Strategy scorecard

Principles of our strategy

Our overriding strategic objective is to drive sustainable growth in a safe manner while creating an attractive investment case with steady returns for our shareholders. We are a South African-based company in the energy business, focused on thermal and metallurgical coal and exploring opportunities to enter the power generation market.

We manage each operating mine for optimal production, focusing on reducing unit cost per saleable tonne, developing our projects innovatively through available synergies that will optimise initial capital outlays while reducing ongoing operating costs. We support this with innovative thinking to generate alternative revenue streams through new saleable products into new markets by leveraging existing resources and infrastructure.

We prioritise sustainable operations by actively minimising our environmental impact and effect on surrounding communities and the safety and health risks to which our employees are exposed in the ordinary course of business. We search constantly for both resource replacement and growth opportunities to ensure longevity for our business.

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Optimising our business portfolio and managing targeted financial performance for the long term – delivering earnings growth and attractive returns on capital investments.

Driving growth by building new relationships to supply product of superior quality that consistently satisfies demand through new projects, acquisition opportunities, and new markets.

Developing and maintaining competitive route-to-market channels, delivering a superior quality product at the right place, at the right time, at the right price.

Focus on operational excellence, developing a competitive and sustainable supply chain, and delivering cost savings.

Optimising our resources and driving continuous improvement

Strategic objective

Progress in FY16

Focus in FY17

Optimise Vanggatfontein

  • Utilisation of available plant capacity
  • Expand slurry and discard sales markets
  • Improve coal recovery and cost cutting
  • Continue Surface Rights acquisition discussions
  • Planning of integration of Moabsvelden into the Vanggatfontein complex
  • Sustain utilisation of the current capacity and explore optimisation strategies
  • Grow slurry and discard markets
  • Conclude Surface Right acquisition
  • Finalise integration of Moabsvelden into Vanggatfontein
  • Sustain coal recovery strategies and deliver coal safely

Stabilise Vaalkrantz

  • Continue investigation into incident of theft and fraud
  • Place colliery on care and maintenance
  • Disposal of loss making colliery
  • Finalise investigation into the incident of theft and fraud
  • Conclude disposal of LME

Bring Moabsvelden online

  • Continued interaction with Eskom to conclude CSA
  • Continued government liaison and consultation to facilitate the approval of the IWUL and amended EMP
  • Continue Surface Rights acquisition discussions
  • Continued discussions with financial institutions for funding
  • Continue interaction with Eskom to finalise Eskom CSA
  • Constant government liaison and consultation to facilitate approval of IWUL and amended EMP
  • Conclude Surface Rights acquisition
  • Finalise funding requirements

Braakfontein

  • Conclusion of BFS
  • MPRDA, NEMA and NWA regulatory submission and approvals
  • Negotiation of Richards Bay and/or other port allocation
  • Negotiation of Eskom CSA for middling product
  • Additional in-fill drilling at the new proposed adit position
  • Samples with Eskom to conduct combustion tests to determine the combustibility of the coal for potential Majuba up-take
  • Conclusion of BFS
  • Initiate MPRDA, NEMA and NWA regulatory submission and approvals under the “One Environmental System” once the peer review of the BFS is concluded
  • Negotiation of Richards Bay and/or other port allocation

Balgray

  • Conclusion of Mining Right application process and awarding of Mining Right
  • NEMA and NWA regulatory approvals
  • Commencement of confirmatory and in-fill drilling
  • Feasibility study for a standalone operation
  • Mining permit granted for the remining of the historic discard dump
  • Conclude disposal of LME

Koudelager

  • Integration of new Prospecting Right into current geological model
  • Design of exploration programme, drilling and upgrade of Coal Resource on new Prospecting Right
  • Conclude disposal of LME

Sterkfontein

  • Call option granted to Moneybox Investments 156 Proprietary Limited to acquire the Sterkfontein Project as fully set out in note 32 (i) to the financial statements
  • Moneybox completion of the Underground Coal Gasification Feasibility Study and exercise, or not, of the call option

Mooiklip

  • Determine whether the Coal Resource will justify a further phase of drilling with a view to conclude the acquisition of Mooiklip
  • Conclude disposal of Amalahle Exploration Proprietary Limited
  • Approval of the Prospecting Right renewal

Bankfontein

  • Opportunity to consolidate Bankfontein and the broader Roodepoort farm into a single exploration tenement with critical mass being pursued
  • Approval of the Prospecting Right renewal
  • Exploration programme to be concluded during Q3 FY17

Roodepoort

  • Possible JV and/or consolidation opportunities are being pursued to add value to the existing Coal Resource
  • Renewal of the Prospecting Right underway
  • Exploration programme to be concluded during Q3 FY17

Responsible and effective management of capital

Strategic objective

Progress in FY16

Focus in FY17

Cost containment

  • Improved underutilisation of plant capacity at Vanggatfontein
  • Limit supplier increases to that which we are able to negotiate with customers
  • Build cash reserves for the development of projects by reducing overheads, optimising operations and growing revenue
  • The group will implement measures to streamline the group structure thereby reducing costs and improving tax efficiency

Creation of new revenue streams

  • Commissioned filter press plant at Vanggatfontein
  • Expanded filter cake markets
  • Increase filter press throughput at Vanggatfontein
  • Expand and sustain filter cake markets
  • First trade deal has been concluded with additional contracts on the horizon for the coming year

Risk management

  • Risk workshops
  • Managed and maintained customer relationships and satisfaction levels
  • Continuous interaction with all stakeholders, including regulators and committees, ensuring compliance and the management of expectations
  • Finalisation of risk registers and updating of mitigating controls
  • Elimination/mitigation of identified risks
  • Implement and audit controls
  • Conclude risk workshops, updating of risk registers and mitigating controls
  • Audit of implemented controls
  • Continue managing stakeholder relationships and expectations
  • Mitigate adverse market conditions by exploring diversification opportunities into new markets, ie A-grade market

Safeguarding our assets

  • Continuous updating of our risk registers and mitigation controls with new risks identified
  • Continuous monitoring of the effectiveness of our preventive and detection controls
  • Build on a culture of zero tolerance
  • Continuous updating of our risk registers and mitigation controls with new risks identified
  • Continuous monitoring of the effectiveness of our preventive and detection controls
  • Build on the culture of zero tolerance

Ownership

  • Concluded Phase 1 of our goal of achieving 51% BEE by flipping up minorities on subsidiary level
  • Pursue and implement identified opportunities to achieve 51% BEE status for the group

Creating a safe, enabling environment for our employees

Strategic objective

Progress in FY16

Focus in FY17

Safety

  • New SHE management systems developed and implemented
  • Continuous monitoring through audits and application of disciplinary codes
  • Employee involvement created through the SLAM – Stop, Look, Assess, Manage system
  • Induction programme finalised and implemented
  • Continuous monitoring of revised systems and controls
  • Recognition of safety and health achievements

Human Resources

  • Conducted human resource compliance audits on all companies and contractors
  • Invested R7.8 million in skills development programmes
  • Continuous review of policies to ensure legal compliance
  • Continued focus to improve employment equity to drive transformation
  • Optimise collaboration with the MQA to facilitate access to skills development funding grants

Reduce our environmental impact

  • Continuing implementation of our concurrent rehabilitation plans
  • Implementation at Vaalkrantz of our proposed water management strategy once accepted and approved by DWS
  • Optimise the usage of the filter press plant at Vanggatfontein to reduce environmental footprint
  • Ongoing tracking of Vaalkrantz and Moabsvelden environmental authorisation permitting issues and close-out thereof
  • Implementation of concurrent rehabilitation plans and alignment with recent financial provision regulations promulgated
  • Pursue approval of the proposed water management strategy for Vaalkrantz, to be implemented in a phased approach, following DWS approval
  • Optimise the usage of the filter press plant at Vanggatfontein to ensure execution of strategies to reduce environmental footprint
  • Ongoing tracking of Moabsvelden environmental authorisation issues and close-out thereof
  • Optimise the available disposal capacity at Vanggatfontein by investigating alternatives to alleviate pressure on current capacity
  • Initiate specialist studies to support the backfilling of discard into opencast pits and apply for the necessary environmental authorisations
  • Apply for environmental authorisations for a further phase of the co-disposal facility

Compliance

  • Maintaining compliance with applicable legislation at all operations and development projects
  • Pursuing status of submitted applications for IWUL for Vaalkrantz and Moabsvelden
  • Process in place where certain individuals have been allocated the responsibility of ensuring compliance with legislation, providing quarterly feedback to the Compliance Officer
  • Subsequent to an external review performed by Hogan Lovells, recommendations made have been addressed
  • Maintaining compliance with applicable legislation at all operations and development projects
  • All legal appointments at Vanggatfontein reviewed and updated
  • Pursue approval of submitted IWUL application for Moabsvelden
  • Possible review on recommendations addressed

Meeting our social and labour responsibilities

  • Monitor progress in the implementation of both social and labour plan commitments, and compliance with the applicable elements of the Mining Charter Scorecard, and ensure regular feedback
  • Revitalise future forum structures and improve functionality
  • Negotiated a draft MOA with the Mpumalanga Department of Agriculture, Land Affairs and Rural Development to set up a PPP for the implementation of future agriculture-related local economic development projects
  • Donation of a stand in Delmas by the Victor Khanye Local Municipality for the construction of the Community Skills Development Centre
  • Reached an “in-principle” agreement with Canyoncoal and Samquartz for a joint venture in the construction of the Skills Development Centre
  • Roll out implementation of eco-furniture factory as part of the Vaalkrantz SLP
  • Identify infrastructure projects at Vanggatfontein
  • Continue engagement with the Victor Khanye Local Municipality for the establishment of a stakeholder engagement structure that is recognised and accepted by all parties so as to minimise the disruption of operations by disgruntled members of the community
  • Identify and implement school and learner assistance programmes in Delmas
  • Negotiate and sign MOA with the Mpumalanga Department of Higher Education for the management and staffing of the Community Skills Development Centre once completed