Oakbay Resources and Energy - 2015 Integrated Annual Report

OAKBAY RESOURCES & ENERGY INTEGRATED ANNUAL REPORT 2015oakbay.co.za 1

Ourvisionandourcorevalues..................................................................................................................2 Ourvalueproposition...................................................................................................................................3

SCOPE & BOUNDARY 4

UNDERSTANDING URANIUM 5

ABOUT OAKBAY RESOURCES Whoweareandwhatwedo.....................................................................................................................11 AbriefhistoryofOakbayResourcesandtheShivaUraniumMine.............................................12 Ourachievements2010-15........................................................................................................................13 Ourgrowthstrategy.....................................................................................................................................14 Toprisks..........................................................................................................................................................16 Ouroperatingcontext................................................................................................................................ 18 Abridgedmineralresourcestatement...................................................................................................19

THE PEOPLE WHO MATTER

Keystakeholders..........................................................................................................................................32 Ourpeople......................................................................................................................................................33

ADDING VALUE

Valueaddedstatement..............................................................................................................................37 Keepingourpeoplesafeandwell......................................................................................................... 38 Health.............................................................................................................................................................. 39 Caringfortheenvironment......................................................................................................................40 BuildingSouthAfrica.................................................................................................................................. 43

FROM THE EXECUTIVE

Directorate&executivemanagement...................................................................................................47 Chairmansreport......................................................................................................................................50 CEOsreport.................................................................................................................................................. 52 FDsreport.....................................................................................................................................................54

GOVERNANCE AT OAKBAY RESOURCES 59

Ourapproachtoriskmanagement.........................................................................................................61 Auditcommitteereport............................................................................................................................. 62 Riskcommitteereport............................................................................................................................... 63 Social,ethicsandremunerationcommitteereport&companysecretarysconfirmation.........64 Remunerationreport.................................................................................................................................65

GROUP FINANCIAL STATEMENTS 71

SHAREHOLDER INFORMATION

Shareholderanalysis................................................................................................................................ 123 Shareholdersdiary................................................................................................................................... 123 Noticeofannualgeneralmeeting....................................................................................................... 124 Formofproxy...............................................................................................................................................131

CONTACT DETAILS 135

ANNEXURES

1.Directorsattendancetable...................................................................................................................... 1362.Governancecompliance(incl.KingIIIChapter2)................................................................................1373.Responsibilitystatementanddisclaimer..............................................................................................1404.Definitions....................................................................................................................................................... 141

OAKBAY RESOURCES & ENERGY LIMITED

INTEGRATED ANNUAL REPORT

2015

OAKBAY RESOURCES & ENERGY INTEGRATED ANNUAL REPORT 2015oakbay.co.za2

OUR VISION To leverage, for the benefit of our stakeholders, one of the largest high quality uranium projects in South Africa and the world and to take advantage of rising uranium demand, while maintaining our exceptional safety record and helping build South Africa.

OUR CORE VALUESPeople focus Creatinganengagedandenablingenvironmentthatrecognisescommunities,individualsandteamsandmotivatesthemtoachievethehighestperformanceandproductivity.

Accountability Takingindividualandcollectiveresponsibilitytodeliveronourundertakingswhilemaintainingthestrictestethics.

ExcellenceDeliveringvaluebeyondexpectationstocreateamutuallypositiverelationshipwithallofourstakeholders.

SafetyAnenduringcommitmenttoourpeoplessafetyandwellbeing.


OUR VALUE PROPOSITIONWithitssignificanthighqualityuraniumresource,aswellasaworldclassuraniumplant,OakbayResources and Energy Limited (Oakbay Resources) iswell placed to take advantage of theexpectedupswing inworldwideuraniumdemandandposition itself asa lowcostproducerof UO concentrates. Additionally by way of its listing on the JSE, Oakbay Resources offersshareholdersoneofthemostsignificantexposureontheJSEtothehighgrowthglobalnuclearmarketthroughourkeyasset,ShivaUraniumProprietaryLimited(ShivaUranium),oneofthemostsignificanthighqualityuraniumprojectsinAfrica.Uraniumisthekeypowersourcefornuclearreactorsofwhichalargenumberarecurrentlyplannedorunderconstructionaroundtheworld.

Asaminingandexplorationbusiness,OakbayResourcesalsofocusesongoldminingandproductionaswellascontractminingservices,whichdiversifythecompanysrevenuestreamsandfundtheassetsongoingmanagementanddevelopmentcostspendingsteadystateuraniumproduction.

Oakbay Resources offers a transparent, regulated and affordable grassroots opportunity for intelligent investors who understand the long-term growth potential of uranium. Atul GuptaChairman

One of the top uranium

projects in the world

High growth global

uranium market

Only uranium plant in Africa using reverse

pressure

leaching technology

Superior

safety record

Excellent

labour relations

record

Excellent

regulatory compliance

Significant

jobcreation


SCOPE & BOUNDARY

Corporate information

OakbayResourcesandEnergyLimited(OakbayResourcesorthecompanyorthegroup)(Registrationnumber:2009/021537/06)ISIN:ZAE000196085Sharecode:ORLListingdate:28November2014Sharesinissue:800000000(28February2015)

Oakbay Resourcess Chairman is Atul Gupta. The executive directors areGeorge van der Merwe (CEO), Varun Gupta (COO) and Trevor Scott(FD/CFO).Theexecutivedirectorscanbecontactedattheregisteredofficeofthecompany.

ThisisOakbayResourcesfirstintegratedannualreportcoveringtheyear1March2014to28February2015.ItfollowsourlistingontheJSEMainBoardintheGeneralMiningsectoron28November2014.

Thereportcomprisesanhonest,measuredaccountofthegroupsapproachtosustainability,includingfinancialresultsandareviewofallresourcesemployedinourbusinessactivitiesandtheimpactthatOakbayResourceshasontheworldaroundus.ThisshouldenableourstakeholderstoaccuratelyevaluateOakbayResourcesabilitytocreateandsustainvalueovertheshort,mediumandlong-termperiods.

Thisreportisprimarilytargetedatcurrentstakeholdersandpotentialinvestorsinthegroup.

AhardcopyofthisintegratedannualreportisavailableonrequestfromourcorporateofficesinSandton,andisalsoavailableonthecompanyswebsiteatwww.oakbay.co.za.

Wewelcomeyourfeedbackandanysuggestionsforourfuturereports:Contact: EnvisageInvestor&CorporateRelationsEmail: [email protected]:+27113255944Fax:+27113255942

Reporting approachIncompilingthisreportwewereguidedbyinternationalandSouthAfricanreportingguidelinesandbestpractices,andSouthAfricanlegislationincluding: CompaniesAct JSELimitedListingsRequirements InternationalFinancialReportingStandards(IFRS) SAICAFinancialReportingGuidesasissuedbytheAccountingPracticesCommittee KingIII InternationalIntegratedReportingFrameworkissuedinDecember2013 TheSAMRECcode GlobalReportingInitiative(GRI)G4

AssuranceThecompanysexternalauditors,KPMGInc.,haveindependentlyauditedthegroupfinancialstatementsfortheyearended28February2015. Their unqualified audit report is available for inspection (during normal business hours) at the companys corporate office inSandton,aswellasonthecompanyswebsite.Thescopeoftheirauditislimitedtotheinformationsetoutinthefinancialstatementsonpages74to115.

George van der Merwe Trevor Scott CA(SA) Mark Pamensky CA(SA)ChiefExecutiveOfficer FinancialDirector ChairmanAuditCommittee LeadIndependentDirector


UNDERSTANDING URANIUM


UNDERSTANDING URANIUMUraniumisusedasfuelfornuclearpowerplantsandisakeymineralfortheaerospaceanddefenceindustries.

Globaldemandisexpectedtooutstripsupplyby50millionlbsperannum. By2030uraniumdemandwillgrowto266millionlbsperannum.

Some fast facts about uranium

URANIUM OXIDE PRICE (1995-2015)

Uran

ium

Oxi

de P

rice

(USD

/lb)

160

140

120

100

80

60

40

20

0 January January January January January 1995 2000 2005 2010 2015

URANIUM ANALYST FORECAST - SPOT URANIUM PRICES (USD/LB)Bank 2013 2014 2015 2016 2017

DundeeCapital 65.00 65.00 65.00HaywoodSecurities 60.00 70.00 75.00 75.00 70.00JPMAustralia 43.00 58.00 70.00 90.00Scotiabank 46.00 52.00 Macquarie 45.00 52.50 63.00 70.00 70.00RBCCapitalMarkets 45.00 65.00 75.00 75.00 80.00UBS 50.00 55.00 65.00 65.00 65.00MorganStanley 46.75 60.00 63.00 64.00 69.50RaymondJames 40.00 52.00 70.00 70.00 70.00BMO 49.00 52.00 60.00 70.00 70.00CanaccordGenuity 44.00 50.00 55.00 60.00 70.00CantorFitzgerald 55.00 70.00TDSecurities 41.30 48.00 55.00 70.00 70.00

Mean 48.47 57.65 65.09 70.90 70.50

Africa produces 18%

of global uranium demand.

It is estimated that by 2030

uranium demand will grow to

266.0 million pounds from 167.5 million

pounds in 2014.

Uranium prices are forecast

to rise by 65% to 85% by

2016 in order to stimulate

increased production.

435+ commercial nuclear power

reactors operate currently in 31 countries, with

>375 000 MWe of total capacity.

+-240 are research

reactors and the remaining +-180 nuclear reactors

power some 140 ships and submarines.

A record 40-65 new nuclear

reactors are under

construction globally.

A further 300 plants are being

proposed for roll-out over

the foreseeable future.


Nuclear power plants use uranium fuel to generate electricity through a process called fission

Globalelectricitydemandisgrowingtwiceasfastasoverallenergysupply

Worldwidedemandforelectricitywillrise75%by2035

Chinasdemandforenergyisexpectedtotripleby2050

1kgofuraniumproducesthreemilliontimestheenergyequivalentofoilorcoal

Nuclearpowerplantsdonotemitcriteriapollutantsorgreenhousegases

Nuclearpoweristhecheapestenergysourceavailable,evenfactoringinthehighcostsofpowerstationconstruction

JapanrecentlyrestarteditsNo.1reactorattheSendainuclearpowerplant.Itisexpectedthatmorereactors;whichwerede-activatedfollowingtheFukushimaaccident;willberestartedinthenearfuture.

TheUnitedStateshasrecentlyreneweditscommitmenttogeneratingpowerwithoutgeneratingcarbonemission.

According,furtherdemandfornuclearpoweranduraniumisexpectedtogrowinthefuture.

Sources BBC www.bbc.com/news/business IEA - International Energy Agency www.iea.org InfoMine - Mining Intelligence and Technology www.infomine.com/Rockstone Research www.rockstone-research.com Uranium Investing News www.uraniuminvestingnews.com World Energy Council www.worldenergy.orgWorld Nuclear Association www.world-nuclear.org

A global nuclear snapshot

Country Reactors Reactors under Reactors Reactors operable construction planned proposed

US 99 5 5 17

France 58 1 1 1

Japan* 48 3 9 3

Russia 34 9 31 18

SouthKorea 23 5 8 0

China 22 27 64 123

India 21 6 22 35

Canada 19 0 2 3

UK 16 0 4 7

Ukraine 15 0 2 11

World total 355 56 148 218


ABOUT OAKBAY RESOURCES


WHO WE ARE AND WHAT WE DOThrough Shiva Uranium, Oakbay Resources owns and operatesoneofthemostsignificanturaniumandgoldminesinSouthernAfrica.ShivaUraniumwhichboastsoneofthelargesthighqualityuraniumorebodiesintheworld,aswellasaworldclassuraniumprocessingplant,isoneofthebiggesturaniumprojectsinAfrica.ShivaUraniumminesgoldonanopencastbasisasaby-product,and undertakes contract mining services; which comprises themajorityofitscurrentoperations.

The company has the potential to become one of the largestand lowest net cost producers of uranium concentrates in theworldbyleveragingitsexistinggoldminingandcontractminingoperations to partially fund uranium production in the future.OurprimarymarketforuraniumcomprisesthecountriesoftheNuclearSuppliersGroup.

We will pursue our targeted growth responsibly, specificallywithin the context of the Oakbay Groups mandate to createnewjobsinSouthAfrica(acrossthefullgroupinthelongterm).In the four years since acquiring ShivaUranium, andwith onlygoldproductionatpresent,OakbayResourcesalonehasalreadycreated800newjobs.

About Shiva UraniumShivaUraniumissituatedintheHartbeesfonteinDistrictofNorthWestprovinceofSouthAfrica,withtotalresourcesof196 million lbs of uranium and 5.2 million oz of gold. Its locationisfirmlywithin the world-renowned Witwatersrand Basin, specificallyminingtheDominionGroupandWestRandGroup.

The uranium ore bodies are accessed through three declineshafts;whilegoldminingisperformedonanopencastbasis.AtthemineShivaUraniumconductstrackless/mechanisedmining,trackboundmining,breastmininganddown-dipminingwhereapplicable. ShivaUraniumalsoboasts both anonsite primaryplant for uranium processing and a secondary gold treatmentplant. The uranium plant is the only plant on the continentusing reverse pressure leaching for extraction, which enablesyieldsofupto92%comparedto62-65%forthemorestandardatmosphericleachplantsusedbyotheruraniumproducers.Theplanthashistoricallybeencommissionedforthebeneficiationofuraniumtoyellowcakestage,withadedicatedproductionlinetofurtherbeneficiatetheuraniumtoexportstage.ShivaUraniumstotal processing capacity for uranium is 250 000 tonnes of orepermonthRun-of-Mine. Thegoldplant iscurrentlyprocessingapproximately 65 000 tonnes of gold ore per month Run-of-Mine.

Total resources

196 million lbs of

uranium

5.2 million oz of gold

Nuclear Suppliers Group:Amultinationalbodyconcernedwithreducingnuclearproliferationbycontrollingtheexportandre-transferofmaterialsthatmaybeapplicabletonuclearweapondevelopment,andbyimprovingsafeguardsandprotectiononexistingmaterials.


A brief history of Oakbay Resources and the Shiva Uranium Mine

1886 Gold discovered in Rietkuil

1930 Afrikander Lease is established when three mining companies consolidate into a single one in Rietkuil, South Africa

1953 First uranium processing plant established in South Africa in Rietkuil

1978 Anglo American establishes a second uranium plant near to Rietkuil

1980 AngloAmericansuraniumprojectdecommissionedasglobaluraniumpricescollapse

1997 Anglo American sells its shareholding in Afrikander Lease

2005 Afrikander Lease changes name to Aflease Uranium One forms on the merger of Southern Cross Resources and Aflease

2006 Uranium One commences development of its underground uranium mine

2007 Uranium One starts uranium and gold recovery

2008 UraniumOneminesplacedoncareandmaintenanceasglobaluraniumpricescollapse following the global financial crisis

2010 Oakbayacquiresa74%interestinUraniumOne,andrenamesitShivaUranium Shiva Uranium produces first gold ahead of target in August

2011 Shiva Uranium produces 1 tonne of gold in December

2012 Oakbay adds a further 1 450 000 ounces of gold and 26 million lbs uranium to ShivaUraniumstotalmineralresources

2014 Oakbay lists on JSE

2015 Oakbay receives a safety commendation from the Department of Mineral Resources in recognition of being fatality free for four years.


OUR ACHIEVEMENTS 2010-2015

2015

2010

2014

Since acquiring Shiva Uranium in 2010

ListedonJSEMainBoardinGeneralMiningsectorinNovember 2014

Successful turnaroundfromcareandmaintenanceintoacashgeneratingminingoperationemployingover1000staff

Significantlycut operational costs

Employedlocalandinternationalconsultantsandserviceprovidersforoptimum efficiency and development planning

Refurbishedthreeundergrounddeclineshafts

Recommissionedthegoldplanttoamillingcapabilityof1.4milliontonnesoforeperannum

Invested R40 millioninuraniumproduction(18-ftVelkorMill)

Only uranium plant in Africa to use reverse pressure leaching - scores uranium yields 30% higherthanstandardplantsofpeersworldwide

Producedfirst gold ahead of schedule and more gold in one year than our predecessors in four years

Commissioned bankable feasibility studyforuraniumproduction,tobecompleted2016

Planningforlocal and international capital raisingtofinanceShivaUraniumsexpansion

Our people

1 000+ strong

workforce 800 new jobs

created since 2010

Fatality free(4.9 million

fatality-free man hours or

4 941 fatality-free shifts)

Zeroincidents of

labour unrest


OUR GROWTH STRATEGY Strategic objectives Deliverables Achievements in FY15 Goals FY16

Short term (0-1 years)

Enhancesafetyenvironment

Improveoperationalefficiencyandproductionprofile

Accesscapitalmarkets

Diversifyrevenuestreams

StrengthenMineralResourcesandReserves

Completeuraniumdevelopment

Repositionasadiversifiedminerofenergyresources

Encouragefurtherliquidity

4941fatalityfreeshifts 4.9millionfatalityfree

manhours AwardfromtheDMRfor

safetyrecordexcellence

Opencastefficiencyimprovedfrom58%(low)to92%(high)

Milledtonsincreasedby23%

Goldproductionincreasedby10%

SuccessfullylistedonJSE

inNovember2014

Securedcontractminingproject

Scopingassessmentforbankablefeasibilitystudy

ApproximatelyR150millionofselffundedundergrounddevelopment

Formalisestrategytomaximiseprofitabilityfromdiversifiedrevenuestreams

Continuetothenextgoalof5000fatalityfreeshifts

ImproveLTIFRby20%

Opencasttargetefficiencyof98%

Increaseof25%volumeofmilledtons

Increaseof20%goldproduction

Increaseshareliquidity

Commencecapitalraisingprogramme

Initiateofftakeagreementnegotiations(industry norm for major purchasers to secure supply through funding arrangements)

Establishsignificantrevenuestreamfromcontractminingopportunities

Completionofbankablefeasibilitystudy

Upgradeofmineralresourcesandreserves

Conclusionofcapitalraisingprogramme

10%increaseinselffundedundergrounddevelopment

Identifypotentialenergy-relatedvalueaddedacquisitiontargets

Increaseshareliquidity

Commencecapitalraisingprogramme

Increasesafetyawareness Roll-outadditionalsafetyinitiatives Entrenchhands-onapproachto

safety/accountability

Increaseopencastgoldminingefficiencyandequipmentavailability

Increasetotalmilledtons Increasetotalgoldproduction

ListingonJSE

Pursueprofitablecontractminingopportunities

Identifyothervalue-addopportunities

Commissionabankablefeasibilitystudy

Increaseexplorationactivity

Completeundergrounddevelopment Re-commissionuraniumplant Ramp-upofuraniumoperationsto

steadystate

Diversifiedrevenuestreams Valueaddedstrategicacquisitions

Strategicissueoffurthersharesforcash/capitalraising

Stakeholderengagement

Mid-term (1-3 years)


Strategic objectives Deliverables Achievements in FY15 Goals FY16

Long-term (3-5 years)

CementShivaUraniumsprofileasasafe,profitableandsustainablemine

AnchorOakbayResourcesontheradarofprovidersofcapital

800newjobscreated2010-endFY15

Seeabove

Seeabove

Seeabove

Seeabove

Improvesafetyrecord Addfurthermineralresourcesand

reservestoresourceportfolio Create2000jobs

Deliverexceptionalreturnstoprovidersofcapital


TOP RISKSSignificantriskstodeliveringthestrategicplanandoperationalperformance,istabledbelow,andcoversasummaryoftheexposuresandcurrentresponses.

Key risk Why is it important Current response

Safety

Failure to deliver on operational and financial plans

Development of uranium deposits

Volatility in the gold and uranium prices, and foreign exchange rates

Labour and trade union stability

Maintaining legal mineral rights

Operating costs

Overall,agoodsafetyrecordwithnofatalitiesinthe2015financialyearand4941fatalityfreeshifts.Effectiveleadershipatalllevelswithsafetybeingahighpriority.SeniormanagementchairaweeklyHealthandSafetyCommitteemeeting.

Theopencastgoldminingrevenuehasincreasedby9%in2015andtheoperatinglosshasdecreasedsignificantlyfromR138milliontoanoperatingprofitofR23.8million.Thegroupmilled791540(2014:576986)tonnesandrealisedsalesof13343(2014:12193)ouncesofgold.Recentinvestmentinadditionalmillingequipmentandrelatedinfrastructurewillfurtherincreaseproductioncapacityatthemine.

Uraniumoperationsareinthedevelopmentstage.Managementintendstocommissionabankablefeasibilitystudyonitsmineraldepositswithaviewtoraisingadditionalcapitalintheforeseeablefuture.Thecapitalwillberaisedfromlocalandforeigninvestors.OakbayResourcesshouldbewellplacedtotakeadvantageoftheupswinginuraniumprices.

Insightsintoeconomicandmarketconditionsutilisedtomanagethebusiness.Rigorousmanagementofcashandworkingcapital,andaconstantfocusoncostefficiency.

Nodayslosttoindustrialactionfor2015.OpencommunicationandtransparentrelationshipwiththeNationalUnionofMineWorkers(NUM).AllemployeesarecoveredbyacollectivebargainingagreementwithNUM.

ImplementationofOakbayResourcessocialandlabourplanscreatessustainableeconomicvalueforlocalcommunities.SocialandLabourPlans(SLPs)havebeensubmittedtotheDepartmentofMineralResourcesandcommitmentshavebeenmet.26%BEEownershipinShivaUranium.

Enhanceoperationalefficiencyandmanagecostsinallareasoverwhichwehavecontrol.Maintainoptimallabourforce.

Safetyincidentsaffectemployeemorale,increasecosts,reduceproductivityandresultindamagetoreputation.

Failuretocompleteprojectsontimeandwithinbudgetwillhaveanegativeimpactonourreputation,operationalperformance,futurerevenuesandabilitytofundfutureprojects.

ShivaUraniumseekstoundertakeabankablefeasibilitystudyandraisecapitaltofundfurtherdevelopmentoftheuraniumasset.Thisprocessmaybedelayed,orwemayencounterotherissuesinexecutingthisobjective.

Marketpriceforgoldanduraniumaresubjecttovolatilefluctuations,affectingtheprofitabilityofOakbayResourcesoperationsandthecashflowsgeneratedbythoseoperations.GoldistradedinUSD,withoperatingcostsincurredinZAR,exposingoperatingresultsandfinancialconditiontocurrencyriskandupside.

Industrialactioncandisruptoperations,negativelyimpactprofitabilityanddamagerelationshipswithemployees.

Non-compliancewiththeMineralsandPetroleumResourcesDevelopmentAct,theMiningCharterandenvironmental,health,safety,socialandlabourregulationscouldresultinpenaltiesorsuspensionofmininglicences.

Minesaresubjecttohighfixedcosts.Itisthereforeessentialtocontainoperationalcostsastheyaffecttheprofitabilityofthebusiness.


Key risk Why is it important Current response

Reputation capital

Theft

Availability of power, and cost increases

Ageing infrastructure

Environmental and climate change

Nuclear disaster

Activeengagementwithemployees,tradeunions,localcommunitiesandinvestorstogether,withstrongshareholdersupport.

Improveaccesscontrols.Increaseguardingcomplementsatshafts.

Contingencyplanningtocontaintheimpactofpoweroutages.Implementprojectstoimproveenergyefficiency.

Capitalexpenditurelinkedtoinfrastructureriskassessment.Maintenanceregisterandfrequentinfrastructureinspections.

Strictcompliancewithrelevantenvironmentallegislation,withauditsconductedbytheNationalNuclearRegulator.100%re-useofwaterthroughthereturndamsystem.ShivaUraniumhasnotreceivedanyfinesfornon-compliancewithenvironmentallawsandregulations.Allinductionandrefreshertrainingincludesenvironmenttraining.Toreduceenergyconsumptionwepumpoutofpeaktimes,restrictuseofcriticalmachineryduringpeaktimes,stopundergroundfansoverweekendsandwehaveinstalleddaylightswitchcontrolsforfloodlights.Wehavea20yearwateruselicenseissuedin2006whichisreviewedeveryfiveyears.Wasteiscrushedonsiteandsoldforapplicationinroadconstruction,whichresultsincostrecoveries.Nowatercontainingwastefromthetailingsdamisdischargedintotheenvironment.

Nosuchnucleardisastershaveoccurredrecently.TheanticipatedrestartoftheFukushimareactorsinJapanthisyear,aftersuccessfulsafetyreviewsinadditiontoconstructionprojectsinChinaandJapanshouldpositivelyimpactthenuclearmarket.

Reputationcapitalresultingfromstakeholderperceptionsimpactsthecompanyslicensetooperate,employeerelations,tradeunionrelations,shareholdersupport,capitalraisingandsustainablegrowth.

Theftofgoldbearingoreandillegalminingisdifficulttocontrol,disruptsproduction,causeslossandmayexposetheminetothird-partyliability.

Powerstoppages,fluctuationsandusageconstraintsmayforceOakbayResourcestohaltorcurtailoperations.Increasedcostofpowermayadverselyaffectprofitability.

Breakdowns,stoppagesandunplannedmaintenanceduetoageinginfrastructuremayresultinproductiondelays,increasedcostsandindustrialaccidents.

Environmentalimpactatoperationsmustbeeffectivelymanagedtomaintainmininglicensesandberatedagoodcorporatecitizen.

Anucleardisasterlocallyorinternationallycouldoccur,leadingtoachangeintheappetiteandtighterlegislationaroundtheuseofuranium.Theglobaldemandforuraniumcouldbenegativelyaffected.


Macroeconomic In contrast to the general downturn in the commodities cycle,uranium is presenting a significant growth opportunity due toforecastrisingdemandresultingfromsignificantnuclearpowerexpansion,particularlyinChinaandIndia.

Approximately80%oftheuraniummarketcompriseslong-termcontracts (and is forecasted to remain so), which will securehigherpricingthantheuraniumspotprice.Withrisingdemandforuranium,thespotpriceisprojectedtoincreasesignificantlyto$66,03/lbby2017withcontractpricestofollowto$70/lb.

Unlikeothermineral investors, potential uranium investors aremore forward-looking given the long-term contract scenario,whichinturngivesvaluetoblueskyexplorationpotentialandnotonlyorefromtheground.

Increasing demand for nuclear power is expected to be a keydriver of the uranium price trajectory. Nuclear expansion isbeing compelledby the expecteddoubling of global electricityconsumption between 2007 and 2030 aswell as rising concernabout climate change, which is encouraging the use of energysources with lower carbon emissions (such as uranium). Therestart of the Fukushima reactors in Japan this year, aftersuccessfulsafetyreviews,aswellascurrentconstructionprojectsinChinaandIndia,hasreignitedthemarket.

Further,asRussiansalesofhighlyenricheduraniumcometoanend,prices areexpected to lift. Atpresent theseRussian salesaccountfor24mlbofan180mlbtotalestimatedmarket.PossibleUSandEUthreatsofsanctiononRussiaposeafurtherthreattoRussiansupplyandapotentialboosttothepriceofuranium.

The outlook for generalmineral exports remains negativewithflagging macroeconomic growth indicators - weak economicstatisticsforChinaandthestagnationoftheEuropeaneconomyweighingheavilyon theminingsector,despite the increasingstrengthoftheUSeconomy.InSouthAfricaanticipatedeconomicgrowth in the short- to medium-term remains challenging.The declining and maligned local mining sector faces its ownchallenges,withtheshadowoflabourunrestandtheimpactoftheongoingpowercrisislooming.

Where Oakbay fits inOakbay Resources, with its considerable mineral resourcesandworld class plant infrastructure, is well positioned to takeadvantage of the expected rise in global demand for uranium.However, we require additional mining capacity to produceuranium in quantities demanded by long-term contracts, at aviable mining cost. With fundamentals in the uranium markethavingshiftedsorapidlyandourbanking feasibilitystudyonly

recently commissioned, we face the risk of lagging themarketupswing.

However,weareprogressingwell.From2010withamineoncareandmaintenance,wehavesuccessfullyrecommissionedthegoldmine and treatment plant, refurbished the three undergroundshafts,introducedopenpits,hauledgoldandstillinvestedaself-fundedR40millionsumintodevelopmentofuraniumproductionwithanew18-footVelkormill.

We have also commissioned a bankable feasibility study onour uranium deposits that will include a comprehensive riskassessment.Fromthiswewilldevelopriskmitigationproceduresonaprojectlevel.

We will require at least R800 million to R1 billion investment,foroptimumuraniumproductionwhichweintendtoraisefrombothlocalandforeigninvestorsin2015/2016.Thecompletionofthe feasibility study is expected to strengthen our investmentcase.Wearealsoaddressinganumberof identifiedchallengesregardingcapitalraising.Werecognisethatweneedtotargetadistinct investorbase,whichweseeasprimarilynon-localandnon-institutionalinvestors,andareimplementinganappropriatestrategy including communications to manage marketperceptions.FurtherwewillenhanceawarenessamongstSouthAfricaninvestorsofthecommodityuraniumandthepotentialintheglobalmarket.

Ensuring our sustainability

Ourmandate from the Oakbay Group is to create a significantnumberofjobsgroup-wideoverthelongterm.

To date we have created 800 jobs at Shiva Uranium. We aredistinguished as the only gold mine in South Africa with zeroincidentof labourunresttodate.Weattributethistoouropenandtransparentrelationshipwithourmajorityunion,NUM,andrecognisethatthistakesongoingcommitmentinordertosustain.(ForfurtherdetailsseeThepeoplewhomatterpage31to33)

Ourworkforceiskeytooursuccessandthesafetyandwellbeingof our people is of paramount importance. To date we haverecordedzerofatalitiesandstrivetomaintainthisachievement.(ForfurtherdetailsseeKeepingourpeoplesafeandwellpage38).

Our approach to managing our environmental and socialresponsibilities is outlined in (Caring for the environment onpage40).

*According to analysts polled by Bloomberg in July 2014

OUR OPERATING CONTEXT


Highlights

Uranium and gold resources

Production

ABRIDGED MINERAL RESOURCE STATEMENT

Uranium resources (millions of lbs)

Inferred115millionlbs Inferred2.7millionoz

Indicated82millionlbs Indicated2.7millionoz

Gold resources (millions of ounces)

Gold tonnes milled

Tonn

es

gram

s/to

nnes

900000

800000

700000

600000

500000

400000

300000

200000

100000

- 2014 2013

Gold average head grade

0.82

0.80

0.78

0.76

0.74

0.72

0.70 2014 2013


1. IntroductionAreviewof thegroupsmineralresources issetoutbelow.ACompetentPersonsReport (CPR)coveringthemineralresourceswasissued by The Mineral Corporation in November 2014. A copy of the CPR is available on the companys website www.oakbay.co.za.Mr.MarkAustin(whosequalificationsappearattheendofthisreport)ofAppliedGeologyandMining,hasindependentlyreviewedthegroupsMineralResourcesforcompliancewiththeSouthAfricanCodefortheReportingofExplorationResults,MineralResourcesandMineralReserves(SAMREC),whichsetsouttheinternationallyrecognisedproceduresandstandardsforreportingmineralresourcesandore/mineralreservesinSouthAfrica.ThiscodewasdevelopedbytheSouthAfricanInstituteofMiningandMetallurgyandistherecommendedguidelineforreserveandresourcereportingforcompanieslistedontheJohannesburgStockExchange.

2. Location, mine history, and regional geology ShivaUraniumMineislocated165kilometressouthwestofJohannesburgand30kilometresnorthwestoftheKlerksdorpGoldfield,andcomprises20131hectaresofconsolidatedMiningRights.

Gold kg milled

Kilo

gram

s

Kilo

gram

s

Gold kg recovered

600.00

500.00

400.00

300.00

200.00

100.00

0.00

390.00

380.00

370.00

360.00

350.00

340.00

330.00

320.00 2014 2013 2014 2013


Variousminingoperationsintheareastartedin1888withaneventualconsolidationintotheAfrikanderLeaseLimitedin1957.Undergroundoperationscloseddownin1964untiltheAngloAmericanCorporationacquisitionduringthe1970s,whowereinterestedintheuraniumresourcesontheproperty.In1997,Anglosolditsshareholdingresultinginvariousownershipsofthemineduringthe2000s.InMay2010,OakbaypurchasedthepropertyandformedShivaUranium.InNovember2014TheMineralCorporationconductedaCPRfromwhichthecurrentresourcesarebased.

CurrentlyShivaUraniumisminingapproximately65000tonnesoforepermonthfromtheRietkuilSynclinewhichisbeingprocessedatthegoldplant.Itisalsocarryingoutlimiteddevelopmentofabout20mpermonthattheRietkuilShaftSection.TheDominionSectionisundercareandmaintenance.

TheShivaUraniumpropertyhoststhelowerportionsoftheWitwatersrandSupergroupwhicharerepresentedbytheDominionGroup,plusasliveroftheCentralRandGroup,whicharejuxtaposedduetolarge-scalestructuralfeatures.ThislocalitymarksthenorthwesternedgeoftheWitwatersrandGoldBasin.

Shiva has three main production areas:a. DominionSectionb. RietkuilShaftSectionc. RietkuilSyncline

thelocationofwhichareshowninFigure1.

Shiva Uranium production sections

Figure1Locationofproductionsections


TheDominionandRietkuilShaftSectionsaccesstheDominionReefandhostbothgoldanduraniumresources.TheRietkuilSynclineislocatedinthestratigraphicallyhigherBuffelsdoornFormation,whichissituatedwithintheCentralRandGroup,andiscomprisedofasuiteoffiveconglomeraticreefsseparatedbypartiallyauriferousquartzites.TheRietkuilSynclineproductionareahaspreviouslybeenminedunderground,butmorelatelybyopenpitandproducesgoldonly.Figure2showsthestratigraphyoftheWitwatersrandSupergroupandthepositionsoftheDominionReefandtheBuffelsdoornReefaswellasdetailofthesereefs.

Shiva Uranium Local Stratigraphy

Figure2Minestratigraphy


TheShivaUraniumareaisstructurallycomplexduetothepresenceofthrustingfromthenorthwestwhichhasthrusttheDominionReefovertheCentralRandGroupandhasfoldedthelatterintoasteep-sidedsyncline(theRietkuilSyncline).TheDominionReefsectionsareseparatedbyasympatheticthrustwhichstrikesN-S.TheDominionReefsdipgentlyat20-35tothesouthwest.Figure3depictsaschematicE-Wcross-sectionthroughtheminewhichshowsthestructureofthemine.

Figure3SchematiccrosssectionthroughShivaUraniumMine

3. Local geologyTheDominionReef,apackageapproximately20mthick,comprisesadiscretebasalquartzpebbleconglomerate(LDOM),rangingfrom0.1mto1mthick,andquartzpebbleupperconglomerate(UDOM),rarelymorethan2mthick,separatedbyaquartziticunitlocallytermedtheMiddleReef.Thislatterunithasoccasionalauriferouslensesofconglomeratedeveloped.BoththeLDOMandtheUDOMaremineralisedwithgoldanduranium.

TheDominionReefliesdirectlyonagraniticfootwallwhichdisplaysundulatingtopography.ThistopographyhascreatedpalaeotopographichighsandlowswhichhaveaffectedthedepositionalextentoftheLDOM.InsomecasestheLDOMisonlypresentintopographiclowsandisseparatedbytopographichighswherethereisnoconglomeratedeveloped.TheLDOMandtheoverlyingMiddleReefshavefilledinthedepressionsandthustheUDOMispresentasablanketofconglomeratenotactuallyaffectedbytheunderlyingtopography.Figure4depictstherelationshipoftheLDOM,UDOM,andthetopography.Thecurrentresourcereflectsthisrelationship.

Figure4SchematicsectionthroughtheDominionReef


TheRietkuilSynclineisanasymmetricalsynclineopeningtotheeast and gently plunging to the southwest.Within the synclinethe Buffelsdoorn Reef package has been separated into theInnerBasinandtheOuterBasinReefs,whichcombinetoforma40mthickpackageofquartzpebbleconglomeratesinterbeddedwith occasionally auriferous quartzites. As shown in Figure 2theBuffelsdoornReef liesat thebaseof the JeppestownShaleFormationonanunconformity.ThelowermostreefistheMagazineReefwhichcomprisesaquartzpebblereefupto8mthickandhasbeenminedonalimitedbasis.ThemajorauriferousreefsaretheLower,Middle,Upper,andthefiveReefswhichareseparatedbyoccasionallyauriferousquartzites.

4. Mineral resources

4.1. Previous work In 2005, a resource estimation, audited by SRK Consulting,

wasdeclaredforpreviousownersAfleaseGoldandUraniumResourcesLimited.InNovember2009,aresourceestimationfor the Dominion Reefs only was undertaken by Deiss aspartofaTechnicalReport insupportofamining feasibilitycommissionedbyOakbayInvestmentProprietaryLimited.

4.2. Uranium (Dominion Section and Rietkuil Shaft Section) OnlytheLDOMandtheUDOMhavebeenconsideredforthe

uraniumresourcecalculation. AsaresultofthelackofaccuraterecordsregardingQA/QC,

the Mineral Corporation selected to exclude the historicalundergroundchipsamplinginitscalculationoftheresources.ThedatathattheMineralCorporationregardedasdependableand had verifiable QAQC and sampling protocols was theboreholedatafromthe2004AngloAmericanCorporation(AAC)explorationdrillingprogrammeandthesubsequentUraniumOneInc.drillprogramme.TheMineralCorporationconcludedthatalackofverifiablerecordsprecludedthedeclarationofaMeasuredResourcethusresultinginIndicatedandInferredbeingtheresourcecategoriesreported.

Initsdatabasevalidation,theMineralCorporationchosefourmethods to identify any data capture errors resulting in ameticulousselectionofboreholesfortheevaluationprocess.Insomecases,boreholesexcludedforevaluationwereusedin the structural interpretation and domain selection i.e.intersectionsthatwerefaultedetc.

It was verified by the author that the purpose built coreyardhousing theexplorationcorewasofverygoodquality,thecoreboxesbeingstakedwell, thecoresuitably labelledand referenced. TheMineral Corporationwere also diligentin verifying the borehole logging. The data control andretrieval was also adequately covered by the CompetentPerson.Borehole collarpositionswere checkedonsiteandthe downhole survey techniques considered suitable andrecordedcorrectly.

TheQAQCofthedatawasthoroughlycheckedbytheMineralCorporation.

Although no density measurements were recorded, themeasurementsspecifiedbyDeiss(2009)havebeenconsideredto be of a rigorous nature and consistent with otherWitwatersrandoperationsandthustakenasappropriateandsuitableforreportingIndicatedresources.

TheMineralCorporationhas includedanassessmentof thestructuraldatausingthemineplansplusdatafromaseismicsurveyaswellasconfirmationbytheShivageologicalstaff.Ithasbeennotedthatpalaeotopographichighs(seeFigure4)limitthedevelopmentoftheLDOMand,intheabsenceofanybetterinformation,thehighsaredeterminedbytheboreholeintersections.TheresourcehashonouredthelimitedextentoftheLDOMbyonlyincludingtheLDOMwhereitisdevelopedinboreholes.Thereislimiteddatafromtheminedoutareasastotheextentandeffectofthepalaeo-highsandthereforetheresourcehasnotmadeanyassumptionsastothedistributionbutrathertakenverifiabledataonly.

The resources declared are to amaximum depth of 1400m

BS with a maximum extrapolation of 1000m from the lastdatapoint,whichwasbasedondataspacingandvariogramranges,butalsosupportedbydataoutsideoftherange.

Data manipulation included data compositing, with aminimumwidthof100cms.ThedataindicatesthattheLDOMisbottom-loadedwithrespecttoUOandAu,soamaximumwidth of 160 cms from the bottom contact has been used.TheUDOMisconverselytoploadedsothemaximumwidthiscalculatedfromtopcontactdownwardsthisisrealisticandreflectslocalminingconditions.Dipcorrectionwasappliedaswastopcuttingtoremovevalueoutliers.

Geological lossesweremeasuredfrombothplansformajorfaultsandintrusionsandtopographichighswereasindicatedbyboreholes.Inaddition,implicitlosseswerealsoincludedas indicated by pillar lines against minor faults. A loss of6%wasassumed for theDominionSectionand14%for theRietkuilSection.

Wheredatawasdenselypackedablocksizeof250mx250mwasusedand500mx500mforareasofsparsedatapoints.

Ordinarykrigingwasusedastheestimationtechnique.

Mineral continuity has been demonstrated by the boreholedata, stratigraphic correlation, data distribution, andgeostatisticalparameters.TheUOdisplayedgoodcontinuitywithrangesupto2000mandtheAuwithrangesupto500m.

Two geostatistical domains were applied for the uranium

resource (Dominion Section and Rietkuil Section) and fourdomainsforthegoldresource.


TheSAMRECcompliantmineralresourcesfortheDominionandRietkuilShaftSectionsaredeclaredbytheMineralCorporationinNovember2014areasfollows:

4.3. Gold (Rietkuil Syncline) The resource for the Rietkuil Syncline has been calculated

per reefplus the5Q (quartzite) as standaloneand theotherquartziteshavebeencombinedseeFigure2forstratigraphicreference.

Theresourceestimationisforgoldonly.

AACminedthesynclineasanundergroundoperationaswellasdoingsomeexplorationdrilling.TheMineralCorporationhaveadjudgedthisdataasbeingrelevantandapplicableforuseintheresourcecalculation.InadditiontheexplorationdrillingbyUraniumOne Inc.and the in-pit samplingdonebyShivahasalsobeenincluded.

The Mineral Corporation performed the same validationprocedures on the Rietkuil Syncline data as they did on theDominionReefdata.Forexample,foreachdatasetallboreholeswerescrutinizedforlocation,logging,andsamplingandthosenot passing all necessary criteria were excluded. In additiontheQA/QCdatawasanalyzedwithCRMplotsandretestingofpulpmaterial.TheShivasamplingmethodologyandaccuracywas checked on-site with sample sections being located bydifferential GPS and the chip sampling honouring the StorermethodologyusedbySouthAfricasgoldminingindustryasthedefactostandard.

DuringthecourseofminingtheShivageologistsmaypickupgoldvaluesinthequartzitesintermediatetotheconglomerate

horizons. Because of this a resource has been compiled toincludethequartzitesasaseparateentity.

The structural model is supported by the AAC undergroundmapping and is thus considered to be superior to a modelcompiled from borehole data alone. Fault losses wereconsidered but not included into the resource and areconsideredtobesmall.

Thedatafortheconglomerateunitswascompositedoverthefullreefunitlengthandthatofthequartziteinto1munits.

ThepayshootdirectionforalltheunitsshowedastrongNWSEdirection.

Duetothepaucityofinformationgenerally,eachhorizonwasassignedonedomain.

The lack of high values dictated that top capping wasunnecessary.

OrdinarykrigingusingDataminesoftwarewasusedtoproduce100mx100mblockswithdatarangesvaryingfrom50mfortheUpper andMiddle Reef to 200m for the 5 Reef. All resourceblocksaretoamaximumof75mbelowsurface.OnlyIndicatedand Inferred resources with kriging efficiency used as theprimary indicator of confidence but with other parametersbeingconsidered,suchasgeologicalconfidence,QA/QCetc.

Mineral Resource Classification Cut-off Density Tonnes Thickness Grade Content Grade Content U3O8 (g/t) (t/m3) (Mt) (m) U3O8 (g/t) U3O8 (Mlbs) Au (g/t) Au (Moz)Indicated RietkuilUpperReef 250 2.75 62.26 1.42 482 66.142 0.58 1.16 RietkuilLowerReef 250 2.72 11.24 1.08 402 9.964 0.5 0.179 DominionUpperReef 200 2.75 28.59 1.39 379 23.867 0.61 0.558 DominionLowerReef 250 2.72 16.03 1.16 428 15.139 0.42 0.217 Sub total Indicated Resources 238 2.74 118.11 1.34 442 115.112 0.56 2.115

Inferred RietkuilUpperReef 200 2.75 47.56 1.39 423 44.383 0.6 0.923 RietkuilLowerReef 300 2.72 15.66 1.38 389 13.442 0.63 0.316 DominionUpperReef 325 2.75 26.55 1.42 392 22.922 0.55 0.472 DominionLowerReef 425 2.72 1.04 1.09 471 1.076 0.31 0.01 Sub total Inferred Resources 256 2.74 90.81 1.39 409 81.822 0.59 1.721

Total Mineral Resources 246 2.74 208.92 1.36 428 196.934 0.57 3.836


TheresourcedeclaredbyMineralCorporationNovember2014isshownbelowinFigure6:

Figure6-RietkuilSynclineResourceasatNovember2014

4.4. Depletions

SinceNovember2014,whentheresourcestatementwasdeclared,ShivahavebeenminingfromtheRietkuilSyncline.ThefollowingtablequantifiestheproductionasfromDecember2014toendFebruary2015:

Figure7OreDepletionsDecember2014toendFebruary2015

Gold Resource Estimation - Mineral Corporation 2014Classification Unit Tonnage Density Grade Au (Mt) (t/m3) (g/t) (Moz)Indicated Quartzite 11.84 2.75 1.03 0.391 5Q 0.91 2.78 0.72 0.021 Reef5 0.18 2.78 3.74 0.021 UpperReef 0.09 2.78 0.86 0.002 MiddleReef 0.10 2.78 1.73 0.006 LowerReef 1.23 2.78 1.56 0.062 MagazineReef 1.06 2.78 0.70 0.024 Sub-total 15.41 2.76 1.06 0.527

Inferred Quartzite 22.17 2.75 0.68 0.481 5Q 2.36 2.78 0.51 0.039 Reef5 2.03 2.78 2.00 0.130 UpperReef 2.41 2.78 0.82 0.064 MiddleReef 1.39 2.78 1.14 0.051 LowerReef 1.43 2.78 1.07 0.049 MagazineReef 4.14 2.78 0.64 0.086 Sub-total 35.94 2.76 0.78 0.900Total 51.35 2.76 0.86 1.427

Gold Resource Depletion - December 2014 February 2015Classification Unit Tonnes Density Grade Au (Mt) (t/m3) (g/t) (Moz)Indicated Quartzite 0.080 2.75 1.26 0.0033 5Q 0.001 2.78 0.90 0.0001 Reef5 0.006 2.78 0.81 0.0002 UpperReef - - - 0.0000 MiddleReef - - - 0.0000 LowerReef - - - 0.0000 MagazineReef - - - 0.0000 Sub-total 0.088 1.22 0.0036

Inferred Quartzite - - - 0.0000 5Q - - - 0.0000 Reef5 - - - 0.0000 UpperReef 0.058 2.78 1.10 0.0024 MiddleReef 0.004 2.78 1.05 0.0001 LowerReef - - - 0.0000 MagazineReef - - - 0.0000 Sub-total 0.062 1.10 0.0026Total 0.149 1.17 0.0062


Figure8showsthecurrentresourceafterminingdepletionssinceDecember2014.

Figure8-DepletedRietkuilSynclineResourceasofendFebruary2015

4.5. Total Resources ThetotalShivaUranium(Pty)Ltdresource(goldanduranium)asatendFebruary2015,isasfollows:

Figure9OreResourcesforShivaUranium(Pty)LtdasofendFebruary2015

Gold Resource - March 2015Classification Unit Tonnage Density Grade Au (Mt) (t/m3) (g/t) (Moz)Indicated Quartzite 11.76 2.75 1.03 0.389 5Q 0.91 2.78 0.72 0.021 Reef5 0.17 2.78 3.84 0.021 UpperReef 0.09 2.78 0.86 0.002 MiddleReef 0.10 2.78 1.73 0.006 LowerReef 1.23 2.78 1.56 0.062 MagazineReef 1.06 2.78 0.70 0.024 Sub-total 15.32 2.76 1.06 0.525

Inferred Quartzite 22.17 2.75 0.68 0.485 5Q 2.36 2.78 0.51 0.039 Reef5 2.03 2.78 2.00 0.131 UpperReef 2.35 2.78 0.81 0.061 MiddleReef 1.39 2.78 1.14 0.051 LowerReef 1.43 2.78 1.07 0.049 MagazineReef 4.14 2.78 0.64 0.085 Sub-total 35.87 2.76 0.78 0.901Total 51.19 2.76 0.86 1.426

Mineral Resource Classification Cut-off Density Tonnes Thickness Grade Content Grade Content U3O8 (g/t) (t/m3) (Mt) (m) U3O8 (g/t) U3O8 (Mlbs) Au (g/t) Au (Moz)Indicated RietkuilUpperReef 250 2.75 62.26 1.42 482 66.142 0.58 1.16 RietkuilLowerReef 250 2.72 11.24 1.08 402 9.964 0.5 0.179 DominionUpperReef 200 2.75 28.59 1.39 379 23.867 0.61 0.558 DominionLowerReef 250 2.72 16.03 1.16 428 15.139 0.42 0.217 RietkuilSyncline >0.4g/tAu 2.76 15.32 - - - 1.07 0.525 Sub total Indicated Resources 238 2.75 133.44 1.34 442 115.112 0.62 2.639

Inferred RietkuilUpperReef 200 2.75 47.56 1.39 423 44.383 0.6 0.923 RietkuilLowerReef 300 2.72 15.66 1.38 389 13.442 0.63 0.316 DominionUpperReef 325 2.75 26.55 1.42 392 22.922 0.55 0.472 DominionLowerReef 425 2.72 1.04 1.09 471 1.076 0.31 0.01 RietkuilSyncline >0.4g/tAu 2.76 35.87 - - - 0.78 0.901 Sub total Inferred Resources 256 2.75 126.68 1.39 409 81.822 0.64 2.622

Total Mineral Resources 246 2.75 260.12 1.36 428 196.934 0.63 5.261


5. RISK ASSESSMENT

5.1. Background Mineral projects, by their nature, possess a certain degree

ofoperational, political, economicandother risks, someofwhich may have the potential to detract from the projectplans.Whatiscriticalisthattheprojectownersbeawareoftherisksanddevelopappropriateriskmitigationmeasures.

The Mineral Corporation identified potential risks to theuraniumandgoldprojectsatShiva,andthesearedescribedbelow.ItisunderstoodthatShivaisawareoftheserisksandis planning to complete a feasibility study within which itplanstoundertakeacomprehensiveriskassessmentaswellasdevelopriskmitigationproceduresfortheprojects.

5.2. Tenure No immediate risks to tenure have been identified in the

review.However,inorderforShivatocomplywiththeMPRDA,itwillneedtoupdateandreportchangeswhereapplicable,particularlybutnotlimitedtotheSLPsandEMPs.Atthedateofthisreport,thisprocessiscurrentlyunderwayasaresultofsubsequentrequirements(asstipulatedbytheDMR)arisingfromtheongoingSection102application.

TheMinisterofMineralResourceshasindicatedthaturaniummaybecomea strategicmineraldue to itsenergy relatedattributes,butitisnotknownhowthiscouldaffecttheprojectdevelopmentifthiscircumstancewastooccur.

5.3. Environmental Inconsistencies between the existing and planned future

miningoperationsandthosedescribedwithintheapprovedEIA and EMP have been identified, the most significant ofwhichbeingtheopencastgoldminingactivitieson400MRand401MR.ASection102applicationtotheDMRrequestingtheconsolidation of all the companysmining and prospectingrightsinthearea,hasbeenacknowledgedbytheDMRon18February 2015. The DMR, as per normal procedure, furtherrequired an addendum to the approved EnvironmentalManagement Programme (EMP), which caters for theadditional properties, aswell as the opencast goldminingactivitieson400MRand401MRwhichiscurrentlyongoing.TheupdateoftheEMPisinprocessandwillsoonbesubmittedtotheDMRtoconformtotheapplicationstotalrequirements.ThenecessarySection55(2)reportshavenotbeensubmittedtotheDMRasaresultoftheSection102process.

Tothisend,thecompanyhasalsoinstructeditsenvironmentalconsultantstoperformafullenvironmentalassessmentandmanagementprogrammeaudit. Thishasalsobeen recentlycompletedandthegapsthusidentifiedarecurrentlybeingattendedto.

TheWULwas issuedfor thewaterusesat themine in2006(LicenseNo. 23011606/11)andpertained largely toactivitiesundertaken in terms of the underground uranium mining,processing,residuehandlingandwatermanagementthereof,asdescribedabove.Asminingactivitiesprogressed,anumberof additional water uses are being undertaken in terms ofthe goldmining activitieswithin the 400MR/401MR section,whicharenotcontemplatedintheexistingWUL.Toaddress

this,meetingswerealreadyheldwithseniorofficialsfromtheDepartmentofWaterAffairs,BloemfonteinandthecompleteupdateoftheWULiscurrentlyinprocess.

Theenvironmentalrisksaremostlyconsideredtoberelated

tocomplianceissuesthatmayinvokedelaystodevelopmentoftheprojectorproductionwithknock-oneffectstorevenuesandcosts.

5.4. Geology and Mineral Resources Geological data that has been used for the estimation of

Mineral Resources for Shiva was generated from severalexploration campaigns and historical mining. There areissueswith regards to the quality of the assay data, whichhasprecludedthereportingofMeasuredMineralResourcesinareaswherethereisnotsufficientlyhighconfidenceinthegeological and structural models. Furthermore, the use ofassumeddensitiesfortonnageestimationhasalsoprecludedthereportingofMeasuredMineralResources.Accordingly,theavailableMineralResourcesatShivacanonlybeconvertedtoProbableMineralReserves.TheMineralCorporation isoftheviewthatadditionalworkinrespectofdrilling,samplingandassayinganddensitydeterminationswillberequiredtoaddress these issues. Shiva is aware of these data qualityissues and is currently exploring mitigation measures toimprovethequalityofthedata.

5.5. Plant and ore processing MineralogicalandmetallurgicaltestworkcompletedatShiva

formed the basis for the existing uranium ore processingplantdesignsandprocessroutes.Thereisavariationoftheplant design from conventional plants employed to treatWitwatersrand uraniumores, which relates to the inclusionofautoclaveunits.Theplantisingoodmechanicalcondition.However,ithasnotbeeninoperationforsufficienttimebythepreviousownerstoallowfortheoptimisationofthroughputs,metal recoveries, reagents mix and recoveries. As a result,there are uncertainties regarding these aspects,whichmayresult in the requirement to reconfigure the plant design,particularlythereplacementofautoclaveunitswithpressureleachtanks,ifitfailstoachievedesigntargets.Whilethisdoesnot representa fatalflaw in thedesign, thereconfigurationmay require significant capital expenditure. Furthermore,theplantisahigh-technologyplant,requiringappropriatelyskilledpersonneltorunit,whichmaynotbereadilyavailabletoShiva.Thiscanbemitigatedbyupgradingtheskillsofthecurrentmetallurgistsatthemine.

Inrespectofthegoldoreprocessingplant,thecrushingunitand steel works are not in a good mechanical condition.Refurbishmentoftheplantinfrastructure,whichmayrequiresignificantcapitalexpenditure,willberequirediftheplantistoberunatitsnameplateproductioncapacityof120ktpm.

5.6. Mining Thereareuncertaintiesregardingthequantityofgroundwater

andthecostsofpumpingwaterfromundergroundexcavations.Itisunderstoodthattheseuncertaintieswillbedealtwithindetailintheenvisagedfeasibilitystudy.

There is anational shortageof electricity supplyby ESKOMandthismayimpactShivasplanstocommenceproduction.


5.7. Marketing MostU3O8 is traded through long-termbilateralagreements

between mining companies and nuclear power utilitiesseekingsecurityofsupply.FollowingtheFukushimanucleardisaster, the spot prices of U3O8 have dropped 51% to nearindustry breakeven prices. Accordingly, the success of theuraniumproject at Shiva could be tied to Shivas ability tosecure offtake arrangements with end users for long termsupplies,which tend toofferbetterprices that canprovidesufficientheadroomovercosts.

6. Production for the yearKey production statistics for the year are set below for goldproduction. No uraniumproduction took place during the yearunderreview. 2014 2013 % ChangeTons milled 791540 576986 37%

Average head grade 0.73 0.80 -8%

Kg Au milled 571.20 463.02 23%

Kg Au recovered 378.82 345.67 10%

7. Exploration activitiesSince Shiva took ownership of the project in 2010 it has spentsignificantamountsonundergrounddevelopment,undergrounddrillingandsurfacedrillingascontainedinthetablebelow:

Item Amount(metres) Cost(Rm)

Undergrounddevelopment 7797 19.620Undergrounddrilling 3429 2.150Surfacedrilling 25827 22.044Total 37 053 43.814

Limited exploration activity was undertaken during the yearunder review, with a total expenditure for the year ended28 February 2015 of R1.9 million mainly on slimes prospectslocatedontheShivaproperty.Explorationresultsarestillintheprocessofbeingreviewedatthedateofthisreport.

8. Potential additional targetsThere isconsiderablepotential toexpandthecurrentresource.Thefollowingareasareconsideredtobeprospectable: TheDominionReefoutsideofthecurrentresourceareasi.e.

tothewest MiddleReefintheDominionandRietkuilsections Bonanza Reef which lies below the Buffelsdoorn Reefs and

hasbeenlocatedoutsideofthelimitsoftheRietkuilSyncline.

9. Legal entitlement - prospecting and surface rights ThegrouphaslegalentitlementtothemineralsreportedonandasatthedateoftheissueoftheIntegratedReport,thecompanywasnotawareofanyimpedimentsthereto.

Prospecting rightsShivaistheholderofelevenprospectingrightsgrantedintermsof section 17(1) of the Mineral and and Petroleum ResourcesDevelopmentAct, 2002 (Act 28of 2002)asamended (MPRDA).Theserightswererenewedintermsofsection18(3)oftheMPRDAforaperiodofthree(3)yearsandexpiredinMarch2012.However,priortotheirexpiryinMarch2012,theserightsformedpartofa

consolidation(viaaSection102applicationseebelow)withthecompanysminingrights.

Section 102 Application An application in terms of Section 102 of the MPRDA wassubmittedtotheSouthAfricanDepartmentofMineralResources(DMR)on29March2012,requestingconsentfromtheministerto consolidate Mining Rights 400MR and 401MR, along withprospecting rights NW 30/5/1/1/2/928PR, 929PR, 930PR, 932PR,934PR, 935PR, 936PR, 938PR, 940PR, 941PR and 1044PR into theNW30/5/1/2/2/228MRminingright. Included in theSection102applicationwasthestandardisationofthemineralstobegoldore and alliedminerals, uranium ore and alliedminerals, rareearthsandmonazite(heavyminerals).

Consent from the Minister has yet to be provided in terms oftheSection102application,astheapplicationiscurrentlybeingprocessed by theDMR. The company recently received a letterdated18February2015 fromtheDMR;whichacknowledgedtheSection 102 application. Shareholders will be further advisedin the future as to the ongoing progress of the Section 102application.

Surface rights Surfacerightownershipovertheminingarea(includingMR228,MR400 and MR401) is held by Uranium One, the State, andprivately.Portion60oftheFarmRietkuil397(situatedinMR400)isheldbySuvukaMining.However,thisdoesnotimpactontheareabeingmined.UraniumOneistheholderofsurfacerightswhereopencastminingistakingplaceonMR400andMR401.

10. Legal proceedings or other material conditions that may impact mining or exploration activitiesAsatthedateofissueoftheIntegratedReport,thedirectorsofOakbaywerenotawareofanylegalproceedingsorothermaterialconditionsthatmayimpacttheminingorexplorationactivitiesofthegroup.

11. Summary of environmental management and funding Oakbays long-term obligations are based on environmentalplans,incompliancewithcurrentenvironmentalandregulatoryrequirements. The group provides for decommissioning andrestoration liabilities based on an annual measurementconducted by independent specialists using latest availableinformation.Thebalanceoftheseliabilitiesispresentedonpage(95) of the annual financial statements. The group contributestowardarehabilitationfund,managedbyGuardrisk,thedetailsofwhichappearonpage(90)oftheannualfinancialstatements.

12. DeclarationThecompanyconfirmsthattheLeadCompetentPerson,Mr.MarkAustin, SACNASP registration number 400235/06 and employedby Applied Geology and Mining (Pty) Ltd., 4a Coombe Place,Rivonia, Johannesburg,SouthAfricahas34yearsexperienceasageologist,including15yearsdirectlyinvolvedwiththegeologyand economic assessment of the Witwatersrand geology. Thecompanyalsodeclaresthathevisitedtheminesiteon13and14April2015.

Mr.MarkAustinherebygiveshisconsentforextractsofhisreporttobeincludedinOakbayResourcesandEnergyLimitedIntegratedReportintheformandcontextinwhichitisintended.


KEY STAKEHOLDERS

AccountabilityisacoreOakbayResourcesvalue,andproperandproactivestakeholderengagementiscriticalforcorporateaccountabil-ity.Wehavethereforeidentifiedkeystakeholdergroupswhomayimpactonorbeimpactedbyourbusinessstrategy.Tobeaprofitableandsustainablebusinesswemusthavemutuallybeneficialandsustainablerelationshipswithourvariousstakeholders,andunderstandandmeettheirneedswherepossible.


External

Shareholders: Sustainability,profitability,ROI(shareprice&dividends),cashgeneration,corporategovernanceandcompliance,riskmanagement,growthprospects,accessibilityofleadership,successionandtheuraniummarket

Funders:Solvencyandliquidity,capitalmanagement,sustainability,creditrating

Contractors and suppliers:Timeouspayment,fairbusinesspractices

Customers: Reliability,securityofsupply

Government, regulators and industry bodies:Employmentequity,environmentalimpact,taxation,compliance,adherencetotheJSEListingsRequirementsandcompanylegislation

Local communities:Jobcreation,impactonthecommunitiesandenvironment

Internal

Employees and contractors:Jobsecurity,sustainability,skillsdevelopment,remunerationandincentives,workingconditionsandsafety

Issues raised in 2015

Jobcreation Socio-economicdevelopment Goodgovernancepractices


Significant

job creation Zerolabour unrest since 2010

100% of workforce

represented on formal management-worker health

and safety committees

OUR PEOPLE

Highlights so far

Job creationWeareproudtobehelpingachievetheOakbayGroupsmandatetocreateasignificantnumberofjobsgroup-wideoverthelongterm.SinceacquiringShivaUraniumin2010,OakbayResourceshasemployed800newstafftotaketotalnumberofemployeestoover1000.WearelookingtofurtheremployasignificantnumberofemployeesintheyearsaheadasShivaUraniumexpands.Intheyearunderreview,wecreated23newpermanentjobsdespitetheuraniumminingoperationessentiallybeinginadevelopmentphase.

Permanent jobs created FY 15 Jobs created No.

Adminassistant 3

Boilermaker 6

Chiefsurveyor 1

Dieselmechanic 2

Electrician 1

Engforeman 1

Fitter 1

Furnaceroomsupervisor 1

HRofficer 1

Metforeman 1

Metallurgisttrainee 1

Personalassistant 1

Receptionist 1

Shiftforeman 1

Tracklessforeman 1

Total 23


AsShivaUraniumissurroundedbylargermines,theworkforceistypicallyquitefluidanditcanbedifficultattimestoretainstaff.However,ouroveralltrackrecordinthisregardisencouraging.Acertainpercentageoftheinsignificantstaffturnovercanalsobeattributedtodismissalsasaresultofmisconduct.

AtOakbayResourceswepromote familyvalues,which includesmakingpossiblethatouremployeeslivewiththeirfamilies.Localcommunities are therefore targeted for employment and skillstraining is provided to upskill residents. During recruitment,potentialcandidatesarecloselyscrutinisedandtheirresidentialaddresses verified in conjunction with the local municipalityand the Department of Labour to ensure they are local. Fulltimeemployeesaremembersofaprovidentfundthatincludesfuneralcoverforimmediatefamilymembers.Thecompanyalsoencouragesemployeestotakefamilyresponsibilityleavewherenecessaryandattendtofamilyneeds.Temporary jobsarecreatedonanongoingbasis,which furtherassistsinreducingunemploymentinlocalcommunities.

Workforce snapshotWearecommittedtoequalopportunityandinparticularpromotetheemploymentofwomenatthemine.

Representation of HDSA (%) 2015 2014 Seniormanagement 20% 20% Middlemanagement 66.6% 66.6% Juniormanagement 36% 36% Representation of women Womenemployedatmine 26% 25%

Labour relations Our Manager of Human Resources and Transformation, JosephMtshali, is responsible for employee relations and has beeninstrumental in ensuringweareoneof theonly goldmines inSouthAfricatohavehadzeroincidentsoflabourunrestinpastfewyears.

The group supports every employees right to belong to aunionanddemonstrates this throughanopenand transparentrelationshipwithNUM,theonlyunionwithanofficialmembershipon themine.Management and the union holdmonthly formalmeetingsaswellasengagedailyininformalinteractions.

AllemployeesarecoveredbyacollectivebargainingagreementbetweenmanagementandNUM.

Therearedisciplinaryandgrievancepoliciesinplacethatwereformulated in consultation with NUM. The disciplinary policyallows for management to implement behavioural correctness,counselling,andvariousstagesofwrittenwarningsculminatingin dismissal. The grievance policy promotes the protection ofemployees from ill treatment by colleagues or seniors. BothpoliciesarecommunicatedtoemployeesduringinductionattheShivaUraniumtrainingcentre.

Oakbaydoesnottolerateanyformofdiscrimination.Weexpectall our employees and associates to respect that people havedifferentbackgrounds,beliefsandcultures.Whenrecruitingandpromoting,wetryasfaraspossibletobefair,balancingthiswithourobligationtoaddresstheimbalancesofthepast.

Noincidentsofdiscriminationwerereportedonduringtheyear.

Skills development The skills development focus during the year was on practicalon-the-job training (given our financial constraint with partof the mine remaining under care andmaintenance). OakbayResources investedR3.1million,averaging 120hoursof trainingperemployee.Thisisinlinewithpreviousyears.Shiva Uranium has awell-equipped onsite training centre thatprovidescourses in linewith theMiningQualificationAuthority(MQA).Anaccreditedtrainingproviderisappointedwithqualifiedinstructorstoruntheseprogrammes.

22 people received trackless machines training, of which 20graduated successfully. Four people received scaffoldingtraining, all of whom passed as specialist scaffolding erectorsandinspectors.Thiscoursefocusedonbuildingscaffoldinganddeclaringitsafetouse.

Wealsoprovidedlearnershipsfor12employeesintheelectricaltradeandboilermakingaswellasanapprenticeshipprogramme.In addition we have provided training and qualification for 25electricians. They were also provided practical experience toensuretheirfutureemployability.

Top management

Senior management

Middle management

Junior management

Semi-skilled and discretionary decision making

Unskilled and defined decision making

2

5

6

106

37

52

Permanent

Permanent

Permanent

Permanent

Permanent

Permanent

SA:1

SA:5

SA:6

SA:106

SA:37

SA:52

Gauteng&NorthWest

Gauteng&NorthWest

NorthWest

FreeState&NorthWest

NorthWest,N.CapeandFreeState

NorthWest

Foreign:1

Foreign:0

Foreign:0

Foreign:0

Foreign:0

Foreign:0


ADDING VALUE


ADDING VALUEVALUE ADDED STATEMENT

In thousands of Rands 2015 % 2014 %

Turnover&otherincome 180066 159164Netcostofproducts&services(note2) (97914) (221686)

Value Added 82152 (62523)Addincomefrominvestments&associates 56519 53121

Wealth Created 138 670 (9 402) Applied to: Employees Salaries,wages&benefits 72108 52% 73220 -779%

Providers of capital 68685 50% 83553 -889% Interestonborrowings 68685 50% 83553 -889% Dividends&capitaldistributionsto non-controllinginterests - 0% - 0% DividendstoordinaryshareHolders - 0% - 0%

Government Taxation(note 1) 3169 2% 1861 -20%

Retained in the group (5291) -4% (168036) 1787%

138 670 100% (9 402) 100% Note 1 Incometaxation(excludingdeferredtax) - - Skilldevelopmentlevies 452 427 Rates&taxespaidtolocalauthorities 999 678Royaltytax 1,718 756

Gross contribution to government 3 169 1 861 Paymentstogovernmentexclude: Taxationdeductedfromemployeesremuneration 8001 7404 UIF 518 511

Note 2 Productioncosts 56213 87315Less:rates&taxes (999) (678)Generalexpenditure 22053 11665Explorationcostexcludingstaffcosts 1962 3313Baddebts 64 202Depreciation 28815 80223Rehabilitationcosts 24277 29450Foreignexchangeloss 2826 23454Valueadjustments (39108) -Metalinventorymovement 1777 (13257)Socialdevelopmentresponsibility 33 -

Net cost of products & services 97 914 221 686


KEEPING OUR PEOPLE SAFE AND WELL

Safety achievements

0

5

10

15

20

25

30

35

0

1

2

3

4

5

6

7

8

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

24.3

3.22.8

5.0

7.0 7.0

21.4

24.6

34.5

25.8

0 0 0 0 0 0

1.7

3.3

3.8 20152014201320122011

1.5

Total recordable injury frequency rate (TRIFR)

Lost time injury frequency rate (LTIFR)

Reportable injury frequency rate (RIFR)

Fatality injury frequency rate (FIFR)

Fatality-free

since August 2010

Surpassed 4,5 million

fatality free man

hours (4 581 Fatality Free Production

Shifts in 1 527 days)

Operated underground

operations for a total of

726 days injury-free

Awarded the Mine Health and Safety Council

Safety Trophy for achieving 4000

Fatality Free Production Shifts

Lost Time Injury FrequencyRate

(LTIFR) of 10.23% at October 2014

compared to industry average

of 19%

Focused on communication

and

competency-based

training

SafetyisofutmostimportanceatOakbayResourcesandisacorevalue. We go further than vigorously encouraging a culture ofzeroharm,wedemandparticipationasaprerequisiteofbeingpartofourteam.Mininganditsrelatedactivitiesintheordinarycourseexposeouremployeestohazardsthatcancauseillness,injuryorevendeath.Tocombatthis,oursafetystrategyisbuilton leadership and competency but depends on every singleemployees assumption of responsibility, another of our corevalues,forhis/herownandhis/hercolleaguessafety.

Safetyismanagedbyatopdownapproachwiththeminemanageheadingweeklysafetymeeting.

OurLTIRrateisbelowtheindustryaverageof3.8

Providingasafeandhealthyworkingenvironmentisakeyconcernforouremployees,contractorsandtheirfamilies,aswellasourinvestors,governmentandregulators.

Key aspects of our safety strategy

Oversight, evaluation and insight Clearcompliantpoliciesareinplacethatarereviewedannually,and if necessary, amended. Further, regular health and safetyinspectionsareconducted.Anydeviationsidentifiedarecompiledintoactionlogsandremedialactionisimplementedasrequired.In addition all reported injuries are investigated and lessonslearntarecommunicatedtotheworkforcetopreventrecurrence.Safetymeetingsareheldonaweeklybasisatwhichbasiccausesofincidentsandmitigationsarediscussed,andremedialactionunderway is monitored. In addition, monthly legal audits areconductedbytheDMR.

Weinstigatecomprehensivetraining,inordertoensurethatourworkforceiscompetentandcanidentifyandmitigaterisks.

A culture of safety Management leads by example through participation in safetydeclarationsandhands-onpre-shiftinspections,wherestaffcanraiseissuesconcerningsafety.TheOakbayResourcesSafetyDepartmentalsomaintainsahighvisibilityprofileinallworkingareasofthemineand,togetherwithsupervisorsandworkforcesafetyrepresentatives,selects amonthly generic safety theme and a weekly site-specifictopictohighlightcompliancewithsafeoperatingprocedures.

Daily safety talks, together with weekly safety meetings withsupervisorsandworkforcesafetyrepresentativeskeepthefocusonZeroHarm.

Everyemployeeistrainedintask-specificrisksandhazardsbeforestartingworkandinordertomaintainacompetentworkforce-aneffectiveweaponinoursafetyarsenal-supervisorsconductongoingplantaskobservation.

Training Safety training is provided at Shiva Uraniums own trainingcentrethroughanaccreditedserviceprovider,SafeSure.Allnewemployeesundergomandatoryinductiontrainingandemployeesreturning from annual leave undergo refresher courses. AllsupervisorsarecertificatedinFirstAidcompetency.

2015 2014 2013 2012 2011

2015 2014 2013 2012 2011

2015 2014 2013 2012 2011


All existing

policies reviewed and

updated

New material introduced

for induction programmes

Health

Health highlights

Shiva Uranium has a fully equipped onsite primary healthcare clinic. It is staffed by amedical practitioner, occupationalhealthpractitionersandadministrativestaff,whichcarefornotonly 1 000 Oakbay Resources employees but also the farmingcommunitiesincloseproximityofthemine.Medicalsurveillanceandmonitoringofdiseases isongoingand the clinicmonitors,reportsandmakesemployeesawareoftherisksandmitigationsinouroperations,includingtheuseofindicatedPersonalProtectiveEquipment (PPE).We alsohave a formalHIV/AIDSpolicy basedontheguidelinesissuedjointlybytheWorldHealthOrganisationandtheInternationalLabourOrganisation.

Reported occupational diseases* Disease 2013 2014 TB 7 2 Silicosis 1 0 TBandPN 3 1 NIHL 3 3 COAD 1 1 Total incidence 15 7

* The year-on-year decrease in incidence is in part due to a decrease in employee numbers in certain areas of the operation which remain under care and maintenance

Monitoring occupational health risks Noise levels are regularly measured and controlled by theOccupationalHygieneDepartment.Thenoisecontrolprogrammefocuses on silencingmachinery and the use of correct PPE, aswell asproperdemarcationofnoisy areas. The clinicperformsaudiometric screening. In addition any shifts higher than 5%PLHareinvestigatedandtheemployeeisreferredfordiagnosticaudiometric testingas indicated.CasesofNIHLarereportedtotheapplicablecompensationbody.

Heat-toleranceandacclimatisationprogrammesarenotrequiredas the thermal environment falls below 27.5 degrees celcius.However,aColdStressManagementprogrammeisinplace.

Dustexposure ismonitoredandPPE is issued toallapplicableemployees. Radon exposure is also closely monitored and alloperationscomplywiththeminimumexposurestandards.

Thereisaminimalriskofradioactiveexposureinuraniumminingwhich is managed by decontamination procedures. Monthlyradiation monitoring is conducted to ensure levels are belowinternational standards. In addition ventilation systems are inplacetoensureminimalexposure. InadditionAnnualmedicalsmonitoraffectedemployeesforanyeffectsofradiationexposure.

Managingthebigfive(HIV/AIDS, TB, diabetes, hypertension and silicosis) Employeeshavebiannualorexitexaminationsforoccupationaldiseasesandstrictconfidentialityisobserved.

Employees requestinganHIV screening testare referred to thelocalclinicwheretestingisperformedtogetherwithcounselling,and treatment begins when necessary. The employee is notobligated in any way to report the results to Shiva Uraniumsonsiteclinic.Shouldtheemployeerequirehospitalisation,heorsheisreferredtothestatefacilitiesforfurthermanagement.

TBisdiagnosedthroughx-raysaspartofthemedicalsurveillanceofallmineemployees.Infectedemployeesarereferredtothelocalhealthfacilitiesandinthisinstancetheonsiteclinicisinvolvedinordertomonitortheemployeesregularattendanceatcheck-ups. The employeemay return towork only once he or she isconfirmednottobecontagious.TheminemedicalservicesretainandsubmitrecordsofTBtotheMedicalBureauforOccupationalDisease(MBOD).

Silicosis is diagnosed through the medical surveillanceprogrammeandall suspectedcasesaresent for testingbeforenotificationtotheMBOD.

Hypertension and diabetes are similarly diagnosed throughmedicalsurveillanceorwhenanemployeepresentsattheclinicwithspecificcomplaintsrequiringinvestigation.Theemployeeisreferredtothelocalmedicalfacilitiesfortreatmentandinthisinstanceisobligatedtoreportbacktotheonsiteclinic.Treatmentisprovidedbythelocalclinicsoraspertheemployeesmedicalaid. The clinic conductsmonthly follow-ups to ensure that theconditioniscontrolled.Recordsofallreadingsandreferralsarekeptonsite.

Ensuring health and wellness awarenessInductionprogrammesareinplacetoeducateallemployeesonrelevant diseases and special ad hoc awareness programs areconductedbytheDepartmentofHealth.

Themanagement, training and programmes for HIV awarenessandpeereducatorsishandledbytheWellnessCo-ordinatoronthemine.


100% re-use of water

through the return dam system

Introduced

strict maintenance and service schedules onequipment

Introduction of

environmental training

Strong compliance in audits

conducted by the National Nuclear

regulator

20% of diesel used

onsite is produced in-house

and is green

CARING FOR THE ENVIRONMENT

Environmental preservation highlights

Uraniummining andmilling has evolved significantly over theyears and can fortunately today be conducted in a way thatprotectsworkers,thepublicandtheenvironment.Ourapproachto environmental management is based on international bestpractice,legalcomplianceandmaintainingourenvironmentalandsociallicencetooperate.CertainadditionalrequirementstoourEMPshavebeenidentifiedintermsoftheNationalEnvironmentalManagement Act, andwewill apply for authorisation once theEMPsawaitingapprovalwiththeDMRarefinalised.

Shiva Uranium has not received any fines for non-compliancewithenvironmentallawsandregulations.

Limitingtheimpactofourminingactivitiesontheenvironmentisakeyconcernforthecommunitiessurroundingourmine,aswellasourinvestors,governmentandregulators.

Key aspects of our environmental management

Independent monitoring AnnualenvironmentalauditsareconductedbyPrimeResourcesandCabangaConceptsathirdpartyspecialisinginenvironmentalaudits.

Environmental training All induction and refresher training includes environmenttraining. Also, the weekly safety meetings include discussionof environmental andhygienematters led by the occupationalhygienist.

How we consume and save energyWe consume 220 000 litres of diesel per month, of which+/-44000litresisbiofuelproducedin-house.(ThisamountstoacostsavingofaroundR1millionpa.)Weuse4.1millionkilo-watthoursofenergypermonthwithamaximumdemandof10000kilo-watts.Inordertoreduceindirectenergyconsumption,wepumpduringout of peak times, restrict theuseof criticalmachineryduring peak times, stop the underground fans over weekends,

halt compressors while our workforce is not underground andhaveinstalleddaylightswitchcontrolsoffloodlights.

How we use and conserve water Wehave inhanda20yearwateruse licence issued in2006bytheDepartmentofWaterAffairsandForestry,whichisreviewedevery five years. It encompasses the consumption of waterfromresources,storingofwateranddisposingordischargingofundergroundwater.

100%ofwaterisrecycledandre-used.Allnormalwaterdischargedaccumulatesinreturnwaterdamsandisre-usedintheminingprocessviareturntotheplantor fordustsuppressiononhaulroads. Dirty water run-off trenches ensure that contaminatedwaterremainswithintheminingarea.

As per regulations, we are authorised to use 2 230m3 per dayofwater fromour localwater resourcesandadailyaverageof1728000m3ofundergroundwaterfromtheportalsspecified.Ouronsite water resources comprise different boreholes andmineshaftsandwehavepermissiontowithdrawanddisposeofwaterfromtheBobGardnerDam,locatedonsite.

The hypothetical quality and impact ofwater containingwastearemonitoredmonthlyandimmediateactionwouldbeinstitutedifnecessary.Todatethishasnotbeenrequired.

How we manage wasteWaste is crushed onsite and sold for application in roadconstruction, which results in cost efficiencies as well asadditional profit of around R10 million per year. The mine isauthorisedtodisposeofamaximumquantityof1200000mofslurrypa into the tailingsdam locatedonsite. Thesupernatantmustbedischargedintoareturnwaterdam.Nowatercontainingwastefromthetailingsdamisdischargedintotheenvironment.

Therewerenosignificantspillsduringtheyear,underreview.


Environmental indicators

MATERIALS 2015 2014 Kilo tonnes Kilo tonnes

Rockbrokenmanagedoperations(100%) 106000 112000Oremilledmanagedoperations(100%) 34000 36000Accumulatedlow-gradestockpiles 36000 19500Coal 19500 145Liquidpetroleumgas(LPG) 6.23 4.48Grease 0.39 0.54Fuels 55.63 59.68Lubricatingandhydraulicoils 6.92 7.91 ENERGY

Energyfromelectricitypurchased 18362 19049Energyfromprocessesandfossilfuels 6000 7117Totalenergyconsumed 24000 26000 WATER Mega litres Mega litres

Totalnewwateruse 33.555 36555Waterusedforprimaryactivities 27000 31000Waterusedfornon-primaryactivities 6100 5000Potablewaterfromanexternalsource 18437 18983Non-potablewaterfromanexternalsource 1300 920Wasteorsecond-classwaterused 9000 10000Surfacewaterused 1502 1535Groundwaterused 4407 4323Waterrecycledinprocesses 53731 51260 EMISSIONS Kilo tonnes Kilo tonnes

GHGemissions,CO2equivalent 5500 5900Fromelectricitypurchased 5100 5500Internallygenerated 520 545Nitrousoxides NM* NM*Sulphurdioxide 19.08 1.77Particulates(pointsources) 0.43 0.42 DISCHARGE Mega litres Mega litres

Dischargetosurfacewater 765 1761Qualityofenvironment Surfacewaterqualitymonitoredatalloperations Yes YesSurfacewaterqualitydeteriorationoff-site Yes YesAdversesurfacewaterimpactonhumans No NoGroundwaterqualitymonitoredatalloperations Yes YesGroundwaterqualitydeterioration Yes YesAdversegroundwaterimpactonhumans No No WASTE Kilo tonnes Kilo tonnes

Mineralwasteaccumulatedin: Tailingsdams(activeandinactive) 893600 752349Rockdumps 840266 810639Slagdumps 3985 3047Non-mineralwastegenerated: Hazardoustolandfill 7.82 18.26Hazardousincinerated 3.71 0.8Non-hazardoustolandfill 14.26 19.14Non-hazardousincinerated


ENVIRONMENTAL INCIDENTS AND COMPLAINTS (2015) Number (2014) Number

Level1and2 350 309Level3 Level4and5 Formalcomplaints 10 20Substandardactsandcondition 875 976 PRODUCTS

Totalrefinedproducts 440000 410000


R5 million spent on

community upliftment

projects

Launch of

new enterprise

development project

Training programmes

Certain senior positions reserved for

previously disadvantaged

people

BUILDING SOUTH AFRICA

Social highlights to date

BEE scorecard

BEE code Progress Scorecard rating (%) Targets

Ownership

Management Control

100%

18%

Managementiscurrentlyassessingnewpoliciesforincreasedempowermenttargets.

ShivaUraniumis26%blackowned,ofwhich

Fourpreviouslydisadvantagedemployeesareundergoingmanagementtrainingwithmentorship.

Weacknowledgethatprogresshasbeenslowandwilldriveimprovementaswegrow.

Workerstrustforemployeesinlowercategories

80% 10%

10%

IslandsiteManagement254comprisesOakbayResourcesemployeesinjunior,middleandseniormanagement

Communitytrust

Topmanagement

(board)

Seniormanagement

(Exco)

Middlemanagement

Juniormanagement

14% 25%66.6% 36%


BEE scorecard

BEE code Progress Overall rating (%) Targets

Employment Equity

Skills Development

Preferential Procurement

Enterprise Development

Socio-Economic Development

*Top management (board) 14%*Senior management (Exco) 25%*Middle management 66.6%*Junior management 36%*Core Skills 38%

The company is currently paying 3% of its payroll to skills development

15% of capital goods (over Mining Charter requirement),35% of services, and 17% of consumables

Project commenced in April 2015

100% agricultural and bricklaying projects implemented and infrastructure development in progress

MiningCharter:5%

MiningCharter:

70%forservices

50%forconsumables

MiningCharter:0.5%levy

MiningCharter:various

MiningCharter:40%HDSArepresentationfromcoreskillstotopmanagement

Wehaveanemploymentequitypolicyinplaceinlinewiththefiveyearemploymentequityplan.Thepolicywasdraftedandapprovedinconsultationwithorganisedlabour.Itpromotescertainseniorpositionsmustbereservedforblackpeopleandinsomeareasforwomen.Itallowsforemployeestoraiseissuesonemploymentequitywithoutanyfearofvictimisation.

ThepolicyiscommunicatedtoallemployeesduringinductionattheShivaUraniumtrainingcentreandcopiesaremadeavailableonrequest.Itisalsogiventoallrelevantlabourorganisations.

Wecontinuetomakegoodprogressinthisarea,withlearnerships,apprenticeshipsandgraduatedevelopmentprogrammesallinplace.

OurtargetsareinlinewiththeMiningCharter.ProgressisslowerthanwehadhopedduetosituationalchallengessuchasfindingsuitableBEEsuppliersintheNorthWestprovince.Measurestoaddressthishavebeenimplemented.

Asthemineisstillundercareandmaintenanceonuraniumproduction,spendcapacityremainslimited.

Wearepartneringwiththelocalmunicipalitytoestablishanenterprisedevelopmentcentre.Thecentrewillcaterforsmallenterprisesfromthesurroundingcommunities

Goodprogresshasbeenmadeinthisarea.Seesomeofourprojectsbelow.

Giving back

Giving back is part of Oakbay Resources core value ofaccountability.Therearemanywayswearecommittedtohelpingbuildourcountry, from jobcreation toenterprisedevelopmentand CSI projects. While some of our initiatives will only gaintraction when the mine becomes fully operational, we havenonetheless to date spent R5 million on community projects.Toensurethatweworkactivelywithourlocalcommunities,weholdmonthlymeetingswith the localmunicipalities aswell aswithcounsellors representing local communities. Meetingsareheld with various formal community stakeholders and formalcommunity structureswhen theneedarises.OakbayResourcesisalsorepresentedatmayoralcommunitymeetings,whichisaninvaluableplatformtoengagewithourcommunities.

Some

Business

Oakbay Resources and Energy - 2015 Integrated Annual Report