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KUMBA IRON ORE LIMITED - Reviewed interim results for the six months ended 30 June 2017 and cash dividend declaration

Release Date: 25/07/2017 08:04
Code(s): KIO     PDF:  
Wrap Text
Reviewed interim results for the six months ended 30 June 2017 and cash dividend declaration

KUMBA IRON ORE LIMITED
JSE code: KIO
ISIN: ZAE000085346
(‘Kumba’ or ‘the Company’ or ‘the group’)
Reviewed interim results for the six months ended 30 June 2017 and cash dividend declaration


KEY FEATURES

- Fatality free and reduced lost-time injuries                            
- Productivity improvement resulted in production of 21.9 Mt, up 23%      
- Improved financial performance with strong cash generation              
- Revenue of R21.5 billion, up 22%                                        
- Headline earnings of R4.6 billion, R14.42 per share, up 53%             
- Balance sheet strengthened with net cash of R13.5 billion        
- Dividend reinstated - R15.97 per share interim cash dividend            


Commentary
SAFETY            
The focus on safety remains a key priority for the group. The continuous effort in our safety performance included an
emphasis on leadership, operational risk management and implementation of critical controls, which have resulted in
encouraging improvements reflected in our leading indicator reporting. No fatalities were recorded during the first half 
of 2017. The total recordable case frequency rate, a measure of frequency of injuries, was 0.73 (1H16: 0.83) and the
lost-time injury frequency rate (LTIFR) decreased to 0.23 (1H16: 0.27). 

SIGNIFICANT IMPROVEMENT IN PRODUCTIVITY AND EFFICIENCIES DELIVERED
Themba Mkhwanazi, Chief executive of Kumba, notes, “I am pleased to report that Kumba has delivered on our key
objectives set for the first half. Kumba was fatality free and improved significantly on all key safety indicators. Our
operational performance was again encouraging, with another step change in productivity from the revised Sishen mine plan 
and enhanced fleet efficiencies. This resulted in a 23% improvement in production.

“Stronger operational performance and commodity prices resulted in the operating margin improving to 36% from 29% in
1H16, and headline earnings increasing 53%. Cash flow conversion was strong with operating free cash flow up 48% to 
R8.3 billion resulting in a robust R13.5 billion net cash position. This has enabled us to resume dividend payments, 
with an interim dividend of R5.1 billion declared representing R15.97 per share. While the overall progress has been 
very encouraging, substantial effort was required simply to offset cost inflation and there is no room for complacency. 
The team is therefore examining every aspect of the value chain in order to improve Kumba’s ability to endure any future 
price volatility.” 

DIVIDEND REINSTATED
The Board has decided to resume paying a dividend, in accordance with the Board’s policy of returning excess cash to
shareholders, whilst retaining a high level of balance sheet flexibility. A conservative approach remains critical in 
the context of an ongoing volatile price environment.

Taking cognisance of the uncertain environment, but also recognising the strong cash balance built up by the group,
the Board has decided to pay an interim cash dividend of R15.97 per share. 

The dividend policy remains under review and the Board will continue to assess the Company’s requirements at each
interim and annual reporting period, taking into account the prevailing risks and opportunities, as well as the future
earnings outlook.

REGULATORY UPDATE
The Reviewed Mining Charter (MCIII)
On 15 June 2017, the South African Department of Mineral Resources (DMR) published its Reviewed Mining Charter 2017
(MCIII). Kumba has expressed its concern that, unlike the collaborative process for agreeing the 2004 and 2010 Mining
Charters, the MCIII was not concluded through agreement between the DMR and all relevant stakeholders, including the 
mining industry, despite the best efforts of those stakeholders over the preceding year. Unfortunately, the practical
experience of the mining industry in implementing the previous Mining Charters - which themselves have contributed to the
achievement of the significant transformation that exists across the South African mining industry today - was not taken 
into account in the development of MCIII.

Kumba is supportive of the legal course of action being followed by the Chamber of Mines, with the ultimate objective
of arriving at a negotiated solution that is practical to implement, and that preserves and enhances investment in what
is a critically important industry for South Africa. In the absence of new investment, South Africa will fail to deliver
the economic growth required to create greater levels of employment and socio-economic upliftment for the benefit of
all South Africans. Kumba is committed to meeting South Africa’s transformation objectives and has been a longstanding and
major contributor to the country’s transformation.

On 14 July 2017, the Chamber of Mines advised that the Minister of Mineral Resources has given a written undertaking
that the Minister and the DMR will not implement or apply the provisions of the 2017 Reviewed Mining Charter in any way,
pending judgment in the urgent interdict application brought by the Chamber of Mines. Kumba welcomes the undertaking
and will continue to engage through the Chamber of Mines.

Sishen consolidated mining right granted
An application, in terms of Section 102 of the Mineral and Petroleum Resources Development Act No 28 of 2002, to
extend Sishen mine’s mining right by the inclusion of the adjacent Sishen Iron Ore (Pty) Ltd (SIOC) Prospecting Rights 
(including Dingleton) and other properties, was lodged on 1 July 2016. This application is required by Sishen mine to expand 
its current mining operations within the adjacent Dingleton area. The official grant letter was received from the DMR on 
6 July 2017 and the process to amend the Sishen mining right, will now proceed. Mining operations will only commence once the 
required environmental authorisation, in terms of the National Environmental Management Act 1998 (Act 107 of 1998), has been 
approved, which is expected soon. 

Thabazimbi transfer to ArcelorMittal SA
SIOC and ArcelorMittal SA announced in 2016 that they had entered into an agreement to transfer Thabazimbi mine to
ArcelorMittal SA, subject to the fulfilment of certain conditions. If these conditions are not satisfied by 31 August 2017
(the later date agreed to by the companies), the agreement will lapse and SIOC will proceed with the closure of the
mine. 

The agreement is expected to become effective in the second half of 2017, at which time the employees, assets and
liabilities will transfer to ArcelorMittal SA at a nominal purchase consideration plus the assumed liabilities of which 97%
is already ArcelorMittal SA’s contractual liability. These liabilities include the mine’s social closure plan based on
the identified needs of the Thabazimbi community. The transfer will simplify the current arrangement by making
ArcelorMittal SA solely responsible for Thabazimbi’s closure and rehabilitation. The Thabazimbi mine assets and related
liabilities that will transfer have been presented separately in the balance sheet as assets and liabilities of the disposal 
group held for sale at 30 June 2017 (refer to note 9 in the condensed consolidated financial statements). 

MARKET OVERVIEW
The Platts 62%Fe CFR index reached US$95.05 per tonne in February, the highest level since August 2014, driven by
Chinese New Year restocking and rising steel prices. Iron ore prices have subsequently fallen and ended the first half of
the year at US$63 per tonne. Economic activity in China remained buoyant, with a rise in domestic steel prices and
improved margins prompting mills to ramp-up capacity and boosting demand for iron ore. Strengthening iron ore prices have
resulted in high cost supply coming back into the market, with iron ore supply from high cost seaborne suppliers, primarily
from India, increasing 20% year-on-year. 

The lump premium started the year at 10 US cents/dmtu and ended the first half at 21 US cents/dmtu, reaching an
historic low of almost 2 US cents/dmtu in April. The recent rally in premiums is on the back of lower availability of lump
product at Chinese ports and record mill margins, incentivising a renewed focus on productivity and supporting demand for
direct charge material. 

Underlying steel production and iron ore demand remained relatively strong during the first six months of the year but
a tempering in steel demand is expected in the second half. Rising iron ore stock levels at Chinese ports, combined
with a number of growth projects coming on line, is anticipated to put pressure on iron ore prices during the next 
six months.

Overview of six months ended 30 June 2017
Total tonnes mined were 125 Mt, a 13% increase. Total production increased to 21.9 Mt with significant productivity
improvements at Sishen helping to deliver 15.6 Mt and a continued solid performance at Kolomela delivering 6.3 Mt. Total
sales volumes increased by 5% to 21.2 Mt (1H16: 20.2 Mt) on the back of export sales of 19.5 Mt (1H16: 18.1 Mt) due to
higher production.

Kumba achieved an average cash break-even price of US$43/tonne (CFR China) in the first six months of 2017, an
increase of US$14/tonne from the average for the full year 2016. Controllable costs increased by US$1/tonne as a result 
of a US$2/tonne increase from mining cost inflation and higher waste mining volumes, partially offset by a further 
reduction in controllable overhead costs of US$1/tonne through continued cost optimisation. Uncontrollable costs increased 
as a result of higher freight rates (US$3/tonne) and lower lump and market premiums (US$5/tonne), higher mineral royalties 
(US$1/tonne) and a stronger currency which added US$4/tonne.

Headline earnings increased by 53% to R4.6 billion (1H16: R3 billion), mainly as a result of the 29% increase in the
average realised iron ore export price to US$71/tonne (1H16: US$55/tonne), and 5% higher total sales volumes.
Attributable and headline earnings for the period were R14.37 and R14.42 per share respectively.

OPERATIONAL PERFORMANCE                                                       
Production summary (unreviewed)                                                
                                     Six months ended                                    
’000 tonnes                           June       June   % change    
                                      2017       2016                                                                                  
Total                               21,854     17,788         23    
 Lump                               14,483     11,391         27    
 Fines                               7,371      6,397         15    
Mine production                     21,854     17,788         23    
 Sishen mine                        15,551     11,541         35    
  DMS plant                          9,705      6,727         44    
  Jig plant                          5,846      4,814         21    
 Kolomela mine                       6,303      5,877          7    
 Thabazimbi mine                         -        370          -    

Sishen mine
The successful execution of the restructuring and mine plan redesign has increased the mine’s flexibility and improved
the run rates on key operating parameters. The new mine plan, Operating Model and significant fleet productivity gains
of 57% helped drive Sishen’s improved performance. Sishen focused on increased operator training and equipment direct
operating hours (DOH) through higher attendance rates, changed shift patterns and more accountability at supervisory
levels. Through these measures and a committed workforce, the mine has been able to reduce its reliance on contractors 
and as productivity rises, this trend is expected to continue. In the pit, wider benches, changed blast sizes and improved
shovel productivity contributed to the increase in mining volumes. Better shovel and truck DOH have added an extra five
production hours per day. Implementation of the Operating Model has resulted in an 84% improvement in mine to plan
compliance since 2015.
 
As a result, total tonnes mined at Sishen increased by 11% to 92.9 Mt (1H16: 83.7 Mt) with 39% less trucks. As per the
plan, the mine’s stripping ratio increased to 4.7 for the six months, compared to 3.5 for the same period in 2016.
 
Production increased by 35% to 15.6 Mt (1H16: 11.5 Mt) due to a combination of increased plant throughput and higher
yields. Waste mined was 76.6 Mt, an 18% increase for the period. Higher than normal levels of rainfall impacted
performance in 1Q17 but the tonnages were recovered in the second quarter. 

Kolomela mine
Kolomela production was impeded by rain and weather delays in 1Q17, but improved substantially in the second quarter
to remain on track to achieve full year guidance. Productivity and efficiencies of the Kolomela drill fleet increased by
20% with the introduction of automated drilling technology. The Operating Model implementation has been responsible for
a 7.6% improvement in DSO plant throughput.

Total tonnes mined increased by 21% to 32.2 Mt, (1H16: 26.7 Mt). Waste mined was 25.4 Mt (1H16: 20.2 Mt), an increase
of 26%, as planned. The mine produced 6.3 Mt of ore (1H16: 5.9 Mt), a 7% increase, from 3% more ex-pit ore, benefiting
from stockpiled material.
 
Operating Model
The implementation of the Operating Model continues to yield operational efficiency improvements. The stabilised
roll-outs at the Kolomela plant and Sishen shovel maintenance area continue to demonstrate the benefits from the completed
implementations. The model ensures more stable operations, reduced variability and enhanced capability and efficiency,
providing a structured approach for continuous improvement. 

Logistics
Despite severe weather disruptions at port and rail, Kumba’s volumes railed on the Sishen-Saldanha Iron Ore Export
Channel increased by 14% to 20.8 Mt (1H16: 18.3 Mt), as a result of increased production.
 
Kumba shipped 19.5 Mt (1H16: 18.1 Mt) from the Saldanha port destined for the export market, an increase of 8%,
including 0.2 Mt shipped through the multi-purpose terminal (MPT) at the Saldanha port. 

Sales summary (unreviewed)                                                      
                                Six months ended                                          
’000 tonnes                      June       June      % change          
                                 2017       2016                                                                                               
Total                          21,234     20,210             5          
 Export sales                  19,477     18,106             8          
 Domestic sales                 1,757      2,104           (16)         
Sishen mine                     1,757      1,416           (24)         
Thabazimbi mine                     -        688             -          
                                                                                  
Sales
Total sales increased by 5% to 21.2 Mt (1H16: 20.2 Mt), as export sales volumes of 19.5 Mt (1H16: 18.1 Mt), including
0.3 Mt from third party producers, were aided by higher production levels. CFR sales accounted for 65% of export sales
volumes (1H16: 70%). Finished product inventory held at the mines and ports increased from 2.3 Mt to 4.4 Mt. China
accounted for 60% (1H16: 65%) of Kumba’s export sales portfolio while the share of EU/MENA/Americas region increased to
20%, as Kumba further diversified its customer portfolio in the region. The group’s lump:fine ratio was 63:37 for the
period (1H16: 63:37).

FINANCIAL RESULTS
Revenue
The group’s total revenue from continuing operations increased by 22% to R21.5 billion for the period compared to
R17.6 billion for the comparable period in 2016, mainly as a result of the 29% increase in the average realised iron ore
export price to US$71/tonne (1H16: US$55/tonne), and 5% higher total sales volumes. These gains were partially offset by
the strengthening of the average Rand/US$ exchange rate (1H17: R13.21/US$1 compared to 1H16: R15.40/US$1). Firmer freight
rates resulted in a R652 million increase in shipping revenue.

Kumba’s FOB achieved prices improved by US$16/tonne compared to 1H16, driven by stronger average iron ore index prices
offsetting impacts of higher freight rates and lower lump premiums. The average 62% Platts index increased by US$22/tonne,
whilst the lump premium decreased by US$3/tonne and freight rates increased by US$5/tonne compared to 2016. The FOB
achieved price increased by US$2/tonne due to pricing our China sales in the month of arrival.

Average lump premiums increased by 76% to US$0.08/dmtu in 2Q16 from that of the first quarter, on the back of
increased demand for direct charge material supported by stronger steel prices. However, the first half average of 
US$0.07/dmtu is 53% lower than the 1H16 average of US$0.15/dmtu.

Operating expenses
Operating expenses increased by 11% to R13.8 billion compared to R12.4 billion in the first half of 2016; principally
as a result of the 23% increase in production volumes and inflationary pressure on input costs. This was partially
offset by saving on mining costs from productivity measures, savings from overhead reductions, reduced use of contractors and
lower diesel prices. Selling and distribution costs remained flat despite the 14% increase in sales volumes railed.

R444 million higher freight costs were incurred due to the Platts freight rate on the Saldanha-Qingdao route
increasing to US$10/wmt. Spot freight rates averaged US$9.91/tonne, an 87% increase from US$5.29/tonne in 1H16. 

Cost savings were achieved through continued aggressive management of overheads and by focusing on high value project
and technical studies, partially offset by inflation.

Unit cash costs at Sishen mine increased by 5% to R311 per tonne (FY16: R296 per tonne) primarily a result of 10%
higher waste mining volumes and inflationary cost pressure, partially offset by productivity gains in mining and processing
activities which resulted in an increase in production volumes, and higher deferred waste stripping costs capitalised,
driven by a higher stripping ratio of 4.7. Kolomela mine incurred unit cash costs of R252 per tonne (FY16: R201 per tonne), 
a 25% increase from higher mining volumes, above inflationary pressures from higher fuel prices, and the costs
incurred for the crushing of feedstock material for the modular plant. 

Operating profit
Kumba’s operating profit margin increased by 7 percentage points to 36% (1H16: 29%). The group’s mining operating
margin increased to 39% (1H16: 32%), excluding the net freight loss incurred on shipping operations mainly as a result of
long-term fixed price chartering contracts. Operating profit increased by 50% to R7.7 billion (1H16: R5.2 billion).
 
Cash flow
The increased profitability on the back of higher average realised iron ore prices and increase in sales volumes
during the six months positively impacted the group’s cash generating ability. Cash flow generated from operations was 
R11.7 billion (1H16: R7.6 billion). The group ended the period with a net cash position of R13.5 billion 
(1H16: R548 million; 2H16: R6.2 billion). Capital expenditure of R1.1 billion was incurred, R0.2 billion on 
stay-in-business (SIB) activities, R0.7 billion on deferred stripping, and R0.2 billion on expansions, which included 
R137 million on the Dingleton project. The relocation of the remaining houses for the Dingleton project has progressed well 
and is expected to be completed on schedule and within budget.

The group expects total capital expenditure for 2017 (including deferred stripping) to be in the range of R3.0 billion
to R3.1 billion.

ORE RESERVES AND MINERAL RESOURCES
There have been no material changes to the ore reserves and mineral resources as disclosed in the 2016 Kumba
Integrated Report. 

EVENTS AFTER THE REPORTING PERIOD
There were no significant events that occurred from 30 June 2017 to the date of this report, not otherwise dealt with
in this report.

CHANGES IN DIRECTORATE
The following directors tendered their resignations from the Board during the period:
- Ms Zarina Bassa as an independent non-executive director with effect from 11 May 2017.
- Mr Andile Sangqu as a non-executive director, and shareholder representative of Anglo American, with effect from 
  24 March 2017.
- Ms Natascha Viljoen as a non-executive director, and shareholder representative of Anglo American, with effect from 
  24 March 2017.
- Mr Frikkie Kotzee as executive director with effect from 11 May 2017 following his resignation as Chief financial
  officer of the group.

The Board thanks all four former directors for their contributions and guidance during their respective tenures and
wishes them all the best in their future endeavours.

The Board announced the following appointments to the Board:
- Mr Terence Goodlace as an independent non-executive director with effect from 24 March 2017.
- Mr Seamus French as a non-executive director and a shareholder representative of Anglo American with effect from 
  24 March 2017.
- Mr Stephen Pearce as a non-executive director and a shareholder representative of Anglo American with effect from 
  24 March 2017.
- Mr Sango Ntsaluba as an independent non-executive director of the Board and chairman of the Audit Committee, with
  effect from 5 June 2017.
- Mr Bothwell Mazarura as Chief financial officer and executive director, effective 1 September 2017.

CHANGE IN MANAGEMENT
The Board announced the resignation of Ms Avanthi Parboosing as Company secretary with effect from 30 June 2017. The
Board expresses gratitude to Ms Parboosing for her valued contribution to the Company. Mr Itumeleng Lebepe was appointed
as acting Company secretary from 1 July 2017.

OUTLOOK
Sishen’s solid and consistent performance and ongoing improvements since the restructuring have resulted in guidance
being revised. Total production for 2017 is expected to be in the range of 41 - 43 Mt, with Sishen producing between 
28 - 29 Mt of product and 155-165 Mt of waste. Kolomela is expected to produce 13 - 14 Mt in 2017, aided by further 
improvements in plant efficiency and throughput rates. Waste guidance remains at 50 - 55 Mt for the year. 

Export sales volumes are expected to be under pressure as a result of adverse weather conditions during the wet
Western Cape winter months, as well as the annual maintenance shutdown on the iron ore export channel during 2H17. Full year
sales guidance is 41 - 43 Mt. Domestic sales volumes of up to 6.25 Mt are contracted to ArcelorMittal SA in terms of the
supply agreement, however, 3 - 3.5 Mt is the expected volume for 2017.

Iron ore prices are expected to remain under pressure in the short to medium term. The group’s performance remains
sensitive to the volatility in iron ore export prices and the Rand/US$ exchange rate. Kumba will continue to optimise its
assets by stepping up financial and operational performance through an increased focus on extracting value from the
entire value chain enabling growth in free cash flow and returns. The Company will remain focused on maintaining a strong
balance sheet to provide flexibility in the face of price volatility.

The presentation of the Company’s results for the six months ended 30 June 2017 will be available on the Company’s website 
www.angloamericankumba.com at 08:00 CAT and the webcast will be available from 11:30 CAT on 25 July 2017.    


SALIENT FEATURES AND OPERATING STATISTICS
for the period ended
                                                                         Unreviewed       Unreviewed         Unaudited     
                                                                           6 months         6 months         12 months    
                                                                            30 June          30 June       31 December     
                                                                               2017             2016              2016                                                                                                                              
Share statistics (’000)                                                                                                   
Total shares in issue                                                       322,086          322,086           322,086    
Weighted average number of shares                                           319,219          319,826           319,521    
Diluted weighted average number of shares                                   321,274          320,706           321,164    
Treasury shares                                                               2,882            3,003             2,798    
Market information                                                                                                        
Closing share price (Rand)                                                      171              111               159    
Market capitalisation (Rand million)                                         55,144           35,752            51,212    
Market capitalisation (US$ million)                                           4,216            2,435             3,730    
Net asset value attributable to owners of Kumba (Rand per share)             100.51            69.42             86.47    
Capital expenditure (Rand million)*                                                                             
Incurred                                                                      1,071            1,294             2,353    
Contracted                                                                      451              806               644    
Authorised but not contracted                                                 2,377            2,719             2,208    
Operating commitments*                                                                                          
Operating lease commitments                                                      75              105                89    
Shipping services                                                             6,850            8,847             8,692    
Economic information                                                                                                      
Average Rand/US Dollar exchange rate (ZAR/US$)                                13.21            15.40             14.69    
Closing Rand/US Dollar exchange rate (ZAR/US$)                                13.08            14.68             13.73    
Sishen mine FOR unit cost                                                                                                 
Unit cost (Rand per tonne)                                                   391.63           480.20            412.04    
Cash cost (Rand per tonne)                                                   311.40           326.90            296.19    
Unit cost (US$ per tonne)                                                     29.65            31.18             28.05    
Cash cost (US$ per tonne)                                                     23.57            21.23             20.16    
Kolomela mine FOR unit cost                                                                                               
Unit cost (Rand per tonne)                                                   346.28           253.79            283.42    
Cash cost (Rand per tonne)                                                   252.30           171.50            201.09    
Unit cost (US$ per tonne)                                                     26.21            16.48             19.29    
Cash cost (US$ per tonne)                                                     19.10            11.14             13.69    
* The capital expenditure and operating commitments amounts shown above have been reviewed.

CONDENSED CONSOLIDATED BALANCE SHEET
as at
                                                                           Reviewed         Reviewed           Audited     
                                                                            30 June          30 June       31 December     
Rand million                                                   Notes           2017             2016              2016                                                                                                                                  
Assets                                                                                                                    
Property, plant and equipment                                      3         31,651           32,680            32,131    
Biological assets                                                                 3               10                 2    
Investments held by environmental trust                                         580              844               559    
Long-term prepayments and other receivables                                     126              547                84    
Inventories                                                                   3,533            2,518             2,889    
Deferred tax assets                                                               -                1                87    
Non-current assets                                                           35,893           36,600            35,752    
Inventories                                                                   3,449            4,305             4,604    
Trade and other receivables                                                   2,579            2,992             5,253    
Cash and cash equivalents                                                    13,486            5,048            10,665    
Current assets                                                               19,514           12,345            20,522    
Assets of disposal group classified as held for sale               9          1,118                -               938    
Total assets                                                                 56,525           48,945            57,212    
Equity                                                                                                                    
Shareholders’ equity                                               4         32,374           22,360            27,850    
Non-controlling interests                                                    10,081            6,754             8,686    
Total equity                                                                 42,455           29,114            36,536    
Liabilities                                                                                                               
Interest-bearing borrowings                                        5              -            4,500             4,500    
Provisions                                                                    2,051            2,931             1,967    
Deferred tax liabilities                                                      7,362            7,860             7,462    
Non-current liabilities                                                       9,413           15,291            13,929    
Provisions                                                                       19              518               164    
Trade and other payables                                                      3,298            2,696             3,741    
Current tax liabilities                                                         353            1,326             1,906    
Current liabilities                                                           3,670            4,540             5,811    
Liabilities of disposal group classified as held for sale          9            987                -               936    
Total liabilities                                                            14,070           19,831            20,676    
Total equity and liabilities                                                 56,525           48,945            57,212    


CONDENSED CONSOLIDATED INCOME STATEMENT
for the period ended
                                                                           Reviewed         Reviewed           Audited     
                                                                           6 months         6 months         12 months     
                                                                            30 June          30 June       31 December     
Rand million                                                  Notes            2017             2016              2016                                                                                                                                                                               
Revenue                                                                      21,500           17,566            40,155    
Operating expenses                                                          (13,761)         (12,411)          (24,881)    
Operating profit                                                  6           7,739            5,155            15,274    
Finance income                                                                  321               75               295    
Finance costs                                                                  (206)            (305)             (496)    
Share of profit of equity accounted                       
joint venture                                                                     -                -                 2    
Profit before taxation                                                        7,854            4,925            15,075    
Taxation                                                                     (1,784)          (1,146)           (3,934)    
Profit for the year from continuing operations                                6,070            3,779            11,141    
Discontinued operations                                                                                                   
(Loss)/profit from discontinued operations                        9             (72)              41                 3    
Profit for the year                                                           5,998            3,820            11,144    
Attributable to:                                                                                                          
Owners of Kumba                                                               4,586            2,974             8,621    
Non-controlling interest                                                      1,412              846             2,523    
                                                                              5,998            3,820            11,144    
Basic earnings/(loss) per share attributable              
to the ordinary equity holders of Kumba                   
(Rand per share)                                          
From continuing operations                                                    14.59             9.20             26.97    
From discontinued operations                                                  (0.22)            0.10              0.01    
Total basic earnings per share                                                14.37             9.30             26.98    
Diluted earnings/(loss) per share attributable            
to the ordinary equity holders of Kumba                   
(Rand per share)                                          
From continuing operations                                                    14.49             9.17             26.83    
From discontinued operations                                                  (0.22)            0.10              0.01    
Total diluted earnings per share                                              14.27             9.27             26.84    


CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the period ended
                                                                           Reviewed         Reviewed           Audited     
                                                                           6 months         6 months         12 months     
                                                                            30 June          30 June       31 December     
Rand million                                                                   2017             2016              2016                                                                                                                         
Profit for the period                                                         5,998            3,820            11,144    
Other comprehensive loss for the year, net of tax                               (70)             (57)             (233)    
Exchange differences on translation of foreign operations1                      (70)             (57)             (233)                                                                                                                         
Total comprehensive income for the year                                       5,928            3,763            10,911    
Attributable to:                                                                                                          
Owners of Kumba                                                               4,533            2,930             8,442    
Non-controlling interest                                                      1,395              833             2,469    
                                                                              5,928            3,763            10,911    
1 There is no tax attributable to items included in other comprehensive income and all items will be subsequently 
  reclassified to profit or loss.                                                            


CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the period ended
                                                                           Reviewed         Reviewed           Audited     
                                                                           6 months         6 months         12 months     
                                                                            30 June          30 June       31 December     
Rand million                                                                   2017             2016              2016                                                                                                                                     
Total equity at beginning of year                                            36,536           25,167            25,167    
Changes in share capital and premium                                                                                      
Treasury shares issued to employees under employee share                 
incentive schemes                                                                82              127               197    
Purchase of treasury shares                                                     (61)            (180)             (180)    
Changes in reserves                                                                                                       
Equity-settled share-based payment                                               52              289               513    
Vesting of shares under employee share incentive schemes                        (82)            (127)             (197)    
Total comprehensive income for the year                                       4,533            2,930             8,442    
Dividends paid                                                                    -                -                 -    
Changes in non-controlling interest                                                                                       
Total comprehensive income for the year                                       1,395              833             2,469    
Dividends paid                                                                    -                -                 -    
Equity-settled share-based payment                                                -               75               125    
Total equity at end of year                                                  42,455           29,114            36,536    
Comprising                                                                                                                
Share capital and premium (net of treasury shares)                              (93)            (184)             (114)    
Equity-settled share-based payment reserve*                                     138            2,191               172    
Foreign currency translation reserve                                          1,208            1,409             1,262    
Retained earnings                                                            31,121           18,944            26,530    
Shareholders’ equity                                                         32,374           22,360            27,850    
Attributable to the owners of Kumba                                          32,374           21,452            27,850    
Attributable to non-controlling interest                                          -              908                 -    
Non-controlling interest                                                     10,081            6,754             8,686    
Total equity                                                                 42,455           29,114            36,536    
Dividend (Rand per share)                                                                                                 
 Interim**                                                                    15.97                -                 -    
 Final                                                                          n/a              n/a               n/a    
 * The second phase of the employee share ownership scheme, Envision, unwound in November 2016. On vesting, the 
   equity-settled share-based payment reserve was reclassified to retained earnings.                                                            
** The interim dividend was declared after 30 June 2017 and has not been recognised as a liability in this interim 
   financial report. It will be recognised in shareholders’ equity for the year ending 31 December 2017.                                                            


CONDENSED CONSOLIDATED CASH FLOW STATEMENT
for the period ended
Rand million                                                               Reviewed          Reviewed           Audited     
                                                                           6 months          6 months         12 months     
                                                                            30 June           30 June       31 December     
                                                                               2017              2016              2016                                                                                                                           
Cash generated from operations                                               11,726             7,632            17,218    
Income from investments                                                           -                 -                 2    
Net finance costs paid                                                          130              (258)             (319)    
Taxation paid                                                                (3,334)             (646)           (3,363)    
Cash flows from operating activities                                          8,522             6,728            13,538    
Additions to property, plant and equipment                                   (1,071)           (1,294)           (2,353)    
Proceeds from the disposal of property, plant and equipment                      21                 3                 9    
Cash flows used in investing activities                                      (1,050)           (1,291)           (2,344)    
Purchase of treasury shares                                                     (61)             (180)             (180)    
Net interest-bearing borrowings repaid                                       (4,500)           (3,705)           (3,705)    
Cash flows used in financing activities                                      (4,561)           (3,885)           (3,885)    
Net increase in cash and cash equivalents                                     2,911             1,552             7,309    
Cash and cash equivalents at beginning of year                               10,665             3,601             3,601    
Foreign currency exchange gains on cash and cash equivalents                    (90)             (105)             (245)    
Cash and cash equivalents at end of year                                     13,486             5,048            10,665    


Headline earnings
for the period ended
                                                                           Reviewed          Reviewed            Audited     
                                                                           6 months          6 months          12 months    
                                                                            30 June           30 June        31 December     
                                                                               2017              2016               2016    
Rand million                                                                                                                             
Reconciliation of headline earnings                                                                                         
Profit attributable to owners of Kumba                                        4,586             2,974              8,621    
Impairment charge                                                                 -                 4                  4    
Net loss on disposal and scrapping of property, plant and equipment              32                60                186    
                                                                              4,618             3,038              8,811    
Taxation effect of adjustments                                                   (9)              (19)               (54)    
Non-controlling interests in adjustments                                         (6)              (10)               (33)    
Headline earnings                                                             4,603             3,009              8,724    
Headline earnings (Rand per share)                                                                                          
Basic                                                                         14.42              9.41              27.30    
Diluted                                                                       14.33              9.38              27.16    
The calculation of basic and diluted earnings and headline earnings 
per share is based on the weighted average number of ordinary shares 
in issue as follows:                                                  
Weighted average number of ordinary shares                              319,218,877       319,825,728        319,520,658    
Diluted weighted average number of ordinary shares                      321,274,112       320,705,715        321,163,523    
The dilution adjustment of 2,055,235 shares at 30 June 2017 (30 June 2016: 879,987 and 31 December 2016: 1,642 865) is a 
result of the vesting of share options previously granted under the various employee share incentive schemes.                                                                   


Normalised earnings
for the period ended
                                                                         Unreviewed         Unreviewed          Unaudited     
                                                                           6 months           6 months          12 months    
                                                                            30 June            30 June        31 December     
                                                                               2017               2016               2016    
Rand million                                                                                                                             
Reconciliation of normalised earnings                                                                                        
Headline earnings attributable to owners of Kumba                             4,603              3,009              8,724    
Recognition of deferred tax asset                                                 -                  -               (86)    
                                                                              4,603              3,009              8,638    
Taxation effect of adjustments                                                    -                  -                  -    
Non-controlling interest in adjustments                                           -                  -                 20    
Normalised earnings                                                           4,603              3,009              8,658    
Normalised earnings (Rand per share)                                                                                         
Basic                                                                         14.42               9.41              27.10    
Diluted                                                                       14.33               9.38              26.96    
The calculation of basic and diluted normalised earnings               
per share is based on the weighted average number of                   
ordinary shares in issue as follows:                                   
Weighted average number of ordinary shares                              319,218,877        319,825,728        319,520,658    
Diluted weighted average number of ordinary shares                      321,274,112        320,705,715        321,163,523    
This measure of earnings is specific to Kumba and is not required in terms of International Financial Reporting Standards 
or the JSE Listings Requirements. Normalised earnings represents earnings from the recurring activities of the group.
                                                                   
This is determined by adjusting the headline earnings attributable to the owners of Kumba for non-recurring expense or 
income items incurred during the year. There were no adjusting items in the current period (30 June 2016: nil, 
31 December 2016: R86 million).                                                                   


NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS 
for the six months ended 30 June 2017
 1. CORPORATE INFORMATION                                                                                                                                         
    Kumba is a limited liability company incorporated and domiciled in South Africa. The main business of Kumba, 
    its subsidiaries, joint ventures and associates is the exploration, extraction, beneficiation, marketing, sale and 
    shipping of iron ore. The group is listed on the JSE Limited (JSE).                                                                                                                                           
                                                                                                                                                   
    The condensed consolidated interim financial statements of Kumba and its subsidiaries for the six months ended 
    30 June 2017 were authorised for issue in accordance with a resolution of the directors on 21 July 2017.                                                                                                                                           
                                                                                                                                                   
 2. BASIS OF PREPARATION                                                                                                                                         
    The condensed consolidated interim financial statements have been prepared under the supervision of DJ Prins CA(SA), 
    acting Chief financial officer, in accordance with IAS 34 Interim Financial Reporting and the South African Companies 
    Act No 71 of 2008 and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial 
    Pronouncements as issued by Financial Reporting Standards Council and in compliance with the JSE Listings Requirements 
    for interim reports.                                                                                                                                           
                                                                                                                                                   
    The condensed consolidated interim financial statements have been prepared in accordance with the historical cost 
    convention except for certain financial instruments, discontinued operations and disposal group held for sale, share-based 
    payments, and biological assets which are stated at fair value, and are presented in Rand, which is Kumba’s functional 
    and presentation currency. All financial information presented in Rand has been rounded off to the nearest million.                                                                                                                                           
                                                                                                                                                   
    2.1. Accounting policies                                                                                                                
         The accounting policies and methods of computation applied in the preparation of these condensed consolidated 
         interim financial statements are in terms of International Financial Reporting Standards and are consistent with 
         those accounting policies applied in the preparation of the previous consolidated annual financial statements.                                                          
                                                                                                                                              
         No new standards, amendments to published standards or interpretations which became effective for the year 
         commencing on 1 January 2017 had an effect on the reported results or the group accounting policies. The group 
         did not early adopt any new, revised or amended accounting standards or interpretations.                                                          
                                                                                                                                              
    2.2. Going concern                                                                                                                      
         In determining the appropriate basis of preparation of the condensed consolidated interim financial statements, 
         the directors are required to consider whether the group can continue in operational existence for the foreseeable 
         future. The financial performance of the group is dependent upon the wider economic environment in which the group 
         operates. Factors exist which are outside the control of management which can have a significant impact on the 
         business, specifically the volatility in the Rand/US$ exchange rate and the iron ore price.                                                          
                                                                                                                                              
         These condensed consolidated interim financial statements are prepared on a going concern basis. The Board is 
         satisfied that the group is sufficiently liquid and solvent to be able to support the current operations for the 
         next 12 months.                                                          
                                                                                                                                     
    2.3. Accounting judgements, estimates and assumptions                                                                                   
         In preparing these condensed consolidated interim financial statements, the significant judgements made by 
         management in applying the group’s accounting policies and the key sources of estimation uncertainty are consistent 
         with those applied to the consolidated financial statements for the year ended 31 December 2016.                                                          
                                                                                                                                              
    2.4. Change in estimates                                                                                                                
         The measurement of the environmental rehabilitation and decommissioning provisions are a key area where management’s 
         judgement is required. The closure provisions are measured at the present value of the expected future cash flows 
         required to perform the rehabilitation and decommissioning. This calculation requires the use of certain estimates 
         and assumptions when determining the amount and timing of the future cash flows and the discount rate. The closure 
         provisions are updated at each balance sheet date for changes in these estimates.                                                          
                                                                                                                                              
         The life of mine (LoM) plan on which accounting estimates are based only includes proved and probable ore reserves 
         as disclosed in Kumba’s 2016 annual ore reserves and mineral resources statement. The most significant changes in 
         the provision for 2017 arises from the change in the LoM for both Sishen and Kolomela. The effect of the change in 
         estimate of the rehabilitation and decommissioning provisions, which was applied prospectively from 1 January 2017, 
         is detailed below:                                                          
                                                                              Reviewed        Reviewed           Audited    
                                                                               30 June         30 June       31 December     
                                                                                  2017            2016              2016    
         Rand million                                                                                                                   
         Increase/(decrease) in environmental rehabilitation provision             120             198                (3)   
         Increase in decommissioning provision                                       1              18                 9    
         (Decrease)/increase in profit after tax attributable to the 
         owners of Kumba                                                           (66)            110                 1    
         Rand per share                                                                                                   
         Decrease in earnings per share attributable to the owners of Kumba       0.21            0.34                 -    
         The change in estimate from the decommissioning provision has been capitalised to the related property, plant and 
         equipment and as a result had no effect on profit or earnings per share.                                                          
                                                                                                                                                   
 3. PROPERTY, PLANT AND EQUIPMENT                                                                                                                                         
                                                                              Reviewed        Reviewed           Audited    
                                                                               30 June         30 June       31 December     
    Rand million                                                                  2017            2016              2016                                                                                                      
    31 December 2016                                                                                                              
    Capital expenditure                                                          1,071           1,458             2,520    
    Comprising:                                                                                                              
    Expansion                                                                      197             340               856    
    Stay-in-business (SIB)*                                                        218             652             1,343    
    Deferred stripping                                                             656             466               321                                                                                                                                                 
    Transfers from assets under construction to property, plant and equipment      663             855             2,392    
    * Included in the expenditure above is the non-cash addition of Rnil (30 June 2016: R164 million and 
      31 December 2016: R167 million) relating to the unguaranteed residual value under a finance lease.                                                                                                                                           
                                                                                                                                                   
    Expansion capital expenditure comprised mainly of the expenditure on the Dingleton relocation project and Sishen’s 
    second modular plant. SIB capital expenditure to maintain operations was principally related to infrastructure to support 
    mining and plant operations.                                                                                                                                           
                                                                                                                                                      
 4. SHARE CAPITAL AND SHARE PREMIUM                                                                                                                                                         
    Reconciliation of share capital and share premium (net of treasury shares):                                                                                                             
    Rand million                                                              Reviewed        Reviewed           Audited    
                                                                               30 June         30 June      31 December     
                                                                                  2017            2016              2016                                                                                                                                    
    Balance at beginning of period                                                (114)           (131)             (131)   
    Net movement in treasury shares under 
    employee share incentive schemes                                                21             (53)               17    
    Purchase of treasury shares                                                    (61)           (180)             (180)    
    Shares issued to employees                                                      82             127               197    
    Share capital and share premium                                                (93)           (184)             (114)   
                                                                                                                                                                                                                                                                       
    Number of shares                                                                                                                                                                           
    Balance at beginning and end of period                                 322,085,974     322,085,974       322,085,974        
    Reconciliation of treasury shares held:                                                                               
    Balance at beginning of period                                           2,797,627       1,109,732         1,109,732    
    Shares purchased                                                           284,194       2,140,891         2,140,891    
    Shares issued to employees under the 
    Long-Term Incentive Plan and Kumba Bonus 
    Share Plan                                                               (200,194)       (247,892)         (452,996)    
    Balance at end of period                                                 2,881,627       3,002,731         2,797,627    
    All treasury shares are held as conditional awards under the Kumba Bonus Share Plan.                                                                                                      

 5. INTEREST-BEARING BORROWINGS                                                                                                              
    Kumba’s net cash position at the balance sheet dates was as follows:                                                                       
                                                                              Reviewed        Reviewed           Audited    
                                                                               30 June         30 June       31 December     
    Rand million                                                                  2017            2016              2016                                                                                                                           
    Interest-bearing borrowings                                                      -          (4,500)           (4,500)   
    Cash and cash equivalents                                                   13,486           5,048            10,665    
    Net cash                                                                    13,486             548             6,165    
    Total equity                                                                42,455          29,114            36,536    
    Interest cover (times)                                                           -              16                36    
    Movements in interest-bearing borrowings are analysed as follows:                                                       
                                                                              Reviewed        Reviewed           Audited    
                                                                               30 June         30 June       31 December     
    Rand million                                                                  2017            2016              2016                                                                                                                              
    Balance at beginning of period                                               4,500           8,205             8,205    
    Interest-bearing borrowings raised                                               -              30                30    
    Interest-bearing borrowings repaid                                          (4,500)         (3,735)           (3,735)   
    Balance at end of period                                                         -           4,500             4,500    
    The group’s committed debt facilities of R12 billion (revolving facility) mature in 2020. At 30 June 2017, Rnil 
    (30 June 2016: R4.5 billion and 31 December 2016: R4.5 billion) of the committed facility had been drawn down. The group 
    had undrawn committed facilities of R12 billion (30 June 2016: R12 billion and 31 December 2016: R12 billion) and 
    uncommitted facilities of R8.3 billion (30 June 2016: R8.3 billion and 31 December 2016: R8.3 billion).                                                          
                                                                                                                                                  
 6. SIGNIFICANT ITEMS INCLUDED IN OPERATING PROFIT                                                                                           
    Operating expenses is made up as follows:                                                                                   
                                                                              Reviewed        Reviewed           Audited    
                                                                               30 June         30 June       31 December     
    Rand million                                                                  2017            2016              2016                                                                                                                                                   
    Production costs                                                             8,200           7,852            15,819    
    Movement in inventories                                                        513             359              (368)   
    Finished products                                                               16             733                84    
    Work-in-progress                                                               497            (374)             (452)                                                                                                                                             
    Cost of goods sold                                                           8,713           8,211            15,451    
    Mineral royalty                                                                648             234               963    
    Selling and distribution costs                                               2,659           2,674             5,379    
    Cost of services rendered - shipping                                         1,761           1,317             3,115    
    Sublease rent received                                                         (20)            (25)              (27)   
    Operating expenses                                                          13,761          12,411            24,881    
    Operating profit has been derived after taking                                          
    into account the following items:                                                       
    Employee expenses                                                            1,796           1,797             3,498    
    Net restructuring cost                                                           8             377               384    
    Share-based payment expenses                                                    55             366               647    
    Depreciation of property, plant and equipment                                1,497           1,496             3,089    
    Deferred waste stripping costs                                                (656)           (466)             (321)   
    Net loss on disposal and scrapping of property,                                         
    plant and equipment                                                             32              60               191    
    Gain on lease receivable                                                         -            (164)             (164)   
    Net finance losses/(gains)                                                     170               8              (657)   
    Net (gains)/losses on derivative financial instruments                                                                  
     Realised                                                                        -             (90)             (420)   
     Unrealised                                                                     42             (76)             (570)   
    Net foreign currency (gains)/losses                                                                                     
     Realised                                                                      208             156               286    
     Unrealised                                                                    (51)             42                69    
    Fair value gains on investments held by the                                             
    environmental trust                                                            (29)            (24)              (22)   
                                                                                                                                                                                                                                                                                                     
 7. TAXATION                                                                                                                                      
    The group’s effective tax rate was 23% for the period (30 June 2016: 23% and 31 December 2016: 26%).                                                                                                    
                                                                                                                                                  
 8. SEGMENTAL REPORTING                                                                                                                           
    Operating segments are reported in a manner consistent with the internal reporting provided to the chief operating 
    decision-maker (CODM). The CODM, who is responsible for allocating resources and assessing performance of the 
    operating segments, has been identified as the Kumba Executive Committee.                                                                                                    
                                                                                                                                                  
    The Kumba Executive Committee considers the business principally according to the nature of the products and services 
    provided, with the identified segments each representing a strategic business unit. ‘Other segments’ compromise 
    corporate, administration and other expenditure not allocated to the reported segments.                                                                                                    
                                                                                                                                                  
    The total reported segment revenue compromises revenue from external customers, and is measured in a manner consistent 
    with that disclosed in the income statement. The performance of the operating segments are assessed based on earnings 
    before interest and tax (EBIT), which is consistent with ‘Operating profit’ in the financial statements. Finance 
    income and finance costs are not allocated to segments, as treasury activity is managed on a central group basis.                                                                                                    
                                                                                                                                                  
    Total segment assets comprise finished goods inventory only, which is allocated based on the operations of the segment 
    and the physical location of the asset.                                                                                                    
                                                                                                                                                  
    Depreciation, staff costs and additions to property, plant and equipment are not reported to the CODM per segment, 
    but are significant items which are included in EBIT and/or reported on for the group as a whole.                                                                                                    
                                                                                                                                                                                                                                                           
                                                      Products3                 Services                                            
                                            Sishen  Kolomela  Thabazimbi                Shipping          
    Rand million                              mine      mine        mine1  Logistics  operations      Other       Total                                                                                                                                                                     
    Reviewed period ended 30 June 2017                                                                                     
    Income statement                                                                                                       
    Revenue from external customers         14,462     5,344           -           -       1,694          -      21,500    
    EBIT                                     7,933     2,864         (92)     (2,659)        (67)      (332)      7,647    
    Significant items included in EBIT:                                                                                    
    Depreciation                               950       488           1           5           -         54       1,498    
    Staff costs                              1,145       383           -          18           -        312       1,858    
    Balance sheet                                                                                                          
    Total segment assets                       552       157           -           -         807         61       1,577    
    Cash flow statement                                                                                                    
    Additions to property, plant and                                         
    equipment                                                                             
    Expansion capex                            197         -           -           -           -          -         197    
    Stay-in-business capex                     139        73           5           1           -          -         218    
    Deferred stripping                         550       106           -           -           -          -         656    
                                                                             
    Reviewed period ended 30 June 2016                                                                            
    Income statement                                                                                            
    Revenue from external customers         11,308     5,216         616           -       1,042          -      18,182    
    EBIT2                                    5,036     3,280          51      (2,675)       (275)      (211)      5,206    
    Significant items included in EBIT:                                                                                    
    Depreciation                               973       446           -           4           -         73       1,496    
    Staff costs                              1,677       354          61          15           -        494       2,601    
    Balance sheet                                                                                                        
    Total segment assets                       257        72           -         343           -        209         881    
    Cash flow statement                                                                                                  
    Additions to property, plant and                                                     
    equipment                                                                             
    Expansion capex                            313        27           -           -           -          -         340    
    Stay-in-business capex                     375       113           -           -           -          -         488    
    Deferred stripping                         340       126           -           -           -          -         466    
                                                                                                              
                                                    Products3                   Services                                            
    Rand million                            Sishen  Kolomela  Thabazimbi                Shipping      Other       Total    
                                              mine      mine        mine1  Logistics  operations                                                                                                                                              
    Audited year ended 31 December 2016                                                                                    
    Income statement                                                                                                       
    Revenue from external customers         26,644    10,764         612           -       2,747          -      40,767    
    EBIT2                                   14,194     6,539          41      (5,379)       (370)       290      15,315    
    Significant items included in EBIT:                                                                                    
    Depreciation                             1,992       943           2           9           -        145       3,091    
    Staff costs                              3,045       738          62          29           -        717       4,591    
    Impairment                                   -         -           4           -           -          -           4    
    Balance sheet                                                                                                          
    Total segment assets                       606       163           -         651           -         58       1,478    
    Cash flow statement                                                                                                    
    Additions to property, plant and                                                                 
    equipment                                                                                        
    Expansion capex                            735       110           -           -           -         11         856    
    Stay-in-business capex                     729       259           -           1           -        187       1,176    
    Deferred stripping                          88       233           -           -           -          -         321    
    1 The segment information above includes the results of Thabazimbi and therefore differs from the information presented 
      in the income statement.                                                                                                    
    2 After impairment charge.                                                                                                                    
    3 Derived from extraction, production and selling of iron ore.                                                                                                    

    Geographical analysis of revenue and non-current assets                                                        
    Rand million                                                              Reviewed         Reviewed           Audited    
                                                                               30 June          30 June       31 December     
                                                                                  2017             2016              2016                                                                                                    
    Total revenue from external customers                                       21,500           18,182            40,767    
    South Africa                                                                 1,431            1,728             2,862    
    Export                                                                      20,069           16,454            37,905    
    China                                                                       11,962           11,086            25,054    
    Rest of Asia                                                                 4,209            3,185             7,730    
    Europe                                                                       3,326            2,183             4,846    
    Middle East and Africa                                                         572                -               275                                                                                                 
    All non-current assets, excluding investments in associates and joint ventures, are located in South Africa, with the 
    exception of R5 million located in Singapore (30 June 2016: R20 million and 31 December 2016: R11 million), which 
    relates to prepayments.                                                        

 9. DISCONTINUED OPERATIONS AND DISPOSAL GROUP HELD FOR SALE                                                                  
    All remaining plant operations at the Thabazimbi mine ceased on 31 March 2016 following the decision taken in 2015 to 
    close the mine. The Thabazimbi operation continues to be classified as a discontinued operation for the period ended 
    30 June 2017, separately from continuing operations, consistent with the periods ended 30 June 2016 and 31 December 2016. 
    Analysis of the result of the Thabazimbi mine is as follows: 
    
                                                                              Reviewed         Reviewed           Audited    
                                                                              6 months         6 months         12 months    
                                                                               30 June          30 June       31 December     
    Rand million                                                                  2017             2016              2016                                                                                                                              
    Revenue                                                                          -              616               612    
    Operating expenses                                                             (92)            (565)             (571)   
    Operating (loss)/profit                                                        (92)              51                41    
    Net finance income                                                               1                5                 4    
    (Loss)/profit before tax                                                       (91)              56                45    
    Income tax credit/(expense)                                                     19              (15)              (42)   
    (Loss)/profit after income tax of discontinued operation                       (72)              41                 3    
    Attributable to owners of the parent                                           (55)              32                 2    
    Attributable to the non-controlling interest                                   (17)               9                 1    
    (Loss)/profit from discontinued operation                                      (72)              41                 3    
    Cash flow (utilised in)/generated from discontinued operations                                                         
    Net cash flows (utilised in)/generated from operating activities               (31)             374               279    
    Net cash (utilised)/generated by Thabazimbi                                    (31)             374               279    
    As previously reported, SIOC and ArcelorMittal SA entered into an agreement for the transfer of the Thabazimbi mine, 
    together with the mining right, to ArcelorMittal SA. The agreement is expected to come into effect by 31 August 2017. 
    If all conditions precedent are not met by 31 August 2017 (the later date agreed between the parties), the agreement 
    will lapse and SIOC will proceed with closure of the mine.                                                          
                                                                                                                              
    The requirements of IFRS 5 Non-current Assets Held for Sale and Discontinued Operations have been considered and as a 
    result the Thabazimbi mine assets and liabilities that will transfer to ArcelorMittal SA have been presented as assets 
    and liabilities held for sale as at 30 June 2017, 30 June 2016 and 31 December 2016.                                                          
                                                                                                                                                                                     
    Assets and liabilities of disposal group held for sale at                                                        
                                                                              Reviewed         Reviewed           Audited    
                                                                               30 June          30 June       31 December     
    Rand million                                                                  2017             2016*             2016                                                                                                      
    ASSETS                                                                                                                 
    Property, plant and equipment                                                   11                -                 8    
    Biological assets                                                               18                -                18    
    Investments held by environmental trust                                        308                -               296    
    Long-term prepayments and other receivables                                    559                -               515    
    Inventories                                                                      2                -                 5    
    Trade and other receivables                                                    220                -                96    
    Total assets                                                                 1,118                -               938    
    LIABILITIES                                                                                                            
    Non-current provisions                                                         885                -               822   
    Current provisions                                                             102                -               114   
    Total liabilities                                                              987                -               936   
    Net carrying amount sold                                                       131                -                 2    
    * At 30 June 2016, Thabazimbi mine was classified as a discontinued operation and not as a disposal group held for sale. 
      No agreement existed between ArcelorMittal and SIOC to transfer Thabazimbi mine to ArcelorMittal at 30 June 2016, and 
      therefore the assets and liabilities were not disclosed as a disposal group held for sale.                                                          

10. RELATED PARTY TRANSACTIONS                                                                                                      
    During the period, Kumba, in the ordinary course of business, entered into various sale, purchase and service 
    transactions with associates, joint ventures, fellow subsidiaries, its holding company and Exxaro Resources Limited. 
    These transactions were subject to terms that are no less favourable than those offered by third parties.                                                          
                                                                                    
                                                                              Reviewed         Reviewed           Audited    
                                                                              6 months         6 months         12 months    
                                                                               30 June          30 June       31 December     
    Rand million                                                                  2017             2016              2016                                                                  
    Short-term deposits held with Anglo American SA Finance Limited1 (AASAF)     9,628            2,277             7,430    
    - Weighted average interest rate (%)                                          7.17             6.83                 -    
    - Deposit                                                                        -            2,277             7,430    
    - Weighted average interest rate (%)                                             -             6.70              7.02    
    Interest earned on short-term deposits with AASAF during the year              299               60               262    
    Short-term deposit held with Anglo American Capital plc1                     2,910            1,970             1,991    
    Interest earned on facility during the period                                   11                3                 7    
    Interest paid on borrowings during the period                                    -                7                 7    
    Weighted average interest rate (%)                                               -             8.16              8.16    
    Trade payable owing to Anglo American Marketing Limited1 (AAML)                374              186               195    
    Shipping services provided by AAML                                           1,788            1,299             3,107    
    1 Subsidiaries of the ultimate holding company.                                                                                
                                                                                                                                         
11. FAIR VALUE ESTIMATION                                                                          
    The carrying value of financial instruments not carried at fair value approximates fair value because of the short period 
    to maturity or as a result of market-related variable interest rates.                                                      
                                                                                                     
    The table below presents the group’s assets and liabilities that are measured at fair value:                                                      
                                                                                                          
    Rand million                                                               Level 11         Level 22      Level 33                                                                                                
    Reviewed 6 months - 30 June 2017                                                                                   
    Investments held by the environmental trust                                    888                -             -    
    Cash and cash equivalents                                                                                            
    - Derivative financial assets                                                    -              107             -    
    - Derivative financial liabilities                                               -             (122)            -    
                                                                                   888              (15)            -    
    Reviewed 6 months - 30 June 2016                                                                                   
    Investments held by the environmental trust                                    844                -             -    
    Derivative financial instruments                                                                                            
    - Derivative financial assets                                                    -               96             -    
    - Derivative financial liabilities                                               -               (3)            -    
                                                                                   844               93             -    
    Audited 12 months - 31 December 2016                                                                               
    Investments held by the environmental trust                                    855                -             -    
    Cash and cash equivalents                                                                                            
    - Derivative financial assets                                                    -              615             -    
    - Derivative financial liabilities                                               -              (28)            -    
                                                                                   855              587             -    
    1 Level 1 fair value measurements are derived from unadjusted quoted prices in active markets for identical assets or 
      liabilities.                                                      
    2 Level 2 fair value measurements are derived from inputs other than quoted prices included within level 1 that are 
      observable either directly or indirectly (i.e. derived from prices).                                                      
    3 Level 3 fair value measurements are derived from valuation techniques that include inputs that are not based on 
      observable market data.                                                      
                                                                                                     
12. CONTINGENT LIABILITIES                         
    The two matters which were reported as contingent liabilities at 31 December 2016, being the South African Revenue Service 
    matter and the matter regarding the Sishen municipal rates and taxes, were resolved during the interim period. There were 
    no contingent liabilities at 30 June 2017.                           
                                                     
13. GUARANTEES                                     
    The total guarantees issued in favour of the DMR in respect of the group’s environmental closure liabilities at 
    30 June 2017 were R2.8 billion (30 June 2016: R2.8 billion and 31 December 2016: R2.8 billion). Included in this 
    amount are financial guarantees for the environmental rehabilitation and decommissioning obligations of the group to 
    the DMR in respect of Thabazimbi mine of R438 million (30 June 2016: R438 million and 31 December 2016: R438 million). 
    ArcelorMittal SA has guaranteed R730 million of this amount by means of bank guarantees issued in favour of SIOC.                           
                                                     
    As a result of the annual revision of closure costs, a shortfall of R450 million arose. Guarantees of the shortfall 
    will be issued in due course.                           
                                                     
14. REGULATORY UPDATE                              
    Mining Charter                                 
    Significant uncertainty remains around the Mining Charter III, released on 15 June 2017, which impacts future 
    empowerment of mining companies and granting of new mining rights. 

    On 14 July 2017, the Chamber of Mines advised that the Minister of Mineral Resources has given a written undertaking
    that the Minister and the DMR will not implement or apply the provisions of the 2017 Reviewed Mining Charter in any 
    way, pending judgment in the urgent interdict application brought by the Chamber of Mines. Kumba welcomes the 
    undertaking and will continue to engage through the Chamber of Mines.
                                                     
15. CORPORATE GOVERNANCE                           
    The group subscribes to the Code of Good Corporate Practices and Conduct and complies with the recommendations of the 
    King III Report. In November 2016, the Board charter was aligned with the provisions of all relevant statutory and 
    regulatory requirements including among others, King IV. Full disclosure of the group’s compliance is contained in 
    the 2016 Integrated Report.                           
                                                     
16. EVENTS AFTER THE REPORTING PERIOD                         
    There have been no material events subsequent to 30 June 2017, not otherwise dealt with in this report.                           
                                                     
17. INDEPENDENT AUDITORS’ REVIEW REPORT                         
    The auditors, Deloitte & Touche, have issued their unmodified review report on the condensed consolidated interim 
    financial statements for the six months ended 30 June 2017. The review was conducted in accordance with ISRE 2410 
    Review of Interim Financial Information Performed by the Independent Auditor of the Entity.                           
                                                     
    The auditor’s report on the condensed consolidated interim financial statements is available for inspection at the 
    Company’s registered office.                           
                                                     
    Any reference to future financial performance included in this announcement has not been reviewed or reported on by 
    the Company’s auditors. The auditor’s report does not necessarily report on all the information contained in the 
    financial results. Shareholders are therefore advised that in order to obtain a full understanding of the review 
    engagement they should obtain a copy of the auditor’s report together with the accompanying financial information 
    from the registered office.                           
                                                        
    On behalf of the Board                           
                                                                                                           
    F Titi                      TM Mkhwanazi       
    Chairman                    Chief executive    
                                                     
    21 July 2017                                     
    Pretoria                                         


NOTICE OF INTERIM CASH DIVIDEND
At its Board meeting on 21 July 2017, the directors approved a gross interim cash dividend of 1,597 cents per share on
the ordinary shares from profits accrued during the period ended 30 June 2017. The dividend has been declared from income
reserves.
 
The dividend will be subject to a dividend withholding tax of 20% for all shareholders who are not exempt from or do
not qualify for a reduced rate of withholding tax. The net dividend payable to shareholders after withholding tax at
a rate of 20% amounts to 1277.6 cents per share.

The issued share capital at the declaration date is 322,085,974 ordinary shares.

The salient dates are as follows:

Publication of declaration data                                                             Tuesday, 25 July 2017    
Last day for trading to qualify and participate in the interim dividend 
(and change of address or dividend instructions)                                          Tuesday, 15 August 2017    
Trading ex-dividend commences                                                           Wednesday, 16 August 2017    
Record date                                                                                Friday, 18 August 2017    
Dividend payment date                                                                      Monday, 21 August 2017    

Share certificates may not be dematerialised or rematerialised between Wednesday, 16 August 2017 and Friday, 18 August
2017, both days inclusive.

By order of the Board
 
I Lebepe 
Acting Company secretary
25 July 2017


Administration
REGISTERED OFFICE                        
Centurion Gate 
Building 2B
124 Akkerboom Road
Centurion, 0157
Republic of South Africa
Tel: +27 12 683 7000            
Fax: +27 12 683 7009

TRANSFER SECRETARIES
Computershare Investor Services (Proprietary) Limited
Rosebank Towers, 15 Biermann Avenue 
Rosebank, 2196, South Africa
PO Box 61051, Marshalltown, 2107

SPONSOR TO KUMBA
RAND MERCHANT BANK (a division of FirstRand Bank Limited)

DIRECTORS
Non-executive: F Titi (chairman), DD Mokgatle, AJ Morgan, BP Sonjica, 
TP Goodlace (British/South African), S French (Irish), NS Dlamini, SS Ntsaluba, 
ST Pearce (Australian) 
Executive: TM Mkhwanazi (chief executive)

ACTING COMPANY SECRETARY
I Lebepe 

COMPANY REGISTRATION NUMBER
2005/015852/06
Incorporated in the Republic of South Africa

INCOME TAX NUMBER
9586/481/15/3

25 July 2017

OTHER SOURCES OF INFORMATION 
Our website provides more information 
on our Company and its performance.
www.angloamericankumba.com

A member of the Anglo American plc group
www.angloamerican.com
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