Page 11 - AMANGO MODEL ANSWER 2

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challenges of drought in the capital market, which are typically the trade-offs that the board seems
split over!

Actions: The Group CFO should investigate the variables in the dividend valuation model for validity

as well as the data in relation to the large receipt within this same year from Canada and should
these be confirmed, Investor Relations should announce a reversal in the pay-out ratio policy to the
market and package the PR/communication to demonstrate a renewed confidence in our ability to

deliver earnings growth irrespective of the commodity price challenges.

B4. POLITICAL RISK MANAGEMENT STRATEGY

Whilst being a strategic threat, there is a commercial side and an ethical dilemma embedded in this

issue. The commercial part relates to the impact of the new mining charter on our business and the
ethical side has to do with a political environment that appears to suggest the leaders of the country
are acting unethically, but also the ‘Tone At the Top’ of AMANGO. We will deal with the commercial

part here and latter in B6.2, we deal with the ethical dilemma.

Before we respond, let’s first objectively evaluate the basis of the mining charter: it is in the long-
term interest of business to support the state to build a better South Africa for all, but most

especially, to advance Historically Disadvantaged South Africans -HDSAs (Africans, Colored and
Indians). If nothing else, to help secure a stable South Africa within which our business can thrive.
Keep in mind, we depend on the goodwill of the public, and we source our workers from the society,
so a stable society will promote the orderly conduct of our business. There is therefore, no question

that we should mutually share with the government, the aims of the mining charter. Having said that,
this cannot be done in a manner that violates the constitution of the country or works against the
interest of other investors, on whom we rely for capital, if nothing else, to secure a thriving economy
and our business.

The objectives of the mining charter, whilst widely shared, can be can be very conflicting especially
in an environment where there is no mutual trust between government and business -or the

chamber of mines that represents our collective interest as a sector. For instance, ‘promoting the
equitable access to the nation's mineral resources to all the people of South Africa’ can be in conflict
with ‘’substantially and meaningfully expand opportunities for black people to enter the mining and
minerals industry and to benefit from the exploitation of the nation's mineral resources,’ depending

on which angle you assess the problem. But what is clear is that anything that takes away from the
‘’much-needed regulatory certainty’’ will be counter-productive.

Developed by The CharterQuest Institute for 'The CFO Business Case Study Competition 2017'
www.charterquest.co.za | Email: thecfo@charterquest.co.za