PALABORA MINING COMPANY LIMITED - Business Update year to date

Business Update year to date

      PALABORA MINING COMPANY LIMITED
      (Incorporated in the Republic of South Africa)
      Registration number – 1956/002134/06
      JSE Code: PAM
      ISIN: ZAE000005245
      (“Palabora” or “the Company”)

      BUSINESS UPDATE YEAR TO DATE



In the 2011 Annual Report, Palabora indicated that its strategic objectives were inter alia;
   I. continued development of the business case for Lift II,
  II. addressing the new environmental emissions legislation promulgated in 2010 that affect the
        smelter,
 III. growing magnetite and,
 IV. growing vermiculite within market constraints and,
as such the Company wishes to update the market on operations and this strategy given the events
of 2012.

The challenging global situation and the commodity price pressures have been challenging and
have seen Palabora addressing its cost base. To ensure that both short and long-term plans are
achieved operating costs and capital expenditure reductions are being addressed. As an example,
significant and tangible effort are going into energy savings to mitigate the effect of rising energy
costs.

Safety performance at Palabora across all our employees has been improving noticeably after the
Site Safety Acceleration Program conducted earlier in the year and the roll out of the Goal Zero
program. Nevertheless the fatality in October 2012 has saddened us immensely. We offer our
heartfelt condolences to the family affected and we wish to thank all personnel who assisted us
during that time. We are working with all appropriate parties to ensure, as far as is reasonably
practicable, that all our employees work in a safe and healthy working environment.

The hoisting shaft guide rope failure in the third quarter was a major event and whilst it has been
fully resolved the impact on the business was material and is a challenge however the manner in
which this hiatus in copper production was resolved was exemplary. The effect of the trucker’s
strike on copper production, which followed the shaft event, was material and we are pleased to
advise that copper production has returned to production at full capacity.

Magnetite shipments have continued to be pleasing during the year and discussions with Transnet
have been positive and fruitful and we look forward to a strong magnetite output for the year. This
has occurred despite the trucker’s strike.

During the third quarter, the Rio Tinto Investment Committee and the Palabora Board of Directors
reviewed the pre-feasibility work that has been completed on Lift II and endorsed the continuation
of critical work to the underground development activities and studies that will allow progression
to determine approval to full feasibility of Lift II.

Palabora continues to look for mechanisms that will improve the smelter’s contributions given its
age, technology and capacity. Investigations are ongoing into how we deal with the new
environmental emissions legislation and this is being assessed in conjunction with the smelter’s
age. Vermiculite has come under market-share pressure from the South American and other
producers and has seen mothballing of mining and the drawing down of inventory to manage this
situation.

Significant progress has been made in executing six of the seven converted mining rights through a
joint and aligned approach with our unions. We look forward to being in a position to enact our
BBBEE transaction upon fulfilment of all the suspensive conditions in the near future.

The Lift II, magnetite uplift and smelter investigations have improved the clarity on the pathway to
2030. In association with this clarity; Palabora’s management, unions, contractors and all
employees are the cornerstone that has allowed the Company to deal with the challenges of the
year and have been outstanding in the manner with which they have addressed the challenges.
The Company is thankful for their support.




      Phalaborwa
      3 December 2012

      Sponsor
      One Capital


      For further information, please contact:

      Dikeledi Nakene, CFO
      Office: +27 (0) 15 780 2277

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