs while reductions in chrome prices, reductant costs and variable power prices mitigated the overall impact, resulting in an overall 14% year-on-year increase in production costs. Despite logistical challenges, projected shipment volumes were achieved. The investment in Unicorn Chrome continued to perform well, benefiting from resilient chrome ore prices. Collaboration with co-investors will continue to explore best ways to maximise this investment's value. The margin squeeze on our smelting business was palpable resulting in the suspension of three smelting plants. The led to the commencement of the consultation process in terms of section 189 of the Labour Relations Act, No. 66 of 1995 (s189 Process) from September 2025.

Discussion with government also commenced resulting in much welcome relieve in the form of a lower electricity tariff of 87.74c/kWh. While the finalisation of this tariff paves way for the restart of Lion smelter, it is unsufficient for the restart of Wonderkop and Boshoek smelter. While discussions with Eskom continue, the s189 Process was suspended until 28 February 2026. Management is actively considering strategies to ensure the resilience and sustainability of our business.

Full details of the financial position and cash flows of the Group and Company are set out in these consolidated and separate annual financial statements.

The Group had cash and balances held with Central Treasury of R1 156 million on 31 December 2025 (2024: R1 434 million). The Group's Revolving Credit Facility (RCF) of R300 million was unutilised at year-end. Refer to note 28 for the disclosure of the Group's facilities and covenants associated with these facilities, including the Venture's facilities.

The Group had a notice deposit, cash and balances held with Central Treasury of R1 550 million and no debt at the reporting date.

The Group benefits from unutilised debt facilities through its 20.5% share of the Venture, which the Board considers sufficient to sustain the business for at least the next 12 months if the need arises. The Group's forecasts and projections of its short to medium-term profitability, taking account of likely changes in production and performance, show that the Group will be able to operate within the level of its cash resources and facilities for at least 12 months from the approval date of the annual financial statements.

The Group generated EBITDA of R533 million and made a profit after tax of R143 million in the current year. The Group and the Company maintain healthy cash balances per note 14 with access to banking and other lending facilities. The Group and Company's credit and liquidity risks have been assessed in notes 28.1 and 28.2. Having considered the Group and Company's key risks, current financial position, solvency and liquidity, debt levels, lending facilities available through the Venture, impairment review, as well as the Group and Company's financial budgets with their underlying business plans, the directors believe that the Group and Company have sufficient resources and cash flows to be able to continue as a going concern. The Group and Company's lending facilities are referenced in 28.2.

The Company has a hybrid dividend policy with features of a stable and residual dividend policy. The Company intends to pay a dividend of at least 30% of headline earnings at least once a year, taking into account, among other things, the annual financial performance, expansionary projects and economic circumstances prevailing at the time. In addition, in any given year, the directors may consider an additional distribution in the form of special dividends and share buy-backs dependent on the Company's financial position, future cash requirements, future earnings prospects, availability of distributable reserves and other factors. Dividends are recognised when they are declared by the Board of the Company.

On 6 March 2026, the Board resolved to declare a final dividend of 8 cents (2024: 8 cents) per ordinary share. This follows an interim dividend of 4 cents (2024: 20 cents) per share, bringing the total dividend for the year ended 31 December 2025 to 12 cents (2024: 28 cents) per share and amounts to 101% of headline earnings.

The full details of the authorised and issued share capital of the Company are set out in note 15 of the annual financial statements. No shares were issued in 2025.

Details of transactions with directors and key management are detailed in note 34.

The Board comprised of the following directors at the date of this report:

The following shareholders were the registered holders of 5% or more of the issued ordinary shares in the Company at 31 December 2025:

• Glencore Netherlands B.V. – 28.82% (2024: 28.82%); and
• Industrial Development Corporation of South Africa Limited – 21.88% (2024: 21.88%).

The analysis of the ordinary shareholding is given in Shareholder analysis.

Refer to note 35 for the beneficial interests of directors in shares of the Company and note 34 for transactions with executive and non-executive directors.

Details of material interests in a subsidiary company, associate and joint arrangements are presented in the annual financial statements in notes 5 and 6.

The interests of the Group in the profits and losses of its subsidiary, associate and joint arrangements for the year ended 31 December 2025 are as follows:

There was no change in the nature of the property, plant and equipment of the Group or in the policy regarding their use during the year.

The Group recognised an impairment loss of R222 million against specific assets during the current year (2024: R575 million). Refer to notes 3 and 38 in the annual financial statements.

Deloitte & Touche were re-elected as the Company's independent external auditor on 13 May 2025 in accordance with section 90, read with section 61(8), of the Companies Act. They will again be proposed for re-election for the 2026 financial year at the forthcoming Annual General Meeting (AGM) of shareholders.

The Audit and Risk Committee's report is presented in Report of the Audit and Risk Committee.

Details of related party transactions are set out in note 33 to the annual financial statements.

Electricity supply and pricing have been concerns for several years now although Eskom managed to bring stability to supply for most of 2025. While the Negotiated Pricing Agreements with Eskom and conclusion of the 100MW solar plant agreement with Pele Green had brought some relief, these were inadequate in sufficiently addressing the electricity pricing challenge faced by the Venture given the competitive pressure brought on by especially Chinese production. Discussions with government have brought about renewed hope for intervention that will result in the medium to long-term sustainability of ferrochrome smelting in South Africa.

The Group is subject to direct and indirect tax in the South African jurisdiction. The Group's subsidiary undertakes various cross-border transactions within the Venture, subject to the Group's transfer pricing policies. As a result, significant judgement is required to determine the Group's provisions for income taxes. The income tax and annual assessments are subject to examination within prescribed periods by SARS.

As previously reported, SARS finalised the audit of the transfer pricing matter on 30 October 2024 and adjusted (increased) the Company's taxable income for the 2016 and 2017 years. Pursuant to the finalisation of the audit, SARS issued additional assessments on 30 October 2024 levying additional income tax, dividends tax, understatement penalties, and interest in the aggregate amount of R406 million against the Company for the 2016 and 2017 years.

The Company disagrees with the additional assessments. After taking several procedural steps, including submitting an objection that was ultimately denied by SARS, the Company filed a notice of appeal in November 2025. This formally initiates the Tax Court appeal process. Furthermore, the Company is currently awaiting SARS' response regarding its request to review the partial suspension of payment for the disputed tax debt.

Management continues to rely on opinions obtained from external legal and tax advisers to inform and support the significant judgement required in interpreting relevant tax legislation. The matter has been disclosed as a contingent liability as its outcome, due to the dispute, remains uncertain, and any potential tax exposure cannot be reliably estimated. Accordingly, the consolidated financial statements have made no adjustment for any effects on the Group.

Eskom

In January 2026 NERSA approved a 12-month interim tariff of 87.74c/kWh. However, the interim tariff is not enough to restart all suspended smelters which require a tariff of 62c/kWh. On 27 February 2026, in-principle support for the proposed 62c/kWh electricity tariff (Proposed Tariff) was received from Eskom and the South African government (Government). Specific terms and conditions of the Proposed Tariff are critical and engagements with Eskom and Government continue. In good faith, the Venture has extended the current termination date under s189 and 189A of the Labour Relations Act, 66 of 1995 consultation process from 28 February 2026 to 31 March 2026.

Dividend

On 6 March 2026, the Board resolved to declare a final dividend of 8 cents (2024: 8 cents) per share for the 2025 financial year. The total gross cash dividend for the year amounted to 12 cents per share. The dividend will be paid out of income reserves.

The directors are not aware of any other material event which occurred after the reporting date and up to the date of this report that may require adjustment or disclosure in these annual financial statements.

The shareholders passed all special resolutions at the 2025 AGM held on 13 May 2025.

The Group's environmental rehabilitation costs are in accordance with the National Environmental Management Act No. 107 of 1998 (NEMA) and Regulation No. 1147 of 20 November 2015. There are proposed amendments to the 2015 financial provisioning regulations of the same Act, which were gazetted on 27 August 2021. These have not yet come into effect on the reporting date.

There has been an increase in the rehabilitation provision as a result of the revised rehabilitation periods for non-operating smelters (Refer to note 17).

The directors are satisfied that there are no foreseeable material risks relating to the Mineral Resources and Mineral Reserves of the Venture and the ability of the Venture to conduct its mining operations. There are also no legal proceedings or other material conditions that may impact the ability of the Venture to continue its mining or exploration activities. The abridged Mineral Resources and Mineral Reserves statement and the detailed Mineral Resources and Mineral Reserves statement have been signed off by a competent person in accordance with the South African Mineral Reporting Codes for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves 2016 edition and in compliance with the JSE Listings Requirements.