Notes to the summarised consolidated financial statements

On 17 March 2023, the board of directors (the "Board") of Merafe Resources Limited (the "Company") approved the audited consolidated annual financial statements of the Group for the year ended 31 December 2022.

The consolidated annual financial statements and the summarised consolidated financial statements have been prepared under the supervision of Ditabe Chocho CA(SA) (Financial Director).

The summarised consolidated financial statements were prepared in accordance with and containing the information required by IAS 34: Interim Financial Reporting, the framework concepts and the measurement and recognition requirements of the International Financial Reporting Standards ("IFRS") a, interpretations by the International Financial Reporting Interpretations Committee (IFRIC), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee (APC), the Financial Pronouncements as issued by the Financial Reporting Standards Council, the Johannesburg Stock Exchange (JSE) Limited Listings Requirements and the requirements of the Companies Act No. 71 of 2008, as amended.

The Board takes full responsibility for the preparation of the summarised consolidated financial statements. This summarised report is extracted from audited information, but is not itself audited. The financial information has been correctly extracted from the underlying audited consolidated annual financial statements.

The audited summarised annual financial statements from which the summarised consolidated financial statements were derived have been audited by the Group's auditors, Deloitte & Touche. Their unmodified audit report along with the audited consolidated annual financial statements are available for inspection at the Company's registered office and also available on Merafe's website at www.meraferesources.co.za/stake-annual-results.php.

The auditor's report does not necessarily cover all of the information contained in this announcement/financial results. Shareholders are therefore advised that in order to obtain a full understanding of the nature of the auditor's engagement they should obtain a copy of the auditor's report together with the accompanying financial information from the issuer's registered office.

Any reference to future financial performance included in these summarised consolidated financial statements, have not been audited or reported on by the Company's auditors.

A number of the accounting policies and disclosures require the determination of fair value, for both financial and non-financial assets and liabilities.

Fair values have been determined for measurement and/or disclosure purposes based on the methods as indicated below.

Related party transactions and balances

During the current financial year, management performed a re-assessment of its related party relationships in accordance with IAS 24, Related Party Disclosures. The Glencore plc Group is a related party taking into consideration the shareholding and related significant influence coupled with the substance of the relationship. Significant transactions and balances with all entities within the Glencore plc Group are therefore disclosed together with the comparative figures.

All related party transactions relate to Merafe's attributable 20.5% interest in the Venture. There are no outstanding commitments at year end.

The Group's effective tax rate is 27.67% (2021: 28.07%) for the year ended 31 December 2022.

During the reporting period, an impairment was raised against assets to the value of R0.2 million (2021: R6 million) due to specific assets having nil economic value.

During the reporting period, inventory was written down to its net realisable value due to low commodity prices at the reporting date, which resulted in a loss or R1 million (2021:  R24 million).

On 16 August 2022, the Group decided to dispose of the mineral rights and land that form part of Boshoek mine. The liability directly associated with the asset held for sale is the environmental rehabilitation obligation. The Group considered that the sale of Boshoek mine meets the criteria to be classified as held for sale at 31 December 2022 as the transaction is expected to be effective within the next 12 months. No impairment loss has been recognised as the mineral right and land have been measured at their carrying amount.

During the current period management performed a reassessment of the environmental rehabilitation provision which resulted in a change in estimate of R92 million asset (2021:  R4 million liability). The increase in the environmental rehabilitation provision was capitalised to property, plant and equipment.

There were no changes to share capital during the reporting period.

The Group is subject to direct and indirect tax in the South African jurisdiction. As a result, significant judgment is required in determining the Group's provision for income taxes. The Group's subsidiary undertakes various cross-border transactions within the Venture, subject to the Group's transfer pricing policies.

On 16 August 2022, the tax authority issued a letter of findings against the Group's operating entity, Merafe Ferrochrome. The matter relates to transfer pricing audit findings which the Group is contesting with the South African Revenue Service. At 31 December 2022, the tax matter was ongoing. The matter has been disclosed as a contingent liability as its outcome remains uncertain, including whether any tax exposure exists, the quantum of which cannot be reliably estimated. Accordingly, no adjustment for any effects on the Group has been made in the consolidated financial statements.

As reported above, 17 March 2023, the Board resolved to declare a final cash dividend of 13 cents (2021: 22 cents) per share for the 2022 financial year. The total gross cash dividend for the year amounted to 25 cents (2021: 29 cents) per share.

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

There were no changes to the Board composition during the period.

Notice is hereby given that a gross final cash dividend of 13 cents (December 2021: 22 cents) per share has been declared payable, by the Board on 17 March 2023, to holders of ordinary shares. The dividend will be paid out of income reserves.

The ordinary dividend will be subject to a local dividend tax rate of 20%. The net local ordinary dividend, to those shareholders who are not exempt from paying dividend tax, is therefore 10.40000 cents per share. Merafe's income tax number is 9550 008 602. The number of ordinary shares issued at the date of the declaration is 2 499 126 870.

The important dates pertaining to the dividend are as follows:

Shareholders will not be permitted to dematerialise or rematerialise their ordinary shares between Wednesday, 12 April 2023 and Friday, 14 April 2023, both days inclusive.