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Buffalo Coal Corp - Quarterly Results - Managements Discussion And Analysis

Release Date: 12/11/2015 17:42:00      Code(s): BUC     
BUFFALO COAL CORP.
(previously Forbes & Manhattan Coal Corp.)
(Registration number: 001891261)
(External company registration number: 2011/011661/10)
Share code on the Toronto Stock Exchange: BUF
Share code on the JSE Limited: BUC
ISIN: CA1194421014
"Buffalo Coal" or "the Company"

MANAGEMENT'S DISCUSSION AND ANALYSIS
For the three and nine months ended September 30, 2015
(Presented in South African Rands)

BASIS OF PREPARATION

The following Management's Discussion and Analysis ("MD&A") relates to the financial condition and results of
operations of Buffalo Coal Corp. and its subsidiaries ("we", "our", "us", "BC Corp", the "Company" or collectively the
"Group") for the three and nine months ended September 30, 2015 and should be read in conjunction with the
audited annual consolidated financial statements for the years ended December 31, 2014 and February 28, 2014 and
the unaudited and condensed interim consolidated financial statements for the three and nine months ended
September 30, 2015. The condensed interim consolidated financial statements ("Interim Results") and related notes
have been prepared in accordance with International Financial Reporting Standards ("IFRS") and are in compliance
with IAS 34, Interim Financial Reporting. Certain non-IFRS measures are discussed in this MD&A which are clearly
disclosed as such. Additional information and press releases have been filed electronically through the System for
Electronic Document Analysis and Retrieval ("SEDAR") and are available online under the Buffalo Coal Corp. profile at
www.sedar.com.

This MD&A reports our activities through November 11, 2015 unless otherwise indicated. References to CYQ3 2015,
CYQ2 2015 and CYQ1 2015 mean the three months ended September 30, 2015, June 30, 2015 and March 31, 2015,
respectively. References to CY2014 and PY2014 mean the financial years ended December 31, 2014 and February 28,
2014, respectively. References to CYQ3 2014, CYQ2 2014 and CYQ1 2014 mean the three, three and four months
ended December 31, 2014, September 30, 2014 and June 30, 2014, respectively and references to PYQ4 2014 and
PYQ3 2014 mean the three months ended February 28, 2014 and November 30, 2013. A reference to CY2015 means
the financial year ending December 31, 2015.

From March 1, 2014, the Company and its subsidiaries changed their financial year-ends from February 28 to
December 31.

Unless otherwise noted all amounts are recorded in South African Rands ("R" or "Rands"). References to "C$" means
Canadian Dollars and to "US$" means United States Dollars. Amounts stated in Canadian Dollars or US Dollars are
translated at the date of transaction, unless otherwise stated. These other amounts stated in Canadian Dollars were
translated at C$1:R10.4609 and amounts in US Dollars were translated at US$1:R14.0282.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING INFORMATION

This MD&A contains forward-looking information under Canadian securities legislation. Forward-looking information
includes, but is not limited to, information with respect to the Company's expected production from, and further
potential of, the Company's properties; financial and operational planning and strategic goals; the Company's ability
to raise additional funds; the timing and amount of advances under existing loan facilities; the future price of
minerals, particularly coal and overall market conditions for resource issuers; the estimation of mineral reserves and
mineral resources; conclusions of economic evaluations; the realization of mineral reserve estimates; the timing and
amount of estimated future production; costs of production; capital expenditures; success of exploration activities;
mining or processing issues; currency exchange rates; government regulation of mining operations; labour relations
and future collective agreements; and environmental risks. In general, forward-looking information can be identified
by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "budget", "scheduled",
"estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words
and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken",
"occur" or "be achieved". Forward-looking information is based on the opinions, estimates and assumptions of
management as of the date such statements are made and the Company can give no assurance that such opinions,
estimates and assumptions are correct. Estimates regarding the anticipated timing, amount and cost of exploration,
and development and production activities are based on assumptions underlying mineral reserve and mineral
resource estimates and the realization of such estimates. Capital and operating cost estimates are based on extensive
research of the Company, purchase orders placed by the Company to date, recent mining costs and other factors.

Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause the
actual results, performance or achievements of the Company to be materially different from any future results,
performance or achievements expressed or implied by the forward-looking information. Such factors include: risks
relating to the requirement for additional capital; production estimate risks; the price of coal; labour and
employment risks; cost estimate risks; mineral legislation risks; title to mineral holdings risks; power supply risks; risks
relating to the depletion of mineral reserves; litigation risks; South Africa country risks; infrastructure risks;
environmental risks and other hazards; risks relating to dependence on key personnel; dependence on outside
parties; exploration and development risks; risks relating to foreign mining tax regimes; insurance and uninsured
risks; competition risks; the Company's securities may experience price volatility; risks relating to owning foreign
assets; currency fluctuation risks; and the Company's directors and officers may have conflicts of interests. Although
management of the Company has attempted to identify important factors that could cause actual results to differ
materially from those contained in forward-looking information, there may be other factors that cause results not to
be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate,
as actual results and future events could differ materially from those anticipated in such information. Accordingly,
readers should not place undue reliance on forward-looking information. The Company does not undertake to update
any forward-looking information, except in accordance with applicable securities laws.

OVERVIEW OF THE COMPANY

BC Corp is a coal mining and supply company operating in South Africa. The Company is listed on the Toronto Stock
Exchange ("TSX") and the securities exchange operated by the JSE Limited ("JSE"). BC Corp trades under the symbol
"BUF" on the TSX and "BUC" on the JSE.

In July 2010, the Company completed an agreement to acquire Buffalo Coal Dundee Proprietary Limited ("BC
Dundee"), a South African company, with an interest in coal mines in South Africa ("BC Dundee Properties"). The BC
Dundee Properties comprise the operating Magdalena bituminous mine ("Magdalena") and the Aviemore anthracite
mine ("Aviemore"). BC Dundee's Magdalena opencast operation reached the end of its life during the quarter ended
March 31, 2015 and the Group is now engaged only in underground coal mining.

BC Dundee indirectly holds a 70% interest in the BC Dundee Properties through its 70% interest in Zinoju Coal
Proprietary Limited ("Zinoju"), which holds all of the mineral rights with respect to the BC Dundee Properties. The
remaining 30% interest in Zinoju is held by South African Black Economic Empowerment ("BEE") partners. BEE is a
statutory initiative on behalf of the South African government, enacted to increase access by historically
disadvantaged South Africans ("HDSA") to the South African economy by increasing HDSA ownership in South African
enterprises.

Magdalena is located 22 kilometers from the town of Dundee in KwaZulu-Natal, South Africa and encompasses
approximately 1 844 hectares. As reported in the National Instrument 43-101 report as at October 1, 2012,
Magdalena, which until the quarter ended March 31, 2015 consisted of the Magdalena underground mine and the
Magdalena opencast operation, had an estimated mineable coal resource, all in the measured resource category, of
an estimated 50.29 million tons of in situ coal with an estimated volume of 33.52 cubic meters. From October 1, 2012
to September 30, 2015, 3.3 million tons of run of mine ("ROM") was extracted from Magdalena at an average
extraction rate of 50%.

The Magdalena underground mine has an estimated total production capacity of 100 000 tons of bituminous coal per
month. Additional sections have been introduced into the underground mine to maintain this capacity with the
opencast operation having closed in the quarter ended March 31, 2015. One of the Company's two processing plants
is located on the Magdalena property.

Aviemore is located eight kilometers from the town of Dundee in KwaZulu-Natal and encompasses approximately
5 592 hectares. As reported in the National Instrument 43-101 report as at October 1, 2012, Aviemore had a
mineable measured and indicated coal resource of 35.35 million tons of in situ coal with an estimated volume of
23.57 million cubic meters. From October 1, 2012 to September 30, 2015, 1.3 million tons of ROM was extracted
from Aviemore at an average extraction rate of 55%.

The Aviemore underground mine has an estimated production capacity of 45 500 tons of anthracite per month.

BC Dundee's head office is located in the town of Dundee and is known as the Coalfields site. The second processing
plant is located at Coalfields, as is the Company's rail siding.

BC CORP RESOURCES

Below is an extract of the National Instrument 43-101 Resource and Reserve statement dated October 1, 2012 as
disseminated on SEDAR. Mr. SP Muller (B.Eng (Mining), M.Eng (Project Management), Pr.Eng, SAIMM), a qualified
person as defined in National Instrument 43-101 has read and approved the scientific and technical information
included in this table. The table sets forth the mineable coal resource estimate for the BC Dundee Properties.

                                    Mineable Coal Resources for the BC Dundee Operations as at October 1, 2012
                                 
                                   Resource       Resource
                                       Seam Classification      Seam    Volume        RD     Tonnage       Ash   Fixed        CV      Inherent                                           
Area             Seam                 Width                    Width                                            Carbon                moisture     Sulphur    Volatiles    Yield            
                                                                                                                                              
                                                                                                                                             
                                  Cut-Off m       Category          m     Mm(3)    t/m(3)          Mt          %      %      MJ/Kg            %           %            %        %
Magdalena
                 Gus                    0.8       Measured       1.90      8.48       1.5       12.72     14.89   65.79     29.46         1.23        1.62        17.76    77.52
Magdalena        Alfred                 0.8       Measured       2.10     10.72       1.5       16.08     15.62   66.21     30.16         1.39        1.48        16.76    79.02      
Underground      Combined               0.8       Measured       4.10     13.98       1.5       20.97     14.77   67.84     29.25         1.39        1.55        15.27    82.98                 
                                    Total Measured                        33.18       1.5       49.77     15.08   66.79     29.60         1.35        1.55        16.39    80.31
                 Gus                   0.8        Measured       1.90      0.10       1.5        0.16     22.35   54.28     25.63         1.83        1.68        21.52    89.01
Magdalena        Alfred                0.8        Measured       2.00      0.24       1.5        0.36     26.58   51.97     23.53         1.93        1.90        19.51    95.04
Opencast                            Total Measured                         0.34       1.5        0.52     25.30   52.67     24.16         1.90        1.83        20.12    93.22

                 Gus                    0.8        Inferred      1.50      1.97       1.5        2.96     21.24       -     22.11         0.98        1.84        13.19      100
Hilltop          Alfred                 0.8        Inferred      1.60      5.64       1.5        8.46     21.07       -     22.24         0.94        1.86        13.47      100
                                     Total Inferred                        7.61       1.5       11.42     21.11       -     22.21         0.95        1.85        13.40      100
Aviemore
Aviemore Mine    Gus                    0.8        Measured      1.80      0.82       1.5        1.23     13.34   77.76     30.15         1.84        2.01         7.19    74.31
                 Total Measured                                            0.82       1.5        1.23     13.34   77.76     30.15         1.84        2.01         7.19    74.31
Leeuw Mining &
Exploration      Gus                    0.8       Indicated      1.72      9.72       1.5       14.58     13.55   77.53     29.00         2.21        1.80         6.73    63.51
Zinoju Coal      Gus                    0.8       Indicated      1.72     13.03       1.5       19.54     13.46   75.51     28.93         2.59        1.60         8.28    57.00
                 Total Indicated                                          22.75       1.5       34.12     13.50   76.37     28.96         2.43        1.69         7.62    59.78
                 Total Measured & Indicated                               23.57       1.5       35.35     13.49   76.42     29.00         2.41        1.70         7.60    60.29

Leeuw Mining &
Exploration      Gus                    0.8        Inferred      1.72      1.09       1.5        1.63     14.97   74.78     27.29         1.77        1.41         8.50    55.98
Zinoju Coal      Gus                    0.8        Inferred      1.72      8.99       1.5       13.48     14.14   74.72     28.85         2.49        1.71         8.64    59.60
                 Total Inferred                                           10.08       1.5       15.11     14.23   74.75     28.69         2.41        1.68         8.63    59.23

Notes:
1. Coal Resources are inclusive of Coal Reserves.
2. Coal Resources are inclusive of tons mined since the effective date.
3. Tons and qualities have been rounded and this may result in minor adding discrepancies.
4. The coal qualities are stated for the ash content ("Ash"), fixed carbon, calorific value ("CV"), inherent moisture, sulphur content ("Sulphur"),
   volatile matter ("Volatiles") and yield.
5. The coal qualities assays were determined on an air-dried moisture basis.
6. A 15% geological loss has been applied to the Gross in situ tons.
7. The declared tabulation of coal resources prepared by Minxcon has been prepared in accordance with the NI 43-101 reporting code and is
   compliant with this Code.
8. A cut-off seam thickness of 0.8 m has been applied to the Gross in situ Coal Resource statements(3).                                                                                            
9. The Coal Resources for the Magdalena and Aviemore Areas are calculated on 1.7 t/m(3) float density coal quality values and the Hilltop Coal
   Resources are calculated on Raw coal quality values 18.
10.The coal density for all areas is 1.5 t/m(3)
11.The Hilltop data received from the Client did not include fixed carbon values.
12.The mining right to Leeuw Mining & Exploration properties has been transferred to Zinoju.


The following table depicts the amount of coal mined since the date of the National Instrument 43-101 Resource and
Reserve statement dated October 1, 2012. The information in this table was read and approved by Mr. SP Muller.

From October 1, 2012 to September 30, 2015, the following run of mine ("ROM") was extracted (1):
- Magdalena opencast (t):       689 377
- Magdalena underground (t):  2 650 341
- Aviemore (t):               1 345 466

(1) At an average extraction factor of 50% for Magdalena and 55% for Aviemore mine.

CONSOLIDATED OPERATIONAL AND FINANCIAL HIGHLIGHTS FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2015

The operational highlights and summarized financial results for the quarter ended September 30, 2015 are presented
below as compared to the quarter ended September 30, 2014 and the quarter ended June 30, 2015. The Group
achieved ROM production of 409kt, saleable production (excluding calcine) of 262kt and sales of 243kt for the
quarter ended September 30, 2015.

                                                    9 months        10 months        3 months       3 months     3 months
                                                       ended            ended           ended          ended        ended
                                               September 30,    September 30,   September 30,  September 30,     June 30,
Operational results                                     2015             2014            2015           2014         2015
ROM (t)                                            1 403 678        1 176 940         408 570        377 266      522 266
- Aviemore (t)                                       364 929          377 521         124 563        118 989      121 135
- Magdalena (t)                                    1 038 749          799 419         284 007        258 277      401 131

Saleable production (excluding calcine) (t)          780 013          718 744         261 953        227 318      281 119
- Anthracite (t)                                     229 523          229 032          79 288         71 175       77 429
- Bituminous (t)                                     550 490          489 712         182 665        156 143      203 690

Yield on plant feed (excluding calcine) (%)            55.4%            60.8%           57.1%          61.0%        57.0%

Sales (t)                                            765 154          809 507         243 131        270 838      276 842
- Anthracite (t)                                     167 833          252 454          47 475         75 288       52 169
- Bituminous (t)                                     570 769          517 532         188 688        179 057      216 279
- Calcine (t)                                         26 552           39 521           6 968         16 493        8 394

Inventory - saleable tons                             67 429           69 304          67 429         69 304       44 849
Financial results                                      
Revenue (R'millions)                                   503.8           572.0            159.9          188.5        179.2
EBITDA (R'millions) (*)                               (56.7)          (38.4)           (24.2)         (21.0)       (12.5)
Average selling price per ton sold (R)                   658             707              658            696          647
Cash cost of sales per ton (R)                           665             683              696            665          636
Cash (utilized in)/generated from operating
activities (R'millions)                               (12.5)          (65.6)              2.0        (19.7)        (16.6)
Cash utilized in investing activities
(R'millions)                                          (43.0)          (68.7)           (11.5)        (56.8)        (12.3)
Cash generated from financing activities
(R'millions)                                            58.6           125.2              1.1          72.4           0.0
CAD:ZAR (average)                                       9.74            9.79             9.93          9.89          9.83
USD:ZAR (average)                                      12.27           10.68            12.98         10.76         12.09

(*) See Non-IFRS Performance Measures section of this MD&A.

OVERVIEW OF THE PERIOD AND OUTLOOK FOR THE GROUP

Markets

The Group supplies high quality bituminous coal and anthracite to both the export and domestic markets.

Bituminous

The API 4 coal price index was around US$66 per ton at the end September 2014, and has decreased to around
US$52 per ton at the end of September 2015. Although, the Rand weakening against the US Dollar from R10.76 for
the quarter ended September 30, 2014 to R12.98 for the quarter ended September 30, 2015 has countered some of
this decrease in the API 4 index, the Group has been impacted by the declining price. Over the past nine months,
approximately 20% of the Group's sales have comprised export bituminous sales which have been priced against the
API 4 coal price index. The Group significantly mitigated its exposure to this index based risk through the restructuring
of one of its major bituminous export contracts to a fixed price contract during PY2014, however, there still remains a
risk on future export sales to current and new potential customers. The short- to medium-term outlook for the API 4
coal price index still remains in backwardation with the forecasts at around US$49-US$50 for the next quarter.

On the domestic front, the bituminous coal market has remained steady, with a stable outlook for the upcoming year.
Domestic coal supply contracts are typically structured at a negotiated coal price over a twelve month period.

Anthracite

The anthracite market is highly correlated with the metals industry where anthracite is primarily used as a reductant.
South Africa is also a large steel producer and continues to be a net importer of metallurgical coal and coke products.
South Africa is one of the world's largest ferrochrome and ferroalloy producers, however as these markets are under
severe pressure, the domestic demand for anthracite has weakened over the past few quarters. Anthracite supply
contracts are typically structured at a negotiated price.

Due to the current economic climate, the Group is focusing all efforts on securing new market opportunities for both
anthracite and bituminous products.

Operational
Restructuring of Business

Over the past two years, BC Dundee has been operating under increasingly difficult financial circumstances. This has
been as a result of a number of factors, but principally arising from the underperformance by Magdalena
underground in CY2014, the end of life of the Magdalena opencast operation, the reduction in export coal prices over
this period and the recent significant weakening in the domestic anthracite market.

BC Corp has undertaken a number of restructuring initiatives to support and turn-around the current financial
position of the business. This restructuring has taken place throughout the Group, and has included the following
initiatives:

- The effective closure of the entire Canadian head office and the termination of service contracts with a large
  number of senior management staff in both Canada and Johannesburg resulting in net savings of
  approximately R15.0 million per annum.

- Restructuring, in the form of dismissals in terms of Section 189A of the South African Labour Relations Act, No
  66 of 1995 ("LRA"), in order to ensure the continuation of employment for the majority of BC Dundee's staff
  whilst enabling the sustainability of the business. This restructuring was implemented by BC Dundee in March
  2015 resulting in an approximate 25% reduction in the labour complement at a total cost of R13.7 million.

- Raising a total of US$29.0 million (approximately R406.8 million) from Resource Capital Fund V L.P. ("RCF"), to
  support the Group's working capital requirements and to implement a capital expenditure program to
  replace old and unreliable equipment as well as steps taken to raise additional funding during the fourth
  quarter of 2015.

- Restructuring of BC Dundee's debt facilities with Investec Bank Limited ("Investec") to provide cash relief to
  BC Dundee in terms of servicing and covenant reporting requirements until December 2015. In addition, the
  Company is in negotiations with Investec to raise additional funding during the fourth quarter of 2015.

- Ongoing cost cutting initiatives implemented in all aspects of the Group over the past two years as markets
  have deteriorated.

- In May 2015, BC Dundee initiated a second Section 189A restructuring process focusing on Magdalena, which
   was concluded in October 2015 at a total cost of R7.0 million.

- In conjunction with the second restructuring process, Zinoju and BC Dundee signed a contract mining
  agreement with STA Coal Mining Company Proprietary Limited ("STA") to mine four sections at Magdalena,
  effective October 31, 2015, for an initial term of three years, with the option for a further two year extension
  if agreed to by all parties. (Refer below regarding further detail of the new contract entered into between
  Zinoju, BC Dundee and STA).

Refer to Legal proceedings below with regards to the application brought by the Association of Mineworkers and
Construction Union ("AMCU") against BC Dundee and Zinoju in relation to the Section 189A process concluded in
March 2015.

Despite the numerous challenges which BC Corp has faced over the past two years, with the support of RCF and
Investec, the Group believes it is able to move forward despite continued depressed markets.

Agreement with STA to perform contract mining services at Magdalena

Zinoju and BC Dundee have signed a contract mining agreement with STA, effective October 31, 2015, to mine four
sections at Magdalena at a fixed rate per ton. STA has employed the majority of the employees who were retrenched
by BC Dundee, resulting in minimal staff becoming redundant. A provision for retrenchment costs of R6.4 million
(excluding leave pay which was previously provided for) was recognized during the quarter ended June 30, 2015, of
which R4.7 million was paid subsequent to September 30, 2015.

BC Dundee and Zinoju have also entered into an agreement to sell two continuous miners to STA. The selling price
will be settled by STA by way of offset against amounts due to STA in terms of a previous contract mining agreement
between the parties, and the balance by way of a reduction in the contract mining rate going forward, until such time
as the selling price has been settled in full.

Zinoju, BC Dundee and STA have further entered into an agreement with BC Corp, in terms of which the Company is
entitled, at its election, to settle an agreed portion of STA's contract mining fees through the issuance of Common
Shares of BC Corp ("Common Shares") to STA ("the Equity Portion"). The Equity Portion will be calculated monthly
based on production levels at Magdalena, with the Common Shares priced at the higher of the 20-day volume
weighted average price ("VWAP") per Common Share, and any minimum pricing restriction applicable to the stock
exchanges on which Buffalo is listed. The Common Shares will be issued to STA at the end of each calendar quarter,
subject to regulatory approvals. The parties have agreed that the percentage of Common Shares held by STA will not
exceed 9.9% of the Company's outstanding shares at any point in time.

STA also has the right to appoint a nominee to act as a non-executive director on the board of directors of BC
Dundee.

BC Dundee will continue to mine Aviemore, as well as to operate the Company's two washing plants and siding.

Other

As announced on August 4, 2015, a fall of ground ("FOG") occurred at Magdalena. No employees were affected by
the incident, and the partial loss of raw coal production lasted approximately two weeks for the first affected section
and just under a month for the second affected section. The FOG occurred in a worked out area of the mine which
was being used as an access way for the conveying of coal from two of the four production sections to surface. The
FOG necessitated that the Company accelerate its planned relocation of a portion of the conveyor infrastructure to a
new surface access adit. This adit had been recently established for that purpose and had been used for several
months already for the transport of working crews to the two underground sections. The new adit has been designed
to significantly shorten the underground infrastructure to surface and installation of the new conveyor belt
infrastructure has been completed.

In early September 2015, a FOG occurred in two STA mining sections, being mined by STA at the time, and as a result,
the sections were abandoned and moved to new sections of the mine. The first section came back into production in
mid-September 2015 with the second section being brought back into production in late September 2015.
Production at the two sections has been relatively sluggish due to poor roof conditions as well as due to capacity
constraints on the conveyor belts as the two STA sections were utilising the same belt conveyors as the two sections
mined by BC Dundee. As a consequence of roof conditions differing to those normally experienced in certain sections
of the mine, the Company has engaged the services of an additional independent certified rock mechanic in order to
ensure that mining operations continue as safely as possible. The conveyor belt constraints have subsequently been
addressed through the establishment of the appropriate infrastructure to handle the necessary production volumes,
and an improvement has been noted in production.

As a result of good production during the quarter ended June 30, 2015 and before the two FOGs occurred, the Group
had excess stock available to service customers for a period, which to a certain extent mitigated the impact of the
reduced production.

RCF loan facilities

On March 27, 2015, BC Corp closed a second amended and restated RCF agreement ("Second Amended RCF
Agreement") and secured an additional US$4.0 million loan facility which was advanced as a bridge loan ("2015
Bridge Loan") and which, on June 19, 2015, upon the Company receiving shareholder approval at the annual and
special meeting of shareholders, rolled over into the US$25.0 million loan facility ("Existing RCF Convertible Loan"),
under the same terms and conditions except for the amendments to the interest rate and conversion price on the
full US$29.0 million facility ("RCF Convertible Loan").

The 2015 Bridge Loan bore interest at a rate of 15% per annum, payable on the maturity date which was the earlier of
the date on which the shareholder approval was received or June 30, 2015.

No establishment fees were incurred on the 2015 Bridge Loan. Upon receipt of the shareholder approval, interest
became payable in Common Shares at a price per share equal to the 20-day VWAP as at the date the payment was
due. In addition, the interest rate on the RCF Convertible Loan was increased to 15% per annum and the conversion
price was decreased to C$0.0469, a 25% discount to the 5-day VWAP as at January 30, 2015.

As of September 30, 2015, the Company was fully drawn on the US$29.0 million (R406.8 million) RCF Convertible
Loan.

Legal proceedings

As mentioned above, AMCU brought an application against BC Dundee and Zinoju in the Labour Court of South Africa
pertaining to the Section 189A restructuring process implemented by BC Dundee during the quarter ended March 31,
2015. The matter was heard in Court on April 14, 2015, and on April 24, 2015, the LRA dismissed the application
brought by AMCU with costs. An application for leave to appeal was lodged by AMCU on April 29, 2015 which was
heard by the Labour Appeal Court on November 4, 2015. The outcome of the hearing is still pending.

On April 10, 2015, BC Dundee received notice that AMCU had referred a dispute to the Commission for Conciliation,
Mediation and Arbitration ("CCMA") in respect of the substantive fairness of the S189A restructuring process
implemented during the quarter ended March 31, 2015, which was heard on May 18, 2015. The CCMA referred the
matter to the Labour Court. AMCU had until August 17, 2015 to submit this dispute, however no submission was
made before this deadline and this process has therefore been concluded.

On April 20, 2015, the trustees of the Avemore Trust brought an application in the High Court of South Africa against,
among others, the South African Minister of Mineral Resources ("the Minister"), BC Dundee and Zinoju in respect of
Mining Right 174 ("MR174"). In terms of the application, the trustees of the Avemore Trust challenged the decision
by the Minister, subsequent to an internal appeal process concluded during September 2014, to grant a converted
mining right to BC Dundee and to grant consent for the cession of the converted mining right to Zinoju. There have
been various settlement offers between the parties, but should settlement not be reached, BC Dundee and Zinoju
intend to oppose the application.

On August 27, 2015, notice was received from the Minister that Mining Right 301 ("MR301") had been withdrawn as
well as the withdrawal of the approval by the Regional Manager of the Environmental Management Plan in respect of
MR301. The reasons given by the Minister for the withdrawal of the right are procedural issues in respect of the
award process, in relation to an objection received from Avemore Trust in October 2013 against the awarding of the
right. On August 28, 2015, the Company instituted proceedings against both the Minister, as the first respondent, and
the Avemore Trust, as the second respondent, to seek urgent relief. The urgent application was heard on September
15, 2015 and relief was granted as requested for the Ministerial decision to be of no force and effect, to interdict the
Minister from awarding MR301 to any other party and for the Company to continue to mine in terms of MR301. A
review application has subsequently been instituted by the Company to obtain final relief in the form of an order
setting aside the Ministerial decision, and the Company's legal team, including Senior Counsel, has indicated a strong
likelihood of the review application being successful.

TSX delisting review

The TSX advised the Company that it had been placed under a remedial delisting review in terms of whether the
Company meets the continued listing requirements of the TSX in the following areas: (i) the Company's financial
condition and operating results, and (ii) the market value of publicly held listed securities of the Company. The
Company had an initial period of 120 days to comply with all requirements of the TSX for continued listing. The
Company subsequently applied to voluntarily delist its Common Shares from the TSX and is in the process of submitting an
application for the listing and posting of the Common Shares on the TSX Venture Exchange (the "TSXV").

It is expected that the Common Shares will be delisted and therefore no longer trade on the TSX with effect from the
end of November 2015. In addition, the Company will make an application to the Johannesburg Stock Exchange ("JSE")
to transfer its JSE listing from the Main Board of the JSE to the Alternative Exchange in order to maintain its South
African listing as a secondary listing.

Changes in directors and officers

On July 23, 2015, the Company announced the resignation of Ms. Lorraine Harrison as Corporate Secretary of BC
Corp, effective July 24, 2015. On that date, the Company appointed Ms. Sarah Williams as Corporate Secretary of BC
Corp.

On September 1, 2015, the Company announced the appointments of Mr. Edward Scholtz and Mr. John Wallington to
the Board of Directors. The appointments of Mr. Scholtz and Mr. Wallington follow the resignations of Mr. John
Dreyer and Dr. Michael Price who stepped down as directors of the Company.

STRATEGY AND FUTURE PLANS FOR THE DECEMBER 2015 FINANCIAL YEAR

The Group's long term vision is to build a high quality bituminous and metallurgical coal mining and supply company.
Future production growth is set to be twofold, firstly through expansion and optimization of the existing BC Dundee
operations and secondly through acquisition in the Southern African region.

In the current economic climate, compounded by the impact of the events of CY2014, including the flooding incident
at Magdalena underground, the tragic fatality at Aviemore and the necessity of having to initiate various
restructuring processes, the short term strategy of the Group is an internal focus on a turn-around back to
profitability to ensure the creation of a sustainable foundation to take forward.

The Group will continue to pursue attractive expansion opportunities where it is believed that such opportunities will
be synergistic and value enhancing to the existing business, while not removing the focus on the existing Dundee
operations. In particular, the Magdalena opencast reserve reached the end of its life of mine during the quarter
ended March 31, 2015, and the Company continues to seek replacement tonnages in the area.

The Company's key strategic goals for the year ending December 31, 2015 are summarized below:

General

- Continued focus on cost containment at both an operational and corporate level and a return to profitability
  and positive cash generation;
- Focus on achieving production targets through forward planning and improvement of operational efficiencies;
- Explore opportunities to increase revenue by sourcing new market opportunities for both anthracite and
  bituminous products;
- Increase rail and port allocation to further gain exposure to seaborne bituminous and anthracite export
  markets, where feasible and profitable; and
- Increasing the awareness of safety to reduce the number of lost time injuries ("LTI").

Magdalena

- Achieve saleable production of 685kt;
- Increase productivity and production capacity at Magdalena through the introduction of STA as a contract
  miner; and
- Replacement of the Magdalena opencast resource which has reached the end of its life of mine, through the
  acquisition of opencastable resources in the area or replacement of the opencast tonnages with additional
  underground sections.

Aviemore

- Achieve saleable production of 315kt;
- Relocate the adit at the mine; and
- Progress the exploration program and feasibility study for the expansion of Aviemore to a 1Mt per year
  producer.

Wash plants

- Improve wash plant recovery rates from current levels by improving efficiencies of the wash plant and reducing
  contamination at source; and
- Investigate product upgrade potential.

Expansion opportunities

- An internal scoping study for the expansion of Aviemore has been completed, the results of which appear
  favourable and management recommends the study to proceed to the next stage.
- The Company continues to seek opportunities to secure additional opencast reserves in the northern KwaZulu-
  Natal region.
- The Company will also continue to explore the potential for acquisition of further high quality bituminous and
  metallurgical coal projects (both greenfield and producing) in the Southern African region.

The ability of the Company to increase production amounts has not been the subject of a feasibility study and there is
no certainty that any expansion proposals will be economically feasible.

OPERATIONAL RESULTS

The operational results are for the three month period ended September 30, 2015 compared to the three month
period ended September 30, 2014.

ROM Production

Total ROM production for the quarter ended September 30, 2015 was 409kt compared to 377kt produced for the
quarter ended September 30, 2014. The monthly average ROM production for the current quarter was 136kt
compared to 126kt for the comparative quarter, an increase of 7.9%. Total ROM production for current quarter was
however down as compared to the quarter ended June 30, 2015 as a result of the FOGs as detailed above under
Overview for the Period and Outlook for the Group section.

ROM production from Magdalena operations for the quarter ended September 30, 2015 was 284kt, compared to
258kt produced for the quarter ended September 30, 2014, which equates to an average of 95kt per month for the
current quarter compared to 86kt for the comparative quarter, an increase of 10.5%. ROM production for the quarter
ended September 30, 2015 comprised 284kt from the underground operations as compared to 177kt from the
underground operations and 81kt from the opencast for the quarter ended September 30, 2014. The increase in tons
is as a result of additional tons mined by STA during the current quarter as well as an improvement in production
from the two sections operated by BC Dundee before the FOGs referred to above which occurred on July 23, 2015
and September 8, 2015 in BC Dundee's and STA's sections respectively. With regards to the FOG that occurred during
July 2015, the loss of production from the two BC Dundee sections lasted approximately two weeks for the first
section and just under a month for the second section. The FOG in September 2015 occurred in the two STA mining
sections, for which the loss of production lasted approximately a week for the first section and approximately three
weeks for the second section.

ROM production from Aviemore for the quarter ended September 30, 2015 was 125kt compared to 119kt produced
for the quarter ended September 30, 2014, which equates to an average of 42kt per month for the current quarter
compared to 40kt for the comparative quarter, an increase of 4.7%. Aviemore continues to perform in line with
historic and budgeted performance levels.

Saleable Production

Saleable coal production for the quarter ended September 30, 2015 was 262kt (excluding calcine) compared to 227kt
for the quarter ended September 30, 2014. The monthly average for the current quarter was 87kt compared to 76kt
for the comparative quarter, an increase of 15.2%, which is due to the opening ROM stock that was washed during
the current quarter (closing ROM inventory decreased from 63kt at the end of June 30, 2015 to 12kt at the end of
September 30, 2015), and offset by a decline in the yields. Saleable coal production was down as compared to the
quarter ended June 30, 2015, as a result of reduced ROM production, as discussed above.

Saleable calcine product was 8kt for the quarter ended September 30, 2015 compared to 7kt for the quarter ended
September 30, 2014, which equates to an average of 3kt per month for the current quarter compared to 2kt for the
comparative quarter, an increase of 18.6%.

The total calculated yield from plant feed was 57% for the quarter ended September 30, 2015, compared to 61% for
the quarter ended September 30, 2014.

Towards the end of CY 2014 and continuing into the quarter ended March 31, 2015, the yields at Magdalena wash
plant deteriorated due to various factors. The Company is pleased with the continued improvement in the yields
from the quarter ended March 31, 2015 as a result of stricter density controls and the reclaiming of the accumulation
of coal around the ROM and product stockpile base areas as previously reported in MD&A for the quarter ended
March 31, 2015.

Sales

Total sales of bituminous coal and anthracite products for the quarter ended September 30, 2015 were 243kt
compared to 271kt sold during the quarter ended September 30, 2014. The monthly average sales for the current
quarter were 81kt compared to 90kt for the comparative quarter, a decrease of 10.2%.

Bituminous sales for the quarter ended September 30, 2015 were 189kt, of which 59% were export sales and 41%
were domestic sales. This compares to 179kt sold during the quarter ended September 30, 2014 of which 61% were
export sales and 39% were domestic sales. The monthly average sales tons for the current quarter were 63kt
compared to 60kt for the comparative quarter, an increase of 5.4%. Bituminous sales increased in comparison to the
quarter ended September 30, 2014 due to the increase in production during the quarter ended June 30, 2015 which
resulted in the build-up of excess inventory. Bituminous sales tons in the current quarter were however down in
comparison to the quarter ended June 30, 2015 as a result of reduced production due to the FOGs at Magdalena
during the quarter.

Anthracite sales for the quarter ended September 30, 2015 were 47kt, of which 83% were export sales and 17% were
domestic sales. This compares to 75kt sold during the quarter ended September 30, 2014 of which 56% were export
sales and 44% were domestic sales. The monthly average sales tons for the current quarter were 16kt compared to
25kt for the comparative quarter, a decrease of 36.9%. The sales tons in the current quarter also were down in
comparison to the quarter ended June 30, 2015. The decrease in anthracite sales is mainly as a result of a decline in
demand domestically as the Group's major domestic customers have shut operations for at least the next six months.
The Company is negotiating with export customers to maintain sales levels.

Logistics

Coal is normally transported by rail and truck to domestic customers, while export coal is transported to the Richards
Bay Coal Terminal ("RBCT") and the Navitrade Terminal by rail. The Company has 204 500 tons of export allocation at
RBCT. The contract with Grindrod Terminal Richards Bay, a division of Grindrod South Africa Proprietary Limited
("Grindrod") in respect of the Navitrade allocation terminated on December 31, 2013 and was not renewed. The
Company will utilize the Navitrade Terminal only on a spot basis or alongside other strategic marketing partners,
when profitable.

Health and Safety

The Company runs an integrated Safety, Health and Environment ("SHE") management system and fully supports the
co-existence of safety, occupational health and the environment within which the Company operates, in order to
ensure compliance and achieve zero harm. The Company values the contribution of a safe and healthy workforce to
its overall productivity and believes that an incident and injury free workplace is possible.

The Company has embarked on various training and development initiatives and related ventures in order to improve
individual outlook on safety, health and the environment. As of September 30, 2015, the Company employed
approximately 650 employees. The Company used the OHSAS18001 framework to establish its integrated SHE
management system as well as minimum standards.

Safety

The Group had gone more than seven years without a fatality, unfortunately, one fatal incident occurred during
September 2014 at Aviemore. Magdalena achieved 5 000 fatality free production shifts on August 26, 2015, which is a
commendable achievement. Aviemore has achieved 563 fatality free shifts since September 2014, and 5 707 fatality
free shifts have been achieved at the Coalfields washing plant. There have been continued pockets of excellence,
such as the Coalfields washing plant which has achieved 1 662 days without an LTI and the Magdalena washing plant
and Aviemore which have both gone more than a year without an LTI.

The main challenge is at the underground operations: Aviemore, which suffered a fatality in September 2014 and
Magdalena, where nine LTIs occurred during CY2014. The Company is pleased to report that there were no LTIs
during the quarter ended September 30, 2015. A number of initiatives have been embarked upon, such as "night
audits" and "Visible Felt Leadership" which are directed at improving health and safety conditions. The theme for the
last two quarters of the financial year is "I am my brother and sister's keeper". This theme has been promoted
through road shows, continued night audits and ten leadership traits of "Shaka Zulu" that the Group has linked to
safety performance. This has been very well received by the employees and contractors of the Group.

Date L   LTI CY15           LTIFR CY 14   Industry Average   LTIFR Target CY 2015           LTIFR CY15   
Jan-15          1                  0.82               0.36                   0.19                 0.78   
Feb-15          0                  0.76               0.36                   0.19                 0.36   
Mar-15          1                  0.74               0.36                   0.19                 0.55   
Apr-15          0                  0.55               0.36                   0.19                 0.45   
May-15          0                  0.71               0.36                   0.19                 0.40   
Jun-15          0                  0.59               0.36                   0.19                 0.32   
Jul-15          0                  0.79               0.36                   0.19                 0.28   
Aug-15          0                  0.70               0.36                   0.19                 0.25   
Sep-15          0                  0.62               0.36                   0.19                 0.23   
Oct-15          1                  0.62               0.36                   0.19                 0.30   
Nov-15          0                  0.57               0.36                   0.19                 0.26   
Dec-15          0                  0.53               0.36                   0.19                 0.24    

Occupational Health

The health and wellness of the Group's employees plays a pivotal role in the Company's safety performance as well as
productivity. The main aim of the Group and policy commitment is to ensure that industry milestones for
occupational health are achieved and that the Group continues to strive towards improving the health of its
employees as well as interested and affected parties.

The Group has established a medical surveillance link between exposure and medical examinations by running an
integrated SHE system. The pre-employment periodical as well as exit medical surveillance are linked to the
occupational health programs for noise, airborne pollutants and thermal stress, which are directly linked to minimum
standards of fitness to work. Other occupational hygiene factors are duly considered.
The Group operates its own occupational health facilities, which are staffed with highly qualified and experienced
professionals who render a high level service to direct as well as indirect clients, whilst ensuring legal compliance as
well as compliance with in-house standards.

Environmental Management

The Group endeavours to conduct its business in a manner that depicts understanding of the fact that the
environment is borrowed from future generations and as such must be conserved. The Company aims to leave the
environment in a better state than it was prior to the start of operations. Compliance with legal and other
requirements, environmental management plans and requirements on water use licenses as well as managing all
environmental aspects and impacts is one of the key principles of the Company. As at September 30, 2015 the
number of non-conformances was kept to a minimum and scheduled environmental audits and inspections have
been embarked upon with the aim to maintain the status quo and continue improvements. Any complaints that have
been received from members of the community have been attended to accordingly.

Minerals Royalty

All operations at BC Dundee are subject to South African law, including the Mineral and Petroleum Resources Royalty
Act, 28 of 2008 ("Royalty Act"). In terms of the Royalty Act, all companies extracting minerals in South Africa are
required to pay royalties at a rate of between 0.5% and 7% based on gross sales, less their allowable deductions,
depending on the refined condition of the mineral resources.

Coal is classified as an unrefined mineral and the percentage royalty payable is therefore calculated according to the
following formula:

% royalty payable = 0.5 + [Earnings before interest and tax/(Gross sales x 9)] x 100

Social Development

A key component of the Group's strategy involves social development and the enrichment of the local communities,
which is carried out through the Group's Social and Labour Plans. The development of people, both employees and
the local community, is a fundamental principle in the business strategy. The Group provides opportunities and
resources for its employees to be fully developed in job disciplines that form part of the occupational structures of
the Group.

The Group's human resource development includes:
- portable skills training for both employees and the community;
- the Adult Education and Training ("AET") project which aims to improve the literacy rate of employees and the
  members of the community. AET learners are offered the opportunity to become functionally literate and
  numerate;
- a Mathematics, Science and Accounting project which offers tutoring to Grade 12 learners in the mining
  community. The Company recruits competent educators through the Department of Education to offer tuition.
  Through this intervention, Grade 12 results have improved;
- an internship program for unemployed graduates;
- a bursary program in mining related fields. The bursars are given the opportunity to do vacation work, gain
  experience and do in-service training to meet the graduation requirements; and
- an engineering and mining learnership program.

The Company's local economic development projects include:

- advancement of Small, Medium and Micro-sized Enterprises ("SMMEs") within the local community including
  the development of a sewing project and various agricultural projects such as poultry farming;
- the construction of a creche near the Magdalena mine; and
- the renovation of a primary school in the district.

FINANCIAL RESULTS

Revenue

Coal revenues earned during CYQ3 2015 were R159.9 million compared to R188.5 million earned during the quarter
ended September 30, 2014. The monthly average for the current quarter was R53.3 million compared to R62.8
million for the comparative quarter, a decrease of 15.2%. During the quarter ended September 30, 2015, the sales
tons were 243kt compared to sales of 271kt for the quarter ended September 30, 2014, which equated to a monthly
average for the current quarter of 81kt compared to 90kt for the comparative quarter, a decrease of 10.2%.
Bituminous sales for the quarter ended September 30, 2015 were R52.5 million for domestic (77kt) and R69.2 million
for export (112kt), compared to R46.6 million for domestic (70kt) and R78.6 million for export (109kt) for the quarter
ended September 30, 2014. The monthly average bituminous revenue for the current quarter was R17.5 million for
domestic (26kt) and R23.1 million for export (37kt) compared to R15.5 million for domestic (23kt) and R26.2 million
for export (36kt) for the comparative quarter.

Anthracite sales (including calcine) for the quarter ended September 30, 2015 were R16.5 million for domestic (15kt)
and R21.5 million for export (40kt), compared to R44.9 million for domestic (60kt) and R18.2 million for export (31kt)
for the quarter ended September 30, 2014. The monthly average revenue for the current quarter was R5.5 million for
domestic (5kt) and R7.2 million for export (13kt) compared to R15.0 million for domestic (20kt) and R6.1 million for
export (10kt) for the comparative quarter.

Average selling prices for the quarter ended September 30, 2015 were R658 per ton compared to an average selling
price of R696 per ton for the quarter ended September 30, 2014.

The decrease in revenue for the quarter ended September 30, 2015 compared to the quarter ended September 30,
2014 is primarily due to an overall decrease in sales tons during the current quarter, particularly in respect of
domestic anthracite sales as noted above, which was further worsened by a lower selling price per ton on export
products. The selling price per ton has been impacted by a reduction in domestic sales at higher selling prices as
compared to export sales. The export bituminous selling price on certain customers, based on a lower API 4 coal price
index as compared to the comparative period, was offset, to some extent, by a weakening in the Rand during the
current quarter.

Cost of Sales

Cost of sales for the quarter ended September 30, 2015 was R189.4 million (cash cost of sales of R696 per ton sold)
compared to R211.4 million (cash cost of sales of R665 per ton sold) for the quarter ended September 30, 2014. The
monthly average cost of sales for the current quarter was R63.1 million compared to R70.5 million for the
comparative quarter, a decrease of 10.4%. The Group has succeeded in reducing fixed costs as a result of the
restructuring initiatives (as discussed above under Overview for the Period and Outlook for the Group section) and
continues to be cost conscious in ensuring expenditure is kept to a minimum in order to ensure the sustainability of
the Group. The increase in cash cost of sales per sales ton is as a result of lower sales tons during the current quarter.

Cost of sales includes mining and processing costs, salaries and wages, depreciation and amortization, transportation,
railage, port handling and wharfage costs.

Salaries and wages for the quarter ended September 30, 2015 amounted to R40.9 million (R168 per ton sold)
compared to R54.8 million for the quarter ended September 30, 2014 (R202 per ton sold) which equated to a
monthly average of R13.6 million and R18.3 million respectively, a decrease of 25.7%. The decrease in salaries and
wages was mainly as a result of the retrenchment of approximately 25% of the workforce which was concluded
during the quarter ended March 31, 2015. The total number of employees was 652 at September 30, 2015 compared
to 994 at September 30, 2014.

Depreciation and amortization for the quarter ended September 30, 2015 amounted to R20.1 million (R83 per ton
sold) compared to R20.5 million (R76 per ton sold) for the quarter ended September 30, 2014, which equated to a
monthly average of R6.7 million and R6.8 million respectively, a decrease of 2.0%. The depreciation and amortization
remained relatively flat period on period.

During the quarter ended September 30, 2015, railage, handling and wharfage expense amounted to R13.0 million
(R147 per export ton sold) compared to R19.3 million (R171 per export ton sold) for the quarter ended September 30,
2014. The monthly average expense amounted to R4.3 million for the current quarter compared to R6.4 million for
the comparative quarter, a decrease of 32.5%. During the quarter ended September 30, 2014, the Group incurred
significant transport costs relating to a once-off contract for the sale of sized anthracite product which was shipped
out of Durban, KwaZulu-Natal.

General and administration expenses

The Company recorded expenses of R15.8 million (R65 per ton sold) during the quarter ended September 30, 2015
compared to R19.4 million (R72 per ton sold) during the quarter ended September 30, 2014. The monthly average
expense for the current quarter was R5.3 million compared to R6.5 million recorded for the comparative quarter, a
decrease of 18.6%. The expenses include general and administration expenses relating to BC Dundee's head office at
Coalfields and the Company's corporate office in Johannesburg including Canadian expenses. The decrease is due to
a settlement fee of R2.1 million which was provided for during the quarter ended September 30, 2014, with regards
to a Sasfin Bank Limited claim for advisory fees in relation to the Riversdale Holdings Proprietary Limited acquisition
agreement, which has subsequently been settled.

Of the R15.7 million incurred, R13.6 million originated from the South African offices, in both Dundee and
Johannesburg, and the balance related to Canadian related expenses. The majority of the expenditure in the
corporate office consists of payroll, legal and TSX and JSE continued listing related costs.

Other (Expense)/Income - net

During the quarter ended September 30, 2015, the Group recorded net other expenses amounting to R148.1 million
compared to net other expenses of R21.8 million for the quarter ended September 30, 2014. Other income and
expense is primarily as a result of impairment losses, profit on sale of assets, loss on remeasurement of assets,
foreign exchange gains/losses, small scrap sales, discounts received, commissions paid and certain fair value
adjustments on financial assets and conversion option liabilities.

The Company recorded a fair value adjustment gain of R16.2 million for the quarter ended September 30, 2015 in
relation to the valuation of the conversion option liability (RCF Convertible Loan), the warrant liability (Investec
warrants) and financial assets compared to a loss of R15.2 million for the quarter ended September 30, 2014.

A net foreign currency exchange loss of R30.9 million was recorded for the quarter ended September 30, 2015
compared to a R7.6 million loss for the quarter ended September 30, 2014, mainly as a result of the weakening of the
Rand in relation to the US Dollar with regards to the RCF Convertible Loan and US Dollar denominated revenues.

As of September 30, 2015, the Company was in negotiations to sell two continuous miners to STA (as discussed in the
Overview of the Period and Outlook for the Group section). The carrying value of the two continuous miners exceeded
the current fair value less costs to sell and was therefore written-down to fair value and disclosed as non-current
assets held for sale. A loss on remeasurement of the non-current assets held for sale of R10.8 million was recognized.
At September 30, 2015, an impairment loss of R123.3 million was recognized (September 30, 2014: Nil). The fair value
less costs to sell, based on the BC Dundee Group's life of mine model was less than the carrying value as of
September 30, 2015.

Finance Expense/Income-net

The Group recorded a net interest and accretion expense of R24.9 million during the quarter ended September 30,
2015 compared to a net interest and accretion expense of R12.2 million for the quarter ended September 30, 2014.
The monthly average expense was R8.3 million for the current quarter compared to R4.1 million recorded for the
comparative quarter, an increase of 103.7%. The majority of the increase in interest and accretion related to the RCF
Convertible Loan which increased from US$20.2 million (R227.8 million) as at September 30, 2014 to US$29.0 million
(R406.8 million) as at September 30, 2015.

Taxation

The Company recorded income and other tax expense of R43.5 million during the quarter ended September 30, 2015
compared to a benefit of R6.2 million during the quarter ended September 30, 2014. Included in the expense for the
quarter ended September 30, 2015 is a write-off of the net deferred tax asset of R109.3 million. Although
management believes that the Group will continue as a sustainable business into the foreseeable future and believes
that the Company is a going concern, the fact that taxable losses have been incurred over the past few years and in
consideration of the need to complete multiple restructurings and refinancings, management can no longer
corroborate that it is probable that BC Dundee will have sufficient taxable profit in the foreseeable future to utilize
the assessed loss, which has resulted in the write-off of the net deferred tax asset in the current quarter.

The amount for the quarter ended September 30, 2015 includes R0.5 million compared to R5.0 million for the quarter
ended September 30, 2014 that was credited to income tax and is related to the income tax effect of the depreciation
and amortization of the fair value adjustments made with respect to the purchase price allocation on the BC Dundee
acquisition. Income tax is payable at a rate of 28% on taxable income earned in South Africa.
Net loss for the period

The net loss for the quarter ended September 30, 2015 was R261.8 million compared to a net loss of R70.1 million for
the quarter ended September 30, 2014. Contributing to the net loss position for the current quarter was an
impairment loss of R123.3 million, a remeasurement of loss on assets held for sale of R10.8 million, an increase in
interest expense relating to the RCF loan facilities and an increase in the income tax expense due to the write-off of
the net deferred tax asset.

SUMMARY OF QUARTERLY FINANCIAL RESULTS

                                            CYQ3 2015   CYQ2 2015   CYQ1 2015   CYQ3 2014   CYQ2 2014   CYQ1 2014   PYQ4 2014   PYQ3 2014
Revenue (R'000)                               159 871     179 220     164 700     185 194     188 477     220 170     163 316     160 305
Cost of sales (excl depreciation and
amortization) (R'000)                         169 280     176 066     163 119     164 279     190 843     205 300     156 711     138 949
Depreciation and amortization                  20 106      19 781      18 331      19 442      20 527      37 602      25 940      21 071
EBITDA (R'000)*                              (24 202)    (12 508)    (19 942)       3 075    (21 034)     (5 486)    (11 894)       5 190
Net loss for the period (R'000)             (261 817)    (88 356)    (33 972)       (248)    (70 080)    (38 113)   (200 187)    (23 506)
Net loss per share - Basic and
Diluted                                        (2.48)      (1.16)      (0.55)      (0.00)      (1.41)      (0.97)      (5.65)      (0.67)
Cash generated from/(utilized in)
operating activities (R'000)                    1 988    (16 622)       2 150       5 314    (19 710)    (10 251)    (42 118)    (12 413)
Total ROM production (t)                      408 570     522 266     472 842     366 066     377 266     490 794     308 880     359 557
Total sales tons (t)                          243 131     276 842     245 058     258 177     270 838     315 495     223 174     216 138
Average selling price per ton sold (R)            658         647         672         717         696         698         732         742
Cash cost of sales per ton (R)                    696         636         666         636         704         651         702         643
Total Assets (R'000)                          574 058     803 068     817 236     770 027     804 859     763 863     836 928   1 027 458
Long-term borrowings (R'000)                  443 732     426 505     347 678     327 497     352 023     188 471     149 944     141 771
  
(*) See Non-IFRS Performance Measures section of this MD&A.

The decrease in total assets from September 30, 2014 to September 30, 2015 related mainly to the write-off of the
net deferred tax asset in BC Dundee, as discussed further below, as well as the impairment of property, plant and
equipment of R123.3 million recognized during the quarter ended September 30, 2015, as discussed above.

The increase in long-term borrowings is as a result of additional drawdowns from the RCF Convertible Loan of
US$29.0 million (approximately R406.8 million), refer to Overview of the Period and Outlook for the Group section for
further detail. The RCF Convertible Loan is fully drawn as of September 30, 2015.

FINANCIAL CONDITION REVIEW

A summary of the statements of financial position is shown below:

                                   September 30,  December 31,
                                            2015          2014
                                           R'000         R'000
Property, plant and equipment            354 483       561 404
Other long-term assets                    38 480        58 869
Cash and cash equivalents                 15 176        12 120
Trade and other receivables               74 923        95 475
Other short-term assets                    1 670         3 924
Inventories                               35 126        27 035
Restricted cash                           11 200        11 200
Non-current assets held for sale          43 000             -
Total assets                             574 058       770 027
Trade and other payables                 185 308       170 507
Total borrowings                         130 533       146 866
RCF loan facilities                      337 199       186 631
Other liabilities                         22 904        21 422
Liabilities held for sale                  3 536             -
Total liabilities                        679 479       525 427
Total equity                           (105 421)       244 600

Assets

Total assets were R574.1 million at September 30, 2015 compared to R770.0 million at December 31, 2014, a
decrease of 25.4%. The most significant movement in assets related to property, plant and equipment, other long-
term assets and trade and other receivables.

As of September 30, 2015, property, plant and equipment had decreased from December 31, 2014 mainly as a result
of an impairment of R123.3 million recorded during the current quarter and the reclassification of two continuous
miners to non-current assets held for sale during the current quarter, refer to Overview of the Period and Outlook for
the Group for further detail.

As of December 31, 2014, other long-term assets included deposits paid for mining equipment which were delivered
during the quarter ended March 31, 2015 and financed using the funds received from RCF, as well as a net deferred
tax asset which arose due to the assessed losses relating to BC Dundee. This deferred tax asset was written off during
the quarter ended September 30, 2015. Although management believes that the Group will continue as a sustainable
business into the foreseeable future and believes that the Group is a going concern, the fact that taxable losses have
been incurred over the past few years and in consideration of the need to complete multiple restructurings and
refinancings, management can no longer corroborate that it is probable that BC Dundee will have sufficient taxable
profit in the foreseeable future to utilize the assessed loss, which has resulted in the write-off of the net deferred tax
asset in the current quarter.

Trade and other receivables at September 30, 2015 decreased compared to December 31, 2014 mainly due to the
decrease in revenue for the quarter.

Liabilities

Total liabilities were R679.5 million at September 30, 2015 compared to R525.4 million at December 31, 2014, an
increase of 29.3%.

The most significant movement related to the additional drawdown of US$2.2 million (R25.4 million) from the
Existing RCF Convertible Loan and US$4.0 million (R49.0 million) from the 2015 Bridge Loan (refer to Overview of the
Period and Outlook for the Group section for further detail).

Loans and Borrowings

At September 30, 2015, the Group had outstanding debt with Investec of R150.2 million and US$29.0 million (R406.8
million) outstanding on the RCF Convertible Loan, refer to Overview of the Period and Outlook for the Group section
for further detail. The Investec debt consists of R90.0 million outstanding on the term loan facility, R45.5 million on
the bullet facility and R14.7 million outstanding on the working capital facility, of which there is R15.3 million
available for drawdown.

It is likely that the Company will not meet the Investec covenants at December 31, 2015. The Company has initiated
discussions with Investec in this regard.

The repayment schedule for the Investec loan facilities, the RCF Convertible Loan and trade and other payables, as of
September 30, 2015 and December 31, 2014, excluding the effect of the fair value of the conversion liability and
warrant liability, is as follows:

                           Not later than     Between 1   Greater than 5
                                   1 year    and 5 years           years
At September 30, 2015
Borrowings(1)                  24 000 000    126 201 640               -
RCF loan facilities(2)                  -    406 817 800               -
Trade and other payables      185 307 529              -               -
At December 31, 2014
Borrowings                      6 000 000     96 000 000      60 228 930
RCF loan facilities                     -    264 970 212               -
Trade and other payables      170 506 885              -               -

(1) Borrowings include future capital repayments (including rolled up interest on the bullet facility). As per the amended
and restated agreement with Investec, the Company is required to make interest payments only on the term loan
facility until December 31, 2015, with the first capital payment of R6.0 million due on that date.

(2) The RCF Convertible Loan includes only the capital amount outstanding as of September 30, 2015. Interest is settled
in Common Shares and has therefore been excluded. At RCF's option, interest shall be paid in cash provided that for
as long as the Investec loan remains outstanding, RCF may demand payment of interest in cash, only to the extent
that BC Corp has cash available to make such payment. At September 30,2015, the company had accrued for interest owing
to RFC for September 2015,which was settled in Common Shares subsequent to quarter end (refer to Subsequent events
for further information).

LIQUIDITY AND CAPITAL RESOURCES

The Company had a working capital deficiency of R83.8 million at September 30, 2015 compared to a working capital
deficiency of R38.0 million as at December 31, 2014 (see Non-IFRS Performance Measures). Working capital has
weakened significantly due to an increase in current borrowings, the provision of retrenchment costs of
R6.4 million recognized during the quarter ended June 30, 2015, a decrease in trade and other receivables as a result
of a decrease in revenue during the period and an increase in trade and other payables.

The condensed consolidated statements of cash flows are summarized below:

                                                  9 months        10 months
                                                     ended            ended
                                              September 30,   September 30,
                                                       2015            2014
                                                      R'000           R'000
Net cash utilized in operating activities          (12 484)        (65 517)
Net cash utilized in investing activities          (43 042)        (68 789)
Net cash generated from financing activities         58 582         125 278
Exchange losses on cash and cash equivalents              -         (3 835)
Change in cash and cash equivalents                   3 056        (12 863)

Operating activities

Cash utilized in operating activities during the nine month period ended September 30, 2015 was R12.5 million
compared to R65.5 million utilized during the ten month period ended September 30, 2014.

The net loss for the nine month period ended September 30, 2015 was R384.1 million compared to a net loss of
R308.4 million for the ten month period ended September 30, 2014 as discussed under the Financial Results section
of this MD&A and the March 31, 2015 and June 30, 2015 MD&A. Non-cash items included in the net loss for the nine
month period were: depreciation and amortization of R58.2 million; net gains on the fair value adjustment on
financial assets, conversion option liability and warrant liability of R88.5 million; loss on extinguishment of debt of
R111.8 million; profit on disposal of property, plant and equipment of R3.6 million, loss on the remeasurement of
non-current assets held for sale of R10.8 million; impairment of property, plant and equipment of R123.3 million and
net unrealized foreign exchange losses of R34.3 million of which the material items were discussed under the
Financial Results section of this MD&A and the March 31, 2015 and June 30, 2015 MD&A.
The Group's net working capital improved by R45.8 million for the nine months ended September 30, 2015 in
comparison to a R54.9 million decrease for the ten month period ended September 30, 2014. The net change in
working capital included in the cash flow statement identifies the changes in current assets and current liabilities that
occurred during the period. An increase in a liability (or a decrease in an asset) is a source of funds; while a decrease
in a liability (or an increase in an asset) is a use of funds.

Investing activities

Investing activities utilized R43.0 million in cash during the nine months ended September 30, 2015 compared to cash
utilized of R68.8 million for the ten months ended September 30, 2014.

During the nine months period ended September 30, 2015, the Group spent R44.8 million on property, plant and
equipment relating to sustaining capital and the purchase of additional equipment financed by RCF (refer to
Financing Activities below) compared to expenditure of R101.9 million for the ten month period ended September
30, 2014. In addition, during the ten month period ended September 30, 2014, the Group received the settlement of
the escrow funds with regards to the Riversdale Holdings Proprietary Limited dispute.

Financing activities

Financing activities generated R58.6 million in cash during the nine months ended September 30, 2015 and generated
R125.3 million during the ten months ended September 30, 2014. During the nine months ended September 30,
2015, the Group received R74.4 million from RCF drawn down under the Existing RCF Convertible Loan facility and
2015 Bridge Loan, which was used to purchase additional equipment, for working capital purposes and for the
restructuring at BC Dundee. During the comparative period, the Group received approximately R154.0 million from
RCF under the Existing RCF Convertible Loan facility which was used to purchase additional equipment and for
working capital purposes.

OFF-BALANCE SHEET ARRANGEMENTS AND PROPOSED TRANSACTIONS

The Group has no off-balance sheet arrangements, nor any proposed transactions.

RELATED PARTY TRANSACTIONS

During the period, the Company entered into the following transactions in the ordinary course of business with
related parties:

                                                                            3 months ended        3 months ended
                                                                        September 30, 2015    September 30, 2014
Payments for services rendered
RCF(1)                                                                             552 593             2 258 226
Total                                                                              552 593             2 258 226

The following balances were outstanding at the end of the reporting period:


                                                                        September 30, 2015    September 30, 2014
Related party payables
RCF(1)                                                                           2 392 543             1 461 913
Total                                                                            2 392 543             1 461 913

These amounts are unsecured, non-interest bearing with no fixed terms of repayment.

RELATED PARTY TRANSACTIONS (continued)

(1) RCF is a related party to the Company as a result of owning more than 10% of the issued and outstanding Common
Shares and having a representative, Mr. David Thomas on the Board of Directors of the Company. As set out in the
Second Amended RCF Agreement, RCF invoiced the Company for costs incurred relating to the facilities, which are
disclosed above. In addition to these costs, the Company settled interest on the RCF Convertible Loan in Common
Shares during the financial period ended September 30, 2015, which amounted to R13.9 million as compared to
R5.9 million for the quarter ended September 30, 2014 and R8.1 million relating to the settlement of the
establishment fee on the Existing RCF Convertible Loan for the quarter ended September 30, 2014.

Compensation of key management personnel

In accordance with IAS 24 - Related-Party Disclosures, key management personnel are those persons having authority
and responsibility for planning, directing and controlling the activities of the Company directly or indirectly, including
any directors (executive and non-executive) of the Company.

The remuneration of directors and other members of key management personnel (officers) during the period was as
follows:

                           3 months ended      3 months ended
                       September 30, 2015  September 30, 2014
Short-term benefits             3 487 009           3 867 845
Share-based payments              134 106             307 785
Total                           3 621 115           4 175 630

On July 30, 2015, C$0.1 million (September 30, 2014: C$0.1 million) (R1.0 million) worth of restricted stock units
("RSUs") granted to a director but not issued under the plan were settled through the issuance of Common Shares to
the director. Amounts owing to directors and other members of key management personnel were R0.9 million as of
September 30, 2015 (September 30, 2014: R1.6 million), which included an accrual for directors' fees settled
subsequent to September 30, 2015.

OTHER

There are no significant other items as at September 30, 2015.

COMMITMENTS AND CONTINGENCIES

Management Contracts

Management contracts in place require that payments of approximately R13.0 million be made upon the occurrence
of a change in control, other than a change of control attributable to RCF. As no triggering event has taken place, no
provision has been recognized as of September 30, 2015.

Subsequent to September 30, 2015, the Company entered into a retention agreement with key management
personnel. The contract contains a minimum commitment of R5.3 million until December 31, 2016.

Capital Commitments

Capital expenditures contracted for at the statement of financial position date but not recognized in the consolidated
financial statements are as follows:

                                September 30,   December 31,
                                         2015           2014
                                            R              R
Property, plant and equipment       2 994 686     27 378 909

Included in the R27.4 million disclosed as of December 31, 2014 are commitments relating to the purchase of
machinery and equipment which were funded by equipment advances from RCF.

Environmental Contingency

The Company's mining and exploration activities are subject to various laws and regulations governing the
environment. These laws and regulations are continually changing and generally becoming more restrictive. The
Company believes its operations are materially in compliance with all applicable laws and regulations. The Company
has made, and expects to make in the future, expenditures to continue to comply with such laws and regulations.

Outstanding Legal Proceedings

On March 20, 2015, AMCU brought an application against BC Dundee and Zinoju in the Labour Court of South Africa
pertaining to the Section 189A restructuring process implemented by BC Dundee during the quarter ended March 31,
2015 in terms of the LRA. The matter was heard in Court on April 14, 2015 and on April 24, 2015, the LRA dismissed
the application brought by AMCU with costs. An application for leave to appeal was lodged by AMCU on April 29,
2015 which was heard by the Labour Appeal Court on November 4, 2015. The outcome of the hearing is still pending.

On April 10, 2015, BC Dundee received notice that AMCU had referred a dispute to the CCMA in respect of the
substantive fairness of the S189A restructuring process conducted during the quarter ended March 31, 2015, which
was heard on May 18, 2015. The CCMA referred the matter to the Labour Court. AMCU had until August 17, 2015 to
submit this dispute however no submission was made before this deadline and the process has been concluded.

On April 20, 2015, the trustees of the Avemore Trust brought an application in the High Court of South Africa against,
among others, the Minister, BC Dundee and Zinoju, in respect of MR174. In terms of the application, the trustees of
the Avemore Trust challenged the decision by the Minister, subsequent to an internal appeal process concluded
during September 2014, to grant a converted mining right to BC Dundee and to grant consent for the cession of the
converted mining right to Zinoju. There have been various settlement offers between the parties, but should
settlement not be reached, BC Dundee and Zinoju intend to oppose the application.
On August 27, 2015, notice was received from the Minister that MR301 had been withdrawn as well as the
withdrawal of the approval by the Regional Manager of the Environmental Management Plan in respect of MR301.
The reasons given by the Minister for the withdrawal of the right are procedural issues in respect of the award
process, in relation to an objection received from Avemore Trust in October 2013 against the awarding of the right.
On August 28, 2015, the Company instituted proceedings against both the Minister, as the first respondent, and the
Avemore Trust, as the second respondent, to seek urgent relief.

The urgent application was heard on September 15, 2015 and relief was granted as requested for the Ministerial
decision to be of no force and effect, to interdict the Minister from awarding MR301 to any other party and for the
Company to continue to mine in terms of MR301. A review application has subsequently been instituted by the
Company to obtain final relief in the form of an order setting aside the Ministerial decision, and the Company's legal
team, including Senior Counsel, has indicated a strong likelihood of the review application being successful.

SUBSEQUENT EVENTS

TSX Delisting Review

The TSX advised the Company that it had been placed under a remedial delisting review in terms of whether the
Company meets the continued listing requirements of the TSX in the following areas: (i) the Company's financial
condition and operating results, and (ii) the market value of publicly held listed securities of the Company. The
Company had an initial period of 120 days to comply with all requirements of the TSX for continued listing. The
Company subsequently applied to voluntarily delist its Common Shares from the TSX and is in the process of submitting an
application for the listing and posting of the Common Shares on the TSXV.

It is expected that the Common Shares will be delisted and therefore no longer trade on the TSX with effect from the
end of November 2015. In addition, the Company will make an application to the JSE to transfer its JSE listing from the
Main Board of the JSE to the Alternative Exchange in order to maintain its South African listing as a secondary listing.

Restructuring of Mining Operations

In May 2015, BC Dundee initiated a second restructuring process focusing on Magdalena, which at that time
continued to underperform, particularly relative to the capital which had been spent on new equipment over the past
year. This restructuring was implemented by BC Dundee in October 2015. In conjunction with the implementation of
the restructuring, Zinoju and BC Dundee signed a contract mining agreement with STA to mine four sections at
Magdalena underground mine at a fixed contract mining fee per ton, effective October 31, 2015. The contract mining
agreement has a three year term, and the option for a further two year extension if agreed to by all parties. As a
result, the majority of the employees who were retrenched were employed by STA, resulting in minimal staff
becoming redundant. A provision for retrenchment costs of R6.4 million (excluding leave pay which was previously
provided for) was recognized during the quarter ended June 30, 2015, of which R4.7 million was paid subsequent to
September 30, 2015.

The STA agreement can be terminated on 60 days notice for which period the Company will be liable for payment for
the tons mined at the fixed rate per ton. In addition, there are minimum commitments of R17.7 million under this
agreement as of October 31, 2015.

BC Dundee and Zinoju have also entered into an agreement to sell two continuous miners to STA. The selling price
will be settled by STA by way of offset against amounts due to STA in terms of the previous arrangements between
the parties, and the balance by way of a reduction in the contract mining rate going forward, until such time as the
selling price has been settled in full.

Zinoju, BC Dundee and STA have further entered into an agreement with BC Corp, in terms of which the Company is
entitled, at its election, to settle an agreed portion of STA's contract mining fees through the issuance of Common
Shares to STA. The Equity Portion will be calculated monthly based on production levels at Magdalena, with the
Common Shares priced at the higher of the 20-day VWAP per Common Share, and any minimum pricing restriction
applicable to the stock exchanges on which Buffalo is listed. The Common Shares will be issued to STA at the end of
each calendar quarter, subject to regulatory approvals. The parties have agreed that the percentage of Common
Shares held by STA will not exceed 9.9% of the Company's outstanding shares at any point in time.

Issuance of Share Capital

Subsequent to September 30, 2015, the Company issued additional shares to RCF in settlement of interest owing on
the RCF Convertible Loan for the periods ended September 30, 2015 and October 31, 2015. An additional 11 083 086
and 10 776 136 Common Shares were issued at prices of C$0.0439 and C$0.0440, in October and November
respectively.

Other Matters

Except for the matters discussed above, no other matters which management believes are material to the financial
affairs of the Company have occurred between the statement of financial position date and the date of approval of
the Interim Results.

DISCLOSURE CONTROLS AND PROCEDURES AND INTERNAL CONTROLS OVER FINANCIAL REPORTING

Management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), has evaluated the
design and effectiveness of the Company's internal controls over financial reporting ("ICFR") and disclosure controls
and procedures ("DC&P") as of September 30, 2015, pursuant to the requirements of Multilateral Instrument 52-109.
Management follows the Integrated Framework (COSO 2013 Framework) published by the Committee of Sponsoring
Organizations of the Treadway Commission ("COSO"). The Company has designed appropriate ICFR and DC&P for the
nature and size of its business, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with applicable accounting standards.

There have been no significant changes to the Company's ICFR and DC&P that occurred during the period ended
September 30, 2015 that have materially affected, or are reasonably likely to materially affect, the Company's ICFR
and DC&P. The functions historically conducted from the Company's Toronto office are now managed from South
Africa.
Because of inherent limitations, ICFR and disclosure controls can provide only reasonable assurances and may not
prevent or detect misstatements. Furthermore, projections of any evaluation of effectiveness to future periods are
subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

The Audit Committee of the Company has reviewed this MD&A, and the unaudited condensed interim consolidated
financial statements for the period ended September 30, 2015. The Company's Board of Directors approved these
documents prior to their release.

SIGNIFICANT ACCOUNTING JUDGMENTS, ESTIMATES AND ASSUMPTIONS

The preparation of the Interim Results in conformity with IFRS requires the Group's management to make judgments,
estimates and assumptions about future events that affect the amounts reported in the Interim Results and related
notes thereto. Although these estimates are based on management's best knowledge of the amounts, events or
actions, actual results may differ from those estimates and these differences could be material.

The critical accounting estimates and judgments applied in the preparation of the Company's Interim Results for the
three and nine months ended September 30, 2015 are consistent with those applied and disclosed in the Company's
audited annual consolidated financial statements for the ten months ended December 31, 2014 and twelve months
ended February 28, 2014.

NEW ACCOUNTING POLICIES

Amendments to IAS 19 ? 'Defined Benefit Plans: Employee Contributions'
These narrow scope amendments apply to contributions from employees or third parties to defined benefit plans.
The objective of the amendments is to simplify the accounting for contributions that are independent of the number
of years of employee service, for example, employee contributions that are calculated according to a fixed
percentage of salary. This amendment has not had a significant impact on the Group.

Annual Improvements to IFRSs 2010-2012 Cycle:

IFRS 2, 'Share-based Payments' ? The amendments clarify the definition of a 'vesting condition' and separately define
'performance condition' and 'service condition'.

IFRS 3, 'Business Combinations' ? The amendments clarify that a contingent consideration that is classified as an asset
or a liability should be measured at fair value at each reporting date, irrespective of whether the contingent
consideration is a financial instrument within the scope of IFRS 9 or IAS 39 or a non-financial asset or liability. Changes
in fair value (other than measurement period adjustments) should be recognized in profit or loss.

IFRS 8, 'Operating Segments' - The amendments require an entity to disclose the judgments made by management in
applying the aggregation criteria to operating segments, including a description of the operating segments
aggregated and the economic indicators assessed in determining whether the operating segments have 'similar
economic characteristics'; and clarify that a reconciliation of the total of the reportable segments' assets to the
entity's assets should only be provided if the segment assets are regularly provided to the chief operating decision-
maker.

IFRS 13, 'Fair Value Measurements' - The amendments to the basis for conclusions of IFRS 13 and consequential
amendments to IAS 36 and IFRS 9 did not remove the ability to measure short-term receivables and payables with no
stated interest rate at their invoice amounts without discounting, if the effect of discounting is immaterial.

IAS 16, 'Property, Plant and Equipment' and IAS 38, 'Intangible Assets' - The amendments remove perceived
inconsistencies in the accounting for accumulated depreciation/amortization when an item of property, plant and
equipment or an intangible asset is revalued. The amended standards clarify that the gross carrying amount is
adjusted in a manner consistent with the revaluation of the carrying amount of the asset and that accumulated
depreciation/amortization is the difference between the gross carrying amount and the carrying amount after taking
into account accumulated impairment losses.

IAS 24, 'Related Party Disclosure' - The amendments clarify that a management entity providing key management
personnel services to a reporting entity is a related party of the reporting entity. Consequently, the reporting entity
should disclose as related party transactions the amounts incurred for the service paid or payable to the management
entity for the provision of key management personnel services. However, disclosure of the components of such
compensation is not required.

The amendments did not have a significant impact on the Group.

Annual Improvements to IFRSs 2011-2013 Cycle:

IFRS 3 - The amendment clarifies that the standard does not apply to the accounting for the formation of all types of
joint arrangements in the financial statements of the joint arrangement itself.

IFRS 13 ? The amendment clarifies that the scope of the portfolio exception for measuring the fair value of a group of
financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted
for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or
financial liabilities within IAS 32.

IAS 40, 'Investment Property' - The amendment clarifies that IAS 40 and IFRS 3 are not mutually exclusive and
application of both standards may be required. The guidance in IAS 40 assists preparers to distinguish between
investment property and owner-occupied property. Preparers also need to refer to the guidance in IFRS 3 to
determine whether the acquisition of an investment property is a business combination.

The amendments did not have a significant impact on the Group.

FINANCIAL INSTRUMENTS

Details of the significant accounting policies and methods adopted (including the criteria for recognition, the bases of
measurement, and the bases for recognition of income and expenses of the Group) for each class of financial asset
and financial liability are disclosed in Note 2 of the audited annual consolidated financial statements for the ten
months ended December 31, 2014 and twelve months ended February 28, 2014.

The Company's financial assets and financial liabilities as at September 30, 2015 and December 31, 2014 were as
follows:

Financial instruments                   Loans and        Fair value    Liabilities at            Other           Total
                                      receivables    through profit        fair value   liabilities at
                                                            or loss    through profit        amortized
                                                                              or loss             cost
September 30, 2015
Trade and other receivables
(excluding non-financial assets)       64 935 407                -                  -                -      64 935 407
Investments in financial assets                 -       33 278 119                  -                -      33 278 119
Cash (excluding restricted cash)       15 175 543                -                  -                -      15 175 543
Non-interest bearing receivables        1 671 397                -                  -                -       1 671 397
Investec borrowings                             -                -        (2 525 964)    (128 006 884)   (130 532 848)
RCF loan facilities                             -                -      (137 875 131)    (199 323 846)   (337 198 977)
Trade and other payables (excluding
non-financial liabilities)                      -                -                  -    (169 213 369)   (169 213 369)

Financial instruments                   Loans and       Fair value     Liabilities at            Other          Total
                                      receivables   through profit         fair value   liabilities at
                                                           or loss     through profit        amortized
                                                                              or loss             cost
December 31, 2014
Trade and other receivables
(excluding non-financial assets)        78 553 015               -                  -                -      78 553 015
Investments in financial assets                  -      29 134 182                  -                -      29 134 182
Cash (excluding restricted cash)        12 120 081               -                  -                -      12 120 081
Non-interest bearing receivables         1 587 766               -                  -                -       1 587 766
Investec borrowings                              -               -        (8 818 534)     (138 047 902)  (146 866 436)
RCF loan facilities                              -               -       (54 088 555)     (132 542 252)  (186 630 807)
Trade and other payables (excluding
non-financial liabilities)                       -               -                 -      (151 541 253)  (151 541 253)

CAPITAL MANAGEMENT

The Group's objectives when managing capital are to safeguard the Group's ability to continue as a going concern in
order to provide returns for shareholders and benefits for other stakeholders. In order to maintain or adjust the
capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders,
issue new shares or sell assets to reduce debt.

Consistent with others in the industry, the Group monitors capital on the basis of the gearing ratio. This ratio is
calculated as net debt divided by total capital.

Net debt is calculated as total borrowings and loans (including current and non-current borrowings, the warrant
liability, current and non-current RCF loan facilities and the conversion option liability as shown in the consolidated
statements of financial position) less cash and cash equivalents. Total capital is calculated as "equity" as shown in the
consolidated statements of financial position plus net debt.

The gearing ratios at September 30, 2015 and December 31, 2014 were as follows:

                                     September 30,        December 31,
                                              2015                2014
Total borrowings                       467 731 825         333 497 243
Less: cash and cash equivalents       (15 175 543)        (12 120 081)
Net debt                               452 556 282         321 377 162
Total equity                         (105 420 960)         244 600 498
Total capital                          347 135 322         565 977 660
Gearing ratio                                 130%                57%

Included within total borrowings is the RCF Convertible Loan of R406.8 million (PY2014: R105.9 million). The
Company's capital management objectives, policies and processes have remained unchanged during the period
ended September 30, 2015 except for the RCF loan facilities.

The Company is not subject to any externally imposed capital requirements with the exception of the RCF loan
facilities and Investec facilities and with regards to Section 710 of the TSX Company Manual which requires adequate
working capital or financial resources such that, in the opinion of the TSX, the listed issuer will be able to continue as
a going concern. The TSX will consider, among other things, the listed issuer's ability to meet its obligations as they
come due, as well as its working capital position, quick asset position, total assets, capitalization, cash flow and
earnings as well as accountant's or auditors' disclosures in financial statements regarding the listed issuer's ability to
continue as a going concern. The TSX also requires minimum public float thresholds. As a result of not meeting the
public float thresholds, management has concluded that the Company has not met the requirements of the TSX at
September 30, 2015 and has applied for a voluntary delisting. (Refer to the Overview of the Period and Outlook for
the Group section for further detail).

FINANCIAL RISK FACTORS

The Group's activities expose it to a variety of financial risks such as currency risk, price risk, cash flow interest rate
risk, credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of
financial markets and seeks to minimize potential adverse effects on the Group's financial performance. Risk
management is carried out by head office management under policies approved by the Board of Directors. The Group
identifies, evaluates and manages financial risks in close co-operation with the Group's subsidiaries.

Market risk

(a) Foreign exchange risk

The Company's functional currency is the Rand. BC Corp's functional currency was changed on March 1, 2014 from
Canadian Dollars to Rands. This change reduces the exposure of foreign exchange risk on the consolidated financial
statements.

The Group operates internationally and is exposed to foreign exchange risk arising from currency exposures with
respect to the US Dollar and Canadian Dollar.

The Group's foreign exchange risk arises primarily from the sale of coal, based on the API 4 coal price index in US
Dollars to foreign customers, external loans denominated in US Dollars and translation differences arising from the
translation of share capital and other equity items.

At September 30, 2015, a 10% increase/(decrease) in the period average foreign exchange rate between the
Canadian Dollar and the Rand, would have increased/(decreased) the Group's profit or loss by approximately R5.5
million as compared to R3.4 million for the comparative period.

A 10% increase/(decrease) in the period average foreign exchange rate between the US Dollar and the Rand, would
have increased/(decreased) the Group's income by approximately R41.2 million compared to R24.3 million for the
comparative period.

(b) Price risk

The Group is exposed to commodity price risk, primarily due to fluctuations in the API 4 coal price index, by which
foreign coal sales are priced. Commodity prices fluctuate on a daily basis and are affected by numerous factors
beyond the Group's control.

The supply and demand for commodities, the level of interest rates, the rate of inflation, investment decisions by
large holders of commodities including governmental reserves and stability of exchange rate can all cause significant
fluctuations in commodity prices. Such external economic factors are in turn influenced by changes in international
investment patterns and monetary systems and political developments.

At September 30, 2015, a 10% change in the API 4 coal price index would have resulted in a corresponding change in
export coal revenue of approximately R11.3 million as compared to R10.3 million for the comparative period.

(c) Cash flow interest rate risk

The Group's interest rate risk arises from deposits held with banks and interest-bearing liabilities. Borrowings issued
at variable rates expose the Group to cash flow interest rate risk which is partially offset by cash held at variable
rates. During CY2015 and CY2014 the Group's borrowings at variable rates were denominated in South African Rands.
Based on the simulations performed, the impact on profit or loss of a 1% shift of interest rates on borrowings and
cash would have been a maximum increase/(decrease) in profit or loss of R0.9 million as compared to R0.7 million for
the comparative period.

Credit risk

Credit risk is managed at a Group level, except in respect of trade receivables which are managed at an operational
level. Credit risk arises from cash and cash equivalents and deposits with banks and financial institutions, as well as
credit exposures to customers, including outstanding receivables and committed transactions. The Group only
transacts with high quality financial institutions.

Risk control assesses the credit quality of customers, taking into account financial position, past experience and other
factors. The utilization of credit limits is regularly monitored. No credit limits were exceeded during the reporting
period, and management does not expect any losses from non-performance by these counterparties.

Restricted cash totaling R11.2 million is on deposit with First National Bank ("FNB") to be released to the relevant
counterparties if payments are not made to them.

Liquidity risk

Cash flow forecasting is performed by Group finance. Group finance monitors rolling forecasts of the Group's liquidity
requirements to ensure it has sufficient cash to meet operational needs. Such forecasting takes into consideration the
Group's debt/equity financing plans, covenant compliance and external legal requirements. Refer to the Financial
Condition Review section for an analysis of the Group's non-derivative financial liabilities disclosed in maturity
groupings based on the remaining period at the consolidated statement of financial position date to the contractual
maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows.

Fair value estimation

Financial instruments carried at fair value are assigned to different levels of the fair value hierarchy, by valuation
method. The different levels have been defined as follows:

- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either
  directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
- Inputs for the asset or liability that are not based on observable market data (that is unobservable inputs) (level 3).

The following table presents the Group's financial assets and liabilities that are measured at fair value at
September 30, 2015 and December 31, 2014:
                                    Level 1       Level 2     Level 3
                                          R             R           R
September 30, 2015
Investment in financial assets   33 278 119             -           -
Conversion option liability               -    137 875 131          -
Warrant liability                         -      2 525 964          -
December 31, 2014
Investment in financial assets   29 134 182              -          -
Conversion option liability               -     54 088 555          -
Warrant liability                         -      8 818 534          -

GOING CONCERN

The Interim Results have been prepared on the basis of accounting principles applicable to a going concern, which
assume that the Group will continue in operation for the foreseeable future and will be able to realize its assets and
discharge its liabilities in the normal course of operations. Market conditions have deteriorated significantly over the
quarter and the Company continues to incur operating losses and is dependent upon reaching profitable levels of
operation in the future to support working capital needs. The performance at Magdalena deteriorated significantly
over the course of CY 2014, which resulted in the Company implementing a restructuring at BC Dundee in March
2015 and a further restructuring in October 2015 which included the conclusion of agreements with STA, for the
provision of contract mining services, for the sale of certain underground mining equipment and for a portion of the
contract mining fees to be settled in Common Shares, in order to further alleviate cash flow pressures. In addition,
the Company is in the process of securing additional funding from RCF and Investec, which is expected to close by the
end of November 2015. Without the funding, the Company cannot continue as a going concern. The Company
believes that, barring any further deterioration in the market and subject to its ability to meet current forecasts
which, among other things, contemplate the current steps that the Company is taking including the additional
funding, it should be able to generate positive cash flows in the foreseeable future.

The mining industry in South Africa has been experiencing challenging labour relation issues including labour
disruptions and mass retrenchments. Apart from the applications brought against the Company by AMCU in respect
of the retrenchment process at BC Dundee, there are currently no other significant labour issues at BC Dundee. Wage
negotiations for the upcoming year have been concluded as at the date of this MD&A. If labour disruptions were to
take place at the Company's mines, they could have significant negative impacts on the operations and financial
results of the Company.

If the going concern assumption was not appropriate for the Interim Results of the Group then adjustments would be
necessary to the carrying values of assets and liabilities, the reported revenues and expenses and the statement of
financial position classifications used. Such adjustments could be material and adverse in nature.

OTHER RISKS AND UNCERTAINTIES

Investing in the Company involves risks that should be carefully considered. The business of the Company is
speculative due to the high-risk nature of coal mining and exploration. Investors should be aware that there are
various risks, including those discussed below, that could have a material adverse effect on, among other things, the
operating results, earnings, properties, business and condition (financial or otherwise) of the Company.

Additional Capital

The continued sustainability of the BC Dundee Properties, including the expansion of mining operations and the
continued sustainability of the Group, may require additional working capital and capital expenditures and therefore
require additional financing. Failure to obtain sufficient financing may result in a delay or indefinite postponement of
development or production on the BC Dundee Properties. Additional financing may not be available when needed or
if available, the terms of such financing might not be favorable and might involve substantial dilution to shareholders.
Failure to raise capital when needed may have a material adverse effect on the Company's business, financial
condition and results of operations.

Production Estimates

BC Corp has prepared estimates of future coal production for its existing and future mines. BC Corp cannot give any
assurance that it will achieve its production estimates. The failure by BC Corp to achieve its production estimates
could have a material adverse effect on any or all of its future cash flows, profitability, results of operations and
financial conditions. The realization of production estimates is dependent on, among other things, the accuracy of
mineral reserve and resource estimates, the accuracy of assumptions regarding coal quality and recovery rates,
ground conditions (including hydrology), the physical characteristics of the coal, the presence or absence of particular
metallurgical characteristics, and the accuracy of the estimated rates and costs of mining and processing.

Actual production may vary from estimates for a variety of reasons, including the actual coal mined varying from
estimates of quality or tonnage; dilution and metallurgical and other characteristics (whether based on
representative samples of coal or not); short-term operating factors such as the need for sequential development of
production panels and the processing of new or adjacent coal qualities from those planned; mine failures or section
failures; industrial accidents; natural phenomena such as inclement weather conditions, floods, droughts, rock slides
and earthquakes; encountering unusual or unexpected geological conditions; changes in power costs and potential
power shortages; shortages of principal supplies needed for mining operations including explosives, fuels, chemical
reagents, water, equipment parts, stonedust, magnetite and lubricants; plant and equipment failure; the inability to
process certain types of coals; labour shortages or strikes; and restrictions or regulations imposed by government
agencies or other changes in the regulatory environment.

Such occurrences could also result in damage to mineral properties or mines, interruptions in production, injury or
death to persons, damage to property of BC Corp or others, monetary losses and legal liabilities in addition to
adversely affecting coal production. These factors may cause a coal reserve that has been mined profitably in the past
to become unprofitable, forcing BC Corp to cease production.

Price of Coal

The Company's profits are directly related to the cost of production, and volume and price of coal sold. Price volatility
could have a significant impact on the future revenues and profitability of the Company.

Coal demand and price are determined by numerous factors that will be beyond the control of the Company
including the demand for electricity; the supply and demand for domestic and foreign coal; interruptions due to
transportation delays; air emission standards for coal-fired power plants; regulatory, administrative and judicial
decisions; the price and availability of alternative fuels, including the effects of technology developments; the effect
of worldwide energy conservation efforts, future limitations on utilities' ability to use coal as an energy source due to
the regulation and/or taxation of greenhouse gases; proximity to, capacity of, and cost of transportation facilities;
and political and economic conditions and production costs in major coal producing regions. The combined effects of
any or all of these factors on coal price or volume are impossible for the Company to predict. If realized coal prices fall
below the full cost of production and remain at such level for any sustained period, the Company will experience
losses, which may be significant and as a result the Company may decide to discontinue affected operations forcing it
to incur closure or care and maintenance costs, as the case may be.

Labour and Employment Matters

While the Company believes that it has good relations with both its unionized and non-unionized employees,
production at the Company's mining operations is dependent upon the efforts of the Company's employees and
those of its contractors.

In November 2012, the Company experienced a wage-related labour disruption, which resulted in stoppages at its
mines. In addition, relations between the Company and its employees may be impacted by changes in the scheme of
labour relations that may be introduced by the relevant governmental authorities in whose jurisdictions the Company
carries on business.

BC Corp announced a restructuring of the BC Dundee operations in December 2014 which was concluded in March
2015, resulting in the retrenchment of approximately 25% of the workforce, with a further restructuring
implemented in October 2015 (Refer to the Operational section in Overview of the Period and Outlook for the Group).

The Company has concluded wage negotiations with the unions for the forthcoming financial year. There remains a
risk of labour disruptions which could have a material adverse effect on the Company's business, results of operations
and financial condition.

Refer to Legal proceedings in Overview of the Period and Outlook for the Group section above, with regards to the
application brought by AMCU against BC Dundee and Zinoju in respect of the first restructuring process.

Cost Estimates

Capital and operating cost estimates made in respect of BC Corp's mines and development projects may not prove
accurate. Capital and operating cost estimates are based on the interpretation of geological data, feasibility studies,
anticipated climatic conditions, other factors and assumptions regarding foreign exchange currency rates and
domestic inflation. Any such events could affect the ultimate accuracy of such estimates; unanticipated changes in
quality and tonnage of coal to be mined and processed; incorrect data on which engineering assumptions are made;
delay in construction schedules, unanticipated transportation costs; the accuracy of major equipment and
construction cost estimates; labour issues; changes in government regulation (including regulations regarding prices,
cost of consumables and capital goods, royalties, duties, taxes, permitting and restrictions on production quotas on
exportation of minerals) and title claims.

Mineral Legislation

The business of mineral exploration, development, mining and processing is subject to various national and local laws
and plans relating to permitting and maintenance of titles, environmental consents, employee relations, health and
safety, royalties, land acquisitions and other matters. There is a risk that the necessary permits, consents,
authorizations and agreements to implement planned exploration, development or mining may not be obtained
under conditions or within the time frames that make such plans economic, that applicable laws, regulations or the
governing authorities will change or that such changes will result in additional material expenditures or time delays.
In addition, mining legislation in South Africa, including the Mineral and Petroleum Resources Development Act, 28 of
2004 ("MPRDA") is currently under review and the proposed amendments, if passed by Government, could have a
material impact on the Company's operations.
Compliance with regulation 8.10 of the Mine Health and Safety Act may require significant capital outlay on behalf of
the Company and may cause material changes or delays in the Company's intended activities. Management is
currently assessing options to comply with the regulation. These regulations could have a material impact on the
Company's operations.

Title to Mineral Holdings

BC Corp requires licenses and permits from various governmental authorities. BC Corp believes that it holds all
necessary licenses and permits under applicable laws and regulations in respect of the BC Dundee Properties and that
it is presently complying in all material respects with the terms of such licenses and permits. Such licenses and
permits, however, are subject to change in various circumstances. There can be no guarantee that the Company will
be able to obtain or maintain all necessary licenses and permits that may be required to explore and develop or mine
its properties. The validity of ownership of property holdings can be uncertain and may be contested.
Although BC Dundee has attempted to acquire satisfactory title to its properties, risk exists that some titles,
particularly titles to undeveloped properties, may be defective.

Refer to Legal proceedings in Overview of the Period and Outlook for the Group section above, with regards to the
legal processes in respect of MR174 and MR301.

Power Supply

The supply of electric power is not guaranteed in South Africa. Currently the public supply is sufficient to power all of
the operations at the BC Dundee Properties; however South African power supply is limited, with limited reserve
capacity. Moreover, the country has been plagued with a shortage of supply recently, which has led to sporadic
"loadshedding" of power in certain areas of the country. This has and will continue to negatively affect the
production at the mines in terms of lost production and increased costs. Fortunately there has been minimal
disruption in the quarter ended September 30, 2015. The Company has procured diesel power generators for backup
power to the various sub-stations that have been installed on the surface and underground at the BC Dundee
Properties. Additionally, any production expansion plan for the BC Dundee operations would be dependent on
additional electrical supply, and the majority of new build projects in the country are behind schedule. While the
Company has taken steps to meet the need for additional supply of electricity from the public utility (Eskom), there
can be no assurance that the BC Dundee Properties will not be negatively affected by the power supply situation on
either an operating or cost basis, or both.

Depletion of Mineral Reserves

The Company must continually replace mining reserves depleted by production to maintain production levels over
the long-term. There is no assurance that the Company's exploration programs will result in any new commercial
mining operations or yield new reserves to replace or expand current reserves.

Litigation

All industries, including the mining industry, are subject to legal claims, with and without merit. Legal proceedings
may arise from time to time in the course of the Company's business. Such litigation may be brought against the
Company or one or more of its subsidiaries in the future from time to time or the Company or one or more of its
subsidiaries may be subject to another form of litigation. Defense and settlement costs of legal claims can be
substantial, even with respect to claims that have no merit.

As of the date hereof, except as disclosed in the Overview of the Period and Outlook for the Group section above, no
other material claims have been brought against the Company, nor has the Company received an indication that any
claims are forthcoming. Due to the inherent uncertainty of the litigation process, the process of defending such
claims (or any other claims that may be brought against the Company) could take away from management time and
effort and the resolution of any particular legal proceeding to which the Company or one or more of its subsidiaries
may become subject could have a material effect on the Company's financial position and results of operations.

South Africa Country Risks

The operations of the Company are subject to risks normally associated with the conduct of business in South Africa.
Risks may include, among others highlighted herein, problems relating to labour disputes, delays or invalidation of
governmental orders and permits, corruption and fraud, uncertain political and economic environments, civil
disturbances and crime, arbitrary changes in laws or policies, foreign taxation and exchange controls, opposition to
mining from environmental or other non-governmental organizations or changes in the political attitude towards
mining, limitations on foreign ownership, limitations on repatriation of earnings, infrastructure limitations and
increased financing costs.

There have been recent calls in South Africa for the nationalization and expropriation without compensation of
domestic mining assets. Any such development would have a significant adverse effect on the Company.

The labour situation in South Africa is currently unstable across the mining industry, and in particular in the platinum
industry, where strikes in early 2014 lasted around five months, followed by a month long strike in the metal and
engineering sector. There is a risk that this instability extends into other sectors, including the coal sector. There have
also been retrenchments carried out by numerous companies across the industry. Wage negotiations for the prior
financial period concluded amicably during the final quarter of December 31, 2014 financial year. During the quarter
ended March 31, 2015 the Company held a consultation process with the unions in terms of Section 189A of the LRA,
resulting in the retrenchment of approximately 25% of the labour complement. The Company initiated a further
restructuring during the quarter ended June 30, 2015, focusing primarily on Magdalena mine which was implemented
in October 2015. Wage negotiations for the upcoming year have been concluded as of the date of this MD&A.

In addition, HIV is prevalent in Southern Africa and tuberculosis is prevalent in the KwaZulu-Natal Province of South
Africa, where the Company's operations are situated. Employees of the Company may have or could contract either
of these potentially deadly illnesses. The prevalence of HIV and tuberculosis could cause substantial lost employee
man-hours and may influence the Company's ability to source skilled labour. The above risks may limit or disrupt the
Company's business activities.

Also, the Company's mining operations must remain compliant with South African mining laws, including, inter alia,
the MPRDA and the Mining Charter, the conditions imposed by the licenses held by the Company, and the BEE
participation requirements. However, no assurance can be given that the Company will be able to meet the
objectives of South African mining laws going forward, including the 26% HDSA ownership objective and compliance
with the requirements of the Mining Charter. There is also no guarantee that the interests of the Company will be
wholly aligned with the interests of its (direct or indirect) BEE shareholders.

Infrastructure

Mining, processing, development and exploration activities depend, to one degree or another, on adequate
infrastructure. Reliable roads, bridges, power sources and water supply are important determinants that affect
capital and operating costs. Unusual or infrequent weather phenomena, sabotage, government or other interference
in the maintenance or provision of such infrastructure could adversely affect the Company's operations, financial
condition and results of operations.

Environmental Risks and Other Hazards

All phases of the Company's operations will be subject to environmental regulation in South Africa. Environmental
legislation in many countries is evolving and the trend has been toward stricter standards and enforcement,
increased fines and penalties for non-compliance, more stringent environmental assessments of proposed projects
and increasing responsibility for companies and their officers, directors and employees.

Compliance with environmental laws and regulations may require significant capital outlays on behalf of the
Company and may cause material changes or delays in the Company's intended activities. There can be no assurance
that future changes in environmental regulations and the manner in which the regulatory authorities enforce these
regulations will not adversely affect the Company's business, and it is possible that future changes in these laws or
regulations could have a significant adverse impact on some portion of the Company's business, causing the Company
to re-evaluate those activities at that time.
Mining involves various other types of risks and hazards, including: industrial accidents; processing problems; unusual
or unexpected geological structures; structural cave-ins or slides; flooding; fires; and periodic interruptions due to
inclement or hazardous weather conditions. These risks could result in damage to, or destruction of, mineral
properties, production facilities or other properties, personal injury, delays in mining, increased production costs,
monetary losses and possible legal liability.

Dependence on Key Personnel

The Company is dependent on a relatively small number of key personnel. The Company currently does not have key
person insurance on these individuals. Due to the Company's relatively small size, the loss of these persons or the
Company's inability to attract and retain additional highly skilled employees required for the operation of the
Company's activities may have a material adverse effect on the Company's business or future operations.

Dependence on Outside Parties

The Company has relied upon consultants, engineers, contractors and others and intends to rely on these parties for
exploration, extraction, development, construction and operating expertise. Substantial expenditures are required to
develop coal properties, to establish mineral reserves through drilling, to carry out environmental and social impact
assessments, to develop processes to extract coal and, in the case of new properties, to develop the exploration and
infrastructure at any particular site. If such parties' work is deficient or negligent or is not completed in a timely
manner, it could have a material adverse effect on the Company.

Effective October 31, 2015, STA is mining four sections at Magdalena. The Company retains legal and operational
responsibilities for these mining operations and must maintain adequate oversight and involvement to ensure
compliance and optimum performance by STA.

Exploration and Development

The exploration and development of coal deposits involves significant risks, which even a combination of careful
evaluation, experience and knowledge may not eliminate. While the discovery of a mineable deposit may result in
substantial rewards, few properties that are explored are ultimately developed into producing mines. Major expenses
may be required to establish additional reserves, to develop metallurgical processes and to construct mining and
processing facilities at a particular site.
It is impossible to ensure that the current exploration programs planned by the Company will result in profitable
commercial mining operations, and significant capital investment is required to achieve commercial production from
successful exploration efforts. There is no certainty that exploration expenditures made by the Company will result in
discoveries of commercial mineable quantities. Exploration for coal is highly speculative, involves substantial
expenditures, and is frequently non-productive.

Foreign Mining Tax Regimes

Mining tax regimes in foreign jurisdictions are subject to differing interpretations and are subject to constant change.
The Company's interpretation of taxation law as applied to its transactions and activities may not coincide with that
of the tax authorities. As a result, transactions may be challenged by tax authorities and the Company's operations
may be assessed, which could result in significant additional taxes, penalties and interest. In addition, proposed
changes to mining tax regimes in foreign jurisdictions could result in significant additional taxes payable by the
Company, which would have a negative impact on the financial results of the Company.

Insurance and Uninsured Risks

The Company's business is subject to a number of risks and hazards generally, including: adverse environmental
conditions; industrial accidents; labour disputes; unusual or unexpected geological conditions; ground or slope
failures; cave-ins; changes in the regulatory environment; and natural phenomena such as inclement weather
conditions, floods and earthquakes. Such occurrences could result in damage to mineral properties or production
facilities, personal injury or death, environmental damage to the Company's properties or the properties of others,
delays in mining, monetary losses and possible legal liability.

The businesses and properties of the Company are insured against loss or damage, subject to a number of limitations
and qualifications. Such insurance will not cover all the potential risks associated with a mining company's operations.

The Company may also be unable to maintain insurance to cover these risks at economically feasible premiums.
Insurance coverage may not continue to be available or may not be adequate to cover any resulting liability.
Moreover, insurance against risks such as environmental pollution or other hazards as a result of exploration and
production is not generally available to the Company or to other companies in the mining industry on acceptable
terms.

The Company might also become subject to liability for pollution or other hazards that may not be insured against or
that the Company may elect not to insure against because of premium costs or other reasons. Losses from these
events may cause the Company to incur significant costs that could have a material adverse effect upon its financial
performance and results of operations.

A process was initiated with the Company's insurers and underwriters to recover all or a portion of the costs relating
to the flooding incident at Magdalena in the final quarter of CY2014, in terms of which a settlement has been reached
between the parties.

Competition

The mining industry is intensely competitive. Significant competition exists for the acquisition of properties producing
or capable of producing coal. The Company may be at a competitive disadvantage in acquiring additional mining
properties because it must compete with other individuals and companies, many of which have greater financial
resources, operational experience and technical capabilities than the Company. The Company may also encounter
increasing competition from other mining companies in its efforts to hire experienced mining professionals. Increased
competition could adversely affect the Company's ability to attract necessary capital funding or acquire suitable
producing properties or prospects for mineral exploration in the future.

The Company's Securities May Experience Price Volatility

Securities markets have a high level of price and volume volatility, and the market price of securities of many
companies have experienced wide fluctuations in price that have not necessarily been related to the operating
performance, underlying asset values or prospects of such companies. Factors unrelated to the financial performance
or prospects of the Company include macroeconomic developments in North America and globally, and market
perceptions of the attractiveness of particular industries. There can be no assurance that continued fluctuations in
coal prices will not occur. As a result of any of these factors, the market price of the securities of the Company may
not accurately reflect the longer term value of the Company.

As of the date of this MD&A, RCF owns 108 732 804 Common Shares representing approximately 77.4% of the
currently issued and outstanding Common Shares. Assuming that RCF has the right to convert the remaining US$29.0
million convertible loan facility at its sole discretion (assuming the Investec warrants are exercised, interest is paid in
Common Shares and assuming a conversion price of C$0.0469), RCF would hold approximately 95.5% and Investec
would hold 2.4% of the then issued and outstanding Common Shares on a fully diluted basis, excluding the effects of
potential dilution by STA.

There is a risk that the Company's securities will not trade on the open market due to a majority holding by one
entity.

Foreign Assets

All of the assets of the Company are located in jurisdictions outside of Canada. As a result, it may be difficult for
shareholders resident in Canada or other jurisdictions to enforce judgments obtained against the Company in
Canada.

Currency Fluctuations

Currency fluctuations may affect the Company's costs and margins. Adverse fluctuations in the South African Rand
relative to the US Dollar and the Canadian Dollar and other currencies could materially and adversely affect the
Company's profitability, results of operation and financial position.

The Company's Directors and Officers may have Conflicts of Interests

Certain of the Company's directors and officers also serve as directors and/or officers of other companies involved in
natural resource exploration, development and production and as directors and/or officers of RCF being the major
shareholder of the Company. Consequently there exists the possibility that such directors may be in a position of
conflict in respect of proposed transactions or the operation of the Company.

The directors and officers of the Company are required by law to act honestly and in good faith with a view to the
best interests of the Company and to disclose any interests that they may have in any project or opportunity of the
Company. If a conflict of interest arises at a meeting of the Board of Directors of the Company, any director in a
conflict will be required to disclose his or her interest and abstain from voting on such matter.

NON-IFRS PERFORMANCE MEASURES

The Company has included in this document certain non-IFRS performance measures that are detailed below. These
non-IFRS performance measures do not have any standardized meaning prescribed by IFRS and, therefore, may not
be comparable to similar measures presented by other companies. The Company believes that, in addition to
conventional measures prepared in accordance with IFRS, certain investors use this information to evaluate the
Company's performance. Accordingly, they are intended to provide additional information and should not be
considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. The
definition for these performance measures and reconciliation of the non-IFRS measures to reported IFRS measures
are as follows:

Working Capital

Working capital includes current assets and current liabilities, excluding provisions and non-financial instruments.

                                                  September 30,    December 31,
                                                           2015            2014
                                                          R'000           R'000
Current assets
Cash and cash equivalents                                15 176          12 120
Trade and other receivables                              74 921          95 475
Inventories                                              35 126          27 035
Non-Interest bearing receivables                          1 671           1 588
Taxation receivable                                           -           2 336
                                                        126 894         138 554
Current liabilities
Trade and other payables (excluding provisions)         185 308         170 507
Taxation payable                                          1 389               -
Current portion of borrowings                            24 000           6 000
                                                        210 697         176 507
Net working capital deficiency                         (83 803)        (37 953)

Consolidated EBITDA

Consolidated EBITDA is defined as earnings before interest, tax, depreciation and amortization and adding back the
following: Impairment or reversal of an impairment of an asset, fair value adjustments to financial instruments, stock-
based compensation, foreign exchange gains and losses, and non-recurring transaction expenses or income.

The reconciliation of operating loss to EBITDA is as follows:

                                            9 months       10 months       3 months      3 months       3 months
                                               ended           ended          ended         ended          ended
                                       September 30,   September 30,  September 30, September 30,       June 30,
R'000                                           2015            2014           2015          2014           2015
Operating loss for the period              (307 209)       (317 684)      (193 392)      (64 076)       (81 950)
Depreciation and amortization                 58 218          84 358         20 106        20 572         19 781
Impairment of receivables                        (1)             345              -         (562)              -
Stock-based payment compensation                 626             308            134           308            492
Impairment of escrow funds                         -          19 427              -             -              -
Impairment of property, plant and
equipment and intangible assets              123 331         152 008        123 331             -              -
Fair value adjustments of financial
assets and conversion option                (88 545)          12 000       (16 158)        15 118       (65 543)
Loss on extinguishment of debt               111 843               -              -             -        111 843
Loss on remeasurement of non-current
assets held for sale                          10 833               -         10 833             -              -
Foreign exchange gains & losses               34 249          10 829         30 944          7 611         2 868
EBITDA                                      (56 655)        (38 409)       (24 202)       (21 029)      (12 509)

Headline earnings/(loss) per share

Headline earnings/(loss) is a profit measure required for JSE-listed companies as defined by the South African
Institute of Chartered Accountants. Headline earnings/(loss) per share is a basis for measuring earnings per share
which accounts for all the profits and losses from operational, trading, and interest activities, that have been
discontinued or acquired at any point during the period. Excluded from this figure are profits or losses associated
with the sale or termination of discontinued operations, fixed assets or related businesses, or from any permanent
devaluation or write off of their values.

Reconciliation of loss for the periods to headline loss is disclosed below:

                                                     9 months       10 months         3 months        3 months
                                                        ended           ended            ended           ended
                                                September 30,   September 30,    September 30,   September 30,
                                                         2015            2014             2015            2014
Loss for the period                             (384 145 228)   (308 379 799)    (261 817 416)    (70 079 750)
Net profit on disposal of property, plant and
equipment                                         (3 612 659)       6 708 810                -               -
Headline loss for the period                    (387 757 887)   (301 670 989)    (261 817 416)    (70 079 750)

Headline loss per share - basic and diluted            (4.76)          (7.29)           (2.48)          (1.41)

SUMMARY OF SECURITIES AS AT NOVEMBER 11, 2015

As at November 11, 2015 the following Common Shares, Common Share purchase options and share purchase
warrants were issued and outstanding:

- 140 426 396 Common Shares;
- 5 614 048 Common Share purchase options with exercise prices ranging from $0.065-$4.10 with a weighted
  average remaining contractual life of 3.94 years; and
- 34 817 237 warrants with a strike price of C$0.1446 maturing on July 3, 2019.

LIST OF DIRECTORS AND OFFICERS

Craig Wiggill               Director, Chairman of the Board of Directors
Robert Francis              Director
Edward Scholtz              Director
David Thomas                Director
John Wallington             Director
Malcolm Campbell            Chief Executive Officer
Sarah Williams              Chief Financial Officer and Corporate Secretary

November 12, 2015

Sponsor
Questco (Pty) Ltd


Date: 12/11/2015 05:42:00 Supplied by www.sharenet.co.za                     
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