PAM - Palabora Mining Company - Broad-Based Black Economic Empowerment

PAM - Palabora Mining Company - Broad-Based Black Economic Empowerment          
Transaction - Update                                                            
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")                                                   
BROAD-BASED BLACK ECONOMIC EMPOWERMENT ("BBBEE") TRANSACTION - UPDATE           
Shareholders are referred to the announcement published on SENS on 15 June 2010 
where it was announced that Palabora and its BBBEE partners had that day signed 
agreements to effect its BBBEE transaction (BEE Transaction), and to the        
subsequent update announcements relating to the BEE Transaction published on    
SENS on 15 October 2010 and 7 February 2011 and in the Company`s 2010 annual    
report released on 26 May 2011.                                                 
The BEE Transaction has not yet been implemented as Palabora has, inter alia,   
yet to receive the required regulatory approval from the Department of Mineral  
Resources (DMR) for the conversion of old order mining rights to new order      
mining rights and transfer of the relevant mineral rights to Palabora Copper    
(Proprietary) Limited ("Palabora Copper").                                      
Shareholders will be aware that the BEE Transaction involves the sale of        
Palabora`s business to Palabora Copper, and that this sale was structured to be 
tax neutral for both Palabora and Palabora Copper by reliance on section 45 of  
the Income Tax Act, 1962 (ITA), which provides tax rollover relief for an intra-
group transaction of this nature.                                               
The Draft Taxation Laws Amendment Bill, 2011 released for comment on 2 June 2011
proposes to suspend the operation of section 45 of the ITA for 18 months (Draft 
Amendment) on and from 3 July 2011 to 1 January 2013.  As presently formulated, 
the Draft Amendment would apply to the BEE Transaction as the transaction will  
likely be implemented during the period of the suspension.                      
If the Draft Amendment was to become law, and the BEE Transaction was to be     
implemented as presently formulated, Palabora would incur an immediate, material
tax charge.  This outcome is presently not commercially tenable for the BEE     
Transaction.                                                                    
The Company is advised that the Draft Amendment will have far reaching, adverse 
implications for industry in South Africa and is widely opposed by various      
interested parties.  In addition to this, Palabora (assisted by its professional
advisors) will actively make representations to Government to withdraw the Draft
Amendment or to amend it so as not to apply to the BEE Transaction.  In doing   
so, Palabora will be making submissions to the Parliamentary Standing Committee 
on Finance on Tuesday, 21 June 2011 and will also be making written submissions 
to National Treasury before 5 July 2011 - all in accordance with the public     
objection process established for the draft legislation.  Palabora will also    
seek to have direct engagement with relevant senior personnel within Government 
to address its concerns with the Draft Amendment.                               
If the outcome of the legislative objection process and engagement with         
Government is not favourable, it is presently Palabora`s intention not to       
proceed with the BEE Transaction in its current form.  In parallel with the     
above processes, Palabora will accordingly also consider and, where necessary,  
pursue comparable, alternative transaction structures in conjunction with its   
legal and financial advisors and the BEE partners.                              
Palabora management is presently confident that the situation will be resolved  
satisfactorily.  Shareholders will be advised accordingly should there be any   
material change in the prevailing position.                                     
Phalaborwa                                                                      
20 June 2011                                                                    
Sponsor:                                                                        
One Capital                                                                     
Date: 20/06/2011 08:30:00 Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department.                  
The SENS service is an information dissemination service administered by the    
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or            
implicitly, represent, warrant or in any way guarantee the truth, accuracy or   
completeness of the information published on SENS. The JSE, their officers,     
employees and agents accept no liability for (or in respect of) any direct,     
indirect, incidental or consequential loss or damage of any kind or nature,     
howsoever arising, from the use of SENS or the use of, or reliance on,          
information disseminated through SENS.