Merafe Resources Integrated Annual Report 2018

MERAFE RESOURCES INTEGRATED ANNUAL REPORT 2018 61 Significant agreements Pooling and Sharing Venture Agreement and addendums to the agreement The Venture Agreement, which was signed in July 2004, governs the pooling and sharing Venture between Merafe Ferrochrome and Glencore Operations South Africa Proprietary Limited. The respective assets of the two companies are pooled to form the world’s largest ferrochrome producer. This agreement sets out the terms and conditions under which the Venture will operate. Major shareholders The following shareholders were the registered holders of 5% or more of the issued ordinary shares in the Company at 31 December 2018: • Glencore BV – 28.68%; • The Industrial Development Corporation – 21.78%; and • PSG Konsult – 5.85% Directors’ interests in Merafe Resources Limited According to information available after reasonable enquiry, the interests of the directors and their families in the shares of the Company at 31 December 2018 are set out in note 23.1 and 23.3 of the annual financial statements and were as follows: 2018 2017 Direct beneficial Indirect beneficial Direct beneficial Indirect beneficial ZJ Matlala 2 492 305 – 2 012 305 – B Majova – 62 610 – 62 610 K Bissessor* 700 000 – D Chocho 258 565 – – – Total 2 750 870 62 610 2 712 305 62 610 * K Bissessor resigned and D Chocho was appointed effective 31 August 2018 and 1 August 2018 respectively. There have been no changes to the directors' interests since the end of the financial year and the date of this report and the release of the annual financial statements. Details of investments in subsidiaries and structured entities Refer to note 3 of the annual financial statements for details of investments in subsidiaries and structured entities. Property, plant and equipment There were no changes in the nature of property, plant and equipment or in the policy regarding their use during the year. In the prior year, management reassesed the useful lives of the permanent structures and furnaces to zero. Depreciation has increased in the current year as a result of the reassesments of the useful lives of the permanent structures and furnaces. This has resulted in an acceleration of depreciation mainly due to the Lion smelter of R38 million (2017: R30 million) on those assets. Events after the reporting date On 14 Febuary 2019 a fatality occured at the Marikana mine. Please see page 10 (Chief Executive Officer's strategic review) of this report for further information. A final dividend of R151 million (2017: R226 million) was declared on 11 March 2019. No other material facts or circumstances occurred after the reporting date that may require adjustment or disclosure in these annual financial statements. Special resolutions The following special resolutions were passed by the shareholders at the 2018 Annual General Meeting: • Approval of non-executive directors’ fees; • Loans or other financial assistance to related or inter-related companies; • General authority to repurchase Company shares; • Approval of amendments to MOI; and • Authority to sign all documents required to give effect to all resolutions. Environmental and decommissioning provision New legislation and financial provisioning regulations relating to asset retirement obligations were enacted, i.e. The National Environmental Management Act ("NEMA"). The legislation effective February 2019 will have an impact on the manner in which the environment rehabilitation costs should be determined. Therefore, this has had a significant impact on the provision for the year. Management had completed the assessments of closure costs for all mines in 2017 and has completed the assessment of closure costs for all smelters in 2018. The increase in the environmental and decommissioning provision of R53 million was a result in the revision of the closure costs as well as the remaining life of mines and useful lives of the smelters. Restatement of financial statements Merafe received a letter from the JSE on the pro-active monitoring review of the Merafe Resources Limited 2017 consolidated and seperate annual financial statements on 3 December 2018. The JSE had enquired about the disclosure of the working capital loan (liability) in the 2017 financial statements, which was treated differently in the 2016 financial statements. In the 2017 financial year, Merafe had referred to the change of the working capital loan disclosure out of trade receivables to a liability as a reclassification instead of an error which is not in compliance with IAS 8 Accounting Policies, Changes in Accounting Estimates . The JSE thus raised a finding on the inadequate disclosure of the reclassification of the working capital loan. In the 2018 financial statements, the 2017 financial year has been restated with the change in the working capital loan disclosure. Appropriate deficiency disclosure has been noted in note 32. Approval of the consolidated and separate annual financial statements of Merafe Resources Limited The consolidated and separate financial statements of Merafe Resources Limited were approved by the Board on 6 March 2019 and signed by: Chris Molefe Zanele Matlala Chairperson Chief Executive Officer 6 March 2019