In the media

Implats, RBH agree ’Simpler and Better’ BEE Transaction

28 September 2006

Johannesburg and Phokeng, 28 September 2006: Impala Platinum Holdings Limited (Implats) and Royal Bafokeng Holdings (Pty) Limited (RBH), which is wholly-owned by the Royal Bafokeng Nation (RBN), today announced an agreement on a new black economic empowerment (BEE) transaction, replacing the previous IRS transaction approved by Implats shareholders in a general meeting on 4 July 2006.

RBH and Implats describe the revised BEE transaction as being simpler and better for both parties than its predecessor, the IRS transaction. In terms of the IRS transaction, RBH was to have acquired a 49% interest in the business of Impala Refining Services (IRS), a wholly-owned subsidiary of Implats, and would have had a right to convert this interest, within 10 years, into a direct holding of about 7.44% in Implats.

The new agreement follows recent discussions with the National Treasury, which suggest that Impala will probably not be able, under the coming revised draft Royalty Bill, to offset any existing royalties payable to the RBN against royalties payable to the state. Also, it had become apparent that in the IRS transaction the interests of the RBN and Implats were potentially not necessarily in alignment.

In terms of the new transaction, known as the "royalty transaction":

• Impala Platinum Limited (Impala), Implats’ major operating subsidiary, will pay to RBH an amount of R10.6 billion, being all royalties due to the RBN from 1 July 2007 onwards under the notarial mineral lease between Impala and the RBN;
• this amount will be used by RBN to subscribe for 9.389 million shares in Implats which, together with RBN’s existing holding of 1 million shares, will give it a holding of 13.4% in Implats; and
• the IRS transaction will be allowed to lapse.

The rights and obligations and benefits of each of Implats and RBN under the IRS transaction will be retained under the royalty transaction insofar as possible, including the creation of a jointly funded R340 million regional development trust.

The royalty transaction will support the long-term objectives of the RBN, in particular delivery of its developmental Masterplan which provides for the creation of a "competitive, thriving, vibrant and self-sufficient" community in the Rustenburg valley over the next 30 years.

Advantages of the proposed royalty transaction, say the parties, include:

• retention by Implats of 100% of the value in and cashflow from IRS;
• lower operating costs and increased cashflow for Impala due to the fact that the royalties will no longer be paid periodically to the RBN; and
• enhanced alignment of the RBN’s interests with those of Implats’ other shareholders.

Also, for Implats, the increased RBH holding in the company – together with the empowerment credits due as a result of the Incwala transaction and Implats’ Employee Share Ownership Plan – will result in an effective empowerment shareholding credits of 33.6% in Impala, well in excess of the 10-year equity requirement of the Mining Charter and its accompanying Scorecard.

Implats CEO David Brown said, "While the original transaction we envisaged was innovative, both parties came to recognise that our interests would not always be directly aligned. The "IRS" transaction nevertheless provided an excellent platform for a more significant deal that not only enhances alignment between our strategic BEE partner and other shareholders, but also settles the royalty payment to the RBN, perceived as a value trap in the company’s market value. Moreover, Implats will now retain 100% of the highly profitable IRS business, while enabling us to exceed the 10-year BEE equity requirement in a simple and direct way. In short, this new transaction is good for Implats shareholders by providing greater certainty at a lower cost."

His Majesty, Kgosi Leruo Molotlegi said, "The new agreement is a product of the deepening relationship between the RBN and Implats; a relationship in which doors for discussion are always open and opportunities for improvement are never passed up. For the RBN, it is a major enabling step towards fulfilment of our Masterplan, aimed at addressing and integrating the physical, economic, social and environmental development of our community of 300,000 people and the surrounding area."

Department National Treasury’s Director-General, Lesetja Kganyago said, "I would like to commend the parties involved for reaching an agreement that has taken into account the interests of not only the respective parties but also of the nation at large."

Queries:

Implats

Cathie Markus
Executive Director
27 11 481 3925
27 82 441 7166

Brenda Berlin
Manager – Group Corporate Finance
27 11 481 3923
27 82 653 0503

David Brown
Chief Executive Officer
27 11 481 3926
27 83 254 4084

Royal Bafokeng Holdings

James Duncan
Russell & Associates
27 11 880 3924 (office)
27 82 892 8052 (mobile)

Charmane Russell
Russell & Associates
27 11 880 3924 (Tel)
27 82 372 5816 (Mobile)