Reviewed Condensed Consolidated Interim Financial Statements
for the six months ended 31 March 2014

OPERATIONAL OVERVIEW

THARISA MINERALS

During the period the open pit mining footprint was increased in order to expose the multiple middle-group (MG) layers, such that the blend of run of mine feed stock into the Genesis and Voyager Plants could be optimised to enhance the PGM recoveries and chrome concentrate yields. 1,957,800t of reef was mined, an increase of 31.7% over the comparable period, equating to 81.6% of plant nameplate capacity. The PGM plant feed grade was 1.68g/t and the chrome feed grade was 20.1% as planned.

Unseasonal heavy rains restricted access to the deeper levels in the open pits. In order to maintain plant throughput, weathered ore from the shallower sections of the pits was mined and ore stockpiles drawn down to supplement fresh ore.

Pre-stripping was accelerated to increase mine flexibility and availability of ore from each of the MG layers. As a consequence, the stripping ratio for the period averaged 9.2 (on a cube for cube basis) against the life of mine average of 8.5. The cost of this pre-stripping has been capitalised to property, plant and equipment.

Plant availability, which is planned at 95%, averaged 90% due to equipment failures on the Genesis and Voyager Plants. Plant redundancy limited total plant downtime. To ensure similar equipment failures will not disrupt production in future, long lead spares have been ordered. In line with the transition from a development asset to an operating asset, a preventative maintenance programme has been implemented.

Production of PGM concentrate (5PGE + Au) totalled 38,400oz, an increase of 21.7% over the comparable period. PGM recoveries averaged 48% for the period, below the planned average of 61% due to the processing of more weathered ore than planned and sub-optimal blending of feedstock to the Genesis and Voyager Plants. The PGM concentrate is sold to Impala Refinery Services Limited (“Impala”) in terms of the off-take agreement. The average PGM metal basket price declined by approximately 5% over the comparable period.

Production of chrome concentrates totalled 569,400t with the inclusion for the first time of 69,400t of premium chemical and foundry grade concentrates. Chrome yield averaged 30% against the planned yield of 34.4%.

ARXO LOGISTICS

During the period, the bulk of the metallurgical grade chrome concentrates was sold on a CIF basis to main ports in China, with the logistics chain managed by Arxo Logistics. The chrome is shipped either in bulk from the Richards Bay dry bulk terminal or via containers from Johannesburg and transported by road to Durban from where it is shipped. The economies of scale and in-house expertise have ensured that our transport costs, a major cost of the Group, remain competitive. Approximately 40.6% of the chrome concentrate export sales were shipped in bulk with the balance shipped via containers. The premium foundry and chemical grade products are sold primarily on an ex works basis and the logistics managed by the off-taker.

The PGM concentrate is transported by road from the Tharisa Mine to the Impala refinery in terms of the off-take agreement.

ARXO RESOURCES

Chrome concentrate sales undertaken by Arxo Resources mainly into the Chinese markets totalled 564,000t. The commodity prices have remained under pressure with the average contract price being approximately 14% lower than the average price for the comparable period.

Subsequent to the financial year end, Arxo Resources entered into a marketing arrangement with Noble Resources International Pte Limited in relation to the sale of 50,000tpm of metallurgical chrome concentrate, which equates to one third of the steady state production of the Tharisa Mine.