Merafe Resources Integrated Annual Report 2018

2018 year in review KEY FEATURES Revenue of R5.6 billion (2017: R5.9 billion) EBITDA of R1.35 billion (2017: R1.7 billion) Net profit of R683 million (2017: R914 million) Fatalities: 1 (2017: 1 fatality) Total dividend for 2018 of R351 million (2017: R301 million) Headline earnings of 27.2c per share (2017: 36.4c) Ferrochrome sales volumes of 372kt (2017: 375kt) Ferrochrome production of 407kt (2017: 395kt) TRIFR of 3.39 (2017: 3.74) Average European benchmark ferrochrome price of 131 USc/lb (2017: 142 USc/lb) Successes Revenue, EBITDA and net profit Record production volumes Nil debt at Merafe level Improved TRIFR Three-year wage agreements concluded Record dividends declared Challenges Electricity pricing and availability Commodity prices/demand volatility Community issues Operating expenses Safety MERAFE RESOURCES INTEGRATED ANNUAL REPORT 2018 3 EY FEATURES Ferrochrome The aim of our business model and strategy is to ensure that our ferrochrome interests are profitable and sustainable and that they add value to all our stakeholders. We achieve this by: • extracting chrome ore from the Venture’s mines and beneficiating it in our smelters in a safe and cost-efficient manner; • investing in projects such as the Bokamoso and Tswelopele pelletising and sintering plants and the Lion ferrochrome plant Phases I and II that improve the energy and cost efficiency of the Venture's ferrochrome operations; • employing the Venture’s proprietary Premus technology to ensure that it is the lowest-cost producer of ferrochrome in South Africa and, despite rising energy costs in South Africa, remains in the lowest quartile of the global ferrochrome production cost curve; • using the flexibility provided by the Venture’s variety of technologies to meet changing operating circumstances and customer requirements; and • focusing on reducing costs at the operations and head office. The Company may also consider acquisitions outside of ferrochrome on an opportunistic basis. OUR BUSINESS MODEL AND STRATEGY S u s t a i n a b i l i t y E m p o w e r m e n t C o r p o r a t e g o v e r n a n c e O p e r a t i o n s FeCr