Independent Technical Experts Report on the Mineral Assets of ...

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Independent Competent Person’s Report Without Valuations December 2010

COMPETENT PERSON’S REPORT (CPR)

ON THE MINERAL ASSETS

OF SYLVANIA RESOURCES LIMITED

(SYLVANIA) WITHOUT VALUATIONS

BY VENMYN RAND (PTY) LIMITED

(VENMYN)

The Directors Sylvania Resources Limited Constantia View Office Park Block 3, 2 Hogsback Road Quellerina Extn 4 1709 Johannesburg South Africa The Directors Ambrian Partners Limited Old Change House 128 Queen Victoria Street London EC4V4BJ

SYNOPSIS

Sylvania has established a chrome recovery and platinum group elements (PGEs) processing and extraction business in South Africa predicated on its ability to build and operate metallurgical concentrators designed and engineered to treat tailings produced by both historical and current mining operations. Sylvania Metals (Pty) Limited (Sylvania Metals), the entity that operates the processing and extraction business in South Africa, is now 100% owned by Sylvania following the recent acquisition by Sylvania of a 26% shareholding in Sylvania Metals that was previously held by its BEE partner, Ehlobo. This 26% shareholding in Sylvania Metals was exchanged for an approximate 19.5% share in Sylvania through the issue of 58,882,551 new Sylvania ordinary shares to a nominee of Africa Asia Capital Limited which is a subsidiary of International Mineral Resources (IMR). IMR owns a controlling interest in Samancor Chrome which owns and operates a number of chrome mines, ferrochrome smelters and tailing dams in South Africa. Sylvania has entered into an agreement with Samancor Chrome to treat its current tailings risings and its existing tailings dams using the Sylvania Chromite Washing Plant (CWP) and PGE Recovery Plant (PRP) technology. The primary purpose of the Sylvania relationship with Samancor Chrome is to enable new technologies to be applied to the chromite miners of the Bushveld Igneous Complex (BIC) so that Samancor Chrome can benefit from increased chromite recovery efficiencies whilst Sylvania can generate revenues from PGE recoveries. The recovery of PGEs from chromite has only been of commercial interest over the past 7 years as previously the PGE grades were considered uneconomic by the chrome miners. In addition, Sylvania has acquired mineral resources in the Northern Limb of the BIC which will be required to realise its smelting and refining initiative. Sylvania has commenced with exploration work to further develop these projects. There are plans to develop the Volspruit Project to a Bankable Feasibility Study by 2011, while carrying out exploration on the farms Harriet’s Wish, Aurora and Cracouw with the aim of defining a mineral resource for the prospect. The AIM Note for mining and oil and gas companies Appendix 3 summary of reserves and resources is presented below:-

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ASSET CATEGORY GROSS NET ATTRIBUTABLE

TONNES (Mt)

GRADE 3PGE (g/t)

CONTAINED 3PGE (oz)

TONNES (Mt)

GRADE (g/t) CONTAINED

4PGE (oz)

Volspruit Project (75%)

Measured 28.47 1.26 1,153,336 21.35 1.26 865,002

Indicated 16.63 1.16 620,223 12.47 1.16 465,167

Inferred 0.76 0.95 23,213 0.57 0.95 17,410

SUBTOTAL 45.86 1.22 1,796,772 34.40 1.22 1,347,579

Everest North Project* (74%)

Measured 5.08 4.74 774,176 3.76 4.74 572,890

Indicated - - - - - -

Inferred - - - - - -

SUBTOTAL 5.08 4.74 774,176 3.76 4.74 572,890

Aurora Project PPD (71%)

Measured - - - - - -

Indicated - - - - - -

Inferred 133.43 1.34 5,748,519 94.74 1.34 4,081,449

SUBTOTAL 133.43 1.34 5,748,519 94.74 1.34 4,081,449

GRAND TOTAL 184.37 1.40 8,319,468 132.89 1.40 6,001,918

* Grade quoted in 4PGE

Operator: Sylvania Resources Limited

Rounding may result in minor computational discrepancies

Sylvania produces PGEs and chromite concentrates using standard gravity and hydrometallurgical technology in South Africa. The company is evaluating alternatives to develop its business through a strategic rationale which includes: -

expanding existing production of chromite and PGEs by accessing conventional, in the ground mineral resources as well as previously uneconomic chromite and PGE deposits which contain low grade PGE grades in existing tailings dumps and current risings;

consolidating Sylvania’s CWP/PRP technology within the Samancor Service and Supply

Agreement (Samancor Chrome Agreement) and expanding the technology throughout

the South African chrome and PGE mining industry in South Africa. The application of the

CWP/PRP technology will be evaluated for global opportunities;

further developing a joint venture relationship with Jubilee/Braemore, the owners of a direct current (DC) furnace technology to treat high chrome low grade PGE concentrates that existing PGE refiners prefer not to treat; and

the original relationship between Samancor Chrome and Sylvania was generated as a result of an open market-related tender for the dumps which was awarded on a competitive basis to Sylvania. As a result, Sylvania and Samancor Chrome have developed a mutually advantageous commercial partnership.

In Venmyn’s opinion, Sylvania has founded its business on relatively simple and standard physical and hydrometallurgical technology for which the capital costs are relatively low and the pay backs short. Sylvania is well positioned in South Africa in the heart of the PGE and chromite orebody mineral resources to take full advantage of its existing technology. It can also grow that niche position based upon a proven track record at a time when the major industry players are seeking ways to minimise cost and improve efficiencies. Prior to the introduction of Africa Asia Capital Limited, the most critical potential threat to Sylvania was the integrity of the Samancor Chrome Agreement, which provides for the on-going feed material to all of Sylvania’s plants. The Samancor Chrome Agreement was renegotiated to clarify some operational clauses and improve the current working relationship. The corporate structure within which the mineral assets described in this report have been set is shown for Sylvania (Figure 1). At the outset, it should be noted that because of the range of mineral assets to be reviewed and evaluated, this document has been structured to provide “Short and concise” information for each material asset. Therefore, this document provides the framework within which to describe the different mineral assets. However, each asset, once prepared into a Short Form Technical Statement, has been included as a specifically numbered Appendix.

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The report process took into account the principles incorporated in the requirements of the Regulatory Guides Numbers 111 and 112 of the Australian Securities and Investments Commission (ASIC), ASIC consultation Paper 143 (which relates to Regulatory Guides 111 and 112), and the Note for Mining and Oil and Gas Companies – June 2009 of the Alternative Investment Market (AIM). The Technical Statements are intended to incorporate all material issues required by the expert reporting codes and, in particular, JORC and VALMIN, of Australasia, and SAMCODE, of South Africa. The Tweefontein Complex is under review and negotiations are taking place for Sylvania to take over the existing “Green” CWP at the Tweefontein site. A scoping level study will be designed to replicate processes at Mooinooi. Whilst this is conceptual, the experience at Mooinooi should lead to successful implementation. The cost and timing will be defined shortly. In respect of the Volspruit Project, the initial Sylvania feasibility work demonstrates a positive NPV valuation but this will be prepared into a Definitive Feasibility Study over the next year and may demonstrate additional upside potential. The mass balances contained within the Metallurgical Statements were accurate at the time of the release of the document, but are subject to change with future developments. The information in this report (and the appendices) relating to exploration results, mineral resources and ore reserves is based on information compiled by Andrew Neil Clay, who is a Fellow of the Australasian Institute of Mining and Metallurgy, as set out in Appendix 3 (Qualifications, Declarations and Consents), has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person, as defined in the 2004 Edition of the JORC Code. Mr Clay is employed by Venmyn.

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DISCLAIMER AND RISKS This Competent Person’s Report has been prepared by Venmyn. In the preparation of the report, Venmyn has utilised information relating to operational methods and expectations provided to it by Sylvania. Where possible, Venmyn has verified this information from independent sources after making due enquiry on all material issues that are required in order to comply with the Code for Technical Assessment of Mineral and Petroleum Assets and Securities for Competent Person’s Reports (Valmin Code). Venmyn and its directors accept no liability for any losses arising from reliance upon the information presented in this report.

OPERATIONAL RISKS The businesses of mining and mineral exploration, development and production by their nature contain significant operational risks. The businesses depend upon, amongst other things, successful prospecting programmes and competent management.

POLITICAL AND ECONOMIC RISK Factors such as political and industrial disruption, currency fluctuation and interest rates could have an impact on Sylvania’s future operations. The majority of these factors are, and will be, beyond the control of Sylvania or any other operating entity.

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COMPETENT PERSON’S REPORT (CPR)

ON THE MINERAL ASSETS

OF SYLVANIA RESOURCES LIMITED

(SYLVANIA) BY

VENMYN RAND (PTY) LIMITED (VENMYN)

SYNOPSIS

LIST OF CONTENTS

1. NATURE AND SCOPE OF THE REPORT ................................................................................................. 1

1.1. Nature and Purpose of the Report ................................................................................................. 1

1.2. Basis of the Assessment ................................................................................................................ 1

1.3. Sources of Information ................................................................................................................... 1

1.4. Limitations and Reliance on Information ........................................................................................ 1

2. INDUSTRY OVERVIEW .............................................................................................................................. 3

2.1. Chrome and Ferrochrome Sector .................................................................................................. 3

2.1.1. Geology and Mineralogy ................................................................................................. 3

2.1.2. Geology of the Bushveld ................................................................................................. 4

2.1.3. Occurrence and Mining ................................................................................................... 4

2.1.4. World Production and Global Development ................................................................... 9

2.1.5. Ore Processing ............................................................................................................. 10

2.1.6. Uses and Applications .................................................................................................. 11

2.1.7. Ferroalloys .................................................................................................................... 11

2.1.8. Future Trends ............................................................................................................... 12

2.1.9. The Asian Influence ...................................................................................................... 13

2.1.10. Supply/Demand Dynamics for Chromite ...................................................................... 13

2.2. PGE Sector .................................................................................................................................. 14

2.2.1. Introduction ................................................................................................................... 14

2.2.2. Geology and Mineralogy ............................................................................................... 14

2.2.3. Occurrence and Mining ................................................................................................. 15

2.2.4. World Production and Global Development ................................................................. 16

2.2.5. Ore Processing ............................................................................................................. 20

2.2.6. Concentration ............................................................................................................... 20

2.2.7. Smelting ........................................................................................................................ 21

2.2.8. Base Metal Refining (BMR) .......................................................................................... 22

2.2.9. Precious Metal Refining (PMR) .................................................................................... 23

2.2.10. Low Grade Concentrate Processing ............................................................................. 24

3. South Africa’s Political and Economic Status ............................................................................................ 25

3.1. Political Climate ............................................................................................................................ 25

3.2. Economic Climate and Fiscal Regime ......................................................................................... 25

3.3. Industrial Relations ....................................................................................................................... 26

3.4. South African Infrastructure Capacity .......................................................................................... 26

3.5. Minerals Industry .......................................................................................................................... 27

3.6. South African Mining Law ............................................................................................................ 27

3.6.1. Mineral and Petroleum Resources Development Act (MPRDA) .................................. 27

3.6.2. Broad-Based Socio-Economic Charter for the South African Mining Industry ............. 28

3.6.3. Amendment of the Broad Based Socio-Economic Empowerment Charter .................. 29

3.6.4. Mineral and Petroleum Reserves Royalty Act (MPRRA) ............................................. 29

3.6.5. Chromium Mineral Rights from UG2 Mined for PGEs .................................................. 30

4. PROFILE OF THE SYLVANIA GROUP .................................................................................................... 30

4.1. Overview ...................................................................................................................................... 30

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4.2. Location ........................................................................................................................................ 30

4.3. Corporate Structure and Management ........................................................................................ 30

4.4. Samancor Chrome Mining and Tailings Operations .................................................................... 32

5. SYLVANIA MINERALS (PTY) LIMITED MINERAL ASSETS ................................................................... 33

5.1. Introduction to the Plant Complex ................................................................................................ 33

5.2. Summary ...................................................................................................................................... 34

6. SYLVANIA SOUTH AFRICA (PTY) LIMITED ........................................................................................... 34

6.1. Introduction ................................................................................................................................... 34

7. GREAT AUSTRALIAN RESOURCES LIMITED ....................................................................................... 35

7.1. Introduction ................................................................................................................................... 35

8. S A METALS LIMITED .............................................................................................................................. 35

8.1. Introduction ................................................................................................................................... 35

9. LEGAL ASPECTS AND TENURE ............................................................................................................. 35

9.1. Material Agreements .................................................................................................................... 38

9.1.1. Samancor Services Supply Agreement ........................................................................ 38

9.1.2. Offtake Agreements ...................................................................................................... 38

9.2. Environmental Considerations ..................................................................................................... 38

LIST OF APPENDICES

Appendix 1: Glossary of Terms ....................................................................................................................... 40

Appendix 2: Abbreviations ............................................................................................................................... 42

Appendix 3: Qualifications, Declarations and Consents .................................................................................. 44

Appendix 4: Metallurgical Statement for Millsell Complex ............................................................................... 59

Appendix 7: Metallurgical Statement for Mooinooi Complex ........................................................................... 60

Appendix 9: Metallurgical Statement for CTRP Complex ................................................................................ 61

Appendix 5: Metallurgical Statement for Lannex Complex .............................................................................. 62

Appendix 6: Metallurgical Statement for Steelpoort Complex ......................................................................... 63

Appendix 8: Metallurgical Statement for Doornbosch Complex ...................................................................... 64

Appendix 10: Technical Statement for Everest North Project ......................................................................... 65

Appendix 11: Technical Statement for Cracouw 391 LR (HACRA Project) .................................................... 66

Appendix 12: Technical Statement for Aurora 397 LR (HACRA Project) ........................................................ 67

Appendix 13: Technical Statement for Harriet’s Wish 393 LR (HACRA Project) ............................................ 68

Appendix 14: Technical Statement for Volspruit Project ................................................................................. 69

Appendix 15: Technical Statement for Aurora Project .................................................................................... 70

LIST OF FIGURES Figure 1: Corporate Structure of Sylvania ......................................................................................................... 2

Figure 2: Regional Location of the Western BIC and Related Mineral Assets to this Transaction ................... 5

Figure 3: Regional Location of the Eastern Bushveld and Mineral Assets Related to this Transaction ........... 6

Figure 4: Regional Location of the Northern Bushveld and Mineral Assets Related to this Transaction .......... 7

Figure 5: Schematic Geology of the BIC ........................................................................................................... 8

LIST OF TABLES

Table 1: Global Chromite Mineral Resources and Mineral Reserves ............................................................... 9

Table 2: Global Chromite Production 2007 ....................................................................................................... 9

Table 3: Global Chromite Production 2008 ....................................................................................................... 9

Table 4 : Global Chromite Production 2009 ...................................................................................................... 9

Table 5: High Carbon Ferrochrome Production in 2007 .................................................................................. 11

Table 6 : High Carbon Ferrochrome Production in 2009 ................................................................................. 11

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Table 7: Low and Medium Carbon Ferrochrome Production 2007 ................................................................. 12

Table 8 : Low and Medium Carbon Ferrochrome Production 2009 ................................................................ 12

Table 9: Typical Compositions of Various Grades of Chromite....................................................................... 12

Table 10: Global Platinum and Palladium Mineral Resources as at 2009 ...................................................... 15

Table 11: Platinum and Palladium Production in 2008 .................................................................................... 16

Table 12: Key Features of the PGE Extraction Business ................................................................................ 23

Table 13: Characteristics of BIC PGE Ore Types ........................................................................................... 24

Table 14: Types of Rights Applicable to Mining in South Africa ...................................................................... 28

Table 15: Attributable Equity of Sylvania South Africa .................................................................................... 35

Table 16: Attributable Equity of GAU ............................................................................................................... 35

Table 17: Attributable Equity of SA Metals ...................................................................................................... 35

Table 18: Summary of the Legal Tenement for Sylvania’s Mineral Properties ............................................... 36

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1. NATURE AND SCOPE OF THE REPORT

1.1. Nature and Purpose of the Report

This Competent Person’s Report has been prepared for Sylvania to describe and define the technical issues relevant to specific mineral assets within the Sylvania corporate structure. Sylvania intends changing its domicile from Australia to Bermuda by way of it becoming held by a newly incorporated Bermudan entity called Sylvania Platinum Limited that will be listed on the ASX and AIM. The existing reporting jurisdiction of Sylvania has led to this document being prepared in accordance with the Code for Technical Assessment of Mineral and Petroleum Assets and Securities for Competent Person’s Reports (Valmin Code). The principal author of this report is a fellow of the Australasian Institute of Mining and Metallurgy (AusIMM) as well as the South African regulatory bodies in the minerals industry. Venmyn was not required to comment on the fairness of any vendor or promoter considerations in relation to any of the properties which are the subject of this report and no opinion in that regard has been offered. However, the reasonableness of the underlying assumptions and the proposed business plan for each individual mineral asset has been assessed.

1.2. Basis of the Assessment

An information gathering process and investigation into the mineral assets held by Sylvania was undertaken during November 2010. This process and the information so gathered were supported by discussions with the various company management and employee representatives, together with site visits where possible. This information was used to substantially update a comprehensive review carried out by Venmyn in October 2009. The relevant details pertaining to the assessment of prospectivity, operating performance and the combination of technical issues for each mineral asset were then consolidated into compliant Short Form Technical Statements. These represent stand alone reports for each mineral asset and have been incorporated into this document as duly marked Appendices. Venmyn has, to the best of its abilities, applied its mind to the reasonableness of the information and parameters pertaining to each mineral asset.

1.3. Sources of Information

Sylvania management provided full and open access to its records and information on its mineral assets. This included corporate, legal, financial and operating information for existing plants, proposed plants and mineral projects. At the same time, the commercial and technical arrangements between Sylvania and Samancor Chrome were also provided since Samancor Chrome is the owner of the source materials for the majority of the existing CWP and PRP operations. Additional sources included the press releases and other public domain information available electronically via the Internet.

1.4. Limitations and Reliance on Information

Venmyn considers that its expert work must be prepared and considered within the context of Sylvania’s business plan to appreciate the status of the mineral assets. Venmyn’s view is also based upon technical, financial and other conditions and expectations prevailing at the date of this report. These conditions and expectations could change over relatively short periods of time. To the extent that there are legal issues relating to the mineral assets or issues relating to compliance by Sylvania with applicable laws, regulations and policies, Venmyn assumes no responsibility and offers no legal opinion or interpretation on these issues.

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2. INDUSTRY OVERVIEW

2.1. Chrome and Ferrochrome Sector

A short review of the global chromite production, supply and demand, and pricing has been prepared to set the context for the South African industry within which Sylvania’s technology is presently applied. The regional location of the Western, Eastern and Northern limbs of the BIC is shown in Figure 2, Figure 3 and Figure 4. Firstly, chromium is the most abundant of the Group VIA family of metallic elements, consisting of chromium, molybdenum and tungsten. At a concentration of nearly 400ppm in the earth's crust, it is the 13

th most common element. The only

commercial ore of chromium is chromite. 2.1.1. Geology and Mineralogy

Chromium ore, or chromite, occurs exclusively in rocks formed by the intrusion and solidification of molten lava or magma which is rich in the heavy, iron containing minerals such as pyroxenes and olivines. Within these rocks, often referred to as ultramafic igneous rocks, chromium occurs as a chromium spinel, a highly complex mineral made up, in its form, of magnesium as MgO and aluminium as Al2O3. However, the magnesium can be substituted in varying proportions by divalent iron, and the aluminium can be substituted, also in varying proportions, by trivalent chromium and trivalent iron. This actually improves the Cr:Fe ratio. For this reason, the chromium spinel may be represented as (Fe,Mg)O(Cr,Fe,Al)2O3. Large variations in the total and relative amounts of Cr and Fe in the lattice occur in different deposits. These affect the ore grade not only in terms of the Cr2O3 content but also in the Cr:Fe ratio which determines the chromium content of the ferrochromium produced. This is a very important ratio. The variations in this ratio also affect the reducibility of the ore. For example, increasing amounts of magnesium compared with iron in the divalent site will make the spinel more difficult to reduce. Conversely, increasing amounts of iron in the trivalent site, replacing aluminium, will increase the reducibility of the spinel. The greater the refractory index, the more refractory, or less reducible, the ore is. Chromium spinel is a heavy mineral and it concentrates through gravity separation from most of the other molten material in the magma during crystallisation from the cooling magma. Commercial chromite deposits are found mainly in two forms which are:-

stratiform seams in basin-like intrusions, often multiple seams through repeated igneous injections; and

the more irregular podiform or lenticular deposits.

The best known example of a stratiform deposit is the BIC of South Africa. This complex contains approximately 72% of the world's chromite reserves. The Great Dyke of Zimbabwe, traversing nearly the length of the country (NNE to SSW), is very similar and has been linked to the BIC in geological history. These two features are well-known also for their important and very large commercial deposits of PGEs. Other stratiform deposits occur in Madagascar and in the Orissa district of India. Stratiform deposits are generally very large complexes. They can be more than 5km thick and cover thousands of square kilometres. The podiform deposits are relatively small in comparison and may be shaped as pods, lenses, slabs or other irregular shapes. Many have been extensively altered to serpentine and they are often faulted. They are generally richer in chromium than the stratiform deposits and have higher Cr:Fe ratios. Mineral resources in Kazakhstan are of the podiform type. Podiform ores were originally sought after as the best source of metallurgical grade chromite for high-carbon ferrochromium. These ores also tend to be massive (hard lumpy) ores, as opposed to the softer, more friable ores from the stratiform deposits, and this makes for better electric smelting operation. There is a third type of chromite deposit but of very limited commercial significance. These are the eluvial and alluvial deposits that have been formed by weathering of chromite-bearing rock and release of the chromite spinels with subsequent gravity concentration by flowing water.

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2.1.2. Geology of the Bushveld

The Kaapvaal and Zimbabwe cratons in Southern Africa are characterised by the presence of large mafic to ultramafic layered complexes. By far the most important and economically viable of these is the BIC, which was intruded 2.06bn years ago into the rocks of the Transvaal Supergroup along the unconformity between the Magaliesburg quartzites and the overlying Rooiberg felsites. The total estimated area of the BIC is 66,000km

2, about 55% of which is covered by younger formations. The mafic rocks of the

BIC can be divided into a number of units according to their representative gravity anomalies. These include the northwestern and southwestern lobes, separated by the Pilanesberg Alkaline Complex, and the north eastern and south eastern lobes that are separated by the Steelpoort fault. The geology and stratigraphy of the BIC is presented in Figure 2, Figure 3 and Figure 4. The mafic rocks (collectively known as the Rustenburg Layered Suite - RLS) can be divided into five zones known (from the top downwards, as shown in Figure 2, Figure 3 and Figure 4) as:-

Upper Zone (UZ);

Main Zone (MZ);

Critical Zone (CZ);

Lower Zone (LZ); and

Marginal Zone.

At the base, the Marginal Zone consists of generally finer-grained rocks than those of the interior of the complex and contains an abundance of xenoliths. It is highly variable in thickness, may be completely absent in some areas and contains no economic mineralisation. The chromite layers are confined to the Critical Zone and are subdivided into Lower, Middle, and Upper Groups. All the layers of the Lower Group (LG) occur within the pyroxenites of the Lower Critical Zone. The Middle Group (MG) of layers occur at the transition from the Lower to the Upper Critical Zone, at a level where plagioclase first becomes persistently cumulus within the whole BIC sequence. The MG chromitite layers are either hosted by pyroxenites or by plagioclase-rich norites and anorthosites. The Upper Group (UG) of layers occur within the Upper Critical Zone below the Merensky Reef. The LG contains seven layers, the MG four, and the UG two layers in the western BIC and three layers in the eastern BIC. The most productive layers for chromite have been the LG6, MG4 and MG2 horizons.

2.1.3. Occurrence and Mining

The International Chromium Development Association (ICDA) estimates that world chromite reserves total 3.6Bt, with resources (exclusive of reserves) totalling 7.5Bt (Table 1). The most intensive mining occurs in the BIC, in South Africa. South Africa’s reserves and resources are the largest in the world, and consist of 3.1Bt and 5.5Bt, respectively. Zimbabwe’s resources are also substantial, and it ranks second in global chromite resources, with 1Bt. Zimbabwe exploits both stratiform deposits in the Great Dyke and podiform deposits in the Selukwe and Belingwe areas. Kazakhstan, meanwhile, ranks second in global chromite mineral reserves and third in global resources. It has podiform deposits in the Southern Ural Mountain region, with greatly varying chromium content and in Cr:Fe ratios. Finland and India each have 1% of the world’s reserves, but Finland has 2% of the world’s resources, compared with 1% in India. India's podiform bodies lie on the east coast of the state of Orissa while Finland’s are located near Kemi in northern Finland. Finland’s Cr2O3 content in its deposits is low, but the ore is successfully mined, concentrated and smelted to ferrochrome, and converted to stainless steel thereafter. Various other countries are home to the remaining 1% of global reserves and 7% of global resources. The potential reserves and resources that can be found in China have yet to be quantified, although the country is known to have podiform and stratiform deposits.

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Historically, there was sufficient high-grade metallurgical ore to meet demand. However, rapid growth in the stainless and other alloy steel industries have led to much larger reserves with lower Cr grade and higher iron content having to be exploited. Table 1: Global Chromite Mineral Resources and Mineral Reserves

RESERVES RANK RESOURCES1 RANK

COUNTRY Mt % Mt %

South Africa 3,100 85% 1 5,500 73% 1

Kazakhstan 320 9% 2 320 4% 3

Zimbabwe 140 4% 3 1,000 13% 2

Finland 41 1% 4 120 2% 4

India 27 1% 4 67 1% 5

Others 38 1% 555 7%

TOTAL 3,666 100% 7,562 100 1 Reported exclusively of reserves

2.1.4. World Production and Global Development

The years 2007, 2008 and 2009 have shown a steady drop in chromite production, as can be seen in Table 2, Table 3 and Table 4. Table 2: Global Chromite Production 2007

COUNTRY 2007 CHROMITE PRODUCTION

Mt %

South Africa 8.58 39

Kazakhstan 3.74 17

India 3.30 15

Brazil, Finland, Russia, Turkey, Zimbabwe 4.18 19

Others 2.20 10

TOTAL 22.00 100

Table 3: Global Chromite Production 2008

COUNTRY 2008 CHROMITE PRODUCTION

Mt %

South Africa 9.6 45%

Kazakstan 3.7 17%

India 3.3 15%

Others 4.9 23%

TOTAL 21.5 100%

Table 4 : Global Chromite Production 2009

COUNTRY 2009 CHROMITE PRODUCTION1

Mt %

South Africa 6.27 33%

India 3.8 20%

Kazakstan 3.23 17%

Brazil, Finland, Oman, Russia, Turkey 3.99 21%

Others 1.71 9%

TOTAL 19 100% 1 Estimate

This can largely be attributed to the global economic slowdown which had resulted in chromite producers reducing production, and is seen as uncharacteristic for an industry with has seen:-

demand for chromium alloys expanding by some 5% annually over the past decade; and

the output of chromite ore following alloy demand increases closely, with an average growth rate of 4.6% per annum over this period.

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Independent Competent Person’s Report Without Valuations December 2010

2.1.5. Ore Processing

Initial processing of chromite ores is generally by hand sorting of lumpy ores followed by heavy media or gravity separation of finer ores, to remove gangue or waste materials and produce upgraded ores or concentrates. Magnetic separation and flotation techniques may also be applied. Over 94% of the world's production of chromite is converted into various ferrochromium alloys for use in the stainless steel and other alloy industries. Chromite is generally smelted in submerged arc furnaces, together with carbonaceous reductants and fluxes, although other technologies such as DC arc furnace smelting are also in use. Importantly, agglomeration of ore fines, especially those produced from South Africa's friable chromites, is an important aspect of processing prior to smelting. Pelletising of the fines is currently the preferred route. A wide range of possible technologies for smelting chromite to ferrochromium has been investigated. Stainless steel is produced from the ferrochromium alloys by melting the alloys in electric arc furnaces together with varying amounts of carbon steel and stainless steel scrap, and then adding nickel and other minor elements for the grade of stainless steel required. In the early days of high-carbon ferrochromium production, the furnaces were supplied with high-grade, lumpy chromite from countries such as Zimbabwe, but with the increasing demand from the 1970s, most countries, and in particular South Africa, began production from lower-grade ores. The alloy produced from these ores became known as charge chrome because the chromium content was lower and the carbon content, and, in particular, the ratio of C:Cr, was very much greater than in high-carbon ferrochromium. This did not suit the stainless steelmakers who required as little carbon as possible entering their melts for each chromium unit and they had compensated for this by using larger quantities of the more costly low-carbon ferrochromium. However, the situation changed significantly with the introduction of the argon-oxygen decarburising (AOD) and vacuum-oxygen decarburising (VOD) processes. These processes enabled the steelmakers to remove carbon from the stainless melts without excessive oxidation and losses of chromium. A more advanced attempt to overcome the problem of ore fines was the introduction of DC arc, or plasma, furnace technology. Some of the advantages of DC arc furnace operation are as follows:-

application use of fine ores without agglomeration;

application of lower-cost reductants and greater choice of reductants;

better chromium recoveries;

specific changes in the charge composition as reflected in slag or metal; and

the introduction of the closed furnace enabling off-gas energy to be used for power co-generation.

Pelletising technology was introduced for friable chromite ores by binding, adding a reductant and fluxes and then passage through a rotary kiln for hardening by sintering. This also enables a degree of pre-heating and pre-reduction of the chromite feed before charging to a submerged arc furnace to produce ferrochrome. A more recent approach, and one which is being incorporated by more plants, is pelletising. Pellets are produced with coke and these are sintered and partly pre-reduced on a steel belt sintering system. From there, the pellets are delivered to pre-heating shaft kilns that are located above submerged arc furnaces and which operate as direct feed bins, making use of the off-gas heat from the furnaces. Lump ore, coke and fluxes are also directed to the feed bins. Chromite in various sizes is typically charged into a submerged AC electric arc furnace with the addition of reductants (coke, coal and quartzite). The smelting process is energy intensive, requiring up to 4MWh/t of material. Slag is separated from the liquid ferrochrome and tapped into ladles for further processing. Liquid ferrochrome is then poured into moulds and after cooling crushed into sizes as required by the customers. Crushed ferrochrome is railed to final customers or harbours for shipment.

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Independent Competent Person’s Report Without Valuations December 2010

2.1.6. Uses and Applications

Chromium is an extremely versatile element and finds a wide variety of uses in applications in the steel and alloy, chemical and refractory industries. Approximately 91% of global chromite production is smelted into ferrochromium alloys. These are used in the stainless steel, steel and other alloy industries. Chromium metal, composed of nearly 100% chromium, is produced by the aluminothermic or electrolytic process. It is mainly used for specialty alloys. Only 2% of the world's production of chromite was used in 2007 for chromium chemicals. The primary product from the chromite is sodium chromate. From this, a variety of other chemical products are made and used, for example, for tanning leather, as coloured pigments in paints, plastics and ceramics, and metal finishing such as chromium plating. Production of chromite for refractory use and foundry sands is about 4% of global chromite production. Refractory chromite is used in sectors of ferrous and non-ferrous metallurgy, in cement kilns and in the glass industry.

2.1.7. Ferroalloys

The main alloys that are produced are:-

high-carbon ferrochrome (HCFeCr), produced from ores with Cr:Fe ratios of 2.0-3.6, and with a chromium content of more than 60% and carbon content of 4-6%,

and charge chrome produced from lower grade ores, mainly from South Africa, with Cr:Fe ranging from 1.3-2.0, and containing 50-55% Cr and 6-8% carbon.

These two alloys are collectively referred to as high-carbon ferrochrome. Some 7.6Mt of HCFeCr were produced in 2007 but this dropped to 5.90Mt in 2009. South Africa share of global production dropped from 46% to 39%, while Finland, Russia and Zimbabwe’s share fell from 10% to 6%. China’s share grew significantly over the period, increasing from 14% of global production to 25%, while Kazakhstan inched up its share of global production by 2%, even though its production volumes fell. Table 5 and Table 6 show a comparison of HCFeCr production between 2007 and 2009. Table 5: High Carbon Ferrochrome Production in 2007

COUNTRY Mt %

South Africa 3.50 46%

Kazakhstan 1.06 14%

China 1.06 14%

India 0.84 11%

Finland, Russia, Zimbabwe 0.76 10%

Others* 0.38 5%

7.60 100%

* Brazil, Iran, Japan, Sweden, & Turkey

Table 6 : High Carbon Ferrochrome Production in 2009

COUNTRY Mt %

South Africa 2.30 39%

China 1.48 25%

Kazakhstan 0.94 16%

India 0.65 11%

Finland, Russia, Zimbabwe 0.35 6%

Others* 0.18 3%

TOTAL 5.90 100%

* Albania, Iran, Sweden, Turkey and Zimbabwe

Levels of impurities of sulphur, phosphorous, and titanium are defined in the alloys with minimum or maximum levels of silicon, depending upon the steelmaking process and required exothermic oxidation of silicon to provide additional energy. Medium-carbon ferrochrome (MCFeCr), for instance, contains less than 5%C and low-carbon ferrochrome (LCFeCr) has less than 0.1%C and less than 1%Si.

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Independent Competent Person’s Report Without Valuations December 2010

MCFeCr and LCFeCr, like HCFeCr, were produced in lower volumes in 2009 as compared with 2007, with 500kt being produced as compared with 681kt in 2007. China, Russia, South Africa, and Kazakhstan remained the main producers in 2009, but China’s share of world production has grown significantly. This is shown in Table 7 and Table 8:-

Table 7: Low and Medium Carbon Ferrochrome Production 2007

COUNTRY kt %

China 245 36%

Russia 218 32%

South Africa 89 13%

Kazakhstan 75 11%

Others 54 8%

681 100%

Table 8 : Low and Medium Carbon Ferrochrome Production 2009

COUNTRY kt %

China 300 60%

Russia 100 20%

Kazakhstan 40 8%

South Africa 25 5%

Others 35 7%

TOTAL 500 100%

Chromium provides stainless steel with its corrosion resistant properties. Nickel and, in the top grades of stainless steel, titanium and molybdenum can also be added to improve technical performance in specific environments. For the purpose of this transaction, further details concerning chrome metal, chemicals and refractories are not relevant. However, Table 9 is a summary of the typical compositions of the chromite required for various types of end-uses: - Table 9: Typical Compositions of Various Grades of Chromite

USE %Cr2O3 %C Cr:Fe %SiO2

HCFeCr >60 4 - 6 2.0 - 3.6 2 - 4

Charge Chrome 50 - 55 6 - 8 1.3 - 2.0

MCFeCr <5

LCFeCr <0.1 <1.0

Chemical 40 - 46 <2.1

Refractory >60 (plus Al2O3) 0.7

2.1.8. Future Trends

Specifications of chromite for metallurgical uses are becoming less rigid. For the manufacture of ferrochrome, the Cr2O3 has decreased from 48% to 46% (minimum) and the Cr:Fe ratio from 2.8:1 to 2:1. This has resulted in the broadening of the base of metallurgical-grade chromite. However, the specification of the ores for charge chrome is far more rigid. A similar trend is also noted in the grade of the refractory grade ore. Also, the use of technologies such as pelletisation, agglomeration, plasma arc technology and direct reduction have meant the ores that were previously considered uneconomic can be used to economically produce ferrochrome. Cutting edge technology, such as Outokumpu Technology, has greatly changed the landscape of the chromite mining industry by making the process more efficient. The advantages of the new technology are:-

lower total production cost;

high chrome recovery;

environmentally friendly process;

clean and safe plant to operate; and

higher production unit capacity available.

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Independent Competent Person’s Report Without Valuations December 2010

Importantly, the retreatment of tailings dams and future risings at existing operations has been a development that has spawned businesses like Sylvania, although Sylvania has been the leader in this regard. Part of the reason for this trend was the recognition that many of the chrome seams, traditionally mined for chromite, contain low grade PGEs which, at high metal prices, could be economically liberated. This was however, really developed from the PGE industry’s Aquarius Platinum Limited (AQP).starting to mine UG2 ore at Kroondal mine in the late 1990s.

2.1.9. The Asian Influence

As the world is experiencing a dramatic economic downturn, with many major economies in a recession, China has continued to post positive growth rate figures. However, the growth of the Chinese economy has slowed from the rate of the past decade. It remains an important driver of many commodity markets, fuelled by strong materials-intensive growth over the last 20 years. Citigroup notes that the Chinese contributions to global economic growth and commodities consumption have been dramatic and, currently, China accounts for:-

5% of global GDP on an exchange rate basis;

11% of world GDP on a purchasing power parity basis, up from 9% in 1995; and

8% of world industrial production, up from 6% in 1995.

The intensity of use of metals and minerals in China lags behind those of the developed economies of the world and especially those of the newly-industralised economies of South Korea and Taiwan. It is, therefore, possible that strong growth in the commodity consumption could be sustained, albeit at rates lower than experienced during the last few years. South Africa has sufficient chromite Mineral Resources (5.5bn tonnes) to sustain an estimated 200 years of mining at current production rates.

2.1.10. Supply/Demand Dynamics for Chromite

The world market for chromite is driven primarily by the world’s demand for ferrochrome used in stainless steels. The largest growth market for chromites has been in ferrochrome production for stainless steels. The secondary markets are all either stable or declining slightly. Especially in the secondary markets, there are environmental concerns related to hexavalent chromium (Cr

6+). In the refractory market, several large international

producers have dropped chromite-bearing refractory from their product range, and in the wood preservatives market, chromated copper arsenate (CCA). It was almost banned in the United States but was allowed to be used provided mitigation measures were submitted. However, it is likely that other chemicals will not be so fortunate. The mining of chromite has shifted from the one based on high-grade ores to one based on lower-grade deposits that are extensive in size. Because of the economies-of-scale, this makes the mining operations competitive in terms of costs to the smaller high-grade ones. Traditionally, mined deposits were sourced from thick chromite seams (preferably 2m) to reduce the unit mining costs. In addition, a high Cr:Fe ratio in the basic chromitite mineral (three at the highest) was sought in order to reduce the unit cost of producing chrome metal as ferrochrome. South Africa’s BIC chromite seams are relatively low grade with Cr:Fe ratios of typically 1.7 or less. Early producers exploited reserves with Cr:Fe ratios of greater than three, but following the advent of the AOD process that permitted charge chrome alloy grades (typically 50 to 52% Cr) to be converted to stainless steel, by the 1980s reserves of Cr:Fe ratios of less than two became the norm. Currently, the typical smelter feeds have a Cr:Fe ratio of approximately 1.5 but ratio requirements are dropping as alloy grades of less than 50%Cr (with concomitantly increased Fe credits) have started to become accepted by some customers.

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Independent Competent Person’s Report Without Valuations December 2010

During the past two decades this has led to the increasing dominance of South Africa as the geographical source of chromites and ferrochrome, so much so that South Africa is the world’s leading supplier of ferrochrome. The factors affecting the global supply of chromite are:-

growth in supply of raw ore for export will be limited by South Africa’s power and water issues;

ore export tariffs were introduced in India (USD40/t), and the Kazakhstan government may follow with similar tariffs;

ferrochrome production costs are rising due to increasing power costs, under utilization of capacity and aggressive inflation in baseline costs;

infrastructure solutions, including rail and port facilities, are likely to be long-term;

deferral of capacity expansion in South Africa limits response to rising demand, creating expected supply shortages for an extended period;

global contract for ferrochrome price at USD1.30/lb which probably is marginally above production costs; and

volatile 2010 contract prices as a result of current global economic issues.

The following factors influence global demand of ferrochrome:-

world consumption of ferrochrome increased from 6.1Mt in 2006 to 7.3Mt in 2007 (19%);

90% of ferrochrome is used in stainless steel and alloy steel production;

there are no substitutes for ferrochrome in the production of stainless steel;

ferrochrome production tracks at 25% of stainless steel volume (28Mt in 2007);

ferrochrome’s growth is expected to be greater than 7% per annum due to shift from austenitic to ferritic stainless steel production (BRIC countries);

China stainless steel production growth was 500% from 1996 to 2006;

Asia now accounts for 60% of global stainless steel production; and

North America imports 400 to 500kt of ferrochrome annually.

2.2. PGE Sector

A short review of the global PGE production, supply and demand, and pricing has been prepared to set the context for the South African industry. 2.2.1. Introduction

PGEs include six closely related elements: platinum (Pt), palladium (Pd), rhodium (Rh), iridium (Ir), ruthenium (Ru), and osmium (Os). Gold (Au) is normally quoted as part of the prill split and included as, for example, 3PGEs plus gold. Each metal has slightly different characteristics and uses. Platinum and palladium are by far the most abundant in all deposits, and the other four are always minor byproducts from exploitation of platinum-palladium deposits, except in alluvial occurrences (which are now relatively minor producers), where osmium and iridium may be abundant. All world resource estimates recognise the importance of the BIC in such global figures.

2.2.2. Geology and Mineralogy

The pattern of values in different ore samples can vary widely. The precious metals occur in a variety of forms. One or more of the metals may be present in combination with sulphur, arsenic, selenium, or tellurium metallic particles of PGEs, or PGEs alloyed with base metals are also found. Additional PGEs are found in solid solution in base-metal sulphide particles.

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In the BIC, the PGEs occur in the Merensky Reef, UG2 Reef, and Platreef. Chromite crystals form a large part of the volume of UG2 PGE ore and other chrome ores. Base-metal sulphides are much more prevalent in Merensky and Platreef ores than in the UG2 or chrome ores. The grain size of mineral particles varies widely but is coarsest in Merensky Reef ores. The difficulty in recovering PGEs from any particular ore is determined by the ore's mineralogy. Although Merensky ores are often easier to treat, it is not easy to generalise. Ore from different areas of the same mine can have quite different characteristics.

2.2.3. Occurrence and Mining

The PGE resources of the BIC were discovered by Hans Merensky and Andries Lombaard in 1924. Within the complex, three horizons occur. The Merensky Reef, UG2 Chromitite, and the Platreef are mined for PGEs and make the BIC the largest PGE source in the world. Platinum and palladium production from the BIC represents 72% and 34% of annual global production, respectively. The location of the reefs is shown in Figure 2, Figure 3 and Figure 4. The Merensky Reef is the source of over 80% of the platinum mined in South Africa and this has been successfully exploited since the late 1920s. More PGEs are found in the chromitite reefs of the BIC. The highest PGE values are associated with the UG2 Reef which lies about 200m below the Merensky. Since the mid 1970s increasing tonnages of UG2 ore have been mined and treated by the established producers. Smaller quantities of PGEs are found in the middle and lower group chrome seams which are mined for their chrome content. Recently, some of these PGEs have been recovered by re-treatment of chrome mine tailings in Chrome Washing Plants (CWP). Other similar schemes are planned, though the quantities of precious metals from this source will not be large relative to the mines. In the case of Sylvania, it operates the CWP and PRP plants in tandem.

The PGE-bearing Platreef occurs in the northern portion of the BIC. Mining of this reef was discontinued in the early 1930s owing to treatment difficulties and patchy values. Exploration and test-work have continued and currently, only Anglo Platinum is mining on this reef for PGEs. The global platinum and palladium mineral resources for different countries are shown in Table 10:-

Table 10: Global Platinum and Palladium Mineral Resources as at 2009

PLATINUM PALLADIUM

COUNTRY CONTENT RANK CONTENT RANK

Moz kt % Moz kt %

South Africa 1,142.00 35.53 74.69 1 827.10 25.73 50.06 1

Zimbabwe 143.00 4.45 9.35 2 87.00 2.71 5.27 4

Russia 89.00 2.77 5.82 3 314.00 9.77 19.01 2

United States 45.00 1.40 2.94 4 162.00 5.04 9.81 3

Canada 11.00 0.34 0.72 5 13.00 0.40 0.79 5

Others 99.00 3.08 6.47 249.00 7.75 15.07

TOTAL 1,529.00 47.57 100.00 1,652.10 51.40 100.00 Source: South African Journal of Science

The mining of PGE ores is similar to Witwatersrand gold mining inasmuch as the BIC orebodies are normally thin, tabular reefs covering an extensive area. This enables a progressive method of mining – the reef is drilled and blasted to advance the face, with support being installed for local control of the hanging wall. As in the Witwatersrand gold mines, PGE mining is incorporating the increased use of mechanisation and trackless-mining methods in stopes little more than 1m high. PGE mining, however, differs from gold mining in several ways. Unlike gold reefs, which are sedimentary deposits resulting from the settling of granular particles on the bed of an inland lake and subjected to great pressure, PGE reefs are igneous rocks.

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Independent Competent Person’s Report Without Valuations December 2010

They were intruded into the BIC as molten volcanic magma rising from below the earth's crust, and later cooling and solidifying. This phenomenon created a strata control environment differing markedly from that of the gold mines. The Merensky and UG2 reefs are narrow (typically less than 1m thick). Traditionally, both reefs were mined using narrow reef methods, and many operations continue to use these methods today. Miners use hand-held pneumatic drills to drill holes that are then filled with explosives. After blasting, the ore is removed from the stope using scrapers attached to winches. It is then transported through a series of ore passes to the bottom of the shaft, and hauled to the surface. Mechanical and hybrid methods are increasingly being adopted by both new and existing mines. Drilling may be carried out either using conventional hand-held pneumatic drills, or via low-profile machines equipped with specialised drilling equipment. Ore is subsequently cleaned from the stopes using low-profile load-haul-dump (LHD) vehicles. The mining width, typically around 1.8m, must allow the use of machinery although some mines are experimenting with ultra-low profile equipment which can operate in stopes little more than a metre high. Open-pit methods are used to mine the Platreef, which is much wider than the other reefs, varying between 5m and 90m in thickness. Open casting is also used on a smaller scale to exploit the UG2 and Merensky Reef where it outcrops. Mill-head grades of the BIC ore (a measure of the ore's PGE content as it enters the first stage of processing) are typically between 3 and 6g/t. Allowing for losses which occur during refining, and the varying platinum contents of the different BIC ores, this means that between 10 and 25t of ore must be processed to obtain a single ounce of platinum.

2.2.4. World Production and Global Development

Global platinum supplies fell in 2008, for the second successive year, to 6.42Moz, a level last seen in 2002. The supplies of platinum from South Africa decreased by 10.7%, to 4.92Moz, whilst Russian platinum supplies also fell by over 10%, to 0.80Moz. Total palladium supplies fell by 14.8%, to 6.61Moz, their lowest for five years, due to lower mine production in South Africa, Russia, and North America and reduced sales of Russian state stocks compared to the previous year. In 2008, world production of platinum and palladium, combined, stood at approximately 13Moz with the data as given in Table 11:-

Table 11: Platinum and Palladium Production in 2008

PLATINUM PALLADIUM

COUNTRY MINE PRODUCTION RANK MINE PRODUCTION RANK

Moz t % Moz t %

South Africa 4.92 153.00 76.61 1 2.57 80.00 38.91 2

Russia 0.80 25.00 12.52 2 2.83 88.00 42.80 1

Canada 0.23 7.20 3.61 3 0.40 12.50 6.08 3

Zimbabwe 0.18 5.60 2.80 4 0.14 4.40 2.14 5

United States 0.12 3.70 1.85 5 0.40 12.40 6.03 4

Colombia 0.05 1.70 0.85 6 0.00 0.00 0.00 6

Others 0.11 3.50 1.75 0.27 8.30 4.04

TOTAL 6.42 199.70 100.00 6.61 205.60 100.00 Source: USGS

A wide range of problems afflicted the mining industry during 2008. At the start of the year, interruptions to electricity supplies in South Africa caused great uncertainty in the market. In fact, only a limited amount of platinum production (approximately 60koz) was lost directly due to the power situation but bad weather conditions in the first quarter, industrial unrest, skills shortages, and numerous safety shutdowns further depressed production. Smelter problems at some of the major South African mining houses also had a significant impact on output.

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Independent Competent Person’s Report Without Valuations December 2010

Later in the year, the mining industry was forced to react to sharp falls in metal prices. In North America, some PGE and nickel mines were placed under care and maintenance and other operations have been reorganised with the aim of ensuring their economic sustainability, with an associated cut in production capacity. In South Africa, planned capital expenditure had been cut heavily at most mines. In contrast to North America, however, relatively little current production capacity had been closed with only a limited number of shafts, pits or smaller operations affected. Difficult economic conditions negatively affected demand for platinum in many sectors during 2009, driving gross demand 11.9% lower to 7.04Moz. Supplies fell by only 20,000oz to 5.92Moz despite the closure of some uneconomic mine production in South Africa. Although the weight of platinum recovered from open loop recycling also fell, to 1.41Moz, the platinum market was in oversupply by 285,000oz during 2009. The short term outlook for platinum production in South Africa is quietly positive. The three newest mines, Blue Ridge, Pilanesberg and Smokey Hills, should continue to ramp up to full production. Other mines, such as Two Rivers, should produce more platinum in the near term. Continuing progress in developing new shafts at Lonmin should boost underlying production marginally, although refined sales will be dependent on smelter availability. Production at Impala is set to remain relatively flat but there is some scope for additional sales of refined metal. At Anglo Platinum, the company has acknowledged that it may elect to increase production by up to 200,000oz of platinum above its planned guidance for 2010, if the market demands it, suggesting that underlying production should rise above 2009 levels. Palladium demand also suffered due to the weak state of the world’s economy. Gross automotive demand fell by 9.3% and gross electrical sector demand decreased by 7.3% as companies and individuals restrained their spending in the first half of 2009, in particular. Although the economic picture started to improve later in 2009, total gross demand fell to 7.77Moz. Supplies of palladium fell to 7.10Moz, including the sale of 960,000oz from Russian state stocks, with mine output decreasing in North America, Russia and South Africa, but rising in Zimbabwe. The weight of metal recovered from scrapped autocatalysts, electronics and jewellery declined to 1.43Moz. The palladium market was therefore in oversupply during 2009 by 760,000oz, a slightly larger surplus than in the previous year. Supplies of palladium from current Russian mining are expected to increase marginally, in line with higher nickel output from Norilsk Nickel’s Polar and Kola operations. Sales are also expected of the remainder of the palladium originally shipped from Russian state stocks in 2007 and 2008, equating to roughly 1Moz. Little if any clarity exists in the longer term about the size and likely fate of remaining palladium stocks. However, over ten tonnes of palladium were shipped into Switzerland in early 2010, apparently also from Russian State stocks, which are not expected to be sold during 2010, although such sales remain possible and, if they were to occur, would boost supplies further. A summary of the world’s platinum market during 2010 as presented by the Johnson Matthey report is as follows:-

the platinum market was in surplus by 290,000oz. Gross demand is set to rise by 11% to 7.56 Moz

supplies are expected to remain flat at 6.01 Moz, while recovery from recycling is forecast to increase to 1.84Moz.

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Independent Competent Person’s Report Without Valuations December 2010

gross autotmotive demand for platinum is forecast to increase by 800,000 oz to 2.99 Moz.

gross demand from the jewellery sector is set to decline by 14% in 2010 to 2.42 Moz as consumers feel the effect of higher prices;

industrial demand is expected to rise by 51% to 1.72 Moz, back to the 2008 level; and

identifiable physical investment demand is forecast to decrease by 34% to 435,000 oz.

A summary of the world’s palladium market during 2010 as presented by the Johnson Matthey report is as follows:-

palladium was in surplus by 45,000oz in 2010. Gross demand is expected to rise by 15% to 8.94 Moz. Supplies of palladium are flat at 7.14 Moz.. Palladium recovery from recycling is set to increase by 29% to 1.85 Moz;gross automotive demand for palladium is set to rise by 27% to 5.15 Moz with purchases of palladium higher in all regions;

gross palladium jewellery is expected to fall by 8% to 630,000oz due to weaker Chinese demand;

gross industrial demand for palladium (is expected to increase by 8% to 2.49 Moz; net annual identifiable physical investment demand for palladium is anticipated to rise to 670,000 oz, an increase of 7%.

PGEs: Looking Back and Forward

A power crisis in January 2008 in South Africa, the world’s largest producer of PGEs, resulted in the closure of all PGE mines for five days. This had the effect of causing production losses leading to supply fears and record-high prices in the first half of 2008. As such, prices of platinum reached an all-time high of USD2,275/oz and that of rhodium also reaching an all-time high of USD10,100/oz. Palladium reached a 7-year high of USD585/oz in 2008, although this price level has since been exceeded, with palladium reaching USD720/oz in November 2010. The global economic downturn has resulted in lower automobile demand, which in turn resulted in the decline of consumption, and therefore, prices of PGEs in the second half of 2008. The desire for an alternative fuel, both for automobiles and homes, has led to a large global public and private effort to develop fuel cell technology. Platinum is the catalyst used in these cells. A decrease in car sales in Europe and North America caused a decrease in the consumption of platinum and palladium in 2009. 2010 however saw a recovery in the automotive sector which caused an increase in demand for PGE’s. The tightening of emissions standards in China, Europe, Japan, and other parts of the world is expected to lead to higher average platinum loadings on catalysts, particularly in light-duty diesel vehicles, as particulate matter emissions become more tightly controlled. Thrifting is continuing at most manufacturers and is likely to lead to the reduction of use of platinum and palladium in auto-catalysts. The large price difference between platinum and palladium has led to the assumption that car manufacturers will continue to change PGEs ratio in petrol-engine vehicles in favour of palladium, as well as continue efforts to increase the proportion of palladium used in diesel vehicles. The sale of platinum jewellery is expected to drop globally as the price continues to be high and white gold and palladium are substituted for platinum. In May 2008, new investment vehicles for PGEs, ETNs (Exchange Traded Notes), were launched for platinum and palladium and are the first such PGE-trading product available to US investors. Unlike exchange-traded funds (ETFs), ETNs are based on futures contracts, and the physical metal is not held. For most other end-uses, certain PGEs can be substituted for other PGEs, with some losses in efficiency. In addition, electronic parts manufacturers are reducing the average palladium content of the conductive pastes used to form the electrodes of multi-layer ceramic capacitors by substituting base-metals or silver-palladium pastes that contain significantly less palladium.

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Independent Competent Person’s Report Without Valuations December 2010

The outlook for rhodium demand in 2009/2010 is poor. Demand for this metal is highly dependent on vehicle output which is currently very weak. Also, car makers are reducing average rhodium loadings in catalysts (the result of thrift programmes carried out at higher metal prices). Although vehicle production is expected to rise from the very low levels of early 2009, gross rhodium auto-catalyst demand is expected to fall sharply this year. The effects of the high rhodium price were also seen in the glass sector last year. Rhodium/platinum alloys are used to prolong the working life of components which are in contact with molten glass. At the highest rhodium prices, the cost savings made by de-alloying drove the greater use of lower-rhodium alloys and demand for rhodium fell substantially. However, the glass industry is able to vary its use of PGEs quite rapidly. The rhodium market moved from a surplus of 25,000oz in 2008 into a much larger surplus of 241,000oz in 2009. Supplies rose from 695,000oz to 770,000oz. Demand was hit by a poor performance by its largest sector, the automotive market, where gross demand fell 19.4% lower to 619,000oz, the lowest figure since 2004. Demand fell in most other applications too, although some of this weakness was offset by lower rhodium recovery from scrapped autocatalysts. It is expected that rhodium will be in another large fundamental surplus in 2010. Supplies of rhodium are unlikely to change significantly from 2009. Production of refined rhodium was hit by a build-up in pipeline stocks in 2008 and some of this metal was refined and sold in 2009, boosting supplies strongly. With the pipeline now less full, sales of rhodium should revert to closer to the level of mine output. So, although increasing production from rhodium-rich UG2 ore on the BC should boost underlying output, supplies will rise by less this year. Rhodium supplies from other producing nations should remain flat. The fate of the ruthenium market is closely tied to that of the electronics sector. With consumer and business purchasing of electronic goods currently weak, gross ruthenium demand is expected to soften. Additionally, the sector is likely to be able to meet most of its ruthenium requirements for the production of hard disks by using metal recycled from its own manufacturing processes. At current price levels, it remains attractive to recycle much of the scrap produced in the manufacture of hard disks. However, at prices significantly below this, recycling becomes less attractive than purchasing new metal. If the price falls further, therefore, net demand could rise strongly, providing some support for the metal price. Ruthenium demand decreased from 699,000oz to 574,000oz in 2009, continuing its slide from the elevated levels of 2006. Demand in the electrical sector fell once again, to 336,000oz, and chemical industry demand softened too. Ruthenium use in the electrochemical sector and in a number of other small applications was steady compared to previous year levels. Supplies were adequate to meet demand. Demand for Ruthenium grew in 2010, largely due to increased demand from the hard disk industry. Perpendicular magnetic recording (PMR) is now the dominant hard disk technology and this market should start to grow rapidly once more as computer sales recover, driving ruthenium usage higher. As importantly, the hard disk makers have reduced their working stocks of ruthenium and are no longer able to source the majority of their requirements from material they had previously bought. Purchases of ruthenium by the industry, equivalent to demand, are therefore rising strongly. The outlook for iridium demand in 2009/2010 was weak. Demand for iridium crucibles for the growth of high quality crystals started to decrease in 2008 and declined further in 2009. Use of this metal in spark plugs and aero-engine igniters is also likely to soften. However, newer technology used in the chlor-alkali process will continue to replace older mercury-based cells, leading to steady iridium demand from the electrochemical industry. Iridium demand dropped in 2009, slipping from 102,000oz to 91,000oz. In the electrochemical sector, demand rose from 25,000oz to 33,000oz, reflecting the move to upgrade the Chinese chlor-alkali industry to membrane technology.

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Independent Competent Person’s Report Without Valuations December 2010

Chemical demand remained flat at 21,000oz. Temporary falls in demand for iridium crucibles and for new vehicles drove demand in the electrical sector and other applications, principally spark plugs, lower to 7,000oz and 30,000oz, respectively. Supplies of iridium, mainly from South Africa, remained sufficient to meet demand and the price moved little throughout the year, remaining at USD425 for most of 2009. Iridium demand is also forecast to perform well this year. Increasing car production will boost iridium demand for use in high-specification spark plugs. Demand for iridium crucibles for growing high-quality metal oxide single crystals is also set to rebound. Electrochemical demand should strengthen again, reflecting the continuing conversion of mercury cell chlor-alkali technology to more environmentally-friendly membrane cells in Asia and in other regions.

2.2.5. Ore Processing

The processing of BIC PGE ores poses a number of challenges due to the nature of the mineralogy and the subsequent smelting requirements. Merensky Reef ores are the easiest to treat, followed by Platreef ores, and then the UG2 Reef ores. The characteristics of the PGE ores from the Western Limb are well known, as compared to those from the other regions. The PGE mineralogy changes significantly on the Eastern Limb, where the PGE minerals are not only finer, but have a greater association with bismuth and antimony, resulting in more difficult flotation metallurgy. Similarly, on the Northern Limb, although superficially similar to Merensky Reef ores, Platreef ores have a different PGE mineralogy which results in a poorer process response. The Merensky Reef is characterised by high PGE grades and a high ratio of platinum to the other PGEs. Although the grade and the PGE proportions are relatively constant, the PGE mineralogy varies considerably. In general, the Pt-Pd sulphides are dominant (60%), followed by the PGE tellurides (11%) and arsenides (6%), with the balance of mostly PGE alloys and Ag/Au phases. There are three PGE associations which are:-

enclosed in or attached to base-metal sulphides (BMS);

enclosed in silicates; and

enclosed in or attached to chromite.

The first association is the most dominant in Merensky Reef ores. The BMS content is around 1% by weight, and consists of mainly pyrrhotite, pentlandite, and chalcopyrite. The PGEs are coarse (20 to 150microns) and are well liberated after comminution. They generally float quickly, reporting with the chalcopyrite to the first rougher cell concentrates. Most composites are with the BMS and also float well. The remainder of the ore consists of mostly silicate minerals such as pyroxene and plagioclase, with some talc and chromite. Although neither pyroxene nor feldspar show any natural flotation tendencies, they can become activated by base-metal ions and subsequently float after interaction with collectors. Talc, a naturally floating mineral, can also rim the pyroxene particles, resulting in flotation.

2.2.6. Concentration

During the processing of Merensky Reef ores, the BMSs and PGEs are recovered using conventional sulphide ore flotation practice to produce a bulk concentrate. A standard rougher-scavenging operation is followed by several cleaning stages. The treatment strategy employs the Mill-Float-Mill-Float or MF2 approach, where the ore is coarsely milled and floated and the flotation tailings further milled to a finer size and re-floated. Comminution is undertaken in low aspect ratio semi-autogenous (SAG) mills using high-chrome grinding media with typical sequential grind sizes of 60% and 75% passing 74microns.

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With such a low BMS content, successful flotation recovery of the PGEs relies on the flotation of gangue minerals to stabilise the froth until the very last stages of cleaning. The process water is saturated with calcium and is high in magnesium with a pH of around 9, which are not ideal conditions for pyrrhotite recovery. A Merensky Reef final concentrate typically has a grade of 130-150g/t PGE, 2-4% Ni, 1.5-2.1% Cu, and 5-9% sulphur, with typical flotation recoveries of 85-90% PGEs, 82-85% Ni, and 85% Cu (4% mass pull). The bulk of the concentrate is made up of pyroxene containing less than 0.1% chromite. There are some differences in the equipment and operations employed by the various producers. Where platinum alloys are more abundant, a dedicated flotation circuit is used to produce a metallic PGE concentrate that is sufficiently rich to bypass the smelter and is sent straight to base-metal refinery (BMR). Some producers adopt a MF1 (a single mill and float) approach and chase PGE recovery rather than grade, which is only possible when sufficient smelting capacity is available. The UG2 Reef ores are dominated by chromite and high rhodium. However, they are very low in BMS. There are generally more PGE sulphides than in Merensky Reef ores, but, they are considerably finer grained (3 to 10microns). Although the mineralogy is different, a similar approach is used. Due to the fineness of the PGEs and their gangue associations, the process flow sheet employs three sequential stages of milling and flotation (MF3), with a final grind size of 80% passing 74microns. This approach attempts to minimise the over-grinding of the brittle chromite phase, which is exacerbated during classification of the high-density chromite by hydrocyclones. Mainly due to size effects, the liberated PGEs float more slowly than the BMS. Whilst some PGE recovery is due to the flotation of chromite composites, PGEs associated with silicates are generally lost. The final concentrate has a grade of 400g/t PGE and 3% Cr2O3 (1% mass pull) and a PGE recovery greater than 87%. This is achieved by carefully managing the entrainment of fine chromite; better PGE metallurgy (1,000g/t PGE at more than 90% PGE recovery) is possible at 6 to 10% Cr2O3 grades. As noted above, the processing methods for UG2 ores is constantly evolving. In order to maximise PGE recoveries, some producers screen the primary mill discharge at 800microns to produce a High Grade stream (-800 micron fraction, with 90% of the PGE in 65% of the mass) and a Low Grade stream for separate treatment. A more holistic approach has been by one of new PGE entrants, where bulk mechanised mining is used to produce a heavily diluted ore that is pre-treated by Heavy Media Separation (HMS) to yield a saleable chromite product and feed for the processing circuit. Other producers are exploring the potential of fine milling technologies such as the IsaMill™ to produce high grade concentrates (more than 2,000g/t) that can bypass the smelting stage. The Platreef ore has equal platinum to palladium ratio and substantial nickel content. The PGE mineralogy tends to be erratic and the dominant class is Pt-Pd tellurides, followed by the arsenides, alloys, and sulphides. While the PGEs are coarser than those in the Merensky Reef ores, the PGE tellurides and arsenides are encapsulated in the silicate gangue. After milling, typically only 70% of the PGEs are liberated. Like the Merensky Reef ore, it is a pyroxenite ore with a similar assemblage of gangue minerals and a similar processing approach is employed. Therefore, oxidised ores are mined from time-to-time and poor flotation metallurgy is experienced.

2.2.7. Smelting

The smelting process is based on two stages. The first stage produces a furnace matte followed by a converter stage which produces a matte for the refining stages. The first stage is concerned with gangue mineral removal (i.e. chromium, magnesium, and silica) by using high temperatures to melt the PGE rich concentrates which typically contain chromite (1-3% Cr2O3) and talc (15-20% MgO).Concentrates are dried in either flash or spray driers and pneumatically fed into an electric furnace containing six carbon paste electrodes (commonly Söderburg) in line.

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The larger furnaces are rectangular in shape (typically 28m x 8m x 5.6m) and rated at 39MVA, with a phase voltage between 350 and 500V and a phase current of 21 to 27kA. These furnaces average 25tph of concentrate and have a residence time of around 20 hours. The electrodes are between 1.14 to 1.25m in diameter and spaced 3.3 to 3.4m apart along the furnace centre-line. The electrodes are normally submerged about 40 to 50cm into the slag phase and are generally consumed at a rate of 3.5kg/MW. The energy consumption is approximately 600 to 1,100kWh/t of concentrate. However, it is strongly dependent on the material being treated as well as the furnace operating conditions. Pilot plant smelting studies of unblended Merensky Reef concentrates determined that 896kWh/t is required at 1,350°C while 1,088kWh/t, at 1,470°C, is required to smelt UG2 concentrates. Smelting typically takes place at 1,350°C although up to 1,600°C may be required for UG2 concentrates due to the higher content of chromium and magnesium oxides. Matte is tapped at one end of the furnace at 1,200°C while slag is removed from the other end at 1,350°C. Electrical energy accounts for about 40% of the direct smelting costs. The furnaces employed to smelt unblended UG2 concentrates are generally smaller (5MVA) and circular in design (5.2m diameter), with only three electrodes. This configuration can better withstand the higher temperature and power flux required. High power fluxes are used to create more turbulent smelting conditions to minimise the build-up of the chrome spinel in the furnace hearth. The furnaces are normally operated with a black top to limit the amount of radiation from the surface of the bath to the walls and roof of the furnace. Typically, this consists of a layer of unsmelted concentrate on top of the molten bath, such as a 15cm layer covering 100cm of slag and 60cm of matte. The main flux addition is burnt lime while carbon may be added to minimise spinel build up by creating reducing conditions that enhance the solubility of Cr2O3 in the slag phase. A furnace slag is typically discarded after granulation. However, the UG2 furnace slag has a high PGE content (2.5 to 3.5g/t) and is, subsequently, granulated and returned to the flotation circuit for PGE recovery. A technology specifically designed to handle high chrome PGE concentrates is the ConRoast™ process (developed by Mintek), which is currently in the final stages of the trial phase and an exclusive right to this technology was granted to Braemore Resources Plc (Braemore) and is now owned by its joint venture with Jubilee Platinum Plc (Jubilee) which is listed on the AIM in London. Sylvania has recently entered in to a joint venture with Braemore/Jubilee, the focus of which will be processing Platreef ore, which forms the core of Sylvania’s proposed business plan. It employs electric arc furnace technology, operating at high temperatures (greater than 1,600°C) and recovers the PGEs as a high-grade iron alloy. This alloy requires further refining to produce pure PGEs. The second smelting stage is a converting process that produces a nickel-copper matte containing all the PGEs and is similar to that used to make copper and nickel mattes. Nearly all the iron and most of the sulphur are removed and fluxes such as silica are added to form an iron-rich slag that is skimmed off and returned to the furnaces. Some producers recover the entrained PGEs contained in the converter slag by milling and flotation. It is not uncommon for up to a third of the matte produced in the converters to be returned to the furnace. The converter matte, also known as white metal, is then sent for refining where the first stage removes the base metals in the BMR stage.

2.2.8. Base Metal Refining (BMR)

Base metals are a valuable by-product of PGE extraction, particularly nickel, and contribute 5% to 28% of the overall revenue, depending upon the ore types. Base metal refining begins with their removal from the converter matte, which generally employs conventional hydrometallurgy consisting of a combination of atmospheric and pressure leaching with sulphuric acid. The base metals are separated by solvent extraction and subsequently electrowon to produce cathode grade nickel and copper, while cobalt is generally produced as a sulphate.

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The copper anode slimes are sold as a source of selenium, arsenic, and tellurium. Some producers use Sherritt-Gordon ammonium leach technology, which produces nickel sulphate and cathode copper as final products. Other producers employ slow cooling (over five days) of the converter matte to promote the growth of coarse crystals of hazelwoodite (Ni2S3) and chalcocite (Cu2S), which are parted by magnetic separation. As a result, the BMR refining process is simpler and reduces the hold-up time of the PGEs.

2.2.9. Precious Metal Refining (PMR)

With the removal of the base-metals, the undissolved residue assays up to 65% PGEs and the separation and purification of the six PGEs can be carried out. Notable features of the PMR stage are the highly toxic nature of the various PGEs, the length of time to yield final products (up to 150 days) and the methods used to exploit the small differences in chemistry between certain PGEs. PMR processes have changed considerably in recent years. Improved separation and refining procedures have been developed and have incorporated both solvent extraction and ion exchange techniques. These process improvements have delivered increased PGE recoveries, lower refining costs, and shorter processing times. The separation and purification of the PGEs is largely carried out by exploiting differences in the chemistry of their anionic chloro-complexes. These differences include ligand substitution kinetics, ammonium salt solubility, ion-exchange reactions, and redox potentials. The actual processes are proprietary. However, a typical flow sheet which highlights the intricate and complex nature of PGE refining is shown in the appropriate Technical Statement. The residue is dissolved in hydrochloric acid in the presence of chlorine to produce the chloro-complexes. Silver chloride precipitates and is the first metal recovered. Fractional distillation is then applied to separate ruthenium and osmium. After arsenic (As), selenium (Se), and tellurium (Te) are removed, gold is reductively precipitated from solution. Palladium, platinum, and iridium are then separated by ion exchange leaving rhodium as the last PGE element to be extracted. Each metal undergoes further purification until a marketable grade is produced, typically 99.99% in the case of silver and gold, 99.95% for palladium and platinum and 99.90% for iridium and rhodium. Table 12 shows the key features of the PGE extraction business and Table 13 shows the characteristics of the BIC PGE ore types:-

Table 12: Key Features of the PGE Extraction Business

PARAMETER MINING COMMUNITION

AND FLOTATION

SMELTING AND

CONVERTING

BASE METAL

REFINING

PRECIOUS METAL

REFINING TOTAL

% of Total Cost 65-75 9-12 6 7 4-5 100

PGE Grade 4-6g/t 100-600g/t 640-6,000g/t 30-65% >99.8% -

PGE Recovery (%) - 80-90 95-98 >99 98-99 75-85

Concentration Ratio - 30-80 20 75 2 200,000

Processing Time (Days) - 2 7 14 30-150 up to 170

The average grain size of the PGEs is about 45microns in Merensky ore, and 15microns in UG2. In order to liberate the PGEs, the UG2 concentrate is more finely milled (about 80% less than 75mm) than Merensky concentrate (about 55% less than 75microns). During concentration, the recovery of PGEs plus gold is around 80 to 87%. From a given quantity of ore, the mass of UG2 concentrate is lower (around 1.3% of the feed ore) than that of Merensky concentrate (around 2.5% of the feed ore). Hence, the grades of UG2 concentrates are higher, and the amount of concentrate to be smelted is smaller.

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Table 13: Characteristics of BIC PGE Ore Types

CHARACTERISTIC MERENSKY REEF PLAT REEF UG2 REEF

Thickness (m) 0.90-1.20 0.45-0.65 0.50-2.50

PGE (g/t) 5.00-9.00 3.00-4.00 6.00-7.00

Ni (%) 0.13 0.36 0.07

Cu (%) 0.08 0.18 0.018

Gangue Minerals

50-80% pyroxene 80-80% pyroxene 5-25% pyroxene

20-40% plagioclase 10-20% plagioclase 5-15% plagioclase

3-5% chromite 3-5% chromite 60-90% chromite

0.5-5% talc 0.5-3% talc 1-5% talc

PGE Grain Size (microns) 20-150 40-200 3-10

Pt (%) 59.00 42.00 41.00

Pd (%) 25.00 46.00 34.00

Rh (%) 3.00 3.00 9.00

Ru (%) 8.00 4.00 12.00

Ir (%) 1.00 0.80 1.90

Os (%) 0.80 0.60 1.70

Au (%) 2.50 3.40 0.40

The total cost of treatment of the UG2 ore is claimed to be considerably lower than for Merensky ore, for the following reasons:-

mining costs are lower, mainly because of the higher relative density of the UG2 reef. The relative density of the Merensky ore is 3.2 and that of the UG2 ore is 4.3;

crushing costs are lower because the UG2 ore is more friable. Milling costs are also lower;

flotation reagent costs are lower because the Merensky ore requires the use of a talc depressant; and

smelting costs are lower because much smaller quantities of concentrates need to be smelted (per quantity of platinum produced).

For South African producers, the approximate distribution of the operating costs for each stage is as follows:-

72% mining;

10% concentrating;

9% smelting; and

9% refining.

PGE recovery is typically about 85% in the concentration stage, 95 to 98% in smelting, and 99% in refining. By far the greatest loss of PGEs occurs during crushing, grinding, and flotation, and research into these operations could prove very rewarding, as could the development of new processes that remove some of the constraints on the various concentration stages.

2.2.10. Low Grade Concentrate Processing

The high chrome, low PGE (<50g/t) concentrates are typically not wanted by the three major PGE refiners and producers, largely due to it taking up smelting capacity which can be utilised for treating higher grade (and lower chrome) materials from other concentrate producers. Where concentrates exhibit higher levels of chrome this restricts the amounts of this material that can be blended with the smelter feed in order to maintain acceptable chrome levels. Without this the penalties applied to this type of material for treatment would consume a considerable part of the PGE value in the feed making this commercially unviable. The alternative route being suggested and investigated by various companies and now Sylvania through its joint venture with Jubilee Platinum and Braemore (Jubilee/Braemore), is to roast if necessary, followed by DC smelting to produce a base metal/PGE alloy.

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This is presently not a process practised in the platinum industry and, although this treatment route has been proposed and tested by Mintek/Braemore, it is not yet practised commercially anywhere in this industry, however this process is used in the heavy metals industry. In addition to this, the smelt product (the alloy) is often difficult to refine hydrometallurgically due to the high levels of base metals (notably iron) and the apparently higher levels of other impurities such as lead, chrome and many other trace elements. Simplistically, there are a number of ways that Sylvania and Jubilee/Braemore can move forward to deal with low grade PGE concentrates that it may produce or acquire. Although there are numerous other variations and combinations, all of them have one thing in common and that is a toll refiner. The reason for this is that refineries are capital intensive and generally require specialists to run and operate them, often with them acting as a take-and-pay marketing and trading agent. It is an acknowledged principle in the PGE industry that there is little or no value add by making a matte that is suitable for end use toll refining. The biggest value additions are generally in mining, concentrating and smelting. However, it is seldom a cost effective process to undertake own refining if it is possible to make a matte/alloy that is compatible with an existing refining circuit. In fact, smelting is often avoided by the concentrate producer as the additional margin generated is often less than 15% which is essentially the amount available to operate such a smelter route. Another factor related to producing alloys is that there are many elements that report to the alloy and, through leaching, it is likely that this may generate base and precious metal intermediates that refiners may not want to take and for which tolling terms may be punitive. The various technical and commercial alternatives are being evaluated by Sylvania and, in theory, any of the process routes should work chemically. It is the commercial combination of alternatives that Sylvania and Jubilee/Braemore is considering and mainly because they anticipate being a significant producer of low-grade PGE concentrates from their own mineral resources. Sylvania hast carried out testwork on the smelting of the low-grade PGE concentrates on 100 tonnes with a recovery of 99.9%, with Jubilee. From a metallurgical perspective, it is possible to separate the constituents of the alloy through leaching and purification processes but it is anticipated that extensive pilot-scale testwork would be required to prove that the processes are both technically and commercially achievable. It should be noted that the outputs from the hydrometallurgical process are still only likely to be semi-refined intermediate products which may not attract a premium price in the metal trading market. There is insufficient information available to take any educated or informed view as to what processing route is applicable to the low-grade concentrate.

3. SOUTH AFRICA’S POLITICAL AND ECONOMIC STATUS

3.1. Political Climate

South Africa gained independence from Britain on the 31st May 1910, and was declared a republic in 1961. From 1948 until 1990, the South African political and legal systems were based upon the concept of apartheid, a philosophy of separate racial development, enforced by a white minority government. The first multiracial elections in 1994 brought an end to apartheid and ushered in black majority rule under the African National Congress (ANC), with a number of different political parties participating in the elections. The country held democratic, peaceful, free and fair elections, the last of which was won by the ANC in 2009, under the leadership of President Jacob Zuma.

3.2. Economic Climate and Fiscal Regime

South Africa is the most advanced economy in Africa and provides the gateway to Sub-Saharan Africa. It is classified as a middle-income emerging market, with well developed financial, legal and judicial systems and modern infrastructure.

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Global developments and concerns about the growth prospects of the largest industrialised countries had influenced the performance of the domestic economy, especially the export sector, but the country is showing signs, reflected in its GDP growth rate, that its economy is improving. Between 2004 and 2008 South Africa grew economically as a result of macroeconomic stability and a global commodities boom, but growth slowed in the second half of 2008 due to poor global economic conditions, which influenced commodity prices and demand. Gross Domestic Product (GDP) fell almost 2% in 2009, worsening the country’s already high unemployment levels. South Africa’s GDP (purchasing power parity) was estimated at USD495.1bn for 2009, with negative growth occurring in that year. However, there are indications that the economy will continue to grow in 2010, with real seasonally-adjusted GDP at market prices in Q1 having increased by an annualised rate of 4.6% compared with Q4 of 2009 (Stats SA, 2010). South African economic policy is fiscally conservative but pragmatic. The country attempts to control inflation by keeping it within an acceptable range (3% - 6%), maintains a budget surplus, uses State-owned enterprises to deliver basic services to low-income areas and provides social grants to a quarter of the population. Currency and inflation volatility, poverty, income disparities, and poor availability of public services, however, continue to characterise the country.

3.3. Industrial Relations

The Constitution and the Labour Relations Act (LRA) of South Africa provide for freedom of association, and workers in South Africa exercise this right in practice. All workers in the private and public sector are entitled to join a union. The LRA also provides for certain "organisational rights", which strengthen the ability of trade unions to organize workers and bargain collectively. Within the context of well organized labour the Commission for Conciliation, Mediation, and Arbitration (CCMA), an independent body, has successfully resolved many disputes, and is gradually playing an interventionist role in disputes before they deteriorate into full-fledged strikes or lockouts, with particular reference to the South African mining industry. The National Union of Mineworkers (NUM), formed on the 5

th December 1982, is the largest

recognized collective bargaining agent representing workers in the Mining, Construction and Electrical Energy Industries in South Africa. It is also the largest affiliate of the Congress of South African Trade Unions (COSATU), with offices in all the South African provinces. NUM and COSATU regularly flex their muscle in the South African mining industry, but there have been only minor value destruction as a result of industrial action over the past ten years.

3.4. South African Infrastructure Capacity

Despite efforts to improve the efficiency of South Africa’s ports and rail utilities, the country’s transport infrastructure has been found inadequate to support higher export volumes. Whilst the South African rail and road infrastructure had previously been effective and sufficient, accelerated economic growth and lack of adequate maintenance and upgrading have now rendered the transport system in need of urgent and comprehensive corrective measures. In 2006, South Africa was rated 44

th out of 60 countries in Swiss business school IMD’s world competitiveness

ranking, but its transport infrastructure was only rated 58th. The National Freight Logistics

Strategy document published by the Department of Transport in September 2005 was a response to the freight system’s inadequacies. This document identifies the main cause for this failure as an inappropriate institutional and regulatory structure that does not punish inefficiency and reward efficiency. Overall logistics costs in South Africa are at the relatively high level of 15.2% of GDP compared to the United States level at 9.8%. Chronic congestion at ports is frequently experienced and movement away from rail transport to road transport has become common practice. The market share of road transportation compared to rail transportation increased from 65% in 1990 to 75% in 2007, resulting in congestion, deteriorating condition of roads and increased numbers of road accidents. In 2007, the total tonnage of road freight in South Africa was 1,037Mt over an average transport distance of 270km, whilst the total tonnage for rail freight was 202Mt over an average distance of 600km. South Africa presently moves 350bn ton-kilometres. The fact that this number is estimated to increase to 400 in 2015 and 1,000 in 2050 emphasises the challenge ahead. From a ferrochrome perspective, existing producers are experiencing constraints in terms of reliable rail transport for their products to the ports, delays at the ports, and generally increasing logistics costs for the transport leg from the plants to the ports.

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3.5. Minerals Industry

South Africa has a mature minerals industry developed from gold and diamond discoveries in the late 1800s. The country is the world’s largest producer of platinum, chrome and vanadium and ranks highly in the production of diamonds, coal, iron ore and other base metals. South Africa hosts a number of large orebodies such as the Bushveld Igneous Complex (BIC) and the Witwatersrand Basin, as well as rich diamond fields and extensive coalfields. The greatest challenges facing the mining industry in South Africa are the uncertainties arising from new legislation. These uncertainties relate to security of tenure, i.e. the issuing of New Order Rights and the conversion of Old Order Rights, as well as issues surrounding the publication of new mineral royalty legislation and black economic empowerment (BEE) requirements, as outlined in the 2006 cabinet-approved Codes of Good Practice. The greatest risks associated with the minerals and mining industry in South Africa are, arguably, the recent uncertainties relating to the power crisis and wage disputes. Another major concern for the mining, manufacturing and construction industry is the uncertainty of the effect of HIV/Aids on the workforce.

3.6. South African Mining Law

3.6.1. Mineral and Petroleum Resources Development Act (MPRDA)

The South African Government enacted the MPRDA on 1st May 2004, which now defines the State’s legislation on mineral rights and mineral transactions in South Africa. The Act emphasises that the government did not accept the existence of the historical dual State and private ownership of mineral rights in South Africa, and as such the Act legislates that all mineral and petroleum resources in South Africa now vest in the State. Additional objects of the Act include the promotion of economic growth, the development of these resources to expand opportunities for the historically disadvantaged, and for mining and prospecting companies to contribute to the socio-economic development of the areas in which they are operating. It also provides for the security of tenure relating to prospecting, exploration, and mining and production operations. The Act incorporated a "use it or lose it" principle that has been applied to companies or individuals who owned mineral rights and the rights to prospect and mine prior to 2004 (old order rights). These old order rights were required to be transferred within specified time frames under the provisions of the Act into new order rights to prospect and mine. Once the State has granted the conversion of the old order rights to new order rights, or grants a new order right to new applications submitted post the implementation of the MPRDA, a Notarial Agreement between the State and the holder of the new order right is entered into. These agreements set out all the conditions associated with the new order right. The new order rights can be suspended or cancelled by the Minister of Minerals and Resources if, upon notice of a breach from the Minister, an entity breaching its obligations to comply with the MPRDA or the conditions prescribed as part of its new order right, fails to rectify such breach. In addition, in terms of the MPRDA, mining and exploration companies will have to comply with additional responsibilities relating to environmental management and to environmental damage, degradation or pollution resulting from their prospecting or exploration activities. Types of rights and permits applicable to the mining industry in South Africa as provided for in the MPRDA are detailed in Table 14.

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Table 14: Types of Rights Applicable to Mining in South Africa

LICENCE TYPE PURPOSE DURATION REQUIREMENTS CONDITIONS

Reconnaissance Permission

Exploration at the reconnaissance stage.

2 years (non renewable)

financial ability;

technical ability; and

work programme.

Holder does not have the exclusive right to apply for a Prospecting Right.

Prospecting Right Exploration at target definition stage.

5 years initially. Renewable once for 3 years.

financial ability;

technical ability;

economic programme;

work programme; and

environmental plan.

Payment of Prospecting fees. The holder has exclusive right to apply for a mining right.

Retention Permit

Hold on to legal rights between Prospecting and Mining stages.

3 years initially. Renewable once for 2 years.

prospecting stage complete;

feasibility study complete;

project not currently feasible; and

EMP complete.

May not result in exclusion of competition, unfair competition or hoarding of rights. May not be transferred, ceded, leased, sold, mortgaged or encumbered in any way.

Mining Right Development and Production stage.

30 years initially. Renewable for further periods of 30 years. Effective for LOM.

financial ability;

technical ability;

prospecting complete;

economic programme;

work programme;

social plan;

labour plan; and

environmental plan.

Payment of royalties (from 2010). Compliance with Mining Charter and Codes of Good Practice on BBBEE.

Mining Permit Small-scale mining.

2 years initially. Renewable for 3 further periods of 1 year at a time.

life of project must be <2 years;

areas must be <1.5Ha; and

environmental plan.

Payment of royalties (after 2009). May not be leased or sold, but is mortgageable.

3.6.2. Broad-Based Socio-Economic Charter for the South African Mining Industry

Pursuant to the MPRDA, the Department of Mineral Resources (DMR), the State entity responsible for overseeing the implantation of the MPRDA and its on-going management, published the Mining Charter. In addition to complying with the MPRDA, all mining and prospecting companies are required to comply with the provisions of the Mining Charter. The objectives of the Mining Charter are to: -

promote equitable access to the State’s mineral resources by all the people of South Africa, It requires that every mining company achieved a 15% level of ownership of its mining assets by historically disadvantaged South Africans (HDSA’s) by 1

st May 2009, and a level of 26% ownership by 1

st

May 2014;

substantially and meaningfully expand opportunities for HDSA’s, including women, to enter the mining and minerals industry and to benefit from the exploitation of the nation’s mineral resources. In terms of this requirement, 40% of management roles are to be held by HDSA’s by 2010;

expand the skills base of HDSA’s in order to serve the community;promote employment and advance the social and economic welfare of mining communities and the major areas from which labour is drawn to carry out the exploration or mining; and

promote the beneficiation of South Africa’s mineral commodities, whereby the companies who have facilitated downstream, value-adding activities in respect of the products they mine could achieve a portion of ‘offset” against the HDSA equity participation requirement.

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Compliance with the Mining Charter will be measured using a designated scorecard, which provides a practical framework against which the Minister can assess whether a company actually measures up to what was intended in the MPRDA and the Mining Charter.

3.6.3. Amendment of the Broad Based Socio-Economic Empowerment Charter

The Amendment of the Broad-based Socio-Economic Empowerment Charter for the South African Mining and Minerals Industry (the Charter Amendment) was released in September 2010. It was unsurprising that it retained the minimum target of 26% HDSA ownership of mining assets by 2014. However, an offsetting of HDSA ownership by as much as 11% is now possible depending on the extent of a company’s beneficiation strategies. BEE procurement targets in the Amendment are as follows:-

a minimum of 40% of capital goods will have to be sourced from BEE entities by 2014; and

70% of services and 50% of consumer goods will have to be purchased by BEE entities by 2014.

In addition, multinational suppliers of capital goods will have to contribute 0.5%/y of their annual income from South African mining firms towards a socio-economic development fund. HDSA targets for employment equity are also further refined and a minimum of 40% HDSA demographic representation is stipulated for executive management, senior management, core and critical skills, middle management and junior management by 2014. Specific annual targets are noted for human resources development, since a percentage of the annual payroll (excluding the mandatory skills levy) will have to be spent on skills development activities and be reflective of South Africa’s demographics. Skills expenditure, as a percentage of payroll, increases by 0,5% each year, with an initial target of 3% of payroll in 2010, rising to 5% by 2014. The expenditure is intended to support South African-based research and development initiatives focused on solutions in sectors such as exploration, mining, processing, technology efficiency in the use of water and energy in mining, beneficiation and environmental conservation and rehabilitation. The Charter Amendment also supports Social and Labour Plans (SLPs) by insisting that on:-

an ethnographic community consultative and collaborative process prior to the start of a mining project; and

a community development needs analysis, together with mining communities, of projects to be implemented in support of Integrated Development Plans, and the spend of which should be proportionate to the size of the mining investment.

The Charter Amendment also calls for an upgrade of hostels to family units, a one-person-per-room occupancy rate, and support for home ownership options – all of which should be implemented by 2014. Environmental management and an improvement in the industry’s health and safety performance are also highlighted, and best-practices in these areas are specifically mentioned. The Charter Amendment also calls for annual reporting by mining companies on their levels of compliance with the Mining Charter, and notes that noncompliance with the Charter and the MPRDA will result in mining companies being in breach of the MPRDA.

3.6.4. Mineral and Petroleum Reserves Royalty Act (MPRRA)

The MPRRA provides for the payment of a royalty according to a formula based on taxable earnings before interest and tax. The royalty will have a minimum rate of 0.5% and a maximum rate of 5%, and is classified as a tax-deductable expense.

30

Independent Competent Person’s Report Without Valuations December 2010

The payment of royalties was scheduled to begin on the 1st

May 2009, but this was subsequently delayed and commenced with effect from the 1

st March 2010.

3.6.5. Chromium Mineral Rights from UG2 Mined for PGEs

Venmyn understands that the chromium rights vest with the holder of the PGE rights. The following points are pertinent with regard to chromium mineral rights from UG2 mined for PGEs: -

the platinum miner has the right to mine and dispose of (sell) the chrome in the UG2 as a by product of PGE mining regardless of chrome rights ownership;

historically the chrome rights were often separate from the PGE rights;

historic mineral rights holders will eventually lose their rights unless they use them to mine the orebody. Application to keep the right to mine has to be made to the DMR;

mineral rights holders should receive fair compensation for the exploitation of their rights by another party. As such, a historical mineral rights holder might have a royalty claim against a platinum miner in the case of UG2 but the probable impact would be small.

4. PROFILE OF THE SYLVANIA GROUP

4.1. Overview

Sylvania is a PGE producer created to exploit the opportunity to treat chromite dumps and various chromite and PGE tailings for the purpose of recovering chromite and, separately, PGEs. Having established the company as a niche hydrometallurgical plant builder and operator in South Africa, the company has acquired mineral exploration projects. These projects are intended to generate mineral resources that can eventually be mined for its own account as a strategic backward integration. In recent times, Sylvania has been evaluating the potential to forward integrate into smelting and base metal refining through a JV arrangement with Jubilee/Braemore.

4.2. Location

Sylvania’s offices are located in west Johannesburg and its operations and interests are shown schematically in Figure 2, Figure 3 and Figure 4.

4.3. Corporate Structure and Management

The corporate structure of the Sylvania Group is shown in Figure 1. The Board and management team of Sylvania is as follows: - Board of Directors Mr Richard Rossiter - Non-Executive Chairman BSc (Hons) MSc Mr Rossiter was appointed to the Sylvania Board in August 2007 and acts as the non-executive Chairman. He leads the Board in implementing its strategy of becoming a significant PGE producer. He began his career as a geologist with General Mining Union Corporation in South Africa. He subsequently qualified in mine management and held various production management and business development roles. He later joined the financial sector as a mining analyst and then moved to Australia where he became involved in corporate advisory, mergers and acquisitions and divestments. Mr Rossiter is also a director of Morning Star Holdings (Australia) Limited. Mr Terry McConnachie - Managing Director Mr McConnachie has over 35 years experience in mining, beneficiation of ferroalloys and precious metals.

31

Independent Competent Person’s Report Without Valuations December 2010

He was the founder of Merafe Resources Limited (formerly South African Chrome & Alloys Limited), a successful black empowered chrome mining company that listed on the JSE Limited with assets worth in excess of ZAR1bn (AUD56m). Mr McConnachie has been CEO of a number of mining, mining services and smelting companies in South Africa. Mr Louis Carroll - Finance Director / Joint Company Secretary B Com, MAP, H. Dip. Corporate Law, H. Dip. Property Management, Dip Business Management Mr Carroll was appointed to the Sylvania Board in August 2007 and acts as the Finance Director having worked for the Company in its South African operations, principally in developing and structuring financial reporting systems. He has 40 years' experience in the resources industry and has served as an executive and non-executive director for a number of private and publicly listed companies. He has also served as chief operating officer in a listed oil and gas company. Mr Grant Button - Executive Director / Joint Company Secretary Mr Button was a director and company secretary of Sylvania for four years until June 2007. He rejoined Sylvania as the company secretary in January 2009 and was appointed to the Board in May 2009. Mr Button is a qualified accountant with 18 years' experience at a senior management level in the resources industry. He has acted as an executive director, managing director, finance director, chief financial officer and company secretary for a range of publicly listed companies. Mr Button is currently an executive director of Magnum Mining & Exploration Limited, chairman of Morning Star Holdings (Australia) Limited and chairman of Alamar Resources Limited. Senior Management N Trevarthen – Deputy Chief Executive Officer BSc (Hons) Mining R.S.M Mr Trevarthen joined Sylvania Resources on 1

st September 2010 and his main focus is on

operations in South Africa. He holds a Bachelor of Science degree in Mining Engineering from the London School of Mining. He joined the Anglo Group after completing his studies and has most recently returned from Guinea where he was managing director of the Siguri Mine. He has held a number of management positions within AngloGold where he gained both operational and corporate experience which will assist Sylvania in implementing its current expansion plans and achieving its long-terms strategies. Mr Zoran Marinkovic – Director of Sylvania Metals (Pty) Ltd BSc (Chem Eng), University of Belgrade Mr Marinkovic has worked in a number of industries, including the petrochemical, shipping and mining sectors in Europe. The senior positions he has held include that of site director and special adviser for Mostec Limited, based at a shipyard in the Ukraine; production director at the High Density PolyEthylene Plant (HDPE) at the Petrochemical Complex of Pancevo in Yugoslavia; and, most recently, co-owner and director of ABM International Limited. This is a Belgrade-based company trading in chrome and other metals on the European and Russian markets as well as undertaking research and consulting in the area of chromium waste and tailings. Since January 2006, Mr Marinkovic has been responsible for developing and controlling Sylvania's chromium and PGE projects pursuant to the Samancor Chrome Agreement. He is currently developing new projects that will expand Sylvania’s supply of PGE base material. Lewanne Carminati – Financial Manager BComm (Hons), CA (SA) Lewanne Carminati started her career in finance in 2005, and has gained experience in both the contracting and mining industry. Lewanne joined Sylvania in July 2009. Mr Ben Kruger – Management Accountant NHD (Cost and Management Accounting), Technikon RSA Mr Kruger has spent 17 years in the field of cost and financial accounting, working in the mining, manufacturing, printing and services industries. His responsibilities have included general accounting, finance, project accounting and costing. While employed by the De Beers Group and Gold Fields Limited, he was exposed to opencast, shallow underground and deep level mining. This experience included involvement in a feasibility study for Gold Fields’ South Deep mine. Mr Kruger joined Sylvania in October 2007.

32

Independent Competent Person’s Report Without Valuations December 2010

Senior Consultants Johan Meyer - General Manager: Operations BEng (Mech) (Hons), University of Stellenbosch GDE (Indus Eng), University of Witwatersrand Mr Meyer started his career in the mining industry as a project engineer, working first for Rio Tinto and afterwards for Anglo American and Gold Fields. He then moved into the manufacturing industry where he held several senior management positions. He has extensive knowledge of business start-ups, as he was a key member of the team that led an aluminium company through an expansion in which the business quadrupled in size. During this period, he acquired a sound understanding of base metals and metals trading as it relates to the London Metal Exchange. After joining Sylvania, Johan designed and constructed the first two plants which are now operating at design capacity. Currently, he is heading growth projects for the group, focusing on the retreatment of chrome and platinum. He is also responsible for all commercial aspects of the business. Mr Phil Carter – General Manager Capital Projects BSc (Mining Eng), University of the Witwatersrand Mr Carter, who holds a Mine Manager’s Certificate of Competency, has been in the mining industry for 30 years. At different stages of his career he has worked for the De Beers Group, AngloGold Ashanti Limited and SA Chrome and he has experience at a senior management level in diamond, deep-level gold and chrome mines. Mr Carter's particular field of expertise is in mine and project management. At SA Chrome, he commenced the Horizon Chrome mine as a greenfields project and was responsible for the design, construction and management of the chrome concentrator plant, as well as the opencast and underground mines. At Sylvania, Mr Carter is managing the development of the Everest North mine project and the capital construction expansion programme. Dr Peter Cox – Strategic Planner BSc (Mining Eng) University of the Witwatersrand; MSc, PhD (Mining Eng) Harrington; Dip (Civil Eng), University of Natal Dr Cox started his career in the mining industry 30 years ago as a learner surveyor. After studying mining engineering as a JCI bursar, he has filled various positions at gold and platinum mines and as a senior section manager. Dr Cox joined a privately owned mining and exploration company, Severin Southern Sphere Mining, as a consulting engineer and general manager. Since mid-1991 he has been the managing director of Goldline Global Consulting (Pty) Ltd, an engineering consulting company which serves the mining industry worldwide. Dr Cox holds a Mine Surveyor’s and a Mine Manager’s Certificate of Competency. Mr Christo de Vos – Internal Legal Adviser BComm, University of the Free State; LLB, Unisa Mr de Vos is admitted as an attorney, notary and conveyancer in South Africa. He was a senior partner at Wessels & Smith, a law firm in Welkom, South Africa, for 28 years, specialising in commercial and mining law, trust law, estate planning and tax law, before being appointed by Sylvania as its legal and commercial executive adviser. Mr de Vos has experience with black economic empowerment transactions, and acts as a trustee for several black empowerment trusts and employee incentive schemes.

4.4. Samancor Chrome Mining and Tailings Operations

Sylvania has entered into an agreement with Samancor Chrome to treat its current tailings risings and its existing tailings dams using the Sylvania CWP and PRP technology. The company dates from 1975, when it was established as a result of a merger between SA Manganese Limited and Amcor Limited. SA Manganese was formed in 1926 to mine manganese ore in the Northern Cape. Amcor was established in 1937 to exploit mineral deposits for the steel industry and to process those minerals into ferroalloys. Samancor was listed on the JSE Limited until 1998, when the minority shareholders were bought out by the then majority shareholders, Billiton and Anglo American plc. This led to the delisting of the company. The resulting shareholding was 60% African Metals Limited (a BHP Billiton (BHPB) Company) and 40% Anglo South Africa Capital (Proprietary) Limited (an Anglo American company).

33

Independent Competent Person’s Report Without Valuations December 2010

Samancor then consisted of chrome and manganese operations and stainless steel investments with marketing and distribution arrangements via structures held wholly and indirectly by BHPB and Anglo American. Towards the end of 2004, bids were invited for the purchase of Samancor Chrome. The successful bidder, the Kermas Group, effectively took over the operations from the 1

st June 2005.

Over 80% of Samancor Chrome’s chromite ore production is used to produce ferrochrome in South Africa. The remainder of the ore is exported. Approximately 85% of the company’s ferrochrome production is exported to stainless steel producers across the globe. Stainless steel typically contains 18% chrome and 8% nickel. Samancor Chrome produces mined chromite ore and chrome alloys produced by smelter operations. Samancor Chrome's five fully integrated and self-reliant chrome alloy plants have a combined annual production capacity of more than 1Mt of alloy, including charge chrome, intermediate carbon ferrochrome (IC3), low-carbon ferrochrome and ferrosilicon chrome. The mining operations’ mineral resources exceed 450Mt, calculated to a depth of 300m, with an annual production capacity of between 5Mt and 10Mt. The company’s total chromite mineral resources exceed 650Mt and are expected to support current mining activity for well over 200 years at the current rate of extraction. Some ores and concentrates are exported, but the main allotments are destined for conversion into ferrochrome at the alloy plants. Samancor Chrome’s core business is the mining and smelting of chrome ore. Samancor Chrome is one of the largest integrated ferrochrome producers in the world. The company’s corporate office is based in Sandton, Johannesburg. Three ferrochrome plants and two chrome ore mining complexes operate as separate business units in different locations in South Africa: -

Western Chrome Mines - Rustenburg area in the North West Province;

Eastern Chrome Mines - Lydenburg /Steelpoort in the Limpopo Province;

Ferrometals Plant near eMalahleni, Mpumalanga Province;

Middelburg Ferrochrome and Middelburg Technochrome Plants near Middelburg, Mpumalanga Province; and

Tubatse Ferrochrome Plant in the Lydenburg/Steelpoort area of the Mpumalanga Province.

Samancor Chrome has a number of tailings dams and its initiative with Sylvania to extract chromite from current risings as well as the previous tailings are both commercially opportune and environmentally friendly.

5. SYLVANIA MINERALS (PTY) LIMITED MINERAL ASSETS

5.1. Introduction to the Plant Complex

The scope of the Metallurgical and Mineral Processing Statements was to provide an independent overview of the Sylvania Resources Limited (Sylvania) tailings retreatment operations in the eastern and western BIC. The set of Metallurgical and Mineral Processing Statements produced by Venmyn are individually focused on each of the assets which represent the Sylvania retreatment operations, termed the Samancor Dumps Operations (SDO) by Sylvania as presented in Figure 1. Sylvania entered into a contract with Samancor Chrome in November 2005 in respect of services to be conducted by Sylvania to retreat chrome tailings for the purpose of extracting chrome and PGEs at Samancor’s Millsell and Waterkloof mine sites in South Africa. In May 2006, Sylvania signed a further agreement with Samancor Chrome to produce chromite concentrate and PGEs from all of the Samancor-controlled chrome tailings assets within the BIC. Each of Sylvania’s re-processing operations consists of two plants operating in series. The first is the Chrome Washing Plant (CWP) and the second is the Platinum Recovery Plant (PRP) located adjacent to each other on each of Samancor Chrome’s washing plant sites. For purposes of this report, the CWP and PRP will be referred to as the “Complex”.

34

Independent Competent Person’s Report Without Valuations December 2010

Sylvania is contracted to produce chromite with a Cr2O3 content of 44%, which is a metallurgical grade for resale to Samancor Chrome from the CWP. This is primarily generated through the spirals section of the plant. However, this also enables an enriched PGE tailings stream to be generated. This enriched PGE tailings streams feeds into the PRP section of the plant to produce a PGE concentrate for sale to a PGE refinery. In effect, the CWP produces a PGE-enriched material for the PRP at basically no cost as capital and operating costs associated with the CWP should be offset by the revenue from the contractual chromite sales to Samancor Chrome. As part of the operational synergies that the Sylvania CWP/PRP combination provides for the primary recovery of Cr2O3 for Samancor Chrome, Sylvania has the right to treat remaining fines for PGEs. This is a strategic and core business process created by Sylvania. The research and development work to confirm the feasibility of PGE extraction from chrome tailings was based upon the successful construction and operation of the Chrome Tailings Retreatment Plant (CTRP) at the Kroondal operations of Aquarius Platinum (SA) (Pty) Limited (AQPSA). The CTRP plant was completed in February 2005 and was financed by a consortium in which Sylvania has a 25% stake. The CTRP was initially designed for a total feed rate of about 20,000tpm of dump material and current risings from the nearby Xstrata and Bayer chrome plants. The success of this plant provided the basis for the Samancor Chrome Agreement with Sylvania. All of the plants are sited on brownfield sites within Samancor Chrome’s surface rights holdings. Consequently, they can take advantage of existing infrastructure such as access roads, power and water supplies. Furthermore, the required environmental impact assessment (EIA) for each plant is based upon existing Samancor Chrome permits rather than new applications. This is a very important benefit of developing the Sylvania operations on the Samancor Chrome’s sites. The business structure for the SDO is shown in Figure 1. The Samancor Chrome tailings dumps, as well as current risings from various projects, provide the feedstock for these re-treatment plants. To-date, Sylvania has constructed and commissioned five facilities, namely the Millsell, Steelpoort, Lannex, Moonooi and Doorbosch plants, and has begun commercial production at each complex. It has been estimated by the management of Sylvania that it should take just under five years to complete the washing of the historical chrome dumps covered by the contract, but the rewashing of current risings is anticipated to continue for a longer time period, albeit at a higher grade and higher recovery because of the nature of current risings. However, Sylvania has determined that the economics of a second reprocessing step is feasible and economically viable. Although several exploration projects in the northern and eastern BIC afford potential for Sylvania to generate its own supply of lower grade PGE concentrates, these are essentially greenfield projects. Sylvania’s dump operations own no Mineral Resources but hold the rights to treat the PGEs for Sylvania’s own account. The retreatment project is directly linked to the mineral assets of the Samancor Chrome mines and dumps, and in terms of compliance with JORC and SAMCode, these plants have been assessed as mineral assets. As a mineral asset and the technical assumptions used in the review are presented in a JORC and SAMCode compliant manner. In terms of the Samancor Chrome Agreement, Sylvania will sell back to Samancor Chrome any chrome washed from the tailings at a fixed price. The revenue obtained from the sale of the PGE concentrates will be for Sylvania’s account.

5.2. Summary

The individual Metallurgical Statements for each plant held and operated by Sylvania have been prepared in the Appendices.

6. SYLVANIA SOUTH AFRICA (PTY) LIMITED

6.1. Introduction

The mineral assets held under Sylvania South Africa (Pty) Limited are the CTRP and the interest in Everest North (Table 15).

35

Independent Competent Person’s Report Without Valuations December 2010

Table 15: Attributable Equity of Sylvania South Africa

Everest North 74.0%

CTRP 25.0%

7. GREAT AUSTRALIAN RESOURCES LIMITED

7.1. Introduction

Sylvania has acquired 100% of GAU. The mineral resource projects are at an early stage. GAU purportedly held a number of other projects which were excluded from this review on the basis that they were not material or the certainty over continued mineral rights tenure was not confirmed. GAU’s shareholding in various projects is presented in Table 16. Table 16: Attributable Equity of GAU

GAU

Aurora 397LR 71.0%

Harriet's Wish 71.0%

Cracouw 71.0%

8. S A METALS LIMITED

8.1. Introduction

SA Metals has recently been acquired by Sylvania. This vehicle held Pan Palladium which, in turn, held projects in the Northern Limb of the BIC. The attributable equity in these projects is presented in Table 17:- Table 17: Attributable Equity of SA Metals

SA METALS ATTRIBUTABLE EQUITY (%)

Volspruit 100%

Kransplaats 422 100.0%

La Pucella/Altona 100.0%

Nonnenwerth 75.0%

PPD/Implats JV 0.0%

Matlala-a-Thaba JV 49.0%

Sub Total

9. LEGAL ASPECTS AND TENURE

Mineral rights in South Africa are held under the custodianship of the DMR and governed primarily by the Minerals and Petroleum Development Act No.28 of 2002 (MPRDA). Companies can apply for either a Prospection or a Mining right under this legislation to earn the right to either carry out exploration or mining on designated land or property. Sylvania, under its subsidiaries and Joint Venture (JV) agreements has the legal titles (all of which are prospecting rights) listed below:- Sylvania’s plant complexes do not fall under mineral projects, but rather under industrial projects. They are therefore not governed by the MPRDA.

36

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38

Independent Competent Person’s Report Without Valuations December 2010

9.1. Material Agreements

9.1.1. Samancor Services Supply Agreement

On 31st March 2006, Sylvania signed the Services and Supply Agreement (Agreement) with Samancor Chrome to retreat historical chrome tailings, current risings at certain defined tailings dams and run of mine (ROM) from current mining activities. The Agreement was subsequently amended to also include ROM fines generated from certain defined mining activities. In the Addendums to the Agreement, other aspects were also addressed such as the duration of Agreement, which was extended to endure until the latest of:-

the application of the services to all the base materials contained in the tailings dams, current risings and ROM;

five years have passed as from the effective date; and

such time as the Agreement is terminated in accordance with its terms.

Other key aspects include:-

Sylvania has agreed to build CWPs to process both historical chrome tailings and current risings to recover a chromite product for delivery to Samancor Chrome;

after the chromite washing phase, Sylvania has the right to treat resultant final tails to recover PGEs and sell it for its own account;

Sylvania has undertaken to Samancor Chrome that it will ensure that its operation entities will be compliant with the terms of the BBBEE Act No 53 of 2002, this requirement has been waived by Samancor;

it is also contracted that the provisions of services such as water for the CWP shall be for the Samancor Chrome account; and

provision for services for the PRP, will either be supplied by Samancor Chrome at an agreed price by both parties, or alternatively supplied directly by the local service provider.

It has been estimated by the management of Sylvania SA that it should take just under 5 years to complete the first pass treatment of the historical chrome dumps covered by the agreement, but the treatment of current risings and second pass re-treatment are anticipated to continue for life of mine (LOM). The Samancor Chrome Agreement does not contain any change of control provisions. However, should there be a change of control in Samancor Chrome, Sylvania has obtained additional rights with regards to the PGE’s in Samancor Chrome’s tailings. As a consequence, Sylvania’s rights to the PGE’s are secure. A subsequent agreement to those already signed by Sylvania and Samancor Chrome provides for the additional service of primary chrome washing treatment of 300,000tpa direct ROM ore from three more Samancor Chrome mines. Additional feed is already derived from Mooinooi and Buffelsfontein mines for the Mooinooi Complex. Spitzkop and Broken Hill mines in the eastern BIC will report to the nearest Sylvania complexes. As a consequence of recent shareholder events, and as per the announcement on the 29

th

September 2010, a third addendum was signed to the Agreement.

9.1.2. Offtake Agreements

Sylvania has entered into several contracts for the sale of PGE flotation concentrates with Anglo Platinum and Impala Platinum. Although the off-take marketing agreements do exist between Sylvania and the larger PGE producers, the vision for the Sylvania initiative is that a DC furnace may be used as a PGE smelter to treat a lower grade PGE concentrate from Sylvania’s Northern Limb resources with which Sylvania can sell a further beneficiated product in years to come.

9.2. Environmental Considerations

The Plant Complexes are the subject of a single environmental authorisation process, namely an Environmental management programme Report (EMPR) amendment as per the MPRDA. The EMPR amendment constitutes an amendment to the existing EMPR held by the mineral rights holder (Samancor) for the inclusion of the plant complex, under Section 102 of the Act.

39

Independent Competent Person’s Report Without Valuations December 2010

Sylvania has compiled and submitted the EMPR amendments to Samancor, who have submitted the document as an amendment during their EMPR Performance Assessment for each year. The financial provision determined for rehabilitation by Sylvania in the EMPR amendment, while technically adequate, is yet to be approved in some cases by the DMR. Finally, a commitment is made in the EMPR for the plant complexes to include Sylvania’s operations in the environmental monitoring commitments of Samancor. No such monitoring results have been undertaken as yet. Samancor will include them in the next review.

Dated the 1st day of December 2010 at Johannesburg, South Africa.

M.M.MOTLOUNG B.Sc.Hons (Geol.) MGSSA, ASAIMM MINERAL PROJECT ANALYST

R. TAYELOR B.Sc.Hons (Geol.) MGSSA, MGASA MINERAL PROJECT ANALYST

A.N.CLAY M.Sc. (Geol.), M.Sc. (Min. Eng.), Dip. Bus. M. Pr Sci Nat, MSAIMM, FAusIMM, FGSSA, MAIMA, M.Inst.D, AAPG, SPE, MANAGING DIRECTOR

Iaan Myburgh BSc (Maths) MINERAL PROJECT ANALYST

Independent Competent Person’s Report Without Valuations December 2010

Appendix 1: Glossary of Terms

Assay laboratory A facility in which the proportions of metal in ores or concentrates are determined using analytical

techniques. Beneficiation plant A plant which upgrades the quality of the ore using mechanical means, and in this case, gravity

separation. Block model Technique of modelling which divides the resources into mineable blocks.

Charge Chrome Charge chrome is produced from lower-grade chrome ores produced in South Africa and Finland, and contains 50-55% chromium and 6-8% carbon. It is used in the production of stainless steel by the AOD process, which is carried out in an adapted converter vessel where impurities are blown-out by a mixture of oxygen and argon gas

Chrome to Iron Ratio This ratio is calculated using the following equation:- Cr/Fe = (Cr2O3 x 0.6843) / (FeO x 0.7773)

Chromite An iron magnesium chromium oxide mineral (Fe, Mg, Cr2O4) classed in the spinel group of minerals.

Chromitite as the BIC An igneous cumulate rock composed mostly of the mineral chromite. It is found in layered intrusions such

Cr2O3 Chrome oxide

Cut-off grade The lowest grade of mineralised material considered economic to extract; used in the calculation of the ore reserves in a given deposit.

Cyclone A device used for classifying a mineral pulp into two streams, one containing coarser and higher-density particles, and another containing finer, lower-density particles.

DC Furnace DC furnaces normally operate with open baths in which molten process liquids are in direct contact with the refractory lining. The high reaction kinetics associated with vigorously stirred baths reduces black top formation of un-reacted material floating on the slag surface, thereby increasing freeboard-operating temperatures by radiation and convection.

Dip The angle that a structural surface, i.e. a bedding or fault plane, makes with the horizontal measured perpendicular to the strike of the structure.

DMS Plant Dense Medium Separation plant which separates gangue from ore using gravity. Examples of DMS plants include spiral plants and drums.

Elutriation Purification or sizing by washing and pouring off fines matter that is suspended in water, leaving the heavier or coarser portions behind.

Exploration Prospecting, sampling, mapping, diamond drilling and other work involved in the search for mineralisation.

Faulting The process of fracturing that produces a displacement.

Feed grade The grade of material fed to the front of the beneficiation plant.

Feasibility study A definitive engineering estimate of all costs, revenues, equipment requirements and production levels likely to be achieved if a mine is developed. The study is used to define the economic viability of a project and to support the search for project financing.

Ferrochrome Ferrochrome is an alloy of iron and chrome produced by the smelting of chromite in a reducing environment.

Flux A chemical used to increase the fluidity of refining slags.

Footwall The underlying side of a fault, orebody or stope.

Grade The relative quality or percentage of ore metal content.

Groundwater Water found beneath the surface of the land.

Hydrological Pertaining to water either above or below the surface.

In situ In place, i.e. within unbroken rock.

Internal standard Internal laboratory sample for which the metal content is known.

Kriging A mathematical estimation technique based on geostatistics and used for modelling ore bodies.

Metallurgy In the context of this document, the science of extracting metals from ores and preparing them for sale.

Metallurgical recovery Proportion of metal in mill feed which is recovered by a metallurgical process or processes.

Milling/mill The comminution of the ore, although the term has come to cover the broad range of machinery inside the treatment plant where the mineral is separated from the ore.

Mineable That portion of a resource for which extraction is technically and economically feasible.

Mineralisation The presence of a target mineral in a mass of host rock.

Mineralised area Any mass of host rock in which minerals of potential commercial value occur.

Mine Recovery Factor This factor reflects the difference between the in situ ore reserve grades (or contained metal) and the grade (or contained metal) at the front of the concentrator plant and accounts for losses of metal during the mining process.

Net Present Value The NPV is the present value of future cash flows calculated from an escalated and inflated free cash flow of the operations. This is discounted back at inflation and then further discounted at a project risk rate. The NPV can be of cash flows before or after tax, or based upon full shareholders returns net of withholding taxes.

Ore A mixture of valuable and worthless minerals from which at least one of the minerals can be mined and processed at an economic profit.

Orebody A continuous well defined mass of material of sufficient ore content to make extraction economically feasible.

Refining The final purification process of a metal or mineral.

Rehabilitation The process of restoring mined land to a condition approximating to a greater or lesser degree its original state. Reclamation standards are determined by the South African Department of Mineral

Independent Competent Person’s Report Without Valuations December 2010

and Energy Affairs and address ground and surface water, topsoil, final slope gradients, waste handling and revegetation issues.

Run-of-Mine This is ore extracted from the mine and which has sufficient metal content to justify processing. This figure includes dilution.

Sampling Taking small pieces of rock at intervals along exposed mineralisation for assay (to determine the mineral content).

Slimes The fraction of tailings discharged from a processing plant after the valuable minerals have been recovered.

Smelting The extraction of metal from ore by heating.

Specific gravity Measure of quantity of mass per unit of volume, density.

Spot price The current price of a metal for immediate delivery.

Stratigraphic A term describing the sequence in time of bedded rocks which can be correlated between different localities.

Strike length Horizontal distance along the direction that a structural surface takes as it intersects the horizontal.

Stockpile A store of unprocessed ore or marginal grade material.

Stope Excavation within the orebody where the main production takes place.

Tailings Finely ground rock from which valuable minerals have been extracted by milling.

Tailings dam Dams or dumps created from waste material from processed ore after the economically recoverable metal has been extracted.

Tonnage Quantities where the ton is an appropriate unit of measure. Typically used to measure reserves of metalbearing material in-situ or quantities of ore and waste material mined, transported or milled.

Total tonnes mined Total number of tonnes of ore and waste which is extracted from the mine.

Waste rock Rock with an insufficient metal content to justify processing.

Working costs Working costs represent:-

a) production costs directly associated with the processing of metal; and

b) selling, administration and general charges related to the operation.

Yield/Recovered grade The actual grade of ore realised after the mining and treatment process.

Independent Competent Person’s Report Without Valuations December 2010

Appendix 2: Abbreviations

AAPG American Association of Petroleum Geologists

AC Alternating Current

Amsl Above Mean Sea Level

Anglo Platinum Anglo Platinum Limited

AQPCS Aquarius Platinum SA Corporate Services (Pty) Limited

ASAIMM Associate of the South African Institute for Mining & Metallurgy

APPA Atmospheric Pollution Prevention Act

B.Com Bachelor of Commerce Degree

BBBEE Broad-Based Black Economic Empowerment

BEE Black Economic Empowerment

BFS Bankable Feasibility Study

BIC Bushveld Igneous Complex

BMR Base Metal Refining

Bn Billion

CCI Cameron Cross Incorporated

CIMMP Canadian Institute of Mining. Metallurgy and Petroleum

Cr2O3 Chrome oxide

CTRP Chrome Tailings Retreatment Plant

CWP Chrome Washing Process

DC Direct Current

DCF Discounted cash flow

DEAT Department of Environmental Affairs and Tourism, Republic of South Africa

Deloitte Deloitte Corporate Finance (Pty) Limited

DFS Definitive Feasibility Study

Dip. Bus. M Diploma of Business Management

DME Department of Minerals and Energy, Republic of South Africa

DWAF Department of Water Affairs and Forestry, South Africa

E&Y Enerst and Young

EAF Electric Arc Furnace

EIA Environmental Impact Assessment

EMP Environmental Management Plan

EMPR E nvironmental Management Programme Report

EPS Environmental and Process Solutions

FAusIMM Fellow of the Australasian Institute of Mining and Metallurgy

FGSSA Fellow of the Geological Society of South Africa

FSAIMM Fellow of the South African Institute for Mining & Metallurgy

GAU Great Australian Resources Limited

GDACE Gauteng Department of Agriculture, Conservation and Environment

GDE Graduate Diploma in Engineering

Golders Golders Associates Africa (Pty) Limited

Hacra Hacra Mining and Exploration (Pty) Limited

HCFeCr High Carbon Ferrochrome

IMR International Mineral Resources (AG)

IOD Institute of Directors of South Africa

IRS Impala Refinery Services

Ivanhoe Ivanhoe Platinum and Nickel Limited

IWWMP Integrated Waste and Water Management Plan

Kermas Kermas South Africa (Pty) Limited

km Kilometre

km2 Square kilometre

LCFeCr Low Carbon Ferrochrome

LG Lower Group (of the Critical Zone of the BIC)

LOP Life-Of-Plant

M.Sc Master of Science degree

m2 Square metres

mamsl Meters above mean sea level

MBA Masters of Business Administration

MBL Masters of Business Leadership

MCFeCr Medium Carbon Ferrochrome

MG Middle Group (of the Critical Zone of the BIC)

MGSSA Member of the Geological Society of South Africa

MIAIA Member of the Institute of Impact Assessment

Min.Eng Mining Engineer

MSAIMM Member of the South African Institute for Mining & Metallurgy

Mt Million tonnes

MPRDA Minerals and Petroleum Development Act No. 28 of 2002 , Republic of South Africa

MRF Mine Recover Factor

NAV Net Asset Value

Independent Competent Person’s Report Without Valuations December 2010

NEMA National Environmental Management Act No.107 of 1998, Republic of South Africa

NMD Notified Maximum Demand

NPV Net Present Value

oz Ounce

PGE's Platinum Group Elements

PMR Precious Metals Refining

Pr.Sci.Nat Professional Natural Scientist

Prescali Prescali Environmental Consultants (Pty) Limited

PRP Platinum Recovery Process

Prill Split The percentage of the individual PGE elements within a feed source

QA/QC Quality Assurance and Quality Control

RPM Rustenburg Platinum Mines Limited

ROM Run-Of-Mine

SABS South African Bureau of Standards

Samancor Chrome Samancor Chrome (Pty) Limited

Samancor Manganese Samancor Manganese (Pty) Limited

Sika Bopha Sika Bopha Trading (Pty) Limited

SSA Stainless Steel Alloy

Sylvania/SLV Sylvania Resources Limited

SXM SA Metals

t Metric tonnes

tpd tonnes per day

tpy tonnes per year

tpm tonnes per month

TSF Tailings Storage Facility

UG Upper Group (of the Critical Zone of the BIC)

USD United States of America Dollar

USDm Million US Dollars

USD/oz US Dollar per ounce

Venmyn Venmyn Rand (Pty) Limited

ZAR South African Rand

ZARm Million South African Rands

ZAR/t South African Rands per tonne

Independent Competent Person’s Report Without Valuations December 2010

Appendix 3: Qualifications, Declarations and Consents

Andrew Neil Clay Venmyn Rand (Pty) Ltd First Floor, Block G Rochester Place 173 Rivonia Road Sandton 2146 South Africa Telephone: +27 11 783 9903 Fax: +27 11 783 9953 CERTIFICATE OF AUTHOR I, Andrew Neil Clay, do hereby certify that:- 1. I am the Managing Director of Venmyn Rand (Pty) Ltd

First Floor, Block G Rochester Place 173 Rivonia Road Sandton. 2146 South Africa

2. I am a graduate in Geology and a Bachelor of Science from University College Cardiff in 1976;

3. I am a member/fellow of the following professional associations:-

CLASS PROFESSIONAL SOCIETY YEAR OF REGISTRATION Member Canadian Institute of Mining, Metallurgy and Petroleum 2006

Advisor JSE Limited Listings Advisory Committee 2005

Issuer JSE Issuer Services 2008

Member JSE Issuer Mining Sub-committee 2009

Associate Member

American Association of Petroleum Geologists 2005

Member South African Institute of Directors 2004

Fellow Geological Society of South Africa 2003

Member American Institute of Mineral Appraisers 2002

Member South African Institute of Mining and Metallurgy 1998

Fellow Australasian Institute of Mining and Metallurgy 1994

Member Natural Scientist Institute of South Africa 1988

Member Investment Analysts Society of South Africa 1990

4. I have practiced my profession from 1975 to currently, my relevant experience for the purpose of this

Expert Opinion Report is:-

YEAR CLIENT COMMODITY DOCUMENTATION

2010 Bauba Platinum Platinum Independent Strategic Technical Advisor

2010 African Copper Copper Independent Mass Balance and Orebody Fatal Flaws Assessment

2010 Advanced Mineral Recovery Technologies

Gold Independent Sampling and Mass Balance Report

2010 Xstrata Coal Coal Independent Valuation Certificate

2010 Sephaku Cement Independent Technical Review

2010 White Water Resources Gold Independent Competent Persons’ Report

2010 White Water Resources Gold Independent Technical Statement

2010 Platmin Platinum Independent Techno-Economic Reports and Valuation

2010 West Wits Mining Gold Independent Prospectivity Review

2010 SSC Mandarin Gold Independent Corporate and Technical Review

2010 Ultra Tech Cement Independent Techno-Economic Statements

2010 Taung Gold Independent Technical Review

2010 Taung Gold Independent Valuation Statement

2010 Sylvania PGMs Independent Technical and Valuation Experts Report

2010 Mzuri Capital Gold Independent AIM Compliant Competent Person’s Report

2010 Kalagadi Managanese Independent High Level Techno-Economic Review

2010 Lesego Platinum Independent Techno-Economic Valuation Report

2010 Lesego Platinum Independent Executive Summary

2010 G&B Resources Li Independent Prospectivity Review

2010 Miranda Coal Independent Technical Resource and Valuation Statement

Independent Competent Person’s Report Without Valuations December 2010

YEAR CLIENT COMMODITY DOCUMENTATION

2010 Loncor Gold Independent Techno-Economic Valuation Report

2010 Gentor Resources Copper Independent Techno-Economic Report

2010 ETA Star Coal Independent Valuation Report

2010 AfriSam Cement Independent Technical Review

2010 Buildmax Cement Independent Short-Form Competent Report

2010 Anglo Platinum Platinum Independent Valuation of the PGM Assets

2010 Nyota Minerals Gold Independent Inferred Resource Estimate

2010 Absolute Holdings Platinum Independent Competent Persons’ Report

2010 AfriSam Cement Independent Technical Review

2010 African Copper Copper Mass Balance and Orebody Fatal Flaws Assessment

2010 Ruukki Platinum Short-Form Techno-Economic Statements

2010 Umbono Capital PGMs Independent Competent Persons’ Report

2010 Anglo Platinum PGMs Independent Mineral Asset Valuation

2010 Zambia Copper Investments Copper Mineral Asset Valuation

2010 White Water Resources Gold Short-Form Valuation Statements

2010 Central African Gold Gold NI 43 – 101 Technical Report

2010 Platmin Platinum Updated NI 43 – 101 Technical Report

2009 G & B Resources Uranium Independent Competent Persons’ Report

2009 Kalagadi Manganese Independent Techno-Economic Review

2009 Sephaku Cement Cement Impendent Competent Persons’ Report

2009 Metorex Gold Independent Fairness Opinion

2009 Kivu Resources Pegmatites Independent prefeasibility study

2009 Kalagadi Manganese Manganese Independent Tehno-Economic Review

2009 Taung Gold Gold Independent Competent Person’s Report

2009 Sylvania Resources Platinum Independent Technical and Valuation Expert’s Report

2009 Ernst & Young Jordan Gold Independent Valuation Report on mineral assets of a Gold Mining Concession in Ethiopia

2009 Dwyka Resources Gold Independent Technical Statement on Tulu Kapi Gold Project

2009 G & B African Resources Pot Ash Independent Prospectivity Review

2009 Central African Gold Gold Information Memorandum in the form of NI 43-101 Compliant Technical Statement

2009 Braemore Resources Platinum Fairness Opinion

2009 New Dawn Gold Independent Technical Statement

2009 Investec Cement Independent Technical Review of CILU Cement assets

2009 IBI Iron ore Independent Technical Resource Statement

2009 Chrometco Chrome Fairness Opinion

2009 Rand Uranium Uranium Mineral Resource Review and Modelling

2008 Signet Mining Coal Independent valuation of coal assets

2008 Lesego Platinum PGMs Independent Competent Person’s Report for JSE Listing

2008 Norilsk Nickel Nickel Review of business strategy

2008 Minero Group Zinc/Lead Review of business strategy and Competent Person’s Report

2008 Paramount Mining Diamonds Independent Technical Statements

2008 Anglo Platinum PGMs Independent Technical Report and valuation

2008 Demindex Diamonds Review of business strategy and Technical Advice

2008 Investec Cement Due Diligence and valuation of Cilu Cement

2008 DGI Copper/Cobalt Independent Technical Statements

2008 Abalengani Platinum Review of plant and valuation

2008 Absolute Holdings Quarry valuation

2008 Metorex Copper/Cobalt Fairness Opinion

2008 Investec Cement Due diligence on Sephaku assets

2008 Kivu Resources Tantalite Tantalite strategic planning and valuation

2008 Tantilite Resources Tantalite Independent Technical Report

2008 DGI Copper/Cobalt Independent Technical Statement and valuation

2008 Uramin Uranium, Recourse Review and Technical Statements

2008 Harmony Gold Mining Au, Uranium Independent Technical Statements and Strategic business plan

2008 Harmony Gold Uranium Cooke Dump Resource and Financial Valuation

2008 Harmony Gold Au Uranium Reserve and Resource Audit for the group

2008 Nkwe Platinum PGMs Independent Technical Statement and Competent Person’s Report

2008 Highveld Steel & Vanadium Corporation

Steel, Vanadium Independent Resource and Reserve planning

2008 African Minerals Diamonds Independent Technical Statements

2008 Continental Coal Coal Independent Technical Report

2008 Industrial Base Metals Base Metals Base Metal Refinery Audit

2007 Crushco Industrial Minerals Independent valuation

2007 Kimberley Consolidated Mining Diamonds Independent valuation

2007 LionOre Mining Nickel. PGMs Technical and economic valuation

Independent Competent Person’s Report Without Valuations December 2010

YEAR CLIENT COMMODITY DOCUMENTATION

2007 PBS Group PGMs Project review

2007 Western Areas Au Independent valuation

2007 Harmony Gold Mining Au. Uranium Independent scoping and valuation

2007 Great Basin Gold Au Independent valuation for BEE transaction

2007 BRC/Diamondcore Resources Diamonds Valuation and Opinion provider

2007 Urals Investors Diamonds Au. PGMs and Oil and Gas

Independent Transaction Report

2007 Energem Diamonds Independent Technical Statement for Koidu

2007 Xstrata Cr Independent CGT and Valuation advice

2007 PWC Magnetite Mine Review Magnetite Independent Mineral Resource Review and Valuation for apportionment calculations

2007 Magnum Resources Ta Independent Mineral Resource Review

2007 Gaanahoek Coal Deposit Coal Prospectivity Review

2005 Letseng Diamonds Independent Competent Person’s Report for disposal

2005 Zimplats Tenements Platinum Group Metals Independent Competent Person’s Report for disposal

2005 DRD Gold Fair & Reasonable

2005 ARM Madikwa Platinum Group Metals Independent Valuation for Impairment Calculation

2005 Harmony Competitions Tribunal Gold Independent Expert Witness

2005 Ecca Holdings Bentonite Independent Industry Review

2007 DRDGold Au Emperor Gold Mines independent forensic review

2007 Kimberley Diamonds Corporation Diamonds Independent Listings Documentation

2007 Rockwell Diamonds Transhex Transaction Documentation

2007 Rockwell Diamonds Independent Mineral Resource Review

2007 Caledonia Mining Au Independent Disposal Documentation Eersteling

2007 Caledonia Mining Au Independent Disposal Documentation Barbrook

2007 Adsani Tantalite Refinery Ta Independent Technical Report

2006 LionOre Ni Base Metals Independent Valuation of Falconbridge International and Nikkelverk Refinery

2006 LionOre/BCL Ni Base Metals Independent Technical and Economic Valuation

2006 Vanamin V Independent Report for disposal

2006 Kurils Islands Au Independent Technical Report NI43-101

2006 Mgart Armenia Au Independent Assessment and Valuation for AIM

2006 Zimbabwe Mining Bill All Preparation of industry submission to government

2006 Energem Oil & Gas Preparation of National Instrument Compliance

2006 Ncondedzi Coal Coal Technical & Corporate Listing Documentation

2006 Metallon International - Armenia Gold & Base Metals Prospectivity & Exploration Programme Preparation

2006 Hood Tantalite Tantalite Independent Techno Economic Valuation Report

2005 Harmony Randfontein 4 Shaft Gold Independent Valuation

2005 Gallery Gold Gold Independent Competent Person’s Report for disposal

2005 Stuart Coal Coal Independent Competent Person’s Report for disposal

2005 Elementis Chrome Chrome Independent Industry Review

2005 Diamond Core Diamonds Independent Competent Person’s Report

2005 Diamond Core Diamonds Fair & Reasonable Statement

2005 Kensington Resources Diamonds Independent Inspection & Certification of Laboratory

2005 Bayer Valuation Chrome Independent Valuation for Economic Empowerment Transaction

2005 Pangea Diamonds Diamonds Independent Competent Person’s Report

2005 LionOre International Nickel Tati Nickel Review of Mineral Resources.

Aquarius PSA2 Independent Competent Person’s Report

2005 Aquarius Platinum Marikana Mineral Resources Review.

2005 LionOre International Nickel Nkomati Due Diligence and Transaction Value Calculations.

2005 LionOre International Nickel World Nickel market study for group corporate work.

2004 Avgold Limited Gold Fair & Reasonable Opinion on the Methodologies applied and Values attributed to the Mineral Assets of ET Cons

2004 Aquarius Platinum Update of Independent Valuation of Mimosa

2004 Aquarius Platinum Independent Techno-Economic Report and Fair and Reasonable Opinion tot the PIC, DBSA and IDC on the 26% BEE Transaction for AQPSA – Document waived by the JSE.

2004 Mimosa Mining Company Platinum Mineral Resource and Ore Reserve Review

2004 Zimplats Platinum Zimplats Makwiro Valuation and Corporate Restructuring

2004 Assmang Manganese CGT Valuation

2004 Aquarius Platinum CGT Valuation

2004 Sishen South Iron CGT Valuation

2003 Unki Platinum Project Platinum CGT Valuation

2003 Hernic Ferrochrome (Pty) Ltd, Itochu Corporation

Chromite Independent valuation of the Stellite Chromite Mine Joint Venture.

Independent Competent Person’s Report Without Valuations December 2010

YEAR CLIENT COMMODITY DOCUMENTATION

2003 African Diamond Holdings (Pty) Ltd Diamonds Independent techno-economic due diligence and valuation of African Diamond Holdings marine diamond concessions and diamond cutting operation in Walvis Bay, Namibia.

2003 Unki Platinum Project, Zimbabwe Platinum Techno-Economic Valuation Report & Fair & Reasonable Opinion

2003 Transvaal Ferrochrome Ltd Ferrochrome Independent Competent Person’s Report and Valuation as a bankable Document for Australian Stock Exchange

2003 Aquarius Platinum (SA) (Pty) Ltd Platinum Independent Competent Person’s Report and Valuation for the Everest South Project

2002 Zimbabwe Platinum Mines Ltd Platinum Independent valuation of Zimplats relative to the value of the Impala Platinum Ltd/AurionGold Ltd transaction.

2002 Mitsubishi Corporation Ferrochrome Expansion Report and Valuation on Hernic Ferrochrome (Pty) Ltd.

2002 Aquarius Platinum Ltd Platinum Acquisition Report on ZCE Platinum Ltd including the due diligence and valuation of Mimosa Mine in Zimbabwe.

2002 Freddev Gold Valuation of Mineral Rights & Royalties

2002 Barnex Gold Valuation of Mineral Rights & Royalties

2002 Western Areas Gold WA4 Project : Valuation of Mineral Rights & Royalty Agreement

2002 Mitsubishi Ferrochrome Expansion report and valuation

2002 Aquarius Platinum Acquisition Report

2001 Northam Platinum Valuation

2001 Mitsubishi Corporation Ferrochrome Due Diligence, Valuation and Acquisition Report

2001 Amcol Due Diligence Bentonite Independent due diligence and valuation on G&W

2001 Zimplats Impala Raising Platinum Circular to shareholders valuation report

2000 African Minerals Varied Independent competent person’s report

2000 Barnato Exploration Limited Varied Competent person’s report

2000 Durban Deep Gold Independent valuation report

2000 Iscor Limited Varied Independent valuation of exploration assets

1999 Harmony Gold Mining Co Ltd Gold Harmony / Kalgold / West Rand Cons

1999 Leighton Contractors Tin Pre-feasibility study Pemali Tin (Indonesia)

1999 Mitsubishi Ferro-Chrome Techno-economic valuation of Hernic Chrome

1998 Barnex Ltd Wits Gold Due diligence

1998 Camco Diamonds Independent Competent Person’s Report and valuation

1998 Crown Mines and DRD Wits Gold Valuation

1998 Egyptian Government Phosphate Due diligence and valuation

1998 Great Fitzroy Mines Copper Competent Person’s Report and Valuation

1998 Iscor Mining Greenstone Gold Due diligence and valuation

1998 JCI Ltd Wits Gold Competent Person’s Report

1998 Randgold & Exploration Co Ltd Gold Competent Person’s Report

1998 Western Areas Wits Gold Competent Person’s Report

1997 CBR Mining Coal Due diligence

1997 Durban Roodepoort Deep Ltd Wits Gold Competent Person’s Report

1997 G&W Base Bentonite Due diligence

1997 JCI Ltd Wits Gold Competent Person’s Report

1997 Opaline Gold Greenstone Gold Competent Person’s Report

1997 Penumbra Coal Due diligence

1997 Randgold & Exploration Co Ltd Greenstone Gold Competent Person’s Report

1997 Rondebult Colliery Coal Due diligence

1996 African Mining Corporation* Alluvial Gold Project valuation

1996 Australian Platinum Mines NL Platinum Due diligence

1996 Benoni Gold Holdings Ltd Wits Gold Competent Person’s Report

1996 Consolidated Metallurgical Industries Ferrochrome Competent Person’s Report and valuation

1996 Durban Roodepoort Deep Ltd Wits Gold Competent Person’s Report

1996 Harmony Gold Mining Co Ltd Wits Gold Competent Person’s Report

1996 JCI Ltd Wits Gold Valuation

1996 Rand Leases Properties Ltd Wits Gold Competent Person’s Report and valuation

1996 Randgold & Exploration Co Ltd Wits Gold Due diligence

1995 African Mines Limited* Greenstone Gold Project valuation

1995 Barney-Seidle Arbitration Granite Project valuation arbitration

1995 Mopet Oil* Oil and Gas Market analysis facilitator

1995 Randgold & Exploration Co Ltd Wits Gold Competent Person’s Report and valuation

1995 Randgold Durban Deep Wits Gold Competent Person’s Report and valuation

1995 Randgold Harmony Unisel Merger Wits Gold Competent Person’s Report and valuation

1994 Aurora Exploration Varied - Industrials Competent Person’s Report and valuation

1994 Consolidated Mining Corp Wits Gold Due diligence and valuation

1994 CRA (Australia) Iron Ore Due diligence

1994 Durban Roodepoort Deep Ltd Wits Gold Competent Person’s Report and valuation

1994 Ghana Gold Mines* Greenstone Gold Due diligence and valuation

1994 Gold Fields of SA Ltd Wits Gold Competent Person’s Report and valuation

Independent Competent Person’s Report Without Valuations December 2010

YEAR CLIENT COMMODITY DOCUMENTATION

1994 Hernic Chrome Ferro-Chrome Valuation and Strategic Analysis

1994 Inca Magnesium Due diligence and valuation

1994 Mitsubishi Ferrochrome Due diligence and valuation

1994 Namco* Diamonds Competent Person’s Report and valuation

1994 Randgold & Exploration Co Ltd Wits Gold Due diligence

1993 Namibia Oil & Gas licence applications

Oil & Gas Working with Paul Blair licence applications

1993 Atomic Energy Commission Uranium Strategic Analysis

1993 Eskom Base metals Strategic Analysis

1993 JCI Wits Gold Financial Planning Analysis (Rehabilitation)

1993 Lonrho Platinum Financial Planning Analysis (Rehabilitation)

1993 Rand Mines Properties Varied Mineral rights evaluation

1992 Barbrook Gold Mines Greenstone Gold Ore resource modelling and mine valuation

1992 Rand Merchant Bank Copper Ore resource modelling and project valuation

1992 Rembrandt Platinum Mine valuation (Northam Platinum)

1992 West Rand Cons Wits Gold Ore resource modelling and mine valuation

1991 Rand Merchant Bank Wits Gold Ore reserve evaluation (Westonaria Gold Mine)

1991 Rembrandt (Gold Fields of SA) Varied Due diligence, valuation and strategic analysis

1991 Standard Merchant Bank Greenstone Gold Due diligence and valuation (Eersteling Gold Mine)

1990 Sequence Oil and Gas Oil & Gas Due Diligence Report

1990 Atomic Energy Corporation Nuclear Fuels Strategic analysis

1990 Consolidated Mining Corp Wits Gold Due diligence and valuation

1990 Eskom Copper/Zinc Strategic Market Analysis (Toll Smelter potential)

1990 Freddies Minerals Feldspar - Industrials Due diligence

1990 Industrial Machinery Supplies Coal Strategic analysis and valuation (Bricketting plant)

1990 Knights Gold Mine Wits Gold Competent Person’s Report

1990 Rand Merchant Bank Diamonds Due diligence and valuation (Alluvial Mine)

1990 Corex Oil & Gas Evaluation of prospectivity

1990 Rand Merchant Bank Lead/Zinc Due diligence and valuation (Miranda Mine)

1990 Rand Mines Varied Corporate Strategic Analysis

1990 Rhogold Wits Gold Ore resource modelling

1990 Rice Rinaldi Coal Due diligence and valuation

1990 Sub Nigel Gold Mine Wits Gold Due diligence and valuation

1990 Zaaiplaats Tin Mine Tin Due diligence and valuation

1989 Avontuur Diamond Mines Diamonds Due diligence and valuation

1989 Granite Consolidated Mining Granite Due diligence and valuation

1989 Osprey Gold Mine Greenstone Gold Due diligence and valuation

1989 Rand Leases Gold Mine Wits Gold Ore resource modelling

1989 Rand Merchant Bank* Varied Mineral portfolio analysis (Swanson Rights)

1989 Rhovan Vanadium Competent Person’s Report and valuation

1989 Vanamin Severrin Mining Vanadium Due diligence and valuation

1989 Zimco Andalusite Competent Person’s Report and valuation

1988 Mullet Slate Slate Due diligence and valuation

1988 Rand Merchant Bank Wits Gold Risk assessment analysis (Peritus Exploration)

1988 Wit Nigel Gold Mine Wits Gold Ore resource modelling

Fair and Reasonable Opinions:

YEAR CLIENT SECURITIES EXCHANGE

JURISDICTION

TRANSACTION TYPE

IMPLIED VALUE (US$m)

DESCRIPTION

2010 Sylvania ASX Issuing new ordinary shares

34 Independent Professional Expert Report

2009 Chrometco JSE Acquisition of interest

8.3 Independent Professional Expert Report

2009 Metorex JSE Disposal of 6.3% interest

5.7 Independent Professional Expert Report

2009 Braemore Resources JSE Acquisition of interest

36.3 Independent Professional Expert Report

2007 Diamondcore/BRC JSE Acquisition 50 Independent F&R for Diamondcore

2006 LionOre International TSX Acquisition notification documentation.

650 Independent Technical and Valuation Fatal Flaws Report and F&R opinion for the Board of LionOre. Not published as an F&R.

2005 Diamond Core JSE Category I Merger 10.0 Independent CPR on the mineral assets of Samadi Resources SA (Pty) Ltd and Diamond Core Resources Limited.

2005 LionOre International TSX Acquisition notification documentation.

110.0 Tati Nickel Review of Mineral Resources.

Independent Competent Person’s Report Without Valuations December 2010

2005 Aquarius JSE 26% BEE 150.0

Independent Techno-Economic Valuation and Fair and Reasonable Opinion on the PIC, IDC, DBSA 26% Empowerment Transaction. Documents waived for the secondary listing.

2004 Barplats JSE Offer to Barplats Minorities

60.0

Offer by Platinum Consortium to take out Implats. The SRP insisted our report be prepared in full. In the end Investec wrote the Fair and Reasonable but was fully reliant upon the Venmyn work as demonstrated in the circular.

2004 Zimplats ASX Collapse of the Makwiro Structure for shares to Implats.

38.0 Fair Value calculation in a corporate restructure.

2003 Amplats JSE Acquisition price calculation for Unki Platinum.

Confidential

Preparation of an Independent Techno-Economic Valuation Report and Fair and Reasonable Opinion. Document not used as the transaction became immaterial for reporting purposes.

2003 Aquarius Platinum (South Africa) (Pty) Ltd

ASX Opinion on the value of a Refinery Agreement.

10.0 Fair & Reasonable Opinions for Aquarius Platinum for the Impala Refinery Commitments.

2002 Consolidated African Mines Limited.

JSE

CAM acquired 40% of the Letseng diamond mine for CAM shares.

10.0 Preparation of an Independent Techno-Economic Valuation Report and Fair and Reasonable Opinion. Document used in full.

2002 Zimplats ASX

Implats acquired a controlling interest in Zimplats by acquiring Aurion Gold shares.

50.0 Preparation of an Independent Techno-Economic Valuation Report and Fair and Reasonable Opinion. Document used in full.

2002 Aquarius ASX Aquarius acquires 65% in ZCE Platinum Limited.

50.0 Preparation of an Independent Techno-Economic Valuation Report and Fair and Reasonable Opinion. Document used in full.

2000 DiamondWorks TSX

Lyndhurst a South African Company takes control of Canadian junior Diamondworks.

20.0

Preparation of an Independent Techno-Economic Valuation Report and Fair and Reasonable Opinion. Document used in full and special representation required in Toronto to explain the transaction and the assets.

1999 New Mining Corporation

JSE Listing and acquisition documentation.

50.0

Complicated transaction and full Independent Techno-Economic Valuation prepared with Fair and Reasonable Opinion included in our report. This satisfied the JSE and the SRP.

1996 West Witwatersrand Gold Holdings Limited

JSE Section 440k Offer 20.0

Independent Competent Persons Report on the Offer by Durban Deep to West Wits under Section 440k. Document included in circulars to both shareholders. Our Fair and Reasonable Opinion was specifically requested by the SRP.

5. I have visited all the project sites on the 31st July 2009, 3

rd August 2009, 4

th August 2009, 18

th August

2009, 11th November 2010 and 15

th November 2010 and a full inspection was made of the operational

areas, plants and infrastructure;

6. I have read the definition of an “Expert” as set out in the Regulatory Guide 111 of the Australian

Securities and Investment Commission and certify that by reason of my qualifications, experience and

affiliation with a professional association (as defined in Regulatory Guide 111.97), I fulfil the

requirements to be an “Expert” for the purposes of the Expert Opinion Report;

7. I have had no prior involvement with the properties that are the subject of the Expert Opinion Report;

8. I have read the SAMREC and SAMVAL Codes of reporting and Regulatory Guides 111 and 112 of the

Australian Securities and Investments Commission, and the Expert Opinion Report has been prepared

in compliance with those reporting codes and those regulatory guides;

9. I am responsible for the main document of the Expert Opinion Report as well as attached Technical

Statements as a Fellow of the Australasian Institute of Mining and Metallurgy;

10. At the date hereof, to the best of my knowledge, information and belief, the Expert Opinion Report

contains all scientific and technical information that is required to be disclosed to make the Expert

Opinion Report not misleading;

11. I am independent of the Sylvania Resources Limited and all their subsidiaries and consultants; and

Independent Competent Person’s Report Without Valuations December 2010

12. I consent to the filing of the Expert Opinion Report with any stock exchange and other regulatory

authority and any publication by them for regulatory purposes, including electronic publication in the

public company files on their websites accessible by the public, of the Expert Opinion Report.

Dated this 1st day of December 2010 at Johannesburg, South Africa.

A.N.CLAY M.Sc. (Geol.), M.Sc. (Min. Eng.), Dip. Bus. M. Pr Sci Nat, MSAIMM, FAusIMM, FGSSA, MAIMA, M.Inst.D., AAPG

MANAGING DIRECTOR

Independent Competent Person’s Report Without Valuations December 2010

Mpai Motloung Venmyn Rand (Pty) Ltd First Floor, Block G Rochester Place 173 Rivonia Road Sandton 2146 South Africa Telephone: +27 11 783 9903 Fax: +27 11 783 9953 CERTIFICATE OF AUTHOR I, Mpai Motloung, do hereby certify that:- 1. I am a Mineral Project Analyst of Venmyn Rand (Pty) Ltd

First Floor, Block G Rochester Place 173 Rivonia Road Sandton. 2146 South Africa

2. I graduated with a B.Sc.Hons (Geology) degree from the University of Pretoria in 2006;

3. I am a member/fellow of the following professional associations:-

CLASS PROFESSIONAL SOCIETY YEAR OF REGISTRATION

Member Geological Society of South Africa 2006

Associate South African Institute of Mining and Metallurgy 2008

4. I have practiced my profession from 2005 to currently, my relevant experience for the purpose of this

Expert Opinion Report is:-

YEAR CLIENT COMMODITY PROJECT DESCRIPTION

2010 Gentor Resources Inc. Copper NI 43-101 Technical Reports on their gold projects in the Semail Ophiolite Belt, Sultanate of Oman.

2010 West Wits Limited Gold and Uranium JORC compliant short-form Techno-Economic Statement on their Rand Lease Property, Witwatersrand Basin.

2010 Miranda Coal Pty (Ltd) Coal SAMREC compliant short-form Technical Resource and Valuation Statements for 6 exploration properties.

2010 Loncor Resources Inc. Gold NI 43-101 Technical Reports on their gold projects in the DRC.

2009 Sylvania Resources Limited

Chromite and PGE's Valuation of the company's mineral assets by means of short-form SAMREC code Compliant Techno-Economic Statements.

2009 Sephaku Holdings Ltd, Tin and limestone Canadian National Instrument NI 43-101 compliant short form Competent Person’s Report for their greenfields projects in South Africa.

2009 George Forest Cement Geology and resources for their CILU Cement Project, DRC, Competent Person’s Report.

2009 World Wide Coal Ltd. Coal Data verification for a mineral resource statement for a due diligence on their projects in the Witbank coal field.

2009 Gatumba Mining Company Ltd.

Tin/Tantalum National Instrument NI 43-101 compliant Preliminary Assessment on the Gatumba South Project in Rwanda.

2009 Bongani Minerals Tungsten Preliminary Assessment on their Riviera Tungsten deposit in the Western Cape Province.

2009 Zambezi Gas Coal Resource modelling and estimation for the Entuba coal project, Zimbabwe.

2008 Minero Zinc (Pty) Ltd Zinc/lead Techno-economic valuation of their Pering Zinc deposit in the Western Cape.

2008 Marula Mines Ltd Iron ore Techno-economic valuation and Environmental Statement of the Opon Mansi Iron Ore Project.

2008 Firestone Energy Ltd Coal Technical Statement for the farms Vetleegte and Olieboomfontein.

Independent Competent Person’s Report Without Valuations December 2010

5. I have visited several project sites on the 11th November 2010 and a full inspection was made of the

operational areas,

6. I have read the definition of an “Expert” as set out in the Regulatory Guide 111 of the Australian

Securities and Investment Commission and certify that by reason of my qualifications, experience and

affiliation with a professional association (as defined in Regulatory Guide 111.97), I fulfil the

requirements to be an “Expert” for the purposes of the Expert Opinion Report;

7. I have had no prior involvement with the properties that are the subject of the Expert Opinion Report;

8. I have read the SAMREC and SAMVAL Codes of reporting and Regulatory Guides 111 and 112 of the

Australian Securities and Investments Commission, and the Expert Opinion Report has been prepared

in compliance with those reporting codes and those regulatory guides;

9. I am responsible for the Short Form Technical Statements of the Expert Opinion Report;

10. At the date hereof, to the best of my knowledge, information and belief, the Expert Opinion Report

contains all scientific and technical information that is required to be disclosed to make the Expert

Opinion Report not misleading;

11. I am independent of the Sylvania Resources Limited and all their subsidiaries and consultants; and

12. I consent to the filing of the Expert Opinion Report with any stock exchange and other regulatory

authority and any publication by them for regulatory purposes, including electronic publication in the

public company files on their websites accessible by the public, of the Expert Opinion Report.

Dated the 1st day of December 2010 at Johannesburg, South Africa.

M. MOTLOUNG B.Sc.Hons (Geol.) MGSSA, ASAIMM MINERAL PROJECT ANALYST

Independent Competent Person’s Report Without Valuations December 2010

Richard Martin Tayelor Venmyn Rand (Pty) Ltd First Floor, Block G Rochester Place 173 Rivonia Road Sandton 2146 South Africa Telephone: +27 11 783 9903 Fax: +27 11 783 9953 CERTIFICATE OF AUTHOR I, Richard Martin Tayelor, do hereby certify that:- 1. I am a Mineral Project Analyst of Venmyn Rand (Pty) Ltd

First Floor, Block G Rochester Place 173 Rivonia Road Sandton. 2146 South Africa

2. I graduated with a B.Sc.Hons (Geology) degree from the University of Johannesburg in 2008;

3. I am a member/fellow of the following professional associations:-

CLASS PROFESSIONAL SOCIETY YEAR OF REGISTRATION Member Geological Society of South Africa 2006

Member Geostatistical Association of South Africa 2008

4. I have practiced my profession from 2008 to currently, my relevant experience for the purpose of this

Expert Opinion Report is:-

YEAR CLIENT COMMODITY PROJECT DESCRIPTION/INVOLVEMENT

2010

SSC Mandarin Group Gold High Level Techno-Economic Fatal Flaws Due Diligence.

Tanzanian Royalty Gold Drilling, Sampling, QAQC and Laboratory Audit for later CPR.

Namakwa Diamonds Diamonds Technical resource Statement update.

White Water Resources Gold Short Form Competent Persons Report for JSE and Valuation of East Rand assets.

UltraTech Cement Coal Xstrata Ermelo Asset Disposal Due Diligence and Valuation.

Consol Glass Pty Ltd Silica Resource confirmation in Surfer™ of Groenfontein deposit and High Level Due Diligence (Fatal Flaws analysis)

Target Holdings Coal Resource confirmation in Surfer™ of Schoongezicht project.

Namakwa Diamonds Diamonds Competent Persons Report and Valuation of the DRC mineral assets.

Nyota Minerals Limited Gold Audit of QA/QC procedures for drilling and sampling as well as preparation laboratory audit

GEM Diamonds Limited Diamonds Revision of sampling campaign and reformulation of database for resource modelling.

Nyota Minerals Limited Nickel Mineral Experts Report on the Muremera Nickel Project in Burundi.

Gem Diamonds Diamonds Mineral Resource Review of the Letšeng and Ellendale operations.

2009

Nyota Minerals Limited Gold Preliminary Scoping Study on the Tulu Kapi Gold Project in Ethiopia.

Namakwa Diamonds Diamonds Mineral Resource update subsequent to Namakwa’s acquisition of Gem Diamonds’ DRC assets.

Nyota Minerals Limited Gold Instigation and training of Internationally compliant QA/QC procedures for drilling and sampling.

Sephaku Holdings Ltd, Tin and limestone

Canadian National Instrument NI 43-101 compliant short form Competent Person’s Report for their greenfields projects in South Africa.

Gatumba Mining Company Ltd.

Tin/Tantalum National Instrument NI 43-101 compliant Preliminary Assessment on the Gatumba South Project in Rwanda.

Dwyka Resources Limited

Gold High level review and Technical Statement.

MSA Geoservices Iron Oxide, copper, gold

Data verification for a mineral resource statement for a due diligence on their projects in Zambia.

IBI International LIBAM Home Office

Iron Independent Prospectivity Review.

Mr. Rob Croll Gold Preliminary Due Diligence and Prospectivity Review on Klipwal.

Bongani Minerals (Pty) Ltd

Tungsten Review of Riviera Tungsten deposit.

Independent Competent Person’s Report Without Valuations December 2010

2008

Minero Mining Company Zinc-Lead Competent Persons Report and Valuation of the Pering Zinc-Lead Mine, in South Africa.

West End Diamond Mine Diamonds Minerals Resource Report of all Diamonds Mineral Assets.

Universal Coal plc Coal Valuation of the Ellof Coal Project in South Africa.

2008

Tegan International Coal Prospectivity Review of Various Coal Properties in the Vryheid region of South Africa.

Worldwide Coal Carolina (Pty) Limited

Coal Update of Techno-economic valuation of Worldwide Coal Carolina’s coal assets.

5. I have visited none of the project sites;

6. I have read the definition of an “Expert” as set out in the Regulatory Guide 111 of the Australian

Securities and Investment Commission and certify that by reason of my qualifications, experience and

affiliation with a professional association (as defined in Regulatory Guide 111.97), I fulfil the

requirements to be an “Expert” for the purposes of the Expert Opinion Report;

7. I have had no prior involvement with the properties that are the subject of the Expert Opinion Report;

8. I have read the SAMREC and SAMVAL Codes of reporting and Regulatory Guides 111 and 112 of the

Australian Securities and Investments Commission, and the Expert Opinion Report has been prepared

in compliance with those reporting codes and those regulatory guides;

9. I am responsible for the Short Form Metallurgical Statements of the Expert Opinion Report;

10. At the date hereof, to the best of my knowledge, information and belief, the Expert Opinion Report

contains all scientific and technical information that is required to be disclosed to make the Expert

Opinion Report not misleading;

11. I am independent of the Sylvania Resources Limited and all their subsidiaries and consultants; and

12. I consent to the filing of the Expert Opinion Report with any stock exchange and other regulatory

authority and any publication by them for regulatory purposes, including electronic publication in the

public company files on their websites accessible by the public, of the Expert Opinion Report.

Dated the 1st day of December 2010 at Johannesburg, South Africa.

R. M. TAYELOR B.Sc.Hons (Geol.) MGSSA, MGASA, MINERAL PROJECT ANALYST

Independent Competent Person’s Report Without Valuations December 2010

Khalid Patel 20B Rothesay Avenue Craighall Park Johannesburg 2196 South Africa Tel: +27 (0)11 880 4209 Fax: +27 (0)11 880 2184 CERTIFICATE OF AUTHOR I, Khalid Patel, do hereby certify that:- 1. I am an Environmental Scientist of MSA Geoservices (Pty) Ltd

20B Rothesay Avenue Craighall Park Johannesburg 2196 South Africa

2. I graduated with a B.Sc.(Hons) in Geography and Environmental Sciences degree from the University

of Witwatersrand in 2005;

3. I am a member/fellow of the following professional associations:-

CLASS PROFESSIONAL SOCIETY YEAR OF REGISTRATION

Member Association for Impact Assessment, SA 2006

4. I have practiced my profession from 2006 to currently, my relevant experience for the purpose of this

Expert Opinion Report is:-

YEAR CLIENT COMMODITY PROJECT DESCRIPTION

2006 Van Mag Vanadium New order Mining Right Conversion

2006 BHP Billiton Copper Compilation of EMP in Zambia

2007 West Wits Gold Environmental Due Dilligence on Lancaster Mine

2007 Veremo Minerals Titanium Compilation of Prospecting Right and EMP

2008 City of Johannesburg N/A Legal Compliance Register

2008 Van Mag Vanadium Mining Right Scoping/ EIA Report

2009 Cargo Carriers N/A Basic Assessment for Above Ground Fuel Storage

2009 Exxaro KZN Sands Heavy Minerals EMPR Amendment of Hillendale and Fairbreeze Mines

2009 Exxaro KZN Sands Heavy Minerals Legal Gap Analysis of Hillendale and Fairbreeze Mines

2009 Exxaro KZN Sands Heavy Minerals Wetland Rehabilitation and Compensation Plan

2009 Sishen Iron Ore Iron EMPR Performance Assessment

2009 Xstrata Chrome EIA and EMPR Amendment for Tailings Dam Construction

5. I have visited all the project sites on the 31st July 2009, 3

rd August 2009, 4

th August 2009 and 18

th

August 2009 and a full inspection was made of the operational areas, plants and infrastructure;

6. I have read the definition of an “Expert” as set out in the Regulatory Guide 111 of the Australian

Securities and Investment Commission and certify that by reason of my qualifications, experience and

affiliation with a professional association (as defined in Regulatory Guide 111.97), I fulfil the

requirements to be an “Expert” for the purposes of the Expert Opinion Report;

7. I have had no prior involvement with the properties that are the subject of the Expert Opinion Report;

8. I have read the SAMREC and SAMVAL Codes of reporting and Regulatory Guides 111 and 112 of the

Australian Securities and Investments Commission, and the Expert Opinion Report has been prepared

in compliance with those reporting codes and those regulatory guides;

9. I am responsible for the Environmental Due Dilligence and sign off of the Expert Opinion Report;

10. At the date hereof, to the best of my knowledge, information and belief, the Expert Opinion Report

contains all scientific and technical information that is required to be disclosed to make the Expert

Opinion Report not misleading;

Independent Competent Person’s Report Without Valuations December 2010

11. I am independent of the Sylvania Resources Limited and all their subsidiaries and consultants; and

12. I consent to the filing of the Expert Opinion Report with any stock exchange and other regulatory

authority and any publication by them for regulatory purposes, including electronic publication in the

public company files on their websites accessible by the public, of the Expert Opinion Report.

Dated the 1st day of December 2010 at Johannesburg, South Africa.

K. PATEL B.Sc.Hons (Geog. and Environmental Science) MIAIA ENVIRONMENTAL SCIENTIST

Independent Competent Person’s Report Without Valuations December 2010

Jacobus Adriaan Myburgh Venmyn Rand (Pty) Ltd First Floor, Block G Rochester Place 173 Rivonia Road Sandton 2146 South Africa Telephone: +27 11 783 9903 Fax: +27 11 783 9953 CERTIFICATE OF AUTHOR I, Iaan Myburgh, do hereby certify that:-

1. I am a Mineral Project Analyst of Venmyn Rand (Pty) Ltd

First Floor, Block G Rochester Place 173 Rivonia Road Sandton. 2146 South Africa

2. I graduated with a B.Sc. (Maths) degree from the University of Pretoria in 2009;

3. I have practiced my profession from 2010 to currently, my relevant experience for the purpose of this

Expert Opinion Report is:-

YEAR CLIENT COMMODITY PROJECT DESCRIPTION

2010 African Copper Copper Feasibility Study

2010 Miranda Mineral Holdings Coal Independent Project Valuations

2010 White Water Resources Gold Independent Project Valuations

2010 Chrometco Limited Chromite Independent Project Valuations

2010 Sekoko Coal Independent Project Valuations

2010 West Wits Gold/Uranium Statistical Analysis

2010 Central African Gold Gold Statistical Analysis

2010 Worldwide Mineral Strategists Gold Statistical Analysis

4. I have visited several project sites on the 11th November 2010 and a full inspection was made of the

operational areas,

5. I have read the definition of an “Expert” as set out in the Regulatory Guide 111 of the Australian

Securities and Investment Commission and certify that by reason of my qualifications, experience

and affiliation with a professional association (as defined in Regulatory Guide 111.97), I fulfil the

requirements to be an “Expert” for the purposes of the Expert Opinion Report;

6. I have had no prior involvement with the properties that are the subject of the Expert Opinion Report;

7. I have read the SAMREC and SAMVAL Codes of reporting and Regulatory Guides 111 and 112 of

the Australian Securities and Investments Commission, and the Expert Opinion Report has been

prepared in compliance with those reporting codes and those regulatory guides;

8. I am responsible for the Short Form Technical Statements of the Expert Opinion Report;

9. At the date hereof, to the best of my knowledge, information and belief, the Expert Opinion Report

contains all scientific and technical information that is required to be disclosed to make the Expert

Opinion Report not misleading;

10. I am independent of the Sylvania Resources Limited and all their subsidiaries and consultants; and

11. I consent to the filing of the Expert Opinion Report with any stock exchange and other regulatory

authority and any publication by them for regulatory purposes, including electronic publication in the

public company files on their websites accessible by the public, of the Expert Opinion Report.

Independent Competent Person’s Report Without Valuations December 2010

Dated the 1st day of December 2010 at Johannesburg, South Africa.

J.A. MYBURGH B.Sc. (Maths) MINERAL PROJECT ANALYST