MINING STRATEGY UPDATE...OUTLOOK • Despite political resolve, conclusion of European debt crisis...

MINING STRATEGY UPDATE

AECI LIMITED

15 NOVEMBER 2011

PROGRAMME

08:30 Arrival and refreshments

09:00 Introduction and AECI overview Graham Edwards

09:30 AEL Mining Services strategy review Tobie Louw

10:30 Tea

11:00 Mining chemicals strategy review Mark Dytor/Theunis Botha

12:00 Safety briefing Frans Labuschagne

12:15 Lunch (dry)

13:00 Depart for Senmin site

15:30 Return to Emerald Resort

3

OVERVIEW

INTRODUCTION AND AECI OVERVIEW

• Introduction to the team

• An overview of drivers of growth – not a trading update

• Mining in context for AECI

• Heartland valuation discussion

• B-BBEE transaction

• Economic outlook

• AEL presentation

4

MINING SECTOR IN CONTEXT

• 51% of revenue in ’10 • Core to strategy going forward • Expanding geographic footprint

beyond SA • R1,8bn investment in 3 years

– Specialty chemicals R1,1bn – Explosives R695m

• Plants mechanically complete and pleasing ramp-up overall

5

HEARTLAND

Ha Value (R000/s)

OMIGPI Remarks

TOTAL LAND VALUATION 4 165 2 445 280 Valuation date – May ’08

SOMERSET WEST ADJUSTMENTS

Somerset West original landholding 1 110

Disposal to end-’08 324

Somerset West (Gross area for development) 786

Adjusted Gross to Net (341) (infrastructure and environmental)

TOTAL SOMERSET WEST LAND VALUATION 445 450 000 Net rate of R101/m2

6

Note: Gross area at SW valued by OMIGPI 715 450 000 Gross rate of R63/m2

HEARTLAND

Ha Value (R000/s)

OMIGPI Remarks

MODDERFONTEIN ADJUSTMENTS

Modderfontein original landholding 4 236

Disposal to end-’08 882

Modderfontein (Gross area for development) 3 354

Currently NOT surplus to operations (934) (262 500)

Modderfontein Reserve (275) (159 500) Gross rate of R58/m2

Adjusted Gross to Net (785) (infrastructure and environmental)

MODDERFONTEIN LAND SUB TOTAL 1 360 1 468 800 Net rate of R108/m2

Deduct for Investment Portfolio (116) (260 000) Land hectares, income valuation

MODDERFONTEIN ADJUSTED TOTAL 1 244 1 208 800

7

Note: Gross area valued by OMIGPI 3 450 1 995 280

HEARTLAND

• Demand for property remains weak • “Property clock” in “minimal

construction” area

• Heartland updating Old Mutual valuation of May ’08

• New business models for Heartland and different approaches for land sales continually evaluated

• Evaluation process driven by considerations of:

– Risk vs return, and

– Liquidity vs value

• Significant sales of land not expected this year

B-BBEE TRANSACTION

• Announced 26 July

– R1,1bn: EST and CST – 27,4% B-BBEE equity ownership

• Full terms announcement published 13 October • Record date to be eligible to vote at General Meeting 18 November • Last date to lodge forms of proxy 13:00 on 22 November • General Meeting of Ordinary Shareholders 13:00 on 24 November

– Participation by conference call possible • Results of General Meeting released on SENS 24 November • Expected listing of new Ordinary Shares on JSE on/about 2 December

ECONOMIC OUTLOOK

• Despite political resolve, conclusion of European debt crisis risk will still involve increasing levels of unwanted turmoil

• Developed world domestic markets will persist with limited investment and basic

employment levels in the face of austerity measures, bank recapitalisations and/or limited-effect government stimuli

• Chinese economic management now complex: limiting inflationary escalations while guarding against a potentially catastrophic housing-centered credit crisis will require dynamic management

• A shift to normality will depend on significant social-political and economic changes around the globe. Progress to sustainable stability likely to be painful and slow

AEL Mining Services Investor Presentation 15 November 2011

WEALTH UNEARTHED

Contents

• Dimensioning

• Strategy

• Global Scene

• South African Business

• Africa Business

• International Business

• Operating Platforms

• Innovation Value

AEL Mining Services - Dimensions

• Established 1896

• Revenue over USD700 million

• No. 1 in Africa

• Head office – Johannesburg

• Over 80 locations internationally

• Over 4 000 employees and contractors

• Full product range and technology offering

• Experienced in all key mining sectors

• Active investment in research and development

ASSETS AMMONIUM NITRATES PLANTS, BULK EMULSION PLANTS, INITIATING SYSTEMS PLANTS AND ON-MINE SITE DELIVERY SYSTEMS

Customer Value – safety, unit cost, speed, environment

SHE Commitment

AEL Group Employees TRIR

Focus • Safety and Health • Environmental impact reduction

Strategy

AEL Mining Services AEL Mining Services

`

Africa Southern Africa

International

Leveraging AEL’s Africa leadership position and international brand for multi-regional growth: • South African value

• Africa expansion

• International start-ups

• Effective operating platforms

• Innovative value

Total Business Shape and Drivers

Key Drivers • Region • Commodity • Mining method

Platinum29%

Coal20%

Gold14%

Industrial Nitrates

11%

Quarry, construction &

Civil8%

Diamonds5%

Copper, Cobalt, Chrome, Nickel

4%

Iron Ore4%

Other5%

Sectors

-

1 000 000

2 000 000

3 000 000

4 000 000

5 000 000

6 000 000

2006 2007 2008 2009 2010 2011

Indicative Business Splits Jul 2011

SA revenue Africa revenue Int revenue

-

2 000 000

4 000 000

6 000 000

2006 2007 2008 2009 2010 2011

Indicative Product Group Splits Jul 2011

Other (Incl ROG) revenue IS revenueExplosives revenue

General Economic Perspectives

• Debt crisis risk will still involve an increasing level of unwanted turmoil

• Limited investment, austerity measures, bank recapitalisations, limited-effect government stimuli

• Chinese economic management complex: Limiting inflationary escalations, potentially catastrophic housing centered credit crisis, demand remains positive

• Shift to normality will be dependent on significant social-political and economic changes around the globe, sustainable stability is likely to be painful and slow

Mining Industry Economic Perspectives

• Growth favouring established mining areas and politically stable regions and where ore grade really favours it

• Mining industry will respond by mining higher grade ores on existing mines wherever possible

• Realignment among mining houses likely to continue

• State mining companies and/or state participation in mining investments is set to escalate

Mining Industry Economic Perspectives

• Despite good growth potential and healthy balance sheets, uncertain future will weigh heavily on large capital investment decisions

• Expansion of recent years and project lead times likely to restrain investment levels in the short term

• Possible exception is coal, where the future of alternative energies might encourage early exploitation of opened reserves

• Larger mining houses will continue to broaden their resource portfolios given any opportunity

• Mining volume long-term rate of 1,6% per annum, short-term growth likely at 4,4%. Africa growth estimated at 6% to 12%

Sector Growth Potential

Metals Favourable economic circumstances in recent past have resulted in high exploration activity and the mining pipeline being filled with potential projects

Coal High energy demands, high oil prices, poor (current) economics of alternative energies and uncertainty around nuclear power have seen coal demand grow Source: Raw Materials Database, September 2011 se, September 2011

AEL South African Business

Dimensions • Largest explosives supplier • Over USD380 million revenue • Over 500 people directly supporting

customers • Full service offering • Surface mining is largest – value add • Underground mining – safety and

efficiencies • Mining sector-focused business units • Lead innovation

June 2011 Sectors

Platinum

Coal Gold

Other

Infra- structure

Wholesale Iron Ore

Diamonds Manganese

June 2011 Sectors

Platinum

CoalGold

Othher

Infraa-struccture

WWholesaleIron Ore

Diamonds Manganese

AEL South African Business

Narrow reef shock tube market conversion • Completed – product performing well • Some capped fuse for other markets

Business balance enhanced • Mining sector and product group splits good

Improved optimisation and electronics • New generation electronics and new centralised

underground blasting control system launched

Bulk emulsion explosives systems • Cutting edge underground solutions and systems • Further enhanced and cost reduced surface bulk

Supply and capacity • Ammonia supply and logistics • Customer positions strengthened, new volume

growth

Shock Tube

Electronic Detonators

Underground Bulk Explosives

Mobile Manufacturing Units

S

AEL Africa Business Outside of South Africa, Lesotho, Swaziland and Namibia

Dimensioning AEL Africa: • In Africa since 1970s • Revenue over USD220 million • Over 500 people • 6 focused regions • Over 12 countries

West Africa

North Africa

Africa - Development

East Africa

Central Africa

Botswana, Zimbabwe,

Mozambique

Africa Complexity and Potential in Perspective

Source: AEL Mining Services projects database, September 2011

Africa Infra Structure Growth Requirements

Source: IFR 2010

Source: IFR 2010

Africa Infrastructure – Rail Logistics

Source: Bullock 2009

AEL Africa Business Outside of South Africa, Lesotho, Swaziland and Namibia

Dimensioning AEL Africa: • In Africa since 1970s • Revenue over USD220 million • Over 500 people • 6 focused regions • Over 12 countries

West Africa

North Africa

Africa - Development

East Africa

Central Africa

Botswana, Zimbabwe,

Mozambique

AEL International Business Off the Africa continent

Dimensions • Over USD70 million

revenue

• Selling in over 10 countries

• 2 Regional offices

• Over 400 people

• 4 Channel partners

• 10 Plants

- Bulk and assembly

`

Africa Southern Africa

International

`

Africa Southern Africa

International

AEL International Business - Focus

Key Focus Areas • South East Asia – Indonesian hub • Latam - channels • Europe and Scandinavia channels

Growth • Good • Shaping AEL’s offering and

appeal • Organisational capability

enhanced • Gaining sound international

perspectives and experience

AEL International - Indonesia positions

AEL Indonesia HEAD OFFICE

Dahana’s AEL STA Plant, Subang

THIESS MELAK COAL PROJECT – Q4 09

THIESS

BUMA GBP COAL PROJECT – Q4 09

AEL Indonesia Balikpapan Office

KPC Sangatta COAL PROJECT – Q4 09

PETROSEA GBP COAL PROJECT - Q2 10

AEL Indonesia

LCI MSJ PROJECT – Q1 11

Indonesian Coal - Exports driven. Growth estimated at 6% to 8%

BUMA

KPC Bengalon COAL PROJECT – Q4 09

LCI MSJ PROJECT –

PETROSEA SB COAL PROJECT - Q4 10

Source: AEL Mining Services projects database, September 2011

AEL International Business - Indonesia

Indonesia • Regional ammonium nitrate

supply extended and diversified

• KPC contract extended - secured new growth

• Seven mine sites operational • Positioned for enhanced coal

growth from 2012 • Supply chain settling

Increased local ammonium nitrate capacity coming on line • Strengthened customer

positions, value offerings

Source: AEL Mining Services projects database, September 2011

AEL International - Investment

• AEL capital investment R158m since 2008 • 6 emulsion manufacturing plants • 16 mobile manufacturing units • Support infrastructure for 7 mine sites

• Shock tube assembly plants in the UK, Chile, Peru and Jakarta will

assemble in excess of 12 million units in 2012 • Deployed 9 UBS units into Europe • Explosives volumes increased to in excess of 100 000 tons in 2012 • Staff complement in excess of 400 people

• Investment in channel partnerships

• Contracts, relationships and joint market development • Product and technology roll out

Effective Operating Platforms

South African Operations • South African Nitrates Complex • South African Initiating Systems

Complex • Remote Sites • Compliance and commitment Services • Multi-regional orientation • Remote deployment is key • Retain strong focus locally • Competitive positioning and risk

management

Aerial View of the ISAP Complex, Modderfontein, Johannesburg

ISAP Update - Initiating Systems Automated Plant

Aerial View of the ISAP Complex, Modderfontein, Johannesburg

ISAP

Capital Progress

• All 3 main plants running and handed over

• All ancillary plants fully operational

• Capital project will be closed by end 2011

• Total final capital cost remains R695 million

Ramp up

• Shock Tubing Plant - exceeding expectation for over a year

• Detonator Plant - new record with over 10 million per month proven capacity in Sep 2011 - targeting 12 mill - inventories at required levels - further product range development work given priority

• Auto-Assembly Plant - new record at 2 million assemblies per month, targeting 5 as main focus. Quality meets expectation and customer satisfaction high

• Semi-automated assembly cells upgraded and enhanced, cost benefits

ISAP continued

Largest single market conversion ever • Project started in 2006 to address pending mass shock tube market

conversion

• Most ambitious AEL project, market, technology and plant wise

• Highest level of technology and safety features internationally

• Up at 70% ramped up on average across the plants

• Original retrenchment phasing delayed - fire on conventional plant, strike, exports growth

• Expected total 2011 retrenchments to be c. 500 people

• Progress made on R10 million per month saving but bulk still to come

• Plant will be fully loaded

• Project returns softened, volume demand lower than original model

Customer Focused Innnovation

AEL’s four value propositions � Improved Mining Safety � Improved Mining Optimisation

� Improved Security of Supply � Buying the Future

AEL’s First “Vertical Drop” Underground Emulsion Solution

Surface Portal

Underground storage tank

Underground mobile unit

Graphic representation of Vertical Drop

Above ground portal

Thank You

42

SPECIALTY CHEMICALS

SPECIALTY CHEMICALS STRATEGIC OBJECTIVES

Southern Africa and Africa • Optimise current business

– Sales, margins, costs – Cash generation – Organic growth, agencies, bolt-on acquisitions – Sell new project capacities (PAM, xanthates, surfactant)

• Acquire new businesses (R250m ytd ’11) – T&C Chemicals ImproChem/SAPC (Feb) – Qwemico: Agricultural chemical distribution Plaaskem (March) – Cobito remaining 20% Lake (July) – Croxton: Bulk caustic soda business Crest (Sept) – Sunbird (Instavet and CombiPharm) Chemfit (Nov) – A major food additive company Lake (final Board approval) – GE water (Africa distribution agreement) ImproChem (Nov)

43

SPECIALTY CHEMICALS STRATEGIC OBJECTIVES CONT.

• Expand appropriate businesses into Africa – Senmin mining chemicals – Chemicals cluster

• Markets of interest – Mining chemicals – Water, energy, oil, gas – Food additives – Agriculture – Green chemistry

• International expansion – Brazil being evaluated

44

SPECIALTY CHEMICALS REVENUE BY MARKET SECTOR (1H11)

45

Mining 23%

Agriculture 10%

Food & beverage 9%

Chemical industry 7%

Paper & packaging 6%

Oil & refining6%

Coatings, ink & adhesives 5%

Detergents 5%

Automotive 5%

Other 24%

Toiletries, cosmetics, pharmaceuticals 5%

Explosives 5%

Plastics & rubber 4%

Construction 2%

Appliances & furniture 2% Engineering & foundry 1% Textiles & leather 1% Steel & metals 1%

Various other 3%

R3,3bn

STRATEGY MINING CHEMICALS

• Market – Large, expanding and exciting

– Target: Africa, Australasia, South America

– Value added minerals: Au, diamonds, Cu, PGMs, uranium, nickel

• Value added model (full service) – Total chemical reagent package

– High technical service

– Capital investment at customer sites

• Supply chain – Strategic raw material supply and production capability (capital investment)

• Technology chain – Continual development of in-house technology

– Fill the gaps in technology basket

– New technology for the future

MINING INDUSTRY TOTAL CHEMICAL SOLUTION

MINING CHEMICALS REVENUE

0

500 000

1 000 000

1 500 000

2 000 000

2 500 000

'03 '04 '05 '06 '07 '08 '09 '10 1H11

Ran

d

CAPITAL PROJECT REVIEW

R1,1bn investment • Guar plant

– Brought on line 3Q08 – Capacity of 14 000t/a verified

• CS2

– Brought on line 3Q09 – Capacity of 20 000t/a verified

• PAM – Brought on line 3Q10 – Capacity of 20 000t/a verified

• Dry xanthate capacity – Ramp-up continues – Targeting 16 000t/a of xanthate pellets

49

Mining chemicals update Senmin

Agenda

� Introduction

� Business model

� Strategy

� Capital projects

Supply specialty chemicals to mineral concentrators, mainly for …

� Flotation � Collectors � Frothers � Depressants

� Tailings treatment � Flocculants

Chemical basket – reagents

� Xanthates

� Specialty collectors

� Formulated surfactants (frothers)

� CMC/guar polymer depressants

� Polyacrylamide (PAM) waste thickening polymers

� Tailings polymer rheology modifiers

Business model

Engagement with customers

� Transactional � Commodity trading

� Consultative

� Technical advice

� Full service � Seamless application

Consultative model

� Technical advice

� On-site product and process evaluation

� Ore sampling and metallurgical evaluations

� Product optimisation and development

� Bench scale and pilot plant evaluations for feasibility studies

� Trials and statistical evaluation

� Data validation and reports

� Contractual agreements and commercial terms

Full service model

� Seamless application

� Manage reagents

� Optimise process

� Install and manage equipment

� Staffing on concentrator

� Health and Safety

� Customer management reporting

Reagent control for full service model

168

229 234

211

147

174156

171 172 179

230

159168 166

128

44

175 171

144 152

126

180

229

186167

195

165182 186

178

141158

177

0

50

100

150

200

250

Ja

n-0

5

Fe

b-0

5

Ma

r-0

5

Ap

r-0

5

Ma

y-0

5

Ju

n-0

5

Ju

l-0

5

Au

g-0

5

Se

p-0

5

Oc

t-0

5

No

v-0

5

De

c-0

5

Ja

n-0

6

Fe

b-0

6

Ma

r-0

6

Ap

r-0

6

Ma

y-0

6

Ju

n-0

6

Ju

l-0

6

Au

g-0

6

Se

p-0

6

Oc

t-0

6

No

v-0

6

De

c-0

6

Ja

n-0

7

Fe

b-0

7

Ma

r-0

7

Ap

r-0

7

Ma

y-0

7

Ju

n-0

7

Ju

l-0

7

Au

g-0

7

Se

p-0

7

TARGET 175BP 2009

SIBX BULK LIQUID GRAMS PER TON MONTH

179 176193 187

172 173

224210

189175

183 177 176 176 177 175 175 172 176 176 175 176189

0

50

100

150

200

250

Se

p-0

7

Oc

t-0

7

No

v-0

7

De

c-0

7

Ja

n-0

8

Fe

b-0

8

Ma

r-0

8

Ap

r-0

8

Ma

y-0

8

Ju

n-0

8

Ju

l-0

8

Au

g-0

8

Se

p-0

8

Oc

t-0

8

No

v-0

8

De

c-0

8

Ja

n-0

9

Fe

b-0

9

Ma

r-0

9

Ap

r-0

9

Ma

y-0

9

Ju

n-0

9

Ju

l-0

9

TARGET 175BP 2009

SIBX BULK LIQUID GRAMS PER TON MONTH

234234234234234250250250250250

T Before

250250250250250250

T After

Benefits

� Yield improvements and plant stability

� Enhanced business for supplier

� Provide stable platform for trials

� Further extraction opportunities – better grade and recoveries

� Industry standard service model

� Win-win

� Improved relationships

Integrated bulk supply – all reagents

Strategy

Geographic market

West and North Africa

Morocco

Mauritania

Mali

Burkina Faso

Sierra Leone

Ivory Coast

Ghana

Egypt

� Mostly gold flotation plants � Major customers

� Adamus � Anglogold Ashanti � Golden Star � Goldfields � Newmont � Redback

East Africa and Islands

� Uranium in Malawi

� Gold in Tanzania

� Coal in Mozambique

� Nickel in Madagascar

� Some new projects in the region

Zimbabwe

� Great Dyke � Platinum at Mimosa, Ngezi and Unki � Exciting future with expansion of Ngezi

from 2 to 4 million t/a milled

Central Africa – Zambia

� Mainly copper � Total copper production in

Zambia: 900 000t/a � Established mines, new

concentrators added recently

Central Africa – DRC

� Copper and cobalt � Multinationals

� ENRC � Forrest � Freeport McMoran � Glencore � Metorex

� Many oxide leach plants that use no reagents, but some treating sulphide and mixed oxide sulphide ores

� Total copper production: 450 000t/a

Namibia and Botswana

� Namibia � Rossing Uranium � Langer Heinrich Uranium � Exploration projects in gold and copper � Mainly flocculants business

� Botswana

� Beside diamonds, gold and copper already established

� Interest now in Maun area � New diamond deposits

Capital projects

Projects identified - 2006

Project Need

Guar depressants Import replacement

Carbon disulphide (CS2) Raw material

Xanthate formulations Expansion

Flocculants (PAM) Import replacement

Xanthate pellets Export potential

Investment rationale

Growing local demand from ’06 for reagents

Limited CS2 capacity - key raw material for xanthates and specialty collectors

Old CS2 technology replacement

Opportunity to develop basket of products

� Depressants

� Specialty collector formulations

Opportunity to participate in growth into Africa

� Excess CS2 utilisation for solid xanthate expansion

� Anticipated demand for PAM and capacity constraint

Volume growth and new capacity

90

100

110

120

130

140

150

160

170

180

Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3

2006 2007 2008 2009 2010 2011

Sales volume index (’06 = 100)

Gu

ar plant

Carbon disulphide

PA

M

Xanthate pellets

Natural polymer process plant complete - Guar

Natural polymer conversion

� Technology developed in-house

� Need functional chemical to be added

� Chemically-modified natural

polymers, eg. guar and wood pulp

� Carboxymethylcellulose � Guar � Other natural gums

� Find application in local mines for specific type of ore (mainly platinum)

Depressants Volumes and anticipated demand

0

50

100

150

200

250

300

'06 '07 '08 '09 '10 '11 '12 '13 '14

Import

Local

Sales tons index (’06 = 100)

Xanthate formulations

� Supplied as bulk liquid product

� Intrinsically safe handling of a hazardous material

� Key raw materials

� CS2 � Alcohols

� Developed specifically for local market

� Limited shelf life/transportability

Xanthate formulations Volumes and anticipated demand

CS2

� Design: 20 000t/a

� Methane-based

� High pressure European technology (only unit in Africa)

� Sulphur recovery plant

� Reduced SO2 emissions and electricity consumption

� Completely self-sufficient

� No imports required

CS2 Volumes and anticipated demand

0

50

100

150

200

250

'06 '07 '08 '09 '10 '11 '12 '13 '14

Import

Local

Sales volume index (’06 = 100)

Xanthate pellet plant

Xanthate pellet plant Reactor installation

� Completed ’10

CS2

Alcohol

Caustic

Xanthate pellet plant Process and new drier installation

Xanthate pellets

� Reaction technology developed in-house

� Improved stability for exports beyond Africa

� Various grades developed for different applications

� Specialised dry state technology in early stage of development

Solid xanthate Volumes and anticipated growth with additional pellet type

PAM

� BASF joint venture

� New biotechnology

� Only unit in Africa

� Local utilities - steam

� Continuous production

� Energy efficient

Fermentation plant completion

PAM plant completion

Flocculants (PAM) Volumes and anticipated demand

Senmin Total volumes and anticipated growth with available capacity

Key success factors

� Modern production technology

� Economies of scale

� Availability of raw materials

� Competitive cost

� Met required hurdle rate

� Sufficient capacity for growing demand

� Market acceptance

Investment in capacity

� Right time � Global demand for resource extraction � Growing water scarcity in mining

� Right scale

� World scale in terms of size � Adequate state-of-the-art technology

� Right place

� African commodity renaissance � Raw materials availability

Certifications

Safety

Furnace

Emergency flare Incinerator

Distillation Waste heat boiler

Claus sulphur recovery

CS2 storage

Methane feed

Cooling/ chilling

CS2 plant Schematic layout

PAM plant Schematic layout

Utilities

Tank Farm

Cooling tower

Monomer make-up Bioconversion

Sieving, grinding & bagging

Laboratories & fermentation

Reactors Drier

Acrylamide Acrylic acid Acrylonitrile

Caustic effluent

Warehouse (not shown)

Visitors’ emergency procedures

� Main siren � Intermittent alarm for 15 seconds Internal emergency � Continuous alarm for 30 seconds Off-site emergency � Intermittent alarm for 15 seconds Emergency call-off

� Announcement � The emergency is announced over the intercom system by Security Department

� Action � Follow instructions of the responsible person to gather at closest emergency

assembly point � Cell/mobile phones

� When visiting the plant, cell/mobile phones must be switched off or left in the bus

Aerial view Production site, Sasolburg Enjoy the tour

Right place Right scale Right time