Mineral rights status

South African legislation

The Mineral and Petroleum Resources Development Act, No 28 of 2002 (MPRDA), came into effect on 1 May 2004 in South Africa. The MPRDA, its associated Broad–Based Socio–Economic Empowerment Charter for the Mining Industry and its attendant Scorecard, play a significant role in the transformation of the South African mining industry. The act effectively transferred ownership of privately held mineral rights to the state to enable any third party to apply to the Department of Minerals and Energy (DME) for new order prospecting rights or mining rights over these previously privately held minerals. In order to promote security of tenure and to secure existing prospecting and mining rights, affected entities were given five years to submit applications for the conversion of old order mining licences to new order mining rights (by 30 April 2009). Up to two years were granted for the conversion of old order prospecting permits to new order prospecting rights (by 30 April 2006). Furthermore, in respect of unused old order rights, the MPRDA granted to the holder of such a right a one–year exclusive right to apply for a new order prospecting or mining right.

Implats has embraced the principles of transformation as a strategic imperative to reinforce its position as a leading southern African company, making the best possible use of available Mineral Resources. To this effect, applications have been lodged with the DME for the conversion of all old order mining licences and old order prospecting permits, as well as for the granting of new order prospecting rights in respect of unused old order rights at Implats’ South African operations. New order prospecting right applications have also been lodged in respect of previously held minerals.

Conversions of old order mining licences

The approval process for converting the existing four old order mining licences at Impala and the two old order mining licences at Marula is still pending. Both Impala and Marula are in continual discussions with the DME in order to satisfy the approval requirements and specifically regarding the relevant social and labour plans and BEE requirements. Impala’s transaction with Royal Bafokeng Holdings and Marula’s BEE transaction were completed during FY2007, which should fulfil the legislative BEE requirements for conversion at these operations.

At Afplats, an application for a new order mining right has been submitted to the DME following the completion of all the necessary statutory requirements, including a social and labour plan, for the Leeuwkop project. Approval of the Leeuwkop mining right is dependent on the Shareholders’ Agreement with the Bakwena Ba–Magopa traditional community becoming unconditional. Two Rivers submitted its application for conversion of its old order mining licence to a new order mining right in July 2007, together with the requisite social and labour plan. Discussions in this regard are ongoing with the DME.

Conversions of old order prospecting rights

By year–end significant progress had been made with the conversion of old order prospecting rights and the applications for new order prospecting rights.

At Impala Rustenburg, all old order prospecting rights have now been converted to new order prospecting rights. New order prospecting rights were awarded over some 3,788 hectares on portions of the farms Doornspruit and Roodekraalspruit, as well as the farms Diepkuil and Klipgatkop, situated down–dip of the present Impala mining lease boundary. These rights are being vended into a joint venture with Royal Bafokeng Resources Platinum (Pty) Limited; in total some seven new order prospecting rights were granted in the Rustenburg area during FY2007.

Pending the approval of the Leeuwkop mining right application, Afplats’ conversion of its old order prospecting permit over Leeuwkop to a new order prospecting right was granted in FY2007. A new order prospecting right was granted near year–end on certain portions of the farms Kareepoort and Wolwekraal, which are contiguous to Leeuwkop. New order prospecting rights were earlier awarded on the so–called Imbasa–Inkosi extension area, which essentially comprises several portions of the farm Hartebeestpoort B. These are held through Afplats’ subsidiaries in partnership with BEE entities. Discussions are ongoing to collapse these agreements into a single arrangement whereby the envisaged share of Afplats should result in a 53% interest.

At Marula, the new order prospecting right covering a portion of the farm Hackney was also issued during the past financial year. New order prospecting rights were also granted during FY2007 for the Paradys project, while the new order prospecting right for the Tamboti project (including portions on the farms Tweefontein, Kalkfontein and the farm Buffelshoek) was awarded towards the end of the previous reporting period. As at 30 June 2007, the only outstanding new order prospecting rights relate to areas not previously held by Implats.

Zimbabwe

The indigenisation bill requiring 51% local ownership of foreign-owned firms was passed by the Zimbabwean parliament at the end of September 2007. Implats supports the aims of localisation and has planned for this eventuality. The agreement signed with the Zimbabwean government by Zimplats towards the end of FY2006 was significant. In terms of this agreement, a portion of land was released to the Zimbabwean government in exchange for a combination of cash and empowerment credits and a guarantee that all remaining land claims retained for long–term expansion be incorporated into the special mining leases that apply to Zimplats’ current operations; the extension of special mining lease 1 and mining lease 27 were duly executed. This gave Zimplats the confidence to proceed with its expansion. The final empowerment shareholdings in Zimplats in terms of this agreement are still to be determined and several options are being considered.