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FIRESTONE ENERGY LIMITED - Independent Specialist Valuation Report

Release Date: 21/02/2013 09:25
Code(s): FSE     PDF:  
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Independent Specialist Valuation Report

  FIRESTONE ENERGY LIMITED
(Incorporated in Australia)
(Registration number ABN 058 436 794)
Share code on the JSE Limited: FSE  
Share code on the ASX: FSE
ISIN: AU000000FSE6
(SA company registration number 2008/023973/10)
("FSE" or "the Company")


                                                                                                                                   About Firestone Energy

                                                                                                                                   Firestone Energy Limited is an
          21 February 2013
                                                                                                                                   independent, Australian exploration and
                                                                                                                                   development company listed on the
                                                                                                                                   Australian Stock Exchange Ltd (ASX) and
                                    Independent Specialist Valuation Report                                                        the Johannesburg Stock Exchange (JSE).
                                                                                                                                   Firestone Energy has entered into a Joint
                                                                                                                                   Venture with Sekoko Resources (Pty) Ltd
                                                                                                                                   through which Firestone Energy has
          Firestone Energy Limited (ASX/JSE: FSE) (the “Company” or “Firestone”) is
                                                                                                                                   acquired the right to 60% participation
          pleased to announce the release of an Independent Specialist Valuation Report in
                                                                                                                                   interests in the Waterberg Coal Project
          relation to the coal assets of the Company’s Waterberg Coal Project Joint Venture                                        located in Lephalale area, Limpopo Province,
          with Sekoko Resources.                                                                                                   South Africa.

          The Company engaged VenmynDeloitte to prepare the Independent Specialist                                                 The first stage of the project is to develop the
          Valuation Report and Venmyn Deloitte was instructed by Deloitte Corporate                                                Smitspan mine which has a substantial
          Finance Pty Limited (“Deloitte Corporate Finance”). Deloitte Corporate Finance                                           measured thermal coal resource and to
          has been separately engaged by the Company to prepare an Independent Expert’s                                            develop the Vetleegte mine which is a
                                                                                                                                   substantial metallurgical coal deposit.
          Report in relation to the off-market takeover offer from Range River Gold Limited
          (ASX: RNG) to acquire all of the shares in the Company for consideration of 1                                            Firestone Energy is committed to becoming a
          share in RNG for every 2 shares in the Company (“Offer”) to opine on whether the                                         profitable independent coal and energy
          Offer is fair and reasonable to the Company’s shareholders.                                                              producer at its projects in South Africa,
                                                                                                                                   thereby making a substantial contribution to
          The Deloitte Corporate Finance Independent Expert’s Report will take into                                                the social and economic development of the
          consideration the Independent Specialist Valuation Report and both reports will                                          Lephalale area and South Africa.
          accompany Firestone’s Target’s Statement.
                                                                                                                                   Corporate Details
                                                                                                                                                                        ASX: FSE
          All Firestone announcements are available on the Company’s website                                                                                            JSE: FSE
          on www.firestoneenergy.com.au and via www.asx.com.au.                                                                                                    Issued Capital:
                                                                                                                                                    3,549 million ordinary shares
          Yours sincerely,
                                                                                                                                                            Major Shareholders:
                                                                                                                                                     Sekoko Resources (Pty) Ltd
                                                                                                                                                                 Linc Energy Ltd
                                                                                                                                                         BBY Nominees Pty Ltd
                                                                                                                                                       Bell Potter Nominees Ltd
          David Knox
          Chief Executive Officer                                                                                                                        Directors and Officers
          www.firestoneenergy.com.au
                                                                                                                                                     Non Executive Directors:
          Tel: Australia (+61 08 9287 4600)
                                                                                                                                                     Mr Tim Tebeila (Chairman)
               South Africa (+27 11 706 3548)                                                                                                  David Perkins (Deputy Chairman)
                                                                                                                                                                 Dr Pius Kasolo
                                                                                                                                                                Ben Mphahlele
          Competent Persons Statement                                                                                                                         Kobus Terblanche
                                                                                                                                                                    David Hillier
          Information contained in the attached report that relates to Exploration results and Mineral Resources and is based on                                    Oren Zohar
                                                                                                                                                                    Jack James
          information compiled by Mr Neil McKenna who is employed by Venmyn Deloitte and is a member of the Australasian
          Institute of Mining and Metallurgy and has sufficient experience which is relevant to the style of mineralisation and                                     Officers:
          type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as                             Mr David Knox CEO
          defined in the 2004 Edition of the “Australasian Code for the Reporting of Exploration Results, Mineral Resources and                       Ms Amanda Matthee CFO
                                                                                                                                            Mr Jerry Monzu Company Secretary
          Ore Reserves” (The JORC Code). Mr McKenna consents to the inclusion of the attached report with this
          announcement of the matters based on his information in the form and context in which it appears.
                                                                                                                                                                       Contact:
                                                                                                                                                    Suite B9, 431 Roberts Road
                                                                                                                                                Subiaco, Western Australia 6008





Independent Specialist Valuation Report
on the Coal Assets of the Sekoko Coal (Pty)
Limited (Sekoko Coal) – Firestone Energy Limited
(Firestone) Joint Venture
(Sekoko Coal – Firestone JV)
at their Waterberg Coal Project, South Africa




N. MCKENNA (COMPETENT EXPERT)
M.Sc. (Geol), Pr. Sci. Nat (400199/04)
MAusIMM (309030), MSAIMM, MGSSA, M. Inst. D.
DIRECTOR

J.A. MYBURGH
B.SC. (Mathematics)
MINERAL PROJECT ANALYST

Reference No.:- VMD1393R
Effective Date :- 21st January 2013
Final Report Date : 14th February 2013
14th February 2013                                                                                                      

Independent Specialist Valuation Report
on the Coal Assets of the Sekoko Coal (Pty)
Limited (Sekoko Coal) – Firestone Energy Limited
(Firestone) Joint Venture
(Sekoko Coal – Firestone JV)
at their Waterberg Coal Project, South Africa
Deloitte Corporate Finance Pty Limited
Woodside Plaza
Level 14
240 St Georges Terrace
Perth WA 6000




Synopsis
Venmyn Deloitte was instructed by Deloitte Corporate Finance Pty Limited (Deloitte), an Australian company that holds
an Australian Financial Services Licence, to prepare a Specialist Valuation Report on certain of the coal assets
(contributing properties) of the Joint Ventures (JV) between Sekoko Coal and Firestone Energy Limited (Firestone) at
their Waterberg Coal Project (Sekoko Coal – Firestone JV), located in the Limpopo Province, South Africa. Venmyn
Deloitte understands that Deloitte will use this Specialist Valuation Report for the purposes of compiling an Independent
Experts Report in relation to a proposed acquisition of 100% of the shares in Firestone by Range River Gold Limited.

To this end, Venmyn Deloitte has independently assessed the mineral assets and the results have been incorporated
into this Specialist Valuation Report.

The valuation considers the Fair Value of the coal assets of the T1, T2 and T3 agreements properties (the contributing
properties or the Waterberg Coal Project) on a 100% attributable basis. No assessment is made with respect to the
relative values attributable to either Firestone or Sekoko Coal, nor is any opinion expressed regarding the proposed
transaction.

The contributing properties are situated less than 5km to the west of the Grootegeluk Colliery mining lease boundary,
approximately 240km northwest of Pretoria (Tshwane) and 70km south of the border with Botswana. The area is
accessed via the tarred R517 between Modimolle (formerly Nylstroom) and Lephalale. The railway line from Thabazimbi
terminates immediately north of Grootegeluk Colliery and power lines from the Matimba Power Station traverse the area.

Approximately 1.4 billion TTIS (Total Tonnes In Situ) of coal has been classified into the Measured, Indicated and
Inferred categories for the contributing properties. These JORC compliant Coal Resources form the basis of the valuation
of these properties, reported herein.

The mineral assets of the contributing properties were valued on the basis of available historical and recent exploration
data and current Coal Resources, using methods appropriate for the development status of the project. Venmyn
Deloitte?s valuation considered the prospectivity of the project and attached a value range consistent with that
assessment. The methods applied are accepted industry methods which aim to reduce subjectivity by assessing the
relevance and effectiveness of exploration work.

This report has been prepared for Deloitte in compliance with, and to the extent required by, the Australian Code for the
Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for Independent Expert Reports
(VALMIN Code, 2005). Consistent with the VALMIN Code, in this report Fair Value is considered to be comprised of the
„Intrinsic? or „Technical? value and a premium or discount relating to market, strategic or other considerations.
14th February 2013                                                                                                     

For the purposes of this valuation, Venmyn Deloitte have assumed that Sekoko Coal (and the JV) have secure tenure
over all contributing properties.

To assess the Intrinsic/Technical Value, both the Cost and Comparable Transactions valuation approaches were utilised.
These assessments resulted in an Intrinsic or Technical Value range of between ZAR1,247m and ZAR1,437m, with a
preferred value of ZAR1,344m for the mineral assets of the contributing properties.

Our assessment suggests that it would be appropriate to apply a discount to the Intrinsic/Technical Value of the mineral
assets, in terms of the requirements of VALMIN, 2005 in assessing Fair Value. In this case, Venmyn Deloitte consider
that a discount of 21% is appropriate.

                                                INTRINSIC OR TECHNICAL VALUE
                                                   COMPARABLE                                           FAIR
                                          COST                     PREFERRED              DISCOUNT
                  FARM                             TRANSACTION                  TOTAL                  VALUE
                                       APPROACH                      VALUE                   (%)
                                                     APPROACH                   (ZARm)                 (ZARm)
                                         (ZARm)                      (ZARm)
                                                       (ZARm)
        Olieboomsfontein 220 LQ                  1.0           N/A        1.0
 T1                                                                              122.3
        Vetleegte 304 LQ                       116.6         126.0      121.3
        Minnasvlakte 258 LQ                     10.1          77.3       43.7
        Smitspan 306 LQ                      1,056.3       1,108.0    1,082.1
 T2                                                                             1,173.2         21%     1,067.8
        Massenberg 305 LQ                       29.3          31.4       30.3
        Hooikraal 315 LQ                        14.6          19.5       17.1
        Swanepoelpan 262LQ                      19.2          71.6       45.4
 T3                                                                               48.0
        Duikerfontein 263LQ                      0.0           2.6        2.6
                          TOTAL              1,247.1       1,436.5    1,343.6   1,343.6         21%     1,067.8
Note: Rounding may result in computational discrepancies


This results in a Fair Value of ZAR1,068m. If a value range is required, we would consider it appropriate to apply the
~21% discount to the technical valuation range which would provide a value range of ZAR991m and ZAR1,142m.

The valuation of exploration assets is, by nature, subjective and uncertain. The placing of a specific monetary value on
historical exploration can be misleading, and the reader is advised to consider the full ranges in which each property has
been evaluated, and to further consider the technical merits of each project area and form an opinion regarding its
prospectivity on the basis of the data presented in this report.
                                                                                                  

Disclaimer and Risks
Venmyn Deloitte has prepared this Specialist Valuation Report and, in so doing, has utilised information provided by
Sekoko Coal and Firestone as to its operational methods and forecasts. Where possible, this information has been
verified from independent sources with due enquiry in terms of all material issues that are a prerequisite to comply with
the JORC and Valmin Code. Venmyn Deloitte and its directors accept no liability for any losses arising from reliance
upon the information presented in this report.

The authors of this Specialist Valuation Report are not qualified to provide extensive commentary on legal issues
associated with Sekoko Coal?s right to the mineral properties. Sekoko Coal and its attorneys have provided certain
information, reports and data to Venmyn Deloitte in preparing this Specialist Valuation Report which, to the best of
Sekoko Coal?s knowledge and understanding, is complete, accurate and true and Sekoko Coal and Firestone
acknowledge that Venmyn Deloitte has relied on such information, reports and data in preparing this Specialist Valuation
Report. No warranty or guarantee, be it express or implied, is made by the authors with respect to the completeness or
accuracy of the legal aspects of this document.


Operational Risks
The businesses of mining and mineral exploration, development and production by their natures contain significant
operational risks. The businesses depend upon, amongst other things, successful prospecting programmes and
competent management. Profitability and asset values can be affected by unforeseen changes in operating
circumstances and technical issues.

Political and Economic Risks
Factors such as political and industrial disruption, currency fluctuation, increased competition from other prospecting and
mining rights holders and interest rates could have an impact on Sekoko Coal and/or Firestone's future operations, and
potential revenue streams can also be affected by these factors. The majority of these factors are, and will be, beyond
the control of Sekoko Coal and/or Firestone or any other operating entity.

Forward Looking Statements
This report contains forward-looking statements. These forward-looking statements are based on the opinions and
estimates of Venmyn Deloitte and Sekoko Coal and Firestone at the date the statements were made. The statements are
subject to a number of known and unknown risks, uncertainties and other factors that may cause actual results to differ
materially from those forward-looking statements anticipated by Venmyn Deloitte and Sekoko Coal and Firestone.
Factors that could cause such differences include changes in world coal markets, equity markets, costs and supply of
materials, and regulatory changes. Although Venmyn Deloitte believes the expectations reflected in the forward-looking
statements to be reasonable, Venmyn Deloitte does not guarantee future results, levels of activity, performance or
achievements.
                                                                                                                                                                  
Independent Specialist Valuation Report
on the Coal Assets of the Sekoko Coal (Pty)
Limited (Sekoko Coal) – Firestone Energy Limited
(Firestone) Joint Venture
(Sekoko Coal – Firestone JV)
at their Waterberg Coal Project, South Africa

List of Contents
1.     Introduction ................................................................................................................................................................. 1
2.     Scope of the Opinion ................................................................................................................................................... 1
3.     Statement of Independence ........................................................................................................................................ 4
4.     Competent Persons Declaration ................................................................................................................................. 5
5.     Site Visits .................................................................................................................................................................... 5
6.     Sources of Information ................................................................................................................................................ 5
7.     THE WATERBERG COAL PROJECT......................................................................................................................... 6
       7.1.          Location ........................................................................................................................................................ 6
       7.2.          Accessibility .................................................................................................................................................. 6
       7.3.          Climate and Vegetation ................................................................................................................................ 6
       7.4.          Local Resources ........................................................................................................................................... 6
       7.5.          Infrastructure................................................................................................................................................. 6
       7.6.          Topography................................................................................................................................................... 7
       7.7.          Legal Tenure................................................................................................................................................. 7
                     7.7.1.          Mineral Rights Summary.............................................................................................................. 7
                     7.7.2.          Effective Ownership of the Waterberg Coal Project ..................................................................... 8
       7.8.          GEOLOGICAL SETTING .............................................................................................................................. 8
                     7.8.1.          Regional Geological Setting......................................................................................................... 8
                                     7.8.1.1.           The Volksrust Formation ........................................................................................ 10
                                     7.8.1.2.           The Vryheid Formation ........................................................................................... 12
                                     7.8.1.3.           Grootegeluk Colliery ............................................................................................... 12
                     7.8.2.          Local Geology ............................................................................................................................ 13
8.     Geological Modelling ................................................................................................................................................. 13
9.     Reporting and Classification of Coal Resources ....................................................................................................... 15
10. Mineral Asset Valuation............................................................................................................................................. 17
       10.1.         Technical or Intrinsic Value of the Mineral Assets ...................................................................................... 19
                     10.1.1.         Cost Approach ........................................................................................................................... 20
       10.2.         Comparable Transaction Approach ............................................................................................................ 22
       10.3.         Intrinsic value Summary ............................................................................................................................. 25
       10.4.         Implied Value of the Mineral Assets............................................................................................................ 27
       10.5.         Fair Value of the Mineral Assets ................................................................................................................. 27
       10.6.         Valuation Summary .................................................................................................................................... 27
       10.7.         Key Assumptions ........................................................................................................................................ 28
       10.8.         Key Risks .................................................................................................................................................... 28
11. Conclusions............................................................................................................................................................... 30
12. Global Coal Market Review ....................................................................................................................................... 31
                                                                                                                                                                   
       12.1.        Reserves .................................................................................................................................................... 31
       12.2.        Supply......................................................................................................................................................... 32
       12.3.        Demand ...................................................................................................................................................... 34
       12.4.        Future Demand ........................................................................................................................................... 34
                    12.4.1.         Thermal Coal ............................................................................................................................. 34
                    12.4.2.         Coking Coal ............................................................................................................................... 36
       12.5.        Future Supply ............................................................................................................................................. 36
13. South African Coal Mining Industry ........................................................................................................................... 37
       13.1.        Reserves .................................................................................................................................................... 37
       13.2.        Supply......................................................................................................................................................... 37
       13.3.        Demand ...................................................................................................................................................... 37
                    13.3.1.         The Export Market ..................................................................................................................... 38
                    13.3.2.         The Domestic Market ................................................................................................................. 38
       13.4.        Prices .......................................................................................................................................................... 39
                    13.4.1.         Thermal Coal ............................................................................................................................. 39
                    13.4.2.         Coking Coal ............................................................................................................................... 40
       13.5.        Outlook ....................................................................................................................................................... 40
                    13.5.1.         Sales to Eskom .......................................................................................................................... 41
                                    13.5.1.1.          The Impact of the SAPP ......................................................................................... 41
                    13.5.2.         Export Sales .............................................................................................................................. 42
14. References ................................................................................................................................................................ 43
15. Certificates of Competent Persons ............................................................................................................................ 44




List of Figures - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS BELOW
Figure 1 : Locality of the Coal Assets in Relation to South African Coalfields ..................................................................... 2
Figure 2 : Location of the Contributing Properties of the Waterberg Coal Project ............................................................... 3
Figure 3 : Corporate Structure and Participation Interests of the Joint Venture .................................................................. 9
Figure 4 : Regional Geology.............................................................................................................................................. 11
Figure 5 : Stratigraphy of the Waterberg Coal Zones and Grootegeluk Colliery Mining Benches ..................................... 14
Figure 6 : Project Lifetime Value and Valuation Methodology Curve for Mineral Resource Projects ................................ 18
Figure 7 : Valuation Curve for South African Coal Projects ............................................................................................... 23
Figure 8 : Global Coal Reserves (end 2011) ..................................................................................................................... 31
Figure 9 : Coal Global Production 1981 – 2011 (Mt) ......................................................................................................... 33
Figure 10 : Coal Global Production 1981 – 2011 (Mtoe) ................................................................................................... 33
Figure 11 : Coal Consumption 2000-2011......................................................................................................................... 34
Figure 12 : Projected Demand for Energy ......................................................................................................................... 35
Figure 13 : Coal Price History from July 2002 to March 2011 (USD) ................................................................................ 40




List of Tables
Table 1 : Sekoko Coal-Firestone JV Agreements ............................................................................................................... 1
Table 2 : Legal Tenure Summary for the Contributing Properties. ...................................................................................... 7
Table 3 : SANS Classification of Coal Resources ............................................................................................................. 15
Table 4 : Coal Resources of the Contributing Properties (Venmyn, August 2010) ............................................................ 16
Table 5 : Valuation Approach and Methodologies ............................................................................................................. 17
Table 6 : Coal Prospect Exploration Phase Classification and the Corresponding PEM ................................................... 21
14th February 2013                                                                                                                                                    



Table 7 : Cost Approach Valuation .................................................................................................................................... 22
Table 8 : Summary of the Results of the Comparable Transaction Valuation. .................................................................. 25
Table 9 : Intrinsic Value Summary .................................................................................................................................... 25
Table 10 : Comparative Valuation Based on Venmyn Deloitte Resource Estimates ......................................................... 26
Table 11: Summary of Valuation Results .......................................................................................................................... 27
Table 12 : Global Coal Reserves (end 2011) .................................................................................................................... 31
Ta le 13 : elected Coal Producers 2011 Production ..................................................................................................... 32
Table 14 : Predicted World Coal-fired Generating Capacity by Country and Region (GW) ............................................... 35
Table 15 : Electricity Generation Mix in Selected Southern African Countries (MW) ........................................................ 38
Table 16 : Weighted Coal Qualities by Sector ................................................................................................................... 39
14th February 2013                                                                                                        1



1. Introduction
       Venmyn Deloitte was instructed by Deloitte Corporate Finance Pty Limited (Deloitte), an Australian company that
       holds an Australian Financial Services Licence, to prepare a Specialist Valuation Report on certain of the coal
       assets (contributing properties) of the Joint Ventures (JV) between Sekoko Coal and Firestone Energy Limited
       (Firestone) at their Waterberg Coal Project (Sekoko Coal – Firestone JV), located in the Limpopo Province, South
       Africa. Venmyn Deloitte understands that Deloitte will use this Specialist Valuation Report for the purposes of
       compiling an Independent Experts Report in relation to a proposed acquisition of 100% of the shares in Firestone
       by Range River Gold Limited.

       The Sekoko Coal-Firestone JV encompasses three separate agreements between Sekoko Coal and Firestone:-

       Table 1 : Sekoko Coal-Firestone JV Agreements
                                                                   SEKOKO
                                                                                 FIRESTONE
                                                                    COAL
                        SIGNATURE                                                 CURRENT
         AGREEMENT                           PROPERTIES           CURRENT
                           DATE                                                  EFFECTIVE
                                                                  EFFECTIVE
                                                                                  INTEREST
                                                                  INTEREST
                                       Olieboomsfontein 220LQ
              T1         12/06/2008                                   40%            60%
                                       Vetleegte 304LQ
                                       Minnasvlakte 258LQ
                                       Smitspan 306LQ
              T2         01/03/2009                                   40%            60%
                                       Massenberg 305LQ
                                       Hooikraal 315LQ
                                       Duikerfontein 263LQ
              T3         02/02/2010                                   40%            60%
                                       Swanepoelpan 262LQ


       To this end, Venmyn Deloitte has independently assessed the mineral assets and the results have been
       incorporated into this Specialist Valuation Report. This valuation considers the Fair Value of the coal assets of the
       T1, T2 and T3 agreements properties (the contributing properties or Waterberg Coal Project) on a 100%
       attributable basis. No assessment is made in this report with respect to the relative values attributable to either
       Firestone or Sekoko Coal, nor is any opinion expressed regarding the proposed transaction. This valuation is
       therefore an assessment of the total Fair Value of the mineral assets only.




2. Scope of the Opinion
       This valuation considers the Fair Value of the coal assets of the T1, T2 and T3 agreement properties (the
       contributing properties or Waterberg Coal Project).

       In the execution of the mandate, Venmyn Deloitte have considered the strategic merits of the contributing
       properties and defined the valuation outcomes on an open and transparent basis. Venmyn Deloitte's mineral
       asset valuation (MAV) has been carried out using industry accepted methods being mindful of the development
       status of each property.

       The MAV included in this report has been prepared in compliance with and to the extent required by The Code
       and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert
       Reports 2005 (VALMIN Code), prepared by the VALMIN Committee, a joint committee of The Australian Institute
       of Mining and Metallurgy (AusIMM), the Australasian Institute of Geoscientists and the Mineral Industry
       Consultants Association with the participation of the Australian Securities and Investment Commission, the ASX,
       the Minerals Council of Australia, the Petroleum Exploration Society of Australia, the Securities Association of
       Australia and representatives from the Australian finance sector.

       These guidelines are considered by Venmyn Deloitte to be a concise recognition of the best practice valuation
       methods for this type of mineral asset and accord with the principles of open and transparent disclosure that are
       embodied in internationally accepted Codes for Corporate Governance.
                                                                                                                                                                                  Figure 01

                                                           Firestone Energy
LOCALITY OF THE COAL ASSETS IN RELATION TO SOUTH AFRICAN COALFIELDS
    LOCALITY WITHIN SOUTH AFRICA

       AREA OF INTEREST - PLEASE REFER TO WEBSITE FOR ALL MAPS

                                                                                                       

       This Specialist Valuation Report considers the Fair Value of the coal assets of the contributing properties at the
       effective date (21 January 2013). This Specialist Valuation Report has been compiled based on information
       available up to and including the effective date of this report. The valuation is therefore only valid for this date and
       may change over time in response to economic, market, legal or political factors, in addition to changes in the
       Coal Resources and their classification as a result of further exploration.

       The valuation of the mineral assets has been conducted on a 100% attributable basis. All monetary values
       included in this report are expressed in South African Rands (ZAR), unless otherwise denoted.

       In the execution of the mandate, Venmyn Deloitte undertook a technical assessment of the contributing assets
       and also considered the strategic merits of each of the mineral assets. This work has been based upon technical
       information which has been supplied by Sekoko Coal and Firestone, and which independent review has been
       performed by Venmyn Deloitte, where possible. Sekoko Coal and Firestone have warranted in writing that they
       have openly provided all material information to Venmyn Deloitte which, to the best of their knowledge,
       understanding, and belief is complete, accurate and true, having made all reasonable enquiries and has not
       omitted anything likely to affect its import.

       Venmyn Deloitte has prepared this Specialist Valuation Report in accordance with and to the extent required by
       the Code for Technical Assessment and Valuation of Mineral and Petroleum Assets and Securities for
       Independent Expert Reports, as amended (the Valmin Code, 2005).

       Venmyn Deloitte consents to the inclusion of this Specialist Valuation Report in Deloitte's Independent Experts
       Report in relation to a proposed acquisition of Firestone shares, and to reference any part of this report, provided
       that no portion is used out of context or in such a manner as to convey a meaning which differs from that set out
       in the whole report.

       Venmyn Deloitte reserves the right to, but will not be obliged to, revise this report or sections therein, and
       conclusions thereto, if additional information becomes known to Venmyn Deloitte subsequent to the date of this
       report.

       This Specialist Valuation Report provides a detailed description of each asset, which includes reference to its
       tenure, status of development, recent exploration and production, resources and reserves, method of valuation,
       valuation assumptions and valuation results. Venmyn Deloitte has also included a review of the Global and South
       African coal industry (in Sections 12 and 13).


3. Statement of Independence
       Neither Venmyn Deloitte nor its staff have, or have had, any interest in the contributing properties capable of
       affecting their ability to give an unbiased opinion and, have not received, and will not receive, any pecuniary or
       other benefits in connection with this assignment, other than normal consulting fees. Neither Venmyn Deloitte nor
       any of its personnel involved in the preparation of this Specialist Valuation Report have any material interest in
       either Sekoko Coal or Firestone.

       Venmyn Deloitte has carried out the valuation in accordance with the relevant provisions of ASIC Regulatory
       Guides (RG), in particular RG111.99 and RG112 (Section E) and Venmyn Deloitte is independent under ASIC RG
       112.

       Venmyn Deloitte was remunerated a fixed fee amount for the preparation of this report, with no part of the fee
       contingent on the conclusions reached, or the content. Except for these fees, Venmyn Deloitte has not received
       and will not receive any pecuniary or other benefit whether direct or indirect for or in connection with the
       preparation of this report.

       Venmyn Deloitte have conducted other valuations for Firestone in the past two years, the most recent previous
       public valuation being in May 2012, which was used by BDO Corporate Finance (WA) (Pty) Ltd in the preparation
       of an Independent Experts Report at that time. In January 2013, Venmyn Deloitte conducted a valuation for
       Firestone, which was not made public. This report represents an update of the January 2013 report.
                                                                                                          



4. Competent Persons Declaration
       Venmyn Deloitte?s professional advisors and directors are Independent Experts as defined by the JORC Code,
       2012. They are also members of the Australasian Institute of Mining and Metallurgy (AusIMM) which embodies
       the JORC Code and the Valmin Code. The Competent Person involved in the preparation of this report is a
       member in good standing with his professional institutions, and has the required qualifications and experience as
       defined in the JORC and Valmin Codes to conduct this valuation.

       Venmyn Deloitte is an independent advisory company. Its consultants have extensive experience in preparing
       competent persons', technical advisers' and valuation reports for mining and exploration companies. The authors
       to this report are qualified to express their professional opinions on the values of the mineral assets described. To
       this end, Competent Persons? Certificates are presented in Section 15.




5. Site Visits
       The Valmin Code requires that site visits be conducted to each asset being valued. A site visit to the contributing
       properties was conducted by the authors of this report in July 2010 in preparation of a resource assessment and
       MAV at that time.

       Since no material exploration or in-field developmental work has occurred on the contributing properties since this
       site visit, it was not considered necessary, by Venmyn Deloitte, to visit the site again for the purposes of the MAV
       reported herein. In addition, Venmyn Deloitte is fully familiar with the geological and operating environment in
       which the contributing properties occur, having conducted numerous techno-economic evaluations of other
       projects within the Waterberg Coalfield.




6. Sources of Information
       Venmyn Deloitte has based its assessment of the contributing properties, reported herein, on information
       provided by Sekoko Coal and Firestone, along with technical reports by its contractors and associates and other
       relevant published data. Drafts of this report have been provided to Sekoko Coal and Firestone in order to identify
       and address any factual errors or omissions prior to finalisation.

                                                                                                                 
       The report has been prepared based on exploration information available up to and including the 21 January
       2013.

       In broad terms we have relied upon, but were not restricted to, the following principal sources of information: -
               - current corporate structure and ownerships;
               - exploration expenditure data as at 31 December 2012;
               - the Firestone website as at 21 January 2013;
               - the Firestone Quarterly Report of 30 September 2012;
               - the Mineral Resources Statement, prepared by Venmyn (now Venmyn Deloitte), as at August 2010;
               - the Mineral Asset Valuation Report, prepared by Venmyn (now Venmyn Deloitte) in May 2012;
               - publicly available information relating to the coal exploration and mining sector, as detailed in Section 15;
               - the current Venmyn Deloitte coal transaction and valuation databases;
               - the memorandum of understanding with Eskom for a 30 year coal supply agreement; and
               - publicly available information relating to Sekoko Coal and Firestone that we deemed to be relevant,
                including:-
                      - share price movements;
                      - company announcements; and
                      - media articles.


7. THE WATERBERG COAL PROJECT
       7.1.      Location
                 The contri uting properties are situated less than 5km west of Exxaro's Grootegeluk Mine oundary,
                 240km northwest of Pretoria ( outh Africa?s capital) and 70km south of the order with Botswana (Figure 2).

       7.2.      Accessibility
                 The properties are well placed with regards to the local infrastructure, located approximately 20km from
                 the railway line that runs from Lephalale to Pretoria, and extends to Maputu, Richards Bay and Saldana
                 Bay (Figure 2). The railway line terminates immediately north of the Grootegeluk Mine (Figure 2).

                 The road network in the area is well established, with the tarred D1675 within 10km from the contributing
                 properties.

       7.3.      Climate and Vegetation
                 The climate of the area is warm, which ensures that exploration and mining can take place throughout
                 the year. Summers are hot (averaging highs of 35ºC) with occasional thunder storm activity. The winters
                 are mild (averaging highs of approximately 20ºC) and generally dry.

                 The Waterberg is generally dry, with an annual average rainfall of 450mm, and prone to drought.

                 The vegetation of the area consists of sparse Bushveld, with the main land use being for game farming.
                 The Waterberg Coal Project properties are all currently being utilised as game farms.

       7.4.      Local Resources
                 The nearest town is that of Lephalale (Figure 2), which is located approximately 40km east of the
                 contributing properties. The town is a regional centre and provides modern conveniences, including
                 accommodation and services. The town is also a source of fuel and la our. The town services Eskom?s
                 Matim a Power tation as well as Exxaro's Grootegeluk Coal Mine among other industries.

                 Lephahale is approximately 3.5 hours drive from Pretoria ( outh Africa's capital) and Johannes urg
                 ( outh Africa's economic hu ) on good tarred roads and is also connected by a well established rail
                 system.

       7.5.      Infrastructure
                 National infrastructure, including Transnet?s Railway line (which terminates at the Grootegeluk Mine) and
                 Eskom?s power distri ution network lie within 20km southwest of the contributing properties (Figure 2).

                 Eskom's existing 3,900MW Matim a Power tation is located adjacent to the Grootegeluk Mine,
                 approximately 15km west of the contri uting properties. Eskom's planned 4,800MW Medupi Power
                 Station is located approximately 10km south of the Waterberg Coal Project properties, and is expected to
                 be commissioned during 2014. Eskom plans to build at least one additional power station in the
                 Waterberg. This together with Medupi will require an additional 30mtpa of coal.

                 In 2012, the South African government made a number of pronouncements on infrastructure (particularly
                 water and rail) improvements in the Waterberg Coalfield region of South Africa.

                 The rail division of Transnet has undertaken to spend ZAR7b on rail upgrades in the next five years to
                 increase coal exports from Limpopo as well as to ensure that coal from the region can reach South
                 Africa?s existing power stations in Mpumalanga, efore their traditional feeder mines in Mpumalanga are
                 depleted. Phase one includes an upgrade of the existing route from the Waterberg to Ermelo via
                 Rustenburg and Pyramid South and includes the construction of passing loops and the increase in the
                 axle loads capacity (Smith, 2012). Phase two of the investment programme is not on the capital
                 expenditure schedule for the next seven years.
                                                                                                                    

                   This involves the expenditure of ZAR31bn on a 450km line from south of Thabazimbi to
                   Broodsnyersplaas, north of Ermelo, as well as the upgrading of the existing line between Thabazimbi
                   and the Waterberg (Smith, 2012)

       7.6.        Topography
                   The topography of the contributing properties is generally a flat plain, with small undulations over the
                   project area. The elevation varies between ~860m above mean sea level (amsl) to ~900mamsl. The
                   topography dips gently to the north and west towards the Limpopo River valley.

                   The Limpopo River, which forms the border between South Africa and Botswana in this area, is a
                   perennial river, and is located approximately 15km from the contributing properties.

       7.7.        Legal Tenure
                   7.7.1.      Mineral Rights Summary
                               The contributing properties are tabulated in Table 2 and illustrated in Figure 2, respectively:-

       Table 2 : Legal Tenure Summary for the Contributing Properties.
                                                         SURFACE            MINERAL RIGHTS              STATUS OF            EXPIRY
         AGREEMENT               FARM NAME
                                                         AREA (ha)              HOLDER                MINERAL RIGHT           DATE
                                                                       Uzalile Property Services
                                                                                                    Granted New Order
                                                                       (Pty) Ltd (60%) and Sekoko
                            Vetleegte 304LQ                   1,134                                 Prospecting Right No.   12/11/2011*
                                                                       Resources (Pty) Ltd (40%)
                                                                                                    651/2006, on 19/10/06
              T1                                                       JV
                                                                                                    Granted New Order
                            Olieboomsfontein 220LQ            1,092    Sekoko Coal (Pty) Ltd        Prospecting Right No.   12/10/2010*
                                                                                                    681/2007, on 13/10/05
                                          SUB TOTAL         2,225.9
                            Minnasvlakte 258 LQ               1,023
                                                                                                    Granted New Order
                            Smitspan 306 LQ                   1,166
              T2                                                       Sekoko Coal (Pty) Ltd        Mining Right No.        16/09/2041
                            Massenberg 305 LQ                 1,217
                                                                                                    22/2011, on 17/09/11
                            Hooikraal 315 LQ RE                 955
                                          SUB TOTAL         4,360.6
                            Duikerfontein 263LQ                 501                                 Granted New Order
              T3                                                       Sekoko Coal (Pty) Ltd        Prospecting Right No.   12/10/2010*
                            Swanepoelpan 262LQ                  911
                                                                                                    681/2007, on 13/10/05
                                        SUB TOTAL           1,411.9
                                             TOTAL          7,998.4
         * Sekoko Coal has applied for an extension to the prospecting rights.



                               Table 2 shows that Sekoko Coal has been granted a New Order Mining Right over
                               Minnasvlakte 258LQ, Smitspan 306LQ, Massenberg 305LQ and Hooikraal 315LQ.

                               Over Vetleegte 304LQ, Sekoko Coal has applied for a renewal of their expired New Order
                               Prospecting Right. Sekoko Coal have informed Venmyn Deloitte that the DMR have
                               acknowledged receipt of the renewal documents but still need to issue the formal renewal.
                               The DMR had an inspection at Vetleegte in early November 2012, and advised that the PR
                               renewal would be issued upon compliance with their instructions. Venmyn Deloitte has been
                               advised that Sekoko Coal have complied with the instructions and are now awaiting the
                               renewal to be issued.

                               For Olieboomsfontein 220LQ, Duikerfontain 263LQ and Swanepoelpan 262LQ, while Sekoko
                               Coal applied for a renewal over these properties (under DMR reference number: LP
                               30/5/1/1/2/137PR), the DMR incorrectly granted a renewal over the farms Minnasvlakte
                               258LQ, Smitspan 306LQ, Massenberg 305LQ and Hooikraal 315LQ, for which they already
                               have a separate Mining Right. Sekoko Coal's legal department have informed the DMR of the
                               error, however to-date the DMR have not responded nor rectified the error. Sekoko Coal have
                               subsequently decided to amend the existing Mining Right to incorporate Olieboomsfontein
                               220LQ, Duikerfontain 263LQ and Swanepoelpan 262LQ, so as to have one mining right that
                               contains all 7 farms.

                               Sekoko Coal are of the opinion that their tenure over the contributing properties is secure,
                               based on, inter alia:-


                              -    their view that Section 18(5) of the MPRDA applies in that, where a renewal
                                   application has been submitted, despite its expiry date, the licence shall remain in
                                   force until the renewal application has been granted or denied;
                              -    Sekoko Coal applied for the renewal of Swanepoelpan, Duikerfontein,
                                   Olieboomsfontein and Vetleegte with the DMR within the prescribed time frame;
                              -    at this point in time, their application has not been renewed nor rejected, accordingly,
                                   and as per the MPRDA they consider that their Prospecting Right over the farms is
                                   still valid and in full force; and
                              -    to further strengthen their tenure on Swanepoelpan, Duikerfontein and
                                   Olieboomsfontein:-
                                         -     Sekoko Coal have also applied for a Section 102 to amend the Mining
                                               Right to include the aforementioned farms; and
                                         -     Sekoko Coal is also in the process of drafting a new Prospecting Right
                                               Application     for    the   farms    Swanepoelpan,     Duikerfontein,
                                               Olieboomsfontein as a pre-emptive action.

                          In view of the above, and based on various legal opinions offered to Sekoko Coal with regard
                          to the aforementioned farms, Sekoko Coal have informed Venmyn Deloitte that they are
                          confident that their tenure over the farms is secure, and have done, and are currently in the
                          process of securing full and final ownership of same.

                          Venmyn Deloitte are not qualified to provide extensive commentary on legal issues associated
                          with Sekoko Coal or Firestone?s right to the mineral properties. ekoko Coal, Firestone and its
                          attorneys have provided certain information, reports and data to Venmyn Deloitte in preparing
                          this Specialist Valuation Report which, to the best of their knowledge and understanding is
                          complete, accurate and true and Sekoko Coal and Firestone acknowledge that Venmyn
                          Deloitte has relied on such information, reports and data in preparing this Specialist Valuation
                          Report. No warranty or guarantee, be it express or implied, is made by the authors with
                          respect to the completeness or accuracy of the legal aspects of this document.

                          For the purposes of this valuation, Venmyn Deloitte have assumed that Sekoko Coal (and the
                          JV) have secure tenure over all contributing properties. However, the unresolved issues
                          detailed above are a significant project risk and may have a significant effect on the value of
                          the assets should Sekoko Coal not retain the mineral rights to the T1 and T3 properties, for
                          whatever reason.

                 7.7.2.   Effective Ownership of the Waterberg Coal Project
                          Sekoko Coal, a wholly-owned subsidiary of Sekoko Resources (Pty) Limited (Sekoko
                          Resources), has entered into three separate JV and "Farm-In" agreements (Table 1) with
                          Firestone, through various wholly owned outh African su sidiary companies. Firestone?s
                          participation interest increases as various milestones are reached. At the effective date of this
                          Specialist Valuation Report, the effective participation interests of Sekoko Coal in the
                          Waterberg Coal Projects are graphically presented in Figure 3.

       7.8.      GEOLOGICAL SETTING
                 7.8.1.   Regional Geological Setting
                          The Water erg Coalfield reportedly accounts for over 45% of outh Africa?s unmined coal
                          inventory. It is considered a strategic coalfield in light of outh Africa?s (and southern Africa?s)
                          current energy crisis, with Eskom as well as mining and exploration companies presently
                          investing heavily in this coalfield.

                          The Waterberg Coalfield is rapidly becoming as important as the better known Witbank,
                          Highveld and Ermelo Coalfields which currently supply the vast majority of Eskom?s coal
                          power stations. It?s importance is set to surpass these other coalfields within the next 20 to 30
                          years as many of the more established coalfields become progressively more depleted, and
                          as Eskom begins to increase its footprint in the Waterberg, away from the concentration of
                          power stations in Mpumalanga in a bid to redistribute their impact on the environment and to
                          satisfy the developmental needs of the Limpopo Province.

CORPORATE STRUCTURE AND PARTICIPATION INTERESTS OF THE JOINT VENTURE - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS


                     The Waterberg Coalfield is currently host to (Figure 2):-
                          -   Exxaro Resources Limited?s (Exxaro) 19mtpa Grootegeluk Coal Mine;
                          -   Eskom's 3,700MW Matimba Power Station; and
                          -   Eskoms planned Medupi Power Station which is currently under construction.

                     The Waterberg Coalfield is currently being explored and developed by a number of
                     exploration and mining companies (Figure 2):-, including inter alia:-
                           -    Sekoko Coal, Firestone Energy, Resource Generation and Namane
                                Resources for steam coal and coking coal;
                           -    Sasol and PetroSA for various coal-to-liquids and gas-to liquids projects; and
                           -    Anglo Coal and Iscor Ltd (Iscor) with Batepro Limited for coal bed methane
                                gas.

                     The Waterberg Coalfield extends for approximately 85km in a westerly direction from
                     Lephalale and has a 40km north-south extent. The coalfield extends westward into Botswana
                     where it is known as the Mmamabula Coalfield.

                     The coalfield is fault-bounded along the southern and northern margins by the Eenzaamheid
                     and Zoetfontein faults respectively (Figure 4), creating a "horst" structure. The Daar fault,
                     with a displacement of between 250m and 400m, divides the coalfield into a shallow
                     opencastable western area and a deep northeastern area, where coal occurs at a depth of
                     between 200m and 400m below surface and may only be extracted by underground mining.

                     The major coal bearing horizons of the Ecca Group of the Karoo Supergroup, in the
                     Waterberg are:-
                          -   the Volksrust Formation, which consists of 55m of intercalated mudstones and
                              coal, and
                          -   the Vryheid Formation, which incorporates four major discrete seams of
                              approximately 1.5m, 3m, 9m and 4m, respectively.

                     Coal measures occur over a stratigraphic interval between 90m – 110m thick, characterised
                     by 11 discrete coal zones, with the upper zones (Zone 6 – Zone 11) holding the highest
                     commercial value (including semi-soft coking coals).

                     The Waterberg Coalfield does not exhibit a noticeable increase in rank (carbon/energy
                     content) with increasing depth. The air dried volatile content of the coal remains at 35% – 36%
                     from the sub-outcrop to a depth of 400m.

                     Only a few dolerite dykes outcrop in the southeastern portion of the Waterberg Coalfield and
                     no sill features have, to-date, been encountered in any exploration borehole.

                     7.8.1.1.    The Volksrust Formation
                                 The Volksrust Formation differs from that of the main Karoo Basin by being
                                 dominantly carbonaceous where it is represented by intercalated carbonaceous
                                 shale and mudstone, and bright coal. The Volksrust Formation consists of cyclical
                                 repetitions of mudstone and coal with an average thickness of approximately
                                 60m, and comprise the upper seven zones (identified as Zones 5 to 11) that can
                                 be correlated across the coalfield.

                                 The Volksrust Formation coals are classified as a thick interbedded seam type
                                 deposits in terms of the SANS 10320:2004 guidelines.

                                 There is a decreasing ratio of bright to dull coal from the top to the bottom of the
                                 succession, with the proportion of semi-soft coking coal greatest in Zones 6 to 11.
                                 The best quality coals are within Zones 8 to 11 over the majority of the coalfield.
                                 These zones are characterised by the highest yields and the presence of both
                                 bright and vitrinite coals.

REGIONAL GEOLOGY - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS



                                The vitrinite content of the coal towards the top of the Volksrust Formation leads
                                to the upper zones having a semi-soft coking coal yield as well as thermal coal.
                                The remainder of the Volksrust Formation yields low grade thermal coal for power
                                station consumption.

                                Each zone is typically characterised with bright coal at its base, with the ratio of
                                coal to shale decreasing from the base in an upward direction. It follows therefore
                                that the ash content of the zones increases upwards from approximately 20% to
                                45%.

                                The coal succession requires beneficiation or up-grading, to produce an
                                acceptable coal quality for the market, which varies from semi-soft coking coals to
                                internationally traded and local power station coals.

                     7.8.1.2.   The Vryheid Formation
                                The Vryheid Formation coal seams are composed of predominantly dull coal with
                                minor carbonaceous mudstone intercalations, mined as thermal coals. The coal
                                seams are identified as Zones 1 to 4 from the base of the Formation. These coals
                                occur over a stratigraphic interval of approximately 40m. The coal seams vary in
                                thickness between 1.5m and 9m.

                                The Vryheid Formation coals are classified a multiple seam deposit type
                                according to the SANS 10320:2004 guidelines. These are not unlike the coalfields
                                in Mpumalanga.

                                While the majority of the coal seams or zones consist mainly of dull coal or
                                inertinite-rich coal, some bright coal is developed at the base of zones 2, 3 and 4.

                                This coal is suitable for steam-raising, gasification or as a direct-injection coal in
                                the metallurgical industry. It requires limited or no beneficiation to up-grade the
                                coal quality parameters.

                                Due to lateral facies changes and changes in the depositional environment, these
                                zones are characterized by a large variation in thickness and quality.

                                Zone 3 is the best-developed dull coal zone and reaches a maximum thickness of
                                9m. The basal portion yields a small fraction with semi-soft coking coal properties.
                                Zone 2 is on average 4m thick and reaches a maximum thickness of 6m in the
                                Grootegeluk lease area. The basal portion also yields a fraction with semi-soft
                                coking coal properties. Zone 1, the basal Vryheid coal zone, has an average
                                thickness of 1.5m.

                     7.8.1.3.   Grootegeluk Colliery
                                Exxaro?s Grootegeluk Colliery is the only presently operating mine in the
                                Waterberg Coalfield. This opencast mine commenced production in 1980
                                primarily as a source of coking coal for Iscor?s steel works with a middlings
                                fraction from the beneficiation process suited to power station consumption.

                                Saleable products currently include semi-soft coking coal, metallurgical coal and
                                thermal coal, with the latter predominating as a dedicated supply to the Matimba
                                Power Station. Metallurgical coal is primarily supplied to ArcelorMittal Steel, with
                                semi-soft coking coal exported via the Durban and Richards Bay ports.
                                Grootegeluk currently has a 14Mtpa supply agreement with Eskom?s
                                neighbouring Matimba Power Station.

                                The coal strata extracted at Grootegeluk is roughly 110m thick (Figure 5). The
                                upper 60m consists of intercalated bright coal and carbonaceous shale of the
                                Volksrust Formation, whilst the bottom 50m consists of well-defined dull coal
                                seams separated by shale and sandstone interburden of the Volksrust Formation.

                                       The deposit is mined selectively using a parallel bench advance approach, with
                                       benches extracted individually or in planned combination to satisfy specific end-
                                       product specifications. In addition, run-of-mine (ROM) from the various benches
                                       is blended to allow the washing plants, in turn, to supply a consistent product to
                                       the end-user.

                                       Grootegeluk's export coal is railed via Tha azim i to Rustenburg and on to the
                                       Gauteng area. From there it is railed on the general-freight lines to destinations
                                       such as Saldanha or Durban. Some export coal is railed via general freight to
                                       Middelburg and onto the coal link line to the Richards Bay Coal Terminal (RBCT).

                                       Exxaro's Grootegeluk Coal Mine produces Eskom coal, soft coking coal and
                                       export steam coal.

                 7.8.2.   Local Geology
                          The contributing properties are superimposed over the regional geology of the western half of
                          the Limpopo Province (Figure 4). The Goedgedacht/Swartrand, Endragtpan and Greenwich
                          Formations form part of the Karoo Sequence and consist of shales, sandstones, mudstones
                          and coal occurrences. Both the Upper and Lower Coal Sequences are present within the
                          Sekoko Coal-Firestone JV Waterberg Project area.

                          Structurally, the stratigraphy, especially in the area of the contributing properties appears to
                          be significantly faulted, generally in an east-west orientation, and increasing in intensity to the
                          south. There is a dominant east-west fault direction with fault throws varying from 10m in the
                          north to as much as 130m in the south.

                          Understanding the structural-geological environment is, arguably, more important than
                          understanding the distribution of the coal quality characteristics. The presence of the various
                          coal zones is directly related to the faulting and subsequent erosion of the upper zones in the
                          southern properties.

                          While the northern properties comprise all the coal zones (Zones 1 – 11), Massenberg 305LQ
                          only has Zones 1 -9 in the north and Zones 1 – 4 in the south, and Hooikraal 315LQ only has
                          Zones 1 – 4.

                          It is generally believed that the geological and structural environment, due to its relatively
                          close proximity to Grootegeluk, should be similar to the geological and mining-geological
                          conditions encountered at that mine. However, since Grootegeluk was established in the most
                          favourable mining-geological environment, areas in close proximity to the mine may not
                          necessarily experience such favourable conditions, due to the presence of fault structures.




8. Geological Modelling
       In August 2010, Sound Mining Solutions (Pty) Ltd (SMS) undertook geological modelling under the direct
       guidance of Venmyn Rand (Pty) Limited (now Venmyn Deloitte).

       Orebody modelling was carried out using recent boreholes to derive the 3D geological and structural model. Coal
       zone roofs and floors were constructed on an inverse distance method using Micromine Version 11.0.5 Build
       1134. The zone surfaces were cut on fault boundaries, received from Lexshell and also based on interpretations
       from the data where there were sudden changes in zone elevations. Where holes were drilled short, the zones
       were extrapolated using surrounding holes and fitting within the interpreted fault blocks. A wireframe for each
       zone was created separately per farm. A wireframe for each zone was created and in-filled in Datamine to form a
       block model. The block size was set at a maximum of 100m x 100m x zone height. The volumes, densities (at a                                            
       wash of RD=1.9t/m ) and quality data (at a wash of RD=1.9t/m ) was modelled over the properties. A cut-off of
       0.5mm minimum thickness limit was applied.
                                                                                                                                      

                                                                                               
STRATIGRAPHY OF THE WATERBERG COAL ZONES AND GROOTEGELUK COLLIERY MINING BENCHES - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS





9. Reporting and Classification of Coal Resources
       All Coal Resources were categorised, in August 2010, by Venmyn Rand (Pty) Limited (now Venmyn Deloitte), in
       accordance with both the SAMREC and JORC codes. Consistent with the Australian Guideline for Estimating and
       Reporting of Inventory Coal, Coal Resources and Coal Reserves, the resources were classified according to the
       distances between points of information. According to section 4.3 of this guideline, “...Coal Resources should be
       estimated and reported for individual seams or seam groupings within a deposit. They should also be subdivided
       and reported on the basis of key variables, such as thickness, depth range, strip ratio, coal quality parameters,
       geographic constraints and geological or technical considerations. The key variables and assumptions for each
       deposit should be clearly stated in order to ensure clarity and transparency of the report.” Neither the guidelines
       nor the JORC Code prescribes how this should be undertaken, merely that resources should be quoted as
       Measured, Indicated and Inferred and reserves should be quoted as Proved and Probable.

       Taking this requirement into account, the resources have been reported in a stepwise process demonstrating the
       application of each of the technical parameters listed in section 4.3 of the guideline. The SAMREC Code which
       embodies the South African National Standard: South African guide to the systematic evaluation of coal resources
       and coal reserves (SANS10320:2004) outlines a standard method of reporting of coal resources and coal
       reserves through the application of the various technical parameters described above in the Australian Guideline.
       This standard is typically applied to South African coal deposits in order to demonstrate the effect of applying
       each of these parameters to the resources and reserves. Coal resource and reserves are reported in this way to
       fully demonstrate clarity and transparency and enable comparisons to be made between projects.

       Venmyn Deloitte believes that this method provides the reader with a full understanding of the resources and
       reserves quoted.

       The SANS 10320:2004 (SANS) method of classification (stipulated in the SAMREC Code) for thick interbedded
       coal deposits was preferred, as it requires closer drill hole spacing than the JORC Code stipulates, and is
       specifically applicable to these types of South African coal deposits. The SANS scheme utilises the distance
       between boreholes as the primary defining factor between the classification of Measured, Indicated and Inferred
       resources and Reconnaissance/Exploration Target occurrences, as per Table 3 below:-

       Table 3 : SANS Classification of Coal Resources
                                                 FOR THICK INTERBEDDED SEAM            FOR MULTIPLE SEAM DEPOSIT
                                                      DEPOSIT (<65% Ash)                       (<50% Ash)
                                                     MAX                                   MAX
                     CATEGORY
                                                  DISTANCE       NO. B/H PER            DISTANCE      NO. B/H PER
                                                  BETWEEN           AREA               BETWEEN B/H        Ha
                                                   B/H (m)                                 (m)
                 Measured Resource                        350.00     8 b/h per 100ha          350.00   8 b/h per 100ha
                 Indicated Resource                     1,000.00     1 b/h per 100ha          500.00   4 b/h per 100ha
                  Inferred Resource                     3,000.00   1 b/h per 1,000ha        1,000.00   1 b/h per 100ha
         Reconnaissance/ Exploration Target             4,000.00   1 b/h per 1,600ha        2,000.00   1 b/h per 400ha
         NB. Boreholes are required to have quality data.


       In accordance with SANS, the coal resources have been reported according to the following definitions:-

            -    each coal zone was "washed" at an RD=1.9 to "remove' the rock fraction from the coal fraction and
                 to calculate the volume of coal in the interlaminated sequence;

            -    the zone tonnage was multiplied by the percent yield (by mass) to derive the coal tonnage. Note
                 that the coal tonnage has a lower RD than the zone tonnage.

            -    this coal tonnage was then reduced by the geological losses to obtain Total Tonnes In-Situ
                 (TTIS);

            -    geological losses were selected based on the density of the drilling and the structures in the area;
                 and

            -    the classification was based strictly on the radii from boreholes according to the SANS
                 specifications.


       Table 4 summarises the Coal Resources of the contributing properties, defined by Venmyn (now Venmyn
       Deloitte) in 2010. The resources are presented in the following standard manner:-

             -     Gross Tonnes In Situ (GTIS), application of mineral tenure boundaries, an RD of 1.9, and a 0.5m
                   seam thickness cut-off. This is the simplest form of resource declaration; and

             -     Total Tonnes In Situ (TTIS), application of geological losses to GTIS.


Table 4 : Coal Resources of the Contributing Properties (Venmyn, August 2010)
                                                                                                                                  AIR DRIED Q UALITIES AT RD = 1. 9

                                RES O URCE /                                            CO AL TO TAL
                                                              CO AL G RO S S                                                                                    S ULP H.     MO IS T.
    FARM NAME & NO .            O CCURENCE       ZO NE                                   TO NNES IN                CV (MJkg)       AS H (% )     V O L. (% )
                                                             TO NNES IN S ITU                                                                                      (% )       (% )
                                 CATEG O RY                                                 S ITU

                                   Indicated       All               26,507,000                  21,201,000             21.59           29.51          27.24         0.94          2.61
     Minnasvlakte 258 LQ
                                    Inferred       All             230,687,000                 173,012,000              21.56          29.58           27.51         0.94         2.54
                            TO TAL / AV E MINNAS V LAKTE        2 5 7 , 19 4 , 0 0 0       19 4 , 2 13 , 0 0 0        2 1. 5 6        29.57          27.48          0.94         2.55
                                  Measured          All            238,667,800                 214,800,600             20.74             31.14        25.69          0.89         2.84
      Smitspan 306 LQ
                                  Indicated         All            475,844,000                 380,671,000              21.49          29.52          26.50          0.98         2.78
                                 TO TAL / AV E S MITS P AN       7 14 , 5 11, 8 0 0        5 9 5 , 4 7 1, 6 0 0       2 1. 2 2        3 0 . 10       26.21          0.95         2.80
                                  Indicated        All              20,797,000                  16,635,000              19.60          33.70           22.12          0.71        2.77
     Massenberg 305 LQ
                                   Inferred        All             109,539,000                  82,148,000              21.04          29.79          22.09          0.69         2.96
                             TO TAL / AV E MAS S ENBERG         13 0 , 3 3 6 , 0 0 0        98,783,000                20.80           30.45          2 2 . 10       0.69         2.93
                                  Indicated         All                7,282,000                  4,366,000            22.56           25.89          26.64           1.00         3.11
      Hooikraal 315 LQ
                                   Inferred         All             155,491,000                77,742,000              22.38           26.63          25.19          0.83         2.78
                               TO TAL / AV E HO O IKRAAL        16 2 , 7 7 3 , 0 0 0        8 2 , 10 8 , 0 0 0        22.39           26.59          25.27          0.84         2.80
                                  Measured         All                  1,224,000                  1,040,300           25.99           16.60          24.27          0.98         3.20
      Vetleegte 315 LQ             Indicated       All             204,499,000                 143,146,000              21.37          28.22          24.71          0.75         3.53
                                    Inferred       All               17,893,000                  11,090,000             22.61          24.81          23.89          0.66         3.67
                                TO TAL / AV E V ETLEEG TE       2 2 3 , 6 16 , 0 0 0       15 5 , 2 7 6 , 3 0 0       2 1. 4 9        27.90          24.65          0.75         3.54
                                    Indicated       All             1,072,000                        853,000            21.49          29.83          25.12          0.82         3.34
    Swanepoelpan 262 LQ
                                     Inferred       All           378,227,000                 283,666,000               21.60          28.52          26.65           1.14        3.35
                           TO TAL / AV E S WANEP O ELP AN       379,299,000                2 8 4 , 5 19 , 0 0 0        2 1. 6 0       28.52          26.65           1. 14       3.35
          Duikerfontein 263 LQ     Inferred      All                  13,949,000                 10,457,000              21.98          27.17         25.44           0.78        4.20
                           TO TAL / AV E DUIKERFO NTEIN            13 , 9 4 9 , 0 0 0        10 , 4 5 7 , 0 0 0        2 1. 9 8       2 7 . 17       25.44          0.78         4.20
 TO TAL / AV E RES O URCE FO R WATERBERG P RO JECT            1, 8 8 1, 6 7 8 , 8 0 0   1, 4 2 0 , 8 2 7 , 9 0 0       2 1. 4 2       29.27          25.96          0.94         2.98



       Venmyn Deloitte understand that no additional resource drilling has been conducted over the resource area since
       the August 2010 resource estimate, and since no mining has taken place, Venmyn Deloitte consider Table 4
       represents the Coal Resources as at the effective date of this report. On this basis ~1.4 billion TTIS of coal has
       been classified into the Measured, Indicated and Inferred categories for the contributing properties.

       Venmyn Deloitte note that in September 2010, Parsons Brinkerhoff (PB) conducted a Definitive Feasibility Study
       for Sekoko Coal. As part of their report, PB reported certain Coal Resource estimates over the T2 properties and
       Vetleegte 315LQ, based on their own geological modelling. While full details of the calculation of the Coal
       Resources over Smitspan 306LQ were provided, there is no detailed Coal Resource reporting for any of the other
       T2 farms or Vetleegte 315LQ. Furthermore, the PB reports do not consider the Coal Resources of the T3
       properties or Olieboomsfontein 220LQ.

       The Venmyn Deloitte estimates can be considered fully JORC compliant. In addition, the Venmyn Deloitte
       estimates detail the Coal Resources over all the contributing properties, while the PB estimates only considered
       certain selected properties for the purposes of their Definitive Feasibility Study.

       For the purposes of this valuation, only the Venmyn Deloitte Coal Resource estimates have been considered.
       Venmyn Deloitte have a high degree of confidence in the quality and reasonableness of these estimates, and they
       have been reported in compliance with the JORC Code.


10. Mineral Asset Valuation
        Most of the international mineral asset valuation codes set out clear approaches and methodologies for the
        valuation of mineral assets, except for the VALMIN Code, with confidence in the Mineral Resource and/or Ore
        Reserves estimates being the primary value lever. In the Australian context, the JORC Code governs Mineral
        Resource and Ore Reserve classifications on the back of demonstrated confidence in the estimates achieved
        through the exploration process. With regard to valuation methodology, the VALMIN Code 2005 states “The
        Expert and Specialist must make use of valuation methods suitable for the Mineral or Petroleum Assets or
        Securities under consideration. Selection of an appropriate valuation method will depend on such factors as:-
                 (a) the nature of the Valuation;
                 (b) the development status of the Mineral Assets; and
                 (c) the extent and reliability of available information.

        The VALMIN Code further defines the various categories of Mineral Assets as follows:-

               -     Exploration Areas – properties where mineralisation may or may not have been identified, but
                     where a Mineral or Petroleum Resource has not been identified;

               -     Advanced Exploration Areas – properties where considerable exploration has been
                     undertaken and specific targets have been identified that warrant further detailed evaluation,
                     usually by drill testing, trenching or some other form of detailed geological sampling. A resource
                     estimate may or may not have been made but sufficient work will have been undertaken on at
                     least one prospect to provide both a good understanding of the type of mineralisation present
                     and encouragement that further work will elevate one or more of the prospects to the resource
                     category;

               -     Pre-Development Projects – properties where Mineral or Petroleum Resources have been
                     identified and their extent estimated (possibly incompletely) but where a decision to proceed
                     with development has not been made. Properties at the early assessment stage, properties for
                     which a decision has been made not to proceed with development, properties on care and
                     maintenance and properties held on retention titles are included in this category if Mineral or
                     Petroleum Resources have been identified, even if no further valuation, technical assessment,
                     delineation or advanced exploration is being undertaken.

               -     Development Projects – properties for which a decision has been made to proceed with
                     construction and/or production, but which are not yet commissioned or are not yet operating at
                     design levels; and

               -     Operating Mines – mineral properties, particularly mines and processing plants that have been
                     commissioned and are in production.


        The VALMIN Code is not prescriptive as to valuation methodology; however, the Code provides that the decisions
        as to the valuation methodology or methodologies to be used are solely the responsibility of the Expert and must
        not be influenced by the commissioning entity. Venmyn Deloitte has opted to use provisions in the other
        internationally accepted mineral asset valuation codes for guidance from the CIMVAL Code from Canada and the
        SAMVAL Code from South Africa. Table 5 summarises the valuation approaches and the underlying
        methodologies as stipulated in the CIMVAL Code and the SAMVAL Code:-

Table 5 : Valuation Approach and Methodologies
                                                                                         DORMANT PROPERTIES
VALUATION        VALUATION          EXPLORATION       DEVELOPMENT          MINING                                     DEFUNCT
APPROACH        METHODOLOGY            AREAS           PROPERTIES        PROPERTIES   ECONOMICALLY                   PROPERTIES
                                                                                                     UNVIABLE
                                                                                         VIABLE
              Various DCF
Cash Flow                                  N/A               P1              P1            P1              NA             NA
              methods
Sales         Comparable
                                           P1                P3              P2            P2              P1             P1
Comparative transactions
              Asset Recognition
Cost                                       P2                NA             NA             NA              P3             P2
              and Impairment Test
P1 = Most acceptable method and widely used
P2 = Acceptable approach and quite widely used
P3 = Less acceptable approach, less widely used and poorly understood.
                                                                                                                                                                           Figure 06

                                                                       
PROJECT LIFETIME VALUE AND VALUATION METHODOLOGY CURVE FOR MINERAL RESOURCE PROJECTS - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS



       Any decision to apply a valuation technique depends on:-

              -      the nature of the valuation;

              -      the development status of the mineral assets;

              -      the stage at which the project has been developed;

              -      the geological confidence;

              -      the extent and reliability of available information; and

              -      the potential of the mineral asset to satisfy the requirement for reasonable prospects for
                     eventual economic extraction.


       Changes in value of a mineral asset are associated with increasing confidence through increased knowledge, as
       well as the greater degree of probability of it being brought to account. As the confidence in mineral resource
       estimates is increased, i.e. from Inferred Mineral Resources to Indicated Mineral Resources and Measured
       Mineral Resource, so is the veracity of the valuation. An appropriate valuation recognises these possibilities.

       The contributing properties are at different stages of development ranging from early to advanced stage
       exploration projects. Different valuation approaches and methodologies have consequently been used in the
       valuation of these individual mineral assets on a case by case basis.

       At the exploration phase, coal projects are valued dependent upon prospects for eventual economic extraction. A
       seller's view may not necessarily match that of a potential uyer?s, and the transaction price is usually a
       compromise.

       The valuations presented in this document, aim to identify the mineral asset values on an asset-by-asset basis as
       a means of identifying the value contribution of each individual asset to the total asset value of the company as at
       the effective date of this report. Each asset has been valued according to the development stage in which it fits
       within the different phases in the mining and development cycle. Figure 6 graphically illustrates the different
       approaches and methodologies that are applicable to different mineral assets at each stage in the mine
       development cycle.

       Venmyn Deloitte has valued the contributing properties in compliance with the VALMIN Code, 2005. Consistent
       with the VALMIN Code, in this report Fair Value is considered to e comprised of the "Intrinsic" or "Technical" value
       and a premium or discount relating to market, strategic or other considerations.

       10.1. Technical or Intrinsic Value of the Mineral Assets
                  There are three generally accepted approaches for establishing the Technical Value of mineral assets.
                  These are the:-

                       -    the Cost Approach or Multiples of Exploration Expenditure (MEE);

                       -    the Market Approach or Comparable Transaction Value Method; and

                       -    the Cash Flow (DCF) Approach.


                  Where insufficient confidence exists in the technical parameters of a mineral deposit, or mineral asset, to
                  classify resources, valuation methods mainly rely on the principle of historical cost. This implies that a
                  mineral asset's value is related to the money spent on its acquisition, plus a multiple of the exploration
                  expenditure, depending upon the degree to which its prospectivity has been enhanced by exploration.

                  Once resources have been classified, then market comparisons are made on a monetary value per unit
                  of mineralisation (ZAR/t).

                  Once technical studies establishing the basis for future economic exploitation have been carried out,
                  discounted cash flow (DCF) methods are applicable and all the methods used to identify a reasonable
                  transaction value. Given that a feasibility study is still in preparation, a DCF valuation has not been
                  considered appropriate at this time.
                                                                                                       

                 The contributing coal assets can be defined as early to advanced stage exploration projects, with JORC
                 code compliant Measured, Indicated and Inferred Coal Resources. Therefore, all the contributing
                 properties were valued using both the historical cost method and comparative sales transaction valuation
                 method.

                 It is important to note that this valuation has utilised the Venmyn August 2010 Coal Resource Statement
                 (Table 4), as this is considered the current compliant resources estimate for the Waterberg Coal Project.

                                                        
                 The effective date of the valuation is 21 January 2013.

                 10.1.1. Cost Approach
                           The Cost Approach or MEE Method is based upon the principle of past exploration
                           expenditures where some expenditures will have added value, and others not. Through the
                           introduction of a prospectivity enhancement multiplier (PEM), a premium (or discount)
                           multiplier can be applied to the total cost of exploration to-date, depending on whether the
                           exploration expense being considered has relatively enhanced the prospectivity of the target
                           or not.

                           The subjectivity of the method is reduced by addressing specific expenditures with reference
                           to the relevance of the type of mineralisation being considered and the effectiveness of the
                           exploration. A measure of the effectiveness of a historical exploration programme is the
                           confidence that can be ascribed to the resultant mineral resource estimate.

                           Exploration expenditure does not only include the costs of physical in-field exploration, but
                           also the costs incurred to make it possible to carry out the exploration, for example, the costs
                           of aerial or other surveys and transportation costs, etc. The value of the resulting asset is not
                           measured by the value of new deposits discovered by the exploration but by the value of the
                           resources allocated to exploration during the period.

                           The Waterberg Coal Project can be considered as an early to advanced stage exploration
                           project with varying degrees of historic and recent exploration and analytical data available on
                           the various properties. Firestone have provided Venmyn Deloitte with all available acquisition
                           and exploration cost data for the contributing properties and, where historical exploration data
                           was available, Venmyn Deloitte assessed its relevance and effectiveness and estimated the
                           cost of replicating that data.

                           Venmyn Deloitte have considered the prospectivity of the respective coal properties according
                           to the classification of exploration phases illustrated in Table 6.

                           This table represents Venmyn Deloitte?s standard PEM schedule for coal deposits. The
                           magnitude of the PEM is determined by the level of sophistication of the exploration for which
                           positive exploration results, applying the concept of successful efforts, have been obtained. In
                           Venmyn Deloitte?s opinion, these PEM values reflect fair and reasona le multipliers ased
                           upon on the amount of work associated with and/or development status of any particular
                           project.

                           In order to establish an appropriate PEM, each property was classified with respect to Table 6
                           knowing that each new exploration phase was carried out contingent upon the successful
                           outcome of the preceding phase. In addition, the PEM selected, was reviewed taking into
                           consideration proximity to well understood resource areas, drillhole density and a qualitative
                           assessment of the prospects for eventual extraction.

                           To-date ~ZAR72.2m of expenditure can be allocated to the acquisition of the prospecting
                           rights, prospecting and current economic studies over the contributing properties, according to
                           information provided by Firestone to Venmyn Deloitte. These costs include geological
                           modelling and resource definition, as well as other project related expenditures.
14th February 2013                                                                                                            21

                     Table 6 : Coal Prospect Exploration Phase Classification and the Corresponding PEM
                                  EXPLORATION          PEM VALUE
                       PHASE                                                        EXPLORATION ACTIVITY
                                     PHASE           UPPER   LOWER
                                     Exploration                        Project about which nothing is known, but which
                          0                            0         0
                                      Concept                           has potential on a conceptual basis.
                                                                        Historical and literature study, records or
                          1        Desktop Study       1         0      evidence of coal findings in the area. Historical
                                                                        mining data, if any.
                                                                        Geological mapping if terrain is suitable. Palaeo
                          2       Reconnaissance       1         1      topographical mapping. Historical drilling with
                                                                        intercept data, no laboratory assay.
                                                                        Detailed outcrop mapping, identification of coal
                                                                        hosting strata, coal seam outcrop mapping.
                                   Ground Follow-
                          3                            1         1      Sampling of exposed coal seams where available.
                                        up
                                                                        Historical drilling data with intercept and analyses,
                                                                        but of questionable authenticity.
                                                                        Ground geophysics, remote sensing techniques.
                                   Ground Follow-
                          4                            2         1      Reliable historical drilling, but correlations difficult
                                        up
                                                                        due to density of drilling.
                                                                        Large diameter core drilling, widely spaced grid
                                    First-phase
                          5                            5         2      with preliminary coal analysis. First-pass tonnage
                                      Drilling                          estimate. Inferred coal resource.
                                     Resource                           In-fill drilling, detailed coal analysis and
                                                                        washability test work. Established coal qualities,
                                    Drilling and
                          6                           11         5      market potential, detailed resource tonnage
                                    Laboratory                          estimation, washabilities. Advanced Inferred and
                                     Testwork                           Indicated Coal Resource classification.
                                                                        Previous commercial production, establishing
                                                                        reliable and well documented quality, tonnage,
                          7        Historic Mining    20        11
                                                                        washability etc. Measured Coal Resource
                                                                        classification.
                                                                        Complete feasibility assessment, establish
                                     Reserve
                          8                           >20       20      economics and design a mine of an appropriate
                                   Classification                       nature. Classification of Coal Reserves.


                     Venmyn Deloitte have analysed and rated the contributing properties according to the results
                     achieved from historical and recent exploration activities as well as the success these
                     activities have had on the classification of coal resources over the various properties.

                     The expenditures have een multiplied by the following PEM's:-

                         -     PEM's of 1.0 – 2.0 for Olieboomsfontein 220LQ;

                         -     PEM's of 11.0 – 20.0 for Vetleegte 304LQ;

                         -     PEM's of 11.0 – 20.0 for Smitspan 306LQ;
                         -     PEM's of 5.0 – 11.0 for Minnasvlakte 258LQ; Massenberg 305LQ, Hooikraal
                               315LQ, and Swanepoelpan 262LQ; and

                         -     PEM's of 2.0 – 5.0 for Duikerfontein 263LQ


                     Smitspan 306LQ has received high PEMs since a significant amount of drilling and sampling
                     has been carried out on this property relative to the other properties. While a previous
                     Feasibility Study has been completed on this property, a revised Feasibility Study is underway
                     to meet the requirements of the recently signed MoU with Eskom. Clearly Smitspan 306LQ is
                     the "stand-out" property and is considered highly prospective by Venmyn Deloitte.
                     Consequently Venmyn Deloitte has selected the maximum PEM of 20.0 to reflect the
                     advanced nature of this property in terms of its level of exploration and development as well
                     as the fact that a revised Feasibility Study is underway.

                     Vetleegte 304LQ has received a preferred PEM of 12. While significant drilling and sampling
                     has been conducted and Measured Resources classified, this property has not undergone the
                     same level of technical investigation and economic studies as Smitspan 306LQ.

                     Minnasvlakte 258LQ, Massenberg 305LQ, Hooikraal 315LQ and Swanepoelpan 262LQ have
                     received preferred PEM?s of 8.0 to reflect the classification of Indicated Resources. However,
                     unlike Smitspan 306LQ, these properties are generally lacking in the Upper Coal Sequence
                     coals and are structurally very complex or have significantly deeper coal, and are therefore
                     considered significantly less prospective than Smitspan 306LQ.
                                                                                                         

                             Duikerfontein 263LQ has received a preferred PEM of 4, reflecting the very limited exploration
                             work, and very limited Coal Resources (at low levels of confidence) over this property.

                             Olieboomsfontein 220LQ has received a preferred PEM of 2, reflecting the very limited
                             exploration work, and the absence of declared Coal Resources over this property.

                             Based on the principles discussed above, PEM values of between 2.0 – 20.0 were allocated
                             to the various properties, with respect to the present value estimates of historical exploration
                             expenditure. This reflects the relative enhancement in the prospectivity that has been
                             achieved on each property as a result of the historical exploration.

                             The various costs, multiplied y their allocated PEM?s (Table 7) have then been added to
                             derive the Cost Approach valuation for each property. This methodology has resulted in a
                             preferred Cost Approach valuation of ZAR1,247m for the contributing properties.

   Table 7 : Cost Approach Valuation
                                          TOTAL                                             MIN          MAX        PREFERRED
                                        ATTRIBUTED       LOWER    UPPER    PREFERRED     PROJECT      PROJECT        PROJECT
                     FARM
                                       EXPENDITURE        PEM      PEM        PEM         VALUE        VALUE          VALUE
                                          (ZARm)                                          (ZARm)       (ZARm)         (ZARm)
           Olieboomsfontein 220 LQ                 0.5      1.0      2.0           2.0          0.5           1.0            1.0
     T1
           Vetleegte 304 LQ                        9.7     11.0     20.0          12.0        106.9         194.4          116.6
           Minnasvlakte 258 LQ                     1.3      5.0     11.0           8.0          6.3          13.9           10.1
           Smitspan 306 LQ                        52.8     11.0     20.0          20.0        581.0       1,056.3        1,056.3
     T2
           Massenberg 305 LQ                       3.7      5.0     11.0           8.0         18.3          40.2           29.3
           Hooikraal 315 LQ                        1.8      5.0     11.0           8.0          9.1          20.1           14.6
           Swanepoelpan 262LQ                      2.4      5.0     11.0           8.0         12.0          26.4           19.2
     T3
           Duikerfontein 263LQ                     0.0      2.0      5.0           4.0          0.0           0.0            0.0
                   TOTAL/ WT. AVE                 72.2     10.2     18.7          17.3        734.1       1,352.3        1,247.1



       10.2. Comparable Transaction Approach
                 The compara le transaction value method is ased upon other, preferably recent, arm's length
                 transactions of a similar nature, which determines a monetary value per unit of resource (ZAR/t).

                 Since Coal Resources have been classified for the contributing properties, Venmyn Deloitte was able to
                 carry out a comparable transaction valuation on the basis that recent market valuations of a similar
                 nature provide the proxy for value. In order to arrive at a reasonable value with which to compare the
                 respective projects, appropriate recent and historical transactions must form the basis.

                 To this end, Venmyn Deloitte maintains a database of coal projects, coal resources and reserves,
                 production statistics and financial information of listed coal mining and exploration companies on the
                 various international stock exchanges. Venmyn Deloitte consolidates this information into coal valuation
                 curves using internally developed algorithms to attribute a company's enterprise value to its various
                 projects taking cognisance of the following factors:-

                      -     level of confidence in the Mineral Resource;

                      -     strategic value of the commodity; and

                      -     geological setting.

                 Based on pre-determined weights for each of these factors, the implied enterprise value per resource is
                 determined. Similarly, recent transactions and compliant public valuations are also analysed and
                 presented on the curves.

                 Venmyn Deloitte has graphically plotted recent transactions of a similar nature in relation to their specific
                 stage of exploration in order to make the necessary comparisons. Figure 7 illustrates Venmyn Deloitte's
                 current Coal Valuation Curve, which represents the coal transaction database for coal projects with
                 mineral resources. This is used for valuations based on a monetary value per unit of resource (ZAR/t).

VALUATION CURVE FOR SOUTH AFRICAN COAL PROJECTS - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS

  
                 Venmyn Deloitte's outh African coal data ase comprises 194 data points (98 market comparative
                 points each representing a mine/mining project, 52 transactions and 44 valuations). This covers over 200
                 South African coal projects and over 30 listed companies. Of the 98 market comparison points, 18
                 represent projects located in the Limpopo Province of South Africa.

                 Given that Venmyn Deloitte's coal data ase represents actual transactions and company/project
                 valuations, Venmyn Deloitte have a high degree of confidence in using this data in order to benchmark
                 the mineral assets of the contributing properties with regards to establishing appropriate mineral asset
                 values using the Market Approach.

                 While Venmyn Deloitte have considered the entire coal transaction database, we have paid particular
                 attention to the Limpopo Coalfields data sub-set within our database and on the coal curve for these
                 valuations. Venmyn Deloitte has also taken into account the following recent transactions/valuations
                 within the Waterberg Coalfield:-

                         -    the valuation by SRK Consulting (South Africa) (Pty) Limited (SRK) in June 2006, of
                              the Grootegeluk Colliery ahead of the merger of Eyesizwe and Kumba (now Exxaro) –
                              Eyesizwe/Kumba Grootegeluk transaction;

                         -    the joint venture transaction between Sekoko Coal and Firestone Energy, in July 2009,
                              concerning the farms Minnasvlakte 258LQ, Smitspan 306LQ, Massenberg 305LQ and
                              Hooikraal 315LQ in the Waterberg;

                         -    the joint venture transaction between Sekoko Coal and Firestone Energy, in February
                              2010, concerning the farms Swanepoelpan 262LQ and Duikerfontein 263LQ in the
                              Waterberg;

                         -    R V Enco's valuation of Resource Generation?s project in the Water erg in July 2010;
                              and

                         -    IDC's ZAR249m funding of the development of ekoko Coal and Firestone Energy's
                              Waterberg Coal Project, resulting in the IDC owning 33.3% of Sekoko Coal's equity in
                              the Waterberg Coal Joint Venture.



                 These transactions represent recent transactions of a similar nature, and have been used, together with
                 enterprise values of listed companies with projects in the Waterberg, to define a Waterberg Coal
                 Valuation Curve.

                 It is clear, in Figure 7, that the Waterberg Coal Valuation Curve, informed by the above
                 transactions/valuations define a less variable range of values than that defined by the entire dataset, and
                 falls within the middle-lower portion of the greater coal curve.

                 As discussed in 7.8.2, the presence of the various coal seams differs across the properties. At Hooikraal
                 315 LQ and Massenberg 305LQ, for example, the preferred (higher quality) Upper Coal Sequence coal
                 zones (zones 5 – 11), are largely absent. These properties are also associated with a more structurally
                 complex environment. As a result, Venmyn Deloitte considers these properties of lower prospectivity and
                 has allocated unit values that are significantly lower than for the highly prospective Smitspan 306LQ
                 property.

                 Similarly, while Minnasvlakte 258LQ has both Upper Coal Sequence and Lower Coal Sequence coal
                 zones present, the coal is deeper in this region, and consequently Venmyn Deloitte have adjusted the
                 unit values downwards to reflect that this property has a lower prospectivity than Smitspan 306LQ, but
                 higher prospectivity than those properties absent in Upper Coal Sequence coal zones.

                 The comparable transaction value range selected for the valuation of the contributing properties has
                 considered the nature of this valuation and the risk factors.

                 Venmyn Deloitte is of the opinion that the ranges defined are reasonable in light of transactions of a
                 similar nature and consideration of the following:-

                          -     the opencastability of the resources;

                          -     the presence of commercially valuable coal zones;

                          -     the range of potential coal qualities;

                          -     the magnitude of the classified Coal Resource;

                          -     availability of infrastructure and logistics; and

                          -     the timing of potential exploitation.


                 The range of values generated, based upon all TTIS coal quantified for the contributing properties of the
                 Sekoko Coal-Firestone JV Waterberg Coal Project, are summarized in Table 10 based on the most
                 recent Venmyn (now Venmyn Deloitte) estimates (we note that these have not changed since May
                 2012). The valuation range was calculated from the range of unit values as defined by the Comparative
                 Transaction Valuation method. The value range reflects the level of confidence attached to the
                 respective Coal Resources and the probability of their being brought to account. The population of
                 historic market transactions provides an indication of reasonability.

                 Table 8 summarises the results of the Compatible Transaction valuation approach.

                 Table 8 : Summary of the Results of the Comparable Transaction Valuation.
                                                      TOTAL          COMPARABLE TRANSACTION VALUE
                                                    RESOURCE          MIN       MAX     PREFERRED
                                 FARM                  (Total      PROJECT   PROJECT     PROJECT
                                                    Tonnes in-      VALUE     VALUE       VALUE
                                                     situ) (Mt)     (ZARm)    (ZARm)      (ZARm)
                     Olieboomsfontein 220 LQ                   -              -             -             -
                     Vetleegte 304 LQ                     155.28          103.5         148.6         126.0
                     Minnasvlakte 258 LQ                  194.21           62.3          92.4          77.3
                     Smitspan 306 LQ                      595.47          810.3       1,405.7       1,108.0
                     Massenberg 305 LQ                     98.78           25.6          37.2          31.4
                     Hooikraal 315 LQ                      82.11           15.2          23.8          19.5
                     Swanepoelpan 262LQ                   284.52           57.3          86.0          71.6
                     Duikerfontein 263LQ                   10.46            2.1           3.1           2.6
                              TOTAL/ WT. AVE            1,420.83        1,076.3       1,796.7       1,436.5


                 Venmyn Deloitte's preferred value is the mean value derived from the unit value ranges per category.
                 This results in a preferred full Comparable Transaction Value of ZAR1,437m for the contributing
                 properties of the Sekoko Coal-Firestone JV Waterberg Coal Project, and equates to a unit value of
                 ~ZAR1/TTIS. Approximately 80% of the value of the contributing properties is made up from the coal
                 assets at Smitspan 306LQ.



       10.3. Intrinsic value Summary
                 Table 9 summarises the results from the various valuation methods used in establishing the
                 Intrinsic/Technical Value of the mineral assets of the contributing properties:-

                 Table 9 : Intrinsic Value Summary
                                                                  INTRINSIC OR TECHNICAL VALUE
                                                                     COMPARABLE
                                                            COST                     PREFERRED
                                      FARM                           TRANSACTION                          TOTAL
                                                         APPROACH                      VALUE
                                                                       APPROACH                           (ZARm)
                                                           (ZARm)                      (ZARm)
                                                                         (ZARm)
                              Olieboomsfontein 220 LQ             1.0                   N/A         1.0
                     T1                                                                                       122.3
                              Vetleegte 304 LQ                  116.6                 126.0       121.3
                              Minnasvlakte 258 LQ                10.1                  77.3        43.7
                              Smitspan 306 LQ                 1,056.3               1,108.0     1,082.1
                     T2                                                                                   1,173.2
                              Massenberg 305 LQ                  29.3                  31.4        30.3
                              Hooikraal 315 LQ                   14.6                  19.5        17.1
                              Swanepoelpan 262LQ                 19.2                  71.6        45.4
                     T3                                                                                        48.0
                              Duikerfontein 263LQ                 0.0                   2.6         2.6
                                                TOTAL         1,247.1               1,436.5     1,343.6   1,343.6



                 The table above demonstrates general agreement between the values derived from the various valuation
                 methods, however the Cost Approach results in lower values in all cases.
                                                                                                                                                                                         26



     Table 10 : Comparative Valuation Based on Venmyn Deloitte Resource Estimates
                                                                                          THE MARKET AP P RO ACH
                                     INFERRED CO AL RES O URCE                INDICATED CO AL RES O URCE               MEAS URED CO AL RES O URCE                                 P RO JECT V ALUE
                                   V ENMY N                                 V ENMY N                                 V ENMY N
                                    TO TAL      LO WER UP P ER               TO TAL      LO WER UP P ER               TO TAL      LO WER UP P ER               MIN                     MAX             P REFERRED
                                                                   MEAN                                     MEAN                                     MEAN
               FARM               INFERRED       UNIT     UNIT             INDICATED      UNIT     UNIT            MEAS URED       UNIT     UNIT           P RO JECT                P RO JECT            P RO JECT
                                                                  V ALUE                                   V ALUE                                   V ALUE
                                 RES O URCE     V ALUE V ALUE             RES O URCE     V ALUE V ALUE             RES O URCE     V ALUE V ALUE              V ALUE                   V ALUE              V ALUE
                                                                  (ZARm)                                   (ZARm)                                   (ZARm)
                                (Tota l Tonne s (ZAR/ t) (ZAR/ t)        (Tota l Tonne s (ZAR/ t) (ZAR/ t)        (Tota l Tonne s (ZAR/ t) (ZAR/ t)         (ZARm)                   (ZARm)               (ZARm)
                                 in- situ) (Mt)                           in- situ) (Mt)                           in- situ) (Mt)

      Olieboomsfontein 220 LQ             -       0.20     0.30      -             -          0.70    1.00     -             -         1.00   2.00       -                -                  -                    -
      Vetleegte 304 LQ                     11.1   0.20     0.30       2.8         143.1       0.70    1.00    121.7              1.0   1.00   2.00           1.6        103.5              148.6                 126.0
      Minnasvlakte 258 LQ                173.0    0.25     0.35      51.9          21.2       0.90    1.50    25.4           -         1.50   2.50       -               62.3               92.4                 77.3
      Smitspan 306 LQ                     -       0.30     0.40      -           380.7        1.00   2.00     571.0        214.8       2.00   3.00     537.0            810.3           1,405.7               1,108.0
      Massenberg 305 LQ                  82.1      0.15    0.25      16.4          16.6       0.80    1.00     15.0          -         1.50   2.00       -               25.6               37.2                  31.4
      Hooikraal 315 LQ                   77.7      0.15    0.25      15.5           4.4       0.80    1.00      3.9          -         1.50   2.00       -               15.2               23.8                  19.5
      Swanepoelpan 262LQ                283.7     0.20     0.30     70.9           0.9        0.70    1.00      0.7          -         1.00   2.00       -               57.3               86.0                  71.6
      Duikerfontein 263LQ                 10.5    0.20     0.30       2.6          -          0.70    1.00     -             -         1.00    2.00      -                    2.1                3.1               2.6
             TO TAL/ WT. AV E           638.1             0.26    16 0 . 2      566.9                0.99    737.7        2 15 . 8            1. 7 5   538.6       1, 0 7 6 . 3       1, 7 9 6 . 7         1, 4 3 6 . 5
                                                                                                        

                 The Cost Approach defines the bottom (ZAR1,247m) of the value range identified, while the Comparative
                 Transaction Approach defined the top (ZAR1,437m) of the value range identified. The preferred
                 Intrinsic/Technical Value is considered to be represented by the mean of the two valuation approaches,
                 and results in a value of ZAR1,344m.

       10.4. Implied Value of the Mineral Assets
                 Venmyn Deloitte consider that the Market Price of Firestone implies a value of the mineral assets, as the
                 contributing properties are the principal mineral assets of Firestone. Since Firestone currently have a
                 60% interest in the mineral assets, the current Market Price of Firestone, adjusted for net debt, could be
                 considered to represent 60% of the value of the mineral assets. On this basis, the Implied Value of the
                 contributing properties can be calculated on a 100% attributable basis. On this basis Venmyn Deloitte
                 have assessed the current Implied Value of the mineral assets to be ZAR792m.

                 Venmyn Deloitte notes the relatively small volume of trade in Firestone shares and also considers that
                 delays in project development and challenges with respect to financing may be contributing to the
                 relatively low Market Price. It is noted further that the Intrinsic Value is based on past transactions, and
                 that the current state of the coal market and future outlook for the coal market are less favourable than
                 when the transactions occurred. This might also have led to the Implied Value of the mineral assets
                 being lower than the Intrinsic Value.

       10.5. Fair Value of the Mineral Assets
                 The assessment above suggests that it would be appropriate to apply a discount to the
                 Intrinsic/Technical Value of the mineral assets, in terms of the requirements of VALMIN, 2005 in
                 assessing Fair Value. In this case, Venmyn Deloitte consider that a discount of 21% is appropriate.

                 This results in a Fair Value of ZAR1,068m. If a value range is required, we would consider it appropriate
                 to apply the ~21% discount to the technical valuation range which would provide a value range of
                 ZAR991m and ZAR1,142m.

       10.6. Valuation Summary
                 The results of the valuations carried out by Venmyn Deloitte are given in Table 11:-

                 Table 11: Summary of Valuation Results
                                                                 INTRINSIC OR TECHNICAL VALUE
                                                                    COMPARABLE                                             FAIR
                                                           COST                     PREFERRED              DISCOUNT
                                   FARM                             TRANSACTION                  TOTAL                    VALUE
                                                        APPROACH                      VALUE                   (%)
                                                                      APPROACH                   (ZARm)                   (ZARm)
                                                          (ZARm)                      (ZARm)
                                                                        (ZARm)
                          Olieboomsfontein 220 LQ                 1.0           N/A        1.0
                     T1                                                                            122.3
                          Vetleegte 304 LQ                      116.6         126.0      121.3
                          Minnasvlakte 258 LQ                    10.1          77.3       43.7
                          Smitspan 306 LQ                     1,056.3       1,108.0    1,082.1
                     T2                                                                          1,173.2           21%     1,067.8
                          Massenberg 305 LQ                      29.3          31.4       30.3
                          Hooikraal 315 LQ                       14.6          19.5       17.1
                          Swanepoelpan 262LQ                     19.2          71.6       45.4
                     T3                                                                             48.0
                          Duikerfontein 263LQ                     0.0           2.6        2.6
                                            TOTAL             1,247.1       1,436.5    1,343.6   1,343.6           21%     1,067.8
                 Note: Rounding may result in computational discrepancies


                 Our assessment determined that the Implied Value is significantly lower than the Intrinsic/Technical
                 Value of the mineral assets. In terms of the requirements of VALMIN, 2005, Venmyn Deloitte considers it
                 appropriate to apply a discount to the Intrinsic/Technical Value of the mineral assets in estimating the
                 Fair Value. In this case, Venmyn Deloitte consider that a discount of ~21% is appropriate.

                 In Venmyn Deloitte?s opinion the current Fair Value of the Contri uting Properties of the Water erg Coal
                 Project, given their current state of development and current market conditions is ZAR1,068m.
                                                                                                      

                 The valuation of exploration assets is, by nature, subjective and uncertain. The placing of a specific
                 monetary value on historical exploration can be misleading, and the reader is advised to consider the
                 ranges in which each property has been evaluated, and to further consider the technical merits of each
                 project area and form an opinion regarding its prospectivity on the basis of the data presented in this
                 report.

                 The reader should note that a transaction involving the assets in question will rely on a willing-buyer
                 willing-seller arms length transaction which will need to consider other strategic considerations, such as
                 the relative scarcity of South African coal projects.

       10.7. Key Assumptions
                 We arrived at our opinion of value based on the following assumptions: -

                       -   that all information provided to Venmyn Deloitte, by Sekoko Coal and/or Firestone can
                           be relied upon;

                       -   that the valuation is with respect to the face value of the mineral assets only;

                       -   that the valuation was conducted on a 100% attributable basis;

                       -   that the legal status of the mineral rights and statutory obligations were fairly stated;

                       -   that the prospecting licences will be kept valid and that they can be converted to
                           Mining Licences in the future;
                       -   that expired Prospecting Rights will be successfully renewed;

                       -   that the Mining Right will be kept valid;

                       -   that all other regulatory approvals for exploration and mining will be timeously obtained;

                       -   that the corporate structures and ongoing activities were fairly presented;

                       -   that reliance can be placed on the exploration expenditures provided by Sekoko Coal
                           and/or Firestone;

                       -   that reliance can be placed on the Financial Statements provided by Firestone;

                       -   that reliance can be placed on the current Mineral Resource Statement;

                       -   that the coal quality lends itself to the production of a suitable thermal coal product
                           after washing;

                       -   that Sekoko Coal, Firestone and their subsidiaries would continue as going concerns
                           and would continue to be fully funded; and

                       -   that Sekoko Coal and/or Firestone would be able to secure markets and off-take for
                           any future operations.


                 Venmyn Deloitte made due enquiry into these issues to be satisfied of the potential impact on the
                 mineral asset valuation.

                 We have relied upon and assumed the accuracy of the information provided to us in deriving our opinion.
                 Where practical, we have corroborated the reasonableness of the information provided to us for the
                 purpose of our valuation, whether in writing or obtained in discussion with management of Sekoko Coal
                 and/or Firestone, by reference to publicly available or independently obtained information.

                 Our valuation is based on current economic, regulatory, market as well as other conditions. Subsequent
                 developments may affect this valuation, and we are under no obligation to update, review or re-affirm our
                 valuation based on such developments.



       10.8. Key Risks
                 The contributing properties represent early- to advanced-stage projects, and are therefore, inherently
                 exposed to normal operational risks associated with exploration and development projects.
                                                                                                      
                 The success of the projects depend largely on successful prospecting programmes and competent
                 management. Profitability and asset values can be affected by unforeseen changes in operating
                 circumstances and technical issues.

                 While the contributing properties are located in an emerging coal exploration and mining hub, there are
                 significant infrastructural challenges to overcome. Lack of adequate water and rail infrastructure are
                 identified as major challenges to the future development of the region.

                 Certain licences have expired and renewals have been applied for. There is no guarantee that these will
                 be awarded in their entirety or in part, and licence applications and renewals are currently experiencing
                 considerable delays. Sekoko Coal are however confident that their tenure over the farms is secure, and
                 have done, and are currently in the process of securing full and final ownership of same.

                 The coal qualities are amenable to the production of large quantities of coal that could meet power
                 station specifications. However any successful coal operation in the Waterberg Coalfield would be highly
                 dependent on its ability to supply existing and future power stations in the area, and securing take-off
                 agreements with such power stations or other external markets. In this regard a memorandum of
                 understanding (MoU) with power utility Eskom on a 30-year supply agreement has recently been signed.
                 In terms of the MoU, the project would commence delivering 2Mtpa of coal to Eskom in 2014, to be
                 ramped up to 10Mtpa by 2019.

                 Factors such as political and industrial disruption, currency fluctuation and interest rates could have an
                 impact on future operations, and potential revenue streams can also be affected by these factors. The
                 majority of these factors are, and will be, beyond the control of any operating entity.

                 The Going Concern assumption is the assumption that an entity will continue to operate for the
                 foreseeable future. Where there is a reasonable expectation that a company will be unable to meet its
                 current obligations as they become due, the Going Concern assumption may not apply. The ability of
                 Sekoko Coal and Firestone to continue operations as going concerns and the recoverability of their
                 respective retained losses are dependent upon the existence of economically recoverable reserves in
                 the future, and continued support from the respective parent companies and/or investors and/or
                 financiers. It is assumed that sufficient working capital will be obtainable from internal and/or external
                 financing to meet their respective companies liabilities and commitments as they ecome due, however
                 there is a risk that additional financing will not be available on a timely basis or on terms acceptable to
                 the respective companies.

                 The valuation presented herein represents the mean values achieved through the combination of value
                 ranges within each method applied. The valuation of exploration assets is, by nature, both subjective and
                 uncertain. The placing of a specific monetary value on historical exploration can be misleading, and the
                 reader is advised to consider the full range in which each mineral asset has been evaluated, and to
                 further consider the technical merits of each mineral asset and form an opinion regarding its prospectivity
                 on the basis of the data presented in this report.

                 It must be noted that this valuation has been carried out based on an assessment of values that could
                 reasonably be expected in view of recent market comparisons and valuations placed on coal producers
                 and explorers by the market. Venmyn Deloitte have provided their view on the unit comparisons having
                 performed a review of the contributing mineral assets. Valuations that consider the timing of extraction,
                 exchange rates fluctuations and views on market trends may arrive at materially different values.

                 This report contains forward-looking statements. These forward-looking statements are based on the
                 opinions and estimates at the date the statements were made. They are subject to a number of known
                 and unknown risks, uncertainties and other factors that may cause actual results to differ materially from
                 those anticipated in the forward-looking statements. Factors that could cause such differences include
                 changes in world coal markets, equity markets, costs and supply of materials relevant to the projects,
                 and changes to regulations affecting them. Although Venmyn Deloitte believes the expectations reflected
                 in its forward-looking statements to be reasonable, Venmyn Deloitte does not guarantee future results,
                 levels of activity, performance or achievements                                                                                                         30



11. Conclusions
       This report has investigated the techno-economic merits of the contributing properties of the Sekoko Coal-
       Firestone JV Waterberg Coal Project. A full range of values was calculated, but this report fully describes each
       coal asset so as not to be misleading.

       Venmyn Deloitte established an Intrinsic/Technical Value range of between ZAR1,247m and ZAR1,437m, with a
       preferred Intrinsic/Technical Value of ZAR1,344m.

       Our assessment suggests that it would be appropriate to apply a discount to the Intrinsic/Technical Value of the
       mineral assets, in terms of the requirements of VALMIN, 2005 in assessing Fair Value. In this case, Venmyn
       Deloitte consider that a discount of 21% is appropriate.

       This results in a Fair Value of ZAR1,068m. If a value range is required, we would consider it appropriate to apply
       the ~21% discount to the technical valuation range which would provide a value range of ZAR991m and
       ZAR1,142m.

       The prospectivity of the Sekoko Coal-Firestone JV Waterberg Coal Project is enhanced by its proximity to the
       operating Grootegeluk Colliery as well as its proximity to water, electrical, road and rail infrastructure. Furthermore
       the coal is thick, relatively shallow and is considered opencastable. Notably, the Waterberg Coal Project is also
       within 40km of Eskom?s Matim a Power tation.

       This valuation has been carried out as an indicative assessment of values that could reasonably be expected in
       view of recent market comparisons and valuations placed on the coal resources by the market. Venmyn Deloitte
       has its view on the unit comparisons having performed a high level review of the contributing properties.
       Valuations that consider the timing of extraction, exchange rate fluctuations, and views on the coal markets may,
       therefore, arrive at different values depending on the purpose of the valuation and prevailing market conditions.

       This valuation is dated to the extent that it is valid at that time and will change if more information is made
       available or market conditions change.

       The valuation of exploration assets is, by nature, both subjective and uncertain. The reader is advised to consider
       the full ranges in which each property has been evaluated, and to further consider the technical merits of each
       project area and form an opinion regarding its prospectivity on the basis of the data presented in this report.
                                                                                                                               

12. Global Coal Market Review
       Coal is mined commercially in over 50 countries and used in more than 70 countries worldwide. Coal is readily
       available from a wide variety of sources in a well-supplied worldwide market and it can be transported to demand
       centres quickly, safely and easily by ship and rail. A large number of suppliers are active in the international coal
       market, ensuring competitive behaviour and efficient functioning.

       12.1. Reserves
                 Venmyn Deloitte is not aware of any calculation of global coal resources. British Petroleum (BP) provides
                 a list of coal reserves globally (Figure 8, Table 12), although whether these reserves are defined in terms
                 of the Committee for Mineral Reserves International Reporting Standards (CRIRSCO) Codes is
                 uncertain.

                     Figure 8 : Global Coal Reserves (end 2011) - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS


      


                 Table 12 : Global Coal Reserves (end 2011)
                                                                           ANTHRACITE &       SUB-BITUMINOUS
                                                                                                                           TOTAL
                                           REGION/COUNTRY                   BITUMINOUS           & LIGNITE                                 R/P RATIO
                                                                                                                            (Mt)
                                                                                (Mt)                (Mt)

                     US                                                            108,501                128,794            237,295             239
                     Canada                                                          3,474                  3,108              6,582              97
                     Mexico                                                            860                    351              1,211              77
                                     TOTAL NORTH AMERICA                           112,835                132,253            245,088             228
                     Brazil                                                              -                  4,559              4,559               *
                     Colombia                                                        6,366                    380              6,746              79
                     Venezuela                                                         479                      -                479              55
                     Other S. & Cent. America                                           45                    679                724               *
                       TOTAL SOUTH & CENTRAL AMERICA                                 6,890                  5,618             12,508             124
                     Bulgaria                                                            2                  2,364              2,366              64
                     Czech Republic                                                    192                    908              1,100              19
                     Germany                                                            99                 40,600             40,699             216
                     Greece                                                              -                  3,020              3,020              53
                     Hungary                                                            13                  1,647              1,660             174
                     Kazakhstan                                                     21,500                 12,100             33,600             290
                     Poland                                                          4,338                  1,371              5,709              41
                     Romania                                                            10                    281                291               8
                     Russia                                                         49,088                107,922            157,010             471
                     Spain                                                             200                    330                530              81
                     Turkey                                                            529                  1,814              2,343              30
                     Ukraine                                                        15,351                 18,522             33,873             390
                     United Kingdom                                                    228                      -                228              12
                                                                                                                             

                                                                   ANTHRACITE &           SUB-BITUMINOUS
                                                                                                                       TOTAL
                              REGION/COUNTRY                        BITUMINOUS               & LIGNITE                                 R/P RATIO
                                                                                                                        (Mt)
                                                                        (Mt)                    (Mt)

                   Other Europe & Eurasia                                        1,440                    20,735              22,175           238
                                 TOTAL EUROPE & EURASIA                         92,990                   211,614            304,604            242
                   South Africa                                                 30,156                          -             30,156           118
                   Zimbabwe                                                        502                          -                502           202
                   Other Africa                                                    860                       174               1,034              *
                   Middle East                                                   1,203                          -              1,203              *
                             TOTAL MIDDLE EAST & AFRICA                         32,721                       174              32,895           126
                   Australia                                                    37,100                    39,300              76,400           184
                   China                                                        62,200                    52,300            114,500             33
                   India                                                        56,100                     4,500              60,600           103
                   Indonesia                                                     1,520                     4,009               5,529            17
                   Japan                                                           340                        10                 350           275
                   New Zealand                                                      33                       538                 571           115
                   North Korea                                                     300                       300                 600            19
                   Pakistan                                                          -                     2,070               2,070              *
                   South Korea                                                       -                       126                 126            60
                   Thailand                                                          -                     1,239               1,239            58
                   Vietnam                                                         150                          -                150             3
                   Other Asia Pacific                                            1,583                     2,125               3,708            88
                                         TOTAL ASIA PACIFIC                   159,326                    106,517            265,843             53
                                                TOTAL WORLD                   404,762                    456,176            860,938            112
                 Source: BP Statistical Review of World Energy 2012
                 Notes: Proved reserves of coal – Generally taken to be those quantities that geological and engineering information indicates
                 with reasonable certainty can be recovered in the future from known deposits under existing economic and operating
                 conditions.
                 Reserves-to-production (R/P) ratio – If the reserves remaining at the end of the year are divided by the production in that year,
                 the result is the length of time that those remaining reserves would last if production were to continue at that rate.



                 Although coal deposits are widely distri uted, 75% of the world?s recovera le Coal Reserves were
                 located in five countries at the end of 2011: the United States (27.6%), Russia (18.2%), China (13.3%),
                 Australia (8.9%) and India (7.0%).

                 Anthracite and ituminous coal accounted for 47% of the world?s estimated recovera le coal reserves
                 (on a tonnage basis) in 2011, while sub-bituminous and lignite accounted for 53% in 2011.

                 Regionally, Europe and Eurasia, with 35.4% of recoverable coal reserves, accounted for the largest
                 quantity of proved coal. The Middle East, with the world?s largest oil deposits, contains the least coal
                 reserves in the world (0.1%). Africa, meanwhile, accounts for 3.7% of recoverable coal reserves (Table
                 12).

       12.2. Supply
                 The most significant producers of coal in 2011 are shown in Table 13, which indicates that China was the
                 largest coal producer in 2011 by tonnage, followed by the US, India, Australia, Indonesia and Russia
                 (BP, 2012).

                 Table 13 :                                      2011 Production
                        COUNTRY                 PRODUCTION (Mt)
                  China                                         3,520
                  US                                              993
                  India                                           588
                  Australia                                       415
                  Russian Federation                              334
                  Indonesia                                       325
                  South Africa                                    255
                 Source: BP Statistical Review of World Energy 2012

                 The Asia Pacific region was the largest coal producing region in 2011 and accounted for 5Bt of coal
                 produced, or ~68% of coal produced (Figure 9 and Figure 10). China, India, Australia and Indonesia
                 were the dominant producers, but China was the most significant producer, producing more than 70% of
                 Asia Pacific coal in 2011.                                                                                                          

                 Several countries production was influenced y floods and heavy rains, among other factors. The Asia-
                 Pacific countries that showed a drop in coal production in 2011 as compared to the previous period
                 included Australia, New Zealand and Pakistan. Heavy rains at the beginning of 2012 had again resulted
                 in coal mine closures, with four Australian coal mines closed in eastern Australia in March 2012 (The
                 Huffington Post, 2012).

                 After the Asia Pacific region, North America produces the next highest amount of coal by energy value,
                 although it produces less coal in volume terms than Europe and Eurasia. Africa, South and Central
                 America and the Middle East are the next largest coal producers by volume and energy values. This
                 pattern is observed in consolidated global figures for 2011 (Figure 9 and Figure 10).

                     Figure 9 : Coal Global Production 1981 – 2011 (Mt) - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS

     



                     Figure 10 : Coal Global Production 1981 – 2011 (Mtoe) - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS

                                                                                                                                                            34

                 Coal production quantities in North America and Africa had not significantly changed between 1981 and
                 2008, but production dropped in 2009 in every region, except in the Asia Pacific and Middle East regions,
                 reducing by 9.1% in North America, 7.1% in Central and South America, 6.9% in Europe and Eurasia,
                 and 0.7% in Africa. All regions reversed this trend between 2009 and 2010, and are again increasing
                 their coal production volumes.

       12.3. Demand
                 2011 has shown a global increase in demand for coal. Among the most significant users of coal was
                 China, which increased its year-on-year consumption (in energy terms) by 9.7%, and India, which
                 increased its consumption by 9.2% (BP, 2012).

                 In line with this increased demand from China and India, as well as other emerging Asian nations, Asia
                 Pacific demand is growing, whilst growth in coal demand from other regions, and particularly from the
                 US, is subdued or even negative.

                 The Asia Pacific region accounted for the bulk of coal demand by energy value in 2011, with 69%, or
                 2,553Mtoe, of global consumption stemming from this region in 2011 (Figure 11).

                     Figure 11 : Coal Consumption 2000-2011 - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS



                 North America was the next largest contributor to consumption by region, at 14.3%, or 534Mtoe, of
                 global demand, followed by Europe and Eurasia, at 13.4% of global demand, or 499Mtoe, in 2011. All
                 regions, with the exception of the Middle East and Asia Pacific, experienced a drop in coal consumption,
                 in energy terms, in 2009, but all of the regions showed an increase in consumption, in energy terms,
                 between 2010 and 2011 (Figure 11).

       12.4. Future Demand
                 The demand for thermal coal in the future will largely depend on the extent of global reliance on coal for
                 electricity production, while the demand for coking coal will depend on the growth in steel production.

                 12.4.1. Thermal Coal
                                         Thermal coal demand is expected to increase significantly, especially on the back of increases
                                         in power and industrial production (Figure 12).
                                                                                                                                                   



                              Figure 12 : Projected Demand for Energy - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS

                            While coal's share of glo al electricity generation capacity is expected to grow (in terms of the
                            number of kWhs or GWs produced (Figure 11 and Figure 12)) in most regions, in some
                            regions, notably Europe, there will be a reduction in the amount of electricity produced by
                            coal, because of environmental concerns. The predicted coal-fired generating capacity by
                            region is shown in Table 14.

                            Unsurprisingly, given many of the Asian countries high future coal-fired electricity
                            consumption levels (Table 14) and limited domestic supplies of coal, many of the top
                            importers of thermal coal are expected to be from the continent in future.

Table 14 : Predicted World Coal-fired Generating Capacity by Country and Region (GW)
                                                                                                                                                             AVERAGE
                                                                     HISTORY                                     PROJECTIONS                                 ANNUAL %
         REGION / COUNTRY
                                                                                                                                                              CHANGE
                                                                         2007         2015         2020              2025             2030      2035         2007-2035
 NORTH AMERICA                                    340          345          346        347          352         363             0.2
                         United States            313          325          326        327          330         337             0.3
                              Canada               21           14           14         14           15          16            -0.8
                               Mexico               7            6            6          6            7          10             1.4
 OECD EUROPE                                      200          189          182        176          174         177            -0.4
 NON-OECD EUROPE AND EURASIA                       98           97           95         96          103         118             0.7
                                 Russia            44           44           44         44           50          61             1.1
                                   Other           54           52           51         51           53          57             0.2
 ASIA                                             729          859          990      1,170        1,381       1,622             3.7
                                  Japan            45           42           41         40           39          39            -0.5
                            South Korea            23           22           23         27           33          41             2.1
                  Australia/New Zealand            31           30           31         31           32          33             0.3
                                   China          496          625          750        901        1,062       1,233             3.3
                                    India          84           86           89         98          113         135             1.7
                              Other Asia           50           53           57         72          102         141             3.8
 MIDDLE EAST                                        6            5            5          5            5           5            -0.4
 AFRICA                                            41           41           43         47           56          70             1.9
 CENTRAL AND SOUTH AMERICA                         10           10            9          9            9          11             0.1
                                   Brazil           2            2            2          2            2           3             0.8
        Other Central and South America             8            8            7          7            7           8            -0.1
                        TOTAL WORLD             1,425        1,545        1,671      1,849        2,080       2,366             1.8
Note: Totals may not equal sum of components due to independent rounding.
Sources: History: Derived from EIA, International Energy Statistics database (as of November 2009), web site
www.eia.doe.gov/emeu/international. Projections: EIA, Annual Energy Outlook 2010, DOE/EIA-0383 (2010) (Washington, DC, April 2010),
AEO2010 National Energy Modelling System, run AEO2010R.D111809A, web site www.eia.doe.gov/oiaf/aeo; and World Energy Projection
System Plus (2010).
14th February 2013                                                                                                           36

                           However, coal's share of net electricity generation stood at 40% globally in 2008, ut will
                           decrease to 35% of world electricity generation by fuel by 2020 only to increase to 37% by
                           2035 (Figure 12). This is according to the EIA (2011b), which has predicted that the share of
                           net electricity generation by fuel type of various other energy fuels will increase. The EIA
                           anticipates that renewables will increase their share of net electricity generation by fuel from
                           19% in 2008 to reach a high of 25% in 2020, followed by a reduction in share of net
                           generation by fuel in 2035 to 23%. The EIA anticipates that natural gass share of net
                           electricity generation by fuel will similarly increase, rising from 22% in 2008 to 24% in 2035.

                           Coal?s significant share of net electricity generation y fuel, as well as expectations that other
                           energy fuels will not increase their share of net electricity generation so dramatically, suggests
                           that coal's future is secure. Indeed, even if coal?s share of electricity generation by fuel falls, in
                           volume terms coal demand is likely to increase.

                           Predictors of the eventual demand for various fuel types typically have a reference case and
                           then various other cases, and the influence of the green economy and environmental
                           concerns is an important differentiator between the various energy futures that are being
                           outlined y analysts. Coal's future, as a result, might not look so positive if there is a more
                           wide-scale embracing of alternative energy types.

                 12.4.2. Coking Coal
                           Those that have been traditionally large consumers of coking coal, including Japan, the
                           European Union (EU) and Korea, are likely to continue to be so, and their year-on-year
                           imports are expected to grow significantly as will India and China's imports (Metalreal, 2010).

                           Lower-than-expected growth levels out of various countries, however, suggest that coking
                           coal demand will be more subdued than it would have been had economic growth been
                           higher.

       12.5. Future Supply
                 Coal supply currently appears to exceed demand, in line with:-

                     -    a reduction in GDP growth and growth expectations in China and India;

                     -    the debt crisis in the Eurozone; and

                     -    changes to substitute fuels in the power generation market.


                 The reduction of once-anticipated GDP growth in China and India has had the most significant impact on
                 the global coal market since it has resulted in a supply glut as coal producers had been producing coal
                 that could not be consumed at current levels of growth.

                 This had led to power plants and other consumers in China, in particular, not accepting any more coal,
                 despite there sometimes being "take-or-pay" agreements in place, and cargoes eing left at Chinese
                 ports. It had also led to the situation that Chinese power plants were reported to have full inventories and
                 that coal traders were wary of buying coal, since they were uncertain that the price would not fall further
                 (Cooper, 2012).

                 The Eurozone debt crisis also continues to affect global demand for coal, since growth from this region
                 has become sluggish. The reduced demand for coal from the Eurozone was not considered significant
                 when China and India?s growth was at a high; however, the Eurozone crisis is exacerbating the situation
                 of reduced growth from India and China and contributing to depressed coal prices.

                 Other regions that are contributing to a coal supply glut are those in which coal is being replaced by
                 substitute energy fuels in power stations. Such is the case in the US, where natural gas power plants are
                 being built and coal-fired power plants are being converted to gas plants, leading some to prophesy that
                 it is the end of King Coal (Balassi, 2012). US coal producers have responded by redirecting their coal to
                 other regions of the world, contributing to the supply glut and the lower coal prices, or by closing their
                 operations.
                                                                                                       

                 However, some believe that the global supply glut will end, as more marginal producers stop production
                 due to the lower prices that they have to be content with obtaining and as they accept the lower growth
                 forecasts for China and India do not support the significant increases in coal production.




13. South African Coal Mining Industry
       South Africa has a well-established, low-risk coal mining industry, which has reputable participants, including
       Anglo Coal, BHP Billiton Energy Coal South Africa (BECSA), Xstrata Coal, Exxaro Resources, and Sasol Mining.
       There are also an increasingly large number of junior mining companies as a result of their investing in greenfield
       projects and brownfield projects, divested by the larger mining companies wishing to secure BEE credits and to
       sell mines that do not fit into their coal portfolios (Ryan, 2011).

       Coal is one of outh Africa?s most important export minerals. The ulk of the exports, particularly when freight
       charges are low, go to Asia (Economist Intelligence Unit, 2010).

       South Africa was the seventh-largest global producer of coal in energy and volume terms in 2011. outh Africa?s
       coal reserves rank ninth in the world with a reported 30.2Bt of economically recoverable coal reserves. The
       country has historically been known for its low-cost, readily-available coal, which makes it a very competitive
       industry.

       13.1. Reserves
                 The country is currently implementing a review of the national resources and reserves and hopes to have
                 a firmer foundation for national estimates of coal resources and reserves. This should assist in reducing
                 the doubt that surrounds estimates of South Africa?s coal reserves. In the current outh African Minerals
                 Industry (DMR, 2010a) Handbook, the Department of Mineral Resources (DMR) states that the 2007
                 South African reserves total 27.9Bt. This contrasts with a higher estimate, given by BP in its 2012
                 Statistical Review of World Energy, of 30.2Bt of reserves, and the much lower estimate implied by US
                 geologist Mr King Hubert, who estimates that the whole continent of Africa has ~15Bt (Hartnady, 2009).

       13.2. Supply
                 The South African coal-mining industry is highly concentrated, with three companies, namely BECSA,
                 Anglo Coal and Exxaro Resources Limited (Exxaro), dominating production.

                 South Africa's coal production accounted for 95.2% of Africa's coal production in 2011 (BP, 2012). outh
                 Africa's coal sales have been increasing since 1900, but this pattern was broken in 2009, when South
                 Africa's sales dropped from 254.9Mt to 245.2Mt etween 2008 and 2009. South Africa's export
                 tonnages, similarly, dropped in 2009, to 60.4Mt, as a result of shortfalls in delivery from Transnet Freight
                 Rail (Ryan 2010, DMR, 2010b and 2010a).

                 In 2011 South Africa produced 255.1Mt of coal and thus passed 2008 year-on-year production levels. Of
                 this production, 65.7Mt were exported from the Richard Bay Coal Terminal (RBCT) in 2011, marking a
                 significant improvement on 2009 export tonnages (RBCT, 2011).

                 There are numerous South African coalfields, with the Witbank and Highveld Coalfields being the most
                 economically important, as they produce the highest percentage of South Africa's saleable coal.
                 However, given that these have been mined for many decades, many are looking to the Limpopo
                 Province for outh Africa?s future production.

       13.3. Demand
                 According to South African Minerals Industry (DMR, 2010a), the main markets for South African coal
                 are:-

                     -    the export market, which took up ~24% of total production in 2009; and

                     -    the domestic market, which consists of:-
                                 
                     -    electricity generation, which consumes 63.7% of coal in the domestic market;

                                 -    petrochemical companies, primarily Sasol, which consume 17.8% of coal in
                                     the domestic market;

                                 -     general industry, which consumes 7.5% of coal in the domestic market;

                                 -     metallurgical industry, primarily ArcelorMittal, Highveld Steel and Columbus
                                       Steel, which consumes 4% of coal in the domestic market; and

                                 -     about 6.8% of coal for the domestic market which is purchased by merchants,
                                       and sold locally for the household market or exported, among other users.


                 13.3.1. The Export Market
                            South Africa has the capacity to export 91Mt of coal from the Richards Bay Coal Terminal
                            (RBCT), but it is exporting significantly lower volumes, having exported slightly more than
                            60Mt in 2009. There has since been an increase in exports, however, with exports reaching
                            66.4Mt in 2010 and 65.7Mt in 2011 (DMR, 2011; RBCT, 2011).

                            An alternative option for exporting South African coal is to export via the Matola Coal
                            Terminal, in Maputo, Mozambique.

                            Another alternative is the Durban Bulk Connection (DBC), which currently has a capacity of
                            2Mtpa for sized coal exports.

                 13.3.2. The Domestic Market
                            South Africa dominates the subregion in its maximum electricity demand, its total electricity
                            capacity and its proportional dependency on coal as part of the possible electricity generation
                            mix that is available to it (Table 15) – and this has significant implications for its current and
                            future use of coal, which finds its dominant domestic use in electricity production.

                 Table 15 : Electricity Generation Mix in Selected Southern African Countries (MW)
                                             MAXIMUM
                                                                        CAPACITY BY TYPE (MW)
                      COUNTRY                DEMAND                                                                  TOTAL
                                               (MW)      COAL        DIESEL       GAS         HYDRO      NUCLEAR    CAPACITY
                 Botswana                         434         132                                                            132
                 Mozambique                       285                     127                    2,385                     2,512
                 South Africa                  33,461      39,863         296        342           600      1,840         42,941
                 Swaziland                        172          10                                   41                        51
                 Zimbabwe                       2,066       1,225                                  750                     1,975
                 Source: Zhou et al (2009)



                            This is for a number of reasons, including that:-

                                        -     South Africa is the regional economic superpower, and its electricity
                                              consumption per capita reflects this dominance;

                                        -     South Africa's power stations have        een   uilt on the   ack of the
                                              country?s a undant coal resources;
                                        -     South Africa's power stations were uilt in the country's apartheid era,
                                              which required the country to attract investors into its mining, chemical
                                              and agricultural sectors using low-cost power which was created through
                                              significant investment into coal-fired power stations capacity
                                              (Malzbender, 2005).


                            Because of its heavy dependence on coal-fired electricity, every year South African State
                            electricity parastatal Eskom consumes more than 60% of domestically-sold coal from which it
                            provides more than 90% of the country?s electricity capacity.
                            Eskom?s power stations have een specifically designed to urn low-grade coals which are
                            abundant in South Africa (Table 16).
                                                                                                

                        Table 16 : Weighted Coal Qualities by Sector
                                                                                                        VOLATILE
                                                                                               Ash
                                       SECTOR                  COAL TYPE       CV (MJ/kg)                MATTER
                                                                                               (%)
                                                                                                           (%)
                         Electricity generation             Bituminous             21         25-33        20
                         Synfuels                           Bituminous          20-22.64     20-29.7     21-26.9
                        Source:- Steyn, M, et al (2010)


                        There are, however, other uses of coal domestically, as already indicated.

                        Sasol, for instance, consumes approximately 17.8% of outh Africa?s annual domestically-
                        consumed coal and operates coal mines to provide feedstock for synthetic fuels and chemical
                        plants. The company primarily uses the coal mined by Sasol Mining to produce petrol, diesel
                        and petrochemicals and power generation at the chemical plants.

                        Approximately 6.8% of local consumption also goes to the household market, with the
                        suppliers largely being coal traders in formal and informal residential areas.

                        The metallurgical sector, in addition, consumes about 4% of the local coal production, with the
                        major players in the industry including ArcelorMittal, Columbus Stainless and Highveld Steel.

                        Cement manufacturers have also emerged as significant consumers in the medium-term as
                        infrastructure developments in southern Africa have gained momentum, creating demand for
                        cement-based products.

                        Coking coal, meanwhile, has historically played a minor role in the South African coal industry.
                        In 2006, less than 4Mt of coking coal was produced y Exxaro?s Grootegeluk and Tshikondeni
                        Collieries, the former for export and the latter for ArcelorMittal?s steel works in Vanderbijlpark.
                        In 2010, less than 3Mt was sold by South African producers, and all of this was for domestic
                        use but in 2011 exports of coking coal did occur. The lack of development historically has
                        largely been a function of the Witbank/Highveld Coalfields? lower qualities which have een
                        better suited to thermal applications.

       13.4. Prices
                 13.4.1. Thermal Coal
                        The South African export prices of steam coal are determined by their calorific value. The
                        typical export specification for South African coal, RB1, varies between 5,850kcal/kg and
                        6,000kcal/kg (Steyn et al, 2010). INet Bridge also supplies prices for steam coal described as
                        Coal 5900, Coal 6000 and Coal 6200. The number in the label refers to the number of kcal/kg,
                        with Coal 6000 referring to a coal with a CV of 6,000kcal/kg or 25MJ/kg on a net as received
                        (NAR) basis (or 27.5MJ/kg on a gross specific energy basis) (Steyn et al, 2010). Figure 13
                        shows prices for Coal 5900, Coal 6000 and Coal 6200.

                        Prices as at the end of June 2012 demonstrated a low point for month-end coal prices, with
                        coal grade prices ranging between USD85.87/t for Coal 5900 and USD87.3/t for Coal 6200.
                        By the end of October coal grade prices ranged between USD93.17/t for Coal 5900 and
                        USD97.32/t for Coal 6200.

                        Coal prices have shown a generally decreasing price trend in 2012 although it must be
                        acknowledged that there has been a slight uptick in prices between since June 2012.

                        However, the generally decreasing prices observed 2012 do not bode well for South African
                        coal exporters who, at present, are also faced with a challenging labour environment, which
                        has seen labour unrest, calls for above-inflation wage increases and damage to mine
                        property, in some cases. This has resulted in costs increasing while the price obtained for coal
                        has been generally showing a decreasing price trend.
                                                                                                                                                                                                                                                                                               40

       Figure 13 : Coal Price History from July 2002 to March 2011 (USD) - PLEASE REFER TO WEBSITE FOR ALL DIAGRAMS

       


                                                            In the South African market, low grade coal is predominantly used in Eskom operated power
                                                            stations. Low grade coal prices are based on contracts and are rarely reported in the public
                                                            domain. The pricing mechanism is usually based on a cost plus basis, where the price of the
                                                            coal covers cost plus a margin. However, Eskom is considering a new pricing model for its
                                                            purchases of coal, called the efficiency-cost-plus-fair-return model. Venmyn Deloitte is
                                                            uncertain what this model will involve but analysts believe that this will increase the price paid
                                                            for coal by the utility (Creamer, 2011).

                               13.4.2. Coking Coal
                                                            South Africa did not export coking coal in 2009, but did sell ~1.9Mt in 2009 domestically at an
                                                            average local coking coal price of ZAR871/t (DMR, 2010b).

                                                            In 2010, South Africa, similarly, did not export any coking coal, but did produce ~3.4Mt locally
                                                            and sell 2.4Mt of bituminous coking coal to the domestic market. The average unit value of
                                                            domestic coal sales for 2010 was ZAR764/t.

                                                            Between November 2010 and October 2011, South Africa sold 2.3Mt of bituminous coking
                                                            coal locally and exported 474,223t. The average unit value of domestic bituminous coal sales
                                                            ranged between ZAR785/t and ZAR1,020/t over this period, while the average unit value of
                                                            export sales ranged between ZAR512/t and ZAR1,161/t.

                                                            The DMR has not provided Venmyn Deloitte with monthly provisional mineral production and
                                                            sales statistics for December 2011 or for the months that follow.

       13.5. Outlook
                               Export sales and sales to Eskom are the most important sources of demand, and the outlook for these
                               sales avenues are the most important to consider for any new entrant into the coal sector.                                                                                                   



                 13.5.1. Sales to Eskom
                        South Africa?s energy resource ase is dominated by coal. Approximately 93% of South
                        Africa's primary energy needs are provided by coal. This is unlikely to change significantly in
                        the next two decades, owing to the relative lack of suitable alternatives to coal as an energy
                        source.

                        The State utility has re-commissioned three mothballed power stations and has constructed or
                        is constructing additional power stations. Eskom predicts a requirement of 141Mt of coal to
                        feed its power stations by 2018. Some analysts believe that there is not enough coal in South
                        Africa to meet this demand while others believe that the industry is still growing and has not
                        reached peak coal growth.

                        The Water erg is key to many of Eskom's plans. It is currently constructing the Medupi power
                        station, which was to become operational in 2012. Medupi Phase 2 is intended to expand the
                        new power station by an additional 2,100MW, and this power is expected to come on stream
                        by around 2016.

                        However, while coal will remain an important fuel source in South Africa it is likely that its
                        share of the electricity generation market will drop if the Integrated Resource Plan for
                        Electricity 2010, which was approved by Cabinet in March 2011, takes effect.

                        This is ecause it is proposed that coal will provide the feed for 15% of South Africa's new
                        power stations coming on stream in the next 20 years, compared to renewable energy and
                        nuclear energy, which will supply 42% and 23%, respectively, of outh Africa?s electricity that
                        comes from new power stations (Reuters and Sapa, 2011).

                        However, it is known that there is a large gap between South African electricity policy and how
                        it is implemented, and it is possible that there will not be as significant a change in the
                        electricity supply mix as policy documents suggest, owing to the historical poor
                        implementation of infrastructure-related policy.

                        13.5.1.1. The Impact of the SAPP
                                    Southern Africa continues to develop the Southern African Power Pool (SAPP), a
                                    community of 12 countries which were to sell surplus electricity to each other
                                    (Musaba, 2010). Historically, the DRC and Zambia, Zambia and Zimbabwe, and
                                    Mozambique and South Africa have had transmission lines linking the countries,
                                    but the intention is to invest USD5.6b in transmission projects to construct
                                    transmission networks between several countries which have not had
                                    transmission networks linking them in the past(Musaba, 2010).

                                    This bodes well for those in the energy sector that can produce electricity for the
                                    region, whose electricity demand is growing at an average of 3% a year.

                                    In the north of the SAPP community, hydropower dominates the energy supply
                                    mix, with Tanzania, Angola, Zambia, Zimbabwe, Malawi, Mozambique and, most
                                    importantly, the DRC having considerable hydropower potential. In the south of
                                    the SAPP community, meanwhile, thermal power is integral, with Namibia,
                                    Botswana, South Africa, Lesotho, Swaziland and arguably also Mozambique, in
                                    the next few years, increasingly building coal-fired power stations or being
                                    dependent on them for a large portion of their energy production (Musaba, 2010).

                                    The SAPP community has the potential to change the way that power is
                                    generated and transmitted throughout the region and could offer the opportunity
                                    for a diverse array of generating possibilities, including additional hydropower and
                                    coal-fired generation possibilities for private or national investors. This could
                                    result in an increase in the number of coal-fired generators that exist in the sub-
                                    region or, if the massive Inga hydropower project, in the DRC, takes off, result in
                                    imported hydropower-derived electricity being the dominant form of power
                                    generation in the whole SAPP community.                                                                                                   

                                    However, the timeframes for the introduction of various power initiatives is still
                                    uncertain as is the likely power supply mix for the sub-region in the medium and
                                    long term. This indeterminate future for the SAPP community is underscored by
                                    the fact that the Inga Project has yet to get off the ground because of its
                                    significant cost of USD8bn to USD10bn and its battle to get an anchor project in
                                    the DRC to use its electricity, with BHP Billiton indicating in February 2012 that it
                                    has decided to abandon its plans for an aluminium smelter (Legalbrief, 2012;
                                    Reuters, 2012).

                 13.5.2. Export Sales
                        Some 65.7Mt of coal was exported from South Africa from the RBCT in 2011, with additional
                        coal tonnages from South Africa having gone through the ports of Durban and Maputo.

                        Export tonnages through RBCT are said to be limited by a lack of rail capacity and operational
                        underperformance, which has included derailments in the past. Exports through the Matola
                        Coal Terminal, meanwhile, have also not been helped by limited rail infrastructure, increasing
                        freight tariffs, and lower throughput capacity through the Matola Terminal (McKay, 2012).

                        South African rail utility Transnet is considering large infrastructure projects in the Limpopo
                        Province to increase rail capacity for coal produced in the Waterberg and Limpopo regions. It
                        is undertaking a pre-feasibility study for the upgrade of the ZAR8bn line between Groenbult
                        (60km north-east of Polokwane) and the Mozambican port of Maputo and considering a new
                        line between Groenbult and the Waterberg. From Lephalale via Groenbult, the rail distance to
                        Maputo is approximately 148km less than to RBCT. These projects, if they are completed,
                        bode well for the exporting of coal from the Waterberg.

                        However, the costs of freight rail remain an obstacle. Freight charges, which became effective
                        on the 1st of April 2011, have resulted in increases of 30% and will increase the tariff from
                        ZAR90/t – ZAR100/t to ZAR117/t – ZAR130/t for exports on the Richards Bay line and
                        increases of 17% will increase freight tariffs from ZAR160/t to ZAR190/t on the Matola line to
                        Mozambique (Ryan, 2011b).                                                                                                                     



14. References
           AUTHOR           DATE                                      TITLE                                             SOURCE
 Australian Bureau of
 Agricultural and
                            2011      Australian Mineral Statistics 2011                                     http://adl.brs.gov.au
 Resource Economics
 and Sciences (Abare)
 Balassi, J                 2012      As gas heats up, coal sector burns less brightly                       http://in.reuters.com
 BP                         2010      BP Statistical Review of World Energy                                  BP
 BP                         2011      BP Statistical Review of World Energy                                  BP
 BP                         2012      BP Statistical Review of World Energy                                  BP
                                      Asian thermal coal prices collapse as demand, defaults weigh on
 Cooper, M                  2012                                                                             http://www.platts.com
                                      market
                                      Eskom wants government to intervene to shore up domestic coal
 Creamer, T                 2011                                                                             polity.org.za
                                      supply
 Department of Mineral
                            2010a     South Africa's Mineral Industry 2009/2010                              DMR
 Resources (DMR)
 Department of Mineral
                            2010b     Information on Coal                                                    www.dme.gov.za
 Resources (DMR)
 Department of Mineral
                            2011      Provisional Mineral Production and Sales Statistics (November 2011)    DMR
 Resources (DMR)
 Economist Intelligence
                            2010      World Coal: EIU Oct Coal Outlook                                       http://Viewswire.eiu.com
 Unit
 Energy Information        Accessed
                                      Government website content                                             www.eia.doe.gov/
 Administration (EIA)        2010
 Energy Information
                            2011a     Short-Term Energy and Summer Fuels Outlook                             www.eia.doe.gov/
 Administration (EIA)
 Energy Information
                            2011b     International Energy Outlook 2011                                      www.eia.doe.gov/
 Administration (EIA)
 Ernst & Young              2011      Business risks facing mining and metals 2011-2012                      www.ey.com
                                      Eskom Transmission Development Plans in the Waterberg Coal
 Eskom                      2008                                                                             Eskom
                                      Fields Area 2008 to 2028
 Hartnady, CJH              2009        outh Africa?s falling coal reserves (Review Article)
                                      South African Coal Road Map – The SA Coal Industry: Present            Coaltech Colloquium, Witbank
 Hall, I                    2011
                                      Context and Preliminary Future Scenarios                               – 22 July 2011
 Hall, J                    2011      Anglo-American settles Apr-Jun coking coal at $330/mt FOB              www.platts.com
 Hellenic Shipping News     2012      Russian coal output rises in 2011                                      www.hellenicshippingnews.com
 The Huffington Post        2012      Australia Flooding : Coal Mines Closed in Queensland                   www.huffingtonpost.com
 Legalbrief                 2012      Inga hydropower project battles to get off the ground                  www.legalbrief.co.za
                                                                                                             The Oil Drum Europe
 Low, D                     2008      What future for Coal in South Africa
                                                                                                             (www.theoildrum.com)
                                                                                                             IBC Coal Markets Conference,
 Lucarelli, B               2011      A tale of Two Steam Coal Industries
                                                                                                             rolevaenergy.com
                                                                                                             Paper for the Nordic Africa
 Malzbender                 2005      Domestic Electricity Provision in the Democratic South Africa          Institute?s Conflicting Forms of
                                                                                                             Citizenship Programme
 McKay, D                   2012      CoAL ends Mooiplaats strike, but market bites                          www.miningmx.com
 Mining Exploration
                            2010      Chinese Coal Production and Supply Exceeds Domestic Demand             www.paguntaka.org
 News
 Mining Review              2011      TFR rail costs may compromise Matola terminal expansion                www.miningreview.com
 Musaba, L                  2010      The Southern African Power Pool                                        www.sari-energy.org
 RBCT                       2011      Richards Bay Coal Terminal Operating Statistics December 2011          www.rbct.co.za
 Reuters and Sapa           2011      SA to rely more on nuclear, green energy                               www.miningmx.com
 Reuters                    2012      BHP pull-out a problem for Inga project                                www.iol.co.za
                                      Update 2- China power output to hit 2-yr low, slow coal production –
 Reuters                    2012b                                                                            Af.reuters .com
                                      NDRC Report
 Ryan, B                     2011     SA coal down in the dumps                                              www.miningmx.com
 Ryan, B                    2011b     Transnet hikes coal tariffs                                            www.miningmx.com
 Sethuraman, D               2012     India?s Nine-Month Coal Production Falls 2.7%, India Coal says         http://mobile.bloomber.com
 Smith,N                     2012     Transnet to spend R7bn on Waterberg lines                              Businesslive.co.za
                                                                                                             The Journal of the Southern
 Steyn, M and Minnitt,
                            2010      Thermal coal products in South Africa                                  African Institute of Mining and
 RCA
                                                                                                             Metallurgy
 Telfer, CA, Njowa, G,                Independent Competent Persons' Report on the Principal within the
 Mc Kenna, N, Cronje,       2011      Soutpansberg Coalfield of Coal of Africa Limited (CoAL) by Venmyn
 JCJ, Spicer, D                       Rand (Pty) Ltd (Venmyn)
 Telfer, CA, Mc Kenna,
                                      Independent Competent Persons' Report on Certain Coal Assets
 N, Cronje, JCJ, Spicer,    2012                                                                             Venmyn
                                      within the Soutpansberg Coalfield of Coal of Africa Limited (CoAL)
 D
 Trademark                  2012      Fact ox: outhern Africa?s coal rail and port bottlenecks               www.trademarksa.org
 Wellstead, J               2012      Coal hits a wall in US market
 Zhou,P; Yamba,FD;
 Lloyd, P; Nyahuma, L;
                                      Determination of regional emission factors for the power sector in     Journal of Energy in Southern
 Mzezewa, C; Kipondya,      2009
                                      Southern Africa                                                        Africa
 F; Keir, J; Asamoah, J;
 Simonsen, H
14th February 2013                                                                                                                         44



15. Certificates of Competent Persons
Name of Staff:                 Neil Mc Kenna
Position:                      Director – Mining Advisory
Name of Firm:                  Venmyn Deloitte, a subsidiary of Deloitte Consulting South Africa (Pty) Ltd
                                 st
Address:                       1 Floor, Block G, 173 Rivonia Road, Sandton, 2146
Profession:                    Geologist
Date of Birth:                 05 June 1977
Years with Firm/Entity:        5
Nationality:                   South African


Membership in Professional Societies:

            CLASS                                    PROFESSIONAL SOCIETY                                   YEAR OF REGISTRATION
 Member                             Australasian Institute of Mining and Metallurgy                                     2011
 Member                             Geological Society of South Africa                                                  2002
 Member                             South African Institute of Mining and Metallurgy                                    2007
 Member                             South African Council for Natural Scientific Professions                            2002
 Member                             Investment Analyst Society of South Africa                                          2009
 Member                             South African Institute of Directors                                                2009

Detailed Tasks Assigned:
 YEAR                   CLIENT                COMMODITY                                 PROJECT DESCRIPTION

          PriceWaterhouseCoopers              Coal             Valuation of a South African Coal Project

          Coal of Africa Limited              Coal             Competent Persons Report and Valuation on their South African Assets

          PriceWaterhouseCoopers              Uranium          Valuation of nickel assets in Burundi
          Umcebo Mining                       Coal             Valuation of certain South African coal assets
          Miranda Minerals                    Coal             Valuation of certain South African coal assets
          Rio Tinto Exploration               Coal             Valuation of certain South African coal assets
          Central Rand Gold                   Gold             Competent Persons Report and Valuation on their South African Gold Assets
          Gem Diamonds                        Diamonds         Competent Persons Report and Valuation of their Principle Mineral Assets
          Namakwa Diamonds                    Diamonds         Mineral Reseource Update
  2012    PriceWaterhouseCoopers              Gold             Valuation of certain African Gold Projects
          Coal of Africa Limited              Coal             Valuation of certain South African coal assets

          Coal of Africa Limited              Coal             Exploration Project Assurance for their GSP Project in South Africa.
                                              Gold,    Coal,
          Kibo Mining Plc                                      Competent Persons Report for Kibo Mining's Mineral Assets.
                                              Uranium
          Sekoko Coal                         Coal             Valuation of Sekoko Coal's Mineral Assets
                                              Gold,    Base
          Razita Mining                                        Prospectivity reviews for Mineral Rights Applications.
                                              Metals, Coal

          Coal of Africa Limited              Coal             Technical Statement on the Coal of Africa's Greater Soutpansberg Project.
          Metmar                              Coal             Technical Due dilligence and Valuation of a Coal Project in Kwa-Zulu Natal.
                                                               Competent Persons Report and Valuation of Coal of Africa Limited's Coal
          Coal of Africa Limited              Coal
                                                               Assets.
                                                               Competent Persons Report and Valuation of Kibo's Mineral Assets in
          Kibo Mining Plc                     Gold
                                                               Tanzania.

                                                               Due Diligence and Valuation of Continental Coal's Mineral Assets in South
          Sishen Iron Ore Company             Coal
                                                               Africa.


          Tanzanian Royalty Exploration                        Updated Mineral Resource Statement for the Kigosi Gold Project in
                                              Gold
          Corporation                                          Tanzania.

  2011    Sew Trident                         Coal             Technical Review and Valuation of the Ikoti Coal Project.

          Sekoko Resources                    Coal             Valuation of ekoko?s Coal Assets in the Thuli Coalfield of outh Africa.

                                                               Update of Competent Persons Report and Valuation on Namane?s
          Namane Resources                    Coal
                                                               Waterberg Coal Project.
                                                               Competent Persons Report and Valuation of Gem Diamonds' Mineral
          Gem Diamonds                        Diamonds
                                                               Assets.
                                              Coal       and
          Mzuri Capital                                        Competent Persons Report on the Mineral Assets of Pinewood Resources.
                                              Uranium

          Gem Diamonds                        Diamonds         Mineral Resource update.
14th February 2013                                                                                                                          45



 YEAR                  CLIENT                  COMMODITY                                PROJECT DESCRIPTION

          Mzuri Capital Limited                Gold           Mineral Assets Valuation of the gold assets of Morogoro Gold in Tanzania.
                                                              Competent Persons Report on the Gold Assets of Morogoro Gold in
          Mzuri Capital Limited                Gold
                                                              Tanzania.
                                                              Mineral Assets Valuation of Noordgrens Landgoed?s mineral assets foregone
          Coal of Africa Limited               Coal
                                                              in 2004.
          Coal of Africa Limited               Coal           Mineral Asset Valuation of CoAL?s mineral assets within outh Africa.
                                               Base Metals
          Trafigura                                           Mineral Asset Valuation of Proposed Greenfields project areas in Angola.
                                               and Gold
          ETA Star                             Coal           Mineral Asset Valuation of certain Coal Assets in near Tete, Mozambique.
          Namakwa Diamonds                     Diamonds       Mineral Resource update for Global Operations
                                                              Competent Persons Report and Valuation on Namane?s Water erg Coal
          Namane Resources                     Coal
                                                              Project.
          Namane Resources                     Coal           Techno-economic assessment of Namane?s Waterberg Coal Project.
  2010
          Sekoko Resources                     Coal           Valuation of the Sekoko-Firestone JV coal assets in the Waterberg Coalfield
                                                              Resource update for the Sekoko-Firestone JV properties in the Waterberg
          Sekoko Resources                     Coal
                                                              Coalfield.
          Keldoron Mining                      Coal           Valuation of Keldoron?s Amaju a District Coal Project in outh Africa
          Nyota Minerals                       Gold           Mineral resource estimation of the Tulu Kapi Gold Project in Ethiopia.
                                                              Competent Persons Report and Valuation on Namakwa Diamonds? Mineral
          Namakwa Diamonds                     Diamonds
                                                              Assets.
          Miranda Mineral Holdings             Coal           Techno-economic assessment of Miranda?s coal assets in outh Africa.
          Nyota Minerals                       Nickel         Mineral Experts Report on the Muremera Nickel Project in Burundi.
          Gem Diamonds                         Diamonds       Mineral Resource Estimation for the Gope Project in Botswana.
                                               Gold     and
          Ernst & Young Jordan                                Valuation of Brinsley Enterprises Orshab Project in Sudan.
                                               Base Metals
          Gem Diamonds                         Diamonds       Mineral resource reporting audit at the Letseng Mine in Lesotho.
          Nyota Minerals                       Gold           Scoping Study on the Tulu kapi Gold Project in Ethiopia.
                                                              Techno-economic assessment of the Kalagadi?s mineral assets in outh
          Kalagadi Manganese                   Manganese
                                                              Africa in the form of a CPR.
          VTB Bank Moscow                      Uranium        Valuation of the Spitzkop Uranium Project in Namibia.
          Nyota Minerals                       Gold           Drilling ans sampling QA/QC audit at the Tulu Kapi Gold Project in Ethiopia.
          Leeuw Mining                         Coal           Due Dilligence and Vlaution of the Maloma Colliery in Swaziland.
          Metorex                              Fluorspar      Fairness opinion on Metorex's disposal of the Vergenoeg project.
          Dwyka Resources                      Gold           Valuation of the Otjikoto Gold Project in Namibia.
                                                              Peer review of the modelling and resource estimation of the Kitumba Copper
          Mike Scott & Associates              Copper
                                                              Project, Zambia.
          Sylvania Resources                   Platinum       Due Dilligence and Valuation of the mineral assets of Sylvania Resources.
          Nyota Minerals Limited               Gold           Valuation of the mineral assets of the Otjikoto Gold Project, Namibia.
          Coal of Africa Limited               Coal           Valuation of the coal assets of the Tshikunda Coal Project in South Africa.
                                                              Mineral Resource Modelling and Mineral Resource Classification of the
          Rand Uranium                         Uranium
                                                              Cooke Dump.
          Dwyka Resources                      Gold           Prospectivity review of the Tulu Kapi Gold Project in Ethiopia
          Northam Platinum Limited             Platinum       Valuation of Micawber 278 (Pty) Limited.
          Herbert Agencies (Pty) Limited       Coal           Valuation of the coal assets of the Vischkuil Coal Project in South Africa.
  2009
                                                              Valuation of the Coal Assets of the Makhado Land Swop Transaction with
          Coal of Africa Limited               Coal
                                                              Rio Tinto
          Ernst & Joung Jordan                 Gold           Valuation of the Gold Assets of Brinsley Enterprises in Sudan
          Namakwa Diamonds                     Diamonds       Mineral Resource and Mineral Reserve audit and update.
                                                              Valuation of the Coal Assets of the Sekoko Coal-Firestone JV Waterberg
          Firestone Energy Limited             Coal
                                                              Coal Project, South Africa
                                                              Valuation of the Diamond Assets of the Lower Orange River Operations,
          Trans Hex Group Limited              Diamonds
                                                              South Africa
                                                              Valuation of the Diamond Assets of the Savanna Diamond Project, South
          Bonaparte Diamond Mines NL           Diamonds
                                                              Africa.
          Tanzanian Royalty Exploration                       A National Instrument (NI-43-101) Technical Report on the Kigosi Gold
                                               Gold
          Corporation                                         Project, Tanzania.

          Mvelaphanda Resources Limited        Platinum       Valuation of the PGE Assets of the Booysendal Project, South Africa.

          Xstrata South Africa (Pty) Limited   Coal           Valuation of the Coal Assets of the Zonnebloem 1 Project, South Africa.

          Anglo Platinum Limited               Platinum       Valuation of the PGE Assets of Micawber 278 (Pty) Limited.
                                                              Valuation Update of the Coal Assets of ekoko?s Water erg Coal Project,
          Sekoko Resources                     Coal
                                                              South Africa.
                                                                                                                           




 YEAR                     CLIENT               COMMODITY                                 PROJECT DESCRIPTION

                                                                 Fair and Reasonable Opinion on the Rights offer by Metorex in December
          Johannesberg Stock Exchange          Multi-
                                                                 2008. This involved the creation and issue of 242,538,403 shares at an issue
          Limited/ Metorex Limited             Commodity
                                                                 price of 200cps resulting in a cash consideration of ZAR485,076,806.
                                                                 Competent Persons Report and Valuation of the Pering Zinc-Lead Mine, in
          Minéro Mining Company                Zinc-Lead
                                                                 South Africa.
          Gem Diamonds                         Diamonds          Minerals Resource Update of all Gem Diamonds Mineral Assets.
          BRC DiamondCore                      Diamonds          Valuation of BRC DiamondCore?s ilverstreams Project in outh Africa.
                                                                 Valuation of ekoko?s Coal Assets of the Water erg Coal Project in outh
          Sekoko Resources                     Coal
                                                                 Africa.
                                                                 Prospectivity report on certain properties within the Tuli and Soutpansberg
          Tata Steel                           Coal
                                                                 Coalfields
          Universal Coal plc                   Coal              Valuation of the Coal Assets of the Elof Coal Project in South Africa
          Anglo Platinum                       Platinum          Valuation of The PGE Assets of the Booysendal Platinum Project
                                                                 Resource Estimation and Update for Namakwa Diamonds South African and
          Namakwa Diamonds                     Diamonds
                                                                 DRC Projects.
          Harmony Gold Mining Company          Gold              Resource Estimation and Classification of the Deelkraal Dump
          Pioneer Coal                         Coal              Competent Persons Report and Valuation of the Coal Assets of Pioneer Coal
                                                                 Technical Statement on the Doornhoek Alluvial Diamond Property, South
  2008    Namakwa Diamonds                     Diamonds
                                                                 Africa
                                                                 Prospectivity Review for Pioneer Coal?s outpans erg Coal Prospecting
          Pioneer Coal                         Coal
                                                                 rights.
                                                                 Prospectivity Review of Varios Coal Properties in the Ermelo region of South
          Target Coal                          Coal
                                                                 Africa.
          Lidongo Group Holdings               Diamonds          Prospectivity Review of Lidonga?s Riet River Prospecting Rights.
                                                                 Technical Review of mineral resources and sampling programme at the
          BRC DiamondCore                      Diamonds
                                                                 Paardeburg East Diamond Project.
                                                                 Technical Review of mineral resources and sampling programme at the
          BRC DiamondCore                      Diamonds
                                                                 Silverstreams Alluvial Diamond Project.
          Namaqua Diamonds                     Diamonds          Technical review of the London Project, North West, South Africa.
                                                                 Competent persons Report and Techno-Economic Valuation of Trans Hex?s
          Trans Hex Group                      Diamonds
                                                                 Lower Orange River Mineral Assets.
                                                                 Comparative Valuation of the Booysendal Platinum Project as part of the Fair
          Ernst & Young                        Platinum          and Reasonable Opinion on the Transaction between Northam and
                                                                 Mvelaphanda.
                                                                 Annual Mineral Resource and Mineral Reserve Review and Update.
          Harmony Gold Mining Company          Gold
                                                                 Identification of Strateigic Opportunities at the Free State Operations.
          Gem Diamonds Limited                 Diamonds          Mineral Resources Review of Gem Diamonds? Glo al Operations.
          Worldwide Coal Carolina (Pty)
                                               Coal              Techno-economic valuation of Worldwide Coal Carolina?s coal assets.
          Limited
                                               Ferro-            National Instrument 43-101F technical Report on the Riders Ferro-
          Apic Atoll (Pty) Ltd
                                               manganese         manganese Slag Dump, Pennsylvania, united States of America.
                                                                 High level independent review of the coal resource, reserve and technical
          Signet Mining                        Coal              operating parameters of Tuli Coal (Private) Limited?s pecial Grant Area in
                                                                 Southern Zimbabwe.
                                                                 An independent comparable transaction valuation of the platinum group
          Anglo Platinum Limited               Platinum
                                                                 element mineral assets of the Booysendal Project.
          Gem Diamonds Limited                 Diamonds          Techno-economic valuation of Kimberley Diamond Company NL
          Gem Diamonds Limited                 Diamonds          Mineral Experts Report on Kimberley Diamond Company NL
          Gem Diamonds Limited                 Diamonds          Competent Persons Report on the Go25 (Gope) kimberlite.
                                                                 Assessment of the geological and resource/reserve data provided to the IDC
          International          Development   Ferro-
                                                                 on the Riders Ferro-magnesium Slag Dump, Pennsylvania, USA, by Apic
          Corporation                          Magnesium
                                                                 Toll Treatment (Pty) Limited as part of their application for funding.
                                               Gold        and   Mineral Resource tatements for Harmony?s surface dump resources of the
  2007    Harmony Gold Mining Company
                                               Uranium           Randfontein and Free State Operations in South Africa.
                                                                 SAMREC compliant Resource and Reserve Statements for the mineral
          Gem Diamonds Limited                 Diamonds          assets of the Cempaka Diamond Mine in Indonesia for BDI Mining
                                                                 Corporation (Subsidiary of Gem Diamonds Limited).
                                                                 SAMREC compliant Resource Statement on the mineral assets of Gope
          Gem Diamonds Limited                 Diamonds          Exploration Company (Pty) Limited (Gope Project) (Subsidiary of Gem
                                                                 Diamonds Limited)
          Mintek/Department of Minerals                          Review and recommendations on the Kumba/Exxaro proposal for
                                               N/A
          and Energy                                             Environmental Provisioning.
          Rockwell    Resources  (Pty)                           Compilation of Technical Statement (NI-43101) for the Wouterspan
                                               Diamonds
          Limited                                                Operation.
          Gem Diamonds Limited                 Diamonds          High level valuation of Cullinan Diamond Mine
          JCI Limited                          Uranium           Review of and Recommendations on JCI?s Laings urg Uranium Project
          Harmony Gold Mining Company          Gold     and      Sample trail Audit and Competent persons sign-off (SAMREC) on Dump
          Limited                              Uranium           Drilling and Sampling

          Magnum Resources Limited             Tantalum          High Level Due Diligence of the Tantalite Valley Project, Southern Namibia
14th February 2013                                                                                                                           47

                                                                  A study of the Relationship Between the Micro- and Macro Diamonds from
             De Beers Consolidated Mines       Diamonds
                                                                  Finsch Diamond Mine.
  2004
                                                                  A study of the Relationship Between the Micro- and Macro Diamonds from
             De Beers Consolidated Mines       Diamonds
                                                                  Snap Lake Diamond Mine.



Employment Record:

  POSITION           COMPANY                                      JOB DESCRIPTION                                            DURATION
                                     Formed after Venmyn was acquired by professional services firm Deloitte,
                                     creating a new technical and economic minerals advisory business. The new
                                     business builds on the two companies' successful track records in minerals
                                     consulting, mining advisory services, audit, tax, risk advisory, consulting and
                                     corporate finance services to the mining industry. Venmyn Deloitte leverages
                  Venmyn Deloitte                                                                                       November      2012   -
 Director                            off the global Deloitte network to enable a global value proposition for
                  (Pty) Ltd                                                                                             Present
                                     technical evaluation and the financial valuation of mineral assets.

                                     Mr Mc Kenna's responsibilities continue to include mineral asset valuations,
                                     mineral projects reviews, public reporting as well as strategic leadership for
                                     the new business.
                                     Venmyn Rand operated as a techno-economic consultancy for the resources
                                     industry on a world wide basis. Responsibilities at Venmyn included:
                                     • erving as Director of Venmyn and responsi le for the company?s strategic
                                     process and management of internal functions and governance;
                  Venmyn      Rand                                                                                         February 2009 -
 Director                            • Providing hands-on services to all the company?s major clients;
                  (Pty) Ltd                                                                                                November 2012
                                     • Providing minerals projects assessments; and
                                     • Mr. Mc Kenna?s expertise in financial valuation was particularly appropriate
                                     for ensuring market to market presentation of both the technical and financial
                                     issues of resources projects.
                                     Venmyn Rand operates as a techno-economic consultancy for the resources
   Minerals                          industry on a world wide basis. Responsibilities at Venmyn include:
                    Venmyn Rand                                                                                         March 2006 – February
   Industry                          • Compiling technical and geological information into reports which are
                      (Pty) Ltd                                                                                         2009
   Advisor                           compliant with the SAMREC and JSE listing rules.
                                     • Production of techno-economic reports for clients.
                                     Responsible for the Mineral Resource Evaluation Drilling of the Block 5
                                     Extension of the Finsch Diamond Mine, Northern Cape. This role included
                                     the following activities:
                                     • Management of diamond core drilling for volume, geological, structural and
                                     grade determinations.
                                     • Co-ordination of drilling/sampling activities of four LM90 drill rigs on three
 Project          De        Beers,   underground levels (510, 650 and 888 levels).                                      October 2006 – March
 Manager          Finsch Mine        • Managing the capturing of all geological data in a Datamine drill-hole           2007
                                     database.
                                     • Responsi le for the managing of drilling contractors (Boart Longyear) and
                                     maintaining project schedules.
                                     • Responsi le for the supervision and mentorship of approximately 10
                                     subordinates (including senior and junior geologists, geological officers and
                                     geological assistants).
                                     • Responsi le for routine reporting, and ad-hoc reviews and requests by
                                     Group Managers Office.
                                     • Corporate governance of Resource Delivery Group.
  Technical        De Beers Group
                                     • Technical reviews of advanced stage projects and resource statements.            2005 - 2006
  Assistant          Exploration
                                     • Compilation of position papers.
                                     • Ad-hoc reports and resource reviews.
                                     • Joint venture reporting.
                                     • Responsi le for routine reporting.
                                     • liaison etween field operations and la oratories.
                                     • Ad-hoc technical reports and reviews.
 Technical        De Beers Africa    • Corporate governance of Africa Management team and HOD committee.
                                                                                                                        2004 - 2005
 Assistant        Exploration        • Active management of relationships and data for a Joint Venture in
                                     Madagascar.
                                     • Projects tracking.
                                     • Business plan management.
                                     • Industrial and exploration related diamond research
                  De        Beers    • Responsi le for diamond related service work and decision support
 Senior
                  Geoscience         • upervision and mentoring for diamond related projects.                           2003-2004
 Geologist
                  Centre             • Providing exploration ventures with targeting and mineral chemistry
                                     interpretations and decision support.
                                     Exposure to various aspects of exploration and mining geology over a 13
                                     month training period. Competencies gained include:
                                     • diamond indicator mineral identification and interpretation.
                  De Beers Group     • ulk sample evaluation.
 Staff
                  Exploration        • la oratory practices.                                                            2002-2003
 Geologist
                  Services           • stream and loam exploration sampling (both reconnaissance and follow-up
                                     sampling).
                                     • Underground geological mapping, density measurements, waste control,
                                     bulk sampling and grade determination studies.
14th February 2013                                                                                          48



Languages:
English: Excellent
Afrikaans: Good



Certification:

I, the undersigned, certify that to the best of my knowledge and belief, these data correctly describe me, my
qualifications, and my experience.




                                                             Date: 14 February 2013
Full name of staff member: Neil Mc Kenna
14th February 2013                                                                                                           49

Name of Staff:                Mr Iaan Myburgh
Position:                     Mineral Industry Analyst
Name of Firm:                 Venmyn Deloitte, a subsidiary of Deloitte Consulting South Africa (Pty) Ltd
                                st
Address:                      1 Floor, Block G, 173 Rivonia Road, Sandton, 2146
Profession:                   Mathematician
                                   th
Date of Birth:                31 December 1984
Years with Firm/Entity:       3
Nationality:                  South African


Membership in Professional Societies:

            CLASS                                       PROFESSIONAL SOCIETY                          YEAR OF REGISTRATION
 Member                              Geostatistical Association of South Africa                                          2012
 Member                              Investment Analyst Society of South Africa                                          2012


Detailed Tasks Assigned:
 YEAR                 CLIENT                   COMMODITY                                 PROJECT DESCRIPTION

  2010    African Copper                       Copper            Feasability Study

  2010    Miranda Mineral Holdings             Coal              Independent Project Valuations

  2010    White Water Resources                Gold              Independent Project Valuations
  2010    Chrometco Limited                    Chromite          Independent Project Valuations
  2010    Sekoko                               Coal              Independent Project Valuations
  2010    West Wits                            Gold/Uranium      Statistical Analysis
  2010    Central African Gold                 Gold              Statistical Analysis
  2010    Worldwide Mineral Strategists        Gold              Statistical Analysis
  2010    Rooderand Chromite                   Chrome            Valuation Statement
  2010    African Copper                       Copper            Valuation Statement
  2010    Sekoko                               Coal              Valuation Statement

  2010    Chrometco                            Chrome            Valuation Statement
  2011    Xceed Capital                        Coal              Techno Economic Valuation
  2011    PSIL                                 Uranium           Techno Economic Valuation

  2011    Wesizwe                              Platinum          Techno Economic Valuation

  2011    Gem Diamonds                         Diamonds          Independent Project Valuations

  2011    Lesego                               Platinum          Statistical Analysis
  2011    Sephaku                              Fluorspar         Independent Project Valuations
  2011    Xceed Capital                        Coal              Valuation Statement
  2011    Wesizwe                              Platinum          Valuation Statement
  2011    Namane Elandslaagte                  Diamonds          Valuation Statement
  2011    PSIL                                 Uranium           Valuation Statement
  2011    Sudor Coal                           Coal              Valuation Statement
  2011    Realm Resources                      Platinum          Valuation Statement
  2011    AEMFC                                Coal              Valuation Statement
  2011    Lodestone Namibia                    Iron Ore          Valuation Statement
  2011    African Copper                       Copper            Valuation Statement
                                               Power
  2011    Karbochem                                              Valuation Statement
                                               Generation
  2011    Miranda Minerals                     Coal              Valuation Statement
  2011    Anglo Namibian Prospects             Base Metals       Valuation Statement
  2011    Umcebo                               Coal              Valuation Statement
  2011    Gem Diamonds                         Diamonds          CPR
  2011    Banro                                Gold              CPR
  2011    Sephaku                              Fluorspar         CPR
  2011    Platmin                              Platinum          CPR
  2011    Harmony                              Gold              CPR
  2011    Lodestone Namibia                    Iron Ore          Valuation Statement
                                               Power
  2011
          Karbochem                            Generation        Valuation Statement
  2011    Miranda Minerals                     Coal              PEA and PFS
  2011    Gravelotte                           Gold              Valuation Statement
  2011    Pan African Resources,BTRP           Gold              Fatal Flaws review
  2011    Anglo Namibian Prospects             Base Metals       Valuation Statement
  2012    Tanzania Royalty                     PEA               PEA
  2012    Frontier Rare Earths                 PEA               PEA
14th February 2013                                                                                                                 50

  2012      Umcebo                           Coal              Valuation Statement
  2012      NMIC                             Gold              PFS
  2012      Andulela Kilken                  PGE               Valuation Statement
  2012      Chrometco                        Chrome            Valuation Statement
  2012      Central Rand Gold                Gold              CPR
  2012      Coal of Africa                   Coal              Corporate Model



Employment Record:

  POSITION           COMPANY                                   JOB DESCRIPTION                                         DURATION
                                    Venmyn provides compliance and valuation reporting services to the
                                    minerals industry.
                                    Responsibilities at Venmyn include:-
 Mineral                             -    Compiling technical and geological information into reports which are
                 Venmyn      Rand         compliant with the SAMREC and JSE listing rules;
 Industry                                                                                                         2010 – present
                 (Pty) Ltd
 Analyst                             -    High level research for multiple facets of mineral projects;
                                     -    Valuation of mineral projects; and
                                     -    Background research of information for CPR?s and Technical
                                          Statements.

Languages:
English: Excellent
Afrikaans: Excellent



Certification:

I, the undersigned, certify that to the best of my knowledge and belief, these data correctly describe me, my
qualifications, and my experience.



Full name of staff member: Iaan Myburgh

Sponsor 
River Group
Johannesburg
21 February 2013


Date: 21/02/2013 09:25:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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