PETMIN LIMITED Incorporated in the Republic of South Africa ...

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The third plant at Somkhele was successfully commissioned and became fully operational in February/March 2013. The table below reflects the expected normalised profits from on‐going operations for the year ended 30 June 2013. Normalised profit from ongoing operations Unaudited Year ended 30 June 2013 Unaudited H2 2013 % change Reviewed H1 2013 Audited Year ended 30 June 2012 tonnes tonnes tonnes tonnes Anthracite tonnes produced 822,431 528,666 80% 293,765 637,220 Anthracite tonnes sold 802,325 431,763 17% 370,562 546,051 Energy tonnes produced 207,238 207,238 ‐ ‐ Energy tonnes sold 178,559 178,559 ‐ ‐ R'000 R'000 % change R'000 R'000 Turnover 833 490 475 857 33% 357 633 516 303 Results from ongoing operations 140 599 86 411 59% 54 188 141 763 Net finance expense (20 354) (13 245) 86% (7 109) (6 988) Pre‐tax results from ongoing operations 120 245 73 166 55% 47 079 134 775 Pre‐tax Gross Profit Margin (includes 14% 15% 17% 13% 26% corporate costs) Assumed tax at 28% (33 669) (20 486) 55% (13 182) (37 737) Assumed profit after tax from ongoing 86 576 52 679 55% 33 897 97 038 operations Shares in issue 576,908,188 576,908,188 0% 576,908,188 576,908,188 Normalised profit after tax from ongoing operations per share 15.01 9.13 55% 5.88 16.82 The table indicates that normalised profit after tax increased by 55 % from R 33.9 million for the six months to December 2012 to R 52.7 million for the six months to June 2013. Somkhele production increased for the year to 822,431 tonnes of anthracite (2012: 637,220) and 207,238 tonnes of energy product (2012: nil). Second half anthracite production was 528,666 tonnes, up 80% on the first half production of 293,765 tonnes. Somkhele’s net profit margins were reduced to 16% (2012: 26%) for the year ended 30 June 2013 as sales price increases in a subdued market could not compensate for cost increases. North Atlantic Iron Corporation (NAIC) During the year under review, Petmin invested an additional US$6.5m (2012: US$5m) to acquire an additional 8% of NAIC and increase its total shareholding to 25%. NAIC is a highly‐prospective iron sands to pig iron project in Canada’s Labrador province, aiming to become one of the lowest cost pig iron producers in the world. Petmin retains joint management control of NAIC with an earn‐in option to acquire up to 40% of the project for a total US$25m, with a further option to acquire an additional 9, 9% at a market‐related price. The NAIC project made significant progress in the year ended 30 June 2013, with an extensive Preliminary Economic Assessment (PEA) due to be published in the fourth quarter of 2013. During the review period, pig iron has successfully been produced in NAIC’s test furnace under the auspices
of HATCH. The PEA will provide detailed information in respect of geology (resource definition), mining methodology and mine design, processing, smelting, logistics and market analysis. Veremo impairment Petmin has reported a R200m impairment of its investment in the Veremo pig iron project in Mpumalanga, South Africa. The controlling shareholders of Veremo Holdings (Proprietary) Limited (Veremo) were to fund and develop the project to commence production within 48 months of 30 April 2008. Veremo was to distribute to Petmin the larger of a cash payment of R65m per year for three years, or 25% of the profit after tax from Veremo. The first of the three cash payments of R65 million fell due on 28 February 2013 and this payment has not been received. Petmin has entered into discussions with the controlling shareholders regarding the payment due to Petmin. Considering the state of the South African and world economies, Petmin has reviewed the project valuation parameters and recorded an impairment expense of R200m at 30 June 2013. The carrying value of the investment in Veremo prior to the impairment was R497m. Petmin’s initial investment in the project amounted to R95m. The difference between the carrying value and the cost was an International Financial Reporting Standard (IFRS) accounting adjustment on acquisition. Neither the IFRS accounting adjustment nor the impairment has any cash effects. The revised carrying value of R297m is still materially in excess of the original cost of the investment. Significant progress has been made at Veremo and development capital of R112 million has been invested to date by the controlling shareholders and the previous owners. MCC International Incorporation Limited (MCC) was commissioned by Veremo 18 months ago to perform a feasibility study and, during the year under review, finalised their report on the project and concluded that it is economically viable. The Veremo management team are in the process of evaluating and reviewing this report. Furthermore, Veremo is awaiting the approval of a new order mining licence application. Intention to de‐list and terminate Petmin’s secondary listing on the Alternative Investment Market (AIM) of the London Stock Exchange (LSE) Petmin is reviewing its costs across the group, including the reduction of costs at the corporate office and, as part of this process, Petmin intends to terminate its secondary listing on the AIM in London. More detailed information as well as advice to shareholders regarding the intention to delist from AIM will be announced in due course. Over the past twelve months, the average daily volume of Petmin shares traded on AIM was 10,820 compared to 1,264,977 shares on the JSE. Whilst Petmin remains cognisant of the interest of all shareholders, the rationale for delisting on AIM is informed by the low volume of trade in the company`s shares on the AIM, with the UK register comprising less than 3% of the overall total shareholding. The Company has determined that the secondary listing is administratively intensive and costly, and is of the view that the volume of trade over the past few years does not sufficiently warrant the expense of maintaining a secondary listing on the AIM.
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PETMIN LIMITED Incorporated in the Republic of South Africa ...

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