Alexkor Limited

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Alexkor Limited Parliamentary Portfolio
Committee- DPE 20 October 2004
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INDEX

• Location
• Corporate Structure
• Financial Review
• Challenges
• Mining
• Litigation
• Way Forward

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LOCATION
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Northern Cape Semi desert with limited
agricultural potential Small seasonal tourist
industry Local economy mineral driven
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CORPORATE STRUCTURE
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CORPORATE STRUCTURE
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FIANCIAL REVIEW
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Results

• Compared to FY03
• Earnings per share up 570 to 71.5 cents
• Return on shareholders funds of 89
• Operating expenses well contained up 0.2 to R238
  million
• US price per carat up 9
• Diamond production up 0.6 to 79,725 carats
• US exchange rate down 22
• Cash and cash equivalent at year end up 6 to
  R71.4 million
• Profit margin rose from 2.14 to 13,50
• The current ratio at 14.96
• Diamond production income decreased from R265.2
  million to R219.79 million.
• Net asset value per share improved from 27.2 cent
  to 90.36 cents.
• ABT reduced the operating loss by 98 to R82,276
  from R5.02 million
• Capex (Replace of property, plant and equipment)
  up 43 to R15.9 million
• Exploration spend up 497 to R13.5 million
• Net tangible value up to 358 cents/share from 316
  cents/share

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NET PROFIT/(LOSS)
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Diamond prices achieved
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Net operating expenses(R millions)
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Available Cash as at 30 June 2004
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RevenueTotal Revenue R264 million
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ABM operating profit
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MINING
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Marine Mining
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5 Year Carat Plan
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Revenue/Profit Plan
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CHALLENGES
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Major Challenges

• Massive replacement Capex
• Extensive exploration on land
• Land Claims case
• Litigation
• Long term liabilities

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Timeline

• Timeline
• 18 Dec 2003, DPE Min, N.C Premier, Dep. Min Land
  Affairs RV community LRC
• 23 Dec 2003, RV Community submitted proposal to
  Government.
• 31 March 2004 Government responds to RV
  settlement proposal.
• LCC 1st 2 nd April 2004
• New DPE Minister _at_ Alexkor 15/07/2004
• Main Hearing 2005

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RV Settlement Proposal

• 90 of Alexkor Shareholding
• 10 Transfer to NAMDA
• Restoration of the rights in the subject land
• Ownership of subject land
• The right to minerals in the subject land.
• Exclusive beneficial use occupation of land.
• Compensation for minerals extracted
• Repair of and compensation for environmental
  damage
• NB Undue burden on the governments LTD resources.

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Government Settlement Proposals

• View to attain sustainable settlement of his
  matter.
• Government seeks to honour and comply with the
  letter and spirit of the Constitutional Court
  Decision.
• End-State Indicated Shareholding
• Government 20
• RV 65 (51 allocated to cap injection
  through SEP)
• Employees 5
• GNC/NAMDA 10
• 
  100

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Richtersveld Community
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ESOPS
NAMDA/ GNC
RC Company (Land and Mineral Rights Ownership)
Government
5
10
65
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Alexkor Company Retains management
skills Retains mining (land and marine) activities
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Rationale

• Controlling interest to an SEP
• Mitigate against over reliance on Government fund
• Viability of Mining Activities needs a capital
  injection of R500 million
• SEP Infuse technical strategic expertise to
  the company
• Government
• Oversight Role S T
• Exit Strategy L T
• Implementation Spec Period
• Alexkor to invest in other sustainable economic
  development models
• Government cannot provide seed funding
• Participation by RV _at_ BOD level in carving the
  final end state of Alexkor Ltd

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Capital additions vs disposals
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Exploration costs (R millions)
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LITIGATION
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NABERA / ALEXKOR
MANAGEMENT FEE AND CHARGEABLE COSTS
REMUNERATION FOR VALUE ADDED
Nabera claimed R3.1 million
Alexkor put R6.1 Million in trust
Snowden jointly appointed
¹/? of R357 million
Internal Auditors
Nabera owes R826,603
R119 million
Misapplication/Inconsistent application of
agreed Valuation Methodology
Mediation
Parties are prepared to talk
Technical/Legal advice
Will oppose claim
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WAY FORWARD
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Long term liabilities

• Provision for post medical retirement aid
  decreased by R5 million. Total liability is R86.5
  million.

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Long term liabilities (continued)

• EMPR, Vol3,CSIR,1994 R17.58 million
• _at_ June 30, 2004 escalated R32.93 million
• _at_ June 30, 2004 Rehabilitation Trust Fund R8.8
  million
• _at_ October 2003, monthly contribution increased
  from R100 000 to R230 000
• Prescribed formula in the Aide-Memoire of DME
  (R201,518)
• Reg 5.16.3 of Mineral Act 50 of 1991
• SPC determining the quantum
• Completion towards end of first semester FY05