Vision & strategy

• Restructuring of senior management to ensure effective management of operations and succession planning at both Somkhele and SamQuarz has been completed.
• Bruce Tanner became Petmin’s Financial Director and Johan Gloy, Chief Executive Officer of Somkhele with effect from 1 July 2009. Ian Cockerill was appointed as Executive Chairman of Petmin and Shehnaaz Ghanchi as Financial Director of Somkhele with effect from 1 July 2010.
• Performance-based incentive schemes continue to be the basis for remunerating management at all Petmin operations, and have instilled a culture of ownership.
• The Executive Committee continues to be remunerated according to performance. Alignment with shareholders is ensured by the executives holding significant equity. They increased their interest by exercising 32.37 million options during the past year.

Risk management:

• A comprehensive risk register is updated and risks are managed, monitored and reviewed on a regular basis. Reports are presented to the Board every quarter.

Safety:

• The management of occupational safety and health at both SamQuarz and Somkhele is based on programmes devised by the National Occupational Safety Association (NOSA). SamQuarz and Somkhele have been awarded NOSA 5-star and 4-star ratings respectively.
• Lost Time Injury Frequency Rate (LTIFR) at SamQuarz was 0.25 and at Somkhele, 0.83 for the 2010 financial year.
• No fatalities have occurred at SamQuarz or Somkhele for the past two years.
• Internal safety audit processes are conducted at regular intervals.

Environment:

• There were no environmental incidents reported at Somkhele during 2010.
• SamQuarz’s Environmental Management Plan is being revised for submission to the Department of Mineral Resources (DMR), so as to keep it current.
• Somkhele’s application for a renewed water use licence was approved by the Department of Water and Environmental Affairs (DWEA) while that of SamQuarz is awaiting approval.

Reporting:

• Financial reporting and other systems have been set up at Somkhele to ensure quality and timeous information and processes are being refined to improve the reporting on environmental issues. High-quality reporting and management systems are already in place at SamQuarz.

Communication:

• Channels of communication between Petmin's operations and key stakeholders (employees, contractors, communities and regulators) have improved; regular meetings are held with stakeholders to address issues and strengthen relations.
• The Petmin website continues to be an effective medium for disseminating information to shareholders and other key stakeholders, and is a great tool for creating awareness about the Group and its activities. Website information is updated on a regular basis.

SamQuarz

• Consistently strong operational and financial performances have been achieved at SamQuarz with sales volumes and profits maintained, despite the global financial crisis.
• Annual production was 1.26 million tonnes of silica and chert in 2010 (2009: 1.33 million) and sales reached 1.17 million tonnes of silica and chert (2009: 1.51 million tonnes).
• Profit before tax was R39 million in 2010, compared to R48 million in 2009. Profit margin per tonne sold increased by 5% to R131.88 (2009: R119.59).
• Petmin is continuing to pursue growth opportunities in the construction and foundry industries to supplement sales to the glass manufacturing and metallurgical sectors.
• SamQuarz completed a SAMREC-compliant exploration programme to delineate the ore body which resulted in Proven and Probable Reserves increasing to approximately 60.64 million tonnes of silica and 11.48 million tonnes of chert, and life of mine in excess of 40 years.
• Capital expenditure focused on ensuring a long-term sustainable mining operation and increasing production capacity in the plant to ensure demand from customers is met.

Somkhele

• Net profit margins of 36% were achieved for the 2010 financial year (2009:28% excluding sale of Springlake Colliery).
• In July 2010, Petmin announced the expansion of Somkhele’s production through the construction of a second coal wash plant, with a modeled capacity of over 550 000 tonnes per annum, to be commissioned during the second half of the 2011 financial year.
• Somkhele continues to benefit from the use of a 600,000 tonne-per-annum dedicated export facility at Richards Bay Dry Bulk Terminal.
• SAMREC-compliant exploration has confirmed additional anthracite Resources of 24 million tonnes, contiguous to current operations, over and above the SAMREC-compliant Resources of 51Mt already declared.

Veremo

• A SAMREC-compliant drilling programme was completed during 2010 and delineated an updated Measured Resource of 44.3 million tonnes, from previous estimates of 11.6 million tonnes and an Indicated Resource of 29.1 million tonnes in the weathered zone of the ore body, which is easier to process.
• Management has been transferred to Framework Investments and a steering committee has been established to address the critical work streams to be delivered over the next year.

• Petmin has a 100% holding in Petmin Logistics which is contracted with the South African Port Authorities to provide a dedicated export facility at Richards Bay for a minimum of 600,000 tonnes per year until 2013.
• Shortly after 30 June 2009, the Group's cash position improved, with R85 million received for the sale of Springlake Holdings.
• The Executive Committee (Exco) pursued a number of opportunities in the 12 months to June 2010, but comprehensive due diligence procedures showed that these prospects did not meet the Company's investment criteria.
• Petmin's strong balance sheet and cash reserves as well as current market conditions position the Company well to evaluate other growth opportunities and potential acquisitions.

• BEE equity is continually monitored and managed to ensure it is maintained above the Mining Charter requirement of 26%. Petmin’s BEE shareholding is currently 28.3%.
• SamQuarz’s mining right conversion application was approved in April 2009, and is valid for 30 years.
• Prospecting rights for Areas 4 and 5 of Somkhele were successfully renewed in June 2010. The mine is awaiting the finalisation of its application for the conversion of old order mining rights for Areas 2 and 3.
• Veremo's five renewals of new order prospecting right applications were approved in May 2009.
• Measured against the requirements of the Mining Charter, the Group's performance has improved significantly in the following areas: women in mining, Adult Basic Education and Training (ABET), and procurement. Acquiring and developing the right skills sets from the ranks of historically disadvantaged South Africans (HDSAs) for senior management positions at Somkhele remains a challenge, but is being managed.
• BEE certification of SamQuarz and Somkhele operations to comply with supply contracts under way.
• Petmin is currently reviewing training programmes at SamQuarz and Somkhele to ensure alignment with Mining Qualifications Authority accreditation requirements where possible.
• The Board is kept up to date with developments regarding proposed legislative changes and their potential impact on the Group.
• The Company continues to engage with communities through mine community forums.