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 The Corporate Affairs Director should liaise with other mining companies through the chamber of
mines to lobby the government about the potentially damaging effects of the new regulations;
and

 The Head of Investor Relations should set up a high level meeting with the PIC to discuss their
concerns and re-assure them our own independent BCG/Ashridge strategic analysis have
concluded or advised against disposing iron and coal and certainly not in South Africa; including

clarifying the other steps we will now take to stabilize the business.

th
4.4 4 Priority: Strategic disposal in Brazil0

We are faced with a threat and an opportunity in our Brazilian operations –contributing 16% of group
earnings. The new political party in office is now mooting changes to the dividend repatriation laws.

There is also the potential hyper inflationary economy we could be facing with the Brazilian Real
(BRL) having lost 50% (0.6122-0.3100/0.6122) against the greenback in the last 2 months. The
opportunity is a final offer of US$ 1.5 billion we have just received from CMOC, for AMA-NP -our
Nobium and Phosphates business in that country; structured in 2 parts: (1) BRL 1,452 million to

settle its intra-group debt and (2) balance to acquire our 100% stake. We have applied Johnson,
Scholes and Wittington’s SAF model to do a broader evaluation of this disposal decision:

4.4.1 Suitability
Appendix 4.1 shows Nobium and Phosphates is a Question Mark per BCG and Value Trap per
Ashridge: we have already made a strategic case for its disposal in 4.2. You will recall our initial

entry to Brazil was with the strategic intent to secure more reserves to finance our growth so we
need to consider this specific disposal question in relation to our broader strategic Nickel
investments in AMA BASIL LIMITATA as well as our strategic Iron Ore interests in AMA FEROUS
BRAZIA SA- both in that country. Section 4.2 also concludes that Nickel should be sold so we have

no issues with AMA BASIL LIMITADA; but that we should hold iron ore to complete our portfolio
range –herein lies our concerns in Brazil. The severe depreciation in the BRL last year would have
improved our earnings in BRL functional currency as we sell our commodities in US$ but we must

have suffered the translation risk on consolidation (IAS 21). Furthermore, a toughening of the current
dividend repatriation laws means we need extra care to repatriate dividends from these subsidiaries.
The board can consider measures such as: (1) moving the refining of metals from Brazil to Colombia
and setting high transfer prices to be paid by Brazilian subsidiaries and then getting the funds out to

group in London (2) making payments to London in the form of royalties, loans, payments of patents,
or management fees for head offices services such as treasury (3) parallel or SWAP-like loans,
whereby say Brazilian subsidiaries lend cash to the subsidiary of another EU-based company in
Brazil and in return we can receive in London a loan of equivalent amount from the EU-based parent

company of the Brazilian subsidiary.

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