MANTENGU LIMITED — Annual Report 2015

Dec 10, 2015

www.minerestoration.co.za

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ANNUAL REPORT 2015

Mine Restoration Investments Limited annual report 2015

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GENERAL INFORMATION

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MINE RESTORATION INVESTMENTS LIMITED

AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 28 FEBRUARY 2015

Country of incorporation and domicile South Africa Directors RM Tait (Chief Executive Officer) CB Roed (Lead Independent Non-Executive Director) QJ George (Non-Executive Chairman) L Albinski (Independent Non-Executive Director) SJM Caddy (Independent Non-Executive Director) Registered office The Zone Business Lofts West 31 Tyrwhitt Avenue The Zone Rosebank 2196 Business address The Zone Business Lofts West 31 Tyrwhitt Avenue The Zone Rosebank 2196 Postal address PO Box 825 Irene Pretoria 0062 Auditor Grant Thornton Johannesburg Partnership Chartered Accountants (SA) Registered Auditors Member firm of Grant Thornton International Secretary Neil Esterhuysen and Associates Incorporated Company registration number 1987/004821/06 Level of assurance These consolidated financial statements have been audited in compliance with the applicable requirements of the Companies Act 71 of 2008 (“Companies Act”) Preparer The audited consolidated financial statements were internally compiled by: CH Gernandt Previous Financial Director

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Mine Restoration Investments Limited annual report 2015

INDEX

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Sustainability and Corporate Governance Report	3
Audit and Risk Committee Report	14
Directors’ Responsibility and Approval	16
Directors’ Report	17
Declaration by Company Secretary	23
Independent Auditor’s Report	24
Statement of Financial Position	26
Statement of Profit or Loss and Other Comprehensive Income	27
Consolidated Statement of Changes in Equity	28
Consolidated Statement of Cash Flows	29
Accounting Policies	30
Notes to the Consolidated Financial Statements	38
Analysis of Shareholders	64
Notice of Annual General Meeting	65

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SUSTAINABILITY AND CORPORATE GOVERNANCE REPORT

Introduction

The directors of Mine Restoration Investments Limited (“MRI”) are pleased to present to stakeholders the MRI Group’s integrated sustainability and corporate governance report. The board of directors (“the Board”) will continue to broaden and deepen the contents of this report. This will be done in conjunction with stakeholders to ensure that meaningful, understandable and useful information is available on a timely basis, thereby achieving true transparency and facilitating the building of a trusted relationship with all stakeholders.

Corporate governance

Introduction

The MRI Group endorses the principles contained in the King Code on Governance for South Africa 2009 (“King III”) report on corporate governance and confirms its commitment to the principles of fairness, accountability, responsibility and transparency as advocated therein. The Board continuously strives to ensure that the MRI Group is being ethically managed according to prudently determined risk parameters and in compliance with generally accepted corporate practices and conduct.

The Board

MRI retains a unitary board structure. As at the date of this report, the Board consists of one nonexecutive director, one executive director and three independent non-executive directors. The nonexecutive directors are of sufficient calibre for their views to carry significant weight in the Board’s decisions. The Board is assisted in fulfilling its duties by a Combined Audit and Risk Committee (“CARC”), a Combined Remuneration and Nomination Committee (“CRNC”) and a Combined Social and Ethics Committee (“CSEC”).

The Board, which is chaired by a non-executive chairman, is scheduled to sit at least four times a year, but meets more frequently if circumstances require it to do so. Since the last Annual General Meeting, held on 26 September 2014, two board meetings have been held. However, given the significant changes in the business over the past year, the Board has held frequent meetings (approximately monthly) outside of the formal board meetings for updates and to give guidance to management.

The Board discloses the number of meetings held each year in the annual report of the Company, together with the attendance of the directors at such meetings. A formal record is kept of all conclusions reached by the Board on matters referred to it for discussion. Where the Board requires independent professional advice procedures have been put in place by the Board for such advice to be sought at the Company’s expense. The Chairman or Chief Executive Officer ensures that all directors are adequately briefed prior to a Board meeting.

Directors are expected to maintain their independence when deciding on matters relating to strategy, performance, resources and standards of conduct. The Board will regularly assess the independence of each director. After appointment, all directors are provided with information on the business and are expected to familiarise themselves with the Company’s strategic plans and objectives, and other relevant laws and regulations. Up to the date of this report, the focus of the directors was on implementing and maintaining effective corporate governance of MRI whilst at the same time providing support to operational staff in the execution of its coal fines processing and briquetting project. The Board continues to oversee management’s efforts to commercialise the intellectual property developed for the Acid Mine Drainage (“AMD”) project, despite the impairment of the project, as well as coal fines processing and briquetting.

Updating is performed on an ongoing basis to ensure that directors remain abreast of changes in regulations and the commercial environment.

The Board is responsible for relations with stakeholders, as well as being accountable to them for the performance of the Company, and reporting thereon in a timely and transparent manner.

The Board includes both executive and non-executive directors in order to maintain a balance of power and ensure independent unbiased decisions.

Management supplies the Board with the relevant information needed to fulfil its duties. Directors make further enquiries where necessary, and thus have unrestricted access to all Company information, records, documents and property. The Board looks not only at the quantitative performance of the Company, but also at issues such as customer satisfaction, market share, environmental performance and other relevant issues.

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SUSTAINABILITY AND CORPORATE GOVERNANCE REPORT continued

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Directors have the authority to delegate certain of their duties, either externally or internally, in order to perform their duties.

At a meeting of the directors, the directors have the power to nominate a director, either to fill a vacancy or as an additional director, provided that the total number of directors shall not at any time exceed the maximum number fixed by the memorandum of incorporation.

The Board is responsible for overseeing the preparation, integrity and fair presentation of the financial statements and related information included in the annual report. The Board has ultimate responsibility for ensuring that adequate accounting records and effective systems of internal control are being maintained. To enable the Board to meet its responsibilities, it employs adequately trained and skilled personnel to implement and maintain the accounting records and systems of control in line with the requirements of the Mining Regulations.

Independence of the Board

The roles of Chairman and Chief Executive Officer are separate as required by the King III report on corporate governance. The Board is chaired by a non-executive director, Quinton George and the position of Chief Executive Officer is held by Richard Tait. The Company’s lead independent director is Chris Roed. The non-executive directors are not appointed under service contracts and their remuneration is not linked to the Company’s financial performance.

The predominance of non-executive directors on the Board helps maintain a balance of power and ensures independent decision-making. The non-executive directors offer independent judgement and there are no extraneous factors that could materially affect their judgement. If there is an actual or potential conflict of interest, the director (executive or non-executive) concerned, after declaring his/her interest in terms of the Companies Act, is excluded from the related decision-making process.

Appointment and re-election of the directors

Appointments to the Board are currently based on the needs of the Company as assessed from time to time. Consideration is given to their qualifications when nominating prospective directors. Appointments are made at meetings of the Board with subsequent confirmation by shareholders in a shareholders meeting.

Messrs George and Roed retire by rotation at the annual general meeting in accordance with the provisions of the Company’s memorandum of incorporation (“MOI”). They also offer themselves for reelection. A brief CV of each director is included on page 19 of this annual report.

Role and function of the Board

The MOI of the Company is the charter which governs the directors’ roles and responsibilities. The Board retains full and effective control over the Company, provides strategic direction and delegates certain powers to management. The day-to-day management of the Company is vested in the executive directors.

The Board determines the Company’s purpose and values, ensures that it complies with codes of sound business practice and has unrestricted right of access to all company information, records, documents and property and independent legal advice when required.

The directors recognise that they are responsible for the Company’s system of financial and internal controls. The executive directors are responsible for identifying, analysing, reporting and managing risk, which forms part of their everyday functions. To date, no formal evaluation of the Board has taken place.

Board committees

The Company has three committees: the Combined Audit and Risk Committee (“CARC”), the Combined Remuneration and Nomination Committee (“CRNC”) and the Combined Social and Ethics Committee (“CSEC”). These committees report to the Board.

The CARC

The composition of the CARC consists of one non-executive director and two independent nonexecutive members, namely Quinton George, Chris Roed and Syd Caddy. Chris Roed acts as chair of the committee. He is also the appointed lead independent non-executive director of the Board.

The objective of the committee is to assist the Board with its responsibility of safeguarding assets, maintaining effective and efficient internal controls, reviewing the financial information and overseeing the preparation of the annual financial statements.

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The committee operates in accordance with terms of reference authorised by the Board and reviewed annually. The external auditors have unrestricted access to the committee members. The committee is also responsible for risk management. The committee ensures that identified risks are monitored and appropriate measures are devised and implemented to manage such risks.

The King III Report recommends that the chairman of the Board should not be the chairman of the audit committee; the Company complies with this requirement. The CARC intends to meet at least three times a year and a partner of the external auditor is invited to attend meetings. During the period under review and up to the date of this report, two CARC meetings were held. The majority of the members of the CARC are financially literate. The Board has unrestricted access to the CARC.

The mandate of the CARC provides for, inter alia , the reviewing of financial information, the effectiveness of the internal controls, considering the expertise and competency of the Financial Director (FD), the reviewing of risks relating to the business and industry, accounting policies, the code of ethics, compliance procedures, auditor independence, audit fees and reporting thereon to the Board. The Board has approved the CARC’s responsibilities in terms of this charter.

The expertise and competency of the Financial Director and the appropriateness of the expertise, resources and adequacy of resources of the finance function are reviewed annually. Currently the Company is operating without a full-time FD, under a dispensation from the JSE, but is committed to filling the post before 1 December 2015. The CARC is satisfied that the Company has the necessary controls and competence to meet its statutory obligations.

Attendance register of committee members at CARC meetings during the current period under review

Committee Member/Invitee	27 May 2014	17 April 2015
C Roed ^	√	√
S Caddy ^	-	√
J Lewis ^	√	*
A Meyer^	*√�	*
Q George^		√
R Tait	�√	�√
Company Secretary	�√	�√
Designated Adviser	�√	�√

^ Member * Resigned √ Present � Invitee - Apologies

The CRNC

The CRNC include two independent non-executive directors, namely Chris Roed and Syd Caddy. Syd Caddy chairs this committee.

The committee is responsible for considering the nomination of new directors and the remuneration of the executive directors and making recommendations to the Board in this regard. In determining the remuneration of directors, the committee takes heed of issues such as market norms, staff retention, the performance of directors, balanced scorecard issues, share incentive scheme considerations and incentives and has access to outside consultation if necessary. The Chief Executive Officer is also consulted. The committee intends meeting at least once a year. During the year under review, one meeting was held.

When considering board appointments, a formal and transparent procedure is applied. Any new appointment of a director is considered by the Board as a whole, on the recommendation of the CRNC. The selection process involves considering the existing balance of skills and experience, and is a continual process of assessing the needs of the Company.

The MRI Group has not entered into any service contracts with its executive directors. All non-executive directors are subject to retirement by rotation and re-election by MRI shareholders at least once every three years in accordance with the MOI.

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SUSTAINABILITY AND CORPORATE GOVERNANCE REPORT continued

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The MRI Group has no share incentive scheme in place. The CEO, Richard Tait, has been granted 10 000 000 share options at a strike price of R0.05 per share, which vest in equal tranches on the first and second anniversary of 1/3/2014.

The CSEC

The Board established the Company’s CSEC in February 2012 to assist the Board in ensuring that the MRI Group is and remains a good and responsible corporate citizen, and to perform the statutory functions required of a social and ethics committee in terms of the Companies Act.

The committee consists of two independent non-executive directors, who are suitably skilled and experienced. The two members are Chris Roed and Quinton George. Chris Roed chairs the committee. During the period under review the CSEC met once.

The responsibilities and functioning of the committee are governed by a formal mandate approved by the Board, which is subject to annual review by the Board. The main objectives of the committee are to assist the Board in ensuring that the MRI Group is and remains a good and responsible corporate citizen by monitoring the sustainable development performance of MRI, which includes the following main responsibilities outlined below.

The committee is responsible for developing and reviewing the MRI Group’s policies with regard to the commitment, governance and reporting of MRI Group’s sustainable development performance and for making recommendations to management and/or the Board in this regard.

The committee performs a monitoring role in respect of the sustainable development performance of the MRI Group, specifically relating to:

• stakeholder engagement;

• health and public safety;

• broad-based black economic empowerment;

• labour relations and working conditions;

• training and skills development of employees;

• management of the MRI Group’s environmental impacts;

• ethics and compliance; and

• corporate social investment.

The committee’s monitoring role also includes the monitoring of relevant legislation, other legal requirements or prevailing codes of best practice, specifically with regard to matters relating to social and economic development, good corporate citizenship, the environment, health and public safety, consumer relationships, as well as labour and employment.

The Board will assess the effectiveness of the committee annually, as further detailed in the Corporate Governance Report.

Board and committee meetings and attendance

The Board intends to meet on a regular basis. The directors are properly briefed in respect of special business prior to board meetings and information is timeously provided to them to enable them to give full consideration to all the issues being considered. The directors do make further enquiries where necessary. Where it is considered necessary, special sub-committees are formed to address areas of focus.

The attendances of the directors as at 28 February 2015 for the period under review, taking into account their dates of appointment, were as follows:

Board Member/Invitee	29 October 2014	17 April 2015
C Roed ^�	√	√
S Caddy ^�	√	√
J Lewis ^ �	√	*
A Meyer^	√	*

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Q George ^ �	√	√
R Tait ^	√	√
Company Secretary*	√	√
Designated Adviser *	√	√

^ Member * Resigned √ Present � Non Executive - Apologies

All directors, committee members and the Chairman are encouraged to attend the Annual General Meeting of the Company.

Fees paid to non-executive directors

Fees payable to non-executive directors are determined by the executive directors in consultation with the Chairman and are approved by the Board.

The following fees were paid during the financial year:

	Chairman	Other members and members of committees
Monthly retainer	R10 000	R10 000

Details of fees paid to non-executive directors for the year ended 28 February 2015 are detailed in the consolidated financial statements. No additional meeting attendance fees are paid to non-executive directors.

Interest of directors and officers

A record of the interests (direct and indirect) of the directors in the Company’s securities as at 28 February 2015 and the record of directors’ dealings during the year under review is set out in note 31 to the consolidated financial statements.

Company Secretary

All directors have access to the advice and services of Neil Esterhuysen and Associates Incorporated, which fulfils the role of Company Secretary; this office has been filled by them since 4 September 2012. The Board is of the opinion that the members of the management team at Neil Esterhuysen and Associates Incorporated have the requisite attributes, experience and qualifications to effectively fulfil the MRI Group’s responsibilities of the Company Secretary. The appointment or dismissal of the Company Secretary is decided by the Board as a whole and not by one individual director.

The Company Secretary is not a director of any of the operations and accordingly maintains an arm’s length relationship with the Board and its directors. The Company Secretary reports to the Chief Executive Officer and has a direct channel of communication to the Chairman. The Company Secretary communicates with the Chairman before each board and general meeting to prepare and discuss important issues, agree on the agenda and assist the Chairman or the Board and committee chairmen in the drafting of yearly work plans.

The Company Secretary is responsible for the functions specified in section 88 of the Companies Act. All meetings of shareholders, directors and all board committees are properly recorded as per the requirements of the Companies Act.

External audit and the audit

The auditor of the Group is Grant Thornton Johannesburg Partnership (“GT”), who replaced the previous auditors, Horwath Leveton Boner Chartered Accountants (SA) GT performs an independent and objective audit of the Company’s financial statements. The financial statements are prepared in terms of International Financial Reporting Standards (“IFRS”). The consolidated financial statements for the period ended 28 February 2015 were audited by GT. The CARC reviews the audit fees for the audit. The auditor has unrestricted access to the CARC and is invited to all meetings of the CARC. The re-appointment of the auditor or the appointment of a new auditor is considered by the CARC.

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SUSTAINABILITY AND CORPORATE GOVERNANCE REPORT continued

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The CARC’s primary objective is to ensure that the auditor is independent. It is also required to provide the Board with additional assurance regarding the efficacy and reliability of the financial information used by the directors to assist them in discharging their duties. The committee is required to provide comfort to the Board that adequate and appropriate financial and operating controls are in place, that significant business, financial and other risks have been identified and are being suitably managed, and that satisfactory standards of governance, reporting and compliance are in operation. The committee has set principles for recommending the use of the external auditor for non-audit services.

No non-audit services were performed by the auditor during the year under review. The CARC is satisfied as to the independence of the auditor.

Accounting and internal controls

The Board is responsible for the MRI Group’s systems of internal financial and operational control, as well as for maintaining an appropriate relationship with the Company’s auditor. The Board is responsible for presenting a balanced and understandable assessment of the Company’s financial position with respect to all financial and price sensitive reports about the Company.

The Board has established controls and procedures to ensure the accuracy and integrity of the accounting records. The Board monitors the MRI Group’s businesses and its performance. The controls are designed to provide reasonable assurance that assets are safeguarded from loss or unauthorised use and that the financial records may be relied upon for maintaining accountability for assets and liabilities and preparing financial statements.

Audit opinion

MRI received a modified audit opinion with an emphasis of matter relating to the Company’s going concern, details of which are set out on page 24.

Internal audit

After review of the Company’s internal control processes and consideration of the nature of the Company and lack of trading activity, the Board did not identify the need to establish a formal internal audit process.

The executive directors will conduct an annual review of the MRI Group’s internal controls when the business size increases. As a result, no findings were presented to the CARC. Such a review would normally cover financial, operational and compliance controls, as well as a review of the risk management policies and procedures of the Company, and will be implemented.

Ethical leadership

The MRI Group subscribes to the highest ethical standards and behaviour in the conduct of its business and related activities, and requires complete honesty and integrity from its directors and employees. The MRI Group expects its shareholders, suppliers and partners to subscribe to the same high ethical standards.

Communications with stakeholders

The MRI Group is committed to ongoing and effective communication with stakeholders. It subscribes to a policy of open and timeous communication in line with the JSE Limited (“JSE”) Listings Requirements and sound corporate governance. MRI is considering an investor relations programme once the Company proceeds into substantial operation.

Employment, development and employment equity

The MRI Group will endeavour to promote a culture that will provide employees with opportunities to advance their careers.

The MRI Group upholds and supports the objectives of the Employment Equity Act No. 55 of 1998 and implemented initiatives that provide opportunities for all levels of staff. MRI seeks to position itself as an employer of choice, whilst at the same time enhancing its participation in making South Africa more internationally competitive.

The MRI Group aims to provide equal opportunities, without discrimination, to all employees.

When considering board appointments, a formal and transparent procedure is applied. Any new appointment of a director is considered by the Board as a whole, on the recommendation of the CRNC. The selection process involves considering the existing balance of skills and experience, and a continual process of assessing the needs of the Company.

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Sustainability reporting

The MRI Group is committed to high moral, ethical and legal standards and expects all representatives of the MRI Group to act in accordance with the highest standards of personal and professional integrity in all aspects of their activities and to comply with all applicable laws, regulations and the Company’s policies. In this regard the Board and Group are guided by the CSEC.

MRI endorses the Code of Corporate Practices and Conduct, as well as King III. The Companies Act also contains governance requirements. King III has been adopted on an “apply or explain” approach.

MRI will continue to adopt, as appropriate, existing and new principles, which advance good practical corporate governance and add value to the Group’s business activities.

Principles contained in the King III Report with which the Company has not complied and the reasons for non-compliance

Ethical Leadership and Corporate Citizenship	Comply	Partially Comply	Under review/do not comply
Effective leadership based on an ethical foundation	√
Responsible corporate citizen	√
Effective management of Company’s ethics	√
Assurance statement on ethics in integrated annual report			√1
Board of Directors
The Board is the focal point for, and custodian of, corporate governance	√
Strategy, risk, performance and sustainability are inseparable	√
The Board should provide effective leadership based on an ethical foundation	√
The Board should ensure that the Company is and is seen to be a responsible corporate citizen	√
The Board should ensure that the Company’s ethics are managed effectively	√
The Board should ensure that the Company has an effective and independent audit committee	√6
The Board should be responsible for the governance of risk	√
The Board should be responsible for information technology (“IT”) governance	√5

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SUSTAINABILITY AND CORPORATE GOVERNANCE REPORT continued

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Ethical Leadership and Corporate Citizenship (continued)	Comply	Partially Comply	Under review/do not comply
The Board should ensure that the company complies with applicable laws and considers adherence to non-binding rules, codes and standards	√
The Board should ensure that there is an effective risk-based internal audit			√1
The Board should appreciate that stakeholders’ perceptions affect the Company’s reputation	√
The Board should ensure the integrity of the Company’s integrated report		√8
The Board should report on the effectiveness of the Company’s system of internal controls			√1
The Board should consider business rescue proceedings or other turnaround mechanisms as soon as the Company is financially distressed as defined in the Act	√
Directors act in the best interest of the Company	√
The Chairman of the Board is an independent non- executive director	√7
Framework for the delegation of authority has been established	√
The Board comprises a balance of power, with a majority of non-executive directors, the majority of whom are independent	√
Directors are appointed through a formal process	√
Formal induction and ongoing training of directors is conducted	√
The Board is assisted by a competent, suitably qualified and experienced Company Secretary	√
Regular performance evaluation of the Board, its committees and the individual directors		√3
Appointment of well-structured committees and oversight of key functions	√

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Board of Directors (continued)	Comply	Partially Comply	Under review/do not comply
An agreed governance framework between the Group and its subsidiary boards is in place	√
Directors and executives are fairly and responsibly remunerated		√2
Remuneration of directors and senior executives is disclosed	√
The remuneration policy is approved by shareholders	√
Audit Committee
Effective and independent	√
Suitably skilled and experienced independent non- executive directors	√4
Chaired by an independent non-executive director	√
Oversees integrated reporting	√
A combined assurance model is applied to improve efficiency in assurance activities	√
Satisfies itself on the expertise, resources and experience of the company’s finance functions	√
Oversees internal audit function	√
Integral to the risk management process	√
Oversees the external audit process	√
Reports to the Board and shareholders on how it has discharged its duties	√
Compliance with laws, codes, rules and standards
The Board ensures that the Company complies with relevant laws	√
Compliance risk forms an integral part of the Company’s risk management process	√
The Board has delegated to management the implementation of an effective compliance framework and processes			√1
Appreciation of stakeholders’ relationships	√
There is an appropriate balance between its various stakeholder groupings	√
Equitable treatment of stakeholders	√
Transparent and effective communication to stakeholders	√
Disputes are resolved effectively and timeously	√

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SUSTAINABILITY AND CORPORATE GOVERNANCE REPORT continued

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Board of Directors (continued)	Comply	Partially Comply	Under review/do not comply
The Governance of Information Technology (“IT”)
The Board is responsible for IT governance	√
IT is aligned with the performance and sustainability objectives of the Company			√5
Management is responsible for the implementation of an IT governance framework			√5
The Board monitors and evaluates significant IT investments and expenditure			√5
IT is an integral part of the group risk management			√5
IT assets are managed effectively			√5
The Risk Management Committee and Audit Committee assist the Board in carrying out its IT responsibilities			√5
The Governance of Risk	Comply	Partially Comply	Under review/do not comply
The Board is responsible for the governance of risk and setting levels of risk tolerance	√
The Audit Committee assists the Board in carrying out its risk responsibilities	√6
The Board delegates the process of risk management to management	√
The Board ensures that risk assessments and monitoring is performed on a continual basis	√
Frameworks and methodologies are implemented to increase the probability of anticipating unpredictable risks			√1
Management implements appropriate risk responses			√1
The Board receives assurance on the effectiveness of the risk management process			√1
Sufficient risk disclosure to stakeholders	√
Integrated Reporting and Disclosure
Ensures the integrity of the Group’s integrated annual report	√
Sustainability reporting and disclosure is integrated with the Group’s financial reporting		√10
Sustainability reporting and disclosure is independently assured			√1

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CONDENSED PROVISIONAL CONSOLIDATED STATEMENT OF CASH FLOW

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• √1 This will be considered by the Board as the MRI Group grows.

• √2 In order for the Company to first focus on its operations, some functions are performed on a parttime basis. As such some functions are not remunerated at market rates.

• √3 The Board will be considering the introduction of board, committee and individual evaluation during the forthcoming year.

• √4 Due to the size and nature of the MRI Group, two independent non-executive directors and one non-executive director were members of the CARC. Once the MRI Group grows and projects increase, three independent non-executive directors will be appointed.

• √5 Due to the size and nature of the MRI Group, there is currently no focus on IT reporting and sustainability. This will be considered by the Board as the MRI Group grows.

• √6 The Company does not have a separate risk committee due to the size and nature of the Company. Risks are being addressed and monitored by the CARC.

• √7 The Chairman of the Board is a non-executive director and by virtue of his directorship with a major shareholder is deemed not independent. However, the Company has appointed a lead independent director, Chris Roed, in order to ensure compliance with the JSE Listings Requirements and King III.

• √8 The Company has started considering the requirements of integrated reporting and will improve the required disclosure in future annual reports.

• √9 The activities for the year were minimal given that the coal project only commenced operations in February 2014, reaching substantive production around September.

• √10 The MRI Group will present integrated reporting in future annual reports.

Closed and prohibited periods

A closed period is implemented by the Company’s directors from the date of the end of the reporting period until the MRI Group results are published on SENS. Additional closed or prohibited periods are enforced as required in terms of any corporate activity or when directors are in possession of price sensitive information. All the directors are aware of the legislation regulating insider trading. A record of dealings by directors in the Company’s securities is retained by the Company Secretary at the registered office of the Company.

Transfer Office

Computershare Investor Services Proprietary Limited acts as transfer secretary to the Company.

Risks

Risk assessments have been prepared by management and reviewed at each meeting of the CARC.

The main risks facing the MRI Group during the year under review related to the viability of the coal fines processing and briquetting plant at Keaton Energy Holdings Limited (“Keaton”) anthracite mine in KwaZulu-Natal. Commercial production commenced in February 2014, but there were a number of delays and technical challenges. These related to design issues, changing of equipment, poor operating conditions on the mine and quality control issues. These issues have been rectified in the subsequent financial period, and the key risk facing the MRI Group now is the operating environment; the plant was put on care and maintenance owing to the severe drought conditions, as disclosed in the SENS announcement made by MRI and released on 20 July 2015.

Stakeholders

Stakeholders are identified as those individuals, groups and entities that are directly affected, both positively and negatively, by the activities of the MRI Group.

Stakeholder concerns are raised in various ways including formal concerns or queries lodged in writing with the MRI Group on concerns raised during stakeholder forums or informal discussion. The MRI Group responds to these concerns appropriately and timeously. The Group timeously reports information that is relevant and meaningful.

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Mine Restoration Investments Limited annual report 2015

AUDIT AND RISK COMMITTEE REPORT

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The report of the CARC is presented as required by Section 61(8 a iii) of the Companies Act.

Functions and responsibilities of the CARC

The role of the CARC is to assist the Board by performing an objective and independent review of the functioning of the organisation’s finance and accounting control mechanisms. It exercises its functions through close liaison and communication with company management and the external auditor.

The CARC is guided by its terms of reference as approved by the Board, dealing with membership, structure, and levels of authority and has the following responsibilities:

• ensuring compliance with applicable legislation and the requirements of any regulatory authority;

• nominating for appointment a registered auditor who, in the opinion of the Audit Committee, is independent of the MRI Group;

• considering whether the expertise and experience of the Financial Director is appropriate;

• considering matters relating to financial accounting, accounting policies, reporting and disclosure and ensuring integrity of the MRI Group’s annual report;

• considering internal and external audit policy including determining fees and the terms of engagement;

• considering and evaluating, on an ongoing basis, the need for an internal audit function and audit plans;

• reviewing and approving external audit plans, findings, problems, reports, fees and determining and approving any non-audit services that the auditor may provide to the MRI Group;

• ensuring compliance with the Code of Corporate Practices and Conduct; and

• ensuring compliance with the MRI Group’s code of ethics.

The members of the CARC adopted an audit mandate which will be reviewed annually. The CARC has established a policy, as well as required procedures with regard to the use of the external auditors, for non-audit services. During the year under review, no non-audit services were utilised.

The CARC also assesses and monitors all risk matters including compliance risk matters, which responsibilities have been assumed with the adoption by the CARC of a risk mandate.

The CARC is informed of regulatory and other monitoring and enforcement requirements designed to ensure that the Company’s financial information complies with financial reporting and other regulatory requirements.

Members of the Combined Audit and Risk Committee

The current CARC members are:

C Roed (Chairman)

Q George, and

S Caddy

In terms of King III, a minimum of three independent non-executive directors is recommended. In terms of the JSE Listings Requirements, the CARC must be constituted in terms of King III. Two members of the CARC are independent non-executive directors. Mr. C Roed acts as lead independent non-executive director and chairs the CARC.

The external auditors, the Chief Executive Officer and the Financial Director are all invited to attend the meetings of the CARC.

Frequency of meetings

The CARC intends meeting a minimum of three times per year and provision will be made for additional meetings to be held when, and if, necessary. The CARC has met twice during the 2015 financial year and twice after the previous annual general meeting and up to the date of this report.

Mine Restoration Investments Limited annual report 2015

15

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CONDENSED PROVISIONAL CONSOLIDATED STATEMENT OF CASH FLOW

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Independence of external audit

A responsibility of the CARC is the assessment of the independence of the external auditor. The CARC duly satisfied itself that, in accordance with the Companies Act, Grant Thornton, remains independent of MRI.

Expertise and experience of the Financial Director

The Combined Audit and Risk Committee considered and confirmed the appropriateness of the expertise, resources and adequacy of resources of the finance function. The Company is currently operating without a full-time FD, under dispensation from the JSE, and will be appointing a suitable candidate before 1 December 2015.

Financial statements

Management has reviewed the consolidated financial statements of the Company and MRI Group with the committee, and the CARC has reviewed them without management or the external auditor being present. The quality of the accounting policies is discussed with the external auditor and a private discussion was held with the external auditor. The CARC considers the consolidated financial statements of the MRI Group to be a fair presentation of its financial position as at 28 February 2015 and of the results of the operations, changes in equity and cash flows for the period then ended, in accordance with International Financial Reporting Standards and the Companies Act and similarly recommended the consolidated financial statements to the Board for approval.

C Roed

30 September 2015

Chairman of the CARC

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Mine Restoration Investments Limited annual report 2015

DIRECTORS’ RESPONSIBILITY AND APPROVAL

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The directors are required by the South African Companies Act No. 71 of 2008, as amended, to maintain adequate accounting records and are responsible for the content and integrity of the consolidated financial statements and related financial information included in this report. It is their responsibility to ensure that the consolidated financial statements fairly represent the state of affairs of the Company and MRI Group as at the end of the financial year and the results of their operations and cash flows for the period ended, in conformity with International Financial Reporting Standards and the SAICA Financial Reporting Guides as issued by the Accounting Practice committee. The external auditor is engaged to express an independent opinion of the consolidated financial statements.

The consolidated financial statements are prepared in accordance with International Financial Reporting Standards and are based upon appropriate accounting policies consistently applied and supported by reasonable and prudent judgements and estimates.

With regard to a system of internal control: this will be enhanced once projects become operational and revenue is generated. The directors are of the opinion, based on the information and explanations given by management, that the current system of internal control provides reasonable assurance that the financial records may be relied on for the preparation of the consolidated financial statements. However, any of the internal financial controls can provide only reasonable, and not absolute, assurance against material misstatement or loss.

The directors have reviewed the MRI Group’s cash flow forecast and are satisfied that the preparation of the consolidated financial statements on a going concern basis is appropriate.

The external auditor is responsible for independently auditing and reporting on the Company and consolidated financial statements. The Company and consolidated financial statements have been examined by the MRI Group’s external auditor and their report is presented on pages 24 and 25.

The consolidated financial statements set out on pages 26 to 63, which have been prepared on the going concern basis, were approved by the Board on 30 September 2015 and were signed on its behalf by:

R Tait Chief Executive Officer

Q George Chairman

Johannesburg 30 September 2015

Mine Restoration Investments Limited annual report 2015 17

DIRECTORS’ REPORT

The directors present their report for the period ended 28 February 2015. The individual company annual financial statements are not included in this report, but can be viewed at the Company’s registered address.

Nature of business

The MRI Group is an environmental services company focusing on the abatement of environmental impacts of the mining industry, while delivering sustainable returns to its shareholders. It has developed two areas of expertise: coal fines processing and briquetting, as well as Acid Mine Drainage (“ AMD ”).

Coal fines have traditionally been an unwanted by-­‐product in the coal mining industry, and present a major disposal challenge. Surface and underground coal mining operations in South Africa produce approximately 300 million tons of coal per year, creating significant coal residues such as dust and fines. These can constitute up to 20% of the total run of mine feed, and although they typically have appreciable calorific values and therefore high energy content, they are not easily marketable in their raw form.

MRI, and its subsidiary, Prodiflex Coal Proprietary Limited (“Prodiflex Coal”) (50% owned by MRI subsidiary Western Utilities Corporation Proprietary Limited ( WUC ”)), have developed specific expertise in screening, agglomerating and briquetting techniques. MRI’s other subsidiary, Octavovox (previously 51% owned by WUC, but subsequently 100% owned), owns and operates a coal fines screening and briquetting plant at Keaton’s Vaalkrantz Colliery, near Vryheid, KwaZulu-Natal. It processes the waste dump and current tailings, and can produce a screened duff product or briquettes, which are marketed by Keaton. The plant was designed with a capacity of 5 000 tonners per month (“tpm”) but required the investment of new technology to reach nameplate capacity. The capital for the plant upgrade was provided by Virto in return for a royalty; the net effects being positive to Octavovox’s cash flow, culminating in the construction of a full-scale coal fines processing plant. The MRI Group is currently investigating agglomeration options for two major thermal coal producers, and is actively looking for opportunities to replicate the Group’s experience in new projects. The Octavovox operation was placed on care and maintenance in July 2015 owing to severe drought conditions in KZN, as disclosed in the SENS announcement made by MRI and released on 20 July 2015.

Gold mining operations in the Witwatersrand Basin over the last century created underground voids that have filled with AMD water, posing a significant threat to ground water in Gauteng. MRI’s subsidiary, WUC, was established by the mining industry in 2007 to find a solution to the problem. After extensive research, it chose the Council for Scientific and Industrial Research’s alkaline barium and calcium process, building a pilot-plant and presenting a bankable feasibility study to government in 2010. However, the Department of Water Affairs launched a feasibility study in February 2012 to investigate all possible technologies, and the company awaits the outcome of their assessment. The MRI Group continues to engage with stakeholders to find possible commercial applications of the technology developed by WUC, but the Board took the decision to impair the Company’s intangible assets in [28 February 2014] in line with prudent accounting principles.

Financial results

The financial year of the Group ends on the last day of February.

The Group profit attributable to owners of the parent amounts to R5.3 million. (2014: loss of R56.3million). The reversal from a loss position was due to the commencement of the operation in Vryheid.

The headline loss of the Group attributable to owners of the parent amounts to R16.3 million (2014: R18.7 million).

Capital and reserves at the financial year end was R25.3 million (2014: R2.6 million) and total assets amounted to R35.0 million (2014: R72.5 million).

The MRI Group incurred a headline loss per share of 2.24 cents (2014: 3.94 cents).

Changes in stated capital

With reference to a circular sent to all shareholders on 16 May 2014 (“ the Circular ”), the Company issued the following equity shares in line with various corporate actions detailed in the Circular and as announced on SENS on 8 April 2014:

18 Mine Restoration Investments Limited annual report 2015

DIRECTORS’ REPORT continued

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• a specific issue of a maximum of 246 181 701 new MRI shares for cash at an issue price of R0.05 per share in settlement of the AfrAsia Special Opportunities Fund Proprietary Limited loan, amounting to approximately R12.3 million;

• a specific issue of a maximum of 65 960 757 new MRI shares for cash at an issue price of R0.05 per share in settlement of the Armadale Capital Plc loan, amounting to approximately R3.3 million;

• a specific issue of 10 000 000 new MRI shares for cash at an issue price of R0.05 per share in settlement of corporate advisory fees owed to AfrAsia Corporate Finance Proprietary Limited;

• the granting of an incentive option in respect of 10 000 000 new MRI shares at a strike price of R0.05 per share to CEO, Mr Richard Tait which are fully vested by 28 February 2015; and

• a specific issue of 13 000 000 new MRI shares for cash at an issue price of R0.05 per share in settlement of directors and employee fees.

These issues and conversions have been completed on 1 July 2014 as per the SENS announcement of the same date.

Changes to the composition of the Board (also refer note 30)

During the reporting period, the following changes to the board of directors were made with effect from the following dates:

29[th] October 2014

Justin Lewis resigns as non-executive director

1 November 2014

Carl Gernandt appointed Financial Director

28 February 2015

Anthon Meyer resigns as non-executive director

31 May 2015

Carl Gernandt resigns as Financial Director

The JSE provided dispensation to the Company to appoint a new Financial Director by latest 1 December 2015.

The current Board of MRI consists of the following directors:

Quinton George	Non-Executive Chairman	Block F, The Terraces
		Steenberg Office Park,
		Cape Town
Richard Tait	Chief Executive Officer	Bar Circle Ranch
		Old Main Road
		Ashburton, KZN
Chris Roed	Lead Independent Non-Executive Director	25 Boston Road, Bellville
		Cape Town, 7530
Syd Caddy	Independent Non-Executive Director	739 Katlagter Street
		Featherbrooke Estate
		Krugersdorp 1746
Luc Albinski	Independent Non-Executive Director	20 Riverclub Country Estate
		9 Outspan Road, Riverclub
		Sandton, 2191

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Mine Restoration Investments Limited annual report 2015

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Quinton George (Non-Executive Chairman) (43)

Quinton is a registered financial advisor with the Securities Institute of London. He began his career in the financial services industry when he joined a South African Corporate member of the JSE. He developed a substantial private client base and played a significant role in building the online business of the company.

In 2000, Quinton started his own Asset Management company, Trinity Asset Management Proprietary Limited. In 2011 he bought a controlling stake in Mcubed Holdings Limited where he is the CEO and runs it as an unlisted Public investment company.

Richard Tait (Chief Executive Officer) (41)

Richard has broad investment banking experience in a variety of countries, with a particular emphasis on emerging markets. He commenced his career at Anglo American, working in South Africa and Mali. In 1998 he joined Goldman Sachs in London, focusing primarily on gold derivatives and hedge funds. In 2000 he moved to Credit Suisse First Boston in the credit department, first in London and later in Sydney where he covered a broad range of industries and structured finance initiatives, including emerging market structuring in the region. Richard returned to South Africa in 2004 and joined Standard Bank with a focus on building the investment banking business into the rest of Africa. He worked in a range of product areas, including establishing and building the bank’s real estate finance business across Africa.

He moved to Mauritius in 2008 and played a regional investment banking role, before leaving the bank to focus on mezzanine finance and principal investment opportunities with GEM in 2011. From early 2012 until March 2013, he ran GEM’s investment in, and turnaround of, Riozim, a diversified mining company in Zimbabwe. Richard joined AfrAsia Corporate Finance as MD in April 2013 but resigned as an executive in February 2014 to become full-time CEO of MRI.

Richard holds a BSc Chemical Engineering degree (UCT), and subsequently obtained a BCom in Economics and Quantitative Management (UNISA) and an Executive MBA (Australian Graduate School of Management, University of Sydney).

Chris Roed (Lead Independent Non-Executive Director) (49)

Chris is a water/civil engineer with more than 20 years of experience and specialises in water and wastewater engineering, as well as conventional civil engineering. Chris gained experience while working for the City of Cape Town Waterworks Department (seven years), Arcus Gibb Consulting Engineers Water Department (eight years), and Watermark Consulting Engineers (six years).

Chris started and owns a successful petroleum products supply company selling mainly bulk liquid petroleum gas (LPG) in Southern Africa.

Luc Albinski (Independent Non-Executive Director) (43)

Luc is managing partner of Vantage Mezzanine and a member of the Fund’s Investment Committee. His primary responsibility is the assessment, structuring, execution and post-transaction monitoring of the mezzanine fund investments. Prior to Vantage, Luc established Standard Bank’s mid-size private equity department in 2003, and thereafter headed up Standard Bank’s mezzanine finance department where he co-led several noteworthy transactions. Before joining Standard Bank, Luc spent time as a strategy consultant with Bain & Co. in Paris (1992) and with Accenture in Johannesburg (1993-94). After completing his MBA at INSEAD, he joined the International Finance Corporation (“IFC”), a member of the World Bank Group, in Washington DC. At the IFC, Luc spent time working on advisory and investment projects in a diverse range of countries including Brazil, Gabon, Poland, Romania, Bosnia and Moldova.

Luc returned to South Africa in 1998 and joined Brait, one of South Africa’s leading private equity firms. As a deal executive, he was responsible for investments in the building materials, logistics, fine chemicals and luxury tourism sectors. Luc subsequently spent two years in Poland as the founder and CEO of a startup employee benefits firm before returning to South Africa in 2002. Luc has an MBA from the INSEAD Business School in Fontainebleau, France. He studied for his undergraduate Economics degree at the Institute for Political Studies in Paris.

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Mine Restoration Investments Limited annual report 2015

DIRECTORS’ REPORT continued

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Syd Caddy (Independent Non-Executive Director) (66)

Syd has more than 40 years’ experience in both shallow and ultra-deep mining environments in the South African gold, uranium and base metal sectors. He has held the title of General Manager for Black Mountain, Kloof and West Driefontein mines and has also been appointed to various positions within JCI, First Uranium and Gold One’s operations, including as Consulting Engineer, Chief Operating Officer and Managing Director. He is currently CEO of Bauba Platinum. Syd is a Registered Professional Engineer and a Fellow of both the Southern African and Australian Institutes of Mining and Metallurgy. He is also a Past President of The Association of Mine Managers of South Africa.

Directors’ emoluments

The emoluments of executive and non-executive directors are determined by the MRI Group’s CRNC and the Board, where appropriate. Further information relating to the earnings of directors is provided in note 27 of the consolidated annual financial statements. The remuneration policy of the MRI Group for the forthcoming year is set out in the notice to the Annual General Meeting, which includes the proposed remuneration for non-executive directors.

Subsidiaries

• MRI holds 100% of the shares in WUC. WUC invested in the AMD project

• WUC holds 50% of the total share capital of Prodiflex Coal which has access to and the right to distribute the binding material used in the production of briquettes

• WUC holds 100% of the total share capital of Octavovox (increased from 51% as at 28/2/2014) which holds the rehabilitation and processing rights to process coal fines at the Vaalkrantz Colliery.

Company Secretary

Neil Esterhuysen and Associates Incorporated was appointed as Company Secretary on 4 September 2012 and has been the Company Secretary up to date of this report.

Auditor

Grant Thornton Johannesburg Partnership has been appointed as the Company’s external auditor for the year ended 28 February 2015. It will be proposed at the Annual General Meeting of shareholders that Grant Thornton continue in office in accordance with section 90(1) of the Companies Act, with Mr. Jacques Barradas as the Designated Auditor. The CARC is satisfied with the independence of the external auditor to the Company.

Dividend

No dividend will be declared for the financial year ended 28 February 2015 (2014: Nil).

Litigation

There are no proceedings which are pending or threatened, which may have, or which have had a material effect on the financial position of the Company.

Special resolutions

Subsequent to year end, at the general meeting of shareholders held on 17 June 2014, the following special resolutions were presented and approved:

• 1) Issue of 13 000 000 new MRI shares to directors at an issue price of 5 cents per share; and

• 2) Issue of more than 30% of MRI’s issued share capital (in terms of the Companies Act requirements).

During the year under review, MRI’s subsidiary WUC passed a special resolution in relation to financial assistance.

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Mine Restoration Investments Limited annual report 2015

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Corporate governance

Carl Gernandt resigned as the Company’s Financial Director effective 31 May 2015. The Company applied to, and obtained a dispensation from, the JSE to operate without a full-time Financial Director up to 1 September 2015. The Company re-applied to extend the dispensation, which the JSE granted, up to 1 December 2015. During this period, the CEO is responsible for the FD role, supported by his advisors and financial consultants. The Board is undertaking a recruitment process, which is at an advanced stage, and is confident that it will meet the deadline of 1 December for the appointment of a new FD.

As a company listed on the JSE’s Alternative Exchange, the directors subscribe to the values of corporate governance as embodied in the King III Report on Governance for South Africa 2009 (“King III Report”). Details of the MRI Group’s compliance with the Code of Corporate Practices and Conduct as contained in the King III Report is contained in the Sustainability and Corporate Governance Report

Auditor’s opinion on the MRI Group’s results

The external auditor has issued a modified audit opinion with an emphasis of matter on the results for the period ended 28 February 2015 and the audit opinion is set out on pages 24 and 25 of the consolidated financial statements.

Corporate actions

The Company published a detailed cautionary on SENS on 26 June 2015 regarding the proposed acquisition of a stake in an iron processing business named Iron Minerals Beneficiation Services Proprietary Limited. IMBS is a South African company founded in 2006 that has developed a proprietary, costefficient technology for the processing and conversion of super-fine iron ore into metallic iron units for use in the steel and foundry industry. IMBS’s current shareholders comprise management and strategic investors Jonah Capital Proprietary Limited, Severstal (global, leading Russian steel maker),Oreport Proprietary Limited and Katleho Capital GmbH. IMBS owns a 62.7% interest in its operating company Masorini Iron Beneficiation Proprietary Limited alongside the Industrial Development Corporation (“IDC”) who own 37.3%. MIB processes iron or fines at MIB's plant at Phalaborwa. MIB's anticipated annual production capacity is in excess of 500 000 tons of metallic iron.

MRI will acquire certain ordinary shares in IMBS, constituting c.25.8% of the total issued share capital and certain shareholder loan claims against IMBS. Immediately following the sale, all IMBS shareholders, including MRI, will convert their shareholder loan claims into additional IMBS shares, such that MRI will acquire a further c.3% interest in IMBS. MRI will thereafter acquire up to a further 10.4% in IMBS pursuant to a rights offer to be conducted by IMBS, and underwritten by MRI. In order to part fund the IMBS Acquisition, MRI will raise up to R200 000 000 through an issue of new MRI shares at 7 cents per share. The transaction, when finalised with external advisors, will be brought to MRI shareholders for approval.

As part of the transaction, the Company has entered into a commercial loan with Stellar Capital Partners for an amount of R12.4 million, with the proceeds to be used as follows:

1. MRI to provide a R10 million convertible loan to IMBS, as an advance on the transaction, with the loan repayable in full if the transaction does not consummate; and

2. To provide the Company with working capital to meet its ongoing requirements.

Events after reporting date

At the end of the last financial year, 28 February 2015, the plant was operating relatively stably and the management team was confident that performance could be maintained and steadily improved, despite ongoing challenges. During the course of June 2015, it became apparent that the limited water supply was more severe than anticipated, and that the mine area was suffering from severe drought conditions. The Company worked with LME to try and cut water consumption but it became apparent that it was impossible to operate commercially in the absence of a steady water supply. The Board took the decision to place the plant on care and maintenance at the end of June. This has a material impact on the future of the operation and may result in further impairment of the briquetting plant and the intangible asset held over the coal processing right at the next reporting date. A possible R4 million could be recovered from the sale of the plant and the intangible asset if the plant is not brought back to operation.

22

Mine Restoration Investments Limited annual report 2015

DIRECTORS’ REPORT continued

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Going concern

Given the uncertainty about the future of the operation in Vryheid, the prospects of future projects, and the likelihood of the IMBS transaction being consummated, the Company remains in a situation where there are material doubts about its ability to operate as a going concern.

Other than the above and as at the date of this report, no further developments have taken place.

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Mine Restoration Investments Limited annual report 2015

CONDENSED PROVISIONAL CONSOLIDATED DECLARATION BY COMPANY SECRETARY STATEMENT OF CASH FLOW

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In terms of section 88 (2e) of the Companies Act, 71 of 2008 (“Act”), I certify that, to the best of our knowledge and belief, the Company has lodged returns and notices with the Companies Intellectual Property Commission as required by the Companies Act, 71 of 2008 and all such returns are true, correct and up to date.

Neil Esterhuysen and Associates Incorporated Company Secretary Units 23 and 24 Norma Jean Square 244 Jean Avenue Centurion

(PO Box 814, Irene, 0062) 30 September 2015

24 Mine Restoration Investments Limited annual report 2015

INDEPENDENT AUDITOR’S REPORT

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Independent Auditor’s Report To the shareholders of Mine Restoration Investment Limited

REPORT ON THE FINANCIAL STATEMENTS

We have audited the consolidated financial statements of Mine Restoration Investment Limited set out on pages 26 to 63, which comprise the statement of financial position as at 28 February 2015, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended, and the notes, comprising a summary of significant accounting policies and other explanatory information.

Directors' RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The company's directors are responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards and the requirements of the Companies Act of South Africa and for such internal control as the directors determine is necessary to enable the preparation of consolidated financial statements that are free from material misstatements, whether due to fraud or error.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these consolidated financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion, the consolidated financial statements present fairly, in all material respects, the consolidated financial position of Mine Restoration Investment Limited as at 28 February 2015, and its consolidated financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards, and the requirements of the Companies Act of South Africa.

EMPHASIS OF MATTER

Without qualifying our opinion, we draw attention to note 29 to the financial statements which indicates that the group incurred a net loss of R9 million for the year ended 28 February 2015. Note 29 also indicates that these conditions, along with other matters, indicate the existence of a material uncertainty which may cast significant doubt on the company’s ability to continue as a going concern.

25

Mine Restoration Investments Limited annual report 2015

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OTHER REPORTS REQUIRED BY THE COMPANIES ACT

As part of our audit of the consolidated financial statements for the year ended 28 February 2015, we have read the Directors' Report, Audit Committee's Report and Company Secretary's Certificate for the purpose of identifying whether there are material inconsistencies between these reports and the audited consolidated financial statements. These reports are the responsibility of the respective preparers. Based on reading these reports we have not identified material inconsistencies between these reports and the audited consolidated financial statements. However, we have not audited these reports and accordingly do not express an opinion on these reports.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

In accordance with our responsibilities in terms of sections 44(2) and 44(3) of the Auditing Profession Act, we report that we have identified certain unlawful acts or omissions committed by persons responsible for the management of Mine Restoration Investment Limited which constitute a reportable irregularity in terms of the Auditing Profession Act, and have reported such matters to the Independent Regulatory Board for Auditors. This matter arose as there has been a contravention of Section 30(1) of the Companies Act as the company did not prepare annual financial statements within six months after year end.

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GRANT THORNTON

Chartered Accountants (SA) Registered Auditors

J Barradas

Partner Chartered Accountant (SA) Registered Auditor

30 September 2015

@Grant Thornton Wanderers Office Park 52 Corlett Drive Illovo 2196

26

Mine Restoration Investments Limited annual report 2015

STATEMENT OF FINANCIAL POSITION

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Group	28 February 2015 28 February 2014 Notes R’000 R’000
ASSETS Non-current assets Property, plant and equipment Intangible assets Goodwill Deferred tax Current assets Trade and other receivables Cash and cash equivalents Total assets EQUITY AND LIABILITIES Equity Amount attributable to owners of the parent Non-controlling interest LIABILITIES Non-current liabilities Deferred tax Current liabilities Other financial liabilities Trade and other payables Deferred income Total equity and liabilities	33 079 68 818 3 11 585 18 296 4 21 384 46 453 5 - 1 053 6 111 3 016 1 944 3 681 7 1 349 696 8 596 2 985
	35 023 72 499
	24 330 16 076 25 304 2 642 (973) 13 434 6 036 13 624 6 6 036 13 624 4 657 42 799 13 553 41 709 14 3 260 1 090 16 844 -
	35 023 72 499

Mine Restoration Investments Limited annual report 2015 27

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STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

Group Notes	28 February 2015 28 February 2014 R’000 R’000
Coal fines revenue Cost of sales Gross profit Other income 17 Operating expenses Impairments Operating loss Investment revenue 18 Finance cost 19 Loss before taxation Taxation 20 Loss for the period Other comprehensive income Total comprehensive loss	9 110 - (3 824) -
	5 286 - 33 105 36 (20 843) (20 974) (25 872) (40 992)
	(8 324) (61 930) - 6 (5 421) (6 156)
	(13 745) (68 080) 4 683 7 833
	(9 062) (60 247) - -
	(9 062) (60 247)
(Loss)/profit attributable to: Owners of the parent Non-controlling interest	5 345 (56 329) (14 407) (3 918)
Total comprehensive (loss)/profit attributable to: Equity holders Non-controlling interest	5 345 (56 329) (14 407) (3 918)
Basic earnings/(loss) per share (cents) 21 Diluted earnings/(loss) per share (cents) 21 Headline earnings/(loss) per share (cents) 21 Diluted headline earnings/(loss) per share (cents) 21 Weighted average number of shares (‘000) Diluted weighted average number of shares in issue (‘000)	0.74 (11.84) 0.73 (9.91) 2.27 (3.94) 2.25 (3.30) 727 114 475 773 732 114 568 376

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Mine Restoration Investments Limited annual report 2015

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

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Group Stated share Capital Share-based Retained Total attributable to Non-controlling Total equity	capital reserve payment income R’000 equity holders of the interest R’000	R’000 R'000 reserve Group R’000 R’000	Balance at 28 February 2013 61 304 5 000 - (12 296) 54 008 17 352 71 360	Total comprehensive loss for the period - - - (56 329) (56 329) (3 918) (60 247)	Issue of shares 5 463 - - - 5 463 - 5 463	Share issue expenses (500) - - - (500) - (500)	Balance at 28 February 2014 66 267 5 000 - (68 625) 2 642 13 434 16 076	Total comprehensive loss for the period - - - 5 345 5 345 (14 407) (9 063)	Issue of shares 16 757 - - - 16 757 - 16 757	Share-based payment charge - - 559 - 559 - 559	Balance at 28 February 2015 83 024 5 000 559 (63 280) 25 304 (973) 24 330	Capital reserve	The capital reserve comprises funding raised from the IDC in order to finance the pre-feasibility study on the AMD project. The agreement provided that should	the project go ahead, the IDC would be entitled to fund further stages of the project and such funding would enable them to participate in up to 10% of the	project but would not be entitled to receive any compensation for any contribution made as this was non-recourse funding. Therefore this instrument is	considered an equity instrument.

Mine Restoration Investments Limited annual report 2015 29

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CONSOLIDATED CONDENSED STATEMENT OF CASH FLOWS

Group Cash flows utilised in operating activities Cash utilised in operations 22 Interest income Finance costs adjusted for non-cash flows Taxation paid 23 Cash utilised in operating activities Cash flows from investing activities Purchase of property, plant and equipment Net cash utilised in investing activities Cash flows from financing activities Proceeds on raising of new share capital Share issue expenses Proceeds from other financial liabilities Repayment of other financial liabilities Net cash available from financing activities Total cash movement for the year Cash and cash equivalents at the beginning of the year Total cash at end of period	28 February 2015 28 February 2014 R’000 R’000
	(4 904) (8 026) - 6 - (655) - (46)
	(4 904) (8 721)
	(394) (7 777)
	(394) (7 777)
	2 356 5 463 - (500) 553 14 206 -
	2 909 19 169
	(2 389) 2 671 2 985 314
	596 2 985

Please refer note 4 for additional comments regarding the impairment of intangible assets.

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Mine Restoration Investments Limited annual report 2015

ACCOUNTING POLICIES

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1. Basis of preparation of financial statements

The consolidated financial statements for the year ended 28 February 2015 have been prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (“ IFRS ”), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Financial Reporting Pronouncements as issued by the Financial Reporting Standards Council, the JSE Limited Listings Requirements and the requirements of the South African Companies Act, 71 of 2008.

The consolidated financial statements for the year ended 28 February 2015 were compiled by CH Gernandt, (ACCA, CPA, CGA). The accounting policies are in terms of IFRS and are consistent with those of the most recent financial statements except for the adoption of the new standards and interpretations which became effective in the current year.

The financial statements are prepared in South African Rands (ZAR), the functional currency of the Group and all amounts are rounded to the nearest thousands, except when otherwise indicated.

The Group has elected to present the ‘income statement’ and a ‘statement of comprehensive income’ in one statement: the ‘statement of profit or loss and other comprehensive income’.

1.1 Basis of consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries The Group exercises control if it has:

• a. Power over the investee

• b. Exposure, or rights, to variable returns from its involvement with the investee

• c. The ability to use its power over the investee to affect the amount of the investors returns

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. Where necessary, adjustments are made to the financial statements to bring their accounting policies into line with those used by other members of the Group. All subsidiaries have a reporting date of 28 February. The results of subsidiaries acquired or disposed of during the year are included in the consolidated statement of profit or loss and other comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Non-controlling interests in subsidiaries are identified separately from the Group’s equity therein. The interests of non-controlling shareholders may be initially measured either at fair value or at the non-controlling interests’ proportionate share of the value of the acquiree’s identifiable net assets. The choice of measurement basis is made on an acquisition-by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensive income is attributable to non-controlling interests even if this results in the noncontrolling interest having a deficit.

1.2 Significant judgements and sources of estimation uncertainty

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the annual financial statements and the reported amounts of revenues and expenses during the reporting period based on management’s best knowledge of current events and actions. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis.

Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period or in the period of the revision and future periods if the revision affects both current and future periods.

Areas involving a high degree of judgment or complexity, or areas where assumptions and estimates are significant to the annual financial statements are:

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Mine Restoration Investments Limited annual report 2015

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Impairment testing

The recoverable amounts of cash-generating units and individual assets have been determined based on the higher of value in use and fair value less costs to sell. Property, plant and equipment relating to the coal briquetting project have been evaluated for impairment and involved estimates that could have a significant impact on these financial statements. These calculations require the use of estimates and assumptions. It is reasonably possible that the assumption may change which may then impact our estimations and may then require a material adjustment to the carrying value tangible assets. The Group reviews and tests the carrying value of assets when events or changes in circumstances suggest that the carrying amount may not be recoverable. Assets are grouped at the lowest level for which identifiable cash flows are largely independent of cash flows of other assets and liabilities. If there are indications that impairment may have occurred, estimates are prepared of expected future cash flows for each group of assets. Expected future cash flows used to determine the value in use of tangible assets are inherently uncertain and could materially change over time. They are significantly affected by a number of factors including production estimates, supply and demand, together with economic factors such as exchange rates, inflation and interest rates.

Taxation

Management’s judgement is exercised when determining the probability of future taxable profits, which will determine whether deferred tax assets should be recognised or authorised. The recognition of deferred tax assets will depend on whether it is possible to generate sufficient taxable income, taking into account any legal restrictions on the life and on the nature of the asset. When deciding whether to authorise taxation credits, management needs to determine the extent to which future taxable income is likely to be earned and be available for future setoff. Estimates of future taxable income are based on forecast cash flows from operations and the application of existing tax laws in each jurisdiction.

To the extent that future cash flows and taxable income differ significantly from estimates, the ability of the Company to authorise the net deferred tax assets recorded at the reporting date could be impacted. In the event that the assessment of future. In the event that the assessment of future payments and future authorisation changes, the change is recognised in the Statement of Comprehensive Income as a prior year under or over provision.

1.3 Segmental reporting

Segmental information is presented in note 24 to the annual financial statements.

Segment assets and liabilities comprise assets and liabilities attributable to a project. This is consistent with the assets and liabilities analysis as reviewed by the chief operating decisionmaker.

No operating segments have been aggregated to form the above reportable operating segments.

1.4 Business combinations

The Group accounts for business combinations using the acquisition method of accounting. The cost of the business combination is measured as the aggregate of the fair values of assets given, liabilities incurred or assumed and equity instruments issued. Costs directly attributable to the business combination are expensed as incurred, except the costs to issue debt which are amortised as part of the effective interest and costs to issue equity which are included in equity.

Contingent consideration is included in the cost of the combination at fair value as at the date of acquisition. Subsequent changes to the assets, liability or equity which arise as a result of the contingent consideration are effected against profit or loss.

The acquiree’s identifiable assets, liabilities and contingent liabilities which meet the recognition conditions of IFRS 3 Business combinations are recognised at their fair values at acquisition date, except for non-current assets (or disposal group) that are classified as held for sale in accordance with IFRS 5 Non-current assets held for sale and discontinued operations, which are recognised at fair value less costs to sell.

Contingent liabilities are only included in the identifiable assets and liabilities of the acquiree where there is a present obligation at acquisition date.

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ACCOUNTING POLICIES continued

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On acquisition, the Group assesses the classification of the acquiree’s assets and liabilities and reclassifies them where the classification is inappropriate for group purposes. This excludes lease agreements and insurance contracts, whose classification remains as per their inception date.

Non-controlling interests arising from a business combination, which are present ownership interests, and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation, are measured either at the present ownership interests’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets or at fair value. The treatment is not an accounting policy choice but is selected for each individual business combination. All other components of non-controlling interests are measured at their acquisition date fair values, unless another measurement basis is required by IFRSs.

Goodwill is determined as the consideration paid, plus the fair value of any shareholding held prior to obtaining control, plus non-controlling interest and less the fair value of the identifiable assets and liabilities of the acquiree.

Goodwill is not amortised but is tested for impairment on an annual basis.

1.5 Property, plant and equipment

The cost of an item of property, plant and equipment is recognised as an asset when:

• it is probable that future economic benefits associated with the item will flow to the group;

and

• the cost of the item can be measured reliably.

Property, plant and equipment is initially measured at cost.

Costs include costs incurred initially to acquire or construct an item of property, plant and equipment and costs incurred subsequently to add to, or replace part of, or service it. If a replacement cost is recognised in the carrying amount of an item of property, plant and equipment, the carrying amount of the replaced part is derecognised.

Subsequent to initial measurement property, plant and equipment are carried at cost less accumulated depreciation and any impairment losses.

Property, plant and equipment are depreciated on the straight-line basis over their expected useful lives to their estimated residual value.

The useful lives of items of property, plant and equipment have been assessed as follows:

Item	Average useful life
Furniture and fixtures	4 years
Office equipment	3 years
IT equipment	3 years
Briquetting plant	15 years
Plant and machinery	10 years
Motor vehicles	4 years

The residual value, useful life and depreciation method of each asset are reviewed at the end of each reporting period. If the expectations differ from previous estimates, the change is accounted for as a change in accounting estimate.

Each part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item is depreciated separately.

The depreciation charge for each period is recognised in profit or loss unless it is included in the carrying amount of another asset.

The gain or loss arising from the d-recognition of an item of property, plant and equipment is included in profit or loss when the item is derecognised. The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item.

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Decommissioning costs are reviewed annually and raised if considered material. A provision for decommissioning costs in respect of the briquetting plant is not required as Keaton Energy Holdings Limited, the ultimate owner of the mine where the briquetting plant is situated, are responsible for any environmental costs. Costs associated with decommissioning the coal briquetting plant are insignificant.

1.6 Intangible assets

An intangible asset is recognised when:

• it is probable that the expected future economic benefits that are attributable to the asset

• will flow to the entity; and

• the cost of the asset can be measured reliably.

Intangible assets are initially recognised at cost.

Expenditure on research (or on the research phase of an internal project) is recognised as an expense when it is incurred.

An intangible asset arising from development (or from the development phase of an internal project) is recognised when:

• it is technically feasible to complete the asset so that it will be available for use or sale;

• there is an intention to complete and use or sell it;

• there is an ability to use or sell it;

• it will generate probable future economic benefits;

• there are available technical, financial and other resources to complete the development

• and to use or sell the asset; and

• the expenditure attributable to the asset during its development can be measured reliably.

Subsequent to initial measurement, intangible assets are carried at cost less any accumulated amortisation and any impairment losses.

An intangible asset is regarded as having an indefinite useful life when, based on all relevant factors, there is no foreseeable limit to the period over which the asset is expected to generate net cash inflows. Amortisation is not provided for these intangible assets, but they are tested for impairment annually and whenever there is an indication that the asset may be impaired. For all other intangible assets amortisation is provided on a straight-line basis over their useful life.

The amortisation period and the amortisation method for intangible assets are reviewed at the end of every period.

Reassessing the useful life of an intangible asset as finite after it was initially classified as indefinite as an indicator that the asset may be impaired. As a result the asset is tested for impairment and the remaining carrying amount is amortised over its useful life.

Internally generated brands, mastheads, publishing titles, customer lists and items similar in substance are not recognised as intangible assets.

Amortisation is provided to write down the intangible assets, on a straight-line basis, to their residual values as follows:

values as follows:
Item	Useful life
Rehabilitation and processing rights relates to the briquetting project	8 years
Intellectual property relates to the briquetting project	8 years
Computer software	3 years

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Mine Restoration Investments Limited annual report 2015

ACCOUNTING POLICIES continued

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1.7 Financial instruments

Classification

Financial assets and financial liabilities are recognised when the Group becomes a party to the contractual provisions of the financial instrument.

Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured, initially at fair value, net of transaction cost and subsequently as described below.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

Financial assets

Financial assets are classified as loans and receivables. The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition.

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts through the expected life of the debt instrument, or (where appropriate) a shorter period, to the net carrying amount on initial recognition.

All income and expenses relating to financial assets that are recognised in profit or loss are presented within ‘finance costs’, ‘finance income’ or ‘other financial items’, except for impairment of trade receivables which is presented within ‘other expenses’.

Loans and receivables

Trade receivables, loans, cash and cash equivalents and other receivables that have fixed or determinable payments that are not quoted in an active market are classified as ‘loans and receivables’. Loans and receivables are measured at amortised cost using the effective interest method, less any impairment.

Interest income is recognised by applying the effective interest rate, except for short-term receivables when the recognition of interest would be immaterial.

Derecognition of financial assets

The Group derecognises financial assets only when the contractual rights to the cash flows from the asset expire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also collateralised borrowing for the proceeds received.

Impairment of financial assets

All financial assets are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below.

Financial assets are assessed for indicators of impairment at each reporting date. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated future cash flows of the investment have been impacted.

For all other financial assets, objective evidence of impairment includes significant financial difficulty of the issuer or counterparty, or default or delinquency in interest or principal payments, or it becoming probable that the borrower will enter bankruptcy or financial rehabilitation.

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Mine Restoration Investments Limited annual report 2015

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For certain categories of financial assets, such as trade receivables, assets that are assessed not to be impaired individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number of delayed payments in the portfolio past the average credit period, as well as observable changes in national or local economic conditions that correlate with default on receivables.

The carrying amount of the financial asset is reduced by the impairment loss directly for all financial assets with the exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. When a trade receivable is considered uncollectible, it is written off against the allowance account.

Subsequent recoveries of amounts previously written off are credited against the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.

If in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment was recognised, the previously recognised impairment loss is reversed through profit or loss to the extent that the carrying amount of the investment at the date the impairment is reversed, does not exceed what the amortised cost would have been had the impairment not been recognised.

Financial liabilities

Financial liabilities are carried at amortised cost.

The Group’s financial liabilities comprise borrowings and trade and other payables.

Classification as debt or equity

Debt and equity instruments are classified as either other financial liabilities or as equity in accordance with the substance of the contractual arrangement.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by the Group are recorded at the proceeds received, net of direct issue costs.

Other financial liabilities

Other financial liabilities are initially measured at fair value, net of transaction costs. Other financial liabilities are subsequently measured at amortised cost using the effective interest method, with interest expense recognised on an effective yield basis.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, its obligations are discharged, cancelled or they expire.

Deferred income/government grants

Government grants are recorded as deferred income when they become receivable and are then recognised as income on a systematic basis over the periods necessary to match the grants with the related cost which they are intended to compensate.

Capital contributions on plant and equipment are credited at a rate of 6.67% per annum on a straight-line basis to profit and loss based on the estimated useful life of the plant and equipment.

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ACCOUNTING POLICIES continued

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1.8 Income tax

Current taxation

Current tax is the expected tax payable or receivable on the taxable income or loss for the year, using tax rates enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of previous years.

Current income tax relating to items recognised directly in equity is recognised in equity and not in the statement of financial position.

Deferred taxation

Deferred tax is recognised on temporary differences between the carrying amounts and liabilities in the consolidated financial statements and the corresponding tax basis used in the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are generally recognised for all deductible temporary differences to the extent that it is probable that profits will be available against which those deductible temporary differences can be utilised. Such deferred tax assets and liabilities are not recognised if the temporary differences arise from goodwill of from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profit. Deferred tax liabilities are recognised for taxable temporary differences associated with investments in subsidiaries and associated, and interests in joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reserve in the foreseeable future. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognised to the extent that it is probable that there will be sufficient taxable profits against which to utilise the benefits of the temporary differences and they are expected to reverse in the foreseeable future. Deferred tax for the period is to be recognised in profit and loss except to the extent that it relates to a transaction that is recognised directly in other comprehensive income or in equity, or a business combination that is an acquisition. The effect on deferred tax of any changes in the tax rates is recognised in profit or loss, except to the extent that it relates to items previously charged or credited directly to other comprehensive income or to equity.

The carrying amount of deferred tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the assets to be recovered.

Deferred tax liabilities and assets are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realised, based on tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

The measurement of deferred tax liabilities and assets reflects the tax consequences that would follow from the manner in which the Group expects, at the end of the reporting period, to recover or settle the carrying amount of its assets and liabilities.

Tax expenses

Income tax expense recognised in profit or loss comprises the sum of deferred taxation and current taxation not recognised in other comprehensive income or directly in equity.

1.9 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.

1.10 Impairment of assets

Impairment of non-financial assets

The Group evaluates the carrying value of assets with finite useful lives when events and circumstances indicate that the carrying value may not be recoverable. Irrespective of whether there is indication of impairment, the Group tests goodwill acquired in business combinations for impairment annually. This impairment test is performed during the initial period and annually thereafter. Intangible assets not yet available for use are tested annually for impairment.

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An impairment loss is recognised in profit or loss when the carrying amount of an asset exceeds its recoverable amount. An asset’s recoverable amount is the higher of the fair value less cost to sell (fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date), or its value in use.

Value in use is the present value of estimated future cash flows expected to arise from the continuing use of an asset and from its disposal at the end of its useful life. The estimated future cash flows are discounted to their present value using a pretax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset. For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are separately identifiable cash flows.

An impairment loss recognised for an asset, other than goodwill, in prior years is reversed if there has been a change in the estimates used to determine the asset’s recoverable amount since the last impairment loss was recognised and the recoverable amount exceeds the carrying amount. The reversal of the impairment is limited to the carrying amount that would have been determined (net of depreciation or amortisation) had no impairment loss been recognised in prior years. The reversal of such an impairment loss is recognised in profit or loss in the same line item as the original impairment charge.

1.11 Share capital and equity

Share capital represents the nominal value of shares that have been issued.

Any transaction cost associated with the issuing of shares is deducted from share capital net of any related income tax benefit.

Retained earnings include all current and prior period retained profits.

Dividend distributions payable to equity shareholders are included in other liabilities when the dividends have been approved in a general meeting prior to the reporting date.

Share-based payments

The Group issues equity-settled share-based payments to certain employees. Equity-settled sharebased payments are measured at fair value at the date of grant. The equity-settled share-based payments are expensed to the statement of comprehensive income on a straight-line basis over the vesting period based on the Group’s estimate of shares that will eventually vest.

1.12 Employee benefits

Short-term employee benefits

The cost of short-term employee benefits (those payable within 12 months after the service is rendered, such as paid vacation leave and sick leave, bonuses, and non-monetary benefits such as medical care) are recognised in the period in which the service is rendered and are not discounted. The expected cost of compensated absences is recognised as an expense as the employees render services that increase their entitlement or, in the case of no accumulating absences, when the absence occurs.

The expected cost of profit sharing and bonus payments is recognised as an expense when there is a legal or constructive obligation to make such payments as a result of past performance.

1.13 Borrowing costs

Finance costs that are directly attributable to the acquisition, construction or production of a qualifying asset form part of the cost of that asset.

All other borrowing costs are recognised as an expense in the period in which they are incurred.

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Mine Restoration Investments Limited annual report 2015

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

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1.14 Earnings per share

The Group presents basic and diluted earnings per share (“EPS”) data for its ordinary shares. Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Group by the weighted average number of ordinary shares outstanding during the period, adjusted for own shares held. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding, adjusted for own shares held, for the effects of all dilutive potential ordinary shares, which comprise convertible notes and share options granted to employees.

Headline earnings per share are presented in terms of JSE Limited listing requirements. Headline earnings as defined in Circular 2/2013 issued by the South African Institute of Chartered Accountants, separates from earnings all separately identifiable re-measurements.

1.15 Operating lease

Operating lease payments are recognised as an operating expense in the income statement on a straight-line basis over the lease term.

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

2. New Standards and Interpretations

2.1 Standards and interpretations effective and adopted in the current year

In the current year, the Group has adopted the following standards and interpretations that are effective for the current financial period and that are relevant to its operations:

Standards/Interpretation:
	Effective date:	Expected impact
	Years beginning on or after
IFRS 12 Disclosure of Interests	1 January 2014	The impact of the standard
in Other Entities		is not material.
Amendments to IAS 32:	1 January 2014	The impact of the
Offsetting Financial Assets		amendment is not material.
and Financial Liabilities
Amendments to IAS 36:	1 January 2014	The impact of the
Recoverable Amount		amendment is not material.
Disclosures for Non-Financial
Assets
Amendments to IAS 39:	1 January 2014	The impact of the
Novation of Derivatives and		amendment is not material.
Continuation of Hedge
Accounting
Amendments to IFRS 10, IFRS	1 January 2014	The impact of the
12 and IAS 27: Investment		amendments are not
Entities		material.

39

Mine Restoration Investments Limited annual report 2015

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2.2 Standards and interpretations not yet effective

The Group has chosen not to early adopt the following standards and interpretations, which have been published and are mandatory for the Group’s accounting periods beginning on or after 1 January 2015 or later periods:

Standard/Interpretation:	Standard/Interpretation:		Effective date:	Expected impact:
			Years beginning
			on or after
IFRS 9 Financial Instruments			1 January 2018	The impact of the	standard
				is not material.
IFRS 10	Consolidated Financial		1 January 2016	The impact of the	standard
Statements				is not material.
IAS 27 Separate Financial Statements			1 January 2016	The impact	of	the
				amendment is not	material.
IAS 1 Presentation		of Financial	1 January 2016	The impact	of	the
Statements				amendment is not	material.
Disclosures –	Offsetting Financial Assets		1 July 2016	The impact	of	the
and Financial Liabilities		(Amendments		amendment is not	material.
to IFRS 7)
Amendment	to IFRS 2: Share-based		1 July 2014	The impact	of	the
Payment:	Annual	improvements		amendment is not	material.
project
Amendment	to IFRS	3: Business	1 July 2014	The impact	of	the
Combinations: Annual		improvements		amendment is not	material.
project
Amendment	to IAS 16:	Property, Plant	1 January 2016	The impact	of	the
and Equipment: Annual		improvements		amendment is not	material.
project
Amendment	to IAS 24:	Related Party	1 July 2014	The impact	of	the
Disclosure:	Annual	improvements		amendment is not	material.
project
Amendment	to IFRS 13: Fair Value		1July 2014	The impact	of	the
Measurement: Annual		improvements		amendment is not	material.
project
Amendments to IAS 16 and IAS 38:			1 January 2016	The impact	of	the
Clarification	Acceptable Methods of			amendment is not	material.
Depreciation and Amortisation
IFRS 15 Revenue from Contracts with			1 January 2018	The impact of the	standard
Customers				is not material.

40

Mine Restoration Investments Limited annual report 2015

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

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3. Property, plant and equipment

3. Property, plant and equipment	3. Property, plant and equipment
2015		COST ACCUMULATED DEPRECIATION AND IMPAIRMENTS CARRYING VALUE R’000 R’000 R’000
Plant and machinery Furniture and fixtures Motor vehicles Office equipment IT equipment Briquetting plant 2014		310 (310) - 242 (229) 13 95 (36) 59 96 (63) 33 110 (86) 24 18 478 (7 022) 11 456
		19 331 (7 746) 11 585
		COST ACCUMULATED DEPRECIATION AND IMPAIRMENTS CARRYING VALUE R’000 R’000 R’000
Plant and machinery 310 (44) 266 Furniture and fixtures 242 (223) 19 Motor vehicles 95 (12) 83 Office equipment 68 (57) 11 IT equipment 77 (77) - Briquetting plant 18 144 (227) 17 917 18 936 (640) 18 296 Reconciliation of property, plant and equipment 2015 OPENING BALANCE ADDITIONS DEPRECIATION IMPAIRMENT TOTAL R’000 R’000 R’000 R’000 R’000		310 (44) 266 242 (223) 19 95 (12) 83 68 (57) 11 77 (77) - 18 144 (227) 17 917
		18 936 (640) 18 296
Plant and machinery Furniture and fixtures Motor vehicles Office equipment IT equipment Briquetting plant 2014	266 - - (266) - 19 - (6) - 13 83 - (24) - 59 11 28 (6) 33 - 33 (9) - 24 17 917 334 (1 192) (5 603) 11 456
	18 296 395 (1 238) (5 869) 11 585
	OPENING BALANCE ADDITIONS DEPRECIATION TOTAL R’000 R’000 R’000 R’000
Plant and machinery Furniture and fixtures Motor vehicles Office equipment Briquetting plant	297 - (31) 266 13 11 (5) 19 - 95 (12) 83 16 - (5) 11 10 472 7 672 (227) 17 917
	10 798 7 778 (280) 18 296

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Mine Restoration Investments Limited annual report 2015

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All assets were assessed on whether future economic benefits will flow to the Group. On conclusion of the assessment the Board considered that an impairment was needed on the briquetting plant as some components were not used within the production of coal fines. An impairment also had to be made on the roller press owned by subsidiary Western Utilities Corporation Proprietary Limited as the roller press is currently not utilised in the production of coal fines.

All assets serve as collateral to secure other financial liabilities.

4. Intangible assets

4. Intangible assets
2015	COST ACCUMULATED AMORTISATION AND IMPAIRMENT CARRYING VALUE R’000 R’000 R’000
Rehabilitation and processing rights AMD project Intellectual property Computer software 2014	47 959 (27 381) 20 578 45 082 (45 082) - 2 000 (1 196) 804 35 (35) -
	95 076 (73 694) 21 382
	COST ACCUMULATED AMORTISATION AND IMPAIRMENT CARRYING VALUE R’000 R’000 R’000
Rehabilitation and processing rights AMD project Intellectual property Computer software Reconciliation of intangible assets 2015	47 959 (3 366) 44 593 45 082 (45 082) - 2 000 (140) 1 860 35 (35) -
	95 076 (48 623) 46 453
	OPENING BALANCE AMORTISATION IMPAIRMENT TOTAL R’000 R’000 R’000 R’000
Rehabilitation and processing rights Intellectual property 2014	44 593 (5 995) (18 020) 20 578 1 860 (126) (930) 804
	46 453 (6 121) (18 950) 21 382
	OPENING BALANCE AMORTISATIO N IMPAIRMENT TOTAL R’000 R’000 R’000 R’000
Rehabilitation and processing rights AMD project Intellectual property Computer software	47 959 (3 366) - 44 593 42 452 (1 460) (40 992) - 2 000 (140) - 1 860 35 (35) - -
	92 446 (5 001) (40 992) 46 453

42

Mine Restoration Investments Limited annual report 2015

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

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Impairment test Rehabilitation and processing rights, intellectual property, goodwill and briquetting plant

The intangible asset for the rehabilitation and processing rights was created as a result of the agreements with Leeuw Mining and Exploration Proprietary Limited (“LME”) and Keaton. These agreements were signed with Octavovox Proprietary Limited and give the MRI Group the right to construct a coal processing and briquetting plant to process the coal fines. The Group was granted the processing rights for a period of eight years, with an option to renew for a further period of eight years.

The intention is to expand and implement solutions at other coal producers, to diversify the Group’s project exposure. At the financial year end, the values of the intangible assets related to the coal fines processing project were tested for impairment, due to the delays in the project and changes in projections for the project. The carrying values of these assets were compared with the estimated value in use. The value in use was based on the discounted cash flows from the sale of the screened fines from the LME site.

The following key assumptions were used:

• A pretax discount rate of 21.5% was applied consistently with the prior year. This is considered an accurate representation of the Group’s cost of capital;

• The period covers the contract period of 16 years adjusted by one year to 15 years as a result of the delay in the project;

• The forecast is based on the past feasibility studies and expected production yields based on new technology. Production is expected to reach 7 500 tons pm after February 2015; and

• The estimate is based on zero growth in revenue after February 2015 and costs have been assumed to remain constant.

Based on the value in use calculations the carrying values exceeded the recoverable amounts and the directors impaired the asset by R18 019 691.26 to a net carry value of R20 578 857.69.

After 28 February 2015 the Company’s efforts to improve productivity and profitability at its coal fines processing operations at the Vaalkrantz Colliery have been impacted by adverse operating conditions, including, in particular, the severe droughts in KwaZulu-Natal which have affected water supply to the project and accordingly reduced production levels. These adverse operating conditions could lead to further impairments to the rehabilitation and processing rights held by the Group.

AMD project impairment

Between 2007 and 2011, the Company invested a significant amount of capital in research and development of a solution to the AMD crisis facing the mining industry on the Witwatersrand Basin. This culminated in a definitive feasibility study and proposal which was presented to government, with further engagement between the Company and government.

In April 2011, the government appointed the Trans Caledon Tunnelling Authority to undertake emergency remedial work, and Aurecon was appointed in February 2012 to conduct a detailed feasibility study of the acid mine drainage problem. The Department of Water Affairs has publicly released Study Report 5.4, “Treatment Technology Options” (dated May 2013), which outlines all the technology options available, including passive, pre-treatment, physical, chemical and biological processes. Amongst the chemical processes, they considered the Company’s Alkali-Barium-Calcium (“ ABC ”) process and the Ettringite precipitation process. Their principal assessment is that the ABC process is untested beyond pilot-plant stage and there is significant risk in scaling it up to full commercial operation.

The full conclusions and recommendations made to the minister are not in the public domain but it is apparent from the extracts that are in the public domain, that the report advises the use of established processes, rather than the innovative technology developed by the Company.

In line with the requirements of IAS 36, the Board reviewed the carrying value of the AMD project at the financial year end. As no concrete evidence of the commercialisation of the project in the foreseeable future could be demonstrated, the Board approached a technical consultant for some guidance. Although the consultant and Board are still of the opinion that the technology has value,

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Mine Restoration Investments Limited annual report 2015

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the Board could not be satisfied that the intellectual property vesting in the project can be commercialised in the near future.

As the underlying value of the asset is imbedded in intellectual property, substantial additional cash will be required to convert the intellectual property into a cash-generating asset. For these reasons, the Board impaired the AMD project to zero in 2014 in terms of IAS 36.

5. Goodwill

	COST	ACCUMULATED IMPAIRMENT	CARRYING VALUE
	R’000	R’000	R’000
2015	1 053	(1 053)	-
2014	9 123	(8 070)	1 053

Impairment testing of goodwill

Goodwill acquired through business combinations has been allocated to the two CGUs below:

Coal briquetting project (R - ) (2014: R1 053)

The Group performed its annual impairment test in February 2015. As a result of the impairment of the AMD project the goodwill allocated to this project was considered to be fully impaired.

The recoverable amount of goodwill allocated to the coal briquetting project has been determined based on a value in use calculation used in the impairment test of other intangibles. The directors are satisfied that the goodwill on the coal briquetting project needs to be impaired.

6. Deferred tax

Deferred tax
	28 Feb 2015	28 Feb 2014
	R’000	R’000
Deferred tax (liability) asset
Deferred tax liability	(6 036)	(13 624)
Deferred tax asset	111	3 016
	(5 925)	(10 608)
Reconciliation of deferred tax asset (liability)
At beginning of the year	(10 608)	(18 453)
Increase (decrease) in tax losses available for set off	(2 905)	(4 157)
against future taxable income
Reversing (originating) temporary differences on	7 019	12 588
intangible assets
Reversing (originating) temporary differences on tangible	569	(586)
assets
	(5 925)	(10 608)
Comprising:
Tangible assets	(48)	(617)
Intangible assets	(5 988)	(13 007)
Tax losses available for set off against future taxable
income	111	3 016
	(5 925)	(10 608)
Unused tax losses	29 816	21 087

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Mine Restoration Investments Limited annual report 2015

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The recognised tax asset relates to the tax losses accumulated of the Company holding an intercompany management contract for services rendered to the company holding the briquetting project. The directors are confident that there will be sufficient taxable profits in the foreseeable future against which the deferred tax asset can be utilised. All other tax losses have been excluded from the tax asset calculation.

7. Trade and other receivables

	28 Feb 2015	28 Feb 2014
	R’000	R’000
Trade receivables	1 192	116
Other receivables	87	-
Deposits	70	46
VAT	-	534
	1 349	696

Fair value of trade receivables

Due to the short-term nature of trade receivables, the carrying amount approximates fair value. There are no trade receivables past due and no impairment is required.

Trade receivables in 2014 refer to operating expenses recovered. Revenue started to be generated from March 2014.

8. Cash and cash equivalents

Cash and cash equivalents consist of:	28 Feb 2015	28 Feb 2014
	R’000	R’000
Cash on hand	1	1
Bank balances	595	2 984
	596	2 985

The carrying value of cash and cash equivalents is considered a reasonable approximation of fair value.

9. Financial assets by category

The accounting policies for financial instruments have been applied to the line items below:

	28 Feb 2015	28 Feb 2014
	R’000	R’000
Financial assets held at amortised cost:
Trade and other receivables	1 279	116
Cash and cash equivalents	596	2 985
	1 875	3 147

Unless otherwise disclosed, the directors consider that the carrying value of financial assets, recognised at amortised cost in the financial statements, approximates their fair values. The fair values of financial assets are presented in the related notes.

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Mine Restoration Investments Limited annual report 2015

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10. Share capital

Share capital
	28 Feb 2015	28 Feb 2014
	R’000	R’000
Authorised
1 000 000 000 no par value ordinary shares	1 000	1 000
Reconciliation of number of shares issued:
Reported as at 1 March 2014 (2013)	498 482	455 695
Issue of shares – ordinary shares	335 142	42 590
Shares in dispute with former director	-	197
	833 624	498 482

The unissued ordinary shares are under the control of the directors in terms of a resolution of shareholders of MRI passed at the last Annual General Meeting. This authority remains in force until the next Annual General Meeting. The MRI Group does not have any unlisted securities.

Issued	28 Feb 2015	28 Feb 2014
	R’000	R’000
Opening balance ordinary shares	66 267	61 304
246 181 701 shares issued at 5 cents each	12 309	-
65 960 757 shares issued at 5 cents each	3 298	-
10 000 000 shares issued at 5 cents each	500	-
13 000 000 shares issued at 5 cents each	650	-
14 812 520 shares issued at 20 cents each	-	2 963
27 777 778 shares issued at 9 cents each	-	2 500
Share issue expenses	-	(500)
Closing balance	83 024	66 267

The Group does not hold any treasury shares.

The Company issued the following equity shares in line with various corporate actions detailed in the Circular issued to shareholders on 16 May 2014 and as announced on SENS on 8 April 2014:

• A specific issue of a maximum of 246 181 701 new MRI shares for cash at an issue price of R0.05 per share in settlement of the AfrAsia Special Opportunities Fund Proprietary Limited loan, amounting to approximately R12.3 million;

• A specific issue of 66 267 000 new MRI shares for cash at an issue price of R0.05 per share in settlement of the Armadale Capital Plc loan, amounting to approximately R 3.3 million;

• A specific issue of 10 000 000 new MRI shares for cash at an issue price of R0.05 per share in settlement of corporate advisory fees owed to AfrAsia Corporate Finance Proprietary Limited; and

• A specific issue of 13 000 000 new MRI shares for cash at an issue price of R0.05 per share in settlement of directors’ fees.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

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These issues and conversions were completed on 1 July 2014 as per the SENS announcement of the same date.

Subsequent to year end MRI has increased its interest to 100% in its subsidiary Octavovox by buying out the minorities and issuing 21 428 570 MRI ordinary shares at seven cents per share on 23 April 2015, which constituted 2.57% of MRI’s issued shares at the time.

11. Share-based payment Share option

The Company granted an incentive option in respect of 10 000 000 new MRI shares at a strike price of R0.05 per share to CEO, Mr Richard Tait (these options were issued to the CEO and vested fully on 1/3/2014).

Outstanding at the beginning of period Granted during the year Forfeited during the year Outstanding at the end of the period Exercisable at the end of the period		2015 Options Weighted average exercise price (cents) - - 10 000 000 5 - - 10 000 000 5 10 000 000 5

The weighted average exercise period of the options outstanding at year end was one year.

The highest and lowest price of the Company's shares during the year was 11 cents and 6 cents respectively. The share price at the year end was 8 cents.

The inputs into the Black Scholes models are as follows:

	2015
Weighted average share price	10 cents
Exercise price	5 cents
Expected volatility	30%
Expected life	2 years
Risk-free rate	6%

Expected volatility was determined by calculating the historical volatility of the Group’s share price over the previous five years. The expected life used in the model has been based on the terms of the options, the vesting period, and exercise restrictions.

The Group recognised a total expense of R559 479.00 related to share-based payment transactions during the year.

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Mine Restoration Investments Limited annual report 2015

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12. Business combination Prodiflex Coal

WUC acquired 50% of Prodiflex on 15 December 2011. Initially the transaction was recognised as an investment in an associate. With effect from 1 January 2012 this investment changed to an investment in a subsidiary as the Group exercised control and continues to do so in terms of IFRS 10. The Group elected to measure the non-controlling interests in the acquiree at fair value

The investment in the associate of R1 million relates to 50% of the intellectual property acquired for the briquetting project. The fair value of the intellectual property was based on the sale agreement and subsequently tested for impairment. The primary reason for the acquisition was to enable the Group to process fines for conversion into briquettes.

Fair value of the intellectual property		2 000
Consideration transferred		( -)
Fair value of former associate		(1 000)
The fair value of the associate was equal to its carrying value
Non-controlling interest		(1 000)
Goodwill (gain on bargain purchase)		-
Other financial liabilities
	28 Feb 2015	28 Feb 2014
	R’000	R’000
Development Bank of Southern Africa Limited (“DBSA”):	-	27 503
First ranking pledge and cession in security of MRI claims in
WUC; first ranking cession in security of all the bank and
investment accounts of the borrower; first ranking pledge
and cession of all debtors balances and claims which the
borrower may have against third parties. The loan bears
interest at 25% per annum on the capital and 25% on
interest capitalised every July. The capital amount of R10
million is due and payable on the implementation of the
water reclamation project provided that it occurred
before July 2014. Because the water reclamation project
was not implemented before that date, the loan together
with interest is not repayable and DBSA was obliged to
release security.
Afrasia Special Opportunities Fund Proprietary Limited(“ASOF”):	-	11 000

13. Other financial liabilities

A loan was granted by ASOF to Octavovox Proprietary Limited, a subsidiary of MRI. The terms of the loan are as follows: As security, all shareholders of Octavovox ceded all their rights, title and interest in and to its shares and claims as well as bank accounts and debtors against the borrower in favor of ASOF. MRI also provided ASOF with a corporate guarantee. The loan is repayable on the anniversary of the advances and bears interest between 2% and 2.5% per month. ASOF also had a conversion option to convert the loan into MRI shares, an option that was executed on 30 June 2014 when the loan plus capitalised interest was converted into shares of MRI at a conversion rate of 5 cents per share. This conversion resulted in the loan being settled in its entirety.

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Armadale Capital Plc (“ACP”):	-
A loan was granted by ACP to MRI. The terms of the loan
are as follows: The ACP loan was subordinated to the rights of ASOF and ACP agreed to indemnify ASOF from possible	553
losses under its secured loan agreement. The loan is
repayable on the anniversary of the advances and bears
interest at the prime interest rate plus 1%. ACP had a
conversion option to convert the loan into MRI shares, an
option that was executed on 30 June 2014 when the loan
plus capitalised interest was converted into shares of MRI
at a conversion rate of 5 cents per share. This conversion		3 206
resulted in the loan being settled in its entirety.
VIRTO Group:
		-
Amount due to screening technology partner based on a
50/50 profit split on our coal screening project. The loan is
unsecured, interest free and is repayable within one year.
	553	41 709
Current liabilities
At amortised cost	553	41 709
Non-current liabilities
At amortised cost	-	-

14. Trade and other payables

Trade and other payables
	28	Feb 2015	28 Feb 2014
		R’000	R’000
Trade payables		1 612	178
Other payables		1 648	912
		3 260	1 090

The increase in ‘other payables’ is mainly attributable to the amount due in directors’ fees for 2015 and VAT payable.

Fair value of trade and other payables

All amounts are short-term and the carrying value of trade and other payables is considered a reasonable approximation of fair value.

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Mine Restoration Investments Limited annual report 2015

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15. Financial liabilities by category

The accounting policies for financial liabilities have been applied to the line items below:

At amortised cost	28 Feb 2015	28 Feb 2014
	R’000	R’000
Other financial liabilities	553	41 709
Trade and other payables	2 809	1 090
	3 362	42 799

Unless otherwise disclosed, the directors consider that the carrying value of financial liabilities recognised at amortised cost in the financial statements approximates their fair values. The fair value of financial liabilities is presented in the related notes.

16. Deferred income

	28 Feb 2015	28 Feb 2014
	R’000	R’000
Opening balance	-	-
Grant received in the current year	844	-
Closing balance	844	-

A government grant was awarded to the Group due to the completion of the briquetting/coal screening plant in Octavovox Proprietary Limited.

This grant will be paid in four stages as certain milestones are achieved. The total awarded grant

amounted to R2 813 132 of which R843 941 was paid in February 2015.

This non-taxable income will be realised from 1 March 2015 over the lifetime of the briquetting/coal screening plant which is estimated at 10 years.

The remainder of the grant will be paid as revenue and employment targets are achieved in Octavovox Proprietary Limited.

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Mine Restoration Investments Limited annual report 2015

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

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17. Operating profit/(loss)

Operating profit/(loss) for the year is stated after accounting for the following:

18. 19.	28 Feb 2015 R’000 28 Feb 2014 R’000
	Operating income Profit on exchange differences - - Exchange differences arose from the loan due to Armadale Capital Plc. The loan was repaid in the previous financial period. In the current year the amount relates to the write-off of the DBSA loan Sundry income (DBSA loan written off/expenses recovered) 33 105 36
	33 105 36
	Operating lease charges Premises 249 247 Motor vehicles - 33
	249 280 Amortisation of intangible assets 6 121 4 966 Depreciation on property, plant and equipment 1 238 280 Impairment of intangible assets and goodwill 18 950 49 062 Impairment of property, plant and equipment 5 869 - Investment revenue 28 Feb 2015 R’000 28 Feb 2014 R’000
	Interest revenue Bank - 6
	Finance costs 28 Feb 2015 R’000 28 Feb 2014 R’000
	Other financial liabilities 5 421 6 156
	5 421 6 156

Mine Restoration Investments Limited annual report 2015

51

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20. Taxation

Taxation
	28 Feb 2015	28 Feb 2014
	R’000	R’000
Taxation recognised in profit/(loss)
Current tax expense	-	12
Deferred
Originating and reversing temporary differences	(4 683)	(7 845)
	(4 683)	(7 833)
Reconciliation of the tax expense
Reconciliation between accounting profit and tax expense
Accounting loss	(13 745)	(68 080)
Tax at the applicable tax rate of 28% (2014: 28%)	(3 849)	(19 062)
Tax effect of adjustments on taxable income
Non-deductible expenditure	-	4 106
Deferred tax not recognised	1524	-
Non-deductible expenses	697	-
Tax-free portion of capital gain	(3 035)	-
Deferred tax charge	-	7 123
	(4 683)	(7 833)

The estimated tax loss recognised and available for set off against future taxable income is R46 704 (2014: R27 426) (R’000). Tax loss not recognised as a deferred tax asset amounts to R42 256 (2014: R30 822) (R’000).

21. Earnings per share Basic earnings per share

Basic earnings per share is determined by dividing profit or loss attributable to the ordinary equity holders of the parent by the weighted average number of ordinary shares outstanding during the period.

period.
	28 Feb 2015	28 Feb 2014
	R’000	R’000
Basic (loss) earnings per share
From operations (cents)	0.74	(11.84)
Basic earnings per share for the MRI Group was based on	5 345	(56 329)
earnings (loss) of
And weighted average number of ordinary shares (‘000)	727 114	475 773
Diluted basic earnings/(loss) per share
From operations (cents)	0.73	(9.91)
Profit or loss for the period attributable to equity holders of the	5 345	(56 329)
parent
Diluted weighted average number of shares in issue (‘000)	732 114	568 376

The after tax effect of interest on profit or loss to calculate diluted earnings per share has not been adjusted as it is insignificant.

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Reconciliation of earnings to headline earnings attributable to equity holders of the parent:

	28 Feb 2015	28 Feb 2014
	R’000	R’000
Headline earnings/(loss) per share (cents)	2.27	(3.94)
Reconciliation between earnings (loss) and headline earnings
(loss)
Basic earnings/(loss)	5 345	(56 329)
Adjusted for:
Impairment of property, plant and equipment	3 123	-
Impairment of intangible assets and goodwill	10 708	49 062
Deferred tax on intangible assets impaired	(2 703)	(11 478)
Headline earnings/(loss)	16 473	(18 745)
Weighted average number of shares in issue(‘000)	727 114	475 773
Headline earnings/(loss) per share(cents)	2.27	(3.94)
Diluted weighted average number of shares in issue(‘000)	732 114	568 376
Diluted headline earnings/(loss) per share(cents)	2.25	(3.30)

The following factors contributed to the difference in the projected financial results and financial results:

• 1) The delay in full production of the coal briquetting and processing project;

• 2) The impairment of the DBSA loan;

• 3) The impairment of intangible asset and goodwill; and

• 4) The impairment of property, plant and equipment.

The weighted average number of shares for the purpose of diluted earnings per share reconciles to the weighted average number of shares used in the calculation of basic earnings per share as follows:

	28 Feb 2015	28 Feb 2014
	R’000	R’000
		(restated)
Weighted number of shares used in the calculation of basic	727 114	475 773
earnings per share
Shares deemed to be issued in respect of loan conversions	-	92 603
Shares deemed to be issued in respect of share options	5 000	-
Weighted average number of shares used in the calculation	732 114	568 376
of diluted earnings per share

If the shares issued subsequent to the financial year end, as detailed in note 10, had been outstanding at the financial year end the number of shares outstanding would have increased by 10 000 000.

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Mine Restoration Investments Limited annual report 2015

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22. Cash generated from (used in) operations

Cash generated from (used in) operations
	28 Feb 2015	28 Feb 2014
	R’000	R’000
Operating loss	(8 324)	(61 930)
Adjustments for:
Depreciation and impairment	7 107	280
Goodwill impairment	1 053	8 070
Impairment and amortization	25 069	45 958
Share-based payment	559	-
DBSA loan write-off	(32 729)	-
Changes in working capital:
Trade and other receivables	(653)	(87)
Trade and other payables	2 170	(317)
Deferred income	844	-
	(4 904)	(8 026)

23. Tax refunded (paid)

Tax refunded (paid)
	28 Feb 2015	28 Feb 2014
	R’000	R’000
Balance at beginning of the period	-	34
Current tax for the period recognised in profit or loss	-	12
Balance at end of the period	-	-
Payment	-	46

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

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Mine Restoration Investments Limited annual report 2015

55

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2014 AMD project Coal fines processing Corporate Total	R'000 R'000 R'000 R'000	Revenues - - - -	Interest received - - 6 6	Other income 17 19 36	Depreciation and	amortisation (50 526) (3 782) - (54 308)	Interest paid (5 037) (938) (181) (6 156)	Loss before tax (56 143) (8 908) (3 029) (68 080)	Taxation 4 763 3 070 - 7 833	Loss after tax (51 380) (5 838) (3 029) (60 247)	Total assets 1 133 70 059 1 307 72 499	Total liabilities (27 525) (28 453) (445) (56 423)	The MRI Group segmental analysis is based on the AMD and coal fines processing projects. The coal fines processing plant was commissioned in December 2013 and started generating	revenue within the year under review. The AMD project was fully impaired in 2014 as the Group has not been able to secure contracts to generate revenue.	The Group was reliant on one major customer contributing more than 20% of trading in respect of the coal fines processing project.

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

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25.	Commitments 28 Feb 2015 R’000 28 Feb 2014 R’000
	Authorised capital expenditure Not yet contracted for but authorised by directors Plant construction - 1 409 Operating leases – as lessee (expense) Minimum lease payments due - within one year 245 142 - in second to fifth year inclusive 481 -
	726 142

The Group has currently one operating lease in place over its head office, this three-year rental agreement is subject to an annual escalation of 9% and expires on 30 November 2017.

Mine Restoration Investments Limited annual report 2015

57

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26. Related party balances and related party transactions

The following related party transactions were entered into during the 2015 financial year:

No transactions between the Company and its subsidiaries have occurred during the financial period except for administration fees and advances as disclosed below. Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Details of transactions between the Group and other related parties are disclosed below.

Relationships

Subsidiary Subsidiary Shareholder with significant influence Shareholder with significant influence Shareholder with significant influence Corporate advisor Sponsor

Western Utilities Corporation Proprietary Limited Octavovox Proprietary Limited Armadale Capital Plc

AfrAsia Special Opportunities Fund Proprietary Limited

Trinity Asset Management Proprietary Limited

AfrAsia Corporate Finance Proprietary Limited Arcay Moela Sponsors Proprietary Limited

Related party balances	2015	2014
Loan account – Owing (to) by related party
Western Utilities Corporation Proprietary Limited	-	68 983
Armadale Capital Plc	-	(3 206)
AfrAsia Special Opportunities Fund Proprietary Limited	-	(11 000)
Octavovox Proprietary Limited	12 263	-
Related party transactions
Advisory services paid to related parties
AfrAsia Corporate Finance Proprietary Limited	928	871
Arcay Moela Sponsors Proprietary Limited	-	240
Trinity Asset Management Proprietary Limited	-	912
Administration fees paid to (received from) related parties
Western Utilities Corporation Proprietary Limited		(1 213)
Octavovox Proprietary Limited	(1 693)
AfrAsia Special Opportunities Fund Proprietary Limited	-	1 567
Armadale Capital Plc	-	165

A Meyer, the Group’s Financial Director, received remuneration for services as an employee of the Group via his company, Q-Fon Proprietary Limited to the amount of R201 000.

R Tait, the Group’s CEO, received remuneration for services as an employee of the Group to the amount of R600 000 via AfrAsia Corporate Finance Proprietary Limited, the Group’s corporate advisor, until 28 February 2014.

10 000 000 new MRI shares were issued to AfrAsia, the Group’s corporate advisor at 5 cents each, in settlement of fees earned for services rendered during the year under review.

In June 2012, as the largest shareholders, Trinity Asset Management Proprietary Limited and Armadale Capital Plc agreed to underwrite any shortfall in the working capital of MRI to the maximum value of R4 million for the period until 30 June 2013. This funding was called upon. As part of the funding agreement an additional 14 812 520 new ordinary shares of no par value were issued for cash on 28 March 2013.

None of the transactions incorporate special terms and conditions and no guarantees were given or received.

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27. Directors’ emoluments

Directors’ emoluments
	28 Feb 2015 R’000 28 Feb 2014 R’000
Executive directors WJ Schoeman (Resigned 15 November 2013) M van den Berg (Resigned 30 August 2013)(3) AT Meyer(1) RM Tait(2) CH Gernandt (Resigned 31 May 2015) Non-executive directors S Swana (Resigned 19 July 2013) QJ George CE Pettit (Resigned 18 April 2013) AT Meyer (Resigned 28 February 2015) CB Roed SP Tredoux (Resigned 3 September 2013) JC Herbst (Resigned 3 September 2013) B McQueen K Jarvis J Lewis (Resigned 29 October 2014) S Caddy AT Meyer	- 103 - 333 90 104 1 214 125 227 - 32 120 137 - 11 - - 120 125 - 69 - 69 - - - - - 60 120 57 30 -
	1 921 1 226

(1) Changed his role from non-executive director to Financial Director on 1 October 2013. Mr Meyer resumed his role as non-executive from 1 December 2014 and subsequently resigned on 28 February 2015.

(2) Appointed on 18 April 2013 as non-executive director with a change in role to CEO effective 18 November 2013. Mr Tait’s remuneration was paid to AfrAsia Corporate Finance Proprietary Limited until 28 February 2014. Payments are now made directly to Mr Tait.

(3) Received an additional payment of R154 000 from subsidiary company, WUC, during the 2014 financial year

Remuneration paid to all executive directors is based on their individual service contract with the Company. There were no other director’s benefits in the 2015 and 2014 financial year apart from executive salaries, non-executive fees and share-based payments to directors (refer note 11).

28. Risk management

Financial risk management

The MRI Group is exposed to various risks in relation to financial instruments. The MRI Group’s financial assets and financial liabilities by category are classified in the accounting policies for financial instruments. The main types of risk are credit risk and interest risk.

Liquidity risk

The MRI Group manages liquidity by constantly monitoring its future commitments.

The table below analyses the MRI Group’s financial liabilities into relevant maturity groupings based on the remaining period at the statement of financial position to the contractual maturity date. The amounts disclosed in the table are the contractual undiscounted cash flows. Balances due within 12 months equal their carrying values as the impact of discounting is not significant.

	Less than 1 year	Between 1 and 2 years
	R’000	R’000
At 28 February 2015
Other financial liabilities	553	-
Trade and other payables	3 260	-
At 28 February 2014
Other financial liabilities	41 709	-
Trade and other payables	1 090	-

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Liquidity risk management

Ultimate responsibility for liquidity risk management is with management, which has established an appropriate framework for the management of the MRI Group’s requirements. The MRI Group manages liquidity risk by continuously monitoring forecasts and actual cash flows. The liquidity risk is fully discussed in the note 29 on Going concern.

Interest rate risk

The MRI Group does not have floating interest rate borrowings. Therefore there is no risk of interest rate movements. Interest-bearing other financial liabilities either expired or were converted into equity and therefore the Group had no exposure to finance costs. Deposits with the banks are insignificant.

Credit risk

Credit risk is managed on a Group basis. The MRI Group has adopted a policy of only dealing with creditworthy counterparties as a means of mitigating the risk of financial loss from defaults. The credit risk for cash and cash equivalents is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.

Deposits and cash balances are maintained by the Standard Bank of South Africa.

No trade and other receivables are past due date and no impairment losses were incurred.

Capital management

The MRI Group’s capital management objectives are to ensure the MRI Group’s ability to continue as a going concern and to provide an adequate return to shareholders from the capital projects in acid mine drainage and coal briquetting. The MRI Group monitors capital through the optimisation of the debt and equity balance. The capital structure of the MRI Group consists of limited borrowings and equity. The directors review capital structure on a regular basis. As part of these reviews the costs of capital and the risk associated with each class of capital is considered.

29. Going concern

The financial period under review reflects a challenging financial period. The post year end results indicate an increase in revenues and reduced operational losses for the period following the commissioning and ramp up of the coal fines project. The overall net loss after tax for the full period under review was R9.1million and the cash flow forecasts prepared by the directors indicate that the Company will require additional funding within the next 12 months in order to meet its commitments as they fall due and to continue funding the expenditure required to progress projects with near-term cash generation potential. These conditions indicate the existence of a material uncertainty which may cast doubt about the Company’s ability to continue as a going concern.

The Board, however, remains confident that the Company retains the continued support of its major shareholders to provide additional funding should other sources not be forthcoming. Though the Board appreciates that formalised funding commitments have not yet been secured, the directors have a reasonable expectation, having regard to the current status and the future strategy of the Company, that the Company has sufficient resources to continue as a going concern and have therefore concluded that it is appropriate to prepare the financial statements on a going concern basis. Accordingly, the financial statements do not include the adjustments that would result if the Company was unable to continue as a going concern.

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Mine Restoration Investments Limited annual report 2015

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

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30. Events after the end of the reporting period Acquisition of Octavovox

MRI increased its interest to 100% in its subsidiary Octavovox by buying out minorities and issuing 21 428 570 MRI ordinary shares at seven cents per share on 23 April 2015, which constituted 2.57% of MRI’s issued shares at the time. The acquisition fell below the categorisation threshold in terms of the JSE Listings Requirements.

IMBS Transaction

The Company published a detailed cautionary on SENS on 26 June 2015 regarding the proposed acquisition of a stake in an iron processing business named Iron Minerals Beneficiation Services Proprietary Limited. IMBS is a South African company founded in 2006 that has developed a proprietary, cost-efficient technology for the processing and conversion of super-fine iron ore into metallic iron units for use in the steel and foundry industry.

MRI will acquire certain ordinary shares in IMBS, constituting c.25.8% of the total issued share capital and certain shareholder loan claims against IMBS. Immediately following the sale, all IMBS shareholders, including MRI, will convert their shareholder loan claims into additional IMBS shares, such that MRI will acquire a further c.3% interest in IMBS. MRI will thereafter acquire up to a further 10.4% in IMBS pursuant to a rights offer to be conducted by IMBS, and underwritten by MRI. In order to part fund the IMBS Acquisition, MRI will raise up to R200 000 000 through an issue of new MRI shares at 7 cents per share. The transaction, when finalised with external advisors, will be brought to MRI shareholders for approval.

Octavovox after year end

At the end of the last financial year, 28 February 2015, the plant was operating relatively stably and the management team was confident that performance could be maintained and steadily improved, despite ongoing challenges. During the course of June 2015, it became apparent that the limited water supply was more severe than anticipated, and that the mine area was suffering from severe drought conditions. The Company worked with LME to try and cut water consumption but it became apparent that it was impossible to operate commercially in the absence of a steady water supply. The Board took the decision to place the plant on care and maintenance at the end of June. This has a material impact on the future of the operation and may result in further impairment of the briquetting plant and the intangible asset held over the coal processing right at the next reporting date. A possible R4 million could be recovered from the sale of the plant and the intangible asset if the plant is not brought back to operation.

31. Directors’ interest in issued shares

The individual interests declared by the directors and officers in the Company’s share capital as at 28 February 2015 as well as the comparative totals for the year ended 28 February 2014, were as follows:

Director	Beneficial		Total – 2015 (as at 27 February 2015)	% - 2015
	Direct	Indirect
Q George	2 508 000	-	2 508 000	0.30%
S Caddy	1 140 000	-	1 140 000	0.13%
AT Meyer	1 898 000	-	1 898 000	0.23%
CB Roed	2 508 000	-	2 508 000	0.30%
RM Tait	1 596 000	-	1 596 000	0.19%
	9 650 000	-	9 650 000	1.15%

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Mine Restoration Investments Limited annual report 2015

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Director	Beneficial		Total – 2014 (as at 28 February 2014)	% - 2014
	Direct	Indirect
Q George	-	-	-	-
R Tait_~_	-	-	-	-
A Meyer	-	-	-	-
C Roed	-	-	-	-
S Caddy_@_	-	-	-	-
J Lewis#	-	3 333 214	3 333 214	0.67%
S Tredoux*	-	-	-	-
J Herbst*	3 745 115	-	3 745 115	0.82%
S Swana_$_	-	-	-	-
J Schoeman^	-	4 166 519	4 166 519	0.91%
C Pettit%	-	-	-	-
M van den Berg+	-	59 522	59 522	0.01%

* Resigned with effect from 3 September 2013, ^ Resigned with effect from 15 November 2013 ~ Appointed with effect from 15 November 2013 @ Appointed with effect from 15 November 2013 $ Resigned with effect from 19 July 2013 # Appointed with effect from 5 September 2013 % Resigned with effect from 18 April 2013 + Resigned with effect from 30 August 2013

After 28 February 2014 and up to the date of this report, the following changes in directors’ interests occurred:

• Various directors were issued shares in lieu of fees, refer to note 10 for details hereon; and

• A Meyer sold 100 000 shares at 9 cents each on 11 July 2014 and purchased 150 000 shares at 8 cents each on 21 July 2014

Other than as mentioned above, there has been no further change in directors’ interests in the share capital of the MRI Group subsequent to 28 February 2014 and up to date of this report.

Mr. Q George is a director of Trinity Asset Management Proprietary Limited (“TAM”). At the date of this report Mr. Q George does not have any direct or indirect beneficial shareholding in TAM nor in the Company.

Mr. R Tait is a non-executive director of AfrAsia Corporate Finance Proprietary Limited (“AfrAsia”). AfrAsia is the corporate advisor to the MRI Group. Mr. R Tait is not a direct or indirect shareholder of AfrAsia and accordingly does not have any direct or indirect beneficial interest in the Company.

AfrAsia received payment of a portion of its fees in shares (10 000 000 at 5 cents each) for services rendered during the year.

Refer to note 26 - Related parties.

62 Mine Restoration Investments Limited annual report 2015

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS continued

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33. Subsidiaries

• MRI holds 100% of the shares in WUC. WUC invested in the AMD project

• WUC holds 50% of the total share capital of Prodiflex Coal which has access to and the right to distribute the binding material used in the production of briquettes. As the holding satisfies the following conditions of control, Prodiflex Coal is accounted for as a subsidiary

o Power

over
the
investee

• Exposure,
  or
  rights,
  to
  variable
  returns
  from
  its
  involvement
  with
  the
  investee

• o The
  ability
  to
  use
  its
  power
  over
  the
  investee
  to
  affect
  the
  amount
  of
  the
  investor’s returns

The commercial arrangement is that the holding company makes all the financial and operating decisions.

• holds 51% of the total share capital of Octavovox which owns the rehabilitation and processing rights to process coal fines.

Material partly-owned subsidiary

Prodiflex is immaterial in the operating activities of the Group

Financial information of a subsidiary that has material non-controlling interests is provided below:

Proportion of equity interest held by non-controlling interests:

Proportion of equity interest held by non-controlling interests:
Octavovox Proprietary Limited - 49%	2015 R’000	2014 R’000
Accumulated balance of material non-controlling interest	(973)	12 434
Loss allocated to non-controlling interest	(13 876)	(1 809)

The summarised financial information of the subsidiary is provided below. This information is based on amounts after inter-company eliminations.

on amounts after inter-company eliminations.
Summarised statement of profit or loss	2015 R’000	2014 R’000
Operating costs	(39 056)	(3 933)
Finance costs	(195)	(935)
Loss before tax	(34 083)	(4 868)
Taxation	994	1 176
Loss for the year	(28 318)	(3 692)
Total comprehensive loss	(28 318)	(3 692)
Attributable to non-controlling interest	(13 876)	(1 809)

Mine Restoration Investments Limited annual report 2015 63

Summarised statement of financial position	2015 R’000	2014 R’000
Bank and receivables (current)	1 604	3 580
Property, plant and equipment and other non-current financial assets	13 907	23 456
Trade and other payables (current)	(1 334)	(33)
Other financial liabilities and deferred tax (non-current)	(1 233)	(30 833)
Total equity	(16 976)	(3 830)
Summarised cash flow information
Operating	(1 432)	(4 990)
Investing	(86)	(7 277)
Financing	138	15 190
Net increase in cash and cash equivalents	(1 380)	2 923

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Mine Restoration Investments Limited annual report 2015

CONDENSED PROVISIONAL CONSOLIDATED ANALYSIS OF SHAREHOLDERS STATEMENT OF CASH FLOW

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at 28 February 2015

1. Shareholders holding more than 5% of the share capital

2. 3. 4.	No. of shares % Holding
	Armadale Capital Plc PSL Client Safe Custody Asset Account 249 260 787 69 610 466 29.90 8.35 Convergenet Management Services (Pty) Ltd 287 532 670 34.49
	606 403 923 72.74
	Shareholder spread
	No. of shareholders No. of shares % Holding
	Directors/Associates 4 7 752 000 0.93 Public Non-public PSL Client Safe Custody Asset Account 487 1 507 001 277 69 610 466 60.82 8.35 Armadale Capital Plc 1 249 260 787 29.90
	493 833 624 530 100
	Categories of shareholders
	Individuals 457 501 260 617 60.13 Nominees and trusts 16 26 427 394 3.17 Close corporations Companies, financial institutions and other institutions 4 16 1 029 500 304 907 019 0.12 36.58
	493 833 624 530 100
	Size of shareholding
	0 – 1 000 44 27 658 0.004 1 001 – 5 000 48 160 092 0.019 5 001 – 100 000 183 7 797 961 0.935 100 001 – 1 000 000 161 55 137 236 6.614 1 000 001 and over 57 770 501 583 92.428
	493 833 624 530 100

Mine Restoration Investments Limited annual report 2015 65

NOTICE OF ANNUAL GENERAL MEETING

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MINE RESTORATION INVESTMENTS LIMITED

(Registration Number 1987/004821/06) (“MRI” or “the Company” or “the Group”) Share code: MRI ISIN: ZAE000149951

Directors RM Tait (Chief Executive Officer) CB Roed (Lead Independent Non-Executive Director) QJ George (Non-Executive Chairman) L Albinski (Independent Non-Executive Director) SJM Caddy (Independent Non-Executive Director)

Notice is hereby given that the annual general meeting of shareholders of the Company will be held in the boardroom of the designated adviser’s offices, P3, Oxford Corner, 32A Jellicoe Avenue, Rosebank at 10:00 on Thursday, 5 November 2015 (“the AGM”), to consider and, if deemed fit, to pass, with or without modification, the following ordinary and special resolutions:

Electronic participation at the AGM

Please note that the Company does not intend to make provisions for shareholders of the Company, or their proxies, to participate in the AGM by way of electronic communication.

The board of directors of the Company has determined that the record date for the purpose of determining which shareholders of the Company are entitled to receive notice of this AGM is Friday, 18 September 2015 and the record date for purposes of determining which shareholders of the Company are entitled to participate in and vote at the AGM is Friday, 30 October 2015. The last date to trade to qualify for the record date for purposes of participating in and voting at the AGM is Friday, 23 October 2015. Accordingly, only shareholders who are registered in the register of members of the Company on Friday, 30 October 2015 will be entitled to participate in and vote at the AGM.

Section 63(1) of the Companies Act requires that a person wishing to participate in the AGM (including any representative or proxy) must provide satisfactory identification (such as identity documents, driver’s licences or passports) before they may attend or participate at such AGM.

Ordinary resolution number 1 – Adoption of the Annual Financial Statements

“ RESOLVED THAT the annual financial statements of the Company for the period ended 28 February 2015, together with the directors’ and auditors’ reports thereon and the Audit Committee report, be received, considered and adopted.”

Explanatory note:

The annual financial statements are required to be adopted in terms of the Companies Act. The minimum number of votes that is required to pass ordinary resolution 1 is a percentage equal to 50% (fifty percent) of the voting rights that are present in person, or by proxy, at the meeting.

Ordinary resolution number 2 – Appointment and remuneration of the auditor – Grant Thornton

“ RESOLVED THAT the reappointment of Grant Thornton as auditor of the Company, with Mr Jacques Barradas as the designated auditor at partner status, be and is hereby approved.”

Explanatory note:

Grant Thornton has indicated its willingness to continue as the Company’s auditor until the next AGM. The members of the Company’s Combined Audit and Risk Committee have satisfied themselves as to the independence of Grant Thornton. The Company’s Combined Audit and Risk Committee has the power in terms of the Companies Act to approve the remuneration of the external auditor.

The minimum number of votes that is required to pass ordinary resolution 2 is a percentage equal to 50% (fifty percent) of the voting rights that are present in person, or by proxy, at the meeting.

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NOTICE OF ANNUAL GENERAL MEETING continued

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Ordinary resolution number 3 – Approval of Remuneration Policy

“ RESOLVED THAT the shareholders endorse, by way of a non-binding advisory vote, the Company’s remuneration policy (excluding the remuneration of the non-executive directors and the members of board committees for their services as directors and members of committees), as set out below, be and is hereby approved.”

The Remuneration Policy will be reviewed annually. The following is a summary of the Remuneration Policy of the Company:

1. Objective

Under the overriding guidance of the Combined Remuneration and Nomination Committee, ensure the integrity, transparency and legitimacy of remuneration within the Company including the development and implementation of related policies, programmes, practices and decisions.

1. Key Policy

2. a. Non-discriminatory practice - remuneration policy directives and practices will be free of unfair distinction

3. b. Internal equity – transparent, equitable and consistent application

4. c. External parity - competitive remuneration based on remuneration trends

5. d. Performance based – direct link between remuneration and performance

6. e. Motivation – integral component of employee motivation

7. Consideration

8. a. Company viability – budgetary constraints as determined by the board

9. b. Company performance – target achievement and wealth generation

10. c. Retention of key skills

11. d. Sustainability

12. e. Career development

13. Application

14. a. Cost to company – flexible total package structure

15. b. Balance – basic salary versus performance reward

16. c. Shares – implementation of appropriate share incentive scheme/s for management

17. Directors’ remuneration

18. a. Executive directors – determined by the Combined Remuneration and Nomination Committee, approved thereafter by the board

19. b. Non-executive directors – determined by the executive directors, but pre-approved by shareholders

Explanatory note:

Chapter 2 of King III dealing with boards and directors requires companies to table their remuneration policy to shareholders for a non-binding advisory vote at the AGM. This vote enables shareholders to express their views on the remuneration policies adopted and on their implementation.

This ordinary resolution is of an advisory nature only and failure to pass this resolution will therefore not have any legal consequences relating to existing arrangements. However, the board will take the outcome of the vote into consideration when considering the Company’s remuneration policy. Nevertheless, for record purposes, the minimum number of votes that is required to pass ordinary resolution 3 is a percentage equal to 50% (fifty percent) of the voting rights that are present in person, or by proxy, at the meeting.

Ordinary resolution number 4 – General authority to allot and issue shares for cash

“ RESOLVED THAT , subject to the approval of 75% of the members present in person and by proxy and entitled to vote at the meeting, the directors of the Company be and hereby are authorised, by way of general authority, to allot and issue all or any of the authorised, but unissued shares, in the capital of the Company as they in their discretion deem fit, subject to the following limitations:

• the shares which are the subject of an issue for cash must be of a class already in issue, or where this is not the case, must be limited to such equity securities or rights that are convertible into a class already in issue; and

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Mine Restoration Investments Limited annual report 2015

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• this authority shall not endure beyond the next annual general meeting of the Company nor shall it endure beyond 15 months from the date of this meeting; and

• there will be no restrictions in regard to the persons to whom shares may be issued, provided that such shares are to be issued to public shareholders (as defined by the JSE Limited (“JSE”) in its Listings Requirements) and not to related parties; and

• upon any issue of shares which, together with prior issues during any financial year, will constitute 5% or more of the number of shares of the class in issue, the Company shall by way of an announcement on Stock Exchange News Service (“SENS”) give full details thereof, including the effect on the net asset value of the Company and earnings per share; and

• the number of shares issued for cash in aggregate in any one financial year shall not exceed 249 241 036 shares, being 15% of the Company’s issued share capital as at the date of this notice of annual general meeting (including securities which are compulsorily convertible into shares of that class, to the extent applicable); and

• the maximum discount at which shares may be issued is 10% of the weighted average traded price of the Company’s shares over the 30 business days prior to the date that the price of the issue is determined or agreed by the directors of the issuer and the party subscribing for the securities.”

Explanatory note:

In terms of the Company’s MOI, read with the JSE Listings Requirements, the shareholders may authorise the directors to allot and issue the authorised but unissued shares for cash, as the directors in their discretion think fit.

The minimum number of votes that is required to pass ordinary resolution 4 is a percentage equal to 75% (seventy five percent) of the voting rights that are present in person, or by proxy, at the meeting. In accordance with the Alternative Exchange requirements, the Designated Advisor and controlling shareholder are precluded from voting on this ordinary resolution number 4 to the extent that they hold shares in MRI.

Ordinary resolution number 5 – 6 Election and re-election of directors

Messrs George and Roed, retire by rotation at the annual general meeting in accordance with article 6.3.2 of the provisions of the Company’s MOI, these directors also offer to be re-elected. In accordance with the Company’s MOI, one third of the directors are required to retire at each annual general meeting and may offer themselves for re-election.

Shareholders are requested to elect, by way of separate resolutions, the following non-executive directors as members of the Company’s board of directors:

1. Q George

2. C Roed

Brief biographies in respect of directors offering themselves for re-election are contained on pages 1920 of this annual report.

Ordinary resolution number 7: Election of independent non-executive director

Mr Albinski was appointed as an independent non-executive director on 1 June 2015.

Shareholders are requested to ratify, by way of separate resolutions the following independent nonexecutive director as a member of the Company’s board of directors:

7. L Albinski

• A brief biography in respect of the independent non-executive director is contained on page 19 of this annual report.

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Mine Restoration Investments Limited annual report 2015

NOTICE OF ANNUAL GENERAL MEETING continued

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Ordinary resolution numbers 8 - 9: Election of Audit Committee members

To elect, by way of separate resolutions, the following independent, non-executive directors, as members of the company’s audit committee:

1. Chris Roed

2. S Caddy

In terms of section 94(2) of the Companies Act, audit committee members must be elected by shareholders at each annual general meeting. King III likewise requires shareholders of a public company to elect the members of an audit committee at each annual general meeting.

In terms of Regulation 42 of the Companies Regulations, 2011 relating to the Act, at least one-third of the members of the Company’s Audit and Risk Committee at any particular time must have academic qualifications, or experience, in economics, law, corporate governance, finance, accounting, commerce, industry, public affairs or human resource management. The proposed members have experience in audit, accounting, commerce, economics, law, corporate governance and general industry, as is evident from the curriculum vitae of each of the members contained in the annual report contained on pages 19 - 20 of this annual report.

The Board of the Company is satisfied that the proposed members of the audit and risk committee meet all relevant requirements.

SPECIAL RESOLUTION 1: AMENDMENT TO MEMORANDUM OF INCORPORATION

“ RESOLVED that the Memorandum of Incorporation be and is hereby amended as follows:

by the deletion in its entirety of clauses 5.10.4, which provides as follows:

• “5.10.4 The provisions of this clause 5.10 shall not apply to any Shareholder meetings that are called for in terms of the Listings Requirements or the passing of any resolution in terms of clause 6.1.2 or to any annual general meeting of the Company. [L.R. SCH.10.11(c) & L.R. SCH.10.16(b)] .”

and the replacement of such clause with the following:

“5.10.4 Unless the Listings Requirements determine otherwise, the provisions of this clause 5.10 shall not apply to any Shareholder meetings that are called for the passing of any resolution in terms of clause 6.1.2 or to any annual general meeting of the Company. [L.R. SCH.10.11(c) & L.R. SCH.10.16(b)”]

Reason for and effect of Special Resolution Number 1

The reason for and effect of Special Resolution Number 1 is to amend the Company’s Memorandum of Incorporation to provide for the passing of written resolutions, including certain shareholder resolutions required in terms of the Listings Requirements of the JSE Limited (the “ Listings Requirements ”), in

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Mine Restoration Investments Limited annual report 2015

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accordance with section 60 of the Companies Act and to the extent permitted in terms of paragraph 10.11(h) of Schedule 10 of the Listings Requirements.

Percentage of voting rights required to approve Special Resolution Number 1

In terms of the Companies Act and the Company’s Memorandum of Incorporation, in order for Special Resolution Number 1 to be approved by shareholders, it must be supported by at least 75% of the voting rights exercised on this special resolution.

Special resolution number 2: General authority to acquire (repurchase) shares

“ RESOLVED THAT , subject to the approval of 75% of the members present in person and by proxy and entitled to vote at the meeting, the Company and/or any subsidiary of the Company is hereby authorised, by way of a general authority, from time to time to acquire ordinary shares in the share capital of the Company from any person in accordance with the requirements of the Company’s memorandum of incorporation, the Companies Act, 2008 (as amended) and the JSE Listings Requirements, provided that:

• any such acquisition of ordinary shares shall be effected through the order book operated by the JSE trading system and done without any prior understanding or arrangement with the counterparty;

• this general authority shall be valid until the earlier of the Company’s next annual general meeting or the variation or revocation of such general authority by special resolution at any subsequent general meeting of the Company, provided that it shall not extend beyond 15 months from the date of passing of this special resolution number 1;

• an announcement is published as soon as the Company, or any of its subsidiary companies, has acquired ordinary shares constituting, on a cumulative basis, 3% of the number of ordinary and/or preference shares in issue and for each 3% in aggregate of the initial number acquired thereafter, in compliance with paragraph 11.27 of the JSE Listings Requirements;

• acquisitions of shares in aggregate in any one financial year may not exceed 5% of the Company’s issued ordinary and/or issued preference share capital, as the case may be, as at the date of passing of this special resolution number 1;

• ordinary shares may not be acquired at a price greater than 10% above the weighted average of the market value at which such ordinary shares are traded on the JSE as determined over the five business days immediately preceding the date of acquisition of such ordinary and/or preference shares;

• the Company has been given authority by its Memorandum of Incorporation;

• the board of directors authorises the acquisition and that the Company passed the solvency and liquidity test, as set out in Section 4 of the Companies Act, and that since the solvency and liquidity test was performed there have been no material changes to the financial position of the Company;

• in having regard to the terms of section 48 (2)(b) of the Companies Act, the board of a subsidiary Company may acquire shares of its holding company on the further provisos that (i) not more than 10%, in aggregate, of the number of issued shares of any class of shares of the Company may be held by, or for the benefit of, all of the subsidiary companies of the Company taken together; and (ii) no voting rights attached to those shares may be exercised while the shares are held by a subsidiary company of the Company whose shares it holds;

• in terms of section 48 (8) (b) of the Companies Act, the repurchase of any shares is subject to the requirements of sections 114 and 115 if, considered alone, or together with other transactions in an integrated series of transactions, it involves the acquisition by the Company of more than 5% of the issued shares of any particular class of the Company’s shares;

• at any point in time, the Company and/or its subsidiaries may only appoint one agent to affect any such acquisition;

• the Company and/or its subsidiaries undertake that they will not enter the market to acquire the Company’s shares until the Company’s Designated Advisor has provided written confirmation to the JSE regarding the adequacy of the Company’s working capital, in accordance with Schedule 25 of the JSE Listings Requirements; and

• the Company and/or its subsidiaries do not acquire any shares during a prohibited period, as defined in the JSE Listings Requirements, unless a repurchase programme is in place where dates and quantities of shares to be traded during the prohibited period are fixed and full details of the

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Mine Restoration Investments Limited annual report 2015

NOTICE OF ANNUAL GENERAL MEETING continued

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programme have been disclosed in an announcement over the Stock Exchange News Service (SENS) prior to the commencement of the prohibited period.

Explanatory note:

The reason for and effect of this special resolution is to grant the Company and its subsidiaries a general authority to facilitate the acquisition by the Company and/or its subsidiaries of the Company’s own shares, which general authority shall be valid until the earlier of the next annual general meeting of the Company or the variation or revocation of such general authority by special resolution.

Any decision by the directors, after considering the effect of an acquisition of up to 5% of the Company’s issued ordinary shares as the case may be, to use the general authority to acquire shares of the Company will be taken after having regard to the prevailing market conditions and other factors and provided, after such acquisition, the directors are of the opinion that:

In accordance with the Listings Requirements of the JSE, the directors record that:

• The directors shall ensure at the time of the Company’s commencement of any acquisition of its own shares, after considering the effect of such acquisitions, up to the maximum limit of 5%, that they are of the opinion that if such acquisition were implemented that for a period of 12 months after the date of such general repurchase;

• the Company and its subsidiaries will be able to pay their debts in the ordinary course of business;

• • the assets of the Company and its subsidiary companies will exceed the liabilities of the Company and its subsidiary companies as recognised and measured in accordance with the accounting policies used in the latest audited annual group financial statements;

• the share capital and reserves of the Company and its subsidiaries will be adequate for the purposes of the business of the Company and its subsidiaries;

• the working capital of the Company and its subsidiary companies will be adequate for the purposes of the business of the Company and its subsidiary companies; and

• the Company and the group will be able in the ordinary course of business to pay its debts.

The JSE Listings Requirements require, in terms of section 11.26, the following disclosures, which appear in this annual report:

• Directors and management – refer to page 18 of this annual report.

• Major shareholders – refer to page 64 of this annual report.

• Directors’ interests in securities – refer to page 61 of this annual report.

• Share capital of the Company – refer to page 17 and 21 of this annual report.

Litigation statement

In terms of paragraph 11.26 of the JSE Listings Requirements, the directors whose names appear on pages 1 and 61 of this annual report, of which the notice of annual general meeting forms part, are not aware of any legal or arbitration proceedings that are pending or threatened that may have or had in the recent past, being at least the previous 12 months, a material effect on the Company’s financial position.

Directors’ responsibility statement

The directors, whose names appear on pages 1 and 61, collectively and individually accept full responsibility for the accuracy of the information pertaining to this special resolution and certify that, to the best of their knowledge and belief, there are no facts that have been omitted which would make any statements false or misleading, and that all reasonable enquiries to ascertain such facts have been made and that this special resolution contains all information required by law and the JSE Listings Requirements.

Material changes

Other than the facts and developments reported in this annual report, there have been no material changes in the financial or trading position of the Company since the date of signature of the audit report and up to the date of the notice of annual general meeting. The directors have no specific intention, at present, for the Company to acquire any of its shares but consider that such a general authority should be put in place should an opportunity present itself to do so during the year, which is in the best interests of the Company and its shareholders.

Mine Restoration Investments Limited annual report 2015

71

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The directors are of the opinion that it would be in the best interests of the Company to extend such general authority and thereby allow the Company or any of its subsidiaries to be in a position to acquire the shares issued by the Company through the order book of the JSE, should the market conditions, tax dispensation and price justify such an action.

The minimum number of votes that is required to pass special resolution 2 is a percentage equal to 75% (seventy five percent) of the voting rights that are present in person, or by proxy, at the meeting.

Special resolution number 3 – General authority to enter into funding agreements, provide loans or other financial assistance

“ RESOLVED THAT , to the extent required by the Companies Act, the board of directors of the Company may, subject to compliance with the requirements of the Company’s Memorandum of Incorporation, the Companies Act and the JSE Listing Requirements, each as presently constituted and as amended from time to time, authorise the Company to provide direct or indirect financial assistance by way of loans, guarantees, the provision of security or otherwise to: 1) any of its present or future subsidiary companies and/or any other company or corporation that is or becomes related or inter-related to the Company for any purpose or in connection with any matter, including but not limited to the subscription of any option, or any securities, issued or to be issued by the Company or a related or interrelated company, or for the purchase of any securities of the Company or a related or inter-related company as contemplated in terms of section 44 of the Companies Act; 2) any of its present or future directors or prescribed officers, and such authority is to endure for a period of 2 (two) years from the date on which this special resolution is passed.”

Explanatory note:

The reason for special resolution number 3 is to obtain approval from the shareholders to enable the Company to provide financial assistance to group companies, when the need arises, in accordance with the provisions of Sections 44 and 45 of the Companies Act. The effect of special resolution number 2 is that the Company will have the necessary authority, as and when required.

The minimum number of votes that is required to pass special resolution 3 is a percentage equal to 75% (seventy five percent) of the voting rights that are present in person, or by proxy, at the meeting.

Special resolution number 4: Non-executive directors’ remuneration

Special resolution number 4 is proposed to enable the Company to comply with the provisions of sections 65(11)(h), 66(8) and 66(9) of the Companies Act, which stipulate that remuneration to directors for their services as directors may be paid only in accordance with a special resolution approved by shareholders.

Companies may pay remuneration to directors for their services as directors unless otherwise provided by the MOI and on approval of shareholders by way of a special resolution. Executive directors are not specifically remunerated for their services as directors but as employees of the Company and as such, the resolution as included in this notice requests approval only for the remuneration paid to nonexecutive directors for their service as directors of the Company. The proposed fees are recommended for approval for a period of two years from the date of this annual general meeting or until such time as the non-executive directors’ remuneration is amended by way of special resolution of shareholders, whichever comes first.

Special resolution number 3 thus requires shareholders to approve fees payable to the Company’s nonexecutive directorate. Below the fees for the 2014 and 2015 financial year:

Non-executive directors’ emoluments	2015 R’000 2014 R’000**
QJ George CB Roed J Lewis S Caddy	10 10 10 10 10 - 10
	144 102

*Monthly fees

72

Mine Restoration Investments Limited annual report 2015

NOTICE OF ANNUAL GENERAL MEETING continued

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Explanatory note:

The reason for special resolution number 4 is to obtain approval from the shareholders to enable the Company to pay its non-executive directors in accordance with the provisions of the Companies Act. The effect of special resolution number 4 is that the Company will have the necessary authority, as and when required.

The minimum number of votes that is required to pass special resolution 4 is a percentage equal to 75% (seventy five percent) of the voting rights that are present in person, or by proxy, at the meeting.

Voting and proxies

Certificated shareholders and dematerialised shareholders with “own name” registration

If you are unable to attend the annual general meeting of MRI shareholders, to be held in the boardroom of the designated adviser’s offices, P3, Oxford Corner, 32A Jellicoe Avenue, Rosebank at 10:00 on Thursday, 5 November 2015 , and wish to be represented thereat, you should complete and return the attached form of proxy in accordance with the instructions contained therein and lodge it with, or post it to, the transfer secretaries, Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg 2001 (PO Box 61051, Marshalltown, 2107) so as to be received by them by no later than 10:00 on Tuesday, 3 November 2015.

Dematerialised shareholders, other than those with “own name” registration

If you hold dematerialised shares in MRI through a CSDP or broker and do not have an “own name” registration, you must timeously advise your CSDP or broker of your intention to attend and vote at the annual general meeting or be represented by proxy thereat in order for your CSDP or broker to provide you with the necessary authorisation to do so, or should you not wish to attend the annual general meeting in person you must timeously provide your CSDP or broker with your voting instruction in order for the CSDP or broker to vote in accordance with your instruction at the annual general meeting.

Each shareholder, whether present in person or represented by proxy, is entitled to attend and vote at the annual general meeting. On a show of hands every shareholder who is present in person or by proxy shall have one vote, and on a poll every shareholder present in person or by proxy shall have one vote for each share held by him/her.

A form of proxy (white) which sets out the relevant instructions for use is attached for those members who wish to be represented at the annual general meeting of members. Duly completed forms of proxy must be lodged with the transfer secretaries of the Company to be received by not later than 10:00 on Tuesday, 3 November 2015.

By order of the board Neil Esterhuysen and Associates Incorporated Units 23 and 24 Norma Jean Square 244 Jean Avenue Centurion (PO Box 814, Irene, 0062) Company Secretary Date: 17 September 2015

for the year ended 28 February 2015