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1 INDEPENDENT COMPETENT PERSONS REPORT _CPR_ ON THE LIMESTONE

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                                                                                                                                Block G, First Floor
                                                                                                                                Rochester Place
                                                                                                                                173 Rivonia Road
                                                                                                                                Sandton 2146
                                                                                                                                PO Box 782761
                                                                                                                                Sandton 2146
                                                                                                                                Republic of South Africa


                                                                                                                                Tel: +27 11 783 9903
                                                                                                                                Fax: +27 11 783 9953
                                                                                                                                www.venmyn.com




                    INDEPENDENT COMPETENT PERSONS REPORT
                                               (CPR)
                                            ON THE
                 LIMESTONE MINERAL ASSET AND CEMENT PLANTS
                                           HELD BY
                            SEPHAKU CEMENT (PTY) LIMITED
                                    (SEPHAKU CEMENT)
                                                BY
                              VENMYN RAND (PTY) LIMITED
                                          (VENMYN)




OUR REFERENCE:- D431R(b)
                 th
FIRST DRAFT:- 28 APRIL 2009
                th
FINAL DRAFT: 11 August 2009 FINAL FOR JSE
 d                    nd
3 JSE SUBMISSION:- 15 JULY 2009
                     th
EFFECTIVE DATE : - 27 MAY 2009 (JSE 12.9(a))



                                          Directors: A N Clay (British); S E Conquest, E de V Greyling; N McKenna; C A Telfer    Venmyn Rand (Pty) Ltd. trading as Venmyn
                                                                                                                                 Reg. No. 1988/004918/07
                                                       ii

                            INDEPENDENT COMPETENT PERSONS REPORT
                                             (CPR)
                                            ON THE
                          LIMESTONE MINERAL ASSET AND CEMENT PLANTS
                                            HELD BY
                                 SEPHAKU CEMENT (PTY) LIMITED
                                       (SEPHAKU CEMENT)
                                              BY
                                   VENMYN RAND (PTY) LIMITED
                                           (VENMYN)

The Directors
Sephaku Cement (Pty) Limited
Suite 4A Manhattan Office Park
16 Pieter Road
Highveld Techno Park
Centurion
0067

                                           EXECUTIVE SUMMARY

Venmyn was requested by the Directors of Sephaku Cement to prepare a CPR on its limestone mineral
asset and cement manufacturing plants as part of the documentation required for a primary listing on the
Johannesburg Securities Exchange (JSE Limited), in South Africa. Venmyn has recently conducted an
Independent Technical Review in the form of a Technical and Economic Due Diligence Audit on the
development and construction of a limestone quarry and adjacent cement plant, called the Itsoseng Project,
situated in the Lichtenburg District of the North West Province, South Africa. ThIS review also includes a
cement grinding and milling plant to be located in Delmas, Mpumalanga Province, known as the Delmas
Project. Venmyn has conducted audit on behalf of the lenders, for the purpose of confirming the accuracy
and completeness of the estimates and assumptions stated in the Feasibility Study Report (FSR) (27th
February 2008) and the First Revision of the FSR (30th October 2008), to provide comfort to the financing
parties. The First Revision FSR supersedes the February 2008 version. Therefore, Venmyn fully
understands these projects and provides an independent professional opinion on the proposed business
model.

Sephaku Cement’s projects, which are collectively termed ‘the Sephaku Cement Assets’ for the purpose of
this CPR include the following projects:-
       •   the Itsoseng Project (limestone quarry and cement manufacturing plant);
       •   the Delmas Project (cement grinding and milling plant); and
       •   the Fly Ash Classification Project (fly ash plant to be located at Eskom’s Kendal Power
           Station, based on the long-term fly ash supply agreement secured by Sephaku Ash from
           Eskom).

The Litchtenburg district of the North West Province hosts economically viable limestone deposits. It is
ideally situated close to Gauteng, which has the largest demand for cement in terms of the South African
market. This is evident by the presence of three cement factories belonging to the largest cement producers,
namely Pretoria Portland Cement Company Limited (PPC), Lafarge South Africa (Pty) Ltd (Lafarge SA) and
Afrisam South Africa (Pty) Ltd (Afrisam). The Itsoseng Project is one of the last identified limestone deposits
that warrant the construction of a new cement manufacturing unit.

Sephaku Cement’s business model consists of the main plant (Itsoseng Project), the grinding plant (Delmas
Project), fly ash classification and is believed by management to provide a greater return to shareholders,
despite the increased capital requirements.

All major pre-requisites for the opening of a new plant are in place and these include:-
       •   a currently undersupplied and expanding market;
       •   a limestone deposit of cement grade;
       •   access to suitable additives;
       •   a commitment of electrical power to run the plant;
       •   acceptable location relative to markets;

Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                       iii

       •   senior personnel of high calibre and expertise; and
       •   a competitive production cost advantage over other older plants in the region.

The expected life of the limestone mine and the cement project is in excess of 30 years. This has potential to
be increased to 45 years based on the new guaranteed kiln production figures from Sinoma International
Engineering Company Limited (Sinoma). It is therefore imperative to utilise the best available technology in
order to ensure that the cost of production is kept to a minimum. There is no doubt that the cost of coal and
electricity will escalate considerably during the life of the cement project, and full cognisance has been taken
of this probability.

CEMENT INDUSTRY
Historically, four companies, PPC Cement, Afrisam (formerly Holcim and Alpha), Lafarge SA (formerly Blue
Circle) and Natal Portland Cement-Cimpor (Proprietary) Limited (NPC), dominate the cement industry in
South Africa. Since 1988, much of the structure and capacity have remained the same, as it operated as a
‘legal cartel.’ However, in 1996, the ownership and the structure of the industry started shifting. Currently the
South African cement producers are operating in an oligopoly market structure. The main suppliers being:-
       •    PPC;
       •   AfriSam;
       •   Lafarge SA; and
       •   NPC.

These companies dominate the current market and account for approximately 99% of the total supply in the
Southern Africa region (incorporating South Africa, Botswana, Swaziland, Lesotho, and Namibia). Cement is
used in the many different sectors in the economy with the largest proportion being sold through resellers.

A record 15.3Mt of cement related products, primarily for building, construction and infrastructure
developments, were sold in the Southern Africa region in 2007. This represented a 7.4% growth on the
previous year. In 2008, 14.7Mt of cement was sold. Industry forecasts for cement demand in 2009 and
beyond are still positive, but do reflect the slower growth expected in the residential sector.

Although in 2007 and 2008, the supply capacity from PPC, NPC, AfriSam and Lafarge SA was insufficient to
fully cater for the growing demand, the market deficit was met through cement imports. The outlook for the
southern Africa economies has deteriorated significantly since the beginning of 2009 in general. However, as
a positive development, the government is committed to continue spending on infrastructure and this is
expected to support construction growth in both the short-and long-term.

CORPORATE STRUCTURE AND MANAGEMENT TEAM
Sephaku Cement is 80.2% owned by Sephaku Holdings Limited (Sephaku Holdings), with the remaining
19.8% held by Dangote Industries Limited (Dangote) of Nigeria. The ownership structure brings with it the
essential suite of geological, technical and financial skills needed to fully exploit and process the project’s
limestone mineral resource and the manufacturing of cement. The aim of Sephaku Cement is to enter the
cement producing industry and become a significant South African producer.

GENERAL INFRASTRUCTURE
The general infrastructure in the Itsoseng and Delmas Project areas is well established. However, on-site
services such as power, communication facilities, potable, roads, industrial water and sewerage are not yet
available and are included in the project plan for development. The Fly Ash Classification Plant will be
located at Kendal Power Station, where general infrastructure is already well established.

The Itsoseng Project is conveniently located within South Africa’s largest cement producing region and is
surrounded by tarred main and secondary roads. The rail network is in place and currently serves other
cement operations in the area. Sephaku Cement will in future explore the option of tapping into the rail
network by constructing a branch line for several kilometres to the plant site.

LEGAL TENURE AND AGREEMENTS
The mining right for the Itsoseng Project was granted in terms of Section 23(1) of the Minerals Petroleum
and Resources Development Act (MPRDA) and the environmental authorisation for this project was granted
in terms of Section 24(2)(a) of the National Environmental Management Act (NEMA).




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                              iv

The mineral title to the properties Verdwaal 57IO, Klein Westerford 78IO and Stiglingspan 73IO are held
under this mining right which is valid for 30 years from the date of issue on 15th December 2008. The table
below outlines the details of the farms falling under the mining right. Through the issue of this right, the
Minister has granted Sephaku Development the sole and exclusive right to mine and recover the minerals
(limestone and clay) in, on and under the mining area for the benefit of the company and to sell the minerals
subject to the terms and conditions of this mining right, the provisions of the MPRDA and any other relevant
law in force for the duration of this right.

                                          MINERAL         TYPE OF        DATE OF       EXPIRY    LICENCE    AREA
    FARM NAME        FARM PORTION
                                           RIGHT          LICENCE         ISSUE         DATE     NUMBERS     (Ha)
                     Remaining Extent   Limestone,
 Verdwaal 57IO                                                                                               2,779
                     and Portion 2      dolomitic                        th           th
                                                         New Order      15 December 14 December
 Stiglingspan 73IO   N/A                limestone                                               602/2008     2,025
                                                         Mining Right   2008        2038
 Klein Westerford                       and       clay
                     Remaining Extent                                                                         329
 78IO                                   (general)
                                                                                                    TOTAL    5,133

In addition, Sephaku Cement is currently compiling the EIA (Environmental Impact Assessment) for the
Delmas Project situated on portion 22 on the farm Witklip 232 for submission to the Department of
Agriculture and Land Affairs (DALA) of Mpumalanga Province. Different environmental consultants have
been mandated to conduct this work which should be completed by the end of June 2009, ready for
submission. No additional information was made available to Venmyn and no further information is reported
on this document. The property measures 76.9ha in size, which is adequate space for development of a
cement milling plant and the requisite infrastructure.

Lastly the Fly Ash classification plant will be located and operated under the Eskom Kendal Power Station
license. Consequently, Sephaku Cement does not require additional licensing to operate the fly ash
classification plant, since it is considered an environmental friendly disposal of the fly ash produced in the
power generation.

GEOLOGY AND MINERALISATION
The geology and associated mineralization of the Itsoseng Project area has been demonstrated to be
suitable for the manufacture of cement. The project area lies in the middle of the largest cement producing
region in South Africa. The quality of the exploration work and level of quality demonstrated in the
geochemical analyses has provided comfort that a South African Code for Reporting of Exploration Results,
Mineral Resources and Mineral Reserves (SAMREC Code) compliant Mineral Resource and Mineral
Reserve can be reported.

The quality of the mineralization has been analysed and presented in various reports reviewed by Venmyn.
The geochemical analysis of the borehole samples recovered, together with the required quality assurance
and quality controls, has provided Venmyn with sufficient comfort levels for the project’s suitability in the
cement manufacturing process.

EXPLORATION ACTIVITIES
Regional reconnaissance work was carried out by Anglo American Corporation (Anglo) between 1990 and
1992 in order to locate a viable cement grade limestone deposit. Target areas were initially defined and
additional work confirmed that the Verdwaal/Stiglingspan area was the most favourable site. Sephaku
Cement has carried out a further two phases of exploration drilling.

Blocks of limestone reserved for mining have been delineated from a detailed database derived from a
combination of the exploration drilling and geochemical analysis obtained from Anglo and Sephaku Cement.
Venmyn is comfortable with the latest database update and the methods used to derive the resultant
tonnages and geochemical assay specifications. The database has been imported into a computerised
modelling package, Surpac™, for on-going geological modelling, mine planning and optimisation.

An airborne survey was recently flown over the area and, apart from aerial photography, a digital terrain
model obtained. This has subsequently been incorporated into the geological model as an accurate land
surface. A further geophysical survey of the project area was completed in August 2007 by the Department
of Groundwater Studies to investigate the level of the water table and quantity of water below the surface.

SAMPLING METHODOLOGY AND QUALITY CONTROL
Venmyn is satisfied that the findings of the high level due diligence audit to ensure that quality results of the
exploration drilling can be relied upon, based on the geological reports prepared Anglo on the prospecting
activities conducted on the Lichtenburg Limestone Project.

Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                         v

The detailed methodology, field sampling process verification and validation procedures was not available.
Venmyn believes that a large corporation like Anglo have appropriate work standards that have to comply
with when conducting such exercises and this have been confirmed through recent exploration by Sephaku
Cement. Therefore, Venmyn believes that the results of this exploration exercise can be relied upon and the
information would not otherwise mislead the investors.

Venmyn understands that SRK Consulting (SRK) was responsible for checking and verifying the drilling
programme and the results obtained. According to SRK, the drilling and sampling process controls were of a
very high standard. These have been reviewed and are materially correct.

MINERAL RESOURCE AND MINERAL RESERVE CLASSIFICATION
The estimation methods used to determine and classify the mineral resources included the assessment of
the geological and geochemical confidence levels achieved from exploration drilling data and the quality of
the mineralization through geochemical analyses.

Venmyn assisted Sephaku Cement in January 2008 in publishing a mineral resource estimation and
classification by following the principles and guidelines of the SAMREC Code. This code is recognised as the
best practice basis for reporting mineral project valuation and ensures compliance to the JSE Listings
Requirements.

The Mineral Resource and Mineral Reserve Statement for the limestone deposits of the Itsoseng Project was
compiled by Venmyn and reported in the Technical Statement dated the 31st January 2008. This statement
has since been up-dated to 28th February 2009 on the basis that no material changes have occurred since
the latest block modelling exercise. The mineral resources are inclusive of the mineral reserves.

The table below shows the Mineral Resource and Mineral Reserve Statement for the limestone deposits of
the Itsoseng Project as at 28th February 2009:-

               MINERAL RESOURCES                                           MINERAL RESERVES
                                                                       QUARRY
             AREA    VOLUME     DENSITY     TONNAGE                   FOOTPRINT VOLUME DENSITY          TONNAGE
CATEGORY                 3            3                CATEGORY                       3           3
              (ha)     (m )      (kg/m )      (Mt)                      AREA        (m )    (kg/m )       (Mt)
                                                                         (ha)
Measured         672      36.67       2.27         83.24 Proved                 -        -          -          -
Indicated         24       1.52       2.27          3.45 Probable             672    36.67      2.27       83.24
Inferred         326      16.30       2.27        11.10
TOTAL/AVE      1,022      54.49       2.27        97.79   TOTAL/AVE          672      36.67      2.27      83.24
Note: All Measured Resources were converted to Probable Reserves

The quality control cut-offs (where rejection occurs) applied by Sephaku Cement in the estimation of the
mineral resources, were as follows:-
        •   Limestone Saturation Factor (LSF) of <90;
        •   Magnesium Oxide (MgO) of >2.3%;
        •   Sodium (Na) plus Potassium (K) of >0.6%; and
        •   a Silica Ratio (SR) (SR=SiO2/(Al2O3 + Fe2O3) of >6.

Subsequently, throughout Venmyn’s due diligence period, Sephaku Cement employed the use of Surpac™
software to assist in generating more accurate estimates of the limestone mineral resources and mineral
reserves. The current indications from the modelling are that the mineral resources would increase, but at
the date of this report these results were not finalised. Hence the original mineral resource statement was
up-dated for this technical review and was considered materially correct at the date of this report. Quality
control cut-offs were reviewed amongst Sephaku Cement’s management team, to more accurately
reconsider the most appropriate criteria to adopt.

Proper due diligence has been made in assessing the criteria and methods used in estimating the
classification and numbers reported in the Mineral Resource and Mineral Reserve Statement. However, it
should be noted that Sephaku Cement is constantly revising block modelling, mine planning and optimisation
using mining software. For this reason, the mineral resources and mineral reserves will be modified and
updated in the future.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                        vi

MINING
The proposed mining method and sequence closely resemble the mining methods currently utilised at other
cement producers in the region. Mining will be carried out on a single mining level with a variable bench
height, depending on the thickness of the mineralisation and the chemical composition. The mining
sequence will be as follows:-
       •   overburden removal;
       •   blast-hole drilling and charging of three separate faces;
       •   blasting; and
       •   loading and hauling of broken ore to the primary crusher.

The mining method and sequence is considered to be appropriate for the extraction of shallow and laterally
extensive deposits. Built-in flexibility will provide the opportunity to blend the material by varying the volumes
extracted from different mining faces. Three open pits will simultaneously be in operation to ensure that
correct blending takes place.

Sephaku Cement is in the process of appointing Mutual Construction Company Transvaal (Proprietary)
Limited (MCC) to execute the mining production plan. The quality control of limestone chemistry is of
paramount importance to the clinkering process and Sephaku Cement will have full control of this process.
This will be achieved by controlling the scheduling and concurrent mining from different mining areas.
Venmyn considers this approach as appropriate and cost effective. The mining contract is being drafted.

The planned schedule for mine development and equipping is considered appropriate to meet the pre-
determined milestones and production targets, provided that the preceding tasks have been conducted on
time.

CEMENT PLANT
Chemical calculations of both the raw mix and resultant clinker have been checked. The formulae used by
Sephaku Cement are standard in the cement industry. The calculation results are correct. The clinker
compositions predicted, are suitable for the intended cement grades. The mass balances in the FSR are
substantially correct and are adequate.

The flow sheet in the FSR has been superseded by the Sinoma flow quotation and revision dated 30th
October 2008. The latter flow sheet of the plant is considered adequate. Sinoma, who is the major cement
plants supplier in recent times, is regarded as a cost effective supplier in the cement industry.

All major pre-requisites for the opening of a new plant appear to be in place and these include:-
       •   a currently undersupplied and expanding market;
       •   a limestone deposit of cement grade;
       •   access to suitable additives;
       •   a promise of electrical power to run the plant;
       •   favourable location;
       •   senior personnel of the right calibre and expertise; and
       •   a competitive production cost advantage over other older plants in the region.

ENVIRONMENTAL ISSUES
Marsh Environmental Services (MES) was requested by Venmyn to undertake an environmental due
diligence investigation to ensure that all environmental risks associated with the project have been
adequately addressed.

Based on the documentation reviewed, the EIA was undertaken in accordance with the provisions of the
MPRDA and the NEMA, and is of a high standard. However, the most notable omission relates to certain
listed activities requiring environmental authorisation, as listed in terms of NEMA.

The amount that is necessary for rehabilitation of any damage caused by the mining activities or sudden
termination during normal mining operations is expected to be small, because the intention of the company is
to do ongoing rehabilitation behind the mining face. An amount of ZAR6.5m has been provided for by means
of a cash guarantee and insurance guarantee with Sanlam.



Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                       vii

It is recommended that a detailed biodiversity assessment be undertaken prior to the construction phase of
the project, in order to determine whether there are any threatened or protected species of plants (or Red
Data species) and the necessary measures be adopted in order to preserve those identified species. The
study was not undertaken, as in the opinion of Sephaku Cement’s consultants it was believed to be
unnecessary. The record of decision (ROD) on the EIA has since been issued to Sephaku Cement on 7th
January 2009. This is not considered to be a fatal flaw.

HUMAN RESOURCES
Sephaku Cement’s management and technical team have considerable expertise in the various fields of
limestone extraction, cement manufacture and marketing arenas, enabling the company to construct and
manage a sophisticated limestone mining operation and cement plant processing and distribution facility.

A due diligence was undertaken on Sephaku Cement’s management structure and proposed Human
Resources (HR) requirements. Sephaku Cement’s management personnel has varied and extensive
experience in the cement industry.

Highly competitive basic salaries and benefits have been identified, based on salary structure of similar
cement companies in South Africa. Career, employment and related work experience reflect appropriate
qualifications, capabilities, industry related competencies, skills, exposure and experience which clearly
demonstrate a good people to job match. There is a good supply of labour in the area.

CAPITAL COSTS
The overall capital estimates have one significant single capital cost, which is the supply and erection of the
plant components. The total capital cost estimates for the two projects (Itsoseng and Delmas) shouldn’t
change since approximately 83% of the capital cost is covered in the Sinoma Turnkey contract. The parties
have agreed on a fixed United States dollar price of USD274m as detailed in a signed letter dated 16th
January 2009. The price is based on two cement mills, one at Itsoseng and one at Delmas. The capacity of
these Loesche mills will be 155tph at a Blaine of 3,200. The quoted price takes into account the reduction in
scope of supply on the turn-key contract. However, Sephaku Cement will arrange the inland transportation
and have budgeted USD4.3m which is considered adequate. The inland transportation costs are additional
to the turnkey contract price. The only potential exposure to Sephaku Cement and the lenders will be the
fluctuations in the ZAR/USD exchange rate and any variation to the Sinoma turnkey contract in terms of
piling requirements if required.

Given that the agreements have already been signed between Sephaku Cement and Sinoma, the agreed
prices should prevail. The newly quoted figures accommodate Sephaku Cement’s local conditions
(specifically high altitude levels) and technical standards required by Sephaku Cement and comply with
South African legislature.

OPERATING COST ESTIMATES
The operating costs for the entire cement manufacturing operation (Itsoseng and Delmas) were estimated to
be approximately ZAR910/t of cement on average for the 2011/2012 financial year. The cost quoted includes
the cost for mining, processing, royalties, general administration and head office costs.

Given that Sephaku Cement are adopting the latest technology in terms of cement manufacture, also given
the fact the highly efficient vertical mills will be used throughout the plant it goes without saying that Sephaku
Cement will be highly competitive from an operating cost perspective, particularly in the areas of fuel and
electrical power consumption.

Input costs and operating costs for the Ash plant are also highly competitive, and in respect of the Ash plant
Sephaku Cement has selected the latest most efficient classifying technology from the United States.

VENMYN’S FINANCIAL MODEL
Venmyn has concluded that the Itsoseng, Delmas and Ash project is technically and economically feasible.
The valuation results using a Discounted Cash Flow (DCF) and treating the mine and the manufacturing
plants as a single cash generating unit on the Itsoseng and Delmas Projects and the Fly Ash Classification
Project yields Venmyn’s most preferred value as detailed in the table below. In our opinion, this methodology
yields the most accurate, fair result by capturing the pertinent aspects of the business investment case. The
summary valuation results for the Base Case (full value) on the projects held by Sephaku Cement are shown
in the table below:-




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                     viii
                                                                                      VENMYN PREFFERED
                                    DCF VALUE       MARKET VALUE          MEE
            PROJECT                                                                        VALUE
                                     (ZARm)            (ZARm)           (ZARm)
                                                                                           (ZARm)
 Itsoseng and Delmas                     2,510.41                N/A            N/A               2,510.41
 Fly Ash                                   108.17                N/A            N/A                 108.17
   TOTAL SEPHAKU CEMENT VALUE            2,618.58           2,073.68       3,072.30               2,618.58


The Base Case analysis indicates that the project would produce a discounted cash flow rate of return
(DCFROR) of 30% and 36% and a net present value (NPV) of ZAR2.6bn and ZAR108m for Itsoseng and
Delmas and the Ash classification plant respectively at a 17% weighted average cost of capital (WACC)
(discount rate). The valuation results detailed in this report are limited only by the reported forecasts,
assumptions and conditions detailed in this report.

RISK ASSESSMENT
The Sinoma plant technology chosen for this project is generally more advanced than the current technology
used by most of the existing industry players in South Africa. Therefore, they are potential cost advantages
to be gained in terms of operating cost and efficiency savings for Sephaku Cement. Other existing operators
are experiencing cost inflation issues and it is expected that Sephaku Cement will not necessarily be
unconnected from these risks.

Nonetheless, the risk to the project is considered to be similar to other projects in general. Ramp-up delays
in production and general construction delays are considered the biggest threat to the project.

CONCLUSIONS
No fatal flaws have been identified in this report from the information reviewed as part of Venmyn’s due
diligence process. The project is robust with respect to potential changes in the input parameters that have
been identified and to the effects of the majority of the possible cost increases. Most cost increases should
be able to be absorbed by sales price increases.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                     ix

                                        DISCLAIMER AND RISKS

This Independent Competent Persons Report has been prepared by Venmyn Rand (Pty) Ltd (Venmyn). In
the preparation of the report, Venmyn has utilised information relating to operational methods and
expectations provided to them by Sephaku Cement. Where possible, Venmyn has verified this information
from independent sources after making due enquiry of all material issues that are required in order to comply
with the SAMREC Code and the JSE Listings Requirements. Venmyn and its directors accept no liability for
any losses arising from reliance upon the information presented in this report.

                                          OPERATIONAL RISKS

The business of mining and mineral exploration, development and production by their nature contain
significant operational risks. The business depends upon, amongst other things, successful prospecting
programmes and competent management. Profitability and asset values can be affected by unforeseen
changes in operating circumstances and technical issues.

                                    POLITICAL AND ECONOMIC RISK

Factors such as political and industrial disruption, currency fluctuation and interest rates could have an
impact on Sephaku Cement future operations, and potential revenue streams can also be affected by these
factors. The majority of these factors are, and will be, beyond the control of Sephaku Cement or any other
operating entity.

                                   REPORTING CODES COMPLIANCE

Venmyn has prepared this CPR in full compliance with the JSE Listing Requirements as defined in Section
12 and the SAMREC Code. The valuation work took into account the new SAMVAL Code. Each section of
the report is designated with the relevant SAMREC Code Table 1 reference number (SR T), SAMVAL Code
Table 1 reference number (SV T) and JSE Listings Requirements (JSE 12.9.)




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                                               x


                                      INDEPENDENT COMPETENT PERSONS REPORT
                                                       (CPR)
                                                      ON THE
                                    LIMESTONE MINERAL ASSET AND CEMENT PLANTS
                                                      HELD BY
                                           SEPHAKU CEMENT (PTY) LIMITED
                                                 (SEPHAKU CEMENT)
                                                        BY
                                             VENMYN RAND (PTY) LIMITED
                                                     (VENMYN)


                                                       LIST OF CONTENTS (SR T1.1)
1.    INTRODUCTION AND NATURE OF TRANSACTION (SR T1.1, T1.2, SV T1.1, JSE 12.9(c)) ................ 1 
2.    SCOPE OF THE OPINION (SR T1.1, SV T1.2, JSE 12.9(e)) ................................................................... 2 
3.    COMPETENT PERSONS’ DECLARATION (SR T1.1, SV T1.13, T1.14, JSE 12.9(c))............................. 2 
4.    COUNTRY PROFILE AND CEMENT INDUSTRY REVIEW (SR T5) ........................................................ 2 
      4.1        Political Climate ............................................................................................................................. 4 
      4.2        Economic Climate and Fiscal Regime .......................................................................................... 4 
      4.3        Mineral Policy (SR T5.1) ............................................................................................................... 5 
                 4.3.1  MPRDA ............................................................................................................................ 5 
                 4.3.2  Mining Charter .................................................................................................................. 5 
                 4.3.3  The Royalty Bill ................................................................................................................ 7 
      4.4        Construction Industry Review (SR T5.8, SV T1.18) ..................................................................... 8 
      4.5        Cement Industry (SV T1.18) ......................................................................................................... 9 
                 4.5.1  Southern African Cement Supply and Demand ............................................................. 10 
                 4.5.2  Sources of Cement Supply ............................................................................................ 11 
                 4.5.3  Cement Markets and Prices ........................................................................................... 12 
                 4.5.4  Cement Market Outlook ................................................................................................. 15 
                 4.5.5  Barriers to Entry into the South African Cement Industry .............................................. 15 
5.  CORPORATE STRUCTURE ................................................................................................................... 15 
      5.1        Directors and Management Team (SR T5.4, T5.5) .................................................................... 16 
6.  ITSOSENG PROJECT ............................................................................................................................. 19 
      6.1        General Information and Logistics (SV T1.3) .............................................................................. 19 
                 6.1.1  Location and Access (SR T1.5, SV T1.3) ...................................................................... 19 
                 6.1.2  Topography and Drainage (SR T1.6) ............................................................................. 20 
                 6.1.3  Climate (SR T1.6)........................................................................................................... 20 
                 6.1.4  General Infrastructure (SR T5.6).................................................................................... 20 
      6.2        Legal Tenure and Agreement (SR T1.7, SV T1.3) ..................................................................... 24 
                 6.2.1  Mining Rights on the Itsoseng Project............................................................................ 24 
                 6.2.2  Environmental Authorisation for Itsoseng Project (SR T5.2) ......................................... 25 
                 6.2.3  Surface Rights ................................................................................................................ 26 
                 6.2.4  Servitudes ...................................................................................................................... 26 
                 6.2.5  Material Agreements ...................................................................................................... 26 
      6.3        Geology and Mineralisation (SR T4.1, SV T1.5) ......................................................................... 27 
                 6.3.1  Regional Geology (SR T4.1, SV T1.5) ........................................................................... 27 
                 6.3.2  Local Geology ................................................................................................................ 29 
                 6.3.3  Nature of Mineralisation ................................................................................................. 29 
      6.4        Historical Exploration (SR T1.3, SV T1.4)................................................................................... 29 
      6.5        Recent Exploration (SR T1.3, SV T1.4) ...................................................................................... 30 
                 6.5.1  Geological Database (SR T1.3, T2.2, T2.3) ................................................................... 30 
                 6.5.2  Sephaku Cement’s Current Geological Model and Exploration Philosophy (SR T4.2) . 30 
                 6.5.3  Geophysics and Geotechnical Studies .......................................................................... 30 
                 6.5.4  Geological Mapping........................................................................................................ 35 
                 6.5.5  Exploration Drilling (SR T1.3, T2.3) ............................................................................... 35 
      6.6        Sampling Methodology and QA/QC Procedures (SR T3.1, T3.2, T3.4) ..................................... 36 

Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                                            xi

                6.6.1      Audits and Reviews (SR T9) .......................................................................................... 38 
      6.7       Classification of Mineral Resources and Mineral Reserves (SR T7, SV T1.6) ........................... 38 
                6.7.1  Grade Estimation (SR T5.5) ........................................................................................... 38 
                6.7.2  Relative Density (SR T2.4) ............................................................................................. 39 
                6.7.3  Basic Statistics ............................................................................................................... 39 
                6.7.4  Geological Losses (SR T5.4) ......................................................................................... 39 
                6.7.5  Modifying Factors (SR T5.5, T5.7, T5.8, SV T1.7) ......................................................... 39 
                6.7.6  Mineral Resource Estimation Methodology (SR T4.1, T4.2).......................................... 40 
                6.7.7  Mineral Resources and Mineral Reserves Statement (SR T7, SV T1.6) ....................... 41 
                6.7.8  Block Modelling Method ................................................................................................. 41 
      6.8       Mining of Limestone (SR T5.4) ................................................................................................... 42 
                6.8.1  Mining Method and Sequence ....................................................................................... 42 
                6.8.2  Mine Design and Planning ............................................................................................. 42 
                6.8.3  Mine Equipment and Production Schedules .................................................................. 44 
                6.8.4  Mine Dewatering ............................................................................................................ 44 
                6.8.5  Mine Manpower .............................................................................................................. 44 
      6.9       Mineral Processing : Manufacturing of Cement (SR T5.5) ......................................................... 44 
                6.9.1  Suitability and Strategic Advantage of the Itsoseng Project .......................................... 47 
                6.9.2  Raw Materials ................................................................................................................. 47 
                6.9.3  Raw Milling and Preparation of Raw Materials .............................................................. 50 
                6.9.4  Pyro-processing ............................................................................................................. 51 
                6.9.5  Clinker Cooling ............................................................................................................... 51 
                6.9.6  Cement Grinding and Milling .......................................................................................... 52 
                6.9.7  Packing and Loading ...................................................................................................... 52 
                6.9.8  Preference Equipment Selection.................................................................................... 52 
                6.9.9  Quality Control................................................................................................................ 53 
      6.10      Environmental Issues and Impact on the Environment (SR T5.2) .............................................. 53 
                6.10.1  EMPR (SR T5.2) ............................................................................................................ 53 
                6.10.2  Environmental Financial Provision (SR T5.2) ................................................................ 54 
                6.10.3  Environmental Assessment ............................................................................................ 54 
                6.10.4  Environmental Issues on the Cement Plant ................................................................... 54 
      6.11      Capital Costs for the Itsoseng Project (SR T5.7, SV T1.7, JSE 12.9(e)(i)) ................................ 55 
      6.12      Production Estimates and Operating Costs ................................................................................ 55 
      6.13      Project Development Plan........................................................................................................... 55 
7.  DELMAS PROJECT (SR T1, SV T1.2) .................................................................................................... 56 
      7.1       General Information and Logistics .............................................................................................. 56 
                7.1.1  Location and Access (SR T1.5, SV T1.2) ...................................................................... 56 
                7.1.2  Roads (SR T5.6) ............................................................................................................ 56 
                7.1.3  Power (SR T5.6)............................................................................................................. 57 
      7.2       Environmental Authorisation for Delmas Project (SR T5.2) ........................................................ 57 
      7.3       Mineral Processing at Delmas (SR T5.5).................................................................................... 57 
                7.3.1  Cement Grinding and Milling .......................................................................................... 57 
                7.3.2  Packing and Loading ...................................................................................................... 57 
                7.3.3  Packing and Loading ...................................................................................................... 57 
      7.4       Capital Costs for Delmas Project (SR T5.7) ............................................................................... 61 
      7.5       Cement Manufacturing Operating Costs for Itsoseng and Delmas Projects (SR T5.7, T10) ..... 61 
      7.6       Production and Revenue Estimates for Itsoseng and Delmas Projects ..................................... 62 
8.  FLY ASH PROJECT (KENDAL POWER STATION) ............................................................................... 64 
      8.1       General Information and Logistics .............................................................................................. 64 
                8.1.1  Location and Access (SR T1.5) ..................................................................................... 64 
                8.1.2  General Infrastructure (SR T5.6).................................................................................... 65 
      8.2       Legal Tenure and Ownership (SR T1.7) ..................................................................................... 65 
      8.3       Material Contracts ....................................................................................................................... 65 
      8.4       Processes that produce Ash (SR T5.5) ...................................................................................... 65 
      8.5       Fly Ash Plant Capital Costs and Operating costs (SR T5.7) ...................................................... 66 
      8.6       Transfer Pricing Mechanism for the Ash ..................................................................................... 66 


Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                                                 xii

9.  CONSOLIDATED PROJECT VALUATION (Sv t1.2, JSE 12.9(f)) ........................................................... 66 
       9.1         Introduction ................................................................................................................................. 66 
       9.2         Mineral Asset Valuation Approaches and Methodologies (SV T1.8) .......................................... 68 
                   9.2.1  Free Cash Flow Capitalisation Approach ....................................................................... 68 
                   9.2.2  Historical Exploration Expenditure ................................................................................. 70 
                   9.2.3  Sales Comparison Approach ......................................................................................... 70 
       9.3         Valuation of Sephaku Cement’s Developmental Properties ....................................................... 70 
                   9.3.1  Multiple of Exploration and Development Expenditure (SV T1.15) ................................ 71 
                   9.3.2  Comparable Transaction Valuation (SV T1.15) ............................................................. 71 
       9.4         Financial Input Assumptions to DCF Valuation........................................................................... 72 
                   9.4.1  Discount Rate ................................................................................................................. 72 
                   9.4.2  Taxation .......................................................................................................................... 74 
       9.5         DCF Valuation Results for the Itsoseng and Delmas Project (SV T1.15) ................................... 74 
       9.6         DCF Valuation Results for the Fly Ash Classification Project (SV T1.15) .................................. 75 
       9.7         Summary Valuation Results for Sephaku Cement’s Projects (SV T1.10) .................................. 77 
       9.8         Risks and Uncertainties in Mineral Asset Valuation (SR T6) ...................................................... 78 
10.  CONCLUSIONS (SV T1.10) ..................................................................................................................... 78 
11.  REFERENCES ......................................................................................................................................... 80 

                                                            LIST OF FIGURES (SR T1.4)
Figure 1: Sephaku Cement’s Projects Regional Localities in relation to other Cement Facilities in South
          Africa. ................................................................................................................................................. 3 
Figure 2: Proportions of Cement Production sold to Different Buying Sectors in 2007. ................................. 11 
Figure 3: Regional Cement Sales from the Four Main Suppliers and the Exports Trend. .............................. 11 
Figure 4: Cement Industry Capacity Plans and Forecasted Demand ............................................................. 13 
Figure 5: Domestic Retail Cement Prices vs CPI from January 2003 to 2007................................................ 14 
Figure 6: Global cement prices in USD/tonne 2008 averages ........................................................................ 14 
Figure 7: Sephaku Cement’s Current Shareholding Structure ........................................................................ 17 
Figure 8: Regional Setting, Geology and Infrastructure of the Itsoseng Project. ............................................ 21 
Figure 9: Locality of the Itsoseng Project in relation to the Infrastructure in the area. .................................... 22 
Figure 10: Detailed Infrastructure, Farm Portions and Legal Tenure of the Itsoseng Project ......................... 28 
Figure 11: Profile of a Bulk Sampling Pit showing the Main Horizons observed............................................. 31 
Figure 12: Defined Mine Blocks derived from Exploration Drilling for Block A Area ....................................... 32 
Figure 13: Defined Mine Blocks derived from Exploration Drilling for Block B Area ....................................... 33 
Figure 14: Defined Mine Blocks derived from Exploration Drilling for Block C Area ....................................... 34 
Figure 15: Exploration Drilling, Proposed Mining Blocks and Environmental Concern of Mining through a
          Water Course ................................................................................................................................... 37 
Figure 16: Mineral Reserve Statement for the Itsoseng Project consisting of Blocks A, B and C. ................. 43 
Figure 17: Mineral Reserve Blocks A, B and C and Proposed Infrastructure ................................................. 45 
Figure 18: Conceptual Limestone Production and Transportation Cycle, Availability and Utilisation ............. 46 
Figure 19: General Arrangement Diagram for the Proposed Plant Layout for the Itsoseng Plant. ................. 48 
Figure 20: Cement Plant Flow Sheet Annotated with Revised Components, Flow Rates and Capacities for
          the Itsoseng Plant............................................................................................................................. 49 
Figure 21: Critical Path and Project Development Timeline for Itsoseng Project............................................ 58 
Figure 22: Locality of the Delmas Milling Plant and the Fly Ash Plant in relation to the Infrastructure in the
          area. ................................................................................................................................................. 59 
Figure 23: Cement Plant Flow Sheet Annotated with Flow Rates and Capacities for the Delmas Milling Plant
          and the Fly Ash Classification Plant ................................................................................................. 60 
Figure 24: Project Lifetime Value and Valuation Methodology Curve ............................................................. 69 
Figure 25: Individual Mining Project Risk ........................................................................................................ 73 
Figure 26: The Variation of the Project NPV with changes in the Discount Rate ........................................... 74 
Figure 27: Individual Sensitivity Analysis of the Major Cost Components ...................................................... 75 
Figure 28: The Variation of the Project NPV with changes in Discount Rate (Ash Project) ............................ 76 
Figure 29: Sensitivity Analysis on the Variation on Price and NPV................................................................. 76 
Figure 30: Sensitivity Analysis of the Variation on Ash Volumes and NPV..................................................... 77 




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                                               xiii



                                                            LIST OF TABLES (SR T1.4)

Table 1: Types of Rights Applicable to Mining in South Africa .......................................................................... 6 
Table 2: Estimated Cement Demand for Approved and Planned Major InfrastructureProjects and Project
          Values (volume in addition to traditional demand) ............................................................................. 8 
Table 3: Southern African (Domestic and Regional) Cement Sales 2003-2008 ............................................. 10 
Table 4: Current Facilities and Clinker Capacity in South Africa ..................................................................... 12 
Table 5: Details of Current Mining Right Granted to Sephaku Development .................................................. 24 
Table 6: Summarised Analysis of the Boreholes Drilled and Samples Analysed ........................................... 36 
Table 7: Mineral Resource and Mineral Reserve Statement as at 28th February 2009 .................................. 41 
Table 8: Summarised Mining Blocks and the corresponding Chemical Composition ..................................... 42 
Table 9: Steady State Requirements of Raw materials for the Budgeted Production .................................... 47 
Table 10: Summarised Capital Cost Estimates for the Itsoseng Project......................................................... 55 
Table 11: Summarised Capital Cost Estimates for the Delmas Project .......................................................... 61 
Table 12: Summarised Cement Manufacturing Operating Costs for the First Nine Years of Production for the
          Itsoseng and Delmas Project ........................................................................................................... 63 
Table 13: Sephaku Cement Production and Revenue Assumptions for the First Six Years of Production .... 64 
Table 14: The Abridged Financial Model for the Fly Ash Classification Plant ................................................. 67 
Table 15: Valuation Results of the Sephaku Cement’s Projects using Historical Costs and Committed Future
          Capital .............................................................................................................................................. 71 
Table 16: Macro Economic Forecasts on Inflation and Escalation Factors .................................................... 72 
Table 17: Nominal Discount Rate Calculation Summary ................................................................................ 73 
Table 18: Range of Valuation Results for the Itsoseng and Delmas Project .................................................. 74 
Table 19: Range of Valuation Results on the Fly Ash Plant............................................................................ 75 
Table 20: Range of Valuation Results for the Itsoseng and Delmas Project .................................................. 77 



                                                               LIST OF APPENDICES


Appendix 1: Competent Persons Certificates (SR T11, SV T1.13, T1.14)...................................................... 81 
Appendix 2: Glossary of Terms and Abbreviations ......................................................................................... 98 




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                       1

1. INTRODUCTION AND NATURE OF TRANSACTION (SR T1.1, T1.2, SV T1.1, JSE 12.9(C))
   Venmyn was requested by the Directors of Sephaku Cement to prepare a CPR on their limestone
   mineral asset and cement manufacturing plants as part of the documentation required for a primary
   listing on the JSE Limited, in South Africa. Venmyn has recently conducted an Independent Technical
   Review in the form of a Technical and Economic Due Diligence Audit on the development and
   construction of a limestone quarry and adjacent cement plant, called the Itsoseng Project, situated in
   the Lichtenburg District of the North West Province, South Africa. This review also includes a cement
   grinding and milling plant to be located in Delmas, Mpumalanga Province, known as the Delmas
   Project. Venmyn has conducted this on behalf of the lenders, for the purpose of confirming the accuracy
   and completeness of the estimates and assumptions stated in the Feasibility Study Report (FSR) (27th
   February 2008) and the First Revision of the FSR (30th October 2008), to provide comfort to the
   financing parties. The First Revision FSR supersedes the February 2008 version. Therefore, Venmyn
   fully understands these projects and provides an independent professional opinion on the proposed
   business model.

    Sephaku Cement’s projects, which are collectively termed ‘the Sephaku Cement Assets’ for the purpose
    of this CPR include the following project:-
        •   the Itsoseng Project (limestone quarry and cement manufacturing plant);
        •   the Delmas Project (cement grinding and milling plant); and
        •   the Fly Ash Classification Project (fly ash plant to be located at Eskom’s Kendal Power
            Station, based on the long-term fly ash supply agreement secured by Sephaku Cement
            from Eskom).

    The Litchtenburg district of the North West Province hosts economically viable limestone deposits. It is
    ideally situated close to Gauteng, which has the largest demand for cement in terms of the South
    African market. This is evident by the presence of three cement factories belonging to the largest
    cement producers, namely PPC, Lafarge SA and AfriSam. The Itsoseng Project is one of the last known
    limestone deposits that warrant the construction of a new cement manufacturing unit.

    The Itsoseng project consists of a contiguous group of four farms located in the centre of the largest
    cement manufacturing region in South Africa. The Itsoseng, Delmas and the Fly Ash Project are the
    sole assets for Sephaku Cement, which is 80.2% owned by Sephaku Holdings and the balance owned
    by Dangote. Early in 2008, Venmyn completed a preliminary mineral asset review of the Itsoseng
    Project, in the form of a Technical Statement compiled for Sephaku Cement. In 2007, Venmyn also
    completed a mineral asset review of another well known limestone deposit in the area and is therefore
    familiar with the environment within which the Itsoseng Project is set.

    Generally, it can be concluded that the technical aspects of the cement manufacturing plant have been
    carefully considered. In summary:-
        •   there is a limestone deposit of suitable quantity and quality to make the cement types
            proposed;
        •   standard and well-accepted calculations have been used to predict the chemistry and
            mass balances and therefore, the results are acceptable; and
        •   the flow sheet selected can be regarded as orthodox. Even though general equipment
            supply is Chinese, a number of key components are from ‘tried and tested’ Western
            suppliers.

    All major pre-requisites for the opening of a new plant appear to be in place and these include:-
        •   a currently undersupplied and expanding market;
        •   a limestone deposit of cement grade;
        •   access to suitable additives;
        •   a commitment of electrical power to run the plant;
        •   acceptable location relative to markets;
        •   senior personnel of high calibre and expertise; and
        •   a competitive production cost advantage over other older plants in the region.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                      2

2. SCOPE OF THE OPINION (SR T1.1, SV T1.2, JSE 12.9(E))
   Venmyn was requested by the Directors of Sephaku Cement to prepare an Independent CPR on all
   their contributing limestone mineral assets and cement manufacturing plants as part of the
   documentation required for a primary listing on the JSE Limited in South Africa. Accordingly, Venmyn
   undertook an independent valuation of the mineral properties or rights and proposed cement plants that
   Sephaku Cement has initiated construction of. Venmyn has prepared this CPR in full compliance with
   the JSE Listing Requirements as defined in Section 12 and the SAMREC Code. The valuation work
   took into account the new SAMVAL Code.

    In the execution of its mandate, Venmyn undertook a comprehensive review of the previous reports and
    information on the drilling and exploration work in particular, and compiled a series of maps and
    diagrams that incorporated results obtained by Sephaku Cement. The company has internally mobilized
    a competent exploration team since January 2006, to conduct and manage extensive exploration drilling
    and preparing of the sampling database for geological modelling and mineral resource evaluation. The
    sampling was also carried out by the team under the direct supervision of the geologist.

    Venmyn has taken into account the technical review and due diligence items in the preparation of this
    CPR. Venmyn also utilised its own proprietary checklist for this work. This checklist incorporates all
    items identified in all International Mineral Resource and Ore Reserve Codes for accuracy,
    completeness and corporate reporting. A site visit was undertaken on the 3rd April 2008 by Mr Michael
    Tyndall, Mr Godknows Njowa and Mr David Gale, accompanied by Sephaku Cement representatives.

    This document has been prepared for Sephaku Cement in compliance with, and to the extent required
    by, the SAMREC and SAMVAL Code issued by the South African Institute for Mining and Metallurgy
    (SAIMM) and the Geological Society of South Africa (GSSA), under whose geographical jurisdiction the
    mineral resources fall. The SAMREC and SAMVAL guidelines are considered by Venmyn to be a
    concise recognition of the best practice due diligence methods for this type of mineral transaction and
    accord with the principles of open and transparent disclosure that are embodied in internationally
    accepted Codes for Corporate Governance. The SAMREC and SAMVAL Code are for all practical
    purposes identical to the JORC Code (Joint Ore Reserves Committee).

3. COMPETENT PERSONS’ DECLARATION (SR T1.1, SV T1.13, T1.14, JSE 12.9(C))
   Venmyn is an independent advisory company. Its consultants have extensive experience in preparing
   competent persons’, technical advisers’ and valuation reports for mining and exploration companies.
   Venmyn’s advisors have, collectively, more than 100 years of experience in the assessment and
   evaluation of mining projects and are members in good standing of appropriate professional institutions.
   The signatories to this report are the responsible Competent Persons and are qualified to express their
   professional opinions on the values of the mineral assets described. To this end, Competent Persons
   Certificates are presented in Appendix 1.

    Neither Venmyn nor its staff has or have had any interest in this project capable of affecting their ability
    to give an unbiased opinion and have not and will not, receive any pecuniary or other benefits in
    connection with this assignment, other than normal consulting fees. Sephaku Cement has warranted in
    writing that it has openly provided all material information to Venmyn, which, to the best of its knowledge
    and understanding, is complete, accurate and true.

4. COUNTRY PROFILE AND CEMENT INDUSTRY REVIEW (SR T5)
   South Africa has a mature minerals industry based upon gold and diamond discoveries in the late
   1800’s. The country is the world’s largest producer of platinum, chrome and vanadium and ranks highly
   in the production of diamonds, gold, coal, iron ore, manganese and other base metals. The country’s
   minerals industry has primarily been developed by large mining houses over the last century. The South
   African Bushveld Complex (BC) and Witwatersrand Basin host a number of unique and large ore
   bodies.

    Currently, the greatest risks to the mining, manufacturing and construction industries in South Africa are
    the uncertainties arising from the fact that the national power utility company, Eskom may not be able to
    provide adequate power to the mining, manufacturing and construction operations in the short-to
    medium-term.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                                                         Sephaku Cement (Pty) Limited - CPR
Independence you can trust

LEGEND:
 ROCK TYPES                                                      SEPHAKU’S PROJECTS REGIONAL LOCALITIES IN RELATION TO OTHER CEMENT FACILITIES IN SOUTH AFRICA
      Roads                                                                                                                  18°E                            22°E                                    26°E                                                              30°E
      Miner Roads
                                                                                                      22°
      Railway lines                                                                                                   Tsumeb                                                                                                                                                   MOZAMBIQUE
                                                                                                                 13                                                                                                                                           Musina

       Distribution Depots




                                                                                                                                                                                                                                          po
                                                                                                                                                                                                                                         po
1     Polokwane




                                                                                                                                                                                                                                     m
                                                                                                                                                                                                                                    Li




                                                                                                                                                                                                                                                                                                             Li m
2     Lichtenburg                                                                                                                                                                                                                             Limpopo         1




                                                                                                                                                                                                                                                                                                                 pop
                                                                                             22°
3     Waltloo (PTA)




                                                                                            22°
                                                                                                                                                                         BOTSWANA                                                                         1




                                                                                                                                                                                                                                                                                                                    o
4     Industria (JHB)
5     Middelburg
6     Nelspruit
7     Queenstown                                                        SOUTH                                     Windhoek                                                                   10
                                                                                                            12                                                              Gaborone
8     East London                                                       AFRICA
                                                                                                                                                                                                             Gauteng


                                                                                             24°
9     George

                                                                                            24°
                                                                                                                                                                                                                              4
10    Montague Gardens
                                                                                                                                                                                                                                                   5               Mpumalanga
11    Maseru                                                                                                                                                                                             1
12    Windhoek                                                                                                                                                   Itsoseng Project Area                           2
                                                                                                                                                                                                                                         3     Pretoria                   6
                                                                                                                                                                                                                      2                        3
13    Tsumeb                                                                                          26°                                                                                                                            4            4
                                                                                                                                                                                                     3                                                         5                      SWAZILAND
                                                                                                                                                                                                                                          2
    Milling/Blending units
                                                                                                                                                                      North West                                                                                                                    9
1  Mokopane                                                                                                                                                                                                                                    6
2  Roodepoort
                                                                                                                                                                                                                                                          Delmas Project Area
3  Brakpan                                                                                                                                                                                                           l
                                                                                                                                                                                                                 Vaa
4  Kaalfontein
5  Newcastle                                                                                                                                                                                                                                                          5                                      6
6  Richards Bay                                                                                                                                                                                              Orange Free State                                                Kwazulu Natal
7  Bloemfontein                                                                                                                                                            7
8  Durban
9  Matsapha                                                                                                                       Orange                                                Kimberley
                                                                                                                                                                                                    7                                                                               Tu
                                                                                                                                                                                                                     Bloemfontein                                                      g
10 Gaborone                                                                                                                                                                                                                                    11
                                                                                                                                                                                                                                                                                           el
                                                                                                                                                                                                                                                                                                a
                                                                                                                                       Northern Cape                                                                                Maseru
                                                                                                                                                                                                                                                                                8
       Production Units
                                                                                                                                                                                                                                  LESOTHO
1     Slurry                                                                                                                                                                                                                                                                        Durban
2     Lichtenburg




                                                                                                                                                                                    O
                                                                                                      30°




                                                                                                                                                                                     ra
3     Dudfield




                                                                                                                                                                                        ng
                                                                                                                                                        SOUTH AFRICA           De Aar




                                                                                                                                                                                          e
4     Dwaalboom                                                                                                                                                                                                                                                   8                                 INDIAN
5     Hercules                                                                                                                                                                                                                                                                                      OCEAN
6     Jupiter
7     Ulco                                                                                                                                                                                   Middleburg
8     Simuma                                                                                                                                                                                                 7            Eastern Cape
9     Port Elizabeth
10    De Hoek
11    Riebeek                                                                                                                     10
                                                                                                            ATLANTIC
                                                                                                             OCEAN
                Graphics By:
                                                                                                                                                                                                                             8           East London
                InterAction
                 Corporate Reporting & Identity Specialists,
                                                                                                                              11
                        Annual Reports, Graphics
                                                                                                                                              Western Cape                                    9
                SCALE:                                                                                                                 10
                                                                                                                                                             9
                                                                                                                      Cape Town                                                                     Port Elizabeth
  125          0              125             250 km
                                                                                                      34°




                                                                                                                                                                                                                                                                                                                        FIGURE 1
    This diagram and the information herein is
     copyrighted. It may not be reproduced or                  Source: Sephaku Cement (Pty) Limited
transmitted in any form or by any means without
prior written permission from Venmyn Rand (Pty)                SephakuCement'09_CPR_Fig01.cdr
              Ltd. Trading as Venmyn.
                                                      4

    In view of the rapid economic growth in the southern African region, and the current growth in the
    construction of infrastructure in some part due to the preparation for the Soccer World Cup in 2010,
    there has been an increase in the demand for power, which is expected to continue even after the world
    cup due to infrastructure development. Although there was a significant shortage at the beginning of
    2008, resulting in sweeping power cuts, the government has committed over ZAR60bn in the next four
    years to Eskom for the construction and revitalisation of new generating capacity, to alleviate the power
    shortfall in the country. The power shortages initially impacted negatively on South Africa, but the latest
    global economic slowdown has meant the pressure on electricity supplies has been temporarily
    alleviated.

    The Itsoseng and Delmas Projects should be operational by mid-2011. At this time, it is not expected
    that Eskom will have significant new power generating capacity coming on stream. Therefore, short-
    term power continuity could affect the project. However, Eskom have made commitments that they will
    supply Sephaku Cement with power.

    4.1   Political Climate
          South Africa gained independence from Britain on 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 multi-racial 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 recently held democratic, peaceful, free and fair
          elections, which were won by the ANC under the leadership of Jacob Zuma.

          Crime is a problem in South Africa, particularly theft and violent criminal activity. Whilst the
          government is attempting to increase policing activity, mainly in response to the World Cup
          soccer event, the levels of success are limited. This factor should be taken into account for
          investment in South Africa mainly through increased security costs, personnel protection and
          focus on business security against fraud and corruption.

    4.2    Economic Climate and Fiscal Regime
          Global developments and concerns about the growth prospects of major industrialised countries
          have had a major impact on the performance of the domestic economy, especially with regards to
          the export sector. Daunting economic problems remain from the apartheid era - especially
          poverty, lack of economic empowerment among the disadvantaged groups, and a shortage of
          public transportation.

          South Africa’s Gross Domestic Product (GDP) was estimated at USD490bn (CIA 2009) for 2008
          with an annual real growth rate of 4.95%. Growth was robust from 2004 to 2008 as South Africa
          reaped the benefits of macroeconomic stability and a global commodities boom, but began to
          slow in the second half of 2008 due to the global financial crisis impact on commodity prices and
          demand. However, unemployment remains high and outdated infrastructure has constrained
          growth. The country is classified as a middle-income emerging market with well developed
          financial, legal and judicial systems and modern infrastructure.

          South African economic policy is fiscally conservative but pragmatic, focusing on controlling
          inflation, maintaining a budget surplus, and using state-owned enterprises to deliver basic
          services to low-income areas as a means to increase job growth and household income. The
          currency and inflation volatility is typical of developing economies and in South Africa, Rand
          hedged stocks such as commodity companies, have traditionally been in demand by private and
          institutional investors.

          The greatest risks associated with the minerals and mining industry in South Africa are arguably
          the recent uncertainties relating to the power crisis and the security of tenure related to the
          MPRDA, the Mining Charter and the Royalty Bill. The other major concerns for the mining,
          manufacturing and construction industry are the uncertainties of the effects of HIV/Aids on the
          workforce.

          On 6th December 2006, cabinet approved Codes of Good Practice specifying Black Economic
          Empowerment (BEE) requirements. The Codes of Good Practice were issued under Section 9(1)
          of the Broad-Based Black Economic Empowerment (BB BEE) Act, 2003 (Act No. 53 of 2003).



Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                     5

          These codes deal with ownership, management control, employment equity, skills development,
          enterprise development, preferential procurement, small-and medium-sized enterprises, as well
          as separate guidelines on the transfer of equity to BEE firms/individuals for multinationals. This
          would specify the percentage to which BEE’s own, manage, and work in an enterprise as well as
          targets for training black South Africans, purchasing supplies from BEE-compliant firms, and
          assisting with the development of black-owned businesses.

    4.3   Mineral Policy (SR T5.1)
          The appropriate legislation related to the minerals industry of South Africa is discussed below:-

          4.3.1    MPRDA
                   The South African government enacted the MPRDA in 2004 which defines the State’s
                   legislation on mineral rights and mineral transactions in South Africa. The Act
                   emphasises that the government does not accept the existence of dual State and
                   private ownership of mineral rights in South Africa, and the long-term objective is that
                   the state becomes custodian of all mineral rights. The government enacted 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. Privately held mineral rights will
                   be transferred over time under the provisions of the Act into rights to prospect and mine.
                   Ultimately, all minerals in South Africa will vest in the State.

                   A further objective of the Act was the pursuance of the government’s policy of furthering
                   BEE within South Africa’s minerals industry, by encouraging mineral exploration and
                   mining companies to enter into equity partnerships with BEE companies. The Act also
                   makes provision for the implementation of social responsibility procedures and
                   programmes by mineral resource companies. Applicants for permits and licences will be
                   required to provide details of these criteria under so-called Schedule II, Transitional
                   Arrangements.

                   In the Act, the State has reaffirmed its commitment to guaranteeing security of tenure in
                   respect of prospecting and mining operations. This has stimulated debate between
                   mining companies and the government on how best to meet the government’s
                   objectives to prevent the hoarding of mineral rights to the exclusion of new entrants to
                   the minerals industry. An issue which still requires clarity is the discretionary power of
                   the Minister, with respect to the transferability of prospecting permits and mining
                   licences.

                   At this stage, it appears that the Minister’s approval will not be “unreasonably” withheld.
                   Schedule II of the Act outlines certain transitional arrangements whereby holders of old
                   order rights, i.e. rights in force immediately before the date on which the Act takes
                   effect, were required to lodge the right for conversion within one year. Types of rights
                   and permits applicable to the mining industry in South Africa as provided for in the
                   MPRDA are detailed in Table 1.

          4.3.2    Mining Charter
                   The primary objective of the Mining Charter is to provide a framework to assist mining
                   companies to discharge their obligations to comply with Sections 2(d) and 2(f) of the
                   MPRDA. These sections oblige mining companies to promote BEE when applying for,
                   or when converting existing mineral rights to the new order rights as introduced by that
                   Act. Industry discussions have provided a “Score Card” assessment of a company’s
                   efforts to meet the Charter’s objectives. There are still issues that need to be resolved
                   with regards to the quantitative assessment of the so called “scores”.

                   Promulgation of the Charter marked the end of a long period of protracted debates and
                   varying interpretations of the legislation requirements, paving a way for the full
                   implementation of the MPRDA. Most mining houses are already implementing their own
                   empowerment strategies within their current activities. These strategies demonstrate
                   their best endeavours to consider the issues and a willingness to accommodate the
                   requirements when they are finally defined.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
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          Table 1: Types of Rights Applicable to Mining in South Africa
           LICENCE TYPE             PURPOSE             DURATION               REQUIREMENTS                         CONDITIONS
                                                                         •   financial ability;                Holder does not have the
          Reconnaissance      Exploration at the 2 years
                                                                         •   technical ability; and            exclusive right to apply for
          Permission          reconnaissance stage. (non renewable)
                                                                         •   work programme.                   a Prospecting Right.
                                                                         •   financial ability;
                                                      Up to 5 years
                                                                         •   technical ability;
                              Exploration at target initially.                                                 Payment of Prospecting
          Prospecting Right                                              •   economic programme;
                              definition stage.       Renewable once                                           fees.
                                                                         •   work programme; and
                                                      for 3 years.
                                                                         •   environmental plan.
                                                                         •   prospecting stage complete;       May     not     result    in
                                                                         •   feasibility study complete;       exclusion of competition,
                                                      3 years initially. •   project not currently feasible;   unfair   competition      or
                              Hold on to legal rights
                                                      Renewable              and                               hoarding of rights.
          Retention Permit    between Prospecting
                                                      once     for     2 •   EMP complete.                     May not be transferred,
                              and Mining stages.
                                                      years.                                                   ceded,    leased,      sold,
                                                                                                               mortgaged                 or
                                                                                                               encumbered in any way.
                                                                         •   financial ability;
                                                      30 years initially.•   technical ability;                Payment       of  royalties
                                                      Renewable for      •   prospecting complete;             (after 2010).
                                                      further periods    •   economic programme;               Compliance with Mining
          Mining Right        Development stage.
                                                      of 30 years.       •   work programme;                   Charter and Codes of
                                                      Effective      for •   social plan;                      Good       Practice      on
                                                      LOM.               •   labour plan; and                  BBBEE.
                                                                         •   environmental plan.
                                                      2 years initially. •   life of project must be <2        Payment       of   royalties
                                                      Renewable for 3        years;                            (after 2009).
          Mining Permit       Small-scale mining.     further periods •      areas must be <1.5Ha; and         May not be leased or
                                                      of 1 year at a •       environmental plan.               sold,    but     can      be
                                                      time.                                                    mortgaged.

                     There are still issues that need to be resolved with regards to the quantitative
                     assessment of the “scores”. The fundamental requirement was that 26% of all mining
                     and exploration operations must be owned by previously-disadvantaged South Africans
                     (this includes black people, mining communities and women) by the year 2014.
                     Companies that applied to convert their old order mining rights required a BEE
                     ownership of 15% by 2009 and 26% share by 2014. Companies applying for new order
                     prospecting and mining rights after 1st May 2005 are required to ensure a 26%
                     shareholding if the mineral rights were formerly privately held. If the BEE component is
                     insufficient this will prevent a new mining licence being awarded.

                     The targets for the participation of historically-disadvantaged persons must be reached
                     by individual companies. However, companies can earn offset points where the
                     ownership target will be moderated should the company facilitate value-addition
                     downstream opportunities. The operation of this system will be clarified in the
                     beneficiation legislation. The Promotion of Beneficiation Bill is still being prepared and is
                     expected to provide incentives for upstream companies that facilitate downstream
                     investments, in order to reduce the exporting of unprocessed mineral products and to
                     promote local value addition.

                     Sephaku Cement is well-placed to take advantage of the new minerals dispensation.
                     Sephaku Holdings, which has an 80.2% shareholding in Sephaku Cement, is a fully-
                     compliant BEE company. This means that Sephaku Cement already fully complies with
                     the MPRDA’s ownership requirements. As a result, Sephaku Development has been
                     able to secure exploration and mining rights over contiguous properties in the largest
                     cement manufacturing region, the Lichtenburg District in the North West Province and a
                     grinding and milling plant in Delmas, in Mpumalanga Province of South Africa.
                     Exploration, evaluation and suitability of the limestone resource for cement
                     manufacturing have been completed and the company has been granted the mining
                     rights and environmental approvals on these properties to mine and manufacture
                     cement on site. However, the company is in the process of raising debt to supplement
                     the equity raised to fund the construction of the cement plant.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
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          4.3.3   The Royalty Bill
                  This proposed legislation incorporates the government’s intention to impose royalties on
                  revenues derived from mineral production of South Africa. A fourth draft of the Minerals
                  and Petroleum Resources Royalty Bill (MPRRB) was released for public comment in
                  June 2008. The main purpose of the Bill was to provide legislation for the collection of
                  royalties from mines developed and operated, in terms of the new-order mineral rights
                  granted through the MPRDA process.

                  There are a number of problems with the administration of the Bill, in that it needs to be
                  linked to existing tax legislation, which clearly defines mining and industrial tax rates
                  based on a profitability formula. The intention is not to facilitate double taxation on an
                  already burdened industry. There has been much debate over this legislation and, as a
                  consequence, the enactment of the Royalty Bill has been postponed to 2010 due to the
                  current global recession.

                  The transition phase stipulated in the MPRDA will be completed by 1st May 2009. The
                  Government intends to provide for the imposition of royalties through the MPRRB which
                  gives effect to the MPRDA which is intended to come into effect during the first half of
                  2010, but uncertainties surrounding this date continue. The MPRDA requires that
                  compensation be given to the State (as custodian) of the country’s Mineral and
                  Petroleum Resources to the country’s “permanent loss of non-renewable resource”.

                  The bill distinguishes between refined and unrefined mineral resources, where refined
                  minerals have been refined beyond a condition specified by the bill, and unrefined
                  minerals have undergone limited beneficiation as specified by the bill.

                  The royalty is determined by multiplying the Gross sales value of the extractor in
                  respect of that mineral resource in a specified year by the percentage determined in
                  accordance with the royalty formula. Both direct operating and capex (Capital
                  Expenditure) incurred is deductable for the determination of earnings before interest
                  and tax (EBIT). The quantum of the revenue royalty on all minerals is dependent on the
                  profitability of the company based on the following formula. For Refined Mineral
                  Resources the formula is as follows:-

                     Royalty Rate = 0.5 +                     EBIT               X 100
                                                 Gross Sales (refined) x 12.5

                  The maximum percentage for refined Mineral Resources is 5%.

                  For Unrefined Mineral Resources the formula is:-

                     Royalty Rate = 0.5 +                    EBIT                X 100
                                                 Gross Sales (unrefined) x 9

                  The maximum percentage for unrefined Mineral Resources is 7%.The limestone
                  produced from the quarry by Sephaku Cement will therefore be treated under the
                  unrefined formula.

                  The corporate tax rate is 28% of the chargeable income of mining and manufacturing
                  companies. Chargeable income is derived from accounting profits adjusted by certain
                  allowances as provided for in the Income Tax Act. Tax losses arising in any one
                  accounting period may be carried forward. In addition to these deductions, a mining and
                  manufacturing company is allowed to capitalise all expenditure during development.

                  Value Added Tax (VAT) at 14% is payable on most goods and services in South Africa.
                  However, as it is claimable against any VAT charged on sales of product, it does not
                  represent a cost to the project. Accordingly, the impact of VAT has been excluded from
                  the evaluation.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
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    4.4    Construction Industry Review (SR T5.8, SV T1.18)
          The South African government is focusing on infrastructural development as a key area to
          maintaining GDP growth levels going forward. A ZAR416bn infrastructure roll-out plan has been
          developed, to be implemented between 2007 and 2010, and is seen as necessary just to
          maintain GDP growth levels of 5% pa. In particular, the construction and building materials
          industries have experienced unprecedented growth over the past six years, and existing cement
          producers in South Africa have been unable to meet the greater than expected demand in terms
          of their current installed capacity as detailed in the cement industry section.

          The construction sector can be broadly categorised as follows:-
               •     residential building, which is the most cement intensive sector, with cement
                     being consumed in concrete foundations, slabs and floors, mortar, plaster,
                     screeds and in concrete products such as bricks, roof tiles and lintels. Higher
                     interest rates during 2006 to 2008, coupled with the introduction of the National
                     Credit Act and reduced household disposable income, were expected to dampen
                     growth in the property market over this period. However, a gradual recovery is
                     forecast from the second half of 2009 onwards as interest rates and inflation are
                     forecast to reduce;
               •     non-residential building, which is less cement intensive than residential
                     building, with cement being consumed primarily in the concrete sub-structure with
                     many structural and other building materials found in the superstructure.
                     Although retail property may be affected by rising interest rates as with residential
                     building, industrial property growth is supported by a strong manufacturing sector
                     and significant growth in the commercial property sector is forecast as a result of
                     solid real economic growth; and
               •     civil construction, which is the least cement intensive sector, including, inter
                     alia, civil concrete structures, roads, pipelines and bulk earthworks. The civil
                     construction industry is set to realise significant growth with the focus on road, rail
                     and port infrastructure, expansion of electricity and water supply sectors and the
                     building of stadia, airports and hotels.
          The strong real growth in the construction sector appears set to continue. Factors driving the
          current and forecast growth phase include, inter alia:-
               •    the imperative for investment in almost all public infrastructure in the country;
               •     a strong emerging Black middle and upper class;
               •     immigration from surrounding countries;
               •     on-going urbanisation; and
               •     an on-going need to address South Africa’s housing backlog.
          Relatively high levels of business confidence as resource and construction-driven economic
          growth are coupled with business-friendly economic and fiscal policies. An indication of the
          cement demand for approved and planned major infrastructure projects from 2007 to 2014
          and the estimated investment into the project is set out in Table 2 below:-
            Table 2 : Estimated Cement Demand for Approved and Planned Major
                      InfrastructureProjects and Project Values (volume in addition to traditional
                      demand)
                             VALUE EURO
           INVESTMENT                           2007    2008    2009    2010      2011    2012    2013    2014    TOTAL
                                (bn)
                                                                                Kilo tons
            Eskom                       16.0       89     115     111      92        83      26       -       -      516
            Transnet                      8.0       -     125     220     195       235      89       -       -      864
            Gautrain                      2.5      62      98      94      40          6      -       -       -      300
            2010 FIFA                     2.0     100     113     111       -          -      -       -       -      325
            SANRAL                        3.0      76     128     161     147       157     145     152     161    1 126
            Housing                       3.0     729     914   1 081   2 650     2 650   2 650   2 650   2 650   15 974
            ACSA                          1.8      43      71      64      28        18      18      18       -      259
            DWAF                          2.0       -      20      34      42        21       9       2       -      129
                   TOTAL                38.3    1 099   1 583   1 876   3 193     3 170   2 937   2 821   2 811   19 492
          Source: PPC Intercem Cape Town 2007


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          Notably, housing construction growth is the largest and most significant contributor to anticipated
          cement demand growth. The key growth driver in the housing sector has been and is expected to
          continue to be middle-income housing, as a result of the emergence of a strong Black middle and
          upper class, and the resultant increase in the number of households.

          The consensus amongst industry analysts is that South Africa has entered a growth phase that is
          incomparable to anything experienced in the past 25 years. Major infrastructural investments on
          the scale currently being planned were last made in South Africa in the late 1960s and early
          1970s.

    4.5     Cement Industry (SV T1.18)
          Historically, the four companies, PPC, Afrisam (previously Holcim and Alpha), Lafarge SA
          (formerly Blue Circle) and Natal Portland Cement, dominate the cement industry in South Africa.
          Since 1988, much of the structure and capacity have remained the same, as it operated as a
          ‘legal cartel.’ However, in 1996, the ownership and the structure of the industry started shifting.
          Currently the South African cement producers are operating in an oligopoly market structure. The
          four main suppliers are:-
                 •    PPC;
                 •    AfriSam;
                 •    Lafarge SA; and
                  • NPC (Cimpor).
          They dominate the market and account for approximately 99% of the total supply in the Southern
          African region (incorporating South Africa, Botswana, Swaziland, Lesotho, and Namibia). Cement
          is used in the different sectors in the economy with the largest proportion being sold through
          resellers. There was a shortfall in the supply which was alleviated to a degree by imports, until
          November 2008 when imports slowed considerably. Figure 1 is a map of the main cement
          producing facilities in South Africa, in relation to Sephaku Cement’s projects (Itsoseng and
          Delmas).

          Turnover derived from building, construction and infrastructure developments surpassed
          expectations in 2007. This was influenced by, amongst other issues, the stadium related work for
          the 2010 Soccer World Cup, work on the King Shaka Airport, continued construction of the
          Gautrain Project, middle and low income housing, need for new infrastructure to sustain GDP
          growth and the Ingula pumped storage scheme. The government has budgeted ZAR787bn in its
          2009 budget to be spent on infrastructure and it is envisaged that 3 million houses will be
          constructed by 2014 for the low and middle income South Africans. Despite the delays in
          commencement of many infrastructure projects, demand from that sector virtually offset the
          residential market decline in 2008. The upmarket residential property was negatively affected by
          the credit crunch that has resulted in South African banks offering at most 95% on residential
          bonds, in the last quarter 2008. This phenomenon is expected to continue in the short-term. It is
          expected that the non-residential market will also maintain excellent growth, even though slower
          economic growth and infrastructure bottlenecks will inevitably impact investment in this industry.

          The value of recent projects awarded provides a short-term indicator of construction activity, in
          that it signals which projects have successfully progressed through the planning and tendering
          phases and are ready for construction. The total value of construction projects awarded during
          2007 increased by 4.5% in real terms during 2007, but the residential market dipped into negative
          territory, falling by 35% as illustrated in Table 2 .

          Non-residential developments edged higher by 2.5%, while the value of civil contracts awarded
          rose 43% (supported by the award of the 2010 soccer stadiums). Coupled to this is Eskom’s
          ZAR1,000bn budget to build power stations, Transnet’s construction of railway lines, ports and
          fuel pipelines and private sector expansion programmes. The drop in commodity prices is also
          depressing the expansion in the mining sector, which will affect the construction industry.

          Conditions in the non-residential market also started to deteriorate during the final quarter of 2007
          and 2008 as the number of building plans approved have moved to negative territory. The
          demand for retail space lags the demand for housing, so the medium-term outlook for retail is also
          less favourable. Retail growth itself has and is expected to continue slowing as consumer
          spending is affected by higher interest rates and inflationary pressures.


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          4.5.1    Southern African Cement Supply and Demand
                   Domestic sales to all nine South African Provinces were down by 4.6% in 2008, with
                   negative growth shown in all provinces except for Mpumalanga (up 9%) and the
                   Limpopo Province (up 0.6%). The largest province in terms of economic activity,
                   Gauteng, exhibited double-digit decline in demand at 11%, whilst the smaller provinces
                   of Eastern Cape, and Northern Cape showed negative growth of 3.5% although these
                   provinces are relatively small cement markets.

                   Approximately 13.5Mt of cement products were sold in South Africa in 2008 (Table 3),
                   which represented a 4.6% decline from the previous year. However, it is important to
                   note that the tonnage included approximately1.6Mt of fly ash and slag which were
                   purchased by contractors and concrete producers for extending and/or enhancing their
                   concrete mixes. These extenders, although they are by-products of the power and
                   smelting industries, do require cement producing capacity and should be included in
                   any cement demand/capacity comparisons. Sales to neighbouring countries in 2008
                   (Botswana, Lesotho, Swaziland and Namibia) were down 3.9% in 2008 with strong
                   demand coming from Botswana (up 21%). Namibia dropped 3% and Swaziland
                   dropped 24%, with Lesotho remaining consistent with 2007 levels.
              Table 3 : Southern African (Domestic and Regional) Cement Sales 2003-2008
                      REGION             2003             2004          2005         2006         2007        2008
               Limpopo Province          770,469           857,500      939,965    1,091,481    1,092,174    1,098,865
               Mpumalanga                626,461           748,324      874,027      979,637    1,050,725    1,140,586
               Gauteng                 3,209,474         3,809,759    4,318,569    4,948,010    5,461,198    4,857,830
               Free State                388,718           459,791      508,177      522,885      546,890      532,945
               KwaZulu-Natal           1,440,235         1,617,193    1,854,289    1,991,682    2,123,780    2,156,964
               Eastern Cape              731,008           938,651      867,683      874,977      985,360      951,208
               North-West Province       695,760           723,388      786,353      884,805      906,684      910,462
               Northern Cape             156,854           179,512      163,793      222,515      250,342      251,178
               Western Cape            1,086,487         1,356,147    1,621,969    1,735,971    1,707,118    1,572,817
                  DOMESTIC TOTAL       9,105,466        10,690,265   11,934,825   13,251,963   14,124,271   13,472,855
               Increase (%)                                   17%          12%          11%           7%          (5%)
               Lesotho                   126,094           111,427      108,913      109,781      122,340      121,999
               Botswana                  539,239           531,285      458,541      385,740      515,024      624,048
               Namibia                   254,251           267,275      286,958      338,631      380,550      368,152
               Swaziland                 138,120           135,748      186,022      170,919      173,535      131,600
                  REGIONAL TOTAL       1,057,704         1,045,735    1,040,434    1,005,071    1,191,449    1,245,799
                     GRAND TOTAL 10,163,170             11,736,000   12,975,259   14,257,034   15,315,720   14,718,654
              Source: Cement and Concrete Institute 2008

                   Industry forecasts for cement demand in 2009 and beyond are uncertain and have been
                   exacerbated by the economic downturn. However, the infrastructure spending planned
                   by government should support the cement industry in the short to medium-term.
                   Housing, particularly in affordable and social housing, uses a proportionately higher
                   amount of cement than more expensive housing and the level of demand is very
                   dependent on growth in this sector. Figure 3 illustrates the proportions of cement
                   production used in the different sectors in the economy with the largest proportion being
                   sold through resellers.

                   According to the South African Reserve Bank data, the value of construction (civil)
                   works reached an estimated ZAR45bn in 2007, which is a 28% increase in real terms
                   from ZAR35bn in 2006 and in the 2009 budget statement ZAR787bn is to be spent over
                   the next three years on infrastructure development in South Africa. Turnover this high
                   was last seen during the construction boom in the 1970’s. The South African Federation
                   of Civil Engineering Contractors (SAFCEC) expects a further 3% - 6% increase in civil
                   engineering turnover in 2008 and into 2009.

                   The biggest challenge facing the civil engineering sector will be capacity constraints
                   (e.g. materials, power and skills). Already international construction companies are
                   partnering with local firms that are unable to cope with the load and lack the expertise,
                   especially for large projects. In South Africa, by far the majority of final cement
                   distribution is transported by road due to the industry’s lack of faith in the level of service
                   provided by the rail network. Road transportation moves 99% of the product to the
                   marketplace.


Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
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                            Figure 2: Proportions of Cement Production sold to Different Buying
                                  Sectors in 2007.



                                                                  Building
                                                                                     Mining
                                                          Civil     4%       Other    1%
                                                           5%                 2%
                                            Blenders                                          Resellers
                                               7%                                               47%


                        Concrete Products
                              16%




                                                       Readymix
                                                         18%




            Source: Concrete and Cement Institute

                    However, a considerable amount (more than 50%) of inter-facility transportation of
                    cement and clinker occurs between distribution depots, blending units and the
                    production units by means of rail transport.

                    Exports have recently remained at low levels representing approximately 1.4% of total
                    cement sales. In recent years, it has been reported that as a result of the tight local
                    supply situation, it was necessary to use imported products to fulfil export commitments
                    as illustrated in Figure 3 below:-

                            Figure 3: Regional Cement Sales from the Four Main Suppliers and the
                                  Exports Trend.




            Source: Concrete and Cement Institute

          4.5.2     Sources of Cement Supply
                    In 2006 and 2007, the supply capacity from PPC, NPC, AfriSam and Lafarge SA was
                    insufficient to fully cater for the growing demand, yet the market was fully served with
                    the deficit taken up through cement and clinker imports. The expansion projects NPC
                    Simuma, PPC and Cimpor come on stream between 2008 and 2009. This will
                    significantly increase the industry capacity.


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                    It is anticipated that if the industry demand does not move into positive growth, the
                    industry capacity could be in excess of the industry demand. Figure 5 shows the
                    relationship between the cement industry’s supply and demand forecast and the
                    expected project implementation plan.

                    The investments by NPC on the Simuma plant expansion of approximately ZAR800m
                    will result in a fully-integrated clinker and cement production process. These recent
                    expansion programmes by NPC, PPC and Lafarge SA are the first new plants to be
                    installed in South Africa in the last 20 years. The NPC expansion includes a new kiln
                    and a multi-compartment cement silo with a capacity of 12,000t and a new silo for raw
                    materials with a capacity of 7,500t. The new cement mill has a production capacity of
                    80t/hr and new packaging and palletising equipment to operate at 3,000 bags per hour.
                    The new kiln has increased capacity at a lower cost and is likely to eliminate most of the
                    cement imports into KwaZulu-Natal.

                    The investments described above are going ahead despite new, multibillion-ZAR
                    capacity expansion projects recently commissioned by established industry players.
                    These include the following:-
                        •      ZAR1.4bn Dwaalboom-Batsweledi expansion in the Limpopo Province
                               by PPC, which was commissioned in September 2008, although later
                               than planned. Along with the ZAR604m upgrade at its Hercules plant
                               in Pretoria which will increase its capacity by 1.6Mt a year by mid-
                               2009; and
                        •       Lafarge SA 's ZAR1.2bn spent to increase its cement capacity by 1Mt
                                a year. The new capacity project has two main parts. Firstly, a 1Mtpa
                                cement grinding plant at Randfontein, representing an investment of
                                ZAR450m. Secondly, a new clinker production line in the Lafarge SA
                                Lichtenburg Cement Works in the North West Province to increase
                                clinker production by 640,000tpa. This represents an investment of
                                ZAR750m.
                    The estimated cement manufacturing facilities, average clinker capacity and plant
                    suppliers for the four main cement producers are shown in Table 4:-
              Table 4: Current Facilities and Clinker Capacity in South Africa
                                                                 AVERAGE CLINKER
                                                       AGE          CAPACITY
                  PRODUCER   SA PLANTS     KILNS                                              PLANT SUPPLIER
                                                     (YEARS)
                                                                    (MT/YEAR)
               PPC                      7       13   21 to 47                    0.2 - 0.9   FLS (12); Polysius (1)
               Afrisam                  2        3    21 - 34                    0.8 - 1.3   FLS (2); Polysius (1)
               Lafarge SA               1        2    24 - 34                    0.8 - 1.2   KHD; Polysius
               NPC                      1        1         24                          0.6   FLS
              Source: PPC Estimates September 2007

                    The table above is based on the PPC estimates in 2007 and in the past two years
                    almost all cement producers have been investing in brown fields expansion projects to
                    increase capacity. Supply and demand imbalances are expected to occur in certain
                    regions, since most additional capacity will be created in the North West Province, and
                    the Eastern Cape is likely to remain net importers of cement. Transport costs will impact
                    on final cement prices.

                    South African production from the four major producers will increase to a higher level,
                    because of additional projects. These projects are expected to come on stream in time
                    to supply the medium term 2010 demand. The projects pipeline is sufficient to satisfy
                    the demand forecast and it is expected that cement imports will be phased out by the
                    end of 2008.

          4.5.3     Cement Markets and Prices
                    Domestic cement prices have demonstrated inflation leading growth over time. Prices
                    have risen 10.9% compared to a 7.8% increase in the building industry inflation and
                    6.6% in Producer Price Index (PPI). Retail cement prices have grown 9.5% compared to
                    a Consumer Price Index (CPI) inflation rate average of 5%.



Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                                                                                    Sephaku Cement (Pty) Limited - CPR
Independence you can trust

  CEMENT INDUSTRY CAPACITY PLANS AND FORECASTED DEMAND



                     26



                                                                               LEGEND
                     24                                                 Industry Demand
                                                                        Industry Maximum Capacity
                                                                        Industry Maximum Capacity
                                                                        with Old PPC Kilns Retired
                     22                                                 Contracted/Building
                                                                        Investigation Stage
 Million Tons (Mt)




                                                                                                                                                                                                                                             PPC 2.5Mt/yr (net 1.9Mt/yr):(2014)
                                                                        Completed

                     20
                                                                                                                                                                                                      Sephaku 2.1Mt/yr: (2011/12)



                     18
                                                                                                                            NPC Simuna
                                                                                                                          Expansion Project


                     16
                                                                                                                                                                                                                                              PPC 1.25Mt/yr (net 0.7Mt/yr)* (2011/12)



                     14                                                                                                                                                                                            Lafarge 1Mt/yr (2010)


                                                                                                 PPC 1.25Mt/yr, Cimpor 0.6Mt/yr: (2009)
                     12                                                                                                                                                            PPC Mill 0.3Mt/yr (2010)




                     10
                       2006                                                    2007                                   2008                            2009                        2010                    2011                        2012                 2013                         2014
                     Growth                                                    7.6%                                    -2%                             0%?                         0%?                        6%                       6%                   7%                          6%




Source: PPC Investor Presentation




                                                                                                                                                                                                                                                                                               FIGURE 4
                      Graphics By:
                                                                         This diagram and the information herein is copyrighted. It may not be
                      InterAction
                          Corporate Reporting & Identity Specialists,
                                                                         reproduced or transmitted in any form or by any means without prior
                                 Annual Reports, Graphics                written permission from Venmyn Rand (Pty) Ltd. Trading as Venmyn.
                                                                                                                                                 SephakuCement'09_CPR_Fig04.cdr
                                                                              14

                                 Cement prices have increased by between 3.1% and 1.7% more than other
                                 complimentary building materials which increased by 7.8% for the whole building
                                 industry. Figure 5 shows a plot of the domestic retail cement price compared with CPI.

                                 Reliable international cement price comparisons are difficult due to the lack of reliable
                                 consistent sources of information. Companies quote prices differently and conclusions
                                 cannot be readily drawn from a single year’s data. From a sample taken in 2008 of
                                 sixteen countries, South Africa ranked as having the eighth highest cement price as
                                 illustrated in Figure 6. Based on this data no correlation is evident between the level of
                                 development of a nation and its cement price.

                                                 Figure 5: Domestic Retail Cement Prices vs CPI from January 2003 to
                                                       2007

                                22.50


                                20.00


                                17.50


                                15.00
                  Percentage




                                12.50


                                10.00


                                 7.50


                                 5.00


                                 2.50


                                 0.00
                                   Jan-03 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07
                                                                                            Date


                                                                     Cement (Retail)                            CPI: All Items




                                                 Figure 6: Global cement prices in USD/tonne 2008 averages


                                   Djibouti
                           Saudi Arabia
                                        Egypt
                                        Oman
                                         UAE
                                        Qatar
                                  Lebanon
              Country




                                    Turkey
                               South Africa
                                        Latvia
                                    Nigeria
                                  Morocco
                                    Russia
                                   Ukraine
                                   Ethopia
                                    Liberia

                                                 0    20      40        60         80    100       120      140       160        180   200       220
                                                                                          Price (USD/t)




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                    15

          4.5.4    Cement Market Outlook
                   The global economy is in a difficult situation and economic forecasting is uncertain.
                   South African economic growth and cement demand have been robust for the last few
                   years because of significant infrastructure spending and the 2010 Soccer World Cup.
                   Prospects for all cement companies in the region could be downgraded, if demand,
                   prices and cash-flows weaken. At this stage, infrastructure projects support the local
                   economy.

                   The outlook for the South African economy has reduced since the beginning of 2008 in
                   line with the global markets. A sharp rise in oil, coal and electricity exceeded the
                   producer price inflation index and exerted pressure on the operating margins,
                   particularly on the first half of 2008. Cement industry margins have fallen, as costs have
                   climbed. Energy costs, one of the industry’s largest cost factors have become a
                   challenge for some companies. In the meantime, the cost of financing debt is
                   increasing, and the availability of credit to refinance debt is decreasing. Since
                   government is committed to continue spending on infrastructure, this is expected to
                   support construction growth in both the short-and long-term.

                   The cement market is conservatively forecast to reach sales of 18Mtpa by 2013, by
                   which time Sephaku Cement’s cement plant will be in production. A minimum of 4Mtpa
                   of production is therefore required for South Africa to produce its cement requirements,
                   not all of which can be achieved via maximum planned production increases over the
                   next two to four years by the major producers. Sephaku Cement expects to contribute
                   2.2Mtpa of this shortfall and to take some market share away from existing producers
                   given its favourable geographic location, state-of-the-art-plant and expected efficiency
                   advantages over its competitors.

          4.5.5    Barriers to Entry into the South African Cement Industry
                   The South African cement industry has been characterised by an extended period
                   during which the installed capacity far exceeded the national demand for cement.
                   Nevertheless, because of the cartel arrangements which existed up to 1994/1995,
                   cement producers were extremely profitable and as the demand has increased to match
                   or exceed capacity, profits have improved even further.

                   New players have not entered the market as meaningful competitors for the following
                   reasons:-
                        •     large capital investment required for an economic plant;
                        •     long project lead time (normally in excess of three years);
                        •     uncertainty as to the stability of the social and political environment;
                        •     requirement and security of tenure for a quality raw material resource
                              which can last for the expected life of the plant; and
                        •      availability of suitable limestone deposits not controlled by the existing
                               producers.
                   As a result of no new players having entered the market, when a shortfall becomes
                   evident, as is currently the case, all the major players are liable to upgrade at the same
                   time in order not to lose market share.

5. CORPORATE STRUCTURE
   Sephaku Cement is an independent emerging company with aspirations of becoming an additional
   South African cement producer in South Africa. Sephaku Cement is currently engaged in the project
   planning phase and will soon be starting the construction phase of a cement plant in the largest cement
   producing district in South Africa. Sephaku Cement is 80.2% owned by Sephaku Holdings as illustrated
   in the updated Feasibility Report dated October 2008, with the remaining 19.8% held by Dangote. The
   current Sephaku Cement shareholding is illustrated graphically in Figure 7. Sephaku Holdings is
   currently raising the balance of the equity required to fully fund the development of the cement project
   which will result in a dilution of both Sephaku Holdings and Dangote’s interests in the company. The
   management structure brings with it the essential suite of geological, technical and financial skills
   needed to fully exploit Sephaku Cement’s limestone mineral resource.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                      16

    The drive is to move forward in a direction that will allow Sephaku Cement to enter the cement
    producing industry and become a significant cement producer. Dangote Cement is part of Nigeria's
    largest diversified industrial group, Dangote, whilst Sephaku Cement forms part of the industrial division
    of Sephaku Holdings, whose interests also include various other minerals such as fluorspar, coal, tin,
    gold and nickel. Dangote Cement is expanding its operations across Africa, with current projects in
    Nigeria and Senegal and negotiations taking place in a number of other African countries as Dangote
    Cement puts in place the infrastructure necessary to achieve its target of 50Mt of production capacity by
    2012.

    5.1    Directors and Management Team (SR T5.4, T5.5)
          Sephaku Cement’s management and technical team have considerable expertise in the various
          fields of limestone extraction, cement manufacture and marketing arenas, enabling the company
          to construct and manage a sophisticated limestone mining operation and cement plant
          processing and distribution facility.

          Additional experience will be identified and recruited as the project develops toward the cement
          producing phase. Incentive structures will be implemented to ensure that the interests of key
          employees are aligned with those of the shareholders. The summary CV’s of Sephaku Cement’s
          directors and the management team are detailed and are commented on below. The following
          senior managers have already been appointed on a permanent basis:-

          Chief Executive Officer
          Pieter Fourie
          BCom (Acc), Executive Development Program (PRISM) For Global Leaders (Switzerland)
          Pieter has extensive experience in the cement industry, having been the marketing director of
          Blue Circle (subsequently acquired by Lafarge SA), the managing director of the cement business
          unit of Lafarge SA and the strategic development director for Africa for Lafarge SA, France.
          Pieter’s role at Blue Circle included sales, distribution and marketing and he was primarily
          responsible for leading Blue Circle from a legal cartel into a competitive environment. He was
          then promoted to managing director of the cement business unit of Lafarge SA, at that time a
          company producing cement of 1.7Mtpa. Pieter subsequently accepted an assignment at Lafarge
          SA’s head office, in a strategic development role aimed at integrating newly acquired businesses
          in Africa into Lafarge SA’s portfolio and identifying new business opportunities.

          Commercial Manager
          Duncan Leith
          BCom (UNISA), Young Managers Program (INSEAD, France), MBA (GIBS)
          Duncan has extensive experience in all commercial aspects of the cement industry, having
          worked for Lafarge SA (formerly Blue Circle) for 10 years. Duncan’s initial role at Blue Circle was
          to establish a fully integrated logistics process after the disbanding of the cartel in 1994. After the
          acquisition of Blue Circle by Lafarge SA, Duncan was promoted to distribution manager,
          responsible for the logistics function as well as all distribution depots. He was later promoted to
          commercial manager with total responsibility for marketing, sales, distribution and logistics.
          Before joining Sephaku Cement, Duncan spent 3 years with the Imperial Group managing their
          Renault Trucks Franchise. After completion of the project, Duncan will take up the position of
          commercial manager: responsible for marketing, sales and distribution.

          Works Manager
          Duan Claassen
          BEng (Metallurgical Engineering) (UP - Cum Laude), MDP (Duke University, USA)
          Duan has 10 years cement production experience, having worked for Lafarge SA and PPC as
          operations manager of Lichtenburg Works and Dwaalboom respectively. His principle duties
          included plant performance and reliability, people management, production planning, product
          quality, safety and cost control.

          Human Resources Manager
          Puseletso Sithole
          B Admin Honours’ (Industrial Psychology), MDP (UDW), MBL (UNISA)
          Puseletso Sithole has extensive Generalist Experience in Human Resources Management
          particularly in the banking sector and manufacturing industry. She has held different key
          responsible positions in the HR Field, while working for Nedcor Electronic Banking, Development
          Bank of Southern Africa and Lafarge Gypsum.


Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                                                                                                                                               FIGURE 7

                                                                                                    Sephaku Cement (Pty) Limited - CPR
 Independence you can trust

   SEPHAKU CEMENT’S CURRENT SHAREHOLDING STRUCTURE




                                                               Sephaku Holdings Ltd                                                   Dangote Industries
                                                                                                                                      and other minorities

                                                                                 80.2%                                                    19.8%



                                                                                                          Sephaku Cement
                                                                                                            (Pty) Limited



                                                      100%                                     100%                      100%
                     Sephaku Development                                             Sephaku Ash                         PNB Cement
                         (Pty) Limited                                               (Pty) Limited                        (Pty) Ltd




                                                                              Fly Ash Classification                                                             Delmas
                                 Mining Rights                                                                                          Itsoseng Project
                                                                                     Project                                                                 Milling Project




Source: Sephaku Cement (Pty) Limited
                                                             This diagram and the information herein
                                                             is copyrighted. It may not be reproduced
            Graphics By:                                        or transmitted in any form or by any
            InterAction
            Corporate Reporting & Identity Specialists,
                                                              means without prior written permission
                                                                    from Venmyn Rand (Pty) Ltd.
                   Annual Reports, Graphics
                                                                        Trading as Venmyn.              SephakuCement’09Fig07.cdr
                                                    18

          At Lafarge Gypsum she was the Human Resources Director for the Business Unit. Her principle
          duties in her career range from developing, aligning HR strategies and systems to the business
          strategy and the implementation.

          Engineering Project Manager
          Heinrich de Beer
          BEng Mechanical (PU for CHE), MDP (PU for CHE), LDP (GIBS)
          Heinrich started his career as Project Engineer and Maintenance Manager at Mittal (Iscor),
          Vanderbijlpark Carbonization Plant. He joined Lafarge SA as Depot Manager for their Kaalfontein
          terminal. He was then promoted to Depot Operations Manager responsible for all of Lafarge
          Cement’s distribution facilities as well as their Richards Bay Grinding Plant. Heinrich was later SA
          promoted to Development Manager at the Lichtenburg Plant where he was responsible for major
          projects (including Lafarge SA’s recent new kiln line), Automation and IT, Quality and
          Environment. After completion of the project, Heinrich will remain in Lichtenburg as a member of
          the works management team.

          Project Manager Delmas
          Andre Roeloffze
          BEng (Chemical Engineering)(UP), MDP (GIBS)
          Andre has 12 years experience in production and commercial aspects in the cement industry. He
          held positions in Lafarge SA as process engineer, optimisation manager, general manager
          (Richards Bay Milling Plant) and distribution manager. His principle duties included process
          optimisation and development, fault cause analysis, plant management, raw material sourcing,
          safety, logistics and distribution depots. After completion of the project, Andre will take up the
          position of the Delmas milling plant general manager.

          Project Finance Manager
          Andrew Craik
          BCom Economics, Accounting (University of the Witwatersrand)
          Andrew worked in Investment banking back office in the United Kingdom and Ireland for seven
          years, involved in accounting and general economics. He then joined Lafarge SA as a Financial
          Accountant in 2002, where he was an instrumental part of the project team for the implementation
          of JD Edwards, the ERP (Enterprise Resource Planning) system selected by Lafarge SA. Before
          joining Sephaku Cement, Andrew spent two years with Commercial Vehicle Holdings a division of
          Imperial Group (Pty) Ltd. as Financial Manager. Andrew will manage the implementation of
          Sephaku Cement’s ERP system, Microsoft Dynamics.

          Project Assistant
          Christine Human
          B.Sc. Chemistry (PU for CHO), B.Sc. (Hons) Chemistry (PU for CHO), Post Graduate Higher
          Education Diploma (R.A.U.), MBA (North West University).
          Christine held positions at Commercial Vehicle Holdings, a division of Imperial Group (Pty) Ltd. of
          Marketing Analyst and Group Project Manager.

          Information Technology, Process control and Plant automation
          Alwyn (Al) Hechter
          Starting in 1992, Al studied Industrial Electronics and Microsoft Operating and Programming
          Platforms specialising in Industrial Communication Protocols. In 2001 he joined Lafarge SA as an
          IT Specialist on the plant which involved expanding the IP Network to incorporate the entire plant
          and interface to the Industrial Equipment in the Lab and in the Plant itself through the PLC’s. He
          also supported a project to implement a Planned Maintenance System. During this time Al also
          built a complete Enterprise LIMS System and an Enterprise Historian fully integrated into the
          Plant Control Systems for Automated Process Changes.

          In 2007 he moved to the position of Systems Administrator on the plant responsible for all IT and
          Automation on the plant including the Process Control System Revamp from Siemens S5 to ABB.
          During this time, Al has attended numerous technical courses on Microsoft and IBM Platforms as
          well Management Courses including GIBS Management Development Programme.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                         19

              Supply Chain Manager
              Wouter Loots
              Higher Diploma in Mechanical Engineering, National Diploma in Mining Engineering
              Wouter has 11 years experience in cement sales and logistics. During his employment at Lafarge
              SA he held the positions of key accounts sales manager, logistics manager and distribution
              manager. Wouter was responsible for high level sales negotiations with major customers,
              logistics optimisation and planning (including imports) as well as being responsible for distribution
              depots.

              Sephaku Cement’s management personnel has varied and extensive experience in the cement
              industry. The current team of permanent senior managers and technical consultants have clearly
              identified and agreed upon the desired structural design and philosophy of the organisation as
              well as the roles and responsibilities required of a high performing organisation that will utilise
              highly automated modern processes and technologies.

              Technical Manager – Sephaku Ash
              Hennie van Heerden
              Hennie is a qualified Concrete Technologist, registered at the Institute for Concrete
              Technologists (ICT) in the UK.
              He started his career as a contractor working on the Orange Fish Tunnel. He also gained
              experience in precasting at Murray & Steward as well as in Namibia. He joined All concrete
              works and then moved to Shaft Sinkers and later Blue Circle Cement. He was also involved in
              R&D at a large contracting company. Hennie was working for Chryso and Admixture company
              prior to joining Sephaku.

6. ITSOSENG PROJECT
   The Itsoseng Project is the main driver and the single most important project, held by Sephaku Cement.
   The primary objective of this cement project is to establish and operate a new cement production plant
   utilising the secured limestone deposit situated on the Stiglingspan, Verdwaal and Klein Westerford
   farms located 7km south west of Itsoseng. The deposit is situated between Lichtenburg and Mafikeng in
   the North West Province of South Africa (Figure 8).

    The Itsoseng Project would consist of a limestone mine and a cement production plant. The operations
    to be conducted on the Itsoseng Project area would include:-
          •    the mining of the principal raw material (limestone mining);
          •    the chemical processing of the raw materials to produce clinker; and
          • grinding and milling of approximately 50% of the clinker and blending with other
            components to produce the finished cement product.
    The mining operation will be confined to a surface operation and entails the removal of a calcrete
    deposit, which will then be milled and blended to form the basic raw meal feed to cement manufacturing
    plant.

    6.1       General Information and Logistics (SV T1.3)

              6.1.1    Location and Access (SR T1.5, SV T1.3)
                       The Itsoseng Project is located approximately 25km west of the town of Lichtenburg in
                       the North West Province. Access to the property from Lichtenburg is via the tarred R503
                       to Mmabatho (Figure 9). The property is accessed via a dirt road from the R503. The
                       condition of this dirt road deteriorates during the wet season. Sephaku Cement’s
                       engineering contractors have planned to construct a new access road to the plant site
                       prior to the start of construction.

                       The option of a rail link to the plant site has been considered as an alternative to road
                       transport. Options with respect to the layout of the rail link with other cement producers
                       in the region are being considered but do not form part of the FSR. The location of the
                       property illustrating the current and proposed access routes is shown on Figure 9.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                   20

          6.1.2   Topography and Drainage (SR T1.6)
                  The properties are situated on a relatively flat plain, with slight undulations covered by
                  typical savannah vegetation. There are no major obstructions. The elevation in the
                  north-eastern end of the properties is 1,500mamsl (metres above mean sea level),
                  sloping gradually to 1,430mamsl towards the southwest. Drainage follows this slope
                  direction. A groundwater study undertaken in 2007 highlighted the risk of a shallow
                  water table area on the original proposed plant site. For this reason, the plant site has,
                  as a result, been moved slightly eastwards.

                  The initial environmental due diligence conducted by MES had identified a potential
                  problem with the main drainage fed by the Springbok Pan situated on the northern
                  boundary of the property. This drainage channel, although dry, can flow and could affect
                  the mining activities planned in Block A. The area has since been removed from the
                  mining plan.

          6.1.3   Climate (SR T1.6)
                  The climate of the Lichtenburg area is typical of the South African highveld, with warm
                  to hot summers and cool winters. Typical maximum temperatures in summer are
                  between 28ºC to 32ºC, whilst minimum temperatures during winters rarely fall below
                  4ºC. The average annual rainfall varies from 400mm to just over 700mm.

                  The rainy season extends over the summer months from October through to April, with
                  the highest rainfall occurring during December and January. Precipitation is usually
                  associated with thunderstorms. These sudden downpours pose some risk of flooding in
                  low-lying areas, but most South African mines are exposed to this type of weather and
                  precautionary measures are routine. The moderate climate means that mining
                  operations can be undertaken throughout the year, with no exceptional measures
                  required.

          6.1.4   General Infrastructure (SR T5.6)
                  Infrastructure in the Itsoseng Project area is well established as a result of the
                  neighbouring limestone mining and cement manufacturing plants. The area is serviced
                  with tarred roads and railway lines throughout the region. Services such as power,
                  communication facilities, potable and industrial water and sewerage are not yet
                  available on site but are included in the project development plan. Figure 9 shows the
                  projects current infrastructure and proposed access routes.

                  To the north, the PPC Slurry factory is conveniently located on the main Mafikeng-
                  Zeerust-Johannesburg railway line. To the south, the town of Lichtenburg is linked to
                  the main Delareyville-Ventersdorp-Johannesburg railway line by means of a 24km
                  branch line from Coligny (Figure 9). A 22km private line links AfriSam’s Dudfield factory
                  with Lichtenburg and a 49km private line links the Tswana Lime quarry with the Lafarge
                  SA factory in Lichtenburg. The cement plant will be located in close proximity to the
                  main and secondary tarred roads.

                    6.1.4.1   Ground Water and Water Sources
                              A geohydrological report prepared in November 2007 by the Institute of
                              Groundwater Studies was issued by Sephaku Cement for review. All the
                              aspects concerning water are addressed in the environmental section of
                              this report.

                    6.1.4.2   Electrical Power
                              The Itsoseng village and surrounding cement factories in the district have
                              been supplied with Eskom power. Additional power will be required to
                              supply Sephaku Cement’s future operations. Extra electricity infrastructure
                              would need to be installed in a suitable locality to enable Sephaku Cement
                              to be connected to the national power grid, once the project progresses to
                              the plant construction phase and beyond.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                                                     Sephaku Cement (Pty) Limited - CPR
Independence you can trust

LEGEND:
 ROCK TYPES                                                            REGIONAL SETTING, GEOLOGY AND INFRASTRUCTURE OF THE ITSOSENG PROJECT
       Road
       Railway line                                                                                                                                                    t                                     To
                                                                                                                                                                    rus




                                                                                                  To Bots
       Farm Boundary                                                                                                                                            e                                                 Ze
                                                                                                                                                             Ze                                                      e
                                                                                                                                                          To                                                             ru
       Other Cement Manufacturers                                                                                                                                                                                             st




                                                                                                          w
       Sephaku Cement Mineral Rights Area




                                                                                                      ana
                                                                                                                                                       Slurry (PPC)
                                                                                  Mmabatho




GEOLOGICAL LEGEND:                                                                       rg
                                                                                    bu
                                                                                Vry




                                                                                                                                                                                                                                                                                        25O55’
                                                                             To
       Kalahari Sand
       Calcrete
       Karoo Sediments
       Almani Sub group Dolomite
       Black Reef Formation
       Ventersdorp Group Lava
       Basement Granite
       Black Reef Formation Sub-crop




  SITE LOCATION
                                         JOHANNESBURG
                                                                                                                                            Lafarge Quarry
                                                                                                                                                                           Itsoseng




                                                                                                                                                                                                                                                                                        26O05’
                      KIMBERLEY                                                                                                                                               VERDWAAL 57 IO
      Northern                                        DURBAN
       Cape                                                                                                            STIGLINGSPAN 73 IO
                                                                                                                                                                                                                                                             Lafarge Plant


                                                                                                                                                                    Proposed Plant Site
        CAPE TOWN                                                                                                                                                                                                                           LICHTENBURG                             r
                                                                                                                                                                                                                                                                                ste
                                                                                                                                                                                                                                                                             Ko
                                                                                                                                                                                      Dudfield (Afrisam)                                                                  To
Source: Sephaku Cement (Pty) Limited

                        Graphics By:
                         InterAction
                         Corporate Reporting & Identity Specialists,
                                Annual Reports, Graphics




                                                                                                                                                                                                                                                                 dal



                                                                                                                                                                                                                                                                           To
                                                                                                                                                                                                                                                                      s
                        SCALE:




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                                                                                                                                                                                                                                                         f




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                                                                                                                                                                                                                                                                                                 FIGURE 8
This diagram and the information herein is copyrighted. It may                                                                                       To Springbokfontein                                                           To
not be reproduced or transmitted in any form or by any means                                                  25O40’                                 25O50’                                         26O00’                                                       26O10’
without prior written permission from Venmyn Rand (Pty) Ltd.
                      Trading as Venmyn.                               SephakuCement’09_CPR_Fig08.cdr
                                                                                          Sephaku Cement (Pty) Limited - CPR
Independence you can trust

LEGEND:
 ROCK TYPES                                                             LOCALITY OF THE ITSOSENG PROJECT IN RELATION TO THE INFRASTRUCTURE IN THE AREA
       Road
       Railway line                                                                                                                                                              t
                                                                                                                                                                         e   ru s                                      To




                                                                                                   To Bots
       Power line                                                                                                                                                     Ze                                                    Ze
                                                                                                                                                                   To                                                          e   ru
       Farm Boundary                                                                                                                                                                                                                    st




                                                                                                       ana w
       Built-up Area
       Other Cement Manufacturers                                                                                                                          Slurry (PPC)
                                                                                  Mmabatho
       Sephaku Cement Mineral Rights Area
       Mineral Reserve Blocks



                                                                                    b   urg
                                                                                Vry




                                                                                                                                                                                                                                                                                                                                   25O55’
                                                                             To




  SITE LOCATION
                                                                                                                                                                                         DE
                                         JOHANNESBURG                                                                                                     RONDEFONTEIN
                                                                                                                                                                                        HOOP
                                                                                                                                                              47 IO
                                                                                                                                                                                        51 IO




                                                                                                                                                                                                                                                                                    50
                                                                                                                                    DE                                               Itsoseng        DE




                                                                                                                                                                                                                                                                                    5
                      KIMBERLEY                                                                                                    HOOP         Lafarge Quarry                                     PAARL




                                                                                                                                                                                                                                                                                                                                   26O05’
                                                      DURBAN                                                                       60 IO                                                            54 IO
      Northern
       Cape                                                                                                                                                                               VERDWAAL 57 IO
                                                                                                                                               SPRINGBOKPAN
                                                                                                                                                    61 IO
                                                                                                                        STIGLINGSPAN 73 IO                                                                                                   50
                                                                                                                                                                                                                                                  3                                           Lafarge Plant
        CAPE TOWN                                                                                                       DRIEHOEK
                                                                                                                                                                                      BETHLEHEM
                                                                                                                          63 IO
                                                                                                                                                                                         75 IO
                                                                                                                                                                         Proposed Plant Site
                                                                                                                                                                                                                                                                                                                          te   r
                                                                                                                           KAPSTEEL                       KLEIN
                                                                                                                                                                                                                                                                                 Lichtenburg                           os
                                                                                                                                                                                                                                                                                                                   K
                                                                                                                             81 IO                     WESTERFORD                               Dudfield (Afrisam)                                                                                              To
                                                                                                                                                          78 IO
Source: Sephaku Cement (Pty) Limited                                                                                                       LUSTHOF
                                                                                                                                             79 IO
                        Graphics By:
                         InterAction




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                         Corporate Reporting & Identity Specialists,
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                                Annual Reports, Graphics
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                                                                                                                                                                                                                                                                                                                                            FIGURE 9
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                                                                                                                                                                                                                                                         Sa
                                                                                                                                                         To Springbokfontein                                                                          To
This diagram and the information herein is copyrighted. It may
not be reproduced or transmitted in any form or by any means                                                   25O40’                                     25O50’                                              26O00’                                                                             26O10’
without prior written permission from Venmyn Rand (Pty) Ltd.
                      Trading as Venmyn.                               SephakuCement’09Fig09.cdr
                                                  23

                              A temporary 11 kiloVolts (kV) supply from Eskom will be connected for the
                              construction phase backed up by generator. The Caterpillar mobile 1
                              Megavolt Ampere (MVA) 16 tonne diesel generator will be used as backup
                              electricity supply once permanent Eskom power is connected. Whilst it was
                              noted that Eskom was struggling to keep up with electricity demand in 2008
                              these circumstances will change over time since the government has
                              injected new capital for power stations and the economic downturn has
                              alleviated the power shortage.

                              Due to the potential electricity supply crisis in South Africa, Venmyn
                              highlights this area as a cause for concern. A new 132kV line will be built
                              from the Watershed substation just north of Lichtenburg to the project area.
                              Formal acceptance of the budget quotation for a new supply for the
                              Sephaku Cement substation consisting of 2 x 40MVA transformers by
                              Sephaku Cement and the payment of ZAR61m to Eskom in the form of a
                              letter dated 4th November 2008 should mitigate any problems.

                              The acceptance of the budget quotation and upfront payment shows the
                              commitment of Eskom to supply electricity to the cement plant. Eskom has
                              acknowledged receipt of a bank guarantee of ZAR2.763m from Sephaku
                              Cement. Venmyn suggests that this letter and budget proposal expresses
                              Eskom’s commitment to the project. Venmyn understands that Sephaku
                              Cement and Eskom are in the process of drafting a contractual agreement
                              that needs to be signed between the two parties, in the form of a binding
                              legal document. The question still remains whether Eskom can actually
                              deliver on its commitment for the project.

                    6.1.4.3   Communications
                              No communication facilities are currently in place. However, once the go-
                              ahead for the start of construction has been authorised, necessary
                              communication requirements will be installed.

                    6.1.4.4   Transportation Facilities
                              Sephaku Cement will plan and construct suitable roads leading to the
                              Itsoseng plant, as well as quarry roads and interlinking roads between the
                              quarry and the primary crusher.

                              A traffic study initiated by Sephaku Cement was undertaken in order to
                              determine the impact of the project on the current traffic situation. The
                              following recommendations were made:-
                                •    the proposed development should be considered favourably
                                     from a traffic engineering perspective by the relevant
                                     authorities; and
                                •    the detailed design of the upgrades should be carried out by
                                     a professional engineer with the relevant experience.

                              A capacity analysis indicated that the existing road network would be
                              sufficient to accommodate the expected additional development trips for
                              present and future traffic demand scenarios. However, the condition of the
                              existing roads is deteriorating due to lack of maintenance. The plans for a
                              possible rail link are being researched and various layout options have
                              been reported in the FSR, even though its not part of the first construction
                              phase and hence no capital has been budgeted for this facility.

                    6.1.4.5   Road Transport
                              Sephaku Cement will outsource all road transport operations. The process
                              will be followed by using a formalised request for proposal which will be
                              given to reputable transport operators, of which there are several in South
                              Africa.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                           24

                                    Organisations such as Imperial, Unitrans and Super Group, and Cargo
                                    Carriers are typical examples of large third party transport operators with
                                    several thousand vehicles between them and vast experience in dedicated
                                    transport contract operations. A formal adjudication process will be followed
                                    prior to awarding any contracts to preferred suppliers.

                                    It is Sephaku Cement’s intention to outsource the transportation and
                                    distribution of the product to more than one contractor, thereby reducing the
                                    risk to Sephaku Cement. Sephaku Cement will also ensure that there is
                                    adequate BEE participation when selecting suitable road transport
                                    operators.

                      6.1.4.6       Accommodation, Offices and Auxillary Facilities
                                    Currently there are no buildings in the project area that relate to the project.
                                    A company project office is situated in Lichtenburg and accommodation
                                    facilities will be provided in Lichtenburg for the duration of the construction
                                    phase and beyond. Plans for the location of storage facilities, general
                                    workshops, fire water storage and reticulation facilities with suitable hazard
                                    protection and general buildings and offices were reviewed. All the
                                    buildings on the site forms part of the turnkey plant supply contract.

                      6.1.4.7       Security
                                    A security company will be employed to monitor the entrance gate and a
                                    perimeter fence will be erected as a priority to prevent against unauthorised
                                    access to the facility for safety and security reasons. As the project
                                    develops, more security personnel will be contracted in to keep pace with
                                    the security requirements. Sephaku Cement is currently in the process of
                                    evaluating the security companies.

    6.2    Legal Tenure and Agreement (SR T1.7, SV T1.3)
          The mineral title to the properties Verdwaal 57 IO, Klein Westerford 78 IO, Stiglingspan 73 IO and
          Lusthof 79 IO were held under Prospecting Right issued to Sephaku Development (Figure 10)
          during the exploration phase. Sephaku Development has decided not to undertake further
          prospecting activities on Lusthof. Subsequently, after Sephaku Development lodged the mining
          right application, the DME (Department of Minerals and Energy) has granted the mining right to
          Sephaku Development in terms of Section 23(1) of the MPRDA, on the properties Verdwaal 57
          IO, Klein Westerford 78 IO, Stiglingspan 73 IO (Itsoseng Project) (Figure 10). Information
          disclosed in this report does not constitute a legal opinion, but information available to Venmyn at
          the time of the report.

          6.2.1     Mining Rights on the Itsoseng Project
                    The mining right for the Itsoseng Project was granted in terms of Section 23(1) of the
                    MPRDA. Table 5 outlines the details of the farms under which the mining right refers to
                    as the mining area (Figure 10). Through the issue of this right, the Minister has granted
                    Sephaku Development the sole and exclusive right to mine and recover the minerals in,
                    on and under the mining area for the benefit of the company and to sell the minerals
                    (limestone and clay) subject to the terms and conditions of this mining right, the
                    provisions of the MPRDA and any other relevant law in force for the duration of this
                    right.

          Table 5: Details of Current Mining Right Granted to Sephaku Development
                                                                              DATE                           AREA
                                 FARM            MINERAL         TYPE OF              EXPIRY     LICENCE
           FARM NAME                                                           OF
                                PORTION           RIGHT          LICENCE               DATE      NUMBERS      (HA)
                                                                             ISSUE
                              Remaining
           Verdwaal 57 IO     Extent      and   Limestone,       New                                         2,779
                                                                              th         th
                              Portion 2         dolomitic        Order       15         14
           Stiglingspan 73                      limestone        Mining    December   December   602/2008
                              N/A                                                                            2,025
           IO                                   and       clay   Right       2008       2038
           Klein Westerford   Remaining         (general)
                                                                                                               329
           78 IO              Extent
                                                                                                    TOTAL    5,133




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                  25

                  Sephaku Development must commence with the mining operations within a year from
                  the date on which the mining right becomes effective in terms of Section 23 (5) of the
                  MPRDA, or any later date as may, upon a written request by Sephaku Development, be
                  authorised in writing by the Minister in terms of the MPRDA, failing which this right may
                  be cancelled or suspended. The mining operations in the mining area must be
                  conducted in accordance with the Mining Works Programme and an approved
                  Environmental Management Programme (EMP).

                  Royalties are payable on the sale of the mineral in terms of and upon the
                  implementation of the relevant Act of Parliament, by the Minister of Finance as
                  contemplated in Section 25 (2)(g). A royalty based on a formula on profitability of the
                  limestone operation is expected, it was suppose to be implemented in 2009. Because of
                  the credit crunch and a steep decrease in the commodity prices, the Minister of Finance
                  has postponed the implementation date to 2010.

                  One of the conditions of granting this mining right would be that Sephaku Development
                  shall dispose of all minerals or products derived from the exploitation of the mineral at
                  competitive market prices. This means, in all cases, non-discriminatory prices or non-
                  export parity prices. If the minerals are sold to any entity within the same group, the
                  purchaser must unconditionally undertake in writing to dispose of the minerals and any
                  products produced from the minerals, at competitive market prices.
                  Venmyn has verified that Sephaku Development has complied with the request from the
                  DME that it has had discussions with Etruscan Diamonds (Pty) Ltd (Etruscan), as an
                  interested and affected party, indicating that Etruscan is only interested in prospecting
                  for diamonds and that it has no objection to amending the prospecting right by deleting
                  limestone and clay from the minerals awarded to Etruscan. Venmyn was supplied with a
                  copy of a letter from the DME to Etruscan confirming the application of the proposed
                  change to the “Mineral” definition.

          6.2.2   Environmental Authorisation for Itsoseng Project (SR T5.2)
                  Department of Agriculture, Conservation and Environment (DACE) was satisfied on the
                  basis of information supplied to it by Sephaku Cement and subject to compliance with
                  the conditions of the environmental authorization. The authorization was granted in
                  terms of section 24(2) (a) of the National Environmental Management Act, 1998 (Act
                  No. 107 of 1998) (as amended) and at the same time the EMPR was approved. The
                  Environmental Authorisation for Sephaku Cement entails the construction of:-
                        •    treatment sewage/ effluent plant;
                        •    surface ground storage of flammable/explosive goods, which will
                             consist of 30m3 of diesel and 20m3 of petrol, 50-100m3 of diesel at
                             quarry, gas cylinders at stores and workshops, 40-50m3 of heavy fuel
                             oil at the plant, 40-50m3 of paraffin at the plant;
                        •    an office block with a mast tower for radio communication
                        •    road from Kapsteel road to the plant of approximately 4km;
                        •    cement plant, which will consist of associated infrastructures such as
                             off-loading and storage areas for raw materials, mills, crushers,
                             conveyers, kiln, warehousing, storage and dispatching facilities,
                             offices with parking area; and
                        •    shunting and marshalling yard and railway line up to the border of
                             Verdwaal.

                  The total extent of the farms within which these facilities will be constructed is
                  approximately 4,200Ha. A site visit was carried out by representatives from the DACE,
                  Sephaku Cement and Environmental and Energy Services (EES) on 20th November,
                  2008.

                  Below is the detail of the conditions governing the commissioning of the activities to
                  follow after the granting of the authorization:-
                        •    the final EMP is to the submitted and approved by the DACE and must
                             be kept on-site, be available to the contractors and be complied with
                             at all times;


Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                  26

                        •    fire fighting measures must be put in place;
                        •    visible road signage indicating the presence of heavy vehicles must
                             be place at least 500m before, on either side of mine site access road
                             intersection to Kapsteel Road;
                        •    no surface or ground water must be polluted subject to activities from
                             the site; and
                        •    general waste generated during construction must be stored in
                             appropriate containers and disposed of at the local permitted waste
                             disposal site.

                  The Draft EMP submitted as part of this application must be amended with the
                  inclusions of this Environmental Authorisation condition and the applicant must appoint
                  an Independent Environmental Control Officer (ECO) to ensure that the conditions
                  stipulated in the Environmental Authorisation and the EMPR are adhered to. The name
                  of the ECO should be submitted to the DACE at least two (2) weeks prior to
                  construction commencing.

                  The holder/applicant of the Environmental Authorisation shall be responsible for all the
                  costs necessary to comply with the above condition unless otherwise specified and
                  records relating to compliance and non-compliance with the conditions of this
                  authorization must be kept in good order. Such records shall be made available to the
                  DACE within seven (7) days of receipt of a written request.

          6.2.3   Surface Rights
                  The feasibility document has outlined the status of the mine and surface rights
                  ownership adequately as at the time of reporting (February, 2008). Subsequently,
                  Venmyn was informed that Sephaku Development has had the acquired ownership of
                  the Remaining Extent and Portions 8, 10 and 11 of the Farm Klein Westerford 78 IO
                  registered in the name of Sephaku Development.

                  The Farms Verdwaal 57 IO and Stiglingspan 73 IO are owned by the State and
                  application for use of the land for mining was submitted to the Department of Land
                  Affairs, Mafikeng in November 2007 (Figure 10).

                  A full list of freehold surface rights covered by the prospecting right area was prepared
                  for Venmyn in order to demonstrate that, given the company’s development plan for the
                  mine, the surface right owners can be identified in order to comply with the
                  requirements of the MPRDA.

          6.2.4   Servitudes
                  The FSR does not make mention of any servitudes crossing the property rights area.
                  There do not appear to be any physical obstacles which would prevent the company
                  from conducting its mining and processing and development work. Figure 10 indicates
                  that there is a proposed servitude along the southern boundary of the farm Verdwaal 57
                  IO, for which Sephaku Cement is considering applying Sephaku Cement’s
                  environmental consultant has informed Venmyn that there are no servitudes in the
                  project area.

          6.2.5   Material Agreements
                  A number of agreements between Sephaku Cement and various contractors have either
                  been finalised or in draft format pending final decision once funding has been secured.
                  Contracts for activities that would not impact the construction of the plant will only be
                  finalised in due course. Sephaku Cement has a project time frame which outlines the
                  critical path as to when certain contracts need to be finalised.

                  Cement sales off-take agreements were being discussed by the company with a
                  number of parties. However, these off-take agreements are confidential. Furthermore,
                  most cement sales are generated as spot sales from the factory gate and long-term
                  agreements are exceptional rather than the rule.




Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009
                                                   27

                   Coal is a critical raw material for the cement process and Sephaku Cement can obtain
                   its requirements from a number of conveniently located collieries in South Africa. Whilst
                   there was some concern over national coal supplies in early 2008 after the Eskom
                   power crisis, this situation spurred the development of additional coal mining capacity
                   and continuity of supply is not considered to be a problem for Sephaku Cement. Hence
                   no supply agreements are in place although Sephaku Cement management has
                   confirmed it is in discussion with Exxaro (Exxaro Resources Limited) as coal supplier to
                   ensure no problems emerge in this regard. Exxaro has indicated its intention to supply
                   Sephaku Cement with coal and the final supply agreement will be concluded towards
                   the end of this year.

                   The supply of ash is not considered to be a problem as Sephaku Cement has secured
                   the rights to ash being generated at Kendal Power Station. Iron ore is also an important
                   raw material for the cement process and Sephaku Cement can obtain its requirements
                   from a number of conveniently located magnetite producers in South Africa. There is no
                   shortage of magnetite and only 0.95% of the raw mix will consist of magnetite.

                   As another important raw material, by-product chemical grade gypsum will be obtained
                   from both Protea Chemicals in Rustenburg and the Oranje Mynbou Vervou fertilizer
                   plant in Potchefstroom.

                   No supply continuity issues for this waste material are anticipated. Natural gypsum is
                   scarce and located in remote areas which make it uneconomical for cement production
                   due to high transport costs.

                   Although alumina may be required, it will only be sourced under a worst-case scenario
                   and is not considered a material ingredient.

    6.3    Geology and Mineralisation (SR T4.1, SV T1.5)
          The geology and associated mineralization of the Itsoseng Project area has been demonstrated
          to be suitable for the manufacture of cement. The project area lies in the middle of the largest
          cement producing region in South Africa. The quality of the exploration work and level of quality
          demonstrated in the geochemical analyses has provided comfort that a SAMREC Code compliant
          Mineral Resource and Mineral Reserve can be reported.

          6.3.1    Regional Geology (SR T4.1, SV T1.5)
                   Basement gneiss and Kraaipan Formation greenstone assemblages occur as the oldest
                   rocks in the region and appear as a small outcrop southwest of Mafikeng.
                   Unconformably overlying the basement rocks is the following Palaeozoic succession:-
                         •    Malmani Dolomite Subgroup-dolomites, cherts and subordinate
                              shales;
                         •    Black Reef Formation-quartzite and shale; and
                         •    Ventersdorp Supergroup- mafic lavas and subordinate sediments.
                   Regionally there is an unconformable relationship between the Ventersdorp Supergroup
                   and overlying Black Reef Formation and a conformable relationship between the Black
                   Reef and the overlying Malmani dolomites.

                   The Malmani dolomites have been divided into five formations based on the relative
                   abundance of interbedded chert layers, with the lowermost, middle and topmost
                   formations being chert-poor. In certain parts of the Transvaal Supergroup, primary
                   limestones have been preserved in the Oaktree Formation. Structurally, the Transvaal
                   Supergroup consists of the Black Reef Formation and the Malmani Subgroup formed a
                   basin margin extending through the project area. This succession strikes north-south
                   through the Slurry West area, gently dipping eastward, then almost flat in the
                   Lotlhakane area. It then strikes east-west through Klein Westerford 78I0 where it dips
                   gently northward.Karoo age sediments, in the form of the Dwyka and Ecca Groups, are
                   developed in the vicinity of the tar road linking Lichtenburg and Rooigrond, as well as
                   immediately east of Lichtenburg. The youngest formations are the Lichtenburg
                   calcretes, estimated to be of Late Pliocene age (5 million years) and the Quaternary
                   Kalahari sands in the Mafikeng area.



Independent Competent Persons Report on Sephaku Cement (Pty) Limited May 2009

				
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